TDS Reports Fourth Quarter 2012 Results And 2013 Financial Guidance

Feb 26, 2013, 07:58 ET from Telephone and Data Systems, Inc.

CHICAGO, Feb. 26, 2013 /PRNewswire/ -- As previously announced, TDS will hold a teleconference Feb. 26, 2013 at 9:30 a.m. CST. Interested parties may listen to the call live by accessing the Investor Relations page of www.teldta.com.  

Telephone and Data Systems, Inc. (NYSE: TDS) reported operating revenues of $1,346.2 million for the fourth quarter of 2012, an increase of 2 percent from $1,316.7 million in the comparable period one year ago. Net loss attributable to TDS shareholders was $41.8 million, or $0.39 per diluted share, respectively, for the fourth quarter of 2012, compared to $6.2 million and $0.06, respectively, in the comparable period one year ago. 

As previously announced on Nov. 7, 2012, U.S. Cellular reached a definitive agreement to sell its Chicago, St. Louis, central Illinois and three other markets (the "Divestiture Markets") to subsidiaries of Sprint Nextel Corporation (NYSE: S) for $480 million (the "Divestiture Transaction").  The transaction is subject to regulatory approvals and is expected to close in mid-2013.  In the fourth quarter of 2012, TDS' operating income was reduced by $44.5 million due to divestiture-related costs, including a $10.7 million write-down of assets, $12.6 million in employee-related costs, including severance, and $20 million in accelerated depreciation, amortization and accretion. 

The table below provides pro forma performance highlights for U.S. Cellular's Total Consolidated Markets, Divestiture Markets, and Core Markets for the fourth quarter of 2012.  Core Markets are the markets that U.S. Cellular will continue to own upon completion of the Divestiture Transaction. 

U.S. Cellular

 

($ in millions except ARPU)

Total Consolidated Markets

Divestiture Markets (1)

Core Markets (1)

Postpaid gross additions

241,000

23,000

218,000

Postpaid churn

1.83%

3.35%

1.67%

Postpaid net additions (losses)

(41,000)

(25,000)

(16,000)

Prepaid net additions (losses)

37,000

(1,000)

38,000

Service revenues (1)

$1,008.9

$101.4

$907.5

Postpaid ARPU (1)

$54.56

$60.91

$53.92

 

(1)

Total Consolidated Markets amounts represent GAAP financial measures and Divestiture Markets and Core Markets amounts represent non-GAAP financial measures. U.S. Cellular believes that the amounts under Divestiture Markets and Core Markets may be useful to investors and other users of its financial information.

 

The following table highlights the performance of U.S. Cellular's Core Markets and TDS Telecom for the fourth quarter of 2012 and 2011.

U.S. Cellular

%

($ in millions except ARPU)

Q4 2012

Q4 2011

Change

Postpaid gross additions

218,000

209,000

4%

Postpaid churn

1.67%

1.48%

(13%)

Postpaid net additions (losses)

(16,000)

(2,000)

(>100%)

Prepaid net additions

38,000

6,000

>100%

Retail net additions

22,000

4,000

>100%

Service revenues (1)

$907.5

$917.5

(1%)

Postpaid ARPU (1)

$53.92

$52.62

2%

Smartphones sold as % of total devices

62.9%

52.6%

20%

4G/LTE smartphones as % of total smartphones sold

74%

0%

>100%

Capital expenditures (1)

$241

$253

(5%)

Cell sites in service

6,292

6,154

2%

Owned towers

3,847

3,755

2%

TDS Telecom

%

Q4 2012

Q4 2011

Change

Operating revenues

$221.5

$206.8

7%

ILEC triple play (voice, data and video) penetration

31%

29%

7%

managedIP (ILEC and CLEC)

94,600

53,500

77%

 

(1)

The Core Markets amounts for Q4 2012 and Q4 2011 represent non-GAAP financial measures. U.S. Cellular believes that the amounts under Core Markets may be useful to investors and other users of its financial information.

 

"U.S. Cellular and TDS Telecom continued to execute on their strategic initiatives, though profitability was impacted by smartphone subsidies, reductions in regulatory support, and investment spending," said LeRoy T. Carlson, Jr., TDS president and CEO.

