Updates TDS Telecom guidance to include Baja Broadband acquisition
CHICAGO, Aug. 2, 2013 /PRNewswire/ -- As previously announced, TDS will hold a teleconference Aug. 2, 2013 at 9:30 a.m. CDT. Interested parties may listen to the call live by accessing the Investor Relations page of www.teldta.com.
Telephone and Data Systems, Inc. (NYSE:TDS) reported operating revenues of $1,228.2 million for the second quarter of 2013, versus $1,323.2 million for the comparable period one year ago. Net income attributable to TDS shareholders and related diluted earnings per share were $156.1 million and $1.42 respectively, for the second quarter of 2013, compared to $42.3 million and $0.39, respectively, in the comparable period one year ago.
The following significant events occurred during the second quarter of 2013:
- On April 3, U.S. Cellular deconsolidated the St. Lawrence Seaway RSA Cellular Partnership ("NY1") and the New York RSA 2 Cellular Partnership ("NY2"). As a result, the NY1 and NY2 partnerships results are now reported using the equity method of accounting for investments in the consolidated financial statements. U.S. Cellular has retained the same ownership percentage and will continue to report the same percentage of income.
- On May 16, U.S. Cellular's previously announced transaction to sell its Chicago, St. Louis, central Illinois and three other markets (the "Divestiture Transaction") closed and U.S. Cellular received $480 million in cash and recognized a pre-tax gain of $266.4 million.
- On June 25, U.S. Cellular paid a special cash dividend of $5.75 per Common Share and Series A Common Share, for an aggregate amount of $482.3 million. Of the amount paid, TDS received $407.1 million.
"Our businesses have achieved significant strategic milestones so far this year," said LeRoy T. Carlson, Jr., TDS president and CEO. "At U.S. Cellular, we divested underperforming markets in May for $480 million, and returned value to shareholders through a special, one-time dividend. In June, U.S. Cellular also announced an agreement to monetize non-strategic spectrum at a significant valuation. Yesterday, we closed the Baja Broadband acquisition and TDS Telecom began implementing strategies to drive customer penetration in Baja's markets. This morning, we announced a new $250 million share repurchase authorization that will enable us to return value to TDS shareholders.
"With the leadership of president and CEO Ken Meyers, U.S. Cellular continues to execute aggressive strategies to accelerate customer growth and improve its competitive position. The 4G LTE network expansion is supporting growth in smartphone penetration and data use, though the corresponding increase in smartphone subsidies continues to impact profitability. To build the customer base and reduce churn, U.S. Cellular plans to enhance its device portfolio with Apple products later this year. U.S. Cellular also recently converted to a new billing and operation support system that will improve efficiency and enable faster delivery of new services and products, such as shared data plans for customers with multiple devices.
"TDS Telecom continued to increase ILEC residential broadband and video penetration in the quarter, and commercial managedIP connections increased 50 percent year over year. TDS Telecom's revenue growth in the quarter was driven primarily by our hosted and managed services acquisitions, where we are focused on offering comprehensive, end-to-end IT solutions for mid-market customers."
SHARE Repurchase
The TDS board has authorized a $250 million share repurchase program, with no expiration date. The board authorized management to use its discretion to make purchases, as market conditions warrant, on the open market or at negotiated prices in private transactions.
2013 ESTIMATES
Estimates of full-year 2013 results for U.S. Cellular, TDS Telecom and TDS are shown below. Such estimates represent management's view as of the date of filing TDS' Form 10-Q for the quarter ended June 30, 2013. Such forward-looking statements should not be assumed to be current as of any future date. TDS undertakes no duty to update such information, whether as a result of new information, future events or otherwise. There can be no assurance that final results will not differ materially from such estimated results.
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2013 EstimatedResults (1)
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U.S. Cellular (2)
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TDS Telecom
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TDS (2)(6)
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Previous
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Current
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Previous
|
Current
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Previous
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Current
|
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(Dollars in millions)
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Adjusted operating revenues (3)
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$3,620-$3,740
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$3,615-$3,715
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$850-$900
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$890-$930
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$4,515-$4,685
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$4,550-$4,690
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Adjusted income before income taxes (4)
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$595-$715
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$600-$700
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$220-$250
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$230-$260
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$810-$960
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$830-$960
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Capital expenditures
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Unchanged
|
$735
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$155
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$165
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$900
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$910
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(1)
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These estimates are based on TDS' current plans, which include an expansion of the multi-year deployment of 4G LTE technology; such expansion includes deployment on 700 MHz in additional markets as well as deployment on the 850 MHz band to provide additional capacity for future growth in data usage, enable potential future 4G LTE roaming, and support the sale of Apple products. The financial impacts of selling Apple products in 2013 consist of the following:
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- Increased Adjusted operating revenues resulting from net incremental customers added and retained as a result of offering Apple products;
- Decreased Adjusted income before income taxes as a result of net increases in costs, primarily loss on equipment sales as a result of offering Apple products; and
- Increased Capital expenditures related to the deployment on the 850 MHz band to provide additional capacity for future growth in data usage, which includes capacity required to accommodate Apple products.
These estimates also reflect the impacts of the deconsolidation of certain partnerships as of April 2013 at U.S. Cellular. These estimates do not include (i) the reported gain on sale of business and other exit costs, net (ii) the reported gain on investments, or (iii) the expected gains from pending spectrum license divestitures. In addition, the estimates also reflect the impacts of the acquisition of Baja Broadband, LLC as of August 1, 2013 and of a multi-year deployment of IPTV at TDS Telecom. New developments or changing conditions (such as, but not limited to, regulatory developments, customer net growth, customer demand for data services, costs to deploy, agreements for content or franchises, or possible acquisitions, dispositions or exchanges) could affect TDS' plans and, therefore, its 2013 estimated results.
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(2)
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These estimates reflect the Divestiture Transaction which closed on May 16, 2013.
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These estimates reflect U.S. Cellular's consolidated results for 2013. Estimated results reflecting U.S. Cellular's Divestiture Markets and Core Markets are shown in the table below:
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2013 Estimated Results
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U.S. Cellular Core
Markets (5)
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U.S. Cellular Divestiture Markets (5)
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U.S. Cellular Consolidated (5)
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Previous
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Current
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Previous
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Current
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Previous
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Current
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(Dollars in millions)
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Adjusted operating revenues (3)
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Unchanged
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$3,475-$3,575
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$145-$165
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$140
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$3,620-$3,740
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$3,615-$3,715
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Adjusted income beforeincome taxes (4)
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Unchanged
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$560-$660
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$35-$55
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$40
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$595-$715
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$600-$700
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Capital expenditures
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Unchanged
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$730
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Unchanged
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$5
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Unchanged
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$735
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(3)
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Adjusted operating revenues is a non-GAAP financial measure defined as Operating revenues excluding U.S. Cellular Equipment sales revenues. U.S. Cellular Equipment sales revenues are excluded from Adjusted operating revenues since U.S. Cellular equipment is generally sold at a net loss, and such net loss that results from U.S. Cellular Equipment sales revenues less U.S. Cellular Cost of equipment sold is viewed as a cost of earning service revenues for purposes of assessing business results. For purposes of developing this guidance, TDS does not calculate an estimate of U.S. Cellular Equipment sales revenues. TDS believes this measure provides useful information to investors regarding TDS' results of operations. Adjusted operating revenues is not a measure of financial performance under GAAP and should not be considered as an alternative to Operating revenues as an indicator of the Company's operating performance.
