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Jane McCahon

Senior Vice President - Corporate Relations

Phone: 312.592.5379
jane.mccahon@tdsinc.com
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TDS reports second quarter 2017 results

08/04/2017

2017 guidance reaffirmed

CHICAGO, Aug. 4, 2017 /PRNewswire/ --

As previously announced, TDS will hold a teleconference August 4, 2017, at 9:30 a.m. CDT. Listen to the call live via the Events & Presentations page of investors.tdsinc.com.   

Telephone and Data Systems, Inc. (NYSE:TDS) reported total operating revenues of $1,247 million for the second quarter of 2017, versus $1,295 million for the same period one year ago. Net income attributable to TDS shareholders and related diluted earnings per share were $10 million and $0.09, respectively, for the second quarter of 2017, compared to $28 million and $0.25 respectively, in the same period one year ago.

"TDS' businesses achieved good results in the quarter as they continued executing on their strategic priorities for 2017," said LeRoy T. Carlson Jr., TDS president and CEO. "U.S. Cellular grew its postpaid handset customer base and increased customer loyalty. TDS Telecom drove growth in IPTV and cable connections and increased revenues in both its wireline and cable segments.

"U.S. Cellular grew postpaid handsets and drove an exceptionally low level of handset churn, the lowest in the company's history. It successfully completed the first commercial deployment of Voice over LTE (VoLTE) technology in Iowa, bringing benefits to customers' network experience and opening opportunities for greater data roaming revenue. U.S. Cellular effectively managed cost reductions throughout the quarter, lowering expenses in system operations, loss on equipment and other operating expenses.

"TDS Telecom grew its Wireline business through an increase in IPTV connections that generated higher residential revenue per connection. They continue to see growth in service revenues from fiber investments and through support from the Alternative Connect America Cost Model (A-CAM). TDS Telecom's Cable segment had an excellent quarter, driving significant increases in broadband connections and residential revenues. They continued to keep cash expenses low, driving a strong increase in profitability. OneNeck IT Solutions had lower revenues this quarter due primarily to less equipment sales to existing customers. They are focused on sales execution as their top priority."

2017 Estimated Results
Current estimates of full-year 2017 results for U.S. Cellular, TDS Telecom, and TDS are shown below.  Such estimates represent management's view as of August 4, 2017.  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. 



2017 Estimated Results
















U.S. Cellular


TDS Telecom


TDS(3)



Current

Previous


Current

Previous


Current

Previous

(Dollars in millions)












Total operating revenues (1)

$3,800-$4,000

Unchanged


$1,200-$1,250

Unchanged


$5,015-$5,265

Unchanged

Adjusted OIBDA (1)(2)(4)

$550-$650

Unchanged


$300-$340

Unchanged


$855-$995

Unchanged

Adjusted EBITDA (2)

$700-$800

Unchanged


$300-$340

Unchanged


$1,005-$1,145

Unchanged

Capital expenditures (Approximately)


$500

Unchanged



$225

Unchanged



$735

Unchanged

The following tables provide reconciliations of Net income to Adjusted OIBDA and Adjusted EBITDA for 2017 estimated results, actual results for the six months ended June 30, 2017, and actual results for the year ended December 31, 2016. In providing 2017 estimated results, TDS has not completed the below reconciliation to net income because it does not provide guidance for income taxes.  Although potentially significant, TDS believes that the impact of income taxes cannot be reasonably predicted; therefore, TDS is unable to provide such guidance.





2017 Estimated Results
















U.S. Cellular



TDS Telecom



TDS(3)

(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)

$

(30)-70


$

80-120


$

(10)-130

Add back:










Interest expense


110





165


Depreciation, amortization and accretion expense


620



220



850

EBITDA (Non-GAAP)

$

700-800


$

300-340


$

1,005-1,145

Add back:










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







(Gain) loss on license sales and exchanges, net


(20)





(20)


(Gain) loss on asset disposals, net


20





20

Adjusted EBITDA (Non-GAAP) (2)

$

700-800


$

300-340


$

1,005-1,145

Deduct:










Equity in earnings of unconsolidated entities


140





140


Interest and dividend income(1)


10





10

Adjusted OIBDA (Non-GAAP)(1)(2)(4)

$

550-650


$

300-340


$

855-995

 




