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 FOURTH-QUARTER AND YEAR-END 2006 OPERATING RESULTS
CHICAGO — June 19, 2007 — Telephone and Data Systems, Inc. [AMEX:TDS, TDS.S] reported operating revenues of $1,124.7 million for the fourth quarter of 2006, up 10 percent from $1,023.1 million for the comparable period one year ago. The company recorded operating income of $87.9 million during the quarter compared to $95.9 million for the fourth quarter of 2005. Net loss available to common and diluted loss per share were $116.2 million and $1.00, respectively, compared to net income available to common and diluted earnings per share of $191.5 million and $1.65, respectively, for the comparable period one year ago.
TDS recorded a loss of $322.4 million in the fourth-quarter related to the fair value adjustment of derivative instruments compared to a gain of $238.4 in the fourth quarter of 2005.
For the full year, TDS reported operating revenues of $4,364.5 million, up 10 percent from $3,953 million, for the comparable period one year ago. The company recorded operating income of $412.8 million for the year compared to $380.7 million, as restated, in 2005. Net income available to common and diluted earnings per share were $161.6 million and $1.37, respectively, compared to net income available to common and diluted earnings per share of $647.5 million and $5.57, respectively, as restated, for the comparable period one year ago.
TDS recorded a loss of $299.5 million in 2006 related to the fair value adjustment of derivative instruments compared to a gain of $733.7 in 2005.
A company spokesman noted that the company continued to grow its customer base, revenues and profitability in 2006. For the full year, U.S. Cellular added 297,000 net new retail customers bringing its total customer based to more than 5.8 million. Fueled by the growth in DSL lines, TDS Telecom increased its total access line equivalents by 3 percent, to 1,213,500 (ILEC and CLEC combined). TDS’ operating revenues grew 10 percent to $4.36 billion and operating income grew 8 percent to $412.8 million.
TDS completed the restatement of prior period results announced on April 23, 2007, which included the years ended Dec. 31, 2005 and 2004, including quarterly information for 2006 and 2005, and certain selected financial data for 2003 and 2002. The restatement was required primarily to reflect step acquisition accounting for share repurchases by U.S. Cellular primarily in 2000 and 2001. TDS will include the restatement in its Form 10-K for the year ended Dec. 31, 2006 that will be filed with the Securities and Exchange Commission (SEC) later today.
About TDS
TDS is a diversified telecommunications corporation founded in 1969. Through its business units, U.S. Cellular and TDS Telecom, TDS operates primarily by providing wireless, local telephone and broadband services. As of March 31, 2007, the company employed 11,600 people and served 7.2 million customers/units in 36 states.
About U.S. Cellular
As of March 31, 2007, U.S. Cellular Corporation, the nation’s sixth-largest wireless service carrier, employed 8,000 associates and provided wireless service to 6 million customers in 26 states. The Chicago-based company operates on a customer satisfaction strategy, meeting customer needs by providing a comprehensive range of wireless products and services, superior customer support, and a high-quality network.
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: 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 assets; 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; risks and uncertainties relating to restatements and possible future restatements; ability to remediate material weaknesses; 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 and its subsidiaries, visit the web sites at:
TDS: www.teldta.com TDS Telecom: www.tdstelecom.com
USM: www.uscellular.com
2
TELEPHONE AND DATA SYSTEMS, INC.
