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TELEPHONE AND DATA SYSTEMS, INC. REPORTS THIRD QUARTER AND NINE MONTHS INCREASES IN CUSTOMERS, REVENUES, EARNINGS AND CASH FLOWS

 TELEPHONE AND DATA SYSTEMS, INC. REPORTS THIRD QUARTER AND NINE
 MONTHS INCREASES IN CUSTOMERS, REVENUES, EARNINGS AND CASH FLOWS
 CHICAGO, Nov. 10 /PRNewswire/ -- Telephone and Data Systems, Inc. (AMEX: TDS) reported increases in customers served, revenues, operating income, operating cash flow, and net income for the third quarter and nine months ended Sept. 30, 1992. Growth in both customers served and calling volumes boosted telephone operations, while rapid growth in customers served moved cellular and paging operations closer to long- term profitability. Cash flow from operations improved significantly in all three business units. Since the third quarter of 1991, TDS has added 21,500 telephone, 49,300 cellular and 56,200 paging customers, increasing consolidated customers served 20.7 percent to over 740,000 at Sept. 30, 1992.
 LeRoy T. Carlson Jr., president and CEO, commented, "TDS's accomplishments through the first nine months of the year confirm the success of our commitment to providing high-quality, high-value telecommunications systems and services to an increasingly sophisticated body of customers. The strong customer, revenue and operating cash flow growth at all three business units reflects our attention to identifying and meeting our customers' requirements."
 Third Quarter Results
 Rapid growth in customers served propelled consolidated revenues to new levels. Close control of costs also contributed to improved operating and cash flow margins. Consolidated operating revenues increased 28.1 percent to $118.4 million in 1992, primarily reflecting the continued expansion of the cellular business.
 Operating income increased 25.6 percent to $14.3 million, primarily on the strength of excellent growth in telephone revenues. Unusually rapid growth in cellular telephones served during September resulted in higher third quarter marketing costs that temporarily slowed growth in cellular operating income. The $7.1 million increase in consolidated operating cash flow reflects improvements in all three business units' operations. The improvements in operating margins reflect both growth in revenues and ongoing cost reduction programs. Interest expense increased 5.0 percent relative to the third quarter 1991 due to an increase in long-term debt under TDS's Medium-Term Note Program and increased cellular vendor financing. Income tax expense increased 10.0 percent due to the growth in pretax income. Overall, net income available to common grew 8.1 percent in the third quarter of 1992 over 1991, while earnings per share decreased slightly to $.16, reflecting the impact of a 16.2 percent increase in weighted average common shares outstanding.
 TELEPHONE AND DATA SYSTEMS, INC.
 THIRD QUARTER 1992 COMPARED TO THIRD QUARTER 1991
 ($ millions)
 TDS Pct. U.S. Pct American Pct. Consoli- Pct.
 Telecom Incr. Cellular Incr. Paging Inc. idated Incr.
 Customers 21,500 7.3 49,300 57.9 56,200 24.0 127,000 20.7
 Operating
 revenues $5.9 10.9 $17.3 63.5 $2.8 24.9 $26.0 28.1
 Operating
 income $1.9 11.3 $ 0.2 8.5 $0.8 34.1 $ 2.9 25.6
 Operating
 cash flow $3.2 11.3 $ 2.7 110.0 $1.1 N/M $ 7.1 23.0
 Operating
 margin (as
 a percent) 30.9 0.1 (6.0) 4.8 (11.0) 9.8 12.1 0.2
 Interest expense $0.4 5.0
 Income taxes $0.5 10.0
 Net income available to common $0.5 8.1
 Nine Months' Results
 Rapid growth in customers served since Sept. 30, 1991, has fueled revenue growth in all three of TDS's primary business units. Acquisitions, internal growth and TDS Telecom's customer-focused marketing activities and improved service offerings have contributed to a 29.0 percent increase in consolidated revenues. U.S. Cellular's and American Paging's progress toward profitability reflects vigorous marketing of steadily improving service offerings, economies of scale in their operations and close attention to customer retention and cost control. Rapid growth in roaming revenue is also moving U.S. Cellular closer to profitability. Consolidated operating income margin improved to 13.4 percent in 1992 compared to 12.8 percent in 1991. A nonrecurring directory revenue settlement recorded during the first quarter added $1.8 million to TDS Telecom's 1992 revenues. Additionally, cullar operating income reflects a change to amortizing license costs over 40 years, up from 20 in 1991, to conform to industry practices.
