Note: Comparisons are year over year unless otherwise noted.
1Q 2009 Highlights
Enterprise/TDS Corporate
- Operating revenues increased to $1,256.6 million.
- Repurchased 504,026 TDS Special Common Shares for $12.1 million.
Wireless/U.S. Cellular®
- 2 percent increase in service revenues, to $981.9 million.
- 36 percent increase in data revenues, to $157.0 million, representing 16 percent of service revenues.
- 1 percent increase in ARPU (average monthly service revenue per unit), to $52.54.
- Postpay churn remained low at 1.5 percent; postpay customers comprised 95 percent of retail customers.
- 8 percent increase in cell sites in service, to 6,942, of which approximately 4,000 are company-owned.
- Repurchased 367,000 common shares for $13.3 million to offset dilution from employee benefit plans.
Wireline/TDS Telecom®
- 21 percent increase in ILEC high-speed data customers, to 188,100; CLEC high-speed data customers totaled 39,700.
- 18 percent increase in ILEC data revenues, to $25.1 million.
- ILEC equivalent access lines increased 1 percent to 777,100, due in part to acquisitions; ILEC physical access lines decreased to 556,800.
CHICAGO, May 6 /PRNewswire-FirstCall/ -- Telephone and Data Systems, Inc. (NYSE: TDS - News, TDS.S - News) reported operating revenues of $1,256.6 million for the first quarter of 2009, an increase of less than 1 percent from $1,249.1 million in the comparable period one year ago.
"The TDS companies started the year with solid results," said LeRoy T. Carlson, Jr., TDS president and CEO. "Both our wireless business, U.S. Cellular, and our broadband and wireline business, TDS Telecom, made good progress on their core strategies and had gains in key areas.
"U.S. Cellular added customers in its target postpay segment, which makes up 95 percent of its retail base," added Carlson. "More U.S. Cellular customers are buying premium handsets and using more data, which increased data revenues and service revenues and resulted in our fourteenth-consecutive quarter of year-over-year ARPU growth.
"U.S. Cellular expects data revenues to continue to grow as it brings 3G speeds to more of its cell sites," continued Carlson, "and more customers have access to a high-quality and high-speed mobile broadband experience.
"TDS Telecom achieved year-over-year double-digit growth in the number of broadband customers and data revenues in its ILEC business," said Carlson. "The company's broadband network has been extended so that, at the end of the quarter, 91 percent of ILEC access lines were able to provide high-speed data. Existing broadband customers continue to migrate to higher data speeds, resulting in higher ARPU. TDS Telecom's consumer service and product bundles (including voice, broadband and video) are popular and are helping the company achieve greater customer penetration. The CLEC business is also increasing ARPU, by focusing on managedIP hosted solutions for commercial customers.
"The TDS companies are building long-term growth and value creation by offering high-demand services and products that run on fast, reliable networks, backed by the security of dedicated customer support organizations," added Carlson. "In addition, TDS was recently named one of the '100 Most Trustworthy Companies' in the United States by Forbes. We are proud of this distinction."
Guidance
Guidance for the year ending Dec. 31, 2009 is as follows. Guidance is unchanged from Feb. 26, 2009. There can be no assurance that final results will not differ materially from this guidance.
U.S. Cellular 2009 guidance as of May 6, 2009 is as follows:
Net Retail Customer Additions 75,000-150,000
Service Revenue $3,900-$4,000 million
Operating Income(1) $275-$350 million
Depreciation, Amortization & Accretion(1) Approx. $600 million
Capital Expenditures Approx. $575 million
TDS Telecom (ILEC and CLEC) 2009 guidance as of May 6, 2009 is as follows:
Operating Revenues $780-$820 million
Operating Income(1) $100-$130 million
Depreciation, Amortization & Accretion(1) Approx. $160 million
Capital Expenditures Approx. $130 million
(1) Includes losses on disposals of assets.
This guidance represents the views of management as of May 6, 2009 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.
Stock Repurchase Summary
The following represents repurchases of both TDS common shares and TDS special common shares.
