<PAGE>
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 22, 1997
Exact name of registrant
as specified in its charter: BELL ATLANTIC CORPORATION
Commission File Number: 1-8606
State of Incorporation: Delaware
I.R.S. Employer Identification No.: 23-2259884
Address of principal
executive offices: 1095 Avenue of the Americas
New York, New York
Zip Code 10036
Registrant's telephone number,
including area code: (212) 395-2121
Former name or former address,
if changed since last report: Not applicable
<PAGE>
Item 5. Other Events
------------
(a) Attached as exhibits are (i) a press release issued by Bell Atlantic
Corporation on October 22, 1997 announcing third quarter earnings for 1997,
and (ii) the Quarterly Bulletin for the 3rd quarter 1997 issued by Bell
Atlantic Corporation on October 22, 1997.
(b) At a Bell Atlantic Analyst Conference on October 22, 1997, the Company
made the following statements:
(i) The Company is comfortable with current analysts' estimates of
$4.90 to $5.00 per share for 1997, excluding transition and integration
costs and other special items.
(ii) The Company is targeting 1998 earnings growth within the 10%-12%
range, excluding transition and integration costs.
(iii) The Company expects to petition the Federal Communications
Commission (FCC) for permission to enter the in-region long distance
market in New York and one or more other states by early 1998, and it
anticipates entering the long distance market in at least one
jurisdiction during the second half of 1998. The timing of the Company's
long distance entry in its 14 jurisdictions is based on the receipt of
FCC approval. There can be no assurance that any approval will be
forthcoming in time to permit the Company to enter the in-region long
distance market on this schedule.
(iv) The Company has established a long-term revenue growth target for
its Telecom segment, excluding any in-region long distance revenues, of
approximately 2.5% in 1998, and approaching 5% thereafter.
<PAGE>
(c) NYNEX Corporation ("NYNEX"), a wholly owned subsidiary of Bell Atlantic
Corporation ("Bell Atlantic"), has previously disclosed that it expected
the total number of employees who would elect to leave under its current
retirement incentive program (the "Program") through its completion in 1998
to be in the range of 19,000 to 21,000, consisting of approximately 9,000
to 10,000 management and 10,000 to 11,000 associate employees. NYNEX has
also disclosed that it anticipated that the aggregate charges to be
recorded in connection with the Program would be in the range of $2.2
billion ($1.4 billion after-tax).
As of September 30, 1997, 18,516 employees (9,329 management and 9,187
associates) had elected to leave under the Program, and aggregate charges
of approximately $1.9 billion ($1.2 billion after-tax) had been recorded in
connection with the Program. The management portion of the Program was
completed as of March 31, 1997.
Based on the experience of employee take rates under the Program and
management's most recent assessment of work volume and productivity trends,
the Company is currently considering and discussing with its unions
possible changes in the Program for associates. The Company now expects
that, if the Program were fully implemented, the total number of employees
electing to leave under the Program, and the associated aggregate charges,
would be substantially greater than previously estimated.
Management's objective is to distribute the Program take rates in a way
that allows the Company to match retirements with downsizing caused by
productivity improvements. This effort could result in an extension of the
Program.
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
- ----------------------------------------------------------
Information contained above with respect to expected financial results is
forward-looking, based on Management's estimates and assumptions and subject to
risks and uncertainties. For those statements, we claim the protection of the
safe harbor for forwarding-looking statements contained in the Private
Securities Litigation Reform Act of 1995.
The following important factors could affect the future results of the Company
and could cause those results to differ materially from those expressed in the
forward looking statements: (i) materially adverse change in economic conditions
in the markets served by the Company, (ii) the final outcome of FCC rulemakings
with respect to interconnection agreements, access charge reform and universal
service, (iii) future state regulatory actions and economic conditions in the
Company's operating areas, (iv) the extent, timing and success of competition
from others in the local telephone and toll service markets, and (v) the timing
of entry and profitability of the Company in the long distance market.
<PAGE>
Item 7. Financial Statements and Exhibits
---------------------------------
(c) Exhibits.
99.1 Press Release, dated October 22, 1997, issued by Bell Atlantic
Corporation.
99.2 Quarterly Bulletin issued by Bell Atlantic Corporation on October 22,
1997.
<PAGE>
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/ Frederic V. Salerno
------------------------
Frederic V. Salerno
Senior Executive Vice President
and Chief Financial Officer
Date: October 22, 1997
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
99.1 Press Release, dated October 22, 1997, issued by Bell Atlantic
Corporation.
99.2 Quarterly Bulletin issued by Bell Atlantic Corporation on October 22,
1997.
<PAGE>
Exhibit 99.1
NEWS RELEASE [Bell Atlantic Logo]
FOR IMMEDIATE RELEASE Contact:
OCT. 22, 1997 DAVID FRAIL
212-395-0500
[email protected])
BELL ATLANTIC ANNOUNCES SOLID THIRD QUARTER EARNINGS;
ADJUSTED EPS UP 9.6 PERCENT
Company Targets Sustained 10 to 12 Percent EPS Growth Through 2000, Sees Merger
Integration Efforts Yielding Additional Savings;
$1.5 Billion In Charges Taken In Quarter
NEW YORK CITY -- Bell Atlantic Corp. (NYSE: BEL) today announced adjusted
third quarter 1997 earnings per share of $1.25, an increase of 9.6 percent over
adjusted earnings per share of $1.14 in the third quarter of 1996. Adjusted
third quarter net income increased 9.5 percent to $969.4 million.
Through the first nine months of 1997, adjusted earnings per share were
$3.71, an increase of 11.7 percent compared to the first nine months of 1996.
Reported results for the quarter show a net loss of $80.1 million, or $.10
per share, as a result of charges which, after offsetting gains, totaled
approximately $1.0 billion, or $1.35 per share.
Adjusted revenues increased 2.4 percent over the third quarter of 1996 to
$7.5 billion, reflecting the impact of significant rate reductions in the
quarter. Including Bell Atlantic's proportionate share of revenues from
unconsolidated businesses, adjusted revenues rose 5.2 percent. Consolidated
revenues for all periods now include those of Bell Atlantic Mobile, which prior
to the merger was accounted for on an equity basis.
Adjusted expenses rose 1.2 percent over the same period last year.
"Finally we are able to think and act as one company and focus entirely on
delivering the merger's benefits to customers, shareowners and employees," said
Bell Atlantic Chairman and CEO Raymond W. Smith.
--more--
<PAGE>
Bell Atlantic News Release, page 2
"Both of our key business segments completed the quarter in line with our
expectations. We maintained our record of solid earnings growth, and remain
confident in our ability to meet our targets for double-digit earnings growth
both this year and in 1998.
"At the same time, we are moving to seize the region-wide growth
opportunities created by our merger," Smith said.
SYNERGIES
"Our new scale and scope as a major player in the world's premier
communications marketplace gives us tremendous leverage," said Bell Atlantic
Vice Chairman, President and COO Ivan Seidenberg, "and in the short time since
the merger closed we've come to believe we can go beyond the cost and capital
savings we originally identified.
"Before the merger, we targeted $600 million in annual cost savings and
$300 million a year in capital savings by consolidating and integrating networks
and operating systems, eliminating approximately 3,100 management positions,
centralizing procurement, reducing the need for contract services, consolidating
real estate, combining information systems and eliminating duplicative
operations. But now we are going to target an additional $500 million in annual
cost savings by the year 2000.
"We also can add $400 million a year in revenues from our current product
portfolio by using our best marketing and advertising practices -- for example,
as we bring penetration levels for vertical services up across our footprint up
to industry-leading levels.
"And of course we will address new markets -- long distance, data, and
video -- which hold more than double the revenues of our current markets,"
Seidenberg said. "We're committed to building the platforms and marketing
capabilities to address these new opportunities and achieve vertical growth --
--------
increasing our revenues per household and business account -- which is
inherently more profitable than horizontal growth."
- more -
<PAGE>
Bell Atlantic News Release, page 3
Smith said, "We structured our merger to create shareowner value from the
start, and it is one of the few large mergers to deliver on that promise from
day one. With our commitments to reduce costs and drive growth, I'm confident
we can achieve our 10 to 12 percent earnings growth target.
"We've done this once already -- at Bell Atlantic Mobile. Since we
combined cellular properties in 1995, BAM has posted record growth and
profitability in an increasingly competitive marketplace. Now we intend to
repeat that success across the entire corporation."
CHARGES
Bell Atlantic announced charges in the quarter totaling $1.5 billion before
taxes, and said it expected to take between $400 million and $500 million in
additional merger-related charges over the three years following the merger's
close. These current and projected merger-related charges are consistent with
previously disclosed estimates.
