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SECURITY 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: July 22, 1997
Exact Name of Regustrant
as specified in its charter: BELL ATLANTIC CORPORATION
Commission File Number: 1-8606
State of Incorporation: Delaware
IRS Employer Identification No: 23-2259884
Address of Principal
executive offices: 1717 Arch Street
Phladelphia, PA. 19103
Registrant's telephone number: (215) 963-6000
Former Name or former address,
if changed since last report: N/A
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Item 5. Other Events
Attached as an exhibit is a copy of a press release issued by Bell Atlantic
Corporation dated July 22, 1997 announcing 2nd Quarter earnings for 1997.
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Item 7. Financial Statements and Exhibits.
c) The following exhibits are incorporated by reference into this report.
20 Press Release Dated July 22, 1997
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EXHIBIT INDEX
Exhibit No. Description
(20) Press Release Dated July 22, 1997
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
BELL ATLANTIC CORPORATION
By /s/ William O. Albertini
Willaim O. Albertini
Executive Vice President and Chief Financial Officer
Date: July 22, 1997
FOR IMMEDIATE RELEASE Contact:
Tuesday, July 22, 1997 Jay Grossman
215-963-6521
[email protected]
Bell Atlantic Announces Robust Second Quarter Earnings
Adjusted Earnings per Share Up 11.4 Percent
PHILADELPHIA - Continuing the pace recorded in the first quarter of the
year, Bell Atlantic Corp. (NYSE: BEL) registered robust earnings in the second
quarter of 1997 on strong demand for communications services in the
company's core telephone and wireless businesses.
The company reported adjusted second quarter 1997 earnings per share of
$1.17, an increase of 11.4 percent over the second quarter of 1996, before a
charge of $.03 for a writedown of its investment in CAI Wireless Systems,
Inc. Adjusted net income for the second quarter of 1997 was $513.9 million,
10.8 percent higher than the second quarter of 1996, before the charge of $15
million.
"The story for our second quarter performance is straightforward and simple,"
said Bell Atlantic Chairman and CEO Raymond W. Smith. "The beat goes
on:
"In the face of increasing competition in our core businesses, revenues are
rising, expenses are in check and operating income is increasing at
double-digit rates. We are opening new channels to make it even easier for
customers to do business with us, our network operations continue to deliver
solid service and our wireless operations continue their success story.
"We again have demonstrated our ability to identify real opportunities and
marshal our resources to take best advantage of them. With the commitments
we have just made to the FCC, we anticipate that our merger with NYNEX
soon will clear the final hurdle at the Commission with no additional financial
impact on our new company. Now we can tackle the best opportunity of all:
unifying, providing service - including long distance - and winning in the best
communications marketplace in the world," Smith said.
"We have never been more confident in our ability to capitalize on the
tremendous opportunities open to us."
The corporation's 1997 second quarter revenues increased by 6.7 percent over
the year earlier period, and by 7.7 percent including its proportionate share
of domestic cellular revenues.
Network Highlights
Bell Atlantic's telephone business realized a strong, 5.6 percent
revenue increase in the second quarter of the year as demand generated
continued growth in access lines and value-added services, while the company
maintained excellent customer service levels.
"We have bolstered our already-strong customer service capabilities by
adding service consultants over the past year to provide faster access to our
business offices while increasing revenue through this channel," said Bell
Atlantic Vice Chairman James G. Cullen. "We believe this is proof that
excellent customer service will be a key differentiator for Bell Atlantic in the
competitive marketplace. We extended that notion to the small business
market, as well, by introducing the Telephone Account Management channel
in the second quarter to provide personalized attention to our top small
business accounts.
"In addition, we have signed up 185,000 customers through the first half of
1997 in our New Jersey and Pennsylvania toll calling plans, clearly
demonstrating the strength of the Bell Atlantic brand in countering
competition."
In the network business:
Access lines in service totaled approximately 21 million on June 30, 1997, an
increase of 4.0 percent over the same date in 1996. The increase included
10.9 percent Centrex line growth year over year.
Access minutes of use grew 7.8 percent compared with the second quarter last
year.
At the end of the second quarter, Bell Atlantic had more than 240,000 ISDN
(Integrated Services Digital Network) lines in service, more than 40 percent
more than a year earlier.
In the residential market:
Sales of secondary residential lines in the second quarter of 1997 continued
at a strong clip, increasing by 228,600, a 7.6 percent increase in sales above
the year earlier period.
In the second quarter, revenues from Home Voice Mail and central office-based
services such as Caller ID, Return Call and Call Waiting were up approximately
20 percent compared with the 1996 period. Caller ID revenues grew 45.5
percent in the last quarter over the year-earlier period. Revenues from
Return Call, often featuring a voice-recorded read-out of the calling party's
number, grew 37.1 percent from second quarter 1996 levels.
In the business markets:
The company's popular customized Centrex packages for small businesses
added 247,000 lines in the quarter for 85 percent growth year over year.
