<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_____________________
FORM 10-Q
_____________________
(Mark one)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 1-3488
BELL ATLANTIC - NEW JERSEY, INC.
A New Jersey Corporation I.R.S. Employer Identification No. 22-1151770
540 Broad Street, Newark, New Jersey 07101
Telephone Number (973) 649-9900
_________________________
THE REGISTRANT, A WHOLLY OWNED SUBSIDIARY OF BELL ATLANTIC CORPORATION, MEETS
THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION H(1)(a) AND (b) OF FORM 10-Q AND
IS THEREFORE FILING THIS FORM WITH REDUCED DISCLOSURE FORMAT PURSUANT TO GENERAL
INSTRUCTION H(2).
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
----- -----
<PAGE>
Bell Atlantic - New Jersey, Inc.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
CONDENSED STATEMENTS OF INCOME
Three Months
Ended March 31,
-------------------------
(Dollars in Millions)(Unaudited) 2000 1999
- -------------------------------------------------------------------------------
OPERATING REVENUES
(including $45.9 and $38.8 from affiliates) $968.8 $910.6
-------------------------
OPERATING EXPENSES
Employee costs, including benefits and taxes 163.2 165.9
Depreciation and amortization 199.3 184.8
Other (including $146.1 and $163.1 to affiliates) 259.0 269.3
-------------------------
621.5 620.0
-------------------------
OPERATING INCOME 347.3 290.6
OTHER INCOME, NET
(including $.1 and $0 from affiliate) 7.6 .8
INTEREST EXPENSE
(including $8.0 and $5.5 to affiliate) 28.7 26.7
-------------------------
INCOME BEFORE PROVISION FOR INCOME TAXES 326.2 264.7
PROVISION FOR INCOME TAXES 133.2 108.0
-------------------------
NET INCOME $193.0 $156.7
=========================
See Notes to Condensed Financial Statements.
1
<PAGE>
Bell Atlantic - New Jersey, Inc.
CONDENSED BALANCE SHEETS
ASSETS
------
March 31, December 31,
(Dollars in Millions)(Unaudited) 2000 1999
- ----------------------------------------------------------------------------
CURRENT ASSETS
Short-term investments $ 44.9 $ 67.3
Accounts receivable:
Trade and other, net of allowances for
uncollectibles of $63.2 and $79.6 734.3 721.6
Affiliates 26.9 38.4
Material and supplies 17.0 18.2
Prepaid expenses 44.3 53.9
Deferred income taxes 12.3 12.0
Other 15.1 6.6
------------------------------
894.8 918.0
------------------------------
PLANT, PROPERTY AND EQUIPMENT 11,251.8 11,073.3
Less accumulated depreciation 6,637.6 6,487.4
------------------------------
4,614.2 4,585.9
------------------------------
DEFERRED INCOME TAXES 45.9 55.4
------------------------------
OTHER ASSETS 239.3 158.2
------------------------------
TOTAL ASSETS $ 5,794.2 $ 5,717.5
==============================
See Notes to Condensed Financial Statements.
2
<PAGE>
Bell Atlantic - New Jersey, Inc.
CONDENSED BALANCE SHEETS
LIABILITIES AND SHAREOWNER'S INVESTMENT
---------------------------------------
<TABLE>
<CAPTION>
March 31, December 31,
(Dollars in Millions)(Unaudited) 2000 1999
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
CURRENT LIABILITIES
Debt maturing within one year:
Note payable to affiliate $ 434.7 $ 539.7
Other 26.6 26.3
Accounts payable and accrued liabilities:
Affiliates 220.6 290.8
Other 597.3 492.6
Other liabilities 120.7 120.1
---------------------------------
1,399.9 1,469.5
---------------------------------
LONG-TERM DEBT 1,256.6 1,256.9
---------------------------------
EMPLOYEE BENEFIT OBLIGATIONS 579.4 582.1
---------------------------------
DEFERRED CREDITS AND OTHER LIABILITIES
Deferred income taxes 242.2 217.8
Unamortized investment tax credits 21.6 22.1
Other 150.7 119.8
---------------------------------
414.5 359.7
---------------------------------
SHAREOWNER'S INVESTMENT
Common stock - one share, without par value, owned by parent 1,381.2 1,381.2
Reinvested earnings 762.9 668.4
Accumulated other comprehensive loss (.3) (.3)
---------------------------------
2,143.8 2,049.3
---------------------------------
TOTAL LIABILITIES AND SHAREOWNER'S INVESTMENT $5,794.2 $5,717.5
=================================
</TABLE>
See Notes to Condensed Financial Statements.
