SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 7, 2012
TELEPHONE AND DATA SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
Delaware (State or other jurisdiction of incorporation) |
001-14157 (Commission File Number) |
36-2669023 (I.R.S. Employer Identification No.) |
30 North LaSalle Street, Suite 4000, Chicago, Illinois (Address of principal executive offices) |
60602 (Zip Code) | |
Registrant’s telephone number, including area code: (312) 630-1900
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
¨ |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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¨ |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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¨ |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02. Results of Operations and Financial Condition
On November 7, 2012, Telephone and Data Systems, Inc. (“TDS”) issued a news release announcing its results of operations for the period ended September 30, 2012. A copy of the news release is attached hereto as Exhibit 99.1 and is incorporated by reference herein.
The information in this Item 2.02 of Form 8-K is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits:
In accordance with the provisions of Item 601 of Regulation S-K, any Exhibits filed or furnished herewith are set forth on the Exhibit Index attached hereto.
Attached as Exhibit 99.2 is a safe harbor cautionary statement under the Private Securities Litigation Reform Act of 1995.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on their behalf by the undersigned, thereto duly authorized.
Telephone and Data Systems, Inc. (Registrant) | |
Date: |
November 7, 2012 |
By: |
/s/ Douglas D. Shuma |
Douglas D. Shuma Senior Vice President and Corporate Controller |
EXHIBIT INDEX
The following exhibits are filed or furnished herewith as noted below.
Exhibit No. |
Description | |
99.1 |
Earnings Press Release dated November 7, 2012 | |
99.2 |
Private Securities Litigation Reform Act of 1995 Safe Harbor Cautionary Statement |
NEWS RELEASE
As previously announced, TDS will hold a teleconference Nov. 7, 2012 at 7:30 a.m. CST. Interested parties may listen to the call live by accessing the Investor Relations page of www.teldta.com.
Contact: |
Jane W. McCahon, Vice President, Corporate Relations (312) 592-5379; jane.mccahon@teldta.com |
Julie D. Mathews, Manager, Investor Relations (312) 592-5341; julie.mathews@teldta.com |
FOR RELEASE: IMMEDIATE
TDS REPORTS THIRD QUARTER 2012 RESULTS
U.S. Cellular Announces Transaction to Exit Certain Midwest Markets
Note: Comparisons are year over year unless otherwise noted.
3Q 2012 Highlights
TDS Consolidated
§ Operating revenues increased 3 percent to $1,370.1 million.
U.S. Cellular
§ Retail gross additions increased 23 percent resulting in a net gain of 19,000 retail customers, compared to a net loss of 23,000 retail customers.
§ Postpaid gross additions increased 7 percent and postpaid churn increased to 1.7 percent, resulting in a net loss of 38,000 postpaid customers in the quarter. Postpaid customers comprised 93 percent of retail customers.
§ Prepaid gross additions increased 71 percent, driven by the introduction of U Prepaid in select Walmart stores, and prepaid churn decreased to 5.9 percent, resulting in a net increase of 57,000 prepaid customers in the quarter.
§ Total revenues increased 3 percent; service revenues remained steady at $1,036.4 million.
§ Postpaid ARPU (average revenue per user) increased 4 percent to $54.34 from $52.41; total ARPU increased 3 percent to $59.57 from $58.09.
§ Postpaid smartphone customers increased to 38.6 percent of customers from 26.2 percent. Smartphones as a percent of total devices sold increased to 53.0 percent from 39.9 percent; 50 percent of smartphones sold were 4G.
§ Cell sites in service increased 2 percent to 7,984, of which 4,545 are owned towers.
§ 4G LTE network now covers 30 percent of customers; expect to reach 58 percent of customers by year end.
TDS Telecom
§ Operating revenues increased 5 percent to $220.4 million.
§ ILEC triple play (voice, data, and video) penetration increased to 31 percent from 28 percent.
§ managedIP connections (ILEC and CLEC) grew 89 percent to 84,500 from 44,800.
CHICAGO –Nov. 7, 2012 — Telephone and Data Systems, Inc. [NYSE:TDS] reported operating revenues of $1,370.1 million for the third quarter of 2012, an increase of 3 percent from $1,325.4 million in the comparable period one year ago. Net income attributable to TDS shareholders and related diluted earnings per share were $29.1 million and $0.27, respectively, for the third quarter of 2012, compared to $71.3 million and $0.65, respectively, in the comparable period one year ago. In the third quarter of 2011, TDS recorded a $12.7 million gain on investment, as a result of an acquisition.
“U.S. Cellular and TDS Telecom achieved modest revenue growth, while profitability declined due to increasing smartphone subsidies, declining regulatory support and investment spending," said LeRoy T. Carlson, Jr., TDS president and CEO.
“U.S. Cellular continued to achieve strong growth in net prepaid customers, driven by the U Prepaid product sold through Walmart. We had solid growth in gross postpaid customers, but churn remained elevated. U.S. Cellular recently began offering a postpaid product through Walmart as well, and continues to explore new distribution options. We are working aggressively to build consideration and loyalty with competitive devices like the 4G LTE Samsung Galaxy S® III, which helped to increase smartphone penetration in the quarter, and the recently introduced 4G LTE Samsung Galaxy Note® II.
“TDS Telecom added residential TDS TV® and triple play bundle customers. Higher revenue from acquisitions in the hosted and managed services business helped to offset decreases in ILEC and CLEC revenue. Profitability was impacted by reductions in wholesale and regulatory revenues, as expected, though to a lesser degree than in the first half of the year.”
U.S. Cellular Strategic Actions
In a separate release, U.S. Cellular also announced today two strategic actions designed to increase focus on markets where it has strong positions and streamline operations to increase overall efficiency and effectiveness. The company has entered into a definitive agreement with Sprint, who will purchase its customers and PCS spectrum in certain Midwest markets. U.S. Cellular will also transition the operations of its Bolingbrook, Ill., customer care center to an existing vendor partner. Further information can be found on the U.S. Cellular Investor Relations website.
Guidance for year ending Dec. 31, 2012
Guidance for the year ending Dec. 31, 2012 as of Nov. 7, 2012 is provided below, compared to the previous guidance provided on Aug. 3, 2012. 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 this guidance.
U.S. Cellular - Before Effects of Sprint Transaction - see Note (1) |
2012 Estimated Results (1) |
|
Previous Estimates (2) | ||
Service revenues |
$4,075-$4,125 million |
$4,050-$4,150 million | |||
Operating income (3) |
$200-$250 million |
$200-$300 million | |||
Depreciation, amortization and accretion expenses, and impairment of assets and net gain |
|
| |||
or loss on asset disposals and exchanges (3) |
Approx. $600 million |
Unchanged | |||
Adjusted OIBDA (3) (5) |
$800-$850 million |
$800-$900 million | |||
Capital expenditures |
Approx. $850 million |
Unchanged | |||
TDS Telecom Operations |
2012 Estimated Results (4) |
Previous Estimates (2) | |||
Operating revenues |
$850-$860 million |
$850-$880 million | |||
Operating income |
$40-$50 million |
$50-$70 million | |||
Depreciation, amortization and accretion expenses, and impairment of assets and net gain |
|
| |||
or loss on asset disposals and exchanges (3) |
Approx. $195 million |
Unchanged | |||
Adjusted OIBDA (5) |
$235-$245 million |
$245-$265 million | |||
Capital expenditures |
$175-$190 million |
$170-$190 million |
(1) These estimates are based on U.S. Cellular’s current plans, which include a multi-year deployment of 4G LTE technology which commenced in 2011. New developments or changing conditions (such as customer net growth, customer demand for data services or possible acquisitions, dispositions or exchanges) could affect U.S. Cellular’s plans and, therefore, its 2012 estimated results. These estimates are before the effects of the definitive agreement signed with Sprint, who will purchase U.S. Cellular customers and PCS Spectrum in certain Midwest markets. The Company expects to incur incremental operating expenses in the fourth quarter of 2012 in the range of $30 to $60 million for severance, incremental accelerated depreciation, asset write-downs and other costs related to this transaction, which will decrease Operating income, increase Depreciation, amortization and accretion expenses, and impairment of assets and net gain or loss on asset disposals and exchanges, and decrease OIBDA.
(2) The 2012 Estimated Results as disclosed in TDS’ Quarterly Report on Form 10-Q for the period ended June 30, 2012.
(3) The 2012 Estimated Results do not include any estimate for unrecognized net gains or losses related to disposals and exchanges of assets or losses on impairment of assets (since such transactions and their effects are uncertain).
(4) These estimates are based on TDS Telecom’s current plans which include a multi-year deployment of IPTV that commenced in 2011. New developments or changing conditions (such as costs to deploy, agreements for content or franchises or possible acquisitions, dispositions or exchanges) could affect TDS Telecom’s plans and, therefore, its 2012 estimated results.
(5) Adjusted OIBDA is defined as operating income excluding the effects of: depreciation, amortization and accretion (OIBDA); the loss on impairment of assets (if any); and the net gain or loss on asset disposals and exchanges (if any). Adjusted OIBDA excludes the loss on impairment of assets (if any) and net gain or loss on asset disposals and exchanges (if any) in order to show operating results on a more comparable basis from period to period. TDS does not intend to imply that any of such amounts that are excluded are non-recurring, infrequent or unusual; such gains or losses may occur in the future.
