UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
F O R M 10 - Q
X Quarterly Report Under Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the period ended March 31, 1994
..............
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: 1-2755
......
GTE Corporation
......................................................
(Exact name of registrant as specified in its charter)
New York 13-1678633
..............................................................................
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Stamford Forum, Stamford, Conn. 06904
.........................................................
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 203-965-2000
............
..............................................................................
Former name, former address and former fiscal year, if changed since last
report
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 .
GTE had 956,672,420 shares of $.05 par value common stock outstanding
at April 30, 1994.
PART I. FINANCIAL INFORMATION
GTE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended
March 31
1994 1993
(In Millions)
REVENUES AND SALES $4,746 $4,826
COSTS AND OPERATING EXPENSES 3,628 3,725
Operating income 1,118 1,101
OTHER (INCOME) DEDUCTIONS:
Interest expense 278 338
Allowance for funds used and interest
capitalized during construction (7) (8)
Interest income (11) (16)
Other - net 42 53
302 367
Income before income taxes 816 734
INCOME TAX PROVISION 312 274
Net income 504 460
PREFERRED STOCK DIVIDENDS OF PARENT 4 4
Net income applicable to
common stock $ 500 $ 456
EARNINGS PER COMMON SHARE $ .52 $ .48
DIVIDENDS DECLARED PER COMMON SHARE $ .47 $ .455
AVERAGE COMMON SHARES 954 941
The accompanying notes are an integral part of these statements.
- 1 -
GTE CORPORATION AND SUBSIDIARIES
CONDENSED SUMMARY OF CONSOLIDATED RESULTS
Three Months Ended
March 31
1994 1993
(In Millions)
REVENUES AND SALES:
Telephone Operations $ 3,865 $ 3,915
Telecommunications Products and Services 881 911
Total revenues and sales $ 4,746 $ 4,826
OPERATING INCOME:
Telephone Operations $ 1,025 $ 1,041
Telecommunications Products and Services 93 60
Operating income 1,118 1,101
OTHER DEDUCTIONS:
Interest expense - net 260 314
Other - net 42 53
Income before income taxes 816 734
Income tax provision 312 274
Net income 504 460
Preferred stock dividends of parent 4 4
Net income applicable to
common stock $ 500 $ 456
The accompanying notes are an integral part of this summary.
- 2 -
GTE CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Consolidated
Consolidated net income for the first quarter of 1994 was $504 million, or
$.52 per share, compared with $460 million, or $.48 per share, in the first
quarter of last year, representing an 8 percent increase in earnings per
share.
Operating income increased to $1.12 billion compared with $1.10 billion
reported in the first quarter of last year which included approximately $28
million of operating income attributable to non-strategic telephone properties
sold at the end of 1993. Excluding the 1993 first quarter contribution of
these properties, operating income increased by 4 percent.
Consolidated revenues and sales for the first quarter totaled $4.75 billion
compared with $4.83 billion in the first quarter of last year which included
$86 million of revenues from telephone properties sold. Excluding the
revenues from these properties, consolidated revenues and sales were
essentially unchanged. Substantially higher mobile-cellular revenues and
increased volumes at Telephone Operations were offset by lower government-
communications sales, primarily resulting from the completion late last year
of the Mobile Subscriber Equipment contract, and competitive domestic
telephone price reductions.
Telephone Operations
Telephone revenues for the first quarter of 1994 amounted to $3.87 billion,
compared with $3.92 billion a year ago. Excluding the impact of the non-
strategic properties sold, revenues would have increased slightly compared
with $3.83 billion in the first quarter of 1993. Increases in unit volumes,
in both domestic and international operations, were largely offset by more
competitive domestic price reductions including lower access tariffs charged
to long-distance companies. Minutes-of-use of GTE's domestic local-exchange
network for long-distance calling grew at a rate of 6.6 percent, while total
access lines increased 4.3 percent over last year.
Effective January 1, 1994, pursuant to its agreement with the California
Public Utilities Commission and its normal annual price cap filing, GTE
California, a wholly-owned subsidiary, reduced its rates by about $100 million
on an annual basis.
Operating income for the first quarter of 1994 was $1.02 billion, slightly
higher than the first quarter last year, excluding the results of the
properties sold. This improvement reflects increased revenues and the
favorable effects of on-going cost-reduction programs which were offset, in
part, by higher depreciation.
