GTE CORPORATION
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
[ X ] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 1-2755
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1993
GTE CORPORATION
SAVINGS, INVESTMENT & TAX-DEFERRAL PLAN FOR HOURLY EMPLOYEES
GTE CORPORATION
ONE STAMFORD FORUM
STAMFORD, CONNECTICUT 06904
GTE CORPORATION
SAVINGS, INVESTMENT & TAX-DEFERRAL PLAN FOR HOURLY EMPLOYEES
FINANCIAL STATEMENTS AS OF DECEMBER 31, 1993 AND DECEMBER 31, 1992
TOGETHER WITH
AUDITORS' REPORT
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Plan Administrator of the
GTE Corporation Savings, Investment & Tax-Deferral Plan for Hourly
Employees:
We have audited the accompanying statements of net assets available
for plan benefits of the GTE Corporation Savings, Investment &
Tax-Deferral Plan for Hourly Employees as of December 31, 1993 and 1992,
and the related statements of changes in net assets available for plan
benefits for the years then ended. These financial statements and the
schedules referred to below are the responsibility of the Plan
Administrator. Our responsibility is to express an opinion on these
financial statements and schedules 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 net assets available for plan
benefits of the GTE Corporation Savings, Investment & Tax-Deferral Plan
for Hourly Employees as of December 31, 1993 and 1992, and the changes
in its net assets available for plan benefits for the years then ended
in conformity with generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the
basic financial statements taken as a whole. The supplemental schedules
of investments and investment income in Master Trust are presented for
purposes of additional analysis and are not a required part of the basic
financial statements but are supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure
under the Employee Retirement Income Security Act of 1974. The
supplemental schedules have been subjected to the auditing procedures
applied in the audit of the basic financial statements and, in our
opinion, are fairly stated in all material respects in relation to the
basic financial statements taken as a whole.
ARTHUR ANDERSEN & CO.
Stamford, Connecticut
June 28, 1994
<TABLE>
GTE CORPORATION
SAVINGS, INVESTMENT & TAX-DEFERRAL PLAN FOR HOURLY EMPLOYEES
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
DECEMBER 31, 1993
<CAPTION>
GTE
Stock Equity Bond Income Loan
Fund Fund Fund Fund Fund Total
(Thousands of Dollars)
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments $46,997 $13,698 $1,422 $25,852 $4,246 $92,215
Receivables 1,968 79 15 141 - 2,203
NET ASSETS AVAILABLE FOR PLAN BENEFITS $48,965 $13,777 $1,437 $25,993 $4,246 $94,418
The accompanying notes are an integral part of this statement.
GTE CORPORATION
SAVINGS, INVESTMENT & TAX-DEFERRAL PLAN FOR HOURLY EMPLOYEES
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
DECEMBER 31, 1992
<CAPTION>
GTE
Stock Equity Bond Income Loan
Fund Fund Fund Fund Fund Total
(Thousands of Dollars)
<S>
ASSETS: <C> <C> <C> <C> <C> <C>
Investments $382,894 $61,302 $9,313 $210,372 $45,425 $709,306
Receivables 29,508 946 545 3,173 3,236 37,408
Total Assets 412,402 62,248 9,858 213,545 48,661 746,714
Forfeitures Payable 4,140 462 17 2,240 5,526 12,385
NET ASSETS AVAILABLE FOR PLAN BENEFITS $408,262 $61,786 $9,841 $211,305 $43,135 $734,329
The accompanying notes are an integral part of this statement.
