<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, 1996
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 1-7757
BELL ATLANTIC - DELAWARE, INC.
A Delaware Corporation I.R.S. Employer Identification No. 23-0523775
901 Tatnall Street, Wilmington, Delaware 19801
Telephone Number (302) 576-5420
_________________________
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 - Delaware, Inc.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
STATEMENTS OF OPERATIONS AND REINVESTED EARNINGS
(Unaudited)
(Dollars in Thousands)
<TABLE>
<CAPTION>
Three months ended
March 31,
------------------
1996 1995
-------- --------
<S> <C> <C>
OPERATING REVENUES
(including $2,848 and $3,483 to affiliates).......... $67,795 $62,870
------- -------
OPERATING EXPENSES
Employee costs, including benefits and taxes......... 14,152 14,170
Depreciation and amortization........................ 13,688 14,651
Other (including $14,046 and $12,327 to affiliates).. 24,065 18,327
------- -------
51,905 47,148
------- -------
OPERATING INCOME.......................................... 15,890 15,722
OTHER EXPENSE, NET........................................ 170 100
INTEREST EXPENSE
(including $384 and $281 to affiliates).............. 1,987 1,795
------- -------
INCOME BEFORE PROVISION FOR INCOME TAXES.................. 13,733 13,827
PROVISION FOR INCOME TAXES................................ 5,480 5,553
------- -------
NET INCOME................................................ $ 8,253 $ 8,274
======= =======
REINVESTED EARNINGS
At beginning of period............................... $22,449 $16,564
Add: net income..................................... 8,253 8,274
------- -------
30,702 24,838
Deduct: dividends................................... 6,500 11,100
other changes............................... 795 ---
------- -------
At end of period..................................... $23,407 $13,738
======= =======
</TABLE>
See Notes to Financial Statements.
1
<PAGE>
Bell Atlantic - Delaware, Inc.
BALANCE SHEETS
(Unaudited)
(Dollars in Thousands)
ASSETS
------
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
--------- ------------
<S> <C> <C>
CURRENT ASSETS
Short-term investments.......................... $ 2,000 $ ---
Accounts receivable:
Trade and other, net of allowances for
uncollectibles of $3,520 and $3,260.. 43,521 43,263
Affiliates................................. 3,987 4,158
Material and supplies........................... 1,891 1,738
Prepaid expenses................................ 11,835 17,651
Deferred income taxes........................... 316 316
Other........................................... 204 75
-------- --------
63,754 67,201
-------- --------
PLANT, PROPERTY AND EQUIPMENT................... 723,146 710,216
Less accumulated depreciation................... 357,427 349,239
-------- --------
365,719 360,977
-------- --------
OTHER ASSETS.................................... 2,926 10,020
-------- --------
TOTAL ASSETS.................................... $432,399 $438,198
======== ========
</TABLE>
See Notes to Financial Statements.
2
<PAGE>
Bell Atlantic - Delaware, Inc.
BALANCE SHEETS
(Unaudited)
(Dollars in Thousands, Except Per Share Amount)
LIABILITIES AND SHAREOWNER'S INVESTMENT
---------------------------------------
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
--------- ------------
<S> <C> <C>
CURRENT LIABILITIES
Debt maturing within one year:
Note payable to affiliate................. $ 4,341 $ 8,720
Accounts payable and accrued liabilities:
Affiliates................................ 24,231 25,961
Other..................................... 39,649 41,426
Advance billings and customer deposits......... 10,740 8,702
-------- --------
78,961 84,809
-------- --------
LONG-TERM DEBT
Note payable to affiliate...................... 20,000 20,000
Other.......................................... 101,153 101,147
-------- --------
121,153 121,147
-------- --------
EMPLOYEE BENEFIT OBLIGATIONS................... 50,930 50,386
-------- --------
DEFERRED CREDITS AND OTHER LIABILITIES
Deferred income taxes.......................... 15,424 15,657
Unamortized investment tax credits............. 3,278 3,421
Other.......................................... 20,804 21,887
-------- --------
39,506 40,965
-------- --------
SHAREOWNER'S INVESTMENT
Common stock, $25 par value per share.......... 118,442 118,442
Authorized shares: 5,262,280
Outstanding shares: 4,737,686
Reinvested earnings............................ 23,407 22,449
-------- --------
141,849 140,891
-------- --------
TOTAL LIABILITIES AND SHAREOWNER'S INVESTMENT.. $432,399 $438,198
======== ========
</TABLE>
See Notes to Financial Statements.
