TDS reports second quarter 2017 results
CHICAGO, Aug. 4, 2017 /PRNewswire/ --
As previously announced, TDS will hold a teleconference August 4, 2017, at 9:30 a.m. CDT. Listen to the call live via the Events & Presentations page of investors.tdsinc.com.
Telephone and Data Systems, Inc. (NYSE:TDS) reported total operating revenues of $1,247 million for the second quarter of 2017, versus $1,295 million for the same period one year ago. Net income attributable to TDS shareholders and related diluted earnings per share were $10 million and $0.09, respectively, for the second quarter of 2017, compared to $28 million and $0.25 respectively, in the same period one year ago.
"TDS' businesses achieved good results in the quarter as they continued executing on their strategic priorities for 2017," said LeRoy T. Carlson Jr., TDS president and CEO. "U.S. Cellular grew its postpaid handset customer base and increased customer loyalty. TDS Telecom drove growth in IPTV and cable connections and increased revenues in both its wireline and cable segments.
"U.S. Cellular grew postpaid handsets and drove an exceptionally low level of handset churn, the lowest in the company's history. It successfully completed the first commercial deployment of Voice over LTE (VoLTE) technology in Iowa, bringing benefits to customers' network experience and opening opportunities for greater data roaming revenue. U.S. Cellular effectively managed cost reductions throughout the quarter, lowering expenses in system operations, loss on equipment and other operating expenses.
"TDS Telecom grew its Wireline business through an increase in IPTV connections that generated higher residential revenue per connection. They continue to see growth in service revenues from fiber investments and through support from the Alternative Connect America Cost Model (A-CAM). TDS Telecom's Cable segment had an excellent quarter, driving significant increases in broadband connections and residential revenues. They continued to keep cash expenses low, driving a strong increase in profitability. OneNeck IT Solutions had lower revenues this quarter due primarily to less equipment sales to existing customers. They are focused on sales execution as their top priority."
2017 Estimated Results
Current estimates of full-year 2017 results for U.S. Cellular, TDS Telecom, and TDS are shown below. Such estimates represent management's view as of August 4, 2017. Such forward-looking statements should not be assumed to be current as of any future date. TDS undertakes no duty to update such information, whether as a result of new information, future events, or otherwise. There can be no assurance that final results will not differ materially from such estimated results.
2017 Estimated Results
U.S. Cellular TDS Telecom TDS(3)
Current Previous Current Previous Current Previous
(Dollars in millions)
Total operating revenues
(1) $3,800-$4,000 Unchanged $1,200-$1,250 Unchanged $5,015-$5,265 Unchanged
Adjusted OIBDA (1)(2)(4) $550-$650 Unchanged $300-$340 Unchanged $855-$995 Unchanged
Adjusted EBITDA (2) $700-$800 Unchanged $300-$340 Unchanged $1,005-$1,145 Unchanged
Capital expenditures
(Approximately) $500 Unchanged $225 Unchanged $735 Unchanged
The following tables provide reconciliations of Net income to Adjusted OIBDA and Adjusted EBITDA for 2017 estimated results, actual results for the six months ended June 30, 2017, and actual results for the year ended December 31, 2016. In providing 2017 estimated results, TDS has not completed the below reconciliation to net income because it does not provide guidance for income taxes. Although potentially significant, TDS believes that the impact of income taxes cannot be reasonably predicted; therefore, TDS is unable to provide such guidance.
