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TDS Reports Fourth Quarter Results

Date : 02/24/2012 @ 8:28AM
Source : PR Newswire (US)
Stock : Telephone & Data Systems, Inc. (TDS)
Quote : 24.65  0.18 (0.74%) @ 4:13PM
Telephone & Data Systems, Inc. share price Chart

TDS Reports Fourth Quarter Results

Telephone & Data Systems, Inc. (NYSE:TDS)
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CHICAGO, Feb. 24, 2012 /PRNewswire/ --

Note: Comparisons are year over year unless otherwise noted.

Fourth Quarter Highlights

U.S. Cellular

  • Smartphones increased to 52.5 percent of total devices sold from 39.6 percent; smartphone customers increased to 30.5 percent of postpaid customers from 16.7 percent.
  • Postpaid ARPU (average revenue per unit) increased 5 percent to $53.35 from $50.99.
  • Service revenues increased 4 percent to $1,030.0 million.
  • Operating income increased $20.4 million to $16.3 million.
  • Net loss of 13,000 retail customers, reflecting loss of 20,000 postpaid customers and a gain of 7,000 prepaid customers; postpaid customers comprised 95 percent of retail customers.
  • Cell sites in service increased 3 percent to 7,882.


TDS Telecom

  • Operating revenues increased 4 percent to $206.8 million.
  • ILEC triple play penetration increased to 29 percent from 26 percent.
  • TDS managedIP stations (ILEC and CLEC) grew to 43,100 from 27,400.


As previously announced, TDS will hold a teleconference Feb. 24, 2012 at 9:30 a.m. CST. Listen to the live call via the Conference Calls page of www.teldta.com.

Telephone and Data Systems, Inc. (NYSE:TDS) reported operating revenues of $1,316.7 million for the fourth quarter of 2011, versus $1,265.8 million in the comparable period one year ago.  Net loss attributable to TDS was $6.2 million, or $0.06 diluted loss per share.  In the fourth quarter of 2010, net income attributable to TDS was $13.1 million, or $0.12 diluted earnings per share.

The fourth quarter of 2011 was impacted by a $7.2 million expense related to the Share Consolidation (see below) that was not deductible for tax purposes, as well as a $6 million adjustment that increased tax expense related to prior periods.

For the twelve months ended Dec. 31, 2011, TDS reported operating revenues of $5,180.5 million, versus $4,986.8 million in 2010.  Net income attributable to TDS for 2011 was $200.5 million, or $1.83 diluted earnings per share. In 2010, net income attributable to TDS was $144.8 million, or $1.31 diluted earnings per share.

"TDS increased revenues and improved profitability in 2011, despite very competitive industry environments for both U.S. Cellular and TDS Telecom," said LeRoy T. Carlson, Jr., TDS president and CEO. "Both companies are making significant investments in their networks and operational infrastructure to enhance customer experiences and improve operational efficiency.

"Average total service revenue per customer at U.S. Cellular grew six percent in 2011, through greater smartphone penetration, the resulting higher-revenue data plans, and data-driven increases in inbound roaming revenues. Effective cost controls, including careful management of device subsidies, helped to improve profitability. U.S. Cellular had solid holiday sales with positive net retail additions in December, though not enough to offset customer losses for the quarter. 

"Growing the postpaid customer base is U.S. Cellular's top priority for 2012. The company's strategy to compete includes bringing 4G LTE speeds and devices to customers, attracting new customers by building awareness, increasing our focus on small-to-medium business customers, and looking to expand other points of distribution. U.S. Cellular is also striving to increase profitability by continuing to improve its cost structure and by efficiently managing data growth.

"TDS Telecom continued to build its broadband business in 2011, adding high-speed data customers in its ILEC business, and offering more data services and faster speeds. On the commercial side, TDS Telecom continued to grow the number of stations for its managedIP voice and data solution, and expanded its hosted and managed services business through acquisitions and organic growth.

"TDS Telecom's strategic priorities for 2012 include continuing to increase broadband speeds, and launching TDS TV® in 19 markets. The company is increasing the range of its services and products for businesses, and will continue to expand the hosted and managed services footprint and service portfolio. TDS Telecom also plans to make substantial progress toward completion of its broadband stimulus projects in 2012 to bring high-speed data access to rural communities.

"At the TDS corporate level, we increased our financial flexibility and reduced the complexity of the capital structure through the Share Consolidation, which was approved by shareholders and became effective in January 2012.  We are also evaluating additional steps to increase shareholder value, while continuing to focus on profitable growth."

Share Consolidation

On Jan. 13, 2012, TDS shareholders approved Charter Amendments to the TDS Restated Certificate of Incorporation, including a Share Consolidation Amendment to reclassify each Special Common Share as one Common Share, each Common Share as 1.087 Common Shares, and each Series A Common Share as 1.087 Series A Common Shares.  Additionally, there was a Vote Amendment that fixed the percentage voting power in certain matters, and amendments to eliminate obsolete and inoperative provisions.  