3
<PAGE>
Bell Atlantic - New Jersey, Inc.
CONDENSED STATEMENTS OF CASH FLOWS
Three Months
Ended March 31,
-------------------------------
(Dollars in Millions)(Unaudited) 2000 1999
- --------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 449.3 $ 410.1
-------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Net change in short-term investments 22.4 19.2
Capital expenditures (264.7) (219.0)
Other, net (.6) 4.8
-------------------------------
Net cash used in investing activities (242.9) (195.0)
-------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal repayments of capital lease obligations (1.5) (1.4)
Net change in note payable to affiliate (105.0) (55.2)
Dividend paid (98.5) (148.8)
Net change in outstanding checks drawn
on controlled disbursement accounts (1.4) (9.7)
-------------------------------
Net cash used in financing activities (206.4) (215.1)
-------------------------------
NET CHANGE IN CASH --- ---
CASH, BEGINNING OF PERIOD --- ---
-------------------------------
CASH, END OF PERIOD $ --- $ ---
===============================
See Notes to Condensed Financial Statements.
4
<PAGE>
Bell Atlantic - New Jersey, Inc.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
Bell Atlantic - New Jersey, Inc. is a wholly owned subsidiary of Bell
Atlantic Corporation (Bell Atlantic). The accompanying unaudited condensed
financial statements have been prepared based upon Securities and Exchange
Commission (SEC) rules that permit reduced disclosure for interim periods.
These financial statements reflect all adjustments that are necessary for a fair
presentation of results of operations and financial position for the interim
periods shown including normal recurring accruals. The results for the interim
periods are not necessarily indicative of results for the full year. For a more
complete discussion of significant accounting policies and certain other
information, you should refer to the financial statements included in our 1999
Annual Report on Form 10-K.
We have reclassified certain amounts from prior year's data to conform to
the 2000 presentation.
2. Dividend
On May 1, 2000, we declared and paid a dividend in the amount of $134.6
million to Bell Atlantic.
3. Recent Accounting Pronouncements
FASB Accounting Standard - Derivatives and Hedging Activities
In June 1998, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for
Derivative Instruments and Hedging Activities." This statement requires that
all derivatives be measured at fair value and recognized as either assets or
liabilities on our balance sheet. Changes in the fair values of derivative
instruments will be recognized in either earnings or comprehensive income,
depending on the designated use and effectiveness of the instruments. The FASB
amended this pronouncement in June 1999 to defer the effective date of SFAS No.
133 for one year. We must adopt SFAS No. 133 no later than January 1, 2001.
On March 3, 2000, the FASB issued a Proposed SFAS "Accounting for Certain
Derivative Instruments and Certain Hedging Activities," which would amend SFAS
No. 133. The proposed amendments address certain implementation issues and
relate to such matters as the normal purchases and normal sales exception, the
definition of interest rate risk, hedging recognized foreign-currency-
denominated debt instruments, and intercompany derivatives.
The adoption of SFAS No. 133 will have no material effect on our results
of operations or financial condition because we currently do not enter into the
use of derivative instruments or participate in hedging activities.
FASB Interpretation - Stock Compensation
In March 2000, the FASB issued Interpretation No. 44, "Accounting for
Certain Transactions Involving Stock Compensation." Interpretation No. 44 was
issued in order to clarify certain issues arising from Accounting Principles
Board (APB) Opinion No. 25 "Accounting for Stock Issued to Employees," which was
previously issued in October 1972. Interpretation No. 44 is effective July 1,
2000, but certain conclusions cover specific events that occur either after
December 15, 1998 or January 12, 2000.
