TDS Reports Second Quarter 2010 Results
U.S. Cellular revises 2010 financial guidance
CHICAGO, Aug. 5 /PRNewswire-FirstCall/ --
Note: Comparisons are year over year unless otherwise noted.
2Q 2010 Highlights
Enterprise/TDS Corporate
- Operating revenues were $1.2 billion.
- Repurchased 568,297 TDS Special Common Shares for $16.3 million.
Wireless/U.S. Cellular
- 7,000 retail net additions, reflecting a gain of 29,000 prepaid customers and a loss of 22,000 postpaid customers.
- Service revenues were $972.6 million.
- 33 percent increase in data revenues to $215.3 million, representing 22 percent of total service revenues.
- Retail service ARPU (average revenue per unit) was $46.81 compared to $46.82.
- Retail postpaid churn remained low at 1.4 percent; postpaid customers comprised 94 percent of retail customers.
- Expanded 3G network to cover approximately 98 percent of customers.
- 5 percent increase in cell sites in service to 7,416.
Wireline/TDS Telecom
- 13 percent increase in ILEC high-speed data customers.
- 26 percent increase in ILEC high-speed data revenues, representing 21 percent of ILEC revenues.
- ILEC equivalent access lines remained stable at 779,200, due in part to acquisitions; ILEC physical access lines decreased 4 percent to 525,000.
- Managed IP stations (ILEC and CLEC) grew to 19,700 from 7,600.
- Approved for $114.5 million in Broadband Stimulus projects, receiving $85.9 million in federal grants and providing $28.6 million of capital expenditures over the next several years.
As previously announced, TDS will hold a teleconference Aug. 5 at 9:30 a.m. CDT. Interested parties may listen to the call live by accessing the Conference Calls page of www.teldta.com.
Telephone and Data Systems, Inc. (NYSE: TDS, TDS.S) reported operating revenues of $1
232.2 million for the second quarter of 2010, a decrease of less than 1 percent from $1,242.1 million in the comparable period one year ago. Net income attributable to TDS shareholders and related diluted earnings per share were $40.3 million and $0.38, respectively, for the second quarter of 2010, compared to $66.4 million and $0.60, respectively, in the comparable period one year ago.
"While our results reflect the intense wireless and wireline competition and the ongoing consumer and business economic uncertainty, we achieved a number of positive performance results in the quarter," said LeRoy T. Carlson, Jr., TDS president and CEO. "Our focus on high-quality data experiences led to significant data revenue increases at U.S. Cellular and TDS Telecom. We achieved reduced postpaid and prepaid wireless churn, and churn among TDS Telecom's Triple Play customers—who represent nearly one quarter of the residential customer base—remains very low.
"U.S. Cellular continued to add high-demand smartphones and data-optimized devices to its lineup. The increase in data use and resulting data revenues is helping to offset lower voice revenues from value-priced plans. U.S. Cellular's prepaid additions in the quarter reflect the popularity of our prepaid plans that include data. U.S. Cellular recently substantially completed its 3G network. In July, we launched the first of several high-demand Android(TM)-powered phones that will come this year. While spending on major strategic initiatives is impacting profitability, the company is making progress on these efforts. One early success is that we implemented systems to provide more customized service and product recommendations in our retail stores and customer care centers.
"TDS Telecom continued to respond to changing customer needs and market conditions with very competitive offerings that led to increased revenues and profitability in the quarter. Residential customers are responding well to our competitive broadband offerings, and to bundles of voice, broadband and video services. While TDS Telecom's commercial business continues to be affected by cautious spending by business customers due to the slow economy, the company is benefiting from cost reductions and from the inclusion of its recently acquired managed services operation.
"TDS' financial position remains strong, and we are committed to funding the investments to support future growth in our businesses."
Guidance
Guidance for the year ending Dec. 31, 2010 as of Aug. 5, 2010 is provided below, compared to previous guidance provided on May 10, 2010. There can be no assurance that final results will not differ materially from this guidance.
Current guidance |
Previous guidance |
|||
U.S. Cellular 2010 guidance as of Aug. 5, 2010 is as follows: |
||||
Service revenue |
$3,925-$4,000 million |
$3,975-$4,075 million |
||
Adjusted OIBDA (1) |
$800-$850 million |
$850-$950 million |
||
Operating income |
$200-$250 million |
$250-$350 million |
||
Depreciation, amortization and accretion (2) |
Approx. $600 million |
Unchanged |
||
Capital expenditures |
Approx. $600 million |
Unchanged |
||
Current guidance |
Previous guidance |
|||
TDS Telecom (ILEC and CLEC) 2010 guidance as of Aug. 5, 2010 is as follows: |
||||
Operating revenues |
$760-$790 million |
Unchanged |
||
Adjusted OIBDA (1) |
$250-$275 million |
Unchanged |
||
Operating income |
$80-$105 million |
Unchanged |
||
Depreciation, amortization and accretion (2) |
Approx. $170 million |
Unchanged |
||
Capital expenditures (3) |
Approx. $155 million |
Unchanged |
||
(1) Adjusted OIBDA is defined as operating income excluding the effects of: depreciation, amortization and (2) The 2010 estimated results include estimated losses on disposals of assets, but does not include an (3) The capital expenditure guidance does not include amounts awarded to TDS Telecom through the |
||||
The foregoing guidance represents the views of management as of Aug. 5, 2010, and should not be assumed to be accurate as of any other date. TDS undertakes no legal duty to update such information, whether as a result of new information, future events or otherwise.
Stock repurchase summary
The following represents repurchases of TDS Common Shares and TDS Special Common Shares.
Repurchase Period |
# Shares |
Cost (in millions) |
||||||
2010 (second quarter) |
568,297 |
$ |
16.3 |
|||||
2010 (first quarter) |
510,902 |
$ |
14.8 |
|||||
2009 (full year) |
6,374,741 |
$ |
176.6 |
|||||
2008 (full year) |
5,861,822 |
$ |
199.6 |
|||||
Total |
13,315,762 |
$ |
407.3 |
|||||
Conference call information
TDS will hold a conference call on Aug. 5, 2010 at 9:30 a.m. CDT.
- Access the live call on the Conference Calls page of www.teldta.com or at http://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=67422&eventID=3258722.
- Access the call by phone at 877/407-8029 (US/Canada), no pass code required.
Before the call, certain financial and statistical information to be discussed during the call will be posted to the Conference Calls page of www.teldta.com. The call will be archived on the Conference Calls page of www.teldta.com.
About TDS
Telephone and Data Systems, Inc. (TDS), a Fortune 500® company, provides wireless, local and long-distance telephone, and broadband services to approximately 7.3 million customers in 36 states through its business units, U.S. Cellular (wireless) and TDS Telecom (wireline). Founded in 1969 and headquartered in Chicago, TDS employed 12,300 people as of June 30, 2010.
Visit www.teldta.com for comprehensive financial information, including earnings releases, quarterly and annual filings, shareholder information and more.
About U.S. Cellular
United States Cellular Corporation, the nation's sixth-largest wireless carrier, provides a comprehensive range of wireless products and services, excellent customer support and a high-quality network to approximately 6.1 million customers in 26 states. The Chicago-based company employed 8,900 full-time equivalent associates as of June 30, 2010.