These approved Charter Amendments were effected on Jan. 24, 2012, and the Special Common Shares ceased to be outstanding and consequently ceased trading on the New York Stock Exchange under the symbol "TDS.S." 

As of Jan. 24, 2012, immediately prior to the reclassification, there were outstanding 6,549,000 Series A Common Shares, 49,980,000 Common Shares and 47,012,000 Special Common Shares.  As of Jan. 24, 2012, immediately following the reclassification, there were outstanding 7,119,000 Series A Common Shares and 101,340,000 Common Shares.

As a result of the Share Consolidation Amendment, shares outstanding as of Dec. 31, 2011, as well as average basic and diluted shares outstanding used to calculate earnings per share as of the beginning of all periods presented, were retroactively restated to reflect the impact of the increased shares outstanding.

TDS' consolidated balance sheet as of Dec. 31, 2011 was also retroactively adjusted to reflect the incremental shares issued to Common and Series A shareholders based on the closing price of TDS Common Shares as of Dec. 31, 2011.  As a result of the reclassification, an increase in Common Shares, Series A Common Shares and capital in excess of par was offset by a corresponding decrease in retained earnings, with no change to the overall amount of shareholders' equity.

Guidance for year ending Dec. 31, 2012

This guidance represents the views of management as of Feb. 24, 2012, and should not be assumed to be current as of any other date.  There can be no assurance that final results will not differ materially from this guidance.  TDS undertakes no legal duty to update such information, whether as a result of new information, future events, or otherwise.









2012 



2011 

U.S. Cellular

Estimated Results (1)



Actual Results



Service revenues

$4,050-$4,150 million



$4,053.8 million



Operating income

$200-$300 million



$280.8 million



Depreciation, amortization and accretion expenses,









  and net gain or loss on asset disposals and exchanges









  and loss on impairment of assets (2)

Approx. $600 million



$571.7 million



Adjusted OIBDA (5)

$800-$900 million



$852.5 million



Capital expenditures

Approx. $850 million



$782.5 million



















2012 



2011 

TDS Telecom ILEC and CLEC operations:

Estimated Results (3)



Actual Results



Operating revenues

$810-$840 million



$815.4 million



Operating income

$55-$85 million



$98.7 million



Depreciation, amortization and accretion expenses,  









  and net gain or loss on asset disposals and exchanges









  and loss on impairment of assets (4)

Approx. $190 million



$181.8 million



Adjusted OIBDA (5)

$245-$275 million



$280.9 million



Capital expenditures (6)

$150-$180 million



$191.2 million







(1)

These estimates are based on U.S. Cellular's current plans, which include a multi-year deployment of 4G LTE technology which commenced in 2011.  New developments or changing conditions (such as customer net growth, customer demand for data services or possible acquisitions, dispositions or exchanges) could affect U.S. Cellular's plans and, therefore, its 2012 estimated results.  

(2)

2011 Actual Results include gains on asset disposals and exchanges, net of $1.9 million.  The 2012 Estimated Results include only Depreciation, amortization and accretion expenses; such estimated results do not include net gains or losses on disposals and exchanges of assets or losses on impairment of assets (since such transactions and their effects cannot be predicted).  

(3)

These estimates are based on TDS Telecom's current operations.  Various other factors, including possible acquisitions, dispositions or exchanges, could affect TDS Telecom's estimated guidance in 2012.

(4)

2011 Actual Results include losses on asset disposals of $1.2 million.  The 2012 Estimated Results include only the estimate for Depreciation, amortization and accretion expenses; such estimated results do not include net gains or losses on asset disposals and exchanges or losses on impairment of assets (since such transactions and their effects cannot be predicted).

(5)

Adjusted OIBDA is defined as operating income excluding the effects of Depreciation, amortization and accretion (OIBDA): the net gain or loss on asset disposals and exchanges (if any); and the loss on impairment of assets (if any).  This measure also may be commonly referred to by management as operating cash flow.  This measure should not be confused with cash flows from operating activities, which is a component of the Consolidated Statement of Cash Flows.  Adjusted OIBDA excludes the net gain or loss on asset disposals and exchanges (if any) and loss on impairment of assets (if any), in order to show operating results on a more comparable basis from period to period.  TDS does not intend to imply that any of such amounts that are excluded are non-recurring, infrequent or unusual and, accordingly, they may be incurred in the future.  TDS believes this measure provides useful information to investors regarding TDS' financial condition and results of operations because it highlights certain key cash and non-cash items and their impacts on cash flows from operating activities.

(6)

Under the American Recovery and Reinvestment Act of 2009 ("the Recovery Act"), TDS Telecom will receive $105.1 million in federal grants and will provide $30.9 million (a portion of which is included in 2012 estimated capital expenditures) of its own funds to complete 44 projects.  Under the terms of the grants, the projects must be completed by June of 2015.





Stock repurchase summary

The following represents repurchases of TDS Common Shares and TDS Special Common Shares.





Repurchase Period



# Shares



Cost (in millions)



2011 (full year)



748,246



$

21.5



2010 (full year)



2,394,476



$

68.1



2009 (full year)



6,374,741



$

176.6



2008 (full year)



5,861,822



$

199.6



Total  



15,379,285



$

465.8







Conference call information

TDS will hold a conference call on Feb. 24, 2012 at 9:30 a.m. CST.

