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TDS reports second quarter 2018 results

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TDS reports second quarter 2018 results

U.S. Cellular raises guidance

PR Newswire

CHICAGO, Aug. 3, 2018 /PRNewswire/ -- As previously announced, TDS will hold a teleconference August 3, 2018, at 9:30 a.m. CDT. Listen to the call live via the Events & Presentations page of investors.tdsinc.com.

Telephone and Data Systems, Inc. (NYSE:TDS) reported total operating revenues of $1,255 million for the second quarter of 2018, versus $1,247 million for the same period one year ago. Net income available to TDS shareholders and related diluted earnings per share were $33 million and $0.29, respectively, for the second quarter of 2018, compared to $10 million and $0.09, respectively, in the same period one year ago. 

"The TDS family of companies produced strong results this quarter and made significant progress toward achieving long-term strategic goals," said LeRoy T. Carlson, Jr., TDS President and CEO. "U.S. Cellular drove high customer loyalty, increased its profitability and continued making enhancements to its high-performing network. TDS Telecom continued investing in its broadband strategy, generating further expansion of its broadband customer base.

"U.S. Cellular added postpaid handsets, driven in part by exceptionally low postpaid handset churn. Higher inbound roaming activity and sales of high-margin device protection plans and accessories contributed to revenue growth. U.S. Cellular effectively managed cost reduction programs, which included lower system operations expense even with significantly higher data traffic.  All in, Adjusted EBITDA increased 25% in the quarter and U.S. Cellular raised its guidance for the year. U.S. Cellular also continued its network enhancements with commercial rollout of VoLTE in the California, Oregon and Washington markets.

"TDS Telecom continued to focus intensely on increasing broadband penetration. Also, increasing video connections and customer demand for faster broadband speeds generated higher residential revenue per connection, which helped offset declining wholesale and commercial revenues. TDS Telecom increased capital expenditures to support Federal A-CAM buildouts and strategic fiber initiatives. Cable operations generated substantially higher cable revenues primarily through continued increases in broadband connections. This is the ninth consecutive quarter of double-digit cable broadband growth."

2018 Estimated Results
TDS' current estimates of full-year 2018 results for U.S. Cellular, TDS Telecom, and TDS are shown below.  Such estimates represent management's view as of August 3, 2018.  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. 



2018 Estimated Results
















U.S. Cellular


TDS Telecom (1)


TDS (1)(2)



Current (3)

Previous


Current (3)

Previous


Current (3)

Previous

(Dollars in millions)












Total operating revenues

$3,925-$4,025

$3,850-$4,050


$900-$950

Unchanged


$5,055-$5,205

$5,015-$5,265

Adjusted OIBDA (4)(5)

$700-$800

$625-$775


$290-$320

Unchanged


$985-$1,115

$925-$1,105

Adjusted EBITDA (4)

$850-$950

$765-$915


$300-$330

Unchanged


$1,145-$1,275

$1,075-$1,255

Capital expenditures

$500-$550

Unchanged



$270

Unchanged


$790-$840

Unchanged

The following tables provide reconciliations of Net income to Adjusted OIBDA and Adjusted EBITDA for 2018 estimated results, actual results for the six months ended June 30, 2018, and actual results for the year ended December 31, 2017. In providing 2018 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.





2018 Estimated Results
















U.S. Cellular (3)



TDS Telecom (1)(3)



TDS (1)(2)(3)

(Dollars in millions)









Net income (GAAP)


N/A



N/A



N/A

Add back:










Income tax expense (benefit)


N/A



N/A



N/A

Income before income taxes (GAAP)

$

110-210


$

80-110


$

90-220

Add back:










Interest expense


110





170


Depreciation, amortization and accretion expense


640



220



895

EBITDA (Non-GAAP) (4)

$

860-960


$

300-330


$

1,155-1,285

Add back or deduct:










(Gain) loss on asset disposals, net


10





10


(Gain) loss on license sales and exchanges, net


(20)





(20)

Adjusted EBITDA (Non-GAAP) (4)

$

850-950


$

300-330


$

1,145-1,275

Deduct:










Equity in earnings of unconsolidated entities


135





135


Interest and dividend income


15



5



20


Other, net (6)




5



5

Adjusted OIBDA (Non-GAAP) (4)(5)

$

700-800


$

290-320


$

985-1,115

 




Actual Results
























Six Months Ended June 30, 2018 (3)


