<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_____________________
FORM 10-Q
_____________________
(Mark one)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 1-7757
BELL ATLANTIC - DELAWARE, INC.
A Delaware Corporation I.R.S. Employer Identification No. 23-0523775
901 Tatnall Street, Wilmington, Delaware 19801
Telephone Number (302) 576-5416
_____________________
THE REGISTRANT, A WHOLLY OWNED SUBSIDIARY OF BELL ATLANTIC CORPORATION, MEETS
THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION H(1)(a) AND (b) OF FORM 10-Q AND
IS THEREFORE FILING THIS FORM WITH REDUCED DISCLOSURE FORMAT PURSUANT TO GENERAL
INSTRUCTION H(2).
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
<PAGE>
Bell Atlantic - Delaware, Inc.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
CONDENSED STATEMENTS OF INCOME
Three Months Ended March 31,
----------------------------
(Dollars in Thousands) (Unaudited) 2000 1999
- --------------------------------------------------------------------------------
OPERATING REVENUES
(including $1,172 and $1,258 to affiliates) $76,897 $71,921
----------------------------
OPERATING EXPENSES
Employee costs, including benefits and taxes 11,278 10,548
Depreciation and amortization 17,655 16,155
Other (including $13,572 and $14,584 to affiliates) 24,541 20,188
----------------------------
53,474 46,891
----------------------------
OPERATING INCOME 23,423 25,030
OTHER INCOME, NET
(including $8 and $0 from affiliate) 357 67
INTEREST EXPENSE
(including $849 and $725 to affiliates) 2,236 2,154
----------------------------
INCOME BEFORE PROVISION FOR INCOME TAXES 21,544 22,943
PROVISION FOR INCOME TAXES 8,750 9,331
----------------------------
NET INCOME $12,794 $13,612
============================
See Notes to Condensed Financial Statements.
1
<PAGE>
Bell Atlantic - Delaware, Inc.
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
------
(Dollars in Thousands) (Unaudited) March 31, 2000 December 31, 1999
- ----------------------------------------------------------------------------------
<S> <C> <C>
CURRENT ASSETS
Short-term investments $ 3,200 $ 4,800
Accounts receivable:
Trade and other, net of allowances for
uncollectibles of $5,449 and $5,181 53,199 55,315
Affiliates 4,530 4,657
Material and supplies 1,146 1,232
Prepaid expenses 4,123 6,020
Deferred income taxes 2,262 2,132
Other 428 566
---------------------------------
68,888 74,722
---------------------------------
PLANT, PROPERTY AND EQUIPMENT 952,940 934,084
Less accumulated depreciation 527,935 512,150
---------------------------------
425,005 421,934
---------------------------------
OTHER ASSETS 15,603 10,738
---------------------------------
TOTAL ASSETS $509,496 $507,394
=================================
</TABLE>
See Notes to Condensed Financial Statements.
2
<PAGE>
Bell Atlantic - Delaware, Inc.
CONDENSED BALANCE SHEETS
LIABILITIES AND SHAREOWNER'S INVESTMENT
---------------------------------------
(Dollars in Thousands, Except Per Share Amount) March 31, December 31,
(Unaudited) 2000 1999
- --------------------------------------------------------------------------------
CURRENT LIABILITIES
Debt maturing within one year:
Note payable to affiliate $ 5,213 $29,167
Current portion of long-term debt:
Affiliate 20,000 20,000
Other 38 50
Accounts payable and accrued liabilities:
Affiliates 22,097 22,066
Other 48,304 43,959
Advance billings and customer deposits 8,936 8,918
--------------------------
104,588 124,160
--------------------------
LONG-TERM DEBT
Note payable to affiliate 30,000 ---
Other 86,326 86,319
--------------------------
116,326 86,319
--------------------------
EMPLOYEE BENEFIT OBLIGATIONS 38,289 38,323
--------------------------
DEFERRED CREDITS AND OTHER LIABILITIES
Deferred income taxes 39,770 37,833
Unamortized investment tax credits 1,819 1,868
Other 10,630 11,011
--------------------------
52,219 50,712
--------------------------
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 79,687 89,493
Accumulated other comprehensive loss (55) (55)
--------------------------
198,074 207,880
--------------------------
TOTAL LIABILITIES AND SHAREOWNER'S INVESTMENT $509,496 $507,394
==========================
See Notes to Condensed Financial Statements.
