EX-99.1 2 tdsexhibit991.htm EX-99.1

 


Exhibit 99.1   NEWS RELEASE                                                                                    

 

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

 FOR IMMEDIATE RELEASE

 TDS reports second quarter 2018 results

U.S. Cellular raises guidance

 

CHICAGO, (August 3, 2018) — Telephone and Data Systems, Inc. (NYSE:TDS) reported total operating revenues of $1,255 million for the second quarter of 2018, versus $1,247 million for the same period one year ago. Net income available to TDS shareholders and related diluted earnings per share were $33 million and $0.29, respectively, for the second quarter of 2018, compared to $10 million and $0.09, respectively, in the same period one year ago. 

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

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

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

 

 

 

 



1

 

 


 


2018 Estimated Results

TDS’ current estimates of full-year 2018 results for U.S. Cellular, TDS Telecom, and TDS are shown below.  Such estimates represent management’s view as of August 3, 2018.  Such forward-looking statements should not be assumed to be current as of any future date.  TDS undertakes no duty to update such information, whether as a result of new information, future events, or otherwise.  There can be no assurance that final results will not differ materially from such estimated results. 

 

 

2018 Estimated Results

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Cellular

 

TDS Telecom (1)

 

TDS (1)(2)

 

 

Current (3)

Previous

 

Current (3)

Previous

 

Current (3)

Previous

(Dollars in millions)

 

 

 

 

 

 

 

 

 

 

 

Total operating revenues

$3,925-$4,025

$3,850-$4,050

 

$900-$950

Unchanged

 

$5,055-$5,205

$5,015-$5,265

Adjusted OIBDA (4)(5)

$700-$800

$625-$775

 

$290-$320

Unchanged

 

$985-$1,115

$925-$1,105

Adjusted EBITDA (4)

$850-$950

$765-$915

 

$300-$330

Unchanged

 

$1,145-$1,275

$1,075-$1,255

Capital expenditures

$500-$550

Unchanged

 

 

$270

Unchanged

 

$790-$840

Unchanged

 

 

 

The following tables provide reconciliations of Net income to Adjusted OIBDA and Adjusted EBITDA for 2018 estimated results, actual results for the six months ended June 30, 2018, and actual results for the year ended December 31, 2017. In providing 2018 estimated results, TDS has not completed the below reconciliation to Net income because it does not provide guidance for income taxes.  Although potentially significant, TDS believes that the impact of income taxes cannot be reasonably predicted; therefore, TDS is unable to provide such guidance.

 

 

 

 

2018 Estimated Results

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Cellular (3)

 

 

TDS Telecom (1)(3)

 

 

TDS (1)(2)(3)

(Dollars in millions)

 

 

 

 

 

 

 

 

Net income (GAAP)

 

N/A

 

 

N/A

 

 

N/A

Add back:

 

 

 

 

 

 

 

 

 

Income tax expense (benefit)

 

N/A

 

 

N/A

 

 

N/A

Income before income taxes (GAAP)

$

110-210 

 

$

80-110 

 

$

90-220 

Add back:

 

 

 

 

 

 

 

 

 

Interest expense

 

110 

 

 

– 

 

 

170 

 

Depreciation, amortization and accretion expense

 

640 

 

 

220 

 

 

895 

EBITDA (Non-GAAP) (4)

$

860-960 

 

$

300-330 

 

$

1,155-1,285 

Add back or deduct:

 

 

 

 

 

 

 

 

 

(Gain) loss on asset disposals, net

 

10 

 

 

– 

 

 

10 

 

(Gain) loss on license sales and exchanges, net

 

(20)

 

 

– 

 

 

(20)

Adjusted EBITDA (Non-GAAP) (4)

$

850-950 

 

$

300-330 

 

$

1,145-1,275 

Deduct:

 

 

 

 

 

 

 

 

 

Equity in earnings of unconsolidated entities

 

135 

 

 

– 

 

 

135 

 

Interest and dividend income

 

15 

 

 

5 

 

 

20 

 

Other, net (6)

 

– 

 

 

5 

 

 

5 

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

$

700-800 

 

$

290-320 

 

$

985-1,115 

 

 

 

 



2

 

 


 


 

 

 

Actual Results

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 30, 2018 (3)

 

Year ended December 31, 2017

 

 

 

U.S. Cellular

 

TDS

Telecom (1)

 

TDS (1)(2)

 

U.S. Cellular

TDS

Telecom (1)

TDS (1)(2)

(Dollars in millions)

 

 

 

 

 

 

 

 

 

 

 

Net income (GAAP)

$

107 

 

$

37 

 

$

101 

 

$

15 

 

$

138 

 

$

157 

Add back or deduct:

