<PAGE>
RULE NO. 424(b)(2)
REGISTRATION NOS. 333-31333 and 33-63145
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED JULY 28, 1997
$2,100,000,000
GTE CORPORATION [LOGO]
$450,000,000 6.36% DEBENTURES DUE 2006
$250,000,000 6.46% DEBENTURES DUE 2008
$600,000,000 6.84% DEBENTURES DUE 2018
$800,000,000 6.94% DEBENTURES DUE 2028
---------------
Interest on the 6.36% Debentures due 2006, the 6.46% Debentures due 2008, the
6.84% Debentures due 2018, and the 6.94% Debentures due 2028 (collectively, the
"New Debentures") is payable semi-annually on April 15 and October 15,
commencing October 15, 1998. The New Debentures will not be redeemable prior to
maturity. Each series of the New Debentures will be represented by global
securities registered in the name of the nominee of The Depository Trust
Company ("DTC"). Beneficial interests in the global securities will be shown
on, and transfers thereof will be effected only through, records maintained by
DTC and its participants. Except as described herein, New Debentures in
definitive form will not be issued. The New Debentures will be issued only in
denominations of $1,000 and integral multiples thereof. See "Description of New
Debentures."
---------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT
OR THE PROSPECTUS TO WHICH IT RELATES. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
---------------
<TABLE>
<CAPTION>
INITIAL PUBLIC UNDERWRITING PROCEEDS TO
OFFERING PRICE(1) DISCOUNT(2) COMPANY(1)(3)
----------------- ------------ -------------
<S> <C> <C> <C>
Per 6.36% Debenture due 2006...... 99.972% 0.625% 99.347%
Total............................ $449,874,000 $2,812,500 $447,061,500
Per 6.46% Debenture due 2008...... 99.968% 0.650% 99.318%
Total............................ $249,920,000 $1,625,000 $248,295,000
Per 6.84% Debenture due 2018...... 99.899% 0.875% 99.024%
Total............................ $599,394,000 $5,250,000 $594,144,000
Per 6.94% Debenture due 2028...... 99.884% 0.875% 99.009%
Total............................ $799,072,000 $7,000,000 $792,072,000
</TABLE>
- -------
(1) Plus accrued interest from April 15, 1998.
(2) GTE Corporation has agreed to indemnify the several Underwriters against
certain liabilities, including liabilities under the Securities Act of
1933. See "Underwriting."
(3) Before deduction of expenses estimated at $865,000 payable by GTE
Corporation.
---------------
The New Debentures offered hereby are offered severally by the Underwriters,
as specified herein, subject to receipt and acceptance by them and subject to
their right to reject any order in whole or in part. It is expected that the
New Debentures will be ready for delivery in book-entry form only through the
facilities of The Depository Trust Company in New York, New York on or about
April 27, 1998, against payment therefor in immediately available funds.
GOLDMAN, SACHS & CO.
BEAR, STEARNS & CO. INC.
MERRILL LYNCH & CO.
MORGAN STANLEY DEAN WITTER
SALOMON SMITH BARNEY
---------------
The date of this Prospectus Supplement is April 22, 1998.
<PAGE>
[Map showing GTE Service Areas. Domestic Service Areas are color coded to
indicate where Wireline, Wireline and Personal Communications Services (PCS),
Wireless, Wireline and Wireless, PCS and Long-distance, dial-up Internet-access
and Directory services are provided. International Service Areas are colored to
indicate the country or portion of the country where GTE provides service,
including Central America, the Caribbean, South America, North America, Europe,
the Middle East and the Asia Pacific region.]
Map indicates domestic and international service areas of GTE Corporation and
its subsidiaries as of December 31, 1997. It does not reflect the impact of any
properties to be repositioned by GTE, as discussed in GTE Corporation's Current
Report on Form 8-K dated April 2, 1998. See "Recent Developments--April 1998
Announcement."
<PAGE>
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE NEW DEBENTURES,
INCLUDING OVER-ALLOTMENT, STABILIZING AND SHORT-COVERING TRANSACTIONS IN SUCH
NEW DEBENTURES, AND THE IMPOSITION OF A PENALTY BID IN CONNECTION WITH THE
OFFERING. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
----------------
This Prospectus Supplement contains forward-looking statements. These
forward-looking statements are based upon a series of projections and
estimates regarding the economy, the telecommunications industry, the effects
of federal, state and local regulations on the industry in general and within
the markets of GTE Corporation and subsidiaries ("GTE"), as well as key
performance indicators that affect GTE directly.
These projections and estimates regarding the economy and the
telecommunications industry relate to the demand for and pricing of services,
the effects of competition, the impact of universal service and the success of
new products, services and new businesses, such as bundled services through
new marketing and sales initiatives, value-added data communications,
internet-related services, long distance and video. With regard to the effects
of regulation, GTE has assumed fair and reasonable resolutions to any pending
and potential federal, state and local regulatory initiatives and proceedings.
GTE Corporation's Current Report on Form 8-K dated April 2, 1998 with the
Securities and Exchange Commission which is incorporated herein by reference
discusses the important factors that could cause the actual results to differ
materially from those contained herein. If future events and actual
performance differ from that assumed in the risk factors noted above, GTE's
actual results could vary significantly from the performance projected in this
Prospectus Supplement.
RECENT DEVELOPMENTS
FIRST QUARTER RESULTS
On April 14, 1998, GTE announced its first quarter 1998 financial results by
reporting consolidated revenue growth of 11 percent and earnings per share
growth of 10 percent from core operations.
During the quarter, consolidated revenues and sales increased by 11 percent
to $5.88 billion, compared to $5.28 billion in the first quarter of 1997.
Earnings per share from core operations increased during the quarter to $.76
per share on net income of $733 million, as compared to $.69 per share or $665
million for the same period last year. Including the effects of the after-tax,
non-recurring charges of $802 million ($.83 per share) described below and
GTE's data initiatives ($.11 per share), a consolidated net loss of $178
million or $.18 per share was reported.
Additional information regarding GTE's first quarter 1998 financial results
may be found in GTE Corporation's Current Report on Form 8-K dated April 14,
1998.
APRIL 1998 ANNOUNCEMENT
On April 2, 1998, GTE announced a series of actions designed to further
sharpen its strategic focus and improve its competitive position by
repositioning non-strategic properties and reducing costs. These actions
include the generation of $2 billion to $3 billion in after-tax proceeds
available for the implementation of strategic initiatives through the
repositioning of non-strategic or under-performing
S-3
<PAGE>
properties and annual cost reductions of $500 million from increased
productivity and improved efficiencies. These actions result in a first
quarter 1998 after-tax charge of $482 million related to cost reductions, the
writedown of hybrid fiber coax ("HFC") test market technologies in the video
business, a reserve for the disposition of assets of GTE's air-to-ground
communications subsidiary, GTE Airfone Incorporated ("Airfone"), and certain
other items. In addition, extraordinary charges totaling $320 million after
tax are being taken in the first quarter of 1998 associated with the
implementation of a required accounting change affecting GTE's Canadian
operations and the early redemption of $800 million in high-coupon debt and
preferred stock.
These combined actions result in a first quarter 1998 after-tax, non-
recurring charge of $802 million which is expected to reduce current year
earnings per share by $.83. More than $600 million of this non-recurring
charge reflects actions that do not affect GTE's cash flow, including the $300
million non-cash charge for the accounting change.
Repositionings
GTE has begun taking steps to reposition non-strategic or under-performing
operations. These steps will include the sale of a small percentage of
wireline properties that do not meet GTE's growth objectives. GTE has also
determined that Airfone is not in a strategic business for GTE and will
develop and implement a plan to reposition that business. Additionally, GTE is
writing down investments in HFC technology associated with its video trial
markets because of advances in new technologies that will eliminate the need
for duplicate networks. GTE remains fully committed to developing its video
business, which includes more than 80,000 customers in California and Florida.
Cost Reductions
GTE expects to reduce annual operating costs in its traditional businesses
and support functions by more than $500 million over the next two years
through a combination of employee reductions and improved efficiencies. An $89
million pretax charge is included in first quarter 1998 results to reflect
costs related to previously announced employee reductions totaling more than
1,500 positions. These reductions will result from streamlining distribution
channels within GTE's wireless business, consolidating staffs and support
functions throughout GTE, positions being eliminated through the relocation of
corporate headquarters to Irving, Texas and employee reductions in certain
international operations. The cost reduction program is expected to involve a
small percentage of GTE's overall employee base, and will not compromise
customer service and quality nor affect the investment in and commitment to
growth initiatives that GTE announced in 1997. In addition, GTE's overall
consolidated workforce is expected to grow as new businesses expand.
