-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VjKKcC640tARbC9oaPKsFQqOCDicHWB3KN5U3G35JZEZiDrmL2iPNuncCpOlnlt8 ugQwXQL8G8Cj9QBfoRIjVw== /in/edgar/work/20000913/0000950134-00-007863/0000950134-00-007863.txt : 20000922 0000950134-00-007863.hdr.sgml : 20000922 ACCESSION NUMBER: 0000950134-00-007863 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000630 ITEM INFORMATION: FILED AS OF DATE: 20000913 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BELL ATLANTIC CORP CENTRAL INDEX KEY: 0000732712 STANDARD INDUSTRIAL CLASSIFICATION: [4813 ] IRS NUMBER: 232259884 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 001-08606 FILM NUMBER: 722499 BUSINESS ADDRESS: STREET 1: 1095 AVE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10036 BUSINESS PHONE: 2123952121 MAIL ADDRESS: STREET 1: 1717 ARCH ST 47TH FL STREET 2: 1717 ARCH ST 47TH FL CITY: PHILADELPHIA STATE: PA ZIP: 19103 8-K/A 1 d80265a1e8-ka.txt AMENDMENT NO. 1 TO FORM 8-K 1 ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K/A CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report: June 30, 2000 (Date of earliest event reported) BELL ATLANTIC CORPORATION (D/B/A VERIZON COMMUNICATIONS) (Exact name of registrant as specified in its charter) Delaware 1-8606 23-2259884 (State or other jurisdiction of incorporation) (Commission File Number) (I.R.S. Employer Identification No.) 1095 Avenue of the Americas, New York, New York 10036 (Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 395-2121 Not applicable (Former name or former address, if changed since last report) ================================================================================ 2 Bell Atlantic Corporation hereby files Amendment No. 1 to its Form 8-K (date of report: June 30, 2000) filed with the Securities and Exchange Commission on September 13, 2000. Item 7. Financial Statements, Pro Forma Financial Information and Exhibits. (a) Financial Statements. None (b) Pro Forma Financial Information. The (i) pro forma combined condensed statements of income of Bell Atlantic Corporation ("Bell Atlantic") and GTE Corporation ("GTE") for the three months ended March 31, 2000 and 1999, and the years ended December 31, 1999, 1998 and 1997; and (ii) pro forma combined condensed balance sheet of Bell Atlantic and GTE as of March 31, 2000 are attached hereto as Exhibit 99.1. (c) Exhibits. 99.1 The (i) pro forma combined condensed statements of income of Bell Atlantic and GTE for the three months ended March 31, 2000 and 1999, and the years ended December 31, 1999, 1998 and 1997; and (ii) pro forma combined condensed balance sheet of Bell Atlantic and GTE as of March 31, 2000. 3 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Bell Atlantic Corporation ------------------------------- (Registrant) Date: September 13, 2000 /s/ Lawrence R. Whitman -------------------------- ------------------------------- Lawrence R. Whitman Vice President and Controller 4 EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION - ------- ----------- 99.1 The (i) pro forma combined condensed statements of income of Bell Atlantic and GTE for the three months ended March 31, 2000 and 1999, and the years ended December 31, 1999, 1998 and 1997; and (ii) pro forma combined condensed balance sheet of Bell Atlantic and GTE as of March 31, 2000.