Of the $1.5 billion, $443 million were merger-related, consisting of direct
merger-related costs, accruals for employee severance, and transition and
integration costs.
Additional charges totaling approximately $1.1 billion before taxes were
recorded for items identified in the process of consolidating operations and
combining organizations and for other special items arising in the quarter.
Major items included write-downs of fixed assets and excess real estate
capacity, write-downs of video investments and operations, and reserves for
specific contingencies.
Other items arising in the quarter resulted in a net after-tax charge of $4
million. Charges for an enhanced pension offer, the company's equity share of
charges related to the formation of Cable & Wireless Communications, and other
tax issues were partially offset by a gain on the sale of the company's interest
in SkyNetwork Television Limited of New Zealand and a tax benefit in New Jersey.
The total after-tax effect of all charges on earnings was $1.0 billion, or
$1.35 per share.
DOMESTIC TELECOMMUNICATIONS HIGHLIGHTS
In the third quarter, adjusted revenues from Bell Atlantic's Telecom and
Network groups grew 1.2 percent compared to the third quarter of 1996.
Continued healthy growth in volumes
- more -
<PAGE>
Bell Atlantic News Release, page 4
was offset by approximately $200 million in state and Federal price reductions,
which depressed revenues by approximately three percent. A change in the timing
of the publication of the Queens, N.Y. directory impacted reported revenue
growth by 0.7 percent. Excluding these effects, domestic telecommunications
revenue growth would have been 4.9 percent.
. Access lines in service at the end of the quarter totaled approximately
39.4 million, up 3.7 percent over the last 12 months. The increase
includes 11.1 percent year-over-year growth in Centrex business lines.
. Access minutes of use grew 7.4 percent compared with the third quarter of
1996.
. Bell Atlantic had more than 408,000 ISDN (Integrated Services Digital
Network) lines in service at the end of the quarter, 37.5 percent above the
total a year earlier.
In the residential market:
. The number of secondary residential lines in service rose more than 16
percent over the third quarter of last year as more households added
computers, fax machines and extra phones.
. Third quarter revenues from Home Voice Mail and central-office-based
services such as Caller ID, Return Call and Call Waiting were up 16.5
percent compared with the same period in 1996. Caller ID revenues grew
nearly 34 percent as subscribers across the region reached 4.8 million,
for a penetration rate of 19 percent. Revenues from Return Call rose 24.6
percent from third-quarter 1996 levels.
In business markets:
. Revenues from high-speed Fast Packet services nearly doubled over third-
quarter 1996 levels.
. Bell Atlantic Network Integration (BANI) is now growing revenues at an
annual rate of 25 percent, and is on track to reach the $250 million mark
by the end of the year.
Network operating expenses for the third quarter totaled $5.1 billion, less
than one percent higher than in the 1996 period, and included expenses for
compliance with the Telecommunications Act `checklist,' which totaled more than
$86 million in the quarter; and systems upgrades, along with additional
employees, to handle greater volumes with higher service quality.
- more -
<PAGE>
Bell Atlantic News Release, page 5
GLOBAL WIRELESS HIGHLIGHTS
Bell Atlantic Global Wireless, which covers 173 million proportionate
worldwide POPs (people in markets served), continued to grow rapidly in the face
of increasing competition while maintaining market-leading low cost structures.
In the first nine months of 1997, more than a million proportionate
subscribers have been added to the Global Wireless portfolio. The portfolio now
has more than 5.8 million proportionate customers. Third quarter net customer
additions totaled 363,000.
International ventures contributed 146,000 third quarter additions,
approximately 40 percent of the total. Joint ventures such as Omnitel and Grupo
Iusacell accelerated their growth rates, and added more than double the number
of new customers compared to the third quarter of 1996. Proportionate
international subscribers totaled 643,000 at the end of the quarter.
For Bell Atlantic Mobile:
. Operating income increased 37.9 percent over the third quarter of last
year, producing record operating cash flow margin of nearly 47 percent.
. The number of BAM subscribers rose to 5.1 million, with 189,000 net
additions in the quarter for an annual growth rate of 25 percent.
. Despite increasing competitive pressure in its markets, BAM cash expense
per subscriber declined 19 percent over the same period last year, from $31
to $25 per customer, and total cash expenses increased by only 1 percent.
. Penetration at BAM was 8.9 percent, up from 7.2 percent a year ago, and
churn decreased again, to 1.66 percent.
. More than 70 percent of BAM POPs are now covered with CDMA digital
service.
In International operations:
. Proportionate international operating revenues increased 79.4 percent
over third quarter 1996 levels, with operating cash flow increasing more
than 600 percent. Proportionate operating income more than doubled.
. Omnitel Pronto Italia, Bell Atlantic's consortium operating Italy's
second wireless license, exceeded the record growth rates of the past 10
months, adding more than 475,000 net new customers -- an annualized growth
rate of more than 150 percent.
- more -
<PAGE>
Bell Atlantic News Release, page 6
. Grupo Iusacell continued the turnaround begun when Bell Atlantic assumed
management control nine months ago. Mexico's only full-service wireless
carrier now projects full-year subscriber growth at 50 percent.
. EuroTel, Bell Atlantic's partnership serving the Czech and Slovak
republics, ended the quarter with nearly 400,000 customers.
. STET Hellas added subscribers at an annual rate of nearly 80 percent,
ending the quarter with nearly 350,000.
* * *
The new Bell Atlantic -- formed through the merger of Bell Atlantic and
NYNEX -- is at the forefront of the new communications, information and
entertainment industry. With 40 million telephone access lines and 5.8 million
wireless customers worldwide, Bell Atlantic companies are premier providers of
advanced wireline voice and data services, market leaders in wireless services
and the world's largest publishers of directory information. Bell Atlantic
companies are also among the world's largest investors in high-growth global
communications markets, with operations and investments in 21 countries.
Additional information about Bell Atlantic is available through the Internet's
World Wide Web at www.bellatlantic.com.
NOTE: This press release contains statements about expected future events
and financial results that are forward-looking and subject to risks and
uncertainties. For those statements, we claim the protection of the safe harbor
for forward-looking statements contained in the Private Securities Litigation
Reform Act of 1995. Discussion of factors that may affect future results is
contained in our recent filings with the Securities and Exchange Commission.
###
- more -
<PAGE>
Bell Atlantic News Release, page 7
BELL ATLANTIC CORPORATION AND SUBSIDIARIES
------------------------------------------
Condensed Consolidated Statements of Income (unaudited)
- -------------------------------------------------------
(In millions, except per-share amounts)
<TABLE>
<CAPTION>
Three months ended September 30, Nine months ended September 30,
1997 1996 1997 1996
-----------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATING REVENUES
Local services $3,321.5 $3,151.4 $ 9,773.8 $ 9,331.8
Network access services 1,666.2 1,822.5 5,377.8 5,347.6
Long distance services 546.7 614.2 1,678.1 1,872.0
Ancillary services 465.8 444.9 1,362.7 1,268.4
Directory and information services 496.1 519.4 1,649.4 1,631.0
Wireless services 842.0 709.7 2,439.7 1,988.2
Other services 35.6 114.5 216.7 311.0
----------------------------------------------------------------
Total Operating Revenues 7,373.9 7,376.6 22,498.2 21,750.0
OPERATING EXPENSES
Employee costs 2,337.8 2,181.6 6,956.9 6,592.3
Depreciation and amortization 1,724.0 1,331.5 4,459.1 4,027.8
Taxes other than income 475.2 390.6 1,252.4 1,132.3
Other operating expenses 2,415.9 1,805.7 6,102.4 5,385.0
----------------------------------------------------------------
Total Operating Expenses 6,952.9 5,709.4 18,770.8 17,137.4
OPERATING INCOME 421.0 1,667.2 3,727.4 4,612.6
Income (loss) from unconsolidated businesses (121.5) 14.9 (236.9) 51.9
Other income (expense), net (13.0) (35.0) (19.5) (65.4)
Interest expense 298.1 266.4 918.7 813.0
Income (loss) before provision for income taxes
and cumulative effect of change in
accounting principle (11.6) 1,380.7 2,552.3 3,786.1
Provision for income taxes 68.5 508.9 1,037.4 1,394.5
Income (loss) before cumulative effect of change
in accounting principle (80.1) 871.8 1,514.9 2,391.6
Cumulative effect of change in accounting
principle:
Directory publishing, net of tax -- -- -- 273.1
NET INCOME (LOSS) $ (80.1) $ 871.8 $ 1,514.9 $ 2,664.7
</TABLE>
- more -
<PAGE>
Bell Atlantic News Release, page 8
BELL ATLANTIC CORPORATION AND SUBSIDIARIES
------------------------------------------
Condensed Consolidated Statements of Income (unaudited) - continued
- -------------------------------------------------------------------
(In millions, except per-share amounts)
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
1997 1996 1997 1996
------------------------------------------------
<S> <C> <C> <C> <C>
Per Common Share amounts
Income (loss) before cumulative effect of
change in accounting principle $(0.10) $ 1.13 $ 1.95 $ 3.10
Cumulative effect of change in
accounting principle -- -- -- .35
Net Income (loss) $(0.10) $ 1.13 $ 1.95 $ 3.45
Cash dividends declared per common share $ .77 $ .72 $ 2.25 $ 2.16(a)
Weighted average number of common
shares outstanding 776.4 774.9 775.8 772.8
</TABLE>
Other Selected Data (unaudited)
- -------------------------------
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
1997 1996 1997 1996
-----------------------------------------------------
<S> <C> <C> <C> <C>
Return on average common equity (2.4)% 27.7% 15.0% 28.8%
Total assets $52,890.9 $51,236.8 $52,890.9 $51,236.8
Total employees 141,801 135,480 141,801 135,480
</TABLE>
(a) Includes payment of $.005 per common share for redemption of rights granted
under the company's Shareholder Rights Plan.
