Note: Comparisons are year over year unless otherwise noted.
CHICAGO, May 7 /PRNewswire-FirstCall/ -- Telephone and Data Systems, Inc. (AMEX:TDSAMEX:TDS.S) reported operating revenues of $1,249.1 million for the first quarter of 2008, an increase of eight percent from $1,156.6 million in the comparable period one year ago. The company recorded operating income of $153.6 million, an eight percent increase from $142.8 million in the first quarter of 2007. Net income available to common and diluted earnings per share were $73.5 million and $0.62, respectively, compared to $219.3 million and $1.85, respectively, in the comparable period one year ago.* * In the first quarter of 2007, the company recorded a gain on investments
and financial instruments of $255.9 million primarily related to the
derivative component of the Deutsche Telekom and Vodafone Group Plc
variable prepaid forward contracts. Solid gains in operating revenues and income
"We had solid increases in operating revenues and income this quarter," said LeRoy T. Carlson, Jr., TDS president and CEO. "In a competitive marketplace with pressure from the slowing national economy, our focus on an excellent customer experience helped to produce gains in service and data revenues at our wireless unit, and generated strong increases in DSL customers at our wireline unit. We continued our share repurchase programs at TDS and U.S. Cellular to provide additional value to shareholders and minimize dilution from employee benefit plans. TDS continues to emphasize steady growth, with a conservative balance sheet and minimal exposure to credit risk and similar issues currently affecting the financial markets.
Wireless data revenues drove increases in service revenues and ARPU "U.S. Cellular's customers are increasingly responding to the company's smartphone offerings," continued Carlson, "such as the BlackBerry(R) Pearl(TM) introduced in the first quarter. Data plans related to these devices, as well as new data services and strong growth in the use of messaging services, helped to increase data revenues, which in turn increased service revenues and ARPU. The company had solid net retail postpay customer additions, while the net retail postpay churn rate was a low, 1.4 percent. Margins were under pressure, due in part to higher advertising costs, handset subsidies, and network costs.
Continued growth in wireline DSL; pressure on physical access lines "In our wireline business, there was a slight increase in overall operating income," added Carlson, "which was helped in part by reduced expenses in both the ILEC and CLEC businesses. Our wireline unit continues to experience pressure on its physical access lines, although steady increases in DSL customers and related revenues have largely offset those losses. ILEC data revenues increased 29 percent, as the company continues to strengthen its broadband position with deeper penetration and new high-speed services for residential and commercial customers." 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 May 7, 2008 is as follows: Net Retail Customer Additions 200,000 - 275,000
Service Revenues $3.9 - 4.0 billion**
Operating Income $435 - 510 million
Depreciation, Amortization
& Accretion Approx. $615 million**
Capital Expenditures $565 - 615 million TDS Telecom (ILEC and CLEC) 2008 guidance as of May 7, 2008 is as follows: Operating Revenues $810 - 840 million
Operating Income $110 - 140 million**
Depreciation, Amortization
& Accretion Approx. $160 million**
Capital Expenditures $130 - 160 million** ** Unchanged from guidance issued on Feb. 29, 2008 This guidance represents the views of management as of May 7, 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 share repurchase summary Repurchase Period # Shares Price (in millions)
2008 (first quarter) 1,041,016 $45.1
2007 (full year) 2,076,979 $126.7
Total 3,117,995 $171.7
In 2007, the TDS Board of Directors authorized the repurchase of up to $250 million in special common shares. As of March 31, 2008, $78.3 million remained under the authorization.
Conference call information
TDS will hold a conference call on May 7, 2008 at 10:00 a.m. Chicago time.
-- Access the live call online at
http://www.videonewswire.com/event.asp?id=48272 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 45884257. 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 & 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 12,100 people as of March 31, 2008. For more information about TDS, visit http://www.teldta.com/.
About U.S. Cellular 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 more than 6.2 million customers in 26 states. The Chicago-based company employed 8,700 associates as of March 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 manage and grow the operations of more recently launched markets; changes in the overall economy, competition, the access to and pricing of unbundled network elements, the state and federal telecommunications regulatory environment, and the value of assets and investments, including variable prepaid forward contracts; 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 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.
