STAMFORD, Conn., Feb. 2 /PRNewswire/ -- GTE (NYSE: GTE) today reported that net income for the fourth quarter of 1992 was $417 million, or 44 cents per share, compared with $515 million, or 57 cents per share, a year ago. The results for the 1992 quarter include after-tax charges totaling $100 million, or 11 cents per share, including an extraordinary charge of $52 million resulting from the early retirement of high-coupon debt and $48 million associated with the recently completed sale of the Electrical Products Group, which has been accounted for as a discontinued operation.
GTE also reported that income from continuing operations for the 1992 fourth quarter was $517 million, or 55 cents per share. These results include a non-cash, after-tax charge of $34 million, or 4 cents per share, associate with the previously announced adoption of a new accounting rule for post-retirement health care and life insurance benefits. For the same period last year, income from continuing operations was $481 million, or 53 cents per share.
Fourth-quarter income from continuing operations also includes a gain on the sale of certain non-strategic cellular properties, while last year's fourth quarter included the favorable impact of an accounting change. Excluding the impact of both accounting changes and the cellular property sale, earnings per share from continuing operations for the quarter increased 10 percent.
GTE is Positioned for Continued Profitable Growth in 1993 and Beyond
"1992 was a year of terrific progress for GTE," said Charles R. Lee, GTE chairman and chief executive officer. "The long-term strategic actions taken by GTE over the past several years have sharpened our focus on telecommunications and have contributed, and will continue to contribute, to our steadily improving operating results."
The GTE chairman noted that, "During 1992, our competitive position in telephone operations was enhanced through price reductions to our customers while excellent profitability was maintained through aggressive cost-reduction programs. Additionally, quality was improved to record levels. Our mobile-cellular business continued its strong growth despite the weak economy. Cellular customers exceeded the one- million mark during the fourth quarter, and grew at the rate of 34 percent for the year.
"We were also pleased with the far-reaching improvements made by CANTV, the Venezuelan telephone company. Since GTE acquired a 20.4 percent equity interest and operating control in late 1991, CANTV has placed 201,000 new lines in service and met all its 1992 goals in the areas of quality improvement and customer service. Also during 1992, GTE-Contel merger-integration activities proceeded on schedule and are now well on their way to completion.
"These actions, together with the divestiture of the Electrical Products Group, have positioned GTE for increased profitability and continued profitable growth in the dynamic and exciting telecommunications industry in 1993 and beyond," Lee stated.
Full-Year 1992 Results
For the full-year 1992, income from continuing operations was $1.79 billion, or $1.95 per share, including a non-cash, after-tax charge of $137 million, or 15 cents per share, resulting from the accounting change for post-retirement health care and life insurance benefits. In 1991, GTE reported income from continuing operations of $1.53 billion, or $1.69 per share. The 1991 results included a one-time net charge of $204 million, or 23 cents per share, in connection with the Contel merger and a gain on the transfer of certain cellular properties.
Excluding the charges from both years, income from continuing operations would have been $1.92 billion, or $2.10 per share, representing a 9 percent increase over 1991 income of $1.73 billion, or $1.92 per share.
Consolidated revenues and sales from continuing operations totaled $19.98 billion in 1992, compared with $19.62 billion in 1991.
GTE Adopts New Accounting Rules
As previously announced, effective Jan. 1, 1992, GTE adopted the new accounting rule for post-retirement health care and life insurance benefits (FAS 106) on the immediate recognition basis. This standard requires the expected cost of these post-retirement benefits to be recognized during the years that employees render service. In addition, GTE adopted the new accounting standard for income taxes which requires, among other things, that deferred tax balances be based on current income tax rates. These accounting changes resulted in a cumulative non-cash, after-tax charge of $2.44 billion, or $2.70 per share, which gave rise to a net loss of $754 million, or 86 cents per share, for the full year. Net income was $1.58 billion, or $1.75 per share, in 1991.
