CONTACT: David Frail (212) 395-0500
FOR IMMEDIATE RELEASE
NYNEX ANNOUNCES EIGHTH STRAIGHT QUARTER
OF DOUBLE-DIGIT NET INCOME GROWTH
- FIRST QUARTER HIGHLIGHTS* -
- Net income up 11.5 percent.
- Earnings per share up 10.8 percent to $0.92.
- Total revenue growth of 3.7 percent, including NYNEX's share of unconsolidated
- Robust access line growth continues -- 3.5 percent in the Northeast and 4.7 percent
NYNEX-wide; cellular partnerships and international ventures also sustain momentum.
- Sales campaign exceeds million-feature sales target.
- Productivity gains help expand operating margin 1.7 percentage points.
(*) Financial results discussed in this release are adjusted for the effects of an
enhanced pension offer, the cumulative effect of a change in accounting principle,
certain charges and a gain on the sale of an investment. Adjustments, and reported
vs. adjusted results, are described in financial table below.
NEW YORK, New York, April 23, 1997 -- NYNEX Corporation (NYSE:NYN) today announced
its eighth consecutive quarter of double-digit earnings growth, as first quarter
net income increased 11.5 percent to $403.1 million, or $0.92 per share, compared
to $361.5 million, or $0.83 per share, in the first quarter of 1996.
Consolidated revenues increased 1.9 percent over the first quarter of 1996 to $3.4
billion. Bell Atlantic NYNEX Mobile (BANM) revenues, which are not consolidated,
grew 22.8 percent. Including NYNEX's share of revenues from BANM and its other unconsolidated
businesses, total corporate revenues grew 3.7 percent.
Productivity gains for the quarter were more than six percent. Operating margin expanded
1.7 percentage points over the first quarter of 1996, to 23.1 percent, and operating
income grew 10.1 percent, to $781.8 million. NYNEX operating margin has now expanded
nearly five percentage points since the first quarter of 1994.
"NYNEX sustained the momentum it has built over the past two years and delivered
double-digit net income growth for the eighth straight quarter," said NYNEX
Chairman and Chief Executive Officer Ivan Seidenberg.
"At the same time, we continued to significantly improve Telecommunications
service results. Our increased investments in outside plant and employees are paying
off, and we are handling higher sales volumes more efficiently and with better quality.
Our productivity gains enabled us to invest not only in service but also in long
distance and checklist requirements. We also resumed our marketing activities, and
our 100-day sales 'blitz,' with a special emphasis on vertical services, has exceeded
its target of a million features above our traditional sales rate.
"Our new businesses continued to make progress as well. In particular, Bell
Atlantic NYNEX Mobile launched digital services in six out of its seven major markets,
and PrimeCo PCS passed the 100,000-subscriber mark in less than five months. Also,
NYNEX CableComms' proposed merger into the new Cable & Wireless Communications,
which will create Europe's largest provider of integrated communications services,
is on schedule for completion within weeks.
"As for our merger with Bell Atlantic, we have completed all state regulatory
processes, and we are eager to hear from the Department of Justice and the Federal
Communications Commission so we can close the transaction. I'm delighted with the
progress we've made and the momentum we've built; I'm even more excited about our
team's potential, and our will to accelerate our growth and deliver greater value
as we integrate our companies and launch the new Bell Atlantic."
Other Results Of First Quarter Operations
- Total Telecommunications revenues grew 1.4 percent over the first quarter of
1996. NYNEX's sales "blitz" helped increase revenues for new value-added
services by 35.1 percent and drove up total non-usage revenues 6.0 percent, the strongest
gains in over two years. Revenues from PhoneSmartsm services, which include Caller
ID, increased 36 percent over the first quarter of 1996, and revenues from voice
messaging services rose 30.5 percent. Robust sales of business services also continued
in the face of competition, with Centrex sales increasing 12.9 percent and private
line revenues increasing 13.1 percent. ISDN revenues grew 93 percent over the first
quarter of 1996 as the number of ISDN lines in service rose to more than 136,000.
- As expected, the strong underlying subscription growth was partially offset by
a 3.3 percent decline in usage revenues over the first quarter of last year. The
comparison is affected by 1996's storm-stimulated volumes and its additional leap-year
day. Access minutes of use increased 5.9 percent. NYNEX has now signed up more than
three million high-value customers for its innovatively priced calling plans.
