<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K/A
Amendment No. 1
CURRENT REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
<TABLE>
<S> <C>
Date of Report: August 14, 1997
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: 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
</TABLE>
<PAGE>
The registrant hereby amends and supplements the following items of its Current
Report on Form 8-K dated August 14, 1997:
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Pro forma Financial Information.
The (i) pro forma combined condensed statements of income of Bell
Atlantic Corporation ("Bell Atlantic") and NYNEX Corporation ("NYNEX")
for the six months ended June 30, 1997 and 1996, and the years December
31, 1996, 1995 and 1994; and (ii) pro forma combined condensed balance
sheet of Bell Atlantic and NYNEX as of June 30, 1997 are attached
hereto as Exhibit 99.5.
(b) Exhibits.
99.4 Press Release, dated August 18, 1997, issued by Bell Atlantic.
99.5 (i) Pro forma combined condensed statements of income of Bell
Atlantic and NYNEX for the six months ended June 30, 1997 and
1996, and the years ended December 31, 1996, 1995 and 1994; and
(ii) the pro forma combined condensed balance sheet of Bell
Atlantic and NYNEX as of June 30, 1997.
99.6 (i) Pro forma combined condensed statements of income of Bell
Atlantic and NYNEX for the three months ended March 31, 1997 and
1996, the three months ended June 30, 1997 and 1996, the three
months ended September 30, 1996, the three months ended December
31, 1996; and (ii) pro forma combined condensed balance sheets of
Bell Atlantic and NYNEX as of December 31, 1996, 1995 and 1994.
99.7 Investor Bulletin, dated August 1997, issued by Bell Atlantic.
<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/ Ellen C. Wolf
------------------------
Ellen C. Wolf
Vice President-Treasurer
Date: August 18, 1997
<PAGE>
File No. 1-8606
INDEX TO EXHIBITS
Exhibits
- --------
Exhibit 99.4 Press Release, dated August 18, 1997, issued
by Bell Atlantic
Exhibit 99.5 (i) Pro forma combined condensed statements of
income of Bell Atlantic and NYNEX for the six
months ended June 30, 1997 and 1996, and the years
ended December 31, 1996, 1995 and 1994; and (ii)
the pro forma combined condensed balance sheet of
Bell Atlantic and NYNEX as of June 30, 1997
Exhibit 99.6 (i) Pro forma combined condensed statements of
income of Bell Atlantic and NYNEX for the three
months ended March 31, 1997 and 1996, and the
three months ended June 30, 1997 and 1996, the
three months ended September 30, 1996, and the
three months ended December 31, 1996; and (ii) pro
forma combined condensed balance sheets of Bell
Atlantic and NYNEX as of December 31, 1996, 1995
and 1994
Exhibit 99.7 Investor Bulletin, dated August 1997, issued by
Bell Atlantic
<PAGE>
EXHIBIT 99.4
[BELL ATLANTIC LOGO]
NEWS RELEASE
FOR IMMEDIATE RELEASE CONTACT:
DAVID FRAIL
212-395-0500
BELL ATLANTIC FILES PRO FORMA COMBINED FINANCIAL RESULTS
NEW YORK, N.Y., August 18, 1997 -- Bell Atlantic Corporation (NYSE:BEL), which
completed its merger with NYNEX Corporation on August 14, 1997, today filed pro
forma financial information with the Securities and Exchange Commission for
financial periods covering the past three and a half years.
Pro forma earnings in all periods were affected by special items disclosed
previously by the separate companies. Pro forma adjusted earnings per share,
which exclude the effects of those items, grew 10 percent in 1996 to $4.49 from
$4.08 in 1995. For 1995, pro forma adjusted earnings per share grew 10.3
percent, compared with $3.70 in 1994.
For the second quarter of 1997, adjusted earnings per share were $1.25, 12.6
percent higher than the same period a year ago. Through the first six months of
1997, adjusted earnings per share were $2.46, an increase of 12.8 percent
compared to the first half of 1996.
"Our pro forma filing will serve as the new Bell Atlantic's financial
baseline, the starting point from which we will deliver the benefits of our
merger to customers and shareowners," said Frederic V. Salerno, Bell Atlantic
senior executive vice president and chief financial officer.
"Our target range for long-term annual earnings per share growth is 10 to 12
percent, excluding transition and integration costs," Salerno said, "and we are
comfortable with current analysts' estimates of $4.90 to $5.00 per share for
1997. We're confident that the power of our merger will allow us to sustain that
kind of performance over the next few years, even while the communications
industry goes through a period of dramatic transition."
- more -
<PAGE>
Bell Atlantic News Release, page 2
-2-
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 5.5 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.
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.
####
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.
<PAGE>
EXHIBIT 99.5
Unaudited Pro Forma Combined Condensed Financial Statements
- --------------------------------------------------------------------------------
The following unaudited pro forma financial statements give effect to the merger
using the pooling-of-interests method of accounting. These financial statements
include certain reclassifications to conform to the presentation to be used by
Bell Atlantic following the merger, and certain pro forma adjustments that
conform the companies' methods of accounting, as described in the accompanying
notes. These pro forma financial statements have been prepared from, and should
be read in conjunction with, the historical consolidated financial statements
and notes of Bell Atlantic and NYNEX.
This pro forma information is presented for illustrative purposes only and is
not necessarily indicative of the operating results or financial position that
would have occurred had the merger been consummated at the dates indicated, nor
is it necessarily indicative of future operating results or financial position
of Bell Atlantic following the merger.
The pro forma balance sheets give effect to the merger by combining the
balance sheets of Bell Atlantic and NYNEX at June 30, 1997 and December 31,
1996, 1995 and 1994. The pro forma statements of income give effect to the
merger as if it had occurred at the beginning of the earliest period presented,
combining the results of Bell Atlantic and NYNEX for each year in the three year
period ended December 31, 1996; for the three month periods ended March 31, 1997
and 1996, June 30, 1997 and 1996, September 30, 1996 and December 31, 1996; and
for the six month periods ended June 30, 1997 and 1996.
Merger-Related Costs
As a result of the merger, it is expected that Bell Atlantic will incur direct
incremental merger-related costs of approximately $200 million (pretax) and
merger-related employee severance costs of approximately $200 million to $300
million (pretax). These costs will be recorded in results of operations in the
third quarter of 1997.
The direct incremental merger-related costs are comprised of the following
amounts:
<TABLE>
<CAPTION>
(Dollars in Millions)
---------------------
<S> <C>
Professional services $ 72.0
Compensation arrangements 57.0
Shareowner-related costs 19.0
Registration and other regulatory costs 25.0
Taxes and other 27.0
------
$200.0
</TABLE>
Unpaid direct incremental merger-related costs have been reflected as an
increase to accounts payable and accrued liabilities with a deferred tax benefit
included in other assets on the pro forma balance sheets. On an after-tax
basis, these costs ($184.6 million) have been reflected as a reduction in
reinvested earnings.
The following pro forma financial statements do not reflect the merger-related
employee severance costs or any of the anticipated recurring expense savings.
Other estimated merger-related transition and integration costs, as disclosed in
the Joint Proxy Statement/Prospectus and in the Management's Discussion and
Analysis contained in Bell Atlantic's 1996 Annual Report and in its Form 10-Q
for the quarterly period ended March 31, 1997, are now under review, and have
also not been considered. All merger-related estimates will be reflected in a
further amendment to this Form 8-K, to be filed as soon as practicable, but not
later than 75 days after the date of consummation of the merger.
<PAGE>
Bell Atlantic Corporation
Pro Forma Combined Condensed Statement of Income
Six Months ended June 30, 1997
(Unaudited)
(Dollars in millions, except per share amounts)
<TABLE>
<CAPTION>
Historical Historical Pro Forma Pro Forma
NYNEX Bell Atlantic Adjustments Combined
---------- ------------- ----------- ---------
<S> <C> <C> <C> <C>
Operating revenues
Local services $ 3,416.1 $ 3,062.9 $ (26.7)[3a] $ 6,452.3
Network access services 1,886.0 1,825.6 3,711.6
Long distance services 467.3 664.1 1,131.4
Ancillary services 307.7 589.2 896.9
Directory and information services 582.7 570.6 1,153.3
Wireless services - 104.5 1,493.2 [3a] 1,597.7
Other services 155.3 37.8 (12.0)[3a] 181.1
- --------------------------------------------------------------------------------------------------------------------------------
Total operating revenues 6,815.1 6,854.7 1,454.5 15,124.3
- --------------------------------------------------------------------------------------------------------------------------------
Operating expenses
Employee costs 2,549.4 1,917.6 210.4 [3a]
(58.3)[3b] 4,619.1
Depreciation and amortization 1,196.7 1,356.4 198.9 [3a]
(3.1)[3b]
(13.8)[3g] 2,735.1
Taxes other than income 425.8 318.5 32.9 [3a] 777.2
Other operating expenses 1,474.8 1,479.1 692.4 [3a]
21.1 [3f]
19.1 [3g] 3,686.5
- --------------------------------------------------------------------------------------------------------------------------------
Total operating expenses 5,646.7 5,071.6 1,099.6 11,817.9
- --------------------------------------------------------------------------------------------------------------------------------
Operating income 1,168.4 1,783.1 354.9 3,306.4
Income (loss) from unconsolidated businesses 64.3 106.9 (286.6)[3a] (115.4)
Other income and expense, net (21.5) 32.8 (21.4)[3a]
3.6 [3g] (6.5)
Interest expense 369.6 268.9 3.2 [3a]
(21.1)[3f] 620.6
Provision for income taxes 301.5 639.4 3.4 [3a]
24.6 [3h] 968.9
- --------------------------------------------------------------------------------------------------------------------------------
Income from continuing operations 540.1 1,014.5 40.4 1,595.0
- --------------------------------------------------------------------------------------------------------------------------------
Net income $ 540.1 $ 1,014.5 $ 40.4 $ 1,595.0
================================================================================================================================
Income from continuing operations per common share $ 1.23 $ 2.31 $ 2.06
Net income per common share $ 1.23 $ 2.31 $ 2.06
Weighted average number of common shares 440.2 439.7 (102.1)[2]
outstanding (in millions) (2.1)[3i] 775.7
</TABLE>
See accompanying Notes to Unaudited Pro Forma Combined Condensed
Financial Statements
<PAGE>
Bell Atlantic Corporation
Pro Forma Combined Condensed Statement of Income
Six Months ended June 30, 1996
(Unaudited)
(Dollars in millions, except per share amounts)
<TABLE>
<CAPTION>
Historical Historical Pro Forma Pro Forma
NYNEX Bell Atlantic Adjustments Combined
---------- ------------- ----------- --------
<S> <C> <C> <C> <C>
Operating revenues
Local services $ 3,343.2 $ 2,867.7 $ (30.5)[3a] $ 6,180.4
Network access services 1,779.4 1,745.7 3,525.1
Long distance services 538.1 719.7 1,257.8
Ancillary services 317.8 505.7 823.5
Directory and information services 560.2 551.4 1,111.6
Wireless services - 1.1 1,277.4 [3a] 1,278.5
Other services 161.2 52.4 (17.1)[3a] 196.5
- --------------------------------------------------------------------------------------------------------------------------------
Total operating revenues 6,699.9 6,443.7 1,229.8 14,373.4
- --------------------------------------------------------------------------------------------------------------------------------
Operating expenses
Employee costs 2,311.2 1,964.2 177.2 [3a]
(41.9)[3b] 4,410.7
Depreciation and amortization 1,280.1 1,267.7 157.6 [3a]
(2.3)[3b]
(6.8)[3g] 2,696.3
Taxes other than income 403.7 312.1 25.9 [3a] 741.7
Other operating expenses 1,586.1 1,359.1 603.3 [3a]
16.9 [3f]
13.9 [3g] 3,579.3
- --------------------------------------------------------------------------------------------------------------------------------
Total operating expenses 5,581.1 4,903.1 943.8 11,428.0
- --------------------------------------------------------------------------------------------------------------------------------
Operating income 1,118.8 1,540.6 286.0 2,945.4
Income from unconsolidated businesses 118.5 165.9 (247.4)[3a] 37.0
Other income and expense, net (16.4) 7.6 (21.6)[3a] (30.4)
Interest expense 321.5 240.6 1.4 [3a]
(16.9)[3f] 546.6
Provision for income taxes 327.6 545.1 1.8 [3a]
11.1 [3h] 885.6
- --------------------------------------------------------------------------------------------------------------------------------
Income from continuing operations 571.8 928.4 19.6 1,519.8
Cumulative effect of change in accounting principle
Directory publishing, net of tax 131.0 142.1 - 273.1
- --------------------------------------------------------------------------------------------------------------------------------
Net income $ 702.8 $ 1,070.5 $ 19.6 $ 1,792.9
================================================================================================================================
Income from continuing operations per common share $ 1.31 $ 2.11 $ 1.97
Net income per common share $ 1.61 $ 2.43 $ 2.32
Weighted average number of common shares 435.5 439.9 (101.0)[2]
outstanding (in millions) (2.2)[3i] 772.2
</TABLE>
See accompanying Notes to Unaudited Pro Forma Combined Condensed
Financial Statements
<PAGE>
Bell Atlantic Corporation
Pro Forma Combined Condensed Statement of Income
Year ended December 31, 1996
(Unaudited)
(Dollars in millions, except per share amounts)
<TABLE>
<CAPTION>
Historical Historical Pro Forma Pro Forma
NYNEX Bell Atlantic Adjustments Combined
---------- ------------- ----------- ---------
<S> <C> <C> <C> <C>
Operating revenues
Local services $ 6,805.6 $ 5,815.4 $ (61.9)[3a] $ 12,559.1
Network access services 3,655.8 3,456.8 7,112.6
Long distance services 984.8 1,388.8 2,373.6
Ancillary services 647.1 1,090.9 1,738.0
Directory and information services 1,001.8 1,222.5 2,224.3
Wireless services - 3.2 2,710.4 [3a] 2,713.6
Other services 359.1 104.1 (29.2)[3a] 434.0
- --------------------------------------------------------------------------------------------------------------------------------
Total operating revenues 13,454.2 13,081.7 2,619.3 29,155.2
- --------------------------------------------------------------------------------------------------------------------------------
Operating expenses
Employee costs 4,500.3 3,921.6 377.3 [3a]
(95.3)[3b] 8,703.9
Depreciation and amortization 2,499.3 2,594.6 302.7 [3a]
(2.7)[3b]
(14.9)[3g] 5,379.0
Taxes other than income 815.8 631.0 53.1 [3a] 1,499.9
Other operating expenses 3,077.6 3,037.6 1,312.1 [3a]
33.9 [3f]
32.6 [3g] 7,493.8
- --------------------------------------------------------------------------------------------------------------------------------
Total operating expenses 10,893.0 10,184.8 1,998.8 23,076.6
- --------------------------------------------------------------------------------------------------------------------------------
Operating income 2,561.2 2,896.9 620.5 6,078.6
Income from unconsolidated businesses 209.4 327.9 (523.1)[3a] 14.2
Other income and expense, net (46.7) 3.7 (56.6)[3a] (99.6)
Interest expense 636.6 477.9 1.4 [3a]
(33.9)[3f] 1,082.0
Provision for income taxes 741.3 1,011.2 5.2 [3a]
24.6 [3h] 1,782.3
- --------------------------------------------------------------------------------------------------------------------------------
Income from continuing operations 1,346.0 1,739.4 43.5 3,128.9
Cumulative effect of change in accounting principle
Directory publishing, net of tax 131.0 142.1 - 273.1
- --------------------------------------------------------------------------------------------------------------------------------
Net income $ 1,477.0 $ 1,881.5 $ 43.5 $ 3,402.0
================================================================================================================================
