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, 1994
GTE SAVINGS PLAN
GTE CORPORATION
ONE STAMFORD FORUM
STAMFORD, CONNECTICUT 06904
GTE SAVINGS PLAN
FINANCIAL STATEMENTS AS OF DECEMBER 31, 1994 AND DECEMBER 31, 1993
TOGETHER WITH
AUDITORS' REPORT
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Plan Administrator of the
GTE Savings Plan:
We have audited the accompanying Statements of Net Assets Available for
Plan Benefits with Fund Information of the GTE Savings Plan as of December
31, 1994 and 1993, and the related Statements of Changes in Net Assets
Available for Plan Benefits with Fund Information for the years then ended.
These financial statements are the responsibility of the Plan Administrator.
Our responsibility is to express an opinion on these financial statements
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits 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 Savings Plan as of December 31, 1994 and 1993, 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
financial statements taken as a whole. The fund information in the
Statements of Net Assets Available for Plan Benefits and Statements of
Changes in Net Assets Available for Plan Benefits is presented for purposes
of additional analysis rather than to present the net assets available for
plan benefits and changes in net assets available for plan benefits of each
fund. The fund information has been subjected to the auditing procedures
applied in the audits of the basic financial statements and, in our opinion,
is fairly stated in all material respects in relation to the basic financial
statements taken as a whole.
ARTHUR ANDERSEN LLP
Stamford, Connecticut
June 9, 1995
<TABLE>
GTE SAVINGS PLAN
STATEMENT of Net Assets Available for Plan Benefits, WITH FUND INFORMATION
DECEMBER 31, 1994
(thousands of dollars)
<CAPTION>
Investments Total Net
in Master Trust Receivables Assets Notes Payable Assets
<S> <C> <C> <C> <C> <C>
FIDELITY FUNDS:
Equity - Income Fund $ 130,795 $ 405 $ 131,200 $ - $ 131,200
Overseas Fund 102,150 427 102,577 - 102,577
U.S. Equity Index Collective Trust Fund 80,530 153 80,683 - 80,683
Retirement Government Money Market Portfolio 53,344 326 53,670 - 53,670
Magellan Fund 258,188 1,050 259,238 - 259,238
Conservative Strategy Portfolio 384,726 373 385,099 - 385,099
Conservative Growth Strategy Portfolio 189,242 382 189,624 - 189,624
Moderate Growth Strategy Portfolio 220,344 668 221,012 - 221,012
Long-Term Growth Strategy Portfolio 172,881 683 173,564 - 173,564
OTHER FUNDS:
GTE Stock Portfolio 814,456 10,723 825,179 - 825,179
Loan Fund 117,529 - 117,529 - 117,529
ESOP Shares Fund 724,649 - 724,649 649,378 75,271
Total $3,248,834 $15,190 $3,264,024 $649,378 $2,614,646
The accompanying notes are an integral part of this financial statement.
GTE SAVINGS PLAN
STATEMENT of Net Assets Available for Plan Benefits, WITH FUND INFORMATION
DECEMBER 31, 1993
(thousands of dollars)
<CAPTION>
Investments Total Net
in Master Trust Receivables Assets Notes Payable Assets
<S> <C> <C> <C> <C> <C>
FIDELITY FUNDS:
Equity - Income Fund $ 127,705 $ 390 $ 128,095 $ - $ 128,095
Overseas Fund 79,518 325 79,843 - 79,843
U.S. Equity Index Collective Trust Fund 87,949 9 87,958 - 87,958
Retirement Government Money Market Portfolio 37,040 369 37,409 - 37,409
Magellan Fund 249,469 1,064 250,533 - 250,533
Conservative Strategy Portfolio 415,480 364 415,844 - 415,844
Conservative Growth Strategy Portfolio 200,902 397 201,299 - 201,299
Moderate Growth Strategy Portfolio 220,083 678 220,761 - 220,761
Long-Term Growth Strategy Portfolio 155,501 585 156,086 - 156,086
OTHER FUNDS:
GTE Stock Portfolio 962,527 16,258 978,785 - 978,785
Loan Fund 118,424 - 118,424 - 118,424
ESOP Shares Fund 850,243 - 850,243 668,875 181,368
Total $3,504,841 $20,439 $3,525,280 $668,875 $2,856,405
The accompanying notes are an integral part of this financial statement.
