<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_____________________
FORM 10-Q
_____________________
(Mark one)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 1-7368
BELL ATLANTIC - WASHINGTON, D.C., INC.
A New York Corporation I.R.S. Employer Identification No. 53-0046277
1710 H Street, N.W., Washington, D.C. 20006
Telephone Number (202) 392-9900
_________________________
THE REGISTRANT, A WHOLLY OWNED SUBSIDIARY OF BELL ATLANTIC CORPORATION, MEETS
THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION H(1)(a) AND (b) OF FORM 10-Q AND
IS THEREFORE FILING THIS FORM WITH REDUCED DISCLOSURE FORMAT PURSUANT TO GENERAL
INSTRUCTION H(2).
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
<PAGE>
Bell Atlantic - Washington, D.C., Inc.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
CONDENSED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
(Dollars in Thousands) (Unaudited) 2000 1999
- ----------------------------------------------------------------------------------
<S> <C> <C>
OPERATING REVENUES
(including $37,712 and $36,175 from affiliates) $174,008 $163,318
--------------------------
OPERATING EXPENSES
Employee costs, including benefits and taxes 19,288 20,160
Depreciation and amortization 44,026 44,467
Other (including $31,398 and $33,100 to affiliates) 60,517 54,920
--------------------------
123,831 119,547
--------------------------
OPERATING INCOME 50,177 43,771
OTHER INCOME, NET
(including $15 and $8 from affiliate) 933 523
INTEREST EXPENSE
(including $1,115 and $1,429 to affiliate) 3,535 4,241
--------------------------
INCOME BEFORE PROVISION FOR INCOME TAXES 47,575 40,053
PROVISION FOR INCOME TAXES 19,652 16,550
--------------------------
NET INCOME $ 27,923 $ 23,503
==========================
</TABLE>
See Notes to Condensed Financial Statements.
1
<PAGE>
Bell Atlantic - Washington, D.C., Inc.
CONDENSED BALANCE SHEETS
ASSETS
------
<TABLE>
<CAPTION>
March 31, December 31,
(Dollars in Thousands) (Unaudited) 2000 1999
- ---------------------------------------------------------------------------------
<S> <C> <C>
CURRENT ASSETS
Cash $ --- $ 703
Short-term investments 4,933 7,400
Accounts receivable:
Trade and other, net of allowances for
uncollectibles of $6,844 and $6,802 145,272 136,333
Affiliates 21,606 32,320
Material and supplies 1,034 804
Prepaid expenses 4,000 4,460
Deferred income taxes 3,188 2,951
Other 814 ---
------------------------------
180,847 184,971
------------------------------
PLANT, PROPERTY AND EQUIPMENT 1,921,094 1,898,332
Less accumulated depreciation 1,036,048 1,028,915
------------------------------
885,046 869,417
OTHER ASSETS 19,154 16,590
------------------------------
TOTAL ASSETS $1,085,047 $1,070,978
==============================
</TABLE>
See Notes to Condensed Financial Statements.
2
<PAGE>
Bell Atlantic - Washington, D.C., Inc.
CONDENSED BALANCE SHEETS
LIABILITIES AND SHAREOWNER'S INVESTMENT
---------------------------------------
<TABLE>
<CAPTION>
March 31, December 31,
(Dollars in Thousands) (Unaudited) 2000 1999
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
CURRENT LIABILITIES
Debt maturing within one year:
Note payable to affiliate $ 101,712 $ 80,379
Accounts payable and accrued liabilities:
Affiliates 82,096 87,412
Other 104,947 103,836
Advance billings and customer deposits 12,782 10,979
----------------------------------
301,537 282,606
----------------------------------
LONG-TERM DEBT 164,320 164,315
----------------------------------
EMPLOYEE BENEFIT OBLIGATIONS 98,203 103,223
----------------------------------
DEFERRED CREDITS AND OTHER LIABILITIES
Deferred income taxes 76,069 71,131
Unamortized investment tax credits 3,048 3,099
Other 19,872 25,429
----------------------------------
98,989 99,659
----------------------------------
SHAREOWNER'S INVESTMENT
Common stock - one share, owned by parent, at stated value 191,968 191,968
Capital surplus 28,549 28,549
Reinvested earnings 201,633 200,810
Accumulated other comprehensive loss (152) (152)
----------------------------------
421,998 421,175
----------------------------------
TOTAL LIABILITIES AND SHAREOWNER'S INVESTMENT $1,085,047 $1,070,978
==================================
</TABLE>
See Notes to Condensed Financial Statements.
