SNET News Release
227 Church Street
New Haven, Connecticut 06510
July 27, 1998
For more information contact: Kevin Moore
(203) 771-2136
SNET Second Quarter Net Income $53.1 Million, Up 6.2%
New Haven, Conn., Southern New England Telecommunications
Corporation (SNET) -- (NYSE: SNG) -- announced today that
second quarter net income for 1998 was $53.1 million, a 6.2%
increase when compared with $50.0 million in the second
quarter of 1997. Diluted earnings per share were $.77 for
the quarter versus $.76 last year when there were 2.6 million
fewer diluted shares outstanding.
Daniel J. Miglio, SNET's chairman and chief executive
officer, said, "We are very pleased with our performance.
Even with intense competition in our markets, revenues grew
7.4%, fueled by continuing healthy growth in all of our
product lines. And net income growth reflects the
incremental impacts of regulatory mandates.
"In a J.D. Power study, released just last week, SNET for the
second consecutive year has been rated the number one long-
distance company in America among mainstream users. We are
immensely pleased with the high scores our customers give us
for credibility, cost, value and customer service.
"The approval process for our pending merger with SBC
Communications is moving along according to plan and we still
expect the merger to close during 1998," he added.
-1-
Revenues
Consolidated revenues and sales for the quarter were $538.6
million, up 7.4%.
Wireline revenues grew to $434.4 million, an increase of 6.5%.
Local service revenues were up 3.6%, the result of continued
strong growth in business and second residential lines.
Network-access revenues increased 5.8% primarily a
result of growth in minutes of use and data services.
In-state toll revenues decreased 4.4%, reflecting
increased competition. Revenues from the
interstate/international long-distance business grew
18.0%, due primarily to an increase in customers.
Wireless revenues were $66.1 million, up 12.8%,
reflecting 14.2% growth in customers.
Information and Entertainment revenues grew by 24.5% to
$58.5 million, due primarily to growth in Publishing and our
cable TV business as well as a doubling of the number of Internet
customers.
Expenses
Consolidated operating expenses for the second quarter
increased to $322.4 million, up 9.2%.
Wireline operating expenses rose $21.3 million, or 8.7%,
reflecting costs associated with expanding our interstate and
international customer base and increased Local Number
Portability costs.
Wireless operating expenses increased $2.5 million, or
5.9%, to support customer growth and for continuing the
rollout of digital service.
Information and Entertainment operating expenses rose by
$16.1 million due primarily to costs associated with the
restructure of Publishing and growth in cable
TV and Internet services.
-2-
Depreciation and amortization expenses were up $1.4 million,
or 1.5%, due to higher depreciable plant levels. Interest
expense was essentially flat. Income taxes increased $1.9 million,
or 6.3%, the result of higher pre-tax income.
Outstanding Shares
The weighted average number of outstanding shares for the
quarter for both basic and diluted EPS increased by 3.2% and
4.0% respectively, primarily the result of the exercise of
employee stock options.
SNET is a leading information, communication and
entertainment company in Connecticut, offering a full range
of wireline products including SNET All Distance[R] service as
well as wireless voice and data services, Internet access and
cable TV. The company is building I-SNET[R], a statewide
broadband information superhighway. In the latest J.D. Power
national customer satisfaction survey, SNET was ranked the
number one long-distance company in America among mainstream
users for the second straight year.
XXX
SNET
Preliminary Summary of Consolidated Results
For the Three Months Ended June 30, 1998
(Dollars in Millions Except Per Share Amounts)
(Unaudited)
For the 3 Months Ended Percent
June 30, Change
1998 1997
INCOME STATEMENT
Revenues and Sales $538.6 $501.6 7.4%
Costs and Expenses:
Operating and maintenance 322.4 295.3 9.2%
Depreciation
and amortization 95.8 94.4 1.5%
Taxes other than income 13.5 13.4 .7%
Total Costs and Expenses 431.7 403.1 7.1%
Operating Income 106.9 98.5 8.5%
Interest expense 22.3 22.4 (.4%)
Other income, net .4 3.9
Income Before Income Taxes 85.0 80.0 6.3%
Income taxes 31.9 30.0 6.3%
Net Income $53.1 $50.0 6.2%
Weighted Average Basic Common Shares
Outstanding (thousands)* 68,025 65,912 3.2%
Weighted Average Diluted Common Shares
Outstanding (thousands)* 68,636 66,016 4.0%
* Effective December 31, 1997, SNET adopted Statement of
Financial Accounting Standards (SFAS) No. 128, "Earnings per
Share." Under SFAS No. 128, basic earnings per common share is
computed by dividing income by the weighted average number of
common shares outstanding during the period. In order to
compute diluted earnings per share, the weighted average
number of common shares is increased by the effect of all
potential common shares outstanding during the period.
As required by SFAS No.128, all periods presented have been
restated to conform to the provisions of the new standard.
