-----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, BWss5UK2XLTtlgCROvkWQGnM1+w3jMlRi+rQMJ5EPwcv1+MFFnzaZW6XA8gRLb4p AdQo6fF4+gHcHtXrPvaZxg== 0001021408-00-000280.txt : 20000203 0001021408-00-000280.hdr.sgml : 20000203 ACCESSION NUMBER: 0001021408-00-000280 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000124 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20000125 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BELL ATLANTIC CORP CENTRAL INDEX KEY: 0000732712 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813] IRS NUMBER: 232259884 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-08606 FILM NUMBER: 512463 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 1 FORM 8-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report: January 24, 2000 (Date of earliest event reported) BELL ATLANTIC CORPORATION (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) Item 5. Other Events ------------ Attached as an exhibit is the press release and financial tables issued by Bell Atlantic Corporation on January 24, 2000 announcing earnings for the fourth quarter of 1999 and the year ended December 31, 1999 and contained in its Investor Relations Bulletin. Item 7. Financial Statements and Exhibits --------------------------------- (c) Exhibits. 99 Press Release and financial tables, dated January 24, 2000, issued by Bell Atlantic Corporation and contained in its Investor Relations Bulletin. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. BELL ATLANTIC CORPORATION By: /s/ Doreen A. Toben -------------------------------- Doreen A. Toben Vice President - Controller Date: January 25, 2000 EXHIBIT INDEX Exhibit Number Description - ------ ----------- 99 Press Release and financial tables, dated January 24, 2000, issued by Bell Atlantic Corporation and contained in its Investor Relations Bulletin. EX-99 2 PRESS RELEASE DATED JANUARY 24, 2000 EXHIBIT 99 NEWS RELEASE [LOGO OF BELL ATLANTIC] FOR IMMEDIATE RELEASE Contact: January 24, 2000 Dave Frail 212-395-7726 David.Frail@BellAtlantic.com ---------------------------- Jim Crosson 212-395-2285 James.E.Crosson@BellAtlantic.com -------------------------------- Bell Atlantic Announces Fifth Consecutive Year Of Double-Digit Earnings Growth; Fourth Quarter Revenues Rise 6.6% on Strong Sales Adjusted EPS Increases 11.6% for Quarter, 10.7% for Year NEW YORK - Bell Atlantic Corp. (NYSE: BEL) announced today that fourth quarter adjusted earnings per diluted share (EPS) increased 11.6 percent, to 77 cents from 69 cents in fourth quarter 1998, as the company completed its fifth consecutive year of double-digit earnings growth. Adjusted EPS for 1999 rose 10.7 percent to $3.01, from $2.72 in 1998. Fourth quarter adjusted net income available to common shareowners increased 12.3 percent, to $1.2 billion from $1.1 billion in 1998, with 1999 adjusted net income available to common shareowners rising 10.9 percent, to $4.8 billion from $4.3 billion in 1998. "Our fourth quarter results, with the best revenue growth of the year in our core telecom business and industry-leading wireless performance, are an indication that the strategies we've put in place -- to focus on high-growth markets, build high-efficiency networks that help us grow vertically and diversify our revenue streams - are starting to pay off at the operational level," said Bell Atlantic Chairman and CEO Ivan Seidenberg. Highlights include: Bell Atlantic Earnings Release, p. 2 . Quarterly revenue growth of 6.6 percent, to $8.6 billion, and annual revenues totaling $33.2 billion, up 5.1 percent. . Strong fourth quarter Bell Atlantic Mobile growth, with 815,000 net customer additions, 363,000 through sales and 452,000 through the Frontier Cellular acquisition, and 23.1 percent revenue growth. . Best-ever quarterly International Wireless growth, with 533,000 proportionate net customer additions. . Data revenue growth in the quarter of 26.2 percent, to nearly $800 million, and 25.5 percent for the year, to $2.9 billion. . A robust wholesale business, with 1.4 million resold lines and 200,000 unbundled loops in service at the end of the year. . Adjusted expense increases of only 3.1 percent for the quarter and 3.6 percent for the year, including aggressive funding of growth investments. . Operating margin expansion to 26.2 percent for the year -- 110 basis points above 1998 -- through cost controls, network efficiencies and $750 million in Bell Atlantic-NYNEX merger synergies. "Not only did we deliver on our financial targets, we had an outstanding year strategically," Seidenberg said. "In December we finally won approval to offer long distance, and three weeks after opening for business in New York, I can report that customer response is even better than we expected. We're also making regulatory progress throughout our region, and our goal is to file in several more states this year. "The other side of the LD coin is the thriving business we're building for network services. We believe that competition expands markets, and we've opened our network because it creates opportunities for us, not just in long distance, but as a wholesale provider as well. We're retaining a substantial amount of New York's consumer traffic on our high-efficiency network, and we're very excited about this growing line of business. "We expanded our data capabilities with network upgrades, targeted acquisitions and alliances, and especially our investment in Metromedia Fiber Network, which will enable us to deliver broadband services end-to-end to 50 cities throughout the country. "Our Wireless Group's results make us eager to complete our transaction with Vodafone AirTouch and, with GTE, create a national wireless competitor with unparalleled coverage, customers and capacity. We're moving quickly, and we're confident we will be in a position to launch the new company this spring. "And we continued to make progress on the most important strategic initiative of all: our Bell Atlantic Earnings Release, p. 3 merger with GTE. The state approval process is nearly complete, our discussions with the FCC continue, and we aim for Bell Atlantic and GTE to be one company around the end of the first quarter. "We're looking forward to this year," Seidenberg said, "when our long distance, DSL and national wireless businesses get up to full speed, and we complete the transformation of Bell