During the first quarter of 1994 GTE's Telephone Operations began
implementation of its re-engineering plan. This plan will allow Telephone
Operations to continue to respond aggressively to competitive and regulatory
- 3 -
GTE CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (Continued)
developments through reduced costs, improved service quality, competitive
prices and new product offerings. Moreover, implementation of this program
over the next three years will position GTE to accelerate delivery of a full
array of voice, video and data services.
As of March 31, 1994, access lines served by GTE's domestic and international
telephone companies operating in 33 states, Canada, the Dominican Republic and
Venezuela totaled 22.3 million.
Telecommunications Products and Services
Revenues and sales from Telecommunications Products and Services, which
includes mobile-cellular, government systems, information services, yellow-
pages directory advertising and satellite and aircraft-passenger
communications services, decreased to $881 million for the quarter, compared
with $911 million for the same quarter last year. This 3 percent decline in
revenue reflects the completion late last year of the eight-year Mobile
Subscriber Equipment contract which more than offset the 41 percent increase
in revenues from the mobile-cellular business.
Operating income in the first quarter of 1994 rose to $93 million, compared
with $60 million in the first quarter of last year, despite the revenue
decline. This increase reflects improved performance at the mobile-cellular
business, as well as reduced depreciation primarily related to the reduction
in the carrying value of satellite communication assets recorded at the end of
1993.
Cellular customer growth continued at a high level during the first quarter
with a total of 143,000 new customers added. This brings total customers
served, including property sales and purchases, to 1,718,000, an increase of
49 percent over the first quarter of last year. During the quarter, service
revenues per subscriber averaged $68 per month, compared with $69 per month in
the preceding quarter and $70 per month in the first quarter of last year.
The current average reflects the continued growth of casual users in the
subscriber base. Cellular service revenues, which exclude equipment sales,
were $335 million for the first quarter of 1994, 41 percent higher than the
same period last year. Operating cash flows, representing operating income
before depreciation and amortization, reached $113 million in the first
quarter, a 45 percent improvement over the first quarter of 1993.
As of March 31, 1994, GTE's U.S. mobile-cellular operations served a
population of some 53 million "POPs" (total U.S. population served times GTE's
percentage interest in the market). Outside the United States, GTE operates
mobile-cellular networks through international subsidiaries in Canada, the
Dominican Republic and Venezuela, where an additional 210,000 customers are
served. The largest market currently is Canada, where the "POPs" served
totaled 2 million as of March 31, 1994. In the second quarter of 1994, a GTE-
led consortium will begin cellular operations serving an area with a
population of 22 million in the northern and southern regions of Argentina.
GTE has a 23 percent ownership stake in this consortium.
- 4 -
GTE CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (Continued)
Other Deductions
Net interest expense for the first quarter of 1994 decreased 17 percent to
$260 million compared to $314 million in the first quarter of last year. This
decrease reflects a reduction of more than $2 billion in debt levels during
1993.
Other-net for the first quarter of 1994 includes a $29 million pre-tax gain on
the sale of a non-strategic cellular property. This gain was largely offset
by a $10 million pre-tax charge for costs associated with the early redemption
of preferred stock and higher minority interests.
CAPITAL RESOURCES AND LIQUIDITY
Cash from operations for the first three months of 1994 totaled $1.21 billion
compared to $1.27 billion for the first quarter of 1993. The slight decline
reflects the payment of income taxes related to the completion of the Mobile
Subscriber Equipment contract which, for income tax purposes, was accounted
for using the completed contract method and gains on non-strategic properties
sold in late-1993.
Cash used in investing activities for the first three months of 1994 totaled
$863 million, compared with $226 million provided from investing activities in
the first quarter of 1993. Cash provided from investing activities during the
first quarter of 1993 included proceeds of $1.02 billion from the sale of the
Electrical Products businesses.
For the first quarter of 1994, capital expenditures totaled $830 million
compared with $821 million in the same period last year. For the full year
1994, capital expenditures are expected to be approximately $4.3 billion,
approximately 10 percent more than in 1993. The majority of new investment is
being made in GTE's regulated telephone operations to meet the demands of
growth, modernize facilities and position GTE as a low-cost provider of high-
quality voice, data and video telecommunications services. Significant
investments are also being made in GTE's other businesses, such as cellular,
to increase capacity and continue to improve the quality of the network.
