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TELEPHONE AND DATA SYSTEMS INC. REPORTS SECOND QUARTER AND FIRST HALF INCREASES IN CUSTOMERS, REVENUES, EARNINGS AND CASH FLOWS

 TELEPHONE AND DATA SYSTEMS INC. REPORTS SECOND QUARTER AND FIRST
 HALF INCREASES IN CUSTOMERS, REVENUES, EARNINGS AND CASH FLOWS
 CHICAGO, Aug. 5 /PRNewswire/ -- Telephone and Data Systems Inc. (AMEX: TDS) reported robust growth in customers served, and in consolidated revenues, operating income, operating cash flow, and net income for the second quarter and first half of 1992. TDS's telephone, cellular and paging businesses all reported excellent growth in customers and revenues during both the second quarter and first half of 1992. Increases in telephone operating income were complemented by substantial improvements in operating losses in both the cellular and paging business units, while cash flow from operations improved significantly in all three units. Consolidated customers served increased to over 700,000 at June 30, 1992.
 LeRoy T. Carlson Jr., president and CEO, commented, "Our excellent progress during the second quarter and first half reflects rapid growth in cellular and paging customers and operations and solid growth in telephone operations. We are very pleased with the excellent growth in customers served, revenues and cash flow." Second Quarter Results
 Consolidated financial results for the second quarter of 1992 reflect primarily the effects of rapid growth in customers, continued expansion of cellular systems and close control of costs. Consolidated operating revenues increased 28.7 percent to $111.0 million in 1992, primarily reflecting rapid growth in cellular customers served. Operating income increased 35.4 percent to $15.3 million, due mainly to a $2.0 million decrease in the cellular operating loss and a $1.6 million increase in telephone operating income. The $10.1 million increase in consolidated operating cash flow reflects improvements in cellular and telephone operations. Interest expense increased 11.7 percent due to the 1991 issuance of TDS's Medium-Term Notes and increased cellular vendor financing. Income tax expense increased 49.9 percent due to the growth in pretax income and a higher effective income tax rate. Overall, excluding nonrecurring items (which were insignificant), net income available to common grew 17.9 percent in the second quarter of 1992 over 1991, while earnings per share remained flat at 17 cents due to a 22.1 percent increase in weighted average common shares outstanding.
 SECOND QUARTER 1992 COMPARED TO SECOND QUARTER 1991
 $ Millions TDS Telecom US Cellular American Paging
 (pct.) (pct.) (pct.)
 Customers 22,000 Up 7.6 45,700 Up 60.5 39,800 Up 17.5
 Operating
 Revenues $5.8 Up 11.1 $16.7 Up 69.7 $2.3 Up 21.3
 Operating
 Income $1.6 Up 10.3 $2.0 Up 73.5 $.4 Up 22.4
 Operating
 Cash Flow $3.9 Up 15.1 $5.5 Up N/M $.7 Up 93.9
 Consolidated
 Customers 107,500 Up 18.1 percent
 Operating Revenue $24.8 Up 28.7 percent
 Operating Income $ 4.0 Up 35.4 percent
 Operating Cash Flow $10.1 Up 36.8 percent
 Interest Expense $ .8 Up 11.7 percent
 Income Taxes $ 1.8 Up 49.9 percent
 Net Income Available
 to Common $ 1.0 Up 17.9 percent


First Half Results
 Rapid growth in customers served since June 30, 1991, had fueled revenue growth in all three of TDS's primary business units. A nonrecurring directory revenue settlement added $1.8 million to TDS Telecom's first quarter 1992 revenues. Substantial increases in U.S. Cellular's operating income and cash flow reflect its strong customer growth and roaming revenue. Additionally, cellular operating income reflects a change to amortizing license costs over 40 years, up from 20 in 1991, to conform to industry practices. American Paging's operating loss declined and cash flow increased. Interest expense and income taxes increased significantly in the first half of 1992 over 1991. Sales of $100 million of medium-term notes during 1991 and additional long-term debt under United States Cellular Corp.'s (AMEX: USM) vendor financing arrangement increased interest costs during the first half of 1992. Offsetting this increase was a reduction in short-term debt from the proceeds of TDS's March 1992 public offering of 2,000,000 common shares. The effective income tax rate increased to 43 percent for the first half of 1992 from 38 percent for the same period in 1991. The 1991 effective tax rate was decreased by the portion or share of cellular losses allocated to USM's minority shareholders. This item increases pretax accounting income, but is not included in TDS's consolidated federal income tax return. This difference between pretax accounting income and taxable income is expected to be less significant in 1992, with the result being a higher effective tax rate this year.
