TDS reports fourth quarter and full year 2015 results

Provides 2016 guidance

As previously announced, TDS will hold a teleconference February 19, 2016 at 9:30 a.m. CST. Interested parties may listen to the call live via the Events & Presentations page of investors.tdsinc.com.

Feb 19, 2016, 08:00 ET from Telephone and Data Systems, Inc.

CHICAGO, Feb. 19, 2016 /PRNewswire/ -- Telephone and Data Systems, Inc. (NYSE: TDS) reported total operating revenues of $1,274.5 million for the fourth quarter of 2015, versus $1,297.1 million for the comparable period one year ago. Net loss attributable to TDS shareholders and related diluted earnings per share improved to $0.8 million and $0.01, respectively, for the fourth quarter of 2015, compared to $16.6 million and $0.15, respectively, in the comparable period one year ago. 

TDS reported total operating revenues of $5,176.2 million and $5,009.4 million for the years ended 2015 and 2014, respectively.  Net income (loss) attributed to TDS shareholders and related diluted earnings per share were $219.0 million and $1.98, respectively, for the year ended 2015, compared to $(136.4) and $(1.26), respectively, for the year ended 2014.

"Our businesses made substantial progress in 2015," said LeRoy T. Carlson, Jr., TDS president and CEO. "U.S. Cellular completed deployment of its high-quality 4G LTE network, further enhancing its strong data capabilities. TDS Telecom successfully expanded its fiber and cable broadband networks. Both businesses generated improved financial results.

"At U.S. Cellular, our excellent network and competitive plans, devices, and pricing helped improve already high-levels of customer loyalty and generated new customer growth. Sales of shared data plans and connected devices such as tablets generated additional data revenue. U.S. Cellular plans to build on its successful 4G LTE deployment with the availability of national 4G LTE roaming and new investments in technologies such as Voice over LTE.

"TDS Telecom performed well in 2015.  Our investments in fiber deployment generated impressive results with competitively priced bundles driving increased customer loyalty and higher revenue per customer. TDS Telecom's wireline segment is on track to deploy fiber to approximately 25 percent of its customers' homes by mid-year. Our cable business was successful in growing broadband customers, and we continue to look for attractive cable acquisitions. OneNeck IT Solutions generated strong equipment sales growth, and is working to more rapidly grow recurring service revenues as it executes its mid-market-focused IT strategy.

"TDS continues to return value to shareholders through dividends. This morning we announced our 42nd consecutive year of increasing cash dividend payments."

2016 Estimated Results Estimates of full-year 2016 results for U.S. Cellular, TDS Telecom, and TDS are shown below.  Such estimates represent management's view as of February 19, 2016.  Such forward-looking statements should not be assumed to be current as of any future date.  TDS undertakes no duty to update such information, whether as a result of new information, future events, or otherwise.  There can be no assurance that final results will not differ materially from such estimated results.

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

U.S. Cellular

TDS Telecom

TDS (2)

Estimate

Actual

Estimate

Actual

Estimate

Actual

(Dollars in millions)

Total operating revenues

$3,900-$4,100

$

3,997

$1,130-$1,180

$

1,158

$5,040-$5,290

$

5,176

Operating cash flow (1)

$525-$650

$

675

$270-$310

$

304

$800-$965

$

981

Adjusted EBITDA (1)

$725-$850

$

852

$270-$310

$

306

$1,000-$1,165

$

1,160

Capital expenditures

Approx. $

500

$

533

Approx. $

180

$

219

Approx. $

695

$

759

 

The following table provides a reconciliation to Operating Cash Flow and Adjusted EBITDA for 2016 estimated results, and actual results for the year ended December 31, 2015:

U.S. Cellular

TDS Telecom

TDS (2)

Estimate (3)

Actual

Estimate (3)

Actual

Estimate (3)

Actual

(Dollars in millions)

Net income (loss) (GAAP)

N/A

247

N/A

46

N/A

263

Add back:

Income tax expense (benefit)

N/A

156

N/A

35

N/A

172

Income (loss) before income taxes

(GAAP)

$

0-125

$

404

$

40-80

$

81

$

(20)-145

$

435

Add back:

Interest expense

105

86

1

165

142

Depreciation, amortization and accretion expense

600

606

230

228

835

844

EBITDA

$

705-830

$

1,096

$

270-310

$

310

$

980-1,145

$

1,421

Add back:

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

(114)

(10)

(136)

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

(147)

(147)

(Gain) loss on asset disposals, net

20

16

6

20

22

Adjusted EBITDA (1)

$

725-850

$

852

$

270-310

$

306

$

1,000-1,165

$

1,160

Deduct:

Equity in earnings of unconsolidated entities

(140)

(140)

(140)

(140)

Interest and dividend income; other income

(60)

(37)

(2)

(60)

(39)

Operating cash flow (1)(4)

$

525-650

$

675

$

270-310

$

304

$

800-965

$

981

Note:

Totals may not foot due to rounding differences.

