Tele Danmark's 1998 Financial Statements.Tele Danmark Achieves Strong 1998 Growth: Earnings Per Share Up 32.8% Adjusted for One Time Items -- Net Revenues Advanced 15.7% -- Total Operating Income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. Before One-Time Items Grew 13.1% -- Net Income Adjusted for One-Time Items Increased 16.9% -- Board proposes 5.6% Dividend Increase Tele Danmark A/S (NYSE NYSE See: New York Stock Exchange :TLD (Top Level Domain) The highest level domain category in the Internet domain naming system. There are two types: the generic top level domains (gTLDs) such as .com, .org, and .net, and the country codes, such as .ca, .uk and .jp. See gTLD and Internet domain name. ), the primary provider of communications services in Denmark, today reported robust growth in revenues, profits and earnings per share. The results were powered by solid advances in domestic operations and strong growth from international investments. Net revenues climbed 15.7% in 1998 to DKK DKK In currencies, this is the abbreviation for the Danish Krone. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. 33,989m, up from DKK 29,386m in 1997. Total operating income before one-time items grew 13.1% to DKK 5,298m, up from DKK 4,684m. Net income adjusted for one-time items grew 16.9% to DKK 3,140m compared with DKK 2,685m in 1997. Earnings per share adjusted for one-time items grew 32.8% to DKK 27.23 up from DKK 20.50 in 1997. Reflecting confidence in the Company's prospects, the Board proposes a 5.6% increase in dividends -- to DKK 19.00 from DKK 18.00 per share. -0- Key Figures --------------------------------------------------------------------- DKKm 1996 1997 1998 Ch.% (1) --------------------------------------------------------------------- Net revenues 23,608 29,386 33,989 15.7 Earnings before interest, taxes, depreciation and amortisation 9,009 9,787 10,389 6.2 Total operating income before one-time items 4,528 4,684 5,298 13.1 One-time items -- (1,818) 699 NM Total operating income 4,528 2,866 5,997 109.2 Net income adjusted for one-time items 3,091 2,685 3,140 16.9 Net income 3,091 1,539 4,013 160.8 --------------------------------------------------------------------- Shares outstanding (average, million) 131.0 131.0 115.3 (12.0) Earnings per share adjusted for one-time items (DKK) 23.60 20.50 27.23 32.8 Earnings per share (DKK) 23.60 11.75 34.80 196.2 --------------------------------------------------------------------- Capital expenditure 10,539 9,201 7,617 17.2 --------------------------------------------------------------------- (1) 1998 vs 1997 NM = Not meaningful "Tele Danmark's results for 1998 demonstrate that our growth strategies are on track," Knud Heinesen, the Chairman of Tele Danmark, said. "Tele Danmark is committed to shareowner share·own·er n. See shareholder. Noun 1. shareowner - someone who holds shares of stock in a corporation shareholder, stockholder investor - someone who commits capital in order to gain financial returns value. We have an excellent record in this regard and are very optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op about our potential for continued growth and value creation." Henning Dyremose, Tele Danmark's new Chief Executive Officer, states: "We are confident in our ability to meet the double digit Noun 1. double digit - a two-digit integer; from 10 to 99 integer, whole number - any of the natural numbers (positive or negative) or zero; "an integer is a number that is not a fraction" revenue and earnings per share growth target we have outlined. Sales from domestic communications continue to grow solidly. Our international investments have shown very exciting results -- becoming an increasingly important part of Tele Danmark's business. Together with our strategic partner Ameritech, we have taken important strides in critical areas such as customer focus, operational efficiencies and strategic planning Strategic planning is an organization's process of defining its strategy, or direction, and making decisions on allocating its resources to pursue this strategy, including its capital and people. . Our new vision `We will strive to be the best provider of communications solutions in Europe' is beginning to produce sustainable results." Extension of stock option program In 1998, EXCO members and 68 executives were covered by the company's stock options program. On top of that, 81 executives were covered by a variable pay program. In order to enhance the long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. incentive scheme, the Board of Directors has decided to increase the maximum number of executives eligible for the stock options program to 200 executives. After the implementation of this decision the total number of stock options granted to employees will be less than 1% of the companies share capital. -0- Domestic Activities -------------------------------------------------------------- DKKm 1997 1998 Ch.