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expense (benefit)

 

40 

 

 

12 

 

 

45 

 

 

(287)

 

 

(13)

 

 

(279)

Income (loss) before income taxes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(GAAP)

$

147 

 

$

48 

 

$

146 

 

$

(272)

 

$

125 

 

$

(122)

Add back:

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

58 

 

 

(1)

 

 

86 

 

 

113 

 

 

– 

 

 

170 

 

Depreciation, amortization and

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

accretion expense

 

317 

 

 

107 

 

 

441 

 

 

615 

 

 

195 

 

 

844 

EBITDA (Non-GAAP) (4)

$

522 

 

$

155 

 

$

673 

 

$

456 

 

$

319 

 

$

892 

Add back or deduct:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss on impairment of goodwill

 

– 

 

 

– 

 

 

– 

 

 

370 

 

 

– 

 

 

262 

 

(Gain) loss on asset disposals, net

 

2 

 

 

1 

 

 

3 

 

 

17 

 

 

3 

 

 

21 

 

(Gain) loss on sale of business and

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

other exit costs, net

 

– 

 

 

– 

 

 

– 

 

 

(1)

 

 

– 

 

 

(1)

 

(Gain) loss on license sales and

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

exchanges, net

 

(17)

 

 

– 

 

 

(17)

 

 

(22)

 

 

– 

 

 

(22)

Adjusted EBITDA (Non-GAAP) (4)

$

507 

 

$

156 

 

$

659 

 

$

820 

 

$

323 

 

$

1,152 

Deduct:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity in earnings of unconsolidated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

entities

 

78 

 

 

– 

 

 

78 

 

 

137 

 

 

– 

 

 

137 

 

Interest and dividend income

 

7 

 

 

3 

 

 

11 

 

 

8 

 

 

5 

 

 

15 

 

Other, net (6)

 

(1)

 

 

1 

 

 

2 

 

 

– 

 

 

3 

 

 

4 

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

$

423 

 

$

152 

 

$

568 

 

$

675 

 

$

314 

 

$

996 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Note: Totals may not foot due to rounding differences.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

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

(2)

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

(3)

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

(4)

EBITDA, Adjusted EBITDA and Adjusted OIBDA are defined as net income adjusted for the items set forth in the reconciliation above.  EBITDA, Adjusted EBITDA and Adjusted OIBDA are not measures of financial performance under Generally Accepted Accounting Principles in the United States (GAAP) and should not be considered as alternatives to Net income or Cash flows from operating activities, as indicators of cash flows or as measures of liquidity.  TDS does not intend to imply that any such items set forth in the reconciliation above are non-recurring, infrequent or unusual; such items may occur in the future.  Management uses Adjusted EBITDA and Adjusted OIBDA as measurements of profitability, and therefore reconciliations to Net income are deemed appropriate.  Management believes Adjusted EBITDA and Adjusted OIBDA are useful measures of TDS’ operating results before significant recurring non-cash charges, gains and losses, and other items as presented above as they provide additional relevant and useful information to investors and other users of TDS’ financial data in evaluating the effectiveness of its operations and underlying business trends in a manner that is consistent with management’s evaluation of business performance.  Adjusted EBITDA shows adjusted earnings before interest, taxes, depreciation, amortization and accretion, and gains and losses, while Adjusted OIBDA reduces this measure further to exclude Equity in earnings of unconsolidated entities and Interest and dividend income in order to more effectively show the performance of operating activities excluding investment activities.  The table above reconciles EBITDA, Adjusted EBITDA and Adjusted OIBDA to the corresponding GAAP measure, Net income or Income (loss) before income taxes.

 

(5)

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

(6)

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



3

 

 


 


Conference Call Information

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

 

  • Access the live call on the Events & Presentations page of investors.tdsinc.com or at https://www.webcaster4.com/Webcast/Page/1145/26840.
  • Access the call by phone at 877-273-7192 (US/Canada), conference ID: 3387588. 

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

About TDS

Telephone and Data Systems, Inc. (TDS), a Fortune 1000® company, provides wireless; cable and wireline broadband, TV and voice; and hosted and managed services to approximately 6 million connections nationwide through its businesses, U.S. Cellular, TDS Telecom, BendBroadband and OneNeck IT Solutions. Founded in 1969 and headquartered in Chicago, TDS employed 9,600 people as of June 30, 2018.

Visit investors.tdsinc.com for comprehensive financial information, including earnings releases, quarterly and annual filings, shareholder information and more.