Income from continuing operations per common share $ 3.08 $ 3.96 $ 4.05
Net income per common share $ 3.38 $ 4.28 $ 4.40
Weighted average number of common shares 436.9 439.6 (101.4)[2]
outstanding (in millions) (1.8)[3i] 773.3
</TABLE>
See accompanying Notes to Unaudited Pro Forma Combined Condensed
Financial Statements
<PAGE>
Bell Atlantic Corporation
Pro Forma Combined Condensed Statement of Income
Year ended December 31, 1995
(Unaudited)
(Dollars in millions, except per share amounts)
<TABLE>
<CAPTION>
Historical Historical Pro Forma Pro Forma
NYNEX Bell Atlantic Adjustments Combined
---------- ------------- ----------- ---------
<S> <C> <C> <C> <C>
Operating revenues
Local services $ 6,722.2 $ 5,419.0 $ (25.9)[3a] $ 12,115.3
Network access services 3,557.5 3,394.7 6,952.2
Long distance services 1,039.2 1,435.1 2,474.3
Ancillary services 487.9 962.9 1,450.8
Directory and information services 943.1 1,107.7 2,050.8
Wireless services 399.8 628.0 1,120.0 [3a] 2,147.8
Other services 257.2 482.1 (3.7)[3a] 735.6
- --------------------------------------------------------------------------------------------------------------------------------
Total operating revenues 13,406.9 13,429.5 1,090.4 27,926.8
- --------------------------------------------------------------------------------------------------------------------------------
Operating expenses
Employee costs 4,770.0 4,022.0 141.5 [3a]
(122.2)[3b] 8,811.3
Depreciation and amortization 2,566.8 2,627.1 134.4 [3a]
(2.1)[3b]
(0.1)[3g] 5,326.1
Taxes other than income 949.6 618.4 21.3 [3a] 1,589.3
Other operating expenses 3,065.5 3,101.1 556.7 [3a]
30.3 [3f]
29.1 [3g] 6,782.7
- --------------------------------------------------------------------------------------------------------------------------------
Total operating expenses 11,351.9 10,368.6 788.9 22,509.4
- --------------------------------------------------------------------------------------------------------------------------------
Operating income 2,055.0 3,060.9 301.5 5,417.4
Income (loss) from unconsolidated businesses 86.6 152.5 (261.2)[3a] (22.1)
Other income and expense, net 38.6 357.0 8.7 [3a] 404.3
Gain on sale of stock by subsidiary 264.1 - (264.1)[3e] -
Interest expense 733.9 561.0 (30.3)[3f] 1,264.6
Provision for income taxes 640.9 1,147.6 1.0 [3a]
(80.6)[3h] 1,708.9
- --------------------------------------------------------------------------------------------------------------------------------
Income from continuing operations 1,069.5 1,861.8 (105.2) 2,826.1
Extraordinary items
Discontinuation of regulatory accounting
principles, net of tax (2,919.4) - - (2,919.4)
Early extinguishment of debt, net of tax - (3.5) - (3.5)
- --------------------------------------------------------------------------------------------------------------------------------
Net income (loss) $ (1,849.9) $ 1,858.3 $ (105.2) $ (96.8)
================================================================================================================================
Income from continuing operations per common share $ 2.50 $ 4.25 $ 3.70
Net income (loss) per common share $ (4.34) $ 4.24 $ (0.13)
Weighted average number of common shares 426.5 438.3 (98.9)[2]
outstanding (in millions) (1.6)[3i] 764.3
</TABLE>
See accompanying Notes to Unaudited Pro Forma Combined Condensed
Financial Statements
<PAGE>
Bell Atlantic Corporation
Pro Forma Combined Condensed Statement of Income
Year ended December 31, 1994
(Unaudited)
(Dollars in millions, except per share amounts)
<TABLE>
<CAPTION>
Historical Historical Pro Forma Pro Forma
NYNEX Bell Atlantic Adjustments Combined
---------- ------------- ----------- ---------
<S> <C> <C> <C> <C>
Operating revenues
Local services $ 6,605.4 $ 5,239.5 $ - $ 11,844.9
Network access services 3,447.0 3,237.6 6,684.6
Long distance services 1,081.2 1,555.5 2,636.7
Ancillary services 377.5 850.1 1,227.6
Directory and information services 894.4 1,084.2 1,978.6
Wireless services 720.0 1,059.8 1,779.8
Other services 181.1 764.7 945.8
- --------------------------------------------------------------------------------------------------------------------------------
Total operating revenues 13,306.6 13,791.4 - 27,098.0
- --------------------------------------------------------------------------------------------------------------------------------
Operating expenses
Employee costs 5,152.1 4,333.1 (61.2)[3b] 9,424.0
Depreciation and amortization 2,640.6 2,652.1 (1.5)[3b] 5,291.2
Taxes other than income 927.8 606.2 - 1,534.0
Other operating expenses 2,868.1 3,426.1 25.1 [3f]
7.1 [3g] 6,326.4
- --------------------------------------------------------------------------------------------------------------------------------
Total operating expenses 11,588.6 11,017.5 (30.5) 22,575.6
- --------------------------------------------------------------------------------------------------------------------------------
Operating income 1,718.0 2,773.9 30.5 4,522.4
Income from unconsolidated businesses 57.7 41.1 (32.9)[3a] 65.9
Other income and expense, net (5.6) 53.9 25.0 [3a] 73.3
Interest expense 673.8 582.1 (25.1)[3f] 1,230.8
Provision for income taxes 303.7 884.9 17.3 [3h] 1,205.9
- --------------------------------------------------------------------------------------------------------------------------------
Income from continuing operations 792.6 1,401.9 30.4 2,224.9
Extraordinary items
Discontinuation of regulatory accounting
principles, net of tax - (2,150.0) - (2,150.0)
Early extinguishment of debt, net of tax - (6.7) - (6.7)
- --------------------------------------------------------------------------------------------------------------------------------
Net income (loss) $ 792.6 $ (754.8) $ 30.4 $ 68.2
================================================================================================================================
Income from continuing operations per common share $ 1.89 $ 3.21 $ 2.94
Net income (loss) per common share $ 1.89 $ (1.73) $ 0.09
Weighted average number of common shares 418.8 437.2 (97.2)[2]
outstanding (in millions) (0.9)[3i] 757.9
</TABLE>
See accompanying Notes to Unaudited Pro Forma Combined Condensed
Financial Statements
<PAGE>
Bell Atlantic Corporation
Pro Forma Combined Condensed Balance Sheet
June 30, 1997
(Unaudited)
(Dollars in millions)
<TABLE>
<CAPTION>
Historical Historical Pro Forma Pro Forma
NYNEX Bell Atlantic Adjustments Combined
---------- ------------- ----------- ---------
<S> <C> <C> <C> <C>
Assets
Current assets
Cash and cash equivalents $ 62.5 $ 103.9 $ 19.5 [3a] $ 185.9
Short-term investments 27.7 213.0 - 240.7
Accounts receivable, net 2,977.9 2,873.5 301.9 [3a]
(10.8) [3g] 6,142.5
Inventories 290.8 191.4 59.4 [3a]
2.9 [3g] 544.5
Prepaid expenses 312.5 413.8 22.9 [3a] 749.2
Other 322.5 154.8 76.8 [3a]
(74.3) [3d]
33.9 [3h] 513.7
- --------------------------------------------------------------------------------------------------------------------------------
Total current assets 3,993.9 3,950.4 432.2 8,376.5
- --------------------------------------------------------------------------------------------------------------------------------
Plant, property and equipment 36,117.2 35,629.6 4,275.9 [3a]
(45.4) [3b]
(148.3) [3g] 75,829.0
Less accumulated depreciation 20,281.7 19,702.6 1,303.4 [3a]
(10.1) [3b]
(79.2) [3g] 41,198.4
- --------------------------------------------------------------------------------------------------------------------------------
15,835.5 15,927.0 2,868.1 34,630.6
Investments in unconsolidated businesses 4,785.5 3,469.2 (3,015.2) [3a] 5,239.5
Other assets 2,180.3 1,631.8 571.8 [3a]
(21.1) [3g] 4,362.8
- --------------------------------------------------------------------------------------------------------------------------------
Total assets $ 26,795.2 $ 24,978.4 $ 835.8 $ 52,609.4
================================================================================================================================
Liabilities and Shareowners' Investment
Current liabilities
Debt maturing within one year $ 3,131.3 $ 2,273.8 $ 533.0 [3a] $ 5,938.1
Accounts payable and accrued liabilities 2,039.2 2,567.0 237.7 [3a]
125.7 [3d]
36.4 [3g] 5,006.0
Other 739.5 685.6 66.2 [3a] 1,491.3
- --------------------------------------------------------------------------------------------------------------------------------
Total current liabilities 5,910.0 5,526.4 999.0 12,435.4
- --------------------------------------------------------------------------------------------------------------------------------
Long-term debt 7,386.0 5,816.4 - 13,202.4
Employee benefit obligations 3,945.6 3,828.2 2,105.1 [3b]
0.1 [3a] 9,879.0
Deferred credits and other liabilities
Deferred income taxes 1,381.7 1,310.1 (818.9) [3h] 1,872.9
Unamortized investment tax credits 153.7 113.7 - 267.4
Other 446.0 387.7 0.9 [3a] 834.6
Minority interest, including a portion subject
to redemption requirements 631.9 102.1 203.1 [3a]
(3.6) [3g] 933.5
Preferred stock of subsidiary - 135.0 - 135.0
Shareowners' investment
Common stock 455.6 437.8 (814.6) [3c] 78.8
Contributed capital 6,876.5 5,519.5 814.6 [3c]
68.1 [3e] 13,278.7
Reinvested earnings 493.3 2,718.4 (19.7) [3a]
(1,362.4) [3b]
(184.6) [3d]
(68.1) [3e]
(83.2) [3g] 1,493.7
Foreign currency translation adjustment (7.4) (485.5) - (492.9)
- --------------------------------------------------------------------------------------------------------------------------------
7,818.0 8,190.2 (1,649.9) 14,358.3
Less common stock in treasury, at cost 567.3 26.1 - 593.4
Less deferred compensation-employee stock ownership plans 310.4 405.3 - 715.7
- --------------------------------------------------------------------------------------------------------------------------------
Total shareowners' investment 6,940.3 7,758.8 (1,649.9) 13,049.2
- --------------------------------------------------------------------------------------------------------------------------------
Total liabilities and shareowners' investment $ 26,795.2 $ 24,978.4 $ 835.8 $ 52,609.4
================================================================================================================================
</TABLE>
See accompanying Notes to Unaudited Pro Forma Combined Condensed
Financial Statements
<PAGE>
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
Note 1 -- Reclassifications
Certain reclassifications have been made to the unaudited historical
financial statements to conform to the presentation to be used by Bell Atlantic
following the merger.
Note 2 -- Exchange Ratio
Under the Merger Agreement, each outstanding share of NYNEX Common Stock is
converted into 0.768 shares of Bell Atlantic Common Stock. This exchange ratio
was used in computing share and per share amounts in the accompanying unaudited
pro forma combined condensed financial statements.
Note 3 -- Pro Forma Adjustments
(a) A pro forma adjustment has been made to record conforming accounting
adjustments and to consolidate the accounts of cellular operations that are
jointly controlled by NYNEX and Bell Atlantic and which were accounted for
by both companies using the equity method beginning July 1, 1995.
(b) A pro forma adjustment has been made to reflect the adoption by NYNEX of
Statement of Financial Accounting Standards No. 106, "Employers' Accounting
for Postretirement Benefits Other Than Pensions," effective January 1, 1993,
by electing the immediate recognition of the transition obligation, to
conform to the method used by Bell Atlantic. In its historical consolidated
financial statements, NYNEX has amortized the transition obligation for
retired employees and active employees over a 20-year period.
(c) Pro forma adjustments have been made to reflect the issuance of shares in
the exchange ratio stated in Note 2 above, the cancellation of NYNEX
treasury stock (other than treasury shares held by consolidated subsidiaries
of NYNEX in connection with certain financing transactions), and the change
in the par value of shares of Bell Atlantic Common Stock, in accordance with
the Merger Agreement.
(d) See the fourth and subsequent paragraphs under "Unaudited Pro Forma Combined
Condensed Financial Statements" above for information related to Merger-
related costs.
(e) A pro forma adjustment has been made to reflect the initial public offering
of stock by a subsidiary of NYNEX as a capital transaction to conform to the
method to be used by the merged companies for recording such transactions.
(f) A pro forma adjustment has been made to conform the presentation of interest
charges incurred by NYNEX's financial services businesses (principally
leasing operations) from Interest expense to Operating expense.
(g) Other pro forma adjustments have been made to conform the accounting
policies of the companies.
(h) Pro forma adjustments have been made for the estimated tax effects of
adjustments discussed in (a), (b), (d), (e) and (g).
(i) A pro forma adjustment has been made to conform the computation of weighted
average number of common shares related to common stock equivalents.
<PAGE>
EXHIBIT 99.6
Unaudited Pro Forma Combined Condensed Financial Statements
- --------------------------------------------------------------------------------
The following unaudited pro forma financial statements give effect to the merger
using the pooling-of-interests method of accounting. These financial statements
include certain reclassifications to conform to the presentation to be used by
Bell Atlantic following the merger, and certain pro forma adjustments that
conform the companies' methods of accounting, as described in the accompanying
notes. These pro forma financial statements have been prepared from, and should
be read in conjunction with, the historical consolidated financial statements
and notes of Bell Atlantic and NYNEX.
This pro forma information is presented for illustrative purposes only and is
not necessarily indicative of the operating results or financial position that
would have occurred had the merger been consummated at the dates indicated, nor
is it necessarily indicative of future operating results or financial position
of Bell Atlantic following the merger.
The pro forma balance sheets give effect to the merger by combining the
balance sheets of Bell Atlantic and NYNEX at June 30, 1997 and December 31,
1996, 1995 and 1994. The pro forma statements of income give effect to the
merger as if it had occurred at the beginning of the earliest period presented,
combining the results of Bell Atlantic and NYNEX for each year in the three year
period ended December 31, 1996; for the three month periods ended March 31, 1997
and 1996, June 30, 1997 and 1996, September 30, 1996 and December 31, 1996; and
for the six month periods ended June 30, 1997 and 1996.
Merger-Related Costs
As a result of the merger, it is expected that Bell Atlantic will incur direct
incremental merger-related costs of approximately $200 million (pretax) and
merger-related employee severance costs of approximately $200 million to $300
million (pretax). These costs will be recorded in results of operations in the
third quarter of 1997.
The direct incremental merger-related costs are comprised of the following
amounts:
<TABLE>
<CAPTION>
(Dollars in Millions)
---------------------
<S> <C>
Professional services $ 72.0
Compensation arrangements 57.0
Shareowner-related costs 19.0
Registration and other regulatory costs 25.0
Taxes and other 27.0
------
$200.0
</TABLE>
Unpaid direct incremental merger-related costs have been reflected as an
increase to accounts payable and accrued liabilities with a deferred tax benefit
included in other assets on the pro forma balance sheets. On an after-tax
basis, these costs ($184.6 million) have been reflected as a reduction in
reinvested earnings.
The following pro forma financial statements do not reflect the merger-related
employee severance costs or any of the anticipated recurring expense savings.
Other estimated merger-related transition and integration costs, as disclosed in
the Joint Proxy Statement/Prospectus and in the Management's Discussion and
Analysis contained in Bell Atlantic's 1996 Annual Report and in its Form 10-Q
for the quarterly period ended March 31, 1997, are now under review, and have
also not been considered. All merger-related estimates will be reflected in a
further amendment to this Form 8-K, to be filed as soon as practicable, but not
later than 75 days after the date of consummation of the merger.