GTE SAVINGS PLAN
STATEMENT of CHANGES IN Net Assets Available for Plan Benefits, WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1994
(thousands of dollars)
<CAPTION>
Fidelity Funds
U.S. Equity Retirement
Equity- Index Government
Income Overseas Collective Money Market Magellan
Fund Fund Trust Fund Portfolio Fund
<S> <C> <C> <C> <C> <C>
Interest and Dividends $ 12,740 $ 1,742 $ - $ 1,802 $ 10,180
Net Investment Gain (Loss) (Note 2) (12,665) (1,593) 1,119 - (15,168)
Contributions (Note 3):
Employee 10,533 10,732 7,527 9,264 27,030
Employer - - - - -
Transfers (To) From Other Plans (Note 6) (612) (70) (22) (97) (104)
Net Transfers Between Funds 6,227 21,240 (5,894) 13,981 6,694
Participant Loans:
Repayments 2,260 2,388 970 3,680 5,880
Withdrawals (2,570) (2,438) (1,276) (2,056) (6,180)
Interest Expense - - - - -
Withdrawals and Terminations (12,808) (9,267) (9,699) (10,313) (19,627)
INCREASE (DECREASE) IN NET ASSETS
AVAILABLE FOR PLAN BENEFITS DURING YEAR 3,105 22,734 (7,275) 16,261 8,705
NET ASSETS AVAILABLE FOR PLAN
BENEFITS AT BEGINNING OF YEAR 128,095 79,843 87,958 37,409 250,533
NET ASSETS AVAILABLE FOR PLAN
BENEFITS AT END OF YEAR $131,200 $102,577 $ 80,683 $ 53,670 $259,238
The accompanying notes are an integral part of this financial statement.
GTE SAVINGS PLAN
STATEMENT of CHANGES IN Net Assets Available for Plan Benefits, WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1994
(thousands of dollars)
<CAPTION>
Fidelity Funds
Conservative Moderate Long-Term
Conservative Growth Growth Growth GTE
Strategy Strategy Strategy Strategy Stock
Portfolio Portfolio Portfolio Portfolio Portfolio
<S> <C> <C> <C> <C> <C>
Interest and Dividends $ - $ - $ - $ - $ 50,736
Net Investment Gain (Loss) (Note 2) 20,962 8,232 7,119 5,645 (122,457)
Contributions (Note 3):
Employee 23,034 10,619 18,343 17,142 30,899
Employer - - - - 19,711
Transfers (To) From Other Plans (Note 6) (951) (623) 33 722 (4,924)
Net Transfers Between Funds (6,033) (7,972) (7,404) 4,532 (24,437)
Participant Loans:
Repayments 2,615 2,345 3,996 3,250 23,348
Withdrawals (4,391) (2,990) (4,378) (3,400) (21,610)
Interest Expense - - - - -
Withdrawals and Terminations (65,981) (21,286) (17,458) (10,413) (104,872)
INCREASE (DECREASE) IN NET ASSETS
AVAILABLE FOR PLAN BENEFITS DURING YEAR (30,745) (11,675) 251 17,478 (153,606)
NET ASSETS AVAILABLE FOR PLAN
BENEFITS AT BEGINNING OF YEAR 415,844 201,299 220,761 156,086 978,785
NET ASSETS AVAILABLE FOR PLAN
BENEFITS AT END OF YEAR $385,099 $189,624 $221,012 $173,564 $825,179
The accompanying notes are an integral part of this financial statement.
GTE SAVINGS PLAN
STATEMENT of CHANGES IN Net Assets Available for Plan Benefits, WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1994
(thousands of dollars)
<CAPTION>
ESOP
Loan Shares
Fund Fund Total
<S> <C> <C> <C>
Interest and Dividends $ 6,883 $ 46,000 $ 130,083
Net Investment Gain (Loss) (Note 2) - (107,957) (216,763)
Contributions (Note 3):
Employee - - 165,123
Employer - 37,849 57,560
Transfers (To) From Other Plans (Note 6) - (395) (7,043)
Net Transfer Between Funds - (934) -
Participant Loans:
Repayments (50,732) - -
Withdrawals 51,289 - -
Interest Expense - (64,860) (64,860)
Withdrawals and Terminations (8,335) (15,800) (305,859)
INCREASE (DECREASE) IN NET ASSETS
AVAILABLE FOR PLAN BENEFITS DURING YEAR (895) (106,097) (241,759)
NET ASSETS AVAILABLE FOR PLAN
BENEFITS AT BEGINNING OF YEAR 118,424 181,368 2,856,405
NET ASSETS AVAILABLE FOR PLAN
BENEFITS AT END OF YEAR $117,529 $ 75,271 $2,614,646
The accompanying notes are an integral part of this financial statement.
