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, 1995
..............
or
Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the transition period from to
Commission File Number: 1-2755
......
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 969,978,487 shares of $.05 par value common stock outstanding
at April 30, 1995.
PART I. FINANCIAL INFORMATION
GTE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended
March 31
1995 1994
(In Millions)
REVENUES AND SALES $4,762 $4,746
COSTS AND OPERATING EXPENSES 3,578 3,628
Operating income 1,184 1,118
OTHER (INCOME) DEDUCTIONS:
Interest expense 281 278
Allowance for funds used and interest
capitalized during construction (8) (7)
Interest income (13) (11)
Other - net 44 42
304 302
Income before income taxes 880 816
INCOME TAX PROVISION 335 312
Net income 545 504
PREFERRED STOCK DIVIDENDS OF PARENT 2 4
Net income applicable to
common stock $ 543 $ 500
EARNINGS PER COMMON SHARE $ .56 $ .52
DIVIDENDS DECLARED PER COMMON SHARE $ .47 $ .47
AVERAGE COMMON SHARES 967 954
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
1995 1994
(In Millions)
REVENUES AND SALES:
Telephone Operations $ 3,836 $ 3,865
Telecommunications Products and Services 926 881
Total revenues and sales $ 4,762 $ 4,746
OPERATING INCOME:
Telephone Operations $ 1,057 $ 1,025
Telecommunications Products and Services 127 93
Operating income 1,184 1,118
OTHER DEDUCTIONS:
Interest expense - net 260 260
Other - net 44 42
Income before income taxes 880 816
Income tax provision 335 312
Net income 545 504
Preferred stock dividends of parent 2 4
Net income applicable to
common stock $ 543 $ 500
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 1995 increased 8 percent
to $545 million, or $.56 per share, compared with $504 million, or $.52 per
share, in the first quarter of last year.
Operating income increased 8 percent to $1.18 billion, compared with $1.10
billion reported in the first quarter of last year, excluding $23 million
of operating income attributable to non-strategic telephone properties and
the satellite-communications business which were sold in 1994.
Consolidated revenues and sales for the first quarter increased 3 percent
to $4.76 billion, compared to $4.62 billion in the first quarter of last
year, excluding $125 million of revenues from the operations sold.
Substantially higher mobile-cellular revenues and increased volumes at
Telephone Operations more than offset lower, more competitive telephone
pricing.
Telephone Operations
Telephone revenues for the first quarter of 1995 amounted to $3.84 billion,
compared with $3.78 billion a year ago, excluding the impact of the
non-strategic properties sold. The revenue improvement reflects the
increase in unit volumes which were partially offset by competitive price
reductions, including reductions for toll service and access charges in
California, effective January 1, 1995. Minutes-of-use of GTE's domestic
local-exchange network for long-distance calling grew at a rate of 7.5
percent, while total access lines increased 5.1 percent over last year.
On January 1, 1995, pursuant to an order issued by the California Public
Utilities Commission ("CPUC"), toll competition (without pre-subscription)
became effective in California. The order also provided for rate
rebalancing with significant rate reductions for toll service and access
charges while increasing basic local exchange rates closer to the actual
cost of providing such service. Although the rate rebalancing is intended
to be revenue neutral, its ultimate effect on revenue will depend, in part,
on the extent to which rate reductions result in increased calling volumes.
The decision does not permit rate increases to compensate for competitive
losses of market share. In the first quarter of 1995, revenues in
California decreased by approximately $60 million, or 8 percent, as a
result of the implementation of this order.
Operating income for the first quarter of 1995 increased 5 percent to $1.06
billion, compared with $1.00 billion a year ago, excluding the results of
the properties sold. The improvement reflects increased revenues and lower
domestic operating expenses resulting from the ongoing process
re-engineering program.