Extraordinary Charges
In addition to the charges referred to above, GTE is taking a non-cash
charge totaling $300 million after tax in connection with the implementation
of an accounting change for its Canadian operations similar to GTE's
discontinuance of regulated accounting principles (FAS 71) in 1995 for its
domestic operations. The Canadian regulatory commission has issued a series of
rulings culminating in a final ruling in March 1998 which opens the Canadian
telecommunications market to full competition, making the continued use of
regulated accounting principles inappropriate for GTE's Canadian operations.
In addition, GTE called for early redemption an aggregate of $800 million in
high-coupon debt and preferred stock in March 1998, taking advantage of
existing low interest rates. These early redemptions result in an after-tax,
non-recurring charge of $20 million in the first quarter of 1998 and provide
net present value savings to GTE of approximately $50 million.
S-4
<PAGE>
SELECTED FINANCIAL DATA
The selected data presented below under the captions "Income Statement Data"
and "Cash Flow Data" for each of the years in the five-year period ended
December 31, 1997, and "Balance Sheet Data" at the end of each of such years,
has been derived from the consolidated financial statements of GTE. Financial
data under such captions has been audited by Arthur Andersen & Co.,
independent certified public accountants. The consolidated financial
statements as of December 31, 1997 and 1996, and for each of the years in the
three-year period ended December 31, 1997, and the independent auditors'
report thereon, are included in the Annual Report on Form 10-K of GTE
Corporation for the year ended December 31, 1997, which is incorporated herein
by reference. See "Incorporation of Certain Documents by Reference" in the
accompanying Prospectus. This financial information should be read in
conjunction with such consolidated financial statements and the notes thereto.
<TABLE>
<CAPTION>
FIVE-YEAR
ANNUAL
GROWTH
1997 1996 1995 1994 1993 RATE*
------- ------- ------- ------- ------- ---------
(MILLIONS OF DOLLARS, EXCEPT PER-SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Revenues and sales
Local services......... $ 6,607 $ 6,060 $ 5,743 $ 5,137 $ 5,062 6.5%
Network access
services.............. 4,923 4,618 4,363 4,348 4,398 1.8
Toll services.......... 2,429 2,500 2,548 3,285 3,321 (7.6)
Cellular services...... 2,817 2,562 2,191 1,666 1,178 26.2
Directory services..... 1,507 1,527 1,383 1,372 1,438 1.6
Other services and
sales................. 4,977 4,072 3,729 3,720 3,935 1.8
------- ------- ------- ------- ------- ----
Total revenues and
sales............... 23,260 21,339 19,957 19,528 19,332 3.5
------- ------- ------- ------- ------- ----
Cost of services and
sales.................. 9,203 8,071 7,537 7,677 7,848 1.8
Selling, general and
administrative......... 4,560 4,010 3,689 3,667 3,817 2.4
Depreciation and
amortization........... 3,886 3,770 3,675 3,432 3,419 3.5
Restructuring costs..... -- -- -- -- 1,840(a) --
------- ------- ------- ------- ------- ----
Operating income..... 5,611 5,488 5,056 4,752 2,408(b) 12.7
------- ------- ------- ------- ------- ----
Net income (loss)
Income before
extraordinary
charges(c)............ 2,794(d) 2,798 2,538 2,441 972 17.1
Consolidated(g)........ 2,794 2,798 (2,144)(e) 2,441 882(f) --
Diluted earnings (loss)
per common share
Income before
extraordinary
charges(c)............ 2.90(d) 2.88 2.61 2.54 1.03 15.8
Consolidated(g)........ 2.90 2.88 (2.20) 2.54 .93 --
Average common shares
outstanding (in
millions).............. 958 969 970 958 945 1.1
BALANCE SHEET DATA
Consolidated assets..... 42,142 38,422 37,019(e) 42,500 41,575 (1.1)
Short-term obligations,
including current
maturities............. 3,398 2,497 2,156 2,042 1,644 7.3
Long-term debt and
redeemable preferred
stock.................. 14,494 13,210 12,744 12,236 13,103 .4
Minority interests...... 2,253 2,316 2,230 1,658 1,178 17.6
Shareholders' equity.... 8,038 7,336 6,871(e) 10,483 9,593 (6.5)
CASH FLOW DATA
Net cash from
operations............. 6,244 5,899 5,033 4,740 5,373 4.7
Capital expenditures.... 5,128 4,088 4,034 4,192 3,893 4.3
CONSOLIDATED RATIOS AND
OTHER INFORMATION
Common dividends
declared per share..... 1.88 1.88 1.88 1.88 1.85 1.1
Book value per share.... 8.39 7.62 7.05(e) 10.85 9.96 (6.6)
Return on common
equity(g).............. 37.6% 40.2% (20.3)% 24.8% 8.8% --
Return on investment(g). 14.5% 15.6% (4.2)% 13.1% 6.9% --
Average common equity... 7,433 6,960 10,539 9,838 10,030 (5.3)
EBITDA coverage of
interest expense(h).... 7.6x 8.3x 7.7x 7.3x 6.1x --
EBIT coverage of
interest expense(i).... 4.6x 5.0x 4.5x 4.3x 3.4x --
Net cash flow/average
total debt(j).......... 29% 33% 32% 28% 24% --
Average investment...... 26,857 24,395 27,150 25,647 27,322 (1.4)
Employees (in thousands)
Total................ 114 102 106 111 117 (3.0)
United States........ 94 83 85 89 94 (2.6)
INTERNATIONAL OPERATIONS
(INCLUDED ABOVE)(K)
Revenues and sales...... $ 2,902 $ 2,711 $ 2,477 $ 2,483 $ 2,420 4.0
Income before
extraordinary charges.. 366 339 206 265 321 5.2
Total assets............ 6,877 6,516 5,808 5,727 5,449 5.4
</TABLE>
- --------
Notes to Selected Financial Data appear on pages S-6 and S-7.
S-5
<PAGE>
<TABLE>
<CAPTION>
FIVE-YEAR
ANNUAL
GROWTH
1997 1996 1995 1994 1993 RATE*
------- ------- ------- ------- ------- ---------
(MILLIONS OF DOLLARS)
<S> <C> <C> <C> <C> <C> <C>
NETWORK STATISTICS
Access minutes of use
(in millions).......... 79,640 70,452 64,193 59,247 55,864 8.6%
Access lines (in
thousands)
Total(l)............... 27,670 25,766 24,050 22,739 21,972 5.5
United States(l)....... 21,539 20,007 18,512 17,427 17,059 5.2
Switched............... 18,378 17,416 16,650 16,022 15,915 3.1
Wireless subscribers
(includes PCS in
thousands)
Total.................. 5,701 4,445 3,547 2,660 1,787 36.1
United States.......... 4,487 3,749 3,011 2,339 1,585 32.7
Adjusted "POPs" (in
millions)(m)
Total.................. 78.9 78.3 76.7 68.0 63.4 6.1
United States.......... 61.3 61.9 61.7 53.0 53.0 3.9
Domestic Wireline
Operations
Revenues and sales..... $15,134 $13,965 $13,375 $13,212 $13,162 2.6
Operating income(a).... 4,491 3,982 3,621 3,490 1,962(b) 11.2
Operating cash flow
margin(n)............. 47.7% 48.3% 47.8% 46.4% 34.7% --
Capital expenditures... 3,607 2,690 2,564 2,821 2,811 2.7
Domestic Cellular
Operations
Service revenues....... $ 2,549 $ 2,347 $ 2,019 $ 1,539 $ 1,082 25.9
Operating income....... 449 461 410 278 124 45.6
Operating cash flow
margin(n)............. 33.5% 36.0% 36.8% 35.3% 31.9% --
Capital expenditures... 297 600 709 610 389 .8
</TABLE>
- --------
* Least-squares method; percentages have been omitted where not meaningful.
(a) During 1993, GTE recorded one-time restructuring costs of $1.8 billion,
which reduced net income by $1.2 billion, or $1.22 per share.
(b) Includes a $74 million pretax charge ($46 million after-tax, or $.05 per
share) for the cost of voluntary separation programs at domestic telephone
operations.
(c) 1996, 1995, 1994 and 1993 include after-tax gains of $8 million, or $.01
per share; $11 million, or $.01 per share; $162 million, or $.17 per
share; and $91 million, or $.10 per share, respectively, on sales of
certain nonstrategic domestic local-exchange telephone properties.
(d) Includes costs associated with the new data initiatives that reduced net
income by $242 million, or $.25 per share.
(e) See Note 2 on Extraordinary Charges from the Notes to Consolidated
Financial Statements contained in GTE Corporation's Annual Report on Form
10-K for the year ended December 31, 1997, which is incorporated herein by
reference.