% (1) -------------------------------------------------------------- Net revenues 21,267 21,031 (1.1) -------------------------------------------------------------- Total revenues 22,384 22,221 (0.7) Total operating expenses (14,457) (13,647) 5.6 Earnings before interest, taxes, depreciation and amortisation 7,927 8,574 8.2 -------------------------------------------------------------- Depreciation and amortisation (including amortisation of goodwill) (3,625) (3,496) 3.6 Operating income before one-time items 4,302 5,078 18.0 -------------------------------------------------------------- One-time items (945) (289) NM Operating income 3,357 4,789 42.7 -------------------------------------------------------------- (1) 1998 vs 1997 NM = Not meaningful Normalising for the closure of the sports channel Sports channels are television specialty channels (usually available exclusively through cable and satellite) broadcast sporting events, usually live, and when not broadcasting events, sports news and other related programming. TVS TVS Transient Voltage Suppressor TVS Textilverband Schweiz TVS TV Virtual Surround TVS Television South (UK; 1982-1992) TVS Tornado Vortex Signature (doppler radar) TVS Total Volatile Solids in December 1997, the change in ownership of the Metronome metronome (mĕ`trənōm'), in music, originally pyramid-shaped clockwork mechanism to indicate the exact tempo in which a work is to be performed. It has a double pendulum whose pace can be altered by sliding the upper weight up or down. group in February 1998 and the sale of DanaData in April 1998, net revenues from continuing domestic operations grew by DKK 710m or 3.5% from 1997 to 1998. Tele Danmark's domestic growth was powered by: -- 14% increase in business voice channel equivalents, which includes high-capacity connections and traditional switched access lines, -- 47% growth in revenues from call management services, -- 33% growth in cellular minutes, -- 99% growth in the number of ISDN ISDN in full Integrated Services Digital Network Digital telecommunications network that operates over standard copper telephone wires or other media. 2 channels, -- 34% growth in revenues from data and Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the services, -- 39% growth in transit traffic. As a consequence of the discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. net revenues from domestic operations decreased slightly to DKK 21,031m compared to DKK 21,267m in 1997. At the end of 1998, Tele Danmark's domestic operations included 3.5 million telephone access lines, 812,000 cable TV users, 220,000 Internet dial-up customers and 995,000 cellular users -- 185,000 of which subscribed to Duet, Tele Danmark's innovative combined cellular/landline service. Total operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. were reduced by DKK 810m to DKK 13,647m in 1998. The decrease reflects strict cost control and the discontinued dis·con·tin·ue v. dis·con·tin·ued, dis·con·tin·u·ing, dis·con·tin·ues v.tr. 1. To stop doing or providing (something); end or abandon: domestic operations. The staff within Domestic activities was reduced by 1,140 people to 14,736 at year-end 1998. The decrease is a consequence of the redundancy programs, previously announced on Jan. 29, 1997, and the sale of DanaData. Since year-end 1996, the number of employees in Tele Danmark's core business has decreased by 1,597. In early 1999, approximately 300 employees will retire under the redundancy schemes. Domestic earnings before interest, taxes, depreciation and amortisation Noun 1. amortisation - the reduction of the value of an asset by prorating its cost over a period of years amortization reduction, step-down, diminution, decrease - the act of decreasing or reducing something 2. (EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become ) increased 8.2% (DKK 647m) to DKK 8,574m in 1998. Depreciation and amortisation decreased by DKK 129m to DKK 3,496m in 1998. Operating income before one-time items increased 18.0% (DKK 776m) to DKK 5,078m. Reported operating income grew by DKK 1,432m to DKK 4,789m in 1998. -0- International Activities --------------------------------------------------------------- DKKm 1997 1998 Ch.