TDS reports first quarter 2020 results
Continuing to provide outstanding communications services to our customers
CHICAGO, April 30, 2020 /PRNewswire/ --
As previously announced, TDS will hold a teleconference May 1, 2020, at 9:00 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 $1,261 million for the first quarter of 2020, versus $1,257 million for the same period one year ago. Net income attributable to TDS shareholders and related diluted earnings per share were $69 million and $0.59, respectively, for the first quarter of 2020 compared to $59 million and $0.50, respectively, in the same period one year ago.
"The TDS Enterprise and its family of companies remain strong in this time of the COVID-19 pandemic and great economic uncertainty," said LeRoy T. Carlson, Jr., TDS President and CEO. "We are continuing to provide critical communications and data services that our customers and communities, especially in underserved areas, depend on. U.S. Cellular and TDS Telecom have risen to meet the business challenges of this national health crisis, by putting people - our associates, their families and our customers - first, and by keeping our operations and networks performing at very high levels.
"U.S. Cellular continues to provide high-quality wireless connectivity. The majority of our stores remain open, with modified store hours, and safety measures including social distancing implemented. Most of our customer care center employees are now working from home, while still maintaining the exceptional service U.S. Cellular is known for. U.S. Cellular is successfully meeting increased demands for capacity on its network, with both data and voice traffic increasing. Our network modernization program continues, adding capacity and speed, launching 5G services commercially, and preparing for remaining VoLTE deployments. U.S. Cellular's financial results this quarter were solid, including a tax benefit resulting from the CARES Act, partially offset by an incremental allowance to cover anticipated higher levels of bad debt. There may be near-term impacts from the pandemic, including lower store traffic and customer growth. Our number one priority is to continue to adapt to meet the wireless needs of the communities and customers we serve. At the same time, we are planning for the return to a more stable future environment and continuing to execute on our strategic priorities.
"TDS Telecom is experiencing strong demand for wired broadband services as many customers work from home. At this time TDS Telecom is successfully meeting the significant demand for higher speeds as well as increased network capacity across its footprint. To keep customers and field service technicians safe, procedures have been implemented to minimize the amount of work technicians do within the home and we are using self-service and remote assistance techniques to complete both installs and repairs. TDS Telecom continues to move forward with fiber deployment in our out-of-territory expansion markets.
"At TDS, we have a good financial foundation. We continue to maintain a strong balance sheet with ample liquidity. We closely monitor leading indicators like customer receipts and accounts receivable aging. We have enhanced our liquidity position to provide near term capital spending."
2020 Estimated Results
TDS' current estimates of full-year 2020 results for U.S. Cellular and TDS Telecom are shown below. Such estimates represent management's view as of April 30, 2020 and should not be assumed to be current as of any future date. TDS undertakes no duty to update such estimates, whether as a result of new information, future events, or otherwise. There can be no assurance that final results will not differ materially from estimated results, especially in light of the uncertainty created by the COVID-19 pandemic.
2020 Estimated Results | ||
U.S. Cellular | Previous | Current |
(Dollars in millions) | ||
Service revenues | $3,000-$3,100 | Unchanged |
Adjusted OIBDA1 | $775-$900 | $725-$850 |
Adjusted EBITDA1 | $950-$1,075 | $900-$1,025 |
Capital expenditures | $850-$950 | Unchanged |
TDS Telecom | Previous | Current |
(Dollars in millions) | ||
Total operating revenues | $950-$1,000 | Unchanged |
Adjusted OIBDA1 | $280-$310 | Unchanged |
Adjusted EBITDA1 | $290-$320 | Unchanged |
Capital expenditures | $300-$350 | Unchanged |
The following tables provide reconciliations of Net income to Adjusted OIBDA and Adjusted EBITDA for 2020 estimated results, actual results for the three months ended March 31, 2020, and actual results for the year ended December 31, 2019. In providing 2020 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.
