<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------------------------------
FORM 10-K
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(Mark one)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1995
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
-----------------------------
Securities registered pursuant to Section 12(b) of the Act: See attached
Schedule A.
Securities registered pursuant to Section 12(g) of the Act: None.
THE REGISTRANT, A WHOLLY OWNED SUBSIDIARY OF BELL ATLANTIC CORPORATION, MEETS
THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION J(1)(a) AND (b) OF FORM 10-K AND
IS THEREFORE FILING THIS FORM WITH REDUCED DISCLOSURE FORMAT PURSUANT TO GENERAL
INSTRUCTION J(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
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Bell Atlantic - Delaware, Inc.
SCHEDULE A
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
- ---------------------------------------------- ---------------------
Forty Year 7% Debentures, due December 1, 2008 New York Stock
Exchange
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Bell Atlantic - Delaware, Inc.
TABLE OF CONTENTS
Item No. Page
- -------- ----
PART I
1. Business......................................................... 1
2. Properties....................................................... 6
3. Legal Proceedings................................................ 7
4. Submission of Matters to a Vote of Security Holders.............. 8
PART II
5. Market for Registrant's Common Equity and Related Stockholder
Matters.......................................................... 8
6. Selected Financial Data.......................................... 8
7. Management's Discussion and Analysis of Results of Operations
(Abbreviated pursuant to General Instruction J(2).).............. 9
8. Financial Statements and Supplementary Data...................... 17
9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure............................................. 17
PART III
10. Directors and Executive Officers of the Registrant............... 17
11. Executive Compensation........................................... 17
12. Security Ownership of Certain Beneficial Owners and Management... 17
13. Certain Relationships and Related Transactions................... 17
PART IV
14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K......................................................... 17
UNLESS OTHERWISE INDICATED, ALL INFORMATION IS AS OF MARCH 25, 1996.
<PAGE>
Bell Atlantic - Delaware, Inc.
PART I
ITEM 1. BUSINESS
GENERAL
Bell Atlantic - Delaware, Inc. (the "Company") is incorporated under the laws
of the State of Delaware and has its principal offices at 901 Tatnall Street,
Wilmington, Delaware 19801 (telephone number 302-576-5420). The Company is a
wholly owned subsidiary of Bell Atlantic Corporation ("Bell Atlantic"), which is
one of the seven regional holding companies ("RHCs") formed in connection with
the court-approved divestiture (the "Divestiture"), effective January 1, 1984,
of those assets of American Telephone and Telegraph Company ("AT&T") related to
exchange telecommunications, exchange access functions, printed directories and
cellular mobile communications.
The Company presently serves a single Local Access and Transport Area
("LATA") which contains the state of Delaware and southeastern Pennsylvania. A
LATA is generally centered on a city or based on some other identifiable common
geography and, with certain limited exceptions, a LATA marks the boundary within
which the Company has historically been permitted to provide telephone service.
The Company currently provides two basic types of telecommunications
services. First, the Company transports telecommunications traffic between
subscribers located within the same LATA ("intraLATA service"), including both
local and toll services. Local service includes the provision of local exchange
("dial tone"), local private line and public telephone services (including dial
tone service for pay telephones owned by the Company and other pay telephone
providers). Among other local services provided are Centrex (telephone company
central office-based switched telephone service enabling the subscriber to make
both intercom and outside calls) and a variety of special and custom calling
services. Toll service includes message toll service (calling service beyond
the local calling area) within LATA boundaries, and intraLATA Wide Area Toll
Service (WATS)/800 services (volume discount offerings for customers with highly
concentrated demand). Second, the Company provides exchange access service,
which links a subscriber's telephone or other equipment to the transmission
facilities of interexchange carriers which, in turn, provide telecommunications
service between LATAs ("interLATA service") to their customers. The Company
also provides exchange access service to interexchange carriers which provide
intrastate intraLATA long distance telecommunications service.
LINE OF BUSINESS RESTRICTIONS AND THE TELECOMMUNICATIONS ACT OF 1996
The consent decree entitled "Modification of Final Judgment" ("MFJ") approved
by the United States District Court for the District of Columbia (the "D.C.
District Court") which, together with the Plan of Reorganization ("Plan")
approved by the D.C. District Court, set forth the terms of Divestiture also
established certain restrictions on the post-Divestiture activities of the RHCs,
including Bell Atlantic and its subsidiaries. The MFJ's principal restrictions
on post-Divestiture RHC activities included prohibitions on (i) providing
interexchange telecommunications, and (ii) engaging in the manufacture of
telecommunications equipment and customer premises equipment ("CPE").
The Telecommunications Act of 1996 (the "Act") became effective on February
8, 1996 and replaces the MFJ. In general, the Act includes provisions that
would open the Company's local exchange markets to competition and would permit
local exchange carriers, such as the Company, 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 to be promulgated thereunder. For a brief discussion of certain
provisions of the Act, see "Management's Discussion and Analysis of Results of
Operations - Factors That May Impact Future Results, Federal Legislation" on
page 14.
OPERATIONS
During 1993, Bell Atlantic reorganized certain functions formerly performed
by each of the seven Bell System operating companies ("BOCs") transferred to it
pursuant to the Divestiture, including the Company (collectively, the "Network
Services Companies"), into lines of business ("LOBs") organized across the
Network Services Companies
1
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Bell Atlantic - Delaware, Inc.
around specific market segments. The Network Services Companies, however, remain
responsible within their respective service areas for the provision of telephone
services, financial performance and regulatory matters. The LOBs are:
The Consumer Services LOB markets communications services to residential
-----------------
customers within the service territories of the Network Services Companies,
including the service territory of the Company.
The Carrier Services LOB markets (i) switched and special access to the
----------------
Company's local exchange network, and (ii) billing and collection services,
including recording, rating, bill processing and bill rendering. The principal
customers of this LOB are interexchange carriers; AT&T is the largest single
customer. Other customers include business customers and government agencies
with their own special access network connections and wireless companies which
resell network connections to their own customers.
The Small Business Services LOB markets communications and information
-----------------------
services to small businesses (customers having up to 20 access lines).
The Large Business Services LOB markets communications and information
-----------------------
services to large businesses (customers having more than 20 access lines).
These services include voice switching/processing services (e.g., dedicated
private lines, custom Centrex, call management and voice messaging), end-user
networking (e.g., credit and debit card transactions, and personal computer-
based conferencing, including data and video), internetworking (establishing
links between the geographically disparate networks of two or more companies or
within the same company), network integration (integrating multiple
geographically disparate networks into one system), network optimization
(disaster avoidance, 911, intelligent vehicle highway systems), video services
(distance learning, telemedicine, videoconferencing) and interactive multi-media
applications services.
The Directory Services LOB manages the provision of (i) advertising and
------------------
marketing services to advertisers, and (ii) listing information (e.g., White
Pages and Yellow Pages). These services are currently provided primarily
through print media, but the Company expects that use of electronic formats will
increase in the future. In addition, the Directory Services LOB manages the
provision of photocomposition, database management and other related products
and services to publishers.
The Public and Operator Services LOB markets pay telephone and operator
----------------------------
services in the service territories of the Network Services Companies to meet
consumer needs for accessing public networks, locating and identifying network
subscribers, providing calling assistance and arranging billing alternatives
(e.g., calling card, collect and third party calls).
The Federal Systems LOB markets communications and information technology and
---------------
services to departments, agencies and offices of the executive, judicial and
legislative branches of the federal government.
The Network LOB manages the technologies, services and systems platforms
-------
required by the other LOBs and the Network Services Companies, including the
Company, to meet the needs of their respective customers, including switching,
feature development and on-premises installation and maintenance services.
FCC REGULATION AND INTERSTATE RATES
The Company is subject to the jurisdiction of the Federal Communications
Commission ("FCC") with respect to interstate services and certain related
matters. The FCC prescribes a uniform system of accounts for telephone
companies, interstate depreciation rates and the principles and standard
procedures used to separate plant investment, expenses, taxes and reserves
between those applicable to interstate services under the jurisdiction of the
FCC and those applicable to intrastate services under the jurisdiction of the
respective state regulatory authorities ("separations procedures"). The FCC
also prescribes procedures for allocating costs and revenues between regulated
and unregulated activities.
The FCC has prescribed structures for exchange access tariffs to specify the
charges ("access charges") for use and availability of the Company's facilities
for the origination and termination of interstate interLATA service. In
general, the tariff structures prescribed by the FCC provide that interstate
costs which do not vary based on usage ("non-traffic sensitive costs") are
recovered from subscribers through flat monthly charges ("subscriber line
charges"), and from interexchange
2
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Bell Atlantic - Delaware, Inc.
carriers through usage-sensitive Carrier Common Line ("CCL") charges. Traffic-
sensitive interstate costs are recovered from carriers through variable access
charges based on several factors, primarily usage.
Price Caps
The price cap system, which became effective in 1991, (the "Prior Price Cap
Plan") placed a cap on overall local exchange carrier ("LEC") prices for
interstate access services which was modified annually, in inflation-adjusted
terms, by a fixed percentage which was intended to reflect increases in
productivity. The price cap level could also be adjusted to reflect "exogenous"
changes, such as changes in FCC separations procedures or accounting rules.
Under the Prior Price Cap Plan, the Company was required to share with customers
in the form of prospective rate reductions a portion of its earnings above a
certain authorized rate of return.
In March 1995, the FCC approved an Interim Price Cap Plan ("Interim Plan")
for interstate access charges, which became effective on August 1, 1995, and
replaced the Prior Price Cap Plan.
Under the Interim Plan, the Company's price cap index must be adjusted by an
inflation index (GDP-PI), less a fixed percentage, either 4.0%, 4.7% or 5.3%,
which is intended to reflect increases in productivity ("Productivity Factor").
Companies selecting the 4.0% or 4.7% Productivity Factor are required to reduce
future prices and share a portion of their interstate return in excess of
12.25%. Companies selecting the 5.3% Productivity Factor are also required to
reduce prices but are not required to share a portion of their future interstate
earnings. The Interim Plan also provided for a reduction in the price cap index
of 2.8% to adjust for what the FCC believes was an underestimate in its
calculation of the Productivity Factor in prior years. The Interim Plan also
eliminated the recovery of certain "exogenous" cost changes, including changes
in accounting costs that the FCC believes have no economic consequences.
In May 1995, Bell Atlantic selected the 5.3% Productivity Factor for the
August 1995 to June 1996 tariff period. The rates included in the May 1995
filing resulted in price decreases totaling approximately $8,700,000 on an
annual basis. These price decreases included the scheduled expiration of a
temporary rate increase of approximately $2,800,000 on an annualized basis that
was in effect from March 17, 1995 through July 31, 1995 to recover prior years
"exogenous" postemployment benefit costs. Approximately 80% of the remaining
$5,900,000 reduction resulted from compliance with the Interim Plan. The
remaining 20% represented reductions that the Company was required to make under
the Prior Price Cap Plan.
Bell Atlantic appealed the Interim Price Cap Order to the Court of Appeals
for the D.C. Circuit, and that case is currently pending.
FCC Cost Allocation and Affiliate Transaction Rules
FCC rules govern: (i) the allocation of costs between the regulated and
unregulated activities of a communications common carrier and (ii) transactions
between the regulated and unregulated affiliates of a communications common
carrier.
The cost allocation rules apply to certain unregulated activities: activities
that have never been regulated as communications common carrier offerings and
activities that have been preemptively deregulated by the FCC. The costs of
these activities are removed prior to the separations procedures process and are
assigned to unregulated activities in the aggregate, not to specific services,
for pricing purposes. Other activities must be accounted for as regulated
activities, and their costs are subject to separations procedures.
The affiliate transaction rules govern the pricing of assets transferred to
and services provided by affiliates. These rules generally require that assets
be transferred between affiliates at "market price", if such price can be
established through a tariff or a prevailing price actually charged to third
parties. In the absence of a tariff or prevailing price, "market price" cannot
be established, in which case (i) asset transfers from a regulated to an
unregulated affiliate must be valued at the higher of cost or fair market value,
and (ii) asset transfers from an unregulated to a regulated affiliate must be
valued at the lower of cost or fair market value.
The FCC has not attempted to make its cost allocation or affiliate
transaction rules preemptive. State regulatory authorities are free to use
different cost allocation methods and affiliate transaction rules for intrastate
ratemaking and to require carriers to keep separate allocation records.
3
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Bell Atlantic - Delaware, Inc.
STATE REGULATION AND COMPETITIVE ENVIRONMENT
The communications services of the Company are subject to regulation by the
Delaware Public Service Commission (the "PSC") with respect to intrastate rates
and services and certain other matters.
In March 1994, the Company elected to be regulated under the alternative
regulation provisions of the Delaware Telecommunications Technology Investment
Act of 1993 (the "Delaware Telecommunications Act"). The Delaware
Telecommunications Act provides:
-that the prices of "Basic Telephone Services" (e.g., dial tone and local
usage) will remain regulated and cannot change in any one year by more than
the rate of inflation (GDP-PI), less 3%;
-that the prices of "Discretionary Services" (e.g., Identa Ring SM and Call
Waiting) cannot increase more than 15% per year per service, after an initial
one-year cap;
-that the prices of "Competitive Services" (e.g., directory advertising and
message toll service) will not be subject to tariff; and
-that the Company will develop a technology deployment plan with a commitment
to invest a minimum of $250 million in Delaware's telecommunications network
during the first five years of the plan.
The Delaware Telecommunications Act also provides protections to ensure that
competitors will not be unfairly disadvantaged, including a prohibition on
cross-subsidization, imputation rules, service unbundling and resale service
availability requirements, and a review by the PSC during the fifth year of the
plan.
COMPETITION
General
Regulatory changes, as well as new technology, are continuing to expand the
types of available communications services and equipment and the number of
competitors offering such services. An increasing amount of this competition is
from large companies which have substantial capital, technological and marketing
resources. For a discussion of competition in the local exchange and intraLATA
toll markets, see "Management's Discussion and Analysis of Results of Operations
- - Factors That May Impact Future Results" on pages 14 and 15.