- 3 -
GTE CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (Continued)
In connection with the re-engineering plan, during the first three months
of 1995, expenditures of approximately $89 million were incurred and
charged to the restructuring reserve. Since the plan's inception at the
beginning of 1994, a total of 74 customer contact, network operations and
operator service centers have been closed and workforce reductions of
approximately 7,000 have occurred resulting in total expenditures of $432
million being charged to the restructuring reserve. These costs were
primarily associated with the consolidation of various service centers and
separation benefits associated with employee reductions as discussed above
as well as incremental expenditures to redesign and streamline processes.
The level of re-engineering activities and related expenditures are
expected to accelerate during the remainder of 1995. There have been no
significant changes made to the overall re-engineering plan as originally
reported. As of March 31, 1995, $868 million remains in the restructuring
reserve which management believes is adequate to cover future expenditures.
As of March 31, 1995, access lines served by GTE's domestic and
international telephone operations operating in 28 states, Canada, the
Dominican Republic and Venezuela totaled 23.1 million.
Telecommunications Products and Services
Revenues and sales from Telecommunications Products and Services, which is
comprised of personal communications services, aircraft-based
telecommunications, government and defense communications systems and
equipment, telecommunications-based information services and systems and
Yellow Pages directories, increased 11 percent to $926 million for the
first quarter of 1995, compared to $837 million a year ago, excluding the
satellite-communications business which was sold late in 1994. This
improvement primarily reflects the continued excellent growth in revenues
from the mobile-cellular business.
Cellular customer growth continued at a high level during the first quarter
of 1995 with a total of 161,000 new domestic customers added. This brings
total U.S. customers served to approximately 2,500,000, an increase of 46
percent over the first quarter of last year. During the first quarter of
1995, service revenues per subscriber averaged $63 per month, compared with
$68 per month in the first quarter of last year. The current average
reflects the continued growth of casual users in the subscriber base.
Operating cash flows, representing operating income before depreciation and
amortization, reached $173 million in the first quarter of 1995, a 53
percent improvement over the first quarter of 1994.
Operating income in the first quarter of 1995 increased 38 percent to $127
million, compared with $92 million in the first quarter of last year,
excluding the satellite-communications business. This increase reflects
the continued improved performance of the mobile-cellular business which
was offset, in part, by changes in the timing of certain Yellow Pages
directories publications.
- 4 -
GTE CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (Continued)
As of March 31, 1995, GTE's U.S. mobile-cellular operations served a
population of some 53 million "POPs" (total population in markets served
times GTE's percentage interest in the entity providing service in those
markets). Outside the United States, GTE operates mobile-cellular networks
serving some 15 million POPs through affiliates in Canada, the Dominican
Republic, Venezuela and Argentina, where an additional 354,000 customers
are served.
CAPITAL RESOURCES AND LIQUIDITY
Cash from operations for the first three months of 1995 totaled $1.36
billion compared to $1.21 billion for the first quarter of 1994. The
increase in cash from operations is due to improved operating results in
the first quarter of 1995 and the absence of one-time income tax payments
in the first quarter of 1994 related to both the completion of the Mobile
Subscriber Equipment Contract and to gains on sales of non-strategic
properties sold in late 1993. Capital expenditures and dividends in the
first quarter were funded by cash flows from operations.
Cash used in investing activities for the first three months of 1995
totaled $830 million, compared with $863 million in the first quarter of
1994. Capital expenditures for the first quarter of 1995 totaled $771
million compared with $830 million in the same period last year. For the
full year 1995, capital expenditures are expected to be approximately $4.4
billion compared with $4.2 billion in 1994. Capital expenditures and
dividends for 1995 are expected to be funded by cash flows from operations
together with funds obtained through employee stock purchase and dividend
reinvestment plans. 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 existing network.
Cash used in financing activities for the first three months of 1995
totaled $519 million, compared with $318 million in the same period last
year. During the first quarter of 1995, dividend payments of $454 million
and net reductions in short and long-term borrowings and preferred stock of
$184 million were partially offset by $107 million received through GTE's
employee stock purchase and dividend reinvestment plans. In March 1995, a
subsidiary of GTE issued $511 million of 8.75% Monthly Income Preferred
Securities ("MIPS"). This issuance completed the $1 billion shelf
registration with the Securities and Exchange Commission for MIPS.
