<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, 1995
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 1-8606
Bell Atlantic Corporation
(Exact name of registrant as specified in its charter)
Delaware 23-2259884
(State of incorporation) (I.R.S. Employer
Identification No.)
1717 Arch Street 19103
Philadelphia, Pennsylvania (Zip Code)
(Address of principal executive offices)
Registrant's telephone number (215) 963-6000
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
--- ---
At April 30, 1995, 436,394,735 shares of the registrant's Common Stock were
outstanding, after deducting 62,615 shares held in treasury.
===============================================================================
<PAGE>
TABLE OF CONTENTS
Item No. Page
- -------- ----
Part I. Financial Information
1. Financial Statements
Condensed Consolidated Statements of Operations
For the three months ended March 31, 1995 and 1994............... 1
Condensed Consolidated Balance Sheets
March 31, 1995 and December 31, 1994............................. 2-3
Condensed Consolidated Statements of Cash Flows
For the three months ended March 31, 1995 and 1994............... 4
Notes to Condensed Consolidated Financial Statements............... 5-6
2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.............................. 7-17
Part II. Other Information
1. Legal Proceedings.................................................. 18
6. Exhibits and Reports on Form 8-K................................... 18
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
--------------------
BELL ATLANTIC CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited)
(Dollars in Millions, Except Per Share Amounts)
<TABLE>
<CAPTION>
Three months ended
March 31,
---------------------
1995 1994
-------- --------
<S> <C> <C>
OPERATING REVENUES................................................... $3,449.7 $3,419.6
-------- --------
OPERATING EXPENSES
Employee costs, including benefits and taxes......................... 1,034.2 1,047.9
Depreciation and amortization........................................ 667.7 648.6
Other................................................................ 916.3 974.3
-------- --------
2,618.2 2,670.8
-------- --------
OPERATING INCOME..................................................... 831.5 748.8
Equity in Income (Loss) of Affiliates................................ (6.7) 21.9
Other Income (Expense), Net.......................................... 1.1 (8.1)
Interest Expense..................................................... 138.9 143.5
-------- --------
INCOME BEFORE PROVISION FOR INCOME TAXES AND
EXTRAORDINARY ITEM................................................. 687.0 619.1
Provision for Income Taxes........................................... 272.5 223.2
-------- --------
INCOME BEFORE EXTRAORDINARY ITEM..................................... 414.5 395.9
EXTRAORDINARY ITEM
Early Extinguishment of Debt, Net of Tax............................. -- (6.7)
-------- --------
NET INCOME........................................................... $ 414.5 $ 389.2
======== ========
PER COMMON SHARE
- ----------------
INCOME BEFORE EXTRAORDINARY ITEM..................................... $ .95 $ .91
EXTRAORDINARY ITEM................................................... -- (.02)
-------- --------
NET INCOME........................................................... $ .95 $ .89
======== ========
Cash Dividends Declared.............................................. $ .70 $ .69
======== ========
Weighted Average Number of Common Shares and
Equivalent Shares Outstanding (in millions)......................... 437.4 437.3
======== ========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
1
<PAGE>
BELL ATLANTIC CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Unaudited)
(Dollars in Millions)
ASSETS
------
<TABLE>
<CAPTION>
March 31, December 31,
1995 1994
------------ ------------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents.................................................... $ 58.6 $ 142.9
Short-term investments....................................................... 135.0 --
Accounts receivable, net of allowances of $198.2 and $188.9.................. 2,207.2 2,328.1
Inventories.................................................................. 298.0 274.6
Prepaid expenses............................................................. 574.2 545.5
Other........................................................................ 526.8 492.2
------------ ------------
3,799.8 3,783.3
------------ ------------
PLANT, PROPERTY AND EQUIPMENT................................................ 34,402.0 33,745.8
Less accumulated depreciation................................................ 17,327.1 16,807.7
------------ ------------
17,074.9 16,938.1
------------ ------------
INVESTMENTS IN AFFILIATES.................................................... 1,557.7 1,576.8
OTHER ASSETS................................................................. 1,879.8 1,973.6
------------ ------------
TOTAL ASSETS................................................................. $ 24,312.2 $ 24,271.8
============ ============
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
2
<PAGE>
BELL ATLANTIC CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Unaudited)
(Dollars in Millions)
LIABILITIES AND SHAREOWNERS' INVESTMENT
---------------------------------------
<TABLE>
<CAPTION>
March 31, December 31,
1995 1994
------------ ------------
<S> <C> <C>
CURRENT LIABILITIES
Debt maturing within one year........................................ $ 2,356.2 $ 2,087.6
Accounts payable..................................................... 1,765.7 2,220.2
Accrued expenses..................................................... 636.6 388.7
Other................................................................ 890.8 880.2
------------ ------------
5,649.3 5,576.7
------------ ------------
LONG-TERM DEBT....................................................... 6,700.0 6,805.7
------------ ------------
EMPLOYEE BENEFIT OBLIGATIONS......................................... 3,833.1 3,773.8
------------ ------------
DEFERRED CREDITS AND OTHER LIABILITIES
Deferred income taxes................................................ 1,327.0 1,305.7
Unamortized investment tax credits................................... 169.6 176.7
Other................................................................ 464.9 466.9
------------ ------------
1,961.5 1,949.3
------------ ------------
PREFERRED STOCK OF SUBSIDIARY........................................ 85.0 85.0
------------ ------------
SHAREOWNERS' INVESTMENT
Preferred and Preference stock ($1 par value; none issued)........... -- --
Common stock ($1 par value; 436,448,191 shares and
436,405,646 shares issued)......................................... 436.4 436.4
Common stock issuable (92,899 shares)................................ .1 .1
Contributed capital.................................................. 5,431.6 5,428.4
Reinvested earnings.................................................. 1,255.5 1,144.4
Foreign currency translation adjustment.............................. (468.1) (330.8)
------------ ------------
6,655.5 6,678.5
Less common stock in treasury, at cost............................... 3.1 11.0
Less deferred compensation-employee stock ownership plans............ 569.1 586.2
------------ ------------
6,083.3 6,081.3
------------ ------------
TOTAL LIABILITIES AND SHAREOWNERS' INVESTMENT........................ $ 24,312.2 $ 24,271.8
============ ============
</TABLE>
See Notes To Condensed Consolidated Financial Statements.