EX-99.1 2 d80265a1ex99-1.txt PRO FORMA STATEMENT 1 EXHIBIT 99.1 Unaudited Pro Forma Combined Condensed Financial Statements The unaudited pro forma financial statements that follow were prepared in connection with the June 30, 2000 merger of Bell Atlantic Corporation (Bell Atlantic) and GTE Corporation (GTE) (the Merger). The combined company will be doing business as Verizon Communications. The unaudited pro forma combined condensed financial statements are presented using the pooling of interests method of accounting for the Merger. Under pooling of interests, the companies are treated as if they had always been combined for accounting and financial reporting purposes. These unaudited pro forma financial statements have been prepared from, and should be read in conjunction with, the historical consolidated financial statements and accompanying notes of Bell Atlantic and GTE, which are included in the companies' Annual Reports on Form 10-K for the year ended December 31, 1999 and the quarterly reports on Form 10-Q for the quarterly period ended March 31, 2000. The unaudited pro forma financial information is presented for illustration purposes only and is not necessarily indicative of the operating results or financial position that would have occurred if the Merger had been completed at the dates indicated. The information is not indicative of the future operating results or financial position of the combined company. We prepared the unaudited pro forma combined condensed balance sheet by combining the balance sheets of Bell Atlantic and GTE at March 31, 2000, giving effect to the Merger as if it had occurred on March 31, 2000. The unaudited pro forma combined condensed statements of income give effect to the Merger as if it had occurred at the beginning of the earliest period presented. We also adjusted the combined financial statements for significant differences in accounting methods used by each company. These adjustments are described in the accompanying notes to the financial statements. Per the terms of the Merger, each share of GTE common stock was converted into the right to receive 1.22 shares of Bell Atlantic common stock. This exchange ratio was used in computing certain of the pro forma adjustments and in computing share and per share amounts in the accompanying unaudited pro forma combined financial information. The following pro forma financial statements do not reflect the disposal of businesses that were required by the Federal Communications Commission and the Department of Justice prior to their approval of the Merger. These disposals include the reduction of GTE's voting interest in Genuity to a level below 10% and domestic wireless property overlaps. Consequently, the balance sheet of Genuity was deconsolidated effective June 30, 2000 and we are accounting for our investment in Genuity of $2.5 billion using the cost method. The overlapping domestic wireless properties are classified as Net assets held for sale in the June 30, 2000 balance sheet. Furthermore, the following pro forma financial statements do not reflect the merger-related and severance costs, transition costs, or costs associated with other related actions, which were recorded in the second quarter of 2000 and are discussed below. Merger-Related and Severance Costs During the second quarter of 2000, the combined company recorded a pretax charge of $472 million ($378 million after-tax) for direct, incremental merger-related costs that we incurred in that quarter or had previously deferred, and $584 million ($371 million after-tax) for employee severance. The direct incremental merger costs include the following:
(Dollars in Millions) - --------------------- Compensation $ 210 Professional services 161 Other 101 ----- $ 472 =====