(f) During 1993, GTE redeemed, prior to scheduled maturity, $2.1 billion of
high-coupon first mortgage bonds of five of its telephone subsidiaries.
These redemptions resulted in an after-tax extraordinary charge of $90
million (net of tax benefits of $53 million), or $.10 per share.
(g) Excluding the special items described in footnotes (a) through (f), net
income, diluted earnings per share, return on common equity and return on
investment would have been:
<TABLE>
<CAPTION>
FIVE-YEAR
ANNUAL
GROWTH
1997 1996 1995 1994 1993 RATE*
------ ------ ------ ------ ------ ---------
<S> <C> <C> <C> <C> <C> <C>
Net income (in millions). $3,036 $2,790 $2,527 $2,279 $2,077 11.2%
Diluted earnings per
common share............ 3.16 2.87 2.60 2.37 2.19 10.0
Return on common equity.. 40.6% 40.1% 23.2% 23.3% 20.4% --
Return on investment..... 15.6% 15.5% 12.8% 12.5% 11.2% --
</TABLE>
(h) EBITDA coverage of interest expense is equal to earnings before interest,
tax, depreciation and amortization ("EBITDA") divided by interest expense.
EBITDA is equal to EBIT plus depreciation and amortization.
(i) EBIT coverage of interest expense is equal to earnings before interest and
tax ("EBIT") divided by interest expense. EBIT is calculated by adding
pretax asset sales, minority interests, income tax expense, interest
expense and interest capitalized to adjusted income from operations.
Adjusted income from operations adds restructuring charges to income
before extraordinary charges.
(j) Net cash flow is equal to funds from operations less preferred and common
stock dividends. Funds from operations is the total of income before
extraordinary charges, restructuring charges, depreciation and
amortization, deferred income taxes, Canadian minority interests and
other--net. Average total debt is the average of total debt at the
beginning and end of the year.
S-6
<PAGE>
(k) Includes GTE's international subsidiaries and affiliates.
(l) Access lines exclude 448,000 and 440,000 net lines sold during 1994 and
1993, respectively. Total access lines include 2.7 million, 2.5 million,
2.4 million, 2.3 million and 2.0 million lines served by CANTV (as defined
below) in Latin America in 1997-93, respectively. Excluding the effect of
CANTV and the access lines sold during 1994 and 1993, the five-year total
access line growth rate was 5.9%.
(m) Represents population to be served times GTE's percentage interest in
wireless markets.
(n) Represents operating income before depreciation and amortization divided
by revenues.
CAPITALIZATION
The following table sets forth the consolidated capitalization of GTE at
December 31, 1997, and as adjusted to give effect to the issuance of the New
Debentures offered hereby and the application of the estimated proceeds
therefrom as described under "Use of Proceeds."
<TABLE>
<CAPTION>
DECEMBER 31, 1997
-------------------------
ACTUAL AS ADJUSTED
---------- -------------
(MILLIONS OF DOLLARS)
<S> <C> <C>
Short-term obligations, including current
maturities*......................................... $ 5,361 $ 3,261
---------- ----------
Long-term debt:
6.36% Debentures due 2006........................... -- 450
6.46% Debentures due 2008........................... -- 250
6.84% Debentures due 2018........................... -- 600
6.94% Debentures due 2028........................... -- 800
Other long-term debt*............................... 12,531 12,531
---------- ----------
Total long-term debt............................... 12,531 14,631
---------- ----------
Minority interests................................... 2,253 2,253
---------- ----------
Shareholders' equity
Common stock........................................ 49 49
Additional paid-in capital.......................... 7,317 7,317
Retained earnings................................... 2,372 2,372
Guaranteed ESOP obligations......................... (550) (550)
Treasury stock...................................... (1,150) (1,150)
---------- ----------
Total shareholders' equity......................... 8,038 8,038
---------- ----------
Total capitalization............................. $ 28,183 $ 28,183
========== ==========
</TABLE>
- --------
* In this table, short-term obligations, including current maturities includes
(and other long-term debt excludes) approximately $1.963 billion of
commercial paper expected to be refinanced on a long-term basis. This amount
was included in long-term debt on GTE's balance sheet at December 31, 1997.
USE OF PROCEEDS
The net proceeds from the sale of the New Debentures, exclusive of accrued
interest, will be used for the repayment of short-term obligations incurred in
connection with (i) the redemption prior to maturity by GTE Corporation of
$200 million of its 10 3/4% Debentures due 2017 on October 1, 1997, $200
million of its 10.30% Debentures due 2017 on November 15, 1997 and $250
million of its 8 1/2% Debentures due 2017 on March 31, 1998, (ii) investment
in, or advances to, subsidiaries in connection with the financing of their
operations and (iii) general corporate purposes. Short-term obligations at
December 31, 1997 were approximately $2.5 billion (including commercial paper
expected to be refinanced on a long-term basis) on an unconsolidated basis at
an average annual interest cost of 6.12%.
S-7
<PAGE>
CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES
The consolidated ratio of earnings to fixed charges for the year ended
December 31, 1997 was 3.98.
THE COMPANY
GTE is one of the largest telecommunications companies in the world, with
1997 revenues of more than $23 billion. GTE's domestic and international
operations served approximately 28.2 million access lines at March 31, 1998
through subsidiaries in the United States, Canada and the Dominican Republic
and an affiliate in Venezuela. GTE is a leading wireless operator in the
United States, with the potential of serving approximately 62 million wireless
and personal communications services customers at March 31, 1998. Outside the
United States, GTE operates wireless networks serving approximately 19.9
million POPs through subsidiaries in Canada and the Dominican Republic and
affiliates in Venezuela and Argentina. GTE also participates in
ventures/consortia which operate a paging network in China and a nationwide
digital cellular network in Taiwan. GTE provides internetworking services
ranging from dial-up Internet access for residential and small business
consumers to web-based applications for Fortune 500 companies. GTE is also a
leader in government and defense communications systems and equipment,
aircraft-passenger telecommunications, directories and telecommunications-
based information services and systems.
DOMESTIC
Wireline Services
Network Services
GTE's telephone operating subsidiaries in the United States served
approximately 21.9 million access lines in 28 states as of March 31, 1998 and
provided many types of communications services, ranging from local telephone
service for the home and office to highly complex voice and data services for
business. Subsidiaries accounting for the largest portion of total domestic
network services revenues are GTE California Incorporated, 21 percent; GTE
North Incorporated, 21 percent; GTE Southwest Incorporated, 12 percent; and
GTE Florida Incorporated, 11 percent. The largest cities served are Los
Angeles, Long Beach and Santa Monica, California; Tampa and St. Petersburg,
Florida; Honolulu, Hawaii; Lexington, Kentucky; Fort Wayne, Indiana; and Erie,
Pennsylvania.
Local services revenues are comprised mainly of fees charged to customers
for providing local-exchange services within the designated franchise area.
GTE telephone subsidiaries also provide toll services within designated
geographic areas under agreements with connecting local-exchange carriers
("LECs") in conformity with individual state regulatory orders. GTE and other
LECs compensate each other pursuant to access charge tariffs that are subject
to review and approval by state regulatory commissions.
Network access services revenues are generated by providing access services
to interexchange carriers. The interstate portion of these service revenues is
based on switched, common-line and special access tariffs approved by the
Federal Communications Commission (the "FCC"). The FCC tariffs include end-
user access charges to residential and business customers. State access is
based on similar rate structures that are subject to approval by state
regulatory commissions.
With the passage of the Telecommunications Act of 1996 (the "Act"), enacted
on February 8, 1996, GTE's telephone subsidiaries are free to operate in the
areas served and to extend service to other areas subject to conditions,
restrictions and limitations of various kinds.
S-8
<PAGE>
Also included in GTE's domestic telephone operations are two major
unregulated affiliates: GTE Data Services Incorporated ("GTEDS") and GTE
Supply. GTEDS, GTE's software development and information processing
subsidiary, provides data processing and information management services to
GTE's telephone subsidiaries and other non-affiliated companies. GTE Supply is
responsible for the procurement and distribution of supplies for GTE's
domestic telephone operating companies, as well as other GTE subsidiaries. GTE
Supply also sells material and logistic services to non-affiliates.
GTE Communications
One of the most significant impacts of the passage of the Act was the
removal of certain restrictions previously applicable to GTE. Prior to
February 1996, GTE was restricted from jointly marketing the products and
services of its regulated local telephone subsidiaries with those of its
interexchange subsidiaries. In connection with the removal of these
restrictions, GTE created GTE Communications Corporation ("GTE
Communications") to compete in the new, highly competitive telecommunications
environment.