Year ended December 31, 2017




U.S. Cellular


TDS

Telecom (1)


TDS (1)(2)


U.S. Cellular

TDS

Telecom (1)

TDS (1)(2)

(Dollars in millions)












Net income (GAAP)

$

107


$

37


$

101


$

15


$

138


$

157

Add back or deduct:













Income tax expense (benefit)


40



12



45



(287)



(13)



(279)

Income (loss) before income taxes



















(GAAP)

$

147


$

48


$

146


$

(272)


$

125


$

(122)

Add back:













Interest expense


58



(1)



86



113





170


Depreciation, amortization and accretion expense


 

317



 

107



 

441



 

615



 

195



 

844


EBITDA (Non-GAAP) (4)

$

522


$

155


$

673


$

456


$

319


$

892

Add back or deduct:



















Loss on impairment of goodwill








370





262


(Gain) loss on asset disposals, net


2



1



3



17



3



21


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








(1)





(1)


(Gain) loss on license sales and exchanges, net


 

(17)



 



 

(17)



 

(22)



 



 

(22)


Adjusted EBITDA (Non-GAAP) (4)

$

507


$

156


$

659


$

820


$

323


$

1,152

Deduct:



















Equity in earnings of unconsolidated entities


78





78



137





137



Interest and dividend income


7



3



11



8



5



15


Other, net (6)


(1)



1



2





3



4

Adjusted OIBDA (Non-GAAP) (4)(5)

$

423


$

152


$

568


$

675


$

314


$

996






















Note: Totals may not foot due to rounding differences.





















(1)

TDS has re-evaluated internal reporting roles with regard to its HMS business unit and, as a result, has changed its reportable segments.  Effective January 1, 2018, HMS is no longer reported under TDS Telecom.  Prior periods have been recast to conform to the revised presentation.

(2)

The TDS column includes U.S. Cellular, TDS Telecom and also the impacts of consolidating eliminations, corporate operations and non-reportable segments (including HMS as indicated in Note (1) above).

(3)

As of January 1, 2018, TDS adopted the new revenue recognition standard, ASC 606, using a modified retrospective approach.  Under this method, the new accounting standard is applied only to the most recent period presented.  As a result, 2018 amounts include the impacts of ASC 606, but 2017 amounts remain as previously reported, except as specifically stated.

(4)

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 (loss) before income taxes.

(5)

Additional information and reconciliations related to Non-GAAP financial measures for June 30, 2018, can be found on TDS' website at investors.tdsinc.com.

(6)

ASU 2017-07, regarding net periodic pension cost and net periodic postretirement benefit cost was adopted as of January 1, 2018, and applied retrospectively.  All prior period numbers have been recast to conform to this standard.





















Conference Call Information
TDS will hold a conference call on August 3, 2018 at 9:30 a.m. Central Time.

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

About TDS
Telephone and Data Systems, Inc. (TDS), a Fortune 1000® company, provides wireless; cable and wireline broadband, TV and voice; and hosted and managed services to approximately 6 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 9,600 people as of June 30, 2018.

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: intense competition; the ability to execute TDS' business strategy; uncertainties in TDS' future cash flows and liquidity and access to the capital markets; the ability to make payments on TDS and U.S. Cellular indebtedness or comply with the terms of debt covenants; impacts of any pending acquisitions/divestitures/exchanges of properties and/or licenses,  including, but not limited to, the ability to obtain regulatory approvals, successfully complete the transactions and the financial impacts of such transactions; the ability of the company to successfully manage and grow its markets; the access to and pricing of unbundled network elements; the ability to obtain or maintain roaming arrangements with other carriers on acceptable terms; the state and federal telecommunications regulatory environment; the value of assets and investments; adverse changes in the ratings of TDS and U.S. Cellular debt securities by accredited ratings organizations; industry consolidation; advances in telecommunications technology; pending and future litigation; changes in income tax rates, laws, regulations or rulings; changes in customer growth rates, average monthly revenue per user, churn rates, roaming revenue and terms, the availability of wireless devices, or the mix of services and products offered by U.S. Cellular and TDS Telecom. Investors are encouraged to consider these and other risks and uncertainties that are discussed in the Form 8-K Current Report used by TDS to furnish this press release to the Securities and Exchange Commission, which are incorporated by reference herein.    