2020 Estimated Results | ||||
U.S. Cellular | TDS Telecom | |||
(Dollars in millions) | ||||
Net income (GAAP) | N/A | N/A | ||
Add back: | ||||
Income tax expense | N/A | N/A | ||
Income before income taxes (GAAP) | $80-$205 | $80-$110 | ||
Add back: | ||||
Interest expense | 110 | — | ||
Depreciation, amortization and accretion expense | 690 | 210 | ||
EBITDA (Non-GAAP)1 | $880-$1,005 | $290-$320 | ||
Add back or deduct: | ||||
(Gain) loss on asset disposals, net | 20 | — | ||
Adjusted EBITDA (Non-GAAP)1 | $900-$1,025 | $290-$320 | ||
Deduct: | ||||
Equity in earnings of unconsolidated entities | 165 | — | ||
Interest and dividend income | 10 | 10 | ||
Adjusted OIBDA (Non-GAAP)1 | $725-$850 | $280-$310 | ||
Actual Results | |||||||||||||||
Three Months Ended | Year Ended | ||||||||||||||
U.S. | TDS | U.S. | TDS | ||||||||||||
(Dollars in millions) | |||||||||||||||
Net income (GAAP) | $ | 72 | $ | 28 | $ | 133 | $ | 92 | |||||||
Add back: | |||||||||||||||
Income tax expense | 4 | 4 | 52 | 30 | |||||||||||
Income before income taxes (GAAP) | $ | 76 | $ | 31 | $ | 185 | $ | 122 | |||||||
Add back: | |||||||||||||||
Interest expense | 24 | (1) | 110 | (3) | |||||||||||
Depreciation, amortization and accretion expense | 177 | 52 | 702 | 200 | |||||||||||
EBITDA (Non-GAAP)1 | $ | 277 | $ | 82 | $ | 997 | $ | 320 | |||||||
Add back or deduct: | |||||||||||||||
(Gain) loss on asset disposals, net | 4 | — | 19 | (7) | |||||||||||
(Gain) loss on sale of business and other exit costs, net | — | — | (1) | — | |||||||||||
Adjusted EBITDA (Non-GAAP)1 | $ | 281 | $ | 82 | $ | 1,015 | $ | 313 | |||||||
Deduct: | |||||||||||||||
Equity in earnings of unconsolidated entities | 45 | — | 166 | — | |||||||||||
Interest and dividend income | 4 | 2 | 17 | 12 | |||||||||||
Other, net | 1 | — | — | — | |||||||||||
Adjusted OIBDA (Non-GAAP)1 | $ | 231 | $ | 80 | $ | 832 | $ | 300 | |||||||
Numbers may not foot due to rounding. | |
1 | EBITDA, Adjusted EBITDA and Adjusted OIBDA are defined as net income adjusted for the items set forth in the reconciliation above. EBITDA, Adjusted EBITDA and Adjusted OIBDA are not measures of financial performance under Generally Accepted Accounting Principles in the United States (GAAP) and should not be considered as alternatives to Net income or Cash flows from operating activities, as indicators of cash flows or as measures of liquidity. TDS does not intend to imply that any such items set forth in the reconciliation above are non-recurring, infrequent or unusual; such items may occur in the future. Management uses Adjusted EBITDA and Adjusted OIBDA as measurements of profitability, and therefore reconciliations to Net income are deemed appropriate. Management believes Adjusted EBITDA and Adjusted OIBDA are useful measures of TDS' operating results before significant recurring non-cash charges, gains and losses, and other items as presented above as they provide additional relevant and useful information to investors and other users of TDS' financial data in evaluating the effectiveness of its operations and underlying business trends in a manner that is consistent with management's evaluation of business performance. Adjusted EBITDA shows adjusted earnings before interest, taxes, depreciation, amortization and accretion, and gains and losses, while Adjusted OIBDA reduces this measure further to exclude Equity in earnings of unconsolidated entities and Interest and dividend income in order to more effectively show the performance of operating activities excluding investment activities. The table above reconciles EBITDA, Adjusted EBITDA and Adjusted OIBDA to the corresponding GAAP measure, Net income or Income before income taxes. Additional information and reconciliations related to Non-GAAP financial measures for March 31, 2020, can be found on TDS' website at investors.tdsinc.com. |
Conference Call Information
TDS will hold a conference call on May 1, 2020 at 9:00 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/1145/34504
- Access the call by phone at (833) 968-2187, conference ID: 1267888.