3
<PAGE>
Bell Atlantic - Washington, D.C., Inc.
CONDENSED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months
Ended March 31,
----------------------------
(Dollars in Thousands) (Unaudited) 2000 1999
- -------------------------------------------------------------------------------
<S> <C> <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 68,602 $ 77,398
----------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Net change in short-term investments 2,467 2,230
Capital expenditures (70,634) (61,148)
Other, net 3,585 2,042
----------------------------
Net cash used in investing activities (64,582) (56,876)
----------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal repayment of capital lease obligations --- (5)
Net change in note payable to affiliate 21,333 4,033
Dividend paid (27,100) (19,600)
Net change in outstanding checks drawn
on controlled disbursement accounts 1,044 (4,950)
----------------------------
Net cash used in financing activities (4,723) (20,522)
----------------------------
NET CHANGE IN CASH (703) ---
CASH, BEGINNING OF PERIOD 703 ---
----------------------------
CASH, END OF PERIOD $ --- $ ---
============================
</TABLE>
See Notes to Condensed Financial Statements.
4
<PAGE>
Bell Atlantic - Washington, D.C., Inc.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
Bell Atlantic - Washington, D.C., Inc. is a wholly owned subsidiary of Bell
Atlantic Corporation (Bell Atlantic). The accompanying unaudited condensed
financial statements have been prepared based upon Securities and Exchange
Commission (SEC) rules that permit reduced disclosure for interim periods.
These financial statements reflect all adjustments that are necessary for a fair
presentation of results of operations and financial position for the interim
periods shown including normal recurring accruals. The results for the interim
periods are not necessarily indicative of results for the full year. For a more
complete discussion of significant accounting policies and certain other
information, you should refer to the financial statements included in our 1999
Annual Report on Form 10-K.
We have reclassified certain amounts from prior year's data to conform to the
2000 presentation.
2. Dividend
On May 1, 2000, we declared and paid a dividend in the amount of $15,900,000
to Bell Atlantic.
3. Recent Accounting Pronouncements
FASB Accounting Standard - Derivatives and Hedging Activities
In June 1998, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for
Derivative Instruments and Hedging Activities." This statement requires that
all derivatives be measured at fair value and recognized as either assets or
liabilities on our balance sheet. Changes in the fair values of derivative
instruments will be recognized in either earnings or comprehensive income,
depending on the designated use and effectiveness of the instruments. The FASB
amended this pronouncement in June 1999 to defer the effective date of SFAS No.
133 for one year. We must adopt SFAS No. 133 no later than January 1, 2001.
On March 3, 2000, the FASB issued a Proposed SFAS "Accounting for Certain
Derivative Instruments and Certain Hedging Activities," which would amend SFAS
No. 133. The proposed amendments address certain implementation issues and
relate to such matters as the normal purchases and normal sales exception, the
definition of interest rate risk, hedging recognized foreign-currency-
denominated debt instruments, and intercompany derivatives.
The adoption of SFAS No. 133 will have no material effect on our results of
operations or financial condition because we currently do not enter into the use
of derivative instruments or participate in hedging activities.
