SECURITIES AND EXCHANGE COMMISSION |
|||||||||||||||||
Washington, D.C. 20549 |
|||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FORM 8-K |
|||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT REPORT |
|||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
|||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Date of Report (Date of earliest event reported): November 8, 2017 |
|
(Exact name of registrant as specified in its charter) |
|||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Delaware |
|
|
001-14157 |
|
|
36-2669023 |
|||||||||||
(State or other jurisdiction of |
|
|
(Commission |
|
|
(I.R.S. Employer Identification No.) |
|||||||||||
incorporation or organization) |
|
|
File Number) |
|
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30 North LaSalle Street, Suite 4000, Chicago, Illinois 60602 |
|||||||||||||||||
(Address of principal executive offices) (Zip Code) |
|||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Registrant's telephone number, including area code: (312) 630-1900 |
|||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Not Applicable |
|||||||||||||||||
(Former name or former address, if changed since last report) |
|||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): |
|||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
□ |
|
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
□ |
|
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
□ |
|
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
□ |
|
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). |
|||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
□ |
|
Emerging growth company |
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
□ |
|
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. |
Item 2.02. Results of Operations and Financial Condition
On November 8, 2017, Telephone and Data Systems, Inc. (TDS) issued a news release announcing its results of operations for the period ended September 30, 2017. A copy of the news release is attached hereto as Exhibit 99.1 and incorporated by reference herein.
The information in this Item 2.02 of Form 8-K is being “furnished” and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section, nor will any such information or exhibits be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except as expressly set forth by specific reference in such filing.
Item 9.01. Financial Statements and Exhibits
(d) The following exhibits are being filed herewith:
Exhibit No. |
|
Exhibit |
99.1 |
|
|
|
|
|
99.2 |
|
Private Securities Litigation Reform Act of 1995 Safe Harbor Cautionary Statement |
|
|||
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. |
|||
|
|
|
|
|
|
TELEPHONE AND DATA SYSTEMS, INC. |
|
|
|
(Registrant) |
|
|
|
|
|
Date: |
November 8, 2017 |
|
|
|
|
|
|
|
|
By: |
/s/ Douglas D. Shuma |
|
|
|
Douglas D. Shuma |
|
|
|
Senior Vice President - Finance and Chief Accounting Officer |
|
|
|
(principal financial officer and principal accounting officer) |
As previously announced, TDS will hold a teleconference November 8, 2017, at 9:30 a.m. CST. Listen to the call live via the Events & Presentations page of investors.tdsinc.com.
FOR IMMEDIATE RELEASE
TDS reports third quarter 2017 results
U.S. Cellular expands customer base and raises guidance;
Sixth consecutive quarter of double digit cable broadband connection growth
CHICAGO, (November 8, 2017) — Telephone and Data Systems, Inc. (NYSE:TDS) reported total operating revenues of $1,251 million for the third quarter of 2017, versus $1,314 million for the same period one year ago. Net loss available to TDS common shareholders and related diluted loss per share were $181 million and $1.64, respectively, as a result of a $262 million ($190 million, net of tax and noncontrolling interests impacts) non-cash charge related to goodwill impairment recorded during the three months ended September 30, 2017. This compares to Net income available to TDS common shareholders and related diluted earnings per share of $13 million and $0.11, respectively, in the same period one year ago. Excluding this goodwill impairment charge and other non-controlling interest impacts associated with this charge, Net income available to TDS common shareholders and related diluted earnings per share were $9 million and $0.08, respectively, for the three months ended September 30, 2017.
“TDS' businesses continue on a solid path of achieving their priorities for 2017,” said LeRoy T. Carlson Jr., TDS president and CEO. “U.S. Cellular grew its customer base while successfully reducing expenses. TDS Telecom expanded its wireline and cable segments while implementing its long-term broadband strategy of providing the best broadband connection in each market.
“U.S. Cellular added postpaid handset customers and continued to drive an exceptionally low level of postpaid handset churn. This shows that effective promotions and pricing through Total Plan packages, which include unlimited data offerings, are well received by both new and current customers. U.S. Cellular effectively managed cost reductions including lowering expenses in system operations, despite increased data traffic. Reflecting these positive results, U.S. Cellular raised its guidance on profitability.
“Wireline revenues and profitability increased at TDS Telecom, through higher revenues from fiber investments and through support from the Alternative Connect America Cost Model (A-CAM). TDS Telecom's Cable segment continued to see a rise in broadband connections and together with an increase in demand for higher data speeds, generated higher revenues and margin expansion. TDS Telecom recently completed its purchase agreements for Crestview Communications in Central Oregon, and K2 Communications in Mead, Colorado. These acquisitions provide excellent clustering opportunities as we continue to build broadband penetration in these target markets. OneNeck IT Solutions reported lower revenues due to less equipment sales to existing customers. Growing sales continues to be their top priority.”
|
Current estimates of full-year 2017 results for U.S. Cellular, TDS Telecom, and TDS are shown below. Such estimates represent management’s view as of November 8, 2017. 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.
|
2017 Estimated Results |
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Cellular |
|
TDS Telecom |
|
TDS(3) |
||||||
|
|
Current |
Previous |
|
Current |
Previous |
|
Current |
Previous |
|||
(Dollars in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
Total operating revenues (1) |
$3,850-$3,950 |
$3,800-$4,000 |
|
$1,125-$1,150 |
$1,200-$1,250 |
|
$4,990-$5,115 |
$5,015-$5,265 |
||||
Adjusted OIBDA (1)(2)(4) |
$600-$700 |
$550-$650 |
|
$310-$330 |
$300-$340 |
|
$910-$1,030 |
$855-$955 |
||||
Adjusted EBITDA (2) |
$740-$840 |
$700-$800 |
|
$310-$330 |
$300-$340 |
|
$1,050-$1,170 |
$1,005-$1,145 |
||||
Capital expenditures (Approximately) |
|
$500 |
Unchanged |
|
|
$225 |
Unchanged |
|
|
$735 |
Unchanged |
The following tables provide reconciliations of Net income (loss) to Adjusted OIBDA and Adjusted EBITDA for 2017 estimated results, actual results for the nine months ended September 30, 2017, and actual results for the year ended December 31, 2016. In providing 2017 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.
