TMCnet News

TDS reports second quarter 2015 results
[July 31, 2015]

TDS reports second quarter 2015 results


CHICAGO, July 31, 2015 /PRNewswire/ -- Telephone and Data Systems, Inc. (NYSE: TDS) reported total operating revenues of $1,276.4 million for the second quarter of 2015, versus $1,236.4 million for the comparable period one year ago. Net income attributable to TDS shareholders and related diluted earnings per share were $23.0 million and $0.21, respectively, for the second quarter of 2015, compared to $(22.1) million and $(0.20), respectively, in the comparable period one year ago. 

"Both of our businesses continued to make good progress on their strategic objectives," said LeRoy T. Carlson, Jr., TDS president and CEO. "U.S. Cellular added postpaid customers and improved customer loyalty. TDS Telecom achieved growth in IPTV customers and continued to move forward with cable, broadband, and hosted and managed services strategies.

"U.S. Cellular maintained momentum in its turnaround in customer growth while generating a significant increase in profitability.  We are further enhancing our high quality network this year, bringing 4G LTE speeds to 98 percent of U.S. Cellular customers.  U.S. Cellular is leveraging this investment to drive growth in smartphone penetration, connected devices, and data usage. 

"TDS Telecom achieved success in the recent quarter, adding IPTV customers and increasing residential revenue per customer. Our cable segment continues to focus on increasing residential and commercial broadband penetration. We are continuing to seek and evaluate potential cable acquisitions. We believe our  IT services business, OneNeck IT Solutions, has strong growth potential as more businesses and other organizations seek to outsource more of their IT needs."

2015 Estimated Results
Estimates of full-year 2015 results for U.S. Cellular, TDS Telecom, and TDS are shown below.  Such estimates represent management's view as of July 31, 2015.  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.






2015 Estimated Results



U.S. Cellular


TDS Telecom


TDS(2)



Current

Previous


Current

Previous


Current

Previous

(Dollars in millions)












Total operating revenues

$4,000-$4,100

$4,000-$4,200


$1,130-$1,180

Unchanged


$5,145-$5,295

$5,145-$5,395

Operating cash flow (1)

$440-$540

$400-$500


$280-$310

Unchanged


$725-$855

$685-$815

Adjusted EBITDA (1)

$600-$700

$580-$680


$280-$310

Unchanged


$890-$1,020

$870-$1,000

Capital expenditures

Approx. $

600

Unchanged


Approx. $

220

Unchanged


Approx. $

830

Unchanged



(1)

Operating cash flow is defined as net income, adjusted for the items set forth in the reconciliation below.  Adjusted EBITDA is defined as net income, adjusted for the items set forth in the reconciliation below.  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 below. The following tables provide a reconciliation to Operating cash flow and Adjusted EBITDA for 2015 estimated results, and actual results for the six months ended June 30, 2015 and year ended December 31, 2014:

 





2015 Estimated Results (3)





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)


$

165-265


$

45-75


$

170-300

Add back:











Interest expense



80





140


Depreciation, amortization and accretion expense



600



235



845

EBITDA


$

845-945


$

280-310


$

1,155-1,285

Add back:











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



(115)





(135)


(Gain) loss on license sales and exchanges, net



(145)





(145)


(Gain) loss on asset disposals, net



15





15

Adjusted EBITDA


$

600-700


$

280-310


$

890-1,020

Deduct:











Equity in earnings of unconsolidated

   entities



(125)





(125)


Interest and dividend income



(35)





(40)

Operating cash flow (4)


$

440-540


$

280-310


$

725-855

 





Actual Results





Six Months Ended June 30, 2015



Year ended December 31, 2014





U.S. Cellular



TDS

Telecom



TDS (2)



U.S. Cellular



TDS

Telecom



TDS (2)

(Dollars in millions)













Net income (loss) (GAAP)


$

185


$

29


$

202


$

(47)


$

(24)


$

(147)

Add back:




















Income tax expense (benefit)



121



19



133



(12)



18



(5)

Income (loss) before income taxes

(GAAP)


$

306


$

48


$

335


$

(59)


$

(7)


$

(153)

Add back:




















Interest expense



40





68



57



(1)