FASB Interpretation - Stock Compensation
In March 2000, the FASB issued Interpretation No. 44, "Accounting for Certain
Transactions Involving Stock Compensation." Interpretation No. 44 was issued in
order to clarify certain issues arising from Accounting Principles Board (APB)
Opinion No. 25 "Accounting for Stock Issued to Employees," which was previously
issued in October 1972. Interpretation No. 44 is effective July 1, 2000, but
certain conclusions cover specific events that occur either after December 15,
1998 or January 12, 2000.
The main issues addressed by Interpretation No. 44 are: (a) the definition of
an employee for purposes of applying APB Opinion No. 25, (b) the criteria for
determining whether a plan qualifies as a noncompensatory plan, (c) the
accounting consequence of various modifications to the terms of a previously
fixed stock option or award, and (d) the accounting for an exchange of stock
compensation awards in a business combination.
We do not expect that Interpretation No. 44 will have a material impact on
our results of operations or financial position.
5
<PAGE>
Bell Atlantic - Washington, D.C., Inc.
SEC Staff Accounting Bulletin - Revenue Recognition
In December 1999, the SEC issued Staff Accounting Bulletin (SAB) No. 101,
"Revenue Recognition in Financial Statements," which currently must be adopted
by June 30, 2000. SAB No. 101 provides additional guidance on revenue
recognition, as well as criteria from when revenue is generally realized and
earned, and also requires the deferral of incremental direct selling costs. We
are currently assessing the impact of SAB No. 101 on our results of operations
and financial position.
4. Shareowner's Investment
<TABLE>
<CAPTION>
Reinvested Accumulated Other
(Dollars in Thousands) Common Stock Capital Surplus Earnings Comprehensive Loss
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance at December 31, 1999 $191,968 $28,549 $200,810 $(152)
Net income 27,923
Dividend paid to Bell Atlantic (27,100)
---------------------------------------------------------------
Balance at March 31, 2000 $191,968 $28,549 $201,633 $(152)
===============================================================
</TABLE>
Net income and comprehensive income were the same for the three months
ended March 31, 2000 and 1999.
5. Commitments and Contingencies
Various legal actions and regulatory proceedings are pending to which we
are a party. We have established reserves for specific liabilities in connection
with regulatory and legal matters that we currently deem to be probable and
estimable. We do not expect that the ultimate resolution of pending regulatory
and legal matters in future periods will have a material effect on our financial
condition, but it could have a material effect on our results of operations.
6. Proposed Bell Atlantic - GTE Merger
Bell Atlantic and GTE Corporation (GTE) have announced a proposed merger of
equals under a definitive merger agreement dated as of July 27, 1998. Under the
terms of the agreement, GTE shareholders will receive 1.22 shares of Bell
Atlantic common stock for each share of GTE common stock that they own. Bell
Atlantic shareholders will continue to own their existing shares after the
merger.
It is expected that the merger will qualify as a pooling of interests,
which means that for accounting and financial reporting purposes the companies
will be treated as if they had always been combined. At annual meetings held in
May 1999, the shareholders of each company approved the merger. The completion
of the merger is subject to a number of conditions, including certain regulatory
approvals (all of which have been obtained except that of the Federal
Communications Commission) and receipt of opinions that the merger will be tax-
free.
The companies are targeting completion of the merger in the second quarter
of 2000. In April 2000, Bell Atlantic announced that the combined company will
be called Verizon Communications.
6
<PAGE>
Bell Atlantic - Washington, D.C., Inc.
Item 2. Management's Discussion and Analysis of Results of Operations
(Abbreviated pursuant to General Instruction H(2).)
This discussion should be read in conjunction with the Financial Statements
and Notes to Financial Statements.
RESULTS OF OPERATIONS
- ---------------------
We reported net income of $27,923,000 for the three month period ended March
31, 2000, compared to net income of $23,503,000 for the same period in 1999.
Our results for 1999 were affected by special items. The special items were
comprised of our allocated share of charges from Bell Atlantic Network Services,
Inc. (NSI).