 Net income was increased substantially by a net gain (after income taxes) of $6.9 million from the exchange of interest in four cellular markets (majority interests in two Rural Service Areas, RSAs, and minority interests in two Metropolitan Statistical Areas, or MSAs) and the sale of a minority interest in another MSA. As a result of these first quarter 1992 gains, USM reported $14.9 million of additional income for the first half of 1992. TDS included the gain but also recorded $2.7 million of this amount as USM's minority shareholders interest in such income. Net income and earnings per share for 1991 were reduced by a change in accounting principle at USM. The company changed its method of accounting for sales commissions from capitalizing and amortizing them over 36 months to expensing them in the period incurred. Overall, excluding significant nonrecurring items, net income available to common and earnings per share were approximately $11.5 million and 30 cents for the first half of 1992 as compared to $11.0 million and 35 cents for the first half of 1991.
 NET INCOME AVAILABLE TO COMMON
 SIX MONTHS 1992 COMPARED TO SIX MONTHS 1991
 (Dollars in millions, except earnings per share amount)
 1992 1991
 As Reported $ 19.4 $ 6.1
 Nonrecurring Items
 (estimated net of tax):
 Cumulative effect of
 accounting change --- 5.0
 Gain on sales or
 exchanges of cellular
 interest
 (net of USM minority
 share) (6.9) (0.1)
 TDS Telecom directory
 revenue settlement (1.0) ---
 Excluding Nonrecurring
 Items $ 11.5 $ 11.0
 Earnings Per Share,
 excluding Nonrecurring
 Items $ .30 $ .35


TDS Telecommunications Corporation
 TDS Telecom added four telephone companies serving 10,200 access lines since June 30, 1991. Internal growth has added 11,800 additional access lines in the past 12 months. TDS Telecom currently operates 87 telephones companies serving 312,600 access lines in 28 states. With the completion of four pending acquisitions, TDS Telecom will serve nearly 318,000 access lines in 29 states.
 Operating revenues for the first half continued to grow steadily, increasing 14.2 percent to $115.4 million in 1992 from $101.1 million in 1991. TDS Telecom's revenues now comprise 54.6 percent of consolidated TDS revenues. Telephone operating income increased 16.5 percent to $36.2 million from $31.0 million in 1991. Operating cash flow increased 17.8 percent $60.8 million from $51.6 million in 1991. The four companies acquired contributed $6.2 million (6.1 percent) to operating revenues, $1.3 million (4.2 percent) to operating income and $3.2 million (6.3 percent) to operating cash flow.
 In July 1992, the Federal Communications Commission (FCC) approved a plan that allows a greater role for telephone companies to deliver video programming to telephone subscribers' residences. Carlson commented, "We anticipate being able to work more closely with video packagers or existing cable television companies in our service areas, improving the quality and price of cable television offerings and providing TDS Telecom with new future revenue opportunities. The FCC plan is part of an encouraging trend which should foster the development of a modern broadband network, especially in rural and smaller communities such as those served by TDS Telecom's telephone companies." United States Cellular Corporation
 TDS's 82.2 percent-owned subsidiary, owns or has the right to acquire interests in cellular telephone systems in 75 MSAs and 104 RSAs at June 30, 1992, representing 18.1 million population equivalents. Additionally, TDS anticipates acquiring another 1.1 million population equivalents pursuant to acquisition agreements that were in various stages of completion at June 30, 1992. USM added six RSA systems to its consolidated operations during the second quarter of 1992. USM increased its customer base in majority-owned systems 60.5 percent to 121,200 at June 30, 1992, for 75,500 at June 30, 1991. The accompanying table illustrates the rapid growth in several of the more significant measures of USM's operations.
 Second Qtr. Second Qtr.
