Exhibit 99.1
30 North LaSalle Street
Suite 4000
Chicago, IL 60602
312/630-1900
Excellence in Communications Services
As previously announced, TDSTM will hold a teleconference Aug. 7, 2008, at 10:00 a.m. Chicago time. Interested parties may listen to the call live via the Internet by accessing the Conference Calls page of www.teldta.com.
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 SECOND QUARTER RESULTS
Note: Comparisons are year over year unless otherwise noted.
2Q 2008 Highlights
Enterprise/TDS Corporate
· 7 percent increase in operating revenues, to $1,274.4 million.
· 3 percent decrease in operating income, to $149.7 million.
· Repurchased 1,015,650 TDS special common shares using $39.6 million of a $250 million stock repurchase program authorized in 2007 ($38.7 million remains).
Wireless/U.S. Cellular®
· 9 percent increase in service revenues, to $987.4 million.
· 45 percent increase in data revenues, to $123.7 million.
· 5.7 percent increase in ARPU (average monthly revenue per unit), to $53.27.
· Retail postpay churn remained flat at 1.4 percent; postpay customers comprised 95 percent of retail customers.
Wireline/TDS Telecom
· 7 percent increase in operating income, to $35.2 million, despite a 4 percent decrease in operating revenues.
· 29 percent increase in ILEC DSL (digital subscriber line) customers, to 164,100; CLEC DSL customers totaled 42,500.
· 24 percent increase in ILEC data revenue, to $21.7 million.
· Acquired Mosinee Telephone Company, LLC in May; 4,900 physical access lines in Wisconsin.
1
· ILEC equivalent access lines grew nearly 2 percent to 774,300; ILEC physical access lines declined to 577,000.
CHICAGO – Aug. 7, 2008 – Telephone and Data Systems, Inc. [AMEX:TDS, TDS.S] reported operating revenues of $1,274.4 million for the second quarter of 2008, an increase of seven percent from $1,192.8 million in the comparable period one year ago. The company recorded operating income of $149.7 million, down from $154 million in the second quarter of 2007. Net income available to common and diluted earnings per share were $87.7 million and $0.75, respectively, for the second quarter of 2008, compared to a net loss available to common and diluted loss per share of $8.6 million and $.08, respectively, in the comparable period one year ago.
“We continue to experience steady gains in service and data revenues and in average revenue per customer at our wireless business, U.S. Cellular®, and improved operating margins through cost controls at TDS Telecom, our wireline business,” said LeRoy T. Carlson, Jr., TDS president and CEO. “The company overall increased its year-over-year operating revenues, and at the corporate level we continued the share repurchase program begun in 2007.
“Both businesses have challenges, as well as opportunities. The market for wireless voice services continues to mature, and the wireline sector has ongoing competition from cable and wireless companies. Consumer anxieties related to the slow economy might also be having an impact. At U.S. Cellular, however, the low churn rate for retail postpay customers, together with continued increases in data revenues and sales of high-ARPU plans and smartphones, demonstrate that customers believe in U.S. Cellular’s commitment to excellent network quality, customer service, and product and service selection. As wireless voice penetration increases, customer loyalty and demand for data services are critical to ongoing wireless growth and profitability.
“TDS Telecom achieved double-digit increases in DSL customers and related revenues, and added equivalent access lines in its ILEC operation, although physical access lines continued to decline. The company also increased its operating income through effective cost controls, despite a decline in operating revenues.
“As part of its goal to be the preferred broadband provider in its markets, TDS Telecom continues to increase the broadband speeds offered to its residential and commercial customers, and to develop new broadband services. The company’s Triple Play bundles of voice, high-speed data, and Dish Network™ TV services enable it to compete effectively with cable offerings. In the second quarter, TDS Telecom exceeded sales targets for both Triple Play bundles and DISH Network services.”
Settlement of variable prepaid forward contracts
During the second quarter of 2008, the company settled all of its outstanding Deutsche Telekom (DT) forward contracts and disposed of its remaining DT shares. In the quarter, interest and dividend income decreased $130.3 million primarily due to a $118 million decrease in DT dividend income as a result of the disposition of DT shares prior to the 2008 dividend by DT. Additionally, interest expense decreased $19.7 million due to the settlement of the variable prepaid forward contracts. In the second quarter of 2007, the company recorded a $220.2 million loss related to its DT, Vodafone Group Plc and VeriSign marketable equity securities and related variable prepaid forward contracts.
2
Guidance
Guidance for the year ending Dec. 31, 2008 is as follows. There can be no assurance that final results will not differ materially from this guidance.
U.S. Cellular 2008 guidance as of Aug. 7, 2008 is as follows:
Net Retail Customer Additions | | 175,000 - 225,000 |
Service Revenues | | $3.9 - 4.0 billion* |
Operating Income | | $385 - 435 million |
Depreciation, Amortization & Accretion** | | Approx. $615 million* |
Capital Expenditures | | $525 - 575 million |
* Unchanged from guidance issued on May 7, 2008
** Includes losses on exchanges and disposals of assets
TDS Telecom (ILEC and CLEC) 2008 guidance as of Aug. 7, 2008 is as follows and remains unchanged from previous guidance issued on May 7, 2008:
Operating Revenues | | $810 - 840 million |
Operating Income | | $110 - 140 million |
Depreciation, Amortization & Accretion | | Approx. $160 million |
Capital Expenditures | | $130 - 160 million |
This guidance represents the views of management as of August 7, 2008 and should not be assumed to be accurate as of any other date. TDS undertakes no legal duty to update such information, whether as a result of new information, future events, or otherwise.
