<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
Date of Report: October 21, 1998
Exact name of registrant
as specified in its charter: BELL ATLANTIC CORPORATION
Commission File Number: 1-8606
State of Incorporation: Delaware
I.R.S. Employer Identification No.: 23-2259884
Address of principal
executive offices: 1095 Avenue of the Americas
New York, New York
Zip Code 10036
Registrant's telephone number,
including area code: (212) 395-2121
Former name or former address,
if changed since last report: Not applicable
<PAGE>
Item 5. Other Events
------------
Attached as an exhibit is a press release issued by Bell Atlantic Corporation
on October 21, 1998 announcing earnings for the third quarter of 1998.
Item 7. Financial Statements and Exhibits
---------------------------------
(c) Exhibits.
99 Press Release, dated October 21, 1998, issued by Bell Atlantic
Corporation.
<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/ Mel Meskin
----------------------------------
Mel Meskin
Vice President - Comptroller
Date: October 22, 1998
<PAGE>
EXHIBIT 99
NEWS RELEASE [LOGO OF BELL ATLANTIC APPEARS HERE]
FOR IMMEDIATE RELEASE Contact:
Oct. 21, 1998 David Frail
212-395-7726
[email protected]
Bell Atlantic Third Quarter Adjusted EPS Rises 11.3%
Operating Income Increases 12.4%;
Data, Wireless Drive Higher Revenue Growth
NEW YORK -- Strong operating performance in its key business units produced
third quarter 1998 adjusted earnings per share for Bell Atlantic (NYSE:BEL) of
69 cents, 11.3 percent above third quarter 1997 EPS of 62 cents. EPS figures
are on a diluted basis. Third quarter adjusted net income of $1.1 billion was
12.7 percent higher than third quarter 1997 net income of $969.4 million.
Third-quarter results have been adjusted for charges announced on Oct. 13,
mainly non-cash in nature, primarily for the completion of a retirement
incentive program, write-downs of certain international investments, and merger
transition charges. The charges total $.70 per share and result in a reported
net loss for the quarter of $ (8.1) million, or one cent per share. In the third
quarter of 1997, Bell Atlantic reported a net loss of $ (80.1) million, or five
cents per share, due to charges largely for the Bell Atlantic-NYNEX merger.
Consolidated revenues grew 5.0 percent over third quarter 1997,
substantially higher than the growth rate in the first half of the year.
Proportionate revenues from Bell Atlantic's Telecom and Global Wireless
businesses, which include Bell Atlantic's share of revenue from its
unconsolidated wireless investments, increased 7.0 percent.
Consolidated operating income increased 12.4 percent, to $2.0 billion.
--more--
<PAGE>
Bell Atlantic News Release, page 2
For the first nine months of 1998, adjusted net income available to common
shareowners rose 11.5 percent to $3.2 billion, and adjusted EPS was $2.03, 10.3
percent higher than $1.84 in the first nine months of 1997. Nine-month EPS
figures have been adjusted for special items totaling 82 cents per share in 1998
and 87 cents per share in 1997. Reported net income available to common
shareowners was $1.9 billion compared to $1.5 billion in the prior-year period.
Reported nine-month EPS was $1.21, compared to $.97 for the first nine months of
1997.
"With four quarters as a new company under our belt, we can say
unequivocally that we have delivered on the promise of the Bell Atlantic-NYNEX
merger," said Ivan Seidenberg, Bell Atlantic vice chairman, president and CEO.
"Our new scale and scope, and the combination of our best operations and
marketing practices, have helped us increase sales, improve productivity and
achieve expense savings. With our merger synergies, we have been able to
produce solid operating results in our key businesses and fund our entry into
new markets as well.
"Now that the impact of the July 1997-June 1998 access charge reductions is
behind us, our Telecom revenue growth of four percent tracks more closely with
the record business volumes we've been experiencing all year," Seidenberg said.
"We're also seeing our first-half marketing initiatives pay off in strong growth
in vertical services.
"Almost half of our Telecom revenue gains came from sales of data-related
services, which is a clear sign of where our future opportunities lie. We are
rapidly building the network capabilities to provide the high-speed, digital
connectivity that our customers require, whether they are global enterprises or
small businesses or individual households. We've just launched our mass-market
connectivity product, Infospeed DSL(SM), and already the response is exceeding
our expectations.
"A key enabler for data services is long distance entry. We anticipate
filing our New York application with the Federal Communications Commission in
the fourth quarter, and we are working toward state support in Pennsylvania as
well. Given our commitment to open markets, we stand an excellent chance of
gaining FCC approval and completing our product set.
"Wireless, of course, will be part of that product set. Global Wireless
did another masterful job of driving subscriber and revenue growth and
profitability in the face of intense
--more--
<PAGE>
Bell Atlantic News Release, page 3
competition by introducing a new digital pricing model at Bell Atlantic Mobile
and accelerating the already rapid growth of our international investments.
"Global Wireless will set the example for competitive entrepreneurship,
innovation and accountability as we reorganize into six business units, each
with the resources and people they need to succeed in competitive markets,"
Seidenberg said. "We're well into the planning process, and we will enter 1999
fully prepared to anticipate and meet customers' requirements for new services
and shareowners requirements for earnings growth."
Telecom Highlights
Demand for communications services in the Bell Atlantic region,
particularly data and vertical services such as Caller ID, drove Telecom revenue
growth up 4.0 percent over third quarter 1997. The number of access lines in
service grew 4.5 percent to 41.3 million, and access minutes of use increased
8.5 percent. More than two-thirds of Telecom revenue growth came from sales of
data and vertical services.
Demand for digital data services increased in all markets, particularly in
the enterprise (large business) and general business markets:
. The number of "DS0" circuits in service (digital, high-bandwidth and
packet-switched services as measured in 64-kilobit voice-grade equivalents)
increased more than 43 percent over third quarter 1997.
