-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WKJr8iJKeeOwX8+Q83ha/VF+qHg/0YEFJw4venEDfqeo9cy1GW/YyFWP952FXkTF J3HoBGzT264/GkSJM8SxIA== 0000821130-98-000004.txt : 19980202 0000821130-98-000004.hdr.sgml : 19980202 ACCESSION NUMBER: 0000821130-98-000004 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980128 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19980129 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: TELEPHONE & DATA SYSTEMS INC CENTRAL INDEX KEY: 0000096966 STANDARD INDUSTRIAL CLASSIFICATION: RADIO TELEPHONE COMMUNICATIONS [4812] IRS NUMBER: 362669023 STATE OF INCORPORATION: IA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-08251 FILM NUMBER: 98517129 BUSINESS ADDRESS: STREET 1: 8401 GREENWAY BLVD STREET 2: PO BOX 628010 CITY: MIDDLETON STATE: WI ZIP: 535628010 BUSINESS PHONE: 3126301900 MAIL ADDRESS: STREET 1: 30 NORTH LASALLE STREET SUITE 400 CITY: CHICAGO STATE: IL ZIP: 60602 FORMER COMPANY: FORMER CONFORMED NAME: TELEPHONE SYSTEMS INC STOCK OPTION PLANS DATE OF NAME CHANGE: 19741118 FORMER COMPANY: FORMER CONFORMED NAME: TELEPHONE SYSTEMS INC DATE OF NAME CHANGE: 19740509 8-K 1 FORM 8-K FORM 8-K 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): January 28, 1998 ---------------- TELEPHONE AND DATA SYSTEMS, INC. -------------------------------- (Exact name of registrant as specified in its charter) Iowa 1-8251 36-2669023 ---- ------ ---------- (State or other (Commission (IRS Employer jurisdiction of File Number) Identification incorporation) No.) 30 North LaSalle Street, Chicago, Illinois 60602 ----------------------------------------------- ---------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (312) 630-1900 Not Applicable -------------- (Former name or former address, if changed since last report) Item 5. Other Events. ------------- On January 28, 1998, Telephone and Data Systems, Inc. announced its fourth quarter financial results. This Current Report on Form 8-K is being filed for the purpose of filing the news release issued by the Company relating to such announcement as an exhibit. Item 7. Financial Statements and Exhibits --------------------------------- Exhibits -------- The exhibits accompanying this report are listed in the accompanying Exhibit Index. 2 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereto duly authorized. Telephone and Data Systems, Inc. (Registrant) Date: January 28, 1998 By: /s/ GREGORY J. WILKINSON -------------------------- Gregory J. Wilkinson Vice President and Controller (principal accounting officer) 3 EXHIBIT INDEX Exhibit Number Description of Exhibit - -------------- ---------------------- 99 News Release dated January 28, 1998 4 EX-99 2 EXHIBIT 99 Exhibit 99 Contact: Karen M. Stewart, Vice President - Investor Relations (608) 828-8316 e-mail: karen.stewart@teldta.com FOR RELEASE: IMMEDIATE TDS REPORTS STRONG GROWTH IN CUSTOMERS AND REVENUES; CASH FLOW AND NET INCOME REDUCED BY AERIAL START-UP AND CELLULAR MARKETING COSTS January 28, 1998, Chicago, Illinois - Telephone and Data Systems, Inc. [AMEX:TDS] today reported excellent fourth quarter 1997 growth in customers and revenues. Both U.S. Cellular and Aerial Communications added subscriber units in excess of internal targets. Because these new subscribers were added primarily during the holiday marketing season, revenues from these units will not reach a significant level until 1998, while the marketing costs incurred to add the units were fully incurred and expensed during the fourth quarter of 1997. These costs and costs related to the effects of competitive pressures at U.S. Cellular and Aerial reduced cash flow and operating income during the quarter. Diluted (loss) per share from operations, excluding gains, totaled $(.65) for the fourth quarter of 1997 compared to diluted earnings per share of $.18, excluding gains, in the fourth quarter of 1996. Fourth Quarter Highlights: o Revenues grew 29% over the fourth