<PAGE>
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): July 15, 1998
TELEPHONE AND DATA SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
Delaware 001-14157 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)
<PAGE>
Item 5. OTHER EVENTS.
On July 15, 1998, Telephone and Data Systems, Inc. announced its second
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
<PAGE>
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: July 16, 1998
By: /s/ GREGORY J. WILKINSON
- -----------------------------
Gregory J. Wilkinson
Vice President and Controller
(principal accounting officer)
3
<PAGE>
EXHIBIT INDEX
Exhibit Number Description of Exhibit
- -------------- ----------------------
99 News Release dated July 16, 1998
<PAGE>
Contact: Mark A. Steinkrauss, Vice President - Corporate Relations
(312) 630-1900 email: [email protected]
FOR RELEASE: IMMEDIATE
TDS REPORTS STRONG CUSTOMER AND REVENUE GROWTH
JULY 15, 1998 - CHICAGO, ILLINOIS - Telephone and Data Systems, Inc.,
[AMEX:TDS]reported strong customer and revenue growth for its second fiscal
quarter as both U.S. Cellular and Aerial Communications posted strong growth
in subscriber units. Loss per share from operations, excluding gains,
totaled $(.32) for the quarter compared to diluted earnings per share of
$.04, excluding gains, in the second quarter of 1997.
SECOND QUARTER HIGHLIGHTS:
- Revenues grew 36% over the second quarter of 1997 to $452 million
fueled by a 32% jump in cellular service revenues and a 52% increase
in cellular customer units.
- Operating expenses excluding depreciation and amortization increased
by 36% due primarily to higher levels of customer service, marketing
and selling and system operating expenses.
- Operating cash flow increased 36% over second quarter 1997 to $104
million driven by a 37% increase in operating cash flow at U.S.
Cellular.
- Depreciation and amortization expenses increased 61% due primarily to
the start-up of operations at Aerial Communications and substantial
acquisitions at U.S. Cellular Corporation coupled with shortened
lives/disposal of some assets. Interest expense was up 57% due
primarily to a higher level of debt outstanding.
- Net (loss) available to common, excluding gains from asset sales, was
$(19.2) million compared to net income available to common of $2.3
million in the second quarter of 1997. Second quarter 1998 results
reflect Aerial losses which reduced net income available to common by
$46.6 million in the quarter and $28.6 million in the second quarter
of 1997.
- Primarily due to the effects of Aerial's operating losses TDS reported
a diluted loss per share of $(.32) in the second quarter of 1998,
excluding gains from asset sales, compared to diluted earnings per
share of $.04 in 1997. The net loss associated
<PAGE>
with Aerial's operations reduced earnings per share by $.77 in the
quarter and $.48 in the second quarter of 1997.
- Gains from asset sales contributed $5.1 million or diluted earnings
per share of $.09 per share in the second quarter of 1998.
LeRoy T. Carlson, Jr., President and Chief Executive Officer commented:
"U.S.Cellular's second quarter results reflect excellent growth in customers,
revenue, cash flow and earnings. Its First Choice branding strategy together
with new product offerings such as its prepaid service, TalkTracker has
differentiated U.S. Cellular from its competitors and generated strong growth
in all categories."
"TDS Telecom reported solid growth in access lines and minutes of use during
the second quarter. I am pleased to see that TDS Telecom's CLEC operations
have generated revenue for the first time. The synergies it was able to
exploit between its ILEC and CLEC businesses reduced the time and startup
costs associated with the new CLEC business."
"Aerial continued to grow at near record pace for American wireless
businesses. It acquired its 200,000th customer in just one year of active
operations. In addition, Aerial formed a strategic partnership with Sonera
Corporation (formerly known as Telecom Finland, Ltd.). Under the terms of
the agreement Sonera took a minority equity stake in the Aerial operating
company. The companies agreed on a far reaching collaboration for the
future."
UNITED STATES CELLULAR CORPORATION [AMEX:USM] TDS's 81% - owned subsidiary
reported 52% customer growth since June 30, 1997. U.S. Cellular's customer
units in service totaled 1,922,000. Net customer unit activations from
marketing channels increased to 101,000 from 99,000 activations during the
second quarter of 1997.
