NON-CASH IMPAIRMENT CHARGES RELATED TO SFAS 142
CHICAGO, Feb. 26 /PRNewswire-FirstCall/ --
Telephone and Data Systems, Inc. (NYSE:TDSNYSE:TDS.S) reported operating revenues of $1,264.0 million for the fourth quarter of 2008, an increase of 1.7 percent from $1,242.7 million in the comparable period one year ago. In the fourth quarter, TDS recorded a $414.4 million impairment, which will be discussed later in this release. Although the impairment resulted in a loss for the quarter, it was a non-cash charge and did not affect cash or cash flow.
"We are proud to have completed our 40th year of providing outstanding communications services to our customers," said LeRoy T. Carlson, Jr., TDS president and chief executive officer. At the same time, we reached the $5 billion revenue mark and now provide wireless and wireline telecommunications services to nearly 7.4 million customers in 36 states. We have every intention of keeping this momentum going.
"U.S. Cellular and TDS delivered solid fourth quarter results, particularly in light of the dramatically slowing economy. U.S. Cellular continued to execute on its strategy of delivering high customer satisfaction. In the quarter, U.S. Cellular added 41,000 net new retail postpay customers. At year end postpay represented 95 percent of the retail customer base. Data revenues continued to be strong, growing 32 percent in the quarter, and represented 14.5 percent of service revenues. ARPU was up year over year for the 13th consecutive quarter, while postpay churn remained low at 1.6 percent.
"TDS Telecom continued to make considerable progress toward being the preferred broadband provider in its markets. TDS Telecom's goal is to make 10 MB service available to more than 50 percent of its customer base in 2009. Additionally, TDS Telecom plans to offer 25 MB or faster service to selected competitive markets in 2009 and 2010. In the quarter, ILEC DSL subscribers increased 24 percent, contributing to a 19 percent increase in data revenues. TDS Telecom is aggressively selling Triple Play bundles, and added 3,900 Triple Play voice, DSL, and satellite TV customers in the quarter. Triple Play customers now total 58,500. Customer churn for Triple Play bundles is very low at 0.5 percent.
"TDS Telecom has also introduced a new service called managedIP. This hosted Internet Protocol (IP) solution offers small and medium businesses a single converged voice and data communications solution. Unlike most VoIP services, which use the public Internet to deliver voice services, managedIP is delivered over a private, secure, and dedicated network that's hosted at a secure TDS facility. Businesses are able to focus on increasing sales and providing improved customer service, while TDS manages, protects, and upgrades their communications systems. Because this is a hosted solution, it allows the customer to avoid a big capital expense, which is a benefit to businesses, particularly during these tough economic times.
"To support the extension of managedIP, TDS Telecom plans to begin implementing a 10G regional fiber transport network in 2009. The 10G network will provide much more capacity, lower costs, and enhanced reliability through redundancy, and will allow the company to roll out new services more quickly in more markets. TDS Telecom expects to connect a majority of its customers with the new network by year end.
"During the quarter, TDS Telecom closed on its acquisition of State Long Distance Telecom located in southeastern Wisconsin. At year end, State Long Distance Telecom served 9,100 access lines and 2,300 DSL lines."
Outlook for 2009
"For 2009," continued Carlson, "TDS is well-positioned to grow during these difficult times by continuing to deliver outstanding customer satisfaction. Both businesses have proven, targeted, and effective strategies. They are both financially strong and generate positive cash flows from operating activities. TDS and U.S. Cellular are investment-grade and have very strong balance sheets that provide financial flexibility. And, TDS has 12,500 excellent associates and employees who are committed to delivering outstanding quality and value to our customers and generating value for shareholders."
Material Weakness Eliminated
In the fourth quarter of 2008, TDS completed the implementation of previously reported enhanced internal controls related to income tax accounting. These controls are operating effectively and, as a result, the company no longer has a material weakness related to income taxes.
SFAS 142 Impairment Charges
TDS recorded an impairment of licenses of $414.4 million in the fourth quarter of 2008 in accordance with Statement of Financial Accounting Standards, "Goodwill and Other Intangible Assets" ("SFAS No. 142"). Of the $414.4 million, $386.7 million is recorded at U.S. Cellular.
