Note: Comparisons are year over year unless otherwise noted.
3Q 2008 Highlights
Enterprise/TDS Corporate
- 5.5 percent increase in operating revenues, to $1,304.6 million.
- 13.1 percent increase in operating income, to $152.1 million.
- Repurchased 806,900 TDS Special Common Shares using $30.3 million of a
$250 million stock repurchase program authorized in 2007.
Wireless/U.S. Cellular(R)
- 6.2 percent increase in service revenues, to $1,013.9 million.
- 34.5 percent increase in data revenues, to $130.2 million.
- 3.5 percent increase in ARPU (average monthly revenue per unit), to
$54.59.
- Retail postpay churn was unchanged at 1.6 percent; postpay customers
comprised 94.8 percent of retail customers.
Wireline/TDS Telecom(R)
- Less than 1 percent decrease in operating income, to $35.9 million,
despite a 4.0 percent decrease in operating revenues.
- 26.2 percent increase in ILEC DSL (digital subscriber line) customers,
to 171,000; CLEC DSL customers totaled 41,200.
- 22.6 percent increase in ILEC data revenue, to $23.0 million.
- ILEC equivalent access lines increased 1.4 percent, to 773,700; ILEC
physical access lines declined to 568,900.
CHICAGO, Nov. 5 /PRNewswire-FirstCall/ -- Telephone and Data Systems, Inc.
(NYSE: TDS, TDS.S) reported operating revenues of $1,304.6 million for the
third quarter of 2008, an increase of 5.5 percent from $1,236.9 million in the
comparable period one year ago. The company recorded operating income of
$152.1 million, up from $134.5 million in the third quarter of 2007. Net
income available to common and diluted earnings per share were $101.2 million
and $0.87, respectively, for the third quarter of 2008, compared to net income
available to common and diluted earnings per share of $231.7 million and
$1.93, respectively, in the comparable period one year ago.
"Despite the financial crisis and its effect on the economy, TDS had a
solid quarter overall," said LeRoy T. Carlson, Jr., TDS president and CEO.
"Our wireless unit, U.S. Cellular, saw a slight increase in margins, as well
as increases in ARPU that drove up service revenues and contributed to an
overall increase in operating revenues. U.S. Cellular had a net loss of
customers, compared to June 30, 2008, due to the reseller and prepaid
segments, although the company added 12,000 customers in the retail postpay
segment. Retail postpay customers are U.S. Cellular's primary focus -- and
postpay churn remained flat year over year.
"U.S. Cellular continues to see marked growth in sales of its
BlackBerry(R) and Windows Mobile(R) smartphone solutions and related premium
data plans, and expects strong sales from the Samsung Delve(TM) premium
touchscreen phone that will be available in early November. In the past month,
the company launched wireless high speed 3G EVDO Release A data services in
many markets, including the greater Chicagoland area, Tulsa, Des Moines,
Madison and Milwaukee. The company will continue its 3G EVDO Release A
expansion in 2009 to support ongoing growth in data services.
"TDS Telecom, TDS' wireline unit, continued its broadband focus and grew
its ILEC DSL customers 26 percent and data revenues 23 percent year over year.
The company continues to increase the DSL speeds offered to its customers, and
is working quickly to reach 10 megabits. The company also had double-digit
growth in its Triple Play bundles, which have very low customer churn. And,
the company's ongoing cost management initiatives kept operating income
essentially flat with the same quarter last year, an admirable accomplishment
in light of decreased voice connections and revenues.
"TDS consolidated ended the quarter with more than $1 billion dollars in
cash and an investment-grade balance sheet, and initiated a new, $250 million
stock repurchase program to take advantage of market opportunities," continued
Carlson.
Gain on sale of investments
The acquisition of Rural Cellular Corporation ("RCC") by Verizon Wireless
was completed in August. TDS received $45 per share in exchange for each RCC
share owned and recorded a $31.7 million pre-tax gain.