|
|
|
2017 Estimated Results |
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Cellular |
|
|
TDS Telecom |
|
|
TDS(3) |
(Dollars in millions) |
|
|
|
|
|
|
|
|
||
Net income (loss) (GAAP) |
|
N/A |
|
|
N/A |
|
|
N/A |
||
Add back: |
|
|
|
|
|
|
|
|
||
|
Income tax expense (benefit) |
|
N/A |
|
|
N/A |
|
|
N/A |
|
Income (loss) before income taxes (GAAP) |
$ |
|
$ |
|
$ |
|||||
Add back: |
|
|
|
|
|
|
|
|
||
|
Interest expense |
|
|
|
|
|
||||
|
Depreciation, amortization and accretion expense |
|
|
|
|
|
||||
EBITDA (Non-GAAP) |
$ |
|
$ |
|
$ |
|||||
Add back: |
|
|
|
|
|
|
|
|
||
|
Loss on impairment of goodwill |
|
|
|
|
|
||||
|
(Gain) loss on sale of business and other exit costs, net |
|
|
|
|
|
||||
|
(Gain) loss on license sales and exchanges, net |
|
|
|
|
|
||||
|
(Gain) loss on asset disposals, net |
|
|
|
|
|
||||
Adjusted EBITDA (Non-GAAP) (2) |
$ |
|
$ |
|
$ |
|||||
Deduct: |
|
|
|
|
|
|
|
|
||
|
Equity in earnings of unconsolidated entities |
|
|
|
|
|
||||
|
Interest and dividend income(1) |
|
|
|
|
|
||||
Adjusted OIBDA (Non-GAAP)(1)(2)(4) |
$ |
|
$ |
|
$ |
|
|
|
Actual Results |
|||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2017 |
|
Year ended December 31, 2016 |
||||||||||||||
|
|
|
U.S. Cellular |
|
TDS Telecom |
|
TDS (3) |
|
U.S. Cellular |
|
TDS Telecom |
|
TDS (3) |
||||||
(Dollars in millions) |
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net income (loss) (GAAP) |
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
||||||||
Add back: |
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Income tax expense (benefit) |
|
|
|
|
|
|
|
|
|
|
|
|||||||
Income (loss) before income taxes |
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
(GAAP) |
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|||||||
Add back: |
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
Depreciation, amortization and |
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
accretion expense |
|
|
|
|
|
|
|
|
|
|
|
||||||
EBITDA (Non-GAAP) |
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
||||||||
Add back: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Loss on impairment of goodwill |
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
(Gain) loss on sale of business and |
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
other exit costs, net |
|
|
|
|
|
|
|
|
|
|
|
||||||
|
(Gain) loss on license sales and |
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
exchanges, net |
|
|
|
|
|
|
|
|
|
|
|
||||||
|
(Gain) loss on asset disposals, net |
|
|
|
|
|
|
|
|
|
|
|
|||||||
Adjusted EBITDA (Non-GAAP) (2) |
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
||||||||
Deduct: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Equity in earnings of unconsolidated |
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
entities |
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Interest and dividend income(1) |
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
Other, net |
|
|
|
|
|
|
|
|
|
|
|
|||||||
Adjusted OIBDA (Non-GAAP) (1)(2)(4) |
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note: Totals may not foot due to rounding differences. |
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
Equipment installment plan interest income is reflected as a component of Service revenues consistent with an accounting policy change effective January 1, 2017. All prior period numbers have been recast to conform to this accounting change. |
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2) |
Adjusted EBITDA is defined as net income adjusted for the items set forth in the reconciliation above. Adjusted OIBDA is defined as net income adjusted for the items set forth in the reconciliation above. 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 Adjusted EBITDA and Adjusted OIBDA flow to the corresponding GAAP measure, Net income or Income before income taxes. |
||||||||||||||||||
|
|
|
|||||||||||||||||
(3) |
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. |
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4) |
A reconciliation of Adjusted OIBDA (Non-GAAP) to Operating income (GAAP) for September 30, 2017 actual results can be found on TDS' website at investors.tdsinc.com. |
|
TDS will hold a conference call on November 8, 2017 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, OneNeck IT Solutions, and BendBroadband. Founded in 1969 and headquartered in Chicago, TDS employed 9,900 people as of September 30, 2017.
Visit www.tdsinc.com for comprehensive financial information, including earnings releases, quarterly and annual filings, shareholder information and more.
Contacts
Jane W. McCahon, Senior Vice President - Corporate Relations and Corporate Secretary
312-592-5379
jane.mccahon@tdsinc.com
Julie D. Mathews, IRC, Director - Investor Relations
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: 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
|
Summary Operating Data (Unaudited) |
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
As of or for the Quarter Ended |
9/30/2017 |
|
6/30/2017 |
|
3/31/2017 |
|
|
12/31/2016 |
|
9/30/2016 |
|||||||||
Retail Connections |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Postpaid |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
Total at end of period |
|
|
|
|
|
|
|
|
|
||||||||
|
|
Gross additions |
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
Feature phones |
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
Smartphones |
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
Connected devices |
|
|
|
|
|
|
|
|
|
|||||||
|
|
Net additions (losses) |
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
Feature phones |
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
Smartphones |