 Growth in net income was held down by increases in interest expense and income taxes. Interest costs increased due to sales of $100 million of Medium-Term Notes during 1991 and additional long-term debt under United States Cellular Corporation's (AMEX: USM) vendor financing arrangement. Offsetting this increase was a reduction in short-term debt from the proceeds of TDS's March 1992 public offering of 2 million Common Shares. Income taxes were up due to both a higher effective tax rate and higher taxable income. The effective income tax rate was 43 percent for the nine months ended Sept. 30, 1992, compared to 40 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 and minority shareholders' interest in the gain) of $6.7 million from the exchange of interests in four cellular markets (majority interests in two Rural Service Areas, or RSAs, and minority interests in two Metropolitan Statistical Areas, or MSAs), and the sale of a minority interest in another MSA. As a reuslt of these first quarter 1992 gains, USM reported $14.3 million of additional income for the nine months ended Sept. 30, 1992. TDS included the gain but also recorded $2.6 million of this amount as USM's minority shareholders interest in such income. A change in accounting principle reduced USM's 1991 net income and earnings per share. USM changed its method of accounting for sales commissions from capitalizing and amortizing them over 36 months to expensing them in the period incurred. Overall, net income available to common rose 115 percent to $25.7 million and earnings per share before the cumulative effect of a change in accounting principle increased 28.8 percent to $.67. Excluding significant nonrecurring items, net income available to common and earnings per share were approximately $18.0 million and $.47 for the nine months ended Sept. 30, 1992, as compared to $15.4 million and $.47 for the nine months ended Sept. 30, 1991.
 TDS Telecommunications Corp.
 (TDS Telecom) has added four telephone companies serving 8,100 access lines through acquisitions and 13,400 access lines through internal growth since Sept. 30, 1991. TDS Telecom currently operates 88 telephone companies serving 316,900 access lines in 28 states. With the completion of four pending acquisitions, TDS Telecom will serve over 335,000 access lines in 29 states.
 Operating revenues for the nine months ended Sept. 30, 1992, continued to grow steadily, increasing 13.0 percent to $175.4 million in 1992 from $155.2 million in 1991. TDS Telecom's revenues now comprise 53.2 percent of consolidated TDS revenues. Telephone operating income increased 14.7 percent to $54.7 million from $47.7 million in 1991. Operating cash flow increased 15.5 percent to $92.3 million from $79.9 million in 1991. TDS Telecom's operating income margin has remained steady despite competitive and regulatory pressures. The four companies acquired contributed $8.1 million (5.2 percent) to operating revenues, $1.4 million (2.9 percent) to operating income and $3.8 million (4.7 percent) to operating cash flow.
 Net Income Available to Common
 Nine Months '92 Compared To Nine Months '91
 (Dollars in millions, except earnings per share amounts)
 1992 1991
 As reported $25.7 $11.9
 Nonrecurring items (estimated net of tax)
 Cumulative effect of accounting change 5.0
 Gain on sales or exchanges of cellular
 interests (net of USM minority share) (6.7) (1.5)
 TDS Telecom directory revenue settlement (1.0)
 Excluding nonrecurring items $18.0 $15.4
 Earnings per share, excluding non-
 recurring items $.47 $.47
 United States Cellular Corp., TDS's 82.2-percent-owned subsidiary, has acquired 2.7 million population equivalents and gained 49,300 customers since Sept. 30, 1991. USM added three RSA systems to its consolidated operations during the third quarter of 1992. USM increased its customer base in majority-owned systems 57.9 percent to 134,500 at Sept. 30, 1992, from 85,200 at Sept. 30, 1991. At the end of the third quarter of 1992, USM owned or had the right to acquire interests in cellular telephone systems in 74 MSAs and 114 RSAs representing 19.8 million population equivalents. The accompanying table illustrates the rapid growth in several of the more significant measures of USM's operations.