Guidance
Guidance for the year ending Dec. 31, 2008 is as follows. There can be no
assurance that final results will not differ materially from this guidance.
U.S. Cellular 2008 guidance as of Nov. 5, 2008 is as follows:
Net Retail Customer Additions 125,000-160,000
Service Revenues $3,925-$3,975 million
Operating Income (1) $385-$435 million
Depreciation, Amortization & Accretion (1)(2) Approx. $615 million
Capital Expenditures (1) $525-$575 million
TDS Telecom (ILEC and CLEC) 2008 guidance as of Nov. 5, 2008 is as
follows:
Operating Revenues $810-$830 million
Operating Income $120-$140 million
Depreciation, Amortization & Accretion (1) Approx. $160 million
Capital Expenditures $130-$150 million
(1) Unchanged from guidance issued on August 7, 2008
(2) Includes losses on exchange and disposals of assets
This guidance represents the views of management as of Nov. 5, 2008 and
should not be assumed to be accurate as of any other date. TDS undertakes no
legal duty to update such information, whether as a result of new information,
future events, or otherwise.
TDS Special Common Shares repurchase summary
TDS completed its $250 million stock repurchase program in October 2008.
The company purchased a total of 5,225,895 shares since June 2007.
Repurchase Period # Shares Cost (in millions)
2008 (third quarter) 806,900 $30.3
2008 (second quarter) 1,015,650 $39.6
2008 (first quarter) 1,041,016 $45.1
2007 (full year) 2,076,979 $126.7
Total 4,940,545 $241.7
Conference call information
TDS will hold a conference call on Nov. 5, 2008 at 10:00 a.m. Chicago
time.
-- Access the live call online at
http://www.videonewswire.com/event.asp?id=52912 or on the Conference
Calls page of http://www.teldta.com.
-- Access the call by phone at 800/706-9695 (US/Canada) and use conference
ID 71161042.
Before the call, certain financial and statistical information to be
discussed during the call will be posted to the Conference Calls page of
http://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 http://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 nearly
7.4 million customers in 36 states through its business units, U.S. Cellular
(wireless) and TDS Telecom (wireline). Founded in 1969 and headquartered in
Chicago, TDS employed 11,800 full-time equivalent employees as of Sept. 30,
2008. For more information about TDS, visit http://www.teldta.com.
About U.S. Cellular(R)
United States Cellular Corporation, the nation's sixth-largest,
full-service wireless carrier, provides a comprehensive range of wireless
products and services, excellent customer support, and a high-quality network
to nearly 6.2 million customers in 26 states. The Chicago-based company
employed 8,400 full-time equivalent associates as of Sept. 30, 2008. For more
information about U.S. Cellular, visit http://www.uscellular.com.
Safe Harbor Statement Under the Private Securities Litigation Reform Act
of 1995: All information set forth in this news release, except historical and
factual information, represents forward-looking statements. This includes all
statements about the company's plans, beliefs, estimates, and expectations.
These statements are based on current estimates, projections, and assumptions,
which involve certain risks and uncertainties that could cause actual results
to differ materially from those in the forward-looking statements. Important
factors that may affect these forward-looking statements include, but are not
limited to: The ability of U.S. Cellular to successfully manage and grow the
operations of more recently launched markets; 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
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; risks and uncertainties relating to
restatements and possible future restatements; ability to remediate the
material weakness; pending and future litigation; changes in income tax rates,
laws, regulations or rulings; acquisitions/divestitures of properties and/or
licenses; and changes in customer growth rates, average monthly revenue per
unit, churn rates, roaming revenue and terms, the availability of devices, or
the mix of products and services offered by U.S. Cellular and TDS Telecom.
Investors are encouraged to consider these and other risks and uncertainties
that are discussed in the Form 8-K used by TDS to furnish this press release
to the SEC, which are incorporated by reference herein.
