<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report: April 25, 1996
AirTouch Communications, Inc.
Delaware 1-12342 94-3213132
(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification No.)
incorporation)
One California Street, San Francisco, California 94111
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (415) 658-2000
<PAGE> 2
Item 5. Other Events.
AirTouch Communications, Inc. ("AirTouch") announced first quarter earnings on
Thursday, April 25, 1996 as described in the press release attached as Exhibit
99.
Item 7. Financial Statements and Exhibits
(c) Exhibits.
Exhibit 99. Press Release dated April 25, 1996.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
AIRTOUCH COMMUNICATIONS, INC.
By: /s/ Mohan S. Gyani
Mohan S. Gyani
Executive Vice President and
Chief Financial Officer
Date: April 26, 1996
<PAGE> 3
Exhibits Index
Exhibit 99. Press Release dated April 25, 1996
<PAGE> 1
EXHIBIT 99
APRIL 25, 1996
AIRTOUCH REPORTS RECORD GROWTH FOR FIRST QUARTER
TOTAL WORLDWIDE CUSTOMERS APPROACH 6 MILLION
SAN FRANCISCO - AirTouch Communications (NYSE:ATI) today reported strong growth
in customers, operating revenues, operating cash flow and net income for the
first quarter, buoyed by continued global demand for wireless services. The
company added 435,000 proportionate cellular and paging customers during the
quarter, reaching nearly 6 million total proportionate worldwide customers. For
the first time, AirTouch gained more international cellular customers than
domestic cellular customers.
For the first quarter ended March 31, 1996, AirTouch reported consolidated
operating revenues of $448.9 million, up 20 percent over the same period in the
previous year. Net income climbed 48 percent to $52.2 million, or 10 cents per
share, compared to $35.3 million, or 7 cents per share in first quarter 1995.
First quarter proportionate operating cash flow (operating income plus
depreciation and amortization) -- a key measure of the company's financial
performance -- increased 34.5 percent to $244.8 million.
"The quarter can be summed up in three words -- record worldwide growth," said
Sam Ginn, chairman and chief executive officer of AirTouch Communications. "For
the first time, we added more cellular customers in our international operations
than our domestic operations. Since average revenue per customer is higher
overseas, we're very pleased with our global success.
"Our domestic operations also had an excellent quarter. We had record growth in
cellular and paging customers, yet our margins were strong," he added. "Looking
ahead, we're well on our way toward our goal of adding over one million
worldwide cellular customers this year."
<PAGE> 2
Because AirTouch participates in a large and growing number of joint ventures,
the company uses proportionate accounting to reflect the relative weight of its
ownership interests in most of its domestic and international operations. Fueled
by a growing customer base, proportionate net operating revenues for first
quarter rose 42 percent over the same period last year to $801.4 million, and
proportionate operating income was up 31 percent to $113 million.
Proportionate U.S. Cellular
AirTouch added 130,000 U.S. cellular customers -- a record first quarter
performance. The company serves 2,392,000 cellular customers -- up 44 percent
over the same period last year. The strong first quarter growth reflects the
company's focus on gaining customers early in the year, to even out its annual
growth.
Boosted by economies of scale and cost containment efforts, domestic cellular
posted strong financials. Proportionate net operating revenues for the quarter
rose 23 percent to $413.5 million and proportionate operating income climbed to
$127.8 million, up 23 percent over last year. Proportionate operating cash flow
was up 25 percent to $186.7 million. The company has introduced new marketing
programs targeting its existing customer base to control its acquisition costs.
The company said it continues to make significant progress in its deployment of
CDMA digital service in Los Angeles and expects to announce in May its plans to
launch initial commercial service for existing customers on a limited basis.
U.S. Paging
AirTouch's U.S. paging operations showed solid growth, adding 131,000 units in
service during the quarter, for a total of 2,468,000. Operating income was $6.8
million, down 6 percent over last year, as a result of increased amortization
expenses from its Message Center acquisition. Operating cash flow increased 27
percent to $21.5 million.