<PAGE>
Bell Atlantic Corporation
Pro Forma Combined Condensed Statement of Income
Three Months ended March 31, 1997
(Unaudited)
(Dollars in millions, except per share amounts)
<TABLE>
<CAPTION>
Historical Historical Pro Forma Pro Forma
NYNEX Bell Atlantic Adjustments Combined
---------- ------------- ----------- ---------
<S> <C> <C> <C> <C>
Operating revenues
Local services $ 1,627.8 $ 1,496.3 $ (13.8)[3a] $ 3,110.3
Network access services 941.7 917.1 1,858.8
Long distance services 234.1 335.9 570.0
Ancillary services 170.7 285.0 455.7
Directory and information services 225.4 305.5 530.9
Wireless services - 52.7 721.4 [3a] 774.1
Other services 101.8 21.4 (6.5)[3a] 116.7
- ---------------------------------------------------------------------------------------------------------------------------------
Total operating revenues 3,301.5 3,413.9 701.1 7,416.5
- ---------------------------------------------------------------------------------------------------------------------------------
Operating expenses
Employee costs 1,447.1 954.5 102.8 [3a]
(34.3)[3b] 2,470.1
Depreciation and amortization 614.1 671.4 94.4 [3a]
(2.9)[3b]
(5.7)[3g] 1,371.3
Taxes other than income 215.2 163.6 16.2 [3a] 395.0
Other operating expenses 616.4 734.8 346.8 [3a]
10.5 [3f]
13.1 [3g] 1,721.6
- ---------------------------------------------------------------------------------------------------------------------------------
Total operating expenses 2,892.8 2,524.3 540.9 5,958.0
- ---------------------------------------------------------------------------------------------------------------------------------
Operating income 408.7 889.6 160.2 1,458.5
Income (loss) from unconsolidated businesses 40.9 47.6 (123.2)[3a] (34.7)
Other income and expense, net (12.9) 31.0 (13.4)[3a]
4.9 [3g] 9.6
Interest expense 202.5 137.5 (10.5)[3f] 329.5
Provision for income taxes 74.6 315.1 1.6 [3a]
14.4 [3h] 405.7
- ---------------------------------------------------------------------------------------------------------------------------------
Income from continuing operations 159.6 515.6 23.0 698.2
- ---------------------------------------------------------------------------------------------------------------------------------
Net income $ 159.6 $ 515.6 $ 23.0 $ 698.2
================================================================================================================================
Income from continuing operations per common share $ 0.36 $ 1.17 $ 0.90
Net income per common share $ 0.36 $ 1.17 $ 0.90
Weighted average number of common shares 440.1 439.9 (102.1)[2]
outstanding (in millions) (2.1)[3i] 775.8
</TABLE>
See accompanying Notes to Unaudited Pro Forma Combined Condensed
Financial Statements
<PAGE>
Bell Atlantic Corporation
Pro Forma Combined Condensed Statement of Income
Three Months ended March 31, 1996
(Unaudited)
(Dollars in millions, except per share amounts)
<TABLE>
<CAPTION>
Historical Historical Pro Forma Pro Forma
NYNEX Bell Atlantic Adjustments Combined
---------- ------------- ----------- ---------
<S> <C> <C> <C> <C>
Operating revenues
Local services $ 1,669.0 $ 1,412.6 $ (13.5)[3a] $ 3,068.1
Network access services 863.7 877.9 1,741.6
Long distance services 274.5 369.6 644.1
Ancillary services 138.5 237.5 376.0
Directory and information services 227.2 298.5 525.7
Wireless services - 0.3 592.1 [3a] 592.4
Other services 81.1 23.7 (8.7)[3a] 96.1
- --------------------------------------------------------------------------------------------------------------------------------
Total operating revenues 3,254.0 3,220.1 569.9 7,044.0
- --------------------------------------------------------------------------------------------------------------------------------
Operating expenses
Employee costs 1,197.3 982.4 84.7 [3a]
(20.6)[3b] 2,243.8
Depreciation and amortization 640.3 628.9 76.5 [3a]
(2.1)[3b]
(3.3)[3g] 1,340.3
Taxes other than income 193.7 156.9 12.6 [3a] 363.2
Other operating expenses 797.7 657.7 282.5 [3a]
8.1 [3f]
4.5 [3g] 1,750.5
- --------------------------------------------------------------------------------------------------------------------------------
Total operating expenses 2,829.0 2,425.9 442.9 5,697.8
- --------------------------------------------------------------------------------------------------------------------------------
Operating income 425.0 794.2 127.0 1,346.2
Income from unconsolidated businesses 69.0 71.6 (109.7)[3a] 30.9
Other income and expense, net 1.4 3.7 (6.8)[3a] (1.7)
Interest expense 165.1 120.8 (8.1)[3f] 277.8
Provision for income taxes 116.5 284.0 0.6 [3a]
6.5 [3h] 407.6
- --------------------------------------------------------------------------------------------------------------------------------
Income from continuing operations 213.8 464.7 11.5 690.0
Cumulative effect of change in accounting principle
Directory publishing, net of tax 131.0 142.1 - 273.1
- --------------------------------------------------------------------------------------------------------------------------------
Net income $ 344.8 $ 606.8 $ 11.5 $ 963.1
================================================================================================================================
Income from continuing operations per common share $ 0.49 $ 1.06 $ 0.90
Net income per common share $ 0.79 $ 1.38 $ 1.25
Weighted average number of common shares 434.5 440.2 (100.8)[2]
outstanding (in millions) (2.5)[3i] 771.4
</TABLE>
See accompanying Notes to Unaudited Pro Forma Combined Condensed
Financial Statements
<PAGE>
Bell Atlantic Corporation
Pro Forma Combined Condensed Statement of Income
Three Months ended June 30, 1997
(Unaudited)
(Dollars in millions, except per share amounts)
<TABLE>
<CAPTION>
Historical Historical Pro Forma Pro Forma
NYNEX Bell Atlantic Adjustments Combined
---------- ------------- ----------- --------
<S> <C> <C> <C> <C>
Operating revenues
Local services $ 1,788.3 $ 1,566.6 $ (12.9)[3a] $ 3,342.0
Network access services 944.3 908.5 1,852.8
Long distance services 233.2 328.2 561.4
Ancillary services 137.0 304.2 441.2
Directory and information services 357.3 265.1 622.4
Wireless services - 51.8 771.8 [3a] 823.6
Other services 53.5 16.4 (5.5)[3a] 64.4
- --------------------------------------------------------------------------------------------------------------------------------
Total operating revenues 3,513.6 3,440.8 753.4 7,707.8
- --------------------------------------------------------------------------------------------------------------------------------
Operating expenses
Employee costs 1,102.3 963.1 107.6 [3a]
(24.0)[3b] 2,149.0
Depreciation and amortization 582.6 685.0 104.5 [3a]
(0.2)[3b]
(8.1)[3g] 1,363.8
Taxes other than income 210.6 154.9 16.7 [3a] 382.2
Other operating expenses 858.4 744.3 345.6 [3a]
10.6 [3f]
6.0 [3g] 1,964.9
- --------------------------------------------------------------------------------------------------------------------------------
Total operating expenses 2,753.9 2,547.3 558.7 5,859.9
- --------------------------------------------------------------------------------------------------------------------------------
Operating income 759.7 893.5 194.7 1,847.9
Income (loss) from unconsolidated businesses 23.4 59.3 (163.4)[3a] (80.7)
Other income and expense, net (8.6) 1.8 (8.0)[3a]
(1.3)[3g] (16.1)
Interest expense 167.1 131.4 3.2 [3a]
(10.6)[3f] 291.1
Provision for income taxes 226.9 324.3 1.8 [3a]
10.2 [3h] 563.2
- --------------------------------------------------------------------------------------------------------------------------------
Income from continuing operations 380.5 498.9 17.4 896.8
- --------------------------------------------------------------------------------------------------------------------------------
Net income $ 380.5 $ 498.9 $ 17.4 $ 896.8
================================================================================================================================
Income from continuing operations per common share $ 0.86 $ 1.14 $ 1.16
Net income per common share $ 0.86 $ 1.14 $ 1.16
Weighted average number of common shares 440.5 439.5 (102.2)[2]
outstanding (in millions) (2.0)[3i] 775.8
</TABLE>
See accompanying Notes to Unaudited Pro Forma Combined Condensed
Financial Statements
<PAGE>
Bell Atlantic Corporation
Pro Forma Combined Condensed Statement of Income
Three Months ended June 30, 1996
(Unaudited)
(Dollars in millions, except per share amounts)
<TABLE>
<CAPTION>
Historical Historical Pro Forma Pro Forma
NYNEX Bell Atlantic Adjustments Combined
---------- ------------- ----------- ---------
<S> <C> <C> <C> <C>
Operating revenues
Local services $ 1,674.2 $ 1,455.1 $ (17.0)[3a] $ 3,112.3
Network access services 915.7 867.8 1,783.5
Long distance services 263.6 350.1 613.7
Ancillary services 179.3 268.2 447.5
Directory and information services 333.0 252.9 585.9
Wireless services - 0.8 685.3 [3a] 686.1
Other services 80.1 28.7 (8.4)[3a] 100.4
- --------------------------------------------------------------------------------------------------------------------------------
Total operating revenues 3,445.9 3,223.6 659.9 7,329.4
- --------------------------------------------------------------------------------------------------------------------------------
Operating expenses
Employee costs 1,113.9 981.8 92.5 [3a]
(21.3)[3b] 2,166.9
Depreciation and amortization 639.8 638.8 81.1 [3a]
(0.2)[3b]
(3.5)[3g] 1,356.0
Taxes other than income 210.0 155.2 13.3 [3a] 378.5
Other operating expenses 788.4 701.4 320.8 [3a]
8.8 [3f]
9.4 [3g] 1,828.8
- --------------------------------------------------------------------------------------------------------------------------------
Total operating expenses 2,752.1 2,477.2 500.9 5,730.2
- --------------------------------------------------------------------------------------------------------------------------------
Operating income 693.8 746.4 159.0 1,599.2
Income from unconsolidated businesses 49.5 94.3 (137.7)[3a] 6.1
Other income and expense, net (17.8) 3.9 (14.8)[3a] (28.7)
Interest expense 156.4 119.8 1.4 [3a]
(8.8)[3f] 268.8
Provision for income taxes 211.1 261.1 1.2 [3a]
4.6 [3h] 478.0
- --------------------------------------------------------------------------------------------------------------------------------
Income from continuing operations 358.0 463.7 8.1 829.8
- --------------------------------------------------------------------------------------------------------------------------------
Net income $ 358.0 $ 463.7 $ 8.1 $ 829.8
================================================================================================================================
Income from continuing operations per common share $ 0.82 $ 1.05 $ 1.07
Net Income per common share $ 0.82 $ 1.05 $ 1.07
Weighted average number of common shares 437.4 439.6 (101.5)[2]
outstanding (in millions) (1.8)[3i] 773.7
</TABLE>
See accompanying Notes to Unaudited Pro Forma Combined Condensed
Financial Statements
<PAGE>
Bell Atlantic Corporation
Pro Forma Combined Condensed Statement of Income
Three Months ended September 30, 1996
(Unaudited)
(Dollars in millions, except per share amounts)
<TABLE>
<CAPTION>
Historical Historical Pro Forma Pro Forma
NYNEX Bell Atlantic Adjustments Combined
---------- ------------- ----------- ---------
<S> <C> <C> <C> <C>
Operating revenues
Local services $ 1,695.7 $ 1,472.2 $ (16.5)[3a] $ 3,151.4
Network access services 935.6 886.9 1,822.5
Long distance services 274.0 340.2 614.2
Ancillary services 163.9 281.0 444.9
Directory and information services 262.6 256.8 519.4
Wireless services - 1.1 708.6 [3a] 709.7
Other services 92.0 28.4 (5.9)[3a] 114.5
- --------------------------------------------------------------------------------------------------------------------------------
Total operating revenues 3,423.8 3,266.6 686.2 7,376.6
- --------------------------------------------------------------------------------------------------------------------------------
Operating expenses
Employee costs 1,089.5 1,018.9 98.7 [3a]
(25.5)[3b] 2,181.6
Depreciation and amortization 611.3 649.1 75.1 [3a]
(0.2)[3b]
(3.8)[3g] 1,331.5
Taxes other than income 214.9 163.1 12.6 [3a] 390.6
Other operating expenses 767.3 681.8 342.6 [3a]
8.8 [3f]
5.2 [3g] 1,805.7
- --------------------------------------------------------------------------------------------------------------------------------
Total operating expenses 2,683.0 2,512.9 513.5 5,709.4
- --------------------------------------------------------------------------------------------------------------------------------
Operating income 740.8 753.7 172.7 1,667.2
Income from unconsolidated businesses 49.8 105.8 (140.7)[3a] 14.9
Other income and expense, net (10.3) (3.7) (21.0)[3a] (35.0)
Interest expense 155.3 119.9 (8.8)[3f] 266.4
Provision for income taxes 230.5 270.5 1.1 [3a]
6.8 [3h] 508.9
- --------------------------------------------------------------------------------------------------------------------------------
Income from continuing operations 394.5 465.4 11.9 871.8
- --------------------------------------------------------------------------------------------------------------------------------
Net income $ 394.5 $ 465.4 $ 11.9 $ 871.8
================================================================================================================================
Income from continuing operations per common share $ 0.90 $ 1.06 $ 1.13
Net Income per common share $ 0.90 $ 1.06 $ 1.13
Weighted average number of common shares 439.0 439.1 (101.9)[2]
outstanding (in millions) (1.3)[3i] 774.9
</TABLE>
See accompanying Notes to Unaudited Pro Forma Combined Condensed
Financial Statements
<PAGE>
Bell Atlantic Corporation
Pro Forma Combined Condensed Statement of Income
Three Months ended December 31, 1996
(Unaudited)
(Dollars in millions, except per share amounts)
<TABLE>
<CAPTION>
Historical Historical Pro Forma Pro Forma
NYNEX Bell Atlantic Adjustments Combined
---------- ------------- ----------- ---------
<S> <C> <C> <C> <C>
Operating revenues
Local services $ 1,766.7 $ 1,475.5 $ (14.9)[3a] $ 3,227.3
Network access services 940.8 824.2 1,765.0
Long distance services 172.7 328.9 501.6
Ancillary services 165.4 304.2 469.6
Directory and information services 179.0 414.3 593.3
Wireless services - 1.0 724.4 [3a] 725.4
Other services 105.9 23.3 (6.2)[3a] 123.0
- --------------------------------------------------------------------------------------------------------------------------------
Total operating revenues 3,330.5 3,371.4 703.3 7,405.2
- --------------------------------------------------------------------------------------------------------------------------------
Operating expenses
Employee costs 1,099.6 938.5 101.4 [3a]
(27.9)[3b] 2,111.6
Depreciation and amortization 607.9 677.8 70.0 [3a]
(0.2)[3b]
(4.3)[3g] 1,351.2
Taxes other than income 197.2 155.8 14.6 [3a] 367.6
Other operating expenses 724.2 996.7 366.2 [3a]
8.2 [3f]
13.5 [3g] 2,108.8
- --------------------------------------------------------------------------------------------------------------------------------
Total operating expenses 2,628.9 2,768.8 541.5 5,939.2
- --------------------------------------------------------------------------------------------------------------------------------
Operating income 701.6 602.6 161.8 1,466.0
Income (loss) from unconsolidated businesses 41.1 56.2 (135.0)[3a] (37.7)
Other income and expense, net (20.0) (0.2) (14.0)[3a] (34.2)
Interest expense 159.8 117.4 (8.2)[3f] 269.0
Provision for income taxes 183.2 195.6 2.3 [3a]
6.7 [3h] 387.8
