<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------
FORM 11-K
-------------
(Mark One)
(X) ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the years ended December 31, 1998 and 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 1-8606
-------------
Bell Atlantic Savings and Security Plan for
Associates of Bell Atlantic South
-------------
Bell Atlantic Corporation
1095 Avenue of the Americas, New York, New York 10036
<PAGE>
BELL ATLANTIC SAVINGS and SECURITY PLAN
for ASSOCIATES OF BELL ATLANTIC SOUTH
As of December 31, 1998 and 1997
TABLE OF CONTENTS
-----------------
<TABLE>
<S> <C>
Independent Auditors' Report 1
Financial Statements:
Statements of Net Assets Available for Plan* Benefits as of
December 31, 1998 and 1997 2-3
Statements of Changes in Net Assets Available for Plan Benefits
for the years ended December 31, 1998 and 1997 4-5
Notes to Financial Statements 6-26
Signature Page 27
</TABLE>
- -------------------
*This and certain other capitalized terms used but not defined herein shall have
their respective meanings as defined in the Plan Prospectus.
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Corporate Employees' Benefits
Committee of Bell Atlantic Corporation:
We have audited the accompanying Statement of Net Assets Available for Plan
Benefits of the Bell Atlantic Savings and Security Plan for Associates of Bell
Atlantic South (the "Plan") as of December 31, 1998, and the related Statement
of Changes in Net Assets Available for Plan Benefits for the year then ended.
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 audit. The financial statements of the Plan as of December 31, 1997 were
audited by other auditors, whose report dated April 14, 1998, expressed an
unqualified opinion on those statements.
We conducted our audit 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 audit provides 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 Bell
Atlantic Savings and Security Plan for Associates of Bell Atlantic South as of
December 31, 1998, and the changes in its net assets available for plan benefits
for the year then ended, in conformity with generally accepted accounting
principles.
/s/ Mitchell & Titus, LLP
New York, New York
June 11, 1999
<PAGE>
BELL ATLANTIC SAVINGS AND SECURITY PLAN FOR ASSOCIATES OF BELL ATLANTIC SOUTH
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
DECEMBER 31, 1998
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FUND INFORMATION
-----------------------------------------------------------------------
BELL GOVERNMENT PASSIVE US
ATLANTIC MONEY EQUITY
SHARES MARKET INDEX INCOME LOAN
FUND FUND FUND FUND FUND
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments at market (see Notes 2 and 3):
Allocated Share of Master Trust net assets $ 1,128,290 $ 15,231 $ 157,336 $ 265,239 $ --
Temporary cash investments -- -- 4,102 -- --
Bell Atlantic Corporation common shares -- -- -- -- --
----------- ----------- ----------- ----------- -----------
Total investments 1,128,290 15,231 161,438 265,239 --
Receivables:
Employer's contributions -- -- -- -- --
Participants' contributions 2,748 192 883 1,190 --
Loan repayments 670 23 172 339 (1,283)
Loans to participants -- -- -- -- 52,880
Other (1,544) 249 737 (825) --
Dividends and interest receivable -- -- 51 -- --
----------- ----------- ----------- ----------- -----------
Total receivables 1,874 464 1,843 704 51,597
----------- ----------- ----------- ----------- -----------
Total assets 1,130,164 15,695 163,281 265,943 51,597
LIABILITIES:
Notes Payable (see Note 7) -- -- -- -- --
----------- ----------- ----------- ----------- -----------
Net assets available for plan
benefits (Notes 1 and 2) $ 1,130,164 $ 15,695 $ 163,281 $ 265,943 $ 51,597
=========== =========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
FUND INFORMATION
------------------------------------------------------------------------------------
EMPLOYEE STOCK PASSIVE
OWNERSHIP PLAN INTERNATIONAL ACTIVE U.S. U.S.
------------------------ PAYSOP EQUITY INDEX EQUITY BALANCED
ALLOCATED UNALLOCATED FUND FUND FUND FUND
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments at market (see Notes 2 and 3):
Allocated Share of Master Trust net assets $ 542,659 -- $ 167,011 $ 22,808 $ 11,867 $ 8,994
Temporary cash investments -- -- -- -- 309 234
Bell Atlantic Corporation common shares -- $ 119,054 -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Total investments 542,659 119,054 167,011 22,808 12,176 9,228
Receivables:
Employer's contributions -- -- -- -- -- --
Participants' contributions -- -- -- 166 121 60
Loan repayments -- -- -- 30 15 7
Loans to participants -- -- -- -- -- --
Other 547 -- (1,416) (39) (147) 70
Dividends and interest receivable -- -- -- -- 4 3
----------- ----------- ----------- ----------- ----------- -----------
Total receivables 547 -- (1,416) 157 (7) 140
----------- ----------- ----------- ----------- ----------- -----------
Total assets 543,206 119,054 165,595 22,965 12,169 9,368
LIABILITIES:
Notes Payable (see Note 7) -- 87,981 -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Net assets available for plan
benefits (Notes 1 and 2) $ 543,206 $ 31,073 $ 165,595 $ 22,965 $ 12,169 $ 9,368
=========== =========== =========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
FUND INFORMATION
-------------------------------------------------------------------
ACTIVE U.S. BOND
GLOBAL INTERNATIONAL U.S. SMALL MARKET
BALANCED EQUITY CAPITALIZATION INDEX
FUND FUND FUND FUND TOTAL
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments at market (see Notes 2 and 3):
Allocated Share of Master Trust net assets $ 1,819 $ 1,843 $ 6,321 $ 12,396 $ 2,341,814
Temporary cash investments 47 48 165 -- 4,905
Bell Atlantic Corporation common shares -- -- -- -- 119,054
----------- ----------- ----------- ----------- -----------
Total investments 1,866 1,891 6,486 12,396 2,465,773
Receivables:
Employer's contributions -- -- -- -- --
Participants' contributions 20 23 63 94 5,560
Loan repayments 2 3 8 14 --
Loans to participants -- -- -- -- 52,880
Other 77 53 -- 208 (2,030)
Dividends and interest receivable 1 1 2 -- 62
----------- ----------- ----------- ----------- -----------
Total receivables 100 80 73 316 56,472
----------- ----------- ----------- ----------- -----------
Total assets 1,966 1,971 6,559 12,712 2,522,245
LIABILITIES:
Notes Payable (see Note 7) -- -- -- -- 87,981
----------- ----------- ----------- ----------- -----------
Net assets available for plan
benefits (Notes 1 and 2) $ 1,966 $ 1,971 $ 6,559 $ 12,712 $ 2,434,264
=========== =========== =========== =========== ===========
</TABLE>
See notes to financial statements.
2
<PAGE>
BELL ATLANTIC SAVINGS AND SECURITY PLAN FOR
ASSOCIATES OF BELL ATLANTIC SOUTH
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
December 31, 1997
(Dollars in Thousands)
<TABLE>
<CAPTION>
PARTICIPANT DIRECTED
------------------------------------------------------------------
SHORT-
BELL GOVERNMENT TERM U.S. BOND U.S.