quarter of 1996, to $412 million, fueled by a 30% jump in cellular revenues and a 59% increase in cellular customer units. o Operating cash flow, excluding the effects of Aerial's start-up activities, increased 10% to $102.4 million in the fourth quarter of 1997. Including Aerial, operating cash flow declined 56% to $41.2 million. o Net (loss) available to common, excluding gains from asset sales, was $(38.9) million in the fourth quarter of 1997 compared to net income available to common of $10.9 million in the fourth quarter of 1996. Fourth quarter 1997 results reflect solid U.S. Cellular and TDS Telecom performance, offset by Aerial losses which reduced net income available to common by $49.7 million in the fourth quarter of 1997 and $6.6 million in 1996. o Primarily due to the effects of Aerial's operating losses, TDS reported diluted (loss) per share of $(.65) in the fourth quarter of 1997, excluding gains from asset sales, compared to diluted earnings per share of $.18, excluding gains, in 1996. The net loss associated with Aerial's operations reduced earnings per share by $.83 in the fourth quarter of 1997 and $.10 in the fourth quarter of 1996. o Gains from asset sales contributed $3.5 million, or $.06 per share in the fourth quarter of 1997, compared to $755,000, or $.01 per share, in the fourth quarter of 1996. LeRoy T. Carlson, Jr., President and Chief Executive Officer, commented, "U.S. Cellular had a very successful fourth quarter in terms of customer additions and revenues in the face of increasing competition from existing carriers and new PCS entrants. U.S. Cellular added 158,000 customer units during the quarter, excluding acquisitions, which drove its penetration to 7.11% at the end of the quarter. We are very pleased that U.S. Cellular exceeded its stated goal of adding two points of penetration during 1997. "TDS Telecom reported solid increases in access lines and minutes during the fourth quarter. TDS Telecom's new ventures, its internet service and structured wiring program, are growing nicely. We believe that these new ventures, along with the commencement of CLEC services in Madison, Wisconsin this year, will fuel TDS Telecom's growth in the future. "Aerial Communications closed the year with 125,000 customer units in service, almost double the customer unit count at September 30. We are most pleased that Aerial exceeded its revised goal of reaching 120,000 customer units by year-end 1997. Aerial's minutes of use and average revenue per unit continue to exceed its internal projections. We look forward to continued growth in customer units and revenues in 1998. "During 1998, we anticipate continued cash flow and earnings growth in our U.S. Cellular and TDS Telecom groups. We also expect that the costs of Aerial's operations will continue to reduce cash flow and earnings during 1998. Thereafter, we look for a return to strong positive growth in cash flow and earnings." United States Cellular Corporation [AMEX:USM], TDS's 81.1%-owned subsidiary, reported strong 59% customer growth during 1997. U.S. Cellular's customer units in service totaled 1,710,000 at year-end 1997, including 195,000 net units added as a result of the completion of an exchange transaction with BellSouth Corporation. Net customer activations from marketing channels increased 19% in the fourth quarter of 1997 to 158,000 compared to 133,000 net activations during the fourth quarter of 1996. U.S. Cellular's service revenues increased 29% to $234.8 million for the fourth quarter of 1997 compared to $182.1 million for the fourth quarter of 1996. Operating cash flow increased 35% to $56.8 million in the fourth quarter of 1997 compared to $42.1 million in the fourth quarter of 1996. U.S. Cellular plans to invest approximately $330 million in capital equipment and business system upgrades during 1998. TDS Telecommunications Corporation ("TDS Telecom"), TDS's wholly owned subsidiary, reported