Company News: Page (1) of 1 - 11/07/12

TDS Reports Third Quarter 2012 Results

U.S. Cellular Announces Transaction to Exit Certain Midwest Markets

November 07, 2012 --

CHICAGO, Nov. 7, 2012 /PRNewswire/ --

Note: Comparisons are year over year unless otherwise noted.

3Q 2012 Highlights


TDS Consolidated

  • Operating revenues increased 3 percent to $1,370.1 million.

U.S. Cellular

  • Retail gross additions increased 23 percent resulting in a net gain of 19,000 retail customers, compared to a net loss of 23,000 retail customers.
  • Postpaid gross additions increased 7 percent and postpaid churn increased to 1.7 percent, resulting in a net loss of 38,000 postpaid customers in the quarter. Postpaid customers comprised 93 percent of retail customers.
  • Prepaid gross additions increased 71 percent, driven by the introduction of U Prepaid in select Walmart stores, and prepaid churn decreased to 5.9 percent, resulting in a net increase of 57,000 prepaid customers in the quarter.
  • Total revenues increased 3 percent; service revenues remained steady at $1,036.4 million.
  • Postpaid ARPU (average revenue per user) increased 4 percent to $54.34 from $52.41; total ARPU increased 3 percent to $59.57 from $58.09.
  • Postpaid smartphone customers increased to 38.6 percent of customers from 26.2 percent. Smartphones as a percent of total devices sold increased to 53.0 percent from 39.9 percent; 50 percent of smartphones sold were 4G.
  • Cell sites in service increased 2 percent to 7,984, of which 4,545 are owned towers.
  • 4G LTE network now covers 30 percent of customers; expect to reach 58 percent of customers by year end.

TDS Telecom

  • Operating revenues increased 5 percent to $220.4 million.
  • ILEC triple play (voice, data and video) penetration increased to 31 percent from 28 percent.
  • managedIP connections (ILEC and CLEC) grew 89 percent to 84,500 from 44,800.

As previously announced, TDS will hold a teleconference Nov. 7, 2012 at 7:30 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 $1,370.1 million for the third quarter of 2012, an increase of 3 percent from $1,325.4 million in the comparable period one year ago. Net income attributable to TDS shareholders and related diluted earnings per share were $29.1 million and $0.27, respectively, for the third quarter of 2012, compared to $71.3 million and $0.65, respectively, in the comparable period one year ago. In the third quarter of 2011, TDS recorded a $12.7 million gain on investment, as a result of an acquisition.

"U.S. Cellular and TDS Telecom achieved modest revenue growth, while profitability declined due to increasing smartphone subsidies, declining regulatory support and investment spending," said LeRoy T. Carlson, Jr., TDS president and CEO.

"U.S. Cellular continued to achieve strong growth in net prepaid customers, driven by the U Prepaid product sold through Walmart. We had solid growth in gross postpaid customers, but churn remained elevated. U.S. Cellular recently began offering a postpaid product through Walmart as well, and continues to explore new distribution options. We are working aggressively to build consideration and loyalty with competitive devices like the 4G LTE Samsung Galaxy S III, which helped to increase smartphone penetration in the quarter, and the recently introduced 4G LTE Samsung Galaxy Note II.

"TDS Telecom added residential TDS TV and triple play bundle customers. Higher revenue from acquisitions in the hosted and managed services business helped to offset decreases in ILEC and CLEC revenue. Profitability was impacted by reductions in wholesale and regulatory revenues, as expected, though to a lesser degree than in the first half of the year."

U.S. Cellular Strategic Actions

In a separate release, U.S. Cellular also announced today two strategic actions designed to increase focus on markets where it has strong positions and streamline operations to increase overall efficiency and effectiveness. The company has entered into a definitive agreement with Sprint, who will purchase its customers and PCS spectrum in certain Midwest markets. U.S. Cellular will also transition the operations of its Bolingbrook, Ill., customer care center to an existing vendor partner. Further information can be found on the U.S. Cellular Investor Relations website.