Proportionate International Cellular
AirTouch experienced record growth in its international ventures. Proportionate
international cellular customers rose by 158,000 to 955,000, up 115 percent over
the comparable period in 1995. On April 23, AirTouch announced it had reached
one million proportionate international customers. Proportionate net operating
revenues for existing international operations in Germany, Portugal, Belgium,
Sweden and Japan grew 89.5 percent to $303.8 million, proportionate operating
income rose 146 percent to $25.6 million, and proportionate net income was $4.7
million. Losses related to start-up operations in Italy, South Korea, Spain,
India, and Poland were $19.7 million.
<PAGE> 3
"Our performance this quarter shows we're delivering on our goals," said Ginn.
"We said we'd achieve record growth while maintaining profitability, and we did.
We said we'd continue our successful international expansion, and we did. We're
also on track for meeting the financial targets we reported last quarter."
Financial Outlook
1996 proportionate operating cash flow is likely to approach $1 billion, as the
company benefits from scale and scope and the improving performance of existing
international operations.
Start-ups will continue to dilute earnings; losses from the continued
construction and build-out of start-up operations in Italy, Poland, Spain, South
Korea and India are expected to be about $100 million during 1996.
In addition, as the company continues to expand its operations domestically and
internationally, capital requirements are expected to reach approximately $1
billion in 1996 (excluding the pending $1.65 billion merger with CCI).
AirTouch Communications is a global wireless communications company, with
interests in cellular, paging, personal communications services, and the
Globalstar satellite system, in the United States and 11 other nations: Belgium,
Germany, India, Italy, Japan, Poland, Portugal, South Korea, Spain, Sweden, and
Thailand. The company, based in San Francisco, serves nearly 6 million
proportionate customers worldwide.
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of
1995:
Except for the historical information presented, the matters discussed in this
release are forward-looking statements and are subject to risks and
uncertainties that could cause actual results to differ materially. Such factors
include: a change in economic conditions in the various markets served by the
Company's operations which would adversely affect the level of demand for
wireless services; greater-than-anticipated competitive activity requiring new
pricing and/or product offerings or resulting in higher acquisition costs;
greater-than-expected customer growth driving increased investment in network
capacity; level of fraudulent activity; impact of new business opportunities
requiring significant up-front investments; impact on capital spending from the
deployment of new technologies; and that technologies will not be developed
according to anticipated schedules, or perform according to expectations. These
and other factors related to the business are described in the Company's 10-K
under "Investment Considerations."
For a fax copy of this or other recent AirTouch press releases, please call
1-800-344-7531.
<PAGE> 4
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
<TABLE>
<CAPTION>
AIRTOUCH COMMUNICATIONS, INC. AND SUBSIDIARIES
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1ST QTR 1ST QTR 4TH QTR
(Dollars in millions, except per share information) 1996 1995 CHANGE 1995 CHANGE
....................................................................................................................................
<S> <C> <C> <C> <C> <C>
OPERATING REVENUES
Wireless services and other revenues (a) $ 419.8 $ 345.9 21.4% $ 398.2 5.4%
Cellular and paging equipment sales 29.1 28.0 3.9% 28.4 2.5%
....................................................................................................................................
TOTAL OPERATING REVENUES 448.9 373.9 20.1% 426.6 5.2%
....................................................................................................................................
OPERATING EXPENSES
Cost of revenues (a) 57.2 50.3 13.7% 60.0 (4.7)%
Cost of cellular and paging equipment sales 45.8 33.1 38.4% 48.1 (4.8)%
Selling and customer operations expenses 138.3 108.5 27.5% 155.8 (11.2)%
General, administrative, and other expenses 93.3 78.1 19.5% 108.0 (13.6)%
Depreciation and amortization expenses 65.0 49.9 30.3% 60.0 8.3 %
....................................................................................................................................
TOTAL OPERATING EXPENSES 399.6 319.9 24.9% 431.9 (7.5)%
....................................................................................................................................