GTE SAVINGS PLAN
STATEMENT of CHANGES IN Net Assets Available for Plan Benefits, WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1993
(thousands of dollars)
<CAPTION>
Fidelity Funds
U.S. Equity Retirement
Equity- Index Government
Income Overseas Collective Money Market Magellan
Fund Fund Trust Fund Portfolio Fund
<S> <C> <C> <C> <C> <C>
Interest and Dividends $ 3,912 $ 1,190 $ - $ 874 $ 21,322
Net Investment Gain (Note 2) 10,919 11,353 15,747 3 8,274
Contributions (Note 3):
Employee 11,306 6,871 2,094 14,043 24,817
Employer - - - - -
Transfers (To) From Other Plans (Note 6) 27,705 (172) (38) 16,572 35,469
Net Transfers Between Funds 88,620 65,101 83,442 14,975 178,351
Participant Loans:
Repayments 1,920 1,173 1,066 4,448 4,152
Withdrawals (2,642) (1,205) (2,659) (1,479) (5,393)
Interest Expense - - - - -
Withdrawals and Terminations (13,645) (4,468) (11,694) (12,027) (16,459)
INCREASE (DECREASE) IN NET ASSETS
AVAILABLE FOR PLAN BENEFITS DURING YEAR 128,095 79,843 87,958 37,409 250,533
NET ASSETS AVAILABLE FOR PLAN
BENEFITS AT BEGINNING OF YEAR - - - - -
NET ASSETS AVAILABLE FOR PLAN
BENEFITS AT END OF YEAR $128,095 $79,843 $87,958 $37,409 $250,533
The accompanying notes are an integral part of this financial statement.
GTE SAVINGS PLAN
STATEMENT of CHANGES IN Net Assets Available for Plan Benefits, WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1993
(thousands of dollars)
<CAPTION>
Fidelity Funds
Conservative Moderate Long-Term
Conservative Growth Growth Growth GTE
Strategy Strategy Strategy Strategy Stock
Portfolio Portfolio Portfolio Portfolio Portfolio
<S> <C> <C> <C> <C> <C>
Interest and Dividends $ - $ - $ - $ - $ 43,042
Net Investment Gain (Note 2) 37,506 13,416 16,643 15,460 30,390
Contributions (Note 3):
Employee 1,113 13,992 21,461 16,233 23,301
Employer - - - - 13,307
Transfers (To) From Other Plans (Note 6) 103,149 (57) (133) (106) 171,883
Net Transfers Between Funds 365,765 203,288 201,737 134,588 (137,711)
Participant Loans:
Repayments 2,954 2,542 3,940 2,677 22,037
Withdrawals (10,083) (3,174) (4,199) (2,912) (35,191)
Interest Expense - - - - -
Withdrawals and Terminations (84,560) (28,708) (18,688) (9,854) (144,652)
INCREASE (DECREASE) IN NET ASSETS
AVAILABLE FOR PLAN BENEFITS DURING YEAR 415,844 201,299 220,761 156,086 (13,594)
NET ASSETS AVAILABLE FOR PLAN
BENEFITS AT BEGINNING OF YEAR - - - - 992,379
NET ASSETS AVAILABLE FOR PLAN
BENEFITS AT END OF YEAR $415,844 $201,299 $220,761 $156,086 $978,785
The accompanying notes are an integral part of this financial statement.
