TDS reports first quarter 2014 results - AZTV7/Cable 13, Me-TV 7.2, HSN 7.3, Phoenix-Prescott, AZ

TDS reports first quarter 2014 results

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SOURCE Telephone and Data Systems, Inc.

As previously announced, TDS will hold a teleconference May 2, 2014 at 9:30 a.m. CDT. Interested parties may listen to the call live via the Events & Presentations page of investors.teldta.com.

CHICAGO, May 2, 2014 /PRNewswire/ -- Telephone and Data Systems, Inc. (NYSE: TDS) reported operating revenues of $1,196.0 million for the first quarter of 2014, versus $1,308.6 million for the comparable period one year ago. Net income attributable to TDS shareholders and related diluted earnings per share were $18.3 million and $0.16 respectively, for the first quarter of 2014, compared to $1.4 million and $0.01, respectively, in the comparable period one year ago.

Year-over-year comparisons are affected by U.S. Cellular's divestiture transaction, the deconsolidation of certain U.S. Cellular partnerships, and acquisitions at TDS Telecom, in 2013.

"Our businesses made significant progress in the quarter to execute on their customer strategies and improve operating efficiency," said LeRoy T. Carlson, Jr., TDS president and CEO. "While we have considerable work to do to improve our financial and operating performance, I believe we're focused on the right areas.

"U.S. Cellular continues to attract new customers and drive smartphone adoption and data use, leading to higher average revenue per customer. Substantial progress has been made to restore high standards of service following the billing system conversion, and U.S. Cellular has already leveraged the system to deliver new services like our Shared Connect Plans and no contract Simple Connect Plans.

"TDS Telecom increased average revenue per customer for both residential and commercial wireline customers, with higher-tier TDS TV packages and faster broadband speeds, and new managedIP plans. We also continued to improve the overall efficiency of the wireline business. Revenues increased 77 percent at OneNeck IT Solutions, our hosted and managed services business, driven by revenues from acquisitions and increased revenues for recurring services.

"As we continued to execute our integration and customer strategies for Baja Broadband, we also agreed to acquire Bend Broadband, a premier cable and broadband provider to residential and business customers in Central Oregon. BendBroadband's high-capacity, all-digital network, technology leadership, and customer-centered approach will be tremendous assets as we develop a premier cable broadband business."

2014 Estimated Results
U.S. Cellular capital expenditures for 2014 are expected to be approximately $640 million, down from $738 million in 2013.

TDS Telecom estimates for full-year 2014 results are shown below.  Such estimates represent management's view as of May 2, 2014.  Such forward-looking statements should not be assumed to be current as of any future date.  TDS undertakes no duty to update such information, whether as a result of new information, future events or otherwise.  There can be no assurance that final results will not differ materially from such estimated results.


TDS Telecom 2014 Estimated Results (1)


Current


Previous

(Dollars in millions)




Operating revenues

$1,050-$1,100


Unchanged

Adjusted income before income taxes (2)

$250-$280


Unchanged

Capital expenditures

$200


Unchanged



(1)

These estimates do not reflect the effects of the acquisition of BendBroadband.

(2)

Adjusted income before income taxes is defined as income before income taxes, adjusted for the items set forth in the reconciliation below. Adjusted income before income taxes excludes these items in order to show operating results on a more comparable basis from period to period. In addition, TDS may exclude other items from adjusted income before income taxes if such items help reflect operating results on a more comparable basis. TDS does not intend to imply that any such amounts that are excluded are non-recurring, infrequent or unusual; such amounts may occur in the future.  Adjusted income before income taxes is not a measure of financial performance under Generally Accepted Accounting Principles in the United States ("GAAP") and should not be considered as an alternative to income before income taxes as an indicator of the company's operating performance or as an alternative to cash flows from operating activities, determined in accordance with GAAP, as an indicator of cash flows or as a measure of liquidity. TDS believes adjusted income before income taxes is a useful measure of TDS' operating results before significant recurring non-cash charges, discrete gains and losses, and financing charges (interest expense). The following table provides a reconciliation of income before income taxes to adjusted income before income taxes for 2014 estimated results, three months ended March 31, 2014, and 2013 actual results:




TDS Telecom




Actual Results


2014 Estimated Results


Three Months Ended

March 31, 2014


Year Ended

December 31, 2013

(Dollars in millions)






Income before income taxes

$25-$55


$19


$49

Depreciation, amortization and accretion expense

$225


$54


$203

(Gain) loss on investments

 ? 


