2020 Estimated Results and Actual Results for the Year Ended December 31, 2019 | |||||
U.S. Cellular | Estimate | Actual | |||
(Dollars in millions) | |||||
Service revenues | $3,000-$3,100 | $ | 3,035 | ||
Adjusted OIBDA1 | $775-$900 | $ | 832 | ||
Adjusted EBITDA1 | $950-$1,075 | $ | 1,015 | ||
Capital expenditures | $850-$950 | $ | 710 | ||
TDS Telecom | Estimate | Actual | |||
(Dollars in millions) | |||||
Total operating revenues | $950-$1,000 | $ | 930 | ||
Adjusted OIBDA1 | $280-$310 | $ | 300 | ||
Adjusted EBITDA1 | $290-$320 | $ | 313 | ||
Capital expenditures | $300-$350 | $ | 316 |
U.S. Cellular | TDS Telecom | ||||||||||||
Estimate | Actual | Estimate | Actual | ||||||||||
(Dollars in millions) | |||||||||||||
Net income (GAAP) | N/A | $ | 133 | N/A | $ | 92 | |||||||
Add back: | |||||||||||||
Income tax expense | N/A | 52 | N/A | 30 | |||||||||
Income before income taxes (GAAP) | $130-$255 | $ | 185 | $80-$110 | $ | 122 | |||||||
Add back: | |||||||||||||
Interest expense | 110 | 110 | — | (3 | ) | ||||||||
Depreciation, amortization and accretion expense | 690 | 702 | 210 | 200 | |||||||||
EBITDA (Non-GAAP)1 | $930-$1,055 | $ | 997 | $290-$320 | $ | 320 | |||||||
Add back or deduct: | |||||||||||||
(Gain) loss on asset disposals, net | 20 | 19 | — | (7 | ) | ||||||||
(Gain) loss on sale of business and other exit costs, net | — | (1 | ) | — | — | ||||||||
Adjusted EBITDA (Non-GAAP)1 | $950-$1,075 | $ | 1,015 | $290-$320 | $ | 313 | |||||||
Deduct: | |||||||||||||
Equity in earnings of unconsolidated entities | 160 | 166 | — | — | |||||||||
Interest and dividend income | 15 | 17 | 10 | 12 | |||||||||
Adjusted OIBDA (Non-GAAP)1 | $775-$900 | $ | 832 | $280-$310 | $ | 300 |
1 | 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 before income taxes. Additional information and reconciliations related to Non-GAAP financial measures for December 31, 2019, can be found on TDS' website at investors.tdsinc.com. |
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As of or for the Quarter Ended | 12/31/2019 | 9/30/2019 | 6/30/2019 | 3/31/2019 | 12/31/2018 | ||||||||||||||
Retail Connections | |||||||||||||||||||
Postpaid | |||||||||||||||||||
Total at end of period | 4,383,000 | 4,395,000 | 4,414,000 | 4,440,000 | 4,472,000 | ||||||||||||||
Gross additions | 170,000 | 163,000 | 137,000 | 137,000 | 179,000 | ||||||||||||||
Feature phones | 2,000 | 3,000 | 5,000 | 4,000 | 4,000 | ||||||||||||||
Smartphones | 128,000 | 121,000 | 97,000 | 98,000 | 132,000 | ||||||||||||||
Connected devices | 40,000 | 39,000 | 35,000 | 35,000 | 43,000 | ||||||||||||||
Net additions (losses) | (12,000 | ) | (19,000 | ) | (26,000 | ) | (32,000 | ) | 6,000 | ||||||||||
Feature phones | (11,000 | ) | (11,000 | ) | (10,000 | ) | (13,000 | ) | (11,000 | ) | |||||||||
Smartphones | 13,000 | 9,000 | (1,000 | ) | (1,000 | ) | 31,000 | ||||||||||||
Connected devices | (14,000 | ) | (17,000 | ) | (15,000 | ) | (18,000 | ) | (14,000 | ) | |||||||||
ARPU1 | $ | 46.57 | $ | 46.16 | $ | 45.90 | $ | 45.44 | $ | 45.58 | |||||||||