TDS special common share repurchase summary
In 2007, the TDS Board of Directors authorized the repurchase of up to $250 million in special common shares. As of June 30, 2008, $38.7 million remained under the authorization.
Repurchase Period | | # Shares | | Price (in millions) | |
2008 (second quarter) | | 1,015,650 | | $ | 39.6 | |
2008 (first quarter) | | 1,041,016 | | $ | 45.1 | |
2007 (full year) | | 2,076,979 | | $ | 126.7 | |
Total | | 4,133,645 | | $ | 211.3 | |
Conference call information
TDS will hold a conference call on August 7, 2008 at 10:00 a.m. Chicago time.
· Access the live call online at http://www.videonewswire.com/event.asp?id=50620 or on the Conference Calls page of www.teldta.com.
· Access the call by phone at 800/723-6498 (US/Canada) and use conference ID 6948709.
Before the call, certain financial and statistical information to be discussed during the call will be posted to the Conference Calls page of www.teldta.com, together with reconciliations to generally accepted accounting principles (GAAP) of any non-GAAP information to be disclosed. The call will be archived on the Conference Calls page of www.teldta.com.
About TDS
Telephone and Data Systems, Inc. (TDS), a Fortune 500® company, provides wireless, local and long-distance telephone, and broadband services to nearly 7.4 million customers in 36 states through its business units, U.S. Cellular (wireless) and TDS Telecom (wireline). Founded in 1969 and headquartered in Chicago, TDS employed 11,700 full-time equivalent employees as of June 30, 2008. For more information about TDS, visit www.teldta.com.
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About U.S. Cellular®
United States Cellular Corporation, the nation’s sixth-largest, full-service wireless carrier, provides a comprehensive range of wireless products and services, excellent customer support, and a high-quality network to nearly 6.2 million customers in 26 states. The Chicago-based company employed 8,400 full-time equivalent associates as of June 30, 2008. For more information about U.S. Cellular, visit www.uscellular.com.
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 more recently launched markets; changes in the overall economy, competition, the access to and pricing of unbundled network elements, the state and federal telecommunications regulatory environment, and the value of assets and investments; adverse changes in the ratings afforded TDS and U.S. Cellular debt securities by accredited ratings organizations; industry consolidation; advances in telecommunications technology; uncertainty of access to the capital markets; risks and uncertainties relating to restatements and possible future restatements; ability to remediate the material weakness; pending and future litigation; changes in income tax rates, laws, regulations or rulings; acquisitions/divestitures of properties and/or licenses; and changes in customer growth rates, average monthly revenue per unit, churn rates, roaming revenue and terms, the availability of devices, or the mix of products and services offered by U.S. Cellular and TDS Telecom. 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.
4
UNITED STATES CELLULAR CORPORATION
SUMMARY OPERATING DATA
Quarter Ended | | 6/30/2008 | | 3/31/2008 | | 12/31/2007 | | 9/30/2007 | | 6/30/2007 | |
Total Population: | | | | | | | | | | | |
| | | | | | | | | | | |
Consolidated markets (1) | | 82,875,000 | | 82,846,000 | | 82,371,000 | | 81,841,000 | | 81,581,000 | |
| | | | | | | | | | | |
Consolidated operating markets (1) | | 45,493,000 | | 45,262,000 | | 44,955,000 | | 44,955,000 | | 44,955,000 | |
All customers: | | | | | | | | | | | |
Customer units (2) | | 6,194,000 | | 6,175,000 | | 6,102,000 | | 6,058,000 | | 6,010,000 | |
Gross customer unit additions | | 365,000 | | 409,000 | | 436,000 | | 447,000 | | 418,000 | |
Net customer unit additions | | 16,000 | | 74,000 | | 44,000 | | 48,000 | | 37,000 | |
Market penetration at end of period: | | | | | | | | | | | |
Consolidated markets (3) | | 7.5 | % | 7.5 | % | 7.4 | % | 7.4 | % | 7.4 | % |
Consolidated operating markets (3) | | 13.6 | % | 13.6 | % | 13.6 | % | 13.5 | % | 13.4 | % |
