News Details

2016 Estimated Results and Actual Results for the year ended December 31, 2015

U.S. Cellular

TDS Telecom

TDS ⁽²⁾

Estimate

Actual

Estimate

Actual

Estimate

Actual

(Dollars in millions)

Total operating revenues

$3,900-$4,100

$

3,997

$1,130-$1,180

$

1,158

$5,040-$5,290

$

5,176

Operating cash flow ⁽¹⁾

$525-$650

$

675

$270-$310

$

304

$800-$965

$

981

Adjusted EBITDA ⁽¹⁾

$725-$850

$

852

$270-$310

$

306

$1,000-$1,165

$

1,160

Capital expenditures

Approx. $

500

$

533

Approx. $

180

$

219

Approx. $

695

$

759

U.S. Cellular

TDS Telecom

TDS ⁽²⁾

Estimate ⁽³⁾

Actual

Estimate ⁽³⁾

Actual

Estimate ⁽³⁾

Actual

(Dollars in millions)

Net income (loss) (GAAP)

N/A

247

N/A

46

N/A

263

Add back:

Income tax expense (benefit)

N/A

156

N/A

35

N/A

172

Income (loss) before income taxes

(GAAP)

$

0-125

$

404

$

40-80

$

81

$

(20)-145

$

435

Add back:

Interest expense

105

86

–

1

165

142

Depreciation, amortization and accretion expense

600

606

230

228

835

844

EBITDA

$

705-830

$

1,096

$

270-310

$

310

$

980-1,145

$

1,421

Add back:

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

–

(114)

–

(10)

–

(136)

(Gain) loss on license sales and exchanges, net ⁽⁵⁾

–

(147)

–

–

–

(147)

(Gain) loss on asset disposals, net

20

16

–

6

20

22

Adjusted EBITDA ⁽¹⁾

$

725-850

$

852

$

270-310

$

306

$

1,000-1,165

$

1,160

Deduct:

Equity in earnings of unconsolidated entities

(140)

(140)

–

–

(140)

(140)

Interest and dividend income; other income

(60)

(37)

–

(2)

(60)

(39)

Operating cash flow ⁽¹⁾⁽⁴⁾

$

525-650

$

675

$

270-310

$

304

$

800-965

$

981

Note:

Totals may not foot due to rounding differences.

(1)

Operating cash flow is defined as net income adjusted for the items set forth in the reconciliation above.  Adjusted EBITDA (earnings before interest, taxes, depreciation, amortization and accretion) is defined as net income adjusted for the items set forth in the reconciliation above.   Operating cash flow and Adjusted EBITDA exclude these items in order to show operating results on a more comparable basis from period to period.  From time to time, TDS may exclude other items from Operating cash flow and/or Adjusted EBITDA if such items help reflect operating results on a more comparable basis. TDS does not intend to imply that any such items that are excluded are non-recurring, infrequent or unusual; such items may occur in the future.  Operating cash flow and Adjusted EBITDA are not measures of financial performance under Generally Accepted Accounting Principles in the United States ("GAAP") and should not be considered as alternatives to net income as indicators of the company's operating performance or as alternatives to cash flows from operating activities, determined in accordance with GAAP, as indicators of cash flows or as measures of liquidity. TDS believes Operating cash flow and Adjusted EBITDA are useful measures of TDS' operating results before significant recurring non-cash charges, gains and losses, and other items as indicated above.

(2)

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

(3)

In providing 2016 Estimated Results, TDS has not completed the above reconciliation to net income because it does not provide guidance for income taxes. TDS believes that the impact of income taxes cannot be reasonably predicted; therefore, the company is unable to provide such guidance.

(4)

A reconciliation of Operating cash flow (Non-GAAP) to operating income (GAAP) for full year 2015, 2014 and 2013 actual results can be found on the Guidance and Reconciliation page of the company's website at investors.tdsinc.com.

(5)

In February 2016, U.S. Cellular entered into multiple agreements to exchange licenses.  Agreements are subject to regulatory approval and other customary closing conditions, and are expected to close in 2016.  Upon closing of the transactions, U.S. Cellular expects to record a gain.  A reasonable estimate of the gains is unavailable at the time of this filing.

