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TDS reports second quarter 2016 results

08/05/2016

2016 guidance reaffirmed
As previously announced, TDS will hold a teleconference Aug. 5, 2016, at 9:30 a.m. CDT. Interested parties may listen to the call live via the Events & Presentations page of investors.tdsinc.com.

CHICAGO, Aug. 5, 2016 /PRNewswire/ -- Telephone and Data Systems, Inc. (NYSE:TDS) reported total operating revenues of $1,283 million for the second quarter of 2016, versus $1,276 million for the comparable period one year ago. Net income attributable to TDS shareholders and related diluted earnings per share were $28 million and $0.25, respectively, for the second quarter of 2016, compared to $23 million and $0.21, respectively, in the comparable period one year ago.

"TDS businesses showed continued progress through the quarter," said LeRoy T. Carlson, Jr., TDS president and CEO. "U.S. Cellular grew its customers while TDS Telecom achieved growth in IPTV and broadband connections and increased service revenues at OneNeck.  

"U.S. Cellular maintained momentum in the quarter by increasing connections and driving exceptionally low churn, reflecting our commitment to providing a top quality network and outstanding customer service at every point of customer engagement. U.S. Cellular focused on stronger adoption of equipment installment plans (EIP), which generated strong equipment revenue growth.

"TDS Telecom achieved success in the recent quarter by growing total wireline residential connections, adding IPTV connections and increasing residential revenue per connection. TDS Telecom's cable segment added residential broadband and voice connections and increased operating revenues. TDS Telecom's IT service business, OneNeck, generated higher revenues from maintenance and professional services and increased its equipment sales of hardware solutions."

2016 Estimated Results

Current estimates of full-year 2016 results for U.S. Cellular, TDS Telecom, and TDS, which are unchanged from the previous estimates, are shown below.  Such estimates represent management's view as of August 5, 2016.  Such forward-looking statements should not be assumed to be current as of any future date.  TDS undertakes no duty to update such information, whether as a result of new information, future events, or otherwise.  There can be no assurance that final results will not differ materially from such estimated results.

 



2016 Estimated Results
















U.S. Cellular


TDS Telecom


TDS(2)



Current

Previous


Current

Previous


Current

Previous

(Dollars in millions)












Total operating revenues

$3,900-$4,100

Unchanged


$1,130-$1,180

Unchanged


$5,040-$5,290

Unchanged

Operating cash flow (1)

$525-$650

Unchanged


$270-$310

Unchanged


$800-$965

Unchanged

Adjusted EBITDA (1)

$725-$850

Unchanged


$270-$310

Unchanged


$1,000-$1,165

Unchanged

Capital expenditures (Approximately)

$

500

Unchanged


$

180

Unchanged


$

695

Unchanged

 

The following tables provide a reconciliation to Operating Cash Flow and Adjusted EBITDA for 2016 estimated results, and actual results for the six months ended June 30, 2016 and year ended December 31, 2015. In providing 2016 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.

 







2016 Estimated Results


















U.S. Cellular



TDS Telecom



TDS(2)

(Dollars in millions)










Net income (loss) (GAAP)



N/A



N/A



N/A

Add back:











Income tax expense (benefit)



N/A



N/A



N/A

Income (loss) before income taxes (GAAP)


$

(5)-120


$

40-80


$

(25)-140

Add back:











Interest expense



110





165


Depreciation, amortization and accretion expense



610



230



850

EBITDA (Non-GAAP)


$

715-840


$

270-310


$

990-1,155

Add back:











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








(Gain) loss on license sales and exchanges, net



(10)





(10)



(Gain) loss on asset disposals, net



20





20

Adjusted EBITDA (Non-GAAP) (1)


$

725-850


$

270-310


$

1,000-1,165

Deduct:











Equity in earnings of unconsolidated entities



140





140



Interest and dividend income



60





60

Operating cash flow (Non-GAAP) (1)


$

525-650


$

270-310


$

800-965

 






Actual Results


























Six Months Ended June 30, 2016


Year ended December 31, 2015





U.S. Cellular


TDS

Telecom


TDS (2)


U.S. Cellular*


TDS

Telecom


TDS (2)*

(Dollars in millions)













Net income (GAAP)


$

37


$

25


$

42


$

247


$

46


$

263

Add back:














Income tax expense



23



16



31



156



35



172

Income before income taxes (GAAP)