For more information about TDS and its subsidiaries, visit:
TDS: www.tdsinc.com 
U.S. Cellular: www.uscellular.com 
TDS Telecom: www.tdstelecom.com 
OneNeck IT Solutions: www.oneneck.com

United States Cellular Corporation

Summary Operating Data (Unaudited)
















As of or for the Quarter Ended

6/30/2018(1)


3/31/2018(1)


12/31/2017



9/30/2017


6/30/2017

Retail Connections
















Postpaid

















Total at end of period


4,468,000



4,481,000



4,518,000



4,513,000



4,478,000



Gross additions


146,000



129,000



177,000



191,000



174,000




Feature phones


5,000



5,000



5,000



7,000



7,000




Smartphones


106,000



91,000



128,000



132,000



116,000




Connected devices


35,000



33,000



44,000



52,000



51,000



Net additions (losses)


(13,000)



(37,000)



5,000



35,000



23,000




Feature phones


(12,000)



(15,000)



(15,000)



(15,000)



(15,000)




Smartphones


17,000



(1,000)



33,000



44,000



34,000




Connected devices


(18,000)



(21,000)



(13,000)



6,000



4,000



ARPU (2)

$

44.74


$

44.34


$

44.12


$

43.41


$

44.60



ABPU (Non-GAAP)(3)

$

57.75


$

57.10


$

56.69


$

54.71


$

55.19



ARPA (4)

$

118.57


$

118.22


$

118.05


$

116.36


$

119.73



ABPA (Non-GAAP)(5)

$

153.03


$

152.26


$

151.68


$

146.65


$

148.15



Churn rate (6)


1.19%



1.23%



1.27%



1.16%



1.13%




Handsets


0.92%



0.97%



1.00%



0.96%



0.91%




Connected devices


2.85%



2.79%



2.84%



2.33%



2.35%


Prepaid

















Total at end of period


527,000



525,000



519,000



515,000



484,000



Gross additions


78,000



88,000



83,000



102,000



73,000



Net additions


2,000



6,000



4,000



31,000



3,000



ARPU (2)

$

32.32


$

31.78


$

32.42


$

33.12


$

33.52



Churn rate (6)


4.83%



5.27%



5.09%



4.75%



4.93%

Total connections at end of period (7)


5,051,000



5,063,000



5,096,000



5,089,000



5,023,000

Market penetration at end of period
















Consolidated operating population


31,469,000



31,469,000



31,834,000



31,834,000



32,089,000


Consolidated operating penetration (8)


16%



16%



16%



16%



16%

Capital expenditures (millions)

$

86


$

70


$

213


$

112


$

84

Total cell sites in service


6,478



6,473



6,460



6,436



6,421

Owned towers


4,105



4,099



4,080



4,051



4,044






















(1)

As of January 1, 2018, U.S. Cellular adopted the new revenue recognition standard, ASC 606, using a modified retrospective approach.  Under this method, the new accounting standard is applied only to the most recent period presented.  As a result, 2018 amounts include the impacts of ASC 606, but 2017 amounts remain as previously reported.

(2)

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.

(3)

Average Billings Per User (ABPU) - non-GAAP metric is calculated by dividing total postpaid service revenues plus equipment installment plan billings by the average number of postpaid connections and by the number of months in the period.  Refer to the end of this release for a reconciliation of this metric to its most comparable GAAP metric.

(4)

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.

(5)

Average Billings Per Account (ABPA) - non-GAAP metric is calculated by dividing total postpaid service revenues plus equipment installment plan billings by the average number of postpaid accounts and by the number of months in the period.  Refer to the end of this release for a reconciliation of this metric to its most comparable GAAP metric.

(6)

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.

(7)

Includes reseller and other connections.

(8)

Market penetration is calculated by dividing the number of wireless connections at the end of the period by the total population of consolidated operating markets as estimated by Nielsen.


 

TDS Telecom

Summary Operating Data (Unaudited)


As of or for the Quarter Ended

6/30/2018


3/31/2018


12/31/2017


9/30/2017


6/30/2017

TDS Telecom















Wireline
















Residential connections

















Voice (1)


282,200



286,000



290,600



298,200



304,600



Broadband (2)


234,300



230,500



228,600



229,900



230,200



Video (3)


51,500



50,300



48,600



47,200



46,200



   Wireline residential connections


568,000



566,900



567,700



575,300



581,000



















Total residential revenue per connection (4)

$

47.22


$

47.04


$

46.21


$

46.07


$

46.39



















Commercial connections

















Voice (1)