Alternative Access
A substantial portion of the Company's revenues from business and government
customers is derived from a relatively small number of large, multiple-line
subscribers.
The Company faces competition from alternative communications systems,
constructed by large end users, interexchange carriers and alternative access
vendors, which are capable of originating and/or terminating calls without the
use of the Company's plant.
The ability of such alternative access providers to compete with the Company
has been enhanced by the FCC's orders requiring the Company to offer virtual
collocated interconnection for special and switched access services.
Other potential sources of competition are cable television systems, shared
tenant services and other non-carrier systems which are capable of bypassing the
Company's local plant, either partially or completely, through substitution of
special access for switched access or through concentration of
telecommunications traffic on fewer of the Company's lines.
Personal Communications Services
Radio-based personal communications services ("PCS") also constitute
potential sources of competition to the Company. PCS consists of wireless
portable telephone services which would allow customers to make and receive
telephone calls from any location using small handsets, and which could also be
used for data transmission.
4
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Bell Atlantic - Delaware, Inc.
Directories
The Company continues to face significant competition from other providers of
directories, as well as competition from other advertising media. In
particular, the former sales representative of several of the Network Services
Companies publishes directories in competition with those published by the
Company in its service territory.
Public Telephone Services
The Company faces increasing competition in the provision of pay telephone
services from other pay telephone service providers. In addition, the growth of
wireless communications negatively impacts usage of public telephones.
Operator Services
Alternative operator services providers have entered into competition with
the Company's operator services product line.
CERTAIN CONTRACTS AND RELATIONSHIPS
Certain planning, marketing, procurement, financial, legal, accounting,
technical support and other management services are provided on behalf of the
Company on a centralized basis by Bell Atlantic's wholly owned subsidiary, Bell
Atlantic Network Services, Inc. ("NSI"). Bell Atlantic Network Funding
Corporation provides short-term financing and cash management services to the
Company.
The seven RHCs each own (directly or through subsidiaries) a one-seventh
interest in Bell Communications Research, Inc. ("Bellcore"). Pursuant to the
Plan, Bellcore furnishes the RHCs and their BOC subsidiaries with technical
assistance such as network planning, engineering and software development, as
well as various other consulting services that can be provided more effectively
on a centralized basis. Bellcore is the central point of contact for
coordinating the efforts of the RHCs in meeting the national security and
emergency preparedness requirements of the federal government. It also helps to
mobilize the combined resources of the RHCs in times of natural disasters.
EMPLOYEES
As of December 31, 1995, the Company had approximately 900 employees. This
workforce is augmented by employees of the centralized staff of NSI, who perform
services for the Company on a contract basis.
5
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Bell Atlantic - Delaware, Inc.
ITEM 2. PROPERTIES
GENERAL
The principal properties of the Company do not lend themselves to simple
description by character and location. The Company's investment in plant,
property and equipment consisted of the following at December 31:
<TABLE>
<CAPTION>
1995 1994
----- -----
<S> <C> <C>
Central office equipment... 37% 40%
Cable, wiring and conduit.. 44 44
Land and buildings......... 7 6
Other equipment............ 8 7
Other...................... 4 3
---- ----
100% 100%
==== ====
</TABLE>
"Central office equipment" consists of switching equipment, transmission
equipment and related facilities. "Cable, wiring and conduit" consists
primarily of aerial cable, underground cable, conduit and wiring. "Land and
buildings" consists of land owned in fee and improvements thereto, principally
central office buildings. "Other equipment" consists of public telephone
terminal equipment and other terminal equipment, poles, furniture, office
equipment, and vehicles and other work equipment. "Other" property consists
primarily of plant under construction and leasehold improvements.
The Company's customers are served by electronic switching systems that
provide a wide variety of services. The Company's network is in a transition
from an analog to a digital network, which provides the capabilities to furnish
advanced data transmission and information management services. At December 31,
1995, approximately 88% of the access lines were served by digital capability.
CAPITAL EXPENDITURES
The Company has been making and expects to continue to make significant
capital expenditures to meet the demand for communications services and to
further improve such services. Capital expenditures were approximately $48
million in 1993, $58 million in 1994 and $70 million in 1995. The total
investment in plant, property and equipment was approximately $656 million at
December 31, 1993, $689 million at December 31, 1994, and $710 million at
December 31, 1995, in each case after giving effect to retirements, but before
deducting accumulated depreciation at such date.
6
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Bell Atlantic - Delaware, Inc.
ITEM 3. LEGAL PROCEEDINGS
PRE-DIVESTITURE CONTINGENT LIABILITIES AND LITIGATION
The Plan provides for the recognition and payment by AT&T and the former BOCs
(including the Company) of liabilities that are attributable to pre-Divestiture
events but do not become certain until after Divestiture. These contingent
liabilities relate principally to litigation and other claims with respect to
the former Bell System's rates, taxes, contracts and torts (including business
torts, such as alleged violations of the antitrust laws). Except to the extent
that affected parties otherwise agree, contingent liabilities that are
attributable to pre-Divestiture events are shared by AT&T and the BOCs in
accordance with formulas prescribed by the Plan, whether or not an entity was a
party to the proceeding and regardless of whether an entity was dismissed from
the proceeding by virtue of settlement or otherwise. Each company's allocable
share of liability under these formulas depends on several factors, including
the type of contingent liability involved and each company's relative net
investment as of the effective date of Divestiture. Under the formula generally
applicable to most of the categories of these contingent liabilities, the
Company's aggregate allocable share of liability is approximately 0.2%.
AT&T and various of its subsidiaries and the BOCs (including, in some cases,
the Company) have been and are parties to various types of litigation relating
to pre-Divestiture events, including actions and proceedings involving
environmental claims and allegations of violations of equal employment laws.
Damages, if any, ultimately awarded in the remaining actions relating to pre-
Divestiture events could have a financial impact on the Company whether or not
the Company is a defendant since such damages will be treated as contingent
liabilities and allocated in accordance with the allocation rules established by
the Plan.
Effective in 1994, the Company and the other Regional Holding Companies
agreed to discontinue sharing of new pre-Divestiture claims and certain existing
claims other than claims relating to environmental matters. AT&T is not a party
to this agreement.
While complete assurance cannot be given as to the outcome of any contingent
liabilities or litigation, in the opinion of the Company's management, any
monetary liability or financial impact to which the Company would be subject
after final adjudication of all of the remaining potential or actual pre-
Divestiture claims would not be material in amount to the financial position of
the Company.
7
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Bell Atlantic - Delaware, Inc.
PART I
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(Omitted pursuant to General Instruction J(2).)
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
(Inapplicable.)
ITEM 6. SELECTED FINANCIAL DATA
(Omitted pursuant to General Instruction J(2).)
8
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Bell Atlantic - Delaware, Inc.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
(ABBREVIATED PURSUANT TO GENERAL INSTRUCTION J(2).)
This discussion should be read in conjunction with the Financial Statements
and Notes to Financial Statements included in the index set forth on page F-1.
RESULTS OF OPERATIONS
- ---------------------
The Company reported net income of $34,042,000 in 1995, compared to net
income of $545,000 in 1994.
In 1994, the Company recorded a pretax charge of $2,974,000, in accordance
with Statement of Financial Accounting Standards No. 112, "Employers' Accounting
for Postemployment Benefits" (Statement No. 112), to recognize the Company's
proportionate share of benefit costs for the separation of employees who are
entitled to benefits under preexisting Bell Atlantic separation pay plans.
Results for 1994 also included a noncash, after-tax extraordinary charge of
$36,926,000 in connection with the Company's decision to discontinue application
of regulatory accounting principles required by Statement of Financial
Accounting Standards No. 71, "Accounting for the Effects of Certain Types of
Regulation" (see Note 2 to the Financial Statements).
These and other items affecting the comparison of operating results between
1995 and 1994 are discussed in the following sections.
<TABLE>
<CAPTION>
OPERATING REVENUES
- ------------------
FOR THE YEARS ENDED DECEMBER 31 1995 1994
- ----------------------------------------------------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Transport Services
Local service................. $ 98,210 $ 96,596
Network access................ 61,573 65,882
Toll service.................. 31,783 36,099
Ancillary Services
Directory publishing.......... 32,298 31,110
Other......................... 4,704 5,666
Value-added Services............. 33,207 29,416
-------- --------
Total............................ $261,775 $264,769
======== ========
</TABLE>
9
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Bell Atlantic - Delaware, Inc.
TRANSPORT SERVICES OPERATING STATISTICS
- ---------------------------------------
<TABLE>
<CAPTION>
PERCENTAGE
INCREASE
1995 1994 (DECREASE)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
At Year-End
- -----------
Access Lines in Service (In thousands)
Residence............................. 315 305 3.3%
Business.............................. 173 162 6.8
Public................................ 6 6 ---
------ ------
494 473 4.4
====== ======
For the Year
- ------------
Access Minutes of Use (In millions)
Interstate............................ 1,645 1,534 7.2
Intrastate............................ 60 50 20.0
------ ------
1,705 1,584 7.6
====== ======
Toll Messages (In thousands)
Intrastate............................ 33,199 34,011 (2.4)
Interstate............................ 25,228 25,046 .7
------ ------
58,427 59,057 (1.1)
====== ======
</TABLE>
LOCAL SERVICE REVENUES
DOLLARS IN THOUSANDS INCREASE
- --------------------------------------------------------------------------------
1995 - 1994 $ 1,614 1.7%
- --------------------------------------------------------------------------------
Local service revenues are earned by the Company from the provision of local
exchange, local private line and public telephone services.
Local service revenues increased in 1995 due to a 4.4% growth in network
access lines in service. This growth was partially offset by lower public
telephone and directory assistance revenues.
NETWORK ACCESS REVENUES
DOLLARS IN THOUSANDS (DECREASE)
- --------------------------------------------------------------------------------
1995 - 1994 $(4,309) (6.5)%
- --------------------------------------------------------------------------------
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 decreased principally due to higher obligations to
affiliated companies pursuant to an interstate revenue sharing agreement, and
the effect of price reductions under the Federal Communications Commission's
(FCC) Price Cap Plans.
10
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Bell Atlantic - Delaware, Inc.
In March 1995, the FCC adopted an order approving an Interim Price Cap Plan
for interstate access charges, which replaced the prior Price Cap Plan. As
required by the FCC's order, Bell Atlantic filed its Transmittal of Interstate
Rates, which resulted in price decreases for the Company totaling approximately
$8,700,000 on an annual basis, effective August 1, 1995. These price decreases
included the scheduled expiration of a temporary rate increase of approximately
$2,800,000 on an annualized basis that was in effect from March 17, 1995 through
July 31, 1995 to recover prior years "exogenous" postemployment benefit costs.
Also as part of the filing, Bell Atlantic selected a 5.3% Productivity Factor,
which eliminates the requirement to share a portion of interstate overearnings
related to the August 1995 to June 1996 tariff period.
The revenue decreases were partially offset by higher customer demand for
access services as reflected by growth of 7.6% in access minutes of use. Higher
end-user revenues attributable to increases in access lines in service also
offset these decreases. Revenues in 1995 were positively impacted by a
temporary interstate rate increase that was in effect from March 17, 1995
through July 31, 1995 to recover prior years "exogenous" postemployment benefit
costs.
TOLL SERVICE REVENUES
DOLLARS IN THOUSANDS (DECREASE)
- --------------------------------------------------------------------------------
1995 - 1994 $ (4,316) (12.0)%
- --------------------------------------------------------------------------------
Toll service revenues are earned from calls made outside a customer's local
calling area, but within the same service area boundaries 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 reduction in toll service revenues was caused by a decline of 1.1% in
toll message volumes. The decrease in toll messages was due primarily to
increased competition for intraLATA toll and private line services. The
reduction in toll service revenues also reflects the impact of customers
switching to lower priced optional calling plans offered by the Company.
The Company expects that competition for toll service revenues will continue
in 1996. See "Factors That May Impact Future Results" below for a further
discussion of toll service revenue issues.
DIRECTORY PUBLISHING REVENUES
DOLLARS IN THOUSANDS INCREASE
- --------------------------------------------------------------------------------
1995 - 1994 $ 1,188 3.8%
- --------------------------------------------------------------------------------
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. Changes in billing procedures and lower customer
claims and disconnects further boosted directory publishing revenues in 1995.
OTHER ANCILLARY SERVICES REVENUES
DOLLARS IN THOUSANDS (DECREASE)
- --------------------------------------------------------------------------------
1995 - 1994 $ (962) (17.0)%
- --------------------------------------------------------------------------------
Other ancillary services include billing and collection services provided to
IXCs and facilities rental services provided to affiliates and non-affiliates.
Other ancillary services revenues decreased due to a reduction in billing and
collection services revenues as a result of the elimination of certain services
from a contract with an IXC. Lower pole attachment rental revenues also
contributed to the reduction in other ancillary services revenues in 1995.
11
<PAGE>
Bell Atlantic - Delaware, Inc.
VALUE-ADDED SERVICES REVENUES
DOLLARS IN THOUSANDS INCREASE
- --------------------------------------------------------------------------------
1995 - 1994 $ 3,791 12.9%
- --------------------------------------------------------------------------------
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 customer premises wiring and
maintenance services.
Continued growth in the network customer base (access lines) and higher
demand by customers for certain value-added central office and voice messaging
services offered by the Company increased value-added services revenues in 1995.
<TABLE>
<CAPTION>
OPERATING EXPENSES
- ------------------
FOR THE YEARS ENDED DECEMBER 31 1995 1994
- --------------------------------------------------------------------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Employee costs, including benefits and taxes..... $ 55,950 $ 59,548
Depreciation and amortization.................... 57,348 52,479
Other operating expenses......................... 83,848 82,677
-------- --------
Total............................................ $197,146 $194,704
======== ========
</TABLE>
EMPLOYEE COSTS
DOLLARS IN THOUSANDS (DECREASE)
- --------------------------------------------------------------------------------
1995 - 1994 $ (3,598) (6.0)%
- --------------------------------------------------------------------------------
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 principally due to the effect of a third
quarter 1994 charge of $2,277,000 to recognize benefit costs, in accordance with
Statement No. 112, for the separation of employees who are entitled to benefits
under preexisting Bell Atlantic separation pay plans. Benefit costs associated
with the separation of employees of NSI were allocated to the Company and
included in other operating expenses. Decreased overtime pay, the effect of
lower workforce levels and a reduction in pension cost further reduced employee
costs in 1995. These cost reductions were partially offset by annual salary and
wage increases and the recognition of certain contract labor and separation pay
costs in 1995 associated with the contract settlement with the Communications
Workers of America (CWA).
