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, 1996
GTE SAVINGS PLAN
GTE CORPORATION
ONE STAMFORD FORUM
STAMFORD, CONNECTICUT 06904
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, 1996 and 1995, and the related statement of changes in net
assets available for plan benefits, with fund information for the year ended
December 31, 1996. 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 Plan as of December 31, 1996 and 1995, and the changes in its net
assets available for plan benefits for the year ended December 31, 1996, 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 statement 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 23, 1997
<TABLE>
GTE SAVINGS PLAN
STATEMENT of Net Assets Available for Plan Benefits, WITH FUND INFORMATION
DECEMBER 31, 1996
(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 $ 256,225 $ 480 $ 256,705 $ - $ 256,705
Overseas Fund 106,632 282 106,914 - 106,914
U.S. Equity Index Collective Trust Fund 180,480 311 180,791 - 180,791
Retirement Government Money Market Portfolio 90,417 262 90,679 - 90,679
Magellan Fund 367,482 879 368,361 - 368,361
Conservative Strategy Portfolio 352,452 247 352,699 - 352,699
Conservative Growth Strategy Portfolio 214,318 297 214,615 - 214,615
Moderate Growth Strategy Portfolio 317,747 594 318,341 - 318,341
Long-Term Growth Strategy Portfolio 256,535 623 257,158 - 257,158
OTHER FUNDS:
GTE Stock Portfolio 1,067,080 14,343 1,081,423 - 1,081,423
PAYSOP Fund (Note 6) 273,103 - 273,103 - 273,103
Loan Fund 116,708 - 116,708 - 116,708
ESOP Shares Fund Allocated (Note 4) 288,215 - 288,215 - 288,215
ESOP Shares Fund Unallocated (Note 4) 741,506 - 741,506 593,018 148,488
Total $4,628,900 $18,318 $4,647,218 $593,018 $4,054,200
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, 1995
(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 $ 180,427 $ 441 $ 180,868 $ - $ 180,868
Overseas Fund 89,521 328 89,849 - 89,849
U.S. Equity Index Collective Trust Fund 120,433 223 120,656 - 120,656
Retirement Government Money Market Portfolio 70,061 303 70,364 - 70,364
Magellan Fund 383,218 1,210 384,428 - 384,428
Conservative Strategy Portfolio 369,893 336 370,229 - 370,229
Conservative Growth Strategy Portfolio 210,984 374 211,358 - 211,358
Moderate Growth Strategy Portfolio 284,488 698 285,186 - 285,186
Long-Term Growth Strategy Portfolio 221,578 706 222,284 - 222,284
OTHER FUNDS:
GTE Stock Portfolio 1,090,951 19,025 1,109,976 - 1,109,976
Loan Fund 110,450 - 110,450 - 110,450
ESOP Shares Fund Allocated (Note 4) 240,375 - 240,375 - 240,375
ESOP Shares Fund Unallocated (Note 4) 781,322 - 781,322 624,324 156,998
Total $4,153,701 $23,644 $4,177,345 $624,324 $3,553,021
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, 1996
(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 $ 15,640 $ 6,511 $ - $ 3,707 $ 60,591
Net Investment Gain (Loss) (Note 2) 25,851 5,695 30,896 - (20,129)
Contributions (Note 3):
Employee 13,489 8,845 7,651 7,597 29,864
Employer - - - - -
Transfers From Other Plans (Note 6) 605 392 660 447 1,257
Net Transfers Between Funds 38,761 5,073 33,760 25,176 (53,924)
Participant Loans:
Repayments 3,387 2,162 1,800 3,135 7,316
Withdrawals (3,324) (2,139) (2,128) (2,631) (8,218)
Interest Expense - - - - -
Withdrawals and Terminations (18,572) (9,474) (12,504) (17,116) (32,824)
INCREASE (DECREASE) IN NET ASSETS