 ? 


($1)

Interest expense

 ? 


 ? 


($2)

Adjusted income before income taxes

$250-$280


$73


$249

 

Stock repurchase summary

TDS began repurchasing under its $250 million repurchase authorization on Aug. 5, 2013.   The following represents repurchases of TDS Common Shares.

Repurchase Period


# Shares


Cost (in millions)

2014 (first quarter)


157,891


$

3.8

2013 (full year)


338,851


$

9.7

Total


496,742


$

13.5

 

Conference Call Information
TDS will hold a conference call on May 2, 2014 at 9:30 a.m. CDT.

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

About TDS
Telephone and Data Systems, Inc. (TDS), a Fortune 500® company, provides wireless; cable and wireline broadband, TV and voice; and hosted and managed services to approximately 5.8 million customers nationwide through its business units, U.S. Cellular, TDS Telecom, OneNeck IT Solutions and Baja Broadband. Founded in 1969 and headquartered in Chicago, TDS employed 10,600 people as of March 31, 2014.

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

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995: All information set forth in this news release, except historical and factual information, represents forward-looking statements. This includes all statements about the company's plans, beliefs, estimates, and expectations. These statements are based on current estimates, projections, and assumptions, which involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Important factors that may affect these forward-looking statements include, but are not limited to: impacts of any pending acquisition and divestiture transactions,  including, but not limited to, the ability to obtain regulatory approvals, successfully complete the transactions and the financial impacts of such transactions; the ability of the company to successfully manage and grow its markets; the overall economy; competition; the access to and pricing of unbundled network elements; the ability to obtain or maintain roaming arrangements with other carriers on acceptable terms; the state and federal telecommunications regulatory environment; the value of assets and investments; adverse changes in the ratings afforded TDS and U.S. Cellular debt securities by accredited ratings organizations; industry consolidation; advances in telecommunications technology; uncertainty of access to the capital markets;  pending and future litigation; changes in income tax rates, laws, regulations or rulings; acquisitions/divestitures of properties and/or licenses; changes in customer growth rates, average monthly revenue per user, churn rates, roaming revenue and terms, the availability of handset devices, or the mix of products and services offered by U.S. Cellular and TDS Telecom. Investors are encouraged to consider these and other risks and uncertainties that are discussed in the Form 8-K Current Report used by TDS to furnish this press release to the Securities and Exchange Commission ("SEC"), which are incorporated by reference herein.   

For more information about TDS and its subsidiaries, visit:
TDS: www.teldta.com
U.S. Cellular: www.uscellular.com
TDS Telecom: www.tdstelecom.com
OneNeck IT Solutions: www.oneneck.com

United States Cellular Corporation

Total Markets* Summary Operating Data (Unaudited)


















As of or for the Quarter Ended

3/31/2014


12/31/2013


9/30/2013


6/30/2013


3/31/2013

Retail Customers
















Postpaid

















Total at end of period


4,174,000



4,267,000



4,343,000



4,412,000



5,060,000



Gross additions


197,000



176,000



165,000



165,000



191,000



Net additions (losses)


(93,000)



(71,000)



(60,000)



(120,000)



(74,000)



ARPU (1)

$

57.59


$

53.53


$

54.64


$

54.18


$

54.85



Churn rate (2)


2.3%



1.9%



1.7%



2.0%



1.7%



Smartphone penetration (3) (4)


53.1%



50.8%



47.1%



45.5%



43.5%


Prepaid

















Total at end of period


356,000



343,000



370,000



381,000



446,000



Gross additions


85,000



63,000



65,000



77,000



104,000



Net additions (losses)


13,000



(26,000)



(11,000)



(7,000)



23,000



ARPU (1)

$

32.22


$

31.66


$

28.72


$

31.69


$

33.31



Churn rate (2)