Cash used in financing activities for the first three months of 1994 totaled
$318 million, compared with $1.54 billion in the same period last year.
Financing activities in the first quarter of 1994 include the issuance of $1
billion of long-term debt related primarily to the refinancing of high-coupon
redemptions begun in 1993. In March 1994, GTE authorized the additional
redemption of its $2.475 No Par Preferred Stock aggregating $100 million.
Since the beginning of 1992, GTE has reduced total debt (and preferred stock)
by over $4.0 billion.
Dividends and the capital requirements for GTE's businesses should continue to
be funded largely with cash from operations and the funds generated from the
employee stock purchase and dividend reinvestment plans. Cash requirements to
begin implemention of the re-engineering plan at Telephone Operations were
minimal during the first quarter of 1994 and are expected to be largely offset
by cost savings during the remainder of the year. Pursuant to definitive
- - 5 -
GTE CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (Continued)
agreements entered into in 1993, GTE expects to complete, during the remainder
of 1994, the sale of non-strategic local-exchange telephone properties serving
over 400,000 access lines in nine states. The net proceeds from these
transactions will be used to further reduce debt.
GTE and its subsidiaries maintain strong, investment grade credit ratings
which should facilitate continued access to long-term credit markets and the
U.S. commercial paper market. Moreover, more than $4.6 billion of bank lines
of credit are available to back up commercial paper borrowings and for working
capital requirements.
- - 6 -
GTE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, December 31,
1994 1993
(In Millions)
ASSETS
CURRENT ASSETS:
Cash and temporary cash investments $ 352 $ 322
Receivables, less allowances
of $214 and $231 million 3,617 3,900
Inventories 686 659
Assets held for sale and other (Note 2) 1,081 1,067
Total Current Assets 5,736 5,948
PROPERTY, PLANT AND EQUIPMENT, at cost:
Telephone subsidiaries 43,369 43,099
Accumulated depreciation (17,087) (16,737)
26,282 26,362
Other subsidiaries 4,269 4,160
Accumulated depreciation (1,881) (1,802)
2,388 2,358
Total Property, Plant and Equipment, net 28,670 28,720
INVESTMENTS AND OTHER ASSETS:
Franchises, goodwill and other intangibles 2,108 2,102
Investments in unconsolidated companies 1,413 1,431
Deferred charges 2,515 2,462
Long-term receivables and other assets 911 912
Total Investments and Other Assets 6,947 6,907
Total Assets $41,353 $41,575
The accompanying notes are an integral part of these statements.
- 7 -
GTE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, December 31,
1994 1993
(In Millions)
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term obligations, including
current maturities $ 2,679 $ 1,644
Accounts and payrolls payable 1,770 1,968
Accrued taxes 950 1,108
Accrued restructuring costs 527 540
Dividends payable 468 469
Other 2,229 2,204
Total Current Liabilities 8,623 7,933
LONG-TERM DEBT 12,004 13,019
RESERVES AND DEFERRED CREDITS:
Deferred income taxes 2,906 2,807
Employee benefit obligations 4,695 4,667
Other 2,262 2,294
Total Reserves and Deferred Credits 9,863 9,768
MINORITY INTERESTS IN EQUITY OF SUBSIDIARIES 1,117 1,106
PREFERRED STOCK, subject to mandatory redemption 123 156
SHAREHOLDERS' EQUITY:
Preferred stock 11 111
Common stock - shares issued 954,613,186
and 951,761,892 48 48
Amounts paid in, in excess of par value 7,375 7,309
Reinvested earnings 2,828 2,769
Guaranteed ESOP obligation (639) (644)
Total Shareholders' Equity 9,623 9,593
Total Liabilities and Shareholders' Equity $41,353 $41,575
The accompanying notes are an integral part of these statements.