111


Depreciation, amortization and accretion expense



298



114



418



606



220



837

EBITDA


$

643


$

162


$

821


$

605


$

212


$

796

Add back:




















Loss on impairment of assets











84



88


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



(113)



(3)



(129)



(33)



(2)



(16)


(Gain) loss on license sales and exchanges, net



(123)





(123)



(113)





(113)


(Gain) loss on asset disposals, net



10





10



21



5



27

Adjusted EBITDA


$

417


$

159


$

579


$

480


$

298


$

781

Deduct:




















Equity in earnings of unconsolidated

entities



(70)





(70)



(130)





(132)


Interest and dividend income



(17)



(1)



(19)



(12)



(2)



(17)

Operating cash flow (4)


$

330


$

158


$

490


$

338


$

296


$

632





















Note: Totals may not foot due to rounding differences.



(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 2015 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 June 30, 2015 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)

2015 (year to date)



$

2014 (full year)


1,541,850


$

39.1

Total


1,541,850


$

39.1


Conference Call Information
TDS will hold a conference call on July 31, 2015 at 9:30 a.m. Central Time.

Before the call, certain financial and statistical information to be discussed during the call will be posted to investors.tdsinc.com. The call will be archived on the Events & Presentations page of investors.tdsinc.com

About TDS
Telephone and Data Systems, Inc. (TDS), a Fortune 1000 company, provides wireless; cable and wireline broadband, TV and voice; and hosted and managed services to approximately 6.0 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 10,600 people as of June 30, 2015.

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: 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; competition; 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; uncertainty of access to the capital markets;  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 ("SEC"), 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

6/30/2015


3/31/2015


12/31/2014


9/30/2014


6/30/2014

Retail Customers
















Postpaid

















Total at end of period


4,324,000



4,307,000



4,298,000



4,200,000



4,148,000



Gross additions


191,000



200,000



302,000



251,000



190,000



Net additions (losses)


17,000



9,000



98,000



52,000



(26,000)



ARPU (1)

$

53.62


$

54.87


$

56.51


$

56.37


$

56.82



ARPA (2)

$

133.85


$

134.94


$

136.13


$

132.99


$

131.95



Churn rate (3)


1.3%



1.5%



1.6%



1.6%



1.7%



Smartphone penetration (4)


69.1%



66.9%



64.8%



61.7%



58.4%


Prepaid

















Total at end of period


368,000



360,000



348,000



350,000



352,000



Gross additions


65,000



73,000



60,000



64,000



65,000



Net additions (losses)


8,000



12,000



(2,000)



(2,000)



(4,000)



ARPU (1)

$

35.98


$

35.72


$

35.33


$

34.40


$

34.02



Churn rate (3)


5.2%



5.8%



5.9%



6.3%



6.5%

Total customers at end of period


4,779,000



4,775,000



4,760,000



4,674,000



4,653,000

Billed ARPU (1)

$

51.29


$

52.29


$

53.63


$

53.24


$

53.36

Service revenue ARPU (1)

$

57.55


$

58.01


$

60.10


$

60.92


$

60.32

Smartphones sold as a percent of total handsets sold


86.7%



85.7%



86.5%



80.8%



79.0%

Total population

















Consolidated markets (5)


45,737,000



45,737,000



50,906,000



54,817,000



54,817,000



Consolidated operating markets (5)


31,814,000



31,814,000



31,729,000



31,729,000



31,729,000

Market penetration at end of period

















Consolidated markets (6)


10.4%



10.4%



9.4%



8.5%



8.5%



Consolidated operating markets (6)


15.0%



15.0%



15.0%



14.7%



14.7%

Capital expenditures (000s)

$

133,666


$

66,460


$

181,655


$

142,452


$

143,927

Total cell sites in service


6,223



6,219



6,220



6,209



6,183

Owned towers (7)


3,940



3,936



4,280



4,487



4,457





















(1)

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

(3)

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.

(4)

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 handset customers.

(5)

The decrease in the population of Consolidated markets is due primarily to the license exchange transactions of certain non-operating licenses in North Carolina in December 2014 and 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 (6) below.

(6)

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.  The increase in consolidated markets penetration is due primarily to a lower denominator as a result of the license divestitures described in footnote (5) above.

