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ROCHESTER TEL REPORTS 1991 EARNINGS

 ROCHESTER TEL REPORTS 1991 EARNINGS
 ROCHESTER, N.Y., Jan. 20 /PRNewswire/ -- Rochester Tel today


reported net income of $77.0 million for its fiscal year ending Dec. 31, 1991, a 54.9 percent improvement over net income of $49.7 million reported in 1990.
 Excluding the impact of a net gain of $19.5 million on the sale of cellular properties, Rochester Tel's income from continuing operations was $57.5 million in 1991, an increase of 15.7 percent over 1990's results. The cellular gain is related to the transfer of cellular properties as part of the acquisition of Centel's Minnesota telephone operations in 1991. A portion of the gain relating to certain properties acquired within two years prior to the sale is reflected as an extraordinary item, with the remainder recorded as an ordinary gain on sale of assets.
 Earnings per share with the cellular gains were $2.48 in 1991. Excluding the cellular gains, earnings per share were $1.84 in 1991, a 7.09 percent improvement over per share results of $1.72 in 1990. There were 2.4 million additional average shares outstanding at the end of 1991.
 Consolidated revenues were $703.2 million for the year, a 16.6 percent improvement over total revenues of $603.0 million in 1990. Consolidated operating income improved 25.1 percent over 1990, reaching $145.2 million for the year.
 The company today also reported its results for the fourth quarter of 1991. Net income was $16.8 million, a 29.0 percent improvement over the fourth quarter of 1990. Earnings per share were $.52, an 18.2 percent increase over per share earnings of $.44 in last year's fourth quarter. The fourth quarter of 1990 included a one-time pre-tax expense of $1.9 million associated with an early retirement program.
 Consolidated revenues for the fourth quarter of the year were $194.6 million, a 22.7 percent improvement over the fourth quarter of 1990. Operating income for the quarter was $41.9 million, an increase of 29.3 percent over the fourth quarter of 1990.
 "This was a good year for Rochester Tel," commented Alan C. Hasselwander, president and chief executive officer. "Our operating results were strong, our newest properties have given us added momentum and our diversified interests have allowed us to manage our business profitably during an economic downturn."
 Approximately 65 percent of the company's revenue growth in 1991 is attributable to 1991 acquisitions. During the year, four telephone companies and two long distance entities were acquired and accounted for as purchase transactions: Minot Telephone, North Dakota (Jan. 31); DePue Telephone, Illinois (March 27); the former Centel properties, Vista Telephone of Minnesota and Iowa (June 28 and Aug. 7, respectively); Long Distance North (Jan. 7) and Taconic Long Distance Corp. (July 25). Fiscal 1991 also includes the full-year operating results of five telephone properties acquired during the last six months of 1990 and recorded under the purchase method of accounting.
 The company's 1991 results reflect a 33.5 percent increase in interest expense, which totaled $44.6 million for the year. The increase is primarily attributable to additional debt incurred as a result of acquisitions.
 Rochester Tel's earnings for 1991 also were impacted by just under $1 million in expenses and lost revenues related to the March 1991 ice storm that devastated the Rochester area. The Rochester operating company will be able to recover an additional $5.2 million in expenses from local service revenues over a four-year period beginning in 1992. Another $1.6 million in intrastate toll expenses was partially recovered in 1991, with the remainder to be recovered through mid-1993. The recovery of an additional $1.9 million in expenses related to interstate toll services is currently pending approval from the Federal Communications Commission.
 Telephone Group
 Revenues in the Telephone Group were $487.3 million in 1991, an increase of 19.6 percent over 1990. Approximately 61 percent of the increase was due to the contributions of four telephone subsidiaries purchased since the beginning of 1991. Operating income for the group was $128.6 million, a 20.8 percent improvement over 1990's results. Revenues in the fourth quarter of 1991 were $138.5 million, up 28.9 percent over the fourth quarter of 1990. Operating income was $36.9 million, a 31.8 percent increase over the fourth quarter of 1990.
 The telephone subsidiaries contributed 41 percent of Telephone Group revenues and 44 percent of the group's operating income in 1991. This compares with a contribution of 33 percent and 37 percent, respectively, in 1990. Rochester Tel now operates 37 telephone companies in 15 states, compared with eight companies in two states five years ago. Thirty-five per cent of the company's 853,000 access lines are located outside New York.
 The Rochester operating company showed a 4.9 percent improvement in revenues during the year, reflecting growth in advanced custom calling features, directory advertising and business lines. The company was able to increase rates on competitive services under a three-year incentive rate agreement effective January 1990.