Actual Results
























Six Months Ended June 30, 2017


Year ended December 31, 2016




U.S.
Cellular


TDS

Telecom


TDS (3)


U.S.
Cellular


TDS

Telecom


TDS (3)

(Dollars in millions)












Net income (GAAP)

$

40


$

33


$

55


$

49


$

42


$

52

Add back:













Income tax expense


33



21



44



33



25



40

Income before income taxes



















(GAAP)

$

73


$

54


$

99


$

82


$

67


$

92

Add back:













Interest expense


56



2



85



113



3



170


Depreciation, amortization and accretion expense




















307



111



422



618



224



850

EBITDA (Non-GAAP)

$

436


$

167


$

606


$

813


$

294


$

1,112

Add back:



















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






























(1)


(Gain) loss on license sales and exchanges, net




















(19)





(19)



(19)



(1)



(20)


(Gain) loss on asset disposals, net


9



1



10



22



4



27

Adjusted EBITDA (Non-GAAP) (2)

$

426


$

168


$

597


$

816


$

298


$

1,118

Deduct:



















Equity in earnings of unconsolidated entities




















66





65



140





140


Interest and dividend income(1)


5



2



8



6



3



11


Other, net


(1)





1



1





Adjusted OIBDA (Non-GAAP) (1)(2)(4)

$

356


$

166


$

523


$

669


$

295


$

967





















Note: Totals may not foot due to rounding differences.





















(1)

Equipment installment plan interest income is reflected as a component of Service revenues consistent with an accounting policy change effective January 1, 2017.  All prior period numbers have been recast to conform to this accounting change. 





















(2)

Adjusted EBITDA is defined as net income adjusted for the items set forth in the reconciliation above.  Adjusted OIBDA is defined as net income adjusted for the items set forth in the reconciliation above.  Adjusted EBITDA and Adjusted OIBDA 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 or Cash flows from operating activities, as indicators of cash flows or as measures of liquidity.  TDS does not intend to imply that any such items set forth in the reconciliation above are non-recurring, infrequent or unusual; such items may occur in the future.  Management uses Adjusted EBITDA and Adjusted OIBDA as measurements of profitability, and therefore reconciliations to Net income are deemed appropriate.  Management believes Adjusted EBITDA and Adjusted OIBDA are useful measures of TDS' operating results before significant recurring non-cash charges, gains and losses, and other items as presented above as they provide additional relevant and useful information to investors and other users of TDS' financial data in evaluating the effectiveness of its operations and underlying business trends in a manner that is consistent with management's evaluation of business performance.  Adjusted EBITDA shows adjusted earnings before interest, taxes, depreciation, amortization and accretion, and gains and losses, while Adjusted OIBDA reduces this measure further to exclude Equity in earnings of unconsolidated entities and Interest and dividend income in order to more effectively show the performance of operating activities excluding investment activities.  The table above reconciles Adjusted EBITDA and Adjusted OIBDA flow to the corresponding GAAP measure, Net income or Income before income taxes.




(3)

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.





















(4)

A reconciliation of Adjusted OIBDA (Non-GAAP) to Operating income (GAAP) for June 30, 2017 actual results can be found on TDS' website at investors.tdsinc.com.

Conference Call Information
TDS will hold a conference call on August 4, 2017 at 9:30 a.m. Central Time.

Before the call, certain financial and statistical information to be discussed during the call will be posted to investors.tdsinc.com. The call will be archived on the Events & Presentations page of investors.tdsinc.com

About TDS
Telephone and Data Systems, Inc. (TDS), a Fortune 1000® company, provides wireless; cable and wireline broadband, TV and voice; and hosted and managed services to approximately 6 million connections nationwide through its businesses, U.S. Cellular, TDS Telecom, OneNeck IT Solutions, and BendBroadband. Founded in 1969 and headquartered in Chicago, TDS employed 10,000 people as of June 30, 2017.

Visit www.tdsinc.com for comprehensive financial information, including earnings releases, quarterly and annual filings, shareholder information and more.

