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RULE NO. 424(b)(2)
REGISTRATION NO. 333-90349
PROSPECTUS SUPPLEMENT
(To prospectus dated November 10, 1999)
$1,375,000,000
GTE Corporation [LOGO]
$975,000,000 Floating Rate Debentures due 2000
$400,000,000 Floating Rate Debentures due 2001
----------------
We are offering $975,000,000 of our floating rate debentures due 2000. The
interest rate on these debentures will be a floating rate, subject to
adjustment on a quarterly basis, equal to LIBOR for three-month U.S. dollar
deposits plus .02%. Interest on these debentures is payable on March 11, 2000,
June 11, 2000, September 11, 2000, and at maturity. The floating rate
debentures due 2000 will mature on December 11, 2000, and are not redeemable
before maturity.
We are also offering $400,000,000 of our floating rate debentures due 2001. The
interest rate on these debentures will be a floating rate, subject to
adjustment on a quarterly basis, equal to LIBOR for three-month U.S. dollar
deposits plus .02%, except that the interest rate for the initial interest
period will be equal to LIBOR for four-month U.S. dollar deposits plus .02%.
Interest on these debentures is payable on April 11, 2000, July 11, 2000,
October 11, 2000, and at maturity. The floating rate debentures due 2001 will
mature on January 5, 2001, and are not redeemable before maturity.
The floating rate debentures are unsecured and rank equally with all of our
other senior unsecured debt. There is currently no public market for the
floating rate debentures. The underwriters will purchase all of the floating
rate debentures if any are purchased.
We do not intend to list the floating rate debentures on any securities
exchange.
----------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus supplement or the prospectus is truthful or complete.
Any representation to the contrary is a criminal offense.
The underwriter proposes to offer the floating rate debentures to investors
from time to time for sale in negotiated transactions at prices based upon
prevailing market prices at the time of sale.
The floating rate debentures will be ready for delivery in book-entry form only
through The Depository Trust Company on or about December 10, 1999.
----------------
Merrill Lynch & Co.
----------------
The date of this prospectus supplement is December 7, 1999.
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TABLE OF CONTENTS
Prospectus Supplement
<TABLE>
<S> <C>
About this Prospectus Supplement........................................... S-2
Description of the Floating Rate Debentures................................ S-2
Underwriting............................................................... S-4
Prospectus
About this Prospectus...................................................... 2
Where You Can Find More Information........................................ 2
The Company................................................................ 3
Proposed Merger with Bell Atlantic Corporation............................. 3
Recent Developments........................................................ 4
Use of Proceeds............................................................ 4
Consolidated Ratios of Earnings to Fixed Charges........................... 5
Description of the Debt Securities......................................... 5
Experts.................................................................... 9
Legal Matters.............................................................. 9
Plan of Distribution....................................................... 10
</TABLE>
ABOUT THIS PROSPECTUS SUPPLEMENT
Before you invest, you should read carefully this prospectus supplement along
with the prospectus that follows. Both documents contain important information
you should consider when making your investment decision. This prospectus
supplement contains information about the floating rate debentures and the
prospectus contains information about our debt securities generally. This
prospectus supplement may add, update or change information in the prospectus.
You should rely only on the information provided or incorporated by reference
in this prospectus supplement and the prospectus. The information in this
prospectus supplement is accurate as of December 7, 1999. We have not
authorized anyone else to provide you with different information.
DESCRIPTION OF THE FLOATING RATE DEBENTURES
Principal Amount, Maturity And Interest
We are issuing $975,000,000 of our floating rate debentures due 2000 which will
mature on December 11, 2000, and $400,000,000 of our floating rate debentures
due 2001 which will mature on January 5, 2001. The floating rate debentures
will be issued in denominations of $1,000 and integral multiples of $1,000. The
floating rate debentures will bear interest at a per annum rate equal to LIBOR
for three-month U.S. dollar deposits plus .02%, except that the interest rate
for the initial interest period on the floating rate debentures due 2001 will
be equal to LIBOR for four-month U.S. dollar deposits plus .02%.
We will pay interest quarterly in arrears on the floating rate debentures due
2000 on March 11, 2000, June 11, 2000, and September 11, 2000, each an interest
payment date, and on the maturity date. We will pay interest in arrears on the
floating rate debentures due 2001 on April 11, 2000, July 11, 2000, October 11,
2000, each an interest payment date, and on the maturity date. If any of the
interest payment dates listed above falls on a day that is not a business day,
we will postpone the interest payment date to the next succeeding business day
unless that business day is in the next succeeding calendar month, in which
case the interest payment date will be the immediately preceding business day.
Interest on the floating rate debentures will be computed on the basis of a
360-day year and the actual number of days elapsed.