6.9%



8.3%



6.8%



6.8%



6.2%

Total customers at end of period


4,684,000



4,774,000



4,875,000



4,968,000



5,736,000

Billed ARPU (1)

$

53.93


$

50.25


$

50.92


$

50.60


$

51.13

Service revenue ARPU (1)

$

60.19


$

57.05


$

58.36


$

57.45


$

57.63

Smartphones sold as a percent of total

  devices sold


73.0%



79.6%



65.2%



66.0%



61.7%

Total population

















Consolidated markets (5)


54,817,000



58,013,000



84,025,000



84,025,000



93,943,000



Consolidated operating markets (5)


31,729,000



31,759,000



31,822,000



31,822,000



47,440,000

Market penetration at end of period

















Consolidated markets (6)


8.5%



8.2%



5.8%



5.9%



6.1%



Consolidated operating markets (6)


14.8%



15.0%



15.3%



15.6%



12.1%

Capital expenditures (000s)

$

89,581


$

208,135


$

242,459


$

168,497


$

118,410

Total cell sites in service


6,165



6,975



7,687



7,748



8,027

Owned towers


4,448



4,448



4,422



4,411



4,411




Represents U.S. Cellular's consolidated markets. These results include markets which U. S. Cellular currently consolidates, or previously consolidated in the periods presented, and is not adjusted in prior periods for subsequent divestitures or deconsolidations.     

Refer to U.S. Cellular's Form 8-K filed on May 3, 2013 for pro forma financial information related to the Divestiture Transaction and the NY1 and NY2 Deconsolidation for the three months ended March 31, 2013, as if the transactions had occurred at the beginning of the period.



 

United States Cellular Corporation

Core* Markets Summary Operating Data (Unaudited)


















As of or for the Quarter Ended

3/31/2014


12/31/2013


9/30/2013


6/30/2013


3/31/2013

Retail Customers
















Postpaid

















Total at end of period


4,174,000



4,267,000



4,343,000



4,412,000



4,463,000



Gross additions


197,000



176,000



165,000



165,000



176,000



Net additions (losses)


(93,000)



(71,000)



(60,000)



(53,000)



(33,000)



ARPU (1)

$

57.59


$

53.53


$

54.64


$

54.44


$

54.21



Churn rate (2)


2.3%



1.9%



1.7%



1.6%



1.6%



Smartphone penetration (3) (4)


53.1%



50.8%



47.1%



45.5%



43.0%


Prepaid

















Total at end of period


356,000



343,000



370,000



381,000



373,000



Gross additions


85,000



63,000



65,000



76,000



91,000



Net additions (losses)


13,000



(26,000)



(11,000)



8,000



31,000



ARPU (1)

$

32.22


$

31.66


$

28.72


$

31.65


$

32.92



Churn rate (2)


6.9%



8.3%



6.8%



6.0%



5.6%

Total customers at end of period


4,684,000



4,774,000



4,875,000



4,968,000



5,005,000

Billed ARPU (1)

$

53.93


$

50.25


$

50.92


$

50.98


$

50.93

Service revenue ARPU (1)

$

60.19


$

57.05


$

58.36


$

57.88


$

57.14

Smartphones sold as a percent of total

  devices sold


73.0%



79.6%



65.2%



66.1%



62.1%

Total population

















Consolidated markets (5)


54,817,000



58,013,000



84,025,000



84,025,000



84,025,000



Consolidated operating markets (5)


31,729,000



31,759,000



31,822,000



31,822,000



31,822,000

Market penetration at end of period

















Consolidated markets (6)


8.5%



8.2%



5.8%



5.9%



6.0%



Consolidated operating markets (6)


14.8%



15.0%



15.3%



15.6%



15.7%

Capital expenditures (000s)

$

89,581


$

211,247


$

239,332


$

171,166


$

107,907

Total cell sites in service


6,165



6,161



6,127



6,113



6,113

Owned towers


3,883



3,883



3,857



3,846



3,846

 

*

U.S. Cellular's Core Markets excludes the results of the Divestiture Markets and NY1 and NY2 Partnerships for the periods presented.