Atlantic and GTE into the nation's leading communications company, with the most complete set of assets serving the best markets in the industry." Proportionate revenues, which include Bell Atlantic's share of revenues from unconsolidated wireless investments, rose 7.5 percent for the quarter and 6.6 percent for the year. Reported results include charges in each period for special items. Charges in fourth quarter 1998 totaled 4 cents a share for Bell Atlantic-NYNEX merger transition costs. Charges in fourth quarter 1999 were $67 million, or 4 cents per share, for Bell Atlantic-NYNEX merger transition costs and a non-cash, after-tax charge of $432 million, or 27 cents per share, which is a non- operating "mark-to-market" accounting adjustment related to the company's $3.2 billion in notes exchangeable into shares of Cable & Wireless Communications plc (CWC). The CWC notes may be exchanged beginning in July 2002. This non-cash charge reflects the difference between the market price of the underlying CWC shares at the end of the fourth quarter and the exchange price. Generally Accepted Accounting Principles require that this difference be recorded as an increase in the company's liability for the notes and a charge to income. The company will make such an accounting adjustment in future quarters, recording either a gain or loss, to reflect any difference between the CWC market price and the exchange price at the end of the quarter (no adjustment is required if the market price is below the exchange price). Charges in 1999 totaled 35 cents per share, for the mark-to-market adjustment and merger transition charges. Charges in 1998 totaled 86 cents per share, primarily for completion of a retirement incentive program, write-downs of certain international investments, and merger transition charges. Reported fourth quarter 1999 net income available to common shareowners was $719 million, or 45 cents per share, compared to $1.0 billion, or 65 cents per share, in fourth quarter 1998. Reported 1999 net income available to common shareowners was $4.2 billion, or $2.65 per share, compared to $2.9 billion, or $1.86 per share, in 1998. Bell Atlantic Earnings Release, p. 4 Domestic Telecom Highlights Healthy demand for core communications services and robust demand for new data services enabled the Domestic Telecom Group to grow revenues 3.5 percent over fourth quarter 1998, and 3.0 percent for the year. The number of voice- grade equivalents (access lines plus data circuits) in service grew 13.2 percent to 64.5 million, with access lines in service growing 3.1 percent to 43 million. Access minutes of use increased 4.2 percent in the quarter and 5.0 percent for the full year. Nearly 80 percent of Domestic Telecom revenue growth for the quarter and the year came from sales of data services. Data revenues, including those from high-bandwidth packet-switched and special access services and Bell Atlantic's network integration business, reached almost $2.9 billion for the year, 25.5 percent over 1998 levels. The demand for digital connectivity and value-added features continued to grow in all markets. In the enterprise (large business) and general business markets: . The number of "DS0" circuits in service (digital, high-bandwidth and packet- switched services as measured in 64-kilobit voice-grade equivalents) increased 39.6 percent over year-end 1998, to 23.2 million. . Bell Atlantic's Data Solutions Group revenues increased 38.4 percent over fourth quarter 1998, to almost $119 million. . The company continued to expand its product offerings to help large business customers manage their complex data networks, and introduced Managed Frame Access Service, which delivers frame relay services with Bell Atlantic- managed advanced routing. In consumer markets: . By the end of the year, Bell Atlantic had equipped wire centers serving nearly 7 million qualified households for Infospeed(sm) DSL, the company's high-bandwidth Internet access service, and began marketing the service to 4.3 million of them. The company aims to have 10 million households qualified by the end of first quarter, approximately half of all households in its service territory. Bell Atlantic ended the year with approximately 30,000 Infospeed DSL subscribers. . Vertical service revenues continued to grow as customers purchased new packages combining Caller ID, Return Call, Call Waiting, Home Voice Mail and other features. Consumer Caller ID revenues increased 26.5 percent in 1999, as the number of subscribers increased to 7.5 million, and Home Voice Mail revenues rose 9.8 percent. The company also Bell Atlantic Earnings Release, p. 5 expanded its portfolio of value-added services to include Talking Call Waiting and Internet Call Manager. In network services markets: . At the end of 1999, Bell Atlantic was providing other carriers with approximately 1.4 million resold access lines and 200,000 unbundled loops. . Special access revenues for the year increased 26.3 percent to $1.9 billion. Domestic Telecom's adjusted fourth quarter operating expenses of $5.1 billion were 1.1 percent above fourth quarter 1998 levels, with cash expenses decreasing 0.8 percent. For the year, operating expenses totaled $19.8 billion, 1.2 percent above 1998 levels, with cash expenses decreasing one-half of one percent. The Group produced these results while absorbing costs for long distance entry, construction of a regional long distance network, Y2K compliance, and interconnection payments to competitive local exchange carriers. Wireless Group Highlights Bell Atlantic's Wireless Group enjoyed one of its strongest fourth quarters ever, with record subscriber growth for Bell Atlantic Mobile (BAM) and record growth in new customers in the Group's International Wireless portfolio. The Wireless Group ended the year with 12 million global proportionate wireless subscribers, up 39.1 percent over year-end 1998. The figure includes 452,000 added through BAM's acquisition of Frontier Cellular properties in upstate New York in December. Proportionate net customer additions in the quarter totaled 954,000 (excluding the Frontier customers), 30.5 percent more than in fourth quarter 1998, with BAM totaling 363,000 net additions, 20.2 percent more than in the prior-year period. The Group's proportionate net customer additions for the year totaled 2.7 million, 23.4 