Adjusted OIBDA is a segment measure reported to the chief operating decision maker for purposes of making decisions about allocating resources to the segments and assessing their performance. This amount may also be commonly referred to by management as operating cash flow. TDS believes this measure provides useful information to investors regarding TDS’ financial condition and results of operations because it highlights certain key cash and non-cash items and their impacts on cash flows from operating activities. This amount should not be confused with Cash flows from operating activities, which is a component of the Consolidated Statement of Cash Flows.
2
Stock repurchase
TDS did not repurchase any shares during the quarter. TDS determines whether to repurchase shares from time to time based on many considerations, including cash needed for other known or possible requirements, the stock price, market conditions, debt rating considerations, business forecasts, business plans, macroeconomic conditions, share issuances under compensation plans, provisions in governing and legal documents and other legal requirements, and other facts and circumstances. Subject to these considerations, TDS intends to continue to repurchase its shares from time to time when circumstances warrant.
Conference call information
TDS will hold a conference call on Nov. 7, 2012 at 7:30 a.m. CST.
§ Access the live call on the Investor Relations page of www.teldta.com or at http://www.videonewswire.com/event.asp?id=90531.
§ 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 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, local and long-distance telephone, and broadband services to approximately 7 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 Sept. 30, 2012.
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 Sprint Transaction including, but not limited to, the ability to obtain regulatory approval, 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; and 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
3
United States Cellular Corporation Summary Operating Data (Unaudited) | ||||||||||||||||||||
|
|
|||||||||||||||||||
Quarter Ended |
9/30/2012 |
6/30/2012 |
3/31/2012 |
12/31/2011 |
9/30/2011 | |||||||||||||||
Total population |
||||||||||||||||||||
|
Consolidated markets (1) |
92,996,000 |
92,684,000 |
92,684,000 |
91,965,000 |
91,965,000 |
||||||||||||||
|
Consolidated operating markets (1) |
46,966,000 |
46,966,000 |
46,966,000 |
46,888,000 |
46,888,000 |
||||||||||||||
Market penetration at end of period |
||||||||||||||||||||
|
Consolidated markets (2) |
6.2 |
% |
6.3 |
% |
6.3 |
% |
6.4 |
% |
6.5 |
% | |||||||||
|
Consolidated operating markets (2) |
12.4 |
% |
12.3 |
% |
12.4 |
% |
12.6 |
% |
12.7 |
% | |||||||||
All customers |
||||||||||||||||||||
|
Total at end of period |
5,808,000 |
5,799,000 |
5,837,000 |
5,891,000 |
5,932,000 |
||||||||||||||
|
Gross additions |
364,000 |
290,000 |
285,000 |
306,000 |
299,000 |
||||||||||||||
|
Net additions (losses) |
9,000 |
|
(38,000 |
) |
(49,000 |
) |
(41,000 |
) |
(36,000 |
) | |||||||||
|
Smartphones sold as a percent of |
|||||||||||||||||||
|
total devices sold (3) |
53.0 |
% |
51.9 |
% |
54.1 |
% |
52.5 |
% |
39.9 |
% | |||||||||
Retail customers |
||||||||||||||||||||
|
Total at end of period |
5,561,000 |
5,542,000 |
5,570,000 |
5,608,000 |
5,621,000 |
||||||||||||||
|
Smartphone penetration (3) (4) |
38.6 |
% |
36.8 |
% |
34.4 |
% |
30.5 |
% |
26.2 |
% | |||||||||
|
Gross additions |
350,000 |
277,000 |
273,000 |
298,000 |
284,000 |
||||||||||||||
|
Net retail additions (losses) (5) |
19,000 |
|
(28,000 |
) |
(34,000 |
) |
(13,000 |
) |
(23,000 |
) | |||||||||
|
Net postpaid additions (losses) |
(38,000 |
) |
(48,000 |
) |
(38,000 |
) |
(20,000 |
) |
(34,000 |
) | |||||||||
|
Net prepaid additions (losses) |
57,000 |
|
20,000 |
|
4,000 |
|
7,000 |
11,000 |
| ||||||||||
Service revenue components (000s) |
||||||||||||||||||||
|
Retail service |
$ |
884,219 |
$ |
889,219 |
$ |
888,527 |
$ |
882,091 |
$ |
871,199 |
|||||||||
|
Inbound roaming |
106,132 |
86,363 |
80,132 |
93,353 |
107,810 |
||||||||||||||
|
Other |
|
46,019 |
|
|
54,160 |
|
|
55,161 |
|
|
54,601 |
|
|
57,600 |
| ||||
Total service revenues (000s) |
$ |
1,036,370 |
$ |
1,029,742 |
$ |
1,023,820 |
$ |
1,030,045 |
$ |
1,036,609 |
||||||||||
Total ARPU (6) |
$ |
59.57 |
$ |
59.05 |
$ |
58.21 |
$ |
58.13 |
$ |
58.09 |
||||||||||
Billed ARPU (7) |
$ |
50.83 |
$ |
50.99 |
$ |
50.52 |
$ |
49.78 |
$ |
48.82 |
||||||||||
Postpaid ARPU (8) |
$ |
54.34 |
$ |
54.42 |
$ |
54.00 |
$ |
53.35 |
$ |
52.41 |
||||||||||
Postpaid churn rate (9) |
1.7 |
% |
1.6 |
% |
1.6 |
% |
1.6 |
% |
1.5 |
% | ||||||||||
Capital expenditures (000s) |
$ |
199,100 |
$ |
183,200 |
$ |
201,300 |
$ |
276,400 |
$ |
248,000 |
||||||||||
Cell sites in service |
7,984 |
7,932 |
7,875 |
7,882 |
7,828 |
(1) Used only to calculate market penetration of consolidated markets and consolidated operating markets, respectively. See footnote (2) below.
(2) Market Penetration is calculated by dividing the number of wireless customers at the end of the period by the total population of consolidated markets and consolidated operating markets, respectively, as estimated by Claritas®.
(3) Smartphones represent wireless devices which run on an Android™, Blackberry®, or Windows Mobile®operating system, excluding tablets.
(4) Smartphone penetration is calculated by dividing postpaid smartphone customers by total postpaid customers.
(5) Includes net postpaid additions (losses) and net prepaid additions (losses).
(6) Total ARPU - Average monthly service revenue per user includes retail service, inbound roaming and other service revenues and is calculated by dividing total service revenues by the number of months in the period and by the average total customers during the period.
(7) Billed ARPU - Average monthly billed revenue per user is calculated by dividing total retail service revenues by the number of months in the period and by the average total customers during the period. Retail service revenues include revenues attributable to postpaid, prepaid and reseller customers.
(8) Postpaid ARPU - Average monthly revenue per postpaid user is calculated by dividing total retail service revenues from postpaid customers by the number of months in the period and by the average postpaid customers during the period.
(9) Represents the percentage of the postpaid customer base that disconnects service each month. This amount represents the average postpaid churn rate for each respective quarterly period.