The impairment charge had no impact on cash or cash flow.
In accordance with SFAS No. 142, TDS and U.S. Cellular performed annual impairment tests of the companies' licenses and goodwill in the second quarter of 2008 and concluded at that time that there was no impairment. As a result of the further deterioration in the credit and financial markets and the accelerated decline in the overall economy in the fourth quarter of 2008, TDS and U.S. Cellular updated the impairment assessment of licenses and goodwill as of Dec. 31, 2008. The impairment assessment resulted in a $414.4 million impairment to licenses and no impairment to goodwill.
Guidance
Guidance for the year ending Dec. 31, 2009 is as follows. There can be no assurance that final results will not differ materially from this guidance.
U.S. Cellular 2009 guidance as of Feb. 26, 2009 is as follows:
Net Retail Customer Additions 75,000-150,000
Service Revenue $3,900-$4,000 million
Operating Income $275-$350 million
Depreciation, Amortization &
Accretion(1) Approx. $600 million
Capital Expenditures Approx. $575 million
TDS Telecom (ILEC and CLEC) 2009 guidance as of Feb. 26, 2009 is as
follows:
Operating Revenues $780-$820 million
Operating Income $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 Feb. 26, 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.
Cost
Repurchase Period # Shares (in millions)
2008 (fourth quarter) 2,998,256 $84.6
2008 (third quarter) 806,900 $30.3
2008 (second quarter) 1,015,650 $39.6
2008 (first quarter) 1,041,016 $45.1
2008 (full year) 5,861,822 $199.6
2007 (full year) 2,076,979 $126.7
Total 2007 and 2008 7,938,801 $326.3
Conference call information
TDS will hold a conference call on Feb. 26 at 10:00 a.m. Chicago time. Access the live call online at http://www.videonewswire.com/event.asp?id=56184 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 86129191.
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 12,500 employees as of Dec. 31, 2008. For more information about TDS, visit http://www.teldta.com/.
About U.S. Cellular(R)
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 8,500 full-time equivalent associates as of Dec. 31, 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 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 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 possible future restatements; 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.
IMPORTANT INFORMATION: TDS and its directors, executive officers and other members of its management and employees may be deemed to be participants in the solicitation of proxies from the shareholders of TDS in connection with the TDS 2009 annual meeting of shareholders. Information regarding TDS directors and executive officers and their respective interests in TDS by security holdings or otherwise is set forth in TDS' proxy statement relating to its 2008 annual meeting, as filed with the Securities and Exchange Commission ("SEC") on April 15, 2008, which may be obtained free of charge at the SEC's website at http://www.sec.gov/ and TDS' website at http://www.teldta.com/. Additional information concerning participants that may be soliciting proxy statements on behalf of the TDS board of directors and their respective interests in TDS by security holdings or otherwise will be included in the proxy statement filed by TDS in connection with its 2009 annual meeting of shareholders. The 2009 proxy statement, other solicitation material and other reports that TDS files with the SEC, when available, can be obtained free of charge at the SEC's web site at http://www.sec.gov/ or from TDS on its website at http://www.teldta.com/. TDS SHAREHOLDERS ARE ADVISED TO READ CAREFULLY THE PROXY STATEMENT AND OTHER SOLICITATION MATERIAL FILED BY TDS IN CONNECTION WITH THE TDS 2009 ANNUAL MEETING OF SHAREHOLDERS WHEN THEY BECOME AVAILABLE BEFORE MAKING ANY VOTING DECISION BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION RELATING TO THE ELECTION OF DIRECTORS OF TDS.
