TELEPHONE AND DATA SYSTEMS, INC. CHICAGO, Aug. 5, 2016 /PRNewswire/ -- Telephone and Data Systems, Inc. (NYSE:TDS) reported total operating revenues of $1,283 million for the second quarter of 2016, versus $1,276 million for the comparable period one year ago. Net income attributable to TDS shareholders and related diluted earnings per share were $28 million and $0.25, respectively, for the second quarter of 2016, compared to $23 million and $0.21, respectively, in the comparable period one year ago.
"TDS businesses showed continued progress through the quarter," said LeRoy T. Carlson, Jr., TDS president and CEO. "U.S. Cellular grew its customers while TDS Telecom achieved growth in IPTV and broadband connections and increased service revenues at OneNeck.
"U.S. Cellular maintained momentum in the quarter by increasing connections and driving exceptionally low churn, reflecting our commitment to providing a top quality network and outstanding customer service at every point of customer engagement. U.S. Cellular focused on stronger adoption of equipment installment plans (EIP), which generated strong equipment revenue growth.
"TDS Telecom achieved success in the recent quarter by growing total wireline residential connections, adding IPTV connections and increasing residential revenue per connection. TDS Telecom's cable segment added residential broadband and voice connections and increased operating revenues. TDS Telecom's IT service business, OneNeck, generated higher revenues from maintenance and professional services and increased its equipment sales of hardware solutions."
2016 Estimated Results
Current estimates of full-year 2016 results for U.S. Cellular, TDS Telecom, and TDS, which are unchanged from the previous estimates, are shown below. Such estimates represent management's view as of August 5, 2016. 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.
2016 Estimated Results
U.S. Cellular TDS Telecom TDS(2)
Current Previous Current Previous Current Previous
(Dollars in millions)
Total operating revenues $3,900-$4,100 Unchanged $1,130-$1,180 Unchanged $5,040-$5,290 Unchanged
Operating cash flow (1) $525-$650 Unchanged $270-$310 Unchanged $800-$965 Unchanged
Adjusted EBITDA (1) $725-$850 Unchanged $270-$310 Unchanged $1,000-$1,165 Unchanged
Capital expenditures
(Approximately) $500 Unchanged $180 Unchanged $695 Unchanged
The following tables provide a reconciliation to Operating Cash Flow and Adjusted EBITDA for 2016 estimated results, and actual results for the six months ended June 30, 2016 and year ended December 31, 2015. In providing 2016 estimated results, TDS has not completed the below reconciliation to net income because it does not provide guidance for income taxes. Although potentially significant, TDS believes that the impact of income taxes cannot be reasonably predicted; therefore, TDS is unable to provide such guidance.
2016 Estimated Results
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) $ (5)-120 $ 40-80 $ (25)-140
--- ------- --- ----- --- --------
Add back:
Interest
expense 110 - 165
Depreciation,
amortization
and accretion
expense
610 230 850
--- --- ---
EBITDA (Non-GAAP) $ 715-840 $ 270-310 $ 990-1,155
--- ------- --- ------- --- ---------
Add back:
(Gain) loss on
sale of
business and
other exit
costs, net
- - -
(Gain) loss on
license sales
and
exchanges,
net
(10) - (10)
(Gain) loss on asset
disposals, net 20 - 20
--- --- ---
Adjusted EBITDA (Non-GAAP) (1) $ 725-850 $ 270-310 $ 1,000-1,165
=== ======= === ======= === ===========
Deduct:
Equity in
earnings of
unconsolidated
entities
140 - 140
Interest and dividend
income 60 - 60
--- --- ---
Operating cash flow (Non-GAAP)
(1) $ 525-650 $ 270-310 $ 800-965
=== ======= === ======= === =======
Actual Results
Six Months Ended June 30, 2016 Year ended December 31, 2015
U.S. Cellular TDS TDS (2) U.S. Cellular* TDS TDS (2)*
Telecom Telecom
(Dollars in millions)
Net income (GAAP) $37 $25 $42 $247 $46 $263
Add back:
Income tax
expense 23 16 31 156 35 172
Income before income taxes (GAAP)
$60 $41 $73 $404 $81 $435
Add back:
Interest
expense 56 1 85 86 1 142
Depreciation,
amortization
and accretion
expense
307 112 422 606 228 844
EBITDA (Non-GAAP) $423 $154 $580 $1,096 $310 $1,421
---- ---- ---- ------ ---- ------
Add back:
(Gain) loss on
sale of
business and
other exit
costs, net
- - - (114) (10) (136)
(Gain) loss on
license sales
and
exchanges,
net
(9) - (9) (147) - (147)
(Gain) loss on
asset
disposals,
net 10 2 12 16 6 22
Adjusted EBITDA (Non-GAAP) (1) $424 $156 $583 $852 $306 $1,160
==== ==== ==== ==== ==== ======
Deduct:
Equity in
earnings of
unconsolidated
entities
72 - 72 140 - 140
Interest and
dividend
income 27 2 29 37 2 39
Operating cash flow (Non-GAAP) (1)(3) $325 $155 $482 $675 $304 $981
==== ==== ==== ==== ==== ====
* Includes $58 million of revenue related to termination of the rewards points program.