"U.S. Cellular achieved strong growth in smartphone penetration as more customers had access to 4G LTE speeds and devices. U.S. Cellular's Core Markets also increased net retail customer additions, due to prepaid customer growth.  While revenue from our customers increased, overall service revenues declined due to lower negotiated roaming rates which had a positive effect on roaming expenses. To further differentiate our superior customer experience, U.S. Cellular is working to provide seamless shopping and support across channels, identify more opportunities to expand distribution, and through the implementation of a new billing and operational support system, is also simplifying operations and processes to increase efficiency and reduce complexity and cost.

"TDS Telecom continued to build its residential customer base with TDS TV® and broadband offerings, and further increased momentum in commercial managedIP sales. TDS Telecom is focused on increasing residential TDS TV and broadband penetration in existing markets, and expanding broadband access through stimulus projects in progress nationwide. To grow the commercial customer base, TDS Telecom plans to expand the managedIP portfolio, and build its hosted and managed services business by providing integrated, end-to-end IT solutions, including ReliaCloudTM, to mid-market customers."

Baja Broadband In a separate release today, TDS announced an agreement to acquire substantially all of the assets of Baja Broadband, LLC for a purchase price of $267.5 million.   

2013 ESTIMATES

Estimates of full-year 2013 results for U.S. Cellular, TDS Telecom and TDS, are shown below.  Such estimates represent management's view as of the date of filing of TDS' Form 10-K for the year ended December 31, 2012.  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 has changed the measures which it uses to present estimates of operating results.  TDS now provides estimates for consolidated revenues and capital expenditures.  In addition, TDS previously presented Adjusted OIBDA, defined as operating income excluding the effects of: depreciation, amortization and accretion (OIBDA); the loss on impairment of assets; and the net gain or loss on asset disposals and exchanges.  TDS believes Adjusted income before income taxes, as defined below, is a measure which provides a more comprehensive and meaningful view of TDS' recurring results of operations.

2013 Estimated Results (1)

U.S. Cellular (2)

TDS Telecom (3)

TDS (2)(3)(7)

(Dollars in millions)

Adjusted operating revenues (4)

$3,765-$3,885

 $850-$900

$4,660-$4,830

Adjusted income before income taxes (5)

$780-$900

$220-$250

$995-$1,145

Capital expenditures

 Approx. $600

 Approx. $155

 Approx. $765

 

(1)

These estimates are based on TDS' current plans, which include a multi-year deployment of 4G LTE technology which commenced in 2011 at U.S. Cellular and a multi-year deployment of IPTV which commenced in 2011 at TDS Telecom. New developments or changing conditions (such as, but not limited to, regulatory developments, customer net growth, customer demand for data services, costs to deploy, agreements for content or franchises, or possible acquisitions, dispositions or exchanges) could affect TDS' plans and, therefore, its 2013 estimated results.

(2)

These estimates also assume the Divestiture Transaction closes July 1, 2013. Actual effects could vary significantly from these estimates as a result of a change in the expected timing of the Divestiture Transaction.

These estimates reflect U.S. Cellular's consolidated results for 2013. Estimated results reflecting U.S. Cellular's Divestiture Markets and Core Markets are shown in the table below:

 

2013 Estimated Results

U.S. Cellular Core

Markets (6)

U.S. Cellular Divestiture

Markets (6)

U.S. Cellular Consolidated (6)

(Dollars in millions)

Adjusted operating revenues (4)

$3,600-$3,700

$165-$185

$3,765-$3,885

Adjusted income before income taxes (5)

$765-$865

$15-$35

$780-$900

Capital expenditures

Approx. $600

Approx. $600

 

(3)

These estimates do not reflect the effects of the acquisition of Baja Broadband, LLC.

(4)

Adjusted operating revenues is a non-GAAP financial measure defined as Operating revenues excluding U.S. Cellular Equipment sales revenues. U.S. Cellular Equipment sales revenues are excluded from Adjusted operating revenues since U.S. Cellular equipment is generally sold at a net loss, and such net loss that results from U.S. Cellular Equipment sales revenues less U.S. Cellular Cost of equipment sold is viewed as a cost of earning service revenues for purposes of assessing business results. For purposes of developing this guidance, TDS does not calculate an estimate of U.S. Cellular Equipment sales revenues. TDS believes this measure provides useful information to investors regarding TDS' results of operations. Adjusted operating revenues is not a measure of financial performance under GAAP and should not be considered as an alternative to Operating revenues as an indicator of the Company's operating performance.