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995: All information set forth in this news release, except historical and factual information, represents forward-looking statements. This includes all statements about the company's plans, beliefs, estimates, and expectations. These statements are based on current estimates, projections, and assumptions, which involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Important factors that may affect these forward-looking statements include, but are not limited to: intense competition; the ability to execute TDS' business strategy; uncertainties in TDS' future cash flows and liquidity and access to the capital markets; the ability to make payments on TDS and U.S. Cellular indebtedness or comply with the terms of debt covenants; impacts of any pending acquisitions/divestitures/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 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 of 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 services and products offered by U.S. Cellular and TDS Telecom. Investors are encouraged to consider these and other risks and uncertainties that are discussed in the Form 8-K Current Report used by TDS to furnish this press release to the Securities and Exchange Commission, which are incorporated by reference herein.    

For more information about TDS and its subsidiaries, visit:
TDS: www.tdsinc.com
U.S. Cellular: www.uscellular.com
TDS Telecom: www.tdstelecom.com
OneNeck IT Solutions: www.oneneck.com

United States Cellular Corporation

Summary Operating Data (Unaudited)
















As of or for the Quarter Ended

6/30/2017


3/31/2017


12/31/2016



9/30/2016


6/30/2016

Retail Connections
















Postpaid

















Total at end of period


4,478,000



4,455,000



4,482,000



4,484,000



4,490,000



Gross additions


174,000



146,000



187,000



174,000



197,000




Feature phones


7,000



7,000



7,000



10,000



8,000




Smartphones


116,000



88,000



109,000



105,000



107,000




Connected devices


51,000



51,000



71,000



59,000



82,000



Net additions (losses)


23,000



(27,000)



(2,000)



(6,000)



36,000




Feature phones


(15,000)



(19,000)



(21,000)



(20,000)



(21,000)




Smartphones


34,000



(9,000)



(4,000)



(7,000)



8,000




Connected devices


4,000



1,000



23,000



21,000



49,000



ARPU (1)

$

44.60


$

45.42


$

45.19


$

47.08


$

47.37



ABPU (Non-GAAP)(2)

$

55.19


$

55.82


$

55.43


$

56.79


$

56.09



ARPA (3)

$

119.73


$

121.88


$

120.67


$

125.31


$

124.91



ABPA (Non-GAAP)(4)

$

148.15


$

149.78


$

148.02


$

151.16


$

147.90



Churn rate (5)


1.13%



1.29%



1.41%



1.34%



1.20%




Handsets


0.91%



1.08%



1.23%



1.22%



1.10%




Connected devices


2.35%



2.55%



2.49%



2.04%



1.84%


Prepaid

















Total at end of period


484,000



480,000



484,000



480,000



413,000



Gross additions


73,000



78,000



83,000



132,000



73,000



Net additions (losses)


3,000



(4,000)



4,000



67,000



14,000



ARPU (1)

$

33.52


$

33.66


$

33.25


$

34.39


$

34.58



Churn rate (5)


4.93%



5.69%



5.44%



4.84%



4.86%

Total connections at end of period (6)


5,023,000



4,996,000



5,031,000



5,030,000



4,973,000

Market penetration at end of period
















Consolidated operating population


32,089,000



32,089,000



31,994,000



31,994,000



31,994,000


Consolidated operating penetration (7)


16%



16%



16%



16%



16%

Capital expenditures (millions)

$

84


$

61


$

171


$

103


$

93

Total cell sites in service


6,421



6,417



6,415



6,374



6,324

Owned towers


4,044



4,041



4,040



4,015



3,988





















(1)

Average Revenue Per User (ARPU) - metric is calculated by dividing a revenue base by an average number of connections and by the number of months in the period.  These revenue bases and connection populations are shown below:


Postpaid ARPU consists of total postpaid service revenues and postpaid connections.


Prepaid ARPU consists of total prepaid service revenues and prepaid connections.

(2)

Average Billings Per User (ABPU) - non-GAAP metric is calculated by dividing total postpaid service revenues plus equipment installment plan billings by the average number of postpaid connections and by the number of months in the period.  Refer to the end of this release for a reconciliation of this metric to its most comparable GAAP metric.

(3)

Average Revenue Per Account (ARPA) - metric is calculated by dividing total postpaid service revenues by the average number of postpaid accounts and by the number of months in the period.

(4)

Average Billings Per Account (ABPA) - non-GAAP metric is calculated by dividing total postpaid service revenues plus equipment installment plan billings by the average number of postpaid accounts and by the number of months in the period.  Refer to the end of this release for a reconciliation of this metric to its most comparable GAAP metric.