Repurchase Period

# Shares

Cost (in millions)

2015 (full year)

–

$

–

2014 (full year)

1,541,850

$

39.1

Total

1,541,850

$

39.1

United States Cellular Corporation

Summary Operating Data (Unaudited)

As of or for the Quarter Ended

12/31/2015

9/30/2015

6/30/2015

3/31/2015

12/31/2014

Retail Customers

Postpaid

Total at end of period

4,409,000

4,341,000

4,324,000

4,307,000

4,298,000

Gross additions

240,000

200,000

191,000

200,000

302,000

Net additions (losses)

68,000

17,000

17,000

9,000

98,000

ARPU ^(1)(11)

$

51.46

$

58.12

$

53.62

$

54.87

$

56.51

ABPU ^(2)(11)

$

58.57

$

63.88

$

58.08

$

58.50

$

59.13

ARPA ^(3)(11)

$

131.96

$

147.00

$

133.85

$

134.94

$

136.13

ABPA ^(4)(11)

$

150.19

$

161.57

$

144.99

$

143.86

$

142.44

Churn rate ⁽⁵⁾

1.3%

1.4%

1.3%

1.5%

1.6%

Smartphone penetration ⁽⁶⁾

74%

72%

69%

67%

65%

Prepaid

Total at end of period

387,000

380,000

368,000

360,000

348,000

Gross additions

69,000

71,000

65,000

73,000

60,000

Net additions (losses)

7,000

12,000

8,000

12,000

(2,000)

ARPU ^(1)(11)

$

35.54

$

35.64

$

35.98

$

35.72

$

35.33

Churn rate ⁽⁵⁾

5.4%

5.2%

5.2%

5.8%

5.9%

Total customers at end of period

4,876,000

4,807,000

4,779,000

4,775,000

4,760,000

Billed ARPU ^(1)(11)

$

49.40

$

55.42

$

51.29

$

52.29

$

53.63

Service revenue ARPU ^(1)(11)

$

55.31

$

62.31

$

57.55

$

58.01

$

60.10

Smartphones sold as a percent of total handsets sold

91%

87%

87%

86%

87%

Total population

Consolidated markets ^(7)(10)

50,520,000

50,313,000

52,809,000

52,822,000

58,840,000

Consolidated operating markets ⁽⁷⁾

31,967,000

31,814,000

31,814,000

31,814,000

31,729,000

Market penetration at end of period

Consolidated markets ⁽⁸⁾

10%

10%

9%

9%

8%

Consolidated operating markets ⁽⁸⁾

15%

15%

15%

15%

15%

Capital expenditures (000s)

$

198,111

$

134,816

$

133,666

$

66,460

$

181,655

Total cell sites in service

6,297

6,246

6,223

6,219

6,220

Owned towers ⁽⁹⁾

3,978

3,957

3,940

3,936

4,280

(1)

Average Revenue Per User ("ARPU") are metrics calculated by dividing a revenue base by an average number of customers by the number of months in the period.  These revenue bases and customer populations are shown below:

a.

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

b.

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

c.

Billed ARPU consists of total postpaid, prepaid and reseller service revenues and postpaid, prepaid and reseller customers.

d.

Service revenue ARPU consists of total postpaid, prepaid and reseller service revenues, inbound roaming and other service revenues and postpaid, prepaid and reseller customers.

(2)

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

(3)

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

(4)

Average Billing Per Account ("ABPA") metric is calculated by dividing total postpaid service revenues plus equipment installment plan billings by the average number of postpaid accounts by the number of months in the period.

(5)

Churn metrics represent the percentage of the postpaid or prepaid customers that disconnect service each month. These metrics represent the average monthly postpaid or prepaid churn rate for each respective period.

(6)

Smartphones represent wireless devices which run on an Android, Apple, BlackBerry or Windows Mobile operating system, excluding connected devices. Smartphone penetration is calculated by dividing postpaid smartphone customers by total postpaid customers.

(7)

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

(8)

Market penetration is calculated by dividing the number of wireless customers at the end of the period by the total population of consolidated markets and consolidated operating markets, respectively, as estimated by Claritas.

