CHICAGO, March 16 /PRNewswire-FirstCall/ -- Telephone and Data Systems,
Inc. (Amex: TDS, TDS.S) today announced revised restatement adjustments. The
previous ranges were provided on Nov. 10, 2005 and discussed in a Feb. 27,
2006 press release.
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. Based on current findings, TDS is revising its previously
disclosed ranges for the restatement. At the present time, the adjustments
are expected to result in increased (decreased) net income and earnings per
share as follows.
Updates to
As Previously Previously
Reported Reported
Range of Range of
Expected Expected
Net Income Adjustments Adjustments
As Previously Increase/ Increase/
Reported (Decrease) (Decrease)
($ in millions)
Second quarter ended
June 30, 2005 $99 $(5) to (2) $(6) to (1)
First quarter ended
March 31, 2005 21 0 to 3 0 to 5
Third quarter ended
September 30, 2004 25 4 to 8 16 to 20
Years ended:
December 31, 2004 49 (4) to 0 13 to 19
December 31, 2003 47 (5) to 0 (15) to (9)
December 31, 2002 (995) (2) to 2 30 to 36
December 31, 2001 (198) (3) to 1 15 to 21
December 31, 2000 $2,237 $(3) to 1 $(57) to (51)
Updates to
As Previously Previously
Reported Reported
Diluted Range of Range of
Earnings Expected Expected
Per Share Adjustments Adjustments
As Previously Increase/ Increase/
Reported (Decrease) (Decrease)
Second quarter ended
June 30, 2005 $0.85 $(0.04) to (0.02) $(0.05) to (0.01)
First quarter ended
March 31, 2005 0.18 0.00 to 0.03 0.00 to 0.04
Third quarter ended
September 30, 2004 0.22 0.03 to 0.07 0.14 to 0.18
Years ended:
December 31, 2004 0.42 (0.03) to 0.00 0.11 to 0.17
December 31, 2003 0.40 (0.04) to 0.00 (0.13) to (0.07)
December 31, 2002 (8.49) (0.02) to 0.02 0.25 to 0.31
December 31, 2001 (1.69) (0.03) to 0.01 0.13 to 0.18
December 31, 2000 $18.44 $(0.02) to 0.01 $(0.47) to (0.42)
Changes from previously reported ranges relate primarily to corrections of
state deferred income tax rates totaling approximately $(53) million in 2000,
$19 million in 2001, $33 million in 2002, $(7) million in 2003 and $2 million
in 2004. Other changes from previously reported ranges also related to income
tax accounts and included corrections to income tax expense, federal and state
income taxes payable, liabilities accrued for tax contingencies and deferred
income tax assets and liabilities. There can be no assurance that final
results will not differ materially from these current expected ranges.
As previously announced, TDS did not file its third quarter 2005 Form 10-Q
on a timely basis because it is restating financial results 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 related financial data for the years
2000 and 2001. It is necessary to complete the restatements on amended Forms
10-Q and 10-K before TDS can file its Form 10-Q for the quarter ended
Sept. 30, 2005.
Due to the lengthy restatement process, TDS does not expect to file its
Form 10-K for the year ended Dec. 31, 2005 and Form 10-Q for the quarter
ending March 31, 2006 on a timely basis. TDS plans to file the restatements,
Form 10-Q for the quarter ended Sept. 30, 2005, Form 10-K for the year ended
Dec. 31, 2005 and Form 10-Q for the quarter ending March 31, 2006 sequentially
when each is complete. The last filings may not be made until late May or in
June 2006.
Later today the company will be filing with the Securities and Exchange
Commission ("SEC") a Form 8-K and Form 12b-25, providing notification of the
expected late filing of Form 10-K for the year ended Dec. 31, 2005.
On Nov. 15, 2005, TDS received a notice from the staff of the AMEX
indicating that it was not in compliance with listing standards, due to its
failure to file quarterly reports on Form 10-Q for the quarter ended Sept. 30,
2005 on a timely basis. The failure by TDS to file Form 10-K for the year
ended Dec. 31, 2005 and its Form 10-Q for the quarter ending March 31, 2006 on
a timely basis will also result in non-compliance with the AMEX listing
standards. The company will regain compliance with the AMEX listing standards
when it has filed with the SEC its Form 10-Q for the quarter ended Sept. 30,
2005, its Form 10-K for the year ended Dec. 31, 2005 and its Form 10-Q for the
quarter ending March 31, 2006. The AMEX granted TDS an extension until
June 30, 2006 to regain compliance with AMEX listing standards.
The restatements and failure to file quarterly reports resulted in
defaults under revolving credit agreements between TDS and certain lenders and
under certain forward contracts between subsidiaries of the companies and a
counterparty. Waivers of such defaults have been extended through March 31,
2006. TDS will request further extensions of waivers from the lenders and the
counterparty under such agreements and such defaults would be waived provided
that TDS files its restatements and Form 10-Q for the quarter ended Sept. 30,
2005 by April 30, 2006, Form 10-K for the year ended Dec. 31, 2005 by May 31,
2006 and Form 10-Q for the quarter ended March 31, 2006 by June 30, 2006.