(7)

During the quarters ended March 31, 2015 and December 31, 2014, sold 359 and 236 towers, respectively, in divested markets.

 

TDS Telecom

Summary Operating Data (Unaudited)



















Quarter Ended

6/30/2015


3/31/2015


12/31/2014


9/30/2014


6/30/2014

TDS Telecom















Wireline

















Residential connections


















Voice (1)


329,000



333,400



335,900



340,300



346,100




Broadband (2)


231,200



229,400



229,200



231,600



232,700




IPTV (3)


27,900



25,600



23,400



20,700



18,200




   Wireline residential connections


588,100



588,400



588,500



592,600



597,000





















Total residential revenue per connection (4)

$

42.10


$

42.32


$

41.56


$

41.47


$

41.05





















Commercial connections


















Voice (1)


181,800



187,500



193,200



199,300



206,200




Broadband (2)


23,700



24,300



24,700



25,300



26,000




managedIP (5)


145,100



143,200



140,200



137,700



133,300




   Wireline commercial connections


350,600



355,000



358,100



362,300



365,500





















Total Wireline connections


938,700



943,400



946,600



954,900



962,500



















Cable

















Cable Connections


















Video (6)


109,100



109,700



110,400



109,100



69,700




Broadband (7)


112,300



112,200



110,900



106,400



63,200




Voice (7)


51,500



49,100



46,000



41,800



17,800




   Cable connections


272,900



271,000



267,300



257,300



150,700



















(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


6/30/2015



3/31/2015



12/31/2014



9/30/2014



6/30/2014

Wireline

$

31,700


$

20,400


$

51,400


$

34,200


$

27,400

Cable


11,900



11,600



14,600



7,600



7,200

HMS


9,400



4,900



13,400



9,800



10,600


$

53,000


$

36,900


$

79,400


$

51,600


$

45,200

 


Telephone and Data Systems, Inc.

Consolidated Statement of Operations Highlights

Three Months Ended June 30,

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











Change





2015


2014


Amount

Percent

Operating revenues












U.S. Cellular

$

975,667


$

957,773


$

17,894


2%


TDS Telecom


294,813



270,850



23,963


9%


All Other (1)


5,915



7,769



(1,854)


(24)%






1,276,395



1,236,392



40,003


3%

Operating expenses












U.S. Cellular













Expenses excluding depreciation, amortization and accretion


812,918



863,361



(50,443)


(6)%



Depreciation, amortization and accretion


150,581



148,337



2,244


2%



(Gain) loss on asset disposals, net


5,399



6,893



(1,494)


(22)%



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


(1,705)



(10,511)



8,806


84%



(Gain) loss on license sales and exchanges, net


(25)





(25)


N/M






967,168



1,008,080



(40,912)


(4)%


TDS Telecom













Expenses excluding depreciation, amortization and accretion


216,160



197,427



18,733


9%



Depreciation, amortization and accretion


56,636



53,175



3,461


7%



(Gain) loss on asset disposals, net


(631)



983



(1,614)


>(100)%



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


(3,054)





(3,054)


N/M






269,111



251,585



17,526


7%


All Other (1)













Expenses excluding depreciation and amortization


4,954



9,613



(4,659)


(48)%



Depreciation and amortization


3,887



3,055



832


27%



(Gain) loss on asset disposals, net


(16)



27



(43)


>(100)%



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


(830)



13,122



(13,952)


>(100)%






7,995



25,817



(17,822)


(69)%


















Total operating expenses


1,244,274



1,285,482



(41,208)


(3)%

Operating income (loss)












U.S. Cellular


8,499



(50,307)



58,806


>100%


TDS Telecom


25,702



19,265



6,437


33%


All Other (1)


(2,080)



(18,048)



15,968


88%






32,121



(49,090)



81,211


>100%

Investment and other income (expense)












Equity in earnings of unconsolidated entities


35,412



34,790



622


2%


Interest and dividend income


10,117



2,751



7,366


>100%


Interest expense


(33,919)



(27,898)



(6,021)


(22)%


Other, net


202



50



152


>100%



Total investment and other income


11,812



9,693



2,119


22%

Income (loss) before income taxes


43,933



(39,397)



