CHICAGO, May 6, 2016 /PRNewswire/ -- Telephone and Data Systems, Inc. (NYSE:TDS) reported total operating revenues of $1,243 million for the first quarter of 2016, versus $1,252 million for the comparable period one year ago. Net income attributable to TDS shareholders and related diluted earnings per share were $8 million and $0.07, respectively, for the first quarter of 2016, compared to $146 million and $1.33, respectively, in the comparable period one year ago. Year-over-year comparisons are affected by pre-tax gains of $247 million ($155 million after-tax) from sales and exchanges of businesses and licenses in 2015.
"Building on the successes of 2015, our businesses started the year with a solid first quarter," said LeRoy T. Carlson Jr., TDS president and CEO. "U.S. Cellular grew its postpaid customer base and improved customer loyalty. TDS Telecom experienced growth in both IPTV and cable connections, and we continued to move forward in our broadband and hosted and managed services strategies.
"U.S. Cellular increased sales of smartphones and connected devices through offering competitive products and devices priced to offer the best value in the industry. We continue to see strong customer adoption of Equipment Installment Plans, which increased equipment sales revenues.
"TDS Telecom maintained the momentum of IPTV growth by adding new connections and increasing average revenue per connection. Our cable segment increased connections, generating higher revenue from both residential and commercial broadband services. Our hosted and managed services company, OneNeck IT Solutions, achieved growth in recurring service and equipment revenues as more companies and organizations selected OneNeck IT to outsource their IT needs."
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 May 6, 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 | Approx. $ 500 | Unchanged | Approx. $ 180 | Unchanged | Approx. $ 695 | Unchanged | ||||||
The following tables provide a reconciliation to Operating Cash Flow and Adjusted EBITDA for 2016 estimated results, and actual results for the three months ended March 31, 2016 and year ended December 31, 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) | $ | 0-125 | $ | 40-80 | $ | (20)-145 | |||||
Add back: | |||||||||||
Interest expense | 105 | – | 160 | ||||||||
Depreciation, amortization and accretion expense | 600 | 230 | 840 | ||||||||
EBITDA | $ | 705-830 | $ | 270-310 | $ | 980-1,145 | |||||
Add back: | |||||||||||
(Gain) loss on sale of business and other exit costs, net | – | – | – | ||||||||
(Gain) loss on license sales and exchanges, net | – | – | – | ||||||||
(Gain) loss on asset disposals, net | 20 | – | 20 | ||||||||
Adjusted EBITDA (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 (1)(4) | $ | 525-650 | $ | 270-310 | $ | 800-965 | |||||
Actual Results | ||||||||||||||||||||
Three Months Ended March 31, 2016 | Year ended December 31, 2015 | |||||||||||||||||||
U.S. Cellular | TDS Telecom | TDS (2) | U.S. Cellular* | TDS Telecom | TDS (2)* | |||||||||||||||
(Dollars in millions) | ||||||||||||||||||||
Net income (loss) (GAAP) | $ | 9 | $ | 10 | $ | 10 | $ | 247 | $ | 46 | $ | 263 | ||||||||
Add back: | ||||||||||||||||||||
Income tax expense (benefit) | 11 | 7 | 13 | 156 | 35 | 172 | ||||||||||||||
Income (loss) before income taxes (GAAP) | $ | 20 | $ | 17 | $ | 23 | $ | 404 | $ | 81 | $ | 435 | ||||||||
Add back: | ||||||||||||||||||||
Interest expense | 28 | – | 41 | 86 | 1 | 142 | ||||||||||||||
Depreciation, amortization and accretion expense | 153 | 58 | 212 | 606 | 228 | 844 | ||||||||||||||
EBITDA | $ | 201 | $ | 75 | $ | 276 | $ | 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 | – | – | – | (147) | – | (147) | ||||||||||||||
(Gain) loss on asset disposals, net | 5 | 1 | 6 | 16 | 6 | 22 | ||||||||||||||
Adjusted EBITDA (1) | $ | 206 | $ | 76 | $ | 282 | $ | 852 | $ | 306 | $ | 1,160 | ||||||||
Deduct: | ||||||||||||||||||||
Equity in earnings of unconsolidated entities | 35 | – | 35 | 140 | – | 140 | ||||||||||||||
Interest and dividend income | 13 | 1 | 14 | 37 | 2 | 39 | ||||||||||||||
Other, net | 1 | (1) | – | – | – | – | ||||||||||||||
Operating cash flow (1)(4) | $ | 157 | $ | 76 | $ | 233 | $ | 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) | Operating cash flow is defined as net income, adjusted for the items set forth in the reconciliation above. Adjusted EBITDA is defined as net income, adjusted for the items set forth in the reconciliation above. 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 above. |
(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 2016 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 March 31, 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 August 5, 2013. The following represents repurchases of TDS Common Shares.
