TELEPHONE & DATA SYSTEMS INC /DE/ - FORM 8-K - EX-99.1 - February 19, 2016

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Exhibit 99.l   NEWS RELEASE                                                                                    

 

 

As previously announced, TDS will hold a teleconference February 19, 2016 at 9:30 a.m. CST. Interested parties may listen to the call live via the Events & Presentations page of investors.tdsinc.com.   

 FOR IMMEDIATE RELEASE

 TDS reports fourth quarter and full year 2015 results

Provides 2016 guidance

 

 

 

CHICAGO, (Feb. 19, 2016) — Telephone and Data Systems, Inc. (NYSE:TDS) reported total operating revenues of $1,274.5 million for the fourth quarter of 2015, versus $1,297.1 million for the comparable period one year ago. Net loss attributable to TDS shareholders and related diluted earnings per share improved to $0.8 million and $0.01, respectively, for the fourth quarter of 2015, compared to $16.6 million and $0.15, respectively, in the comparable period one year ago. 

TDS reported total operating revenues of $5,176.2 million and $5,009.4 million for the years ended 2015 and 2014, respectively.  Net income (loss) attributed to TDS shareholders and related diluted earnings per share were $219.0 million and $1.98, respectively, for the year ended 2015, compared to $(136.4) and $(1.26), respectively, for the year ended 2014.

"Our businesses made substantial progress in 2015," said LeRoy T. Carlson, Jr., TDS president and CEO. "U.S. Cellular completed deployment of its high-quality 4G LTE network, further enhancing its strong data capabilities. TDS Telecom successfully expanded its fiber and cable broadband networks. Both businesses generated improved financial results.

"At U.S. Cellular, our excellent network and competitive plans, devices, and pricing helped improve already high-levels of customer loyalty and generated new customer growth. Sales of shared data plans and connected devices such as tablets generated additional data revenue. U.S. Cellular plans to build on its successful 4G LTE deployment with the availability of national 4G LTE roaming and new investments in technologies such as Voice over LTE.

"TDS Telecom performed well in 2015.  Our investments in fiber deployment generated impressive results with competitively priced bundles driving increased customer loyalty and higher revenue per customer. TDS Telecom’s wireline segment is on track to deploy fiber to approximately 25 percent of its customers’ homes by mid-year. Our cable business was successful in growing broadband customers, and we continue to look for attractive cable acquisitions. OneNeck IT Solutions generated strong equipment sales growth, and is working to more rapidly grow recurring service revenues as it executes its mid-market-focused IT strategy.

"TDS continues to return value to shareholders through dividends. This morning we announced our 42nd consecutive year of increasing cash dividend payments.”

 

 


1

 

 



2016 Estimated Results

Estimates of full-year 2016 results for U.S. Cellular, TDS Telecom, and TDS are shown below.  Such estimates represent management’s view as of February 19, 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 and Actual Results for the year ended December 31, 2015

 

 

 

U.S. Cellular

 

TDS Telecom

 

TDS (2)

 

 

 

Estimate

 

Actual

 

Estimate

 

Actual

 

Estimate

 

Actual

(Dollars in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total operating revenues

 

$3,900-$4,100

$

3,997

 

$1,130-$1,180

$

1,158

 

$5,040-$5,290

$

5,176

Operating cash flow (1)

 

$525-$650

$

675

 

$270-$310

$

304

 

$800-$965

$

981

Adjusted EBITDA (1)

 

$725-$850

$

852

 

$270-$310

$

306

 

$1,000-$1,165

$

1,160

Capital expenditures

 

Approx. $

500

$

533

 

Approx. $

180

$

219

 

Approx. $

695

$

759

 

The following table provides a reconciliation to Operating Cash Flow and Adjusted EBITDA for 2016 estimated results, and actual results for the year ended December 31, 2015:

 

 

 

 

U.S. Cellular

 

TDS Telecom

 

TDS (2)

 

 

 

 

Estimate (3)

 

Actual

 

Estimate (3)

 

Actual

 

Estimate (3)

 

Actual

(Dollars in millions)

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) (GAAP)

 

N/A

 

247 

 

N/A

 

46 

 

N/A

 

263 

Add back:

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expense (benefit)

 

N/A

 

156 

 

N/A

 

35 

 

N/A

 

172 

Income (loss) before income taxes

 

 

 

 

 

 

 

 

 

 

 

 

 

(GAAP)

$

0-125 

$

404 

$

40-80 

$

81 

$

(20)-145

$

435 

Add back:

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

105 

 

86 

 

– 

 

1 

 

165 

 

142 

 

Depreciation, amortization and

 

 

 

 

 

 

 

 

 

 

 

 

 

 

accretion expense

 

600 

 

606 

 

230 

 

228 

 

835 

 

844 

EBITDA

$

705-830 

$

1,096 

$

270-310 

$

310 

$

980-1,145 

$

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 (5)

 

– 

 

(147)

 

– 

 

– 

 

– 

 

(147)

 

 

(Gain) loss on asset disposals, net

 

20 

 

16 

 

– 

 

6 

 

20 

 

22 

Adjusted EBITDA (1)

$

725-850 

$

852 

$

270-310 

$

306 

$

1,000-1,165 

$

1,160 

Deduct:

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity in earnings of

 

 

 

 

 

 

 

 

 

 

 

 

 

 

unconsolidated entities

 

(140)

 

(140)

 

– 

 

– 

 

(140)

 

(140)

 

Interest and dividend income;

 

 

 

 

 

 

 

 

 

 

 

 

 

 

other income

 

(60)

 

(37)

 

– 

 

(2)

 

(60)

 

(39)

Operating cash flow (1)(4)

$

525-650 

$

675 

$

270-310 

$

304 

$

800-965 

$

981 

 

Note: Totals may not foot due to rounding differences.