Interest on the floating rate debentures will accrue from, and including,
December 10, 1999, to, but excluding, the first interest payment date and then
from, and including, the immediately preceding interest payment date to which
interest has been paid or duly provided for to, but excluding, the next
interest payment
S-2
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date or the maturity date, as the case may be. We will refer to each of these
periods as an "interest period." The amount of accrued interest that we will
pay for any interest period can be calculated by multiplying the face amount of
the floating rate debentures by an accrued interest factor. This accrued
interest factor is computed by adding the interest factor calculated for each
day from December 10, 1999, or from the last date we paid interest to you, to
the date for which accrued interest is being calculated. The interest factor
for each day is computed by dividing the interest rate applicable to that day
by 360.
If the maturity date of the floating rate debentures falls on a day that is not
a business day, we will pay principal and interest on the next succeeding
business day, but we will consider that payment as being made on the date that
the payment was due to you. Accordingly, no interest will accrue on the payment
for the period from and after the maturity date to the date we make the payment
to you on the next succeeding business day.
The interest payable by us on a floating rate debenture on any interest payment
date, subject to certain exceptions, will be paid to the person in whose name
the floating rate debenture is registered at the close of business on the
fifteenth calendar day, whether or not a business day, immediately preceding
the interest payment date. However, interest that we pay on the maturity date,
will be payable to the person to whom the principal will be payable.
When we use the term "business day" we mean any day except a Saturday, a Sunday
or a legal holiday in The City of New York on which banking institutions are
authorized or required by law, regulation or executive order to close;
provided, that the day is also a London business day. "London business day"
means any day on which dealings in United States dollars are transacted in the
London interbank market.
The interest rate on the floating rate debentures due 2000 will be calculated
by the calculation agent appointed by us and will be equal to a per annum rate
equal to LIBOR for three-month U.S. dollar deposits plus .02%, except that the
interest rate in effect for the initial interest period will be established by
us as the rate for deposits in U.S. dollars having a maturity of three months
commencing on December 10, 1999, that appears on Telerate Page 3750 as of 11:00
a.m., London time, on December 8, 1999, plus .02%.
The interest rate on the floating rate debentures due 2001 will be calculated
by the calculation agent and will be equal to a per annum rate equal to LIBOR
for three-month U.S. dollar deposits plus .02%, except that the interest rate
in effect for the initial interest period will be established by us as the rate
for deposits in U.S. dollars having a maturity of four months commencing on
December 10, 1999, that appears on Telerate Page 3750 as of 11:00 a.m., London
time, on December 8, 1999, plus .02%.
The calculation agent will reset the interest rate on each applicable interest
payment date, each of which we will refer to as an "interest reset date." The
second London business day preceding an interest reset date will be the
"interest determination date" for that interest reset date. The interest rate
in effect on each day that is not an interest reset date will be the interest
rate determined as of the interest determination date pertaining to the
immediately preceding interest reset date. The interest rate in effect on any
day that is an interest reset date will be the interest rate determined as of
the interest determination date pertaining to that interest reset date, except
that the interest rate in effect for the period from and including December 10,
1999, to the applicable initial interest reset date will be the initial
interest rate.
S-3
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"LIBOR" will be determined by the calculation agent in accordance with the
following provisions:
(i) With respect to any interest determination date, LIBOR will be the rate for
deposits in U.S. dollars having a maturity for the applicable time period
commencing on the first day of the applicable interest period that appears on
Telerate Page 3750 as of 11:00 a.m., London time, on that interest
determination date. If no rate appears, LIBOR, in respect to that interest
determination date and time period, will be determined in accordance with the
provisions described in (ii) below.
(ii) With respect to an interest determination date and time period on which no
rate appears on Telerate Page 3750, as specified in (i) above, the calculation
agent will request the principal London offices of each of four major reference
banks in the London interbank market, as selected by the calculation agent, to
provide the calculation agent with its offered quotation for deposits in U.S.
dollars for the applicable time period, commencing on the first day of the
applicable interest period, to prime banks in the London interbank market at
approximately 11:00 a.m., London time, on that interest determination date and
in a principal amount that is representative for a single transaction in U.S.
dollars in that market at that time. If at least two quotations are provided,
then LIBOR on that interest determination date will be the arithmetic mean of
those quotations. If fewer than two quotations are provided, then LIBOR on the
interest determination date will be the arithmetic mean of the rates quoted at
approximately 11:00 a.m., in The City of New York, on the interest
determination date by three major banks in The City of New York selected by the
calculation agent for loans in U.S. dollars to leading European banks, having a
maturity of the applicable time period and in a principal amount that is
representative for a single transaction in U.S. dollars in that market at that
time; provided, however, that if the banks selected by the calculation agent
are not providing quotations in the manner described by this sentence, LIBOR
determined as of that interest determination date will be LIBOR in effect on
that interest determination date.
"Telerate Page 3750" means the display designated as "Page 3750" on Bridge
Telerate, Inc., or any successor service, for the purpose of displaying the
London interbank rates of major banks for U.S. dollars.