U.S. Cellular's service revenues increased 32% to $280.9 million compared to
$212.4 million for the second quarter of 1997. Operating cash flow increased
37% to $100.6 million in the quarter compared to $73.6 million in the second
quarter of 1997. USM plans to invest approximately $330 million in capital
equipment and business system upgrades during 1998.
TDS TELECOMMUNICATIONS CORPORATION ("TDS Telecom"), a wholly owned
subsidiary, reported a 17% increase in revenues in the second quarter versus
the same period a year ago. TDS Telecom's landline telephone revenues
increased 12%, based on a 7.4% increase in access lines and a strong increase
in minutes of use. Operating cash flow from the landline business was $52.6
million versus $48.6 in the second quarter of 1997. TDS Telecom's operating
cash flow margin on its landline business was 47% compared to 48% in the
second quarter of 1997. The reduced margin reflects the impact of higher
expenses for the company's network operations. TDS Telecom is also
experiencing some downward pressure on certain revenue streams, and smaller
margins on new non-traditional product offerings such as DBS (Direct
Broadcast Satellite).
2
<PAGE>
TDS Telecom generated approximately $6.8 million in revenues and $7.5 million
in expenses during the second quarter of 1998 related to its internet and
structured wiring service offerings which are both still in the start-up
phase. Additionally, Telecom reported approximately $676,000 in revenues and
$3 million in expenses during the quarter related to its new CLEC operations
in Madison, Appleton, and Green Bay, Wisconsin. TDS Telecom expects capital
spending in 1998 to be approximately $140 million. As of June 30, the
Madison CLEC market has approximately 6,000 access lines in service.
AERIAL COMMUNICATIONS, INC. [NASDAQ:AERL], TDS's 82.4% - owned subsidiary
reported nearly 40,000 net customer activations during the second quarter of
1998. Aerial reported revenues of $36.7 million. Aerial's operating cash
flow for the second quarter of 1998 was a negative $46.2 million and Aerial's
capital expenditures for 1998 are anticipated to be $80 to $100 million.
TDS is a diversified telecommunications corporation founded in 1969. Through
its strategic business units, United States Cellular, TDS Telecom and Aerial
Communications, TDS operates primarily in cellular, local telephone and
personal communications services (PCS) markets around the country. TDS
builds value for its shareholders by providing excellent communications
services in growing, closely-related segments of the telecommunications
industry. The Company currently employs over 8,700 people and serves over
2.66 million customers in 35 states.
Except for the historical and factual information presented, other
information set forth in this news release represents forward-looking
statements, including all statements about the Company's plans, beliefs,
estimates and expectations. These statements are based on current estimates
and projections, 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: changes in technology that might
effect the company's services; changes in Delaware law; potential litigation;
and changes in market conditions. Investors are encouraged to consider these
and other risks and uncertainties which are discussed in documents filed by
the Company with the Securities and Exchange Commission.
Internet Home Pages: TDS http://www.teldta.com
USM http://www.uscc.com
AERL http://www.aerial1.com
TDS Telecom http://www.tdstelecom.co
3
<PAGE>
TELEPHONE AND DATA SYSTEMS, INC.