Guidance for year ending Dec. 31, 2012

Guidance for the year ending Dec. 31, 2012, as of Nov. 7, 2012, is provided below, compared to the previous guidance provided on Aug. 3, 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 - Before Effects of Sprint Transaction - see Note (1)




Service revenues

$4,075-$4,125 million


$4,050-$4,150 million


Operating income (3)

$200-$250 million


$200-$300 million


Depreciation, amortization and accretion expenses,





and impairment of assets and net gain





or loss on asset disposals and exchanges (3)

Approx. $600 million


Unchanged


Adjusted OIBDA (3) (5)

$800-$850 million


$800-$900 million


Capital expenditures

Approx. $850 million


Unchanged








2012 Estimated Results (4)


Previous Estimates (2)

TDS Telecom





Operating revenues

$850-$860 million


$850-$880 million


Operating income

$40-$50 million


$50-$70 million


Depreciation, amortization and accretion expenses,





and impairment of assets and net gain





or loss on asset disposals and exchanges (3)

Approx. $195 million


Unchanged


Adjusted OIBDA (5)

$235-$245 million


$245-$265 million


Capital expenditures

$175-$190 million


$170-$190 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. These estimates are before the effects of the definitive agreement signed with Sprint, who will purchase U.S. Cellular customers and PCS Spectrum in certain Midwest markets. The Company expects to incur incremental operating expenses in the fourth quarter of 2012 in the range of $30 to $60 million for severance, incremental accelerated depreciation, asset write-downs and other costs related to this transaction, which will decrease Operating income, increase Depreciation, amortization and accretion expenses, and impairment of assets and net gain or loss on asset disposals and exchanges, and decrease OIBDA.

(2)

The 2012 Estimated Results as disclosed in TDS' Quarterly Report on Form 10-Q for the period ended June 30, 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 loss on impairment of assets (if any); and the net gain or loss on asset disposals and exchanges (if any). Adjusted OIBDA excludes the loss on impairment of assets (if any) and net gain or loss on asset disposals and exchanges (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; such gains or losses may occur in the future.


Adjusted OIBDA is a segment measure reported to the chief operating decision maker for purposes of making decisions about allocating resources to the segments and assessing their performance. This amount may also be commonly referred to by management as operating cash flow. 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. This amount should not be confused with Cash flows from operating activities, which is a component of the Consolidated Statement of Cash Flows.

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.

Conference call information

TDS will hold a conference call on Nov. 7, 2012 at 7:30 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 http://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 Sept. 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: impacts of the Sprint Transaction including, but not limited to, the ability to obtain regulatory approval, 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; and 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: http://www.teldta.com/
U.S. Cellular: http://www.uscellular.com/
TDS Telecom: http://www.tdstelecom.com/

United States Cellular Corporation

Summary Operating Data (Unaudited)

















Quarter Ended


9/30/2012



6/30/2012



3/31/2012



12/31/2011



9/30/2011

Total population
















Consolidated markets (1)


92,996,000



92,684,000



92,684,000



91,965,000



91,965,000


Consolidated operating markets (1)


46,966,000



46,966,000



46,966,000



46,888,000



46,888,000

Market penetration at end of period
















Consolidated markets (2)


6.2%



6.3%



6.3%



6.4%



6.5%


Consolidated operating markets (2)


12.4%



12.3%



12.4%



12.6%



12.7%

All customers
















Total at end of period


5,808,000



5,799,000



5,837,000



5,891,000



5,932,000


Gross additions


364,000



290,000



285,000



306,000



299,000


Net additions (losses)


9,000



(38,000)



(49,000)



(41,000)



(36,000)


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


53.0%



51.9%



54.1%



52.5%



39.9%

Retail customers
















Total at end of period


5,561,000



5,542,000



5,570,000



5,608,000



5,621,000


Smartphone penetration (3) (4)


38.6%



36.8%



34.4%



30.5%



26.2%


Gross additions


350,000



277,000



273,000



298,000



284,000


Net retail additions (losses) (5)


19,000



(28,000)



(34,000)



(13,000)



(23,000)


Net postpaid additions (losses)


(38,000)



(48,000)



(38,000)



(20,000)



(34,000)


Net prepaid additions (losses)


57,000



20,000



4,000



7,000



11,000

Service revenue components (000s)
















Retail service

$

884,219


$

889,219


$

888,527


$

882,091


$

871,199


Inbound roaming


106,132



86,363



80,132



93,353



107,810


Other


46,019



54,160



55,161



54,601



57,600

Total service revenues (000s)

$

1,036,370


$

1,029,742


$

1,023,820


$

1,030,045


$

1,036,609

Total ARPU (6)

$

59.57


$

59.05


$

58.21


$

58.13


$

58.09

Billed ARPU (7)

$

50.83


$

50.99


$

50.52


$

49.78


$

48.82

Postpaid ARPU (8)

$

54.34


$

54.42


$

54.00


$

53.35


$

52.41

Postpaid churn rate (9)


1.7%



1.6%



1.6%



1.6%



1.5%

Capital expenditures (000s)