The Company's contract with the CWA, representing approximately 800
employees, expired on August 5, 1995. In January 1996, a tentative three-year
labor agreement was reached, which was subsequently ratified in February 1996.
The agreement includes a 10.6% wage increase over the three-year contract
period, a ratification bonus, improved pensions and benefits, and certain
employment security provisions.
DEPRECIATION AND AMORTIZATION
DOLLARS IN THOUSANDS INCREASE
- --------------------------------------------------------------------------------
1995 - 1994 $ 4,869 9.3%
- --------------------------------------------------------------------------------
Depreciation and amortization increased primarily due to growth in
depreciable telephone plant and higher depreciation rates. The composite
depreciation rates were 8.4% in 1995 and 8.0% in 1994.
12
<PAGE>
Bell Atlantic - Delaware, Inc.
OTHER OPERATING EXPENSES
DOLLARS IN THOUSANDS INCREASE
- --------------------------------------------------------------------------------
1995 - 1994 $ 1,171 1.4%
- --------------------------------------------------------------------------------
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 attributable to higher
centralized services costs allocated from NSI, primarily as a result of
additional costs incurred in that organization to enhance systems, consolidate
work activities and market value-added services at Bell Atlantic's network
operations subsidiaries.
This increase was partially offset by lower costs for contracted labor and
engineering services and a reduction in the provision for uncollectible accounts
receivable. The effect of a third quarter 1994 charge for the Company's
allocated share of separation benefit costs associated with employees of NSI
also partially offset the increase in other operating expenses.
OTHER INCOME AND (EXPENSE), NET
DOLLARS IN THOUSANDS (DECREASE)
- --------------------------------------------------------------------------------
1995 - 1994 $ (105)
- --------------------------------------------------------------------------------
The change in other income and (expense), net was largely attributable to the
elimination of the allowance for funds used during construction.
Upon the discontinued application of regulatory accounting principles,
effective August 1, 1994, the Company began recognizing capitalized interest
costs as a reduction of interest expense. Previously, the Company recorded an
allowance for funds used during construction as an item of other income.
INTEREST EXPENSE
DOLLARS IN THOUSANDS (DECREASE)
- --------------------------------------------------------------------------------
1995 - 1994 $ (313) (3.9)%
- --------------------------------------------------------------------------------
Interest expense decreased principally due to the recognition of increased
capitalized interest costs, subsequent to the discontinued application of
regulatory accounting principles, effective August 1, 1994. Partially
offsetting this decrease was additional expense resulting from higher levels of
average short-term debt during 1995.
13
<PAGE>
Bell Atlantic - Delaware, Inc.
PROVISION FOR INCOME TAXES
DOLLARS IN THOUSANDS (DECREASE)
- --------------------------------------------------------------------------------
1995 - 1994 $(1,799) (7.5)%
- --------------------------------------------------------------------------------
EFFECTIVE INCOME TAX RATES
FOR THE YEARS ENDED DECEMBER 31
- --------------------------------------------------------------------------------
1995 39.6%
- --------------------------------------------------------------------------------
1994 39.2%
- --------------------------------------------------------------------------------
The Company's effective income tax rate was higher in 1995 principally due to
the reduction in the amortization of investment tax credits and the elimination
of the benefit of the income tax rate differential applied to reversing timing
differences, both as a result of the discontinued application of regulatory
accounting principles in August 1994.
A reconciliation of the statutory federal income tax rate to the effective
income tax rate for each period is provided in Note 8 to the Financial
Statements.
FACTORS THAT MAY IMPACT FUTURE RESULTS
- --------------------------------------
FEDERAL LEGISLATION
The Telecommunications Act of 1996 (the Act), which became effective on
February 8, 1996, is the most comprehensive revision of the federal
communications laws in over 60 years. In general, the Act includes provisions
that would open the Company's local exchange markets 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.
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.
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 within its jurisdiction. 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 and exchange access at
any technically feasible point; (ii) provide unbundled access to network
elements at any technically feasible point; (iii) provide retail services for
resale at wholesale prices; (iv) establish reciprocal compensation arrangements
for the origination and termination of telecommunications and (v) provide
physical collocation.
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.
14
<PAGE>
Bell Atlantic - Delaware, Inc.
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 services
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 the carrier
of their choice without having to dial the five-digit access code.
During 1995, the Delaware Public Service Commission (PSC) conducted
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.
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.
Other
See Item 1 - Description of Business, Competition on pages 4 and 5 for
additional information on the Company's competitive environment.
OTHER STATE REGULATORY MATTERS
The communications services of the Company are subject to regulation by the
PSC with respect to intrastate rates and services and certain other matters.
See Item 1 - Description of Business, State Regulation on page 4 for a
description of the Company's current regulatory plan.
15
<PAGE>
Bell Atlantic - Delaware, Inc.
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.
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 December 31, 1995, the Company had $31,280,000 of an unused line of
credit with an affiliate, Bell Atlantic Network Funding Corporation.
The Company's debt ratio was 48.0% at December 31, 1995, compared to 45.6% at
December 31, 1994.
On February 1, 1996, the Company declared and paid a dividend in the amount
of $6,500,000 to Bell Atlantic.
16
<PAGE>
Bell Atlantic - Delaware, Inc.
PART II
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this Item is set forth on pages F-1
through F-19.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
(Omitted pursuant to General Instruction J(2).)
ITEM 11. EXECUTIVE COMPENSATION
(Omitted pursuant to General Instruction J(2).)
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(Omitted pursuant to General Instruction J(2).)
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
(Omitted pursuant to General Instruction J(2).)
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this report:
(1) Financial Statements
See Index to Financial Statements and Financial Statement
Schedule appearing on Page F-1.
(2) Financial Statement Schedule
See Index to Financial Statements and Financial Statement
Schedule appearing on Page F-1.
17
<PAGE>
Bell Atlantic - Delaware, Inc.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(CONTINUED)
(3) Exhibits
Exhibits identified in parentheses below, on file with the
Securities and Exchange Commission (SEC), are incorporated herein
by reference as exhibits hereto.
Exhibit Number (Referenced to Item 601 of Regulation S-K)
---------------------------------------------------------
3a Certificate of Incorporation of the registrant, as amended and
restated June 17, 1987. (Exhibit 3a to the registrant's Annual Report
on Form 10-K for the year ended December 31, 1987, File No. 1-7757.)
3a(i) Certificate of Amendment of Certificate of Incorporation,
dated August 14, 1992. (Exhibit 3a(i) to the registrant's
Annual Report on Form 10-K for the year ended December 31,
1992, File No. 1-7757.)
3a(ii) Certificate of Amendment of Certificate of Incorporation,
dated January 10, 1994 and filed January 13, 1994. (Exhibit
3a(ii) to the registrant's Annual Report on Form 10-K for the
year ended December 31, 1993, File No. 1-7757.)
3b By-Laws of the registrant, as amended December 15, 1995.
3b(i) Consent of Sole Stockholder of Bell Atlantic - Delaware, Inc.,
dated December 15, 1995.
4 No instrument which defines the rights of holders of long and
intermediate term debt of the registrant is filed herewith pursuant to
Regulation S-K, Item 601(b)(4)(iii)(A). Pursuant to this regulation,
the registrant hereby agrees to furnish a copy of any such instrument
to the SEC upon request.
10a Agreement Concerning Contingent Liabilities, Tax Matters and
Termination of Certain Agreements among AT&T, Bell Atlantic
Corporation, and the Bell Atlantic Corporation telephone subsidiaries,
and certain other parties, dated as of November 1, 1983. (Exhibit 10a
to Bell Atlantic Corporation Annual Report on Form 10-K for the year
ended December 31, 1993, File No. 1-8606.)
10b Agreement Among Bell Atlantic Network Services, Inc. and the Bell
Atlantic Corporation telephone subsidiaries, dated November 7, 1983.
(Exhibit 10b to Bell Atlantic Corporation Annual Report on Form 10-K
for the year ended December 31, 1993, File No. 1-8606.)
24 Powers of Attorney.
27 Financial Data Schedule.
(b) Reports on Form 8-K
There were no Current Reports on Form 8-K filed during the quarter
ended December 31, 1995.
18
<PAGE>
Bell Atlantic - Delaware, Inc.
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(d) 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.
By /s/ John J. Parker
-------------------------------------
John J. Parker
Controller and Treasurer
March 27, 1996
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES AND ON THE DATE INDICATED.
Principal Executive Officer:
Carolyn S. Burger President and
Chief Executive
Officer
Principal Financial Officer:
John J. Parker Controller
and Treasurer
Directors: By /s/ John J. Parker
---------------------------------
Carolyn S. Burger John J. Parker
Joshua W. Martin III (individually and as
John J. Parker attorney-in-fact)
March 27, 1996
19
<PAGE>
Bell Atlantic - Delaware, Inc.
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE
<TABLE>
<CAPTION>
Page
----
<S> <C>
Report of Independent Accountants.......................... F-2
Statements of Operations and Reinvested Earnings
For the years ended December 31, 1995, 1994 and 1993.... F-3
Balance Sheets - December 31, 1995 and 1994................ F-4
Statements of Cash Flows
For the years ended December 31, 1995, 1994 and 1993.... F-6
Notes to Financial Statements.............................. F-7
Schedule II - Valuation and Qualifying Accounts
For the years ended December 31, 1995, 1994 and 1993.... F-19
</TABLE>
Financial statement schedules other than that listed above have been omitted
because such schedules are not required or applicable.
F-1
<PAGE>
Bell Atlantic - Delaware, Inc.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareowner of
Bell Atlantic - Delaware, Inc.
We have audited the financial statements and financial statement schedule of
Bell Atlantic - Delaware, Inc. as listed in the index on page F-1 of this Form
10-K. The financial statements and financial statement schedule are the
responsibility of the Company's management. Our responsibility is to express an
opinion on the financial statements and financial statement schedule based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Bell Atlantic - Delaware, Inc.
as of December 31, 1995 and 1994, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1995 in
conformity with generally accepted accounting principles. In addition, in our
opinion, the financial statement schedule referred to above, when considered in
relation to the basic financial statements taken as a whole, presents fairly, in
all material respects, the information required to be included therein.
As discussed in Notes 1 and 2 to the financial statements, the Company
discontinued accounting for its operations in accordance with Statement of
Financial Accounting Standards No. 71, "Accounting for the Effects of Certain
Types of Regulation," effective August 1, 1994. Also, as discussed in Notes 1,
7 and 8 to the financial statements, the Company changed its method of
accounting for income taxes and postemployment benefits in 1993.
/s/ COOPERS & LYBRAND L.L.P.
2400 Eleven Penn Center
Philadelphia, Pennsylvania
February 5, 1996
F-2
<PAGE>
Bell Atlantic - Delaware, Inc.
STATEMENTS OF OPERATIONS AND REINVESTED EARNINGS
FOR THE YEARS ENDED DECEMBER 31
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
1995 1994 1993
--------- ----------- ---------
<S> <C> <C> <C>
OPERATING REVENUES (including $13,839,
$5,047 and $3,172 to affiliates)........ $261,775 $264,769 $248,786
-------- -------- --------
OPERATING EXPENSES
Employee costs, including benefits
and taxes............................. 55,950 59,548 55,174
Depreciation and amortization.......... 57,348 52,479 40,970
Other (including $52,712, $48,102
and $48,077 to affiliates)............ 83,848 82,677 78,700
-------- -------- --------
197,146 194,704 174,844
-------- -------- --------
OPERATING INCOME......................... 64,629 70,065 73,942
OTHER INCOME AND (EXPENSE), NET
Allowance for funds used during
construction.......................... --- 216 185
Other, net (including $0, $0
and $62 from affiliate)............... (549) (660) (672)
-------- -------- --------
(549) (444) (487)
INTEREST EXPENSE (including $1,660, $657
and $109 to affiliates)................. 7,709 8,022 8,702
-------- -------- --------
INCOME BEFORE PROVISION FOR INCOME TAXES,
EXTRAORDINARY ITEMS, AND CUMULATIVE
EFFECT OF CHANGE IN ACCOUNTING
PRINCIPLE............................... 56,371 61,599 64,753
PROVISION FOR INCOME TAXES............... 22,329 24,128 24,625
-------- -------- --------
INCOME BEFORE EXTRAORDINARY ITEMS AND
CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE.................... 34,042 37,471 40,128
-------- -------- --------
EXTRAORDINARY ITEMS
Discontinuation of Regulatory
Accounting Principles, Net of Tax..... --- (36,926) ---
Early Extinguishment of Debt,
Net of Tax............................ --- --- (996)
-------- -------- --------
--- (36,926) (996)
-------- -------- --------
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING
PRINCIPLE
Postemployment Benefits, Net of Tax.... --- --- (877)
-------- -------- --------
NET INCOME............................... $ 34,042 $ 545 $ 38,255
======== ======== ========
REINVESTED EARNINGS
At beginning of year................... $ 16,564 $ 54,235 $ 52,773
Add: net income....................... 34,042 545 38,255
-------- -------- --------
50,606 54,780 91,028
Deduct: dividends..................... 28,100 38,225 36,600
other changes................. 57 (9) 193
-------- -------- --------
At end of year......................... $ 22,449 $ 16,564 $ 54,235
======== ======== ========
</TABLE>
See Notes to Financial Statements.
F-3
<PAGE>
Bell Atlantic - Delaware, Inc.