2

 

 



  1. Operating cash flow is defined as net income adjusted for the items set forth in the reconciliation above.  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 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 full year 2015, 2014 and 2013 actual results can be found on the Guidance and Reconciliation page of the company's website at investors.tdsinc.com.
  5. In February 2016, U.S. Cellular entered into multiple agreements to exchange licenses.  Agreements are subject to regulatory approval and other customary closing conditions, and are expected to close in 2016.  Upon closing of the transactions, U.S. Cellular expects to record a gain.  A reasonable estimate of the gains is unavailable at the time of this filing.

 

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)

2015 (full year)

 

– 

 

$

– 

2014 (full year)

 

1,541,850 

 

$

39.1 

Total

 

1,541,850 

 

$

39.1 

 


3

 

 



Conference Call Information

TDS will hold a conference call on February 19, 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/1145/13319.   
  • 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; broadband, video and voice; and hosted and managed services to approximately 6.1 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 December 31, 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: 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 (“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


4

 

 




United States Cellular Corporation

Summary Operating Data (Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of or for the Quarter Ended

12/31/2015

 

9/30/2015

 

6/30/2015

 

3/31/2015

 

12/31/2014

Retail Customers

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Postpaid

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total at end of period

 

4,409,000 

 

 

4,341,000 

 

 

4,324,000 

 

 

4,307,000 

 

 

4,298,000 

 

 

Gross additions

 

240,000 

 

 

200,000 

 

 

191,000 

 

 

200,000 

 

 

302,000 

 

 

Net additions (losses)

 

68,000 

 

 

17,000 

 

 

17,000 

 

 

9,000 

 

 

98,000 

 

 

ARPU (1)(11)

$

51.46 

 

$

58.12 

 

$

53.62 

 

$

54.87 

 

$

56.51 

 

 

ABPU (2)(11)

$

58.57 

 

$

63.88 

 

$

58.08 

 

$

58.50 

 

$

59.13 

 

 

ARPA (3)(11)

$

131.96 

 

$

147.00 

 

$

133.85 

 

$

134.94 

 

$

136.13 

 

 

ABPA (4)(11)

$

150.19 

 

$

161.57 

 

$

144.99 

 

$

143.86 

 

$

142.44 

 

 

Churn rate (5)

 

1.3%

 

 

1.4%

 

 

1.3%

 

 

1.5%

 

 

1.6%

 

 

Smartphone penetration (6)

 

74%

 

 

72%

 

 

69%

 

 

67%

 

 

65%

 

Prepaid

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total at end of period

 

387,000 

 

 

380,000 

 

 

368,000 

 

 

360,000 

 

 

348,000 

 

 

Gross additions

 

69,000 

 

 

71,000 

 

 

65,000 

 

 

73,000 

 

 

60,000 

 

 

Net additions (losses)

 

7,000 

 

 

12,000 

 

 

8,000 

 

 

12,000 

 

 

(2,000)

 

 

ARPU (1)(11)

$

35.54 

 

$

35.64 

 

$

35.98 

 

$

35.72 

 

$

35.33 

 

 

Churn rate (5)

 

5.4%

 

 

5.2%

 

 

5.2%

 

 

5.8%

 

 

5.9%

Total customers at end of period

 

4,876,000 

 

 

4,807,000 

 

 

4,779,000 

 

 

4,775,000 

 

 

4,760,000 

Billed ARPU (1)(11)

$

49.40 

 

$

55.42 

 

$

51.29 

 

$

52.29 

 

$

53.63 

Service revenue ARPU (1)(11)

$

55.31 

 

$

62.31 

 

$

57.55 

 

$

58.01 

 

$

60.10 

Smartphones sold as a percent of total

  handsets sold

 

91%

 

 

87%

 

 

87%

 

 

86%

 

 

87%

Total population

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated markets (7)(10)

 

50,520,000 

 

 

50,313,000 

 

 

52,809,000 

 

 

52,822,000 

 

 

58,840,000 

 

 

Consolidated operating markets (7)

 

31,967,000 

 

 

31,814,000 

 

 

31,814,000 

 

 

31,814,000 

 

 

31,729,000 

Market penetration at end of period

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated markets (8)

 

10%

 

 

10%

 

 

9%

 

 

9%

 

 

8%

 

 

Consolidated operating markets (8)

 

15%

 

 

15%

 

 

15%

 

 

15%

 

 

15%

Capital expenditures (000s)

$

198,111 

 

$

134,816 

 

$

133,666 

 

$

66,460 

 

$

181,655 

Total cell sites in service

 

6,297 

 

 

6,246 

 

 

6,223 

 

 

6,219 

 

 

6,220 

Owned towers (9)

 

3,978 

 

 

3,957 

 

 

3,940 

 

 

3,936 

 

 

4,280 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Average Revenue Per User (“ARPU”) are metrics 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 Billing Per User (“ABPU”) metric is calculated by dividing total postpaid service revenues plus equipment installment plan billings by the average number of postpaid customers 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 by the number of months in the period.

(4)

Average Billing Per Account (“ABPA”) metric is calculated by dividing total postpaid service revenues plus equipment installment plan billings by the average number of postpaid accounts 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 customers.

(7)

During the third quarter of 2015 U.S. Cellular reassessed population statistics with respect to markets which U.S. Cellular consolidates and revised its calculations to more accurately calculate such population statistics.  As a result, prior period population data and corresponding market penetration ratios were revised for markets that U.S. Cellular currently consolidates, or previously consolidated in the periods presented.  The decrease in the population of Consolidated markets is due primarily to the license exchange transactions of certain non-operating licenses in 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 (8) below.

(8)

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.

(9)

During the quarter ended March 31, 2015, U.S. Cellular sold 359 towers in divested markets.

(10)

As licenses awarded in Auction 97 have not yet been granted, population statistics related to such licenses have not been included in population data.

(11)

The quarter ended September 30, 2015 results include the recognition of $58 million in revenue due to the termination of the awards program.


