SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------
FORM 11-K
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(Mark One)
(X) ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to _______
Commission file number 1-8608
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NYNEX Corporation Savings Plan
for Salaried Employees
-------------
Bell Atlantic Corporation
1095 Avenue of the Americas, New York, New York 10036
<PAGE>
Item 1. Financial Statements and Exhibits.
(a) Financial Statements of the Plan* included herein:
Report of Independent Accountants
Financial Statements:
Statements of Net Assets Available for Plan Benefits as of
December 31, 1997 and 1996
Statements of Changes in Net Assets Available for Plan
Benefits for the years ended December 31, 1997 and 1996
Notes to Financial Statements
- ----------
* This and certain other capitalized terms used but not defined herein shall
have their respective meanings as defined in the Plan Prospectus.
<PAGE>
Report of Independent Accountants
To the Employees' Benefit Committee
of Bell Atlantic Corporation:
We have audited the Statements of Net Assets Available for Plan Benefits of the
NYNEX Corporation Savings Plan for Salaried Employees as of December 31, 1997
and 1996, and the related Statements of Changes in Net Assets Available for Plan
Benefits for each of the two years in the period ended December 31, 1997. These
financial statements are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits of the NYNEX
Corporation Savings Plan for Salaried Employees as of December 31, 1997 and 1996
and the changes in net assets available for plan benefits for each of the two
years in the period ended December 31, 1997, in conformity with generally
accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The Fund Information in the Statements of
Net Assets Available for Plan Benefits as of December 31, 1997 and 1996 and the
Statements of Changes in Net Assets Available for Plan Benefits for each of the
two years in the period ended December 31, 1997 is presented for purposes of
additional analysis rather than to present the net assets available for plan
benefits and changes in net assets available for plan benefits of each Fund. The
Fund Information has been subjected to the auditing procedures applied in the
audits of the basic financial statements and, in our opinion, is fairly stated
in all material respects in relation to the basic financial statements taken as
a whole.
COOPERS & LYBRAND L.L.P.
New York, New York
April 30, 1998.
1
<PAGE>
NYNEX CORPORATION SAVINGS PLAN for SALARIED EMPLOYEES
Statement of Net Assets Available for Plan Benefits
December 31, 1997
(Dollars in Thousands)
<TABLE>
<CAPTION>
Fund Information
----------------------------------------------------------------------------------------------
Bell Govern-
Bell ment Employee Stock
Atlantic Telecommun- Obliga- Diversified Interest Ownership Plan
Shares ications tions Equity Income Loan -----------------------
Fund Fund Fund Portfolio Fund Fund Allocated Unallocated
-------- -------- -------- ---------- -------- --------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments at market
(see Notes 2 and 3):
Allocated Share of Master
Trust net assets $808,784 $186,055 $110,813 $1,048,229 $781,835 $ -- $460,975 $ --
Temporary cash investments -- -- -- 2,400 -- -- -- --
Bell Atlantic Corporation
common shares -- -- -- -- -- -- -- 527,893
-------- -------- -------- ---------- -------- --------- -------- --------
Total investments 808,784 186,055 110,813 1,050,629 781,835 -- 460,975 527,893
Receivables:
Employer's contributions -- -- -- -- -- -- 463 --
Participants' contributions 173 -- -- 462 114 -- -- --
Loan repayments 73 -- -- 158 37 (341) -- --
Loans to participants -- -- -- -- -- 86,503 -- --
Dividends and interest receivable -- -- -- 19 -- -- -- --
-------- -------- -------- ---------- -------- --------- -------- --------
Total receivables 246 -- -- 639 151 86,162 463 --
-------- -------- -------- ---------- -------- --------- -------- --------
Total assets 809,030 186,055 110,813 1,051,268 781,986 86,162 461,438 527,893
-------- -------- -------- ---------- -------- --------- -------- --------
LIABILITIES:
Note payable (Note 7) -- -- -- -- -- -- -- 383,647
-------- -------- -------- ---------- -------- --------- -------- --------
Total liabilities -- -- -- -- -- -- -- 383,647
-------- -------- -------- ---------- -------- --------- -------- --------
Net assets available
for plan benefits
(Notes 1 and 2) $809,030 $186,055 $110,813 $1,051,268 $781,986 $ 86,162 $461,438 $144,246
======== ======== ======== ========== ======== ========= ======== ========
Fund Information
---------------------------------------------------------------------------------------
Active U.S. U.S. Global International U.S. Bond
Equity Balanced Balanced Equity U.S. Small Market
Fund Fund Fund Fund Cap Fund Fund Total
-------- ------- ------- ------- ------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments at market
(see Notes 2 and 3):
Allocated Share of Master
Trust net assets $100,296 $56,000 $50,094 $40,225 $83,014 $ -- $3,726,320
Temporary cash investments 230 128 115 92 190 -- 3,155
Bell Atlantic Corporation
common shares -- -- -- -- -- -- 527,893
-------- ------- ------- ------- ------- ---------- ----------
Total investments 100,526 56,128 50,209 40,317 83,204 -- 4,257,368
Receivables:
Employer's contributions -- -- -- -- -- -- 463
Participants' contributions 76 30 33 33 66 14 1,001
Loan repayments 22 7 10 10 19 5 --
Loans to participants -- -- -- -- -- -- 86,503
Dividends and interest receivable 1 1 1 1 2 -- 25
-------- ------- ------- ------- ------- ---------- ----------
Total receivables 99 38 44 44 87 19 87,992
-------- ------- ------- ------- ------- ---------- ----------
Total assets 100,625 56,166 50,253 40,361 83,291 19 4,345,360
-------- ------- ------- ------- ------- ---------- ----------
LIABILITIES:
Note payable (Note 7) -- -- -- -- -- -- 383,647
-------- ------- ------- ------- ------- ---------- ----------
Total liabilities -- -- -- -- -- -- 383,647
-------- ------- ------- ------- ------- ---------- ----------
Net assets available
for plan benefits
(Notes 1 and 2) $100,625 $56,166 $50,253 $40,361 $83,291 $ 19 $3,961,713
======== ======= ======= ======= ======= ========== ==========
</TABLE>
See notes to financial statements.
2
<PAGE>
NYNEX CORPORATION SAVINGS PLAN for SALARIED EMPLOYEES
Statement of Net Assets Available for Plan Benefits
December 31, 1996
(Dollars in Thousands)
<TABLE>
<CAPTION>
Fund Information
--------------------------------------------------------------------------------------------
Govern-
ment Employee Stock
NYNEX Telecommun- Obliga- Diversified Interest Ownership Plan
Shares ications tions Equity Income Loan -----------------------
Fund Fund Fund Portfolio Fund Fund Allocated Unallocated
-------- -------- -------- -------- -------- ------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments at market
(see Notes 2 and 3):
Allocated Share of Master
Trust net assets $622,838 $155,919 $116,553 $767,040 $786,005 $ -- $291,677 $ --
Temporary cash investments -- -- -- 1,376 -- -- -- --
NYNEX Corporation common shares -- -- -- -- -- -- -- 388,855
Receivable for loans
to participants -- -- -- -- -- 85,863 -- --
-------- -------- -------- -------- -------- ------- -------- ---------
Total investments 622,838 155,919 116,553 768,416 786,005 85,863 291,677 388,855
Dividends and interest receivable -- -- -- 15 -- -- -- --
-------- -------- -------- -------- -------- ------- -------- ---------
Total assets 622,838 155,919 116,553 768,431 786,005 85,863 291,677 388,855
-------- -------- -------- -------- -------- ------- -------- ---------
LIABILITIES:
Note payable (Note 7) -- -- -- -- -- -- -- 399,454
-------- -------- -------- -------- -------- ------- -------- ---------
Total liabilities -- -- -- -- -- -- -- 399,454
-------- -------- -------- -------- -------- ------- -------- ---------
Net assets available
for plan benefits
(Notes 1 and 2) $622,838 $155,919 $116,553 $768,431 $786,005 $85,863 $291,677 $ (10,599)
======== ======== ======== ======== ======== ======= ======== =========
<CAPTION>
Fund Information
-----------------------------------------------------------------------
Active U.S. U.S. Global International
Equity Balanced Balanced Equity U.S. Small
Fund Fund Fund Fund Cap Fund Total
-------- ------- ------- ------- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments at market
(see Notes 2 and 3):
Allocated Share of Master
Trust net assets $57,715 $37,237 $35,365 $33,288 $44,422 $2,948,059
Temporary cash investments 103 72 62 58 79 1,750
NYNEX Corporation common shares -- -- -- -- -- 388,855
Receivable for loans
to participants -- -- -- -- -- 85,863
------- ------- ------- ------- ------- ----------
Total investments 57,818 37,309 35,427 33,346 44,501 3,424,527
Dividends and interest receivable 1 1 1 1 1 20
------- ------- ------- ------- ------- ----------
Total assets 57,819 37,310 35,428 33,347 44,502 3,424,547
------- ------- ------- ------- ------- ----------
LIABILITIES:
Note payable (Note 7) -- -- -- -- -- 399,454
------- ------- ------- ------- ------- ----------
Total liabilities -- -- -- -- -- 399,454
------- ------- ------- ------- ------- ----------
Net assets available
for plan benefits
(Notes 1 and 2) $57,819 $37,310 $35,428 $33,347 $44,502 $3,025,093
======= ======= ======= ======= ======= ==========
</TABLE>
See notes to financial statements.