Note: Totals may not foot due to rounding differences.
(1) Adjusted EBITDA (earnings before interest, taxes,
depreciation, amortization and accretion) is
defined as net income adjusted for the items set
forth in the reconciliation above. Operating
cash flow is defined as net income adjusted for
the items set forth in the reconciliation above.
Adjusted EBITDA and Operating cash flow 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 incomes, as
indicators of cash flows or as measure of
liquidity. TDS does not intend to imply that
any such items set forth in the reconciliation
above are non-recurring, infrequent or unusual;
such items may occur in the future. Management
uses Adjusted EBITDA and Operating cash flow as
measurements of profitability, and therefore
reconciliations to applicable GAAP income
measures are deemed most appropriate.
Management believes Adjusted EBITDA and
Operating cash flow are useful measures of TDS'
operating results before significant recurring
non-cash charges, gains and losses, and other
items as presented below as they provide
additional relevant and useful information to
investors and other users of TDS' financial data
in evaluating the effectiveness of its
operations and underlying business trends in a
manner that is consistent with management's
evaluation of business performance. Adjusted
EBITDA shows adjusted earnings before interest,
taxes, depreciation, amortization and accretion,
while Operating cash flow reduces this measure
further to exclude Equity in earnings of
unconsolidated entities and Interest and
dividend income in order to more effectively
show the performance of operating activities
excluding investment activities. The table
above reconciles Adjusted EBITDA and Operating
cash flow to the corresponding GAAP measure, Net
income or Income (loss) before incomes taxes.
(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) A reconciliation of Operating cash flow (Non-
GAAP) to operating income (GAAP) for June 30,
2016 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)
2016 (year-to-date through June
30, 2016) 111,700 $3
2015 (full year) - $ -
Total 111,700 $3
======= ===
Conference Call Information
TDS will hold a conference call on August 5, 2016 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/1145/16520.
-- 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 500((R)) company, provides wireless; cable and wireline broadband, TV and voice; and hosted and managed services to approximately 6 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 10,400 people as of June 30, 2016.