a 9% increase in revenues in the fourth quarter of 1997 versus the same period in 1996. TDS Telecom's landline telephone revenues increased 7% on a 6% increase in access lines and a 10% increase in minutes of use. Operating cash flow from the landline business declined 7% to $49.5 million in the fourth quarter of 1997 from $53.4 million in 1996 primarily due to non-recurring, one-time expense reductions occurring in 1996. TDS Telecom's operating margin on its landline business was 24% during the fourth quarter of 1997 compared to 30% in 1996. The full-year 1997 margin of 25% reflects the impacts of slightly higher expenses for the company's data network, increased advertising and sales promotion costs, and full implementation of the network management center. In addition, TDS Telecom is experiencing some downward pressure on certain revenue streams, and smaller margins on new non-traditional product offerings such as DBS (Direct Broadcast Satellite). TDS Telecom generated approximately $4.3 million in revenues and $6.1 million in expenses during the fourth quarter of 1997 related to its internet and structured wiring service offerings. The company anticipates these programs will be producing increasing revenues during the next several quarters. Additionally, Telecom reported approximately $1.4 million in expenses during the quarter related to the start-up of its CLEC operation in Madison, Wisconsin. The CLEC is expected to commence service during the first quarter of 1998. TDS Telecom plans to invest approximately $140 million in capital expenditures, including for the CLEC operation, in 1998. Aerial Communications, Inc. [NASDAQ:AERL], TDS's 82.5%-owned subsidiary, reported 60,000 net customer activations during the fourth quarter of 1997. Usage of Aerial's PCS networks continues to be strong, with average revenue per user running nearly $70 per month and average minutes of use nearly 350 per month. Aerial's operating cash flow for the fourth quarter of 1997 was a negative $61.2 million. Both the customer churn rate and bad debt expense were higher than anticipated for 1997. Aerial's churn rate was approximately 4% during 1997. About 60% of the churn was at Aerial's direction, as it focused on clearing the customer rolls on non-pay and slow-pay customers. Aerial recently launched a pre-payment plan which is anticipated to reduce both customer churn and bad debt expense in 1998. Aerial plans to invest approximately $75 million in capital expenditures during 1998. American Paging, Inc. [AMEX:APP], TDS's 81.9%-owned subsidiary, reported fourth quarter results reflecting continuing modest progress in its turnaround efforts. Customer units in service increased 18,300 since September 30, 1997, American Paging's third consecutive quarterly increase in customer units. Revenues declined 10% from the fourth quarter of 1996, primarily due to competitive price pressures in the direct distribution channel. Customer churn was 2.3% for the fourth quarter of 1997. American Paging recorded expenses related to its proposed merger with TSR Paging, Inc., totaling $1.9 million in the fourth quarter of 1997. As a result, operating cash flow was a negative $2.1 for the fourth quarter of 1997 compared with a negative $2.5 million in the fourth quarter of 1996. Litigation As previously disclosed, TDS has offered to acquire all of the Common Shares of U.S. Cellular and all of the Common Shares of Aerial which it does not already own, pursuant to mergers between subsidiaries of TDS and each of U.S. Cellular (the "U.S. Cellular Merger") and Aerial (the "Aerial Merger"). On December 29, 1997, Airmont Plaza Associates, which claims to be a holder of U.S. Cellular Common Shares, filed a putative class action complaint on behalf of the minority shareholders of U.S. Cellular in the Court of Chancery of the State of Delaware in New Castle County. The complaint names as defendants TDS, U.S. Cellular and