- 8 -
GTE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended
March 31
1994 1993
(In Millions)
Cash Flows from Operations:
Net income $ 504 $ 460
Adjustments to reconcile net income to
net cash from operations:
Depreciation and amortization 837 834
Change in current assets and current
liabilities, excluding the effects of
acquisitions and dispositions (226) (14)
Deferred income taxes and other - net 96 (11)
Net cash provided from operations 1,211 1,269
Cash Flows from Investing:
Capital expenditures (830) (821)
Proceeds from sales of businesses 58 1,021
Other - net (91) 26
Net cash provided from (used in) investing (863) 226
Cash Flows from Financing:
GTE common stock issued 138 127
Long-term debt issued 990 57
Long-term debt and preferred stock retirements (1,534) (1,238)
Dividends to shareholders of parent (449) (428)
Increase (decrease) in short-term obligations,
excluding current maturities 528 (60)
Other - net 9 3
Net cash used in financing (318) (1,539)
Increase (decrease) in cash and temporary
cash investments 30 (44)
Cash and temporary cash investments:
Beginning of period 322 354
End of period $ 352 $ 310
Cash paid during the period for:
Interest $ 200 $ 300
Income taxes 420 282
The accompanying notes are an integral part of these statements.
- 9 -
GTE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(1) BASIS OF PRESENTATION:
The Condensed Consolidated Financial Statements included herein have
been prepared by the Company, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations. However, in the opinion of management of the Company, the
Condensed Consolidated Financial Statements include all adjustments,
which consist only of normal recurring accruals, necessary to present
fairly the financial information for such periods. These Condensed
Consolidated Financial Statements should be read in conjunction with
the consolidated financial statements and the notes thereto included in
the Company's 1993 Annual Report on Form 10-K.
(2) SALE OF TELEPHONE PROPERTIES:
In December 1992, GTE announced a plan to pursue the sale or trade of a
small percentage of local-exchange telephone properties (representing
less than 5% of its U.S. access lines) in markets that may be of greater
long-term strategic value to other telephone service providers. As part
of this program, during the fourth quarter of 1993, GTE sold local-
exchange telephone properties serving 530,000 access lines in eight
states in return for 90,000 access lines in Illinois, Indiana and
Michigan and $1 billion in cash. The net proceeds from these sales were
used to reduce debt.
The Condensed Summary of Consolidated Results and the Condensed
Consolidated Statement of Income for 1993 include the operations of those
properties sold at the end of 1993. For comparability, the table below
includes pro forma adjustments to remove the operating results of those
properties, including interest, from the first quarter 1993 results.
Three Months Ended
March 31
1994 1993
(In Millions)
REVENUES AND SALES:
Telephone Operations $3,865 $3,829
Telecommunications Products and Services 881 911
Total revenues and sales $4,746 $4,740
OPERATING INCOME:
Telephone Operations $1,025 $1,013
Telecommunications Products and Services 93 60
Total operating income $1,118 $1,073
NET INCOME APPLICABLE TO COMMON STOCK $ 500 $ 448
EARNINGS PER COMMON SHARE $ .52 $ .48
- - 10 -
GTE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
GTE has also entered into definitive agreements for the sale of
additional non-strategic local-exchange telephone properties serving over
400,000 access lines in nine states. These transactions are subject to
various government and regulatory approvals. The transfers of ownership
are expected to occur on a state-by-state basis later in 1994. The net
proceeds from each of these transactions, which are expected to exceed
the net book value of the properties to be sold, will be used to further
reduce debt.
(3) INVESTMENT IN ARGENTINA:
In early 1994, a GTE-led international consortium, Compania de Telefonos
del Interior ("CTI") was successful in its bid for two cellular licenses
to provide cellular services in Argentina. GTE, as operator, has a
leading 23 percent ownership interest in CTI, and its partners include
AT&T Network Systems, Trust Company of the West and three other
companies. CTI has an initial two year exclusivity to provide cellular
services in the north and south interior regions of Argentina. The two
contracts constitute one of the largest cellular license awards in South
America to date, involving an area with a population of 22 million.
The consortium will invest, through CTI, up to $700 million over the next
two to three years.
GTE's investment is being accounted for on the equity method. Accordingly,
GTE's investment is included in the accompanying condensed consolidated
balance sheet under the caption "Investments in unconsolidated companies".
- 11 -
PART II. OTHER INFORMATION
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) Annual Meeting - April 20, 1994
(b) Proxies for the meeting were solicited pursuant to Regulation
14A. There was no solicitation in opposition to management's
nominees as listed in the proxy statement. All of
management's nominees as listed in the proxy statement were
elected, the vote on said proposal being as follows:
Shares Voted
Directors Shares For Shares Withheld
James R. Barker 745,510,684 23,389,635
Richard W. Jones 745,062,064 23,838,255
Howard Sloan 743,797,632 25,102,687
James W. Walter 744,515,134 24,385,185
Charles Wohlstetter 740,173,115 28,727,204
(c) Other matters voted upon:
Proposal to Ratify the Appointment of Auditors
Shareholders ratified the appointment of Arthur Andersen & Co. to
conduct the annual audit of the financial statements of GTE
Corporation and its subsidiary companies for the year ending
December 31, 1994. The vote was:
FOR - 743,148,741 shares, or 97.90 percent of the shares voted.