. Revenues from high-bandwidth packet-switched and special access services,
and from BANI, Bell Atlantic's network integration business, reached $597
million in the quarter, 30 percent over third quarter 1997 levels.
. Bell Atlantic ended the quarter with nearly 500,000 basic rate Integrated
Services Digital Network (ISDN) lines in service, up 22 percent from third
quarter 1997, and the number of primary rate ISDN channels in service more
than doubled, to more than 715,000.
In consumer markets:
. New pricing packages and targeted campaigns drove substantial gains in
sales of vertical services such as Caller ID, Return Call, Call Waiting and
Home Voice Mail. Revenues from these services were up 15.5 percent compared
to the prior-year period. Revenues from Caller ID and Caller ID Deluxe grew
48 percent, as the number of subscribers increased to 6.2 million, with a
penetration rate approaching 24 percent. Revenues from Home Voice Mail
service rose 19.5 percent.
--more--
<PAGE>
Bell Atlantic News Release, page 4
. Bell Atlantic launched high-capacity digital Infospeed DSL(SM) service on
Oct. 5 to consumers in the Washington, D.C. and Pittsburgh areas. Initial
results indicate strong interest in the service, which is packaged with
Internet access. More than 2,000 requests for the service were registered
at the Infospeed website (www.bellatlantic.com/infospeed) in the first week
after the launch.
In network services markets:
. At the end of the quarter, Bell Atlantic was providing other carriers with
approximately 540,000 resold access lines and 60,000 unbundled loops.
Adjusted quarterly network operating expenses of $5.2 billion were 1.8
percent above third quarter 1997 levels, with cash expenses up 1.1 percent, as
the company continued to realize expense savings and productivity gains from the
Bell Atlantic-NYNEX merger.
Global Wireless Highlights
Global Wireless posted one of its strongest quarters ever, with vigorous
performance at Bell Atlantic Mobile (BAM) and PrimeCo Personal Communications,
Bell Atlantic's domestic PCS partnership, as well as increasingly strong
contributions from its International Wireless portfolio of investments.
Proportionate subscribers increased 35 percent over third quarter 1997 to
7.9 million, with proportionate net subscriber additions in the quarter totaling
549,000, 53 percent more than in the prior-year period. Domestic properties and
international investments each contributed approximately half of the net
additions, demonstrating Global Wireless's strength across its entire portfolio.
Total proportionate revenues for the group increased 27.5 percent and
reached $1.2 billion, with international ventures and PrimeCo generating more
than 60 percent of the growth. Proportionate operating income reached $242
million, up 33 percent from third quarter 1997.
Bell Atlantic's domestic wireless properties continued their strong
customer and revenue growth. With 207,000 net subscriber additions, BAM ended
the quarter with 5.9 million customers, 17 percent higher than third quarter
1997. PrimeCo ended the quarter with 108,000 net subscriber additions and grew
its subscriber base 170 percent, to 706,600. BAM revenues for the quarter grew
$100 million, or 12.5 percent, to $903 million, and total PrimeCo revenues grew
--more--
<PAGE>
Bell Atlantic News Release, page 5
to $131 million, up $76 million over third quarter 1997, with average monthly
revenue per subscriber of $57.
Domestic highlights:
. BAM's digital subscriber base climbed to more than 565,000 during the
quarter, driven in part by the introduction of the company's new
DigitalChoice SingleRate(SM) price plans late in the third quarter. Early
results indicate the all-inclusive flat rate plans are successfully
retaining and attracting high-usage wireless subscribers. Twenty percent of
new subscribers in the quarter took a DigitalChoice(SM) plan, and digital
subscribers now generate approximately 30 percent of BAM busy-hour network
traffic.
. BAM reduced acquisition costs per new subscriber 11 percent to $202,
compared to $226 in the prior-year period. BAM also reduced cash expense
per subscriber by over 5 percent to a record low of $23.61.
. BAM operating cash flow for the quarter was $370 million, with operating
cash flow margins exceeding 47 percent. Operating income grew 8 percent to
$234.4 million.
. J.D. Power and Associates' 1998 U.S. Wireless Customer Satisfaction
Study(SM) named BAM the leader in overall customer satisfaction among
wireless users in New York, Boston, Washington/Baltimore and Pittsburgh.
Survey respondents rated call quality the most important factor in their
choice.
. PrimeCo extended its PrimeTravel(SM) digital and analog coverage areas
through roaming agreements with several leading wireless carriers,
expanding the company's footprint to 90 percent of the U.S. population.
The International Wireless portfolio set new milestones for net subscriber
additions, revenue and operating cash flow. International proportionate
subscribers now exceed 1.6 million, as International Wireless made 291,000
proportionate net additions in the quarter, more than double the additions in
third quarter 1997. International proportionate revenues doubled over third
quarter 1997, climbing to $251 million. Proportionate operating income more
than tripled to $49 million, and operating cash flow more than doubled to $70
million.
International highlights:
. Grupo Iusacell in Mexico ended the quarter with more than 660,000
subscribers, an increase of 95 percent over third quarter 1997. Iusacell's
net customer additions in the quarter were the highest in its history.
. Omnitel Pronto Italia added more than a million subscribers in the quarter,
bringing its total to almost 5 million. Omnitel is now the third-largest
wireless carrier in Europe.
--more--
<PAGE>
Bell Atlantic News Release, page 6
. STET Hellas in Greece saw net subscriber additions of 76,000 and ended the
quarter with more than 580,000 subscribers, a 68 percent increase over
third quarter 1997.
Bell Atlantic is at the forefront of the new communications and information
industry. With 42 million telephone access lines and 8 million wireless
customers worldwide, Bell Atlantic companies are premier providers of advanced
wireline voice and data services, market leaders in wireless services and the
world's largest publishers of directory information. Bell Atlantic companies
are also among the world's largest investors in high-growth global
communications markets, with operations and investments in 23 countries.
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 (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.