percent more than in 1998. Total proportionate wireless revenues increased 27.5 percent in the quarter to $1.6 billion, and totaled $5.9 billion for the year, 28 percent higher than 1998. Proportionate operating income reached $293 million in the fourth quarter, an increase of 50.3 percent over fourth quarter 1998, with proportionate operating cash flow increasing 32 percent to $536 million. Full-year operating income totaled $1.1 billion, up 41.2 percent over 1998, with full-year operating cash flow increasing 29.3 percent to $1.9 billion. Bell Atlantic Earnings Release, p. 6 During the quarter, Bell Atlantic, GTE and Vodafone AirTouch continued to move ahead with the creation of the nation's premier wireless business, as the U.S. Department of Justice cleared the wireless combination subject to a consent decree providing for the resolution of overlapping wireless properties. Bell Atlantic and Vodafone AirTouch also have increased to 100 percent their ownership of the partnerships operating PrimeCo Personal Communications LP's Texas markets -- Dallas/Fort Worth, San Antonio and Houston -- by acquiring TXU Communications' 20 percent interest. PrimeCo will become part of its partners' national wireless venture. Other domestic highlights: . Bell Atlantic Mobile closed out the quarter with 7.7 million customers, up 24 percent from 1998. Quarterly revenues grew 23.1 percent over fourth quarter 1998, to $1.1 billion. For the year, BAM revenues year grew 18.9 percent to $4.1 billion. . Underscoring the quality of its network performance and overall customer service, BAM won numerous service awards during the year, including the highest customer rating in the Yankee Group 1999 Mobile User Survey; the highest ranking from the J.D. Power and Associates 1999 U.S. Wireless Customer Satisfaction Study(sm) in New York and Boston; first place for customer satisfaction in the 1999 Solomon-Wolff Associates annual customer research survey and Wireless Week's Overall Excellence Award for 1999. . The primary force behind BAM's strong 1999 growth was the company's popular digital wireless services. More than 70 percent of all new retail customers and nearly 40 percent of BAM's total base now subscribe to CDMA digital services, generating 72 percent of the company's busy-hour network usage. BAM continued its aggressive rollout of new digital voice and data service offerings, including: . Web Access service, featuring Web-enabled digital wireless phones that allow customers to surf the Web. . Share-A-Minute(sm), which allows families and small businesses to share monthly access and local airtime minutes among multiple phones -- all on one bill. . "Call Me" service, an option freeing wireless customers from paying for incoming calls received in their local service area. . On Jan. 18, BAM and GTE Wireless announced they have been selected by General Motors to establish a nationwide wireless network that will support expansion of its OnStar in-vehicle services to include personal calling and Internet access. OnStar estimates that more than four million vehicles will be equipped with access to its communications services in the next three years. Bell Atlantic Earnings Release, p. 7 . At PrimeCo Personal Communications, total revenues for the quarter grew 49.6 percent over fourth quarter 1998, to $230 million, with average monthly revenue per subscriber of $49. Full-year revenues were $841 million, compared to $509 million in 1998. Average monthly revenue per subscriber for the year was $51. . During the quarter, PrimeCo grew its customer base to 1.4 million, 53.2 percent over year-end 1998. PrimeCo ended the year with a 3.3 percent penetration rate of covered POPs. Bell Atlantic's international wireless portfolio ended 1999 with 3.6 million proportionate subscribers, up 83.7 percent over year-end 1998. International proportionate net subscriber additions of 533,000, 58.6 percent more than in fourth quarter 1998, represented more than half of Bell Atlantic's total wireless customer growth. Net international customer growth for the year was 1.4 million, 32.1 percent higher than in 1998. Proportionate international revenues for the quarter were $378 million, 37 percent higher than fourth quarter 1998, bringing the full-year total to $1.3 billion, $472 million more than 1998. Proportionate operating income doubled over fourth quarter 1998, to $82 million, with proportionate operating cash flow growing 62.7 percent to $135 million. For the year, proportionate operating income was $302 million, with proportionate operating cash flow of $465 million. International highlights: . Omnitel Pronto Italia added a record 4.2 million customers in 1999, driving its total to more than 10.4 million, a 68 percent increase over the prior year. On New Year's Day, OPI's network successfully processed 100 million voice and 18 million SMS calls. . EuroTel Praha added 120,000 customers in December, a new monthly subscriber growth record for the Czech Republic, closing out the year with 1.1 million subscribers. During the fourth quarter the company launched the country's first Internet access service using WAP (Wireless Application Protocol) technology. . Grupo Iusacell ended 1999 with more than 1.3 million customers, an increase of 77 percent over 1998. Digital subscribers now total more than 16 percent of Iusacell's customer base. The company recently placed a US$350 million bond offering to help fund capital expenditures, expand digital capacity and increase coverage. . STET Hellas grew its customer base 71.8 percent over the previous year and ended 1999 with 1.2 million customers. Net subscriber additions for 1999 increased 66 percent, including 148,000 in the fourth quarter. Through the introduction of new pricing plans and aggressive Bell Atlantic Earnings Release, p. 8 promotion of Greece's only prepaid roaming product, the company's prepaid customers grew to 62 percent of its total base. *** Bell Atlantic is at the forefront of the new communications and information industry. With nearly 44 million telephone access lines and 12 million wireless customers worldwide, Bell Atlantic companies are premier providers of advanced wireline voice and data services, market leaders in wireless services and the world's largest publishers of directory information. Bell Atlantic companies are also among the world's largest