TELEPHONE & DATA SYSTEMS INC /DE/ - FORM 8-K - EX-99.1 - July 31, 2015

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Exhibit 99.l   NEWS RELEASE                                                                                    

 

 

As previously announced, TDS will hold a teleconference July 31, 2015 at 9:30 a.m. CDT. Interested parties may listen to the call live via the Events & Presentations page of investors.tdsinc.com.   

 FOR IMMEDIATE RELEASE

 TDS reports second quarter 2015 results

U.S. Cellular updates guidance; raises profitability forecast

 

 

 

CHICAGO, (July 31, 2015) — 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.”

 


1

 


 


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:

 


2

 


 


 

 

 

 

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

   entities

 

 

(125)

 

 

– 

 

 

(125)

 

Interest and dividend income

 

 

(35)

 

 

– 

 

 

(40)

Operating cash flow (4)

 

$

440-540 

 

$

280-310 

 

$

725-855 

 

 


3

 


 


 

 

 

 

Actual Results

 

 

 

Six Months Ended June 30, 2015

 

Year ended December 31, 2014

 

 

 

U.S. Cellular

 

TDS

Telecom

 

TDS (2)

 

U.S. Cellular

 

TDS

Telecom

 

TDS (2)

(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

(GAAP)

 

$

306 

 

$

48 

 

$

335 

 

$

(59)

 

$

(7)

 

$

(153)

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

entities

 

 

(70)

 

 

– 

 

 

(70)

 

 

(130)

 

 

– 

 

 

(132)

 

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.

 

  1. 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.
  2. 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.
  3. 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 

 

 

 

 

 

 

 


4

 


 


 

 

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 1000TM 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.

Contacts     

Jane McCahon, Vice President, Corporate Relations and Corporate Secretary

312- 592-5379

jane.mccahon@tdsinc.com

 

Julie Mathews, Investor Relations Director

312- 592-5341

 julie.mathews@tdsinc.com 

 

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


5

 



 


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.


6

 



 


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 

 

  


7

 


 


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

 



8

 


 


 

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

 

 

 

 


9

 


 


 

 

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 

 

 

 


10

 


 


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 

 

 

  


11

 


 


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 

 

 

 


12

 


 


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 

 


13

 


 


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%

 


14

 


 


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%

 


15

 


 


 

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.

 

 


16

 


TELEPHONE & DATA SYSTEMS INC /DE/ Reports