AVAILABLE FOR PLAN BENEFITS DURING THE YEAR 75,837 17,065 60,135 20,315 (16,067)
NET ASSETS AVAILABLE FOR PLAN
BENEFITS AT BEGINNING OF YEAR 180,868 89,849 120,656 70,364 384,428
NET ASSETS AVAILABLE FOR PLAN
BENEFITS AT END OF YEAR $256,705 $106,914 $180,791 $90,679 $368,361
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, 1996
(thousands of dollars)
<CAPTION>
Other
Fidelity Funds 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 $ - $ - $ - $ - $ 45,915
Net Investment Gain (Loss) (Note 2) 20,989 18,889 35,525 29,938 34,029
Contributions (Note 3):
Employee 8,129 9,481 18,496 18,888 21,087
Employer - - - - 13,675
Transfers From Other Plans (Note 6) 366 407 822 1,026 1,683
Net Transfers Between Funds (4,887) (1,864) 1,106 130 (40,891)
Participant Loans:
Repayments 2,593 2,505 4,499 4,004 23,442
Withdrawals (3,370) (2,616) (4,763) (4,103) (26,021)
Interest Expense - - - - -
Withdrawals and Terminations (41,350) (23,545) (22,530) (15,009) (101,472)
INCREASE (DECREASE) IN NET ASSETS
AVAILABLE FOR PLAN BENEFITS DURING THE YEAR (17,530) 3,257 33,155 34,874 (28,553)
NET ASSETS AVAILABLE FOR PLAN
BENEFITS AT BEGINNING OF YEAR 370,229 211,358 285,186 222,284 1,109,976
NET ASSETS AVAILABLE FOR PLAN
BENEFITS AT END OF YEAR $352,699 $214,615 $318,341 $257,158 $1,081,423
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, 1996
(thousands of dollars)
<CAPTION>
Other Funds
ESOP Shares ESOP Shares
PAYSOP Loan Fund Fund
Fund Fund Allocated Unallocated Total
<S> <C> <C> <C> <C> <C>
Interest and Dividends $ 2,844 $ 8,034 $ 12,029 $ 32,697 $ 187,968
Net Investment Gain (Loss)(Note 2) 558 - 7,666 25,560 215,467
Contributions (Note 3):
Employee - - - - 143,527
Employer - - - 47,122 60,797
Transfers From Other Plans (Note 6) 271,529 - - - 279,194
Net Transfers Between Funds - - 50,992 (53,432) -
Participant Loans:
Repayments - (54,843) - - -
Withdrawals - 59,313 - - -
Interest Expense - - - (60,457) (60,457)
Withdrawals and Terminations (1,828) (6,246) (22,847) - (325,317)
INCREASE (DECREASE) IN NET ASSETS
AVAILABLE FOR PLAN BENEFITS DURING THE YEAR 273,103 6,258 47,840 (8,510) 501,179
NET ASSETS AVAILABLE FOR PLAN
BENEFITS AT BEGINNING OF YEAR - 110,450 240,375 156,998 3,553,021
NET ASSETS AVAILABLE FOR PLAN
BENEFITS AT END OF YEAR $273,103 $116,708 $288,215 $148,488 $4,054,200
The accompanying notes are an integral part of this financial statement.
</TABLE>
GTE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
(1) Description of the Plan:
Eligibility
The GTE Corporation ("GTE") GTE Savings Plan (the "Plan") is a defined
contribution plan under the Employee Retirement Income Security Act of 1974
("ERISA"). The Plan provides eligible employees of GTE and its subsidiaries
("Participating Affiliates") with a convenient way to save for both medium
and long-term needs.
Eligible employee generally 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;
b. an individual paid by the hour unless GTE or a Participating
Affiliate has agreed to become a co-sponsor under the Plan for such
employees;
c. a nonresident alien with no United States source income from
GTE;
d. a "leased employee" within the meaning of the Internal Revenue
Code Section 414(n);
e. an individual who is not paid directly by GTE or a Participating
Affiliate; and
f. an individual whose employment contract excludes participation
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.