2017 Estimated Results
U.S. Cellular TDS Telecom TDS(3)
(Dollars in millions)
Net income (loss) (GAAP) N/A N/A N/A
Add back:
Income tax
expense
(benefit) N/A N/A N/A
Income (loss) before income
taxes (GAAP) $ (30)-70 $ 80-120 $ (10)-130
Add back:
Interest
expense 110 - 165
Depreciation,
amortization
and accretion
expense 620 220 850
EBITDA (Non-GAAP) $ 700-800 $ 300-340 $ 1,005-1,145
Add back:
(Gain) loss on
sale of
business and
other exit
costs, net - - -
(Gain) loss on
license sales
and
exchanges,
net (20) - (20)
(Gain) loss on
asset
disposals,
net 20 - 20
Adjusted EBITDA (Non-GAAP) (2) $ 700-800 $ 300-340 $ 1,005-1,145
Deduct:
Equity in
earnings of
unconsolidated
entities 140 - 140
Interest and
dividend
income(1) 10 - 10
Adjusted OIBDA (Non-
GAAP)(1)(2)(4) $ 550-650 $ 300-340 $ 855-995
=== ======= === ======= === =======
Actual Results
Six Months Ended June 30, 2017 Year ended December 31, 2016
U.S. TDS TDS (3) U.S. TDS TDS (3)
Cellular Cellular
Telecom Telecom
(Dollars in millions)
Net income (GAAP) $40 $33 $55 $49 $42 $52
Add back:
Income tax
expense 33 21 44 33 25 40
Income before income taxes
(GAAP) $73 $54 $99 $82 $67 $92
Add back:
Interest
expense 56 2 85 113 3 170
Depreciation,
amortization
and accretion
expense
307 111 422 618 224 850
EBITDA (Non-GAAP) $436 $167 $606 $813 $294 $1,112
---- ---- ---- ---- ---- ------
Add back:
(Gain) loss on
sale of
business and
other exit
costs, net
- - - - - (1)
(Gain) loss on
license sales
and
exchanges,
net
(19) - (19) (19) (1) (20)
(Gain) loss on
asset
disposals,
net 9 1 10 22 4 27
Adjusted EBITDA (Non-GAAP) (2) $426 $168 $597 $816 $298 $1,118
==== ==== ==== ==== ==== ======
Deduct:
Equity in
earnings of
unconsolidated
entities
66 - 65 140 - 140
Interest and
dividend
income(1) 5 2 8 6 3 11
Other, net (1) - 1 1 - -
Adjusted OIBDA (Non-GAAP)
(1)(2)(4) $356 $166 $523 $669 $295 $967
==== ==== ==== ==== ==== ====
Note: Totals may not foot due to rounding differences.
(1) Equipment installment plan interest income is reflected
as a component of Service revenues consistent with an
accounting policy change effective January 1, 2017. All
prior period numbers have been recast to conform to this
accounting change.
(2) Adjusted EBITDA is defined as net income adjusted for the
items set forth in the reconciliation above. Adjusted
OIBDA is defined as net income adjusted for the items
set forth in the reconciliation above. Adjusted EBITDA
and Adjusted OIBDA are not measures of financial
performance under Generally Accepted Accounting
Principles in the United States (GAAP) and should not be
considered as alternatives to Net income or Cash flows
from operating activities, as indicators of cash flows
or as measures of liquidity. TDS does not intend to
imply that any such items set forth in the
reconciliation above are non-recurring, infrequent or
unusual; such items may occur in the future. Management
uses Adjusted EBITDA and Adjusted OIBDA as measurements
of profitability, and therefore reconciliations to Net
income are deemed appropriate. Management believes
Adjusted EBITDA and Adjusted OIBDA are useful measures
of TDS' operating results before significant recurring
non-cash charges, gains and losses, and other items as
presented above as they provide additional relevant and
useful information to investors and other users of TDS'
financial data in evaluating the effectiveness of its
operations and underlying business trends in a manner
that is consistent with management's evaluation of
business performance. Adjusted EBITDA shows adjusted
earnings before interest, taxes, depreciation,
amortization and accretion, and gains and losses, while
Adjusted OIBDA reduces this measure further to exclude
Equity in earnings of unconsolidated entities and
Interest and dividend income in order to more
effectively show the performance of operating activities
excluding investment activities. The table above
reconciles Adjusted EBITDA and Adjusted OIBDA flow to
the corresponding GAAP measure, Net income or Income
before income taxes.
(3) The TDS column includes U.S. Cellular, TDS Telecom and
also the impacts of consolidating eliminations,
corporate operations and non-reportable segments, all
of which are not presented above.
(4) A reconciliation of Adjusted OIBDA (Non-GAAP) to
Operating income (GAAP) for June 30, 2017 actual results
can be found on TDS' website at investors.tdsinc.com.
Conference Call Information
TDS will hold a conference call on August 4, 2017 at 9:30 a.m. Central Time.
-- Access the live call on the Events & Presentations page of
investors.tdsinc.com or at
https://www.webcaster4.com/Webcast/Page/1145/2198.
-- Access the call by phone at 877/407-8029 (US/Canada), no pass code
required.
Before the call, certain financial and statistical information to be discussed during the call will be posted to investors.tdsinc.com. The call will be archived on the Events & Presentations page of investors.tdsinc.com.
About TDS
Telephone and Data Systems, Inc. (TDS), a Fortune 1000(®) company, provides wireless; cable and wireline broadband, TV and voice; and hosted and managed services to approximately 6 million connections nationwide through its businesses, U.S. Cellular, TDS Telecom, OneNeck IT Solutions, and BendBroadband. Founded in 1969 and headquartered in Chicago, TDS employed 10,000 people as of June 30, 2017.
Visit www.tdsinc.com for comprehensive financial information, including earnings releases, quarterly and annual filings, shareholder information and more.