Repurchase Period # Shares Cost (in millions)
2009 (first quarter) 504,026 $12.1
2008 (full year) 5,861,822 $199.6
Total 2009 and 2008 6,365,848 $211.7
Conference call information
TDS will hold a conference call on May 6, 2009 at 10:00 a.m. Chicago time.
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 12,570 people as of March 31, 2009. For more information about TDS, visit www.teldta.com.
About U.S. Cellular®
United States Cellular Corporation, the nation's fifth-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 8,800 full-time equivalent associates as of March 31, 2009. 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 grow its markets; the current credit crisis affecting financial markets, and its effects on the overall economy; competition; the access to and pricing of unbundled network elements; the ability to obtain or maintain roaming arrangements with other carriers; the state and federal telecommunications regulatory environment; 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; 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 handset 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.
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
As previously announced, TDS(TM) will hold a teleconference May 6, 2009 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.
UNITED STATES CELLULAR CORPORATION
SUMMARY OPERATING DATA
Quarter Ended 3/31/2009 12/31/2008 9/30/2008 6/30/2008 3/31/2008
Total
Population:
Consolidated
markets(1) 83,726,000 83,014,000 82,875,000 82,875,000 82,846,000
Consolidated
operating
markets(1) 46,306,000 46,009,000 45,493,000 45,493,000 45,262,000
All customers:
Total at end
of period 6,243,000 6,196,000 6,176,000 6,194,000 6,175,000
Gross
additions 404,000 395,000 367,000 365,000 408,000
Net additions
(losses) 47,000 20,000 (18,000) 16,000 73,000
Market penetration
at end of period:
Consolidated
markets(2) 7.5% 7.5% 7.5% 7.5% 7.5%
Consolidated
operating
markets(2) 13.5% 13.5% 13.6% 13.6% 13.6%
Retail customers:
Total at end
of period 5,770,000 5,707,000 5,674,000 5,677,000 5,640,000
Gross
additions 366,000 352,000 325,000 318,000 360,000
Net postpay
additions 60,000 41,000 12,000 33,000 72,000
Net prepay
additions
(losses) 3,000 (8,000) (15,000) 1,000 13,000
Cell sites in
service 6,942 6,877 6,716 6,596 6,452
Average monthly
revenue per
unit(3) $52.54 $52.71 $54.59 $53.27 $52.24
Retail service
revenue per
unit(3) (5) $46.78 $46.43 $46.97 $46.53 $46.18
Inbound roaming
revenue per
unit(3) (5) $3.21 $4.25 $5.03 $4.54 $3.95
Other revenue
per unit(3) (5) $2.55 $2.03 $2.59 $2.20 $2.11
Postpay churn
rate(4) 1.5% 1.6% 1.6% 1.4% 1.4%
Construction
expenditures
(000s) $137,700 $190,000 $146,100 $137,800 $111,700
(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) 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.
(3) Per unit revenue measurements are derived from Service Revenues as
reported in Financial Highlights for each respective quarter as follows:
Service Revenues
(000s) $981,874 $976,952 $1,013,928 $987,352 $962,094
Components:
Retail service
revenue (000s) 874,098 860,503 872,397 862,392 850,470
Inbound roaming
revenue (000s) 60,057 78,768 93,472 84,201 72,755
Other revenue
(000s) 47,719 37,681 48,059 40,759 38,869
Divided by average
customers (000s) 6,229 6,178 6,191 6,178 6,139
Divided by three
months in each
quarter 3 3 3 3 3
Average monthly
revenue per unit $52.54 $52.71 $54.59 $53.27 $52.24
Retail service
revenue per unit $46.78 $46.43 $46.97 $46.53 $46.18
Inbound roaming
revenue per unit $3.21 $4.25 $5.03 $4.54 $3.95
Other revenue per
unit $2.55 $2.03 $2.59 $2.20 $2.11
(4) Postpay churn rate is calculated by dividing the total postpay
customer disconnects during the quarter by the average postpay customer
base for the quarter.
(5) Long-distance revenue was reclassified in the fourth quarter of 2008
from Long-distance/Other revenue to Retail service revenue and Inbound
roaming revenue. Previous quarters have been adjusted to reflect this
change.
TELEPHONE AND DATA SYSTEMS, INC.