UNITED STATES CELLULAR CORPORATION
SUMMARY OPERATING DATA
Quarter Ended 9/30/2008 6/30/2008 3/31/2008 12/31/2007 9/30/2007
Total Population:
Consolidated
markets (1) 82,875,000 82,875,000 82,846,000 82,371,000 81,841,000
Consolidated
operating
markets (1) 45,493,000 45,493,000 45,262,000 44,955,000 44,955,000
All customers:
Customer units(2) 6,176,000 6,194,000 6,175,000 6,102,000 6,058,000
Gross customer
unit additions 367,000 365,000 409,000 436,000 447,000
Net customer unit
additions
(losses) (18,000) 16,000 74,000 44,000 48,000
Market penetration
at end of period:
Consolidated
markets (3) 7.5% 7.5% 7.5% 7.4% 7.4%
Consolidated
operating
markets (3) 13.6% 13.6% 13.6% 13.6% 13.5%
Retail customers:
Customer
units (2) 5,674,000 5,677,000 5,640,000 5,564,000 5,500,000
Gross customer
unit additions 325,000 318,000 360,000 367,000 374,000
Net postpay customer
unit additions 12,000 33,000 71,000 70,000 73,000
Net prepay customer
unit additions
(losses) (15,000) 1,000 14,000 (6,000) (21,000)
Cell sites in service 6,716 6,596 6,452 6,383 6,255
Average monthly
revenue per unit (4) $54.59 $53.27 $52.24 $52.57 $52.73
Retail service
revenue per
unit (4) $46.04 $45.62 $45.30 $45.45 $45.02
Inbound roaming
revenue per
unit (4) $3.73 $3.40 $2.94 $3.09 $3.36
Long-distance/other
revenue per
unit (4) $4.82 $4.25 $4.00 $4.03 $4.35
Minutes of use
(MOU) - Voice (5) 695 704 701 689 680
Retail postpay churn
rate per month (6) 1.6% 1.4% 1.4% 1.5% 1.6%
Construction
Expenditures (000s) $146,100 $137,800 $111,700 $188,100 $130,600
(1) "Total population of consolidated markets" and "Total population of
consolidated operating markets" are used only for the purposes of
calculating market penetration of consolidated markets and
consolidated operating markets, respectively, which is calculated by
dividing customers by the total market population (without duplication
of population in overlapping markets).
(2) All customer units as of September 30, 2007, December 31, 2007 and
March 31, 2008, and retail customer units as of March 31, 2008 have
been adjusted from amounts previously reported, as a result of a
review of U.S. Cellular's customer reporting procedures.
(3) Calculated by dividing the number of wireless customers at the end of
the period by the total population of consolidated markets and
consolidated operating markets, respectively, as estimated by
Claritas.
(4) Per unit revenue measurements are derived from Service Revenues as
reported in Financial Highlights for each respective quarter as
follows:
Service Revenues
(000s) $1,013,928 $987,352 $962,094 $957,896 $954,540
Components:
Retail service revenue
(000s) 855,167 845,564 834,213 828,169 814,948
Inbound roaming revenue
(000s) 69,319 63,033 54,089 56,358 60,843
Long-distance/other
revenue (000s) 89,442 78,755 73,792 73,369 78,749
Divided by average
customers (000s) 6,191 6,178 6,139 6,074 6,034
Divided by three months
in each quarter 3 3 3 3 3
Average monthly revenue
per unit $54.59 $53.27 $52.24 $52.57 $52.73
Retail service revenue
per unit $46.04 $45.62 $45.30 $45.45 $45.02
Inbound roaming revenue
per unit $3.73 $3.40 $2.94 $3.09 $3.36
Long-distance/other
revenue per unit $4.82 $4.25 $4.00 $4.03 $4.35
(5) Average monthly local voice minutes of use per customer (without
roaming).
(6) Retail postpay churn rate per month is calculated by dividing the
total monthly retail postpay customer disconnects during the quarter
by the average retail postpay customer base for the quarter.