ATLANTIC MONEY FIXED MARKET EQUITY
SHARES MARKET INCOME INDEX INDEX
FUND FUND FUND FUND FUND
------------ -------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments, net (Note 4) $ 1,003,234 $ 11,993 $ 290,079 $ 9,449 $ 118,492
Allocations and contributions receivable 2,369 1 - 2 71
Fund, plan and other transfers receivable-net - 585 - 394 1,277
Prepaid expenses - - - - -
------------ -------- ---------- --------- ----------
Total assets 1,005,603 12,579 290,079 9,845 119,840
------------ -------- ---------- --------- ----------
LIABILITIES:
Notes payable (Note 5) - - - - -
Accrued interest - - - - -
Fund, plan and other transfers payable - net 1,974 - 3,832 - -
Administrative expenses payable 511 13 198 6 14
------------ -------- ---------- --------- ----------
Total liabilities 2,485 13 4,030 6 14
------------ -------- ---------- --------- ----------
Net assets available for plan benefits (Note 3) $ 1,003,118 $ 12,566 $ 286,049 $ 9,839 $ 119,826
------------ -------- ---------- --------- ----------
------------ -------- ---------- --------- ----------
</TABLE>
<TABLE>
<CAPTION>
NON-PARTICIPANT
DIRECTED
----------------------
INTERNATIONAL BELL ESOP
EQUITY ATLANTIC UNALLOCATED
INDEX LOAN SHARES SHARES
FUND FUND FUND FUND TOTAL
--------- --------- --------- --------- -----------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments, net (Note 4) $ 22,735 $ 40,598 $ 447,071 $ 178,475 $ 2,122,126
Allocations and contributions receivable - - 4,211 - 6,654
Fund, plan and other transfers receivable-net - 1,857 - - 4,113
Prepaid expenses - - - 199 199
--------- --------- --------- --------- -----------
Total assets 22,735 42,455 451,282 178,674 2,133,092
--------- --------- --------- --------- -----------
LIABILITIES:
Notes payable (Note 5) - - - 120,694 120,694
Accrued interest - - - 4,930 4,930
Fund, plan and other transfers payable - net 730 - 376 - 6,912
Administrative expenses payable 41 - 230 30 1,043
--------- --------- --------- --------- -----------
Total liabilities 771 - 606 125,654 133,579
--------- --------- --------- --------- -----------
Net assets available for plan benefits (Note 3) $ 21,964 $ 42,455 $ 450,676 $ 53,020 $ 1,999,513
--------- --------- --------- --------- -----------
--------- --------- --------- --------- -----------
</TABLE>
See notes to financial statements.
3
<PAGE>
BELL ATLANTIC SAVINGS AND SECURITY PLAN FOR ASSOCIATES OF BELL ATLANTIC SOUTH
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
FOR THE PERIOD ENDED DECEMBER 31, 1998
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FUND INFORMATION
---------------------------------------------------------------------
BELL GOVERNMENT PASSIVE US
ATLANTIC MONEY EQUITY
SHARES MARKET INDEX INCOME LOAN
FUND FUND FUND FUND FUND
------------- --------------- ------------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Additions:
Allotments, Contributions and Transfers:
Employee allotments $ 40,454 $ 2,518 $ 17,259 $ 26,484 $ -
Interfund transfers (6,292) 2,568 4,897 (23,046) -
Plan transfers-in 2,116 7 94 90 -
Plan transfer from PAYSOP (Note 1) - - - - -
Rollover contributions (Note 1) 495 71 310 43 -
Employing company contributions (Note 1) 24,447 - - - -
Loans to participants (18,950) (551) (3,801) (9,277) 34,275
Transfer for loan repayments 12,735 421 3,400 6,731 (24,750)
------------- --------------- ------------- ----------- ----------
Total allotments, contributions,
and transfers 55,005 5,034 22,159 1,025 9,525
Investment income:
Dividends/Interest 45,135 - - - -
Allocated share of Master Trust investment
activities (Note 3) 155,891 1,091 34,077 16,729 -
------------- --------------- ------------- ----------- ----------
Total additions 256,031 6,125 56,236 17,754 9,525
------------- --------------- ------------- ----------- ----------
Deductions:
Administrative expenses 2,612 31 176 592 -
Distributions to participants 116,284 2,903 11,471 36,027 -
Plan transfers-out 10,089 62 1,134 1,241 383
------------- --------------- ------------- ----------- ----------
Total deductions 128,985 2,996 12,781 37,860 383
------------- --------------- ------------- ----------- ----------
Net increase(decrease) 127,046 3,129 43,455 (20,106) 9,142
Net assets available for plan benefits:
Beginning of year 1,003,118 12,566 119,826 286,049 42,455
------------- --------------- ------------- ----------- ----------
End of year (Notes 1 and 2) $ 1,130,164 $ 15,695 $ 163,281 $ 265,943 $ 51,597
============= =============== ============= =========== ==========
</TABLE>
<TABLE>
<CAPTION>
FUND INFORMATION
--------------------------------------------------------------------------------
PASSIVE
EMPLOYEE STOCK INTERNATIONAL ACTIVE U.S.
OWNERSHIP PLAN PAYSOP EQUITY INDEX U.S. EQUITY BALANCED
ALLOCATED UNALLOCATED FUND FUND FUND FUND
----------- ------------ ---------- ------------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Additions:
Allotments, Contributions and Transfers:
Employee allotments $ - $ - $ - $ 3,646 $ 1,861 $ 896
Interfund transfers - - - (5,426) 9,708 8,303
Plan transfers-in - - 50 17 - -
Plan transfer from PAYSOP (Note 1) - - 157,508 - - -
Rollover contributions (Note 1) - - - 104 65 23
Employing company contributions (Note 1) 18,803 36,395 - - - -
Loans to participants (160) - - (717) (199) (86)
Transfer for loan repayments 10 - - 601 255 123
----------- ------------ ------------ ------------- ----------- ----------
Total allotments, contributions,
and transfers 18,653 36,395 157,558 (1,775) 11,690 9,259
Investment income:
Dividends/Interest 3,909 4,170 (3,615) - - -
Allocated share of Master Trust investmen
activities (Note 3) 85,003 (3,492) 28,452 4,718 1,213 724
----------- ------------ ------------ ------------- ----------- ----------
Total additions 107,565 37,073 182,395 2,943 12,903 9,983
----------- ------------ ------------ ------------- ----------- ----------
Deductions:
Administrative expenses 141 37 36 49 35 20
Distributions to participants 12,360 43,713 16,383 1,612 631 538
Plan transfers-out 2,534 15,270 381 281 68 57
----------- ------------ ------------ ------------- ----------- ----------
Total deductions 15,035 59,020 16,800 1,942 734 615
----------- ------------ ------------ ------------- ----------- ----------
Net increase(decrease) 92,530 (21,947) 165,595 1,001 12,169 9,368
Net assets available for plan benefits:
Beginning of year 450,676 53,020 - 21,964 - -
----------- ------------ ------------ ------------- ----------- ----------
End of year (Notes 1 and 2) $ 543,206 $ 31,073 $ 165,595 $ 22,965 $ 12,169 $ 9,368
========== =========== =========== ============ ========== =========
</TABLE>
<TABLE>
<CAPTION>
FUND INFORMATION
-------------------------------------------------------------------
ACTIVE US. BOND
GLOBAL INTERNATIONAL U.S. SMALL MARKET
BALANCED EQUITY CAPITALIZATION INDEX
FUND FUND FUND FUND TOTAL
---------- ----------- -------------- --------- ---------
<S> <C> <C> <C> <C> <C>
Additions:
Allotments, Contributions and Transfers:
Employee allotments $ 304 $ 362 $1,049 $ 1,895 $ 96,728
Interfund transfers 1,597 1,607 5,406 678 -
Plan transfers-in 11 18 8 22 2,433
Plan transfer from PAYSOP (Note 1) - - - - 157,508
Rollover contributions (Note 1) 17 25 48 87 1,288
Employing company contributions (Note 1) - - - - 79,645
Loans to participants (23) (43) (81) (387) -
Transfer for loan repayments 35 50 146 243 -
--------- ------- ------ ------- -----------
Total allotments, contributions,
and transfers 1,941 2,019 6,576 2,538 337,602
Investment income:
Dividends/Interest - - - - 49,599
Allocated share of Master Trust investmen
activities (Note 3) 147 69 221 1,179 326,022
--------- ------- ------ ------- -----------
Total additions 2,088 2,088 6,797 3,717 713,223
--------- ------- ------ ------- -----------
Deductions:
Administrative expenses 6 8 23 (16) 3,750
Distributions to participants 90 109 185 739 243,045
Plan transfers-out 26 - 30 121 31,677
--------- ------- ------ ------- -----------
Total deductions 122 117 238 844 278,472
--------- ------- ------ ------- -----------
Net increase(decrease) 1,966 1,971 6,559 2,873 434,751
Net assets available for plan benefits:
Beginning of year - - - 9,839 1,999,513
--------- ------- ------ ------- -----------
End of year (Notes 1 and 2) $ 1,966 $ 1,971 $6,559 $12,712 $ 2,434,264
========= ======= ====== ======= ===========
</TABLE>
4
<PAGE>
BELL ATLANTIC SAVINGS AND SECURITY PLAN FOR ASSOCIATES OF BELL ATLANTIC SOUTH
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
For the year ended December 31, 1997
(Dollars in Thousands)
<TABLE>
<CAPTION>
PARTICIPANT DIRECTED
-----------------------------------------------------------------
SHORT-
BELL GOVERNMENT TERM U.S. BOND U.S.
