SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) Of The SECURITIES EXCHANGE
ACT of 1934
Date of Report: October 19, 1995
Exact name of registrant
as specified in its charter: BELL ATLANTIC CORPORATION
Commission File No.: 1-8606
State of Incorporation: Delaware
IRS Employer Identification No.: 23-2259884
Address of principal
executive offices: 1717 Arch Street
Philadelphia, Pennsylvania
Zip Code 19103
Registrant's telephone number,
including area code: (215) 963-6000
Former name or former address,
if changed since last report: N/A
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its by the undersigned
duly authorized.
BELL ATLANTIC CORPORATION
By: /s/ William O. Albertini
William O. Albertini
Vice President and Chief
Financial Officer
Date: October 19, 1995
Item 5. Other Events.
Attached as an exhibit hereto is a copy of a press release issued by
Bell Atlantic Corporation (the Company) dated October 19, 1995 announcing
third quarter earnings.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(20) Press Release dated October 19, 1995
EXHIBIT INDEX
Exhibit No. Description Page No.
(20) Press Release dated
October 19, 1995
FOR IMMEDIATE RELEASE Contact:
October 19, 1995 David Stakun
215-963-6639
[email protected]
Bell Atlantic Posts Double-Digit Earnings Growth
Philadelphia -- Increasing demand for network services, aggressive cost
control and strong wireless profits drove third-quarter 1995 net income at Bell
Atlantic Corporation (NYSE: BEL) up 11.2 percent over third-quarter 1994 levels,
excluding certain one-time items in both periods. Earnings per share, excluding
those one-time items, rose 11.0 percent, to $1.01.
"This was a very impressive quarter for Bell Atlantic," said Chairman and
Chief Executive Officer Raymond W. Smith, "and another step toward a very
successful year. In our network business, strong revenue growth from
vertical services and across-the-board efficiency improvements produced a solid
bottom line, even while we undertook strategic price reductions in key
competitive markets. What's more, our new domestic wireless company is reaching
ever higher levels of profitability, putting us on a firm foundation for
continued expansion."
For the third quarter, Bell Atlantic posted earnings per share of $1.38 and
net income of $604.8 million, which include a one-time after-tax gain of $203
million, or $.46 per share, from the sale of overlapping cellular properties in
connection with the July 1, 1995, combination of Bell Atlantic Mobile and NYNEX
Mobile Communications, and non-recurring charges of approximately $40 million,
or $.09 per share, associated with certain business development ventures and
contracts. To exclude these items for comparison purposes, third-quarter 1995
earnings should be reduced by $162.9 million, or $.37 per share, to $441.9
million, or $1.01 per share.
In the prior year, the company reported a third-quarter loss of $1.87
billion, or $4.29 per share, which included non-cash charges related to the dis-
continuation of regulatory accounting practices, employee separation costs and
the disposition of non-core businesses. For comparison purposes, third-quarter
1994 earnings should be increased by $2.27 billion, or $5.20 per share, to
$397.5 million, or $.91 per share (see supplemental table).
Network Highlights
"In our network business, we're clearly seeing increasing revenue growth
from aggressive marketing and new product introductions," said Bell Atlantic
Vice Chairman James G. Cullen.
During the third quarter:
Access lines increased 3.3 percent, supported by 45 percent higher year-to-date
sales of second residential lines;
Total ISDN (integrated services digital network) lines in service rose above
130,000 as Bell Atlantic prepared for commercial introduction to the consumer
marketplace;
Caller ID penetration topped 10 percent, nearly doubling since the third quarter
of last year, with quarterly revenues up 64 percent;
And Bell Atlantic's network integration business continues to grow revenue at an
annual rate above 50 percent.
On the expense side, Bell Atlantic continues to meet aggressive network
cost reduction targets.
Network operating expenses, including depreciation, totaled $2.34 billion,
up only 1.7 percent;
Employees per 10,000 access lines decreased by 6.5 percent;
And year-to-date cash operating expenses per access line are at $316, more than
4 percent lower than year-ago levels.
