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
July 16, 1997
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Date of Report (Date of earlier 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 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.
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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/ Gary L. Burge
Gary L. Burge
Senior Vice President - Finance
(Principal Accounting Officer)
Date: July 16, 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 July 16,
1997 announcing the consolidated operating results of the Company
and its subsidiaries for the second quarter and first six 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:
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.
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<PAGE>
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.
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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.
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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 accessed 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 Six Months
Ended June 30, Ended June 30,
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1997 1996(2) 1997 1996(2)
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Operating Revenues
Service revenues $ 328,834 $ 263,560 $ 622,804 $ 494,314
Equipment sales 11,428 10,613 24,304 19,554
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Total operating revenues 340,262 274,173 647,108 513,868
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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
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Total operating expenses 264,402 206,392 528,535 399,664
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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
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Income before income taxes 41,537 43,857 59,528 60,119
Income tax expense 19,730 19,573 28,276 28,855
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Net income $ 21,807 $ 24,284 $ 31,252 $ 31,264
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Earnings per share $ 0.18 $ 0.21 $ 0.25 $ 0.27
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Weighted average shares
outstanding 122,580 117,066 122,996 117,048
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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.
(2) Certain 1996 amounts have been reclassified to conform to the
presentation used in 1997.
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360 COMMUNICATIONS COMPANY AND SUBSIDIARIES
CONSOLIDATED OPERATING DATA
(Unaudited)
For the Three Months Ended
and as of June 30,
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1997 1996
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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,
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1997 1996
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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.
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360 COMMUNICATIONS COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
June 30, December 31,
1997 1996
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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
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Total current assets 232,651 228,843
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Property, plant and equipment 1,556,847 1,499,407
Less: accumulated depreciation 466,360 415,981
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Property, plant and equipment, net 1,090,487 1,083,426
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Investments in unconsolidated entities 443,466 349,231
Intangibles, net 1,140,733 1,136,587
Other assets 16,798 13,982
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Total Assets $ 2,924,135 $ 2,812,069
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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
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Total current liabilities 293,464 350,848
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Long-term debt 1,844,577 1,699,778
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Deferred Credits and Other Liabilities
Deferred income taxes 118,868 113,005
Postretirement and other benefit obligations 5,980 5,855
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Total deferred credits and other liabilities 124,848 118,860
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Minority interests in consolidated entities 184,945 180,083
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Shareowners' Equity
Common stock 1,233 1,233
Additional paid-in capital 754,748 772,199
Accumulated deficit (279,680) (310,932)
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Total shareowners' equity 476,301 462,500
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Total liabilities and shareowners' equity $ 2,924,135 $ 2,812,069
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<PAGE>
360 COMMUNICATIONS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
For the Six Months
Ended June 30,
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1997 1996
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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)
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Net Cash Provided by Operating Activities 110,993 136,817
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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)
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Net Cash Used for Investing Activities (189,633) (256,060)
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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)
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Net Cash Provided by Financing Activities 84,194 128,827
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Increase in Cash and Cash Equivalents 5,554 9,584
Cash and Cash Equivalents at Beginning of Period 2,554 19,023
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Cash and Cash Equivalents at End of Period $ 8,108 $ 28,607
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