- more -
<PAGE>
Bell Atlantic News Release, page 9
BELL ATLANTIC CORPORATION AND SUBSIDIARIES
------------------------------------------
Condensed Consolidated Statements Of Cash Flows (unaudited)
- -----------------------------------------------------------
(In millions)
<TABLE>
<CAPTION>
Nine months ended September 30,
1997 1996
--------------------------
<S> <C> <C>
Cash Flows from Operating Activities
Net income $ 1,514.9 $ 2,664.7
Depreciation and amortization 4,459.1 4,027.8
Cumulative effect of change in accounting
principle, net of tax -- (273.1)
Loss from unconsolidated businesses 281.7 22.5
Dividends received from unconsolidated businesses 101.1 95.4
Other, net (356.3) (437.6)
Net Cash Provided by Operating Activities 6,000.5 6,099.7
Net Cash Used in Investing Activities (4,693.8) (4,452.4)
Net Cash Used in Financing Activities (1,240.3) (1,897.8)
Increase (Decrease) in Cash and Cash Equivalents 66.4 (250.5)
Cash and Cash Equivalents, Beginning of Period 249.4 462.9
Cash and Cash Equivalents, End of Period $ 315.8 $ 212.4
</TABLE>
- more -
<PAGE>
Bell Atlantic News Release, page 10
BELL ATLANTIC GLOBAL WIRELESS PROPORTIONATE DATA
------------------------------------------------
(UNAUDITED)
------------
<TABLE>
<CAPTION>
Three Months ended September 30, 1997
1997 1996 % change
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Combined Global Wireless:
- -------------------------
Subscribers (000) 5,829 4,287 36.0
Subscribers net adds in period (000) 363 294 23.5
POPs (000) 172,817 168,889 2.3
Bell Atlantic Mobile:
- ---------------------
Selected Financial Results
- --------------------------
(Dollars in Millions)
Operating revenues (1) $ 732.3 $ 631.9 15.9
Less: equipment revenues 33.1 33.8 (2.1)
............................................
Service revenues 699.2 598.1 16.9
............................................
Operating income 216.3 156.9 37.9
Operating cash flow (2) $ 327.2 $ 231.5 41.3
Operating cash flow margin (3) 47% 39%
Capital expenditures, excluding acquisitions $ 163.9 $ 263.1 (37.7)
Selected Operating Data
- -----------------------
Subscribers (000) 5,064 4,054 24.9
Penetration (4) 8.9% 7.2% 23.6
Subscribers net adds in period (000) 189 232 (18.5)
Controlled POPs (000) (5) 56,830 56,502 0.6
Owned POPs (000) (6) 54,944 54,562 0.7
Churn rate 1.7% 1.8%
Total revenue per subscriber (7) $ 54 $ 58 (6.9)
Service revenue per subscriber $ 47 $ 51 (7.8)
Cash expense per subscriber $ 25 $ 31 (19.4)
Acquisition cost per subscriber (8) $ 226 $ 235 (3.8)
PrimeCo Personal Communications:
- --------------------------------
Subscribers (000) 122
Subscriber net adds in period (000) 28
POPs (000) 28,487 28,487 0.0
International Wireless Operations: (9)
- ----------------------------------
Subscribers (000) 643 233 176.0
Subscriber net adds in period (000) 146 62 135.5
POPs (000) 87,500 83,900 4.3
(Dollars in Millions)
Operating revenues $ 125.2 $ 69.8 79.4
Operating income (loss) $ 12.7 $ (11.0)
Operating cash flow $ 42.5 $ 5.9 620.3
</TABLE>
- more -
<PAGE>
Bell Atlantic News Release, page 11
Footnotes:
(1) Operating revenues include service revenues, outcollect roaming, and
equipment revenues.
(2) Operating cash flow equals operating income plus depreciation and
amortization.
(3) Operating cash flow margin is calculated by dividing operating cash flow by
service revenues.
(4) Penetration is calculated by dividing subscribers by controlled POPs.
(5) Controlled POPs represent the total number of POPs for markets in which BAM
has operating control.
(6) Owned POPs represent BAM percentage ownership in all licensed markets.
(7) Revenue per subscriber is calculated using service revenues, incollect
roaming, outcollect roaming and equipment revenue. Incollect roaming
revenues were $71.0 million for the three-month period ended 9/30/97 and
$58.3 million for the three-month period ended 9/30/96.
(8) Acquisition costs include commission expense and loss on handsets.
(9) Represents Bell Atlantic's proportionate share of International Wireless
investments including consolidated, equity method, and cost basis
investments.
- more -
<PAGE>
Exhibit 99.2
[LOGO OF BELL ATLANTIC APPEARS HERE]
---------
Quarterly
=============
bulletin 3
3rd Quarter 1997
October 1997
- --------------------------------------------------------------------------------
<PAGE>
BELL ATLANTIC CORPORATION 2
- ---------------------------------
CONSOLIDATED STATEMENTS OF INCOME
- ---------------------------------
<TABLE>
<CAPTION>
(Dollars in Millions, Except Per Share Amounts)
------------ ------------
3 Mos. Ended 3 Mos. Ended 9 Mos. Ended 9 Mos. Ended
Unaudited 9/30/97 9/30/96 % Change 9/30/97 9/30/96 % Change
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Operating Revenues
Local services $ 3,321.5 $ 3,151.4 5.4 $ 9,773.8 $ 9,331.8 4.7
Network access services 1,666.2 1,822.5 (8.6) 5,377.8 5,347.6 0.6
Long distance services 546.7 614.2 (11.0) 1,678.1 1,872.0 (10.4)
Ancillary services 465.8 444.9 4.7 1,362.7 1,268.4 7.4
Directory and information services 496.1 519.4 (4.5) 1,649.4 1,631.0 1.1
Wireless services 842.0 709.7 18.6 2,439.7 1,988.2 22.7
Other services 35.6 114.5 (68.9) 216.7 311.0 (30.3)
-----------------------------------------------------------------------------------
Total Operating Revenues 7,373.9 7,376.6 - 22,498.2 21,750.0 3.4
-----------------------------------------------------------------------------------
Operating Expenses
Employee costs 2,337.8 2,181.6 7.2 6,956.9 6,592.3 5.5
Depreciation and amortization 1,724.0 1,331.5 29.5 4,459.1 4,027.8 10.7
Taxes other than income 475.2 390.6 21.7 1,252.4 1,132.3 10.6
Other operating expenses 2,415.9 1,805.7 33.8 6,102.4 5,385.0 13.3
-----------------------------------------------------------------------------------
Total Operating Expenses 6,952.9 5,709.4 21.8 18,770.8 17,137.4 9.5
-----------------------------------------------------------------------------------
Operating Income 421.0 1,667.2 (74.7) 3,727.4 4,612.6 (19.2)
Income (loss) from unconsolidated businesses (121.5) 14.9 - (236.9) 51.9 -
Other income and expense, net (13.0) (35.0) 62.9 (19.5) (65.4) 70.2
Interest expense 298.1 266.4 11.9 918.7 813.0 13.0
Provision for income taxes 68.5 508.9 (86.5) 1,037.4 1,394.5 (25.6)
-----------------------------------------------------------------------------------
Income from Continuing Operations (80.1) 871.8 - 1,514.9 2,391.6 (36.7)
Cumulative effect of change in
accounting principle
Directory publishing, net of tax 273.1
-----------------------------------------------------------------------------------
Net Income (Loss) $ (80.1) $ 871.8 - $ 1,514.9 $ 2,664.7 (43.1)
===================================================================================
Earnings (Loss) per Share $ (.10) $ 1.13 $ 1.95 $ 3.45
===================================================================================
Weighted average number of common shares
outstanding (in millions) 776.4 774.9 775.8 772.8
-----------------------------------------------------------------------------------
</TABLE>
<PAGE>
BELL ATLANTIC CORPORATION 3
- ------------------------
EARNINGS RECONCILIATIONS
- ------------------------
<TABLE>
<CAPTION>
(Dollars in Millions, Except Per Share Amounts)
-------------------------------
3 Mos. Ended 9/30/97 3 Mos. Ended 9/30/96
Unaudited Net Income EPS Net Income EPS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Reported Earnings (Loss) $ (80.1) $ (.10) $ 871.8 $ 1.13
Adjustments:
Merger-related costs
Direct costs 182.0 .23
Employee severance costs 139.5 .18
Transition costs 13.0 .02
Special charges