Repurchase Period | # Shares | Cost (in millions) | |||
2016 (year-to-date through March 31, 2016) | 111,700 | $ | 3 | ||
2015 (full year) | – | $ | – | ||
Total | 111,700 | $ | 3 | ||
Conference Call Information
TDS will hold a conference call on May 6, 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/1145/14974
- 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 1000TM 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 10,600 people as of March 31, 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 | 3/31/2016 | 12/31/2015 | 9/30/2015 | 6/30/2015 | 3/31/2015 | ||||||||||||||
Retail Customers | |||||||||||||||||||
Postpaid | |||||||||||||||||||
Total at end of period | 4,454,000 | 4,409,000 | 4,341,000 | 4,324,000 | 4,307,000 | ||||||||||||||
Gross additions | 215,000 | 240,000 | 200,000 | 191,000 | 200,000 | ||||||||||||||
Feature phones | 9,000 | 10,000 | 14,000 | 15,000 | 14,000 | ||||||||||||||
Smartphones | 124,000 | 132,000 | 119,000 | 115,000 | 119,000 | ||||||||||||||
Connected devices | 82,000 | 98,000 | 67,000 | 61,000 | 67,000 | ||||||||||||||
Net additions (losses) | 45,000 | 68,000 | 17,000 | 17,000 | 9,000 | ||||||||||||||
Feature phones | (25,000) | (25,000) | (28,000) | (26,000) | (34,000) | ||||||||||||||
Smartphones | 20,000 | 23,000 | 6,000 | 7,000 | 3,000 | ||||||||||||||
Connected devices | 50,000 | 70,000 | 39,000 | 36,000 | 40,000 | ||||||||||||||
ARPU (1)(8) | $ | 48.13 | $ | 51.46 | $ | 58.12 | $ | 53.62 | $ | 54.87 | |||||||||
ABPU (2)(8) | $ | 56.06 | $ | 58.57 | $ | 63.88 | $ | 58.08 | $ | 58.50 | |||||||||
ARPA (3)(8) | $ | 125.36 | $ | 131.96 | $ | 147.00 | $ | 133.85 | $ | 134.94 | |||||||||
ABPA (4)(8) | $ | 145.99 | $ | 150.19 | $ | 161.57 | $ | 144.99 | $ | 143.86 | |||||||||
Churn rate (5) | 1.28% | 1.31% | 1.41% | 1.34% | 1.48% | ||||||||||||||
Smartphone penetration (6) | 75% | 74% | 72% | 69% | 67% | ||||||||||||||
Prepaid | |||||||||||||||||||
Total at end of period | 399,000 | 387,000 | 380,000 | 368,000 | 360,000 | ||||||||||||||
Gross additions | 75,000 | 69,000 | 71,000 | 65,000 | 73,000 | ||||||||||||||
Net additions (losses) | 12,000 | 7,000 | 12,000 | 8,000 | 12,000 | ||||||||||||||
ARPU (1) | $ | 35.51 | $ | 35.54 | $ | 35.64 | $ | 35.98 | $ | 35.72 | |||||||||
Churn rate (5) | 5.37% | 5.40% | 5.24% | 5.22% | 5.76% | ||||||||||||||
Total customers at end of period | 4,926,000 | 4,876,000 | 4,807,000 | 4,779,000 | 4,775,000 | ||||||||||||||
Smartphones sold as a percent of total handsets sold | 92% | 91% | 87% | 87% | 86% | ||||||||||||||
Market penetration at end of period | |||||||||||||||||||
Consolidated operating population | 31,994,000 | 31,967,000 | 31,814,000 | 31,814,000 | 31,814,000 | ||||||||||||||
Consolidated operating penetration (7) | 15% | 15% | 15% | 15% | 15% | ||||||||||||||
Capital expenditures (millions) | $ | 79 | $ | 198 | $ | 135 | $ | 134 | $ | 66 | |||||||||
Total cell sites in service | 6,306 | 6,297 | 6,246 | 6,223 | 6,219 | ||||||||||||||
Owned towers | 3,989 | 3,978 | 3,957 | 3,940 | 3,936 | ||||||||||||||