BALANCE SHEETS
(DOLLARS IN THOUSANDS)
ASSETS
------
<TABLE>
<CAPTION>
DECEMBER 31
------------------
1995 1994
-------- --------
<S> <C> <C>
CURRENT ASSETS
Accounts receivable:
Customers and agents, net of allowances for
uncollectibles of $3,260 and $2,768............ $ 40,910 $ 32,925
Affiliates...................................... 4,158 4,403
Other........................................... 2,353 974
Material and supplies............................. 1,738 1,581
Prepaid expenses.................................. 17,651 11,513
Deferred income taxes............................. 316 1,802
Other............................................. 75 611
-------- --------
67,201 53,809
-------- --------
PLANT, PROPERTY AND EQUIPMENT..................... 710,216 688,509
Less accumulated depreciation..................... 349,239 339,173
-------- --------
360,977 349,336
-------- --------
OTHER ASSETS...................................... 10,020 12,532
-------- --------
TOTAL ASSETS...................................... $438,198 $415,677
======== ========
</TABLE>
See Notes to Financial Statements.
F-4
<PAGE>
Bell Atlantic - Delaware, Inc.
BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNT)
LIABILITIES AND SHAREOWNER'S INVESTMENT
---------------------------------------
<TABLE>
<CAPTION>
DECEMBER 31
------------------
1995 1994
-------- --------
<S> <C> <C>
CURRENT LIABILITIES
Debt maturing within one year:
Note payable to affiliate.................... $ 8,720 $ 12,038
Accounts payable and accrued liabilities:
Affiliates................................... 25,961 24,230
Other........................................ 41,426 46,669
Advance billings and customer deposits......... 8,702 11,976
-------- --------
84,809 94,913
-------- --------
LONG-TERM DEBT:
Note payable to affiliate...................... 20,000 ---
Other.......................................... 101,147 101,123
-------- --------
121,147 101,123
-------- --------
EMPLOYEE BENEFIT OBLIGATIONS................... 50,386 49,632
-------- --------
DEFERRED CREDITS AND OTHER LIABILITIES
Deferred income taxes.......................... 15,657 15,256
Unamortized investment tax credits............. 3,421 4,193
Other.......................................... 21,887 15,554
-------- --------
40,965 35,003
-------- --------
COMMITMENTS (Note 4)
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........................... 22,449 16,564
-------- --------
140,891 135,006
-------- --------
TOTAL LIABILITIES AND SHAREOWNER'S INVESTMENT.. $438,198 $415,677
======== ========
</TABLE>
See Notes to Financial Statements.
F-5
<PAGE>
Bell Atlantic - Delaware, Inc.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
1995 1994 1993
------------- ------------- ----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income............................. $ 34,042 $ 545 $ 38,255
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization....... 57,348 52,479 40,970
Extraordinary items, net of tax..... --- 36,926 996
Cumulative effect of change in
accounting principle, net of tax.. --- --- 877
Allowance for funds used during
construction...................... --- (216) (185)
Other items, net.................... (35) 1,210 (1,491)
Changes in certain assets and
liabilities:
Accounts receivable.............. (7,823) (11,184) 4,440
Material and supplies............ (158) (91) (499)
Other assets..................... (3,089) (16,320) (1,735)
Accounts payable and accrued
taxes........................... (70) 13,889 (6,795)
Deferred income taxes, net....... 1,887 (4,183) 1,998
Unamortized investment tax
credits......................... (772) (954) (1,247)
Employee benefit obligations..... 754 5,839 1,976
Other liabilities................ 4,029 2,649 617
-------- -------- --------
Net cash provided by operating
activities............................ 86,113 80,589 78,177
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of short-term investments.... (2,201) --- ---
Proceeds from sale of short-term
investments........................... 2,201 --- ---
Additions to plant, property and
equipment............................. (69,635) (57,843) (48,782)
Net change in note receivable from
affiliate............................. --- --- 2,882
Other, net............................. 647 (43) 565
-------- -------- --------
Net cash used in investing activities.. (68,988) (57,886) (45,335)
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings............... --- --- 39,416
Early extinguishment of debt........... --- --- (40,000)
Net change in short-term note payable
to affiliate.......................... (3,318) 7,775 4,263
Net change in long-term note payable
to affiliate.......................... 20,000 --- ---
Dividends paid......................... (28,100) (38,225) (36,600)
Net change in outstanding checks drawn
on controlled disbursement accounts... (5,707) 7,434 ---
-------- -------- --------
Net cash used in financing activities.. (17,125) (23,016) (32,921)
-------- -------- --------
NET CHANGE IN CASH..................... --- (313) (79)
CASH, BEGINNING OF YEAR................ --- 313 392
-------- -------- --------
CASH, END OF YEAR...................... $ --- $ --- $ 313
======== ======== ========
</TABLE>
See Notes to Financial Statements.
F-6
<PAGE>
Bell Atlantic - Delaware, Inc.
NOTES TO FINANCIAL STATEMENTS
1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS
Bell Atlantic - Delaware, Inc. (the Company) is a wholly owned subsidiary of
Bell Atlantic Corporation (Bell Atlantic). The Company provides two basic types
of telecommunications services within a single Local Access and Transport Area
(LATA) which contains the state of Delaware and southeastern Pennsylvania.
First, the Company transports telecommunications traffic between subscribers
located within the same LATA (intraLATA service), including both local and toll
services. Local service includes the provision of local exchange, local private
line and public telephone services. Toll service includes message toll services
and intraLATA Wide Area Toll Service/800 services. Second, the Company provides
exchange access service, which links a subscriber's telephone equipment to the
facilities of an interexchange carrier (IXC) which, in turn, provides
telecommunications service between LATAs (interLATA service) to their customers.
The Company also provides exchange access service to IXCs which provide
intrastate intraLATA long distance telecommunications service. Other services
provided by the Company include directory publishing, customer premises wiring
and maintenance, and billing and collection services.
The Telecommunications Act of 1996 is the most comprehensive revision of the
federal communications laws in over 60 years. In general, the
Telecommunications Act includes provisions that would open the Company's local
exchange markets 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.
BASIS OF PRESENTATION
Effective August 1, 1994, the Company discontinued accounting for its
operations under the provisions of Statement of Financial Accounting Standards
No. 71, "Accounting for the Effects of Certain Types of Regulation" (Statement
No. 71) (see Note 2).
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of revenues, expenses, assets, and liabilities and
disclosure of contingencies. Actual results could differ from those estimates.
REVENUE RECOGNITION
Revenues are recognized as earned on the accrual basis, which is generally
when services are rendered based on the usage of the Company's local exchange
network and facilities.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments with a maturity of 90
days or less when purchased to be cash equivalents. Cash equivalents are stated
at cost, which approximates market value.
SHORT-TERM INVESTMENTS
Short-term investments consist of investments that mature 91 days to 12
months from the date of purchase. Short-term investments are stated at cost,
which approximates market value.
MATERIAL AND SUPPLIES
New and reusable materials are carried in inventory, principally at average
original cost, except that specific costs are used in the case of large
individual items.
F-7
<PAGE>
Bell Atlantic - Delaware, Inc.
PREPAID DIRECTORY
Costs of directory production and advertising sales are principally deferred
until the directory is published. Such costs are amortized to expense and the
related advertising revenues are recognized over the average life of the
directory, which is generally 12 months.
PLANT AND DEPRECIATION
The Company's provision for depreciation is based principally on the
composite group remaining life method of depreciation and straight-line
composite rates. This method provides for the recovery of the remaining net
investment in telephone plant, less anticipated net salvage value, over the
remaining asset lives. The composite group method requires periodic revisions
to depreciation rates based on a number of variables, including retirement
estimates, survivor curves, salvage, and cost of removal.
In connection with the discontinued application of Statement No. 71,
effective August 1, 1994, for financial reporting purposes, the Company began
using estimated asset lives for certain categories of plant and equipment that
were shorter than those approved by regulators prior to the discontinuance of
Statement No. 71. The shorter lives result principally from the Company's
expectation as to the revenue-producing lives of the assets.
The following asset lives were used in 1994 and 1995:
<TABLE>
<CAPTION>
JANUARY 1, 1994 EFFECTIVE
AVERAGE LIVES (IN YEARS) TO JULY 31, 1994 AUGUST 1, 1994 1995
- -------------------------------------------------------------------------
<S> <C> <C> <C>
Buildings.................. 18 - 52 18 - 40 18 - 40
Central office equipment... 7 - 17 5 - 12 7 - 12
Cable, wiring and conduit.. 22 - 50 16 - 50 16 - 50
Other equipment............ 6 - 38 6 - 35 6 - 30
</TABLE>
When depreciable plant is replaced or retired, the amounts at which such
plant has been carried in plant, property and equipment are removed from the
respective accounts and charged to accumulated depreciation, and any gains or
losses on disposition are amortized over the remaining asset lives of the
remaining net investment in telephone plant.
MAINTENANCE AND REPAIRS
The cost of maintenance and repairs, including the cost of replacing minor
items not constituting substantial betterments, is charged to operating expense.
CAPITALIZED INTEREST COST
Upon the discontinued application of Statement No. 71, effective August 1,
1994, the Company began reporting capitalized interest as a cost of telephone
plant and equipment and a reduction in interest expense, in accordance with the
provisions of Statement of Financial Accounting Standards No. 34,
"Capitalization of Interest Cost."
Prior to the discontinued application of Statement No. 71, the Company
recorded an allowance for funds used during construction, which included both
interest and equity return components, as a cost of plant and as an item of
other income.
EMPLOYEE BENEFITS
Pensions, Postretirement Benefits Other Than Pensions, and Postemployment
Benefits
Substantially all employees of the Company are covered under multi-employer
noncontributory defined benefit pension plans and postretirement health and life
insurance benefit plans sponsored by Bell Atlantic and certain of its
subsidiaries, including the Company.
F-8
<PAGE>
Bell Atlantic - Delaware, Inc.
Amounts contributed to the Company's pension plans are actuarially
determined, principally under the aggregate cost actuarial method, and are
subject to applicable federal income tax regulations. Amounts contributed to
501(c)(9) trusts and 401(h) accounts under applicable federal income tax
regulations to pay certain postretirement benefits are actuarially determined,
principally under the aggregate cost actuarial method.
The Company also provides employees with postemployment benefits such as
disability benefits, workers' compensation, and severance pay. Effective
January 1, 1993, the Company adopted Statement of Financial Accounting Standards
No. 112, "Employers' Accounting for Postemployment Benefits."
INCOME TAXES
Bell Atlantic and its domestic subsidiaries, including the Company, file a
consolidated federal income tax return.
Effective January 1, 1993, the Company adopted Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" (Statement No. 109).
The consolidated amount of current and deferred tax expense is allocated by
applying the provisions of Statement No. 109 to each subsidiary as if it were a
separate taxpayer.
The Tax Reform Act of 1986 repealed the investment tax credit (ITC) as of
January 1, 1986, subject to certain transitional rules. ITCs were deferred and
are being amortized as a reduction to income tax expense over the estimated
service lives of the related assets.
RECLASSIFICATIONS
Certain reclassifications of prior years' data have been made to conform to
1995 classifications.
2. DISCONTINUATION OF REGULATORY ACCOUNTING PRINCIPLES
In the third quarter of 1994, the Company determined that it was no longer
eligible for continued application of the accounting required by Statement of
Financial Accounting Standards No. 71, "Accounting for the Effects of Certain
Types of Regulation" (Statement No. 71). In connection with the decision to
discontinue regulatory accounting principles under Statement No. 71, the Company
recorded a noncash, extraordinary charge of $36,926,000, which is net of an
income tax benefit of $35,952,000.
The Company's determination that it was no longer eligible for continued
application of the accounting required by Statement No. 71 was based on the
belief that the convergence of competition, technological change, actual and
potential regulatory, legislative and judicial actions, and other factors were
creating fully open and competitive markets. In such markets, the Company does
not believe it can be assured that prices can be maintained at levels that will
recover the net carrying amount of existing telephone plant and equipment, which
has been depreciated over relatively long regulator-prescribed lives. In
addition, changes from cost-based regulation to a form of incentive regulation
contributed to the determination that the continued application of Statement No.
71 was inappropriate.
A summary of the components of the after-tax charge recognized as a result of
the discontinued application of Statement No. 71 follows:
<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS)
-----------------------
<S> <C>
Increase in plant and equipment depreciation
reserve........................................... $41,015
Accelerated investment tax credit amortization..... (3,097)
Tax-related regulatory asset and liability
elimination....................................... (3,226)
Other regulatory asset and liability elimination... 2,234
-------
Total.............................................. $36,926
=======
</TABLE>
F-9
<PAGE>
Bell Atlantic - Delaware, Inc.
The increase in the accumulated depreciation reserve was supported by both an
impairment analysis, which identified estimated amounts not recoverable from
future discounted cash flows, and a depreciation study, which identified
inadequate depreciation reserve levels which the Company believes resulted
principally from the cumulative underdepreciation of plant as a result of the
regulatory process. Investment tax credit amortization was accelerated as a
result of the reduction in remaining asset lives of the associated telephone
plant and equipment.
Tax-related regulatory assets of $12,289,000 and tax-related regulatory
liabilities of $15,515,000, which were established upon the adoption of
Statement No. 109 and amortized as the related deferred taxes were recognized in
the ratemaking process, were eliminated (see Note 8). The elimination of other
regulatory assets and liabilities relates principally to deferred debt
refinancing and vacation pay costs, which were being amortized as they were
recognized in the ratemaking process.
3. PLANT, PROPERTY AND EQUIPMENT
Plant, property and equipment, which is stated at cost, is summarized as
follows at December 31:
<TABLE>
<CAPTION>
1995 1994
------------ ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Land....................... $ 2,695 $ 2,656
Buildings.................. 44,180 42,039
Central office equipment... 264,832 272,435
Cable, wiring and conduit.. 315,684 303,206
Other equipment............ 56,343 50,809
Other...................... 9,953 3,001
Construction-in-progress... 16,529 14,363
-------- ---------
710,216 688,509
Accumulated depreciation... (349,239) (339,173)
-------- ---------
Total...................... $360,977 $ 349,336
======== =========
</TABLE>
Certain prior year amounts previously included in Construction-in-progress
have been reclassified to Other to conform to 1995 classifications.
4. LEASES
The Company leases certain facilities and equipment for use in its operations
under operating leases.
