TELEPHONE AND DATA SYSTEMS, INC. CHICAGO, Feb. 25, 2015 /PRNewswire/ -- Telephone and Data Systems, Inc. (NYSE:TDS) reported total operating revenues of $1,297.1 million for the fourth quarter of 2014, versus $1,183.5 million for the comparable period one year ago. Net loss attributable to TDS shareholders and related diluted loss per share were $16.6 million and $0.15 respectively, for the fourth quarter of 2014, compared to $6.1 million and $0.06, respectively, in the comparable period one year ago.
"I am very pleased with the progress that both businesses achieved in 2014," said LeRoy T. Carlson, Jr., TDS president and CEO. "U.S. Cellular turned around its customer results and grew its postpaid customer base. TDS Telecom very successfully executed its broadband strategy and generated strong financial results.
"At U.S. Cellular, our excellent network and competitive devices, plans, and pricing helped drive customer growth. Customer service levels returned to our normal high standards. We completed our fourth wave of 4G LTE network deployment and now cover 94 percent of our postpaid customers. And to ensure that the company remains competitive and meets broadband demands, U.S. Cellular's partners were successful in acquiring meaningful spectrum in the most recent government auction. Looking ahead, U.S. Cellular is in a strong competitive position and plans to grow its customer base, revenues and improve profitability.
"TDS Telecom performed well in 2014. The wireline segment continued its targeted fiber deployment and now offers TDS TV service in eighteen markets. Ongoing cost reductions led to improved profitability. The BendBroadband acquisition integration has gone smoothly and the entire cable segment has been executing on its strategy to increase residential and commercial broadband penetration while leveraging wireline's expertise, infrastructure and product set. While OneNeck IT Solutions did not perform up to our expectations, we are highly confident that growth will accelerate as it executes its mid-market-focused IT outsourcing strategy. TDS Telecom is well-positioned for continued success in 2015.
"In 2014 TDS continued to execute on its capital allocation strategy by returning $97 million to shareholders through dividends and repurchase of shares. At the same time, TDS invested $261 million into the business through the purchase of BendBroadband. Additionally, at the U.S. Cellular level, we have been actively managing the portfolio of assets. We agreed to sell non-strategic towers for $159 million and entered into exchanges involving licenses with 153 million MHz/pops that will generate $145 million in pre-tax cash."
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 February 25, 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.
TDS has changed one of the measures which it uses to present estimates of future operating results. TDS previously presented adjusted income before income taxes, defined as income before income taxes, adjusted for: Depreciation, amortization and accretion; net Loss on impairment of assets (if any); net Gain or loss on sale of business and other exit costs (if any); net Gain or loss on license sales and exchanges (if any); net Gain or loss on investments (if any); and interest expense. TDS is now presenting Operating cash flow and Adjusted earnings before interest, taxes, depreciation, amortization and accretion ("Adjusted EBITDA"), as defined below, which it believes are measures which provide a comprehensive view of TDS' recurring results of operations.
2015 Estimated Results and Actual Results for the Year Ended December 31,
2014
--------------------------------------------------------------------------
U.S. Cellular TDS Telecom TDS(2)
------------- ----------- -----
Estimate Actual Estimate Actual Estimate Actual
-------- ------ -------- ------ -------- ------
(Dollars in millions)
Total operating revenues $4,000-$4,200 $3,893 $1,130-$1,180 $1,088 $5,145-$5,395 $5,009
Operating cash flow (1) $350-$450 $338 $280-$310 $296 $635-$765 $632
Adjusted EBITDA (1) $530-$630 $480 $280-$310 $298 $820-$950 $781
Capital expenditures $600 $558 $220 $208 $830 $771
(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
year ended December 31, 2014
actual results:
2015 Estimated and Actual Results for the Year Ended December 31, 2014
----------------------------------------------------------------------
U.S. Cellular Telecom TDS (2)
Estimate (3) Actual Estimate (3) Actual Estimate (3) Actual
----------- ------ ----------- ------ ----------- ------
(Dollars in millions)
Net income (loss) (GAAP) N/A ($47) N/A ($24) N/A ($147)
Add back:
Income tax expense (benefit) N/A ($12) N/A $18 N/A ($5)
---
Income (loss) before income
taxes (GAAP) ($10)-$90 ($59) $45-$75 ($7) ($25)-$105 ($153)
--------- ---- ------- --- ---------- -----
Add back:
Interest expense $85 $57 - ($1) $145 $111
Depreciation, amortization and
accretion expense $545 $606 $235 $220 $790 $837
----
EBITDA $620-$720 $605 $280-$310 $212 $910-$1,040 $796
--------- ---- --------- ---- ----------- ----
Add back:
Loss on impairment of assets - - - $84 - $88
(Gain) loss on sale of business and
other exit costs, net ($105) ($33) - ($2) ($105) ($16)
(Gain) loss on license sales and
exchanges - ($113) - - - ($113)
(Gain) loss on assets disposals, net $15 $21 - $5 $15 $27
---
Adjusted EBITDA (4) $530-$630 $480 $280-$310 $298 $820-$950 $781
========= ==== ========= ==== ========= ====
Deduct:
Equity in earnings of unconsolidated
entities ($130) ($130) - - ($130) ($132)
Interest and dividend income ($50) ($12) - ($2) ($55) ($17)
-----
Operating cash flow (5) $350-$450 $338 $280-$310 $296 $635-$765 $632
========= ==== ========= ==== ========= ====
(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.