Merger-related Costs
In connection with the Bell Atlantic-NYNEX merger, which was completed in
August 1997, we recorded pre-tax transition and integration costs of $310,000 in
the first quarter of 1999. These costs were recorded in Other Operating
Expenses.
Transition and integration costs consisted of our proportionate share of
costs associated with integrating the operations of Bell Atlantic and NYNEX,
such as systems modifications costs and advertising and branding costs.
Transition and integration costs were expensed as incurred.
OPERATING REVENUE STATISTICS
- ----------------------------
<TABLE>
<CAPTION>
2000 1999 % Change
- ------------------------------------------------------------------
<S> <C> <C> <C>
At March 31,
Access Lines in Service (in thousands)
Residence 310 304 2.0%
Business 635 631 0.6
Public 10 10 ---
-----------
955 945 1.1
===========
Three Months Ended March 31,
Access Minutes of Use (in millions) 770 745 3.4
===========
</TABLE>
OPERATING REVENUES
- ------------------
(Dollars in Thousands)
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
2000 1999
- ------------------------------------------------------------------------
<S> <C> <C>
Local services $ 76,363 $ 70,765
Network access services 46,645 39,913
Long distance services 818 1,121
Ancillary services 50,182 51,519
---------------------------
Total $174,008 $163,318
===========================
</TABLE>
7
<PAGE>
Bell Atlantic - Washington, D.C., Inc.
LOCAL SERVICES
2000 - 1999 Increase
- --------------------------------------------------------------------------------
First Quarter $5,598 7.9%
- --------------------------------------------------------------------------------
Local service revenues are earned from the provision of local exchange, local
private line, public telephone (pay phone) and value-added services. Value-
added services are a family of services that expand the utilization of the
network. These services include products such as Caller ID, Call Waiting and
Return Call.
Local service revenues increased in the first quarter of 2000 due to higher
customer demand and usage of our value-added services, as well as our data
transport and digital services. Local service revenue growth in the first
quarter of 2000 also reflects higher usage of our network facilities. Revenue
growth was generated, in part, by an increase in access lines in service of 1.1%
from March 31, 1999.
Growth in local service revenues was partially offset by lower revenues from
our pay phone services due to the increasing popularity of wireless
communications.
NETWORK ACCESS SERVICES
2000 - 1999 Increase
- --------------------------------------------------------------------------------
First Quarter $6,732 16.9%
- --------------------------------------------------------------------------------
Network access revenues are earned from end-user subscribers and from long
distance and other competing carriers who use our local exchange facilities to
provide services to their customers. Switched access revenues are derived from
fixed and usage-based charges paid by carriers for access to our local network.
Special access revenues originate from carriers and end-users that buy dedicated
local exchange capacity to support their private networks. End-user access
revenues are earned from our customers and from resellers who purchase dial-tone
services.
Network access revenue growth in the first quarter of 2000 was mainly
attributable to increased demand for special access services, reflecting a
greater utilization of our network, and volume growth resulting from continuing
expansion of the business market, particularly for high capacity data services.
Higher customer demand was also reflected by growth in access minutes of use of
3.4% from the same period in 1999.
In addition, network access revenues included higher revenues received from
customers for the recovery of local number portability (LNP) costs. LNP allows
customers to change local exchange carriers while maintaining their existing
telephone numbers. In December 1998, the Federal Communications Commission
(FCC) issued an order permitting us to recover costs incurred for LNP in the
form of monthly end-user charges for a five-year period beginning in March 1999.
Revenue growth was partially offset by price reductions associated with a
federal price cap filing and other regulatory decisions. The FCC regulates the
rates that we charge long distance carriers and end-user subscribers for
interstate access services. We are required to file new access rates with the
FCC each year. In July 1999, we implemented interstate price decreases of
approximately $400,000 on an annual basis in connection with the FCC's Price Cap
Plan. The rates included in our July 1999 filing will be in effect through June
2000. Interstate price decreases were $2,200,000 on an annual basis for the
period July 1998 through June 1999. The rates include amounts necessary to
recover our contribution to the FCC's universal service fund which are subject
to adjustment every quarter due to potential increases or decreases in our
contribution to the fund. Our contributions to the universal service fund are
included in Other Operating Expenses. As a result of a U.S. Court of Appeals
decision last year, our contributions to the universal service fund were reduced
by approximately $2,000,000 annually beginning November 1, 1999, and our
interstate access rates were reduced accordingly because we will no longer have
to recover these contributions in our rates.