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, video and voice; and hosted and managed services to approximately 6 million connections nationwide through its businesses, U.S. Cellular, TDS Telecom, BendBroadband and OneNeck IT Solutions. Founded in 1969 and headquartered in Chicago, TDS employed 9,400 people as of March 31, 2020.
Visit investors.tdsinc.com for comprehensive financial information, including earnings releases, quarterly and annual filings, shareholder information and more.
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995: All information set forth in this news release, except historical and factual information, represents forward-looking statements. This includes all statements about the company's plans, beliefs, estimates, and expectations. These statements are based on current estimates, projections, and assumptions, which involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Important factors that may affect these forward-looking statements include, but are not limited to: the impact, duration and severity of the COVID-19 pandemic; 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.
The impact of the COVID-19 pandemic on TDS' business is uncertain, but depending on its duration and severity it could have a material adverse effect on TDS' business, financial condition or results of operations.
The impact of the recent global spread of COVID-19 on TDS' future operations is uncertain. Public health emergencies, such as COVID-19, pose the risk that TDS or its associates, agents, partners and suppliers may be unable to conduct business activities for an extended period of time and/or provide the level of service expected. TDS' ability to attract customers, maintain adequate supply chain and execute on its business strategies and initiatives could be negatively impacted by this outbreak. Additionally, COVID-19 has caused and could continue to cause increased unemployment, economic downturn and credit market deterioration, all of which could negatively impact TDS. The extent of the impact of COVID-19 on TDS' business, financial condition and results of operations will depend on future circumstances, including the severity of the disease, the duration of the outbreak, actions taken by governmental authorities and other possible direct and indirect consequences, all of which are uncertain and cannot be predicted.
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 | 3/31/2020 | 12/31/2019 | 9/30/2019 | 6/30/2019 | 3/31/2019 | ||||||||||||||
Retail Connections | |||||||||||||||||||
Postpaid | |||||||||||||||||||
Total at end of period | 4,359,000 | 4,383,000 | 4,395,000 | 4,414,000 | 4,440,000 | ||||||||||||||
Gross additions | 132,000 | 170,000 | 163,000 | 137,000 | 137,000 | ||||||||||||||
Feature phones | 2,000 | 2,000 | 3,000 | 5,000 | 4,000 | ||||||||||||||
Smartphones | 88,000 | 128,000 | 121,000 | 97,000 | 98,000 | ||||||||||||||
Connected devices | 42,000 | 40,000 | 39,000 | 35,000 | 35,000 | ||||||||||||||
Net additions (losses) | (26,000) | (12,000) | (19,000) | (26,000) | (32,000) | ||||||||||||||
Feature phones | (10,000) | (11,000) | (11,000) | (10,000) | (13,000) | ||||||||||||||
Smartphones | (10,000) | 13,000 | 9,000 | (1,000) | (1,000) | ||||||||||||||
Connected devices | (6,000) | (14,000) | (17,000) | (15,000) | (18,000) | ||||||||||||||
