TELEPHONE AND DATA SYSTEMS, INC. CHICAGO, July 31, 2015 /PRNewswire/ -- Telephone and Data Systems, Inc. (NYSE: TDS) reported total operating revenues of $1,276.4 million for the second quarter of 2015, versus $1,236.4 million for the comparable period one year ago. Net income attributable to TDS shareholders and related diluted earnings per share were $23.0 million and $0.21, respectively, for the second quarter of 2015, compared to $(22.1) million and $(0.20), respectively, in the comparable period one year ago.
"Both of our businesses continued to make good progress on their strategic objectives," said LeRoy T. Carlson, Jr., TDS president and CEO. "U.S. Cellular added postpaid customers and improved customer loyalty. TDS Telecom achieved growth in IPTV customers and continued to move forward with cable, broadband, and hosted and managed services strategies.
"U.S. Cellular maintained momentum in its turnaround in customer growth while generating a significant increase in profitability. We are further enhancing our high quality network this year, bringing 4G LTE speeds to 98 percent of U.S. Cellular customers. U.S. Cellular is leveraging this investment to drive growth in smartphone penetration, connected devices, and data usage.
"TDS Telecom achieved success in the recent quarter, adding IPTV customers and increasing residential revenue per customer. Our cable segment continues to focus on increasing residential and commercial broadband penetration. We are continuing to seek and evaluate potential cable acquisitions. We believe our IT services business, OneNeck IT Solutions, has strong growth potential as more businesses and other organizations seek to outsource more of their IT needs."
2015 Estimated Results
Estimates of full-year 2015 results for U.S. Cellular, TDS Telecom, and TDS are shown below. Such estimates represent management's view as of July 31, 2015. Such forward-looking statements should not be assumed to be current as of any future date. TDS undertakes no duty to update such information, whether as a result of new information, future events, or otherwise. There can be no assurance that final results will not differ materially from such estimated results.
2015 Estimated Results
----------------------
U.S. Cellular TDS Telecom TDS(2)
------------- ----------- -----
Current Previous Current Previous Current Previous
------- -------- ------- -------- ------- --------
(Dollars in
millions)
Total operating
revenues $4,000-$4,100 $4,000-$4,200 $1,130-$1,180 Unchanged $5,145-$5,295 $5,145-$5,395
Operating cash
flow (1) $440-$540 $400-$500 $280-$310 Unchanged $725-$855 $685-$815
Adjusted EBITDA
(1) $600-$700 $580-$680 $280-$310 Unchanged $890-$1,020 $870-$1,000
Capital
expenditures Approx. $600 Unchanged Approx. $220 Unchanged Approx. $830 Unchanged
(1) Operating cash flow is defined
as net income, adjusted for the
items set forth in the
reconciliation below. Adjusted
EBITDA is defined as net
income, adjusted for the items
set forth in the reconciliation
below. Operating cash flow and
Adjusted EBITDA exclude these
items in order to show
operating results on a more
comparable basis from period to
period. From time to time, TDS
may exclude other items from
Operating cash flow and/or
Adjusted EBITDA if such items
help reflect operating results
on a more comparable basis. TDS
does not intend to imply that
any such items that are
excluded are non-recurring,
infrequent or unusual; such
items may occur in the future.
Operating cash flow and
Adjusted EBITDA are not
measures of financial
performance under Generally
Accepted Accounting Principles
in the United States ("GAAP")
and should not be considered as
alternatives to net income as
indicators of the company's
operating performance or as
alternatives to cash flows from
operating activities,
determined in accordance with
GAAP, as indicators of cash
flows or as measures of
liquidity. TDS believes
Operating cash flow and
Adjusted EBITDA are useful
measures of TDS' operating
results before significant
recurring non-cash charges,
gains and losses, and other
items as indicated below. The
following tables provide a
reconciliation to Operating
cash flow and Adjusted EBITDA
for 2015 estimated results, and
actual results for the six
months ended June 30, 2015 and
year ended December 31, 2014:
2015 Estimated Results (3)
-------------------------
U.S. Cellular TDS Telecom TDS(2)
------------- ----------- -----
(Dollars in millions)
Net income (loss) (GAAP) N/A N/A N/A
Add back:
Income tax expense (benefit) N/A N/A N/A
Income (loss) before income
taxes (GAAP) $ 165-265 $ 45-75 $ 170-300
--- ------- --- ----- --- -------
Add back:
Interest expense 80 - 140
Depreciation, amortization and
accretion expense 600 235 845
EBITDA $ 845-945 $ 280-310 $ 1,155-1,285
--- ------- --- ------- --- -----------
Add back:
(Gain) loss on sale of business and
other exit costs, net (115) - (135)
(Gain) loss on license sales and
exchanges, net (145) - (145)
(Gain) loss on asset disposals, net 15 - 15
Adjusted EBITDA $ 600-700 $ 280-310 $ 890-1,020
=== ======= === ======= === =========
Deduct:
Equity in earnings of
unconsolidated (125) - (125)
entities
Interest and dividend income (35) - (40)
Operating cash flow (4) $ 440-540 $ 280-310 $ 725-855