the directors of U.S. Cellular. The complaint alleges a breach of fiduciary duties by the defendants in connection with the proposed U.S. Cellular Merger and seeks to have the U.S. Cellular Merger enjoined or, if it is consummated, to have it rescinded and to recover unspecified damages, fees and expenses. On January 5, 1998, Richard Greenfield, who claims to be a holder of Aerial Common Shares, filed a putative class action complaint on behalf of the minority shareholders of Aerial in the Court of Chancery of the State of Delaware in New Castle County. The complaint names as defendants TDS, Aerial and the directors of TDS and Aerial. The complaint alleges a breach of fiduciary duties by the defendants in connection with the proposed Aerial Merger and seeks to have the Aerial Merger enjoined or, if it is consummated, to have it rescinded and to recover unspecified damages, fees and expenses. The Company intends to vigorously defend against these lawsuits. TDS is a Chicago-based telecommunications company with established cellular telephone, local telephone and radio paging operations and developing PCS operations. TDS strives to build value for its shareholders by providing excellent communications services in attractive, closely related segments of the telecommunications industry. This news release contains "forward-looking" statements, as defined in the private securities litigation reform act of 1995, that are based on current expectations, estimates and projections. These statements contain potential risks and uncertainties and, therefore, actual results may differ materially. TDS undertakes no obligation to publicly update any forward-looking statements whether as a result of new information, future events or otherwise. In early April 1998, TDS's Annual Report on Form 10-K will be available, without charge, to our investors, security analysts and other members of the investment community. Please contact Julie Mathews, Senior Investor Relations Coordinator, at (312) 630-1900 for further information. Internet Home Pages: TDS http://www.teldta.com USM http://www.uscc.com AERL http://www.aerial1.com APP http://www.americanpaging.com TELEPHONE AND DATA SYSTEMS, INC. SUMMARY OPERATING DATA Quarter Ended 12/31/97 9/30/97 6/30/97 3/31/97 12/31/96 ---------- --------- --------- --------- --------- U.S. Cellular: Total pops (1) 25,300 26,012 25,810 25,873 25,517 TDS's proportionate share 20,517 21,044 20,890 20,941 20,566 Consolidated Markets: Pops owned (000s) 22,611 20,578 20,557 20,390 20,389 Total population (000s) 24,034 21,844 21,844 21,712 21,712 Customer units 1,710,000 1,357,000 1,263,000 1,164,000 1,073,000 Market penetration 7.11% 6.21% 5.78% 5.36% 4.94% Markets in operation 134 132 132 131 131 Cell sites in service 1,748 1,556 1,485 1,377 1,328 Average monthly revenue per unit (2) $ 49.88 $ 57.56 $ 58.41 $ 53.50 $ 60.84 Churn rate per month 2.0% 2.0% 1.8% 2.0% 1.9% Marketing cost per net customer add (2) $ 469 $ 603 $ 531 $ 550 $ 459 TDS Telecom: Companies 106 105 105 105 105 Access lines 515,500 506,600 500,000 493,000 484,500 Growth in access lines from prior quarter-end: Acquisitions 3,200 --- --- --- --- Internal growth 5,700 6,600 7,000 8,500 4,800 Average monthly revenue per access line $ 70 $ 70 $ 67 $ 67 $ 70 Aerial Communications: Total pops (1) 27,601 27,601 27,601 27,601 27,601 TDS's proportionate share 22,744 22,788 22,803 22,843 22,854 Customer units 125,000 65,000 28,000 --- --- Market penetration 0.45% 0.24% 0.10% --- --- American Paging: Pagers in service 811,100 792,800 780,600 767,400 777,400 Average monthly revenue per unit $ 8.74 $ 8.97 $ 9.34 $ 9.63 $ 9.75 Disconnect rate per month 2.3% 2.5% 2.6% 3.0% 3.1% Telephone and Data Systems: Notes Payable $ 527,587 $ 451,329 $ 505,206 $ 299,468 $ 160,537 Long-term Debt, excluding current $1,264,218 $1,228,175 $ 983,364 $ 983,911 $ 982,232 (1) Population equivalents ("Pops"), owned and acquirable, in