3
<PAGE>
Bell Atlantic - Delaware, Inc.
CONDENSED STATEMENTS OF CASH FLOWS
Three Months Ended March 31,
----------------------------
(Dollars in Thousands) (Unaudited) 2000 1999
- --------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES $39,961 $37,140
--------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Net change in short-term investments 1,600 1,438
Capital expenditures (24,043) (16,893)
Other, net 10 424
--------------------------
Net cash used in investing activities (22,433) (15,031)
--------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal repayments of capital lease obligations (8) (11)
Net change in short-term note payable to affiliate (23,954) (19,909)
Proceeds from medium term note payable to affiliate 30,000 ---
Dividend paid (22,600) ---
Net change in outstanding checks drawn
on controlled disbursement accounts (966) (2,189)
--------------------------
Net cash used in financing activities (17,528) (22,109)
--------------------------
NET CHANGE IN CASH --- ---
CASH, BEGINNING OF PERIOD --- ---
--------------------------
CASH, END OF PERIOD $ --- $ ---
==========================
See Notes to Condensed Financial Statements.
4
<PAGE>
Bell Atlantic - Delaware, Inc.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
Bell Atlantic - Delaware, Inc. is a wholly owned subsidiary of Bell
Atlantic Corporation (Bell Atlantic). The accompanying unaudited condensed
financial statements have been prepared based upon Securities and Exchange
Commission (SEC) rules that permit reduced disclosure for interim periods. These
financial statements reflect all adjustments that are necessary for a fair
presentation of results of operations and financial position for the interim
periods shown including normal recurring accruals. The results for the interim
periods are not necessarily indicative of results for the full year. For a more
complete discussion of significant accounting policies and certain other
information, you should refer to the financial statements included in our 1999
Annual Report on Form 10-K.
We have reclassified certain amounts from prior year's data to conform to
the 2000 presentation.
2. Dividend
On May 1, 2000, we declared and paid a dividend in the amount of
$10,700,000 to Bell Atlantic.
3. Debt
On March 30, 2000, we issued a medium term note for $30,000,000 to an
affiliated company, Bell Atlantic NSI Holdings, Inc. The note carries a floating
interest rate with an initial rate of 6.40%, which will be reset each quarter.
The note matures on March 30, 2003.
4. Recent Accounting Pronouncements
FASB Accounting Standard - Derivatives and Hedging Activities
In June 1998, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for
Derivative Instruments and Hedging Activities." This statement requires that all
derivatives be measured at fair value and recognized as either assets or
liabilities on our balance sheet. Changes in the fair values of derivative
instruments will be recognized in either earnings or comprehensive income,
depending on the designated use and effectiveness of the instruments. The FASB
amended this pronouncement in June 1999 to defer the effective date of SFAS No.
133 for one year. We must adopt SFAS No. 133 no later than January 1, 2001.
On March 3, 2000, the FASB issued a Proposed SFAS "Accounting for Certain
Derivative Instruments and Certain Hedging Activities," which would amend SFAS
No. 133. The proposed amendments address certain implementation issues and
relate to such matters as the normal purchases and normal sales exception, the
definition of interest rate risk, hedging recognized
foreign-currency-denominated debt instruments, and intercompany derivatives.
The adoption of SFAS No. 133 will have no material effect on our results of
operations or financial condition because we currently do not enter into the use
of derivative instruments or participate in hedging activities.