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: intense competition; the ability to execute TDS' business strategy; uncertainties in TDS' future cash flows and liquidity and access to the capital markets; the ability to make payments on TDS and U.S. Cellular indebtedness or comply with the terms of debt covenants; 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; 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; 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, 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 6/30/2016 3/31/2016 12/31/2015 9/30/2015 6/30/2015
Retail Connections
Postpaid
Total at end of
period 4,490,000 4,454,000 4,409,000 4,341,000 4,324,000
Gross additions 197,000 215,000 240,000 200,000 191,000
Feature
phones 8,000 9,000 10,000 14,000 15,000
Smartphones 107,000 124,000 132,000 119,000 115,000
Connected
devices 82,000 82,000 98,000 67,000 61,000
Net additions
(losses) 36,000 45,000 68,000 17,000 17,000
Feature
phones (21,000) (25,000) (25,000) (28,000) (26,000)
Smartphones 8,000 20,000 23,000 6,000 7,000
Connected
devices 49,000 50,000 70,000 39,000 36,000
ARPU (1)(8) $47.37 $48.13 $51.46 $58.12 $53.62
ABPU (Non-
GAAP)*(2)(8) $56.09 $56.06 $58.57 $63.88 $58.06
ARPA (3)(8) $124.91 $125.36 $131.96 $147.00 $133.85
ABPA (Non-
GAAP)*(4)(8) $147.90 $145.99 $150.19 $161.57 $144.94
Churn rate (5) 1.20% 1.28% 1.31% 1.41% 1.34%
Handsets 1.10% 1.18% 1.23% 1.33% 1.26%
Connected
devices 1.84% 2.01% 1.95% 2.20% 2.13%
Smartphone
penetration (6) 77% 75% 74% 72% 69%
Prepaid
Total at end of
period 413,000 399,000 387,000 380,000 368,000
Gross additions 73,000 75,000 69,000 71,000 65,000
Net additions
(losses) 14,000 12,000 7,000 12,000 8,000
ARPU (1) $34.58 $35.51 $35.54 $35.64 $35.98
Churn rate (5) 4.86% 5.37% 5.40% 5.24% 5.22%
Total connections at end of period (9) 4,973,000 4,926,000 4,876,000 4,807,000 4,779,000
Smartphones sold as a percent of total handsets sold
91% 92% 91% 87% 87%
Market penetration at end of period
Consolidated operating
population 31,994,000 31,994,000 31,967,000 31,814,000 31,814,000
Consolidated operating
penetration (7) 16% 15% 15% 15% 15%
Capital expenditures (millions) $93 $79 $198 $135 $134
Total cell sites in service 6,324 6,306 6,297 6,246 6,223
Owned towers 3,988 3,989 3,978 3,957 3,940
* See Non-GAAP reconciliation at end.
(1) Average Revenue Per User ("ARPU") -metric is calculated by
dividing a revenue base by an average number of connections and
by the number of months in the period. These revenue bases and
connection populations are shown below:
Postpaid ARPU consists of total postpaid service revenues
and postpaid connections.
Prepaid ARPU consists of total prepaid service revenues
and prepaid connections.
(2) Average Billings Per User ("ABPU") - non-GAAP metric is
calculated by dividing total postpaid service revenues plus
equipment installment plan billings by the average number of
postpaid connections and by the number of months in the period.
(3) Average Revenue Per Account ("ARPA") -metric is calculated by
dividing total postpaid service revenues by the average number of
postpaid accounts and by the number of months in the period.
(4) Average Billings Per Account ("ABPA") - non-GAAP metric is
calculated by dividing total postpaid service revenues plus
equipment installment plan billings by the average number of
postpaid accounts and by the number of months in the period.
(5) Churn metrics represents the percentage of the connections that
disconnect service each month. These rates represent the average
monthly churn rate for each respective period.
(6) 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 connections by postpaid handset
connections.
(7) Market penetration is calculated by dividing the number of
wireless connections at the end of the period by the total
population of consolidated operating markets as estimated by
Nielsen.
(8) The quarter ended September 30, 2015 results include the
recognition of $58 million in revenue due to the termination of
the rewards program.
(9) Includes reseller and other connections.
TDS Telecom
Summary Operating Data (Unaudited)
Quarter Ended 6/30/2016 3/31/2016 12/31/2015 9/30/2015 6/30/2015
TDS Telecom
Wireline
--------
Residential
connections
Voice (1) 316,800 318,400 319,800 325,900 329,000
Broadband (2) 232,200 229,100 228,500 231,600 231,200
IPTV (3) 41,200 38,300 34,400 30,300 27,900
Wireline residential connections 590,200 585,800 582,700 587,800 588,100
------- ------- ------- ------- -------
Total residential
revenue per
connection (4) $43.67 $43.28 $41.24 $42.83 $42.10
Commercial
connections
Voice (1) 164,000 167,400 171,500 176,700 181,800
Broadband (2) 21,900 22,000 22,400 23,000 23,700
managedIP (5) 149,000 148,500 147,100 145,900 145,100
Wireline commercial connections 334,900 337,900 341,000 345,600 350,600
------- ------- ------- ------- -------
Total Wireline
connections 925,100 923,700 923,700 933,400 938,700
Cable
-----
Cable Connections
Video (6) 102,900 104,600 106,800 108,300 109,100
Broadband (7) 125,700 121,700 117,100 114,600 112,300
Voice (8) 58,900 58,100 56,400 54,000 51,500
Cable connections 287,600 284,400 280,300 276,900 272,900
======= ======= ======= ======= =======
Numbers may not foot due to rounding.