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(4)
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Adjusted income before income taxes is a non-GAAP financial measure defined as Income before income taxes, adjusted for: Depreciation, amortization and accretion, net Gain or loss on sale of business and other exit costs (if any), net Gain or loss on investments (if any), and Interest expense. Adjusted income before income taxes excludes these items in order to show operating results on a more comparable basis from period to period. In the future, TDS may also exclude other items from adjusted income before income taxes if such items may help reflect operating results on a more comparable basis. TDS does not intend to imply that any such amounts that are excluded are non-recurring, infrequent or unusual; such amounts may occur in the future. Adjusted income before income taxes is not a measure of financial performance under GAAP and should not be considered as an alternative to Income before income taxes as an indicator of the Company's operating performance or as an alternative to Cash flows from operating activities, determined in accordance with GAAP, as an indicator of cash flows or as a measure of liquidity. The following tables provide a reconciliation of Income (loss) before income taxes to Adjusted income before income taxes for 2013 Estimated Results, six months ended June 30, 2013 actual results, and 2012 actual results:
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2013 Current Estimated Results
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U.S. Cellular Core
Markets (5)
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U.S. Cellular Divestiture Markets (2)(5)
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U.S. Cellular
Consolidated(5)
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TDS
Telecom
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TDS (6)
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(Dollars in millions)
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Income (loss) before income taxes
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($10)-$90
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$30
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$20-$120
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$25-$55
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$30-$160
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Depreciation, amortization and accretion expense (7)
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$540
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$250
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$790
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$205
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$1,005
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(Gain) loss on sale of business andother exit costs, net
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—
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($240)
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($240)
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—
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($295)
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(Gain) loss on investments
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($20)
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—
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($20)
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—
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($15)
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Interest expense
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$50
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—
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$50
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—
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$105
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Adjusted income beforeincome taxes
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$560-$660
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$40
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$600-$700
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$230-$260
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$830-$960
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Actual Results
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Six Months Ended June 30, 2013
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Year Ended December 31, 2012
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U.S. Cellular Consolidated (5)
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TDS
Telecom
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TDS (6)
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U.S. Cellular Consolidated (5)
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TDS
Telecom
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TDS (6)
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(Dollars in millions)
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Income before income taxes
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$ 282
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$ 22
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$ 322
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$ 205
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$ 45
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$ 196
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Depreciation, amortization andaccretion expense (7)
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393
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98
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497
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609
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193
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814
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(Gain) loss on sale of businessand other exit costs, net
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(242)
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—
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(296)
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21
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—
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21
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(Gain) loss on investments
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(19)
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—
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(15)
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4
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—
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4
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Interest expense
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21
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(1)
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48
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42
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(1)
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87
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Adjusted income beforeincome taxes
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$ 435
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$ 119
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$ 556
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$ 881
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$ 237
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$ 1,122
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(5)
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The U.S. Cellular Consolidated amounts represent GAAP financial measures and include the results of both the Core Markets and the Divestiture Markets. The amounts for Core Markets and Divestiture Markets represent non-GAAP financial measures. TDS believes that the amounts for the Core Markets and Divestiture Markets may be useful to investors and other users of its financial information in evaluating the separate results for the Core Markets. Divestiture Markets are comprised of U.S. Cellular's Chicago, central Illinois, St. Louis and certain Indiana/Michigan/Ohio markets. Core Markets are comprised of all other markets in which U.S. Cellular conducts business including Peoria, Rockford and certain other areas in Illinois, and in Columbia, Joplin, Jefferson City and certain other areas in Missouri. Core Markets as defined also includes any other income or expenses due to U.S. Cellular's direct or indirect ownership interests in other spectrum in the Divestiture Markets which was not included in the sale and other retained assets from the Divestiture Markets.
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(6)
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The TDS column includes U.S. Cellular, TDS Telecom and also the impacts of consolidating eliminations, corporate operations and non-reportable segments, all of which are not presented above.
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(7)
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The 2013 estimated amount for Depreciation, amortization and accretion expense in the U.S. Cellular Divestiture Markets includes approximately $168 million of incremental accelerated depreciation, amortization and accretion resulting from the Divestiture Transaction. Actual results for the six months ended June 30, 2013 and the year ended December 31, 2012 include $88 million and $20 million, respectively, of incremental accelerated depreciation, amortization and accretion resulting from the Divestiture Transaction.
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Conference Call Information
TDS will hold a conference call on Aug. 2, 2013 at 9:30 a.m. CDT.