FASB Interpretation - Stock Compensation
In March 2000, the FASB issued Interpretation No. 44, "Accounting for
Certain Transactions Involving Stock Compensation." Interpretation No. 44 was
issued in order to clarify certain issues arising from Accounting Principles
Board (APB) Opinion No. 25 "Accounting for Stock Issued to Employees," which was
previously issued in October 1972. Interpretation No. 44 is effective July 1,
2000, but certain conclusions cover specific events that occur either after
December 15, 1998 or January 12, 2000.
The main issues addressed by Interpretation No. 44 are: (a) the definition
of an employee for purposes of applying APB Opinion No. 25, (b) the criteria for
determining whether a plan qualifies as a noncompensatory plan, (c) the
accounting consequence of various modifications to the terms of a previously
fixed stock option or award, and (d) the accounting for an exchange of stock
compensation awards in a business combination.
We do not expect that Interpretation No. 44 will have a material impact on
our results of operations or financial position.
5
<PAGE>
Bell Atlantic - Delaware, Inc.
SEC Staff Accounting Bulletin - Revenue Recognition
In December 1999, the SEC issued Staff Accounting Bulletin (SAB) No. 101,
"Revenue Recognition in Financial Statements," which currently must be adopted
by June 30, 2000. SAB No. 101 provides additional guidance on revenue
recognition, as well as criteria from when revenue is generally realized and
earned, and also requires the deferral of incremental direct selling costs. We
are currently assessing the impact of SAB No. 101 on our results of operations
and financial position.
5. Shareowner's Investment
Reinvested Accumulated Other
(Dollars in Thousands) Common Stock Earnings Comprehensive Loss
- --------------------------------------------------------------------------------
Balance at December 31, 1999 $118,442 $89,493 $(55)
Net income 12,794
Dividend paid to Bell Atlantic (22,600)
-------------------------------------------------
Balance at March 31, 2000 $118,442 $79,687 $(55)
=================================================
Net income and comprehensive income were the same for the three months
ended March 31, 2000 and 1999.
6. Commitments and Contingencies
Various legal actions and regulatory proceedings are pending to which we
are a party. We have established reserves for specific liabilities in connection
with regulatory and legal matters that we currently deem to be probable and
estimable. We do not expect that the ultimate resolution of pending regulatory
and legal matters in future periods will have a material effect on our financial
condition, but it could have a material effect on our results of operations.
7. Proposed Bell Atlantic - GTE Merger
Bell Atlantic and GTE Corporation (GTE) have announced a proposed merger of
equals under a definitive merger agreement dated as of July 27, 1998. Under the
terms of the agreement, GTE shareholders will receive 1.22 shares of Bell
Atlantic common stock for each share of GTE common stock that they own. Bell
Atlantic shareholders will continue to own their existing shares after the
merger.
It is expected that the merger will qualify as a pooling of interests,
which means that for accounting and financial reporting purposes the companies
will be treated as if they had always been combined. At annual meetings held in
May 1999, the shareholders of each company approved the merger. The completion
of the merger is subject to a number of conditions, including certain regulatory
approvals (all of which have been obtained except that of the Federal
Communications Commission) and receipt of opinions that the merger will be
tax-free.
The companies are targeting completion of the merger in the second quarter
of 2000. In April 2000, Bell Atlantic announced that the combined company will
be called Verizon Communications.
6
<PAGE>
Bell Atlantic - Delaware, Inc.
Item 2. Management's Discussion and Analysis of Results of Operations
(Abbreviated pursuant to General Instruction H(2).)
This discussion should be read in conjunction with the Financial Statements
and Notes to Financial Statements.
RESULTS OF OPERATIONS
- ---------------------
We reported net income of $12,794,000 for the three month period ended
March 31, 2000, compared to net income of $13,612,000 for the same period in
1999.
Our results for 1999 were affected by special items. The special items were
comprised of our allocated share of charges from Bell Atlantic Network Services,
Inc. (NSI).
Merger-related Costs
In connection with the Bell Atlantic-NYNEX merger, which was completed in
August 1997, we recorded pre-tax transition and integration costs of $159,000 in
the first quarter of 1999. These costs were recorded in Other Operating
Expenses.