GTE believes that its present investment grade credit rating and those of
its subsidiaries provide it with the financial flexibility necessary to
pursue growth opportunities as they arise. At March 31, 1995, GTE had $4.4
billion of unused bank lines of credit available to back up commercial
paper borrowings and for working capital requirements.
- 5 -
GTE CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (Continued)
RECENT DEVELOPMENTS
In 1994, GTE reached agreement to acquire the 10 percent ownership of
Contel Cellular Inc. that it does not already own for approximately $250
million in cash. The transaction is expected to close on May 12, 1995.
In March 1995, the Federal Communications Commission ("FCC") increased the
local-exchange carrier ("LEC") productivity factors associated with its
interstate price cap plan to provide three different options, on an interim
basis, regarding the determination and use of productivity factors. These
changes will be reflected in the LECs' annual tariff filing, effective
August 1, 1995. The FCC is expected to continue to consider permanent
changes to its price cap plan in a future rulemaking proceeding. GTE
believes the impact of the interim rules will be minimized in the near-term
because GTE has reduced its access fees in previous years to amounts below
the FCC's maximum price.
Also in March 1995, GTE was successful in its bid for licenses serving four
markets in the FCC's auction for personal communications services licenses.
The licenses were acquired at a cost of approximately $400 million and
included those for the Atlanta, Seattle, Cincinnati and Denver Major
Trading Areas. These markets, with approximately 20 million POPs, will
enhance GTE's ability to bring new wireless services to its key local
telephone operating properties, further strengthen existing cellular
clusters, and expand an already strong cellular presence. Approximately
$80 million of the purchase price has already been paid with the final $320
million expected to be paid during the second quarter of 1995.
Construction of the cellular networks in the new markets is expected to
commence in late 1995 and continue through 1997.
GTE has also signed a definitive agreement to exchange certain GTE cellular
assets in Oregon, Minnesota, New Mexico and Washington for 100 percent of
US WEST's cellular assets in San Diego, the 13th largest cellular market in
the U.S. containing 2.6 million POPs. The transaction, which will give GTE
operating control of the San Diego MSA, is subject to regulatory approval
and is expected to close during the second half of 1995.
In April 1995, the Supreme Court of Texas ruled in favor of GTE Southwest
in its rate case dating to 1989. The Supreme Court agreed with GTE's
position concerning retroactive ratemaking, the ratemaking treatment of
federal income tax expense and the payment for services from GTE Service
Corporation, a wholly-owned subsidiary of GTE. The final issue, payments
associated with directory publications rendered by GTE Directories
Corporation, also a wholly-owned subsidiary of GTE, has been remanded to
the Texas Public Utilities Commission ("TPUC") for further proceedings. It
is not known when the TPUC will make a decision on this matter. While the
ultimate outcome of this matter is not presently determinable, it is not
expected to have a material effect on GTE's results of operations.
- 6 -
GTE CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (Continued)
Also in April 1995, GTE filed a motion with the U.S. District Court for the
District of Columbia to remove the 1984 Consent Decree, which restricts GTE
from providing interLATA services. GTE believes that the Consent Decree is
no longer required since GTE has since divested its interests in the
entities whose purchase gave rise to the Consent Decree.
In May 1995, the FCC approved GTE's applications to construct a new
fiber-optic and coaxial-cable video network in Ventura County, California,
Pasco and Pinellas Counties, Florida, Honolulu, Hawaii and Manassas,
Virginia. GTE expects to submit tariffs that set the rates for use of its
video network to the FCC for approval and to commence the initial
deployment of the network in late 1995 and early 1996.