Form
The floating rate debentures will be issued in book-entry only form.
Redemption
We cannot redeem the floating rate debentures before they mature.
Additional Information
See "Description of the Debt Securities" in the accompanying prospectus for
additional important information about the floating rate debentures. That
information includes:
. additional information about the terms of the floating rate debentures;
. general information about the indenture and the trustee;
. a description of certain restrictions; and
. a description of events of default under the indenture.
UNDERWRITING
Merrill Lynch, Pierce, Fenner & Smith Incorporated, the underwriter, has agreed
to purchase all of the floating rate debentures from us according to the terms
of our purchase agreement at an aggregate price equal to 99.980516% of the
aggregate principal amount of the floating rate debentures due 2000 and
99.97557% of the aggregate principal amount of the floating rate debentures due
2001.
If all of the conditions under the purchase agreement have been met, the
underwriter will purchase all of the floating rate debentures.
S-4
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We will also pay our issuing expenses estimated at $452,500. We filed a form of
the purchase agreement with the Securities and Exchange Commission as an
exhibit to our registration statement covering the floating rate debentures.
The underwriter has advised us that it proposes to offer the floating rate
debentures to the public from time to time in negotiated transactions at prices
based upon prevailing market prices at the time of sale. In connection with the
sale of any floating rate debentures, the underwriter may be considered to have
received compensation from us equal to the difference between the amount
received by the underwriter in that sale and the price at which the underwriter
purchased the floating rate debentures from us. In addition, the underwriter
may sell the floating rate debentures to or through certain dealers, and those
dealers may receive compensation in the form of underwriting discounts,
concessions or commissions from the underwriter or from any purchasers of the
floating rate debentures for whom it may act as agent (which may be in excess
of customary compensation).
This prospectus supplement and the prospectus should not be considered an offer
of the floating rate debentures in states where prohibited by law.
We do not intend to list the floating rate debentures on a national securities
exchange. Although the underwriter intends to make a market in the floating
rate debentures in the secondary trading market, the underwriter is not
required to do so and may stop its market making activities at any time.
Liquidity for the floating rate debentures cannot be assured.
To facilitate this offering, the underwriter may engage in transactions that
stabilize, maintain or otherwise affect the price of the floating rate
debentures. Specifically, the underwriter may over-allot in connection with the
offering, creating a short position in the floating rate debentures for its own
account. In addition, to cover over-allotments or to stabilize the price of the
floating rate debentures, the underwriter may bid for and purchase floating
rate debentures in the open market. Finally, the underwriter may reclaim
selling concessions allowed to a dealer if the underwriter repurchases
previously distributed floating rate debentures in transactions to cover short
positions of the underwriter, in stabilization transactions or otherwise. Any
of these activities may stabilize or maintain the market price of the floating
rate debentures above independent market levels. The underwriter is not
required to engage in these activities, and may end any of these activities at
any time.
We have agreed to indemnify the underwriter against certain liabilities,
including liabilities under the Securities Act of 1933.
The underwriter or its affiliates have provided commercial or investment
banking services to us and certain of our affiliates, and may provide these
services in the future. They receive customary fees and commissions for these
services.
S-5
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PROSPECTUS
$1,375,000,000
GTE Corporation [LOGO]
DEBT SECURITIES
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GTE Corporation intends to offer at one or more times debt securities with a
total offering price not to exceed $1,375,000,000. We will provide the specific
terms of these securities in supplements to this prospectus. You should read
this prospectus and the supplements carefully before you invest.
--------------------------------------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus is truthful or complete. Any representation to the contrary is
a criminal offense.
November 10, 1999
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
About this Prospectus...................................................... 2
Where You Can Find More Information........................................ 2
The Company................................................................ 3
Proposed Merger with Bell Atlantic Corporation............................. 3
Recent Developments........................................................ 4
Use of Proceeds............................................................ 4
Consolidated Ratios of Earnings to Fixed Charges........................... 5
Description of the Debt Securities......................................... 5
Experts.................................................................... 9
Legal Matters.............................................................. 9
Plan of Distribution....................................................... 10
</TABLE>
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the
Securities and Exchange Commission utilizing a "shelf" registration process.
Under this shelf process, we may, from time to time, sell the debt securities
described in this prospectus in one or more offerings with a total offering
price not to exceed $1,375,000,000. This prospectus provides you with a general
description of the debt securities. Each time we sell debt securities, we will
provide a prospectus supplement (and a pricing supplement, if any) that will
contain specific information about the terms of that offering. The prospectus
supplement or pricing supplement may also add, update or change information in
this prospectus. The information in this prospectus is accurate as of November
10, 1999. Please carefully read both this prospectus, any prospectus supplement
and any pricing supplement together with additional information described under
the heading "Where You Can Find More Information."