=== ======= === ======= === =======
Actual Results
--------------
Six Months Ended June 30, 2015 Year ended December 31, 2014
------------------------------ ----------------------------
U.S. Cellular TDS TDS (2) U.S. Cellular TDS TDS (2)
Telecom Telecom
------- -------
(Dollars in millions)
Net income (loss) (GAAP) $185 $29 $202 $(47) $(24) $(147)
Add back:
Income tax expense (benefit) 121 19 133 (12) 18 (5)
Income (loss) before income taxes $306 $48 $335 $(59) $(7) $(153)
(GAAP)
Add back:
Interest expense 40 - 68 57 (1) 111
Depreciation, amortization and
accretion expense 298 114 418 606 220 837
EBITDA $643 $162 $821 $605 $212 $796
---- ---- ---- ---- ---- ----
Add back:
Loss on impairment of assets - - - - 84 88
(Gain) loss on sale of business and
other exit costs, net (113) (3) (129) (33) (2) (16)
(Gain) loss on license sales and
exchanges, net (123) - (123) (113) - (113)
(Gain) loss on asset disposals, net 10 - 10 21 5 27
Adjusted EBITDA $417 $159 $579 $480 $298 $781
==== ==== ==== ==== ==== ====
Deduct:
Equity in earnings of
unconsolidated (70) - (70) (130) - (132)
entities
Interest and dividend income (17) (1) (19) (12) (2) (17)
Operating cash flow (4) $330 $158 $490 $338 $296 $632
==== ==== ==== ==== ==== ====
Note: Totals may not foot due to rounding differences.
(2) The TDS column includes U.S. Cellular, TDS
Telecom and also the impacts of consolidating
eliminations, corporate operations and non-
reportable segments, all of which are not
presented above.
(3) In providing 2015 Estimated Results, TDS has
not completed the above reconciliation to net
income because it does not provide guidance
for income taxes. TDS believes that the impact
of income taxes cannot be reasonably
predicted; therefore, the company is unable to
provide such guidance.
(4) A reconciliation of Operating cash flow (Non-
GAAP) to operating income (GAAP) for June 30,
2015 actual results can be found on the
company's website at investors.tdsinc.com.
Stock Repurchase Summary
TDS began repurchasing stock under its $250 million repurchase authorization on Aug. 5, 2013. The following represents repurchases of TDS Common Shares.
Repurchase Period # Shares Cost (in
millions)
----------------- -------- ---------
2015 (year to date) - $ -
2014 (full year) 1,541,850 $39.1
Total 1,541,850 $39.1
========= =====
Conference Call Information
TDS will hold a conference call on July 31, 2015 at 9:30 a.m. Central Time.
-- Access the live call on the Events & Presentations page of
investors.tdsinc.com or at
https://www.webcaster4.com/Webcast/Page/1145/9684.
-- Access the call by phone at 877/407-8029 (US/Canada), no pass code
required.
Before the call, certain financial and statistical information to be discussed during the call will be posted to investors.tdsinc.com. The call will be archived on the Events & Presentations page of investors.tdsinc.com.
About TDS
Telephone and Data Systems, Inc. (TDS), a Fortune 1000(TM) company, provides wireless; cable and wireline broadband, TV and voice; and hosted and managed services to approximately 6.0 million customers nationwide through its businesses, U.S. Cellular, TDS Telecom, OneNeck IT Solutions, and BendBroadband. Founded in 1969 and headquartered in Chicago, TDS employed 10,600 people as of June 30, 2015.
Visit www.tdsinc.com for comprehensive financial information, including earnings releases, quarterly and annual filings, shareholder information and more.
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995: All information set forth in this news release, except historical and factual information, represents forward-looking statements. This includes all statements about the company's plans, beliefs, estimates, and expectations. These statements are based on current estimates, projections, and assumptions, 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: impacts of any pending acquisitions/divestures/exchanges of properties and/or licenses, including, but not limited to, the ability to obtain regulatory approvals, successfully complete the transactions and the financial impacts of such transactions; the ability of the company to successfully manage and grow its markets; the overall economy; competition; the access to and pricing of unbundled network elements; the ability to obtain or maintain roaming arrangements with other carriers on acceptable terms; the state and federal telecommunications regulatory environment; the value of assets and investments; adverse changes in the ratings afforded TDS and U.S. Cellular debt securities by accredited ratings organizations; industry consolidation; advances in telecommunications technology; uncertainty of access to the capital markets; pending and future litigation; changes in income tax rates, laws, regulations or rulings; changes in customer growth rates, average monthly revenue per user, churn rates, roaming revenue and terms, the availability of wireless devices, or the mix of products and services offered by U.S. Cellular and TDS Telecom. Investors are encouraged to consider these and other risks and uncertainties that are discussed in the Form 8-K Current Report used by TDS to furnish this press release to the Securities and Exchange Commission ("SEC"), which are incorporated by reference herein.
