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Jane McCahon

Senior Vice President - Corporate Relations

Phone: 312.592.5379
jane.mccahon@tdsinc.com
Full Contact Info

TDS reports fourth quarter and full year 2017 results

02/23/2018

Provides 2018 guidance

CHICAGO, Feb. 23, 2018 /PRNewswire/ --

As previously announced, TDS will hold a teleconference February 23, 2018 at 9:30 a.m. CST. 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 $1,308 million for the fourth quarter of 2017, versus $1,293 million for the same period one year ago and Net income available to TDS common shareholders and related diluted earnings per share were $287 million and $2.54, respectively, for the fourth quarter of 2017.  Excluding a benefit of $327 million ($282 million, non-GAAP, net of noncontrolling interests impacts) related to the enactment of new tax legislation, Net income available to TDS common shareholders and related diluted earnings per share excluding adjustments (non-GAAP) were $6 million and $0.05, respectively for the three months ended December 31, 2017, compared to a Net loss available to TDS common shareholders and related diluted loss per share of $5 million and $0.05, respectively, in the same period one year ago. 

TDS reported total operating revenues of $5,044 million and $5,155 million for the years ended 2017 and 2016, respectively, and Net income available to TDS common shareholders and related diluted earnings per share were $153 million and $1.37, respectively, for the year ended 2017.  Excluding the benefit of $327 million ($282 million, non-GAAP, net of noncontrolling interests impacts) related to the enactment of new tax legislation and a loss on goodwill impairment of $262 million ($188 million, non-GAAP, net of tax and noncontrolling interest impacts) in the third quarter of 2017, Net income available to TDS common shareholders and related diluted earnings per share excluding adjustments (non-GAAP) were $59 million and $0.53, respectively for the year ended December 31, 2017, compared to Net income available to TDS common shareholders and related diluted earnings per share of $43 million and $0.39, respectively, for the year ended 2016.    

"In 2017, the TDS family of companies continued to act on our long-term strategic goals," said LeRoy T. Carlson, Jr., TDS President and CEO. "U.S. Cellular successfully balanced customer growth with profitability, while TDS Telecom implemented its broadband strategy of driving broadband revenue and margin growth in its wireline and cable segments.

"U.S. Cellular protected and grew its customer base through an award winning network and the successful marketing and sales of Total Plans, which include no hidden fees and an unlimited data option. With record low churn, the company achieved postpaid handset growth for the year. We continued to invest in U.S. Cellular's high-quality network by increasing capacity and launching VoLTE, which is now fully operational in Iowa and Wisconsin. Tower rental revenues, accessories sales and device protection plan sales, along with effective cost management all worked to partially offset competitive pricing pressures.

"TDS Telecom continued to grow broadband services, bundling these with video and voice services. Several years of fiber investments led to growth in IPTV connections and to increased demand for higher broadband speeds, generating residential wireline revenue growth. Network investments in our cable properties also continue to see success, driving strong increases in broadband connections and cable revenues. This quarter we accomplished our seventh consecutive quarter of double-digit broadband cable connections growth. We also signed several small cable acquisitions to strengthen our existing markets, and are continuing to seek attractive cable properties.

"At OneNeck IT Solutions, lower spending by existing customers impacted equipment revenues, and associated hardware maintenance and service revenues. OneNeck remains focused on growing recurring revenues from high-margin services through a full portfolio of offerings. In 2017, our Colocation and Relia Cloud revenues grew nicely."

2018 Estimated Results
Current estimates of full-year 2018 results for U.S. Cellular, TDS Telecom, and TDS are shown below.  Such estimates represent management's view as of February 23, 2018.  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.