Fixed assets and real estate 221.0 .29
Video-related 158.7 .21
Regulatory, legal and other 219.5 .28
Miscellaneous items 111.4 .14
Other one-time items
Special pension enhancement 12.2 .01 13.9 .01
CWC restructuring 59.3 .08
Disposition (gains) and losses (31.5) (.04)
Tax related issues (35.6) (.05)
-----------------------------------------------------------------
Adjusted Earnings $ 969.4 $ 1.25 $ 885.7 $ 1.14
=================================================================
Adjusted Growth 9.5% 9.6%
<CAPTION>
(Dollars in Millions, Except Per Share Amounts)
------------------------------
9 Mos. Ended 9/30/97 9 Mos. Ended 9/30/96
Unaudited Net Income EPS Net Income EPS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Reported Earnings $ 1,514.9 $ 1.95 $ 2,664.7 $ 3.45
Adjustments:
Merger-related costs
Direct costs 182.0 .23
Employee severance costs 139.5 .18
Transition costs 13.0 .02
Special charges
Fixed assets and real estate 221.0 .29
Video-related 196.3 .25
Regulatory, legal and other 219.5 .28 108.3 .14
Miscellaneous items 111.4 .14
Other one-time items
Special pension enhancement 286.1 .37 110.5 .14
CWC restructuring 59.3 .08
Disposition (gains) and losses (31.5) (.04) (45.7) (.06)
Tax related issues (35.6) (.04)
Change in accounting principle (273.1) (.35)
-----------------------------------------------------------------
Adjusted Earnings $ 2,875.9 $ 3.71 $ 2,564.7 $ 3.32
=================================================================
Adjusted Growth 12.1% 11.7%
</TABLE>
<PAGE>
BELL ATLANTIC CORPORATION 4
- ------------------------------------------
CONSOLIDATED ADJUSTED STATEMENTS OF INCOME
- ------------------------------------------
<TABLE>
<CAPTION>
3 Mos. Ended 9/30/97 3 Mos. Ended 9/30/96
Unaudited Reported Adjustments Adjusted Reported Adjustments Adjusted % Change
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Operating Revenues
Local services $ 3,321.5 $ 3,321.5 $ 3,151.4 $ 3,151.4 5.4
Network access services 1,666.2 136.1 (1) 1,802.3 1,822.5 1,822.5 (1.1)
Long distance services 546.7 546.7 614.2 614.2 (11.0)
Ancillary services 465.8 1.7 (8) 467.5 444.9 444.9 5.1
Directory and information services 496.1 496.1 519.4 519.4 (4.5)
Wireless services 842.0 19.8 (2) 861.8 709.7 (18.4)(2) 691.3 24.7
Other services 35.6 5.1 (1) 40.7 114.5 114.5 (64.5)
--------------------------------------------------------------------------------------------
Total Operating Revenues 7,373.9 162.7 7,536.6 7,376.6 (18.4) 7,358.2 2.4
--------------------------------------------------------------------------------------------
Operating Expenses
Employee costs 2,337.8 (296.0)(3) 2,041.8 2,181.6 (21.9)(10) 2,159.7 (5.5)
Depreciation and amortization 1,724.0 (301.7)(4) 1,422.3 1,331.5 1,331.5 6.8
Taxes other than income 475.2 (79.7)(5) 395.5 390.6 390.6 1.3
Other operating expenses 2,415.9 (537.8)(6) 1,878.1 1,805.7 (18.4)(2) 1,787.3 5.1
--------------------------------------------------------------------------------------------
Total Operating Expenses 6,952.9 (1,215.2) 5,737.7 5,709.4 (40.3) 5,669.1 1.2
--------------------------------------------------------------------------------------------
Operating Income 421.0 1,377.9 1,798.9 1,667.2 21.9 1,689.1 6.5
Income (loss) from unconsolidated
businesses (121.5) 149.7 (7) 28.2 14.9 14.9 89.3
Other income and expense, net (13.0) (1.2)(8) (14.2) (35.0) (35.0) 59.4
Interest expense 298.1 298.1 266.4 266.4 11.9
Provision for income taxes 68.5 476.9 (9) 545.4 508.9 8.0 (11) 516.9 5.5
--------------------------------------------------------------------------------------------
Net Income (Loss) (80.1) 1,049.5 969.4 871.8 13.9 885.7 9.5
============================================================================================
Earnings (Loss) per Share $ (.10) 1.35 1.25 $ 1.13 .01 $ 1.14 9.6
============================================================================================
Weighted average number of common
shares outstanding (in millions) 776.4 776.4 774.9 774.9
</TABLE>
Footnotes:
(1) Adjustment related to regulatory contingencies
(2) Adjustment related to an accounting reclass for BAM promotions
(3) Adjustment for merger-related costs, ($277.1) and special pension
enhancement ($18.9)
(4) Adjustment related to fixed asset write-downs ($297.2) and miscellaneous
items ($4.5)
(5) Adjustment for merger-related costs ($25.0) and other contingencies ($54.7)
(6) Adjustment for merger-related costs ($141.3), special charges for, real
estate consolidations ($54.9), video-related ($69.3), regulatory, legal and
other ($126.2), miscellaneous items ($165.9) and an increase for an
accounting reclass for BAM promotions ($19.8)
(7) Adjustment for CWC restructuring ($59.3), video-related charges ($131.8)
and adjustment for pre-tax gain on Sky TV sale ($41.4)
(8) Adjustment for miscellaneous items
(9) Tax effects of items (1)-(8) above ($469.4), miscellaneous items ($28.1),
and a net benefit for tax related issues ($35.6)
(10) Adjustment for special pension enhancement
(11) Tax effect of item (10) above
<PAGE>
BELL ATLANTIC CORPORATION 5
- ------------------------------------------
CONSOLIDATED ADJUSTED STATEMENTS OF INCOME
- ------------------------------------------
<TABLE>
<CAPTION>
(Dollars in Millions, Except Per Share Amounts)
9 Mos. Ended 9/30/97 9 Mos. Ended 9/30/96
Unaudited Reported Adjustments Adjusted Reported Adjustments Adjusted % Change
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Operating Revenues
Local services $ 9,773.8 83.0 (1) 9,856.8 $ 9,331.8 $ 9,331.8 5.6
Network access services 5,377.8 136.1 (2) 5,513.9 5,347.6 55.0 (10) 5,402.6 2.1
Long distance services 1,678.1 1,678.1 1,872.0 1,872.0 (10.4)
Ancillary services 1,362.7 1.7 (8) 1,364.4 1,268.4 1,268.4 7.6
Directory and information services 1,649.4 1,649.4 1,631.0 1,631.0 1.1
Wireless services 2,439.7 2,439.7 1,988.2 (45.3)(11) 1,942.9 25.6
Other services 216.7 5.1 (2) 221.8 311.0 311.0 (28.7)
----------------------------------------------------------------------------------------
Total Operating Revenues 22,498.2 225.9 22,724.1 21,750.0 9.7 21,759.7 4.4
----------------------------------------------------------------------------------------
Operating Expenses
Employee costs 6,956.9 (741.9)(3) 6,215.0 6,592.3 (176.9)(12) 6,415.4 (3.1)
Depreciation and amortization 4,459.1 (301.7)(4) 4,157.4 4,027.8 4,027.8 3.2
Taxes other than income 1,252.4 (79.7)(5) 1,172.7 1,132.3 1,132.3 3.6
Other operating expenses 6,102.4 (461.6)(6) 5,640.8 5,385.0 (155.3)(13) 5,229.7 7.9
----------------------------------------------------------------------------------------
Total Operating Expenses 18,770.8 (1,584.9) 17,185.9 17,137.4 (332.2) 16,805.2 2.3
----------------------------------------------------------------------------------------
Operating Income 3,727.4 1,810.8 5,538.2 4,612.6 341.9 4,954.5 11.8
Income (loss) from unconsolidated businesses (236.9) 179.7 (7) (57.2) 51.9 (66.3)(14) (14.4) --
Other income and expense, net (19.5) (1.2)(8) (20.7) (65.4) 1.9 (10) (63.5) 67.4
Interest expense 918.7 (13.0)(1) 905.7 813.0 813.0 11.4
Provision for income taxes 1,037.4 641.3 (9) 1,678.7 1,394.5 104.4 (15) 1,498.9 12.0
----------------------------------------------------------------------------------------
Income from Continuing Operations 1,514.9 1,361.0 2,875.9 2,391.6 173.1 2,564.7 12.1
Cumulative effect of change in
accounting principle
Directory publishing, net of tax 273.1 (273.1)(16)
----------------------------------------------------------------------------------------
Net Income 1,514.9 1,361.0 2,875.9 2,664.7 (100.0) 2,564.7 12.1
