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Business Segment Information
 9 Months Ended
Sep. 30, 2014
Disclosure Text Block  
Business Segment Information

11. Business Segment Information

 

U.S. Cellular and TDS Telecom are billed for all services they receive from TDS, consisting primarily of information processing, accounting and finance, and general management services. Such billings are based on expenses specifically identified to U.S. Cellular and TDS Telecom and on allocations of common expenses. Management believes the method used to allocate common expenses is reasonable and that all expenses and costs applicable to U.S. Cellular and TDS Telecom are reflected in the accompanying business segment information on a basis that is representative of what they would have been if U.S. Cellular and TDS Telecom operated on a stand-alone basis.

 

Financial data for TDS' reportable segments for the three and nine month periods ended, or as of September 30, 2014 and 2013, is as follows. See Note 1 — Basis of Presentation for additional information.

               
    TDS Telecom       
Three Months Ended or as of September 30, 2014 U.S. Cellular Wireline Cable HMS TDS Telecom Eliminations TDS Telecom Total Non-Reportable Segment Corporate, Eliminations and Other Reconciling Items Total
(Dollars in thousands)                           
Operating revenues                           
 Service $ 851,063 $ 177,650 $ 28,519 $ 27,806 $ (980) $ 232,995 $ 3,356 $ (5,942) $ 1,081,472
 Equipment and product sales   149,356   425   -   39,737   -   40,162   9,033   -   198,551
  Total operating revenues   1,000,419   178,075   28,519   67,543   (980)   273,157   12,389   (5,942)   1,280,023
Cost of services (excluding Depreciation, amortization and accretion reported below)   199,750   64,072   12,651   19,442   (926)   95,239   3,332   (1,138)   297,183
Cost of equipment and products   307,862   829   -   33,819   -   34,648   6,703   (4)   349,209
Selling, general and administrative   397,545   46,627   9,948   12,724   (54)   69,245   3,022   (4,798)   465,014
Depreciation, amortization and accretion   148,952   41,358   6,171   6,726   -   54,255   725   1,597   205,529
Loss on impairment of assets   -   -   -   84,000   -   84,000   -   -   84,000
(Gain) loss on asset disposals, net   7,947   743   626   (2)   -   1,367   -   (21)   9,293
(Gain) loss on sale of business and other exit costs, net   (10,283)   (2,201)   -   -   -   (2,201)   7,694   -   (4,790)
Operating income (loss)   (51,354)   26,647   (877)   (89,166)   -   (63,396)   (9,087)   (1,578)   (125,415)
Equity in earnings of unconsolidated entities   35,971   2   -   -   -   2   -   108   36,081
Interest and dividend income   3,572   569   (1)   (23)   -   545   1   408   4,526
Interest expense   (13,514)   598   32   (343)   -   287   (964)   (12,979)   (27,170)
Other, net   95   71   -   (86)   -   (15)   (5)   (6)   69
Income (loss) before income taxes   (25,230)   27,887   (846)   (89,618)   -   (62,577)   (10,055)   (14,047)   (111,909)
Add back:                           
Depreciation, amortization and accretion   148,952   41,358   6,171   6,726   -   54,255   725   1,597   205,529
Loss on impairment of assets   -   -   -   84,000   -   84,000   -   -   84,000
(Gain) loss on sale of business and other exit costs, net   (10,283)   (2,201)   -   -   -   (2,201)   7,694   -   (4,790)
Interest expense   13,514   (598)   (32)   343   -   (287)   964   12,979   27,170
Adjusted income (loss) before income taxes $ 126,953 $ 66,446 $ 5,293 $ 1,451 $ - $ 73,190 $ (672) $ 529 $ 200,000
                              
Investments in unconsolidated entities $ 296,900 $ 3,804 $ - $ - $ - $ 3,804 $ - $ 34,744 $ 335,448
Total assets $ 6,257,075 $ 1,385,524 $ 543,731 $ 255,519 $ - $ 2,184,774 $ 54,302 $ 144,397 $ 8,640,548
Capital expenditures $ 142,452 $ 34,243 $ 7,598 $ 9,800 $ - $ 51,641 $ 161 $ 971 $ 195,225

