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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 14, 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
- ---------------------- ------------------- --------------------------------
(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)
(733) 399-2500
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(Registrant's telephone number, including area code)
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Item 5. Other Events.
On February 14, 1997, 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 1996. A copy of the 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
14, 1997 regarding the consolidated operating results of 360 Communication
Company and its subsidiaries for the fourth quarter and year-end 1996.
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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
Date: February 14, 1997
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EXHIBIT INDEX
Exhibit
No. Description of Exhibits
- -------- ----------------------------
1 Press Release issued by 360 Communications Company on February
14, 1997 regarding the consolidated operating results of 360
Communications Company and its subsidiaries for the fourth
quarter and year-end 1996.
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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:
Dave Gould
(773) 399-2284
360 COMMUNICATIONS REPORTS RECORD FOURTH QUARTER, YEAR-END 1996 CUSTOMER
GAIN, REVENUES AND OPERATING CASH FLOW
(Chicago) Feb. 14, 1997 -- Chicago-based 360 Communications Company
(NYSE:XO) today reported record fourth quarter and year-end 1996 customer gain,
revenues and operating cash flow. The company said its annual cellular service
revenues surpassed the billion-dollar mark for the first time, its customer base
reached a milestone of more than 2.1 million and it produced positive annual
earnings for the first time in the company's history.
Excluding customers added through 360's acquisition of Independent
Cellular Network properties in the fourth quarter of 1996, 360 Communications
added a record 168,000 net customers during the quarter, up from 153,000 during
the fourth quarter of 1995. During 1996, 360 added a record 470,000 customers
through internal growth and 185,000 customers through acquisitions, to end the
year with more than 2.1 million customers, up 44 percent from 1.5 million at
Dec. 31, 1995.
"We are very pleased with our performance during our first year as an
independent company," said Dennis Foster, president and chief executive officer
of 360 Communications. "In addition to producing record results, during 1996 we
introduced our new name and logo, launched residential long distance and paging,
rolled out Code
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360 Reports Fourth Quarter/Year-End Results
Page 2
Division Multiple Access (CDMA) digital service in Las Vegas, and completed
approximately $600 million in acquisitions to further strengthen our market
clusters. Collectively, we acquired 4 million potential customers (POPS) at very
attractive values for our shareowners. Since we began offering residential long
distance service in August 1996, we've signed up more than 50,000 long distance
customers -- another indication that our customers value their relationships
with 360."
The company reported record total operating revenues of $300 million
during the fourth quarter of 1996, up from $228 million in the same period last
year. For the year ended Dec. 31, 1996, the company reported total operating
revenues of $1.1 billion, up 31 percent from $834 million in 1995. Cellular
service revenues during the fourth quarter of 1996 were $287 million, up 32
percent from $217 million reported for the same period in 1995. Cellular service
revenues for the year were $1 billion, up 33 percent from $789 million reported
in 1995.
360 reported record fourth quarter operating cash flow of $84 million,
a 34 percent increase from $63 million reported in the fourth quarter of 1995.
For the year, 360 reported operating cash flow of $367 million, compared with
$260 million in 1995, an increase of 41 percent. Operating cash flow, as a
percentage of cellular service revenues, reached 35 percent for the year,
compared with 33 percent in 1995.
360 Communications reported net income of $5.4 million, or 4 cents per
share, for the fourth quarter of 1996, compared with $435,000, approximately
break-even per share for the fourth quarter of 1995. For the year ending Dec.
31, 1996, 360 reported net income of $59.5 million, or 50 cents per share,
compared with a loss of $1.7 million, or a loss of 1 cent per share in 1995,
making 1996 the first profitable year in the company's history. As previously
announced, 360 recognized charges of 6 to 8 cents per share during the fourth
quarter of 1996, which included earnings from unconsolidated subsidiaries that
fell short of expectations, a one-time federal income tax adjustment and higher
than projected fraud losses in December.
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360 Reports Fourth Quarter/Year-End Results
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The company reported a market penetration rate of 8.9 percent at the
end of the fourth quarter of 1996, compared with 7.6 percent for the fourth
quarter of 1995. 360's total market penetration is among the highest in the
industry. The company has more than 15 percent penetration in eight markets and
more than 10 percent penetration in 19 additional markets. 360's churn rate,
which is a measure of customer retention, was 1.86 percent in 1996, which is
better than the industry average.
"Our team remains focused on delivering results," Foster said. During
1997 we plan to continue growing our residential long distance and paging
businesses, and we expect to conduct market trials for local telephone service.
We also plan to begin building our Code Division Multiple Access (CDMA) digital
infrastructure in Raleigh, N.C., to increase operating efficiencies and prepare
for future customer growth.
"Our strong local presence continues to be a strategic competitive
advantage. As a leader in the wireless industry, 360 is well positioned to
compete in our markets and to continue delivering products and services that are
of value to our customers."
Chicago-based 360 Communications provides wireless voice and data
services to more than 2.1 million customers in more than 100 markets in Alabama,
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.
