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 April 15, 1998 ----------------------------------------------------------------------- Date of Report (Date of earliest 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 April 15, 1998, 360 Communications Company (the "Company") issued a press release announcing the consolidated operating results of the Company and its subsidiaries for the first quarter of 1998. 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 April 15, 1998 announcing the consolidated operating results of the Company and its subsidiaries for the first quarter of 1998. -2- 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 thereunto duly authorized. 360 Communications Company By: /s/ Jeffery R. Gardner Jeffery R. Gardner Senior Vice President - Finance (Principal Accounting Officer) Date: April 15, 1998 -3- EXHIBIT INDEX Exhibit No. Description of Exhibits - -------- ---------------------------- 1 Press Release issued by 360 Communications Company on April 15, 1998 announcing the consolidated operating results of the Company and its subsidiaries for the first quarter of 1998. -4- 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 REPORTS RECORD FIRST QUARTER NET INCOME AND REVENUES (Chicago) April 15, 1998 -- 360 Communications Company (NYSE:XO) today reported record first quarter 1998 net income, driven by record revenues and strong operating cash flow. 360 reported record net income of $44.1 million, or 36 cents per share, for the first quarter of 1998, compared with $9.4 million, or 8 cents per share, for the first quarter of 1997. Excluding gains from 1998 and 1997 divestitures of unconsolidated entities, first quarter 1998 earnings per share increased 250 percent to 21 cents from 6 cents in 1997. 1998 net income includes an after-tax gain of $18.1 million, or 15 cents per share, from the sale of the company's 28 percent interest in the Omaha, Neb., cellular market. Excluding the Omaha transaction, net income would have been $26 million. In 1997, 360's first quarter net income included an after-tax gain of $2 million as a result of the divestiture of its ownership interests in two unconsolidated entities. -more- 360 Reports First Quarter Results Page 2 360 reported record total operating revenues of $355 million during the first quarter of 1998, up 15.6 percent from $307 million in the same period last year. Service revenues were $342 million, up 16.2 percent from $294 million reported in the first quarter of 1997. For the first quarter, 360 reported operating cash flow of $130 million, including a loss of $1.5 million for residential long distance. This represents a 47 percent increase over $88 million reported in the first quarter of 1997. Operating cash flow as a percentage of service revenues was 38 percent for the quarter, compared with 30 percent for the same period last year. Cellular-only cash flow margin was 39 percent for the first quarter of 1998. Dennis E. Foster, president and chief executive officer of 360 Communications, said, "Our strategy of maximizing revenues and managing the decline in average revenue per customer continued to produce improved results for the third consecutive quarter, and our team is diligently focused on our operating performance and strong revenue growth. "On the network side, our Southeast region is gearing up to launch Code Division Multiple Access (CDMA) digital service in Raleigh in the second quarter. Our plans are on target to deploy digital service in several other large markets this year, including Greensboro, North Carolina; Greenville, South Carolina; Norfolk and Richmond, Virginia; and Toledo, Ohio." 360 added nearly 61,500 net customers during the quarter, down 51 percent from 124,500 during the first quarter of 1997. As of March 31, 1998, the company had more than 2.6 million customers, up 16 percent from nearly 2.3 million at March 31, 1997. The company reported a market penetration rate of 10.79 percent, compared with 9.36 percent at March 31, 1997. At March 31, 1998, the company had reached 20 percent penetration in seven markets and 15 percent penetration in seven additional markets. 360's average monthly churn rate, which measures the percentage of customers who discontinue service, was 1.97 percent for the first quarter of 1998, compared with 1.87 percent for the first quarter of 1997. -more- 360 Reports First Quarter Results Page 3 Service revenue per average customer per month for the first quarter of 1998 was $43.46, down 1 percent from $43.91 during the prior-year period. During the quarter, the company entered into a definitive agreement to merge with Little Rock-based ALLTEL Corporation. The companies expect the merger to be completed during the third quarter of this year, following the required approvals. Chicago-based 360 Communications provides wireless voice and data services to more than 2.6 million customers in more than 100 markets in 15 states. 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. 