As previously announced, TDS will hold a teleconference May 7, 2008, at 10:00 a.m. Chicago time. Interested parties may listen to the call live via the Internet by accessing the Conference Calls page of http://www.teldta.com/.
TELEPHONE AND DATA SYSTEMS, INC. SUMMARY OPERATING DATA Quarter Ended 3/31/2008 12/31/2007 9/30/2007 6/30/2007 3/31/2007
U.S. Cellular
Total Population:
Consolidated
markets (1) 82,846,000 82,371,000 81,841,000 81,581,000 56,048,000
Consolidated
operating
markets (1) 45,262,000 44,955,000 44,955,000 44,955,000 44,416,000
All customers:
Customer
units (2) 6,201,000 6,122,000 6,067,000 6,010,000 5,973,000
Gross customer
unit additions 409,000 437,000 447,000 418,000 459,000
Net customer
unit additions 80,000 55,000 57,000 37,000 152,000
Market penetration
at end of period:
Consolidated
markets (3) 7.5% 7.4% 7.4% 7.4% 10.7%
Consolidated
operating
markets (3) 13.7% 13.6% 13.5% 13.4% 13.4%
Retail customers:
Customer
units (2) 5,640,000 5,564,000 5,500,000 5,448,000 5,377,000
Gross customer
unit additions 360,000 367,000 374,000 347,000 397,000
Net customer
unit additions 85,000 64,000 52,000 71,000 146,000 Cell sites
in service 6,452 6,383 6,255 6,140 6,004
Average monthly
revenue per
unit (4) $52.06 $52.46 $52.71 $50.42 $48.69
Retail service
revenue per
unit (4) $45.14 $45.36 $45.00 $43.87 $42.69
Inbound roaming
revenue per
unit (4) $2.93 $3.09 $3.36 $2.68 $2.33
Long-distance/
other revenue
per unit (4) $3.99 $4.01 $4.35 $3.87 $3.67
Minutes of
use (MOU) (5) 948 906 887 858 783
Retail postpay
churn rate
per month (6) 1.4% 1.5% 1.6% 1.4% 1.3%
Construction
Expenditures
(000s) $111,700 $188,100 $130,600 $137,100 109,700 (1) "Total population of consolidated markets" and "Total population of
consolidated operating markets" are used only for the purposes of
calculating market penetration of consolidated markets and
consolidated operating markets, respectively, which is calculated by
dividing customers by the total market population (without duplication
of population in overlapping markets).
(2) All customer units and Retail customer units as of March 31, 2008
include one time adjustments, resulting from 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
per Financial
Highlights $962,094 $957,896 $954,540 $906,218 $860,583
Components:
Retail service
revenue during
quarter $834,213 $828,169 $814,948 $788,535 $754,515
Inbound roaming
revenue during
quarter $54,089 $56,358 $60,843 $48,084 $41,268
Long-distance/
other revenue
during quarter $73,792 $73,369 $78,749 $69,599 $64,800 Divided by
average customers
during quarter
(000s) 6,160 6,086 6,036 5,991 5,892
Divided by
three months
in each
quarter 3 3 3 3 3 Average monthly
revenue per unit $52.06 $52.46 $52.71 $50.42 $48.69
Retail service
revenue per unit $45.14 $45.36 $45.00 $43.87 $42.69
Inbound roaming
revenue per unit $2.93 $3.09 $3.36 $2.68 $2.33
Long-distance/
other revenue
per unit $3.99 $4.01 $4.35 $3.87 $3.67 (5) Average monthly local 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 3/31/2008 12/31/2007 9/30/2007 6/30/2007 3/31/2007
TDS Telecom
ILEC:
Access line
equivalents (1) 767,100 762,700 763,000 761,200 763,400
Access lines 579,200 585,600 595,100 601,600 610,300
Digital Subscriber
Lines (DSL)
customers 154,800 143,500 135,500 127,400 118,000
Long Distance
customers 344,900 345,200 346,400 346,500 343,800
Construction
Expenditures
