TDS Reports Third Quarter 2005 Operating Results and Restated Results for Certain Prior Periods28 April 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 with renewed dedication to fulfilling 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 SpeedTalk(SM) 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) Study(SM). 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 Study(SM). 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 http://www.teldta.com or on the website of the SEC at http://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.
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: http://www.teldta.com TDS Telecom: http://www.tdstelecom.com
USM: http://www.uscellular.com TDS Metrocom: http://www.tdsmetro.com
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
activa-
tions 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
activa-
tions 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 includes
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 http://www.uscellular.com .
TELEPHONE AND DATA SYSTEMS, INC.
SUMMARY OPERATING DATA
9/30/2005 6/30/2005 3/31/2005 12/31/2004 9/30/2004
Quarter Ended
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.
TELEPHONE AND DATA SYSTEMS, INC.
FINANCIAL HIGHLIGHTS
Three Months Ended September 30,
(Unaudited, dollars in thousands, except per share amounts)
2004 Increase
(As (Decrease)
2005 Restated) Amount Percent
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
TELEPHONE AND DATA SYSTEMS, INC.
FINANCIAL HIGHLIGHTS
Nine Months Ended September 30,
(Unaudited, dollars in thousands, except per share amounts)
2004 Increase (Decrease)
2005 (As Restated) Amount Percent
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
TELEPHONE AND DATA SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS HIGHLIGHTS
(Unaudited, dollars in thousands)
ASSETS
December 31,
September 30, 2004
2005 (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
TELEPHONE AND DATA SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS HIGHLIGHTS
(Unaudited, dollars in thousands)
LIABILITIES AND STOCKHOLDERS' EQUITY
December 31,
September 30, 2004
2005 (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
BALANCE SHEET HIGHLIGHTS
SEPTEMBER 30, 2005
(Unaudited, dollars in thousands)
TDS
U.S. 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
TDS Telecom Highlights
Three Months Ended September 30,
(Unaudited, dollars in thousands)
2004 Increase
(As (Decrease)
2005 Restated) Amount Percent
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.
TDS Telecom Highlights
Nine Months Ended September 30,
(Unaudited, dollars in thousands)
2004 Increase
(As (Decrease)
2005 Restated) Amount Percent
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.
TELEPHONE AND DATA SYSTEMS, INC.
FINANCIAL HIGHLIGHTS
Year Ended December 31,
(Unaudited, dollars in thousands, except per share amounts)
2004 2003
As As
Previously As Previously As
Reported Restated Reported Restated
Operating Revenues $3,720,389 $3,703,920 $3,445,216 $3,455,174
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
Selling, general
and administrative 1,420,967 1,380,718 1,298,294 1,293,853
Depreciation,
amortization and
accretion 667,956 670,731 595,732 598,336
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
Operating Income 220,751 221,999 267,888 261,590
Investment and
Other Income (Expense)
Investment income 69,623 64,900 53,154 52,179
Interest and
dividend income 27,755 28,803 19,918 20,140
Gain (loss) on
investments 36,854 38,209 (10,200) (10,200)
Interest expense (198,706) (198,706) (171,391) (171,391)
Minority interest
in income of
subsidiary trust -- -- (16,678) (16,678)
Other income
(expense), net (6,931) (6,592) (11,955) (13,880)
Investment and Other
Income (Expense) (71,405) (73,386) (137,152) (139,830)
Income (Loss) from
Continuing Operations
before Income Taxes
and Minority Interest 149,346 148,613 130,736 121,760
Income tax expense
(benefit) 78,651 59,251 50,350 58,262
Income (Loss) From
Continuing Operations
before Minority
Interest 70,695 89,362 80,386 63,498
Minority Share