3
<PAGE>
Bell Atlantic - Delaware, Inc.
STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in Thousands)
<TABLE>
<CAPTION>
Three months ended
March 31,
--------------------------
1996 1995
------------ ------------
<S> <C> <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES... $ 29,959 $ 35,334
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Net change in short-term investments........ (2,000) (2,201)
Additions to plant, property and equipment.. (18,829) (28,919)
Other, net.................................. 367 (222)
-------- --------
Net cash used in investing activities....... (20,462) (31,342)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Net change in note payable to affiliate..... (4,379) 10,664
Dividends paid.............................. (6,500) (11,100)
Net change in outstanding checks drawn
on controlled disbursement accounts.... 1,382 (3,556)
-------- --------
Net cash used in financing activities....... (9,497) (3,992)
-------- --------
NET CHANGE IN CASH.......................... -- --
CASH, BEGINNING OF PERIOD................... -- --
-------- --------
CASH, END OF PERIOD......................... $ -- $ --
======== ========
</TABLE>
See Notes to Financial Statements.
4
<PAGE>
Bell Atlantic - Delaware, Inc.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
The accompanying financial statements are unaudited and have been prepared
by Bell Atlantic - Delaware, Inc. (the Company) pursuant to the rules and
regulations of the Securities and Exchange Commission (SEC). The December 31,
1995 balance sheet was derived from audited financial statements, but does not
include all disclosures required by generally accepted accounting principles. In
the opinion of management, these financial statements include all adjustments
(consisting of only normal recurring adjustments) necessary to present fairly
the results of operations, financial position and cash flows. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such SEC rules and regulations. The Company
believes that the disclosures made are adequate to make the information
presented not misleading. It is suggested that these financial statements be
read in conjunction with the financial statements and notes thereto included in
the Company's Annual Report on Form 10-K for the year ended December 31, 1995.
2. Dividend
On May 1, 1996, the Company declared and paid a dividend in the amount of
$9,000,000 to Bell Atlantic Corporation (Bell Atlantic).
3. Reclassifications
Certain reclassifications of the prior year's data have been made to conform
to 1996 classifications.
4. Subsequent Event - Proposed Bell Atlantic - NYNEX Merger
On April 22, 1996, Bell Atlantic and NYNEX Corporation announced a proposed
merger of equals pursuant to a definitive merger agreement dated April 21, 1996,
that provides for the formation of a new company to be named Bell Atlantic
Corporation. Under the terms of the agreement, NYNEX shareholders will receive
one share in the new company for each NYNEX share owned and Bell Atlantic
shareholders will receive 1.302 shares in the new company for each Bell Atlantic
share owned. The merger, which is expected to qualify as a pooling of interests
for accounting purposes, is subject to a number of conditions, including
regulatory approvals, receipt of opinions that the merger will be tax free, and
the approval of the shareholders of both Bell Atlantic and NYNEX. The
transaction is expected to close within 12 months.
5
<PAGE>
Bell Atlantic - Delaware, 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
- ---------------------
The Company reported net income for the first quarter of 1996 of $8,253,000,
compared to net income of $8,274,000 for the same period in 1995.
Items affecting the comparison of operating results between the three month
periods ended March 31, 1996 and 1995 are discussed in the following sections.
<TABLE>
<CAPTION>
OPERATING REVENUES
- ------------------
(Dollars in Thousands)
For the Three Month Period Ended March 31 1996 1995
- ------------------------------------------------------------------------
<S> <C> <C>
Transport Services
Local service.......................... $25,003 $24,292
Network access......................... 16,011 14,219
Toll service........................... 7,972 7,794
Ancillary Services
Directory publishing................... 8,500 8,085
Other.................................. 1,597 804
Value-added Services....................... 8,712 7,676
-------- --------
Total...................................... $67,795 $62,870
======== ========
<CAPTION>
TRANSPORT SERVICES OPERATING STATISTICS
- ---------------------------------------
Percentage
1996 1995 Increase
- -------------------------------------------------------------------------
<S> <C> <C> <C>
At March 31
- -----------
Access Lines in Service (In thousands)
Residence............................. 318 308 3.2%
Business.............................. 176 165 6.7
Public................................ 6 6 --
------ -------
500 479 4.4
====== =======
For the Three Month Period Ended March 31
- -----------------------------------------
Access Minutes of Use (In millions)
Interstate............................ 439 389 12.9
Intrastate............................ 16 13 23.1
------ -------
455 402 13.2
====== =======
Toll Messages (In thousands)
Intrastate............................ 8,620 7,786 10.7
Interstate............................ 6,672 6,166 8.2
------ -------
15,292 13,952 9.6
====== =======
</TABLE>
6
<PAGE>
Bell Atlantic - Delaware, Inc.