Telephone Operations Reviewed
Revenues from Telephone Operations for the year 1992 totaled $15.86 billion, compared with $15.65 billion in the previous year. This revenue improvement reflects an 8.3 percent annual increase in the usage of GTE's local-exchange network for long-distance calling and a 4.0 percent annual increase in access lines. These increases were partially offset by lower, more competitive tariffs that GTE charges domestic long-distance telephone companies for access to its local networks.
Operating income increased 2 percent to $4.03 billion for the year, after a charge of $171 million associated with the 1992 adoption of FAS 106. Excluding this charge, operating income increased 6 percent. The improvement reflects increased revenues and ongoing cost-containment programs, including efficiencies resulting from the consolidation of GTE's and Contel's telephone operations following the merger in March 1991. Operating expenses at domestic telephone operations declined for the third consecutive year.
Revenues for the 1992 fourth quarter declined slightly to $4.05 billion from $4.09 billion in the year-ago quarter, while operating income increased 4 percent in the fourth quarter of 1992, excluding the FAS 106 charge. These results reflect the favorable impact in the 1991 fourth quarter of an accounting change and settlements with other telephone service providers.
GTE is the largest U.S.-based local-exchange telephone company with domestic and international operations serving 21.4 million access lines in 40 states, Canada and Latin America.
Telecommunications Products and Services
Revenues and sales from Telecommunications Products and Services increased 4 percent in 1992 to $4.12 billion. The increase primarily reflects higher revenues from the continued strong customer growth in the mobile-cellular business offset, in part, by decreased government-communications sales.
Operating income increased substantially, rising to $182 million in 1992, despite a $36 million charge resulting from the adoption of FAS 106. This compares with operating income of $127 million in 1991. The improvement reflects higher revenues and operating efficiencies particularly in the mobile-cellular business.
For the fourth quarter of 1992, revenues declined to $1.08 billion from $1.14 billion a year ago, reflecting the reduced government- communications sales. Operating income, however, increased to $41 million, compared with $35 million in the fourth quarter of 1991, reflecting the improved results in the mobile-cellular business. Fourth-quarter 1992 results include a $9 million charge relating to the adoption of FAS 106.
Mobile-Cellular Business Reports Record-High Customer Growth
GTE is the second-largest mobile-cellular operator in the United States -- serving a population of some 53 million RPOPsS.
Customer growth continued at a high level throughout 1992 despite the weak economy. A record-high 113,000 new customers were added during the fourth quarter, more than doubling the average of 55,000 new customers added during each of the first three quarters of 1992. This brings total customers served at year-end 1992 to 1,090,000 -- a 34 percent increase over the 811,000 customers served at the end of 1991. During the year, revenues per subscriber averaged $76 per month, compared with $82 per month in 1991. The decline from last year reflects the weak economy as well as the growth of casual users in the subscriber base -- a trend that is common to the industry. Cellular revenues for the year reached $973 million, 24 percent higher than 1991.
Outside the United States, GTE also operates mobile-cellular networks through international subsidiaries. Its largest market is in Canada where the "POPs" served total 1.9 million.
GTE's Telecommunications Products and Services group includes mobile-cellular, government systems, information services, yellow-pages directory advertising and satellite and aircraft-passenger communications services.
GTE is the fourth-largest publicly held telecommunications company in the world.
