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SECURITIES AND EXCHANGE COMMISSION
8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
Date of Report
(Date of earliest event reported) October 31, 1996
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TELEPORT COMMUNICATIONS GROUP INC.
(Exact Name of Registrant as specified in its Charter)
Delaware 0-20913 13-3173139
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(State or Other jurisdiction of (Commission (IRS Employer of
Incorporation) File Number) Identification No.)
One Teleport Drive, Staten Island, New York 10311
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number including area code (718) 355-2000
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ITEM 5. OTHER EVENTS
The Registrant issued the following Press Release on October 31, 1996:
TELEPORT COMMUNICATIONS GROUP INC. (TCG) REPORTED THIRD QUARTER 1996 RESULTS:
QUARTERLY REVENUES GREW 53% TO A RECORD $72.7 MILLION WITH EXPANSION OF EBITDA
For Immediate Release:
NEW YORK, N.Y. OCTOBER 31 , 1996
TCG (Nasdaq/NM:TCGI) reported record third quarter revenues of $72.7 million, a
53% increase over $47.6 million for the same period in 1995. On a sequential
quarterly basis, revenues grew 12% while EBITDA (earnings before interest,
taxes, depreciation and amortization), a standard industry measure of operating
cashflow, improved by 30% to $3.1 million.
September quarter, 1996 was the fourth consecutive quarter of positive EBITDA.
------- Quarter --------- Nine Months Ended
September 30
($ in millions) 3Q96 3Q95 2Q96 1996 1995
Revenues $72.75 $47.67 $65.11 $195.99 $130.50
% Increase
96Year/ 95Year 53% 50%
Sequential Qtrly 12%
EBITDA $3.06 $ ( .04) $2.35 $6.39 $(1.55)
Revenues for the first nine months of 1996 were $196 million, a $65.5 million or
50% increase over the same period in 1995. Year to date 1996 EBITDA improved
by $7.9 million from 1995.
"Third quarter results represent a solid trend of revenue growth. TCG's EBITDA
improvements illustrate the operating leverage of our extensive 6,255 route
mile network and organizational infrastructure. Concurrent with EBITDA
improvements, TCG expanded in existing markets, built new markets and added new
products and services." said Bob Annunziata, TCG's Chairman and CEO.
Note: All results (financial and operational) presented in this release for
periods prior to July 1, 1996 are on a pro forma basis to reflect the
Reorganization, described in TCG's SEC Registration Statements.
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REVENUE GROWTH:
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In the third quarter, TCG continued to successfully shift the revenue mix from
dedicated services to switched and high speed data services. Switched services
grew 74% from the same period in 1995 and 11% from second quarter 1996 and now
comprise 40% of third quarter revenues. For the nine months ended September 30,
1996, switched services revenues were 39% of total revenues compared to 34% for
the comparable period in 1995.
In the other lines of business, dedicated service revenues grew at 41% in the
third quarter of 1996 over the comparable period in 1995. While high speed data
is only 2% of total revenues, this line of business continues to be a high
growth opportunity for TCG.
Annualized monthly recurring revenue in September, 1996 was $283 million, a 57%
increase from $180 million in September 1995.
NETWORK EXPANSION:
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9/96 12/95 Increase
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Route Miles 6,255 5,428 827
Fiber Miles 316,480 253,285 63,195
Tel. Switches 22 21 1
ATM Switches 40 14 26
MSAs 55 48 7
Voice Grade Equiv 3,712,000 2,871,000 841,000
Buildings (on net) 2,781 2,185 596
(off net) 4,030 2,551 1,479
Total Bldgs 6,811 4,736 2,075
For the nine months ended September 30, 1996, capital expenditures totaled $232
million. Use of funds was primarily for expansion of the network by an
additional 827 route miles and locations in 596 additional on-net buildings.
In the third quarter, capital expenditures were $105 million. Three fiber optic
networks serving the Cleveland, Ohio, Portland, Oregon, and Salt Lake City,
Utah metropolitan areas became operational in the third quarter. In addition,
the New Jersey digital telephone switch was placed in operation and began
generating revenues in September.