ATLANTIC MONEY FIXED MARKET EQUITY
SHARES MARKET INCOME INDEX INDEX
FUND FUND FUND FUND FUND
----------- -------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C>
Net assets available for plan benefits,
December 31, 1996 $ 727,300 $ 9,809 $ 283,616 $ 7,545 $ 61,833
----------- -------- ---------- --------- ----------
Employees contributions 32,157 1,453 23,974 1,333 11,586
Employing company contributions and allocations - - - - -
Transfer of ESOP Shares and participants'
balances - net (35,092) 2,316 (16,769) 948 16,825
----------- -------- ---------- --------- ----------
Total allocations, contributions and transfers (2,935) 3,769 7,205 2,281 28,411
Allocated share of Master Trust net investment
activities (Note 4) (40,807) 125 3,242 108 (12,180)
Dividends on Bell Atlantic Common Shares 22,693 - - - -
Other Dividends - - - - 1,184
Interest - 465 6,440 381 15
Net appreciation in value of investments 350,626 - 8,543 291 44,991
----------- -------- ---------- --------- ----------
Net additions 329,577 4,359 25,430 3,061 62,421
----------- -------- ---------- --------- ----------
Less: Distributions to participants 52,639 1,588 22,702 731 4,294
Interest expense - - - - -
Amortization of capitalized ESOP expenses - - - - -
Administrative expenses 1,120 14 295 36 134
----------- -------- ---------- --------- ----------
Total deductions 53,759 1,602 22,997 767 4,428
----------- -------- ---------- --------- ----------
Net assets available for plan benefits,
December 31, 1997 (Note 3) $ 1,003,118 $ 12,566 $ 286,049 $ 9,839 $ 119,826
=========== ======== ========== ========= ==========
</TABLE>
<TABLE>
<CAPTION>
NON-PARTICIPANT
DIRECTED
----------------------
INTERNATIONAL BELL ESOP
EQUITY ATLANTIC UNALLOCATED
INDEX LOAN SHARES SHARES
FUND FUND FUND FUND TOTAL
--------- --------- --------- --------- -----------
<S> <C> <C> <C> <C> <C>
Net assets available for plan benefits,
December 31, 1996 $ 16,019 $ 37,131 $297,066 $ 9,606 $1,449,925
----------- ----------- -------- ---------- ----------
Employees contributions 3,383 - - - 73,886
Employing company contributions and allocations - - - 33,902 33,902
Transfer of ESOP Shares and participants'
balances - net 2,950 2,980 31,490 (22,875) (17,227)
--------- --------- --------- --------- -----------
Total allocations, contributions and transfers 6,333 2,980 31,490 11,027 90,561
Allocated share of Master Trust net investment
activities (Note 4) (896) 498 (7,865) (11,011) (68,786)
Dividends on Bell Atlantic Common Shares - - 13,150 4,844 40,687
Other Dividends 210 - - - 1,394
Interest - 2,668 - 177 10,146
Net appreciation in value of investments 1,934 - 138,839 49,212 594,436
--------- --------- --------- --------- -----------
Net additions 7,581 6,146 175,614 54,249 668,438
--------- --------- --------- --------- -----------
Less: Distributions to participants 1,564 822 21,500 - 105,840
Interest expense - - - 10,677 10,677
Amortization of capitalized ESOP expenses - - - 99 99
Administrative expenses 72 - 504 59 2,234
--------- --------- --------- --------- -----------
Total deductions 1,636 822 22,004 10,835 118,850
--------- --------- --------- --------- -----------
Net assets available for plan benefits,
December 31, 1997 (Note 3) $ 21,964 $ 42,455 $ 450,676 $ 53,020 $ 1,999,513
========== ========== ========== ========== ============
</TABLE>
See notes to financial statements.
5
<PAGE>
BELL ATLANTIC SAVINGS AND SECURITY PLAN FOR
ASSOCIATES OF BELL ATLANTIC SOUTH
NOTES TO FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
1. DESCRIPTION
The following description of the Bell Atlantic Savings and Security
Plan for Associates of Bell Atlantic South (the "BASSP") provides only
general information on the BASSP's provisions as of December 31, 1998.
Participants should refer to the Benefits Handbook, BASSP plan document
and prospectus for a more complete description of BASSP's provisions.
The BASSP * was established by Bell Atlantic Corporation on January 1,
1984 to provide a convenient way for non-salaried employees to save on
a regular and long-term basis. In August 1997, Bell Atlantic
Corporation merged with NYNEX Corporation (the "Merger") to form the
new Bell Atlantic Corporation ("Bell Atlantic"). The BASSP is a defined
contribution plan covering all regular non-salaried employees primarily
of the business units of the pre-merger Bell Atlantic and its
participating subsidiaries. Employees are eligible to make tax-deferred
or after-tax contributions to the BASSP upon completion of enrollment
in the plan as soon as practicable following the date of hire.
Employees become eligible for employer matching contributions upon
completion of one year of service. The BASSP is also characterized as
an employee stock ownership plan ("ESOP").
ALLOTMENTS AND CONTRIBUTIONS
Eligible employees generally may authorize basic contributions of $5 to
$45 per week, which is as much as 5% to 7% of the basic weekly rate,
and supplementary contributions up to an amount which, when added to
the basic contribution, is not more than 16% of the employees' weekly
rate. For employees of Bell Atlantic and most of its participating
subsidiaries, Bell Atlantic makes employer matching contributions in an
amount equal to 66 2/3% of basic contributions. Certain participating
subsidiaries have other employee contribution and employer matching
contribution arrangements. Contributions are subject to applicable
rules set forth in the Internal Revenue Code (the "Code") and the
regulations thereunder. Employer matching contributions are invested
only in the BASSP until employees reach age fifty-five and ten years
of service.
The BASSP provides for 100% vesting of employer matching contributions
upon attaining three years of service. A terminated employee's unvested
employer matching contributions are forfeited and offset against the
participating companies' obligation to make subsequent contributions to
the BASSP. Forfeitures were $164 and $53 in 1998 and 1997,
respectively.
- --------------------
*Certain other capitalized terms used but not defined herein shall have their
respective meanings as defined in the BASSP Prospectus.
Continued
6
<PAGE>
BELL ATLANTIC SAVINGS AND SECURITY PLAN FOR
ASSOCIATES OF BELL ATLANTIC SOUTH
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(DOLLARS IN THOUSANDS)
LOANS
The BASSP includes an employee loan provision authorizing participants
to borrow an amount from their vested account balances in the BASSP.
Loans are generally repaid by payroll deductions. The term of repayment
for loans generally will not be less than one year nor more than
fifteen years. Each new loan will bear interest at a rate based upon
the prime for loans up to sixty months and the prime plus one for loans
from sixty-one months to one hundred eighty months as published in The
Wall Street Journal.
TERMINATION PRIORITIES
Although it has not expressed any intent to do so, Bell Atlantic has
the right under the BASSP to discontinue all employer matching
contributions at any time and to terminate the BASSP subject to the
provisions of ERISA. In the event of plan termination, participants
would become 100% vested in their accounts.