Finally, the states of Virginia and North Carolina recently enacted
legislation to open local telephone markets to competition in 1996, while
requiring the implementation of price regulation. Several other states are
considering similar regulatory reform proposals during the current
legislative sessions.
- 7 -
GTE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, December 31,
1995 1994
(In Millions)
ASSETS
CURRENT ASSETS:
Cash and temporary cash investments $ 330 $ 323
Receivables, less allowances
of $220 and $207 million 3,667 4,022
Inventories 689 676
Other current assets 640 613
Total Current Assets 5,326 5,634
PROPERTY, PLANT AND EQUIPMENT, at cost:
Telephone operations 44,597 44,287
Accumulated depreciation (18,209) (17,656)
26,388 26,631
Telecommunications products
and services and other 4,363 4,258
Accumulated depreciation (1,636) (1,561)
2,727 2,697
Total Property, Plant and Equipment, net 29,115 29,328
INVESTMENTS AND OTHER ASSETS:
Franchises, goodwill and other intangibles,
net of accumulated amortization of
$334 and $319 million 2,217 2,149
Investments in unconsolidated companies 1,577 1,551
Prepaid pension costs and deferred charges 3,054 3,004
Long-term receivables and other assets 865 834
Total Investments and Other Assets 7,713 7,538
Total Assets $42,154 $42,500
The accompanying notes are an integral part of these statements.
- 8 -
GTE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, December 31,
1995 1994
(In Millions)
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term obligations, including
current maturities $ 1,449 $ 2,042
Accounts and payrolls payable 1,757 2,229
Accrued taxes 1,017 871
Dividends payable 475 472
Accrued restructuring costs 472 436
Other current liabilities 2,129 2,171
Total Current Liabilities 7,299 8,221
LONG-TERM DEBT 12,072 12,163
RESERVES AND DEFERRED CREDITS:
Deferred income taxes 3,542 3,522
Employee benefit obligations 4,703 4,651
Restructuring costs and other 1,622 1,729
Total Reserves and Deferred Credits 9,867 9,902
MINORITY INTERESTS IN EQUITY OF SUBSIDIARIES 2,132 1,622
PREFERRED STOCK, subject to mandatory redemption 107 109
SHAREHOLDERS' EQUITY:
Preferred stock 10 10
Common stock - shares issued 968,123,939
and 965,084,925 48 48
Amounts paid in, in excess of par value 7,725 7,627
Reinvested earnings 3,513 3,422
Guaranteed ESOP obligations (619) (624)
Total Shareholders' Equity 10,677 10,483
Total Liabilities and Shareholders' Equity $42,154 $42,500
The accompanying notes are an integral part of these statements.
- 9 -
GTE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended
March 31
1995 1994
(In Millions)
Cash Flows from Operations:
Net income $ 545 $ 504
Adjustments to reconcile net income to
net cash from operations:
Depreciation and amortization 894 837
Change in current assets and current
liabilities, excluding the effects of
acquisitions and dispositions (250) (226)
Deferred income taxes and other - net 167 96
Net cash provided from operations 1,356 1,211
Cash Flows from Investing:
Capital expenditures (771) (830)
Other - net (59) (33)
Net cash used in investing (830) (863)
Cash Flows from Financing:
GTE common stock issued 107 138
Long-term debt and preferred securities issued 532 990
Long-term debt and preferred securities retired (191) (1,534)
Dividends to shareholders of parent (454) (449)
Increase (decrease) in short-term obligations,
excluding current maturities (525) 528
Other - net 12 9
Net cash used in financing (519) (318)
Increase in cash and temporary
cash investments 7 30
Cash and temporary cash investments:
Beginning of period 323 322
End of period $ 330 $ 352
Cash paid during the period for:
Interest $ 207 $ 200
Income taxes 122 420
The accompanying notes are an integral part of these statements.
- 10 -
GTE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(1) BASIS OF PRESENTATION:
The unaudited Condensed Consolidated Financial Statements included
herein have been prepared by the Company 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 1994 Annual Report on Form 10-K.