SUMMARY OPERATING DATA
Quarter Ended | | | | 12/31/2006 | | 9/30/2006 | | 6/30/2006 | | 3/31/2006 | | 12/31/2005 | |
U.S. Cellular | | | | | | | | | | | |
Consolidated Markets: | | | | | | | | | | | |
Total population (000s) (1) | | 55,543 | | 55,543 | | 55,543 | | 55,164 | | 45,244 | |
All customers - | | | | | | | | | | | |
Customer units | | 5,815,000 | | 5,729,000 | | 5,704,000 | | 5,633,000 | | 5,482,000 | |
Gross customer unit activations | | 389,000 | | 365,000 | | 347,000 | | 434,000 | | 419,000 | |
Net customer unit activations | | 86,000 | | 25,000 | | 48,000 | | 151,000 | | 125,000 | |
Market penetration (1) | | 10.5 | % | 10.3 | % | 10.3 | % | 10.2 | % | 12.1 | % |
Retail customers - | | | | | | | | | | | |
Customer units | | 5,225,000 | | 5,127,000 | | 5,099,000 | | 5,029,000 | | 4,927,000 | |
Gross customer unit activations | | 375,000 | | 353,000 | | 331,000 | | 380,000 | | 392,000 | |
Net customer unit activations | | 98,000 | | 28,000 | | 49,000 | | 122,000 | | 130,000 | |
| | | | | | | | | | | |
Cell sites in service | | 5,925 | | 5,726 | | 5,583 | | 5,438 | | 5,428 | |
Average monthly revenue per unit (2) | | $ | 48.15 | | $ | 47.93 | | $ | 46.54 | | $ | 46.17 | | $ | 45.88 | |
Retail service revenue per unit (2) | | $ | 42.21 | | $ | 41.75 | | $ | 40.92 | | $ | 40.77 | | $ | 40.19 | |
Inbound roaming revenue per unit (2) | | $ | 2.34 | | $ | 2.55 | | $ | 2.28 | | $ | 2.12 | | $ | 2.31 | |
Long-distance/other revenue per unit (2) | | $ | 3.60 | | $ | 3.63 | | $ | 3.34 | | $ | 3.28 | | $ | 3.38 | |
Minutes of use (MOU) (3) | | 749 | | 725 | | 719 | | 658 | | 648 | |
Postpay churn rate per month (4) | | 1.5 | % | 1.6 | % | 1.5 | % | 1.5 | % | 1.6 | % |
Marketing cost per gross customer unit addition (5) | | $ | 511 | | $ | 496 | | $ | 503 | | $ | 412 | | $ | 501 | |
Construction Expenditures (000s) | | $ | 158,400 | | $ | 152,800 | | $ | 151,400 | | $ | 117,200 | | $ | 197,400 | |
(1) Market penetration is calculated using 2005 Claritas population estimates for all periods of 2006 and 2004 Claritas estimates for all periods of 2005. “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 12/31/06, 9/30/06, 6/30/06 and 3/31/06 total population count includes the markets acquired in January 2006 by Carroll Wireless, L.P., a consolidated U.S. Cellular subsidiary, representing the licensed areas for which Carroll Wireless L.P. was the winning bidder in the Federal Communications Commission’s Auction 58 that concluded in February 2005. 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.
(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 | | $ | 831,663 | | $ | 821,820 | | $ | 791,705 | | $ | 769,222 | | $ | 737,790 | |
Components: | | | | | | | | | | | |
Retail service revenue during quarter | | $ | 729,072 | | $ | 715,896 | | $ | 696,079 | | $ | 679,256 | | $ | 646,271 | |
Inbound roaming revenue during quarter | | $ | 40,354 | | $ | 43,806 | | $ | 38,745 | | $ | 35,344 | | $ | 37,184 | |
Long-distance/other revenue during quarter | | $ | 62,237 | | $ | 62,118 | | $ | 56,881 | | $ | 54,622 | | $ | 54,335 | |
| | | | | | | | | | | |
Divided by average customers during quarter (000s) | | 5,757 | | 5,716 | | 5,670 | | 5,554 | | 5,360 | |
Divided by three months in each quarter | | 3 | | 3 | | 3 | | 3 | | 3 | |
| | | | | | | | | | | |
Average monthly revenue per unit | | $ | 48.15 | | $ | 47.93 | | $ | 46.54 | | $ | 46.17 | | $ | 45.88 | |
Retail service revenue per unit | | $ | 42.21 | | $ | 41.75 | | $ | 40.92 | | $ | 40.77 | | $ | 40.19 | |
Inbound roaming revenue per unit | | $ | 2.34 | | $ | 2.55 | | $ | 2.28 | | $ | 2.12 | | $ | 2.31 | |
Long-distance/other revenue per unit | | $ | 3.60 | | $ | 3.63 | | $ | 3.34 | | $ | 3.28 | | $ | 3.38 | |
(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 fourth quarter results, at www.uscellular.com.
3
TELEPHONE AND DATA SYSTEMS, INC.