3
<PAGE>
BELL ATLANTIC CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(Dollars in Millions)
<TABLE>
<CAPTION>
Three months ended
March 31,
-----------------------------
1995 1994
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income.................................................................... $ 414.5 $ 389.2
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization............................................. 667.7 648.6
Extraordinary item, net of tax............................................ -- 6.7
Other items, net.......................................................... 30.3 (34.6)
Changes in certain assets and liabilities, net of effects from
acquisition/disposition of businesses................................... (75.4) (346.1)
------------ ------------
Net cash provided by operating activities..................................... 1,037.1 663.8
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Net change in short-term investments.......................................... (135.0) (1.5)
Additions to plant, property and equipment.................................... (808.9) (434.8)
Proceeds from sale of plant, property and equipment........................... .2 17.8
Investment in finance lease and notes receivable.............................. -- (499.2)
Proceeds from finance lease and notes receivable.............................. 9.2 500.5
Proceeds from notes receivable................................................ 100.4 --
Acquisition of businesses, less cash acquired................................. (25.0) --
Proceeds from Telecom Corporation of New Zealand Limited capital
reduction plan.............................................................. -- 67.4
Investment in joint ventures.................................................. (85.1) (5.9)
Proceeds from disposition of businesses....................................... -- 5.7
Other, net.................................................................... (7.9) (11.2)
------------ ------------
Net cash used in investing activities......................................... (952.1) (361.2)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings...................................................... 1.5 249.5
Principal repayments of borrowings and capital lease obligations.............. (123.1) (93.4)
Early extinguishment of debt.................................................. -- (350.0)
Net change in short-term borrowings with original
maturities of three months or less.......................................... 285.8 359.8
Dividends paid................................................................ (301.0) (292.2)
Proceeds from sale of common stock............................................ 12.6 2.0
Purchase of common stock for treasury......................................... (5.6) (.7)
Net change in outstanding checks drawn on controlled disbursement accounts.... (39.5) (68.3)
------------ ------------
Net cash used in financing activities......................................... (169.3) (193.3)
------------ ------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS.............................. (84.3) 109.3
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD................................ 142.9 146.1
------------ ------------
CASH AND CASH EQUIVALENTS, END OF PERIOD...................................... $ 58.6 $ 255.4
============ ============
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
4
<PAGE>
BELL ATLANTIC CORPORATION AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1. Basis of Presentation
---------------------
The accompanying financial statements are unaudited and have been prepared by
Bell Atlantic Corporation (Bell Atlantic or the Company) pursuant to the rules
and regulations of the Securities and Exchange Commission (SEC). The December
31, 1994 balance sheet was derived from audited financial statements, but does
not include all disclosures required by generally accepted accounting
principles. In the opinion of management, these financial statements include all
adjustments (consisting of only normal recurring adjustments) necessary to
present fairly the results of operations, financial position and cash flows.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to such SEC rules and regulations. The
Company believes that the disclosures made are adequate to make the information
presented not misleading. It is suggested that these financial statements be
read in conjunction with the financial statements and notes thereto included in
the Company's Annual Report on Form 10-K for the year ended December 31, 1994.
Effective August 1, 1994, the Company discontinued accounting for the operations
of its telephone subsidiaries in accordance with Statement of Financial
Accounting Standards No. 71, "Accounting for the Effects of Certain Types of
Regulation."
2. Shareowners' Investment
-----------------------
<TABLE>
<CAPTION>
(Dollars in Millions)
-----------------------------------------------------------------------------------
Foreign
Common Currency Deferred
Common Stock Contributed Reinvested Translation Treasury Compensation
Stock Issuable Capital Earnings Adjustment Stock ESOPs
---------- ---------- ---------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1994.......... $ 436.4 $ .1 $ 5,428.4 $1,144.4 $ (330.8) $11.0 $ 586.2
Net income.......................... 414.5
Dividends declared on common stock.. (305.5)
Purchase of common stock for
treasury........................... 5.6
Common stock issued:
Employee plans..................... -- 1.8 (.3) (1.9)
Shareowner plans................... -- 1.4 (11.6)
Foreign currency translation
adjustment, net.................... (137.3)
Reduction of ESOP obligations....... (17.1)
Tax benefit of dividends
paid to ESOPs...................... 2.4
---------- ---------- ---------- ---------- ---------- ---------- -----------
Balance, March 31, 1995............. $ 436.4 $ .1 $ 5,431.6 $1,255.5 $ (468.1) $ 3.1 $ 569.1
========== ========== ========== ========== ========== ========== ===========
</TABLE>
During the three months ended March 31, 1995, the Company distributed
approximately 35,000 shares of common stock for employee plans and approximately
8,000 shares of common stock for shareowner plans. During the same period, the
Company repurchased approximately 115,000 shares of its common stock for
treasury, and distributed approximately 39,000 treasury shares for employee
plans and approximately 234,000 treasury shares for shareowner plans.
5
<PAGE>
3. Long-Term Debt--Bell Atlantic Financial Services, Inc.
------------------------------------------------------
Debt securities of Bell Atlantic Financial Services, Inc. (FSI) (aggregating
$672.1 million at March 31, 1995) have the benefit of a Support Agreement dated
October 1, 1992 between Bell Atlantic and FSI, under which Bell Atlantic has
committed to make payments of interest, premium, if any, and principal on the
FSI debt in the event of FSI's failure to pay. The Support Agreement provides
that the holders of FSI debt shall not have recourse to the stock or assets of
Bell Atlantic's telephone subsidiaries. However, in addition to dividends paid
to Bell Atlantic by any of its consolidated subsidiaries, assets of Bell
Atlantic that are not subject to such exclusion are available as recourse to
holders of FSI debt. The carrying value of the available assets reflected in the
condensed consolidated financial statements of Bell Atlantic was approximately
$5 billion at March 31, 1995.