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any document we file at the
SEC's public reference room at 450 Fifth Street, N.W., Washington, D.C. 20549.
Please call the SEC at 1-800-SEC-0330 for further information on the operation
of the public reference rooms. Our SEC filings are also available to the public
over the Internet at the SEC's web site at http://www.sec.gov. We also maintain
a web site at http://www.gte.com. Our common stock is listed on the New York
Stock Exchange, The Chicago Stock Exchange and the Pacific Exchange. We have
also issued other securities which are listed on the New York Stock Exchange.
Our SEC filings are also available at those exchanges.
Once our merger with Bell Atlantic Corporation described under "Proposed Merger
with Bell Atlantic Corporation" is completed, our common stock will no longer
be listed on any of these exchanges. Under the rules of the SEC, we may
discontinue filing reports or other information with the SEC if each class of
our debt securities is owned of record by less than three hundred persons and
no class of our securities is listed on a stock exchange. Provided that these
two circumstances occur, we could discontinue filing information with the SEC
after we file an Annual Report on Form 10-K for the year in which our most
recent series of debt securities is issued. We are currently evaluating actions
which could permit us to discontinue our reporting requirements.
The SEC allows us to "incorporate by reference" the information we file with
them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus, and information that we file later
with the SEC will automatically update and supersede this information.
Information on our web site is not incorporated by reference into this
prospectus. We incorporate by reference the following documents and any future
filings we make with the SEC under Sections 13(a), 13(c), 14, or 15(d) of the
Securities Exchange Act of 1934 until we or any underwriters sell all of the
debt securities:
. Annual Report on Form 10-K for the year ended December 31, 1998;
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. Quarterly Reports on Form 10-Q for the quarters ended March 31 and June 30,
1999;
. Current Reports on Form 8-K filed on January 20, January 26, April 5, April
28, May 10, August 26 and September 23, 1999; and
. Joint Proxy Statement and Prospectus of GTE Corporation and Bell Atlantic
Corporation filed on April 14, 1999.
You may request a copy of these filings at no cost, by writing or calling us at
the following address:
Assistant Secretary
GTE Corporation
1255 Corporate Drive
Mail Code: SVC04A34
Irving, Texas 75038
(972) 507-5243
You should rely only on the information incorporated by reference or provided
in this prospectus or any supplement. We have not authorized anyone else to
provide you with different information.
THE COMPANY
We are one of the largest publicly-held telecommunications companies in the
world. Our domestic and international operations serve approximately 35 million
access lines through subsidiaries in the United States, Canada and the
Dominican Republic and through affiliates in Canada, Puerto Rico and Venezuela.
We are a leading mobile-cellular operator in the United States, where we serve
approximately 5.2 million wireless customers, and have the opportunity to serve
approximately 61.9 million potential wireless customers. Outside the fifty
states, we operate mobile-cellular networks serving approximately 5.6 million
customers with the opportunity to serve approximately 34.7 million potential
wireless customers through subsidiaries in Argentina, Canada and the Dominican
Republic and affiliates in Canada, Puerto Rico, Taiwan and Venezuela. When we
refer to "potential wireless customers," we mean the number of people living in
the relevant area served by our wireless operations, adjusted to reflect our
ownership interests in these wireless operations.
Beginning in 1996, we became the first among our peers to offer "one-stop
shopping" for local, long-distance and Internet access services. We are also a
leader in directories and telecommunication-based information services and
systems.
Our principal executive offices are located at 1255 Corporate Drive, SVC04C08,
Irving, Texas 75038, telephone (972) 507-5000.
PROPOSED MERGER WITH BELL ATLANTIC CORPORATION
On July 28, 1998, we announced our intentions to combine in a merger of equals
with Bell Atlantic Corporation. Both companies are working diligently to
complete the merger and are targeting completion of the merger around the end
of the first quarter of 2000. However, we must obtain the approval of a variety
of state and federal regulatory agencies and, given the inherent uncertainties
of the regulatory process, the closing of the merger may be delayed.
Immediately after the merger, we will be a wholly-owned subsidiary of the
combined company.
Immediately after the merger, we will continue to be the sole obligor of our
debt securities. Our merger agreement with Bell Atlantic does not provide for,
or otherwise require, Bell Atlantic to assume or become a guarantor of any of
our debt securities, including the debt securities offered by this prospectus.
The Bell Atlantic financial information and the pro forma combined condensed
financial information included or incorporated by reference in our Joint Proxy
Statement and Prospectus with Bell Atlantic filed on April 14, 1999 and in our
subsequently filed reports, all of which are incorporated by reference in this
prospectus, are for informational purposes only.
The indenture for our debt securities contains no covenants or other
protections which would prevent us from transferring any of our assets,
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unless we were to transfer all or substantially all of our assets. While it is
possible that transfers of assets between GTE and Bell Atlantic or other
affiliated entities may take place after the merger, whether those transfers
will occur and the nature, timing and extent of those transfers cannot be
determined at this time.