NOTE: This press release contains statements about expected future events
and financial results that are forward-looking and subject to risks and
uncertainties. For those statements, we claim the protection of the safe harbor
for forward-looking statements contained in the Private Securities Litigation
Reform Act of 1995. Discussion of factors that may affect future results is
contained in our recent filings with the Securities and Exchange Commission.
###
--more--
<PAGE>
Bell Atlantic Corporation
- ---------------------------------------------------
Consolidated Statements of Income
- ---------------------------------------------------
<TABLE>
<CAPTION>
(Dollars in Millions, Except Per Share Amounts)
3 Mos. Ended 3 Mos. Ended 9 Mos. Ended 9 Mos. Ended
Unaudited 9/30/98 9/30/97 % Change 9/30/98 9/30/97 % Change
- -------------------------------------------------------------------------------------- ----------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Operating Revenues
Local services $ 3,509.7 $ 3,321.5 5.7 $ 10,303.7 $ 9,773.8 5.4
Network access services 1,893.4 1,666.2 13.6 5,742.7 5,377.8 6.8
Long distance services 488.6 546.7 (10.6) 1,464.7 1,678.1 (12.7)
Ancillary services 502.3 465.8 7.8 1,425.8 1,362.7 4.6
Directory and information services 513.2 496.1 3.4 1,699.5 1,649.4 3.0
Wireless services 979.7 842.0 16.4 2,779.8 2,439.7 13.9
Other services 23.0 35.6 (35.4) 72.6 216.7 (66.5)
-------------------------- ----------------------------
Total Operating Revenues 7,909.9 7,373.9 7.3 23,488.8 22,498.2 4.4
-------------------------- ----------------------------
Operating Expenses
Employee costs 2,792.0 2,337.8 19.4 7,212.4 6,956.9 3.7
Depreciation and amortization 1,469.8 1,724.0 (14.7) 4,326.1 4,459.1 (3.0)
Taxes other than income 383.3 475.2 (19.3) 1,134.9 1,252.4 (9.4)
Other operating expenses 2,134.7 2,415.9 (11.6) 6,020.7 6,102.4 (1.3)
-------------------------- ----------------------------
Total Operating Expenses 6,779.8 6,952.9 (2.5) 18,694.1 18,770.8 (.4)
-------------------------- ----------------------------
Operating Income 1,130.1 421.0 NM 4,794.7 3,727.4 28.6
Income (loss) from unconsolidated businesses (459.9) (121.5) NM (462.6) (236.9) (95.3)
Other income and (expense), net 43.9 (13.0) NM 99.5 (19.5) NM
Interest expense 358.7 298.1 20.3 1,031.8 918.7 12.3
Provision for income taxes 362.6 68.5 NM 1,470.2 1,037.4 41.7
-------------------------- ----------------------------
Income (Loss) from Continuing Operations (7.2) (80.1) 91.0 1,929.6 1,514.9 27.4
Extraordinary item
Early extinguishment of debt, net of tax (0.9) -- NM (23.4) -- NM
-------------------------- ----------------------------
Net Income (Loss) (8.1) (80.1) 89.9 1,906.2 1,514.9 25.8
Redemption of investee preferred stock -- -- (2.5) -- NM
-------------------------- ----------------------------
Net Income (Loss) Available to
Common Shareowners $ (8.1) $ (80.1) 89.9 $ 1,903.7 $ 1,514.9 25.7
========================== ============================
Basic Earnings (Loss) per Share $ (.01) $ (.05) 80.0 $ 1.23 $ .98 25.5
Weighted average number of common
shares outstanding (in millions) 1,552.9 1,552.8 1,552.9 1,551.5
Diluted Earnings (Loss) per Share $ (.01) $ (.05) 80.0 $ 1.21 $ .97 24.7
Weighted average number of common
shares-assuming dilution (in millions) 1,552.9 1,552.8 1,576.8 1,567.1
</TABLE>
Notes:
All prior period share and per share amounts have been adjusted to reflect a
2-for-1 stock split declared and paid in the second quarter of 1998
Basic Earnings per Share are based on the weighted-average number of shares
outstanding during the period
Diluted Earnings per Share include the dilutive effect of shares issuable under
our stock-based compensation plans, which represent the only potential dilutive
common shares
For purposes of computing earnings per share amounts, net income available to
common shareowners for the nine months ended September 30, 1998 has been reduced
by the amount of the premium paid on the redemption of preferred stock by an
equity investee
NM Not meaningful
<PAGE>
Bell Atlantic Corporation
- -------------------------------------------------------
Earnings Reconciliations
- -------------------------------------------------------
<TABLE>
<CAPTION>
(Dollars in Millions, Except Per Share Amounts)
-----------------------------
3 Mos. Ended 9/30/98 3 Mos. Ended 9/30/97
Unaudited Net Income Diluted EPS Net Income Diluted EPS
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Income (Loss) Available to
Common Shareowners $ (8.1) $ (.01) $ (80.1) $ (.05)
Adjustments:
Merger-related costs
Direct costs 182.0 .12
Employee severance costs 139.5 .09
Transition costs 31.4 .02 13.0 .01
Special charges & other one-time items 702.8 .45
Special pension enhancement and contract-related 502.0 .32 12.2 .01
International investments 542.9 .34
Video-related and other 23.9 .02
---------------------------------------------------------
Adjusted Earnings $ 1,092.1 $ .69 $ 969.4 $ .62
=========================================================
Adjusted Growth 12.7% 11.3%
<CAPTION>
---------------------------
9 Mos. Ended 9/30/98 9 Mos. Ended 9/30/97
Net Income Diluted EPS Net Income Diluted EPS
----------------------------------------------------------
<S> <C> <C> <C> <C>
Net Income Available to Common Shareowners $ 1,903.7 $ 1.21 $ 1,514.9 $ .97