ARPU1 | $ | 47.23 | $ | 46.57 | $ | 46.16 | $ | 45.90 | $ | 45.44 | |||||||||
ARPA2 | $ | 122.92 | $ | 120.99 | $ | 119.87 | $ | 119.46 | $ | 118.84 | |||||||||
Churn rate3 | 1.21 | % | 1.38 | % | 1.38 | % | 1.23 | % | 1.26 | % | |||||||||
Handsets | 0.95 | % | 1.11 | % | 1.09 | % | 0.97 | % | 0.99 | % | |||||||||
Connected devices | 3.11 | % | 3.44 | % | 3.44 | % | 3.01 | % | 3.08 | % | |||||||||
Prepaid | |||||||||||||||||||
Total at end of period | 494,000 | 506,000 | 510,000 | 500,000 | 503,000 | ||||||||||||||
Gross additions | 57,000 | 63,000 | 70,000 | 61,000 | 61,000 | ||||||||||||||
Net additions (losses) | (12,000) | (3,000) | 9,000 | (2,000) | (13,000) | ||||||||||||||
ARPU1 | $ | 34.07 | $ | 34.11 | $ | 34.35 | $ | 34.43 | $ | 33.44 | |||||||||
Churn rate3 | 4.67 | % | 4.40 | % | 4.03 | % | 4.20 | % | 4.92 | % | |||||||||
Total connections at end of period4 | 4,903,000 | 4,941,000 | 4,957,000 | 4,967,000 | 4,995,000 | ||||||||||||||
Market penetration at end of period | |||||||||||||||||||
Consolidated operating population | 31,292,000 | 30,740,000 | 31,310,000 | 31,310,000 | 31,310,000 | ||||||||||||||
Consolidated operating penetration5 | 16 | % | 16 | % | 16 | % | 16 | % | 16 | % | |||||||||
Capital expenditures (millions) | $ | 236 | $ | 243 | $ | 170 | $ | 195 | $ | 102 | |||||||||
Total cell sites in service | 6,629 | 6,578 | 6,554 | 6,535 | 6,506 | ||||||||||||||
Owned towers | 4,184 | 4,166 | 4,123 | 4,116 | 4,106 | ||||||||||||||
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 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. | |
3 | 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. | |
4 | Includes reseller and other connections. | |
5 | 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 | 3/31/2020 | 12/31/2019 | 9/30/2019 | 6/30/2019 | 3/31/2019 | ||||||||||||||
TDS Telecom | |||||||||||||||||||
Wireline | |||||||||||||||||||
Residential connections | |||||||||||||||||||
Voice1 | 259,100 | 262,100 | 266,100 | 269,000 | 271,100 | ||||||||||||||
Broadband2 | 242,700 | 241,300 | 242,200 | 240,200 | 236,100 | ||||||||||||||
Video3 | 59,000 | 58,500 | 57,300 | 56,200 | 54,300 | ||||||||||||||
Wireline residential connections | 560,700 | 561,900 | 565,600 | 565,500 | 561,500 | ||||||||||||||
Total residential revenue per connection4 | $ | 50.12 | $ | 49.11 | $ | 49.02 | $ | 47.88 | $ | 48.16 | |||||||||
Commercial connections | |||||||||||||||||||
Voice1 | 114,400 | 117,800 | 121,200 | 124,200 | 127,300 | ||||||||||||||
Broadband2 | 20,500 | 20,400 | 20,600 | 20,600 | 20,400 | ||||||||||||||
managedIP5 | 118,300 | 121,200 | 124,500 | 128,300 | 132,000 | ||||||||||||||
Video3 | 100 | 100 | 400 | 400 | 400 | ||||||||||||||
Wireline commercial connections | 253,400 | 259,600 | 266,600 | 273,500 | 280,100 | ||||||||||||||
Total Wireline connections | 814,200 | 821,500 | 832,300 | 839,000 | 841,500 | ||||||||||||||
Cable | |||||||||||||||||||
Cable residential and commercial connections | |||||||||||||||||||
Broadband6 | 196,800 | 193,500 | 174,900 | 172,600 | 171,100 | ||||||||||||||
Video7 | 105,100 | 106,600 | 98,000 | 100,300 | 101,400 | ||||||||||||||
Voice8 | 68,900 | 69,500 | 63,900 | 64,800 | 65,400 | ||||||||||||||
managedIP5 | 1,400 | 1,300 | 1,200 | 1,100 | 1,100 | ||||||||||||||