OPERATING INCOME (LOSS) 49.3 54.0 (8.7)% (5.3)
Equity in net income (loss) of unconsolidated
wireless systems:
Domestic 56.1 35.4 58.5% 51.2 9.6%
International (7.1) (6.4) (10.9)% (11.1) 36.0%
Minority interests in net (income) loss of consolidated
wireless systems (8.5) (8.9) 4.5% (10.3) 17.5%
Interest:
Expense (8.4) (3.9) (115.4)% (8.6) 2.3%
Income 4.5 12.1 (62.8)% 5.6 (19.6)%
Foreign exchange gain (loss) 1.7 (7.8) 121.8% 2.1 (19.0)%
Miscellaneous income (expense) 6.0 (0.7) 957.1% (7.3) 182.2%
....................................................................................................................................
INCOME BEFORE INCOME TAXES 93.6 73.8 26.8% 16.3 474.2%
Income taxes 41.4 38.5 7.5% 5.1 711.8%
....................................................................................................................................
NET INCOME $ 52.2 $ 35.3 47.9% $ 11.2 366.1%
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EARNINGS PER SHARE $ 0.10 $ 0.07 42.9% $ 0.02 400.0%
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Weighted average shares
outstanding (in thousands) 498,837 494,088 1.0% 495,930 0.6%
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</TABLE>
See footnotes.
<PAGE> 5
CONSOLIDATED BALANCE SHEETS (Unaudited)
<TABLE>
<CAPTION>
AIRTOUCH COMMUNICATIONS, INC. AND SUBSIDIARIES
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(Dollars in millions) 3/31/96 12/31/95 CHANGE 3/31/95 CHANGE
........................................................................................................................
<S> <C> <C> <C> <C> <C>
ASSETS
Cash and cash equivalents $ 38.4 $ 82.9 (53.7)% $ 446.7 (91.4)%
Accounts receivable, net 217.0 232.4 (6.6)% 179.3 21.0%
Held-to-maturity investments 0.0 0.0 77.2 (100.0)%
Other receivables 83.2 103.6 (19.7)% 54.9 51.5%
Due from affiliates 24.4 21.0 16.2% 26.2 (6.9)%
Other current assets 54.4 66.3 (17.9)% 88.1 (38.3)%
........................................................................................................................
TOTAL CURRENT ASSETS 417.4 506.2 (17.5)% 872.4 (52.2)%
Property, plant, and equipment, net 1,334.9 1,320.2 1.1% 1,022.7 30.5%
Investments in unconsolidated wireless systems 3,201.7 3,076.3 4.1% 2,002.1 59.9%
Intangible assets, net 582.5 605.7 (3.8)% 498.6 16.8%
Deferred charges and other noncurrent assets 249.9 139.5 79.1% 69.6 259.1%
........................................................................................................................
TOTAL ASSETS $5,786.4 $5,647.9 2.5% $4,465.4 29.6%
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LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable - trade $ 118.0 $ 171.4 (31.2)% $ 118.1 (0.1)%
Short-term borrowings 0.0 0.0 10.5 (100.0)%
Other current liabilities 343.1 316.3 8.5% 204.6 67.7%
........................................................................................................................
TOTAL CURRENT LIABILITIES 461.1 487.7 (5.5)% 333.2 38.4%
Long-term debt 1,008.1 892.4 13.0% 127.4 691.3%
Deferred income taxes 254.8 258.6 (1.5)% 202.5 25.8%
Deferred credits 93.1 106.0 (12.2)% 141.6 (34.3)%
........................................................................................................................
TOTAL LIABILITIES 1,817.1 1,744.7 4.1% 804.7 125.8%
........................................................................................................................
COMMITMENTS AND CONTINGENCIES
MINORITY INTERESTS IN CONSOLIDATED
WIRELESS SYSTEMS 157.0 152.5 3.0% 134.1 17.1%
........................................................................................................................
Common stock 5.0 5.0 0.0% 4.9 2.0%
Additional paid-in capital 3,887.1 3,877.2 0.3% 3,755.6 3.5%
Accumulated deficit (105.9) (158.1) 33.0% (254.7) 58.4%
Cumulative translation adjustment 15.9 17.1 (7.0)% 19.1 (16.8)%
Other 10.2 9.5 7.4% 1.7 500.0%
........................................................................................................................