137,300



140,100



143,000



146,900



150,500



Broadband (2)


20,600



20,600



20,600



20,900



21,000



managedIP (5)


141,400



143,000



146,500



147,600



149,700



Video (3)


400



400









   Wireline commercial connections


299,600



304,000



310,100



315,300



321,200



















Total Wireline connections


867,700



870,900



877,800



890,700



902,200


















Cable
















Cable Connections

















Broadband (6)


159,400



156,800



153,300



143,800



140,300



Video (7)


101,600



100,700



101,800



97,900



97,900



Voice (8)


62,000



60,600



59,700



58,500



58,500



managedIP (5)


700



600



400



400



300



   Cable connections


323,700



318,700



315,100



300,600



297,000


















Note:  Totals may not foot due to rounding differences.


















(1)

The individual circuits connecting a customer to Wireline's central office facilities.

(2)

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

(3)

The number of Wireline customers provided video services.

(4)

Total residential revenue per connection is calculated by dividing total Wireline residential revenue by the average number of Wireline residential connections and by the number of months in the period.

(5)

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

(6)

Billable number of lines into a building for high-speed data services.

(7)

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

(8)

Billable number of lines into a building for voice services.

 

TDS Telecom

Capital Expenditures (Unaudited)

















Quarter Ended

6/30/2018


3/31/2018


12/31/2017


9/30/2017


6/30/2017

(Dollars in millions)















Wireline

$

33


$

29


$

55


$

41


$

33

Cable


13



11



20



14



12

Total TDS Telecom (1)

$

46


$

40


$

74


$

56


$

45


















Note:  Totals may not foot due to rounding differences.

















(1)

TDS has re-evaluated internal reporting roles with regard to its HMS business unit and, as a result, has changed its reportable segments.  Effective January 1, 2018, HMS is no longer reported under TDS Telecom.  Prior periods have been recast to conform to the revised presentation.

 

Telephone and Data Systems, Inc.

Consolidated Statement of Operations Highlights

(Unaudited)
























Three Months Ended


Six Months Ended





June 30,


June 30,


2018 (1)


2017


2018

vs. 2017


2018 (1)


2017


2018

vs. 2017

(Dollars and shares in millions, except per share amounts)
















Operating revenues

















U.S. Cellular

$

974


$

963


1%


$

1,915


$

1,899


1%


TDS Telecom (2)


230



231


-



461



459


-


All Other (2)(3)


51



53


(4)%



104



127


(18)%






1,255



1,247


1%



2,480



2,485


-

Operating expenses

















U.S. Cellular


















Expenses excluding depreciation, amortization and accretion


769



800


(4)%



1,492



1,543


(3)%



Depreciation, amortization and accretion


159



155


3%



317



307


3%



(Gain) loss on asset disposals, net


1



5


(84)%



2



9


(75)%



(Gain) loss on license sales and exchanges, net


(11)



(2)


>(100)%



(17)



(19)


8%






918



958


(4)%



1,794



1,840


(2)%


TDS Telecom (2)


















Expenses excluding depreciation, amortization and accretion (4)


158



152


4%



308



300


3%



Depreciation, amortization and accretion


53



48


11%



107



97


11%



(Gain) loss on asset disposals, net


1



1


37%



1



1


(8)%






212



200


6%



417



398


5%


All Other (2)(3)


















Expenses excluding depreciation and amortization (4)


57



53


5%



112



120


(8)%



Depreciation and amortization


8



8


(6)%



17



18


(5)%






64



62


4%



128



138


(8)%




Total operating expenses


1,194



1,220


(2)%



2,339



2,376


(2)%

Operating income (loss)

















U.S. Cellular


56



5


>100%



121



59


>100%


TDS Telecom (2)(4)


18



31


(41)%



43



61


(29)%


All Other (2)(3)(4)


(13)



(9)


(53)%



(23)



(11)


>(100)%






61



27


>100%



141



109


29%

Investment and other income (expense)

















Equity in earnings of unconsolidated entities


40



33


23%



78



65


20%


Interest and dividend income


6



4


65%



11



8


48%


Interest expense


(43)



(43)


(1)%



(86)



(85)


(1)%


Other, net (4)


1



1


(33)%



2



2


(39)%



Total investment and other income (expense) (4)


4



(5)


>100%



5



(10)