  • Listen to the live call online at http://www.videonewswire.com/event.asp?id=85230 or on the Conference Calls page of www.teldta.com.
  • Listen to the live call by phone at 877/869-3847 (US/Canada), no pass code required.


Before the call, certain financial and statistical information to be discussed during the call will be posted to the Conference Calls page of www.teldta.com. The call will be archived on the Conference Calls page of www.teldta.com.

About TDS

Telephone and Data Systems, Inc. (TDS), a Fortune 500® company, provides wireless, local and long-distance telephone, and broadband services to approximately 7 million customers in 36 states through its business units, U.S. Cellular (wireless) and TDS Telecom (wireline). Founded in 1969 and headquartered in Chicago, TDS employed 12,300 people as of Dec. 31, 2011.

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: The ability of U.S. Cellular to successfully grow its markets; the overall economy; competition; the access to and pricing of unbundled network elements; 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; risks and uncertainties relating to possible future restatements; pending and future litigation; changes in income tax rates, laws, regulations or rulings; acquisitions/divestitures of properties and/or licenses; and changes in customer growth rates, average monthly revenue per unit, 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 used by TDS to furnish this press release to the SEC, which are incorporated by reference herein.

For more information about TDS and its subsidiaries, visit our websites at:



TDS:  www.teldta.com

TDS Telecom: www.tdstelecom.com

U.S. Cellular: www.uscellular.com









UNITED STATES CELLULAR CORPORATION

SUMMARY OPERATING DATA (UNAUDITED)

































Quarter Ended



12/31/2011





9/30/2011





6/30/2011





3/31/2011





12/31/2010

Total population































Consolidated markets (1)



91,965,000





91,965,000





91,204,000





91,090,000





90,468,000



Consolidated operating markets (1)



46,888,000





46,888,000





46,888,000





46,774,000





46,546,000

Market penetration at end of period































Consolidated markets (2)



6.4%





6.5%





6.5%





6.6%





6.7%



Consolidated operating markets (2)



12.6%





12.7%





12.7%





12.9%





13.0%

All customers































Total at end of period



5,891,000





5,932,000





5,968,000





6,033,000





6,072,000



Gross additions



306,000





299,000





257,000





293,000





327,000



Net additions (losses)



(41,000)





(36,000)





(70,000)





(39,000)





(31,000)



Smartphones sold as a percent of































     total devices sold (3)



52.5%





39.9%





39.6%





42.5%





39.6%

Retail customers































Total at end of period



5,608,000





5,621,000





5,644,000





5,698,000





5,729,000



Smartphone penetration (3) (4)



30.5%





26.2%





23.1%





20.3%





16.7%



Gross additions



298,000





284,000





226,000





256,000





292,000



Net retail additions (losses) (5)



(13,000)





(23,000)





(58,000)





(31,000)





(21,000)



     Net postpaid additions (losses)



(20,000)





(34,000)





(41,000)





(22,000)





(10,000)



     Net prepaid additions (losses)



7,000





11,000





(17,000)





(9,000)





(11,000)

Service revenue components (000s)































Retail service

$

882,091



$

871,199



$

868,630



$

864,602



$

864,905



Inbound roaming



93,353





107,810





82,760





64,386





67,545



Other



54,601





57,600





50,640





56,125





59,464

Total service revenues (000s)

$

1,030,045



$

1,036,609



$

1,002,030



$

985,113



$

991,914

Total ARPU (6)



58.13



$

58.09



$

55.69



$

54.29



$

54.37

Billed ARPU (7)



49.78



$

48.82



$

48.27



$

47.65



$

47.41

Postpaid ARPU (8)

$

53.35



$

52.41



$

51.84



$

51.21



$

50.99

Postpaid churn rate (9)



1.6%





1.5%





1.4%





1.4%





1.5%

Capital expenditures (000s)

$

276,400



$

248,000



$

162,100



$

95,900



$

203,400

Cell sites in service



7,882





7,828





7,770





7,663





7,645







(1)

Used only to calculate market penetration of consolidated markets and consolidated operating markets, respectively. See footnote (2) below.

(2)

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®.

(3)

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

(4)

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

(5)

Includes net postpaid additions (losses) and net prepaid additions (losses).

(6)

Total ARPU - Average monthly service revenue per customer includes retail service, inbound roaming and other service revenues and is calculated by dividing total service revenues by the number of months in the period and by the average total customers during the period.

(7)

Billed ARPU - Average monthly billed revenue per customer is calculated by dividing total retail service revenues by the number of months in the period and by the average total customers during the period. Retail service revenues include revenues attributable to postpaid, prepaid and reseller customers.

(8)

Postpaid ARPU - Average monthly revenue per postpaid customer is calculated by dividing total retail service revenues from postpaid customers by the number of months in the period and by the average postpaid customers during the period.