Adjustments:
Merger-related costs
Direct costs 182.0 .12
Employee severance costs 139.5 .09
Transition costs 65.3 .04 13.0 .01
Special charges & other one-time items 740.4 .47
Special pension enhancement and contract-related 670.0 .42 286.1 .18
International investments 542.9 .34
Video-related and other 23.9 .02
----------------------------------------------------------
Adjusted Earnings $ 3,205.8 $ 2.03 $ 2,875.9 $ 1.84
==========================================================
Adjusted Growth 11.5% 10.3%
</TABLE>
<PAGE>
Bell Atlantic Corporation
- -------------------------------------------------------
Sector Summary
- -------------------------------------------------------
<TABLE>
<CAPTION>
(Dollars in Millions)
------------
Unaudited 3 Mos. Ended 3 Mos. Ended
9/30/98 9/30/97 % Change
---------------------------------------------
<S> <C> <C> <C>
Revenues
Telecom 6,932.7 6,663.0 4.0
Global Wireless (1) 1,214.6 952.7 27.5
---------------------------
Total $ 8,147.3 $ 7,615.7 7.0
===========================
<CAPTION>
------------
3 Mos. Ended 3 Mos. Ended
9/30/98 9/30/97 % Change
---------------------------------------------
<S> <C> <C> <C>
Operating Income
Telecom 1,782.1 1,602.7 11.2
Global Wireless (1) 241.8 181.9 32.9
---------------------------
Total $ 2,023.9 $ 1,784.6 13.4
===========================
<CAPTION>
------------
9 Mos. Ended 9 Mos. Ended
9/30/98 9/30/97 % Change
---------------------------------------------
<S> <C> <C> <C>
Revenues
Telecom 20,711.0 20,139.0 2.8
Global Wireless (1) 3,303.2 2,661.5 24.1
---------------------------
Total $ 24,014.2 $ 22,800.5 5.3
===========================
<CAPTION>
------------
9 Mos. Ended 9 Mos. Ended
9/30/98 9/30/97 % Change
---------------------------------------------
<S> <C> <C> <C>
Operating Income
Telecom 5,411.2 5,113.0 5.8
Global Wireless (1) 565.1 378.7 49.2
---------------------------
Total $ 5,976.3 $ 5,491.7 8.8
===========================
</TABLE>
Footnote:
(1) Represents Bell Atlantic's proportionate share of ownership interests in
its Global Wireless (consolidated and unconsolidated) investments
Telecom sector results appear on page 10
Global Wireless sector results appear on pages 11 and 12
<PAGE>
Bell Atlantic Corporation
- ------------------------------------------------------------------------------
Consolidated Adjusted Statements of Income - 3rd Quarter (Adjusted Basis)
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(Dollars in Millions, Except Per Share Amounts)
3 Mos. Ended 9/30/98 3 Mos. Ended 9/30/97
Unaudited Reported Adjustments Adjusted Reported Adjustments Adjusted % Change
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Operating Revenues
Local services $ 3,509.7 $ $ 3,509.7 $ 3,321.5 $ $ 3,321.5 5.7
Network access services 1,893.4 1,893.4 1,666.2 136.1 (5) $ 1,802.3 5.1
Long distance services 488.6 488.6 546.7 $ 546.7 (10.6)
Ancillary services 502.3 502.3 465.8 1.7 (5) $ 467.5 7.4
Directory and information services 513.2 513.2 496.1 $ 496.1 3.4
Wireless services 979.7 979.7 842.0 19.8 (6) $ 861.8 13.7
Other services 23.0 23.0 35.6 5.1 (5) $ 40.7 (43.5)
--------------------------------------------------------------------------
Total Operating Revenues 7,909.9 7,909.9 7,373.9 162.7 7,536.6 5.0
--------------------------------------------------------------------------
Operating Expenses
Employee costs 2,792.0 (779.8)(1) 2,012.2 2,337.8 (296.0)(7) 2,041.8 (1.4)
Depreciation and amortization 1,469.8 1,469.8 1,724.0 (301.7)(5) 1,422.3 3.3
Taxes other than income 383.3 383.3 475.2 (79.7)(8) 395.5 (3.1)
Other operating expenses 2,134.7 (112.2)(2) 2,022.5 2,415.9 (537.8)(9) 1,878.1 7.7
--------------------------------------------------------------------------
Total Operating Expenses 6,779.8 (892.0) 5,887.8 6,952.9 (1,215.2) 5,737.7 2.6
--------------------------------------------------------------------------
Operating Income 1,130.1 892.0 2,022.1 421.0 1,377.9 1,798.9 12.4
Income (loss) from unconsolidated businesses (459.9) 493.5 (3) 33.6 (121.5) 149.7 (10) 28.2 19.1
Other income and (expense), net 43.9 (45.4)(3) (1.5) (13.0) (1.2)(5) (14.2) 89.4
Interest expense 358.7 (46.8)(3) 311.9 298.1 298.1 4.6
Provision for income taxes 362.6 286.7 (4) 649.3 68.5 476.9 (11) 545.4 19.1
--------------------------------------------------------------------------
Income (Loss) from Continuing Operations (7.2) 1,100.2 1,093.0 (80.1) 1,049.5 969.4 12.8
Extraordinary item
Early extinguishment of debt, net of tax (0.9) (0.9) - - NM
--------------------------------------------------------------------------
Net Income (Loss) Available to
Common Shareowners $ (8.1) $1,100.2 $1,092.1 $ (80.1) $ 1,049.5 $ 969.4 12.7
==========================================================================
Diluted Earnings (Loss) per Share $ (.01) $ .70 $ .69 $ (.05) $ .67 $ .62 11.3
--------------------------------------------------------------------------
Weighted average number of common
shares-assuming dilution (in millions) 1,552.9 1,573.8 1,552.8 1,573.3
</TABLE>
Footnotes:
1998
(1) Adjustment for special pension enhancement and contract-related ($777.3),
and merger transition costs ($2.5)
(2) Adjustment for merger transition costs ($49.1), international investments
($38.8) and video & other ($24.3)
(3) Adjustment for international investments ($485.1) and video & other ($8.4)