thousands. (2) Amounts for 1996 have been restated for a change in income statement presentation. (3) At December 31, 1997, 60.6 million TDS Common and Series A Common Shares were outstanding and approximately 268,000 Common Shares were scheduled to be issued in the future pursuant to definitive acquisition agreements. An additional 926,000 Common Shares are registered for use in connection with the Company's continuing acquisition program. TELEPHONE AND DATA SYSTEMS, INC. FINANCIAL HIGHLIGHTS Three Months Ended December 31, 1997 (Unaudited, dollars in thousands, except per share amounts) Increase (Decrease) ------------------------- 1997 1996 Amount Percent --------- --------- ---------- --------- Operating Revenues U.S. Cellular $ 242,843 $ 186,737 * $ 56,106 30.0% TDS Telecom 116,673 106,766 * 9,907 9.3% Aerial Communications 30,161 --- 30,161 N/M American Paging 22,655 25,042 (2,387) (9.5%) --------- --------- ---------- 412,332 318,545 93,787 29.4% --------- --------- ---------- Operating Expenses Before Depreciation and Amortization U.S. Cellular 186,073 144,685 * 41,388 28.6% TDS Telecom 68,949 53,251 * 15,698 29.5% Aerial Communications 91,328 --- 91,328 N/M American Paging 24,735 27,531 (2,796) (10.2%) --------- --------- ---------- 371,085 225,467 145,618 64.6% --------- --------- ---------- Operating Cash Flow (Operating Income Plus Depreciation and Amortization) U.S. Cellular 56,770 42,052 14,718 35.0% TDS Telecom 47,724 53,515 * (5,791) (10.8%) Aerial Communications (61,167) --- (61,167) N/M American Paging (2,080) (2,489) 409 (16.4%) --------- --------- --------- 41,247 93,078 (51,831) (55.7%) --------- --------- --------- Depreciation and Amortization* U.S. Cellular 37,738 29,623 8,115 27.4% TDS Telecom 24,920 24,518 * 402 1.6% Aerial Communications 19,214 --- 19,214 N/M American Paging 8,382 6,790 1,592 23.4% *includes amortization of $13,044--------- --------- --------- and $11,246, respectively 90,254 60,931 29,323 48.1% --------- --------- --------- Operating (Loss) Income U.S. Cellular 19,032 12,429 6,603 53.1% TDS Telecom 22,804 28,997 * (6,193) (21.4%) Aerial Communications (80,381) --- (80,381) N/M American Paging (10,462) (9,279) (1,183) 12.7% --------- --------- -------- (49,007) 32,147 (81,154) N/M --------- --------- -------- Investment and Other Income Interest and Dividend Income 3,738 5,521 (1,783) (32.3%) Minority Share of Loss (Income) 8,248 (2,293) 10,541 N/M Cellular Investment Income, Net 18,349 16,578 * 1,771 10.7% PCS Development Costs --- (19,638) 19,638 (100.0%) Gain on Sale of Cellular and Other Investments 17,073 2,686 14,387 N/M Other (Expense) Income, Net (1,477) 1,748 (3,225) (184.5%) --------- --------- -------- 45,931 4,602 41,329 N/M --------- --------- -------- (Loss) Income Before Interest and Income Taxes (3,076) 36,749 (39,825) (108.4%) Interest Expense 30,688 12,510 18,178 145.3% --------- --------- -------- (Loss)Income Before Income Taxes (33,764) 24,239 (58,003) N/M Income Tax Expense 1,242 12,150 (10,908) (89.8%) --------- --------- -------- Net (Loss) Income (35,006) 12,089 (47,095) N/M Preferred Dividend Requirement (470) (483) 13 (2.7%) --------- --------- -------- Net (Loss) Income Available to Common $ (35,476) $ 11,606 $(47,082) N/M ========= ========= ======== Average Common Shares Outstanding (000s) 60,099 61,127 (1,028) (1.7%) Earnings Per Common Share (Basic) $ (0.59) $ 0.19 $ (0.78) N/M ========= ========= ========= Earnings Per Common Share (Diluted) $ (0.59) $ 0.19 $ (0.78) N/M ========= ========= ========= Diluted EPS--Operations $ (0.65) $ 0.18 $ (0.83) N/M Diluted EPS--Gains $ 0.06 $ 0.01 $ 0.05 N/M N/M - Percentage change not meaningful * Amounts reclassified for change in current year presentation. TELEPHONE AND DATA SYSTEMS, INC. FINANCIAL HIGHLIGHTS Twelve Months Ended December 31, 1997 (Dollars in thousands, except per share amounts) Increase (Decrease) ----------------------------- 1997 1996 