Refer to U.S. Cellular's Form 8-K filed on May 3, 2013 for pro forma financial information related to the Divestiture Transaction and the NY1 and NY2 Deconsolidation for the three months ended March 31, 2013, as if the transactions had occurred at the beginning of the period.



(1)

ARPU metrics are calculated by dividing a revenue base by an average number of customers by the number of months in the period.  These revenue bases and customer populations are shown below:


     a. Postpaid ARPU consists of total postpaid service revenues and postpaid customers.


     b. Prepaid ARPU consists of total prepaid service revenues and prepaid customers.


     c. Billed ARPU consists of total postpaid, prepaid and reseller service revenues and postpaid, prepaid and reseller customers.


     d. Service revenue ARPU consists of total retail service revenues, inbound roaming and other service revenues and postpaid, prepaid and reseller customers.

(2)

Churn metrics represent the percentage of the postpaid or prepaid customers that disconnect service each month. These metrics represent the average monthly postpaid or prepaid churn rate for each respective period.

(3)

Smartphones represent wireless devices which run on an Android, Apple, BlackBerry or Windows Mobile operating system, excluding tablets.

(4)

Smartphone penetration is calculated by dividing postpaid smartphone customers by total postpaid customers.

(5)

Used only to calculate market penetration of consolidated markets and consolidated operating markets, respectively. See footnote (6) below.

(6)

Market penetration is calculated by dividing the number of wireless customers at the end of the period by the total population of consolidated markets and consolidated operating markets, respectively, as estimated by Claritas.


 


TDS Telecom

Summary Operating Data (Unaudited)



















Quarter Ended

3/31/2014


12/31/2013


9/30/2013


6/30/2013


3/31/2013

TDS Telecom















Wireline

















Residential connections


















Voice (1)


348,700



352,100



358,100



364,100



368,600




Broadband (2)


229,000



227,000



229,500



231,700



229,500




IPTV (3)


15,900



13,800



12,200



10,500



9,000




   Wireline residential connections


593,600



592,900



599,800



606,300



607,100





















Commercial connections


















Voice (1)


212,200



218,400



223,800



229,100



235,700




Broadband (2)


26,600



27,100



27,600



28,200



28,800




managedIP (4)


131,000



127,600



121,000



112,000



103,400




   Wireline commercial connections


369,800



373,100



372,400



369,300



367,900





















Total Wireline connections


963,400



966,000



972,200



975,600



975,000





















Total residential revenue per connection (5)

$

40.79


$

40.93


$

41.12


$

40.10


$

39.99



















Cable

















Cable Connections


















Video (6)


68,700



69,100



70,300










Broadband (7)


63,000



61,000



59,800










Voice (7)


17,700



17,200



16,800










   Cable connections


149,400



147,300



146,900



























Total residential revenue per connection (5)

$

57.37


$

55.27


$

55.67









(1)

The individual circuit connecting a customer to TDS Telecom's central office facilities.

(2)

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

(3)

The number of customers provided video services using IP networking technology.

(4)

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

(5)

Total residential revenue divided by the average number of total residential connections.

(6)

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

(7)

Broadband and voice connections reflect billable number of lines into a building for high speed data and voice services, respectively.































TDS Telecom

Capital Expenditures (000s)
















Quarter Ended

3/31/2014


12/31/2013


9/30/2013


6/30/2013


3/31/2013

Wireline

$

22,900


$

46,000


$

32,800


$

33,300


$

27,900

Cable


6,200



7,000



1,400



-



-

HMS


2,800



9,200



2,400



2,300



2,600


$

31,900


$

62,200


$

36,600


$

35,600


$

30,500

 


Telephone and Data Systems, Inc.