TELEPHONE AND DATA SYSTEMS, INC.
SUMMARY OPERATING DATA
Quarter Ended 9/30/2008 6/30/2008 3/31/2008 12/31/2007 9/30/2007
TDS Telecom
ILEC:
Access line
equivalents(1) 773,700 774,300 767,100 762,700 763,000
Access lines 568,900 577,000 579,200 585,600 595,100
Digital Subscriber
Lines (DSL)
customers 171,000 164,100 154,800 143,500 135,500
Long Distance
customers 346,600 346,100 344,900 345,200 346,400
Construction
Expenditures
(000s) $33,300 $22,800 $14,600 $41,300 $23,500
CLEC:
Access line
equivalents (1) 402,600 417,200 426,700 435,000 443,700
Percent of access
lines on-switch 94.6% 94.4% 94.3% 94.0% 93.9%
Digital Subscriber
Lines (DSL)
customers 41,200 42,500 43,100 43,300 43,600
Construction
Expenditures
(000s) $4,500 $4,700 $3,500 $5,700 $3,400
(1) Equivalent access lines are the sum of physical access lines and
high-capacity data lines adjusted to estimate the equivalent number
of physical access lines in terms of capacity. A physical access
line is the individual circuit connecting a customer to a telephone
company's central office facilities.
TELEPHONE AND DATA SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS HIGHLIGHTS
Three Months Ended September 30,
(Unaudited, dollars and shares in thousands, except per share amounts)
Increase (Decrease)
2008 2007 Amount Percent
Operating Revenues
U.S. Cellular $1,091,875 $1,015,834 $76,041 7.5%
TDS Telecom 205,992 214,632 (8,640) (4.0)%
All Other(1) 6,731 6,419 312 4.9%
1,304,598 1,236,885 67,713 5.5%
Operating Expenses
U.S. Cellular
Expenses excluding
depreciation, amortization
and accretion 819,600 765,119 54,481 7.1%
Depreciation, amortization
and accretion 145,434 148,014 (2,580) (1.7)%
Loss on asset disposals, net 6,884 1,762 5,122 N/M
971,918 914,895 57,023 6.2%
TDS Telecom
Expenses excluding
depreciation, amortization
and accretion 130,944 140,124 (9,180) (6.6)%
Depreciation, amortization
and accretion 39,036 38,474 562 1.5%
Loss on asset disposals, net 151 --- 151 N/M
170,131 178,598 (8,467) (4.7)%
All Other (1)
Expenses excluding
depreciation and amortization 6,840 5,458 1,382 25.3%
Depreciation and amortization 3,505 3,445 60 1.7%
Loss on asset disposals, net 65 --- 65 N/M
10,410 8,903 1,507 16.9%
Total Operating Expenses 1,152,459 1,102,396 50,063 4.5%
Operating Income (Loss)
U.S. Cellular 119,957 100,939 19,018 18.8%
TDS Telecom 35,861 36,034 (173) (0.5)%
All Other (1) (3,679) (2,484) (1,195) (48.1)%
152,139 134,489 17,650 13.1%
Investment and Other Income
(Expense)
Equity in earnings of
unconsolidated entities 22,566 23,823 (1,257) (5.3)%
Interest and dividend income 8,617 18,687 (10,070) (53.9)%
Gain (loss) on investments
and financial instruments 31,997 194,036 (162,039) (83.5)%
Interest expense (31,684) (49,730) 18,046 36.3%
Other, net 383 (865) 1,248 N/M
Total Investment and Other
Income (Expense) 31,879 185,951 (154,072) (82.9)%
Income Before Income Taxes,
Minority Interest and
Extraordinary Item 184,018 320,440 (136,422) (42.6)%
Income tax expense 61,024 115,907 (54,883) (47.4)%
Income Before Minority Interest
and Extraordinary Item 122,994 204,533 (81,539) (39.9)%
Minority share of income,
net of tax (21,771) (15,623) (6,148) (39.4)%
Income Before Extraordinary Item 101,223 188,910 (87,687) (46.4)%