5

 

 




TDS Telecom

Summary Operating Data (Unaudited)

 

Quarter Ended

12/31/2015

 

9/30/2015

 

6/30/2015

 

3/31/2015

 

12/31/2014

TDS Telecom

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Wireline

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential connections

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Voice (1)

 

319,800 

 

 

325,900 

 

 

329,000 

 

 

333,400 

 

 

335,900 

 

 

 

Broadband (2)

 

228,500 

 

 

231,600 

 

 

231,200 

 

 

229,400 

 

 

229,200 

 

 

 

IPTV (3)

 

34,400 

 

 

30,300 

 

 

27,900 

 

 

25,600 

 

 

23,400 

 

 

 

   Wireline residential connections

 

582,700 

 

 

587,800 

 

 

588,100 

 

 

588,400 

 

 

588,500 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total residential revenue per connection (4)

$

41.24 

 

$

42.83 

 

$

42.10 

 

$

42.32 

 

$

41.56 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial connections

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Voice (1)

 

171,500 

 

 

176,700 

 

 

181,800 

 

 

187,500 

 

 

193,200 

 

 

 

Broadband (2)

 

22,400 

 

 

23,000 

 

 

23,700 

 

 

24,300 

 

 

24,700 

 

 

 

managedIP (5)

 

147,100 

 

 

145,900 

 

 

145,100 

 

 

143,200 

 

 

140,200 

 

 

 

   Wireline commercial connections

 

341,000 

 

 

345,600 

 

 

350,600 

 

 

355,000 

 

 

358,100 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Wireline connections

 

923,700 

 

 

933,400 

 

 

938,700 

 

 

943,400 

 

 

946,600 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cable

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cable Connections

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Video (6)

 

106,800 

 

 

108,300 

 

 

109,100 

 

 

109,700 

 

 

110,400 

 

 

 

Broadband (7)

 

117,100 

 

 

114,600 

 

 

112,300 

 

 

112,200 

 

 

110,900 

 

 

 

Voice (7)

 

56,400 

 

 

54,000 

 

 

51,500 

 

 

49,100 

 

 

46,000 

 

 

 

   Cable connections

 

280,300 

 

 

276,900 

 

 

272,900 

 

 

271,000 

 

 

267,300 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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

12/31/2015

 

9/30/2015

 

6/30/2015

 

3/31/2015

 

12/31/2014

Wireline

$

49,900 

 

$

38,400 

 

$

31,700 

 

$

20,400 

 

$

51,400 

Cable

 

15,000 

 

 

13,000 

 

 

11,900 

 

 

11,600 

 

 

14,600 

HMS

 

7,700 

 

 

5,100 

 

 

9,400 

 

 

4,900 

 

 

13,400 

 

$

72,600 

 

$

56,500 

 

$

53,000 

 

$

36,900 

 

$

79,400 

 


6

 

 



Telephone and Data Systems, Inc.

Consolidated Statement of Operations Highlights

Three Months Ended December 31,

(Unaudited, dollars and shares in thousands, except per share amounts)

 

 

 

 

 

 

Change

 

 

 

 

2015

 

2014

 

Amount

Percent

Operating revenues

 

 

 

 

 

 

 

 

 

 

 

U.S. Cellular

$

987,035 

 

$

1,008,744 

 

$

(21,709)

 

(2)%

 

TDS Telecom

 

283,871 

 

 

281,889 

 

 

1,982 

 

1%

 

All Other (1)

 

3,549 

 

 

6,428 

 

 

(2,879)

 

(45)%

 

 

 

 

 

1,274,455 

 

 

1,297,061 

 

 

(22,606)

 

(2)%

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

U.S. Cellular

 

 

 

 

 

 

 

 

 

 

 

 

Expenses excluding depreciation, amortization and accretion

 

849,895 

 

 

939,331 

 

 

(89,436)

 

(10)%

 

 

Depreciation, amortization and accretion

 

156,420 

 

 

140,955 

 

 

15,465 

 

11%

 

 

(Gain) loss on asset disposals, net

 

4,045 

 

 

4,695 

 

 

(650)

 

(14)%

 

 

(Gain) loss on sale of business and other exit costs, net

 

270 

 

 

(5,136)

 

 

5,406 

 

>100%

 

 

(Gain) loss on license sales and exchanges, net

 

– 

 

 

(21,547)

 

 

21,547 

 

N/M

 

 

 

 

 

1,010,630 

 

 

1,058,298 

 

 

(47,668)

 

(5)%

 

TDS Telecom

 

 

 

 

 

 

 

 

 

 

 

 

Expenses excluding depreciation, amortization and accretion

 

213,864 

 

 

205,825 

 

 

8,039 

 

4%

 

 

Depreciation, amortization and accretion

 

57,713 

 

 

58,394 

 

 

(681)

 

(1)%

 

 

(Gain) loss on asset disposals, net

 

3,083 

 

 

2,060 

 

 

1,023 

 

50%

 

 

(Gain) loss on sale of business and other exit costs, net

 

(6,371)

 

 

(156)

 

 

(6,215)

 

>(100)%

 

 

 

 

 

268,289 

 

 

266,123 

 

 

2,166 

 

1%

 

All Other (1)

 

 

 

 

 

 

 

 

 

 

 

 

Expenses excluding depreciation and amortization

 

4,719 

 

 

4,039 

 

 

680 

 

17%

 

 

Depreciation and amortization

 

1,785 

 

 

2,168 

 

 

(383)

 

(18)%

 

 

Loss on impairment of assets

 

– 

 

 

3,802 

 

 

(3,802)

 

N/M

 

 

(Gain) loss on asset disposals, net

 

– 

 

 

150 

 

 

(150)

 

N/M

 

 

(Gain) loss on sale of business and other exit costs, net

 

145 

 

 

(1,475)

 

 

1,620 

 

>100%

 

 

 

 

 

6,649 

 

 

8,684 

 

 

(2,035)

 

(23)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total operating expenses

 

1,285,568 

 

 

1,333,105 

 

 

(47,537)

 