(000s) $14,600 $41,300 $23,500 $30,900 $16,100
CLEC:
Access line
equivalents (1) 426,700 435,000 443,700 448,400 456,200
Percent of
access lines
on-switch 94.3% 94.0% 93.9% 93.7% 93.3%
Digital
Subscriber
Lines (DSL)
customers 43,100 43,300 43,600 43,800 42,600
Construction
Expenditures
(000s) $3,500 $5,700 $3,400 $4,800 $2,500 (1) Equivalent access lines are the sum of physical access lines and
high-capacity data lines adjusted to estimate the equivalent number of
physical access lines in terms of capacity. 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 March 31,
(Unaudited, dollars and shares in thousands, except per share amounts) Increase (Decrease)
2008 2007 Amount Percent
Operating Revenues
U.S. Cellular $1,037,856 $934,674 $103,182 11.0%
TDS Telecom 206,076 217,622 (11,546) (5.3%)
All Other (1) 5,169 4,261 908 21.3%
1,249,101 1,156,557 92,544 8.0%
Operating Expenses
U.S. Cellular
Expenses excluding
depreciation, amortization
and accretion 772,687 676,894 95,793 14.2%
Depreciation, amortization
and accretion 142,530 145,952 (3,422) (2.3%)
Loss on asset disposals, net 3,673 3,305 368 11.1%
918,890 826,151 92,739 11.2%
TDS Telecom
Expenses excluding
depreciation, amortization
and accretion 128,806 140,196 (11,390) (8.1%)
Depreciation, amortization
and accretion 39,508 39,905 (397) (1.0%)
(Gain) on asset disposals,
net (21) --- (21) N/M
168,293 180,101 (11,808) (6.6%)
All Other (1)
Expenses excluding
depreciation and amortization 4,189 5,360 (1,171) (21.8%)
Depreciation and amortization 4,120 2,148 1,972 91.8%
8,309 7,508 801 10.7% Total Operating Expenses 1,095,492 1,013,760 81,732 8.1%
Operating Income (Loss)
U.S. Cellular 118,966 108,523 10,443 9.6%
TDS Telecom 37,783 37,521 262 0.7%
All Other (1) (3,140) (3,247) 107 3.3%
153,609 142,797 10,812 7.6%
Investment and Other Income
(Expense)
Equity in earnings of
unconsolidated entities 21,470 23,696 (2,226) (9.4%)
Interest and dividend income 9,746 16,196 (6,450) (39.8%)
Gain (loss) on investments and
financial instruments (3,490) 255,870 (259,360) N/M
Interest expense (41,380) (57,801) 16,421 28.4%
Other, net (199) (2,224) 2,025 91.1%
(13,853) 235,737 (249,590) N/M
Income Before Income Taxes and
Minority Interest 139,756 378,534 (238,778) (63.1%)
Income tax expense 49,251 141,238 (91,987) (65.1%)
Income Before Minority Interest 90,505 237,296 (146,791) (61.9%)
Minority share of income, net
of tax (17,018) (17,971) 953 5.3%
Net Income 73,487 219,325 (145,838) (66.5%)
Preferred dividend requirement (13) (13) --- 0.0%
Net Income Available to Common $73,474 $219,312 $(145,838) (66.5%) Basic Weighted Average Common
Shares Outstanding 117,570 116,837 733 0.6%
Basic Earnings Per Share $0.62 $1.88 $(1.26) (67.0%) Diluted Weighted Average Common
Shares Outstanding 118,191 118,383 (192) (0.2%)
Diluted Earnings Per Share $0.62 $1.85 $(1.23) (66.5%) (1) Consists of Suttle Straus printing and distribution operations and
intercompany eliminations. N/M - Percentage change not meaningful TELEPHONE AND DATA SYSTEMS, INC. CONSOLIDATED BALANCE SHEET HIGHLIGHTS
(Unaudited, dollars in thousands) ASSETS
March 31, December 31,
2008 2007
Current Assets
Cash and cash equivalents $1,209,786 $1,174,446
Marketable equity
securities 969,311 1,917,893
Accounts receivable from
customers and other 509,381 530,421
Inventory 128,771 115,818
Other current assets 116,762 137,010