"Earnings improvement at Bell Atlantic was achieved despite a number of
price reductions, including an annual $305 million access price decrease in
compliance with an FCC order and the introduction of new toll discount plans,"
Cullen said. "Though we're pleased with our performance this quarter, Bell
Atlantic will continue its vigorous pursuit of sustained network revenue growth
by developing high-value products and addressing new market opportunities."
Wireless Highlights
In the wireless marketplace, Bell Atlantic reaped healthy returns from its
partnership in BELL ATLANTIC NYNEX Mobile, the company created by the July 1,
1995, combination of the domestic cellular operations of Bell Atlantic and
NYNEX. (Returns from this investment -- along with those of other components of
Bell Atlantic's wireless portfolio -- are now reported as "Equity in income of
affiliates.")
"We've become a global leader in wireless, with 85 million proportionately
owned POPs (population in markets where a carrier is licensed)," said Bell
Atlantic Vice Chairman Lawrence T. Babbio, Jr. "We've positioned ourselves to
participate not only in today's phenomenal domestic growth, but also in the
tremendous growth worldwide.
"Today, BELL ATLANTIC NYNEX Mobile is setting the benchmark for how
wireless businesses should be managed for maximum investment value. Thanks to
cost-effective marketing and distribution channels, cash flow margins are among
the highest in the industry. And thanks to innovative product design and
pricing, we're positioned to compete with anyone."
Highlights of BELL ATLANTIC NYNEX Mobile's third-quarter performance, with
comparative financial and operating statistics derived as if the company had
existed prior to July 1, 1995 (see supplemental table), include:
Annual subscriber growth of 47 percent with the addition of 228,800 subscribers
during the third quarter, bringing the total to nearly 3 million;
A reduction in per-customer acquisition costs to $216, among the lowest in the
country;
Further reduction in the customer churn (turnover) rate, to 1.7 percent;
Success in broadening the wireless market with the uniquely priced, consumer-
friendly TalkAlong (SM) wireless communication service; since the debut of the
service in March 1995, more than 50,000 people have subscribed. BELL ATLANTIC
NYNEX Mobile will make TalkAlong available in major retail outlets in time for
this year's holiday season;
And despite innovative pricing initiatives such as TalkAlong and low-cost
MobileReach(r) roaming from Maine to the Carolinas, operating cash flow margins
increased to 43 percent, reflecting a 78 percent increase in operating cash
flow over year-earlier levels.
In other ventures, Bell Atlantic continues to develop new market
opportunities across the United States and abroad.
The national alliance of PCS PrimeCo, L.P., agreed to award contracts to AT&T
Network Systems and Motorola to build end-to-end CDMA (code division multiple
access) wireless communication systems.
Bell Atlantic's Omnitel Pronto Italia consortium, which holds the second
cellular license in the rapidly growing Italian market, began a market trial
in preparation for full commercial launch in early 1996.
The Mexican government granted Grupo Iusacell, S.A. de C.V., Mexico's leading
independent wireless company, a concession to install and operate a public
network to provide domestic and international long-distance services. The
concession paves the way for Iusacell, in which Bell Atlantic owns a 41.9
percent equity interest, to become a full-service telecommunications provider
in high-growth Mexican markets.
"While we acknowledge the economic difficulties in Mexico's recent past,"
said Babbio, "we also recognize tremendous long-term growth opportunities in the
under-served Mexican marketplace."
Additional Strategic Initiatives
Indicating confidence in the future of its video market opportunity, TELE-TV,
the national video and interactive alliance of Bell Atlantic, NYNEX and Pacific
Telesis, selected Thomson Consumer Electronics to provide digital wireless
television set-top devices for up to three million homes.
Bell Atlantic introduced its Bell Atlantic (TM) Visa r credit card, which offers
consumers telephone service rebates of 1% on all credit card purchases, 2% on
Bell Atlantic services and 3% on calling card charges.
The company initiated a residential ISDN market trial in Baltimore and four
Maryland counties. Commercial residential ISDN service was recently introduced
in three West Virginia metropolitan areas.