4. Wireless Joint Ventures
-----------------------
In October 1994, Bell Atlantic and NYNEX Corporation formed two partnerships
with U S West, Inc. and AirTouch Communications to provide nationwide wireless
communications services. The first partnership (PCS PrimeCo) participated in
the Federal Communications Commision's auctions for personal communications
services (PCS) licenses. In March 1995, PCS PrimeCo was a successful bidder for
licenses for spectrum to provide PCS services in 11 major markets across the
United States. The partnership will pay approximately $1.1 billion for these
licenses. The Company has invested approximately $55 million through the first
quarter of 1995 to purchase these PCS licenses and expects to invest an
additional amount in excess of $200 million by June 1995. The second
partnership will develop a national branding and marketing strategy and wireless
communications services standards. The joint ventures are being accounted for
under the equity method.
5. Reclassifications
-----------------
Certain reclassifications of prior year's data have been made to conform to
1995 classifications.
6
<PAGE>
- --------------------------------------------------------------------------------
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
- --------------------------------------------------------------------------------
- ---------------------
Results of Operations
- ---------------------
Net income for the three months ended March 31, 1995 increased $25.3 million
or 6.5% from the corresponding period in 1994. First quarter earnings per share
were $.95, an increase of 6.7% compared with $.89 per share for the first
quarter of 1994.
Major items affecting the comparison of operating results for the three month
period ended March 31, 1995, versus the three month period ended March 31, 1994,
are discussed in the following sections.
- ------------------
Operating Revenues
- ------------------
<TABLE>
<CAPTION>
(Dollars in Millions)
------------------------
For the Three Months Ended March 31, 1995 1994
- ----------------------------------------------------------------------------
<S> <C> <C>
Transport Services
Local service $1,081.3 $1,062.3
Network access 820.9 803.9
Toll service 367.0 411.3
Ancillary Services
Directory advertising 275.7 267.6
Other 125.4 94.0
Value-added Services 326.7 308.0
Wireless Services 291.5 236.7
Other Services 161.2 235.8
------------------------
Total $3,449.7 $3,419.6
========================
</TABLE>
- ---------------------------------------
Transport Services Operating Statistics
- ---------------------------------------
<TABLE>
<CAPTION>
-----------------------------------
Percentage Increase
(Decrease)
-------------------
1995 1994 1995 vs 1994
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
At March 31
- -----------
Access Lines in Service (In thousands)
Residence 12,413 12,173 2.0%
Business 6,663 6,356 4.8
Public 278 280 (.7)
----------------
19,354 18,809 2.9
================
For the Three Month Period Ended March 31
- -----------------------------------------
Access Minutes of Use (In millions)
Interstate 14,616 13,768 6.2
Intrastate 3,756 3,441 9.2
----------------
18,372 17,209 6.8
================
Toll Messages (In millions)
Intrastate 793 860 (7.8)
Interstate 42 46 (8.7)
----------------
835 906 (7.8)
================
</TABLE>
7
<PAGE>
Local Service Revenues
<TABLE>
<CAPTION>
Dollars in Millions Increase
================================================================================
<S> <C> <C>
Three Months $ 19.0 1.8%
================================================================================
</TABLE>
Local service revenues are earned by the telephone subsidiaries from the
provision of local exchange, local private line and public telephone services.
Local service revenues increased due primarily to a 2.9% growth in the number
of access lines in service, higher usage of basic calling services by residence
customers and increased usage and data transport by business customers. This
growth was partially offset by lower directory assistance volumes and the effect
of storm-driven usage experienced in the first quarter of 1994.
Network Access Revenues
<TABLE>
<CAPTION>
Dollars in Millions Increase
================================================================================
<S> <C> <C>
Three Months $ 17.0 2.1%
================================================================================
</TABLE>
Network access revenues are received from interexchange carriers (IXCs) for
their use of the Company's local exchange facilities in providing long-distance
services to IXCs' customers and from end-user subscribers. Switched access
service revenues are derived from usage-based charges paid by IXCs for access to
the Company's network. Special access revenues arise from access charges paid by
IXCs and end-users who have private networks. End-user access revenues are
earned from local exchange carrier customers who pay for access to the network.
Network access revenues increased principally due to higher customer demand
for access services as reflected by growth in access minutes of use of 6.8%, as
well as growth in revenues from end-user charges attributable to increasing
access lines in service. Increased demand for digital data transport services
also contributed to growth in access revenues. Reported growth in access
minutes of use and revenues was negatively impacted by storm-related calling
volumes experienced in the first quarter of 1994. Volume-related revenue
increases were partially offset by price reductions and the recognition of the
Company's obligations under the Federal Communications Commission's (FCC)
current price cap order. See "Competitive and Regulatory Environment - Federal
Regulation" for a discussion of FCC interstate access revenue issues.
Toll Service Revenues
<TABLE>
<CAPTION>
Dollars in Millions (Decrease)
================================================================================
<S> <C> <C>
Three Months $(44.3) (10.8)%
================================================================================
</TABLE>
Toll service revenues are earned from calls made outside a customer's local
calling area, but within the same service area boundaries of the Company's
telephone subsidiaries, commonly referred to as "LATAs." Other toll services
include 800 services, Wide Area Telephone Service (WATS), and corridor services
(between Northern New Jersey and New York City and between Southern New Jersey
and Philadelphia).