4
TDS Telecom Summary Operating Data (Unaudited) | ||||||||||||||||||
|
||||||||||||||||||
Quarter Ended |
9/30/2012 |
|
6/30/2012 |
|
3/31/2012 |
|
12/31/2011 |
9/30/2011 | ||||||||||
TDS Telecom |
|
|
|
|
|
|
|
|
|
|
||||||||
ILEC: |
|
|
|
|
|
|
|
|
|
|
||||||||
|
Residential Connections |
|||||||||||||||||
|
Physical access lines (1) |
355,800 |
360,100 |
363,500 |
367,600 |
373,700 | ||||||||||||
|
Broadband connections (2) |
223,100 |
222,400 |
219,500 |
219,600 |
220,500 | ||||||||||||
|
IPTV customers |
|
6,700 |
|
5,600 |
|
4,900 |
|
4,600 |
|
4,500 | |||||||
|
ILEC Residential Connections |
|
585,600 |
|
588,100 |
|
587,900 |
|
591,800 |
|
598,700 | |||||||
|
|
|||||||||||||||||
|
Commercial Connections |
|||||||||||||||||
|
Physical access lines (1) |
109,800 |
111,100 |
112,600 |
114,400 |
116,500 | ||||||||||||
|
Broadband connections (2) |
18,500 |
18,400 |
18,200 |
18,200 |
17,900 | ||||||||||||
|
managedIP connections (3) |
|
15,000 |
|
13,200 |
|
10,800 |
|
8,600 |
6,800 | ||||||||
|
ILEC Commercial Connections |
|
143,300 |
|
142,700 |
|
141,600 |
|
141,200 |
141,200 | ||||||||
|
|
|||||||||||||||||
CLEC: |
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
Residential Connections |
|||||||||||||||||
|
Physical access lines (1) |
26,200 |
27,900 |
29,600 |
31,800 |
33,900 | ||||||||||||
|
Broadband connections (2) |
|
8,900 |
|
9,500 |
|
10,100 |
|
11,000 |
11,700 | ||||||||
|
CLEC Residential Connections |
|
35,100 |
|
37,400 |
|
39,700 |
|
42,800 |
45,600 | ||||||||
|
|
|||||||||||||||||
|
Commercial Connections |
|||||||||||||||||
|
Physical access lines (1) |
140,300 |
145,100 |
151,100 |
157,300 |
163,600 | ||||||||||||
|
Broadband connections (2) |
12,000 |
12,800 |
13,700 |
14,600 |
15,400 | ||||||||||||
|
managedIP connections (3) |
|
69,500 |
|
61,400 |
|
53,700 |
|
44,900 |
|
38,000 | |||||||
|
CLEC Commercial Connections |
|
221,800 |
|
219,300 |
|
218,500 |
|
216,800 |
|
217,000 | |||||||
|
|
|||||||||||||||||
Total ILEC and CLEC customer connections |
|
985,800 |
|
987,500 |
|
987,700 |
|
992,600 |
|
1,002,500 |
(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 |
9/30/2012 |
|
6/30/2012 |
|
3/31/2012 |
|
12/31/2011 |
9/30/2011 | ||||||||||
ILEC |
$ |
33,700 |
|
$ |
32,500 |
|
$ |
27,500 |
|
$ |
50,300 |
$ |
36,500 | |||||
CLEC |
|
5,400 |
|
|
4,900 |
|
|
5,100 |
|
|
7,200 |
4,700 | ||||||
HMS |
|
4,400 |
|
5,500 |
|
3,100 |
|
5,900 |
|
15,000 | ||||||||
|
$ |
43,500 |
$ |
42,900 |
$ |
35,700 |
$ |
63,400 |
$ |
56,200 |
5
Telephone and Data Systems, Inc. Consolidated Statement of Operations Highlights Three Months Ended September 30, (Unaudited, dollars and shares in thousands, except per share amounts) | ||||||||||||||||||
|
|
|
||||||||||||||||
|
|
Increase/ (Decrease) | ||||||||||||||||
2012 |
|
2011 |
|
Amount |
|
Percent | ||||||||||||
Operating revenues |
|
|
|
|||||||||||||||
U.S. Cellular |
$ |
1,140,357 |
|
$ |
1,110,439 |
|
$ |
29,918 |
|
3 |
% | |||||||
TDS Telecom |
220,417 |
|
210,806 |
|
9,611 |
|
|
5 |
% | |||||||||
All Other (1) |
|
9,334 |
|
|
|
4,178 |
|
|
|
5,156 |
|
|
>100 |
% | ||||
|
1,370,108 |
|
|
|
1,325,423 |
|
|
|
44,685 |
|
|
3 |
% | |||||
Operating expenses |
|
|
|
|||||||||||||||
U.S. Cellular |
|
|
|
|||||||||||||||
Expenses excluding depreciation, amortization and accretion |
935,800 |
|
876,855 |
|
58,945 |
|
7 |
% | ||||||||||
Depreciation, amortization and accretion |
145,151 |
|
141,664 |
|
3,487 |
|
2 |
% | ||||||||||
(Gain) loss on asset disposals and exchanges, net |
|
11,327 |
|
|
|
(9,700 |
) |
|
|
21,027 |
|
|
>(100 |
%) | ||||
|
1,092,278 |
|
|
|
1,008,819 |
|
|
|
83,459 |
|
|
8 |
% | |||||
TDS Telecom |
|
|
|
|||||||||||||||
Expenses excluding depreciation, amortization and accretion |
161,515 |
|
139,601 |
|
21,914 |
|
|
16 |
% | |||||||||
Depreciation, amortization and accretion |
48,251 |
|
45,682 |
|
2,569 |
|
6 |
% | ||||||||||
Loss on asset disposals and exchanges, net |
|
351 |
|
|
|
337 |
|
|
|
14 |
|
|
4 |
% | ||||
|
210,117 |
|
|
|
185,620 |
|
|
|
24,497 |
|
|
13 |
% | |||||
All Other (1) |
|
|
|
|||||||||||||||
Expenses excluding depreciation and amortization |
9,361 |
|
1,355 |
|
8,006 |
|
>100 |
% | ||||||||||
Depreciation and amortization |
2,817 |
|
2,693 |
|
124 |
|
|
5 |
% | |||||||||
Loss on asset disposals and exchanges, net |
|
29 |
|
|
|
12 |
|
|
|
17 |
|
|
>100 |
% | ||||
|
12,207 |
|
|
|
4,060 |
|
|
|
8,147 |
|
|
>100 |
% | |||||
|
|
|
||||||||||||||||
Total operating expenses |
|
1,314,602 |
|
|
|
1,198,499 |
|
|
|
116,103 |
|
|
10 |
% | ||||
Operating income (loss) |
|
|
|
|||||||||||||||
U.S. Cellular |
48,079 |
|
101,620 |
|
(53,541 |
) |
|
(53 |
%) | |||||||||
TDS Telecom |
10,300 |
|
25,186 |
|
(14,886 |
) |
|
(59 |
%) | |||||||||
All Other (1) |
|
(2,873 |
) |
|
|
118 |
|
|
|
(2,991 |
) |
|
>(100 |
%) | ||||
|
55,506 |
|
|
|
126,924 |
|
|
|
(71,418 |
) |
|
(56 |
%) | |||||
Investment and other income (expense) |
|
|
|
|||||||||||||||
Equity in earnings of unconsolidated entities |
25,015 |
|
22,053 |
|
2,962 |
|
|
13 |
% | |||||||||
Interest and dividend income |
2,359 |
|
2,199 |
|
160 |
|
|
7 |
% | |||||||||
Gain on investment |
— |
|
|
12,730 |
|
(12,730 |
) |
|
NM |
| ||||||||
Interest expense |
(20,497 |
) |
|
(22,258 |
) |
|
1,761 |
|
|
8 |
% | |||||||
Other, net |
|
217 |
|
|
|
115 |
|
|
|
102 |
|
|
89 |
% | ||||
Total investment and other income (expense) |
|
7,094 |
|
|
|
14,839 |
|
|
|
(7,745 |
) |
|
(52 |
%) | ||||
Income before income taxes |
62,600 |
|
141,763 |
|
(79,163 |
) |
|
(56 |
%) | |||||||||
Income tax expense |
|
22,442 |
|
|
|
53,545 |
|
|
|
(31,103 |
) |
|
(58 |
%) | ||||
Net income |
40,158 |
|
88,218 |
|
(48,060 |
) |
|
(54 |
%) | |||||||||
Less: Net income attributable to noncontrolling interests, net of tax |
|
(11,041 |
) |
|
|
(16,924 |
) |
|
|
5,883 |
|
|
35 |
% | ||||
Net income attributable to TDS shareholders |
29,117 |
|
71,294 |
|
(42,177 |
) |
|
(59 |
%) | |||||||||
|
Preferred dividend requirement |
|
(12 |
) |
|
|
(12 |
) |
|
|
— |
|
|
— |
||||
Net income available to common shareholders |
$ |
29,105 |
|
|
$ |
71,282 |
|
|
$ |
(42,177 |
) |
|
(59 |
%) | ||||
|
|
|
||||||||||||||||
Basic weighted average shares outstanding (2) |
108,819 |
|
108,404 |
|
415 |
|
|
— |
| |||||||||
Basic earnings per share attributable to TDS shareholders (2) |
$ |
0.27 |
|
$ |
0.66 |
|
$ |
(0.39 |
) |
|
(59 |
%) | ||||||
|
|
|
||||||||||||||||
Diluted weighted average shares outstanding (2) |
109,246 |
|
108,732 |
|
514 |
|
|
— |
| |||||||||
Diluted earnings per share attributable to TDS shareholders (2) |
$ |
0.27 |
|
$ |
0.65 |
|
$ |
(0.38 |
) |
|
(58 |
%) |
(1) Consists of Suttle Straus printing and distribution operations, Airadigm, corporate operations and intercompany eliminations.
(2) On January 13, 2012, TDS shareholders approved a Share Consolidation Amendment to the Restated Certificate of Incorporation of TDS. Average basic and diluted shares outstanding used to calculate earnings per share for the comparative period presented have been retroactively restated to reflect the impact of the increased shares outstanding as a result of the Share Consolidation Amendment.