GTE CORPORATION
SAVINGS, INVESTMENT & TAX-DEFERRAL PLAN FOR HOURLY EMPLOYEES
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1993
<CAPTION>
GTE
Stock Equity Bond Income Loan
Fund Fund Fund Fund Fund Total
(Thousands of Dollars)
<S> <C> <C> <C> <C> <C> <C>
Contributions (Note 3)
Employee $ 12,104 $ 4,789 $ 753 $ 11,747 $ - $ 29,393
Employer 1,734 - - - - 1,734
Interest and Dividends 12,060 - - 10,853 - 22,913
Net Investment Gain 23,612 4,984 987 632 - 30,215
Withdrawals, Terminations and
Interfund Transfers (64,766) (4,678) (851) (24,689) 8,620 (86,364)
Transfer to Another Plan (Note 5) (344,041) (53,104) (9,293) (183,855) (47,509) (637,802)
Net change during the year (359,297) (48,009) (8,404) (185,312) (38,889) (639,911)
NET ASSETS AVAILABLE FOR PLAN
BENEFITS - beginning of year 408,262 61,786 9,841 211,305 43,135 734,329
NET ASSETS AVAILABLE FOR PLAN
BENEFITS - end of year $ 48,965 $13,777 $1,437 $ 25,993 $ 4,246 $ 94,418
The accompanying notes are an integral part of this statement.
GTE CORPORATION
SAVINGS, INVESTMENT & TAX-DEFERRAL PLAN FOR HOURLY EMPLOYEES
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1992
<CAPTION>
GTE
Stock Equity Bond Income Loan
Fund Fund Fund Fund Fund Total
(Thousands of Dollars)
<S> <C> <C> <C> <C> <C> <C>
Contributions (Note 3)
Employee $ 24,599 $ 7,965 $1,465 $ 26,233 $ - $ 60,262
Employer 23,847 - - - - 23,847
Interest and Dividends 18,835 - - 15,388 - 34,223
Net Investment Gain 242 4,327 628 - - 5,197
Withdrawals, Terminations and
Interfund Transfers (28,982) (3,255) (609) (22,497) 7,052 (48,291)
Transfer to Another Plan (Note 5) (2,160) (146) (70) (1,128) 15 (3,489)
Net change during the year 36,381 8,891 1,414 17,996 7,067 71,749
NET ASSETS AVAILABLE FOR PLAN
BENEFITS - beginning of year 371,881 52,895 8,427 193,309 36,068 662,580
NET ASSETS AVAILABLE FOR PLAN
BENEFITS - end of year $408,262 $61,786 $9,841 $211,305 $43,135 $734,329
The accompanying notes are an integral part of this statement.
</TABLE>
GTE CORPORATION
SAVINGS, INVESTMENT & TAX-DEFERRAL PLAN FOR HOURLY EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
(1) Description of the Plan:
The GTE Corporation ("GTE") Savings, Investment & Tax-Deferral Plan for
Hourly Employees ("Plan") is a defined contribution plan under the Employee
Retirement Income Security Act of 1974 ("ERISA"). The purpose of the Plan
is to provide eligible employees of GTE's subsidiaries ("Participating
Affiliates") with a convenient way to save for both medium and long-term
needs.
The Plan is available to employees of GTE's Participating Affiliates who
(a) are not in units covered by a collective bargaining agreement unless
such agreement specifically provides for the participation of such employees
in the Plan, or (b) are not in units deemed by a Participating Affiliate to
be a nonparticipating unit on the basis of uniform and nondiscriminatory
rules, (c) are not active participants in the GTE Savings Plan or (d) are
not nonresident aliens who do not receive compensation that constitutes
earned income from sources within the United States.
Normally, participation will continue as long as a member is employed by
GTE or a Participating Affiliate. Participation ceases upon death,
disability or separation from service for more than one year, and when all
funds in a member's account have been paid to the member or his
beneficiaries.
Company contributions vest immediately upon death, disability,
retirement, attainment of age 65 or five years of service. For members with
less than five years of service, Company contributions vest 50% immediately
and 50% two years after the end of the Plan year for which the contributions
were made. Forfeitures of a participant's account due to termination prior
to 100% vesting are used to reduce GTE's future contributions.
