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
October 15, 1997
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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)
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Item 5. Other Events.
On October 15, 1997, 360 Communications Company (the "Company") issued
a press release announcing the consolidated operating results of the Company and
its subsidiaries for the third quarter and first nine 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
October 15, 1997 announcing the consolidated operating results of the Company
and its subsidiaries for the third quarter and first nine months of 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/ Jeffrey R. Gardner
Jeffrey R. Gardner
Senior Vice President - Finance
(Principal Accounting Officer)
Date: October 15, 1997
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EXHIBIT INDEX
Exhibit
No. Description of Exhibits
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1 Press Release issued by 360 Communications Company on October 15,
1997 announcing the consolidated operating results of the Company
and its subsidiaries for the third quarter and first nine months
of 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
(773) 399-2385
ANALYSTS:
Linda Wait
(773) 399-2284
360 REPORTS RECORD NET INCOME, REVENUES AND CASH FLOW
FOR THIRD QUARTER, FIRST NINE MONTHS OF 1997
Achieves Double Digit Market Penetration
(Chicago) Oct. 15, 1997 -- Chicago-based 360 Communications Company
(NYSE:XO) today reported record net income, revenues and operating cash flow for
the third quarter and first nine months of 1997, and produced double digit
market penetration for the first time in the company's history.
360 reported record net income of $28.9 million, or 24 cents per share,
for the third quarter of 1997, up 26 percent from $22.9 million, or 20 cents per
share, for the third quarter of 1996. 360 reported net income of $60.1 million
for the first nine months of 1997, compared with $54.2 million for the same
period in 1996.
Total operating revenues rose 23 percent in the third quarter of 1997
to a record $347.5 million, up from $281.7 million in the same period last year.
Service revenues during the quarter were $335.2 million, including $2.4 million
for residential long distance, up 23 percent from $271.8 million reported in the
third quarter of 1996. For the first nine months of 1997, total operating
revenues were $994.6 million, including $5.9 million for residential long
distance, up 25 percent from $795.5 million in the same period of 1996.
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360 Reports Third Quarter Results
Page 2
For the third quarter of 1997, 360 reported record operating cash flow
of $130.9 million, including a loss of $3.6 million for residential long
distance, compared with $100.4 million reported in the third quarter of 1996.
Operating cash flow as a percentage of service revenues was 39.04 percent for
the quarter, compared with 36.95 percent for the same period last year. For the
first nine months of 1997, operating cash flow was $341.8 million, including a
loss of $11.4 million for residential long distance, compared with $282.8
million during the same period in 1996.
"360 continues to deliver strong operating results," said Dennis E.
Foster, president and chief executive officer of 360 Communications. "We
reported our best-ever earnings, revenues and cash flow for the quarter, and we
continue to improve our operating margins. We're proud of our results, and our
competitive position, in today's heated marketplace."
360 added 87,000 net customers during the third quarter of 1997,
compared with 100,000 during the third quarter of 1996. For the first nine
months of 1997, 360 added 310,000 net customers, compared with 302,000 in the
first nine months of 1996. 360 closed the period with 2.45 million customers, up
32 percent from 1.85 million a year ago.
"Despite aggressive promotions from new and existing competitors, we
were able to achieve an overall market penetration rate that is among the
highest in the industry," Foster said. "In fact, we have nearly doubled our
customer base in just two years."
The company reported a double digit market penetration rate of 10.11
percent at Sept. 30, 1997, compared with 8.84 percent at Sept. 30, 1996. At
Sept. 30, 1997, 360 had more than 15 percent penetration in 13 markets, four of
which exceeded 20 percent. Market penetration represents the total number of
customers as a percentage of potential customers.
The company's average monthly churn rate, which measures the percentage
of customers who discontinue service, was 1.90 percent for the third quarter of
1997, compared with 1.86 percent during the same period last year.