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
Connected devices |
|
|
|
|
|
|
|
|
|
|||||||
|
|
ARPU (1) |
$ |
|
$ |
|
$ |
|
$ |
|
$ |
||||||||
|
|
ABPU (Non-GAAP)(2) |
$ |
|
$ |
|
$ |
|
$ |
|
$ |
||||||||
|
|
ARPA (3) |
$ |
|
$ |
|
$ |
|
$ |
|
$ |
||||||||
|
|
ABPA (Non-GAAP)(4) |
$ |
|
$ |
|
$ |
|
$ |
|
$ |
||||||||
|
|
Churn rate (5) |
|
1.16% |
|
|
1.13% |
|
|
1.29% |
|
|
1.41% |
|
|
1.34% |
|||
|
|
|
Handsets |
|
0.96% |
|
|
0.91% |
|
|
1.08% |
|
|
1.23% |
|
|
1.22% |
||
|
|
|
Connected devices |
|
2.33% |
|
|
2.35% |
|
|
2.55% |
|
|
2.49% |
|
|
2.04% |
||
|
Prepaid |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
Total at end of period |
|
|
|
|
|
|
|
|
|
||||||||
|
|
Gross additions |
|
|
|
|
|
|
|
|
|
||||||||
|
|
Net additions (losses) |
|
|
|
|
|
|
|
|
|
||||||||
|
|
ARPU (1) |
$ |
|
$ |
|
$ |
|
$ |
|
$ |
||||||||
|
|
Churn rate (5) |
|
4.75% |
|
|
4.93% |
|
|
5.69% |
|
|
5.44% |
|
|
4.84% |
|||
Total connections at end of period (6) |
|
|
|
|
|
|
|
|
|
||||||||||
Market penetration at end of period |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Consolidated operating population |
|
|
|
|
|
|
|
|
|
|||||||||
|
Consolidated operating penetration (7) |
|
16% |
|
|
16% |
|
|
16% |
|
|
16% |
|
|
16% |
||||
Capital expenditures (millions) |
$ |
|
$ |
|
$ |
|
$ |
|
$ |
||||||||||
Total cell sites in service |
|
|
|
|
|
|
|
|
|
||||||||||
Owned towers |
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
(1) |
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. |
|||||||||||||||
(2) |
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. |
||||||||||||||||||
(3) |
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. |
||||||||||||||||||
(4) |
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. |
||||||||||||||||||
(5) |
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. |
||||||||||||||||||
(6) |
Includes reseller and other connections. |
||||||||||||||||||
(7) |
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. |
|
Summary Operating Data (Unaudited) |
||||||||||||||||
|
||||||||||||||||
As of or for the Quarter Ended |
9/30/2017 |
|
6/30/2017 |
|
3/31/2017 |
|
12/31/2016 |
|
9/30/2016 |
|||||||
TDS Telecom |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Wireline |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Residential connections |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Voice (1) |
|
|
|
|
|
|
|
|
|
|||||
|
|
Broadband (2) |
|
|
|
|
|
|
|
|
|
|||||
|
|
IPTV (3) |
|
|
|
|
|
|
|
|
|
|||||
|
|
Wireline residential connections |
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total residential revenue per connection (4) |
$ |
|
$ |
|
$ |
|
$ |
|
$ |
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial connections |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Voice (1) |
|
|
|
|
|
|
|
|
|
|||||
|
|
Broadband (2) |
|
|
|
|
|
|
|
|
|
|||||
|
|
managedIP (5) |
|
|
|
|
|
|
|
|
|
|||||
|
|
Wireline commercial connections |
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Wireline connections |
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cable |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Cable Connections |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Broadband (6) |
|
|
|
|
|
|
|
|
|
|||||
|
|
Video (7) |
|
|
|
|
|
|
|
|
|
|||||
|
|
Voice (8) |
|
|
|
|
|
|
|
|
|
|||||
|
|
Cable connections |
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Numbers may not foot due to rounding. |
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 using IP networking technology. |
|||||||||||||||
(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. |
Capital Expenditures (Unaudited) |
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||
Quarter Ended |
9/30/2017 |
|
6/30/2017 |
|
3/31/2017 |
|
12/31/2016 |
|
9/30/2016 |
|||||
(Dollars in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wireline |
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|||||
Cable |
|
|
|
|
|
|
|
|
|
|||||
HMS |
|
|
|
|
|
|
|
|
|
|||||
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Numbers may not foot due to rounding. |
|
Consolidated Statement of Operations Highlights |
|||||||||||||
(Unaudited) |
|||||||||||||
|
|
|
|
Three Months Ended September 30, |
|||||||||
|
|
|
|
2017 |
|
2016 |
|
2017 vs. 2016 |
|||||
|
|
|
|
|
|
Increase (Decrease) |
|||||||
(Dollars and shares in millions, except per share amounts) |
|
|
|
|
|
|
|
|
|
|
|||
Operating revenues |
|
|
|
|
|
|
|
|
|
|
|||
|
U.S. Cellular (1) |
$ |
|
$ |
|
$ |
|
(6)% |
|||||
|
TDS Telecom |
|
|
|
|
|
|
(1)% |
|||||
|
All Other (2) |
|
|
|
|
|
|
- |
|||||
|
|
|
|
|
|
|
|
|
|
(5)% |
|||
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|||
|
U.S. Cellular |
|
|
|
|
|
|
|
|
|
|
||
|
|
Expenses excluding depreciation, amortization and accretion |
|
|
|
|
|
|
(6)% |
||||
|
|
Depreciation, amortization and accretion |
|
|
|
|
|
|
(2)% |
||||
|
|
Loss on impairment of goodwill |
|
|
|
|
|
|
N/M |
||||
|
|
(Gain) loss on asset disposals, net |
|
|
|
|
|
|
(26)% |
||||
|
|
(Gain) loss on sale of business and other exit costs, net |
|
|
|
|
|
|
N/M |
||||
|
|
(Gain) loss on license sales and exchanges, net |
|
|
|
|
|
|
100% |
||||
|
|
|
|
|
|
|
|
|
|
32% |
|||
|
TDS Telecom |
|
|
|
|
|
|
|
|
|
|
||
|
|
Expenses excluding depreciation, amortization and accretion |
|
|
|
|
|
|
(5)% |
||||
|
|
Depreciation, amortization and accretion |
|
|
|
|
|
|
(2)% |
||||
|
|
Loss on impairment of goodwill |
|
|
|
|
|
|
N/M |
||||
|
|
(Gain) loss on asset disposals, net |
|
|
|
|
|
|
(51)% |
||||
|
|
|
|
|
|
|
|
|
|
8% |
|||
|
All Other (2) |
|
|
|
|
|
|
|
|
|
|
||
|
|
Expenses excluding depreciation and amortization |
|
|
|
|
|
|
64% |
||||
|
|
Depreciation and amortization |
|
|
|
|
|
|
(9)% |
||||
|
|
Loss on impairment of goodwill(3) |
|
|