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/
UNITED STATES CELLULAR CORPORATION
SUMMARY OPERATING DATA
Quarter Ended 12/31/2008 9/30/2008 6/30/2008 3/31/2008 12/31/2007
Total
Population:
Consolidated
markets (1) 83,014,000 82,875,000 82,875,000 82,846,000 82,371,000
Consolidated
operating
markets (1) 46,009,000 45,493,000 45,493,000 45,262,000 44,955,000
All customers:
Customer
units (2) 6,196,000 6,176,000 6,194,000 6,175,000 6,102,000
Gross customer
unit additions 395,000 367,000 365,000 408,000 436,000
Net customer
unit
additions
(losses) 20,000 (18,000) 16,000 73,000 44,000
Market penetration
at end of period:
Consolidated
markets (3) 7.5% 7.5% 7.5% 7.5% 7.4%
Consolidated
operating
markets (3) 13.5% 13.6% 13.6% 13.6% 13.6%
Retail customers:
Customer
units (2) 5,707,000 5,674,000 5,677,000 5,640,000 5,564,000
Gross customer
unit additions 352,000 325,000 318,000 360,000 367,000
Net postpay
customer unit
additions 41,000 12,000 33,000 72,000 70,000
Net prepay
customer
unit additions
(losses) (8,000) (15,000) 1,000 13,000 (6,000)
Cell sites in
service 6,877 6,716 6,596 6,452 6,383
Average monthly
revenue per
unit (4) $52.71 $54.59 $53.27 $52.24 $52.60
Retail service
revenue per
unit (4) (7) $46.43 $46.97 $46.53 $46.18 $46.39
Inbound roaming
revenue per
unit (4) (7) $4.25 $5.03 $4.54 $3.95 $4.22
Other revenue
per unit (4) (7) $2.03 $2.59 $2.20 $2.11 $1.99
Minutes of use
(MOU) - Voice (5) 678 695 704 701 689
Postpay churn
rate (6) 1.6% 1.6% 1.4% 1.4% 1.5%
Construction
Expenditures
(000s) $190,000 $146,100 $137,800 $111,700 $188,100
(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 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) $976,952 $1,013,928 $987,352 $962,094 $957,896
Components:
Retail service
revenue
(000s) 860,503 872,397 862,392 850,470 844,848
Inbound roaming
revenue
(000s) 78,768 93,472 84,201 72,755 76,850
Other revenue
(000s) 37,681 48,059 40,759 38,869 36,198
Divided by
average
customers
(000s) 6,178 6,191 6,178 6,139 6,070
Divided by
three months
in each quarter 3 3 3 3 3
Average monthly
revenue per
unit $52.71 $54.59 $53.27 $52.24 $52.60
Retail
service
revenue per
unit $46.43 $46.97 $46.53 $46.18 $46.39
Inbound
roaming
revenue
per unit $4.25 $5.03 $4.54 $3.95 $4.22
Other revenue
per unit $2.03 $2.59 $2.20 $2.11 $1.99
(5) Average monthly voice minutes of use per customer (without roaming).
(6) Postpay churn rate is calculated by dividing the total postpay
customer disconnects during the quarter by the average postpay
customer base for the quarter.
(7) 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 12/31/2008 9/30/2008 6/30/2008 3/31/2008 12/31/2007
TDS Telecom
ILEC:
Access line
equivalents(1) 776,700 773,700 774,300 767,100 762,700
Access lines 566,200 568,900 577,000 579,200 585,600
Digital
Subscriber
Lines (DSL)
customers 178,000 171,000 164,100 154,800 143,500
Long Distance
customers 347,000 346,600 346,100 344,900 345,200
Construction
Expenditures
(000s) $50,200 $33,300 $22,800 $14,600 $41,300
CLEC:
Access line
equivalents
(1) 393,000 402,600 417,200 426,700 435,000
Percent of
access lines
on-switch 94.8% 94.6% 94.4% 94.3% 94.0%
Digital
Subscriber
Lines (DSL)
customers 40,100 41,200 42,500 43,100 43,300
Construction
Expenditures