Extraordinary Item, net of taxes --- 42,827 (42,827) N/M
Net Income 101,223 231,737 (130,514) (56.3)%
Preferred dividend requirement (13) (13) --- 0.0%
Net Income Available to Common $101,210 $231,724 $(130,514) (56.3)%
Basic Weighted Average Common
Shares Outstanding 115,700 118,705 (3,005) (2.5)%
Basic Earnings Per Share
Income before extraordinary item $0.87 $1.59 $(0.72) (45.3)%
Extraordinary Item --- 0.36 (0.36) N/M
Net income available to common $0.87 $1.95 $(1.08) (55.4)%
Diluted Weighted Average
Common Shares Outstanding 116,193 119,950 (3,757) (3.1)%
Diluted Earnings Per Share
Income before extraordinary item $0.87 $1.57 $(0.70) (44.6)%
Extraordinary Item --- 0.36 (0.36) N/M
Net income available to common $0.87 $1.93 $(1.06) (54.9)%
(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 STATEMENTS OF OPERATIONS HIGHLIGHTS
Nine Months Ended September 30,
(Unaudited, dollars and shares in thousands, except per share amounts)
Increase/ (Decrease)
2008 2007 Amount Percent
Operating Revenues
U.S. Cellular $3,190,323 $2,922,154 $268,169 9.2%
TDS Telecom 619,492 648,555 (29,063) (4.5)%
All Other(1) 18,235 15,567 2,668 17.1%
3,828,050 3,586,276 241,774 6.7%
Operating Expenses
U.S. Cellular
Expenses excluding
depreciation, amortization
and accretion 2,383,500 2,141,331 242,169 11.3%
Depreciation, amortization
and accretion 433,222 439,990 (6,768) (1.5)%
Loss on asset disposals, net 16,776 7,899 8,877 N/M
2,833,498 2,589,220 244,278 9.4%
TDS Telecom
Expenses excluding
depreciation, amortization
and accretion 392,661 425,125 (32,464) (7.6)%
Depreciation, amortization
and accretion 117,615 116,823 792 0.7%
Loss on asset disposals, net 349 --- 349 N/M
510,625 541,948 (31,323) (5.8)%
All Other(1)
Expenses excluding
depreciation and amortization 17,049 15,046 2,003 13.3%
Depreciation and amortization 11,322 8,821 2,501 28.4%
Loss on asset disposals, net 65 --- 65 N/M
28,436 23,867 4,569 19.1%
Total Operating Expenses 3,372,559 3,155,035 217,524 6.9%
Operating Income (Loss)
U.S. Cellular 356,825 332,934 23,891 7.2%
TDS Telecom 108,867 106,607 2,260 2.1%
All Other (1) (10,201) (8,300) (1,901) (22.9)%
455,491 431,241 24,250 5.6%
Investment and Other Income
(Expense)
Equity in earnings of
unconsolidated entities 66,945 71,394 (4,449) (6.2)%
Interest and dividend income 35,818 182,651 (146,833) (80.4)%
Gain (loss) on investments and
financial instruments 31,595 229,707 (198,112) (86.2)%
Interest expense (108,634) (162,776) 54,142 33.3%
Other, net 2,086 (4,957) 7,043 N/M
Total Investment and Other
Income (Expense) 27,810 316,019 (288,209) (91.2)%
Income Before Income Taxes,
Minority Interest and
Extraordinary Item 483,301 747,260 (263,959) (35.3)%
Income tax expense 163,536 283,845 (120,309) (42.4)%
Income Before Minority Interest
and Extraordinary Item 319,765 463,415 (143,650) (31.0)%
Minority share of income,
net of tax (57,298) (63,807) 6,509 10.2%
Income Before Extraordinary Item 262,467 399,608 (137,141) (34.3)%
Extraordinary Item, net of taxes --- 42,827 (42,827) N/M
Net Income 262,467 442,435 (179,968) (40.7)%
Preferred dividend requirement (39) (39) --- 0.0%
Net Income Available to Common $262,428 $442,396 $(179,968) (40.7)%
Basic Weighted Average Common