Before the call, certain financial and statistical information to be discussed during the call will be posted to the Investor Relations 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; broadband, TV and voice; and hosted and managed services to approximately 6 million customers nationwide through its business units, U.S. Cellular, TDS Telecom and TDS Hosted & Managed Services. Founded in 1969 and headquartered in Chicago, TDS employed 10,700 people as of June 30, 2013.
Visit www.teldta.com for comprehensive financial information, including earnings releases, quarterly and annual filings, shareholder information and more.
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: impacts of the pending acquisition and divestiture transactions, including, but not limited to, the ability to obtain regulatory approvals, successfully complete the transaction and the financial impacts of such transaction; the ability of the company to successfully manage and 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 on acceptable terms; 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; changes in customer growth rates, average monthly revenue per user, 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 Current Report used by TDS to furnish this press release to the Securities and Exchange Commission ("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
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United States Cellular Corporation
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Total Markets Summary Operating Data (Unaudited)
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Quarter Ended
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6/30/2013
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3/31/2013
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12/31/2012
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9/30/2012
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6/30/2012
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Retail Customers
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Postpaid
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|
|
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|
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Total at end of period
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4,412,000
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5,060,000
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5,134,000
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|
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5,175,000
|
|
|
5,213,000
|
|
|
Gross additions
|
|
165,000
|
|
|
191,000
|
|
|
241,000
|
|
|
230,000
|
|
|
199,000
|
|
|
Net additions (losses)
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(120,000)
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|
|
(74,000)
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|
|
(41,000)
|
|
|
(38,000)
|
|
|
(48,000)
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|
|
ARPU (1)
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$
|
54.18
|
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$
|
54.85
|
|
$
|
54.56
|
|
$
|
54.34
|
|
$
|
54.42
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Churn rate (2)
|
|
2.0%
|
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1.7%
|
|
|
1.8%
|
|
|
1.7%
|
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|
1.6%
|
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Smartphone penetration (3) (4)
|
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45.5%
|
|
|
43.5%
|
|
|
41.8%
|
|
|
38.6%
|
|
|
36.8%
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Prepaid
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Total at end of period
|
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381,000
|
|
|
446,000
|
|
|
423,000
|
|
|
386,000
|
|
|
329,000
|
|
|
Gross additions
|
|
77,000
|
|
|
104,000
|
|
|
107,000
|
|
|
120,000
|
|
|
78,000
|
|
|
Net additions (losses)
|
|
(7,000)
|
|
|
23,000
|
|
|
37,000
|
|
|
57,000
|
|
|
20,000
|
|
|
ARPU (1)
|
$
|
31.69
|
|
$
|
33.31
|
|
$
|
33.56
|
|
$
|
32.97
|
|
$
|
33.59
|
|
|
Churn rate (2)
|
|
6.8%
|
|
|
6.2%
|
|
|
5.8%
|
|
|
5.9%
|
|
|
6.2%
|
|
Total customers at end of period
|
|
4,968,000
|
|
|
5,736,000
|
|
|
5,798,000
|
|
|
5,808,000
|
|
|
5,799,000
|
|
Billed ARPU (1)
|
$
|
50.60
|
|
$
|
51.13
|
|
$
|
50.94
|
|
$
|
50.83
|
|
$
|
50.99
|
|
Service revenue ARPU (1)
|
$
|
57.45
|
|
$
|
57.63
|
|
$
|
58.00
|
|
$
|
59.57
|
|
$
|
59.05
|
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Smartphones sold as a percent of total devices sold
|
|
66.0%
|
|
|
61.7%
|
|
|
62.9%
|
|
|
53.0%
|
|
|
51.9%
|
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Total population
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated markets (5)
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|
84,025,000
|
|
|
93,943,000
|
|
|
93,244,000
|
|
|
92,996,000
|
|
|
92,684,000
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Consolidated operating markets (5)
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31,822,000
|
|
|
47,440,000
|
|
|
46,966,000
|
|
|
46,966,000
|
|
|
46,966,000
|
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Market penetration at end of period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated markets (6)
|
|
5.9%
|
|
|
6.1%
|
|
|
6.2%
|
|
|
6.2%
|
|
|
6.3%
|
|
|
Consolidated operating markets (6)
|
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15.6%
|
|
|
12.1%
|
|
|
12.3%
|
|
|
12.4%
|
|
|
12.3%
|
|
Capital expenditures (000s)
|
$
|
168,500
|
|
$
|
118,400
|
|
$
|
253,100
|
|
$
|
199,100
|
|
$
|
183,200
|
|
Total cell sites in service
|
|
7,748
|
|
|
8,027
|
|
|
8,028
|
|
|
7,984
|
|
|
7,932
|
|
Owned towers in service
|
|
4,411
|
|
|
4,411
|
|
|
4,408
|
|
|
4,377
|
|
|
4,346
|
|
United States Cellular Corporation
|
|
Core Markets Summary Operating Data (Unaudited)
|
|
Excludes NY1 & NY2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
6/30/2013
|
|
3/31/2013
|
|
12/31/2012
|
|
9/30/2012
|
|
6/30/2012
|
|
Retail Customers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Postpaid
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total at end of period
|
|
4,412,000
|
|
|
4,463,000
|
|
|
4,496,000
|
|
|
4,515,000
|
|
|
4,538,000
|
|
|
Gross additions
|
|
165,000
|
|
|
176,000
|
|
|
208,000
|
|
|
196,000
|
|
|
167,000
|
|
|
Net additions (losses)
|
|
(53,000)
|
|
|
(33,000)
|
|
|
(19,000)
|
|
|
(23,000)
|
|
|
(30,000)
|
|
|
ARPU (1)
|
$
|
54.44
|
|
$
|
54.21
|
|
$
|
53.91
|
|
$
|
53.67
|
|
$
|
53.73
|
|
|
Churn rate (2)
|
|
1.6%
|
|
|
1.6%
|
|
|
1.7%
|
|
|
1.6%
|
|
|
1.4%
|
|
|
Smartphone penetration (3) (4)
|
|
45.5%
|
|
|
43.0%
|
|
|
41.1%
|
|
|
37.8%
|
|
|
36.0%
|
|
Prepaid
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total at end of period
|
|
381,000
|
|
|
373,000
|
|
|
342,000
|
|
|
305,000
|
|
|
246,000
|
|
|
Gross additions
|
|
76,000
|
|
|
91,000
|
|
|
87,000
|
|
|
99,000
|
|
|
60,000
|
|
|
Net additions (losses)
|
|
8,000
|
|
|
31,000
|
|
|
37,000
|
|
|
59,000
|
|
|
23,000
|
|
|
ARPU (1)
|
$
|
31.65
|
|
$
|
32.92
|
|
$
|
33.21
|
|
$
|
32.97
|
|
$
|
33.23
|
|
|
Churn rate (2)
|
|
6.0%
|
|
|
5.6%
|
|
|
5.1%
|
|
|
4.8%
|
|
|
5.4%
|
|
Total customers at end of period
|
|
4,968,000
|
|
|
5,005,000
|
|
|
5,022,000
|
|
|
5,012,000
|
|
|
4,989,000
|
|
Billed ARPU (1)
|
$
|
50.98
|
|
$
|
50.93
|
|
$
|
50.71
|
|
$
|
50.59
|
|
$
|
50.71
|
|
Service revenue ARPU (1)
|
$
|
57.88
|
|
$
|
57.14
|
|
$
|
57.67
|
|
$
|
59.34
|
|
$
|
58.89
|
|
Smartphones sold as a percent of total devices sold
|
|
66.1%
|
|
|
62.1%
|
|
|
62.9%
|
|
|
53.0%
|
|
|
52.0%
|
|
Total population
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated markets (5)
|
|
84,025,000
|
|
|
84,025,000
|
|
|
83,384,000
|
|
|
82,595,000
|
|
|
82,283,000
|
|
|
Consolidated operating markets (5)
|
|
31,822,000
|
|
|
31,822,000
|
|
|
31,445,000
|
|
|
31,110,000
|
|
|
31,110,000
|
|
Market penetration at end of period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated markets (6)
|
|
5.9%
|
|
|
6.0%
|
|
|
6.0%
|
|
|
6.1%
|
|
|
6.1%
|
|
|
Consolidated operating markets (6)
|
|
15.6%
|
|
|
15.7%
|
|
|
16.0%
|
|
|
16.1%
|
|
|
16.0%
|
|
Capital expenditures (000s)
|
$
|
171,200
|
|
$
|
113,300
|
|
$
|
241,400
|
|
$
|
184,100
|
|
$
|
163,600
|
|
Total cell sites in service
|
|
6,113
|
|
|
6,113
|
|
|
6,130
|
|
|
6,089
|
|
|
6,041
|
|
Owned towers in service
|
|
3,844
|
|
|
3,846
|
|
|
3,847
|
|
|
3,818
|
|
|
3,787
|
|
|
|
(1)
|
ARPU metrics are calculated by dividing a revenue base by an average number of customers by the number of months in the period. These revenue bases and customer populations are shown below:
|
|
a.
|
Postpaid ARPU consists of total postpaid service revenues and postpaid customers.
|
|
b.
|
Prepaid ARPU consists of total prepaid service revenues and prepaid customers.
|
|
c.
|
Billed ARPU consists of total retail service revenues and postpaid, prepaid and reseller customers.
|
|
d.
|
Service revenue ARPU consists of total retail service revenues, inbound roaming and other service revenues and postpaid, prepaid and reseller customers.
|
|
(2)
|
Churn metrics represent the percentage of the postpaid or prepaid customers that disconnect service each month. These metrics represent the average monthly postpaid or prepaid churn rate for each respective period.
|
|
(3)
|
Smartphones represent wireless devices which run on an AndroidTM, BlackBerry® or Windows Mobile® operating system, excluding tablets.
|
|
(4)
|
Smartphone penetration is calculated by dividing postpaid smartphone customers by total postpaid customers.
|
|
(5)
|
Used only to calculate market penetration of consolidated and core markets and consolidated and core operating markets, respectively. See footnote (6)below.
|
|
(6)
|
Market penetration is calculated by dividing the number of wireless customers at the end of the period by the total population of consolidated and core markets and consolidated and core operating markets, respectively, as estimated by Claritas®.