(5)

Churn rate represents the percentage of the connections that disconnect service each month.  These rates represent the average monthly churn rate for each respective period.

(6)

Includes reseller and other connections.

(7)

Market penetration is calculated by dividing the number of wireless connections at the end of the period by the total population of consolidated operating markets as estimated by Nielsen.

 

TDS Telecom

Summary Operating Data (Unaudited)


As of or for the Quarter Ended

6/30/2017


3/31/2017


12/31/2016


9/30/2016


6/30/2016

TDS Telecom















Wireline
















Residential connections

















Voice (1)


304,600



308,200



310,600



314,600



316,800



Broadband (2)


230,200



228,500



229,500



232,800



232,200



IPTV (3)


46,200



45,200



45,300



43,600



41,200



   Wireline residential connections


581,000



581,900



585,400



590,900



590,200



















Total residential revenue per connection (4)

$

46.39


$

45.17


$

44.27


$

44.25


$

43.67



















Commercial connections

















Voice (1)


150,500



154,000



157,400



160,900



164,000



Broadband (2)


21,000



21,200



21,400



21,700



21,900



managedIP (5)


149,700



150,300



150,900



151,500



149,000



   Wireline commercial connections


321,200



325,500



329,700



334,000



334,900



















Total Wireline connections


902,200



907,400



915,200



924,900



925,100


















Cable
















Cable Connections

















Broadband (6)


140,300



137,800



133,700



130,200



125,700



Video (7)


97,900



97,600



99,000



101,100



102,900



Voice (8)


58,700



59,000



59,600



59,800



58,900



   Cable connections


297,000



294,300



292,400



291,000



287,600


















Numbers may not foot due to rounding.


















(1)

The individual circuits connecting a customer to Wireline's central office facilities.

(2)

The number of Wireline customers provided high-capacity data circuits via various technologies, including DSL and dedicated internet circuit technologies.

(3)

The number of Wireline customers provided video services using IP networking technology.

(4)

Total residential revenue per connection is calculated by dividing total Wireline residential revenue by the average number of Wireline residential connections and by the number of months in the period.

(5)

The number of telephone handsets, data lines and IP trunks providing communications using IP networking technology.

(6)

Billable number of lines into a building for high-speed data services.

(7)

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.

(8)

Billable number of lines into a building for voice services.

 

TDS Telecom

Capital Expenditures (Unaudited)











Quarter Ended

6/30/2017


3/31/2017


12/31/2016


9/30/2016


6/30/2016

(Dollars in millions)















Wireline

$

33


$

17


$

26


$

27


$

27

Cable


12



9



13



11



17

HMS


4



6



5



2



2


$

49


$

33


$

45


$

40


$

46
















Numbers may not foot due to rounding.

 

Telephone and Data Systems, Inc.

Consolidated Statement of Operations Highlights

(Unaudited)





Three Months Ended June 30,





2017


2016


2017 vs. 2016






Increase (Decrease)

(Dollars and shares in millions, except per share amounts)










Operating revenues












U.S. Cellular (1)

$

963


$

992


$

(29)


(3)%


TDS Telecom


281



300



(18)


(6)%


All Other (2)


3



3




-






1,247



1,295



(48)


(4)%

Operating expenses












U.S. Cellular













Expenses excluding depreciation, amortization and accretion














800



812



(12)


(2)%



Depreciation, amortization and accretion


155



154



1


-



(Gain) loss on asset disposals, net


5



5




6%



(Gain) loss on license sales and exchanges, net


(2)



(9)



7


81%






958



962



(4)


(1)%


TDS Telecom













Expenses excluding depreciation, amortization and accretion














201



221



(20)


(9)%



Depreciation, amortization and accretion


55



54



1


3%



(Gain) loss on asset disposals, net


1



1




(30)%






257



275



(19)


(7)%


All Other (2)













Expenses excluding depreciation and amortization


3



3




40%



Depreciation and amortization


1



2




(9)%



(Gain) loss on asset disposals, net







>(100)%






4



5




19%




Total operating expenses


1,219



1,242



(23)


(2)%

Operating income (loss)












U.S. Cellular (1)


5



30



(25)


(82)%


TDS Telecom


25



24




1%


All Other (2)


(2)



(1)




>(100)%






28



53



(25)


(47)%

Investment and other income (expense)












Equity in earnings of unconsolidated entities


33



36



(3)