Retail customers: | | | | | | | | | | | |
Customer units (2) | | 5,677,000 | | 5,640,000 | | 5,564,000 | | 5,500,000 | | 5,448,000 | |
Gross customer unit additions | | 318,000 | | 360,000 | | 367,000 | | 374,000 | | 347,000 | |
Net customer unit additions | | 34,000 | | 85,000 | | 64,000 | | 52,000 | | 71,000 | |
| | | | | | | | | | | |
Cell sites in service | | 6,596 | | 6,452 | | 6,383 | | 6,255 | | 6,140 | |
Average monthly revenue per unit (4) | | $ | 53.27 | | $ | 52.24 | | $ | 52.57 | | $ | 52.73 | | $ | 50.42 | |
Retail service revenue per unit (4) | | $ | 45.62 | | $ | 45.30 | | $ | 45.45 | | $ | 45.02 | | $ | 43.87 | |
Inbound roaming revenue per unit (4) | | $ | 3.40 | | $ | 2.94 | | $ | 3.09 | | $ | 3.36 | | $ | 2.68 | |
Long-distance/other revenue per unit (4) | | $ | 4.25 | | $ | 4.00 | | $ | 4.03 | | $ | 4.35 | | $ | 3.87 | |
Minutes of use (MOU) (5) | | 1,012 | | 951 | | 908 | | 888 | | 858 | |
Retail postpay churn rate per month (6) | | 1.4 | % | 1.4 | % | 1.5 | % | 1.6 | % | 1.4 | % |
Construction Expenditures (000s) | | $ | 137,800 | | $ | 111,700 | | $ | 188,100 | | $ | 130,600 | | $ | 137,100 | |
(1) | | “Total population of consolidated markets” and “Total population of consolidated operating markets” are used only for the purposes of calculating market penetration of consolidated markets and consolidated operating markets, respectively, which is calculated by dividing customers by the total market population (without duplication of population in overlapping markets). |
(2) | | All customer units and Retail customer units as of June 30, 2008 include one time adjustments, resulting from a review of U.S. Cellular’s customer reporting procedures. |
(3) | | Calculated by dividing the number of wireless customers at the end of the period by the total population of consolidated markets and consolidated operating markets, respectively, as estimated by Claritas. |
(4) | | 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 | | $ | 987,352 | | $ | 962,094 | | $ | 957,896 | | $ | 954,540 | | $ | 906,218 | |
Components: | | | | | | | | | | | |
Retail service revenue during quarter | | 845,564 | | 834,213 | | 828,169 | | 814,948 | | 788,535 | |
Inbound roaming revenue during quarter | | 63,033 | | 54,089 | | 56,358 | | 60,843 | | 48,084 | |
Long-distance/other revenue during quarter | | 78,755 | | 73,792 | | 73,369 | | 78,749 | | 69,599 | |
| | | | | | | | | | | |
Divided by average customers during quarter (000s) | | 6,178 | | 6,139 | | 6,074 | | 6,034 | | 5,991 | |
Divided by three months in each quarter | | 3 | | 3 | | 3 | | 3 | | 3 | |
| | | | | | | | | | | |
Average monthly revenue per unit | | $ | 53.27 | | $ | 52.24 | | $ | 52.57 | | $ | 52.73 | | $ | 50.42 | |
Retail service revenue per unit | | $ | 45.62 | | $ | 45.30 | | $ | 45.45 | | $ | 45.02 | | $ | 43.87 | |
Inbound roaming revenue per unit | | $ | 3.40 | | $ | 2.94 | | $ | 3.09 | | $ | 3.36 | | $ | 2.68 | |
Long-distance/other revenue per unit | | $ | 4.25 | | $ | 4.00 | | $ | 4.03 | | $ | 4.35 | | $ | 3.87 | |
(5) | | Average monthly local minutes of use per customer (without roaming). |
(6) | | Retail postpay churn rate per month is calculated by dividing the total monthly retail postpay customer disconnects during the quarter by the average retail postpay customer base for the quarter. |
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TELEPHONE AND DATA SYSTEMS, INC.
SUMMARY OPERATING DATA
Quarter Ended | | 6/30/2008 | | 3/31/2008 | | 12/31/2007 | | 9/30/2007 | | 6/30/2007 | |
TDS Telecom | | | | | | | | | | | |
ILEC: | | | | | | | | | | | |
Access line equivalents(1) | | 774,300 | | 767,100 | | 762,700 | | 763,000 | | 761,200 | |
Access lines | | 577,000 | | 579,200 | | 585,600 | | 595,100 | | 601,600 | |
Digital Subscriber Lines (DSL) customers | | 164,100 | | 154,800 | | 143,500 | | 135,500 | | 127,400 | |
Long Distance customers | | 346,100 | | 344,900 | | 345,200 | | 346,400 | | 346,500 | |
Construction Expenditures (000s) | | $ | 22,800 | | $ | 14,600 | | $ | 41,300 | | $ | 23,500 | | $ | 30,900 | |
CLEC: | | | | | | | | | | | |
Access line equivalents (1) | | 417,200 | | 426,700 | | 435,000 | | 443,700 | | 448,400 | |