Total rent expense amounted to $5,750,000 in 1995, $5,706,000 in 1994 and
$3,521,000 in 1993. Of these amounts, $4,300,000, $4,133,000 and $1,693,000 in
1995, 1994 and 1993, respectively, were lease payments to affiliated companies.
At December 31, 1995, the aggregate minimum rental commitments under
noncancelable operating leases for the periods shown are as follows:
<TABLE>
<CAPTION>
YEARS (DOLLARS IN THOUSANDS)
----- ----------------------
<S> <C>
1996........ $316
1997........ 209
1998........ 78
1999........ ---
2000........ ---
Thereafter.. ---
----
Total....... $603
====
</TABLE>
F-10
<PAGE>
Bell Atlantic - Delaware, Inc.
5. DEBT
DEBT MATURING WITHIN ONE YEAR
Debt maturing within one year consists of the following at December 31:
<TABLE>
<CAPTION>
1995 1994
----------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Note payable to affiliate (BANFC)................ $8,720 $12,038
====== =======
Weighted average interest rate for note payable
outstanding at year-end......................... 5.8% 5.7%
====== =======
</TABLE>
The Company has a contractual agreement with an affiliated company, Bell
Atlantic Network Funding Corporation (BANFC), for the provision of short-term
financing and cash management services. BANFC issues commercial paper and
secures bank loans to fund the working capital requirements of Bell Atlantic's
network services subsidiaries, including the Company, and invests funds in
temporary investments on their behalf. At December 31, 1995, the Company had
$31,280,000 of an unused line of credit with BANFC.
LONG-TERM DEBT
Long-term debt consists principally of debentures issued by the Company.
Interest rates and maturities of the amounts outstanding are as follows at
December 31:
<TABLE>
<CAPTION>
1995 1994
----------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Ten year 6 1/8%, due 2003.............. $ 20,000 $ 20,000
Forty year 4 5/8%, due 2005............ 7,000 7,000
Forty year 7%, due 2008................ 10,000 10,000
Forty year 7 3/4%, due 2013............ 15,000 15,000
Thirty year 8 3/8%, due 2019........... 15,000 15,000
Thirty year 7%, due 2023............... 20,000 20,000
Forty year 8 5/8%, due 2031............ 15,000 15,000
-------- --------
102,000 102,000
Unamortized discount and premium, net.. (853) (877)
Note payable to affiliate (BANSHI),
five year 5.95%, due 2000............. 20,000 ---
-------- --------
Total long-term debt................... $121,147 $101,123
======== ========
</TABLE>
Long-term debt outstanding at December 31, 1995 includes $32,000,000 that is
callable by the Company. The call prices range from 102.7% to 100.6% of face
value, depending upon the remaining term to maturity of the issue. In addition,
$15,000,000 of long-term debt, bearing interest at 8 3/8%, will become
redeemable only on September 15, 1999, at the option of the holders. The
redemption prices will be 100.0% of face value, plus accrued interest.
The Company has a promissory note payable to an affiliated company, Bell
Atlantic NSI Holdings, Inc. (BANSHI). The note bears interest at 5.95% and is
due on December 1, 2000.
In 1993, the Company recorded an extraordinary charge associated with the
early extinguishment of debentures called by the Company of $996,000, net of an
income tax benefit of $685,000.
F-11
<PAGE>
Bell Atlantic - Delaware, Inc.
6. FINANCIAL INSTRUMENTS
CONCENTRATIONS OF CREDIT RISK
Financial instruments that subject the Company to concentrations of credit
risk consist primarily of trade receivables.
Concentrations of credit risk with respect to trade receivables other than
those from AT&T are limited due to the large number of customers in the
Company's customer base. For the years ended December 31, 1995, 1994 and 1993,
revenues generated from services provided to AT&T, primarily network access and
billing and collection, were $19,525,000, $25,093,000 and $25,842,000,
respectively. At December 31, 1995 and 1994, Accounts receivable, net, included
$769,000 and $853,000, respectively, from AT&T.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate the fair value of
each class of financial instruments.
Note Payable to Affiliates (BANFC and BANSHI)
The carrying amount approximates fair value.
Debt
Fair value is estimated based on the quoted market prices for the same or
similar issues or on the net present value of the expected future cash flows
using current interest rates.
The estimated fair values of the Company's financial instruments are as
follows at December 31:
<TABLE>
<CAPTION>
1995 1994
------------------ ------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
-------- -------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Debt *..................... $130,720 $138,954 $114,038 $104,787
</TABLE>
* Debt includes Long-term debt and Debt maturing within one year, but
excludes unamortized discount and premium.
7. EMPLOYEE BENEFITS
PENSION PLANS
Substantially all of the Company's management and associate employees are
covered under multi-employer noncontributory defined benefit pension plans
sponsored by Bell Atlantic and certain of its subsidiaries, including the
Company. The pension benefit formula is based on a flat dollar amount per year
of service according to job classification under the associate plan. The
pension benefit formula for plans covering management employees in 1995 and
prior years is based on a stated percentage of adjusted career average earnings.
The Company's objective in funding the plans is to accumulate funds at a
relatively stable level over participants' working lives so that benefits are
fully funded at retirement. Plan assets consist principally of investments in
domestic and foreign corporate equity securities, U.S. and foreign government
and corporate debt securities, and real estate.
F-12
<PAGE>
Bell Atlantic - Delaware, Inc.
Effective January 1, 1996, the plan covering management employees was
converted to a cash balance plan. Under the cash balance plan, pension benefits
are determined by a combination of compensation credits based on age and service
and individual account-based interest credits. Each management employee's
opening account balance is based on accrued pension benefits as of December 31,
1995, and converted to a lump-sum amount determined under the prior plan's
provisions. The lump-sum value is multiplied by a transition factor, based on
age and service, to arrive at the opening balance.
Pension cost was $763,000, $1,971,000 and $1,864,000 for the years ended
December 31, 1995, 1994 and 1993, respectively. The reduction in 1995 pension
cost is principally due to an increase in the discount rate from 7.25% at
December 31, 1993 to 8.25% at December 31, 1994, and plan changes.
Statement of Financial Accounting Standards No. 87, "Employers' Accounting
for Pensions" (Statement No. 87) requires a comparison of the actuarial present
value of projected benefit obligations with the fair value of plan assets, the
disclosure of the components of net periodic pension costs and a reconciliation
of the funded status of the plans with amounts recorded on the balance sheets.
The Company participates in multi-employer plans and therefore, such disclosures
are not presented for the Company because the structure of the plans does not
allow for the determination of this information on an individual participating
company basis.
The significant assumptions used for the pension measurements were as follows
at December 31:
<TABLE>
<CAPTION>
1995 1994 1993
----- ----- -----
<S> <C> <C> <C>
Discount rate.................................... 7.25% 8.25% 7.25%
Rate of future increases in compensation levels.. 4.75% 5.25% 5.25%
</TABLE>
The expected long-term rate of return on plan assets was 8.25% for 1995, 1994
and 1993.
Pension benefits for associate employees are subject to collective
bargaining. Modifications in pension benefits have been bargained from time to
time. Additionally, the Company has amended the benefit formula under pension
plans maintained for its management employees. Substantive commitments for
future amendments to the Company's pension plans have been reflected in
determining the Company's pension cost. The actuarial assumptions used to
determine pension cost are based on financial market interest rates, past
experience, and management's best estimate of future benefit changes and
economic conditions. Changes in these assumptions may impact future pension
cost levels and benefit obligations.
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
Substantially all of the Company's management and associate employees are
covered under postretirement health and life insurance benefit plans sponsored
by Bell Atlantic and certain of its subsidiaries, including the Company. The
determination of benefit cost for postretirement health benefit plans is based
on comprehensive medical and dental benefit plan provisions. The postretirement
life insurance benefit formula used in the determination of postretirement
benefit cost is primarily based on annual basic pay at retirement. The Company
funds the postretirement health and life insurance benefits of current and
future retirees. Plan assets consist principally of investments in domestic and
foreign corporate equity securities, and U.S. Government and corporate debt
securities.
Postretirement benefit cost was $3,802,000, $4,187,000 and $4,185,000 for the
years ended December 31, 1995, 1994 and 1993, respectively. Postretirement
benefit cost decreased in 1995 principally as a result of an increase in the
discount rate from 7.25% at December 31, 1993 to 8.25% at December 31, 1994, and
the effect of favorable plan experience.
Statement of Financial Accounting Standards No. 106, "Employers' Accounting
for Postretirement Benefits Other Than Pensions," (Statement No. 106) requires a
comparison of the actuarial present value of projected postretirement benefit
obligations with the fair value of plan assets, the disclosure of the components
of net periodic postretirement benefit costs, a reconciliation of the funded
status of the plan with amounts recorded on the balance sheets and the effect of
a one-percentage-point increase in the assumed health care cost trend rates for
each future year on net periodic postretirement benefit cost and the accumulated
postretirement benefit obligation. The Company participates in multi-employer
plans and
F-13
<PAGE>
Bell Atlantic - Delaware, Inc.
therefore, such disclosures are not presented for the Company because the
structure of the plans does not provide for the determination of this
information on an individual participating company basis.
Assumptions used in the actuarial computations for postretirement benefits
are as follows at December 31:
<TABLE>
<CAPTION>
1995 1994 1993
------ ------ ------
<S> <C> <C> <C>
Discount rate.................................... 7.25% 8.25% 7.25%
Rate of future increases in compensation levels.. 4.75 5.25 5.25
Medical cost trend rate:
Year ending.................................... 11.00 12.00 13.00
Ultimate (year 2003)........................... 5.00 5.00 5.00
Dental cost trend rate........................... 4.00 4.00 4.00
</TABLE>
The expected long-term rate of return on plan assets was 8.25% for 1995, 1994
and 1993.
Postretirement benefits other than pensions for associate employees are
subject to collective bargaining agreements and have been modified from time to
time. The Company has also periodically modified benefits under plans
maintained for its management employees. Substantive commitments for future
amendments to the Company's postretirement benefit plans have been reflected in
determining the Company's postretirement benefit cost. The actuarial assumptions
used to determine postretirement benefit cost are based on financial market
interest rates, past experience, and management's best estimate of future
benefit changes and economic conditions. Changes in these assumptions may
impact future postretirement benefit cost levels and benefit obligations.
POSTEMPLOYMENT BENEFITS
Effective January 1, 1993, the Company adopted Statement of Financial
Accounting Standards No. 112, "Employers' Accounting for Postemployment
Benefits" (Statement No. 112). The cumulative effect at January 1, 1993 of
adopting Statement No. 112 reduced net income by $877,000, net of a deferred
income tax benefit of $578,000.
In the third quarter of 1994, the Company recorded a pretax charge of
$2,974,000 to recognize the Company's proportionate share of benefit costs for
the separation of employees who are entitled to benefits under preexisting Bell
Atlantic separation pay plans. The charge, which was actuarially determined,
represents benefits earned through July 1, 1994 for employees who are expected
to receive separation payments in the future.
SAVINGS PLANS AND EMPLOYEE STOCK OWNERSHIP PLANS
Substantially all of the Company's employees are eligible to participate in
savings plans established by Bell Atlantic to provide opportunities for eligible
employees to save for retirement on a tax-deferred basis and encourage employees
to acquire and maintain an equity interest in Bell Atlantic. Under these plans,
a certain percentage of eligible employee contributions are matched with shares
of Bell Atlantic common stock. Bell Atlantic funds the matching contribution
through two leveraged employee stock ownership plans (ESOPs). Bell Atlantic
accounts for its ESOPs in accordance with the accounting rules applicable to
companies with ESOP trusts that held securities prior to December 15, 1989. The
Company recognizes its proportionate share of total ESOP cost based on the
Company's matching obligation attributable to participating Company employees.
The Company recorded total ESOP cost of $1,091,000, $886,000 and $820,000 in
1995, 1994 and 1993, respectively.
8. INCOME TAXES
Effective January 1, 1993, the Company adopted Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" (Statement No. 109).
As of January 1, 1993, the Company recorded a charge to income of $62,000,
representing the cumulative effect of adopting Statement No. 109, which has been
reflected in the Provision for Income Taxes in the Statement of Operations and
Reinvested Earnings.
F-14
<PAGE>
Bell Atlantic - Delaware, Inc.
Upon adoption of Statement No. 109, the effects of required adjustments to
deferred tax balances of the Company, which would be recognized in the future
for regulatory purposes, were deferred on the balance sheet as regulatory assets
and liabilities in accordance with Statement No. 71. At January 1, 1993, the
Company recorded income tax-related regulatory assets totaling $15,111,000 in
Other Assets and income tax-related regulatory liabilities totaling $23,155,000
in Deferred Credits and Other Liabilities - Other. During 1993, these
regulatory assets were increased by $478,000 and regulatory liabilities were
reduced by $1,725,000 for the effect of the federal income tax rate increase
from 34% to 35%, effective January 1, 1993.
The income tax-related regulatory assets and liabilities were eliminated as a
result of the discontinued application of Statement No. 71, effective August 1,
1994 (see Note 2).
The components of income tax expense are as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
----------------------------
1995 1994 1993
-------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Current:
Federal.................. $16,713 $22,991 $18,927
State and local.......... 4,501 6,274 4,947
------- ------- -------
Total.................... 21,214 29,265 23,874
------- ------- -------
Deferred:
Federal.................. 1,428 (3,611) 813
State and local.......... 459 (572) 1,185
------- ------- -------
Total.................... 1,887 (4,183) 1,998
------- ------- -------
23,101 25,082 25,872
Investment tax credits.... (772) (954) (1,247)
------- ------- -------
Total income tax expense.. $22,329 $24,128 $24,625
======= ======= =======
</TABLE>
As a result of the increase in the federal corporate income tax rate from 34%
to 35%, effective January 1, 1993, the Company recorded a net charge to the tax
provision of $155,000 in 1993.