(1)

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

(2)

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

(3)

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

(4)

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

(5)

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

 

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

Repurchase Period

# Shares

Cost (in millions)

2015 (full year)

$

2014 (full year)

1,541,850

$

39.1

Total

1,541,850

$

39.1

 

Conference Call Information TDS will hold a conference call on February 19, 2016 at 9:30 a.m. Central Time.

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

About TDS Telephone and Data Systems, Inc. (TDS), a Fortune 1000TM company, provides wireless; broadband, video and voice; and hosted and managed services to approximately 6.1 million customers nationwide through its businesses, U.S. Cellular, TDS Telecom, OneNeck IT Solutions, and BendBroadband. Founded in 1969 and headquartered in Chicago, TDS employed 10,400 people as of December 31, 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: intense competition; the ability to execute TDS' business strategy; uncertainties in TDS' future cash flows and liquidity and access to the capital markets; the ability to make payments on TDS and U.S. Cellular indebtedness or comply with the terms of debt covenants; impacts of any pending acquisitions/divestures/exchanges of properties and/or licenses,  including, but not limited to, the ability to obtain regulatory approvals, successfully complete the transactions and the financial impacts of such transactions; the ability of the company to successfully manage and grow its markets; the overall economy; the access to and pricing of unbundled network elements; the ability to obtain or maintain roaming arrangements with other carriers on acceptable terms; the state and federal telecommunications regulatory environment; the value of assets and investments; adverse changes in the ratings afforded TDS and U.S. Cellular debt securities by accredited ratings organizations; industry consolidation; advances in telecommunications technology; pending and future litigation; changes in income tax rates, laws, regulations or rulings; changes in customer growth rates, average monthly revenue per user, churn rates, roaming revenue and terms, the availability of wireless devices, or the mix of products and services offered by U.S. Cellular and TDS Telecom. Investors are encouraged to consider these and other risks and uncertainties that are discussed in the Form 8-K Current Report used by TDS to furnish this press release to the Securities and Exchange Commission ("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

12/31/2015

9/30/2015

6/30/2015

3/31/2015

12/31/2014

Retail Customers

Postpaid

Total at end of period

4,409,000

4,341,000

4,324,000

4,307,000

4,298,000

Gross additions

240,000

200,000

191,000

200,000

302,000

Net additions (losses)

68,000

17,000

17,000

9,000

98,000

ARPU (1)(11)

$

51.46

$

58.12

$

53.62

$

54.87

$

56.51

ABPU (2)(11)

$

58.57

$

63.88

$

58.08

$

58.50

$

59.13

ARPA (3)(11)

$

131.96

$

147.00

$

133.85

$

134.94

$

136.13

ABPA (4)(11)

$

150.19

$

161.57

$

144.99

$

143.86

$

142.44

Churn rate (5)

1.3%

1.4%

1.3%

1.5%

1.6%

Smartphone penetration (6)

74%

72%

69%

67%

65%

Prepaid

Total at end of period

387,000

380,000

368,000

360,000

348,000

Gross additions

69,000

71,000

65,000

73,000

60,000

Net additions (losses)

7,000

12,000

8,000

12,000

(2,000)

ARPU (1)(11)

$

35.54

$

35.64

$

35.98

$

35.72

$

35.33

Churn rate (5)

5.4%

5.2%

5.2%

5.8%

5.9%

Total customers at end of period

4,876,000

4,807,000

4,779,000

4,775,000

4,760,000

Billed ARPU (1)(11)

$

49.40

$

55.42

$

51.29

$

52.29

$

53.63

Service revenue ARPU (1)(11)

$

55.31

$

62.31

$

57.55

$

58.01

$

60.10

Smartphones sold as a percent of total handsets sold

91%

87%

87%

86%

87%

Total population

Consolidated markets (7)(10)

50,520,000

50,313,000

52,809,000

52,822,000

58,840,000

Consolidated operating markets (7)

31,967,000

31,814,000

31,814,000

31,814,000

31,729,000

Market penetration at end of period

Consolidated markets (8)

10%

10%

9%

9%

8%

Consolidated operating markets (8)

15%

15%

15%

15%

15%

Capital expenditures (000s)

$

198,111

$

134,816

$

133,666

$

66,460

$

181,655

Total cell sites in service

6,297

6,246

6,223

6,219

6,220

Owned towers (9)

3,978

3,957

3,940

3,936

4,280

(1)

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

a.

