CHICAGO, May 10, 2010 /PRNewswire via COMTEX/ --Note: Comparisons are year over year unless otherwise noted.
1Q 2010 Highlights
Enterprise/TDS Corporate
- Operating revenues were $1.2 billion.
- Repurchased 510,902 TDS special common shares for a total of $14.8 million.
Wireless/U.S. Cellular
- 24,000 retail net additions, reflecting a gain of 33,000 prepaid customers and a loss of 9,000 postpay customers.
- Service revenues of $965.2 million decreased 2 percent due to reductions in voice and inbound roaming revenues, offset by higher data revenues.
- 28 percent increase in data revenues to $201.3 million, representing 21 percent of total service revenues.
- Retail service ARPU (average revenue per unit) increased to $46.99 from $46.87.
- Retail postpay churn low at 1.4 percent; postpay customers comprised 95 percent of retail customers.
- 5 percent increase in cell sites in service to 7,310.
Wireline/TDS Telecom
- 16 percent increase in ILEC high-speed data customers.
- 13 percent increase in ILEC high-speed data revenues, representing 19 percent of ILEC revenues.
- ILEC equivalent access lines remained stable at 778,700, due in part to acquisitions; ILEC physical access lines decreased 5 percent to 530,400.
- Managed IP stations (ILEC and CLEC) grew to 16,600 from 5,100.
As previously announced, TDS will hold a teleconference May 10, 2010 at 9:30 am CDT. Interested parties may listen to the call live by accessing the Conference Calls page of www.teldta.com.
Telephone and Data Systems, Inc. (NYSE: TDS, TDS.S) reported operating revenues of $1,222.6 million for the first quarter of 2010, a decrease of 3 percent from $1,258.4 million in the comparable period one year ago. Net income attributable to TDS shareholders and related diluted earnings per share were $49.1 million and $0.46, respectively, for the first quarter of 2010, compared to $74.5 million and $0.66, respectively, in the comparable period one year ago.
"Both of our businesses are dedicated to ensuring outstanding customer experiences," said LeRoy T. Carlson, Jr., TDS president and CEO, "and that means a focus on providing excellent data and broadband services. Increased customer use of data in the quarter led to strong growth in wireless data revenues, and U.S. Cellular's commitment to quality in all aspects of the customer experience reduced retail postpay churn to 1.4 percent. Data revenue growth helped to stabilize profitability in our wireline business, along with benefits from cost-reduction initiatives implemented in 2009. In a highly competitive communications industry, our businesses' shared focus on superior customer service is an important differentiator.
"U.S. Cellular continues to drive data revenue growth with its broad assortment of smartphones and data-intensive devices, and through its expanded 3G network. This growth has helped to offset a decline in service revenues due to lower voice and inbound roaming revenues. The company made progress on its major enablement initiatives in the quarter, including upgrading its marketing campaign management system to better target key customer segments. Though planned expenses related to these initiatives reduced profitability in the quarter, U.S. Cellular expects that the initiatives will ultimately reduce operational expenses and support its customer-focused strategy over the long term.
"TDS Telecom continued to attract customers to its high-speed data services, which led to a year-over-year increase in data revenues. Value-oriented bundles of voice, high-speed data and video services remained popular and helped to keep churn low. As part of its commitment to bringing critical broadband services to rural communities, TDS Telecom submitted 46 applications, totaling $136 million, to the Rural Utilities Service for the second round of broadband stimulus funding. To advance our strategy of growing through complementary businesses, TDS recently acquired VISI Incorporated. VISI, based in Minnesota, provides data center services and managed hosting primarily to small and medium sized businesses.
"Both of our businesses are increasingly well-positioned to capitalize on the growing customer interest in wireless data and wireline broadband services. U.S. Cellular plans to make 3G speeds available to 98 percent of its customers by the end of this summer, while it continues to develop its 4G/LTE rollout plans. Ninety-three percent of TDS Telecom's ILEC access lines are equipped for broadband services, and the company is focused on increasing the broadband speeds offered to customers. Both businesses have the support and financial strength to move forward with their customer-focused strategies."
Guidance
Guidance for the year ending Dec. 31, 2010 is shown below compared to previous guidance provided on Feb. 25, 2010. The company has commenced guidance for adjusted OIBDA. There can be no assurance that final results will not differ materially from this guidance.