Total Cable connections | 372,300 | 370,900 | 338,000 | 338,900 | 339,000 | ||||||||||||||
Numbers may not foot due to rounding. | |
1 | The individual circuits connecting a customer to Wireline's central office facilities that provide voice services. |
2 | The number of Wireline customers provided high-capacity data circuits via various technologies, including DSL and dedicated internet circuit technologies. |
3 | The number of Wireline customers provided video services. |
4 | Total residential revenue per connection is calculated by dividing total Wireline residential revenue by the average number of Wireline residential connections and by the number of months in the period. |
5 | The number of telephone handsets, data lines and IP trunks providing communications using IP networking technology. |
6 | Billable number of lines into a building for high-speed data services. |
7 | Generally, a home or business receiving video programming counts as one video connection. In counting bulk residential or commercial connections, such as an apartment building or hotel, connections are counted based on the number of units/rooms within the building receiving service. |
8 | Billable number of lines into a building for voice services. |
TDS Telecom | |||||||||||||||||||
Capital Expenditures (Unaudited) | |||||||||||||||||||
Quarter Ended | 3/31/2020 | 12/31/2019 | 9/30/2019 | 6/30/2019 | 3/31/2019 | ||||||||||||||
(Dollars in millions) | |||||||||||||||||||
Wireline | $ | 39 | $ | 98 | $ | 61 | $ | 55 | $ | 29 | |||||||||
Cable | 15 | 26 | 20 | 15 | 13 | ||||||||||||||
Total TDS Telecom | $ | 54 | $ | 124 | $ | 81 | $ | 70 | $ | 42 | |||||||||
Telephone and Data Systems, Inc. | ||||||||||
Consolidated Statement of Operations Highlights | ||||||||||
(Unaudited) | ||||||||||
Three Months Ended | ||||||||||
2020 | 2019 | 2020 | ||||||||
(Dollars and shares in millions, except per share amounts) | ||||||||||
Operating revenues | ||||||||||
U.S. Cellular | $ | 963 | $ | 966 | – | |||||
TDS Telecom | 240 | 230 | 4 | % | ||||||
All Other1 | 58 | 61 | (5) | % | ||||||
1,261 | 1,257 | – | ||||||||
Operating expenses | ||||||||||
U.S. Cellular | ||||||||||
Expenses excluding depreciation, amortization and accretion | 732 | 735 | – | |||||||
Depreciation, amortization and accretion | 177 | 169 | 5 | % | ||||||
(Gain) loss on asset disposals, net | 4 | 2 | 72 | % | ||||||
(Gain) loss on sale of business and other exit costs, net | — | (2) | N/M | |||||||
(Gain) loss on license sales and exchanges, net | — | (2) | N/M | |||||||
913 | 902 | 1 | % | |||||||
TDS Telecom | ||||||||||
Expenses excluding depreciation, amortization and accretion | 160 | 150 | 7 | % | ||||||
Depreciation, amortization and accretion | 52 | 50 | 2 | % | ||||||
(Gain) loss on asset disposals, net | — | (7) | N/M | |||||||
212 | 193 | 10 | % | |||||||
All Other1 | ||||||||||
Expenses excluding depreciation and amortization | 58 | 60 | (4) | % | ||||||
Depreciation and amortization | 6 | 8 | (23) | % | ||||||
64 | 68 | (6) | % | |||||||
Total operating expenses | 1,189 | 1,163 | 2 | % | ||||||
Operating income (loss) | ||||||||||
U.S. Cellular | 50 | 64 | (22) | % | ||||||
TDS Telecom | 28 | 37 | (23) | % | ||||||
All Other1 | (6) | (7) | 10 | % | ||||||
72 | 94 | (23) | % | |||||||
Investment and other income (expense) | ||||||||||