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995: All information set forth in this news release, except historical and factual information, represents forward-looking statements. This includes all statements about the company's plans, beliefs, estimates and expectations. These statements are based on current estimates, projections and assumptions, which involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Important factors that may affect these forward-looking statements include, but are not limited to: The ability of the company to successfully grow its markets; the overall economy; competition; the access to and pricing of unbundled network elements; the ability to obtain or maintain roaming arrangements with other carriers; the state and federal telecommunications regulatory environment; the value of assets and investments; adverse changes in the ratings afforded TDS and U.S. Cellular debt securities by accredited ratings organizations; industry consolidation; advances in telecommunications technology; uncertainty of access to the capital markets; pending and future litigation; changes in income tax rates, laws, regulations or rulings; acquisitions/divestitures of properties and/or licenses; and changes in customer growth rates, average monthly revenue per unit, churn rates, roaming revenue and terms, the availability of handset devices, or the mix of products and services offered by U.S. Cellular and TDS Telecom. Investors are encouraged to consider these and other risks and uncertainties that are discussed in the Form 8-K used by TDS to furnish this press release to the SEC, which are incorporated by reference herein.
For more information about TDS and its subsidiaries, visit:
TDS: www.teldta.com
U.S. Cellular: www.uscellular.com
TDS Telecom: www.tdstelecom.com
United States Cellular Corporation Summary Operating Data |
||||||||||||||||||||
Quarter Ended |
6/30/2010 |
3/31/2010 |
12/31/2009 |
9/30/2009 |
6/30/2009 |
|||||||||||||||
Total population |
||||||||||||||||||||
Consolidated markets (1) |
90,468,000 |
90,468,000 |
89,712,000 |
85,118,000 |
83,726,000 |
|||||||||||||||
Consolidated operating markets (1) |
46,546,000 |
46,546,000 |
46,306,000 |
46,306,000 |
46,306,000 |
|||||||||||||||
Market penetration at end of period |
||||||||||||||||||||
Consolidated markets (2) |
6.8% |
6.8% |
6.8% |
7.2% |
7.4% |
|||||||||||||||
Consolidated operating markets (2) |
13.2% |
13.2% |
13.3% |
13.2% |
13.3% |
|||||||||||||||
All customers |
||||||||||||||||||||
Total at end of period |
6,144,000 |
6,147,000 |
6,141,000 |
6,131,000 |
6,155,000 |
|||||||||||||||
Gross additions |
349,000 |
358,000 |
399,000 |
386,000 |
317,000 |
|||||||||||||||
Net additions (losses) |
(3,000) |
6,000 |
10,000 |
(24,000) |
(88,000) |
|||||||||||||||
Retail customers |
||||||||||||||||||||
Total at end of period |
5,775,000 |
5,768,000 |
5,744,000 |
5,705,000 |
5,711,000 |
|||||||||||||||
Gross additions |
307,000 |
305,000 |
354,000 |
351,000 |
286,000 |
|||||||||||||||
Net retail additions (losses) (3) |
7,000 |
24,000 |
39,000 |
(6,000) |
(59,000) |
|||||||||||||||
Net postpaid additions (losses) |
(22,000) |
(9,000) |
26,000 |
8,000 |
(32,000) |
|||||||||||||||
Net prepaid additions (losses) |
29,000 |
33,000 |
13,000 |
(14,000) |
(27,000) |
|||||||||||||||
Service revenues components (000s) |
||||||||||||||||||||
Voice and other retail service |
$ |
648,565 |
$ |
663,759 |
$ |
677,107 |
$ |
690,576 |
$ |
708,847 |
||||||||||
Data service |
215,271 |
201,280 |
189,759 |
174,286 |
161,955 |
|||||||||||||||
Total retail service |
$ |
863,836 |
$ |
865,039 |
$ |
866,866 |
$ |
864,862 |
$ |
870,802 |
||||||||||
Inbound roaming |
60,902 |
51,942 |
61,728 |
68,767 |
62,223 |
|||||||||||||||
Other |
47,838 |
48,027 |
56,814 |
50,289 |
41,323 |
|||||||||||||||
Total service revenues (000s) (4) |
$ |
972,576 |
$ |
965,008 |
$ |
985,408 |
$ |
983,918 |
$ |
974,348 |
||||||||||
Divided by average customers (000s) |
6,151 |
6,137 |
6,139 |
6,138 |
6,199 |
|||||||||||||||
Divided by three months in each quarter |
3 |
3 |
3 |
3 |
3 |
|||||||||||||||
Average monthly revenue per unit (5) |
$ |
52.71 |
$ |
52.41 |
$ |
53.51 |
$ |
53.43 |
$ |
52.39 |
||||||||||
Voice and other retail service (5) |
$ |
35.14 |
$ |
36.05 |
$ |
36.77 |
$ |
37.51 |
$ |
38.11 |
||||||||||
Data service (5) |
$ |
11.67 |
$ |
10.93 |
$ |
10.30 |
$ |
9.46 |
$ |
8.71 |
||||||||||
Total retail service (5) |
$ |
46.81 |
$ |
46.98 |
$ |
47.07 |
$ |
46.97 |
$ |
46.82 |
||||||||||
Inbound roaming (5) |
$ |
3.30 |
$ |
2.82 |
$ |
3.35 |
$ |
3.73 |
$ |
3.35 |
||||||||||
Other (5) |
$ |
2.60 |
$ |
2.61 |
$ |
3.09 |
$ |
2.73 |
$ |
2.22 |
||||||||||
Postpaid churn rate (6) |
1.4% |
1.4% |
1.6% |
1.7% |
1.7% |
|||||||||||||||
Capital expenditures (000s) |
$ |
133,500 |
$ |
121,500 |
$ |
189,000 |
$ |
128,900 |
$ |
91,200 |
||||||||||
Cell sites in service |
7,416 |
7,310 |
7,279 |
7,161 |
7,043 |
|||||||||||||||
(1) Used only to calculate market penetration of consolidated markets and consolidated operating markets, respectively, which is (2) Calculated by dividing the number of wireless customers at the end of the period by the total population of consolidated markets (3) Calculated by adding net postpaid additions (losses) and net prepaid additions (losses). (4) U.S. Cellular adjusted previously reported service revenues for the three months ended March 31, 2010 and all quarterly periods in (5) Calculated by dividing the components of service revenues by the average customers and number of months in the quarter. (6) Calculated by dividing the total postpaid customer disconnects during the quarter by the average postpaid customer base for the |
||||||||||||||||||||
TDS Telecom Summary Operating Data |
|||||||||||||||||
Quarter Ended |
6/30/2010 |
3/31/2010 |
12/31/2009 |
9/30/2009 |
6/30/2009 |
||||||||||||
TDS Telecom |
|||||||||||||||||
ILEC |
|||||||||||||||||