SUMMARY OPERATING DATA
<TABLE>
<CAPTION>
QUARTER ENDED 6/30/98 3/31/98 12/31/97 9/30/97 6/30/97
<S> <C> <C> <C> <C> <C>
U.S. CELLULAR:
Total pops (1) 25,917 25,674 25,300 26,012 25,810
TDS's proportionate share 21,000 20,812 20,517 21,044 20,890
Consolidated Markets:
Pops owned (000s) 23,006 22,837 22,611 20,578 20,557
Total population (000s) 24,136 24,034 24,034 21,844 21,844
Customer units 1,922,000 1,817,000 1,710,000 1,357,000 1,263,000
Market penetration 7.96% 7.56% 7.11% 6.21% 5.78%
Markets in operation 136 134 134 132 132
Cell sites in service 1,864 1,786 1,748 1,556 1,485
Average monthly revenue
per unit $50.16 $44.66 $49.88 $57.56 $58.41
Churn rate per month 1.9% 1.7% 2.0% 2.0% 1.8%
Marketing cost per
gross customer add (1) $305 $313 $294 $334 $327
TDS TELECOM:
Companies 106 106 106 105 105
Access lines 537,500 528,900 515,500 506,600 500,000
Growth in access lines
from prior quarter-end:
Acquisitions --- 6,000 3,200 --- ---
Internal growth 8,600 7,400 5,700 6,600 7,000
Average monthly revenue
per access line $70 $68 $70 $70 $67
AERIAL COMMUNICATIONS:
Total pops (2) 27,601 27,601 27,601 27,601 27,601
TDS's proportionate share 22,735 22,749 22,774 22,788 22,803
Customer units 204,000 165,000 125,000 65,000 28,000
Market penetration 0.74% 0.60% 0.45% 0.24% 0.10%
TELEPHONE AND DATA SYSTEMS:
Notes Payable $512,266 $450,615 $527,587 $451,329 $505,206
Long-term Debt,
excluding current $1,313,596 $1,292,311 $1,264,218 $1,228,175 $983,364
</TABLE>
(1) Amounts for 1997 have been reclassified for the change in current year
presentation.
(2) Population equivalents ("Pops"), owned and acquirable, in thousands.
(3) At June 30, 1998, 61.0 million TDS Common and Series A Common Shares were
outstanding and 967,000 Common Shares are registered for use in connection
with the Company's continuing acquisition program.
4
<PAGE>
TELEPHONE AND DATA SYSTEMS, INC.
FINANCIAL HIGHLIGHTS
THREE MONTHS ENDED JUNE 30, 1998
(Unaudited, dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
Increase (Decrease)
-------------------
1998 1997 Amount Percent
------- ------ -------- ---------
<S> <C> <C> <C> <C>
OPERATING REVENUES
U.S. Cellular $ 290,108 $ 217,579 $ 72,529 33.3%
TDS Telecom 125,054 107,374* 17,680 16.5%
Aerial Communications 36,688 7,143 29,545 N/M
--------- --------- ---------
451,850 332,096 119,754 36.1%
--------- --------- ---------
OPERATING EXPENSES BEFORE DEPRECIATION AND AMORTIZATION
U.S. Cellular 189,529 143,994 45,535 31.6%
TDS Telecom 75,227 58,805* 16,422 27.9%
Aerial Communications 82,906 52,893 30,013 56.7%
--------- --------- ---------
347,662 255,692 91,970 36.0%
--------- --------- ---------
OPERATING CASH FLOW (OPERATING INCOME PLUS DEPRECIATION AND AMORTIZATION)
U.S. Cellular 100,579 73,585 26,994 36.7%
TDS Telecom 49,827 48,569* 1,258 2.6%
Aerial Communications (46,218) (45,750) (468) (1.0%)
--------- --------- ---------
104,188 76,404 27,784 36.4%
--------- --------- ---------
DEPRECIATION AND AMORTIZATION*
U.S. Cellular 50,442 31,431 19,011 60.5%
TDS Telecom 27,829 24,607* 3,222 13.1%
Aerial Communications 21,244 5,883 15,361 N/M
--------- --------- ---------
*includes amortization of $13,082 and
$11,270, respectively 99,515 61,921 37,594 60.7%
--------- --------- ---------
OPERATING INCOME (LOSS) FROM ONGOING OPERATIONS
U.S. Cellular 50,137 42,154 7,983 18.9%
TDS Telecom 21,998 23,962* (1,964) (8.2%)
Aerial Communications (67,462) (51,633) (15,829) (30.7%)
--------- --------- ---------
4,673 14,483 (9,810) (67.7%)
American Paging Operating (Loss) --- (7,129) 7,129 N/M
--------- --------- ---------
OPERATING INCOME 4,673 7,354 (2,681) (36.5%)