FUND OPTIONS
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, U.S. Bond
Market Index Fund, Passive U.S. Equity Index Fund, Government Money
Market Fund, Income Fund, Passive International Equity Index Fund,
U.S. Balanced Fund, Global Balanced Fund, Active U.S. Equity Fund,
Active International Equity Fund and U.S. Small Capitalization Fund.
The ESOP component of the BASSP is described below.
Beginning in 1998, these seven fund options were newly offered by
the BASSP:
- Income Fund
- U.S. Balanced Fund
- Global Balanced Fund
- Passive U.S. Equity Index Fund
- Active U.S. Equity Index Fund
- U.S. Small Capitalization Fund
- Active International Equity Fund
The Bell Atlantic Shares Fund invests primarily in the common stock of
Bell Atlantic.
The U.S. Bond Market Index Fund includes all U.S. Treasury,
government-sponsored, mortgaged-backed, asset-backed and
investment-grade corporate bonds, with at least one year maturity and
at least $100 million outstanding. The Fund may use interest rate
futures and various other kinds of derivatives to adjust portfolio
duration or as interest rate hedges. The Fund is managed by Barclays
Global Investors, N.A.
7
<PAGE>
BELL ATLANTIC SAVINGS AND SECURITY PLAN FOR
ASSOCIATES OF BELL ATLANTIC SOUTH
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(DOLLARS IN THOUSANDS)
On January 1, 1998, a new Fund, the Passive U.S. Equity Index Fund,
became the successor fund to the BASSP's U.S. Equity Index Fund. Any
assets in the U.S. Equity Index Fund not designated for transfer to
another fund by BASSP participants by December 31, 1997 were
automatically transferred to the Passive U.S. Equity Index Fund.
Effective January 1, 1998 the U.S. Equity Index Fund ceased to exist.
The Passive U.S Equity Index Fund invests in an equity index fund which
is managed by Bell Atlantic Asset Management Company ("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 Money Market Fund invests in securities of the U.S.
government or its agencies, obligations guaranteed or insured by the
U.S. government and repurchase agreements that use these securities as
collateral. The average maturity of the securities in the Fund
generally will be thirty to sixty days, but may vary from one to ninety
days. The Fund may use interest rate futures for cash management
purposes or to adjust the average duration of the portfolio. The Fund
is managed by Bankers Trust Company.
Effective January 1, 1998 the Short-Term Fixed Income Fund ceased to
exist. Any assets in the BASSP's Short-Term Fixed Income Fund not
designated for transfer to another fund by BASSP participants by
December 31, 1997 were automatically transferred to the new Income
Fund. The Income Fund invests primarily in a diversified portfolio of
guaranteed investment contracts ("GICs") issued by insurance companies.
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 Investment Contract").
As an integral part of the purchase of each pool of these investments,
a financial institution, via a wrapper contract, agrees to pay at book
value for qualified distributions (e.g. participant withdrawals) and at
maturity of the contract, based upon the agreed upon interest rate for
the relevant time period, but not in the event of a default of any
security in the pool. The BASSP is exposed to credit risk in the event
of nonperformance by the entities for which the contracts are placed.
The BASSP seeks to minimize credit risk by diversifying among a group
of GIC issuers and other 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 an indefinite period of time. 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).
On January 1, 1998 the BASSP's International Equity Index Fund was
renamed the Passive International Equity Index Fund. The Passive
International Equity Index Fund has investments that mirror the
MSCI-EAFE-GDP, which is an index established by Morgan Stanley Dean
Witter, comprised of approximately 1,000 companies from twenty of the
Continued
8
<PAGE>
BELL ATLANTIC SAVINGS AND SECURITY PLAN FOR
ASSOCIATES OF BELL ATLANTIC SOUTH
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(DOLLARS IN THOUSANDS)
largest countries outside of the United States, including Japan,
Germany and the United Kingdom. The weighting of each country in the
index is based upon its GDP, which is a measure of domestic economic
output. The Fund is managed by Barclays Global Investors, N.A.
In addition to the Passive U.S. Equity Index Fund, each of the
following five Funds invest in the assets of unitized investment
advisor account(s) of the Bell Atlantic Master Trust ("Master Trust"),
as designated by BAAMCO: U.S. Balanced Fund, Global Balanced Fund,
Active U.S. Equity Fund, Active International Equity Fund, and the U.S.
Small Capitalization Fund.
On January 1, 1998 the U.S. Balanced Fund became available to
participants in the BASSP. The U.S. Balanced Fund invests primarily in
domestic stocks and bonds. The fixed income portion of the Fund may
invest a small portion of its assets in issues of international
agencies, foreign governments, their agencies and foreign corporations.
The Fund targets approximately 60% in stocks and 40% in bonds. As of
December 31, 1998, 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.,
Equinox Capital Management, LLC, Fidelity Management Trust Company,
Franklin Portfolio Associates, Inc., Gardner Lewis Asset Management,
L.P., Goldman Sachs Asset Management Co., Independence Investment
Associates, Inc., Miller Anderson & Sherrerd, LLP, Palisade Capital
Management, L.L.C., Provident Investment Counsel, State Street Research
and Management Company, Transamerica Investment Services, Trinity
Investment Management Corporation, and Wilshire Associates Inc.
On January 1, 1998 the Global Balanced Fund became available to
participants in the BASSP. The Global Balanced Fund invests in the
world's capital markets, primarily in equity and fixed income
instruments. The Fund is diversified and has representation in a
variety of countries, from those of the most mature and developed
nations to those still in their developmental states (generally
referred to as emerging market countries). The Fund may invest in large
or small capitalization stocks. The Global Balanced Fund typically
targets 75% of its investments for the domestic market and 25% for the
foreign market, and approximately 70% in stocks and 30% in bonds.
Emerging markets investments are targeted at 4% of the total Fund. As
of December 31, 1998, BAAMCO had selected the following Master Trust
pooled accounts for the Fund: Barrow, Hanley, Mewhinney & Strauss,
Inc., Capital Guardian Trust Company, Equinox Capital Management, LLC,
Fidelity Management Trust Company, Franklin Portfolio Associates, Inc.,
Gardner Lewis Asset Management, L.P., Goldman Sachs Asset Management
Co., Independence Investment Associates, Inc., Miller Anderson &
Sherrerd, LLP, Morgan Stanley Asset Management, Morgan Stanley
International, Northern Cross Investments, Ltd., Palisade Capital
Management, L.L.C., Provident Investment Counsel, Rogge Global
Partners, PLC, State Street Global Advisors,
Continued
9
<PAGE>
BELL ATLANTIC SAVINGS AND SECURITY PLAN FOR
ASSOCIATES OF BELL ATLANTIC SOUTH
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(DOLLARS IN THOUSANDS)
State Street Research and Management Company, Transamerica Investment
Services, Trinity Investment Management Corporation, and Wilshire
Associates Inc.
On January 1, 1998 the Active U.S. Equity Fund became available to
participants in the BASSP. The Active U.S. Equity Fund invests
primarily in domestic common stocks. As of December 31, 1998, BAAMCO
had selected the following Master Trust pooled accounts for the Fund:
Barrow, Hanley, Mewhinney & Strauss, Inc., Equinox Capital Management,
LLC, Fidelity Management Trust Company, Franklin Portfolio Associates,
Inc., Gardner Lewis Asset Management, L.P., Goldman Sachs Asset
Management Co., Independence Investment Associates, Inc., Miller
Anderson & Sherrerd, LLP, Palisade Capital Management, L.L.C.,
Provident Investment Counsel, Transamerica Investment Services, Trinity
Investment Management Corporation, and Wilshire Associates Inc.
On January 1, 1998 the Active International Equity Fund became
available to participants in the BASSP. The Active International Equity
Fund invests in international equity markets throughout the world,
generally excluding the United States. It is diversified and has
representation in a variety of economies, from those of the most mature
and developed nations to those still in their developmental stages
(generally referred to as emerging market countries). The Fund may
invest in large or small capitalization stocks. It targets 80% of its
investments for developed countries such as Japan, Germany and the
United Kingdom and 20% for emerging markets such as Brazil, Mexico and
Taiwan. As of December 31, 1998, BAAMCO had selected Capital Guardian
Trust Company, Morgan Stanley Asset Management, Morgan Stanley
International, Northern Cross Investments, Ltd., and State Street
Global Advisors as the Master Trust pooled accounts for the Fund.