$

60


$

41


$

73


$

404


$

81


$

435

Add back:














Interest expense



56



1



85



86



1



142


Depreciation, amortization and accretion expense



307



112



422



606



228



844

EBITDA (Non-GAAP)


$

423


$

154


$

580


$

1,096


$

310


$

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



(9)





(9)



(147)





(147)


(Gain) loss on asset disposals, net



10



2



12



16



6



22

Adjusted EBITDA (Non-GAAP) (1)


$

424


$

156


$

583


$

852


$

306


$

1,160

Deduct:




















Equity in earnings of unconsolidated entities



72





72



140





140


Interest and dividend income



27



2



29



37



2



39

Operating cash flow (Non-GAAP) (1)(3)


$

325


$

155


$

482


$

675


$

304


$

981






















* Includes $58 million of revenue related to termination of the rewards points program.

Note: Totals may not foot due to rounding differences.



(1)

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 is defined as net income adjusted for the items set forth in the reconciliation above.  Adjusted EBITDA and Operating cash flow 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 incomes, as indicators of cash flows or as measure 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 Operating cash flow as measurements of profitability, and therefore reconciliations to applicable GAAP income measures are deemed most appropriate.  Management believes Adjusted EBITDA and Operating cash flow are useful measures of TDS' operating results before significant recurring non-cash charges, gains and losses, and other items as presented below 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, while Operating cash flow reduces this measure further to exclude Equity in earnings of unconsolidated entities and Interest and dividend income in order to more effectively show the performance of operating activities excluding investment activities.  The table above reconciles Adjusted EBITDA and Operating cash flow to the corresponding GAAP measure, Net income or Income (loss) before incomes taxes.



(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)

A reconciliation of Operating cash flow (Non-GAAP) to operating income (GAAP) for June 30, 2016 actual results can be found on the company's website at investors.tdsinc.com.

 

Stock Repurchase Summary

TDS began repurchasing stock under its $250 million repurchase authorization on Aug. 5, 2013.   The following represents repurchases of TDS Common Shares.  

Repurchase Period


# Shares


Cost (in millions)

2016 (year-to-date through June 30, 2016)


111,700


$

3

2015 (full year)



$

Total


111,700


$

3

 

Conference Call Information

TDS will hold a conference call on August 5, 2016 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 500® company, provides wireless; cable and wireline broadband, TV and voice; and hosted and managed services to approximately 6 million customers nationwide through its businesses, U.S. Cellular, TDS Telecom, OneNeck IT Solutions, and BendBroadband. Founded in 1969 and headquartered in Chicago, TDS employed 10,400 people as of June 30, 2016.

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/divestures/exchanges of properties and/or licenses,  including, but not limited to, the ability to obtain regulatory approvals, successfully complete the transactions and the financial impacts of such transactions; the ability of the company to successfully manage and grow its markets; the overall economy; the access to and pricing of unbundled network elements; the ability to obtain or maintain roaming arrangements with other carriers on acceptable terms; the state and federal telecommunications regulatory environment; the value of assets and investments; adverse changes in the ratings afforded TDS and U.S. Cellular debt securities by accredited ratings organizations; industry consolidation; advances in telecommunications technology; pending and future litigation; changes in income tax rates, laws, regulations or rulings; changes in customer growth rates, average monthly revenue per user, churn rates, roaming revenue and terms, the availability of wireless devices, or the mix of products and services offered by U.S. Cellular and TDS Telecom. Investors are encouraged to consider these and other risks and uncertainties that are discussed in the Form 8-K Current Report used by TDS to furnish this press release to the Securities and Exchange Commission, which are incorporated by reference herein.    

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

 


United States Cellular Corporation

Summary Operating Data (Unaudited)
















As of or for the Quarter Ended

6/30/2016


3/31/2016


12/31/2015



9/30/2015


6/30/2015

Retail Connections
















Postpaid

















Total at end of period


4,490,000



4,454,000



4,409,000



4,341,000



4,324,000



Gross additions


197,000



215,000



240,000



200,000



191,000




Feature phones


8,000



9,000



10,000



14,000



15,000




Smartphones


107,000



124,000



132,000



119,000



115,000




Connected devices


82,000



82,000



98,000



67,000



61,000



Net additions (losses)


36,000



45,000



68,000



17,000



17,000




Feature phones


(21,000)



(25,000)



(25,000)



