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ROCHESTER TEL REPORTS THIRD QUARTER EARNINGS; LONG DISTANCE REVENUES JUMP BY 48 PERCENT

 ROCHESTER, N.Y., Oct. 18 /PRNewswire/ -- Rochester Tel (NYSE: RTC) today reported consolidated net income of $19.2 million for the third quarter of 1993, and earnings per share of $.56
 Results for the third quarter included several one-time items that impacted earnings. Excluding these items, net income was $21.6 million for the quarter, a 17 percent improvement over last year's third quarter. Earnings per share excluding these items were $.63, a 16.7 percent increase over the third quarter of 1992.
 The one-time items included a $1.2 million charge related to the federal tax rate increase to 35 percent, as mandated by the Revenue Reconciliation Act of 1993. Approximately $800,000 of the tax expense relates to the first two quarters of 1993; the remainder represents a revaluation of deferred taxes. The quarter also included a $3.3 million pretax write-off at the Rochester, N.Y., operating company for a discontinued computer software project. These expenses were partially offset by an aftertax gain of nearly $1 million on the spin-off of S&A Telephone in Kansas, which took place on Sept. 16, 1993.
 Ron Bittner, chairman, president and chief executive officer, said that again this quarter the company's results were led by outstanding performance at RCI Long Distance as well as by the regional telephone companies outside of Rochester, N.Y.
 Long distance revenues improved by 48 percent in the recent quarter, and total billed minutes of use grew by 57 percent over the third quarter of 1992.
 "Through strategic acquisitions and targeted marketing, our long distance operation has grown stronger and more profitable," said Bittner. "We're proud of this achievement, especially in light of the competitive market for long distance services."
 Bittner also underscored the value of the company's telephone network of over 900,000 access lines in 14 states.
 "Nearly 51 percent of the company's overall consolidated operating income was generated by the telephone companies outside Rochester," said Bittner. "In addition, for the first time this quarter, the regional telephone companies outside of Rochester became the largest source of revenue for the company."
 CONSOLIDATED RESULTS
 Consolidated revenues grew 14.3 percent during the quarter, reaching $230.5 million. Consolidated operating income, which includes the impact of the $3.3 million software charge, was $48.4 million for the quarter, a 4.9 percent increase over the prior year's quarter. In the first and second quarters of 1993, Rochester Tel reported consolidated operating income of $44 million and $48.9 million, respectively.
 For the first nine months of the year, consolidated revenues improved 11.9 percent, reaching $664.3 million. Operating income was $141.7 million, a 9.2 percent increase over the same period in 1992. Net income was $57.1 million, a 13.6 percent increase over the first nine months of 1992, and earnings per share were $1.67 for the period, up 12.7 percent over last year.
 As announced with the first and second quarter results, the company's performance for the quarter also includes the impact of the adoption on Jan. 1, 1993, of a new accounting method required for postretirement benefits other than pensions, partially offset by a change in accounting for pension costs at the Rochester operating company. This resulted in additional pretax operating expenses of $1.4 million for the quarter and $4.4 million for the first nine months of the year.
 "This was an excellent quarter for the company and its shareowners," concluded Bittner. "We continue to focus on long-term growth and profitability in our effort to become the premier company in the industry."
 TELECOMMUNICATION SERVICES
 The Telecommunication Services group reported a 39.1 percent increase in revenues for the quarter and a 20.3 percent improvement in operating income.
 Driving this performance was the long distance business segment, which generated a 31.8 percent increase in operating income for the quarter. The operating margin for long distance was 10.3 percent for the quarter, compared with a margin of 10.0 percent in the second quarter of this year.
 Long distance usage grew by 57 percent over the third quarter of 1992, reflecting the success of a new residential marketing program and the favorable reception of RCI's comprehensive full-service Dimension product. On Sept. 30, 1993, the company finalized the purchase of Mid Atlantic Telecom, a long distance reseller based in Washington, whose results will be reflected the fourth quarter of this year.
 In the company's wireless segment, annual customer growth remained strong at 32 percent and revenues increased by 39.3 percent. Wireless operating income declined by 5.5 percent versus the third quarter of 1992, primarily because of expenses related to the Utica-Rome MSA, 70 percent of which was acquired by Rochester Tel on April 15, 1993. Significant progress was made at the Utica-Rome property, which had a 33 percent increase in customers over the third quarter of last year.