========================================================================================
Adjusted Earnings per Share $ 1.95 1.76 3.71 $ 3.45 (0.13) $ 3.32 11.7
========================================================================================
Weighted average number of common
shares outstanding (in millions) 775.8 775.8 772.8 772.8
</TABLE>
Footnotes:
(1) Restated for reclass adjustment
(2) Adjustment related to regulatory contingencies
(3) Adjustment for merger-related costs ($277.1), special pension enhancement
($453.1) and video-related charge ($11.7)
(4) Adjustment related to fixed asset write-downs ($297.2) and miscellaneous
items ($4.5)
(5) Adjustment for merger-related costs ($25.0) and other contingencies ($54.7)
(6) Adjustment for merger-related costs ($141.3), special charges for; real
estate consolidations ($54.9), video-related ($69.3), regulatory, legal and
other ($126.2), miscellaneous items ($165.9) and an increase for a reclass
adjustment ($96.0)
(7) Adjustment for CWC restructuring ($59.3), video-related charges ($161.8)
and pre-tax gain on Sky TV sale ($41.4)
(8) Adjustment for miscellaneous item
(9) Tax effects on items (1)-(8) above ($633.8), miscellaneous items ($28.1),
and a net benefit for tax related issues ($35.6)
(10) Adjustment related to regulatory issues
(11) Adjustment related to an accounting reclass for BAM promotions
(12) Adjustment for special pension enhancement
(13) Adjustment for regulatory and other issues ($110.0) and accounting reclass
for BAM promotions ($45.3)
(14) Adjustment related to pre-tax gain on dispositions (Vanstar sale)
(15) Tax effects of items (10)-(13) above
(16) Adjustment for change in accounting principle
<PAGE>
BELL ATLANTIC CORPORATION 6
- -------------------------------------------------------------
CONSOLIDATED ADJUSTED STATEMENTS OF INCOME 1994, 1995 & 1996
- -------------------------------------------------------------
Revisions to amounts previously disclosed are footnoted below. These revisions
are reclassifications between income statement line items and do not affect
adjusted net income.
<TABLE>
<CAPTION>
(Dollars in Millions, Except Per Share Amounts)
For the years ended December 31,
---------------------------------------------------------
Unaudited 1994 1995 1996
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Revenues
Local services $ 11,844.9 $ 12,115.3 $ 12,559.1
Network access services 6,684.6 6,952.2 7,245.0
Long distance services 2,636.7 2,474.3 2,373.6
Ancillary services 1,227.6 1,450.8 1,738.0
Directory and information services 1,978.6 2,050.8 2,224.3
Wireless services 1,771.9 (1) 2,113.1 (2) 2,651.0 (3)
Other services 945.8 735.6 434.0
---------------------------------------------------------
Total Operating Revenues 27,090.1 27,892.1 29,225.0
---------------------------------------------------------
Operating Expenses
Employee costs 8,568.6 8,297.2 8,426.8
Depreciation and amortization 5,291.2 5,326.1 5,360.5
Taxes other than income 1,534.0 1,589.3 1,499.9
Other operating expenses 6,318.5 (1) 6,474.0 (2) 7,260.8 (3)(4)
---------------------------------------------------------
Total Operating Expenses 21,712.3 21,686.6 22,548.0
---------------------------------------------------------
Operating Income 5,377.8 6,205.5 6,677.0
Income (loss) from unconsolidated businesses 65.9 (22.1) (45.4)
Other income and expense, net 112.2 20.0 (87.8)(4)
Interest expense 1,230.8 1,262.8 1,081.7
Provision for income taxes 1,522.1 1,819.9 1,987.9
---------------------------------------------------------
Adjusted Net Income $ 2,803.0 $ 3,120.7 $ 3,474.2
=========================================================
Adjusted Earnings per Share $ 3.70 $ 4.08 $ 4.49
=========================================================
Weighted average number of common shares outstanding (in millions) 757.9 764.3 773.3
</TABLE>
Footnotes:
(1) Adjustment of $7.9 related to an accounting reclass for BAM promotions
(2) Adjustment of $34.7 related to an accounting reclass for BAM promotions
(3) Adjustment of $62.6 related to an accounting reclass for BAM promotions
(4) Restated for $13.0 reclass between other income and expense, net and other
operating expense
<PAGE>
BELL ATLANTIC CORPORATION 7
- ----------------------------------------------------
CONSOLIDATED ADJUSTED QUARTERLY STATEMENTS OF INCOME
- ----------------------------------------------------
Revisions to amounts previously disclosed are footnoted below. These revisions
are reclassifications between income statement line items and do not affect
adjusted net income.
<TABLE>
<CAPTION>
(Dollars in Millions, Except Per Share Amounts)
For the three month periods ended
---------------------------------------------------------------------------------------------
Unaudited 3/31/96 6/30/96 9/30/96 12/31/96 3/31/97 6/30/97
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Operating Revenues
Local services $3,068.1 $3,112.3 3,151.4 $3,227.3 $3,193.3 (3) $3,342.0
Network access services 1,796.6 1,783.5 1,822.5 1,842.4 1,858.8 1,852.8
Long distance services 644.1 613.7 614.2 501.6 570.0 561.4
Ancillary services 376.0 447.5 444.9 469.6 455.7 441.2
Directory and information services 525.7 585.9 519.4 593.3 530.9 622.4
Wireless services 581.1 (1) 670.5 (1) 691.3 (1) 708.1 (1) 755.4 (1) 822.5 (1)
Other services 96.1 100.4 114.5 123.0 116.7 64.4
---------------------------------------------------------------------------------------------
Total Operating Revenues 7,087.7 7,313.8 7,358.2 7,465.3 7,480.8 7,706.7
---------------------------------------------------------------------------------------------
Operating Expenses
Employee costs 2,136.0 2,119.7 2,159.7 2,011.4 2,083.3 2,089.9
Depreciation and amortization 1,340.3 1,356.0 1,331.5 1,332.7 1,371.3 1,363.8
Taxes other than income 363.2 378.5 390.6 367.6 395.0 382.2
Other operating expenses 1,629.2 (1) 1,813.2 (1) 1,787.3 (1) 2,031.1 (1),(2) 1,798.9 (1),(3) 1,963.8 (1)
---------------------------------------------------------------------------------------------
Total Operating Expenses 5,468.7 5,667.4 5,669.1 5,742.8 5,648.5 5,799.7
---------------------------------------------------------------------------------------------
Operating Income 1,619.0 1,646.4 1,689.1 1,722.5 1,832.3 1,907.0
Income (loss) from
unconsolidated businesses (35.4) 6.1 14.9 (31.0) (34.7) (50.7)
Other income and expense, net .2 (28.7) (35.0) (24.3)(2) 9.6 (16.1)
Interest expense 277.8 268.8 266.4 268.7 316.5 (3) 291.1
Provision for income taxes 486.9 495.1 516.9 489.0 548.9 584.4
---------------------------------------------------------------------------------------------
Adjusted Net Income $819.1 $859.9 $885.7 $909.5 $941.8 $964.7
=============================================================================================
Adjusted Earnings per Share $ 1.07 $ 1.11 $ 1.14 $ 1.17 $ 1.21 $ 1.25
=============================================================================================
Weighted average number of common
shares outstanding (in millions) 771.4 773.7 774.9 775.6 775.8 775.8
</TABLE>
Footnotes:
(1) Adjustment related to accounting reclass for BAM promotions
(2) Restated for $13.0 reclass between other income and expense, net and other
operating expense
(3) Restated for reclass adjustment between revenues ($83.0), expense ($96.0)
and interest ($130)
<PAGE>
BELL ATLANTIC CORPORATION 8
- -------------------------------------------
SELECTED FINANCIAL AND OPERATING STATISTICS
- -------------------------------------------
<TABLE>
<CAPTION>
(Dollars in Millions, Except Per Share Amounts)
------------ ------------
3 Mos. Ended 3 Mos. Ended 9 Mos. Ended 9 Mos. Ended