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.
Vesting and Investment Choices
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
GTE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS - (Continued)
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 following current investment options: five Fidelity funds, four
Fidelity strategy portfolios, 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 United
States and also invests in public and private bonds (both
foreign and domestic), bank deposits and money market
instruments denominated in United States 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 United States 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 United States government or its
agencies.
e. Fidelity Magellan Fund - invests primarily in stocks and
securities convertible into common stock of United States and
foreign companies and in high yield securities, options, and
futures contracts related to securities in the portfolio.
f. Fidelity Conservative Strategy Portfolio - invests 100% of its
assets in an underlying portfolio of fixed-income securities, including
investment contracts and bonds.
g. Fidelity 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 United States equities.
h. Fidelity Moderate Growth Strategy Portfolio - invests approximately
50% of its assets in a portfolio of United States equities. The
remaining 50% is invested in a portfolio of fixed-income securities,
including investment contracts and bonds.
GTE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS - (Continued)
i. Fidelity Long-Term Growth Strategy Portfolio - invests
approximately 75% of its assets in a portfolio of equity securities
consisting of a combination of United States 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.
Participant Loans
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 who have taken loans.
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, the principal and interest are reinvested according to the
participants' current investment choices. Short-term loans are from six
months to five years; long-term loans for the purchase of a primary
residence are from sixty months to twenty years.
Master Trust
The Plan participates in the GTE Master Savings Trust (the "Master
Trust") and, along with other plans, which owns a percentage of the assets
in the Master Trust. These percentages are based on a pro rata share of the
Master Trust assets. At December 31, 1996 and 1995, the Plan owned
approximately 76% and 79%, respectively, of the assets in the Master Trust.
Interest and dividends along with net investment gains or losses are
allocated to the Plan on a daily basis based upon the Plans' participation
in the various investment funds and portfolios that comprise the Master
Trust as a percentage of the total participation in such funds and
portfolios (see Note 7).
Trustee
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 and portfolios of the
Plan including the payment of principal and interest on the Employee Stock
Ownership Plan's (the "ESOP") notes payable (see Note 4). Expenses of
administering the Plan and related funds and portfolios, 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 SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS - (Continued)
Plan Modification
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.
Effective January 1, 1997, participants may elect to have dividends on
GTE common stock paid in cash rather than reinvested in the Plan. Also, GTE
has enhanced the Plan to 16 investment choices from the 10 current
investment choices. The investment choices added are as follows: The
Aggressive Growth Strategy, MAS Fixed Income Fund, Morgan Stanley
Institutional Equity Growth Fund, Templeton Institutional Foreign Equity
Fund, Warburg Pincus Emerging Growth Fund and the Templeton Institutional
Emerging Market Fund.
(2) Accounting Policies:
The accompanying financial statements have been prepared in accordance
with generally accepted accounting principles which require that estimates
and assumptions be made that affect reported amounts. Actual results could
differ from those estimates.
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 at the beginning of the Plan year or at the time of purchase if
acquired during the Plan year. For 1996, the GTE Stock Portfolio had an
unrealized gain of $39.8 million and a realized loss of $5.8 million. For
the same period, the combined ESOP shares fund had an unrealized gain of
$12.8 million and a realized gain of $20.4 million.
(3) Contributions:
The Plan is funded by employee contributions up to a maximum of 16% of
compensation and by company matching contributions in shares of GTE common
stock equivalent in value to 75% of the initial 6% of the employees'
contributions not withdrawn during the Plan year. The company matching
contributions are 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 1996 Plan year was limited to
$9,500. The total amount of Elective contributions, After-Tax contributions
GTE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS - (Continued)
and company matching contributions and certain forfeitures that may be
allocated to a Plan participant for the 1996 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 matching contributions are made in GTE common stock and in
general, participants cannot redirect these shares into other investment
choices. For the 1996 Plan year, total company matching contributions of
1,566,199 shares of GTE common stock were made with a market value at date
of contribution of $72.8 million. These contributions included an
allocation of ESOP shares of 1,272,437 with a market value of $59.2 million
and accrued contributions of GTE common stock of 293,762 shares with a
market value of $13.6 million. Employer contributions receivable in the GTE
Stock Portfolio were $13.6 million and $18.2 million at December 31, 1996
and 1995, respectively.