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360 Reports Third Quarter Results
Page 3
During the quarter, 360 acquired minority interests in 10 of its
controlled markets in Pennsylvania, Florida and Indiana, bringing 360's
ownership interest in those markets to 100 percent and increasing its potential
customer base (POPs) by 340,000. In addition, 360 sold its 100 percent ownership
interest in the Dothan, Ala., market, reducing its POPs by 136,000.
In late September, 360 achieved the highest customer satisfaction
rating among service providers in Las Vegas, Nev., in the third annual J.D.
Power and Associates Wireless Customer Satisfaction Study. Las Vegas was the
only 360 market among 18 major markets surveyed throughout the country.
Chicago-based 360 Communications, which had revenues of more than $1
billion in 1996, provides wireless voice and data services to 2.45 million
customers in more than 100 markets in 15 states. 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.
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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 obtained by calling (800) 578-7888, #111849. 360's Internet address is
www.360.com.
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360 COMMUNICATIONS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
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1997 1996 1997 1996
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Operating Revenues
Service revenues $ 335,245 $ 271,819 $ 958,049 $ 766,133
Equipment sales 12,264 9,857 36,568 29,411
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Total operating revenues 347,509 281,676 994,617 795,544
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Operating Expenses
Cost of service 37,127 24,148 118,899 68,492
Cost of equipment sales 28,486 25,046 81,329 71,010
Other operations expense 19,177 15,498 51,182 39,824
Sales, marketing and advertising
expenses 54,438 48,527 170,692 143,146
General, administrative and other
expenses 77,399 68,030 230,698 190,287
Depreciation and amortization 45,376 36,833 137,738 104,987
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Total operating expenses 262,003 218,082 790,538 617,746
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Operating Income 85,506 63,594 204,079 177,798
Interest expense (33,570) (24,752) (97,603) (78,854)
Minority interests in net income
of consolidated entities (13,534) (13,843) (39,451) (38,168)
Equity in net income of
unconsolidated entities 16,536 16,339 44,454 40,359
Other income, net (1) 73 101 3,060 423
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Income before income taxes 55,011 41,439 114,539 101,558
Income tax expense 26,132 18,552 54,408 47,407
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Net income $ 28,879 $ 22,887 $ 60,131 $ 54,151
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Earnings per share $ 0.24 $ 0.20 $ 0.49 $ 0.46
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Weighted average shares
outstanding 121,875 117,086 122,626 117,060
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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.
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360 COMMUNICATIONS COMPANY AND SUBSIDIARIES
CONSOLIDATED OPERATING DATA
(Unaudited)
For the Three Months Ended
and as of September 30,
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1997 1996
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Consolidated
EBITDA (in thousands) $ 130,882 $ 100,427
EBITDA margin 39.04% 36.95%
Capital expenditures (in thousands) $ 64,714 $ 49,601
Cellular
Controlled POPs 24,222,292 20,938,734
Controlled customers 2,449,996 1,850,528
Gross customer additions 230,640 204,437
Net customer additions 87,367 100,199
Average customers 2,409,635 1,799,913
Churn 1.90% 1.86%
Penetration 10.11% 8.84%
Service revenue per average customer per month $ 46.12 $ 50.34
EBITDA margin 40.34% 37.28%
Cost to acquire a new customer $ 301 $ 312
Long Distance
Revenue (in thousands) $ 2,369 $ 31
EBITDA (in thousands) $ (3,637) $ (909)
For the Nine Months Ended
and as of September 30,
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1997 1996
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Consolidated
EBITDA (in thousands) $ 341,817 $ 282,785
EBITDA margin 35.68% 36.91%
Capital expenditures (in thousands) $ 154,234 $ 193,543
Cellular
Controlled POPs 24,222,292 20,938,734
Controlled customers (1) 2,449,996 1,850,528
Gross customer additions (2) 704,076 582,227
Net customer additions (2) 310,143 302,124
Average customers 2,319,821 1,684,336
Churn 1.82% 1.80%
Penetration 10.11% 8.84%
Service revenue per average customer per month $ 45.69 $ 50.54
EBITDA margin 37.03% 37.03%
Cost to acquire a new customer $ 298 $ 317
Long Distance
Revenue (in thousands) $ 5,927 $ 31
EBITDA (in thousands) $ (11,448) $ (909)
(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.