Current guidance Previous guidance
---------------- -----------------
U.S. Cellular 2010 guidance as
of May 10, 2010 is as follows:
Service revenue $3,975-$4,075 million Unchanged
Adjusted OIBDA(1) $850-$950 million N/A
Operating income $250-$350 million Unchanged
Depreciation, amortization and
accretion(2) Approx. $600 million Unchanged
Capital expenditures Approx. $600 million Unchanged
TDS Telecom (ILEC and CLEC)
2010 guidance as of
May 10, 2010 is as follows:
Operating revenues $760-$790 million $740-$780 million
Adjusted OIBDA(1) $250-$275 million N/A
Operating income $80-$105 million $70-$100 million
Depreciation, amortization
and accretion(2) Approx. $170 million Unchanged
Capital expenditures Approx. $155 million Approx. $140 million
(1) Defined as operating income excluding the effects of:
depreciation, amortization and accretion (OIBDA); the net gain or
loss on asset disposals (if any); and the loss on impairment of
intangible assets (if any). This amount may also be commonly
referred to by management as operating cash flow. This amount should
not be confused with cash flows from operating activities, which is
a component of the consolidated statement of cash flows. TDS did
not previously provide guidance on adjusted OIBDA.
(2) Includes estimated losses on disposals of assets but does not
include an estimate for loss on impairment of intangible assets
since this cannot be predicted.
This guidance represents the views of management as of May 10, 2010 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 TDS common shares and TDS special common shares.
Cost (in
Repurchase Period # Shares millions)
----------------- -------- ---------
2010 (first quarter) 510,902 $14.8
2009 (full year) 6,374,741 $176.6
2008 (full year) 5,861,822 $199.6
-------- ------
Total 12,747,465 $391.0
========= ======
Conference call information
TDS will hold a conference call on May 10, 2010 at 9:30 a.m. CDT.
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(R) company, provides wireless, local and long-distance telephone, and broadband services to approximately 7.3 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 12,300 people as of March 31, 2010.
Visit www.teldta.com for comprehensive financial information, including earnings releases, quarterly and annual filings, shareholder information and more.
About U.S. Cellular
United States Cellular Corporation, the nation's sixth-largest wireless carrier, provides a comprehensive range of wireless products and services, excellent customer support and a high-quality network to approximately 6.1 million customers in 26 states. The Chicago-based company employed 8,900 full-time equivalent associates as of March 31, 2010.
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 the company to successfully grow its markets; 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:
TDS: www.teldta.com
U.S. Cellular: www.uscellular.com
TDS Telecom: www.tdstelecom.com
UNITED STATES CELLULAR CORPORATION
SUMMARY OPERATING DATA
Quarter Ended 3/31/2010 12/31/2009 9/30/2009
--------- ---------- ---------
Total population
Consolidated markets (1) 90,468,000 89,712,000 85,118,000
Consolidated operating
markets (1) 46,546,000 46,306,000 46,306,000
Market penetration at end of
period
Consolidated markets (2) 6.8% 6.8% 7.2%
Consolidated operating markets (2) 13.2% 13.3% 13.2%
All customers
Total at end of period 6,147,000 6,141,000 6,131,000
Gross additions 358,000 399,000 386,000
Net additions (losses) 6,000 10,000 (24,000)
Retail customers
Total at end of period 5,768,000 5,744,000 5,705,000
Gross additions 305,000 354,000 351,000
Net retail additions (losses) (3) 24,000 39,000 (6,000)
Net postpay additions (losses) (9,000) 26,000 8,000
Net prepaid additions (losses) 33,000 13,000 (14,000)
Service revenues components
(000s)
Voice and other retail service $663,939 $676,554 $690,106
Data service 201,280 189,759 174,286
------- ------- -------
Total retail service $865,219 $866,313 $864,392
Inbound roaming 51,942 61,728 68,767
Other 48,027 56,814 50,289
------ ------ ------
Total service revenues (000s) (4) $965,188 $984,855 $983,448
Divided by average customers
(000s) 6,137 6,139 6,138
