Exhibit 99.1
Contact: | Mark A. Steinkrauss, Vice President, Corporate Relations |
| (312) 592-5384 mark.steinkrauss@teldta.com |
| |
| Julie D. Mathews, Manager, Investor Relations |
| (312) 592-5341 julie.mathews@teldta.com |
FOR RELEASE: IMMEDIATE
TDS REPORTS THIRD QUARTER 2005 OPERATING RESULTS
AND RESTATED RESULTS FOR CERTAIN PRIOR PERIODS
CHICAGO – April 26, 2006 – Telephone and Data Systems, Inc. [AMEX:TDS, TDS.S] reported operating revenues of $1,028.8 million for the third quarter of 2005, up 7 percent from $964.4 million, as restated, for the comparable period one year ago. Operating income was $107.8 million, up 21 percent from operating income of $89.3 million, as restated, for the third quarter of 2004. Net income available to common and diluted earnings per share were $41.5 million and $0.36, respectively. In the third quarter of 2004, net income available to common and diluted earnings per share were $43.3 million and $0.37, respectively, as restated.
On Nov. 10, 2005, TDS announced that it would restate financial results for several prior periods, resulting in a delay in issuing its third quarter 2005 results. Today, the company has completed the restatements for the first and second quarters of 2005, the years ended Dec. 31, 2002 – 2004, each of the quarters of 2003 and 2004, and certain selected financial data for the years 2000 and 2001. It was necessary to complete the restatements on amended Forms 10-Q and 10-K before the company could release third quarter operating results. All of the amended financial statements are expected to be filed with the Securities and Exchange Commission (SEC) later today.
Restated consolidated statements of operations and consolidated balance sheets are attached to this press release as appendices 1 through 5.
“We are pleased to have completed our restated financials and third quarter 2005 operating results,” said LeRoy T. Carlson, Jr., president and chief executive officer of TDS. “While the restatement and the subsequent delays were regrettable, they were necessary for both TDS and U.S. Cellular to complete a thorough review of our prior period financials. It was important for us to be confident that our restated financials were complete and fairly stated in accordance with generally accepted accounting principles.
“We are now focused on completing our year-end 2005 operating results and implementing the remediation plans included in today’s SEC filings,” continued Mr. Carlson. “We’ve learned a great deal from this experience, which we will take with us going forward. Everyone at TDS and U.S. Cellular looks forward to focusing more fully on our mission to deliver outstanding telecommunications to all of our wireless and wireline customers.”
Comments on Third Quarter 2005 Results
U.S. Cellular, TDS’s 81 percent owned subsidiary, continued to execute on its strategy of delivering outstanding customer service, resulting in another quarter of low postpay customer churn of 1.5 percent. At the same time, U.S. Cellular enhanced its growth prospects by launching service in the St. Louis market in late July, and it is off to a good start in that market. U.S. Cellular also launched its SpeedTalkSM service during the third quarter, giving customers access to a convenient ‘walkie-talkie’ service. Business customer reaction to SpeedTalk has been strong to date.
TDS Telecom, TDS’s wholly owned wireline business, has a goal to be the preferred broadband provider in its markets and the company is working diligently toward that end. During the quarter, the sales and marketing team made great progress by growing the ILEC DSL customer base to 60,300, up 83 percent from a year ago, and that momentum continued through year end. At the end of September, the ILEC provided DSL in 87 markets, covering 68 percent of its access lines. TDS Telecom’s ILEC long distance customer base also continues to grow and now numbers 316,100 customers, representing an increase of 9 percent from a year ago.
TDS Metrocom, TDS Telecom’s CLEC operation, is focused on increasing market share in its existing markets. TDS Metrocom grew revenues 7 percent compared to one year ago, while reducing operating costs and improving its overall financial position. CLEC access line equivalents are up 8 percent year over year and now total 445,600. TDS Metrocom’s sales of DSL have also been strong, with the DSL customer base growing 29 percent to 34,800, from the third quarter of 2004.
Outstanding customer service is the foundation of U.S. Cellular and TDS Telecom. Both companies received J.D. Power and Associates awards in 2005. U.S. Cellular received a ranking of “Highest Overall Satisfaction Among Wireless Telephone Users in North Central Region in a Tie” in the J.D. Power and Associates 2005 U.S. Wireless Regional Customer Satisfaction Index (CSI) StudySM. TDS Telecom was ranked “Highest in Residential All-Distance Telephone Customer Satisfaction in North Central Region” in the J.D. Power and Associates 2005 Residential All-Distance Telephone Customer Satisfaction StudySM. The North Central Region covers Wisconsin, Illinois, Indiana, Ohio, and Michigan. These honors are true testaments to both companies’ excellent customer service.
Restatement
TDS has amended its Form 10-K for the year ended Dec. 31, 2004 to restate financial statements and financial information for each of the years ended Dec. 31, 2002-2004, including quarterly information for 2004 and 2003, and certain selected financial data for the years 2001 and 2000. TDS also amended its Forms 10-Q for the first two quarters of 2005 to restate quarterly financial statements and financial information. Restated consolidated statements of operations and consolidated balance sheets are attached to this press release as appendices 1 through 5. TDS will also file its Form 10-Q for the third quarter of 2005. All of these filings can be accessed on the TDS website at www.teldta.com or on the website of the SEC at www.sec.gov.
TDS’ filings include disclosure of certain material weaknesses in internal control over financial reporting and TDS management’s plans to remediate those weaknesses.
Due to the lengthy restatement process, TDS does not expect to file its Form 10-K for the year ended Dec. 31, 2005, or its Form 10-Q for the quarter ended March 31, 2006, on a timely basis. As a result of the late filings, TDS will not be in compliance with American Stock Exchange (AMEX) listing standards. TDS has obtained an extension until June 30, 2006 to regain compliance with AMEX listing standards.
2
TDS has received waivers under its multi-bank revolving credit facilities, certain forward contracts and a line of credit, which permit TDS to remain in compliance with its covenants provided that it files its Form 10-K for the year ended Dec. 31, 2005 by May 31, 2006, and its Form 10-Q for the quarter ended March 31, 2006 by June 30, 2006.
Certain financial and statistical information will be posted to the website, together with reconciliations to generally accepted accounting principles (GAAP). Investors may access this additional information on the Conference Calls page of the TDS web site.
About TDS
TDS is a diversified telecommunications corporation founded in 1969. Through its strategic business units, U.S. Cellular and TDS Telecom, TDS operates primarily by providing wireless, local telephone and broadband services. TDS builds value for its shareholders by providing excellent communications services in closely related segments of the telecommunications industry. As of Dec. 31, 2005, the company employed 11,600 people and served 6.7 million customers/units in 36 states.
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995: All information set forth in this news release, except historical and factual information, represents forward-looking statements. This includes all statements about the company’s plans, beliefs, estimates and expectations. These statements are based on current estimates, projections and assumptions, which involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Important factors that may affect these forward-looking statements include, but are not limited to: Possible future restatements; the ability of U.S. Cellular to successfully manage and grow the operations of the Chicago MTA and newly launched markets; changes in the overall economy; changes in competition in the markets in which U.S. Cellular and TDS Telecom operate; changes due to industry consolidation; advances in telecommunications technology, including Voice over Internet Protocol; changes to access and pricing of unbundled network elements; changes in the state and federal telecommunications regulatory environment; changes in the value of investments, including variable prepaid forward contracts; an adverse change in the ratings afforded TDS and U.S. Cellular debt securities by accredited ratings organizations; uncertainty of access to the capital markets; pending and future litigation; acquisitions/divestitures of properties and/or licenses; and changes in customer growth rates, average monthly revenue per unit, churn rates, roaming rates and the mix of products and services offered in U.S. Cellular and TDS Telecom markets. Investors are encouraged to consider these and other risks and uncertainties that are discussed in the Form 8-K used by TDS to furnish this press release to the SEC, which are incorporated by reference herein.