Bell Atlantic Corporation (NYSE: BEL) is at the forefront of the new
communications, entertainment and information industry. In the mid-Atlantic
region, the company is the premier provider of local telecommunications and
advanced services. Globally, it is one of the largest investors in the high-
growth wireless communication marketplace. Bell Atlantic also owns a sub-
stantial interest in Telecom Corporation of New Zealand and is actively
developing high-growth national and international business opportunities in all
phases of the industry.
####
INTERNET USERS: Bell Atlantic news releases, executive speeches, news
media contacts and other useful information are available on Bell Atlantic's
media relations World Wide Web site (http://www.ba.com), by gopher
(gopher://ba.com) or by ftp (ftp://ba.com/pub).
<PAGE>
BELL ATLANTIC CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Operations (unaudited)
(In millions, except per-share amounts)
Three months ended Nine months ended
September 30 September 30
1995(a) 1994(b) 1995(a) 1994(b)
Operating Revenues
Transport Services:
Local service $1,118.6 $1,090.9 $3,305. 2 $3,235.1
Network access 856.2 836.8 2,549.5 2,424.4
Toll service 355.9 376.5 1,082.2 1,189.6
Ancillary Services:
Directory advertising 273.4 270.8 826.3 808.3
Other 142.3 120.8 414.9 331.4
Value-Added Services 353.0 316.9 1,010.6 948.3
Wireless Services -- 271.7 628.0 767.5
Other Services 161.7 170.9 458.6 600.3
Total Operating Revenues 3,261.1 3,455.3 10,275.3 10,304.9
Operating Expenses
Employee costs,
including benefits and taxes 1,034.6 1,236.2 3,129.5 3,312.9
Depreciation and amortization 642.5 674.7 1,991.9 1,972.4
Other 864.6 953.4 2,760.0 2,882.3
Total Operating Expenses 2,541.7 2,864.3 7,881.4 8,167.6
Operating Income 719.4 591.0 2,393.9 2,137.3
Equity in income of affiliates 74.5 23.0 90.3 62.0
Other income (expense), net 317.1 (20.5) 324.0 7.1
Interest expense 133.9 153.6 420.5 437.4
Income before provision for income
taxes and extraordinary items 977.1 439.9 2,387.7 1,769.0
Provision for income taxes 372.3 164.2 921.3 682.0
Income before extraordinary items 604.8 275.7 1,466.4 1,087.0
Extraordinary items:
Early extinguishment of debt,
net of tax -- -- -- (6.7)
Discontinuation of regulatory
accounting principles,
net of tax -- (2,150.0) -- ( 2,150.0)
Total extraordinary items (2,150.0 (2,156.7)
Net Income (loss) $604.8 $(1,874.3) $1,466.4 $(1,069.7)
(a) On July 1, 1995, the company contributed its domestic cellular business to a
partnership and accounts for its share of the partnership's results under
the equity method.
(b) Effective August 1, 1994, the company's telephone subsidiaries discontinued
application of Statement of Financial Accounting Standards No. 71,
"Accounting for the Effects of Certain Types of Regulation."
<PAGE>
BELL ATLANTIC CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Operations (unaudited) -- continued
(In millions, except per-share amounts)
Three months ended Nine months ended
September 30 September 30
1995(a) 1994(b) 1995(a) 1994(b)
Per Common Share Amounts
Income before extraordinary items $1.38 $.63 $3.35 $2.49
Extraordinary items -- (4.92) -- (4.94)
Net Income (loss) $1.38 $(4.29) $3.35 $(2.45)
Dividends declared per common share $.70 $.69 $2.10 $2.07
Weighted average number of common
and equivalent shares outstanding 438.5 437.3 437.9 437.3
Per Share Analysis (unaudited)
Earnings per Share, as Reported $1.38 $(4.29) $3.35 $(2.45)
Adjustments:
Gain on sale of conflicted properties (.46) -- (.46) --
Non-recurring business development
charges .09 -- .09 --
Discontinuance of regulatory
accounting principles -- $4.92 -- $4.92
Employee severance plan costs -- .23 -- .23
Loss on disposition of non-strategic assets -- .05 -- .05
Impact of peso devaluation -- -- . 03 --
Early extinguishment of debt -- -- -- .02
Adjusted Earnings per Share $1.01 $.91 $3.01 $2.77
Other Selected Data
September 30,
1995 1994
Return on Average Common Equity
Three months ended 36.2% (10.1)%
Nine months ended 30.5% (8.3)%
Total Assets (millions) $24,546.0 $24,517.9
Total Employees 67,800 72,900
(a) On July 1, 1995, the company contributed its domestic cellular business to
a partnership and accounts for its share of the partnership's results under
the equity method.
