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: January 23, 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: January 23, 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 January 23, 1995 announcing
Fourth quarter and full year 1994 earnings.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(20) Press Release dated January 23, 1995
EXHIBIT INDEX
Exhibit No. Description Page No.
(20) Press Release dated
January 23, 1995
NEWS RELEASE BELL ATLANTIC
Contact: Cynthia M. Ciangio
(215) 963-6306
For Release: Immediately
January 23, 1995
STRONG NETWORK AND WIRELESS REVENUES SPUR BELL ATLANTIC 1994
RESULTS
Fourth Quarter Operating Income Increased Nearly 10 Percent
PHILADELPHIA, January 23, 1995 -- Bell Atlantic Corporation (NYSE: BEL)
today announced solid 1994 operating results reflecting continued strong
demand in its network business and record customer growth in its
wireless operations.
While the company reported a loss for 1994 of $1.73 per share, 1994
earnings excluding special charges amounted to $3.53 per share. These
charges included: non-cash items totalling $5.20 per share taken in the
third quarter for the discontinuance of regulatory accounting and the
revaluation of telephone plant, a work force reduction of 5,600 network
employees, and the exiting of certain non-strategic investments; an
extraordinary charge of $.02 per share for the early extinguishment of
debt taken in the first quarter; and a $.04 per share charge taken in the
fourth quarter due to the devaluation of the peso. On a comparable basis,
this represents a 9 percent increase in earnings per share over 1993 (see
sidebar). Excluding these charges, net income for 1994 was $1.5 billion,
representing a 9.7 percent increase over 1993 on a comparable basis.
"We achieved our financial and operating objectives for the year," said
Bell Atlantic Chairman and Chief Executive Officer Raymond W. Smith.
"We also took a number of strategic actions to enhance long-term
shareowner value and to support our intention to be a leader in
communications, information, and entertainment."
For the fourth quarter of 1994, operating income increased by 9.9 percent
compared with the fourth quarter of 1993. Earnings were $.72 per share,
or $314.9 million, which included a charge of $.04 per share, or
approximately $19 million, primarily consisting of the company's
estimated proportionate share of the impact of the Mexican peso
devaluation on the dollar-denominated debt of Grupo Iusacell, Mexico's
largest independent cellular provider. Despite the sharp decline in the
peso, Bell Atlantic continues to believe that its 42 percent economic
interest in Iusacell represents a significant long-term opportunity.
Earnings in the fourth quarter of 1993 were $.76 per share, or $333.1
million. After adjusting both periods for comparability, earnings
per share for the fourth quarter of 1994 increased by 5.6 percent over the
same period last year.
Total operating revenues in 1994 were $13.8 billion, compared with $13.1
billion in 1993, an increase of nearly 5 percent. Excluding the company's
financial services businesses, which were substantially disposed of in
1994, revenues from continuing operations increased by 6.5 percent.
Network revenues increased by 4.3 percent, including continued strong
growth in value-added services such as Answer Call and Caller ID. Total
access minutes of use for 1994 increased by 8.9 percent over 1993.
Access lines at the end of 1994 totaled 19.2 million, an increase of
522,700 lines, or 2.8 percent, compared with the end of 1993. Business
and Centrex access lines increased 3.3 percent and 6.5 percent,
respectively, over totals at the end of 1993.
Bell Atlantic's total operating expenses in 1994 were $11.0 billion
compared with $10.3 billion in 1993. Excluding a previously announced
charge in 1994 for costs associated with the separation of employees,
operating expenses increased by 4.6 percent, or $476.9 million.
Revenues in the company's cellular operations increased 43.5 percent,
driven by record customer growth of 602,000 subscribers, or 57.9 percent,
in 1994. Cellular customers totalled approximately 1.64 million at the
end of 1994.
"In our network services business, we made a difficult but necessary
decision to reduce our work force by 5,600 by the end of 1997. As a result
of our decision to discontinue using regulatory accounting principles, we
revalued a significant portion of assets in recognition of the increasingly
competitive environment in our industry. Our aggressive pricing on highly
competitive services and increased product development for new market
opportunities, such as video services, position us for continued network
revenue growth in the future.
"To further expand our presence in the high-growth wireless market, we
signed an agreement to merge our domestic cellular operations with those
of NYNEX," Smith said. "We expect this merger to be completed in
mid-1995. Bell Atlantic and NYNEX also formed partnerships with U S
WEST and AirTouch to bid jointly in the FCC's auctions for personal
communications services and to develop a national branding and marketing
strategy and service standards for their wireless businesses, moves
which add significant scope and scale to our operations and position us for
national leadership in the provision of wireless services.