GTE SAVINGS PLAN
STATEMENT of CHANGES IN Net Assets Available for Plan Benefits, WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1993
(thousands of dollars)
<CAPTION>
ESOP
Loan Shares Equity Bond Income
Fund Fund Fund Fund Fund Total
<S> <C> <C> <C> <C> <C> <C>
Interest and Dividends $ 6,474 $ 45,568 $ - $ - $ - $ 122,382
Net Investment Gain (Note 2) - 8,859 - - - 168,570
Contributions (Note 3):
Employee - - - - - 135,231
Employer - 35,268 - - - 48,575
Transfers (To) From Other Plans (Note 6) - - - - - 354,272
Net Transfers Between Funds - (2,379) (321,720) (34,889) (839,168) -
Participant Loans:
Repayments (46,909) - - - - -
Withdrawals 68,937 - - - - -
Interest Expense - (66,061) - - - (66,061)
Withdrawals and Terminations (5,377) (16,632) - - - (366,764)
INCREASE (DECREASE) IN NET ASSETS
AVAILABLE FOR PLAN BENEFITS DURING YEAR 23,125 4,623 (321,720) (34,889) (839,168) 396,205
NET ASSETS AVAILABLE FOR PLAN
BENEFITS AT BEGINNING OF YEAR 95,299 176,745 321,720 34,889 839,168 2,460,200
NET ASSETS AVAILABLE FOR PLAN
BENEFITS AT END OF YEAR $118,424 $181,368 $ - $ - $ - $2,856,405
The accompanying notes are an integral part of this financial statement.
</TABLE>
GTE CORPORATION
GTE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
(1) Description of the Plan:
The GTE Savings Plan (the "Plan") is a defined contribution plan under
the Employee Retirement Income Security Act of 1974 ("ERISA"). The Plan is
designed to provide eligible employees of GTE Corporation's ("GTE")
participating affiliates ("Participating Affiliates") with a convenient way
to save for both medium-term and long-term needs. The Plan is available to
eligible employees of GTE and its subsidiaries as authorized by the Board of
Directors of GTE.
"Eligible Employee" means an employee of GTE or a Participating
Affiliate, but does not include any of the following:
a. an individual in a unit covered by a collective bargaining
agreement between GTE or one or more Participating Affiliates and
a collective bargaining agent (unless the collective bargaining
agreement, by specific reference to the Plan, provides for
coverage for such employees under the Plan);
b. an individual paid by the hour unless GTE or a Participating
Affiliate has agreed, by resolution of its board of directors, to
become a co-sponsor under the Plan for such employees;
c. an active participant in any other tax-qualified retirement
plan maintained by GTE or a Participating Affiliate that includes
a cash or deferred arrangement qualified under Internal Revenue
Code Section 401(k);
d. a nonresident alien who does not receive compensation from GTE
or a Participating Affiliate that constitutes earned income from
sources within the United States;
e. a "leased employee" within the meaning of the Internal Revenue
Code Section 414(n);
f. an individual whose basic compensation for services rendered
on behalf of GTE or a Participating Affiliate is not paid directly
by GTE or a Participating Affiliate; and
g. an individual retained by GTE or a Participating Affiliate
pursuant to a contract or agreement that specifies that the
employee is not eligible to participate in the Plan.
To the extent expressly provided in any written separation policy of
GTE or a Participating Affiliate, "Eligible Employee" also includes any
former employee of GTE or a Participating Affiliate who is receiving salary
continuation payments pursuant to the separation policy.
GTE CORPORATION
GTE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS - (Continued)
An individual's active participation in the Plan shall terminate when
the individual ceases to be an Eligible Employee; but the individual shall
remain a participant until the entire account balance under the Plan has
been distributed or forfeited.
Matching contributions vest immediately upon death, disability,
retirement, attainment of age 65 or five years of service with GTE or
Participating Affiliate. For participants with less than five years of
service, matching contributions vest 50% immediately and 50% 24 months 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.
Each participant directs their contributions to be invested in one of
the current investment options: five Fidelity funds, one of four Fidelity
strategy portfolios, in the GTE stock portfolio or in any combination of
these funds and portfolios. Participants are permitted to make changes to
investment choices on a daily basis. A description of the investment
choices follows:
a. Fidelity Equity-Income Fund - invests primarily in corporate
common and preferred stock, with up to 20% of the fund invested in
bonds and convertible securities.
b. Fidelity Overseas Fund - invests primarily in foreign
securities whose principal activities are outside the U.S. and
also invests in public and private bonds (both foreign and
domestic) and bank deposits and money market instruments
denominated in U.S. dollars or foreign currencies.
c. Fidelity U.S. Equity Index Collective Trust Fund - invests in
commingled funds seeking to provide results that correspond to the
total return performance of common stocks publicly traded in the
U.S. as represented by the Standard & Poor's 500 Composite Stock
Price Index.
d. Fidelity Retirement Government Money Market Portfolio -
invests in high-quality money market instruments and obligations
issued or guaranteed by the U.S. government or its agencies or
instrumentalities.
e. Fidelity Magellan Fund - invests primarily in stocks and
securities convertible into common stock of U.S. and foreign
companies and also invests in high yield securities, options, and
futures contracts related to securities in the portfolio.
f. Conservative Strategy Portfolio - invests 100% of its assets
in an underlying portfolio of fixed-income securities, including
investment contracts and bonds.