- --------------------------------------------------------------------------------------------------------------------------------
Income from continuing operations 379.7 345.6 12.0 737.3
- --------------------------------------------------------------------------------------------------------------------------------
Net income $ 379.7 $ 345.6 $ 12.0 $ 737.3
================================================================================================================================
Income from continuing operations per common share $ 0.86 $ 0.79 $ 0.95
Net Income per common share $ 0.86 $ 0.79 $ 0.95
Weighted average number of common shares 439.9 439.4 (102.1)[2]
outstanding (in millions) (1.6)[3i] 775.6
</TABLE>
See accompanying Notes to Unaudited Pro Forma Combined Condensed
Financial Statements
<PAGE>
Bell Atlantic Corporation
Pro Forma Combined Condensed Balance Sheet
December 31, 1996
(Unaudited)
(Dollars in millions)
<TABLE>
<CAPTION>
Historical Historical Pro Forma Pro Forma
NYNEX Bell Atlantic Adjustments Combined
---------- ------------- ----------- ---------
<S> <C> <C> <C> <C>
Assets
Current assets
Cash and cash equivalents $ 81.6 $ 152.5 $ 15.3 [3a] $ 249.4
Short-term investments 28.8 271.7 - 300.5
Accounts receivable, net 3,003.6 2,846.8 329.3 [3a]
(10.8)[3g] 6,168.9
Inventories 243.7 148.7 83.1 [3a]
2.9 [3g] 478.4
Prepaid expenses 294.7 402.0 19.6 [3a] 716.3
Other 303.7 126.3 63.9 [3a]
(51.3)[3d]
(4.8)[3g]
33.9 [3h] 471.7
- --------------------------------------------------------------------------------------------------------------------------------
Total current assets 3,956.1 3,948.0 481.1 8,385.2
- --------------------------------------------------------------------------------------------------------------------------------
Plant, property and equipment 37,317.3 34,758.4 3,786.0 [3a]
(39.8)[3b]
(142.4)[3g] 75,679.5
Less accumulated depreciation 19,642.3 18,842.7 1,137.7 [3a]
(7.0)[3b]
(71.0)[3g] 39,544.7
- --------------------------------------------------------------------------------------------------------------------------------
17,675.0 15,915.7 2,544.1 36,134.8
Investments in unconsolidated businesses 3,880.3 3,766.8 (2,724.9)[3a] 4,922.2
Other assets 2,147.7 1,225.7 518.3 [3a]
(8.7)[3g] 3,883.0
- --------------------------------------------------------------------------------------------------------------------------------
Total assets $ 27,659.1 $ 24,856.2 $ 809.9 $ 53,325.2
================================================================================================================================
Liabilities and Shareowners' Investment
Current liabilities
Debt maturing within one year $ 327.9 $ 2,137.3 $ 419.0 [3a] $ 2,884.2
Accounts payable and accrued liabilities 2,698.7 2,902.7 336.8 [3a]
148.7 [3d]
36.4 [3g] 6,123.3
Other 768.2 662.8 60.1 [3a] 1,491.1
- --------------------------------------------------------------------------------------------------------------------------------
Total current liabilities 3,794.8 5,702.8 1,001.0 10,498.6
- --------------------------------------------------------------------------------------------------------------------------------
Long-term debt 9,325.8 5,960.2 - 15,286.0
Employee benefit obligations 3,531.5 3,887.4 0.1 [3a]
2,169.0 [3b] 9,588.0
Deferred credits and other liabilities
Deferred income taxes 1,460.5 1,229.9 (843.5)[3h] 1,846.9
Unamortized investment tax credits 165.8 123.0 - 288.8
Other 501.6 364.0 0.3 [3a] 865.9
Minority interest, including a portion subject
to redemption requirements 1,819.8 21.1 173.3 [3a] 2,014.2
Preferred stock of subsidiary - 145.0 - 145.0
Shareowners' investment
Common stock 455.0 437.8 (814.1)[3c] 78.7
Contributed capital 6,913.4 5,510.9 802.6 [3c]
68.1 [3e] 13,295.0
Reinvested earnings 471.7 2,381.9 (23.0)[3a]
(1,401.5)[3b]
(184.6)[3d]
(68.1)[3e]
(81.2)[3g] 1,095.2
Foreign currency translation adjustment 139.1 (458.5) - (319.4)
- --------------------------------------------------------------------------------------------------------------------------------
7,979.2 7,872.1 (1,701.8) 14,149.5
Less common stock in treasury, at cost 597.2 3.6 (11.5)[3c] 589.3
Less deferred compensation-employee stock ownership plans 322.7 445.7 - 768.4
- --------------------------------------------------------------------------------------------------------------------------------
Total shareowners' investment 7,059.3 7,422.8 (1,690.3) 12,791.8
- --------------------------------------------------------------------------------------------------------------------------------
Total liabilities and shareowners' investment $ 27,659.1 $ 24,856.2 $ 809.9 $ 53,325.2
================================================================================================================================
</TABLE>
See accompanying Notes to Unaudited Pro Forma Combined Condensed
Financial Statements
<PAGE>
Bell Atlantic Corporation
Pro Forma Combined Condensed Balance Sheet
December 31, 1995
(Unaudited)
(Dollars in millions)
<TABLE>
<CAPTION>
Historical Historical Pro Forma Pro Forma
NYNEX Bell Atlantic Adjustments Combined
---------- ------------- ----------- ---------
<S> <C> <C> <C> <C>
Assets
Current assets
Cash and cash equivalents $ 93.2 $ 356.8 $ 12.9 [3a] $ 462.9
Short-term investments 10.9 - - 10.9
Accounts receivable, net 2,631.2 2,386.0 225.1 [3a]
(10.8)[3g] 5,231.5
Inventories 141.3 132.8 85.4 [3a]
2.9 [3g] 362.4
Prepaid expenses 360.2 611.7 32.0 [3a] 1,003.9
Other 444.3 385.4 43.8 [3a]
(0.6)[3g]
33.9 [3h] 906.8
- --------------------------------------------------------------------------------------------------------------------------------
Total current assets 3,681.1 3,872.7 424.6 7,978.4
- --------------------------------------------------------------------------------------------------------------------------------
Plant, property and equipment 35,734.6 33,553.8 2,894.1 [3a]
(29.0)[3b]
(119.5)[3g] 72,034.0
Less accumulated depreciation 18,679.3 17,632.5 913.0 [3a]
(4.3)[3b]
(56.3)[3g] 37,164.2
- --------------------------------------------------------------------------------------------------------------------------------
17,055.3 15,921.3 1,893.2 34,869.8
Investments in unconsolidated businesses 3,279.9 3,007.7 (2,136.1)[3a] 4,151.5
Other assets 1,879.6 1,355.1 407.5 [3a]
(3.4)[3g] 3,638.8
- --------------------------------------------------------------------------------------------------------------------------------
Total assets $ 25,895.9 $ 24,156.8 $ 585.8 $ 50,638.5
================================================================================================================================
Liabilities and Shareowners' Investment
Current liabilities
Debt maturing within one year $ 506.6 $ 1,930.2 $ 186.0 [3a] $ 2,622.8
Accounts payable and accrued liabilities 2,625.1 2,723.5 311.2 [3a]
200.0 [3d]
36.4 [3g] 5,896.2
Other 825.5 719.3 52.0 [3a] 1,596.8
- --------------------------------------------------------------------------------------------------------------------------------
Total current liabilities 3,957.2 5,373.0 785.6 10,115.8
- --------------------------------------------------------------------------------------------------------------------------------
Long-term debt 9,336.9 6,407.2 - 15,744.1
Employee benefit obligations 3,271.1 3,841.3 0.9 [3a]
2,275.1 [3b] 9,388.4
Deferred credits and other liabilities
Deferred income taxes 1,332.4 1,213.9 (868.5)[3h] 1,677.8
Unamortized investment tax credits 198.8 147.3 - 346.1
Other 642.9 327.8 0.5 [3a] 971.2
Minority interest, including a portion subject
to redemption requirements 1,077.4 17.7 126.0 [3a] 1,221.1
Preferred stock of subsidiary - 145.0 - 145.0
Shareowners' investment
Common stock 447.2 437.8 (807.8)[3c] 77.2
Contributed capital 6,566.9 5,506.4 311.5 [3c]
68.1 [3e] 12,452.9
Reinvested earnings 25.4 1,776.5 (15.4)[3a]
(1,463.9)[3b]
(184.6)[3d]
(68.1)[3e]
(69.9)[3g] -
Foreign currency translation adjustment (25.4) (515.9) - (541.3)
- --------------------------------------------------------------------------------------------------------------------------------
7,014.1 7,204.8 (2,230.1) 11,988.8
Less common stock in treasury, at cost 591.1 3.1 (496.3)[3c] 97.9
Less deferred compensation-employee stock ownership plans 343.8 518.1 - 861.9
- --------------------------------------------------------------------------------------------------------------------------------
Total shareowners' investment 6,079.2 6,683.6 (1,733.8) 11,029.0
- --------------------------------------------------------------------------------------------------------------------------------
Total liabilities and shareowners' investment $ 25,895.9 $ 24,156.8 $ 585.8 $ 50,638.5
================================================================================================================================
</TABLE>
See accompanying Notes to Unaudited Pro Forma Combined Condensed
Financial Statements
<PAGE>
Bell Atlantic Corporation
Pro Forma Combined Condensed Balance Sheet
December 31, 1994
(Unaudited)
(Dollars in millions)
<TABLE>
<CAPTION>
Historical Historical Pro Forma Pro Forma
NYNEX Bell Atlantic Adjustments Combined
---------- ------------- ----------- ---------
<S> <C> <C> <C> <C>
Assets
Current assets
Cash and cash equivalents $ 137.5 $ 142.9 $ - $ 280.4
Short-term investments 7.0 - - 7.0
Accounts receivable, net 2,497.9 2,328.1 (10.8)[3g] 4,815.2
Inventories 173.3 274.6 2.9 [3g] 450.8
Prepaid expenses 361.2 545.5 - 906.7
Other 620.0 492.2 33.9 [3h] 1,146.1
- --------------------------------------------------------------------------------------------------------------------------------
Total current assets 3,796.9 3,783.3 26.0 7,606.2
- --------------------------------------------------------------------------------------------------------------------------------
Plant, property and equipment 35,467.1 33,745.8 (19.7)[3b]
(82.8)[3g] 69,110.4
Less accumulated depreciation 14,843.7 16,807.7 (2.2)[3b]
(44.6)[3g] 31,604.6
- --------------------------------------------------------------------------------------------------------------------------------
20,623.4 16,938.1 (55.7) 37,505.8
Investments in unconsolidated businesses 1,999.4 1,576.8 (7.9)[3a] 3,568.3
Other assets 3,381.7 1,973.6 - 5,355.3
- --------------------------------------------------------------------------------------------------------------------------------
Total assets $ 29,801.4 $ 24,271.8 $ (37.6) $ 54,035.6
================================================================================================================================
Liabilities and Shareowners' Investment
Current liabilities
Debt maturing within one year $ 2,128.8 $ 2,087.6 $ - $ 4,216.4
Accounts payable and accrued liabilities 2,385.0 2,737.4 200.0 [3d]
36.4 [3g] 5,358.8
Other 1,302.3 751.7 - 2,054.0
- --------------------------------------------------------------------------------------------------------------------------------
Total current liabilities 5,816.1 5,576.7 236.4 11,629.2
- --------------------------------------------------------------------------------------------------------------------------------
Long-term debt 7,784.5 6,805.7 - 14,590.2
Employee benefit obligations 2,799.8 3,773.8 2,406.6 [3b] 8,980.2
Deferred credits and other liabilities
Deferred income taxes 3,099.2 1,305.7 (896.8)[3h] 3,508.1
Unamortized investment tax credits 304.4 176.7 - 481.1
Other 848.8 386.1 - 1,234.9
Minority interest, including a portion subject
to redemption requirements 567.2 80.8 - 648.0
Preferred stock of subsidiary - 85.0 - 85.0
Shareowners' investment
Common stock 439.7 436.4 (799.9)[3c] 76.2
Common stock issuable - 0.1 - 0.1
Contributed capital 6,942.0 5,428.4 155.6 [3c] 12,526.0
Reinvested earnings 2,205.0 1,144.4 (4.9)[3a]
(1,542.9)[3b]
(184.6)[3d]
(51.4)[3g] 1,565.6
Foreign currency translation adjustment 3.2 (330.8) - (327.6)
- --------------------------------------------------------------------------------------------------------------------------------
9,589.9 6,678.5 (2,428.1) 13,840.3
Less common stock in treasury, at cost 644.3 11.0 (644.3)[3c] 11.0
Less deferred compensation-employee stock ownership plans 364.2 586.2 - 950.4
- --------------------------------------------------------------------------------------------------------------------------------
Total shareowners' investment 8,581.4 6,081.3 (1,783.8) 12,878.9
- --------------------------------------------------------------------------------------------------------------------------------
Total liabilities and shareowners' investment $ 29,801.4 $ 24,271.8 $ (37.6) $ 54,035.6
================================================================================================================================
</TABLE>
See accompanying Notes to Unaudited Pro Forma Combined Condensed
Financial Statements
<PAGE>
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
Note 1 -- Reclassifications
Certain reclassifications have been made to the unaudited historical
financial statements to conform to the presentation to be used by Bell Atlantic
following the merger.
Note 2 -- Exchange Ratio
Under the Merger Agreement, each outstanding share of NYNEX Common Stock is
converted into 0.768 shares of Bell Atlantic Common Stock. This exchange ratio
was used in computing share and per share amounts in the accompanying unaudited
pro forma combined condensed financial statements.
Note 3 -- Pro Forma Adjustments
(a) A pro forma adjustment has been made to record conforming accounting
adjustments and to consolidate the accounts of cellular operations that are
jointly controlled by NYNEX and Bell Atlantic and which were accounted for
by both companies using the equity method beginning July 1, 1995.
(b) A pro forma adjustment has been made to reflect the adoption by NYNEX of
Statement of Financial Accounting Standards No. 106, "Employers' Accounting
for Postretirement Benefits Other Than Pensions," effective January 1, 1993,
by electing the immediate recognition of the transition obligation, to
conform to the method used by Bell Atlantic. In its historical consolidated
financial statements, NYNEX has amortized the transition obligation for
retired employees and active employees over a 20-year period.
(c) Pro forma adjustments have been made to reflect the issuance of shares in
the exchange ratio stated in Note 2 above, the cancellation of NYNEX
treasury stock (other than treasury shares held by consolidated subsidiaries
of NYNEX in connection with certain financing transactions), and the change
in the par value of shares of Bell Atlantic Common Stock, in accordance with
the Merger Agreement.
(d) See the fourth and subsequent paragraphs under "Unaudited Pro Forma Combined
Condensed Financial Statements" above for information related to Merger-
related costs.
(e) A pro forma adjustment has been made to reflect the initial public offering
of stock by a subsidiary of NYNEX as a capital transaction to conform to the
method to be used by the merged companies for recording such transactions.
(f) A pro forma adjustment has been made to conform the presentation of interest
charges incurred by NYNEX's financial services businesses (principally
leasing operations) from Interest expense to Operating expense.
(g) Other pro forma adjustments have been made to conform the accounting
policies of the companies.
(h) Pro forma adjustments have been made for the estimated tax effects of
adjustments discussed in (a), (b), (d), (e) and (g).
(i) A pro forma adjustment has been made to conform the computation of weighted
average number of common shares related to common stock equivalents.