ARPA2 | $ | 120.99 | $ | 119.87 | $ | 119.46 | $ | 118.84 | $ | 119.60 | |||||||||
Churn rate3 | 1.38 | % | 1.38 | % | 1.23 | % | 1.26 | % | 1.29 | % | |||||||||
Handsets | 1.11 | % | 1.09 | % | 0.97 | % | 0.99 | % | 1.00 | % | |||||||||
Connected devices | 3.44 | % | 3.44 | % | 3.01 | % | 3.08 | % | 3.20 | % | |||||||||
Prepaid | |||||||||||||||||||
Total at end of period | 506,000 | 510,000 | 500,000 | 503,000 | 516,000 | ||||||||||||||
Gross additions | 63,000 | 70,000 | 61,000 | 61,000 | 66,000 | ||||||||||||||
Net additions (losses) | (3,000 | ) | 9,000 | (2,000 | ) | (13,000 | ) | (12,000 | ) | ||||||||||
ARPU1 | $ | 34.11 | $ | 34.35 | $ | 34.43 | $ | 33.44 | $ | 32.80 | |||||||||
Churn rate3 | 4.40 | % | 4.03 | % | 4.20 | % | 4.92 | % | 4.98 | % | |||||||||
Total connections at end of period4 | 4,941,000 | 4,957,000 | 4,967,000 | 4,995,000 | 5,041,000 | ||||||||||||||
Market penetration at end of period | |||||||||||||||||||
Consolidated operating population | 30,740,000 | 31,310,000 | 31,310,000 | 31,310,000 | 31,469,000 | ||||||||||||||
Consolidated operating penetration5 | 16 | % | 16 | % | 16 | % | 16 | % | 16 | % | |||||||||
Capital expenditures (millions) | $ | 243 | $ | 170 | $ | 195 | $ | 102 | $ | 242 | |||||||||
Total cell sites in service | 6,578 | 6,554 | 6,535 | 6,506 | 6,531 | ||||||||||||||
Owned towers | 4,166 | 4,123 | 4,116 | 4,106 | 4,129 |
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 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. |
3 | 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. |
4 | Includes reseller and other connections. |
5 | 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. |
As of or for the Quarter Ended | 12/31/2019 | 9/30/2019 | 6/30/2019 | 3/31/2019 | 12/31/2018 | ||||||||||||||
TDS Telecom | |||||||||||||||||||
Wireline | |||||||||||||||||||
Residential connections | |||||||||||||||||||
Voice1 | 262,100 | 266,100 | 269,000 | 271,100 | 274,100 | ||||||||||||||
Broadband2 | 241,300 | 242,200 | 240,200 | 236,100 | 235,400 | ||||||||||||||
Video3 | 58,500 | 57,300 | 56,200 | 54,300 | 54,000 | ||||||||||||||
Wireline residential connections | 561,900 | 565,600 | 565,500 | 561,500 | 563,500 | ||||||||||||||
Total residential revenue per connection4 | $ | 49.11 | $ | 49.02 | $ | 47.88 | $ | 48.16 | $ | 47.39 | |||||||||
Commercial connections | |||||||||||||||||||
Voice1 | 117,800 | 121,200 | 124,200 | 127,300 | 130,500 | ||||||||||||||
Broadband2 | 20,400 | 20,600 | 20,600 | 20,400 | 20,600 | ||||||||||||||
managedIP5 | 121,200 | 124,500 | 128,300 | 132,000 | 134,000 | ||||||||||||||
Video3 | 100 | 400 | 400 | 400 | 400 | ||||||||||||||
Wireline commercial connections | 259,600 | 266,600 | 273,500 | 280,100 | 285,400 | ||||||||||||||
Total Wireline connections | 821,500 | 832,300 | 839,000 | 841,500 | 848,900 | ||||||||||||||
Cable | |||||||||||||||||||
Cable residential and commercial connections | |||||||||||||||||||
Broadband6 | 193,500 | 174,900 | 172,600 | 171,100 | 167,400 | ||||||||||||||