3
<PAGE>
NYNEX CORPORATION SAVINGS PLAN for SALARIED EMPLOYEES
Statement of Changes in Net Assets Available for Plan Benefits
For the year ended December 31, 1997
(Dollars in Thousands)
<TABLE>
<CAPTION>
Fund Information
-------------------------------------------------------------------------------------------
Bell Telecom- Employee Stock
Atlantic munica Government Diversified Interest Ownership Plan
Shares tions Obligations Equity Income Loan -----------------------
Fund Fund Fund Portfolio Fund Fund Allocated Unallocated
-------- -------- -------- ---------- -------- -------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Additions:
Allotments, Contributions,
Allocations and Transfers:
Employee allotments $ 18,244 $ 2,655 $ 2,162 $ 39,618 $ 16,077 $ -- $ -- $ --
Interfund transfers (69,266) (14,128) (6,175) 85,519 2,754 -- -- --
Plan transfers-in 8,334 978 1,191 8,654 5,591 -- -- --
Rollover contributions 180 53 54 446 56 -- -- --
Employing company contributions
(Note 1) 1,420 116 192 2,026 1,594 -- 15,899 --
Allocation of shares to
participants -- -- -- -- -- -- 22,404 (22,404)
Supplemental contributions -- -- -- -- -- -- -- 26,454
Loans to participants (9,333) (910) (743) (12,795) (7,021) 35,251 (346) --
Transfer for loan repayments 7,586 944 891 13,614 5,919 (34,952 -- --
-------- -------- -------- ---------- -------- -------- -------- --------
Total allotments,
contributions,
allocations and
transfers (42,835) (10,292) (2,428) 137,082 24,970 299 37,957 4,050
Investment income:
Allocated share of Master Trust
investment activities (Note 3) 289,701 54,654 7,250 217,776 50,799 -- 153,532 188,807
-------- -------- -------- ---------- -------- -------- -------- --------
Total additions 246,866 44,362 4,822 354,858 75,769 299 191,489 192,857
-------- -------- -------- ---------- -------- -------- -------- --------
Deductions:
Administrative expenses 208 59 59 275 300 -- 149 --
Distributions to participants 59,653 14,067 10,475 70,828 78,700 -- 21,579 --
Plan transfers-out 813 100 28 918 788 -- -- --
Interest on note -- -- -- -- -- -- -- 38,012
-------- -------- -------- ---------- -------- -------- -------- --------
Total deductions 60,674 14,226 10,562 72,021 79,788 -- 21,728 38,012
-------- -------- -------- ---------- -------- -------- -------- --------
Net (decrease) increase 186,192 30,136 (5,740) 282,837 (4,019) 299 169,761 154,845
Net assets available for plan benefits:
Beginning of year - January 1, 1997 622,838 155,919 116,553 768,431 786,005 85,863 291,677 (10,599)
-------- -------- -------- ---------- -------- -------- -------- --------
End of year - December 31, 1997
(Notes 1 and 2) $809,030 $186,055 $110,813 $1,051,268 $781,986 $ 86,162 $461,438 $144,246
======== ======== ======== ========== ======== ======== ======== ========
<CAPTION>
Fund Information
--------------------------------------------------------------------------------------------
Active U.S. Global International U.S. Bond
U.S. Equity Balanced Balanced Equity U.S. Small Market
Fund Fund Fund Fund Cap Fund Fund Total
--------- -------- -------- -------- -------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Additions:
Allotments, Contributions,
Allocations and Transfers:
Employee allotments $ 6,250 $ 2,610 $ 3,294 $ 3,373 $ 5,070 $ 14 $ 99,367
Interfund transfers (11,288) (1,437) (7,876) 1,991 19,906 -- --
Plan transfers-in 11,051 749 621 572 1,003 -- 38,744
Rollover contributions 148 56 63 51 96 -- 1,203
Employing company contributions
(Note 1) 261 131 148 149 245 -- 22,181
Allocation of shares to
participants -- -- -- -- -- -- --
Supplemental contributions -- -- -- -- -- -- 26,454
Loans to participants (1,280) (504) (704) (655) (960) -- --
Transfer for loan repayments 1,734 673 937 983 1,425 5 (241)
--------- -------- -------- -------- -------- ---------- ----------
Total allotments,
contributions,
allocations and
transfers 6,876 2,278 (3,517) 6,464 26,785 19 187,708
Investment income:
Allocated share of Master Trust
investment activities (Note 3) 41,130 20,388 22,036 3,436 16,058 -- 1,065,567
--------- -------- -------- -------- -------- ---------- ----------
Total additions 48,006 22,666 18,519 9,900 42,843 19 1,253,275
--------- -------- -------- -------- -------- ---------- ----------
Deductions:
Administrative expenses 276 193 238 248 519 -- 2,524
Distributions to participants 4,791 3,558 3,417 2,590 3,398 -- 273,056
Plan transfers-out 133 59 39 48 137 -- 3,063
Interest on note -- -- -- -- -- -- 38,012
--------- -------- -------- -------- -------- ---------- ----------
Total deductions 5,200 3,810 3,694 2,886 4,054 -- 316,655
--------- -------- -------- -------- -------- ---------- ----------
Net (decrease) increase 42,806 18,856 14,825 7,014 38,789 19 936,620
Net assets available for plan benefits:
Beginning of year - January 1, 1997 57,819 37,310 35,428 33,347 44,502 -- 3,025,093
--------- -------- -------- -------- -------- ---------- ----------
End of year - December 31, 1997
(Notes 1 and 2) $ 100,625 $ 56,166 $ 50,253 $ 40,361 $ 83,291 $ 19 $3,961,713
========= ======== ======== ======== ======== ========== ==========
</TABLE>
See notes to financial statements.