For more information about TDS or its business units, visit:
TDS: www.teldta.com | | TDS Telecom: www.tdstelecom.com |
USM: www.uscellular.com | | TDS Metrocom: www.tdsmetro.com |
###
3
TELEPHONE AND DATA SYSTEMS, INC.
SUMMARY OPERATING DATA
Quarter Ended | | 9/30/2005 | | 6/30/2005 | | 3/31/2005 | | 12/31/2004 | | 9/30/2004 | |
U.S. Cellular | | | | | | | | | | | |
Consolidated Markets: | | | | | | | | | | | |
Total population (000s) (1) | | 44,690 | | 44,690 | | 44,576 | | 44,391 | | 45,581 | |
All customers - | | | | | | | | | | | |
Customer units | | 5,303,000 | | 5,227,000 | | 5,127,000 | | 4,945,000 | | 4,828,000 | |
Gross customer unit activations | | 355,000 | | 340,000 | | 426,000 | | 408,000 | | 387,000 | |
Net customer unit activations | | 76,000 | | 94,000 | | 182,000 | | 150,000 | | 144,000 | |
Market penetration (1) | | 11.87 | % | 11.70 | % | 11.50 | % | 11.14 | % | 10.59 | % |
Retail customers - | | | | | | | | | | | |
Customer units | | 4,765,000 | | 4,688,000 | | 4,601,000 | | 4,478,000 | | 4,395,000 | |
Gross customer unit activations | | 346,000 | | 317,000 | | 365,000 | | 358,000 | | 354,000 | |
Net customer unit activations | | 77,000 | | 81,000 | | 123,000 | | 105,000 | | 111,000 | |
| | | | | | | | | | | |
Cell sites in service | | 5,149 | | 5,034 | | 4,899 | | 4,856 | | 4,713 | |
Average monthly revenue per unit (2) | | $ | 46.19 | | $ | 44.52 | | $ | 44.46 | | $ | 45.41 | | $ | 47.88 | |
Retail service revenue per unit (2) | | $ | 40.25 | | $ | 39.40 | | $ | 39.20 | | $ | 39.93 | | $ | 40.91 | |
Inbound roaming revenue per unit (2) | | $ | 2.70 | | $ | 2.27 | | $ | 1.98 | | $ | 2.38 | | $ | 3.47 | |
Long-distance/other revenue per unit (2) | | $ | 3.24 | | $ | 2.85 | | $ | 3.28 | | $ | 3.10 | | $ | 3.50 | |
Minutes of use (MOU) (3) | | 639 | | 627 | | 584 | | 568 | | 553 | |
Postpay churn rate per month (4) | | 1.5 | % | 1.4 | % | 1.5 | % | 1.6 | % | 1.6 | % |
Marketing cost per gross customer unit addition (5) | | $ | 491 | | $ | 461 | | $ | 396 | | $ | 440 | | $ | 407 | |
Construction Expenditures (000s) | | $ | 128,300 | | $ | 143,800 | | $ | 112,800 | | $ | 261,500 | | $ | 130,800 | |
(1) Market penetration is calculated using 2004 Claritas population estimates for all periods of 2005 and 2003 Claritas estimates for all periods of 2004. “Total population” represents the total population of each of U.S. Cellular’s consolidated markets, regardless of whether the market has begun marketing operations. The 9/30/05 and 6/30/05 total population counts include the population of the market acquired from Cingular Wireless in April 2005. The total population counts on and after 12/31/04 exclude the population of the two markets sold to ALLTEL in November 2004. The 9/30/04 total population counts include the population of the market added to consolidated operations as of 1/1/04. The population of markets in which U.S. Cellular has deferred the transfer of licenses from AT&T Wireless (now Cingular Wireless) are not included in the total population counts for any period, nor are the population counts of markets for which Carroll Wireless, L.P., a consolidated U.S. Cellular subsidiary, was the winning bidder in the Federal Communications Commission’s Auction 58 that concluded in February 2005. The total population counts for all periods include the population of the two markets agreed to be divested to ALLTEL pursuant to the September 2005 exchange agreement, and exclude the population of the 15 markets agreed to be acquired pursuant to such agreement.
(2) Per unit revenue measurements are derived from Service Revenues as reported in Financial Highlights for each respective quarter as follows:
| Service Revenues per Financial Highlights | | $ | 729,504 | | $ | 691,746 | | $ | 671,639 | | $ | 662,955 | | $ | 683,258 | |
| Components: | | | | | | | | | | | |
| Retail service revenue during quarter | | $ | 635,610 | | $ | 612,159 | | $ | 592,167 | | $ | 582,950 | | $ | 583,852 | |
| Inbound roaming revenue during quarter | | $ | 42,654 | | $ | 35,313 | | $ | 29,875 | | $ | 34,812 | | $ | 49,572 | |
| Long-distance/other revenue during quarter | | $ | 51,240 | | $ | 44,274 | | $ | 49,597 | | $ | 45,193 | | $ | 49,834 | |
| | | | | | | | | | | | |
| Divided by average customers during quarter (000s) | | 5,264 | | 5,179 | | 5,035 | | 4,866 | | 4,757 | |
| Divided by three months in each quarter | | 3 | | 3 | | 3 | | 3 | | 3 | |
| | | | | | | | | | | | |
| Average monthly revenue per unit | | $ | 46.19 | | $ | 44.52 | | $ | 44.46 | | $ | 45.41 | | $ | 47.88 | |
| Retail service revenue per unit | | $ | 40.25 | | $ | 39.40 | | $ | 39.20 | | $ | 39.93 | | $ | 40.91 | |
| Inbound roaming revenue per unit | | $ | 2.70 | | $ | 2.27 | | $ | 1.98 | | $ | 2.38 | | $ | 3.47 | |
| Long-distance/other revenue per unit | | $ | 3.24 | | $ | 2.85 | | $ | 3.28 | | $ | 3.10 | | $ | 3.50 | |
(3) Average monthly local minutes of use per customer (without roaming).
(4) Postpay churn rate per month is calculated by dividing the average monthly postpay customer disconnects during the quarter by the average postpay customer base for the quarter.
(5) This measurement is not calculable using information from the financial statements as reported. The details of this calculation and a reconciliation to line items reported in Financial Highlights for each respective quarter are shown on U.S. Cellular’s web site, along with additional information related to U.S. Cellular’s third quarter results, at www.uscellular.com.
4
TELEPHONE AND DATA SYSTEMS, INC.
SUMMARY OPERATING DATA
Quarter Ended | | 9/30/2005 | | 6/30/2005 | | 3/31/2005 | | 12/31/2004 | | 9/30/2004 | |
TDS Telecom | | | | | | | | | | | |
ILEC: | | | | | | | | | | | |
Access line equivalents (1) | | 734,800 | | 734,200 | | 734,000 | | 730,400 | | 725,500 | |
Access lines | | 640,700 | | 645,800 | | 649,300 | | 652,300 | | 658,200 | |
Dial-up Internet service accounts | | 89,700 | | 94,500 | | 98,200 | | 101,300 | | 104,800 | |
Digital Subscriber Lines (DSL) customers | | 60,300 | | 54,200 | | 49,300 | | 41,900 | | 33,000 | |
Long Distance customers | | 316,100 | | 310,000 | | 302,400 | | 295,000 | | 289,000 | |
Construction Expenditures (000s) | | $ | 25,100 | | $ | 18,800 | | $ | 16,100 | | $ | 27,000 | | $ | 31,500 | |
CLEC: | | | | | | | | | | | |
Access line equivalents (1) | | 445,600 | | 442,900 | | 438,000 | | 426,800 | | 412,500 | |
Dial-up Internet service accounts | | 14,700 | | 16,000 | | 17,100 | | 18,200 | | 19,100 | |
Percent of access lines on-switch | | 90.6 | % | 89.8 | % | 88.8 | % | 87.9 | % | 86.8 | % |
Digital Subscriber Lines (DSL) customers | | 34,800 | | 33,500 | | 31,600 | | 29,000 | | 27,000 | |
Construction Expenditures (000s) | | $ | 7,100 | | $ | 7,200 | | $ | 4,300 | | $ | 12,800 | | $ | 7,300 | |
(1) Access line equivalents are derived by converting high capacity data lines to the estimated capacity of one switched access line.