(4) Employee Stock Ownership Plan:
An Employee Stock Ownership Plan (the "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 2004.
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 in the form of company matching contributions.
Debt service payments for 1996 totaled $92 million. This requirement
was funded from $45 million of dividends accumulated on the GTE stock held
by the ESOP and by $47 million of cash contributions. At December 31, 1996,
14.9 million shares of GTE common stock in the ESOP Shares Fund were held as
collateral for the ESOP loans.
The borrowings of the ESOP are as follows:
Interest Maturity
Rates Dates 1996 1995
(thousands of dollars)
Series A 9.48% 1998-1999 $ 84,518 $115,824
Series B 9.73% 1999-2005 508,500 508,500
$593,018 $624,324
GTE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS - (Continued)
Maturities of the outstanding loans are as follows:
Maturity 1996 1995
Date Amount Amount
(thousands of dollars)
1997 $ - $ 31,306
1998 38,324 38,324
1999 46,194 46,194
2000 55,231 55,231
2001 65,316 65,316
Thereafter 387,953 387,953
Total $593,018 $624,324
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 income tax. Management amended the
Plan in 1995 to comply with changes to the law made by the Tax Reform Act of
1986, as amended, and has requested a determination letter from the Internal
Revenue Service with respect to these changes. Management believes that such
determination letter will be received in due course.
(6) Transfers from Other Plans:
Effective November 15, 1996, a portion of the GTE Consolidated
Employee Stock Ownership Plan (the "PAYSOP") was merged into the Plan.
Accordingly, approximately 6 million shares of GTE common stock with an
approximate market value of $272 million and a small amount of cash was
transferred into the Plan. All participants in the PAYSOP are fully vested.
The only participant directed funds are those which were contributed by
participants between 1979 and 1982. All other contributions, in the form of
GTE common shares, were made by GTE. Participants may elect to reinvest
dividends or receive them in cash. Participants cannot borrow from this
account; however, the balance is used to determine a maximum loan amount
available to participants.
GTE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS - (Continued)
(7) GTE Master Savings Trust:
The plans participating in the Master Trust include the GTE Savings
Plan; GTE Hourly Savings Plan; GTE Corporation Savings, Investment &
Tax-Deferral Plan for Hourly Employees; AGCS Savings Plan (limited
participation) and AGCS Hourly Savings Plan (limited participation).
In the Master Trust, funds are invested in contracts with insurance
companies which represented 68% of the conservative pool consisting of 58
investment contracts held with 20 insurance companies. These insurance
companies, excluding Mutual Benefit Life Insurance Company ("Mutual
Benefit") and Confederation Life Insurance and Annuity Company
("Confederation") discussed below were rated AA- or better by Standard &
Poor's as of December 31, 1996 and 1995. The contracts are included in the
financial statements at contract value, approximately $621 million, which
approximates fair value, as reported by the insurance companies.
Contract value represents contributions made under the contract, plus
earnings, less withdrawals and administrative expenses. Investment
contracts are normally set at a fixed rate through maturity, which is also
the minimum crediting interest rate. Limitations on guarantees for normal
investment contracts are dependent on the creditworthiness of the insurance
company. Synthetic investment contracts ("Synthetics") are determined by an
internal rate of return calculation that equates market value and book value
at the expected average life of the securities. The Synthetics interest
rate is reset quarterly but has no minimum crediting rate. Limitations on
Synthetics are dependent upon the credit quality of the underlying
securities.