Divided by three months in each
quarter 3 3 3
--- --- ---
Average monthly revenue per
unit (5) $52.42 $53.48 $53.41
Voice and other retail service
(5) $36.06 $36.75 $37.48
Data service (5) $10.93 $10.30 $9.46
------ ------ -----
Total retail service (5) $46.99 $47.05 $46.94
Inbound roaming (5) $2.82 $3.35 $3.73
Other (5) $2.61 $3.08 $2.74
Postpay churn rate (6) 1.4% 1.6% 1.7%
Capital expenditures (000s) $121,500 $189,000 $128,900
Cell sites in service 7,310 7,279 7,161
Quarter Ended 6/30/2009 3/31/2009
--------- ---------
Total population
Consolidated markets (1) 83,726,000 83,726,000
Consolidated operating markets (1) 46,306,000 46,306,000
Market penetration at end of
period
Consolidated markets (2) 7.4% 7.5%
Consolidated operating markets (2) 13.3% 13.5%
All customers
Total at end of period 6,155,000 6,243,000
Gross additions 317,000 404,000
Net additions (losses) (88,000) 47,000
Retail customers
Total at end of period 5,711,000 5,770,000
Gross additions 286,000 366,000
Net retail additions (losses) (3) (59,000) 63,000
Net postpay additions (losses) (32,000) 60,000
Net prepaid additions (losses) (27,000) 3,000
Service revenues components
(000s)
Voice and other retail service $708,609 $718,885
Data service 161,955 156,954
------- -------
Total retail service $870,564 $875,839
Inbound roaming 62,223 60,057
Other 41,323 47,719
------ ------
Total service revenues (000s) (4) $974,110 $983,615
Divided by average customers
(000s) 6,199 6,229
Divided by three months in each
quarter 3 3
--- ---
Average monthly revenue per
unit (5) $52.38 $52.64
Voice and other retail service (5) $38.11 $38.47
Data service (5) $8.71 $8.40
----- -----
Total retail service (5) $46.82 $46.87
Inbound roaming (5) $3.35 $3.21
Other (5) $2.21 $2.56
Postpay churn rate (6) 1.7% 1.5%
Capital expenditures (000s) $91,200 $137,700
Cell sites in service 7,043 6,942
(1) Used only to calculate 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) Calculated by adding net postpay additions (losses) and net
prepaid additions (losses).
(4) U.S. Cellular revised previously reported Service revenues for all
quarterly periods in 2009 to reflect certain corrections. See "Revision
of Prior Period Amounts" section for additional details. Previously
reported Service revenues were $986.3 million, $984.9 million,
$974.8 million and $981.9 million for the three month periods ended
December 31, September 30, June 30 and March 31, 2009, respectively.
(5) Calculated by dividing the components of service revenues by the
average customers and number of months in the quarter.
(6) Calculated by dividing the total postpay customer disconnects
during the quarter by the average postpay customer base for the
quarter.
TELEPHONE AND DATA SYSTEMS, INC.
SUMMARY OPERATING DATA
Quarter Ended 3/31/2010 12/31/2009 9/30/2009
--------- ---------- ---------
TDS Telecom
ILEC
Equivalent access lines (1) 778,700 775,900 772,700
Physical access lines (2) 530,400 536,300 539,400
High-speed data customers (3) 217,400 208,300 202,100
Long-distance customers 365,600 362,800 356,500
Managed IP stations (4) 2,300 1,900 1,500
Capital expenditures (000s) $20,200 $26,900 $23,800
CLEC
Equivalent access lines (1) 349,300 355,900 364,100
High-speed data customers (3) 36,000 36,900 37,600
Managed IP stations (4) 14,300 12,000 9,600
Capital expenditures (000s) $3,200 $6,800 $4,700
Quarter Ended 6/30/2009 3/31/2009
--------- ---------
TDS Telecom
ILEC
Equivalent access lines (1) 775,800 777,100
Physical access lines (2) 548,000 556,800
High-speed data customers (3) 197,100 188,100
Long-distance customers 354,100 348,900
Managed IP stations (4) 1,200 1,000
Capital expenditures (000s) $26,200 $21,400
CLEC
Equivalent access lines (1) 372,300 381,100
High-speed data customers (3) 38,700 39,700
Managed IP stations (4) 6,400 4,100
Capital expenditures (000s) $5,700 $5,000
(1) 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) Individual circuits connecting customers to a telephone company's
central office facilities.
(3) 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) The number of telephone handsets providing communications using
packet networking technology.
Telephone And Data Systems, Inc.