For more information about TDS and its subsidiaries, visit:
TDS: www.tdsinc.com
U.S. Cellular: www.uscellular.com
TDS Telecom: www.tdstelecom.com
OneNeck IT Solutions: www.oneneck.com
United States Cellular Corporation
Summary Operating Data (Unaudited)
As of or for the Quarter Ended 6/30/2015 3/31/2015 12/31/2014 9/30/2014 6/30/2014
------------------------------ --------- --------- ---------- --------- ---------
Retail Customers
Postpaid
Total at end of
period 4,324,000 4,307,000 4,298,000 4,200,000 4,148,000
Gross additions 191,000 200,000 302,000 251,000 190,000
Net additions
(losses) 17,000 9,000 98,000 52,000 (26,000)
ARPU (1) $53.62 $54.87 $56.51 $56.37 $56.82
ARPA (2) $133.85 $134.94 $136.13 $132.99 $131.95
Churn rate (3) 1.3% 1.5% 1.6% 1.6% 1.7%
Smartphone
penetration (4) 69.1% 66.9% 64.8% 61.7% 58.4%
Prepaid
Total at end of
period 368,000 360,000 348,000 350,000 352,000
Gross additions 65,000 73,000 60,000 64,000 65,000
Net additions
(losses) 8,000 12,000 (2,000) (2,000) (4,000)
ARPU (1) $35.98 $35.72 $35.33 $34.40 $34.02
Churn rate (3) 5.2% 5.8% 5.9% 6.3% 6.5%
Total customers at end of period 4,779,000 4,775,000 4,760,000 4,674,000 4,653,000
Billed ARPU (1) $51.29 $52.29 $53.63 $53.24 $53.36
Service revenue ARPU (1) $57.55 $58.01 $60.10 $60.92 $60.32
Smartphones sold as a percent of total handsets sold 86.7% 85.7% 86.5% 80.8% 79.0%
Total population
Consolidated
markets (5) 45,737,000 45,737,000 50,906,000 54,817,000 54,817,000
Consolidated
operating markets
(5) 31,814,000 31,814,000 31,729,000 31,729,000 31,729,000
Market penetration at end of period
Consolidated
markets (6) 10.4% 10.4% 9.4% 8.5% 8.5%
Consolidated
operating markets
(6) 15.0% 15.0% 15.0% 14.7% 14.7%
Capital expenditures (000s) $133,666 $66,460 $181,655 $142,452 $143,927
Total cell sites in service 6,223 6,219 6,220 6,209 6,183
Owned towers (7) 3,940 3,936 4,280 4,487 4,457
(1) Average Revenue Per User ("ARPU") metrics are calculated by dividing a revenue base by an average number of customers by the
number of months in the period. These revenue bases and customer populations are shown below:
a. Postpaid ARPU consists of total postpaid service revenues and postpaid customers.
b. Prepaid ARPU consists of total prepaid service revenues and prepaid customers.
c. Billed ARPU consists of total postpaid, prepaid and reseller service revenues and postpaid, prepaid and reseller
customers.
d. Service revenue ARPU consists of total postpaid, prepaid and reseller service revenues, inbound roaming and other
service revenues and postpaid, prepaid and reseller customers.
(2) Average Revenue Per Account ("ARPA") metric is calculated by dividing total postpaid service revenues by the average number
of postpaid accounts by the number of months in the period.
(3) Churn metrics represent the percentage of the postpaid or prepaid customers that disconnect service each month. These metrics
represent the average monthly postpaid or prepaid churn rate for each respective period.
(4) Smartphones represent wireless devices which run on an Android, Apple, BlackBerry or Windows Mobile operating system,
excluding connected devices. Smartphone penetration is calculated by dividing postpaid smartphone customers by total
postpaid handset customers.
(5) The decrease in the population of Consolidated markets is due primarily to the license exchange transactions of certain non-
operating licenses in North Carolina in December 2014 and Illinois and Indiana in March 2015. Total Population is used only
to calculate market penetration of consolidated markets and consolidated operating markets, respectively. See footnote (6)
below.
(6) Market penetration is calculated by dividing the number of wireless customers at the end of the period by the total
population of consolidated markets and consolidated operating markets, respectively, as estimated by Claritas. The increase
in consolidated markets penetration is due primarily to a lower denominator as a result of the license divestitures
described in footnote (5) above.
(7) During the quarters ended March 31, 2015 and December 31, 2014, sold 359 and 236 towers, respectively, in divested markets.