$

199,100


$

183,200


$

201,300


$

276,400


$

248,000

Cell sites in service


7,984



7,932



7,875



7,882



7,828



(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


9/30/2012



6/30/2012



3/31/2012



12/31/2011



9/30/2011

TDS Telecom















ILEC:

















Residential Connections


















Physical access lines (1)


355,800



360,100



363,500



367,600



373,700




Broadband connections (2)


223,100



222,400



219,500



219,600



220,500




IPTV customers


6,700



5,600



4,900



4,600



4,500




ILEC Residential Connections


585,600



588,100



587,900



591,800



598,700





















Commercial Connections


















Physical access lines (1)


109,800



111,100



112,600



114,400



116,500




Broadband connections (2)


18,500



18,400



18,200



18,200



17,900




managedIP connections (3)


15,000



13,200



10,800



8,600



6,800




ILEC Commercial Connections


143,300



142,700



141,600



141,200



141,200



















CLEC:

















Residential Connections


















Physical access lines (1)


26,200



27,900



29,600



31,800



33,900




Broadband connections (2)


8,900



9,500



10,100



11,000



11,700




CLEC Residential Connections


35,100



37,400



39,700



42,800



45,600





















Commercial Connections


















Physical access lines (1)


140,300



145,100



151,100



157,300



163,600




Broadband connections (2)


12,000



12,800



13,700



14,600



15,400




managedIP connections (3)


69,500



61,400



53,700



44,900



38,000




CLEC Commercial Connections


221,800



219,300



218,500



216,800



217,000



















Total ILEC and CLEC customer connections


985,800



987,500



987,700



992,600



1,002,500



(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


9/30/2012



6/30/2012



3/31/2012



12/31/2011



9/30/2011

ILEC

$

33,700


$

32,500


$

27,500


$

50,300


$

36,500

CLEC


5,400



4,900



5,100



7,200



4,700

HMS


4,400



5,500



3,100



5,900



15,000





$

43,500


$

42,900


$

35,700


$

63,400


$

56,200







Telephone and Data Systems, Inc.

Consolidated Statement of Operations Highlights


Three Months Ended September 30,


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

































Increase/ (Decrease)






2012



2011



Amount



Percent


Operating revenues

















U.S. Cellular

$

1,140,357



$

1,110,439



$

29,918




3%



TDS Telecom


220,417




210,806




9,611




5%



All Other (1)


9,334




4,178




5,156




>100%







1,370,108




1,325,423




44,685




3%


Operating expenses

















U.S. Cellular


















Expenses excluding depreciation, amortization and accretion


935,800




876,855




58,945




7%




Depreciation, amortization and accretion


145,151




141,664




3,487




2%




(Gain) loss on asset disposals and exchanges, net


11,327




(9,700)




21,027




>(100%)







1,092,278




1,008,819




83,459




8%



TDS Telecom


















Expenses excluding depreciation, amortization and accretion


161,515




139,601




21,914




16%




Depreciation, amortization and accretion


48,251




45,682




2,569




6%




Loss on asset disposals and exchanges, net


351




337




14




4%







210,117




185,620




24,497




13%



All Other (1)


















Expenses excluding depreciation and amortization


9,361




1,355




8,006




>100%




Depreciation and amortization


2,817




2,693




124




5%




Loss on asset disposals and exchanges, net


29




12




17




>100%







12,207




4,060




8,147




>100%
























Total operating expenses


1,314,602




1,198,499




116,103




10%


Operating income (loss)

















U.S. Cellular


48,079




101,620




(53,541)




(53%)



TDS Telecom


10,300




25,186




(14,886)




(59%)



All Other (1)


(2,873)




118




(2,991)




>(100%)







55,506




126,924




(71,418)




(56%)


Investment and other income (expense)

















Equity in earnings of unconsolidated entities


25,015




22,053




2,962




13%



Interest and dividend income


2,359




2,199




160




7%



Gain on investment


-




12,730




(12,730)




N/M



Interest expense


(20,497)




(22,258)




1,761




8%



Other, net


217




115




102




89%




Total investment and other income (expense)


7,094




14,839




(7,745)




(52%)


Income before income taxes


62,600




141,763




(79,163)




(56%)



Income tax expense


22,442




53,545




(31,103)




(58%)


Net income


40,158




88,218




(48,060)




(54%)



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


(11,041)




(16,924)




5,883




35%


Net income attributable to TDS shareholders


29,117




71,294




(42,177)




(59%)



Preferred dividend requirement


(12)




(12)




-




-


Net income available to common shareholders

$

29,105



$

71,282



$

(42,177)




(59%)





















Basic weighted average shares outstanding (2)