2018 Estimated Results and Actual Results for the Year Ended December 31, 2017



















U.S. Cellular


Wireline and Cable (1)


TDS (1)(2)



Estimate


Actual


Estimate


Actual


Estimate


Actual

(Dollars in millions)
















Total operating revenues


$3,850-$4,050

$

3,890


$900-$950

$

919


$5,015-$5,265

$

5,044

Adjusted OIBDA (3)(4)


$625-$775

$

675


$290-$320

$

317


$925-$1,105

$

999

Adjusted EBITDA (3)


$765-$915

$

820


$300-$330

$

323


$1,075-$1,255

$

1,152

Capital expenditures


$500-$550

$

469


$270

$

201


$795-$845

$

694

The following tables provide reconciliations of Net income to Adjusted OIBDA and Adjusted EBITDA for 2018 estimated results and actual results for the year ended December 31, 2017.  In providing 2018 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. 





U.S. Cellular



Wireline and Cable (1)



TDS (1)(2)





Estimate



Actual



Estimate



Actual



Estimate



Actual

(Dollars in millions)


















Net income (GAAP)


N/A



15



N/A



N/A



N/A



157

Add back:



















Income tax benefit


N/A



(287)



N/A



N/A



N/A



(279)

Income (loss) before income



















taxes (GAAP)

$

10-160


$

(272)


$

80-110


$

125


$

5-185


$

(122)

Add back:



















Interest expense


110



113







170



170


Depreciation, amortization and




















accretion expense


625



615



220



195



880



844

EBITDA (Non-GAAP) (3)

$

745-895


$

456


$

300-330


$

319


$

1,055-1,235


$

892

Add back:



















Loss on impairment of goodwill




370









262


(Gain) loss on sale of business




















and other exit costs, net




(1)









(1)


(Gain) loss on license sales and




















exchanges, net




(22)









(22)


(Gain) loss on asset




















disposals, net


20



17





3



20



21

Adjusted EBITDA (Non-GAAP)(3)

$

765-915


$

820


$

300-330


$

323


$

1,075-1,255


$

1,152

Deduct:



















Equity in earnings of




















unconsolidated entities


130



137







130



137


Interest and dividend income


10



8



5



5



15



15


Other, net






5





5



1

Adjusted OIBDA (Non-GAAP)(3)(4)

$

625-775


$

675


$

290-320


$

317


$

925-1,105


$

999






















Note: Totals may not foot due to rounding differences.





















(1)

Effective January 1, 2018, HMS will be considered a non-reportable segment and will no longer be reported under TDS Telecom.  To be comparable with the 2018 estimated results, HMS actual results for the year ended 2017 have been included as part of TDS.  A reconciliation of Cable and Wireline actual results to TDS Telecom as reported for full year 2017 can be found on TDS' website at investors.tdsinc.com.

(2)

The TDS column includes U.S. Cellular, Cable and Wireline, HMS and also the impacts of consolidating eliminations, corporate operations and non-reportable segments, all of which are not presented above.

(3)

EBITDA, Adjusted EBITDA and Adjusted OIBDA are defined as net income adjusted for the items set forth in the reconciliation above.  EBITDA, 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 EBITDA, Adjusted EBITDA and Adjusted OIBDA flow to the corresponding GAAP measure, Net income or Income (loss) before income taxes.

(4)

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

Conference Call Information
TDS will hold a conference call on February 23, 2018, 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 over 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 9,900 people as of December 31, 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

12/31/2017


9/30/2017


6/30/2017


3/31/2017


12/31/2016

Retail Connections
















Postpaid

















Total at end of period


4,518,000



4,513,000



4,478,000



4,455,000



4,482,000



Gross additions


177,000



191,000



174,000



146,000



187,000




Feature phones


5,000



7,000



7,000



7,000



7,000




Smartphones


128,000



132,000



116,000



88,000



109,000




Connected devices


44,000



52,000



51,000



51,000



71,000



Net additions (losses)


5,000



35,000



23,000



(27,000)



(2,000)




Feature phones


(15,000)



(15,000)



(15,000)



(19,000)



(21,000)




Smartphones


33,000



44,000



34,000



(9,000)



(4,000)