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

b.

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

c.

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

d.

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

(2)

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

(3)

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

(4)

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

(5)

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

(6)

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

(7)

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

(8)

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

(9)

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

(10)

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

(11)

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

 

 

TDS Telecom

Summary Operating Data (Unaudited)

Quarter Ended

12/31/2015

9/30/2015

6/30/2015

3/31/2015

12/31/2014

TDS Telecom

Wireline

Residential connections

Voice (1)

319,800

325,900

329,000

333,400

335,900

Broadband (2)

228,500

231,600

231,200

229,400

229,200

IPTV (3)

34,400

30,300

27,900

25,600

23,400

   Wireline residential connections

582,700

587,800

588,100

588,400

588,500

Total residential revenue per connection (4)

$

41.24

$

42.83

$

42.10

$

42.32

$

41.56

Commercial connections

Voice (1)

171,500

176,700

181,800

187,500

193,200

Broadband (2)

22,400

23,000

23,700

24,300

24,700

managedIP (5)

147,100

145,900

145,100

143,200

140,200

   Wireline commercial connections

341,000

345,600

350,600

355,000

358,100

Total Wireline connections

923,700

933,400

938,700

943,400

946,600

Cable

Cable Connections

Video (6)

106,800

108,300

109,100

109,700

110,400

Broadband (7)

117,100

114,600

112,300

112,200

110,900

Voice (7)

56,400

54,000

51,500

49,100

46,000

   Cable connections

280,300

276,900

272,900

271,000

267,300

(1)

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

(2)

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

(3)

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

(4)

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

(5)

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

(6)

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

(7)

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

 

TDS Telecom

Capital Expenditures (000s)

Quarter Ended

12/31/2015

9/30/2015

6/30/2015

3/31/2015

12/31/2014

Wireline

$

49,900

$

38,400

$

31,700

$

20,400

$

51,400

Cable

15,000

13,000

11,900

11,600

14,600

HMS

7,700

5,100

9,400

4,900

13,400

$

72,600

$

56,500

$

53,000

$

36,900

$

79,400

 

Telephone and Data Systems, Inc.

Consolidated Statement of Operations Highlights

Three Months Ended December 31,

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

Change

2015

2014

Amount

Percent

Operating revenues

U.S. Cellular

$

987,035

$

1,008,744

$

(21,709)

(2)%

TDS Telecom

283,871

281,889

1,982

1%

All Other (1)

3,549

6,428

(2,879)

(45)%

1,274,455

1,297,061

(22,606)

(2)%

Operating expenses

U.S. Cellular

Expenses excluding depreciation, amortization and accretion

849,895

939,331

(89,436)

(10)%

Depreciation, amortization and accretion

156,420

140,955

15,465

11%

(Gain) loss on asset disposals, net

4,045

4,695

(650)

(14)%

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

270

(5,136)

5,406

>100%

(Gain) loss on license sales and exchanges, net

(21,547)

21,547

N/M

1,010,630

1,058,298

(47,668)

(5)%

TDS Telecom

Expenses excluding depreciation, amortization and accretion

213,864

205,825

8,039

4%

Depreciation, amortization and accretion

57,713

58,394

(681)

(1)%

(Gain) loss on asset disposals, net

3,083

2,060

1,023

50%

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

(6,371)

(156)

(6,215)

>(100)%

268,289

266,123

2,166

1%

All Other (1)

Expenses excluding depreciation and amortization

4,719

4,039

680

17%

Depreciation and amortization

1,785

2,168

(383)

(18)%

Loss on impairment of assets

3,802

(3,802)

N/M

(Gain) loss on asset disposals, net

150

(150)

N/M

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

145

(1,475)

1,620

>100%

6,649

8,684

(2,035)

(23)%

Total operating expenses

1,285,568

1,333,105

(47,537)

(4)%

Operating income (loss)

U.S. Cellular

(23,595)