(5)

Adjusted income before income taxes is a non-GAAP financial measure defined as income before: Income taxes, Depreciation, amortization and accretion, net Gain or loss on sale of business and other exit costs, and Interest expense. Adjusted income before income taxes is not a measure of financial performance under 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 meaningful measure of TDS' operating results before significant recurring non-cash charges, discrete gains and losses and financing charges (Interest expense). The following tables provide a reconciliation of Income before income taxes to Adjusted income before income taxes for 2013 Estimated Results and 2012, 2011 and 2010 actual results:

 

2013 Estimated Results

U.S. Cellular Core

Markets (6)

U.S. Cellular Divestiture Markets (2)(6)

U.S. Cellular Consolidated (6)

TDS

Telecom

TDS (7)

(Dollars in millions)

Income before income taxes (8)(9)

$165-$265

($180)-($160)

($15)-$105

$25-$55

($55)-$95

Depreciation, amortization and accretion

expense

Approx. $545

Approx. $195

Approx. $740

Approx. $195

Approx. $940

Interest expense

Approx. $55

Approx. $55

Approx. $110

Adjusted income before income taxes

$765-$865

$15-$35

$780-$900

$220-$250

$995-$1,145

2012 Actual Results

U.S. Cellular Consolidated (6)

TDS

Telecom

TDS (7)

(Dollars in millions)

Income before income taxes (9)

$

205.1

$

45.0

$

196.2

Depreciation, amortization and accretion expense

608.6

193.1

813.6

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

21.0

-

21.1

Interest expense (Capitalized interest)

42.4

(1.5)

86.7

Adjusted income before income taxes

$

877.1

$

236.6

$

1,117.6

2011 Actual Results

U.S. Cellular Consolidated (6)

TDS

Telecom

TDS (7)

(Dollars in millions)

Income before income taxes

$

312.8

$

107.5

$

363.7

Depreciation, amortization and accretion expense

573.6

180.5

765.8

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

-

-

-

Interest expense (Capitalized interest)

65.6

(2.6)

118.2

Adjusted income before income taxes

$

952.0

$

285.4

$

1,247.7

2010 Actual Results

U.S. Cellular Consolidated (6)

TDS

Telecom

TDS (7)

(Dollars in millions)

Income before income taxes

$

241.1

$

101.3

$

285.8

Depreciation, amortization and accretion expense

571.0

174.1

755.6

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

-

-

-

Interest expense (Capitalized interest)

61.6

(0.8)

116.8

Adjusted income before income taxes

$

873.7

$

274.6

$

1,158.2

 

(6)

The U.S. Cellular Consolidated amounts represent GAAP financial measures and include the results of both the Core Markets and the Divestiture Markets. As used herein, "Core Markets" represents U.S. Cellular's total consolidated markets excluding the Divestiture Markets. The Core Markets and Divestiture Markets amounts represent non-GAAP financial measures. TDS believes that the Core Markets and Divestiture Markets amounts may be useful to investors and other users of its financial information in evaluating the pro forma results for the Core Markets.

(7)

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.

(8)

This amount does not include any estimate for (Gain) loss on sale of business and other exit costs, net, as the timing of such amount is not readily estimable.

(9)

The 2013 estimated amounts for depreciation, amortization and accretion expense in the U.S. Cellular Divestiture Markets include approximately $120 million of incremental accelerated depreciation resulting from the Divestiture Transaction. The 2012 actual results include $20.1 million of incremental accelerated depreciation resulting from the Divestiture Transaction.

 

Stock Repurchase The following represents repurchases of TDS Common Shares (including Special Common Shares that were reclassified as Common Shares in the Share Consolidation Amendment in January 2012).

Repurchase Period

# Shares

Cost (in millions)

2012 (full year)

867,841

$

20.0

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 

16,247,126

$

485.8

 

Conference Call Information TDS will hold a conference call on Feb. 26, 2013 at 9:30 a.m. CST.

Before the call, certain financial and statistical information to be discussed during the call will be posted to the Investor Relations 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; broadband, TV and voice; and hosted and managed services to approximately 7 million customers in 36 states through its business units, U.S. Cellular, TDS Telecom and TDS Hosted & Managed Services. Founded in 1969 and headquartered in Chicago, TDS employed 12,300 people as of Dec. 31, 2012.