 Wireless operating margin in the third quarter was 15.5 percent, compared with 7.1 percent in the second quarter of this year.
 TELEPHONE OPERATIONS
 Revenues and operating income in Telephone Operations improved 4.0 and 1.9 percent, respectively, over the third quarter of last year.
 The regional telephone companies reported revenue growth of 8.3 percent, primarily the combined result of an interim rate award in Minnesota, access line growth of 4.8 percent, and overall growth in toll minutes.
 The regional telephone companies continued to realize expense savings related to operational synergies and staff realignments. Total costs and expenses increased only 1.6 percent over the third quarter of 1992, contributing to operating income growth of 24.7 percent. The operating margin for the regional telephone companies was 33.3 percent in the third quarter of 1993.
 At the Rochester, N.Y., operating company, revenues were virtually flat compared to the third quarter of last year. The Rochester company's revenues were impacted by a multi-year rate stability agreement currently under final consideration by the New York State Public Service Commission. In anticipation of the final agreement, the company reduced revenue by $2.1 million in the third quarter of 1993, which is expected to benefit local ratepayers.
 Operating income at the Rochester company was negatively impacted by the revenue adjustment, as well as by the $3.3 million software write- off. Without the write-off, the operating margin was 24.4 percent for the quarter.
 Rochester Tel has operations that serve one million customers through 50 telecommunications companies in 22 states. The company's principal lines of business include long distance, network systems, wireless and telephone operations. Rochester Tel is headquartered in Rochester, N.Y., and was incorporated in 1921.
 ROCHESTER TELEPHONE CORPORATION
 Consolidated Statement of Income
 (Unaudited)
 3 Months Ended Sept. 30,
 In thousands, except per share data 1993(A)(B) 1992
 Revenue and Sales
 Telephone Operations $147,763 $142,116
 Telecommunication Services 82,743 59,478
 Total Revenues and Sales 230,506 201,594
 Costs and Expenses
 Operating expenses 133,268 110,676
 Cost of goods sold 4,362 4,807
 Depreciation 28,944 28,527
 Taxes other than income taxes 12,259 11,466
 Software write-off(C) 3,300 ---
 Total Costs and Expenses 182,133 155,476
 Operating Income 48,373 46,118
 Interest expense 11,805 12,636
 Other income and expense:
 Allowance for funds used during
 construction 290 292
 Gain on sale of assets 954 ---
 Other income (expense), net (5,615) (4,111)
 Income Before Taxes 32,197 29,663
 Income Taxes 12,960 11,215
 Consolidated Net Income 19,237 18,448
 Dividends on preferred stock 297 297
 Income Applicable to Common Stock $18,940 $18,151
 Dividends on common stock $13,378 $13,044
 Average common shares outstanding 33,860 33,319
 Earnings Per Common Share
 Primary $.56 $.54
 Fully Diluted $.56 $.54
 9 Months Ended Sept. 30,
 In thousands, except per share data 1993(A)(B) 1992
 Revenue and Sales
 Telephone Operations $440,640 $420,501
 Telecommunication Services 223,687 173,081
 Total Revenues and Sales 664,327 593,582
 Costs and Expenses
 Operating expenses 383,487 330,741
 Cost of goods sold 15,279 14,458
 Depreciation 85,755 84,697
 Taxes other than income taxes 34,820 33,980
 Software write-off(C) 3,300 ---
 Total Costs and Expenses 522,641 463,876
 Operating Income 141,686 129,706
 Interest expense 35,805 37,973
 Other income and expense:
 Allowance for funds used during
 construction 962 1,022
 Gain on sale on assets 954 ---
 Other income (expense), net (14,667) (10,814)
 Income Before Taxes 93,130 81,941
 Income Taxes 36,045 31,684
 Consolidated Net Income 57,085 50,257
 Dividends on preferred stock 890 891
 Income Applicable to Common Stock $56,195 $49,366
 Dividends on common stock $40,127 $38,135
 Average common shares outstanding 33,648 33,319
 Earnings Per Common Share
 Primary $1.67 $1.48
 Fully Diluted $1.67 $1.48
 (A) -- On Jan. 1, 1993, the company adopted Financial Accounting Standards Board Statement No. 106 (FAS 106), "Employers' Accounting for Postretirement Benefits Other Than Pensions," using the delayed recognition of the transition obligation method. Net of a change in accounting, subject to approval by the New York State Public Service Commission, for pension costs at the Rochester Operating Company, additional operating expenses of $1.4 million were recognized in the quarter and $4.4 million for the first nine months of the year.