<PAGE>
EXHIBIT 99.7
[LOGO OF BELL ATLANTIC APPEARS HERE]
The new
Bell Atlantic
-----------
August 1997
-----------
Pro Forma Financials
<PAGE>
BELL ATLANTIC CORPORATION 2
- -----------------------------------------------------------
PRO FORMA COMBINED STATEMENTS OF INCOME - 1994, 1995 & 1996
- -----------------------------------------------------------
<TABLE>
<CAPTION>
For the years ended December 31,
------------------------------------------------
(Dollars in millions, except per share amounts) 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 7,112.6
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 1,779.8 2,147.8 2,713.6
Other services 945.8 735.6 434.0
------------------------------------------------
Total Operating Revenues 27,098.0 27,926.8 29,155.2
------------------------------------------------
Operating Expenses
Employee costs 9,424.0 8,811.3 8,703.9
Depreciation and amortization 5,291.2 5,326.1 5,379.0
Taxes other than income 1,534.0 1,589.3 1,499.9
Other operating expenses 6,326.4 6,782.7 7,493.8
------------------------------------------------
Total Operating Expenses 22,575.6 22,509.4 23,076.6
------------------------------------------------
Operating Income 4,522.4 5,417.4 6,078.6
Income (loss) from unconsolidated businesses 65.9 (22.1) 14.2
Other income and expense, net 73.3 404.3 (99.6)
Interest expense 1,230.8 1,264.6 1,082.0
Provision for income taxes 1,205.9 1,708.9 1,782.3
------------------------------------------------
Income from Continuing Operations 2,224.9 2,826.1 3,128.9
Cumulative effect of change in accounting principle
Directory publishing, net of tax 273.1
Extraordinary items
Discontinuation of regulatory accounting
principles, net of tax (2,150.0) (2,919.4)
Early extinguishment of debt, net of tax (6.7) (3.5)
------------------------------------------------
Net Income (Loss) $ 68.2 $ (96.8) $ 3,402.0
================================================
Earnings (Loss) per Share $ .09 $ (.13) $ 4.40
================================================
Weighted average number of common shares outstanding (in millions) 757.9 764.3 773.3
</TABLE>
<PAGE>
BELL ATLANTIC CORPORATION 3
- ---------------------------------------------------------------
PRO FORMA COMBINED EARNINGS RECONCILIATIONS - 1994, 1995 & 1996
- ---------------------------------------------------------------
<TABLE>
<CAPTION>
For the years ended December 31,
---------------------------------------------------------------
Unaudited 1994 1995 1996
---------------------------------------------------------------
(Dollars in millions, except per share amounts) Net Income EPS Net Income EPS Net Income EPS
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Reported Earnings (Loss) $ 68.2 $ .09 $ (96.8) $ (.13) $ 3,402.0 $ 4.40
Adjustments:
Discontinuation of regulatory
accounting principles 2,150.0 2.84 2,919.4 3.82
Cumulative effect of change
in accounting principle (273.1) (.35)
Early extinguishment of debt 6.7 .01 3.5 .01
Force management initiatives 552.3 .73 326.8 .43 172.9 .22
Disposition (gains) and losses 25.8 .03 (204.0) (.27) 8.0 .01
Regulatory and other issues 171.8 .22 164.4 .21
---------------------------------------------------------------
Adjusted Earnings $2,803.0 $ 3.70 $3,120.7 $ 4.08 $ 3,474.2 $ 4.49
===============================================================
Adjusted Earnings Growth 11.3% 10.3% 11.3% 10.0%
</TABLE>
- --------------------------------------------------------
Pro Forma Earnings per Share Summary - 1994, 1995 & 1996
- --------------------------------------------------------
<TABLE>
<CAPTION>
For the years ended December 31,
------------------------------------
Unaudited 1994 1995 1996
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Pre-Merger Adjusted EPS $ 3.49 $ 3.88 $ 4.26
Merger effects .21 .20 .23
------------------------------------
Post-Merger Adjusted EPS $ 3.70 $ 4.08 $ 4.49
====================================
</TABLE>
<PAGE>
BELL ATLANTIC CORPORATION 4
- ---------------------------------------------------
PRO FORMA COMBINED STATEMENTS OF INCOME - QUARTERLY
- ---------------------------------------------------
<TABLE>
<CAPTION>
Unaudited For the three month periods ended
-----------------------------------------------------------------
(Dollars in millions, except per share amounts) 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 $3,110.3 $3,342.0
Network access services 1,741.6 1,783.5 1,822.5 1,765.0 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 592.4 686.1 709.7 725.4 774.1 823.6
Other services 96.1 100.4 114.5 123.0 116.7 64.4
-----------------------------------------------------------------
Total Operating Revenues 7,044.0 7,329.4 7,376.6 7,405.2 7,416.5 7,707.8
-----------------------------------------------------------------
Operating Expenses
Employee costs 2,243.8 2,166.9 2,181.6 2,111.6 2,470.1 2,149.0
Depreciation and amortization 1,340.3 1,356.0 1,331.5 1,351.2 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 1,750.5 1,828.8 1,805.7 2,108.8 1,721.6 1,964.9
-----------------------------------------------------------------
Total Operating Expenses 5,697.8 5,730.2 5,709.4 5,939.2 5,958.0 5,859.9
-----------------------------------------------------------------
Operating Income 1,346.2 1,599.2 1,667.2 1,466.0 1,458.5 1,847.9
Income (loss) from unconsolidated businesses 30.9 6.1 14.9 (37.7) (34.7) (80.7)
Other income and expense, net (1.7) (28.7) (35.0) (34.2) 9.6 (16.1)
Interest expense 277.8 268.8 266.4 269.0 329.5 291.1
Provision for income taxes 407.6 478.0 508.9 387.8 405.7 563.2
-----------------------------------------------------------------
Income from Continuing Operations 690.0 829.8 871.8 737.3 698.2 896.8
Cumulative effect of change in
accounting principle
Directory publishing, net of tax 273.1
-----------------------------------------------------------------
Net Income $ 963.1 $ 829.8 $ 871.8 $ 737.3 $ 698.2 $ 896.8
=================================================================
Earnings per Share $ 1.25 $ 1.07 $ 1.13 $ .95 $ .90 $ 1.16
=================================================================
Weighted average number of common shares
outstanding (in millions) 771.4 773.7 774.9 775.6 775.8 775.8
</TABLE>
<PAGE>
BELL ATLANTIC CORPORATION 5
- -------------------------------------------------------
PRO FORMA COMBINED QUARTERLY NET INCOME RECONCILIATIONS
- -------------------------------------------------------
<TABLE>
<CAPTION>
Unaudited For the three month periods ended
--------------------------------------------------------------
(Dollars in millions, except per share amounts) 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>
Reported Net Income $ 963.1 $ 829.8 $ 871.8 $ 737.3 $ 698.2 $ 896.8
Adjustments:
Changes in accounting principle (273.1)
Force management initiatives 66.5 30.1 13.9 62.4 243.6 30.3
Disposition (gains) and losses (45.7) 53.7
Regulatory and other issues 108.3 56.1
Restructuring CAI Wireless investment 30.0
Video-related severance charges 7.6
--------------------------------------------------------------
Adjusted Net Income $ 819.1 $ 859.9 $ 885.7 $ 909.5 $ 941.8 $ 964.7
==============================================================
Adjusted Net Income Growth 15.0% 12.2%
</TABLE>
- ---------------------------------------------------------------
Pro Forma Combined Quarterly Earnings per Share Reconciliations
- ---------------------------------------------------------------
<TABLE>
<CAPTION>
Unaudited For the three month periods ended
--------------------------------------------------------------
(Dollars in millions, except per share amounts) 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>
Reported Earnings per Share $ 1.25 $ 1.07 $ 1.13 $ .95 $ .90 $ 1.16
Adjustments:
Changes in accounting principle (.35)
Force management initiatives .09 .04 .01 .08 .31 .04
Disposition (gains) and losses (.06) .07
Regulatory and other issues .14 .07
Restructuring CAI Wireless investment .04
Video-related severance charges .01
--------------------------------------------------------------
Adjusted Earnings per Share $ 1.07 $ 1.11 $ 1.14 $ 1.17 $ 1.21 $ 1.25
==============================================================
Adjusted Earnings per Share Growth 13.1% 12.6%
</TABLE>
- ----------------------------------------------
Pro Forma Quarterly Earnings per Share Summary
- ----------------------------------------------
<TABLE>
<CAPTION>
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>
Pre-Merger Adjusted EPS $ 1.06 $ 1.05 $ 1.06 $ 1.09 $ 1.17 $ 1.17
Merger effects .01 .06 .08 .08 .04 .08
--------------------------------------------------------------
Post-Merger Adjusted EPS $ 1.07 $ 1.11 $ 1.14 $ 1.17 $ 1.21 $ 1.25
==============================================================
</TABLE>
<PAGE>
BELL ATLANTIC CORPORATION 6
- --------------------------------------------------------------------
PRO FORMA COMBINED ADJUSTED STATEMENTS OF INCOME - 1994, 1995 & 1996
- --------------------------------------------------------------------
<TABLE>
<CAPTION>
For the years ended December 31,
-----------------------------------------
(Dollars in millions, except per share amounts) 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 (9)
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 1,779.8 2,147.8 2,713.6
Other services 945.8 735.6 434.0
-----------------------------------------
Total Operating Revenues 27,098.0 27,926.8 29,287.6
-----------------------------------------
Operating Expenses
Employee costs 8,568.6 (1) 8,297.2 (4) 8,426.8 (10)
Depreciation and amortization 5,291.2 5,326.1 5,360.5 (11)
Taxes other than income 1,534.0 1,589.3 1,499.9
Other operating expenses 6,326.4 6,508.7 (5) 7,336.4 (12)
-----------------------------------------
Total Operating Expenses 21,720.2 21,721.3 22,623.6
-----------------------------------------
Operating Income 5,377.8 6,205.5 6,664.0
Income (loss) from unconsolidated businesses 65.9 (22.1) (45.4)(13)
Other income and expense, net 112.2 (2) 20.0 (6) (74.8)(14)
Interest expense 1,230.8 1,262.8 (7) 1,081.7 (15)
Provision for income taxes 1,522.1 (3) 1,819.9 (8) 1,987.9 (16)
-----------------------------------------
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:
1994
(1) Excludes $855.4 related to force management initiatives ($693.5 for an
enhanced pension offer and $161.9 for an employee severance plan)
(2) Excludes a $38.9 pre-tax loss on disposition
(3) Excludes a net reduction of $316.2 for the tax effects of items (1) and (2)
above
1995
(4) Excludes $514.1 related to force management initiatives (enhanced pension
offer)
(5) Excludes $225.8 for regulatory and other issues and $48.2 related to
dispositions
(6) Excludes $384.3 pre-tax gain on disposition (sale of conflicted cellular
properties)
(7) Excludes $1.8 for regulatory and other issues
(8) Excludes a net reduction of $111.0 for the tax effects of items (4)-(7)
above
1996
(9) Excludes a $132.4 reduction for regulatory issues
(10) Excludes $277.1 related to force management initiatives ($235.8 for an
enhanced pension offer and $41.3 for a benefit plan amendment)
(11) Excludes $ 18.5 related to dispositions
(12) Excludes $110.0 for regulatory and other issues and $47.4 related to
dispositions
(13) Excludes a $66.3 pre-tax gain on disposition (Vanstar sale) and
$6.7 of charges related to dispositions
(14) Excludes $14.9 of costs for regulatory and other issues and $9.9 of costs
related to dispositions
(15) Excludes $.3 related to dispositions
(16) Excludes a net reduction of $205.6 for the tax effects of items (9)-(15)
above
<PAGE>
BELL ATLANTIC CORPORATION 7
- ----------------------------------------------------------
PRO FORMA COMBINED ADJUSTED QUARTERLY STATEMENTS OF INCOME
- ----------------------------------------------------------
<TABLE>
<CAPTION>
Unaudited For the three month periods ended
-------------------------------------------------------------------------------------
(Dollars in millions, except per share
amounts) 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 $ 3,110.3 $ 3,342.0
Network access services 1,796.6 (1) 1,783.5 1,822.5 1,842.4 (11) 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 592.4 686.1 709.7 725.4 774.1 823.6
Other services 96.1 100.4 114.5 123.0 116.7 64.4
-------------------------------------------------------------------------------------
Total Operating Revenues 7,099.0 7,329.4 7,376.6 7,482.6 7,416.5 7,707.8
-------------------------------------------------------------------------------------
Operating Expenses
Employee costs 2,136.0 (2) 2,119.7 (7) 2,159.7 (9) 2,011.4 (12) 2,083.3 (19) 2,089.9 (21)
Depreciation and amortization 1,340.3 1,356.0 1,331.5 1,332.7 (13) 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 1,640.5 (3) 1,828.8 1,805.7 2,061.4 (14) 1,721.6 1,964.9
-------------------------------------------------------------------------------------
Total Operating Expenses 5,480.0 5,683.0 5,687.5 5,773.1 5,571.2 5,800.8
-------------------------------------------------------------------------------------
Operating Income 1,619.0 1,646.4 1,689.1 1,709.5 1,845.3 1,907.0
Income (loss) from
unconsolidated businesses (35.4)(4) 6.1 14.9 (31.0)(15) (34.7) (50.7)(22)
Other income and expense, net 0.2 (5) (28.7) (35.0) (11.3)(16) 9.6 (16.1)
Interest expense 277.8 268.8 266.4 268.7 (17) 329.5 291.1
Provision for income taxes 486.9 (6) 495.1 (8) 516.9 (10) 489.0 (18) 548.9 (20) 584.4 (23)
-------------------------------------------------------------------------------------
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:
1st Quarter 1996
(1) Excludes a $55.0 reduction for regulatory issues
(2) Excludes $107.8 related to force management initiatives (enhanced pension
offer)
(3) Excludes $110.0 for regulatory and other issues
(4) Excludes a $66.3 pre-tax gain on disposition (Vanstar sale)
(5) Excludes $1.9 of costs for regulatory and other issues
(6) Excludes a net reduction of $79.3 for the tax effects of items (1)-(5)
above
2nd Quarter 1996
(7) Excludes $47.2 related to force management initiatives (enhanced pension
offer)
(8) Excludes a reduction of $17.1 for the tax effects of item (7) above
3rd Quarter 1996
(9) Excludes $21.9 related to force management initiatives (enhanced pension
offer)
(10) Excludes a reduction of $8.0 for the tax effects of item (9) above
4th Quarter 1996
(11) Excludes a $77.4 reduction for regulatory issues
(12) Excludes $100.2 related to force management initiatives ($58.9 for an
enhanced pension offer and $41.3 for a benefit plan amendment)
(13) Excludes $18.5 related to dispositions
(14) Excludes $47.4 related to dispositions
(15) Excludes $6.7 of charges related to dispositions
(16) Excludes $13.0 of costs for regulatory and other issues and $9.9 of costs
related to dispositions
(17) Excludes $.3 related to dispositions
(18) Excludes a net reduction of $101.2 for the tax effects of items
(11)-(17) above
1st Quarter 1997
(19) Excludes $386.8 related to force management initiatives (enhanced pension
offer)
(20) Excludes reduction of $143.2 for the tax effects of item (19) above
2nd Quarter 1997
(21) Excludes $47.4 related to force management initiatives (enhanced pension
offer) and $11.7 for video-related severance costs
(22) Excludes a $30.0 charge associated with restructuring our investment in CAI
Wireless
(23) Excludes reduction of $21.2 for the tax effects of item (21) above
<PAGE>
BELL ATLANTIC CORPORATION 8
- ----------------------------------------------
