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TELEPHONE AND DATA SYSTEMS REPORTS YEAR-END AND FOURTH QUARTER RESULTS

TELEPHONE AND DATA SYSTEMS REPORTS YEAR-END AND FOURTH QUARTER RESULTS
 CHICAGO, Feb. 24 /PRNewswire/ -- Telephone and Data Systems, Inc. (AMEX: TDS) reported excellent growth in customers and operating revenues for the fourth quarter and year ended Dec. 31, 1991. Consolidated revenues for the full year 1991 climbed 20.4 percent to $354.0 million fueled by an 18.7 percent increase in customers served. As anticipated, sharply higher cellular development costs reduced operating income 14.1 percent to $40.5 million, net income before the cumulative effect of a change in accounting principle 22.4 percent to $21.1 million and earnings per share before the cumulative effect of a change in accounting principle 31.4 percent to $.59. Cash flow from operations grew 13.4 percent to $112.2 million from $98.9 million in 1990 (1990 stated on a basis consistent with 1991). Cellular telephones served by cellular systems in majority-owned and managed ("consolidated") markets soared 69.3 percent to 97,000 at the end of 1991, telephone access lines served increased a robust 9.1 percent to 304,000 and pagers in service climbed 17.7 percent to 236,800 compared to year-end 1990.
 TDS has very rapidly expanded its cellular operations during 1990 and 1991 as shown in the table below.
 TELEPHONE AND DATA SYSTEMS, INC.
 (dollars in millions)
 1990 1991
 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
 POPULATION
 EQUIVALENTS
 (MILLIONS)
 USM 9.1 9.1 9.6 14.2 15.2 16.2 17.3 18.0
 TDS proportionate
 share 10.8 13.1
 License Acquisition
 costs, net $73.6 $83.3 $99.2 $141.1 $176.3 $306.2 $356.1 $386.5
 CONSOLIDATED MARKETS
 In service 26 26 28 32 33 43 50 67
 Cell sites
 in service 80 86 89 107 113 121 145 186
 Cellular plant
 in service,
 net $33.4 $35.0 $37.3 $44.3 $51.8 $71.2 $83.4 $109.3
 Cellulate tele-
 phones in
 service 39,100 43,800 48,700 57,300 63,500 75,500 85,200 97,000
 TOTAL MANAGED MARKETS
 In service 34 34 36 44 51 63 73 91
 Cellular tele-
 phones in
 service 48,500 54,500 60,800 71,200 79,200 89,400 101,600 115,000
 Short- and
 long-term
 debt $283.3 $305.8 $317.5 $340.6 $368.1 $370.7 $401.7 $437.2
 Common and
 Series A
 common shares
 outstanding
 (millions) 29.6 29.7 29.9 30.3 30.6 32.8 33.8 35.0
 CONSOLIDATED FINANCIAL RESULTS
 Fourth quarter 1991 results reflect primarily the effects of rapid growth in customers served and significant cellular start-up activities. Consolidated operating revenues grew 22.5 percent to $98.3 million in 1991 from $80.3 million in 1990. Operating income declined 34.8 percent to $7.9 million from $12.1 million in the fourth quarter of 1990 due to cellular market development costs and higher license cost amortization. Interest expense increased 27.5 percent to $7.8 million from $6.1 million in the same period in 1990 due to the issuance of $97 million of additional debt during 1991, net of repayments, to finance cellular development activities. Net income available to common declined 70.7 percent to $2.5 million from $8.4 million in 1990. Operating results, coupled with a 13.4 percent increase in the number of weighted average common shares outstanding due to the issuance of 4.4 million common shares in connection with acquisitions, reduced earnings per common share to $.07 in 1991 from $.27 in 1990. Cash flow from operations grew 11.0 percent to $28.6 million from $25.8 million in 1990.
 Commenting on fourth quarter financial results, LeRoy T. Carlson Jr., president and chief executive officer, said "Sales and marketing expense related to substantial growth in cellular customers and the consolidation of additional cellular markets into USM's financial statements were significant contributors to reduced operating and net income. We anticipate that the growth in customers and markets served should help establish a foundation for future growth in cash flow and earnings."