The decrease in toll revenues was caused by a decline of 7.8% in toll message
volumes and price reductions on certain toll services. The decline in toll
message volumes was due to the effect of storm-driven usage experienced in the
first quarter of 1994 and increased competition throughout the region for
intraLATA toll and WATS services. The Company extended local calling service
areas in Virginia which also contributed to the reduction in toll service
revenues in the first quarter of 1995. The Company expects that competition
will continue to negatively impact toll service revenues in 1995, relative to
1994 levels.
8
<PAGE>
Directory Advertising Revenues
<TABLE>
<CAPTION>
Dollars in Millions Increase
================================================================================
<S> <C> <C>
Three Months $ 8.1 3.0%
================================================================================
</TABLE>
Directory advertising revenues are earned primarily from local advertising and
marketing services provided to businesses in White and Yellow Pages directories
published throughout the region. Other directory advertising services include
database and foreign directory marketing.
Growth in directory advertising revenues was principally due to higher rates
charged for these services. Volume growth continues to be impacted by
competition from other directory companies, as well as other advertising media.
Other Ancillary Services Revenues
<TABLE>
<CAPTION>
Dollars in Millions Increase
================================================================================
<S> <C> <C>
Three Months $ 31.4 33.4%
================================================================================
</TABLE>
Other ancillary services include systems integration services, billing and
collection services provided to IXCs, and facilities rental services.
Other ancillary services revenues increased primarily due to an increase in
the number of contracts for systems integration services provided to the federal
government and business customers.
Value-added Services Revenues
<TABLE>
<CAPTION>
Dollars in Millions Increase
================================================================================
<S> <C> <C>
Three Months $ 18.7 6.1%
================================================================================
</TABLE>
Value-added services represent a family of enhanced services including Call
Waiting, Return Call, Caller ID and Caller ID Deluxe, Answer Call, and Voice
Mail. These services also include customer premises services such as inside wire
installation and maintenance and other central office services and features.
Continued growth in the network customer base (access lines) and higher demand
by residence customers for value-added central office and voice messaging
services offered by the network services subsidiaries increased value-added
services revenues. These revenue increases were partially offset by the
elimination of Touch-Tone service charges for Bell Atlantic-Virginia customers.
The elimination of Touch-Tone charges in Virginia is expected to reduce value-
added services revenues by approximately $25 million annually.
Wireless Services Revenues
<TABLE>
<CAPTION>
Dollars in Millions Increase
================================================================================
<S> <C> <C>
Three Months $ 54.8 23.2%
================================================================================
</TABLE>
Wireless services include revenues generated from Bell Atlantic Mobile (BAM)
and its affiliates that provide domestic cellular and paging communications
services.
Growth in the Company's cellular customer base in excess of 50% was the
primary reason for the increase in wireless revenues. Volume-related revenue
growth was negatively impacted by an 11% decline in average monthly revenue per
subscriber as a result of increased penetration of the lower-usage consumer
market and the effect of severe winter storms in the first quarter of 1994.
Additionally, the first quarter of 1994 included cellular revenues associated
with a reseller operation that, beginning in May 1994, is included in the
operating results of a partnership and reported as equity in income of
affiliates.
9
<PAGE>
Other Services Revenues
<TABLE>
<CAPTION>
Dollars in Millions (Decrease)
================================================================================
<S> <C> <C>
Three Months $(74.6) (31.6)%
================================================================================
</TABLE>
Other services include revenues from the Company's computer maintenance,
telecommunications consulting, video services, real estate, leasing, software
development and support, and liquefied petroleum gas distribution businesses.
The decrease in other services revenues in the first quarter 1995 is due
primarily to the April 1994 sale of a majority of the Company's leasing
portfolio and the disposition of Bell Atlantic Systems Leasing International,
Inc. and liquefied petroleum gas distribution businesses during the fourth
quarter of 1994. These revenue decreases were partially offset by strong growth
in revenues from the Company's third-party computer maintenance business,
principally due to higher volumes resulting from new contracts.
- ---------------------------------------
Operating Expenses
- ---------------------------------------
<TABLE>
<CAPTION>
(Dollars in Millions)
------------------------
For the Three Months Ended March 31, 1995 1994
- ------------------------------------------------------------------------------
<S> <C> <C>
Employee costs, including benefits and taxes $1,034.2 $1,047.9
Depreciation and amortization 667.7 648.6
Other operating expenses 916.3 974.3
------------------------
Total $2,618.2 $2,670.8
========================
</TABLE>
Employee Costs
<TABLE>
<CAPTION>
Dollars in Millions (Decrease)
================================================================================
<S> <C> <C>
Three Months $(13.7) (1.3)%
================================================================================
</TABLE>
Employee costs consist of salaries, wages, and other employee compensation,
employee benefits and payroll taxes.
Employee costs decreased by $26.0 million or 2.9% at the network services
subsidiaries and increased by $12.3 million or 8.9% at the Company's
nonregulated subsidiaries over the comparable period in 1994.
The decline in employee costs at the network services subsidiaries was
principally due to a decrease in overtime pay and repair and maintenance
activity, both of which were higher in the first quarter of 1994 as a result of
unusually severe weather conditions experienced throughout the region. The
effect of lower workforce levels also contributed to the overall decrease in
employee costs. These reductions were partially offset by annual salary and
wage increases for management and associate employees, effective April and
August 1994, respectively. Associate employee wage increases were determined
under contracts ratified in October 1992 by unions representing associate
employees of the network services companies. Such contracts will expire in
August 1995.
Higher employee costs at the nonregulated subsidiaries were principally
attributable to an increased workforce at the wireless, computer maintenance,
systems integration and directory companies due to growth at these business
units. This expense increase was offset, in part, by the effect of the
aforementioned disposition of certain non-strategic businesses during 1994.
10
<PAGE>
Depreciation and Amortization
<TABLE>
<CAPTION>
Dollars in Millions Increase
================================================================================
<S> <C> <C>
Three Months $ 19.1 2.9%
================================================================================
</TABLE>
Depreciation and amortization expense increased $31.6 million or 5.5% at the
network services subsidiaries over the comparable period in 1994, principally
due to growth in depreciable telephone plant. The network services companies'
composite depreciation rate was 7.8% for the first quarter of 1995. The Company
expects this composite depreciation rate to remain substantially unchanged for
the remainder of 1995.