Accordingly, a reconciliation to net income is
not available without unreasonable effort.
(4) Adjusted EBITDA (new measure) equals adjusted
income before income taxes (previous measure)
excluding gain or loss on asset disposals, net.
See Adjusted EBITDA reconciliation for full year
2014, 2013, and 2012 actual results on the
company's website at investors.tdsinc.com.
------------------------------------------------
(5) A reconciliation of Operating cash flow (Non-
GAAP) to operating income (GAAP) for full year
2014, 2013, and 2012 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)
----------------- -------- ---------
2014 (fourth quarter) 312,009 $7.3
2014 (third quarter) 421,322 $10.7
2014 (second quarter) 650,628 $17.3
2014 (first quarter) 157,891 $3.8
2014 (full year) 1,541,850 $39.1
2013 (full year) 338,851 $9.7
------- ----
Total 1,880,701 $48.8
========= =====
Conference Call Information
TDS will hold a conference call on Feb. 25, 2015 at 9:30 a.m. CST.
-- Access the live call on the Events & Presentations page of
investors.tdsinc.com or at
http://www.videonewswire.com/event.asp?id=101572.
-- Access the call by phone at 877-407-8029 (US/Canada), no pass code
required.
Before the call, certain financial and statistical information to be discussed during the call will be posted to investors.tdsinc.com. The call will be archived on the Events & Presentations page of investors.tdsinc.com.
About TDS
Telephone and Data Systems, Inc. (TDS), a Fortune 1000(TM) company, provides wireless; wireline and cable broadband, TV and voice; and hosted and managed services to approximately 6.0 million customers nationwide through its business units, U.S. Cellular, TDS Telecom, OneNeck IT Solutions, Baja Broadband and BendBroadband. Founded in 1969 and headquartered in Chicago, TDS employed 10,600 people as of Dec. 31, 2014.
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 acquisition and divestiture transactions, 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
Total Markets* Summary Operating Data (Unaudited)
As of or for the Quarter Ended 12/31/2014 9/30/2014 6/30/2014 3/31/2014 12/31/2013
------------------------------ ---------- --------- --------- --------- ----------
Retail Customers
Postpaid
Total at end of period 4,298,000 4,200,000 4,148,000 4,174,000 4,267,000
Gross additions 302,000 251,000 190,000 197,000 176,000
Net additions (losses) 98,000 52,000 (26,000) (93,000) (71,000)
ARPU (1) $56.51 $56.37 $56.82 $57.59 $53.53
ARPA (2) $136.13 $132.99 $131.95 $132.03 $121.21
Churn rate (3) 1.6% 1.6% 1.7% 2.3% 1.9%
Smartphone penetration (4) 59.8% 57.9% 55.3% 53.1% 50.8%
Prepaid
Total at end of period 348,000 350,000 352,000 356,000 343,000
Gross additions 60,000 64,000 65,000 85,000 63,000
Net additions (losses) (2,000) (2,000) (4,000) 13,000 (26,000)
ARPU (1) $35.33 $34.40 $34.02 $32.22 $31.66
Churn rate (3) 5.9% 6.3% 6.5% 6.9% 8.3%
Total customers at end of period 4,760,000 4,674,000 4,653,000 4,684,000 4,774,000
Billed ARPU (1) $53.63 $53.24 $53.36 $53.93 $50.25
Service revenue ARPU (1) $60.10 $60.92 $60.32 $60.19 $57.05
Smartphones sold as a percent of total 86.5% 80.8% 79.0% 78.2% 84.5%
handsets sold
Total population
Consolidated markets (5) 50,906,000 54,817,000 54,817,000 54,817,000 58,013,000
Consolidated operating markets
(5) 31,729,000 31,729,000 31,729,000 31,729,000 31,759,000
Market penetration at end of period
Consolidated markets (6) 9.4% 8.5% 8.5% 8.5% 8.2%
Consolidated operating markets
(6) 15.0% 14.7% 14.7% 14.8% 15.0%
Capital expenditures (000s) $181,655 $142,452 $143,927 $89,581 $208,135
Total cell sites in service 6,220 6,209 6,183 6,165 6,975
Owned towers 4,281 4,487 4,457 4,448 4,448
* Represents U.S. Cellular's consolidated
markets. These results include markets
which U. S. Cellular currently
consolidates, or previously consolidated
in the periods presented, and are not
adjusted in prior periods for subsequent
divestitures or deconsolidations.