 Full year 1991 results also reflect the impact of excellent customer growth in all three major businesses and sharply higher cellular development costs, including license amortization and interest expense. Revenues climbed 20.4 percent to $354.0 million from $294.1 million in 1990. Operating income decreased 14.1 percent to $40.5 million from $47.1 million in 1990. Telephone operating income increased 4.0 percent while the cellular and paging operating losses increased 84.1 percent and 23.0 percent respectively. Operating results, combined with sharply higher interest expense resulting from increased borrowings are the primary reasons net income before the cumulative effect of a change in accounting principle decreased 22.4 percent to $21.1 million from $27.2 million in 1990. Earnings per common share before the cumulative effect of the change in accounting principle were $.59 in 1991 compared to $.86 in 1990. Cash flows from operations grew 13.4 percent to $112.2 million from $98.9 million in 1990.
 Net income and earnings per share for 1991 were reduced by a change in accounting principle at United States Cellular Corp. The company changed its method of accounting for sales commissions from capitalizing and amortizing over 36 months to expensing in the period incurred. Also, two partnerships which USM accounts for as equity investments made a similar change. The $5.0 million charge to net income and the $.15 reduction in earnings per share reflect the effects of the change on years prior to 1991. Operating results for the year and fourth quarter of 1991 reflect the new accounting principle.
 Reflecting on the company's performance, Carlson observed "TDS's three major business units all experienced substantial growth in 1991, especially our cellular business. Current earnings reflect both rapid customer and revenue growth and the costs of developing the cellular markets TDS and USM have acquired during 1990 and 1991. We anticipate continued downward pressure on earnings for the next few quarters as additional cellular markets are brought into operation and consolidated in our financial statements. We remain committed to a long-term strategy of conservatively financed growth which has been exceptionally successful. Our company is better positioned today than ever before to compete and win in all of our telecommunications businesses."
 TDS Telecommunications Corp. (TDS Telecom) acquired seven new telephone companies with 15,800 access lines in 1991 including its first acquisition in the state of Colorado. At year-end, TDS Telecom served 304,000 access lines in 28 states. Carlson cited the benefits many independent telephone company owners realize in joining TDS Telecom by remarking, "Our active and visible commitment to rural telecommunications provides us with an advantage in acquiring new companies. Our strategy of providing the highest-quality telephone service is another key reason telephone company owners choose to affiliate with TDS."
 Telephone operating revenues, which comprised 59.7 percent of total revenues at year-end, increased 8.8 percent to $211.2 million from $194.1 million in 1990. The increase in revenues was primarily due to acquisitions, increased usage of the network, changes in cost separations rules, and internal access line growth. Telephone operating income rose 4.0 percent to $65.2 million from $62.7 million last year, while the operating margin declined to 30.9 percent from 32.3 percent in 1990. Telephone operations generated cash flows of $108.7 million, up 7.6 percent from 1990.
 United States Cellular Corp. initiated service in 32 new majority- owned Rural Service Areas (RSAs) in 1991 and gained controlling interests in three additional Metropolitan Statistical Areas (MSAs). USM and TDS own or have the right to acquire interests in 73 MSAs and 104 RSAs representing 18.0 million population equivalents.
 USM's revenues soared 59.3 percent to $99.5 million from $62.5 million in 1990 reflecting the 69.3 percent growth in customers served in majority-owned markets. USM revenues provided 28.1 percent of total TDS revenues during 1991. Service revenues increased 67.4 percent to $92.0 million, while equipment sales revenues remained level. Service operating loss increased 73.8 percent to $10.8 million in 1991 from $6.2 million in 1990. Operating results reflect USM's rapid expansion into new markets, offset somewhat by the progress of its more mature MSA systems toward profitability. Loss from equipment sales was $6.1 million in 1991, an increase of $3.1 million over 1990 due to extensive discounting of equipment sold. Cellular operating cash flows were a positive $2.4 million for 1991 compared to a 1990 operating cash requirement of $3.9 million (stated on a basis consistent with 1991).
 TDS and USM have financed the cellular acquisition program primarily through the issuance of TDS and USM common stock. TDS is currently providing USM with debt financing and USM has arranged intermediate-term financing with a major vendor. The table below summarizes population equivalents owned or acquirable at Dec. 31, 1991, and TDS common shares issuable in connection with acquisitions, including telephone acquisitions.
