Exhibit 99.l NEWS RELEASE
As previously announced, TDS will hold a teleconference Feb. 25, 2015 at 9:30 a.m. CST. Interested parties may listen to the call live via the Events & Presentations page of investors.tdsinc.com.
FOR IMMEDIATE RELEASE
TDS reports fourth quarter 2014 results
Provides 2015 guidance
CHICAGO, (Feb. 25, 2015) — 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 1000TM 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.
Contacts
Jane McCahon, Vice President, Corporate Relations and Corporate Secretary
312- 592-5379
jane.mccahon@tdsinc.com
Julie Mathews, Investor Relations Manager
312- 592-5341
julie.mathews@tdsinc.com
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 handsets sold | | 86.5% | | | 80.8% | | | 79.0% | | | 78.2% | | | 84.5% |
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 handsets sold | | 86.5% | | | 80.8% | | | 79.0% | | | 78.2% | | | 84.5% |
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, plant and equipment | | | 245,778 | | | 252,427 | | | 799,496 | | | 883,797 |
| | 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.