N/M – Percentage change not meaningful
6
Telephone and Data Systems, Inc. Consolidated Statement of Operations Highlights Nine Months Ended September 30, (Unaudited, dollars and shares in thousands, except per share amounts) | ||||||||||||||||||
|
|
|
||||||||||||||||
|
|
Increase/ (Decrease) | ||||||||||||||||
2012 |
|
2011 |
|
Amount |
|
Percent | ||||||||||||
Operating revenues |
|
|
|
|||||||||||||||
U.S. Cellular |
$ |
3,336,878 |
|
$ |
3,243,713 |
|
$ |
93,165 |
|
3 |
% | |||||||
TDS Telecom |
633,011 |
|
608,618 |
|
24,393 |
|
|
4 |
% | |||||||||
All Other (1) |
|
29,179 |
|
|
|
11,413 |
|
|
|
17,766 |
|
|
>100 |
% | ||||
|
3,999,068 |
|
|
|
3,863,744 |
|
|
|
135,324 |
|
|
4 |
% | |||||
Operating expenses |
|
|
|
|||||||||||||||
U.S. Cellular |
|
|
|
|||||||||||||||
Expenses excluding depreciation, amortization and accretion |
2,668,224 |
|
2,553,409 |
|
114,815 |
|
4 |
% | ||||||||||
Depreciation, amortization and accretion |
439,391 |
|
431,581 |
|
7,810 |
|
2 |
% | ||||||||||
(Gain) loss on asset disposals and exchanges, net |
|
11,819 |
|
|
|
(5,741 |
) |
|
|
17,560 |
|
|
>(100 |
%) | ||||
|
3,119,434 |
|
|
|
2,979,249 |
|
|
|
140,185 |
|
|
5 |
% | |||||
TDS Telecom |
|
|
|
|||||||||||||||
Expenses excluding depreciation, amortization and accretion |
453,918 |
|
390,216 |
|
63,702 |
|
|
16 |
% | |||||||||
Depreciation, amortization and accretion |
143,639 |
|
134,362 |
|
9,277 |
|
7 |
% | ||||||||||
Loss on asset disposals and exchanges, net |
|
777 |
|
|
|
758 |
|
|
|
19 |
|
|
3 |
% | ||||
|
598,334 |
|
|
|
525,336 |
|
|
|
72,998 |
|
|
14 |
% | |||||
All Other (1) |
|
|
|
|||||||||||||||
Expenses excluding depreciation and amortization |
31,418 |
|
8,040 |
|
23,378 |
|
>100 |
% | ||||||||||
Depreciation and amortization |
9,132 |
|
7,954 |
|
1,178 |
|
|
15 |
% | |||||||||
Loss on impairment of assets |
515 |
|
— |
|
515 |
|
N/M |
|||||||||||
Loss on asset disposals and exchanges, net |
|
11 |
|
|
|
13 |
|
|
|
(2 |
) |
|
(15 |
%) | ||||
|
41,076 |
|
|
|
16,007 |
|
|
|
25,069 |
|
|
>100 |
% | |||||
|
|
|
||||||||||||||||
Total operating expenses |
|
3,758,844 |
|
|
|
3,520,592 |
|
|
|
238,252 |
|
|
7 |
% | ||||
Operating income (loss) |
|
|
|
|||||||||||||||
U.S. Cellular |
217,444 |
|
264,464 |
|
(47,020 |
) |
|
(18 |
%) | |||||||||
TDS Telecom |
34,677 |
|
83,282 |
|
(48,605 |
) |
|
(58 |
%) | |||||||||
All Other (1) |
|
(11,897 |
) |
|
|
(4,594 |
) |
|
|
(7,303 |
) |
|
>(100 |
%) | ||||
|
240,224 |
|
|
|
343,152 |
|
|
|
(102,928 |
) |
|
(30 |
%) | |||||
Investment and other income (expense) |
|
|
|
|||||||||||||||
Equity in earnings of unconsolidated entities |
73,796 |
|
64,031 |
|
9,765 |
|
|
15 |
% | |||||||||
Interest and dividend income |
6,894 |
|
6,916 |
|
(22 |
) |
|
— |
| |||||||||
Gain (loss) on investment |
(3,728 |
) |
|
26,103 |
|
(29,831 |
) |
|
>(100 |
%) | ||||||||
Interest expense |
(68,100 |
) |
|
(94,184 |
) |
|
26,084 |
|
|
28 |
% | |||||||
Other, net |
|
196 |
|
|
|
1,501 |
|
|
|
(1,305 |
) |
|
(87 |
%) | ||||
Total investment and other income (expense) |
|
9,058 |
|
|
|
4,367 |
|
|
|
4,691 |
|
|
>100 |
% | ||||
Income before income taxes |
249,282 |
|
347,519 |
|
(98,237 |
) |
|
(28 |
%) | |||||||||
Income tax expense |
|
85,619 |
|
|
|
95,264 |
|
|
|
(9,645 |
) |
|
(10 |
%) | ||||
Net income |
163,663 |
|
252,255 |
|
(88,592 |
) |
|
(35 |
%) | |||||||||
Less: Net income attributable to noncontrolling interests, net of tax |
|
(39,955 |
) |
|
|
(45,503 |
) |
|
|
5,548 |
|
|
12 |
% | ||||
Net income attributable to TDS shareholders |
123,708 |
|
206,752 |
|
(83,044 |
) |
|
(40 |
%) | |||||||||
|
Preferred dividend requirement |
|
(37 |
) |
|
|
(37 |
) |
|
|
— |
|
|
— |
||||
Net income available to common shareholders |
$ |
123,671 |
|
|
$ |
206,715 |
|
|
$ |
(83,044 |
) |
|
(40 |
%) | ||||
|
|
|
||||||||||||||||
Basic weighted average shares outstanding (2) |
108,735 |
|
108,586 |
|
149 |
|
|
— |
| |||||||||
Basic earnings per share attributable to TDS shareholders (2) |
$ |
1.14 |
|
$ |
1.90 |
|
$ |
(0.76 |
) |
|
(40 |
%) | ||||||
|
|
|
||||||||||||||||
Diluted weighted average shares outstanding (2) |
109,018 |
|
109,194 |
|
(176 |
) |
|
— |
| |||||||||
Diluted earnings per share attributable to TDS shareholders (2) |
$ |
1.13 |
|
$ |
1.89 |
|
$ |
(0.76 |
) |
|
(40 |
%) |
(1) Consists of Suttle Straus printing and distribution operations, Airadigm, corporate operations and intercompany eliminations.
(2) On January 13, 2012, TDS shareholders approved a Share Consolidation Amendment to the Restated Certificate of Incorporation of TDS. Average basic and diluted shares outstanding used to calculate earnings per share for the comparative period presented have been retroactively restated to reflect the impact of the increased shares outstanding as a result of the Share Consolidation Amendment.
N/M – Percentage change not meaningful
7
Telephone and Data Systems, Inc. Consolidated Balance Sheet Highlights (Unaudited, dollars in thousands) | |||||||
|
|||||||
ASSETS | |||||||
|
|
||||||
September 30, 2012 |
|
December 31, 2011 | |||||
|
| ||||||
Current assets |
|
||||||
Cash and cash equivalents |
$ |
589,284 |
|
$ |
563,275 | ||
Short-term investments |
180,578 |
|
246,273 | ||||
Accounts receivable from customers and others |
578,195 |
|
542,577 | ||||
Inventory |
201,693 |
|
130,044 | ||||
Net deferred income tax asset |
46,809 |
|
40,898 | ||||
Prepaid expenses |
86,346 |
|
80,628 | ||||
Income taxes receivable |
11,595 |
|
85,636 | ||||
Other current assets |
26,720 |
|
16,349 | ||||
1,721,220 |
|
1,705,680 | |||||
|
|||||||
Assets held for sale |
— |
|
49,647 | ||||
|
|||||||
Investments |
|
||||||
Licenses |
1,555,118 |
|
1,494,014 | ||||
Goodwill |
816,668 |
|
797,077 | ||||
Other intangible assets, net |
61,873 |
|
50,734 | ||||
Investments in unconsolidated entities |
199,480 |
|
173,710 | ||||
Long-term investments |
10,171 |
|
45,138 | ||||
Other investments |
886 |
|
3,072 | ||||
|
2,644,196 |
|
2,563,745 | ||||
|
|||||||
Property, plant and equipment, net |
|
||||||
U.S. Cellular |
2,934,785 |
|
2,790,302 | ||||
TDS Telecom |
927,767 |
|
936,757 | ||||
Other |
40,931 |
|
57,476 | ||||
|
3,903,483 |
|
3,784,535 | ||||
|
|||||||
Other assets and deferred charges |
121,917 |
|
97,398 | ||||
|
|||||||
Total assets |
$ |
8,390,816 |
|
$ |
8,201,005 |
8
Telephone and Data Systems, Inc. Consolidated Balance Sheet Highlights (Unaudited, dollars in thousands) |
| |||||||||
| ||||||||||
|
|
|
|
|
|
|
|
|
| |
LIABILITIES AND EQUITY |
| |||||||||
|
September 30, 2012 |
|
December 31, 2011 | |||||||
|
| |||||||||
Current liabilities |
|
|
|
|
|
|
| |||
Current portion of long-term debt |
$ |
1,283 |
$ |
1,509 |
||||||
Accounts payable |
311,868 |
364,746 |
||||||||
Customer deposits and deferred revenues |
237,281 |
207,633 |
||||||||
Accrued interest |
16,772 |
7,456 |
||||||||
Accrued taxes |
74,296 |
41,069 |
||||||||
Accrued compensation |
85,485 |
107,719 |
||||||||
Other current liabilities |
99,119 |
|
144,001 |
| ||||||
826,104 |
874,133 |
|||||||||
Liabilities held for sale |
— |
1,051 |
||||||||
Deferred liabilities and credits |
|
|
|
|||||||
Net deferred income tax liability |
867,188 |
808,713 |
||||||||
Other deferred liabilities and credits |
405,160 |
383,567 |
||||||||
Long-term debt |
1,528,515 |
1,529,857 |
||||||||
|
||||||||||
Noncontrolling interests with redemption features |
759 |
1,005 |
||||||||
|
||||||||||
Equity |
||||||||||
|
TDS shareholders’ equity |
|||||||||
Series A Common and Common Shares, par value $.01 per share (1) |
1,326 |
1,326 |
||||||||
Capital in excess of par value (1) |
2,293,008 |
2,268,711 |
||||||||
Treasury shares at cost (1) |
(739,560 |
) |
(750,921 |
) | ||||||
Accumulated other comprehensive loss |
(8,343 |
) |
(8,854 |
) | ||||||
Retained earnings (1) |
2,528,209 |
|
2,451,899 |
| ||||||
Total TDS shareholders’ equity |
4,074,640 |
3,962,161 |
||||||||
Preferred shares |
826 |
830 |
||||||||
Noncontrolling interests |
687,624 |
|
639,688 |
| ||||||
Total equity |
4,763,090 |
4,602,679 |
||||||||
|
|
|
|
|
| |||||
Total liabilities and equity |
$ |
8,390,816 |
|
$ |
8,201,005 |
|
(1) The December 31, 2011 amounts reflect the impact of the Share Consolidation Amendment to the Restated Certificate of Incorporation of TDS, as approved by the TDS shareholders on January 13, 2012.