investors in high-growth global communications markets, with operations and investments in 23 countries. INTERNET USERS: Further information on quarterly results is available at Bell Atlantic's News Center or Investor Information sites on the World Wide Web (www.ba.com and www.bellatlantic.com/invest) or through Fax on Demand at 800- --------------------------- 329-7310. To receive news releases by email, visit the News Center and register for personalized automatic delivery of Bell Atlantic news releases. NOTE: This press release contains statements about expected future events and financial results that are forward-looking and subject to risks and uncertainties. For those statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. The following important factors could affect future results and could cause those results to differ materially from those expressed in the forward-looking statements: materially adverse changes in economic conditions in the markets served by us or by companies in which we have substantial investments; material changes in available technology; the final outcome of federal, state, and local regulatory initiatives and proceedings, including arbitration proceedings, and judicial review of those initiatives and proceedings, pertaining to, among other matters, the terms of interconnection, access charges, universal service, and unbundled network element and resale rates; the extent, timing, success, and overall effects of competition from others in the local telephone and toll service markets; the timing and profitability of our entry into the in-region long distance market; the timing of, and regulatory or other conditions associated with, the completion of the merger with GTE and our ability to combine operations and obtain revenue enhancements and cost savings following the merger; and the timing of, and regulatory or other conditions associated with, the completion of the wireless transaction with Vodafone AirTouch, and the ability of the new wireless enterprise to combine operations and obtain revenue enhancements and cost savings. BELL ATLANTIC CORPORATION - -------------------------------------------------- Consolidated Statements of Income - Reported Basis - --------------------------------------------------
(Dollars in Millions, except per share amounts) 3 Mos. Ended 3 Mos. Ended 12 Mos. Ended 12 Mos. Ended Unaudited 12/31/99 12/31/98 % Change 12/31/99 12/31/98 % Change - ----------------------------------------------------------------------------------- --------------------------------------------- Operating Revenues Local services $ 3,567 $ 3,512 1.6 $ 14,251 $ 13,816 3.1 Network access services 2,019 1,913 5.5 7,924 7,655 3.5 Long distance services 446 463 (3.7) 1,816 1,928 (5.8) Ancillary services 613 519 18.1 2,172 2,026 7.2 Directory services 665 640 3.9 2,331 2,258 3.2 Wireless services 1,252 1,000 25.2 4,544 3,780 20.2 Other services 46 30 53.3 136 103 32.0 -------------------------------- -------------------------------- Total Operating Revenues 8,608 8,077 6.6 33,174 31,566 5.1 -------------------------------- -------------------------------- Operating Expenses Employee costs 2,089 2,054 1.7 8,241 9,266 (11.1) Depreciation and amortization 1,619 1,544 4.9 6,221 5,870 6.0 Other operating expenses 2,748 2,647 3.8 10,217 9,803 4.2 -------------------------------- -------------------------------- Total Operating Expenses 6,456 6,245 3.4 24,679 24,939 (1.0) -------------------------------- -------------------------------- Operating Income 2,152 1,832 17.5 8,495 6,627 28.2 Income (loss) from unconsolidated businesses 19 47 (59.6) 143 (415) (134.5) Other income and (expense), net 19 23 (17.4) 54 122 (55.7) Interest expense 324 303 6.9 1,263 1,335 (5.4) Mark-to-market adjustment for exchangeable notes (664) - - (664) - - Provision for income taxes 483 538 (10.2) 2,557 2,008 27.3 -------------------------------- -------------------------------- Income from Continuing Operations 719 1,061 (32.2) 4,208 2,991 40.7 Extraordinary item Early extinguishment of debt, net of tax - (2) - (6) (26) (76.9) -------------------------------- -------------------------------- Net Income 719 1,059 (32.1) 4,202 2,965 41.7 Redemption of minority interest - (30) - - (30) - Redemption of investee preferred stock - - - - (2) - -------------------------------- -------------------------------- Net Income Available to Common Shareowners $ 719 $ 1,029 (30.1) $ 4,202 $ 2,933 43.3 ================================ ================================ Diluted Earnings per Share $ .45 $ .65 (30.8) $ 2.65 $ 1.86 42.4 Weighted average number of common shares-assuming dilution (in millions) 1,584 1,582 1,583 1,578
Footnotes: Diluted Earnings per Share include the dilutive effect of shares issuable under our stock-based compensation plans, which represent the only potential dilutive common shares. 1 BELL ATLANTIC CORPORATION - ------------------------- Earnings Reconciliations - -------------------------
(Dollars in Millions, except per share amounts) 3 Mos. Ended 12/31/99 3 Mos. Ended 12/31/98 Net Income Net Income Available to Common Available to Common Unaudited Shareowners Diluted EPS Shareowners Diluted EPS - ---------------------------------------------------------------------------------------------------------------------- Reported Earnings $ 719 $ .45 $ 1,029 $ .65 Adjustments: Transition costs 67 .04 56 .04 Mark-to-market adjustment for exchangeable notes (1) 432 .27 -------------------------------------------------------------------------- Adjusted Earnings $ 1,218 $ .77 $ 1,085 $ .69 ========================================================================== Adjusted Growth 12.3% 11.6%
12 Mos. Ended 12/31/99 12 Mos. Ended 12/31/98 Net Income Net Income Available to Common Available to Common Unaudited Shareowners Diluted EPS Shareowners Diluted EPS - ---------------------------------------------------------------------------------------------------------------------- Reported Earnings $ 4,202 $ 2.65 $ 2,933 $ 1.86 Adjustments: Transition costs 126 .08 121 .08 Mark-to-market adjustment for exchangeable notes (1) 432 .27 Special pension enhancement 670 .42 Special charges 567 .36 -------------------------------------------------------------------------- Adjusted Earnings $ 4,760 $ 3.01 $ 4,291 $ 2.72 ========================================================================== Adjusted Growth 10.9% 10.7%