The main issues addressed by Interpretation No. 44 are: (a) the definition
of an employee for purposes of applying APB Opinion No. 25, (b) the criteria for
determining whether a plan qualifies as a noncompensatory plan, (c) the
accounting consequence of various modifications to the terms of a previously
fixed stock option or award, and (d) the accounting for an exchange of stock
compensation awards in a business combination.
We do not expect that Interpretation No. 44 will have a material impact on
our results of operations or financial position.
5
<PAGE>
Bell Atlantic - New Jersey, Inc.
SEC Staff Accounting Bulletin - Revenue Recognition
In December 1999, the SEC issued Staff Accounting Bulletin (SAB) No. 101,
"Revenue Recognition in Financial Statements," which currently must be adopted
by June 30, 2000. SAB No. 101 provides additional guidance on revenue
recognition, as well as criteria from when revenue is generally realized and
earned, and also requires the deferral of incremental direct selling costs. We
are currently assessing the impact of SAB No. 101 on our results of operations
and financial position.
4. Shareowner's Investment
Accumulated
Other
Common Reinvested Comprehensive
(Dollars in Millions) Stock Earnings Loss
- -------------------------------------------------------------------------------
Balance at December 31, 1999 $1,381.2 $668.4 $(.3)
Net income 193.0
Dividend paid to Bell Atlantic (98.5)
------------------------------------------
Balance at March 31, 2000 $1,381.2 $762.9 $(.3)
==========================================
Net income and comprehensive income were the same for the three months
ended March 31, 2000 and 1999.
5. Commitments and Contingencies
Various legal actions and regulatory proceedings are pending to which we are
a party. We have established reserves for specific liabilities in connection
with regulatory and legal matters that we currently deem to be probable and
estimable. We do not expect that the ultimate resolution of pending regulatory
and legal matters in future periods will have a material effect on our financial
condition, but it could have a material effect on our results of operations.
6. Proposed Bell Atlantic - GTE Merger
Bell Atlantic and GTE Corporation (GTE) have announced a proposed merger
of equals under a definitive merger agreement dated as of July 27, 1998. Under
the terms of the agreement, GTE shareholders will receive 1.22 shares of Bell
Atlantic common stock for each share of GTE common stock that they own. Bell
Atlantic shareholders will continue to own their existing shares after the
merger.
It is expected that the merger will qualify as a pooling of interests,
which means that for accounting and financial reporting purposes the companies
will be treated as if they had always been combined. At annual meetings held in
May 1999, the shareholders of each company approved the merger. The completion
of the merger is subject to a number of conditions, including certain regulatory
approvals (all of which have been obtained except that of the Federal
Communications Commission) and receipt of opinions that the merger will be tax-
free.
The companies are targeting completion of the merger in the second quarter
of 2000. In April 2000, Bell Atlantic announced that the combined company will
be called Verizon Communications.
6
<PAGE>
Bell Atlantic - New Jersey, Inc.
Item 2. Management's Discussion and Analysis of Results of Operations
(Abbreviated pursuant to General Instruction H(2).)
This discussion should be read in conjunction with the Financial
Statements and Notes to Financial Statements.
RESULTS OF OPERATIONS
- ---------------------
We reported net income of $193.0 million for the three month period ended
March 31, 2000, compared to net income of $156.7 million for the same period in
1999.
Our results for 1999 were affected by special items. The special items
were comprised of our allocated share of charges from Bell Atlantic Network
Services, Inc. (NSI).
Merger-related Costs
In connection with the Bell Atlantic-NYNEX merger, which was completed in
August 1997, we recorded pre-tax transition and integration costs of $2.0
million in the first quarter of 1999. These costs were recorded in Other
Operating Expenses.
Transition and integration costs consisted of our proportionate share of
costs associated with integrating the operations of Bell Atlantic and NYNEX,
such as systems modifications costs and advertising and branding costs.
Transition and integration costs were expensed as incurred.