(1) | Average Revenue Per User ("ARPU") are metrics calculated by dividing a revenue base by an average number of customers and by the number of months in the period. These revenue bases and customer populations are shown below: | ||||||||||||||||||
▪ | Postpaid ARPU consists of total postpaid service revenues and postpaid customers. | ||||||||||||||||||
▪ | Prepaid ARPU consists of total prepaid service revenues and prepaid customers. | ||||||||||||||||||
(2) | Average Billings Per User ("ABPU") metric is calculated by dividing total postpaid service revenues plus equipment installment plan billings by the average number of postpaid customers and by the number of months in the period. | ||||||||||||||||||
(3) | Average Revenue Per Account ("ARPA") metric is calculated by dividing total postpaid service revenue by the average number of postpaid accounts and by the number of months in the period. | ||||||||||||||||||
(4) | Average Billings Per Account ("ABPA") 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 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. | ||||||||||||||||||
(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 customers by total postpaid handsets. | ||||||||||||||||||
(7) | Market penetration is calculated by dividing the number of wireless customers 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 awards program. | ||||||||||||||||||
TDS Telecom | ||||||||||||||||
Summary Operating Data (Unaudited) | ||||||||||||||||
Quarter Ended | 3/31/2016 | 12/31/2015 | 9/30/2015 | 6/30/2015 | 3/31/2015 | |||||||||||
TDS Telecom | ||||||||||||||||
Wireline | ||||||||||||||||
Residential connections | ||||||||||||||||
Voice (1) | 318,400 | 319,800 | 325,900 | 329,000 | 333,400 | |||||||||||
Broadband (2) | 229,100 | 228,500 | 231,600 | 231,200 | 229,400 | |||||||||||
IPTV (3) | 38,300 | 34,400 | 30,300 | 27,900 | 25,600 | |||||||||||
Wireline residential connections | 585,800 | 582,700 | 587,800 | 588,100 | 588,400 | |||||||||||
Total residential revenue per connection (4) | $ | 43.28 | $ | 41.24 | $ | 42.83 | $ | 42.10 | $ | 42.32 | ||||||
Commercial connections | ||||||||||||||||
Voice (1) | 167,400 | 171,500 | 176,700 | 181,800 | 187,500 | |||||||||||
Broadband (2) | 22,000 | 22,400 | 23,000 | 23,700 | 24,300 | |||||||||||
managedIP (5) | 148,500 | 147,100 | 145,900 | 145,100 | 143,200 | |||||||||||
Wireline commercial connections | 337,900 | 341,000 | 345,600 | 350,600 | 355,000 | |||||||||||
Total Wireline connections | 923,700 | 923,700 | 933,400 | 938,700 | 943,400 | |||||||||||
Cable | ||||||||||||||||
Cable Connections | ||||||||||||||||
Video (6) | 104,600 | 106,800 | 108,300 | 109,100 | 109,700 | |||||||||||
Broadband (7) | 121,700 | 117,100 | 114,600 | 112,300 | 112,200 | |||||||||||
Voice (7) | 58,100 | 56,400 | 54,000 | 51,500 | 49,100 | |||||||||||
Cable connections | 284,400 | 280,300 | 276,900 | 272,900 | 271,000 | |||||||||||
(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 monthly 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 (millions) | ||||||||||||||
Quarter Ended | 3/31/2016 | 12/31/2015 | 9/30/2015 | 6/30/2015 | 3/31/2015 | |||||||||
Wireline | $ | 27 | $ | 50 | $ | 38 | $ | 32 | $ | 20 | ||||