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

 

 

 


4

 

 



 


United States Cellular Corporation

Summary Operating Data (Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of or for the Quarter Ended

6/30/2018(1)

 

3/31/2018(1)

 

12/31/2017

 

 

9/30/2017

 

6/30/2017

Retail Connections

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Postpaid

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total at end of period

 

4,468,000 

 

 

4,481,000 

 

 

4,518,000 

 

 

4,513,000 

 

 

4,478,000 

 

 

Gross additions

 

146,000 

 

 

129,000 

 

 

177,000 

 

 

191,000 

 

 

174,000 

 

 

 

Feature phones

 

5,000 

 

 

5,000 

 

 

5,000 

 

 

7,000 

 

 

7,000 

 

 

 

Smartphones

 

106,000 

 

 

91,000 

 

 

128,000 

 

 

132,000 

 

 

116,000 

 

 

 

Connected devices

 

35,000 

 

 

33,000 

 

 

44,000 

 

 

52,000 

 

 

51,000 

 

 

Net additions (losses)

 

(13,000)

 

 

(37,000)

 

 

5,000 

 

 

35,000 

 

 

23,000 

 

 

 

Feature phones

 

(12,000)

 

 

(15,000)

 

 

(15,000)

 

 

(15,000)

 

 

(15,000)

 

 

 

Smartphones

 

17,000 

 

 

(1,000)

 

 

33,000 

 

 

44,000 

 

 

34,000 

 

 

 

Connected devices

 

(18,000)

 

 

(21,000)

 

 

(13,000)

 

 

6,000 

 

 

4,000 

 

 

ARPU (2)

$

44.74 

 

$

44.34 

 

$

44.12 

 

$

43.41 

 

$

44.60 

 

 

ABPU (Non-GAAP)(3)

$

57.75 

 

$

57.10 

 

$

56.69 

 

$

54.71 

 

$

55.19 

 

 

ARPA (4)

$

118.57 

 

$

118.22 

 

$

118.05 

 

$

116.36 

 

$

119.73 

 

 

ABPA (Non-GAAP)(5)

$

153.03 

 

$

152.26 

 

$

151.68 

 

$

146.65 

 

$

148.15 

 

 

Churn rate (6)

 

1.19%

 

 

1.23%

 

 

1.27%

 

 

1.16%

 

 

1.13%

 

 

 

Handsets

 

0.92%

 

 

0.97%

 

 

1.00%

 

 

0.96%

 

 

0.91%

 

 

 

Connected devices

 

2.85%

 

 

2.79%

 

 

2.84%

 

 

2.33%

 

 

2.35%

 

Prepaid

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total at end of period

 

527,000 

 

 

525,000 

 

 

519,000 

 

 

515,000 

 

 

484,000 

 

 

Gross additions

 

78,000 

 

 

88,000 

 

 

83,000 

 

 

102,000 

 

 

73,000 

 

 

Net additions

 

2,000 

 

 

6,000 

 

 

4,000 

 

 

31,000 

 

 

3,000 

 

 

ARPU (2)

$

32.32 

 

$

31.78 

 

$

32.42 

 

$

33.12 

 

$

33.52 

 

 

Churn rate (6)

 

4.83%

 

 

5.27%

 

 

5.09%

 

 

4.75%

 

 

4.93%

Total connections at end of period (7)

 

5,051,000 

 

 

5,063,000 

 

 

5,096,000 

 

 

5,089,000 

 

 

5,023,000 

Market penetration at end of period

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated operating population

 

31,469,000 

 

 

31,469,000 

 

 

31,834,000 

 

 

31,834,000 

 

 

32,089,000 

 

Consolidated operating penetration (8)

 

16%

 

 

16%

 

 

16%

 

 

16%

 

 

16%

Capital expenditures (millions)

$

86 

 

$

70 

 

$

213 

 

$

112 

 

$

84 

Total cell sites in service

 

6,478 

 

 

6,473 

 

 

6,460 

 

 

6,436 

 

 

6,421 

Owned towers

 

4,105 

 

 

4,099 

 

 

4,080 

 

 

4,051 

 

 

4,044 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

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

(2)

Average Revenue Per User (ARPU) - metric is calculated by dividing a revenue base by an average number of connections and by the number of months in the period.  These revenue bases and connection populations are shown below:

 

 

 

▪

Postpaid ARPU consists of total postpaid service revenues and postpaid connections.

 

 

 

▪

Prepaid ARPU consists of total prepaid service revenues and prepaid connections.

(3)

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

(4)

Average Revenue Per Account (ARPA) - metric is calculated by dividing total postpaid service revenues by the average number of postpaid accounts and by the number of months in the period.

(5)

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

(6)

Churn rate represents the percentage of the connections that disconnect service each month.  These rates represent the average monthly churn rate for each respective period.

(7)

Includes reseller and other connections.