SUMMARY OPERATING DATA
Quarter Ended | | | | 12/31/2006 | | 9/30/2006 | | 6/30/2006 | | 3/31/2006 | | 12/31/2005 | |
TDS Telecom | | | | | | | | | | | |
ILEC: | | | | | | | | | | | |
Access line equivalents (1) | | 757,300 | | 752,100 | | 747,500 | | 742,300 | | 735,300 | |
Access lines | | 616,500 | | 622,700 | | 628,600 | | 632,100 | | 635,500 | |
Dial-up Internet service accounts | | 77,100 | | 82,200 | | 86,800 | | 90,800 | | 90,700 | |
Digital Subscriber Lines (DSL) customers | | 105,100 | | 94,100 | | 84,000 | | 75,300 | | 65,500 | |
Long Distance customers | | 340,000 | | 335,100 | | 331,300 | | 327,100 | | 321,500 | |
Construction Expenditures (000s) | | $ | 39,400 | | $ | 27,000 | | $ | 29,700 | | $ | 17,100 | | $ | 37,500 | |
CLEC: | | | | | | | | | | | |
Access line equivalents (1) | | 456,200 | | 452,900 | | 450,900 | | 449,200 | | 448,600 | |
Dial-up Internet service accounts | | 10,200 | | 11,000 | | 11,800 | | 13,500 | | 14,200 | |
Percent of access lines on-switch | | 93.0 | % | 92.6 | % | 92.2 | % | 91.7 | % | 91.1 | % |
Digital Subscriber Lines (DSL) customers | | 42,100 | | 41,000 | | 39,900 | | 38,500 | | 36,400 | |
Construction Expenditures (000s) | | $ | 5,700 | | $ | 4,500 | | $ | 4,400 | | $ | 2,700 | | $ | 8,500 | |
(1) Access line equivalents are derived by converting high capacity data lines to the estimated capacity of one switched access line.
4
TELEPHONE AND DATA SYSTEMS, INC.
FINANCIAL HIGHLIGHTS
Three Months Ended December 31,
(Unaudited, dollars in thousands, except per share amounts)
| | | | 2005 | | Increase (Decrease) | | |
| | 2006 | | (as restated) | | Amount | | Percent | | |
Operating Revenues | | | | | | | | | | |
U.S. Cellular | | $ | 902,119 | | $ | 785,239 | | $ | 116,880 | | 14.9 | % | |
TDS Telecom | | 218,277 | | 233,946 | | (15,669 | ) | (6.7 | %) | |
All Other (1) | | 4,288 | | 3,936 | | 352 | | 8.9 | % | |
| | 1,124,684 | | 1,023,121 | | 101,563 | | 9.9 | % | |
Operating Expenses | | | | | | | | | | |
U.S. Cellular | | | | | | | | | | |
Expenses excluding depreciation, amortization and accretion | | 692,813 | | 635,465 | | 57,348 | | 9.0 | % | |
Depreciation, amortization and accretion | | 145,661 | | 128,243 | | 17,418 | | 13.6 | % | |
(Gain) on assets held for sale | | — | | (44,660 | ) | 44,660 | | N/M | | |
| | 838,474 | | 719,048 | | 119,426 | | 16.6 | % | |
TDS Telecom | | | | | | | | | | |
Expenses excluding depreciation and amortization | | 151,881 | | 149,215 | | 2,666 | | 1.8 | % | |
Depreciation and amortization | | 40,497 | | 42,628 | | (2,131 | ) | (5.0 | %) | |
| | 192,378 | | 191,843 | | 535 | | 0.3 | % | |
All Other (1) | | | | | | | | | | |
Expenses excluding depreciation and amortization | | 5,301 | | 13,359 | | (8,058 | ) | (60.3 | %) | |
Depreciation and amortization | | 622 | | 692 | | (70 | ) | (10.1 | %) | |