Shares Outstanding 116,510 117,526 (1,016) (0.9)%
Basic Earnings Per Share
Income before extraordinary item $2.25 $3.40 $(1.15) (33.8)%
Extraordinary item --- 0.36 (0.36) N/M
Net income available to common $2.25 $3.76 $(1.51) (40.2)%
Diluted Weighted Average
Common Shares Outstanding 117,065 119,164 (2,099) (1.8)%
Diluted Earnings Per Share
Income before extraordinary item $2.24 $3.33 $(1.09) (32.7)%
Extraordinary item --- 0.36 (0.36) N/M
Net income available to common $2.24 $3.69 $(1.45) (39.3)%
(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
September 30, December 31,
2008 2007
Current Assets
Cash and cash equivalents $1,006,083 $1,174,446
Marketable equity securities --- 1,917,893
Accounts receivable from customers and other 543,171 530,421
Inventory 118,183 115,818
Other current assets 149,888 137,010
1,817,325 3,875,588
Investments
Licenses 1,831,526 1,516,629
Goodwill 695,870 679,129
Customer lists 27,736 25,851
Investments in unconsolidated entities 227,425 206,418
Other investments 10,791 11,509
2,793,348 2,439,536
Property, Plant and Equipment, net
U.S. Cellular 2,575,280 2,595,096
TDS Telecom 889,262 900,267
Other 29,573 29,739
3,494,115 3,525,102
Other Assets and Deferred Charges 53,558 53,917
Total Assets $8,158,346 $9,894,143
TELEPHONE AND DATA SYSTEMS, INC.
CONSOLIDATED BALANCE SHEET HIGHLIGHTS
(Unaudited, dollars in thousands)
LIABILITIES AND STOCKHOLDERS' EQUITY
September 30, December 31,
2008 2007
Current Liabilities
Forward contracts $ --- $1,005,512
Current portion of long-term debt 6,171 3,860
Derivative liability --- 711,692
Accounts payable 320,763 308,882
Customer deposits and deferred revenues 176,098 166,191
Accrued interest 23,984 18,456
Accrued taxes 107,200 40,439
Accrued compensation 85,792 91,703
Net deferred income tax liability --- 327,162
Other current liabilities 116,567 125,622
836,575 2,799,519
Deferred Liabilities and Credits
Net deferred income tax liability 614,022 555,593
Asset retirement obligation 194,810 173,468
Other deferred liabilities and credits 148,814 154,602
957,646 883,663
Long-Term Debt 1,631,627 1,632,226
Minority Interest 694,561 651,537
Preferred Shares 854 860
Common Stockholders' Equity
Common Shares, $.01 par value 566 566
Special Common Shares, $.01 par value 630 629
Series A Common Shares, $.01 par value 65 64
Capital in excess of par value 2,062,218 2,048,110
Treasury Shares, at cost
Common Shares (118,390) (120,544)
Special Common Shares (313,472) (204,914)
Accumulated other comprehensive income (8,338) 511,776
Retained earnings 2,413,804 1,690,651
4,037,083 3,926,338
Total Liabilities and Stockholders' Equity $8,158,346 $9,894,143
BALANCE SHEET HIGHLIGHTS
September 30, 2008
(Unaudited, dollars in thousands)
TDS
U.S. TDS Corporate Intercompany TDS
Cellular Telecom & Other Eliminations Consolidated
Cash and cash
equivalents $177,608 $1,721 $826,754 $ --- $1,006,083
Affiliated cash
investments --- 1,188,073 --- (1,188,073) ---
Notes receivable
-- affiliates --- --- 253,582 (253,582) ---
$177,608 $1,189,794 $1,080,336 $(1,441,655) $1,006,083
Licenses, goodwill
and customer
lists $2,299,305 $416,992 $(161,165) $ --- $2,555,132
Investment in
unconsolidated
entities 175,424 6,515 50,246 (4,760) 227,425