Note: Total columns for Diluted EPS in 1999 do not add due to rounding in EPS calculations (1) This non-cash charge reflects the difference between the market price of the underlying Cable & Wireless Communications, Plc (CWC) shares at the end of the fourth quarter and the exchange price. Generally Accepted Accounting Principles require that this difference be recorded as an increase in the company's liability for the notes and a charge to income. The company will make such an accounting adjustment in future quarters, recording either a gain or loss, to reflect any difference between the CWC market price and the exchange price at the end of the quarter (no adjustment is required if the market price is below the exchange price). 2 BELL ATLANTIC CORPORATION - ---------------------------------------------------------------- Consolidated Statements of Income - Adjusted Basis - 4th Quarter - ----------------------------------------------------------------
(Dollars in Millions, except per share amounts) 3 Months Ended 3 Months Ended Unaudited 12/31/99 12/31/98 % Change - ------------------------------------------------------------------------------------------------------------------------ Operating Revenues Local services $ 3,567 $ 3,512 1.6 Network access services 2,019 1,913 5.5 Long distance services 446 463 (3.7) Ancillary services 613 519 18.1 Directory services 665 640 3.9 Wireless services 1,252 1,000 25.2 Other services 46 30 53.3 --------------------------------------- Total Operating Revenues 8,608 8,077 6.6 --------------------------------------- Operating Expenses Employee costs 2,063 (1) 2,048 (4) .7 Depreciation and amortization 1,619 1,504 (5) 7.6 Other operating expenses 2,666 (2) 2,603 (6) 2.4 --------------------------------------- Total Operating Expenses 6,348 6,155 3.1 --------------------------------------- Operating Income 2,260 1,922 17.6 Income from unconsolidated businesses 19 47 (59.6) Other income and (expense), net 19 23 (17.4) Interest expense 324 303 6.9 Provision for income taxes 756 (3) 572 (7) 32.2 --------------------------------------- Income from Continuing Operations 1,218 1,117 9.0 Extraordinary item Early extinguishment of debt, net of tax - (2) - --------------------------------------- Net Income 1,218 1,115 9.2 Redemption of minority interest - (30) - --------------------------------------- Net Income Available to Common Shareowners $ 1,218 $ 1,085 12.3 ======================================= Diluted Earnings per Share $ .77 $ .69 11.6 Weighted average number of common common shares-assuming dilution (in millions) 1,584 1,582
Footnotes: 4th Quarter 99 (1) Excludes $26 million related to transition costs (2) Excludes $82 million related to transition costs (3) Excludes tax effects of (1) and (2) above Note: Excludes mark-to-market adjustment for exchangeable notes 4th Quarter 98 (4) Excludes $6 million related to transition costs (5) Excludes $40 million reclass adjustment related to international investments (6) Excludes $84 million related to transition costs partially offset by a $40 million reclass adjustment related to international investments (7) Excludes tax effects of items (4), (5) and (6) above 3 BELL ATLANTIC CORPORATION - -------------------------------------------------------------- Consolidated Statements of Income - Adjusted Basis - Full Year - --------------------------------------------------------------
(Dollars in Millions, except per share amounts) 12 Months Ended 12 Months Ended Unaudited 12/31/99 12/31/98 % Change - ------------------------------------------------------------------------------------------------------------------------- Operating Revenues Local services $ 14,251 $ 13,816 3.1 Network access services 7,924 7,655 3.5 Long distance services 1,816 1,928 (5.8) Ancillary services 2,172 2,026 7.2 Directory services 2,331 2,258 3.2 Wireless services 4,544 3,780 20.2 Other services 136 103 32.0 --------------------------------------- Total Operating Revenues 33,174 31,566 5.1 --------------------------------------- Operating Expenses Employee costs 8,183 (1) 8,200 (4) (.2) Depreciation and amortization 6,221 5,830 (5) 6.7 Other operating expenses 10,070 (2) 9,598 (6) 4.9 --------------------------------------- Total Operating Expenses 24,474 23,628 3.6 --------------------------------------- Operating Income 8,700 7,938 9.6 Income from unconsolidated businesses 143 78 (7) 83.3 Other income and (expense), net 54 77 (8) (29.9) Interest expense 1,263 1,288 (9) (1.9) Provision for income taxes 2,868 (3) 2,456 (10) 16.8 --------------------------------------- Income from Continuing Operations 4,766 4,349 9.6 Extraordinary item Early extinguishment of debt, net of tax (6) (26) (76.9) --------------------------------------- Net Income 4,760 4,323 10.1 Redemption of minority interest - (30) - Redemption of investee preferred stock - (2) - --------------------------------------- Net Income Available to Common Shareowners $ 4,760 $ 4,291 10.9 ======================================= Diluted Earnings per Share $ 3.01 $ 2.72 10.7 Weighted average number of common common shares-assuming dilution (in millions) 1,583 1,578
Footnotes: 1999 (1) Excludes $58 million related to transition costs (2) Excludes $147 million related to transition costs (3) Excludes tax effects of (1) and (2) above Note: Excludes mark-to-market adjustment for exchangeable notes 1998 (4) Excludes $1,052 million related to special pension enhancement and contracts and $14 million related to transition costs (5) Excludes $40 million reclass adjustment related to international investments (6) Excludes $182 million related to transition costs and $23 million related to special charges (7) Excludes $485 million related to international investments and $8 million related to special charges (8) Excludes $45 million related to special charges (9) Excludes $47 million related to special charges (10) Excludes tax effects of (4) - (9) above 4 BELL ATLANTIC CORPORATION - ------------------------------------------- Selected Financial and Operating Statistics - -------------------------------------------