5
TELEPHONE AND DATA SYSTEMS, INC.
FINANCIAL HIGHLIGHTS
Three Months Ended September 30,
(Unaudited, dollars in thousands, except per share amounts)
| | | | | | Increase (Decrease) | |
| | 2005 | | 2004 | | Amount | | Percent | |
| | | | (As Restated) | | | | | |
Operating Revenues | | | | | | | | | |
U.S. Cellular | | $ | 795,506 | | $ | 740,293 | | $ | 55,213 | | 7.5 | % |
TDS Telecom | | 228,140 | | 220,182 | | 7,958 | | 3.6 | % |
All Other (1) | | 5,105 | | 3,941 | | 1,164 | | 29.5 | % |
| | 1,028,751 | | 964,416 | | 64,335 | | 6.7 | % |
Operating Expenses | | | | | | | | | |
U.S. Cellular | | | | | | | | | |
Expenses excluding depreciation, amortization and accretion | | 602,702 | | 559,355 | | 43,347 | | 7.7 | % |
Depreciation, amortization and accretion | | 126,583 | | 127,503 | | (920 | ) | (0.7 | )% |
| | 729,285 | | 686,858 | | 42,427 | | 6.2 | % |
TDS Telecom | | | | | | | | | |
Expenses excluding depreciation and amortization | | 146,841 | | 142,646 | | 4,195 | | 2.9 | % |
Depreciation and amortization | | 40,317 | | 42,054 | | (1,737 | ) | (4.1 | )% |
| | 187,158 | | 184,700 | | 2,458 | | 1.3 | % |
All Other (1) | | | | | | | | | |
Expenses excluding depreciation and amortization | | 3,846 | | 2,935 | | 911 | | 31.0 | % |
Depreciation and amortization | | 688 | | 620 | | 68 | | 11.0 | % |
| | 4,534 | | 3,555 | | 979 | | 27.5 | % |
| | | | | | | | | |
Total Operating Expenses | | 920,977 | | 875,113 | | 45,864 | | 5.2 | % |
Operating Income | | | | | | | | | |
U.S. Cellular | | 66,221 | | 53,435 | | 12,786 | | 23.9 | % |
TDS Telecom | | 40,982 | | 35,482 | | 5,500 | | 15.5 | % |
All Other (1) | | 571 | | 386 | | 185 | | 47.9 | % |
| | 107,774 | | 89,303 | | 18,471 | | 20.7 | % |
Investment and Other Income (Expense) | | | | | | | | | |
Investment income | | 18,065 | | 18,316 | | (251 | ) | (1.4 | )% |
Interest and dividend income | | 14,204 | | 6,105 | | 8,099 | | 132.7 | % |
Gain (loss) on investments | | — | | (491 | ) | 491 | | N/M | |
Interest expense | | (53,852 | ) | (52,135 | ) | (1,717 | ) | (3.3 | )% |
Other income (expense), net | | (2,968 | ) | (2,711 | ) | (257 | ) | (9.5 | )% |
| | (24,551 | ) | (30,916 | ) | 6,365 | | 20.6 | % |
Income Before Income Taxes and Minority Interest | | 83,223 | | 58,387 | | 24,836 | | 42.5 | % |
Income tax expense | | 32,766 | | 11,461 | | 21,305 | | 185.9 | % |
Income Before Minority Interest | | 50,457 | | 46,926 | | 3,531 | | 7.5 | % |
Minority share of income | | (9,231 | ) | (7,904 | ) | (1,327 | ) | (16.8 | )% |
Income From Continuing Operations | | 41,226 | | 39,022 | | 2,204 | | 5.6 | % |
Discontinued Operations, net of tax | | 340 | | 4,351 | | (4,011 | ) | (92.2 | )% |
Net Income | | 41,566 | | 43,373 | | (1,807 | ) | (4.2 | )% |
Preferred dividend requirement | | (50 | ) | (51 | ) | 1 | | N/M | |
Net Income Available to Common | | $ | 41,516 | | $ | 43,322 | | $ | (1,806 | ) | (4.2 | )% |
| | | | | | | | | |
Basic Weighted Average Common Shares Outstanding (000s) | | 115,423 | | 114,641 | | 782 | | 0.7 | % |
Basic Earnings Per Share | | | | | | | | | |
Continuing Operations | | $ | 0.36 | | $ | 0.34 | | $ | 0.02 | | 5.9 | % |
Discontinued Operations | | 0.00 | | 0.04 | | (0.04 | ) | N/M | |
| | $ | 0.36 | | $ | 0.38 | | $ | (0.02 | ) | (5.3 | )% |
| | | | | | | | | |
Diluted Weighted Average Common Shares Outstanding (000s) | | 116,212 | | 115,267 | | 945 | | 0.8 | % |
Diluted Earnings Per Share | | | | | | | | | |
Continuing Operations | | $ | 0.36 | | $ | 0.33 | | $ | 0.03 | | 9.1 | % |
Discontinued Operations | | 0.00 | | 0.04 | | (0.04 | ) | N/M | |
| | $ | 0.36 | | $ | 0.37 | | $ | (0.01 | ) | (2.7 | )% |
(1) Consists of Suttle Straus printing and distribution operations and intercompany eliminations.
N/M - Percentage change not meaningful
6
TELEPHONE AND DATA SYSTEMS, INC.
