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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 2018 results

02/22/2019
Provides 2019 guidance

CHICAGO, Feb. 22, 2019 /PRNewswire/ -- 

As previously announced, TDS will hold a teleconference onFebruary 22, 2019 at 9:30 a.m. CST. Listen to the call live via the Events & Presentations page ofinvestors.tdsinc.com.

Telephone and Data Systems, Inc. (NYSE:TDS) reported total operating revenues of $1,332 million for the fourth quarter of 2018, versus $1,308 million for the same period one year ago. Net income available to TDS common shareholders and related diluted earnings per share were $16 million and $0.14, respectively, for the fourth quarter of 2018. For the quarter ended December 31, 2017, excluding a benefit of $327 million ($282 million, non-GAAP, net of noncontrolling interests impacts) related to the enactment of new tax legislation in the fourth quarter of 2017, Net income available to TDS common shareholders and related diluted earnings per share (non-GAAP) were $6 million and $0.05, respectively.  Including the tax benefit recorded during the quarter ended December 31, 2017, Net income available to TDS common shareholders and related diluted earnings per share were $287 million and $2.54, respectively.

TDS reported total operating revenues of $5,109 million and $5,044 million for the years ended 2018 and 2017, respectively. Net income available to TDS common shareholders and related diluted earnings per share were $135 million and $1.17, respectively, for the year ended 2018. For the year ended December 31, 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 (non-GAAP) were $59 million and $0.53, respectively.  Including the tax benefit and the goodwill impairment charge, Net income available to TDS common shareholders and related diluted earnings per share were $153 million and $1.37, respectively.

"As we celebrate 50 successful years in business, I am pleased with the progress the TDS Family of Companies made in 2018 toward our long-term strategic goals," said LeRoy T. Carlson, Jr., TDS President and CEO. "U.S. Cellular executed their customer-centric strategy which led to expansion of their handset customer base, and increased revenues and profitability. TDS Telecom continued to focus on fiber expansion and broadband penetration, resulting in increased broadband connections and revenues.

"U.S. Cellular strengthened and grew their customer base with increased postpaid handset connections and excellent levels of customer loyalty. U.S. Cellular also generated additional revenues through increased inbound roaming. For the second year in a row, U.S. Cellular tightly managed spending initiatives costs throughout the business, which generated $200 million in savings over the two years. All in, these initiatives lead to significant increases in profitability. These positive results put U.S. Cellular in a strong position to support the level of investment needed to execute network enhancements and ready our network for deployment of 5G.

"TDS Telecom continued to execute on their strategy to provide high-quality broadband, video and voice services. The Wireline segment obtained growth in revenues from fiber investments and through Federal A-CAM support. Cable operations produced outstanding results with strong broadband growth during the year, resulting in a revenue increase of 12 percent. TDS Telecom plans more fiber expansion in 2019, and to launch new customer focused offerings like TDS TV+, its next generation video platform."

2019 Estimated Results

TDS' current estimates of full-year 2019 results for U.S. Cellular, TDS Telecom, and TDS are shown below. Such estimates represent management's view as of February 22, 2019. 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.


2019 Estimated Results and Actual Results for the Year Ended December 31, 2018


U.S. Cellular


TDS Telecom


TDS (1)


Estimate


Actual


Estimate


Actual


Estimate


Actual

(Dollars in millions)












Total operating revenues

$4,100-$4,300


$

3,967



$900-$950


$

927



$5,225-$5,475


$

5,109


Adjusted OIBDA (2)

$725-$875


$

790



$280-$310


$

303



$1,000-$1,180


$

1,079


Adjusted EBITDA (2)

$900-$1,050


$

963



$290-$320


$

313



$1,185-$1,365


$

1,267


Capital expenditures

$625-$725


$

515



$300-$350


$

232



$940-$1,090


$

767


The following tables provide reconciliations of Net income to Adjusted OIBDA and Adjusted EBITDA for 2019 estimated results and actual results for the year ended December 31, 2018. In providing 2019 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


TDS Telecom


TDS (1)


Estimate


Actual


Estimate


Actual


Estimate


Actual

(Dollars in millions)












Net income (GAAP)

N/A



$

164



N/A



$

89



N/A



$

175


Add back:












Income tax expense

N/A



51



N/A



16



N/A



46


Income before income taxes (GAAP)

$60-$210



$

215



$85-$115



$

105



$50-$230



$

221


Add back:












Interest expense

115



116





(2)