(28,000)



(26,000)




Smartphones


8,000



20,000



23,000



6,000



7,000




Connected devices


49,000



50,000



70,000



39,000



36,000



ARPU (1)(8)

$

47.37


$

48.13


$

51.46


$

58.12


$

53.62



ABPU (Non-GAAP)*(2)(8)

$

56.09


$

56.06


$

58.57


$

63.88


$

58.06



ARPA (3)(8)

$

124.91


$

125.36


$

131.96


$

147.00


$

133.85



ABPA (Non-GAAP)*(4)(8)

$

147.90


$

145.99


$

150.19


$

161.57


$

144.94



Churn rate (5)


1.20%



1.28%



1.31%



1.41%



1.34%




Handsets


1.10%



1.18%



1.23%



1.33%



1.26%




Connected devices


1.84%



2.01%



1.95%



2.20%



2.13%



Smartphone penetration (6)


77%



75%



74%



72%



69%


Prepaid

















Total at end of period


413,000



399,000



387,000



380,000



368,000



Gross additions


73,000



75,000



69,000



71,000



65,000



Net additions (losses)


14,000



12,000



7,000



12,000



8,000



ARPU (1)

$

34.58


$

35.51


$

35.54


$

35.64


$

35.98



Churn rate (5)


4.86%



5.37%



5.40%



5.24%



5.22%

Total connections at end of period (9)


4,973,000



4,926,000



4,876,000



4,807,000



4,779,000

Smartphones sold as a percent of total handsets sold


91%



92%



91%



87%



87%

Market penetration at end of period
















Consolidated operating population


31,994,000



31,994,000



31,967,000



31,814,000



31,814,000


Consolidated operating penetration (7)


16%



15%



15%



15%



15%

Capital expenditures (millions)

$

93


$

79


$

198


$

135


$

134

Total cell sites in service


6,324



6,306



6,297



6,246



6,223

Owned towers


3,988



3,989



3,978



3,957



3,940





















*

See Non-GAAP reconciliation at end.





















(1)

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




?

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




?

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

(2)

Average Billings Per User ("ABPU") - non-GAAP metric is calculated by dividing total postpaid service revenues plus equipment installment plan billings by the average number of postpaid connections and by the number of months in the period.

(3)

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

(4)

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

(5)

Churn metrics represents the percentage of the connections that disconnect service each month.  These rates represent the average monthly 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 connections by postpaid handset 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.

(8)

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

(9)

Includes reseller and other connections.

 

TDS Telecom

Summary Operating Data (Unaudited)


Quarter Ended

6/30/2016


3/31/2016


12/31/2015


9/30/2015


6/30/2015

TDS Telecom















Wireline
















Residential connections

















Voice (1)


316,800



318,400



319,800



325,900



329,000



Broadband (2)


232,200



229,100



228,500



231,600



231,200



IPTV (3)


41,200



38,300



34,400



30,300



27,900



   Wireline residential connections


590,200



585,800



582,700



587,800



588,100



















Total residential revenue per connection (4)

$

43.67


$

43.28


$

41.24


$

42.83


$

42.10



















Commercial connections

















Voice (1)


164,000



167,400



171,500



176,700



181,800



Broadband (2)


21,900



22,000



22,400



23,000



23,700



managedIP (5)


149,000



148,500



147,100



145,900



145,100



   Wireline commercial connections


334,900



337,900



341,000



345,600



350,600



















Total Wireline connections


925,100



923,700



923,700



933,400



938,700


















Cable
















Cable Connections

















Video (6)


102,900



104,600



106,800



108,300



109,100



Broadband (7)


125,700



121,700



117,100



114,600



112,300



Voice (8)


58,900



58,100



56,400



54,000



51,500



   Cable connections


287,600



284,400



280,300



276,900



272,900


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 total 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)

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)

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

(8)

Billable number of lines into a building for voice services.

 


TDS Telecom

Capital Expenditures (millions)











Quarter Ended

6/30/2016


3/31/2016


12/31/2015


9/30/2015


6/30/2015

Wireline

$

27


$

27


$

50


$

38


$

32

Cable


17



13



15



13



12

HMS


2



2



8



5



9


$

46


$

42


$

73


$

56


$

53

 


Telephone and Data Systems, Inc.