GTE Long Distance, a division of GTE Communications ("GTELD"), began
operations as an interexchange carrier in March 1996. It operates as a
switchless reseller of interexchange and international long-distance services.
A substantial portion of GTELD's switching and transmission capacity is
provided under a reseller agreement. GTELD provides a full range of services
in all 50 states to residential and business customers, including long-
distance services, calling cards, 800/888 services and operator services to
its presubscribed customers. GTELD is also authorized to provide alternative
operator services in 41 states and currently provides such services in
Pennsylvania, Texas and Virginia.
GTE's competitive local-exchange carrier, a part of GTE Communications (the
"CLEC"), is certified to offer competitive local-exchange services in 22
states and has applications pending in several others. The CLEC is currently
operational in California, Florida, Texas and Washington. Service in
additional states is planned to begin during 1998. The CLEC markets value-
added telecommunications products and services nationwide to communications
intensive residential and business customers. These product and service
offerings will include local-exchange service, long-distance, wireless, data,
internet, paging and video. The CLEC is developing integrated systems to
market, fulfill, service and bill these various products to customers.
In addition, the Act eliminated the telephone company programming ban on
video services and allowed GTE to enter the wireline video distribution
business through an open video platform arrangement or via a standard cable
television operation and to deploy video networks which are fully integrated
with its telephone operations. At March 31, 1998, GTE had been granted seven
video franchises in the Pinellas County, Florida market and six video
franchises in the Ventura County, California market. Construction of the cable
television networks in these markets is underway. In addition, approximately
8,000 video subscribers were acquired during the first quarter of 1998,
bringing GTE's total video subscribers to approximately 81,000 at March 31,
1998. Services currently offered in these markets include over 150 channels of
programming, high-speed cable modem Internet access and GTE's interactive
mainStreet(TM) service.
GTE Internetworking
During 1997, GTE acquired BBN Corporation ("BBN"), a leading provider of
Internet services to businesses and a provider of contract research and
development services to governmental and other organizations. Formed by
combining BBN with GTE's existing Internet services business, GTE
Internetworking offers a wide range of Internet and internetworking services
and solutions, including dedicated and dial-up access to the Internet and a
variety of value-added Internet services such as
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<PAGE>
managed network security, web server hosting, application development and
systems integration services. In December 1997, GTE Internetworking acquired
the assets of Genuity, Inc., a value-added provider of distributed application
hosting solutions. At the end of 1997, GTE Internetworking had over 2,600
dedicated connections, 270,000 dial-up subscribers and 700 web hosting and
security customers.
GTE Internetworking supports its service offerings with a high bandwidth
network infrastructure, two network operations centers, 13 web hosting and
server operations centers, and a technical support organization. It is
currently participating in a major buildout of a nationwide network, with
planned completion by mid-1999. This new network infrastructure is a self-
healing SONET ring network which will cover more than 15,000 miles and connect
over 100 metropolitan areas.
GTE Internetworking has entered into an agreement with America Online
("AOL") to build, maintain, and operate a significant portion of AOL's
nationwide, high-speed, dial-in network. The contract with AOL includes
substantial pass-through costs to GTE Internetworking for telecommunications
circuits and other services provided by local and interexchange carriers. In
November 1997, GTE Internetworking announced that it was awarded a $500
million extension of its contract with AOL, bringing the total value of this
contract to approximately $1.2 billion through June 2002.
Wireless Services
GTE Wireless Products and Services ("GTE Wireless") is one of the largest
providers of cellular services in the United States in terms of population in
the areas served. GTE Wireless includes 800 MHz cellular telephone and
wireless data transmission services and 1.8 GHz personal communications
services ("PCS"). GTE manages or controls 73 Metropolitan Statistical Areas
and 53 Rural Service Areas. GTE's 800 MHz cellular operations serve a
population of approximately 52 million POPs, approximately 17 million of which
are in the top 30 U.S. markets. GTE Wireless also has PCS licenses in
metropolitan Cincinnati and Dayton, Ohio and metropolitan Seattle and Spokane,
Washington and certain surrounding areas. GTE Wireless' PCS network covers
approximately 9 million POPs and became operational in 1997. During the twelve
months ended March 31, 1998, GTE's U.S. cellular operations increased their
subscriber base by 13 percent to approximately 4.5 million.
In 1996, GTE Wireless began to deploy Code Division Multiple Access ("CDMA")
digital technology in its markets. As of December 31, 1997, GTE Wireless had
deployed CDMA service in 16 markets. GTE Wireless will continue to deploy CDMA
over the next several years. CDMA technology allows for clearer calls,
enhanced security, greater functionality and additional capacity to process
more calls.
GTE is continuing its deployment of Cellular Digital Packet Data services
("CDPD"). CDPD provides efficient transmission of data over cellular networks
with the added benefits of airlink encryption and mobility services. CDPD is a
more cost effective means than traditional circuit switched data for users to
remotely access their host systems or other services. The service is also a
fast, efficient way for cellular users to transmit short bursts of data, such
as credit card verifications for retail businesses, service and order
information for field sales representatives and delivery tracking for
transportation businesses.
GTE Telecommunications Services Inc. ("GTE TSI") provides transaction
processing, software applications, fraud detection tools and network support
services that facilitate the "roaming" of cellular subscribers and the
management of cellular markets.
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<PAGE>
Airfone operates a telecommunications service for passengers onboard
aircraft. Airfone continues deployment of its new advanced digital GenStar
System SM to its contracted airlines. Airfone has agreements with United,
Delta, Continental, TWA, US Airways, Reno Air, Midwest Express, US Air
Shuttle, United Express, Air Wisconsin, Mexicana and AeroMexico. At December
31, 1997, the GenStar System SM was installed on approximately 2,028
commercial aircraft in the U.S., Canada and Mexico.
Directories
GTE annually publishes or provides sales and other telephone directory-
related services primarily through GTE Directories Corporation ("GTE
Directories") for approximately 2,600 directory titles in 47 states, the
District of Columbia and 16 foreign countries with a total circulation of
approximately 96 million copies. GTE Directories, one of the world's largest
telephone directory publishers, is a leader in the business of linking buyers
and sellers together through effective advertising and informational media.
Internationally, GTE Directories has operations in Europe, Asia and Latin
America.
INTERNATIONAL
GTE, through its international operations, provides telecommunications
services in Canada, Venezuela, Argentina and the Dominican Republic and offers
paging services in twenty major metropolitan areas in China. As of December
31, 1997, GTE's international operations served approximately 6.1 million
access lines and provided cellular and paging services to over 1.5 million
customers.
Through its ownership of common stock of Anglo-Canadian Telephone Company,
GTE has voting control of BC TELECOM Inc. ("BC Tel") and The Quebec Tel Group
Inc. ("Quebec Tel"). At December 31, 1997, BC Tel served approximately 2.5
million access lines in the province of British Columbia, Canada and provided
cellular services to approximately 400,000 subscribers. At December 31, 1997,
Quebec Tel served approximately 293,000 access lines in the province of
Quebec, Canada and provided cellular services to approximately 23,000
subscribers.
In addition, GTE owns the common stock of Compania Dominicana de Telefonos,
C. por A. ("CODETEL"), a telephone company providing local, wireless and
domestic and international long-distance telephone service in the Dominican
Republic. CODETEL served approximately 649,000 access lines and 92,000
cellular subscribers at December 31, 1997.
GTE owns, directly and through a multinational consortium, a 25.9 percent
ownership interest in, and maintains operational control of, Compania Anonima
Nacional Telefonos de Venezuela (CANTV) ("CANTV"), the national telephone
company of Venezuela. CANTV is a full service telecommunications provider
offering local, wireless and domestic and international long-distance service
throughout Venezuela. CANTV also offers paging services, public telephones,
private networks, data transmission, directory services and other value added
services. CANTV had approximately 2.7 million access lines in service at
December 31, 1997 and served approximately 375,000 cellular subscribers.
In 1994, a GTE-led consortium, Compania de Telefonos del Interior ("CTI"),
was awarded two cellular licenses by the National Telecommunications
Commission of Argentina. The concession allows CTI to provide cellular
services in the north and south interior regions of Argentina, areas with a
total population of 22 million. GTE currently has a 41.9 percent ownership
interest in CTI and holds a ten-year contract to manage the network. During
1997, CTI more than tripled its subscriber base and as of December 31, 1997,
CTI served over 300,000 cellular subscribers.
S-11
<PAGE>
GTE also has offices in Beijing, China and Sao Paulo, Brazil. These
operations are chartered with pursuing business development opportunities
within the telecommunications market of each respective country. The first
opportunity, announced in December 1995, was the establishment of a joint
venture between GTE China and Guangzhou Guangtong Resources Co. to construct
and operate a wireless paging system that currently serves 20 metropolitan
areas in China, including Beijing. At the end of 1997, over 130,000 paging
customers were served by this network.