 Sept. 30 1992 1991
 Population Equivalents (millions)
 USM 19.8 17.1
 TDS's Proportionate Share 14.6 12.3
 Consolidated Markets--
 In service 87 50
 Cell sites in service 291 145
 Telephones in service 134,500 85,200
 Total Managed Markets--
 In service 112 73
 Telephones in service 159,800 101,600
 USM's revenues for the nine months ended Sept. 30, 1992, grew 68.8 percent to $116.0 million from $68.7 million in 1991. The increase is primarily due to USM's 57.9 percent growth in consolidated customers, consistently strong roaming revenues and the effects of acquisitions and start-ups in new RSAs. Cellular revenues now comprise 35.2 percent of total TDS revenues. Cellular operating loss improved to $6.1 million from $9.3 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 margin improved from a negative 13.6 percent to a negative 5.3 percent. Operating cash flow totaled $15.1 million for the nine months ended Sept. 30, 1992, compared to $2.7 million in the nine months ended Sept. 30, 1991. Equipment sales losses increased 19.2 percent to $4.8 million in 1992 from $4.0 million in 1991. USM continued its program of discounting prices on cellular telephones sold, which aims to increase subscribers and service revenues.
 American Paging Inc. (API)
 API has increased its customer base by 56,200 (24.9 percent) since Sept. 30, 1991. API served 290,300 pagers through 25 systems at Sept. 30, 1992. Paging revenues increased 21.1 percent to $38.5 million in the nine months ended Sept. 30, 1992, from $31.8 million in 1991. API's financial results reflect rapid growth in units served, offset somewhat by a 1.9 percent decrease in average revenue per pager. Operating income margin improved greatly from a negative 18.0 percent in 1991 to a negative 11.4 percent in 1992. Paging revenues now comprise 11.6 percent of TDS's total revenues. API's operating loss improved 23.4 percent to $4.4 million from $5.7 million in 1991. Operating cash flow increased 235 percent to $3.4 million from $1.0 million in 1991.
 American Paging continues to make progress toward profitability by improving the quality of the messaging services it offers its customers and driving down its operating costs. As a result, API has lowered its disconnect rate and significantly reduced its cost of sales. New product and service developments have also contributed to increasing revenue streams. API's management team is focused on improving the quality, productivity and profitability of all of its messaging activities.
 Acquisitions
 In recent years, TDS has acquired cellular interests 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. At Sept. 30, 1992, TDS had nearly 40.0 million issued and outstanding common and Series A common shares. In addition, TDS had reserved approximately 4.6 million Common Shares in connection with pending acquisitions for 18,600 access lines and 2.5 million population equivalents. About 2.2 million of those shares are scheduled to be issued during 1992, nearly one-half in connection with tax-free exchanges. Approximately $63 million in cash will also be paid in connection with these acquisitions. Subsequent to Sept. 30, 1992, TDS entered into additional agreements to acquire cellular interests representing about 590,000 population equivalents which will require the issuance of an additional 1.0 million TDS common shares. Mr. Carlson remarked, "We are focused on seizing the many opportunities available in the dynamic telecommunications industry. Our acquisition program seeks to create additional shareholder value as we build our business for the future."
 COMMON and
 SERIES A COMMON SHARES
 (Thousands)
 Outstanding Sept. 30, 1992 39,971
 Reserved for pending acquisitions
 under definitive agreements--
 At Sept. 30, 1992 4,620
 After Sept. 30, 1992 1,030
 Total outstanding and committed 46,621
 TDS is a Chicago-based telecommunications company with established local telephone operations and developing cellular telephone and radio paging oeprations. 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
 (Unaudited, dollars in thousands, except per share amounts)
 Three months ended
 Sept. 30 1992 1991 Increase (Decrease)
 Operating revenues Amount Percent
 TDS Telecom $ 59,983 $ 54,080 $ 5,903 10.9
 USM 44,514 27,224(A) 17,290 63.5
 API 13,879 11,109 2,770 24.9
 Total 118,376 92,413 25,963 28.1
 Operating expenses
 TDS Telecom $ 41,460 $ 37,433 $ 4,027 10.8
 USM 47,201 30,160(A) 17,041 56.5
 API 15,402 13,420 1,982 14.8
 Total 104,063 81,013 23,050 28.5
 Operating income
 TDS Telecom $ 18,523 $ 16,647 $ 1,876 11.3
 USM (2,687) (2,936) 249 8.5
 API (1,523) (2,311) 788 34.1
 Total 14,313 11,400 2,913 25.6
 Investment and other income
 Interest and dividend
 income 1,773 1,714 59 3.5
 Minority share of cell-
 ular (income) losses 568 48 520 N/M
 Cellular investment
 income, net 2,583 2,089 494 23.6
 Gain on sale of
 investments (544) 2,851 (3,395) (119.1)
 Other income, net 1,357 339 1,018 298.4
 Total 5,737 7,041 (1,304) (18.5)
 Interest expense 8,086 7,697 389 5.0
 Income tax expense 5,145 4,675 470 10.0
 Net income 6,819 6,069 750 12.4
 Preferred dividend
 requirement (561) (281) (280) 99.9
 Net income available
 to common $ 6,258 $ 5,788 $ 470 8.1
 Weighted average
 common shares(000s) 40,027 34,435 5,592 16.2
 Earnings per
 common share $.16 $.17 $(.01) (5.9)
 Operating cash flow
 (Operating income plus
 depreciation & amortization):
 TDS Telecom $ 31,500 $ 28,291 $ 3,209 11.3
 USM 5,214 2,486 2,728 109.7
 API 1,118 (12) 1,130 N/M
 Total $ 37,832 $ 30,765 $ 7,067 23.0
 Served at Sept. 30 3-month additions
 Customer Units: 1992 1991 1992 1991
 TDS Telecom 316,900 295,400 4,300 4,800
 USM 134,500 85,200 13,300 9,700
 API 290,300 234,100 22,800 6,400
 (A) -- Certain 1991 amounts have been restated to conform to current year presentation.