(Dollars in Millions, except per share amounts) 3 Months Ended 3 Months Ended 12 Months Ended 12 Months Ended Unaudited 12/31/99 12/31/98 12/31/99 12/31/98 - -------------------------------------------------------------------------------------- ---------------------------------- Debt ratio-end of period 60.1% 61.2% 60.1% 61.2% Return on average common equity-adjusted basis 30.9% 31.4% 32.3% 31.5% Return on average assets-adjusted basis 8.0% 8.0% 8.3% 7.9% Book value per common share $ 10.23 $ 8.42 $ 10.23 $ 8.42 Cash dividends declared per common share $ .385 $ .385 $ 1.54 $ 1.54 Common shares outstanding (in millions) End of period 1,553 1,553 1,553 1,553 Capital expenditures Domestic Telecom $ 2,530 $ 1,643 $ 7,498 $ 6,409 Domestic Cellular 248 259 953 702 Other 81 123 224 335 ----------------------------------- --------------------------------- Total $ 2,859 $ 2,025 $ 8,675 $ 7,446 =================================== ================================= Employees Domestic Telecom 129,283 125,692 129,283 125,692 Other 16,133 14,747 16,133 14,747 ----------------------------------- --------------------------------- Total 145,416 140,439 145,416 140,439 =================================== =================================
5 BELL ATLANTIC CORPORATION - --------------------------- Consolidated Balance Sheets - ---------------------------
(Dollars in Millions) Unaudited 12/31/99 12/31/98 $ Change - ----------------------------------------------------------------------------------------------------------------------------------- Assets Current assets Cash and cash equivalents $ 1,097 $ 237 $ 860 Short-term investments 839 786 53 Accounts receivable, net 7,025 6,560 465 Inventories 664 566 98 Prepaid expenses 673 522 151 Other 298 411 (113) ----------------------------------------------------------- Total current assets 10,596 9,082 1,514 ----------------------------------------------------------- Plant, property and equipment 89,238 83,064 6,174 Less accumulated depreciation 49,939 46,248 3,691 ----------------------------------------------------------- 39,299 36,816 2,483 ----------------------------------------------------------- Investments in unconsolidated businesses 6,275 4,276 1,999 Other assets 6,444 4,970 1,474 ----------------------------------------------------------- Total Assets $ 62,614 $ 55,144 $ 7,470 =========================================================== Liabilities and Shareowners' Investment Current liabilities Debt maturing within one year $ 5,455 $ 2,988 $ 2,467 Accounts payable and accrued liabilities 6,465 6,105 360 Other 1,547 1,438 109 ----------------------------------------------------------- Total current liabilities 13,467 10,531 2,936 ----------------------------------------------------------- Long-term debt 18,463 (1) 17,646 817 ----------------------------------------------------------- Employee benefit obligations 9,326 10,384 (1,058) ----------------------------------------------------------- Deferred credits and other liabilities Deferred income taxes 3,892 2,254 1,638 Unamortized investment tax credits 197 222 (25) Other 730 551 179 ----------------------------------------------------------- 4,819 3,027 1,792 ----------------------------------------------------------- Minority interest, including a portion subject to redemption requirements 458 330 128 ----------------------------------------------------------- Preferred stock of subsidiary 201 201 - ----------------------------------------------------------- Shareowners' investment Common stock 158 158 - Contributed capital 13,550 13,368 182 Reinvested earnings 2,806 1,371 1,435 Accumulated other comprehensive income (loss) 450 (714) 1,164 ----------------------------------------------------------- 16,964 14,183 2,781 Less common stock in treasury, at cost 640 593 47 Less deferred compensation - employee stock ownership plans 444 565 (121) ----------------------------------------------------------- Total shareowners' investment 15,880 13,025 2,855 ----------------------------------------------------------- Total Liabilities and Shareowners' Investment $ 62,614 $ 55,144 $ 7,470 ===========================================================
(1) Includes mark-to-market adjustment for exchangeable notes 6 BELL ATLANTIC CORPORATION - ----------------------------------------------- Condensed Consolidated Statements of Cash Flows - -----------------------------------------------
(Dollars in Millions) 12 Months Ended 12 Months Ended Unaudited 12/31/99 12/31/98 $ Change - ---------------------------------------------------------------------------------------------------------------------- Cash Flows From Operating Activities Net Income $ 4,202 $ 2,965 $ 1,237 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 6,221 5,870 351 Deferred income taxes, net 928 264 664 Mark-to-market adjustment for exchangeable notes 664 --- 664 (Income)/loss from unconsolidated businesses (143) 415 (558) Dividends received from unconsolidated businesses 116 170 (54) Amortization of unearned lease income (151) (120) (31) Investment tax credits (25) (29) 4 Extraordinary items, net of tax 6 26 (20) Other items, net 169 227 (58) Changes in certain assets and liabilities, net of effects from acquisition/disposition of businesses (1,331) 283 (1,614) ---------------------------------------------------- Net cash provided by operating activities 10,656 10,071 585 ---------------------------------------------------- Cash Flows From Investing Activities Net change in short-term investments (60) (60) - Capital expenditures (8,675) (7,446) (1,229) Proceeds from sale of plant, property and equipment 211 12 199 Investments in unconsolidated businesses, net (901) (603) (298) Proceeds from disposition of businesses 612 637 (25) Acquisition of businesses, less cash acquired (505) (62) (443) Other investing activities, net (311) (163) (148) ---------------------------------------------------- Net cash used in investing activities (9,629) (7,685) (1,944) ---------------------------------------------------- Cash Flows From Financing Activities Proceeds from borrowings 662 6,328 (5,666) Principal repayments of borrowings and capital lease obligations (942) (651) (291) Early extinguishment of debt (257) (790) 533 Net change in short-term borrowings with original maturities of three months or less 2,645 (4,038) 6,683 Proceeds from financing of cellular assets 380 --- 380 Dividends paid (2,399) (2,379) (20) Proceeds from sale of common stock 314 559 (245) Purchase of common stock for treasury (723) (1,002) 279 Other financing activities, net 153 (499) 652 ---------------------------------------------------- Net cash used in financing activities (167) (2,472) 2,305 ---------------------------------------------------- Increase (decrease) in cash and cash equivalents 860 (86) 946 Cash and cash equivalents, beginning of period 237 323 (86) ---------------------------------------------------- Cash and cash equivalents, end of period $ 1,097 $ 237 $ 860 ====================================================