8
<PAGE>
Bell Atlantic - Washington, D.C., Inc.
LONG DISTANCE SERVICES
2000 - 1999 (Decrease)
- --------------------------------------------------------------------------------
First Quarter $(303) (27.0)%
- --------------------------------------------------------------------------------
Long distance revenues are earned primarily from calls made to points outside
a customer's local calling area, but within our service area (intraLATA toll).
IntraLATA toll calls originate and terminate within the same LATA, but generally
cover a greater distance than a local call.
The decline in long distance revenues in the first quarter of 2000 was
principally caused by the competitive effects of presubscription, which enables
customers to make intraLATA toll calls using a competing carrier without having
to dial an access code.
ANCILLARY SERVICES
2000 - 1999 (Decrease)
- --------------------------------------------------------------------------------
First Quarter $(1,337) (2.6)%
- --------------------------------------------------------------------------------
Our ancillary services include such services as billing and collections for
long distance carriers and affiliates, facilities rentals to affiliates and
nonaffiliates, collocation for competitive local exchange carriers, usage of
separately priced (unbundled) components of our network by competitive local
exchange carriers, voice messaging, customer premises equipment (CPE) and wiring
and maintenance services, and sales of materials and supplies to affiliates.
Ancillary services revenues also include fees paid by customers for
nonpublication of telephone numbers and multiple white page listings and fees
paid by an affiliate for usage of our directory listings.
Ancillary services revenues were lower in the first quarter of 2000 due to a
reduction in CPE services provided to government customers. This decrease was
partially offset by higher payments received from competitive local exchange
carriers for the purchase of unbundled network elements and for interconnection
of their networks with our network.
9
<PAGE>
Bell Atlantic - Washington, D.C., Inc.
OPERATING EXPENSES
- ------------------
(Dollars in Thousands)
<TABLE>
<CAPTION>
Three Months Ended March 31,
-----------------------------
2000 1999
- ----------------------------------------------------------------------------
<S> <C> <C>
Employee costs, including benefits and taxes $ 19,288 $ 20,160
Depreciation and amortization 44,026 44,467
Other operating expenses 60,517 54,920
-----------------------------
Total $123,831 $119,547
=============================
</TABLE>
EMPLOYEE COSTS
2000 - 1999 (Decrease)
- --------------------------------------------------------------------------------
First Quarter $(872) (4.3)%
- --------------------------------------------------------------------------------
Employee costs consist of salaries, wages and other employee compensation,
employee benefits and payroll taxes paid directly by us. Similar costs incurred
by employees of NSI, who provide centralized services on a contract basis, are
allocated to us and are included in Other Operating Expenses.
Employee costs decreased in the first quarter of 2000 primarily as a result
of lower pension and benefit costs. The decline in pension and benefit costs
was due to favorable pension plan investment returns and changes in actuarial
assumptions. These factors were partially offset by changes in certain plan
provisions, including a previously reported amendment to our management cash
balance plan and a special lump sum pension payment to management and associate
retirees. A reduction in repair and maintenance activity in the first quarter
of 2000 also contributed to the decrease in employee costs, but to a lesser
extent.
These cost reductions were partially offset by higher overtime payments and
the effect of higher work force levels.