The provision for income taxes varies from the amount computed by applying
the statutory federal income tax rate to income before provision for income
taxes. The difference is attributable to the following factors:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
--------------------------
1995 1994 1993
-------- ------- -------
<S> <C> <C> <C>
Statutory federal income tax rate................ 35.0% 35.0% 35.0%
Investment tax credits........................... (.8) (1.6) (1.6)
State income taxes, net of federal tax benefits.. 5.7 5.7 5.7
Benefit of rate differential applied to
reversing timing differences.................... -- (.6) (1.4)
Other, net....................................... (.3) .7 .3
---- ---- ----
Effective income tax rate........................ 39.6% 39.2% 38.0%
==== ==== ====
</TABLE>
F-15
<PAGE>
Bell Atlantic - Delaware, Inc.
Significant components of deferred tax liabilities (assets) were as follows
at December 31:
<TABLE>
<CAPTION>
1995 1994
----------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Deferred tax liabilities:
Depreciation............... $ 49,500 $ 49,000
Other...................... 7,400 3,900
-------- --------
56,900 52,900
-------- --------
Deferred tax assets:
Employee benefits.......... (31,400) (28,500)
Investment tax credits..... (1,400) (2,900)
Advance payments........... (2,500) (2,900)
Other...................... (6,300) (5,100)
-------- --------
(41,600) (39,400)
-------- --------
Net deferred tax liability... $ 15,300 $ 13,500
======== ========
</TABLE>
Total deferred tax assets include approximately $22,000,000 at December 31,
1995 and 1994 related to postretirement benefit costs recognized in accordance
with Statement No. 106. This deferred tax asset will gradually be realized over
the estimated lives of current retirees and employees.
9. ADDITIONAL FINANCIAL INFORMATION
<TABLE>
<CAPTION>
DECEMBER 31
----------------
1995 1994
------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
BALANCE SHEETS:
Accounts payable and accrued liabilities:
Accounts payable - affiliates............... $25,821 $24,150
Accounts payable - other.................... 27,923 34,116
Accrued expenses............................ 7,706 5,992
Accrued vacation pay........................ 3,553 3,722
Accrued taxes............................... 1,076 1,648
Interest payable - affiliates............... 140 80
Interest payable - other.................... 1,168 1,191
------- -------
$67,387 $70,899
======= =======
</TABLE>
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
-------------------------
1995 1994 1993
------- ------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
STATEMENTS OF CASH FLOWS:
Cash paid during the year for:
Interest, net of amounts capitalized......... $ 7,263 $ 7,664 $ 9,740
Income taxes, net of amounts refunded........ 25,343 30,417 25,637
STATEMENTS OF OPERATIONS AND
REINVESTED EARNINGS:
Interest expense, net of amounts capitalized.. 7,709 8,022 8,702
Capitalized interest.......................... 1,604 330 ---
</TABLE>
Interest paid during the year includes $1,501,000 in 1995, $581,000 in 1994
and $105,000 in 1993 related to short-term financing services provided by Bell
Atlantic Network Funding Corporation (see Note 5).
F-16
<PAGE>
Bell Atlantic - Delaware, Inc.
At December 31, 1995 and 1994, respectively, $1,727,000 and $7,434,000 of
negative cash was classified as accounts payable.
Total advertising expense amounted to $1,548,000 in 1995, $1,352,000 in 1994
and $1,779,000 in 1993. Of these amounts, $1,398,000, $940,000 and $1,513,000 in
1995, 1994 and 1993, respectively, were advertising expenses allocated to the
company by Bell Atlantic Network Services, Inc. (NSI).
10. TRANSACTIONS WITH AFFILIATES
The financial statements include transactions with NSI, Bell Atlantic Network
Funding Corporation (BANFC), Bell Atlantic NSI Holdings, Inc. (BANSHI), Bell
Atlantic, and various other affiliates.
The Company has contractual arrangements with NSI for the provision of
various centralized corporate, administrative, planning, financial and other
services. These arrangements serve to fulfill the common needs of Bell
Atlantic's operating telephone subsidiaries on a centralized basis. The
Company's allocated share of NSI costs include costs billed by Bell
Communications Research, Inc. (Bellcore), another affiliated company owned
jointly by the seven regional holding companies.
The Company recognizes interest expense and income in connection with
contractual arrangements with BANFC to provide short-term financing, investing
and cash management services to the Company, and recognizes interest expense
related to a promissory note held by BANSHI (see Note 5).
Operating revenues include obligations to affiliates in connection with an
interstate revenue sharing arrangement with Bell Atlantic's operating telephone
subsidiaries. Operating revenues and expenses also include miscellaneous items
of income and expense resulting from transactions with other affiliates,
primarily rental of facilities and equipment. The Company also paid cash
dividends to its parent company, Bell Atlantic.
Transactions with affiliates are summarized as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
-----------------------------
1995 1994 1993
--------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Operating revenues:
Interstate revenue sharing to affiliates...... $(15,988) $(6,407) $(4,025)
Other revenue from affiliates................. 2,149 1,360 853
-------- ------- -------
(13,839) (5,047) (3,172)
-------- ------- -------
Operating expenses:
NSI........................................... 40,249 35,957 35,439
Bellcore...................................... 2,266 2,135 2,999
Other......................................... 10,197 10,010 9,639
-------- ------- -------
52,712 48,102 48,077
-------- ------- -------
Interest income from BANFC..................... --- --- 62
Interest expense:
BANFC......................................... 1,561 657 109
BANSHI........................................ 99 --- ---
-------- ------- -------
1,660 657 109
-------- ------- -------
Dividends paid to Bell Atlantic................ 28,100 38,225 36,600
</TABLE>
Outstanding balances with affiliates are reported on the Balance Sheets at
December 31, 1995 and 1994 as Accounts receivable - affiliates, Note payable to
affiliate, Accounts payable and accrued liabilities - affiliates and Long-term
debt - affiliate.
F-17
<PAGE>
Bell Atlantic - Delaware, Inc.
In 1994, NSI operating expenses included $697,000, representing the Company's
proportionate share of separation benefit costs for employees of NSI. Bellcore
expenses in 1994 included reimbursements of $1,088,000 from other Bellcore
owners in connection with their decision to participate in the Advanced
Intelligent Network project. This project previously had been supported
entirely by Bell Atlantic's operating telephone subsidiaries, including the
Company.
In 1993, the Company's reported charge for the cumulative effect of the
change in accounting for postemployment benefits included $161,000, net of a
deferred income tax benefit of $106,000, representing the Company's
proportionate share of NSI's accrued cost of postemployment benefits at January
1, 1993.
On February 1, 1996, the Company declared and paid a dividend in the amount
of $6,500,000 to Bell Atlantic.
11. QUARTERLY FINANCIAL INFORMATION (unaudited)
<TABLE>
<CAPTION>
INCOME BEFORE NET
OPERATING OPERATING EXTRAORDINARY INCOME
QUARTER ENDED REVENUES INCOME ITEM (LOSS)
- ------------- --------- --------- ------------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
1995:
March 31............. $ 62,870 $15,722 $ 8,274 $ 8,274
June 30.............. 66,414 17,143 9,053 9,053
September 30......... 66,944 15,718 8,180 8,180
December 31.......... 65,547 16,046 8,535 8,535
-------- ------- ------- --------
Total................ $261,775 $64,629 $34,042 $ 34,042
======== ======= ======= ========
1994:
March 31............. $ 64,952 $20,545 $11,174 $ 11,174
June 30.............. 65,534 19,115 10,280 10,280
September 30*........ 67,063 9,496 4,887 (32,039)
December 31.......... 67,220 20,909 11,130 11,130
-------- ------- ------- --------
Total................ $264,769 $70,065 $37,471 $ 545
======== ======= ======= ========
</TABLE>
* The loss for the third quarter of 1994 includes an extraordinary charge of
$36,926,000, net of an income tax benefit of $35,952,000, related to the
discontinuation of regulatory accounting principles (see Note 2).
F-18
<PAGE>
Bell Atlantic - Delaware, Inc.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
ADDITIONS
-----------------------
CHARGED
BALANCE AT CHARGED TO OTHER BALANCE
BEGINNING TO ACCOUNTS DEDUCTIONS AT END
DESCRIPTION OF PERIOD EXPENSES NOTE(a) NOTE(b) OF PERIOD
- ----------- ---------- -------- ----------- ------------- ---------
<S> <C> <C> <C> <C> <C>
Allowance for Uncollectible
Accounts Receivable:
Year 1995............... $2,768 $2,781 $3,622 $5,911 $3,260
Year 1994............... $2,767 $3,238 $2,855 $6,092 $2,768
Year 1993............... $2,635 $2,407 $2,996 $5,271 $2,767
</TABLE>
- -------------------
(a) (i) Amounts previously written off which were credited directly to this
account when recovered; and (ii) accruals charged to accounts payable for
anticipated uncollectible charges on purchases of accounts receivable from
others which were billed by the Company.
(b) Amounts written off as uncollectible.
F-19
<PAGE>
EXHIBITS
FILED WITH ANNUAL REPORT FORM 10-K
UNDER THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995
Bell Atlantic - Delaware, Inc.
COMMISSION FILE NUMBER 1-7757
<PAGE>
Form 10-K for 1995
File No. 1-7757
Page 1 of 1
EXHIBIT INDEX
Exhibits identified in parentheses below, on file with the Securities and
Exchange Commission (SEC), are incorporated herein by reference as exhibits
hereto.
Exhibit Number (Referenced to Item 601 of Regulation S-K)
---------------------------------------------------------
3a Certificate of Incorporation of the registrant, as amended and
restated June 17, 1987. (Exhibit 3a to the registrant's Annual
Report on Form 10-K for the year ended December 31, 1987, File No.
1-7757.)
3a(i) Certificate of Amendment of Certificate of Incorporation,
dated August 14, 1992. (Exhibit 3a(i) to the registrant's
Annual Report on Form 10-K for the year ended December 31,
1992, File No. 1-7757.)
3a(ii) Certificate of Amendment of Certificate of Incorporation,
dated January 10, 1994 and filed January 13, 1994. (Exhibit
3a(ii) to the registrant's Annual Report on Form 10-K for
the year ended December 31, 1993, File No. 1-7757.)
3b By-Laws of the registrant, as amended December 15, 1995.
3b(i) Consent of Sole Stockholder of Bell Atlantic - Delaware,
Inc., dated December 15, 1995.
4 No instrument which defines the rights of holders of long and
intermediate term debt of the registrant is filed herewith pursuant
to Regulation S-K, Item 601(b)(4)(iii)(A). Pursuant to this
regulation, the registrant hereby agrees to furnish a copy of any
such instrument to the SEC upon request.
10a Agreement Concerning Contingent Liabilities, Tax Matters and
Termination of Certain Agreements among AT&T, Bell Atlantic
Corporation, and the Bell Atlantic Corporation telephone
subsidiaries, and certain other parties, dated as of November 1,
1983. (Exhibit 10a to Bell Atlantic Corporation Annual Report on
Form 10-K for the year ended December 31, 1993, File No. 1-8606.)
10b Agreement Among Bell Atlantic Network Services, Inc. and the Bell
Atlantic Corporation telephone subsidiaries, dated November 7,
1983. (Exhibit 10b to Bell Atlantic Corporation Annual Report on
Form 10-K for the year ended December 31, 1993, File No. 1-8606.)
24 Powers of Attorney.
27 Financial Data Schedule.
<PAGE>
Exhibit 3b
BY-LAWS
Bell Atlantic - Delaware, Inc.
AS AMENDED DECEMBER 15, 1995
----------------------------
ARTICLE I
STOCKHOLDERS' MEETINGS
----------------------
Section 1-a Place of Meetings. All meetings of the stockholders shall
-----------------------------
be held at the registered office of the corporation or at such other place,
within or without the State of Delaware, as the Board of Directors or
stockholders may from time to time determine.
Section 1-b Annual Meeting. An annual meeting of the stockholders
--------------------------
shall be held in April of every year on a business day and at an hour to be
fixed by the President and set forth in the notice of the meeting, for the
election of Directors and the transaction of such other business as may properly
be brought before the meeting.
Section 1-c Special Meetings. Special meetings of the stockholders
----------------------------
may be called at any time by the Board of Directors, the President, or the
holder or holders of not less than one-fifth of all the shares of the
corporation outstanding and entitled to vote at the particular meeting.
Section 1-d Notice of Meetings. Written notice of every meeting of
------------------------------
the stockholders shall be given by or at the direction of the person or persons
authorized to call the meeting, to each stockholder of record entitled to vote
at the meeting, not less than ten (10) nor more than sixty (60) days prior to
the date named for the meeting, unless a greater period of notice is required by
law in a particular case, by delivery of or by mailing such notice to each
stockholder addressed to such stockholder at such stockholder's address
appearing on the books of the corporation for the purpose of notice. Such
notice shall specify the place, day and hour of the meeting, and shall state the
nature of the business to be transacted if, and to the extent, required by law.
<PAGE>
Section 1-e Quorum. The presence, in person or by proxy, of the
------------------
stockholders entitled to cast at least a majority of the votes which all
stockholders are entitled to cast shall constitute a quorum at any meeting of
the stockholders for the election of Directors or for the transaction of other
business, except as otherwise provided by statute or in the Certificate of
Incorporation.
Section 1-f Stockholders Entitled to Vote. Except as may be otherwise
-----------------------------------------
provided by law or in the Certificate of Incorporation, every stockholder shall
have the right at every stockholders' meeting to cast one vote, either in person
or by proxy, for every share having voting power standing in his or her name on
the books of the corporation.
Section 1-g Voting. When a quorum exists at any meeting and unless
------------------
otherwise provided by law or in the Certificate of Incorporation, the acts of
the stockholders present, in person or by proxy, entitled to cast at least a
majority of the votes which all stockholders present are entitled to cast shall
be the acts of the stockholders, except that Directors shall be elected by a
plurality of such votes.
Section 1-h Informal Action. Except as may be otherwise provided in
---------------------------
the Certificate of Incorporation, any action which could be taken at a meeting
of the stockholders may be taken without a meeting, if a consent in writing,
setting forth the action so taken, is signed by all of the stockholders who
would be entitled to vote at a meeting for such purpose and is filed with the
Secretary of the corporation.