|
|
TDS Telecom
|
|
Summary Operating Data (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
6/30/2013
|
|
3/31/2013
|
|
12/31/2012
|
|
9/30/2012
|
|
6/30/2012
|
|
TDS Telecom
|
|
|
|
|
|
|
|
|
|
|
ILEC:
|
|
|
|
|
|
|
|
|
|
|
|
Residential Connections
|
|
|
|
|
|
|
|
|
|
|
|
|
Physical access lines (1)
|
342,200
|
|
345,500
|
|
350,100
|
|
355,800
|
|
360,100
|
|
|
|
Broadband connections (2)
|
224,500
|
|
221,900
|
|
221,700
|
|
223,100
|
|
222,400
|
|
|
|
IPTV customers
|
10,500
|
|
9,000
|
|
7,900
|
|
6,700
|
|
5,600
|
|
|
|
ILEC residential connections
|
577,200
|
|
576,400
|
|
579,700
|
|
585,600
|
|
588,100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Connections
|
|
|
|
|
|
|
|
|
|
|
|
|
Physical access lines (1)
|
104,100
|
|
106,000
|
|
107,600
|
|
109,800
|
|
111,100
|
|
|
|
Broadband connections (2)
|
18,500
|
|
18,400
|
|
18,500
|
|
18,500
|
|
18,400
|
|
|
|
managedIP connections (3)
|
19,900
|
|
18,400
|
|
17,200
|
|
15,000
|
|
13,200
|
|
|
|
ILEC commercial connections
|
142,500
|
|
142,800
|
|
143,300
|
|
143,300
|
|
142,700
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CLEC:
|
|
|
|
|
|
|
|
|
|
|
|
Residential Connections
|
|
|
|
|
|
|
|
|
|
|
|
|
Physical access lines (1)
|
21,800
|
|
23,000
|
|
24,600
|
|
26,200
|
|
27,900
|
|
|
|
Broadband connections (2)
|
7,200
|
|
7,700
|
|
8,200
|
|
8,900
|
|
9,500
|
|
|
|
CLEC residential connections
|
29,000
|
|
30,700
|
|
32,800
|
|
35,100
|
|
37,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Connections
|
|
|
|
|
|
|
|
|
|
|
|
|
Physical access lines (1)
|
125,000
|
|
129,700
|
|
135,500
|
|
140,300
|
|
145,100
|
|
|
|
Broadband connections (2)
|
9,700
|
|
10,400
|
|
11,200
|
|
12,000
|
|
12,800
|
|
|
|
managedIP connections (3)
|
92,000
|
|
85,000
|
|
77,400
|
|
69,500
|
|
61,400
|
|
|
|
CLEC commercial connections
|
226,700
|
|
225,100
|
|
224,100
|
|
221,800
|
|
219,300
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total ILEC and CLEC Customer Connections
|
975,400
|
|
975,000
|
|
979,900
|
|
985,800
|
|
987,500
|
|
|
|
(1)
|
Individual circuits connecting customers to TDS Telecom's central office facilities.
|
|
(2)
|
The number of customers provided high-capacity data circuits via various technologies, including DSL and dedicated Internet circuit technologies.
|
|
(3)
|
The number of telephone handsets, data lines and IP trunks providing communications using IP networking technology.
|
|
TDS Telecom
|
|
Capital Expenditures (000s)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
6/30/2013
|
|
|
3/31/2013
|
|
|
12/31/2012
|
|
|
9/30/2012
|
|
|
6/30/2012
|
|
ILEC
|
$
|
29,400
|
|
$
|
22,400
|
|
$
|
43,400
|
|
$
|
33,700
|
|
$
|
32,500
|
|
CLEC
|
|
3,900
|
|
|
5,500
|
|
|
6,100
|
|
|
5,400
|
|
|
4,900
|
|
HMS
|
|
2,300
|
|
|
2,600
|
|
|
2,300
|
|
|
4,400
|
|
|
5,500
|
|
$
|
35,600
|
|
$
|
30,500
|
|
$
|
51,800
|
|
$
|
43,500
|
|
$
|
42,900
|
|
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)
|
|
|
|
|
|
2013
|
|
2012
|
|
Amount
|
Percent
|
|
|
Operating revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Cellular
|
$
|
995,130
|
|
$
|
1,104,400
|
|
$
|
(109,270)
|
|
(10%)
|
|
|
TDS Telecom
|
|
223,460
|
|
|
208,519
|
|
|
14,941
|
|
7%
|
|
|
All Other (1)
|
|
9,576
|
|
|
10,250
|
|
|
(674)
|
|
(7%)
|
|
|
|
|
|
|
1,228,166
|
|
|
1,323,169
|
|
|
(95,003)
|
|
(7%)
|
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Cellular
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses excluding depreciation, amortization and accretion
|
|
813,464
|
|
|
869,980
|
|
|
(56,516)
|
|
(6%)
|
|
|
|
Depreciation, amortization and accretion
|
|
202,580
|
|
|
147,555
|
|
|
55,025
|
|
37%
|
|
|
|
Loss on asset disposals, net
|
|
9,018
|
|
|
2,702
|
|
|
6,316
|
|
>100%
|
|
|
|
(Gain) loss on sale of business and other exit costs, net
|
|
(249,024)
|
|
|
—
|
|
|
(249,024)
|
|
N/M
|
|
|
|
|
|
|
776,038
|
|
|
1,020,237
|
|
|
(244,199)
|
|
(24%)
|
|
|
TDS Telecom
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses excluding depreciation, amortization and accretion
|
|
162,954
|
|
|
148,983
|
|
|
13,971
|
|
9%
|
|
|
|
Depreciation, amortization and accretion
|
|
48,756
|
|
|
47,945
|
|
|
811
|
|
2%
|
|
|
|
(Gain) loss on asset disposals, net
|
|
(682)
|
|
|
306
|
|
|
(988)
|
|
>(100%)
|
|
|
|
|
|
|
211,028
|
|
|
197,234
|
|
|
13,794
|
|
7%
|
|
|
All Other (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses excluding depreciation and amortization
|
|
10,033
|
|
|
11,111
|
|
|
(1,078)
|
|
(10%)
|
|
|
|
Depreciation and amortization
|
|
2,867
|
|
|
3,009
|
|
|
(142)
|
|
(5%)
|
|
|
|
Loss on impairment of assets
|
|
—
|
|
|
515
|
|
|
(515)
|
|
N/M
|
|
|
|
Gain on asset disposals, net
|
|
(17)
|
|
|
(13)
|
|
|
(4)
|
|
(31%)
|
|
|
|
(Gain) loss on sale of business and other exit costs, net
|
|
(54,010)
|
|
|
—
|
|
|
(54,010)
|
|
N/M
|
|
|
|
|
|
|
(41,127)
|
|
|
14,622
|
|
|
(55,749)
|
|
>(100%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
945,939
|
|
|
1,232,093
|
|
|
(286,154)
|
|
(23%)
|
|
|
Operating income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Cellular
|
|
219,092
|
|
|
84,163
|
|
|
134,929
|
|
>100%
|
|
|
TDS Telecom
|
|
12,432
|
|
|
11,285
|
|
|
1,147
|
|
10%
|
|
|
All Other (1)
|
|
50,703
|
|
|
(4,372)
|
|
|
55,075
|
|
>(100%)
|
|
|
|
|
|
|
282,227
|
|
|
91,076
|
|
|
191,151
|
|
>100%
|
|
|
Investment and other income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in earnings of unconsolidated entities
|
|
35,605
|
|
|
25,392
|
|
|
10,213
|
|
40%
|
|
|
Interest and dividend income
|
|
2,600
|
|
|
2,352
|
|
|
248
|
|
11%
|
|
|
Gain (loss) on investments
|
|
14,518
|
|
|
(3,728)
|
|
|
18,246
|
|
>(100%)
|
|
|
Interest expense
|
|
(23,749)
|
|
|
(23,139)
|
|
|
(610)
|
|
(3%)
|
|
|
Other, net
|
|
(197)
|
|
|
(249)
|
|
|
52
|
|
21%
|
|
|
|
Total investment and other income
|
|
28,777
|
|
|
628
|
|
|
28,149
|
|
>100%
|
|
|
Income before income taxes
|
|
311,004
|
|
|
91,704
|
|
|
219,300
|
|
>100%
|
|
|
Income tax expense
|
|
132,607
|
|
|
35,765
|
|
|
96,842
|
|
>100%
|
|
|
Net income
|
|
178,397
|
|
|
55,939
|
|
|
122,458
|
|
>100%
|
|
|
Less: Net income attributable to noncontrolling interests, net of tax
|
|
(22,320)
|
|
|
(13,602)
|
|
|
(8,718)
|
|
(64%)
|
|
|
Net income attributable to TDS shareholders
|
|
156,077
|
|
|
42,337
|
|
|
113,740
|
|
>100%
|
|
|
Preferred dividend requirement
|
|
(12)
|
|
|
(12)
|
|
|
—
|
|
—
|
|
|
Net income available to common shareholders
|
$
|
156,065
|
|
$
|
42,325
|
|
$
|
113,740
|
|
>100%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic weighted average shares outstanding
|
|
108,385
|
|
|
108,732
|
|
|
(347)
|
|
—
|
|
|
Basic earnings per share attributable to TDS shareholders
|
$
|
1.44
|
|
$
|
0.39
|
|
$
|
1.05
|
|
>100%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted average shares outstanding
|
|
108,913
|
|
|
109,022
|
|
|
(109)
|
|
—
|
|
|
Diluted earnings per share attributable to TDS shareholders
|
$
|
1.42
|
|
$
|
0.39
|
|
$
|
1.03
|
|
>100%
|
|
|
|
|
(1)
|
Consists of Non-Reportable Segment, corporate operations and intercompany eliminations between U.S. Cellular, TDS Telecom, the Non-Reportable Segment and corporate operations. TDS recognized an incremental $53.5 million upon closing of the Divesture Transaction as a result of lower asset basis in assets disposed.