Compensation includes retention payments to employees that were contingent on the Merger close and payments to employees to satisfy contractual obligations triggered by the change in control. Professional services includes investment banking, legal, accounting, consulting and other advisory fees incurred to obtain federal and state regulatory approvals and take other actions necessary to complete the Merger. Other includes costs incurred to obtain shareholder approval of the Merger, register securities and communicate with shareholders, employees and regulatory authorities regarding Merger issues. 2 Employee severance costs, as recorded under Statement of Financial Accounting Standards (SFAS) No. 112, "Employers' Accounting for Postemployment Benefits," represent the benefit costs for the separation of approximately 5,500 management employees who are entitled to benefits under pre-existing separation plans, as well as an accrual of ongoing SFAS No. 112 obligations for GTE employees. Of these employees, approximately 5,200 are located in the United States and approximately 300 are located at various international locations. The separations are expected to occur as a result of consolidations and process enhancements within our operating segments. Transition Costs In addition to the direct merger-related and severance costs discussed above, over the next several years, we expect to incur substantial transition costs related to the Merger and the recently formed wireless joint venture, Verizon Wireless. These costs will be incurred to integrate systems, consolidate real estate, and relocate employees. They also include advertising and other costs to establish the Verizon brand. During the second quarter, we incurred approximately $172 million ($47 million after taxes and minority interests) of transition costs primarily related to the wireless joint venture. Other related actions During the second quarter of 2000, we also recorded various other charges for other actions in relation to the Merger or other strategic decisions. The following pro forma financial statements also do not reflect any of the anticipated revenue increases or expense or capital savings resulting from the integration of operations of GTE and Bell Atlantic. 3 BELL ATLANTIC CORPORATION AND GTE CORPORATION PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME (Unaudited) For the Three Months Ended March 31, 2000 (Dollars in Millions, Except Per Share Amounts)
Historical Historical Pro Forma Pro Forma Bell Atlantic GTE Adjustments Combined ------------- ---------- ----------- ---------- Operating Revenues $ 8,534 $ 6,100 $ (85) (2a) $ 14,549 Operating Expenses 6,329 4,515 (85) (2a) (6) (2b) (16) (2c) (17) (2d) 10,720 ---------- ---------- ---------- ---------- Operating Income 2,205 1,585 39 3,829 Income (loss) from unconsolidated businesses 123 120 (8) (2a) 1 (2c) (5) (2d) 231 Other income and (expense), net 71 9 (2) (2d) 78 Interest expense 370 404 774 Minority interest (16) (18) 8 (2a) (26) Mark-to-market adjustment for exchangeable notes (825) -- (825) Provision for income taxes 457 476 14 (2g) 947 ---------- ---------- ---------- ---------- Income from continuing operations 731 816 19 1,566 Extraordinary charge -- (9) (9) ---------- ---------- ---------- ---------- Net Income 731 807 19 1,557 Redemption of subsidiary preferred stock -- (8) (8) ---------- ---------- ---------- ---------- Net Income Available to Common Shareowners $ 731 $ 799 $ 19 $ 1,549 ========== ========== ========== ========== Basic Earnings per Common Share: Before extraordinary charges $ 0.47 $ 0.84 $ 0.09 $ 0.57 Extraordinary charges -- (.01) -- -- ---------- ---------- ---------- ---------- Net Income $ 0.47 $ 0.83 $ 0.09 $ 0.57 ========== ========== ========== ========== Diluted Earnings per Common Share: Before extraordinary charge $ 0.46 $ 0.84 $ 0.09 (2f) $ 0.56 Extraordinary charge -- (0.01) -- -- ---------- ---------- ---------- ---------- Net Income $ 0.46 $ 0.83 $ 0.09 $ 0.56 ========== ========== ========== ========== Weighted average number of common shares- basic (in millions) 1,551 962 212 2,725 assuming dilution (in millions) 1,575 968 213 (2f) 2,756 ========== ========== ========== ==========
See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial Statements. 4 \ BELL ATLANTIC CORPORATION AND GTE CORPORATION PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME (Unaudited) For the Three Months Ended March 31, 1999 (Dollars in Millions, Except Per Share Amounts)