>100%

Income before income taxes


65



22


>100%



146



99


47%


Income tax expense


21



10


>100%



45



44


1%

Net income


44



12


>100%



101



55


84%


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


11



2


>100%



29



8


>100%

Net income available to TDS common shareholders

$

33


$

10


>100%


$

72


$

47


52%




















Basic weighted average shares outstanding


112



111


1%



112



110


1%

Basic earnings per share available to TDS common shareholders

$

0.30


$

0.09


>100%


$

0.65


$

0.43


51%




















Diluted weighted average shares outstanding


113



112


1%



113



112


1%

Diluted earnings per share available to TDS common shareholders

$

0.29


$

0.09


>100%


$

0.63


$

0.42


50%





















Note:  Totals may not foot due to rounding differences.

(1)

As of January 1, 2018, TDS adopted the new revenue recognition standard, ASC 606, using a modified retrospective approach. Under this method, the new accounting standard is applied only to the most recent period presented. As a result, 2018 amounts include the impacts of ASC 606, but 2017 amounts remain as previously reported, except as specifically stated.

(2)

TDS has re-evaluated internal reporting roles with regard to its HMS business unit and, as a result, has changed its reportable segments.  Effective January 1, 2018, HMS is no longer reported under TDS Telecom.  Prior periods have been recast to conform to the revised presentation.

(3)

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

(4)

ASU 2017-07, regarding net periodic pension cost and net periodic postretirement benefit cost was adopted January 1, 2018, and applied retrospectively.  All prior period numbers have been recast to conform to this standard.

 

Telephone and Data Systems, Inc.

Consolidated Statement of Cash Flows

(Unaudited)








Six Months Ended







June 30,



2018 (1)


2017


(Dollars in millions)







Cash flows from operating activities








Net income

$

101


$

55



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










Depreciation, amortization and accretion


441



422





Bad debts expense


43



49





Stock-based compensation expense


23



22





Deferred income taxes, net


25



(22)





Equity in earnings of unconsolidated entities


(78)



(65)





Distributions from unconsolidated entities


70



65





(Gain) loss on asset disposals, net


3



10





(Gain) loss on license sales and exchanges, net


(17)



(19)





Noncash interest


2



1



Changes in assets and liabilities from operations










Accounts receivable


51



5





Equipment installment plans receivable


(47)



(107)





Inventory


(8)



2





Accounts payable


(50)



(59)





Customer deposits and deferred revenues


(25)



(10)





Accrued taxes


(5)



53





Other assets and liabilities


(66)



(44)






Net cash provided by operating activities


463



358













Cash flows from investing activities








Cash paid for additions to property, plant and equipment


(275)



(242)



Cash paid for acquisitions and licenses


(10)



(200)



Cash received for investments


100





Cash received from divestitures and exchanges


21



17



Other investing activities


3



1






Net cash used in investing activities


(161)



(424)













Cash flows from financing activities








Repayment of long-term debt


(10)



(6)



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


7



(1)



Repurchase of TDS Preferred Shares




(1)



Dividends paid to TDS shareholders


(36)



(34)



Payment of debt issuance costs


(1)





Distributions to noncontrolling interests


(4)



(2)



Other financing activities


(3)



1






Net cash used in financing activities


(47)



(43)













Net increase (decrease) in cash, cash equivalents and restricted cash


255



(109)













Cash, cash equivalents and restricted cash








Beginning of period


622



904



End of period

$

877


$

795














(1)

As of January 1, 2018, TDS adopted the new revenue recognition standard, ASC 606, using a modified retrospective approach. Under this method, the new accounting standard is applied only to the most recent period presented. As a result, 2018 amounts include the impacts of ASC 606, but 2017 amounts remain as previously reported.



  

Telephone and Data Systems, Inc.

Consolidated Balance Sheet Highlights

(Unaudited)







ASSETS
















June 30,


December 31,




2018 (1)


2017

(Dollars in millions)






Current assets







Cash and cash equivalents

$

873


$

619


Short-term investments




100


Accounts receivable


987



961


Inventory, net


153



145


Prepaid expenses


103



112


Income taxes receivable


1



2


Other current assets


43



27



Total current assets


2,160



1,966









Assets held for sale


1



10









Licenses


2,240



2,232

Goodwill


509



509

Other intangible assets, net


266



279

Investments in unconsolidated entities


477



453









Property, plant and equipment, net


3,259



3,424









Other assets and deferred charges


586



422









Total assets

$

9,498


$

9,295


 

Telephone and Data Systems, Inc.