The investment contracts had average yields of 7.0% and 6.9% at
December 31, 1996 and 1995, respectively. The crediting interest rate for
the investment contracts, excluding Mutual Benefit and Confederation, had a
range from 5.28% to 8.56% and 5.28% to 8.90% at December 31, 1996 and 1995
respectively. The investment contracts have scheduled maturities from
January 6, 1997 to February 5, 2001.
At December 31, 1996, the income pool had an investment contract with
Mutual Benefit which represented approximately 4% of the conservative pool's
investments and approximately 1% of the Master Trust investments. At
December 31, 1996, this investment is carried at contract value of $38.2
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 participated in the plan and
received a new contract which preserves principal and extends maturities,
with minimum interest and premium payments over the rehabilitation period.
During 1996, the contract was credited with interest at 6.35% for the period
from January 1, 1996 to September 30, 1996; and at 9.25% for the period from
October 1, 1996 to December 31, 1996. 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. There is no reserve held for resolution of the
rehabilitation.
GTE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
At December 31, 1996, the income pool had three investment contracts
with Confederation at a contract value of $13.6 million, which represented
approximately 2% of the conservative pool's investments and is 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.
In the fourth quarter of 1996 a hearing was held with Confederation
Life to approve a rehabilitation workout plan. The Trustee analyzed the
Plans rehabilitation options and issued their recommendation, which GTE
concurred with. On April 25, 1997 the Plan received $11.5 million or 89% of
the distributable liquid assets. On May 27, 1997 the Plan received an
additional $1.5 million or 11% of the distributable liquid assets. On July
31, 1997, the first illiquid trust distributions will be made, if any, with
semiannual distributions thereafter.
The following schedules reflect Master Trust net investments by fund
as of December 31, 1996 and 1995 and net investment income for the year
ended December 31, 1996:
GTE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS - (Continued)
December 31,
Investments in Master Trust: 1996 1995
(thousands of dollars)
Fidelity funds:
Equity - Income Fund $ 303,235 $ 212,302
Overseas Fund 125,478 104,147
U.S. Equity Index Collective Trust Fund 241,454 164,358
Retirement Government Money Market Portfolio 137,236 107,307
Magellan Fund 454,381 464,931
Broad Market Duration Collective Trust - 1,034
Conservative Strategy Portfolio 481,725 494,246
Conservative Growth Strategy Portfolio 257,709 250,779
Moderate Growth Strategy Portfolio 379,793 335,534
Long-Term Growth Strategy Portfolio 312,522 265,100
Other funds:
GTE Stock Portfolio 1,651,259 1,655,820
ESOP Shares Fund Allocated 288,215 240,375
ESOP Shares Fund Unallocated 741,506 781,322
PAYSOP Fund 539,904 -
Loan Fund 183,536 169,028
Income Portfolio - 8,605
Total $6,097,953 $5,254,888
Year Ended December 31, 1996
Dividends Net Investment
& Interest Gain (Loss)
Investment Income in Master Trust: (thousands of dollars)
Fidelity funds:
Equity - Income Fund $ 18,436 $ 30,400
Overseas Fund 7,634 6,607
U.S. Equity Index Collective Trust Fund - 41,410
Retirement Government Money Market Portfolio 5,755 -
Magellan Fund 73,594 (24,035)
Broad Market Duration Collective Trust - 46
Conservative Strategy Portfolio - 28,013
Conservative Growth Strategy Portfolio - 22,570
Moderate Growth Strategy Portfolio - 42,195
Long-Term Growth Strategy Portfolio - 36,142
Other funds:
GTE Stock Portfolio 70,028 51,695
ESOP Shares Fund Allocated 12,029 7,666
ESOP Shares Fund Unallocated 32,697 25,560
PAYSOP Fund 5,621 1,133
Loan Fund 12,465 -
Income Portfolio - 602
Total $238,259 $270,004
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 26, 1997 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 26, 1997