Video7 | 106,600 | 98,000 | 100,300 | 101,400 | 102,900 | ||||||||||||||
Voice8 | 69,500 | 63,900 | 64,800 | 65,400 | 65,200 | ||||||||||||||
managedIP5 | 1,300 | 1,200 | 1,100 | 1,100 | 1,000 | ||||||||||||||
Total Cable connections | 370,900 | 338,000 | 338,900 | 339,000 | 336,500 |
1 | The individual circuits connecting a customer to Wireline’s central office facilities that provide voice services. |
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. |
Quarter Ended | 12/31/2019 | 9/30/2019 | 6/30/2019 | 3/31/2019 | 12/31/2018 | ||||||||||||||
(Dollars in millions) | |||||||||||||||||||
Wireline | $ | 98 | $ | 61 | $ | 55 | $ | 29 | $ | 73 | |||||||||
Cable | 26 | 20 | 15 | 13 | 19 | ||||||||||||||
Total TDS Telecom | $ | 124 | $ | 81 | $ | 70 | $ | 42 | $ | 91 |
Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||||||||
2019 | 2018 | 2019 vs. 2018 | 2019 | 2018 | 2019 vs. 2018 | ||||||||||||||||
(Dollars and shares in millions, except per share amounts) | |||||||||||||||||||||
Operating revenues | |||||||||||||||||||||
U.S. Cellular | $ | 1,052 | $ | 1,051 | – | $ | 4,022 | $ | 3,967 | 1 | % | ||||||||||
TDS Telecom | 235 | 232 | 1 | % | 930 | 927 | – | ||||||||||||||
All Other1 | 49 | 49 | 1 | % | 224 | 215 | 4 | % | |||||||||||||
1,336 | 1,332 | – | 5,176 | 5,109 | 1 | % | |||||||||||||||
Operating expenses | |||||||||||||||||||||
U.S. Cellular | |||||||||||||||||||||
Expenses excluding depreciation, amortization and accretion | 871 | 881 | (1 | )% | 3,190 | 3,177 | – | ||||||||||||||
Depreciation, amortization and accretion | 178 | 162 | 10 | % | 702 | 640 | 10 | % | |||||||||||||
(Gain) loss on asset disposals, net | 6 | 5 | 18 | % | 19 | 10 | 80 | % | |||||||||||||
(Gain) loss on sale of business and other exit costs, net | — | — | N/M | (1 | ) | — | N/M | ||||||||||||||
(Gain) loss on license sales and exchanges, net | — | — | N/M | — | (18 | ) | 98 | % | |||||||||||||
1,055 | 1,048 | 1 | % | 3,910 | 3,809 | 3 | % | ||||||||||||||
TDS Telecom | |||||||||||||||||||||
Expenses excluding depreciation, amortization and accretion | 162 | 159 | 2 | % | 629 | 624 | 1 | % | |||||||||||||
Depreciation, amortization and accretion | 51 | 52 | (2 | )% | 200 | 212 | (5 | )% | |||||||||||||
(Gain) loss on asset disposals, net | — | — | 77 | % | (7 | ) | (2 | ) | N/M | ||||||||||||
213 | 211 | 1 | % | 823 | 834 | (1 | )% | ||||||||||||||
All Other1 | |||||||||||||||||||||
Expenses excluding depreciation and amortization | 53 | 53 | – | 235 | 229 | 2 | % | ||||||||||||||
Depreciation and amortization | 7 | 8 | (8 | )% | 30 | 31 | (5 | )% | |||||||||||||
(Gain) loss on asset disposals, net | — | — | N/M | — | 1 | N/M | |||||||||||||||
60 | 60 | (1 | )% | 264 | 261 | 1 | % | ||||||||||||||
Total operating expenses | 1,328 | 1,319 | 1 | % | 4,997 | 4,904 | 2 | % | |||||||||||||
Operating income (loss) | |||||||||||||||||||||
U.S. Cellular | (3 | ) | 3 | N/M | 112 | 158 | (29 | )% | |||||||||||||
TDS Telecom | 21 | 22 | (3 | )% | 107 | 93 | 15 | % | |||||||||||||
All Other1 | (11 | ) | (12 | ) | 10 | % | (40 | ) | (46 | ) | 12 | % | |||||||||