Cable | 13 | 15 | 13 | 12 | 12 | |||||||||
HMS | 2 | 8 | 5 | 9 | 5 | |||||||||
$ | 42 | $ | 73 | $ | 56 | $ | 53 | $ | 37 | |||||
Telephone and Data Systems, Inc. | |||||||||||||
Consolidated Statement of Operations Highlights | |||||||||||||
(Unaudited) | |||||||||||||
Three Months Ended March 31, | |||||||||||||
2016 | 2015 | 2016 vs. 2015 | |||||||||||
(Dollars and shares in millions, except per share amounts) | |||||||||||||
Operating revenues | |||||||||||||
U.S. Cellular | $ | 958 | $ | 965 | $ | (7) | (1)% | ||||||
TDS Telecom | 281 | 280 | 1 | - | |||||||||
All Other (1) | 4 | 7 | (3) | (51)% | |||||||||
1,243 | 1,252 | (9) | (1)% | ||||||||||
Operating expenses | |||||||||||||
U.S. Cellular | |||||||||||||
Expenses excluding depreciation, amortization and accretion | 801 | 798 | 3 | - | |||||||||
Depreciation, amortization and accretion | 153 | 147 | 6 | 4% | |||||||||
(Gain) loss on asset disposals, net | 5 | 4 | 1 | 19% | |||||||||
(Gain) loss on sale of business and other exit costs, net | – | (111) | 111 | 100% | |||||||||
(Gain) loss on license sales and exchanges, net | – | (123) | 123 | N/M | |||||||||
959 | 715 | 244 | 34% | ||||||||||
TDS Telecom | |||||||||||||
Expenses excluding depreciation, amortization and accretion | 205 | 201 | 4 | 2% | |||||||||
Depreciation, amortization and accretion | 58 | 57 | 1 | 1% | |||||||||
(Gain) loss on asset disposals, net | 1 | 1 | – | (14)% | |||||||||
264 | 259 | 5 | 2% | ||||||||||
All Other (1) | |||||||||||||
Expenses excluding depreciation and amortization | 4 | 5 | (1) | (59)% | |||||||||
Depreciation and amortization | 1 | 3 | (2) | (19)% | |||||||||
(Gain) loss on sale of business and other exit costs, net (2) | – | (13) | 13 | 100% | |||||||||
5 | (5) | 10 | >100% | ||||||||||
Total operating expenses | 1,228 | 969 | 259 | 27% | |||||||||
Operating income (loss) | |||||||||||||
U.S. Cellular (3) | (1) | 250 | (251) | >(100)% | |||||||||
TDS Telecom | 17 | 21 | (4) | (21)% | |||||||||
All Other (1) | (1) | 12 | (13) | >(100)% | |||||||||
15 | 283 | (268) | (95)% | ||||||||||
Investment and other income (expense) | |||||||||||||
Equity in earnings of unconsolidated entities | 35 | 35 | – | 2% | |||||||||
Interest and dividend income | 14 | 8 | 6 | 65% | |||||||||
Interest expense | (41) | (34) | (7) | (24)% | |||||||||
Total investment and other income | 8 | 9 | (1) | (22)% | |||||||||
Income before income taxes | 23 | 292 | (269) | (92)% | |||||||||
Income tax expense (benefit) | 13 | 116 | (103) | (89)% | |||||||||
Net income | 10 | 176 | (166) | (94)% | |||||||||
Less: Net income attributable to noncontrolling interests, net of tax | 2 | 30 | (28) | (94)% | |||||||||
Net income attributable to TDS shareholders | 8 | 146 | (138) | (94)% | |||||||||
TDS Preferred dividend requirement | – | – | – | - | |||||||||
Net income available to common shareholders | $ | 8 | $ | 146 | $ | (138) | (94)% | ||||||
Basic weighted average shares outstanding | 109 | 108 | 1 | 1% | |||||||||
Basic earnings per share attributable to TDS shareholders | $ | 0.07 | $ | 1.35 | $ | (1.28) | (95)% | ||||||