Second quarter revenue was $56.3 million, up 48.3 percent over the 1996
period.
In the large business segment, revenues from high-speed Fast Packet services
grew about 90 percent from second quarter 1996 levels.
Bell Atlantic Network Integration, Inc., delivered revenue growth of more
than 50 percent over the 1996 quarter, bringing the unit's quarterly revenues
to nearly $60 million.
Network operating expenses of $2.5 billion for the quarter were 2.7 percent
higher than in the 1996 quarter, including costs of meeting the requirements of
the Telecom Act checklist and increased marketing expenditures.
"Expense control is especially impressive in that we spent nearly $55 million
in the second quarter to redesign software, add capacity in our operating
support systems and improve our ordering systems to meet our obligations under
the Telecom Act and to accommodate competitive local carriers as we continue
to open our local networks," Cullen said. "All this helps pave the way for our
entry into the long distance market. We plan to start filing our applications
in the fourth quarter.
"Our core network business continued to advance last quarter on all essential
fronts: revenue generation, expense control, efficient delivery channels and
customer service," Cullen said. "Margins and capital productivity were higher
as we demonstrated that we can win in the marketplace and create value for
our shareowners."
Wireless Highlights
In the second quarter of 1997, Bell Atlantic's global wireless portfolio
of 89 million POPs (people in markets served) saw new product introductions
and business expansion on all fronts.
"In the second quarter, we deployed CDMA (code division multiple
access) digital networks in all our domestic markets, enabling us to launch
next-generation wireless services well ahead of most new market entrants.
We improved our wireless results for market penetration, customer churn and
cash flow margin, despite downward pressure on service pricing and increased
marketing expenses," said Bell Atlantic Vice Chairman Lawrence T. Babbio,
Jr. "We've shown the rest of the industry how to deliver a great value
proposition: Real innovation at great prices.
"PrimeCo, our PCS partnership, added about 81,000 new subscribers
in the second quarter - in addition to 77,000 in the first quarter of this year
- for a total of 195,000 subscribers since PrimeCo opened for business last
October. We continue with our aggressive network build plan to increase our
PCS footprint and handle the rapid growth in subscribers and call volumes.
"We also have a real turnaround story in Grupo Iusacell, S.A. de C.V., where
we consolidated our operational and management control in February. Since
then, we have launched a new consolidated brand strategy, enhanced network
performance and expanded retail distribution, and we are on target for meeting
our 1997 subscriber growth objectives," Babbio said.
For Bell Atlantic NYNEX Mobile:
The company had a 16 percent increase in operating revenues over the second
quarter of 1996 and operating cash flow improvement of 19.6 percent,
resulting in an operating cash flow margin of 45 percent.
At the end of the second quarter of 1997, the company had 27.6 percent more
subscribers year over year, adding 241,000 new customers in the quarter for a
total of nearly 4.9 million.
Penetration at the end of the 1997 quarter was 8.6 percent, up from 6.8
percent at the end of the year-earlier date, and churn decreased in the
quarter to 1.6 percent per month.
In other international wireless operations:
Omnitel Pronto Italia, Bell Atlantic's consortium which provides wireless
service in Italy, continued to be one of the world's fastest growing mobile
operations, adding 341,000 new subscribers in the quarter for a total of 1.25
million. In the second quarter, Omnitel had continuing strong operating
results and, after less than 18 months of service, earned Europe's
prestigious 1997 Teleperformance Gold Award for excellence in customer care.
EuroTel Praha, Bell Atlantic's wireless partnership in the Czech Republic,
added more than 200,000 customers on its GSM (global system for mobile)
network since the digital service was launched on July 7, 1996. The company
has 272,000 digital and analog service customers in total.
"There are five fundamentals for leadership in the wireless industry: a
strong value proposition, direct customer access, superior network quality,
world-class customer service and high-efficiency operations," Babbio said. "We
are successfully applying that formula in all our properties."
Bell Atlantic's combined wireless portfolio added some 325,000 proportionate
subscribers in the second quarter of 1997, bringing its total to 3.5 million,
an increase of 40 percent over the end of the second quarter of 1996.
Significantly, about one third of this growth came from international
operations.
Bell Atlantic Corp. (NYSE: BEL) is at the forefront of the new
communications, entertainment and information industry. In the mid-Atlantic
region, the company's telephone company subsidiaries are the premier
providers 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 substantial 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 at Bell Atlantic's
News Center on the World Wide Web (http://www.ba.com). To receive news
releases by e-mail, visit the News Center and register for personalized
automatic delivery of Bell Atlantic news releases.