Equivalent access lines (1) |
779,200 |
778,700 |
775,900 |
772,700 |
775,800 |
||||||||||||
Physical access lines (2) |
525,000 |
530,400 |
536,300 |
539,400 |
548,000 |
||||||||||||
High-speed data customers (3) |
223,200 |
217,400 |
208,300 |
202,100 |
197,100 |
||||||||||||
Long-distance customers |
369,100 |
365,600 |
362,800 |
356,500 |
354,100 |
||||||||||||
Managed IP stations (4) |
2,700 |
2,300 |
1,900 |
1,500 |
1,200 |
||||||||||||
Capital expenditures (000s) |
$ |
28,200 |
$ |
20,200 |
$ |
26,900 |
$ |
23,800 |
$ |
26,200 |
|||||||
CLEC |
|||||||||||||||||
Equivalent access lines (1) |
343,100 |
349,300 |
355,900 |
364,100 |
372,300 |
||||||||||||
High-speed data customers (3) |
35,000 |
36,000 |
36,900 |
37,600 |
38,700 |
||||||||||||
Managed IP stations (4) |
17,000 |
14,300 |
12,000 |
9,600 |
6,400 |
||||||||||||
Capital expenditures (000s) |
$ |
5,400 |
$ |
3,200 |
$ |
6,800 |
$ |
4,700 |
$ |
5,700 |
|||||||
(1) Sum of physical access lines and high-capacity data lines, adjusted to estimate the equivalent number of physical access lines in terms of (2) Individual circuits connecting customers to a telephone company's central office facilities. (3) The number of customers provided high-capacity data circuits via various technologies, including digital subscriber line ("DSL"), managed (4) The number of telephone handsets providing communications using packet networking technology. |
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Telephone and Data Systems, Inc. |
||||||||||||||||||||
Consolidated Statement of Operations Highlights |
||||||||||||||||||||
Three Months Ended June 30, |
||||||||||||||||||||
(Unaudited, dollars and shares in thousands, except per share amounts) |
||||||||||||||||||||
Increase/ (Decrease) |
||||||||||||||||||||
2010 |
2009 (1) |
Amount |
Percent |
|||||||||||||||||
Operating revenues |
||||||||||||||||||||
U.S. Cellular |
$ |
1,029,893 |
$ |
1,042,143 |
$ |
(12,250) |
(1)% |
|||||||||||||
TDS Telecom |
199,206 |
195,960 |
3,246 |
2 % |
||||||||||||||||
All Other (2) |
3,120 |
3,967 |
(847) |
(21)% |
||||||||||||||||
1,232,219 |
1,242,070 |
(9,851) |
(1)% |
|||||||||||||||||
Operating expenses |
||||||||||||||||||||
U.S. Cellular |
||||||||||||||||||||
Expenses excluding depreciation, amortization |
||||||||||||||||||||
and accretion |
820,684 |
761,917 |
58,767 |
8 % |
||||||||||||||||
Depreciation, amortization and accretion |
144,455 |
138,777 |
5,678 |
4 % |
||||||||||||||||
Loss on asset disposals, net |
1,250 |
2,611 |
(1,361) |
(52)% |
||||||||||||||||
966,389 |
903,305 |
63,084 |
7 % |
|||||||||||||||||
TDS Telecom |
||||||||||||||||||||
Expenses excluding depreciation, amortization |
||||||||||||||||||||
and accretion |
131,565 |
134,898 |
(3,333) |
(2)% |
||||||||||||||||
Depreciation, amortization and accretion |
43,149 |
41,663 |
1,486 |
4 % |
||||||||||||||||
Loss on asset disposals, net |
(68) |
402 |
(470) |
>(100)% |
||||||||||||||||
174,646 |
176,963 |
(2,317) |
(1)% |
|||||||||||||||||
All Other (2) |
||||||||||||||||||||
Expenses excluding depreciation and amortization |
2,117 |
5,283 |
(3,166) |
(60)% |
||||||||||||||||
Depreciation and amortization |
2,654 |
3,072 |
(418) |
(14)% |
||||||||||||||||
Loss on asset disposals, net |
32 |
8 |
24 |
>100% |
||||||||||||||||
4,803 |
8,363 |
(3,560) |
(43)% |
|||||||||||||||||
Total operating expenses |
1,145,838 |
1,088,631 |
57,207 |
5 % |
||||||||||||||||
Operating income (loss) |
||||||||||||||||||||
U.S. Cellular |
63,504 |
138,838 |
(75,334) |
(54)% |
||||||||||||||||
TDS Telecom |
24,560 |
18,997 |
5,563 |
29 % |
||||||||||||||||
All Other (2) |
(1,683) |
(4,396) |
2,713 |
62 % |
||||||||||||||||
86,381 |
153,439 |
(67,058) |
(44)% |
|||||||||||||||||
Investment and other income (expense) |
||||||||||||||||||||
Equity in earnings of unconsolidated entities |
25,997 |
18,363 |
7,634 |
42 % |
||||||||||||||||
Interest and dividend income |
2,674 |
2,902 |
(228) |
(8)% |
||||||||||||||||
Interest expense |
(29,265) |
(32,534) |
3,269 |
10 % |
||||||||||||||||
Other, net |
(1,929) |
(25) |
(1,904) |
>100% |
||||||||||||||||
Total investment and other income (expense) |
(2,523) |
(11,294) |
8,771 |
78 % |
||||||||||||||||
Income before income taxes |
83,858 |
142,145 |
(58,287) |
(41)% |
||||||||||||||||
Income tax expense |
31,469 |
55,242 |
(23,773) |
(43)% |
||||||||||||||||
Net income |
52,389 |
86,903 |
(34,514) |
(40)% |
||||||||||||||||
Less: Net income attributable to noncontrolling |
||||||||||||||||||||
interests, net of tax |
(12,102) |
(20,539) |
8,437 |
41 % |
||||||||||||||||
Net income attributable to TDS shareholders |
40,287 |
66,364 |
(26,077) |
(39)% |
||||||||||||||||
Preferred dividend requirement |
(12) |
(13) |
1 |
8 % |
||||||||||||||||
Net income available to common shareholders |
$ |
40,275 |
$ |
66,351 |
$ |
(26,076) |
(39)% |
|||||||||||||
Basic weighted average shares outstanding |
105,520 |
110,741 |
(5,221) |
(5)% |
||||||||||||||||
Basic earnings per share attributable to |
||||||||||||||||||||
TDS shareholders |
$ |
0.38 |
$ |
0.60 |
$ |
(0.22) |
(37)% |
|||||||||||||
Diluted weighted average shares outstanding |
105,907 |
110,971 |
(5,064) |
(5)% |
||||||||||||||||
Diluted earnings per share attributable to |
||||||||||||||||||||
TDS shareholders |
$ |
0.38 |
$ |
0.60 |
$ |
(0.22) |
(37)% |
|||||||||||||
(1) Amounts have been adjusted. See "Revision of Prior Period Amounts" section for additional details. (2) Consists of a non-reportable segment (Suttle-Straus printing and distribution operations), corporate operations, |
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Telephone and Data Systems, Inc. |
|||||||||||||||||||
Consolidated Statement of Operations Highlights |
|||||||||||||||||||
Six Months Ended June 30, |
|||||||||||||||||||
(Unaudited, dollars and shares in thousands, except per share amounts) |
|||||||||||||||||||
Increase/ (Decrease) |
