<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: July 23, 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 July 23, 1998 announcing earnings for the second quarter of 1998.
Item 7. Financial Statements and Exhibits
---------------------------------
(c) Exhibits.
99.1 Press Release, dated July 23, 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: July 24, 1998
<PAGE>
EXHIBIT 99.1
NEWS RELEASE [LOGO OF BELL ATLANTIC APPEARS HERE]
FOR IMMEDIATE RELEASE Contact:
July 23, 1998 David Frail
212-395-7726
[email protected]
Bell Atlantic Second Quarter Net Income Rises 11%
Data Revenues Increase 29% to $580 Million;
Global Wireless Adds 486,000 Subscribers
NEW YORK -- Bell Atlantic (NYSE:BEL) today announced second quarter net income
of $1.1 billion, an 11 percent increase over second quarter 1997 net income of
$964.7 million. Diluted earnings per share of 68 cents rose 9.7 percent from
second quarter 1997 EPS of 62 cents./(1)/
Results are adjusted for special items in this quarter related to merger
integration and an enhanced pension offer which resulted in charges totaling 3
cents per share, and 5 cents per share in the prior-year period for special
items. Reported net income for the quarter was $1.0 billion compared to $896.8
million, and reported EPS was 65 cents compared to 57 cents in second quarter
1997.
Proportionate revenues, which include Bell Atlantic's Telecom and Global
Wireless businesses, increased 4.6 percent. Operating income for these units
grew 8.9 percent, to $2.0 billion.
For the first six months of 1998, net income available to common
shareowners rose 10.9 percent to $2.1 billion, and EPS was $1.34, 9.8 percent
higher than $1.22 in the first six months of 1997.
- ---------------------------------
/(1)/ EPS comparisons for the quarter and the first six months of 1998 were
affected by rounding resulting from a 2-for-1 stock split on June 1. On a pre-
split basis, second quarter 1998 EPS would have grown from $1.23 to $1.36 in
second quarter 1997, or 10.6 percent. Six-month 1998 EPS on a pre-split basis
would have grown from $2.43 to $2.68, or 10.3 percent. The number of shares
outstanding increased in the quarter by .6 percent. All EPS amounts are on a
diluted basis.
--more--
<PAGE>
Bell Atlantic News Release, page 2
Six-month EPS figures have been adjusted for special items totaling 13
cents per share in 1998 and 20 cents per share in 1997. Reported net income
available to common shareowners of $1.9 billion rose 19.9 percent over $1.6
billion in the prior-year period. Reported EPS grew 18.6 percent, to $1.21
compared to $1.02.
"Our second-quarter results are on target, with our Telecom and Global
Wireless businesses both delivering solid operating results." said Bell Atlantic
Vice Chairman, President and CEO Ivan Seidenberg.
"Telecom volumes remain very strong, as evidenced by continued growth in
access lines and minutes of use. Especially encouraging is the acceleration in
demand for data services, and our success in participating in this high-growth
market. In fact, data has become one of Telecom's largest sources of growth.
"Our strong volumes will serve as the foundation for improved top-line
growth in the second half of the year, as we move past the effects of last
July's access charge reductions, build on the momentum of our vertical service
sales campaigns and increase our focus on the data market.
"Global Wireless continues its stellar performance, delivering nearly
500,000 new customers and generating 62 percent growth in operating income.
With 85 million potential customers in the United States and 92 million in
international markets, Global Wireless has the market presence and demonstrated
capabilities to sustain this kind of growth and profitability for years to
come."
Bell Atlantic Chairman Ray Smith said, "Our challenge has been to meet our
financial targets while positioning ourselves for a competitive future and new
opportunities. We are meeting that challenge.
"We are making substantial progress toward developing full capabilities in
the data and long distance markets. We've begun construction of a region-wide,
SONET- and ATM-based data network and are preparing to roll out high-capacity
ADSL lines for the mass market this quarter. As for long distance, we're
beginning to see the light at the end of the tunnel. With third-party review
underway in New York, I'm confident we will file an application with the FCC in
the fall that will cut the Gordian knot of Section 271.
--more--
<PAGE>
Bell Atlantic News Release, page 3
"At this time last year we were anticipating final approval of our merger
with NYNEX; now we're eager to fully realize the opportunities created by the
merger. I'm confident we will deliver on our 1998 financial targets and
continue to position ourselves to leverage all of the potential in the world's
richest communications market."
Domestic Telecommunications Highlights
Strong demand for communications services was reflected in 4.4 percent
growth in the number of access lines in service, to 40.8 million, and an 8.4
percent increase in access minutes of use. Strong volumes helped offset the
effects of approximately $130 million in mandated rate reductions and grow
revenues 2.1 percent compared to second quarter 1997.
The market for digital data services continued to be the most dynamic in
telecommunications, as shown by Bell Atlantic's results in data services and
other business services:
. Revenues from high-bandwidth switched and special access services, and from
Bell Atlantic's network integration business, known as BANI, rose 29
percent over second quarter 1997 levels to $580 million.
. 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 42 percent over second quarter 1997.