Transition and integration costs consisted of our proportionate share of
costs associated with integrating the operations of Bell Atlantic and NYNEX,
such as systems modifications costs and advertising and branding costs.
Transition and integration costs were expensed as incurred.
OPERATING REVENUE STATISTICS
- ----------------------------
2000 1999 % Change
- ----------------------------------------------------------------- --------------
At March 31,
Access Lines in Service (in thousands)
Residence 375 367 2.2%
Business 218 215 1.4
Public 6 6 ---
---------------------
599 588 1.9
=====================
Three Months Ended March 31,
Access Minutes of Use (in millions) 635 631 .6
=====================
OPERATING REVENUES
- ------------------
(Dollars in Thousands)
Three Months Ended March 31,
-----------------------------
2000 1999
- --------------------------------------------------------------------------------
Local services $43,476 $41,277
Network access services 21,627 18,994
Long distance services 4,553 5,540
Ancillary services 7,241 6,110
-----------------------------
Total $76,897 $71,921
=============================
7
<PAGE>
Bell Atlantic - Delaware, Inc.
LOCAL SERVICES
2000 - 1999 Increase
- --------------------------------------------------------------------------------
First Quarter $2,199 5.3%
- --------------------------------------------------------------------------------
Local service revenues are earned from the provision of local exchange,
local private line, public telephone (pay phone) and value-added services.
Value-added services are a family of services that expand the utilization of the
network. These services include products such as Caller ID, Call Waiting and
Return Call.
Local service revenues increased in first quarter of 2000 primarily due to
higher usage of our network facilities. Revenue growth was generated, in part,
by an increase in access lines in service of 1.9% from March 31, 1999. Local
service revenue growth in the first quarter of 2000 also reflects higher
customer demand and usage of our value-added services, as well as our data
transport and digital services and national directory assistance services.
NETWORK ACCESS SERVICES
2000 - 1999 Increase
- --------------------------------------------------------------------------------
First Quarter $2,633 13.9%
- --------------------------------------------------------------------------------
Network access revenues are earned from end-user subscribers and from long
distance and other competing carriers who use our local exchange facilities to
provide services to their customers. Switched access revenues are derived from
fixed and usage-based charges paid by carriers for access to our local network.
Special access revenues originate from carriers and end-users that buy dedicated
local exchange capacity to support their private networks. End-user access
revenues are earned from our customers and from resellers who purchase dial-tone
services.
Network access revenue growth in the first quarter of 2000 was mainly
attributable to increased demand for special access services, reflecting a
greater utilization of our network, and volume growth resulting from continuing
expansion of the business market, particularly for high capacity data services.
Higher customer demand was also reflected by growth in access minutes of use of
.6% from the same period in 1999.
In addition, network access revenues included higher revenues received from
customers for the recovery of local number portability (LNP) costs. LNP allows
customers to change local exchange carriers while maintaining their existing
telephone numbers. In December 1998, the Federal Communications Commission (FCC)
issued an order permitting us to recover costs incurred for LNP in the form of
monthly end-user charges for a five-year period beginning in March 1999.
Revenue growth was partially offset by price reductions associated with a
federal price cap filing and other regulatory decisions. The FCC regulates the
rates that we charge long distance carriers and end-user subscribers for
interstate access services. We are required to file new access rates with the
FCC each year. In July 1999, we implemented interstate price decreases of
approximately $500,000 on an annual basis in connection with the FCC's Price Cap
Plan. The rates included in our July 1999 filing will be in effect through June
2000. Interstate price decreases were $600,000 on an annual basis for the period
July 1998 through June 1999. The rates include amounts necessary to recover our
contribution to the FCC's universal service fund which are subject to adjustment
every quarter due to potential increases or decreases in our contribution to the
fund. Our contributions to the universal service fund are included in Other
Operating Expenses. As a result of a U.S. Court of Appeals decision last year,
our contributions to the universal service fund were reduced by approximately
$1,200,000 annually beginning November 1, 1999, and our interstate access rates
were reduced accordingly because we will no longer have to recover these
contributions in our rates.