Consolidated Statement of Operations Highlights
Three Months Ended March 31,
(Unaudited, dollars and shares in thousands, except per share amounts)
2010 2009 (1)
---- -------
Operating revenues
U.S. Cellular $1,024,037 $1,054,505
TDS Telecom 195,505 199,302
All Other (2) 3,073 4,580
----- -----
1,222,615 1,258,387
--------- ---------
Operating expenses
U.S. Cellular
Expenses excluding depreciation,
amortization
and accretion 796,843 793,743
Depreciation, amortization and accretion 143,233 137,878
Loss on asset disposals, net 5,176 3,945
945,252 935,566
------- -------
TDS Telecom
Expenses excluding depreciation,
amortization
and accretion 125,865 130,745
Depreciation, amortization and accretion 43,423 41,863
Loss on asset disposals, net 345 215
--- ---
169,633 172,823
------- -------
All Other (2)
Expenses excluding depreciation and
amortization 1,930 6,358
Depreciation and amortization 2,733 3,252
Loss on asset disposals, net (90) 10
4,573 9,620
----- -----
Total operating expenses 1,119,458 1,118,009
--------- ---------
Operating income (loss)
U.S. Cellular 78,785 118,939
TDS Telecom 25,872 26,479
All Other (2) (1,500) (5,040)
------ ------
103,157 140,378
------- -------
Investment and other income (expense)
Equity in earnings of unconsolidated
entities 24,903 25,337
Interest and dividend income 2,441 2,072
Interest expense (28,720) (30,370)
Other, net (190) 499
---- ---
Total investment and other income (expense) (1,566) (2,462)
------ ------
Income before income taxes 101,591 137,916
Income tax expense 38,465 42,106
------ ------
Net income 63,126 95,810
Less: Net income attributable to
noncontrolling
interests, net of tax (14,011) (21,350)
------- -------
Net income attributable to TDS shareholders 49,115 74,460
Preferred dividend requirement (12) (13)
--- ---
Net income available to common shareholders $49,103 $74,447
======= =======
Basic weighted average shares outstanding 105,938 112,238
Basic earnings per share attributable to
TDS shareholders $0.46 $0.66
Diluted weighted average shares outstanding 106,250 112,427
Diluted earnings per share attributable to
TDS shareholders $0.46 $0.66
Increase/(Decrease)
Amount Percent
------ -------
Operating revenues
U.S. Cellular $(30,468) (3)%
TDS Telecom (3,797) (2)%
All Other (2) (1,507) (33)%
------
(35,772) (3)%
-------
Operating expenses
U.S. Cellular
Expenses excluding depreciation,
amortization
and accretion 3,100 -
Depreciation, amortization and accretion 5,355 4 %
Loss on asset disposals, net 1,231 31 %
9,686 1 %
-----
TDS Telecom
Expenses excluding depreciation,
amortization
and accretion (4,880) (4)%
Depreciation, amortization and accretion 1,560 4 %
Loss on asset disposals, net 130 60 %
---
(3,190) (2)%
------
All Other (2)
Expenses excluding depreciation and
amortization (4,428) (70)%
Depreciation and amortization (519) (16)%
Loss on asset disposals, net (100) >(100)%
(5,047) (52)%
------
Total operating expenses 1,449 -
-----
Operating income (loss)
U.S. Cellular (40,154) (34)%
TDS Telecom (607) (2)%
All Other (2) 3,540 70 %
-----
(37,221) (27)%
-------
Investment and other income (expense)
Equity in earnings of unconsolidated
entities (434) (2)%
Interest and dividend income 369 18 %
Interest expense 1,650 5 %
Other, net (689) >(100)%
----
Total investment and other income (expense) 896 36 %
---
Income before income taxes (36,325) (26)%
Income tax expense (3,641) (9)%
------
Net income (32,684) (34)%
Less: Net income attributable to
noncontrolling
interests, net of tax 7,339 34 %
-----
Net income attributable to TDS shareholders (25,345) (34)%
Preferred dividend requirement 1 8 %
---
Net income available to common shareholders $(25,344) (34)%
========
Basic weighted average shares outstanding (6,300) (6)%
Basic earnings per share attributable to
TDS shareholders $(0.20) (30)%
Diluted weighted average shares outstanding (6,177) (5)%
Diluted earnings per share attributable to
TDS shareholders $(0.20) (30)%
(1) Amounts have been revised. See "Revision of Prior Period Amounts"
section for additional details.
(2) Consists of a non-reportable segment
(Suttle-Straus printing
and distribution operations), corporate operations, intercompany
eliminations and corporate investments.
Telephone and Data Systems, Inc.