Depreciation and amortization expense at the nonregulated companies decreased
by $12.5 million or 17.3% over the first quarter of 1994. This decrease was
principally due to the effect of the April and November 1994 sales of
substantially all of the assets of the Company's lease financing businesses
offset, in part, by higher depreciation expense at the Company's wireless
subsidiary resulting from growth in cellular plant.
Other Operating Expenses
<TABLE>
<CAPTION>
Dollars in Millions (Decrease)
================================================================================
<S> <C> <C>
Three Months $ (58.0) (6.0)%
================================================================================
</TABLE>
Other operating expenses consist primarily of contracted services, rent,
network software costs, the provision for uncollectible accounts receivable and
other costs.
The reduction in other operating expenses was largely due to the effect of the
aforementioned disposition of several non-strategic businesses during 1994, as
well as lower expenses at the network services subsidiaries attributable to the
timing of telephone network software purchases and the effect of the severe
winter storms in the first quarter of 1994. These expense decreases were
partially offset by increased costs at the Company's wireless, computer
maintenance, and systems integration subsidiaries due to higher business
volumes, and to additional costs incurred by the network services subsidiaries
to enhance systems and consolidate work activities.
Equity in Income (Loss) of Affiliates
<TABLE>
<CAPTION>
Dollars in Millions (Decrease)
================================================================================
<S> <C>
Three Months $ (28.6)
================================================================================
</TABLE>
Equity in income of affiliates includes equity income and losses and goodwill
amortization related to the Company's investments in unconsolidated businesses.
Equity in income of affiliates decreased due principally to the effects of
goodwill amortization and equity losses associated with the Company's investment
in Grupo Iusacell, S.A. de C.V. (Iusacell). Iusacell's equity loss, including
goodwill amortization, in the first quarter of 1995 was approximately $31
million, compared to approximately $6 million for the same period in 1994. The
Company increased its economic interest in Iusacell from 23.2% to 41.9% in
August 1994 through the purchase of additional Iusacell stock. The first
quarter 1995 equity loss in Iusacell included a charge of approximately $20
million for the Company's estimated proportionate share of the impact of the
Mexican peso devaluation on Iusacell's net liabilities, primarily debt,
denominated in U.S. dollars. The Company's equity in income of Iusacell will
continue to be impacted by changes in the Mexican peso exchange rate. Improved
operating results from the Company's investment in Telecom Corporation of New
Zealand Limited (Telecom) partially offset the negative impact of the Company's
equity losses in Iusacell and certain other unconsolidated subsidiaries.
11
<PAGE>
Other Income (Expense), Net
<TABLE>
<CAPTION>
Dollars in Millions Increase
================================================================================
<S> <C>
Three Months $ 9.2
================================================================================
</TABLE>
Other income and expense, net principally includes interest and dividend
income, and gains and losses from the disposition of subsidiaries and non-
operating assets and investments.
The increase in other income, net of expense, includes interest income of $8.6
million related to notes receivable held by the Company in connection with the
April 1994 sale of a lease financing subsidiary and the sale of real estate in
December 1994.
Interest Expense
<TABLE>
<CAPTION>
Dollars in Millions (Decrease)
================================================================================
<S> <C> <C>
Three Months $ (4.6) (3.2)%
================================================================================
</TABLE>
Interest expense decreased principally due to the recognition of capitalized
interest costs at the network services subsidiaries. Upon the discontinued
application of regulatory accounting principles, effective August 1, 1994, the
Company began recognizing capitalized interest costs as a reduction of interest
expense. Previously, the Company recorded an allowance for funds used during
construction as an item of other income.
Provision for Income Taxes
<TABLE>
<CAPTION>
Dollars in Millions Increase
================================================================================
<S> <C> <C>
Three Months $ 49.3 22.1%
================================================================================
</TABLE>
Effective Income Tax Rates
<TABLE>
<CAPTION>
For the Three Months Ended March 31,
================================================================================
<S> <C>
1995 39.7%
- --------------------------------------------------------------------------------
1994 36.1%
================================================================================
</TABLE>
The higher effective income tax rate in the first quarter of 1995 resulted
principally from certain foreign operations, which reduced consolidated pretax
income without providing corresponding tax benefits. Also contributing to the
higher effective income tax rate in 1995 were the effects of the reduction in
the amortization of investment tax credits and the elimination of the benefit of
the rate differential applied to reversing timing differences at the network
services subsidiaries, both as a result of the discontinued application of
regulatory accounting principles in August 1994. The Company expects the higher
effective income tax rate to continue for the remainder of 1995.
12
<PAGE>
- ---------------------------------------
Competitive and Regulatory Environment
- ---------------------------------------
The communications industry continues to undergo fundamental changes which may
have a significant impact on future financial performance of telecommunications
companies. These changes are being driven by a number of factors, including the
accelerated pace of technological innovation, the convergence of the
telecommunications, cable television, information services and entertainment
businesses and a regulatory environment in which traditional barriers are being
lowered or eliminated and competition permitted or encouraged.
The Company's telecommunications business is subject to competition from
numerous sources. An increasing amount of this competition is from companies
that have substantial capital, technological and marketing resources, many of
which do not face the same regulatory constraints as the Company. The entry of
well-financed competitors has the potential to adversely affect multiple revenue
streams of the telephone subsidiaries, including toll, local exchange and
network access services in the market segments and geographical areas in which
the competitors operate. The amount of revenue reductions will depend, in part,
on the competitors' success in marketing these services, and the conditions
established by regulatory authorities. The potential impact is expected to be
offset, to some extent, by revenues from interconnection charges to be paid to
the telephone subsidiaries by these competitors.