. Bell Atlantic ended the quarter with more than 470,000 basic rate
Integrated Services Digital Network (ISDN) lines in service, up 23 percent
from second quarter 1997, and more than 650,000 primary rate ISDN channels
in service, nearly double the second-quarter 1997 total.
. The number of Centrex lines increased 8.7 percent over second quarter 1997
to 4.6 million.
In residential markets:
. Caller ID subscribers increased to more than 5.8 million, with revenues up
37.6 percent.
. Revenues from Home Voice Mail service rose 19.1 percent.
--more--
<PAGE>
Bell Atlantic News Release, page 4
In wholesale markets:
. At the end of the quarter, Bell Atlantic was providing other carriers with
approximately 415,000 resold access lines and nearly 50,000 unbundled
loops.
Network operating expenses for the quarter totaled $5.2 billion, 1.1
percent higher than in second quarter 1997. Merger-related synergies helped
offset upward pressures from interconnections payments to competitive local
exchange carriers (CLECs) and helped cover costs for compliance with the
Telecommunications Act "checklist," including local number portability, and
investments in growth opportunities.
Global Wireless Highlights
The Global Wireless group posted record results for the second quarter,
driven by strong performance at Bell Atlantic Mobile (BAM) and sustained healthy
growth in its international portfolio.
Global Wireless ended the quarter with 7.3 million proportionate customers,
nearly 34 percent more than in second quarter 1997. Proportionate net customer
additions in the quarter totaled 486,000, an increase of 22.7 percent over
second quarter 1997.
Total proportionate revenues for the quarter reached a record $1.1 billion,
increasing 23.3 percent over second quarter 1997. Contributions from
international ventures and PrimeCo Personal Communications increased, accounting
for more than 50 percent of the growth. Proportionate operating income for the
portfolio totaled $203 million, up 62.2 percent from second quarter 1997.
Domestic highlights:
. BAM subscribers grew more than 17 percent over second quarter 1997. With
224,000 net customer additions, BAM ended the quarter with 5.7 million
customers. Revenues increased nearly $100 million, or 13 percent, to $869.4
million.
. BAM's DigitalChoice(SM) price plans, introduced in March, drove up the
number of digital subscribers to nearly 400,000 at the end of the quarter.
Twenty percent of new customers are taking a DigitalChoice plan, and digital
subscribers now generate nearly 25 percent of BAM's busy-hour traffic on its
high-efficiency CDMA network.
--more--
<PAGE>
Bell Atlantic News Release, page 5
. BAM reduced acquisition costs per subscriber 17.1 percent, to $194 compared
to $234 in the prior-year period, through control of commission expenses,
lower handset costs, and by selling through direct distribution channels. BAM
also reduced cash expense per subscriber by $4 to a record low of $24.
. BAM operating cash flow improved to its highest level ever at $348 million,
and operating cash flow margins expanded to 46 percent, five percentage
points higher than second quarter 1997. Operating income grew 21.7 percent to
nearly $220 million.
. PrimeCo Personal Communications ended the quarter with 90,000 net subscriber
additions. PrimeCo's total customer base at the end of the quarter was
598,000, triple the number in second quarter 1997.
. Total PrimeCo revenues for the quarter grew to $120 million, nearly two and
one-half times the level in second quarter 1997, with average monthly revenue
per subscriber of nearly $61. Bell Atlantic owns 47.6 percent of PrimeCo.
The International Wireless portfolio contributed 220,000 proportionate net
additions in the quarter, 91.3 percent higher than in the prior-year period and
nearly half of the Global Wireless total. The international proportionate
customer base now exceeds 1.3 million, and Bell Atlantic's wireless ventures
outside the U.S. serve more than eight million subscribers. International
proportionate revenues totaled $186.8 million, up 73.1 percent over second
quarter 1997. Operating income climbed eightfold and operating cash flow
increased three and one-half times over second quarter 1997.
International highlights:
. Grupo Iusacell in Mexico closed the first half of the year with more than
550,000 customers, double the number in the same period last year. Iusacell's
net customer additions in the second quarter were the highest in its history.
. During the second quarter Grupo Iusacell won two new PCS licenses for the
fast-growing industrial regions on the Mexico-U.S. border. Iusacell now will
become a nationwide provider, increasing its coverage from 70 percent to more
than 80 percent of Mexico's 94 million people.
. Omnitel Pronto Italia ended the quarter with almost four million customers,
as the company increased its share of the Italian wireless market to 25
percent. During the second quarter, the company took first place in the Grand
Prix of Customer Service conducted by Teleperformance.
. STET Hellas closed the quarter with more than 500,000 subscribers in Greece,
an increase of 77 percent over second quarter 1997. STET Hellas completed a
global
--more--
<PAGE>
Bell Atlantic News Release, page 6
public offering on June 4 and ended the quarter with a market capitalization
of more than $3.5 billion. Bell Atlantic owns 20 percent of STET Hellas.