Diluted weighted average shares outstanding | 110 | 109 | 1 | 1% | |||||||||
Diluted earnings per share attributable to TDS shareholders | $ | 0.07 | $ | 1.33 | $ | (1.26) | (95)% | ||||||
(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 $247 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) | ||||||||||
Three Months Ended March 31, | ||||||||||
2016 | 2015 | |||||||||
(Dollars in millions) | ||||||||||
Cash flows from operating activities | ||||||||||
Net income (loss) | $ | 10 | $ | 176 | ||||||
Add (deduct) adjustments to reconcile net income to net cash flows from operating activities | ||||||||||
Depreciation, amortization and accretion | 212 | 207 | ||||||||
Bad debts expense | 19 | 30 | ||||||||
Stock-based compensation expense | 9 | 8 | ||||||||
Deferred income taxes, net | 5 | (47) | ||||||||
Equity in earnings of unconsolidated entities | (35) | (35) | ||||||||
Distributions from unconsolidated entities | 14 | 13 | ||||||||
(Gain) loss on asset disposals, net | 6 | 5 | ||||||||
(Gain) loss on sale of business and other exit costs, net | – | (124) | ||||||||
(Gain) loss on license sales and exchanges, net | – | (123) | ||||||||
Noncash interest expense | 1 | 1 | ||||||||
Changes in assets and liabilities from operations | ||||||||||
Accounts receivable | 20 | 21 | ||||||||
Equipment installment plans receivable | (41) | (36) | ||||||||
Inventory | (1) | 95 | ||||||||
Accounts payable | 39 | (14) | ||||||||
Customer deposits and deferred revenues | (6) | 13 | ||||||||
Accrued taxes | 63 | 252 | ||||||||
Accrued interest | 9 | 9 | ||||||||
Other assets and liabilities | (78) | (96) | ||||||||
Net cash provided by operating activities | 246 | 355 | ||||||||
Cash flows from investing activities | ||||||||||
Cash used for additions to property, plant and equipment | (159) | (166) | ||||||||
Cash paid for acquisitions and licenses | – | (281) | ||||||||
Cash received from divestitures and exchanges | 2 | 274 | ||||||||
Other investing activities | – | 3 | ||||||||
Net cash used in investing activities | (157) | (170) | ||||||||
Cash flows from financing activities | ||||||||||
Repayment of long-term debt | (3) | – | ||||||||
U.S. Cellular Common Shares reissued for benefit plans, net of tax payments | 1 | – | ||||||||
Repurchase of TDS Common Shares | (3) | – | ||||||||
Repurchase of U.S. Cellular Common Shares | (2) | (2) | ||||||||
Dividends paid to TDS shareholders | (16) | (15) | ||||||||
Payment of debt issuance costs | – | (3) | ||||||||
Other financing activities | 3 | (2) | ||||||||
Net cash provided by financing activities | (20) | (22) | ||||||||
Net increase in cash and cash equivalents | 69 | 163 | ||||||||
Cash and cash equivalents | ||||||||||
Beginning of period | 985 | 472 | ||||||||
End of period | $ | 1,054 | $ | 635 | ||||||
Telephone and Data Systems, Inc. | ||||||
Consolidated Balance Sheet Highlights | ||||||
(Unaudited) | ||||||
ASSETS | ||||||
March 31, | December 31, | |||||
2016 | 2015 | |||||
(Dollars in millions) | ||||||
Current assets | ||||||
Cash and cash equivalents | $ | 1,054 | $ | 985 | ||