83,330


>100%


Income tax expense (benefit)


17,433



(13,671)



31,104


>100%

Net income (loss)


26,500



(25,726)



52,226


>100%


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


3,454



(3,688)



7,142


>100%

Net income (loss) attributable to TDS shareholders


23,046



(22,038)



45,084


>100%


TDS Preferred dividend requirement


(12)



(12)




-

Net income (loss) available to common shareholders

$

23,034


$

(22,050)


$

45,084


>100%















Basic weighted average shares outstanding


108,484



108,719



(235)


-

Basic earnings per share attributable to TDS shareholders

$

0.21


$

(0.20)


$

0.42


>100%















Diluted weighted average shares outstanding


109,785



108,719



1,066


1%

Diluted earnings per share attributable to TDS shareholders

$

0.21


$

(0.20)


$

0.41


>100%















(1)

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

(2)

Due to Airadigm Transaction, TDS recognized expenses of $13.1 million related to exit and disposal activities in 2014.

N/M – Percentage change not meaningful

 

Telephone and Data Systems, Inc.

Consolidated Statement of Operations Highlights

Six Months Ended June 30,

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











Change





2015


2014


Amount

Percent

Operating revenues












U.S. Cellular

$

1,940,912


$

1,883,584


$

57,328


3%


TDS Telecom


574,798



533,266



41,532


8%


All Other (1)


12,278



15,504



(3,226)


(21)%






2,527,988



2,432,354



95,634


4%

Operating expenses












U.S. Cellular













Expenses excluding depreciation, amortization and accretion


1,610,864



1,710,006



(99,142)


(6)%



Depreciation, amortization and accretion


297,666



316,090



(18,424)


(6)%



(Gain) loss on asset disposals, net


9,650



8,827



823


9%



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


(113,182)



(17,411)



(95,771)


>(100)%



(Gain) loss on license sales and exchanges, net


(122,898)



(91,446)



(31,452)


(34)%






1,682,100



1,926,066



(243,966)


(13)%


TDS Telecom













Expenses excluding depreciation, amortization and accretion


416,620



387,730



28,890


7%



Depreciation, amortization and accretion


113,799



106,950



6,849


6%



(Gain) loss on asset disposals, net


499



1,327



(828)


(62)%



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


(3,054)





(3,054)








527,864



496,007



31,857


6%


All Other (1)













Expenses excluding depreciation and amortization


10,216



18,939



(8,723)


(46)%



Depreciation and amortization


6,214



6,446



(232)


(4)%



(Gain) loss on asset disposals, net


(20)



179



(199)


>(100)%



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


(13,136)



13,122



(26,258)


>(100)%






3,274



38,686



(35,412)


(92)%


















Total operating expenses


2,213,238



2,460,759



(247,521)


(10)%

Operating income (loss)












U.S. Cellular


258,812



(42,482)



301,294


>100%


TDS Telecom


46,934



37,259



9,675


26%


All Other (1)


9,004



(23,182)



32,186


>100%






314,750



(28,405)



343,155


>100%

Investment and other income (expense)












Equity in earnings of unconsolidated entities


70,053



72,117



(2,064)


(3)%


Interest and dividend income


18,502



5,237



13,265


>100%


Interest expense


(67,749)



(56,605)



(11,144)


(20)%


Other, net


198



210



(12)


(6)%



Total investment and other income


21,004



20,959



45


-

Income (loss) before income taxes


335,754



(7,446)



343,200


>100%


Income tax expense (benefit)


133,453



(2,014)



135,467


>100%

Net income (loss)


202,301



(5,432)



207,733


>100%


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


33,515



(1,648)



35,163


>100%

Net income (loss)attributable to TDS shareholders


168,786



(3,784)



172,570


>100%


TDS Preferred dividend requirement


(25)



(25)




-

Net income (loss) available to common shareholders

$

168,761


$

(3,809)


$

172,570


>100%















Basic weighted average shares outstanding


108,327



108,853



(526)


-

Basic earnings per share attributable to TDS shareholders

$

1.56


$

(0.04)


$

1.60


>100%















Diluted weighted average shares outstanding


109,380



108,853



527


-

Diluted earnings per share attributable to TDS shareholders

$

1.53


$

(0.04)


$

1.57


>100%















(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 $11.9 million on the tower sale as a result of a lower basis in the assets disposed in 2015.  Due to the Airadigm Transaction, TDS recognized expenses of $13.1 million related to exit and disposal activities in 2014.