In Japan, GTE holds a minority interest in nine cellular partnerships
created by Nissan Motor Corp. LTD and Japan Telecom Co. LTD to provide 1.5 GHz
digital-cellular services throughout Japan. In addition, GTE participates, as
a minority owner, in a cellular partnership comprised of a consortium of
Japanese companies that provides 1.9 GHz PHS (comparable to PCS) services.
Early in 1997, the government of Taiwan announced that it had awarded a
nationwide license for digital cellular communications services to a
consortium in which GTE has a 12 percent interest. During 1997, GTE assisted
in the design, build-out and operation of the system, and service was launched
in January 1998. As of March 31, 1998, this system has attracted nearly
400,000 customers.
TECHNOLOGY AND SYSTEMS
GTE Government Systems Corporation ("GSC") develops, manufactures and
integrates customized command, control, communications and intelligence
systems for the defense and national security agencies of the U.S. Government
and selected foreign governments. In addition, GSC provides information systems,
telecommunications services and electronic system operation and maintenance
support services for civilian agencies of the Federal government and for
commercial users, both domestically and internationally. GSC provides and
manages integrated system solutions tailored to customer information processing
and telecommunications requirements.
During 1997, GSC received orders valued at $1.4 billion, an 18 percent
increase compared with 1996. GSC is strengthening its presence with
traditional military customers while aggressively attempting to offset a
declining defense market by broadening its penetration of the civilian
agencies of the Federal government. GSC is exploiting selected niches in the
domestic commercial marketplace and transitioning its capabilities, products
and services to non-defense applications. GSC is addressing complex
telecommunications and information processing needs in markets such as health
care, banking and finance in addition to pursuing selected programs and
markets in the international defense and commercial telecommunications arenas.
S-12
<PAGE>
DESCRIPTION OF NEW DEBENTURES
The following description of specific terms of the New Debentures offered
hereby supplements and should be read in conjunction with the description of
the general terms and provisions of the New Debentures set forth in the
accompanying Prospectus under the caption "The Securities." The following
description does not purport to be complete and is qualified in its entirety
by reference to the description in the accompanying Prospectus and the
Indenture, dated as of December 1, 1996 (as amended and supplemented, the
"Indenture"), between GTE Corporation and The Bank of New York, as trustee.
FORM
The New Debentures will be issued in the form of registered global
securities. See "The Securities--Book-Entry, Delivery and Form" in the
accompanying Prospectus.
PRINCIPAL AMOUNT, MATURITY AND INTEREST
The 6.36% Debentures due 2006 will be limited to $450 million aggregate
principal amount and will mature on April 15, 2006. The 6.46% Debentures due
2008 will be limited to $250 million aggregate principal amount and will
mature on April 15, 2008. The 6.84% Debentures due 2018 will be limited to
$600 million aggregate principal amount and will mature on April 15, 2018. The
6.94% Debentures due 2028 will be limited to $800 million aggregate principal
amount and will mature on April 15, 2028. Interest on the New Debentures will
be payable semi-annually on April 15 and October 15, commencing October 15,
1998, to the person or persons in whose name or names the New Debentures are
registered at the close of business on the April 1 or October 1, as the case
may be, next preceding such interest payment date, subject to certain
exceptions provided for in the Indenture.
REDEMPTION
The New Debentures will not be redeemable prior to maturity.
S-13
<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in the Purchase Agreement, GTE
Corporation has agreed to sell to each of the Underwriters named below, and
each of such Underwriters has severally agreed to purchase, the principal
amount of the New Debentures set forth opposite its name below:
<TABLE>
<CAPTION>
PRINCIPAL PRINCIPAL PRINCIPAL PRINCIPAL
AMOUNT OF 6.36% AMOUNT OF 6.46% AMOUNT OF 6.84% AMOUNT OF 6.94%
DEBENTURES DEBENTURES DEBENTURES DEBENTURES
UNDERWRITER DUE 2006 DUE 2008 DUE 2018 DUE 2028
----------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Goldman, Sachs & Co..... $ 90,000,000 $ 50,000,000 $120,000,000 $160,000,000
Bear, Stearns & Co.
Inc.................... 90,000,000 50,000,000 120,000,000 160,000,000
Merrill Lynch, Pierce,
Fenner & Smith
Incorporated........... 90,000,000 50,000,000 120,000,000 160,000,000
Morgan Stanley & Co.
Incorporated........... 90,000,000 50,000,000 120,000,000 160,000,000
Salomon Brothers Inc ... 90,000,000 50,000,000 120,000,000 160,000,000
------------ ------------ ------------ ------------
Total................... $450,000,000 $250,000,000 $600,000,000 $800,000,000
============ ============ ============ ============
</TABLE>
Under the terms and conditions of the Purchase Agreement, the Underwriters
are committed to take and pay for all of the New Debentures, if any are taken.
The Underwriters propose to offer the New Debentures in part directly to the
public at the initial public offering price set forth on the cover page of
this Prospectus Supplement and in part to certain securities dealers at such
price less a concession of 0.375% of the principal amount in the case of the
6.36% Debentures due 2006, 0.400% of the principal amount in the case of the
6.46% Debentures due 2008, 0.500% of the principal amount in the case of the
6.84% Debentures due 2018, and 0.500% of the principal amount in the case of
the 6.94% Debentures due 2028. The Underwriters may allow, and such dealers
may reallow, a concession to certain brokers and dealers not to exceed 0.250%
of the principal amount of the New Debentures. After the New Debentures are
released for sale to the public, the offering price and other selling terms
may from time to time be varied by the Underwriters.
The New Debentures are new issues of securities with no established trading
market. GTE Corporation has been advised by the Underwriters that the
Underwriters intend to make a market in each series of the New Debentures but
are not obligated to do so and may discontinue market making at any time
without notice. No assurance can be given as to the liquidity of the trading
market for any series of the New Debentures.
In connection with the offering, the Underwriters may purchase and sell the
New Debentures in the open market. These transactions may include
overallotment and stabilizing transactions and purchases to cover short
positions created by the Underwriters in connection with the offering.
Stabilizing transactions consist of certain bids or purchases for the purpose
of preventing or retarding a decline in the market price of the New
Debentures; and short positions created by the Underwriters involve the sale
by the Underwriters of a greater number of New Debentures than they are
required to purchase from GTE Corporation in the offering. The Underwriters
also may impose a penalty bid, whereby selling concessions allowed to broker-
dealers in respect of the securities sold in the offering may be reclaimed by
the Underwriters if such New Debentures are repurchased by the Underwriters in
stabilizing or covering transactions. These activities may stabilize, maintain
or otherwise affect the market price of the New Debentures, which may be
higher than the price that might otherwise prevail in the open market; and
these activities, if commenced, may be discontinued at any time. These
transactions may be effected in the over-the-counter market or otherwise.
GTE Corporation has agreed to indemnify the several Underwriters against
certain liabilities, including liabilities under the Securities Act of 1933.
S-14
<PAGE>
GTE CORPORATION [LOGO]
DEBT SECURITIES
----------------
GTE Corporation ("GTE") intends to offer from time to time up to
$3,000,000,000 aggregate initial offering price, or the equivalent thereof in
one or more foreign or composite currencies, of its debt securities (the
"Securities") in one or more series at prices and on terms to be determined at
the time or times of sale. The aggregate amount, authorized denominations,
rate and time of payment of interest, maturity, initial public offering price,
redemption provisions, if any, the currency or composite currency (if other
than United States dollars) in which principal or premium, if any, and
interest on the Securities will be payable and other specific terms, of each
series of Securities will be set forth in an accompanying prospectus
supplement ("Prospectus Supplement") or a pricing supplement thereto (a
"Pricing Supplement").
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
----------------
GTE may sell the Securities through underwriters, dealers or agents, or
directly to one or more institutional purchasers. A Prospectus Supplement or a
Pricing Supplement thereto will set forth the names of underwriters or agents,
if any, any applicable commissions or discounts, the price of the Securities
and the net proceeds to GTE from any such sale or sales.
----------------
The date of this Prospectus is July 28, 1997.