The Company continues to respond to competitive challenges by intensely
focusing on meeting customer requirements and by reducing its cost structure
through efficiency and productivity initiatives. In addition, the Company
continues to seek growth opportunities in businesses where it possesses core
competencies. Several examples of the Company's recent initiatives to address
competition are described below.
To expand its presence in the wireless business, the Company agreed to merge
its domestic cellular operations with those of NYNEX Corporation. This merger,
which is subject to regulatory approvals and various other conditions to
closing, is expected to be completed in mid-1995. Coincident with the
completion of the merger, Bell Atlantic Mobile will sell certain cellular
properties in Massachusetts and Rhode Island.
Bell Atlantic and NYNEX also formed two partnerships with U S WEST, Inc. and
AirTouch Communications to provide nationwide wireless communications services.
The first partnership (PCS PrimeCo) participated in the FCC's auctions for
personal communications services (PCS) licenses. In March 1995, PCS PrimeCo
was a successful bidder for licenses for spectrum to provide PCS services in 11
major markets across the United States. The partnership will pay approximately
$1.1 billion for these licenses. The Company has invested approximately $55
million through the first quarter of 1995 to purchase these PCS licenses and
expects to invest an additional amount in excess of $200 million by June 1995.
The second partnership will develop a national branding and marketing strategy
and wireless communications services standards.
To expedite its entry into the video services market and reduce business
risks, Bell Atlantic formed two new jointly-owned partnerships with NYNEX and
Pacific Telesis Group. TELE-TV, a media company, will license, acquire, and
develop entertainment and information services. A technology and integration
company will provide the systems necessary to deliver these services over the
partners' networks. Over the next three years, each of the partners will
contribute approximately $100 million in cash or assets to the new joint
ventures.
In March 1995, Bell Atlantic and NYNEX signed an agreement to invest
collectively up to $100 million in CAI Wireless Systems Inc., a wireless cable
television company, which in turn has entered into several agreements to acquire
the stock or assets of other wireless cable television companies. The
investment will occur in two stages. In the first stage, which closed on May 9,
1995, Bell Atlantic and NYNEX each invested $15 million in CAI Wireless in
exchange for senior debt bearing 12.5% interest maturing in the first quarter of
1996. In the second stage, which is expected to close later in 1995, Bell
Atlantic and NYNEX would each invest $35 million in CAI Wireless. As part of
this transaction, Bell Atlantic and NYNEX receive the right to acquire up to a
total of 45% of CAI Wireless through the exercise of warrants. Bell Atlantic
and NYNEX have also entered into an agreement with CAI Wireless which gives each
of them the right (but not the obligation) to use, for specified charges, the
distribution systems of CAI Wireless to begin offering digital video programming
to customers in their respective operating markets.
13
<PAGE>
Federal Regulation
Legislation has been introduced in the current session of the United States
Congress that would open the telephone subsidiaries' local exchange markets to
competitors and would permit local exchange carriers, such as the Company, to
provide interLATA services upon meeting certain conditions. No definitive
prediction can be made as to whether or when such legislation will be enacted,
the provisions thereof or the impact on the business or financial condition of
the Company.
On April 28, 1995, the U.S. District Court, which administers the
Modification of Final Judgment (MFJ), granted the Regional Bell Operating
Companies' (RBOCs) joint motion for a waiver of the MFJ permitting them to
provide interLATA wireless telecommunications services. The Court's decision
contained a number of restrictions limiting the extent and manner in which the
RBOCs may provide interLATA wireless services. While the Company plans to comply
with the requirements of the Court's decision so that it may provide the
services authorized therein, it has appealed the decision to the U.S. Court of
Appeals for the District of Columbia Circuit.
In February 1995, the FCC issued an Order to Show Cause with respect to
certain findings contained in an independent audit of the network services
companies' 1988 and first quarter 1989 reported adjustments to the National
Exchange Carrier Association (NECA) interstate common line pool. On May 2, 1995,
the Company filed its response to the Show Cause Order, asserting that there is
no legal basis for the FCC to institute enforcement proceedings with respect to
these findings. Resolution of this matter is expected later in 1995.
FCC Interim Price Cap Orders
On March 30, 1995, the FCC adopted its Report and Order approving an
Interim Price Cap Plan for interstate access rates. The Interim Plan, which is
effective August 1, 1995, replaces the Price Cap Plan that the FCC adopted in
1990.
Under the Interim Plan, the Company's Price Cap Index must be reduced by a
fixed percentage, either 4.0%, 4.7% or 5.3%, which is intended to reflect
increases in productivity ("Productivity Factor"). Companies selecting the 4.0%
or 4.7% Productivity Factor are required to reduce future prices and share a
portion of their interstate return in excess of 12.25%. Companies selecting the
5.3% Productivity Factor are also required to reduce prices but are not required
to share. The Interim Plan also provides for a reduction in the Price Cap Index
of 2.8% to adjust for what the FCC believes was an underestimate in its
calculation of the Productivity Factor in prior years. The Interim Plan provides
for increases to the Price Cap Indices for inflation, 2.9% effective August 1,
1995, based on the increase in the GDP-PI. The Interim Plan also eliminated the
recovery of certain "exogenous" cost changes including changes in accounting
costs that the FCC believes have no economic consequences.
On March 30, 1995, the FCC also adopted an Order relating to the Price Cap
Plan requiring local exchange carriers to include in their calculation of
interstate earnings an adjustment to add back to revenues the amounts that were
required to be shared with ratepayers. This adjustment, which is effective for
1994 and subsequent years, increased 1994 calculated interstate returns for the
purpose of determining the prior years sharing amounts that will be reflected in
rate reductions that become effective August 1, 1995.
On May 9, 1995, the Company filed its Transmittal of Interstate Rates as
required by the March 30, 1995 Orders. In the filing, the Company selected the
5.3% productivity factor for the August 1995 to June 1996 tariff period. The
rates included in the May 9, 1995 filing result in price decreases totaling
approximately $305 million on an annual basis. These price decreases include the
scheduled expiration of a temporary rate increase of approximately $98 million
on an annualized basis that is in effect from March 17, 1995 through July 31,
1995 to recover prior years "exogenous" postemployment benefit costs.