RECENT DEVELOPMENTS
On September 1, 1999, we completed our previously announced sale of
substantially all of the GTE Government Systems business to General Dynamics
for $1.03 billion in cash.
On September 21, 1999, Bell Atlantic and Vodafone AirTouch Plc announced that
they had entered into a definitive agreement for the creation of a new wireless
business composed of the parties' United States wireless assets. The new
wireless business combines assets from Bell Atlantic Mobile, AirTouch Cellular,
PrimeCo Personal Communications and AirTouch Paging. Our United States wireless
assets will be contributed to the new wireless business after the merger
between us and Bell Atlantic is complete. After the merger, Bell Atlantic and
GTE combined will own 55% and Vodafone AirTouch will own 45% of the new
wireless business. We anticipate that after we complete our merger with Bell
Atlantic, we will own, directly or through our subsidiaries, an interest in the
new wireless business in consideration of the contribution of our wireless
assets to that business.
Including our United States wireless assets, the new business will serve
approximately 20 million wireless customers and 3.5 million paging customers
throughout the United States, making it by far the largest wireless business in
the country. After the addition of our properties, the new business will have a
footprint covering more than 90% of the United States population and will serve
49 of the top 50 United States wireless markets. The companies will explore
various options to address overlapping properties, which currently serve
approximately 3 million wireless customers. The transaction requires the
approval of the shareholders of Vodafone AirTouch, is subject to certain
regulatory approvals and includes our participation only upon the completion of
our merger with Bell Atlantic. The agreement between Bell Atlantic and Vodafone
AirTouch to create a new wireless business and the agreement between Bell
Atlantic and GTE to merge are independent transactions. The completion of one
is not contingent upon completion of the other.
On October 8, 1999, we completed our previously announced acquisition of
approximately half of the wireless properties operated by Ameritech Corporation
for approximately $3.25 billion in cash. These properties were included as a
part of our United States wireless assets in the September 21, 1999
announcement described above.
On October 19, 1999, we announced that we ended discussions with a previously
announced potential buyer of GTE Airfone, and that the Airfone in-flight
communications business would continue to operate as a unit of GTE. We also
stated that while there were no talks currently under way with other potential
buyers, we would continue to consider our future strategic options for the in-
flight communications business, including its sale.
USE OF PROCEEDS
We will use the net proceeds from the sale of the debt securities:
. to repay short-term borrowings, including short-term borrowings incurred to
acquire wireless properties operated by Ameritech;
. to invest in and advance to our subsidiaries to finance their operations; and
. for general corporate purposes.
At September 30, 1999, our short-term borrowings (not including current
maturities) were approximately $2,216,000,000 with an average annual interest
rate of 5.508%.
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CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES
Our consolidated ratios of earnings to fixed charges for the periods indicated
are as follows:
<TABLE>
<CAPTION>
Years Ended December 31,
------------------------
<S> <C> <C> <C> <C> <C>
Nine Months Ended
September 30, 1999 1998 1997 1996 1995 1994
------------------ ---- ---- ---- ---- ----
5.22 3.49 3.98 4.27 4.00 4.18
</TABLE>
For these ratios, "earnings" have been calculated by adding income taxes and
fixed charges to income before extraordinary charges, and "fixed charges"
include 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. We added amounts applicable
to entities that are at least 50%-owned to both earnings and fixed charges, and
we deducted amounts applicable to minority interests from both earnings and
fixed charges.
Our ratio for the nine months ended September 30, 1999 includes special items
that resulted in a net pre-tax gain of $1,026,000,000 and our ratio for the
year ended December 31, 1998 includes a pre-tax special charge of $755,000,000.
Excluding those items and charge, these ratios would have been 4.32 and 3.96,
respectively. The 1999 special items related to gains associated with the sale
of substantially all of the GTE Government Systems business and the merger of
BC TELECOM Inc. and TELUS Corporation, partially offset by charges associated
with employee separation programs completed in early April 1999 and the
impairment of assets associated with new product development. The 1998 special
charge related to actions taken in 1998 to sell or exit various business
activities and reduce costs through employee reductions and related actions.
DESCRIPTION OF THE DEBT SECURITIES
General
We will issue the debt securities under an indenture between us and the
trustee, The Bank of New York, dated as of December 1, 1996, as supplemented
and amended. We have summarized selected provisions of the indenture below.
This is a summary and is not complete. It does not describe all exceptions and
qualifications contained in the indenture or the debt securities. You should
read the indenture and the form of the debt securities we filed as exhibits to
the registration statement for the debt securities for provisions that may be
important to you. In the summary below, we have included references to article
and section numbers of the indenture so that you can easily locate these
provisions.