|||||||||||||||||||
2010 |
2009 (1) |
Amount |
Percent |
||||||||||||||||
Operating revenues |
|||||||||||||||||||
U.S. Cellular |
$ |
2,053,750 |
$ |
2,096,487 |
$ |
(42,737) |
(2)% |
||||||||||||
TDS Telecom |
394,711 |
395,262 |
(551) |
— |
|||||||||||||||
All Other (2) |
6,193 |
8,547 |
(2,354) |
(28)% |
|||||||||||||||
2,454,654 |
2,500,296 |
(45,642) |
(2)% |
||||||||||||||||
Operating expenses |
|||||||||||||||||||
U.S. Cellular |
|||||||||||||||||||
Expenses excluding depreciation, amortization |
|||||||||||||||||||
and accretion |
1,618,508 |
1,556,069 |
62,439 |
4% |
|||||||||||||||
Depreciation, amortization and accretion |
287,688 |
276,655 |
11,033 |
4% |
|||||||||||||||
Loss on asset disposals, net |
6,426 |
6,556 |
(130) |
(2)% |
|||||||||||||||
1,912,622 |
1,839,280 |
73,342 |
4% |
||||||||||||||||
TDS Telecom |
|||||||||||||||||||
Expenses excluding depreciation, amortization |
|||||||||||||||||||
and accretion |
257,430 |
265,643 |
(8,213) |
(3)% |
|||||||||||||||
Depreciation, amortization and accretion |
86,572 |
83,526 |
3,046 |
4% |
|||||||||||||||
Loss on asset disposals, net |
277 |
617 |
(340) |
(55)% |
|||||||||||||||
344,279 |
349,786 |
(5,507) |
(2)% |
||||||||||||||||
All Other (2) |
|||||||||||||||||||
Expenses excluding depreciation and amortization |
4,047 |
11,641 |
(7,594) |
(65)% |
|||||||||||||||
Depreciation and amortization |
5,387 |
6,324 |
(937) |
(15)% |
|||||||||||||||
Loss on asset disposals, net |
(58) |
18 |
(76) |
>(100)% |
|||||||||||||||
9,376 |
17,983 |
(8,607) |
(48)% |
||||||||||||||||
Total operating expenses |
2,266,277 |
2,207,049 |
59,228 |
3% |
|||||||||||||||
Operating income (loss) |
|||||||||||||||||||
U.S. Cellular |
141,128 |
257,207 |
(116,079) |
(45)% |
|||||||||||||||
TDS Telecom |
50,432 |
45,476 |
4,956 |
11% |
|||||||||||||||
All Other (2) |
(3,183) |
(9,436) |
6,253 |
66% |
|||||||||||||||
188,377 |
293,247 |
(104,870) |
(36)% |
||||||||||||||||
Investment and other income (expense) |
|||||||||||||||||||
Equity in earnings of unconsolidated entities |
50,900 |
43,700 |
7,200 |
16% |
|||||||||||||||
Interest and dividend income |
5,115 |
4,974 |
141 |
3% |
|||||||||||||||
Interest expense |
(58,223) |
(63,044) |
4,821 |
8% |
|||||||||||||||
Other, net |
(2,119) |
474 |
(2,593) |
>(100)% |
|||||||||||||||
Total investment and other income (expense) |
(4,327) |
(13,896) |
9,569 |
69% |
|||||||||||||||
Income before income taxes |
184,050 |
279,351 |
(95,301) |
(34)% |
|||||||||||||||
Income tax expense |
69,392 |
97,081 |
(27,689) |
(29)% |
|||||||||||||||
Net income |
114,658 |
182,270 |
(67,612) |
(37)% |
|||||||||||||||
Less: Net income attributable to noncontrolling |
|||||||||||||||||||
interests, net of tax |
(25,957) |
(41,809) |
15,852 |
38% |
|||||||||||||||
Net income attributable to TDS shareholders |
88,701 |
140,461 |
(51,760) |
(37)% |
|||||||||||||||
Preferred dividend requirement |
(25) |
(26) |
1 |
4% |
|||||||||||||||
Net income available to common shareholders |
$ |
88,676 |
$ |
140,435 |
$ |
(51,759) |
(37)% |
||||||||||||
Basic weighted average shares outstanding |
105,728 |
111,486 |
(5,758) |
(5)% |
|||||||||||||||
Basic earnings per share attributable to TDS |
|||||||||||||||||||
shareholders |
$ |
0.84 |
$ |
1.26 |
$ |
(0.42) |
(33)% |
||||||||||||
Diluted weighted average shares outstanding |
106,071 |
111,698 |
(5,627) |
(5)% |
|||||||||||||||
Diluted earnings per share attributable to TDS |
|||||||||||||||||||
shareholders |
$ |
0.83 |
$ |
1.25 |
$ |
(0.42) |
(34)% |
||||||||||||
(1) Amounts have been adjusted. See "Revision of Prior Period Amounts" section for additional details. (2) Consists of a non-reportable segment (Suttle-Straus printing and distribution operations), corporate operations, intercompany |
|||||||||||||||||||
Telephone and Data Systems, Inc. |
||||||||
Consolidated Balance Sheet Highlights |
||||||||
(Unaudited, dollars in thousands) |
||||||||
ASSETS |
||||||||
June 30, |
December 31, |
|||||||
2010 |
2009 (1) |
|||||||
Current assets |
||||||||
Cash and cash equivalents |
$ |
378,477 |
$ |
670,992 |
||||
Short-term investments |
379,227 |
113,275 |
||||||
Accounts receivable from customers and other |
498,356 |
515,443 |
||||||
Inventory |
124,810 |
156,987 |
||||||
Other current assets |
185,377 |
190,974 |
||||||
1,566,247 |
1,647,671 |
|||||||
Investments |
||||||||
Licenses |
1,453,526 |
1,443,025 |
||||||
Goodwill |
718,635 |
707,840 |
||||||
Other intangible assets |
28,693 |
26,589 |
||||||
Investments in unconsolidated entities |
200,352 |
203,799 |
||||||
Long-term investments |
107,506 |
— |
||||||
Other investments |
9,447 |
9,785 |
||||||
2,518,159 |
2,391,038 |
|||||||
Property, plant and equipment, net |
||||||||
U.S. Cellular |
2,571,340 |
2,601,338 |
||||||
TDS Telecom |
863,033 |
880,378 |
||||||
Other |
28,368 |
26,129 |
||||||
3,462,741 |
3,507,845 |
|||||||
Other assets and deferred charges |
63,281 |
65,759 |
||||||
Total assets |
$ |
7,610,428 |
$ |
7,612,313 |
||||
(1) Amounts have been adjusted. See "Revision of Prior Period Amounts" section for additional details. |
||||||||
Telephone and Data Systems, Inc. |
|||||||||||
Consolidated Balance Sheet Highlights |
|||||||||||
(Unaudited, dollars in thousands) |
|||||||||||
LIABILITIES AND STOCKHOLDERS' EQUITY |
|||||||||||
June 30, |
December 31, |
||||||||||
2010 |
2009 (1) |
||||||||||
Current liabilities |
|||||||||||
Current portion of long-term debt |
$ |
2,038 |
$ |
2,509 |
|||||||
Accounts payable |
312,527 |
347,348 |
|||||||||
Customer deposits and deferred revenues |
169,513 |
164,451 |
|||||||||
Accrued interest |
12,208 |
12,227 |
|||||||||
Accrued taxes |
84,346 |
62,568 |
|||||||||
Accrued compensation |
71,722 |
93,524 |
|||||||||
Other current liabilities |
98,467 |
117,081 |
|||||||||
750,821 |
799,708 |
||||||||||
Deferred liabilities and credits |
|||||||||||
Net deferred income tax liability |