|
|
|
N/M – Percentage change not meaningful
|
|
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)
|
|
|
|
|
|
2013
|
|
2012
|
|
Amount
|
Percent
|
|
|
Operating revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Cellular
|
$
|
2,076,876
|
|
$
|
2,196,521
|
|
$
|
(119,645)
|
|
(5%)
|
|
|
TDS Telecom
|
|
440,521
|
|
|
412,594
|
|
|
27,927
|
|
7%
|
|
|
All Other (1)
|
|
19,342
|
|
|
19,845
|
|
|
(503)
|
|
(3%)
|
|
|
|
|
|
|
2,536,739
|
|
|
2,628,960
|
|
|
(92,221)
|
|
(4%)
|
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Cellular
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses excluding depreciation, amortization and accretion
|
|
1,691,534
|
|
|
1,732,424
|
|
|
(40,890)
|
|
(2%)
|
|
|
|
Depreciation, amortization and accretion
|
|
392,425
|
|
|
294,240
|
|
|
98,185
|
|
33%
|
|
|
|
Loss on asset disposals, net
|
|
14,452
|
|
|
4,705
|
|
|
9,747
|
|
>100%
|
|
|
|
(Gain) loss on sale of business and other exit costs, net
|
|
(242,093)
|
|
|
(4,213)
|
|
|
(237,880)
|
|
>100%
|
|
|
|
|
|
|
1,856,318
|
|
|
2,027,156
|
|
|
(170,838)
|
|
(8%)
|
|
|
TDS Telecom
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses excluding depreciation, amortization and accretion
|
|
322,440
|
|
|
292,403
|
|
|
30,037
|
|
10%
|
|
|
|
Depreciation, amortization and accretion
|
|
98,247
|
|
|
95,388
|
|
|
2,859
|
|
3%
|
|
|
|
(Gain) loss on asset disposals, net
|
|
(489)
|
|
|
426
|
|
|
(915)
|
|
>(100%)
|
|
|
|
|
|
|
420,198
|
|
|
388,217
|
|
|
31,981
|
|
8%
|
|
|
All Other (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses excluding depreciation and amortization
|
|
19,272
|
|
|
22,057
|
|
|
(2,785)
|
|
(13%)
|
|
|
|
Depreciation and amortization
|
|
5,608
|
|
|
6,315
|
|
|
(707)
|
|
(11%)
|
|
|
|
Loss on impairment of assets
|
|
—
|
|
|
515
|
|
|
(515)
|
|
N/M
|
|
|
|
Gain on asset disposals, net
|
|
(28)
|
|
|
(18)
|
|
|
(10)
|
|
(56%)
|
|
|
|
(Gain) loss on sale of business and other exit costs, net
|
|
(54,010)
|
|
|
—
|
|
|
(54,010)
|
|
N/M
|
|
|
|
|
|
|
(29,158)
|
|
|
28,869
|
|
|
(58,027)
|
|
>(100%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
2,247,358
|
|
|
2,444,242
|
|
|
(196,884)
|
|
(8%)
|
|
|
Operating income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Cellular
|
|
220,558
|
|
|
169,365
|
|
|
51,193
|
|
30%
|
|
|
TDS Telecom
|
|
20,323
|
|
|
24,377
|
|
|
(4,054)
|
|
(17%)
|
|
|
All Other (1)
|
|
48,500
|
|
|
(9,024)
|
|
|
57,524
|
|
>(100%)
|
|
|
|
|
|
|
289,381
|
|
|
184,718
|
|
|
104,663
|
|
57%
|
|
|
Investment and other income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in earnings of unconsolidated entities
|
|
62,694
|
|
|
48,781
|
|
|
13,913
|
|
29%
|
|
|
Interest and dividend income
|
|
4,178
|
|
|
4,535
|
|
|
(357)
|
|
(8%)
|
|
|
Gain (loss) on investments
|
|
14,518
|
|
|
(3,728)
|
|
|
18,246
|
|
>(100%)
|
|
|
Interest expense
|
|
(48,247)
|
|
|
(47,603)
|
|
|
(644)
|
|
(1%)
|
|
|
Other, net
|
|
(351)
|
|
|
(21)
|
|
|
(330)
|
|
>100%
|
|
|
|
Total investment and other income
|
|
32,792
|
|
|
1,964
|
|
|
30,828
|
|
>100%
|
|
|
Income before income taxes
|
|
322,173
|
|
|
186,682
|
|
|
135,491
|
|
73%
|
|
|
Income tax expense
|
|
136,787
|
|
|
63,177
|
|
|
73,610
|
|
>100%
|
|
|
Net income
|
|
185,386
|
|
|
123,505
|
|
|
61,881
|
|
50%
|
|
|
Less: Net income attributable to noncontrolling interests, net of tax
|
|
(27,890)
|
|
|
(28,914)
|
|
|
1,024
|
|
4%
|
|
|
Net income attributable to TDS shareholders
|
|
157,496
|
|
|
94,591
|
|
|
62,905
|
|
67%
|
|
|
Preferred dividend requirement
|
|
(25)
|
|
|
(25)
|
|
|
—
|
|
—
|
|
|
Net income available to common shareholders
|
$
|
157,471
|
|
$
|
94,566
|
|
$
|
62,905
|
|
67%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic weighted average shares outstanding
|
|
108,320
|
|
|
108,693
|
|
|
(373)
|
|
—
|
|
|
Basic earnings per share attributable to TDS shareholders
|
$
|
1.45
|
|
$
|
0.87
|
|
$
|
0.58
|
|
67%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted average shares outstanding
|
|
108,827
|
|
|
108,964
|
|
|
(137)
|
|
—
|
|
|
Diluted earnings per share attributable to TDS shareholders
|
$
|
1.44
|
|
$
|
0.86
|
|
$
|
0.58
|
|
67%
|
|
|
|
|
(1)
|
Consists of Non-Reportable Segment, corporate operations and intercompany eliminations between U.S. Cellular, TDS Telecom, the Non-Reportable Segment and corporate operations. TDS recognized an incremental $53.5 million upon closing of the Divesture Transaction as a result of lower asset basis in assets disposed.
