TDS Reports Fourth Quarter 2012 Results And 2013 Financial Guidance

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 (NY SE: 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









Net deferred income tax liability


862,580



808,713




Other deferred liabilities and credits


438,727



383,567












Long-term debt


1,721,571



1,529,857












Noncontrolling interests with redemption features


493



1,005












Equity








TDS shareholders' equity









Series A Common and Common Shares, par value $.01 (1)


1,327



1,326




Capital in excess of par value (1)


2,304,122



2,268,711




Treasury shares, at cost (1)


(750,099)



(750,921)




Accumulated other comprehensive loss


(8,132)



(8,854)




Retained earnings (1)


2,464,318



2,451,899





Total TDS shareholders' equity


4,011,536



3,962,161













Preferred shares


825



830



Noncontrolling interests


643,966



639,688














Total equity


4,656,327



4,602,679












Total liabilities and equity

$

8,623,900


$

8,201,005


 

(1)

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, 2012


(Unaudited, dollars in thousands)









































U.S.


TDS


TDS Corporate


Intercompany


TDS





Cellular


Telecom


& Other


Eliminations


Consolidated


Cash and cash equivalents

$

378,358


$

89,479


$

272,644


$

-


$

740,481


Affiliated cash investments


-



356,414



-



(356,414)



-


Short-term investments


100,676



-



15,024



-



115,700




$

479,034


$

445,893


$

287,668


$

(356,414)


$

856,181




















Licenses, goodwill and other intangible assets

$

1,878,639


$

582,909


$

(125,793)


$

-


$

2,335,755


Investment in unconsolidated entities


144,531



3,809



37,932



(6,351)



179,921


Long-term and other investments


50,305



824



-



-



51,129





$

2,073,475


$

587,542


$

(87,861)


$

(6,351)


$

2,566,805






































Property, plant and equipment, net

$

3,022,588


$

934,188


$

40,490


$

-


$

3,997,266




















Long-term debt:

















Current portion

$

92


$

95


$

1,046


$

-


$

1,233



Non-current portion


878,858



749



841,964



-



1,721,571




Total

$

878,950


$

844


$

843,010


$

-


$

1,722,804




















Preferred shares

$

-


$

-


$

825


$

-


$

825




















 

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, 2012 and December 31, 2011.








December 31,


December 31,


2012


2011








Cash and cash equivalents

$

740,481


$

563,275

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







Government-backed securities (3)


115,700



218,829


Certificates of deposit


-



27,444



$

115,700


$

246,273








Amounts included in long-term investments (1) (4)







Government-backed securities (3)