4
<PAGE>
NYNEX CORPORATION SAVINGS PLAN for SALARIES EMPLOYEES
Statement of Changes in Net Assets Available for Plan Benefits
For the year ended December 31, 1996
(Dollars in Thousands)
<TABLE>
<CAPTION>
Fund Information
------------------------------------------------------------------------------------------
Tele- Diversi- Employee Stock
NYNEX communi- Government fied Interest Ownership Plan
Shares cations Obligations Equity Income Loan ----------------------
Fund Fund Fund Portfolio Fund Fund Allocated Unallocated
-------- -------- -------- -------- -------- -------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Additions:
Allotments, contributions,
allocations and transfers:
Employee allotments $ 21,079 $ 3,062 $ 2,701 $ 34,312 $ 19,831 $ -- $ -- $ --
Interfund transfers (8,757) (5,735) (8,789) 15,247 (35,288) -- (2,168) --
Employing company contributions
(Note 1) 1,766 131 239 1,841 2,074 -- 16,609 --
Allocation of shares to
participants -- -- -- -- -- -- 19,836 (19,836)
Supplemental contributions -- -- -- -- -- -- -- 26,530
Loans to participants, net of
transfersof participants' balances (10,519) (799) (1,001) (10,986) (9,082) 35,507 (408) --
Transfer for loan repayments 9,869 1,264 1,133 13,024 8,225 (38,054) -- --
-------- -------- -------- -------- -------- -------- -------- --------
Total allotments,
contributions,
allocations and transfers 13,438 (2,077) (5,717) 53,438 (14,240) (2,547) 33,869 6,694
Investment income:
Allocated share of Master
Trust investment activities (Note 3) (52,183) 2,070 4,324 164,818 50,535 5,854 (17,904) (21,307)
-------- -------- -------- -------- -------- -------- -------- --------
Total additions (38,745) (7) (1,393) 218,256 36,295 3,307 15,965 (14,613)
-------- -------- -------- -------- -------- -------- -------- --------
Deductions:
Administrative expenses 182 55 113 180 227 -- 84 --
Distributions to participants 50,445 11,983 10,566 46,108 67,547 -- 12,190 --
Interest on note -- -- -- -- -- -- -- 39,530
-------- -------- -------- -------- -------- -------- -------- --------
Total deductions 50,627 12,038 10,679 46,288 67,774 -- 12,274 39,530
-------- -------- -------- -------- -------- -------- -------- --------
Net (decrease) increase (89,372) (12,045) (12,072) 171,968 (31,479) 3,307 3,691 (54,143)
Net assets available for plan benefits:
Beginning of year - January 1, 1996 712,210 167,964 128,625 596,463 817,484 82,556 287,986 43,544
-------- -------- -------- -------- -------- -------- -------- --------
End of year - December 31, 1996
(Notes 1 and 2) $622,838 $155,919 $116,553 $768,431 $786,005 $ 85,863 $291,677 $(10,599)
======== ======== ======== ======== ======== ======== ======== ========
<CAPTION>
Fund Information
-----------------------------------------------------------------------
Interna-
Active U.S. Global tional
U.S. Equity Balanced Balanced Equity U.S. Small
Fund Fund Fund Fund Cap Fund Total
--------- -------- -------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Additions:
Allotments, contributions,
allocations and transfers:
Employee allotments $ 3,979 $ 2,099 $ 2,361 2,829 3,812 96,065
Interfund transfers 14,663 8,049 10,279 5,768 6,731 --
Employing company contributions
(Note 1) 177 108 112 111 158 23,326
Allocation of shares to
participants -- -- -- -- -- --
Supplemental contributions -- -- -- -- -- 26,530
Loans to participants, net of
transfersof participants' balances (714) (334) (437) (620) (607) --
Transfer for loan repayments 1,200 602 753 951 1,220 187
-------- -------- -------- -------- -------- ----------
Total allotments,
contributions,
allocations and transfers 19,305 10,524 13,068 9,039 11,314 146,108
Investment income:
Allocated share of Master
Trust investment activities (Note 3) 9,312 4,697 4,300 3,562 7,421 165,499
-------- -------- -------- -------- -------- ----------
Total additions 28,617 15,221 17,368 12,601 18,735 311,607
-------- -------- -------- -------- -------- ----------
Deductions:
Administrative expenses 99 78 77 106 248 1,449
Distributions to participants 2,832 1,954 1,769 1,151 1,983 208,528
Interest on note -- -- -- -- -- 39,530
-------- -------- -------- -------- -------- ----------
Total deductions 2,931 2,032 1,846 1,257 2,231 249,507
-------- -------- -------- -------- -------- ----------
Net (decrease) increase 25,686 13,189 15,522 11,344 16,504 62,100
Net assets available for plan benefits:
Beginning of year - January 1, 1996 32,133 24,121 19,906 22,003 27,998 2,962,993
-------- -------- -------- -------- -------- ----------
End of year - December 31, 1996
(Notes 1 and 2) $ 57,819 $ 37,310 $ 35,428 $ 33,347 $ 44,502 $3,025,093
======== ======== ======== ======== ======== ==========
</TABLE>
See notes to financial statements.
5
<PAGE>
NYNEX CORPORATION SAVINGS PLAN for SALARIED EMPLOYEES
Notes to Financial Statements
(Dollars in Thousands)
1. Plan Description
The Plan* was established by NYNEX Corporation ("NYNEX") on January 1,
1984 to provide a convenient way for salaried employees to save on a
regular and long-term basis. In August 1997, NYNEX merged with Bell
Atlantic Corporation (the "merger") to form the new Bell Atlantic
Corporation ("Bell Atlantic"). However, the Plan continues to maintain its
former Plan title. As of the date of the merger, the Plan's investments in
the NYNEX Shares Fund and the Employee Stock Ownership Plan ("ESOP") were
converted into shares of Bell Atlantic common stock within the Bell
Atlantic Shares Fund and the ESOP Fund. Participants are able to invest in
one or more combinations of the following funds (referred to herein
individually as a "Fund" and collectively as the "Funds"): Bell Atlantic
Shares Fund, Telecommunications Fund, Government Obligations Fund,
Diversified Equity Portfolio, Interest Income Fund, Active U.S. Equity
Fund, U.S. Balanced Fund, Global Balanced Fund, International Equity Fund
and U.S. Small Cap Fund. The ESOP component of the Plan is described
below.
Allotments and Contributions
An Eligible Employee may authorize a basic pre-tax or after-tax allotment
from 1% to 6% of Salary. A pre-tax or after-tax supplementary allotment of
not more than 10% of Salary may be authorized by employees electing the
maximum 6% basic allotment. Employing Company matching contributions are
made based upon an amount equal to 66 2/3% of the authorized Basic
After-tax Allotment and 75% of the authorized Basic Pre-Tax Allotment of
each Participating Employee. Such matching contributions on authorized
Basic Pre-tax Allotments are invested currently only in Bell Atlantic
shares and are placed in an ESOP account within the Plan. Eligible
Employees of certain Bell Atlantic companies which participate in the
Plan, and are immaterial to the Plan, are subject to different rules
concerning allotments, company matching contributions and participation in
the ESOP. For a detailed discussion of these differences, participants
should refer to the Plan Document.
Contributions are subject to applicable rules set forth in the Internal
Revenue Code (the "Code") and the regulations thereunder.
Participating Employees are immediately vested in their contributions plus
actual earnings thereon. A Participating Employee shall be vested in
his/her accrued benefit derived from Employing Company contributions and
Employing Company ESOP contributions after completing three years of
service. Non-vested Employing Company contributions which are forfeited
are applied as a credit to reduce subsequent contributions of the
Employing Company. At December 31, 1997 and 1996, forfeited non-vested
accounts were $279 and $142, respectively.
- --------
* This and certain other capitalized terms used but not defined herein shall
have their respective meanings as defined in the Plan Prospectus.
6
<PAGE>
NYNEX CORPORATION SAVINGS PLAN for SALARIED EMPLOYEES
Notes to Financial Statements, Continued
(Dollars in Thousands)
Termination Priorities
Although it has not expressed intent to do so, in the event that the Plan
is terminated by Bell Atlantic, subject to conditions set forth in the
Employee Retirement Income Security Act of 1974, as amended, the Plan
provides that the net assets shall be distributed to Participating
Employees in an amount equal to their respective vested interests in such
assets.
Fund Options
The Bell Atlantic Shares Fund invests primarily in the common stock of
Bell Atlantic.
The Telecommunications Fund's portfolio is comprised of investments in
twenty-eight North American telephone utility and telecommunications
companies each with a minimum market value of approximately $1 billion at
December 31, 1997. The Telecommunications Fund was open to new
contributions through December 31, 1997. As of January 1, 1998 the Fund
was closed to new contributions. Its earnings are reinvested in this Fund.
The Fund is a market weighted index fund and is managed by Bell Atlantic
Asset Management Company ("BAAMCO").