of Income (28,053) (28,872) (20,380) (17,979)
Income (Loss) From
Continuing Operations 42,642 60,490 60,006 45,519
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
Cumulative Effect of
Accounting Change, net
of tax and minority
interest -- -- (11,789) (11,789)
Net Income (Loss) 49,004 66,852 46,608 32,121
Preferred dividend
requirement (203) (203) (417) (417)
Net Income (Loss)
Available to Common $48,801 $66,649 $46,191 $31,704
Basic Earnings
per Share: (1)
Income (Loss) from
Continuing Operations $0.38 $0.53 $0.51 $0.38
Discontinued Operations 0.05 0.05 (0.01) (0.01)
Cumulative Effect
of Accounting Change -- -- (0.10) (0.10)
Net Income (Loss)
Available to Common $0.43 $0.58 $0.40 $0.27
Diluted Earnings
per Share: (1)
Income (Loss) from
Continuing Operations $0.37 $0.52 $0.51 $0.38
Discontinued Operations 0.05 0.05 (0.01) (0.01)
Cumulative Effect
of Accounting Change -- -- (0.10) (0.10)
Net Income (Loss)
Available to Common $0.42 $0.57 $0.40 $0.27
2002
As
Previously As
Reported Restated
Operating Revenues $2,998,474 $3,012,547
Operating Expenses
Cost of services and products
(excluding depreciation,
amortization and accretion
shown separately below) 962,760 979,988
Selling, general and administrative 1,138,914 1,133,347
Depreciation, amortization
and accretion 510,445 512,931
Loss on impairment of intangible assets - -
Loss on impairment of long-lived assets - -
(Gain) loss on assets held for sale - -
Total Operating Expenses 2,612,119 2,626,266
Operating Income 386,355 386,281
Investment and Other Income (Expense)
Investment income 43,675 43,799
Interest and dividend income 57,330 57,705
Gain (loss) on investments (1,888,391) (1,888,391)
Interest expense (132,224) (132,224)
Minority interest in income of
subsidiary trust (24,810) (24,810)
Other income (expense), net 2,396 986
Investment and Other Income (Expense) (1,942,024) (1,942,935)
Income (Loss) from Continuing Operations
before Income Taxes and Minority
Interest (1,555,669) (1,556,654)
Income tax expense (benefit) (577,000) (611,183)
Income (Loss) From Continuing Operations
before Minority Interest (978,669) (945,471)
Minority Share of Income (9,068) (7,578)
Income (Loss) From Continuing Operations (987,737) (953,049)
Discontinued Operations, net of tax - -
Income (Loss) before Cumulative Effect
of Accounting Change (987,737) (953,049)
Cumulative Effect of Accounting
Change, net of tax and minority
interest (7,035) (7,035)
Net Income (Loss) (994,772) (960,084)
Preferred dividend requirement (427) (427)
Net Income (Loss) Available to Common $(995,199) $(960,511)
Basic Earnings per Share:(1)
Income (Loss) from Continuing Operations $(8.43) $(8.13)
Discontinued Operations - -
Cumulative Effect of Accounting Change (0.06) (0.06)
Net Income (Loss) Available to Common $(8.49) $(8.19)
Diluted Earnings per Share:(1)
Income (Loss) from Continuing Operations $(8.43) $(8.13)
Discontinued Operations - -
Cumulative Effect of Accounting Change (0.06) (0.06)
Net Income (Loss) Available to Common $(8.49) $(8.19)
(1) Earnings per Share amounts have been adjusted to give effect to the
Special Common Share dividend in May 2005.
TELEPHONE AND DATA SYSTEMS, INC.
CONSOLIDATED BALANCE SHEET HIGHLIGHTS
(Unaudited, dollars in thousands)
December 31, 2004 December 31, 2003
As Previously As As Previously As
Reported Restated Reported 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
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 As
Previously As Previously As
Reported Restated Reported 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
TELEPHONE AND DATA SYSTEMS, INC.
CONSOLIDATED BALANCE SHEET HIGHLIGHTS
(Unaudited, dollars in thousands)
March 31, 2005 June 30, 2005
As Previously As As Previously As
Reported Restated Reported 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
TELEPHONE AND DATA SYSTEMS, INC.
CONSOLIDATED BALANCE SHEET HIGHLIGHTS
(Unaudited, dollars in thousands)
March 31, 2005 June 30, 2005
As Previously As As Previously As
Reported Restated Reported 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
Source: prnewswire
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