(Gain) on assets held for sale | | — | | 2,235 | | (2,235 | ) | N/M | | |
| | 5,923 | | 16,286 | | (10,363 | ) | (63.6 | %) | |
| | | | | | | | | | |
Total Operating Expenses | | 1,036,775 | | 927,177 | | 109,598 | | 11.8 | % | |
Operating Income (Loss) | | | | | | | | | | |
U.S. Cellular | | 63,645 | | 66,191 | | (2,546 | ) | (3.8 | %) | |
TDS Telecom | | 25,899 | | 42,103 | | (16,204 | ) | (38.5 | %) | |
All Other (1) | | (1,635 | ) | (12,350 | ) | 10,715 | | 86.8 | % | |
| | 87,909 | | 95,944 | | (8,035 | ) | (8.4 | %) | |
Investment and Other Income (Expense) | | | | | | | | | | |
Equity in earnings of unconsolidated entities | | 28,794 | | 17,810 | | 10,984 | | 61.7 | % | |
Interest and dividend income | | 20,293 | | 14,968 | | 5,325 | | 35.6 | % | |
Fair value adjustment of derivative instruments | | (322,406 | ) | 238,434 | | (560,840 | ) | N/M | | |
Gain on investments | | 70,428 | | (6,754 | ) | 77,182 | | N/M | | |
Interest (expense) | | (57,358 | ) | (55,781 | ) | (1,577 | ) | (2.8 | %) | |
Other income (expense) | | (844 | ) | 4,743 | | (5,587 | ) | N/M | | |
| | (261,093 | ) | 213,420 | | (474,513 | ) | N/M | | |
Income (Loss) Before Income Taxes and Minority Interest | | (173,184 | ) | 309,364 | | (482,548 | ) | N/M | | |
Income tax expense | | (68,787 | ) | 105,203 | | (173,990 | ) | N/M | | |
Income (Loss) Before Minority Interest | | (104,397 | ) | 204,161 | | (308,558 | ) | N/M | | |
Minority share of income | | (11,839 | ) | (13,233 | ) | 1,394 | | 10.5 | % | |
Income (Loss) From Continuing Operations | | (116,236 | ) | 190,928 | | (307,164 | ) | N/M | | |
Discontinued Operations, net of tax | | — | | 657 | | (657 | ) | N/M | | |
Net Income (Loss) | | (116,236 | ) | 191,585 | | (307,821 | ) | N/M | | |
Preferred dividend requirement | | (13 | ) | (50 | ) | 37 | | N/M | | |
Net Income (Loss) Available to Common | | $ | (116,249 | ) | $ | 191,535 | | $ | (307,784 | ) | N/M | | |
| | | | | | | | | | |
Basic Weighted Average Common Shares Outstanding (000s) | | 116,335 | | 115,531 | | 804 | | 0.7 | % | |
Basic Earnings (Loss) Per Share | | | | | | | | | | |
Continuing Operations | | $ | (1.00 | ) | $ | 1.65 | | $ | (2.65 | ) | N/M | | |
Discontinued Operations | | — | | 0.01 | | (0.01 | ) | N/M | | |
| | $ | (1.00 | ) | $ | 1.66 | | $ | (2.66 | ) | N/M | | |
| | | | | | | | | | |
Diluted Weighted Average Common Shares Outstanding (000s) | | 116,335 | | 116,189 | | 146 | | 0.1 | % | |
Diluted Earnings (Loss) Per Share | | | | | | | | | | |
Continuing Operations | | $ | (1.00 | ) | $ | 1.64 | | $ | (2.64 | ) | N/M | | |
Discontinued Operations | | — | | 0.01 | | (0.01 | ) | N/M | | |
| | $ | (1.00 | ) | $ | 1.65 | | $ | (2.65 | ) | N/M | | |
(1) Consists of Suttle Straus printing and distribution operations and intercompany eliminations.
N/M - Percentage change not meaningful
5
TELEPHONE AND DATA SYSTEMS, INC.
