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Atlantic Corporation (NYSE: BEL) announced today that continued strong growth in its core wireline and wireless businesses produced record 1996 net income of $1.87 billion, 10 percent above 1995 earnings of $1.70 billion, and fourth-quarter net income of $424.4 million, up 7.3 percent from 1995 results of $395.4 million, excluding certain one-time adjustments in the three- and 12-month periods in both years. On the same basis, earnings per share were $4.26 for the year, up 9.8 percent versus adjusted 1995 earnings per share of $3.88, and fourth-quarter earnings per share grew 7.8 percent, to $.97 from $.90.
On a reported basis, Bell Atlantic's 1996 net income was $1.88 billion, or $4.28 per share. These results include a non-cash gain from the cumulative effect of a change in accounting principle of $142 million, or $0.32 per share, associated with the adoption of the "point of publication" accounting method for the company's directory publishing business. Adopted in the fourth quarter and retroactive to January 1, 1996, this method recognizes revenues and expenses upon publication rather than over the life of the directories.
Reported 1996 results also include one-time, mostly non-cash charges in the fourth quarter that largely offset the gain from the directory accounting change (1996 special adjustments and previously reported one-time items in 1995 are quantified in the "Per Share Analysis" table attached):
- Reserves associated with regulatory and other issues;
- Actuarially determined costs of a benefit plan amendment;
- Certain asset and investment dispositions.
Including one-time items, reported earnings in the fourth quarter of 1996 were $345.6 million, or $.79 per share.
"We posted strong gains in our key communications markets in 1996 as we prepare to complete our merger with NYNEX in 1997," said Bell Atlantic Chairman and Chief Executive Officer Raymond W. Smith. "Robust market demand for our communications products and services has produced record revenue growth and record earnings that will strengthen our competitiveness in existing markets and support our entry into significant new markets such as in-region long distance."
Earnings results for 1996 include significant start-up costs in the company's long-distance and Internet businesses, plus costs associated with meeting the competitive "checklist" requirements for long-distance market entry set forth in the Telecommunications Act of 1996. Operating revenues from the company's core businesses, including its proportionate share of Bell Atlantic NYNEX Mobile revenues, grew 7.9 percent for the fourth quarter of 1996 and 7.5 percent for the year, despite reductions in access charges and increased price discounting and product packaging initiatives in the Network and wireless businesses.
Bell Atlantic's adjusted Network revenues grew 5.3 percent in 1996 compared with 1995 and 6.0 percent in the fourth quarter.
"Network revenue growth in 1996 was driven by strong customer demand, increased marketing and promotion activity, and new product introductions," said Bell Atlantic Vice Chairman James G. Cullen. "The effects were evident across all our business segments, from consumer to business to wholesale."
- Access lines in service on December 31, 1996, totaled approximately 20.6 million, up 3.8 percent over the last 12 months. The increase includes 12.9 percent year-over-year Centrex line growth in the business markets.
- Access minutes of use grew 9.7 percent for the year.
- Approximately 200,000 ISDN (integrated services digital network) lines were in service at December 31, 1996, up 39 percent from the year-ago total.
In the residential market:
- Sales of secondary residential telephone lines totaled 886,000, compared with 511,000 in 1995. Fourth-quarter sales increased about 29 percent above 1995 levels, reaching almost 236,000. Total additional lines in service grew almost 24 percent during 1996, to approximately 2.1 million.
- Revenues from Home Voice Mail (formerly Answer Call) and central-office-based services such as Caller ID, Return Call and Call Waiting were up more than 23 percent compared with 1995. Caller ID revenues nearly doubled as subscribers grew to about 2.3 million. Revenues from Return Call, in some markets now featuring a voice-recorded readout of the calling party's number, jumped more than 40 percent, with a 50 percent increase in activations.
In the business markets:
- "Special access" revenues were up almost 27 percent in the fourth quarter compared with the same period a year earlier, largely as a result of demand for high-speed private lines. Special access revenues for the full year increased more than 12 percent above 1995 levels.
- Spurred by growing demand for customized, feature-rich call management packages, Centrex revenues from small-businesses customers grew nearly 63 percent compared with 1995.
- Revenues from high-speed Fast-Packet data services more than doubled their 1995 totals.