Consolidated Statement of Operations Highlights

(Unaudited)





Three Months Ended June 30,





2016


2015


2016 vs. 2015







Increase (Decrease)

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











Operating revenues












U.S. Cellular

$

980


$

976


$

4


-


TDS Telecom


300



295



5


2%


All Other (1)


3



5



(2)


(40)%






1,283



1,276



7


1%

Operating expenses












U.S. Cellular













Expenses excluding depreciation, amortization and accretion


812



814



(2)


-



Depreciation, amortization and accretion


154



151



3


2%



(Gain) loss on asset disposals, net


5



5




(12)%



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




(2)



2


N/M



(Gain) loss on license sales and exchanges, net


(9)





(9)


>(100)%






962



968



(6)


(1)%


TDS Telecom













Expenses excluding depreciation, amortization and accretion


221



216



4


2%



Depreciation, amortization and accretion


54



57



(3)


(6)%



(Gain) loss on asset disposals, net


1



(1)



2


>100%



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




(3)



3


>100%






275



269



6


2%


All Other (1)













Expenses excluding depreciation and amortization


3



4



(1)


(49)%



Depreciation and amortization


2



3



(1)


(52)%



(Gain) loss on asset disposals, net




1



(1)


>100%



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




(1)



1


100%






5



7



(2)


(45)%


















Total operating expenses


1,242



1,244



(2)


-

Operating income (loss)












U.S. Cellular


18



8



10


>100%


TDS Telecom


24



26



(1)


(5)%


All Other (1)


(1)



(2)




61%






41



32



9


28%

Investment and other income (expense)












Equity in earnings of unconsolidated entities


36



35



1


3%


Interest and dividend income


15



10



5


52%


Interest expense


(43)



(34)



(9)


(26)%


Other, net


1



1




>(100)%



Total investment and other income


9



12



(3)


(25)%

Income before income taxes


50



44



6


14%


Income tax expense


18



18




4%

Net income


32



26



6


20%


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


4



3



1


18%

Net income attributable to TDS shareholders


28



23



5


21%


TDS Preferred dividend requirement







-

Net income available to common shareholders

$

28


$

23


$

5


21%















Basic weighted average shares outstanding


109



108



1


1%

Basic earnings per share attributable to TDS shareholders

$

0.25


$

0.21


$

0.04


19%















Diluted weighted average shares outstanding


111



110



1


1%

Diluted earnings per share attributable to TDS shareholders

$

0.25


$

0.21


$

0.04


19%















(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

(Unaudited)





Six Months Ended June 30,





2016


2015


2016 vs. 2015







Increase (Decrease)

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











Operating revenues












U.S. Cellular

$

1,938


$

1,941


$

(3)


-


TDS Telecom


581



575



6


1%


All Other (1)


7



12



(5)


(45)%






2,526



2,528



(2)


-

Operating expenses












U.S. Cellular













Expenses excluding depreciation, amortization and accretion


1,613



1,610



3


-



Depreciation, amortization and accretion


307



298



9


3%



(Gain) loss on asset disposals, net


10



10




2%



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




(113)



113


100%



(Gain) loss on license sales and exchanges, net


(9)



(123)



114


93%






1,921



1,682



239


14%


TDS Telecom













Expenses excluding depreciation, amortization and accretion


426



417



10


2%



Depreciation, amortization and accretion


112



114



(2)


(2)%



(Gain) loss on asset disposals, net


2





2


>100%



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




(3)



3


>100%






540



528



12


2%


All Other (1)













Expenses excluding depreciation and amortization


5



10



(5)


(54)%



Depreciation and amortization


3



6



(3)


(40)%



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




(13)



13


100%






8



3



5


>100%


















Total operating expenses


2,469



2,213



256


12%

Operating income (loss)












U.S. Cellular (3)


17



259



(242)


(93)%


TDS Telecom


41



47



(6)


(12)%


All Other (1)


(1)



9



(10)


>(100)%






57



315



(258)


(82)%

Investment and other income (expense)












Equity in earnings of unconsolidated entities


72



70



2


2%


Interest and dividend income


29



19



10


58%


Interest expense


(85)



(68)



(17)


(25)%



Total investment and other income


16



21



(5)


(24)%

Income before income taxes


73



336



(263)


(78)%


Income tax expense


31



134



(103)


(77)%

Net income


42



202



(160)


(79)%


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


6



33



(27)


(82)%

Net income attributable to TDS shareholders


36



169



(133)


(79)%


TDS Preferred dividend requirement







-

Net income available to common shareholders

$

36


$

169


$

(133)


(79)%















Basic weighted average shares outstanding


109



108



1


1%

Basic earnings per share attributable to TDS shareholders

$

0.33


$

1.56


$

(1.23)


(79)%

Diluted weighted average shares outstanding


111



109



2


1%

Diluted earnings per share attributable to TDS shareholders

$

0.32


$

1.53


$

(1.21)


(79)%















(1)

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

(2)

Compared to U.S. Cellular, TDS recognized an incremental gain of $12 million on the tower sale as a result of a lower basis in the assets disposed in 2015.