 USM'S POPULATION EQUIVALENTS MSA RSA TOTAL
 AT DEC. 31, 1991--
 Owned 7,295,000 7,307,000 14,602,000
 Acquirable 833,000 2,519,000 3,352,000
 8,128,000 9,826,000 17,954,000
 COMMON AND SERIES A COMMON OUTSTANDING ISSUABLE(A) TOTAL
 SHARES DEC. 31, 1991 34,963,906 58,812 35,022,718
 Carlson commented, "Our recent development efforts have been focused on acquiring and clustering our cellular markets. Operationally we are focused on rapidly growing our customer base and better understanding and more effectively and efficiently meeting our customers' requirements for high-quality service. We look forward to additional customer and revenue growth during 1992."
 American Paging Inc. (API) served 236,800 pagers through 25 systems at Dec. 31, 1991, an increase of 17.7 percent since year-end 1990. Paging revenues, 12.2 percent of TDS' total revenues, increased 15.5 percent to $43.3 million from $37.5 million in 1990. The paging operating loss for 1991 increased 23.0 percent to $7.9 million, compared to $6.4 million in 1990. API's financial results reflect rapid growth in units served, offset by a 7.3 percent decrease in average revenue per pager. API made progress in 1991 towards becoming a quality-oriented, customer-focused, highly efficient paging company. Key 1991 activities include the strategic exchange of customers to enhance competitiveness in API's Florida systems, the improvement of paging system signal quality and coverage, and recently, the start-up of a satellite- controlled statewide paging system in Florida. Carlson said that "American Paging has prepared for continued increases in customer and revenue growth as we move towards profitable operations."
 TDS is a Chicago-based telecommunications company with established local telephone operations and developing cellular telephone and radio paging operations. TDS builds value for its shareholders by providing excellent telecommunications services in attractive, closely related segments of the telecommunications industry.
 (A) At Dec. 31, 1991, TDS had commitments to issue 58,812 common shares in connection with completed acquisitions. At that date, the company also had commitments to issue approximately 2.4 million common shares and 199,000 Series A common shares in connection with pending acquisitions. It is anticipated that most of these shares will be issued during 1992.
 TELEPHONE AND DATA SYSTEMS INC. FINANCIAL HIGHLIGHTS
 (dollars in thousands, except per share amounts)
 Year Percent
 Increase/
 (Decrease)
 Dec. 31, 1991 1990 Amount
 Operating revenues
 TDS Telecom $211,231 $194,100 $17,131 8.8
 USM 99,477 62,452(B) 37,025 59.3
 API 43,332 37,520 5,812 15.5
 Total $354,040 $294,072 59,968 20.4
 Operating expenses
 TDS Telecom $145,989 $131,393 $14,596 11.1
 USM 116,308 71,593(B) 44,715 62.5
 API 51,256 43,962 7,294 16.6
 Total $313,553 $246,948 66,605 27.0
 Operating income
 TDS Telecom $ 65,242 $ 62,707 $ 2,535 4.0
 USM (16,831) (9,141) (7,690) (84.1)
 API (7,924) (6,442) (1,482) (23.0)
 Total $ 40,487 $ 47,124 (6,637) (14.1)
 Investment and Other Income
 Interest and Dividend
 Income 8,100 7,593 507 6.7
 Minority Share of
 Cellular Losses 2,783 2,586 197 7.6
 Cellular Investment
 Income, Net 6,824 5,517 1,307 23.7
 Gain on sale of
 Investments 3,407 2,384 1,023 42.9
 Other Income, Net 3,449 1,164 2,285 196.5
 Total $ 24,563 $ 19,244 $ 5,319 27.6
 Interest Expense 28,993 22,765 6,228 27.4
 Income Tax Expense 14,944 16,395 (1,451) (8.9)
 Net Income Before
 Cumulative Effect of
 Accounting Change 21,113 27,208 (6,095) (22.4)
 Cumulative Effect of
 Accounting Change (5,035) -- (5,035) --
 Net Income 16,078 27,208 (11,130) (40.9)
 Preferred Dividend
 Requirement (1,688) (1,161) (527) 45.4
 Net Income Available
 to Common $ 14,390 $26,047 $ (11,657) (44.8)
 Weighted Average Common
 Shares (000s) 33,036 30,415 2,621 8.6
 Earnings Per Common Share
 Before Cumulative Effect
 of Accounting Change $ .59 $.86 $ (.27) (31.4)
 Cumulative Effect of
 Accounting Change (.15) -- (.15) --
 Net Income $ .44 $.86 $ (.42) (48.8)
 Pro forma amounts assuming
 the new method of
 accounting is applied
 retroactively:
 Net Income $ 21,113 $ 25,773 $ (4,660) (18.1)
 Earnings per Common
 Share $.59 $.81 $(.22) (27.2)
 CASH FLOW FROM OPERATIONS
 (Operating Income Plus Depreciation, 1990
 stated on a basis consistent with 1991)
 TDS Telecom $108,667 $100,988 $ 7,679 7.6
 USM 2,438 (3,913) 6,351 162.3
 API 1,123 1,862 (739) (39.7)
 Served at 12-31 12 Month Additions
 CUSTOMER UNITS: 1991 1990 1991 1990
 TDS Telecom $304,000 $278,700 $25,300 14,800
 USM 97,000 57,300 39,700 21,200
 API 236,800 201,200 35,600 39,600
 (B) USM revenues and expenses have been restated to eliminate certain affiliated roamer revenues and expenses.