AGAINST - 15,922,704 shares, or 2.10 percent of the shares voted.
ABSTENTIONS - 9,828,874 shares.
Proposal to Implement a System of Confidential Voting
Shareholders voted against a shareholder proposal requiring the
implementation of a system of confidential voting whereby (a) all
proxies, ballots and voting tabulations that identify shareholders
shall be kept secret and (b) independent third parties shall
tabulate such votes. The vote was:
FOR - 263,207,797 shares, or 42.00 percent of the shares voted.
AGAINST - 363,525,076 shares, or 58.00 percent of the shares voted.
ABSTENTIONS - 14,548,493 shares.
BROKERS NON-VOTES - 127,498,447 shares.
- 12 -
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - (Continued)
Proposal to Establish a Committee to Develop Criteria for Military
Contracts
Shareholders voted against a shareholder proposal for the
establishment of a committee to develop criteria for military
contracts. The vote was:
FOR - 58,328,223 shares, or 9.40 percent of the shares voted.
AGAINST - 562,284,290 shares, or 90.60 percent of the shares voted.
ABSTENTIONS - 20,669,853 shares.
BROKERS NON-VOTES - 127,497,447 shares.
Proposal to Eliminate the Staggered Election of Directors
Shareholders voted against a shareholder proposal to eliminate the
staggered election of Directors. The vote was:
FOR - 181,769,379 shares, or 29.02 percent of the shares voted.
AGAINST - 444,484,540 shares, or 70.98 percent of the shares voted.
ABSTENTIONS - 15,023,727 shares.
BROKERS NON-VOTES - 127,502,167 shares.
Proposal for the Establishment of Criteria to Limit Executive
Officers' Compensation
Shareholders voted against a shareholder proposal for the Board of
Directors to establish criteria to limit executive officers'
compensation. The vote was:
FOR - 138,264,195 shares, or 22.15 percent of the shares voted.
AGAINST - 485,978,618 shares, or 77.85 percent of the shares voted.
ABSTENTIONS - 17,037,143 shares.
BROKERS NON-VOTES - 127,499,857 shares.
- 13 -
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - (Continued)
Proposal to Limit Executive Officers' Pay Increases
Shareholders voted against a shareholder proposal to limit
executive officers' pay increases. The vote was:
FOR - 139,139,823 shares, or 22.28 percent of the shares voted.
AGAINST - 485,448,507 shares, or 77.72 percent of the shares voted.
ABSTENTIONS - 16,693,036 shares.
BROKERS NON-VOTES - 127,498,447 shares.
Proposal to Request a Report of the Board of Directors on the
Coalition for Environmentally Responsible Economies ("CERES")
Principles
Shareholders voted against a shareholder proposal to request a
report of GTE's Board of Directors on the CERES Principles. The
vote was:
FOR - 80,647,557 shares, or 13.32 percent of the shares voted.
AGAINST - 524,734,606 shares, or 86.68 percent of the shares voted.
ABSTENTIONS - 35,900,203 shares.
BROKERS NON-VOTES - 127,497,447 shares.
Proposal to Request a Report of the Board of Directors Regarding
Equal Employment Opportunity ("EEO") and Affirmative Action
Policies and Programs
Shareholders voted against a shareholder proposal to request a
report of GTE's Board of Directors regarding EEO and Affirmative
Action policies and programs. The vote was:
FOR - 87,199,637 shares, or 14.41 percent of the shares voted.
AGAINST - 517,908,009 shares, or 85.59 percent of the shares voted.
ABSTENTIONS - 36,175,120 shares.
BROKERS NON-VOTES - 127,497,047 shares.
- 14 -
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits required by Item 601 of Regulation S-K.
(11) Statement re: Calculation of earnings per common
share
(12) Statement re: Calculation of the ratio of earnings to
fixed charges
(b) GTE filed a report on Form 8-K dated January 13, 1994
under Item 5, "Other Events". No financial statements were
included with this report.
- 15 -
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.
GTE CORPORATION
.............................
