SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
February 18, 1998
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Date of Report (Date of earliest event reported)
360 COMMUNICATIONS COMPANY
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(Exact name of registrant as specified in its charter)
Delaware 1 - 14108 47-0649117
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(State of Incorporation) (Commission File No.) (IRS Employer Identification No.)
8725 W. Higgins Road, Chicago, Illinois 60631
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(Address of principal executive offices) (Zip Code)
(773) 399-2500
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(Registrant's telephone number, including area code)
Item 5. Other Events.
On February 18, 1998, 360 Communications Company (the "Company") issued
a press release announcing the consolidated operating results of the Company and
its subsidiaries for the fourth quarter and year-end 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
February 18, 1998 announcing the consolidated operating results of the Company
and its subsidiaries for the fourth quarter and year-end 1997.
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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/ Jeffery R. Gardner
Jeffery R. Gardner
Senior Vice President - Finance
(Principal Accounting Officer)
Date: February 18, 1998
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EXHIBIT INDEX
Exhibit
No. Description of Exhibits
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1 Press Release issued by 360 Communications Company on February
18, 19987 announcing the consolidated operating results of the
Company and its subsidiaries for the fourth quarter and year-end
1997.
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360 Communications....Corporate Communications....8725 W. Higgins
Road....Chicago, Illinois 60631....(773)399-2200
FOR IMMEDIATE RELEASE
MEDIA:
Margaret Kirch Cohen Sal Cinquegrani
(773) 399-2385 (773) 399-2783
ANALYSTS:
Linda Wait
(773) 399-2284
360 COMMUNICATIONS REPORTS RECORD FOURTH QUARTER,
1997 NET INCOME, REVENUES AND OPERATING CASH FLOW
(Chicago) Feb. 18, 1998 -- Chicago-based 360 Communications Company
(NYSE: XO) today reported record fourth quarter and year-end 1997 net income,
revenues and operating cash flow.
360 reported record net income of $21.4 million, or 18 cents per share,
for the fourth quarter of 1997, up from $5.4 million, or 4 cents per share, for
the fourth quarter of 1996. For the year ended Dec. 31, 1997, the company
reported record net income of $81.5 million, or 67 cents per share, up from
$59.5 million, or 50 cents per share, in the prior year. 1997 earnings per share
increased 350 percent for the quarter and 34 percent for the year, compared with
the same periods during 1996.
"During 1997 we achieved healthy revenue growth and delivered
substantially improved earnings," said Dennis Foster, president and chief
executive officer of 360 Communications. "We have made tremendous progress
toward our strategic goals of achieving industry-leading results in our core
wireless business, creating new revenue sources by leveraging our incumbent
position, strong brand and local presence, and strengthening our regional market
clusters."
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360 Reports Fourth Quarter/Year-end Results
Page 2
"During 1998 we will continue to focus on increasing revenue by
offering multiple telecommunications services, highlighted by our bundled
service package of cellular, paging and residential long distance. We also are
accelerating the deployment of Code Division Multiple Access (CDMA) digital
service to deliver more minutes of use to our customers at a lower cost per
minute. Our plans to launch digital service in Raleigh during the second quarter
of this year are on target, and our digital plans are well under way in five
additional markets."
The company reported record total operating revenues of $352.6 million
during the fourth quarter of 1997, an increase of 17 percent from $300.3 million
in the same period last year. For the year ended Dec. 31, 1997, the company
reported record total operating revenues of $1.35 billion, up 23 percent from
$1.1 billion in 1996. Service revenues during the fourth quarter of 1997 were
$338.6 million, up 18 percent from $286.6 million reported for the same period
in 1996. Service revenues for the year were $1.3 billion, up 23 percent from
$1.05 billion reported in 1996.
360 reported record fourth quarter operating cash flow of $116.7
million, a 39 percent increase from $83.9 million reported in the fourth quarter
of 1996. For the year, 360 reported record operating cash flow of $458.5
million, a 25 percent increase over $366.7 million in 1996. Operating cash flow
as a percentage of service revenues reached 34.5 percent for the fourth quarter
and 35.4 percent for the year, compared with 29.3 percent for the fourth quarter
of 1996 and 34.8 percent for the year ended 1996. Cellular-only cash flow margin
was 35.2 percent for the fourth quarter of 1997 and 36.6 percent for the year.
360 added 133,000 net customers during the quarter, down from 168,000
during the fourth quarter of 1996. For the year, 360 added 443,000 net customers
and ended the year with 2.6 million customers, up 20 percent from 2.1 million at
Dec. 31, 1996.
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360 Reports Fourth Quarter/Year-end Results
Page 3
During 1997, for the first time in the company's history, 360's
cellular business achieved double-digit market penetration, which represents the
company's share of customers as a percentage of the estimated population in its
service areas. The company reported a market penetration rate of 10.7 percent at
Dec., 31, 1997, compared with 8.9 percent at Dec. 31, 1996. 360's total market
penetration is among the highest in the industry. At Dec. 31, 1997, the company
reached 20 percent penetration in six markets and 15 percent penetration in
eight additional markets.