8
<PAGE>
Bell Atlantic - Delaware, Inc.
LONG DISTANCE SERVICES
2000 - 1999 (Decrease)
- --------------------------------------------------------------------------------
First Quarter $(987) (17.8)%
- --------------------------------------------------------------------------------
Long distance revenues are earned primarily from calls made to points
outside a customer's local calling area, but within our service area (intraLATA
toll). IntraLATA toll calls originate and terminate within the same LATA, but
generally cover a greater distance than a local call. These services are
regulated by the Delaware Public Service Commission (DPSC) except where they
cross state lines. Other long distance services that we provide include 800
services and Wide Area Telephone Service (WATS).
The decline in long distance revenues in the first quarter of 2000 was
principally caused by the competitive effects of presubscription, which enables
customers to make intraLATA toll calls using a competing carrier without having
to dial an access code. The negative effect of presubscription on long distance
revenues was partially mitigated by increased network access services for usage
of our network by alternative service providers. In response to presubscription,
we have implemented customer win-back and retention initiatives that include
toll calling discount packages and product bundling offers. These revenue
reductions were partially offset by additional revenues generated from higher
calling volumes.
ANCILLARY SERVICES
2000 - 1999 Increase
- --------------------------------------------------------------------------------
First Quarter $1,131 18.5%
- --------------------------------------------------------------------------------
Our ancillary services include such services as billing and collections for
long distance carriers and affiliates, facilities rentals to affiliates and
nonaffiliates, collocation for competitive local exchange carriers, usage of
separately priced (unbundled) components of our network by competitive local
exchange carriers, voice messaging, customer premises equipment (CPE) and wiring
and maintenance services, and sales of materials and supplies to affiliates.
Ancillary services revenues also include fees paid by customers for
nonpublication of telephone numbers and multiple white page listings and fees
paid by an affiliate for usage of our directory listings.
Ancillary services revenues increased in the first quarter of 2000 as a
result of higher payments received from competitive local exchange carriers for
the purchase of unbundled network elements and for interconnection of their
networks with our network. Revenue growth was also attributable to higher demand
for voice messaging services.
9
<PAGE>
Bell Atlantic - Delaware, Inc.
OPERATING EXPENSES
- ------------------
(Dollars in Thousands)
Three Months Ended March 31,
-----------------------------
2000 1999
- --------------------------------------------------------------------------------
Employee costs, including benefits and taxes $11,278 $10,548
Depreciation and amortization 17,655 16,155
Other operating expenses 24,541 20,188
----------------------------
Total $53,474 $46,891
============================
EMPLOYEE COSTS
2000 - 1999 Increase
- --------------------------------------------------------------------------------
First Quarter $730 6.9%
- --------------------------------------------------------------------------------
Employee costs consist of salaries, wages and other employee compensation,
employee benefits and payroll taxes paid directly by us. Similar costs incurred
by employees of NSI, who provide centralized services on a contract basis, are
allocated to us and are included in Other Operating Expenses.
Employee costs increased in the first quarter of 2000 primarily as a result
of higher work force levels, annual salary and wage increases for management and
associate employees and higher overtime payments.
These increases were partially offset by lower pension and benefit costs.
The decline in pension and benefit costs was due to favorable pension plan
investment returns and changes in actuarial assumptions. These factors were
partially offset by changes in certain plan provisions, including a previously
reported amendment to our management cash balance plan and a special lump sum
pension payment to management and associate retirees.
DEPRECIATION AND AMORTIZATION
2000 - 1999 Increase
- --------------------------------------------------------------------------------
First Quarter $1,500 9.3%
- --------------------------------------------------------------------------------
Depreciation and amortization expense increased in the first quarter of
2000 over the same period in 1999 principally as a result of growth in
depreciable telephone plant and changes in the mix of plant assets. The growth
in telephone plant was largely attributable to increased capital expenditures
for software and hardware to support the expansion of our network.