(9)%


Interest and dividend income (1)


4



3



1


15%


Interest expense


(43)



(43)




-


Other, net




1



(1)


>100%



Total investment and other income (expense)(1)


(6)



(3)



(3)


(78)%

Income before income taxes


22



50



(28)


(55)%


Income tax expense


10



18



(8)


(45)%

Net income


12



32



(20)


(62)%


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













2



4



(2)


(49)%

Net income attributable to TDS shareholders


10



28



(18)


(63)%


TDS Preferred dividend requirement







N/M

Net income available to common shareholders

$

10


$

28


$

(18)


(63)%















Basic weighted average shares outstanding


111



109



2


1%

Basic earnings per share attributable to TDS shareholders

$

0.09


$

0.25


$

(0.16)


(64)%















Diluted weighted average shares outstanding


112



111



1


1%

Diluted earnings per share attributable to TDS shareholders

$

0.09


$

0.25


$

(0.16)


(64)%















N/M - Percentage change not meaningful















Numbers may not foot due to rounding.















(1)

Equipment installment plan interest income is reflected as a component of Service revenues consistent with an accounting policy change effective January 1, 2017.  All prior period numbers have been recast to conform to this accounting change.















(2)

Consists of TDS corporate, intercompany eliminations and all other business operations not included in the U.S. Cellular and TDS Telecom segments.

 

Telephone and Data Systems, Inc.

Consolidated Statement of Operations Highlights

(Unaudited)





Six Months Ended June 30,





2017


2016


2017 vs. 2016






Increase (Decrease)

(Dollars and shares in millions, except per share amounts)











Operating revenues












U.S. Cellular(1)

$

1,899


$

1,962


$

(63)


(3)%


TDS Telecom


580



581



(1)


-


All Other(2)


6



7



(1)


(4)%






2,485



2,550



(65)


(3)%

Operating expenses












U.S. Cellular













Expenses excluding depreciation, amortization and accretion














1,543



1,613



(70)


(4)%



Depreciation, amortization and accretion


307



307




-



(Gain) loss on asset disposals, net


9



10



(1)


(12)%



(Gain) loss on license sales and exchanges, net


(19)



(9)



(10)


>(100)%






1,840



1,921



(81)


(4)%


TDS Telecom













Expenses excluding depreciation, amortization and accretion














414



426



(12)


(3)%



Depreciation, amortization and accretion


111



112



(1)


(1)%



(Gain) loss on asset disposals, net


1



2



(1)


(28)%






527



540



(13)


(2)%


All Other(2)













Expenses excluding depreciation and amortization


5



5




2%



Depreciation and amortization


4



3




(10)%



(Gain) loss on asset disposals, net







57%






8



8




(3)%


















Total operating expenses


2,375



2,469



(94)


(4)%

Operating income (loss)












U.S. Cellular(1)


59



41



18


45%


TDS Telecom


53



41



12


29%


All Other(2)


(2)



(1)



(1)


(1)%






110



81



29


38%

Investment and other income (expense)












Equity in earnings of unconsolidated entities


65



72



(7)


(9)%


Interest and dividend income(1)


8



5



3


36%


Interest expense


(85)



(85)




(1)%


Other, net


1





1


>100%



Total investment and other income (expense)(1)


(11)



(8)



(3)


(53)%

Income before income taxes


99



73



26


36%


Income tax expense


44



31



13


43%

Net income


55



42



13


31%


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













8



6



2


24%

Net income attributable to TDS shareholders


47



36



11


32%


TDS Preferred dividend requirement







(50)%

Net income available to common shareholders

$

47


$

36


$

11


32%















Basic weighted average shares outstanding


110



109



1


1%

Basic earnings per share attributable to TDS shareholders

$

0.43


$

0.33


$

0.10


30%

Diluted weighted average shares outstanding


112



111



1


1%

Diluted earnings per share attributable to TDS shareholders

$

0.42


$

0.32


$

0.10


31%















Numbers may not foot due to rounding.















(1)

Equipment installment plan interest income is reflected as a component of Service revenues consistent with an accounting policy change effective January 1, 2017.  All prior period numbers have been recast to conform to this accounting change.















(2)

Consists of TDS corporate, intercompany eliminations and all other business operations not included in the U.S. Cellular and TDS Telecom segments.





