(49,554)

25,959

52%

TDS Telecom

15,582

15,766

(184)

(1)%

All Other (1)

(3,100)

(2,256)

(844)

(37)%

(11,113)

(36,044)

24,931

69%

Investment and other income (expense)

Equity in earnings of unconsolidated entities

30,253

23,767

6,486

27%

Interest and dividend income

10,664

7,194

3,470

48%

Interest expense

(38,927)

(27,622)

(11,305)

(41)%

Other, net

249

(164)

413

>100%

Total investment and other income

2,239

3,175

(936)

(29)%

Loss before income taxes

(8,874)

(32,869)

23,995

73%

Income tax expense (benefit)

(6,788)

(12,208)

5,420

44%

Net loss

(2,086)

(20,661)

18,575

90%

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

(1,254)

(4,120)

2,866

70%

Net loss attributable to TDS shareholders

(832)

(16,541)

15,709

95%

TDS Preferred dividend requirement

(12)

(12)

-

Net loss available to common shareholders

$

(844)

$

(16,553)

$

15,709

95%

Basic weighted average shares outstanding

109,067

107,995

1,072

1%

Basic earnings (loss) per share attributable to TDS shareholders

$

(0.01)

$

(0.15)

$

0.15

95%

Diluted weighted average shares outstanding

109,067

107,995

1,072

1%

Diluted earnings (loss) per share attributable to TDS shareholders

$

(0.01)

$

(0.15)

$

0.14

88%

(1)

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

N/M – Percentage change not meaningful

 

Telephone and Data Systems, Inc.

Consolidated Statement of Operations Highlights

Twelve Months Ended December 31,

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

Change

2015

2014

Amount

Percent

Operating revenues

U.S. Cellular

$

3,996,853

$

3,892,747

$

104,106

3%

TDS Telecom

1,158,043

1,088,312

69,731

6%

All Other (1)

21,345

28,379

(7,034)

(25)%

5,176,241

5,009,438

166,803

3%

Operating expenses

U.S. Cellular

Expenses excluding depreciation, amortization and accretion

3,321,582

3,554,494

(232,912)

(7)%

Depreciation, amortization and accretion

606,455

605,997

458

-

(Gain) loss on asset disposals, net

16,313

21,469

(5,156)

(24)%

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

(113,555)

(32,830)

(80,725)

>(100)%

(Gain) loss on license sales and exchanges, net

(146,884)

(112,993)

(33,891)

(30)%

3,683,911

4,036,137

(352,226)

(9)%

TDS Telecom

Expenses excluding depreciation, amortization and accretion

854,179

792,687

61,492

8%

Depreciation, amortization and accretion

228,060

219,599

8,461

4%

Loss on impairment of assets

84,000

(84,000)

N/M

(Gain) loss on asset disposals, net

5,874

4,754

1,120

24%

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

(9,530)

(2,357)

(7,173)

1,078,583

1,098,683

(20,100)

(2)%

All Other (1)

Expenses excluding depreciation and amortization

19,643

30,095

(10,452)

(35)%

Depreciation and amortization

9,846

10,936

(1,090)

(10)%

Loss on impairment of assets

3,802

(3,802)

N/M

(Gain) loss on asset disposals, net

(11)

308

(319)

>(100)%

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

(12,802)

19,341

(32,143)

>(100)%

16,676

64,482

(47,806)

(74)%

Total operating expenses

4,779,170

5,199,302

(420,132)

(8)%

Operating income (loss)

U.S. Cellular

312,942

(143,390)

456,332

>100%

TDS Telecom

79,460

(10,371)

89,831

>100%

All Other (1)

4,669

(36,103)

40,772

>100%

397,071

(189,864)

586,935

>100%

Investment and other income (expense)

Equity in earnings of unconsolidated entities

140,076

131,965

8,111

6%

Interest and dividend income

38,783

16,957

21,826

>100%

Interest expense

(141,719)

(111,397)

(30,322)

(27)%

Other, net

391

115

276

>100%

Total investment and other income

37,531

37,640

(109)

-

Income (loss) before income taxes

434,602

(152,224)

586,826

>100%

Income tax expense (benefit)

171,992

(4,932)

176,924

>100%

Net income (loss)

262,610

(147,292)

409,902

>100%

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

43,573

(10,937)

54,510

>100%

Net income (loss) attributable to TDS shareholders

219,037

(136,355)

