TDS Reports Second Quarter 2012 Results

CHICAGO, Aug. 3, 2012 /PRNewswire/ --

Note: Comparisons are year over year unless otherwise noted.

2Q 2012 Highlights

TDS Consolidated

  • Operating revenues increased 3 percent to $1,323.2 million.

U.S. Cellular

  • Smartphones as a percent of total devices sold increased to 51.9 percent from 39.6 percent; smartphone customers increased to 36.8 percent of postpaid customers from 23.1 percent.
  • Postpaid ARPU (average revenue per user) increased 5 percent to $54.42 from $51.84; total ARPU increased 6 percent to $59.05 from $55.69.
  • Service revenues increased 3 percent to $1,029.7 million.
  • Postpaid gross additions increased 9 percent and postpaid churn increased to 1.57 percent, resulting in a net loss of 48,000 postpaid customers.  Postpaid customers comprised 94 percent of retail customers.
  • Prepaid gross additions increased 77 percent, driven by the introduction in select Walmart stores of U Prepaid, a new no contract wireless service, and prepaid churn decreased to 6.2 percent, resulting in a net increase of 20,000 prepaid customers.
  • Retail gross additions increased 23 percent; net loss of 28,000 retail customers, compared to a net loss of 58,000 retail customers.
  • Cell sites in service increased 2 percent to 7,932, of which 4,512 are owned towers.
  • 4G LTE network covers 30 percent of customers; expect to reach 58 percent of customers by year end.
  • Investment in the Los Angeles Partnership contributed $19 million to equity in earnings of unconsolidated entities, up from $14 million.

TDS Telecom

  • Operating revenues increased 5 percent to $208.5 million.
  • ILEC triple play (voice, data and video) penetration increased to 30 percent from 27 percent.
  • managedIP connections (ILEC and CLEC) grew 91 percent to 74,600 from 39,000.

As previously announced, TDS will hold a teleconference Aug. 3, 2012 at 9:30 a.m. CDT. 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 $1,323.2 million for the second quarter of 2012, an increase of 3 percent from $1,279.6 million in the comparable period one year ago. Net income attributable to TDS shareholders and related diluted earnings per share were $42.3 million and $0.39, respectively, for the second quarter of 2012, compared to $92.0 million and $0.84, respectively, in the comparable period one year ago.

"Both of our primary businesses achieved solid growth in revenues, though higher expenses related mainly to device subsidies, data growth and investment spending caused profitability to decline," said LeRoy T. Carlson, Jr., TDS president and CEO. "U.S. Cellular had a strong increase in gross retail customer additions and grew its net prepaid customer base. Postpaid churn remained elevated, and the company is working to address this. TDS Telecom added ILEC residential broadband and IPTV customers, and commercial managedIP customers, and increased revenues in its hosted and managed services business."

"U.S. Cellular continued to increase average revenue per user through growth in smartphone penetration. To attract more customers, the company expanded the scope of its prepaid distribution through entry into more than 400 Walmart stores, and it is evaluating further opportunities to be where customers most want to shop. U.S. Cellular is offering high-demand devices like the 4G LTE Samsung Galaxy S® III on its growing 4G LTE network. To further differentiate itself from competitors and increase consideration, the company launched an innovative marketing campaign, Hello Better, in July that encourages consumers who are frustrated with their providers to switch to U.S. Cellular for a better wireless experience. 

"TDS Telecom continued to add high-speed broadband customers and to expand availability of TDS TV®. The company added commercial managedIP connections at a rapid pace, increasing 91 percent. Higher revenue from the hosted and managed services business offset decreases in legacy ILEC and CLEC revenue, and we continued to build the HMS business with the acquisition of solutions provider Vital Support Systems in June. Recent reforms to USF and ICC negatively impacted revenue and earnings in the first half of this year.  We expect FCC-authorized recovery mechanisms to help offset additional rate changes set to begin in the second half."

Guidance for year ending Dec. 31, 2012

Guidance for the year ending Dec. 31, 2012, as of Aug. 3, 2012, is provided below, compared to the previous guidance provided on May 4, 2012.  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 this guidance. 