492,657 |
517,762 |
|||||||||
Other deferred liabilities and credits |
393,485 |
373,862 |
|||||||||
Long-term debt |
1,492,500 |
1,492,908 |
|||||||||
Noncontrolling interests with redemption features |
746 |
727 |
|||||||||
Equity |
|||||||||||
TDS shareholders' equity |
|||||||||||
Series A Common, Special Common and Common Shares, |
|||||||||||
par value $.01 |
1,270 |
1,270 |
|||||||||
Capital in excess of par value |
2,098,380 |
2,088,807 |
|||||||||
Special Common and Common Treasury shares, at cost |
(706,987) |
(681,649) |
|||||||||
Accumulated other comprehensive loss |
(3,139) |
(2,710) |
|||||||||
Retained earnings |
2,420,862 |
2,358,580 |
|||||||||
Total TDS shareholders' equity |
3,810,386 |
3,764,298 |
|||||||||
Preferred shares |
831 |
832 |
|||||||||
Noncontrolling interests |
669,002 |
662,216 |
|||||||||
Total equity |
4,480,219 |
4,427,346 |
|||||||||
Total liabilities and equity |
$ |
7,610,428 |
$ |
7,612,313 |
|||||||
(1) Amounts have been adjusted. See "Revision of Prior Period Amounts" section for additional details. |
|||||||||||
Telephone and Data Systems, Inc. |
|||||||||||||||||||||
Balance Sheet Highlights |
|||||||||||||||||||||
June 30, 2010 |
|||||||||||||||||||||
(Unaudited, dollars in thousands) |
|||||||||||||||||||||
U.S. |
TDS |
TDS |
Intercompany |
TDS |
|||||||||||||||||
Cash and cash equivalents |
$ |
232,853 |
$ |
33,190 |
$ |
112,434 |
$ |
— |
$ |
378,477 |
|||||||||||
Affiliated cash investments |
— |
333,562 |
(333,562) |
— |
|||||||||||||||||
Short-term investments |
135,798 |
97,510 |
145,919 |
— |
379,227 |
||||||||||||||||
Notes receivable—affiliates |
— |
8,809 |
(8,809) |
— |
|||||||||||||||||
$ |
368,651 |
$ |
464,262 |
$ |
267,162 |
$ |
(342,371) |
$ |
757,704 |
||||||||||||
Licenses, goodwill and other intangibles |
$ |
1,941,939 |
$ |
450,330 |
$ |
(191,415) |
$ |
— |
$ |
2,200,854 |
|||||||||||
Investment in unconsolidated entities |
163,518 |
3,650 |
40,200 |
(7,016) |
200,352 |
||||||||||||||||
Long-term and other investments |
45,130 |
1,927 |
69,896 |
— |
116,953 |
||||||||||||||||
$ |
2,150,587 |
$ |
455,907 |
$ |
(81,319) |
$ |
(7,016) |
$ |
2,518,159 |
||||||||||||
Property, plant and equipment, net |
$ |
2,571,340 |
$ |
863,033 |
$ |
28,368 |
$ |
— |
$ |
3,462,741 |
|||||||||||
Notes payable—affiliates |
$ |
— |
$ |
8,809 |
$ |
333,562 |
$ |
(342,371) |
$ |
— |
|||||||||||
Long-term debt |
|||||||||||||||||||||
Current portion |
$ |
86 |
$ |
391 |
$ |
1,561 |
$ |
— |
$ |
2,038 |
|||||||||||
Non-current portion |
867,880 |
2,081 |
622,539 |
— |
1,492,500 |
||||||||||||||||
$ |
867,966 |
$ |
2,472 |
$ |
624,100 |
$ |
— |
$ |
1,494,538 |
||||||||||||
Preferred shares |
$ |
— |
$ |
— |
$ |
831 |
$ |
— |
$ |
831 |
|||||||||||
Telephone and Data Systems, Inc. Schedule of Cash and Cash Equivalents and Investments (Unaudited, dollars in thousands) In an effort to improve investment returns, during the second quarter of 2010, TDS elected to use a portion |
||||||||||
June 30, |
December 31, |
|||||||||
2010 |
2009 |
|||||||||
Cash and cash equivalents |
$ |
378,477 |
$ |
670,992 |
||||||
Amounts included in short-term investments |
||||||||||
U.S. treasury securities |
180,732 |
— |
||||||||
Certificates of deposit (1) |
97,614 |
113,275 |
||||||||
Commercial paper (2) |
100,881 |
— |
||||||||
$ |
379,227 |
$ |
113,275 |
|||||||
Amounts included in long-term investments (3) |
||||||||||
U.S. treasury securities |
30,181 |
— |
||||||||
Commercial paper (2) |
77,325 |
— |
||||||||
$ |
107,506 |
$ |
— |
|||||||
(1) TDS' investments in certificates of deposits are insured by the FDIC. (2) TDS' investments in commercial paper are insured by the FDIC under its Temporary Liquidity (3) TDS' long-term investments have maturity dates between July 2011 and December 2012. |
||||||||||
TDS Telecom Highlights |
||||||||||||||||||
Three Months Ended June 30, |
||||||||||||||||||
(Unaudited, dollars in thousands) |
||||||||||||||||||
Increase (Decrease) |
||||||||||||||||||
2010 |
2009 |
Amount |
Percent |
|||||||||||||||
Local Telephone Operations |
||||||||||||||||||
Operating revenues |
||||||||||||||||||
Voice |
$ |
45,738 |
$ |
46,879 |
$ |
(1,141) |
(2)% |
|||||||||||
Data |
31,993 |
25,491 |
6,502 |
26% |
||||||||||||||
Network access |
66,951 |
67,118 |
(167) |
— |
||||||||||||||
Miscellaneous |
9,576 |
8,720 |
856 |
10% |
||||||||||||||
154,258 |
148,208 |
6,050 |
4% |
|||||||||||||||
Operating expenses |
||||||||||||||||||
Cost of services and products (excluding |
||||||||||||||||||
Depreciation, amortization and accretion |
||||||||||||||||||
expense reported below) |
49,302 |
48,406 |
896 |
2% |
||||||||||||||
Selling, general and administrative expenses |
44,167 |
45,083 |
(916) |
(2)% |
||||||||||||||
Depreciation, amortization and accretion |
36,847 |
35,302 |
1,545 |
4% |
||||||||||||||
Loss on asset disposals, net |
(228) |
283 |
(511) |
>(100)% |
||||||||||||||
130,088 |
129,074 |
1,014 |
1% |
|||||||||||||||
Operating income |
$ |
24,170 |
$ |
19,134 |
$ |
5,036 |
26% |
|||||||||||
Competitive Local Exchange Carrier Operations |
||||||||||||||||||
Revenues |
$ |
47,325 |
$ |
50,093 |
$ |
(2,768) |
(6)% |
|||||||||||
Expenses (excluding Depreciation, amortization |
||||||||||||||||||
and accretion expense reported below) |
40,473 |
43,750 |
(3,277) |
(7)% |
||||||||||||||
Depreciation, amortization and accretion |
6,302 |
6,361 |
(59) |
(1)% |
||||||||||||||
Loss on asset disposals, net |
160 |
119 |
41 |
34% |
||||||||||||||
46,935 |
50,230 |
(3,295) |
(7)% |
|||||||||||||||
Operating income (loss) |
$ |
390 |
$ |
(137) |
$ |
527 |
>100% |
|||||||||||
Intercompany revenues |
$ |
(2,377) |
$ |
(2,341) |
$ |
(36) |
(2)% |
|||||||||||
Intercompany expenses |
(2,377) |
(2,341) |
(36) |
(2)% |
||||||||||||||
— |
— |
— |
||||||||||||||||
Total TDS Telecom operating income |
$ |
24,560 |
$ |
18,997 |
$ |
5,563 |
29% |
|||||||||||