(4) Tax effects of items (1) through (3) above
1997
(5) Adjustment related to special charges
(6) Adjustment related to an accounting reclass for BAM promotions
(7) Adjustment for merger-related costs ($277.1) and special pension
enhancement ($18.9)
(8) Adjustment for merger-related costs ($25.0) and special charges ($54.7)
(9) Adjustment for merger-related costs ($141.3), special charges ($416.3)
offset by an increase for an accounting reclass for BAM promotions ($19.8)
(10) Adjustment for special charges and other one-time items
(11) Tax effects of items (5) through (10) above
<PAGE>
- -------------------------------------------------------------------------------
Consolidated Adjusted Statements of Income - Year-to-Date (Adjusted Basis)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(Dollars in Millions, Except Per Share Amounts)
9 Mos. Ended 9/30/98 9 Mos. Ended 9/30/97
Unaudited Reported Adjustments Adjusted Reported Adjustments Adjusted % Change
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Operating Revenues
Local services $10,303.7 $ $10,303.7 $ 9,773.8 $ 83.0 (5) $ 9,856.8 4.5
Network access services 5,742.7 5,742.7 5,377.8 136.1 (6) 5,513.9 4.1
Long distance services 1,464.7 1,464.7 1,678.1 1,678.1 (12.7)
Ancillary services 1,425.8 1,425.8 1,362.7 1.7 (6) 1,364.4 4.5
Directory and information services 1,699.5 1,699.5 1,649.4 1,649.4 3.0
Wireless services 2,779.8 2,779.8 2,439.7 2,439.7 13.9
Other services 72.6 72.6 216.7 5.1 (6) 221.8 (67.3)
----------------------------------------------------------------------------
Total Operating Revenues 23,488.8 23,488.8 22,498.2 225.9 22,724.1 3.4
----------------------------------------------------------------------------
Operating Expenses
Employee costs 7,212.4 (1,059.7)(1) 6,152.7 6,956.9 (741.9)(7) 6,215.0 (1.0)
Depreciation and amortization 4,326.1 4,326.1 4,459.1 (301.7)(6) 4,157.4 4.1
Taxes other than income 1,134.9 1,134.9 1,252.4 (79.7)(8) 1,172.7 (3.2)
Other operating expenses 6,020.7 (161.4)(2) 5,859.3 6,102.4 (461.6)(9) 5,640.8 3.9
----------------------------------------------------------------------------
Total Operating Expenses 18,694.1 (1,221.1) 17,473.0 18,770.8 (1,584.9) 17,185.9 1.7
----------------------------------------------------------------------------
Operating Income 4,794.7 1,221.1 6,015.8 3,727.4 1,810.8 5,538.2 8.6
Income (loss) from unconsolidated businesses (462.6) 493.5 (3) 30.9 (236.9) 179.7 (10) (57.2) NM
Other income and (expense), net 99.5 (45.4)(3) 54.1 (19.5) (1.2)(6) (20.7) NM
Interest expense 1,031.8 (46.8)(3) 985.0 918.7 (13.0)(5) 905.7 8.8
Provision for income taxes 1,470.2 413.9 (4) 1,884.1 1,037.4 641.3 (11) 1,678.7 12.2
----------------------------------------------------------------------------
Income from Continuing Operations 1,929.6 1,302.1 3,231.7 1,514.9 1,361.0 2,875.9 12.4
Extraordinary item
Early extinguishment of debt, net of tax (23.4) (23.4) NM
----------------------------------------------------------------------------
Net Income 1,906.2 1,302.1 3,208.3 1,514.9 1,361.0 2,875.9 11.6
Redemption of investee preferred stock (2.5) (2.5) - -
----------------------------------------------------------------------------
Net Income Available to
Common Shareowners $ 1,903.7 $ 1,302.1 $ 3,205.8 $ 1,514.9 $1,361.0 $ 2,875.9 11.5
=============================================================================
Diluted Earnings per Share $ 1.21 $ .82 $ 2.03 $ .97 $ .87 $ 1.84 10.3
----------------------------------------------------------------------------
Weighted average number of common
shares-assuming dilution (in millions) 1,576.8 1,576.8 1,567.1 1,567.1
</TABLE>
Footnotes:
1998
(1) Adjustment for special pension enhancement and contract-related ($1,051.4),
and merger transition costs ($8.3)
(2) Adjustment for merger transition costs ($98.3), international investments
($38.8) and video & other items ($24.3)
(3) Adjustment for international investments ($485.1) and video & other ($8.4)
(4) Tax effects of items (1) and (3) above
1997
(5) Restated for reclass adjustment
(6) Adjustment related to special charges
(7) Adjustment for merger-related costs ($277.1), special pension enhancement
($453.1) and special charges ($11.7)
(8) Adjustment for merger-related costs ($25.0) and special charges ($54.7)
(9) Adjustment for merger-related costs ($141.3), special charges ($416.3)
offset by an increase for a reclass adjustment ($96.0)
(10) Adjustment for special charges and other one-time items
(11) Tax effects of items (5) - (10) above
<PAGE>
- ----------------------------------------------------------------
Selected Financial and Operating Statistics
- ----------------------------------------------------------------
<TABLE>
<CAPTION>
(Dollars in Millions, Except Per Share Amounts)
3 Mos. Ended 3 Mos. Ended 9 Mos. Ended 9 Mos. Ended
Unaudited 9/30/98 9/30/97 9/30/98 9/30/97
- ------------------------------------------------------------------------------------ -----------------------------------
<S> <C> <C> <C> <C>
Debt ratio-end of period 61.5% 60.5%
Return on average common equity-adjusted basis 31.7% 28.0% 31.8% 28.3%
Return on average assets-adjusted basis 7.9% 7.3% 7.8% 7.2%
Book value per common share $ 8.12 $ 8.08
Cash dividends declared per common share $ .385 $ .385 $ 1.155 $ 1.125
Common shares outstanding (in millions)