(Registrant)
Date: May 12, 1994 By J. Michael Kelly
.............................
J. Michael Kelly
Senior Vice President-Finance
Date: May 12, 1994 By Marianne Drost
.............................
Marianne Drost
Secretary
- 16 -
EXHIBIT 11
GTE CORPORATION AND SUBSIDIARIES
CALCULATION OF EARNINGS PER COMMON SHARE
Three Months Ended
March 31
1994 1993
(In Thousands)
Net income applicable to common stock $499,610 $455,969
Adjustments to net income:
Add - Preferred dividend requirements on
dilutive convertible preferred stocks 158 181
Interest expense, net of tax effect, on
employees' stock plans 172 193
Total adjustments 330 374
Adjusted consolidated net income
applicable to common stock $499,940 $456,343
Average common shares 953,609 941,274
Adjustments to common shares:
Add - Dilutive convertible preferred stocks 605 687
Employees' stock and stock option plans 1,694 2,232
Total adjustments 2,299 2,919
Adjusted average common shares 955,908 944,193
EARNINGS PER COMMON SHARE:
Primary (1) $ .52 $ .48
Fully diluted (2) $ .52 $ .48
(1) Computed by dividing net income applicable to common stock for the
periods by the average common shares outstanding. Common stock
equivalents are excluded from this computation since they do not have
a 3% dilutive effect.
(2) Computed assuming conversion or exercise of those preferred stocks and
stock plans that would have a dilutive effect.
(a) Average common shares outstanding are adjusted to reflect the
shares which would be issued upon conversion of preferred stocks
using the "if converted" method. Equivalent common shares to be
added to average shares for the employees' stock plans, stock
ownership plan and stock options are computed according to the
"treasury stock" method.
(b) Net income for the periods is adjusted to reflect the increase in
income for the preferred dividends declared for the periods on the
convertible preferred stocks, and the interest accrued, net of tax
effect, on funds received from installments under the employees'
stock plans.
<TABLE>
Exhibit 12
GTE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF THE RATIO OF EARNINGS TO FIXED CHARGES
(Thousands of Dollars)
(Unaudited)
<CAPTION>
Three Months Ended Years Ended December 31
March 31, 1994 1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C> <C>
Net earnings available for fixed charges:
Income from continuing operations $ 503,899 $ 989,803 $1,787,035 $1,528,102 $1,622,261 $1,550,450
Add (deduct) -
Income taxes 312,000 567,747 966,589 662,860 697,963 719,854
Interest expense 278,329 1,298,234 1,475,670 1,574,746 1,510,909 1,282,691
Capitalized interest (net of
amortization) (1,116) (3,421) (4,931) (14,791) (18,316) (18,121)
Preferred stock dividends of subsidiaries 5,315 22,162 23,429 25,317 28,697 33,775
Additional income requirement on preferred
stock dividends of subsidiaries 3,285 12,739 12,671 11,006 12,357 15,676
Minority interests 31,142 112,335 112,425 103,626 83,471 79,554
Portion of rent expense representing
interest 34,898 153,058 196,533 210,698 206,959 199,408
1,167,752 3,152,657 4,569,421 4,101,564 4,144,301 3,863,287
Deduct - Minority interests (48,326) (236,944) (248,979) (247,284) (224,240) (211,816)
Adjusted earnings available
for fixed charges from
continuing operations $1,119,426 $2,915,713 $4,320,442 $3,854,280 $3,920,061 $3,651,471
Fixed Charges:
Interest charges $ 278,329 $1,298,234 $1,475,670 $1,574,746 $1,510,909 $1,282,691
Preferred dividends of subsidiaries 5,315 22,162 23,429 25,317 28,697 33,775
Additional income requirement on preferred
dividends of subsidiaries 3,285 12,739 12,671 11,006 12,357 15,676
Portion of rent expense representing
interest 34,898 153,058 196,533 210,698 206,959 199,408
321,827 1,486,193 1,708,303 1,821,767 1,758,922 1,531,550
Deduct - Minority interests (18,149) (78,421) (86,504) (89,479) (91,730) (80,287)
Adjusted fixed charges $ 303,678 $1,407,772 $1,621,799 $1,732,288 $1,667,192 $1,451,263
Ratio of Earnings to Fixed Charges - continuing
operations 3.69 2.07 2.66 2.22 2.35 2.52
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