###
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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<TABLE>
<CAPTION>
360 COMMUNICATIONS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Thousands of Dollars)
(Unaudited)
For the Three Months For the Year
Ended December 31, Ended December 31,
-------------------------- --------------------------
1996 1995 1996 1995
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Operating Revenues
Cellular Service Revenues ...................... $ 286,593 $ 217,431 $ 1,052,726 $ 789,459
Equipment Sales ................................ 13,735 10,831 43,146 44,956
----------- ----------- ----------- -----------
Total Operating Revenues .................. 300,328 228,262 1,095,872 834,415
----------- ----------- ----------- -----------
Operating Expenses
Cost of Service ................................ 31,253 17,734 99,745 68,223
Cost of Equipment Sales ........................ 33,317 31,508 104,327 109,441
Other Operations Expense ....................... 15,952 12,064 55,776 40,591
Sales, Marketing and Advertising Expenses ...... 63,001 43,786 206,147 141,505
General, Administrative and Other Expenses ..... 72,904 60,636 263,191 214,536
Depreciation and Amortization .................. 41,854 31,065 146,841 114,731
----------- ----------- ----------- -----------
Total Operating Expenses .................. 258,281 196,793 876,027 689,027
----------- ----------- ----------- -----------
Operating Income ............................... 42,047 31,469 219,845 145,388
Interest Expense ............................... (27,510) (32,159) (106,364) (127,240)
Minority Interests in Net Income
of Consolidated Entities .................... (8,454) (8,051) (46,622) (34,269)
Equity in Net Income of
Unconsolidated Entities ..................... 9,875 16,450 50,234 40,016
Other Income (Expense), net .................... (168) 1,003 255 (185)
----------- ----------- ----------- -----------
Income Before Income Taxes ..................... 15,790 8,712 117,348 23,710
Income Tax Expense ............................. 10,421 8,277 57,829 25,405
----------- ----------- ----------- -----------
Net Income (Loss) ......................... $ 5,369 $ 435 $ 59,519 $ (1,695)
=========== =========== =========== ===========
Net Income (Loss) per Share (in Dollars) ....... $ 0.04 $ 0.00<F1> $ 0.50 $ (0.01)<F1>
=========== =========== =========== ===========
Weighted Average Shares
Outstanding, in thousands ................... 121,342 117,118<F1> 118,136 116,706<F1>
=========== =========== =========== ===========
<FN>
<F1>
(1) In 1995 Net Income (Loss) per Share has been calculated based upon the
number of Sprint Corporation weighted average shares outstanding for each
respective period, adjusted for a conversion ratio of 1 share of 360 Common
Stock to 3 shares of Sprint Common Stock.
(2) Certain amounts have been reclassified to conform to the presentation used
for the Three Months and Year Ended December 31, 1996.
</FN>
</TABLE>
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360 COMMUNICATIONS COMPANY AND SUBSIDIARIES
OPERATING DATA
Unaudited
For the Three Months Ended
and as of December 31,
---------------------------------
1996 1995
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EBITDA (in thousands) $ 83,901 $ 62,534
EBITDA Margin 29.28% 28.76%
Capital Expenditures (in thousands) $ 106,580 $ 53,624
Controlled POPs 4,192,590 19,670,534
Controlled Customers 2,156,412 1,501,757
Gross Customer Additions 292,091 239,189
Net Customer Additions 167,661 153,261
Average Customers 2,023,923 1,408,924
Churn 1.88% 1.86%
Penetration 8.91% 7.63%
Service Revenue per Average Customer per Month $ 47.20 $ 51.44
Cost to Acquire a New Customer (1) $ 273 $ 270
For the Year Ended
and as of December 31,
--------------------------------
1996 1995
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EBITDA (in thousands) 366,686 $ 260,119
EBITDA Margin 34.83% 32.95%
Capital Expenditures (in thousands) $ 300,123 $ 323,651
Controlled POPs 24,192,590 19,670,534
Controlled Customers (2) 2,156,412 1,501,757
Gross Customer Additions (3) 874,318 734,612
Net Customer Additions (3) 469,785 461,768
Average Customers 1,776,040 1,240,970
Churn 1.86% 1.81%
Penetration 8.91% 7.63%
Service Revenue per Average Customer per Month $ 49.39 $ 53.01
Cost to Acquire a New Customer (1) $ 302 $ 280
(1) Cost to Acquire a New Customer includes Sales, Marketing and Advertising
Expenses and the gross margin on equipment sales.
(2) Controlled Customers include 184,870 customers added through acquisitions
which were completed in 1996. There were 138,223 customers added through
acquisitions in the fourth quarter of 1996.
(3) The 1996 amounts exclude customer base acquired.