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995: All information set forth in this news release, except historical and factual information, represents forward-looking statements. This includes all statements about the company's plans, beliefs, estimates, and expectations. These statements are based on current estimates, projections, and assumptions, which involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Important factors that may affect these forward-looking statements include, but are not limited to: intense competition; the ability to execute TDS' business strategy; uncertainties in TDS' future cash flows and liquidity and access to the capital markets; the ability to make payments on TDS and U.S. Cellular indebtedness or comply with the terms of debt covenants; impacts of any pending acquisitions/divestitures/exchanges of properties and/or licenses, including, but not limited to, the ability to obtain regulatory approvals, successfully complete the transactions and the financial impacts of such transactions; the ability of the company to successfully manage and grow its markets; the access to and pricing of unbundled network elements; the ability to obtain or maintain roaming arrangements with other carriers on acceptable terms; the state and federal telecommunications regulatory environment; the value of assets and investments; adverse changes in the ratings of TDS and U.S. Cellular debt securities by accredited ratings organizations; industry consolidation; advances in telecommunications technology; pending and future litigation; changes in income tax rates, laws, regulations or rulings; changes in customer growth rates, average monthly revenue per user, churn rates, roaming revenue and terms, the availability of wireless devices, or the mix of services and products offered by U.S. Cellular and TDS Telecom. Investors are encouraged to consider these and other risks and uncertainties that are discussed in the Form 8-K Current Report used by TDS to furnish this press release to the Securities and Exchange Commission, which are incorporated by reference herein.
For more information about TDS and its subsidiaries, visit:
TDS: www.tdsinc.com
U.S. Cellular: www.uscellular.com
TDS Telecom: www.tdstelecom.com
OneNeck IT Solutions: www.oneneck.com
United States Cellular Corporation
Summary Operating Data (Unaudited)
As of or for the Quarter Ended 6/30/2017 3/31/2017 12/31/2016 9/30/2016 6/30/2016
Retail Connections
Postpaid
Total at end of
period 4,478,000 4,455,000 4,482,000 4,484,000 4,490,000
Gross additions 174,000 146,000 187,000 174,000 197,000
Feature
phones 7,000 7,000 7,000 10,000 8,000
Smartphones 116,000 88,000 109,000 105,000 107,000
Connected
devices 51,000 51,000 71,000 59,000 82,000
Net additions
(losses) 23,000 (27,000) (2,000) (6,000) 36,000
Feature
phones (15,000) (19,000) (21,000) (20,000) (21,000)
Smartphones 34,000 (9,000) (4,000) (7,000) 8,000
Connected
devices 4,000 1,000 23,000 21,000 49,000
ARPU (1) $44.60 $45.42 $45.19 $47.08 $47.37
ABPU (Non-
GAAP)(2) $55.19 $55.82 $55.43 $56.79 $56.09
ARPA (3) $119.73 $121.88 $120.67 $125.31 $124.91
ABPA (Non-
GAAP)(4) $148.15 $149.78 $148.02 $151.16 $147.90
Churn rate (5) 1.13% 1.29% 1.41% 1.34% 1.20%
Handsets 0.91% 1.08% 1.23% 1.22% 1.10%
Connected
devices 2.35% 2.55% 2.49% 2.04% 1.84%
Prepaid
Total at end of
period 484,000 480,000 484,000 480,000 413,000
Gross additions 73,000 78,000 83,000 132,000 73,000
Net additions
(losses) 3,000 (4,000) 4,000 67,000 14,000
ARPU (1) $33.52 $33.66 $33.25 $34.39 $34.58
Churn rate (5) 4.93% 5.69% 5.44% 4.84% 4.86%
Total connections at end of period (6) 5,023,000 4,996,000 5,031,000 5,030,000 4,973,000
Market penetration at end of period
Consolidated
operating population 32,089,000 32,089,000 31,994,000 31,994,000 31,994,000
Consolidated
operating
penetration (7) 16% 16% 16% 16% 16%
Capital expenditures (millions) $84 $61 $171 $103 $93
Total cell sites in service 6,421 6,417 6,415 6,374 6,324
Owned towers 4,044 4,041 4,040 4,015 3,988
(1) Average Revenue
Per User (ARPU)
-metric is
calculated by
dividing a
revenue base by
an average
number of
connections and
by the number
of months in
the period.
These revenue
bases and
connection
populations are
shown below:
Postpaid ARPU
consists of
total
postpaid
service
revenues and
postpaid
connections.
?
Prepaid ARPU
consists of
total
prepaid
service
revenues and
prepaid
connections.
?
(2) Average Billings
Per User (ABPU)
- non-GAAP
metric is
calculated by
dividing total
postpaid
service
revenues plus
equipment
installment
plan billings
by the average
number of
postpaid
connections and
by the number
of months in
the period.
Refer to the
end of this
release for a
reconciliation
of this metric
to its most
comparable GAAP
metric.