(2) PROPERTY SALES:
The accompanying Condensed Consolidated Statements of Income and the
Condensed Summary of Consolidated Results include the results of
operations, through the date of sale, of GTE Spacenet and certain non-
strategic local-exchange telephone properties sold during 1994. For
comparability, the following table includes pro forma adjustments to
remove the 1994 operating results of GTE Spacenet and the telephone
properties sold.
Three Months Ended
March 31
1995 1994
(In Millions)
REVENUES AND SALES:
Telephone Operations $3,836 $3,784
Telecommunications Products
and Services 926 837
Total revenues and sales $4,762 $4,621
OPERATING INCOME:
Telephone Operations $1,057 $1,003
Telecommunications Products
and Services 127 92
Total operating income $1,184 $1,095
- 11 -
PART II. OTHER INFORMATION
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) Annual Meeting - April 19, 1995
(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
Class III Directors:
Edwin L. Artzt 794,438,309 22,936,659
Kent B. Foster 792,419,576 24,955,392
Sandra O. Moose 793,880,978 23,493,990
Russell E. Palmer 794,980,191 22,394,777
Robert D. Storey 794,164,064 23,210,904
Class II Director:
Nicholas L. Trivisonno 793,080,607 24,294,361
(c) Other matters voted upon:
Proposal to Ratify the Appointment of Auditors
Shareholders ratified the appointment of Arthur Andersen LLP to
conduct the annual audit of the financial statements of GTE
Corporation and its subsidiary companies for the year ending
December 31, 1995. The vote was:
FOR - 795,390,805 shares, or 98.39 percent of the shares voted.
AGAINST - 13,037,848 shares, or 1.61 percent of the shares voted.
ABSTENTIONS - 8,946,315 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 - 254,832,548 shares, or 38.26 percent of the shares voted.
AGAINST - 411,288,537 shares, or 61.74 percent of the shares
voted.
ABSTENTIONS - 17,601,601 shares.
BROKERS NON-VOTES - 133,652,282 shares.
- 12 -
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - (Continued)
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 - 146,461,373 shares, or 22.16 percent of the shares voted.
AGAINST - 514,319,586 shares, or 77.84 percent of the shares
voted.
ABSTENTIONS - 22,941,728 shares.
BROKERS NON-VOTES - 133,652,281 shares.
Proposal to Limit Executive Officers' Pay Increases
Shareholders voted against a shareholder proposal to limit
executive officers' pay increases. The vote was:
FOR - 147,493,953 shares, or 22.29 percent of the shares voted.
AGAINST - 514,310,105 shares, or 77.71 percent of the shares
voted.
ABSTENTIONS - 21,915,830 shares.
BROKERS NON-VOTES - 133,655,080 shares.
Proposal to endorse the Coalition for Environmentally Responsible
Economies ("CERES") Principles
Shareholders voted against a shareholder proposal to request that
GTE endorse the CERES Principles. The vote was:
FOR - 77,107,454 shares, or 12.47 percent of the shares voted.
AGAINST - 541,153,149 shares, or 87.53 percent of the shares
voted.
ABSTENTIONS - 65,462,081 shares.
BROKERS NON-VOTES - 133,652,284 shares.
- 13 -
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - (Continued)
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 - 86,277,645 shares, or 13.72 percent of the shares voted.
AGAINST - 542,616,191 shares, or 86.28 percent of the shares
voted.
ABSTENTIONS - 54,828,852 shares.
BROKERS NON-VOTES - 133,652,280 shares.
Proposal to Eliminate Non-Employee Directors' Pension Benefits
Shareholders voted against a shareholder proposal to eliminate
future non-employee directors' pension benefits and the
relinquishment of pension benefits for current non-employee
directors. The vote was:
FOR - 218,317,914 shares, or 33.14 percent of the shares voted.
AGAINST - 440,505,513 shares, or 66.86 percent of the shares
voted.