 TELEPHONE AND DATA SYSTEMS, INC.
 (unaudited)
 (dollars in thousands, except per share amounts)
 Three months
 Percent
 Increase/
 (Decrease)
 Dec. 31, 1991 1990 Amount
 Operating revenues
 TDS Telecom $ 56,047 $ 52,210 $ 3,837 7.3
 USM 30,759 18,058(B) 12,701 70.3
 API 11,502 10,003 1,499 15.0
 Total $ 98,308 $ 80,271 18,037 22.5
 Operating expenses
 TDS Telecom $ 38,494 $ 34,755 $ 3,739 10.8
 USM 38,250 21,524(B) 16,726 77.7
 API 13,689 11,922 1,767 14.9
 Total $ 90,433 $ 68,201 22,232 32.6
 Operating income
 TDS Telecom $ 17,553 $ 17,455 $ 98 .6
 USM (7,491) (3,466) (4,025) (116.1)
 API (2,187) (1,919) (268) (14.1)
 Total $ 7,875 $ 12,070 (4,195) (34.8)
 Investment and Other Income
 Interest and Dividend
 Income 2,227 2,324 (97) (4.1)
 Minority Share of
 Cellular Losses 1,202 1,141 61 5.3
 Cellular Investment
 Income, Net 2,371 1,976 395 20.0
 Gain on Sale of
 Investments 310 1,037 (727) (70.1)
 Other Income, Net 228 (396) 624 (157.1)
 Total $ 6,338 $ 6,082 $ 256 4.2
 Interest Expense 7,760 6,085 1,675 27.5
 Income Tax Expense 3,102 3,433 (331) (9.6)
 Net Income 3,351 8,634 (5,283) (61.2)
 Preferred Dividend
 Requirement (892) (243) (649) 266.6
 Net Income Available
 to Common $ 2,459 $ 8,391 $ (5,932) (70.7)
 Weighted Average
 Common Shares (000s) 34,981 30,846 4,135 13.4
 Earnings Per Common
 Share $ .07 $ .27 $ (.20) (74.1)
 CASH FLOW FROM OPERATIONS


(Operating Income Plus Depreciation, 1990 stated on a basis consistent
 with 1991)
 TDS Telecom $ 28,801 $ 27,682 $ 1,119 4.0
 USM (253) (2,107) 1,854 88.0
 API 100 243 (143) (59.0)
 Served at 12/31 12 Month Additions
 CUSTOMER UNITS: 1991 1990 1991 1990
 TDS Telecom $304,000 $278,700 $ 8,600 1,600
 USM 97,000 57,300 11,800 8,600
 API 236,800 201,200 2,700 8,800
 (B) USM revenues and expenses have been restated to eliminate certain affiliated roamer revenues and expenses.
 -0- 2/24/92
 /CONTACT: Murray L. Swanson, executive vice president-finance of Telephone and Data Systems, Inc., 312-630-1900 (Out-of-town media, please call collect.)/
 (TDS) CO: Telephone and Data Systems, Inc. ST: Illinois IN: TLS SU: ERN


SH -- NY065 -- 2027 02/24/92 16:10 EST
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