Other investments 4,328 2,805 3,658 --- 10,791
$2,479,057 $426,312 $(107,261) $(4,760) $2,793,348
Property, Plant
and Equipment,
net $2,575,280 $889,262 $29,573 $ --- $3,494,115
Notes payable
-- affiliates $ --- $253,582 $1,188,073 $(1,441,655) $ ---
Long-term Debt:
Current portion $607 $474 $5,090 $ --- $6,171
Non-current
portion 1,006,431 2,749 622,447 --- 1,631,627
Total $1,007,038 $3,223 $627,537 $ --- $1,637,798
Preferred Shares $ --- $ --- $854 $ --- $854
Construction
expenditures:
Quarter ended
9/30/08 $146,100 $37,800 $2,100 $ --- $186,000
Nine months
ended 9/30/08 $395,600 $83,400 $6,000 $ --- $485,000
TDS Telecom Highlights
Three Months Ended September 30,
(Unaudited, dollars in thousands)
Increase (Decrease)
2008 2007 Amount Percent
Local Telephone Operations
Operating Revenues
Voice $51,222 $53,427 $(2,205) (4.1)%
Data 22,964 18,726 4,238 22.6%
Network access 69,199 74,473 (5,274) (7.1)%
Miscellaneous 9,604 10,614 (1,010) (9.5)%
152,989 157,240 (4,251) (2.7)%
Operating Expenses
Cost of services and products 47,337 49,069 (1,732) (3.5)%
Selling, general and
administrative expenses 40,311 43,703 (3,392) (7.8)%
Depreciation, amortization
and accretion 33,469 32,642 827 2.5%
Loss on asset disposals, net 78 --- 78 N/M
121,195 125,414 (4,219) (3.4)%
Operating Income $31,794 $31,826 $(32) (0.1)%
Competitive Local Exchange Carrier
Operations
Revenues $54,690 $58,972 $(4,282) (7.3)%
Expenses excluding
depreciation, amortization
and accretion 44,983 48,932 (3,949) (8.1)%
Depreciation, amortization and
accretion 5,567 5,832 (265) (4.5)%
Loss on asset disposals, net 73 --- 73 N/M
50,623 54,764 (4,141) (7.6)%
Operating Income $4,067 $4,208 $(141) (3.4)%
Intercompany revenues $(1,687) $(1,580) $(107) N/M
Intercompany expenses (1,687) (1,580) (107) N/M
--- --- ---
Total TDS Telecom Operating
Income $35,861 $36,034 $(173) (0.5)%
N/M - Percentage change not meaningful.
TDS Telecom Highlights
Nine Months Ended September 30,
(Unaudited, dollars in thousands)
Increase (Decrease)
2008 2007 Amount Percent
Local Telephone Operations
Operating Revenues
Voice $153,723 $167,396 $(13,673) (8.2)%
Data 65,888 52,689 13,199 25.1%
Network access 210,008 227,675 (17,667) (7.8)%
Miscellaneous 28,384 26,175 2,209 8.4 %
458,003 473,935 (15,932) (3.4)%
Operating Expenses
Cost of services and products 139,044 148,883 (9,839) (6.6)%
Selling, general and
administrative expenses 124,208 129,622 (5,414) (4.2)%
Depreciation, amortization
and accretion 100,595 98,912 1,683 1.7%
Loss on asset disposals, net 32 --- 32 N/M
363,879 377,417 (13,538) (3.6)%
Operating Income $94,124 $96,518 $(2,394) (2.5)%
Competitive Local Exchange Carrier
Operations
Revenues $166,707 $179,089 $(12,382) (6.9)%
Expenses excluding
depreciation, amortization
and accretion 134,627 151,089 (16,462) (10.9)%
Depreciation, amortization
and accretion 17,020 17,911 (891) (5.0)%
Loss on asset disposals, net 317 --- 317 N/M
151,964 169,000 (17,036) (10.1)%
Operating Income $14,743 $10,089 $4,654 46.1%
Intercompany revenues $(5,218) $(4,469) $(749) N/M
Intercompany expenses (5,218) (4,469) (749) N/M
--- --- ---
Total TDS Telecom Operating
Income $108,867 $106,607 $2,260 2.1%
N/M - Percentage change not meaningful.