Historical Historical Pro Forma Pro Forma Bell Atlantic GTE Adjustments Combined ------------- ---------- ----------- ---------- Operating Revenues $ 7,967 $ 5,879 $ (85) (2a) $ 13,761 Operating Expenses 5,888 4,197 (85) (2a) (14) (2b) (6) (2c) (6) (2d) 9,974 ---------- ---------- ---------- ---------- Operating Income 2,079 1,682 26 3,787 Income (loss) from unconsolidated businesses 34 105 (6) (2a) 1 (2c) (1) (2d) 133 Other income and (expense), net 40 12 52 Interest expense 315 324 639 Minority interest (22) (32) 6 (2a) (48) Provision for income taxes 674 531 8 (2g) 1,213 ---------- ---------- ---------- ---------- Income from continuing operations 1,142 912 18 2,072 Extraordinary charge -- (30) (30) ---------- ---------- ---------- ---------- Net Income $ 1,142 $ 882 $ 18 $ 2,042 ========== ========== ========== ========== Basic Earnings per Common Share Before Exraordinary Charges $ 0.74 $ 0.94 $ 0.08 (2f) $ 0.76 Extraordinary charges -- (0.03) -- (0.01) ---------- ---------- ---------- ---------- Net Income $ 0.74 $ 0.91 $ 0.08 $ 0.75 ========== ========== ========== ========== Diluted Earnings per Common Share: Before extraordinary charge $ 0.72 $ 0.93 $ 0.08 (2f) $ 0.75 Extraordinary charge -- (0.03) -- (0.01) ---------- ---------- ---------- ---------- Net Income $ 0.72 $ 0.90 $ 0.08 $ 0.74 ========== ========== ========== ========== Weighted average number of common shares- Basic 1,553 969 213 (2f) 2,735 assuming dilution (in millions) 1,582 976 216 2,774 ========== ========== ========== ==========
See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial Statements. 5 BELL ATLANTIC CORPORATION AND GTE CORPORATION PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME (Unaudited) For the Year Ended December 31, 1999 (Dollars in Millions, Except Per Share Amounts)
Historical Historical Pro Forma Pro Forma Bell Atlantic GTE Adjustments Combined ------------- ---------- ----------- ---------- Operating Revenues $ 33,174 $ 25,336 $ (316) (2a) $ 58,194 Operating Expenses 24,626 18,000 (316) (2a) (24) (2b) (59) (2c) 14 (2d) 42,241 ---------- ---------- ---------- ---------- Operating Income 8,548 7,336 69 15,953 Income (loss) from unconsolidated businesses 143 432 (44) (2a) 2 (2c) (22) (2d) 511 Other income and (expense), net 82 61 143 Interest expense 1,263 1,353 2,616 Minority interest (81) (122) 44 (2a) (159) Mark-to-market adjustment for exchangeable notes (664) -- (664) Provision for income taxes 2,557 2,291 24 (2g) 4,872 ---------- ---------- ---------- ---------- Income from continuing operations 4,208 4,063 25 8,296 Extraordinary charges (6) (30) (36) ---------- ---------- ---------- ---------- Net Income $ 4,202 $ 4,033 $ 25 $ 8,260 ========== ========== ========== ========== Basic Earnings per Common Share: Before extraordinary charge $ 2.72 $ 4.18 $ 0.12 (2f) $ 3.03 Extraordinary charges (.01) (.03) -- (.01) ---------- ---------- ---------- ---------- Net Income $ 2.71 $ 4.15 $ 0.12 $ 3.02 ========== ========== ========== ========== Diluted Earnings per Common Share: Before extraordinary charges $ 2.66 $ 4.15 $ 0.12 (2f) $ 2.98 Extraordinary charges (0.01) (0.03) -- (0.01) ---------- ---------- ---------- ---------- Net Income $ 2.65 $ 4.12 $ 0.12 $ 2.97 ========== ========== ========== ========== Weighted average number of common shares- basic (in millions) 1,553 972 214 (2f) 2,739 ========== ========== ========== ========== assuming dilution (in millions) 1,583 979 215 2,777 ========== ========== ========== ==========
See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial Statements. 6 BELL ATLANTIC CORPORATION AND GTE CORPORATION PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME (Unaudited) For the Year Ended December 31, 1998 (Dollars in Millions, Except Per Share Amounts)
Historical Historical Pro Forma Pro Forma Bell Atlantic GTE Adjustments Combined ------------- ---------- ----------- ---------- Operating Revenues $ 31,566 $ 25,753 $ (244) (2a) $ 57,075 Operating Expenses 24,895 20,417 (244) (2a) (24) (2b) 218 (2c) 57 (2d) 45,319 ---------- ---------- ---------- ---------- Operating Income 6,671 5,336 (251) 11,756 Income (loss) from unconsolidated businesses (415) 240 (42) (2a) 2 (2c) (1) (2d) (216) Other income and (expense), net 153 128 281 Interest expense 1,335 1,370 2,705 Minority interest (75) (289) 42 (2a) 3 (2c) 4 (2d) (315) Provision for income taxes 2,008 1,553 (86) (2g) 3,475 ---------- ---------- ---------- ---------- Income from continuing operations 2,991 2,492 (157) 5,326 Extraordinary charges (26) (320) (346) ---------- ---------- ---------- ---------- Net