(000s) $7,200 $4,500 $4,700 $3,500 $5,700
(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 STATEMENT OF OPERATIONS HIGHLIGHTS
Three Months Ended December 31,
(Unaudited, dollars and shares in thousands, except per share amounts)
Increase/(Decrease)
2008 2007 Amount Percent
Operating Revenues
U.S. Cellular $1,052,862 $1,024,110 $28,752 2.8%
TDS Telecom 204,790 211,656 (6,866) (3.2)%
All Other(1) 6,317 6,942 (625) (9.0)%
1,263,969 1,242,708 21,261 1.7%
Operating Expenses
U.S. Cellular
Expenses excluding
depreciation,
amortization and
accretion 845,013 771,609 73,404 9.5%
Depreciation,
amortization
and accretion 143,709 142,279 1,430 1.0%
Loss on asset
disposals, net 6,602 26,117 (19,515) (74.7)%
Loss on
impairment of
intangible
assets 386,653 20,840 365,813 N/M
1,381,977 960,845 421,132 43.8%
TDS Telecom
Expenses
excluding
depreciation,
amortization
and accretion 130,154 136,422 (6,268) (4.6)%
Depreciation,
amortization
and accretion 40,751 40,639 112 0.3%
Loss on asset
disposals, net 508 --- 508 N/M
171,413 177,061 (5,648) (3.2)%
All Other(1)
Expenses
excluding
depreciation and
amortization 6,739 4,478 2,261 50.5%
Depreciation and
amortization 3,458 3,667 (209) (5.7)%
(Gain) Loss on
asset disposals,
net (4) --- (4) N/M
Loss on impairment
of intangible
assets 27,723 --- 27,723 N/M
37,916 8,145 29,771 N/M
Total
Operating
Expenses 1,591,306 1,146,051 445,255 38.9%
Operating Income
(Loss)
U.S. Cellular (329,115) 63,265 (392,380) N/M
TDS Telecom 33,377 34,595 (1,218) (3.5)%
All Other (1) (31,599) (1,203) (30,396) N/M
(327,337) 96,657 (423,994) N/M
Investment and Other
Income (Expense)
Equity in earnings
of unconsolidated
entities 22,867 20,437 2,430 11.9%
Interest and
dividend income 3,313 16,784 (13,471) (80.3)%
Gain (loss) on
investments and
financial instruments --- (148,284) 148,284 N/M
Interest expense (29,265) (45,960) 16,695 36.3%
Other, net 127 (1,444) 1,571 N/M
(2,958) (158,467) 155,509 98.1%
Loss Before Income
Taxes and Minority
Interest (330,295) (61,810) (268,485) N/M
Income tax
(benefit) (133,443) (14,791) (118,652) N/M
Loss Before Minority
Interest (196,852) (47,019) (149,833) N/M
Minority share of
income 27,926 (9,304) 37,230 N/M
Net Loss (168,926) (56,323) (112,603) N/M
Preferred dividend
requirement (13) (13) --- 0.0%
Net Loss Available
to Common $(168,939) $(56,336) $(112,603) N/M
Basic Weighted
Average Shares
Outstanding 113,711 117,914 (4,203) (3.6)%
Basic Loss Per Share $(1.49) $ (0.48) $(1.01) N/M
Diluted Weighted
Average Shares
Outstanding 113,711 117,914 (4,203) (3.6)%
Diluted Loss Per
Share $(1.49) $(0.48) $(1.01) N/M
(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 STATEMENT OF OPERATIONS HIGHLIGHTS
Year Ended December 31
(Unaudited, dollars and shares in thousands, except per share amounts)
Increase (Decrease)
2008 2007 Amount Percent
Operating Revenues
U.S. Cellular $4,243,185 $3,946,264 $296,921 7.5%
TDS Telecom 824,282 860,211 (35,929) (4.2)%
All Other(1) 24,552 22,509 2,043 9.1%
5,092,019 4,828,984 263,035 5.4%
Operating Expenses
U.S. Cellular
Expenses
excluding
depreciation,
amortization
and accretion 3,228,513 2,912,940 315,573 10.8%
Depreciation,
amortization
and accretion 576,931 578,186 (1,255) (0.2)%
Loss on asset
disposals, net 23,378 34,016 (10,638) (31.3)%
