Exhibit 99.1   NEWS RELEASE                                                                                    

As previously announced, TDS will hold a teleconference May 6, 2016 at 9:30 a.m. CDT. Interested parties may listen to the call live via the Events & Presentations page of investors.tdsinc.com.   

 FOR IMMEDIATE RELEASE

 TDS reports first quarter 2016 results

2016 guidance reaffirmed;

2015 gains affect year-over-year comparisons

 

 

CHICAGO, (May 6, 2016) — Telephone and Data Systems, Inc. (NYSE:TDS) reported total operating revenues of $1,243 million for the first quarter of 2016, versus $1,252 million for the comparable period one year ago. Net income attributable to TDS shareholders and related diluted earnings per share were $8 million and $0.07, respectively, for the first quarter of 2016, compared to $146 million and $1.33, respectively, in the comparable period one year ago.  Year-over-year comparisons are affected by pre-tax gains of $247 million ($155 million after-tax) from sales and exchanges of businesses and licenses in 2015.

 

“Building on the successes of 2015, our businesses started the year with a solid first quarter,” said LeRoy T. Carlson Jr., TDS president and CEO.  “U.S. Cellular grew its postpaid customer base and improved customer loyalty.  TDS Telecom experienced growth in both IPTV and cable connections, and we continued to move forward in our broadband and hosted and managed services strategies.

“U.S. Cellular increased sales of smartphones and connected devices through offering competitive products and devices priced to offer the best value in the industry. We continue to see strong customer adoption of Equipment Installment Plans, which increased equipment sales revenues.

“TDS Telecom maintained the momentum of IPTV growth by adding new connections and increasing average revenue per connection. Our cable segment increased connections, generating higher revenue from both residential and commercial broadband services. Our hosted and managed services company, OneNeck IT Solutions, achieved growth in recurring service and equipment revenues as more companies and organizations selected OneNeck IT to outsource their IT needs.”

 

2016 Estimated Results

Current estimates of full-year 2016 results for U.S. Cellular, TDS Telecom, and TDS, which are unchanged from the previous estimates, are shown below.  Such estimates represent management’s view as of May 6, 2016.  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.

 

2016 Estimated Results

U.S. Cellular

TDS Telecom

TDS(2)

Current

Previous

Current

Previous

Current

Previous

(Dollars in millions)

Total operating revenues

$3,900-$4,100

Unchanged

$1,130-$1,180

Unchanged

$5,040-$5,290

Unchanged

Operating cash flow (1)

$525-$650

Unchanged

$270-$310

Unchanged

$800-$965

Unchanged

Adjusted EBITDA (1)

$725-$850

Unchanged

$270-$310

Unchanged

$1,000-$1,165

Unchanged

Capital expenditures

Approx. $

500

Unchanged

Approx. $

180

Unchanged

Approx. $

695

Unchanged

 

The following tables provide a reconciliation to Operating Cash Flow and Adjusted EBITDA for 2016 estimated results, and actual results for the three months ended March 31, 2016 and year ended December 31, 2015:

 

					Estimated Results (3)
					U.S. Cellular			TDS Telecom			TDS(2)
(Dollars in millions)
Net income (loss) (GAAP)					N/A			N/A			N/A
Add back:
	Income tax expense (benefit)				N/A			N/A			N/A
Income (loss) before income taxes
	(GAAP)			$	0-125		$	40-80		$	(20)-145
Add back:
	Interest expense				105			–			160
	Depreciation, amortization and
		accretion expense			600			230			840
EBITDA				$	705-830		$	270-310		$	980-1,145
Add back:
	(Gain) loss on sale of business and
		other exit costs, net			–			–			–
	(Gain) loss on license sales and
		exchanges, net			–			–			–
		(Gain) loss on asset disposals, net			20			–			20
Adjusted EBITDA (1)				$	725-850		$	270-310		$	1,000-1,165
Deduct:
	Equity in earnings of unconsolidated
		entities			140			–			140
		Interest and dividend income			60			–			60
Operating cash flow (1)(4)				$	525-650		$	270-310		$	800-965

 

 

 