LOCAL SERVICE REVENUES
1996-1995 Increase
- --------------------------------------------------------------------------------
Three Months $711 2.9%
- --------------------------------------------------------------------------------
Local service revenues are earned by the Company from the provision of local
exchange, local private line and public telephone services.
Higher network usage increased local service revenues during the first
quarter of 1996. The increase in calling volumes principally resulted from
growth in the number of access lines in service, which increased 4.4% from March
31, 1995.
NETWORK ACCESS REVENUES
1996-1995 Increase
- --------------------------------------------------------------------------------
Three Months $1,792 12.6%
- --------------------------------------------------------------------------------
Network access revenues are received from interexchange carriers (IXCs) for
their use of the Company's local exchange facilities in providing long distance
services to IXCs' customers and from end-user subscribers. Switched access
service revenues are derived from usage-based charges paid by IXCs for access to
the Company's network. Special access revenues arise from access charges paid
by IXCs and end-users who have private networks. End-user access revenues are
earned from local exchange carrier customers who pay for access to the network.
Network access revenues increased principally due to higher customer demand
for access services, as reflected by growth in access minutes of use of 13.2%
over the same period in 1995. Revenues were further increased by lower
obligations to affiliated companies pursuant to an interstate revenue sharing
agreement. Revenue growth was partially offset by the net effect of price
reductions under the Federal Communications Commission's (FCC) Price Cap Plans.
The net effect of price reductions is expected to have a larger negative
impact on reported revenues relative to the same period last year, in the second
quarter of 1996. See also "Factors That May Impact Future Results - FCC Interim
Price Cap Plan" below for a discussion of Bell Atlantic's proposed FCC price cap
filing, which would become effective during the third quarter of 1996.
TOLL SERVICE REVENUES
1996-1995 Increase
- --------------------------------------------------------------------------------
Three Months $178 2.3%
- --------------------------------------------------------------------------------
Toll service revenues are earned from calls made outside a customer's local
calling area, but within the same service area of the Company, commonly referred
to as Local Access and Transport Areas (LATAs). Other toll services include 800
services and Wide Area Telephone Service (WATS).
The increase in toll service revenues was caused by increased network usage,
partially attributable to severe winter storms in early 1996. Toll message
volumes increased by 9.6% over the first quarter of 1995. Revenue growth from
volume increases was partially offset by company-initiated price reductions on
certain toll services and increased competition for intraLATA toll services.
The Company expects that competition for toll services will continue in 1996.
See "Factors That May Impact Future Results" below for a further discussion of
toll service revenue issues.
7
<PAGE>
Bell Atlantic - Delaware, Inc.
DIRECTORY PUBLISHING REVENUES
1996-1995 Increase
- --------------------------------------------------------------------------------
Three Months $415 5.1%
- --------------------------------------------------------------------------------
Directory publishing revenues are earned primarily from local advertising and
marketing services provided to businesses in White and Yellow Pages directories.
Other directory publishing services include database and foreign directory
marketing.
Growth in directory publishing revenues was principally due to higher rates
charged for these services. Volume growth continues to be negatively impacted
by competition from other directory companies, as well as other advertising
media.
OTHER ANCILLARY SERVICES REVENUES
1996-1995 Increase
- --------------------------------------------------------------------------------
Three Months $793 98.6%
- --------------------------------------------------------------------------------
Other ancillary services include billing and collection services provided to
IXCs, facilities rental services provided to affiliates and non-affiliates, and
sales of materials and supplies to affiliates.
Other ancillary services revenues increased principally due to higher
facilities rental revenues from affiliates and non-affiliates in the first
quarter of 1996. These increases were offset, in part, by a reduction in
billing and collection services revenues, primarily as a result of the
elimination of certain services from a contract with an IXC.
VALUE-ADDED SERVICES REVENUES
1996-1995 Increase
- --------------------------------------------------------------------------------
Three Months $1,036 13.5%
- --------------------------------------------------------------------------------
Value-added services represent a family of services which expand the
utilization of the network. These services include recent products such as
voice messaging services, Caller ID and Return Call as well as more mature
products such as Centrex, Touch-Tone, and other customer premises wiring and
maintenance services.