Connected devices


(13,000)



6,000



4,000



1,000



23,000



ARPU (1)

$

44.12


$

43.41


$

44.60


$

45.42


$

45.19



ABPU (Non-GAAP)(2)

$

56.69


$

54.71


$

55.19


$

55.82


$

55.43



ARPA (3)

$

118.05


$

116.36


$

119.73


$

121.88


$

120.67



ABPA (Non-GAAP)(4)

$

151.68


$

146.65


$

148.15


$

149.78


$

148.02



Churn rate (5)


1.27%



1.16%



1.13%



1.29%



1.41%




Handsets


1.00%



0.96%



0.91%



1.08%



1.23%




Connected devices


2.84%



2.33%



2.35%



2.55%



2.49%


Prepaid

















Total at end of period


519,000



515,000



484,000



480,000



484,000



Gross additions


83,000



102,000



73,000



78,000



83,000



Net additions (losses)


4,000



31,000



3,000



(4,000)



4,000



ARPU (1)

$

32.42


$

33.12


$

33.52


$

33.66


$

33.25



Churn rate (5)


5.09%



4.75%



4.93%



5.69%



5.44%

Total connections at end of

period (6)


5,096,000



5,089,000



5,023,000



4,996,000



5,031,000

Market penetration at end of period
















Consolidated operating
population


31,834,000



31,834,000



32,089,000



32,089,000



31,994,000


Consolidated operating penetration (7)


16%



16%



16%



16%



16%

Capital expenditures (millions)

$

213


$

112


$

84


$

61


$

171

Total cell sites in service


6,460



6,436



6,421



6,417



6,415

Owned towers


4,080



4,051



4,044



4,041



4,040






















(1)

Average Revenue Per User (ARPU) - metric which 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 which 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 which 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 which 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

12/31/2017


9/30/2017


6/30/2017


3/31/2017


12/31/2016

TDS Telecom















Wireline
















Residential connections

















Voice (1)


290,600



298,200



304,600



308,200



310,600



Broadband (2)


228,600



229,900



230,200



228,500



229,500



IPTV (3)


48,600



47,200



46,200



45,200



45,300



   Wireline residential connections


567,700



575,300



581,000



581,900



585,400



















Total residential revenue per connection (4)

$

46.21


$

46.07


$

46.39


$

45.17


$

44.27



















Commercial connections

















Voice (1)


143,000



146,900



150,500



154,000



157,400



Broadband (2)


20,600



20,900



21,000



21,200



21,400



managedIP (5)


146,500



147,600



149,700



150,300



150,900



   Wireline commercial connections


310,100



315,300



321,200



325,500



329,700



















Total Wireline connections


877,800



890,700



902,200



907,400



915,200


















Cable
















Cable Connections

















Broadband (6)


153,300



143,800



140,300



137,800



133,700



Video (7)


101,800



97,900



97,900



97,600



99,000



Voice (8)


60,100



58,900



58,700



59,000



59,600



   Cable connections


315,100



300,600



297,000



294,300



292,400



















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

12/31/2017


9/30/2017


6/30/2017


3/31/2017


12/31/2016

(Dollars in millions)















Wireline

$

55


$

41


$

33


$

17


$

26

Cable


20



14



12



9



13

HMS


2



2



4



6



5


$

76


$

58


$

49


$

33


$

45

















Numbers may not foot due to rounding.

 

Telephone and Data Systems, Inc.