Amount Percent ---------- ---------- --------- --------- Operating Revenues U.S. Cellular $ 876,965 $ 680,068 * $ 196,897 29.0% TDS Telecom 444,203 395,602 * 48,601 12.3% Aerial Communications 55,952 --- 55,952 N/M American Paging 94,413 104,187 (9,774) (9.4%) ---------- ---------- --------- 1,471,533 1,179,857 291,676 24.7% ---------- ---------- --------- Operating Expenses Before Depreciation and Amortization U.S. Cellular 615,043 483,863 * 131,180 27.1% TDS Telecom 247,524 204,435 * 43,089 21.1% Aerial Communications 213,432 --- 213,432 N/M American Paging 97,680 107,036 (9,356) (8.7%) ---------- ---------- --------- 1,173,679 795,334 378,345 47.6% ---------- ---------- --------- Operating Cash Flow (Operating Income Plus Depreciation and Amortization) U.S. Cellular 261,922 196,205 65,717 33.5% TDS Telecom 196,679 191,167 * 5,512 2.9% Aerial Communications (157,480) --- (157,480) N/M American Paging (3,267) (2,849) (418) 14.7% ---------- ---------- --------- 297,854 384,523 (86,669) (22.5%) ---------- ---------- --------- Depreciation and Amortization* U.S. Cellular 132,379 108,839 23,540 21.6% TDS Telecom 98,066 88,459 * 9,607 10.9% Aerial Communications 39,071 --- 39,071 N/M American Paging 32,040 33,777 (1,737) (5.1%) ---------- ---------- --------- *includes amortization of $49,281 and $43,937, respectively 301,556 231,075 70,481 30.5% ---------- ---------- --------- Operating (Loss) Income U.S. Cellular 129,543 87,366 42,177 48.3% TDS Telecom 98,613 102,708 * (4,095) (4.0%) Aerial Communications (196,551) --- (196,551) N/M American Paging (35,307) (36,626) 1,319 (3.6%) ---------- ---------- --------- (3,702) 153,448 (157,150) (102.4%) ---------- ---------- --------- Investment and Other Income Interest and Dividend Income 13,660 15,569 (1,909) (12.3%) Minority Share of Loss (Income) 6,813 (26,690) 33,503 (125.5%) Cellular Investment Income, Net 77,620 54,799 * 22,821 41.6% PCS Development Costs (21,614) (43,950) 22,336 (50.8%) Gain on Sale of Cellular and Other Investments 41,438 138,735 (97,297) (70.1%) Other (Expense) Income, Net (3,938) 2,727 (6,665) N/M ---------- ---------- --------- 113,979 141,190 (27,211) (19.3%) ---------- ---------- --------- (Loss) Income Before Interest and Income Taxes 110,277 294,638 (184,361) (62.6%) Interest Expense 91,267 42,853 48,414 113.0% ---------- ---------- --------- (Loss) Income Before Income Taxes 19,010 251,785 (232,775) (92.4%) Income Tax Expense 28,559 123,646 (95,087) (76.9%) ---------- ---------- --------- Net (Loss) Income (9,549) 128,139 (137,688) (107.5%) Preferred Dividend Requirement (1,892) (1,957) 65 (3.3%) ---------- ---------- --------- Net (Loss) Income Available to Common $ (11,441) $ 126,182 $(137,623) (109.1%) ========== ========== ========= Average Common Shares Outstanding (000s) 60,211 60,464 (253) (0.4%) Earnings Per Common Share (Basic) $ (0.19) $ 2.09 $ (2.28) (109.1%) ========== ========== ========= Earnings Per Common Share (Diluted) $ (0.19) $ 2.07 $ (2.26) (109.2%) ========== ========== ========= Diluted EPS--Operations $ (0.45) $ 1.02 $ (1.47) (144.1%) Diluted EPS--Gains $ 0.26 $ 1.05 $ (0.79) (75.2%) N/M - Percentage change not meaningful. * Amounts reclassified for change in current year presentation. TELEPHONE AND DATA SYSTEMS, INC. BALANCE SHEET HIGHLIGHTS DECEMBER 31, 1997 (Dollars in thousands) U.S TDS Aerial American Cellular Telecom Communications Paging ----------- ----------- ----------- --------- Cash and Cash Equivalents $ 13,851 $ 22,640 $ 5,012 $ 3,058 Affiliated Cash Investments --- 161,941 --- --- Temporary Cash Investments 218 21,658 197 61 Notes Receivable-Affiliates --- 3,746 --- --- ----------- ----------- ----------- ---------- $ 14,069 $ 209,985 $ 5,209 $ 3,119 ----------- ----------- ----------- ---------- Marketable Equity Securities $ --- $ 1,621 $ --- $ --- Marketable Non-equity Securities 870 22,107 788 244 License and Franchise Costs, net 1,150,924 220,332 297,043 