2014

TDS Reports Fourth Quarter Results Provides financial guidance for 2012

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.


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