BELL ATLANTIC CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Income (unaudited)
(In millions, except per-share amounts)
Three months ended June 30, Six months ended June 30,
1997 1996(a) 1997 1996(a)
Operating Revenues
Transport Services:
Local service $1,256.9 $1,179.4 $2,445.6 $2,319.1
Network access 908.5 867.8 1,825.6 1,745.7
Toll service 328.2 350.1 664.1 719.7
Ancillary Services:
Directory publishing 265.1 252.9 570.6 551.4
Other 186.8 157.4 344.5 295.7
Value-Added Services 427.0 386.4 862.0 758.3
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Total Network Services Revenues 3,372.5 3,194.0 6,712.4 6,389.9
Other Services 68.2 29.6 142.2 53.6
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Total Operating Revenues 3,440.7 3,223.6 6,854.6 6,443.5
Operating Expenses
Employee costs,
including benefits and taxes 963.1 981.8 1,917.6 1,964.2
Depreciation and amortization 685.0 638.8 1,356.4 1,267.7
Other 893.8 850.6 1,785.3 1,659.0
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Total Operating Expenses 2,541.9 2,471.2 5,059.3 4,890.9
Operating Income 898.8 752.4 1,795.3 1,552.6
Income from unconsolidated
businesses 59.3 94.3 106.9 165.9
Other income (expense), net (3.5) (2.1) 20.6 (4.4)
Interest expense 131.4 119.8 268.9 240.6
Income before provision for
income taxes and cumulative
effect of change in
accounting principle 823.2 724.8 1,653.9 1,473.5
Provision for income taxes 324.3 261.1 639.4 545.1
Income before cumulative effect
of change in
accounting principle 498.9 463.7 1,014.5 28.4
Cumulative effect of change in
accounting principle:
Directory publishing,net of tax -- -- -- 142.1
Net Income $498.9 $463.7 $1,014.5 $1,070.5
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BELL ATLANTIC CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Income (unaudited) - continued
(In millions, except per-share amounts)
Three months ended Six months ended
June 30 June 30,
1997 1996(a) 1997 1996(a)
Per Common Share amounts
Income before cumulative effect of
change in accounting principle $1.14 $1.05 $2.31 $2.11
Cumulative effect of change in
accounting principle -- -- -- .32
Net Income $1.14 $1.05 $2.31 $2.43
Cash dividends declared per common share $.74 $.72 $1.48 1.44(b)
Weighted average number of common
and equivalent shares outstanding 439.5 439.6 439.7 439.9
Other Selected Data (unaudited)
Three months ended June 30, Six months ended June 30,
1997 1996 1997 1996
Return on average common equity 26.2% 26.1% 26.6% 26.5%
Total assets $24,978.4 $23,771.6 $24,978.4 $23,771.6
Total employees 66,900 60,800 66,900 60,800
(a) Restated to reflect a change in the method of accounting for directory
publishing revenues and expenses, effective January 1, 1996.
(b) Includes payment of $.005 per common share for redemption of rights
granted under the company's Shareholder Rights Plan.
BELL ATLANTIC CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows (unaudited)
(In millions)
Six months ended June 30,
1997 1996
Cash Flows from Operating Activities
Net income $1,014.5 $1,070.5
Depreciation and amortization 1,356.4 1,267.7
Cumulative effect of change in accounting
principle, net of tax -- (142.1)
Income from unconsolidated businesses (106.9) (165.9)
Dividends received from unconsolidated businesses 65.4 60.9
Other, net (386.7) (206.9)
Net Cash Provided by Operating Activities 1,942.7 1,884.2
Net Cash Used in Investing Activities (1,052.1) (1,115.8)
Net Cash Used in Financing Activities (939.2) (1,061.5)
Decrease in Cash and Cash Equivalents (48.6) (293.1)
Cash and Cash Equivalents, Beginning of Period 152.5 356.8
Cash and Cash Equivalents, End of Period $103.9 $63.7
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BELL ATLANTIC NYNEX MOBILE CELLULAR OPERATIONS PROFORMA (unaudited)
Three months ended June 30,
1997 1996 %
change
Selected Operating Data
Controlled POPs (1) (000) 56,830 55,840 1.8
Owned POPs (2) (000) 54,944 53,788 2.1
Subscribers (000) 4,875 3,822 27.6
Penetration (3) 8.58% 6.84% 25.3
Churn 1.6% 1.7% (0.1)
Revenues per subscriber (4) $54 $60 (10.0)
Acquisition cost per gross add (5) $230 $204 12.7
Cash expense per subscriber $30 $34 (11.8)
Selected Financial Data
(Dollars in millions)
Operating revenues (6) $714.2 $615.6 16.0
Less: Cost of equipment 84.0 66.8 25.7
Net revenues 630.2 548.8 14.8
Operating income 176.0 153.4 14.7
Pre-tax income (7) 167.5 139.7 19.9
Operating cash flow (8) 282.4 236.2 19.6
Operating cash flow margin 45% 43% 4.1
Capital expenditures
excluding acquisitions 260.2 228.0 14.1
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 $57.3 million for the three-month period ended 6/30/97 and
$54.7 million for the three-month period ended 6/30/96.
(5) Acquisition costs include commission expense and net margin on sale
of 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.