(9)

Represents the percentage of the postpaid customer base that disconnects service each month. This amount represents the average postpaid churn rate for each respective quarterly period.







TELEPHONE AND DATA SYSTEMS, INC.

SUMMARY OPERATING DATA (UNAUDITED)

































Quarter Ended



12/31/2011





9/30/2011





6/30/2011





3/31/2011





12/31/2010

TDS Telecom































ILEC:































Equivalent access lines (1)



754,400





762,500





764,600





765,300





767,200



Physical access lines (2)



482,000





490,200





496,300





501,200





507,700



High-speed data customers (3)



238,400





239,000





235,600





231,800





227,700



Long-distance customers



371,500





373,300





373,200





370,600





370,100



managedIP stations (4)



6,900





5,800





5,100





4,300





3,600



Capital expenditures (000s)

$

56,200



$

51,500



$

39,100



$

22,100



$

55,700



CLEC:































Equivalent access lines (1)



317,500





322,600





328,700





331,000





335,400



High-speed data customers (3)



28,900





30,200





31,500





32,300





33,100



managedIP stations (4)



36,200





33,600





30,200





27,200





23,800



Capital expenditures (000s)

$

7,200



$

4,700



$

6,200



$

4,200



$

6,200







(1)

Sum of physical access lines and high-capacity data lines, adjusted to estimate the equivalent number of physical access lines in terms of capacity, plus the number of managed Internet Protocol telephony ("managedIP") stations.

(2)

Individual circuits connecting customers to a telephone company's central office facilities.

(3)

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

(4)

The number of telephone handsets providing communications using IP networking technology.







TELEPHONE AND DATA SYSTEMS, INC.

CONSOLIDATED STATEMENT OF OPERATIONS HIGHLIGHTS

Three Months Ended December 31,

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





















































Increase/ (Decrease)









2011 





2010 



Amount



  Percent   

Operating revenues

























U.S. Cellular

$

1,099,633





$

1,063,150



$

36,483



3%



TDS Telecom



206,770







199,101





7,669



4%



All Other (1)



10,324







3,508





6,816



>(100%)











1,316,727







1,265,759





50,968



4%

Operating expenses

























U.S. Cellular



























Expenses excluding depreciation, amortization and accretion (2) (3)



937,473







921,778





15,695



2%





Depreciation, amortization and accretion



141,976







143,124





(1,148)



(1%)





(Gain) loss on asset disposals, net



3,868







2,310





1,558



67%











1,083,317







1,067,212





16,105



2%



TDS Telecom



























Expenses excluding depreciation, amortization and accretion



144,748







129,981





14,767



11%





Depreciation, amortization and accretion



46,168







43,837





2,331



5%





(Gain) loss on asset disposals, net



485







464





21



5%











191,401







174,282





17,119



10%



All Other (1)



























Expenses excluding depreciation and amortization



19,117







1,677





17,440



>(100%)





Depreciation and amortization



3,735







2,643





1,092



41%





(Gain) loss on asset disposals, net



(193)







(34)





(159)



>(100%)











22,659







4,286





18,373



>(100%)





































Total operating expenses



1,297,377







1,245,780





51,597



4%

Operating income (loss)

























U.S. Cellular



16,316







(4,062)





20,378



>(100%)



TDS Telecom



15,369







24,819





(9,450)



(38%)



All Other (1)



(12,335)







(778)





(11,557)



>(100%)











19,350







19,979





(629)



(3%)

Investment and other income (expense)

























Equity in earnings of unconsolidated entities



18,507







23,027





(4,520)



(20%)



Interest and dividend income



2,229







2,608





(379)



(15%)



Loss on investment



(2,000)











(2,000)



N/M



Interest expense (2)



(24,017)







(30,290)





6,273



21%



Other, net



2,157







468





1,689



>(100%)





Total investment and other income (expense)



(3,124)







(4,187)





1,063



25%

Income before income taxes



16,226







15,792





434



3%



Income tax expense (benefit) (3)



18,239







(4,716)





22,955



>(100%)

Net income (loss)



(2,013)







20,508





(22,521)



>(100%)



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



(4,173)







(7,364)





3,191



43%

Net income (loss) attributable to TDS shareholders



(6,186)







13,144





(19,330)



>(100%)



Preferred dividend requirement



(12)







(12)







Net income (loss) available to common

$

(6,198)





$

13,132



$

(19,330)



>(100%)































Basic weighted average shares outstanding (4)



108,492







108,979





(487)



Basic earnings (loss) per share attributable to TDS shareholders (4)

$

(0.06)





$

0.12



$

(0.18)



>(100%)

Diluted weighted average shares outstanding (4)



108,492







109,790





(1,298)



(1%)

Diluted earnings (loss) per share attributable to TDS shareholders (4)

$

(0.06)





$

0.12



$

(0.18)



>(100%)







(1)

Consists of Suttle Straus printing and distribution operations, Airadigm, corporate operations and intercompany eliminations.

