7

P> Total Contracts $621,861,000

http://www.gte.com/

Although government contracts are fewer and farther between these days, GTE Government Systems, Chantilly, Va., won some important ones in 1995. Last April, GTE announced four contracts to update telecommunications systems for the Air Force. The Regional Distribution System contracts have a potential value of $155 million.

The Army also awarded GTE a $200 million contract to supply off-the-shelf computer equipment, including high-capacity workstations and hand-held terminals. GTE will work with Sun Microsystems Federal Inc., Vienna, Va., on the Common Hardware Software-2 contract, an umbrella contract that runs to 2000 and extends to 2005 for support and spare parts.

GTE also won a contract to provide and install telephone systems for the State Department's overseas posts and embassies. The Telephone Equipment Contract will run for 10 years and is worth $61 million.

The first few months of 1996 have been especially good for GTE Government Systems. In March, the Justice Department awarded GTE a computer systems contract potentially worth $500 million. The Justice Consolidated Office Network contract, which lasts seven years, will bring new hardware, software and electronic mail programs to Justice, along with the appropriate training and systems support. JCON will automate most of the department, including the Attorney General's Office, 93 U.S. Attorney offices, and the six litigating divisions -- antitrust, civil, civil rights, criminal, environment and tax.

"With improved ability to communicate electronically, the Justice Department's organizations can provide better law enforcement and litigation service to the public," said Stephen R. Colgate, assistant attorney general.

In February, GTE's Worldwide Telecommunications Services unit, Needham, Mass., won a $259 million contract to modernize services at Army and other defense facilities in the United States, Panama and Puerto Rico. The Outside Cable Rehabilitation II Program runs through 2001.

GTE also is installing a secure information system for the Pentagon, providing integrated voice and data equipment for the General Services Administration, and developing a national Medicare claims processing system for the Department of Health and Human Services.

Looking to the future, CEO Charles Lee has focused on five strategic areas: enhancing wire line voice services, accelerating wireless development, expanding data services, pursuing international opportunities, and entering video services. "For several years, we've pushed to get ready for open competition," said Lee in his 1995 letter to shareholders.

GTE was the first, but not the last, of the large local phone carriers to get into the long distance business following the passage of telecommunications reform. "The Telecom Act is the legislative equivalent of Lindbergh's crossing the Atlantic," said Lee.

More than one-third of the U.S. population uses GTE service, making it the largest local telephone company in the United States -- for now. The reform, which lets local and long distance service providers get into each other's business, will change the telecom industry landscape.

GTE, like the Baby Bells, will lose its stranglehold on the local market but will pick up some of the valuable long distance market share. GTE is positioning itself as the one to beat the Baby Bells because it has name recognition beyond any one geographic region.

In March, GTE started offering long distance service to Michigan and Minnesota, and plans similar offerings in the 28 states where it sells local service. GTE has 12.4 million residential and 6.1 million business customers. The service is offered through a partnership with LDDS WorldCom, which operates a nationwide digital fiber optic network.

Although part of that reorganization involved huge layoffs, GTE, like AT&ampT, ended up pleasing shareholders. Revenues and sales grew 4 percent in 1995 to $20 billion. GTE shareholders in 1995 received a total return of 52 percent .

In 1995, the cellular market continued to be a strong area for GTE, which counts 3 million customers nationwide, and another 536,000 internationally.

GTE of late has also become known as one of the major airplane phone companies. GTE Airfone provides airborne telecom equipment for 1,800 commercial aircraft representing 20 domestic and international carriers.