(1) The individual circuits connecting a customer to
Wireline's central office facilities.
(2) The number of Wireline customers provided high-
capacity data circuits via various technologies,
including DSL and dedicated internet circuit
technologies.
(3) The number of Wireline customers provided video
services using IP networking technology.
(4) Total residential revenue per connection is calculated
by dividing total Wireline residential revenue by the
average number of total Wireline residential
connections and by the number of months in 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) Billable number of lines into a building for high-
speed data services.
(8) Billable number of lines into a building for voice
services.
TDS Telecom
Capital Expenditures (millions)
Quarter
Ended 6/30/2016 3/31/2016 12/31/2015 9/30/2015 6/30/2015
Wireline $27 $27 $50 $38 $32
Cable 17 13 15 13 12
HMS 2 2 8 5 9
$46 $42 $73 $56 $53
=== === === === ===
Telephone and Data Systems, Inc.
Consolidated Statement of Operations Highlights
(Unaudited)
Three Months Ended June 30,
2016 2015 2016 vs. 2015
Increase (Decrease)
(Dollars and shares in millions, except per share
amounts)
Operating revenues
U.S. Cellular $980 $976 $4 -
TDS Telecom 300 295 5 2%
All Other (1) 3 5 (2) (40)%
1,283 1,276 7 1%
----- ----- ---
Operating expenses
U.S. Cellular
Expenses
excluding
depreciation,
amortization
and accretion
812 814 (2) -
Depreciation,
amortization
and accretion 154 151 3 2%
(Gain) loss on
asset
disposals, net 5 5 - (12)%
(Gain) loss on
sale of
business and
other exit
costs, net - (2) 2 N/M
(Gain) loss on
license sales
and exchanges,
net (9) - (9) >(100)%
962 968 (6) (1)%
--- --- ---
TDS Telecom
Expenses
excluding
depreciation,
amortization
and accretion
221 216 4 2%
Depreciation,
amortization
and accretion 54 57 (3) (6)%
(Gain) loss on
asset
disposals, net 1 (1) 2 >100%
(Gain) loss on
sale of
business and
other exit
costs, net - (3) 3 >100%
275 269 6 2%
--- --- ---
All Other (1)
Expenses
excluding
depreciation
and
amortization 3 4 (1) (49)%
Depreciation
and
amortization 2 3 (1) (52)%
(Gain) loss on
asset
disposals, net - 1 (1) >100%
(Gain) loss on
sale of
business and
other exit
costs, net (2) - (1) 1 100%
5 7 (2) (45)%
--- --- ---
Total operating expenses 1,242 1,244 (2) -
----- ----- ---
Operating income (loss)
U.S. Cellular 18 8 10 >100%
TDS Telecom 24 26 (1) (5)%
All Other (1) (1) (2) - 61%
41 32 9 28%
--- --- ---
Investment and other income (expense)
Equity in earnings
of unconsolidated
entities 36 35 1 3%
Interest and
dividend income 15 10 5 52%
Interest expense (43) (34) (9) (26)%
Other, net 1 1 - >(100)%
Total
investment and
other income 9 12 (3) (25)%
--- --- ---
Income before income taxes 50 44 6 14%
Income tax expense 18 18 - 4%
Net income 32 26 6 20%
Less: Net income
attributable to
noncontrolling
interests, net of
tax
4 3 1 18%
--- --- ---
Net income attributable to TDS shareholders 28 23 5 21%
TDS Preferred
dividend
requirement - - - -
Net income available to common shareholders $28 $23 $5 21%
=== === ===
Basic weighted average shares outstanding 109 108 1 1%
Basic earnings per share attributable to TDS
shareholders $0.25 $0.21 $0.04 19%
Diluted weighted average shares outstanding 111 110 1 1%
Diluted earnings per share attributable to
TDS shareholders $0.25 $0.21 $0.04 19%
(1) Consists of TDS corporate, intercompany
eliminations and all other business operations
not included in the U.S. Cellular and TDS
Telecom segments.