108,819




108,404




415




-


Basic earnings per share attributable to TDS shareholders (2)

$

0.27



$

0.66



$

(0.39)




(59%)





















Diluted weighted average shares outstanding (2)


109,246




108,732




514




-


Diluted earnings per share attributable to TDS shareholders (2)

$

0.27



$

0.65



$

(0.38)




(58%)




(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


Nine Months Ended September 30,


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

































Increase/ (Decrease)






2012



2011



Amount



Percent


Operating revenues

















U.S. Cellular

$

3,336,878



$

3,243,713



$

93,165




3%



TDS Telecom


633,011




608,618




24,393




4%



All Other (1)


29,179




11,413




17,766




>100%







3,999,068




3,863,744




135,324




4%


Operating expenses

















U.S. Cellular


















Expenses excluding depreciation, amortization and accretion


2,668,224




2,553,409




114,815




4%




Depreciation, amortization and accretion


439,391




431,581




7,810




2%




(Gain) loss on asset disposals and exchanges, net


11,819




(5,741)




17,560




>(100%)







3,119,434




2,979,249




140,185




5%



TDS Telecom


















Expenses excluding depreciation, amortization and accretion


453,918




390,216




63,702




16%




Depreciation, amortization and accretion


143,639




134,362




9,277




7%




Loss on asset disposals and exchanges, net


777




758




19




3%







598,334




525,336




72,998




14%



All Other (1)


















Expenses excluding depreciation and amortization


31,418




8,040




23,378




>100%




Depreciation and amortization


9,132




7,954




1,178




15%




Loss on impairment of assets


515




-




515




N/M




Loss on asset disposals and exchanges, net


11




13




(2)




(15%)







41,076




16,007




25,069




>100%
























Total operating expenses


3,758,844




3,520,592




238,252




7%


Operating income (loss)

















U.S. Cellular


217,444




264,464




(47,020)




(18%)



TDS Telecom


34,677




83,282




(48,605)




(58%)



All Other (1)


(11,897)




(4,594)




(7,303)




>(100%)







240,224




343,152




(102,928)




(30%)


Investment and other income (expense)

















Equity in earnings of unconsolidated entities


73,796




64,031




9,765




15%



Interest and dividend income


6,894




6,916




(22)




-



Gain (loss) on investment


(3,728)




26,103




(29,831)




>(100%)



Interest expense


(68,100)




(94,184)




26,084




28%



Other, net


196




1,501




(1,305)




(87%)




Total investment and other income (expense)


9,058




4,367




4,691




>100%


Income before income taxes


249,282




347,519




(98,237)




(28%)



Income tax expense


85,619




95,264




(9,645)




(10%)


Net income


163,663




252,255




(88,592)




(35%)



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


(39,955)




(45,503)




5,548




12%


Net income attributable to TDS shareholders


123,708




206,752




(83,044)




(40%)



Preferred dividend requirement


(37)




(37)




-




-


Net income available to common shareholders

$

123,671



$

206,715



$

(83,044)




(40%)





















Basic weighted average shares outstanding (2)


108,735




108,586




149




-


Basic earnings per share attributable to TDS shareholders (2)

$

1.14



$

1.90



$

(0.76)




(40%)





















Diluted weighted average shares outstanding (2)


109,018




109,194




(176)




-


Diluted earnings per share attributable to TDS shareholders (2)

$

1.13



$

1.89



$

(0.76)




(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. 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




















September 30,


December 31,




2012


2011

Current assets







Cash and cash equivalents

$

589,284


$

563,275


Short-term investments


180,578



246,273


Accounts receivable from customers and others


578,195



542,577


Inventory


201,693



130,044


Net deferred income tax asset


46,809



40,898


Prepaid expenses


86,346



80,628


Income taxes receivable


11,595



85,636


Other current assets


26,720



16,349





1,721,220



1,705,680









Assets held for sale


-



49,647









Investments







Licenses


1,555,118



1,494,014


Goodwill


816,668



797,077


Other intangible assets, net


61,873



50,734


Investments in unconsolidated entities


199,480



173,710


Long-term investments


10,171



45,138


Other investments


886



3,072





2,644,196



2,563,745









Property, plant and equipment, net







U.S. Cellular


2,934,785



2,790,302


TDS Telecom


927,767



936,757


Other


40,931



57,476





3,903,483



3,784,535









Other assets and deferred charges


121,917



97,398









Total assets

$

8,390,816


$

8,201,005







Telephone and Data Systems, Inc.