Percent of access lines on-switch | | 94.4 | % | 94.3 | % | 94.0 | % | 93.9 | % | 93.7 | % |
Digital Subscriber Lines (DSL) customers | | 42,500 | | 43,100 | | 43,300 | | 43,600 | | 43,800 | |
Construction Expenditures (000s) | | $ | 4,700 | | $ | 3,500 | | $ | 5,700 | | $ | 3,400 | | $ | 4,800 | |
(1) | | Equivalent access lines are the sum of physical access lines and high-capacity data lines adjusted to estimate the equivalent number of physical access lines in terms of capacity. A physical access line is the individual circuit connecting a customer to a telephone company’s central office facilities. |
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TELEPHONE AND DATA SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS HIGHLIGHTS
Three Months Ended June 30,
(Unaudited, dollars and shares in thousands, except per share amounts)
| | | | | | Increase (Decrease) | |
| | 2008 | | 2007 | | Amount | | Percent | |
Operating Revenues | | | | | | | | | |
U.S. Cellular | | $ | 1,060,592 | | $ | 971,646 | | $ | 88,946 | | 9.2 | % |
TDS Telecom | | 207,424 | | 216,301 | | (8,877 | ) | (4.1 | )% |
All Other(1) | | 6,335 | | 4,887 | | 1,448 | | 29.6 | % |
| | 1,274,351 | | 1,192,834 | | 81,517 | | 6.8 | % |
Operating Expenses | | | | | | | | | |
U.S. Cellular | | | | | | | | | |
Expenses excluding depreciation, amortization and accretion | | 791,213 | | 699,318 | | 91,895 | | 13.1 | % |
Depreciation, amortization and accretion | | 145,258 | | 146,024 | | (766 | ) | (0.5 | )% |
(Gain) Loss on asset disposals, net | | 6,219 | | 2,832 | | 3,387 | | N/M | |
| | 942,690 | | 848,174 | | 94,516 | | 11.1 | % |
TDS Telecom | | | | | | | | | |
Expenses excluding depreciation, amortization and accretion | | 132,911 | | 144,805 | | (11,894 | ) | (8.2 | )% |
Depreciation, amortization and accretion | | 39,071 | | 38,444 | | 627 | | 1.6 | % |
(Gain) Loss on asset disposals, net | | 219 | | — | | 219 | | N/M | |
| | 172,201 | | 183,249 | | (11,048 | ) | (6.0 | )% |
All Other (1) | | | | | | | | | |
Expenses excluding depreciation and amortization | | 6,020 | | 4,227 | | 1,793 | | 42.4 | % |
Depreciation and amortization | | 3,697 | | 3,229 | | 468 | | 14.5 | % |
| | 9,717 | | 7,456 | | 2,261 | | 30.3 | % |
| | | | | | | | | |
Total Operating Expenses | | 1,124,608 | | 1,038,879 | | 85,729 | | 8.3 | % |
Operating Income (Loss) | | | | | | | | | |
U.S. Cellular | | 117,902 | | 123,472 | | (5,570 | ) | (4.5 | )% |
TDS Telecom | | 35,223 | | 33,052 | | 2,171 | | 6.6 | % |
All Other (1) | | (3,382 | ) | (2,569 | ) | (813 | ) | (31.6 | )% |
| | 149,743 | | 153,955 | | (4,212 | ) | (2.7 | )% |
Investment and Other Income (Expense) | | | | | | | | | |
Equity in earnings of unconsolidated entities | | 22,909 | | 23,875 | | (966 | ) | (4.0 | )% |
Interest and dividend income | | 17,455 | | 147,768 | | (130,313 | ) | (88.2 | )% |
Gain (loss) on investments and financial instruments | | 3,088 | | (220,199 | ) | 223,287 | | N/M | |
Interest expense | | (35,570 | ) | (55,245 | ) | 19,675 | | 35.6 | % |
Other, net | | 1,902 | | (1,868 | ) | 3,770 | | N/M | |
| | 9,784 | | (105,669 | ) | 115,453 | | N/M | |
Income Before Income Taxes and Minority Interest | | 159,527 | | 48,286 | | 111,241 | | N/M | |
Income tax expense | | 53,261 | | 26,700 | | 26,561 | | 99.5 | % |
Income Before Minority Interest | | 106,266 | | 21,586 | | 84,680 | | N/M | |
Minority share of income | | (18,509 | ) | (30,213 | ) | 11,704 | | 38.7 | % |
Net Income (Loss) | | 87,757 | | (8,627 | ) | 96,384 | | N/M | |
Preferred dividend requirement | | (13 | ) | (13 | ) | — | | 0.0 | % |
Net Income (Loss) Available to Common | | $ | 87,744 | | $ | (8,640 | ) | $ | 96,384 | | N/M | |
| | | | | | | | | |
Basic Weighted Average Common Shares Outstanding | | 116,267 | | 117,031 | | (764 | ) | (0.7 | )% |
Basic Earnings (Loss) Per Share | | $ | 0.75 | | $ | (0.07 | ) | $ | 0.82 | | N/M | |
| | | | | | | | | |
Diluted Weighted Average Common Shares Outstanding | | 116,814 | | 117,031 | | (217 | ) | (0.2 | )% |
Diluted Earnings (Loss) Per Share | | $ | 0.75 | | $ | (0.08 | ) | $ | 0.83 | | N/M | |
(1) Consists of Suttle Straus printing and distribution operations and intercompany eliminations.