(4)%

Operating income (loss)

 

 

 

 

 

 

 

 

 

 

 

U.S. Cellular

 

(23,595)

 

 

(49,554)

 

 

25,959 

 

52%

 

TDS Telecom

 

15,582 

 

 

15,766 

 

 

(184)

 

(1)%

 

All Other (1)

 

(3,100)

 

 

(2,256)

 

 

(844)

 

(37)%

 

 

 

 

 

(11,113)

 

 

(36,044)

 

 

24,931 

 

69%

Investment and other income (expense)

 

 

 

 

 

 

 

 

 

 

 

Equity in earnings of unconsolidated entities

 

30,253 

 

 

23,767 

 

 

6,486 

 

27%

 

Interest and dividend income

 

10,664 

 

 

7,194 

 

 

3,470 

 

48%

 

Interest expense

 

(38,927)

 

 

(27,622)

 

 

(11,305)

 

(41)%

 

Other, net

 

249 

 

 

(164)

 

 

413 

 

>100%

 

 

Total investment and other income

 

2,239 

 

 

3,175 

 

 

(936)

 

(29)%

Loss before income taxes

 

(8,874)

 

 

(32,869)

 

 

23,995 

 

73%

 

Income tax expense (benefit)

 

(6,788)

 

 

(12,208)

 

 

5,420 

 

44%

Net loss

 

(2,086)

 

 

(20,661)

 

 

18,575 

 

90%

 

Less: Net income (loss) attributable to noncontrolling interests, net of tax

 

(1,254)

 

 

(4,120)

 

 

2,866 

 

70%

Net loss attributable to TDS shareholders

 

(832)

 

 

(16,541)

 

 

15,709 

 

95%

 

TDS Preferred dividend requirement

 

(12)

 

 

(12)

 

 

– 

 

-

Net loss available to common shareholders

$

(844)

 

$

(16,553)

 

$

15,709 

 

95%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic weighted average shares outstanding

 

109,067 

 

 

107,995 

 

 

1,072 

 

1%

Basic earnings (loss) per share attributable to TDS shareholders

$

(0.01)

 

$

(0.15)

 

$

0.15 

 

95%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted weighted average shares outstanding

 

109,067 

 

 

107,995 

 

 

1,072 

 

1%

Diluted earnings (loss) per share attributable to TDS shareholders

$

(0.01)

 

$

(0.15)

 

$

0.14 

 

88%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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

 


7

 

 



Telephone and Data Systems, Inc.

Consolidated Statement of Operations Highlights

Twelve Months Ended December 31,

(Unaudited, dollars and shares in thousands, except per share amounts)

 

 

 

 

 

 

Change

 

 

 

 

2015

 

2014

 

Amount

Percent

Operating revenues

 

 

 

 

 

 

 

 

 

 

 

U.S. Cellular

$

3,996,853 

 

$

3,892,747 

 

$

104,106 

 

3%

 

TDS Telecom

 

1,158,043 

 

 

1,088,312 

 

 

69,731 

 

6%

 

All Other (1)

 

21,345 

 

 

28,379 

 

 

(7,034)

 

(25)%

 

 

 

 

 

5,176,241 

 

 

5,009,438 

 

 

166,803 

 

3%

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

U.S. Cellular

 

 

 

 

 

 

 

 

 

 

 

 

Expenses excluding depreciation, amortization and accretion

 

3,321,582 

 

 

3,554,494 

 

 

(232,912)

 

(7)%

 

 

Depreciation, amortization and accretion

 

606,455 

 

 

605,997 

 

 

458 

 

-

 

 

(Gain) loss on asset disposals, net

 

16,313 

 

 

21,469 

 

 

(5,156)

 

(24)%

 

 

(Gain) loss on sale of business and other exit costs, net

 

(113,555)

 

 

(32,830)

 

 

(80,725)

 

>(100)%

 

 

(Gain) loss on license sales and exchanges, net

 

(146,884)

 

 

(112,993)

 

 

(33,891)

 

(30)%

 

 

 

 

 

3,683,911 

 

 

4,036,137 

 

 

(352,226)

 

(9)%

 

TDS Telecom

 

 

 

 

 

 

 

 

 

 

 

 

Expenses excluding depreciation, amortization and accretion

 

854,179 

 

 

792,687 

 

 

61,492 

 

8%

 

 

Depreciation, amortization and accretion

 

228,060 

 

 

219,599 

 

 

8,461 

 

4%

 

 

Loss on impairment of assets

 

– 

 

 

84,000 

 

 

(84,000)

 

N/M

 

 

(Gain) loss on asset disposals, net

 

5,874 

 

 

4,754 

 

 

1,120 

 

24%

 

 

(Gain) loss on sale of business and other exit costs, net

 

(9,530)

 

 

(2,357)

 

 

(7,173)

 

 

 

 

 

 

 

1,078,583 

 

 

1,098,683 

 

 

(20,100)

 

(2)%

 

All Other (1)

 

 

 

 

 

 

 

 

 

 

 

 

Expenses excluding depreciation and amortization

 

19,643 

 

 

30,095 

 

 

(10,452)

 

(35)%

 

 

Depreciation and amortization

 

9,846 

 

 

10,936 

 

 

(1,090)

 

(10)%

 

 

Loss on impairment of assets

 

– 

 

 

3,802 

 

 

(3,802)

 

N/M

 

 

(Gain) loss on asset disposals, net

 

(11)

 

 

308 

 

 

(319)

 

>(100)%

 

 

(Gain) loss on sale of business and other exit costs, net (2)

 

(12,802)

 

 

19,341 

 

 

(32,143)

 

>(100)%

 

 

 

 

 

16,676 

 

 

64,482 

 

 

(47,806)

 

(74)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total operating expenses

 

4,779,170 

 

 

5,199,302 

 

 

(420,132)

 

(8)%

Operating income (loss)

 

 

 

 

 

 

 

 

 

 

 

U.S. Cellular

 