2,934,011 3,875,588 Investments
Licenses 1,824,144 1,516,629
Goodwill 684,164 679,129
Customer lists 25,794 25,851
Investments in
unconsolidated entities 224,282 206,418
Other investments 11,279 11,509
2,769,663 2,439,536 Property, Plant and
Equipment, net
U.S. Cellular 2,568,338 2,595,096
TDS Telecom 883,544 900,267
Other 30,758 29,739
3,482,640 3,525,102 Other Assets and Deferred
Charges 52,099 53,917 Total Assets $9,238,413 $9,894,143 LIABILITIES AND STOCKHOLDERS' EQUITY
March 31, December 31,
2008 2007
Current Liabilities
Prepaid forward contracts $669,226 $1,005,512
Current portion of long-term
debt 4,444 3,860
Derivative liability 156,081 711,692
Accounts payable 298,840 308,882
Customer deposits and
deferred revenues 172,377 166,191
Accrued interest 24,264 18,456
Accrued taxes 153,245 40,439
Accrued compensation 61,806 91,703
Net deferred income tax
liability 209,074 327,162
Other current liabilities 335,535 125,622
2,084,892 2,799,519
Deferred Liabilities
Net deferred income tax
liability 570,747 555,593
Asset retirement obligation 177,527 173,468
Other deferred liabilities
and credits 157,195 154,602
905,469 883,663 Long-Term Debt 1,635,373 1,632,226 Minority Interest in
Subsidiaries 665,701 651,537 Preferred Shares 860 860 Common Stockholders' Equity
Common Shares, $.01
par value 566 566
Special Common Shares, $.01
par value 629 629
Series A Common Shares, $.01
par value 64 64
Capital in excess of par
value 2,049,738 2,048,110
Treasury Shares, at cost
Common Shares (119,598) (120,544)
Special Common Shares (245,177) (204,914)
Accumulated other
comprehensive income 9,180 511,776
Retained earnings 2,250,716 1,690,651 Total Liabilities and
Stockholders' Equity $9,238,413 $9,894,143 BALANCE SHEET HIGHLIGHTS
MARCH 31, 2008
(Unaudited, dollars in thousands)
TDS
U.S. TDS Corporate Intercompany TDS
Cellular Telecom & Other Eliminations Consolidated
Cash and
cash
equivalents $216,475 $389,883 $603,428 $--- $1,209,786
Affiliated
cash
investments --- 752,090 --- (752,090) ---
Marketable
equity
securities 16,404 --- 952,907 --- 969,311
Notes
receivable
--affiliates --- --- 270,582 (270,582) ---
$232,879 $1,141,973 $1,826,917 $(1,022,672) $2,179,097 Licenses,
goodwill and
customer
lists $2,295,167 $404,133 $(165,198) $--- $2,534,102
Investment in
unconsol-
idated
entities 172,586 6,528 50,644 (5,476) 224,282
Other
investments 4,391 3,118 3,770 --- 11,279
$2,472,144 $413,779 $(110,784) $(5,476) $2,769,663 Property,
Plant and
Equipment,
net $2,568,338 $883,544 $30,758 $--- $3,482,640 Notes
payable:
cash
management --- --- 752,090 (752,090) ---
intercompany --- 270,582 --- (270,582) ---
$--- $270,582 $752,090 $(1,022,672) $--- Forward
contracts
(all current) $--- $--- $669,226 $--- $669,226 Long-term
Debt:
Current
portion $509 $474 $3,461 $--- $4,444
Non-current
portion 1,006,395 2,995 625,983 --- 1,635,373
Total $1,006,904 $3,469 $629,444 $--- $1,639,817 Preferred
Shares $--- $--- $860 $--- $860 Construction
expenditures:
Quarter ended
3/31/08 $111,690 $18,082 $2,693 $132,465 TDS Telecom Highlights
Three Months Ended March 31,
(Unaudited, dollars in thousands) Increase
(Decrease)
2008 2007 Amount Percent
Local Telephone Operations
Operating Revenues
Voice $51,576 $57,522 $(5,946) (10.3%)
Data 21,186 16,422 4,764 29.0%
Network access 70,082 76,173 (6,091) (8.0%)
Miscellaneous 8,971 7,475 1,496 20.0%
151,815 157,592 (5,777) (3.7%)