175



172


Depreciation, amortization and accretion expense

710



640



205



212



945



883


EBITDA (Non-GAAP) (2)

$885-$1,035



$

971



$290-$320



$

315



$1,170-$1,350



$

1,276


Add back or deduct:












(Gain) loss on asset disposals, net

20



10





(2)



20



9


(Gain) loss on license sales and exchanges, net

(5)



(18)







(5)



(18)


Adjusted EBITDA (Non-GAAP) (2)

$900-$1,050



$

963



$290-$320



$

313



$1,185-$1,365



$

1,267


Deduct:












Equity in earnings of unconsolidated entities

155



159







155



160


Interest and dividend income

20



15



10



8



30



26


Other, net



(1)





2





2


Adjusted OIBDA (Non-GAAP) (2)

$725-$875



$

790



$280-$310



$

303



$1,000-$1,180



$

1,079



Numbers may not foot due to rounding.


(1)

The TDS column includes U.S. Cellular, TDS Telecom and also the impacts of consolidating eliminations, corporate operations and non-reportable segments.



(2)

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 to the corresponding GAAP measure, Net income or Income (loss) before income taxes. Additional information and reconciliations related to Non-GAAP financial measures for December 31, 2018, can be found on TDS' website at investors.tdsinc.com.

Conference Call Information
TDS will hold a conference call on February 22, 2019 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, BendBroadband and OneNeck IT Solutions. Founded in 1969 and headquartered in Chicago, TDS employed 9,400 people as of December 31, 2018.

Visit investors.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

12/31/2018 (1)


9/30/2018 (1)


6/30/2018 (1)


3/31/2018 (1)


12/31/2017

Retail Connections










Postpaid










Total at end of period

4,472,000



4,466,000



4,468,000



4,481,000



4,518,000


Gross additions

179,000



172,000



146,000



129,000



177,000


Feature phones

4,000



3,000



5,000



5,000



5,000


Smartphones

132,000



130,000



106,000



91,000



128,000


Connected devices

43,000



39,000



35,000



33,000



44,000


Net additions (losses)

6,000



(1,000)



(13,000)



(37,000)



5,000


Feature phones

(11,000)



(14,000)



(12,000)



(15,000)



(15,000)


Smartphones

31,000



29,000



17,000



(1,000)



33,000


Connected devices

(14,000)



(16,000)



(18,000)



(21,000)



(13,000)


ARPU (2)

$

45.58



$

45.31



$

44.74



$

44.34



$

44.12


ABPU (Non-GAAP) (3)

$

60.46



$

59.41



$

57.75



$

57.10



$

56.69


ARPA (4)

$

119.60



$

119.42



$

118.57



$

118.22



$

118.05


ABPA (Non-GAAP) (5)

$

158.66



$

156.57



$

153.03



$

152.26



$

151.68


Churn rate (6)

1.29

%


1.29

%


1.19

%


1.23

%


1.27

%

Handsets

1.00

%


1.02

%


0.92

%


0.97

%


1.00

%

Connected devices

3.20

%


3.04

%


2.85

%


2.79

%


2.84

%

Prepaid










Total at end of period

516,000



528,000



527,000



525,000



519,000


Gross additions

66,000



80,000



78,000



88,000



83,000


Net additions (losses)

(12,000)



1,000



2,000



6,000



4,000


ARPU (2)

$

32.80



$

32.09



$

32.32



$

31.78



$

32.42


Churn rate (6)

4.98

%


4.98

%


4.83

%


5.27

%


5.09

%

Total connections at end of period (7)

5,041,000



5,050,000



5,051,000



5,063,000



5,096,000


Market penetration at end of period










Consolidated operating population

31,469,000



31,469,000



31,469,000



31,469,000



31,834,000


Consolidated operating penetration (8)

16

%


16

%


16

%


16

%


16

%

Capital expenditures (millions)

$

242



$

118



$

86



$

70



$

213


Total cell sites in service

6,531



6,506



6,478



6,473



6,460


Owned towers

4,129



4,119



4,105



4,099



4,080



Due to rounding, the sum of quarterly results may not equal the total for the year.


(1)

As of January 1, 2018, U.S. Cellular adopted the new revenue recognition standard, ASC 606, using a modified retrospective approach.  Under this method, the new accounting standard is applied only to the most recent period presented.  As a result, 2018 amounts include the impacts of ASC 606, but 2017 amounts remain as previously reported.



(2)

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.



(3)

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.



(4)

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.



(5)

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.



(6)

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.



(7)

Includes reseller and other connections.