N/M - Percentage change not meaningful
Telephone and Data Systems, Inc.
Consolidated Statement of Operations Highlights
(Unaudited)
Six Months Ended June 30,
2016 2015 2016 vs. 2015
Increase (Decrease)
(Dollars and shares in millions, except per share
amounts)
Operating revenues
U.S. Cellular $1,938 $1,941 $(3) -
TDS Telecom 581 575 6 1%
All Other (1) 7 12 (5) (45)%
2,526 2,528 (2) -
----- ----- ---
Operating expenses
U.S. Cellular
Expenses
excluding
depreciation,
amortization
and accretion
1,613 1,610 3 -
Depreciation,
amortization
and accretion 307 298 9 3%
(Gain) loss on
asset
disposals, net 10 10 - 2%
(Gain) loss on
sale of
business and
other exit
costs, net - (113) 113 100%
(Gain) loss on
license sales
and exchanges,
net (9) (123) 114 93%
1,921 1,682 239 14%
----- ----- ---
TDS Telecom
Expenses
excluding
depreciation,
amortization
and accretion
426 417 10 2%
Depreciation,
amortization
and accretion 112 114 (2) (2)%
(Gain) loss on
asset
disposals, net 2 - 2 >100%
(Gain) loss on
sale of
business and
other exit
costs, net - (3) 3 >100%
540 528 12 2%
--- --- ---
All Other (1)
Expenses
excluding
depreciation
and
amortization 5 10 (5) (54)%
Depreciation
and
amortization 3 6 (3) (40)%
(Gain) loss on
sale of
business and
other exit
costs, net (2) - (13) 13 100%
8 3 5 >100%
--- --- ---
Total operating expenses 2,469 2,213 256 12%
----- ----- ---
Operating income (loss)
U.S. Cellular (3) 17 259 (242) (93)%
TDS Telecom 41 47 (6) (12)%
All Other (1) (1) 9 (10) >(100)%
57 315 (258) (82)%
--- --- ----
Investment and other income (expense)
Equity in earnings
of unconsolidated
entities 72 70 2 2%
Interest and
dividend income 29 19 10 58%
Interest expense (85) (68) (17) (25)%
Total
investment and
other income 16 21 (5) (24)%
--- --- ---
Income before income taxes 73 336 (263) (78)%
Income tax expense 31 134 (103) (77)%
Net income 42 202 (160) (79)%
Less: Net income
attributable to
noncontrolling
interests, net of
tax
6 33 (27) (82)%
--- --- ---
Net income attributable to TDS shareholders 36 169 (133) (79)%
TDS Preferred
dividend
requirement - - - -
Net income available to common shareholders $36 $169 $(133) (79)%
=== ==== =====
Basic weighted average shares outstanding 109 108 1 1%
Basic earnings per share attributable to TDS
shareholders $0.33 $1.56 $(1.23) (79)%
Diluted weighted average shares outstanding 111 109 2 1%
Diluted earnings per share attributable to
TDS shareholders $0.32 $1.53 $(1.21) (79)%
(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 $12 million on the tower
sale as a result of a lower basis in the
assets disposed in 2015.
(3) Year-over-year comparisons are affected by
gains of $252 million from sales and exchanges
of businesses and licenses in 2015.
N/M - Percentage change not meaningful
Telephone and Data Systems, Inc.