 That agreement allowed for a $5.6 million rate increase in 1990 and rate increases on Jan. 1, 1991 and 1992 reflecting the change in inflation offset for a productivity factor. In 1991, the company increased rates $2.5 million under this arrangement and expects rate increases effective Jan. 1, 1992 to produce additional local service revenues of $1.6 million. As an additional incentive under the agreement, the company was allowed to exceed its adjusted rate of return on equity with the condition that it share a portion of this amount with ratepayers. The company has made provisions in 1991 to share an estimated $269,000 with ratepayers in early 1992. The refund will be finalized following the outcome of discussions with the New York State Public Service Commission.
 Telecommunications Group
 Total sales in the telecommunications group improved 10.5 percent in 1991, reaching $216.0 million for the year. Sales for the group in the fourth quarter were $56.1 million, up 9.8 percent over the fourth quarter of 1990. Operating income was $16.6 million for the year, an improvement of 72.7 percent over 1990. For the fourth quarter, operating income was $5.0 million, an improvement of 13.3 percent over 1990's results.
 Network services and systems reported a revenue increase of 10.1 percent in 1991 over 1990. Of the increase, long distance revenues improved 17.6 percent. This reflects continued growth at RCI Long Distance, particularly in the areas of operator services and basic long distance access, as well as the acquisition of the two new long distance companies, which represented 9.9 percent of long distance revenues in 1991. The increase in long distance revenues was offset by lower sales of business systems during the year.
 Revenues for wireless communications, composed of cellular and paging services, improved 30.6 percent during 1991. The increase reflects growth in the customer base, and additional roaming and paging revenues at Rochester Tel Mobile Communications, which serves the six-county Rochester area.
 Outlook for 1992
 In looking ahead to 1992, Hasselwander said, "We enter the year with a number of strengths. We have made extraordinary progress on our Strategic Plan, particularly in spreading our regulatory and economic risk beyond New York State. The Telecommunications Group has dealt very effectively in competitive markets and has streamlined its organization. Our telephone subsidiaries have performed well, and the Rochester company is successfully optimizing the investments in its network."
 Rochester Tel has 37 telephone operating companies in the Mid-Atlantic, Midwest and South. Its Telecommunications Group subsidiaries operate in New York State, the Northeast and the Mid-Atlantic Region.
 ROCHESTER TELEPHONE CORPORATION
 Consolidated Statement of Income(D)
 (Unaudited)
 3 Months Ended Dec. 31
 In thousands, except per share data 1991 1990
 Revenues and Sales
 Telephone Group $138,517 $107,466
 Telecommunications Group 56,100 51,096
 Total Revenues and Sales 194,617 158,562
 Costs and Expenses
 Operating expenses 108,374 87,810
 Cost of goods sold 5,438 6,318
 Depreciation 26,671 21,079
 Taxes other than income taxes 12,222 10,931
 Total Costs and Expenses 152,705 126,138
 Operating Income 41,912 32,424
 Interest expense 13,052 8,974
 Other income and expense:
 Allowance for funds used during
 construction 287 454
 Gain on sale of assets --- ---
 Other income (expense), net (2,981) (1,932)
 Income Before Taxes and Extraordinary
 Item 26,166 21,972
 Income Taxes(A) 9,374 8,958
 Income Before Extraordinary Item 16,792 13,014
 Extraordinary item - gain on sale of
 assets (net of income taxes of $2,430) --- ---
 Consolidated Net Income(B) 16,792 13,014
 Dividends on preferred stock 297 299
 Income Applicable to Common Stock(B) $16,495 $12,715
 Dividends on common stock $12,260 $11,118
 Average common shares outstanding(C) 31,843 28,832
 Earnings Per Common Share
 Primary:
 Income before extraordinary item $.52 $.44
 Extraordinary Item --- ---
 Earnings per Common Share-Primary $.52 $.44
 Fully Diluted:
 Income before extraordinary item $.52 $.44
 Extraordinary item --- ---
 Earnings Per Common Share-Fully
 Diluted $.52 $.44
 12 Months Ended Dec. 31
 In thousands, except per share data 1991 1990
 Revenues and Sales
 Telephone Group $487,259 $407,487
 Telecommunications Group 215,962 195,474
 Total Revenues and Sales 703,221 602,961
 Costs and Expenses
 Operating expenses 396,745 342,234
 Cost of goods sold 20,621 26,684
 Depreciation 97,090 79,825
 Taxes other than income taxes 43,556 38,161
 Total Costs and Expenses 558,012 486,904
 Operating Income 145,209 116,057
 Interest expense 44,595 33,417
 Other income and expense:
 Allowance for funds used during
 construction 1,568 2,031
 Gain on sale of assets 27,561 533
 Other income (expense), net (10,488) (5,888)
 Income Before Taxes and Extraordinary
 Item 119,255 79,316
 Income Taxes(A) 45,998 29,601
 Income Before Extraordinary Item 73,257 49,715
 Extraordinary item-gain on sale of
 assets (net of income taxes of $2,430) 3,757 ---
 Consolidated Net Income(B) 77,014 49,715
 Dividends on preferred stock 1,189 1,192
 Income Applicable to Common Stock(B) $75,825 $48,523
 Dividends on common stock $46,993 $41,488
 Average common shares outstanding(C) 30,622 28,194
 Earnings Per Common Share
 Primary:
 Income before extraordinary item $2.36 $1.72
 Extraordinary Item $.12 ---
 Earnings per Common Share-Primary $2.48 $1.72
 Fully Diluted:
 Income before extraordinary item $2.35 $1.71
 Extraordinary item $.12 ---
 Earnings Per Common Share-Fully
 Diluted $2.47 $1.71
 (A) 1991 includes taxes relating to sale of cellular interest of $11,827 YTD.