PRO FORMA COMBINED STATEMENTS OF INCOME - 1994
- ----------------------------------------------
<TABLE>
<CAPTION>
For the year ended December 31, 1994
--------------------------------------------------------------
Historical Historical Pro Forma Pro Forma
(Dollars in millions, except per share amounts) Unaudited NYNEX Bell Atlantic Adjustments Combined
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operating Revenues
Local services $ 6,605.4 $ 5,239.5 $ $11,844.9
Network access services 3,447.0 3,237.6 6,684.6
Long distance services 1,081.2 1,555.5 2,636.7
Ancillary services 377.5 850.1 1,227.6
Directory and information services 894.4 1,084.2 1,978.6
Wireless services 720.0 1,059.8 1,779.8
Other services 181.1 764.7 945.8
--------------------------------------------------------------
Total Operating Revenues 13,306.6 13,791.4 27,098.0
--------------------------------------------------------------
Operating Expenses
Employee costs 5,152.1 4,333.1 (61.2)(b) 9,424.0
Depreciation and amortization 2,640.6 2,652.1 (1.5)(b) 5,291.2
Taxes other than income 927.8 606.2 1,534.0
Other operating expenses 2,868.1 3,426.1 25.1 (c)
7.1 (d) 6,326.4
--------------------------------------------------------------
Total Operating Expenses 11,588.6 11,017.5 (30.5) 22,575.6
--------------------------------------------------------------
Operating Income 1,718.0 2,773.9 30.5 4,522.4
Income from unconsolidated businesses 57.7 41.1 (32.9)(a) 65.9
Other income and expense, net (5.6) 53.9 25.0 (a) 73.3
Interest expense 673.8 582.1 (25.1)(c) 1,230.8
Provision for income taxes 303.7 884.9 17.3 (f) 1,205.9
--------------------------------------------------------------
Income from Continuing Operations 792.6 1,401.9 30.4 2,224.9
Extraordinary items
Discontinuation of regulatory accounting principles, net of tax (2,150.0) (2,150.0)
Early extinguishment of debt, net of tax (6.7) (6.7)
--------------------------------------------------------------
Net Income (Loss) $ 792.6 $ (754.8) $ 30.4 $ 68.2
==============================================================
Earnings (Loss) per Share $ 1.89 $ (1.73) $ 0.09
==============================================================
Weighted average number of common shares 418.8 437.2 (97.2)(g)
outstanding (in millions) (.9)(h) 757.9
</TABLE>
Footnotes:
(a)-(h) See page 19 for explanations
- ------------------------------------------
Additional Pro Forma Financial Data - 1994
- ------------------------------------------
<TABLE>
<CAPTION>
Unaudited (Dollars in millions)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Capital Expenditures Employees
Telecom $ 4,589 Telecom 130,284
Domestic Cellular 559 Other 12,566 (1)
Other 502 ---------
-------- Total 142,850
Total $ 5,650 =========
========
</TABLE>
Footnotes:
(1) Includes approximately 4,300 employees at Business Systems Services, which
was sold in October 1995
<PAGE>
BELL ATLANTIC CORPORATION 9
- ----------------------------------------------
PRO FORMA COMBINED STATEMENTS OF INCOME - 1995
- ----------------------------------------------
<TABLE>
<CAPTION>
For the year ended December 31, 1995
------------------------------------------------------------
Historical Historical Pro Forma Pro Forma
(Dollars in millions, except per share amounts) Unaudited NYNEX Bell Atlantic Adjustments Combined
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operating Revenues
Local services $ 6,722.2 $ 5,419.0 $ (25.9)(a) $12,115.3
Network access services 3,557.5 3,394.7 6,952.2
Long distance services 1,039.2 1,435.1 2,474.3
Ancillary services 487.9 962.9 1,450.8
Directory and information services 943.1 1,107.7 2,050.8
Wireless services 399.8 628.0 1,120.0 (a) 2,147.8
Other services 257.2 482.1 (3.7)(a) 735.6
-------------------------------------------------------------
Total Operating Revenues 13,406.9 13,429.5 1,090.4 27,926.8
-------------------------------------------------------------
Operating Expenses
Employee costs 4,770.0 4,022.0 141.5 (a)
(122.2)(b) 8,811.3
Depreciation and amortization 2,566.8 2,627.1 134.4 (a)
(2.1)(b)
(.1)(d) 5,326.1
Taxes other than income 949.6 618.4 21.3 (a) 1,589.3
Other operating expenses 3,065.5 3,101.1 556.7 (a)
30.3 (c)
29.1 (d) 6,782.7
-------------------------------------------------------------
Total Operating Expenses 11,351.9 10,368.6 788.9 22,509.4
-------------------------------------------------------------
Operating Income 2,055.0 3,060.9 301.5 5,417.4
Income (loss) from unconsolidated businesses 86.6 152.5 (261.2)(a) (22.1)
Other income and expense, net 38.6 357.0 8.7 (a) 404.3
Gain on sale of stock by subsidiary 264.1 (264.1)(e)
Interest expense 733.9 561.0 (30.3)(c) 1,264.6
Provision for income taxes 640.9 1,147.6 1.0 (a)
(80.6)(f) 1,708.9
-------------------------------------------------------------
Income from Continuing Operations 1,069.5 1,861.8 (105.2) 2,826.1
Extraordinary items
Discontinuation of regulatory accounting principles, net of tax (2,919.4) (2,919.4)
Early extinguishment of debt, net of tax (3.5) (3.5)
-------------------------------------------------------------
Net Income (Loss) $(1,849.9) $ 1,858.3 $ (105.2) $ (96.8)
=============================================================
Earnings (Loss) per Share $ (4.34) $ 4.24 $ (0.13)
=============================================================
Weighted average number of common shares 426.5 438.3 (98.9)(g)
outstanding (in millions) (1.6)(h) 764.3
</TABLE>
Footnotes:
(a)-(h) See page 19 for explanations
- ------------------------------------------
Additional Pro Forma Financial Data - 1995
- ------------------------------------------
<TABLE>
<CAPTION>
Unaudited (Dollars in millions)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Capital Expenditures Employees
Telecom $ 4,880 Telecom 123,631
Domestic Cellular 708 Other 9,455
Other 681 --------
-------- Total 133,086
Total $ 6,269 ========
========
</TABLE>
<PAGE>
BELL ATLANTIC CORPORATION 10
- ----------------------------------------------
PRO FORMA COMBINED STATEMENTS OF INCOME - 1996
- ----------------------------------------------
<TABLE>
<CAPTION>
For the year ended December 31, 1996
----------------------------------------------------------------
Historical Historical Pro Forma Pro Forma
(Dollars in millions, except per share amounts) Unaudited NYNEX Bell Atlantic Adjustments Combined
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operating Revenues
Local services $ 6,805.6 $ 5,815.4 $ (61.9)(a) $12,559.1
Network access services 3,655.8 3,456.8 7,112.6
Long distance services 984.8 1,388.8 2,373.6
Ancillary services 647.1 1,090.9 1,738.0
Directory and information services 1,001.8 1,222.5 2,224.3
Wireless services - 3.2 2,710.4 (a) 2,713.6
Other services 359.1 104.1 (29.2)(a) 434.0
-------------------------------------------------------------
Total Operating Revenues 13,454.2 13,081.7 2,619.3 29,155.2
-------------------------------------------------------------
Operating Expenses
Employee costs 4,500.3 3,921.6 377.3 (a)
(95.3)(b) 8,703.9
Depreciation and amortization 2,499.3 2,594.6 302.7 (a)
(2.7)(b)
(14.9)(d) 5,379.0
Taxes other than income 815.8 631.0 53.1 (a) 1,499.9
Other operating expenses 3,077.6 3,037.6 1,312.1 (a)
33.9 (c)
32.6 (d) 7,493.8
-------------------------------------------------------------
Total Operating Expenses 10,893.0 10,184.8 1,998.8 23,076.6
-------------------------------------------------------------
Operating Income 2,561.2 2,896.9 620.5 6,078.6
Income from unconsolidated businesses 209.4 327.9 (523.1)(a) 14.2
Other income and expense, net (46.7) 3.7 (56.6)(a) (99.6)
Interest expense 636.6 477.9 1.4 (a)
(33.9)(c) 1,082.0
Provision for income taxes 741.3 1,011.2 5.2 (a)
24.6 (f) 1,782.3
-------------------------------------------------------------
Income from Continuing Operations 1,346.0 1,739.4 43.5 3,128.9
Cumulative effect of change in accounting principle
Directory publishing income, net of tax 131.0 142.1 273.1
-------------------------------------------------------------
Net Income $ 1,477.0 $ 1,881.5 $ 43.5 $ 3,402.0
=============================================================
Earnings per Share $ 3.38 $ 4.28 $ 4.40
=============================================================
Weighted average number of common shares 436.9 439.6 (101.4)(g)
outstanding (in millions) (1.8)(h) 773.3
</TABLE>
Footnotes:
(a)-(h) See page 19 for explanations
- ------------------------------------------
Additional Pro Forma Financial Data - 1996
- ------------------------------------------
<TABLE>
<CAPTION>
Unaudited (Dollars in millions)
- ---------------------------------------------------------------------------------
<S> <C> <C> <C>
Capital Expenditures Employees
Telecom $ 4,928 Telecom 127,296
Domestic Cellular 935 Other 9,859
Other 530 --------
-------- Total 137,155
Total $ 6,393 ========
========
</TABLE>
<PAGE>
BELL ATLANTIC CORPORATION 11
- ----------------------------------------------------------
PRO FORMA COMBINED STATEMENTS OF INCOME - 1ST QUARTER 1996
- ----------------------------------------------------------
<TABLE>
<CAPTION>
For the three months ended March 31, 1996
---------------------------------------------------------------
Historical Historical Pro Forma Pro Forma
(Dollars in millions, except per share amounts) Unaudited NYNEX Bell Atlantic Adjustments Combined
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operating Revenues
Local services $1,669.0 $1,412.6 $ (13.5)(a) $3,068.1
Network access services 863.7 877.9 1,741.6
Long distance services 274.5 369.6 644.1
Ancillary services 138.5 237.5 376.0
Directory and information services 227.2 298.5 525.7
Wireless services - 0.3 592.1 (a) 592.4
Other services 81.1 23.7 (8.7)(a) 96.1
-------------------------------------------------------------
Total Operating Revenues 3,254.0 3,220.1 569.9 7,044.0
-------------------------------------------------------------
Operating Expense
Employee costs 1,197.3 982.4 84.7 (a)
(20.6)(b) 2,243.8
Depreciation and amortization 640.3 628.9 76.5 (a)
(2.1)(b)
(3.3)(d) 1,340.3
Taxes other than income 193.7 156.9 12.6 (a) 363.2
Other operating expenses 797.7 657.7 282.5 (a)
8.1 (c)
4.5 (d) 1,750.5
-------------------------------------------------------------
Total Operating Expenses 2,829.0 2,425.9 442.9 5,697.8
-------------------------------------------------------------
Operating Income 425.0 794.2 127.0 1,346.2
Income from unconsolidated businesses 69.0 71.6 (109.7)(a) 30.9
Other income and expense, net 1.4 3.7 (6.8)(a) (1.7)
Interest expense 165.1 120.8 (8.1)(c) 277.8
Provision for income taxes 116.5 284.0 .6 (a)
6.5 (f) 407.6
-------------------------------------------------------------
Income from Continuing Operations 213.8 464.7 11.5 690.0
Cumulative effect of change in accounting principle
Directory publishing, net of tax 131.0 142.1 273.1
-------------------------------------------------------------
Net Income $ 344.8 $ 606.8 $ 11.5 $ 963.1
=============================================================
Earnings per Share $ .79 $ 1.38 $ 1.25
=============================================================
Weighted average number of common shares 434.5 440.2 (100.8)(g)
outstanding (in millions) (2.5)(h) 771.4
</TABLE>
Footnotes:
(a)-(h) See page 19 for explanations
- ------------------------------------------------------
Additional Pro Forma Financial Data - 1st Quarter 1996
- ------------------------------------------------------
<TABLE>
<CAPTION>
Unaudited (Dollars in millions)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Capital Expenditures Employees
Telecom $ 855 Telecom 123,959
Domestic Cellular 115 Other 8,973
Other 134 --------
-------- Total 132,932
Total $ 1,104 ========
========
</TABLE>
<PAGE>
BELL ATLANTIC CORPORATION 12
- ----------------------------------------------------------
PRO FORMA COMBINED STATEMENTS OF INCOME - 2ND QUARTER 1996
- ----------------------------------------------------------
<TABLE>
<CAPTION>
For the three months ended June 30, 1996
---------------------------------------------------------------
Historical Historical Pro Forma Pro Forma
(Dollars in millions, except per share amounts) Unaudited NYNEX Bell Atlantic Adjustments Combined
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operating Revenues
Local services $1,674.2 $1,455.1 $ (17.0)(a) $3,112.3
Network access services 915.7 867.8 1,783.5
Long distance services 263.6 350.1 613.7
Ancillary services 179.3 268.2 447.5
Directory and information services 333.0 252.9 585.9
Wireless services - 0.8 685.3 (a) 686.1
Other services 80.1 28.7 (8.4)(a) 100.4
--------------------------------------------------------------
Total Operating Revenues 3,445.9 3,223.6 659.9 7,329.4
--------------------------------------------------------------
Operating Expenses
Employee costs 1,113.9 981.8 92.5 (a)
(21.3)(b) 2,166.9
Depreciation and amortization 639.8 638.8 81.1 (a)
(.2)(b)
(3.5)(d) 1,356.0
Taxes other than income 210.0 155.2 13.3 (a) 378.5
Other operating expenses 788.4 701.4 320.8 (a)
8.8 (c)
9.4 (d) 1,828.8
--------------------------------------------------------------
Total Operating Expenses 2,752.1 2,477.2 500.9 5,730.2
--------------------------------------------------------------
Operating Income 693.8 746.4 159.0 1,599.2
Income from unconsolidated businesses 49.5 94.3 (137.7)(a) 6.1
Other income and expense, net (17.8) 3.9 (14.8)(a) (28.7)
Interest expense 156.4 119.8 1.4 (a)
(8.8)(c) 268.8
Provision for income taxes 211.1 261.1 1.2 (a)
4.6 (f) 478.0
--------------------------------------------------------------
Net Income $ 358.0 $ 463.7 $ 8.1 $ 829.8
==============================================================
Earnings per Share $ .82 $ 1.05 $ 1.07
==============================================================
Weighted average number of common shares 437.4 439.6 (101.5)(g)
outstanding (in millions) (1.8)(h) 773.7
</TABLE>
Footnotes:
(a)-(h) See page 19 for explanations
- ------------------------------------------------------
Additional Pro Forma Financial Data - 2nd Quarter 1996
- ------------------------------------------------------
<TABLE>
<CAPTION>
Unaudited (Dollars in millions)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Capital Expenditures Employees
Telecom $ 1,039 Telecom 124,453
Domestic Cellular 227 Other 9,439
Other 113 --------
-------- Total 133,892
Total $ 1,379 ========
========
</TABLE>
<PAGE>
BELL ATLANTIC CORPORATION 13
- ----------------------------------------------------------
PRO FORMA COMBINED STATEMENTS OF INCOME - 3RD QUARTER 1996
- ----------------------------------------------------------
<TABLE>
<CAPTION>
For the three months ended September 30, 1996
----------------------------------------------------------------
Historical Historical Pro Forma Pro Forma
(Dollars in millions, except per share amounts) Unaudited NYNEX Bell Atlantic Adjustments Combined
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operating Revenues
Local services $1,695.7 $1,472.2 $ (16.5)(a) $3,151.4
Network access services 935.6 886.9 1,822.5
Long distance services 274.0 340.2 614.2
Ancillary services 163.9 281.0 444.9
Directory and information services 262.6 256.8 519.4
Wireless services - 1.1 708.6 (a) 709.7
Other services 92.0 28.4 (5.9)(a) 114.5
--------------------------------------------------------------
Total Operating Revenues 3,423.8 3,266.6 686.2 7,376.6
--------------------------------------------------------------
Operating Expenses