TDS Telecom
Summary Operating Data (Unaudited)
Quarter Ended 6/30/2015 3/31/2015 12/31/2014 9/30/2014 6/30/2014
--------- --------- ---------- --------- ---------
TDS Telecom
Wireline
--------
Residential
connections
Voice (1) 329,000 333,400 335,900 340,300 346,100
Broadband (2) 231,200 229,400 229,200 231,600 232,700
IPTV (3) 27,900 25,600 23,400 20,700 18,200
Wireline residential
connections 588,100 588,400 588,500 592,600 597,000
======= ======= ======= ======= =======
Total
residential
revenue per
connection (4) $42.10 $42.32 $41.56 $41.47 $41.05
Commercial
connections
Voice (1) 181,800 187,500 193,200 199,300 206,200
Broadband (2) 23,700 24,300 24,700 25,300 26,000
managedIP (5) 145,100 143,200 140,200 137,700 133,300
Wireline commercial
connections 350,600 355,000 358,100 362,300 365,500
======= ======= ======= ======= =======
Total Wireline
connections 938,700 943,400 946,600 954,900 962,500
======= ======= ======= ======= =======
Cable
-----
Cable
Connections
Video (6) 109,100 109,700 110,400 109,100 69,700
Broadband (7) 112,300 112,200 110,900 106,400 63,200
Voice (7) 51,500 49,100 46,000 41,800 17,800
Cable connections 272,900 271,000 267,300 257,300 150,700
======= ======= ======= ======= =======
(1) The individual circuit connecting customers to TDS Telecom's central office facilities.
(2) The number of customers provided high-capacity data circuits via various technologies, including
DSL and dedicated internet circuit technologies.
(3) The number of customers provided video services using IP networking technology.
(4) Total residential revenue per connection is calculated by dividing the average residential revenue
for the period by the average number of residential connections for the period.
(5) The number of telephone handsets, data lines and IP trunks providing communications using IP
networking technology.
(6) Generally, a home or business receiving video programming counts as one video connection. In
counting bulk residential or commercial connections, such as an apartment building or hotel,
connections are counted based on the number of units/rooms within the building receiving
service.
(7) Broadband and voice connections reflect billable number of lines into a building for high speed
data and voice services, respectively.
TDS Telecom
Capital Expenditures (000s)
Quarter
Ended 6/30/2015 3/31/2015 12/31/2014 9/30/2014 6/30/2014
--------- --------- ---------- --------- ---------
Wireline $31,700 $20,400 $51,400 $34,200 $27,400
Cable 11,900 11,600 14,600 7,600 7,200
HMS 9,400 4,900 13,400 9,800 10,600
$53,000 $36,900 $79,400 $51,600 $45,200
======= ======= ======= ======= =======
Telephone and Data Systems, Inc.
Consolidated Statement of Operations Highlights
Three Months Ended June 30,
(Unaudited, dollars and shares in thousands, except per share amounts)
Change
------
2015 2014 Amount Percent
---- ---- ------ -------
Operating revenues
U.S. Cellular $975,667 $957,773 $17,894 2%
TDS Telecom 294,813 270,850 23,963 9%
All Other (1) 5,915 7,769 (1,854) (24)%
1,276,395 1,236,392 40,003 3%
--------- --------- ------
Operating expenses
U.S. Cellular
Expenses
excluding
depreciation,
amortization
and accretion 812,918 863,361 (50,443) (6)%
Depreciation,
amortization
and accretion 150,581 148,337 2,244 2%
(Gain) loss on
asset
disposals,
net 5,399 6,893 (1,494) (22)%
(Gain) loss on
sale of
business and
other exit
costs, net (1,705) (10,511) 8,806 84%
(Gain) loss on
license sales
and
exchanges,
net (25) - (25) N/M
967,168 1,008,080 (40,912) (4)%
------- --------- -------
TDS Telecom
Expenses
excluding
depreciation,
amortization
and accretion 216,160 197,427 18,733 9%
Depreciation,
amortization
and accretion 56,636 53,175 3,461 7%
(Gain) loss on
asset
disposals,
net (631) 983 (1,614) >(100)%
(Gain) loss on
sale of
business and
other exit
costs, net (3,054) - (3,054) N/M
269,111 251,585 17,526 7%
------- ------- ------
All Other (1)
Expenses
excluding
depreciation
and
amortization 4,954 9,613 (4,659) (48)%
Depreciation
and
amortization 3,887 3,055 832 27%
(Gain) loss on
asset
disposals,
net (16) 27 (43) >(100)%
(Gain) loss on
sale of
business and
other exit
costs, net
(2) (830) 13,122 (13,952) >(100)%
7,995 25,817 (17,822) (69)%
----- ------ -------
Total operating expenses 1,244,274 1,285,482 (41,208) (3)%
--------- --------- -------
Operating income (loss)
U.S. Cellular 8,499 (50,307) 58,806 >100%
TDS Telecom 25,702 19,265 6,437 33%
All Other (1) (2,080) (18,048) 15,968 88%
32,121 (49,090) 81,211 >100%
------ ------- ------
Investment and other income (expense)
Equity in earnings