FINANCIAL HIGHLIGHTS
Nine Months Ended September 30,
(Unaudited, dollars in thousands, except per share amounts)
| | | | | | Increase (Decrease) | |
| | 2005 | | 2004 | | Amount | | Percent | |
| | | | (As Restated) | | | | | |
Operating Revenues | | | | | | | | | |
U.S. Cellular | | $ | 2,248,542 | | $ | 2,099,058 | | $ | 149,484 | | 7.1 | % |
TDS Telecom | | 671,663 | | 653,047 | | 18,616 | | 2.9 | % |
All Other (1) | | 14,192 | | 11,495 | | 2,697 | | 23.5 | % |
| | 2,934,397 | | 2,763,600 | | 170,797 | | 6.2 | % |
Operating Expenses | | | | | | | | | |
U.S. Cellular | | | | | | | | | |
Expenses excluding depreciation, amortization and accretion | | 1,695,009 | | 1,591,139 | | 103,870 | | 6.5 | % |
Depreciation, amortization and accretion | | 380,860 | | 363,749 | | 17,111 | | 4.7 | % |
(Gain) on assets held for sale | | — | | (725 | ) | 725 | | N/M | |
| | 2,075,869 | | 1,954,163 | | 121,706 | | 6.2 | % |
TDS Telecom | | | | | | | | | |
Expenses excluding depreciation and amortization | | 428,529 | | 408,215 | | 20,314 | | 5.0 | % |
Depreciation and amortization | | 122,988 | | 125,774 | | (2,786 | ) | (2.2 | )% |
| | 551,517 | | 533,989 | | 17,528 | | 3.3 | % |
All Other (1) | | | | | | | | | |
Expenses excluding depreciation and amortization | | 11,003 | | 8,753 | | 2,250 | | 25.7 | % |
Depreciation and amortization | | 2,063 | | 1,860 | | 203 | | 10.9 | % |
| | 13,066 | | 10,613 | | 2,453 | | 23.1 | % |
| | | | | | | | | |
Total Operating Expenses | | 2,640,452 | | 2,498,765 | | 141,687 | | 5.7 | % |
Operating Income | | | | | | | | | |
U.S. Cellular | | 172,673 | | 144,895 | | 27,778 | | 19.2 | % |
TDS Telecom | | 120,146 | | 119,058 | | 1,088 | | 0.9 | % |
All Other (1) | | 1,126 | | 882 | | 244 | | 27.7 | % |
| | 293,945 | | 264,835 | | 29,110 | | 11.0 | % |
Investment and Other Income (Expense) | | | | | | | | | |
Investment income | | 51,007 | | 48,911 | | 2,096 | | 4.3 | % |
Interest and dividend income | | 141,386 | | 14,163 | | 127,223 | | N/M | |
Gain (loss) on investments | | 500 | | (2,321 | ) | 2,821 | | N/M | |
Interest expense | | (160,240 | ) | (147,378 | ) | (12,862 | ) | (8.7 | )% |
Other income (expense), net | | (13,997 | ) | (5,682 | ) | (8,315 | ) | (146.3 | )% |
| | 18,656 | | (92,307 | ) | 110,963 | | 120.2 | % |
Income Before Income Taxes and Minority Interest | | 312,601 | | 172,528 | | 140,073 | | 81.2 | % |
Income tax expense | | 127,141 | | 58,201 | | 68,940 | | 118.5 | % |
Income Before Minority Interest | | 185,460 | | 114,327 | | 71,133 | | 62.2 | % |
Minority share of income | | (24,129 | ) | (19,713 | ) | (4,416 | ) | (22.4 | )% |
Income From Continuing Operations | | 161,331 | | 94,614 | | 66,717 | | 70.5 | % |
Discontinued Operations, net of tax | | 340 | | 4,351 | | (4,011 | ) | (92.2 | )% |
Net Income | | 161,671 | | 98,965 | | 62,706 | | 63.4 | % |
Preferred dividend requirement | | (152 | ) | (152 | ) | — | | N/M | |
Net Income Available to Common | | $ | 161,519 | | $ | 98,813 | | $ | 62,706 | | 63.5 | % |
| | | | | | | | | |
Basic Weighted Average Common Shares Outstanding (000s) | | 115,217 | | 114,506 | | 711 | | 0.6 | % |
Basic Earnings Per Share | | | | | | | | | |
Continuing Operations | | $ | 1.40 | | $ | 0.82 | | $ | 0.58 | | 70.7 | % |
Discontinued Operations | | 0.00 | | 0.04 | | (0.04 | ) | N/M | |
| | $ | 1.40 | | $ | 0.86 | | $ | 0.54 | | 62.8 | % |
| | | | | | | | | |
Diluted Weighted Average Common Shares Outstanding (000s) | | 116,063 | | 115,040 | | 1,023 | | 0.9 | % |
Diluted Earnings Per Share | | | | | | | | | |
Continuing Operations | | $ | 1.39 | | $ | 0.82 | | $ | 0.57 | | 69.5 | % |
Discontinued Operations | | 0.00 | | 0.04 | | (0.04 | ) | N/M | |
| | $ | 1.39 | | $ | 0.86 | | $ | 0.53 | | 61.6 | % |
(1) Consists of Suttle Straus printing and distribution operations and intercompany eliminations.
N/M - Percentage change not meaningful
7
TELEPHONE AND DATA SYSTEMS, INC.
CONSOLIDATED BALANCE SHEET HIGHLIGHTS
(Unaudited, dollars in thousands)
ASSETS
| | September 30, | | December 31, | |
| | 2005 | | 2004 | |
| | | | (As Restated) | |
Current Assets | | | | | |
Cash and cash equivalents | | $ | 1,084,540 | | $ | 1,171,105 | |
Accounts receivable from customers and other | | 452,152 | | 439,309 | |
Deferred income tax asset | | 18,599 | | 43,867 | |
Materials and supplies, at average cost | | 66,132 | | 91,556 | |
Other current assets | | 63,720 | | 71,877 | |
| | 1,685,143 | | 1,817,714 | |
Investments | | | | | |
Licenses | | 1,340,489 | | 1,228,801 | |
Goodwill | | 840,873 | | 843,387 | |
Customer lists | | 18,876 | | 24,915 | |
Marketable equity securities | | 2,797,224 | | 3,398,804 | |
Investments in unconsolidated entities | | 223,770 | | 199,518 | |
Other investments | | 22,387 | | 23,039 | |
| | 5,243,619 | | 5,718,464 | |
Property, Plant and Equipment, net | | | | | |
U.S. Cellular | | 2,421,407 | | 2,440,720 | |
TDS Telecom | | 909,741 | | 945,762 | |
Other | | 31,553 | | 32,962 | |
| | 3,362,701 | | 3,419,444 | |
| | | | | |
Other Assets and Deferred Charges | | 54,008 | | 56,981 | |
| | | | | |
Assets of Operations Held for Sale | | 66,644 | | — | |
| | | | | |
Total Assets | | $ | 10,412,115 | | $ | 11,012,603 | |
LIABILITIES AND STOCKHOLDERS’ EQUITY
| | September 30, | | December 31, | |
| | 2005 | | 2004 | |
| | | | (As Restated) | |
Current Liabilities | | | | | |
Current portion of long-term debt | | $ | 202,727 | | $ | 38,787 | |
Notes payable | | — | | 30,000 | |
Accounts payable | | 272,110 | | 327,497 | |
Customer deposits and deferred revenues | | 119,366 | | 119,196 | |
Accrued taxes | | 92,654 | | 63,184 | |
Accrued compensation | | 56,414 | | 71,707 | |
Other current liabilities | | 93,404 | | 79,100 | |
| | 836,675 | | 729,471 | |
| | | | | |
Deferred Liabilities and Credits | | | | | |
Net deferred income tax liability | | 1,417,552 | | 1,488,655 | |
Derivative Liability | | 686,327 | | 1,210,500 | |
Other deferred liabilities and credits | | 240,165 | | 220,206 | |
| | 2,344,044 | | 2,919,361 | |
| | | | | |
Long-term Debt | | 3,372,147 | | 3,664,243 | |
| | | | | |
Liabilities of Operations Held for Sale | | 5,585 | | — | |
| | | | | |
Minority Interest in Subsidiaries | | 547,539 | | 499,468 | |
| | | | | |
Preferred Shares | | 3,863 | | 3,864 | |
| | | | | |
Common Stockholders’ Equity | | | | | |
Common Shares, $.01 par value | | 565 | | 564 | |
Special Common Shares, $.01 par value | | 629 | | — | |
Series A Common Shares, $.01 par value | | 64 | | 64 | |