355,392

>100%

TDS Preferred dividend requirement

(49)

(49)

-

Net income (loss) available to common shareholders

$

218,988

$

(136,404)

$

355,392

>100%

Basic weighted average shares outstanding

108,645

108,485

160

-

Basic earnings (loss) per share attributable to TDS shareholders

$

2.02

$

(1.26)

$

3.28

N/M

Diluted weighted average shares outstanding

109,910

108,485

1,425

1%

Diluted earnings (loss) per share attributable to TDS shareholders

$

1.98

$

(1.26)

$

3.24

>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 $20.2 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

December 31,

December 31,

2015

2014

Current assets

Cash and cash equivalents

$

984,643

$

471,901

Accounts receivable from customers and others, net

802,856

683,681

Inventory, net

158,222

273,707

Net deferred income tax asset

107,686

Prepaid expenses

112,235

86,506

Income taxes receivable

70,094

113,708

Other current assets

30,293

29,766

2,158,343

1,766,955

Assets held for sale

103,343

Licenses

1,844,348

1,453,574

Goodwill

765,792

771,352

Franchise rights

244,180

244,300

Other intangible assets, net

46,525

64,499

Investments in unconsolidated entities

401,720

321,729

Other investments

616

508

Property, plant and equipment, net

3,764,477

3,846,125

Other assets and deferred charges (1)

196,461

282,037

Total assets

$

9,422,462

$

8,854,422

(1)

TDS reclassified unamortized debt issuance costs of $52.5 million as of December 31, 2014 from Other assets and deferred charges to Long-term debt, net due to early adoption of ASU 2015-03.

 

Telephone and Data Systems, Inc.

Consolidated Balance Sheet Highlights

(Unaudited, dollars in thousands)

LIABILITIES AND EQUITY

December 31,

December 31,

2015

2014

Current liabilities

Current portion of long-term debt

$

14,306

$

808

Accounts payable

348,737

387,125

Customer deposits and deferred revenues

288,412

324,318

Accrued interest

11,962

7,919

Accrued taxes

40,569

46,734

Accrued compensation

113,375

114,549

Other current liabilities

127,023

181,803

944,384

1,063,256

Liabilities held for sale

21,643

Deferred liabilities and credits

Net deferred income tax liability

900,054

941,519

Other deferred liabilities and credits

432,949

430,774

Long-term debt, net (1)

2,439,827

1,941,069

Noncontrolling interests with redemption features

1,097

1,150

Equity

TDS shareholders' equity

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

1,328

1,327

Capital in excess of par value

2,363,558

2,336,511

Treasury shares, at cost

(727,182)

(748,199)

Accumulated other comprehensive income

355

6,452

Retained earnings

2,487,491

2,330,187

 Total TDS shareholders' equity

4,125,550

3,926,278

Preferred shares

824

824

Noncontrolling interests

577,777

527,909

Total equity

4,704,151

4,455,011

Total liabilities and equity

$

9,422,462

$

8,854,422

(1)

TDS reclassified unamortized debt issuance costs of $52.5 million as of December 31, 2014 from Other assets and deferred charges to Long-term debt, net due to early adoption of ASU 2015-03.

 

Balance Sheet Highlights

December 31, 2015

(Unaudited, dollars in thousands)

U.S.

TDS

TDS Corporate

Intercompany

TDS

Cellular

Telecom

& Other

Eliminations

Consolidated

Cash and cash equivalents

$

715,376

$

40,303

$

228,964

$

$

984,643

Affiliated cash investments

298,472

(298,472)

$

715,376

$

338,775

$

228,964

$

(298,472)

$

984,643

Licenses, goodwill and other intangible assets

$

2,203,808

$

835,149

$

(138,112)

$

$

2,900,845

Investment in unconsolidated entities

363,383

3,802

39,888

(5,353)

401,720

Long-term and other investments

423

193

616

$

2,567,191

$

839,374

$

(98,031)

$

(5,353)

$

3,303,181

Property, plant and equipment, net

$

2,648,933

$

1,093,790

$

21,963

$

(209)

$

3,764,477

Long-term debt:

Current portion

$

11,313

$

25

$

2,968

$

$

14,306

Non-current portion, net

1,628,507

1,399

809,921

2,439,827

$

1,639,820

$

1,424

$

812,889

$

$

2,454,133

 

Telephone and Data Systems, Inc.