of unconsolidated
entities 35,412 34,790 622 2%
Interest and
dividend income 10,117 2,751 7,366 >100%
Interest expense (33,919) (27,898) (6,021) (22)%
Other, net 202 50 152 >100%
Total
investment
and other
income 11,812 9,693 2,119 22%
------ ----- -----
Income (loss) before income taxes 43,933 (39,397) 83,330 >100%
Income tax expense
(benefit) 17,433 (13,671) 31,104 >100%
Net income (loss) 26,500 (25,726) 52,226 >100%
Less: Net income
(loss)
attributable to
noncontrolling
interests, net of
tax 3,454 (3,688) 7,142 >100%
Net income (loss) attributable to TDS shareholders 23,046 (22,038) 45,084 >100%
TDS Preferred
dividend
requirement (12) (12) - -
Net income (loss) available to common
shareholders $23,034 $(22,050) $45,084 >100%
======= ======== =======
Basic weighted average shares outstanding 108,484 108,719 (235) -
Basic earnings per share attributable to TDS
shareholders $0.21 $(0.20) $0.42 >100%
Diluted weighted average shares outstanding 109,785 108,719 1,066 1%
Diluted earnings per share attributable to TDS
shareholders $0.21 $(0.20) $0.41 >100%
(1) Consists of TDS corporate, intercompany eliminations and all other business operations not
included in the U.S. Cellular and TDS Telecom segments.
(2) Due to Airadigm Transaction, TDS recognized expenses of $13.1 million related to exit and
disposal activities in 2014.
N/M - Percentage change not meaningful
Telephone and Data Systems, Inc.
Consolidated Statement of Operations Highlights
Six Months Ended June 30,
(Unaudited, dollars and shares in thousands, except per share amounts)
Change
------
2015 2014 Amount Percent
---- ---- ------ -------
Operating revenues
U.S. Cellular $1,940,912 $1,883,584 $57,328 3%
TDS Telecom 574,798 533,266 41,532 8%
All Other (1) 12,278 15,504 (3,226) (21)%
2,527,988 2,432,354 95,634 4%
--------- --------- ------
Operating expenses
U.S. Cellular
Expenses
excluding
depreciation,
amortization
and accretion 1,610,864 1,710,006 (99,142) (6)%
Depreciation,
amortization
and accretion 297,666 316,090 (18,424) (6)%
(Gain) loss on
asset
disposals,
net 9,650 8,827 823 9%
(Gain) loss on
sale of
business and
other exit
costs, net (113,182) (17,411) (95,771) >(100)%
(Gain) loss on
license sales
and
exchanges,
net (122,898) (91,446) (31,452) (34)%
1,682,100 1,926,066 (243,966) (13)%
--------- --------- --------
TDS Telecom
Expenses
excluding
depreciation,
amortization
and accretion 416,620 387,730 28,890 7%
Depreciation,
amortization
and accretion 113,799 106,950 6,849 6%
(Gain) loss on
asset
disposals,
net 499 1,327 (828) (62)%
(Gain) loss on
sale of
business and
other exit
costs, net (3,054) - (3,054)
527,864 496,007 31,857 6%
------- ------- ------
All Other (1)
Expenses
excluding
depreciation
and
amortization 10,216 18,939 (8,723) (46)%
Depreciation
and
amortization 6,214 6,446 (232) (4)%
(Gain) loss on
asset
disposals,
net (20) 179 (199) >(100)%
(Gain) loss on
sale of
business and
other exit
costs, net
(2) (13,136) 13,122 (26,258) >(100)%
3,274 38,686 (35,412) (92)%
----- ------ -------
Total operating expenses 2,213,238 2,460,759 (247,521) (10)%
--------- --------- --------
Operating income (loss)
U.S. Cellular 258,812 (42,482) 301,294 >100%
TDS Telecom 46,934 37,259 9,675 26%
All Other (1) 9,004 (23,182) 32,186 >100%
314,750 (28,405) 343,155 >100%
------- ------- -------
Investment and other income (expense)
Equity in earnings
of unconsolidated
entities 70,053 72,117 (2,064) (3)%
Interest and
dividend income 18,502 5,237 13,265 >100%
Interest expense (67,749) (56,605) (11,144) (20)%
Other, net 198 210 (12) (6)%
Total
investment
and other
income 21,004 20,959 45 -
------ ------ ---
Income (loss) before income taxes 335,754 (7,446) 343,200 >100%
Income tax expense
(benefit) 133,453 (2,014) 135,467 >100%
Net income (loss) 202,301 (5,432) 207,733 >100%
Less: Net income
(loss)
attributable to
noncontrolling
interests, net of
tax 33,515 (1,648) 35,163 >100%
Net income (loss)attributable to TDS shareholders 168,786 (3,784) 172,570 >100%
TDS Preferred
dividend
requirement (25) (25) - -
Net income (loss) available to common
shareholders $168,761 $(3,809) $172,570 >100%
======== ======= ========
Basic weighted average shares outstanding 108,327 108,853 (526) -
Basic earnings per share attributable to TDS
shareholders $1.56 $(0.04) $1.60 >100%
Diluted weighted average shares outstanding 109,380 108,853 527 -
Diluted earnings per share attributable to TDS
shareholders $1.53 $(0.04) $1.57 >100%
(1) Consists of TDS corporate, intercompany eliminations and all other business operations not
included in the U.S. Cellular and TDS Telecom segments.