8 | 13 | (41 | )% | 179 | 205 | (13 | )% | ||||||||||||||
Investment and other income (expense) | |||||||||||||||||||||
Equity in earnings of unconsolidated entities | 39 | 39 | (2 | )% | 168 | 160 | 5 | % | |||||||||||||
Interest and dividend income | 5 | 8 | (39 | )% | 29 | 26 | 15 | % | |||||||||||||
Interest expense | (37 | ) | (43 | ) | 15 | % | (165 | ) | (172 | ) | 4 | % | |||||||||
Other, net | (1 | ) | 1 | (71 | )% | — | 2 | N/M | |||||||||||||
Total investment and other income (expense) | 6 | 5 | 38 | % | 32 | 16 | 92 | % | |||||||||||||
Income before income taxes | 14 | 18 | (19 | )% | 211 | 221 | (5 | )% | |||||||||||||
Income tax expense (benefit) | (1 | ) | (2 | ) | 75 | % | 64 | 46 | 37 | % | |||||||||||
Net income | 15 | 20 | (25 | )% | 147 | 175 | (16 | )% | |||||||||||||
Less: Net income attributable to noncontrolling interests, net of tax | 3 | 4 | (17 | )% | 26 | 40 | (36 | )% | |||||||||||||
Net income attributable to TDS shareholders | $ | 12 | $ | 16 | (27 | )% | $ | 121 | $ | 135 | (10 | )% | |||||||||
Basic weighted average shares outstanding | 115 | 113 | 1 | % | 114 | 112 | 2 | % | |||||||||||||
Basic earnings per share attributable to TDS shareholders | $ | 0.10 | $ | 0.14 | (28 | )% | $ | 1.06 | $ | 1.20 | (11 | )% | |||||||||
Diluted weighted average shares outstanding | 116 | 115 | – | 116 | 114 | 2 | % | ||||||||||||||
Diluted earnings per share attributable to TDS shareholders | $ | 0.10 | $ | 0.14 | (28 | )% | $ | 1.03 | $ | 1.17 | (12 | )% |
1 | Consists of TDS corporate, intercompany eliminations and all other business operations not included in the U.S. Cellular and TDS Telecom segments. |
Year Ended December 31, | 2019 | 2018 | |||||
(Dollars in millions) | |||||||
Cash flows from operating activities | |||||||
Net income | $ | 147 | $ | 175 | |||
Add (deduct) adjustments to reconcile net income to net cash flows from operating activities | |||||||
Depreciation, amortization and accretion | 932 | 883 | |||||
Bad debts expense | 112 | 101 | |||||
Stock-based compensation expense | 59 | 54 | |||||
Deferred income taxes, net | 34 | 33 | |||||
Equity in earnings of unconsolidated entities | (168 | ) | (160 | ) | |||
Distributions from unconsolidated entities | 162 | 153 | |||||
(Gain) loss on asset disposals, net | 12 | 9 | |||||
(Gain) loss on sale of business and other exit costs, net | (1 | ) | — | ||||
(Gain) loss on license sales and exchanges, net | — | (18 | ) | ||||
Other operating activities | 4 | 4 | |||||
Changes in assets and liabilities from operations | |||||||
Accounts receivable | (49 | ) | (39 | ) | |||
Equipment installment plans receivable | (97 | ) | (149 | ) | |||
Inventory | (19 | ) | (5 | ) | |||
Accounts payable | (60 | ) | 2 | ||||
Customer deposits and deferred revenues | (9 | ) | 8 | ||||
Accrued taxes | (17 | ) | (29 | ) | |||
Other assets and liabilities | (26 | ) | (5 | ) | |||
Net cash provided by operating activities | 1,016 | 1,017 | |||||
Cash flows from investing activities | |||||||