The increase in value-added services revenues during the first quarter of
1996 was primarily attributable to continued growth in the network customer base
and higher demand for certain central office and voice messaging services.
8
<PAGE>
Bell Atlantic - Delaware, Inc.
<TABLE>
<CAPTION>
OPERATING EXPENSES
- ------------------
(Dollars in Thousands)
For the Three Month Period Ended March 31 1996 1995
- -------------------------------------------------------------------------
<S> <C> <C>
Employee costs, including benefits and taxes.. $14,152 $14,170
Depreciation and amortization................. 13,688 14,651
Other operating expenses...................... 24,065 18,327
------- -------
Total......................................... $51,905 $47,148
======= =======
</TABLE>
EMPLOYEE COSTS
1996-1995 (Decrease)
- --------------------------------------------------------------------------------
Three Months $(18) (.1)%
- --------------------------------------------------------------------------------
Employee costs consist of salaries, wages and other employee compensation,
employee benefits and payroll taxes paid directly by the Company. Similar costs
incurred by employees of Bell Atlantic Network Services, Inc. (NSI), who provide
centralized services on a contract basis, are allocated to the Company and are
included in other operating expenses.
The decrease in employee costs was primarily due to savings associated with
lower workforce levels in 1996 and reduced overtime pay. These reductions were
partially offset by annual salary and wage increases.
DEPRECIATION AND AMORTIZATION
1996-1995 (Decrease)
- --------------------------------------------------------------------------------
Three Months $(963) (6.6)%
- --------------------------------------------------------------------------------
Depreciation and amortization decreased principally due to lower depreciation
rates. The composite depreciation rate was 7.9% for the first quarter of 1996,
compared to 8.6% for the three month period ended March 31, 1995.
OTHER OPERATING EXPENSES
1996-1995 Increase
- --------------------------------------------------------------------------------
Three Months $5,738 31.3%
- --------------------------------------------------------------------------------
Other operating expenses consist primarily of contract services including
centralized services expenses allocated from NSI, rent, network software costs,
operating taxes other than income, provision for uncollectible accounts
receivable and other costs.
The increase in other operating expenses was largely attributable to higher
centralized services expenses allocated from NSI. This increase was due, in
part, to higher employee costs incurred in that organization as a result of the
transfer of employees from the network services subsidiaries to NSI in December
1995. Additional operating costs incurred to enhance billing and operating
systems, consolidate work activities and market value-added services also
contributed to the increase in centralized services expenses. First quarter
1996 other operating expenses were also higher due to the timing of network
software purchases.
OTHER EXPENSE, NET
1996-1995 Increase
- --------------------------------------------------------------------------------
Three Months $70
- --------------------------------------------------------------------------------
The change in other expense, net was attributable to higher nonoperating
costs incurred in the first quarter of 1996.
9
<PAGE>
Bell Atlantic - Delaware, Inc.
INTEREST EXPENSE
1996-1995 Increase
- --------------------------------------------------------------------------------
Three Months $192 10.7%
- --------------------------------------------------------------------------------
Interest expense increased principally due to the recognition of additional
expense related to a long-term note payable with an affiliate. Partially
offsetting this increase was a reduction in interest expense resulting from
lower levels of average short-term debt in the first quarter of 1996.
PROVISION FOR INCOME TAXES
1996-1995 (Decrease)
- --------------------------------------------------------------------------------
Three Months $(73) (1.3)%
- --------------------------------------------------------------------------------
EFFECTIVE INCOME TAX RATES
For the Three Months Ended March 31
- --------------------------------------------------------------------------------
1996 39.9%
- --------------------------------------------------------------------------------
1995 40.2%
- --------------------------------------------------------------------------------
The Company's effective income tax rate was lower in the first quarter of
1996 as a result of a prior period tax true-up of deferred taxes.
FACTORS THAT MAY IMPACT FUTURE RESULTS
- --------------------------------------
Federal Legislation
The Telecommunications Act of 1996 (the Act) became effective on February 8,
1996 and replaces the Modification of Final Judgment (MFJ). In general, the Act
includes provisions that would open the Company's local exchange market to
competition and would permit local exchange carriers, such as the Company, upon
meeting certain conditions, to provide interLATA services (long distance) and
video programming and to engage in manufacturing. However, the ability of the
Company to engage in businesses previously prohibited by the MFJ is largely
dependent on satisfying certain conditions contained in the Act and regulations
promulgated thereunder. The following is a brief discussion regarding certain
provisions of the Act.