(2) Compared to U.S. Cellular, TDS recognized an incremental gain of $11.9 million on the
tower sale as a result of a lower basis in the assets disposed in 2015. Due to the
Airadigm Transaction, TDS recognized expenses of $13.1 million related to exit and
disposal activities in 2014.
N/M - Percentage change not meaningful
Telephone and Data Systems, Inc.
Consolidated Balance Sheet Highlights
(Unaudited, dollars in thousands)
ASSETS
June 30, December 31,
2015 2014
---- ----
Current assets
Cash and cash equivalents $631,549 $471,901
Accounts receivable from customers
and others 703,892 683,681
Inventory, net 146,686 273,707
Net deferred income tax asset 92,881 107,686
Prepaid expenses 102,975 86,506
Income taxes receivable 426 113,708
Other current assets 30,480 29,766
1,708,889 1,766,955
Assets held for sale 22,203 103,343
Investments
Licenses 1,837,792 1,453,574
Goodwill 771,119 771,352
Franchise rights 244,300 244,300
Other intangible assets, net 55,123 64,499
Investments in unconsolidated
entities 364,205 321,729
Other investments 465 508
3,273,004 2,855,962
Property, plant and equipment, net
U.S. Cellular 2,625,815 2,728,217
TDS Telecom 1,078,653 1,093,671
Other 21,987 24,237
3,726,455 3,846,125
Other assets and deferred charges 255,761 334,554
------- -------
Total assets $8,986,312 $8,906,939
========== ==========
Telephone and Data Systems, Inc.
Consolidated Balance Sheet Highlights
(Unaudited, dollars in thousands)
LIABILITIES AND EQUITY
June 30, December 31,
2015 2014
---- ----
Current liabilities
Current portion
of long-term
debt $747 $808
Accounts payable 345,747 387,125
Customer
deposits and
deferred
revenues 317,759 324,318
Accrued interest 8,276 7,919
Accrued taxes 121,144 46,734
Accrued
compensation 92,994 114,549
Other current
liabilities 134,516 181,803
1,021,183 1,063,256
Liabilities held for sale - 21,643
Deferred liabilities and credits
Net deferred
income tax
liability 885,462 941,519
Other deferred
liabilities and
credits 436,810 430,774
Long-term debt 1,993,429 1,993,586
Noncontrolling interests with redemption features 1,178 1,150
Equity
TDS shareholders'
equity
Series A Common
and Common
Shares, par
value $.01 1,327 1,327
Capital in
excess of par
value 2,342,587 2,336,511
Treasury shares,
at cost (735,218) (748,199)
Accumulated
other
comprehensive
loss 5,130 6,452
Retained
earnings 2,468,070 2,330,187
Total TDS shareholders' equity 4,081,896 3,926,278
Preferred shares 824 824
Noncontrolling
interests 565,530 527,909
Total equity 4,648,250 4,455,011
Total liabilities and equity $8,986,312 $8,906,939
========== ==========
Balance Sheet Highlights
June 30, 2015
(Unaudited, dollars in thousands)
U.S. TDS TDS Corporate Intercompany TDS
Cellular Telecom & Other Eliminations Consolidated
-------- ------- ------- ------------ ------------
Cash and cash
equivalents $362,282 $62,234 $207,033 $ - $631,549
Affiliated cash investments - 405,855 - (405,855) -
$362,282 $468,089 $207,033 $(405,855) $631,549
======== ======== ======== ========= ========
Licenses, goodwill
and other intangible
assets $2,197,252 $849,195 $(138,113) $ - $2,908,334
Investment in unconsolidated
entities 325,857 3,804 39,575 (5,031) 364,205
Long-term and other
investments - 463 2 - 465
--- --- --- ---
$2,523,109 $853,462 $(98,536) $(5,031) $3,273,004
========== ======== ======== ======= ==========
Property, plant and
equipment, net $2,625,815 $1,078,653 $22,156 $(169) $3,726,455
========== ========== ======= ===== ==========
Long-term debt:
Current
portion $57 $25 $665 $ - $747
Non-
current
portion 1,151,999 1,401 840,029 - 1,993,429
$1,152,056 $1,426 $840,694 $ - $1,994,176
========== ====== ======== === === ==========
Telephone and Data Systems, Inc.