Refer to U.S. Cellular's Form 8-K filed
on February 26, 2014 for pro forma
financial information related to the
Divestiture Transaction and the NY1 and
NY2 Deconsolidation for the three and
twelve months ended December 31, 2013,
as if the transactions had occurred at
the beginning of the period.
United States Cellular Corporation
Core* Markets Summary Operating Data (Unaudited)
As of or for the Quarter Ended 12/31/2014 9/30/2014 6/30/2014 3/31/2014 12/31/2013
------------------------------ ---------- --------- --------- --------- ----------
Retail Customers
Postpaid
Total at end of period 4,298,000 4,200,000 4,148,000 4,174,000 4,267,000
Gross additions 302,000 251,000 190,000 197,000 176,000
Net additions (losses) 98,000 52,000 (26,000) (93,000) (71,000)
ARPU (1) $56.51 $56.37 $56.82 $57.59 $53.53
ARPA (2) $136.13 $132.99 $131.95 $132.03 $121.21
Churn rate (3) 1.6% 1.6% 1.7% 2.3% 1.9%
Smartphone penetration (4) 59.8% 57.9% 55.3% 53.1% 50.8%
Prepaid
Total at end of period 348,000 350,000 352,000 356,000 343,000
Gross additions 60,000 64,000 65,000 85,000 63,000
Net additions (losses) (2,000) (2,000) (4,000) 13,000 (26,000)
ARPU (1) $35.33 $34.40 $34.02 $32.22 $31.66
Churn rate (3) 5.9% 6.3% 6.5% 6.9% 8.3%
Total customers at end of period 4,760,000 4,674,000 4,653,000 4,684,000 4,774,000
Billed ARPU (1) $53.63 $53.24 $53.36 $53.93 $50.25
Service revenue ARPU (1) $60.10 $60.92 $60.32 $60.19 $57.05
Smartphones sold as a percent of total 86.5% 80.8% 79.0% 78.2% 84.5%
handsets sold
Total population
Consolidated markets (5) 50,906,000 54,817,000 54,817,000 54,817,000 58,013,000
Consolidated operating markets
(5) 31,729,000 31,729,000 31,729,000 31,729,000 31,759,000
Market penetration at end of period
Consolidated markets (6) 9.4% 8.5% 8.5% 8.5% 8.2%
Consolidated operating markets
(6) 15.0% 14.7% 14.7% 14.8% 15.0%
Capital expenditures (000s) $181,655 $142,452 $143,927 $89,581 $211,247
Total cell sites in service 6,220 6,209 6,183 6,165 6,161
Owned towers 3,951 3,922 3,892 3,883 3,883
* U.S. Cellular's
Core Markets
excludes the
results of the
Divestiture
Markets and
NY1 and NY2
Partnerships
for the
periods
presented.
Refer to U.S.
Cellular's
Form 8-K filed
on February
26, 2014 for
pro forma
financial
information
related to the
Divestiture
Transaction
and the NY1
and NY2
Deconsolidation
for the three
and twelve
months ended
December 31,
2013, as if
the
transactions
had occurred
at the
beginning of
the period.
(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
customers.
(5) The decrease in
the population
of
consolidated
markets is due
primarily to
the
divestiture of
the majority
of the St.
Louis area
non-operating
market license
in March 2014,
and certain
non-operating
licenses in
North Carolina
in December
2014. 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.