With regard to the rules governing competition in the interLATA market, the
Act takes a two-fold approach. Effective February 8, 1996, Bell Atlantic is
permitted to apply for approval to offer interLATA services outside of the
geographic region in which it currently operates as a local exchange carrier.
Bell Atlantic has announced its plans to offer such services in several states.
In addition, Bell Atlantic's wireless businesses are now permitted to offer
interLATA services without having to comply with the conditions imposed in
waivers granted under the MFJ.
Secondly, within Bell Atlantic's geographic region, each of the telephone
subsidiaries, including the Company, must demonstrate to the FCC that it has
satisfied certain requirements in order to be permitted to offer interLATA
services. Among the requirements with which the Company must comply is a 14-
point "competitive checklist" which is aimed at ensuring that competitors have
the ability to connect to the Company's network. The Company must also
demonstrate to the FCC that its entry into the interLATA market would be in the
public interest.
The Act also imposes specific requirements on the Company that are intended
to promote competition in the local exchange markets. These requirements include
the duty to: (i) provide interconnection to any other carrier for the
transmission and routing of telephone exchange service at any technically
feasible point; (ii) provide unbundled access to network elements at any
technically feasible point; (iii) provide retail services at wholesale prices
for resale; (iv) establish reciprocal compensation arrangements for the
origination and termination of telecommunications; and (v) provide physical
collocation.
10
<PAGE>
Bell Atlantic - Delaware, Inc.
No definitive prediction can be made as to the specific impact of the Act on
the business or financial condition of the Company. The financial impact on the
Company will be dependent on several factors, including the timing, extent and
success of competition in the Company's markets and the timing, extent and
success of the Company's pursuit of new business opportunities resulting from
the Act.
Competition
IntraLATA Toll Services
Competition to offer intrastate intraLATA toll services is currently
permitted in the Company's jurisdiction. Increased competition from IXCs has
resulted in a decline in several components of the Company's toll service
revenues.
Currently, intraLATA toll calls are completed by the Company unless the
customer dials a five-digit access code. Presubscription for intraLATA toll
services would enable customers to make intraLATA toll calls using another
carrier without having to dial the five-digit access code.
During 1995, the Delaware Public Service Commission (PSC) continued
proceedings to determine whether, and under what conditions, to authorize
presubscription. Proceedings were suspended pending the outcome of the federal
legislative process, which concluded with the passage of the Act.
In general, the Act prohibits a state from requiring presubscription or
"dialing parity" until the earlier of such time as an operating telephone
company in the state is authorized to provide interLATA long distance services
or until February 8, 1999. This prohibition does not apply to those states
considered to be single-LATA states under the Act. However, the Company does
not believe that Delaware is a single-LATA state under the Act.
On March 26, 1996, the PSC considered the issue of implementation of
presubscription in Delaware and deferred any decision for six months. During
this six month period, an additional phase of this docket will be initiated to
consider various unresolved implementation issues. A final decision is expected
in the fourth quarter of 1996.
Implementation of presubscription for intraLATA toll services could have a
material negative impact on toll service revenues, especially if the Company is
not permitted contemporaneously to offer interLATA services. The ability to
offset the impact of presubscription will depend, in part, upon how quickly the
Company meets the requirements of the "competitive checklist."
Local Exchange Services
The ability to offer local exchange services has historically been subject to
regulation by the PSC. Applications from competitors to provide local exchange
services are currently pending. The Act is expected to significantly increase
the level of competition in the Company's local exchange market. However,
increased competition in the local exchange market will facilitate FCC approval
of the Company's entry into the interLATA markets.
FCC Interim Price Cap Plan
On April 2, 1996, Bell Atlantic filed its Annual Access Tariff Filing of
Interstate Rates, as required by the FCC's Interim Price Cap Plan. In the
filing, Bell Atlantic selected the 5.3% Productivity Factor for the July 1996 to
June 1997 tariff period. Companies selecting the 5.3% Productivity Factor are
not required to share earnings in excess of allowed rates of return. The
reduction in the price cap index resulting from the 5.3% Productivity Factor was
more than offset by the reversal of prior year exogenous rate reductions and the
FCC's partial annulment of ratemaking requirements related to the Company's
adoption of Statement of Financial Accounting Standards No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions." The rates included
in the April 2, 1996 filing propose actual price increases for the Company
totaling approximately $1,000,000 on an annual basis, which would become
effective July 1, 1996.
In 1995, Bell Atlantic filed an appeal with the Court of Appeals for the D.C.