Consolidated Statement of Operations Highlights

(Unaudited)










2017 vs. 2016










Increase

Three Months Ended December 31,

2017


2016

(Decrease)

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








Operating revenues









U.S. Cellular (1)

$

1,029


$

1,006


2%


TDS Telecom


275



283


(3)%


All Other (2)


4



4


12%






1,308



1,293


1%

Operating expenses









U.S. Cellular










Expenses excluding depreciation, amortization and accretion


877



861


2%



Depreciation, amortization and accretion


155



156


(1)%



(Gain) loss on asset disposals, net


4



6


(34)%



(Gain) loss on license sales and exchanges, net


(3)



(3)


(24)%






1,033



1,020


1%


TDS Telecom










Expenses excluding depreciation, amortization and accretion


196



212


(8)%



Depreciation, amortization and accretion


56



56


-



(Gain) loss on asset disposals, net


1



1


51%



(Gain) loss on license sales and exchanges, net




(1)


N/M






253



269


(6)%


All Other (2)










Expenses excluding depreciation and amortization


4



4


4%



Depreciation and amortization


2



2


(7)%






5



5


(2)%




Total operating expenses


1,291



1,294


-

Operating income (loss)









U.S. Cellular (1)


(4)



(14)


75%


TDS Telecom


22



14


52%


All Other (2)


(1)



(1)


29%






17



(1)


>100%

Investment and other income (expense)









Equity in earnings of unconsolidated entities


36



30


18%


Interest and dividend income (1)


4



3


15%


Interest expense


(42)



(43)


3%


Other, net





(23)%



Total investment and other income (expense) (1)


(2)



(10)


75%

Income (loss) before income taxes


15



(11)


>100%


Income tax benefit


(319)



(6)


>(100)%

Net income (loss)


334



(5)


>100%


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


47




>100%

Net income (loss) available to TDS common shareholders

$

287


$

(5)


>100%












Basic weighted average shares outstanding


111



110


1%

Basic earnings (loss) per share available to TDS common shareholders

$

2.59


$

(0.05)


>100%












Diluted weighted average shares outstanding


112



110


2%

Diluted earnings (loss) per share available to TDS common shareholders

$

2.54


$

(0.05)


>100%













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)










2017 vs. 2016










Increase

Year Ended December 31,

2017


2016

(Decrease)

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








Operating revenues









U.S. Cellular

$

3,890


$

3,990


(3)%


TDS Telecom


1,140



1,151


(1)%


All Other (1)


14



14


1%






5,044



5,155


(2)%

Operating expenses









U.S. Cellular










Expenses excluding depreciation, amortization and accretion


3,215



3,321


(3)%



Depreciation, amortization and accretion


615



618


-



Loss on impairment of goodwill


370




N/M



(Gain) loss on asset disposals, net


17



22


(22)%



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


(1)




>(100)%



(Gain) loss on license sales and exchanges, net


(22)



(19)


(17)%






4,194



3,942


6%


TDS Telecom










Expenses excluding depreciation, amortization and accretion


817



856


(5)%



Depreciation, amortization and accretion


222



224


(1)%



Loss on impairment of goodwill


35




N/M



(Gain) loss on asset disposals, net


4



4


(21)%



(Gain) loss on license sales and exchanges, net




(1)


N/M






1,077



1,084


(1)%


All Other(1)










Expenses excluding depreciation and amortization


13



11


18%



Depreciation and amortization


7



8


(9)%



Loss on impairment of goodwill (2)


(143)




N/M



(Gain) loss on asset disposals, net




1


>(100)%



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




(1)


N/M






(122)



18


>(100)%




Total operating expenses


5,149



5,044


2%

Operating income (loss)









U.S. Cellular


(304)



48


>(100)%


TDS Telecom


63



67


(7)%


All Other (1)


136



(4)


>100%






(105)



111


>(100)%

Investment and other income (expense)









Equity in earnings of unconsolidated entities


137



140


(2)%


Interest and dividend income


15



11


42%


Interest expense


(170)



(170)


-


Other, net


1




>100%



Total investment and other income (expense)


(17)



(19)


12%

Income (loss) before income taxes


(122)



92


>(100)%


Income tax expense (benefit)


(279)



40


>(100)%

Net income


157



52


>100%


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


4



9


(55)%

Net income available to TDS common shareholders

$

153


$

43


>100%

Basic weighted average shares outstanding


111



110


1%

Basic earnings per share available to TDS common shareholders

$

1.39


$

0.39


>100%

Diluted weighted average shares outstanding


112



111


1%

Diluted earnings per share available to TDS common shareholders

$

1.37


$

0.39


>100%













N/M - Percentage change not meaningful












Numbers may not foot due to rounding.