On January 1, 1998 the U.S. Small Capitalization Fund became available
to participants in the BASSP. The U.S. Small Capitalization Fund
invests primarily in the stocks of smaller-sized domestic companies,
generally with a market capitalization that is in the smallest 15% of
publicly traded stocks. As of December 31, 1998, 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., The Boston Company Asset
Management, Inc., Provident Investment Counsel, and Wilshire Associates
Inc.
The Leveraged ESOP ("LESOP") is a leveraged Fund that invests primarily
in Bell Atlantic shares. The LESOP component of the BASSP, initially
funded in 1989, is a stock bonus plan intended to qualify under
Sections 401(a)(4) and 4975(e)(7) of the Code. It is used to match the
employee's Basic Pre-Tax Allotments and Post-Tax Allotments. Depending
on the value of Bell Atlantic shares from time to time, the LESOP may
fund more or less than all of the required employer matching
contributions in a given calendar year. As a result of a continuing
series of additional LESOP refinancings (See Note 7), the LESOP is
likely to continue to generate most of the shares required for employer
matching contributions but not
Continued
10
<PAGE>
BELL ATLANTIC SAVINGS AND SECURITY PLAN FOR
ASSOCIATES OF BELL ATLANTIC SOUTH
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(DOLLARS IN THOUSANDS)
more than the amount required for those contributions. In the event of
a shortfall, Bell Atlantic and its participating subsidiaries make
additional employer matching contributions to the BASSP. Any surplus is
allocated in equal amounts to the BASSP accounts of participants who,
as of the last day of the year, are active employees of Bell Atlantic
and its participating subsidiaries, and have account balances under the
BASSP. The employee may not withdraw or transfer funds out of the LESOP
Fund except for hardship withdrawals and except for those participants
over age 55 with more than one year of participation in the BASSP. The
amounts allowed to be transferred during any election period are
subject to certain limitations under the terms of the BASSP.
The Bell Atlantic Employee Stock Ownership Plan (the "PAYSOP") was
established by Bell Atlantic on January 1, 1984 as an ERISA plan. The
assets in the PAYSOP consisted of Employing Company contributions of
Bell Atlantic Corporation common shares and earnings thereon. As a
result of PAYSOP amendments necessitated by the Tax Reform Act of 1986,
there have been no Employing Company contributions to the PAYSOP since
the 1986 plan year. Effective January 1, 1998, the PAYSOP was merged
into the BASSP and the Bell Atlantic Savings Plan for Salaried
Employees (the "BASP"). The assets of the PAYSOP were transferred to
the Bell Atlantic Master Trust on January 1, 1998 and accordingly
allocated to the BASSP based on the participating employees' balances
in PAYSOP as of December 31, 1997.
All the assets of the BASSP are included in the Bell Atlantic Master
Trust (See Note 2) for which Mellon Bank, N.A., is the trustee.
Metropolitan Life Insurance Company (previously operating as Bankers
Trust Company) was the recordkeeper for the BASSP through June 30,
1998. As of July 1, 1998, the Kwasha Group of PriceWaterhouseCoopers
L.L.P. became the recordkeeper for the BASSP.
2. ACCOUNTING POLICIES
INVESTMENTS
Prior to 1997, the assets of the BASSP were commingled for investment
purposes in the Bell Atlantic Master Savings Trust (the "Master Savings
Trust") with the assets of the BASP. On March 31,1997, the Master
Savings Trust was dissolved and the respective assets held were
transferred to the BASP and BASSP. For the period from April 1, 1997
until December 31, 1997, the BASSP presents in the Statement of Changes
in Net Assets Available for Plan Benefits, Bell Atlantic dividends,
other dividends and interest income and net appreciation (depreciation)
in the fair value of investments. For the period from January 1, 1997
until March 31, 1997, the BASSP presents in the Statement of Changes in
Net Assets Available
Continued
11
<PAGE>
BELL ATLANTIC SAVINGS AND SECURITY PLAN FOR
ASSOCIATES OF BELL ATLANTIC SOUTH
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(DOLLARS IN THOUSANDS)
for Plan Benefits its allocated share of Master Savings Trust
investment activities which includes net appreciation (depreciation) in
the fair value of its investments.
As of January 1, 1998, the assets of Bell Atlantic's defined benefit
plans and defined contribution plans were transferred to the NYNEX
Master Trust. Effective January 1, 1998, the NYNEX Master Trust was
renamed the Bell Atlantic Master Trust (the "Master Trust").
VALUE OF INVESTMENTS
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.
The value of each contract with an insurance company or other financial
institution included in the 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
6.3% and 6.4% for the years ended December 31, 1998 and 1997,
respectively.
ii. The crediting interest rates ranged from 4.2% to 8.3% at
December 31, 1998 and 1997.
iii. The fair value, as determined by discounting future cash flows
of the underlying BASSP investments, at December 31, 1998 and
1997, was approximately $229,921 and $113,471, respectively.
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.
Continued
12
<PAGE>
BELL ATLANTIC SAVINGS AND SECURITY PLAN FOR
ASSOCIATES OF BELL ATLANTIC SOUTH
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(DOLLARS IN THOUSANDS)
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
BASSP's investments, which consists of the realized gains or losses and
the unrealized appreciation (depreciation) on those investments.
DISTRIBUTIONS
Distributions elected to be withdrawn from the BASSP by participants
are recorded when paid.
PLAN EXPENSES
The BASSP pays certain administrative expenses out of assets held in
the Master Trust and out of interest income earned from the BASSP's
disbursement account, as held by the Trustee, in accordance with BASSP
provisions and to the extent permitted by law. Any expenses not paid by
the BASSP are paid by Bell Atlantic.
BELL ATLANTIC'S USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires the BASSP's trust asset
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 BASSP 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.
Continued
13
<PAGE>
BELL ATLANTIC SAVINGS AND SECURITY PLAN FOR
ASSOCIATES OF BELL ATLANTIC SOUTH
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(DOLLARS IN THOUSANDS)
3. INVESTMENTS
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 and the defined
contribution plans or (b) net assets that are specific to the defined
benefit plans, or (c) net assets specific to the defined contribution
plans. The total fair value of the Master Trust at December 31, 1998
was approximately $51.2 billion (of which net assets totaling
approximately $17.5 billion are specific to the defined benefit plans,
item (b) above, for which separate financial statements are prepared).
INVESTMENTS HELD IN POOLED ACCOUNTS
The pooled investments are unitized, aggregated and reported by the
Master Trust with a carrying value of $22.7 billion at December 31,
1998 and with investment earnings of $2.2 billion for the period or
year ended December 31, 1998. Given that the pooled accounts include
interests of the defined contribution plans 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 footnote.
The total investments held in the Master Trust pooled accounts at
December 31, 1998 were as follows:
<TABLE>
<CAPTION>
DESCRIPTION FAIR VALUE (NOTE 2)
----------- -------------------
<S> <C>
Cash - non interest bearing $ 7,587
Receivables 1,300,045
Common Stock 18,625,854
Bell Atlantic Corporation common shares 70,998
Preferred Stock 115,874
U.S. Government Securities 1,097,450
Corporate Debt - preferred and other 1,489,671
Real estate 166
Temporary cash investments 619,688
Other investments* 708,470
-------------
24,035,803
Liabilities 1,307,975
-------------
Total pooled net assets in the Master Trust $ 22,727,828
=============
</TABLE>
*Other investments include foreign investments, principally foreign
government debt.
Continued
14
<PAGE>
BELL ATLANTIC SAVINGS AND SECURITY PLAN FOR
ASSOCIATES OF BELL ATLANTIC SOUTH
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(DOLLARS IN THOUSANDS)
The BASSP'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" as of December 31, 1998, 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, 1998.