<PAGE>
STATEMENT OF AVAILABLE INFORMATION
GTE is subject to the informational requirements of the Securities Exchange
Act of 1934 (the "Exchange Act") and, in accordance therewith, files reports,
proxy statements and other information with the Securities and Exchange
Commission ("SEC"). These reports, proxy statements and other information can
be inspected and copied at the public reference facilities maintained by the
SEC at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, as well as
at the following Regional Offices: Seven World Trade Center, New York, New
York 10048 and 500 West Madison Street, Chicago, Illinois 60661. Copies of
such material can be obtained from the public reference section of the SEC at
its prescribed rates and can also be inspected at the New York, Chicago and
Pacific Stock Exchanges on which securities of GTE are listed. In addition,
the SEC maintains a Web site that contains reports, proxy and information
statements and other information regarding registrants that file
electronically with the SEC. The address of this site is http://www.sec.gov.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents are incorporated herein by reference:
1. The Annual Report on Form 10-K of GTE for the year ended December 31,
1996;
2. The Quarterly Report on Form 10-Q of GTE for the quarter ended March 31,
1997; and
3. The Current Reports on Form 8-K of GTE dated May 6, 1997 and June 10,
1997.
All documents filed by GTE pursuant to Section 13(a), 13(c), 14 or 15(d) of
the Exchange Act after the date of this Prospectus and prior to the
termination of the offering of the Securities hereunder shall be deemed to be
incorporated by reference in this Prospectus and to be part hereof from the
date of filing of such documents.
GTE hereby undertakes to provide without charge to each person to whom a
copy of this Prospectus has been delivered, on the written or oral request of
any such person, including any beneficial owner, a copy of any or all of the
documents referred to above which have been or may be incorporated in this
Prospectus by reference, other than exhibits to such documents unless such
exhibits are specifically incorporated by reference into the information that
the Prospectus incorporates. Requests for such copies should be directed to
Mr. R. J. Tuccillo, Assistant Secretary of GTE, at One Stamford Forum,
Stamford, CT 06904. Mr. Tuccillo's telephone number is (203) 965-2942.
Unless otherwise indicated, currency amounts in this Prospectus and the
Prospectus Supplement and any Pricing Supplement thereto are stated in United
States dollars ("$" or "U.S. $").
GTE CORPORATION
GTE was incorporated under the laws of the State of New York on February 25,
1935 and has its principal executive offices at One Stamford Forum, Stamford,
Connecticut 06904, telephone (203) 965-2000.
GTE is one of the largest publicly-held telecommunications companies in the
world. GTE's domestic and international operations serve 26.6 million access
lines through subsidiaries in the United States, Canada, and the Dominican
Republic and an affiliate in Venezuela. GTE is a leading mobile-cellular
operator in the United States, with the potential of serving 61.3 million
cellular and personal communications service customers. Outside the United
States, GTE operates mobile-cellular networks serving some 16.8 million POPs
through subsidiaries in Canada and the Dominican Republic and affiliates in
Venezuela and Argentina. Beginning in 1996, GTE became the first among its
peers to offer "one-stop shopping" for local, long-distance and Internet access
services. GTE is also a leader in government and defense communications systems
and equipment, aircraft-passenger telecommunications, directories and
telecommunication-based information services and systems.
2
<PAGE>
USE OF PROCEEDS
Except as specified in a Prospectus Supplement, or a Pricing Supplement
thereto, the net proceeds from the sale of the Securities, exclusive of
accrued interest, will be used toward (1) the repayment of short-term debt,
which at June 30, 1997 was $985,000,000 on an unconsolidated basis at an
average annual interest cost of 5.63%, (2) further investment in, or advances
to, subsidiaries in connection with the financing of their operations and (3)
general corporate purposes.
CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
THREE MONTHS YEARS ENDED DECEMBER 31,
ENDED ---------------------------
MARCH 31, 1997 1996 1995 1994 1993(B) 1992
-------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Consolidated Ratios of Earnings
to Fixed Charges (Unaudited)(a)...... 4.00 4.27 4.00 4.18 2.07 2.66
</TABLE>
- --------
(a) For purposes of computing the consolidated ratios, earnings consist of
income from continuing operations before income taxes and fixed charges.
Fixed charges consist of interest expense, preferred stock dividends of
subsidiaries, the additional income requirement to cover preferred
dividends of subsidiaries, and the portion of rent expense representing
interest. Amounts applicable to entities that are at least 50%-owned have
been added to both earnings and fixed charges, and amounts applicable to
minority interests have been deducted from both earnings and fixed
charges.
(b) Excluding from 1993 the effect of a $1.8 billion pre-tax one-time
restructuring charge, the cost of voluntary separation programs and the
gain on the sale of non-strategic telephone properties, the consolidated
ratio of earnings to fixed charges would have been 3.31.
THE SECURITIES
The Securities are to be issued as one or more series under an Indenture
dated as of December 1, 1996, as amended and supplemented (the "Indenture"),
between GTE and The Bank of New York, as trustee (the "Trustee"). By any one
of (a) a supplemental indenture to the Indenture duly executed by authorized
officers of GTE and the Trustee (a "Supplemental Indenture"), (b) a resolution
of the Board of Directors of GTE or a special committee thereof (a "Board
Resolution"), or (c) a certificate of authorized officers of GTE pursuant to
authorization from the Board of Directors of GTE (an "Officers' Certificate"),
GTE will establish, or specify the manner for establishing, the title,
aggregate principal amount, date or dates of maturity, dates for payment and
rate of interest (if any), redemption dates, prices, obligations and
restrictions, and other terms applicable to each new series of Securities. The
following summary does not purport to be complete and is subject in all
respects to the provisions of, and is qualified in its entirety by express
reference to, the cited Articles and Sections of the Indenture and the forms
of the Securities, which are filed as exhibits to the Registration Statement
pertaining to the Securities and the documents incorporated therein by
reference.
FORM AND EXCHANGE
The Securities are issuable in one or more series pursuant to a Supplemental
Indenture, Board Resolution or Officers' Certificate. The Securities will be
issuable in registered form, and, except as otherwise provided for in a
Prospectus Supplement, or a Pricing Supplement thereto, only in denominations
of $1,000 and multiples thereof and will be exchangeable for Securities of the
same series of other denominations of a like aggregate principal amount,
without service charge except for reimbursement of taxes, if any. (ARTICLE
TWO)
3
<PAGE>
MATURITY, INTEREST AND PAYMENT
Information concerning the maturity, interest rate (if any) and payment
dates of the Securities will be contained in a Prospectus Supplement, or a
Pricing Supplement thereto, relating to such Securities.
The Indenture permits the issuance of Securities of any series as "Original
Issue Discount Securities". If any Securities are issued as Original Issue
Discount Securities, they will state on their face that they are Original
Issue Discount Securities and will generally provide for an amount less than
the stated principal amount thereof to be due and payable upon declaration of
acceleration of the maturity thereof pursuant to the terms of the Indenture.
United States Federal income tax considerations and other special
considerations applicable to any such Original Issue Discount Securities will
be described in the applicable Prospectus Supplement, or a Pricing Supplement
thereto.
REDEMPTION PROVISIONS, SINKING FUND AND DEFEASANCE
The Securities will be redeemable upon not less than 30 days notice at the
redemption prices and subject to the conditions that will be set forth in a
Supplemental Indenture, Board Resolution, or Officers' Certificate and in a
Prospectus Supplement, or a Pricing Supplement thereto, relating to such
Securities. (ARTICLE THREE) If a sinking fund is established with respect to
any of the Securities, a description of the terms of such sinking fund will be
set forth in a Supplemental Indenture, Board Resolution, or Officers'
Certificate and in a Prospectus Supplement, or a Pricing Supplement thereto,
relating to such Securities. The Indenture provides that the Securities are
subject to defeasance. (ARTICLE ELEVEN)
RESTRICTIONS
The Securities will not be secured. The Indenture provides, however, that if
GTE shall at any time mortgage or pledge any of its property, GTE will secure
the Securities, equally and ratably with the other indebtedness or obligations
secured by each mortgage or pledge, so long as such other indebtedness or
obligations shall be so secured. There are certain exceptions to the
foregoing, among them that the Securities need not be secured in the case of
purchase money mortgages or conditional sales agreements, or mortgages
existing at time of purchase, on property acquired after the date of the
Indenture, certain deposits or pledges to secure the performance of bids,
tenders, contracts or leases or in connection with workers' compensation and
similar matters, mechanics' and similar liens in the ordinary course of
business, and subordination of GTE's rights with respect to indebtedness owed
to GTE by a subsidiary. (SECTION 4.05)
The Indenture does not limit the amount of debt securities which may be
issued or the amount of debt which may be incurred by GTE. (SECTION 2.01)
Unless otherwise indicated in a Prospectus Supplement, the covenants
described above would not necessarily afford the holders of Securities
protection in the event of a highly leveraged transaction involving GTE.