312,942 

 

 

(143,390)

 

 

456,332 

 

>100%

 

TDS Telecom

 

79,460 

 

 

(10,371)

 

 

89,831 

 

>100%

 

All Other (1)

 

4,669 

 

 

(36,103)

 

 

40,772 

 

>100%

 

 

 

 

 

397,071 

 

 

(189,864)

 

 

586,935 

 

>100%

Investment and other income (expense)

 

 

 

 

 

 

 

 

 

 

 

Equity in earnings of unconsolidated entities

 

140,076 

 

 

131,965 

 

 

8,111 

 

6%

 

Interest and dividend income

 

38,783 

 

 

16,957 

 

 

21,826 

 

>100%

 

Interest expense

 

(141,719)

 

 

(111,397)

 

 

(30,322)

 

(27)%

 

Other, net

 

391 

 

 

115 

 

 

276 

 

>100%

 

 

Total investment and other income

 

37,531 

 

 

37,640 

 

 

(109)

 

-

Income (loss) before income taxes

 

434,602 

 

 

(152,224)

 

 

586,826 

 

>100%

 

Income tax expense (benefit)

 

171,992 

 

 

(4,932)

 

 

176,924 

 

>100%

Net income (loss)

 

262,610 

 

 

(147,292)

 

 

409,902 

 

>100%

 

Less: Net income (loss) attributable to noncontrolling interests, net of tax

 

43,573 

 

 

(10,937)

 

 

54,510 

 

>100%

Net income (loss) attributable to TDS shareholders

 

219,037 

 

 

(136,355)

 

 

355,392 

 

>100%

 

TDS Preferred dividend requirement

 

(49)

 

 

(49)

 

 

– 

 

-

Net income (loss) available to common shareholders

$

218,988 

 

$

(136,404)

 

$

355,392 

 

>100%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic weighted average shares outstanding

 

108,645 

 

 

108,485 

 

 

160 

 

-

Basic earnings (loss) per share attributable to TDS shareholders

$

2.02 

 

$

(1.26)

 

$

3.28 

 

N/M

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted weighted average shares outstanding

 

109,910 

 

 

108,485 

 

 

1,425 

 

1%

Diluted earnings (loss) per share attributable to TDS shareholders

$

1.98 

 

$

(1.26)

 

$

3.24 

 

>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 $20.2 million related to exit and disposal activities in 2014.

N/M – Percentage change not meaningful

8

 

 



Telephone and Data Systems, Inc.

Consolidated Balance Sheet Highlights

(Unaudited, dollars in thousands)

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

December 31,

 

December 31,

 

 

2015

 

2014

Current assets

 

 

 

 

 

 

Cash and cash equivalents

$

984,643 

 

$

471,901 

 

Accounts receivable from customers and others, net

 

802,856 

 

 

683,681 

 

Inventory, net

 

158,222 

 

 

273,707 

 

Net deferred income tax asset

 

– 

 

 

107,686 

 

Prepaid expenses

 

112,235 

 

 

86,506 

 

Income taxes receivable

 

70,094 

 

 

113,708 

 

Other current assets

 

30,293 

 

 

29,766 

 

 

 

2,158,343 

 

 

1,766,955 

 

 

 

 

 

 

 

Assets held for sale

 

– 

 

 

103,343 

 

 

 

 

 

 

 

Licenses

 

1,844,348 

 

 

1,453,574 

Goodwill

 

765,792 

 

 

771,352 

Franchise rights

 

244,180 

 

 

244,300 

Other intangible assets, net

 

46,525 

 

 

64,499 

Investments in unconsolidated entities

 

401,720 

 

 

321,729 

Other investments

 

616 

 

 

508 

 

 

 

 

 

 

 

Property, plant and equipment, net

 

3,764,477 

 

 

3,846,125 

 

 

 

 

 

 

 

Other assets and deferred charges (1)

 

196,461 

 

 

282,037 

 

 

 

 

 

 

 

Total assets

$

9,422,462 

 

$

8,854,422 

 

 

 

 

 

 

 

(1)

TDS reclassified unamortized debt issuance costs of $52.5 million as of December 31, 2014 from Other assets and deferred charges to Long-term debt, net due to early adoption of ASU 2015-03.

 


9

 

 



Telephone and Data Systems, Inc.

Consolidated Balance Sheet Highlights

(Unaudited, dollars in thousands)

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31,

 

December 31,

 

 

 

 

2015

 

2014

Current liabilities

 

 

 

 

 

 

 

Current portion of long-term debt

$

14,306 

 

$

808 

 

 

Accounts payable

 

348,737 

 

 

387,125 

 

 

Customer deposits and deferred revenues

 

288,412 

 

 

324,318 

 

 

Accrued interest

 

11,962 

 

 

7,919 

 

 

Accrued taxes

 

40,569 

 

 

46,734 

 

 

Accrued compensation

 

113,375 

 

 

114,549 

 

 

Other current liabilities

 

127,023 

 

 

181,803 

 

 

 

 

 

944,384 

 

 

1,063,256 

 

 

 

 

 

 

 

 

 

Liabilities held for sale

 

– 

 

 

21,643 

 

 

 

 

 

 

 

 

 

Deferred liabilities and credits

 

 

 

 

 

 

 

Net deferred income tax liability

 

900,054 

 

 

941,519 

 

 

Other deferred liabilities and credits

 

432,949 

 

 

430,774 

 

 

 

 

 

 

 

 

 

Long-term debt, net (1)

 

2,439,827 

 

 

1,941,069 

 

 

 

 

 

 

 

 

 

Noncontrolling interests with redemption features

 

1,097 

 

 

1,150 

 

 

 

 

 

 

 

 

 

Equity

 

 

 

 

 

 

TDS shareholders' equity

 

 

 

 

 

 

 

Series A Common and Common Shares, par value $.01

 

1,328 

 

 

1,327 

 

 

Capital in excess of par value

 

2,363,558 

 