(3) Average Revenue
Per Account
(ARPA) -metric
is calculated
by dividing
total postpaid
service
revenues by the
average number
of postpaid
accounts and by
the number of
months in the
period.
(4) Average Billings
Per Account
(ABPA) - non-
GAAP metric is
calculated by
dividing total
postpaid
service
revenues plus
equipment
installment
plan billings
by the average
number of
postpaid
accounts and by
the number of
months in the
period. Refer
to the end of
this release
for a
reconciliation
of this metric
to its most
comparable GAAP
metric.
(5) Churn rate
represents the
percentage of
the connections
that disconnect
service each
month. These
rates represent
the average
monthly churn
rate for each
respective
period.
(6) Includes
reseller and
other
connections.
(7) Market
penetration is
calculated by
dividing the
number of
wireless
connections at
the end of the
period by the
total
population of
consolidated
operating
markets as
estimated by
Nielsen.
TDS Telecom
Summary Operating Data (Unaudited)
As of or for the Quarter Ended 6/30/2017 3/31/2017 12/31/2016 9/30/2016 6/30/2016
TDS Telecom
Wireline
--------
Residential
connections
Voice (1) 304,600 308,200 310,600 314,600 316,800
Broadband (2) 230,200 228,500 229,500 232,800 232,200
IPTV (3) 46,200 45,200 45,300 43,600 41,200
Wireline residential connections 581,000 581,900 585,400 590,900 590,200
------- ------- ------- ------- -------
Total
residential
revenue per
connection (4) $46.39 $45.17 $44.27 $44.25 $43.67
Commercial
connections
Voice (1) 150,500 154,000 157,400 160,900 164,000
Broadband (2) 21,000 21,200 21,400 21,700 21,900
managedIP (5) 149,700 150,300 150,900 151,500 149,000
Wireline commercial connections 321,200 325,500 329,700 334,000 334,900
------- ------- ------- ------- -------
Total Wireline
connections 902,200 907,400 915,200 924,900 925,100
Cable
-----
Cable
Connections
Broadband (6) 140,300 137,800 133,700 130,200 125,700
Video (7) 97,900 97,600 99,000 101,100 102,900
Voice (8) 58,700 59,000 59,600 59,800 58,900
Cable connections 297,000 294,300 292,400 291,000 287,600
======= ======= ======= ======= =======
Numbers may not foot due to rounding.
(1) The individual circuits connecting a customer
to Wireline's central office facilities.
(2) The number of Wireline customers provided high-
capacity data circuits via various
technologies, including DSL and dedicated
internet circuit technologies.
(3) The number of Wireline customers provided video
services using IP networking technology.
(4) Total residential revenue per connection is
calculated by dividing total Wireline
residential revenue by the average number of
Wireline residential connections and by the
number of months in the period.
(5) The number of telephone handsets, data lines
and IP trunks providing communications using
IP networking technology.
(6) Billable number of lines into a building for
high-speed data services.
(7) Generally, a home or business receiving video
programming counts as one video connection. In
counting bulk residential or commercial
connections, such as an apartment building or
hotel, connections are counted based on the
number of units/rooms within the building
receiving service.
(8) Billable number of lines into a building for
voice services.
TDS Telecom
Capital Expenditures (Unaudited)
Quarter
Ended 6/30/2017 3/31/2017 12/31/2016 9/30/2016 6/30/2016
(Dollars in
millions)
Wireline $33 $17 $26 $27 $27
Cable 12 9 13 11 17
HMS 4 6 5 2 2
$49 $33 $45 $40 $46
=== === === === ===
Numbers may not foot due to rounding.
Telephone and Data Systems, Inc.