Consolidated Balance Sheet Highlights
(Unaudited, dollars in thousands)
ASSETS
March 31, December 31,
2010 2009 (1)
---- -------
Current assets
Cash and cash equivalents $645,466 $670,992
Short-term investments 148,364 113,275
Accounts receivable from customers and
other 486,778 515,443
Inventory 157,935 156,987
Other current assets 200,522 190,974
------- -------
1,639,065 1,647,671
--------- ---------
Investments
Licenses 1,446,825 1,443,025
Goodwill 713,013 707,840
Other intangible assets 31,823 26,589
Investments in unconsolidated entities 221,112 203,799
Other investments 9,627 9,785
----- -----
2,422,400 2,391,038
--------- ---------
Property, plant and equipment, net
U.S. Cellular 2,578,460 2,601,338
TDS Telecom 871,232 880,378
Other 25,963 26,129
------ ------
3,475,655 3,507,845
--------- ---------
Other assets and deferred charges 64,651 65,759
------ ------
Total assets $7,601,771 $7,612,313
========== ==========
(1) Amounts have been revised. See "Revision of Prior Period Amounts"
section for additional details.
Telephone and Data Systems, Inc.
Consolidated Balance Sheet Highlights
(Unaudited, dollars in thousands)
LIABILITIES AND STOCKHOLDERS' EQUITY
March 31, December 31,
2010 2009 (1)
---- -------
Current liabilities
Current portion of
long-term debt $2,277 $2,509
Accounts payable 307,423 347,348
Customer deposits and
deferred revenues 166,080 164,451
Accrued interest 21,330 12,227
Accrued taxes 99,432 57,087
Accrued compensation 62,021 93,524
Other current
liabilities 99,023 117,081
------ -------
757,586 794,227
Deferred liabilities
and credits
Net deferred income tax
liability 506,453 516,919
Other deferred
liabilities and
credits 371,698 373,862
------- -------
878,151 890,781
Long-term debt 1,492,666 1,492,908
Noncontrolling
interests with
redemption features 752 727
Equity
TDS shareholders'
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 2,095,636 2,088,807
Treasury shares, at
cost:
Common Shares (216,249) (217,381)
Special Common Shares (477,140) (464,268)
Accumulated other
comprehensive loss (2,966) (2,710)
Retained earnings 2,399,321 2,363,759
--------- ---------
Total TDS shareholders'
equity 3,799,872 3,769,477
Preferred shares 831 832
Noncontrolling
interests 671,913 663,361
------- -------
Total equity 4,472,616 4,433,670
Total liabilities and
equity $7,601,771 $7,612,313
========== ==========
(1) Amounts have been revised. See "Revision of Prior Period
Amounts" section for additional details.
Telephone and Data Systems, Inc.
Balance Sheet Highlights
Three Months Ended March 31, 2010
(Unaudited, dollars in thousands)
U.S. TDS TDS
---- --- ---
Cellular Telecom Corporate
-------- ------- ---------
& Other
-------
Cash and cash equivalents $289,658 $33,691 $322,117
Affiliated cash investments - 310,856 -
Short-term investments 25,534 97,510 25,320
Notes receivable-affiliates - - 8,809
-- -- -----
$315,192 $442,057 $356,246
======== ======== ========
Licenses, goodwill and other
intangibles $1,936,429 $451,282 $(196,050)
Investment in unconsolidated
entities 178,903 3,661 45,120
Other investments 4,179 2,072 3,376
----- ----- -----
$2,119,511 $457,015 $(147,554)
========== ======== =========
Property, plant and equipment,
net $2,578,460 $871,232 $25,963
========== ======== =======
Notes payable-affiliates $- $8,809 $310,856
=== ====== ========
Long-term debt
Current portion $84 $391 $1,802
Non-current portion 867,662 2,181 622,823
Total $867,746 $2,572 $624,625
======== ====== ========
Preferred shares $- $- $831
=== === ====
Capital expenditures
Quarter ended 3/31/2010 $121,514 $23,376 $1,732
Intercompany TDS
------------ ---
Eliminations Consolidated
------------ ------------
Cash and cash equivalents $- $645,466
Affiliated cash investments (310,856) -
Short-term investments - 148,364
Notes receivable-affiliates (8,809) -
------ --
$(319,665) $793,830
========= ========
Licenses, goodwill and other
intangibles $- $2,191,661
Investment in unconsolidated
entities (6,572) 221,112
Other investments - 9,627
-- -----
$(6,572) $2,422,400
======= ==========
Property, plant and equipment,
net $- $3,475,655
=== ==========
Notes payable-affiliates $(319,665) $-
========= ===
Long-term debt
Current portion $- $2,277
Non-current portion - 1,492,666