(9)

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

(10)

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

(11)

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

TDS Telecom

Summary Operating Data (Unaudited)

Quarter Ended

12/31/2015

9/30/2015

6/30/2015

3/31/2015

12/31/2014

TDS Telecom

Wireline

Residential connections

Voice ⁽¹⁾

319,800

325,900

329,000

333,400

335,900

Broadband ⁽²⁾

228,500

231,600

231,200

229,400

229,200

IPTV ⁽³⁾

34,400

30,300

27,900

25,600

23,400

   Wireline residential connections

582,700

587,800

588,100

588,400

588,500

Total residential revenue per connection (4)

$

41.24

$

42.83

$

42.10

$

42.32

$

41.56

Commercial connections

Voice ⁽¹⁾

171,500

176,700

181,800

187,500

193,200

Broadband ⁽²⁾

22,400

23,000

23,700

24,300

24,700

managedIP ⁽⁵⁾

147,100

145,900

145,100

143,200

140,200

   Wireline commercial connections

341,000

345,600

350,600

355,000

358,100

Total Wireline connections

923,700

933,400

938,700

943,400

946,600

Cable

Cable Connections

Video ⁽⁶⁾

106,800

108,300

109,100

109,700

110,400

Broadband ⁽⁷⁾

117,100

114,600

112,300

112,200

110,900

Voice ⁽⁷⁾

56,400

54,000

51,500

49,100

46,000

   Cable connections

280,300

276,900

272,900

271,000

267,300

(1)

The individual circuit connecting customers to TDS Telecom's central office facilities.

(2)

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

(3)

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

(4)

Total residential revenue per connection is calculated by dividing the average residential revenue for the period by the average number of residential connections for the period.

(5)

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

(6)

Generally, a home or business receiving video programming counts as one video connection. In counting bulk residential or commercial connections, such as an apartment building or hotel, connections are counted based on the number of units/rooms within the building receiving service.

(7)

Broadband and voice connections reflect billable number of lines into a building for high speed data and voice services, respectively.

TDS Telecom

Capital Expenditures (000s)

Quarter Ended

12/31/2015

9/30/2015

6/30/2015

3/31/2015

12/31/2014

Wireline

$

49,900

$

38,400

$

31,700

$

20,400

$

51,400

Cable

15,000

13,000

11,900

11,600

14,600

HMS

7,700

5,100

9,400

4,900

13,400

$

72,600

$

56,500

$

53,000

$

36,900

$

79,400

Telephone and Data Systems, Inc.

Consolidated Statement of Operations Highlights

Three Months Ended December 31,

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

Change

2015

2014

Amount

Percent

Operating revenues

U.S. Cellular

$

987,035

$

1,008,744

$

(21,709)

(2)%

TDS Telecom

283,871

281,889

1,982

1%

All Other ⁽¹⁾

3,549

6,428

(2,879)

(45)%

1,274,455

1,297,061

(22,606)

(2)%

Operating expenses

U.S. Cellular

Expenses excluding depreciation, amortization and accretion

849,895

939,331

(89,436)

(10)%

Depreciation, amortization and accretion

156,420

140,955

15,465

11%

(Gain) loss on asset disposals, net

4,045

4,695

(650)

(14)%

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

270

(5,136)

5,406

>100%

(Gain) loss on license sales and exchanges, net

–

(21,547)

21,547

N/M

1,010,630

1,058,298

(47,668)

(5)%

TDS Telecom

Expenses excluding depreciation, amortization and accretion

213,864

205,825

8,039

4%

Depreciation, amortization and accretion

57,713

58,394

(681)

(1)%

(Gain) loss on asset disposals, net

3,083

2,060

1,023

50%

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

(6,371)

(156)

(6,215)

>(100)%

268,289

266,123

2,166

1%

All Other ⁽¹⁾

Expenses excluding depreciation and amortization

4,719

4,039

680

17%

Depreciation and amortization

1,785

2,168

(383)

(18)%

Loss on impairment of assets

–

3,802

(3,802)

N/M

(Gain) loss on asset disposals, net

–

150

(150)

N/M

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

145

(1,475)

1,620

>100%

6,649

8,684

(2,035)

(23)%

Total operating expenses

1,285,568

1,333,105

(47,537)

(4)%

Operating income (loss)

U.S. Cellular

(23,595)

(49,554)

25,959

52%

TDS Telecom

15,582

15,766

(184)