BOOK-ENTRY, DELIVERY AND FORM
If a Prospectus Supplement, or a Pricing Supplement thereto, specifies that
any Securities are to be issued in the form of one or more registered global
certificates (collectively, a "Global Security"), unless otherwise specified
in such Prospectus Supplement, or a Pricing Supplement thereto, the Global
Security will be deposited with, or on behalf of, The Depository Trust Company
(the "Depository") and registered in the name of the Depository's nominee.
Except as set forth below, the Global Security may be transferred, in whole
and not in part, only to another nominee of the Depository or to a successor
of the Depository or its nominee.
4
<PAGE>
The Depository has advised as follows: It is a limited-purpose trust company
which was created to hold securities for its participants and to facilitate
the clearance and settlement of securities transactions between participants
in such securities through electronic book-entry changes in accounts of its
participants. Participants include securities brokers and dealers (including
the underwriters or dealers named in the Prospectus Supplement, or a Pricing
Supplement thereto, relating to the Securities), banks and trust companies,
clearing corporations and certain other organizations. Access to the
Depository's system is also available to others such as banks, brokers,
dealers and trust companies that clear through or maintain a custodial
relationship with a participant, either directly or indirectly ("indirect
participants"). Persons who are not participants may beneficially own
securities held by the Depository only through participants or indirect
participants.
The Depository has advised that pursuant to procedures established by it (i)
upon issuance of the Securities by GTE, the Depository will credit the
accounts of the participants designated by the underwriters or dealers with
the principal amounts of the Securities purchased by the underwriters or
dealers, and (ii) ownership of beneficial interests in the Global Security
will be shown on, and the transfer of that ownership will be effected only
through, records maintained by the Depository (with respect to participants'
interests), the participants and indirect participants (with respect to the
owners of beneficial interests in the Global Security). The laws of some
states require that certain persons take physical delivery in definitive form
of securities which they own. Consequently, the ability to transfer beneficial
interests in the Global Security is limited to such extent.
So long as the Depository's nominee is the registered owner of the Global
Security, such nominee for all purposes will be considered the sole owner or
holder of the Securities. Except as provided below, owners of beneficial
interests in the Global Security will not be entitled to have any of the
Securities registered in their names and will not receive or be entitled to
receive physical delivery of the Securities in definitive form.
Neither GTE, the Trustee, any paying agent of GTE nor the Depository will
have any responsibility or liability for any aspect of the records relating to
or payments made on account of beneficial ownership interests in the Global
Security, or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.
Principal and interest payments on the Securities registered in the name of
the Depository's nominee will be made to the Depository's nominee as the
registered owner of the Global Security. GTE and the Trustee will treat the
persons in whose names the Securities are registered as the owners of such
Securities for the purpose of receiving payment of principal and interest on
the Securities and for all other purposes whatsoever. Therefore, neither GTE,
the Trustee nor any paying agent of GTE will have any direct responsibility or
liability for the payment of principal and interest on the Securities to
owners of beneficial interests in the Global Security. The Depository has
advised GTE and the Trustee that its present practice is, upon receipt of any
payment of principal or interest, to immediately credit the accounts of the
participants with such payment in amounts proportionate to their respective
holdings in principal amount of beneficial interests in the Global Security as
shown in the records of the Depository. Payments by participants and indirect
participants to owners of beneficial interests in the Global Security will be
governed by standing instructions and customary practices, as is now the case
with securities held for the accounts of customers in bearer form or
registered in "street name," and will be the responsibility of the
participants or indirect participants.
If the Depository is at any time unwilling or unable to continue as
depository with respect to any outstanding Securities or if at any time the
Depository shall no longer be registered or in good standing under the
Exchange Act or other applicable statute and a successor depository is not
appointed by GTE within 90 days, GTE will issue Securities in definitive form
in exchange for the Global Security. In addition, GTE may at any time
determine not to have outstanding Securities represented by a Global
5
<PAGE>
Security. In either instance, an owner of a beneficial interest in the Global
Security will be entitled to have Securities equal in principal amount to such
beneficial interest registered in its name and will be entitled to physical
delivery of such Securities in definitive form. Securities so issued in
definitive form will be issued in denominations of U.S. $1,000 and integral
multiples thereof and will be issued in registered form only, without coupons.
MODIFICATION OF INDENTURE
The Indenture contains provisions permitting GTE and the Trustee, with the
consent of the holders of not less than a majority in aggregate principal
amount of the Securities of any series at the time outstanding and affected by
such modification, to modify the Indenture or any supplemental indenture
affecting that series of Securities or the rights of the holders of that
series of Securities; provided that no such modification shall (i) extend the
fixed maturity of any Security, or reduce the principal amount thereof, or
reduce the rate or extend the time of payment of interest thereon, or reduce
any premium payable upon the redemption thereof, without the consent of the
holder of each Security so affected, or (ii) reduce the aforesaid percentage
of Securities, the holders of which are required to consent to any such
supplemental indenture, without the consent of each holder of Securities then
outstanding and affected thereby. (SECTION 9.02)
In addition, GTE and the Trustee may execute, without the consent of any
holder of Securities, any supplemental indenture for certain other usual
purposes including the creation of any new series of the Securities. (SECTIONS
2.01, 9.01 and 10.01)
EVENTS OF DEFAULT AND NOTICE THEREOF
The Indenture provides that the following described events constitute
"Events of Default" with respect to each series of the Securities issued
thereunder: (a) failure for 30 business days to pay interest on the Securities
of that series when due; (b) failure to pay principal or premium, if any, on
the Securities of that series when due, whether at maturity, upon redemption,
by declaration or otherwise, or to make any sinking fund payment with respect
to that series; (c) failure to observe or perform any other covenant (other
than those specifically relating to another series) in the Indenture for 90
days after notice with respect thereto; or (d) certain events in bankruptcy,
insolvency or reorganization. (SECTION 6.01)
The holders of a majority in aggregate outstanding principal amount of any
series of Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee for that
series. (SECTION 6.06) The Trustee or the holders of not less than 25% in
aggregate outstanding principal amount of any particular series of Securities
may declare the principal (or, for any Original Issue Discount Securities of
that series, such portion of the principal amount thereof as may be specified
in the terms of such Original Issue Discount Securities) due and payable
immediately upon an Event of Default with respect to such series, but the
holders of a majority in aggregate outstanding principal amount of such series
may annul such declaration and waive the default if the default has been cured
and a sum sufficient to pay all matured installments of interest and principal
and any premium has been deposited with the Trustee. (SECTION 6.01) Reference
is made to the Prospectus Supplement, or a Pricing Supplement thereto,
relating to any Securities that are Original Issue Discount Securities for the
particular provisions relating to acceleration of a portion of the principal
amount of such Original Issue Discount Securities upon the occurrence of an
Event of Default and the continuation thereof.
The holders of a majority in aggregate outstanding principal amount of any
series of the Securities may, on behalf of the holders of all the Securities
of such series, waive any past default except a default in the payment of
principal, premium, if any, or interest. (SECTION 6.06) GTE is required to
file annually with the Trustee a certificate as to whether or not GTE is in
compliance with all the conditions and covenants under the Indenture. (SECTION
5.03(d))
6
<PAGE>
CONCERNING THE TRUSTEE
The Trustee, prior to an Event of Default, undertakes to perform only such
duties as are specifically set forth in the Indenture and, after the
occurrence of an Event of Default, shall exercise the same degree of care as a
prudent individual would exercise in the conduct of his or her own affairs.
(SECTION 7.01) Subject to such provisions, the Trustee is under no obligation
to exercise any of the powers vested in it by the Indenture at the request of
any holder of Securities, unless offered reasonable indemnity by such security
holder against the costs, expenses and liabilities which might be incurred
thereby. (SECTION 7.02) The Trustee is not required to expend or risk its own
funds or incur personal financial liability in the performance of its duties
if the Trustee reasonably believes that repayment or adequate indemnity is not
reasonably assured to it. (SECTION 7.01)
GTE maintains a deposit account and banking relationship with the Trustee.
The Trustee serves as trustee under other indentures pursuant to which
unsecured debt securities of GTE are outstanding.
EXPERTS
The consolidated financial statements included in GTE's Annual Report on
Form 10-K for the year ended December 31, 1996, which is incorporated by
reference in this Prospectus, have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their report with respect
thereto, and are incorporated herein in reliance upon the authority of said
firm as experts in giving said report. Reference is made to said report, which
includes an explanatory paragraph with respect to the discontinuance of the
application of the provisions of Statement of Financial Accounting Standards
No. 71 "Accounting for the Effects of Certain Types of Regulation" in 1995, as
discussed in Note 2 to the consolidated financial statements.
CERTAIN LEGAL MATTERS
The validity of the Securities will be passed upon for GTE by William P.
