Growth in Core Business, International Expansion Drive Results CHICAGO, April 14 /PRNewswire/ -- Ameritech (NYSE: AIT) today reported record first-quarter revenues and its 18th consecutive quarter of double-digit profit growth before one-time items. Major growth drivers for the quarter were strong volume and customer gains across Ameritech's U.S. operations combined with expanded contributions from the company's extensive European investments. Revenues climbed 7.1% to a first-quarter record of $4.13 billion, up from $3.86 billion in the first quarter of 1997. First-quarter earnings per share on a diluted basis grew 10.4% to 53 cents, up from 48 cents a year ago, and basic earnings per share increased 10.2% to 54 cents, up from 49 cents a year ago, both before one-time items. Net income advanced 10.1% to $590 million before one-time items, up from $536 million in the first quarter of 1997. "Ameritech is off to an outstanding start in 1998," said Richard C. Notebaert, Ameritech chairman and chief executive officer. "We generate superior value for shareowners through enhanced revenue growth, continuous cost improvements and disciplined expansion in the United States and Europe. Our sustained record of success in all of these areas gives us tremendous momentum and confidence going forward." Ameritech's first-quarter growth was highlighted by: * 21% growth in sales of call management services such as Caller ID, call waiting and voice messaging. * 4.3% annual increase in access lines to 20.8 million -- including a 12.7% increase in additional lines and a 63% increase in ISDN lines. * 23.5% annual growth in cellular customers to 3.3 million. Ameritech added 636,000 cellular customers over the past 12 months. Ameritech's significant investments in international businesses contributed more than one-fourth of the company's earnings growth in the quarter. With major strategic investments in Belgium, Denmark and Hungary, Ameritech is the largest foreign investor in European telecommunications, with a portfolio valued at $7.5 billion. In January, Ameritech completed its $3.1 billion investment for an eventual 42% equity stake in Tele Danmark (NYSE: TLD), the national communications company in Denmark. Since announcement of Ameritech's investment in Tele Danmark on October 27, 1997, Tele Danmark's stock price has increased more than 70%. In April, Ameritech completed the sale of its 24.95% stake in Telecom Corporation of New Zealand Limited (NYSE: NZT) through a global offering. Total proceeds are expected to be $2.1 billion. As a result of the sale, Ameritech expects to record a one-time gain in the second quarter of 1998. In March, Ameritech outlined plans to reduce cumulative operating expenses over the next five years by $3 billion. In the first quarter, Ameritech recorded a one-time after-tax charge of $64 million for restructuring costs, which are part of that cost containment program. Results for the quarter also included a previously reported one-time after-tax non-cash accounting charge of $34 million for currency-related fair value adjustments related to Ameritech's investment in Tele Danmark. Including these charges, reported first quarter earnings per share were 44 cents on a diluted basis, 45 cents basic, and net income was $492 million. Ameritech serves millions of customers in 50 states and 40 countries. Ameritech provides a full range of communications services, including local and long distance telephone, cellular, paging, security services, cable TV, Internet services and more. One of the world's 100 largest companies, Ameritech (www.ameritech.com) has 73,000 employees, 1 million shareowners and nearly $28 billion in assets. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Dollars in millions, except per share amounts) Three Months Ended March 31 % 1998(a) 1997(a) Change (Unaudited) (Unaudited) Revenues $4,133 $3,859 7.1% Operating expenses (b) 3,228 2,947 9.5% Operating income 905 912 (0.8)% Other income, net (c) 51 65 (21.5)% Interest expense 175 125 40.0% Income before income taxes 781 852 (8.3)% Income taxes 289 316 (8.5)% Net income $492 $536 (8.2)% Average common shares outstanding (000) 1,099,650 1,101,054 (0.1)% Dilutive potential common shares (000) 8,968 4,703 n/m Average shares with dilution (000) 1,108,618 1,105,757 0.3% Basic earnings per common share $0.45 $0.49 (8.2)% Diluted earnings per common share $0.44 $0.48 (8.3)% Dividends declared per common share $0.30 $0.2825 6.2% n/m -- not meaningful (a) Income before one-time items rose 10.1 percent to $590 million from $536 million in the first quarter of 1997. Diluted earnings per share before one-time items grew 10.4 percent to $0.53 per share, up from $0.48 per share in the first quarter of 1997. See notes (b) and (c) for details of the one-time items reflected in 1998. (b) Results for the first quarter of 1998 include a pretax charge of $104 million ($64 million after-tax, or $0.06 per share) for a restructuring charge related to the recently announced $3 billion cost containment program. (c) Results for the first quarter of 1998 also include a pretax charge of $54 million ($34 million after-tax, or $0.03 per share) for a currency-related fair-value adjustment in conjunction with our January 1998 investment in Tele Danmark. CONDENSED CONSOLIDATED BALANCE SHEETS (Dollars in millions) Change from March 31 Dec. 31 Dec. 31 1998 1997 1997 (Unaudited) ASSETS Current assets $3,966 $4,549 $(583) Property, plant and equipment 13,900 13,873 27 Investments, primarily international 4,741 1,751 2,990 Other assets and deferred charges 5,346 5,166 180 Total assets $27,953 $25,339 $2,614 LIABILITIES AND SHAREOWNERS' EQUITY Debt maturing within one year $2,893 $3,036 $(143) Other current liabilities 4,393 4,205 188 Long-term debt 7,019 4,610 2,409 Deferred credits and other long-term liabilities 5,121 5,180 (59) Shareowners' equity 8,527 8,308 219 Total liabilities and shareowners' equity $27,953 $25,339 $2,614 SELECTED FINANCIAL AND OPERATING DATA (Unaudited) (Dollars in millions) March 31, March 31, % 1998 1997 Change Debt ratio 53.8% 47.2% 13.9% Customer lines (000's) 20,751 19,895 4.3% Employees 72,944 66,403 9.8% Telephone company employees 51,393 50,015 2.8% Customer lines per telephone company employee 404 398 1.5% Return on average equity - annualized 26.3% 27.3% (3.7)% Return on average total capital - annualized 15.6% 16.9% (7.7)% Construction activity $663 $533 24.4% SOURCE Ameritech /CONTACT: Jerrell Ross, 312-750-5265, firstname.lastname@example.org, or George Stenitzer, 312-609-6166, email@example.com, both of Ameritech/ /Web site: http://www.ameritech.com/ (AIT TLD NZT) CO: Ameritech; Tele Danmark; Telecom Corporation of New Zealand Limited ST: Illinois IN: TLS SU: ERN
AMERITECH EARNINGS PER SHARE UP 10.4% IN FIRST QUARTER;
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