Through December 31, 1993, each member directed their contributions to
be invested in any of four funds. Members are permitted to make changes to
their investment choices once every six months. A description of the funds
follows:
GTE Stock Fund - Common Stock of GTE Corporation
Equity Fund - Common stocks of various corporations in
accordance with a commonly used index of
corporate equity shares of stock, such
as
the Standard & Poor's 500 Composite
Price
Index; stock index futures contracts;
stock index options; or cash, interests
in money-market funds, or other cash
equivalents
Bond Fund - Public and private bonds and debentures,
interest and other distributions
received
with respect to those bonds and
debentures
will be invested in bonds as soon as is
practicable
GTE CORPORATION
SAVINGS, INVESTMENT & TAX-DEFERRAL PLAN FOR HOURLY EMPLOYEES
NOTES TO FINANCIAL STATEMENTS - (Continued)
Income Fund - Funds invested in contracts with
insurance
companies, securities of U. S.
government,
government agencies or other highly
rated
issuers yielding current income and
reasonable rate of return with low risk
of
principal loss.
A loan feature is available to members which permits borrowing up to
50% of a participant's vested balance subject to certain limitations. The
primary assets of the Loan Fund are the promissory notes executed by
participants who have taken loans.
The Plan participates in a master trust with other plans and, along
with these other plans, owns a percentage of the assets in the master trust.
These percentages are based on a pro rata share of the trust assets. At
December 31, 1993, the Plan owned two percent of the assets in the trust.
Dividends and interest and net investment gain or losses are allocated to
the plan based upon the plan's participation in the master trust as a
percentage of the total participation.
Through December 31, 1992, State Street Bank and Trust Company (the
"Trustee") was designated as the Trustee under the Plan and was responsible
for the investment, reinvestment, control and disbursement of the funds of
the Plan. Administrative expenses of the Plan were paid by the
Participating Affiliates. Effective January 1, 1993, Fidelity Management
Trust Company became the trustee of the Plan. GTE Service Corporation is
the Plan Administrator.
GTE reserves the right to terminate, modify, alter or amend the Plan
at any time, provided that no such change shall permit any of the funds to
be used for any purpose other than the exclusive benefit of the members. In
the event of termination or discontinuance of the Plan by GTE, a
participant's interest in his account will be fully vested.
(2) Accounting Policies:
The accompanying financial statements have been prepared on the
accrual basis of accounting.
GTE Stock Fund is valued on the last published sales price on the last
business day of the year on the composite listing of the New York Stock
Exchange.
The Equity and Bond Funds are valued based on the market values of the
securities which underlie the portfolio of the pooled investments plus
dividends and interest awaiting reinvestment (Securities listed on national
securities exchanges are valued at closing sales prices on such exchanges
or, in the absence of closing sales prices, at the mean of the last
published bid and asked prices or the last published sales price, whichever
is more recent. Nonlisted securities are valued at either the mean of the
most recent GTE CORPORATION
SAVINGS, INVESTMENT & TAX-DEFERRAL PLAN FOR HOURLY EMPLOYEES
NOTES TO FINANCIAL STATEMENTS - (Continued)
published bid and asked prices or by officers of State Street Bank and Trust
Company or Fidelity Management Trust Company, as Trustee).
Investment contracts in the Income Fund are valued at cost plus
reinvested interest. Promissory notes in the Loan Fund are valued at cost
plus interest earned.
Dividends and interest earned on underlying securities in the Equity
and Bond Funds are reinvested in such funds and are not remitted to the
Plan. Accordingly, dividends and interest in these funds are included in
the net investment gains and losses.
Realized and unrealized gains and losses of Plan assets are based on
the value of the assets at the beginning of the Plan year or at time of
purchase if acquired during the year. For the GTE Stock Fund, the realized
gain or loss on the sale of investments was a $0.6 million gain and a $0.3
million loss for 1993 and 1992, respectively. The unrealized gains on
investments were $23.0 million and $0.5 million for 1993 and 1992,
respectively.