Capital in excess of par value | | 1,815,886 | | 1,822,541 | |
Treasury Shares, at cost | | | | | |
Common Shares | | (209,971 | ) | (449,173 | ) |
Special Common Shares | | (211,201 | ) | — | |
Accumulated other comprehensive income | | 324,324 | | 370,857 | |
Retained earnings | | 1,581,966 | | 1,451,343 | |
| | 3,302,262 | | 3,196,196 | |
| | | | | |
Total Liabilities and Stockholders’ Equity | | $ | 10,412,115 | | $ | 11,012,603 | |
8
BALANCE SHEET HIGHLIGHTS
SEPTEMBER 30, 2005
(Unaudited, dollars in thousands)
| | U.S. | | TDS | | TDS Corporate | | Intercompany | | TDS | |
| | Cellular | | Telecom | | & Other | | Eliminations | | Consolidated | |
Cash and cash equivalents | | $ | 31,069 | | $ | 345,702 | | $ | 707,769 | | $ | — | | $ | 1,084,540 | |
Affiliated cash investments | | — | | 484,745 | | — | | (484,745 | ) | — | |
Notes receivable-affiliates | | — | | — | | 349,015 | | (349,015 | ) | — | |
| | $ | 31,069 | | $ | 830,447 | | $ | 1,056,784 | | $ | (833,760 | ) | $ | 1,084,540 | |
| | | | | | | | | | | |
Licenses, goodwill and customer lists | | $ | 1,802,063 | | $ | 395,894 | | $ | 2,281 | | $ | — | | $ | 2,200,238 | |
Marketable equity securities | | 270,582 | | 74,372 | | 2,452,270 | | — | | 2,797,224 | |
Investment in unconsolidated entities | | 178,874 | | 3,623 | | 50,203 | | (8,930 | ) | 223,770 | |
Other investments | | 4,727 | | 14,284 | | 3,376 | | — | | 22,387 | |
| | $ | 2,256,246 | | $ | 488,173 | | $ | 2,508,130 | | $ | (8,930 | ) | $ | 5,243,619 | |
| | | | | | | | | | | |
Property, Plant and Equipment, net | | $ | 2,421,407 | | $ | 909,741 | | $ | 31,553 | | $ | — | | $ | 3,362,701 | |
| | | | | | | | | | | |
Notes : | payable external | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | |
| cash management | | — | | — | | 484,745 | | (484,745 | ) | — | |
| intercompany | | — | | 349,015 | | — | | (349,015 | ) | — | |
| | $ | — | | $ | 349,015 | | $ | 484,745 | | $ | (833,760 | ) | $ | — | |
| | | | | | | | | | | |
Forward contracts | | $ | 159,856 | | $ | 41,182 | | $ | 1,501,762 | | $ | — | | $ | 1,702,800 | |
| | | | | | | | | | | |
Long-term Debt: | | | | | | | | | | | |
Current portion | | $ | — | | $ | 378 | | $ | 202,349 | | $ | — | | $ | 202,727 | |
Non-current portion | | 1,001,271 | | 4,416 | | 663,660 | | — | | 1,669,347 | |
Total | | $ | 1,001,271 | | $ | 4,794 | | $ | 866,009 | | $ | — | | $ | 1,872,074 | |
| | | | | | | | | | | |
Preferred Shares | | $ | — | | $ | — | | $ | 3,863 | | $ | — | | $ | 3,863 | |
| | | | | | | | | | | |
Construction expenditures: | | | | | | | | | | | |
Quarter ended 9/30/05 | | $ | 128,287 | | $ | 32,250 | | $ | 2,772 | | | | $ | 163,309 | |
Nine Months ended 9/30/05 | | $ | 384,844 | | $ | 78,646 | | $ | 7,224 | | | | $ | 470,714 | |
9
TDS Telecom Highlights
Three Months Ended September 30,
(Unaudited, dollars in thousands)
| | | | | | Increase (Decrease) | |
| | 2005 | | 2004 | | Amount | | Percent | |
| | | | (As Restated) | | | | | |
Local Telephone Operations | | | | | | | | | |
Operating Revenues | | | | | | | | | |
Local service | | $ | 50,477 | | $ | 51,203 | | $ | (726 | ) | (1.4 | )% |
Network access and long-distance | | 94,139 | | 91,185 | | 2,954 | | 3.2 | % |
Miscellaneous | | 23,953 | | 22,450 | | 1,503 | | 6.7 | % |
| | 168,569 | | 164,838 | | 3,731 | | 2.3 | % |
Operating Expenses | | | | | | | | | |
Network operations | | 47,601 | | 43,257 | | 4,344 | | 10.0 | % |
Customer operations | | 22,184 | | 22,431 | | (247 | ) | (1.1 | )% |
Corporate expenses | | 21,653 | | 21,077 | | 576 | | 2.7 | % |
Depreciation and amortization | | 33,319 | | 32,667 | | 652 | | 2.0 | % |
| | 124,757 | | 119,432 | | 5,325 | | 4.5 | % |
| | | | | | | | | |
Operating Income | | $ | 43,812 | | $ | 45,406 | | $ | (1,594 | ) | (3.5 | )% |
| | | | | | | | | |
Competitive Local Exchange Carrier Operations | | | | | | | | | |
Revenues | | $ | 60,697 | | $ | 56,574 | | $ | 4,123 | | 7.3 | % |
| | | | | | | | | |
Expenses excluding depreciation and amortization | | 56,529 | | 57,111 | | (582 | ) | (1.0 | )% |
Depreciation and amortization | | 6,998 | | 9,387 | | (2,389 | ) | (25.5 | )% |
| | 63,527 | | 66,498 | | (2,971 | ) | (4.5 | )% |
| | | | | | | | | |
Operating (Loss) | | $ | (2,830 | ) | $ | (9,924 | ) | $ | 7,094 | | 71.5 | % |
| | | | | | | | | |
Intercompany revenues | | $ | (1,126 | ) | $ | (1,230 | ) | $ | 104 | | N/M | |
Intercompany expenses | | (1,126 | ) | (1,230 | ) | 104 | | N/M | |
| | — | | — | | — | | N/M | |
| | | | | | | | | |
Total TDS Telecom Operating Income | | $ | 40,982 | | $ | 35,482 | | $ | 5,500 | | 15.5 | % |
N/M - Percentage change not meaningful.
10
TDS Telecom Highlights
Nine Months Ended September 30,
(Unaudited, dollars in thousands)
| | | | | | Increase (Decrease) | |
| | 2005 | | 2004 | | Amount | | Percent | |
| | | | (As Restated) | | | | | |
Local Telephone Operations | | | | | | | | | |
Operating Revenues | | | | | | | | | |
Local service | | $ | 150,200 | | $ | 152,979 | | $ | (2,779 | ) | (1.8 | )% |
Network access and long-distance | | 275,452 | | 268,914 | | 6,538 | | 2.4 | % |
Miscellaneous | | 69,139 | | 65,757 | | 3,382 | | 5.1 | % |
| | 494,791 | | 487,650 | | 7,141 | | 1.5 | % |
Operating Expenses | | | | | | | | | |
Network operations | | 134,234 | | 120,250 | | 13,984 | | 11.6 | % |
Customer operations | | 68,773 | | 68,449 | | 324 | | 0.5 | % |
Corporate expenses | | 63,086 | | 61,657 | | 1,429 | | 2.3 | % |
Depreciation and amortization | | 101,165 | | 97,639 | | 3,526 | | 3.6 | % |
| | 367,258 | | 347,995 | | 19,263 | | 5.5 | % |
| | | | | | | | | |
Operating Income | | $ | 127,533 | | $ | 139,655 | | $ | (12,122 | ) | (8.7 | )% |
| | | | | | | | | |
Competitive Local Exchange Carrier Operations | | | | | | | | | |
Revenues | | $ | 180,736 | | $ | 168,555 | | $ | 12,181 | | 7.2 | % |
| | | | | | | | | |
Expenses excluding depreciation and amortization | | 166,300 | | 161,017 | | 5,283 | | 3.3 | % |
Depreciation and amortization | | 21,823 | | 28,135 | | (6,312 | ) | (22.4 | )% |
| | 188,123 | | 189,152 | | (1,029 | ) | (0.5 | )% |
| | | | | | | | | |
Operating (Loss) | | $ | (7,387 | ) | $ | (20,597 | ) | $ | 13,210 | | 64.1 | % |
| | | | | | | | | |
Intercompany revenues | | $ | (3,864 | ) | $ | (3,158 | ) | $ | (706 | ) | N/M | |
Intercompany expenses | | (3,864 | ) | (3,158 | ) | (706 | ) | N/M | |
| | — | | — | | — | | N/M | |
| | | | | | | | | |
Total TDS Telecom Operating Income | | $ | 120,146 | | $ | 119,058 | | $ | 1,088 | | 0.9 | % |
N/M - - Percentage change not meaningful.