TDS Telecom
Summary Operating Data (Unaudited)
Quarter Ended 12/31/2014 9/30/2014 6/30/2014 3/31/2014 12/31/2013
---------- --------- --------- --------- ----------
TDS Telecom
Wireline
--------
Residential
connections
Voice (1) 335,900 340,300 346,100 348,700 352,100
Broadband (2) 229,200 231,600 232,700 229,000 227,000
IPTV (3) 23,400 20,700 18,200 15,900 13,800
------ ------ ------ ------ ------
Wireline residential
connections 588,500 592,600 597,000 593,600 592,900
======= ======= ======= ======= =======
Total
residential
revenue per
connection (4) $41.56 $41.47 $41.05 $40.79 $40.93
Commercial
connections
Voice (1) 193,200 199,300 206,200 212,200 218,400
Broadband (2) 24,700 25,300 26,000 26,600 27,100
managedIP (5) 140,200 137,700 133,300 131,000 127,600
------- ------- ------- ------- -------
Wireline commercial connections 358,100 362,300 365,500 369,800 373,100
======= ======= ======= ======= =======
Total Wireline
connections 946,600 954,900 962,500 963,400 966,000
======= ======= ======= ======= =======
Cable
-----
Cable
Connections
Video (6) 110,400 109,100 69,700 68,700 69,100
Broadband (7) 110,900 106,400 63,200 63,000 61,000
Voice (7) 46,000 41,800 17,800 17,700 17,200
------ ------ ------ ------ ------
Cable connections 267,300 257,300 150,700 149,400 147,300
======= ======= ======= ======= =======
(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 divided by
the average number of total
residential connections.
(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 12/31/2014 9/30/2014 6/30/2014 3/31/2014 12/31/2013
---------- --------- --------- --------- ----------
Wireline $51,400 $34,200 $27,400 $22,900 $46,000
Cable 14,600 7,600 7,200 6,200 7,000
HMS 13,400 9,800 10,600 2,800 9,200
------ ----- ------ ----- -----
$79,400 $51,600 $45,200 $31,900 $62,200
======= ======= ======= ======= =======
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
------
2014 2013 Amount Percent
---- ---- ------ -------
Operating revenues
U.S. Cellular $1,008,744 $902,724 $106,020 12%
TDS Telecom 281,889 271,939 9,950 4%
All Other (1) 6,428 8,854 (2,426) (27%)
1,297,061 1,183,517 113,544 10%
--------- --------- -------
Operating expenses
U.S. Cellular
Expenses
excluding
depreciation,
amortization
and accretion 939,331 967,005 (27,674) (3%)
Depreciation,
amortization
and accretion 140,955 210,371 (69,416) (33%)
(Gain) loss on
asset
disposals, net 4,695 14,453 (9,758) (68%)
(Gain) loss on
sale of
business and
other exit
costs, net (5,136) (3,140) (1,996) (64%)
(Gain) loss on
sale of
license sales
and exchanges (21,547) (255,479) 233,932 92%
------- -------- -------
1,058,298 933,210 125,088 13%
--------- ------- -------
TDS Telecom
Expenses
excluding
depreciation,
amortization
and accretion 205,825 206,097 (272) -
Depreciation,
amortization
and accretion 58,394 53,149 5,245 10%
(Gain) loss on
asset
disposals, net 2,060 336 1,724 >100%
(Gain) loss on
sale of
business and
other exit
costs, net (156) - (156) N/M
---- --- ----
266,123 259,582 6,541 3%
------- ------- -----
All Other (1)
Expenses
excluding
depreciation
and
amortization 4,039 8,597 (4,558) (53%)
Depreciation
and
amortization 2,168 2,982 (814) (27%)
Loss on
impairment of
assets 3,802 - 3,802 N/M
(Gain) loss on
asset
disposals, net 150 (38) 188 >(100%)
(Gain) loss on
sale of
business and
other exit
costs, net (1,475) 121 (1,596) >(100%)
------ --- ------
8,684 11,662 (2,978) (26%)
----- ------ ------
Total operating expenses 1,333,105 1,204,454 128,651 11%
--------- --------- -------
Operating income (loss)
U.S. Cellular (49,554) (30,486) (19,068) (63%)
TDS Telecom 15,766 12,357 3,409 28%
All Other (1) (2,256) (2,808) 552 20%
(36,044) (20,937) (15,107) (72%)
------- ------- -------
Investment and other income (expense)
Equity in earnings
of unconsolidated
entities 23,767 32,411 (8,644) (27%)
Interest and
dividend income 7,194 2,407 4,787 >100%
Gain (loss) on
investment - 29 (29) N/M
Interest expense (27,622) (25,603) (2,019) (8%)
Other, net (164) 169 (333) >(100%)
Total
investment and
other income
(expense) 3,175 9,413 (6,238) (66%)
----- ----- ------
Loss before income taxes (32,869) (11,524) (21,345) >(100%)
Income tax expense
(benefit) (12,208) (4,013) (8,195) >(100%)