The Diversified Equity Portfolio invests in an equity index fund which is
managed by BAAMCO. This Fund is principally a portfolio of common stocks
and is structured and maintained with the objective of providing
investment results which approximate the overall performance of the common
stocks included in the Standard and Poors Composite Index of 500 stocks.
The Government Obligations Fund invests in a Bankers Trust Company pooled
Short Government Bond Index Fund. This Fund invests primarily in fixed
income securities of the United States Government or any agency thereof
with the objective of providing investment results which approximate the
overall performance of the securities included in the Lehman Brothers Inc.
1 - 3 year Government Index. The Fund is managed by Bankers Trust Company.
At the close of business on December 31, 1997, the Government Obligations
Fund ceased to exist. Participants who did not choose any other fund had
their balances transferred to the new U.S. Bond Market Index Fund (see
Note 12).
The Interest Income Fund, invests primarily in a diversified portfolio of
guaranteed insurance contracts issued by insurance companies ("GICs").
Some of the assets of the Fund are also invested in pools of asset-backed
securities, corporate bonds, and obligations of the United States
Government and its agencies ("Synthetic Guaranteed Investment Contract").
As an integral part of the purchase of each pool of these investments, a
financial institution agrees to protect the pool, via a wrapper contract,
to the extent its market value and/or interest return fluctuates but not
in the event of a default of any security in the pool. The Plan is exposed
to credit risk in the event of nonperformance by the entities with whom
the contracts are placed. The Plan seeks to minimize credit risk by
diversifying among a group of GIC issuers and other
7
<PAGE>
NYNEX CORPORATION SAVINGS PLAN for SALARIED EMPLOYEES
Notes to Financial Statements, Continued
(Dollars in Thousands)
financial institutions which meet certain investment criteria established
by BAAMCO. These contracts guarantee (i) a fixed rate of interest for a
fixed period of time or (ii) a fixed rate of interest for a fixed or
indefinite period of time combined with the right to participate in income
earned above such fixed rate. Such interest is not guaranteed by any of
the Employing Companies. The Fund is managed by BAAMCO. (For further
discussion of this Fund see Note 2.)
In addition to the Diversified Equity Portfolio, each of the following
five Funds invest in the assets of unitized investment advisor account(s)
of the NYNEX Master Trust ("Master Trust"), as designated by BAAMCO.
The U.S. Balanced Fund invests in stocks and bonds of U.S. corporations in
a variety of industries. This Fund has invested approximately 60 percent
in stocks with most of the remainder in bonds. As of December 31, 1997,
BAAMCO had selected the following unitized investment advisor account(s)
of the Master Trust ("Master Trust pooled accounts") for the Fund: Barrow,
Hanley, Mewhinney, & Strauss, Inc., Fidelity Management Trust Company,
Franklin Portfolio Associates, Inc., Gardner Lewis Asset Management, L.P.,
Miller, Anderson & Sherrerd, LLP, Palisade Capital Management, L.L.C.,
Standish, Ayer & Wood, Inc., State Street Research and Management Company,
Trinity Investment Management Corporation, Western Asset Management
Company and Wilshire Associates Incorporated.
The Global Balanced Fund primarily invests in a diversified array of
international capital market stocks and bonds. The Fund has investments in
a variety of developed countries in Europe and the Pacific. The Fund has
invested approximately 65 percent in stocks with most of the remainder in
bonds. The portfolio holdings may include both large and small
capitalization stocks. As of December 31, 1997, BAAMCO had selected the
following Master Trust pooled accounts for the Fund: Barrow, Hanley,
Mewhinney, & Strauss, Inc., Capital Guardian Trust Company, Fidelity
Management Trust Company, Franklin Portfolio Associates, Inc., Gardner
Lewis Asset Management, L.P., Miller, Anderson & Sherrerd, LLP, Morgan
Stanley International, Palisade Capital Management, L.L.C., Standish, Ayer
& Wood, Inc., State Street Global Advisors, State Street Research and
Management Company, Trinity Investment Management Corporation, Western
Asset Management Company, Wilshire Associates Incorporated and WorldInvest
Limited.
The Active U.S. Equity Fund invests primarily in domestic common stocks.
As of December 31, 1997, BAAMCO had selected the following Master Trust
pooled accounts for the Fund: Barrow, Hanley, Mewhinney, & Strauss, Inc.,
Fidelity Management Trust Company, Franklin Portfolio Associates, Inc.,
Gardner Lewis Asset Management, L.P., Miller, Anderson & Sherrerd, LLP,
Palisade Capital Management, L.L.C., Trinity Investment Management
Corporation and Wilshire Associates Incorporated.
8
<PAGE>
NYNEX CORPORATION SAVINGS PLAN for SALARIED EMPLOYEES
Notes to Financial Statements, Continued
(Dollars in Thousands)
The International Equity Fund invests in twenty international equity
markets of developed countries in Europe and the Pacific; it has
investments in many industries. The portfolio holdings may include both
large and small capitalization stocks. As of December 31, 1997, BAAMCO had
selected Capital Guardian Trust Company, Morgan Stanley International and
State Street Global Advisors as the Master Trust pooled accounts for the
Fund.
The U.S. Small Cap Fund invests in the domestic stocks of smaller-sized
companies, generally with market capitalization under $1 billion at the
time of purchase. As of December 31, 1997, BAAMCO had selected the
following as the Master Trust pooled accounts for the Fund: Columbus
Circle Investors, Gardner Lewis Asset Management, L.P., Investment
Counselors of Maryland, Inc., and the Boston Company Asset Management,
Inc.
The ESOP is a leveraged Fund that invests primarily in Bell Atlantic
shares. The ESOP component of the Plan is a stock bonus plan intended to
qualify under Sections 401(a)(4) and 4975(e)(7) of the Code. An employee's
Employing Company ESOP Contribution Account reflects all amounts released
from the ESOP Suspense Account and any additional Employing Company
contributions that were made on and after July 1, 1990 to match the
employee's Employee Basic Pre-Tax Allotments, together with the earnings
thereon. The employee may not withdraw or transfer funds out of the ESOP
Fund except for hardship withdrawals and during certain election periods
commencing with the plan year in which occurs the latest of the (a)
employee's attainment of age 55 or (b) completion of 10 years of
participation in the Plan. The amounts allowed to be transferred during
any election period are subject to certain limitations under the terms of
the Plan.
The ESOP Suspense Account (the "Unallocated Fund") which is part of the
ESOP Fund consists of Bell Atlantic Shares that were acquired with the
proceeds of an acquisition loan and have not yet been released and
allocated to Participating Employees.
The amount that a Participating Employee may borrow is limited by certain
factors, including the Employee's vested interest in the respective
Employee's pre-tax account. Generally, the amount can be no less than one
thousand dollars and no greater than fifty thousand dollars. An employee
may not have more than two loans outstanding. Except under certain
circumstances, the loans provide for periodic repayments over a period not
to exceed five years, at an interest rate determined under the Plan.
Effective September 1, 1993, Participating Employees also may prepay the
entire loan at any time, after the first of the month following the loan's
effective date. Loans are collateralized by the Participating Employee's
vested account and are recorded in the Loan Fund. In the event of a
default, all of the Participating Employee's contributions to the Plan
shall be suspended. In addition, the Employees' Benefit Committee (the
"Committee") shall cause the amount of unpaid debt to be deducted from any
interest in, or payment or distribution from, the employee's account,
subject to certain limitations. If the
9
<PAGE>
NYNEX CORPORATION SAVINGS PLAN for SALARIED EMPLOYEES
Notes to Financial Statements, Continued
(Dollars in Thousands)
amount of such interest, payment or distribution is not sufficient to
repay the unpaid balance of said debt, the Committee may exercise the
Plan's right, if any, to any non-Plan assets and to the extent a loan
balance remains, take whatever collection action, including suit, the
Committee determines necessary.
All the assets of the Plan, excluding the ESOP-unallocated account, are
included in the Master Trust (See Note 2) for which Mellon Bank, N.A., is
the trustee of all Master Trust assets. Beginning January 1, 1996, the
assets of the ESOP-unallocated account were transferred to Mellon Bank,
N.A., as Trustee, and are held in a separate account within the Master
Trust.