GTE CORPORATION
GTE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS - (Continued)
g. Conservative Growth Strategy Portfolio - invests approximately
75% of its assets in a portfolio of fixed-income securities,
including investment contracts and bonds, with the remaining 25%
invested in a portfolio of U.S. equities.
h. Moderate Growth Strategy Portfolio - invests approximately 50%
of its assets in a portfolio of U.S. equities. The remaining 50%
is invested in a portfolio of fixed-income securities, including
investment contracts and bonds.
i. Long-Term Growth Strategy Portfolio - invests approximately
75% of its assets in a portfolio of equity securities consisting
of a combination of U.S. equities (50%) and international equities
(25%). The remaining 25% is invested in a portfolio of fixed-
income securities, including investment contracts and bonds.
j. GTE Stock Portfolio - invests principally in GTE common stock
but may also invest a portion in short-term money market
instruments.
The Savings Plan Committee may, at its sole discretion, eliminate,
and/or change the underlying composition of any investment options, and may
add other funds as a current investment option.
A loan feature is available to participants which permits borrowing up
to 50% of a participant's vested balance, subject to certain limitations.
The primary assets of the Loan Fund are promissory notes executed by
participants.
Interest rates on loans are equal to the prime interest rate on the
first business day of each calendar quarter. Participant loans are
withdrawn proportionately from the participants' investment accounts. When
loans are repaid, they are reinvested according to the participants' current
investment choices. Short-term loan terms are from six months to five
years; long-term loan terms for the purchase of a primary residence are from
sixty-six months to twenty years.
The Plan participates in a master trust along with other plans which
own a percentage of the assets in the master trust. These percentages are
based on a pro rata share of the master trust assets. The Plan owns 80% of
the assets in the trust. Interest and dividends along with net investment
gain or loss on the sale of securities are allocated to the plans on a daily
basis based upon the Plans' participation in the various investment funds
and portfolios that comprise the master trust. The net investment gain
(loss), for the GTE Stock Fund and ESOP Shares Fund for 1994 and 1993 are as
follows (in millions):
GTE STock Fund ESOP Shares Fund
1994 1993 1994 1993
Realized Gain (Loss) $ (20.1) $ 8.7 $ (2.2) $0.7
Unrealized Gain (Loss) (102.4) 21.7 (105.8) 8.2
Net Investment Gain (Loss) $(122.5) $30.4 $108.0 $8.9
GTE CORPORATION
GTE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS - (Continued)
Fidelity Management Trust Company (the "Trustee") has been designated
as the Trustee under the Plan and is responsible for the investment,
reinvestment, control and disbursement of the funds of the Plan including
the payment of principal and interest on the Employee Stock Ownership Plan
(the "ESOP") notes payable (see Note 4). Expenses of administering the
Plan, including fees and expenses of the Trustee, are charged to the
participants' accounts. GTE Service Corporation, a subsidiary of GTE, 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
participants. In the event of termination or discontinuance of the Plan by
GTE, participants' interest in their accounts will become fully vested.
(2) Accounting Policies:
The financial statements have been prepared on the accrual basis of
accounting. Investments are stated at market value determined from publicly
stated price information, if available; otherwise, the estimated fair value
is used. Guaranteed investment contracts are stated at cost plus accrued
interest. Net investment gains and losses include both unrealized gains and
losses on investments held by the Plan at year end as well as realized gains
and losses on investments sold during the year. Net unrealized and net
realized gains and losses are based on the changes in value of the
investments since the beginning of the Plan year or the time of purchase if
acquired during the Plan year.
Reclassifications of prior year data have been made in the financial
statements where appropriate to conform to the 1994 presentations.
(3) Contributions:
The profit-sharing portion of 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 of up to 50% of
the initial 6% of the participants' 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 participation. Participant
contributions may be before tax ("Elective Contributions") or from currently
taxed compensation ("After-Tax Contributions"). Each participant's Elective
Contributions for the 1994 Plan year was limited to $9,240.