				Actual Results
				Three Months Ended March 31, 2016									Year ended December 31, 2015
				U.S. Cellular			TDS Telecom			TDS (2)			U.S. Cellular*			TDS Telecom			TDS (2)*
(Dollars in millions)
Net income (loss) (GAAP)				$	9		$	10		$	10		$	247		$	46		$	263
Add back:
	Income tax expense (benefit)				11			7			13			156			35			172
Income (loss) before income taxes
	(GAAP)			$	20		$	17		$	23		$	404		$	81		$	435
Add back:
	Interest expense				28			–			41			86			1			142
	Depreciation, amortization and
		accretion expense			153			58			212			606			228			844
EBITDA				$	201		$	75		$	276		$	1,096		$	310		$	1,421
Add back:
	(Gain) loss on sale of business and
		other exit costs, net			–			–			–			(114)			(10)			(136)
	(Gain) loss on license sales and
		exchanges, net			–			–			–			(147)			–			(147)
	(Gain) loss on asset disposals, net				5			1			6			16			6			22
Adjusted EBITDA (1)				$	206		$	76		$	282		$	852		$	306		$	1,160
Deduct:
	Equity in earnings of unconsolidated
		entities			35			–			35			140			–			140
	Interest and dividend income				13			1			14			37			2			39
	Other, net				1			(1)			–			–			–			–
Operating cash flow (1)(4)				$	157		$	76		$	233		$	675		$	304		$	981
* Includes $58 million of revenue related to termination of the rewards points program.
Note: Totals may not foot due to rounding differences.

 

1. Operating cash flow is defined as net income, adjusted for the items set forth in the reconciliation above.  Adjusted EBITDA is defined as net income, adjusted for the items set forth in the reconciliation above.  Operating cash flow and Adjusted EBITDA exclude these items in order to show operating results on a more comparable basis from period to period. From time to time, TDS may exclude other items from Operating cash flow and/or Adjusted EBITDA if such items help reflect operating results on a more comparable basis. TDS does not intend to imply that any such items that are excluded are non-recurring, infrequent or unusual; such items may occur in the future.  Operating cash flow and Adjusted EBITDA 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 as indicators of the company’s operating performance or as alternatives to cash flows from operating activities, determined in accordance with GAAP, as indicators of cash flows or as measures of liquidity. TDS believes Operating cash flow and Adjusted EBITDA are useful measures of TDS’ operating results before significant recurring non-cash charges, gains and losses, and other items as indicated above.
2. The TDS column includes U.S. Cellular, TDS Telecom and also the impacts of consolidating eliminations, corporate operations and non-reportable segments, all of which are not presented above.
3. In providing 2016 Estimated Results, TDS has not completed the above reconciliation to net income because it does not provide guidance for income taxes. TDS believes that the impact of income taxes cannot be reasonably predicted; therefore, the company is unable to provide such guidance.
4. A reconciliation of Operating cash flow (Non-GAAP) to operating income (GAAP) for March 31, 2016 actual results can be found on the company's website at investors.tdsinc.com.

 

Stock Repurchase Summary

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

Repurchase Period		# Shares		Cost (in millions)
2016 (year-to-date through March 31, 2016)		111,700		$	3
2015 (full year)		–		$	–
Total		111,700		$	3

 

Conference Call Information

TDS will hold a conference call on May 6, 2016 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/1145/14974
• Access the call by phone at 877/407-8029 (US/Canada), no pass code required. 

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 1000TM company, provides wireless; cable and wireline broadband, TV and voice; and hosted and managed services to approximately 6 million customers nationwide through its businesses, U.S. Cellular, TDS Telecom, OneNeck IT Solutions, and BendBroadband. Founded in 1969 and headquartered in Chicago, TDS employed 10,600 people as of March 31, 2016.

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

Contacts     

Jane McCahon, Senior Vice President, Corporate Relations and Corporate Secretary

312-592-5379

jane.mccahon@tdsinc.com

 

Julie Mathews, IRC, Investor Relations Director

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/divestures/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 overall economy; 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; 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 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, 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