--------- --------- ---------
INVESTMENT AND OTHER INCOME
Interest and Dividend Income 3,025 3,478 (453) (13.0%)
Minority Share of Income 6,584 (1,433) 8,017 N/M
Cellular Investment Income, Net 8,241 17,920* (9,679) (54.0%)
Gain on Sale of Cellular and
Other Investments 10,516 10,598 (82) (0.8%)
Other (Expense), Net (9,354) (1,129) (8,225) N/M
--------- --------- ---------
19,012 29,434 (10,422) (35.4%)
--------- --------- ---------
INCOME BEFORE INTEREST AND INCOME TAXES 23,685 36,788 (13,103) (35.6%)
Interest Expense 31,272 19,880 11,392 57.3%
Minority interest in income of
subsidiary trust 6,203 --- 6,203 N/M
--------- --------- ---------
INCOME (LOSS) BEFORE INCOME TAXES (13,790) 16,908 (30,698) N/M
Income Tax Expense (113) 10,087 (10,200) N/M
--------- --------- ---------
NET INCOME (LOSS) (13,677) 6,821 (20,498) N/M
Preferred Dividend Requirement (418) (470) 52 11.1%
--------- --------- ---------
NET INCOME (LOSS) AVAILABLE TO COMMON $ (14,095) $ 6,351 $ (20,446) N/M
--------- --------- ---------
--------- --------- ---------
AVERAGE COMMON SHARES OUTSTANDING (000s) 60,984 60,051 933 1.6%
EARNINGS PER COMMON SHARE (Basic) $ (0.23) $ 0.11 $ (0.34) N/M
--------- --------- ---------
--------- --------- ---------
EARNINGS PER COMMON SHARE (DILUTED) $ (0.23) $ 0.11 $ (0.34) N/M
--------- --------- ---------
--------- --------- ---------
DILUTED EPS--OPERATIONS $ (0.32) $ 0.04 $ (0.36) N/M
DILUTED EPS--GAINS $ 0.09 $ 0.07 $ 0.02 28.6%
</TABLE>
N/M - Percentage change not meaningful.
* Amounts reclassified for change in current year presentation.
5
<PAGE>
TELEPHONE AND DATA SYSTEMS, INC.
FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED JUNE 30, 1998
(Unaudited, dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
Increase (Decrease)
-------------------
1998 1997 Amount Percent
------- ------ -------- ---------
<S> <C> <C> <C> <C>
OPERATING REVENUES
U.S. Cellular $ 535,265 $ 402,163 $ 133,102 33.1%
TDS Telecom 241,269 212,945* 28,324 13.3%
Aerial Communications 67,434 7,143 60,291 N/M
--------- --------- ---------
843,968 622,251 221,717 35.6%
--------- --------- ---------
OPERATING EXPENSES BEFORE DEPRECIATION AND AMORTIZATION
U.S. Cellular 356,264 274,972 81,292 29.6%
TDS Telecom 144,312 113,611* 30,701 27.0%
Aerial Communications 163,269 52,893 110,376 N/M
--------- --------- ---------
663,845 441,476 222,369 50.4%
--------- --------- ---------
OPERATING CASH FLOW (OPERATING INCOME PLUS DEPRECIATION AND AMORTIZATION)
U.S. Cellular 179,001 127,191 51,810 40.7%
TDS Telecom 96,957 99,334* (2,377) (2.4%)
Aerial Communications (95,835) (45,750) (50,085) (109.5%)
--------- --------- ---------
180,123 180,775 (652) (0.4%)
--------- --------- ---------
DEPRECIATION AND AMORTIZATION*
U.S. Cellular 95,709 61,592 34,117 55.4%
TDS Telecom 54,644 48,465* 6,179 12.7%
Aerial Communications 40,940 5,883 35,057 N/M
--------- --------- ---------
*includes amortization of $25,843 and
$21,728, respectively 191,293 115,940 75,353 65.0%
--------- --------- ---------
OPERATING INCOME (LOSS) FROM
ONGOING OPERATIONS
U.S. Cellular 83,292 65,599 17,693 27.0%
TDS Telecom 42,313 50,869* (8,556) (16.8%)
Aerial Communications (136,775) (51,633) (85,142) (164.9%)
--------- --------- ---------
(11,170) 64,835 (76,005) (117.2%)
American Paging Operating (Loss) (11,406) (15,540) 4,134 N/M
--------- --------- ---------
OPERATING INCOME (LOSS) (22,576) 49,295 (71,871) (145.8%)
--------- --------- ---------
INVESTMENT AND OTHER INCOME
Interest and Dividend Income 6,462 6,896 (434) (6.3%)
Minority Share of Income (4,969) (4,192) (777) 18.5%