% (1) --------------------------------------------------------------- Net revenues Belgacom 4,628 5,159 11.5 Talkline (from July 1, 1997) 2,202 5,715 159.5 Other activities 1,289 2,084 61.7 Net revenues 8,119 12,958 59.6 --------------------------------------------------------------- Total revenues 8,542 13,460 57.6 Total operating expenses (6,682) (11,645) (74.3) Earnings before interest, taxes, depreciation and amortisation 1,860 1,815 (2.4) Depreciation and amortisation (including amortisation of goodwill) (1,478) (1,595) (7.9) Operating income before one-time items 382 220 (42.4) --------------------------------------------------------------- One-time items (873) 988 NM Operating income (491) 1,208 NM --------------------------------------------------------------- (1) 1998 vs 1997 NM = Not meaningful Net revenues from international activities amounted to DKK 12,958m in 1998, an increase of DKK 4,839m from 1997. The increase reflects both the full year inclusion of Talkline the 100% owned German telecommunications company See telecom company. , which Tele Danmark acquired on July 1, 1997, and rapid growth throughout all of Tele Danmark's international activities. International activities generated 38% of the Group's net revenue in 1998. Talkline generated significant growth in 1998. The total number of cellular customers grew by 272,000 during 1998 to 909,000 at Dec. 31, 1998, and the total number of landline Land based. Refers to standard telephone and data communications systems that use in-ground and telephone pole cables in contrast to wireless cellular and satellite services. customers increased to 168,000 at Dec. 31, 1998. Net revenues in Belgacom increased 11.5% from 1997 to 1998, while other international activities generated a 61.7% increase. The latter increase was mainly attributable to strong growth in net revenue in Polkomtel S.A., a mobile company in Poland; Sunrise Sunrise, city (1990 pop. 64,407), Broward co., SE Fla., a residential suburb 8 mi (13 km) W of Fort Lauderdale; inc. 1961 as Sunrise Golf Village. It is a major office and commercial center and the site of Sawgrass Mills, one of the largest malls in the United States. , a landline company in Switzerland; Telenordia AB, a landline company in Sweden; and Ukrainian Mobile Communications, a mobile company in the Ukraine. Total operating expenses grew to DKK 11,645m in 1998 from DKK 6,682m in 1997. The increase reflects the full year inclusion of Talkline in 1998, and the start-up costs of Tele Danmark's international investments during 1997 and 1998. Total Company Tele Danmark's total staff (exclusive of associated enterprises) declined by 858 to 16,410 at year-end 1998, reflecting a reduction in the domestic operations of 1,140 people, partly offset by increases in the international activities. Financial items, net, were DKK (108)m in 1998 against DKK 21m in 1997. The decrease was mainly a result of the company's buy-back of shares in April 1998 worth DKK 10bn. Income tax amounted to DKK 1,876m. The effective tax rate was 31.9% in 1998 against 46.7% in 1997. Corrected for one-time items the tax rates in 1998 and 1997 were 39.5% and 42.9% respectively. The difference in these tax rates is primarily due to a decrease in the deferred tax in 1998 caused by the reduction of the Danish corporate income tax rate to 32.0% from 34.0% as of Jan. 1, 1999. Capital expenditure's declined to DKK 7,617m (1997: DKK 9,201m), of which DKK 4,095m (1997: DKK 4,432m) went into domestic activities and DKK 3,522m (1997: DKK 4,769m) into international activities. The reduction within domestic capital expenditure is caused by reduced investments in the landline network of DKK 125m and reduced investments in other domestic business activities of DKK 213m. The reduction within international capital expenditure is mainly caused by lower expenditure for acquisitions in 1998 compared to 1997. One-time Items Four one-time items impact the comparison between 1998 and 1997. Results for 1998 include a one-time tax-free gain of DKK 221m from the sale of DanaData, and a one-time tax-free gain of DKK 1,007m from the sale of approximately 70% of Tele Danmark's shares in Pannon. Results for 1998 also include a one-time write-off on tangible fixed assets fixed assets npl → activo sg fijo fixed assets npl → immobilisations fpl fixed assets fix npl → amounting to DKK 356m after tax. Results for 1997 included a one-time after-tax charge of DKK 1,146m for the work force restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). cost at Belgacom and Tele Danmark. Including the above-mentioned one-time items total operating income grew 109.2% to DKK 5,997m, up from DKK 2,866m in 1997. Net income grew 160.8% to DKK 4,013m compared with DKK 1,539m in 1997, and earnings per share nearly tripled to DKK 34.80, up from DKK 11.75 in 1997. -0- Effects of one-time items ---------------------------------------------------------------------- The Group 1997 1998 Change (1) Ch.