Wellspring Resources, LLC was the recordkeeper for the Plan during 1997
and 1996.
For a complete description of the Plan, participants should refer to the
Plan Document.
2. Accounting Policies
Investments
The NYNEX Master Pension Trust was established on January 1, 1984, and
through December 31, 1994, it served as the vehicle for the investment of
the assets of two defined benefit pension plans of NYNEX, the NYNEX
Pension Plan and the NYNEX Management Pension Plan. Effective January 1,
1995, the NYNEX Master Pension Trust was renamed the NYNEX Master Trust
and amended to incorporate, in addition to the assets of such defined
benefit pension plans, the following: (1) as of January 1, 1995, certain
of the assets of the Plan and the NYNEX Corporation Savings and Security
Plan (Non-Salaried Employees) (the "Non-Salaried Plan") and (2) as of
January 1, 1996, all of the assets of the Plan and the Non-Salaried Plan,
except for the assets of the ESOP-unallocated account which are included
in a separate account within the Master Trust.
Value of Investments Held In the Master Trust (See Note 3)
The Trustee values the investments in the Master Trust as follows:
Investments in securities traded on national and foreign securities
exchanges are valued by the Trustee at the last reported sale prices on
the last business day of the year or, if no sales were reported on that
date, at the last reported bid prices. Over-the-counter securities and
government obligations are valued at the bid prices or the average of the
bid and asked prices on the last business day of the year from published
sources where available or, if not available, from other sources
considered reliable, generally broker quotes.
10
<PAGE>
NYNEX CORPORATION SAVINGS PLAN for SALARIED EMPLOYEES
Notes to Financial Statements, Continued
(Dollars in Thousands)
The value of each contract with an insurance company or other financial
institution included in the Interest Income Fund is reported at contract
value in the Statements of Net Assets Available for Plan Benefits based
upon the principal then invested in by the Fund plus the interest then
accrued on such principal, which approximates the fair value. In
accordance with Statement of Position 94-4 "Reporting of Investment
Contracts held by Health and Welfare Benefit Plans and Defined
Contribution Pension Plans" and in connection with the fully
benefit-responsive investment contracts, the following information is
presented:
(i) The asset weighted crediting interest rate yielded a return of 6.5%
and 6.7% for the years ended December 31, 1997 and 1996,
respectively.
(ii) The crediting interest rates ranged from 4.2% to 9.3% and from 4.2%
to 8.3% at December 31, 1997 and 1996, respectively.
(iii) The fair value, as determined either by discounting future cash
flows of the underlying investments, at December 31, 1997 and 1996,
respectively was approximately $709,466 and $712,722.
Forward currency contracts are accounted for as contractual commitments on
a trade date basis and are carried at fair value derived by the Trustee at
the exchange rate prevailing on the last business day of the year. Index
futures contracts are recorded as contractual commitments on a trade-date
basis and are carried at fair value based on the closing index futures
price prevailing on the last business day of the year. Both exchange rates
and index futures prices are readily available from published sources.
Temporary cash investments are stated at redemption value which
approximates fair value.
Purchases and Sales of Investments
Purchases and sales of investments are reflected as of the trade date.
Realized gains and losses on sales of investments are determined on the
basis of average cost.
Investment Income
Dividend income is recorded on the ex-dividend date. Interest earned on
investments is recorded on the accrual basis.
Net Appreciation (Depreciation) of Investments
The Statements of Changes in Net Assets Available for Plan Benefits
reflects the net appreciation (depreciation) in the fair value of the
Plan's investments, which consists of the realized gains or losses and the
unrealized appreciation (depreciation) on those investments.
11
<PAGE>
NYNEX CORPORATION SAVINGS PLAN for SALARIED EMPLOYEES
Notes to Financial Statements, Continued
(Dollars in Thousands)
Distributions
Distributions elected to be withdrawn from the Plan by participants are
recorded when paid.
Plan Expenses
The Plan pays certain administrative fees out of Fund assets held in the
Master Trust and out of interest income earned from the Plan's
disbursement account, as held by the Trustee, in accordance with Plan
provisions and to the extent permitted by law. Any fees not paid by the
Plan are paid by Bell Atlantic.
Bell Atlantic's Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires Bell Atlantic, as Plan
administrator, to make significant estimates and assumptions that affect
the reported amounts of net assets available for plan benefits at the date
of the financial statements and the changes in net assets available for
benefits during the reporting period and, when applicable, disclosures of
contingent assets and liabilities at the date of the financial statements.
Actual results could differ from those estimates.
Risks and Uncertainties
The Plan provides for various participant investment options in any
combination of funds which can invest in any combination of stocks, bonds,
fixed income securities, mutual funds, and other investment securities.
Investment securities are exposed to various risks, such as interest rate,
market, and credit risks. Due to the level of risk associated with certain
investment securities, it is at least reasonably possible that changes in
the values of investment securities will occur in the near term and that
such changes could materially affect participants' account balances and
the amounts reported in the Statements of Net Assets Available for Plan
Benefits.
3. Investments
The following table reflects the investments that represent 5% or more of
the net assets in the Master Trust as of December 31, 1997 and 1996:
<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
Bell Atlantic Corporation common shares $2,761,266 --
NYNEX Corporation common shares -- $2,220,164
</TABLE>
12
<PAGE>
NYNEX CORPORATION SAVINGS PLAN for SALARIED EMPLOYEES
Notes to Financial Statements, Continued
(Dollars in Thousands)
Investment in Master Trust
All of the investment assets in the Master Trust are managed by BAAMCO or
external investment advisors. The assets in the Master Trust are either
(a) pooled between the defined benefit plans, the Non-Salaried Plan and
the Plan ($11,845,864 and $8,107,361 at December 31, 1997 and 1996,
respectively, see below) or (b) net assets that are specific to the
defined benefit plans, or (c) net assets specific to the Non-Salaried Plan
and the Plan. The total fair value of the Master Trust at December 31,
1997 and 1996 is $25,909,191 (of which net assets totalling $9,159,139 are
specific to the defined benefit pension plans, item (b) above, for which
separate financial statements are prepared) and $22,282,741 respectively.
Investments held in Pooled Accounts:
The pooled investments are unitized, aggregated and reported by the Master
Trust with a carrying value of $11,845,864 and $8,107,361 at December 31,
1997 and 1996, respectively, and with investment earnings of $2,070,271
and $1,253,840 for the years ended December 31, 1997 and 1996,
respectively. Given that the pooled accounts include interests of the
Plan, the Non-Salaried Plan and the defined benefit plans, the totals in
each respective statement do not equal the carrying value or net
investment income of/from the Master Trust pooled accounts in this
accompanying footnote.
The total investments held in the Master Trust pooled accounts at
December 31, 1997 and 1996 are as follows:
<TABLE>
<CAPTION>
Fair Value (Note 2)
------------------------
Description 1997 1996
----------- ----------- ----------
<S> <C> <C>
Cash - non interest bearing $ -- $ 57
Receivables 721,643 512,740
Common Stock 9,313,917 6,342,696
Bell Atlantic Corporation common shares 101,036 --
NYNEX Corporation common shares -- 25,577
Preferred Stock 79,863 56,156
U.S. Government Securities 892,987 680,805
Corporate Debt - preferred and other 832,741 429,302
Real estate 278 65
Temporary cash investments 391,265 346,004
Other investments* 277,734 259,666
----------- ----------
12,611,464 8,653,068
Liabilities 765,600 545,707
----------- ----------
Total pooled net assets in
the Master Trust $11,845,864 $8,107,361
=========== ==========
</TABLE>
* Other investments include foreign investments, principally foreign
government debt.