|
|
|
|
N/M |
||||
|
|
(Gain) loss on asset disposals, net |
|
|
|
|
|
|
(100)% |
||||
|
|
|
|
|
|
|
|
|
|
(100)% |
|||
|
|
|
Total operating expenses |
|
|
|
|
|
|
16% |
|||
Operating income (loss) |
|
|
|
|
|
|
|
|
|
|
|||
|
U.S. Cellular (1) |
|
|
|
|
|
|
>(100)% |
|||||
|
TDS Telecom |
|
|
|
|
|
|
>(100)% |
|||||
|
All Other (2) |
|
|
|
|
|
|
>100% |
|||||
|
|
|
|
|
|
|
|
|
|
>(100)% |
|||
Investment and other income (expense) |
|
|
|
|
|
|
|
|
|
|
|||
|
Equity in earnings of unconsolidated entities |
|
|
|
|
|
|
(6)% |
|||||
|
Interest and dividend income (1) |
|
|
|
|
|
|
>100% |
|||||
|
Interest expense |
|
|
|
|
|
|
(2)% |
|||||
|
Other, net |
|
|
|
|
|
|
>100% |
|||||
|
|
Total investment and other income (expense)(1) |
|
|
|
|
|
|
(38)% |
||||
Income (loss) before income taxes |
|
|
|
|
|
|
>(100)% |
||||||
|
Income tax expense (benefit) |
|
|
|
|
|
|
>(100)% |
|||||
Net income (loss) |
|
|
|
|
|
|
>(100)% |
||||||
|
Less: Net income (loss) attributable to noncontrolling |
|
|
|
|
|
|
|
|||||
|
|
interests, net of tax |
|
|
|
|
|
|
>(100)% |
||||
Net income (loss) attributable to TDS shareholders |
|
|
|
|
|
|
>(100)% |
||||||
|
TDS Preferred dividend requirement |
|
|
|
|
|
|
- |
|||||
Net income (loss) available to TDS common shareholders |
$ |
|
$ |
|
$ |
|
>(100)% |
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic weighted average shares outstanding |
|
|
|
|
|
|
1% |
||||||
Basic earnings (loss) per share available to TDS common shareholders |
$ |
|
$ |
|
$ |
|
N/M |
||||||
|
|
|
|
|
|
|
|
|
|
|
|||
Diluted weighted average shares outstanding |
|
|
|
|
|
|
(1)% |
||||||
Diluted earnings (loss) per share available to TDS common shareholders |
$ |
|
$ |
|
$ |
|
>(100)% |
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||
N/M - Percentage change not meaningful |
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||
Numbers may not foot due to rounding. |
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
End Notes (1) (2) (3) ̶ Explained on page 11 of the release |
|
Consolidated Statement of Operations Highlights |
|||||||||||||
(Unaudited) |
|||||||||||||
|
|
|
|
Nine Months Ended September 30, |
|||||||||
|
|
|
|
2017 |
|
2016 |
|
2017 vs. 2016 |
|||||
|
|
|
|
|
|
Increase (Decrease) |
|||||||
(Dollars and shares in millions, except per share amounts) |
|
|
|
|
|
|
|
|
|
|
|||
Operating revenues |
|
|
|
|
|
|
|
|
|
|
|||
|
U.S. Cellular(1) |
$ |
|
$ |
|
$ |
|
(4)% |
|||||
|
TDS Telecom |
|
|
|
|
|
|
- |
|||||
|
All Other(2) |
|
|
|
|
|
|
(2)% |
|||||
|
|
|
|
|
|
|
|
|
|
(3)% |
|||
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|||
|
U.S. Cellular |
|
|
|
|
|
|
|
|
|
|
||
|
|
Expenses excluding depreciation, amortization and accretion |
|
|
|
|
|
|
(5)% |
||||
|
|
Depreciation, amortization and accretion |
|
|
|
|
|
|
- |
||||
|
|
Loss on impairment of goodwill |
|
|
|
|
|
|
N/M |
||||
|
|
(Gain) loss on asset disposals, net |
|
|
|
|
|
|
(17)% |
||||
|
|
(Gain) loss on sale of business and other exit costs, net |
|
|
|
|
|
|
>(100)% |
||||
|
|
(Gain) loss on license sales and exchanges, net |
|
|
|
|
|
|
(16)% |
||||
|
|
|
|
|
|
|
|
|
|
8% |
|||
|
TDS Telecom |
|
|
|
|
|
|
|
|
|
|
||
|
|
Expenses excluding depreciation, amortization and accretion |
|
|
|
|
|
|
(4)% |
||||
|
|
Depreciation, amortization and accretion |
|
|
|
|
|
|
(1)% |
||||
|
|
Loss on impairment of goodwill |
|
|
|
|
|
|
N/M |
||||
|
|
(Gain) loss on asset disposals, net |
|
|
|
|
|
|
(38)% |
||||
|
|
|
|
|
|
|
|
|
|
1% |
|||
|
All Other(2) |
|
|
|
|
|
|
|
|
|
|
||
|
|
Expenses excluding depreciation and amortization |
|
|
|
|
|
|
25% |
||||
|
|
Depreciation and amortization |
|
|
|
|
|
|
(10)% |
||||
|
|
Loss on impairment of goodwill(3) |
|
|
|
|
|
|
N/M |
||||
|
|
(Gain) loss on sale of business and other exit costs, net |
|
|
|
|
|
|
N/M |
||||
|
|
|
|
|
|
|
|
|
|
>(100)% |
|||
|
|
|
Total operating expenses |
|
|
|
|
|
|
3% |
|||
Operating income (loss) |
|
|
|
|
|
|
|
|
|
|
|||
|
U.S. Cellular(1) |
|
|
|
|
|
|
>(100)% |
|||||
|
TDS Telecom |
|
|
|
|
|
|
(23)% |
|||||
|
All Other(2) |
|
|
|
|
|
|
>100% |
|||||
|
|
|
|
|
|
|
|
|
|
>(100)% |
|||
Investment and other income (expense) |
|
|
|
|
|
|
|
|
|
|
|||
|
Equity in earnings of unconsolidated entities |
|
|
|
|
|
|
(8)% |
|||||
|
Interest and dividend income(1) |
|
|
|
|
|
|
53% |
|||||
|
Interest expense |
|
|
|
|
|
|
(1)% |
|||||
|
Other, net |
|
|
|
|
|
|
>100% |
|||||
|
|
Total investment and other income (expense)(1) |
|
|
|
|
|
|
(50)% |
||||
Income (loss) before income taxes |
|
|
|
|
|
|
>(100)% |
||||||
|
Income tax expense |
|
|
|
|
|
|
(12)% |
|||||
Net income (loss) |
|
|
|
|
|
|
>(100)% |
||||||
|
Less: Net income (loss) attributable to noncontrolling |
|
|
|
|
|
|
|
|||||
|
|
interests, net of tax |
|
|
|
|
|
|
>(100)% |
||||
Net income (loss) attributable to TDS shareholders |
|
|
|
|
|
|
>(100)% |
||||||
|
TDS Preferred dividend requirement |
|
|
|
|
|
|
(67)% |
|||||
Net income (loss) available to TDS common shareholders |
$ |
|
$ |
|
$ |
|
>(100)% |
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic weighted average shares outstanding |
|
|
|
|
|
|
1% |
||||||
Basic earnings (loss) per share available to TDS common shareholders |
$ |
|
$ |
|
$ |
|
>(100)% |
||||||
Diluted weighted average shares outstanding |
|
|
|
|
|
|
1% |
||||||
Diluted earnings (loss) per share available to TDS common shareholders |
$ |
|
$ |
|
$ |
|
>(100)% |
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||
N/M - Percentage change not meaningful |
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||
Numbers may not foot due to rounding. |
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
End Notes (1) (2) (3) ̶̶ Explained on page 11 of the release |
|
Telephone and Data Systems, Inc.