% (1) ---------------------------------------------------------------------- Total operating income (DKKm): - Before one-time items 4,684 5,298 614 13.1% - Redundancy payments (1,818) 1,818 - Sale of DanaData 221 221 - Sale of Pannon 1,007 1,007 - Tangible asset write off (529) (529) Total operating income as reported 2,866 5,997 3,131 109.2% ---------------------------------------------------------------------- Net income (DKKm): - Adjusted for one-time items 2,685 3,140 455 16.9% - Redundancy payments (1,146) 1,146 - Sale of DanaData 221 221 - Sale of Pannon 1,007 1,007 - Tangible asset write off (356) (356) Net income as reported 1,539 4,013 2,474 160.8% ---------------------------------------------------------------------- Earnings per share (DKK): - Adjusted for one-time items 20.50 27.23 6.73 32.8% - Redundancy payments (8.75) 8.75 - Sale of DanaData 1.92 1.92 - Sale of Pannon 8.73 8.73 - Tangible asset write off (3.09) (3.09) Earnings per share as reported 11.75 34.80 23.05 196.2% ---------------------------------------------------------------------- (1) 1998 vs 1997 Year 2000 compliance Tele Danmark has launched a comprehensive project in the face of the so-called Year 2000 (Y2K See Y2K problem and Y2K compliant. Y2K - Year 2000 ) problem. The purpose of the project is to safeguard the company against operational problems by minimising Y2K-related risks and costs for Tele Danmark's customers and for the company. Tele Danmark carries out comprehensive testing to ensure that the company will not experience any material Y2K-related operational disruptions. Individual components have been reviewed, corrected and tested by suppliers after which Tele Danmark has carried out testing. Administrative systems, IT platforms, operating systems Operating systems can be categorized by technology, ownership, licensing, working state, usage, and by many other characteristics. In practice, many of these groupings may overlap. , tools and internal data networks have all been tested. Tele Danmark will make integration testing (testing) integration testing - A type of testing in which software and/or hardware components are combined and tested to confirm that they interact according to their requirements. Integration testing can continue progressively until the entire system has been integrated. of telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. and data services in 1999. Tele Danmark's Y2K project has been subject to a thorough external review in the fall of 1998 to check the quality of management and methods. Factors that might impact the Y2K issue include, among others, the availability and costs of employees trained in this area, the ability to locate and correct all affected computer code, the timing and success remedial REMEDIAL. That which affords a remedy; as, a remedial statute, or one which is made to supply some defects or abridge some superfluities of the common law. 1 131. Com. 86. The term remedial statute is also applied to those acts which give a new remedy. Esp. Pen. Act. 1. efforts of third party suppliers and similar uncertainties. Outlook 1999 In 1999 Tele Danmark expects continued growth in both domestic and international activities. Growth in the domestic activities will be driven by increasing traffic volumes, particularly in wholesale, Internet, data and cellular. Based on continued development of improved services, focus on meeting the needs of the various customer segments and strict cost control, Tele Danmark expects solid growth in total operating income from domestic activities. The company considers itself well-positioned to meet the challenge of the legislation concerning raw copper, carrier pre-select and service provision, which will be implemented in 1999. As a consequence of the rapid growth anticipated from recent Tele Danmark acquisitions, revenues from international activities are expected to increase in the coming year. Revenue growth from international activities is expected to exceed operating expense Operating Expense The essential things that a company must purchase in order to maintain business. Notes: For example, the payment of employees wages are an operating expense. Also known as OPEX. growth, resulting in total operating income from international activities, adjusted for one-time items, posting solid growth in 1999. As a consequence of Tele Danmark's share buy-back in the spring of 1998 and the hereby following change of the Group's capital structure, financial expenses, net, are expected to increase in 1999 compared to 1998. As an overall assessment, based on these forecasts, 1999 net revenue and earnings per share, adjusted for one-time items, are targeted to generate double-digit growth compared to 1998. Certain sections of this Earnings Release contain forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. , which reflect management's current views with respect to certain future events and financial performance. Statements concerning the outlook for 1999 naturally involve uncertainties, and actual results may consequently differ materially from those projected or implied in the forward-looking statements herein. Further, certain forward-looking statements are