The debt securities will be unsecured and will rank equally with all our senior
unsecured debt. The debt securities may be issued up to the principal amount
that may be authorized by us. The indenture does not limit the amount of debt
securities that may be issued and each series of debt securities may differ as
to its terms. (SECTION 2.01)
A board resolution or officers' certificate may designate the specific terms
relating to any new series of debt securities. (ARTICLE TWO) These terms will
be described in a prospectus supplement (and a pricing supplement, if any) and
will include the following:
. title of the series;
. total principal amount of the series;
. maturity date or dates;
. interest rate and interest payment dates;
. any redemption dates, prices, obligations and restrictions; and
. any other terms of the series.
Form and Exchange
The debt securities will normally be denominated in United States dollars in
which case we will pay principal, interest and any premium in United States
dollars. We may, however, denominate any series of debt securities in another
currency or composite currency. Payments of principal, interest and any premium
would then be in that currency or
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composite currency and not United States dollars. We will also normally issue
the debt securities in book-entry only form, which means that they will be
represented by one or more permanent global certificates registered in the name
of The Depository Trust Company, New York, New York, which we refer to as
"DTC," or its nominee. We will refer to this form here and in the prospectus
supplement as "book-entry only."
Alternatively, we may issue the debt securities in certificated form registered
in the name of the debt security holder. Under these circumstances, holders may
receive certificates representing the debt securities. Debt securities in
certificated form will be issued only in increments of $1,000 and will be
exchangeable without charge except for reimbursement of taxes, if any. We will
refer to this form in the prospectus supplement as "certificated." (ARTICLE
TWO)
Original Issue Discount
We may issue any series of debt securities as "original issue discount
securities." They will state on their face that they are original issue
discount securities. Generally, if this type of debt security is required to be
paid before its stated maturity date, less than the face amount will be paid to
you. The prospectus supplement or any pricing supplement will describe United
States Federal income tax considerations and other special considerations that
may apply to any original issue discount securities we issue.
Redemption Provisions, Sinking Fund and Defeasance
We may redeem some or all of the debt securities at our option subject to the
conditions stated in the prospectus supplement or any pricing supplement
relating to that series of debt securities. (ARTICLE THREE) If a series of debt
securities is subject to a sinking fund, the prospectus supplement or pricing
supplement will describe those terms.
The indenture permits us to discharge or "defease" certain of our obligations
on any series of debt securities at any time. We may defease by depositing with
the trustee sufficient cash or government securities to pay all sums due on the
debt securities of the series. (ARTICLE ELEVEN)
Book-Entry Procedures
The following discussion pertains to debt securities that are issued in book-
entry only form.
One or more global securities would be issued to DTC or its nominee. DTC would
keep a computerized record of its participants (for example, your broker) whose
clients have purchased the securities. The participant would then keep a record
of its clients who purchased the securities. A global security may not be
transferred, except that DTC, its nominees, and their successors may transfer a
global security as a whole to one another.
Under book-entry only, we will not issue certificates to individual holders of
the debt securities. Beneficial interests in global securities will be shown
on, and transfers of global securities will be made only through, records
maintained by DTC and its participants.
DTC has provided us with the following information: DTC is a limited-purpose
trust company organized under the New York Banking Law, a "banking
organization" within the meaning of the New York Banking Law, a member of the
United States Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code and a "clearing agency"
registered under Section 17A of the Securities Exchange Act of 1934. DTC holds
securities that its participants deposit with DTC. DTC also facilitates the
settlement among direct participants of securities transactions, such as
transfers and pledges, in deposited securities through computerized records for
direct participant's accounts. This eliminates the need to exchange
certificates. Direct participants include securities brokers and dealers,
banks, trust companies, clearing corporations and certain other organizations.
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DTC's book-entry system is also used by other organizations such as securities
brokers and dealers, banks and trust companies that work through a direct
participant. The rules that apply to DTC and its participants are on file with
the SEC.
DTC is owned by a number of its direct participants and by the New York Stock
Exchange, Inc., The American Stock Exchange, Inc. and the National Association
of Securities Dealers, Inc.
We will wire principal and interest payments to DTC's nominee. We and the
trustee will treat DTC's nominee as the owner of the global securities for all
purposes. Accordingly, we and the trustee will have no direct responsibility or
liability to pay amounts due on the securities to owners of beneficial
interests in the global securities.
It is DTC's current practice, upon receipt of any payment of principal or
interest, to credit direct participants' accounts on the payment date according
to their respective holdings of beneficial interests in the global securities
as shown on DTC's records. In addition, it is DTC's current practice to assign
any consenting or voting rights to direct participants whose accounts are
credited with securities on a record date, by using an omnibus proxy. Payments
by participants to owners of beneficial interests in the global securities, and
voting by participants, will be governed by the customary practices between the
participants and owners of beneficial interests, as is the case with securities
held for the account of customers registered in "street name." However,
payments will be the responsibility of the participants and not of DTC, the
trustee, or us.