 (B) 1991 includes net gain on sale of cellular interests of $19,491 YTD.
 (C) As a result of conversions of 4-3/4 percent convertible debentures, 869 shares and 1,738 shares of common stock were issued during the three and 12-month periods ended Dec. 31, 1991, respectively.
 (D) In the fourth quarter of 1991, the Telecommunications Group changed its classification of bad debt expense from a reduction of revenue to an operating expense. Prior periods have been reclassified to conform with the current period's presentation.
 ROCHESTER TELEPHONE CORPORATION
 Business Segment Information
 (Unaudited)
 3 Months Ended December 31
 In thousands of dollars 1991 1990
 Telephone Group
 Revenues
 Local service $51,162 $40,615
 Network access service 47,927 33,843
 Long distance network service 7,884 8,623
 Miscellaneous 32,749 25,601
 Less: Uncollectibles 1,205 1,216
 Total Revenues $138,517 $107,466
 Operating Income $36,942 $28,038
 Depreciation $23,570 $18,664
 Construction Expenditures $31,080 $23,279
 Identifiable Assets (A) $1,363,887 $1,083,111
 Telecommunications Group (B)
 Sales
 Network Services & Systems:
 Non-Affiliate $51,555 $47,149
 Affiliate 2,619 1,660
 Wireless Communications 4,824 3,820
 Eliminations (2,896) (1,533)
 Total Sales $56,100 $51,096
 Operating Income
 Network Services & Systems $4,144 $3,621
 Wireless Communications 808 746
 Eliminations 18 19
 Total Operating Income $4,970 $4,386
 Depreciation $3,101 $2,415
 Construction Expenditures $4,079 $4,313
 Identifiable Assets (A) $208,308 $170,923
 12 Months Ended December 31
 In thousands of dollars 1991 1990
 Telephone Group
 Revenues
 Local service $183,215 $153,467
 Network access service 162,549 126,667
 Long distance network service 32,920 33,069
 Miscellaneous 112,866 97,502
 Less: Uncollectibles 4,291 3,218
 Total Revenues 487,259 407,487
 Operating Income 128,582 106,431
 Depreciation 85,009 71,241
 Construction Expenditures 98,322 91,619
 Identifiable Assets (A) 1,363,887 1,083,111
 Telecommunications Group (B)
 Sales
 Network Services & Systems:
 Non-Affiliate $190,917 $181,005
 Affiliate 9,319 7,173
 Wireless Communications 17,038 13,048
 Eliminations (9,312) (6,652)
 Total Sales 215,962 195,474
 Operating Income
 Network Services & Systems 13,153 7,551
 Wireless Communications 3,412 2,000
 Eliminations 62 75
 Total Operating Income 16,627 9,626
 Depreciation 12,081 8,584
 Construction Expenditures 9,657 15,403
 Identifiable Assets (A) 208,308 170,923
 (A) -- Includes assets eliminated in consolidation of $96,446 in 1991 and $74,173 in 1990.
 (B) -- In the fourth quarter of 1991, the Telecommunications Group changed its classification of bad debt expense from a reduction of revenue to an operating expense. Prior periods have been reclassified to conform with the current period's presentation.
 -0- 1/20/92
 /CONTACT: Frederick R. Pestorius, vice president-finance and treasurer, 716-777-7330; or Kenneth P. Schirmuhly, corporate communications director, 716-777-6028, both of Rochester Tel/ CO: Rochester Tel ST: New York IN: TLS SU: ERN


KK -- CL007 -- 1467 01/20/92 14:30 EST
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