(1)

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












(2)

During the third quarter of 2017, U.S. Cellular recorded a goodwill impairment of $370 million while TDS recorded a goodwill impairment of the U.S. Cellular reporting unit of $227 million.  Prior to 2009, TDS accounted for U.S. Cellular's share repurchases as step acquisitions, allocating a portion of the share repurchase value to TDS' Goodwill.  Further, goodwill was impaired at the TDS level in 2003 but not at the U.S. Cellular level, effectively resulting in a lower basis of goodwill attributable to the U.S. Cellular reporting unit rather than at U.S. Cellular itself.  Consequently, U.S. Cellular's Goodwill on a stand-alone basis and any resulting impairment of Goodwill does not equal the TDS consolidated Goodwill related to U.S. Cellular.

 

Telephone and Data Systems, Inc.

Consolidated Statement of Cash Flows

(Unaudited)






Year Ended December 31,

2017


2016

(Dollars in millions)






Cash flows from operating activities







Net income

$

157


$

52


Add (deduct) adjustments to reconcile net income to net







   cash flows from operating activities








Depreciation, amortization and accretion


844



850



Bad debts expense


95



102



Stock-based compensation expense


46



42



Deferred income taxes, net


(369)



22



Equity in earnings of unconsolidated entities


(137)



(140)



Distributions from unconsolidated entities


136



93



Loss on impairment of goodwill


262





(Gain) loss on asset disposals, net


21



27



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


(1)



(1)



(Gain) loss on license sales and exchanges, net


(22)



(20)



Noncash interest


3



3



Other operating activities




(3)


Changes in assets and liabilities from operations








Accounts receivable


(61)



(23)



Equipment installment plans receivable


(261)



(246)



Inventory


6



4



Accounts payable


(7)



36



Customer deposits and deferred revenues


(4)



(52)



Accrued taxes


37



60



Accrued interest




(1)



Other assets and liabilities


31



(23)




Net cash provided by operating activities


776



782










Cash flows from investing activities







Cash paid for additions to property, plant and equipment


(685)



(636)


Cash paid for acquisitions and licenses


(218)



(53)


Cash paid for investments


(100)




Cash received from divestitures and exchanges


21



21


Federal Communications Commission deposit




(143)


Other investing activities


1



3




Net cash used in investing activities


(981)



(808)










Cash flows from financing activities







Issuance of long-term debt




2


Repayment of long-term debt


(17)



(12)


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


4



9


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


1



6


Repurchase of TDS Common Shares




(3)


Repurchase of U.S. Cellular Common Shares




(5)


Repurchase of TDS Preferred Shares


(1)




Dividends paid to TDS shareholders


(69)



(65)


Payment of debt issuance costs


(2)



(4)


Distributions to noncontrolling interests


(4)



(1)


Other financing activities


11



14




Net cash used in financing activities


(77)



(59)










Net decrease in cash, cash equivalents and restricted cash


(282)



(85)










Cash, cash equivalents and restricted cash (1)







Beginning of period


904



989


End of period

$

622


$

904











(1)

As of December 31, 2017, TDS early adopted ASU 2016-18 on a retrospective basis which requires that restricted cash be presented with Cash and cash equivalents in the Statement of Cash Flows.  The Statement of Cash Flows includes restricted cash of $3 million and $4 million as of December 31, 2017 and 2016, respectively.

 

Telephone and Data Systems, Inc.