11
Appendix 1
TELEPHONE AND DATA SYSTEMS, INC.
FINANCIAL HIGHLIGHTS
Year Ended December 31,
(Unaudited, dollars in thousands, except per share amounts)
| | 2004 | | 2003 | | 2002 | |
| | As Previously
Reported | | As
Restated | | As Previously
Reported | | As
Restated | | As Previously
Reported | | As
Restated | |
Operating Revenues | | $ | 3,720,389 | | $ | 3,703,920 | | $ | 3,445,216 | | $ | 3,455,174 | | $ | 2,998,474 | | $ | 3,012,547 | |
Operating Expenses | | | | | | | | | | | | | |
Cost of services and products (excluding depreciation, amortization and accretion shown separately below) | | 1,304,171 | | 1,323,928 | | 1,182,885 | | 1,200,978 | | 962,760 | | 979,988 | |
Selling, general and administrative | | 1,420,967 | | 1,380,718 | | 1,298,294 | | 1,293,853 | | 1,138,914 | | 1,133,347 | |
Depreciation, amortization and accretion | | 667,956 | | 670,731 | | 595,732 | | 598,336 | | 510,445 | | 512,931 | |
Loss on impairment of intangible assets | | 29,440 | | 29,440 | | 49,595 | | 49,595 | | — | | — | |
Loss on impairment of long-lived assets | | 87,910 | | 87,910 | | 4,914 | | 4,914 | | — | | — | |
(Gain) loss on assets held for sale | | (10,806 | ) | (10,806 | ) | 45,908 | | 45,908 | | — | | — | |
Total Operating Expenses | | 3,499,638 | | 3,481,921 | | 3,177,328 | | 3,193,584 | | 2,612,119 | | 2,626,266 | |
| | | | | | | | | | | | | |
Operating Income | | 220,751 | | 221,999 | | 267,888 | | 261,590 | | 386,355 | | 386,281 | |
| | | | | | | | | | | | | |
Investment and Other Income (Expense) | | | | | | | | | | | | | |
Investment income | | 69,623 | | 64,900 | | 53,154 | | 52,179 | | 43,675 | | 43,799 | |
Interest and dividend income | | 27,755 | | 28,803 | | 19,918 | | 20,140 | | 57,330 | | 57,705 | |
Gain (loss) on investments | | 36,854 | | 38,209 | | (10,200 | ) | (10,200 | ) | (1,888,391 | ) | (1,888,391 | ) |
Interest expense | | (198,706 | ) | (198,706 | ) | (171,391 | ) | (171,391 | ) | (132,224 | ) | (132,224 | ) |
Minority interest in income of subsidiary trust | | — | | — | | (16,678 | ) | (16,678 | ) | (24,810 | ) | (24,810 | ) |
Other income (expense), net | | (6,931 | ) | (6,592 | ) | (11,955 | ) | (13,880 | ) | 2,396 | | 986 | |
Investment and Other Income (Expense) | | (71,405 | ) | (73,386 | ) | (137,152 | ) | (139,830 | ) | (1,942,024 | ) | (1,942,935 | ) |
| | | | | | | | | | | | | |
Income (Loss) from Continuing Operations before Income Taxes and Minority Interest | | 149,346 | | 148,613 | | 130,736 | | 121,760 | | (1,555,669 | ) | (1,556,654 | ) |
Income tax expense (benefit) | | 78,651 | | 59,251 | | 50,350 | | 58,262 | | (577,000 | ) | (611,183 | ) |
Income (Loss) From Continuing Operations before Minority Interest | | 70,695 | | 89,362 | | 80,386 | | 63,498 | | (978,669 | ) | (945,471 | ) |
Minority Share of Income | | (28,053 | ) | (28,872 | ) | (20,380 | ) | (17,979 | ) | (9,068 | ) | (7,578 | ) |
Income (Loss) From Continuing Operations | | 42,642 | | 60,490 | | 60,006 | | 45,519 | | (987,737 | ) | (953,049 | ) |
Discontinued Operations, net of tax | | 6,362 | | 6,362 | | (1,609 | ) | (1,609 | ) | — | | — | |
Income (Loss) before Cumulative Effect of Accounting Change | | 49,004 | | 66,852 | | 58,397 | | 43,910 | | (987,737 | ) | (953,049 | ) |
Cumulative Effect of Accounting Change, net of tax and minority interest | | — | | — | | (11,789 | ) | (11,789 | ) | (7,035 | ) | (7,035 | ) |
Net Income (Loss) | | 49,004 | | 66,852 | | 46,608 | | 32,121 | | (994,772 | ) | (960,084 | ) |
Preferred dividend requirement | | (203 | ) | (203 | ) | (417 | ) | (417 | ) | (427 | ) | (427 | ) |
Net Income (Loss) Available to Common | | $ | 48,801 | | $ | 66,649 | | $ | 46,191 | | $ | 31,704 | | $ | (995,199 | ) | $ | (960,511 | ) |
| | | | | | | | | | | | | |
Basic Earnings per Share: (1) | | | | | | | | | | | | | |
Income (Loss) from Continuing Operations | | $ | 0.38 | | $ | 0.53 | | $ | 0.51 | | $ | 0.38 | | $ | (8.43 | ) | $ | (8.13 | ) |
Discontinued Operations | | 0.05 | | 0.05 | | (0.01 | ) | (0.01 | ) | — | | — | |
Cumulative Effect of Accounting Change | | — | | — | | (0.10 | ) | (0.10 | ) | (0.06 | ) | (0.06 | ) |
Net Income (Loss) Available to Common | | $ | 0.43 | | $ | 0.58 | | $ | 0.40 | | $ | 0.27 | | $ | (8.49 | ) | $ | (8.19 | ) |
| | | | | | | | | | | | | |
Diluted Earnings per Share: (1) | | | | | | | | | | | | | |
Income (Loss) from Continuing Operations | | $ | 0.37 | | $ | 0.52 | | $ | 0.51 | | $ | 0.38 | | $ | (8.43 | ) | $ | (8.13 | ) |
Discontinued Operations | | 0.05 | | 0.05 | | (0.01 | ) | (0.01 | ) | — | | — | |
Cumulative Effect of Accounting Change | | — | | — | | (0.10 | ) | (0.10 | ) | (0.06 | ) | (0.06 | ) |
Net Income (Loss) Available to Common | | $ | 0.42 | | $ | 0.57 | | $ | 0.40 | | $ | 0.27 | | $ | (8.49 | ) | $ | (8.19 | ) |
(1) Earnings per Share amounts have been adjusted to give effect to the Special Common Share dividend in May 2005.
Appendix 2
TELEPHONE AND DATA SYSTEMS, INC.