Consolidated Statement of Operations Highlights
(Unaudited)
Three Months Ended June 30,
2017 2016 2017 vs. 2016
Increase (Decrease)
(Dollars and shares in millions, except per share amounts)
Operating revenues
U.S. Cellular (1) $963 $992 $(29) (3)%
TDS Telecom 281 300 (18) (6)%
All Other (2) 3 3 - -
1,247 1,295 (48) (4)%
----- ----- ---
Operating expenses
U.S. Cellular
Expenses
excluding
depreciation,
amortization and
accretion
800 812 (12) (2)%
Depreciation,
amortization and
accretion 155 154 1 -
(Gain) loss on
asset disposals,
net 5 5 - 6%
(Gain) loss on
license sales
and exchanges,
net (2) (9) 7 81%
958 962 (4) (1)%
--- --- ---
TDS Telecom
Expenses
excluding
depreciation,
amortization and
accretion
201 221 (20) (9)%
Depreciation,
amortization and
accretion 55 54 1 3%
(Gain) loss on
asset disposals,
net 1 1 - (30)%
257 275 (19) (7)%
--- --- ---
All Other (2)
Expenses
excluding
depreciation and
amortization 3 3 - 40%
Depreciation and
amortization 1 2 - (9)%
(Gain) loss on
asset disposals,
net - - - >(100)%
4 5 - 19%
--- --- ---
Total
operating
expenses 1,219 1,242 (23) (2)%
----- ----- ---
Operating income (loss)
U.S. Cellular (1) 5 30 (25) (82)%
TDS Telecom 25 24 - 1%
All Other (2) (2) (1) - >(100)%
28 53 (25) (47)%
--- --- ---
Investment and other income (expense)
Equity in earnings of
unconsolidated
entities 33 36 (3) (9)%
Interest and dividend
income (1) 4 3 1 15%
Interest expense (43) (43) - -
Other, net - 1 (1) >100%
Total investment
and other income
(expense)(1) (6) (3) (3) (78)%
--- --- ---
Income before income taxes 22 50 (28) (55)%
Income tax expense 10 18 (8) (45)%
Net income 12 32 (20) (62)%
Less: Net income
attributable to
noncontrolling
interests, net of
tax
2 4 (2) (49)%
--- --- ---
Net income attributable to TDS shareholders 10 28 (18) (63)%
TDS Preferred
dividend requirement - - - N/M
Net income available to common shareholders $10 $28 $(18) (63)%
=== === ====
Basic weighted average shares outstanding 111 109 2 1%
Basic earnings per share attributable to TDS
shareholders $0.09 $0.25 $(0.16) (64)%
===== ===== ======
Diluted weighted average shares outstanding 112 111 1 1%
Diluted earnings per share attributable to TDS
shareholders $0.09 $0.25 $(0.16) (64)%
===== ===== ======
N/M - Percentage change not meaningful
Numbers may not foot due to rounding.
(1) Equipment installment plan interest
income is reflected as a component of
Service revenues consistent with an
accounting policy change effective
January 1, 2017. All prior period
numbers have been recast to conform to
this accounting change.
(2) Consists of TDS corporate, intercompany
eliminations and all other business
operations not included in the U.S.
Cellular and TDS Telecom segments.
Telephone and Data Systems, Inc.
Consolidated Statement of Operations Highlights
(Unaudited)
Six Months Ended June 30,
2017 2016 2017 vs. 2016
Increase (Decrease)
(Dollars and shares in millions, except per share amounts)
Operating revenues
U.S. Cellular(1) $1,899 $1,962 $(63) (3)%
TDS Telecom 580 581 (1) -
All Other(2) 6 7 (1) (4)%
2,485 2,550 (65) (3)%
----- ----- ---
Operating expenses
U.S. Cellular
Expenses
excluding
depreciation,
amortization and
accretion
1,543 1,613 (70) (4)%
Depreciation,
amortization and
accretion 307 307 - -
(Gain) loss on
asset disposals,
net 9 10 (1) (12)%
(Gain) loss on
license sales
and exchanges,
net (19) (9) (10) >(100)%
1,840 1,921 (81) (4)%
----- ----- ---
TDS Telecom
Expenses
excluding
depreciation,
amortization and
accretion
414 426 (12) (3)%
Depreciation,
amortization and
accretion 111 112 (1) (1)%
(Gain) loss on
asset disposals,
net 1 2 (1) (28)%
527 540 (13) (2)%
--- --- ---
All Other(2)
Expenses
excluding
depreciation and
amortization 5 5 - 2%
Depreciation and
amortization 4 3 - (10)%
(Gain) loss on
asset disposals,
net - - - 57%
8 8 - (3)%
--- --- ---
Total
operating
expenses 2,375 2,469 (94) (4)%
----- ----- ---
Operating income (loss)
U.S. Cellular(1) 59 41 18 45%
TDS Telecom 53 41 12 29%
All Other(2) (2) (1) (1) (1)%
110 81 29 38%
--- --- ---
Investment and other income (expense)
Equity in earnings of
unconsolidated
entities 65 72 (7) (9)%
Interest and dividend
income(1) 8 5 3 36%
Interest expense (85) (85) - (1)%
Other, net 1 - 1 >100%
Total investment
and other income
(expense)(1) (11) (8) (3) (53)%
--- --- ---
Income before income taxes 99 73 26 36%
Income tax expense 44 31 13 43%
Net income 55 42 13 31%
Less: Net income
attributable to
noncontrolling
interests, net of
tax
8 6 2 24%
--- --- ---
Net income attributable to TDS shareholders 47 36 11 32%
TDS Preferred
dividend requirement - - - (50)%
Net income available to common shareholders $47 $36 $11 32%
=== === ===
Basic weighted average shares outstanding 110 109 1 1%
Basic earnings per share attributable to TDS
shareholders $0.43 $0.33 $0.10 30%
===== ===== =====
Diluted weighted average shares outstanding 112 111 1 1%
Diluted earnings per share attributable to TDS
shareholders $0.42 $0.32 $0.10 31%
===== ===== =====
Numbers may not foot due to rounding.