TDS Telecom Highlights |
||||||||||||||||||
Six Months Ended June 30, |
||||||||||||||||||
(Unaudited, dollars in thousands) |
||||||||||||||||||
Increase (Decrease) |
||||||||||||||||||
2010 |
2009 |
Amount |
Percent |
|||||||||||||||
Local Telephone Operations |
||||||||||||||||||
Operating revenues |
||||||||||||||||||
Voice |
$ |
90,296 |
$ |
95,457 |
$ |
(5,161) |
(5)% |
|||||||||||
Data |
60,291 |
50,551 |
9,740 |
19% |
||||||||||||||
Network access |
134,893 |
134,949 |
(56) |
— |
||||||||||||||
Miscellaneous |
18,934 |
17,438 |
1,496 |
9% |
||||||||||||||
304,414 |
298,395 |
6,019 |
2% |
|||||||||||||||
Operating expenses |
||||||||||||||||||
Cost of services and products (excluding |
||||||||||||||||||
Depreciation, amortization and accretion |
||||||||||||||||||
expense reported below) |
95,794 |
96,090 |
(296) |
— |
||||||||||||||
Selling, general and administrative expenses |
85,904 |
86,112 |
(208) |
— |
||||||||||||||
Depreciation, amortization and accretion |
73,905 |
71,388 |
2,517 |
4% |
||||||||||||||
Loss on asset disposals, net |
32 |
421 |
(389) |
(92)% |
||||||||||||||
255,635 |
254,011 |
1,624 |
1% |
|||||||||||||||
Operating income |
$ |
48,779 |
$ |
44,384 |
$ |
4,395 |
10% |
|||||||||||
Competitive Local Exchange Carrier Operations |
||||||||||||||||||
Revenues |
$ |
95,068 |
$ |
101,282 |
$ |
(6,214) |
(6)% |
|||||||||||
Expenses (excluding Depreciation, amortization |
||||||||||||||||||
and accretion expense reported below) |
80,503 |
87,856 |
(7,353) |
(8)% |
||||||||||||||
Depreciation, amortization and accretion |
12,667 |
12,138 |
529 |
4% |
||||||||||||||
Loss on asset disposals, net |
245 |
196 |
49 |
25% |
||||||||||||||
93,415 |
100,190 |
(6,775) |
(7)% |
|||||||||||||||
Operating income |
$ |
1,653 |
$ |
1,092 |
$ |
561 |
51% |
|||||||||||
Intercompany revenues |
$ |
(4,771) |
$ |
(4,415) |
$ |
(356) |
(8)% |
|||||||||||
Intercompany expenses |
(4,771) |
(4,415) |
(356) |
(8)% |
||||||||||||||
— |
— |
— |
||||||||||||||||
Total TDS Telecom operating income |
$ |
50,432 |
$ |
45,476 |
$ |
4,956 |
11% |
|||||||||||
Telephone and Data Systems, Inc. |
|||||||||||
Consolidated Statement of Cash Flows |
|||||||||||
(Unaudited) |
|||||||||||
Six Months Ended |
|||||||||||
June 30, |
|||||||||||
2010 |
2009 (1) |
||||||||||
(Dollars in thousands) |
|||||||||||
Cash flows from operating activities |
|||||||||||
Net income |
$ |
114,658 |
$ |
182,270 |
|||||||
Add (deduct) adjustments to reconcile net income to net cash flows |
|||||||||||
from operating activities |
|||||||||||
Depreciation, amortization and accretion |
379,647 |
366,505 |
|||||||||
Bad debts expense |
39,633 |
42,761 |
|||||||||
Stock-based compensation expense |
16,743 |
14,394 |
|||||||||
Deferred income taxes, net |
(28,881) |
18,882 |
|||||||||
Equity in earnings of unconsolidated entities |
(50,900) |
(43,700) |
|||||||||
Distributions from unconsolidated entities |
48,740 |
13,239 |
|||||||||
Loss on asset disposals, net |
6,645 |
7,191 |
|||||||||
Other operating activities |
3,381 |
2,125 |
|||||||||
Changes in assets and liabilities from operations |
|||||||||||
Accounts receivable |
(20,985) |
(68,283) |
|||||||||
Inventory |
32,177 |
(9,928) |
|||||||||
Accounts payable |
(35,572) |
(63,963) |
|||||||||
Customer deposits and deferred revenues |
4,217 |
(5,151) |
|||||||||
Accrued taxes |
24,209 |
60,406 |
|||||||||
Accrued interest |
102 |
513 |
|||||||||
Other assets and liabilities |
(31,468) |
(73,300) |
|||||||||
502,346 |
443,961 |
||||||||||
Cash flows from investing activities |
|||||||||||
Additions to property, plant and equipment |
(317,950) |
(290,821) |
|||||||||
Cash paid for acquisitions and licenses |
(28,264) |
(15,042) |
|||||||||
Cash paid for investments |
(385,000) |
(109,055) |
|||||||||
Cash received for investments |
15,661 |
— |
|||||||||
Other investing activities |
1,479 |
2,040 |
|||||||||
(714,074) |
(412,878) |
||||||||||
Cash flows from financing activities |
|||||||||||
Repayment of long-term debt |
(1,280) |
(1,655) |
|||||||||
TDS Common Shares and Special Common Shares reissued for benefit plans, |
|||||||||||
net of tax payments |
845 |
743 |
|||||||||
U.S. Cellular Common Shares reissued for benefit plans, net of tax payments |
144 |
(405) |
|||||||||
Repurchase of TDS Special Common Shares |
(31,092) |
(86,565) |
|||||||||
Repurchase of U.S. Cellular Common Shares |
(21,423) |
(19,332) |
|||||||||
Dividends paid |
(23,732) |
(23,814) |
|||||||||
Payment of debt issuance costs |
— |
(9,959) |
|||||||||
Distributions to noncontrolling interests |
(4,314) |
(3,417) |
|||||||||
Other financing activities |
65 |
769 |
|||||||||
(80,787) |
(143,635) |
||||||||||
Net decrease in cash and cash equivalents |
(292,515) |
(112,552) |
|||||||||
Cash and cash equivalents |
|||||||||||
Beginning of period |
670,992 |
777,309 |
|||||||||
End of period |
$ |
378,477 |
$ |
664,757 |
|||||||
(1) Amounts have been adjusted. See "Revision of Prior Period Amounts" section for additional details. |
|||||||||||
Telephone and Data Systems, Inc. |
||||||||||||||||||
Financial Measures and Reconciliations |
||||||||||||||||||
(Unaudited, dollars in thousands) |
||||||||||||||||||
Consolidated |
||||||||||||||||||
Three Months Ended June 30, 2010 |
U.S. Cellular |
TDS Telecom (1) |
All Other (2) |
Total |
||||||||||||||
Operating revenues |
$ |
1,029,893 |
$ |
199,206 |
$ |
3,120 |
$ |
1,232,219 |
||||||||||
Deduct: |
||||||||||||||||||
U.S. Cellular equipment sales revenue |
57,317 |
|||||||||||||||||
Service revenues |
$ |
972,576 |
||||||||||||||||
Operating income |
$ |
63,504 |
$ |
24,560 |
$ |
(1,683) |
$ |
86,381 |
||||||||||
Add: |
||||||||||||||||||
Depreciation, amortization and accretion |
144,455 |
43,149 |
2,654 |
190,258 |
||||||||||||||
(Gain) Loss on asset disposals |
1,250 |
(68) |
32 |
1,214 |
||||||||||||||
Adjusted OIBDA (3)(6) |
$ |
209,209 |
$ |
67,641 |
$ |
1,003 |