Bell Atlantic -- formed through the merger of Bell Atlantic and NYNEX is at
the forefront of the new communications and information industry. With more than
41 million telephone access lines and more than 7 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 6 Mos. Ended 6 Mos. Ended
Unaudited 6/30/98 6/30/97 % Change 6/30/98 6/30/97 % Change
- ----------------------------------------------------------------------------------- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Operating Revenues
Local services $ 3,462.4 $ 3,342.0 3.6 $ 6,794.0 $ 6,452.3 5.3
Network access services 1,942.8 1,852.8 4.9 3,849.3 3,711.6 3.7
Long distance services 474.2 561.4 (15.5) 976.1 1,131.4 (13.7)
Ancillary services 453.8 441.2 2.9 923.5 896.9 3.0
Directory and information services 628.6 622.4 1.0 1,186.3 1,153.3 2.9
Wireless services 943.7 823.6 14.6 1,800.1 1,597.7 12.7
Other services 22.3 64.4 (65.4) 49.6 181.1 (72.6)
.......................... ...........................
Total Operating Revenues 7,927.8 7,707.8 2.9 15,578.9 15,124.3 3.0
.......................... ...........................
Operating Expenses
Employee costs 2,116.0 2,149.0 (1.5) 4,420.4 4,619.1 (4.3)
Depreciation and amortization 1,445.8 1,363.8 6.0 2,856.3 2,735.1 4.4
Taxes other than income 379.7 382.2 (.7) 751.6 777.2 (3.3)
Other operating expenses 2,033.7 1,964.9 3.5 3,886.0 3,686.5 5.4
.......................... ...........................
Total Operating Expenses 5,975.2 5,859.9 2.0 11,914.3 11,817.9 0.8
.......................... ...........................
Operating Income 1,952.6 1,847.9 5.7 3,664.6 3,306.4 10.8
Income (loss) from unconsolidated businesses (25.5) (80.7) 68.4 (2.7) (115.4) 97.6
Other income and (expense), net 41.8 (16.1) NM 55.6 (6.5) NM
Interest expense 363.1 291.1 24.7 673.1 620.6 8.5
Provision for income taxes 578.6 563.2 2.7 1,107.6 968.9 14.3
.......................... ...........................
Income from Continuing Operations 1,027.2 896.8 14.5 1,936.8 1,595.0 21.4
Extraordinary item
Early extinguishment of debt, net of tax (6.3) -- NM (22.5) -- NM
.......................... ...........................
Net Income 1,020.9 896.8 13.8 1,914.3 1,595.0 20.0
Redemption of investee preferred stock -- -- (2.5) -- NM
.......................... ...........................
Net Income Available to
Common Shareowners $ 1,020.9 $ 896.8 13.8 $ 1,911.8 $ 1,595.0 19.9
========================== ===========================
Basic Earnings per Share $ .66 $ .58 13.8 $ 1.23 $ 1.03 19.4
Weighted average number of common
shares outstanding (in millions) 1,552.9 1,551.5 1,552.9 1,551.4
Diluted Earnings per Share $ .65 $ .57 14.0 $ 1.21 $ 1.02 18.6
Weighted average number of common
shares-assuming dilution (in millions) 1,578.3 1,568.4 1,578.4 1,566.7
</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 year
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 six months ended June 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 6/30/98 3 Mos. Ended 6/30/97
Unaudited Net Income Diluted EPS Net Income Diluted EPS
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Income Available to Common Shareowners $ 1,020.9 $ .65 $ 896.8 $ .57
Adjustments:
Special pension enhancement 21.3 .01 30.3 .02
Merger transition costs 28.6 .02
Video-related charges 37.6 .03
..................................................................
Adjusted Earnings $ 1,070.8 $ .68 $ 964.7 $ .62
==================================================================
Adjusted Growth 11.0% 9.7%
<CAPTION>
-----------------------------
6 Mos. Ended 6/30/98 6 Mos. Ended 6/30/97
Net Income Diluted EPS Net Income Diluted EPS
------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Income Available to Common Shareowners $ 1,911.8 $ 1.21 $ 1,595.0 $ 1.02
Adjustments:
Special pension enhancement 168.0 .11 273.9 .17
Merger transition costs 33.9 .02
Video-related charges 37.6 .03
..................................................................
Adjusted Earnings $ 2,113.7 $ 1.34 $ 1,906.5 $ 1.22
==================================================================
Adjusted Growth 10.9% 9.8%
</TABLE>
<PAGE>
Bell Atlantic Corporation
- -----------------------------------------------------------------
Sector Summary
- -----------------------------------------------------------------
(Dollars in Millions)
------------
Unaudited 3 Mos. Ended 3 Mos. Ended
6/30/98 6/30/97 % Change
- -----------------------------------------------------------------------------
Revenues
Telecom 6,987.2 6,843.3 2.1
Global Wireless (1) 1,112.0 902.1 23.3
..............................
Total $ 8,099.2 $ 7,745.4 4.6%
==============================
------------
3 Mos. Ended 3 Mos. Ended
6/30/98 6/30/97 % Change
----------------------------------------------
Operating Income
Telecom 1,818.2 1,731.6 5.0
Global Wireless (1) 202.9 125.1 62.2
------------------------------
Total $ 2,021.1 $ 1,856.7 8.9%
==============================
------------
Unaudited 6 Mos. Ended 6 Mos. Ended
6/30/98 6/30/97 % Change
- -----------------------------------------------------------------------------
Revenues
Telecom 13,778.3 13,476.0 2.2
Global Wireless (1) 2,088.7 1,708.8 22.2
...............................