FINANCIAL HIGHLIGHTS
Year Ended December 31,
(Unaudited, dollars in thousands, except per share amounts)
| | | | 2005 | | Increase (Decrease) | |
| | 2006 | | (as restated) | | Amount | | Percent | |
Operating Revenues | | | | | | | | | |
U.S. Cellular | | $ | 3,473,155 | | $ | 3,030,765 | | $ | 442,390 | | 14.6 | % |
TDS Telecom | | 875,918 | | 904,085 | | (28,167 | ) | (3.1 | %) |
All Other (1) | | 15,445 | | 18,128 | | (2,683 | ) | (14.8 | %) |
| | 4,364,518 | | 3,952,978 | | 411,540 | | 10.4 | % |
Operating Expenses | | | | | | | | | |
U.S. Cellular | | | | | | | | | |
Expenses excluding depreciation, amortization and accretion | | 2,608,147 | | 2,333,741 | | 274,406 | | 11.8 | % |
Depreciation, amortization and accretion | | 575,112 | | 510,487 | | 64,625 | | 12.7 | % |
(Gain) on assets held for sale | | — | | (44,660 | ) | 44,660 | | N/M | |
| | 3,183,259 | | 2,799,568 | | 383,691 | | 13.7 | % |
TDS Telecom | | | | | | | | | |
Expenses excluding depreciation and amortization | | 587,450 | | 577,744 | | 9,706 | | 1.7 | % |
Depreciation and amortization | | 159,612 | | 165,616 | | (6,004 | ) | (3.6 | %) |
| | 747,062 | | 743,360 | | 3,702 | | 0.5 | % |
All Other (1) | | | | | | | | | |
Expenses excluding depreciation and amortization | | 18,666 | | 24,362 | | (5,696 | ) | (23.4 | %) |
Depreciation and amortization | | 2,754 | | 2,755 | | (1 | ) | N/M | |
(Gain) on assets held for sale | | — | | 2,235 | | (2,235 | ) | N/M | |
| | 21,420 | | 29,352 | | (7,932 | ) | (27.0 | %) |
| | | | | | | | | |
Total Operating Expenses | | 3,951,741 | | 3,572,280 | | 379,461 | | 10.6 | % |
Operating Income (Loss) | | | | | | | | | |
U.S. Cellular | | 289,896 | | 231,197 | | 58,699 | | 25.4 | % |
TDS Telecom | | 128,856 | | 160,725 | | (31,869 | ) | (19.8 | %) |
All Other (1) | | (5,975 | ) | (11,224 | ) | 5,249 | | 46.8 | % |
| | 412,777 | | 380,698 | | 32,079 | | 8.4 | % |
Investment and Other Income (Expense) | | | | | | | | | |
Equity in earnings of unconsolidated entities | | 95,170 | | 68,039 | | 27,131 | | 39.9 | % |
Interest and dividend income | | 194,644 | | 156,482 | | 38,162 | | 24.4 | % |
Fair value adjustment of derivative instruments | | (299,525 | ) | 733,728 | | (1,033,253 | ) | N/M | |
Gain on investments | | 161,846 | | (6,254 | ) | 168,100 | | N/M | |
Interest (expense) | | (234,543 | ) | (216,021 | ) | (18,522 | ) | (8.6 | %) |
Other (expense) | | (7,031 | ) | (9,537 | ) | 2,506 | | 26.3 | % |
| | (89,439 | ) | 726,437 | | (815,876 | ) | N/M | |
Income Before Income Taxes and Minority Interest | | 323,338 | | 1,107,135 | | (783,797 | ) | (70.8 | %) |
Income tax expense | | 116,459 | | 423,185 | | (306,726 | ) | (72.5 | %) |
Income Before Minority Interest | | 206,879 | | 683,950 | | (477,071 | ) | (69.8 | %) |
Minority share of income | | (45,120 | ) | (37,207 | ) | (7,913 | ) | (21.3 | %) |
Income (Loss) From Continuing Operations | | 161,759 | | 646,743 | | (484,984 | ) | (75.0 | %) |
Discontinued Operations, net of tax | | — | | 997 | | (997 | ) | N/M | |
Net Income | | 161,759 | | 647,740 | | (485,981 | ) | (75.0 | %) |
Preferred dividend requirement | | (165 | ) | (202 | ) | 37 | | N/M | |
Net Income Available to Common | | $ | 161,594 | | $ | 647,538 | | $ | (485,944 | ) | (75.0 | %) |
| | | | | | | | | |
Basic Weighted Average Common Shares Outstanding (000s) | | 115,904 | | 115,296 | | 608 | | 0.5 | % |
Basic Earnings (Loss) Per Share | | | | | | | | | |
Continuing Operations | | $ | 1.39 | | $ | 5.61 | | $ | (4.22 | ) | (75.2 | %) |
Discontinued Operations | | — | | 0.01 | | (0.01 | ) | N/M | |
| | $ | 1.39 | | $ | 5.62 | | $ | (4.23 | ) | (75.3 | %) |
| | | | | | | | | |
Diluted Weighted Average Common Shares Outstanding (000s) | | 116,844 | | 116,081 | | 763 | | 0.7 | % |
Diluted Earnings (Loss) Per Share | | | | | | | | | |
Continuing Operations | | $ | 1.37 | | $ | 5.56 | | $ | (4.19 | ) | (75.4 | %) |
Discontinued Operations | | — | | 0.01 | | (0.01 | ) | N/M | |
| | $ | 1.37 | | $ | 5.57 | | $ | (4.20 | ) | (75.4 | %) |
(1) Consists of Suttle Straus printing and distribution operations and intercompany eliminations.