Employee costs 1,089.5 1,018.9 98.7 (a)
(25.5)(b) 2,181.6
Depreciation and amortization 611.3 649.1 75.1 (a)
(.2)(b)
(3.8)(d) 1,331.5
Taxes other than income 214.9 163.1 12.6 (a) 390.6
Other operating expenses 767.3 681.8 342.6 (a)
8.8 (c)
5.2 (d) 1,805.7
--------------------------------------------------------------
Total Operating Expenses 2,683.0 2,512.9 513.5 5,709.4
--------------------------------------------------------------
Operating Income 740.8 753.7 172.7 1,667.2
Income from unconsolidated businesses 49.8 105.8 (140.7)(a) 14.9
Other income and expense, net (10.3) (3.7) (21.0)(a) (35.0)
Interest expense 155.3 119.9 (8.8)(c) 266.4
Provision for income taxes 230.5 270.5 1.1 (a)
6.8 (f) 508.9
--------------------------------------------------------------
Net Income $ 394.5 $ 465.4 $ 11.9 $ 871.8
==============================================================
Earnings per Share $ .90 $ 1.06 $ 1.13
==============================================================
Weighted average number of common shares 439.0 439.1 (101.9)(g)
outstanding (in millions) (1.3)(h) 774.9
</TABLE>
Footnotes:
(a)-(h) See page 19 for explanations
- ------------------------------------------------------
Additional Pro Forma Financial Data - 3rd Quarter 1996
- ------------------------------------------------------
<TABLE>
<CAPTION>
Unaudited (Dollars in millions)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Capital Expenditures Employees
Telecom $ 1,299 Telecom 125,692
Domestic Cellular 263 Other 9,690
Other 104 --------
-------- Total 135,382
Total $ 1,666 ========
========
</TABLE>
<PAGE>
BELL ATLANTIC CORPORATION 14
- ----------------------------------------------------------
PRO FORMA COMBINED STATEMENTS OF INCOME - 4TH QUARTER 1996
- ----------------------------------------------------------
<TABLE>
<CAPTION>
For the three months ended December 31, 1996
---------------------------------------------------------------
Historical Historical Pro Forma Pro Forma
(Dollars in millions, except per share amounts) Unaudited NYNEX Bell Atlantic Adjustments Combined
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operating Revenues
Local services $1,766.7 $1,475.5 $ (14.9)(a) $3,227.3
Network access services 940.8 824.2 1,765.0
Long distance services 172.7 328.9 501.6
Ancillary services 165.4 304.2 469.6
Directory and information services 179.0 414.3 593.3
Wireless services - 1.0 724.4 (a) 725.4
Other services 105.9 23.3 (6.2)(a) 123.0
-------------------------------------------------------------
Total Operating Revenues 3,330.5 3,371.4 703.3 7,405.2
-------------------------------------------------------------
Operating Expenses
Employee costs 1,099.6 938.5 101.4 (a)
(27.9)(b) 2,111.6
Depreciation and amortization 607.9 677.8 70.0 (a)
(.2)(b)
(4.3)(d) 1,351.2
Taxes other than income 197.2 155.8 14.6 (a) 367.6
Other operating expenses 724.2 996.7 366.2 (a)
8.2 (c)
13.5 (d) 2,108.8
-------------------------------------------------------------
Total Operating Expenses 2,628.9 2,768.8 541.5 5,939.2
-------------------------------------------------------------
Operating Income 701.6 602.6 161.8 1,466.0
Income (loss) from unconsolidated businesses 41.1 56.2 (135.0)(a) (37.7)
Other income and expense, net (20.0) (.2) (14.0)(a) (34.2)
Interest expense 159.8 117.4 (8.2)(c) 269.0
Provision for income taxes 183.2 195.6 2.3 (a)
6.7 (f) 387.8
-------------------------------------------------------------
Net Income $ 379.7 $ 345.6 $ 12.0 $ 737.3
=============================================================
Earnings per Share $ .86 $ .79 $ .95
=============================================================
Weighted average number of common shares 439.9 439.4 (102.1)(g)
outstanding (in millions) (1.6)(h) 775.6
</TABLE>
Footnotes:
(a)-(h) See page 19 for explanations
- ------------------------------------------------------
Additional Pro Forma Financial Data - 4th Quarter 1996
- ------------------------------------------------------
<TABLE>
<CAPTION>
Unaudited (Dollars in millions)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Capital Expenditures Employees
Telecom $ 1,736 Telecom 127,296
Domestic Cellular 330 Other 9,859
Other 178 --------
-------- Total 137,155
Total $ 2,244 ========
========
</TABLE>
<PAGE>
BELL ATLANTIC CORPORATION 15
- ----------------------------------------------------------
PRO FORMA COMBINED STATEMENTS OF INCOME - 1ST QUARTER 1997
- ----------------------------------------------------------
<TABLE>
<CAPTION>
For the three months ended March 31, 1997
---------------------------------------------------------------
Historical Historical Pro Forma Pro Forma
(Dollars in millions, except per share amounts) Unaudited NYNEX Bell Atlantic Adjustments Combined
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operating Revenues
Local services $1,627.8 $1,496.3 $ (13.8)(a) $3,110.3
Network access services 941.7 917.1 1,858.8
Long distance services 234.1 335.9 570.0
Ancillary services 170.7 285.0 455.7
Directory and information services 225.4 305.5 530.9
Wireless services - 52.7 721.4 (a) 774.1
Other services 101.8 21.4 (6.5)(a) 116.7
-------------------------------------------------------------
Total Operating Revenues 3,301.5 3,413.9 701.1 7,416.5
-------------------------------------------------------------
Operating Expenses
Employee costs 1,447.1 954.5 102.8 (a)
(34.3)(b) 2,470.1
Depreciation and amortization 614.1 671.4 94.4 (a)
(2.9)(b)
(5.7)(d) 1,371.3
Taxes other than income 215.2 163.6 16.2 (a) 395.0
Other operating expenses 616.4 734.8 346.8 (a)
10.5 (c)
13.1 (d) 1,721.6
-------------------------------------------------------------
Total Operating Expenses 2,892.8 2,524.3 540.9 5,958.0
-------------------------------------------------------------
Operating Income 408.7 889.6 160.2 1,458.5
Income (loss) from unconsolidated businesses 40.9 47.6 (123.2)(a) (34.7)
Other income and expense, net (12.9) 31.0 (13.4)(a)
4.9 (d) 9.6
Interest expense 202.5 137.5 (10.5)(c) 329.5
Provision for income taxes 74.6 315.1 1.6 (a)
14.4 (f) 405.7
-------------------------------------------------------------
Net Income $ 159.6 $ 515.6 $ 23.0 $ 698.2
=============================================================
Earnings per Share $ .36 $ 1.17 $ .90
=============================================================
Weighted average number of common shares 440.1 439.9 (102.1)(g)
outstanding (in millions) (2.1)(h) 775.8
</TABLE>
Footnotes:
(a)-(h) See page 19 for explanations
- ------------------------------------------------------
Additional Pro Forma Financial Data - 1st Quarter 1997
- ------------------------------------------------------
<TABLE>
<CAPTION>
Unaudited (Dollars in millions)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Capital Expenditures Employees
Telecom $ 1,102 Telecom 128,796
Domestic Cellular 240 Other 12,482 (1)
Other 106 --------
-------- Total 141,278
Total $ 1,448 ========
========
</TABLE>
Footnotes:
(1) Includes approximately 2,300 employees at Grupo Iusacell, which we began
consolidating in February 1997
<PAGE>
BELL ATLANTIC CORPORATION 16
- ----------------------------------------------------------
PRO FORMA COMBINED STATEMENTS OF INCOME - 2ND QUARTER 1997
- ----------------------------------------------------------
<TABLE>
<CAPTION>
For the three months ended June 30, 1997
---------------------------------------------------------------
Historical Historical Pro Forma Pro Forma
(Dollars in millions, except per share amounts) Unaudited NYNEX Bell Atlantic Adjustments Combined
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operating Revenues
Local services $1,788.3 $1,566.6 $ (12.9)(a) $3,342.0
Network access services 944.3 908.5 1,852.8
Long distance services 233.2 328.2 561.4
Ancillary services 137.0 304.2 441.2
Directory and information services 357.3 265.1 622.4
Wireless services - 51.8 771.8 (a) 823.6
Other services 53.5 16.4 (5.5)(a) 64.4
-------------------------------------------------------------
Total operating revenues 3,513.6 3,440.8 753.4 7,707.8
-------------------------------------------------------------
Operating Expenses
Employee costs 1,102.3 963.1 107.6 (a)
(24.0)(b) 2,149.0
Depreciation and amortization 582.6 685.0 104.5 (a)
(.2)(b)
(8.1)(d) 1,363.8
Taxes other than income 210.6 154.9 16.7 (a) 382.2
Other operating expenses 858.4 744.3 345.6 (a)
10.6 (c)
6.0 (d) 1,964.9
-------------------------------------------------------------
Total operating expenses 2,753.9 2,547.3 558.7 5,859.9
-------------------------------------------------------------
Operating Income 759.7 893.5 194.7 1,847.9
Income (loss) from unconsolidated businesses 23.4 59.3 (163.4)(a) (80.7)
Other income and expense, net (8.6) 1.8 (8.0)(a)
(1.3)(d) (16.1)
Interest expense 167.1 131.4 3.2 (a)
(10.6)(c) 291.1
Provision for income taxes 226.9 324.3 1.8 (a)
10.2 (f) 563.2
-------------------------------------------------------------
Net Income $ 380.5 $ 498.9 $ 17.4 $ 896.8
=============================================================
Earnings per Share $ .86 $ 1.14 $ 1.16
=============================================================
Weighted average number of common shares 440.5 439.5 (102.2)(g)
outstanding (in millions) (2.0)(h) 775.8
</TABLE>
Footnotes:
(a)-(h) See page 19 for explanations
- ------------------------------------------------------
Additional Pro Forma Financial Data - 2nd Quarter 1997
- ------------------------------------------------------
<TABLE>
<CAPTION>
Unaudited (Dollars in millions)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Capital Expenditures Employees
Telecom $ 1,328 Telecom 132,029
Domestic Cellular 260 Other 9,582
Other 39 --------
-------- Total 141,611
Total $ 1,627 ========
========
</TABLE>
<PAGE>
BELL ATLANTIC CORPORATION 17
- ---------------------------------
PRO FORMA COMBINED BALANCE SHEETS
- ---------------------------------
<TABLE>
<CAPTION>
(Dollars in millions)
Unaudited 12/31/94 12/31/95 12/31/96 6/30/97
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets
Current assets
Cash and cash equivalents $ 280.4 $ 462.9 $ 249.4 $ 185.9
Short-term investments 7.0 10.9 300.5 240.7
Accounts receivable, net 4,815.2 5,231.5 6,168.9 6,142.5
Inventories 450.8 362.4 478.4 544.5
Prepaid expenses 906.7 1,003.9 716.3 749.2
Other 1,146.1 906.8 471.7 513.7
---------------------------------------------
Total current assets 7,606.2 7,978.4 8,385.2 8,376.5
---------------------------------------------
Plant, property and equipment 69,110.4 72,034.0 75,679.5 75,829.0
Less accumulated depreciation 31,604.6 37,164.2 39,544.7 41,198.4
---------------------------------------------
37,505.8 34,869.8 36,134.8 34,630.6
Investments in unconsolidated businesses 3,568.3 4,151.5 4,922.2 5,239.5
Other assets 5,355.3 3,638.8 3,883.0 4,362.8
---------------------------------------------
Total Assets $54,035.6 $50,638.5 $53,325.2 $52,609.4
=============================================
Liabilities and Shareowners' Investment
Current liabilities
Debt maturing within one year $ 4,216.4 $ 2,622.8 $ 2,884.2 $ 5,938.1
Accounts payable and accrued liabilities 5,358.8 5,896.2 6,123.3 5,006.0
Other 2,054.0 1,596.8 1,491.1 1,491.3
---------------------------------------------
Total current liabilities 11,629.2 10,115.8 10,498.6 12,435.4
---------------------------------------------
Long-term debt 14,590.2 15,744.1 15,286.0 13,202.4
Employee benefit obligations 8,980.2 9,388.4 9,588.0 9,879.0
Deferred credits and other liabilities
Deferred income taxes 3,508.1 1,677.8 1,846.9 1,872.9
Unamortized investment tax credits 481.1 346.1 288.8 267.4
Other 1,234.9 971.2 865.9 834.6
Minority interest, including a portion
subject to redemption requirements 648.0 1,221.1 2,014.2 933.5
Preferred stock of subsidiary 85.0 145.0 145.0 135.0
Shareowners' investment
Common stock 76.2 77.2 78.7 78.8
Common stock issuable .1
Contributed capital 12,526.0 12,452.9 13,295.0 13,278.7
Reinvested earnings 1,565.6 - 1,095.2 1,493.7
Foreign currency translation adjustment (327.6) (541.3) (319.4) (492.9)
---------------------------------------------
13,840.3 11,988.8 14,149.5 14,358.3
Less common stock in treasury, at cost 11.0 97.9 589.3 593.4
Less deferred compensation-employee
stock ownership plans 950.4 861.9 768.4 715.7
---------------------------------------------
Total shareowners' investment 12,878.9 11,029.0 12,791.8 13,049.2
=============================================
Total Liabilities and Shareowners' Investment $54,035.6 $50,638.5 $53,325.2 $52,609.4
=============================================
</TABLE>
- -----------------------------------
Selected Pro Forma Financial Ratios
- -----------------------------------
<TABLE>
<CAPTION>
Unaudited 12/31/94 12/31/95 12/31/96 6/30/97
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Debt ratio 59.4% 62.5% 58.7% 59.5%
Return on average common
equity - adjusted basis 19.1% 20.1% 20.5% 21.3%
Return on average total
capital - adjusted basis 10.6% 11.6% 11.9% 12.6%
</TABLE>
<PAGE>
BELL ATLANTIC CORPORATION 18
- -----------------------------
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
interexchange (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 19
- -------------------------------------------
PRO FORMA ADJUSTMENTS AND RECLASSIFICATIONS
- -------------------------------------------
Pro Forma Adjustments
The following explanations of pro forma adjustments relate to items identified
on pages 8-16.
(a)A pro forma adjustment has been made to record conforming accounting
adjustments and to consolidate the accounts of cellular operations that are
jointly controlled by NYNEX and Bell Atlantic and which were accounted for
by both companies using the equity method beginning July 1, 1995.
(b)A pro forma adjustment had been made to reflect the adoption by NYNEX of
Statement of Financial Accounting Standards No. 106, "Employers' Accounting
for Postretirement Benefits Other Than Pensions," effective January 1,
1993, by electing the immediate recognition of the transition obligation,
to conform to the method used by Bell Atlantic. In its historical
consolidated financial statements, NYNEX has amortized the transition
obligation for retired employees and active employees over a 20-year
period.
(c)A pro forma adjustment has been made to conform the presentation of
interest charges incurred by the NYNEX financial services businesses
(principally leasing operations) from Interest expense to Operating
expense.
(d)Other pro forma adjustments have been made to conform the accounting
policies of the companies.
(e)A pro forma adjustment has been made to reflect the initial public offering
of stock by a subsidiary of NYNEX as a capital transaction to conform to
the method to be used by the merged companies for recording such
transactions.
(f)Pro forma adjustments have been made for the estimated tax effects of
adjustments discussed above.
(g)Under the Merger Agreement, each outstanding share of NYNEX Common Stock is
converted into 0.768 shares of Bell Atlantic Common Stock. This exchange
ratio was used in computing share and per share amounts in the accompanying
unaudited pro forma combined financial statements.
(h)A pro forma adjustment has been made to conform the computation of
weighted average number of common shares related to common stock
equivalents.
Reclassifications
Certain reclassifications have been made to the unaudited historical financial
statements to conform to the presentation used by Bell Atlantic following the
merger.