Total $15,867.0 $15,184.8 4.5%
===============================
------------
3 Mos. Ended 3 Mos. Ended
6/30/98 6/30/97 % Change
----------------------------------------------
Operating Income
Telecom 3,629.1 3,510.3 3.4
Global Wireless (1) 323.4 196.8 64.3
...............................
Total $ 3,952.5 $ 3,707.1 6.6%
===============================
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 page 11
<PAGE>
Bell Atlantic Corporation
- --------------------------------------------------------------------
Consolidated Adjusted Statements of Income - Second Quarter
- --------------------------------------------------------------------
<TABLE>
<CAPTION>
(Dollars in Millions, Except Per Share Amounts)
3 Mos. Ended 6/30/98 3 Mos. Ended 6/30/97
Unaudited Reported Adjustments Adjusted Reported Adjustments Adjusted % Change
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Operating Revenues
Local services $ 3,462.4 $ $ 3,462.4 $ 3,342.0 $ $ 3,342.0 3.6
Network access services 1,942.8 1,942.8 1,852.8 1,852.8 4.9
Long distance services 474.2 474.2 561.4 561.4 (15.5)
Ancillary services 453.8 453.8 441.2 441.2 2.9
Directory and information services 628.6 628.6 622.4 622.4 1.0
Wireless services 943.7 943.7 823.6 (1.1)(4) 822.5 14.7
Other services 22.3 22.3 64.4 64.4 (65.4)
..........................................................................
Total Operating Revenues 7,927.8 7,927.8 7,707.8 (1.1) 7,706.7 2.9
..........................................................................
Operating Expenses
Employee costs 2,116.0 (36.8)(1) 2,079.2 2,149.0 (59.1)(5) 2,089.9 (.5)
Depreciation and amortization 1,445.8 1,445.8 1,363.8 1,363.8 6.0
Taxes other than income 379.7 379.7 382.2 382.2 (.7)
Other operating expenses 2,033.7 (43.6)(2) 1,990.1 1,964.9 (1.1)(4) 1,963.8 1.3
..........................................................................
Total Operating Expenses 5,975.2 (80.4) 5,894.8 5,859.9 (60.2) 5,799.7 1.6
..........................................................................
Operating Income 1,952.6 80.4 2,033.0 1,847.9 59.1 1,907.0 6.6
Income (loss) from unconsolidated businesses (25.5) (25.5) (80.7) 30.0(6) (50.7) 49.7
Other income and (expense), net 41.8 41.8 (16.1) (16.1) NM
Interest expense 363.1 363.1 291.1 291.1 24.7
Provision for income taxes 578.6 30.5(3) 609.1 563.2 21.2(7) 584.4 4.2
..........................................................................
Income from Continuing Operations 1,027.2 49.9 1,077.1 896.8 67.9 964.7 11.7
Extraordinary item
Early extinguishment of debt, net of tax (6.3) (6.3) - - - NM
..........................................................................
Net Income Available to
Common Shareowners $ 1,020.9 $ 49.9 $ 1,070.8 $ 896.8 $ 67.9 $ 964.7 11.0
==========================================================================
Diluted Earnings per Share $ .65 $ .03 $ .68 $ .57 $ .05 $ .62 9.7
--------------------------------------------------------------------------
Weighted average number of common
shares-assuming dilution (in millions) 1,578.3 1,578.3 1,568.4 1,568.4
</TABLE>
Footnotes:
1998
(1) Adjustment for special pension enhancement ($34.2) and merger transition
costs ($2.6)
(2) Adjustment for merger transition costs
(3) Tax effects of items (1) and (2) above
1997
(4) Adjustment related to an accounting reclass for BAM promotions
(5) Adjustment for special pension enhancement ($47.4) and video-related
severance charges ($11.7)
(6) Adjustment for restructuring CAI wireless investment
(7) Tax effects of items (4) - (6) above
<PAGE>
Bell Atlantic Corporation
- -----------------------------------------------------------------
Consolidated Adjusted Statements of Income - Year-to-Date
- -----------------------------------------------------------------
<TABLE>
<CAPTION>
(Dollars in Millions, Except Per Share Amounts)
6 Mos. Ended 6/30/98 6 Mos. Ended 6/30/97
Unaudited Reported Adjustments Adjusted Reported Adjustments Adjusted % Change
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Operating Revenues
Local services $ 6,794.0 $ $ 6,794.0 $ 6,452.3 $ 83.0 (4) $ 6,535.3 4.0
Network access services 3,849.3 3,849.3 3,711.6 3,711.6 3.7
Long distance services 976.1 976.1 1,131.4 1,131.4 (13.7)
Ancillary services 923.5 923.5 896.9 896.9 3.0
Directory and information services 1,186.3 1,186.3 1,153.3 1,153.3 2.9
Wireless services 1,800.1 1,800.1 1,597.7 (19.8) (5) 1,577.9 14.1
Other services 49.6 49.6 181.1 181.1 (72.6)
.............................................................................