Total $- $1,494,943
=== ==========
Preferred shares $- $831
=== ====
Capital expenditures
Quarter ended 3/31/2010 $- $146,622
TDS Telecom Highlights
Three Months Ended March 31,
(Unaudited, dollars in thousands)
2010 2009
---- ----
Local Telephone Operations
Operating revenues
Voice $44,558 $48,578
Data 28,298 25,060
Network access 67,942 67,831
Miscellaneous 9,358 8,718
---- ----
150,156 150,187
------ ------
Operating expenses
Cost of services and products 46,492 47,684
Selling, general and administrative
expenses 41,737 41,029
Depreciation, amortization and
accretion 37,058 36,086
Loss on asset disposals, net 260 138
-- --
125,547 124,937
------ ------
Operating income $24,609 $25,250
------- -------
Competitive Local Exchange Carrier
Operations
Revenues $47,743 $51,189
------- -------
Expenses excluding depreciation,
amortization
and accretion 40,030 44,106
Depreciation, amortization and
accretion 6,365 5,777
Loss on asset disposals, net 85 77
-- --
46,480 49,960
----- -----
Operating income $1,263 $1,229
------ ------
Intercompany revenues $(2,394) $(2,074)
Intercompany expenses (2,394) (2,074)
------ ------
- -
-- --
Total TDS Telecom operating income $25,872 $26,479
======= =======
Increase (Decrease)
-------------------
Amount Percent
------ -------
Local Telephone Operations
Operating revenues
Voice $(4,020) (8)%
Data 3,238 13%
Network access 111 -
Miscellaneous 640 7%
--
(31) -
---
Operating expenses
Cost of services and products (1,192) (2)%
Selling, general and administrative
expenses 708 2%
Depreciation, amortization and
accretion 972 3%
Loss on asset disposals, net 122 88%
--
610 -
--
Operating income $(641) (3)%
-----
Competitive Local Exchange Carrier
Operations
Revenues $(3,446) (7)%
-------
Expenses excluding depreciation,
amortization
and accretion (4,076) (9)%
Depreciation, amortization and
accretion 588 10%
Loss on asset disposals, net 8 10%
--
(3,480) (7)%
------
Operating income $34 3%
--
Intercompany revenues $(320) (15)%
Intercompany expenses (320) (15)%
----
-
--
Total TDS Telecom operating income $(607) (2)%
=====
Telephone and Data Systems, Inc.
Consolidated Statement of Cash Flows
(Unaudited)
Three Months Ended
March 31,
2010 2009 (1)
---- -------
(Dollars in thousands)
Cash flows from operating
activities
Net income $63,126 $95,810
Add (deduct) adjustments
to reconcile net income
to net cash flows
from operating activities
Depreciation, amortization
and accretion 189,389 182,993
Bad debts expense 20,245 20,303
Stock-based compensation
expense 7,444 5,556
Deferred income taxes, net (13,874) 5,603
Equity in earnings of
unconsolidated entities (24,903) (25,337)
Distributions from
unconsolidated entities 7,243 6,029
Loss on asset disposals,
net 5,431 4,170
Other operating activities 948 52
Changes in assets and
liabilities from
operations
Accounts receivable 9,648 (10,936)
Inventory (947) 7,720
Accounts payable (40,676) (48,271)
Customer deposits and
deferred revenues 784 (1,010)
Accrued taxes 35,641 34,893
Accrued interest 9,212 9,358
Other assets and
liabilities (58,051) (63,683)
------- -------
210,660 223,250
------- -------
Cash flows from investing
activities
Additions to property,
plant and equipment (146,622) (165,236)
Cash paid for acquisitions
and licenses (21,118) (14,582)
Cash paid for investments (50,000) (26,248)
Cash received for
investments 15,561 -
Other investing activities 439 1,010
--- -----
(201,740) (205,056)
-------- --------
Cash flows from financing
activities
Repayment of long-term
debt (697) (993)
TDS Common Shares and
Special Common Shares
reissued for benefit
plans,
net of tax payments 463 383
U.S. Cellular Common
Shares reissued for
benefit plans, net of tax
payments 486 356
Repurchase of TDS Special
Common Shares (14,810) (12,237)
Repurchase of U.S.
Cellular Common Shares (5,186) (13,291)
Dividends paid (11,891) (12,057)
Distributions to
noncontrolling interests (2,284) (1,458)
Other financing activities (527) 61
---- ---
(34,446) (39,236)
------- -------
Net decrease in cash and
cash equivalents (25,526) (21,042)
Cash and cash equivalents
Beginning of period 670,992 777,309
------- -------
End of period $645,466 $756,267
(1) Amounts have been revised. See "Revision of Prior
Period Amounts" section for additional details.