SUMMARY OPERATING DATA
Quarter Ended 3/31/2009 12/31/2008 9/30/2008 6/30/2008 3/31/2008
TDS Telecom
ILEC:
Access line
equivalents(1) 777,100 776,700 773,700 774,300 767,100
Physical access
lines(2) 556,800 566,200 568,900 577,000 579,200
High-speed data
customers(3) 188,100 178,300 171,300 164,400 155,000
Managed IP
stations(4) 1,000 600 500 300 200
Long-distance
customers 348,900 347,000 346,600 346,100 344,900
Construction
expenditures
(000s) $21,400 $50,200 $33,300 $22,800 $14,600
CLEC:
Access line
equivalents (1) 381,000 393,000 402,600 417,200 426,700
High-speed data
customers 39,700 40,800 41,900 43,100 43,700
Managed IP
stations(4) 4,100 2,100 600 500 400
Construction
expenditures
(000s) $5,000 $7,200 $4,500 $4,700 $3,500
(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 plus the number of managed IP
stations.
(2) A physical access line is the individual circuit connecting a customer
to a telephone company's central office facilities.
(3) High-speed data customers are the number of customers provided high
capacity data circuits via various technologies including digital
subscriber line ("DSL"), managed Internet Protocol ("Managed IP"), and
dedicated Internet circuit technologies.
(4) Managed IP stations are the number of telephone handsets provided
communications using packet networking technology.
TELEPHONE AND DATA SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS HIGHLIGHTS
Three Months Ended March 31,
(Unaudited, dollars and shares in thousands, except per share amounts)
Increase/(Decrease)
2009 2008 Amount Percent
Operating revenues
U.S. Cellular $1,052,764 $1,037,856 $14,908 1%
TDS Telecom 199,302 206,076 (6,774) (3)%
All Other(1) 4,580 5,169 (589) (11)%
1,256,646 1,249,101 7,545 1%
Operating expenses
U.S. Cellular
Expenses excluding
depreciation, amortization
and accretion 798,152 772,687 25,465 3%
Depreciation, amortization
and accretion 137,651 142,530 (4,879) (3)%
Loss on asset disposals, net 2,191 3,673 (1,482) (40)%
937,994 918,890 19,104 2%
TDS Telecom
Expenses excluding
depreciation, amortization
and accretion 130,745 128,806 1,939 2%
Depreciation, amortization
and accretion 41,863 39,508 2,355 6%
Loss on asset disposals, net 215 (21) 236 N/M
172,823 168,293 4,530 3%
All Other(1)
Expenses excluding
depreciation and amortization 6,358 4,189 2,169 52%
Depreciation and amortization 3,252 4,120 (868) (21)%
Loss on asset disposals, net 10 --- 10 N/M
9,620 8,309 1,311 16%
Total Operating
Expenses 1,120,437 1,095,492 24,945 2%
Operating income (loss)
U.S. Cellular 114,770 118,966 (4,196) (4)%
TDS Telecom 26,479 37,783 (11,304) (30)%
All Other (1) (5,040) (3,140) (1,900) (61)%
136,209 153,609 (17,400) (11)%
Investment and other income
(expense)
Equity in earnings of
unconsolidated entities 25,337 21,470 3,867 18%
Interest and dividend income 2,072 9,746 (7,674) (79)%
Interest expense (30,105) (41,380) 11,275 27%
Loss on investments and financial
instruments --- (3,490) 3,490 N/M
Other, net 499 (199) 698 N/M
Total investment and other
income (expense) (2,197) (13,853) 11,656 84%
Income before income taxes 134,012 139,756 (5,744) (4)%
Income tax expense 40,638 49,251 (8,613) (17)%
Net income 93,374 90,505 2,869 3%
Less: Net income attributable to
noncontrolling interests,
net of tax (21,366) (17,018) (4,348) (26)%
Net income attributable to TDS 72,008 73,487 (1,479) (2)%
Preferred dividend requirement (13) (13) --- 0%
Net income available to common $71,995 $73,474 $(1,479) (2)%
Basic weighted average shares
outstanding 112,238 117,570 (5,332) (5)%
Basic earnings per share
attributable to TDS
shareholders $0.64 $0.62 0.02 3%
Diluted weighted average shares
outstanding 112,427 118,191 (5,764) (5)%
Diluted earnings per share
attributable to TDS
shareholders $0.64 $0.62 $0.02 3%
(1) Consists of Suttle-Straus printing and distribution operations,
corporate operations and intercompany eliminations.