60,901 Cellular Minority Interests 128,810 8,912 510 --- Other Investments 10,673 12,453 --- 185 ----------- ----------- ----------- ---------- $ 1,291,277 $ 265,425 $ 298,341 $ 61,330 =========== =========== =========== ========== Property, Plant and Equipment, net $ 940,253 $ 830,767 $ 604,104 $ 43,230 =========== =========== =========== ========== Notes Payable: external $ 1,302 $ --- $ --- $ --- intercompany --- 83,473 448,234 179,990 ----------- ----------- ----------- ---------- $ 1,302 $ 83,473 $ 448,234 $ 179,990 =========== =========== =========== ========== Long-term Debt: Current Portion $ --- $ 14,577 $ --- $ --- Non-current Portion 515,330 307,158 196,439 --- ----------- ----------- ----------- ---------- Total $ 515,330 $ 321,735 $ 196,439 $ --- =========== =========== =========== ========== Preferred Stock $ --- $ --- $ --- $ --- =========== =========== =========== ========== Trusted Originated Preferred Securities $ --- $ --- $ --- $ --- ========== =========== =========== ========== Total outstanding debt and Preferred Stock $ 516,632 $ 405,208 $ 644,673 $ 179,990 ========== =========== =========== ========== Construction Expenditures: Quarter Ended 12/31/97 $ 66,291 $ 57,347 $ 74,296 $ 5,030 Twelve months ended 12/31/97 $ 283,577 $ 148,426 $ 327,119 $ 18,624 TELEPHONE AND DATA SYSTEMS, INC. BALANCE SHEET HIGHLIGHTS DECEMBER 31, 1997 (Dollars in thousands) (Continued) TDS Corporate Intercompany TDS & Other Eliminations Consolidated ------------- ------------ ------------ Cash and Cash Equivalents $ 6,447 $ --- $ 51,008 Affiliated Cash Investments --- (161,941) --- Temporary Cash Investments 2,425 --- 24,559 Notes Receivable-Affiliates 711,763 (715,509) --- ------------- ------------ ------------ $ 720,635 $ (877,450) $ 75,567 ============= ============ ============ Marketable Equity Securities $ --- $ --- $ 1,621 Marketable Non-equity Securities 7,015 --- 31,024 License and Franchise Costs, net 22,622 (14) 1,751,808 Cellular Minority Interests 2,752 (2,617) 138,367 Other Investments 2,436,241 (2,409,788) 49,764 ------------- ------------ ------------ $ 2,468,630 $ (2,412,419) $ 1,972,584 ============= ============ ============ Property, Plant and Equipment, net $ 47,299 $ --- $ 2,465,653 ============= ============ ============ Notes Payable: external $ 526,285 $ --- $ 527,587 intercompany 165,753 (877,450) --- ------------- ------------ ------------ $ 692,038 $ (877,450) $ 527,587 ============= ============ ============ Long-term Debt: Current Portion $ 239 $ --- $ 14,816 Non-current Portion 245,291 --- 1,264,218 ------------- ------------ ------------ Total $ 245,530 $ --- $ 1,279,034 ============= ============ ============ Preferred Stock $ 31,167 $ --- $ 31,167 ============= ============ ============ Trust Originated Preferred Securities $ 150,000 $ --- $ 150,000 ============= ============ ============ Total outstanding debt and Preferred Stock $ 1,118,735 $ (877,450) $ 1,987,788 ============= ============ ============ Construction Expenditures: Quarter ended 12/31/97 $ 5,921 $ --- $ 208,885 Twelve months ended 12/31/97 $ 23,418 $ --- $ 801,164 TELEPHONE AND DATA SYSTEMS, INC. FINANCIAL HIGHLIGHTS Three Months Ended December 31, 1997 (Unaudited, dollars in thousands, except per share amounts) Increase (Decrease) -------------------- 1997 1996 Amount Percent --------- --------- --------- --------- Local Telephone Operating Revenues Local Service $ 31,443 $ 29,353 $ 2,090 7.1% Network Access and Long-Distance 60,904 57,841 3,063 5.3% Miscellaneous 14,832 13,397 1,435 10.7% --------- --------- --------- 107,179 100,591 6,588 6.5% --------- --------- --------- Local Telephone Operating Expenses Network Operations 22,460 15,850 6,610 41.7% Customer Operations 16,248 13,804 2,444 17.7% Corporate Expenses 18,937 17,543 1,394 7.9% --------- --------- --------- 57,645 47,197 10,448 22.1% --------- --------- --------- Local Telephone Operating Cash Flow 49,534 