Consolidated Balance Sheet Highlights

(Unaudited)








LIABILITIES AND EQUITY



















June 30,


December 31,





2018 (1)


2017

(Dollars in millions, except per share amounts)






Current liabilities







Current portion of long-term debt

$

20


$

20


Accounts payable


296



368


Customer deposits and deferred revenues


165



223


Accrued interest


12



11


Accrued taxes


54



64


Accrued compensation


84



126


Other current liabilities


98



106



Total current liabilities


729



918










Deferred liabilities and credits







Deferred income tax liability, net


636



552


Other deferred liabilities and credits


523



495










Long-term debt, net


2,427



2,437










Noncontrolling interests with redemption features


11



1










Equity







TDS shareholders' equity








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


1



1



Capital in excess of par value


2,418



2,413



Treasury shares, at cost


(624)



(669)



Accumulated other comprehensive income


(3)



(1)



Retained earnings


2,692



2,525




   Total TDS shareholders' equity


4,484



4,269











Noncontrolling interests


688



623












Total equity


5,172



4,892










Total liabilities and equity

$

9,498


$

9,295











(1)

As of January 1, 2018, TDS adopted the new revenue recognition standard, ASC 606, using a modified retrospective approach.  Under this method, the new accounting standard is applied only to the most recent period presented.  As a result, 2018 amounts include the impacts of ASC 606, but 2017 amounts remain as previously reported.


 

Balance Sheet Highlights

(Unaudited)




June 30, 2018



U.S.


TDS


TDS Corporate


Intercompany


TDS



Cellular


Telecom


& Other


Eliminations


Consolidated

(Dollars in millions)















Cash and cash equivalents

$

596


$

23


$

254


$


$

873

Affiliated cash investments




391





(391)





$

596


$

414


$

254


$

(391)


$

873

















Licenses, goodwill and other intangible assets

$

2,231


$

764


$

20


$


$

3,015

Investment in unconsolidated entities


439



4



41



(7)



477



$

2,670


$

768


$

61


$

(7)


$

3,492

















Property, plant and equipment, net

$

2,159


$

968


$

132


$


$

3,259

















Long-term debt, net:
















Current portion

$

18


$

1


$

1


$


$

20


Non-current portion


1,614



2



811





2,427



$

1,632


$

3


$

812


$


$

2,447


 

TDS Telecom Highlights

(Unaudited)
























Three Months Ended


Six Months Ended





June 30,


June 30,



2018 (1)



2017


2018
vs.
2017



2018 (1)



2017


2018
vs.
2017

(Dollars in millions)
















Wireline
















Operating revenues

















Residential

$

80


$

81


(1)%


$

160


$

160


-


Commercial


46



50


(8)%



94



101


(7)%


Wholesale


46



49


(5)%



94



98


(5)%



Total service revenues


173



180


(4)%



348



359


(3)%


Equipment and product sales





53%



1



1


39%






174



181


(4)%



349



360


(3)%

Operating expenses

















Cost of services


67



65


2%



131



129


2%


Cost of equipment and products




1


(41)%



1



1


(32)%


Selling, general and administrative expenses (2)


50



49


1%



97



97


(1)%


Expenses excluding depreciation, amortization and accretion


117



115


1%



229



227


1%


Depreciation, amortization and accretion


36



37


(4)%



72



76


(5)%


(Gain) loss on asset disposals, net


1




94%



1



1


17%






153



153


-



302



304


(1)%


Operating income (2)

$

21


$

28


(25)%


$

47


$

56


(16)%




















Cable
















Operating revenues

















Residential

$

47


$

41


12%


$

92


$

82


12%


Commercial


10



9


7%



20



18


10%





57



51


12%



112



100


12%

Operating expenses

















Cost of services


27



24


11%



52



48


9%


Selling, general and administrative expenses


15



13


14%



28



25


10%


Expenses excluding depreciation, amortization and accretion


41



37


12%



80



73


10%


Depreciation, amortization and accretion


18



11


63%



35



21


67%


(Gain) loss on asset disposals, net





(12)%



1



1


(27)%






59



48


24%



116



95


22%


Operating income (loss)

$

(3)


$

3


>(100)%


$

(4)


$

5


>(100)%




















Total TDS Telecom operating income (2)(3)

$

18


$

31


(41)%


$

43


$

61


(29)%





















Note:  Totals may not foot due to rounding differences.




