United States Cellular Corporation
Summary Operating Data (Unaudited)
As of or for the Quarter Ended						3/31/2016			12/31/2015			9/30/2015				6/30/2015			3/31/2015
Retail Customers
	Postpaid
		Total at end of period					4,454,000			4,409,000			4,341,000			4,324,000			4,307,000
		Gross additions					215,000			240,000			200,000			191,000			200,000
			Feature phones				9,000			10,000			14,000			15,000			14,000
			Smartphones				124,000			132,000			119,000			115,000			119,000
			Connected devices				82,000			98,000			67,000			61,000			67,000
		Net additions (losses)					45,000			68,000			17,000			17,000			9,000
			Feature phones				(25,000)			(25,000)			(28,000)			(26,000)			(34,000)
			Smartphones				20,000			23,000			6,000			7,000			3,000
			Connected devices				50,000			70,000			39,000			36,000			40,000
		ARPU (1)(8)				$	48.13		$	51.46		$	58.12		$	53.62		$	54.87
		ABPU (2)(8)				$	56.06		$	58.57		$	63.88		$	58.08		$	58.50
		ARPA (3)(8)				$	125.36		$	131.96		$	147.00		$	133.85		$	134.94
		ABPA (4)(8)				$	145.99		$	150.19		$	161.57		$	144.99		$	143.86
		Churn rate (5)					1.28%			1.31%			1.41%			1.34%			1.48%
		Smartphone penetration (6)					75%			74%			72%			69%			67%
	Prepaid
		Total at end of period					399,000			387,000			380,000			368,000			360,000
		Gross additions					75,000			69,000			71,000			65,000			73,000
		Net additions (losses)					12,000			7,000			12,000			8,000			12,000
		ARPU (1)				$	35.51		$	35.54		$	35.64		$	35.98		$	35.72
		Churn rate (5)					5.37%			5.40%			5.24%			5.22%			5.76%
Total customers at end of period							4,926,000			4,876,000			4,807,000			4,779,000			4,775,000
Smartphones sold as a percent of total
	handsets sold						92%			91%			87%			87%			86%
Market penetration at end of period
	Consolidated operating population						31,994,000			31,967,000			31,814,000			31,814,000			31,814,000
	Consolidated operating penetration (7)						15%			15%			15%			15%			15%
Capital expenditures (millions)						$	79		$	198		$	135		$	134		$	66
Total cell sites in service							6,306			6,297			6,246			6,223			6,219
Owned towers							3,989			3,978			3,957			3,940			3,936
(1)		Average Revenue Per User (“ARPU”) are metrics calculated by dividing a revenue base by an average number of customers and by the number of months in the period.  These revenue bases and customer populations are shown below:
			▪	Postpaid ARPU consists of total postpaid service revenues and postpaid customers.
			▪	Prepaid ARPU consists of total prepaid service revenues and prepaid customers.
(2)		Average Billings Per User (“ABPU”) metric is calculated by dividing total postpaid service revenues plus equipment installment plan billings by the average number of postpaid customers and by the number of months in the period.
(3)		Average Revenue Per Account (“ARPA”) metric is calculated by dividing total postpaid service revenue by the average number of postpaid accounts and by the number of months in the period.
(4)		Average Billings Per Account (“ABPA”) 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.
(5)		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.
(6)		Smartphones represent wireless devices which run on an Android, Apple, BlackBerry or Windows Mobile operating system, excluding connected devices. Smartphone penetration is calculated by dividing postpaid smartphone customers by total postpaid handsets.
(7)		Market penetration is calculated by dividing the number of wireless customers at the end of the period by the total population of consolidated operating markets as estimated by Nielsen.
(8)		The quarter ended September 30, 2015 results include the recognition of $58 million in revenue due to the termination of the awards program.