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 the pending acquisition and divestiture transactions,  including, but not limited to, the ability to obtain regulatory approvals, successfully complete the transaction and the financial impacts of such transaction; 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   

 

United States Cellular Corporation

Total Markets Summary Operating Data (Unaudited)

Quarter Ended

12/31/2012

9/30/2012

6/30/2012

3/31/2012

12/31/2011

Total population

Consolidated markets (1)

93,244,000

92,996,000

92,684,000

92,684,000

91,965,000

Consolidated operating markets (1)

46,966,000

46,966,000

46,966,000

46,966,000

46,888,000

Market penetration at end of period

Consolidated markets (2)

6.2%

6.2%

6.3%

6.3%

6.4%

Consolidated operating markets (2)

12.3%

12.4%

12.3%

12.4%

12.6%

All customers

Total at end of period

5,798,000

5,808,000

5,799,000

5,837,000

5,891,000

Gross additions

363,000

364,000

290,000

285,000

306,000

Net additions (losses)

(10,000)

9,000

(38,000)

(49,000)

(41,000)

Smartphones sold as a percent of total devices sold (3)

62.9%

53.0%

51.9%

54.1%

52.5%

Retail customers

Total at end of period

5,557,000

5,561,000

5,542,000

5,570,000

5,608,000

Postpaid smartphone penetration (3) (4)

41.8%

38.6%

36.8%

34.4%

30.5%

Gross additions

348,000

350,000

277,000

273,000

298,000

Net retail additions (losses) (5)

(4,000)

19,000

(28,000)

(34,000)

(13,000)

      Net postpaid additions (losses)

(41,000)

(38,000)

(48,000)

(38,000)

(20,000)

      Net prepaid additions (losses)

37,000

57,000

20,000

4,000

7,000

Service revenue components (000s)

Retail service

$

886,014

$

884,219

$

889,219

$

888,527

$

882,091

Inbound roaming

76,090

106,132

86,363

80,132

93,353

Other

46,820

46,019

54,160

55,161

54,601

Total service revenues (000s)

$

1,008,924

$

1,036,370

$

1,029,742

$

1,023,820

$

1,030,045

Total ARPU (6)

$

58.00

$

59.57

$

59.05

$

58.21

$

58.13

Billed ARPU (7)

$

50.94

$

50.83

$

50.99

$

50.52

$

49.78

Postpaid ARPU (8)

$

54.56

$

54.34

$

54.42

$

54.00

$

53.35

Postpaid churn rate (9)

1.8%

1.7%

1.6%

1.6%

1.6%

Capital expenditures (000s)

$

253,100

$

199,100

$

183,200

$

201,300

$

276,400

Cell sites in service

8,028

7,984

7,932

7,875

7,882

 

(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 user 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 user 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 user 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.

 

TDS Telecom

Summary Operating Data (Unaudited)

Quarter Ended

12/31/2012

9/30/2012

6/30/2012

3/31/2012

12/31/2011

TDS Telecom

ILEC:

Residential Connections

Physical access lines (1)

350,100

355,800

360,100

363,500

367,600

Broadband connections (2)

221,700

223,100

222,400

219,500

219,600

IPTV customers

7,900

6,700

5,600

4,900

4,600

  ILEC residential connections

579,700

585,600

588,100

587,900

591,800

Commercial Connections

Physical access lines (1)

107,600

109,800

111,100

112,600

114,400

Broadband connections (2)

18,500

18,500

18,400

18,200

18,200

managedIP connections (3)

17,200

15,000

13,200

10,800

8,600

  ILEC commercial connections

143,300

143,300

142,700

141,600

141,200

CLEC:

Residential Connections

Physical access lines (1)

24,600

26,200

27,900

29,600

31,800

Broadband connections (2)

8,200

8,900

9,500

10,100

11,000

  CLEC residential connections

32,800

35,100

37,400

39,700

42,800

Commercial Connections

Physical access lines (1)

135,500

140,300

145,100

151,100

157,300

Broadband connections (2)

11,200

12,000

12,800

13,700

14,600

managedIP connections (3)

77,400

69,500

61,400

53,700

44,900

  CLEC commercial connections

224,100

221,800

219,300

218,500

216,800

Total ILEC and CLEC Customer Connections

979,900

985,800

987,500

987,700

992,600

 

(1)

Individual circuits 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 telephone handsets, data lines and IP trunks providing communications using IP networking technology.