7 BELL ATLANTIC CORPORATION - --------------------------------------------- Domestic Telecom - Selected Financial Results - ---------------------------------------------
(Dollars in Millions) 3 Months Ended 3 Months Ended 12 Months Ended 12 Months Ended Unaudited 12/31/99 12/31/98 % Change 12/31/99 12/31/98 % Change - ---------------------------------------------------------------------------------- ----------------------------------------------- Operating Revenues Local services $ 3,594 $ 3,529 1.8 $ 14,346 $ 13,882 3.3 Network access services 2,019 1,913 5.5 7,924 7,656 3.5 Long distance services 446 464 (3.9) 1,816 1,929 (5.9) Ancillary services 606 534 13.5 2,236 2,090 7.0 -------------------------------- ---------------------------------- Total Operating Revenues 6,665 6,440 3.5 26,322 25,557 3.0 -------------------------------- ---------------------------------- Operating Expenses Employee costs 1,834 1,807 1.5 7,275 7,298 (0.3) Depreciation and amortization 1,418 1,333 6.4 5,505 5,195 6.0 Other operating expenses 1,842 1,897 (2.9) 6,994 7,047 (0.8) -------------------------------- ---------------------------------- Total Operating Expenses 5,094 5,037 1.1 19,774 19,540 1.2 -------------------------------- ---------------------------------- Operating Income $ 1,571 $ 1,403 12.0 $ 6,548 $ 6,017 8.8 Operating Income Margin 23.6% 21.8% 24.9% 23.5% Operating Cash Flow $ 2,989 $ 2,736 9.2 $ 12,053 $ 11,212 7.5 Operating Cash Flow Margin 44.8% 42.5% 45.8% 43.9%
- -------------------------------------------------------------------------------- BELL ATLANTIC CORPORATION Directory - Selected Financial Results - --------------------------------------------------------------------------------
(Dollars in Millions) 3 Months Ended 3 Months Ended 12 Months Ended 12 Months Ended Unaudited 12/31/99 12/31/98 % Change 12/31/99 12/31/98 % Change - ---------------------------------------------------------------------------------- ----------------------------------------------- Operating Revenues $ 669 $ 642 4.2 $ 2,338 $ 2,264 3.3 Operating Expenses Employee costs 77 75 2.7 314 326 (3.7) Depreciation and amortization 9 11 (18.2) 36 37 (2.7) Other operating expenses 215 229 (6.1) 757 777 (2.6) -------------------------------- ---------------------------------- Total Operating Expenses 301 315 (4.4) 1,107 1,140 (2.9) -------------------------------- ---------------------------------- Operating Income $ 368 $ 327 12.5 $ 1,231 $ 1,124 9.5 Operating Income Margin 55.0% 50.9% 52.7% 49.6% Operating Cash Flow $ 377 $ 338 11.5 $ 1,267 $ 1,161 9.1 Operating Cash Flow Margin 56.4% 52.6% 54.2% 51.3%
Footnotes: The selected financial results for the segments noted above are presented on an adjusted basis and exclude the effects of special items. This presentation is not intended to follow GAAP prescribed segment reporting in all respects. Disclosure of segment information will appear in the company's 1999 Annual Report Intercompany and intersegment transactions have not been eliminated. 8 BELL ATLANTIC CORPORATION - --------------------------------------- Domestic Telecom - Operating Statistics - ---------------------------------------
3 Months Ended 3 Months Ended 12 Months Ended 12 Months Ended Unaudited 12/31/99 12/31/98 % Change 12/31/99 12/31/98 % Change - -------------------------------------------------------------------------------------- -------------------------------------------- Operating Statistics Switched access lines in service (000) (1) Residence 26,883 26,137 2.9 26,883 26,137 2.9 Business 15,574 15,006 3.8 15,574 15,006 3.8 Public 514 521 (1.3) 514 521 (1.3) ---------------------------------------------------------------------------------------- Total 42,971 41,664 * 3.1 42,971 41,664 * 3.1 ---------------------------------------------------------------------------------------- Voice grade equivalents (000) (2) Residence 26,883 26,137 2.9 26,883 26,137 2.9 Business 37,614 30,828 22.0 37,614 30,828 22.0 ---------------------------------------------------------------------------------------- Total 64,497 56,965 * 13.2 64,497 56,965 * 13.2 ---------------------------------------------------------------------------------------- BRI ISDN lines (000) (3) 588 525 * 12.0 588 525 * 12.0 Access minutes of use (M) 46,009 44,164 4.2 181,604 173,004 5.0 Employees per 10,000 access lines (4) 28.8 28.9 (0.3) 28.8 28.9 (0.3) High Capacity and Digital Data Data Revenue ($ in millions) Wideband transport (5) $ 486 $ 401 21.2 $ 1,813 $ 1,481 22.4 Fast packet and other (6) 194 146 32.9 702 523 34.2 Data solutions (7) 119 86 38.4 358 286 25.2 ---------------------------------------------------------------------------------------- Total Revenues $ 799 $ 633 * 26.2 $ 2,873 $ 2,290 * 25.5 Data Volumes (000) DSO Equivalents (8) 23,214 16,625 39.6 23,214 16,625 39.6 ---------------------------------------------------------------------------------------- PRI ISDN (9) 1,174 823 42.6 1,174 823 42.6 Frame Relay (9) 911 599 52.1 911 599 52.1 ATM Cell Relay (9) 940 465 102.2 940 465 102.2
Footnotes: (1) Switched access lines include ISDN. Basic Rate Interface (BRI) ISDN is counted as one access line and Primary Rate Interface (PRI) is counted as 23 lines (2) Voice Grade Equivalents (VGEs) represent the combination of switched access lines and DSO equivalents, adjusted to avoid double counting of primary rate ISDN channels (3) Represents the number of Basic Rate Interface (BRI) lines counted as one access line. Each BRI line consists of two 'B' channels that each operate at 64 kbps, and one 'D' channel that serves as a signaling channel directing voice & data transmissions (4) Calculated based on employees of telephone operations only (5) Includes circuit-based digital dedicated transport services such as Digital DSO, DS1, DS3 and Sonet-based services used to carry local and access traffic, both voice & data (6) Includes fast packet data transport services such as Frame Relay, SMDS and ATM. Also includes ISDN, ADSL and internet revenue (7) Revenues associated with our Data Solution - Retail business (8) Includes digital DS0 and above circuits (e.g. Digital DS0, DS1, DS3), including packet-based services, converted to a DSO or 64kbps signal, the equivalent to one voice signal. DS1=24 DSOs, DS3=672 DSOs, OC3=2,106 DSOs, OC12=8,424 DSOs, OC48=33,696 DSOs (9) Volumes expressed as DSO equivalents * Restated from amounts previously disclosed 9 BELL ATLANTIC CORPORATION - --------------------------------------- Global Wireless - Proportionate Results - ---------------------------------------