Income 2,965 2,172 (157) 4,980 ---------- ---------- ---------- ---------- Redemption of minority interest (30) -- (30) Redemption of investee preferred stock (2) -- (2) ---------- ---------- ---------- ---------- Net Income Available to Common Shareowners $ 2,933 $ 2,172 $ (157) $ 4,948 ========== ========== ========== ========== Basic Earnings per Common Share: Before extraordinary charges $ 1.90 $ 2.59 $ (0.74) (2f) $ 1.94 Extraordinary charges (.01) (.33) -- (0.13) ---------- ---------- ---------- ---------- Net Income $ 1.89 $ 2.26 $ (0.74) $ 1.81 ========== ========== ========== ========== Diluted Earnings per Common Share: Before extraordinary charges $ 1.87 $ 2.57 $ (0.74) (2f) $ 1.92 Extraordinary charges (0.01) (0.33) -- (0.13) ---------- ---------- ---------- ---------- Net Income $ 1.86 $ 2.24 $ (0.74) $ 1.79 ========== ========== ========== ========== Weighted average number of common shares- basic (in millions) 1,553 963 212 (2f) 2,728 ========== ========== ========== ========== assuming dilution (in millions) 1,578 968 213 2,759 ========== ========== ========== ==========
See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial Statements. 7 BELL ATLANTIC CORPORATION AND GTE CORPORATION PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME (Unaudited) For the Year Ended December 31, 1997 (Dollars in Millions, Except Per Share Amounts)
Historical Historical Pro Forma Pro Forma Bell Atlantic GTE Adjustments Combined ------------- ---------- ----------- ---------- Operating Revenues $ 30,194 $ 23,625 $ (244) (2a) $ 53,575 Operating Expenses 24,836 18,014 (244) (2a) (12) (2b) 124 (2c) (24) (2d) 42,694 ---------- ---------- ---------- ---------- Operating Income 5,358 5,611 (88) 10,881 Income (loss) from unconsolidated businesses (124) 217 (37) (2a) (8) (2c) 48 Other income and (expense), net 75 70 145 Interest expense 1,230 1,235 2,465 Minority interest (95) (245) 37 (2a) (303) Provision for income taxes 1,529 1,624 (28) (2g) 3,125 ---------- ---------- ---------- ---------- Income from continuing operations 2,455 2,794 (68) 5,181 ---------- ---------- ---------- ---------- Net Income $ 2,455 $ 2,794 $ (68) $ 5,181 ========== ========== ========== ========== Basic Earnings per Common Share $ 1.58 $ 2.92 $ (0.32) (2f) $ 1.90 ========== ========== ========== ========== Diluted Earnings per Common Share $ 1.56 $ 2.90 $ (0.32) (2f) $ 1.89 ========== ========== ========== ========== Weighted average number of common shares- Basic (in millions) 1,552 958 211 (2f) 2,721 ========== ========== ========== ========== assuming dilution (in millions) 1,571 962 212 2,745 ========== ========== ========== ==========
See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial Statements. 8 BELL ATLANTIC CORPORATION AND GTE CORPORATION PRO FORMA COMBINED CONDENSED BALANCE SHEET (Unaudited) As of March 31, 2000 (Dollars in Millions)
Historical Historical Pro Forma Pro Forma Bell Atlantic GTE Adjustments Combined ------------- ---------- ----------- ---------- Assets Current assets Cash and temporary cash investments $ 360 $ 344 $ $ 704 Accounts receivable, net 7,085 4,958 (53)(2a) 11,990 Net assets held for sale -- 1,773 1,773 Other current assets 2,415 1,735 (14)(2a) (47)(2d) 4,089 ---------- ---------- ---------- ---------- 9,860 8,810 (114) 18,556 ---------- ---------- ---------- ---------- Plant, property and equipment, net 39,749 23,386 (68)(2b) (262)(2c) (5)(2d) 62,800 Investments in unconsolidated businesses 8,207 4,062 (5)(2c) (28)(2d) 12,236 Other assets 8,236 14,756 (3)(2c) (79)(2d) 22,910 ---------- ---------- ---------- ---------- Total assets $ 66,052 $ 51,014 $ (564) $ 116,502 ========== ========== ========== ========== Liabilities and Shareowners' Investment Current liabilities Debt maturing within one year $ 5,812 $ 10,795 $ $ 16,607 Accounts payable and accrued liabilities 7,000 4,258 (53)(2a) 2 (2d) 11,207 Other current liabilities 1,489 2,281 10 (2d) 3,780 ---------- ---------- ---------- ---------- 14,301 17,334 (41) 31,594 ---------- ---------- ---------- ---------- Long-term debt 20,149 13,643 33,792 Employee benefit obligations 8,958 4,411 13,369 Deferred credits and other liabilities 6,012 4,927 (14)(2a) (26)(2b) (96)(2c) (76)(2d) 10,727 Shareowners' investment