Consolidated Balance Sheet Highlights

(Unaudited)







ASSETS







December 31,

2017


2016

(Dollars in millions)






Current assets







Cash and cash equivalents

$

619


$

900


Short-term investments


100




Accounts receivable from customers and others, net


961



851


Inventory, net


145



151


Prepaid expenses


112



115


Income taxes receivable


2



10


Other current assets


27



32



Total current assets


1,966



2,059









Assets held for sale


10



8









Licenses


2,232



1,895

Goodwill


509



766

Franchise rights


255



244

Other intangible assets, net


24



33

Investments in unconsolidated entities


453



451

Other investments




1









Property, plant and equipment, net


3,424



3,555









Other assets and deferred charges


422



434









Total assets

$

9,295


$

9,446









 

Telephone and Data Systems, Inc.

Consolidated Balance Sheet Highlights

(Unaudited)








LIABILITIES AND EQUITY








December 31,

2017


2016

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






Current liabilities








Current portion of long-term debt

$

20


$

12



Accounts payable


368



365



Customer deposits and deferred revenues


223



229



Accrued interest


11



11



Accrued taxes


64



44



Accrued compensation


126



127



Other current liabilities


106



99




Total current liabilities


918



887










Deferred liabilities and credits








Deferred income tax liability, net


552



922



Other deferred liabilities and credits


495



453










Long-term debt, net


2,437



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


2,413



2,386



Treasury shares, at cost


(669)



(698)



Accumulated other comprehensive income (loss)


(1)



1



Retained earnings


2,525



2,454




   Total TDS shareholders' equity


4,269



4,144











Preferred shares




1


Noncontrolling interests


623



605












Total equity


4,892



4,750










Total liabilities and equity

$

9,295


$

9,446










 

Telephone and Data Systems, Inc.

Balance Sheet Highlights

(Unaudited)




December 31, 2017



U.S.


TDS


TDS Corporate


Intercompany


TDS



Cellular


Telecom


& Other


Eliminations


Consolidated

(Dollars in millions)















Cash and cash equivalents

$

352


$

24


$

243


$


$

619

Affiliated cash investments




362





(362)





$

352


$

386


$

243


$

(362)


$

619

















Short-term investments

$

50


$


$

50


$


$

100

















Licenses, goodwill and other intangible
















assets

$

2,223


$

793


$

4


$


$

3,020

Investment in unconsolidated entities


415



4



41



(7)



453



$

2,638


$

797


$

45


$

(7)


$

3,473

































Property, plant and equipment, net

$

2,320


$

1,081


$

23


$


$

3,424

















Long-term debt, net:
















Current portion

$

18


$

1


$

1


$


$

20


Non-current portion


1,622



2



813





2,437



$

1,640


$

3


$

814


$


$

2,457

 

TDS Telecom Highlights

(Unaudited)















2017 vs. 2016










Increase

Three Months Ended December 31,

2017


2016

(Decrease)

(Dollars in millions)








Wireline








Operating revenues









Residential

$

79


$

78


1%


Commercial


48



52


(7)%


Wholesale


48



44


9%



Total service revenues


175



174


1%


Equipment and product sales





(30)%





176



174


1%

Operating expenses









Cost of services


64



66


(4)%


Cost of equipment and products




1


(41)%


Selling, general and administrative expenses


47



49


(5)%


Expenses excluding depreciation, amortization and accretion


111



116


(5)%


Depreciation, amortization and accretion


37



40


(7)%


(Gain) loss on license sales and exchanges, net




(1)


N/M






148



156


(5)%


Operating income

$

28


$

19


48%












Cable








Operating revenues









Residential

$

44


$

38


16%


Commercial


10



11


(8)%





54



49


10%

Operating expenses









Cost of services


25



24


1%


Selling, general and administrative expenses


15



13


15%


Expenses excluding depreciation, amortization and accretion


40



38


6%


Depreciation, amortization and accretion


12



9


31%


(Gain) loss on asset disposals, net


1



1


46%






53



47


11%


Operating income

$

1


$

1


(23)%












HMS








Operating revenues









Service revenues

$

27


$

28


(5)%


Equipment and product sales


21



34


(37)%





48



61


(22)%

Operating expenses









Cost of services


20



21


(2)%


Cost of equipment and products


17



28


(37)%


Selling, general and administrative expenses


10



12


(17)%


Expenses excluding depreciation, amortization and accretion


48



60


(21)%


Depreciation, amortization and accretion


7



7


1%






55



67


(19)%


Operating loss

$

(7)