(2)

During the quarter ended December 31, 2010, TDS recorded adjustments to reduce its liability for transactional taxes in the amount of $5.8 million. Of this amount, $2.7 million and $3.1 million reduced Selling, general and administrative expenses and Interest expense, respectively, in the quarter ended December 31, 2010. These transactional taxes related to periods from 2002 through the first quarter of 2010. This adjustment reflects a change in TDS' estimate of its liability for transactional taxes and interest and the actual amounts due and settled with the taxing authorities of taxes and interest.

(3)

During the quarter ended December 31, 2011, TDS recorded an immaterial adjustment to correct its liabilities and prepaid expense related to property taxes for errors occurring primarily prior to 2009. This adjustment reduced Selling, general and administrative expenses by $5.4 million in the quarter. TDS also recorded an immaterial adjustment to correct its deferred tax balances related to a difference in the tax basis in certain partnerships for errors occurring prior to 2009. This adjustment increased Income tax expense by $6.0 million in the quarter. TDS also recorded other immaterial adjustments to correct errors in prior periods which, together with the foregoing adjustments, reduced Net income (loss) attributable to TDS shareholders by a net of $5.4 million. The correction of such errors in the fourth quarter of 2011 did not have a material effect on any prior periods, the full year ended December 31, 2011, or the trend in earnings.

(4)

On January 13, 2012 TDS shareholders approved a Share Consolidation Amendment to the Restated Certificate of Incorporation of TDS.  Shares outstanding at December 31, 2011, as well as average basic and diluted shares outstanding used to calculate earnings per share as of the beginning of all periods presented, have been retroactively restated to reflect the impact of the increased shares outstanding as a result of the Share Consolidation Amendment.  





N/M – Percentage change not meaningful







TELEPHONE AND DATA SYSTEMS, INC.

CONSOLIDATED STATEMENT OF OPERATIONS HIGHLIGHTS

Year Ended December 31,

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





















Increase/(Decrease)









2011 



2010 



Amount



  Percent   

Operating revenues























U.S. Cellular

$

4,343,346



$

4,177,681



$

165,665



4%



TDS Telecom



815,388





795,842





19,546



2%



All Other (1)



21,737





13,306





8,431



63%











5,180,471





4,986,829





193,642



4%

Operating expenses























U.S. Cellular

























Expenses excluding depreciation, amortization and accretion



3,490,882





3,394,536





96,346



3%





Depreciation, amortization and accretion



573,557





570,955





2,602







(Gain) loss on asset disposals and exchanges, net



(1,873)





10,717





(12,590)



>(100%)











4,062,566





3,976,208





86,358



2%



TDS Telecom

























Expenses excluding depreciation, amortization and accretion



534,964





520,823





14,141



3%





Depreciation, amortization and accretion



180,530





174,054





6,476



4%





(Gain) loss on asset disposals, net



1,243





1,131





112



10%











716,737





696,008





20,729



3%



All Other (1)

























Expenses excluding depreciation and amortization



27,157





7,967





19,190



>(100%)





Depreciation and amortization



11,689





10,640





1,049



10%





(Gain) loss on asset disposals, net



(180)





(85)





(95)



>(100%)











38,666





18,522





20,144



>(100%)



































Total operating expenses



4,817,969





4,690,738





127,231



3%

Operating income (loss)























U.S. Cellular



280,780





201,473





79,307



39%



TDS Telecom



98,651





99,834





(1,183)



(1%)



All Other (1)



(16,929)





(5,216)





(11,713)



>(100%)











362,502





296,091





66,411



22%

Investment and other income (expense)























Equity in earnings of unconsolidated entities



82,538





98,074





(15,536)



(16%)



Interest and dividend income



9,145





10,508





(1,363)



(13%)



Gain on investment



24,103









24,103



N/M



Interest expense



(118,201)





(116,810)





(1,391)



(1%)



Other, net



3,658





(2,089)





5,747



>(100%)





Total investment and other income (expense)



1,243





(10,317)





11,560



>(100%)

Income before income taxes



363,745





285,774





77,971



27%



Income tax expense



113,503





95,188





18,315



19%

Net income



250,242





190,586





59,656



31%



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



(49,676)





(45,737)





(3,939)



(9%)

Net income attributable to TDS shareholders



200,566





144,849





55,717



38%



Preferred dividend requirement



(50)





(50)







Net income available to common

$

200,516



$

144,799



$

55,717



38%





























Basic weighted average shares outstanding (2)



108,562





110,016





(1,454)



(1%)

Basic earnings per share attributable to TDS shareholders (2)

$

1.85



$

1.32



$

0.53



40%

Diluted weighted average shares outstanding (2)



109,100





110,489





(1,389)



(1%)

Diluted earnings per share attributable to TDS shareholders (2)

$

1.83



$

1.31



$

0.52



40%







(1)

Consists of Suttle Straus printing and distribution operations, Airadigm, corporate operations and intercompany eliminations.

(2)

On January 13, 2012 TDS shareholders approved a Share Consolidation Amendment to the Restated Certificate of Incorporation of TDS.  Shares outstanding at December 31, 2011, as well as average basic and diluted shares outstanding used to calculate earnings per share as of the beginning of all periods presented, have been retroactively restated to reflect the impact of the increased shares outstanding as a result of the Share Consolidation Amendment.