 

Telephone and Data Systems, Inc.

Consolidated Statement of Cash Flows

(Unaudited)







Six Months Ended






June 30,


2017


2016

(Dollars in millions)






Cash flows from operating activities







Net income

$

55


$

42


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















Depreciation, amortization and accretion


422



422




Bad debts expense


49



46




Stock-based compensation expense


22



18




Deferred income taxes, net


(22)



8




Equity in earnings of unconsolidated entities


(65)



(72)




Distributions from unconsolidated entities


65



30




(Gain) loss on asset disposals, net


10



12




(Gain) loss on license sales and exchanges, net


(19)



(9)




Noncash interest expense


1



2




Other operating activities




(3)


Changes in assets and liabilities from operations









Accounts receivable


5



(6)




Equipment installment plans receivable


(107)



(94)




Inventory


2



(26)




Accounts payable


(59)



32




Customer deposits and deferred revenues


(10)



(18)




Accrued taxes


53



76




Accrued interest




(1)




Other assets and liabilities


(44)



(59)





Net cash provided by operating activities


358



400











Cash flows from investing activities







Cash paid for additions to property, plant and equipment


(242)



(281)


Cash paid for acquisitions and licenses


(200)



(46)


Cash received from divestitures and exchanges


17



17


Federal Communications Commission deposit




(143)


Other investing activities


1



1





Net cash used in investing activities


(424)



(452)











Cash flows from financing activities







Repayment of long-term debt


(6)



(6)


Issuance of long-term debt




2


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


(1)




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




3


Repurchase of TDS Common Shares




(3)


Repurchase of U.S. Cellular Common Shares




(2)


Repurchase of TDS Preferred Shares


(1)




Dividends paid to TDS shareholders


(34)



(32)


Payment of debt issuance costs




(4)


Distributions to noncontrolling interests


(2)



(1)


Other financing activities


1



9





Net cash used in financing activities


(43)



(34)











Net decrease in cash and cash equivalents


(109)



(86)











Cash and cash equivalents







Beginning of period


900



985


End of period

$

791


$

899











 

Telephone and Data Systems, Inc.

Consolidated Balance Sheet Highlights

(Unaudited)







ASSETS
















June 30,


December 31,




2017


2016

(Dollars in millions)






Current assets







Cash and cash equivalents

$

791


$

900


Accounts receivable from customers and others, net


845



851


Inventory, net


149



151


Prepaid expenses


111



115


Income taxes receivable


2



10


Other current assets


26



32



Total current assets


1,924



2,059









Assets held for sale


4



8









Licenses


2,235



1,895

Goodwill


770



766

Franchise rights


244



244

Other intangible assets, net


28



33

Investments in unconsolidated entities


452



451

Other investments




1









Property, plant and equipment, net


3,373



3,555









Other assets and deferred charges


348



434









Total assets

$

9,378


$

9,446

 

Telephone and Data Systems, Inc.

Consolidated Balance Sheet Highlights

(Unaudited)








LIABILITIES AND EQUITY



















June 30,


December 31,





2017


2016

(Dollars and shares in millions, except per share amounts)






Current liabilities







Current portion of long-term debt

$

12


$

12


Accounts payable


295



365


Customer deposits and deferred revenues


218



229


Accrued interest


11



11


Accrued taxes


85



44


Accrued compensation


78



127


Other current liabilities


87



99



Total current liabilities


786



887










Deferred liabilities and credits







Deferred income tax liability, net


899



922


Other deferred liabilities and credits


472



453










Long-term debt, net


2,428



2,433










Noncontrolling interests with redemption features


1



1










Equity







TDS shareholders' equity








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


1



1



Capital in excess of par value


2,393



2,386



Treasury shares, at cost


(684)



(698)



Accumulated other comprehensive income




1



Retained earnings


2,457



2,454




   Total TDS shareholders' equity


4,167



4,144











Preferred shares




1


Noncontrolling interests


625



605












Total equity


4,792



4,750










Total liabilities and equity

$

9,378


$

9,446

 

Balance Sheet Highlights

(Unaudited)




June 30, 2017



U.S.