Equity in earnings of unconsolidated entities | 45 | 44 | 3 | % | ||||||
Interest and dividend income | 6 | 9 | (30) | % | ||||||
Interest expense | (37) | (43) | 14 | % | ||||||
Total investment and other income | 14 | 10 | 41 | % | ||||||
Income before income taxes | 86 | 104 | (17) | % | ||||||
Income tax expense | 3 | 34 | (89) | % | ||||||
Net income | 83 | 70 | 18 | % | ||||||
Less: Net income attributable to noncontrolling interests, net of tax | 14 | 11 | 25 | % | ||||||
Net income attributable to TDS shareholders | $ | 69 | $ | 59 | 17 | % | ||||
Basic weighted average shares outstanding | 115 | 114 | 1 | % | ||||||
Basic earnings per share attributable to TDS shareholders | $ | 0.60 | $ | 0.52 | 16 | % | ||||
Diluted weighted average shares outstanding | 116 | 116 | – | |||||||
Diluted earnings per share attributable to TDS shareholders | $ | 0.59 | $ | 0.50 | 17 | % | ||||
N/M - Percentage change not meaningful. | |
Numbers may not foot due to rounding. | |
1 | 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) | |||||||
Three Months Ended | |||||||
2020 | 2019 | ||||||
(Dollars in millions) | |||||||
Cash flows from operating activities | |||||||
Net income | $ | 83 | $ | 70 | |||
Add (deduct) adjustments to reconcile net income to net cash flows from operating activities | |||||||
Depreciation, amortization and accretion | 235 | 227 | |||||
Bad debts expense | 34 | 25 | |||||
Stock-based compensation expense | 11 | 13 | |||||
Deferred income taxes, net | 75 | 25 | |||||
Equity in earnings of unconsolidated entities | (45) | (44) | |||||
Distributions from unconsolidated entities | 25 | 19 | |||||
(Gain) loss on asset disposals, net | 4 | (5) | |||||
(Gain) loss on sale of business and other exit costs, net | — | (2) | |||||
(Gain) loss on license sales and exchanges, net | — | (2) | |||||
Other operating activities | — | 1 | |||||
Changes in assets and liabilities from operations | |||||||
Accounts receivable | 43 | 28 | |||||
Equipment installment plans receivable | 23 | (10) | |||||
Inventory | (52) | (15) | |||||
Accounts payable | 87 | 46 | |||||
Customer deposits and deferred revenues | (9) | 5 | |||||
Accrued taxes | (74) | 9 | |||||
Accrued interest | 9 | 11 | |||||
Other assets and liabilities | (82) | (74) | |||||
Net cash provided by operating activities | 367 | 327 | |||||
Cash flows from investing activities | |||||||
Cash paid for additions to property, plant and equipment | (377) | (155) | |||||
Cash paid for licenses | (26) | (1) | |||||
Cash received from investments | — | 2 | |||||
Cash paid for investments | (1) | (1) | |||||
Cash received from divestitures and exchanges | — | 31 | |||||
Advance payments for license acquisitions | — | (135) | |||||
Net cash used in investing activities | (404) | (259) | |||||
Cash flows from financing activities | |||||||
Issuance of long-term debt | 50 | — | |||||
Repayment of long-term debt | (2) | (5) | |||||
TDS Common Shares reissued for benefit plans, net of tax payments | (1) | (3) | |||||
U.S. Cellular Common Shares reissued for benefit plans, net of tax payments | — | (1) | |||||
Repurchase of TDS Common Shares | (6) | — | |||||
Repurchase of U.S. Cellular Common Shares | (21) | — | |||||
Dividends paid to TDS shareholders | (19) | (19) | |||||
Distributions to noncontrolling interests | (1) | (1) | |||||