N/M – Percentage change not meaningful

 

Telephone and Data Systems, Inc.

Consolidated Balance Sheet Highlights

(Unaudited, dollars in thousands)








ASSETS

















June 30,


December 31,



2015


2014

Current assets







Cash and cash equivalents

$

631,549


$

471,901


Accounts receivable from customers and others


703,892



683,681


Inventory, net


146,686



273,707


Net deferred income tax asset


92,881



107,686


Prepaid expenses


102,975



86,506


Income taxes receivable


426



113,708


Other current assets


30,480



29,766




1,708,889



1,766,955








Assets held for sale


22,203



103,343








Investments







Licenses


1,837,792



1,453,574


Goodwill


771,119



771,352


Franchise rights


244,300



244,300


Other intangible assets, net


55,123



64,499


Investments in unconsolidated entities


364,205



321,729


Other investments


465



508




3,273,004



2,855,962








Property, plant and equipment, net







U.S. Cellular


2,625,815



2,728,217


TDS Telecom


1,078,653



1,093,671


Other


21,987



24,237




3,726,455



3,846,125








Other assets and deferred charges


255,761



334,554








Total assets

$

8,986,312


$

8,906,939

 

Telephone and Data Systems, Inc.

Consolidated Balance Sheet Highlights

(Unaudited, dollars in thousands)










LIABILITIES AND EQUITY























June 30,


December 31,





2015


2014

Current liabilities








Current portion of long-term debt

$

747


$

808



Accounts payable


345,747



387,125



Customer deposits and deferred revenues


317,759



324,318



Accrued interest


8,276



7,919



Accrued taxes


121,144



46,734



Accrued compensation


92,994



114,549



Other current liabilities


134,516



181,803






1,021,183



1,063,256










Liabilities held for sale




21,643










Deferred liabilities and credits








Net deferred income tax liability


885,462



941,519



Other deferred liabilities and credits


436,810



430,774










Long-term debt


1,993,429



1,993,586










Noncontrolling interests with redemption features


1,178



1,150










Equity







TDS shareholders' equity








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


1,327



1,327



Capital in excess of par value


2,342,587



2,336,511



Treasury shares, at cost


(735,218)



(748,199)



Accumulated other comprehensive loss


5,130



6,452



Retained earnings


2,468,070



2,330,187




   Total TDS shareholders' equity


4,081,896



3,926,278











Preferred shares


824



824


Noncontrolling interests


565,530



527,909












Total equity


4,648,250



4,455,011










Total liabilities and equity

$

8,986,312


$

8,906,939

 

Balance Sheet Highlights

June 30, 2015

(Unaudited, dollars in thousands)






































U.S.


TDS


TDS Corporate


Intercompany


TDS




Cellular


Telecom


& Other


Eliminations


Consolidated

Cash and cash equivalents

$

362,282


$

62,234


$

207,033


$


$

631,549

Affiliated cash investments




405,855





(405,855)





$

362,282


$

468,089


$

207,033


$

(405,855)


$

631,549


















Licenses, goodwill and other intangible assets

$

2,197,252


$

849,195


$

(138,113)


$


$

2,908,334

Investment in unconsolidated entities


325,857



3,804



39,575



(5,031)



364,205

Long-term and other investments




463



2





465




$

2,523,109


$

853,462


$

(98,536)


$

(5,031)


$

3,273,004



































Property, plant and equipment, net

$

2,625,815


$

1,078,653


$

22,156


$

(169)


$

3,726,455


















Long-term debt:
















Current portion

$

57


$

25


$

665


$


$

747


Non-current portion


1,151,999



1,401



840,029





1,993,429




$

1,152,056


$

1,426


$

840,694


$


$

1,994,176

 

Telephone and Data Systems, Inc.