Cash paid for additions to property, plant and equipment | (957 | ) | (776 | ) | |||
Cash paid for acquisitions and licenses | (346 | ) | (16 | ) | |||
Cash received from investments | 29 | 100 | |||||
Cash paid for investments | (11 | ) | (17 | ) | |||
Cash received from divestitures and exchanges | 41 | 29 | |||||
Other investing activities | (5 | ) | — | ||||
Net cash used in investing activities | (1,249 | ) | (680 | ) | |||
Cash flows from financing activities | |||||||
Repayment of long-term debt | (118 | ) | (20 | ) | |||
TDS Common Shares reissued for benefit plans, net of tax payments | (6 | ) | 42 | ||||
U.S. Cellular Common Shares reissued for benefit plans, net of tax payments | (9 | ) | 18 | ||||
Repurchase of U.S. Cellular Common Shares | (21 | ) | — | ||||
Dividends paid to TDS shareholders | (75 | ) | (72 | ) | |||
Distributions to noncontrolling interests | (4 | ) | (6 | ) | |||
Other financing activities | 13 | 6 | |||||
Net cash used in financing activities | (220 | ) | (32 | ) | |||
Net increase (decrease) in cash, cash equivalents and restricted cash | (453 | ) | 305 | ||||
Cash, cash equivalents and restricted cash | |||||||
Beginning of period | 927 | 622 | |||||
End of period | $ | 474 | $ | 927 |
December 31, | 2019¹ | 2018 | |||||
(Dollars in millions) | |||||||
Current assets | |||||||
Cash and cash equivalents | $ | 465 | $ | 921 | |||
Short-term investments | — | 17 | |||||
Accounts receivable | 1,124 | 1,099 | |||||
Inventory, net | 169 | 150 | |||||
Prepaid expenses | 98 | 103 | |||||
Income taxes receivable | 36 | 12 | |||||
Other current assets | 29 | 28 | |||||
Total current assets | 1,921 | 2,330 | |||||
Assets held for sale | — | 54 | |||||
Licenses | 2,480 | 2,195 | |||||
Goodwill | 547 | 509 | |||||
Other intangible assets, net | 239 | 253 | |||||
Investments in unconsolidated entities | 488 | 480 | |||||
Property, plant and equipment, net | 3,527 | 3,346 | |||||
Operating lease right-of-use assets | 972 | — | |||||
Other assets and deferred charges | 607 | 616 | |||||
Total assets | $ | 10,781 | $ | 9,783 |
December 31, | 2019¹ | 2018 | |||||
(Dollars in millions, except per share amounts) | |||||||
Current liabilities | |||||||
Current portion of long-term debt | $ | 10 | $ | 21 | |||
Accounts payable | 374 | 365 | |||||
Customer deposits and deferred revenues | 189 | 197 | |||||
Accrued interest | 11 | 11 | |||||
Accrued taxes | 41 | 44 | |||||
Accrued compensation | 121 | 127 | |||||
Short-term operating lease liabilities | 116 | — | |||||
Other current liabilities | 100 | 114 | |||||
Total current liabilities | 962 | 879 | |||||
Liabilities held for sale | — | 1 | |||||
Deferred liabilities and credits | |||||||
Deferred income tax liability, net | 676 | 640 | |||||
Long-term operating lease liabilities | 931 | — | |||||
Other deferred liabilities and credits | 481 | 541 | |||||
Long-term debt, net | 2,316 | 2,418 | |||||
Noncontrolling interests with redemption features | 11 | 11 | |||||
Equity | |||||||
TDS shareholders' equity | |||||||