N/M - Percentage change not meaningful
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TELEPHONE AND DATA SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS HIGHLIGHTS
Six Months Ended June 30,
(Unaudited, dollars and shares in thousands, except per share amounts)
| | | | | | Increase/ (Decrease) | |
| | 2008 | | 2007 | | Amount | | Percent | |
Operating Revenues | | | | | | | | | |
U.S. Cellular | | $ | 2,098,448 | | $ | 1,906,320 | | $ | 192,128 | | 10.1 | % |
TDS Telecom | | 413,500 | | 433,923 | | (20,423 | ) | (4.7 | )% |
All Other(1) | | 11,504 | | 9,148 | | 2,356 | | 25.8 | % |
| | 2,523,452 | | 2,349,391 | | 174,061 | | 7.4 | % |
Operating Expenses | | | | | | | | | |
U.S. Cellular | | | | | | | | | |
Expenses excluding depreciation, amortization and accretion | | 1,563,900 | | 1,376,212 | | 187,688 | | 13.6 | % |
Depreciation, amortization and accretion | | 287,788 | | 291,976 | | (4,188 | ) | (1.4 | )% |
Loss on asset disposals, net | | 9,892 | | 6,137 | | 3,755 | | 61.2 | % |
| | 1,861,580 | | 1,674,325 | | 187,255 | | 11.2 | % |
TDS Telecom | | | | | | | | | |
Expenses excluding depreciation, amortization and accretion | | 261,717 | | 285,001 | | (23,284 | ) | (8.2 | )% |
Depreciation, amortization and accretion | | 78,579 | | 78,349 | | 230 | | 0.3 | % |
(Gain) on asset disposals, net | | 198 | | — | | 198 | | N/M | |
| | 340,494 | | 363,350 | | (22,856 | ) | (6.3 | )% |
All Other(1) | | | | | | | | | |
Expenses excluding depreciation and amortization | | 10,209 | | 9,588 | | 621 | | 6.5 | % |
Depreciation and amortization | | 7,817 | | 5,376 | | 2,441 | | 45.4 | % |
| | 18,026 | | 14,964 | | 3,062 | | 20.5 | % |
| | | | | | | | | |
Total Operating Expenses | | 2,220,100 | | 2,052,639 | | 167,461 | | 8.2 | % |
Operating Income (Loss) | | | | | | | | | |
U.S. Cellular | | 236,868 | | 231,995 | | 4,873 | | 2.1 | % |
TDS Telecom | | 73,006 | | 70,573 | | 2,433 | | 3.4 | % |
All Other (1) | | (6,522 | ) | (5,816 | ) | (706 | ) | (12.1 | )% |
| | 303,352 | | 296,752 | | 6,600 | | 2.2 | % |
Investment and Other Income (Expense) | | | | | | | | | |
Equity in earnings of unconsolidated entities | | 44,379 | | 47,571 | | (3,192 | ) | (6.7 | )% |
Interest and dividend income | | 27,201 | | 163,964 | | (136,763 | ) | (83.4 | )% |
Gain (loss) on investments and financial instruments | | (402 | ) | 35,671 | | (36,073 | ) | N/M | |
Interest expense | | (76,950 | ) | (113,046 | ) | 36,096 | | 31.9 | % |
Other, net | | 1,703 | | (4,092 | ) | 5,795 | | N/M | |
| | (4,069 | ) | 130,068 | | (134,137 | ) | N/M | |
Income Before Income Taxes and Minority Interest | | 299,283 | | 426,820 | | (127,537 | ) | (29.9 | )% |
Income tax expense | | 102,512 | | 167,938 | | (65,426 | ) | (39.0 | )% |
Income Before Minority Interest | | 196,771 | | 258,882 | | (62,111 | ) | (24.0 | )% |
Minority share of income | | (35,527 | ) | (48,184 | ) | 12,657 | | 26.3 | % |
Net Income | | 161,244 | | 210,698 | | (49,454 | ) | (23.5 | )% |
Preferred dividend requirement | | (26 | ) | (26 | ) | — | | 0.0 | % |
Net Income Available to Common | | $ | 161,218 | | $ | 210,672 | | $ | (49,454 | ) | (23.5 | )% |
| | | | | | | | | |
Basic Weighted Average Common Shares Outstanding | | 116,919 | | 116,935 | | (16 | ) | (0.0 | )% |
Basic Earnings Per Share | | $ | 1.38 | | $ | 1.80 | | $ | (0.42 | ) | (23.3 | )% |
| | | | | | | | | |
Diluted Weighted Average Common Shares Outstanding | | 117,500 | | 118,432 | | (932 | ) | (0.8 | )% |
Diluted Earnings Per Share | | $ | 1.37 | | $ | 1.76 | | $ | (0.39 | ) | (22.2 | )% |
(1) Consists of Suttle Straus printing and distribution operations and intercompany eliminations.
N/M - Percentage change not meaningful
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TELEPHONE AND DATA SYSTEMS, INC.
CONSOLIDATED BALANCE SHEET HIGHLIGHTS
(Unaudited, dollars in thousands)
ASSETS
| | June 30, | | December 31, | |
| | 2008 | | 2007 | |
Current Assets | | | | | |
Cash and cash equivalents | | $ | 1,125,163 | | $ | 1,174,446 | |
Marketable equity securities | | 32,020 | | 1,917,893 | |
Accounts receivable from customers and other | | 542,664 | | 530,421 | |
Inventory | | 126,083 | | 115,818 | |
Other current assets | | 144,569 | | 137,010 | |
| | 1,970,499 | | 3,875,588 | |
| | | | | |
Investments | | | | | |
Licenses | | 1,829,014 | | 1,516,629 | |
Goodwill | | 695,696 | | 679,129 | |
Customer lists | | 29,069 | | 25,851 | |
Investments in unconsolidated entities | | 209,053 | | 206,418 | |
Other investments | | 11,032 | | 11,509 | |
| | 2,773,864 | | 2,439,536 | |
| | | | | |
Property, Plant and Equipment, net | | | | | |
U.S. Cellular | | 2,566,940 | | 2,595,096 | |
TDS Telecom | | 888,521 | | 900,267 | |
Other | | 29,752 | | 29,739 | |
| | 3,485,213 | | 3,525,102 | |
| | | | | |
Other Assets and Deferred Charges | | 51,910 | | 53,917 | |
| | | | | |
Total Assets | | $ | 8,281,486 | | $ | 9,894,143 | |
9
TELEPHONE AND DATA SYSTEMS, INC.