OTHER OPERATING EXPENSES
2000 - 1999 Increase
- --------------------------------------------------------------------------------
First Quarter $4,353 21.6%
- --------------------------------------------------------------------------------
Other operating expenses consist of contract services including centralized
services expenses allocated from NSI, rent, network software costs, operating
taxes other than income, the provision for uncollectible accounts receivable,
and other costs.
The increase in other operating expenses in the first quarter of 2000 was
largely attributable to higher interconnection and related costs associated with
reciprocal compensation arrangements with competitive local exchange and other
carriers to terminate calls on their networks. Higher costs for contracted
services and the effect of additional costs billed to us by an affiliate also
contributed to the increase in other operating expenses, but to a lesser extent.
These increases were partially offset by a reduction in centralized
services expenses allocated from NSI, partially as a result of lower employee
costs incurred by NSI.
10
<PAGE>
Bell Atlantic - Delaware, Inc.
OTHER INCOME, NET
2000 - 1999 Increase
- --------------------------------------------------------------------------------
First Quarter $290 ---%
- --------------------------------------------------------------------------------
The change in other income, net, was primarily attributable to additional
interest income associated with the settlement of a tax-related matter in the
first quarter of 2000.
INTEREST EXPENSE
2000 - 1999 Increase
- --------------------------------------------------------------------------------
First Quarter $82 3.8%
- --------------------------------------------------------------------------------
Interest expense includes costs associated with borrowings and capital
leases, net of interest capitalized as a cost of acquiring or constructing plant
assets.
Interest expense increased in the first quarter of 2000 over the same
period in 1999 primarily due to higher levels of average short-term debt with an
affiliate and higher interest rates associated with this debt. These factors
were partially offset by higher capitalized interest costs resulting from higher
levels of average telephone plant under construction.
EFFECTIVE INCOME TAX RATES
Three Months Ended March 31,
- --------------------------------------------------------------------------------
2000 40.6%
- --------------------------------------------------------------------------------
1999 40.7%
- --------------------------------------------------------------------------------
The effective income tax rate is the provision for income taxes as a
percentage of income before the provision for income taxes. Our effective income
tax rate was lower in the first quarter of 2000 principally due to non-recurring
adjustments recorded in 1999.
FINANCIAL CONDITION
- -------------------
We use the net cash generated from operations and from external financing
to fund capital expenditures for network expansion and modernization, and to pay
dividends. While current liabilities exceeded current assets at both March 31,
2000 and 1999 and December 31, 1999, our sources of funds, primarily from
operations and, to the extent necessary, from readily available financing
arrangements with an affiliate, are sufficient to meet ongoing operating
requirements. Management expects that presently foreseeable capital requirements
will continue to be financed primarily through internally generated funds.
Additional long-term debt may be needed to fund development activities or to
maintain our capital structure to ensure financial flexibility.
As of March 31, 2000, we had $ 34,787,000 of an unused line of credit with
an affiliate, Bell Atlantic Network Funding Corporation. Our debt securities
continue to be accorded high ratings by primary rating agencies. After the
announcement of the Bell Atlantic - GTE merger, the rating agencies placed our
ratings under review for potential downgrade.
Our debt ratio was 41.7% at March 31, 2000, compared to 40.3% at March 31,
1999 and 39.5% at December 31, 1999.
On May 1, 2000, we declared and paid a dividend in the amount of
$10,700,000 to Bell Atlantic.
11
<PAGE>
Bell Atlantic - Delaware, Inc.
OTHER MATTERS
- -------------
FCC Regulation and Interstate Rates
Price Caps
As previously reported, in May 1999, the U. S. Court of Appeals reversed
the FCC order that adopted the current 6.5% productivity factor applied to
interstate access rates, but granted the FCC a stay of its order until April 1,
2000. The Court has further extended the stay until June 30, 2000 to allow the
FCC time to consider an industry proposal to further restructure access rates.