N/M - Percentage change not meaningful
TELEPHONE AND DATA SYSTEMS, INC.
CONSOLIDATED BALANCE SHEET HIGHLIGHTS
(Unaudited, dollars in thousands)
ASSETS
March 31, December 31,
2009 2008
Current assets
Cash and cash equivalents $756,267 $777,309
Short-term investments 53,688 27,705
Accounts receivable from
customers and other 502,893 516,849
Inventory 113,384 122,377
Other current assets 148,740 184,696
1,574,972 1,628,936
Investments
Licenses 1,453,690 1,441,440
Goodwill 707,840 707,079
Customer lists 30,978 34,032
Investments in unconsolidated
entities 224,585 205,768
Other investments 10,385 10,623
2,427,478 2,398,942
Property, plant and equipment, net
U.S. Cellular 2,622,805 2,620,376
TDS Telecom 904,471 918,454
Other 28,797 30,094
3,556,073 3,568,924
Other assets and deferred charges 95,656 55,614
Total assets $7,654,179 $7,652,416
TELEPHONE AND DATA SYSTEMS, INC.
CONSOLIDATED BALANCE SHEET HIGHLIGHTS
(Unaudited, dollars in thousands)
LIABILITIES AND STOCKHOLDERS' EQUITY
March 31, December 31,
2009 2008
Current liabilities
Current portion of long-term debt $17,431 $15,337
Accounts payable 271,141 319,575
Customer deposits and deferred
revenues 173,278 174,101
Accrued interest 23,593 14,236
Accrued taxes 31,252 25,192
Accrued compensation 70,387 90,512
Other current liabilities 115,759 134,334
702,841 773,287
Deferred liabilities and credits
Net deferred income tax liability 477,490 471,623
Other deferred liabilities and
credits 373,900 368,045
851,390 839,668
Long-term debt 1,619,403 1,621,422
Noncontrolling interests with
redemption features 612 589
Preferred shares 852 852
Equity
TDS stockholders' equity
Common Shares, par value $.01 571 571
Special Common Shares, par value
$.01 634 634
Series A Common Shares, par value
$.01 65 65
Capital in excess of par value 2,071,654 2,066,597
Treasury shares, at cost:
Common Shares (162,838) (163,017)
Special Common Shares (360,464) (350,091)
Accumulated other comprehensive
loss (16,365) (16,812)
Retained earnings 2,288,917 2,229,540
Total TDS stockholders' equity 3,822,174 3,767,487
Noncontrolling interests 656,907 649,111
Total equity 4,479,081 4,416,598
Total liabilities and equity $7,654,179 $7,652,416
BALANCE SHEET HIGHLIGHTS
March 31, 2009
(Unaudited, dollars in thousands)
TDS TDS
U.S. TDS Corporate Intercompany Consoli-
Cellular Telecom & Other Eliminations dated
Cash and cash
equivalents $191,797 $2,579 $561,891 $--- $756,267
Affiliated cash
investments --- 577,768 --- (577,768) ---
Notes
receivable--affiliates --- --- 253,582 (253,582) ---
$191,797 $580,347 $815,473 $(831,350) $756,267
Licenses, goodwill and
customer lists $1,948,058 $436,916 $(192,466) $--- $2,192,508
Investment in
unconsolidated
entities 175,571 6,521 47,254 (4,761) 224,585
Other investments 4,265 2,574 3,546 --- 10,385
$2,127,894 $446,011 $(141,666) $(4,761) $2,427,478
Property, Plant and
Equipment, net $2,622,805 $904,471 $28,797 $--- $3,556,073
Notes
payable--affiliates $--- $253,582 $577,768 $(831,350) $---
Long-term Debt:
Current portion $10,086 $428 $6,917 $--- $17,431
Non-current portion 997,534 2,568 619,301 --- 1,619,403
Total $1,007,620 $2,996 $626,218 $--- $1,636,834
Preferred Shares $--- $--- $852 $--- $852
Construction
expenditures:
Quarter ended
3/31/09 $137,700 $26,400 $1,100 $--- $165,200
TDS Telecom Highlights
Three Months Ended March 31,
(Unaudited, dollars in thousands)
Increase (Decrease)
2009 2008 Amount Percent