Fourth Quarter and Twelve Months Ended 2005
Below is a summary of the preliminary operating data and unaudited results
of certain key components of the statement of operations for the fourth
quarter and twelve months of 2005, and for the fourth quarter and twelve
months of 2004, reflecting anticipated restatements. There can be no
assurance that final results will not differ materially from these preliminary
results.
Range of Amounts Range of Amounts
Currently Anticipated Currently Anticipated
to be Reported for to be Reported for
Three months Twelve months
ended December 31 ended December 31
($ in 2004 2005 2004 2005
millions) (as Restated) (as Restated)
Operating
Revenues $915 to 965 $1,000 to 1,050 $3,650 to 3,750 $3,900 to 4,000
Operating
Income $(60) to (20) $90 to 130 $200 to 250 $375 to 430
The increases in operating revenues are related primarily to increases in
the number of wireless customers and landline equivalent access lines served.
The increases in operating income are due in part to higher operating revenues
and higher operating margin (for the full year 2005) as a result of lower
operating expenses as a percent of revenues and higher gains on sales and
exchanges of assets, including a gain of approximately $40 - $45 million on
the exchange of properties with Alltel Corporation in the fourth quarter of
2005. In addition, TDS Telecom recorded impairment losses on intangible and
long-lived assets in the fourth quarter of 2004 totaling $117 million, which
is included in operating income, while no such losses were recorded in 2005.
Until the accounting review is complete, TDS and U.S. Cellular are unable to
finalize their financial statements for the year ended December 31, 2005.
There can be no assurance that final results will not differ materially from
these preliminary results.
The following are selected summary operating data including certain fourth
quarter 2005 data.
U.S. Cellular
Summary Operating Data
Quarter
Ended 12/31/2005 9/30/2005 6/30/2005 3/31/2005 12/31/2004
Consolidated
Markets:
All
customers -
Customer
units 5,482,000 5,303,000 5,227,000 5,127,000 4,945,000
Gross
customer
unit
Activ-
ations 419,000 355,000 340,000 426,000 408,000
Net
customer
unit
activ-
ations 125,000 76,000 94,000 182,000 150,000
Retail
customers -
Customer
units 4,927,000 4,765,000 4,688,000 4,601,000 4,478,000
Gross
customer
unit
Activ-
ations 392,000 346,000 317,000 365,000 358,000
Net
customer
unit
activ-
ations 130,000 77,000 81,000 123,000 105,000
Cell
sites in
service 5,428 5,149 5,034 4,899 4,856
Minutes of
use (MOU)(1) 648 639 627 584 568
Postpay
churn rate
per month(2) 1.6% 1.5% 1.4% 1.5% 1.6%
(1) Average monthly local minutes of use per customer (without roaming).
(2) 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.
Telephone and Data Systems, Inc.
Summary Operating Data
Quarter
Ended 12/31/2005 9/30/2005 6/30/2005 3/31/2005 12/31/2004
TDS Telecom
ILEC:
Access line
equivalents
(1) 735,300 734,800 734,200 734,000 730,400
Access
lines 635,500 640,700 645,800 649,300 652,300
Dial-up
Internet
service
accounts 90,700 89,700 94,500 98,200 101,300
Digital
Subscriber
Lines (DSL)
Customers 65,500 60,300 54,200 49,300 41,900
Long Distance
customers 321,500 316,100 310,000 302,400 295,000
CLEC:
Access line
equivalents
(1) 448,600 445,600 442,900 438,000 426,800
Dial-up
Internet
service
accounts 14,200 14,700 16,000 17,100 18,200
Percent of
access lines
on-switch 91.1% 90.6% 89.8% 88.8% 87.9%
Digital
Subscriber
Lines (DSL)
Customers 36,400 34,800 33,500 31,600 29,000
(1) Access line equivalents are derived by converting high capacity data
lines to the estimated capacity of one switched access line.
About TDS
TDS, a FORTUNE(R) 500 company, 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 growing, 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.
About U.S. Cellular
As of Dec. 31, 2005, U.S. Cellular, the nation's sixth-largest wireless
service carrier, provided wireless service to 5.5 million customers in 25
states. The Chicago-based company operates on a customer satisfaction
strategy, meeting customer needs by providing a comprehensive range of
wireless products and services, superior customer support and a high-quality
network.
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 final results of the restatements and results of operations
for the periods ended Sept. 30, 2005 and Dec. 31, 2005; possible future
restatements; possible material weaknesses in internal controls; 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 and U.S. Cellular 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: http://www.teldta.com TDS Telecom: http://www.tdstelecom.com
USM: http://www.uscellular.com TDS Metrocom: http://www.tdsmetro.com
SOURCE Telephone and Data Systems, Inc.
CONTACT:
Mark A. Steinkrauss
Vice President, Corporate Relations
312-592-5384
mark.steinkrauss@teldta.com
Julie D. Mathews
Manager,
Investor Relations
312-592-5341
julie.mathews@teldta.com