Consolidated Statement of Cash Flows
Six Months Ended June 30,
(Unaudited, dollars in thousands)
2015 2014
---- ----
Cash flows from operating activities
Net income (loss) $202,301 $(5,432)
Add (deduct)
adjustments to
reconcile net income
to cash flows from
operating activities
Depreciation, amortization and
accretion 417,679 429,486
Bad debts expense 54,599 52,098
Stock-based compensation expense 17,949 15,488
Deferred income taxes, net (40,640) (33,346)
Equity in earnings of
unconsolidated entities (70,053) (72,117)
Distributions from unconsolidated
entities 27,226 65,569
(Gain) loss on asset disposals, net 10,129 10,333
(Gain) loss on sale of business and
other exit costs, net (129,372) (4,289)
(Gain) loss on license sales and
exchanges, net (122,898) (91,446)
Noncash interest expense 1,363 1,014
Other operating activities (387) 3
Changes in assets and
liabilities from
operations
Accounts receivable (17,935) 67,136
Equipment installment plans
receivable (65,124) (47,971)
Inventory 127,021 38,674
Accounts payable 29,589 (43,132)
Customer deposits and deferred
revenues (7,005) 13,139
Accrued taxes 191,508 1,049
Accrued interest 361 22
Other assets and liabilities (87,880) (80,636)
538,431 315,642
------- -------
Cash flows from investing activities
Cash used for additions
to property, plant and
equipment (359,513) (339,907)
Cash paid for
acquisitions and
licenses (280,710) (18,681)
Cash received from
divestitures and
exchanges 291,888 125,905
Cash received for
investments - 10,000
Other investing
activities 2,328 3,720
(346,007) (218,963)
-------- --------
Cash flows from financing activities
Repayment of long-term
debt (434) (589)
TDS Common Shares
reissued for benefit
plans, net of tax
payments 9,831 401
U.S. Cellular Common
Shares reissued for
benefit plans, net of
tax payments (1,570) 830
Repurchase of TDS Common
Shares - (20,090)
Repurchase of U.S.
Cellular Common Shares (2,302) (8,298)
Dividends paid to TDS
shareholders (30,530) (29,107)
Payment of debt issuance
costs (3,080) -
Distributions to
noncontrolling interests (5,872) (482)
Other financing
activities 1,181 5,502
(32,776) (51,833)
------- -------
Net increase in cash and cash equivalents 159,648 44,846
Cash and cash equivalents
Beginning of period 471,901 830,014
End of period $631,549 $874,860
TDS Telecom Highlights
Three Months Ended June 30,
(Unaudited, dollars in thousands)
Change
------
2015 2014 Amount Percent
---- ---- ------ -------
Wireline
Operating revenues
Residential $74,277 $73,360 $917 1%
Commercial 55,395 57,472 (2,077) (4)%
Wholesale 45,741 49,465 (3,724) (8)%
Total
service
revenues 175,413 180,297 (4,884) (3)%
Equipment
sales 557 431 126 29%
175,970 180,728 (4,758) (3)%
------- ------- ------
Operating expenses
Cost of
services 62,604 64,305 (1,701) (3)%
Cost of
equipment
sold 597 481 116 24%
Selling,
general and
administrative
expenses 49,200 47,708 1,492 3%
Depreciation,
amortization
and accretion 41,203 41,827 (624) (1)%
(Gain) loss on
asset
disposals,
net 1,010 514 496 96%
(Gain) loss on
sale of
business and
other exit
costs, net (3,054) - (3,054) N/M
151,560 154,835 (3,275) (2)%
------- ------- ------
Operating
income $24,410 $25,893 $(1,483) (6)%
----------
Cable
Operating revenues
Residential $34,913 $18,222 $16,691 92%
Commercial 9,632 4,262 5,370 >100%
Total
service
revenues 44,545 22,484 22,061 98%
Equipment
sales 70 - 70 N/M
44,615 22,484 22,131 98%
------ ------ ------
Operating expenses
Cost of
services 19,849 11,394 8,455 74%
Cost of
equipment 15 - 15 N/M
Selling,
general and
administrative
expenses 13,764 6,285 7,479 >100%
Depreciation,
amortization
and accretion 8,860 4,557 4,303 94%
(Gain) loss on
asset
disposals,
net (1,668) 425 (2,093) >(100)%
40,820 22,661 18,159 80%
------ ------ ------
Operating
income (loss) $3,795 $(177) $3,972 >100%
------------
HMS
Operating revenues
Service
revenues $29,467 $27,575 $1,892 7%
Equipment
sales 46,119 40,361 5,758 14%
75,586 67,936 7,650 11%
------ ------ -----
Operating expenses
Cost of
services 21,954 21,301 653 3%
Cost of
equipment
sold 38,566 33,875 4,691 14%
Selling,
general and
administrative
expenses 10,969 12,376 (1,407) (11)%