Loss on
impairment of
intangible assets 386,653 24,923 361,730 N/M
4,215,475 3,550,065 665,410 18.7%
TDS Telecom
Expenses
excluding
depreciation,
amortization
and accretion 522,815 561,547 (38,732) (6.9)%
Depreciation,
amortization
and accretion 158,366 157,462 904 0.6%
Loss on asset
disposals, net 857 --- 857 N/M
682,038 719,009 (36,971) (5.1)%
All Other (1)
Expenses excluding
depreciation and
amortization 23,788 19,524 4,264 21.8%
Depreciation and
amortization 14,780 12,488 2,292 18.4%
Loss on asset
disposals, net 61 --- 61 N/M
Loss on impairment
of intangible
assets 27,723 --- 27,723 N/M
6,352 32,012 34,340 N/M
Total
Operating
Expenses 4,963,865 4,301,086 662,779 15.4%
Operating Income
(Loss)
U.S. Cellular 27,710 396,199 (368,489) (93.0)%
TDS Telecom 142,244 141,202 1,042 0.7%
All Other (1) (41,800) (9,503) (32,297) N/M
128,154 527,898 (399,744) (75.7)%
Investment and Other
Income (Expense)
Equity in earnings
of unconsolidated
entities 89,812 91,831 (2,019) (2.2)%
Interest and dividend
income 39,131 199,435 (160,304) (80.4)%
Gain (loss) on
investments and
financial
instruments 31,595 81,423 (49,828) (61.2)%
Interest expense (137,899) (208,736) 70,837 33.9%
Other, net 2,213 (6,401) 8,614 N/M
Total Investment
and Other Income
(Expense) 24,852 157,552 (132,700) (84.2)%
Income Before Income
Taxes, Minority
Interest and
Extraordinary Item 153,006 685,450 (532,444) (77.7)%
Income tax expense 30,093 269,054 (238,961) (88.8)%
Income Before Minority
Interest and
Extraordinary Item 122,913 416,396 (293,483) (70.5)%
Minority share of
income, net of tax (29,372) (73,111) 43,739 59.8%
Income Before
Extraordinary Item 93,541 343,285 (249,744) (72.8)%
Extraordinary Item,
net of taxes --- 42,827 (42,827) N/M
Net Income 93,541 386,112 (292,571) (75.8)%
Preferred dividend
requirement (52) (52) --- 0.0%
Net Income Available
to Common $93,489 $386,060 $(292,571) (75.8)%
Basic Weighted Average
Shares Outstanding 115,817 117,624 (1,807) (1.5)%
Basic Earnings Per
Share
Income before
extraordinary item $0.81 $2.92 (2.11) (72.3)%
Extraordinary item - 0.36 (0.36) N/M
Net income available
to common $0.81 $3.28 $(2.47) (75.3)%
Diluted Weighted
Average Shares
Outstanding 116,255 119,126 (2,871) (2.4)%
Diluted Earnings Per
Share
Income before
extraordinary item 0.80 $2.86 (2.06) (72.0)%
Extraordinary item - 0.36 (0.36) N/M
Net income available
to common $0.80 $3.22 $(2.42) (75.2)%
(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
December 31, December 31,
2008 2007
Current Assets
Cash and cash equivalents $777,309 $1,174,446
Short-term investments 27,705 ---
Marketable equity securities --- 1,917,893
Accounts receivable from customers and other 516,849 530,421
Inventory 122,377 115,818
Other current assets 184,696 137,010
1,628,936 3,875,588
Investments
Licenses 1,441,440 1,516,629
Goodwill 707,079 679,129
Customer lists 34,032 25,851
Investments in unconsolidated entities 205,768 206,418
Other investments 10,623 11,509
2,398,942 2,439,536
Property, Plant and Equipment, net
U.S. Cellular 2,620,376 2,595,096
TDS Telecom 918,454 900,267
Other 30,094 29,739
3,568,924 3,525,102
Other Assets and Deferred Charges 55,614 53,917
Total Assets $7,652,416 $9,894,143
TELEPHONE AND DATA SYSTEMS, INC.