Total Operating Revenues 15,578.9 15,578.9 15,124.3 63.2 15,187.5 2.6
.............................................................................
Operating Expenses
Employee costs 4,420.4 (279.9) (1) 4,140.5 4,619.1 (445.9) (6) 4,173.2 (.8)
Depreciation and amortization 2,856.3 2,856.3 2,735.1 2,735.1 4.4
Taxes other than income 751.6 751.6 777.2 777.2 (3.3)
Other operating expenses 3,886.0 (49.2) (2) 3,836.8 3,686.5 76.2 (7) 3,762.7 2.0
.............................................................................
Total Operating Expenses 11,914.3 (329.1) 11,585.2 11,817.9 (369.7) 11,448.2 1.2
.............................................................................
Operating Income 3,664.6 329.1 3,993.7 3,306.4 432.9 3,739.3 6.8
Income (loss) from unconsolidated businesses (2.7) (2.7) (115.4) 30.0 (8) (85.4) NM
Other income and (expense), net 55.6 55.6 (6.5) (6.5) NM
Interest expense 673.1 673.1 620.6 (13.0) (9) 607.6 10.8
Provision for income taxes 1,107.6 127.2 (3) 1,234.8 968.9 164.4 (10) 1,133.3 9.0
.............................................................................
Income from Continuing Operations 1,936.8 201.9 2,138.7 1,595.0 311.5 1,906.5 12.2
Extraordinary item
Early extinguishment of debt, net of tax (22.5) (22.5) - - NM
.............................................................................
Net Income 1,914.3 201.9 2,116.2 1,595.0 311.5 1,906.5 11.0
Redemption of investee preferred stock (2.5) (2.5) - -
.............................................................................
Net Income Available to
Common Shareowners $ 1,911.8 $ 201.9 $ 2,113.7 $ 1,595.0 $ 311.5 $ 1,906.5 10.9
=============================================================================
Diluted Earnings per Share $ 1.21 $ .13 $ 1.34 $ 1.02 $ .20 $ 1.22 9.8
-----------------------------------------------------------------------------
Weighted average number of common
shares-assuming dilution (in millions) 1,578.4 1,578.4 1,566.7 1,566.7
</TABLE>
Footnotes:
1998
(1) Adjustment for special pension enhancement ($274.5) and merger transition
costs ($5.4)
(2) Adjustment for merger transition costs
(3) Tax effects of items (1) and (2) above
1997
(4) Restated for reclass adjustment
(5) Adjustment related to an accounting reclass for BAM promotions
(6) Adjustment for special pension enhancement ($434.2) and video-related
severance charges ($11.7)
(7) Restated for reclass adjustment ($96.0) and accounting reclass for BAM
promotions ($19.8)
(8) Adjustment for restructuring CAI wireless investment
(9) Restated for reclass adjustment
(10) Tax effects of items (4) - (9) above
<PAGE>
Bell Atlantic Corporation
- ------------------------------------------------------------------
Selected Financial and Operating Statistics
- ------------------------------------------------------------------
<TABLE>
<CAPTION>
(Dollars in Millions, Except Per Share Amounts)
---------------- --------------
3 Mos. Ended 3 Mos. Ended 6 Mos. Ended 6 Mos. Ended
Unaudited 6/30/98 6/30/97 6/30/98 6/30/97
- ----------------------------------------------------------------------------------- -------------------------------------
<S> <C> <C> <C> <C>
Debt ratio-end of period 60.1% 59.1%
Return on average common equity-adjusted basis 32.0% 28.5% 31.9% 28.5%
Return on average assets-adjusted basis 7.9% 7.3% 7.8% 7.2%
Book value per common share $ 8.48 $ 8.52
Cash dividends declared per common share $ .385 $ .37 $ .77 $ .74
Common shares outstanding (in millions)
End of period 1,553.5 1,552.4
Capital expenditures
Telecom $ 1,605 $ 1,328 $ 3,093 $ 2,430
Domestic cellular 163 260 266 500
Other 57 39 125 145
.............. ............... ............... ..............
Total $ 1,825 $ 1,627 $ 3,484 $ 3,075
============== =============== =============== ==============
Employees
Telecom 132,552 132,029
Other 9,984 9,582
............... ..............
Total 142,536 141,611
=============== ==============
</TABLE>
<PAGE>
Bell Atlantic Corporation
- ---------------------------------------
Consolidated Balance Sheets
- ---------------------------------------
<TABLE>
<CAPTION>
(Dollars in Millions)
------------
Unaudited 6/30/98 6/30/97 $ Change 12/31/97 $ Change
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Assets
Current assets
Cash and cash equivalents $ 303.1 $ 185.9 $ 117.2 $ 322.8 $ (19.7)
Short-term investments 423.4 240.7 182.7 720.6 (297.2)
Accounts receivable, net 6,467.3 6,142.5 324.8 6,340.8 126.5
Inventories 604.9 544.4 60.5 550.3 54.6
Prepaid expenses 608.6 749.2 (140.6) 634.0 (25.4)
Other 595.5 572.7 22.8 432.3 163.2
.......................................................................