 TELEPHONE AND DATA SYSTEMS, INC.
 Financial Highlights
 (Unaudited, Dollars in thousands, except per share amounts)
 Nine months ended
 Sept. 30 1992 1991 Increase (Decrease)
 Operating revenues Amount Percent
 TDS Telecom $175,429 $155,184 $20,245 13.0
 USM 116,006 68,718(A) 47,288 68.8
 API 38,536 31,830 6,706 21.1
 Total 329,971 255,732 74,239 29.0
 Operating expenses
 TDS Telecom 120,727 107,495 13,232 12.3
 USM 122,104 78,058/a/ 44,046 56.4
 API 42,932 37,567 5,365 14.3
 Total 285,763 223,120 62,643 28.1
 Operating income
 TDS Telecom 54,702 47,689 7,013 14.7
 USM (6,098) (9,340) 3,242 34.7
 API (4,396) (5,737) 1,341 23.4
 Total 44,208 32,612 11,596 35.6
 Investment and other income
 Interest and dividend
 income 5,637 5,873 (236) (4.0)
 Minority share of cell-
 ular (income) losses(2,005) 1,581 (3,586) (226.8)
 Cellular investment
 income, net 6,782 4,453 2,329 52.3
 Gain on sale of
 investments 14,331 3,097 11,234 362.7
 Other income, net 3,172 3,221 (49) (1.5)
 Total 27,917 18,225 9,692 53.2
 Interest expense 24,128 21,233 2,895 13.6
 Income tax expense 20,639 11,842 8,797 74.3
 Net income before
 cumulative effect of
 accounting change 27,358 17,762 9,596 54.0
 Cumulative effect of
 accounting change -- (5,035) 5,035 N/M
 Net income 27,358 12,727 14,631 115.0
 Preferred dividend
 requirement (1,677) (796) (881) 110.6
 Net income available
 to common $25,681 $11,931 $13,750 115.2
 Weighted average
 common shares (000s) 38,553 32,671 5,882 18.0
 Earnings per common share
 Before cumulative effect
 of accounting change $.67 $.52 $ .15 28.8
 Cumulative effect of
 accounting change -- (.15) .15 N/M
 Net income $.67 $.37 $ .30 81.1
 Operating cash flow
 (Operating income plus
 depreciation & amortization):
 TDS Telecom $ 92,267 $ 79,866 $12,401 15.5
 USM 15,117 2,692 12,425 461.7
 API 3,429 1,023 2,406 235.2
 Total $110,813 $ 83,581 $27,232 32.6
 Served at Sept. 30 9-month additions
 CUSTOMER UNITS: 1992 1991 1992 1991
 TDS Telecom 316,900 295,400 12,900 16,700
 USM 134,500 85,200 37,500 27,900
 API 290,300 234,100 53,500 32,900
 (A) -- Certain 1991 amounts have been restated to conform to current year presentation.
 -0- 11/10/92
 /CONTACT: Murray Swanson, executive vice president-finance of Telephone and Data Systems, Inc., 312-630-1900/
 (TDS) CO: Telephone and Data Systems, Inc. ST: Illinois IN: TLS SU: ERN


TS -- NY078 -- 9358 11/10/92 14:40 EST
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