SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 ----------------------------------- FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 July 16, 1997 ---------------------------------------------------------------- Date of Report (Date of earlier event reported) 360 COMMUNICATIONS COMPANY ------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 1 - 14108 47-0649117 - ---------------------- ------------------- -------------------------------- (State of Incorporation) (Commission File No.) (IRS Employer Identification No.) 8725 W. Higgins Road, Chicago, Illinois 60631 --------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (773) 399-2500 --------------------------------------------------------- (Registrant's telephone number, including area code) Item 5. Other Events. On July 16, 1997, 360 Communications Company (the "Company") issued a press release announcing the consolidated operating results of the Company and its subsidiaries for the second quarter and first six months of 1997. A copy of such press release is attached hereto as Exhibit 1. Item 7. Financial Statements and Exhibits. (c) Exhibits. Exhibit 1: Press Release issued by 360 Communications Company on July 16, 1997 announcing the consolidated operating results of the Company and its subsidiaries for the second quarter and first six months of 1997. -2- SIGNATURE Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. 360 Communications Company By: /s/ Gary L. Burge Gary L. Burge Senior Vice President - Finance (Principal Accounting Officer) Date: July 16, 1997 -3- EXHIBIT INDEX Exhibit No. Description of Exhibits - -------- ---------------------------- 1 Press Release issued by 360 Communications Company on July 16, 1997 announcing the consolidated operating results of the Company and its subsidiaries for the second quarter and first six months of 1997. -4- 360 Communications....Corporate Communications....8725 W. Higgins Road....Chicago, Illinois 60631....(773)399-2200 FOR IMMEDIATE RELEASE MEDIA: Sal Cinquegrani Margaret Kirch Cohen (773) 399-2783 (773) 399-2385 ANALYSTS: Linda Wait (773) 399-2284 360 REPORTS RECORD REVENUES AND CASH FLOW FOR SECOND QUARTER AND FIRST SIX MONTHS OF 1997 (Chicago) July 16, 1997 -- Chicago-based 360 Communications Company (NYSE:XO) today reported record revenues and operating cash flow as well as strong net income and customer growth for the second quarter and first six months of 1997. Total operating revenues rose 24 percent in the second quarter of 1997 to a record $340.3 million, up from $274.2 million in the same period last year. Service revenues during the quarter were $328.8 million, including $2 million for residential long distance, up 25 percent from $263.6 million reported in the second quarter of 1996. For the first six months of 1997, total operating revenues were $647.1 million, up 26 percent from $513.9 million in the same period of 1996. 360 added 98,000 net customers during the second quarter of 1997, compared with 107,000 during the second quarter of 1996. For the first six months of 1997, 360 added 223,000 net customers, compared with 202,000 in the first six months of 1996. 360 closed the period with 2.4 million customers, up 36 percent from 1.75 million a year ago. -more- 360 Reports Second Quarter, First Half Results Page 2 The company also reported its best-ever churn rate, which measures the percentage of customers who discontinue service. 360's average monthly churn rate was 1.69 percent for the second quarter of 1997, down from 1.77 percent during the same period last year. "We're very pleased with our strong, balanced results for the second quarter," said Dennis E. Foster, president and chief executive officer of 360 Communications. "Demand for wireless service continues to be strong, our customer growth is on target for the year, and our cellular fraud has gone back down to historically low levels. The measures we've taken to make it easy for our customers to do business with us continue to produce healthy customer growth rates that are better than the industry average. We're pleased with the performance of 360's direct sales channels, and we're proud of our low churn rates, which indicate how well we are retaining our customers in an increasingly competitive environment." For the second quarter of 1997, 360 reported operating cash flow of $122.7 million, including a loss of $4.1 million for residential long distance, compared with $102.9 million reported in the second quarter of 1996. Operating cash flow as a percentage of service revenues was 37.3 percent for the quarter, compared with 39.1 percent for the same period last year. For the first six months of 1997, operating cash flow was $210.9 million, compared with $182.4 million during the same period in 1996. 360 reported net income of $21.8 million, or 18 cents per share, for the second quarter of 1997, down 10 percent from $24.3 million, or 21 cents per share, for the second quarter of 1996. 360 reported net income of $31.3 million for the first six months of 1997 and 1996. 