360's average monthly churn rate, which measures the percentage of
customers who discontinue service, was 1.88 percent in 1997, compared with 1.86
percent in 1996.
Service revenue per average customer per month for the fourth quarter
of 1997 was $44.81, down 5.1 percent from $47.20 during the prior-year period.
For the year, service revenue per average customer per month declined 8 percent
to $45.44, from $49.39 during 1996.
360's revenue per customer trend and churn rate compare favorably with
the industry average.
During the fourth quarter, the company entered into a definitive
agreement to divest its 27.9 percent interest in the Omaha, Neb., cellular
market, through the sale of its interest in the Omaha Cellular General
Partnership.
Chicago-based 360 Communications provides wireless voice and data
services to 2.6 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. In addition to the New
York Stock Exchange, 360 Communications' stock is listed on the Chicago and
Pacific stock exchanges under the symbol XO.
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360 Reports Fourth Quarter/Year-end Results
Page 4
Forward-Looking Statements
Except for historical information contained herein, the matters
discussed and the statements made in this release concerning the company's
future prospects are forward-looking statements. Such statements are subject to
risks and uncertainties that could cause actual results or outcomes to differ
materially. Such risks and uncertainties are discussed under the heading
"Forward-Looking Statements" in the company's most recent reports on Form 10-K
and Form 10-Q filed with the Securities and Exchange Commission. Forward-looking
statements speak only as of the date hereof and the company undertakes no
obligation to revise or update such statements to reflect events or
circumstances after the date hereof or to reflect the occurrence of
unanticipated events.
# # #
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 also are available through PR Newswire and may
be obtained by calling 1.800.578.7888, #111849. 360's Internet address is
www.360.com.
EDITOR'S NOTE: A degrees SYMBOL should immediately follow the numerals "360" in
the company's name. The word Degrees is NOT part of the company's name. If you
are unable to add the degree symbol, just print "360 Communications."
360 COMMUNICATIONS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)
For the Three Months For the Year
Ended December 31, Ended December 31,
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1997 1996 1997 1996
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Operating Revenues
Service revenues $ 338,620 $ 286,593 $ 1,296,669 $ 1,052,726
Equipment sales 13,935 13,735 50,503 43,146
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Total operating revenues 352,555 300,328 1,347,172 1,095,872
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Operating Expenses
Cost of service 39,410 31,253 158,309 99,745
Cost of equipment sales 35,127 33,317 116,456 104,327
Other operations expense 19,379 15,952 70,561 55,776
Sales, marketing and advertising
expenses 62,270 63,001 232,962 206,147
General, administrative and other
expenses 79,642 72,904 310,340 263,191
Depreciation and amortization 46,964 41,854 184,702 146,841
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Total operating expenses 282,792 258,281 1,073,330 876,027
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Operating Income 69,763 42,047 273,842 219,845
Interest expense (33,986) (27,510) (131,589) (106,364)
Minority interests in net income
of consolidated entities (11,429) (8,454) (50,880) (46,622)
Equity in net income of
unconsolidated entities 16,227 9,875 60,681 50,234
Other income (expense), net (1) 210 (168) 3,270 255
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Income before income taxes 40,785 15,790 155,324 117,348
Income tax expense 19,421 10,421 73,829 57,829
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Net income $ 21,364 $ 5,369 $ 81,495 $ 59,519
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Basic and diluted earnings
per share $ 0.18 $ 0.04 $ 0.67 $ 0.50
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Weighted average shares
outstanding 121,636 121,140 122,339 117,917
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(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.
360 COMMUNICATIONS COMPANY AND SUBSIDIARIES
CONSOLIDATED OPERATING DATA
(Unaudited)
For the Three Months Ended
and as of December 31,
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1997 1996
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Consolidated
EBITDA (in thousands) $ 116,727 $ 83,901
EBITDA margin 34.47% 29.28%
Capital expenditures (in thousands) $ 127,079 $ 106,580
Cellular
Controlled POPs 24,222,292 24,192,590
Controlled customers 2,582,613 2,156,412
Gross customer additions 294,789 292,091
Net customer additions 132,617 167,661
Average customers 2,505,579 2,023,923
Churn 1.93% 1.88%
Penetration 10.66% 8.91%
Service revenue per average customer per month $ 44.81 $ 47.20
EBITDA margin 35.19% 30.50%
Cost to acquire a new customer $ 281 $ 273
Long Distance
Revenue (in thousands) $ 2,709 $ 370
EBITDA (in thousands) $ (1,732) $ (3,399)
For the Year Ended
and as of December 31,
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1997 1996
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Consolidated
EBITDA (in thousands) $ 458,544 $ 366,686
EBITDA margin 35.36% 34.83%
Capital expenditures (in thousands) $ 81,313 $ 300,123
Cellular
Controlled POPs 24,222,292 24,192,590
Controlled customers (1) 2,582,613 2,156,412
Gross customer additions (2) 998,865 874,318
Net customer additions (2) 442,760 469,785
Average customers 2,366,964 1,776,040
Churn 1.88% 1.86%
Penetration 10.66% 8.91%
Service revenue per average customer per month $ 45.44 $ 49.39
EBITDA margin 36.55% 35.25%
Cost to acquire a new customer $ 293 $ 302
Long Distance
Revenue (in thousands) $ 8,635 $ 401
EBITDA (in thousands) $ (13,180) $ (4,308)
(1) Controlled Customers for 1997 exclude 16,559 customers divested in the
third quarter. Controlled Customers for 1996 include 184,870 customers
added through acquisitions, of which 138,223 occurred in the fourth
quarter.