(3)

Year-over-year comparisons are affected by gains of $252 million from sales and exchanges of businesses and licenses in 2015.

N/M – Percentage change not meaningful

 


Telephone and Data Systems, Inc.

Consolidated Statement of Cash Flows

(Unaudited)







Six Months Ended June 30,







2016


2015

(Dollars in millions)






Cash flows from operating activities







Net income

$

42


$

202



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










Depreciation, amortization and accretion


422



418





Bad debts expense


46



55





Stock-based compensation expense


18



18





Deferred income taxes, net


8



(41)





Equity in earnings of unconsolidated entities


(72)



(70)





Distributions from unconsolidated entities


30



27





(Gain) loss on asset disposals, net


12



10





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




(129)





(Gain) loss on license sales and exchanges, net


(9)



(123)





Noncash interest expense


2



1





Other operating activities


(3)





Changes in assets and liabilities from operations










Accounts receivable


(6)



(18)





Equipment installment plans receivable


(94)



(65)





Inventory


(26)



127





Accounts payable


32



30





Customer deposits and deferred revenues


(18)



(7)





Accrued taxes


76



191





Accrued interest


(1)







Other assets and liabilities


(59)



(88)






Net cash provided by operating activities


400



538












Cash flows from investing activities







Cash used for additions to property, plant and equipment


(281)



(359)


Cash paid for acquisitions and licenses


(46)



(281)


Cash received from divestitures and exchanges


17



292


Federal Communications Commission deposit


(143)




Other investing activities


1



2






Net cash used in investing activities


(452)



(346)












Cash flows from financing activities







Repayment of long-term debt


(6)




Issuance of long-term debt


2




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




10


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


3



(2)


Repurchase of TDS Common Shares


(3)




Repurchase of U.S. Cellular Common Shares


(2)



(2)


Dividends paid to TDS shareholders


(32)



(31)


Payment of debt issuance costs


(4)



(3)


Distributions to noncontrolling interests


(1)



(6)


Other financing activities


9



2






Net cash provided by financing activities


(34)



(32)












Net increase (decrease) in cash and cash equivalents


(86)



160












Cash and cash equivalents







Beginning of period


985



472


End of period

$

899


$

632

 


Telephone and Data Systems, Inc.

Consolidated Balance Sheet Highlights

(Unaudited)







ASSETS
















June 30,


December 31,




2016


2015

(Dollars in millions)






Current assets







Cash and cash equivalents

$

899


$

985


Accounts receivable from customers and others, net


824



803


Inventory, net


184



158


Prepaid expenses


121



112


Income taxes receivable


6



70


Other current assets


31



30



Total current assets


2,065



2,158









Assets held for sale


23











Licenses


1,864



1,844

Goodwill


766



766

Franchise rights


244



244

Other intangible assets, net


39



47

Investments in unconsolidated entities


446



402









Property, plant and equipment, net


3,613



3,764









Other assets and deferred charges


366



197









Total assets

$

9,426


$

9,422

 


Telephone and Data Systems, Inc.

Consolidated Balance Sheet Highlights

(Unaudited)








LIABILITIES AND EQUITY



















June 30,


December 31,





2016


2015

(Dollars in millions)






Current liabilities







Current portion of long-term debt

$

14


$

14


Accounts payable


362



349


Customer deposits and deferred revenues


269



288


Accrued interest


11



12


Accrued taxes


50



41


Accrued compensation


96



113


Other current liabilities


96



127



Total current liabilities


898



944










Deferred liabilities and credits







Deferred income tax liability, net


908



900


Other deferred liabilities and credits


447



433










Long-term debt


2,436



2,440










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


2,363



2,365



Treasury shares, at cost


(717)



(727)



Accumulated other comprehensive income (loss)






Retained earnings


2,487



2,487




   Total TDS shareholders' equity


4,134



4,126











Preferred shares


1



1


Noncontrolling interests


601



577












Total equity


4,736



4,704










Total liabilities and equity

$

9,426


$

9,422

 


Balance Sheet Highlights

(Unaudited)




June 30, 2016



U.S.