Consolidated Statement of Cash Flows

Six Months Ended June 30,

(Unaudited, dollars in thousands)






2015


2014

Cash flows from operating activities







Net income (loss)

$

202,301


$

(5,432)



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










Depreciation, amortization and accretion


417,679



429,486





Bad debts expense


54,599



52,098





Stock-based compensation expense


17,949



15,488





Deferred income taxes, net


(40,640)



(33,346)





Equity in earnings of unconsolidated entities


(70,053)



(72,117)





Distributions from unconsolidated entities


27,226



65,569





(Gain) loss on asset disposals, net


10,129



10,333





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


(129,372)



(4,289)





(Gain) loss on license sales and exchanges, net


(122,898)



(91,446)





Noncash interest expense


1,363



1,014





Other operating activities


(387)



3



Changes in assets and liabilities from operations










Accounts receivable


(17,935)



67,136





Equipment installment plans receivable


(65,124)



(47,971)





Inventory


127,021



38,674





Accounts payable


29,589



(43,132)





Customer deposits and deferred revenues


(7,005)



13,139





Accrued taxes


191,508



1,049





Accrued interest


361



22





Other assets and liabilities


(87,880)



(80,636)







538,431



315,642











Cash flows from investing activities







Cash used for additions to property, plant and equipment


(359,513)



(339,907)


Cash paid for acquisitions and licenses


(280,710)



(18,681)


Cash received from divestitures and exchanges


291,888



125,905


Cash received for investments




10,000


Other investing activities


2,328



3,720







(346,007)



(218,963)











Cash flows from financing activities







Repayment of long-term debt


(434)



(589)


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


9,831



401


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


(1,570)



830


Repurchase of TDS Common Shares




(20,090)


Repurchase of U.S. Cellular Common Shares


(2,302)



(8,298)


Dividends paid to TDS shareholders


(30,530)



(29,107)


Payment of debt issuance costs


(3,080)




Distributions to noncontrolling interests


(5,872)



(482)


Other financing activities


1,181



5,502







(32,776)



(51,833)











Net increase in cash and cash equivalents


159,648



44,846











Cash and cash equivalents







Beginning of period


471,901



830,014


End of period

$

631,549


$

874,860

 

TDS Telecom Highlights

Three Months Ended June 30,

(Unaudited, dollars in thousands)

























Change





2015


2014


Amount


Percent

Wireline











Operating revenues












Residential

$

74,277


$

73,360


$

917


1%


Commercial


55,395



57,472



(2,077)


(4)%


Wholesale


45,741



49,465



(3,724)


(8)%



Total service revenues


175,413



180,297



(4,884)


(3)%


Equipment sales


557



431



126


29%






175,970



180,728



(4,758)


(3)%

Operating expenses












Cost of services


62,604



64,305



(1,701)


(3)%


Cost of equipment sold


597



481



116


24%


Selling, general and administrative expenses


49,200



47,708



1,492


3%


Depreciation, amortization and accretion


41,203



41,827



(624)


(1)%


(Gain) loss on asset disposals, net


1,010



514



496


96%


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


(3,054)





(3,054)


N/M






151,560



154,835



(3,275)


(2)%
















Operating income

$

24,410


$

25,893


$

(1,483)


(6)%















Cable











Operating revenues












Residential

$

34,913


$

18,222


$

16,691


92%


Commercial


9,632



4,262



5,370


>100%



Total service revenues


44,545



22,484



22,061


98%


Equipment sales


70





70


N/M






44,615



22,484



22,131


98%

Operating expenses












Cost of services


19,849



11,394



8,455


74%


Cost of equipment


15





15


N/M


Selling, general and administrative expenses


13,764



6,285



7,479


>100%


Depreciation, amortization and accretion


8,860



4,557



4,303


94%


(Gain) loss on asset disposals, net


(1,668)



425



(2,093)


>(100)%






40,820



22,661



18,159


80%
















Operating income (loss)

$

3,795


$

(177)


$

3,972


>100%















HMS











Operating revenues












Service revenues

$

29,467


$

27,575


$

1,892


7%


Equipment sales


46,119



40,361



5,758


14%






75,586



67,936



7,650


11%

Operating expenses












Cost of services


21,954



21,301



653


3%


Cost of equipment sold


38,566



33,875



4,691


14%


Selling, general and administrative expenses


10,969



12,376



(1,407)