End of period 1,552.3 1,553.3
Capital expenditures
Telecom $ 1,691 $ 1,604 $ 4,784 $ 4,034
Domestic cellular 178 164 444 664
Other 68 40 193 185
---------------------------------- -----------------------------------
Total $ 1,937 $ 1,808 $ 5,421 $ 4,883
================================== ===================================
Employees
Telecom 129,435 132,117
Other 10,313 9,684
-----------------------------------
Total 139,748 141,801
===================================
</TABLE>
Note:
All prior period share and per share amounts have been adjusted to reflect a
2-for-1 stock split declared and paid in the second quarter of 1998
<PAGE>
- ---------------------------------------------------------------
Consolidated Balance Sheets
- ---------------------------------------------------------------
<TABLE>
<CAPTION>
(Dollars in Millions)
Unaudited 9/30/98 9/30/97 $ Change 12/31/97 $ Change
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Assets
Current assets
Cash and cash equivalents $ 620.8 $ 315.8 $ 305.0 $ 322.8 $ 298.0
Short-term investments 163.7 166.8 (3.1) 720.6 (556.9)
Accounts receivable, net 6,424.1 6,147.2 276.9 6,340.8 83.3
Inventories 571.2 516.0 55.2 550.3 20.9
Prepaid expenses 592.1 730.5 (138.4) 634.0 (41.9)
Other 535.2 579.0 (43.8) 432.3 102.9
-------------------------------------------------------------------
Total current assets 8,907.1 8,455.3 451.8 9,000.8 (93.7)
-------------------------------------------------------------------
Plant, property and equipment 81,714.6 76,470.8 5,243.8 77,437.2 4,277.4
Less accumulated depreciation 45,487.3 41,746.3 3,741.0 42,397.8 3,089.5
-------------------------------------------------------------------
36,227.3 34,724.5 1,502.8 35,039.4 1,187.9
-------------------------------------------------------------------
Investments in unconsolidated businesses 4,846.5 5,137.4 (290.9) 5,144.2 (297.7)
Other assets 5,017.4 4,573.7 443.7 4,779.7 237.7
-------------------------------------------------------------------
Total Assets $ 54,998.3 $ 52,890.9 $ 2,107.4 $ 53,964.1 $ 1,034.2
===================================================================
Liabilities and Shareowners' Investment
Current liabilities
Debt maturing within one year $ 1,924.3 $ 6,131.7 $(4,207.4) $ 6,342.8 $(4,418.5)
Accounts payable and accrued liabilities 6,254.1 5,444.6 809.5 5,966.4 287.7
Other 1,399.3 1,536.7 (137.4) 1,355.0 44.3
-------------------------------------------------------------------
Total current liabilities 9,577.7 13,113.0 (3,535.3) 13,664.2 (4,086.5)
-------------------------------------------------------------------
Long-term debt 18,200.9 13,071.4 5,129.5 13,265.2 4,935.7
-------------------------------------------------------------------
Employee benefit obligations 10,437.9 10,031.4 406.5 10,004.4 433.5
-------------------------------------------------------------------
Deferred credits and other liabilities
Deferred income taxes 2,120.4 1,826.5 293.9 2,106.2 14.2
-------------------------------------------------------------------
Unamortized investment tax credits 229.0 258.8 (29.8) 250.7 (21.7)
-------------------------------------------------------------------
Other 697.6 956.9 (259.3) 772.6 (75.0)
-------------------------------------------------------------------
Minority interest, including a portion subject to
redemption requirements 930.2 948.5 (18.3) 911.2 19.0
-------------------------------------------------------------------
Preferred stock of subsidiary 200.5 135.0 65.5 200.5 -
-------------------------------------------------------------------
Shareowners' investment
Common stock 157.6 157.6 - 157.6 -
Contributed capital 13,303.7 13,196.6 107.1 13,176.8 126.9
Reinvested earnings 1,064.0 994.3 69.7 1,261.6 (197.6)
Accumulated other comprehensive loss (719.8) (529.0) (190.8) (553.3) (166.5)
-------------------------------------------------------------------
13,805.5 13,819.5 (14.0) 14,042.7 (237.2)
Less common stock in treasury, at cost 632.7 580.4 52.3 590.5 42.2
Less deferred compensation-employee stock ownership plans 568.7 689.7 (121.0) 663.1 (94.4)
-------------------------------------------------------------------
Total shareowners' investment 12,604.1 12,549.4 54.7 12,789.1 (185.0)
-------------------------------------------------------------------
Total Liabilities and Shareowners' Investment $ 54,998.3 $ 52,890.9 $ 2,107.4 $ 53,964.1 $ 1,034.2
===================================================================
</TABLE>
<PAGE>
- -------------------------------------------------------------------------------
Consolidated Statements of Cash Flows
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(Dollars in Millions)
------------
9 Mos. Ended 9 Mos. Ended
Unaudited 9/30/98 9/30/97 $ Change
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash Flows from Operating Activities
Net Income $ 1,906.2 $ 1,514.9 $ 391.3
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 4,326.1 4,459.1 (133.0)
Extraordinary item, net of tax 23.4 - 23.4
Loss from unconsolidated businesses 462.6 236.9 225.7
Dividends received from unconsolidated businesses 128.6 145.9 (17.3)
Amortization of unearned lease income (86.9) (80.2) (6.7)
Deferred income taxes, net (19.0) (173.3) 154.3
Investment tax credits (21.7) (59.9) 38.2
Other items, net 231.9 (39.3) 271.2