OPERATING REVENUE STATISTICS
- ----------------------------
2000 1999 % Change
- -------------------------------------------------------------------------------
At March 31
- ------------
Access Lines in Service (in thousands)
Residence 4,278 4,117 3.9%
Business 2,465 2,363 4.3
Public 92 94 (2.1)
------------------
6,835 6,574 4.0
==================
Three Months Ended March 31
- ----------------------------
Access Minutes of Use (in millions) 8,996 8,405 7.0
==================
OPERATING REVENUES
- ------------------
(Dollars in Millions) Three Months Ended March 31
-----------------------------
2000 1999
- -----------------------------------------------------------------------------
Local services $424.7 $398.3
Network access services 335.1 311.8
Long distance services 127.8 127.8
Ancillary services 81.2 72.7
-----------------------------
Total $968.8 $910.6
=============================
7
<PAGE>
Bell Atlantic - New Jersey, Inc.
LOCAL SERVICES
2000 - 1999 Increase
- --------------------------------------------------------------------------------
First Quarter $26.4 6.6%
- --------------------------------------------------------------------------------
Local service revenues are earned from the provision of local exchange,
local private line, public telephone (pay phone) and value-added services.
Value-added services are a family of services that expand the utilization of the
network. These services include products such as Caller ID, Call Waiting and
Return Call.
Local service revenues increased in the first quarter of 2000 due to
higher customer demand and usage of our value-added services, as well as our
national directory assistance and data transport and digital services. Local
service revenue growth in the first quarter of 2000 also reflects higher usage
of our network facilities. Revenue growth was generated, in part, by an increase
in access lines in service of 4.0% from March 31, 1999, and higher business
message volumes.
Growth in local service revenues were partially offset by a decline in
revenues from our pay phone services due to the increasing popularity of
wireless communications.
NETWORK ACCESS SERVICES
2000 - 1999 Increase
- --------------------------------------------------------------------------------
First Quarter $23.3 7.5%
- --------------------------------------------------------------------------------
Network access revenues are earned from end-user subscribers and from long
distance and other competing carriers who use our local exchange facilities to
provide services to their customers. Switched access revenues are derived from
fixed and usage-based charges paid by carriers for access to our local network.
Special access revenues originate from carriers and end-users that buy dedicated
local exchange capacity to support their private networks. End-user access
revenues are earned from our customers and from resellers who purchase dial-tone
services.
Network access revenue growth in the first quarter of 2000 was mainly
attributable to higher customer demand, as reflected by growth in access minutes
of use of 7.0% from the same period in 1999. Volume growth also reflects a
continuing expansion of the business market, particularly for high capacity data
services. In the first quarter of 2000, demand for special access services
increased, reflecting a greater utilization of our network. Higher network
usage by alternative providers of intraLATA toll services and higher end-user
revenues attributable to an increase in access lines in service further
contributed to revenue growth this year.
In addition, network access revenues included higher revenues received
from customers for the recovery of local number portability (LNP) costs. LNP
allows customers to change local exchange carriers while maintaining their
existing telephone numbers. In December 1998, the Federal Communications
Commission (FCC) issued an order permitting us to recover costs incurred for LNP
in the form of monthly end-user charges for a five-year period beginning in
March 1999.
Revenue growth was partially offset by price reductions associated with a
federal price cap filing and other regulatory decisions. The FCC regulates the
rates that we charge long distance carriers and end-user subscribers for
interstate access services. We are required to file new access rates with the
FCC each year. In July 1999, we implemented interstate price decreases of
approximately $4 million on an annual basis in connection with the FCC's Price
Cap Plan. The rates included in our July 1999 filing will be in effect through
June 2000. Interstate price decreases were $14 million on an annual basis for
the period July 1998 through June 1999. The rates include amounts necessary to
recover our contribution to the FCC's universal service fund which are subject
to adjustment every quarter due to potential increases or decreases in our
contribution to the fund. Our contributions to the universal service fund are
included in Other Operating Expenses. As a result of a U.S. Court of Appeals
decision last year, our contributions to the universal service fund were reduced
by approximately $13 million annually beginning November 1, 1999, and our
interstate access rates were reduced accordingly because we will no longer have
to recover these contributions in our rates.