$

(6)


(22)%












Intercompany revenues

$

(2)


$

(1)


(29)%

Intercompany expenses


(2)



(1)


(29)%

Total TDS Telecom operating income

$

22


$

14


52%













N/M – Percentage change not meaningful








Numbers may not foot due to rounding.

 

TDS Telecom Highlights




(Unaudited)













2017 vs. 2016











Increase


Year Ended December 31,

2017


2016

(Decrease)


(Dollars in millions)









Wireline









Operating revenues










Residential

$

319


$

309


3%



Commercial


199



212


(6)%



Wholesale


195



175


12%




Total service revenues


713



696


2%



Equipment and product sales


1



2


(33)%






714



698


2%


Operating expenses










Cost of services


258



258


-



Cost of equipment and products


2



2


(16)%



Selling, general and administrative expenses


191



197


(3)%



Expenses excluding depreciation, amortization and accretion


451



458


(1)%



Depreciation, amortization and accretion


151



159


(5)%



(Gain) loss on asset disposals, net


1



2


(35)%



(Gain) loss on license sales and exchanges, net




(1)


N/M







603



618


(2)%



Operating income

$

111


$

80


40%














Cable









Operating revenues










Residential

$

169


$

147


15%



Commercial


37



38


(4)%






206



185


11%


Operating expenses










Cost of services


98



94


4%



Selling, general and administrative expenses


54



51


6%



Expenses excluding depreciation, amortization and accretion


151



144


5%



Depreciation, amortization and accretion


44



37


21%



(Gain) loss on asset disposals, net


2



2


(7)%







198



183


8%



Operating income

$

8


$

2


>100%














HMS









Operating revenues










Service revenues

$

111


$

119


(6)%



Equipment and product sales


114



155


(26)%






225



273


(18)%


Operating expenses










Cost of services


83



82


1%



Cost of equipment and products


95



128


(26)%



Selling, general and administrative expenses


42



48


(13)%



Expenses excluding depreciation, amortization and accretion


220



259


(15)%



Depreciation, amortization and accretion


28



29


(4)%



Loss on impairment of goodwill


35




N/M







282



288


(2)%



Operating loss

$

(57)


$

(14)


>(100)%














Intercompany revenues

$

(5)


$

(5)


(9)%


Intercompany expenses


(5)



(5)


(9)%


Total TDS Telecom operating income

$

63


$

67


(7)%















N/M – Percentage change not meaningful









Numbers may not foot due to rounding.


 

Telephone and Data Systems, Inc.

Financial Measures and Reconciliations

(Unaudited)

Free Cash Flow





Three Months Ended
December 31,


Year Ended December 31,



2017


2016


2017


2016

(Dollars in millions)









Cash flows from operating activities (GAAP)


$

155


$

144


$

776


$

782

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



287



209



685



636


Free cash flow (Non-GAAP)(1)


$

(132)


$

(65)


$

91


$

146
















(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.

 


Non-GAAP Adjustments

The following non-GAAP financial measures present certain information in the table below excluding the effect of the goodwill impairment charge, enactment of H.R.1, originally referred to as the Tax Cuts and Jobs Act (the Tax Act) and other related tax effects and noncontrolling interests impacts.  The goodwill impairment charge, which occurred in the third quarter of 2017, and the deferred tax benefit are being excluded in this presentation, as they cause current operations of TDS not to be comparable with prior periods.  TDS believes these measures may be useful to investors and other users of its financial information when comparing the current period financial results with periods that were not impacted by such items.  