TDS Telecom
Summary Operating Data (Unaudited)
Quarter Ended			3/31/2016			12/31/2015			9/30/2015			6/30/2015			3/31/2015
TDS Telecom
Wireline
	Residential connections
		Voice (1)		318,400			319,800			325,900			329,000			333,400
		Broadband (2)		229,100			228,500			231,600			231,200			229,400
		IPTV (3)		38,300			34,400			30,300			27,900			25,600
		Wireline residential connections		585,800			582,700			587,800			588,100			588,400
	Total residential revenue per connection (4)		$	43.28		$	41.24		$	42.83		$	42.10		$	42.32
	Commercial connections
		Voice (1)		167,400			171,500			176,700			181,800			187,500
		Broadband (2)		22,000			22,400			23,000			23,700			24,300
		managedIP (5)		148,500			147,100			145,900			145,100			143,200
		Wireline commercial connections		337,900			341,000			345,600			350,600			355,000
	Total Wireline connections			923,700			923,700			933,400			938,700			943,400
Cable
	Cable Connections
		Video (6)		104,600			106,800			108,300			109,100			109,700
		Broadband (7)		121,700			117,100			114,600			112,300			112,200
		Voice (7)		58,100			56,400			54,000			51,500			49,100
		Cable connections		284,400			280,300			276,900			272,900			271,000
(1)		The individual circuit connecting customers 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)		Total residential revenue per connection is calculated by dividing the average monthly residential revenue for the period by the average number of residential connections for the period.
(5)		The number of telephone handsets, data lines and IP trunks providing communications using IP networking technology.
(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 (millions)
Quarter Ended	3/31/2016			12/31/2015			9/30/2015			6/30/2015			3/31/2015
Wireline	$	27		$	50		$	38		$	32		$	20
Cable		13			15			13			12			12
HMS		2			8			5			9			5
	$	42		$	73		$	56		$	53		$	37

 

 

Telephone and Data Systems, Inc.
Consolidated Statement of Operations Highlights
(Unaudited)
				Three Months Ended March 31,
				2016			2015			2016 vs. 2015
(Dollars and shares in millions, except per share amounts)
Operating revenues
	U.S. Cellular			$	958		$	965		$	(7)		(1)%
	TDS Telecom				281			280			1		-
	All Other (1)				4			7			(3)		(51)%
					1,243			1,252			(9)		(1)%
Operating expenses
	U.S. Cellular
		Expenses excluding depreciation, amortization and
			accretion		801			798			3		-
		Depreciation, amortization and accretion			153			147			6		4%
		(Gain) loss on asset disposals, net			5			4			1		19%
		(Gain) loss on sale of business and other exit costs, net			–			(111)			111		100%
		(Gain) loss on license sales and exchanges, net			–			(123)			123		N/M
					959			715			244		34%
	TDS Telecom
		Expenses excluding depreciation, amortization and
			accretion		205			201			4		2%
		Depreciation, amortization and accretion			58			57			1		1%
		(Gain) loss on asset disposals, net			1			1			–		(14)%
					264			259			5		2%
	All Other (1)
		Expenses excluding depreciation and amortization			4			5			(1)		(59)%
		Depreciation and amortization			1			3			(2)		(19)%
		(Gain) loss on sale of business and other exit costs, net (2)			–			(13)			13		100%
					5			(5)			10		>100%
			Total operating expenses		1,228			969			259		27%
Operating income (loss)
	U.S. Cellular (3)				(1)			250			(251)		>(100)%
	TDS Telecom				17			21			(4)		(21)%
	All Other (1)				(1)			12			(13)		>(100)%
					15			283			(268)		(95)%
Investment and other income (expense)
	Equity in earnings of unconsolidated entities				35			35			–		2%
	Interest and dividend income				14			8			6		65%
	Interest expense				(41)			(34)			(7)		(24)%
		Total investment and other income			8			9			(1)		(22)%
Income before income taxes					23			292			(269)		(92)%
	Income tax expense (benefit)				13			116			(103)		(89)%
Net income					10			176			(166)		(94)%
	Less: Net income attributable to noncontrolling interests, net of tax				2			30			(28)		(94)%
Net income attributable to TDS shareholders					8			146			(138)		(94)%
	TDS Preferred dividend requirement				–			–			–		-
Net income available to common shareholders				$	8		$	146		$	(138)		(94)%
Basic weighted average shares outstanding					109			108			1		1%
Basic earnings per share attributable to TDS shareholders				$	0.07		$	1.35		$	(1.28)		(95)%
Diluted weighted average shares outstanding					110			109			1		1%
Diluted earnings per share attributable to TDS shareholders				$	0.07		$	1.33		$	(1.26)		(95)%
(1)	Consists of TDS corporate, intercompany eliminations and all other business operations not included in the U.S. Cellular and TDS Telecom segments.
(2)	Compared to U.S. Cellular, TDS recognized an incremental gain of $12 million on the tower sale as a result of a lower basis in the assets disposed in 2015.
(3)	Year-over-year comparisons are affected by gains of $247 million from sales and exchanges of businesses and licenses in 2015.
N/M – Percentage change not meaningful