|
|
|
N/M – Percentage change not meaningful
|
|
Telephone and Data Systems, Inc.
|
|
|
Consolidated Balance Sheet Highlights
|
|
|
(Unaudited, dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
December 31,
|
|
|
|
2013
|
|
2012
|
|
|
Current assets
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
1,246,415
|
|
$
|
740,481
|
|
|
Short-term investments
|
|
110,352
|
|
|
115,700
|
|
|
Accounts receivable from customers and others
|
|
485,596
|
|
|
574,328
|
|
|
Inventory
|
|
168,700
|
|
|
160,692
|
|
|
Net deferred income tax asset
|
|
56,822
|
|
|
43,411
|
|
|
Prepaid expenses
|
|
93,383
|
|
|
86,385
|
|
|
Income taxes receivable
|
|
9
|
|
|
9,625
|
|
|
Other current assets
|
|
32,375
|
|
|
32,815
|
|
|
|
|
2,193,652
|
|
|
1,763,437
|
|
|
|
|
|
|
|
|
|
|
Assets held for sale
|
|
78,389
|
|
|
163,242
|
|
|
|
|
|
|
|
|
|
|
Investments
|
|
|
|
|
|
|
|
Licenses
|
|
1,418,832
|
|
|
1,480,039
|
|
|
Goodwill
|
|
759,885
|
|
|
797,194
|
|
|
Other intangible assets, net
|
|
52,592
|
|
|
58,522
|
|
|
Investments in unconsolidated entities
|
|
312,046
|
|
|
179,921
|
|
|
Long-term investments
|
|
40,120
|
|
|
50,305
|
|
|
Other investments
|
|
738
|
|
|
824
|
|
|
|
|
2,584,213
|
|
|
2,566,805
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net
|
|
|
|
|
|
|
|
U.S. Cellular
|
|
2,823,509
|
|
|
3,022,588
|
|
|
TDS Telecom
|
|
906,904
|
|
|
934,188
|
|
|
Other
|
|
38,520
|
|
|
40,490
|
|
|
|
|
3,768,933
|
|
|
3,997,266
|
|
|
|
|
|
|
|
|
|
|
Other assets and deferred charges
|
|
129,578
|
|
|
133,150
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
$
|
8,754,765
|
|
$
|
8,623,900
|
|
|
Telephone and Data Systems, Inc.
|
|
|
Consolidated Balance Sheet Highlights
|
|
|
(Unaudited, dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
December 31,
|
|
|
|
|
|
2013
|
|
2012
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
Current portion of long-term debt
|
$
|
1,899
|
|
$
|
1,233
|
|
|
|
Accounts payable
|
|
393,906
|
|
|
377,291
|
|
|
|
Customer deposits and deferred revenues
|
|
228,259
|
|
|
222,345
|
|
|
|
Accrued interest
|
|
8,599
|
|
|
6,565
|
|
|
|
Accrued taxes
|
|
190,836
|
|
|
48,237
|
|
|
|
Accrued compensation
|
|
95,677
|
|
|
134,932
|
|
|
|
Other current liabilities
|
|
114,910
|
|
|
134,005
|
|
|
|
|
|
|
1,034,086
|
|
|
924,608
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities held for sale
|
|
559
|
|
|
19,594
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred liabilities and credits
|
|
|
|
|
|
|
|
|
Net deferred income tax liability
|
|
855,623
|
|
|
862,580
|
|
|
|
Other deferred liabilities and credits
|
|
460,991
|
|
|
438,727
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt
|
|
1,720,642
|
|
|
1,721,571
|
|
|
|
|
|
|
|
|
|
|
|
|
Noncontrolling interests with redemption features
|
|
512
|
|
|
493
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
TDS shareholders' equity
|
|
|
|
|
|
|
|
|
Series A Common and Common Shares, par value $.01
|
|
1,327
|
|
|
1,327
|
|
|
|
Capital in excess of par value
|
|
2,299,091
|
|
|
2,304,122
|
|
|
|
Treasury shares, at cost
|
|
(738,397)
|
|
|
(750,099)
|
|
|
|
Accumulated other comprehensive loss
|
|
(8,438)
|
|
|
(8,132)
|
|
|
|
Retained earnings
|
|
2,586,567
|
|
|
2,464,318
|
|
|
|
|
Total TDS shareholders' equity
|
|
4,140,150
|
|
|
4,011,536
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred shares
|
|
825
|
|
|
825
|
|
|
Noncontrolling interests
|
|
541,377
|
|
|
643,966
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity
|
|
4,682,352
|
|
|
4,656,327
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and equity
|
$
|
8,754,765
|
|
$
|
8,623,900
|
|
|
Balance Sheet Highlights
|
|
|
June 30, 2013
|
|
|
(Unaudited, dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
TDS
|
|
TDS Corporate
|
|
Intercompany
|
|
TDS
|
|
|
|
|
Cellular
|
|
Telecom
|
|
& Other
|
|
Eliminations
|
|
Consolidated
|
|
|
Cash and cash equivalents
|
$
|
467,421
|
|
$
|
92,257
|
|
$
|
686,737
|
|
$
|
?
|
|
$
|
1,246,415
|
|
|
Affiliated cash investments
|
|
?
|
|
|
397,972
|
|
|
?
|
|
|
(397,972)
|
|
|
?
|
|
|
Short-term investments
|
|
110,352
|
|
|
?
|
|
|
?
|
|
|
?
|
|
|
110,352
|
|
|
|
$
|
577,773
|
|
$
|
490,229
|
|
$
|
686,737
|
|
$
|
(397,972)
|
|
$
|
1,356,767
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Licenses, goodwill and other intangible assets
|
$
|
1,783,572
|
|
$
|
577,367
|
|
$
|
(129,630)
|
|
$
|
?
|
|
$
|
2,231,309
|
|
|
Investment in unconsolidated entities
|
|
276,363
|
|
|
3,809
|
|
|
38,985
|
|
|
(7,111)
|
|
|
312,046
|
|
|
Long-term and other investments
|
|
40,120
|
|
|
738
|
|
|
?
|
|
|
?
|
|
|
40,858
|
|
|
|
|
$
|
2,100,055
|
|
$
|
581,914
|
|
$
|
(90,645)
|
|
$
|
(7,111)
|
|
$
|
2,584,213
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net
|
$
|
2,823,509
|
|
$
|
906,904
|
|
$
|
38,520
|
|
$
|
?
|
|
$
|
3,768,933
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current portion
|
$
|
100
|
|
$
|
70
|
|
$
|
1,729
|
|
$
|
?
|
|
$
|
1,899
|
|
|
Non-current portion
|
|
879,121
|
|
|
724
|
|
|
840,797
|
|
|
?
|
|
|
1,720,642
|
|
|
|
Total
|
$
|
879,221
|
|
$
|
794
|
|
$
|
842,526
|
|
$
|
?
|
|
$
|
1,722,541
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred shares
|
$
|
?
|
|
$
|
?
|
|
$
|
825
|
|
$
|
?
|
|
$
|
825
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Telephone and Data Systems, Inc.
|
|
Schedule of Cash and Cash Equivalents and Investments
|
|
(Unaudited, dollars in thousands)
|
|
|
The following table presents TDS' cash and cash equivalents and investments at June 30, 2013 and December 31, 2012.