$ |
277,853 |
||||||||||
Adjusted OIBDA margin (4) |
21.5% |
34.0% |
||||||||||||||||
Consolidated |
||||||||||||||||||
Three Months Ended June 30, 2009 |
U.S. Cellular (7) |
TDS Telecom (1)(7) |
All Other (2) |
Total (7) |
||||||||||||||
Operating revenues |
$ |
1,042,143 |
$ |
195,960 |
$ |
3,967 |
$ |
1,242,070 |
||||||||||
Deduct: |
||||||||||||||||||
U.S. Cellular equipment sales revenue |
67,795 |
|||||||||||||||||
Service revenues |
$ |
974,348 |
||||||||||||||||
Operating income |
$ |
138,838 |
$ |
18,997 |
$ |
(4,396) |
$ |
153,439 |
||||||||||
Add (Deduct): |
||||||||||||||||||
Depreciation, amortization and accretion |
138,777 |
41,663 |
3,072 |
183,512 |
||||||||||||||
Loss on asset disposals |
2,611 |
402 |
8 |
3,021 |
||||||||||||||
Adjusted OIBDA (3)(6) |
$ |
280,226 |
$ |
61,062 |
$ |
(1,316) |
$ |
339,972 |
||||||||||
Adjusted OIBDA margin (4) |
28.8% |
31.2% |
||||||||||||||||
TDS Consolidated |
||||||||||||||||||
Three Months Ended June 30, |
2010 |
2009 |
||||||||||||||||
Cash flows from operating activities |
$ |
291,686 |
$ |
220,711 |
||||||||||||||
Deduct: |
||||||||||||||||||
Capital expenditures |
171,328 |
125,585 |
||||||||||||||||
Free cash flow (5) |
$ |
120,358 |
$ |
95,126 |
||||||||||||||
Telephone and Data Systems, Inc. |
||||||||||||||||||
Financial Measures and Reconciliations |
||||||||||||||||||
(Unaudited, dollars in thousands) |
||||||||||||||||||
Consolidated |
||||||||||||||||||
Six Months Ended June 30, 2010 |
U.S. Cellular |
TDS Telecom (1) |
All Other (2) |
Total |
||||||||||||||
Operating revenues |
$ |
2,053,750 |
$ |
394,711 |
$ |
6,193 |
$ |
2,454,654 |
||||||||||
Deduct: |
||||||||||||||||||
U.S. Cellular equipment sales revenue |
116,166 |
|||||||||||||||||
Service revenues |
$ |
1,937,584 |
||||||||||||||||
Operating income |
$ |
141,128 |
$ |
50,432 |
$ |
(3,183) |
$ |
188,377 |
||||||||||
Add: |
||||||||||||||||||
Depreciation, amortization and accretion |
287,688 |
86,572 |
5,387 |
379,647 |
||||||||||||||
(Gain) Loss on asset disposals |
6,426 |
277 |
(58) |
6,645 |
||||||||||||||
Adjusted OIBDA (3)(6) |
$ |
435,242 |
$ |
137,281 |
$ |
2,146 |
$ |
574,669 |
||||||||||
Adjusted OIBDA margin (4) |
22.5% |
34.8% |
||||||||||||||||
Consolidated |
||||||||||||||||||
Six Months Ended June 30, 2009 |
U.S. Cellular (7) |
TDS Telecom (1)(7) |
All Other (2) |
Total (7) |
||||||||||||||
Operating revenues |
$ |
2,096,487 |
$ |
395,262 |
$ |
8,547 |
$ |
2,500,296 |
||||||||||
Deduct: |
||||||||||||||||||
U.S. Cellular equipment sales revenue |
138,685 |
|||||||||||||||||
Service revenues |
$ |
1,957,802 |
||||||||||||||||
Operating income |
$ |
257,207 |
$ |
45,476 |
$ |
(9,436) |
$ |
293,247 |
||||||||||
Add (Deduct): |
||||||||||||||||||
Depreciation, amortization and accretion |
276,655 |
83,526 |
6,324 |
366,505 |
||||||||||||||
Loss on asset disposals |
6,556 |
617 |
18 |
7,191 |
||||||||||||||
Adjusted OIBDA (3)(6) |
$ |
540,418 |
$ |
129,619 |
$ |
(3,094) |
$ |
666,943 |
||||||||||
Adjusted OIBDA margin (4) |
27.6% |
32.8% |
||||||||||||||||
TDS Consolidated |
||||||||||||||||||
Six Months Ended June 30, |
2010 |
2009 |
||||||||||||||||
Cash flows from operating activities |
$ |
502,346 |
$ |
443,961 |
||||||||||||||
Deduct: |
||||||||||||||||||
Capital expenditures |
317,950 |
290,821 |
||||||||||||||||
Free cash flow (5) |
$ |
184,396 |
$ |
153,140 |
||||||||||||||
(1) Includes ILEC and CLEC intercompany eliminations. (2) Consists of a non-reportable segment (Suttle-Straus), corporate operations, intercompany eliminations between U.S. Cellular, TDS Telecom and (3) Adjusted OIBDA is a segment measure reported to the chief operating decision maker for purposes of making decisions about allocating (4) Adjusted OIBDA margin is defined as adjusted OIBDA divided by service revenues (U.S. Cellular) and operating revenues (TDS Telecom). (5) Free cash flow is defined as cash flows from operating activities minus capital expenditures. Free cash flow is a non-GAAP financial measure. (6) Adjusted OIBDA excludes the net gain or loss on asset disposals and loss on impairment of assets, if any, in order to show operating results on a (7) Amounts have been adjusted. See "Revision of Prior Period Amounts" section for additional details. |
||||||||||||||||||
Revision of Prior Period Amounts
In preparing its financial statements for the three months ended March 31, 2010, TDS discovered certain errors related to accounting for operating revenues and sales tax liabilities. The quantification of these errors was subsequently refined during the second quarter of 2010. These errors resulted in the overstatement of operating revenues and understatement of sales tax liabilities for the years ended December 31, 2009, 2008, 2007, and the three months ended March 31, 2010. In addition to recording these adjustments, TDS recorded other adjustments to prior-year amounts to correct other immaterial items. In accordance with SEC Staff Accounting Bulletin Nos. 99 and 108 ("SAB 99 and SAB 108"), TDS evaluated these errors and determined that they were immaterial to each of the reporting periods affected and, therefore, amendment of previously filed reports was not required. However, if the adjustments to correct the cumulative errors had been recorded in the first or second quarter of 2010, TDS believes the impact would have been significant to those respective periods and would impact comparisons to prior periods. As permitted by SAB 108, TDS revised in the current filing its comparative consolidated financial statements for these immaterial amounts. In addition, on August 5, 2010, TDS filed a Current Report on Form 8-K (Items 8.01 and 9.01) with the SEC to revise financial statements and other financial information previously included in its Annual Report on Form 10-K for the year ended December 31, 2009 and Quarterly Report on Form 10-Q for the period ended March 31, 2010.