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360 COMMUNICATIONS COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Thousands of Dollars)
(Unaudited)
December 31,
-----------------------------
ASSETS 1996 1995
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Current Assets
Cash and Cash Equivalents $ 2,554 $ 19,023
Accounts Receivable, less allowances
of $5,730 and $2,370, respectively 102,483 68,087
Other Receivables 27,090 29,799
Unbilled Revenue 35,712 23,481
Inventory 35,908 19,576
Deferred Income Taxes 8,462 -----
Prepaid Expenses and Other 16,634 6,604
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Total Current Assets 228,843 166,570
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Property, Plant and Equipment 1,499,407 1,151,157
Less: Accumulated Depreciation 415,981 300,703
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Property, Plant and Equipment, net 1,083,426 850,454
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Investments in Unconsolidated Entities 349,231 318,287
Intangibles, net 1,136,587 632,756
Other Assets 13,982 5,179
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Total Assets $ 2,812,069 $ 1,973,246
============= ============
LIABILITIES AND SHAREOWNERS' EQUITY
Current Liabilities
Trade Accounts and Other Payables $ 227,654 $ 111,770
Short-Term Borrowings 43,750 -----
Advance Billings 28,314 20,559
Accrued Taxes 17,951 19,690
Accrued Agent Commissions 12,089 15,417
Other 21,090 27,092
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Total Current Liabilities 350,848 194,528
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Long-Term Debt 1,699,778 -----
Advances From and Notes to Affiliates ----- 1,517,729
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Deferred Credits and Other Liabilities
Deferred Income Taxes 113,005 99,168
Postretirement and Other Benefit Obligations 5,855 12,859
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Total Deferred Credits and Other Liabilities 118,860 112,027
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Minority Interests in Consolidated Entities 180,083 146,894
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Shareowners' Equity
Common Stock ($.01 par value; 1,000,000,000
shares authorized;123,308,921 shares
issued and outstanding) 1,233 11,541
Additional Paid-In Capital 772,199 360,978
Accumulated Deficit (310,932) (370,451)
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Total Shareowners' Equity 462,500 2,068
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Total Liabilities and Shareowners' Equity $ 2,812,069 $ 1,973,246
============= ============
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<TABLE>
<CAPTION>
360 COMMUNICATIONS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Thousands of Dollars)
(Unaudited)
For the Year Ended December 31,
-------------------------------------
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Operating Activities
Net Income (Loss) $ 59,519 $ (1,695) $ (19,757)
Adjustments to Reconcile Net Income (Loss) to Net
Cash Provided by Operating Activities:
Depreciation and Amortization 146,841 114,731 92,435
Deferred Income Taxes 36,197 36,267 20,646
Loss on the Sale of Cellular Property 4,352
Equity in Net Income of Unconsolidated
Entities, net of distributions (27,838) (7,206) (10,899)
Minority Interests in Net Income of
Consolidated Entities 46,622 34,269 22,110
Changes in Operating Assets and Liabilities
Receivables, net (28,748) (20,610) (23,111)
Other Current Assets (23,222) 7,592 (18,225)
Trade Accounts and Other Payables 110,146 3,420 38,293
Accrued Expenses and Other
Current Liabilities (3,984) 6,365 36,590
Noncurrent Assets and Liabilities, net (685) 12,007 (1,455)
Other, net 4,425 (1,847) 834
----------- ----------- ----------
Net Cash Provided by Operating Activities 319,273 183,293 141,813
----------- ----------- ----------
Investing Activities
Capital Expenditures (300,123) (323,651) (264,333)
Acquisitions (352,533) (1,142) -----
Investment in Unconsolidated Entities and Other (14,890) (3,743) (8,009)
Proceeds from Sale of Cellular Property ----- ----- 9,920
----------- ----------- ----------
Net Cash Used by Investing Activities (667,546) (328,536) (262,422)
----------- ----------- ----------
Financing Activities
Net Borrowings under Bank Revolving Credit Facility 664,106 ----- -----
Proceeds from Long-Term Debt 900,000 ----- -----
Net Short-Term Borrowings 43,750 ----- -----
Increase in Advances from Affiliates 135,892 158,482 107,294
Contributions from Minority Investors 5,636 7,228 17,742
Distributions to Minority Investors (14,849) (6,971) (4,405)
Repayment of Advances from Affiliates (1,400,000) ----- -----
Other (2,731) ----- -----
----------- ----------- ----------
Net Cash Provided by Financing Activities 331,804 158,739 120,631
----------- ----------- ----------
(Decrease) Increase in Cash and Cash Equivalents (16,469) 13,496 22
Cash and Cash Equivalents at Beginning of Year 19,023 5,527 5,505
----------- ----------- ----------
Cash and Cash Equivalents at End of Year $ 2,554 $ 19,023 $ 5,527
=========== =========== ==========
</TABLE>
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February 14, 1997
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549
Attention: Filing Desk, Stop 1-4
Re: Current Report on Form 8-K of 360 Communications Company
Ladies and Gentlemen:
On behalf of 360 Communications Company (the "Company"), I am transmitting
herewith for filing with the Commission pursuant to Sections 13 or 15(d) of the
Securities Exchange Act of 1934, as amended, a copy of the Company's Current
Report on Form 8-K, with attached exhibit, relating to events reported as of
February 14, 1997.
Very truly yours,