Consolidated Balance Sheet Highlights


(Unaudited, dollars in thousands)













LIABILITIES AND EQUITY




























September 30,



December 31,






2012



2011













Current liabilities









Current portion of long-term debt

$

1,283



$

1,509



Accounts payable


311,868




364,746



Customer deposits and deferred revenues


237,281




207,633



Accrued interest


16,772




7,456



Accrued taxes


74,296




41,069



Accrued compensation


85,485




107,719



Other current liabilities


99,119




144,001







826,104




874,133













Liabilities held for sale


-




1,051













Deferred liabilities and credits









Net deferred income tax liability


867,188




808,713



Other deferred liabilities and credits


405,160




383,567













Long-term debt


1,528,515




1,529,857













Noncontrolling interests with redemption features


759




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)


2,293,008




2,268,711




Treasury shares at cost (1)


(739,560)




(750,921)




Accumulated other comprehensive loss


(8,343)




(8,854)




Retained earnings (1)


2,528,209




2,451,899





Total TDS shareholders' equity


4,074,640




3,962,161














Preferred shares


826




830



Noncontrolling interests


687,624




639,688















Total equity


4,763,090




4,602,679













Total liabilities and equity

$

8,390,816



$

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


September 30, 2012


(Unaudited, dollars in thousands)









































U.S.


TDS


TDS Corporate


Intercompany


TDS





Cellular


Telecom


& Other


Eliminations


Consolidated


Cash and cash equivalents

$

409,579


$

96,520


$

83,185


$

-


$

589,284


Affiliated cash investments


-



372,644



-



(372,644)



-


Short-term investments


140,494



-



40,084



-



180,578




$

550,073


$

469,164


$

123,269


$

(372,644)


$

769,862




















Licenses, goodwill and other intangible assets

$

2,026,745


$

586,068


$

(179,154)


$

-


$

2,433,659


Investment in unconsolidated entities


162,012



3,813



40,664



(7,009)



199,480


Long-term and other investments


10,173



882



2



-



11,057





$

2,198,930


$

590,763


$

(138,488)


$

(7,009)


$

2,644,196






































Property, plant and equipment, net

$

2,934,785


$

927,767


$

40,931


$

-


$

3,903,483




















Long-term debt:

















Current portion

$

127


$

190


$

966


$

-


$

1,283



Non-current portion


880,486



743



647,286



-



1,528,515




Total

$

880,613


$

933


$

648,252


$

-


$

1,529,798




















Preferred shares

$

-


$

-


$

826


$

-


$

826





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 September 30, 2012 and December 31, 2011.














September 30,


December 31,




2012


2011












Cash and cash equivalents


$

589,284


$

563,275


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









Government-backed securities (3)




180,578



218,829



Certificates of deposit




-



27,444







180,578



246,273


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









Government-backed securities (3)




10,171



45,138












Total cash and cash equivalents and investments


$

780,033


$

854,686



(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 September 30, 2012, maturities range between 17 and 18 months.







Telephone and Data Systems, Inc.


Consolidated Statement of Cash Flows


Nine Months Ended September 30,


(Unaudited, dollars in thousands)







2012


2011


Cash flows from operating activities








Net income

$

163,663


$

252,255




Add (deduct) adjustments to reconcile net income to net










cash flows from operating activities











Depreciation, amortization and accretion


592,162



573,897






Bad debts expense


56,597



49,101






Stock-based compensation expense


31,724



27,792






Deferred income taxes, net


52,169



160,436






Equity in earnings of unconsolidated entities


(73,796)



(64,031)






Distributions from unconsolidated entities


45,558



52,385






Loss on impairment of assets


515



-






(Gain) loss on asset disposals and exchanges, net


12,607



(4,970)






(Gain) loss on investment


3,728



(26,103)






Noncash interest expense


2,555



17,973






Other operating activities


1,650



1,630




Changes in assets and liabilities from operations











Accounts receivable


(69,478)



(69,690)






Inventory


(70,918)



(36,387)






Accounts payable


(37,728)



37,369






Customer deposits and deferred revenues


28,323



31,191






Accrued taxes


107,502



2,011






Accrued interest


9,488



10,519






Other assets and liabilities


(95,785)



(76,177)








760,536



939,201













Cash flows from investing activities








Cash used for additions to property, plant and equipment


(730,897)



(601,760)



Cash paid for acquisitions and licenses


(97,523)



(105,184)



Cash received from divestitures


50,182



-



Cash paid for investments


(45,000)



(101,000)



Cash received for investments


143,444



268,686



Other investing activities


(13,121)



(3,703)








(692,915)



(542,961)













Cash flows from financing activities








Repayment of short-term debt