(8)

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


5

 

 



 


 

TDS Telecom

Summary Operating Data (Unaudited)

 

As of or for the Quarter Ended

6/30/2018

 

3/31/2018

 

12/31/2017

 

9/30/2017

 

6/30/2017

TDS Telecom

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Wireline

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential connections

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Voice (1)

 

282,200 

 

 

286,000 

 

 

290,600 

 

 

298,200 

 

 

304,600 

 

 

Broadband (2)

 

234,300 

 

 

230,500 

 

 

228,600 

 

 

229,900 

 

 

230,200 

 

 

Video (3)

 

51,500 

 

 

50,300 

 

 

48,600 

 

 

47,200 

 

 

46,200 

 

 

   Wireline residential connections

 

568,000 

 

 

566,900 

 

 

567,700 

 

 

575,300 

 

 

581,000 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total residential revenue per connection (4)

$

47.22 

 

$

47.04 

 

$

46.21 

 

$

46.07 

 

$

46.39 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial connections

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Voice (1)

 

137,300 

 

 

140,100 

 

 

143,000 

 

 

146,900 

 

 

150,500 

 

 

Broadband (2)

 

20,600 

 

 

20,600 

 

 

20,600 

 

 

20,900 

 

 

21,000 

 

 

managedIP (5)

 

141,400 

 

 

143,000 

 

 

146,500 

 

 

147,600 

 

 

149,700 

 

 

Video (3)

 

400 

 

 

400 

 

 

– 

 

 

– 

 

 

– 

 

 

   Wireline commercial connections

 

299,600 

 

 

304,000 

 

 

310,100 

 

 

315,300 

 

 

321,200 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Wireline connections

 

867,700 

 

 

870,900 

 

 

877,800 

 

 

890,700 

 

 

902,200 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cable

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cable Connections

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Broadband (6)

 

159,400 

 

 

156,800 

 

 

153,300 

 

 

143,800 

 

 

140,300 

 

 

Video (7)

 

101,600 

 

 

100,700 

 

 

101,800 

 

 

97,900 

 

 

97,900 

 

 

Voice (8)

 

62,000 

 

 

60,600 

 

 

59,700 

 

 

58,500 

 

 

58,500 

 

 

managedIP (5)

 

700 

 

 

600 

 

 

400 

 

 

400 

 

 

300 

 

 

   Cable connections

 

323,700 

 

 

318,700 

 

 

315,100 

 

 

300,600 

 

 

297,000 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Note:  Totals may not foot due to rounding differences.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

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

(2)

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

(3)

The number of Wireline customers provided video services.

(4)

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

(5)

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

(6)

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

(7)

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

(8)

Billable number of lines into a building for voice services.

 

TDS Telecom

Capital Expenditures (Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter Ended

6/30/2018

 

3/31/2018

 

12/31/2017

 

9/30/2017

 

6/30/2017

(Dollars in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Wireline

$

33 

 

$

29 

 

$

55 

 

$

41 

 

$

33 

Cable

 

13 

 

 

11 

 

 

20 

 

 

14 

 

 

12 

Total TDS Telecom (1)

$

46 

 

$

40 

 

$

74 

 

$

56 

 

$

45 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Note:  Totals may not foot due to rounding differences.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

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

6

 

 


 


 

Telephone and Data Systems, Inc.

Consolidated Statement of Operations Highlights

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

 

June 30,

 

June 30,

 

2018 (1)

 

2017

 

2018

vs. 2017

 

2018 (1)

 

2017

 

2018

vs. 2017

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Cellular

$

974 

 

$

963 

 

1%

 

$

1,915 

 

$

1,899 

 

1%

 

TDS Telecom (2)

 

230 

 

 

231 

 

-

 

 

461 

 

 

459 

 

-

 

All Other (2)(3)

 

51 

 

 

53 

 

(4)%

 

 

104 

 

 

127 

 

(18)%

 

 

 

 

 

1,255 

 

 

1,247 

 

1%

 

 

2,480 

 

 

2,485 

 

-

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Cellular

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses excluding depreciation, amortization and accretion

 

769 

 

 

800 

 

(4)%

 

 

1,492 

 

 

1,543 

 

(3)%

 

 

Depreciation, amortization and accretion

 

159 

 

 

155 

 

3%

 

 

317 

 

 

307 

 

3%

 

 

(Gain) loss on asset disposals, net

 

1 

 

 

5 

 

(84)%

 

 

2 

 

 

9 

 

(75)%

 

 

(Gain) loss on license sales and exchanges, net

 

(11)

 

 

(2)

 

>(100)%

 

 

(17)

 

 

(19)

 

8%

 

 

 

 

 

918 

 

 

958 

 

(4)%

 

 

1,794 

 

 