Other financing activities | (3) | — | |||||
Net cash used in financing activities | (3) | (29) | |||||
Net increase (decrease) in cash, cash equivalents and restricted cash | (40) | 39 | |||||
Cash, cash equivalents and restricted cash | |||||||
Beginning of period | 474 | 927 | |||||
End of period | $ | 434 | $ | 966 | |||
Telephone and Data Systems, Inc. | |||||||
Consolidated Balance Sheet Highlights | |||||||
(Unaudited) | |||||||
ASSETS | |||||||
March 31, 2020 | December 31, 2019 | ||||||
(Dollars in millions) | |||||||
Current assets | |||||||
Cash and cash equivalents | $ | 421 | $ | 465 | |||
Accounts receivable, net | 1,052 | 1,124 | |||||
Inventory, net | 218 | 169 | |||||
Prepaid expenses | 115 | 98 | |||||
Income taxes receivable | 111 | 36 | |||||
Other current assets | 33 | 29 | |||||
Total current assets | 1,950 | 1,921 | |||||
Licenses | 2,511 | 2,480 | |||||
Goodwill | 547 | 547 | |||||
Other intangible assets, net | 232 | 239 | |||||
Investments in unconsolidated entities | 509 | 488 | |||||
Property, plant and equipment, net | 3,595 | 3,527 | |||||
Operating lease right-of-use assets | 975 | 972 | |||||
Other assets and deferred charges | 576 | 607 | |||||
Total assets | $ | 10,895 | $ | 10,781 | |||
Telephone and Data Systems, Inc. | |||||||
Consolidated Balance Sheet Highlights | |||||||
(Unaudited) | |||||||
LIABILITIES AND EQUITY | |||||||
March 31, 2020 | December 31, 2019 | ||||||
(Dollars in millions, except per share amounts) | |||||||
Current liabilities | |||||||
Current portion of long-term debt | $ | 8 | $ | 10 | |||
Accounts payable | 378 | 374 | |||||
Customer deposits and deferred revenues | 181 | 189 | |||||
Accrued interest | 19 | 11 | |||||
Accrued taxes | 38 | 41 | |||||
Accrued compensation | 77 | 121 | |||||
Short-term operating lease liabilities | 121 | 116 | |||||
Other current liabilities | 78 | 100 | |||||
Total current liabilities | 900 | 962 | |||||
Deferred liabilities and credits | |||||||
Deferred income tax liability, net | 750 | 676 | |||||
Long-term operating lease liabilities | 929 | 931 | |||||
Other deferred liabilities and credits | 491 | 481 | |||||
Long-term debt, net | 2,365 | 2,316 | |||||
Noncontrolling interests with redemption features | 11 | 11 | |||||
Equity | |||||||
TDS shareholders' equity | |||||||
Series A Common and Common Shares, par value $.01 per share | 1 | 1 | |||||
Capital in excess of par value | 2,489 | 2,468 | |||||
Treasury shares, at cost | (480) | (479) | |||||
Accumulated other comprehensive loss | (8) | (9) | |||||
Retained earnings | 2,718 | 2,672 | |||||
Total TDS shareholders' equity | 4,720 | 4,653 | |||||
Noncontrolling interests | 729 | 751 | |||||
Total equity | 5,449 | 5,404 | |||||
Total liabilities and equity | $ | 10,895 | $ | 10,781 | |||
Balance Sheet Highlights | |||||||||||||||||||
(Unaudited) | |||||||||||||||||||
March 31, 2020 | |||||||||||||||||||
U.S. | TDS | TDS | Intercompany | TDS | |||||||||||||||
Cellular | Telecom | & Other | Eliminations | Consolidated | |||||||||||||||
(Dollars in millions) | |||||||||||||||||||
Cash and cash equivalents | $ | 258 | $ | 26 | $ | 137 | $ | — | $ | 421 | |||||||||
Affiliated cash investments | — | 488 | — | (488) | — | ||||||||||||||
$ | 258 | $ | 514 | $ | 137 | $ | (488) | $ | 421 | ||||||||||