|
|
|
|
|
|
|
|
June 30,
|
|
December 31,
|
|
2013
|
|
2012
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
1,246,415
|
|
$
|
740,481
|
|
|
|
|
|
|
|
|
Amounts included in short-term investments (1) (2)
|
|
|
|
|
|
|
U.S. Treasury Notes
|
|
110,352
|
|
|
115,700
|
|
|
|
|
|
|
|
|
Amounts included in long-term investments (1) (3)
|
|
|
|
|
|
|
U.S. Treasury Notes
|
|
40,120
|
|
|
50,305
|
|
|
|
|
|
|
|
|
Total cash and cash equivalents and investments
|
$
|
1,396,887
|
|
$
|
906,486
|
|
|
|
(1)
|
Designated as held-to-maturity investments and are recorded at amortized cost in the Consolidated Balance Sheet.
|
|
(2)
|
Maturities are less than twelve months from the respective balance sheet dates.
|
|
(3)
|
At June 30, 2013, maturities range between 17 and 18 months.
|
|
Telephone and Data Systems, Inc.
|
|
|
Consolidated Statement of Cash Flows
|
|
|
Six Months Ended June 30,
|
|
|
(Unaudited, dollars in thousands)
|
|
|
|
|
|
|
2013
|
|
2012
|
|
|
Cash flows from operating activities
|
|
|
|
|
|
|
|
Net income
|
$
|
185,386
|
|
$
|
123,505
|
|
|
|
Add (deduct) adjustments to reconcile net income to net cash flowsfrom operating activities
|
|
|
|
|
|
|
|
|
|
|
Depreciation, amortization and accretion
|
|
496,280
|
|
|
395,943
|
|
|
|
|
|
Bad debts expense
|
|
35,187
|
|
|
33,626
|
|
|
|
|
|
Stock-based compensation expense
|
|
12,902
|
|
|
20,955
|
|
|
|
|
|
Deferred income taxes, net
|
|
(21,246)
|
|
|
29,929
|
|
|
|
|
|
Equity in earnings of unconsolidated entities
|
|
(62,694)
|
|
|
(48,781)
|
|
|
|
|
|
Distributions from unconsolidated entities
|
|
47,635
|
|
|
6,973
|
|
|
|
|
|
Loss on impairment of assets
|
|
—
|
|
|
515
|
|
|
|
|
|
Loss on asset disposals, net
|
|
13,935
|
|
|
5,074
|
|
|
|
|
|
(Gain) loss on sale of business and other exit costs, net
|
|
(296,103)
|
|
|
(4,174)
|
|
|
|
|
|
(Gain) loss on investments
|
|
(14,518)
|
|
|
3,728
|
|
|
|
|
|
Noncash interest expense
|
|
997
|
|
|
1,728
|
|
|
|
|
|
Other operating activities
|
|
505
|
|
|
1,010
|
|
|
|
Changes in assets and liabilities from operations
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
(5,781)
|
|
|
(10,197)
|
|
|
|
|
|
Inventory
|
|
(8,105)
|
|
|
(58,467)
|
|
|
|
|
|
Accounts payable
|
|
58,204
|
|
|
(23,336)
|
|
|
|
|
|
Customer deposits and deferred revenues
|
|
7,897
|
|
|
22,786
|
|
|
|
|
|
Accrued taxes
|
|
150,425
|
|
|
89,433
|
|
|
|
|
|
Accrued interest
|
|
2,172
|
|
|
(1,823)
|
|
|
|
|
|
Other assets and liabilities
|
|
(81,586)
|
|
|
(81,517)
|
|
|
|
|
|
|
|
521,492
|
|
|
506,910
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
Cash used for additions to property, plant and equipment
|
|
(384,281)
|
|
|
(501,211)
|
|
|
Cash paid for acquisitions and licenses
|
|
(14,150)
|
|
|
(52,213)
|
|
|
Cash received from divestitures
|
|
480,000
|
|
|
50,036
|
|
|
Cash paid for investments
|
|
—
|
|
|
(45,000)
|
|
|
Cash received for investments
|
|
15,000
|
|
|
128,444
|
|
|
Other investing activities
|
|
14,127
|
|
|
(8,916)
|
|
|
|
|
|
|
|
110,696
|
|
|
(428,860)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
Repayment of long-term debt
|
|
(605)
|
|
|
(952)
|
|
|
Issuance of long-term debt
|
|
—
|
|
|
358
|
|
|
TDS Common Shares and Special Common Shares reissued for benefit plans, net of tax payments
|
|
776
|
|
|
(39)
|
|
|
U.S. Cellular Common Shares reissued for benefit plans, net of tax payments
|
|
(2,206)
|
|
|
(2,465)
|
|
|
Repurchase of U.S. Cellular Common Shares
|
|
(18,425)
|
|
|
—
|
|
|
Dividends paid to TDS shareholders
|
|
(27,598)
|
|
|
(26,610)
|
|
|
U.S. Cellular dividends paid to noncontrolling public shareholders
|
|
(75,235)
|
|
|
—
|
|
|
Payment of debt issuance costs
|
|
(23)
|
|
|
—
|
|
|
Distributions to noncontrolling interests
|
|
(3,292)
|
|
|
(643)
|
|
|
Other financing activities
|
|
354
|
|
|
2,790
|
|
|
|
|
|
|
|
(126,254)
|
|
|
(27,561)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase in cash and cash equivalents
|
|
505,934
|
|
|
50,489
|
|
|
Cash and cash equivalents
|
|
|
|
|
|
|
|
Beginning of period
|
|
740,481
|
|
|
563,275
|
|
|
End of period
|
$
|
1,246,415
|
|
$
|
613,764
|
|
|
TDS Telecom Highlights
|
|
|
Three Months Ended June 30,
|
|
|
(Unaudited, dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (Decrease)
|
|
|
|
|
|
2013
|
|
2012
|
|
Amount
|
|
Percent
|
|
|
Local Telephone Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential
|
$
|
69,516
|
|
$
|
70,082
|
|
$
|
(566)
|
|
(0)
|
|
|
|
Commercial
|
|
24,266
|
|
|
24,201
|
|
|
65
|
|
—
|
|
|
|
Wholesale
|
|
48,691
|
|
|
49,769
|
|
|
(1,078)
|
|
(2%)
|
|
|
|
|
|
|
142,473
|
|
|
144,052
|
|
|
(1,579)
|
|
(1%)
|
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of services and products
|
|
46,621
|
|
|
47,180
|
|
|
(559)
|
|
(0)
|
|
|
|
Selling, general and administrative expenses
|
|
41,274
|
|
|
43,216
|
|
|
(1,942)
|
|
(4%)
|
|
|
|
Depreciation, amortization and accretion
|
|
37,972
|
|
|
37,834
|
|
|
138
|
|
—
|
|
|
|
(Gain) loss on asset disposals and exchanges, net
|
|
(850)
|
|
|
136
|
|
|
(986)
|
|
>(100)%
|
|
|
|
|
|
|
125,017
|
|
|
128,366
|
|
|
(3,349)
|
|
(3%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
$
|
17,456
|
|
$
|
15,686
|
|
$
|
1,770
|
|
11%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Competitive Local Exchange Carrier Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential
|
$
|
3,395
|
|
$
|
4,338
|
|
$
|
(943)
|
|
(22%)
|
|
|
|
Commercial
|
|
35,022
|
|
|
34,905
|
|
|
117
|
|
—
|
|
|
|
Wholesale
|
|
3,716
|
|
|
4,957
|
|
|
(1,241)
|
|
(25%)
|
|
|
|
|
|
|
42,133
|
|
|
44,200
|
|
|
(2,067)
|
|
(5%)
|
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of services and products
|
|
22,183
|
|
|
22,702
|
|
|
(519)
|
|
(2%)
|
|
|
|
Selling, general and administrative expenses
|
|
15,850
|
|
|
16,769
|
|
|
(919)
|
|
(5%)
|
|
|
|
Depreciation, amortization and accretion