Withdrawals are reported on the cash basis in the Statement of
Changes in Net Assets Available for Plan Benefits. Amounts payable to
individuals at December 31, 1992, who withdrew from participation in the
Plan have been included in plan equity of the accompanying December 31, 1992
statement of net assets available for plan benefits and are as follows (in
thousands):
Fund
GTE Shares $1,093
Equity 180
Bond -
Income 1,409
Total $2,682
There were no amounts payable to individuals who had withdrawn from
participation in the Plan as of December 31, 1993.
(3) Contributions:
The Plan is funded by contributions from participants up to a maximum
of 16% of compensation and from Participating Affiliates in shares of GTE
Common Stock equivalent in value to 50% of the initial 6% of the member's
contribution not withdrawn during the Plan year. The Participating
Affiliates matching contribution is credited following the close of each
calendar year to the accounts of participants who have not terminated their
active membership. Member contributions may be before tax ("Elective
Contributions") or from currently taxed compensation ("After-Tax
Contributions"). For the part of any Plan year in which a member's Elective
and/or After-Tax contributions were at least 6% of compensation, but less
than the 16% maximum, the member was eligible to make an additional
After-Tax contribution in succeeding years equivalent to the difference
between these contributions and 16% of compensation. Each member's Elective
Contributions to the Plan for the 1993 Plan year was limited to $8,994.
GTE CORPORATION
SAVINGS, INVESTMENT & TAX-DEFERRAL PLAN FOR HOURLY EMPLOYEES
NOTES TO FINANCIAL STATEMENTS - (Continued)
Company contributions in the form of GTE Common Stock are generally
made within 60 days after the end of the Plan year. Contributions for the
1993 and 1992 Plan years were 52,714 shares and 675,526 shares,
respectively.
(4) Tax Status:
The Plan is a qualified profit sharing plan under Sections 401 and
501 of the Internal Revenue Code ("Code"), as amended, and consequently is
exempt from Federal income tax. Certain changes have been made to the Plan
to comply with the Tax Reform Act of 1986 ("TRA 86"). Management also
intends to make additional changes to comply with the final rulings of TRA
86 and will file for a determination letter in accordance with guidelines as
issued by the Internal Revenue Service. Management anticipates that a
letter to the effect that the Plan, as amended, qualifies under Sections 401
and 501 of the Code will be received in due course.
(5) Transfer (to) from Another Plan:
During 1993, approximately $638 million of net assets were
transferred out of the Plan into the newly established GTE Hourly Savings
Plan.
During 1992, net assets of approximately $3.5 million were
transferred to a newly established plan for certain employees of WESGO
Corporation.
GTE CORPORATION
SAVINGS, INVESTMENT & TAX-DEFERRAL PLAN FOR HOURLY EMPLOYEES
SCHEDULE OF INVESTMENTS IN MASTER TRUST
(thousands of dollars)
1993 1992
FIDELITY FUNDS:
Equity - Income Fund $ 142,560 $ -
Overseas Fund 86,633 -
U.S. Equity Index Collective Trust Fund 117,315 -
Retirement Government Money Market Portfolio 45,128 -
Magellan Fund 282,612 -
Conservative Strategy Portfolio 556,015 -
Conservative Growth Strategy Portfolio 228,880 -
Moderate Growth Strategy Portfolio 249,088 -
Long-Term Growth Strategy Portfolio 177,260 -
OTHER FUNDS:
GTE Stock Fund 1,385,236 1,434,617
ESOP Shares Fund 850,243 860,188
Loan Fund 173,313 141,237
Equity Fund 13,698 399,381
Bond Fund 1,422 45,868
Income Fund 25,852 1,079,404
Total $4,335,255 $3,960,695
The accompanying notes are an integral part of this schedule.