(Dollars in Millions, except subscriber amounts) 3 Months Ended 3 Months Ended 12 Months Ended 12 Months Ended Unaudited 12/31/99 12/31/98 % Change 12/31/99 12/31/98 % Change - ------------------------------------------------------------------------------------ ---------------------------------------------- Combined Global Wireless Selected Financial Results Revenues $ 1,621 $ 1,271 27.5 $ 5,859 $ 4,576 28.0 Operating income $ 293 $ 195 50.3 $ 1,072 $ 759 41.2 Operating cash flow (1) $ 536 $ 406 32.0 $ 1,939 $ 1,500 29.3 Selected Operating Data Subscribers (000) 11,956 8,595 39.1 11,956 8,595 39.1 Subscriber net adds in period (000) 954 731 30.5 2,665 2,160 23.4 POPs (000) 188,792 180,477 4.6 188,792 180,477 4.6 - ------------------------------------------------------------------------------------ ---------------------------------------------- Bell Atlantic Mobile (2) Selected Financial Results Revenues $ 1,136 923 23.1 $ 4,139 3,481 18.9 Operating income $ 250 202 23.8 $ 900 820 9.8 Operating cash flow $ 408 343 19.0 $ 1,498 1,350 11.0 Selected Operating Data Subscribers (000) 7,688 6,201 24.0 7,688 6,201 24.0 Subscriber net adds in period (000) 363 302 20.2 1,035 860 20.3 Controlled POPs (000) 62,958 57,190 10.1 62,958 57,190 10.1 - ------------------------------------------------------------------------------------ ---------------------------------------------- PrimeCo Personal Communications (3) Selected Financial Data Revenues $ 107 72 48.6 $ 391 238 64.3 Operating income $ (39) (48) 18.8 $ (130) (201) 35.3 Operating cash flow $ (7) (20) 65.0 $ (24) (100) 76.0 Selected Operating Data Subscribers (000) 645 422 52.8 645 422 52.8 Subscriber net adds in period (000) 58 93 (37.6) 232 242 (4.1) POPs (000) 28,634 28,487 0.5 28,634 28,487 0.5 - ------------------------------------------------------------------------------------ ---------------------------------------------- International Wireless Operations (4) Selected Financial Data Revenues $ 378 276 37.0 $ 1,329 857 55.1 Operating income $ 82 41 100.0 $ 302 140 115.7 Operating cash flow $ 135 83 62.7 $ 465 250 86.0 Selected Operating Data Subscribers (000) 3,623 1,972 83.7 3,623 1,972 83.7 Subscriber net adds in period (000) 533 336 58.6 1,398 1,058 32.1 POPs (000) 97,200 94,800 2.5 97,200 94,800 2.5 - ------------------------------------------------------------------------------------ ----------------------------------------------
Footnotes: (1) Operating cash flow equals operating income plus depreciation and amortization (2) Bell Atlantic Mobile results reflect consolidated results for all controlled markets (3) Represents 47% of total PrimeCo Personal Communications. (4) Represents Bell Atlantic's proportionate share of International wireless investments including consolidated, equity method, and cost basis investments. This presentation is not intended to follow GAAP prescribed segment reporting in all respects Disclosure of segment information will appear in the company's 1999 Annual Report Intercompany and intersegment transactions have not been eliminated 10 BELL ATLANTIC CORPORATION - ---------------------------------------- Bell Atlantic Mobile - Operating Results - ----------------------------------------
(Dollars in Millions, except subscriber amounts) 3 Months Ended 3 Months Ended 12 Months Ended 12 Months Ended Unaudited 12/31/99 12/31/98 % Change 12/31/99 12/31/98 % Change - ------------------------------------------------------------------------------------ ---------------------------------------------- Bell Atlantic Mobile (1) Selected Financial Results Revenues $ 1,136 923 23.1 $ 4,139 3,481 18.9 Less: Incollect revenues $ 85 63 34.9 $ 340 277 22.7 Less: Equipment revenues $ 103 65 58.5 $ 336 183 83.6 ----------------------------- ------------------------------ Service revenues $ 948 $ 795 19.2 $ 3,463 $ 3,021 14.6 ----------------------------- ------------------------------ Operating income $ 250 202 23.8 $ 900 820 9.8 Operating cash flow (2) $ 408 343 19.0 $ 1,498 1,350 11.0 Operating cash flow margin (3) 43% 43% 43% 45% Capital expenditures, $ 248 259 (4.2) $ 953 702 35.8 excluding acquisitions Selected Operating Data Subscribers (000) (4) 7,688 6,201 24.0 7,688 6,201 24.0 Penetration (5) 12.2% 10.8% 12.2% 10.8% Subscriber net adds in period (000) 363 302 20.2 1,035 860 20.3 Controlled POPs (000) (6) 62,958 57,190 10.1 62,958 57,190 10.1 Owned POPs (000) (7) 58,392 55,306 5.6 58,392 55,306 5.6 Churn rate 1.99% 1.99% 1.93% 1.85% Total revenue per subscriber $ 52.91 51.15 3.4 $ 51.71 50.84 1.7 Service revenue per subscriber $ 44.17 44.06 0.2 $ 43.27 44.11 (1.9) Cash expense per subscriber $ 25.17 25.06 0.4 $ 24.56 24.40 0.7 Acquisition cost per add (8) $ 145 177 (18.1) $ 172 196 (12.2)
Footnotes: (1) Bell Atlantic Mobile results reflect consolidated results for all controlled markets (2) Operating cash flow equals operating income plus depreciation and amortization (EBITDA). (3) Operating cash flow margin is calculated by dividing operating cash flow by service revenues. (4) Fourth quarter and year to date subscribers include 452 acquired subscribers in connection with the Frontier Cellular transaction. (5) Penetration is calculated by dividing subscribers by controlled POPs. Total penetration at December 31, 1999 was 12.5% when normalized for the Frontier Cellular transaction (6) Controlled POPs represent the total number of POPs for which Bell Atlantic Mobile has operating control. (7) Owned POPs represent Bell Atlantic Mobile percentage ownership in all licensed markets. (8) Acquisition cost per add includes commissions and loss on handsets Certain reclassifications have been made to prior results to conform to current presentation 11 -----END PRIVACY-ENHANCED MESSAGE-----