Consolidated Statement of Cash Flows
(Unaudited)
|
|
|
|
Nine Months Ended |
|||||||||||||
|
|
|
|
|
September 30, |
||||||||||||
|
2017 |
|
2016 |
||||||||||||||
(Dollars in millions) |
|
|
|
|
|
||||||||||||
Cash flows from operating activities |
|
|
|
|
|
||||||||||||
|
Net income (loss) |
$ |
|
$ |
|||||||||||||
|
Add (deduct) adjustments to reconcile net income (loss) to net cash flows |
|
|
|
|||||||||||||
|
from operating activities |
|
|
|
|||||||||||||
|
|
|
Depreciation, amortization and accretion |
|
|
|
|||||||||||
|
|
|
Bad debts expense |
|
|
|
|||||||||||
|
|
|
Stock-based compensation expense |
|
|
|
|||||||||||
|
|
|
Deferred income taxes, net |
|
|
|
|||||||||||
|
|
|
Equity in earnings of unconsolidated entities |
|
|
|
|||||||||||
|
|
|
Distributions from unconsolidated entities |
|
|
|
|||||||||||
|
|
|
Loss on impairment of goodwill |
|
|
|
|||||||||||
|
|
|
(Gain) loss on asset disposals, net |
|
|
|
|||||||||||
|
|
|
(Gain) loss on sale of business and other exit costs, net |
|
|
|
|||||||||||
|
|
|
(Gain) loss on license sales and exchanges, net |
|
|
|
|||||||||||
|
|
|
Noncash interest |
|
|
|
|||||||||||
|
|
|
Other operating activities |
|
|
|
|||||||||||
|
Changes in assets and liabilities from operations |
|
|
|
|||||||||||||
|
|
|
Accounts receivable |
|
|
|
|||||||||||
|
|
|
Equipment installment plans receivable |
|
|
|
|||||||||||
|
|
|
Inventory |
|
|
|
|||||||||||
|
|
|
Accounts payable |
|
|
|
|||||||||||
|
|
|
Customer deposits and deferred revenues |
|
|
|
|||||||||||
|
|
|
Accrued taxes |
|
|
|
|||||||||||
|
|
|
Accrued interest |
|
|
|
|||||||||||
|
|
|
Other assets and liabilities |
|
|
|
|||||||||||
|
|
|
|
Net cash provided by operating activities |
|
|
|
||||||||||
|
|
|
|
|
|
|
|
||||||||||
Cash flows from investing activities |
|
|
|
||||||||||||||
|
Cash paid for additions to property, plant and equipment |
|
|
|
|||||||||||||
|
Cash paid for acquisitions and licenses |
|
|
|
|||||||||||||
|
Cash paid for investments |
|
|
|
|||||||||||||
|
Cash received from divestitures and exchanges |
|
|
|
|||||||||||||
|
Federal Communications Commission deposit |
|
|
|
|||||||||||||
|
Other investing activities |
|
|
|
|||||||||||||
|
|
|
|
Net cash used in investing activities |
|
|
|
||||||||||
|
|
|
|
|
|
|
|
||||||||||
Cash flows from financing activities |
|
|
|
||||||||||||||
|
Repayment of long-term debt |
|
|
|
|||||||||||||
|
Issuance of long-term debt |
|
|
|
|||||||||||||
|
TDS Common Shares reissued for benefit plans, net of tax payments |
|
|
|
|||||||||||||
|
U.S. Cellular Common Shares reissued for benefit plans, net of tax payments |
|
|
|
|||||||||||||
|
Repurchase of TDS Common Shares |
|
|
|
|||||||||||||
|
Repurchase of U.S. Cellular Common Shares |
|
|
|
|||||||||||||
|
Repurchase of TDS Preferred Shares |
|
|
|
|||||||||||||
|
Dividends paid to TDS shareholders |
|
|
|
|||||||||||||
|
Payment of debt issuance costs |
|
|
|
|||||||||||||
|
Distributions to noncontrolling interests |
|
|
|
|||||||||||||
|
Other financing activities |
|
|
|
|||||||||||||
|
|
|
|
Net cash used in financing activities |
|
|
|
||||||||||
|
|
|
|
|
|
|
|
||||||||||
Net increase (decrease) in cash and cash equivalents |
|
|
|
||||||||||||||
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents |
|
|
|
||||||||||||||
|
Beginning of period |
|
|
|
|||||||||||||
|
End of period |
$ |
|
$ |
|
|
|
|
|
|
|
|
|
|
|||||||||
Consolidated Balance Sheet Highlights |
|||||||||||||||||
(Unaudited) |
|||||||||||||||||
|
|
|
|
|
|
||||||||||||
ASSETS |
|||||||||||||||||
|
|
|
|
|
|
||||||||||||
|
|
|
|
|
|
||||||||||||
|
|
|
September 30, |
|
December 31, |
||||||||||||
|
|
|
2017 |
|
2016 |
||||||||||||
(Dollars in millions) |
|
|
|
|
|
||||||||||||
Current assets |
|
|
|
||||||||||||||
|
Cash and cash equivalents |
$ |
|
$ |
|||||||||||||
|
Short-term investments |
|
|
|
|||||||||||||
|
Accounts receivable from customers and others, net |
|
|
|
|||||||||||||
|
Inventory, net |
|
|
|
|||||||||||||
|
Prepaid expenses |
|
|
|
|||||||||||||
|
Income taxes receivable |
|
|
|
|||||||||||||
|
Other current assets |
|
|
|
|||||||||||||
|
|
Total current assets |
|
|
|
||||||||||||
|
|
|
|
|
|
|
|
||||||||||
Assets held for sale |
|
|
|
||||||||||||||
|
|
|
|
|
|
||||||||||||
Licenses |
|
|
|
||||||||||||||
Goodwill |
|
|
|
||||||||||||||
Franchise rights |
|
|
|
||||||||||||||
Other intangible assets, net |
|
|
|
||||||||||||||
Investments in unconsolidated entities |
|
|
|
||||||||||||||
Other investments |
|
|
|
||||||||||||||
|
|
|
|
|
|
||||||||||||
Property, plant and equipment, net |
|
|
|
||||||||||||||
|
|
|
|
|
|
||||||||||||
Other assets and deferred charges |
|
|
|
||||||||||||||
|
|
|
|
|
|
|
|
||||||||||
Total assets |
$ |
|
$ |
||||||||||||||
|
Consolidated Balance Sheet Highlights |
||||||||
(Unaudited) |
||||||||
|
|
|
|
|
|
|
||
LIABILITIES AND EQUITY |
||||||||
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
|
|
|
|
September 30, |
|
December 31, |
||
|
|
|
|
2017 |
|
2016 |
||
(Dollars and shares in millions, except per share amounts) |
|
|
|
|
|
|||
Current liabilities |
|
|
|
|
|
|||
|
Current portion of long-term debt |
$ |
|
$ |
||||
|
Accounts payable |
|
|
|
||||
|
Customer deposits and deferred revenues |
|
|
|
||||
|
Accrued interest |
|
|
|
||||
|
Accrued taxes |
|
|
|
||||
|
Accrued compensation |
|
|
|
||||
|
Other current liabilities |