ARTICLE II
DIRECTORS
---------
Section 2-a Number and Term of Office. The business and affairs of
-------------------------------------
the corporation shall be managed by or under the direction of the Board of
Directors. The Board of Directors shall consist of not less than one (1) nor
more than ten (10) Directors. Directors shall be natural persons of full age.
At each annual meeting the directors shall be elected by the
-2-
<PAGE>
stockholders to serve until their respective successors shall be elected and
shall qualify or until his or her earlier death, resignation or removal.
Section 2-b Place of Meetings. The meetings of the Board of Directors
-----------------------------
may be held at such place, within or without the State of Delaware, as a
majority of the Directors may, from time to time, by resolution prescribe, or as
may be designated in the notice or waiver of notice of a particular meeting. In
the absence of specification, such meetings shall be held at the registered
office of the corporation.
Section 2-c Time of Meetings. The first meeting of each newly elected
----------------------------
Board of Directors shall be the regularly scheduled meeting of the Board of
Directors next following the annual meeting of the stockholders, unless
otherwise provided in the notice of the meeting. Such meeting shall be for the
purpose of organization, the election of officers and the transaction of other
business.
Regular meetings of the Board of Directors may be held at such times
as the Board of Directors may by resolution determine. Unless otherwise
specified by resolution of the Board of Directors, if any day fixed for a
regular meeting shall be a legal holiday, then the meeting shall be held at the
same hour and place on the immediately preceding business day which is not a
legal holiday.
Special meetings of the Board of Directors may be called at any time
by the President, and shall be called upon the written request of any two or
more Directors delivered to the Secretary. Upon receipt of such request it
shall be the duty of the Secretary promptly to issue the call for such meeting.
Section 2-d Notice of Meetings. Written notice of every meeting of
------------------------------
the Board of Directors shall be given personally or by mailing the same at least
forty-eight (48) hours before the time named for such meeting, except that
notice of a special meeting of the Board of Directors may instead be give by
telegraphing or telephoning the same, at least twenty-four (24) hours before the
time named for such meeting. Such notice shall specify the place, day and hour
of the meeting, and shall also
-3-
<PAGE>
state the nature of the business to be transacted at a special meeting or if
otherwise required by law.
Section 2-e Quorum. At all meetings of the Board of Directors, a
------------------
majority of the Directors in office shall constitute a quorum for the
transaction of business, and the acts of a majority of the Directors present at
a meeting at which a quorum is present shall be the acts of the Board of
Directors, except as may otherwise be specifically provided by statute.
Section 2-f Vacancies. Vacancies in the Board of Directors, whether
---------------------
or not caused by an increase in the number of Directors, may be filled by a
majority of the remaining members of the Board though less than a quorum, and
each person so elected shall be a Director until his successor is elected and
qualified or until his or her earlier death, resignation or removal. Any
Director may resign at any time upon written notice to the corporation.
Section 2-g Removal of Directors. Any Director, or the entire
--------------------------------
Board, may be removed with or without cause by vote of the holders of a majority
of the shares then entitled to vote at an election of Directors.
Section 2-h General Powers. The Board of Directors may exercise all
--------------------------
such powers of the corporation and do all such lawful acts and things as are not
by statute, or by the Certificate of Incorporation, directed or required to be
exercised and done by the stockholders. The Board of Directors may adopt and
enforce such rules and regulations, not inconsistent herewith, as they may deem
necessary for the conduct of the corporation's business; the Board of Directors
may, from time to time, designate one of its members to serve as Chairman, with
such duties as the Board of Directors shall specify. The Chairman or, if the
position is vacant, the President, shall preside at all Board Meetings.
Section 2-i Board Committees. The Board of Directors may, by
----------------------------
resolution adopted by a majority of the whole Board of Directors, designate an
Executive Committee, which shall consist of two or more Directors and the Board
of Directors may, by resolution adopted by a majority of the whole Board of
Directors,
-4-
<PAGE>
designate from time to time such other committees consisting of two or more
Directors, as it shall deem necessary or appropriate, each to have such powers,
in addition to those set forth in these By-Laws, as the Board of Directors by
resolution shall authorize. Vacancies in the membership of any Committee shall
be filled by the Board of Directors of a regular or special meeting of the Board
of Directors. The Board of Directors may designate one or more Directors as
alternate members of the Executive or other Committee (to serve in the order
named if more than one) who may replace any absent or disqualified member at any
meeting of such Committee. If the Board has not made such designation, or if
none of the alternate members designated is available, in the absence or
disqualification of any member of the Executive or other Committee, the member
or members thereof present at any meeting and not disqualified from voting,
whether or not the member or members constitute a quorum, may unanimously
appoint another Director to act at the meeting in the place of any such absent
or disqualified member. The Executive or other Committee shall keep regular
minutes of its proceedings and shall report actions taken by it to the next
meeting of the Board of Directors.
Section 2-j Specific Powers of Executive and other Committees. The
-------------------------------------------------------------
President, if a Director, shall be a member of the Executive Committee. Except
as prohibited by law or granted to another Committee by resolution of the Board
of Directors, the Executive Committee shall have and exercise all the powers of
the Board of Directors provided that neither the Executive nor any other
Committee shall have the power to adopt, amend or repeal the By-Laws of the
corporation or to elect Directors. At any meeting of a Committee a majority of
such Committee shall constitute a quorum. Each committee may fix the time and
place of its regular meetings, and after such time and place shall have been
fixed no notice of such regular meeting shall be necessary. Special meetings of
the Executive Committee may be called by the President whenever he or she shall
think proper, and the President shall call such meetings whenever requested, in
writing, by any two members of the Executive Committee. Special Meetings of
other Committees may be called by the respective chairmen. Notice of the time
and place of every special meeting of a Committee shall be given by the
Secretary to each member of
-5-
<PAGE>
the Committee in the manner prescribed in Section 2-d for special meetings of
the whole Board of Directors.
Section 2-k Informal Action. Any action which could be taken at a
---------------------------
meeting of the Board or the Executive or other Board Committee, may be taken
without a meeting, if consent in writing setting forth the action so taken is
signed by all of the Directors or the members of the Executive or other
Committee, as the case my be, and is filed by the Secretary of the corporation
with the minutes of the proceedings of the Board of Directors or the appropriate
Committee.
Section 2-l Emergency Authority. The Board of Directors may adopt
-------------------------------
emergency succession rules which make advance provision for the continuity and
authority of the corporation's management in the event of a major catastrophe,
such as a nuclear attack, or other disaster resulting in the loss or
unavailability of officers of the corporation, and in the event of such a major
catastrophe or disaster, the terms of any such rules shall have the same effect
as if included in these By-Laws and shall supersede the terms of these By-Laws
and any resolutions of the Board of Directors, to the extent that they may be
inconsistent therewith, until the Board of Directors can be convened pursuant to
such rules.
-6-
<PAGE>
Section 2-m Telecommunications. One or more Directors may participate
------------------------------
in a meeting of the Board of Directors or a Committee thereof, by means of
conference telephone or similar communication equipment by means of which all
persons participating in the meeting can hear each other. Participation in
a meeting pursuant to this Section shall constitute presence in person at such
meeting.
ARTICLE III
OFFICERS
--------
Section 3-a Number, Qualifications and Designation. The officers of
--------------------------------------------------
the corporation shall be a President, who shall be the chief executive officer,
a Secretary, a Treasurer and such other officers (who may also be officers of an
affiliated company) as may be required by law or may from time to time be
elected by the Board of Directors and whose powers and duties shall be
prescribed by these By-Laws or as from time to time elected by the Board of
Directors. One person may hold more than one office except that the same person
shall not hold the offices of President and Secretary.
Section 3-b Election and Term of Office. The officers of the
---------------------------------------
corporation, except subordinate officers appointed by delegated authority
pursuant to Section 3-c hereof, shall be elected by the Board of Directors for
such terms as may be specified by the Board of Directors, and each such officer
shall hold such office until such officer's successor shall have been elected
and qualified, or until such officer's earlier death, resignation or removal.
The Board of Directors shall designate a principal financial officer and a
principal accounting officer. Any officer may resign at any time up on written
notice to the corporation and, unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective. If
the office of an officer elected by the Board of Directors becomes vacant for
any reason, the vacancy may be filled by the President on an interim basis until
the next meeting of the Board of Directors, at which time the position shall be
filled by the Board of Directors.
-7-
<PAGE>
Section 3-c Subordinate officers, Employees and Agents. The Board of
------------------------------------------------------
Directors may from time to time appoint such subordinate officers, employees or
agents (who may also be officers or employees of an affiliated company) as it
deems necessary, who shall hold such position for such terms and shall exercise
such powers and perform such duties as are provided in these By-Laws, or as the
Board of Directors may from time to time determine. The Board of Directors may
delegate to any officer or Committee of the Board of Directors the power to
appoint or remove subordinate officers and to retain, appoint or remove
employees or other agents, and to prescribe the authority and duties, not
inconsistent with these By-Laws, of such subordinate officers, employees or
other agents. In the absence of any such specific delegation, the President
shall have the authority to appoint subordinate officers, employees or agents.
The President shall have the authority to approve giving one or more subordinate
officers the title of Vice President, if deemed appropriate under the
circumstances.
Section 3-d Removal of Officers, Agents or Employees. Any officer,
----------------------------------------------------
subordinate officer, agent or employee of the corporation may be removed, or his
or her authority revoked, by resolution of the Board of Directors whenever in
its judgment the best interests of the corporation will be served thereby. Any
subordinate officer, agent or employee likewise may be removed by the President
or, subject to the President's supervision, by the person having authority with
respect to the appointment of such subordinate officer, agent or employee.
Section 3-e President. The President shall have such authority and
---------------------
perform such duties as usually appertain to that office in business
corporations, and shall perform such other duties as shall from time to time be
assigned to him or her by the Board of Directors.
Section 3-f Secretary. The Secretary, or an Assistant Secretary,
---------------------
shall attend all meetings of the stockholders and of the Board of Directors and
shall record the proceedings of the stockholders and Directors in a book or
books to be kept for that purpose; see that notices are given and records and
reports properly kept and filed by the corporation as required by law; be the
custodian of the seal of the corporation and attest or cause
-8-
<PAGE>
to be attested documents on behalf of the corporation under its seal; and in
general, perform all duties incident to the office of Secretary and such other
duties as may from time to time be assigned to him or her by the Board of
Directors or President. The Secretary shall appoint one or more Assistant
Secretaries with such powers and duties as the Board of Directors, the President
or the Secretary shall from time to time determine.
Section 3-g Treasurer. The Treasurer, or an Assistant Treasurer,
---------------------
shall have or provide for the custody of the funds and other property of the
corporation and shall keep or cause to be kept full and accurate accounts of
receipts and disbursements in books belonging to the corporation; collect and
receive, or provide for the collection and receipt of, moneys earned by or in
any manner due to or received by the corporation; deposit all funds in his or
her custody as Treasurer in such banks or other places of deposit as may be
designated from time to time by the Board of Directors or pursuant to its
authority; whenever so required by the Board of Directors, render an account
showing his or her transactions as Treasurer and the financial condition of the
corporation; and, in general, discharge such other duties as may from time to
time be assigned to him or her by the Board of Directors or the President. The
Treasurer shall appoint one or more Assistant Treasurers with such powers and
duties as the Board of Directors, the President or the Treasurer shall from time
to time determine.
Section 3-h Controller. The Controller, if one shall have been
----------------------
elected or appointed, shall have custody and charge of all books of account,
except those required by the Treasurer in keeping records of the work of the
Treasurer's office, and shall have supervision over subsidiary accounting
records, wherever located. The Controller shall have access to all books of
account, including the Treasurer's records, for purposes of audit and for
obtaining information necessary to verify or complete the records of the
Controller's office. Unless otherwise provided by the Board of Directors, the
Controller shall certify to authorization and approvals pertaining to vouchers
and shall perform such other duties as may be assigned by the Board of Directors
or the President. With the approval of the President, the controller may
designate one or more persons to perform all
-9-
<PAGE>
of the Controller's duties as may be found necessary to delegate in the ordinary
course of the business or in the event of the absence or disability of the
Controller.
Section 3-i Delegation of Duties. The President may delegate duties
--------------------------------
to other officers, subordinate officers, employees or agents and may similarly
provide for the re-delegation thereof.
Section 3-j Voting of Stock. Unless otherwise provided by the Board
---------------------------
of Directors, the President or the Treasurer shall have full power and
authority, on behalf of the corporation to attend, and to act and vote, in
person or by proxy, at any meeting of the stockholders of any company in which
the corporation may hold stock, and at any such meeting shall possess and may
exercise any and all of the rights and powers incident to the ownership of such
stock which, as the owner thereof the corporation might have possessed and
exercised if present. The Board of Directors may from time to time confer
like powers upon any other person or persons.
Section 3-k Endorsement of Securities for Transfer. The President and
--------------------------------------------------
the Treasurer shall each have power to endorse and deliver for sale, assignment
or transfer certificates of stock, bonds or other securities, registered in the
name of or belonging to the corporation, whether issued by this corporation or
by any other corporation, government, state or municipality or agency thereof.
ARTICLE IV
CERTIFICATES FOR STOCK, TRANSFER, ETC.
--------------------------------------
Section 4-a Issuance. Each stockholder shall be entitled to a
--------------------
certificate or certificates, under the seal of the corporation, showing the
number of shares to which the stockholder is entitled. Such certificates shall
be signed by the President and by the Treasurer or an Assistant Treasurer.
Section 4-b Transfer. Stock shall be transferable on the books of the
--------------------
corporation only by the holder thereof in
-10-
<PAGE>
person, or by attorney, upon surrender of the outstanding certificate; provided,
however, that in the case of a lost, stolen or destroyed certificate, a new
certificate may be issued in place thereof upon such terms as the Board of
Directors may prescribe.
Section 4-c Record Holder of Shares; Record Date. The corporation
------------------------------------------------
shall be entitled to recognize the exclusive right of a person registered on its
books as the owner of shares to receive dividends and to vote as such owner and
shall not be bound to recognize any equitable or other claim to or interest in
such share or shares on the part of any other person except as otherwise
provided by law. In order that the corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders, to receive any
dividend or other distribution, or to exercise any other right to which a
stockholder is entitled, the Board of Directors may fix in advance a record date
in accordance with the provisions specified by statute. If no record date is
fixed, then the record date shall be determined in accordance with the
applicable statutory provisions.