Consolidated Statement of Cash Flows
(Unaudited)
Six Months Ended June 30,
2016 2015
(Dollars in millions)
Cash flows from operating activities
Net income $42 $202
Add (deduct)
adjustments to
reconcile net income
to net cash flows
from operating
activities
Depreciation,
amortization
and accretion 422 418
Bad debts
expense 46 55
Stock-based
compensation
expense 18 18
Deferred
income taxes,
net 8 (41)
Equity in
earnings of
unconsolidated
entities (72) (70)
Distributions
from
unconsolidated
entities 30 27
(Gain) loss on
asset
disposals,
net 12 10
(Gain) loss on
sale of
business and
other exit
costs, net - (129)
(Gain) loss on
license sales
and
exchanges,
net (9) (123)
Noncash
interest
expense 2 1
Other
operating
activities (3) -
Changes in assets and
liabilities from
operations
Accounts
receivable (6) (18)
Equipment
installment
plans
receivable (94) (65)
Inventory (26) 127
Accounts
payable 32 30
Customer
deposits and
deferred
revenues (18) (7)
Accrued taxes 76 191
Accrued
interest (1) -
Other assets
and
liabilities (59) (88)
Net cash provided by
operating activities 400 538
--- ---
Cash flows from investing activities
Cash used for additions
to property, plant and
equipment (281) (359)
Cash paid for
acquisitions and
licenses (46) (281)
Cash received from
divestitures and
exchanges 17 292
Federal Communications
Commission deposit (143) -
Other investing
activities 1 2
Net cash used in investing
activities (452) (346)
---- ----
Cash flows from financing activities
Repayment of long-term
debt (6) -
Issuance of long-term
debt 2 -
TDS Common Shares
reissued for benefit
plans, net of tax
payments - 10
U.S. Cellular Common
Shares reissued for
benefit plans, net of
tax payments 3 (2)
Repurchase of TDS Common
Shares (3) -
Repurchase of U.S.
Cellular Common Shares (2) (2)
Dividends paid to TDS
shareholders (32) (31)
Payment of debt issuance
costs (4) (3)
Distributions to
noncontrolling interests (1) (6)
Other financing
activities 9 2
Net cash provided by
financing activities (34) (32)
--- ---
Net increase (decrease) in cash and cash equivalents (86) 160
Cash and cash equivalents
Beginning of period 985 472
End of period $899 $632
Telephone and Data Systems, Inc.
Consolidated Balance Sheet Highlights
(Unaudited)
ASSETS
June 30, December 31,
2016 2015
(Dollars in millions)
Current assets
Cash and cash
equivalents $899 $985
Accounts
receivable
from
customers
and others,
net 824 803
Inventory,
net 184 158
Prepaid
expenses 121 112
Income taxes
receivable 6 70
Other current
assets 31 30
Total current assets 2,065 2,158
Assets held for sale 23 -
Licenses 1,864 1,844
Goodwill 766 766
Franchise rights 244 244
Other intangible assets, net 39 47
Investments in unconsolidated
entities 446 402
Property, plant and equipment, net 3,613 3,764
Other assets and deferred charges 366 197
--- ---
Total assets $9,426 $9,422
====== ======
Telephone and Data Systems, Inc.
Consolidated Balance Sheet Highlights
(Unaudited)
LIABILITIES AND EQUITY
June 30, December 31,
2016 2015
(Dollars in millions)
Current liabilities
Current portion of
long-term debt $14 $14
Accounts payable 362 349
Customer deposits and
deferred revenues 269 288
Accrued interest 11 12
Accrued taxes 50 41
Accrued compensation 96 113
Other current
liabilities 96 127
Total current
liabilities 898 944
Deferred liabilities and credits
Deferred income tax
liability, net 908 900
Other deferred
liabilities and
credits 447 433
Long-term debt 2,436 2,440
Noncontrolling interests with redemption features 1 1
Equity
TDS shareholders'
equity
Series A Common
and Common
Shares, par
value $.01 1 1
Capital in excess
of par value 2,363 2,365
Treasury shares,
at cost (717) (727)
Accumulated other
comprehensive
income (loss) - -
Retained earnings 2,487 2,487
Total TDS shareholders' equity 4,134 4,126
Preferred shares 1 1
Noncontrolling
interests 601 577
Total equity 4,736 4,704
Total liabilities and equity $9,426 $9,422
====== ======
Balance Sheet Highlights
(Unaudited)
June 30, 2016
U.S. TDS TDS Corporate Intercompany TDS