(11)%


Depreciation, amortization and accretion


6,573



6,791



(218)


(3)%


(Gain) loss on asset disposals, net


27



44



(17)


(39)%






78,089



74,387



3,702


5%
















Operating (loss)

$

(2,503)


$

(6,451)


$

3,948


61%















Intercompany revenues

$

(1,358)


$

(298)


$

(1,060)


>(100)%

Intercompany expenses


(1,358)



(298)



(1,060)


>(100)%















Total TDS Telecom operating income (loss)

$

25,702


$

19,265


$

6,437


33%

 

TDS Telecom Highlights

Six Months Ended June 30,

(Unaudited, dollars in thousands)

























Change





2015


2014


Amount


Percent

Wireline











Operating revenues












Residential

$

148,962


$

145,865


$

3,097


2%


Commercial


111,158



115,452



(4,294)


(4)%


Wholesale


90,984



95,913



(4,929)


(5)%



Total service revenues


351,104



357,230



(6,126)


(2)%


Equipment sales


1,001



984



17


2%






352,105



358,214



(6,109)


(2)%

Operating expenses












Cost of services


125,031



128,705



(3,674)


(3)%


Cost of equipment sold


1,160



964



196


20%


Selling, general and administrative expenses


94,869



94,228



641


1%


Depreciation, amortization and accretion


83,212



84,563



(1,351)


(2)%


(Gain) loss on asset disposals, net


1,528



759



769


>100%


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


(3,054)





(3,054)


N/M






302,746



309,219



(6,473)


(2)%
















Operating income

$

49,359


$

48,995


$

364


1%















Cable











Operating revenues












Residential

$

69,959


$

36,475


$

33,484


92%


Commercial


18,067



8,512



9,555


>100%



Total service revenues


88,026



44,987



43,039


96%


Equipment sales


158





158


N/M






88,184



44,987



43,197


96%

Operating expenses












Cost of services


39,797



22,349



17,448


78%


Cost of equipment sold


75





75


N/M


Selling, general and administrative expenses


26,389



12,663



13,726


>100%


Depreciation, amortization and accretion


17,579



8,918



8,661


97%


(Gain) loss on asset disposals, net


(986)



490



(1,476)


>(100)%






82,854



44,420



38,434


87%
















Operating income

$

5,330


$

567


$

4,763


>100%















HMS











Operating revenues












Service revenues

$

57,883


$

54,951


$

2,932


5%


Equipment sales


78,664



76,093



2,571


3%






136,547



131,044



5,503


4%

Operating expenses












Cost of services


41,982



38,247



3,735


10%


Cost of equipment sold


65,696



64,342



1,354


2%


Selling, general and administrative expenses


23,659



27,211



(3,552)


(13)%


Depreciation, amortization and accretion


13,008



13,469



(461)


(3)%


(Gain) loss on asset disposals, net


(43)



78



(121)


>(100)%






144,302



143,347



955


1%
















Operating (loss)

$

(7,755)


$

(12,303)


$

4,548


37%















Intercompany revenues

$

(2,038)


$

(979)


$

(1,059)


>(100)%

Intercompany expenses


(2,038)



(979)



(1,059)


>(100)%















Total TDS Telecom operating income

$

46,934


$

37,259


$

9,675


26%

 

Telephone and Data Systems, Inc.

Financial Measures and Reconciliations

(Unaudited, dollars in thousands)




















TDS Consolidated




















Three Months Ended


Six Months Ended





June 30,


June 30,



2015


2014


2015


2014
















Cash flows from operating activities


$

183,125


$

210,705


$

538,431


$

315,642

Add: Sprint Cost Reimbursement



7,462



22,862



23,174



34,116

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



193,052



189,017



359,513



339,907



Adjusted free cash flow (1)


$

(2,465)


$

44,550


$

202,092


$

9,851
















(1)

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 used for additions to property, plant and equipment. Adjusted 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 the amount of cash generated by business operations (including cash proceeds from the Sprint Cost Reimbursement), after Cash used for additions to property, plant and equipment.

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/tds-reports-second-quarter-2015-results-300121827.html

SOURCE Telephone and Data Systems, Inc.


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