13
<PAGE>
NYNEX CORPORATION SAVINGS PLAN for SALARIED EMPLOYEES
Notes to Financial Statements, Continued
(Dollars in Thousands)
The Plan's interests in the Master Trust pooled accounts carrying value
and investment income of the Master Trust pooled accounts are reported in
each respective Fund Option as the "Allocated share of Master Trust net
assets" in 1997 and 1996, respectively, in the Statement of Net Assets
Available for Plan Benefits and "Allocated share of Master Trust
investment activities" in the Statements of Changes in Net Assets
Available for Plan Benefits for the year ended December 31, 1997 and 1996,
respectively.
Investments in the Master Trust are allocated to the Plan's Fund Options
in accordance with their respective percentages of interest. The
proportionate interests of the Plan's Fund Options in the carrying value
of the Master Trust pooled accounts at December 31, 1997 and 1996 are as
follows:
<TABLE>
<CAPTION>
Carrying Carrying
Value Value
1997 1997 1996 1996
---------- ------ -------- ------
<S> <C> <C> <C> <C>
Active U.S. Equity Fund $ 100,625 0.8495% $ 57,819 0.7132%
U.S. Balanced Fund 56,166 0.4741% 37,310 0.4602%
Global Balanced Fund 50,253 0.4242% 35,428 0.4370%
International Equity Fund 40,361 0.3407% 33,347 0.4113%
U.S. Small Cap Fund 83,291 0.7031% 44,502 0.5489%
Diversified Equity Portfolio 1,051,268 8.8746% 768,431 9.4782%
---------- --------
Total $1,381,964 $976,837
========== ========
</TABLE>
Investments Held in Specific Accounts for the Plan and the Non-Salaried
Plan:
Effective January 1, 1996, all of the assets of the Plan and the
Non-Salaried Plan were transferred into the Master Trust. As such, the net
assets specific to these plans are the Bell Atlantic Shares Fund,
Telecommunications Fund, Government Obligations Fund, U.S. Bond Market
Fund, Interest Income Fund, Loan Fund and the ESOP allocated account.
14
<PAGE>
NYNEX CORPORATION SAVINGS PLAN for SALARIED EMPLOYEES
Notes to Financial Statements, Continued
(Dollars in Thousands)
The investments held in the Master Trust specific accounts for the Plan
and the Non-Salaried Plan at December 31, 1997 and 1996 are as follows:
<TABLE>
<CAPTION>
Fair Value (Note 2)
-------------------------
Description 1997 1996
----------- ---------- ----------
<S> <C> <C>
Cash - non interest bearing $ -- $ 40
Receivables 231,946 226,323
Common Stock 307,288 272,663
Bell Atlantic Corporation common shares 2,660,230 --
NYNEX Corporation common shares -- 2,194,587
Temporary cash investments 599,054 120,880
Fixed income obligations - insurance contract 1,105,670 1,104,453
Fixed income corporate obligations 118,112 --
Other investments -- 121,035
---------- ----------
Total net assets in the specific
accounts in the Master Trust $5,022,300 $4,039,981
========== ==========
</TABLE>
Investments in the Master Trust are allocated to the Plan's Fund Options
in accordance with their respective percentages of interest. The
proportionate interests of the Plan and the Non-Salaried Plan in the
carrying value of the Master Trust specific accounts at December 31, 1997
are as follows:
<TABLE>
<CAPTION>
Carrying
Carrying Value Non-
Value Non-Salaried Salaried
Plan Plan Plan Plan
---------- -------- ---------- --------
<S> <C> <C> <C> <C>
Bell Atlantic Shares Fund $ 809,030 30.5626% $1,838,090 69.4374%
Telecommunications Fund 186,055 52.2428% 170,080 47.7572%
Government Obligations Fund 110,813 93.8529% 7,258 6.1471%
Interest Income Fund 781,986 63.6618% 446,359 36.3382%
Loan Fund 86,162 39.9623% 129,444 60.0377%
Employee Stock Ownership Plan 461,438 100.0000% -- --
---------- ----------
Total $2,435,484 $2,591,231
========== ==========
</TABLE>
Investment Income:
Investment income and expenses are allocated to the Plan's Fund Options
daily in accordance with their respective daily percentages of interest in
the Master Trust's pooled accounts. Percentages of interest are based on
the daily ratio of units owned by each Plan's Fund Options to the total
units in the Master Trust pooled accounts. Investment income related to
15
<PAGE>
NYNEX CORPORATION SAVINGS PLAN for SALARIED EMPLOYEES
Notes to Financial Statements, Continued
(Dollars in Thousands)
investments held in specific accounts for the Plan and the Non-Salaried
Plan is allocated to the Plan's Fund Options daily in accordance with each
Plan's respective percentage of interest. The allocated net investment
income to the Plan's Fund Options for the years ended December 31, 1997
and 1996 is as follows:
<TABLE>
<CAPTION>
Dividends
on NYNEX Other
Corporation Net income/ Net
common Other appreciation expenses- Investment
Interest shares Dividends (depreciation) net Income
------- ------- ------- --------- ----- -----------
<S> <C> <C> <C> <C> <C> <C>
December 31, 1997:
------------------
Bell Atlantic Shares Fund $ 1,773 $28,804 $ -- $ 259,124 $ -- $ 289,701
Telecommunications Fund -- -- 4,535 50,119 -- 54,654
Government Obligations Fund 217 -- -- 7,033 -- 7,250
Diversified Equity Portfolio 3,469 -- 16,128 198,167 12 217,776
Interest Income Fund 50,302 -- -- 497 -- 50,799
Loan Fund -- -- -- -- -- --
Employee Stock Ownership Plan:
Allocated -- -- -- 153,532 -- 153,532
Unallocated* 6 -- -- 188,801 -- 188,807
Active U.S. Equity Fund 398 -- 2,862 37,847 23 41,130
U.S. Balanced Fund 1,287 -- 1,623 17,454 24 20,388
Global Balanced Fund 1,050 -- 1,614 19,359 13 22,036
International Equity Fund 231 -- 802 2,436 (33) 3,436
U.S. Small Cap Fund 484 -- 392 15,182 -- 16,058
------- ------- ------- --------- ----- -----------
Total $59,217 $28,804 $27,956 $ 949,551 $ 39 $ 1,065,567
======= ======= ======= ========= ===== ===========
December 31, 1996:
------------------
NYNEX Shares Fund $ 27 $31,651 $ -- $ (83,861) $ -- $ (52,183)
Telecommunications Fund -- -- 4,955 (2,885) -- 2,070
Government Obligations Fund -- -- -- 4,324 -- 4,324
Diversified Equity Portfolio 4,273 -- 12,774 147,803 (32) 164,818
Interest Income Fund 52,722 -- -- (2,187) -- 50,535
Loan Fund 5,854 -- -- -- -- 5,854
Employee Stock Ownership Plan:
Allocated 6 13,223 -- (31,133) -- (17,904)
Unallocated* -- 19,810 -- (41,117) -- (21,307)
Active U.S. Equity Fund 88 -- 906 8,319 (1) 9,312
U.S. Balanced Fund 755 -- 432 3,512 (2) 4,697
Global Balanced Fund 522 -- 406 3,382 (10) 4,300
International Equity Fund 45 -- 577 3,001 (61) 3,562
U.S. Small Cap Fund 161 -- 304 6,956 -- 7,421
------- ------- ------- --------- ----- -----------
Total $64,453 $64,684 $20,354 $ 16,114 $(106) $ 165,499
======= ======= ======= ========= ===== ===========
</TABLE>
*Held in a separate Trust (see Note 1)
16
<PAGE>
NYNEX CORPORATION SAVINGS PLAN for SALARIED EMPLOYEES
Notes to Financial Statements, Continued
(Dollars in Thousands)
4. Derivative Financial Instruments
Derivative financial instruments are used in the Master Trust's pooled
accounts primarily to rebalance fixed income/equity allocations, to
efficiently gain exposure to a specific underlying market, and to offset
the currency risk associated with foreign investments. Leveraging of the
Plan's assets and speculation are prohibited as stated in the Plan
documents. Offsetting currency positions are not permitted to exceed the
level of exposure in the Plan's foreign asset base. The derivatives most
commonly used by investment managers are highly-liquid, exchange-traded
equity and fixed income futures and over-the-counter foreign exchange
forward contracts.