Approximately 80% of the remaining $207 million reduction results from
compliance with the Interim Plan. The remaining 20% represents reductions that
the Company was required to make under the prior Price Cap Plan. It is expected
that the earnings impact of these price decreases will be substantially
mitigated by volume increases and cost reductions that result from improved
productivity.
Bell Atlantic has appealed the Orders with the D.C. Circuit Court of
Appeals and has petitioned the FCC for a stay of certain aspects of the Orders
pending the results of the appeals.
14
<PAGE>
State Regulation
The ability of IXCs to offer intrastate intraLATA toll services is subject
to state regulation. Such competition is permitted in all of the Company's state
jurisdictions that provide intraLATA toll services, except Virginia. The
Virginia State Corporation Commission is considering whether, and under what
terms, to permit such competition. Increased competition from IXCs resulted in a
continued decline in several components of the telephone subsidiaries' toll
service revenues. The Company expects the level of intraLATA toll service
competition to increase during 1995.
State regulatory commissions in Pennsylvania, New Jersey, West Virginia,
and Delaware have initiated proceedings to determine whether, and under what
conditions, to authorize presubscription for intraLATA toll services. Currently,
intraLATA toll calls default to the network services companies unless the
customer dials a five-digit access code to use an alternate carrier.
Presubscription would enable customers to make intraLATA toll calls using the
carrier of their choice without having to dial the five-digit access code. The
telephone subsidiaries' ability to offset the impact of presubscription, if
ordered, will depend, in part, upon the terms and conditions under which
presubscription for intraLATA toll services may be authorized.
- -------------
Other Matters
- -------------
Environmental Issues
The Company is subject to a number of environmental proceedings as a result
of the operations of its subsidiaries and shared liability provisions in the
Plan of Reorganization related to the Modification of Final Judgment. Certain of
these environmental matters relate to Superfund sites for which the Company's
subsidiaries have been designated as potentially responsible parties by the U.S.
Environmental Protection Agency or joined as third-party defendants in pending
Superfund litigation. Such designation or joinder subjects the named company to
potential liability for costs relating to cleanup of the affected sites. The
Company is also responsible for the remediation of sites with underground fuel
storage tanks and other expenses associated with environmental compliance.
The Company continually monitors its operations with respect to potential
environmental issues, including changes in legally mandated standards and
remediation technologies. The Company's recorded liabilities reflect those
specific issues where remediation activities are currently deemed to be probable
and where the cost of remediation is estimable. Management believes that the
aggregate amount of any additional potential liability would not have a material
effect on the Company's results of operations or financial condition.
Wireless Joint Venture
Following completion of the proposed merger of the domestic cellular
properties of Bell Atlantic and NYNEX Corporation, which is expected to close in
mid-1995, the cellular operations of the Company will no longer be included in
operating revenues and expenses. The joint venture will be controlled equally by
both parties and, therefore, will be accounted for by the Company under the
equity method. Revenues and operating income related to the Company's domestic
cellular operations were $287.2 million and $34.1 million, respectively, for the
three months ended March 31, 1995, $233.2 million and $20.5 million,
respectively, for the three months ended March 31, 1994 and $1,044.9 million and
$112.2 million, respectively, for the year ended December 31, 1994.
15
<PAGE>
- -------------------
Financial Condition
- -------------------
<TABLE>
<CAPTION>
(Dollars in Millions)
----------------------------------
For the Three Months Ended March 31, 1995 1994
- -------------------------------------------------------------------------------
<S> <C> <C>
Cash Flows From (Used In):
Operating Activities $1,037.1 $663.8
Investing Activities (952.1) (361.2)
Financing Activities (169.3) (193.3)
----------------------------------
</TABLE>
Management believes that the Company has adequate internal and external
resources available to meet ongoing operating requirements, including network
expansion and modernization, business development, and the payment of dividends.
Management expects that presently foreseeable capital requirements will be
financed primarily through internally generated funds. Additional long-term debt
and equity financing may be needed to fund development activities and to
maintain the Company's capital structure within management's guidelines. The
Company determines the appropriateness of the level of its dividend payments on
a periodic basis by considering such factors as long-term growth opportunities,
internal requirements of the Company, and the expectations of shareowners.
The use of derivatives by the Company is limited to managing risk that
could endanger the financing and operating flexibility of the Company, making
cash flows more stable over the long run, and achieving savings over traditional
means of financing. Derivative agreements are tied to a specific liability or
asset and hedge the related economic exposures. The use of these hedging
agreements has not had a material impact on the Company's financial condition or
results of operations. The Company does not use derivatives for speculative
purposes and has not hedged its accounting translation exposure to foreign
currency fluctuations relative to its net investment position in foreign
affiliates.
Cash Flows from Operating Activities
The Company's primary source of funds continued to be cash generated
from operations. Cash provided by operating activities was higher in the first
quarter of 1995, as compared to the same period in 1994, due primarily to
reduced payments for certain taxes and timing differences in the payment of
accounts payable.
Cash Flows from Investing Activities
Capital expenditures continued to be the primary use of capital resources in
1995. In the first quarter of 1995, the Company invested approximately $730
million in its telecommunications core business to facilitate the introduction
of new products and services, enhance responsiveness to the competitive
challenge and increase the operating efficiency and productivity of the network.
Further, capital spending in the cellular business was approximately $63 million
to support the continued expansion of the wireless infrastructure.
During the first three months of 1995, the Company prefunded a trust with
the purchase of $135.0 million in short-term investments for the purpose of
compensating employees for vacation pay earned during 1994. The Company also
invested $110.1 million in joint ventures and acquisitions including a $41.7
million investment in PCS PrimeCo, $25.0 million for the purchase of a cellular
property, and $18.2 million for an additional investment in the Omnitel-Pronto
Italia consortium that was awarded the second cellular license in Italy in 1994.