1,840 

 

(2)%

 

TDS Telecom (2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses excluding depreciation, amortization and accretion (4)

 

158 

 

 

152 

 

4%

 

 

308 

 

 

300 

 

3%

 

 

Depreciation, amortization and accretion

 

53 

 

 

48 

 

11%

 

 

107 

 

 

97 

 

11%

 

 

(Gain) loss on asset disposals, net

 

1 

 

 

1 

 

37%

 

 

1 

 

 

1 

 

(8)%

 

 

 

 

 

212 

 

 

200 

 

6%

 

 

417 

 

 

398 

 

5%

 

All Other (2)(3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses excluding depreciation and amortization (4)

 

57 

 

 

53 

 

5%

 

 

112 

 

 

120 

 

(8)%

 

 

Depreciation and amortization

 

8 

 

 

8 

 

(6)%

 

 

17 

 

 

18 

 

(5)%

 

 

 

 

 

64 

 

 

62 

 

4%

 

 

128 

 

 

138 

 

(8)%

 

 

 

Total operating expenses

 

1,194 

 

 

1,220 

 

(2)%

 

 

2,339 

 

 

2,376 

 

(2)%

Operating income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Cellular

 

56 

 

 

5 

 

>100%

 

 

121 

 

 

59 

 

>100%

 

TDS Telecom (2)(4)

 

18 

 

 

31 

 

(41)%

 

 

43 

 

 

61 

 

(29)%

 

All Other (2)(3)(4)

 

(13)

 

 

(9)

 

(53)%

 

 

(23)

 

 

(11)

 

>(100)%

 

 

 

 

 

61 

 

 

27 

 

>100%

 

 

141 

 

 

109 

 

29%

Investment and other income (expense)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity in earnings of unconsolidated entities

 

40 

 

 

33 

 

23%

 

 

78 

 

 

65 

 

20%

 

Interest and dividend income

 

6 

 

 

4 

 

65%

 

 

11 

 

 

8 

 

48%

 

Interest expense

 

(43)

 

 

(43)

 

(1)%

 

 

(86)

 

 

(85)

 

(1)%

 

Other, net (4)

 

1 

 

 

1 

 

(33)%

 

 

2 

 

 

2 

 

(39)%

 

 

Total investment and other income (expense) (4)

 

4 

 

 

(5)

 

>100%

 

 

5 

 

 

(10)

 

>100%

Income before income taxes

 

65 

 

 

22 

 

>100%

 

 

146 

 

 

99 

 

47%

 

Income tax expense

 

21 

 

 

10 

 

>100%

 

 

45 

 

 

44 

 

1%

Net income

 

44 

 

 

12 

 

>100%

 

 

101 

 

 

55 

 

84%

 

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

 

11 

 

 

2 

 

>100%

 

 

29 

 

 

8 

 

>100%

Net income available to TDS common shareholders

$

33 

 

$

10 

 

>100%

 

$

72 

 

$

47 

 

52%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic weighted average shares outstanding

 

112 

 

 

111 

 

1%

 

 

112 

 

 

110 

 

1%

Basic earnings per share available to TDS common shareholders

$

0.30 

 

$

0.09 

 

>100%

 

$

0.65 

 

$

0.43 

 

51%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted weighted average shares outstanding

 

113 

 

 

112 

 

1%

 

 

113 

 

 

112 

 

1%

Diluted earnings per share available to TDS common shareholders

$

0.29 

 

$

0.09 

 

>100%

 

$

0.63 

 

$

0.42 

 

50%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Note:  Totals may not foot due to rounding differences.

(1)

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

(2)

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

(3)

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

(4)

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

7

 

 


 


Telephone and Data Systems, Inc.

Consolidated Statement of Cash Flows

(Unaudited)

 

 

 

 

 

 

Six Months Ended

 

 

 

 

 

June 30,

 

2018 (1)

 

2017

(Dollars in millions)

 

 

 

 

 

Cash flows from operating activities

 

 

 

 

 

 

Net income

$

101 

 

$

55 

 

Add (deduct) adjustments to reconcile net income to net cash flows

 

 

 

 

 

 

  from operating activities

 

 

 

 

 

 

 

 

Depreciation, amortization and accretion

 

441 

 

 

422 

 

 

 

Bad debts expense

 

43 

 

 

49 

 

 

 

Stock-based compensation expense

 

23 

 

 

22 

 

 

 

Deferred income taxes, net

 

25 

 

 

(22)

 

 

 

Equity in earnings of unconsolidated entities

 

(78)

 

 

(65)

 

 

 

Distributions from unconsolidated entities

 

70 

 

 

65 

 

 

 

(Gain) loss on asset disposals, net

 