(1)%

All Other ⁽¹⁾

(3,100)

(2,256)

(844)

(37)%

(11,113)

(36,044)

24,931

69%

Investment and other income (expense)

Equity in earnings of unconsolidated entities

30,253

23,767

6,486

27%

Interest and dividend income

10,664

7,194

3,470

48%

Interest expense

(38,927)

(27,622)

(11,305)

(41)%

Other, net

249

(164)

413

>100%

Total investment and other income

2,239

3,175

(936)

(29)%

Loss before income taxes

(8,874)

(32,869)

23,995

73%

Income tax expense (benefit)

(6,788)

(12,208)

5,420

44%

Net loss

(2,086)

(20,661)

18,575

90%

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

(1,254)

(4,120)

2,866

70%

Net loss attributable to TDS shareholders

(832)

(16,541)

15,709

95%

TDS Preferred dividend requirement

(12)

(12)

–

-

Net loss available to common shareholders

$

(844)

$

(16,553)

$

15,709

95%

Basic weighted average shares outstanding

109,067

107,995

1,072

1%

Basic earnings (loss) per share attributable to TDS shareholders

$

(0.01)

$

(0.15)

$

0.15

95%

Diluted weighted average shares outstanding

109,067

107,995

1,072

1%

Diluted earnings (loss) per share attributable to TDS shareholders

$

(0.01)

$

(0.15)

$

0.14

88%

(1)

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

N/M – Percentage change not meaningful

Telephone and Data Systems, Inc.

Consolidated Statement of Operations Highlights

Twelve Months Ended December 31,

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

Change

2015

2014

Amount

Percent

Operating revenues

U.S. Cellular

$

3,996,853

$

3,892,747

$

104,106

3%

TDS Telecom

1,158,043

1,088,312

69,731

6%

All Other ⁽¹⁾

21,345

28,379

(7,034)

(25)%

5,176,241

5,009,438

166,803

3%

Operating expenses

U.S. Cellular

Expenses excluding depreciation, amortization and accretion

3,321,582

3,554,494

(232,912)

(7)%

Depreciation, amortization and accretion

606,455

605,997

458

-

(Gain) loss on asset disposals, net

16,313

21,469

(5,156)

(24)%

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

(113,555)

(32,830)

(80,725)

>(100)%

(Gain) loss on license sales and exchanges, net

(146,884)

(112,993)

(33,891)

(30)%

3,683,911

4,036,137

(352,226)

(9)%

TDS Telecom

Expenses excluding depreciation, amortization and accretion

854,179

792,687

61,492

8%

Depreciation, amortization and accretion

228,060

219,599

8,461

4%

Loss on impairment of assets

–

84,000

(84,000)

N/M

(Gain) loss on asset disposals, net

5,874

4,754

1,120

24%

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

(9,530)

(2,357)

(7,173)

1,078,583

1,098,683

(20,100)

(2)%

All Other ⁽¹⁾

Expenses excluding depreciation and amortization

19,643

30,095

(10,452)

(35)%

Depreciation and amortization

9,846

10,936

(1,090)

(10)%

Loss on impairment of assets

–

3,802

(3,802)

N/M

(Gain) loss on asset disposals, net

(11)

308

(319)

>(100)%

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

(12,802)

19,341

(32,143)

>(100)%

16,676

64,482

(47,806)

(74)%

Total operating expenses

4,779,170

5,199,302

(420,132)

(8)%

Operating income (loss)

U.S. Cellular

312,942

(143,390)

456,332

>100%

TDS Telecom

79,460

(10,371)

89,831

>100%

All Other ⁽¹⁾

4,669

(36,103)

40,772

>100%

397,071

(189,864)

586,935

>100%

Investment and other income (expense)

Equity in earnings of unconsolidated entities

140,076

131,965

8,111

6%

Interest and dividend income

38,783

16,957

21,826

>100%

Interest expense

(141,719)

(111,397)

(30,322)

(27)%

Other, net

391

115

276

>100%

Total investment and other income

37,531

37,640

(109)

-

Income (loss) before income taxes

434,602

(152,224)

586,826

>100%

Income tax expense (benefit)

171,992

(4,932)

176,924

>100%

Net income (loss)

262,610

(147,292)

409,902

>100%

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

43,573

(10,937)