Debt securities represented by a global security would be exchangeable for debt
security certificates with the same terms in authorized denominations only if:
. DTC notifies us that it is unwilling or unable to continue as depository or
if DTC ceases to be a clearing agency registered under applicable law and a
successor depository is not appointed by us within 90 days; or
. we deliver to the trustee an order that the global security shall be
exchangeable.
The following Year 2000 disclosure has also been provided to us by DTC: DTC
management is aware that some computer applications, systems, and the like for
processing data that are dependent upon calendar dates, including dates before,
on, and after January 1, 2000, may encounter "Year 2000 problems." DTC has
informed its participants and other members of the financial community that it
has developed and is implementing a program so that its systems, as the same
relate to the timely payment of distributions (including principal and income
payments) to securityholders, book-entry deliveries, and settlement of trades
within DTC, continue to function appropriately. This program includes a
technical assessment and a remediation plan, each of which is complete.
Additionally, DTC's plan includes a testing phase, which is expected to be
completed within appropriate time frames.
However, DTC's ability to perform properly its services is also dependent upon
other parties, including but not limited to issuers and their agents, as well
as third party vendors from whom DTC licenses software and hardware, and third
party vendors on whom DTC relies for information or the provision of services,
including telecommunication and electrical utility service providers, among
others. DTC has informed its participants and other members of the financial
community that it is contacting (and will continue to contact) third party
vendors from whom DTC acquires services to: (i) impress upon them the
importance of such services being Year 2000 compliant; and (ii) determine the
extent of their efforts for Year 2000 remediation (and, as appropriate,
testing) of their services. In addition, DTC is in the process of developing
such contingency plans as it deems appropriate.
According to DTC, the foregoing information with respect to DTC has been
provided to its participants and other members of the financial community for
informational purposes only and is not intended to serve as a representation,
warranty, or contract modification of any kind.
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Restrictions
The debt securities will not be secured. However, if we at any time incur other
debt or obligations secured by a mortgage or pledge on any of our property, the
indenture requires us to secure the debt securities equally with the other debt
or obligations for as long as they remain secured. Exceptions to this
requirement include the following:
. purchase money mortgages or conditional sales agreements on property acquired
after December 1, 1996, or pre-existing mortgages;
. certain deposits or pledges to secure the performance of bids, tenders,
contracts or leases or in connection with worker's compensation and similar
matters;
. mechanics' and similar liens in the ordinary course of business; and
. when we own debt of our subsidiaries, we can permit other creditors of these
subsidiaries to be repaid before we are repaid. (SECTION 4.05)
We may issue or assume an unlimited amount of debt under the indenture. As a
result, the indenture does not prevent us from significantly increasing our
unsecured debt levels, which may negatively affect the resale value of the debt
securities. (SECTION 2.01)
Changes to the Indenture
The indenture may be changed with the consent of holders owning more than 50%
in principal amount of the outstanding debt securities of each series affected
by the change. However, we may not change your principal or interest payment
terms, or the percentage required to change other terms of the indenture,
without your consent, as well as the consent of others similarly affected.
(SECTION 9.02)
We may enter into supplemental indentures for other specified purposes
including the creation of any new series of debt securities, without the
consent of any holder of debt securities. (SECTIONS 2.01, 9.01 and 10.01)
Consolidation, Merger or Sale
We cannot merge with another company or sell or transfer all or substantially
all of our property to another company unless:
. we are the continuing corporation; or
. the successor corporation expressly assumes:
--payment of principal, interest and any premium on the debt securities; and
--performance and observance of all covenants and conditions in the
Indenture.
(SECTIONS 10.01 and 10.02)
Events of Default
"Event of default" means with respect to any series of debt securities any of
the following:
. failure to pay interest on that series of debt securities for 30 business
days after payment is due;
. failure to pay principal or any premium on that series of debt securities
when due;
. failure to perform any other covenant relating to that series of debt
securities for 90 days after we are given written notice; or
. certain events in bankruptcy, insolvency or reorganization.