3 

 

 

10 

 

 

 

(Gain) loss on license sales and exchanges, net

 

(17)

 

 

(19)

 

 

 

Noncash interest

 

2 

 

 

1 

 

Changes in assets and liabilities from operations

 

 

 

 

 

 

 

 

Accounts receivable

 

51 

 

 

5 

 

 

 

Equipment installment plans receivable

 

(47)

 

 

(107)

 

 

 

Inventory

 

(8)

 

 

2 

 

 

 

Accounts payable

 

(50)

 

 

(59)

 

 

 

Customer deposits and deferred revenues

 

(25)

 

 

(10)

 

 

 

Accrued taxes

 

(5)

 

 

53 

 

 

 

Other assets and liabilities

 

(66)

 

 

(44)

 

 

 

 

Net cash provided by operating activities

 

463 

 

 

358 

 

 

 

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

 

Cash paid for additions to property, plant and equipment

 

(275)

 

 

(242)

 

Cash paid for acquisitions and licenses

 

(10)

 

 

(200)

 

Cash received for investments

 

100 

 

 

– 

 

Cash received from divestitures and exchanges

 

21 

 

 

17 

 

Other investing activities

 

3 

 

 

1 

 

 

 

 

Net cash used in investing activities

 

(161)

 

 

(424)

 

 

 

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

 

Repayment of long-term debt

 

(10)

 

 

(6)

 

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

 

7 

 

 

(1)

 

Repurchase of TDS Preferred Shares

 

– 

 

 

(1)

 

Dividends paid to TDS shareholders

 

(36)

 

 

(34)

 

Payment of debt issuance costs

 

(1)

 

 

– 

 

Distributions to noncontrolling interests

 

(4)

 

 

(2)

 

Other financing activities

 

(3)

 

 

1 

 

 

 

 

Net cash used in financing activities

 

(47)

 

 

(43)

 

 

 

 

 

 

 

 

 

 

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

 

255 

 

 

(109)

 

 

 

 

 

 

 

 

 

 

Cash, cash equivalents and restricted cash

 

 

 

 

 

 

Beginning of period

 

622 

 

 

904 

 

End of period

$

877 

 

$

795 

 

 

 

 

 

 

 

 

 

 

(1)

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

 



8

 

 


 


  

Telephone and Data Systems, Inc.

Consolidated Balance Sheet Highlights

(Unaudited)

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30,

 

December 31,

 

 

 

2018 (1)

 

2017

(Dollars in millions)

 

 

 

 

 

Current assets

 

 

 

 

 

 

Cash and cash equivalents

$

873 

 

$

619 

 

Short-term investments

 

– 

 

 

100 

 

Accounts receivable

 

987 

 

 

961 

 

Inventory, net

 

153 

 

 

145 

 

Prepaid expenses

 

103 

 

 

112 

 

Income taxes receivable

 

1 

 

 

2 

 

Other current assets

 

43 

 

 

27 

 

 

Total current assets

 

2,160 

 

 

1,966 

 

 

 

 

 

 

 

 

Assets held for sale

 

1 

 

 

10 

 

 

 

 

 

 

 

 

Licenses

 

2,240 

 

 

2,232 

Goodwill

 

509 

 

 

509 

Other intangible assets, net

 

266 

 

 

279 

Investments in unconsolidated entities

 

477 

 

 

453 

 

 

 

 

 

 

 

 

Property, plant and equipment, net

 

3,259 

 

 

3,424 

 

 

 

 

 

 

 

 

Other assets and deferred charges

 

586 

 

 

422 

 

 

 

 

 

 

 

 

Total assets

$

9,498 

 

$

9,295 



9

 

 


 


Telephone and Data Systems, Inc.

Consolidated Balance Sheet Highlights

(Unaudited)

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30,

 

December 31,

 

 

 

 

2018 (1)

 

2017

(Dollars in millions, except per share amounts)

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Current portion of long-term debt

$

20 

 

$

20 

 

Accounts payable

 

296 

 

 

368 

 

Customer deposits and deferred revenues

 

165 

 

 

223 

 

Accrued interest

 

12 

 

 

11 

 

Accrued taxes

 

54 

 

 

64 

 

Accrued compensation

 

84 

 

 

126 

 

Other current liabilities

 

98 

 

 

106 

 

 

Total current liabilities

 

729 

 

 

918 

 

 

 

 

 

 

 

 

 

Deferred liabilities and credits

 

 

 

 

 

 

Deferred income tax liability, net

 

636 

 

 

552 

 

Other deferred liabilities and credits

 

523 

 

 

495 

 

 

 

 

 

 

 

 

 

Long-term debt, net

 

2,427 

 

 

2,437 

 