Net loss (20,661) (7,511) (13,150) >(100%)
Less: Net income
(loss)
attributable to
noncontrolling
interests, net of
tax (4,120) (1,454) (2,666) >(100%)
Net loss attributable to TDS shareholders (16,541) (6,057) (10,484) >(100%)
TDS Preferred
dividend
requirement (12) (12) - -
Net loss available to common shareholders $(16,553) $(6,069) $(10,484) >(100%)
======== ======= ========
Basic weighted average shares outstanding 107,995 108,742 (747) (1%)
Basic earnings (loss) per share attributable
to TDS shareholders $(0.15) $(0.06) $(0.09) >(100%)
Diluted weighted average shares outstanding 107,995 108,742 (747) (1%)
Diluted earnings (loss) per share
attributable to TDS shareholders $(0.15) $(0.06) $(0.09) >(100%)
(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
------
2014 2013 Amount Percent
---- ---- ------ -------
Operating revenues
U.S. Cellular $3,892,747 $3,918,836 $(26,089) (1%)
TDS Telecom 1,088,312 947,003 141,309 15%
All Other (1) 28,379 35,397 (7,018) (20%)
5,009,438 4,901,236 108,202 2%
--------- --------- -------
Operating expenses
U.S. Cellular
Expenses
excluding
depreciation,
amortization
and accretion 3,554,494 3,439,830 114,664 3%
Depreciation,
amortization
and accretion 605,997 803,781 (197,784) (25%)
(Gain) loss on
asset
disposals, net 21,469 30,606 (9,137) (30%)
(Gain) loss on
sale of
business and
other exit
costs, net (32,830) (246,767) 213,937 87%
(Gain) loss on
license sales
and exchanges (112,993) (255,479) 142,486 56%
-------- -------- -------
4,036,137 3,771,971 264,166 7%
--------- --------- -------
TDS Telecom
Expenses
excluding
depreciation,
amortization
and accretion 792,687 699,187 93,500 13%
Depreciation,
amortization
and accretion 219,599 202,701 16,898 8%
Loss on
impairment of
assets 84,000 - 84,000 N/M
(Gain) loss on
asset
disposals, net 4,754 283 4,471 >100%
(Gain) loss on
sale of
business and
other exit
costs, net (2,357) - (2,357) N/M
------ --- ------
1,098,683 902,171 196,512 22%
--------- ------- -------
All Other (1)
Expenses
excluding
depreciation
and
amortization 30,095 34,077 (3,982) (12%)
Depreciation
and
amortization 10,936 11,595 (659) (6%)
Loss on
impairment of
assets 3,802 ? 3,802 N/M
(Gain) loss on
asset
disposals, net 308 (48) 356 >(100%)
(Gain) loss on
sale of
business and
other exit
costs, net (2) 19,341 (53,889) 73,230 >(100%)
------ ------- ------
64,482 (8,265) 72,747 >(100%)
------ ------ ------
Total operating expenses 5,199,302 4,665,877 533,425 11%
--------- --------- -------
Operating income (loss)
U.S. Cellular (143,390) 146,865 (290,255) >(100%)
TDS Telecom (10,371) 44,832 (55,203) >(100%)
All Other (1) (36,103) 43,662 (79,765) >(100%)
(189,864) 235,359 (425,223) >(100%)
-------- ------- --------
Investment and other income (expense)
Equity in earnings
of unconsolidated
entities 131,965 132,714 (749) (1%)
Interest and
dividend income 16,957 9,092 7,865 87%
Gain (loss) on
investments ? 14,547 (14,547) N/M
Interest expense (111,397) (98,811) (12,586) (13%)
Other, net 115 (37) 152 >(100%)
Total
investment and
other income
(expense) 37,640 57,505 (19,865) (35%)
------ ------ -------
Income (loss) before income taxes (152,224) 292,864 (445,088) >(100%)
Income tax expense
(benefit) (4,932) 126,043 (130,975) >(100%)
Net income (loss) (147,292) 166,821 (314,113) >(100%)
Less: Net income
(loss)
attributable to
noncontrolling
interests, net of
tax (10,937) 24,894 (35,831) >(100%)
Net income (loss) attributable to TDS shareholders (136,355) 141,927 (278,282) >(100%)
TDS Preferred
dividend
requirement (49) (49) - -
Net income (loss) available to common
shareholders $(136,404) $141,878 $(278,282) >(100%)
========= ======== =========
Basic weighted average shares outstanding 108,485 108,490 (5) -
Basic earnings (loss) per share attributable
to TDS shareholders $(1.26) $1.31 $(2.57) >(100%)
Diluted weighted average shares outstanding 108,485 109,132 (647) (1%)
Diluted earnings (loss) per share
attributable to TDS shareholders $(1.26) $1.29 $(2.55) >(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 the Airadigm Transaction,
TDS recognized expenses of $20.2
million related to exit and
disposal activities in 2014. In
2013, TDS recognized an
incremental gain of $53.5
million compared to U.S.