 



2012 Estimated Results (1)


Previous Estimates (2)

U.S. Cellular




Service revenues

$4,050-$4,150 million


Unchanged


Operating income (3)

$200-$300 million


Unchanged


Depreciation, amortization and accretion expenses, 





  and net gain or loss on asset disposals and exchanges





  and loss on impairment of assets (3)

Approx. $600 million


Unchanged


Adjusted OIBDA (3) (5)

$800-$900 million


Unchanged


Capital expenditures

Approx. $850 million


Unchanged


 








2012 Estimated Results (4)


Previous Estimates (2)

TDS Telecom Operations





Operating revenues

$850-$880 million


$810-$840 million


Operating income

$50-$70 million


$55-$85 million


Depreciation, amortization and accretion expenses,





  and net gain or loss on asset disposals and exchanges





  and loss on impairment of assets (3)

Approx. $195 million


Approx. $190 million


Adjusted OIBDA (5)

$245-$265 million


$245-$275 million


Capital expenditures

$170-$190 million


$150-$180 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)

The 2012 Estimated Results as disclosed in TDS' Quarterly Report on Form 10-Q for the period ended March 31, 2012.

(3)

The 2012 Estimated Results do not include any estimate for unrecognized net gains or losses related to disposals and exchanges of assets or losses on impairment of assets (since such transactions and their effects are uncertain).

(4)

These estimates are based on TDS Telecom's current plans which include a multi-year deployment of IPTV that commenced in 2011.  New developments or changing conditions (such as costs to deploy, agreements for content or franchises or possible acquisitions, dispositions or exchanges) could affect TDS Telecom's plans and, therefore, its 2012 estimated results.

(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.

Interest expense

Interest expense was down $22 million, primarily due to the write-off of unamortized debt issuance costs in 2011 of $15.4 million, as well as lower interest rates on outstanding debt.

Income taxes

In the quarter, TDS' overall effective tax rate was 39 percent, compared to 9.5 percent.  In the second quarter of 2011, income tax expense was reduced by $29.1 million, primarily due to tax benefits from state law changes and other discrete items. 

Stock repurchase

TDS did not repurchase any shares during the quarter.  TDS determines whether to repurchase shares from time to time based on many considerations, including cash needed for other known or possible requirements, the stock price, market conditions, debt rating considerations, business forecasts, business plans, macroeconomic conditions, share issuances under compensation plans, provisions in governing and legal documents and other legal requirements, and other facts and circumstances.  Subject to these considerations, TDS intends to continue to repurchase its shares from time to time when circumstances warrant.  To the extent TDS does not complete its existing share authorization by the expiration date in November 2012, it is expected that the TDS board of directors will approve an additional authorization at that time.   

Conference call information

TDS will hold a conference call on Aug. 3, 2012 at 9:30 a.m. CDT.

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, 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 June 30, 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: 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

 Summary Operating Data (Unaudited)

















 Quarter Ended


6/30/2012



3/31/2012



12/31/2011



9/30/2011



6/30/2011

 Total population
















Consolidated markets (1)


92,684,000



92,684,000



91,965,000



91,965,000



91,204,000


Consolidated operating markets (1)


46,966,000



46,966,000



46,888,000



46,888,000



46,888,000

 Market penetration at end of period
















Consolidated markets (2)


6.3%



6.3%



6.4%



6.5%



6.5%


Consolidated operating markets (2)


12.3%



12.4%



12.6%



12.7%



12.7%

 All customers
















Total at end of period


5,799,000



5,837,000



5,891,000



5,932,000



5,968,000


Gross additions


290,000



285,000



306,000



299,000



257,000


Net additions (losses)


(38,000)



(49,000)



(41,000)



(36,000)



(70,000)


Smartphones sold as a percent of

total devices sold (3)















51.9%



54.1%



52.5%



39.9%



39.6%

 Retail customers
















Total at end of period


5,542,000



5,570,000



5,608,000



5,621,000



5,644,000


Smartphone penetration (3) (4)