Cellular Telecom & Other Eliminations Consolidated
(Dollars in millions)
Cash and cash
equivalents $621 $40 $238 $ - $899
Affiliated cash investments - 359 - (359) -
$621 $399 $238 $(359) $899
==== ==== ==== ===== ====
Licenses, goodwill and other
intangible assets
$2,224 $828 $(138) $ - $2,913
Investment in unconsolidated
entities 407 4 40 (6) 446
$2,631 $832 $(98) $(6) $3,359
====== ==== ==== === ======
Property, plant and
equipment, net $2,510 $1,078 $25 $ - $3,613
====== ====== === === === ======
Long-term debt:
Current portion $11 $ - $3 $ - $14
Non-current portion 1,623 1 812 - 2,436
$1,634 $1 $815 $ - $2,450
====== === ==== === === ======
TDS Telecom Highlights
(Unaudited)
Three Months Ended June 30,
2016 2015 2016 vs. 2015
Increase (Decrease)
Wireline
Operating revenues
Residential $77 $74 $3 4%
Commercial 53 55 (2) (4)%
Wholesale 44 46 (1) (3)%
Total
service
revenues 175 175 - -
Equipment
sales - 1 - (11)%
175 176 (1) -
--- --- ---
Operating expenses
Cost of
services 64 63 1 -
Cost of
equipment
sold - 1 (1) (22)%
Selling,
general and
administrative
expenses 49 49 - -
Depreciation,
amortization
and accretion 37 41 (4) (10)%
(Gain) loss on
asset
disposals,
net 1 1 - (43)%
(Gain) loss on
sale of
business and
other exit
costs, net - (3) 3 >100%
151 152 (1) (1)%
--- --- ---
Operating
income $25 $24 $(1) 1%
----------
Cable
Operating revenues
Residential $36 $35 $1 3%
Commercial 9 10 - (3)%
Total
service
revenues 45 45 1 2%
Operating expenses
Cost of
services 24 20 4 19%
Selling,
general and
administrative
expenses 12 14 (2) (11)%
Depreciation,
amortization
and accretion 9 9 - 5%
(Gain) loss on
asset
disposals,
net - (2) 2 >100%
46 41 5 12%
--- --- ---
Operating
income $ - $4 $(4) >(100)%
---------- ---
HMS
Operating revenues
Service
revenues $33 $29 $3 11%
Equipment
sales 47 46 1 3%
80 76 4 6%
--- --- ---
Operating expenses
Cost of
services 19 22 (3) (13)%
Cost of
equipment
sold 39 39 - 1%
Selling,
general and
administrative
expenses 15 11 4 33%
Depreciation,
amortization
and accretion 7 7 1 11%
80 78 2 2%
--- --- ---
Operating
(loss) $ - $(3) $2 99%
---------- ---
Intercompany revenues $(1) $(1) $ - 20%
Intercompany expenses (1) (1) - 20%
--- --- ---
Total TDS Telecom operating
income $24 $26 $(1) (5)%
=== === ===
Numbers may not foot due to rounding.
TDS Telecom Highlights
(Unaudited)
Six Months Ended June 30,
2016 2015 2016 vs. 2015
Increase (Decrease)
(Dollars in millions)
Wireline
Operating revenues
Residential $153 $149 $4 3%
Commercial 107 111 (4) (4)%
Wholesale 87 91 (4) (4)%
Total
service
revenues 347 351 (4) (1)%
Equipment
sales 1 1 - 2%
348 352 (4) (1)%
--- --- ---
Operating expenses
Cost of
services 126 125 1 -
Cost of
equipment
sold 1 1 - (15)%
Selling,
general and
administrative
expenses 98 95 3 3%
Depreciation,
amortization
and accretion 78 83 (5) (6)%
(Gain) loss on
asset
disposals,
net 1 2 (1) (35)%
(Gain) loss on
sale of
business and
other exit
costs, net - (3) 3 >100%
304 303 1 -
--- --- ---
Operating
income $45 $49 $(5) (9)%
----------
Cable
Operating revenues
Residential $72 $70 $2 2%
Commercial 19 18 1 3%
Total
service
revenues 90 88 3 2%
--- --- ---
Operating expenses
Cost of
services 46 40 6 15%
Selling,
general and
administrative
expenses 24 26 (2) (7)%
Depreciation,
amortization
and accretion 18 18 - 5%
(Gain) loss on
asset
disposals,
net 1 (1) 2 >100%
90 83 7 8%
--- --- ---
Operating
income $1 $5 $(5) (90)%
----------
HMS
Operating revenues
Service
revenues $62 $58 $4 7%
Equipment
sales 82 79 4 5%
144 137 8 6%
--- --- ---
Operating expenses
Cost of
services 40 42 (2) (4)%
Cost of
equipment
sold 68 66 3 4%
Selling,
general and
administrative
expenses 25 24 2 6%
Depreciation,
amortization
and accretion 15 13 2 12%
148 144 4 3%
--- --- ---
Operating
(loss) $(4) $(8) $4 46%
----------
Intercompany revenues $(2) $(2) $ - (2)%
Intercompany expenses (2) (2) - (2)%
--- --- ---
Total TDS Telecom operating
income $41 $47 $(6) (12)%
=== === ===
Numbers may not foot due to rounding.