The total amount of Elective Contributions, After-Tax Contributions
and company matching contributions and certain forfeitures that may be
allocated to a Plan participant for the 1994 Plan year was limited to the
lesser of (i) $30,000 or (ii) 25% of the participant's total compensation;
and the compensation on which such contributions were based was limited to
$150,000.
GTE CORPORATION
GTE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS - (Continued)
Effective January 1, 1995, GTE increased the company match to 75% of
the initial 6% of the participant's contribution not withdrawn during the
Plan year.
In 1994 and 1993, a portion of the company matching contributions were
made through the ESOP Shares Fund. Matching contributions are made in GTE
shares and in general, participants cannot redirect these shares into other
investment choices.
Accrued Company contributions for the 1994 and 1993 Plan years were as
follows:
Description Plan Year Shares Amount
(in thousands)
Stock contribution 1994 293,822 $ 9,935
Allocation of ESOP shares 1994 1,147,722 38,807
Stock contribution 1993 467,456 15,309
Allocation of ESOP shares 1993 1,169,079 38,287
(4) Employee Stock Ownership Plan:
An ESOP was established within the Plan. In 1989 the ESOP borrowed
$700 million to acquire, at market value, 24.6 million shares of GTE common
stock which will be used to meet a portion of the estimated employer
contributions to the Plan through 2005. GTE and the Participating
Affiliates also make annual cash contributions to the ESOP which, when
combined with dividends on the GTE common stock held by the ESOP, are
sufficient to repay the principal and interest on the loans which have 10
and 15-year terms. As the ESOP makes loan payments, a percentage of the GTE
common stock held by the ESOP will be allocated to the participants'
accounts.
Debt service payments for 1994 and 1993 totaled $84 million and $81
million, respectively. This requirement was funded from $46 million and $46
million of dividends accumulated on the GTE stock held by the ESOP and by
$38 and $35 million of cash contributions for the years 1994 and 1993,
respectively. At December 31, 1994 and 1993, 17.8 million and 19.2 million
shares of GTE common stock in the ESOP Shares Fund, respectively, were held
as collateral for the ESOP loans.
The borrowings of the ESOP are as follows:
Interest Maturity
Rates Date 1994 1993
(in thousands)
Series A 9.48% 1995-1999 $140,878 $160,375
Series B 9.73% 1999-2005 508,500 508,500
$649,378 $668,875
GTE CORPORATION
GTE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS - (Continued)
Maturities of the outstanding loans are as follows:
Maturity
Date Amount
(in thousands)
1995 $ -
1996 25,054
1997 31,306
1998 38,324
1999 46,194
Thereafter 508,500
Total $649,378
The Plan has pledged the unallocated shares in the ESOP Shares Fund as
collateral for the ESOP borrowings. GTE has guaranteed all principal and
interest payments on the ESOP borrowings in the event of default by the
Plan.
(5) Tax Status:
The Plan is a qualified profit sharing plan under Sections 401(a),
401(k) and 501 of the Internal Revenue Code of 1986, as amended (the
"Code"), and consequently is exempt from Federal income tax. Management
amended the Plan in 1995 to comply with the final rulings under the Tax
Reform Act of 1986, as amended, and has filed 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(a), 401(k) and 501 of the Code will be
received in due course.
(6) Plan Transfers:
During 1994, net assets of plan participants totaling $12 million were
transferred from the Plan to savings plans of Citizens Utilities Company as
a result of the sale of certain non-strategic local-exchange telephone
properties by GTE. Also during 1994, as a result of new GTE employees
rolling over their Individual Retirement Accounts and non-GTE Savings Plans,
approximately $5 million was transferred into the plan.
During 1993, the Plan was amended to provide for participation by
certain persons who, as of December 31, 1992, were participants in the
Contel Retirement Savings Plan and the GTE Corporation Savings and
Investment Plan. As a result, effective January 1, 1993, $368 million of
net assets were transferred from the participant accounts of the Contel
Retirement Savings Plan and the GTE Corporation Savings and Investment Plan
into the Plan. Also during 1993, net assets of plan participants totaling
$14 million were transferred to the newly established GTE Hourly Savings
Plan.