 

TDS Telecom

Capital Expenditures (000s)

Quarter Ended

12/31/2012

9/30/2012

6/30/2012

3/31/2012

12/31/2011

ILEC

$

43,400

$

33,700

$

32,500

$

27,500

$

50,300

CLEC

6,100

5,400

4,900

5,100

7,200

HMS

2,300

4,400

5,500

3,100

5,900

$

51,800

$

43,500

$

42,900

$

35,700

$

63,400

 

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)

2012

2011

Amount

Percent

Operating revenues

U.S. Cellular

$

1,115,206

$

1,099,633

$

15,573

1%

TDS Telecom

221,495

206,770

14,725

7%

All Other (1)

9,508

10,324

(816)

(8%)

1,346,209

1,316,727

29,482

2%

Operating expenses

U.S. Cellular

Expenses excluding depreciation, amortization and accretion

979,461

937,473

41,988

4%

Depreciation, amortization and accretion

169,242

141,976

27,266

19%

Loss on asset disposals and exchanges, net

2,121

3,868

(1,747)

(45%)

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

25,170

-

25,170

N/M

1,175,994

1,083,317

92,677

9%

TDS Telecom

Expenses excluding depreciation, amortization and accretion

165,585

144,748

20,837

14%

Depreciation, amortization and accretion

49,455

46,168

3,287

7%

Loss on asset disposals and exchanges, net

390

485

(95)

(20%)

215,430

191,401

24,029

13%

All Other (1)

Expenses excluding depreciation and amortization

7,865

19,117

(11,252)

(59%)

Depreciation and amortization

2,767

3,735

(968)

(26%)

(Gain) loss on asset disposals and exchanges, net

514

(193)

707

>(100%)

11,146

22,659

(11,513)

(51%)

Total operating expenses

1,402,570

1,297,377

105,193

8%

Operating income (loss)

U.S. Cellular

(60,788)

16,316

(77,104)

>(100%)

TDS Telecom

6,065

15,369

(9,304)

(61%)

All Other  (1)

(1,638)

(12,335)

10,697

87%

(56,361)

19,350

(75,711)

>(100%)

Investment and other income (expense)

Equity in earnings of unconsolidated entities

19,071

18,507

564

3%

Interest and dividend income

2,354

2,229

125

6%

Gain (loss) on investment

10

(2,000)

2,010

>(100%)

Interest expense

(18,645)

(24,017)

5,372

22%

Other, net

524

2,157

(1,633)

(76%)

Total investment and other income (expense)

3,314

(3,124)

6,438

>100%

Income (loss) before income taxes

(53,047)

16,226

(69,273)

>(100%)

Income tax expense (benefit)

(12,037)

18,239

(30,276)

>(100%)

Net loss

(41,010)

(2,013)

(38,997)

>100%

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

(837)

(4,173)

3,336

80%

Net loss attributable to TDS shareholders

(41,847)

(6,186)

(35,661)

>100%

Preferred dividend requirement

(12)

(12)

-

-

Net loss available to common shareholders

$

(41,859)

$

(6,198)

$

(35,661)

>100%

Basic weighted average shares outstanding (2)

108,481

108,492

(11)

-

Basic loss per share attributable to TDS shareholders (2)

$

(0.39)

$

(0.06)

$

(0.33)

>100%

Diluted weighted average shares outstanding (2)

108,481

108,492

(11)

-

Diluted loss per share attributable to TDS shareholders (2)

$

(0.39)

$

(0.06)

$

(0.33)

>100%

 

(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, 2012, 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

Twelve Months Ended December 31,

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

 

Increase/ (Decrease)

2012

2011

Amount

Percent

Operating revenues

U.S. Cellular

$

4,452,084

$

4,343,346

$

108,738

3%

TDS Telecom

854,506

815,388

39,118

5%

All Other (1)