TOTAL STOCKHOLDERS' EQUITY 3,812.3 3,750.7 1.6% 3,526.6 8.1%
........................................................................................................................
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $5,786.4 $5,647.9 2.5% $4,465.4 29.6%
........................................................................................................................
</TABLE>
<PAGE> 6
PROPORTIONATE OPERATING DATA (Unaudited) (1)
AirTouch Communications, Inc. and Subsidiaries
<TABLE>
<CAPTION>
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TOTAL COMPANY
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1ST QTR 1ST QTR 4TH QTR
(Dollars in millions & operating data in thousands) 1996 1995 (b) CHANGE 1995 CHANGE
.................................................................................................................................
<S> <C> <C> <C> <C> <C>
Consolidated capital expenditures, excluding
acquisitions and capital calls (GAAP basis) $ 80.5 $ 95.5 (15.7)% $ 121.4 (33.7)%
Total Company proportionate data:
Net operating revenues (a) $ 801.4 $ 562.8 42.4 % $ 745.4 7.5 %
Operating income $ 113.0 $ 86.4 30.8 % $ 69.9 61.7 %
Operating cash flow (2) $ 244.8 $ 182.0 34.5 % $ 176.2 38.9 %
Cellular POPs (3) 165,002 113,365 45.5 % 164,908 0.1 %
Cellular subscribers 3,347 2,109 58.7 % 3,059 9.4 %
Subscriber net adds in period, excluding acquisitions 288 160 80.0 % 373 (22.8)%
Paging units in service 2,614 1,760 48.5 % 2,474 5.7 %
Units in service net adds in period, excl. acq. and disp. 147 113 30.1 % 114 28.9 %
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<CAPTION>
DOMESTIC CELLULAR OPERATIONS -- PROPORTIONATE
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1ST QTR 1ST QTR 4TH QTR
OPERATING RESULTS (Dollars in millions ) 1996 1995 CHANGE 1995 CHANGE
.................................................................................................................................
<S> <C> <C> <C> <C> <C>
Service and other revenues (a) $ 434.1 $ 343.5 26.4 % $ 413.5 5.0 %
Equipment sales 18.7 22.8 (18.0)% 15.7 19.1 %
Cost of equipment sales (39.3) (31.3) (25.6)% (41.6) 5.5 %
.................................................................................................................................
Net operating revenues 413.5 335.0 23.4 % 387.6 6.7 %
.................................................................................................................................
Cost of revenues (a) 49.4 43.1 14.6 % 50.3 (1.8)%
Selling and customer operations 143.6 113.7 26.3 % 163.3 (12.1)%
General, administrative, and other expenses 33.8 28.9 17.0 % 39.0 (13.3)%
Depreciation and amortization expenses 58.9 45.3 30.0 % 53.5 10.1 %
.................................................................................................................................
Total costs and expenses 285.7 231.0 23.7 % 306.1 (6.7)%
.................................................................................................................................
Operating income $ 127.8 $ 104.0 22.9 % $ 81.5 56.8 %
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Operating cash flow (2) $ 186.7 $ 149.3 25.1 % $ 135.0 38.3 %
Operating cash flow margin (c) 45.2% 44.6% 1.3 % 34.8% 29.9 %
Capital expenditures, excluding acquisitions $ 55.8 $ 63.0 (11.4)% $ 120.1 (53.5)%
<CAPTION>
OPERATING DATA (In thousands) 3/31/96 3/31/95 CHANGE 12/31/95 CHANGE
.................................................................................................................................
<S> <C> <C> <C> <C> <C>
Total POPs (3) 37,798 35,390 6.8 % 37,739 0.2 %
Subscribers 2,392 1,664 43.8 % 2,262 5.7 %
Subscriber net adds in period, excluding acquisitions 130 104 25.0 % 236 (44.9)%
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<CAPTION>
DOMESTIC PAGING OPERATIONS (4)
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1ST QTR 1ST QTR 4TH QTR
OPERATING RESULTS (Dollars in millions ) 1996 1995 CHANGE 1995 CHANGE
.................................................................................................................................