 1992 1991
 Population Equivalents-(millions)
 USM 18.1 16.1
 TDS's Proportionate Share 13.1 12.0
 Consolidated Markets-In Service
 In Service 84 43
 Cell Sites in Service 251 128
 Telephones in Service 121,200 75,500
 Total Managed Markets-In Service
 In Service 107 63
 Telephones in Service 142,600 89,400
 USM's revenues for the first half of 1992 grew 72.3 percent to $71.5 million from $41.5 million in 1991. The increase is primarily due to USM's 60.5 percent growth in consolidated subscribers, increased roaming revenues and the effects of acquisitions and start-ups in new RSAs. Cellular revenues now comprise 33.8 percent of total TDS revenues. Cellular operating loss improved to $3.4 million from $6.4 million in 1991, primarily reflecting improvement in USM's more established systems and a change in the amortization period for license costs from 20 to 40 years. Operating cash flow totalled $9.9 million for the first half of 1992 compared to $206,000 in the first half of 1991. Equipment sales losses were flat at $2.6 million in 1992 and 1991. USM continued its program of discounting prices on cellular telephones sold, which aims to increase subscribers and service revenues.
 American Paging, Inc. (API) served 267,500 pagers through 25 systems at June 30, 1992, an increase of 17.5 percent in pagers served since June 30, 1991. Paging revenues increased 19.0 percent to $24.7 million in the first half of 1992 from $20.7 million in 1991. API's financial results reflect rapid growth in units served, offset somewhat by a 1.5 percent decrease in average revenue per pager. Paging revenues now comprise 11.6 percent of TDS's total revenues. API's operating loss improved 16.1 percent to $2.9 million from $3.4 million in 1991. Operating cash flow increased 123 percent to $2.3 million from $1.0 million in 1991.
 American Paging is rapidly improving the quality of the messaging services it offers its customers while at the same time driving down its operating costs. As a result, API has lowered its disconnect rate and significantly reduced its cost of sales. API's management team is focused on improving the quality, the productivity and profitability of all of its messaging activities.
 Acquisitions
 In recent years, TDS has acquired cellular licenses and telephone operations that have substantially enhanced its long-term growth opportunities and has greatly strengthened its financial position by issuing equity securities to finance most of these acquisitions. Consistent with this program, TDS is today filing a "shelf" registration statement covering 3,000,000 additional common shares for issuance in connection with acquisitions. Carlson remarked, "The addition of 3,000,000 shares to our current shelf registration statement will allow TDS to continue its acquisition program and thereby continue creating additional value for our shareholders." At June 30, 1992, TDS had a total of 39.6 million issued and outstanding common and Series A common shares. At that date, TDS also had reserved approximately 3.0 million common shares in connection with definitive and pending acquisitions, chiefly 1.7 million populations equivalents. The accompanying table sets forth the status of TDS's common shares outstanding, shares committed for acquisitions and shard available for further acquisition.
 TELEPHONE AND DATA SYSTEMS INC.
 Common And Series A Common Shares
 (Thousands)
 Shares outstanding June 30, 1992 39,584
 Shares reserved for
 pending acquisitions:
 Under Definitive Agreements 1,490
 Pending Offers and Understandings 1,500
 Total shares outstanding and committed 42,584
 Shares available under existing
 shelf registration statement 550
 Shares to be registered under
 new shelf registration statement 3,000
 TDS is a Chicago-based telecommunications company with established local telephone operations and developing cellular telephone and radio paging operations. TDS strives to build value for its shareholders by providing excellent communications services in attractive, closely related segments of the telecommunications industry.
 TELEPHONE AND DATA SYSTEMS INC.
 Financial Highlights
 (Dollars in thousands, except per share amounts - Unaudited)
 Increase (Decrease)
 Three months ended June 30 1992 1991 Amount Pct.