Consolidated Statement of Operations Highlights

Three Months Ended March 31,

(Unaudited, dollars and shares in thousands, except per share amounts)











Change





2014


2013


Amount

Percent

Operating revenues












U.S. Cellular

$

925,811


$

1,081,746


$

(155,935)


(14%)


TDS Telecom


262,416



217,061



45,355


21%


All Other (1)


7,735



9,766



(2,031)


(21%)






1,195,962



1,308,573



(112,611)


(9%)

Operating expenses












U.S. Cellular













Expenses excluding depreciation, amortization and accretion


846,645



878,070



(31,425)


(4%)



Depreciation, amortization and accretion


167,753



189,845



(22,092)


(12%)



(Gain) loss on asset disposals, net


1,934



5,434



(3,500)


(64%)



(Gain) loss on sale of business and other exit costs, net


(6,900)



6,931



(13,831)


>(100%)



(Gain) loss on license sales and exchanges


(91,446)



-



(91,446)


N/M






917,986



1,080,280



(162,294)


(15%)


TDS Telecom













Expenses excluding depreciation, amortization and accretion


190,303



159,486



30,817


19%



Depreciation, amortization and accretion


53,775



49,491



4,284


9%



(Gain) loss on asset disposals, net


344



193



151


78%






244,422



209,170



35,252


17%


All Other (1)













Expenses excluding depreciation and amortization


9,326



9,239



87


1%



Depreciation and amortization


3,391



2,741



650


24%



(Gain) loss on asset disposals, net


152



(11)



163


>(100%)






12,869



11,969



900


8%


















Total operating expenses


1,175,277



1,301,419



(126,142)


(10%)

Operating income (loss)












U.S. Cellular


7,825



1,466



6,359


>100%


TDS Telecom


17,994



7,891



10,103


>100%


All Other  (1)


(5,134)



(2,203)



(2,931)


>(100%)






20,685



7,154



13,531


>100%

Investment and other income (expense)












Equity in earnings of unconsolidated entities


37,327



27,089



10,238


38%


Interest and dividend income


2,486



1,578



908


58%


Interest expense


(28,707)



(24,498)



(4,209)


(17%)


Other, net


160



(154)



314


>(100%)



Total investment and other income


11,266



4,015



7,251


>100%

Income before income taxes


31,951



11,169



20,782


>100%


Income tax expense


11,657



4,180



7,477


>100%

Net income


20,294



6,989



13,305


>100%


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


2,040



5,570



(3,530)


(63%)

Net income attributable to TDS shareholders


18,254



1,419



16,835


>100%


TDS Preferred dividend requirement


(12)



(12)



-


-

Net income available to common shareholders

$

18,242


$

1,407


$

16,835


>100%















Basic weighted average shares outstanding


108,988



108,255



733


1%

Basic earnings per share attributable to TDS shareholders

$

0.17


$

0.01


$

0.16


>100%















Diluted weighted average shares outstanding


109,672



108,693



979


1%

Diluted earnings per share attributable to TDS shareholders

$

0.16


$

0.01


$

0.15


>100%



(1)

Consists of Non-Reportable Segment, corporate operations and intercompany eliminations between U.S. Cellular, TDS Telecom, the Non-Reportable Segment and corporate operations.



N/M – Percentage change not meaningful

 


Telephone and Data Systems, Inc.

Consolidated Balance Sheet Highlights

(Unaudited, dollars in thousands)








ASSETS

















March 31,


December 31,



2014


2013

Current assets







Cash and cash equivalents

$

872,910


$

830,014


Short-term investments


40,056



50,104


Accounts receivable from customers and others


615,009



731,114


Inventory, net


224,904



244,560


Net deferred income tax asset


106,077



106,077


Prepaid expenses


89,344



87,920


Income taxes receivable


5,679



2,397


Other current assets


35,154



35,151




1,989,133



2,087,337








Assets held for sale


-



16,027








Investments







Licenses


1,448,598



1,423,779


Goodwill


836,843



836,843


Franchise rights


123,668



123,668


Other intangible assets, net


66,439



71,454


Investments in unconsolidated entities


326,279



301,772


Other investments


611



641




2,802,438



2,758,157








Property, plant and equipment, net







U.S. Cellular


2,776,220



2,856,520


TDS Telecom


967,847



984,634


Other


35,066



36,990




3,779,133



3,878,144








Other assets and deferred charges


178,599



164,482








Total assets

$

8,749,303


$

8,904,147

 


Telephone and Data Systems, Inc.