Local Telephone Operations
Operating Revenues
Voice $48,578 $51,576 $(2,998) (6)%
Data 25,060 21,186 3,874 18%
Network access 67,831 70,082 (2,251) (3)%
Miscellaneous 8,718 8,971 (253) (3)%
150,187 151,815 (1,628) (1)%
Operating Expenses
Cost of services and
products 47,684 44,834 2,850 6%
Selling, general and
administrative expenses 41,029 42,481 (1,452) (3)%
Depreciation, amortization
and accretion 36,086 33,624 2,462 7%
Loss on asset disposals, net 138 (21) 159 N/M
124,937 120,918 4,019 3%
Operating Income $25,250 $30,897 $(5,647) (18)%
Competitive Local Exchange
Carrier Operations
Revenues $51,189 $56,129 $(4,940) (9)%
Expenses excluding
depreciation, amortization
and accretion 44,106 43,359 747 2%
Depreciation, amortization
and accretion 5,777 5,884 (107) (2)%
Loss on asset disposals, net 77 --- 77 N/M
49,960 49,243 717 1%
Operating Income $1,229 $6,886 $(5,657) (82)%
Intercompany revenues $(2,074) $(1,868) $(206) N/M
Intercompany expenses (2,074) (1,868) (206) N/M
--- --- ---
Total TDS Telecom Operating
Income $26,479 $37,783 $(11,304) (30)%
N/M - Percentage change not meaningful.
Telephone and Data Systems, Inc.
Consolidated Statement of Cash Flows
(Unaudited)
Three Months Ended
March 31,
2009 2008
(Dollars in thousands)
Cash flows from operating activities
Net income $93,374 $90,505
Add (deduct) adjustments to reconcile net income
to net cash flows from operating activities
Depreciation, amortization and accretion 182,766 186,158
Bad debts expense 20,303 20,405
Stock-based compensation expense 5,556 3,116
Deferred income taxes, net 4,934 (102,540)
Loss on investments and financial
instruments, net - 3,490
Equity in earnings of unconsolidated
entities (25,337) (21,470)
Distributions from unconsolidated
entities 6,029 7,047
Loss on asset disposals, net 2,416 3,652
Noncash interest expense 96 5,319
Excess tax benefit from stock awards (3) (1,138)
Other operating activities (41) 189
Changes in assets and liabilities from
operations
Accounts receivable (6,272) (10,156)
Inventory 7,720 (15,485)
Accounts payable (48,271) (14,529)
Customer deposits and deferred revenues (823) 6,162
Accrued taxes 34,865 149,349
Accrued interest 9,358 5,807
Other assets and liabilities (63,420) (46,882)
223,250 268,999
Cash flows from investing activities
Additions to property, plant and equipment (165,236) (132,465)
Cash paid for acquisitions and licenses (14,582) (107,685)
Cash received from divestitures - 6,838
Proceeds from disposition of investments - 48,619
Cash paid for short-term investments (26,248) -
Other investing activities 1,010 371
(205,056) (184,322)
Cash flows from financing activities
Repayment of long-term debt (993) (928)
TDS Common Shares and Special Common Shares
reissued for benefit plans, net of tax payments 383 1,103
U.S. Cellular Common Shares reissued for
benefit plans, net of tax payments 356 (2,526)
Excess tax benefit from stock awards 3 1,138
Repurchase of TDS Special Common Shares (12,237) (40,584)
Repurchase of U.S. Cellular Common Shares (13,291) (6,201)
Dividends paid (12,057) (13)
Distributions to noncontrolling interests (1,458) (2,588)
Other financing activities 58 1,262
(39,236) (49,337)
Net increase (decrease) in cash and cash
equivalents (21,042) 35,340
Cash and cash equivalents -
Beginning of period 777,309 1,174,446
End of period $756,267 $1,209,786
The accompanying notes are an integral part of these consolidated
financial statements.