9
Balance Sheet Highlights September 30, 2012 (Unaudited, dollars in thousands) | ||||||||||||||||||||
|
|
|
|
|
|
|||||||||||||||
U.S. |
TDS |
|
TDS Corporate |
|
Intercompany |
|
TDS | |||||||||||||
Cellular |
Telecom |
|
& Other |
|
Eliminations |
|
Consolidated | |||||||||||||
Cash and cash equivalents |
$ |
409,579 |
|
|
$ |
96,520 |
|
|
$ |
83,185 |
|
|
$ |
― |
|
|
$ |
589,284 | ||
Affiliated cash investments |
― |
|
|
372,644 |
|
|
― |
|
|
(372,644 |
) |
|
― | |||||||
Short-term investments |
|
140,494 |
|
|
|
― |
|
|
|
40,084 |
|
|
|
― |
|
|
|
180,578 | ||
$ |
550,073 |
$ |
469,164 |
$ |
123,269 |
$ |
(372,644 |
) |
$ |
769,862 | ||||||||||
|
|
|
|
|
|
|
|
|||||||||||||
Licenses, goodwill and other intangible assets |
$ |
2,026,745 |
|
|
$ |
586,068 |
|
|
$ |
(179,154 |
) |
|
$ |
― |
|
|
$ |
2,433,659 | ||
Investment in unconsolidated entities |
162,012 |
|
|
3,813 |
|
|
40,664 |
|
|
(7,009 |
) |
|
199,480 | |||||||
Long-term and other investments |
|
10,173 |
|
|
|
882 |
|
|
|
2 |
|
|
|
― |
|
|
|
11,057 | ||
$ |
2,198,930 |
$ |
590,763 |
$ |
(138,488 |
) |
$ |
(7,009 |
) |
$ |
2,644,196 | |||||||||
|
|
|
|
|
|
|
|
|||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||
Property, plant and equipment, net |
$ |
2,934,785 |
$ |
927,767 |
$ |
40,931 |
$ |
― |
$ |
3,903,483 | ||||||||||
Long-term debt: |
|
|
|
|
|
|
|
|
||||||||||||
Current portion |
$ |
127 |
|
|
$ |
190 |
|
|
$ |
966 |
|
|
$ |
― |
|
|
$ |
1,283 | ||
Non-current portion |
|
880,486 |
|
|
|
743 |
|
|
|
647,286 |
|
|
|
― |
|
|
|
1,528,515 | ||
Total |
$ |
880,613 |
$ |
933 |
$ |
648,252 |
$ |
― |
$ |
1,529,798 | ||||||||||
Preferred shares |
$ |
― |
$ |
― |
$ |
826 |
$ |
― |
$ |
826 |
10
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 September 30, 2012 and December 31, 2011.
|
September 30, 2012 |
December 31, 2011 | ||||||
|
||||||||
|
||||||||
Cash and cash equivalents |
$ |
589,284 |
$ |
563,275 | ||||
Amounts included in short-term investments (1) (2) |
||||||||
Government-backed securities (3) |
180,578 |
218,829 | ||||||
Certificates of deposit |
|
— |
|
27,444 | ||||
|
|
180,578 |
|
246,273 | ||||
Amounts included in long-term investments (1) (4) |
||||||||
Government-backed securities (3) |
|
10,171 |
|
45,138 | ||||
Total cash and cash equivalents and investments |
$ |
780,033 |
$ |
854,686 |
(2) Maturities are less than twelve months from the respective balance sheet dates.
(3) Includes U.S. treasuries and corporate notes guaranteed under the Federal Deposit Insurance Corporation’s Temporary Liquidity Guarantee Program.
(4) At September 30, 2012, maturities range between 17 and 18 months.
11
Telephone and Data Systems, Inc. | |||||||||||
Consolidated Statement of Cash Flows | |||||||||||
Nine Months Ended September 30, | |||||||||||
(Unaudited, dollars in thousands) | |||||||||||
|
|
|
|
|
2012 |
|
2011 |
| |||
Cash flows from operating activities |
|
|
|
|
|
||||||
|
Net income |
$ |
163,663 |
|
$ |
252,255 |
|||||
|
|
Add (deduct) adjustments to reconcile net income to net cash flows from operating activities |
|
|
|
|
|
||||
|
|
|
Depreciation, amortization and accretion |
|
592,162 |
|
|
573,897 |
|||
|
|
|
Bad debts expense |
|
56,597 |
|
|
49,101 |
|||
|
|
|
Stock-based compensation expense |
|
31,724 |
|
|
27,792 |
|||
|
|
|
Deferred income taxes, net |
|
52,169 |
|
|
160,436 |
| ||
|
|
|
Equity in earnings of unconsolidated entities |
|
(73,796 |
) |
|
(64,031 |
) | ||
|
|
|
Distributions from unconsolidated entities |
|
45,558 |
|
|
52,385 |
|||
Loss on impairment of assets |
515 |
— |
|||||||||
|
|
|
(Gain) loss on asset disposals and exchanges, net |
|
12,607 |
|
|
(4,970 |
) | ||
(Gain) loss on investment |
3,728 |
(26,103 |
) | ||||||||
Noncash interest expense |
2,555 |
17,973 |
|||||||||
|
|
|
Other operating activities |
|
1,650 |
|
|
1,630 |
|||
|
|
Changes in assets and liabilities from operations |
|
|
|
|
|
||||
|
|
|
Accounts receivable |
|
(69,478 |
) |
|
(69,690 |
) | ||
|
|
|
Inventory |
|
(70,918 |
) |
|
(36,387 |
) | ||
|
|
|
Accounts payable |
|
(37,728 |
) |
|
37,369 |
| ||
|
|
|
Customer deposits and deferred revenues |
|
28,323 |
|
|
31,191 |
|||
|
|
|
Accrued taxes |
|
107,502 |
|
|
2,011 |
| ||
|
|
|
Accrued interest |
|
9,488 |
|
|
10,519 |
|||
|
|
|
Other assets and liabilities |
|
(95,785 |
) |
|
(76,177 |
) | ||
|
|
|
|
|
|
760,536 |
|
|
939,201 |
| |
|
|
|
|
|
|
|
|
|
|
||
Cash flows from investing activities |
|
|
|
|
|
||||||
|
Cash used for additions to property, plant and equipment |
|
(730,897 |
) |
|
(601,760 |
) | ||||
|
Cash paid for acquisitions and licenses |
|
(97,523 |
) |
|
(105,184 |
) | ||||
Cash received from divestitures |
50,182 |
— |
|||||||||
|
Cash paid for investments |
|
(45,000 |
) |
|
(101,000 |
) | ||||
|
Cash received for investments |
|
143,444 |
|
|
268,686 |
|||||
|
Other investing activities |
|
(13,121 |
) |
|
(3,703 |
) | ||||
|
|
|
|
|
|
(692,915 |
) |
|
(542,961 |
) | |
|
|
|
|
|
|
|
|
|
|
||
Cash flows from financing activities |
|
|
|
|
|
||||||
Repayment of short-term debt |
— |
(32,671 |
) | ||||||||
|
Repayment of long-term debt |
|
(2,435 |
) |
|
(613,933 |
) | ||||
|
Issuance of long-term debt |
|
358 |
|
|
643,700 |
|||||
|
TDS Common Shares and Special Common Shares reissued for benefit plans, net of tax payments |
|
(23 |
) |
|
1,402 |
|||||
|
U.S. Cellular Common Shares reissued for benefit plans, net of tax payments |
|
(2,299 |
) |
|
1,755 |
|||||
|
Repurchase of TDS Common and Special Common Shares |
|
— |
|
|
(21,500 |
) | ||||
|
Repurchase of U.S. Cellular Common Shares |
|
— |
|
|
(62,294 |
) | ||||
|
Dividends paid |
|
(39,930 |
) |
|
(36,496 |
) | ||||
|
Payment of debt issuance costs |
|
— |
|
|
(21,650 |
) | ||||
|
Distributions to noncontrolling interests |
|
(1,491 |
) |
|
(1,676 |
) | ||||
|
Other financing activities |
|
4,208 |
|
|
(2,657 |
) | ||||
|
|
|
|
|
|
(41,612 |
) |
|
(146,020 |
) | |
|
|
|
|
|
|
|
|
|
|
||
Cash classified as held for sale |
— |
(11,237 |
) | ||||||||
|
|||||||||||
Net increase in cash and cash equivalents |
|
26,009 |
|
|
238,983 |
| |||||
Cash and cash equivalents |
|
|
|
|
|
||||||
|
Beginning of period |
|
563,275 |
|
|
341,683 |
| ||||
|
End of period |
$ |
589,284 |
|
$ |
580,666 |
|
12
TDS Telecom Highlights Three Months Ended September 30, (Unaudited, dollars in thousands) | ||||||||||||||||||
Increase (Decrease) | ||||||||||||||||||
2012 |
2011 |
Amount |
|
Percent | ||||||||||||||