Investments in the Master Trust are allocated to the BASSP's Fund
options in accordance with their respective percentages of interest.
The proportionate interests of the BASSP's Fund options in the carrying
value of the Master Trust pooled accounts at December 31, 1998 were as
follows:
<TABLE>
<CAPTION>
CARRYING
VALUE
1998 1998
--------- -------
<S> <C> <C>
Active U.S. Equity Fund $ 12,169 0.0535%
U.S. Balanced Fund 9,368 0.0412%
Global Balanced Fund 1,966 0.0087%
Active International Equity Fund 1,971 0.0087%
U.S. Small Capitalization Fund 6,559 0.0289%
Passive U.S. Equity Index Fund 163,281 0.7184%
---------
Total $ 195,314
=========
</TABLE>
INVESTMENTS HELD IN SPECIFIC ACCOUNTS
Effective January 1, 1998, the assets of all Bell Atlantic's defined
contribution plans were included in the Master Trust. The net assets specific to
these plans are the Bell Atlantic Shares Fund, Telecommunications Fund,
Government Money Market Fund, Income Fund, Loan Fund, the ESOP allocated
account, Passive International Equity Index Fund, and the U.S. Bond Market Index
Fund.
15
<PAGE>
BELL ATLANTIC SAVINGS AND SECURITY PLAN FOR
ASSOCIATES OF BELL ATLANTIC SOUTH
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(DOLLARS IN THOUSANDS)
The investments held in the Master Trust specific accounts for the
defined contribution plans at December 31, 1998 were as follows:
<TABLE>
<CAPTION>
DESCRIPTION FAIR VALUE (NOTE 2)
----------- -------------------
<S> <C>
Receivables $ 410,006
Common Stock 609,620
Bell Atlantic Corporation common shares 8,324,047
Temporary cash investments 139,788
Fixed income obligations - insurance contracts 1,973,019
Fixed income corporate obligations 239,031
------------
11,695,511
Liabilities 642,498
------------
Total net assets in the specific
Accounts in the Master Trust $ 11,053,013
------------
------------
</TABLE>
Investments in the Master Trust are allocated to the BASSP's Fund
options in accordance with their respective percentages of interest.
The proportionate interest of the BASSP, the BASP and the Bell Atlantic
Savings and Security Plan for Associates of Bell Atlantic North (the
"NSSP") in the carrying value of the Master Trust specific accounts at
December 31, 1998 was as follows:
<TABLE>
<CAPTION>
CARRYING CARRYING CARRYING
VALUE VALUE VALUE
BASSP PLAN % BASP PLAN % NSSP PLAN %
------------ ------ ------------ ------ ------------ ------
<S> <C> <C> <C> <C> <C> <C>
Bell Atlantic Shares Fund $ 1,130,164 21.14 $ 2,039,193 38.14 $ 2,177,321 40.72
Telecommunications Fund - - 253,335 52.76 226,831 47.24
Government Money Market Fund 15,695 8.79 155,902 87.30 6,982 3.91
Passive International Equity Index 22,965 17.45 102,392 77.80 6,246 4.75
Fund
Income Fund 265,943 13.50 1,268,983 64.40 435,441 22.10
Loan Fund 51,597 14.64 148,922 42.25 151,936 43.11
Employee Stock Ownership Plan 574,279 27.32 1,527,926 72.68 - -
U.S. Bond Market Index Fund 12,712 5.22 211,022 86.67 19,739 8.11
PAYSOP 165,595 66.91 81,892 33.09 - -
------------ ------------ ------------
Total $ 2,238,950 $ 5,789,567 $ 3,024,496
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
16
<PAGE>
BELL ATLANTIC SAVINGS AND SECURITY PLAN FOR
ASSOCIATES OF BELL ATLANTIC SOUTH
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(DOLLARS IN THOUSANDS)
The following table reflects the investments that represent 5% or more
of the net assets in the Master Trust as of December 31, 1998:
<TABLE>
<CAPTION>
1998
-------------
<S> <C>
Bell Atlantic Corporation common shares $ 8,324,047
</TABLE>
At December 31, 1997, the fair value of the BASSP's investments were as
follows:
<TABLE>
<CAPTION>
1997
-------------
<S> <C>
Bell Atlantic Shares Fund:
Bell Atlantic Corporation common shares $ 1,438,211 *
BT Pyramid Government Securities Cash Fund 12,094
Government Money Market Fund:
BT Pyramid Government Securities Cash Fund 11,993
Short-Term Fixed Income Fund:
Contracts with insurance companies and commercial banks 113,471 *
BT Pyramid Government Securities Cash Fund 176,608 *
U.S. Bond Market Index Fund:
Fund shares 9,286
BT Pyramid Government Securities Cash Fund 163
U.S. Equity Index Fund:
Fund shares 117,436 *
BT Pyramid Government Securities Cash Fund 1,056
International Equity Index Fund:
Fund shares 22,507
BT Pyramid Government Securities Cash Fund 228
Loan Fund:
Loans receivable from participants 40,598
ESOP Unallocated Shares Fund:
Bell Atlantic Corporation common shares 175,651 *
BT Pyramid Government Securities Cash Fund 2,824
-------------
Total investments $ 2,122,126
-------------
</TABLE>
*Indicates investments that represent 5% or more of the net assets in
the plan as of December 31, 1997.
17
<PAGE>
BELL ATLANTIC SAVINGS AND SECURITY PLAN FOR
ASSOCIATES OF BELL ATLANTIC SOUTH
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(DOLLARS IN THOUSANDS)
INVESTMENT INCOME
Investment income and expenses are allocated to the BASSP'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 investments held in specific accounts for the defined
contribution plans is allocated to each plan's Fund options daily in
accordance with each plan's respective percentage of interest.
The allocated net investment income to the BASSP's Fund options for the
year ended December 31, 1998 were as follows:
<TABLE>
<CAPTION>
DIVIDENDS ON
BELL ATLANTIC 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, 1998:
Bell Atlantic Shares Fund $ 560 $ 44,575 $ - $ 110,756 $ - $ 155,891
Government Money Market Fund 1,091 - - - - 1,091
Passive U.S. Equity Index 261 - 1,940 31,873 3 34,077
Fund
Passive International Equity
Index Fund 25 - - 4,693 - 4,718
Income Fund 16,708 - - 21 - 16,729
Employee Stock Ownership
Plan:
Allocated 30 - 4,879 80,094 - 85,003
Unallocated (6) - 4,170 (7,656) - (3,492)
U.S. Bond Market Index Fund 7 - - 1,172 - 1,179
Active U.S. Equity Fund 8 - 139 1,066 - 1,213
U.S. Balanced Fund 135 - 61 528 - 724
Global Balanced Fund 22 - 16 109 - 147
Active International Equity 3 - 31 38 (3) 69
Fund
U.S. Small Capitalization 12 - 35 174 - 221
Fund
PAYSOP 95 - 5,054 23,303 - 28,452
-------- ---------- --------- ---------- ------ -----------
Total $ 18,951 $ 44,575 $ 16,325 $ 246,171 $ - $ 326,022
-------- ---------- --------- ---------- ------ -----------
</TABLE>
BASSP'S SHARE OF MASTER TRUST INVESTMENT ACTIVITIES
On March 31, 1997, the Master Savings Trust was dissolved. The BASSP's
allocated share of Master Savings Trust investment activities is based
upon the total of each individual plan participant's share of the
Master Savings Trust investment activities during the period from
January 1, 1997 until March 31, 1997.