The Consolidated Balance Sheet at December 31, 2009 was revised to reflect the cumulative effect of these errors, which resulted in a decrease to retained earnings of $13.0 million. Also, in accordance with SAB 108, the Consolidated Statement of Operations and the Consolidated Statement of Cash Flows have been revised as follows:
Consolidated Balance Sheet — December 31, 2009 |
|||||||||||||||
As previously |
|||||||||||||||
(Dollars in thousands) |
reported (1) |
Adjustment |
Revised |
||||||||||||
Accounts receivable from customers and others |
$ |
511,914 |
$ |
3,529 |
$ |
515,443 |
|||||||||
Total current assets |
1,644,142 |
3,529 |
1,647,671 |
||||||||||||
Total assets |
7,608,784 |
3,529 |
7,612,313 |
||||||||||||
Customer deposits and deferred revenues |
167,963 |
(3,512) |
164,451 |
||||||||||||
Accrued taxes |
39,644 |
22,924 |
62,568 |
||||||||||||
Total current liabilities |
780,296 |
19,412 |
799,708 |
||||||||||||
Retained earnings |
2,371,587 |
(13,007) |
2,358,580 |
||||||||||||
Total TDS shareholders' equity |
3,777,305 |
(13,007) |
3,764,298 |
||||||||||||
Noncontrolling interests |
665,092 |
(2,876) |
662,216 |
||||||||||||
Total equity |
4,443,229 |
(15,883) |
4,427,346 |
||||||||||||
Total liabilities and equity |
7,608,784 |
3,529 |
7,612,313 |
||||||||||||
Consolidated Statement of Operations — Three Months Ended June 30, 2009 |
|||||||||||||||
As previously |
|||||||||||||||
(Dollars in thousands, except per share amounts) |
reported (2) |
Adjustment |
Revised |
||||||||||||
Operating revenues |
$ |
1,242,477 |
$ |
(407) |
$ |
1,242,070 |
|||||||||
Total operating expenses |
1,087,877 |
754 |
1,088,631 |
||||||||||||
Operating income |
154,600 |
(1,161) |
153,439 |
||||||||||||
Interest expense |
(32,245) |
(289) |
(32,534) |
||||||||||||
Total investment and other income (expense) |
(11,005) |
(289) |
(11,294) |
||||||||||||
Income before income taxes |
143,595 |
(1,450) |
142,145 |
||||||||||||
Income tax expense |
53,036 |
2,206 |
55,242 |
||||||||||||
Net income |
90,559 |
(3,656) |
86,903 |
||||||||||||
Net income attributable to noncontrolling interests, |
|||||||||||||||
net of tax |
(20,828) |
289 |
(20,539) |
||||||||||||
Net income attributable to TDS shareholders |
69,731 |
(3,367) |
66,364 |
||||||||||||
Net income available to common shareholders |
69,718 |
(3,367) |
66,351 |
||||||||||||
Basic earnings attributable to TDS shareholders |
0.63 |
(0.03) |
0.60 |
||||||||||||
Diluted earnings attributable to TDS shareholders |
0.63 |
(0.03) |
0.60 |
||||||||||||
Consolidated Statement of Operations — Six Months Ended June 30, 2009 |
|||||||||||||||
As previously |
|||||||||||||||
(Dollars in thousands, except per share amounts) |
reported (2) |
Adjustment |
Revised |
||||||||||||
Operating revenues |
$ |
2,499,123 |
$ |
1,173 |
$ |
2,500,296 |
|||||||||
Total operating expenses |
2,208,314 |
(1,265) |
2,207,049 |
||||||||||||
Operating income |
290,809 |
2,438 |
293,247 |
||||||||||||
Interest expense |
(62,350) |
(694) |
(63,044) |
||||||||||||
Total investment and other income (expense) |
(13,202) |
(694) |
(13,896) |
||||||||||||
Income before income taxes |
277,607 |
1,744 |
279,351 |
||||||||||||
Income tax expense |
93,674 |
3,407 |
97,081 |
||||||||||||
Net income |
183,933 |
(1,663) |
182,270 |
||||||||||||
Net income attributable to noncontrolling interests, |
|||||||||||||||
net of tax |
(42,194) |
385 |
(41,809) |
||||||||||||
Net income attributable to TDS shareholders |
141,739 |
(1,278) |
140,461 |
||||||||||||
Net income available to common shareholders |
141,713 |
(1,278) |
140,435 |
||||||||||||
Basic earnings attributable to TDS shareholders |
1.27 |
(0.01) |
1.26 |
||||||||||||
Diluted earnings attributable to TDS shareholders |
1.27 |
(0.02) |
1.25 |
||||||||||||
Consolidated Statement of Cash Flows — Six Months Ended June 30, 2009 |
|||||||||||||||
As previously |
|||||||||||||||
(Dollars in thousands) |
reported (2) |
Adjustment |
Revised |
||||||||||||
Net income |
$ |
183,933 |
$ |
(1,663) |
$ |
182,270 |
|||||||||
Depreciation, amortization and accretion |
366,115 |
390 |
366,505 |
||||||||||||
Deferred income taxes, net |
16,237 |
2,645 |
18,882 |
||||||||||||
Loss on asset disposals |
4,912 |
2,279 |
7,191 |
||||||||||||
Change in accounts receivable |
(62,870) |
(5,413) |
(68,283) |
||||||||||||
Change in customer deposits and deferred revenues |
(4,824) |
(327) |
(5,151) |
||||||||||||
Change in accrued taxes |
56,741 |
3,665 |
60,406 |
||||||||||||
Change in other assets and liabilities |
(71,724) |
(1,576) |
(73,300) |
||||||||||||
Cash flows from operating activities |
443,961 |
— |
443,961 |
||||||||||||
(1) In Annual Report on Form 10-K for the year ended December 31, 2009 filed on February 25, 2010. (2) In Quarterly Report on Form 10-Q for the period ended June 30, 2009 filed on August 6, 2009. |
|||||||||||||||
SOURCE Telephone and Data Systems, Inc.
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