|
|
5,221
|
|
|
5,466
|
|
|
(245)
|
|
(4%)
|
|
|
|
Loss on asset disposals and exchanges, net
|
|
85
|
|
|
72
|
|
|
13
|
|
18%
|
|
|
|
|
|
|
43,339
|
|
|
45,009
|
|
|
(1,670)
|
|
(4%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss
|
$
|
(1,206)
|
|
$
|
(809)
|
|
$
|
(397)
|
|
(49%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hosted and Managed Services Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
$
|
41,374
|
|
$
|
22,876
|
|
$
|
18,498
|
|
81%
|
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of services and products
|
|
30,185
|
|
|
15,090
|
|
|
15,095
|
|
>100%
|
|
|
|
Selling, general and administrative expenses
|
|
9,361
|
|
|
6,635
|
|
|
2,726
|
|
41%
|
|
|
|
Depreciation, amortization and accretion
|
|
5,563
|
|
|
4,645
|
|
|
918
|
|
20%
|
|
|
|
Loss on asset disposals and exchanges, net
|
|
83
|
|
|
98
|
|
|
(15)
|
|
(15%)
|
|
|
|
|
|
|
45,192
|
|
|
26,468
|
|
|
18,724
|
|
71%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss
|
$
|
(3,818)
|
|
$
|
(3,592)
|
|
$
|
(226)
|
|
(6%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intercompany revenues
|
$
|
(2,520)
|
|
$
|
(2,609)
|
|
$
|
89
|
|
3%
|
|
|
Intercompany expenses
|
|
(2,520)
|
|
|
(2,609)
|
|
|
89
|
|
3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total TDS Telecom operating income
|
$
|
12,432
|
|
$
|
11,285
|
|
$
|
1,147
|
|
10%
|
|
|
TDS Telecom Highlights
|
|
|
Six Months Ended June 30,
|
|
|
(Unaudited, dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (Decrease)
|
|
|
|
|
|
2013
|
|
2012
|
|
Amount
|
|
Percent
|
|
|
Local Telephone Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential
|
$
|
138,902
|
|
$
|
139,481
|
|
$
|
(579)
|
|
—
|
|
|
|
Commercial
|
|
48,550
|
|
|
48,331
|
|
|
219
|
|
—
|
|
|
|
Wholesale
|
|
96,541
|
|
|
101,305
|
|
|
(4,764)
|
|
(5%)
|
|
|
|
|
|
|
283,993
|
|
|
289,117
|
|
|
(5,124)
|
|
(2%)
|
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of services and products
|
|
94,216
|
|
|
96,348
|
|
|
(2,132)
|
|
(2%)
|
|
|
|
Selling, general and administrative expenses
|
|
83,113
|
|
|
84,730
|
|
|
(1,617)
|
|
(2%)
|
|
|
|
Depreciation, amortization and accretion
|
|
76,548
|
|
|
75,612
|
|
|
936
|
|
1%
|
|
|
|
(Gain) loss on asset disposals and exchanges, net
|
|
(728)
|
|
|
202
|
|
|
(930)
|
|
>(100)%
|
|
|
|
|
|
|
253,149
|
|
|
256,892
|
|
|
(3,743)
|
|
(1%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
$
|
30,844
|
|
$
|
32,225
|
|
$
|
(1,381)
|
|
(4%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Competitive Local Exchange Carrier Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential
|
$
|
7,013
|
|
$
|
9,126
|
|
$
|
(2,113)
|
|
(23%)
|
|
|
|
Commercial
|
|
70,130
|
|
|
69,246
|
|
|
884
|
|
1%
|
|
|
|
Wholesale
|
|
7,544
|
|
|
9,872
|
|
|
(2,328)
|
|
(24%)
|
|
|
|
|
|
|
84,687
|
|
|
88,244
|
|
|
(3,557)
|
|
(4%)
|
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of services and products
|
|
44,145
|
|
|
45,266
|
|
|
(1,121)
|
|
(2%)
|
|
|
|
Selling, general and administrative expenses
|
|
31,782
|
|
|
33,029
|
|
|
(1,247)
|
|
(4%)
|
|
|
|
Depreciation, amortization and accretion
|
|
10,668
|
|
|
10,955
|
|
|
(287)
|
|
(3%)
|
|
|
|
Loss on asset disposals and exchanges, net
|
|
126
|
|
|
125
|
|
|
1
|
|
1%
|
|
|
|
|
|
|
86,721
|
|
|
89,375
|
|
|
(2,654)
|
|
(3%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss
|
$
|
(2,034)
|
|
$
|
(1,131)
|
|
$
|
(903)
|
|
(80%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hosted and Managed Services Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
$
|
76,938
|
|
$
|
40,434
|
|
$
|
36,504
|
|
90%
|
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of services and products
|
|
54,999
|
|
|
24,864
|
|
|
30,135
|
|
>100%
|
|
|
|
Selling, general and administrative expenses
|
|
19,282
|
|
|
13,367
|
|
|
5,915
|
|
44%
|
|
|
|
Depreciation, amortization and accretion
|
|
11,031
|
|
|
8,821
|
|
|
2,210
|
|
25%
|
|
|
|
Loss on asset disposals and exchanges, net
|
|
113
|
|
|
99
|
|
|
14
|
|
14%
|
|
|
|
|
|
|
85,425
|
|
|
47,151
|
|
|
38,274
|
|
81%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss
|
$
|
(8,487)
|
|
$
|
(6,717)
|
|
$
|
(1,770)
|
|
(26%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intercompany revenues
|
$
|
(5,097)
|
|
$
|
(5,201)
|
|
$
|
104
|
|
2%
|
|
|
Intercompany expenses
|
|
(5,097)
|
|
|
(5,201)
|
|
|
104
|
|
2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total TDS Telecom operating income
|
$
|
20,323
|
|
$
|
24,377
|
|
$
|
(4,054)
|
|
(17%)
|
|
|
Telephone and Data Systems, Inc.
|
|
|
Financial Measures and Reconciliations
|
|
|
(Unaudited, dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TDS Consolidated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
|
|
|
June 30,
|
|
June 30,
|
|
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from operating activities
|
|
$
|
275,140
|
|
$
|
224,665
|
|
$
|
521,492
|
|
$
|
506,910
|
|
|
Deduct:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash used for additions to property, plant and equipment
|
|
|
207,963
|
|
|
258,600
|
|
|
384,281
|
|
|
501,211
|
|
|
|
Free cash flow (1)
|
|
$
|
67,177
|
|
$
|
(33,935)
|
|
$
|
137,211
|
|
$
|
5,699
|
|
|
|
|
(1)
|
Free cash flow is defined as Cash flows from operating activities less Cash used for additions to property, plant and equipment. Free cash flow is a non-GAAP financial measure. TDS believes that free cash flow as reported by TDS is useful to investors and other users of its financial information in evaluating the amount of cash generated by business operations, after consideration of capital expenditures.
|
SOURCE Telephone and Data Systems, Inc.
Jane W. McCahon, Vice President, Corporate Relations and Corporate Secretary, (312) 592-5379; jane.mccahon@teldta.com; or Julie D. Mathews, Manager, Investor Relations, (312) 592-5341; julie.mathews@teldta.com