ARTICLE V
INDEMNIFICATION OF DIRECTORS, OFFICERS AND OTHER
------------------------------------------------
AUTHORIZED REPRESENTATIVES
--------------------------
Section 5-a Indemnification of Authorized Representatives in Third
------------------------------------------------------------------
Party Proceedings. The corporation shall indemnify any person who was or is an
- -----------------
"authorized representative" of the corporation (which shall mean for purposes of
this Article a director or officer of the corporation) and who was or is a party
or is threatened to be made a party to any "third party proceeding" (which shall
include for purposes of this Article any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative, other that an action by or in the right of the corporation) by
reason of the fact that such person was or is an authorized representative of
the corporation, against expenditures (which shall include for purposes of this
Article attorneys fees), judgments, penalties, fines and amounts paid in
-11-
<PAGE>
settlement actually and reasonably incurred by such person in connection with
such third party proceeding if such person acted in good faith and in a manner
such person reasonably believed to be in, or not opposed to, the best interests
of the corporation and, with respect to any criminal third party proceeding
(including any action or investigation which could or does lead to a criminal
third party proceeding), had no reasonable cause to believe such conduct was
unlawful. The termination of any third party proceeding by judgment, order,
settlement, conviction or upon a plea of nolo contendere or its equivalent shall
not of itself create a presumption that the authorized representative (i) did
not act in good faith and in a manner which such person reasonably believed to
be in, or not opposed to, the best interests of the corporation, or (ii) with
respect to any criminal third party proceeding, had reasonable cause to believe
that such conduct was unlawful.
Section 5-b Indemnification of Authorized Representatives in Corporate
----------------------------------------------------------------------
Proceedings. The corporation shall indemnify any person who was or is an
- -----------
authorized representative of the corporation and who was or is a party or is
threatened to be made a party to any "corporate proceeding" (which shall include
for purposes of this Article any threatened, pending or completed action or suit
by or in the right of the corporation to procure a judgment in its favor and any
investigative proceeding by the corporation) by reason of the fact that such
person was or is an authorized representative of the corporation, against
expenses actually and reasonably incurred by such person in connection with the
defense or settlement of such corporate action if such person acted in good
faith and in a manner reasonably believed to be in, or not opposed to, the best
interests of the corporation, except that no indemnification shall be made in
respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable for negligence or misconduct in the performance of such
person's duty to the corporation unless and only to the extent that the Court of
Chancery or the court in which such corporate proceedings was pending shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such authorized representative is
fairly and reasonably entitled to indemnity for such expenses which the Court of
Chancery or such other court shall deem proper.
-12-
<PAGE>
Section 5-c Mandatory Indemnification of Authorized Representatives.
-------------------------------------------------------------------
To the extent that an authorized representative of the corporation has been
successful on the merits or otherwise in defense of any third party or corporate
proceeding or in defense of any claim, issue or matter therein, such person
shall be indemnified against expenses actually and reasonably incurred by such
person in connection therewith.
Section 5-d Determination of Entitlement to Indemnification. Any
-----------------------------------------------------------
indemnification under Section 5-a, 5-b, or 5-c hereof (unless ordered by a
court) shall be made by the corporation only as authorized in the specific case
upon a determination that indemnification of the authorized representative is
proper in the circumstances because such person has either met the applicable
standard of conduct set forth in Section 5-a or 5-b or has been successful on
the merits or otherwise as set forth in Section 5-c and that the amount
requested has been actually and reasonably incurred. Such determination shall
be made:
(1) By the Board of Directors by a majority vote of a quorum
consisting of directors who were not parties to such third party or corporate
proceeding, or
(2) If such quorum is not obtainable or, even if obtainable, a
majority vote of such a quorum so directs, by independent legal counsel in a
written opinion, or
(3) By the stockholders.
Section 5-e Advancing Expenses. Expenses actually and reasonably
------------------------------
incurred in defending a third party or corporate proceeding shall be paid on
behalf of an authorized representative by the corporation in advance of the
final disposition of such third party or corporate proceeding and within 30 days
of receipt by the Secretary of the corporation of (i) an application from such
authorized representative setting forth the basis for such application, and (ii)
if required by law at the time such application is made, and undertaking by or
on behalf of the authorized representative to repay such amount if it shall
ultimately be determined that such person is not
-13-
<PAGE>
entitled to be indemnified by the corporation under this Article. The financial
ability of such authorized representative to make such repayment shall not be a
prerequisite to the making of an advance.
Section 5-f Employee Benefit Plans. For purposes of this Article,
----------------------------------
references to "other enterprises" shall include employee benefit plans;
references to "fines" shall include any excise taxes assessed on a person with
respect to an employee benefit plan; and references to "serving at the request
of the corporation" shall include any service as director, officer, employee or
agent of the corporation which imposes duties on, or involves services by, such
director, officer, employee, or agent with respect to an employee benefit plan,
its participants, or beneficiaries; and a person who acted in good faith and in
a manner he or she reasonably believed to be in the interest of the participants
and beneficiaries of an employee benefit plan shall be deemed to have acted in a
manner "not opposed to the best interests of the corporation" as referred to in
this Article.
Section 5-g Scope of Article. The indemnification and advancement of
----------------------------
expenses provided by or granted pursuant to this Article shall (i) not be deemed
exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any statute, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in an
official capacity and as to action in another capacity while holding such
office, (ii) unless otherwise provided when authorized or ratified, continue as
to a person who has ceased to be an authorized representative and (iii) inure to
the benefit of the heirs, executors and administrators of such a person.
Section 5-h Reliance on Provisions. Each person who shall act as an
----------------------------------
authorized representative of the corporation shall be deemed to be doing so in
reliance upon the rights of indemnification and advancement of expenses provided
by this Article.
Section 5-i Insurance. The corporation may purchase and maintain
---------------------
insurance on behalf of any person who is or was an authorized representative
against any liability asserted against
-14-
<PAGE>
such person and incurred by such person in any such capacity, or arising out of
such person's status as such, whether or not the corporation would have the
power to indemnify such person against such liability under the provisions of
this Article or otherwise.
ARTICLE VI
MISCELLANEOUS
-------------
Section 6-a Waiver of Notice. Except as otherwise provided by law or
----------------------------
the Certificate of Incorporation, any notice required to be given under the
provisions of the By-Laws, or otherwise, may be waived in writing by the
stockholder, director or officer to whom such notice is required to be given,
either before or after the meeting or action of which notice is waived.
Attendance of any stockholder, in person or by proxy, and of any director or
officer at any meeting shall constitute a waiver of notice of such meeting
except where a person entitled to notice attends the meeting for the express
purpose of objecting to the transaction of any business because the meeting was
not lawfully called or convened. A stockholder or director who signs a written
consent, in lieu of a meeting, as provided for in these By-Laws, shall be deemed
to have waived any notice of such meeting.
Section 6-b Checks, Notes, Etc. All checks, notes and evidences of
------------------------------
indebtedness of the corporation shall be signed by such person or persons as the
Board of Directors may from time to time designate or the Board may adopt a
single symbol to be affixed to such documents. In either case, the signature of
such person or persons, or a symbol, if such is adopted, and any facsimile or
facsimiles thereof, shall be an "authorized signature" of the corporation and
shall be affixed to such checks, notes, and evidences of indebtedness in such
manner, and by such persons, as the Board of Directors shall authorize.
Section 6-c Corporate Seal. The Corporate seal shall have inscribed
--------------------------
thereon the name of the corporation, with such device or devices as the Board of
Directors may determine. The seal may be used by causing it or a facsimile
thereof to be impressed or affixed in any other manner reproduced.
-15-
<PAGE>
Section 6-d Amendment of By-Laws. The By-Laws may be adopted, amended
--------------------------------
or repealed by the Board of Directors at any meeting, except that Section 2-a,
above, shall be amended or repealed only by the stockholders.
-16-
<PAGE>
Exhibit 3b(i)
CONSENT OF SOLE STOCKHOLDER
OF BELL ATLANTIC - DELAWARE, INC.
The undersigned, which holds all of the outstanding stock of Bell Atlantic -
Delaware, Inc. (the "Corporation"), does hereby consent to and adopt the
following resolution pursuant to Section 228 of the General Corporation Law of
the State of Delaware:
RESOLVED, that the By-Laws of the corporation be, and they hereby are, amended
and restated in their entirety as set forth on Exhibit A attached hereto and
made a part hereof.
IN WITNESS WHEREOF, the undersigned sole stockholder of Bell Atlantic -
Delaware, Inc. has executed this consent as of the 15th day of December, 1995.
Bell Atlantic Corporation
By:
Raymond W. Smith
Chairman of the Board and
Chief Executive
<PAGE>
Exhibit 24
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, BELL ATLANTIC - DELAWARE, INC., a Delaware Corporation
(hereinafter referred to as the "Company"), proposes to file shortly with the
Securities and Exchange Commission, under the provisions of the Securities
Exchange Act of 1934, as amended, an annual report on Form 10-K; and
WHEREAS, the undersigned is an officer and a director of the
Company;
NOW, THEREFORE, the undersigned hereby constitutes and appoints
CAROLYN S. BURGER and JOHN J. PARKER and each of them, as attorneys for him and
in his name, place and stead as a director of the Company, to execute and file
such annual report, and thereafter to execute and file any amendment or
amendments thereto on Form 8, hereby giving and granting to said attorneys full
power and authority to do and perform all and every act and thing whatsoever
requisite and necessary to be done in and about the premises as fully, to all
intents and purposes, as he might or could do if personally present at the doing
thereof, hereby ratifying and confirming all that said attorneys may or shall
lawfully do, or cause to be done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand
this 22nd day of March, 1996.
[SIGNATURE OF JOSHUA W. MARTIN III APPEARS HERE]
_____________________________________
Joshua W. Martin III
Vice President and General Counsel;
Secretary; Director
<PAGE>
STATE OF DELAWARE )
SS:
COUNTY OF )
On this the 22nd day of March, 1996, before me, the undersigned
officer, personally appeared Joshua W. Martin III, known to me to be the person
whose name is subscribed to the within instrument, and acknowledged that he
executed the same for the purposes therein contained.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
Notary Public
My Commission Expires:
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, BELL ATLANTIC - DELAWARE, INC., a Delaware Corporation
(hereinafter referred to as the "Company"), proposes to file shortly with the
Securities and Exchange Commission, under the provisions of the Securities
Exchange Act of 1934, as amended, an annual report on Form 10-K; and
WHEREAS, the undersigned is an officer and director of the Company;
NOW, THEREFORE, the undersigned hereby constitutes and appoints
CAROLYN S. BURGER as attorney for him and in his name, place and stead as an
officer of the Company, to execute and file such annual report, and thereafter
to execute and file any amendment or amendments thereto on Form 8, hereby giving
and granting to said attorney full power and authority to do and perform all and
every act and thing whatsoever requisite and necessary to be done in and about
the premises as fully, to all intents and purposes, as he might or could do if
personally present at the doing thereof, hereby ratifying and confirming all
that said attorney may or shall lawfully do, or cause to be done, by virtue
hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand
this 25th day of March, 1996.
[SIGNATURE OF JOHN J. PARKER APPEARS HERE]
______________________________
John J. Parker
Controller and Treasurer;
Director
<PAGE>
STATE OF DELAWARE )
SS:
COUNTY OF )
On this the 25th day of March, 1996, before me, the undersigned
officer, personally appeared John J. Parker, known to me to be the person whose
name is subscribed to the within instrument, and acknowledged that he executed
the same for the purposes therein contained.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
Notary Public
My Commission Expires:
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, BELL ATLANTIC - DELAWARE, INC., a Delaware Corporation
(hereinafter referred to as the "Company"), proposes to file shortly with the
Securities and Exchange Commission, under the provisions of the Securities
Exchange Act of 1934, as amended, an annual report on Form 10-K; and
WHEREAS, the undersigned is an officer and a director of the
Company;
NOW, THEREFORE, the undersigned hereby constitutes and
appoints JOHN J. PARKER as attorney for her and in her name, place and stead as
an officer of the Company, to execute and file such annual report, and
thereafter to execute and file any amendment or amendments thereto on Form 8,
hereby giving and granting to said attorney full power and authority to do and
perform all and every act and thing whatsoever requisite and necessary to be
done in and about the premises as fully, to all intents and purposes, as she
might or could do if personally present at the doing thereof, hereby ratifying
and confirming all that said attorney may or shall lawfully do, or cause to be
done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set her hand
this 25th day of March, 1996
[SIGNATURE OF CAROLYN S. BURGER APPEARS HERE]
______________________________
Carolyn S. Burger
President and Chief Executive
Officer; Director
<PAGE>
STATE OF DELAWARE )
SS:
COUNTY OF )
On this the 25th day of March, 1996, before me, the undersigned
officer, personally appeared Carolyn S. Burger, known to me to be the person
whose name is subscribed to the within instrument, and acknowledged that she
executed the same for the purposes therein contained.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
Notary Public
My Commission Expires:
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1995 AND THE BALANCE
SHEET AS OF DECEMBER 31, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 44,170
<ALLOWANCES> 3,260
<INVENTORY> 1,738
<CURRENT-ASSETS> 67,201
<PP&E> 710,216
<DEPRECIATION> 349,239
<TOTAL-ASSETS> 438,198
<CURRENT-LIABILITIES> 84,809
<BONDS> 101,147
0
0
<COMMON> 118,442
<OTHER-SE> 22,449
<TOTAL-LIABILITY-AND-EQUITY> 438,198
<SALES> 0
<TOTAL-REVENUES> 261,775
<CGS> 0
<TOTAL-COSTS> 197,146
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,709
<INCOME-PRETAX> 56,371
<INCOME-TAX> 22,329
<INCOME-CONTINUING> 34,042
<DISCONTINUED> 0
<EXTRAORDINARY> 0
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<NET-INCOME> 34,042
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<EPS-DILUTED> 0
</TABLE>