Unaudited 9/30/97 9/30/96 9/30/97 9/30/96
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Debt ratio 60.5% 58.0%
Return on average common equity-adjusted basis 28.0% 28.3% 29.8% 28.8%
Book value per common share $ 16.16 $ 16.29
Cash dividends declared per common share $ 0.77 $ 0.72 $ 2.25 $ 2.16 (1)
Common shares outstanding
Weighted average 776.4 774.9 775.8 772.8
End of period 776.6 775.5
Capital expenditures
Telecom $ 1,604 $ 1,299 $ 4,034 $ 3,193
Domestic cellular 164 263 664 605
Other 40 104 185 351
-------------------------------------------------------------------
Total $ 1,808 $ 1,666 $ 4,883 $ 4,149
Employees
Telecom 132,117 125,692
Other 9.684 9,788
---------------------------------
Total 141,801 135,480
</TABLE>
Footnotes:
(1) Cash dividends declared in 1996 include a payment of $.005 per common share
for redemption of all rights granted under our Shareholder Rights Plan
<PAGE>
BELL ATLANTIC CORPORATION 9
- ---------------------------
CONSOLIDATED BALANCE SHEETS
- ---------------------------
<TABLE>
<CAPTION>
(Dollars in Millions, Except Per Share Amounts)
--------- ---------
Unaudited 9/30/97 9/30/96 $ Change 12/31/96 $ Change
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Assets
Current assets
Cash and cash equivalents $ 315.8 $ 212.4 $ 103.4 $ 249.4 $ 66.4
Short-term investments 166.8 69.8 97.0 300.5 (133.7)
Accounts receivable, net 6,147.2 5,905.1 242.1 6,168.9 (21.7)
Inventories 516.0 413.7 102.3 478.4 37.6
Prepaid expenses 730.5 786.2 (55.7) 716.3 14.2
Other 579.0 572.8 6.2 507.6 71.4
------------------------------------------------------------------------
Total current assets 8,455.3 7,960.0 495.3 8,421.1 34.2
------------------------------------------------------------------------
Plant, property and equipment 76,470.8 74,280.7 2,190.1 75,679.5 791.3
Less accumulated depreciation 41,746.3 39,223.4 2,522.9 39,544.7 2,201.6
------------------------------------------------------------------------
34,724.5 35,057.3 (332.8) 36,134.8 (1,410.3)
Investments in unconsolidated businesses 5,137.4 4,464.1 673.3 4,922.2 215.2
Other assets 4,573.7 3,755.4 818.3 3,883.0 690.7
------------------------------------------------------------------------
Total Assets $52,890.9 $51,236.8 $ 1,654.1 $53,361.1 $ (470.2)
========================================================================
Liabilities and Shareowners' Investment
Current liabilities
Debt maturing within one year $ 6,131.7 $ 2,014.3 $ 4,117.4 $ 2,884.2 $ 3,247.5
Accounts payable and accrued liabilities 5,444.6 5,200.4 244.2 5,974.6 (530.0)
Other 1,536.7 1,362.0 174.7 1,491.1 45.6
------------------------------------------------------------------------
Total current liabilities 13,113.0 8,576.7 4,536.3 10,349.9 2,763.1
------------------------------------------------------------------------
Long-term debt 13,071.4 15,464.3 (2,392.9) 15,286.0 (2,214.6)
Employee benefit obligations 10,031.4 9,651.1 380.3 9,588.0 443.4
Deferred credits and other liabilities
Deferred income taxes 1,826.5 1,640.0 186.5 1,846.9 (20.4)
Unamortized investment tax credits 258.8 304.6 (45.8) 288.8 (30.0)
Other 956.9 956.8 .1 865.9 91.0
Minority interest, including a portion subject to
redemption requirements 948.5 1,866.7 (918.2) 2,014.2 (1,065.7)
Preferred stock of subsidiary 135.0 145.0 (10.0) 145.0 (10.0)
Shareowners' investment
Common stock 78.8 78.7 .1 78.7 .1
Contributed capital 13,275.4 13,270.0 5.4 13,295.0 (19.6)
Reinvested earnings 993.8 1,116.6 (122.8) 1,279.8 (286.0)
Foreign currency translation adjustment (528.5) (478.4) (50.1) (319.4) (209.1)
------------------------------------------------------------------------
13,819.5 13,986.9 (167.4) 14,334.1 (514.6)
Less common stock in treasury, at cost 580.4 577.3 3.1 589.3 (8.9)
Less deferred compensation-employee
stock ownership plans 689.7 778.0 (88.3) 768.4 (78.7)
------------------------------------------------------------------------
Total shareowners' investment 12,549.4 12,631.6 (82.2) 12,976.4 (427.0)
------------------------------------------------------------------------
Total Liabilities and Shareowners' Investment $52,890.9 $51,236.8 $ 1,654.1 $53,361.1 $ (470.2)
========================================================================
</TABLE>
<PAGE>
BELL ATLANTIC CORPORATION 10
- -------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
- -------------------------------------
<TABLE>
<CAPTION>
(Dollars in Millions)
---------------
9 Mos. Ended 9 Mos. Ended
Unaudited 9/30/97 9/30/96 $ Change
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net Income $ 1,514.9 $ 2,664.7 $(1,149.8)
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 4,459.1 4,027.8 431.3
Cumulative effect of change in accounting principles, net of tax - (273.1) 273.1
Loss from unconsolidated businesses 281.7 22.5 259.2
Dividends received from unconsolidated businesses 101.1 95.4 5.7
Amortization of unearned lease income (80.2) (72.2) (8.0)
Other items, net (39.3) 97.4 (136.7)
Changes in certain assets and liabilities, net of effects
from acquisition/disposition of businesses (236.8) (462.8) 226.0
----------------------------------------
Net cash provided by operating activities 6,000.5 6,099.7 (99.2)
----------------------------------------
Cash Flows from Investing Activities
Net change in short-term investments 175.4 (53.5) 228.9
Additions to plant, property and equipment (4,883.1) (4,149.6) (733.5)
Proceeds from sale of plant, property and equipment 1.6 5.8 (4.2)
Investment in leased assets (109.2) (97.1) (12.1)
Proceeds from leasing activities 62.0 85.3 (23.3)
Investment in notes receivable and preferred stock (32.8) (19.1) (13.7)
Proceeds from notes receivable 34.1 132.8 (98.7)
Acquisition of businesses, less cash acquired - (2.2) 2.2
Investments in unconsolidated businesses (574.3) (444.0) (130.3)
Proceeds from Telecom Corp NZ capital repurchase plan 114.6 - 114.6
Proceeds from disposition of businesses 360.6 4.2 356.4
Other, net 157.3 85.0 72.3
----------------------------------------
Net cash used in investing activities (4,693.8) (4,452.4) (241.4)
----------------------------------------
Cash Flows from Financing Activities
Proceeds from borrowings 436.0 49.9 386.1
Principal repayments of borrowings and capital lease obligations (505.7) (332.3) (173.4)
Net change in short-term borrowings with original maturities of three months or less 1,031.3 (586.8) 1,618.1
Dividends paid (1,768.3) (1,628.7) (139.6)
Proceeds from sale of common stock 484.4 296.2 188.2
Purchase of common stock for treasury (564.4) (83.8) (480.6)
Minority interest (0.1) 566.8 (566.9)
Net change in outstanding checks drawn on controlled disbursement account (343.5) (179.1) (164.4)
Reduction in preferred stock of subsidiary (10.0) - (10.0)
----------------------------------------
Net cash used in financing activities (1,240.3) (1,897.8) 657.5
----------------------------------------
Increase (decrease) in cash and cash equivalents 66.4 (250.5) 316.9
Cash and cash equivalents, beginning of period 249.4 462.9 (213.5)
----------------------------------------
Cash and cash equivalents, end of period $ 315.8 $ 212.4 $ 103.4
========================================
</TABLE>
<PAGE>
BELL ATLANTIC CORPORATION 11
- -----------------------------
REVENUE CATEGORY DESCRIPTIONS
- -----------------------------
Local Services
Includes revenues from the provision of local exchange, private line, and public
phone services. Also includes revenues from value-added central-office services
such as Caller ID, Call Waiting, Return Call, and a number of other call
management features.