8
<PAGE>
Bell Atlantic - New Jersey, Inc.
LONG DISTANCE SERVICES
2000 - 1999
- --------------------------------------------------------------------------------
First Quarter $0 ---%
- --------------------------------------------------------------------------------
Long distance revenues are earned primarily from calls made to points
outside a customer's local calling area, but within our service area (intraLATA
toll). IntraLATA toll calls originate and terminate within the same LATA, but
generally cover a greater distance than a local call. These services are
regulated by the New Jersey Board of Public Utilities (BPU) except where they
cross state lines. Other long distance services that we provide include 800
services, Wide Area Telephone Service (WATS), and corridor services (between
LATAs in southern New Jersey and Philadelphia and between LATAs in northern New
Jersey and New York City).
Long distance revenue was unchanged from the first quarter of 1999. There
was a decline in long distance revenues in the first quarter of 2000 principally
caused by the competitive effects of presubscription, which enables customers to
make intraLATA toll calls using a competing carrier without having to dial an
access code. However, this decline was entirely offset by additional revenue
generated by higher calling volumes and price increases implemented on certain
toll services. The negative effect of presubscription on long distance revenues
was partially mitigated by increases in network access services for usage of our
network by these alternative service providers. In response to presubscription,
we have implemented customer win-back and retention initiatives that include
toll calling discount packages and product bundling offers.
ANCILLARY SERVICES
2000 - 1999 Increase
- --------------------------------------------------------------------------------
First Quarter $8.5 11.7%
- --------------------------------------------------------------------------------
Our ancillary services include such services as billing and collections
for long distance carriers and affiliates, facilities rentals to affiliates and
nonaffiliates, collocation for competitive local exchange carriers, usage of
separately priced (unbundled) components of our network by competitive local
exchange carriers, voice messaging, customer premises equipment (CPE) and wiring
and maintenance services, and sales of materials and supplies to affiliates.
Ancillary services revenues also include fees paid by customers for
nonpublication of telephone numbers and multiple white page listings and fees
paid by an affiliate for usage of our directory listings.
Ancillary services revenues increased in the first quarter of 2000
primarily as a result of higher payments received from competitive local
exchange carriers for interconnection of their networks with our network and for
the purchase of unbundled network elements. Revenue growth was also attributable
to higher facilities rental revenues received from affiliates and greater demand
for voice messaging services. These increases were partially offset by lower
revenues from our billing and collection services.
9
<PAGE>
Bell Atlantic - New Jersey, Inc.
OPERATING EXPENSES
- ------------------
(Dollars in Millions) Three Months Ended March 31
-----------------------------
2000 1999
- ----------------------------------------------------------------------------
Employee costs, including benefits and taxes $163.2 $165.9
Depreciation and amortization 199.3 184.8
Other operating expenses 259.0 269.3
-----------------------------
Total $621.5 $620.0
=============================
EMPLOYEE COSTS
2000 - 1999 (Decrease)
- --------------------------------------------------------------------------------
First Quarter $(2.7) (1.6)%
- --------------------------------------------------------------------------------
Employee costs consist of salaries, wages and other employee compensation,
employee benefits and payroll taxes paid directly by us. Similar costs incurred
by employees of NSI, who provide centralized services on a contract basis, are
allocated to us and are included in Other Operating Expenses.
Employee costs decreased in the first quarter of 2000 primarily as a
result of lower pension and benefit costs. The decline in pension and benefit
costs was due to favorable pension plan investment returns and changes in
actuarial assumptions. These factors were partially offset by changes in certain
plan provisions, including a previously reported amendment to our management
cash balance plan and a special lump sum pension payment to management and
associate retirees.
This cost reduction was partially offset by the effect of higher work
force levels, annual salary and wage increases for management and associate
employees and higher overtime payments.