ABSTENTIONS - 24,898,458 shares.
BROKERS NON-VOTES - 133,653,083 shares.
Proposal to Require Shareholder Approval of Future Compensation
Agreements Contingent on a Change in Control
Shareholders voted against a shareholder proposal for the
adoption of a policy against future agreements with officers and
directors providing compensation contingent on a change in
control unlessapproved by a majority of shareholders.
The vote was:
FOR - 280,616,276 shares, or 42.90 percent of the shares voted.
AGAINST - 373,530,342 shares, or 57.10 percent of the shares
voted.
ABSTENTIONS - 29,575,223 shares.
BROKERS NON-VOTES - 133,653,127 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
(27) Financial Data Schedule
(b) GTE filed a report on Form 8-K dated February 17, 1995
under Item 7, "Financial Statements and Exhibits". 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 11, 1995 By Lawrence R. Whitman
.............................
Lawrence R. Whitman
Vice President - Controller
Date: May 11, 1995 By Marianne Drost
.............................
Marianne Drost
Secretary
- 16 -
EXHIBIT 11
GTE CORPORATION AND SUBSIDIARIES
CALCULATION OF EARNINGS PER COMMON SHARE
Three Months Ended
March 31
1995 1994
(In Thousands)
Net income applicable to common stock $543,282 $499,610
Adjustments to net income:
Add - Preferred dividend requirements on
dilutive convertible preferred stocks 138 158
Interest expense, net of tax effect, on
employees' stock plans 172 172
Total adjustments 310 330
Adjusted consolidated net income
applicable to common stock $543,592 $499,940
Average common shares 967,091 953,609
Adjustments to common shares:
Add - Dilutive convertible preferred stocks 532 605
Employees' stock and stock option plans 1,935 1,694
Total adjustments 2,467 2,299
Adjusted average common shares 969,558 955,908
EARNINGS PER COMMON SHARE:
Primary (1) $ .56 $ .52
Fully diluted (2) $ .56 $ .52
(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
Page 1
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, 1995 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C> <C>
Net earnings available for fixed charges:
Income from continuing operations $ 544,857 $2,450,779 $ 989,803 $1,787,035 $1,528,102 $1,622,261
Add (deduct) -
Income taxes 334,654 1,532,482 567,747 966,589 662,860 697,963
Interest expense 281,250 1,139,233 1,298,234 1,475,670 1,574,746 1,510,909
Capitalized interest (net of
amortization) (2,330) (6,045) (3,421) (4,931) (14,791) (18,316)
Preferred stock dividends of
subsidiaries 18,653 18,252 22,162 23,429 25,317 28,697
Additional income requirement on preferred
stock dividends of subsidiaries 2,612 11,426 12,739 12,671 11,006 12,357
Minority interests 30,175 140,464 112,335 112,425 103,626 83,471
Portion of rent expense representing
interest 31,103 139,715 153,058 196,533 210,698 206,959
1,240,974 5,426,306 3,152,657 4,569,421 4,101,564 4,144,301
Deduct - Minority interests (55,393) (242,937) (236,944) (248,979) (247,284) (224,240)
Adjusted earnings available
for fixed charges from
continuing operations $1,185,581 $5,183,369 $2,915,713 $4,320,442 $3,854,280 $3,920,061
Fixed Charges:
Interest charges $ 281,250 $1,139,233 $1,298,234 $1,475,670 $1,574,746 $1,510,909
Preferred dividends of subsidiaries 18,653 18,252 22,162 23,429 25,317 28,697
Additional income requirement on preferred
dividends of subsidiaries 2,612 11,426 12,739 12,671 11,006 12,357
Portion of rent expense representing