CONSOLIDATED BALANCE SHEET HIGHLIGHTS
(Unaudited, dollars in thousands)
| | December 31, 2004 | | December 31, 2003 | |
| | As Previously
Reported | | As
Restated | | As Previously
Reported | | As
Restated | |
Current Assets | | | | | | | | | |
Cash and cash equivalents | | $ | 1,168,581 | | $ | 1,171,105 | | $ | 937,651 | | $ | 940,578 | |
Accounts receivable
Due from customers, less allowance | | 308,410 | | 304,851 | | 282,313 | | 281,271 | |
Other, principally connecting companies, less allowance | | 131,665 | | 134,458 | | 127,358 | | 131,214 | |
Materials and supplies | | 91,556 | | 91,556 | | 87,270 | | 87,270 | |
Prepaid expenses | | 44,014 | | 44,271 | | 32,766 | | 32,760 | |
Deferred income tax asset | | 36,040 | | 43,867 | | 19,396 | | 21,586 | |
Other current assets | | 29,951 | | 27,606 | | 18,192 | | 13,968 | |
| | 1,810,217 | | 1,817,714 | | 1,504,946 | | 1,508,647 | |
Investments | | | | | | | | | |
Marketable equity securities | | 3,398,804 | | 3,398,804 | | 2,772,410 | | 2,772,410 | |
Licenses | | 1,186,764 | | 1,186,764 | | 1,189,326 | | 1,189,326 | |
License rights | | 42,037 | | 42,037 | | 42,037 | | 42,037 | |
Goodwill | | 823,259 | | 843,387 | | 887,937 | | 908,065 | |
Customer lists, net of accumulated amortization | | 24,915 | | 24,915 | | 24,448 | | 24,448 | |
Investments in unconsolidated entities | | 206,763 | | 199,518 | | 214,885 | | 211,178 | |
Notes receivable, less valuation allowance | | 4,885 | | 4,885 | | 6,476 | | 6,476 | |
Other investments | | 18,154 | | 18,154 | | 15,439 | | 15,439 | |
| | 5,705,581 | | 5,718,464 | | 5,152,958 | | 5,169,379 | |
Property, Plant and Equipment, net | | | | | | | | | |
U.S. Cellular | | 2,439,719 | | 2,440,720 | | 2,271,254 | | 2,271,389 | |
TDS Telecom | | 945,762 | | 945,762 | | 1,079,732 | | 1,077,791 | |
Corporate and Other | | — | | 32,962 | | — | | 29,468 | |
| | 3,385,481 | | 3,419,444 | | 3,350,986 | | 3,378,648 | |
| | | | | | | | | |
Other Assets and Deferred Charges | | 92,562 | | 56,981 | | 83,925 | | 52,651 | |
| | | | | | | | | |
Assets of Operations Held for Sale | | — | | — | | 100,523 | | 100,523 | |
| | | | | | | | | |
Total Assets | | $ | 10,993,841 | | $ | 11,012,603 | | $ | 10,193,338 | | $ | 10,209,848 | |
Current Liabilities | | | | | | | | | |
Current portion of long-term debt | | $ | 38,787 | | $ | 38,787 | | $ | 23,712 | | $ | 23,712 | |
Notes payable | | 30,000 | | 30,000 | | — | | — | |
Accounts payable | | 323,256 | | 327,497 | | 361,010 | | 361,115 | |
Customer deposits and deferred revenues | | 119,380 | | 119,196 | | 108,372 | | 108,929 | |
Accrued interest | | 27,936 | | 27,936 | | 31,884 | | 31,884 | |
Accrued taxes | | 76,266 | | 63,184 | | 46,107 | | 47,607 | |
Accrued compensation | | 71,707 | | 71,707 | | 69,290 | | 69,290 | |
Other current liabilities | | 53,991 | | 51,164 | | 56,570 | | 56,895 | |
| | 741,323 | | 729,471 | | 696,945 | | 699,432 | |
Deferred Liabilities and Credits | | | | | | | | | |
Net deferred income tax liability | | 1,466,649 | | 1,488,655 | | 1,285,024 | | 1,304,796 | |
Derivative liability | | 1,210,500 | | 1,210,500 | | 712,252 | | 712,252 | |
Asset retirement obligation | | 137,534 | | 137,575 | | 124,501 | | 124,540 | |
Other deferred liabilities and credits | | 79,674 | | 82,631 | | 119,076 | | 125,607 | |
| | 2,894,357 | | 2,919,361 | | 2,240,853 | | 2,267,195 | |
Long-Term Debt | | | | | | | | | |
Long-term debt, excluding current portion | | 1,974,599 | | 1,974,599 | | 1,994,913 | | 1,994,913 | |
Forward contracts | | 1,689,644 | | 1,689,644 | | 1,672,762 | | 1,672,762 | |
| | 3,664,243 | | 3,664,243 | | 3,667,675 | | 3,667,675 | |
| | | | | | | | | |
Liabilities of Operations Held for Sale | | — | | — | | 2,427 | | 2,427 | |
| | | | | | | | | |
Minority Interest in Subsidiaries | | 499,306 | | 499,468 | | 502,702 | | 501,517 | |
| | | | | | | | | |
Preferred Shares | | 3,864 | | 3,864 | | 3,864 | | 3,864 | |
| | | | | | | | | |
Common Stockholders’ Equity | | | | | | | | | |
Common Shares, par value $.01 per share | | 564 | | 564 | | 563 | | 563 | |
Special Common Shares, par value $.01 per share | | — | | — | | — | | — | |
Series A Common Shares, par value $.01 per share | | 64 | | 64 | | 64 | | 64 | |
Capital in excess of par value | | 1,823,161 | | 1,822,541 | | 1,843,468 | | 1,843,468 | |
Treasury Shares, at cost | | (449,173 | ) | (449,173 | ) | (493,714 | ) | (493,714 | ) |
Accumulated other comprehensive income | | 373,505 | | 370,857 | | 296,820 | | 294,818 | |
Retained earnings | | 1,442,627 | | 1,451,343 | | 1,431,671 | | 1,422,539 | |
| | 3,190,748 | | 3,196,196 | | 3,078,872 | | 3,067,738 | |
| | | | | | | | | |
Total Liabilities and Stockholders' Equity | | $ | 10,993,841 | | $ | 11,012,603 | | $ | 10,193,338 | | $ | 10,209,848 | |
Appendix 3
TELEPHONE AND DATA SYSTEMS, INC.