Consolidated Balance Sheet Highlights

(Unaudited, dollars in thousands)










LIABILITIES AND EQUITY























March 31,


December 31,





2014


2013

Current liabilities








Current portion of long-term debt

$

1,415


$

1,646



Accounts payable


414,015



496,069



Customer deposits and deferred revenues


287,999



289,445



Accrued interest


15,757



6,673



Accrued taxes


72,761



70,518



Accrued compensation


65,486



115,031



Other current liabilities


167,746



212,374






1,025,179



1,191,756










Deferred liabilities and credits








Net deferred income tax liability


847,850



862,975



Other deferred liabilities and credits


477,305



458,709










Long-term debt


1,720,031



1,720,074










Noncontrolling interests with redemption features


543



536










Equity







TDS shareholders' equity








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


1,327



1,327



Capital in excess of par value


2,313,682



2,308,807



Treasury shares, at cost


(722,658)



(721,354)



Accumulated other comprehensive loss


(938)



(569)



Retained earnings


2,533,298



2,529,626




   Total TDS shareholders' equity


4,124,711



4,117,837











Preferred shares


824



824


Noncontrolling interests


552,860



551,436












Total equity


4,678,395



4,670,097










Total liabilities and equity

$

8,749,303


$

8,904,147

 


Balance Sheet Highlights

March 31, 2014

(Unaudited, dollars in thousands)
































U.S.


TDS


TDS Corporate


Intercompany


TDS


Cellular


Telecom


& Other


Eliminations


Consolidated

Cash and cash equivalents

$

398,541


$

84,120


$

390,249


$

 ? 


$

872,910

Affiliated cash investments


 ? 



444,181



 ? 



(444,181)



 ? 

Short-term investments


40,056



 ? 



 ? 



 ? 



40,056


$

438,597


$

528,301


$

390,249


$

(444,181)


$

912,966
















Licenses, goodwill and other intangible assets

$

1,813,469


$

792,606


$

(130,527)


$

 ? 


$

2,475,548

Investment in unconsolidated entities


289,842



3,807



39,771



(7,141)



326,279

Long-term and other investments


 ? 



611



 ? 



 ? 



611


$

2,103,311


$

797,024


$

(90,756)


$

(7,141)


$

2,802,438































Property, plant and equipment, net

$

2,776,220


$

967,847


$

35,066


$

 ? 


$

3,779,133
















Long-term debt:















     Current portion

$

166


$

73


$

1,176


$

 ? 


$

1,415

     Non-current portion


878,127



1,420



840,484



 ? 



1,720,031


$

878,293


$

1,493


$

841,660


$

 ? 


$

1,721,446

 



Telephone and Data Systems, Inc.

Schedule of Cash and Cash Equivalents and Investments

(Unaudited, dollars in thousands)





The following table presents TDS' cash and cash equivalents and investments at March 31, 2014 and December 31, 2013.






March 31,


December 31,


2014


2013







Cash and cash equivalents

$

872,910


$

830,014







Amounts included in short-term investments (1) (2)






               U.S. Treasury Notes


40,056



50,104







Total cash and cash equivalents and investments

$

912,966


$

880,118



(1)

Designated as held-to-maturity investments and are recorded at amortized cost in the Consolidated Balance Sheet.

(2)

Maturities are less than twelve months from the respective balance sheet dates.

 


Telephone and Data Systems, Inc.

Consolidated Statement of Cash Flows

Three Months Ended March 31,

(Unaudited, dollars in thousands)






2014


2013

Cash flows from operating activities







Net income

$

20,294


$

6,989



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

  from operating activities










Depreciation, amortization and accretion


224,919



242,077





Bad debts expense


21,559



17,874





Stock-based compensation expense


6,759



7,585





Deferred income taxes, net


(14,510)



3,009





Equity in earnings of unconsolidated entities


(37,327)



(27,089)





Distributions from unconsolidated entities


12,820



8,089





(Gain) loss on asset disposals, net


2,430



5,616





(Gain) loss on sale of business and other exit costs, net


(6,900)



6,931





(Gain) loss on license sales and exchanges


(91,446)



-





Noncash interest expense


506



497





Other operating activities


47



256



Changes in assets and liabilities from operations










Accounts receivable


92,949



34,038





Inventory


19,656



16,860





Accounts payable


(53,403)



(3,203)





Customer deposits and deferred revenues


(1,447)