Series A Common and Common Shares, par value $.01 per share | 1 | 1 | |||||
Capital in excess of par value | 2,468 | 2,432 | |||||
Treasury shares, at cost | (479 | ) | (519 | ) | |||
Accumulated other comprehensive loss | (9 | ) | (10 | ) | |||
Retained earnings | 2,672 | 2,656 | |||||
Total TDS shareholders' equity | 4,653 | 4,560 | |||||
Noncontrolling interests | 751 | 733 | |||||
Total equity | 5,404 | 5,293 | |||||
Total liabilities and equity | $ | 10,781 | $ | 9,783 |
1 | As of January 1, 2019, TDS adopted the new lease accounting standard, ASC 842, using a modified retrospective method. Under this method, the new accounting standard is applied only to the most recent period presented. As a result, 2019 amounts include the impacts of ASC 842, but 2018 amounts remain as previously reported. |
December 31, 2019 | |||||||||||||||||||
U.S. Cellular | TDS Telecom | TDS Corporate & Other | Intercompany Eliminations | TDS Consolidated | |||||||||||||||
(Dollars in millions) | |||||||||||||||||||
Cash and cash equivalents | $ | 285 | $ | 21 | $ | 159 | $ | — | $ | 465 | |||||||||
Affiliated cash investments | — | 505 | — | (505 | ) | — | |||||||||||||
$ | 285 | $ | 526 | $ | 159 | $ | (505 | ) | $ | 465 | |||||||||
Licenses, goodwill and other intangible assets | $ | 2,471 | $ | 783 | $ | 12 | $ | — | $ | 3,266 | |||||||||
Investment in unconsolidated entities | 447 | 4 | 47 | (10 | ) | 488 | |||||||||||||
$ | 2,918 | $ | 787 | $ | 59 | $ | (10 | ) | $ | 3,754 | |||||||||
Property, plant and equipment, net | $ | 2,207 | $ | 1,211 | $ | 109 | $ | — | $ | 3,527 | |||||||||
Long-term debt, net: | |||||||||||||||||||
Current portion | $ | 8 | $ | 1 | $ | 1 | $ | — | $ | 10 | |||||||||
Non-current portion | 1,502 | 4 | 810 | — | 2,316 | ||||||||||||||
$ | 1,510 | $ | 5 | $ | 811 | $ | — | $ | 2,326 |
Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||||||||
2019 | 2018 | 2019 vs. 2018 | 2019 | 2018 | 2019 vs. 2018 | ||||||||||||||||
(Dollars in millions) | |||||||||||||||||||||
Wireline | |||||||||||||||||||||
Operating revenues | |||||||||||||||||||||
Residential | $ | 83 | $ | 80 | 3 | % | $ | 328 | $ | 321 | 2 | % | |||||||||
Commercial | 40 | 45 | (10 | )% | 168 | 184 | (9 | )% | |||||||||||||
Wholesale | 47 | 48 | – | 186 | 191 | (2 | )% | ||||||||||||||
Total service revenues | 171 | 173 | (1 | )% | 682 | 697 | (2 | )% | |||||||||||||
Equipment and product sales | — | — | (30 | )% | 1 | 2 | (26 | )% | |||||||||||||
171 | 173 | (1 | )% | 683 | 699 | (2 | )% | ||||||||||||||
Operating expenses | |||||||||||||||||||||
Cost of services | 68 | 67 | 2 | % | 263 | 266 | (1 | )% | |||||||||||||
Cost of equipment and products | — | — | (17 | )% | 1 | 1 | (24 | )% | |||||||||||||
Selling, general and administrative expenses | 50 | 51 | (2 | )% | 199 | 197 | 1 | % | |||||||||||||
Expenses excluding depreciation, amortization and accretion | 119 | 118 | – | 463 | 465 | – | |||||||||||||||
Depreciation, amortization and accretion | 33 | 35 | (4 | )% | 132 | 142 | (7 | )% | |||||||||||||