360's second quarter net income primarily was affected by the short-term dilutive effect of the November 1996 acquisition of cellular markets from Independent Cellular Network, as well as the company's previously announced rate simplification changes. "We're positioning 360 for long term growth and success," Foster added. "We expected the short-term impact on earnings, and we're on track to continue delivering strong results." The company reported a market penetration rate of 9.77 percent for the second quarter of 1997, compared with 8.36 percent for the second quarter of 1996. 360's total market penetration is among the highest in the industry. At June 30, 1997, 360 had more than 15 percent penetration in 12 markets, two of which exceeded 20 percent. -more- 360 Reports Second Quarter, First Half Results Page 3 During the quarter, 360 completed its previously announced transaction with BellSouth, under which 360 assumed management of the Richmond, Va., cellular operations. In addition, 360 completed its transition of the cellular properties it acquired from Independent Cellular Network, including network and customer care systems conversions. Under the company's share repurchase program, 360 purchased 1.2 million shares during the second quarter at an average price of less than $16 per share. Chicago-based 360 Communications provides wireless voice and data services to 2.4 million customers in more than 100 markets in Florida, Illinois, Indiana, Iowa, Kentucky, Nevada, New Mexico, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, Texas, Virginia and West Virginia. The company also offers residential long distance and paging services. 360 Communications' stock is listed on the New York, Chicago and Pacific stock exchanges under the symbol XO. ### To obtain copies of the company's Form 10-K, 10-Qs, or copies of quarterly earnings and other recent news releases issued by the company, please call toll-free 1.888.360.INFO (1.888.360.4636), 24 hours a day, seven days a week. 360 Communications' news releases are also available through PR Newswire and can be accessed by calling (800) 578-7888, #111849. 360's Internet address is www.360.com. 360 COMMUNICATIONS COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share amounts) (Unaudited) For the Three Months For the Six Months Ended June 30, Ended June 30, ---------------------- ---------------------- 1997 1996(2) 1997 1996(2) ---------- ---------- ---------- ---------- Operating Revenues Service revenues $ 328,834 $ 263,560 $ 622,804 $ 494,314 Equipment sales 11,428 10,613 24,304 19,554 ---------- ---------- ---------- ---------- Total operating revenues 340,262 274,173 647,108 513,868 ---------- ---------- ---------- ---------- Operating Expenses Cost of service 40,283 22,205 81,772 44,344 Cost of equipment sales 24,394 25,355 52,843 45,964 Other operations expense 17,012 11,783 32,005 24,326 Sales, marketing and advertising expenses 55,673 47,649 116,254 94,619 General, administrative and other expenses 80,207 64,243 153,299 122,257 Depreciation and amortization 46,833 35,157 92,362 68,154 ---------- ---------- ---------- ---------- Total operating expenses 264,402 206,392 528,535 399,664 ---------- ---------- ---------- ---------- Operating Income 75,860 67,781 118,573 114,204 Interest expense (32,843) (24,274) (64,033) (54,102) Minority interests in net income of consolidated entities (16,208) (13,861) (25,917) (24,325) Equity in net income of unconsolidated entities 14,755 14,348 27,918 24,020 Other income (expense), net (1) (27) (137) 2,987 322 ---------- ---------- ---------- ---------- Income before income taxes 41,537 43,857 59,528 60,119 Income tax expense 19,730 19,573 28,276 28,855 ---------- ---------- ---------- ---------- Net income $ 21,807 $ 24,284 $ 31,252 $ 31,264 ========== ========== ========== ========== Earnings per share $ 0.18 $ 0.21 $ 0.25 $ 0.27 ========== ========== ========== ========== Weighted average shares outstanding 122,580 117,066 122,996 117,048 ========== ========== ========== ========== (1) In January 1997, the Company recognized a gain of $3 million ($2 million, net of tax) in connection with the divestiture of its ownership interests in two of its unconsolidated entities. (2) Certain 1996 amounts have been reclassified to conform to the presentation used in 1997. 360 COMMUNICATIONS COMPANY AND SUBSIDIARIES CONSOLIDATED OPERATING DATA (Unaudited) For the Three Months Ended and as of June 30, ------------------------------- 1997 1996 ------------- ------------- Consolidated EBITDA (in thousands) $ 122,693 $ 102,938 EBITDA margin 37.31% 39.06% Capital expenditures (in thousands) $ 66,247 $ 87,166 Cellular Controlled POPs 24,358,200 20,938,734 Controlled customers 2,379,188 1,750,329 Gross customer additions 219,364 199,204 Net customer additions 98,250 107,320 Average customers 2,330,879 1,698,446 Churn 1.69% 1.77% Penetration 9.77% 8.36% Service revenue per average customer per month $ 46.86 $ 51.73 EBITDA margin 38.70% 39.06% Cost to acquire a new customer $ 303 $ 313 Long Distance Revenue (in thousands) $ 2,040 $ ----- EBITDA (in thousands) $ (4,123) $ ----- For the Six Months Ended and as of June 30, ------------------------------- 1997 1996 ------------- -------------- Consolidated EBITDA (in thousands) $ 210,935 $ 182,358 EBITDA margin 33.87% 36.89% Capital expenditures (in thousands) $ 89,520 $ 143,942 Cellular Controlled POPs 24,358,200 20,938,734 Controlled customers (1) 2,379,188 1,750,329 Gross customer additions (2) 473,436 377,790 Net customer additions (2) 222,776 201,925 Average customers 2,274,614 1,627,719 Churn 1.78% 1.78% Penetration 9.77% 8.36% Service revenue per average customer per month $ 45.47 $ 50.61 EBITDA margin 35.25% 36.89% Cost to acquire a new customer $ 297 $ 320 Long Distance Revenue (in thousands) $ 3,558 $ ----- EBITDA (in thousands) $ (7,811) $ ----- (1) Controlled Customers include 46,647 customers added through acquisitions which were completed in the first quarter of 1996. (2) The 1996 amounts exclude customer base acquired. 360 COMMUNICATIONS COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited) June 30, December 31, 1997 1996 ------------- -------------- ASSETS Current Assets Cash and cash equivalents $ 8,108 $ 2,554 Accounts receivable, less allowances of $6,243 and $5,730, respectively 101,672 102,483 Other receivables 32,945 27,090 Unbilled revenue 36,091 35,712 Inventory 32,771 35,908 Deferred income taxes 10,894 8,462 Prepaid expenses and other 10,170 16,634 ------------- -------------- Total current assets 232,651 228,843 ------------- -------------- Property, plant and equipment 1,556,847 1,499,407 Less: accumulated depreciation 466,360 415,981 ------------- -------------- Property, plant and equipment, net 1,090,487 1,083,426 ------------- -------------- Investments in unconsolidated entities 443,466 349,231 Intangibles, net 1,140,733 1,136,587 Other assets 16,798 13,982 ------------- -------------- Total Assets $ 2,924,135 $ 2,812,069 ============= ============== LIABILITIES AND SHAREOWNERS' EQUITY Current Liabilities Trade accounts and other payables $ 191,938 $ 227,654 Short-term borrowings 10,845 43,750 Advance billings 30,656 28,314 Accrued taxes 29,997 17,951 Accrued agent commissions 7,643 12,089 Other 22,385 21,090 ------------- -------------- Total current liabilities 293,464 350,848 ------------- -------------- Long-term debt 1,844,577 1,699,778 ------------- -------------- Deferred Credits and Other Liabilities Deferred income taxes 118,868 113,005 Postretirement and other benefit obligations 5,980 5,855 ------------- -------------- Total deferred credits and other liabilities 124,848 118,860 ------------- -------------- Minority interests in consolidated entities 184,945 180,083 ------------- -------------- Shareowners' Equity Common stock 1,233 1,233 Additional paid-in capital 754,748 772,199 Accumulated deficit (279,680) (310,932) ------------- -------------- Total shareowners' equity 476,301 462,500 ------------- -------------- Total liabilities and shareowners' equity $ 2,924,135 $ 2,812,069 ============= ============== 360 COMMUNICATIONS COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) For the Six Months Ended June 30, -------------------------- 1997 1996 ----------- ------------ Operating Activities Net income $ 31,252 $ 31,264 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 92,362 68,154 Deferred income taxes 3,431 11,919 Gain on sale of cellular investments (3,029) ----- Equity in net income of unconsolidated entities, net of distributions (16,472) (14,891) Minority interests in net income of consolidated entities 25,917 24,325 Changes in operating assets and liabilities, excluding acquisitions Receivables, net (1,814) (12,010) Other current assets 5,016 (6,529) Trade accounts and other payables (24,770) 26,573 Accrued expenses and other current liabilities (1,040) 7,759 Noncurrent assets and liabilities, net (2,944) 255 Other, net 3,084 (2) ----------- ------------ Net Cash Provided by Operating Activities 110,993 136,817 ----------- ------------ Investing Activities Capital expenditures (89,520) (143,942) Acquisitions and divestitures (19,957) (109,642) Investments in unconsolidated entities and other (80,156) (2,476) ----------- ------------ Net Cash Used for Investing Activities (189,633) (256,060) ----------- ------------ Financing Activities Net (payments) borrowings under bank revolving credit facility (55,000) 490,000 Proceeds from long-term debt 200,000 900,000 Debt issuance costs (1,609) (15,229) Net short-term (payments) borrowings (32,905) 24,950 Purchases of common stock for treasury (18,878) ----- Increase in advances from affiliates ----- 135,892 Contributions from minority investors ----- 4,597 Distributions to minority investors (8,322) (7,075) Repayment of advances from affiliates ----- (1,400,000) Other, net 908 (4,308) ----------- ------------ Net Cash Provided by Financing Activities 84,194 128,827 ----------- ------------ Increase in Cash and Cash Equivalents 5,554 9,584 Cash and Cash Equivalents at Beginning of Period 2,554 19,023 ----------- ------------ Cash and Cash Equivalents at End of Period $ 8,108 $ 28,607 =========== ============