DEPRECIATION AND AMORTIZATION
2000 - 1999 (Decrease)
- --------------------------------------------------------------------------------
First Quarter $(441) (1.0)%
- --------------------------------------------------------------------------------
Depreciation and amortization expense decreased in the first quarter of 2000
over the same period in 1999 principally due to the effect of lower rates of
depreciation and amortization. This decrease was partially offset by growth in
depreciable telephone plant and changes in the mix of plant assets. The growth
in telephone plant was largely attributable to increased capital expenditures
for software and hardware to support the expansion of our network.
OTHER OPERATING EXPENSES
2000 - 1999 Increase
- --------------------------------------------------------------------------------
First Quarter $5,597 10.2%
- --------------------------------------------------------------------------------
Other operating expenses consist of contract services including centralized
services expenses allocated from NSI, rent, network software costs, operating
taxes other than income, the provision for uncollectible accounts receivable,
and other costs.
The increase in other operating expenses in the first quarter of 2000 was
largely attributable to higher property taxes, higher costs for uncollectible
accounts receivable associated with our billing and collection services, and
higher interconnection and related costs associated with reciprocal compensation
arrangements with competitive local exchange and other carriers to terminate
calls on their networks. The effect of a gain recognized in 1999 on the
termination of a capital lease also contributed to the increase in other
operating expenses, but to a lesser extent.
These increases were partially offset by a reduction in centralized services
expenses allocated from NSI, primarily as a result of lower employee costs
incurred by NSI.
10
<PAGE>
Bell Atlantic - Washington, D.C., Inc.
OTHER INCOME, NET
2000 - 1999 Increase
- --------------------------------------------------------------------------------
First Quarter $410 78.4%
- --------------------------------------------------------------------------------
The change in other income, net, was primarily attributable to additional
interest income associated with the settlement of a tax-related matter in the
first quarter of 2000.
INTEREST EXPENSE
2000 - 1999 (Decrease)
- --------------------------------------------------------------------------------
First Quarter $(706) (16.6)%
- --------------------------------------------------------------------------------
Interest expense includes costs associated with borrowings and capital
leases, net of interest capitalized as a cost of acquiring or constructing plant
assets.
Interest expense decreased in the first quarter of 2000 over the same period
in 1999 as a result of lower levels of average short-term debt with an affiliate
and higher capitalized interest costs resulting from higher levels of average
telephone plant under construction.
EFFECTIVE INCOME TAX RATES
Three Months Ended March 31,
- --------------------------------------------------------------------------------
2000 41.3%
- --------------------------------------------------------------------------------
1999 41.3%
- --------------------------------------------------------------------------------
The effective income tax rate is the provision for income taxes as a
percentage of income before the provision for income taxes. Our effective
income tax rate was unchanged from the first quarter of 1999.
FINANCIAL CONDITION
- -------------------
We use the net cash generated from operations and from external financing to
fund capital expenditures for network expansion and modernization, and to pay
dividends. While current liabilities exceeded current assets at both March 31,
2000 and 1999 and December 31, 1999, our sources of funds, primarily from
operations and, to the extent necessary, from readily available financing
arrangements with an affiliate, are sufficient to meet ongoing operating
requirements. Management expects that presently foreseeable capital requirements
will continue to be financed primarily through internally generated funds.
Additional long-term debt may be needed to fund development activities or to
maintain our capital structure to ensure financial flexibility.
As of March 31, 2000, we had $148,288,000 of an unused line of credit with an
affiliate, Bell Atlantic Network Funding Corporation. In addition, we had
$100,000,000 remaining under a shelf registration statement filed with the
Securities and Exchange Commission for the issuance of unsecured debt
securities. Our debt securities continue to be accorded high ratings by primary
rating agencies. After the announcement of the Bell Atlantic - GTE merger, the
rating agencies placed our ratings under review for potential downgrade.
Our debt ratio was 38.7% at March 31, 2000, compared to 40.7% at March 31,
1999 and 36.7% at December 31, 1999.
On May 1, 2000, we declared and paid a dividend in the amount of $15,900,000
to Bell Atlantic.
11
<PAGE>
Bell Atlantic - Washington, D.C., Inc.