(1) Equipment installment plan interest income is reflected as a component of Service
revenues consistent with an accounting policy change effective January 1, 2017. All
prior period numbers have been recast to conform to this accounting change.
(2) Consists of TDS corporate, intercompany eliminations and all other business
operations not included in the U.S. Cellular and TDS Telecom segments.
Telephone and Data Systems, Inc.
Consolidated Statement of Cash Flows
(Unaudited)
Six Months Ended
June 30,
2017 2016
(Dollars in millions)
Cash flows from operating activities
Net income $55 $42
Add (deduct)
adjustments to
reconcile net income
to net cash flows
from operating
activities
Depreciation,
amortization
and accretion 422 422
Bad debts
expense 49 46
Stock-based
compensation
expense 22 18
Deferred
income taxes,
net (22) 8
Equity in
earnings of
unconsolidated
entities (65) (72)
Distributions
from
unconsolidated
entities 65 30
(Gain) loss on
asset
disposals,
net 10 12
(Gain) loss on
license sales
and
exchanges,
net (19) (9)
Noncash
interest
expense 1 2
Other
operating
activities - (3)
Changes in assets and
liabilities from
operations
Accounts
receivable 5 (6)
Equipment
installment
plans
receivable (107) (94)
Inventory 2 (26)
Accounts
payable (59) 32
Customer
deposits and
deferred
revenues (10) (18)
Accrued taxes 53 76
Accrued
interest - (1)
Other assets
and
liabilities (44) (59)
Net cash provided by
operating activities 358 400
--- ---
Cash flows from investing activities
Cash paid for
additions to
property, plant and
equipment (242) (281)
Cash paid for
acquisitions and
licenses (200) (46)
Cash received from
divestitures and
exchanges 17 17
Federal
Communications
Commission deposit - (143)
Other investing
activities 1 1
Net cash used in investing
activities (424) (452)
---- ----
Cash flows from financing activities
Repayment of long-
term debt (6) (6)
Issuance of long-
term debt - 2
TDS Common Shares
reissued for benefit
plans, net of tax
payments (1) -
U.S. Cellular Common
Shares reissued for
benefit plans, net
of tax payments - 3
Repurchase of TDS
Common Shares - (3)
Repurchase of U.S.
Cellular Common
Shares - (2)
Repurchase of TDS
Preferred Shares (1) -
Dividends paid to TDS
shareholders (34) (32)
Payment of debt
issuance costs - (4)
Distributions to
noncontrolling
interests (2) (1)
Other financing
activities 1 9
Net cash used in financing
activities (43) (34)
--- ---
Net decrease in cash and cash equivalents (109) (86)
Cash and cash equivalents
Beginning of period 900 985
End of period $791 $899
Telephone and Data Systems, Inc.
Consolidated Balance Sheet Highlights
(Unaudited)
ASSETS
June 30, December
31,
2017 2016
(Dollars in millions)
Current assets
Cash and cash
equivalents $791 $900
Accounts
receivable
from
customers and
others, net 845 851
Inventory, net 149 151
Prepaid
expenses 111 115
Income taxes
receivable 2 10
Other current
assets 26 32
Total current assets 1,924 2,059
Assets held for sale 4 8
Licenses 2,235 1,895
Goodwill 770 766
Franchise rights 244 244
Other intangible assets, net 28 33
Investments in unconsolidated
entities 452 451
Other investments - 1
Property, plant and equipment, net 3,373 3,555
Other assets and deferred charges 348 434
Total assets $9,378 $9,446
====== ======
Telephone and Data Systems, Inc.