Local Telephone Operations |
||||||||||||||||||
|
Operating revenues |
|||||||||||||||||
Residential |
$ |
70,239 |
$ |
70,449 |
$ |
(210 |
) |
— |
| |||||||||
Commercial |
24,386 |
24,315 |
71 |
|
— |
| ||||||||||||
Wholesale |
|
49,425 |
|
|
56,468 |
|
|
(7,043 |
) |
(12 |
%) | |||||||
|
144,050 |
|
|
151,232 |
|
|
(7,182 |
) |
(5 |
%) | ||||||||
|
Operating expenses |
|||||||||||||||||
Cost of services and products |
47,617 |
50,230 |
(2,613 |
) |
(5 |
%) | ||||||||||||
Selling, general and administrative expenses |
41,743 |
38,960 |
2,783 |
7 |
% | |||||||||||||
Depreciation, amortization and accretion |
37,276 |
35,882 |
1,394 |
4 |
% | |||||||||||||
|
|
Loss on asset disposals and exchanges, net |
|
103 |
|
|
|
225 |
|
|
|
(122 |
) |
|
|
(54 |
%) | |
|
126,739 |
|
|
125,297 |
|
|
1,442 |
|
1 |
% | ||||||||
Operating income |
$ |
17,311 |
|
$ |
25,935 |
|
$ |
(8,624 |
) |
(33 |
%) | |||||||
|
||||||||||||||||||
Competitive Local Exchange Carrier Operations |
||||||||||||||||||
Operating revenues | ||||||||||||||||||
Residential |
$ |
4,195 |
$ |
5,269 |
$ |
(1,074 |
) |
(20 |
%) | |||||||||
Commercial |
34,491 |
34,676 |
(185 |
) |
(1 |
%) | ||||||||||||
Wholesale |
|
3,840 |
|
|
5,066 |
|
|
(1,226 |
) |
(24 |
%) | |||||||
|
42,526 |
|
|
45,011 |
|
|
(2,485 |
) |
(6 |
%) | ||||||||
Operating expenses |
||||||||||||||||||
Cost of services and products |
22,226 |
23,193 |
(967 |
) |
(4 |
%) | ||||||||||||
Selling, general and administrative expenses |
16,283 |
15,984 |
299 |
|
2 |
% | ||||||||||||
Depreciation, amortization and accretion |
5,524 |
5,597 |
(73 |
) |
(1 |
%) | ||||||||||||
|
|
Loss on asset disposals and exchanges, net |
|
242 |
|
|
|
112 |
|
|
|
130 |
|
|
|
>100 |
% | |
|
44,275 |
|
|
44,886 |
|
|
(611 |
) |
(1 |
%) | ||||||||
|
||||||||||||||||||
Operating income (loss) |
$ |
(1,749 |
) |
$ |
125 |
|
$ |
(1,874 |
) |
>(100 |
%) | |||||||
|
||||||||||||||||||
Hosted and Managed Services Operations |
||||||||||||||||||
Revenues |
$ |
36,428 |
|
$ |
17,055 |
|
$ |
19,373 |
|
>100 |
% | |||||||
Operating expenses |
||||||||||||||||||
Cost of services and products |
25,332 |
9,298 |
16,034 |
>100 |
% | |||||||||||||
|
Selling, general and administrative expenses |
10,901 |
4,428 |
6,473 |
>100 |
% | ||||||||||||
Depreciation, amortization and accretion |
5,451 |
4,203 |
1,248 |
30 |
% | |||||||||||||
Loss on asset disposals and exchanges, net |
|
6 |
|
|
— |
|
|
6 |
|
NM |
| |||||||
|
41,690 |
|
|
17,929 |
|
|
23,761 |
|
>100 |
% | ||||||||
|
||||||||||||||||||
Operating loss |
$ |
(5,262 |
) |
$ |
(874 |
) |
$ |
(4,388 |
) |
>(100 |
%) | |||||||
|
||||||||||||||||||
Intercompany revenues |
$ |
(2,587 |
) |
$ |
(2,492 |
) |
$ |
(95 |
) |
(4 |
%) | |||||||
Intercompany expenses |
|
(2,587 |
) |
|
(2,492 |
) |
|
(95 |
) |
(4 |
%) | |||||||
|
||||||||||||||||||
Total TDS Telecom operating income |
$ |
10,300 |
|
$ |
25,186 |
|
$ |
(14,886 |
) |
(59 |
%) |
13
TDS Telecom Highlights Nine Months Ended September 30, (Unaudited, dollars in thousands) | ||||||||||||||||||
Increase (Decrease) | ||||||||||||||||||
2012 |
2011 |
Amount |
|
Percent | ||||||||||||||
Local Telephone Operations |
||||||||||||||||||
|
Operating revenues |
|||||||||||||||||
Residential |
$ |
209,720 |
$ |
210,113 |
$ |
(393 |
) |
— |
| |||||||||
Commercial |
72,717 |
74,542 |
(1,825 |
) |
(2 |
%) | ||||||||||||
Wholesale |
|
150,730 |
|
|
165,532 |
|
|
(14,802 |
) |
(9 |
%) | |||||||
|
433,167 |
|
|
450,187 |
|
|
(17,020 |
) |
(4 |
%) | ||||||||
|
Operating expenses |
|||||||||||||||||
Cost of services and products |
143,965 |
143,278 |
687 |
|
— |
| ||||||||||||
Selling, general and administrative expenses |
126,473 |
114,518 |
11,955 |
10 |
% | |||||||||||||
Depreciation, amortization and accretion |
112,888 |
109,198 |
3,690 |
3 |
% | |||||||||||||
|
|
Loss on asset disposals and exchanges, net |
|
305 |
|
|
|
511 |
|
|
|
(206 |
) |
|
|
(40 |
%) | |
|
383,631 |
|
|
367,505 |
|
|
16,126 |
|
4 |
% | ||||||||
Operating income |
$ |
49,536 |
|
$ |
82,682 |
|
$ |
(33,146 |
) |
(40 |
%) | |||||||
|
||||||||||||||||||
Competitive Local Exchange Carrier Operations |
||||||||||||||||||
Operating revenues | ||||||||||||||||||
Residential |
$ |
13,321 |
$ |
17,096 |
$ |
(3,775 |
) |
(22 |
%) | |||||||||
Commercial |
103,737 |
103,716 |
21 |
|
— |
| ||||||||||||
Wholesale |
|
13,712 |
|
|
15,123 |
|
|
(1,411 |
) |
(9 |
%) | |||||||
|
130,770 |
|
|
135,935 |
|
|
(5,165 |
) |
(4 |
%) | ||||||||
Operating expenses |
||||||||||||||||||
Cost of services and products |
67,492 |
68,694 |
(1,202 |
) |
(2 |
%) | ||||||||||||
Selling, general and administrative expenses |
49,312 |
47,719 |
1,593 |
|
3 |
% | ||||||||||||
Depreciation, amortization and accretion |
16,479 |
16,526 |
(47 |
) |
— |
| ||||||||||||
|
|
Loss on asset disposals and exchanges, net |
|
367 |
|
|
|
190 |
|
|
|
177 |
|
|
|
93 |
% | |
|
133,650 |
|
|
133,129 |
|
|
521 |
|
— |
| ||||||||
|
||||||||||||||||||
Operating income (loss) |
$ |
(2,880 |
) |
$ |
2,806 |
|
$ |
(5,686 |
) |
>(100 |
%) | |||||||
|
||||||||||||||||||
Hosted and Managed Services Operations |
||||||||||||||||||
Revenues |
$ |
76,862 |
|
$ |
29,922 |
|
$ |
46,940 |
|
>100 |
% | |||||||
Operating expenses |
||||||||||||||||||
Cost of services and products |
50,196 |
13,773 |
36,423 |
>100 |
% | |||||||||||||
|
Selling, general and administrative expenses |
24,268 |
9,660 |
14,608 |
>100 |
% | ||||||||||||
Depreciation, amortization and accretion |
14,272 |
8,638 |
5,634 |
65 |
% | |||||||||||||
Loss on asset disposals and exchanges, net |
|
105 |
|
|
57 |
|
|
48 |
|
84 |
% | |||||||
|
88,841 |
|
|
32,128 |
|
|
56,713 |
|
>100 |
% | ||||||||
|
||||||||||||||||||
Operating loss |
$ |
(11,979 |
) |
$ |
(2,206 |
) |
$ |
(9,773 |
) |
>(100 |
%) | |||||||
|
||||||||||||||||||
Intercompany revenues |
$ |
(7,788 |
) |
$ |
(7,426 |
) |
$ |
(362 |
) |
(5 |
%) | |||||||
Intercompany expenses |
|
(7,788 |
) |
|
(7,426 |
) |
|
(362 |
) |
(5 |
%) | |||||||
|
||||||||||||||||||
Total TDS Telecom operating income |
$ |
34,677 |
|
$ |
83,282 |
|
$ |
(48,605 |
) |
(58 |
%) |
14
Telephone and Data Systems, Inc. | ||||||||||||||||||
Three Months Ended September 30, 2012 | U.S. Cellular | TDS Telecom (1) | All Other (2) | Consolidated Total | ||||||||||||||
Operating revenues | $ | 1,140,357 | $ | 220,417 | $ | 9,334 | $ | 1,370,108 | ||||||||||
Deduct: | ||||||||||||||||||
U.S. Cellular equipment sales revenue | 103,987 | |||||||||||||||||