 

2,336,511 

 

 

Treasury shares, at cost

 

(727,182)

 

 

(748,199)

 

 

Accumulated other comprehensive income

 

355 

 

 

6,452 

 

 

Retained earnings

 

2,487,491 

 

 

2,330,187 

 

 

 

   Total TDS shareholders' equity

 

4,125,550 

 

 

3,926,278 

 

 

 

 

 

 

 

 

 

 

Preferred shares

 

824 

 

 

824 

 

Noncontrolling interests

 

577,777 

 

 

527,909 

 

 

 

 

 

 

 

 

 

 

 

Total equity

 

4,704,151 

 

 

4,455,011 

 

 

 

 

 

 

 

 

 

Total liabilities and equity

$

9,422,462 

 

$

8,854,422 

 

 

 

 

 

 

 

 

 

(1)

TDS reclassified unamortized debt issuance costs of $52.5 million as of December 31, 2014 from Other assets and deferred charges to Long-term debt, net due to early adoption of ASU 2015-03.

 


10

 

 



Balance Sheet Highlights

December 31, 2015

(Unaudited, dollars in thousands)

 

 

 

 

 

U.S.

 

TDS

 

TDS Corporate

 

Intercompany

 

TDS

 

 

 

Cellular

 

Telecom

 

& Other

 

Eliminations

 

Consolidated

Cash and cash equivalents

$

715,376 

 

$

40,303 

 

$

228,964 

 

$

– 

 

$

984,643 

Affiliated cash investments

 

– 

 

 

298,472 

 

 

– 

 

 

(298,472)

 

 

– 

 

 

$

715,376 

 

$

338,775 

 

$

228,964 

 

$

(298,472)

 

$

984,643 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Licenses, goodwill and other intangible assets

$

2,203,808 

 

$

835,149 

 

$

(138,112)

 

$

– 

 

$

2,900,845 

Investment in unconsolidated entities

 

363,383 

 

 

3,802 

 

 

39,888 

 

 

(5,353)

 

 

401,720 

Long-term and other investments

 

– 

 

 

423 

 

 

193 

 

 

– 

 

 

616 

 

 

 

$

2,567,191 

 

$

839,374 

 

$

(98,031)

 

$

(5,353)

 

$

3,303,181 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property, plant and equipment, net

$

2,648,933 

 

$

1,093,790 

 

$

21,963 

 

$

(209)

 

$

3,764,477 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-term debt:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current portion

$

11,313 

 

$

25 

 

$

2,968 

 

$

– 

 

$

14,306 

 

Non-current portion, net

 

1,628,507 

 

 

1,399 

 

 

809,921 

 

 

– 

 

 

2,439,827 

 

 

 

$

1,639,820 

 

$

1,424 

 

$

812,889 

 

$

– 

 

$

2,454,133 

 


11

 

 



Telephone and Data Systems, Inc.

Consolidated Statement of Cash Flows

Twelve Months Ended December 31,

(Unaudited, dollars in thousands)

 

 

 

 

 

2015

 

2014

Cash flows from operating activities

 

 

 

 

 

 

Net income (loss)

$

262,610 

 

$

(147,292)

 

 

Add (deduct) adjustments to reconcile net income (loss) to net cash flows from operating activities

 

 

 

 

 

 

 

 

 

Depreciation, amortization and accretion

 

844,361 

 

 

836,532 

 

 

 

 

Bad debts expense

 

112,292 

 

 

107,861 

 

 

 

 

Stock-based compensation expense

 

40,400 

 

 

35,793 

 

 

 

 

Deferred income taxes, net

 

70,849 

 

 

71,713 

 

 

 

 

Equity in earnings of unconsolidated entities

 

(140,076)

 

 

(131,965)

 

 

 

 

Distributions from unconsolidated entities

 

60,060 

 

 

112,349 

 

 

 

 

Loss on impairment of assets

 

– 

 

 

87,802 

 

 

 

 

(Gain) loss on asset disposals, net

 

22,176 

 

 

26,531 

 

 

 

 

(Gain) loss on sale of business and other exit costs, net

 

(135,887)

 

 

(15,846)

 

 

 

 

(Gain) loss on license sales and exchanges, net

 

(146,884)

 

 

(112,993)

 

 

 

 

Noncash interest expense

 

2,760 

 

 

1,642 

 

 

 

 

Other operating activities

 

(769)

 

 

(641)

 

 

Changes in assets and liabilities from operations

 

 

 

 

 

 

 

 

 

Accounts receivable

 

(120,230)

 

 

17,629 

 

 

 

 

Equipment installment plans receivable

 

(133,734)

 

 

(188,829)

 

 

 

 

Inventory

 

115,482 

 

 

(29,149)

 

 

 

 

Accounts payable

 

7,245 

 

 

(117,264)

 

 

 

 

Customer deposits and deferred revenues

 

(35,850)

 

 

33,952 

 

 

 

 

Accrued taxes

 

38,259 

 

 

(122,921)

 

 

 

 

Accrued interest

 

4,046 

 

 

1,277 

 

 

 

 

Other assets and liabilities

 

(77,416)

 

 

(71,369)

 

 

 

 

   Net cash provided by operating activities

 

789,694 

 

 

394,812 

 

 

 

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

 

Cash used for additions to property, plant and equipment

 

(800,628)

 

 

(799,496)

 

Cash paid for acquisitions and licenses

 

(286,861)

 

 

(295,253)

 

Cash received from divestitures and exchanges

 

342,870 

 

 

187,645 

 

Cash received for investments

 

– 

 

 

50,000 

 

Federal Communications Commission deposit

 

– 

 

 

(60,000)

 

Other investing activities

 

6,932 

 

 

7,360 

 

 

 

 

   Net cash used in investing activities

 

(737,687)

 

 

(909,744)

 

 

 

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

 

Repayment of long-term debt

 

(816)

 

 

(1,072)

 

Issuance of long-term debt

 