N/M - Percentage change not meaningful
6
TELEPHONE AND DATA SYSTEMS, INC.
CONSOLIDATED BALANCE SHEET HIGHLIGHTS
(Unaudited, dollars in thousands)
ASSETS
| | | | December 31, | |
| | December 31, | | 2005 | |
| | 2006 | | (as restated) | |
Current Assets | | | | | |
Cash and cash equivalents | | $ | 1,013,325 | | $ | 1,095,791 | |
Marketable equity securities | | 1,205,344 | | — | |
Accounts receivable from customers and other | | 520,167 | | 489,460 | |
Deferred income tax asset | | — | | 13,438 | |
Materials and supplies, at average cost | | 128,981 | | 103,211 | |
Other current assets | | 105,267 | | 76,520 | |
| | 2,973,084 | | 1,778,420 | |
| | | | | |
Investments | | | | | |
Licenses | | 1,520,407 | | 1,388,343 | |
Goodwill | | 647,853 | | 643,636 | |
Customer lists | | 26,196 | | 47,649 | |
Marketable equity securities | | 1,585,286 | | 2,531,690 | |
Investments in unconsolidated entities | | 197,636 | | 217,180 | |
Other investments | | 11,073 | | 12,274 | |
| | 3,988,451 | | 4,840,772 | |
| | | | | |
Property, Plant and Equipment, net | | | | | |
U.S. Cellular | | 2,628,848 | | 2,553,029 | |
TDS Telecom | | 920,350 | | 945,854 | |
Other | | 32,188 | | 30,877 | |
| | 3,581,386 | | 3,529,760 | |
| | | | | |
Other Assets and Deferred Charges | | 56,593 | | 55,830 | |
| | | | | |
Total Assets | | $ | 10,599,514 | | $ | 10,204,782 | |
7
TELEPHONE AND DATA SYSTEMS, INC.
CONSOLIDATED BALANCE SHEET HIGHLIGHTS
(Unaudited, dollars in thousands)
LIABILITIES AND STOCKHOLDERS’ EQUITY
| | | | December 31, | |
| | December 31, | | 2005 | |
| | 2006 | | (as restated) | |
Current Liabilities | | | | | |
Current portion of long-term debt | | $ | 741,325 | | $ | 237,948 | |
Derivative Liability | | 359,970 | | — | |
Notes payable | | 35,000 | | 135,000 | |
Accounts payable | | 294,932 | | 305,752 | |
Customer deposits and deferred revenues | | 141,164 | | 126,454 | |
Accrued taxes | | 38,324 | | 46,061 | |
Accrued compensation | | 72,804 | | 67,443 | |
Deferred taxes | | 236,397 | | — | |
Other current liabilities | | 164,815 | | 146,667 | |
| | 2,084,731 | | 1,065,325 | |
| | | | | |
Deferred Liabilities and Credits | | | | | |
Net deferred income tax liability | | 950,348 | | 1,283,267 | |
Derivative Liability | | 393,776 | | 449,192 | |
Other deferred liabilities and credits | | 369,045 | | 298,306 | |
| | 1,713,169 | | 2,030,765 | |
| | | | | |
Long-term Debt | | 2,620,609 | | 3,340,801 | |
| | | | | |
Minority Interest in Subsidiaries | | 609,722 | | 546,833 | |
| | | | | |
Preferred Shares | | 863 | | 3,863 | |
| | | | | |
Common Stockholders' Equity | | | | | |
Common Shares, $.01 par value | | 566 | | 565 | |
Special Common Shares, $.01 par value | | 629 | | 629 | |
Series A Common Shares, $.01 par value | | 64 | | 64 | |
Capital in excess of par value | | 1,992,597 | | 1,961,200 | |
Treasury Shares, at cost | | | | | |
Common Shares | | (187,103 | ) | (208,156 | ) |
Special Common Shares | | (187,016 | ) | (210,600 | ) |
Accumulated other comprehensive income | | 522,113 | | 363,641 | |
Retained earnings | | 1,428,570 | | 1,309,852 | |
| | 3,570,420 | | 3,217,195 | |
| | | | | |
Total Liabilities and Stockholders' Equity | | $ | 10,599,514 | | $ | 10,204,782 | |