Accounts receivable from customers and others, net | 792 | 803 | ||||
Inventory, net | 160 | 158 | ||||
Prepaid expenses | 130 | 112 | ||||
Income taxes receivable | 5 | 70 | ||||
Other current assets | 32 | 30 | ||||
2,173 | 2,158 | |||||
Assets held for sale | 26 | – | ||||
Licenses | 1,818 | 1,844 | ||||
Goodwill | 766 | 766 | ||||
Franchise rights | 244 | 244 | ||||
Other intangible assets, net | 43 | 47 | ||||
Investments in unconsolidated entities | 423 | 402 | ||||
Property, plant and equipment, net | 3,679 | 3,764 | ||||
Other assets and deferred charges | 211 | 197 | ||||
Total assets | $ | 9,383 | $ | 9,422 | ||
Telephone and Data Systems, Inc. | ||||||||
Consolidated Balance Sheet Highlights | ||||||||
(Unaudited) | ||||||||
LIABILITIES AND EQUITY | ||||||||
March 31, | December 31, | |||||||
2016 | 2015 | |||||||
(Dollars in millions) | ||||||||
Current liabilities | ||||||||
Current portion of long-term debt | $ | 14 | $ | 14 | ||||
Accounts payable | 355 | 349 | ||||||
Customer deposits and deferred revenues | 283 | 288 | ||||||
Accrued interest | 21 | 12 | ||||||
Accrued taxes | 36 | 41 | ||||||
Accrued compensation | 75 | 113 | ||||||
Other current liabilities | 106 | 127 | ||||||
890 | 944 | |||||||
Deferred liabilities and credits | ||||||||
Net deferred income tax liability | 905 | 900 | ||||||
Other deferred liabilities and credits | 441 | 433 | ||||||
Long-term debt | 2,437 | 2,440 | ||||||
Noncontrolling interests with redemption features | 2 | 1 | ||||||
Equity | ||||||||
TDS shareholders' equity | ||||||||
Series A Common and Common Shares, par value $.01 | 1 | 1 | ||||||
Capital in excess of par value | 2,372 | 2,365 | ||||||
Treasury shares, at cost | (726) | (727) | ||||||
Accumulated other comprehensive income (loss) | – | – | ||||||
Retained earnings | 2,479 | 2,487 | ||||||
Total TDS shareholders' equity | 4,126 | 4,126 | ||||||
Preferred shares | 1 | 1 | ||||||
Noncontrolling interests | 581 | 577 | ||||||
Total equity | 4,708 | 4,704 | ||||||
Total liabilities and equity | $ | 9,383 | $ | 9,422 | ||||
Balance Sheet Highlights | |||||||||||||||
(Unaudited) | |||||||||||||||
March 31, 2016 | |||||||||||||||
U.S. | TDS | TDS Corporate | Intercompany | TDS | |||||||||||
Cellular | Telecom | & Other | Eliminations | Consolidated | |||||||||||
(Dollars in millions) | |||||||||||||||
Cash and cash equivalents | $ | 772 | $ | 47 | $ | 235 | $ | – | $ | 1,054 | |||||
Affiliated cash investments | – | 330 | – | (330) | – | ||||||||||
$ | 772 | $ | 377 | $ | 235 | $ | (330) | $ | 1,054 | ||||||
Licenses, goodwill and other intangible assets | $ | 2,178 | $ | 831 | $ | (138) | $ | – | $ | 2,871 | |||||
Investment in unconsolidated entities | 384 | 4 | 40 | (5) | 423 | ||||||||||
$ | 2,562 | $ | 835 | $ | (98) | $ | (5) | $ | 3,294 | ||||||
Property, plant and equipment, net | $ | 2,573 | $ | 1,082 | $ | 24 | $ | – | $ | 3,679 | |||||
Long-term debt: | |||||||||||||||
Current portion | $ | 11 | $ | – | $ | 3 | $ | – | $ | 14 | |||||
Non-current portion | 1,626 | 1 | 810 | – | 2,437 | ||||||||||
$ | 1,637 | $ | 1 | $ | 813 | $ | – | $ | 2,451 | ||||||