Cellular Investment Income, Net 21,846 35,840* (13,994) (39.0%)
PCS Development Costs --- (21,614) 21,614 N/M
Gain on Sale of Cellular and
Other Investments 231,958 10,598 221,360 N/M
Other (Expense), Net (12,403) (2,766) (9,637) N/M
--------- --------- ---------
242,894 24,762 218,132 N/M
--------- --------- ---------
INCOME BEFORE INTEREST AND INCOME TAXES 220,318 74,057 146,261 197.5%
Interest Expense 62,885 33,694 29,191 86.6%
Minority interest in income of
subsidiary trust 11,099 --- 11,099 N/M
--------- --------- ---------
INCOME BEFORE INCOME TAXES 146,334 40,363 105,971 N/M
Income Tax Expense 85,841 23,925 61,916 N/M
--------- --------- ---------
NET INCOME 60,493 16,438 44,055 N/M
Preferred Dividend Requirement (858) (951) 93 9.8%
--------- --------- ---------
NET INCOME AVAILABLE TO COMMON $ 59,635 $ 15,487 $ 44,148 N/M
--------- --------- ---------
--------- --------- ---------
AVERAGE COMMON SHARES OUTSTANDING (000s) 60,867 60,617 250 0.4%
EARNINGS PER COMMON SHARE (BASIC) $ 0.98 $ 0.26 $ 0.72 N/M
--------- --------- ---------
--------- --------- ---------
EARNINGS PER COMMON SHARE (DILUTED) $ 0.97 $ 0.25 $ 0.72 N/M
--------- --------- ---------
--------- --------- ---------
DILUTED EPS--OPERATIONS $ (0.94) $ 0.19 $ (1.13) N/M
DILUTED EPS--GAINS $ 1.91 $ 0.06 $ 1.85 N/M
</TABLE>
N/M - Percentage change not meaningful.
* Amounts reclassified for change in current year presentation.
6
<PAGE>
TELEPHONE AND DATA SYSTEMS, INC.
BALANCE SHEET HIGHLIGHTS
JUNE 30, 1998
(Dollars in thousands)
<TABLE>
<CAPTION>
U.S. TDS Aerial TDS Corporate Intercompany TDS
Cellular Telecom Communications & Other Eliminations Consolidated
-------- ------- -------------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Cash and Cash Equivalents $20,905 $53,236 $1,979 $15,868 $--- $91,988
Affiliated Cash Investments 41,808 173,594 --- --- (215,402) ---
Temporary Cash Investments 293 12,629 117 1,204 --- 14,243
Notes Receivable--Affiliates --- 1,469 --- 638,625 (640,094) ---
----------- ----------- ----------- ---------- ------------ -----------
$63,006 $240,928 $2,096 $655,697 $(855,496) $106,231
----------- ----------- ----------- ---------- ------------ -----------
----------- ----------- ----------- ---------- ------------ -----------
----------- ----------- ----------- ---------- ------------ -----------
Long-term Receivable - Affiliates $--- $--- $ --- $517,608 $(517,608) $---
----------- ----------- ----------- ---------- ------------ -----------
----------- ----------- ----------- ---------- ------------ -----------
Marketable Equity Securities $239,416 $68,979 $ --- $ - $--- $308,395
Marketable Non-equity Securities --- 13,028 --- 3,440 --- 16,468
License and Franchise Costs, net 1,191,922 216,160 293,266 22,982 --- 1,724,330
Cellular Minority Interests 90,428 1,740 510 99 --- 92,777
Other Investments 15,046 11,566 --- 140,648 --- 167,260
----------- ----------- ----------- ---------- ------------ -----------
$1,536,812 $311,473 $293,776 $167,169 $--- $2,309,230
----------- ----------- ----------- ---------- ------------ -----------
----------- ----------- ----------- ---------- ------------ -----------
Property, Plant and
Equipment, net $940,236 $846,383 $615,445 $40,186 $--- $2,442,250
----------- ----------- ----------- ---------- ------------ -----------
----------- ----------- ----------- ---------- ------------ -----------
Notes Payable: external $--- $--- $ --- $512,266 $--- $512,266
intercompany --- 28,560 610,065 216,871 (855,496) ---
----------- ----------- ----------- ---------- ------------ -----------
$--- $28,560 $610,065 $729,137 $(855,496) $512,266