N/M – Percentage change not meaningful







TELEPHONE AND DATA SYSTEMS, INC.

CONSOLIDATED BALANCE SHEET HIGHLIGHTS

(Unaudited, dollars in thousands)

















ASSETS























December 31,



December 31,







2011 



2010 (1)

Current assets













Cash and cash equivalents

$

563,275



$

341,683



Short-term investments



246,273





402,882



Accounts receivable from customers and others



542,577





512,946



Inventory



130,044





116,330



Net deferred income tax asset



40,898





37,079



Prepaid expenses



80,628





76,935



Income taxes receivable



85,636





64,985



Other current assets



16,349





17,384









1,705,680





1,570,224

















Assets held for sale



49,647





















Investments













Licenses



1,494,014





1,460,126



Goodwill



797,077





728,455



Other intangible assets, net



50,734





30,810



Investments in unconsolidated entities



173,710





197,922



Long-term investments



45,138





102,185



Other investments



3,072





8,988









2,563,745





2,528,486

















Property, plant and equipment, net













U.S. Cellular



2,790,302





2,574,522



TDS Telecom



936,757





909,951



Other



57,476





33,311









3,784,535





3,517,784

















Other assets and deferred charges



97,398





79,623

















Total assets

$

8,201,005



$

7,696,117







(1)

Amounts have been adjusted. See "Revision of Prior Period Amounts" section for additional details.







TELEPHONE AND DATA SYSTEMS, INC.

CONSOLIDATED BALANCE SHEET HIGHLIGHTS

(Unaudited, dollars in thousands)



















LIABILITIES AND EQUITY



























December 31,



December 31,









2011 



2010 (1)

Current liabilities















Current portion of long-term debt

$

1,509



$

1,711





Accounts payable



364,746





317,904





Customer deposits and deferred revenues



207,633





171,781





Accrued interest



7,456





4,308





Accrued taxes



41,069





46,110





Accrued compensation



107,719





99,020





Other current liabilities



144,001





144,938











874,133





785,772



















Liabilities held for sale



1,051























Deferred liabilities and credits















Net deferred income tax liability



808,713





589,092





Other deferred liabilities and credits



383,567





354,798



















Long-term debt



1,529,857





1,499,862



















Noncontrolling interests with redemption features



1,005





855



















Equity













TDS shareholders' equity















Series A Common, Special Common and Common Shares, par value $.01 (2)



1,326





1,270





Capital in excess of par value (2)



2,268,711





2,107,929





Special Common and Common Treasury shares, at cost (2)



(750,921)





(738,695)





Accumulated other comprehensive loss



(8,854)





(3,208)





Retained earnings (2)



2,451,899





2,450,599







  Total TDS shareholders' equity



3,962,161





3,817,895





















Preferred shares



830





830



Noncontrolling interests



639,688





647,013























Total equity



4,602,679





4,465,738



















Total liabilities and equity

$

8,201,005



$

7,696,117







(1)

Amounts have been adjusted. See "Revision of Prior Period Amounts" section for additional details.

(2)

The December 31, 2011 amounts reflect the impact of the Share Consolidation Amendment to the Restated Certificate of Incorporation of TDS, as approved by the TDS shareholders on January 13, 2012.  







BALANCE SHEET HIGHLIGHTS

December 31, 2011

(Unaudited, dollars in thousands)









































U.S.



TDS



TDS Corporate



Intercompany



TDS







Cellular



Telecom



& Other



Eliminations



Consolidated

Cash and cash equivalents

$

424,155



$

44,241



$

94,879



$



$

563,275

Affiliated cash investments







361,285









(361,285)





Short-term investments



127,039





27,444





91,790









246,273





$

551,194



$

432,970



$

186,669



$

(361,285)



$

809,548



































Licenses, goodwill and other intangible assets

$

1,965,820



$

553,464



$

(177,459)



$



$

2,341,825

Investment in unconsolidated entities



138,096





3,808





36,836





(5,030)





173,710

Long-term and other investments



31,978





1,150





15,082









48,210







$

2,135,894



$

558,422



$

(125,541)



$

(5,030)



$

2,563,745





































































Property, plant and equipment, net

$

2,790,302



$

936,757



$

57,476



$



$

3,784,535



































Long-term debt:































Current portion

$

127



$

196



$

1,186



$



$

1,509



Non-current portion



880,320





1,780





647,757









1,529,857





Total

$

880,447



$

1,976



$

648,943



$



$

1,531,366



































Preferred shares

$



$



$

830



$



$

830







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 December 31, 2011 and December 31, 2010.













December 31,



December 31,







2011 



2010 



Cash and cash equivalents (1)



$

563,275



$

341,683



Amounts included in short-term investments (2) (3)

















Government-backed securities (4)





218,829





305,612





Certificates of deposit  





27,444





97,270











$

246,273



$

402,882























Amounts included in long-term investments (2) (5)

















Government-backed securities (4)



$

45,138



$

102,185







(1)

Amounts have been adjusted. See "Revision of Prior Period Amounts" section for additional details.