(1)

As of January 1, 2018, TDS adopted the new revenue recognition standard, ASC 606, using a modified retrospective approach. Under this method, the new accounting standard is applied only to the most recent period presented. As a result, 2018 amounts include the impacts of ASC 606, but 2017 amounts remain as previously reported, except as specifically stated.




















(2)

ASU 2017-07, regarding net periodic pension cost and net periodic postretirement benefit cost was adopted as of January 1, 2018, and applied retrospectively.  All prior period numbers have been recast to conform to this standard.




















(3)

TDS has re-evaluated internal reporting roles with regard to its HMS business unit and, as a result, has changed its reportable segments.  Effective January 1, 2018, HMS is no longer reported under TDS Telecom.  Prior periods have been recast to conform to the revised presentation.


 

Telephone and Data Systems, Inc.

Financial Measures and Reconciliations































Free Cash Flow




















Three Months Ended June 30,


Six Months Ended June 30,



2018


2017


2018


2017

(Dollars in millions)













Cash flows from operating activities (GAAP)


$

249


$

221


$

463


$

358

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



145



115



275



242



Free cash flow (Non-GAAP)(1)


$

104


$

106


$

188


$

116

















(1)

Management uses Free cash flow as a liquidity measure and it is defined as Cash flows from operating activities less Cash paid for additions to property, plant and equipment.  Free cash flow is a non-GAAP financial measure which TDS believes may be useful to investors and other users of its financial information in evaluating liquidity, specifically, the amount of net cash generated by business operations after deducting Cash paid for additions to property, plant and equipment.

Postpaid ABPU and Postpaid ABPA
U.S. Cellular presents Postpaid ABPU and Postpaid ABPA to reflect the revenue shift from Service revenues to Equipment and product sales resulting from the increased adoption of equipment installment plans.  Postpaid ABPU and Postpaid ABPA, as previously defined herein, are non-GAAP financial measures which U.S. Cellular believes are useful to investors and other users of its financial information in showing trends in both service and equipment and product sales revenues received from customers.


















For the Quarter Ended


6/30/2018(1)



3/31/2018(1)



12/31/2017



9/30/2017



6/30/2017

(Dollars and connection counts in millions)















Calculation of Postpaid ARPU















Postpaid service revenues

$

600


$

598


$

598


$

586


$

597

Average number of postpaid connections


4.47



4.50



4.52



4.50



4.47

Number of months in period


3



3



3



3



3


Postpaid ARPU (GAAP metric)

$

44.74


$

44.34


$

44.12


$

43.41


$

44.60


















Calculation of Postpaid ABPU















Postpaid service revenues

$

600


$

598


$

598


$

586


$

597

Equipment installment plan billings


174



172



170



152



142


Total billings to postpaid connections

$

774


$

770


$

768


$

738


$

739

Average number of postpaid connections


4.47



4.50



4.52



4.50



4.47

Number of months in period


3



3



3



3



3


Postpaid ABPU (Non-GAAP metric)

$

57.75


$

57.10


$

56.69


$

54.71


$

55.19


















Calculation of Postpaid ARPA















Postpaid service revenues

$

600


$

598


$

598


$

586


$

597

Average number of postpaid accounts


1.69



1.69



1.69



1.68



1.66

Number of months in period


3



3



3



3



3


Postpaid ARPA (GAAP metric)

$

118.57


$

118.22


$

118.05


$

116.36


$

119.73


















Calculation of Postpaid ABPA















Postpaid service revenues

$

600


$

598


$

598


$

586


$

597

Equipment installment plan billings


174



172



170



152



142


Total billings to postpaid accounts

$

774


$

770


$

768


$

738


$

739

Average number of postpaid accounts


1.69



1.69



1.69



1.68



1.66

Number of months in period


3



3



3



3



3


Postpaid ABPA (Non-GAAP metric)

$

153.03


$

152.26


$

151.68


$

146.65


$

148.15



















(1)

As of January 1, 2018, U.S. Cellular adopted the new revenue recognition standard, ASC 606, using a modified retrospective approach. Under this method, the new accounting standard is applied only to the most recent period presented. As a result, 2018 amounts include the impacts of ASC 606, but 2017 amounts remain as previously reported.

 

Cision View original content:http://www.prnewswire.com/news-releases/tds-reports-second-quarter-2018-results-300691716.html

SOURCE Telephone and Data Systems, Inc.

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