An event of default for a particular series of debt securities does not
necessarily impact any other series of debt securities issued under the
Indenture. (SECTION 6.01)
If an event of default for any series of debt securities occurs and continues,
the trustee or the holders of at least 25% of the principal amount of the debt
securities of the series may declare the entire principal of all the debt
securities of that series (or for any original issue discount series, the
required amount which may be less than the principal) to be due and payable
immediately. If this happens, subject to certain conditions, the holders of a
majority of the principal amount of the debt securities of that series can
rescind the
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declaration if we have deposited with the trustee a sum sufficient to pay all
matured installments of interest, principal and any premium. (SECTION 6.01)
The holders of more than 50% of the principal amount of any series of the debt
securities may, on behalf of the holders of all the debt securities of that
series, control any proceedings resulting from an event of default or waive any
past default except a default in the payment of principal, interest or any
premium. (SECTION 6.06) We are required to file an annual certificate with the
trustee stating whether we are in compliance with all the conditions and
covenants under the indenture. (SECTION 5.03)
Concerning the Trustee
Within 90 days after a default occurs, the trustee must notify the holders of
the debt securities of the series of all defaults known to the trustee if we
have not remedied them (default is defined for this purpose to include the
events of default specified above absent any grace periods or notice). The
trustee may withhold notice to the holders of such debt securities of any
default (except in the payment of principal, interest or any premium) if it in
good faith considers such withholding in the interest of the holders. (SECTION
6.07)
Prior to an event of default, the trustee is required to perform only the
specific duties stated in the indenture and, after an event of default, must
exercise the same degree of care as a prudent individual would exercise in the
conduct of his or her own affairs. (SECTION 7.01) The trustee is not required
to take any action permitted by the indenture at the request of any holders of
debt securities, unless such holders protect the trustee against costs,
expenses and liabilities. (SECTION 7.02) The trustee is not required to spend
its own funds or become financially liable when performing its duties if it
reasonably believes that it will not be adequately protected financially.
(SECTION 7.01)
We have a deposit account and a normal commercial banking relationship with the
trustee. The trustee also serves as trustee on other indentures under which we
have unsecured debt securities outstanding. If a default occurred on any debt
securities and/or any of those other outstanding unsecured debt securities, The
Bank of New York may be required to resign as trustee for the debt securities
within 90 days of default unless the default were cured, duly waived or
otherwise eliminated.
EXPERTS
The consolidated financial statements included in GTE Corporation's Annual
Report on Form 10-K for the year ended December 31, 1998, incorporated by
reference in this prospectus and elsewhere in the registration statement, have
been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their report with respect thereto dated January 28, 1999, and are
incorporated by reference herein in reliance upon the authority of said firm as
experts in giving said reports.
The consolidated financial statements and consolidated financial statement
schedule included in Bell Atlantic Corporation's Annual Report on Form 10-K for
the year ended December 31, 1998, incorporated in this prospectus and in the
registration statement by reference to the Joint Proxy Statement and Prospectus
of GTE and Bell Atlantic, have been so incorporated in reliance on the report
(which contains an explanatory paragraph stating that, in 1996, Bell Atlantic
changed its method of accounting for directory publishing revenues and
expenses) of PricewaterhouseCoopers LLP, independent accountants, given on the
authority of such firm as experts in auditing and accounting.
LEGAL MATTERS
William P. Barr, Esq., our Executive Vice President-Government & Regulatory
Advocacy, General Counsel, or his successor, will issue an opinion about the
validity of the debt securities
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for us. Milbank, Tweed, Hadley & McCloy LLP of New York, New York will issue an
opinion for the agents or underwriters. As of October 5, 1999, Mr. Barr was the
beneficial owner of 278,664 shares of our common stock, including 269,200
shares which may be acquired within 60 days pursuant to the exercise of stock
options.
PLAN OF DISTRIBUTION
We may sell any series of debt securities:
. through underwriters or dealers;
. through agents; or
. directly to one or more purchasers.
A prospectus supplement or pricing supplement will include:
. the names of any underwriters, dealers or agents;
. the purchase price of the debt securities;
. our proceeds from such sale;
. any underwriting discounts or agency fees and other underwriters' or agents'
compensation; and
. any initial public offering price, any discounts or concessions allowed or
reallowed or paid to dealers.
If underwriters are used in the sale, they will buy the debt securities for
their own account. The underwriters may then resell the debt securities in one
or more transactions, at any time or times, at a fixed public offering price or
at varying prices.
We will only offer the debt securities in states where the offer is permitted
by law.
If there is a default by one or more of the underwriters affecting 10% or less
of the total principal amount of debt securities offered, the non-defaulting
underwriters must purchase the debt securities agreed to be purchased by the
defaulting underwriters. If the default affects more than 10% of the total
principal amount of the debt securities, we may, at our option, sell less than
all the debt securities offered.
Underwriters and agents that participate in the distribution of the debt
securities may be underwriters as defined in the Securities Act of 1933. Any
discounts or commissions that we pay them and any profit they receive from the
resale of the debt securities by them may be treated as underwriting discounts
and commissions under the Securities Act of 1933. We may have agreements with
underwriters, dealers and agents to indemnify them against certain civil
liabilities, including liabilities under the Securities Act of 1933, or to
contribute with respect to payments which they may be required to make.
Underwriters and agents may be our customers or may engage in transactions with
us or perform services for us in the ordinary course of business.
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$1,375,000,000
GTE Corporation [LOGO]
$975,000,000 Floating Rate Debentures due 2000
$400,000,000 Floating Rate Debentures due 2001
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PROSPECTUS SUPPLEMENT
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Merrill Lynch & Co.
December 7, 1999
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