(2) The 1996 amounts exclude customer base acquired.
360 COMMUNICATIONS COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
December 31,
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1997 1996
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ASSETS
Current Assets
Cash and cash equivalents $ 3,471 $ 2,554
Accounts receivable, less allowances
of $6,602 and $5,730, respectively 100,472 102,483
Other receivables 26,981 27,090
Unbilled revenue 35,618 35,712
Inventory 34,354 35,908
Deferred income taxes 15,220 8,462
Prepaid expenses and other 14,051 16,634
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Total current assets 230,167 228,843
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Property, plant and equipment 1,750,097 1,499,407
Less: accumulated depreciation 561,140 415,981
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Property, plant and equipment, net 1,188,957 1,083,426
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Investments in unconsolidated entities 459,669 349,231
Intangibles, net 1,045,007 1,136,587
Other assets 18,124 13,982
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Total assets $ 2,941,924 $ 2,812,069
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LIABILITIES AND SHAREOWNERS' EQUITY
Current Liabilities
Trade accounts and other payables $ 241,127 $ 227,654
Short-term borrowings 18,150 43,750
Advance billings 31,779 28,314
Accrued taxes 17,846 17,951
Accrued agent commissions 11,923 12,089
Other 46,386 21,090
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Total current liabilities 367,211 350,848
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Long-term debt 1,825,347 1,699,778
Deferred Credits and Other Liabilities
Deferred income taxes 60,470 113,005
Postretirement and other benefit obligations 6,347 5,855
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Total deferred credits and other liabilities 66,817 118,860
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Minority interests in consolidated entities 173,248 180,083
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Shareowners' Equity
Common stock ($.01 par value; 1,000,000,000
shares authorized; issued and outstanding
121,267,127 shares in 1997 and 123,308,921
shares in 1996) 1,233 1,233
Additional paid-in capital 774,938 773,472
Accumulated deficit (229,437) (310,932)
Treasury stock, at cost (2,097,021 shares in 1997
and 55,227 shares in 1996) (37,433) (1,273)
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Total shareowners' equity 509,301 462,500
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Total liabilities and shareowners' equity $ 2,941,924 $ 2,812,069
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360 COMMUNICATIONS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
For the Year Ended December 31,
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1997 1996 1995
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Operating Activities
Net income (loss) $ 81,495 $ 59,519 $ (1,695)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization 184,702 146,841 114,731
Deferred income taxes 41,286 36,197 36,267
Gain on the sale of cellular investments (3,029) ----- -----
Equity in net income of unconsolidated
entities, net of distributions (22,903) (27,838) (7,206)
Minority interests in net income of
consolidated entities 50,880 46,622 34,269
Changes in operating assets and
liabilities, excluding acquisitions
Receivables, net (2,161) (28,748) (20,610)
Other current assets 5,058 (23,222) 7,592
Trade accounts and other payables 21,301 110,146 3,420
Accrued expenses and other
current liabilities 33,379 (3,984) 6,365
Noncurrent assets and liabilities, net (5,007) (685) 12,007
Other, net 2,704 4,425 (1,847)
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Net Cash Provided by Operating Activities 387,705 319,273 183,293
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Investing Activities
Capital expenditures (281,313) (300,123) (323,651)
Acquisitions and divestitures (56,629) (352,533) (1,142)
Investments in unconsolidated entities
and other (80,928) (14,890) (3,743)
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Net Cash Used for Investing Activities (418,870) (667,546) (328,536)
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Financing Activities
Net borrowings (payments) under bank revolving
credit facility (80,000) 680,000 -----
Proceeds from long-term debt 200,000 900,000 -----
Debt issuance costs (1,609) (15,229) -----
Net short-term borrowings (payments) (25,600) 43,750 -----
Purchases of common stock for treasury (36,401) (3,427) -----
Increase in advances from affiliates ----- 135,892 158,482
Contributions from minority investors 100 5,636 7,228
Distributions to minority investors (25,358) (14,849) (6,971)
Repayment of advances from affiliates ----- (1,400,000) -----
Other, net 950 31 -----
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Net Cash Provided by Financing Activities 32,082 331,804 158,739
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Increase (Decrease) in Cash and Cash
Equivalents 917 (16,469) 13,496
Cash and Cash Equivalents at Beginning of Year 2,554 19,023 5,527
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Cash and Cash Equivalents at End of Year $ 3,471 $ 2,554 $ 19,023
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