36.8%



34.4%



30.5%



26.2%



23.1%


Gross additions


277,000



273,000



298,000



284,000



226,000


Net retail additions (losses) (5)


(28,000)



(34,000)



(13,000)



(23,000)



(58,000)


      Net postpaid additions (losses)


(48,000)



(38,000)



(20,000)



(34,000)



(41,000)


      Net prepaid additions (losses)


20,000



4,000



7,000



11,000



(17,000)

 Service revenue components (000s)
















Retail service

$

889,219


$

888,527


$

882,091


$

871,199


$

868,630


Inbound roaming


86,363



80,132



93,353



107,810



82,760


Other


54,160



55,161



54,601



57,600



50,640

 Total service revenues (000s)

$

1,029,742


$

1,023,820


$

1,030,045


$

1,036,609


$

1,002,030

 Total ARPU (6)

$

59.05


$

58.21


$

58.13


$

58.09


$

55.69

 Billed ARPU (7)

$

50.99


$

50.52


$

49.78


$

48.82


$

48.28

 Postpaid ARPU (8)

$

54.42


$

54.00


$

53.35


$

52.41


$

51.84

 Postpaid churn rate (9)


1.6%



1.6%



1.6%



1.5%



1.4%

 Capital expenditures (000s)

$

183,200


$

201,300


$

276,400


$

248,000


$

162,100

 Cell sites in service


7,932



7,875



7,882



7,828



7,770

 

(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


6/30/2012



3/31/2012



12/31/2011



9/30/2011



6/30/2011

TDS Telecom















ILEC:

















Residential Connections


















Physical access lines (1)


360,100



363,500



367,600



373,700



378,500




Broadband connections (2)


222,400



219,500



219,600



220,500



217,600




IPTV customers


5,600



4,900



4,600



4,500



4,300




   ILEC Residential Connections


588,100



587,900



591,800



598,700



600,400





















Commercial Connections


















Physical access lines (1)


111,100



112,600



114,400



116,500



117,800




Broadband connections (2)


18,400



18,200



18,200



17,900



17,600




managedIP connections (3)


13,200



10,800



8,600



6,800



5,800




   ILEC Commercial Connections


142,700



141,600



141,200



141,200



141,200



















CLEC:

















Residential Connections


















Physical access lines (1)


27,900



29,600



31,800



33,900



36,700




Broadband connections (2)


9,500



10,100



11,000



11,700



12,800




   CLEC Residential Connections


37,400



39,700



42,800



45,600



49,500





















Commercial Connections


















Physical access lines (1)


145,100



151,100



157,300



163,600



168,100




Broadband connections (2)


12,800



13,700



14,600



15,400



15,900




managedIP connections (3)


61,400



53,700



44,900



38,000



33,200




   CLEC Commercial Connections


219,300



218,500



216,800



217,000



217,200



















Total ILEC and CLEC customer connections


987,500



987,700



992,600



1,002,500



1,008,300

 

(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

6/30/2012


3/31/2012


12/31/2011


9/30/2011


6/30/2011

ILEC

$

32,500


$

27,500


$

50,300


$

36,500


$

34,500

CLEC


4,900



5,100



7,200



4,700



6,200

HMS


5,500



3,100



5,900



15,000



4,600





$

42,900


$

35,700


$

63,400


$

56,200


$

45,300


 

Telephone and Data Systems, Inc.

Consolidated Statement of Operations Highlights

Three Months Ended June 30,

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











 Increase/ (Decrease)





2012


2011


Amount


Percent

Operating revenues













U.S. Cellular

$

1,104,400


$

1,076,182


$

28,218



3%


TDS Telecom


208,519



198,896



9,623



5%


All Other (1)


10,250



4,562



5,688



>100%






1,323,169



1,279,640



43,529



3%

Operating expenses













U.S. Cellular














Expenses excluding depreciation, amortization and accretion


869,980



822,587



47,393



6%



Depreciation, amortization and accretion


147,555



146,577



978



1%



Loss on asset disposals and exchanges, net


2,702



2,922



(220)