FINANCIAL HIGHLIGHTS
Three Months Ended,
(Unaudited, dollars in thousands, except per share amounts)
| | March 31, 2005 | | June 30, 2005 | |
| | As
Previously
Reported | | As
Restated | | As
Previously
Reported | | As
Restated | |
| | | | | | | | | |
Operating Revenues | | $ | 928,166 | | $ | 935,787 | | $ | 965,558 | | $ | 969,859 | |
Operating Expenses | | | | | | | | | |
| | | | | | | | | |
Cost of service and products (exclusive of depreciation, amortization and accretion separately below) | | 333,864 | | 338,624 | | 332,854 | | 337,600 | |
Selling, general and administrative expense | | 350,045 | | 348,571 | | 357,281 | | 356,357 | |
Depreciation, amortization and accretion expense | | 168,817 | | 169,748 | | 167,571 | | 168,575 | |
Total Operating Expenses | | 852,726 | | 856,943 | | 857,706 | | 862,532 | |
| | | | | | | | | |
Operating Income | | 75,440 | | 78,844 | | 107,852 | | 107,327 | |
Investment and Other Income (Expense) | | | | | | | | | |
Investment income | | 14,233 | | 14,754 | | 16,520 | | 18,188 | |
Interest and dividend income | | 7,819 | | 8,286 | | 118,814 | | 118,896 | |
Gain (loss) on investments | | 500 | | 500 | | (54,532 | ) | (54,532 | ) |
Interest expense | | (51,856 | ) | (51,856 | ) | — | | — | |
Other income (expense), net | | (4,193 | ) | (4,321 | ) | (4,381 | ) | (6,708 | ) |
Total Investment and Other Income (Expense) | | (33,497 | ) | (32,637 | ) | 76,421 | | 75,844 | |
| | | | | | | | | |
Income (Loss) before Income Taxes and Minority Interest | | 41,943 | | 46,207 | | 184,273 | | 183,171 | |
Income tax expense (benefit) | | 16,148 | | 17,395 | | 76,005 | | 76,980 | |
Income (Loss) before Minority Interest | | 25,795 | | 28,812 | | 108,268 | | 106,191 | |
Minority share of income | | (5,250 | ) | (5,763 | ) | (8,907 | ) | (9,135 | ) |
Net Income (Loss) | | 20,545 | | 23,049 | | 99,361 | | 97,056 | |
Preferred dividend requirement | | (50 | ) | (50 | ) | (52 | ) | (52 | ) |
Net Income (Loss) Available to Common | | $ | 20,495 | | $ | 22,999 | | $ | 99,309 | | $ | 97,004 | |
| | | | | | | | | |
Basic Earnings per Share | | $ | 0.18 | | $ | 0.20 | | $ | 0.86 | | $ | 0.84 | |
Diluted Earnings per Share | | $ | 0.18 | | $ | 0.20 | | $ | 0.85 | | $ | 0.83 | |
Appendix 4
TELEPHONE AND DATA SYSTEMS, INC.
CONSOLIDATED BALANCE SHEET HIGHLIGHTS
(Unaudited, dollars in thousands)
| | March 31, 2005 | | June 30, 2005 | |
| | As Previously
Reported | | As
Restated | | As Previously
Reported | | As
Restated | |
| | | | | | | | | |
Current Assets | | | | | | | | | |
Cash and cash equivalents | | $ | 1,155,431 | | $ | 1,158,396 | | $ | 1,132,739 | | $ | 1,135,777 | |
Accounts receivable
Due from customers, | | 296,770 | | 296,768 | | 312,362 | | 312,953 | |
Other, principally connecting companies, | | 124,442 | | 125,336 | | 137,261 | | 137,750 | |
Deferred income tax asset | | 32,679 | | 40,505 | | 20,601 | | 28,427 | |
Materials and supplies, at average cost | | 83,020 | | 83,020 | | 67,184 | | 67,184 | |
Other current assets | | 61,548 | | 60,760 | | 59,660 | | 58,248 | |
| | 1,753,890 | | 1,764,785 | | 1,729,807 | | 1,740,339 | |
| | | | | | | | | |
Investments | | | | | | | | | |
Marketable equity securities | | 3,042,028 | | 3,042,028 | | 2,821,208 | | 2,821,208 | |
Licenses | | 1,358,725 | | 1,358,725 | | 1,362,434 | | 1,362,434 | |
Goodwill | | 823,249 | | 843,377 | | 823,399 | | 843,527 | |
Customer lists, net of accumulated amortization | | 22,615 | | 22,615 | | 20,952 | | 20,952 | |
Investments in unconsolidated entities | | 220,553 | | 213,820 | | 211,011 | | 205,940 | |
Other investments | | 22,397 | | 22,397 | | 22,710 | | 22,710 | |
| | 5,489,567 | | 5,502,962 | | 5,261,714 | | 5,276,771 | |
| | | | | | | | | |
Property, Plant and Equipment | | | | | | | | | |
U.S. Cellular | | 2,428,470 | | 2,429,759 | | 2,450,296 | | 2,451,307 | |
TDS Telecom | | 928,851 | | 928,851 | | 915,965 | | 915,965 | |
Corporate and Other | | — | | 31,674 | | — | | 31,111 | |
| | 3,357,321 | | 3,390,284 | | 3,366,261 | | 3,398,383 | |
| | | | | | | | | |
Other Deferred Charges | | 91,340 | | 57,058 | | 90,952 | | 57,416 | |
| | | | | | | | | |
Total Assets | | $ | 10,692,118 | | $ | 10,715,089 | | $ | 10,448,734 | | $ | 10,472,909 | |
Appendix 5
TELEPHONE AND DATA SYSTEMS, INC.
CONSOLIDATED BALANCE SHEET HIGHLIGHTS
(Unaudited, dollars in thousands)
| | March 31, 2005 | | June 30, 2005 | |
| | As Previously
Reported | | As
Restated | | As Previously
Reported | | As
Restated | |
Current Liabilities | | | | | | | | | |
Current portion of long-term debt | | $ | 15,106 | | $ | 15,106 | | $ | 2,727 | | $ | 2,727 | |
Notes payable | | 135,000 | | 135,000 | | 50,000 | | 50,000 | |
Accounts payable | | 256,840 | | 262,756 | | 274,288 | | 281,146 | |
Customer deposits and deferred revenues | | 122,952 | | 123,040 | | 124,380 | | 124,457 | |
Accrued taxes | | 93,016 | | 79,500 | | 148,125 | | 133,753 | |
Accrued compensation | | 42,006 | | 42,006 | | 50,291 | | 50,291 | |
Other current liabilities | | 83,570 | | 81,349 | | 82,407 | | 80,351 | |
| | 748,490 | | 738,757 | | 732,218 | | 722,725 | |
| | | | | | | | | |
Deferred Liabilities and Credits | | | | | | | | | |
Net deferred income tax liability | | 1,458,205 | | 1,481,565 | | 1,420,201 | | 1,444,367 | |
Derivative liability | | 863,530 | | 863,530 | | 699,348 | | 699,348 | |
Other deferred liabilities and credits | | 222,454 | | 223,280 | | 231,595 | | 234,360 | |
| | 2,544,189 | | 2,568,375 | | 2,351,144 | | 2,378,075 | |
| | | | | | | | | |
Long-Term Debt | | | | | | | | | |
Long-term debt, excluding current portion | | 1,987,229 | | 1,987,229 | | 1,869,928 | | 1,869,928 | |
Forward contracts | | 1,693,981 | | 1,693,981 | | 1,698,366 | | 1,698,366 | |
| | 3,681,210 | | 3,681,210 | | 3,568,294 | | 3,568,294 | |
| | | | | | | | | |
Minority Interest in Subsidiaries | | 511,992 | | 512,646 | | 527,185 | | 528,056 | |
| | | | | | | | | |
Preferred Shares | | 3,864 | | 3,864 | | 3,864 | | 3,864 | |
| | | | | | | | | |
Common Stockholders’ Equity | | | | | | | | | |
Common Shares, par value $.01 per share | | 564 | | 564 | | 564 | | 564 | |
Special Common Shares, par value $.01 per share | | — | | — | | 633 | | 629 | |
Series A Common Shares, par value $.01 per share | | 64 | | 64 | | 64 | | 64 | |
Additional paid-in capital | | 1,819,710 | | 1,819,090 | | 1,819,953 | | 1,819,336 | |
Treasury Shares, at cost: | | | | | | (215,385 | ) | (215,385 | ) |
Common Shares | | (439,038 | ) | (439,038 | ) | (215,385 | ) | (215,385 | ) |
Accumulated other comprehensive income | | 368,022 | | 365,287 | | 333,945 | | 331,516 | |
Retained earnings | | 1,453,051 | | 1,464,270 | | 1,541,640 | | 1,550,556 | |
| | 3,202,373 | | 3,210,237 | | 3,266,029 | | 3,271,895 | |
Total Liabilities and Stockholders’ Equity | | $ | 10,692,118 | | $ | 10,715,089 | | $ | 10,448,734 | | $ | 10,472,909 | |