Cellular upon closing of the
Divestiture Transaction as a
result of lower asset basis in
the assets disposed.
N/M - Percentage change not meaningful
Telephone and Data Systems, Inc.
Consolidated Balance Sheet Highlights
(Unaudited, dollars in thousands)
ASSETS
December 31, December 31,
2014 2013
---- ----
Current assets
Cash and cash equivalents $471,901 $830,014
Short-term investments - 50,104
Accounts receivable from customers
and others 683,681 731,114
Inventory, net 273,707 244,560
Net deferred income tax asset 107,686 106,077
Prepaid expenses 86,506 87,920
Income taxes receivable 113,708 2,397
Other current assets 29,766 35,151
1,766,955 2,087,337
Assets held for sale 103,343 16,027
Investments
Licenses 1,453,574 1,423,779
Goodwill 771,352 836,843
Franchise rights 244,300 123,668
Other intangible assets, net 64,499 71,454
Investments in unconsolidated
entities 321,729 301,772
Other investments 508 641
2,855,962 2,758,157
Property, plant and equipment, net
U.S. Cellular 2,728,217 2,856,520
TDS Telecom 1,093,671 984,634
Other 24,237 36,990
3,846,125 3,878,144
Other assets and deferred charges 334,554 164,482
------- -------
Total assets $8,906,939 $8,904,147
========== ==========
Telephone and Data Systems, Inc.
Consolidated Balance Sheet Highlights
(Unaudited, dollars in thousands)
LIABILITIES AND EQUITY
December 31, December 31,
2014 2013
---- ----
Current liabilities
Current portion
of long-term
debt $808 $1,646
Accounts payable 387,125 496,069
Customer deposits
and deferred
revenues 324,318 289,445
Accrued interest 7,919 6,673
Accrued taxes 46,734 70,518
Accrued
compensation 114,549 115,031
Other current
liabilities 181,803 212,374
------- -------
1,063,256 1,191,756
Liabilities held for sale 21,643 -
Deferred liabilities and credits
Net deferred
income tax
liability 941,519 862,975
Other deferred
liabilities and
credits 430,774 458,709
Long-term debt 1,993,586 1,720,074
Noncontrolling interests with redemption features 1,150 536
Equity
TDS shareholders'
equity
Series A Common
and Common
Shares, par
value $.01 1,327 1,327
Capital in excess
of par value 2,336,511 2,308,807
Treasury shares,
at cost (748,199) (721,354)
Accumulated other
comprehensive
loss 6,452 (569)
Retained earnings 2,330,187 2,529,626
--------- ---------
Total TDS shareholders' equity 3,926,278 4,117,837
Preferred shares 824 824
Noncontrolling
interests 527,909 551,436
Total equity 4,455,011 4,670,097
Total liabilities and equity $8,906,939 $8,904,147
========== ==========
Balance Sheet Highlights
December 31, 2014
(Unaudited, dollars in thousands)
U.S. TDS TDS Corporate Intercompany TDS
Cellular Telecom & Other Eliminations Consolidated
-------- ------- ------- ------------ ------------
Cash and cash
equivalents $211,513 $71,999 $188,389 $ ? $471,901
Affiliated cash investments ? 332,334 ? (332,334) ?
--- ------- --- -------- ---
$211,513 $404,333 $188,389 $(332,334) $471,901
======== ======== ======== ========= ========
Licenses, goodwill and
other intangible
assets $1,813,589 $857,864 $(137,728) $ ? $2,533,725
Investment in unconsolidated
entities 283,014 3,804 39,657 (4,746) 321,729
Long-term and other investments ? 508 ? ? 508
--- --- --- --- ---
$2,096,603 $862,176 $(98,071) $(4,746) $2,855,962
========== ======== ======== ======= ==========
Property, plant and
equipment, net $2,728,217 $1,093,671 $24,478 $(241) $3,846,125
========== ========== ======= ===== ==========
Long-term debt:
Current
portion $46 $32 $730 $ ? $808
Non-
current
portion 1,151,819 1,435 840,332 ? 1,993,586
$1,151,865 $1,467 $841,062 $ ? $1,994,394
========== ====== ======== === === ==========
Telephone and Data Systems, Inc.
Schedule of Cash and Cash Equivalents and Investments
(Unaudited, dollars in thousands)
The following table presents TDS' cash and cash equivalents and investments at December 31,
2014 and December 31, 2013.
December 31, December 31,
2014 2013
---- ----
Cash and cash
equivalents $471,901 $830,014
Amounts included in short-
term investments (1) (2)
U.S. Treasury Notes - 50,104
Total cash and cash
equivalents and
investments $471,901 $880,118
======== ========
(1) Designated as held-to-maturity
investments and are recorded at
amortized cost in the
Consolidated Balance Sheet.