8
BALANCE SHEET HIGHLIGHTS
DECEMBER 31, 2006
(Unaudited, dollars in thousands)
| | U.S. | | TDS | | TDS Corporate | | Intercompany | | TDS | |
| | Cellular | | Telecom | | & Other | | Eliminations | | Consolidated | |
Cash and cash equivalents | | $ | 32,912 | | $ | 376,593 | | $ | 603,820 | | $ | — | | $ | 1,013,325 | |
Affiliated cash investments | | — | | 604,444 | | — | | (604,444 | ) | — | |
Marketable equity securities | | 249,039 | | 65,643 | | 890,662 | | — | | 1,205,344 | |
Notes receivable—affiliates | | — | | — | | 284,582 | | (284,582 | ) | — | |
| | $ | 281,951 | | $ | 1,046,680 | | $ | 1,779,064 | | $ | (889,026 | ) | $ | 2,218,669 | |
| | | | | | | | | | | |
Licenses, goodwill and customer lists | | $ | 2,005,975 | | $ | 401,452 | | $ | (212,971 | ) | $ | — | | $ | 2,194,456 | |
Marketable equity securities | | 4,873 | | 4,588 | | 1,575,825 | | — | | 1,585,286 | |
Investment in unconsolidated entities | | 150,325 | | 3,623 | | 48,907 | | (5,219 | ) | 197,636 | |
Other investments | | 4,541 | | 3,157 | | 3,375 | | — | | 11,073 | |
| | $ | 2,165,714 | | $ | 412,820 | | $ | 1,415,136 | | $ | (5,219 | ) | $ | 3,988,451 | |
| | | | | | | | | | | |
Property, Plant and Equipment, net | | $ | 2,628,848 | | $ | 920,350 | | $ | 32,188 | | $ | — | | $ | 3,581,386 | |
| | | | | | | | | | | |
Notes payable: | external | | $ | 35,000 | | $ | — | | $ | — | | $ | — | | $ | 35,000 | |
| cash management | | — | | — | | 604,444 | | (604,444 | ) | — | |
| intercompany | | — | | 284,582 | | — | | (284,582 | ) | — | |
| | $ | 35,000 | | $ | 284,582 | | $ | 604,444 | | $ | (889,026 | ) | $ | 35,000 | |
| | | | | | | | | | | |
Forward contracts: | | | | | | | | | | | |
Current portion | | $ | 159,856 | | $ | 41,182 | | $ | 537,370 | | $ | — | | $ | 738,408 | |
Non-current portion | | — | | — | | 987,301 | | — | | 987,301 | |
Total | | $ | 159,856 | | $ | 41,182 | | $ | 1,524,671 | | $ | — | | $ | 1,725,709 | |
| | | | | | | | | | | |
Long-term Debt: | | | | | | | | | | | |
Current portion | | $ | — | | $ | 424 | | $ | 2,493 | | $ | — | | $ | 2,917 | |
Non-current portion | | 1,001,839 | | 3,652 | | 627,817 | | — | | 1,633,308 | |
Total | | $ | 1,001,839 | | $ | 4,076 | | $ | 630,310 | | $ | — | | $ | 1,636,225 | |
| | | | | | | | | | | |
Preferred Shares | | $ | — | | $ | — | | $ | 863 | | $ | — | | $ | 863 | |
| | | | | | | | | | | |
Construction expenditures: | | | | | | | | | | | |
Quarter ended 12/31/06 | | $ | 158,407 | | $ | 45,050 | | $ | 2,391 | | | | $ | 205,848 | |
Year ended 12/31/06 | | $ | 579,785 | | $ | 130,434 | | $ | 12,239 | | | | $ | 722,458 | |
9
TDS Telecom Highlights
Three Months Ended December 31,
(Unaudited, dollars in thousands)
| | | | | | Increase (Decrease) | |
| | 2006 | | 2005 | | Amount | | Percent | |
Local Telephone Operations | | | | | | | | | |
Operating Revenues | | | | | | | | | |
Local service | | $ | 49,155 | | $ | 51,821 | | $ | (2,666 | ) | (5.1 | )% |
Network access and long-distance | | 85,305 | | 98,285 | | (12,980 | ) | (13.2 | )% |
Miscellaneous | | 25,837 | | 24,827 | | 1,010 | | 4.1 | % |
| | 160,297 | | 174,933 | | (14,636 | ) | (8.4 | )% |