(8)

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

12/31/2018


9/30/2018


6/30/2018


3/31/2018


12/31/2017

TDS Telecom










Wireline










Residential connections










Voice (1)

274,100



278,400



282,200



286,000



290,600


Broadband (2)

235,400



237,100



234,300



230,500



228,600


Video (3)

54,000



53,100



51,500



50,300



48,600


Wireline residential connections

563,500



568,600



568,000



566,900



567,700












Total residential revenue per connection (4)

$

47.39



$

47.30



$

47.22



$

47.04



$

46.21












Commercial connections










Voice (1)

130,500



134,000



137,300



140,100



143,000


Broadband (2)

20,600



20,700



20,600



20,600



20,600


managedIP (5)

134,000



138,000



141,400



143,000



146,500


Video (3)

400



400



400



400




Wireline commercial connections

285,400



293,100



299,600



304,000



310,100












Total Wireline connections

848,900



861,700



867,700



870,900



877,800












Cable










Cable Connections










Broadband (6)

167,400



163,600



159,400



156,800



153,300


Video (7)

102,900



102,100



101,600



100,700



101,800


Voice (8)

65,200



63,600



62,000



60,600



59,700


managedIP (5)

1,000



700



700



600



400


Cable connections

336,500



330,100



323,700



318,700



315,100



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.



(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

12/31/2018


9/30/2018


6/30/2018


3/31/2018


12/31/2017

(Dollars in millions)










Wireline

$

73



$

41



$

33



$

29



$

55


Cable

19



13



13



11



20


Total TDS Telecom (1)

$

91



$

54



$

46



$

40



$

74



Numbers may not foot due to rounding.


(1)

TDS re-evaluated internal reporting roles with regard to its HMS business unit and, as a result, changed its reportable segments.  Effective January 1, 2018, HMS is no longer reported under TDS Telecom.  Prior periods have been recast to conform to the revised presentation.

 

Telephone and Data Systems, Inc.

Consolidated Statement of Operations Highlights

(Unaudited)



Three Months Ended
December 31,


Year Ended
December 31,


2018 (1)


2017


2018

vs. 2017


2018 (1)


2017


2018

vs. 2017

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












Operating revenues












U.S. Cellular

$

1,051



$

1,029



2

%


$

3,967



$

3,890



2

%

TDS Telecom (2)

232



229



1

%


927



919



1

%

All Other (2)(3)

49



50



(3)

%


215



235



(9)

%


1,332



1,308



2

%


5,109



5,044



1

%

Operating expenses












U.S. Cellular












Expenses excluding depreciation, amortization and accretion

881



877





3,177



3,215



(1)%


Depreciation, amortization and accretion

162



155



5

%


640



615



4

%

Loss on impairment of goodwill (4)





N/M





370



N/M


(Gain) loss on asset disposals, net

5



4



33

%


10



17



(40)

%

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





N/M





(1)



N/M


(Gain) loss on license sales and exchanges, net



(3)



N/M



(18)



(22)



20

%


1,048



1,033



2

%


3,809



4,194



(9)

%

TDS Telecom (2)












Expenses excluding depreciation, amortization and accretion (5)

159



151



5

%


624



604



3

%

Depreciation, amortization and accretion

52



49



6

%


212



195



9

%

(Gain) loss on asset disposals, net



1



(87)

%


(2)



3



N/M



211



201



5

%


834



803



4

%

All Other (2)(3)












Expenses excluding depreciation and amortization (5)

53



50



6

%


229



229



Depreciation and amortization

8



9



(8)

%


31



34



(6)

%

Loss on impairment of goodwill (4)





N/M





(108)



N/M


(Gain) loss on asset disposals, net





N/M



1



1



N/M



60



58



4

%


261



155



68

%

Total operating expenses

1,319



1,292



2

%


4,904



5,152



(5)

%

Operating income (loss)












U.S. Cellular

3



(4)



N/M



158



(304)



N/M


TDS Telecom (2)(5)

22



28



(22)

%


93



116



(20)

%

All Other (2)(3)(5)

(12)



(8)



(45)

%


(46)



80



N/M



13



16



(21)

%


205



(108)



N/M


Investment and other income (expense)












Equity in earnings of unconsolidated entities

39



36



9

%


160



137



17

%

Interest and dividend income

8



4



N/M



26



15



67

%

Interest expense

(43)



(42)



(3)

%


(172)



(170)



(1)

%

Other, net (5)

1



1



17

%


2



4



(22)