- Securing several new, high-profile contracts, Bell Atlantic Network Integration posted revenues of nearly $200 million, a 32 percent increase from 1995.
"Our strong revenue performance results in large measure from Bell Atlantic's brand marketing, product promotion and packaging initiatives," Cullen said. "These efforts are key to unlocking the tremendous vertical growth potential in the Network business. In the converging information, entertainment and communications industry, we envision Bell Atlantic as the ultimate systems integrator for consumers as well as businesses, providing a complete array of advanced services, customized packages and easy-to-use, turn-key solutions."
Network operating expenses for the year amounted to $9.8 billion, 5.3 percent higher than in 1995. Contributing to this growth were start-up expenses in businesses such as long distance and Internet, costs associated with increased sales and marketing activities, and the cost of compliance with the Telecommunications Act's competitive "checklist."
Bell Atlantic's wireless investment portfolio of 89 million proportionate worldwide POPs (people in markets served) produced adjusted equity income of $262.8 million in 1996, more than 57 percent higher than in 1995. At Bell Atlantic NYNEX Mobile, operating income grew 42.1 percent, while operating cash flow was up 33.5 percent.
"Overall, this was a banner year for our wireless investments," said Bell Atlantic Vice Chairman Lawrence T. Babbio, Jr. "Domestically, our PCS (personal communication services) consortium (PrimeCo Personal Communications) executed the most successful wireless launch in history -- 16 major cities just 16 months after acquiring the licenses - while proving CDMA (code division multiple access) to be the technology to beat for digital wireless communication. And Bell Atlantic NYNEX Mobile made another strong contribution to our corporate earnings, continuing to penetrate the consumer segment, introducing product and pricing packages and maintaining robust growth while meeting competitive challenges in key markets."
- For Bell Atlantic NYNEX Mobile:
- Annual subscriber growth for 1996 was more than 31 percent as once again, more than one million customers were added, bringing total subscribers to just beyond the 4.4 million mark.
- The company continued to expand its presence in the consumer market segment with PCS-like services such as TalkAlong (SM) and EZ-MAX (SM), which have attracted close to one million subscribers since their introduction.
- Omnitel Pronto Italia, Bell Atlantic's consortium providing wireless service in Italy, signed up more than 700,000 customers to its digital GSM (global system for mobile) service in its first year, becoming one of the world's fastest-growing mobile operations. Bell Atlantic recently increased its ownership share of Omnitel from 11.6 to 17.4 percent, adding another 3.4 million proportionate POPs to the company's wireless portfolio.
- EuroTel Praha, Bell Atlantic's partnership serving the Czech Republic, introduced digital GSM service, nearly doubling the customer base in that country. EuroTel Bratislava, a similar partnership serving Slovakia, was awarded a GSM license and plans to launch digital service early in 1997.
- And Bell Atlantic reached an agreement to restructure its ownership of Grupo Iusacell, S.A. de C.V., under which it would take operational control to strengthen the company's position to capture growth opportunities in the Mexican cellular, long-distance and fixed wireless markets.
"Success in the wireless business is increasingly a marketing game," Babbio said. "Going forward, the winning companies will be differentiated by their focus on the customer and the strength of their value propositions. For example, with today's announcement of DigitalChoice (SM) CDMA service in Washington, Baltimore, Pittsburgh and Charlotte (N.C.), and the introduction of new packages of wireless services for our customers in these markets, we continue to demonstrate our commitment to innovation, quality, value and leadership in the wireless industry."
Looking ahead to 1997, Smith said, "We're entering the new year with significant momentum and strong customer relationships, both of which will serve us well as we complete our merger with NYNEX and vigorously pursue market opportunities in long distance and data connectivity," Smith said. "The upside potential for this industry is tremendous."
Bell Atlantic Corporation (NYSE: BEL) is at the forefront of the new communications, entertainment and information industry. In the mid-Atlantic region, the company is the premier provider of local telecommunications and advanced services. Globally, it is one of the largest investors in the high-growth wireless communication marketplace. Bell Atlantic also owns a substantial interest in Telecom Corporation of New Zealand and is actively developing high-growth national and international business opportunities in all phases of the industry.