(2)

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

(3)

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

(4)

Includes U.S treasuries and corporate notes guaranteed under the Federal Deposit Insurance Corporation's Temporary Liquidity Guarantee Program.

(5)

Maturities range between 15 and 21 months from the balance sheet date.







TELEPHONE AND DATA SYSTEMS, INC.

CONSOLIDATED STATEMENT OF CASH FLOWS

Twelve Months Ended December 31,

(Unaudited, dollars in thousands)











2011 



2010 (1)

Cash flows from operating activities













Net income

$

250,242



$

190,586





Add (deduct) adjustments to reconcile net income to net

















cash flows from operating activities



















Depreciation, amortization and accretion



765,776





755,649









Bad debts expense



68,611





83,098









Stock-based compensation expense



36,837





35,128









Deferred income taxes, net



202,547





76,391









Equity in earnings of unconsolidated entities



(82,538)





(98,074)









Distributions from unconsolidated entities



92,231





100,845









(Gain) loss on asset disposals and exchanges, net



(810)





11,763









Gain on investment



(24,103)













Noncash interest expense



18,849





9,733









Other operating activities



1,067





383





Changes in assets and liabilities from operations



















Accounts receivable



(95,426)





(79,182)









Inventory



(13,382)





40,657









Accounts payable



29,291





(47,759)









Customer deposits and deferred revenues



35,457





6,478









Accrued taxes



(27,871)





(95,284)









Accrued interest



3,351





(7,680)









Other assets and liabilities



(4,418)





93,475













1,255,711





1,076,207





















Cash flows from investing activities













Cash used for additions to property, plant and equipment



(971,759)





(739,222)



Cash paid for acquisitions and licenses



(105,508)





(81,691)



Cash paid for investments



(180,920)





(493,750)



Cash received from investments



393,246





106,255



Other investing activities



(1,148)





370













(866,089)





(1,208,038)





















Cash flows from financing activities













Repayment of short-term debt



(32,671)







Repayment of long-term debt



(614,639)





(220,249)



Issuance of long-term debt



643,700





225,648



TDS Common Shares and Special Common Shares















reissued for benefit plans, net of tax payments



32





309



U.S. Cellular Common Shares reissued for benefit















plans, net of tax payments



1,935





509



Repurchase of TDS Common  and Special Common Shares



(21,500)





(68,053)



Repurchase of U.S. Cellular Common Shares



(62,294)





(52,827)



Dividends paid



(48,670)





(47,202)



Payment of debt issuance costs



(21,657)





(12,533)



Distributions to noncontrolling interests



(16,236)





(19,630)



Payments to acquire additional interest in subsidiaries







(9,248)



Other financing activities



3,970





2,321













(168,030)





(200,955)





















Net increase (decrease) in cash and cash equivalents



221,592





(332,786)

Cash and cash equivalents













Beginning of period



341,683





674,469



End of period

$

563,275



$

341,683







(1)

Amounts have been adjusted. See "Revision of Prior Period Amounts" section for additional details.







TDS TELECOM HIGHLIGHTS

Three Months Ended December 31,

(Unaudited, dollars in thousands)













































Increase/(Decrease)







2011 



2010 



Amount



  Percent  

Local Telephone Operations























Operating revenues

























Voice

$

41,427



$

43,880



$

(2,453)



(6%)





Data



48,395





33,265





15,130



45%





Network access



65,354





68,039





(2,685)



(4%)





Miscellaneous



9,706





10,410





(704)



(7%)









164,882





155,594





9,288



6%



Operating expenses

























Cost of services and products



58,042





48,684





9,358



19%





Selling, general and administrative expenses



49,771





43,921





5,850



13%





Depreciation, amortization and accretion



40,718





37,942





2,776



7%





Loss on asset disposals, net



590





425





165



39%









149,121





130,972





18,149



14%





























Operating income

$

15,761



$

24,622



$

(8,861)



(36%)



























Competitive Local Exchange Carrier Operations

























Revenues

$

44,397



$

45,878



$

(1,481)



(3%)































Expenses (excluding Depreciation, amortization

 and accretion)



39,444





39,747





(303)



(1%)





Depreciation, amortization and accretion



5,450





5,895





(445)



(8%)





(Gain) loss on asset disposals, net



(105)





39





(144)



>(100%)









44,789





45,681





(892)



(2%)





























Operating income (loss)

$

(392)



$

197



$

(589)



>(100%)



























Intercompany revenues

$

(2,509)



$

(2,371)



$

(138)



(6%)

Intercompany expenses



(2,509)





(2,371)





(138)



(6%)



























Total TDS Telecom operating income

$

15,369



$

24,819



$

(9,450)



(38%)













TDS TELECOM HIGHLIGHTS





Twelve Months Ended December 31,





(Unaudited, dollars in thousands)













































Increase/(Decrease)







2011 



2010 



Amount



Percent

Local Telephone Operations























Operating revenues

























Voice

$

170,238



$

179,539



$

(9,301)