Network Access Services
Includes interstate and intrastate revenues from other carriers for their use of
our local exchange facilities in the provision of both local exchange and long
distance services to their customers. Also includes revenues received from end-
user subscribers.
Long Distance Services
Includes revenues from intraLATA toll services (calls made from outside a
customer's local calling area, but within the same area served by our operating
telephone subsidiaries). Also includes revenues from the provision of inter-
exchange (long distance) services outside of our region. This category will
include revenues from long distance services once we are allowed to provide
these services within our region.
Ancillary Services
Includes revenues from a number of services including voice messaging, ISDN and
other high bandwidth services, billing and collection, rent, and systems
integration.
Directory and Information Services
Includes revenues from advertising and marketing services provided by our White
and Yellow Page directories within our region, international directory services,
and electronic directories on the Internet through Big Yellow/sm/. Also
includes revenues from our Internet services business.
Wireless Services
Includes revenues from our consolidated wireless subsidiaries, which include
Bell Atlantic Mobile, our wholly-owned domestic unit, and Grupo Iusacell in
Mexico, where we have management control. Also includes revenues from wireless
consulting services.
Other Services
Includes revenues from all other sources not included above, such as our leasing
business and telecommunications consulting.
- -------------------
Sector Descriptions
- -------------------
Telecom
A group of subsidiaries consisting of our nine operating telephone companies and
a centralized services and support staff, our directory and information services
companies, our systems integration company, our long distance company, and a
number of other companies providing telecom-related services.
Global Wireless
A portfolio of domestic and international wireless companies consisting of a
wholly-owned subsidiary and others with various equity ownership stakes,
Domestically, our portfolio includes Bell Atlantic Mobile (wholly-owned) and
PrimeCo Personal Communications (50%). Internationally, our wireless investments
include Group Iusacell in Mexico (42%), Omnitel Pronto Italia in Italy (17.4%),
EuroTel in the Czech Republic and Slovakia (24.5%), STET Hellas in Greece (20%),
and Excelcomindo in Indonesia (23.1%).
International Telecom
A portfolio of investments, principally related to telecommunications. These
investments include equity ownership stakes in publicly-traded companies such as
Telecom Corporation of New Zealand (24.9%), Cable and Wireless Communications
(18.5%), and TelecomAsia (18.2%). In addition, we are the managing sponsor of
FLAG (Fiberoptic Link Around the Globe) with a 39% equity stake, and own 20% of
BayanTel in the Philippines.
<PAGE>
BELL ATLANTIC CORPORATION 12
- ------------------------------------------
TELECOM SECTOR ADJUSTED FINANCIAL RESULTS
- ------------------------------------------
<TABLE>
<CAPTION>
(Dollars in Millions, Except Per Share Amounts)
------------ ------------
3 Mos. Ended 3 Mos. Ended 9 Mos. Ended 9 Mos. Ended
Unaudited 9/30/97 9/30/96 % Change 9/30/97 9/30/96 % Change
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Operating Revenues
Local services $ 3,333.7 $ 3,168.5 5.2 $ 9,896.2 $ 9,381.0 5.5
Network access services 1,802.4 1,822.8 (1.1) 5,514.2 5,403.6 2.0
Long distance services 546.4 614.3 (11.1) 1,678.1 1,872.3 (10.4)
Ancillary services 484.5 456.4 6.2 1,401.1 1,302.5 7.6
Directory and information services 496.0 519.4 (4.5) 1,649.4 1,631.0 1.1
-------------------------------------------------------------------------------------
Total Operating Revenues 6,663.0 6,581.4 1.2 20,139.0 19,590.4 2.8
-------------------------------------------------------------------------------------
Operating Expenses
Employee costs 1,905.4 2,022.9 (5.8) 5,786.5 6,017.8 (3.8)
Depreciation and amortization 1,271.9 1,227.2 3.6 3,731.6 3,714.4 0.5
Taxes other than income 368.8 370.0 (0.3) 1,102.5 1,075.2 2.5
Other operating expenses 1,514.2 1,402.5 8.0 4,405.4 4,113.2 7.1
-------------------------------------------------------------------------------------
Total Operating Expenses 5,060.3 5,022.6 0.8 15,026.0 14,920.6 0.7
-------------------------------------------------------------------------------------
Operating Income 1,602.7 1,558.8 2.8 5,113.0 4,669.8 9.5
-------------------------------------------------------------------------------------
Operating Income Margin 24.1% 23.7% 25.4% 23.8%
Operating Cash Flow 2,874.6 2,786.0 3.2 8,844.6 8,384.2 5.5
-------------------------------------------------------------------------------------
Operating Cash Flow Margin 43.1% 42.3% 43.9% 42.8%
Operating Statistics
Access lines in service (in thousands) 39,377 37,983 3.7
Residence 25,079 24,362 2.9
Business 13,839 13,158 5.2
Public 459 463 (0.9)
ISDN lines 408 297 37.4
Access Minutes of Use (in millions) 40,473 37,676 7.4 118,791 111,239 6.8
Employees per 10,000 access lines (1) 31.1 30.9 0.6
</TABLE>
Footnotes:
(1) Calculated based on employees of telephone operations only
<PAGE>
BELL ATLANTIC CORPORATION 13
- ----------------------------------------------------
TELECOM SECTOR ADJUSTED QUARTERLY FINANCIAL RESULTS
- ----------------------------------------------------
Revisions to amounts previously disclosed are footnoted below.
<TABLE>
<CAPTION>
(Dollars in Millions)
For the three month periods ended
------------------------------------------------------------------------------
Unaudited 3/31/96 6/30/96 9/30/96 12/31/96 3/31/97 6/30/97
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Operating Revenues
Local services $3,082.3 $3,130.2 $3,168.5 $ 3,243.2 $3,207.5 (2),(3) $3,355.0 (3)
Network access services 1,796.9 1,783.9 1,822.8 1,842.9 1,859.0 (3) 1,852.8 (3)
Long distance services 644.2 613.8 614.3 501.9 570.3 (3) 561.4 (3)
Ancillary services 387.6 458.5 456.4 478.5 464.8 (3) 451.8 (3)
Directory and information services 525.7 585.9 519.4 593.3 531.1 (3) 622.3 (3)
-------------------------------------------------------------------------------
Total Operating Revenues 6,436.7 6,572.3 6,581.4 6,659.8 6,632.7 6,843.3 (3)
-------------------------------------------------------------------------------
Operating Expenses
Employee costs 2,004.9 1,990.0 2,022.9 1,871.2 1,926.3 (3) 1,954.8 (3)
Depreciation and amortization 1,238.5 1,248.7 1,227.2 1,230.8 1,230.0 (3) 1,229.7
Taxes other than income 344.6 360.6 370.0 348.2 373.0 360.7 (3)
Other operating expenses 1,288.0 1,422.7 1,402.5 1,590.3 (1) 1,324.7 (2),(3) 1,566.5 (3)
-------------------------------------------------------------------------------
Total Operating Expenses 4,876.0 5,022.0 5,022.6 5,040.5 4,854.0 (3) 5,111.7 (3)
-------------------------------------------------------------------------------
Operating Income $1,560.7 $1,550.3 $1,558.8 $1,619.3 $1,778.7 (3) $1,731.6 (3)
===============================================================================
Operating Income Margin 24.2% 23.6% 23.7% 24.3% 26.8% (3) 25.3%
Operating Cash Flow $2,799.2 $2,799.0 $2,786.0 $2,850.1 $3,008.7 (3) $2,961.3 (3)
===============================================================================
Operating Cash Flow Margin 43.5% 42.6% 42.3% 42.8% 45.4% (3) 43.3%
</TABLE>
Footnotes:
(1) Restated for $13.0 reclass between other income and expense, net and other
operating expense
(2) Restated for reclass adjustment between revenues ($83.0) and expense
($96.0)
(3) Revised from amounts previously reported for telecom sector
<PAGE>
BELL ATLANTIC CORPORATION 14
- --------------------------------------------------------
GLOBAL WIRELESS SECTOR - QUARTERLY PROPORTIONATE RESULTS
- --------------------------------------------------------
<TABLE>
<CAPTION>
(Dollars in Millions)
------------ ------------
3 Mos. Ended 3 Mos. Ended 9 Mos. Ended 9 Mos. Ended
Unaudited 9/30/97 9/30/96 % Change 9/30/97 9/30/96 % Change
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Combined Global Wireless
Subscribers (000) 5,829 4,287 36.0 5,829 4,287 36.0
Subscriber net adds in period (000) 363 294 23.5 1,126 795 41.6
POPs (000) 172,817 168,889 2.3 172,817 168,889 2.3
Bell Atlantic Mobile
Selected Financial Results
Operating revenues (1) $ 732.3 $ 631.9 15.9 $2,103.4 $1,787.0 17.7
Less: equipment revenues 33.1 33.8 (2.1) 94.9 96.8 (2.0)
----------------------------------------------------------------------------
Service revenues 699.2 598.1 16.9 2,008.5 1,690.2 18.8
----------------------------------------------------------------------------
Operating income 216.3 156.9 37.9 535.5 422.1 26.9
Operating cash flow (2) $ 327.2 $ 231.5 41.3 $ 844.0 $ 653.6 29.1
Operating cash flow margin (3) 47% 39% 42% 39%
Capital expenditures, excluding acquisitions $ 163.9 $ 263.1 (37.7) $ 664.0 $ 605.2 9.7
Selected Operating Data
Subscribers (000) 5,064 4,054 24.9 5,064 4,054 24.9
Penetration (4) 8.9% 7.2% 23.6 8.9% 7.2% 23.6
Subscriber net adds in period (000) 189 232 (18.5) 654 695 (5.9)
Controlled POPs (000) (5) 56,830 56,502 0.6 56,830 56,502 0.6
Owned POPs (000) (6) 54,944 54,562 0.7 54,944 54,562 0.7
Churn rate 1.7% 1.8% 1.7% 1.7%
Total revenue per subscriber (7) $ 54 $ 58 (6.9) $ 53 $ 58 (8.6)
Service revenue per subscriber $ 47 $ 51 (7.8) $ 47 $ 51 (7.8)
Cash expense per subscriber $ 25 $ 31 (19.4) $ 27 $ 31 (12.9)
Acquisition cost per subscriber (8) $ 226 $ 235 (3.8) $ 223 $ 218 2.3
PrimeCo Personal Communications
Subscribers (000) 122 122
Subscriber net adds in period (000) 28 104
POPs (000) 28,487 28,487 0.0 28,487 28,487 0.0
International Wireless Operations (9)
Subscribers (000) 643 233 176.0 643 233 176.0
Subscriber net adds in period (000) 146 62 135.5 368 62 493.5
POPs (000) 87,500 83,900 4.3 87,500 83,900 4.3
Operating revenues $ 125.2 $ 69.8 79.4 $ 323.1 $ 164.5 96.4
Operating income (loss) $ 12.7 $ (11.0) - $ 8.2 $ (24.9) -
Operating cash flow $ 42.5 $ 5.9 620.3 $ 72.3 $ 15.2 375.7
</TABLE>
Footnotes:
Proportionate results reflect the relative weight of the Company's
ownership interests in its domestic and international wireless investments.