Operating Expenses | | | | | | | | | |
Network operations | | 50,099 | | 48,246 | | 1,853 | | 3.8 | % |
Customer operations | | 21,355 | | 23,687 | | (2,332 | ) | (9.8 | )% |
Corporate expenses | | 29,438 | | 27,587 | | 1,851 | | 6.7 | % |
Depreciation and amortization | | 34,785 | | 34,013 | | 772 | | 2.3 | % |
| | 135,677 | | 133,533 | | 2,144 | | 1.6 | % |
| | | | | | | | | |
Operating Income | | $ | 24,620 | | $ | 41,400 | | $ | (16,780 | ) | (40.5 | )% |
| | | | | | | | | |
Competitive Local Exchange Carrier Operations | | | | | | | | | |
Revenues | | $ | 59,205 | | $ | 60,129 | | $ | (924 | ) | (1.5 | )% |
| | | | | | | | | |
Expenses excluding depreciation and amortization | | 52,214 | | 50,811 | | 1,403 | | 2.8 | % |
Depreciation and amortization | | 5,712 | | 8,615 | | (2,903 | ) | (33.7 | )% |
| | 57,926 | | 59,426 | | (1,500 | ) | (2.5 | )% |
| | | | | | | | | |
Operating Income | | $ | 1,279 | | $ | 703 | | $ | 576 | | 81.9 | % |
| | | | | | | | | |
Intercompany revenues | | $ | (1,225 | ) | $ | (1,116 | ) | $ | (109 | ) | N/M | |
Intercompany expenses | | (1,225 | ) | (1,116 | ) | (109 | ) | N/M | |
| | — | | — | | — | | | |
| | | | | | | | | |
Total TDS Telecom Operating Income | | $ | 25,899 | | $ | 42,103 | | $ | (16,204 | ) | (38.5 | )% |
N/M - Percentage change not meaningful.
10
TDS Telecom Highlights
Year Ended December 31,
(Unaudited, dollars in thousands)
| | | | | | Increase (Decrease) | |
| | 2006 | | 2005 | | Amount | | Percent | |
Local Telephone Operations | | | | | | | | | |
Operating Revenues | | | | | | | | | |
Local service | | $ | 200,213 | | $ | 202,021 | | $ | (1,808 | ) | N/M | |
Network access and long-distance | | 352,299 | | 373,737 | | (21,438 | ) | (5.7 | )% |
Miscellaneous | | 93,013 | | 93,966 | | (953 | ) | (1.0 | )% |
| | 645,525 | | 669,724 | | (24,199 | ) | (3.6 | )% |
Operating Expenses | | | | | | | | | |
Network operations | | 191,932 | | 177,252 | | 14,680 | | 8.3 | % |
Customer operations | | 77,655 | | 92,460 | | (14,805 | ) | (16.0 | )% |
Corporate expenses | | 110,574 | | 95,901 | | 14,673 | | 15.3 | % |
Depreciation and amortization | | 135,370 | | 135,178 | | 192 | | N/M | |
| | 515,531 | | 500,791 | | 14,740 | | 2.9 | % |
| | | | | | | | | |
Operating Income | | $ | 129,994 | | $ | 168,933 | | $ | (38,939 | ) | (23.0 | )% |
| | | | | | | | | |
Competitive Local Exchange Carrier Operations | | | | | | | | | |
Revenues | | $ | 235,804 | | $ | 239,341 | | $ | (3,537 | ) | (1.5 | )% |
| | | | | | | | | |
Expenses excluding depreciation and amortization | | 212,700 | | 217,111 | | (4,411 | ) | (2.0 | )% |
Depreciation and amortization | | 24,242 | | 30,438 | | (6,196 | ) | (20.4 | )% |
| | 236,942 | | 247,549 | | (10,607 | ) | (4.3 | )% |
| | | | | | | | | |
Operating (Loss) | | $ | (1,138 | ) | $ | (8,208 | ) | $ | 7,070 | | 86.1 | % |
| | | | | | | | | |
Intercompany revenues | | $ | (5,411 | ) | $ | (4,980 | ) | $ | (431 | ) | N/M | |
Intercompany expenses | | (5,411 | ) | (4,980 | ) | (431 | ) | N/M | |
| | — | | — | | — | | | |
| | | | | | | | | |
Total TDS Telecom Operating Income | | $ | 128,856 | | $ | 160,725 | | $ | (31,869 | ) | (19.8 | )% |
N/M - Percentage change not meaningful.
11