525,000 

 

 

275,000 

 

Repayment of borrowing under revolving credit facility

 

– 

 

 

(150,000)

 

Borrowing under revolving credit facility

 

– 

 

 

150,000 

 

TDS Common Shares reissued for benefit plans, net of tax payments

 

13,329 

 

 

(2,019)

 

U.S. Cellular Common Shares reissued for benefit plans, net of tax payments

 

2,167 

 

 

830 

 

Repurchase of TDS Common Shares

 

– 

 

 

(39,096)

 

Repurchase of U.S. Cellular Common Shares

 

(6,188)

 

 

(18,943)

 

Dividends paid to TDS shareholders

 

(61,219)

 

 

(58,040)

 

Payment of debt issuance costs

 

(13,026)

 

 

(10,215)

 

Distributions to noncontrolling interests

 

(6,369)

 

 

(627)

 

Payments to acquire additional interest in subsidiaries

 

(3,983)

 

 

– 

 

Other financing activities

 

11,840 

 

 

11,001 

 

 

 

 

   Net cash provided by financing activities

 

460,735 

 

 

156,819 

 

 

 

 

 

 

 

 

 

 

Net increase (decrease) in cash and cash equivalents

 

512,742 

 

 

(358,113)

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

 

 

 

 

Beginning of period

 

471,901 

 

 

830,014 

 

End of period

$

984,643 

 

$

471,901 

12

 

 



TDS Telecom Highlights

Three Months Ended December 31,

(Unaudited, dollars in thousands)

 

 

 

 

 

 

 

Change

 

 

 

 

2015

 

2014

 

Amount

 

Percent

Wireline

 

 

 

 

 

 

 

 

 

 

Operating revenues

 

 

 

 

 

 

 

 

 

 

 

Residential

$

72,473 

 

$

73,538 

 

$

(1,065)

 

(1)%

 

Commercial

 

54,445 

 

 

56,675 

 

 

(2,230)

 

(4)%

 

Wholesale

 

46,337 

 

 

49,493 

 

 

(3,156)

 

(6)%

 

 

Total service revenues

 

173,255 

 

 

179,706 

 

 

(6,451)

 

(4)%

 

Equipment and product sales

 

487 

 

 

427 

 

 

60 

 

14%

 

 

 

 

 

173,742 

 

 

180,133 

 

 

(6,391)

 

(4)%

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

Cost of services

 

66,152 

 

 

64,101 

 

 

2,051 

 

3%

 

Cost of equipment and products

 

537 

 

 

543 

 

 

(6)

 

(1)%

 

Selling, general and administrative expenses

 

48,919 

 

 

49,101 

 

 

(182)

 

-

 

Depreciation, amortization and accretion

 

41,401 

 

 

43,123 

 

 

(1,722)

 

(4)%

 

(Gain) loss on asset disposals, net

 

1,721 

 

 

589 

 

 

1,132 

 

>100%

 

(Gain) loss on sale of business and other exit costs, net

 

(6,371)

 

 

(156)

 

 

(6,215)

 

>(100)%

 

 

 

 

 

152,359 

 

 

157,301 

 

 

(4,942)

 

(3)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

$

21,383 

 

$

22,832 

 

$

(1,449)

 

(6)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cable

 

 

 

 

 

 

 

 

 

 

Operating revenues

 

 

 

 

 

 

 

 

 

 

 

Residential

$

33,530 

 

$

34,587 

 

$

(1,057)

 

(3)%

 

Commercial

 

9,232 

 

 

8,762 

 

 

470 

 

5%

 

 

Total service revenues

 

42,762 

 

 

43,349 

 

 

(587)

 

(1)%

 

Equipment and product sales

 

160 

 

 

– 

 

 

160 

 

N/M

 

 

 

 

 

42,922 

 

 

43,349 

 

 

(427)

 

(1)%

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

Cost of services

 

19,416 

 

 

19,265 

 

 

151 

 

1%

 

Cost of equipment and products

 

69 

 

 

– 

 

 

69 

 

N/M

 

Selling, general and administrative expenses

 

13,003 

 

 

13,564 

 

 

(561)

 

(4)%

 

Depreciation, amortization and accretion

 

9,162 

 

 

8,554 

 

 

608 

 

7%

 

(Gain) loss on asset disposals, net

 

1,252 

 

 

1,366 

 

 

(114)

 

(8)%

 

 

 

 

 

42,902 

 

 

42,749 

 

 

153 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

$

20 

 

$

600 

 

$

(580)

 

(97)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

HMS

 

 

 

 

 

 

 

 

 

 

Operating revenues

 

 

 

 

 

 

 

 

 

 

 

Service revenues

$

28,499 

 

$

27,009 

 

$

1,490 

 

6%

 

Equipment and product sales

 

40,107 

 

 

33,136 

 

 

6,971 

 

21%

 

 

 

 

 

68,606 

 

 

60,145 

 

 

8,461 

 

14%

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

Cost of services

 

22,018 

 

 

19,703 

 

 

2,315 

 

12%

 

Cost of equipment and products

 

34,150 

 

 

28,201 

 

 

5,949 

 

21%

 

Selling, general and administrative expenses

 

10,999 

 

 

13,085 

 

 

(2,086)

 

(16)%

 

Depreciation, amortization and accretion

 

7,150 

 

 

6,717 

 

 

433 

 

6%

 

(Gain) loss on asset disposals, net

 

110 

 

 

105 

 

 

5 

 

5%

 

 

 

 

 

74,427 

 

 

67,811 

 

 

6,616 

 

10%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating (loss)

$

(5,821)

 

$

(7,666)

 

$

1,845 

 

24%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Intercompany revenues

$

(1,399)

 

$

(1,738)

 

$

339 

 

20%

Intercompany expenses

 

(1,399)

 

 

(1,738)

 

 

339 

 

20%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total TDS Telecom operating income

$

15,582 

 

$

15,766 

 

$

(184)

 

(1)%

 