----------- ----------- ----------- ---------- ------------ -----------
----------- ----------- ----------- ---------- ------------ -----------
Long-term Debt:
Current Portion $--- $14,636 $ --- $243 $--- $14,879
Non-current Portion 523,290 821,824 241,147 244,943 (517,608) 1,313,596
----------- ----------- ----------- ---------- ------------ -----------
Total $523,290 $836,460 $241,147 $245,186 $(517,608) $1,328,475
----------- ----------- ----------- ---------- ------------ -----------
----------- ----------- ----------- ---------- ------------ -----------
Preferred Stock $--- $--- $ --- $26,421 $--- $26,421
----------- ----------- ----------- ---------- ------------ -----------
----------- ----------- ----------- ---------- ------------ -----------
Trust Originated Preferred
Securities $--- $--- $ --- $300,000 $--- $300,000
----------- ----------- ----------- ---------- ------------ -----------
----------- ----------- ----------- ---------- ------------ -----------
Total outstanding debt and
Preferred Stock $523,290 $865,020 $851,212 $1,300,744 $(1,373,104) $2,167,162
----------- ----------- ----------- ---------- ------------ -----------
----------- ----------- ----------- ---------- ------------ -----------
Construction Expenditures:
Quarter ended 6/30/98 $89,955 $31,067 $16,192 $7,228 $--- $144,442
Six months ended 6/30/98 $143,054 $59,878 $49,256 $2,383 $--- $254,571
7
</TABLE>
<PAGE>
TDS TELECOM HIGHLIGHTS
THREE MONTHS ENDED JUNE 30, 1998
(Unaudited, dollars in thousands)
<TABLE>
<CAPTION>
Increase (Decrease)
----------------------------
1998 1997 Amount Percent
----------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
LOCAL TELEPHONE OPERATIONS
OPERATING REVENUES
Local Service $33,570 $30,491 $3,079 10.1%
Network Access and Long-Distance 64,171 56,717 7,454 13.1%
Miscellaneous 14,645 13,104 1,541 11.8%
---------- ---------- ---------
112,386 100,312 12,074 12.0%
---------- ---------- ---------
OPERATING EXPENSES
Network Operations 22,455 17,770 4,685 26.4%
Customer Operations 17,359 16,290 1,069 6.6%
Corporate Expenses 19,944 17,607 2,337 13.3%
---------- ---------- ---------
59,758 51,667 8,091 15.7%
---------- ---------- ---------
OPERATING CASH FLOW
52,628 48,645 3,983 8.2%
---------- ---------- ---------
DEPRECIATION AND AMORTIZATION
Depreciation 24,991 21,987 3,004 13.7%
Amortization 1,615 1,824 (209) (11.5%)
---------- ---------- ---------
26,606 23,811 2,795 11.7%
---------- ---------- ---------
OPERATING INCOME 26,022 24,834 1,188 4.8%
---------- ---------- ---------
LONG-DISTANCE OPERATIONS
Revenues 5,944 5,831 113 1.9%
Expenses Before Depreciation and
Amortization 5,611 4,981 630 12.6%
---------- ---------- ---------
OPERATING CASH FLOW 333 850 (517) (60.8%)
Depreciation and Amortization 377 393 (16) (4.1%)
---------- ---------- ---------
OPERATING INCOME (44) 457 (501) (109.6%)
---------- ---------- ---------
OTHER SERVICES (1)
Revenues 7,445 1,459 5,986 N/M
Expenses Before Depreciation 10,579 2,385 8,194 N/M
---------- ---------- ---------
OPERATING CASH FLOW (3,134) (926) (2,208) N/M
Depreciation 846 403 443 109.9%
---------- ---------- ---------
OPERATING (LOSS) (3,980) (1,329) (2,651) N/M
---------- ---------- ---------
Intercompany Revenues (721) (228) (493) N/M
Intercompany Expenses (721) (228) (493) N/M
---------- ---------- ---------
--- --- --- N/M
---------- ---------- ---------
TOTAL TDS TELECOM OPERATING INCOME $21,998 $23,962 $(1,964) (8.2%)
---------- ---------- ---------
---------- ---------- ---------
(1) Cellular revenues and expenses included in prior reports have been reclassified to non-operating income.