Telephone and Data Systems, Inc.
Financial Measures and Reconciliations
(Unaudited)
Free Cash Flow and Adjusted Free Cash Flow
Three Months Ended June 30, Six Months Ended June 30,
2016 2015 2016 2015
(Dollars in millions)
Cash flows from operating activities
(GAAP) $154 $183 $400 $538
Less: Cash used for additions to
property, plant and equipment 122 193 281 359
--- --- --- ---
Free cash flow 32 (10) 119 179
Add: Sprint Cost Reimbursement 2 7 4 23
Adjusted free cash flow
(Non-GAAP)(1) $34 $(3) $123 $202
=== === ==== ====
(1) Management uses Free cash flow as a
liquidity measure and it is defined as
Cash flows from operating activities less
Cash paid for additions to property, plant
and equipment. 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 paid for additions to property,
plant and equipment. Sprint
decommissioning and Sprint Cost
Reimbursement are further defined and
discussed in our Annual Report on Form 10-
K for the year ended December 31, 2015.
Free cash flow and Adjusted free cash flow
are non-GAAP financial measures 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 paid for
additions to property, plant and
equipment.
Postpaid ABPU and Postpaid ABPA
U.S. Cellular presents Postpaid ABPU and Postpaid ABPA to reflect the revenue shift from Service revenues to Equipment and product sales resulting from the increased adoption of equipment installment plans. Postpaid ABPU and Postpaid ABPA, as previously defined, are non-GAAP financial measure which U.S. Cellular believes are useful to investors and other users of its financial information in showing trends in both service and equipment revenues received from customers.
Three Months Ended June 30, Six Months Ended June 30,
2016 2015 2016 2015
(Dollars and connection
counts in millions)
Calculation of Postpaid
ARPU
-----------------------
Postpaid service revenues $636 $694 $1,275 $1,401
Average number of postpaid
connections 4.48 4.31 4.45 4.31
Number of months in period 3 3 6 6
Postpaid
ARPU (GAAP
metric) $47.37 $53.62 $47.76 $54.24
===
Calculation of Postpaid
ABPU
-----------------------
Postpaid service revenues $636 $694 $1,275 $1,401
Equipment installment plan
billings 118 58 223 104
--- --- --- ---
Total
billings to
postpaid
connections $754 $752 $1,498 $1,505
Average number of postpaid
connections 4.48 4.31 4.45 4.31
Number of months in period 3 3 6 6
Postpaid
ABPU (Non-
GAAP
metric) $56.09 $58.06 $56.08 $58.28
===
Calculation of Postpaid
ARPA
-----------------------
Postpaid service revenues $636 $694 $1,275 $1,401
Average number of postpaid
accounts 1.70 1.73 1.70 1.74
Number of months in period 3 3 6 6
Postpaid
ARPA (GAAP
metric) $124.91 $133.85 $125.13 $134.39
===
Calculation of Postpaid
ABPA
-----------------------
Postpaid service revenues $636 $694 $1,275 $1,401
Equipment installment plan
billings 118 58 223 104
--- --- --- ---
Total
billings to
postpaid
accounts $754 $752 $1,498 $1,505
Average number of postpaid
accounts 1.70 1.73 1.70 1.74
Number of months in period 3 3 6 6
Postpaid
ABPA (Non-
GAAP
metric) $147.90 $144.94 $146.95 $144.40
===
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/tds-reports-second-quarter-2016-results-300309796.html
SOURCE Telephone and Data Systems, Inc.