        TDS Telecom       
                       
Three Months Ended or as of September 30, 2013 U.S. Cellular Wireline Cable HMS TDS Telecom Eliminations TDS Telecom Total Non-Reportable Segment Corporate, Eliminations and Other Reconciling Items Total
(Dollars in thousands)                           
Operating revenues                           
 Service $ 862,330 $ 181,087 $ 14,362 $ 23,200 $ (346) $ 218,303 $ 5,475 $ (6,951) $ 1,079,157
 Equipment and product sales   76,906   713   -   15,527   -   16,240   8,677   -   101,823
  Total operating revenues   939,236   181,800   14,362   38,727   (346)   234,543   14,152   (6,951)   1,180,980
Cost of services (excluding Depreciation, amortization and accretion reported below)   177,431   67,308   6,727   14,369   (322)   88,082   4,051   (2,227)   267,337
Cost of equipment and products   193,392   941   -   13,149   -   14,090   6,466   -   213,948
Selling, general and administrative   410,468   53,254   5,184   10,064   (24)   68,478   3,295   (5,377)   476,864
Depreciation, amortization and accretion   200,985   42,136   2,914   6,255   -   51,305   1,485   1,520   255,295
(Gain) loss on asset disposals, net   1,701   426   -   10   -   436   32   (14)   2,155
(Gain) loss on sale of business and other exit costs, net   (1,534)   -   -   -   -   -   -   -   (1,534)
Operating income (loss)   (43,207)   17,735   (463)   (5,120)   -   12,152   (1,177)   (853)   (33,085)
Equity in earnings of unconsolidated entities   37,360   2   -   -   -   2   -   247   37,609
Interest and dividend income   1,095   331   -   15   -   346   1   1,065   2,507
Gain (loss) on investments   -   830   -   -   -   830   -   (830)   -
Interest expense   (11,329)   794   (32)   (397)   -   365   (1,024)   (12,973)   (24,961)
Other, net   47   (35)   -   111   -   76   4   18   145
Income (loss) before income taxes   (16,034)   19,657   (495)   (5,391)   -   13,771   (2,196)   (13,326)   (17,785)
Add back:                           
Depreciation, amortization and accretion   200,985   42,136   2,914   6,255   -   51,305   1,485   1,520   255,295
(Gain) loss on sale of business and other exit costs, net   (1,534)   -   -   -   -   -   -   -   (1,534)
Gain (loss) on investments   -   (830)   -   -   -   (830)   -   830   -
Interest expense   11,329   (794)   32   397   -   (365)   1,024   12,973   24,961
Adjusted income (loss) before income taxes $ 194,746 $ 60,169 $ 2,451 $ 1,261 $ - $ 63,881 $ 313 $ 1,997 $ 260,937
                              
Investments in unconsolidated entities $ 309,481 $ 3,809 $ - $ - $ - $ 3,809 $ - $ 32,121 $ 345,411
Total assets $ 6,259,854 $ 1,464,208 $ 276,943 $ 264,675 $ - $ 2,005,826 $ 58,697 $ 375,323 $ 8,699,700
Capital expenditures $ 242,459 $ 32,792 $ 1,400 $ 2,371 $ - $ 36,563 $ 203 $ 2,023 $ 281,248

       TDS Telecom       
                     
Nine Months Ended or as of September 30, 2014 U.S. Cellular Wireline Cable HMS TDS Telecom Eliminations TDS Telecom Total Non- Reportable Segment Corporate, Eliminations and Other Reconciling Items Total
(Dollars in thousands)                           
Operating revenues                           
 Service $ 2,548,149 $ 534,880 $ 73,506 $ 82,757 $ (1,959) $ 689,184 $ 12,374 $ (15,814) $ 3,233,893
 Equipment and product sales   335,854   1,409   -   115,830   -   117,239   25,391   -   478,484
  Total operating revenues   2,884,003   536,289   73,506   198,587   (1,959)   806,423   37,765   (15,814)   3,712,377
Cost of services (excluding Depreciation, amortization and accretion expense reported below)   567,488   192,777   35,000   57,689   (1,820)   283,646   11,834   (3,339)   859,629
Cost of equipment and products   850,314   1,793   -   98,161   -   99,954   18,603   (4)   968,867
Selling, general and administrative   1,197,361   140,855   22,611   39,935   (139)   203,262   10,285   (11,323)   1,399,585
Depreciation, amortization and accretion   465,042   125,921   15,089   20,195   -   161,205   4,019   4,749   635,015
Loss on impairment of assets   -   -   -   84,000   -   84,000   -   -   84,000
(Gain) loss on asset disposals, net   16,774   1,502   1,116   76   -   2,694   170   (12)   19,626
(Gain) loss on sale of business and other exit costs, net   (27,694)   (2,201)   -   -   -   (2,201)   20,816   -   (9,079)
(Gain) loss on license sales and exchanges   (91,446)   -   -   -   -   -   -   -   (91,446)
Operating income (loss)   (93,836)   75,642   (310)   (101,469)   -   (26,137)   (27,962)   (5,885)   (153,820)
Equity in earnings of unconsolidated entities   106,166   6   -   -   -   6   -   2,026   108,198
Interest and dividend income   6,029   1,744   1   19   -   1,764   1   1,969   9,763
Interest expense   (42,712)   1,939   67   (1,203)   -   803   (3,182)   (38,684)   (83,775)
Other, net   281   (78)   -   93   -   15   (11)   (6)   279
Income (loss) before income taxes   (24,072)   79,253   (242)   (102,560)   -   (23,549)   (31,154)   (40,580)   (119,355)
Add back:                           
Depreciation, amortization and accretion   465,042   125,921   15,089   20,195   -   161,205   4,019   4,749   635,015
Loss on impairment of assets   -   -   -   84,000   -   84,000   -   -   84,000
(Gain) loss on sale of business and other exit costs, net   (27,694)   (2,201)   -   -   -   (2,201)   20,816   -   (9,079)
(Gain) loss on license sales and exchanges   (91,446)   -   -   -   -   -   -   -   (91,446)
Interest expense   42,712   (1,939)   (67)   1,203   -   (803)   3,182   38,684   83,775
Adjusted income (loss) before income taxes $ 364,542 $ 201,034 $ 14,780 $ 2,838 $ - $ 218,652 $ (3,137) $ 2,853 $ 582,910
                              