Common stock (2,748,391,520 shares issued) 158 50 67 (2e) 275 Contributed capital 13,691 8,671 (2,565)(2e) 19,797 Reinvested earnings 2,895 5,310 (311)(2h) 7,894 Accumulated other comprehensive income (loss) 1,348 (397) 1 (2c) (1)(2d) 951 ---------- ---------- ---------- ---------- 18,092 13,634 (2,809) 28,917 Less common stock in treasury, at cost 1,026 2,498 (2,498)(2e) 1,026 Less deferred compensation - employee stock ownership plans 434 437 871 ---------- ---------- ---------- ---------- Total shareowners' investment 16,632 10,699 (311) 27,020 ---------- ---------- ---------- ---------- Total liabilities and shareowners' investment $ 66,052 $ 51,014 $ (564) $ 116,502 ========== ========== ========== ==========
See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial Statements. 9 BELL ATLANTIC CORPORATION AND GTE CORPORATION NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS Note 1 - Reclassifications Certain reclassifications have been made to the unaudited historical financial statements of Bell Atlantic Corporation (Bell Atlantic) and GTE Corporation (GTE) to conform to the presentation used by Verizon Communications following the Merger. Note 2 - Pro Forma Adjustments (a) Pro forma adjustments have been made to eliminate intercompany transactions between Bell Atlantic and GTE. (b) Pro forma adjustments have been made to conform GTE to Bell Atlantic's policy of expensing general support assets costing under $2,000, retroactive to January 1, 1996. The Federal Communications Commission raised the capitalization limit for general support assets from $500 to $2,000, and local exchange carriers were given the option to implement the change on January 1, 1998 or apply retroactively. Bell Atlantic adopted the change effective January 1, 1996 for external reporting purposes and wrote off the embedded base. GTE adopted the change effective January 1, 1998 and amortized the embedded base over a five year period. Adjustments have been made to eliminate the capitalization and associated amortization effect of GTE's embedded base. (c) Pro forma adjustments have been made to conform GTE to Bell Atlantic's policy of adoption of Statement of Position (SOP) 98-1 "Accounting for the Costs of Computer Software Developed or Obtained for Internal Use." Prior to SOP 98-1, GTE capitalized non-network software in 1997 and 1998, while Bell Atlantic expensed non-network software. Adjustments have been made to eliminate the capitalization and associated amortization effect of non-network software capitalized by GTE during 1997 and 1998. (d) Other individually insignificant pro forma adjustments have been made to conform the accounting policies of Bell Atlantic and GTE. (e) The terms of the merger agreement specify that each outstanding share of GTE common stock is converted into 1.22 shares of Bell Atlantic common stock. A pro forma adjustment has been made to equity, which represents the issuance of new shares of Bell Atlantic common stock in exchange for all outstanding shares of GTE common stock at the 1.22 exchange rate. The adjustment also reflects the cancellation of shares of GTE treasury stock, but does not reflect the impact of fractional shares. (f) Pro forma adjustments have been made to the number of weighted average shares outstanding used in the calculation of basic and diluted earnings per share. The number of weighted average shares outstanding reflects the conversion of shares and share equivalents of GTE common stock into Bell Atlantic common stock in accordance with the Merger agreement. (g) Pro forma adjustments have been made for the estimated tax effects of the adjustments discussed in (a) - (d) above. (h) Pro forma adjustments have been made for the retained earnings effect on the pro forma adjustments discussed in (a) - (d) above. Note 3 - Common Stock Split Bell Atlantic issued a two-for-one split of Bell Atlantic common stock, effected in the form of a 100% stock dividend to shareholders of record on June 1, 1998 and paid on June 29, 1998. Shareowners' equity accounts were adjusted at the time of such issuance. The unaudited pro forma combined condensed financial statements give effect to this stock split as if it had occurred at the earliest period presented. -----END PRIVACY-ENHANCED MESSAGE-----