38,687

21,737

16,950

78%

5,345,277

5,180,471

164,806

3%

Operating expenses

U.S. Cellular

Expenses excluding depreciation, amortization and accretion

3,647,685

3,490,882

156,803

4%

Depreciation, amortization and accretion

608,633

573,557

35,076

6%

(Gain) loss on asset disposals and exchanges, net

18,088

(1,873)

19,961

>(100%)

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

21,022

-

21,022

N/M

4,295,428

4,062,566

232,862

6%

TDS Telecom

Expenses excluding depreciation, amortization and accretion

619,503

534,964

84,539

16%

Depreciation, amortization and accretion

193,094

180,530

12,564

7%

Loss on asset disposals and exchanges, net

1,167

1,243

(76)

(6%)

813,764

716,737

97,027

14%

All Other (1)

Expenses excluding depreciation and amortization

39,283

27,157

12,126

45%

Depreciation and amortization

11,899

11,689

210

2%

Loss on impairment of assets

515

-

515

N/M

(Gain) loss on asset disposals and exchanges, net

525

(180)

705

>(100%)

52,222

38,666

13,556

35%

Total operating expenses

5,161,414

4,817,969

343,445

7%

Operating income (loss)

U.S. Cellular

156,656

280,780

(124,124)

(44%)

TDS Telecom

40,742

98,651

(57,909)

(59%)

All Other (1)

(13,535)

(16,929)

3,394

20%

183,863

362,502

(178,639)

(49%)

Investment and other income (expense)

Equity in earnings of unconsolidated entities

92,867

82,538

10,329

13%

Interest and dividend income

9,248

9,145

103

1%

Gain (loss) on investment

(3,718)

24,103

(27,821)

>(100%)

Interest expense

(86,745)

(118,201)

31,456

27%

Other, net

720

3,658

(2,938)

(80%)

Total investment and other income (expense)

12,372

1,243

11,129

>100%

Income before income taxes

196,235

363,745

(167,510)

(46%)

Income tax expense

73,582

113,503

(39,921)

(35%)

Net income

122,653

250,242

(127,589)

(51%)

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

(40,792)

(49,676)

8,884

18%

Net income attributable to TDS shareholders

81,861

200,566

(118,705)

(59%)

Preferred dividend requirement

(50)

(50)

-

-

Net income available to common shareholders

$

81,811

$

200,516

$

(118,705)

(59%)

Basic weighted average shares outstanding (2)

108,671

108,562

109

-

Basic earnings per share attributable to TDS shareholders (2)

$

0.75

$

1.85

$

(1.10)

(59%)

Diluted weighted average shares outstanding (2)

108,937

109,098

(161)

-

Diluted earnings per share attributable to TDS shareholders (2)

$

0.75

$

1.83

$

(1.08)

(59%)

 

(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, 2012, 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,

2012

2011

Current assets

Cash and cash equivalents

$

740,481

$

563,275

Short-term investments

115,700

246,273

Accounts receivable from customers and others

574,328

542,577

Inventory

160,692

130,044

Net deferred income tax asset

43,411

40,898

Prepaid expenses

86,385

80,628

Income taxes receivable

9,625

85,636

Other current assets

32,815

16,349

1,763,437

1,705,680

Assets held for sale

163,242

49,647

Investments

Licenses

1,480,039

1,494,014

Goodwill

797,194

797,077

Other intangible assets, net

58,522

50,734

Investments in unconsolidated entities

179,921

173,710

Long-term investments

50,305

45,138

Other investments

824

3,072

2,566,805

2,563,745

Property, plant and equipment, net

U.S. Cellular

3,022,588

2,790,302

TDS Telecom

934,188

936,757

Other

40,490

57,476

3,997,266

3,784,535

Other assets and deferred charges

133,150

97,398

Total assets

$

8,623,900

$

8,201,005

 

Telephone and Data Systems, Inc.

Consolidated Balance Sheet Highlights

(Unaudited, dollars in thousands)

LIABILITIES AND EQUITY

December 31,

December 31,

2012

2011

Current liabilities

Current portion of long-term debt

$

1,233

$

1,509

Accounts payable

377,291

364,746

Customer deposits and deferred revenues

222,345

207,633

Accrued interest

6,565

7,456

Accrued taxes

48,237

41,069

Accrued compensation

134,932

107,719

Other current liabilities

134,005

144,001

924,608

874,133

Liabilities held for sale

19,594

1,051

Deferred liabilities and credits