<TABLE>
GTE CORPORATION
SAVINGS, INVESTMENT & TAX-DEFERRAL PLAN FOR HOURLY EMPLOYEES
Schedule of INVESTMENT INCOME IN MASTER TRUST
(thousands of dollars)
<CAPTION>
December 31, 1993 December 31, 1992
Dividends Net Investment Dividends Net Investment
& Interest Gain & Interest Gain
<S> <C> <C> <C> <C>
Equity - Income Fund $ 4,119 $ 11,122 $ - $ -
Overseas Fund 1,296 11,598 - -
U.S. Equity Index Collective Trust Fund - 16,413 - -
Retirement Government Money Market Portfolio 917 3 - -
Magellan Fund 23,172 7,337 - -
Conservative Strategy Portfolio - 41,707 - -
Conservative Growth Strategy Portfolio - 14,289 - -
Moderate Growth Strategy Portfolio - 17,772 - -
Long-Term Growth Strategy Portfolio - 16,366 - -
OTHER FUNDS:
GTE Stock Fund 61,959 40,045 68,612 2,843
ESOP Shares Fund 45,568 8,859 44,133 237
Loan Fund - - - -
Equity Fund - 4,984 559 28,132
Bond Fund - 987 605 2,437
Income Fund 10,853 632 80,503 -
Total $147,884 $192,114 $194,412 $33,649
The accompanying notes are an integral part of this schedule.
</TABLE>
GTE CORPORATION
SAVINGS, INVESTMENT & TAX-DEFERRAL PLAN FOR HOURLY EMPLOYEES
SAVINGS & INVESTMENT MASTER TRUST
Notes to Schedules
(1) The plans participating in the Master Trust include the GTE Savings
Plan; GTE Hourly Savings Plan; GTE Savings, Investment and Tax-Deferral
Plan for Hourly Employees; AGCS Savings Plan and AGCS Hourly Savings
Plan.
(2) Funds invested in contracts with insurance companies, excluding
Mutual Benefit Life Insurance Company (Mutual Benefit) discussed in note
2 below, at December 31, 1993, represented 66% of the Conservative
Strategy Portfolio consisting of 68 investment contracts held with 24
different insurance companies (these insurance companies were rated A-
or better by Standard & Poor's as of December 31, 1993). The investment
contracts bear interest rates ranging from 5.28% to 9.67% and have
scheduled maturities from March 1, 1994 to December 31, 1999.
(3) At December 31, 1993, the Income Fund had an investment contract
with Mutual Benefit which represented approximately 5% of the
Conservative Strategy Portfolio's investments and approximately 1% of
the master trust investments. At December 31, 1993 this investment is
carried at contract value of $31,560,000 in the master trust. On July
15, 1991 the Board of Directors of Mutual Benefit asked the New Jersey
Department of Insurance to place Mutual Benefit into rehabilitation. On
January 15, 1993 Mutual Benefit filed its First Amended Plan of
Rehabilitation which, was approved by the Superior Court of New Jersey
effective May 2, 1994. GTE opted into the plan and will receive a new
contract which preserves principle and extends maturities, with minimum
interest and premium payments over the rehabilitation period. The
contract balance will be credited with the contract rate of interest for
the period from July 16, 1991 to December 31, 1991. A crediting rate of
4% will be applied from January 1, 1992 to December 31, 1992 and 3.50%
will be applied for each year in the period from January 1, 1993 to
December 31, 1994. In each subsequent rehabilitation period year, the
contract balance will earn an annual rate of interest that can be
adjusted each year, or more often under certain circumstances, and will
be determined by a formula based on the investment performance of the
assets which support the GTE contract. No interest has been accrued on
the investment since October 1, 1991.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Savings Plan Committee has duly caused this annual report to
be signed by the undersigned thereunto duly authorized.
GTE CORPORATION
SAVINGS, INVESTMENT & TAX-DEFERRAL PLAN
FOR HOURLY EMPLOYEES
(Name of Plan)
Date June 28, 1994 By William D. Wilson
(William D. Wilson)
Vice President and Controller
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation of our report included in this Form 11-K into GTE
Corporation's previously filed Registration Statement on Form S-8 (File
No. 33-46612).
ARTHUR ANDERSEN & CO.
Stamford, Connecticut
June 28, 1994