"Another significant milestone was achieved in 1994 when we formed two
new companies with NYNEX and Pacific Telesis to expedite our entry into
the video services market and reduce business risks. A newly formed
media company will develop, acquire, license, and package entertainment
and information services, and a technology and integration company will
provide the systems necessary to deliver these services.
"In addition, we achieved progressive state regulatory relief in
Pennsylvania and Virginia, and an extension of incentive regulation in
West Virginia. Recently, the FCC approved our 214 application for a
market trial of video-on-demand in northern Virginia.
"1994 was an extraordinary year for Bell Atlantic, and one of which we
are well proud. We will continue to capitalize on the opportunities and
challenges of this dynamic industry to increase shareowner value over the
long-term. We believe that we are positioned for record earnings in
1995," Smith said.
Bell Atlantic Corporation, based in Philadelphia, is the parent of
companies which provide a full array of local exchange
telecommunications services in New Jersey, Pennsylvania, Delaware,
Maryland, Virginia, West Virginia, and Washington, D.C. The corporation is
at the forefront of developing a variety of new products, including video,
entertainment, and information services.
Bell Atlantic also is the parent of one of the nation's largest cellular
carriers and has an ownership position in cellular properties
internationally, including a 42 percent economic interest in Grupo
Iusacell, S.A. de C.V., Mexico's largest independent cellular company. In
addition, Bell Atlantic owns an interest in Telecom Corporation of New
Zealand and is the parent of companies that provide business systems
services for customer-based information technology throughout the U.S.
and internationally.
###
SIDEBAR
Bell Atlantic Corporation
Earnings Analysis (on a per-share basis)
Three Months Ended Year Ended
December 31 December 31
1994 1993 Change 1994 1993 Change
Reported Earnings $.72 $.76 ($1.73) $3.22
Adjustments:
Early Extinguishment
of Debt -- .01 .02 .13
Strategic Initiatives
Asset Revaluation -- -- 4.56 --
Elimination of Net Regulatory
Assets -- -- .36 --
Employee Separation Pay Plan
Costs -- -- .23 --
Disposition of Non-Strategic Invest-
ments -- -- .05 --
Sub-Total -- -- 5.20 --
Impact of Devaluation of
Peso .04 -- .04 --
Change in Accounting for Income Taxes
(FAS 109) -- -- -- (.15)
Change in Accounting for Post-Employment Benefits
(FAS 112) -- -- -- .18
Total Adjust-
ments .04 .01 5.2 .16
Sub-Total of Adjusted
Earnings $.76 $.77 (1.3)% $3.53 $3.38 4.4%
Comparability Adjustment:
Other Net Effects of Investment in Grupo
Iusacell -- (.05) -- (.14)
Adjusted
Earnings $.76 $.72 5.6% $3.53 $3.24 9.0%
BELL ATLANTIC CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Operations (unaudited)
(In millions, except per-share amounts)
Three months ended Year ended
December 31 December 31
1994* 1993 1994* 1993
Operating Revenues
Transport Services
Local services $ 1,077.3 $1,060.0 $4,312.4 $4,187.4
Network access 813.2 763.5 3,237.6 3,070.9
Toll service 365.9 393.4 1,555.5 1,558.0
Ancillary Services
Directory advertising 275.5 265.7 1,082.0 1,049.0
Other 128.9 87.7 441.9 363.3
Value-Added Services 336.1 308.7 1,284.4 1,193.6
Wireless 292.3 226.6 1,059.8 785.5
Other Services 197.3 250.5 817.8 937.9
Total Operating Revenues 3,486.5 3,356.1 13,791.4 13,145.6
Operating Expenses
Employee costs, including benefits
and taxes 1,020.2 1,019.0 4,333.1 4,027.6
Depreciation and
amortization 679.7 649.8 2,652.1 2,545.1
Other 1,119.3 1,080.1 4,001.6 3,775.3
Total operating
expenses 2,819.2 2,748.9 10,986.8 10,348.0
Operating Income 667.3 607.2 2,804.6 2,797.6
Equity in income (loss) of
affiliates (20.9) 22.1 41.1 48.3
Other income and expense,
net 16.1 7.0 23.2 39.8
Interest expense 144.7 141.3 582.1 612.1
Income before provision for income
taxes, extraordinary items, and
cumulative effect of changes in
accounting
principles 517.8 495.0 2,286.8 2,273.6
Provision for income
taxes 202.9 157.8 884.9 792.0
Income before extraordinary items and
cumulative effect of changes in
accounting
principles 314.9 337.2 1,401.9 1,481.6
Extraordinary items:
Discontinuation of regulatory accounting
principles, net of
tax -- -- (2,150.0) --
Early extinguishment of debt,
net of tax -- (4.1) (6.7) (58.4)
Total extraordinary
items -- (4.1) (2,156.7) (58.4)
Cumulative effect of changes in
accounting principles:
Income taxes -- -- -- 65.2
Post-employment benefits,
net of tax -- -- -- (85.0)
Total cumulative effect of changes in accounting
principles -- -- -- (19.8)
Net Income (Loss) $314.9 $333.1 $(754.8) $1,403.4
* Effective 8/1/94, the company's telephone subsidiaries discontinued
application of Statement of Financial Accounting Standards No. 71,
"Accounting for the Effects of Certain Types of Regulation."