Total current assets 9,002.8 8,435.4 567.4 9,000.8 2.0
.......................................................................
Plant, property and equipment 80,184.9 75,829.0 4,355.9 77,437.2 2,747.7
Less accumulated depreciation 44,383.1 41,198.4 3,184.7 42,397.8 1,985.3
.......................................................................
35,801.8 34,630.6 1,171.2 35,039.4 762.4
-----------------------------------------------------------------------
Investments in unconsolidated businesses 5,224.8 5,239.4 (14.6) 5,144.2 80.6
Other assets 4,686.3 4,362.8 323.5 4,779.7 (93.4)
.......................................................................
Total Assets $ 54,715.7 $ 52,668.2 $ 2,047.5 $ 53,964.1 $ 751.6
=======================================================================
Liabilities and Shareowners' Investment
Current liabilities
Debt maturing within one year $ 4,352.8 $ 5,938.1 $ (1,585.3) $ 6,342.8 $ (1,990.0)
Accounts payable and accrued liabilities 6,103.4 4,880.3 1,223.1 5,966.4 137.0
Other 1,362.9 1,491.3 (128.4) 1,355.0 7.9
.......................................................................
Total current liabilities 11,819.1 12,309.7 (490.6) 13,664.2 (1,845.1)
.......................................................................
Long-term debt 15,503.2 13,202.3 2,300.9 13,265.2 2,238.0
.......................................................................
Employee benefit obligations 9,914.8 9,879.0 35.8 10,004.4 (89.6)
.......................................................................
Deferred credits and other liabilities
Deferred income taxes 2,259.5 1,872.8 386.7 2,106.2 153.3
.......................................................................
Unamortized investment tax credits 236.3 267.4 (31.1) 250.7 (14.4)
.......................................................................
Other 698.4 834.6 (136.2) 772.6 (74.2)
.......................................................................
Minority interest, including a portion subject to
redemption requirements 913.7 933.5 (19.8) 911.2 2.5
.......................................................................
Preferred stock of subsidiary 200.5 135.0 65.5 200.5 -
.......................................................................
Shareowners' investment
Common stock 157.6 157.5 0.1 157.6 -
Contributed capital 13,286.5 13,200.0 86.5 13,176.8 109.7
Reinvested earnings 1,698.2 1,683.9 14.3 1,261.6 436.6
Accumulated other comprehensive loss (789.4) (498.5) (290.9) (553.3) (236.1)
.......................................................................
14,352.9 14,542.9 (190.0) 14,042.7 310.2
Less common stock in treasury, at cost 583.6 593.4 (9.8) 590.5 (6.9)
Less deferred compensation-employee stock ownership plans 599.1 715.6 (116.5) 663.1 (64.0)
.......................................................................
Total shareowners' investment 13,170.2 13,233.9 (63.7) 12,789.1 381.1
.......................................................................
Total Liabilities and Shareowners' Investment $ 54,715.7 $ 52,668.2 $ 2,047.5 $ 53,964.1 $ 751.6
=======================================================================
</TABLE>
<PAGE>
Bell Atlantic Corporation
- ----------------------------------------------
Consolidated Statements of Cash Flows
- ----------------------------------------------
<TABLE>
<CAPTION>
(Dollars in Millions)
--------------
6 Mos. Ended 6 Mos. Ended
Unaudited 6/30/98 6/30/97 $ Change
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash Flows from Operating Activities
Net Income $ 1,914.3 $ 1,595.0 $ 319.3
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 2,856.3 2,735.1 121.2
Extraordinary item, net of tax 22.5 22.5
Loss from unconsolidated businesses 2.7 115.4 (112.7)
Dividends received from unconsolidated businesses 88.1 97.8 (9.7)
Amortization of unearned lease income (57.5) (52.5) (5.0)
Deferred income taxes, net 118.1 85.5 32.6
Investment tax credits (14.5) (21.4) 6.9
Other items, net 101.2 (5.9) 107.1
Changes in certain assets and liabilities, net of effects
from acquisition/disposition of businesses (158.5) (732.9) 574.4
...........................................
Net cash provided by operating activities 4,872.7 3,816.1 1,056.6
...........................................
Cash Flows from Investing Activities
Net change in short-term investments 299.9 66.1 233.8
Additions to plant, property and equipment (3,483.8) (3,074.8) (409.0)
Proceeds from sale of plant, property and equipment 2.1 25.2 (23.1)
Investment in leased assets (26.8) (83.2) 56.4
Proceeds from leasing activities 105.6 47.0 58.6
Investment in notes receivable - (17.9) 17.9
Proceeds from notes receivable 20.8 29.6 (8.8)
Proceeds from TCNZ share repurchase plan - 82.0 (82.0)
Investments in unconsolidated businesses, net (413.6) (387.4) (26.2)
Acquisition of businesses (15.8) - (15.8)
Proceeds from disposition of businesses 4.6 271.5 (266.9)
Other, net (58.6) (84.9) 26.3
...........................................