Three Months Ended


Year Ended



December 31,


December 31,

Year ended December 31,

2017


2016


2017


2016

(Dollars in millions, except per share amounts)








Net income (loss) available to TDS common shareholders (GAAP)

$

287


$

(5)


$

153


$

43

Adjustments:













Loss on impairment of goodwill






262




Tax benefit on impairment of goodwill(1)






(22)




Noncontrolling interests impact (2)






(52)




Subtotal of Non-GAAP goodwill adjustments






188

















Effect of the Tax Act


(327)





(327)




Noncontrolling interests impact (2)


45





45




Subtotal of Non-GAAP tax reform adjustments


(282)





(282)
















Subtotal of Non-GAAP adjustments


(282)





(94)



Net income (loss) available to TDS common shareholders excluding adjustments (Non-GAAP)

$

6


$

(5)


$

59


$

43













Diluted earnings (loss) per share available to TDS common shareholders (GAAP)

$

2.54


$

(0.05)


$

1.37


$

0.39

Adjustments:













Loss on impairment of goodwill






2.34




Tax benefit on impairment of goodwill(1)






(0.20)




Noncontrolling interests impact on goodwill impairment (2)






(0.46)




Effect of the Tax Act


(2.91)





(2.92)




Noncontrolling interests impact on tax reform (2)


0.42





0.40



Diluted earnings (loss) per share available to TDS common shareholders excluding adjustments (Non-GAAP)

$

0.05


$

(0.05)


$

0.53


$

0.39















Note:  Totals may not foot due to rounding differences.















(1)

Tax benefit represents the amount associated with the tax-amortizable portion of the loss on goodwill impairment.














(2)

Noncontrolling interests, net of tax, includes noncontrolling public shareholders' share in U.S. Cellular for similar adjustments recorded on U.S. Cellular's consolidated financial statements.

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 herein, 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


12/31/2017



9/30/2017



6/30/2017



3/31/2017



12/31/2016

(Dollars and connection counts in millions)















Calculation of Postpaid ARPU















Postpaid service revenues

$

598


$

586


$

597


$

608


$

607

Average number of postpaid connections


4.52



4.50



4.47



4.46



4.48

Number of months in period


3



3



3



3



3


Postpaid ARPU (GAAP metric)

$

44.12


$

43.41


$

44.60


$

45.42


$

45.19


















Calculation of Postpaid ABPU















Postpaid service revenues

$

598


$

586


$

597


$

608


$

607

Equipment installment plan billings


170



152



142



139



138


Total billings to postpaid connections

$

768


$

738


$

739


$

747


$

745

Average number of postpaid connections


4.52



4.50



4.47



4.46



4.48

Number of months in period


3



3



3



3



3


Postpaid ABPU (Non-GAAP metric)

$

56.69


$

54.71


$

55.19


$

55.82


$

55.43


















Calculation of Postpaid ARPA















Postpaid service revenues

$

598


$

586


$

597


$

608


$

607

Average number of postpaid accounts


1.69



1.68



1.66



1.66



1.68

Number of months in period


3



3



3



3



3


Postpaid ARPA (GAAP metric)

$

118.05


$

116.36


$

119.73


$

121.88


$

120.67


















Calculation of Postpaid ABPA















Postpaid service revenues

$

598


$

586


$

597


$

608


$

607

Equipment installment plan billings


170



152



142



139



138


Total billings to postpaid accounts

$

768


$

738


$

739


$

747


$

745

Average number of postpaid accounts


1.69



1.68



1.66



1.66



1.68

Number of months in period


3



3



3



3



3


Postpaid ABPA (Non-GAAP metric)

$

151.68


$

146.65


$

148.15


$

149.78


$

148.02

 

Cision View original content:http://www.prnewswire.com/news-releases/tds-reports-fourth-quarter-and-full-year-2017-results-300603347.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; 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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Oct 12, 2018 04:02 PM

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