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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report: MAY 11, 2000
(Date of earliest event reported)
GTE CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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NEW YORK 1-2755 13-1678633
(STATE OR OTHER JURISDICTION OF (COMMISSION FILE NUMBER) (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION)
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1255 Corporate Drive, SVC04C08, Irving, Texas 75038
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Registrant's telephone number, including area code 972-507-5000
(Former name, former address and former fiscal year,
if changed since last report)
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GTE CORPORATION
FORM 8-K
Item 5. Other Events
The unaudited pro forma financial statements, attached as Exhibit 99 and
incorporated herein by reference, are for GTE Corporation (GTE) and Bell
Atlantic Corporation (Bell Atlantic) as of and for the year ended December 31,
1999 in connection with the proposed merger of GTE and Bell Atlantic, taking
into account the combination of Bell Atlantic and Vodafone AirTouch plc
(Vodafone AirTouch) U.S. wireless assets.
On April 3, 2000, Bell Atlantic and Vodafone AirTouch combined in a joint
venture their U.S. cellular, paging and PCS businesses and formed a new
nationwide company, Verizon Wireless, that will offer wireless products and
services coast-to-coast. Upon completion of the GTE-Bell Atlantic merger, GTE's
domestic wireless assets will be combined with Verizon Wireless.
Item 7. Financial Statements and Exhibits
(a) Financial Statements - None
(b) Pro Forma Financial Information
The unaudited pro forma combined condensed balance sheet of
GTE and Bell Atlantic as of December 31, 1999 and the
unaudited pro forma combined condensed statement of income of
GTE and Bell Atlantic for the year ended December 31, 1999,
are filed as Exhibit 99 to this Form 8-K and are incorporated
herein by reference.
(c) Exhibits
99 Unaudited pro forma combined condensed financial
statements of GTE and Bell Atlantic as of and for the
year ended December 31, 1999.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
GTE Corporation
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(Registrant)
Date: May 11, 2000 /s/ Paul R. Shuell
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Paul R. Shuell
Vice President and Controller
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EXHIBIT INDEX
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Exhibit
Number Description
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99 Unaudited pro forma combined condensed financial statements of
GTE and Bell Atlantic as of and for the year ended December
31, 1999.
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EXHIBIT 99
UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
The unaudited pro forma financial statements that follow are for GTE Corporation
(GTE) and Bell Atlantic Corporation (Bell Atlantic) as of and for the year ended
December 31, 1999 in connection with the proposed merger of GTE and Bell
Atlantic, taking into account the combination of Bell Atlantic and Vodafone
AirTouch plc (Vodafone AirTouch) U.S. wireless assets (the "wireless
transaction"). The wireless transaction was consummated on April 3, 2000. Bell
Atlantic has supplied all information contained in this Exhibit relating to Bell
Atlantic (taking into account the effect of the wireless transaction) and GTE
has supplied all information relating to GTE.
The following unaudited pro forma combined condensed financial statements are
presented assuming that the merger of GTE and Bell Atlantic will be accounted
for as a pooling of interests. Under this method of accounting, the companies
are treated as if they had always been combined for accounting and financial
reporting purposes. These unaudited pro forma financial statements have been
prepared from, and should be read in conjunction with, the historical
consolidated financial statements and accompanying notes of GTE and Bell
Atlantic, which are included in the companies' Annual Reports on Form 10-K for
the year ended December 31, 1999. The unaudited pro forma financial information
is presented for illustration purposes only and is not necessarily indicative of
the operating results or financial position that would have occurred if the
merger had been completed at the dates indicated. The information does not
necessarily indicate the future operating results or financial position of the
combined company.
We prepared the following unaudited pro forma financial data by adding or
combining the historical amounts of each company (in the case of Bell Atlantic,
taking into account the effect of the wireless transaction) and adjusting the
combined amounts for significant differences in accounting methods used by each
company. These adjustments are described in the accompanying notes to the
financial statements. We prepared the unaudited pro forma combined condensed
balance sheet by combining the balance sheets of GTE and Bell Atlantic (in the
case of Bell Atlantic, taking into account the effect of the wireless
transaction) at December 31, 1999. The unaudited pro forma combined condensed
statement of income gives effect to the merger as if it had occurred at the
beginning of the earliest period presented. The terms of the merger specify that
each share of GTE common stock will be converted into the right to receive 1.22
shares of combined company common stock. This exchange ratio was used in
computing certain of the pro forma adjustments and in computing share and per
share amounts in the accompanying unaudited pro forma financial information.