Barr, Esq., its Executive Vice President--Government & Regulatory Advocacy,
General Counsel. Certain legal matters in connection with the Securities will
be passed upon for the purchasers, underwriters, or agents by Milbank, Tweed,
Hadley & McCloy, New York, New York. As of May 16, 1997, Mr. Barr was the
beneficial owner of approximately 3,032 shares of GTE Common Stock and had
options to purchase an aggregate of 58,666 shares of GTE Common Stock.
PLAN OF DISTRIBUTION
GTE may sell Securities in one or more of the following ways: (i) to
underwriters for resale to the public or to institutional investors; (ii)
directly to institutional investors; or (iii) through agents to the public or
to institutional investors. The Prospectus Supplement, or a Pricing Supplement
thereto, with respect to any Securities will set forth the terms of the
offering of such Securities, including the name or names of any underwriters
or agents, the purchase price of such Securities and the proceeds to GTE from
such sale, any underwriting discounts or agency fees and other items
constituting underwriters' or agents' compensation, any initial public
offering price, any discounts or concessions allowed or reallowed or paid to
dealers and any securities exchanges on which such Securities may be listed.
If underwriters are used in the sale, such Securities will be acquired by
the underwriters for their own account and may be resold from time to time in
one or more transactions, including negotiated transactions, at a fixed public
offering price or at varying prices determined at the time of sale.
7
<PAGE>
Unless otherwise set forth in the Prospectus Supplement, or a Pricing
Supplement thereto, the obligations of the underwriters to purchase Securities
will be subject to certain conditions precedent and the underwriters will be
obligated to purchase all of such Securities if any are purchased. In the
event of a default of one or more of the underwriters involving not more than
10% of the aggregate principal amount of the Securities offered for sale, the
non-defaulting underwriters would be required to purchase the Securities
agreed to be purchased by such defaulting underwriter or underwriters. In the
event of a default in excess of 10% of the aggregate principal amount of the
Securities, GTE may, at its option, sell less than all the Securities offered.
If agents are used in the sale, unless otherwise indicated in the Prospectus
Supplement, or a Pricing Supplement thereto, any such agent will be acting on
a reasonable best efforts basis.
Underwriters and agents may be entitled under agreements entered into with
GTE to indemnification by GTE against certain civil liabilities, including
liabilities under the Securities Act of 1933, or to contribution with respect
to payments which the underwriters or agents may be required to make in
respect thereof. Underwriters and agents may be customers of, engage in
transactions with, or perform services for GTE in the ordinary course of
business.
8
<PAGE>
GTE AT A GLANCE.
MAJOR DOMESTIC OPERATIONS.
GTE NETWORK SERVICES is GTE's nationwide regulated wireline telephone operation.
It served more than 21.5 million residential and business lines at the end of
1997. The business unit is also responsible for all wholesale operations to
other telecommunications companies.
GTE COMMUNICATIONS CORPORATION is GTE's competitive local-exchange carrier
(CLEC). It markets the full spectrum of GTE's services, including local, long-
distance, wireless and data services, without regard to franchise boundaries.
GTE LONG DISTANCE provides long-distance services to customers in all
50 states.
GTE VIDEO SERVICES provides advanced high-quality video services to
residential and business customers in California, Florida and Hawaii
(including cable modem Internet access in some markets).
GTE WIRELESS is a leading provider of wireless telecommunications products and
services in 73 metropolitan statistical areas, 53 rural statistical areas and
three major trading areas. Some 61.3 million people live in the areas GTE is
licensed to serve and it has 4.5 million customers.
GTE INTERNETWORKING INC. offers managed access to the Internet and a variety of
value-added services for businesses and other organizations. It offers Internet
services with global reach, as well as Internet and Intranet business
application solutions. It includes BBN Technologies, which provides the core
research and development efforts that continue to drive the evolution
of the Internet.
GTE DIRECTORIES annually publishes or provides sales and other directory-
related services for more than 2,300 directory titles with a circulation of 70
million copies.
GTE NEW MEDIA SERVICES develops and markets online advertising and information
services, including SuperPages (R), an interactive service for consumers and
advertisers on the Internet's World Wide Web.
GTE TECHNOLOGY & SYSTEMS serves as a consolidated source of technology-related
information, coordination, support and guidance for all GTE business units.
GTE GOVERNMENT SYSTEMS is a leading supplier of communications and
intelligence systems for defense, government and industry primarily in the
United States. It also provides field engineering services, logistics support
and the installation, operation and maintenance of telecommunications and
information systems.
GTE LABORATORIES is the central research and development facility for GTE
Corporation.
GTE AIRFONE, the leading provider of airborne communications systems, provides
clear, reliable inflight telecommunications services to passengers on more than
2,300 aircraft. Passengers can use the Airfone(R) service to make and receive
calls, send and receive data and faxes, and access e-mail and voice mail. Since
the first call in 1984, the Airfone service has logged more than 76 million
calls.
MAJOR INTERNATIONAL OPERATIONS.
GTE INTERNATIONAL networks connect more than 250 locations on five continents.
GTE has more than 40 years of international experience and serves more than
seven million customers.
BC TELECOM provides local, long-distance and wireless services in the province
of British Columbia, Canada, to three million customers. GTE has a 50.8%
controlling interest in BC Telecom.
COMPANIA ANONIMA NACIONAL TELEFONOS DE VENEZUELA (CANTV) is a full-service
telecommunications provider offering local, wireless, national and international
long-distance services throughout Venezuela. GTE is part of a multinational
consortium that owns a controlling minority interest in CANTV.
COMPANIA DOMINICANA DE TELEFONOS (CODETEL) provides local, wireless, national
and international long-distance services throughout the Dominican Republic.
COMPANIA DE TELEFONOS DEL INTERIOR (CTI) provides wireless services in the
north and south interior regions of Argentina. CTI has more than 328,000
wireless customers. GTE is part of a multinational consortium that owns a
controlling minority interest in CTI.
GTE CHINA provides paging services in 20 major metropolitan areas, including
Beijing.
QUEBECTEL GROUP INC. provides local, long-distance and wireless services to
more than 300,000 customers in the northeastern region of Quebec, Canada. GTE
has a 50.6% controlling interest in QuebecTel.
GTE INTERNATIONAL TELECOM SERVICES includes business initiatives involving the
publishing and sale of directory-related services in Europe, Canada, Asia and
Latin America, as well as an Engineer, Furnish and Install (EF&I) business unit.
The discussion above briefly describes the major domestic and international
operations of GTE Corporation and its subsidiaries as of December 31, 1997. It
does not reflect the impact of any properties or operations (including GTE
Airfone) to be repositioned by GTE, as discussed in GTE Corporation's Current
Report on Form 8-K dated April 2, 1998. See "Recent Developments--April 1998
Announcement."
<PAGE>
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESEN-
TATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS SUPPLEMENT OR THE PRO-
SPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS SUPPLEMENT AND THE PRO-
SPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO
BUY ANY SECURITIES OTHER THAN THE SECURITIES DESCRIBED IN THIS PROSPECTUS SUP-
PLEMENT OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SUCH SECURI-
TIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL. NEI-
THER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS NOR ANY SALE
MADE HEREUNDER OR THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLI-
CATION THAT THE INFORMATION CONTAINED HEREIN OR THEREIN IS CORRECT AS OF ANY
TIME SUBSEQUENT TO THE DATE OF SUCH INFORMATION.
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TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Recent Developments........................................................ S-3
Selected Financial Data.................................................... S-5
Capitalization............................................................. S-7
Use of Proceeds............................................................ S-7
Consolidated Ratio of Earnings to Fixed Charges............................ S-8
The Company................................................................ S-8
Description of New Debentures.............................................. S-13
Underwriting............................................................... S-14
PROSPECTUS
Statement of Available Information......................................... 2
Incorporation of Certain Documents by Reference............................ 2
GTE Corporation............................................................ 2
Use of Proceeds............................................................ 3
Consolidated Ratios of Earnings to Fixed Charges........................... 3
The Securities............................................................. 3
Experts.................................................................... 7
Certain Legal Matters...................................................... 7
Plan of Distribution....................................................... 7
</TABLE>
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$2,100,000,000
GTE CORPORATION [LOGO]
$450,000,000
6.36% DEBENTURES DUE 2006
$250,000,000
6.46% DEBENTURES DUE 2008
$600,000,000
6.84% DEBENTURES DUE 2018
$800,000,000
6.94% DEBENTURES DUE 2028
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PROSPECTUS SUPPLEMENT
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GOLDMAN, SACHS & CO.
BEAR, STEARNS & CO. INC.
MERRILL LYNCH & CO.
MORGAN STANLEY DEAN WITTER
SALOMON SMITH BARNEY
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