Bell Atlantic's use of financial instruments for risk management purposes
is represented by notional amounts. These notional values represent solely
contractual amounts that serve as the basis or reference amounts upon
which contractually stipulated calculations are based. Therefore, these
amounts are intended to serve as general volume indicators only and do not
represent the potential gain or loss from market or credit risks.
Market risk arises from the potential for changes in the value of
financial instruments resulting from fluctuations in interest rates,
foreign exchange rates and prices of equity securities. Market risk is
also affected by changes in volatility and liquidity in the markets in
which these instruments are traded.
Equity price risk arises from the possibility that equity prices will
fluctuate, affecting the value of equity securities and derivative
financial instruments that derive their value from a stock index, a
particular stock or a defined basket of stocks.
The credit risk and amount of accounting loss of the Plan's forward
contracts is equal to any gains which have not yet settled as of the
Plan's year end. The credit risk of the Plan's futures contracts is equal
to the posted margin plus any unsettled positive variation margin. The
amount of accounting loss at year end is equal to any variation margin
owed to the Plan.
All derivative activity relating to the Plan is within the Master Trust
pooled accounts. The Master Trust pooled accounts' derivative activity is
allocated to the Plan in accordance with the Plan's Fund Options'
respective percentages of interest (see Note 3). The following disclosures
regarding the notional values, fair values, average fair values and net
trading gains are reported per the Plan.
17
<PAGE>
NYNEX CORPORATION SAVINGS PLAN for SALARIED EMPLOYEES
Notes to Financial Statements, Continued
(Dollars in Thousands)
The notional values and fair values of the derivative activity used for
trading purposes held by the Plan at December 31, are as follows:
<TABLE>
<CAPTION>
1997 1996
------ ------
<S> <C> <C>
Domestic Equity Futures Contracts:
Notional Values $3,017 $1,818
Fair Values 3,041 1,835
Fixed Income Futures Contracts:
Notional Values 69 237
Fair Values 70 236
Forward Foreign Currency Payable Contracts:
Notional Values 477 521
Fair Values 457 510
Forward Foreign Currency Receivable Contracts:
Notional Values 477 523
Fair Values 474 518
</TABLE>
The average fair values of the derivative activity used for trading
purposes held by the Plan during the year ended December 31, are as
follows:
<TABLE>
<CAPTION>
1997 1996
------ ------
<S> <C> <C>
Average Fair Values:
Domestic Equity Futures Contracts $2,163 $15,167
Fixed Income Futures Contracts 92 229
Forward Foreign Currency Payable Contracts 377 650
Forward Foreign Currency Receivable Contracts 391 648
</TABLE>
The Plan was allocated $3,478 in 1997 of net trading losses from futures
contracts and $2,622 in 1996 of net trading gains from futures contracts.
Net trading gains allocated to the Plan from foreign exchange contracts
totalled $42 and $124 in 1997 and 1996, respectively.
5. Number and Value of Units
The interest of an employee in each Fund of the Plan, with the exception
of the Loan Fund, is represented by units as described in Section 8 of the
Plan. A Participant's unit value is determined daily by dividing each
Fund's adjusted net assets, as defined in the Plan, by the number of
outstanding units.
18
<PAGE>
NYNEX CORPORATION SAVINGS PLAN for SALARIED EMPLOYEES
Notes to Financial Statements, Continued
(Dollars in Thousands)
The number and value of units at each month end, which are all unaudited
except at December 31, 1997 and 1996, carried to the fourth decimal place,
were as follows:
<TABLE>
<CAPTION>
December 31,
-----------------------------------------------
1997 1996
---------------------- ----------------------
Number Value Number Value
of Units per Unit of Units per Unit
----------- -------- ----------- --------
<S> <C> <C> <C> <C>
Bell Atlantic Shares Fund 82,972,114 $ 9.7506 -- $ --
NYNEX Shares Fund -- -- 96,597,286 6.4478
Telecommunications Fund 8,677,950 21.4400 10,158,751 15.3482
Government Obligations Fund 10,935,086 10.1337 12,352,919 9.4353
Diversified Equity Portfolio 44,537,743 23.6040 43,548,894 17.6452
Interest Income Fund 146,219,557 5.3480 156,221,942 5.0313
Employee Stock Ownership Plan 172,928,068 2.6684 165,580,211 1.7615
Active U.S. Equity Fund 45,877,892 2.1933 34,634,466 1.6694
U.S. Balanced Fund 30,340,465 1.8512 25,019,740 1.4912
Global Balanced Fund 28,040,604 1.7922 24,143,457 1.4674
International Equity Fund 30,313,910 1.3314 27,295,545 1.2217
U.S. Small Cap Fund 43,679,669 1.9069 28,819,185 1.5441
</TABLE>
19
<PAGE>
NYNEX CORPORATION SAVINGS PLAN for SALARIED EMPLOYEES
Notes to Financial Statements, Continued
(Dollars in Thousands)
<TABLE>
<CAPTION>
Bell Atlantic Telecommunications Government Diversified Equity
Shares Fund Fund Obligations Fund Portfolio
---------------------- --------------------- ---------------------- ----------------------
Number Value Number Value Number Value Number Value
1997 of Units per Unit of Units per Unit of Units per Unit of Units per Unit
---------- -------- --------- -------- ---------- -------- ---------- --------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
January 94,559,275 $ 6.8492 9,852,069 $15.7913 12,166,473 $ 9.4672 43,757,174 $18.6987
February 93,206,580 6.9642 9,640,351 16.2962 11,980,653 9.4883 44,134,551 18.8522
March 94,308,950 6.1770 9,527,347 15.0335 11,889,560 9.4827 43,691,705 18.1190
April 93,495,736 7.0783 9,352,533 15.4678 11,683,159 9.5611 43,304,647 19.2007
May 90,292,253 7.3460 8,985,272 16.5153 11,536,240 9.6239 44,036,745 20.3671
June 86,603,482 7.8703 8,766,659 17.0927 11,431,992 9.6913 44,601,766 21.2968
July 88,203,204 7.6530 8,621,991 17.4741 11,305,211 9.7982 44,803,147 22.9545
August 87,203,423 7.6697 8,498,696 16.6556 11,320,063 9.8032 44,783,347 21.6669
September 85,478,608 8.5168 8,414,523 18.2357 11,225,394 9.8801 44,794,534 22.8527
October 85,092,900 8.5372 8,386,361 18.5520 11,375,767 9.9533 44,558,558 22.0943
November 83,412,229 9.5299 8,342,797 20.8358 11,504,765 9.9747 44,560,010 23.1091
<CAPTION>
Employee Stock Active U.S.