%

Total investment and other income (expense) (5)

5



(1)



N/M



16



(14)



N/M


Income (loss) before income taxes

18



15



22

%


221



(122)



N/M


Income tax expense (benefit)

(2)



(319)



99

%


46



(279)



N/M


Net income

20



334



(94)

%


175



157



11

%

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

4



47



(91)

%


40



4



N/M


Net income available to TDS common shareholders

$

16



$

287



(94)

%


$

135



$

153



(12)

%













Basic weighted average shares outstanding

113



111



2

%


112



111



1

%

Basic earnings per share available to TDS common shareholders

$

0.14



$

2.59



(95)

%


$

1.20



$

1.39



(14)

%













Diluted weighted average shares outstanding

115



112



3

%


114



112



2

%

Diluted earnings per share available to TDS common shareholders

$

0.14



$

2.54



(94)

%


$

1.17



$

1.37



(15)

%


N/M - Percentage change not meaningful.

Numbers may not foot due to rounding.

End Notes (1) (2) (3) (4) (5) — Explained on page 10 of the release.

 

Telephone and Data Systems, Inc.

Consolidated Statement of Cash Flows

(Unaudited)


Year Ended December 31,

2018 (1)


2017

(Dollars in millions)




Cash flows from operating activities




Net income

$

175



$

157


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




Depreciation, amortization and accretion

883



844


Bad debts expense

101



95


Stock-based compensation expense

54



46


Deferred income taxes, net

33



(369)


Equity in earnings of unconsolidated entities

(160)



(137)


Distributions from unconsolidated entities

153



136


Loss on impairment of goodwill



262


(Gain) loss on asset disposals, net

9



21


(Gain) loss on license sales and exchanges, net

(18)



(22)


Other operating activities

4



2


Changes in assets and liabilities from operations




Accounts receivable

(39)



(61)


Equipment installment plans receivable

(149)



(261)


Inventory

(5)



6


Accounts payable

2



(7)


Customer deposits and deferred revenues

8



(4)


Accrued taxes

(29)



37


Other assets and liabilities

(5)



31


Net cash provided by operating activities

1,017



776






Cash flows from investing activities




Cash paid for additions to property, plant and equipment

(776)



(685)


Cash paid for acquisitions and licenses

(16)



(218)


Cash received for investments

100




Cash paid for investments

(17)



(100)


Cash received from divestitures and exchanges

29



21


Other investing activities



1


Net cash used in investing activities

(680)



(981)






Cash flows from financing activities




Repayment of long-term debt

(20)



(17)


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

42



4


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

18



1


Dividends paid to TDS shareholders

(72)



(69)


Distributions to noncontrolling interests

(6)



(4)


Other financing activities

6



8


Net cash used in financing activities

(32)



(77)






Net increase (decrease) in cash, cash equivalents and restricted cash

305



(282)






Cash, cash equivalents and restricted cash




Beginning of period

622



904


End of period

$

927



$

622



End Note (1) — Explained on page 10 of the release.

 

Telephone and Data Systems, Inc.

Consolidated Balance Sheet Highlights

(Unaudited)


ASSETS


December 31,

2018


2017

(Dollars in millions)




Current assets




Cash and cash equivalents

$

921



$

619


Short-term investments

17



100


Accounts receivable

1,099



961


Inventory, net

150



145


Prepaid expenses

103



112


Income taxes receivable

12



2


Other current assets

28



27


Total current assets

2,330



1,966






Assets held for sale

54



10






Licenses

2,195



2,232






Goodwill

509



509






Other intangible assets, net

253



279






Investments in unconsolidated entities

480



453






Property, plant and equipment, net

3,346



3,424






Other assets and deferred charges

616



422






Total assets

$

9,783



$

9,295


 

Telephone and Data Systems, Inc.

Consolidated Balance Sheet Highlights

(Unaudited)


LIABILITIES AND EQUITY


December 31,

2018


2017

(Dollars in millions, except per share amounts)




Current liabilities




Current portion of long-term debt

$

21



$

20


Accounts payable

365



368


Customer deposits and deferred revenues

197



223


Accrued interest

11



11


Accrued taxes

44



64


Accrued compensation

127



126


Other current liabilities

114



106


Total current liabilities

879



918






Liabilities held for sale

1








Deferred liabilities and credits




Deferred income tax liability, net

640



552


Other deferred liabilities and credits

541



495






Long-term debt, net

2,418



2,437






Noncontrolling interests with redemption features

11



1






Equity




TDS shareholders' equity




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

1



1


Capital in excess of par value

2,432



2,413


Treasury shares, at cost

(519)