Cash proceeds from investing activities in the first quarter of 1995
included approximately $76 million received in connection with a note receivable
resulting from the sale of substantially all of the Company's lease financing
business in April 1994.
16
<PAGE>
Cash Flows from Financing Activities
Dividend payments in the first quarter of 1995, as in prior years, were
also a significant use of capital resources. The Company decreased its long-term
debt by $105.7 million and increased its short-term borrowings by $268.6 million
principally as a result of additional funding requirements for the vacation pay
and retiree health trusts and the financing of investments in joint ventures and
acquisitions.
As of March 31, 1995, the Company and its subsidiaries had in excess
of $2.2 billion of unused bank lines of credit and shelf registrations for the
issuance of up to $2.0 billion of unsecured debt securities.
The Company's debt ratio was 59.8% at March 31, 1995 and 59.4% at December
31, 1994. The debt securities of Bell Atlantic's subsidiaries continue to be
accorded high ratings by primary rating agencies.
17
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
-----------------
For background concerning the Company's contingent liabilities under
the Plan of Reorganization governing the divestiture by AT&T Corp.
(formerly American Telephone and Telegraph Company) of certain assets
of the former Bell System Operating Companies with respect to private
actions relating to pre-divestiture events, including pending antitrust
cases, see Item 3 of the Company's Annual Report on Form 10-K for the
year ended December 31, 1994.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits:
Exhibit Number
11 Computation of Per Common Share Earnings.
12 Computation of Ratio of Earnings to Fixed Charges.
27 Financial Data Schedule.
(b) Report on Form 8-K filed during the quarter ended March 31, 1995:
A Current Report on Form 8-K, dated January 23, 1995, was filed
regarding the Company's 1994 financial results.
18
<PAGE>
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 CORPORATION
Date: May 11, 1995 By /s/ William O. Albertini
------------------------
William O. Albertini
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
UNLESS OTHERWISE INDICATED, ALL INFORMATION IS AS OF MAY 8, 1995.
19
<PAGE>
Exhibit 11
BELL ATLANTIC CORPORATION AND SUBSIDIARIES
Computation of Per Common Share Earnings
(Dollars in Millions, Except Per Share Amounts)
<TABLE>
<CAPTION>
Three months ended March 31,
----------------------------
1995 1994
------------ ------------
<S> <C> <C>
Income before extraordinary item......................................... $ 414.5 $ 395.9
Extraordinary item....................................................... -- (6.7)
------------ ------------
Net income............................................................... $ 414.5 $ 389.2
============ ============
Earnings Per Common Share
- -------------------------
Weighted average shares outstanding...................................... 436,381,047 436,299,626
Incremental shares from assumed exercise of stock
options and payment of performance share awards........................ 1,002,653 1,041,399
------------ ------------
Total shares............................................................. 437,383,700 437,341,025
============ ============
Income before extraordinary item........................................ $ .95 $ .91
Extraordinary item ..................................................... -- (.02)
------------ ------------
Net income.............................................................. $ .95 $ .89
============ ============
Fully Diluted Earnings Per Common Share*
- ----------------------------------------
Weighted average shares outstanding..................................... 436,381,047 436,299,626
Incremental shares from assumed exercise of stock
options and payment of performance share awards....................... 1,031,322 1,041,399
------------ ------------
Total shares............................................................ 437,412,369 437,341,025
============ ============
Income before extraordinary item........................................ $ .95 $ .91
Extraordinary item...................................................... -- (.02)
------------ ------------
Net income.............................................................. $ .95 $ .89
============ ============
</TABLE>
* Fully diluted earnings per share calculation is presented in accordance with
Regulation S-K item 601(b)(11) although not required by footnote 2 to
paragraph 14 of Accounting Principles Board Opinion No. 15 because it results
in dilution of less than 3%.
<PAGE>
Exhibit 12
BELL ATLANTIC CORPORATION AND SUBSIDIARIES
Computation of Ratio of Earnings to Fixed Charges
(Dollars in Millions)
<TABLE>
<CAPTION>
Three months ended
March 31, 1995
------------------
<S> <C>
Income before provision for income taxes.............................................. $ 687.0
Equity in loss of less than majority-owned subsidiaries............................... 6.7
Dividends from less than majority-owned subsidiaries.................................. 3.9
Interest expense, including interest on capital lease obligations..................... 143.5
Portion of rent expense representative of the interest factor......................... 25.2
----------
Income, as adjusted................................................................... $ 866.3
==========
Fixed charges:
Interest expense, including interest on capital lease obligations..................... $ 143.5
Portion of rent expense representative of the interest factor......................... 25.2
Interest capitalized on construction.................................................. 12.6
Preferred stock dividend requirement.................................................. 2.5
----------
Fixed charges......................................................................... $ 183.8
==========
Ratio of Earnings to Fixed Charges.................................................... 4.71
==========
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1995
AND THE CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 1995 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-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 59
<SECURITIES> 135
<RECEIVABLES> 2,405
<ALLOWANCES> 198
<INVENTORY> 298
<CURRENT-ASSETS> 3,800
<PP&E> 34,402
<DEPRECIATION> 17,327
<TOTAL-ASSETS> 24,312
<CURRENT-LIABILITIES> 5,649
<BONDS> 6,700
<COMMON> 436
0
0
<OTHER-SE> 5,647
<TOTAL-LIABILITY-AND-EQUITY> 24,312
<SALES> 0
<TOTAL-REVENUES> 3,450
<CGS> 0
<TOTAL-COSTS> 2,618
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 139
<INCOME-PRETAX> 687
<INCOME-TAX> 273
<INCOME-CONTINUING> 414
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 414
<EPS-PRIMARY> .95
<EPS-DILUTED> 0
</TABLE>