(2) Maturities are less than twelve
months from the respective
balance sheet dates.
Telephone and Data Systems, Inc.
Consolidated Statement of Cash Flows
Twelve Months Ended December 31,
(Unaudited, dollars in thousands)
2014 2013
---- ----
Cash flows from operating activities
Net income (loss) $(147,292) $166,821
Add (deduct)
adjustments to
reconcile net income
to cash flows
from operating
activities
Depreciation, amortization and
accretion 836,532 1,018,077
Bad debts expense 107,861 105,629
Stock-based compensation expense 35,793 30,338
Deferred income taxes, net 71,713 (67,150)
Equity in earnings of unconsolidated
entities (131,965) (132,714)
Distributions from unconsolidated
entities 112,349 127,929
Loss on impairment of assets 87,802 -
(Gain) loss on asset disposals, net 26,531 30,841
(Gain) loss on sale of business and
other exit costs, net (15,846) (300,656)
(Gain) loss on license sales and
exchanges (112,993) (255,479)
(Gain) loss on investments - (14,547)
Noncash interest expense 1,642 2,463
Other operating activities (641) 612
Changes in assets and
liabilities from
operations
Accounts receivable 17,629 (293,729)
Equipment installment plans
receivable (188,829) (591)
Inventory (29,149) (83,536)
Accounts payable (117,264) 86,028
Customer deposits and deferred
revenues 33,952 66,460
Accrued taxes (122,921) 17,388
Accrued interest 1,277 380
Other assets and liabilities (71,369) (9,954)
------- ------
394,812 494,610
------- -------
Cash flows from investing activities
Cash used for additions
to property, plant and
equipment (799,496) (883,797)
Cash paid for
acquisitions and
licenses (295,253) (314,570)
Cash received from
divestitures 187,645 811,120
Cash received for
investments 50,000 115,000
Federal Communications
Commission deposit (60,000) -
Other investing
activities 7,360 11,594
(909,744) (260,653)
-------- --------
Cash flows from financing activities
Issuance of long-term
debt 275,000 37
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 (2,019) 9,654
U.S. Cellular Common
Shares reissued for
benefit plans, net of
tax payments 830 5,784
Repurchase of TDS Common
Shares (39,096) (9,692)
Repurchase of U.S.
Cellular Common Shares (18,943) (18,544)
Dividends paid to TDS
shareholders (58,040) (55,293)
U.S. Cellular dividends
paid to noncontrolling
public shareholders - (75,235)
Payment of debt issuance
costs (10,215) (23)
Distributions to
noncontrolling interests (627) (3,766)
Payments to acquire
additional interest in
subsidiaries - (4,505)
Other financing
activities 9,929 7,159
156,819 (144,424)
------- --------
Net increase (decrease) in cash and cash equivalents (358,113) 89,533
Cash and cash equivalents
Beginning of period 830,014 740,481
End of period $471,901 $830,014
TDS Telecom Highlights
Three Months Ended December 31,
(Unaudited, dollars in thousands)
Change
------
2014 2013 Amount Percent
---- ---- ------ -------
Wireline
--------
Operating revenues
Residential $73,537 $73,045 $492 1%
Commercial 56,676 58,387 (1,711) (3%)
Wholesale 49,493 48,747 746 2%
Total
service
revenues 179,706 180,179 (473) -
Equipment
sales 427 820 (393) (48%)
180,133 180,999 (866) -
------- ------- ----
Operating expenses
Cost of
services 64,101 67,159 (3,058) (5%)
Cost of
equipment
sold 543 786 (243) (31%)
Selling,
general and
administrative
expenses 49,101 52,771 (3,670) (7%)
Depreciation,
amortization
and accretion 43,123 41,516 1,607 4%
(Gain) loss on
asset
disposals,
net 589 306 283 92%
(Gain) loss on
sale of
business and
other exit
costs, net (156) - (156) N/M
157,301 162,538 (5,237) (3%)
------- ------- ------
Operating
income $22,832 $18,461 $4,371 24%
----------
Cable
-----
Operating revenues
Residential $34,588 $17,374 $17,214 99%
Commercial 8,761 4,147 4,614 >100%
43,349 21,521 21,828 >100%
Operating expenses
Cost of
services 19,265 10,547 8,718 83%
Selling,
general and
administrative
expenses 13,564 5,870 7,694 >100%