|
|
|
||||
|
|
Total current liabilities |
|
|
|
|||
|
|
|
|
|
|
|
|
|
Deferred liabilities and credits |
|
|
|
|
|
|||
|
Deferred income tax liability, net |
|
|
|
||||
|
Other deferred liabilities and credits |
|
|
|
||||
|
|
|
|
|
|
|
|
|
Long-term debt, net |
|
|
|
|||||
|
|
|
|
|
|
|
||
Noncontrolling interests with redemption features |
|
|
|
|||||
|
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|||
|
TDS shareholders' equity |
|
|
|
|
|
||
|
|
Series A Common and Common Shares, par value $.01 |
|
|
|
|||
|
|
Capital in excess of par value |
|
|
|
|||
|
|
Treasury shares, at cost |
|
|
|
|||
|
|
Accumulated other comprehensive income |
|
|
|
|||
|
|
Retained earnings |
|
|
|
|||
|
|
|
Total TDS shareholders' equity |
|
|
|
||
|
|
|
|
|
|
|
|
|
|
Preferred shares |
|
|
|
||||
|
Noncontrolling interests |
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
Total equity |
|
|||||
|
|
|
|
|
|
|
|
|
Total liabilities and equity |
$ |
|
$ |
|||||
|
|
|
|
|
|
|
|
|
(1) |
Equipment installment plan interest income is reflected as a component of Service revenues consistent with an accounting policy change effective January 1, 2017. All prior period numbers have been recast to conform to this accounting change. |
|||||||
|
|
|
|
|
|
|
|
|
(2) |
Consists of TDS corporate, intercompany eliminations and all other business operations not included in the U.S. Cellular and TDS Telecom segments. |
|||||||
|
|
|
|
|
|
|
|
|
(3) |
During the three months ended September 30, 2017, U.S. Cellular recorded a goodwill impairment of $370 million while TDS recorded a goodwill impairment of the U.S. Cellular reporting unit of $227 million. Prior to 2009, TDS accounted for U.S. Cellular's share repurchases as step acquisitions, allocating a portion of the share repurchase value to TDS' Goodwill. Further, goodwill was impaired at the TDS level in 2003 but not at the U.S. Cellular level, effectively resulting in a lower basis of goodwill attributable to the U.S. Cellular reporting unit rather than at U.S. Cellular itself. Consequently, U.S. Cellular's Goodwill on a stand-alone basis and any resulting impairments of Goodwill does not equal the TDS consolidated Goodwill related to U.S. Cellular. |
|
(Unaudited) |
|||||||||||||||
|
|||||||||||||||
|
|
September 30, 2017 |
|||||||||||||
|
|
U.S. |
|
TDS |
|
TDS Corporate |
|
Intercompany |
|
TDS |
|||||
|
|
Cellular |
|
Telecom |
|
& Other |
|
Eliminations |
|
Consolidated |
|||||
(Dollars in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
$ |
|
$ |
|
$ |
|
$ |
|
$ |
||||||
Affiliated cash investments |
|
|
|
|
|
|
|
|
|
||||||
|
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|||||
|
|
|
|
|
|
|
|
|
|
|
|||||
Short-term investments |
$ |
|
$ |
|
$ |
|
$ |
|
$ |
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Licenses, goodwill and other intangible |
|
|
|
|
|
|
|
|
|
||||||
|
assets |
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|||||
Investment in unconsolidated entities |
|
|
|
|
|
|
|
|
|
||||||
|
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net |
$ |
|
$ |
|
$ |
|
$ |
|
$ |
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt, net: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current portion |
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|||||
|
Non-current portion |
|
|
|
|
|
|
|
|
|
|||||
|
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
(Unaudited) |
|||||||||||||
|
|
|
|
Three Months Ended September 30, |
|||||||||
|
|
|
|
|
|
|
|
|
|
2017 vs. 2016 |
|||
|
|
|
|
2017 |
|
2016 |
|
Increase (Decrease) |
|||||
(Dollars in millions) |
|
|
|
|
|
|
|
|
|
|
|||
Wireline |
|
|
|
|
|
|
|
|
|
|
|||
Operating revenues |
|
|
|
|
|
|
|
|
|
|
|||
|
Residential |
$ |
|
$ |
|
$ |
|
2% |
|||||
|
Commercial |
|
|
|
|
|
|
(6)% |
|||||
|
Wholesale |
|
|
|
|
|
|
13% |
|||||
|
|
Total service revenues |
|
|
|
|
|
|
2% |
||||
|
Equipment and product sales |
|
|
|
|
|
|
(28)% |
|||||
|
|
|
|
|
|
|
|
|
|
2% |
|||
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|||
|
Cost of services |
|
|
|
|
|
|
(1)% |
|||||
|
Cost of equipment and products |
|
|
|
|
|
|
(37)% |
|||||
|
Selling, general and administrative expenses |
|
|
|
|
|
|
(3)% |
|||||
|
Expenses excluding depreciation, amortization and accretion |
|
|
|
|
|
|
(2)% |
|||||
|
Depreciation, amortization and accretion |
|
|
|
|
|
|
(8)% |
|||||
|
(Gain) loss on asset disposals, net |
|
|
|
|
|
|
(76)% |
|||||
|
|
|
|
|
|
|
|
|
|
(4)% |
|||
|
Operating income |
$ |
|
$ |
|
$ |
|
63% |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cable |
|
|
|
|
|
|
|
|
|
|
|||
Operating revenues |
|
|
|
|
|
|
|
|
|
|
|||
|
Residential |
$ |
|
$ |
|
$ |
|
16% |
|||||
|
Commercial |
|
|
|
|
|
|
(2)% |
|||||
|
|
|
|
|
|
|
|
|
12% |
||||
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|||
|
Cost of services |
|
|
|
|
|
|
8% |
|||||
|
Selling, general and administrative expenses |
|
|
|
|
|
|
2% |
|||||
|
Expenses excluding depreciation, amortization and accretion |
|
|
|
|
|
|
6% |
|||||
|
Depreciation, amortization and accretion |
|
|
|
|
|
|
24% |
|||||
|
(Gain) loss on asset disposals, net |
|
|
|
|
|
|
(33)% |
|||||
|
|
|
|
|
|
|
|
|
|
8% |
|||
|
Operating income |
$ |
|
$ |
|
$ |
|
>100% |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HMS |
|
|
|
|
|
|
|
|
|
|
|||
Operating revenues |
|
|
|
|
|
|
|
|
|
|
|||
|
Service revenues |
$ |
|
$ |
|
$ |
|
(2)% |