<S> <C> <C> <C> <C> <C>
Service and other revenues $ 69.0 $ 50.9 35.6 % $ 59.5 16.0 %
Equipment sales 12.9 11.3 14.2 % 12.0 7.5 %
Cost of equipment sales (11.4) (9.7) (17.5)% (10.3) (10.7)%
.................................................................................................................................
Net operating revenues 70.5 52.5 34.3 % 61.2 15.2 %
.................................................................................................................................
Total operating expenses before
depreciation and amortization expenses 49.0 35.6 37.6 % 40.7 20.4 %
Depreciation and amortization expenses 14.7 9.7 51.5 % 11.7 25.6 %
- ---------------------------------------------------------------------------------------------------------------------------------
Operating income $ 6.8 $ 7.2 (5.6)% $8.8 (22.7)%
- ---------------------------------------------------------------------------------------------------------------------------------
Operating cash flow (2) $ 21.5 $ 16.9 27.2 % $ 20.5 4.9 %
Operating cash flow margin 30.5% 32.2% (5.3)% 33.5% (9.0)%
Capital expenditures, excluding acquisitions $ 27.2 $ 13.3 104.5 % $ 30.8 (11.7)%
<CAPTION>
OPERATING DATA (In thousands) 3/31/96 3/31/95 CHANGE 12/31/95 CHANGE
.................................................................................................................................
<S> <C> <C> <C> <C> <C>
Units in service 2,468 1,634 51.0 % 2,338 5.6 %
Units in service net adds in period, excluding acquisitions 131 109 20.2 % 113 15.9 %
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</TABLE>
See footnotes.
<PAGE> 7
PROPORTIONATE OPERATING DATA (CONTINUED) (Unaudited) (1)
<TABLE>
<CAPTION>
AirTouch Communications, Inc. and Subsidiaries
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INTERNATIONAL OPERATIONS
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1ST QTR 1ST QTR 4TH QTR
CELLULAR OPERATING RESULTS (Dollars in millions) 1996 1995 (b) CHANGE 1995 CHANGE
......................................................................................................................
<S> <C> <C> <C> <C> <C>
Existing operations (5):
Proportionate data:
Net operating revenues $303.8 $160.3 89.5 % $281.8 7.8 %
Operating income $25.6 $10.4 146.2 % $51.9 (50.7)%
Operating cash flow (2) $76.3 $43.9 73.8 % $81.8 (6.7)%
Income/ (loss) $ 4.7 ($1.4) 435.7 % $14.8 (68.2)%
Start-up systems (6):
Income/ (loss) ($19.7) ($10.2) (93.1)% ($23.5) 16.2 %
Total cellular income/(loss) ($15.0) ($11.6) (29.3)% ($8.7) (72.4)%
<CAPTION>
OPERATING DATA (In thousands) 3/31/96 3/31/95 CHANGE 12/31/95 CHANGE
......................................................................................................................
<S> <C> <C> <C> <C> <C>
Cellular POPs (3) 112,904 64,675 74.6 % 112,869 0.0 %
Cellular subscribers 955 445 114.6 % 797 19.8 %
Subscriber net adds in period, excluding acquisitions 158 56 182.1 % 137 15.3 %
Paging units in service 146 126 15.9 % 136 7.4 %
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</TABLE>
<TABLE>
<CAPTION>
INTERNATIONAL CELLULAR - - PROPORTIONATE
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3/31/96
........................................................
Percentage Total System Total System
INTERNATIONAL CELLULAR (In thousands) (d) Ownership Subscribers POPs
............................................................................................................................
<S> <C> <C> <C>
European Operations
Germany* 34.8% (greater than) 1,600 81,490
Portugal* 23.0% (greater than) 195 9,865
Sweden 51.1% 185 8,882
Belgium 25.0% 267 10,065
Italy 11.7% 123 57,420
Spain 16.0% 74 39,300
Poland 19.3% - 38,920
Asian Operations
Japan
Tokyo 15.0% 42,237
Kansai 13.0% 20,568
Tokai 13.0% 14,410
............................................................................................................................