Interest Income Fund Ownership Fund Equity Fund U.S. Balanced Fund
----------------------- ----------------------- --------------------- ---------------------
Number Value Number Value Number Value Number Value
1997 of Units per Unit of Units per Unit of Units per Unit of Units per Unit
----------- -------- ----------- -------- ---------- ------- ---------- -------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
January 154,940,831 $ 5.0566 166,483,356 $ 1.8724 36,760,106 $1.7452 25,809,105 $1.5426
February 153,439,099 5.0833 167,200,724 1.9038 38,403,997 1.7514 26,074,142 1.5494
March 155,137,123 5.1097 170,691,100 1.6862 38,227,977 1.6696 26,262,291 1.4933
April 155,641,442 5.1362 171,117,091 1.9327 38,351,851 1.7402 25,967,349 1.5427
May 154,086,470 5.1621 171,682,735 2.0074 39,965,056 1.8524 26,311,284 1.6100
June 154,835,969 5.1906 170,978,613 2.1519 41,457,614 1.9280 26,936,521 1.6560
July 149,043,296 5.2180 170,951,420 2.0921 41,770,141 2.0801 27,433,918 1.7591
August 148,932,319 5.2443 171,806,966 2.0972 42,676,266 2.0256 27,810,341 1.7268
September 147,428,605 5.2733 172,130,802 2.3310 43,290,524 2.1484 28,520,994 1.8027
October 147,018,156 5.3007 172,290,229 2.3369 43,988,115 2.0771 28,364,192 1.7707
November 148,081,480 5.3267 172,508,103 2.6111 44,683,318 2.1442 28,882,921 1.8150
<CAPTION>
Global Balanced International U.S. Small
Fund Equity Fund Cap Fund
--------------------- --------------------- ---------------------
Number Value Number Value Number Value
1997 of Units per Unit of Units per Unit of Units per Unit
---------- ------- ---------- ------- ---------- -------
(Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C> <C>
January 25,544,615 $1.5123 27,729,043 $1.2148 30,454,436 $1.5853
February 26,497,095 1.5222 28,078,733 1.2403 31,681,898 1.5409
March 26,858,032 1.4740 28,685,245 1.2473 32,116,485 1.4848
April 26,914,019 1.5167 29,075,962 1.2532 32,174,132 1.4813
May 27,740,152 1.5917 31,068,039 1.3334 34,070,283 1.6412
June 28,249,987 1.6433 32,116,888 1.4023 35,115,269 1.7435
July 28,270,522 1.7338 32,192,243 1.4340 35,445,706 1.8440
August 28,906,334 1.6981 32,446,230 1.3540 37,458,213 1.8930
September 29,574,633 1.7793 32,908,663 1.4332 42,420,514 2.0341
October 28,843,852 1.7339 31,632,270 1.3487 42,911,971 1.9436
November 28,695,590 1.7632 31,136,266 1.3232 43,341,304 1.9274
</TABLE>
20
<PAGE>
NYNEX CORPORATION SAVINGS PLAN for SALARIED EMPLOYEES
Notes to Financial Statements, Continued
(Dollars in Thousands)
6. Federal Income Taxes
The Internal Revenue Service has determined and informed Bell Atlantic
(formerly NYNEX) by a letter dated October 12, 1995, that the Plan, as
submitted, is qualified and the Master Trust established under the Plan is
tax-exempt, under the appropriate sections of the Internal Revenue Code
(the "Code"). The Plan has been amended since receiving the determination
letter. However, the Plan administrator and the Plan's tax counsel believe
that the Plan is currently designed and being operated in compliance with
the applicable requirements of the Code. Therefore, they believe that the
Plan was qualified and the related Master Trust was tax-exempt as of the
date of the financial statements.
7. Indebtedness
During 1990, pursuant to the NYNEX Employee Stock Ownership Trust, the
ESOP Trust issued a Secured Promissory Note of $449,297 to Bell Atlantic
for the purpose of purchasing shares of common stock of Bell Atlantic. The
Secured Promissory Note is collateralized by all shares of common stock of
Bell Atlantic acquired by the ESOP Trust. The borrowings bear interest at
9.778% and have maturities from February 1, 1996 through February 1, 2015.
Principal amounts of $15,807, $16,912, $17,949, $18,926 and $19,854 will
be payable from 1998 to 2002, respectively. Employing Company supplemental
contributions to the ESOP Fund and dividends earned on unallocated and
allocated shares for 1997 of $26,454, $18,535, and $6,425 and for 1996 of
$26,530, $19,810, and $5,504, respectively, were used to pay principal and
interest on the debt. Interest credits earned from principal prepayments
were used to pay interest on the debt of $2,405 and $2,311 in 1997 and
1996, respectively. The fair value of the Note, $349,476 at December 31,
1997, is determined based on discounted future cash flows.
8. Related Party Transactions
BAAMCO, a wholly owned subsidiary of Bell Atlantic, is the investment
advisor for the Telecommunications Fund, Diversified Equity Portfolio and
Interest Income Fund and therefore qualifies as a party-in-interest.
BAAMCO received no compensation from the Plan for the investment advisory
services rendered to the Plan.
21
<PAGE>
NYNEX CORPORATION SAVINGS PLAN for SALARIED EMPLOYEES
Notes to Financial Statements, Continued
(Dollars in Thousands)
9. Concentrations of Credit Risk
Financial instruments which potentially subject the Plan to concentrations
of credit risk consist principally of investment contracts with insurance
companies and other financial institutions.
The Plan places its investment contracts with high-credit quality
insurance companies and financial institutions in order to limit credit
exposure.
10. Plan Amendments
On April 1, 1997, the Plan was amended to provide that certain employees
who are plan participants and who are involuntarily terminated in
connection with the merger of NYNEX Corporation and Bell Atlantic
Corporation would be fully vested in their accrued benefit derived from
Employing Company Contributions and Employing Company ESOP Contributions.
11. Reconciliation of Financial Statements in Form 11-K to Form 5500
The Department of Labor requires that amounts allocated to accounts of
persons who have elected to withdraw from the Plan but have not yet been
paid be reported as liabilities on the Plan's Form 5500. In accordance
with the relevant American Institute of Certified Public Accountants audit
and accounting guide, benefit amounts should not be accrued as liabilities
of the Plan. The following is a reconciliation of distributions to
participants and net assets available for Plan benefits in the financial
statements to the amounts reported in Form 5500.
<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
Aggregate distributions to participants as
presented in the Statement of Changes in
Net Assets Available for Plan Benefits $ 274,597 $ 208,528
Add: Current year benefits claims payable
presented in the Statement of Net Assets Available
for Plan Benefits in Form 5500 (see Note 2) 4,442 2,343
Less: Prior year benefits claims payable presented
in the Statement of Net Assets Available for Plan
Benefits in Form 5500 (see Note 2) 2,343 681
---------- ----------
Benefit payments and payments to provide benefits
directly to Participants and beneficiaries
presented in the Statement of Changes in Net
Assets Available for Plan Benefits in Form 5500 $ 276,696 $ 210,190
========== ==========
</TABLE>
22
<PAGE>
NYNEX CORPORATION SAVINGS PLAN for SALARIED EMPLOYEES
Notes to Financial Statements, Continued
(Dollars in Thousands)
<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
Net assets available for Plan benefits presented
in the Statement of Net Assets Available for
Plan Benefits $3,961,713 $3,025,093
Less: Benefits claims payable presented in the
Statement of Net Assets Available for Plan
Benefits in Form 5500 (see Note 2) 4,442 2,343
---------- ----------
Net assets available for Plan benefits presented
in the Statement of Net Assets Available for
Plan Benefits in Form 5500 $3,957,271 $3,022,750
========== ==========
</TABLE>
12. Subsequent Events:
Change of Fund Options
Effective January 1, 1998, the Telecommunications Fund was no longer open
to new investments. Participants who did not elect a new investment
direction had their contributions automatically directed to the Passive
U.S. Equity Index Fund. Also effective January 1, 1998 transfers of
participant existing balances into the Telecommunications Fund were
prohibited. Dividends, including stock dividends of the Telecommunications
Fund, will be reinvested in the Fund. Participants will be allowed to move
money out of the Fund at any time.
Effective January 1, 1998, the Government Obligations Fund was no longer
offered as a fund selection. Any balances in the fund were automatically
transferred to the U.S. Bond Market Index Fund along with any investment
directions designated to the Government Obligations Fund. To accomplish
this automatic transfer, some of the Government Obligation Fund's assets
may be held in shorter maturity government instruments beginning in
December 1997.
Also beginning in 1998, three new fund options were offered to
participants:
o Government Money Market Fund, managed by Bankers Trust Company
o U.S. Bond Market Index Fund, managed by Barclays Global Investors, N.A.
o Passive International Equity Index Fund, managed by Barclays Global
Investors, N.A.
Merger of the Plan
It is intended that effective on or about July 1, 1998, the Plan will be
merged into the Bell Atlantic Savings Plan for Salaried Employees.
23
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Bell
Atlantic Corporate Employees' Benefits Committee has duly caused this annual
report to be signed by the undersigned thereunto duly authorized.
NYNEX Corporation Savings Plan for Salaried Employees
By: /s/ D.J. Sacco
----------------------------------------
(D.J. Sacco, Chairman, Bell Atlantic
Corporate Employees' Benefits Committee)
Date: June 24, 1998
24