SNET
Preliminary Summary of Consolidated Results
For the Three Months Ended June 30, 1998
(Dollars in Millions Except Per Share Amounts)
(Unaudited)
For the 3 Months Ended Percent
June 30, Change
1998 1997
BASIC EARNINGS PER COMMON SHARE*
Net Income** $0.78 $0.76 2.6%
DILUTED EARNINGS PER COMMON SHARE*
Net Income** $0.77 $0.76 1.3%
STATISTICS
Access Lines in Service
(thousands) 2,335 2,205 5.9%
Interstate Minutes of Use
(millions) 2,159 2,053 5.2%
* Effective December 31, 1997, SNET adopted Statement of
Financial Accounting Standards (SFAS) No. 128, "Earnings per
Share." Under SFAS No. 128, basic earnings per common share is
computed by dividing income by the weighted average number of
common shares outstanding during the period. In order to
compute diluted earnings per share, the weighted average
number of common shares is increased by the effect of all
potential common shares outstanding during the period.
As required by SFAS No.128, all periods presented have been
restated to conform to the provisions of the new standard.
** 1997 amount does not include the accounting change. If the
accounting change had been applied to 1997, Basic and Diluted
Earnings Per Share Before Extraordinary Charge and Accounting
Change for the period would have been $.77. The Basic and
Diluted Earnings Per Share percent change for the period would
have been 1.3% and 0.0%, respectively.
SNET
Preliminary Summary of Consolidated Results
For the Six Months Ended June 30, 1998
(Dollars in Millions Except Per Share Amounts)
(Unaudited)
For the 6 Months Ended Percent
June 30, Change
1998 1997
INCOME STATEMENT
Revenues and Sales $1,065.7 $984.3 8.3%
Costs and Expenses:
Operating and maintenance 627.8 576.9 8.8%
Depreciation
and amortization 190.8 186.0 2.6%
Taxes other than income 26.4 26.5 (.4%)
Total Costs and Expenses 845.0 789.4 7.0%
Operating Income 220.7 194.9 13.2%
Interest expense 44.9 45.1 (.4%)
Other income, net (.6) 4.0
Income Before Income Taxes 175.2 153.8 13.9%
Income taxes 65.7 57.7 13.9%
Income Before Extraordinary
Charge and Accounting Change 109.5 96.1 13.9%
Extraordinary Charge,
Net of Tax - (3.7)
Accounting Change, Net of Tax 15.5 -
Net Income $125.0 $92.4 35.3%
Weighted Average Basic Common Shares
Outstanding (thousands)* 67,627 65,848 2.7%
Weighted Average Diluted Common Shares
Outstanding (thousands)* 68,317 65,930 3.6%
* Effective December 31, 1997, SNET adopted Statement of
Financial Accounting Standards (SFAS) No. 128, "Earnings per
Share." Under SFAS No. 128, basic earnings per common share is
computed by dividing income by the weighted average number of
common shares outstanding during the period. In order to
compute diluted earnings per share, the weighted average
number of common shares is increased by the effect of all
potential common shares outstanding during the period.
As required by SFAS No.128, all periods presented have been
restated to conform to the provisions of the new standard.
SNET
Preliminary Summary of Consolidated Results
For the Six Months Ended June 30, 1998
(Dollars in Millions Except Per Share Amounts)
(Unaudited)
For the 6 Months Ended
June 30, Change
1998 1997
BASIC EARNINGS PER COMMON SHARE*
Income Before
Extraordinary Charge and
Accounting Change** $1.62 $1.46 11.0%
Extraordinary Charge,
Net of Tax - (0.06)
Accounting Change, Net of Tax .23 -
Net Income $1.85 $1.40 32.1%
DILUTED EARNINGS PER COMMON SHARE*
Income Before
Extraordinary Charge and
Accounting Change** $1.60 $1.46 9.6%
Extraordinary Charge,
Net of Tax - (0.06)
Accounting Change, Net of Tax .23 -
Net Income $1.83 $1.40 30.7%
STATISTICS
Access Lines in Service
(thousands) 2,335 2,205 5.9%
Interstate Minutes of Use
(millions) 4,332 4,101 5.6%
* Effective December 31, 1997, SNET adopted Statement of
Financial Accounting Standards (SFAS) No. 128, "Earnings per
Share." Under SFAS No. 128, basic earnings per common share is
computed by dividing income by the weighted average number of
common shares outstanding during the period. In order to
compute diluted earnings per share, the weighted average
number of common shares is increased by the effect of all
potential common shares outstanding during the period.
As required by SFAS No.128, all periods presented have been
restated to conform to the provisions of the new standard.
** 1997 amount does not include the accounting change. If the
accounting change had been applied to 1997, Basic and Diluted
Earnings Per Share Before Extraordinary Charge and Accounting
Change for the period would have been $1.53. The Basic and
Diluted Earnings Per Share percent change for the period would
have been 5.9% and 4.6%, respectively.