(669)


Accumulated other comprehensive loss

(10)



(1)


Retained earnings

2,656



2,525


Total TDS shareholders' equity

4,560



4,269






Noncontrolling interests

733



623






Total equity

5,293



4,892






Total liabilities and equity

$

9,783



$

9,295




(1)

As of January 1, 2018, TDS adopted the new revenue recognition standard, ASC 606, using a modified retrospective approach. Under this method, the new accounting standard is applied only to the most recent period presented. As a result, 2018 amounts include the impacts of ASC 606, but 2017 amounts remain as previously reported, except as specifically stated.



(2)

TDS re-evaluated internal reporting roles with regard to its HMS business unit and, as a result, changed its reportable segments.  Effective January 1, 2018, HMS is no longer reported under TDS Telecom.  Prior periods have been recast to conform to the revised presentation.



(3)

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



(4)

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 of the U.S. Cellular reporting unit was impaired at the TDS level in 2003 but not at U.S. Cellular.  Consequently, U.S. Cellular's goodwill on a stand-alone basis and any resulting impairments of goodwill does not equal the TDS consolidated goodwill related to U.S. Cellular.  The TDS adjustment of $143 million is included in "All other".  During the third quarter of 2017, TDS also recorded a goodwill impairment of $35 million related to its HMS operations included in "All other".



(5)

ASU 2017-07, regarding net periodic pension cost and net periodic postretirement benefit cost was adopted January 1, 2018, and applied retrospectively.  All prior period numbers have been recast to conform to this standard.

 

Balance Sheet Highlights

(Unaudited)



December 31, 2018


U.S.

Cellular


TDS

Telecom


TDS
Corporate

& Other


Intercompany

Eliminations


TDS

Consolidated

(Dollars in millions)










Cash and cash equivalents

$

580



$

23



$

318



$



$

921


Affiliated cash investments



460





(460)





$

580



$

483



$

318



$

(460)



$

921












Licenses, goodwill and other intangible assets

$

2,186



$

754



$

17



$



$

2,957


Investment in unconsolidated entities

441



4



42



(7)



480



$

2,627



$

758



$

59



$

(7)



$

3,437












Property, plant and equipment, net

$

2,202



$

1,017



$

127



$



$

3,346












Long-term debt, net:










Current portion

$

19



$

1



$

1



$



$

21


Non-current portion

1,605



2



811





2,418



$

1,624



$

3



$

812



$



$

2,439


 

TDS Telecom Highlights

(Unaudited)



Three Months Ended
December 31,


Year Ended
December 31,


2018 (1)


2017


2018 vs.
2017


2018 (1)


2017


2018 vs.
2017

(Dollars in millions)












Wireline












Operating revenues












Residential

$

80



$

79



2

%


$

321



$

319



1

%

Commercial

45



48



(8)

%


184



199



(7)

%

Wholesale

48



48



(1)

%


191



195



(2)

%

Total service revenues

173



175



(2)

%


697



713



(2)

%

Equipment and product sales





53

%


2



1



35

%


173



176



(2)

%


699



714



(2)

%

Operating expenses












Cost of services

67



64



5

%


266



258



3

%

Cost of equipment and products





(20)

%


1



2



(31)

%

Selling, general and administrative expenses (2)

51



47



9

%


197



194



1

%

Expenses excluding depreciation, amortization and accretion

118



111



6

%


465



454



2

%

Depreciation, amortization and accretion

35



37



(6)

%


142



151



(5)

%

(Gain) loss on asset disposals, net





N/M



(3)



1



N/M



153



149



3

%


604



606




Operating income (2)

$

20



$

27



(27)

%


$

95



$

108



(13)

%













Cable












Operating revenues












Residential

$

48



$

44



10

%


$

188



$

169



11

%

Commercial

12



10



19

%


42



37



13

%


60



54



11

%


230



206



12

%

Operating expenses












Cost of services

26



25



3

%


104



98



6

%

Selling, general and administrative expenses

15



15



(1)

%


57



54



6

%

Expenses excluding depreciation, amortization and accretion

41



40



1

%


161



151



6

%

Depreciation, amortization and accretion

17



12



42

%


69



44



57

%

(Gain) loss on asset disposals, net



1



(72)

%


1



2



(33)

%


58



53



9

%


231



198



17

%

Operating income (loss)

$

2



$

1



N/M



$

(2)



$

8



N/M














Total TDS Telecom operating income (2)(3)

$

22



$

28



(22)

%


$

93



$

116



(20)

%


N/M - Percentage change not meaningful.