Operating Expenses
Cost of services and products 44,834 49,097 (4,263) (8.7%)
Selling, general and
administrative expenses 42,481 41,859 622 1.5%
Depreciation, amortization and
accretion 33,624 34,046 (422) (1.2%)
(Gain) on asset disposals (21) --- (21) N/M
120,918 125,002 (4,084) (3.3%) Operating Income $30,897 $32,590 $(1,693) (5.2%) Competitive Local Exchange Carrier
Operations
Revenues $56,129 $61,350 $(5,221) (8.5%) Expenses excluding depreciation,
amortization and accretion 43,359 50,560 (7,201) (14.2%)
Depreciation, amortization and
accretion 5,884 5,859 25 0.4%
49,243 56,419 (7,176) (12.7%) Operating Income $6,886 $4,931 $1,955 39.6% Intercompany revenues $(1,868) $(1,320) $(548) N/M
Intercompany expenses (1,868) (1,320) (548) N/M
--- --- --- Total TDS Telecom Operating Income $37,783 $37,521 $262 0.7% N/M - Percentage change not meaningful.
TELEPHONE AND DATA SYSTEMS, INC. CONSOLIDATED STATEMENT OF CASH FLOWS
Three Months Ended March 31,
(Unaudited, dollars in thousands)
2008 2007
Cash Flows from Operating Activities
Net income $73,487 $219,325
Add (deduct) adjustments to
reconcile net income to net
cash flows from operating
activities:
Depreciation, amortization and
accretion 186,158 188,005
Bad debts expense 20,405 12,255
Stock-based compensation expense 3,116 4,651
Deferred income taxes, net (102,540) 81,841
(Gain) loss on investments and
financial instruments 3,490 (255,870)
Equity in earnings of
unconsolidated entities (21,470) (23,696)
Distributions from
unconsolidated entities 7,047 2,321
Minority share of income 17,018 17,971
Loss on asset disposals, net 3,652 3,305
Noncash interest expense 5,319 5,378
Other noncash expense 189 ---
Excess tax benefit from exercise
of stock awards (1,138) (1,522)
Changes in assets and liabilities
from operations:
Change in accounts receivable (10,156) 20,262
Change in inventory (15,485) 15,785
Change in accounts payable (14,529) (27,048)
Change in customer deposits and
deferred revenues 6,162 12,648
Change in accrued taxes 149,349 55,355
Change in accrued interest 5,807 5,403
Change in other assets and
liabilities (46,882) (49,901)
268,999 286,468
Cash Flows from Investing Activities
Additions to property, plant and
equipment (132,465) (130,717)
Cash paid for acquisitions, net of
cash acquired (107,685) (18,237)
Cash received from divestitures 6,838 279
Proceeds from sale of investments 48,619 ---
Other investing activities 371 2,246
(184,322) (146,429)
Cash Flows from Financing Activities
Issuance of notes payable --- 25,000
Issuance of long-term debt --- 454
Repayment of long-term debt (928) (848)
TDS Common Shares and Special
Common Shares reissued for benefit plans,
net of tax payments 1,103 7,040
U.S. Cellular Common Shares issued
for benefit plans, net of tax payments (2,526) 5,558
Excess tax benefit from stock
option exercises 1,138 1,522
Repurchase of TDS Special Common Shares (40,584) ---
Repurchase of U.S. Cellular Common Shares (6,201) ---
Dividends paid (13) (11,399)
Distributions to minority partners (2,588) (2,519)
Other financing activities 1,262 (1,769)
(49,337) 23,039 Net Increase in Cash and Cash Equivalents 35,340 163,078
Cash and Cash Equivalents
Beginning of period 1,174,446 1,013,325
End of period $1,209,786 $1,176,403
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/
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