CONSOLIDATED BALANCE SHEET HIGHLIGHTS
(Unaudited, dollars in thousands)
LIABILITIES AND STOCKHOLDERS' EQUITY
December 31, December 31,
2008 2007
Current Liabilities
Current portion of long-term debt $15,337 $3,860
Forward contracts --- 1,005,512
Accounts payable 319,575 308,882
Customer deposits and deferred revenues 174,101 166,191
Accrued interest 14,236 18,456
Accrued taxes 25,192 40,439
Accrued compensation 90,512 91,703
Derivative liability --- 711,692
Net deferred income tax liability --- 327,162
Other current liabilities 134,334 125,622
773,287 2,799,519
Deferred Liabilities and Credits
Net deferred income tax liability 471,623 555,593
Other deferred liabilities and credits 368,045 328,070
839,668 883,663
Long-Term Debt 1,621,422 1,632,226
Minority Interest in Subsidiaries 649,700 651,537
Preferred Shares 852 860
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 2,066,597 2,048,110
Treasury Shares, at cost
Common Shares (163,012) (120,544)
Special Common Shares (350,087) (204,914)
Accumulated other comprehensive income (16,812) 511,776
Retained earnings 2,229,540 1,690,651
3,767,487 3,926,338
Total Liabilities and Stockholders' Equity $7,652,416 $9,894,143
BALANCE SHEET HIGHLIGHTS
December 31, 2008
(Unaudited, dollars in thousands)
TDS
U.S. TDS Corporate Intercompany TDS
Cellular Telecom & Other Eliminations Consolidated
Cash and cash
equivalents $170,996 $4,496 $601,817 $--- $777,309
Affiliated cash
investments --- 581,165 --- (581,165) ---
Notes receivable--
affiliates --- --- 253,582 (253,582) ---
$170,996 $585,661 $855,399 $(834,747) $777,309
Licenses,
goodwill and
customer
lists $1,936,630 $437,152 $(191,231) $--- $2,182,551
Investment in
unconsolidated
entities 156,637 6,517 47,616 (5,002) 205,768
Other
investments 4,297 2,725 3,601 --- 10,623
$2,097,564 $446,394 $(140,014) $(5,002) $2,398,942
Property,
Plant and
Equipment,
net $2,620,376 $918,454 $30,094 $--- $3,568,924
Long-term
Debt:
Current
portion $10,258 $254,035 $585,791 $(834,747) $15,337
Non-current
portion 996,636 2,656 622,130 --- 1,621,422
Total $1,006,894 $256,691 $1,207,921 $(834,747) $1,636,759
Preferred Shares $--- $--- $852 $--- $852
Construction
expenditures:
Quarter
ended
12/31/08 $190,000 $57,400 $2,400 - $249,800
Year
ended
12/31/08 $585,600 $140,800 $8,500 - $734,900
TDS Telecom Highlights
Three Months Ended December 31,
(Unaudited, dollars in thousands)
Increase (Decrease)
2008 2007 Amount Percent
Local Telephone
Operations
Operating Revenues
Voice $49,649 $51,492 $(1,843) (3.6)%
Data 24,171 20,329 3,842 18.9%
Network access 68,476 73,612 (5,136) (7.0)%
Miscellaneous 10,735 10,615 120 1.1%
153,031 156,048 (3,017) (1.9)%
Operating Expenses
Cost of services
and products 45,241 44,878 363 0.8%
Selling, general
and administrative
expenses 42,579 45,770 (3,191) (7.0)%
Depreciation,
amortization
and accretion 34,340 34,528 (188) (0.5)%
Loss on asset
disposals 434 --- 434 N/M
122,594 125,176 (2,582) (2.1)%
Operating Income $30,437 $30,872 $(435) (1.4)%
Competitive Local
Exchange Carrier
Operations
Revenues $53,295 $57,440 $(4,145) (7.2)%
Expenses excluding
depreciation,
amortization and
accretion 43,870 47,606 (3,736) (7.8)%
Depreciation,
amortization
and accretion 6,411 6,111 300 4.9%
Loss on asset
disposals 74 --- 74 N/M
50,355 53,717 (3,362) (6.3)%
Operating Income $2,940 $3,723 $(783) (21.0)%
Intercompany
revenues $(1,536) $(1,832) $296 N/M
Intercompany
expenses (1,536) (1,832) 296 N/M
1 --- --- ---
Total TDS Telecom
Operating Income $33,377 $34,595 $(1,218) (3.5)%
N/M - Percentage change not meaningful.