TELEPHONE AND DATA SYSTEMS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
Nine Months Ended September 30,
(Unaudited, dollars in thousands)
2008 2007
(Dollars in thousands)
Cash Flows from Operating Activities
Net income $262,467 $442,435
Add (Deduct) adjustments to reconcile net income
to net cash flows from operating activities
Depreciation, amortization and accretion 562,159 565,634
Bad debts expense 59,452 51,131
Stock-based compensation expense 15,961 22,946
Deferred income taxes, net (298,200) (195,108)
Gain on investments and financial
instruments, net (31,595) (229,707)
Equity in earnings of unconsolidated entities (66,945) (71,394)
Distributions from unconsolidated entities 51,224 47,871
Minority share of income 57,298 63,807
Loss on asset disposals, net 17,190 7,899
Extraordinary Item, net of tax --- (42,827)
Noncash interest expense 8,573 15,855
Excess tax benefit from stock awards (1,832) (24,530)
Other operating activities (1,955) (3,306)
Changes in assets and liabilities
Change in accounts receivable (82,857) (79,571)
Change in inventory (12,929) 3,312
Change in accounts payable 7,140 (2,439)
Change in customer deposits and deferred
revenues 9,827 24,760
Change in accrued taxes 109,269 205,227
Change in accrued interest 5,528 4,295
Change in other assets and liabilities (37,951) (30,543)
631,824 775,747
Cash Flows from Investing Activities
Additions to property, plant and equipment (485,028) (463,019)
Cash paid for acquisitions and licenses (336,259) (20,569)
Cash received from divestitures 6,838 4,277
Proceeds from disposition of investments 259,017 91,740
Cash paid to settle derivative liabilities (17,404) ---
Other investing activities (832) (1,345)
(573,668) (388,916)
Cash Flows from Financing Activities
Issuance of notes payable 100,000 25,000
Issuance of long-term debt --- 2,857
Repayment of notes payable (100,000) (60,000)
Repayment of variable prepaid forward contracts (47,357) ---
Repayment of long-term debt (8,296) (2,460)
TDS Common Shares and Special Common Shares
reissued for benefit plans, net of tax payments 1,916 109,842
U.S. Cellular Common Shares reissued for benefit
plans, net of tax payments (1,286) 12,181
Excess tax benefit from stock awards 1,832 24,530
Repurchase of TDS Special Common Shares (111,769) (85,584)
Repurchase of U.S. Cellular Common Shares (23,146) (65,202)
Dividends paid (35,783) (34,337)
Distributions to minority partners (6,539) (6,258)
Other financing activities 3,909 (747)
(226,519) (80,178)
Net Increase (Decrease) in Cash and Cash
Equivalents (168,363) 306,653
Cash and Cash Equivalents -
Beginning of period 1,174,446 1,013,325
End of period $1,006,083 $1,319,978
SOURCE Telephone and Data Systems, Inc.
CONTACT: Mark A. Steinkrauss, Vice President, Corporate Relations,
+1-312-592-5384, mark.steinkrauss@teldta.com, or Julie D. Mathews, Manager,
Investor Relations, +1-312-592-5341, julie.mathews@teldta.com, both of
Telephone and Data Systems, Inc./
/Web site: http://www.teldta.com /
(TDS TDS.S)