Net cash used in investing activities (3,565.6) (3,126.8) (438.8)
...........................................
Cash Flows from Financing Activities
Proceeds from borrowings 2,990.1 151.3 2,838.8
Principal repayments of borrowings and capital lease obligations (209.2) (349.6) 140.4
Early extinguishment of debt (590.0) 0.0 (590.0)
Net change in short-term borrowings with original maturities of three months or less (2,031.9) 1,026.4 (3,058.3)
Dividends paid (1,188.3) (1,158.6) (29.7)
Proceeds from sale of common stock 375.5 310.5 65.0
Purchase of common stock for treasury (655.3) (390.6) (264.7)
Minority interest - (0.1) .1
Reduction in preferred stock of subsidiary - (10.0) 10.0
Net change in outstanding checks drawn on controlled disbursement accounts (17.7) (332.1) 314.4
-------------------------------------------
Net cash used in financing activities (1,326.8) (752.8) (574.0)
-------------------------------------------
Decrease in cash and cash equivalents (19.7) (63.5) 43.8
Cash and cash equivalents, beginning of period 322.8 249.4 73.4
-------------------------------------------
Cash and cash equivalents, end of period $ 303.1 $ 185.9 $ 117.2
===========================================
</TABLE>
<PAGE>
Bell Atlantic Corporation
- -------------------------------------------------------------------
Telecom Sector - Adjusted Financial Results
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
(Dollars in Millions)
------------- -------------
3 Mos. Ended 3 Mos. Ended 6 Mos. Ended 6 Mos. Ended
Unaudited 6/30/98 6/30/97 % Change 6/30/98 6/30/97 % Change
- ------------------------------------------------------------------------------ -----------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Operating Revenues
Local services $ 3,478.1 $ 3,355.0 3.7 $ 6,823.7 $ 6,562.5 4.0
Network access services 1,942.8 1,852.8 4.9 3,849.3 3,711.8 3.7
Long distance services 474.2 561.4 (15.5) 976.1 1,131.7 (13.7)
Ancillary services 463.5 451.8 2.6 942.9 916.6 2.9
Directory and information services 628.6 622.3 1.0 1,186.3 1,153.4 2.9
............................ ...............................
Total Operating Revenues $ 6,987.2 $ 6,843.3 2.1 $ 13,778.3 $ 13,476.0 2.2
............................ ...............................
Operating Expenses
Employee costs 1,940.2 1,954.8 (.7) 3,854.3 3,881.1 (.7)
Depreciation and amortization 1,296.0 1,229.7 5.4 2,566.4 2,459.7 4.3
Taxes other than income 354.5 360.7 (1.7) 703.4 733.7 (4.1)
Other operating expenses 1,578.3 1,566.5 .8 3,025.1 2,891.2 4.6
............................ ...............................
Total Operating Expenses $ 5,169.0 $ 5,111.7 1.1 $ 10,149.2 $ 9,965.7 1.8
............................ ...............................
Operating Income $ 1,818.2 $ 1,731.6 5.0 $ 3,629.1 $ 3,510.3 3.4
Operating Income Margin 26.0% 25.3% 26.3% 26.0%
Operating Cash Flow $ 3,114.2 $ 2,961.3 5.2 $ 6,195.5 $ 5,970.0 3.8
Operating Cash Flow Margin 44.6% 43.3% 45.0% 44.3%
- ------------------------------------------------------------------------------ -----------------------------------------
Operating Statistics
Access lines in service (in millions)
Residence 25,739 24,888 3.4
Business 14,565 13,700 6.3
Public 523 524 (.2)
...............................
Total 40,827 39,112 4.4
...............................
ISDN (BRI lines) (000) 470 380 23.7
Access minutes of use (in millions) 43,349 39,985 8.4 84,958 78,318 8.5
Employees per 10,000 access lines (1) 30.0 31.4 (4.5)
High Capacity and Digital Data
Revenues (in millions)
Transport & Services $ 579.9 $ 449.2 29.1 $ 1,137.1 $ 876.1 29.8
Volumes in service (000)
DSO Equivalents (2) 14,517 10,191 * 42.4
PRI ISDN (circuits) 650 334 94.6
</TABLE>
Footnotes:
(1) Calculated based on employees of telephone operations only
(2) Includes all DSO and above circuits (Digital DSO, DS1, DS3, PRI, Frame
Relay, OCnC) and does not include Bell Atlantic Official Company Service or
Network Facilities. DSO equivalents defined as a factor of 64KBS
transmission rate.