<TABLE>
GTE SAVINGS PLAN
SCHEDULE OF INVESTMENTS IN MASTER TRUST
(thousands of dollars)
<CAPTION>
1994 1993
<S> <C> <C>
FIDELITY FUNDS:
Equity - Income Fund $ 152,380 $ 142,560
Overseas Fund 117,757 86,633
U.S. Equity Index Collective Trust Fund 112,306 131,013
Retirement Government Money Market Portfolio 78,287 45,128
Magellan Fund 307,397 282,612
Broad Market Duration Collective Trust 779 1,422
Conservative Strategy Portfolio 515,488 556,015
Conservative Growth Strategy Portfolio 221,646 228,880
Moderate Growth Strategy Portfolio 257,401 249,088
Long-Term Growth Strategy Portfolio 204,259 177,260
OTHER FUNDS:
GTE Stock Portfolio 1,196,697 1,410,604
ESOP Shares Fund 724,649 850,243
Loan Fund 176,034 173,313
Income Portfolio 8,351 25,852
Total $4,073,431 $4,360,623
The accompanying notes are an integral part of this schedule.
GTE SAVINGS PLAN
Schedule of INVESTMENT INCOME IN MASTER TRUST
(thousands of dollars)
<CAPTION>
December 31, 1994 December 31, 1993
Dividends Net Investment Dividends Net Investment
& Interest Gain (Loss) & Interest Gain
<S> <C> <C> <C> <C>
FIDELITY FUNDS:
Equity - Income Fund $ 14,713 $ (14,699) $ 4,119 $ 11,122
Overseas Fund 2,004 (2,019) 1,296 11,598
U.S. Equity Index Collective Trust Fund - 1,704 - 21,397
Retirement Government Money Market Portfolio 2,494 - 917 3
Magellan Fund 11,984 (18,123) 23,172 7,337
Broad Market Duration Collective Trust - (16) - 987
Conservative Strategy Portfolio - 28,189 - 41,707
Conservative Growth Strategy Portfolio - 9,554 - 14,289
Moderate Growth Strategy Portfolio - 8,186 - 17,772
Long-Term Growth Strategy Portfolio - 6,503 - 16,366
OTHER FUNDS:
GTE Stock Portfolio 74,534 (183,332) 61,959 40,045
ESOP Shares Fund 46,000 (107,957) 45,568 8,859
Loan Fund 10,046 - 9,187 -
Income Portfolio - 657 - 11,485
Total $161,775 $(271,353) $146,218 $202,967
The accompanying notes are an integral part of this schedule.
</TABLE>
GTE CORPORATION
GTE SAVINGS PLAN
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 Corporation Savings, Investment and
Tax-Deferral Plan for Hourly Employees; AGCS Savings Plan (limited
participation) and AGCS Hourly Savings Plan (limited participation).
(2) Funds invested in contracts with insurance companies represented 68% of
the Conservative Strategy Portfolio consisting of 56 investment contracts
held with 24 insurance companies. These insurance companies, excluding
Mutual Benefit Life Insurance Company (Mutual Benefit) discussed in note 3
below and Confederation Life Insurance and Annuity Company (Confederation)
discussed in note 4 below, at December 31, 1994, were rated A- or better by
Standard & Poor's as of December 31, 1994. The investment contracts,
excluding Mutual Benefit and Confederation Life, bear interest rates
ranging from 5.28% to 9.23% and have scheduled maturities from January 3,
1995 to May 25, 2001.
(3) At December 31, 1994, the Income Portfolio had an investment contract
with Mutual Benefit which represented approximately 7% of the Conservative
Strategy Portfolio's investments and approximately 1% of the master trust
investments. At December 31, 1994, this investment is carried at contract
value of $34.9 million 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 principal and
extends maturities, with minimum interest and premium payments over the
rehabilitation period. During 1993 and 1994, the contract was credited
with interest at a rate of 3.5%. During 1995, interest will be credited at
3.55%. In each subsequent 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.
(4) At December 31, 1994, the Income Portfolio had three investment
contracts with Confederation, which represented approximately 3% of the
Conservative Strategy Portfolio's investments and are less than 1% of the
master trust investments. On August 11, 1994, Confederation was seized by
Canada's Office of the Superintendent of Financial Institutions. As of
December 31, 1994, the workout of the appropriation of assets had not been
completed. At December 31, 1994, this investment is carried at contract
value of $13.3 million in the master trust.
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 SAVINGS PLAN
(Name of Plan)
Date June 27, 1995 By Lawrence R. Whitman
(Lawrence R. Whitman)
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.
33-20178).
ARTHUR ANDERSEN LLP
Stamford, Connecticut,
June 23, 1995