TDS


TDS Corporate


Intercompany


TDS



Cellular


Telecom


& Other


Eliminations


Consolidated

(Dollars in millions)















Cash and cash equivalents

$

621


$

40


$

238


$


$

899

Affiliated cash investments




359





(359)





$

621


$

399


$

238


$

(359)


$

899

















Licenses, goodwill and other intangible assets

$

2,224


$

828


$

(138)


$


$

2,913

Investment in unconsolidated entities


407



4



40



(6)



446



$

2,631


$

832


$

(98)


$

(6)


$

3,359

































Property, plant and equipment, net

$

2,510


$

1,078


$

25


$


$

3,613

















Long-term debt:
















Current portion

$

11


$


$

3


$


$

14


Non-current portion


1,623



1



812





2,436



$

1,634


$

1


$

815


$


$

2,450

 


TDS Telecom Highlights

(Unaudited)





Three Months Ended June 30,





2016


2015


2016 vs. 2015







Increase (Decrease)

Wireline











Operating revenues












Residential

$

77


$

74


$

3


4%


Commercial


53



55



(2)


(4)%


Wholesale


44



46



(1)


(3)%



Total service revenues


175



175




-


Equipment sales




1




(11)%






175



176



(1)


-

Operating expenses












Cost of services


64



63



1


-


Cost of equipment sold




1



(1)


(22)%


Selling, general and administrative expenses


49



49




-


Depreciation, amortization and accretion


37



41



(4)


(10)%


(Gain) loss on asset disposals, net


1



1




(43)%


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




(3)



3


>100%






151



152



(1)


(1)%
















Operating income

$

25


$

24


$

(1)


1%















Cable











Operating revenues












Residential

$

36


$

35


$

1


3%


Commercial


9



10




(3)%



Total service revenues


45



45



1


2%















Operating expenses












Cost of services


24



20



4


19%


Selling, general and administrative expenses


12



14



(2)


(11)%


Depreciation, amortization and accretion


9



9




5%


(Gain) loss on asset disposals, net




(2)



2


>100%






46



41



5


12%
















Operating income

$


$

4


$

(4)


>(100)%















HMS











Operating revenues












Service revenues

$

33


$

29


$

3


11%


Equipment sales


47



46



1


3%






80



76



4


6%

Operating expenses












Cost of services


19



22



(3)


(13)%


Cost of equipment sold


39



39




1%


Selling, general and administrative expenses


15



11



4


33%


Depreciation, amortization and accretion


7



7



1


11%






80



78



2


2%
















Operating (loss)

$


$

(3)


$

2


99%















Intercompany revenues

$

(1)


$

(1)


$


20%

Intercompany expenses


(1)



(1)




20%















Total TDS Telecom operating income

$

24


$

26


$

(1)


(5)%















Numbers may not foot due to rounding.

 


TDS Telecom Highlights

(Unaudited)





Six Months Ended June 30,





2016


2015


2016 vs. 2015







Increase (Decrease)

(Dollars in millions)











Wireline











Operating revenues












Residential

$

153


$

149


$

4


3%


Commercial


107



111



(4)


(4)%


Wholesale


87



91



(4)


(4)%



Total service revenues


347



351



(4)


(1)%


Equipment sales


1



1




2%






348



352



(4)


(1)%

Operating expenses












Cost of services


126



125



1


-


Cost of equipment sold


1



1




(15)%


Selling, general and administrative expenses


98



95



3


3%


Depreciation, amortization and accretion


78



83



(5)


(6)%


(Gain) loss on asset disposals, net


1



2



(1)


(35)%


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




(3)



3


>100%






304



303



1


-
















Operating income

$

45


$

49


$

(5)


(9)%















Cable











Operating revenues












Residential

$

72


$

70


$

2


2%


Commercial


19



18



1


3%



Total service revenues


90



88



3


2%















Operating expenses












Cost of services


46



40



6


15%


Selling, general and administrative expenses


24



26



(2)