Service revenues | 1,036,370 | |||||||||||||||||
Operating income (loss) | 48,079 | 10,300 | (2,873 | ) | 55,506 | |||||||||||||
Add (Deduct): | ||||||||||||||||||
|
Depreciation, amortization and accretion | 145,151 | 48,251 | 2,817 | 196,219 | |||||||||||||
Loss on impairment of assets |
— |
— |
— |
— |
||||||||||||||
Loss on asset disposals and exchanges, net | 11,327 | 351 | 29 | 11,707 | ||||||||||||||
Adjusted OIBDA (3) | $ | 204,557 | $ | 58,902 | $ | (27 | ) | $ | 263,432 | |||||||||
Adjusted OIBDA margin (4) | 19.7 | % | 26.7 | % | ||||||||||||||
| ||||||||||||||||||
Three Months Ended September 30, 2011 | U.S. Cellular | TDS Telecom (1) | All Other (2) | Consolidated Total | ||||||||||||||
Operating revenues | $ | 1,110,439 | $ | 210,806 | $ | 4,178 | $ | 1,325,423 | ||||||||||
Deduct: | ||||||||||||||||||
U.S. Cellular equipment sales revenue | 73,830 | |||||||||||||||||
Service revenues | 1,036,609 | |||||||||||||||||
Operating income | 101,620 | 25,186 | 118 | 126,924 | ||||||||||||||
Add (Deduct): | ||||||||||||||||||
Depreciation, amortization and accretion | 141,664 | 45,682 | 2,693 | 190,039 | ||||||||||||||
Loss on impairment of assets |
— |
— |
— |
— |
||||||||||||||
(Gain) loss on asset disposals and exchanges, net | (9,700 | ) | 337 | 12 | (9,351 | ) | ||||||||||||
Adjusted OIBDA (3) | $ | 233,584 | $ | 71,205 | $ | 2,823 | $ | 307,612 | ||||||||||
Adjusted OIBDA margin (4) | 22.5 | % | 33.8 | % | ||||||||||||||
TDS Consolidated | ||||||||||||||||||
Three Months Ended September 30, | 2012 | 2011 | ||||||||||||||||
Cash flows from operating activities | $ | 253,626 | $ | 376,990 | ||||||||||||||
Deduct: | ||||||||||||||||||
Cash used for additions to property, plant and equipment | 229,686 | 250,904 | ||||||||||||||||
Free cash flow (5) | $ | 23,940 | $ | 126,086 |
15
Telephone and Data Systems, Inc. | ||||||||||||||||||
Nine Months Ended September 30, 2012 | U.S. Cellular | TDS Telecom (1) | All Other (2) | Consolidated Total | ||||||||||||||
Operating revenues | $ | 3,336,878 | $ | 633,011 | $ | 29,179 | $ | 3,999,068 | ||||||||||
Deduct: | ||||||||||||||||||
U.S. Cellular equipment sales revenue | 246,946 | |||||||||||||||||
Service revenues | 3,089,932 | |||||||||||||||||
Operating income (loss) | 217,444 | 34,677 | (11,897 | ) | 240,224 | |||||||||||||
Add (Deduct): | ||||||||||||||||||
|
Depreciation, amortization and accretion | 439,391 | 143,639 | 9,132 | 592,162 | |||||||||||||
Loss on impairment of assets |
— |
— |
515 |
515 |
||||||||||||||
Loss on asset disposals and exchanges, net | 11,819 |
|
777 | 11 | 12,607 |
| ||||||||||||
Adjusted OIBDA (3) | $ | 668,654 | $ | 179,093 | $ | (2,239 | ) | $ | 845,508 | |||||||||
Adjusted OIBDA margin (4) | 21.6 | % | 28.3 | % | ||||||||||||||
| ||||||||||||||||||
Nine Months Ended September 30, 2011 | U.S. Cellular | TDS Telecom (1) | All Other (2) | Consolidated Total | ||||||||||||||
Operating revenues | $ | 3,243,713 | $ | 608,618 | $ | 11,413 | $ | 3,863,744 | ||||||||||
Deduct: | ||||||||||||||||||
U.S. Cellular equipment sales revenue | 219,961 | |||||||||||||||||
Service revenues | 3,023,752 | |||||||||||||||||
Operating income (loss) | 264,464 | 83,282 | (4,594 | ) | 343,152 | |||||||||||||
Add (Deduct): | ||||||||||||||||||
Depreciation, amortization and accretion | 431,581 | 134,362 | 7,954 | 573,897 | ||||||||||||||
Loss on impairment of assets |
— |
— |
— |
— |
||||||||||||||
(Gain) loss on asset disposals and exchanges, net | (5,741 | ) | 758 | 13 | (4,970 | ) | ||||||||||||
Adjusted OIBDA (3) | $ | 690,304 | $ | 218,402 | $ | 3,373 | $ | 912,079 | ||||||||||
Adjusted OIBDA margin (4) | 22.8 | % | 35.9 | % | ||||||||||||||
TDS Consolidated | ||||||||||||||||||
Nine Months Ended September 30, | 2012 | 2011 | ||||||||||||||||
Cash flows from operating activities | $ | 760,536 | $ | 939,201 | ||||||||||||||
Deduct: | ||||||||||||||||||
Cash used for additions to property, plant, and equipment | 730,897 | 601,760 | ||||||||||||||||
Free cash flow (5) | $ | 29,639 | $ | 337,441 |
(1) Includes ILEC, CLEC and HMS intercompany eliminations.
(2) Consists of Suttle-Straus and Airadigm (as of September 23, 2011), which represents TDS’ Non-Reportable Segment, corporate operations and intercompany eliminations between U.S. Cellular, TDS Telecom and corporate operations. Amounts in this column are presented only to reconcile to consolidated totals and may not otherwise be meaningful.
(3) Adjusted OIBDA is defined as operating income excluding the effects of: depreciation, amortization and accretion (OIBDA); the loss on impairment of assets (if any); and the net gain or loss on asset disposals and exchanges (if any). Adjusted OIBDA excludes the loss on impairment of assets (if any) and net gain or loss on asset disposals and exchanges (if any) in order to show operating results on a more comparable basis from period to period. TDS does not intend to imply that any of such amounts that are excluded are non-recurring, infrequent or unusual; such gains or losses may occur in the future.
Adjusted OIBDA is a segment measure reported to the chief operating decision maker for purposes of making decisions about allocating resources to the segments and assessing their performance. This amount may also be commonly referred to by management as operating cash flow. TDS believes this measure provides useful information to investors regarding TDS’ financial condition and results of operations because it highlights certain key cash and non-cash items and their impacts on cash flows from operating activities. This amount should not be confused with Cash flows from operating activities, which is a component of the Consolidated Statement of Cash Flows.
(4) Adjusted OIBDA margin is defined as adjusted OIBDA divided by service revenues (U.S. Cellular) and operating revenues (TDS Telecom). Equipment revenues are excluded from the denominator of the U.S. Cellular calculation since equipment is generally sold at a net negative margin, and the net equipment subsidy is effectively a cost for purposes of assessing business results and is already reflected in adjusted OIBDA. TDS believes that this calculation method is consistent with the method used by certain investors to assess U.S. Cellular’s business results. Adjusted OIBDA margin may also be commonly referred to by management as operating cash flow margin.
(5) 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.