Depreciation,
amortization
and accretion 6,573 6,791 (218) (3)%
(Gain) loss on
asset
disposals,
net 27 44 (17) (39)%
78,089 74,387 3,702 5%
------ ------ -----
Operating
(loss) $(2,503) $(6,451) $3,948 61%
----------
Intercompany revenues $(1,358) $(298) $(1,060) >(100)%
Intercompany expenses (1,358) (298) (1,060) >(100)%
------ ---- ------
Total TDS Telecom operating
income (loss) $25,702 $19,265 $6,437 33%
======= ======= ======
TDS Telecom Highlights
Six Months Ended June 30,
(Unaudited, dollars in thousands)
Change
------
2015 2014 Amount Percent
---- ---- ------ -------
Wireline
Operating revenues
Residential $148,962 $145,865 $3,097 2%
Commercial 111,158 115,452 (4,294) (4)%
Wholesale 90,984 95,913 (4,929) (5)%
Total
service
revenues 351,104 357,230 (6,126) (2)%
Equipment
sales 1,001 984 17 2%
352,105 358,214 (6,109) (2)%
------- ------- ------
Operating expenses
Cost of
services 125,031 128,705 (3,674) (3)%
Cost of
equipment
sold 1,160 964 196 20%
Selling,
general and
administrative
expenses 94,869 94,228 641 1%
Depreciation,
amortization
and accretion 83,212 84,563 (1,351) (2)%
(Gain) loss on
asset
disposals,
net 1,528 759 769 >100%
(Gain) loss on
sale of
business and
other exit
costs, net (3,054) - (3,054) N/M
302,746 309,219 (6,473) (2)%
------- ------- ------
Operating
income $49,359 $48,995 $364 1%
----------
Cable
Operating revenues
Residential $69,959 $36,475 $33,484 92%
Commercial 18,067 8,512 9,555 >100%
Total
service
revenues 88,026 44,987 43,039 96%
Equipment
sales 158 - 158 N/M
88,184 44,987 43,197 96%
------ ------ ------
Operating expenses
Cost of
services 39,797 22,349 17,448 78%
Cost of
equipment
sold 75 - 75 N/M
Selling,
general and
administrative
expenses 26,389 12,663 13,726 >100%
Depreciation,
amortization
and accretion 17,579 8,918 8,661 97%
(Gain) loss on
asset
disposals,
net (986) 490 (1,476) >(100)%
82,854 44,420 38,434 87%
------ ------ ------
Operating
income $5,330 $567 $4,763 >100%
----------
HMS
Operating revenues
Service
revenues $57,883 $54,951 $2,932 5%
Equipment
sales 78,664 76,093 2,571 3%
136,547 131,044 5,503 4%
------- ------- -----
Operating expenses
Cost of
services 41,982 38,247 3,735 10%
Cost of
equipment
sold 65,696 64,342 1,354 2%
Selling,
general and
administrative
expenses 23,659 27,211 (3,552) (13)%
Depreciation,
amortization
and accretion 13,008 13,469 (461) (3)%
(Gain) loss on
asset
disposals,
net (43) 78 (121) >(100)%
144,302 143,347 955 1%
------- ------- ---
Operating
(loss) $(7,755) $(12,303) $4,548 37%
----------
Intercompany revenues $(2,038) $(979) $(1,059) >(100)%
Intercompany expenses (2,038) (979) (1,059) >(100)%
------ ---- ------
Total TDS Telecom operating
income $46,934 $37,259 $9,675 26%
======= ======= ======
Telephone and Data Systems, Inc.
Financial Measures and Reconciliations
(Unaudited, dollars in thousands)
TDS Consolidated
----------------
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
2015 2014 2015 2014
---- ---- ---- ----
Cash flows from operating activities $183,125 $210,705 $538,431 $315,642
Add: Sprint Cost Reimbursement 7,462 22,862 23,174 34,116
Less: Cash used for additions to
property, plant and equipment 193,052 189,017 359,513 339,907
Adjusted free cash flow
(1) $(2,465) $44,550 $202,092 $9,851
======= ======= ======== ======
(1) Adjusted free cash flow is defined as Cash flows from operating activities
(which includes cash outflows related to the Sprint decommissioning), as
adjusted for cash proceeds from the Sprint Cost Reimbursement (which are
included in Cash flows from investing activities in the Consolidated Statement
of Cash Flows), less Cash used for additions to property, plant and equipment.
Adjusted free cash flow is a non-GAAP financial measure which TDS believes
may be useful to investors and other users of its financial information in
evaluating the amount of cash generated by business operations (including cash
proceeds from the Sprint Cost Reimbursement), after Cash used for additions to
property, plant and equipment.
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/tds-reports-second-quarter-2015-results-300121827.html
SOURCE Telephone and Data Systems, Inc.