The unaudited pro forma financial data does not include (a) any dispositions
made, consideration received or costs incurred in connection with actions taken
with respect to certain overlapping wireless properties as a result of
regulatory or contractual issues associated with the GTE-Bell Atlantic merger or
the wireless transaction or (b) the proposed initial public offering of a
substantial portion of GTE's internetworking business, Genuity Inc.
Cautionary Statement Concerning Forward-Looking Statements
This pro forma financial information contains forward-looking statements. These
statements are based on the Company's estimates and assumptions and are subject
to certain risks and uncertainties. Forward-looking statements include the
information concerning possible or assumed future results of operations.
Forward-looking statements also include those preceded or followed by the words
"anticipates," "believes," "estimates," "expects," "hopes," "targets" or similar
expressions. For those statements, the Company claims the protection of the safe
harbor for forward-looking statements contained in the Private Securities
Litigation Reform Act of 1995.
The following important factors could affect the future results of the Company
and could cause those results to differ materially from those expressed in the
forward-looking statements:
o materially adverse changes in economic conditions in the markets served by
the Company or by companies in which GTE has substantial investments;
o material changes in available technology;
o the final resolution of federal, state, and local regulatory initiatives
and proceedings, including arbitration proceedings, and judicial review of
those initiatives and proceedings, pertaining to, among other matters, the
terms of interconnection, access charges, universal service, and unbundled
network element and resale rates;
o the extent, timing, success, and overall effects of competition from others
in the local telephone and toll service markets;
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o the success of our efforts to expand service capability in the data
communication, long-distance and enhanced services segments of the
telecommunications marketplace and to provide a bundle of products and
services both in and outside of its traditional service territories;
o the timing of, and regulatory or other conditions associated with, the
completion of the merger with Bell Atlantic and our ability to combine
operations and obtain revenue enhancements and cost savings following the
merger; and
o the ability of Verizon Wireless, the entity created by the wireless
transaction, to combine operations and obtain revenue enhancements and cost
savings.
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COMBINED COMPANY
PRO FORMA COMBINED CONDENSED BALANCE SHEET
DECEMBER 31, 1999
(UNAUDITED)
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PRO FORMA
COMBINED HISTORICAL PRO FORMA PRO FORMA
(Dollars in Millions) BELL ATLANTIC(1) GTE ADJUSTMENTS COMBINED
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ASSETS
Current assets
Cash and temporary cash investments $ 1,959 $ 1,132 $ 3,091
Receivables, net 7,698 5,058 12,756
Net assets held for sale 1,802 1,802
Other current assets 1,994 1,451 $ (232)(4b)
65 (4e) 3,278
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11,651 9,443 (167) 20,927
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Plant, property and equipment, net 44,435 23,233 (166)(4d) 67,502
Investments in unconsolidated businesses 7,353 3,932 11,285
Intangible assets, net 34,669 6,492 41,161
Other assets 4,302 7,732 12,034
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Total assets $ 102,410 $ 50,832 $ (333) $ 152,909
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LIABILITIES AND SHAREOWNERS' INVESTMENT
Current liabilities
Debt maturing within one year $ 5,959 $ 9,608 $ 15,567
Accounts payable and accrued liabilities 7,116 5,782 12,898
Other current liabilities 2,182 945 $ 143 (4b) 3,270
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15,257 16,335 143 31,735
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Long-term debt 22,214 13,957 36,171
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Employee benefit obligations 9,326 4,418 13,744
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Deferred income taxes 9,142 3,406 (63)(4e) 12,485
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Deferred credits and other liabilities 1,172 623 1,795
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Minority interest, including a portion subject to
redemption requirements 24,319 1,266 25,585
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Shareowners' investment
Common stock (2,756,484,606 shares) 158 50 68 (4a) 276
Contributed capital 18,650 8,680 (2,095)(4a) 25,235
Reinvested earnings 2,806 4,953 (310)(4b)
(103)(4d) 7,346
Accumulated other comprehensive income (loss) 450 (376) 74
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22,064 13,307 (2,440) 32,931
Less common stock in treasury, at cost 640 2,027 (2,027)(4a) 640
Less deferred compensation - employee
stock ownership plans 444 453 897
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Total shareowners' investment 20,980 10,827 (413) 31,394
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Total liabilities and shareowners' investment $ 102,410 $ 50,832 $ (333) $ 152,909
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See accompanying Notes to Unaudited Pro Forma Combined
Condensed Financial Statements.