TDS Telecom Highlights
Twelve Months Ended December 31,
(Unaudited, dollars in thousands)
Increase (Decrease)
2008 2007 Amount Percent
Local Telephone
Operations
Operating Revenues
Voice $203,372 $218,888 $(15,516) (7.1)%
Data 90,059 73,018 17,041 23.3%
Network access 278,484 301,287 (22,803) (7.6)%
Miscellaneous 39,119 36,790 2,329 6.3%
611,034 629,983 (18,949) (3.0)%
Operating Expenses
Cost of services
and products 184,285 193,761 (9,476) (4.9)%
Selling, general
and administrative
expenses 166,787 175,392 (8,605) (4.9)%
Depreciation,
amortization and
accretion 134,935 133,440 1,495 1.1%
Loss on asset
disposals 466 --- 466 N/M
486,473 502,593 (16,120) (3.2)%
Operating Income $124,561 $127,390 $(2,829) (2.2)%
Competitive Local
Exchange Carrier
Operations
Revenues $220,002 $236,529 $(16,527) (7.0)%
Expenses excluding
depreciation,
amortization and
accretion 178,497 198,695 (20,198) (10.2)%
Depreciation,
amortization
and accretion 23,431 24,022 (591) (2.5)%
Loss on asset
disposals 391 --- 391 N/M
202,319 222,717 (20,398) (9.2)%
Operating Income $17,683 $13,812 $3,871 28.0%
Intercompany
revenues $(6,754) $(6,301) $(453) N/M
Intercompany
expenses (6,754) (6,301) (453) N/M
1 --- --- ---
Total TDS Telecom
Operating Income $142,244 $141,202 $1,042 0.7%
N/M - Percentage change not meaningful.
TELEPHONE AND DATA SYSTEMS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
Twelve Months Ended December 31,
(Unaudited, dollars in thousands)
2008 2007
(Dollars in thousands)
Cash Flows from Operating Activities
Net income $93,541 $386,112
Add (Deduct) adjustments to reconcile net
income to net cash flows from operating
activities
Depreciation, amortization and accretion 750,077 748,136
Bad debts expense 83,004 74,988
Stock-based compensation expense 22,693 31,891
Deferred income taxes (437,919) (283,047)
(Gain) loss on investments and financial
instruments, net (31,595) (81,423)
Equity in earnings of unconsolidated
entities (89,812) (91,831)
Distributions from unconsolidated entities 92,335 87,404
Minority share of income 29,372 73,111
Loss on impairment of intangible assets 414,376 24,923
Loss on asset disposals, net 24,296 34,016
Extraordinary item, net of tax - (42,827)
Noncash interest expense 10,125 21,124
Excess tax benefit from stock awards (1,966) (28,981)
Other operating activities (1,831) (3,683)
Changes in assets and liabilities
Change in accounts receivable (79,427) (88,889)
Change in inventory (17,123) 16,848
Change in accounts payable 6,804 13,905
Change in customer deposits and deferred
revenues 7,692 24,725
Change in accrued taxes (11,725) 56,225
Change in accrued interest (4,221) (8,273)
Change in other assets and liabilities (9,804) (23,422)
848,892 941,032
Cash flows from investing activities
Additions to property, plant and equipment (734,923) (699,566)
Cash paid for acquisitions and licenses (389,189) (23,764)
Cash received from divestitures 6,838 4,277
Proceeds from disposition of investments 259,017 92,002
Cash paid to settle derivative liabilities (17,404) -
Proceeds from return of investments 1,335 -
Cash paid for short-term investments (27,446) -
Other investing activities (980) (804)
(902,752) (627,855)
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)
Settlement of variable prepaid forward
contracts (47,357) -
Repayment of long-term debt (9,448) (3,552)
TDS Common Shares and Special Common Shares
reissued for benefit plans, net of tax
payments 1,409 113,605
U.S. Cellular Common Shares reissued for
benefit plans, net of tax payments (2,288) 10,073
Excess tax benefit from stock awards 1,966 28,981
Repurchase of TDS Special Common Shares and
Common Shares (197,672) (126,668)
Repurchase of U.S. Cellular Common Shares (28,366) (87,902)
Dividends paid (47,320) (45,830)
Distributions to minority partners (16,769) (8,559)
Other financing activities 2,568 (61)
(343,277) (152,056)
Net Increase (Decrease) in Cash and Cash
Equivalents (397,137) 161,121
Cash and Cash Equivalents -
Beginning of period 1,174,446 1,013,325
End of period $777,309 $1,174,446
DATASOURCE: Telephone and Data Systems, Inc.
CONTACT: Mark A. Steinkrauss, Vice President, Corporate Relations,
+1-312-592-5384, , or Julie D. Mathews, Manager,
Investor Relations, +1-312-592-5341, , both of
Telephone and Data Systems, Inc.
Web site: http://www.teldta.com/