Consolidated Balance Sheet Highlights
(Unaudited)
LIABILITIES AND EQUITY
June 30, December
31,
2017 2016
(Dollars and shares in millions, except per share
amounts)
Current liabilities
Current portion of
long-term debt $12 $12
Accounts payable 295 365
Customer deposits
and deferred
revenues 218 229
Accrued interest 11 11
Accrued taxes 85 44
Accrued compensation 78 127
Other current
liabilities 87 99
Total current
liabilities 786 887
Deferred liabilities and credits
Deferred income tax
liability, net 899 922
Other deferred
liabilities and
credits 472 453
Long-term debt, net 2,428 2,433
Noncontrolling interests with redemption features 1 1
Equity
TDS shareholders'
equity
Series A Common
and Common
Shares, par
value $.01 1 1
Capital in
excess of par
value 2,393 2,386
Treasury shares,
at cost (684) (698)
Accumulated
other
comprehensive
income - 1
Retained
earnings 2,457 2,454
Total TDS shareholders' equity 4,167 4,144
Preferred shares - 1
Noncontrolling
interests 625 605
Total equity 4,792 4,750
Total liabilities and equity $9,378 $9,446
====== ======
Balance Sheet Highlights
(Unaudited)
June 30, 2017
U.S. TDS TDS
Corporate Intercompany TDS
Cellular Telecom & Other Eliminations Consolidated
(Dollars in millions)
Cash and cash
equivalents $472 $22 $297 $ - $791
Affiliated cash investments - 499 - (499) -
$472 $521 $297 $(499) $791
==== ==== ==== ===== ====
Licenses, goodwill and other
intangible assets
$2,596 $820 $(139) $ - $3,277
Investment in unconsolidated
entities 414 4 40 (6) 452
$3,010 $824 $(99) $(6) $3,729
====== ==== ==== === ======
Property, plant and
equipment, net $2,304 $1,043 $26 $ - $3,373
====== ====== === === === ======
Long-term debt, net:
Current portion $11 $ - $1 $ - $12
Non-current portion 1,613 2 813 - 2,428
$1,624 $2 $814 $ - $2,440
====== === ==== === === ======
TDS Telecom Highlights
(Unaudited)
Three Months Ended June 30,
2017 vs. 2016
2017 2016 Increase (Decrease)
(Dollars in millions)
Wireline
Operating revenues
Residential $81 $77 $4 5%
Commercial 50 53 (3) (6)%
Wholesale 49 44 5 10%
Total
service
revenues 180 175 5 3%
Equipment
sales - - - (36)%
181 175 5 3%
--- --- ---
Operating expenses
Cost of
services 65 64 2 3%
Cost of
equipment
sold 1 - - 22%
Selling,
general and
administrative
expenses 48 49 (1) (2)%
Expenses
excluding
depreciation,
amortization
and accretion
114
113 1 1%
Depreciation,
amortization
and accretion 37 37 - 1%
(Gain) loss on
asset
disposals,
net - 1 - (46)%
152 151 1 1%
--- --- ---
Operating
income $29 $25 $4 17%
----------
Cable
Operating revenues
Residential $41 $36 $5 15%
Commercial 9 9 - 1%
51 45 5 12%
--- --- ---
Operating expenses
Cost of
services 24 24 - 1%
Selling,
general and
administrative
expenses 13 12 1 4%
Expenses
excluding
depreciation,
amortization
and accretion
37
36 1 2%
Depreciation,
amortization
and accretion 11 9 2 18%
(Gain) loss on
asset
disposals,
net - - - (5)%
48 46 2 5%
--- --- ---
Operating
income $3 $ - $3 >100%
---------- ---
HMS
Operating revenues
Service
revenues $27 $33 $(5) (16)%
Equipment
sales 23 47 (24) (51)%
51 80 (29) (37)%
--- --- ---
Operating expenses
Cost of
services 21 19 2 11%
Cost of
equipment
sold 19 39 (20) (51)%
Selling,
general and
administrative
expenses 10 15 (4) (29)%
Expenses
excluding
depreciation,
amortization
and accretion
51
73 (22) (30)%
Depreciation,
amortization
and accretion 7 7 (1) (7)%
58 80 (22) (28)%
--- --- ---
Operating loss $(7) $ - $(7) >(100)%
------------ ---
Intercompany revenues $(1) $(1) $ - 12%
Intercompany expenses (1) (1) - 12%
--- --- ---
Total TDS Telecom operating
income $25 $24 $ - 1%
=== === === ===
Numbers may not foot due to rounding.