Recent Accounting Pronouncements
FASB Accounting Standard - Derivatives and Hedging Activities
In June 1998, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for
Derivative Instruments and Hedging Activities." This statement requires that all
derivatives be measured at fair value and recognized as either assets or
liabilities on our balance sheet. Changes in the fair values of the derivative
instruments will be recognized in either earnings or comprehensive income,
depending on the designated use and effectiveness of the instruments. The FASB
amended this pronouncement in June 1999 to defer the effective date of SFAS No.
133 for one year. We must adopt SFAS No. 133 no later than January 1, 2001.
On March 3, 2000, the FASB issued a Proposed SFAS "Accounting for Certain
Derivative Instruments and Certain Hedging Activities," which would amend SFAS
No. 133. The proposed amendments address certain implementation issues and
relate to such matters as the normal purchases and normal sales exception, the
definition of interest rate risk, hedging recognized
foreign-currency-denominated debt instruments, and intercompany derivatives.
The adoption of SFAS No. 133 will have no material effect on our results of
operations or financial condition because we currently do not enter into the use
of derivative instruments or participate in hedging activities.
FASB Interpretation - Stock Compensation
In March 2000, the FASB issued Interpretation No. 44, "Accounting for
Certain Transactions Involving Stock Compensation." Interpretation No. 44 was
issued in order to clarify certain issues arising from Accounting Principles
Board (APB) Opinion No. 25 "Accounting for Stock Issued to Employees," which was
previously issued in October 1972. Interpretation No. 44 is effective July 1,
2000, but certain conclusions cover specific events that occur either after
December 15, 1998 or January 12, 2000.
The main issues addressed by Interpretation No. 44 are: (a) the definition
of an employee for purposes of applying APB Opinion No. 25, (b) the criteria for
determining whether a plan qualifies as a noncompensatory plan, (c) the
accounting consequence of various modifications to the terms of a previously
fixed stock option or award, and (d) the accounting for an exchange of stock
compensation awards in a business combination.
We do not expect that Interpretation No. 44 will have a material impact on
our results of operations or financial position.
SEC Staff Accounting Bulletin - Revenue Recognition
In December 1999, the Securities and Exchange Commission (SEC) issued Staff
Accounting Bulletin (SAB) No. 101, "Revenue Recognition in Financial
Statements," which currently must be adopted by June 30, 2000. SAB No. 101
provides additional guidance on revenue recognition, as well as criteria from
when revenue is generally realized and earned, and also requires the deferral of
incremental direct selling costs. We are currently assessing the impact of SAB
No. 101 on our results of operations and financial position.
12
<PAGE>
Bell Atlantic - Delaware, Inc.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
There were no proceedings reportable under this Item.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit Number
27 Financial Data Schedule.
(b) There were no Current Reports on Form 8-K filed during the quarter
ended March 31, 2000.
13
<PAGE>
Bell Atlantic - Delaware, Inc.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
BELL ATLANTIC - DELAWARE, INC.
Date: May 12, 2000 By /s/ Edwin F. Hall
---------------------------
Edwin F. Hall
Controller
UNLESS OTHERWISE INDICATED, ALL INFORMATION IS AS OF MAY 10, 2000.
14
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED STATEMENT OF INCOME FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND THE
CONDENSED BALANCE SHEET AT MARCH 31, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 3,200
<SECURITIES> 0
<RECEIVABLES> 58,648
<ALLOWANCES> 5,449
<INVENTORY> 1,146
<CURRENT-ASSETS> 68,888
<PP&E> 952,940
<DEPRECIATION> 527,935
<TOTAL-ASSETS> 509,496
<CURRENT-LIABILITIES> 104,588
<BONDS> 86,326
0
0
<COMMON> 118,442
<OTHER-SE> 79,632
<TOTAL-LIABILITY-AND-EQUITY> 509,496
<SALES> 0
<TOTAL-REVENUES> 76,897
<CGS> 0
<TOTAL-COSTS> 53,474
<OTHER-EXPENSES> 0
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<INTEREST-EXPENSE> 2,236
<INCOME-PRETAX> 21,544
<INCOME-TAX> 8,750
<INCOME-CONTINUING> 12,794
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,794
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