CONSOLIDATED BALANCE SHEET HIGHLIGHTS
(Unaudited, dollars in thousands)
LIABILITIES AND STOCKHOLDERS’ EQUITY
| | June 30, | | December 31, | |
| | 2008 | | 2007 | |
Current Liabilities | | | | | |
Notes payable | | $ | 50,000 | | $ | — | |
Prepaid forward contracts | | — | | 1,005,512 | |
Current portion of long-term debt | | 4,390 | | 3,860 | |
Derivative liability | | — | | 711,692 | |
Accounts payable | | 307,572 | | 308,882 | |
Customer deposits and deferred revenues | | 176,574 | | 166,191 | |
Accrued interest | | 14,676 | | 18,456 | |
Accrued taxes | | 310,861 | | 40,439 | |
Accrued compensation | | 61,840 | | 91,703 | |
Net deferred income tax liability | | — | | 327,162 | |
Other current liabilities | | 122,877 | | 125,622 | |
| | 1,048,790 | | 2,799,519 | |
| | | | | |
Deferred Liabilities and Credits | | | | | |
Net deferred income tax liability | | 595,420 | | 555,593 | |
Asset retirement obligation | | 182,495 | | 173,468 | |
Other deferred liabilities and credits | | 149,726 | | 154,602 | |
| | 927,641 | | 883,663 | |
| | | | | |
Long-Term Debt | | 1,635,147 | | 1,632,226 | |
| | | | | |
Minority Interest in Subsidiaries | | 679,938 | | 651,537 | |
| | | | | |
Preferred Shares | | 860 | | 860 | |
| | | | | |
Common Stockholders’ Equity | | | | | |
Common Shares, $.01 par value | | 566 | | 566 | |
Special Common Shares, $.01 par value | | 630 | | 629 | |
Series A Common Shares, $.01 par value | | 65 | | 64 | |
Capital in excess of par value | | 2,055,677 | | 2,048,110 | |
Treasury Shares, at cost | | | | | |
Common Shares | | (118,506 | ) | (120,544 | ) |
Special Common Shares | | (283,682 | ) | (204,914 | ) |
Accumulated other comprehensive income | | 9,546 | | 511,776 | |
Retained earnings | | 2,324,814 | | 1,690,651 | |
| | 3,989,110 | | 3,926,338 | |
| | | | | |
Total Liabilities and Stockholders’ Equity | | $ | 8,281,486 | | $ | 9,894,143 | |
10
BALANCE SHEET HIGHLIGHTS
June 30, 2008
(Unaudited, dollars in thousands)
| | U.S. | | TDS | | TDS
Corporate | | Intercompany | | TDS | |
| | Cellular | | Telecom | | & Other | | Eliminations | | Consolidated | |
Cash and cash equivalents | | $ | 101,155 | | $ | 3,542 | | $ | 1,020,466 | | $ | — | | $ | 1,125,163 | |
Affiliated cash investments | | — | | 1,154,070 | | — | | (1,154,070 | ) | — | |
Marketable equity securities | | 16,508 | | — | | 15,512 | | — | | 32,020 | |
Notes receivable—affiliates | | — | | — | | 260,582 | | (260,582 | ) | — | |
| | $ | 117,663 | | $ | 1,157,612 | | $ | 1,296,560 | | $ | (1,414,652 | ) | $ | 1,157,183 | |
| | | | | | | | | | | |
Licenses, goodwill and customer lists | | $ | 2,299,097 | | $ | 417,827 | | $ | (163,145 | ) | $ | — | | $ | 2,553,779 | |
Investment in unconsolidated entities | | 157,162 | | 6,512 | | 50,711 | | (5,332 | ) | 209,053 | |
Other investments | | 4,359 | | 2,957 | | 3,716 | | — | | 11,032 | |
| | $ | 2,460,618 | | $ | 427,296 | | $ | (108,718 | ) | $ | (5,332 | ) | $ | 2,773,864 | |
| | | | | | | | | | | |
Property, Plant and Equipment, net | | $ | 2,566,940 | | $ | 888,521 | | $ | 29,752 | | $ | — | | $ | 3,485,213 | |
| | | | | | | | | | | |
Notes payable: external | | $ | 50,000 | | $ | — | | $ | — | | $ | — | | $ | 50,000 | |
| | | | | | | | | | | |
Long-term Debt: | | | | | | | | | | | |
Current portion | | $ | 455 | | $ | 474 | | $ | 1,418,113 | | $ | (1,414,652 | ) | $ | 4,390 | |
Non-current portion | | 1,007,054 | | 2,872 | | 625,221 | | — | | 1,635,147 | |
Total | | $ | 1,007,509 | | $ | 3,346 | | $ | 2,043,334 | | $ | (1,414,652 | ) | $ | 1,639,537 | |
| | | | | | | | | | | |
Preferred Shares | | $ | — | | $ | — | | $ | 860 | | $ | — | | $ | 860 | |
| | | | | | | | | | | |
Construction expenditures: | | | | | | | | | | | |
Quarter ended 6/30/08 | | $ | 137,810 | | $ | 27,511 | | $ | 1,275 | | — | | $ | 166,596 | |
Six months ended 6/30/08 | | $ | 249,500 | | $ | 45,593 | | $ | 3,968 | | — | | $ | 299,061 | |
11
TDS Telecom Highlights
Three Months Ended June 30,