BELL ATLANTIC CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Operations (unaudited) - continued
(In millions, except per-share amounts)
Three months ended Year ended
December 31 December 31
1994* 1993 1994* 1993
Per Common Share Amounts
Income before extraordinary items and
cumulative effect of changes in
accounting
principles $.72 $.77 $ 3.21 $3.39
Extraordinary
items -- (.01) (4.94) (.13)
Cumulative effect of changes in
accounting
principles -- -- -- (.04)
Net Income (Loss) $.72 $.76 $(1.73) $3.22
Dividends declared per
common share $.69 $.67 $2.76 $2.68
Weighted average number of
common and equivalent
shares outstanding 437.2 437.5 437.2 436.3
Other Selected Data
December 31
1994 1993
Return on Average Common Equity
Three months ended 19.8% 16.0%
Year ended ( 9.8)% 17.3%
Total Assets (millions) $24,271.8 $29,544.2
Total Employees 72,300 73,600
* 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."
BELL ATLANTIC CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows (unaudited)
(In millions)
Year Ended December 31,
1994 1993
Cash Flows from Operating Activities
Net income (loss) $(754.8) $1,403.4
Depreciation and amortization 2,652.1 2,545.1
Extraordinary items 2,156.7 58.4
Cumulative effect of changes in
accounting principles -- 19.8
Other, net (301.4) 128.1
Net Cash Provided by Operating
Activities 3,752.6 4,154.8
Net Cash Used in Investing
Activities (1,669.8) (2,953.5)
Net Cash Used in Financing
Activities (2,086.0) (1,351.2)
Decrease in Cash and
Cash Equivalents (3.2) (149.9)
Cash and Cash Equivalents,
Beginning of Year 146.1 296.0
Cash and Cash Equivalents,
End of Year $142.9 $146.1
BELL ATLANTIC CELLULAR OPERATIONS
Selected Operating Statistics and Financial Data (unaudited)
(In thousands, except percentages and data per subscriber)
Three months ended December 31
1994 1993 % Change
Selected Operating Statistics
Total Owned Pops(1) 35,064 35,238 (.05)
Controlled MSA Pops(1) 32,519 27,883 16.6
Controlled RSA Pops(1) 3,875 3,706 4.6
Controlled Penetration(1)(2) 4.63% 3.05% 51.8
Total Subscribers(3) 1,684.4 1,039.1 62.1
( 57.9% normalized)
Churn 1.57% 1.64% (4.3)
Rev. per Subscriber per Month(4) $ 70 $ 7 (9.1)
(- 9.9% normalized)
Acquisition Cost per Gross Add(5) $268 $23 13.6
( 12.1% normalized)
Selected Financial Data
Revenue(6) $288,373 $223,197 29.2
( 40.8% normalized)
Operating Income(7) $12,165 $ (4,638) --
(521.0% normalized)
Operating Cash Flow(8)(9) $ 48,414 $ 24,185 100.2
( 57.6% normalized)
Operating Cash Flow
Margin(8)(10) 23.34% 13.93% 67.6
(20.1% normalized)
Uncollectibles for quarter ended December 31, 1994, were less than 2% of
total revenue.
On May 1, 1994, the NYSMSA partnership restructured to include the Bell
Atlantic Mobile Northern New Jersey reseller operations. Quarterly data
and statistics include Northern New Jersey reseller operations for three
months in 1993. Normalized growth rates exclude the Bell Atlantic Mobile
Northern New Jersey reseller operations for the three months.
(1)1994 population data source is different than 1993 source. 1994
Controlled MSA POPs includes approximately 5 million Northern New
Jersey POPs managed by Bell Atlantic Mobile pursuant to the restructured
NYSMSA partnership arrangement.
(2)1993 Controlled Penetration is calculated using controlled subscribers
over total controlled POPs.
(3)1994 includes subscribers managed by Bell Atlantic Mobile pursuant to
the restructured NYSMSA partnership arrangement. Some of these
customers were managed by NYNEX Mobile prior to 1994. 1993 includes
subscribers from Bell Atlantic Mobile's Northern New Jersey reseller
operations that, effective May 1, 1994, are part of the NYSMSA
partnership. Excluding customers previously managed by NYNEX, the
normalized 1994 subscribers and growth rate would have been 1,641.1 and
57.9%, respectively.