18
<PAGE>
BELL ATLANTIC SAVINGS AND SECURITY PLAN FOR
ASSOCIATES OF BELL ATLANTIC SOUTH
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(DOLLARS IN THOUSANDS)
The Master Savings Trust's investment activities for the year ended
December 31, 1997 were as follows:
<TABLE>
<S> <C>
Investment Activities:
Dividends on Bell Atlantic Corporation common shares:
Non-ESOP shares $ 23,881
ESOP shares 4,964
Other dividends 3,005
Short-Term Fixed Income Fund* (BASP) income 4,599
Short-Term Fixed Income Fund* (BASSP) income 2,497
Other interest 3,121
Net (depreciation) in value of investments (172,237)
----------------
Net investment activities $ (130,170)
----------------
----------------
Allocated share of net investment activities:
BASP $ (61,384)
BASSP (68,786)
</TABLE>
*Formerly Interest Income Fund
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 BASSP's assets and speculation are prohibited as
stated in the BASSP plan documents. Offsetting currency positions are
not permitted to exceed the level of exposure in the BASSP'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.
19
<PAGE>
BELL ATLANTIC SAVINGS AND SECURITY PLAN FOR
ASSOCIATES OF BELL ATLANTIC SOUTH
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(DOLLARS IN THOUSANDS)
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 BASSP's forward
contracts is equal to any gains which have not been settled as of the
BASSP's year end. The credit risk of the BASSP'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 BASSP.
All derivative activity relating to the BASSP is within the Master
Trust pooled accounts. The Master Trust pooled accounts' derivative
activity is allocated to the BASSP in accordance with the BASSP'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 for the BASSP.
The notional values and fair values of the derivative activity used for
trading purposes held by the BASSP at December 31, 1998 were as
follows:
<TABLE>
<CAPTION>
1998
----
<S> <C>
Domestic Equity Futures Contracts:
Notional values $ 1,187
Fair values 1,253
Fixed Income Futures Contracts:
Notional values -
Fair values -
Forward Foreign Currency Payable Contracts:
Notional values 14
Fair values 15
Forward Foreign Currency Receivable Contracts:
Notional values 14
Fair values 15
</TABLE>
20
<PAGE>
BELL ATLANTIC SAVINGS AND SECURITY PLAN FOR
ASSOCIATES OF BELL ATLANTIC SOUTH
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(DOLLARS IN THOUSANDS)
The average fair values of the derivative activity used for trading
purposes held by the BASSP during the year ended December 31, 1998 were
as follows:
<TABLE>
<CAPTION>
1998
----------
<S> <C>
Average Fair Values:
Domestic Equity Futures Contracts $ 871
Fixed Income Futures Contracts -
Forward Foreign Currency Payable Contracts 20
Forward Foreign Currency Receivable Contracts 20
</TABLE>
The BASSP was allocated $339 in 1998 of net trading losses from futures
contracts. Net trading losses allocated to the BASSP from foreign
exchange contracts totalled $16,521 in 1998.
5. NUMBER AND VALUE OF UNITS
The interest of an employee in each Fund of the BASSP, with the
exception of the Loan Fund, is represented by units as described in
Section 8 of the BASSP plan document. In the first six months of 1998,
a participant's unit value is determined daily by dividing each Fund's
adjusted net assets, as defined in the BASSP plan document, by the
number of outstanding units. Effective July 1, 1998, unit values
reflect a Fund's gross asset value , but the unit value is not
calculated to be net of expenses chargeable to the Fund. Effective
July 1, 1998, therefore, the disbursement of plan expenses from the
Master Trust results in a commensurate reduction in the number of
units each participant holds in his/her account.
21
<PAGE>
BELL ATLANTIC SAVINGS AND SECURITY PLAN FOR
ASSOCIATES OF BELL ATLANTIC SOUTH
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(DOLLARS IN THOUSANDS)
The number and value of units at December 31, 1998 in the Master Trust
and December 31, 1997 in the Master Savings Trust were as follows:
<TABLE>
<CAPTION>
1998
--------------------------------
NUMBER VALUE
OF UNITS PER UNIT
--------------------------------
<S> <C> <C>
Bell Atlantic Shares Fund 94,365,920 $ 11.9764
Government Money Market Fund 1,486,213 10.5604
Passive International Equity Index Fund 1,840,823 12.4754
Passive U.S. Equity Index Fund 5,641,195 28.9444
U.S. Bond Market Index Fund 1,171,365 10.8523
Income Fund 22,055,681 12.0578
Employee Stock Ownership Plan 31,713,964 17.1293
Active U.S. Equity Fund 481,045 25.2970
U.S. Balanced Fund 442,576 21.1670
Global Balanced Fund 96,312 20.4128
Active International Equity Fund 141,727 13.9070
U.S. Small Capitalization Fund 328,247 19.9819
PAYSOP 13,686,442 12.0992
</TABLE>
<TABLE>
<CAPTION>
1997
---------------------------
NUMBER VALUE
OF UNITS PER UNIT
----------- ----------
<S> <C> <C>
Bell Atlantic Shares Fund 195,662,455 $ 7.38
Government Money Market Fund 8,531,523 1.46
Short-Term Fixed Income Fund 52,307,024 5.42
U.S. Bond Market Index Fund 6,301,488 1.54
U.S. Equity Index Fund 37,119,189 3.21
International Equity Index Fund 12,802,758 1.71
</TABLE>
Continued
22
<PAGE>
BELL ATLANTIC SAVINGS AND SECURITY PLAN FOR
ASSOCIATES OF BELL ATLANTIC SOUTH
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(DOLLARS IN THOUSANDS)
The number and value of units at each month end, which are unaudited, carried to
the fourth decimal place, were as follows:
<TABLE>
<CAPTION>
BELL ATLANTIC GOVERNMENT MONEY PASSIVE US BOND MARKET INCOME FUND
SHARES FUND MARKET FUND US EQUITY FUND INDEX FUND
---------------------- --------------------- --------------------- -------------------- -------------------
1998 NUMBER VALUE NUMBER VALUE NUMBER VALUE NUMBER VALUE NUMBER VALUE
OF PER OF PER OF PER OF PER OF PER
UNITS UNIT UNITS UNIT UNITS UNIT UNITS UNIT UNITS UNIT
- ----------- ---------------------- --------------------- --------------------- -------------------- -------------------
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January - $ 10.2894 1,296,889 10.0504 5,257,908 $ 22.8042 999,650 $ 10.1448 24,292,981 11.4017
February - 9.9770 1,298,650 10.0934 5,282,848 24.4512 1,036,716 10.1130 23,904,637 11.4580
March - 11.3622 1,258,808 10.1406 5,273,469 25.6839 1,038,200 10.1311 23,522,110 11.5166
April - 10.4833 1,258,679 10.1849 5,304,738 25.9430 1,032,567 10.1817 23,242,995 11.5731
May - 10.2619 1,210,564 10.2266 5,287,870 25.4983 988,178 10.2749 22,786,639 11.6324
June - 10.2191 1,194,121 10.2756 5,306,376 26.5039 976,521 10.3638 22,487,687 11.6915
July 108,138,021 10.2501 1,154,125 10.3245 5,303,802 26.2392 970,157 10.3866 22,122,847 11.7525
August 107,391,021 9.9256 1,246,532 10.3764 5,356,256 22.4414 1,024,184 10.5643 22,016,414 11.8138
September 106,920,913 10.8865 1,340,291 10.4130 6,370,272 23.8416 1,076,409 10.8213 21,966,639 11.8747
October 106,680,664 12.0150 1,429,770 10.4562 5,419,491 25.7863 1,130,287 10.7564 22,110,737 11.9361
November 105,816,638 12.5727 1,446,093 10.5137 5,436,224 27.3340 1,142,380 10.8002 21,993,186 11.9961
</TABLE>
<TABLE>
<CAPTION>
EMPLOYEE PAYSOP FUND PASSIVE INTERNATIONAL ACTIVE U.S. U.S. BALANCED FUND
STOCK ONWERSHIP EQUITY INDEX FUND EQUITY FUND
PLAN FUND
---------------------- --------------------- --------------------- -------------------- ---------------------
1998 NUMBER VALUE NUMBER VALUE NUMBER VALUE NUMBER VALUE NUMBER VALUE