Telephone and Data Systems, Inc.
Financial Measures and Reconciliations
(Unaudited, dollars in thousands)
Three Months Ended March 31, U.S. TDS
2010 Cellular Telecom (1)
---------------------------- -------- ------------
Operating revenues $1,024,037 $195,505
Deduct:
U.S. Cellular equipment sales
revenue 58,849
------
Service revenues $965,188
Operating income $78,785 $25,872
Add:
Depreciation, amortization and
accretion 143,233 43,423
(Gain) Loss on asset disposals 5,176 345
----- ---
Adjusted OIBDA (3)(6) $227,194 $69,640
======== =======
Adjusted OIBDA margin (4) 23.5% 35.6%
Three Months Ended March 31, U.S. TDS
2009 Cellular (7) Telecom (1)
---------------------------- --------- ------------
Operating revenues $1,054,505 $199,302
Deduct:
U.S. Cellular equipment sales
revenue 70,890
------
Service revenues $983,615
Operating income $118,939 $26,479
Add (Deduct):
Depreciation, amortization and
accretion 137,878 41,863
Loss on asset disposals 3,945 215
----- ---
Adjusted OIBDA (3)(6) $260,762 $68,557
======== =======
Adjusted OIBDA margin (4) 26.5% 34.4%
Three Months Ended March 31, All Consolidated
2010 Other (2) Total
---------------------------- ---------- -----
Operating revenues $3,073 $1,222,615
Deduct:
U.S. Cellular equipment sales
revenue
Service revenues
Operating income $(1,500) $103,157
Add:
Depreciation, amortization and
accretion 2,733 189,389
(Gain) Loss on asset disposals (90) 5,431
--- -----
Adjusted OIBDA (3)(6) $1,143 $297,977
====== ========
Adjusted OIBDA margin (4)
Three Months Ended March 31, All Consolidated
2009 Other (2) Total (7)
---------------------------- ---------- ---------
Operating revenues $4,580 $1,258,387
Deduct:
U.S. Cellular equipment sales
revenue
Service revenues
Operating income $(5,040) $140,378
Add (Deduct):
Depreciation, amortization and
accretion 3,252 182,993
Loss on asset disposals 10 4,170
--- -----
Adjusted OIBDA (3)(6) $(1,778) $327,541
======= ========
Adjusted OIBDA margin (4)
TDS Consolidated
----------------
Three Months Ended March 31, 2010 2009
---- ----
Cash flows from operating
activities $210,660 $223,250
Deduct:
Capital expenditures 146,622 165,236
------ ------
Free cash flow (5) $64,038 $58,014
======= =======
(1) Includes ILEC and CLEC intercompany eliminations.
(2) Consists of a non-reportable segment (Suttle Straus), corporate
operations, intercompany eliminations between U.S. Cellular, TDS
Telecom and corporate investments. Amounts in this column are
presented only to reconcile to consolidated totals and may not
otherwise be meaningful.
(3) Adjusted OIBDA is a segment measure reported to the chief
operating decision maker for purposes of making decisions about
allocating resources to the segments and assessing their
performance. Adjusted OIBDA is defined as operating income
excluding the effects of: depreciation, amortization and accretion
(OIBDA); the net gain or loss on asset disposals (if any); and the
loss on impairment of intangible assets (if any). This amount may
also be commonly referred to by management as operating cash flow.
This amount should not be confused with Cash flows from operating
activities, which is a component of the consolidated statement of
cash flows.
(4) Defined as Adjusted OIBDA divided by service revenues (U.S.
Cellular) and operating revenues (TDS Telecom). Equipment revenues
are excluded from the denominator of the U.S. Cellular calculation
since equipment is generally sold at a net negative margin, and the
equipment subsidy is effectively a cost for purposes of assessing
business results. TDS believes that this calculation method is
consistent with the method used by certain investors to assess U.S.
Cellular's business results. Adjusted OIBDA margin may also be
commonly referred to by management as operating cash flow margin.
(5) Defined as cash flows from operating activities minus capital
expenditures. Free cash flow is a Non-GAAP financial measure. TDS
believes that free cash flow as reported by TDS is useful to
investors and other users of its financial information in evaluating
the amount of cash generated by business operations, after
consideration of capital expenditures.