* Restated
<PAGE>
Bell Atlantic Corporation
- ---------------------------------------------------------
Global Wireless Sector - Proportionate Results
- ---------------------------------------------------------
<TABLE>
<CAPTION>
(Dollars in Millions)
------------- -------------
3 Mos. Ended 3 Mos. Ended 6 Mos. Ended 6 Mos. Ended
Unaudited 6/30/98 6/30/97 % Change 6/30/98 6/30/97 % Change
- ------------------------------------------------------------------------------------------ ----------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Combined Global Wireless
Selected Financial Results
Revenues $ 1,112.0 $ 902.1 23.3 $ 2,088.7 $ 1,708.8 22.2
Operating income $ 202.9 $ 125.1 62.2 $ 323.4 $ 196.8 64.3
Operating cash flow (1) $ 380.5 $ 255.5 48.9 $ 672.8 $ 450.1 49.5
Selected Operating Data
Subscribers (000) 7,298 5,467 33.5 7,298 5,467 33.5
Subscriber net adds in period (000) 486 396 22.7 880 722 21.9
POPs (000) 177,074 174,817 1.3 177,074 174,817 1.3
- ------------------------------------------------------------------------------------------ ----------------------------------------
Bell Atlantic Mobile (2)
Selected Financial Results
Revenues $ 869.4 $ 771.0 12.8 $ 1,655.0 $ 1,474.8 12.2
Operating income $ 217.4 $ 178.6 21.7 $ 384.9 $ 319.3 20.5
Operating cash flow $ 347.9 $ 282.5 23.2 $ 636.9 $ 516.9 23.2
Selected Operating Data
Subscribers (000) 5,707 4,875 17.1 5,707 4,875 17.1
Subscriber net adds in period (000) 224 241 (7.1) 351 465 (24.5)
Controlled POPs (000) 56,987 56,830 .3 56,987 56,830 .3
- ------------------------------------------------------------------------------------------ ----------------------------------------
PrimeCo Personal Communications (3)
Selected Financial Data
Revenues $ 55.8 $ 23.2 NM $ 104.3 $ 35.0 NM
Operating income $ (46.2) $ (57.4) 19.5 $ (111.1) $ (116.0) 4.2
Operating cash flow $ (23.9) $ (43.0) 44.4 $ (60.5) $ (85.7) 29.4
Selected Operating Data
Subscribers (000) 279 94 NM 279 94 NM
Subscriber net adds in period (000) 42 40 5.0 98 76 28.9
POPs (000) 28,487 28,487 - 28,487 28,487 -
- ------------------------------------------------------------------------------------------ ----------------------------------------
International Wireless Operations (4)
Selected Financial Data
Revenues $ 186.8 $ 107.9 73.1 $ 329.4 $ 199.0 65.5
Operating income $ 31.7 $ 3.9 NM $ 49.6 $ (6.5) NM
Operating cash flow $ 56.5 $ 16.0 NM $ 96.4 $ 18.9 NM
Selected Operating Data
Subscribers (000) 1,312 498 NM 1,312 498 NM
Subscriber net adds in period (000) 220 115 NM 431 181 NM
POPs (000) 91,600 89,500 2.3 91,600 89,500 2.3
</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 Corporation
- -----------------------------------------------
Bell Atlantic Mobile Results
- -----------------------------------------------
<TABLE>
<CAPTION>
(Dollars in Millions)
-------------- --------------
3 Mos. Ended 3 Mos. Ended 6 Mos. Ended 6 Mos. Ended
Unaudited 6/30/98 6/30/97 % Change 6/30/98 6/30/97 % Change
- ---------------------------------------------------------------------------------------- -----------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Bell Atlantic Mobile (1)
Selected Financial Results
Revenues $ 869.4 $ 771.0 12.8 $ 1,655.0 $ 1,474.8 12.2
Less: Incollect revenues 71.5 57.3 24.8 133.5 104.7 27.5
Less: Equipment revenues 42.5 31.3 35.8 77.7 61.7 25.9
............................. ...............................
Service revenues $ 755.4 $ 682.4 10.7 $ 1,443.8 $ 1,308.4 10.3
............................. ...............................
Operating income $ 217.4 $ 178.6 21.7 $ 384.9 $ 319.3 20.5
Operating cash flow $ 347.9 $ 282.5 23.2 $ 636.9 $ 516.9 23.2
Operating cash flow margin (2) 46% 41% 44% 40%
Capital expenditures, excluding acquisitions 162.1 260.1 (37.7) 265.5 500.0 (46.9)
Selected Operating Data
Subscribers (000) 5,707 4,875 17.1 5,707 4,875 17.1
Penetration (3) 10.0% 8.6% 10.0% 8.6%
Subscriber net adds in period (000) 224 241 (7.1) 351 465 (24.5)
Controlled POPs (000) (4) 56,987 56,830 .3 56,987 56,830 .3
Owned POPs (000) (5) 55,101 54,944 .3 55,101 54,944 .3
Churn rate 1.75% 1.59% 1.79% 1.72%
Total revenue per subscriber $ 51.89 $ 54.04 (4.0) $ 50.17 $ 52.95 (5.3)
Service revenue per subscriber $ 45.09 $ 47.83 (5.7) $ 43.77 $ 46.98 (6.8)
Cash expense per subscriber $ 24.32 $ 28.03 (13.2) $ 24.46 $ 28.42 (13.9)
Acquisition cost per add (6) $ 194 $ 234 (17.1) $ 210 $ 222 (5.4)
</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