(Unaudited, dollars in thousands)
| | | | | | Increase (Decrease) | |
| | 2008 | | 2007 | | Amount | | Percent | |
Local Telephone Operations | | | | | | | | | |
Operating Revenues | | | | | | | | | |
Voice | | $ | 50,925 | | $ | 56,447 | | $ | (5,522 | ) | (9.8 | )% |
Data | | 21,738 | | 17,541 | | 4,197 | | 23.9 | % |
Network access | | 70,727 | | 77,029 | | (6,302 | ) | (8.2 | )% |
Miscellaneous | | 9,809 | | 8,086 | | 1,723 | | 21.3 | % |
| | 153,199 | | 159,103 | | (5,904 | ) | (3.7 | )% |
Operating Expenses | | | | | | | | | |
Cost of services and products | | 46,873 | | 50,717 | | (3,844 | ) | (7.6 | )% |
Selling, general and administrative expenses | | 41,416 | | 44,060 | | (2,644 | ) | (6.0 | )% |
Depreciation, amortization and accretion | | 33,502 | | 32,224 | | 1,278 | | 4.0 | % |
(Gain) on asset disposals | | (25 | ) | — | | (25 | ) | N/M | |
| | 121,766 | | 127,001 | | (5,235 | ) | (4.1 | )% |
| | | | | | | | | |
Operating Income | | $ | 31,433 | | $ | 32,102 | | $ | (669 | ) | (2.1 | )% |
| | | | | | | | | |
Competitive Local Exchange Carrier Operations | | | | | | | | | |
Revenues | | $ | 55,888 | | $ | 58,767 | | $ | (2,879 | ) | (4.9 | )% |
| | | | | | | | | |
Expenses excluding depreciation, amortization and accretion | | 46,285 | | 51,597 | | (5,312 | ) | (10.3 | )% |
Depreciation, amortization and accretion | | 5,569 | | 6,220 | | (651 | ) | (10.5 | )% |
Loss on asset disposals | | 244 | | — | | 244 | | N/M | |
| | 52,098 | | 57,817 | | (5,719 | ) | (9.9 | )% |
| | | | | | | | | |
Operating Income | | $ | 3,790 | | $ | 950 | | $ | 2,840 | | N/M | |
| | | | | | | | | |
Intercompany revenues | | (1,663 | ) | (1,569 | ) | (94 | ) | N/M | |
Intercompany expenses | | (1,663 | ) | (1,569 | ) | (94 | ) | N/M | |
| | — | | — | | — | | | |
| | | | | | | | | |
Total TDS Telecom Operating Income | | $ | 35,223 | | $ | 33,052 | | $ | 2,171 | | 6.6 | % |
N/M - Percentage change not meaningful.
12
TDS Telecom Highlights
Six Months Ended June 30,
(Unaudited, dollars in thousands)
| | | | | | Increase (Decrease) | |
| | 2008 | | 2007 | | Amount | | Percent | |
Local Telephone Operations | | | | | | | | | |
Operating Revenues | | | | | | | | | |
Voice | | $ | 102,501 | | $ | 113,969 | | $ | (11,468 | ) | (10.1 | )% |
Data | | 42,924 | | 33,963 | | 8,961 | | 26.4 | % |
Network access | | 140,809 | | 153,202 | | (12,393 | ) | (8.1 | )% |
Miscellaneous | | 18,780 | | 15,561 | | 3,219 | | 20.7 | % |
| | 305,014 | | 316,695 | | (11,681 | ) | (3.7 | )% |
Operating Expenses | | | | | | | | | |
Cost of services and products | | 91,707 | | 99,814 | | (8,107 | ) | (8.1 | )% |
Selling, general and administrative expenses | | 83,897 | | 85,919 | | (2,022 | ) | (2.4 | )% |
Depreciation, amortization and accretion | | 67,126 | | 66,270 | | 856 | | 1.3 | % |
(Gain) on asset disposals | | (46 | ) | — | | (46 | ) | N/M | |
| | 242,684 | | 252,003 | | (9,319 | ) | (3.7 | )% |
| | | | | | | | | |
Operating Income | | $ | 62,330 | | $ | 64,692 | | $ | (2,362 | ) | (3.7 | )% |
| | | | | | | | | |
Competitive Local Exchange Carrier Operations | | | | | | | | | |
Revenues | | $ | 112,017 | | $ | 120,117 | | $ | (8,100 | ) | (6.7 | )% |
| | | | | | | | | |
Expenses excluding depreciation, amortization and accretion | | 89,644 | | 102,157 | | (12,513 | ) | (12.2 | )% |
Depreciation, amortization and accretion | | 11,453 | | 12,079 | | (626 | ) | (5.2 | )% |
Loss on asset disposals | | 244 | | — | | 244 | | N/M | |
| | 101,341 | | 114,236 | | (12,895 | ) | (11.3 | )% |
| | | | | | | | | |
Operating Income | | $ | 10,676 | | $ | 5,881 | | $ | 4,795 | | 81.5 | % |
| | | | | | | | | |
Intercompany revenues | | (3,531 | ) | (2,889 | ) | (642 | ) | N/M | |
Intercompany expenses | | (3,531 | ) | (2,889 | ) | (642 | ) | N/M | |
| | — | | — | | — | | | |
| | | | | | | | | |
Total TDS Telecom Operating Income | | $ | 73,006 | | $ | 70,573 | | $ | 2,433 | | 3.4 | % |
N/M - Percentage change not meaningful.