- ------------------------------------------
NET INCOME EFFECT OF PRO FORMA ADJUSTMENTS
- ------------------------------------------
<TABLE>
<CAPTION>
(Dollars in millions)
Unaudited For the years ended December 31 For the three month periods ended
-------------------------------- --------------------------------------------------------------
Increase(Decrease) 1994 1995 1996 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> <C> <C> <C>
(a)Cellular adjustments/
consolidation $(4.9) $(10.5) $(7.6) $(2.2) $(1.8) $(3.5) $ (.1) $ 1.7 $ 1.6
(b)NYNEX FAS 106 - OPEB
treatment 39.8 79.0 62.4 14.5 13.7 16.3 17.9 23.7 15.4
(d)Other conforming
adjustments (4.5) (18.5) (11.3) (.8) (3.8) (.9) (5.8) (2.4) .4
(e)NYNEX CableComms
adjustment (155.2)
-------------------------------- --------------------------------------------------------------
Net Income Effect $30.4 $(105.2) $43.5 $11.5 $8.1 $11.9 $12.0 $23.0 $17.4
================================ ==============================================================
</TABLE>
<PAGE>
BELL ATLANTIC CORPORATION 20
- -----------------------------------------------------
TELECOM SECTOR - SELECTED PRO FORMA FINANCIAL RESULTS
- -----------------------------------------------------
<TABLE>
<CAPTION>
Unaudited For the years ended December 31, For the six month period ended
------------------------------------------------- -------------------------------
(Dollars in millions) 1994 1995 1996 6/30/97
- ----------------------------------------------------------------------------------------- -------------------------------
<S> <C> <C> <C> <C>
Operating Revenues
Local services $11,885.5 $12,167.6 $12,624.2 $6,480.5
Network access services 6,685.7 6,953.5 7,246.5 (4) 3,712.3
Long distance services 2,637.0 2,474.7 2,374.2 1,131.9
Ancillary services 1,271.0 1,508.9 1,781.0 915.1
Directory and information services 1,978.6 2,050.8 2,224.3 1,153.3
-----------------------------------------------------------------------------------
Total Operating Revenues 24,457.8 25,155.5 26,250.2 13,393.1
-----------------------------------------------------------------------------------
Operating Expenses
Employee costs 7,894.3 (1) 7,761.4 (2) 7,889.0 (5) 3,870.3 (8)
Depreciation and amortization 4,922.8 4,945.1 4,945.2 (6) 2,459.6
Taxes other than income 1,481.0 1,530.1 1,423.4 733.8
Other operating expenses 4,788.1 5,052.0 (3) 5,716.5 (7) 2,796.8
-----------------------------------------------------------------------------------
Total Operating Expenses 19,086.2 19,288.6 19,974.1 9,860.5
-----------------------------------------------------------------------------------
Operating Income $ 5,371.6 $ 5,866.9 $ 6,276.1 $3,532.6
===================================================================================
Operating Income Margin 22.0% 23.3% 23.9% 26.4%
Operating Cash Flow * $10,294.4 $10,812.0 $11,221.3 $5,992.2
===================================================================================
Operating Cash Flow Margin 42.1% 43.0% 42.7% 44.7%
</TABLE>
Footnotes:
* Operating cash flow equals operating income plus depreciation and
amortization
(1) Excludes $855.4 related to force management initiatives ($693.5 for an
enhanced pension offer and $161.9 for an employee severance plan
(2) Excludes $514.1 related to force management initiatives (enhanced pension
offer)
(3) Excludes $225.8 for regulatory and other issues and $10.2 associated with
dispositions
(4) Excludes a $132.4 reduction for regulatory issues
(5) Excludes $277.1 related to force management initiatives ($235.8 for an
enhanced pension offer and $41.3 for a benefit plan amendment)
(6) Excludes $18.5 related to dispositions
(7) Excludes $110.0 for regulatory and other issues and $46.0 related to
dispositions
(8) Excludes $434.2 related to force management initiatives (enhanced pension
offer) and $11.7 for video-related severance costs
- -----------------------------------------------------
Telecom Sector - Selected Pro Forma Volume Statistics
- -----------------------------------------------------
<TABLE>
<CAPTION>
For the years ended December 31, For the six month period ended
-------------------------------------- ------------------------------
Unaudited 1994 1995 1996 6/30/97
- ------------------------------------------------------------------------------------ ------------------------------
<S> <C> <C> <C> <C>
Access Lines in Service (in thousands)
Residence 23,416 23,912 24,496 24,896
Business 11,851 12,565 13,326 13,651
Public 479 476 458 460
---------------------------------------------------------------------------
Total 35,746 36,953 38,280 39,007
===========================================================================
Access Minutes of Use (in millions)
Interstate 103,654 111,181 119,758 61,711
Intrastate 22,060 25,226 29,757 16,604
---------------------------------------------------------------------------
Total 125,714 136,407 149,515 78,315
===========================================================================
</TABLE>
<PAGE>
BELL ATLANTIC CORPORATION 21
- ---------------------------------------------------------------
TELECOM SECTOR - SELECTED PRO FORMA QUARTERLY FINANCIAL RESULTS
- ---------------------------------------------------------------
<TABLE>
<CAPTION>
Unaudited For the three month periods ended
--------------------------------------------------------------------------------------------
(Dollars in millions) 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 $3,124.9 $3,355.6
Network access services 1,796.9 (1) 1,783.9 1,822.8 1,842.9 (6) 1,859.2 1,853.1
Long distance services 644.2 613.8 614.3 501.9 570.4 561.5
Ancillary services 387.6 458.5 456.4 478.5 464.3 450.8
Directory and information
services 525.7 585.9 519.4 593.3 530.9 622.4
--------------------------------------------------------------------------------------------
Total Operating Revenues 6,436.7 6,572.3 6,581.4 6,659.8 6,549.7 6,843.4
--------------------------------------------------------------------------------------------
Operating Expenses
Employee costs 2,004.9 (2) 1,990.0 (4) 2,022.9 (5) 1,871.2 (7) 1,915.3 (10) 1,955.0 (11)
Depreciation and amortization 1,238.5 1,248.7 1,227.2 1,230.8 (8) 1,229.9 1,229.7
Taxes other than income 344.6 360.6 370.0 348.2 373.0 360.8
Other operating expenses 1,288.0 (3) 1,422.7 1,402.5 1,603.3 (9) 1,229.9 1,566.9
--------------------------------------------------------------------------------------------
Total Operating Expenses 4,876.0 5,022.0 5,022.6 5,053.5 4,748.1 5,112.4
--------------------------------------------------------------------------------------------
Operating Income $1,560.7 $1,550.3 $1,558.8 $ 1,606.3 $1,801.6 $1,731.0
============================================================================================
Operating Income Margin 24.2% 23.6% 23.7% 24.1% 27.5% 25.3%
Operating Cash Flow * $2,799.2 $2,799.0 $2,786.0 $ 2,837.1 $3,031.5 $2,960.7
============================================================================================
Operating Cash Flow Margin 43.5% 42.6% 42.3% 42.6% 46.3% 43.3%
</TABLE>
Footnotes:
* Operating cash flow equals operating income plus depreciation and
amortization
(1) Excludes a $55.0 reduction for regulatory issues
(2) Excludes $107.8 related to force management initiatives (enhanced pension
offer)
(3) Excludes $110.0 for regulatory and other issues
(4) Excludes $47.2 related to force management initiatives (enhanced pension
offer)
(5) Excludes $21.9 related to force management initiatives (enhanced pension
offer)
(6) Excludes a $77.4 reduction for regulatory issues
(7) Excludes $100.2 related to force management initiatives ($58.9 for an
enhanced pension offer and $41.3 for a benefit plan amendment)
(8) Excludes $18.5 related to dispositions
(9) Excludes $46.0 related to dispositions
(10) Excludes $386.8 related to force management initiatives (enhanced pension
offer)
(11) Excludes $47.4 related to force management initiatives (enhanced pension
offer) and $11.7 for video-related severance costs
- ---------------------------------------------------------------
Telecom Sector - Selected Pro Forma Quarterly Volume Statistics
- ---------------------------------------------------------------
<TABLE>
<CAPTION>
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>
Access Lines in Service (in thousands)
Residence 24,129 24,198 24,362 24,496 24,755 24,896
Business 12,751 12,948 13,158 13,326 13,501 13,651
Public 473 470 463 458 458 460
-------------------------------------------------------------------------------------------
Total 37,353 37,616 37,983 38,280 38,714 39,007
===========================================================================================
Access Minutes of Use (in millions)
Interstate 29,644 29,666 30,120 30,328 30,275 31,436
Intrastate 7,053 7,201 7,555 7,948 8,058 8,546
-------------------------------------------------------------------------------------------
Total 36,697 36,867 37,675 38,276 38,333 39,982
===========================================================================================
</TABLE>
<PAGE>
BELL ATLANTIC CORPORATION 22
- ----------------------------------------------
GLOBAL WIRELESS SECTOR - PROPORTIONATE RESULTS
- ----------------------------------------------
<TABLE>
<CAPTION>
Unaudited For the years ended December 31, For the six months ended
---------------------------------- -------------------------
(Dollars in millions) 1994 1995 1996 6/30/97
- ----------------------------------------------------------------------------------------------- -------------------------
<S> <C> <C> <C> <C>
Combined Global Wireless
Subscribers (000) 2,440 3,513 4,703 5,466
Subscriber net adds in period (000) 920 1,073 1,211 720
POPs (000) 87,931 123,740 172,930 172,930
Bell Atlantic Mobile
Selected Financial Results
Operating revenues (1) $1,478.7 $1,928.4 $2,439.3 $1,371.1
Less: cost of equipment sales 217.7 271.2 291.5 158.9
------------------------------------------------------------------
Net operating revenues 1,261.0 1,657.2 2,147.8 1,212.2
------------------------------------------------------------------
Operating Income 152.9 397.2 573.0 319.2
Operating cash flow (2) $ 363.0 $ 655.0 $ 873.7 $ 516.8
Operating cash flow margin 29% 40% 41% 43%
Capital expenditures, excluding acquisitions $ 559.2 $ 707.6 $ 935.4 $ 500.1
Selected Operating Data
Subscribers 2,340 3,358 4,410 4,875
Penetration (3) 4.2% 6.0% 7.8% 8.6%
Subscriber net adds in period (000) 883 1,018 1,052 465
Controlled POPs (000) (4) 55,431 55,840 56,830 56,830
Owned POPs (000) (5) 53,102 53,511 55,021 54,944
Churn rate 1.8% 1.7% 1.8% 1.7%
Revenue per subscriber (6) $ 74 $ 63 $ 58 $ 53
Cash expense per subscriber $ 51 $ 38 $ 34 $ 31
Acquisition cost per subscriber (7) $ 242 $ 213 $ 220 $ 222
PrimeCo Personal Communications
Subscribers (000) 18 94
Subscriber net adds in period (000) 18 76
POPs (000) 28,600 28,600 28,600
International Wireless Operations (8)
Subscribers (000) 100 155 275 497
Subscriber net adds in period (000) 35 55 141 179
POPs (000) 32,500 39,300 87,500 87,500
Operating revenues $ 168.3 $ 136.7 $ 241.8 $ 197.9
Operating income (loss) $ (1.8) $ (14.5) $ (36.7) $ (4.5)
Operating cash flow $ 43.0 $ 18.3 $ 22.4 $ 29.8
</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) Penetration is calculated by dividing subscribers by controlled POPs
(4) Controlled POPs represent the total number of POPs for which Bell Atlantic
Mobile has operating control
(5) Owned POPs represent Bell Atlantic Mobile percentage ownership in all
licensed markets
(6) Revenue per subscriber is calculated using operating revenues and incollect
roaming revenues. Incollect roaming revenues were $147.7 for 1994, $181.4
for 1995, $208.8 for 1996, and $151.9 for the first six months of 1997
(7) Acquisition cost per subscriber includes commissions and loss on handsets
(8) Represents Bell Atlantic's proportionate share of International wireless
investments including consolidated, equity method, and cost basis
investments
<PAGE>
BELL ATLANTIC CORPORATION 23
- --------------------------------------------------------
GLOBAL WIRELESS SECTOR - QUARTERLY PROPORTIONATE RESULTS
- --------------------------------------------------------
<TABLE>
<CAPTION>
Unaudited For the three month periods ended
------------------------------------------------------------------
(Dollars in millions) 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) 230 271 294 416 325 395
POPs (000) 168,890 168,890 169,002 172,930 172,930 172,930
Bell Atlantic Mobile
Selected Financial Results
Operating revenues (1) $ 539.5 $ 615.6 $ 631.9 $ 652.3 $ 656.9 $ 714.2
Less: cost of equipment sales 60.9 66.8 75.2 88.6 74.9 84.0
------------------------------------------------------------------
Net operating revenues 478.6 548.8 556.7 563.7 582.0 630.2
------------------------------------------------------------------
Operating Income 113.4 151.9 156.9 150.8 140.6 178.6
Operating cash flow (2) $ 189.5 $ 232.5 $ 231.5 $ 220.2 $ 234.4 $ 282.4
Operating cash flow margin 40% 42% 42% 39% 40% 45%
Capital expenditures, excluding acquisitions $ 114.7 $ 227.4 $ 263.1 $ 330.2 $ 239.9 $ 260.2
Selected Operating Data
Subscribers 3,575 3,822 4,054 4,410 4,634 4,875
Penetration (3) 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) (4) 55,840 55,840 56,502 56,830 56,830 56,830
Owned POPs (000) (5) 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%
Revenue per subscriber (6) $ 56 $ 60 $ 58 $ 56 $ 52 $ 54
Cash expense per subscriber $ 34 $ 35 $ 34 $ 34 $ 31 $ 30
Acquisition cost per subscriber (7) $ 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 28,600 28,600 28,600 28,600
International Wireless Operations (8)
Subscribers (000) 147 171 233 275 382 497
Subscriber net adds in period (000) 13 24 62 42 65 114
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:
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) Penetration is calculated by dividing subscribers by controlled POPs
(4) Controlled POPs represent the total number of POPs for which Bell Atlantic
Mobile has operating control
(5) Owned POPs represent Bell Atlantic Mobile percentage ownership in all
licensed markets
(6) Revenue per subscriber is calculated using operating revenues and incollect
roaming revenues. Incollect roaming revenues were $41.3 for 1Q '96, $54.8
for 2Q '96, $58.3 for 3Q '96, $54.4 for 4Q '96, $47.3 for 1Q '97, and $57.3
for 2Q '97
(7) Acquisition cost per subscriber includes commissions and loss on handsets
(8) Represents Bell Atlantic's proportionate share of International wireless
investments including consolidated, equity method, and cost basis
investments
<PAGE>
BELL ATLANTIC CORPORATION 24
- --------------------------------------------------------------
INTERNATIONAL TELECOM SECTOR - PRO FORMA FINANCIAL INFORMATION
- --------------------------------------------------------------
<TABLE>
<CAPTION>
Unaudited
- --------------------------------------------------------------------------------
<S> <C>
Total assets at June 30, 1997 (proportionate basis) $3.7 billion
Operating revenues for 1996 (proportionate basis) $1.3 billion
Estimated book value of portfolio $2.0 billion
Estimated market value of portfolio $4.4 billion
</TABLE>
- --------------------------------------
Investor Relations Contact Information
- --------------------------------------
Peter D. Crawford, CFA
Vice President
Primary contact for institutional
investors and sell-side analysts
215 963-6123
Laura W. O'Connor, CFA
Director
Contact for institutional investors
and sell-side analysts
215 963-6097
Kevin R. Tarrant, CPA
Director
Responsible for print and electronic
investor communications
215 963-6243
Mailing Address:
Bell Atlantic Corporation
Investor Relations
1717 Arch Street
31st Floor West
Philadelphia, PA 19103
Fax:
215 963-6470
Fax on demand services:
800 329-7310
World Wide Web:
www.bellatlantic.com/invest
[LOGO OF BELL ATLANTIC APPEARS HERE]