(4)1993 normalized Revenue per Subscriber rounds to $77, resulting in a
- -9.9% growth rate.
(5)Acquisition costs include commission expense and margin on sale of
CPE. 1993 normalized Acquisition Cost per Gross Add is $239, resulting
in a 12.1% growth rate.
(6)Revenue includes service revenues, incollect, outcollect, and equipment
revenue, but excludes paging revenue. 1993 normalized Revenue is
$204,777, resulting in a 40.8% growth rate.
(7)1993 normalized Operating Income is $1,959, resulting in a 521%
growth rate.
(8)Operating Cash Flow equals Operating Income plus depreciation and
amortization. Operating Cash Flow Margin uses revenues which consist
primarily of service revenues, outcollect revenue, and net margin on
equipment.
(9)1993 normalized Operating Cash Flow is $30,723, resulting in a 57.6%
growth rate.
(10)1993 normalized Operating Cash Flow Margin is 19.43%, resulting in a
20.1% growth rate.
BELL ATLANTIC CELLULAR OPERATIONS
Selected Operating Statistics and Financial Data (unaudited)
(In thousands, except percentages and data per subscriber)
Year ended December 31
1994 1993 % Change
Selected Operating Statistics
Total Owned Pops(1) 35,064 35,238 (.05)
Controlled MSA Pops(1) 32,519 27,883 16.6
Controlled RSA Pops(1) 3,875 3,706 4.6
Controlled Penetration(1)(2) 4.63% 3.05% 51.8
Total Subscribers(3) 1,684.4 1,039 .1 62.1 ( 57.9% normalized)
Churn 1.51% 1.65% (8.5)
Rev. per Subscriber per Month(4) $71 $ 77 (7.8) (- 6.7%
normalized)
Acquisition Cost per Gross Add(5)$255 $240 6.3 ( 4.1% normalized)
Selected Financial Data
Revenue(6) $ 1,044,855 $ 773,448 35.1 ( 43.5% normalized)
Operating Income( 7) $ 112,191 $ 43,892 155.6 (103.4% normalized)
Operating Cash Flow(8)(9) $ 246,955 $ 149,825 64.8 ( 54.5% normalized)
Operating Cash Flow
Margin(8)(10) 30.79% 24.43% 26.0 ( 10.7% normalized)
Uncollectibles for year ended December 31, 1994, were less than 2% of
total revenue.
On May 1, 1994, the NYSMSA partnership restructured to include the Bell
Atlantic Mobile Northern New Jersey reseller operation. 1994 and 1993
year to date data and statistics include Northern New Jersey reseller
operations for four months and twelve months, respectively. Normalized
growth rates exclude the Bell Atlantic Mobile Northern New Jersey
reseller operations for the four months in 1994 and the twelve months in
1993.
(1)1994 population data source is different than 1993 source. 1994
Controlled MSA POPs include approximately 5 million Northern New Jersey
POPs managed by Bell Atlantic Mobile pursuant to the restructured
NYSMSA partnership arrangement.
(2)1993 Controlled Penetration is calculated using controlled subscribers
over total controlled POPs.
(3)1994 includes subscribers managed by Bell Atlantic Mobile pursuant to
the restructured NYSMSA partnership arrangement. Some of these
customers were managed by NYNEX Mobile prior to 1994. 1993 includes
subscribers from Bell Atlantic Mobile's Northern New Jersey reseller
operations that, effective May 1, 1994, are part of the NYSMSA
partnership. Excluding customers previously managed by NYNEX, the
normalized 1994 subscribers and growth rate would have been 1,641.1 and
57.9%, respectively.
(4)1994 and 1993 normalized Revenue per Subscriber is $70 and $75,
respectively, resulting in a -6.7% growth rate.
(5)Acquisition costs include commission expense and margin on sale of
CPE. 1994 and 1993 normalized Acquisition Cost per Gross Add is $256
and $246, respectively, resulting in a 4.1% growth rate.
(6)Revenue includes service revenues, incollect, outcollect, and equipment
revenue, but excludes paging revenue. 1994 and 1993 normalized Revenue
is $1,014,860 and $707,331, respectively, resulting in a 43.5% growth
rate.
(7)1994 and 1993 normalized Operating Income is $119,029 and $58,519,
respectively, resulting in a 103.4% growth rate.
(8)Operating Cash Flow equals Operating Income plus depreciation and
amortization. Operating Cash Flow Margin uses revenues which consist
primarily of service revenues, outcollect revenue, and net margin on
equipment.
(9)1994 and 1993 normalized Operating Cash Flow is $253,663 and
$164,151, respectively, resulting in a 54.5% growth rate.
(10)1994 and 1993 normalized Operating Cash Flow Margin is 32.61% and
29.45%, respectively, resulting in a 10.7% growth rate.
###