7,904





Accrued taxes


(1,634)



5,309





Accrued interest


9,136



9,279





Other assets and liabilities


(99,471)



(95,669)







104,937



246,352











Cash flows from investing activities







Cash used for additions to property, plant and equipment


(150,890)



(176,318)


Cash paid for acquisitions and licenses


(8,254)



(14,150)


Cash received from divestitures


103,042



-


Cash received for investments


10,000



-


Other investing activities


1,623



6,364







(44,479)



(184,104)











Cash flows from financing activities







Repayment of long-term debt


(392)



(328)


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


(50)



140


U.S. Cellular Common Shares reissued for benefit plans, net of tax payments


316



123


Repurchase of TDS Common Shares


(3,342)



-


Repurchase of U.S. Cellular Common Shares


(2,000)



(18,425)


Dividends paid to TDS shareholders


(14,582)



(13,792)


Distributions to noncontrolling interests


(346)



(2,396)


Other financing activities


2,834



(1,351)







(17,562)



(36,029)











Net increase in cash and cash equivalents


42,896



26,219

Cash and cash equivalents







Beginning of period


830,014



740,481


End of period

$

872,910


$

766,700

 


TDS Telecom Highlights

Three Months Ended March 31,

(Unaudited, dollars in thousands)























Change




2014


2013


Amount


Percent

Wireline











Operating revenues












Residential

$

72,505


$

73,004


$

(499)


(1%)


Commercial


57,980



57,125



855


1%


Wholesale


46,448



50,549



(4,101)


(8%)



Total service revenues


176,933



180,678



(3,745)


(2%)


Equipment sales


553



897



(344)


(38%)





177,486



181,575



(4,089)


(2%)

Operating expenses












Cost of services


64,400



66,439



(2,039)


(3%)


Cost of equipment sold


483



1,010



(527)


(52%)


Selling, general and administrative expenses


46,520



57,380



(10,860)


(19%)


Depreciation, amortization and accretion


42,736



44,023



(1,287)


(3%)


Loss on asset disposals, net


245



163



82


50%





154,384



169,015



(14,631)


(9%)















Operating income

$

23,102


$

12,560


$

10,542


84%














Cable











Operating revenues












Residential

$

18,253


$

-


$

18,253


N/M


Commercial


4,250



-



4,250


N/M





22,503



-



22,503


N/M

Operating expenses












Cost of services


10,955



-



10,955


N/M


Selling, general and administrative expenses


6,378



-



6,378


N/M


Depreciation, amortization and accretion


4,361



-



4,361


N/M


Loss on asset disposals, net


65



-



65


N/M





21,759



-



21,759


N/M















Operating income

$

744


$

-


$

744


N/M














HMS











Operating revenues












Service revenues

$

27,376


$

22,000


$

5,376


24%


Equipment sales


35,732



13,564



22,168


>100%





63,108



35,564



27,544


77%

Operating expenses












Cost of services


16,946



13,602



3,344


25%


Cost of equipment sold


30,467



11,212



19,255


>100%


Selling, general and administrative expenses


14,835



9,921



4,914


50%


Depreciation, amortization and accretion


6,678



5,468



1,210


22%


Loss on asset disposals, net


34



30



4


13%





68,960



40,233



28,727


71%















Operating loss

$

(5,852)


$

(4,669)


$

(1,183)


(25%)














Intercompany revenues

$

(681)


$

(78)


$

(603)


>(100)%

Intercompany expenses


(681)



(78)



(603)


>(100)%














Total TDS Telecom operating income

$

17,994


$

7,891


$

10,103


>100%

 


Telephone and Data Systems, Inc.

Financial Measures and Reconciliations

(Unaudited, dollars in thousands)














TDS Consolidated

Three Months Ended March 31,


2014


2013











Cash flows from operating activities


$

104,937


$

246,352


Deduct:








Cash used for additions to property, plant, and equipment



150,890



176,318



Free cash flow (1)


$

(45,953)


$

70,034



(1)

Free cash flow is defined as Cash flows from operating activities less Cash used 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 the amount of cash generated by business operations, after Cash used for additions to property, plant and equipment.

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