53,394 (3,860) (7.2%) --------- --------- --------- Local Telephone Depreciation and Amortization Depreciation 23,024 22,055 969 4.4% Amortization 1,211 1,613 (402) (24.9%) --------- --------- --------- 24,235 23,668 567 2.4% --------- --------- --------- Local Telephone Operating Income 25,299 29,726 (4,427) (14.9%) --------- --------- --------- Long-Distance Operations Revenues 5,593 5,681 (88) (1.5%) Expenses before Depreciation and Amortization 4,639 4,623 16 0.3% --------- --------- --------- Long-Distance Operating Cash Flow 954 1,058 (104) (9.8%) Long-Distance Depreciation and Amortization 374 513 (139) (27.1%) --------- --------- --------- Long-Distance Operating Income 580 545 35 6.4% --------- --------- --------- Other Services (1) Revenue 4,345 715 3,630 N/M Expenses before Depreciation 7,109 1,652 5,457 N/M --------- --------- --------- Other Services Operating Cash Flow (2,764) (937) (1,827) 195.0% Other Services Depreciation 311 337 (26) (7.7%) --------- --------- --------- Other Services Operating (Loss) (3,075) (1,274) (1,801) 141.4% --------- --------- --------- Intercompany Revenues (444) (221) (223) 100.9% Intercompany Expenses (444) (221) (223) 100.9% --------- --------- --------- --- --- --- N/M --------- --------- --------- Total TDS Telecom Operating Income $ 22,804 $ 28,997 $ (6,193) (21.4%) ========= ========= ========= (1) Cellular revenues and expenses included in prior reports have been reclassified to non-operating income. N/M - Percentage change not meaningful. TELEPHONE AND DATA SYSTEMS, INC. FINANCIAL HIGHLIGHTS Twelve Months Ended December 31, 1997 (Dollars in thousands, except per share amounts) Increase (Decrease) -------------------- 1997 1996 Amount Percent --------- ---------- --------- --------- Local Telephone Operating Revenues Local Service $ 122,826 $ 110,501 $ 12,325 11.2% Network Access and Long-Distance 235,725 213,113 22,612 10.6% Miscellaneous 53,829 48,299 5,530 11.4% --------- ---------- --------- 412,380 371,913 40,467 10.9% --------- ---------- --------- Local Telephone Operating Expenses Network Operations 80,487 67,521 12,966 19.2% Customer Operations 65,167 53,764 11,403 21.2% Corporate Expenses 68,454 62,276 6,178 9.9% --------- ---------- --------- 214,108 183,561 30,547 16.6% --------- ---------- --------- Local Telephone Operating Cash Flow 198,272 188,352 9,920 5.3% --------- ---------- --------- Local Telephone Depreciation and Amortization Depreciation 89,177 79,931 9,246 11.6% Amortization 6,101 5,644 457 8.1% --------- ---------- --------- 95,278 85,575 9,703 11.3% --------- ---------- --------- Local Telephone Operating Income 102,994 102,777 217 0.2% --------- ---------- --------- Long-Distance Operations Revenues 22,969 23,102 (133) (0.6%) Expenses before Depreciation and Amortization 19,376 18,631 745 4.0% --------- ---------- --------- Long-Distance Operating Cash Flow 3,593 4,471 (878) (19.6%) Long-Distance Depreciation and Amortization 1,533 2,321 (788) (34.0%) --------- ---------- --------- Long-Distance Operating Income 2,060 2,150 (90) (4.2%) --------- ---------- --------- Other Services (1) Revenue 10,547 1,645 8,902 N/M Expenses before Depreciation 15,733 3,301 12,432 N/M --------- ---------- --------- Other Services Operating Cash Flow (5,186) (1,656) (3,530) N/M Other Services Depreciation 1,255 563 692 122.9% --------- ---------- --------- Other Services Operating (Loss) (6,441) (2,219) (4,222) 190.3% --------- ---------- --------- Intercompany Revenues (1,693) (1,058) (635) 60.0% Intercompany Expenses (1,693) (1,058) (635) 60.0% --------- ---------- --------- --- --- --- N/M --------- ---------- --------- Total TDS Telecom Operating Income $ 98,613 $ 102,708 $ (4,095) (4.0%) ========= ========== ========= (1) Cellular revenues and expenses included in prior reports have been reclassified to non-operating income. N/M - Percentage change not meaningful. -----END PRIVACY-ENHANCED MESSAGE-----