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OPERATING RESULTS:
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EBITDA margins continue to show steady increases quarter over quarter and were
4.2%, 3.6%, and 1.7% for the third, second and first quarters, respectively in
1996. For nine months 1996, EBITDA margins are 3.3% of revenues. The solid
margin expansion trend was a result of network efficiencies in operating
expenses, which improved to 60% of revenues for the third quarter from 62% in
the second quarter and from 63% in third quarter 1995.
At the end of the September 30, 1996, TCG had 1849 employees.
The net loss for the third quarter of 1996 was $33.7 million or $ 0.21 per share
compared with $15.7 million for the same period in 1995. The additional net
loss was due primarily to an increase of $10.5 in depreciation and $10.4 million
in net interest expense associated with network and product expansion.
FINANCINGS AND ACQUISITION:
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In early July, TCG repaid the $250 million revolving credit facility and
redeemed 7.98 million shares from Continental Cablevision for $121 million.
On October 23rd, TCG announced an agreement in principle to acquire the
remaining 75% interest of Eastern Telelogic Corporation (ETC) for approximately
$233 million. ETC provides switched, private line and data services in a tri-
state region serving Philadelphia, Pennsylvania; Camden, New Jersey; and
Wilmington, Delaware. This acquisition will strategically position TCG to meet
customers regional calling and local access requirements in the Northeast
Corridor from Boston to Washington D.C.
This press release, other than historical financial information, contains
forward - looking statements that involve risks and uncertainties detailed in
the company's SEC reports and registration statements. Actual results may vary
materially.
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TABLE 1
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TELEPORT COMMUNICATIONS GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
( UNAUDITED)
($ in millions)
Three Months Ended
September 30
1996 1995*
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Revenue $ 72.7 $ 47.6
Expenses:
Operating 43.6 29.9
Selling, Gen, & Admin 26.0 17.7
Depreciation/Amort. 25.0 14.5
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Operating loss (21.9) (14.5)
Interest Income 14.7 1.2
Interest Expense (26.8) (2.9)
Minority Interest 1.3 .8
Equity of Unconsol. Affiliates ( .3) ( .3)
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Loss Before Taxes (33.0) (15.7)
Income Tax Provision (.7) (.03)
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Net Loss (33.7) (15.7)
EPS* $( .21) (.12)
Weighted Ave. Shares* 158.9 131.9
*1995 results, including EPS are pro forma for the Reorganizations which
occurred in 1996.
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TABLE 2
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TELEPORT COMMUNICATIONS GROUP INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
( UNAUDITED)
($ in millions)
Nine Months Ended
September 30
1996* 1995*
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Revenues $ 196.0 $130.5
Expenses:
120.8 81.2
Operating 68.8 50.8
Selling, Gen, & Admin. 68.9 39.2
Depreciation/Amort ------- ------
Operating loss ( 62.5) (40.7)
Interest Income 16.3 3.8
Interest Expense (37.8) (7.4)
Minority Interest 3.4 2.3
Equity of Unconsol. Affiliates ( .9) (1.1)
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Loss Before Taxes (81.5) (43.1)
Income Tax Provision ( 1.5) (.4)
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Net Loss (83.0) (43.5)
EPS (.59) (.33)
Weighted Ave. Shares 140.9 131.9
*1995 and YTD 1996 results are pro forma for the Reorganization which occurred
in 1996.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf of the
undersigned, thereunto duly authorized.
TELEPORT COMMUNICATIONS
GROUP INC.
Dated: October 31, 1996
By: /s/ John A. Scarpati
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Name: John A. Scarpati
Title: Senior Vice President and Chief
Financial Officer
Dated: October 31, 1996
By: /s/ Maria Terranova-Evans
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Name: Maria Terranova-Evans
Title: Vice President and Controller
(Principal Accounting Officer)