DEPRECIATION AND AMORTIZATION
2000 - 1999 Increase
- --------------------------------------------------------------------------------
First Quarter $14.5 7.8%
- --------------------------------------------------------------------------------
Depreciation and amortization expense increased in the first quarter of
2000 over the same period in 1999 principally as a result of growth in
depreciable telephone plant and changes in the mix of plant assets. The growth
in telephone plant was largely attributable to increased capital expenditures
for software and hardware to support the expansion of our network. These factors
were partially offset by the effect of lower rates of depreciation and
amortization.
OTHER OPERATING EXPENSES
2000 - 1999 (Decrease)
- --------------------------------------------------------------------------------
First Quarter $(10.3) (3.8)%
- --------------------------------------------------------------------------------
Other operating expenses consist of contract services including
centralized services expenses allocated from NSI, rent, network software costs,
operating taxes other than income, the provision for uncollectible accounts
receivable, and other costs.
The decrease in other operating expenses in the first quarter of 2000 was
largely attributable to a reduction in centralized services expenses allocated
from NSI, primarily as a result of lower employee costs incurred by NSI. This
decrease was partially offset by higher interconnection and related costs
associated with reciprocal compensation arrangements with competitive local
exchange and other carriers to terminate calls on their networks.
10
<PAGE>
Bell Atlantic - New Jersey, Inc.
OTHER INCOME, NET
2000 - 1999 Increase
- --------------------------------------------------------------------------------
First Quarter $6.8 --%
- --------------------------------------------------------------------------------
The change in other income, net, was primarily attributable to additional
interest income associated with the settlement of a tax-related matter in the
first quarter of 2000.
INTEREST EXPENSE
2000 - 1999 Increase
- --------------------------------------------------------------------------------
First Quarter $2.0 7.5%
- --------------------------------------------------------------------------------
Interest expense includes costs associated with borrowings and capital
leases, net of interest capitalized as a cost of acquiring or constructing plant
assets.
Interest expense increased in the first quarter of 2000 over the same
period in 1999 primarily due to higher levels of average short-term debt with an
affiliate and higher interest rates associated with this debt.
EFFECTIVE INCOME TAX RATES
Three Months Ended March 31
- --------------------------------------------------------------------------------
2000 40.8%
- --------------------------------------------------------------------------------
1999 40.8%
- --------------------------------------------------------------------------------
The effective income tax rate is the provision for income taxes as a
percentage of income before the provision for income taxes. Our effective
income tax rate was unchanged from the first quarter of 1999.
FINANCIAL CONDITION
- -------------------
We use the net cash generated from operations and from external financing
to fund capital expenditures for network expansion and modernization, and to pay
dividends. While current liabilities exceeded current assets at both March 31,
2000 and 1999 and December 31, 1999, our sources of funds, primarily from
operations and, to the extent necessary, from readily available financing
arrangements with an affiliate, are sufficient to meet ongoing operating
requirements. Management expects that presently foreseeable capital requirements
will continue to be financed primarily through internally generated funds.
Additional long-term debt may be needed to fund development activities or to
maintain our capital structure to ensure financial flexibility.
As of March 31, 2000, we had $365.3 million of an unused line of credit
with an affiliate, Bell Atlantic Network Funding Corporation. In addition, we
had $350.0 million remaining under a shelf registration statement filed with the
Securities and Exchange Commission for the issuance of unsecured debt
securities. Our debt securities continue to be accorded high ratings by primary
rating agencies. After the announcement of the Bell Atlantic - GTE merger, the
rating agencies placed our ratings under review for potential downgrade.
Our debt ratio was 44.5% at March 31, 2000, compared to 47.6% at March 31,
1999 and 47.1% at December 31, 1999.
On May 1, 2000, we declared and paid a dividend in the amount of $134.6
million to Bell Atlantic.
11
<PAGE>
Bell Atlantic - New Jersey, Inc.
OTHER MATTERS
- -------------
FCC Regulation and Interstate Rates
Price Caps
As previously reported, in May 1999, the U. S. Court of Appeals reversed
the FCC order that adopted the current 6.5% productivity factor applied to
interstate access rates, but granted the FCC a stay of its order until April 1,
2000. The Court has further extended the stay until June 30, 2000 to allow the
FCC time to consider an industry proposal to further restructure access rates.