Changes in certain assets and liabilities, net of effects
from acquisition/disposition of businesses 399.2 (3.6) 402.8
-------------------------------------------------
Net cash provided by operating activities 7,350.4 6,000.5 1,349.9
-------------------------------------------------
Cash Flows from Investing Activities
Net change in short-term investments 560.4 175.4 385.0
Additions to plant, property and equipment (5,421.3) (4,883.1) (538.2)
Proceeds from sale of plant, property and equipment 2.8 1.6 1.2
Investment in leased assets (77.9) (109.2) 31.3
Proceeds from leasing activities 139.2 62.0 77.2
Acquisition of business, less cash acquired (61.9) - (61.9)
Investment in notes receivable (7.2) (32.8) 25.6
Proceeds from notes receivable 20.8 34.1 (13.3)
Investments in unconsolidated businesses, net (529.0) (574.3) 45.3
Proceeds from TCNZ share repurchase plan - 114.6 (114.6)
Proceeds from disposition of businesses 20.8 360.6 (339.8)
Other, net (55.0) 157.3 (212.3)
-------------------------------------------------
Net cash used in investing activities (5,408.3) (4,693.8) (714.5)
-------------------------------------------------
Cash Flows from Financing Activities
Proceeds from borrowings 6,105.1 436.0 5,669.1
Principal repayments of borrowings and capital lease obligations (506.3) (505.7) (.6)
Early extinguishment of debt (650.0) - (650.0)
Net change in short-term borrowings with original maturities of three
months or less (4,561.5) 1,031.3 (5,592.8)
Dividends paid (1,783.8) (1,768.3) (15.5)
Proceeds from sale of common stock 423.8 484.4 (60.6)
Purchase of common stock for treasury (784.4) (564.4) (220.0)
Minority interest - (.1) .1
Reduction in preferred stock of subsidiary - (10.0) 10.0
Net change in outstanding checks drawn on controlled disbursement accounts 113.0 (343.5) 456.5
-------------------------------------------------
Net cash used in financing activities (1,644.1) (1,240.3) (403.8)
-------------------------------------------------
Increase in cash and cash equivalents 298.0 66.4 231.6
Cash and cash equivalents, beginning of period 322.8 249.4 73.4
-------------------------------------------------
Cash and cash equivalents, end of period $ 620.8 $ 315.8 $ 305.0
=================================================
</TABLE>
<PAGE>
- -----------------------------------------------------------------
Telecom Sector - Financial Results (Adjusted Basis)
- -----------------------------------------------------------------
<TABLE>
<CAPTION>
(Dollars in Millions)
3 Mos. Ended 3 Mos. Ended 9 Mos. Ended 9 Mos. Ended
Unaudited 9/30/98 9/30/97 % Change 9/30/98 9/30/97 % Change
- ------------------------------------------------------------------------------ --------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Operating Revenues
Local services $ 3,525.5 $ 3,333.7 5.8 $ 10,349.2 $ 9,896.2 4.6
Network access services 1,893.6 1,802.4 5.1 5,742.9 5,514.2 4.1
Long distance services 488.7 546.4 (10.6) 1,464.8 1,678.1 (12.7)
Ancillary services 511.7 484.5 5.6 1,454.6 1,401.1 3.8
Directory and information services 513.2 496.0 3.5 1,699.5 1,649.4 3.0
---------------------------- -----------------------------
Total Operating Revenues $ 6,932.7 $ 6,663.0 4.0 $ 20,711.0 $ 20,139.0 2.8
---------------------------- -----------------------------
Operating Expenses
Employee costs 1,888.4 1,905.4 (.9) 5,742.7 5,786.5 (.8)
Depreciation and amortization 1,322.2 1,271.9 4.0 3,888.6 3,731.6 4.2
Taxes other than income 371.4 368.8 .7 1,074.8 1,102.5 (2.5)
Other operating expenses 1,568.6 1,514.2 3.6 4,593.7 4,405.4 4.3
---------------------------- -----------------------------
Total Operating Expenses $ 5,150.6 $ 5,060.3 1.8 $ 15,299.8 $ 15,026.0 1.8
---------------------------- -----------------------------
Operating Income $ 1,782.1 $ 1,602.7 11.2 $ 5,411.2 $ 5,113.0 5.8
Operating Income Margin 25.7% 24.1% 26.1% 25.4%
Operating Cash Flow $ 3,104.3 $ 2,874.6 8.0 $ 9,299.8 $ 8,844.6 5.1
Operating Cash Flow Margin 44.8% 43.1% 44.9% 43.9%
- ------------------------------------------------------------------------------ -----------------------------------------
Operating Statistics
Access lines in service (in thousands)
Residence 25,956 25,068* 3.5
Business 14,798 13,911* 6.4
Public 522 524 (.4)
----------------------------
Total 41,276 39,503 4.5
----------------------------
ISDN (BRI lines) (000) 499 409 22.0
Access minutes of use (in millions) 43,883 40,456 8.5 128,841 118,773 8.5
Employees per 10,000 access lines (1) 29.0 31.0 (6.5)
High Capacity and Digital Data
Revenues (in millions)
Wideband Transport (2) 392.5 313.5 25.2 1,113.2 881.3 26.3
Fast Packet Services and ISDN (3) 129.4 79.8 62.2 341.8 214.5 59.3
Data Solutions 74.8 65.7 13.9 199.2 168.3 18.4
---------------------------- -----------------------------
Total Revenues $ 596.7 $ 459.0 30.0 $ 1,654.2 $ 1,264.1 30.9
============================ =============================
Volumes in service (000s) (4)
Total DSO Equivalents (5) 15,702 10,941 43.5
-----------------------------
PRI ISDN (6) 720 393 83.2
Frame Relay (6) 509 249 104.4
ATM Cell Relay (6) 404 80 405.0
</TABLE>
Footnotes:
(1) Calculated based on employees of telephone operations only
(2) Circuit based dedicated transport services such as DDS, DS1, DS3 and Sonet
based services, used to carry local and access traffic, both voice and data