OF PER OF PER OF PER OF PER OF PER
UNITS UNIT UNITS UNIT UNITS UNIT UNITS UNIT UNITS UNIT
- ----------- ---------------------- --------------------- --------------------- -------------------- ---------------------
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January - $ 14.6172 N/A N/A 1,944,011 $ 10.3939 N/A $ 22.0695 N/A 18.5904
February - 14.1739 N/A N/A 1,832,538 11.1220 349,624 23.6548 292,802 19.4210
March - 16.1573 N/A N/A 1,801,168 11.5747 402,085 24.8305 343,582 20.0667
April - 14.8849 N/A N/A 1,816,333 11.7372 430,636 24.8847 366,551 20.1220
May - 14.5779 N/A N/A 1,814,388 11.9271 432,012 24.3555 371,726 19.9613
June - 5.5127 14,449,432 10.2345 1,821,858 12.0044 447,296 24.8561 378,292 20.3110
July 22,877,924 14.5557 14,013,905 10.2762 1,816,327 12.1440 446,935 24.0303 378,274 19.9115
August 22,916,786 14.1572 13,850,694 10.0035 1,804,600 10.5998 446,938 20.1161 398,537 18.1021
September 23,025,221 15.5408 13,701,871 10.9818 1,814,688 10.2894 459,782 21.3394 412,718 18.9705
October 23,182,845 17.1684 13,531,463 12.1295 1,830,163 11.4226 463,887 22.8296 416,167 19.7653
November 23,158,893 17.9712 13,377,786 12.6959 1,829,295 12.0283 469,423 24.5249 426,047 20.4791
</TABLE>
<TABLE>
<CAPTION>
GLOBAL ACTIVE U.S. SMALL
BALANCED FUND INTERNATIONAL CAPITALIZATION FUND
EQUITY FUND
---------------------- --------------------- --------------------------
1998 NUMBER VALUE NUMBER VALUE NUMBER VALUE
OF PER OF PER OF PER
UNITS UNIT UNITS UNIT UNITS UNIT
- ----------- ---------------------- --------------------- --------------------------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
January N/A $ 18.1597 N/A 13.7630 N/A $ 19.4036
February 62,982 19.0630 92,377 14.6206 222,912 20.9504
March 72,291 19.7584 107,413 15.3474 248,650 21.8047
April 72,487 19.8295 119,025 15.3808 252,227 22.2694
May 79,001 19.6210 123,918 15.0538 254,266 21.1641
June 79,711 19.8152 130,760 14.8515 263,987 21.3178
July 80,490 19.5002 129,274 14.9344 279,106 19.6289
August 84,895 17.4188 127,397 12.5228 284,086 15.7307
September 88,300 18.0950 135,130 12.2756 289,253 16.6310
October 89,003 19.0585 138,665 13.3365 308,684 17.4633
November 89,271 19.8065 133,311 13.8731 3,141,311 18.6830
</TABLE>
Continued
23
<PAGE>
BELL ATLANTIC SAVINGS AND SECURITY PLAN FOR
ASSOCIATES OF BELL ATLANTIC SOUTH
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(DOLLARS IN THOUSANDS)
6. TAX DETERMINATION
On November 13, 1997, the Internal Revenue Service issued a ruling that
the BASSP meets the requirements of Section 401(a) of the Code and is
exempt from Federal income taxes under Section 501(a) of the Code and
that the ESOP portion of the BASSP qualifies as an employee stock
ownership plan within the meaning of Section 4975(e)(7) of the Code.
The BASSP has been amended since receiving the determination letter.
However, the BASSP administrator and the BASSP's tax counsel believe
that the BASSP is designed and is currently being operated in
compliance with the applicable requirements of the Code.
7. INDEBTEDNESS
BASSP LEVERAGED ESOP NOTES PAYABLE
The LESOP notes payable originally bore an 8.17% interest rate subject
to adjustment due to changes in the Federal income tax rate or changes
in the Federal law regarding the alternative minimum tax. Portions of
the LESOP note were refinanced in 1998 for $11M at 5.5%. Interest and
principal payments are guaranteed by Bell Atlantic and are due on
January 1 and July 1 of each year; principal payments began July 1,
1990.
The following table displays the principal maturities under the note
with the final payment due July 1, 2005.
<TABLE>
<S> <C>
1999 $ 51,195
2000 28,515
2001 1,480
2002 1,562
2003 1,649
Thereafter 3,580
-------------
$ 87,981
-------------
</TABLE>
The fair value of the LESOP notes payable is based on quoted market
prices for the same or similar instruments. As of December 31, 1998,
the note payable carrying amount was $87,981 and the estimated fair
value was $80,525.
8. RELATED PARTY TRANSACTIONS
BAAMCO, a wholly owned subsidiary of Bell Atlantic, is the investment
advisor for the Telecommunications Fund, Passive U.S. Equity Index
Fund, and Income Fund and therefore qualifies as a party-in-interest.
BAAMCO received no compensation from the BASSP for the investment
advisory services rendered to the BASSP.
Continued
24
<PAGE>
BELL ATLANTIC SAVINGS AND SECURITY PLAN FOR
ASSOCIATES OF BELL ATLANTIC SOUTH
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(DOLLARS IN THOUSANDS)
9. CONCENTRATIONS OF CREDIT RISK
Financial instruments that potentially subject the BASSP to
concentrations of credit risk consist principally of investment
contracts with insurance companies and other financial institutions.
The BASSP places its investment contracts with high-credit quality
insurance companies and financial institutions in order to limit credit
exposure. The BASSP regularly monitors the financial stability of the
financial institutions and insurance companies.
10. PLAN AMENDMENTS
Effective July 1, 1998, the BASSP was amended for conforming changes in
certain administrative rules.
Effective January 1, 1998, the portion of the PAYSOP which contains
accounts for BASSP associate employees was merged into the BASSP.
Effective January 1, 1998, the BASSP was amended to offer new
investment funds (See Note 1).
11. RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500
The following is a reconciliation of net assets available for plan
benefits per the financial statements to the Form 5500:
<TABLE>
<CAPTION>
1998 1997
---------------- ----------------
(Dollars in Thousands)
<S> <C> <C>
Net assets available for plan benefits per the financial
statements $ 2,434,264 $ 1,999,513
Less: Amounts allocated to withdrawing participants 10,330 13,461
---------------- ----------------
Net assets available for plan benefits per the Form 5500 $ 2,423,934 $ 1,986,052
================ ================
</TABLE>
Continued
25
<PAGE>
BELL ATLANTIC SAVINGS AND SECURITY PLAN FOR
ASSOCIATES OF BELL ATLANTIC SOUTH
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(DOLLARS IN THOUSANDS)
The following is a reconciliation of benefits paid to participants per
the financial statements to the Form 5500:
<TABLE>
<CAPTION>
1998 1997
------------ -------------
(Dollars in Thousands)
<S> <C> <C>
Benefits paid to participants per the financial statements $ 243,045 $ 105,840
Add: Amounts allocated to withdrawing participants at
December 31, 1998 and 1997, respectively 10,330 13,461
Less: Amounts allocated to withdrawing participants at
December 31, 1997 and 1996, respectively 13,461 7,766
------------ -------------
Benefits paid to participants per the Form 5500 $ 239,914 $ 111,535
============ =============
</TABLE>
12. TRANSFERS
The line in the Statement of Changes in Net Assets described as
"Transfer of ESOP Shares and participants' balances--net" includes the
effect of LESOP debt service activity, the allocation of Bell Atlantic
shares from the LESOP to the Bell Atlantic Shares Fund,
participant-directed transfers between investment options, and asset
transfers between the BASSP and other defined contribution plans.
26
<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.
Bell Atlantic Savings and Security Plan
for Associates of Bell Atlantic South
By: /S/ D.J. Sacco
--------------------------------
D. J. Sacco
(Chairman, Bell Atlantic Corporate
Employees' Benefit Committee)
Date: June 30, 1999
27