Circuit for review of the FCC's Interim Price Cap Plan. On March 29, 1996, the
U.S. Court of Appeals denied Bell Atlantic's petition.
11
<PAGE>
Bell Atlantic - Delaware, Inc.
By the end of 1996, Bell Atlantic expects the FCC to replace the Interim
Price Cap Plan for interstate access charges with a revised price cap plan.
OTHER MATTERS
- -------------
Environmental Issues
The Company is subject to a number of environmental proceedings as a result
of its operations and the shared liability provisions in the Plan of
Reorganization related to the Modification of Final Judgment. Certain of these
environmental matters relate to a Superfund site for which the Company has been
joined as a third-party defendant in pending Superfund litigation. Such joinder
subjects the Company to potential liability for costs relating to cleanup of the
affected site. The Company is also responsible for the remediation of sites with
underground fuel storage tanks and other expenses associated with environmental
compliance.
The Company continually monitors its operations with respect to potential
environmental issues, including changes in legally mandated standards and
remediation technologies. The Company's recorded liabilities reflect those
specific situations where remediation activities are currently deemed to be
probable and where the cost of remediation is estimable. Management believes
that the aggregate amount of any additional potential liability would not have a
material effect on the Company's results of operations or financial condition.
Subsequent Event - Proposed Bell Atlantic - NYNEX Merger
On April 22, 1996, Bell Atlantic and NYNEX Corporation announced a proposed
merger of equals pursuant to a definitive merger agreement dated April 21, 1996,
that provides for the formation of a new company to be named Bell Atlantic
Corporation. Under the terms of the agreement, NYNEX shareholders will receive
one share in the new company for each NYNEX share owned and Bell Atlantic
shareholders will receive 1.302 shares in the new company for each Bell Atlantic
share owned. The merger, which is expected to qualify as a pooling of interests
for accounting purposes, is subject to a number of conditions, including
regulatory approvals, receipt of opinions that the merger will be tax free, and
the approval of the shareholders of both Bell Atlantic and NYNEX. The
transaction is expected to close within 12 months.
FINANCIAL CONDITION
- -------------------
Management believes that the Company has adequate internal and external
resources available to meet ongoing operating requirements, including network
expansion and modernization, and payment of dividends. Management expects that
presently foreseeable capital requirements will be financed primarily through
internally generated funds. Additional long-term debt may be needed to fund
development activities and to maintain the Company's capital structure within
management's guidelines.
As of March 31, 1996, the Company had $35,659,000 of an unused line of credit
with an affiliate, Bell Atlantic Network Funding Corporation.
The Company's debt ratio was 46.9% at March 31, 1996, compared to 48.0% at
December 31, 1995.
On May 1, 1996, the Company declared and paid a dividend in the amount of
$9,000,000 to Bell Atlantic Corporation.
12
<PAGE>
Bell Atlantic - Delaware, Inc.
PART II-OTHER INFORMATION
Item 1. Legal Proceedings
For background concerning the Company's contingent liabilities under
the Plan of Reorganization governing the divestiture by AT&T Corp.
(formerly American Telephone and Telegraph Company) of certain assets
of the former Bell System Operating Companies with respect to private
actions relating to pre-divestiture events, including pending
antitrust cases, see Item 3 of the Company's Annual Report on Form
10-K for the year ended December 31, 1995.
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, 1996.
13
<PAGE>
Bell Atlantic - Delaware, 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 - DELAWARE, INC.
Date: May 8, 1996 By /s/ John J. Parker
----------------------------------
John J. Parker
Controller and Treasurer
UNLESS OTHERWISE INDICATED, ALL INFORMATION IS AS OF MAY 3, 1996.
14
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS STATEMENT CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND THE
BALANCE SHEET AS OF MARCH 31, 1996 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-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 0
<SECURITIES> 2,000
<RECEIVABLES> 47,041
<ALLOWANCES> 3,520
<INVENTORY> 1,891
<CURRENT-ASSETS> 63,754
<PP&E> 723,146
<DEPRECIATION> 357,427
<TOTAL-ASSETS> 432,399
<CURRENT-LIABILITIES> 78,961
<BONDS> 101,153
0
0
<COMMON> 118,442
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<INCOME-PRETAX> 13,733
<INCOME-TAX> 5,480
<INCOME-CONTINUING> 8,253
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<EXTRAORDINARY> 0
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<NET-INCOME> 8,253
<EPS-PRIMARY> 0
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</TABLE>