|||||
|
Equipment and product sales |
|
|
|
|
|
|
(30)% |
|||||
|
|
|
|
|
|
|
|
|
|
(18)% |
|||
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|||
|
Cost of services |
|
|
|
|
|
|
- |
|||||
|
Cost of equipment and products |
|
|
|
|
|
|
(31)% |
|||||
|
Selling, general and administrative expenses |
|
|
|
|
|
|
(3)% |
|||||
|
Expenses excluding depreciation, amortization and accretion |
|
|
|
|
|
|
(16)% |
|||||
|
Depreciation, amortization and accretion |
|
|
|
|
|
|
(3)% |
|||||
|
Loss on impairment of goodwill |
|
|
|
|
|
|
N/M |
|||||
|
|
|
|
|
|
|
|
|
|
33% |
|||
|
Operating loss |
$ |
|
$ |
|
$ |
|
>(100)% |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intercompany revenues |
$ |
|
$ |
|
$ |
|
(10)% |
||||||
Intercompany expenses |
|
|
|
|
|
|
(10)% |
||||||
Total TDS Telecom operating income (loss) |
$ |
|
$ |
|
$ |
|
>(100)% |
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
N/M - Percentage change not meaningful |
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Numbers may not foot due to rounding. |
|
(Unaudited) |
|||||||||||||
|
|
|
|
Nine Months Ended September 30, |
|||||||||
|
|
|
|
|
|
|
|
|
|
2017 vs. 2016 |
|||
|
|
|
|
2017 |
|
2016 |
|
Increase (Decrease) |
|||||
(Dollars in millions) |
|
|
|
|
|
|
|
|
|
|
|||
Wireline |
|
|
|
|
|
|
|
|
|
|
|||
Operating revenues |
|
|
|
|
|
|
|
|
|
|
|||
|
Residential |
$ |
|
$ |
|
$ |
|
3% |
|||||
|
Commercial |
|
|
|
|
|
|
(6)% |
|||||
|
Wholesale |
|
|
|
|
|
|
13% |
|||||
|
|
Total service revenues |
|
|
|
|
|
|
3% |
||||
|
Equipment and product sales |
|
|
|
|
|
|
(34)% |
|||||
|
|
|
|
|
|
|
|
|
|
3% |
|||
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|||
|
Cost of services |
|
|
|
|
|
|
1% |
|||||
|
Cost of equipment and products |
|
|
|
|
|
|
(7)% |
|||||
|
Selling, general and administrative expenses |
|
|
|
|
|
|
(2)% |
|||||
|
Expenses excluding depreciation, amortization and accretion |
|
|
|
|
|
|
- |
|||||
|
Depreciation, amortization and accretion |
|
|
|
|
|
|
(5)% |
|||||
|
(Gain) loss on asset disposals, net |
|
|
|
|
|
|
(54)% |
|||||
|
|
|
|
|
|
|
|
|
|
(2)% |
|||
|
Operating income |
$ |
|
$ |
|
$ |
|
37% |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cable |
|
|
|
|
|
|
|
|
|
|
|||
Operating revenues |
|
|
|
|
|
|
|
|
|
|
|||
|
Residential |
$ |
|
$ |
|
$ |
|
15% |
|||||
|
Commercial |
|
|
|
|
|
|
(3)% |
|||||
|
|
|
|
|
|
|
|
|
11% |
||||
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|||
|
Cost of services |
|
|
|
|
|
|
5% |
|||||
|
Selling, general and administrative expenses |
|
|
|
|
|
|
3% |
|||||
|
Expenses excluding depreciation, amortization and accretion |
|
|
|
|
|
|
5% |
|||||
|
Depreciation, amortization and accretion |
|
|
|
|
|
|
17% |
|||||
|
(Gain) loss on asset disposals, net |
|
|
|
|
|
|
(24)% |
|||||
|
|
|
|
|
|
|
|
|
|
7% |
|||
|
Operating income |
$ |
|
$ |
|
$ |
|
>100% |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HMS |
|
|
|
|
|
|
|
|
|
|
|||
Operating revenues |
|
|
|
|
|
|
|
|
|
|
|||
|
Service revenues |
$ |
|
$ |
|
$ |
|
(7)% |
|||||
|
Equipment and product sales |
|
|
|
|
|
|
(23)% |
|||||
|
|
|
|
|
|
|
|
|
|
(16)% |
|||
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|||
|
Cost of services |
|
|
|
|
|
|
2% |
|||||
|
Cost of equipment and products |
|
|
|
|
|
|
(24)% |
|||||
|
Selling, general and administrative expenses |
|
|
|
|
|
|
(12)% |
|||||
|
Expenses excluding depreciation, amortization and accretion |
|
|
|
|
|
|
(13)% |
|||||
|
Depreciation, amortization and accretion |
|
|
|
|
|
|
(6)% |
|||||
|
Loss on impairment of goodwill |
|
|
|
|
|
|
N/M |
|||||
|
|
|
|
|
|
|
|
|
|
3% |
|||
|
Operating loss |
$ |
|
$ |
|
$ |
|
>(100)% |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intercompany revenues |
$ |
|
$ |
|
$ |
|
- |
||||||
Intercompany expenses |
|
|
|
|
|
|
- |
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total TDS Telecom operating income |
$ |
|
$ |
|
$ |
|
(23)% |
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
N/M - Percentage change not meaningful |
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Numbers may not foot due to rounding. |
|
Financial Measures and Reconciliations |
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free Cash Flow |
|
|
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
||||||||
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
||||||
(Dollars in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
||
Cash flows from operating activities (GAAP) |
|
$ |
|
$ |
|
$ |
|
$ |
||||||
Less: Cash paid for additions to property, plant and equipment |
|
|
|
|
|
|
|
|
||||||
|
|
Free cash flow (Non-GAAP)(1) |
|
$ |
|
$ |
|
$ |
|
$ |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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. |
|
Net income excluding Goodwill impairment charge
The following non-GAAP financial measures present certain information in the table below excluding the effect of the goodwill impairment charge, related tax effects and noncontrolling interests impacts. The goodwill impairment charge, which occurred in the third quarter of 2017, is being excluded in this presentation, as it is not related to the current operations of TDS. TDS believes these measures may be useful to investors and other users of its financial information when comparing the current period financial results with periods that were not impacted by such a charge.