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 report on Form 10-K 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 Ended March 31, -------------------------------- 1998 1997 ----------- ----------- Operating Revenues Service revenues $ 341,575 $ 293,970 Equipment sales 13,260 12,876 ----------- ----------- Total operating revenues 354,835 306,846 ----------- ----------- Operating Expenses Cost of service 40,792 41,489 Cost of equipment sales 28,434 28,449 Other operations expense 17,873 14,993 Sales, marketing and advertising expenses 56,386 60,581 General, administrative and other expenses 81,673 73,092 Depreciation and amortization 49,833 45,529 ----------- ----------- Total operating expenses 274,991 264,133 ----------- ----------- Operating Income 79,844 42,713 Interest expense (33,259) (31,190) Minority interests in net income of consolidated entities (13,647) (9,709) Equity in net income of unconsolidated entities 16,174 13,163 Other income, net 30,536 (1) 3,014 (2) ----------- ----------- Income before income taxes 79,648 17,991 Income tax expense 35,528 8,546 ----------- ----------- Net income $ 44,120 $ 9,445 =========== =========== Basic and diluted earnings per share $ 0.36 $ 0.08 =========== =========== Weighted average shares outstanding 121,287 123,309 =========== =========== (1) In February 1998, the Company recognized a gain of $30.5 million ($18.1 million, net of tax) in connection with the divestiture of its ownership interest in an unconsolidated entity. (2) 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 March 31, ------------------------------- 1998 1997 ------------- ------------- Consolidated EBITDA (in thousands) $ 129,677 $ 88,242 EBITDA margin 37.96% 30.02% Capital expenditures (in thousands) $ 32,544 $ 23,273 Cellular Controlled POPs 24,501,552 24,358,200 Controlled customers 2,644,073 2,280,938 Gross customer additions 220,363 254,072 Net customer additions 61,460 124,526 Average customers 2,606,554 2,219,930 Churn 1.97% 1.87% Penetration 10.79% 9.36% Service revenue per average customer per month $ 43.46 $ 43.91 EBITDA margin 38.60% 31.43% Cost to acquire a new customer $ 324 $ 290 Long Distance Revenues (in thousands) $ 2,238 $ 1,518 EBITDA (in thousands) $ (1,509) $ (3,688) 360 COMMUNICATIONS COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited) March 31, December 31, 1998 1997 ------------ ------------ ASSETS Current Assets Cash and cash equivalents $ 7,123 $ 3,471 Accounts receivable, less allowances of $6,187 and $6,602, respectively 93,036 100,472 Other receivables 27,707 26,981 Unbilled revenue 35,087 35,618 Inventory 26,590 34,354 Deferred income taxes 15,932 15,220 Prepaid expenses and other 8,976 14,051 ------------ ------------ Total current assets 214,451 230,167 ------------ ------------ Property, plant and equipment 1,782,963 1,750,097 Less: accumulated depreciation 603,721 561,140 ------------ ------------ Property, plant and equipment, net 1,179,242 1,188,957 ------------ ------------ Investments in unconsolidated entities 484,575 459,669 Intangibles, net 1,036,109 1,045,007 Other assets 21,857 18,124 ------------ ------------ Total assets $ 2,936,234 $ 2,941,924 ============ ============ LIABILITIES AND SHAREOWNERS' EQUITY Current Liabilities Trade accounts and other payables $ 161,807 $ 241,127 Short-term borrowings 20,400 18,150 Advance billings 32,450 31,779 Accrued taxes 39,823 17,846 Accrued agent commissions 8,960 11,923 Other 30,303 46,386 ------------ ------------ Total current liabilities 293,743 367,211 ------------ ------------ Long-term debt 1,845,400 1,825,347 ------------ ------------ Deferred Credits and Other Liabilities Deferred income taxes 63,804 60,470 Postretirement and other benefit obligations 6,495 6,347 ------------ ------------ Total deferred credits and other liabilities 70,299 66,817 ------------ ------------ Minority interests in consolidated entities 171,386 173,248 ------------ ------------ Shareowners' Equity Common stock 1,233 1,233 Additional paid-in capital 774,943 774,938 Accumulated deficit (185,317) (229,437) Treasury stock, at cost (35,453) (37,433) ------------ ------------ Total shareowners' equity 555,406 509,301 ------------ ------------ Total liabilities and shareowners' equity $ 2,936,234 $ 2,941,924 ============ ============ 360 COMMUNICATIONS COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) For the Three Months Ended March 31, ------------------------ 1998 1997 ---------- ----------- Operating Activities Net income $ 44,120 $ 9,445 Adjustments to reconcile net income to net cash provided by (used for) operating activities: Depreciation and amortization 49,833 45,529 Deferred income taxes 12,249 2,161 Gain on sale of cellular investments (30,506) (3,029) Equity in net income of unconsolidated entities, net of distributions (8,846) (7,803) Minority interests in net income of consolidated entities 13,647 9,709 Changes in operating assets and liabilities, excluding acquisitions Receivables, net 7,967 15,170 Other current assets 12,113 (4,389) Trade accounts and other payables (63,087) (75,932) Accrued expenses and other current liabilities (11,440) (7,763) Noncurrent assets and liabilities, net (2,907) (1,112) Other, net 615 1,178 ---------- ----------- Net Cash Provided by (Used for) Operating Activities 23,758 (16,836) ---------- ----------- Investing Activities Capital expenditures (32,544) (23,273) Acquistions of additional interests in consolidated entities (14,284) (24,812) Divestitures of cellular investments 15,199 3,888 ---------- ----------- Net Cash Used for Investing Activities (31,629) (44,197) ---------- ----------- Financing Activities Net payments under bank revolving credit facility (80,000) (100,000) Proceeds from long-term debt 100,000 200,000 Debt issuance costs (856) (1,609) Net short-term borrowings (payments) 2,250 (30,000) Distributions to minority investors (10,383) (2,040) Other, net 512 798 ---------- ----------- Net Cash Provided by Financing Activities 11,523 67,149 ---------- ----------- Increase in Cash and Cash Equivalents 3,652 6,116 Cash and Cash Equivalents at Beginning of Period 3,471 2,554 ---------- ----------- Cash and Cash Equivalents at End of Period $ 7,123 $ 8,670 ========== ===========