16
Exhibit 99.2
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
SAFE HARBOR CAUTIONARY STATEMENT
This Form 8-K and/or press release attached to this Form 8-K contain statements that are not based on historical facts and represent forward-looking statements, as this term is defined in the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, that address activities, events or developments that TDS intends, expects, projects, believes, estimates, plans or anticipates will or may occur in the future are forward-looking statements. The words “believes,” “anticipates,” “estimates,” “expects,” “plans,” “intends,” “projects” and similar expressions are intended to identify these forward-looking statements, but are not the exclusive means of identifying them. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, events or developments to be significantly different from any future results, events or developments expressed or implied by such forward-looking statements. Such risks, uncertainties and other factors include those set forth below, as more fully discussed under “Risk Factors” in the most recent filing of TDS’ Form 10-K, as updated by any TDS Form 10-Q filed subsequent to such Form 10-K. However, such factors are not necessarily all of the important factors that could cause actual results, performance or achievements to differ materially from those expressed in, or implied by, the forward-looking statements contained in this document. Other unknown or unpredictable factors also could have material adverse effects on future results, performance or achievements. TDS undertakes no obligation to update publicly any forward-looking statements whether as a result of new information, future events or otherwise. You should carefully consider the Risk Factors in the most recent filing of TDS’ Form 10-K, as updated by any TDS Form 10-Q filed subsequent to such Form 10-K, the following factors and other information contained in, or incorporated by reference into, this Form 8-K and/or press release attached to this Form 8-K to understand the material risks relating to TDS’ business.
· Intense competition in the markets in which TDS operates could adversely affect TDS’ revenues or increase its costs to compete.
· A failure by TDS to successfully execute its business strategy (including planned acquisitions, divestitures and exchanges) or allocate resources or capital could have an adverse effect on TDS’ business, financial condition or results of operations.
· A failure by TDS’ service offerings to meet customer expectations could limit TDS’ ability to attract and retain customers and could have an adverse effect on TDS’ business, financial condition or results of operations.
· TDS’ system infrastructure may not be capable of supporting changes in technologies and services expected by customers, which could result in lost customers and revenues.
· An inability to obtain or maintain roaming arrangements with other carriers on terms that are acceptable to TDS could have an adverse effect on TDS’ business, financial condition or results of operations.
· TDS currently receives a significant amount of roaming revenues from its wireless business. Further consolidation within the wireless industry and/or continued network build-outs by other wireless carriers could cause roaming revenues to decline from current levels, which would have an adverse effect on TDS' business, financial condition and results of operations.
· A failure by TDS to obtain access to adequate radio spectrum to meet current or anticipated future needs and/or to accurately predict future needs for radio spectrum could have an adverse effect on TDS’ business and operations.
· To the extent conducted by the Federal Communications Commission (“FCC”), TDS is likely to participate in FCC auctions in the future as an applicant or as a noncontrolling partner in another auction applicant and, during certain periods, will be subject to the FCC’s anti-collusion rules, which could have an adverse effect on TDS.
· Changes in the regulatory environment or a failure by TDS to timely or fully comply with any applicable regulatory requirements could adversely affect TDS’ financial condition, results of operations or ability to do business.
· Changes in Universal Service Fund (“USF”) funding and/or intercarrier compensation could have a material adverse impact on TDS' financial condition or results of operations.
· An inability to attract and/or retain highly competent management, technical, sales and other personnel could have an adverse effect on TDS’ business, financial condition or results of operations.
· TDS’ assets are concentrated in the U.S. telecommunications industry. As a result, its results of operations may fluctuate based on factors related entirely to conditions in this industry.
· The completion of acquisitions by other companies has led to increased consolidation in the wireless telecommunications industry. TDS’ lower scale relative to larger wireless carriers has in the past and could in the future prevent or delay its access to new products including wireless devices, new technology and/or new content and applications which could adversely affect TDS' ability to attract and retain customers and, as a result, could adversely affect its business, financial condition or results of operations.
· TDS' inability to manage its supply chain or inventory successfully could have an adverse effect on its business, financial condition or results of operations.
· Changes in general economic and business conditions, both nationally and in the markets in which TDS operates, could have an adverse effect on TDS’ business, financial condition or results of operations.
· Changes in various business factors could have an adverse effect on TDS’ business, financial condition or results of operations.
· Advances or changes in telecommunications technology could render certain technologies used by TDS obsolete, could put TDS at a competitive disadvantage, could reduce TDS’ revenues or could increase its costs of doing business.
· Complexities associated with deploying new technologies, such as TDS' ongoing upgrade to 4G LTE technology, present substantial risk.
· TDS is subject to numerous surcharges and fees from federal, state and local governments, and the applicability and the amount of these fees are subject to great uncertainty.
· Changes in TDS’ enterprise value, changes in the market supply or demand for wireless licenses or wireline markets, adverse developments in the business or the industry in which TDS is involved and/or other factors could require TDS to recognize impairments in the carrying value of its license costs, goodwill and/or physical assets.
· Costs, integration problems or other factors associated with developing and enhancing business support systems, acquisitions/divestitures of properties or licenses and/or expansion of TDS’ business could have an adverse effect on TDS’ business, financial condition or results of operations.
· A significant portion of TDS’ wireless revenues is derived from customers who buy services through independent agents who market TDS’ services on a commission basis. If TDS’ relationships with these agents are seriously harmed, its business, financial condition or results of operations could be adversely affected.
· TDS’ investments in technologies which are unproven may not produce the benefits that TDS expects.
· A failure by TDS to complete significant network construction and systems implementation activities as part of its plans to improve the quality, coverage, capabilities and capacity of its network and support systems could have an adverse effect on its operations.
· Financial difficulties (including bankruptcy proceedings) or other operational difficulties of any of TDS’ key suppliers, termination or impairment of TDS’ relationships with such suppliers, or a failure by TDS to manage its supply chain effectively could result in delays or termination of TDS' receipt of required equipment or services, or could result in excess quantities of required equipment or services, any of which could adversely affect TDS' business, financial condition or results of operations.
· TDS has significant investments in entities that it does not control. Losses in the value of such investments could have an adverse effect on TDS’ financial condition or results of operations.
· A failure by TDS to maintain flexible and capable telecommunication networks or information technology, or a material disruption thereof, including breaches of network or information technology security, could have an adverse effect on TDS’ business, financial condition or results of operations.
· Wars, conflicts, hostilities and/or terrorist attacks or equipment failures, power outages, natural disasters or other events could have an adverse effect on TDS’ business, financial condition or results of operations.
· The market price of TDS’ Common Shares is subject to fluctuations due to a variety of factors.
· Identification of errors in financial information or disclosures could require amendments to or restatements of financial information or disclosures included in this or prior filings with the Securities and Exchange Commission (“SEC”). Such amendments or restatements and related matters, including resulting delays in filing periodic reports with the SEC, could have an adverse effect on TDS' business, financial condition or results of operations.
· The existence of material weaknesses in the effectiveness of internal control over financial reporting could result in inaccurate financial statements or other disclosures or failure to prevent fraud, which could have an adverse effect on TDS’ business, financial condition or results of operations.
· Changes in facts or circumstances, including new or additional information that affects the calculation of potential liabilities for contingent obligations under guarantees, indemnities, claims, litigation or otherwise, could require TDS to record charges in excess of amounts accrued in the financial statements, if any, which could have an adverse effect on TDS' financial condition or results of operations.
· Disruption in credit or other financial markets, a deterioration of U.S. or global economic conditions or other events could, among other things, impede TDS' access to or increase the cost of financing its operating and investment activities and/or result in reduced revenues and lower operating income and cash flows, which would have an adverse effect on TDS' financial condition or results of operations.
· Uncertainty of access to capital for telecommunications companies, deterioration in the capital markets, other changes in market conditions, changes in TDS’ credit ratings or other factors could limit or restrict the availability of financing on terms and prices acceptable to TDS, which could require TDS to reduce its construction, development or acquisition programs.
· Settlements, judgments, restraints on its current or future manner of doing business and/or legal costs resulting from pending and future litigation could have an adverse effect on TDS’ financial condition, results of operations or ability to do business.
· The possible development of adverse precedent in litigation or conclusions in professional studies to the effect that radio frequency emissions from wireless devices and/or cell sites cause harmful health consequences, including cancer or tumors, or may interfere with various electronic medical devices such as pacemakers, could have an adverse effect on TDS' wireless business, financial condition or results of operations.
· Claims of infringement of intellectual property and proprietary rights of others, primarily involving patent infringement claims, could prevent TDS from using necessary technology to provide products or services or subject TDS to expensive intellectual property litigation or monetary penalties, which could have an adverse effect on TDS' business, financial condition or results of operations.
· Certain matters, such as control by the TDS Voting Trust and provisions in the TDS Restated Certificate of Incorporation, may serve to discourage or make more difficult a change in control of TDS.
· Any of the foregoing events or other events could cause customer net additions, revenues, operating income, capital expenditures and/or any other financial or statistical information to vary from TDS’ forward-looking estimates by a material amount.
TDS undertakes no obligation to update publicly any forward-looking statements whether as a result of new information, future events or otherwise. Readers should evaluate any statements in light of these important factors.
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