(8%)






1,020,237



972,086



48,151



5%


TDS Telecom














Expenses excluding depreciation, amortization and accretion


148,983



128,846



20,137



16%



Depreciation, amortization and accretion


47,945



43,843



4,102



9%



Loss on asset disposals, net


306



317



(11)



(3%)






197,234



173,006



24,228



14%


All Other (1)














Expenses excluding depreciation and amortization


11,111



4,569



6,542



>100%



Depreciation and amortization


3,009



2,625



384



15%



Loss on impairment of intangible assets


515





515



N/M



(Gain) on asset disposals, net


(13)



(1)



(12)



>100%






14,622



7,193



7,429



>100%



















Total operating expenses


1,232,093



1,152,285



79,808



7%

Operating income (loss)













U.S. Cellular


84,163



104,096



(19,933)



(19%)


TDS Telecom


11,285



25,890



(14,605)



(56%)


All Other  (1)


(4,372)



(2,631)



(1,741)



(66%)






91,076



127,355



(36,279)



(28%)

Investment and other income (expense)













Equity in earnings of unconsolidated entities


25,392



22,590



2,802



12%


Interest and dividend income


2,352



2,093



259



12%


Gain (loss) on investment


(3,728)



13,373



(17,101)



>(100%)


Interest expense


(23,139)



(45,417)



22,278



49%


Other, net


(249)



1,306



(1,555)



>(100%)



Total investment and other income (expense)


628



(6,055)



6,683



>100%

Income before income taxes


91,704



121,300



(29,596)



(24%)


Income tax expense


35,765



11,560



24,205



>100%

Net income


55,939



109,740



(53,801)



(49%)


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


(13,602)



(17,786)



4,184



24%

Net income attributable to TDS shareholders


42,337



91,954



(49,617)



(54%)


Preferred dividend requirement


(12)



(12)





Net income available to common shareholders

$

42,325


$

91,942


$

(49,617)



(54%)
















Basic weighted average shares outstanding (2)


108,732



108,423



309



Basic earnings per share attributable to TDS shareholders (2)

$

0.39


$

0.85


$

(0.46)



(54%)
















Diluted weighted average shares outstanding (2)


109,022



109,133



(111)



Diluted earnings per share attributable to TDS shareholders (2)

$

0.39


$

0.84


$

(0.45)



(54%)

 

(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. Average basic and diluted shares outstanding used to calculate earnings per share for the comparative period 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

Six Months Ended June 30,

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


























 Increase/ (Decrease)





2012


2011


Amount


Percent

Operating revenues













U.S. Cellular

$

2,196,521


$

2,133,274


$

63,247



3%


TDS Telecom


412,594



397,812



14,782



4%


All Other (1)


19,845



7,235



12,610



>100%






2,628,960



2,538,321



90,639



4%

Operating expenses













U.S. Cellular














Expenses excluding depreciation, amortization and accretion


1,732,424



1,676,554



55,870



3%



Depreciation, amortization and accretion


294,240



289,917



4,323



1%



Loss on asset disposals and exchanges, net


492



3,959



(3,467)



(88%)






2,027,156



1,970,430



56,726



3%


TDS Telecom














Expenses excluding depreciation, amortization and accretion


292,403



250,615



41,788



17%



Depreciation, amortization and accretion


95,388



88,680



6,708



8%



Loss on asset disposals, net


426



421



5



1%






388,217



339,716



48,501



14%


All Other (1)














Expenses excluding depreciation and amortization


22,057



6,685



15,372



>100%



Depreciation and amortization


6,315



5,261



1,054



20%



Loss on impairment of intangible assets


515





515



N/M



(Gain) loss on asset disposals, net


(18)



1



(19)



>(100%)






28,869



11,947



16,922



>100%



















Total operating expenses


2,444,242



2,322,093



122,149



5%

Operating income (loss)













U.S. Cellular


169,365



162,844



6,521



4%


TDS Telecom


24,377



58,096



(33,719)



(58%)


All Other  (1)