TDS


TDS Corporate


Intercompany


TDS



Cellular


Telecom


& Other


Eliminations


Consolidated

(Dollars in millions)















Cash and cash equivalents

$

472


$

22


$

297


$


$

791

Affiliated cash investments




499





(499)





$

472


$

521


$

297


$

(499)


$

791

















Licenses, goodwill and other intangible assets















$

2,596


$

820


$

(139)


$


$

3,277

Investment in unconsolidated entities


414



4



40



(6)



452



$

3,010


$

824


$

(99)


$

(6)


$

3,729

















Property, plant and equipment, net

$

2,304


$

1,043


$

26


$


$

3,373

















Long-term debt, net:
















Current portion

$

11


$


$

1


$


$

12


Non-current portion


1,613



2



813





2,428



$

1,624


$

2


$

814


$


$

2,440

 

TDS Telecom Highlights

(Unaudited)





Three Months Ended June 30,











2017 vs. 2016





2017


2016


Increase (Decrease)

(Dollars in millions)











Wireline











Operating revenues












Residential

$

81


$

77


$

4


5%


Commercial


50



53



(3)


(6)%


Wholesale


49



44



5


10%



Total service revenues


180



175



5


3%


Equipment sales







(36)%






181



175



5


3%

Operating expenses












Cost of services


65



64



2


3%


Cost of equipment sold


1






22%


Selling, general and administrative expenses


48



49



(1)


(2)%


Expenses excluding depreciation, amortization and accretion


114












113



1


1%


Depreciation, amortization and accretion


37



37




1%


(Gain) loss on asset disposals, net




1




(46)%






152



151



1


1%
















Operating income

$

29


$

25


$

4


17%















Cable











Operating revenues












Residential

$

41


$

36


$

5


15%


Commercial


9



9




1%





51



45



5


12%

Operating expenses












Cost of services


24



24




1%


Selling, general and administrative expenses


13



12



1


4%


Expenses excluding depreciation, amortization and accretion


37












36



1


2%


Depreciation, amortization and accretion


11



9



2


18%


(Gain) loss on asset disposals, net







(5)%






48



46



2


5%
















Operating income

$

3


$


$

3


>100%















HMS











Operating revenues












Service revenues

$

27


$

33


$

(5)


(16)%


Equipment sales


23



47



(24)


(51)%






51



80



(29)


(37)%

Operating expenses












Cost of services


21



19



2


11%


Cost of equipment sold


19



39



(20)


(51)%


Selling, general and administrative expenses


10



15



(4)


(29)%


Expenses excluding depreciation, amortization and accretion


51












73



(22)


(30)%


Depreciation, amortization and accretion


7



7



(1)


(7)%






58



80



(22)


(28)%
















Operating loss

$

(7)


$


$

(7)


>(100)%















Intercompany revenues

$

(1)


$

(1)


$


12%

Intercompany expenses


(1)



(1)




12%















Total TDS Telecom operating income

$

25


$

24


$


1%















Numbers may not foot due to rounding.

 

TDS Telecom Highlights

(Unaudited)





Six Months Ended June 30,











2017 vs. 2016





2017


2016


Increase (Decrease)

(Dollars in millions)











Wireline











Operating revenues












Residential

$

160


$

153


$

7


4%


Commercial


101



107



(6)


(6)%


Wholesale


98



87



11


12%



Total service revenues


359



347



12


3%


Equipment sales


1



1




(37)%






360



348



11


3%

Operating expenses












Cost of services


129



126



3


2%


Cost of equipment sold


1



1




13%


Selling, general and administrative expenses


96



98



(2)


(2)%


Expenses excluding depreciation, amortization and accretion













226



224



1


1%


Depreciation, amortization and accretion


76



78



(2)


(3)%


(Gain) loss on asset disposals, net


1



1




(40)%






302



304



(1)


-
















Operating income

$

57


$

45


$

13


28%















Cable











Operating revenues












Residential

$

82


$

72


$

11


15%


Commercial


18



19



(1)


(4)%





100



90



10


11%

Operating expenses












Cost of services


48



46



2


4%


Selling, general and administrative expenses


25



24



1


3%


Expenses excluding depreciation, amortization and accretion













73



70



3


4%


Depreciation, amortization and accretion


21



18



3


14%


(Gain) loss on asset disposals, net


1



1




(15)%






95



90



5


6%
















Operating income

$

5


$

1


$

5


>100%















HMS











Operating revenues












Service revenues

$

56


$

62


$

(6)


(9)%


Equipment sales


66



82



(17)