(6) Excludes the net gain or loss on asset disposals and loss on
impairment of intangible assets, if any, in order to show operating
results on a more comparable basis from period to period. TDS does
not intend to imply that any of such amounts that are excluded are
non-recurring, infrequent or unusual. Accordingly, you should be
aware that TDS may incur such amounts in the future.
(7) Previously reported GAAP amounts have been revised. See "Revision
of Prior Period Amounts" section for additional details.
Revision of Prior Period Amounts
In preparing its financial statements for the three months ended March 31, 2010, TDS discovered certain errors related to accounting for service revenues and sales tax liabilities. These errors resulted in the overstatement of operating revenues and understatement of sales tax liabilities for 2009, 2008 and 2007. In accordance with SEC Staff Accounting Bulletin Nos. 99 and 108 ("SAB 99 and SAB 108"), TDS evaluated these errors and determined that they were immaterial to each of the reporting periods affected and, therefore, amendment of previously filed reports was not required. However, if the adjustments to correct the cumulative errors had been recorded in the first quarter 2010, TDS believes the impact would have been significant to the first quarter and would impact comparisons to prior periods. As permitted by SAB 108, TDS revised in the current filing and plans to revise in the next filings of its quarterly and annual consolidated financial statements previously reported annual and quarterly results for 2009, 2008 and 2007 for these immaterial amounts. In addition to recording these adjustments, TDS recorded and plans to record other adjustments to prior-year amounts to correct other immaterial items, which include adjustments related to rent expense, as disclosed in TDS' 2009 Form 10-K.
The Consolidated Balance Sheet at December 31, 2009 was revised to reflect the cumulative effect of these errors which resulted in a decrease to Retained earnings of $7.8 million. Also, in accordance with SAB 108, the Consolidated Statement of Operations and the Consolidated Statement of Cash Flows have been revised as follows:
Consolidated Statement of Operations -- Three Months Ended March 31, 2009
As
previously
(Dollars in thousands) reported Adjustment Revised
-------- ---------- -------
Operating revenues $1,256,646 $1,741 $1,258,387
Total operating expenses 1,120,437 (2,428) 1,118,009
Operating income 136,209 4,169 140,378
Interest expense (30,105) (265) (30,370)
Total investment and other
income (expense) (2,197) (265) (2,462)
Income before income taxes 134,012 3,904 137,916
Income tax expense 40,638 1,468 42,106
Net income 93,374 2,436 95,810
Net income attributable to
noncontrolling interests,
net of tax (21,366) 16 (21,350)
Net income attributable to TDS
shareholders 72,008 2,452 74,460
Net income available to common
shareholders 71,995 2,452 74,447
Basic earnings attributable to
TDS shareholders 0.64 0.02 0.66
Diluted earnings attributable
to TDS shareholders 0.64 0.02 0.66
Consolidated Balance Sheet -- December 31, 2009
As
previously
(Dollars in thousands) reported Adjustment Revised
-------- ---------- -------
Accounts receivable from customers
and others $511,914 $3,529 $515,443
Total current assets 1,644,142 3,529 1,647,671
Total assets 7,608,784 3,529 7,612,313
Customer deposits and deferred
revenues 167,963 (3,512) 164,451
Accrued taxes 39,644 17,443 57,087
Total current liabilities 780,296 13,931 794,227
Net deferred income tax liability 517,762 (843) 516,919
Total deferred liabilities and
credits 891,624 (843) 890,781
Retained earnings 2,371,587 (7,828) 2,363,759
Total TDS shareholders' equity 3,777,305 (7,828) 3,769,477
Noncontrolling interests 665,092 (1,731) 663,361
Total equity 4,443,229 (9,559) 4,433,670
Total liabilities and equity 7,608,784 3,529 7,612,313
Consolidated Statement of Cash Flows -- Three Months Ended March 31, 2009
As
previously
(Dollars in thousands) reported Adjustment Revised
-------- ---------- -------
Net income $93,374 $2,436 $95,810
Depreciation, amortization and
accretion 182,766 227 182,993
Deferred income taxes, net 4,934 669 5,603
Loss on asset disposals 2,416 1,754 4,170
Change in accounts receivable (6,272) (4,664) (10,936)
Change in customer deposits and
deferred revenues (823) (187) (1,010)
Change in accrued taxes 34,865 28 34,893
Change in other assets and
liabilities (63,420) (263) (63,683)
Cash flows from operating
activities 223,250 - 223,250
SOURCE Telephone and Data Systems, Inc.