(7)%


Depreciation, amortization and accretion


18



18




5%


(Gain) loss on asset disposals, net


1



(1)



2


>100%






90



83



7


8%
















Operating income

$

1


$

5


$

(5)


(90)%















HMS











Operating revenues












Service revenues

$

62


$

58


$

4


7%


Equipment sales


82



79



4


5%






144



137



8


6%

Operating expenses












Cost of services


40



42



(2)


(4)%


Cost of equipment sold


68



66



3


4%


Selling, general and administrative expenses


25



24



2


6%


Depreciation, amortization and accretion


15



13



2


12%






148



144



4


3%
















Operating (loss)

$

(4)


$

(8)


$

4


46%















Intercompany revenues

$

(2)


$

(2)


$


(2)%

Intercompany expenses


(2)



(2)




(2)%















Total TDS Telecom operating income

$

41


$

47


$

(6)


(12)%















Numbers may not foot due to rounding.

 

Telephone and Data Systems, Inc.

Financial Measures and Reconciliations

(Unaudited)
















Free Cash Flow and Adjusted Free Cash Flow




















Three Months Ended June 30,


Six Months Ended June 30,



2016


2015


2016


2015

(Dollars in millions)













Cash flows from operating activities (GAAP)


$

154


$

183


$

400


$

538

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



122



193



281



359



Free cash flow



32



(10)



119



179

Add: Sprint Cost Reimbursement



2



7



4



23



Adjusted free cash flow (Non-GAAP)(1)


$

34


$

(3)


$

123


$

202



(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.  Adjusted free cash flow is defined as Cash flows from operating activities (which includes cash outflows related to the Sprint decommissioning), as adjusted for cash proceeds from the Sprint Cost Reimbursement (which are included in Cash flows from investing activities in the Consolidated Statement of Cash Flows), less Cash paid for additions to property, plant and equipment.  Sprint decommissioning and Sprint Cost Reimbursement are further defined and discussed in our Annual Report on Form 10-K for the year ended December 31, 2015.  Free cash flow and Adjusted free cash flow are non-GAAP financial measures which TDS believes may be useful to investors and other users of its financial information in evaluating the amount of cash generated by business operations (including cash proceeds from the Sprint Cost Reimbursement), after Cash paid for additions to property, plant and equipment.

Postpaid ABPU and Postpaid ABPA

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




Three Months Ended June 30,


Six Months Ended June 30,


2016


2015


2016


2015

(Dollars and connection counts in millions)












Calculation of Postpaid ARPU












Postpaid service revenues

$

636


$

694


$

1,275


$

1,401

Average number of postpaid connections


4.48



4.31



4.45



4.31

Number of months in period


3



3



6



6


Postpaid ARPU (GAAP metric)

$

47.37


$

53.62


$

47.76


$

54.24















Calculation of Postpaid ABPU












Postpaid service revenues

$

636


$

694


$

1,275


$

1,401

Equipment installment plan billings


118



58



223



104


Total billings to postpaid connections

$

754


$

752


$

1,498


$

1,505

Average number of postpaid connections


4.48



4.31



4.45



4.31

Number of months in period


3



3



6



6


Postpaid ABPU (Non-GAAP metric)

$

56.09


$

58.06


$

56.08


$

58.28















Calculation of Postpaid ARPA












Postpaid service revenues

$

636


$

694


$

1,275


$

1,401

Average number of postpaid accounts


1.70



1.73



1.70



1.74

Number of months in period


3



3



6



6


Postpaid ARPA (GAAP metric)

$

124.91


$

133.85


$

125.13


$

134.39















Calculation of Postpaid ABPA












Postpaid service revenues

$

636


$

694


$

1,275


$

1,401

Equipment installment plan billings


118



58



223



104


Total billings to postpaid accounts

$

754


$

752


$

1,498


$

1,505

Average number of postpaid accounts


1.70



1.73



1.70



1.74

Number of months in period


3



3



6



6


Postpaid ABPA (Non-GAAP metric)

$

147.90


$

144.94


$

146.95


$

144.40

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/tds-reports-second-quarter-2016-results-300309796.html

SOURCE Telephone and Data Systems, Inc.

Jane McCahon, Senior Vice President, Corporate Relations and Corporate Secretary, 312-592-5379, jane.mccahon@tdsinc.com, Julie Mathews, IRC, Investor Relations Director, 312-592-5341, julie.mathews@tdsinc.com

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