Consolidated Statement of Cash Flows

Twelve Months Ended December 31,

(Unaudited, dollars in thousands)

2015

2014

Cash flows from operating activities

Net income (loss)

$

262,610

$

(147,292)

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

Depreciation, amortization and accretion

844,361

836,532

Bad debts expense

112,292

107,861

Stock-based compensation expense

40,400

35,793

Deferred income taxes, net

70,849

71,713

Equity in earnings of unconsolidated entities

(140,076)

(131,965)

Distributions from unconsolidated entities

60,060

112,349

Loss on impairment of assets

87,802

(Gain) loss on asset disposals, net

22,176

26,531

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

(135,887)

(15,846)

(Gain) loss on license sales and exchanges, net

(146,884)

(112,993)

Noncash interest expense

2,760

1,642

Other operating activities

(769)

(641)

Changes in assets and liabilities from operations

Accounts receivable

(120,230)

17,629

Equipment installment plans receivable

(133,734)

(188,829)

Inventory

115,482

(29,149)

Accounts payable

7,245

(117,264)

Customer deposits and deferred revenues

(35,850)

33,952

Accrued taxes

38,259

(122,921)

Accrued interest

4,046

1,277

Other assets and liabilities

(77,416)

(71,369)

   Net cash provided by operating activities

789,694

394,812

Cash flows from investing activities

Cash used for additions to property, plant and equipment

(800,628)

(799,496)

Cash paid for acquisitions and licenses

(286,861)

(295,253)

Cash received from divestitures and exchanges

342,870

187,645

Cash received for investments

50,000

Federal Communications Commission deposit

(60,000)

Other investing activities

6,932

7,360

   Net cash used in investing activities

(737,687)

(909,744)

Cash flows from financing activities

Repayment of long-term debt

(816)

(1,072)

Issuance of long-term debt

525,000

275,000

Repayment of borrowing under revolving credit facility

(150,000)

Borrowing under revolving credit facility

150,000

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

13,329

(2,019)

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

2,167

830

Repurchase of TDS Common Shares

(39,096)

Repurchase of U.S. Cellular Common Shares

(6,188)

(18,943)

Dividends paid to TDS shareholders

(61,219)

(58,040)

Payment of debt issuance costs

(13,026)

(10,215)

Distributions to noncontrolling interests

(6,369)

(627)

Payments to acquire additional interest in subsidiaries

(3,983)

Other financing activities

11,840

11,001

   Net cash provided by financing activities

460,735

156,819

Net increase (decrease) in cash and cash equivalents

512,742

(358,113)

Cash and cash equivalents

Beginning of period

471,901

830,014

End of period

$

984,643

$

471,901

 

TDS Telecom Highlights

Three Months Ended December 31,

(Unaudited, dollars in thousands)

Change

2015

2014

Amount

Percent

Wireline

Operating revenues

Residential

$

72,473

$

73,538

$

(1,065)

(1)%

Commercial

54,445

56,675

(2,230)

(4)%

Wholesale

46,337

49,493

(3,156)

(6)%

Total service revenues

173,255

179,706

(6,451)

(4)%

Equipment and product sales

487

427

60

14%

173,742

180,133

(6,391)

(4)%

Operating expenses

Cost of services

66,152

64,101

2,051

3%

Cost of equipment and products

537

543

(6)

(1)%

Selling, general and administrative expenses

48,919

49,101

(182)

-

Depreciation, amortization and accretion

41,401

43,123

(1,722)

(4)%

(Gain) loss on asset disposals, net

1,721

589

1,132

>100%

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

(6,371)

(156)

(6,215)

>(100)%

152,359

157,301

(4,942)

(3)%

Operating income

$

21,383

$

22,832

$

(1,449)

(6)%

Cable

Operating revenues

Residential

$

33,530

$

34,587

$

(1,057)

(3)%

Commercial

9,232

8,762

470

5%

Total service revenues

42,762

43,349

(587)

(1)%

Equipment and product sales

160

160

N/M

42,922

43,349

(427)

(1)%

Operating expenses

Cost of services

19,416

19,265

151

1%

Cost of equipment and products

69

69

N/M

Selling, general and administrative expenses

13,003

13,564

(561)

(4)%

Depreciation, amortization and accretion

9,162

8,554

608

7%

(Gain) loss on asset disposals, net

1,252

1,366

(114)

(8)%

42,902

42,749

153

-

Operating income

$

20

$

600

$

(580)