13
TELEPHONE AND DATA SYSTEMS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
Six Months Ended June 30,
(Unaudited, dollars in thousands)
| | 2008 | | 2007 | |
| | (Dollars in thousands) | |
Cash Flows from Operating Activities | | | | | |
Net income | | $ | 161,244 | | $ | 210,698 | |
Add (Deduct) adjustments to reconcile net income to net cash provided by operating activities | | | | | |
Depreciation, amortization and accretion | | 374,184 | | 375,701 | |
Bad debts expense | | 36,806 | | 26,991 | |
Stock-based compensation expense | | 9,022 | | 10,879 | |
Deferred income taxes | | (316,269 | ) | (61,814 | ) |
(Gain) loss on investments and financial instruments | | 402 | | (35,671 | ) |
Equity in earnings of unconsolidated entities | | (44,379 | ) | (47,571 | ) |
Distributions from unconsolidated entities | | 45,810 | | 43,435 | |
Minority share of income | | 35,527 | | 48,184 | |
Loss on asset disposals, net | | 10,090 | | 6,137 | |
Noncash interest expense | | 7,930 | | 10,635 | |
Other noncash expense | | 247 | | 1,788 | |
Excess tax benefit from stock awards | | (1,706 | ) | (17,598 | ) |
Other operating activities | | (2,350 | ) | (5,000 | ) |
Changes in assets and liabilities | | | | | |
Change in accounts receivable | | (59,440 | ) | (43,884 | ) |
Change in inventory | | (20,830 | ) | (1,213 | ) |
Change in accounts payable | | (4,171 | ) | (5,792 | ) |
Change in customer deposits and deferred revenues | | 10,303 | | 19,469 | |
Change in accrued taxes | | 304,231 | | 128,672 | |
Change in accrued interest | | (3,780 | ) | (712 | ) |
Change in other assets and liabilities | | (47,432 | ) | (44,784 | ) |
| | 495,439 | | 618,550 | |
| | | | | |
Cash Flows from Investing Activities | | | | | |
Additions to property, plant and equipment | | (299,061 | ) | (304,559 | ) |
Cash paid for acquisitions | | (334,350 | ) | (20,569 | ) |
Cash received from divestitures | | 6,838 | | 4,277 | |
Proceeds from sale of investments | | 226,644 | | 10,547 | |
Settlement of derivative liabilities | | (17,404 | ) | — | |
Other investing activities | | (934 | ) | (242 | ) |
| | (418,267 | ) | (310,546 | ) |
| | | | | |
Cash Flows from Financing Activities | | | | | |
Issuance of notes payable | | 100,000 | | 25,000 | |
Issuance of long-term debt | | — | | 2,857 | |
Repayment of notes payable | | (50,000 | ) | (60,000 | ) |
Repayment of variable prepaid forward contracts | | (47,357 | ) | — | |
Repayment of long-term debt | | (6,442 | ) | (1,679 | ) |
TDS Common Shares and Special Common Shares reissued for benefit plans, net of tax payments | | 1,494 | | 74,339 | |
U.S. Cellular Common Shares reissued for benefit plans, net of tax payments | | (1,878 | ) | 9,223 | |
Excess tax benefit from stock awards | | 1,706 | | 17,598 | |
Repurchase of TDS Special Common Shares | | (83,013 | ) | (7,036 | ) |
Repurchase of U.S. Cellular Common Shares | | (14,516 | ) | (49,057 | ) |
Dividends paid | | (23,922 | ) | (22,798 | ) |
Distributions to minority partners | | (4,594 | ) | (4,676 | ) |
Other financing activities | | 2,067 | | (1,869 | ) |
| | (126,455 | ) | (18,098 | ) |
| | | | | |
Net Increase (Decrease) in Cash and Cash Equivalents | | (49,283 | ) | 289,906 | |
| | | | | |
Cash and Cash Equivalents - | | | | | |
Beginning of period | | 1,174,446 | | 1,013,325 | |
End of period | | $ | 1,125,163 | | $ | 1,303,231 | |
14