13

 

 



TDS Telecom Highlights

Twelve Months Ended December 31,

(Unaudited, dollars in thousands)

 

 

 

 

 

 

 

Change

 

 

 

 

2015

 

2014

 

Amount

 

Percent

Wireline

 

 

 

 

 

 

 

 

 

 

Operating revenues

 

 

 

 

 

 

 

 

 

 

 

Residential

$

296,943 

 

$

293,304 

 

$

3,639 

 

1%

 

Commercial

 

220,643 

 

 

229,306 

 

 

(8,663)

 

(4)%

 

Wholesale

 

181,352 

 

 

191,976 

 

 

(10,624)

 

(6)%

 

 

Total service revenues

 

698,938 

 

 

714,586 

 

 

(15,648)

 

(2)%

 

Equipment and product sales

 

1,965 

 

 

1,836 

 

 

129 

 

7%

 

 

 

 

 

700,903 

 

 

716,422 

 

 

(15,519)

 

(2)%

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

Cost of services

 

254,879 

 

 

256,878 

 

 

(1,999)

 

(1)%

 

Cost of equipment and products

 

2,212 

 

 

2,336 

 

 

(124)

 

(5)%

 

Selling, general and administrative expenses

 

193,850 

 

 

189,956 

 

 

3,894 

 

2%

 

Depreciation, amortization and accretion

 

165,841 

 

 

169,044 

 

 

(3,203)

 

(2)%

 

(Gain) loss on asset disposals, net

 

5,094 

 

 

2,091 

 

 

3,003 

 

>100%

 

(Gain) loss on sale of business and other exit costs, net

 

(9,530)

 

 

(2,357)

 

 

(7,173)

 

>(100)%

 

 

 

 

 

612,346 

 

 

617,948 

 

 

(5,602)

 

(1)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

$

88,557 

 

$

98,474 

 

$

(9,917)

 

(10)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cable

 

 

 

 

 

 

 

 

 

 

Operating revenues

 

 

 

 

 

 

 

 

 

 

 

Residential

$

138,377 

 

$

93,983 

 

$

44,394 

 

47%

 

Commercial

 

36,152 

 

 

22,872 

 

 

13,280 

 

58%

 

 

Total service revenues

 

174,529 

 

 

116,855 

 

 

57,674 

 

49%

 

Equipment and product sales

 

437 

 

 

– 

 

 

437 

 

N/M

 

 

 

 

 

174,966 

 

 

116,855 

 

 

58,111 

 

50%

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

Cost of services

 

78,758 

 

 

54,265 

 

 

24,493 

 

45%

 

Cost of equipment and products

 

169 

 

 

– 

 

 

169 

 

N/M

 

Selling, general and administrative expenses

 

53,738 

 

 

36,175 

 

 

17,563 

 

49%

 

Depreciation, amortization and accretion

 

35,271 

 

 

23,643 

 

 

11,628 

 

49%

 

(Gain) loss on asset disposals, net

 

691 

 

 

2,482 

 

 

(1,791)

 

(72)%

 

 

 

 

 

168,627 

 

 

116,565 

 

 

52,062 

 

45%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

$

6,339 

 

$

290 

 

$

6,049 

 

>100%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

HMS

 

 

 

 

 

 

 

 

 

 

Operating revenues

 

 

 

 

 

 

 

 

 

 

 

Service revenues

$

116,810 

 

$

109,766 

 

$

7,044 

 

6%

 

Equipment and product sales

 

169,985 

 

 

148,966 

 

 

21,019 

 

14%

 

 

 

 

 

286,795 

 

 

258,732 

 

 

28,063 

 

11%

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

Cost of services

 

85,163 

 

 

77,392 

 

 

7,771 

 

10%

 

Cost of equipment and products

 

142,927 

 

 

126,362 

 

 

16,565 

 

13%

 

Selling, general and administrative expenses

 

47,104 

 

 

53,020 

 

 

(5,916)

 

(11)%

 

Depreciation, amortization and accretion

 

26,948 

 

 

26,912 

 

 

36 

 

-

 

Loss on impairment of assets

 

– 

 

 

84,000 

 

 

(84,000)

 

N/M

 

(Gain) loss on asset disposals, net

 

89 

 

 

181 

 

 

(92)

 

(51)%

 

 

 

 

 

302,231 

 

 

367,867 

 

 

(65,636)

 

(18)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating (loss)

$

(15,436)

 

$

(109,135)

 

$

93,699 

 

86%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Intercompany revenues

$

(4,621)

 

$

(3,697)

 

$

(924)

 

(25)%

Intercompany expenses

 

(4,621)

 

 

(3,697)

 

 

(924)

 

(25)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total TDS Telecom operating income (loss)

$

79,460 

 

$

(10,371)

 

$

89,831 

 

>100%

 


14

 

 



Telephone and Data Systems, Inc.

Financial Measures and Reconciliations

(Unaudited, dollars in thousands)

 

 

 

 

 

 

 

 

 

TDS Consolidated

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Twelve Months Ended

 

 

 

 

December 31,

 

December 31,

 

 

2015

 

2014

 

2015

 

2014

 

 

 

 

 

 

 

 

 

 

 

Cash flows from operating activities

 

$

62,776 

 

$

(101,399)

 

$

789,694 

 

$

394,812 

Less: Cash used for additions to property, plant

   and equipment

 

 

242,516 

 

 

245,778 

 

 

800,628 

 

 

799,496 

 

 

Free cash flow

 

 

(179,740)

 

 

(347,177)

 

 

(10,934)

 

 

(404,684)

Add: Sprint Cost Reimbursement

 

 

2,378 

 

 

19,085 

 

 

29,974 

 

 

71,097 

 

 

Adjusted free cash flow (1)

 

$

(177,362)

 

$

(328,092)

 

$

19,040 

 

$

(333,587)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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.

 


15

 

 


TELEPHONE & DATA SYSTEMS INC /DE/ Reports