(9,024)



(4,712)



(4,312)



(92%)






184,718



216,228



(31,510)



(15%)

Investment and other income (expense)













Equity in earnings of unconsolidated entities


48,781



41,978



6,803



16%


Interest and dividend income


4,535



4,717



(182)



(4%)


Gain (loss) on investment


(3,728)



13,373



(17,101)



>(100%)


Interest expense


(47,603)



(71,926)



24,323



34%


Other, net


(21)



1,386



(1,407)



>(100%)



Total investment and other income (expense)


1,964



(10,472)



12,436



>100%

Income before income taxes


186,682



205,756



(19,074)



(9%)


Income tax expense


63,177



41,719



21,458



51%

Net income


123,505



164,037



(40,532)



(25%)


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


(28,914)



(28,579)



(335)



(1%)

Net income attributable to TDS shareholders


94,591



135,458



(40,867)



(30%)


Preferred dividend requirement


(25)



(25)





Net income available to common shareholders

$

94,566


$

135,433


$

(40,867)



(30%)
















Basic weighted average shares outstanding (2)


108,693



108,678



15



Basic earnings per share attributable to TDS shareholders (2)

$

0.87


$

1.25


$

(0.38)



(30%)
















Diluted weighted average shares outstanding (2)


108,964



109,385



(421)



Diluted earnings per share attributable to TDS shareholders (2)

$

0.86


$

1.23


$

(0.37)



(30%)

 

(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. Average basic and diluted shares outstanding used to calculate earnings per share for the comparative period 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




















June 30,


December 31,




2012


2011

Current assets







Cash and cash equivalents

$

613,764


$

563,275


Short-term investments


150,921



246,273


Accounts receivable from customers and others


542,156



542,577


Inventory


189,242



130,044


Net deferred income tax asset


44,598



40,898


Prepaid expenses


86,794



80,628


Income taxes receivable


9,376



85,636


Other current assets


19,224



16,349





1,656,075



1,705,680









Assets held for sale




49,647









Investments







Licenses


1,507,447



1,494,014


Goodwill


816,668



797,077


Other intangible assets, net


65,285



50,734


Investments in unconsolidated entities


213,049



173,710


Long-term investments


55,468



45,138


Other investments


1,017



3,072





2,658,934



2,563,745









Property, plant and equipment, net







U.S. Cellular


2,883,118



2,790,302


TDS Telecom


928,686



936,757


Other


41,483



57,476





3,853,287



3,784,535









Other assets and deferred charges


115,435



97,398









Total assets

$

8,283,731


$

8,201,005


 

Telephone and Data Systems, Inc.

Consolidated Balance Sheet Highlights


(Unaudited, dollars in thousands)













LIABILITIES AND EQUITY




























June 30,



December 31,






2012



2011













Current liabilities









Current portion of long-term debt

$

1,283



$

1,509



Accounts payable


310,610




364,746



Customer deposits and deferred revenues


231,743




207,633



Accrued interest


5,522




7,456



Accrued taxes


53,698




41,069



Accrued compensation


83,080




107,719



Other current liabilities


105,640




144,001







791,576




874,133













Liabilities held for sale





1,051













Deferred liabilities and credits









Net deferred income tax liability


847,725




808,713



Other deferred liabilities and credits


391,898




383,567













Long-term debt


1,529,836




1,529,857













Noncontrolling interests with redemption features


1,050




1,005













Equity









TDS shareholders' equity










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


1,326




1,326




Capital in excess of par value (1)


2,280,802




2,268,711




Treasury shares at cost (1)


(742,906)




(750,921)




Accumulated other comprehensive loss


(8,494)




(8,854)




Retained earnings (1)


2,514,327




2,451,899





Total TDS shareholders' equity


4,045,055




3,962,161














Preferred shares


830




830



Noncontrolling interests


675,761




639,688















Total equity


4,721,646




4,602,679













Total liabilities and equity

$

8,283,731



$

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

June 30, 2012

(Unaudited, dollars in thousands)






































U.S.