- Worldwide, NYNEX access lines (including NYNEX's share of its unconsolidated
ventures) grew 4.7 percent over the first quarter of 1996. Growth in the northeastern
U.S. continued at its recent high level, with the number of lines in service increasing
3.5 percent to 17.9 million. At NYNEX's overseas operations, access lines increased
- Worldwide wireless operations sustained their rapid growth. BANM's customer gains
set a first-quarter record, as net additions of 224,000 increased the total number
of subscribers to 4.6 million, a 29.6 percent increase over the first quarter of
1996. PrimeCo PCS, NYNEX's PCS partnership, ended the quarter with more than 114,000
subscribers. The number of international customers at STET Hellas and Excelcomindo,
NYNEX's Greek and Indonesian cellular partnerships, more than doubled.
- In information services, NYNEX Information Resources Company (NIRC) increased
the total number of advertisers 7.4 percent over the first quarter of last year.
This includes a tripling of the number of advertisers on BigYellowSM, NIRC's industry-leading
on-line shopping directory. NIRC and NBC recently announced that BigYellow will be
the official shopping directory on NBC's Interactive Neighborhood website.
* * *
NYNEX is a global communications and media corporation that provides a full range
of services in the northeastern United States and high-growth markets around the
world, including the United Kingdom, Thailand, Gibraltar, Greece, Indonesia, the
Philippines, Poland, Slovakia and the Czech Republic. The corporation is a leader
in telecommunications, wireless communications, directory publishing and video entertainment
and information services. NYNEX is also managing sponsor of FLAG -- Fiberoptic Link
Around the Globe -- the world's longest undersea fiber optic communications cable.
NYNEX news releases are available on the Internet at http://www.nynex.com or via
fax for no charge at 1-800-331-1214.
FIRST QUARTER 1997
Reported Adjusted(a) (in millions, except EPS 3 Months Ended 3 Months Ended and percentages) 3/31/97 3/31/96 3/31/97 3/31/96 ------ ------ ------ ------ Operating revenues $ 3,301.5 $ 3,254.0 $ 3,384.5 $ 3,323.0 Operating expenses 2,878.9 2,816.5 2,602.7 2,612.7 Operating income 422.6 437.5 781.8 710.3 Operating margin 12.8% 13.4% 23.1% 21.4% EBITDA (operating cash flow)* 1,036.7 1,077.8 1,393.4 1,350.6 EBITDA margin 31.4% 33.1% 41.2% 40.6% Earnings before cumulative effect of change in accounting principle 159.6 213.8 403.1 361.5 Cumulative effect of change in accounting principle --- 131.0 --- --- Net income 159.6 344.8 403.1 361.5 Earnings per share before cumulative effect of change in accounting principle $0.36 $0.49 $0.92 $0.83 Earnings per share $0.36 $0.79 $0.92 $0.83 Wghtd. avg. shares outstanding 440.1 434.5 440.1 434.5 *EBITDA refers to operating income plus depreciation and amortization.
(a) Results in both quarters are adjusted for the effects of an enhanced pension
offer. Approximately 2,900 employees accepted the corporation's enhanced pension
offer in the first quarter of 1997, resulting in after-tax charges of $243.6 million,
or $0.56 per share. First quarter 1996 charges were $66.5 million after taxes, or
$0.16 per share, for approximately 960 employees who accepted the offer. Under a
force reduction plan and enhanced pension offer initiated in 1994, between 19,000
and 21,000 employees are expected to leave NYNEX through 1998. A total of $1.4 billion
in after-tax charges are to be recorded as employees accept the offer.
Certain first quarter 1997 results were reclassified to account for charges previously
recorded in connection with various legal contingencies and settlements of audits
of affiliate transactions and sales taxes. First quarter 1996 results are also adjusted
for a gain resulting from a change in accounting for directory advertising revenues
and expenses to reflect revenues and expenses upon publication rather than over the
life of the directory. This gain was partially offset by certain charges to meet
various legal, regulatory and other obligations and contingencies, resulting in a
net increase of $4.0 million after taxes, or $0.01 per share. In addition, adjusted
first quarter 1996 results include a change in presentation of certain taxes other
than income and exclude a one-time after-tax gain of $45.8 million, or $0.11 per
share, from the sale of NYNEX's interest in Vanstar Corporation.