 Operating Revenues
 TDS Telecom $57,384 $51,629 5,755 11.1
 USM 40,736 24,002(A) 16,734 69.7
 API 12,881 10,619 2,262 21.3
 Total 111,001 86,250 24,751 28.7
 Operating Expenses
 TDS Telecom $40,093 $35,957 4,136 11.5
 USM 41,467 26,760(A) 14,707 55.0
 API 14,126 12,224 1,902 15.6
 Total 95,686 74,941 20,745 27.7
 Operating Income
 TDS Telecom $17,291 $15,672 1,619 10.3
 USM (731) (2,758) 2,027 73.5
 API (1,245) (1,605) 360 22.4
 Total 15,315 11,309 4,006 35.4
 Investment and Other Income
 Interest and Dividend
 Income 2,313 1,669 644 38.6
 Minority Share of
 Cellular (Income) Losses (192) 750 (942) (125.5)
 Cellular Investment
 Income, Net 2,568 1,294 1,274 98.6
 Other Income, Net 573 1,626 (1,053) (64.8)
 Total 5,262 5,339 (77) (1.4)
 Interest Expense 7,970 7,133 837 11.7
 Income Tax Expense 5,421 3,616 1,805 49.9
 Net Income 7,186 5,899 1,287 21.8
 Preferred Dividend
 Requirement (560) (280) 280 100.1
 Net Income Available to Common 6,626 5,619 1,007 17.9
 Weighted Average
 Common Shares (000s) 39,479 32,336 7,143 22.1
 Earnings Per
 Common Share $ .17 $ .17 $ -- --
 Operating Cash Flow
 (Operating Income
 Plus Depreciation
 and Amortization)
 TDS Telecom $29,827 $25,917 3,910 15.1
 USM 6,407 869 5,538 N/M
 API 1,374 709 665 93.9
 Total $37,608 $27,495 $10,113 36.8
 Customer Units Served At June 30 3 Months Additions
 1992 1991 1992 1991
 TDS Telecom 312,600 290,600 4,400 9,400
 USM 121,200 75,500 12,600 12,000
 API 267,500 227,700 19,400 10,400
 (A) -- Certain 1991 amounts have been restated to conform to current year presentation.
 TELEPHONE AND DATA SYSTEMS INC.
 Financial Highlights
 (Dollars in thousands, except per share amounts - Unaudited)
 Increase (Decrease)
 Six months ended June 30, 1992 1991 Amount Pct.
 Operating Revenues
 TDS Telecom $115,446 $101,104 $ 14,342 14.2
 USM 71,492 41,494(A) 29,998 72.3
 API 24,657 20,721 3,936 19.0
 Total 211,595 163,319 48,276 29.6
 Operating Expenses
 TDS Telecom 79,267 70,062 9,205 13.1
 USM 74,903 47,898(A) 27,005 56.4
 API 27,530 24,147 3,383 14.0
 Total 181,700 142,107 39,593 27.9
 Operating Income
 TDS Telecom 36,179 31,042 5,137 16.5
 USM (3,411) (6,404) 2,993 46.7
 API (2,873) (3,426) 553 16.1
 Total 29,895 21,212 8,683 40.9
 Investment and Other Income
 Interest and Dividend
 Income 3,864 4,159 (295) (7.1)
 Minority Share of
 Cellular (Income) Losses (2,573) 1,533 (4,106) (267.8)
 Cellular Investment
 Income, Net 4,199 2,364 1,835 77.7
 Gain on Sale of Investments 14,875 246 14,629 N/M
 Other Income, Net 1,815 2,882 (1,067) (37.0)
 Total 22,180 11,184 10,996 98.3
 Interest Expense 16,042 13,536 2,508 18.5
 Income Tax Expense 15,494 7,167 8,327 116.2
 Net Income
 Before Cumulative Effect
 of Accounting Change 20,539 11,693 8,846 75.7
 Cumulative Effect of
 Accounting Change --- (5,035) 5,035 N/M
 Net Income 20,539 6,658 13,881 208.5
 Preferred Dividend
 Requirement (1,119) (515) 604 117.0
 Net Income Available
 to Common $ 19,420 $ 6,143 $13,277 216.1
 Weighted Average
 Common Shares (000s) 37,810 31,789 6,021 18.9
 Earnings Per Common Share
 Before Cumulative Effect
 of Accounting Change $ .51 $ .35 $ .16 45.7
 Cumulative Effect of
 Accounting Change --- (.16) .16 N/M
 Net Income $ .51 $ .19 $ .32 168.4
 Operating Cash Flow
 (Operating Income
 Plus Depreciation
 and Amortization)
 TDS Telecom $60,767 $51,575 $ 9,192 17.8
 USM 9,903 206 9,697 N/M
 API 2,311 1,034 1,277 123.4
 $72,981 $52,815 $20,166 38.2
 Customer Units Served At June 30 3 Months Additions
 1992 1991 1992 1991
 TDS Telecom 312,600 290,600 8,600 11,900
 USM 121,200 75,500 24,200 18,200
 API 267,500 227,700 30,700 26,500
 (A) -- Certain 1991 amounts have been restated to conform to current year presentation.
 -0- 7/5/92
 /CONTACT: Murray L. Swanson, executive vice president-finance of Telephone and Data Systems, 312-630-1900/
 (TDS USM) CO: Telephone and Data Systems Inc. ST: Illinois IN: TLS SU: ERN


TM-SM -- NY084 -- 7298 08/05/92 17:20 EDT
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