Licenses, goodwill and other intangible assets | $ | 2,502 | $ | 778 | $ | 10 | $ | — | $ | 3,290 | |||||||||
Investment in unconsolidated entities | 469 | 4 | 46 | (10) | 509 | ||||||||||||||
$ | 2,971 | $ | 782 | $ | 56 | $ | (10) | $ | 3,799 | ||||||||||
Property, plant and equipment, net | $ | 2,268 | $ | 1,222 | $ | 105 | $ | — | $ | 3,595 | |||||||||
Long-term debt, net: | |||||||||||||||||||
Current portion | $ | 6 | $ | 1 | $ | 1 | $ | — | $ | 8 | |||||||||
Non-current portion | 1,503 | 4 | 858 | — | 2,365 | ||||||||||||||
$ | 1,509 | $ | 5 | $ | 859 | $ | — | $ | 2,373 | ||||||||||
TDS Telecom Highlights | ||||||||||||||
(Unaudited) | ||||||||||||||
Three Months Ended | ||||||||||||||
2020 | 2019 | 2020 vs. 2019 | ||||||||||||
(Dollars in millions) | ||||||||||||||
Wireline | ||||||||||||||
Operating revenues | ||||||||||||||
Residential | $ | 84 | $ | 81 | 4 | % | ||||||||
Commercial | 39 | 43 | (10) | % | ||||||||||
Wholesale | 46 | 46 | – | |||||||||||
Total service revenues | 169 | 170 | (1) | % | ||||||||||
Equipment and product sales | — | — | (43) | % | ||||||||||
169 | 171 | (1) | % | |||||||||||
Operating expenses | ||||||||||||||
Cost of services | 65 | 63 | 4 | % | ||||||||||
Cost of equipment and products | — | — | (46) | % | ||||||||||
Selling, general and administrative expenses | 48 | 47 | 3 | % | ||||||||||
Expenses excluding depreciation, amortization and accretion | 114 | 110 | 3 | % | ||||||||||
Depreciation, amortization and accretion | 32 | 34 | (4) | % | ||||||||||
(Gain) loss on asset disposals, net | — | (7) | N/M | |||||||||||
146 | 136 | 7 | % | |||||||||||
Operating income | $ | 23 | $ | 34 | (32) | % | ||||||||
Cable | ||||||||||||||
Operating revenues | ||||||||||||||
Residential | $ | 60 | $ | 49 | 20 | % | ||||||||
Commercial | 11 | 10 | 11 | % | ||||||||||
71 | 60 | 19 | % | |||||||||||
Operating expenses | ||||||||||||||
Cost of services | 30 | 26 | 17 | % | ||||||||||
Selling, general and administrative expenses | 17 | 14 | 16 | % | ||||||||||
Expenses excluding depreciation, amortization and accretion | 47 | 40 | 17 | % | ||||||||||
Depreciation, amortization and accretion | 19 | 17 | 15 | % | ||||||||||
(Gain) loss on asset disposals, net | — | — | (87) | % | ||||||||||
66 | 57 | 15 | % | |||||||||||
Operating income (loss) | $ | 5 | $ | 2 | N/M | |||||||||
Total TDS Telecom operating income | $ | 28 | $ | 37 | (23) | % | ||||||||
N/M - Percentage change not meaningful. |
Numbers may not foot due to rounding. |
Telephone and Data Systems, Inc. | |||||||
Financial Measures and Reconciliations | |||||||
(Unaudited) | |||||||
Free Cash Flow | |||||||
Three Months Ended | |||||||
2020 | 2019 | ||||||
(Dollars in millions) | |||||||
Cash flows from operating activities (GAAP) | $ | 367 | $ | 327 | |||
Less: Cash paid for additions to property, plant and equipment | 377 | 155 | |||||
Free cash flow (Non-GAAP)1 | $ | (10) | $ | 172 | |||
1 | Free cash flow is a non-GAAP financial measure which TDS believes may be useful to investors and other users of its financial information in evaluating liquidity, specifically, the amount of net cash generated by business operations after deducting Cash paid for additions to property, plant and equipment. |
SOURCE Telephone and Data Systems, Inc.
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