based upon assumptions of future events, which may prove not to be accurate. Factors, which may cause the actual results to differ materially from those projected or implied in the forward-looking statements, include -- but are not limited to -- the economic trends and the development in the financial markets; technological developments; changes in applicable Danish regulation and EU regulation; changes in interconnect (1) To attach one device to another. (2) A physical port (plug, socket) or wireless port (transmitter, receiver) used to attach one device to another. rates; developments in competition within domestic and international telephone services; introduction of and demand for new services and products; developments in the demand, the product mix and the prices in the cellular market, including marketing expenses; developments in the market for multimedia services; the possibilities of being awarded licenses abroad; developments in the Company's international activities, which also involve certain political risks; and investments and divestitures in domestic and foreign companies. Resolutions Passed by the Board of Directors At its meeting today, the Board of Directors of Tele Danmark approved the Consolidated Financial Statements Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge 1998. The Board proposes dividends of DKK 19.00 per share of nominal value Nominal Value The stated value of an issued security that remains fixed, as opposed to its market value, which fluctuates. Notes: When referring to fixed-income securities, the nominal value is also the face value. DKK 10 (1997: DKK 18.00). The share dividend corresponds to USD USD In currencies, this is the abbreviation for the U.S. Dollar. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. 2.97 per ADS (based on the year-end exchange rate of DKK/USD 6.39 -- the exact amount will depend on the exchange rate at the date of payment). Tele Danmark's Annual Report is scheduled for distribution after March 29, 1999. As of the same date, the Report can be accessed via the Internet under the following address: www.teledanmark.dk/ar98eng. The Annual General Meeting will be held in Arhus on April 23, 1999. February 26, 1999 Knud Heinesen Henning Dyremose Chairman of the Chief Executive Officer Board of Directors Tele Danmark is the principal provider of a full range of telecommunications services In telecommunication, the term telecommunications service has the following meanings: 1. Any service provided by a telecommunication provider. 2. in Denmark and holds significant interests in a range of telecom companies across Northern and Continental Europe Continental Europe, also referred to as mainland Europe or simply the Continent, is the continent of Europe, explicitly excluding European islands and, at times, peninsulas. . The domestic activities include fixed-line and wireless telephone, data communications data communications, application of telecommunications technology to the problem of transmitting data, especially to, from, or between computers. In popular usage, it is said that data communications make it possible for one computer to "talk" with another. , Internet, leased lines A private communications channel leased from a common carrier. Most digital lines require four wires (two pairs) for full-duplex transmission. (communications, networking) leased line , cable television and directory services. The total amount of employees in the group (exclusive of associated enterprises) is 16,410. Tele Danmark has DKK 45.8bn in assets (USD 7.2bn at the year-end USD/DKK exchange rate of 6.39). The Company was privatised in 1994 and is 42% owned by Ameritech, with the remaining shares owned by individual and institutional shareowners all over the World. The market value of Tele Danmark's shares is presently approximately DKK 89bn (USD 13bn). TLD Listings Shares: Copenhagen SE. Reuters TLD.CO. Bloomberg TLD DC. Nominal value DKK 10. ISIN Isin (ĭs`ĭn), capital of an ancient Semitic kingdom of N Babylonia. The city became important after the third dynasty of Ur fell to the Elamites and the Amorites (c.2025 B.C.). The phase from c.2025–c.1763 B.C. DK00-1020242-3. SEDOL SEDOL Stock Exchange Daily Official List SEDOL Special Education District of Lake County (Illinois) 4889874. ADRs: NYSE (TLD). Reuters TLD.N. Bloomberg TLD US. SEC 1-12998. Half of one ordinary share. CUSIP CUSIP See: Committee on Uniform Securities Identification Procedures CUSIP See Committee on Uniform Securities Identification Procedures. 879242105. SEDOL 2883094. For tabular tab·u·lar adj. 1. Having a plane surface; flat. 2. Organized as a table or list. 3. Calculated by means of a table. tabular resembling a table. results, please contact Taylor Rafferty Associates at 212/889-4350. |
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