Depreciation,
amortization
and accretion 8,554 4,657 3,897 84%
(Gain) loss on
asset
disposals,
net 1,366 28 1,338 >100%
42,749 21,102 21,647 >100%
------ ------ ------
Operating
income $600 $419 $181 43%
----------
HMS
---
Operating revenues
Service
revenues $27,009 $26,470 $539 2%
Equipment
sales 33,136 43,481 (10,345) (24%)
60,145 69,951 (9,806) (14%)
------ ------ ------
Operating expenses
Cost of
services 19,703 17,381 2,322 13%
Cost of
equipment
sold 28,201 36,516 (8,315) (23%)
Selling,
general and
administrative
expenses 13,085 15,599 (2,514) (16%)
Depreciation,
amortization
and accretion 6,717 6,976 (259) (4%)
(Gain) loss on
asset
disposals,
net 105 2 103 >100%
67,811 76,474 (8,663) (11%)
------ ------ ------
Operating loss $(7,666) $(6,523) $(1,143) (18%)
------------
Intercompany revenues $(1,738) $(532) $(1,206) >(100)%
Intercompany expenses (1,738) (532) (1,206) >(100)%
------ ---- ------
Total TDS Telecom operating
income $15,766 $12,357 $3,409 28%
======= ======= ======
TDS Telecom Highlights
Twelve Months Ended December 31,
(Unaudited, dollars in thousands)
Change
------
2014 2013 Amount Percent
---- ---- ------ -------
Wireline
--------
Operating revenues
Residential $293,302 $293,217 $85 -
Commercial 229,308 229,715 (407) -
Wholesale 191,976 200,440 (8,464) (4%)
Total
service
revenues 714,586 723,372 (8,786) (1%)
Equipment
sales 1,836 3,195 (1,359) (43%)
716,422 726,567 (10,145) (1%)
------- ------- -------
Operating expenses
Cost of
services 256,878 266,635 (9,757) (4%)
Cost of
equipment
sold 2,336 3,831 (1,495) (39%)
Selling,
general and
administrative
expenses 189,956 220,097 (30,141) (14%)
Depreciation,
amortization
and accretion 169,044 170,868 (1,824) (1%)
(Gain) loss on
asset
disposals,
net 2,091 130 1,961 >100%
(Gain) loss on
sale of
business and
other exit
costs, net (2,357) - (2,357) N/M
617,948 661,561 (43,613) (7%)
------- ------- -------
Operating
income $98,474 $65,006 $33,468 51%
----------
Cable
-----
Operating revenues
Residential $93,985 $29,016 $64,969 >100%
Commercial 22,870 6,867 16,003 >100%
116,855 35,883 80,972 >100%
Operating expenses
Cost of
services 54,265 17,274 36,991 >100%
Selling,
general and
administrative
expenses 36,175 11,054 25,121 >100%
Depreciation,
amortization
and accretion 23,643 7,571 16,072 >100%
(Gain) loss on
asset
disposals,
net 2,482 28 2,454 >100%
116,565 35,927 80,638 >100%
------- ------ ------
Operating
income (loss) $290 $(44) $334 >100%
------------
HMS
---
Operating revenues
Service
revenues $109,766 $94,875 $14,891 16%
Equipment
sales 148,966 90,741 58,225 64%
258,732 185,616 73,116 39%
------- ------- ------
Operating expenses
Cost of
services 77,392 60,423 16,969 28%
Cost of
equipment
sold 126,362 75,991 50,371 66%
Selling,
general and
administrative
expenses 53,020 44,945 8,075 18%
Depreciation,
amortization
and accretion 26,912 24,262 2,650 11%
Loss on
impairment of
assets 84,000 - 84,000 N/M
(Gain) loss on
asset
disposals,
net 181 125 56 45%
367,867 205,746 162,121 79%
------- ------- -------
Operating loss $(109,135) $(20,130) $(89,005) >(100)%
------------
Intercompany revenues $(3,697) $(1,063) $(2,634) >(100)%
Intercompany expenses (3,697) (1,063) (2,634) >(100)%
------ ------ ------
Total TDS Telecom operating
income (loss) $(10,371) $44,832 $(55,203) >(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,
------------ ------------
2014 2013 2014 2013
---- ---- ---- ----
Cash flows from
operating
activities $(101,399) $56,710 $394,812 $494,610
Add: Sprint Cost
Reimbursement 19,085 9,429 71,097 10,560
Less: Cash used
for additions to
property, 245,778 252,427 799,496 883,797
plant and
equipment
Adjusted free cash flow (1) $(328,092) $(186,288) $(333,587) $(378,627)
========= ========= ========= =========
(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-fourth-quarter-2014-results-300041150.html
SOURCE Telephone and Data Systems, Inc.