(3) Fast packet data transport services such as Frame Relay, SMDS and ATM, as
well as ISDN
(4) All volumes exclude Bell Atlantic Official Company Service or Network
Facilities
(5) Includes Digital DSO (excludes analog) and above circuits (e.g. Digital
DSO, DS1, DS3), including packet based services, converted to a DSO or 64
KBS transmission rate
(6) Volumes are expressed as DSO equivalents
* Restated from amounts previously disclosed
<PAGE>
- ------------------------------------------------------------------------------
Global Wireless Sector - Proportionate Results
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(Dollars in Millions, except subscriber amounts)
3 Mos. Ended 3 Mos. Ended 9 Mos. Ended 9 Mos. Ended
Unaudited 9/30/98 9/30/97 % Change 9/30/98 9/30/97 % Change
- ------------------------------------------------------------------------------------ ------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Combined Global Wireless
Selected Financial Results
Revenues $ 1,214.6 $ 952.7 27.5 $ 3,303.2 $ 2,661.5 24.1
Operating income $ 241.8 $ 181.9 32.9 $ 565.1 $ 378.7 49.2
Operating cash flow (1) $ 420.6 $ 327.4 28.5 $ 1,093.3 $ 777.5 40.6
Selected Operating Data
Subscribers (000) 7,878 5,827 35.2 7,878 5,827 35.2
Subscriber net adds in period (000) 549 360 52.5 1,429 1,083 31.9
POPs (000) 180,497 175,117 3.1 180,497 175,117 3.1
- ------------------------------------------------------------------------------------ ------------------------------------------
Bell Atlantic Mobile (2)
Selected Financial Results
Revenues $ 903.0 $ 802.7 12.5 $ 2,558.0 $ 2,277.5 12.3
Operating income $ 234.4 $ 216.1 8.5 $ 619.3 $ 535.4 15.7
Operating cash flow $ 370.0 $ 327.0 13.1 $ 1,006.9 $ 843.9 19.3
Selected Operating Data
Subscribers (000) 5,914 5,064 16.8 5,914 5,064 16.8
Subscriber net adds in period (000) 207 189 9.5 558 654 (14.7)
Controlled POPs (000) 57,190 56,830 .6 57,190 56,830 .6
PrimeCo Personal Communications (3)
Selected Financial Data
Revenues $ 60.8 $ 26.0 NM $ 165.1 $ 61.0 NM
Operating income $ (42.0) $ (49.3) 14.8 $ (153.1) $ (165.3) 7.4
Operating cash flow $ (19.4) $ (32.7) 40.7 $ (79.9) $ (118.4) 32.5
Selected Operating Data
Subscribers (000) 329 122 NM 329 122 NM
Subscriber net adds in period (000) 51 28 82.1 148 104 42.3
POPs (000) 28,487 28,487 - 28,487 28,487 -
- ------------------------------------------------------------------------------------ ------------------------------------------
International Wireless Operations (4)
Selected Financial Data
Revenues $ 250.8 $ 124.0 NM $ 580.1 $ 323.0 79.6
Operating income $ 49.4 $ 15.1 NM $ 98.9 $ 8.6 NM
Operating cash flow $ 70.0 $ 33.1 NM $ 166.3 $ 52.0 NM
Selected Operating Data
Subscribers (000) 1,635 641 NM 1,635 641 NM
Subscriber net adds in period (000) 291 143 NM 723 325 NM
POPs (000) 94,820 89,800 5.6 94,820 89,800 5.6
</TABLE>
Footnotes:
(1) Operating cash flow equals operating income plus depreciation and
amortization
(2) Bell Atlantic Mobile results reflect consolidated results for all
controlled markets
(3) Represents 46.7% of total PrimeCo Personal Communications
(4) Represents Bell Atlantic's proportionate share of International wireless
investments including consolidated, equity method, and cost basis
investments
NM Not meaningful
<PAGE>
- -------------------------------------------------------
Bell Atlantic Mobile Results
- -------------------------------------------------------
<TABLE>
<CAPTION>
(Dollars in Millions, except subscriber amounts)
3 Mos. Ended 3 Mos. Ended 9 Mos. Ended 9 Mos. Ended
Unaudited 9/30/98 9/30/97 % Change 9/30/98 9/30/97 % Change
- ------------------------------------------------------------------------------------- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Bell Atlantic Mobile (1)
Selected Financial Results
Revenues $ 903.0 $ 802.7 12.5 $ 2,558.0 $ 2,277.5 12.3
Less: Incollect revenues 81.3 71.0 14.5 214.8 175.7 22.3
Less: Equipment revenues 39.8 33.2 19.9 117.5 94.9 23.8
--------------------------- ------------------------------
Service revenues $ 781.9 $ 698.5 11.9 $ 2,225.7 $ 2,006.9 10.9
--------------------------- ------------------------------
Operating income $ 234.4 $ 216.1 8.5 $ 619.3 $ 535.4 15.7
Operating cash flow $ 370.0 $ 327.0 13.1 $ 1,006.9 $ 843.9 19.3
Operating cash flow margin (2) 47% 47% 45% 42%
Capital expenditures, excluding acquisitions 178.5 163.9 8.9 444.0 663.9 (33.1)
Selected Operating Data
Subscribers (000) 5,914 5,064 16.8 5,914 5,064 16.8
Penetration (3) 10.3% 8.9% 10.3% 8.9%
Subscriber net adds in period (000) 207 189 9.5 558 654 (14.7)
Controlled POPs (000) (4) 57,190 56,830 .6 57,190 56,830 .6
Owned POPs (000) (5) 55,306 54,944 .7 55,306 54,944 .7
Churn rate 1.82% 1.66% 1.80% 1.70%
Total revenue per subscriber $ 51.76 $ 53.84 (3.9) $ 50.72 $ 53.26 (4.8)
Service revenue per subscriber $ 44.82 $ 46.85 (4.3) $ 44.13 $ 46.93 (6.0)
Cash expense per subscriber $ 23.61 $ 24.92 (5.3) $ 24.17 $ 27.20 (11.1)
Acquisition cost per add (6) $ 202 $ 226 (10.6) $ 207 $ 223 (7.2)
</TABLE>
Footnotes:
(1) Bell Atlantic Mobile results reflect consolidated results for all
controlled markets
(2) Operating cash flow margin is calculated by dividing operating cash flow by
service revenues
(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) Acquisition cost per add includes commissions and loss on handsets