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|||||||||
|
|
|
2017 |
|
2016 |
2017 |
|
2016 |
||||
(Dollars in millions, except per share amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) available to TDS common shareholders (GAAP) |
$ |
|
$ |
|
$ |
|
$ |
|||||
Adjustments: |
|
|
|
|
|
|
|
|||||
|
Loss on impairment of goodwill |
|
|
|
|
|
|
|
||||
|
Tax benefit on impairment of goodwill(1) |
|
|
|
|
|
|
|
||||
|
Net income (loss) attributable to noncontrolling interests, net of tax |
|
|
|
|
|
|
|
||||
|
Subtotal of Non-GAAP adjustments |
|
|
|
|
|
|
|
||||
Net income available to TDS common shareholders excluding goodwill impairment charge (Non-GAAP) |
$ |
|
$ |
|
$ |
|
$ |
|||||
|
|
|
|
|
|
|
|
|
||||
Diluted earnings (loss) per share available to TDS common shareholders (GAAP) |
$ |
|
$ |
|
$ |
|
$ |
|||||
Adjustments: |
|
|
|
|
|
|
|
|||||
|
Adjustment to weighted average diluted shares(2) |
|
|
|
|
|
|
|
||||
|
Loss on impairment of goodwill |
|
|
|
|
|
|
|
||||
|
Tax benefit on impairment of goodwill(1) |
|
|
|
|
|
|
|
||||
|
Net income (loss) attributable to noncontrolling interests, net of tax |
|
|
|
|
|
|
|
||||
Diluted earnings per share available to TDS common shareholders excluding goodwill impairment charge (Non-GAAP) |
$ |
|
$ |
|
$ |
|
$ |
|||||
|
|
|
|
|
|
|
|
|
||||
Diluted weighted average shares outstanding (GAAP) |
|
|
|
|
|
|
|
|||||
|
Adjustment to weighted average diluted shares(2) |
|
|
|
|
|
|
|
||||
Adjusted diluted weighted average shares (Non-GAAP) |
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
(1) |
Tax benefit represents the amount associated with the tax-deductible portion of the loss on goodwill impairment. |
|||||||||||
|
|
|
|
|
|
|
|
|||||
(2) |
Adjustment to reflect the incremental shares deemed anti-dilutive for GAAP diluted earnings per share. |
|
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, 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 |
|
9/30/2017 |
|
|
6/30/2017 |
|
|
3/31/2017 |
|
|
12/31/2016 |
|
|
9/30/2016 |
||
(Dollars and connection counts in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Calculation of Postpaid ARPU |
|
|
|
|
|
|
|
|
|
|
||||||
Postpaid service revenues |
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|||||||
Average number of postpaid connections |
|
|
|
|
|
|
|
|
|
|||||||
Number of months in period |
|
|
|
|
|
|
|
|
|
|||||||
|
Postpaid ARPU (GAAP metric) |
$ |
|
$ |
|
$ |
|
$ |
|
$ |
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Calculation of Postpaid ABPU |
|
|
|
|
|
|
|
|
|
|||||||
Postpaid service revenues |
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|||||||
Equipment installment plan billings |
|
|
|
|
|
|
|
|
|
|||||||
|
Total billings to postpaid connections |
$ |
|
$ |
|
$ |
|
$ |
|
$ |
||||||
Average number of postpaid connections |
|
|
|
|
|
|
|
|
|
|||||||
Number of months in period |
|
|
|
|
|
|
|
|
|
|||||||
|
Postpaid ABPU (Non-GAAP metric) |
$ |
|
$ |
|
$ |
|
$ |
|
$ |
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Calculation of Postpaid ARPA |
|
|
|
|
|
|
|
|
|
|||||||
Postpaid service revenues |
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|||||||
Average number of postpaid accounts |
|
|
|
|
|
|
|
|
|
|||||||
Number of months in period |
|
|
|
|
|
|
|
|
|
|||||||
|
Postpaid ARPA (GAAP metric) |
$ |
|
$ |
|
$ |
|
$ |
|
$ |
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Calculation of Postpaid ABPA |
|
|
|
|
|
|
|
|
|
|||||||
Postpaid service revenues |
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|||||||
Equipment installment plan billings |
|
|
|
|
|
|
|
|
|
|||||||
|
Total billings to postpaid accounts |
$ |
|
$ |
|
$ |
|
$ |
|
$ |
||||||
Average number of postpaid accounts |
|
|
|
|
|
|
|
|
|
|||||||
Number of months in period |
|
|
|
|
|
|
|
|
|
|||||||
|
Postpaid ABPA (Non-GAAP metric) |
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
SAFE HARBOR CAUTIONARY STATEMENT
This Form 8-K and/or press release attached to this Form 8-K contain statements that are not based on historical facts and represent forward-looking statements, as this term is defined in the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, that address activities, events or developments that TDS intends, expects, projects, believes, estimates, plans or anticipates will or may occur in the future are forward-looking statements. The words “believes,” “anticipates,” “estimates,” “expects,” “plans,” “intends,” “projects” and similar expressions are intended to identify these forward-looking statements, but are not the exclusive means of identifying them. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, events or developments to be significantly different from any future results, events or developments expressed or implied by such forward-looking statements. Such risks, uncertainties and other factors include those set forth below, as more fully described under “Risk Factors” in the most recent filing of TDS’ Form 10-K, as updated by any TDS Form 10-Q filed subsequent to such Form 10-K. Each of the following risks could have a material adverse effect on TDS’ business, financial condition or results of operations. However, such factors are not necessarily all of the important factors that could cause actual results, performance or achievements to differ materially from those expressed in, or implied by, the forward-looking statements contained in this document. Other unknown or unpredictable factors also could have material adverse effects on future results, performance or achievements. TDS undertakes no obligation to update publicly any forward-looking statements whether as a result of new information, future events or otherwise. You should carefully consider the Risk Factors in the most recent filing of TDS’ Form 10-K, as updated by any TDS Form 10-Q filed subsequent to such Form 10-K, the following factors and other information contained in, or incorporated by reference into, this Form 8-K and/or press release attached to this Form 8-K to understand the material risks relating to TDS’ business, financial condition or results of operations.
C?#?_@X6^%/
MB74;6U\1>&?&'AD7#!9+I8XKZVMO]IBC"0K_ +L;'VKXBUC_ ((E_M&:5:-+
M'X+L;[:"2EOKEEO_ ":5<_0*._MFB
M$Z@X+1M]UUSQE217)1X+X.Q_[O!.+E_