TDS


TDS Corporate


Intercompany


TDS




Cellular


Telecom


& Other


Eliminations


Consolidated

Cash and cash equivalents

$

437,624


$

71,861


$

104,279


$

 ―


$

613,764

Affiliated cash investments


 ―



396,855



 ―



(396,855)



 ―

Short-term investments


100,738



 ―



50,183



 ―



150,921



$

538,362


$

468,716


$

154,462


$

(396,855)


$

764,685


















Licenses, goodwill and other intangible assets

$

1,979,109


$

589,225


$

(178,934)


$

 ―


$

2,389,400

Investment in unconsolidated entities


175,663



3,805



39,906



(6,325)



213,049

Long-term and other investments


55,550



933



2



 ―



56,485




$

2,210,322


$

593,963


$

(139,026)


$

(6,325)


$

2,658,934



































Property, plant and equipment, net

$

2,883,118


$

928,686


$

41,483


$

 ―


$

3,853,287


















Long-term debt:
















Current portion

$

127


$

190


$

966


$

 ―


$

1,283


Non-current portion


880,623



1,685



647,528



 ―



1,529,836



Total

$

880,750


$

1,875


$

648,494


$

 ―


$

1,531,119


















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 June 30, 2012 and December 31, 2011.

 














June 30,


December 31,




2012


2011












Cash and cash equivalents


$

613,764


$

563,275


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









Government-backed securities (3)




150,921



218,829



Certificates of deposit






27,444






$

150,921


$

246,273












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









Government-backed securities (3)



$

55,468


$

45,138

 

(1)

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

(2)

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

(3)

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

(4)

At June 30, 2012, maturities range between 12 and 21 months.


 

Telephone and Data Systems, Inc.

Consolidated Statement of Cash Flows

Six Months Ended June 30,

(Unaudited, dollars in thousands)






2012


2011

Cash flows from operating activities







Net income

$

123,505


$

164,037



Add (deduct) adjustments to reconcile net income to net









cash flows from operating activities










Depreciation, amortization and accretion


395,943



383,858





Bad debts expense


33,626



29,906





Stock-based compensation expense


20,955



18,913





Deferred income taxes, net


29,929



79,637





Equity in earnings of unconsolidated entities


(48,781)



(41,978)





Distributions from unconsolidated entities


6,973



47,375





Loss on impairment of intangible assets


515







Loss on asset disposals, net


900



4,381





(Gain) loss on investment


3,728



(13,373)





Noncash interest expense


1,728



17,147





Other operating activities


1,010



1,070



Changes in assets and liabilities from operations










Accounts receivable


(10,197)



(37,819)





Inventory


(58,467)



(48,826)





Accounts payable


(23,336)



24,678





Customer deposits and deferred revenues


22,786



22,600





Accrued taxes


89,433



(459)





Accrued interest


(1,823)



1,355





Other assets and liabilities


(81,517)



(90,291)







506,910



562,211











Cash flows from investing activities







Cash used for additions to property, plant and equipment


(501,211)



(350,856)


Cash paid for acquisitions and licenses


(52,213)



(22,167)


Cash received from divestitures


50,036




Cash paid for investments


(45,000)



(71,000)


Cash received for investments


128,444



213,030


Other investing activities


(8,916)



(816)







(428,860)



(231,809)











Cash flows from financing activities







Repayment of long-term debt


(952)



(613,387)


Issuance of long-term debt


358



643,700


TDS Common Shares and Special Common Shares








reissued for benefit plans, net of tax payments


(39)



1,055


U.S. Cellular Common Shares reissued for benefit








plans, net of tax payments


(2,465)



1,264


Repurchase of TDS Common and Special Common Shares




(21,500)


Repurchase of U.S. Cellular Common Shares




(62,308)


Dividends paid


(26,610)



(24,343)


Payment of debt issuance costs




(21,191)


Distributions to noncontrolling interests


(643)



(1,377)


Other financing activities


2,790



2,077







(27,561)



(96,010)











Cash classified as held for sale




(5,687)











Net increase in cash and cash equivalents


50,489