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GTE reports ten percent increase in earnings per share
January 25, 1996
STAMFORD, Conn., January 25, 1996 -- GTE Corp. today reported that fourth-quarter 1995 operational earnings per share increased 10 percent over the same period last year. Income before special items was $719 million, or 74 cents per share, compared with $648 million, or 67 cents per share, in the fourth quarter of 1994.
For the full-year 1995, earnings per share increased 10 percent. Income before special items was $2.53 billion, or $2.61 per share in 1995, compared with $2.28 billion, or $2.38 per share, in 1994.
"1995 was a year of record operational financial results, strong operational achievements and key strategic actions that position us well for continued profitable growth," said GTE Chairman and Chief Executive Officer Charles R. Lee. "We're very excited about the momentum underlying this year's record performance and confident that we can build upon it in 1996 and beyond."
1995 consolidated revenues and sales totaled $19.96 billion, compared with $19.53 billion in 1994. Consolidated revenues and sales increased 4 percent in 1995, excluding revenues from the non-strategic telephone properties and the satellite-communications business divested in 1994. Strong volume growth in telephone operations and substantial increases in cellular customers more than offset lower, more competitive pricing.
Fourth-quarter consolidated revenues and sales increased 5 percent to $5.36 billion, excluding the impact of the telephone properties and the satellite-communications business.
Full-Year Operating Income Reaches Record $5.06 Billion
Operating income for the full-year 1995 reached a record $5.06 billion, up 8 percent, excluding the operating income attributable to the properties sold. This improvement was due to increased revenues, ongoing cost reductions from process re-engineering and other management actions. As a result of these factors, operating income margins at Telephone Operations reached a record 27.1 percent, and at Mobilnet operating cash flow margin reached a record 36.8 percent. Consolidated operating cash flows, representing operating income plus depreciation and amortization, reached a record $8.73 billion, an 8 percent improvement over last year.
GTE Chairman Comments on Company's Growth
"Our strong revenue and operating income growth, as well as the continuing improvement in cash flow, reflect the benefit of earlier competitive-positioning actions," the GTE chairman said. "This past year our volume growth was extremely strong with our domestic operations adding over one million lines, our cellular business over 600,000 customers and Directories adding approximately 10,000 new advertisers. "However, our customers are asking for more: one-stop shopping for their telecommunication needs," said Lee. "We're planning to respond aggressively by offering bundled packages of high-quality products and services at competitive prices through our extensive re-engineering effort," the GTE chairman said. "We believe we are well on our way to becoming the easiest company to do business with in the industry.
"Internationally, GTE is continuing to capitalize on the tremendous growth opportunities arising particularly in the Americas and Asia," Lee said. "Our ability to leverage GTE's existing presence in these areas, coupled with our depth of international experience and focused strategy, will lead to increased profitability. In fact, we expect to double our income from existing international operations over the next five years," the GTE chairman noted.
Domestic Network Services Post Strong Growth with Minutes of Use Up 10%, Access Lines up 6% and Cellular Customers Up 29%
Revenues from Domestic Network Services, which include GTE's wireline and wireless network operations, increased 5 percent to $13 billion, compared with $12.40 billion a year ago, excluding the impact of the non-strategic telephone properties sold.
Strong increases in wireline unit volumes as well as substantial increases in new and non-traditional service revenues were partially offset by lower, more competitive pricing. The markets for new services continued to expand in 1995, as enhanced services were rolled out and demand for additional lines accelerated. Revenues from new and non-traditional services including CentraNet, data and custom-calling features increased to a record $850 million, representing a 33 percent improvement over 1994. Minutes of use of GTE's domestic wireline network for long-distance calling grew at an annual rate of 10.1 percent, while total access lines increased 6.2 percent over last year. Access lines per employee, a key measure of productivity, improved 14.7 percent over a year ago to 289.
New milestones were reached in 1995 as cellular-service revenues grew at a 31 percent rate to exceed the $2 billion mark, despite slower growth in the fourth quarter as various targeted marketing programs were successfully implemented to focus on the acquisition of higher-value customers. "We are pleased with the initial results of these targeted marketing programs," said Lee, "and continue to be excited by the opportunities in this fast-growing industry." For the full year, customer growth was up by 29 percent to over 3 million. GTE added 672,000 domestic customers in 1995, bringing total U.S. customers served to 3,011,000 -- almost double the number of customers just two years ago.
Accounting Change Implemented
As previously announced, in response to recently enacted and pending legislation and the increasingly competitive environment, effective Jan. 1, 1996, GTE has adopted the use of accounting practices appropriate for non-regulated enterprises.
As a result, GTE recorded non-cash, extraordinary charges of $4.7 billion after taxes, or $4.83 per share, during the fourth quarter of 1995. These charges, which were primarily a result of a comprehensive study of the economic lives of GTE's telephone plant and equipment, will have no effect on the company's customers, liquidity or dividend policy. Including the extraordinary charges, as well as the gain on the sale of non-strategic telephone properties, GTE reported a consolidated net loss for 1995 of $2.1 billion, or $2.21 per share.
GTE is the largest U.S.-based local telephone company, with domestic and international operations serving 24.1 million access lines in 28 states, Canada, the Dominican Republic and Venezuela.
GTE is also a leading mobile-cellular operator in the United States -- with the potential of serving some 67 million cellular and personal communications service customers. Outside the United States, GTE operates mobile-cellular networks serving some 15 million POPs through affiliates in Canada, the Dominican Republic, Venezuela and Argentina. As of Dec. 31, 1995, these international networks served an additional 536,000 customers.