TDS Telecom Highlights | |||||||||||||
(Unaudited) | |||||||||||||
Three Months Ended March 31, | |||||||||||||
2016 | 2015 | 2016 vs. 2015 | |||||||||||
(Dollars in millions) | |||||||||||||
Wireline | |||||||||||||
Operating revenues | |||||||||||||
Residential | $ | 76 | $ | 75 | $ | 1 | 2% | ||||||
Commercial | 54 | 56 | (2) | (4)% | |||||||||
Wholesale | 43 | 45 | (2) | (5)% | |||||||||
Total service revenues | 173 | 176 | (3) | (2)% | |||||||||
Equipment sales | – | – | – | 19% | |||||||||
173 | 176 | (3) | (2)% | ||||||||||
Operating expenses | |||||||||||||
Cost of services | 62 | 62 | – | (1)% | |||||||||
Cost of equipment sold | 1 | 1 | – | (8)% | |||||||||
Selling, general and administrative expenses | 48 | 46 | 2 | 6% | |||||||||
Depreciation, amortization and accretion | 42 | 42 | – | (1)% | |||||||||
153 | 151 | 2 | 1% | ||||||||||
Operating income | $ | 20 | $ | 25 | $ | (5) | (19)% | ||||||
Cable | |||||||||||||
Operating revenues | |||||||||||||
Residential | $ | 35 | $ | 35 | $ | – | 1% | ||||||
Commercial | 10 | 9 | 1 | 10% | |||||||||
Total service revenues | 45 | 44 | 1 | 3% | |||||||||
Operating expenses | |||||||||||||
Cost of services | 22 | 20 | 2 | 12% | |||||||||
Selling, general and administrative expenses | 12 | 13 | (1) | (4)% | |||||||||
Depreciation, amortization and accretion | 9 | 9 | – | 5% | |||||||||
(Gain) loss on asset disposals, net | 1 | 1 | – | (20)% | |||||||||
44 | 43 | 1 | 5% | ||||||||||
Operating income | $ | 1 | $ | 1 | $ | – | (56)% | ||||||
HMS | |||||||||||||
Operating revenues | |||||||||||||
Service revenues | $ | 29 | $ | 28 | $ | 1 | 2% | ||||||
Equipment sales | 35 | 33 | 2 | 8% | |||||||||
64 | 61 | 3 | 5% | ||||||||||
Operating expenses | |||||||||||||
Cost of services | 21 | 20 | 1 | 6% | |||||||||
Cost of equipment sold | 29 | 27 | 2 | 8% | |||||||||
Selling, general and administrative expenses | 11 | 13 | (2) | (16)% | |||||||||
Depreciation, amortization and accretion | 7 | 6 | 1 | 13% | |||||||||
68 | 66 | 2 | 3% | ||||||||||
Operating (loss) | $ | (4) | $ | (5) | $ | 1 | 21% | ||||||
Intercompany revenues | $ | (1) | $ | (1) | $ | – | (47)% | ||||||
Intercompany expenses | (1) | (1) | – | (47)% | |||||||||
Total TDS Telecom operating income | $ | 17 | $ | 21 | $ | (4) | (21)% | ||||||
Telephone and Data Systems, Inc. | ||||||||
Financial Measures and Reconciliations | ||||||||
(Unaudited) | ||||||||
Three Months Ended March 31, | ||||||||
2016 | 2015 | |||||||
(Dollars in millions) | ||||||||
Cash flows from operating activities | $ | 246 | $ | 355 | ||||
Less: Cash used for additions to property, plant and equipment | 159 | 166 | ||||||
Free cash flow | 87 | 189 | ||||||
Add: Sprint Cost Reimbursement | 2 | 16 | ||||||
Adjusted free cash flow (1) | $ | 89 | $ | 205 | ||||
(1) | Free cash flow is defined as Cash flows from operating activities less Cash used 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 used 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 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-first-quarter-2016-results-300264313.html
SOURCE Telephone and Data Systems, Inc.