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360 COMMUNICATIONS COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
September 30, December 31,
1997 1996
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ASSETS
Cash and cash equivalents $ 5,772 $ 2,554
Accounts receivable, less allowances
of $7,300 and $5,730, respectively 99,002 102,483
Other receivables 36,153 27,090
Unbilled revenue 33,000 35,712
Inventory 32,314 35,908
Deferred income taxes 11,700 8,462
Prepaid expenses and other 9,286 16,634
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Total current assets 227,227 228,843
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Property, plant and equipment 1,627,781 1,499,407
Less: accumulated depreciation 521,466 415,981
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Property, plant and equipment, net 1,106,315 1,083,426
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Investments in unconsolidated entities 461,385 349,231
Intangibles, net 1,150,661 1,136,587
Other assets 17,349 13,982
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Total assets $ 2,962,937 $ 2,812,069
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LIABILITIES AND SHAREOWNERS' EQUITY
Current Liabilities
Trade accounts and other payables $ 172,862 $ 227,654
Short-term borrowings 29,175 43,750
Advance billings 31,045 28,314
Accrued taxes 22,082 17,951
Accrued agent commissions 7,648 12,089
Other 29,960 21,090
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Total current liabilities 292,772 350,848
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Long-term debt 1,849,643 1,699,778
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Deferred Credits and Other Liabilities
Deferred income taxes 144,065 113,005
Postretirement and other benefit obligations 6,133 5,855
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Total deferred credits and other liabilities 150,198 118,860
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Minority interests in consolidated entities 170,238 180,083
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Shareowners' Equity 500,086 462,500
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Total liabilities and shareowners' equity $ 2,962,937 $ 2,812,069
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360 COMMUNICATIONS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
For the Nine Months
Ended September 30,
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1997 1996
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Operating Activities
Net income $ 60,131 $ 54,151
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 137,738 104,987
Deferred income taxes 27,822 19,119
Gain on sale of cellular investments (3,029)
Equity in net income of unconsolidated
entities, net of distributions (24,639) (25,104)
Minority interests in net income of
consolidated entities 39,451 38,168
Changes in operating assets and liabilities,
excluding acquisitions
Receivables, net 4,115 (16,009)
Other current assets 2,551 (1,410)
Trade accounts and other payables (48,771) 1,825
Accrued expenses and other
current liabilities 9,353 10,267
Noncurrent assets and liabilities, net (3,985) (868)
Other, net 2,453 5,266
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Net Cash Provided by Operating Activities 203,190 190,392
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Investing Activities
Capital expenditures (154,234) (193,543)
Acquisitions and divestitures (57,797) (109,613)
Investments in unconsolidated entities and other (80,735) (14,709)
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Net Cash Used for Investing Activities (292,766) (317,865)
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Financing Activities
Net (payments) borrowings under bank revolving
credit facility (50,000) 465,000
Proceeds from long-term debt 200,000 900,000
Debt issuance costs (1,609) (15,229)
Net short-term (payments) borrowings (14,575) 45,650
Purchases of common stock for treasury (24,152)
Increase in advances from affiliates 135,892
Contributions from minority investors 100 4,881
Distributions to minority investors (17,878) (9,275)
Repayment of advances from affiliates (1,400,000)
Other, net 908 (8,600)
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Net Cash Provided by Financing Activities 92,794 118,319
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Increase (Decrease) in Cash and Cash Equivalents 3,218 (9,154)
Cash and Cash Equivalents at Beginning of Period 2,554 19,023
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Cash and Cash Equivalents at End of Period $ 5,772 $ 9,869
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