interest 31,103 139,715 153,058 196,533 210,698 206,959
333,618 1,308,626 1,486,193 1,708,303 1,821,767 1,758,922
Deduct - Minority interests (16,768) (68,096) (78,421) (86,504) (89,479) (91,730)
Adjusted fixed charges $ 316,850 $1,240,530 $1,407,772 $1,621,799 $1,732,288 $1,667,192
Ratio of Earnings to Fixed Charges - continuing
operations 3.74 4.18 2.07 2.66 2.22 2.35
Exhibit 12
Page 1
GTE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF THE RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
(Thousands of Dollars)
(Unaudited)
<CAPTION>
Three Months Ended Years Ended December 31
March 31, 1995 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C> <C>
Net earnings available for fixed charges
and preferred stock dividends:
Income from continuing operations $ 544,857 $2,450,779 $ 989,803 $1,787,035 $1,528,102 $1,622,261
Add (deduct) -
Income taxes 334,654 1,532,482 567,747 966,589 662,860 697,963
Interest expense 281,250 1,139,233 1,298,234 1,475,670 1,574,746 1,510,909
Capitalized interest (net of
amortization) (2,330) (6,045) (3,421) (4,931) (14,791) (18,316)
Preferred stock dividends of
subsidiaries 18,653 18,252 22,162 23,429 25,317 28,697
Additional income requirement on preferred
stock dividends of subsidiaries 2,612 11,426 12,739 12,671 11,006 12,357
Minority interests 30,175 140,464 112,335 112,425 103,626 83,471
Additional income requirement on preferred
stock dividends of Parent 969 6,204 10,246 14,241 15,991 18,802
Portion of rent expense representing
interest 31,103 139,715 153,058 196,533 210,698 206,959
1,241,943 5,432,510 3,162,903 4,583,662 4,117,555 4,163,103
Deduct - Minority interests (55,393) (242,937) (236,944) (248,979) (247,284) (224,240)
Adjusted earnings available for fixed
charges and preferred stock
dividends - continuing operations $1,186,550 $5,189,573 $2,925,959 $4,334,683 $3,870,271 $3,938,863
Fixed Charges and preferred stock dividends:
Interest charges $ 281,250 $1,139,233 $1,298,234 $1,475,670 $1,574,746 $1,510,909
Preferred dividends of subsidiaries 18,653 18,252 22,162 23,429 25,317 28,697
Additional income requirement on preferred
dividends of subsidiaries 2,612 11,426 12,739 12,671 11,006 12,357
Preferred stock dividends of Parent 1,575 9,910 17,825 26,331 36,785 43,662
Additional income requirement on preferred
stock dividends of Parent 969 6,204 10,246 14,241 15,991 18,802
Portion of rent expense representing
interest 31,103 139,715 153,058 196,533 210,698 206,959
336,162 1,324,740 1,514,264 1,748,875 1,874,543 1,821,386
Deduct - Minority interests (16,768) (68,096) (78,421) (86,504) (89,479) (91,730)
Adjusted fixed charges $ 319,394 $1,256,644 $1,435,843 $1,662,371 $1,785,064 $1,729,656
Ratio of Earnings to Fixed Charges and
preferred stock dividends -
continuing operations 3.72 4.13 2.04 2.61 2.17 2.28
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> MAR-31-1995
<CASH> 330
<SECURITIES> 0
<RECEIVABLES> 3,667
<ALLOWANCES> 0
<INVENTORY> 690
<CURRENT-ASSETS> 5,326
<PP&E> 48,960
<DEPRECIATION> 19,845
<TOTAL-ASSETS> 42,154
<CURRENT-LIABILITIES> 7,299
<BONDS> 12,072
<COMMON> 48
107
10
<OTHER-SE> 10,619
<TOTAL-LIABILITY-AND-EQUITY> 42,154
<SALES> 4,762
<TOTAL-REVENUES> 4,762
<CGS> 3,578
<TOTAL-COSTS> 3,578
<OTHER-EXPENSES> 304
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 281
<INCOME-PRETAX> 880
<INCOME-TAX> 335
<INCOME-CONTINUING> 545
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 545
<EPS-PRIMARY> .56
<EPS-DILUTED> .56
</TABLE>