OTHER MATTERS
- -------------
FCC Regulation and Interstate Rates
Price Caps
As previously reported, in May 1999, the U. S. Court of Appeals reversed the
FCC order that adopted the current 6.5% productivity factor applied to
interstate access rates, but granted the FCC a stay of its order until April 1,
2000. The Court has further extended the stay until June 30, 2000 to allow the
FCC time to consider an industry proposal to further restructure access rates.
Recent Accounting Pronouncements
FASB Accounting Standard - Derivatives and Hedging Activities
In June 1998, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for
Derivative Instruments and Hedging Activities." This statement requires that
all derivatives be measured at fair value and recognized as either assets or
liabilities on our balance sheet. Changes in the fair values of the derivative
instruments will be recognized in either earnings or comprehensive income,
depending on the designated use and effectiveness of the instruments. The FASB
amended this pronouncement in June 1999 to defer the effective date of SFAS No.
133 for one year. We must adopt SFAS No. 133 no later than January 1, 2001.
On March 3, 2000, the FASB issued a Proposed SFAS "Accounting for Certain
Derivative Instruments and Certain Hedging Activities," which would amend SFAS
No. 133. The proposed amendments address certain implementation issues and
relate to such matters as the normal purchases and normal sales exception, the
definition of interest rate risk, hedging recognized foreign-currency-
denominated debt instruments, and intercompany derivatives.
The adoption of SFAS No. 133 will have no material effect on our results of
operations or financial condition because we currently do not enter into the use
of derivative instruments or participate in hedging activities.
FASB Interpretation - Stock Compensation
In March 2000, the FASB issued Interpretation No. 44, "Accounting for Certain
Transactions Involving Stock Compensation." Interpretation No. 44 was issued in
order to clarify certain issues arising from Accounting Principles Board (APB)
Opinion No. 25 "Accounting for Stock Issued to Employees," which was previously
issued in October 1972. Interpretation No. 44 is effective July 1, 2000, but
certain conclusions cover specific events that occur either after December 15,
1998 or January 12, 2000.
The main issues addressed by Interpretation No. 44 are: (a) the definition of
an employee for purposes of applying APB Opinion No. 25, (b) the criteria for
determining whether a plan qualifies as a noncompensatory plan, (c) the
accounting consequence of various modifications to the terms of a previously
fixed stock option or award, and (d) the accounting for an exchange of stock
compensation awards in a business combination.
We do not expect that Interpretation No. 44 will have a material impact on
our results of operations or financial position.
SEC Staff Accounting Bulletin - Revenue Recognition
In December 1999, the Securities and Exchange Commission (SEC) issued Staff
Accounting Bulletin (SAB) No. 101, "Revenue Recognition in Financial
Statements," which currently must be adopted by June 30, 2000. SAB No. 101
provides additional guidance on revenue recognition, as well as criteria from
when revenue is generally realized and earned, and also requires the deferral of
incremental direct selling costs. We are currently assessing the impact of SAB
No. 101 on our results of operations and financial position.
12
<PAGE>
Bell Atlantic - Washington, D.C., Inc.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
There were no proceedings reportable under this Item.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit Number
27 Financial Data Schedule.
(b) There were no Current Reports on Form 8-K filed during the
quarter ended March 31, 2000.
13
<PAGE>
Bell Atlantic - Washington, D.C., Inc.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
BELL ATLANTIC - WASHINGTON, D.C., INC.
Date: May 12, 2000 By /s/ Edwin F. Hall
----------------------------------
Edwin F. Hall
Controller
UNLESS OTHERWISE INDICATED, ALL INFORMATION IS AS OF MAY 10, 2000.
14
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED STATEMENT OF INCOME FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND THE
CONDENSED BALANCE SHEET AT MARCH 31, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 4,933
<SECURITIES> 0
<RECEIVABLES> 152,116
<ALLOWANCES> 6,844
<INVENTORY> 1,034
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0
0
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</TABLE>