 

 

 

 

 

 

 

 

Noncontrolling interests with redemption features

 

11 

 

 

1 

 

 

 

 

 

 

 

 

 

Equity

 

 

 

 

 

 

TDS shareholders' equity

 

 

 

 

 

 

 

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

 

1 

 

 

1 

 

 

Capital in excess of par value

 

2,418 

 

 

2,413 

 

 

Treasury shares, at cost

 

(624)

 

 

(669)

 

 

Accumulated other comprehensive income

 

(3)

 

 

(1)

 

 

Retained earnings

 

2,692 

 

 

2,525 

 

 

 

   Total TDS shareholders' equity

 

4,484 

 

 

4,269 

 

 

 

 

 

 

 

 

 

 

Noncontrolling interests

 

688 

 

 

623 

 

 

 

 

 

 

 

 

 

 

 

Total equity

 

5,172 

 

 

4,892 

 

 

 

 

 

 

 

 

 

Total liabilities and equity

$

9,498 

 

$

9,295 

 

 

 

 

 

 

 

 

 

(1)

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

 



10

 

 


 


Balance Sheet Highlights

(Unaudited)

 

 

 

June 30, 2018

 

 

U.S.

 

TDS

 

TDS Corporate

 

Intercompany

 

TDS

 

 

Cellular

 

Telecom

 

& Other

 

Eliminations

 

Consolidated

(Dollars in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

$

596 

 

$

23 

 

$

254 

 

$

– 

 

$

873 

Affiliated cash investments

 

– 

 

 

391 

 

 

– 

 

 

(391)

 

 

– 

 

 

$

596 

 

$

414 

 

$

254 

 

$

(391)

 

$

873 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Licenses, goodwill and other intangible assets

$

2,231 

 

$

764 

 

$

20 

 

$

– 

 

$

3,015 

Investment in unconsolidated entities

 

439 

 

 

4 

 

 

41 

 

 

(7)

 

 

477 

 

 

$

2,670 

 

$

768 

 

$

61 

 

$

(7)

 

$

3,492 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property, plant and equipment, net

$

2,159 

 

$

968 

 

$

132 

 

$

– 

 

$

3,259 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-term debt, net:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current portion

$

18 

 

$

1 

 

$

1 

 

$

– 

 

$

20 

 

Non-current portion

 

1,614 

 

 

2 

 

 

811 

 

 

– 

 

 

2,427 

 

 

$

1,632 

 

$

3 

 

$

812 

 

$

– 

 

$

2,447 



11

 

 


 


TDS Telecom Highlights

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

 

June 30,

 

June 30,

 

 

2018 (1)

 

 

2017

 

2018 vs. 2017

 

 

2018 (1)

 

 

2017

 

2018 vs. 2017

(Dollars in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Wireline

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential

$

80 

 

$

81 

 

(1)%

 

$

160 

 

$

160 

 

-

 

Commercial

 

46 

 

 

50 

 

(8)%

 

 

94 

 

 

101 

 

(7)%

 

Wholesale

 

46 

 

 

49 

 

(5)%

 

 

94 

 

 

98 

 

(5)%

 

 

Total service revenues

 

173 

 

 

180 

 

(4)%

 

 

348 

 

 

359 

 

(3)%

 

Equipment and product sales

 

– 

 

 

– 

 

53%

 

 

1 

 

 

1 

 

39%

 

 

 

 

 

174 

 

 

181 

 

(4)%

 

 

349 

 

 

360 

 

(3)%

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of services

 

67 

 

 

65 

 

2%

 

 

131 

 

 

129 

 

2%

 

Cost of equipment and products

 

– 

 

 

1 

 

(41)%

 

 

1 

 

 

1 

 

(32)%

 

Selling, general and administrative expenses (2)

 

50 

 

 

49 

 

1%

 

 

97 

 

 

97 

 

(1)%

 

Expenses excluding depreciation, amortization and accretion

 

117 

 

 

115 

 

1%

 

 

229 

 

 

227 

 

1%

 

Depreciation, amortization and accretion

 

36 

 

 

37 

 

(4)%

 

 

72 

 

 

76 

 

(5)%

 

(Gain) loss on asset disposals, net

 

1 

 

 

– 

 

94%

 

 

1 

 

 

1 

 

17%

 

 

 

 

 

153 

 

 

153 

 

-

 

 

302 

 

 

304 

 

(1)%

 

Operating income (2)

$

21 

 

$

28 

 

(25)%

 

$

47 

 

$

56 

 

(16)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cable

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential

$

47 

 

$

41 

 

12%

 

$

92 

 

$

82 

 

12%

 

Commercial

 

10 

 

 

9 

 

7%

 

 