N/M - Percentage change not meaningful.
</TABLE>
8
<PAGE>
TDS TELECOM HIGHLIGHTS
SIX MONTHS ENDED JUNE 30, 1998
(Unaudited, dollars in thousands)
<TABLE>
<CAPTION>
Increase (Decrease)
----------------------------
1998 1997 Amount Percent
----------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
LOCAL TELEPHONE OPERATIONS
OPERATING REVENUES
Local Service $66,121 $60,352 $5,769 9.6%
Network Access and Long-Distance 125,017 113,309 11,708 10.3%
Miscellaneous 28,542 25,283 3,259 12.9%
---------- ---------- ---------
219,680 198,944 20,736 10.4%
---------- ---------- ---------
OPERATING EXPENSES
Network Operations 43,133 35,800 7,333 20.5%
Customer Operations 34,868 31,187 3,681 11.8%
Corporate Expenses 38,892 33,063 5,829 17.6%
---------- ---------- ---------
116,893 100,050 16,843 16.8%
---------- ---------- ---------
OPERATING CASH FLOW 102,787 98,894 3,893 3.9%
---------- ---------- ---------
DEPRECIATION AND AMORTIZATION
Depreciation 49,489 43,489 6,000 13.8%
Amortization 3,124 3,615 (491) (13.6%)
---------- ---------- ---------
52,613 47,104 5,509 11.7%
---------- ---------- ---------
OPERATING INCOME 50,174 51,790 (1,616) (3.1%)
---------- ---------- ---------
LONG-DISTANCE OPERATIONS
Revenues 11,528 11,560 (32) (0.3%)
Expenses before Depreciation and Amortization 10,542 9,738 804 8.3%
---------- ---------- ---------
OPERATING CASH FLOW 986 1,822 (836) (45.9%)
Depreciation and Amortization 750 784 (34) (4.3%)
---------- ---------- ---------
OPERATING INCOME 236 1,038 (802) (77.3%)
---------- ---------- ---------
OTHER SERVICES (1)
Revenues 11,261 2,901 8,360 N/M
Expenses before Depreciation 18,077 4,283 13,794 N/M
---------- ---------- ---------
OPERATING CASH FLOW (6,816) (1,382) (5,434) N/M
Depreciation 1,281 577 704 122.0%
---------- ---------- ---------
OPERATING (LOSS) (8,097) (1,959) (6,138) N/M
---------- ---------- ---------
Intercompany Revenues (1,200) (460) (740) 160.9%
Intercompany Expenses (1,200) (460) (740) 160.9%
---------- ---------- ---------
--- --- --- N/M
---------- ---------- ---------
TOTAL TDS TELECOM OPERATING INCOME $42,313 $50,869 $(8,556) (16.8%)
---------- ---------- ---------
---------- ---------- ---------
(1) Cellular revenues and expenses included in prior reports have been reclassified to non-operating income.
N/M - Percentage change not meaningful.
</TABLE>
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