(20)%






122



144



(22)


(15)%

Operating expenses












Cost of services


42



40



1


4%


Cost of equipment sold


55



68



(14)


(20)%


Selling, general and administrative expenses


21



25



(4)


(16)%


Expenses excluding depreciation, amortization and accretion













118



134



(16)


(12)%


Depreciation, amortization and accretion


14



15



(1)


(7)%






131



148



(17)


(12)%
















Operating loss

$

(9)


$

(4)


$

(5)


>(100)%















Intercompany revenues

$

(2)


$

(2)


$


5%

Intercompany expenses


(2)



(2)




5%















Total TDS Telecom operating income

$

53


$

41


$

12


29%















Numbers may not foot due to rounding.

Telephone and Data Systems, Inc.


Financial Measures and Reconciliations


































Free Cash Flow


























Three Months Ended June 30,


Six Months Ended June 30,




2017


2016


2017


2016


(Dollars in millions)














Cash flows from operating activities (GAAP)


$

221


$

154


$

358


$

400


Less: Cash paid for additions to property, plant and equipment



115



122



242



281



Free cash flow (Non-GAAP)(1)



106



32



116



119


















(1)

Management uses Free cash flow as a liquidity measure and it is defined as Cash flows from operating activities less Cash paid for additions to property, plant and equipment.  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 liquidity, specifically, the amount of net cash generated by business operations after deducting Cash paid for additions to property, plant and equipment. 


Postpaid ABPU and Postpaid ABPA

U.S. Cellular presents Postpaid ABPU and Postpaid ABPA to reflect the revenue shift from Service revenues to Equipment and product sales resulting from the increased adoption of equipment installment plans.  Postpaid ABPU and Postpaid ABPA, as previously defined, are non-GAAP financial measures which U.S. Cellular believes are useful to investors and other users of its financial information in showing trends in both service and equipment and product sales revenues received from customers.


















For the Quarter Ended

6/30/2017



3/31/2017



12/31/2016



9/30/2016



6/30/2016

(Dollars and connection counts in millions)















Calculation of Postpaid ARPU















Postpaid service revenues

$

597


$

608


$

607


$

635


$

636

Average number of postpaid connections


4.47



4.46



4.48



4.49



4.48

Number of months in period


3



3



3



3



3


Postpaid ARPU (GAAP metric)

$

44.60


$

45.42


$

45.19


$

47.08


$

47.37


















Calculation of Postpaid ABPU















Postpaid service revenues

$

597


$

608


$

607


$

635


$

636

Equipment installment plan billings


142



139



138



131



118


Total billings to postpaid connections

$

739


$

747


$

745


$

766


$

754

Average number of postpaid connections


4.47



4.46



4.48



4.49



4.48

Number of months in period


3



3



3



3



3


Postpaid ABPU (Non-GAAP metric)

$

55.19


$

55.82


$

55.43


$

56.79


$

56.09


















Calculation of Postpaid ARPA















Postpaid service revenues

$

597


$

608


$

607


$

635


$

636

Average number of postpaid accounts


1.66



1.66



1.68



1.69



1.70

Number of months in period


3



3



3



3



3


Postpaid ARPA (GAAP metric)

$

119.73


$

121.88


$

120.67


$

125.31


$

124.91


















Calculation of Postpaid ABPA















Postpaid service revenues

$

597


$

608


$

607


$

635


$

636

Equipment installment plan billings


142



139



138



131



118


Total billings to postpaid accounts

$

739


$

747


$

745


$

766


$

754

Average number of postpaid accounts


1.66



1.66



1.68



1.69



1.70

Number of months in period


3



3



3



3



3


Postpaid ABPA (Non-GAAP metric)

$

148.15


$

149.78


$

148.02


$

151.16


$

147.90

 

View original content:http://www.prnewswire.com/news-releases/tds-reports-second-quarter-2017-results-300499747.html

SOURCE Telephone and Data Systems, Inc.

Jane W. McCahon, Senior Vice President - Corporate Relations and Corporate Secretary, 312-592-5379, jane.mccahon@tdsinc.com or Julie D. Mathews, IRC, Director - Investor Relations, 312-592-5341, julie.mathews@tdsinc.com
Copyright © 2017 Telephone and Data Systems, Inc. All Rights Reserved.

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Aug 16, 2017 05:00 PM

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