(5%)





Data



169,450





126,029





43,421



34%





Network access



265,773





271,964





(6,191)



(2%)





Miscellaneous



39,530





39,862





(332)



(1%)









644,991





617,394





27,597



4%



Operating expenses

























Cost of services and products



215,093





196,298





18,795



10%





Selling, general and administrative expenses



173,949





173,020





929



1%





Depreciation, amortization and accretion



158,554





149,375





9,179



6%





Loss on asset disposals, net



1,158





769





389



51%









548,754





519,462





29,292



6%





























Operating income

$

96,237



$

97,932



$

(1,695)



(2%)



























Competitive Local Exchange Carrier Operations

























Revenues

$

180,332



$

187,984



$

(7,652)



(4%)































Expenses (excluding Depreciation, amortization

 and accretion)



155,857





161,041





(5,184)



(3%)





Depreciation, amortization and accretion



21,976





24,679





(2,703)



(11%)





Loss on asset disposals, net



85





362





(277)



(77%)









177,918





186,082





(8,164)



(4%)





























Operating income

$

2,414



$

1,902



$

512



27%



























Intercompany revenues

$

(9,935)



$

(9,536)



$

(399)



(4%)

Intercompany expenses



(9,935)





(9,536)





(399)



(4%)



























Total TDS Telecom operating income

$

98,651



$

99,834



$

(1,183)



(1%)









Telephone and Data Systems, Inc.

Financial Measures and Reconciliations

(Unaudited, dollars in thousands)



































Consolidated



Three Months Ended December 31, 2011



U.S. Cellular



TDS Telecom (1)



All Other (2)



Total







































Operating revenues



$

1,099,633



$

206,770



$

10,324



$

1,316,727





Deduct:































U.S. Cellular equipment sales revenue





69,588



























Service revenues





1,030,045

























































Operating income (loss)





16,316





15,369





(12,335)





19,350





Add (Deduct):































Depreciation, amortization and accretion





141,976





46,168





3,735





191,879







Loss on impairment of intangible assets























(Gain) loss on asset disposals and exchanges





3,868





485





(193)





4,160









Adjusted OIBDA (3)



$

162,160



$

62,022



$

(8,793)



$

215,389











































Adjusted OIBDA margin (4)





15.7%





30.0%













































































Consolidated



Three Months Ended December 31, 2010



U.S. Cellular



TDS Telecom (1)



All Other (2)



Total







































Operating revenues



$

1,063,150



$

199,101



$

3,508



$

1,265,759





Deduct:































U.S. Cellular equipment sales revenue





71,236



























Service revenues





991,914

























































Operating income (loss)





(4,062)





24,819





(778)





19,979





Add (Deduct):































Depreciation, amortization and accretion





143,124





43,837





2,643





189,604







Loss on impairment of intangible assets























(Gain) loss on asset disposals and exchanges





2,310





464





(34)





2,740









Adjusted OIBDA (3)



$

141,372



$

69,120



$

1,831



$

212,323











































Adjusted OIBDA margin (4)





14.3%





34.7%





























































































TDS Consolidated















Three Months Ended December 31,



2011



2010 (6)



















































Cash flows from operating activities



$

316,510



$

307,166

















Deduct:





























Cash used for additions to property, plant





























  and equipment





369,999





232,883





















Free cash flow (5)



$

(53,489)



$

74,283























Telephone and Data Systems, Inc.

Financial Measures and Reconciliation

(Unaudited, dollars in thousands)



































Consolidated



Twelve Months Ended December 31, 2011



U.S. Cellular



TDS Telecom (1)



All Other (2)



Total







































Operating revenues



$

4,343,346



$

815,388



$

21,737



$

5,180,471





Deduct:































U.S. Cellular equipment sales revenue





289,549



























Service revenues





4,053,797

























































Operating income (loss)





280,780





98,651





(16,929)





362,502





Add (Deduct):































Depreciation, amortization and accretion





573,557





180,530





11,689





765,776







Loss on impairment of intangible assets























(Gain) loss on asset disposals and exchanges





(1,873)





1,243





(180)





(810)









Adjusted OIBDA (3)



$

852,464



$

280,424



$

(5,420)



$

1,127,468











































Adjusted OIBDA margin (4)





21.0%





34.4%













































































Consolidated



Twelve Months Ended December 31, 2010



U.S. Cellular



TDS Telecom (1)



All Other (2)



Total







































Operating revenues



$

4,177,681



$

795,842



$

13,306



$

4,986,829





Deduct:































U.S. Cellular equipment sales revenue





264,680



























Service revenues





3,913,001

























































Operating income (loss)





201,473





99,834





(5,216)





296,091





Add (Deduct):































Depreciation, amortization and accretion





570,955





174,054





10,640





755,649







Loss on impairment of intangible assets























(Gain) loss on asset disposals and exchanges





10,717





1,131





(85)





11,763









Adjusted OIBDA (3)



$

783,145



$

275,019



$

5,339



$

1,063,503











































Adjusted OIBDA margin (4)





20.0%





34.6%