Bell Atlantic Mobile results reflect consolidated results for all
controlled markets.
(1) Operating revenues include service revenues, outcollect roaming, and
equipment revenues
(2) Operating cash flow equals operating income plus depreciation and
amortization
(3) Operating cash flow margin is calculated by dividing operating cash flow by
service revenues
(4) Penetration is calculated by dividing subscribers by controlled POPs
(5) Controlled POPs represent the total number of POPs for which Bell Atlantic
Mobile has operating control
(6) Owned POPs represent Bell Atlantic Mobile percentage ownership in all
licensed markets
(7) Revenue per subscriber is calculated using operating revenues and incollect
roaming revenues. Incollect roaming revenues were $71.0 and $175.6 for the
three and nine month periods ended 9/30/97, respectively, and $58.3 and
$154.4 for the three and nine month periods ended 9/30/96, respectively
(8) Acquisition cost per subscriber includes commissions and loss on handsets
(9) Represents Bell Atlantic's proportionate share of International wireless
investments including consolidated, equity method, and cost basis
investments
<PAGE>
BELL ATLANTIC CORPORATION 15
- --------------------------------------------------------
GLOBAL WIRELESS SECTOR - QUARTERLY PROPORTIONATE RESULTS
- --------------------------------------------------------
Revisions to amounts previously disclosed are footnoted below.
<TABLE>
<CAPTION>
(Dollars in Millions)
For the three month periods ended
--------------------------------------------------------------------------
Unaudited 3/31/96 6/30/96 9/30/96 12/31/96 3/31/97 6/30/97
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Combined Global Wireless
Subscribers (000) 3,722 3,993 4,287 4,703 5,070 5,466
Subscriber net adds in period (000) 230 271 294 416 367 396
POPs (000) 168,890 168,890 168,889 172,930 172,930 172,930
Bell Atlantic Mobile
Selected Financial Results
Operating revenues $ 539.5 $ 615.6 $ 631.9 $ 652.3 $ 656.9 $ 714.2
Less: equipment revenues 28.2 34.8 33.8 34.7 28.4 33.4
--------------------------------------------------------------------------
Service revenues 511.3 580.8 598.1 617.6 628.5 680.8
--------------------------------------------------------------------------
Operating income 113.4 151.9 156.9 150.8 140.6 178.6
Operating cash flow $ 189.5 $ 232.5 $ 231.5 $ 220.2 $ 234.4 $ 282.4
Operating cash flow margin* 37% 40% 39% 36% 37% 42%
Capital expenditures, excluding acquisitions $ 114.7 $ 227.4 $ 263.1 $ 330.2 $ 239.9 $ 260.2
Selected Operating Data
Subscribers (000) 3,575 3,822 4,054 4,410 4,634 4,875
Penetration 6.4% 6.8% 7.2% 7.8% 8.2% 8.6%
Subscriber net adds in period (000) 217 247 232 356 224 241
Controlled POPs (000) 55,840 55,840 56,502 56,830 56,830 56,830
Owned POPs (000) 53,788 53,788 54,562 55,021 55,021 54,944
Churn rate 1.8% 1.7% 1.8% 1.9% 1.8% 1.6%
Total revenue per subscriber $ 56 $ 60 $ 58 $ 56 $ 52 $ 54
Service revenue per subscriber $ 49 $ 52 $ 51 $ 49 $ 46 $ 48
Cash expense per subscriber $ 31 $ 32 $ 31 $ 32 $ 29 $ 28
Acquisition cost per subscriber $ 215 $ 204 $ 235 $ 225 $ 215 $ 230
PrimeCo Personal Communications
Subscribers (000) 18 54 94
Subscriber net adds in period (000) 18 36 40
POPs (000) 29,150 29,150 28,487 28,487 28,487 28,487
International Wireless Operations
Subscribers (000) 147 171 233 275 382 497
Subscriber net adds in period (000) 13 24 62 42 107 115
POPs (000) 83,900 83,900 83,900 87,500 87,500 87,500
Operating revenues $ 43.3 $ 51.4 $ 69.8 $ 77.3 $ 88.8 $ 109.1
Operating income (loss) $ (5.5) $ (8.4) $ (11.0) $ (11.8) $ (8.1) $ 3.6
Operating cash flow $ 5.9 $ 3.4 $ 5.9 $ 7.2 $ 9.1 $ 20.7
</TABLE>
Footnotes:
* Operating cash flow margin has been restated to reflect a revised
calculation dividing operating cash flow by service revenues (operating
revenues less equipment revenues) rather than net revenues (operating
revenues less cost of equipment) as was previously reported.
<PAGE>
BELL ATLANTIC CORPORATION 16
- ----------------------------
INVESTOR CONTACT INFORMATION
- ----------------------------
Peter D. Crawford, CFA
Vice President - Investor Relations and Shareowner Services
Primary contact for institutional investors and sell-side analysts
215 963-6123 212 395-1955
Laura W. O'Connor, CFA
Director - Investor Relations
Contact for institutional investors and sell-side analysts
215 963-6097 212 395-1924
Kevin R. Tarrant, CPA
Director - Investor Communications
Responsible for print and electronic investor communications
215 963-6243 212 395-1868
Kerry I. Higgins, CPA
Manager
215 963-6122 212 395-1930
Diane Kozik
Manager
212 395-1932
Mailing Address
We will be moving to our New York headquarters location during the fourth
quarter of 1997. Until such time, we will be located in our Philadelphia office.
Investor Relations
1717 Arch Street
31st Floor West
Philadelphia, PA 19103
Investor Relations
1095 Avenue of the Americas
36th Floor
New York, New York 10036
Fax
215 963-6470 (Philadelphia)
212 921-2917 (New York)
Fax on demand
800 329-7310
Transfer Agent and Registrar
For information about your stock account or shareowner services such as dividend
reinvestment or the direct deposit of dividends, contact our transfer agent:
Boston EquiServe
P.O. Box 8038
Boston, MA 02266-8038
Phone 800-631-2355
Outside the U.S. 617-575-3994
(collect)
TDD 800-829-8259
E-mail [email protected]
Shareowner Newsline
800 BEL-5595
World Wide Web
www.bellatlantic.com/invest
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