TDS Telecom Highlights
(Unaudited)
Six Months Ended June 30,
2017 vs. 2016
2017 2016 Increase (Decrease)
(Dollars in millions)
Wireline
Operating revenues
Residential $160 $153 $7 4%
Commercial 101 107 (6) (6)%
Wholesale 98 87 11 12%
Total
service
revenues 359 347 12 3%
Equipment
sales 1 1 - (37)%
360 348 11 3%
--- --- ---
Operating expenses
Cost of
services 129 126 3 2%
Cost of
equipment
sold 1 1 - 13%
Selling,
general and
administrative
expenses 96 98 (2) (2)%
Expenses
excluding
depreciation,
amortization
and accretion
226 224 1 1%
Depreciation,
amortization
and accretion 76 78 (2) (3)%
(Gain) loss on
asset
disposals,
net 1 1 - (40)%
302 304 (1) -
--- --- ---
Operating
income $57 $45 $13 28%
----------
Cable
Operating revenues
Residential $82 $72 $11 15%
Commercial 18 19 (1) (4)%
100 90 10 11%
--- --- ---
Operating expenses
Cost of
services 48 46 2 4%
Selling,
general and
administrative
expenses 25 24 1 3%
Expenses
excluding
depreciation,
amortization
and accretion
73 70 3 4%
Depreciation,
amortization
and accretion 21 18 3 14%
(Gain) loss on
asset
disposals,
net 1 1 - (15)%
95 90 5 6%
--- --- ---
Operating
income $5 $1 $5 >100%
----------
HMS
Operating revenues
Service
revenues $56 $62 $(6) (9)%
Equipment
sales 66 82 (17) (20)%
122 144 (22) (15)%
--- --- ---
Operating expenses
Cost of
services 42 40 1 4%
Cost of
equipment
sold 55 68 (14) (20)%
Selling,
general and
administrative
expenses 21 25 (4) (16)%
Expenses
excluding
depreciation,
amortization
and accretion
118 134 (16) (12)%
Depreciation,
amortization
and accretion 14 15 (1) (7)%
131 148 (17) (12)%
--- --- ---
Operating loss $(9) $(4) $(5) >(100)%
------------
Intercompany revenues $(2) $(2) $ - 5%
Intercompany expenses (2) (2) - 5%
--- --- ---
Total TDS Telecom operating
income $53 $41 $12 29%
=== === ===
Numbers may not foot due to rounding.
Telephone and Data Systems, Inc.
Financial Measures and Reconciliations
Free Cash Flow
Three Months Ended Six Months Ended June
June 30, 30,
2017 2016 2017 2016
(Dollars in millions)
Cash flows from
operating activities
(GAAP) $221 $154 $358 $400
Less: Cash paid for
additions to
property, plant and
equipment 115 122 242 281
--- --- --- ---
Free
cash
flow
(Non-
GAAP)(1) 106 32 116 119
(1) Management
uses Free
cash flow as
a liquidity
measure and
it is
defined as
Cash flows
from
operating
activities
less Cash
paid for
additions to
property,
plant and
equipment.
Free cash
flow is a
non-GAAP
financial
measure
which TDS
believes may
be useful to
investors
and other
users of its
financial
information
in
evaluating
liquidity,
specifically,
the amount
of net cash
generated by
business
operations
after
deducting
Cash paid
for
additions to
property,
plant and
equipment.
Postpaid ABPU and Postpaid ABPA
U.S. Cellular presents Postpaid ABPU and Postpaid ABPA to reflect the revenue shift from Service revenues to Equipment and product sales resulting from the increased adoption of equipment installment plans. Postpaid ABPU and Postpaid ABPA, as previously defined, are non-GAAP financial measures which U.S. Cellular believes are useful to investors and other users of its financial information in showing trends in both service and equipment and product sales revenues received from customers.
For the Quarter Ended 6/30/2017 3/31/2017 12/31/2016 9/30/2016 6/30/2016
(Dollars and connection
counts in millions)
Calculation of Postpaid
ARPU
-----------------------
Postpaid service revenues $597 $608 $607 $635 $636
Average number of postpaid
connections 4.47 4.46 4.48 4.49 4.48
Number of months in period 3 3 3 3 3
Postpaid
ARPU (GAAP
metric) $44.60 $45.42 $45.19 $47.08 $47.37
=========
Calculation of Postpaid
ABPU
-----------------------
Postpaid service revenues $597 $608 $607 $635 $636
Equipment installment plan
billings 142 139 138 131 118
--- --- --- --- ---
Total
billings to
postpaid
connections $739 $747 $745 $766 $754
Average number of postpaid
connections 4.47 4.46 4.48 4.49 4.48
Number of months in period 3 3 3 3 3
Postpaid
ABPU (Non-
GAAP
metric) $55.19 $55.82 $55.43 $56.79 $56.09
=========
Calculation of Postpaid
ARPA
-----------------------
Postpaid service revenues $597 $608 $607 $635 $636
Average number of postpaid
accounts 1.66 1.66 1.68 1.69 1.70
Number of months in period 3 3 3 3 3
Postpaid
ARPA (GAAP
metric) $119.73 $121.88 $120.67 $125.31 $124.91
=========
Calculation of Postpaid
ABPA
-----------------------
Postpaid service revenues $597 $608 $607 $635 $636
Equipment installment plan
billings 142 139 138 131 118
--- --- --- --- ---
Total
billings to
postpaid
accounts $739 $747 $745 $766 $754
Average number of postpaid
accounts 1.66 1.66 1.68 1.69 1.70
Number of months in period 3 3 3 3 3
Postpaid
ABPA (Non-
GAAP
metric) $148.15 $149.78 $148.02 $151.16 $147.90
=========
View original content:http://www.prnewswire.com/news-releases/tds-reports-second-quarter-2017-results-300499747.html
SOURCE Telephone and Data Systems, Inc.