GTE CORPORATION AND SUBSIDIARIES
Condensed Summary of Consolidated Results
Periods ended Fourth Quarter Year
Dec. 31 1992 1991 1992 1991
REVENUES AND SALES
Telephone Operations $4,049 $4,094 $15,862 $15,652
and Services 1,084 1,135 4,122 3,969
Total revenues and sales $5,133 $5,229 $19,984 $19,621
Telephone Operations $1,038 $1,040 $ 4,034 $ 3,957
and Services 41 35 182 127
Merger consummation and
integration costs -- -- -- (342)
Operating income 1,079 1,075 4,216 3,742
Interest expense - net 303 347 1,332 1,384
Other - net 3 63 130 167
Income before income taxes 773 665 2,754 2,191
Income tax provision 256 184 967 662
Income from continuing operations 517 481 1,787 1,529
Discontinued operations (48) 34 (48) 51
Extraordinar -- (2,441) --
Net income (loss) 417 515 (754) 1,580
Preferred stock dividends 5 9 26 37
Net income (loss) applicable to
common stock $ 412 $ 506 $ (780) $ 1,543
EARNINGS (LOSS) PER COMMON SHARE
Continuing operations $ .55 $ .53 $ 1.95 $ 1.69
Discontinued operations (.05) .04 (.05) .06
Extraordinary charge (.06) -- (.06) --
Cumulative effect of accounting
changes -- -- (2.70) --
Consolidated $ .44 $ .57 $ (.86) $ 1.75
Average common shares 935 888 905 882
GTE CORPORATION AND SUBSIDIARIES
Condensed Summary of Consolidated Results - Continued
The table below has been adjusted for comparison purposes to exclude from income from continuing operations the 1992 impact of the new accounting for postretirement health care and life insurance benefits (Note 1) of $137 million, or $.15 per share, and the one-time net charge incurred in 1991 in connection with the Contel merger and gain on the transfer of certain cellular properties, which reduced income from continuing operations by $204 million, or $.23 per share.
Periods ended Fourth Quarter Year
Dec. 31 1992 1991 1992 1991
Operating income $1,131 $1,075 $4,423 $4,084
Income from Continuing
Operations 551 481 1,924 1,733
Earnings Per Common Share
from Continuing Operations $ .59 $ .53 $ 2.10 $ 1.92
NOTES TO CONDENSED SUMMARY OF CONSOLIDATED RESULTS
1. During the fourth quarter of 1992, GTE adopted Financial Accounting Standards ("FAS") No. 106 "Employers' Accounting for Postretirement Benefits Other Than Pensions" and FAS No. 109 "Accounting for Income Taxes", retroactive to Jan. 1, 1992.
FAS 106 requires the expected cost of postretirement health care and life insurance benefits to be recognized during the years that employees render service. Prior to adoption, the cost of these benefits was charged to expense on a pay-as-you-go basis. GTE elected to adopt FAS 106 on the immediate recognition basis. This resulted in a one-time, non-cash, after-tax charge of $2.34 billion or $2.59 per share to give effect to past service costs. This charge was recorded by restating previously reported first quarter 1992 results.
FAS 109 changes the method by which companies account for income taxes.
Among other things, the statement requires that deferred tax balances be adjusted to reflect new tax rates when they are enacted into law.
The cumulative prior years' effect of this change reduced net income by $100 million or $.11 per share and was reflected in restated earnings for the first quarter of 1992.
Results for the first three quarters of 1992 were also restated to give effect to the adoption of FAS 106. The current year effect reduced income from continuing operations by $137 million, or $.15 per share, with the decrease recognized about evenly over the four quarters of the year, as shown below:
First Second Third Fourth
Quarter Quarter Quarter Quarter Year
Income from continuing
adoption of new accounting
standards $ .47 $ .49 $ .55 $ .59 $2.10
Impact of adoption of
FAS 106 (.04) (.04) (.03) (.04) (.15)
Income from continuing
operations, as restated $ .43 $ .45 $ .52 $ .55 $1.95
2. In December 1991, GTE adopted a plan to divest its Electrical Products Group ("EPG") in order to focus its resources on the telecommunications industry. In January 1993, GTE sold its world-wide EPG businesses in three separate transactions. The aggregate sales price, which included the assumption of debt, totaled approximately $1.2 billion. Proceeds from these sales are being used to retire high-coupon debt. As a result of these transactions, in December 1992, GTE recorded after-tax charges totaling $100 million, including an extraordinary charge of $52 million resulting from the early retirement of high-coupon debt and a $48 million charge associated with the sale of EPG, which has been accounted for as a discontinued operation.
/CONTACT: Harvey W. Greisman, 203-965-2903 or after 6 p.m.: 203-226-7661, or Tony Hamilton, 203-965-2853 or after 6 p.m.: 203/327-2162, or in Washington: Julia Spicer: 202-463-5206, or after 6 p.m., 202-797-0751, all of GTE Corp./
(GTE) CO: GTE Corp. ST: Connecticut IN: SU: ERN TS -- NY027 -- 1736 02/02/93 10:19 EST