20 

 

 

18 

 

10%

 

 

 

 

57 

 

 

51 

 

12%

 

 

112 

 

 

100 

 

12%

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of services

 

27 

 

 

24 

 

11%

 

 

52 

 

 

48 

 

9%

 

Selling, general and administrative expenses

 

15 

 

 

13 

 

14%

 

 

28 

 

 

25 

 

10%

 

Expenses excluding depreciation, amortization and accretion

 

41 

 

 

37 

 

12%

 

 

80 

 

 

73 

 

10%

 

Depreciation, amortization and accretion

 

18 

 

 

11 

 

63%

 

 

35 

 

 

21 

 

67%

 

(Gain) loss on asset disposals, net

 

– 

 

 

– 

 

(12)%

 

 

1 

 

 

1 

 

(27)%

 

 

 

 

 

59 

 

 

48 

 

24%

 

 

116 

 

 

95 

 

22%

 

Operating income (loss)

$

(3)

 

$

3 

 

>(100)%

 

$

(4)

 

$

5 

 

>(100)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total TDS Telecom operating income (2)(3)

$

18 

 

$

31 

 

(41)%

 

$

43 

 

$

61 

 

(29)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Note:  Totals may not foot due to rounding differences.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2)

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3)

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



12

 

 


 


Telephone and Data Systems, Inc.

Financial Measures and Reconciliations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Free Cash Flow

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

2018

 

2017

 

2018

 

2017

(Dollars in millions)

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows from operating activities (GAAP)

 

$

249 

 

$

221 

 

$

463 

 

$

358 

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

 

 

145 

 

 

115 

 

 

275 

 

 

242 

 

 

Free cash flow (Non-GAAP)(1)

 

$

104 

 

$

106 

 

$

188 

 

$

116 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

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

Postpaid ABPU and Postpaid ABPA

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Quarter Ended

 

6/30/2018(1)

 

 

3/31/2018(1)

 

 

12/31/2017

 

 

9/30/2017

 

 

6/30/2017

(Dollars and connection counts in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Calculation of Postpaid ARPU

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Postpaid service revenues

$

600 

 

$

598 

 

$

598 

 

$

586 

 

$

597 

Average number of postpaid connections

 

4.47 

 

 

4.50 

 

 

4.52 

 

 

4.50 

 

 

4.47 

Number of months in period

 

3 

 

 

3 

 

 

3 

 

 

3 

 

 

3 

 

Postpaid ARPU (GAAP metric)

$

44.74 

 

$

44.34 

 

$

44.12 

 

$

43.41 

 

$

44.60 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Calculation of Postpaid ABPU

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Postpaid service revenues

$

600 

 

$

598 

 

$

598 

 

$

586 

 

$

597 

Equipment installment plan billings

 

174 

 

 

172 

 

 

170 

 

 

152 

 

 

142 

 

Total billings to postpaid connections

$

774 

 

$

770 

 

$

768 

 

$

738 

 

$

739 

Average number of postpaid connections

 

4.47 

 

 

4.50 

 

 

4.52 

 

 

4.50 

 

 

4.47 

Number of months in period

 

3 

 

 

3 

 

 

3 

 

 

3 

 

 

3 

 

Postpaid ABPU (Non-GAAP metric)

$

57.75 

 

$

57.10 

 

$

56.69 

 

$

54.71 

 

$

55.19 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Calculation of Postpaid ARPA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Postpaid service revenues

$

600 

 

$

598 

 

$

598 

 

$

586 

 

$

597 

Average number of postpaid accounts

 

1.69 

 

 

1.69 

 

 

1.69 

 

 

1.68 

 

 

1.66 

Number of months in period

 

3 

 

 

3 

 

 

3 

 

 

3 

 

 

3 

 

Postpaid ARPA (GAAP metric)

$

118.57 

 

$

118.22 

 

$

118.05 

 

$

116.36 

 

$

119.73 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Calculation of Postpaid ABPA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Postpaid service revenues

$

600 

 

$

598 

 

$

598 

 

$

586 

 

$

597 

Equipment installment plan billings

 

174 

 

 

172 

 

 

170 

 

 

152 

 

 

142 

 

Total billings to postpaid accounts

$

774 

 

$

770 

 

$

768 

 

$

738 

 

$

739 

Average number of postpaid accounts

 

1.69 

 

 

1.69 

 

 

1.69 

 

 

1.68 

 

 

1.66 

Number of months in period

 

3 

 

 

3 

 

 

3 

 

 

3 

 

 

3 

 

Postpaid ABPA (Non-GAAP metric)

$

153.03 

 

$

152.26 

 

$

151.68 

 

$

146.65 

 

$

148.15 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

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

 


13