(97)%

HMS

Operating revenues

Service revenues

$

28,499

$

27,009

$

1,490

6%

Equipment and product sales

40,107

33,136

6,971

21%

68,606

60,145

8,461

14%

Operating expenses

Cost of services

22,018

19,703

2,315

12%

Cost of equipment and products

34,150

28,201

5,949

21%

Selling, general and administrative expenses

10,999

13,085

(2,086)

(16)%

Depreciation, amortization and accretion

7,150

6,717

433

6%

(Gain) loss on asset disposals, net

110

105

5

5%

74,427

67,811

6,616

10%

Operating (loss)

$

(5,821)

$

(7,666)

$

1,845

24%

Intercompany revenues

$

(1,399)

$

(1,738)

$

339

20%

Intercompany expenses

(1,399)

(1,738)

339

20%

Total TDS Telecom operating income

$

15,582

$

15,766

$

(184)

(1)%

 

TDS Telecom Highlights

Twelve Months Ended December 31,

(Unaudited, dollars in thousands)

Change

2015

2014

Amount

Percent

Wireline

Operating revenues

Residential

$

296,943

$

293,304

$

3,639

1%

Commercial

220,643

229,306

(8,663)

(4)%

Wholesale

181,352

191,976

(10,624)

(6)%

Total service revenues

698,938

714,586

(15,648)

(2)%

Equipment and product sales

1,965

1,836

129

7%

700,903

716,422

(15,519)

(2)%

Operating expenses

Cost of services

254,879

256,878

(1,999)

(1)%

Cost of equipment and products

2,212

2,336

(124)

(5)%

Selling, general and administrative expenses

193,850

189,956

3,894

2%

Depreciation, amortization and accretion

165,841

169,044

(3,203)

(2)%

(Gain) loss on asset disposals, net

5,094

2,091

3,003

>100%

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

(9,530)

(2,357)

(7,173)

>(100)%

612,346

617,948

(5,602)

(1)%

Operating income

$

88,557

$

98,474

$

(9,917)

(10)%

Cable

Operating revenues

Residential

$

138,377

$

93,983

$

44,394

47%

Commercial

36,152

22,872

13,280

58%

Total service revenues

174,529

116,855

57,674

49%

Equipment and product sales

437

437

N/M

174,966

116,855

58,111

50%

Operating expenses

Cost of services

78,758

54,265

24,493

45%

Cost of equipment and products

169

169

N/M

Selling, general and administrative expenses

53,738

36,175

17,563

49%

Depreciation, amortization and accretion

35,271

23,643

11,628

49%

(Gain) loss on asset disposals, net

691

2,482

(1,791)

(72)%

168,627

116,565

52,062

45%

Operating income

$

6,339

$

290

$

6,049

>100%

HMS

Operating revenues

Service revenues

$

116,810

$

109,766

$

7,044

6%

Equipment and product sales

169,985

148,966

21,019

14%

286,795

258,732

28,063

11%

Operating expenses

Cost of services

85,163

77,392

7,771

10%

Cost of equipment and products

142,927

126,362

16,565

13%

Selling, general and administrative expenses

47,104

53,020

(5,916)

(11)%

Depreciation, amortization and accretion

26,948

26,912

36

-

Loss on impairment of assets

84,000

(84,000)

N/M

(Gain) loss on asset disposals, net

89

181

(92)

(51)%

302,231

367,867

(65,636)

(18)%

Operating (loss)

$

(15,436)

$

(109,135)

$

93,699

86%

Intercompany revenues

$

(4,621)

$

(3,697)

$

(924)

(25)%

Intercompany expenses

(4,621)

(3,697)

(924)

(25)%

Total TDS Telecom operating income (loss)

$

79,460

$

(10,371)

$

89,831

>100%

 

Telephone and Data Systems, Inc.

Financial Measures and Reconciliations

(Unaudited, dollars in thousands)

TDS Consolidated

Three Months Ended

Twelve Months Ended

December 31,

December 31,

2015

2014

2015

2014

Cash flows from operating activities

$

62,776

$

(101,399)

$

789,694

$

394,812

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

242,516

245,778

800,628

799,496

Free cash flow

(179,740)

(347,177)

(10,934)

(404,684)

Add: Sprint Cost Reimbursement

2,378

19,085

29,974

71,097

Adjusted free cash flow (1)

$

(177,362)

$

(328,092)

$

19,040

$

(333,587)

(1)

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

 

SOURCE Telephone and Data Systems, Inc.



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