 (B) -- As a result of the Revenue Reconciliation Act of 1993, the third quarter income tax provision includes the retroactive impact of the federal tax rate increase to 35 percent. The impact amounts to approximately $1.6 million, of which approximately $380,000 is attributable to the third quarter.
 (C) -- As part of the Rochester Company's Settlement Agreement with the New York State Public Service Commission, the company agreed to write-off one-half of costs previously deferred as part of a project to redesign customer accounts records, order flow and customer billing systems. The costs were incurred from January 1990 to December 1992 and the project was abandoned after it was determined that the cost to complete was substantially greater than initially estimated. The remaining one-half of the costs previously deferred are being amortized to expense and recovered in rates.
 ROCHESTER TELEPHONE CORPORATION
 Business Segment Information
 (Unaudited)
 3 Months Ended Sept. 30,
 In thousands of dollars 1993 1992
 Telephone Operations
 Revenues
 Local service $ 60,962 $ 54,445
 Network access service 55,658 50,279
 Long distance network service 4,866 8,307
 Directory advertising, billing
 services, and other 27,849 29,799
 Less: Uncollectibles 1,572 714
 Total Revenues $147,763 $142,116
 Operating Income(A) $ 39,447 $ 38,696
 Depreciation $ 24,976 $ 25,233
 Construction Expenditures $ 22,692 $ 17,876
 Identifiable Assets(B) $1,394,788 $1,386,333
 Telecommunications Services
 Sales
 Network Systems & Services:
 Non-Affiliate $ 74,796 $ 53,793
 Affiliate 744 125
 Wireless Communications 7,920 5,685
 Eliminations (717) (125)
 Total Sales $ 82,743 $ 59,478
 Operating Income
 Network Systems & Services $ 7,682 $ 6,107
 Wireless Communications 1,225 1,296
 Eliminations 19 19
 Total Operating Income(A) $ 8,926 $ 7,422
 Depreciation $ 3,968 $ 3,294
 Construction Expenditures $ 3,426 $ 1,932
 Identifiable Assets(B) $265,089 $191,168
 9 Months Ended Sept. 30,
 In thousands of dollars 1993 1992
 Telephone Operations
 Revenues
 Local service $173,405 $159,156
 Network access service 164,235 149,489
 Long distance network service 18,390 22,355
 Directory advertising, billing
 services, and other 88,217 91,631
 Less: Uncollectibles 3,607 2,130
 Total Revenues $440,640 $420,501
 Operating Income(A) $119,859 $112,702
 Depreciation $ 73,878 $ 74,822
 Construction Expenditures $ 65,082 $ 74,936
 Identifiable Assets(B) $1,394,788 $1,386,333
 Telecommunications Services
 Sales
 Network Systems & Services:
 Non-Affiliate $202,988 $157,712
 Affiliate 2,709 322
 Wireless Communications 20,333 15,349
 Eliminations (2,343) (302)
 Total Sales $223,687 $173,081
 Operating Income
 Network Systems & Services $ 19,620 $ 14,052
 Wireless Communications 2,151 2,896
 Eliminations 56 56
 Total Operating Income(A) $ 21,827 $ 17,004
 Depreciation $ 11,877 $ 9,875
 Construction Expenditures $ 7,747 $ 7,036
 Identifiable Assets(B) $265,089 $191,168
 (A) -- See notes (A) and (B) on Consolidated Statement of Income.
 (B) -- Includes assets eliminated in consolidation of $155,241 in 1993 and $95,716 in 1992.
 -0- 10/18/93
 /CONTACT: Diana C. Melville, of Rochester Tel, 716-777-1090/
 (RTC)


CO: Rochester Telephone ST: New York IN: TLS SU: ERN

KL-BU -- CL027 -- 3502 10/18/93 15:20 EDT
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Date:Oct 18, 1993
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