(Gain) loss on asset disposals, net | — | — | N/M | (8 | ) | (3 | ) | N/M | |||||||||||||
153 | 153 | – | 587 | 604 | (3 | )% | |||||||||||||||
Operating income | $ | 18 | $ | 20 | (7 | )% | $ | 96 | $ | 95 | 1 | % | |||||||||
Cable | |||||||||||||||||||||
Operating revenues | |||||||||||||||||||||
Residential | $ | 53 | $ | 48 | 9 | % | $ | 205 | $ | 188 | 9 | % | |||||||||
Commercial | 11 | 12 | (5 | )% | 43 | 42 | 3 | % | |||||||||||||
64 | 60 | 7 | % | 247 | 230 | 8 | % | ||||||||||||||
Operating expenses | |||||||||||||||||||||
Cost of services | 26 | 26 | 3 | % | 105 | 104 | 2 | % | |||||||||||||
Selling, general and administrative expenses | 17 | 15 | 15 | % | 62 | 57 | 8 | % | |||||||||||||
Expenses excluding depreciation, amortization and accretion | 44 | 41 | 8 | % | 167 | 161 | 4 | % | |||||||||||||
Depreciation, amortization and accretion | 17 | 17 | 1 | % | 68 | 69 | (2 | )% | |||||||||||||
(Gain) loss on asset disposals, net | — | — | (46 | )% | 1 | 1 | (48 | )% | |||||||||||||
61 | 58 | 5 | % | 236 | 231 | 2 | % | ||||||||||||||
Operating income (loss) | $ | 3 | $ | 2 | 42 | % | $ | 11 | $ | (2 | ) | N/M | |||||||||
Total TDS Telecom operating income | $ | 21 | $ | 22 | (3 | )% | $ | 107 | $ | 93 | 15 | % |
Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
(Dollars in millions) | |||||||||||||||
Cash flows from operating activities (GAAP) | $ | 142 | $ | 205 | $ | 1,016 | $ | 1,017 | |||||||
Less: Cash paid for additions to property, plant and equipment | 326 | 330 | 957 | 776 | |||||||||||
Free cash flow (Non-GAAP)1 | $ | (184 | ) | $ | (125 | ) | $ | 59 | $ | 241 |
1 | 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. |
Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||
TDS1 | 2019 | 2018 | 2019 | 2018 | |||||||||||
(Dollars in millions) | |||||||||||||||
Net income (GAAP) | $ | 15 | $ | 20 | $ | 147 | $ | 175 | |||||||
Add back or deduct: | |||||||||||||||
Income tax benefit | (1 | ) | (2 | ) | 64 | 46 | |||||||||
Income before income taxes (GAAP) | 14 | 18 | 211 | 221 | |||||||||||
Add back: | |||||||||||||||
Interest expense | 37 | 43 | 165 | 172 | |||||||||||
Depreciation, amortization and accretion expense | 236 | 222 | 932 | 883 | |||||||||||
EBITDA (Non-GAAP) | 287 | 283 | 1,308 | 1,276 | |||||||||||
Add back or deduct: | |||||||||||||||
(Gain) loss on asset disposals, net | 6 | 5 | 12 | 9 | |||||||||||
(Gain) loss on sale of business and other exit costs, net | — | — | (1 | ) | — | ||||||||||
(Gain) loss on license sales and exchanges, net | — | — | — | (18 | ) | ||||||||||
Adjusted EBITDA (Non-GAAP) | 293 | 288 | 1,319 | 1,267 | |||||||||||
Deduct: | |||||||||||||||
Equity in earnings of unconsolidated entities | 39 | 39 | 168 | 160 | |||||||||||
Interest and dividend income | 5 | 8 | 29 | 26 | |||||||||||
Other, net | (1 | ) | 1 | — | 2 | ||||||||||
Adjusted OIBDA (Non-GAAP) | $ | 250 | $ | 240 | $ | 1,122 | $ | 1,079 |
1 | Includes U.S. Cellular, TDS Telecom and also the impacts of consolidating eliminations, corporate operations and non-reportable segments. |