Sub-Total for Digital Phone Group 13.7% 1,081 77,215
Digital TU-KA Companies ** 4.5% 100 46,252
South Korea 10.7% - 45,300
India
Madras 20.0% 3 6,695
Madhya Pradesh 49.0% - 72,662
</TABLE>
* Germany and Portugal had more than 1,600 and more than 195 customers,
respectively.
** Digital TU-KA Companies are cost based investments which are not included in
proportionate results.
<PAGE> 8
PROPORTIONATE OPERATING DATA (CONTINUED) (Unaudited) (1)
AIRTOUCH COMMUNICATIONS, INC. AND SUBSIDIARIES
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FOOTNOTES:
(a) Presentation for 1995 has been restated to classify roaming fraud as an
operating expense in conformity with the current year presentation.
(b) Certain data has been restated to include effects of the Company's interests
in Italy, South Korea, Spain, and India.
(c) If net losses on equipment sales were reclassified as operating expenses,
operating cash flow margins would be 43.0%, 43.5%, and 32.6% for each of the
three months ended March 31, 1996, March 31, 1995, and December 31, 1995,
respectively.
(d) Commercial service in South Korea began April 1, 1996; commercial service in
Poland and Madhya Pradesh is expected later in 1996.
(1) Because significant assets of the Company are not consolidated, the Company
believes that proportionate financial and operating data facilitate the
understanding and assessment of its results. Unlike consolidation accounting,
proportionate accounting is not in accordance with generally accepted accounting
principles. Proportionate accounting reflects the relative weight of the
Company's ownership interests in its domestic and international systems, total
subscribers of all cellular systems, and total units in service of all paging
systems, exclusive of cost-based investments and certain equity-based
investments that are not material to the Consolidated Financial Statements taken
as a whole.
(2) Operating cash flow is defined as operating income plus depreciation and
amortization and is not the same as cash flow from operating activities in the
Company's Consolidated Statements of Cash Flows. Proportionate operating cash
flow represents the Company's ownership interest in the respective entities'
operating cash flows. As such, proportionate operating cash flow does not
represent cash available to the Company.
(3) POPs are the estimated market population multiplied by the Company's
ownership interest in a licensee operating in that market and include markets in
which the networks are under construction and the markets of certain cost-basis
investments not included in proportionate operating results. Total Company
cellular POPs include 14,300, 13,300, and 14,300 personal communications
services ("PCS") POPs at March 31, 1996, March 31, 1995, and December 31, 1995,
respectively; international cellular POPs (and therefore total Company cellular
POPs) include 7,491 and 7,469 POPs for Poland at March 31, 1996 and December 31,
1995, respectively, where the Company's consortium was awarded a national
cellular license in February 1996.
(4) Domestic paging is wholly owned by the Company; therefore, proportionate
information reflects 100% of the subsidiary's GAAP-basis operating results.
(5) Represents the Company's share of income or loss (after foreign taxes where
applicable) for international cellular systems which have completed twelve
months of commercial service, as follows:
1ST QTR 1996: Germany, Portugal, Sweden, Belgium, and Japan
4TH QTR 1995: Germany, Portugal, Sweden, Belgium, and Japan
1ST QTR 1995: Germany, Portugal, Sweden, Belgium, and Japan
(6) Effective January 1, 1996, start-up systems represents the Company's share
of income or loss (after foreign taxes where applicable) for international
cellular systems which did not provide commercial service for the full twelve
months of any preceding calendar year as follows:
1ST QTR 1996: Italy, South Korea, Spain, India, and Poland
Prior to January 1, 1996, start-up systems represent the Company's share of
income or loss (after foreign taxes where applicable) for international cellular
systems which have not yet completed twelve months of commercial service, as
follows:
4TH QTR 1995: Italy, South Korea, Spain, and India
1ST QTR 1995: Italy, South Korea, Spain, and India