Investments in unconsolidated entities $ 296,900 $ 3,804 $ - $ - $ - $ 3,804 $ - $ 34,744 $ 335,448
Total assets $ 6,257,075 $ 1,385,524 $ 543,731 $ 255,519 $ - $ 2,184,774 $ 54,302 $ 144,397 $ 8,640,548
Capital expenditures $ 375,960 $ 84,511 $ 20,998 $ 23,179 $ - $ 128,688 $ 629 $ 3,227 $ 508,504

    TDS Telecom       
Nine Months Ended or as of September 30, 2013 U.S. Cellular Wireline Cable HMS TDS Telecom Eliminations TDS Telecom Total Non- Reportable Segment Corporate, Eliminations and Other Reconciling Items Total
(Dollars in thousands)                           
Operating revenues                           
 Services $ 2,769,645 $ 543,193   14,362 $ 68,405 $ (531) $ 625,429 $ 15,064 $ (16,418) $ 3,393,720
 Equipment and product sales   246,467   2,375   -   47,260   -   49,635   27,897   -   323,999
  Total operating revenues   3,016,112   545,568   14,362   115,665   (531)   675,064   42,961   (16,418)   3,717,719
Cost of services (excluding Depreciation, amortization and accretion expense reported below)   585,997   199,476   6,727   43,042   (507)   248,738   10,497   (2,931)   842,301
Cost of equipment and products   652,153   3,045   -   39,475   -   42,520   19,934   -   714,607
Selling, general and administrative   1,234,675   167,326   5,184   29,346   (24)   201,832   10,767   (12,787)   1,434,487
Depreciation, amortization and accretion   593,410   129,352   2,914   17,286   -   149,552   4,494   4,119   751,575
(Gain) loss on asset disposals, net   16,153   (176)   -   123   -   (53)   32   (42)   16,090
(Gain) loss on sale of business and other exit costs, net   (243,627)   -   -   -   -   -   -   (54,010)   (297,637)
Operating income (loss)   177,351   46,545   (463)   (13,607)   -   32,475   (2,763)   49,233   256,296
Equity in earnings of unconsolidated entities   99,797   16   -   -   -   16   -   490   100,303
Interest and dividend income   2,967   1,263   -   47   -   1,310   3   2,405   6,685
Gain (loss) on investments   18,527   830   -   -   -   830   -   (4,839)   14,518
Interest expense   (32,393)   2,420   (32)   (1,205)   -   1,183   (3,007)   (38,991)   (73,208)
Other, net   153   (213)   -   (11)   -   (224)   (153)   18   (206)
Income (loss) before income taxes   266,402   50,861   (495)   (14,776)   -   35,590   (5,920)   8,316   304,388
Add back:                           
Depreciation, amortization and accretion   593,410   129,352   2,914   17,286   -   149,552   4,494   4,119   751,575
(Gain) loss on sale of business and other exit costs, net   (243,627)   -   -   -   -   -   -   (54,010)   (297,637)
Gain (loss) on investments   (18,527)   (830)   -   -   -   (830)   -   4,839   (14,518)
Interest expense   32,393   (2,420)   32   1,205   -   (1,183)   3,007   38,991   73,208
Adjusted income before income taxes $ 630,051 $ 176,963 $ 2,451 $ 3,715 $ - $ 183,129 $ 1,581 $ 2,255 $ 817,016
                              
Investments in unconsolidated entities $ 309,481 $ 3,809 $ - $ - $ - $ 3,809 $ - $ 32,121 $ 345,411
Total assets $ 6,259,854 $ 1,464,208 $ 276,943 $ 264,675 $ - $ 2,005,826 $ 58,697 $ 375,323 $ 8,699,700
Capital expenditures $ 529,366 $ 93,998 $ 1,400 $ 7,220 $ - $ 102,618 $ 720 $ 4,724 $ 637,428

Adjusted income before income taxes is a segment measure reported to the chief operating decision maker for purposes of making decisions about allocating resources to the segments and assessing their performance. Adjusted income before income taxes is defined as Income (loss) before income taxes, adjusted for the items set forth in the reconciliation above. Adjusted income before income taxes excludes these items in order to show operating results on a more comparable basis from period to period. From time to time, TDS may also exclude other items from adjusted income before income taxes if such items help reflect operating results on a more comparable basis. TDS does not intend to imply that any of such items that are excluded are non-recurring, infrequent or unusual; such items may occur in the future. TDS believes Adjusted income before income taxes is a useful measure of TDS' operating results before significant recurring non-cash charges, discrete gains and losses and financing charges (Interest expense).