Numbers may not foot due to rounding.



(1)

As of January 1, 2018, TDS adopted the new revenue recognition standard, ASC 606, using a modified retrospective approach. Under this method, the new accounting standard is applied only to the most recent period presented. As a result, 2018 amounts include the impacts of ASC 606, but 2017 amounts remain as previously reported, except as specifically stated.



(2)

ASU 2017-07, regarding net periodic pension cost and net periodic postretirement benefit cost was adopted as of January 1, 2018, and applied retrospectively.  All prior period numbers have been recast to conform to this standard.



(3)

TDS re-evaluated internal reporting roles with regard to its HMS business unit and, as a result, changed its reportable segments.  Effective January 1, 2018, HMS is no longer reported under TDS Telecom.  Prior periods have been recast to conform to the revised presentation.

 

Telephone and Data Systems, Inc.

Financial Measures and Reconciliations


Free Cash Flow



Three Months Ended
December 31,


Year Ended
December 31,


2018


2017


2018


2017

(Dollars in millions)








Cash flows from operating activities (GAAP)

$

205



$

155



$

1,017



$

776


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

330



287



776



685


Free cash flow (Non-GAAP) (1)

$

(125)



$

(132)



$

241



$

91




(1)

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 impacted by such items.


Three Months Ended
December 31,


Year Ended
December 31,


2018


2017


2018


2017

(Dollars in millions, except per share amounts)








Net income available to TDS common shareholders (GAAP)

$

16



$

287



$

135



$

153


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

$

16



$

6



$

135



$

59










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

$

0.14



$

2.54



$

1.17



$

1.37


Adjustments:








Loss in 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 of the Tax Act (2)



0.42





0.40


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

$

0.14



$

0.05



$

1.17



$

0.53



Numbers may not foot due to rounding.

(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

12/31/2018(1)


9/30/2018(1)


6/30/2018(1)


3/31/2018(1)


12/31/2017

(Dollars and connection counts in millions)










Calculation of Postpaid ARPU










Postpaid service revenues

$

611



$

607



$

600



$

598



$

598


Average number of postpaid connections

4.47



4.47



4.47



4.50



4.52


Number of months in period

3



3



3



3



3


Postpaid ARPU (GAAP metric)

$

45.58



$

45.31



$

44.74



$

44.34



$

44.12












Calculation of Postpaid ABPU










Postpaid service revenues

$

611



$

607



$

600



$

598



$

598


Equipment installment plan billings

199



189



174



172



170


Total billings to postpaid connections

$

810



$

796



$

774



$

770



$

768


Average number of postpaid connections

4.47



4.47



4.47



4.50



4.52


Number of months in period

3



3



3



3



3


Postpaid ABPU (Non-GAAP metric)

$

60.46



$

59.41



$

57.75



$

57.10



$

56.69












Calculation of Postpaid ARPA










Postpaid service revenues

$

611



$

607



$

600



$

598



$

598


Average number of postpaid accounts

1.70



1.70



1.69



1.69



1.69


Number of months in period

3



3



3



3



3


Postpaid ARPA (GAAP metric)

$

119.60



$

119.42



$

118.57



$

118.22



$

118.05












Calculation of Postpaid ABPA










Postpaid service revenues

$

611



$

607



$

600



$

598



$

598


Equipment installment plan billings

199



189



174



172



170


Total billings to postpaid accounts

$

810



$

796



$

774



$

770



$

768


Average number of postpaid accounts

1.70



1.70



1.69



1.69



1.69


Number of months in period

3



3



3



3



3


Postpaid ABPA (Non-GAAP metric)

$

158.66



$

156.57



$

153.03



$

152.26



$

151.68



Numbers may not foot due to rounding.


(1)

As of January 1, 2018, U.S. Cellular adopted the new revenue recognition standard, ASC 606, using a modified retrospective approach. Under this method, the new accounting standard is applied only to the most recent period presented. As a result, 2018 amounts include the impacts of ASC 606, but 2017 amounts remain as previously reported.

 

Cision View original content:http://www.prnewswire.com/news-releases/tds-reports-fourth-quarter-and-full-year-2018-results-300800315.html

SOURCE Telephone and Data Systems, Inc.

Copyright © 2017 Telephone and Data Systems, Inc. All Rights Reserved.

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Sep 13, 2019 04:02 PM

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