Recent Accounting Pronouncements
FASB Accounting Standard - Derivatives and Hedging Activities
In June 1998, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for
Derivative Instruments and Hedging Activities." This statement requires that
all derivatives be measured at fair value and recognized as either assets or
liabilities on our balance sheet. Changes in the fair values of the derivative
instruments will be recognized in either earnings or comprehensive income,
depending on the designated use and effectiveness of the instruments. The FASB
amended this pronouncement in June 1999 to defer the effective date of SFAS No.
133 for one year. We must adopt SFAS No. 133 no later than January 1, 2001.
On March 3, 2000, the FASB issued a Proposed SFAS "Accounting for Certain
Derivative Instruments and Certain Hedging Activities," which would amend SFAS
No. 133. The proposed amendments address certain implementation issues and
relate to such matters as the normal purchases and normal sales exception, the
definition of interest rate risk, hedging recognized foreign-currency-
denominated debt instruments, and intercompany derivatives.
The adoption of SFAS No. 133 will have no material effect on our results
of operations or financial condition because we currently do not enter into the
use of derivative instruments or participate in hedging activities.
FASB Interpretation - Stock Compensation
In March 2000, the FASB issued Interpretation No. 44, "Accounting for
Certain Transactions Involving Stock Compensation." Interpretation No. 44 was
issued in order to clarify certain issues arising from Accounting Principles
Board (APB) Opinion No. 25 "Accounting for Stock Issued to Employees," which was
previously issued in October 1972. Interpretation No. 44 is effective July 1,
2000, but certain conclusions cover specific events that occur either after
December 15, 1998 or January 12, 2000.
The main issues addressed by Interpretation No. 44 are: (a) the definition
of an employee for purposes of applying APB Opinion No. 25, (b) the criteria for
determining whether a plan qualifies as a noncompensatory plan, (c) the
accounting consequence of various modifications to the terms of a previously
fixed stock option or award, and (d) the accounting for an exchange of stock
compensation awards in a business combination.
We do not expect that Interpretation No. 44 will have a material impact on
our results of operations or financial position.
SEC Staff Accounting Bulletin - Revenue Recognition
In December 1999, the Securities and Exchange Commission (SEC) issued
Staff Accounting Bulletin (SAB) No. 101, "Revenue Recognition in Financial
Statements," which currently must be adopted by June 30, 2000. SAB No. 101
provides additional guidance on revenue recognition, as well as criteria from
when revenue is generally realized and earned, and also requires the deferral of
incremental direct selling costs. We are currently assessing the impact of SAB
No. 101 on our results of operations and financial position.
12
<PAGE>
Bell Atlantic - New Jersey, Inc.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
There were no proceedings reportable under this Item.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit Number
27 Financial Data Schedule.
(b) There were no Current Reports on Form 8-K filed during the
quarter ended March 31, 2000.
13
<PAGE>
Bell Atlantic - New Jersey, Inc.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
BELL ATLANTIC - NEW JERSEY, INC.
Date: May 12, 2000 By /s/ Edwin F. Hall
------------------------------------
Edwin F. Hall
Chief Financial Officer
UNLESS OTHERWISE INDICATED, ALL INFORMATION IS AS OF MAY 10, 2000.
14
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED STATEMENT OF INCOME FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND THE
CONDENSED BALANCE SHEET AT MARCH 31, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 45
<SECURITIES> 0
<RECEIVABLES> 797
<ALLOWANCES> 63
<INVENTORY> 17
<CURRENT-ASSETS> 895
<PP&E> 11,252
<DEPRECIATION> 6,638
<TOTAL-ASSETS> 5,794
<CURRENT-LIABILITIES> 1,400
<BONDS> 1,257
0
0
<COMMON> 1,381
<OTHER-SE> 763
<TOTAL-LIABILITY-AND-EQUITY> 5,794
<SALES> 0
<TOTAL-REVENUES> 969
<CGS> 0
<TOTAL-COSTS> 622
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 29
<INCOME-PRETAX> 326
<INCOME-TAX> 133
<INCOME-CONTINUING> 193
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 193
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