(b) Effective August 1, 1994, the company's telephone subsidiaries discontinued
application of Statement of Financial Accounting Standards No. 71,
"Accounting for the Effects of Certain Types of Regulation."
<PAGE>
BELL ATLANTIC CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows (unaudited)
(In millions)
Nine months ended September 30,
1995 1994
Cash Flows from Operating Activities
Net income (loss) $1,466.4 $(1,069.7)
Depreciation and amortization 1,991.9 1,972.4
Extraordinary items -- 2,156.7
Other, net (542.1) (517.1)
Net Cash Provided by Operating Activities 2,916.2 2,542.3
Net Cash Used in Investing Activities (1,952.5) (966.1)
Net Cash Used in Financing Activities (1,008.9) (1,496.2)
Increase (Decrease) in Cash and Cash Equivalents (45.2) 80.0
Cash and Cash Equivalents, Beginning of Period 142.9 146.1
Cash and Cash Equivalents, End of Period $97.7 $226.1
<PAGE>
BELL ATLANTIC NYNEX MOBILE CELLULAR OPERATIONS PRO FORMA
(unaudited)
The following unaudited pro-forma selected operating and financial data give
effect to the combination of Bell Atlantic Mobile and NYNEX Mobile Communi-
cations for periods presented prior to July 1, 1995, and have been adjusted for
certain intercompany transactions and the disposition of overlapping properties.
These pro-forma results, therefore, are an approximate representation of BELL
ATLANTIC NYNEX Mobile (BANM) results "as if" the company had been in existence
prior to July 1, 1995.
Three months ended September 30,
1995 1994 % change
Selected Operating Data
Controlled POPs (1) (000) 55,840 54,750 2.0
Owned POPs (2)(000) 53,511 52,476 2.0
Subscribers (000) 2,973 2,020 47.2
Penetration (3) 5.3% 3.7% 44.3
Churn 1.7% 1.8% (2.9)
Revenues per subscriber per month (4) $64 $75 (15.2)
Acquisition cost per gross add (5) $216 $246 (12.1)
Selected Financial Data
(Dollars in millions)
Operating revenues (6) $496.3 $391.4 26.8
Less: Cost of equipment 69.1 58.3 18.5
Net revenues 427.2 $333.1 28.2
Operating income 117.3 51.1 129.6
Pre-tax income (7) 111.0 43.6 154.4
Operating cash flow (8) 184.2 103.8 77.5
Operating cash flow margin 43% 31% 38.5
Capital expenditures
excluding acquisitions 76.1 129.5 (41.2)
Footnotes:
(1) Controlled POPs represent the total number of POPs for markets in which
BANM has operating control.
(2) Owned POPs represent BANM percentage ownership in all licensed markets.
(3) Penetration is calculated by dividing subscribers by controlled POPs.
(4) Revenue per subscriber is calculated using service revenues, incollect
roaming, outcollect roaming and equipment revenue. Incollect roaming
revenues were $48.3 million and $125.4 million, respectively, for the
three- and nine-month periods ended 9/30/95 and $38.6 million and $112.4
million, respectively, for the three- and nine-month periods ended 9/30/94.
(5) Acquisition costs include commission expense and net margin on sale of
customer equipment.
(6) Operating revenues include service revenues, outcollect roaming, and
equipment revenues.
(7) Pre-tax income represents the income distribution to the two equity
partners, Bell Atlantic and NYNEX.
(8) Operating cash flow equals operating income plus depreciation and
amortization.