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COMBINED COMPANY
PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1999
(UNAUDITED)
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PRO FORMA
COMBINED HISTORICAL PRO FORMA PRO FORMA
(Dollars in Millions, Except Per Share Amounts) BELL ATLANTIC(1) GTE ADJUSTMENTS COMBINED
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Operating revenues $ 38,831 $ 25,336 $ 64,167
Operating expenses 30,990 18,000 $ (36)(4d) 48,954
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Operating income 7,841 7,336 36 15,213
Income from unconsolidated businesses 339 432 771
Other income and (expense), net 185 61 246
Interest expense 1,554 1,353 2,907
Mark-to-market adjustment for exchangeable notes (664) (664)
Provision for income taxes 2,258 2,291 14 (4e) 4,563
Minority interest income (expense) (54) (122) (176)
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Income from continuing operations $ 3,835 $ 4,063 $ 22 $ 7,920
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BASIC EARNINGS PER COMMON SHARE
Income from continuing operations per
common share $ 2.47 $ 4.18 $ 2.89
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Weighted-average shares outstanding (in millions) 1,553 972 214 (4c) 2,739
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DILUTED EARNINGS PER COMMON SHARE
Income from continuing operations per
common share $ 2.42 $ 4.15 $ 2.85
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Weighted-average shares - diluted (in millions) 1,583 979 215 (4c) 2,777
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See accompanying Notes to Unaudited Pro Forma Combined
Condensed Financial Statements.
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NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
Note 1 - Pro Forma Combined Bell Atlantic
Represents Bell Atlantic's historical results, taking into account the effect of
Bell Atlantic's acquisition of Vodafone AirTouch's U.S. wireless businesses
(including Vodafone AirTouch's 50% ownership of PrimeCo Personal Communications,
L.P.) using the purchase method of accounting. For additional information, refer
to Bell Atlantic's Current Report on Form 8-K/A filed with the Securities and
Exchange Commission on May 11, 2000.
Note 2 - Reclassifications
Reclassifications have been made to the historical financial statements to
conform to the presentation expected to be used by the combined company.
Note 3 - Exchange Ratio
The terms of the merger agreement specify that each outstanding share of GTE
common stock will be converted into 1.22 shares of combined company common
stock. This exchange ratio was used in computing share and per share amounts in
the accompanying pro forma financial information.
Note 4 - Pro Forma Adjustments
(a) A pro forma adjustment has been made to reflect the issuance of 1,180
million shares of combined company common stock in exchange for all
outstanding shares of GTE common stock as per the exchange ratio stated in
Note 3, above. The adjustment also reflects the cancellation of shares of
GTE treasury stock, but does not reflect the impact of fractional shares.
(b) A pro forma adjustment has been made to reflect direct incremental
merger-related costs. Amounts anticipated to be incurred (approximately
$143 million) have been shown as an increase to "Other current
liabilities." Amounts incurred through December 31, 1999 by GTE and Bell
Atlantic (approximately $232 million) have been shown as a reduction to
"Other current assets." The after-tax cost of this anticipated charge
(approximately $310 million) has been reflected as a reduction in
"Reinvested earnings."
(c) Pro forma adjustments have been made to the number of weighted average
shares outstanding used in the calculation of basic and diluted earnings
per share. The number of weighted average shares outstanding reflects the
conversion of shares and share equivalents of GTE common stock into
combined company common stock in accordance with the merger agreement.
(d) Pro forma adjustments have been made to conform GTE's accounting policies
for certain computer software costs to Bell Atlantic's policies.
(e) Pro forma adjustments have been made for the estimated tax effects of the
adjustments discussed in (b) and (d) above.
(f) There are no significant intercompany transactions between GTE and Bell
Atlantic.
