TELEPHONE & DATA SYSTEMS INC /DE/ - FORM 8-K - EX-99.1

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8-K - 8-K - TELEPHONE & DATA SYSTEMS INC /DE/	form8-k.htm
EX-99.2 - EX-99.2 - TELEPHONE & DATA SYSTEMS INC /DE/	exhibit992.htm

Exhibit 99.1

NEWS RELEASE

As previously announced, TDS will hold a teleconference Feb. 24, 2011 at 9:30 a.m. CST. Listen to the live call online via the Conference Calls page of www.teldta.com.

Contact:	Jane W. McCahon, Vice President, Corporate Relations (312) 592-5379, jane.mccahon@teldta.com

	Julie D. Mathews, Manager, Investor Relations (312) 592-5341, julie.mathews@teldta.com

FOR RELEASE: IMMEDIATE

TDS Reports FOURTH quarter results

provides financial guidance for 2011

Note: Comparisons are year over year unless otherwise noted.

Fourth Quarter Highlights

Enterprise/TDS Corporate

§ Operating revenues were $1.3 billion.

§ Repurchased 610,277 special common shares for $17.5 million; $179 million remaining on current authorization.

Wireless/U.S. Cellular

§ Service revenues were $992 million.

§ Retail service ARPU (average revenue per unit) increased to $47.41 from $47.07.

§ Net retail customer losses were 10,000 postpaid and 11,000 prepaid.

§ Retail postpaid churn improved to 1.5 percent from 1.6 percent; postpaid customers comprised 95 percent of retail customers.

§ 5 percent increase in cell sites to 7,645.

§ Nearly 1.2 million customers signed-up for Belief Plans.

Wireline/TDS Telecom

§ 9 percent increase in ILEC high-speed data customers.

§ 23 percent increase in ILEC data revenues, representing 21 percent of ILEC revenues.

§ ILEC equivalent access lines remained stable at 767,200, primarily due to a loss of physical access lines partially offset by growth in high-speed data customers.

§ managedIP stations (ILEC and CLEC) grew to 27,400 from 13,900.

CHICAGO – Feb. 24, 2011 – Telephone and Data Systems, Inc. [NYSE:TDS, TDS.S] reported operating revenues of $1,265.8 million for the fourth quarter of 2010, versus $1,261.9 million in the comparable period one year ago. Net income attributable to TDS was $14.5 million, or $0.14 earnings per diluted share. In the fourth quarter of 2009, net income attributable to TDS was $11.7 million, or $0.11 diluted earnings per share.

For the twelve months ended Dec. 31, 2010, TDS reported operating revenues of $4,986.8 million, versus $5,019.9 million in 2009. Net income attributable to TDS for 2010 was $143.8 million, or $1.36 per diluted share. In 2009, net income attributable to TDS was $188.9 million, or $1.72 diluted earnings per share. Fourth quarter and full year 2009 results were impacted by a $14.0 million (pre-tax), or $0.07 diluted loss per share, charge for impairment of licenses.

“Both U.S. Cellular and TDS Telecom faced a cautious economy and intense competition in 2010,” said LeRoy T. Carlson, Jr., TDS president and CEO. “We made progress on our underlying strategies and improved certain key metrics, and we’re focused on growing and improving our competitive position.”

“TDS Telecom had a good year in 2010, increasing revenue and improving operating margins, despite physical access line losses. Data revenue growth was strong, as we added DSL customers, and more customers migrated to higher data speeds. On the commercial side, the company significantly expanded availability of its managedIP service and nearly doubled the number of stations. TDS Telecom is also now offering hosted and managed service solutions, as part of its strategy to offer a diverse range of commercial services that complement its core offerings.

“U.S. Cellular’s launch of The Belief Project in October was an important step in the company’s customer satisfaction strategy. Nearly 1.2 million new and existing customers had chosen our Belief Plans by year end. Two important measures—average revenue per customer and customer loyalty—improved in 2010. Customer additions, however, did not meet expectations, and the impact of promotions and smartphone subsidies, as well as spending related to enablement initiatives, reduced 2010 profitability.

“Our businesses are making significant strides to compete effectively, and TDS stands behind them with a strong financial foundation that provides support and flexibility for future growth.”

TDS common and special common repurchase summary

Repurchase Period	Number of Shares	Cost (in millions)
Repurchase Period	Number of Shares	Cost (in millions)
2010 (fourth quarter)	610,277	$	17.5
2010 (third quarter)	705,000	$	19.5
2010 (second quarter)	568,297	$	16.3
2010 (first quarter)	510,902	$	14.8
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	14,631,039	$	444.3

Fourth Quarter Treasury Activities

TDS issued $225 million in 49-year debt at 6.875 percent and in turn redeemed $217.5 million of 7.6 percent debt. Additionally, TDS and U.S. Cellular entered into new revolving credit facilities, for $400 million and $300 million respectively, that are due to expire in Dec. 2015.

Guidance for year ending Dec. 31, 2011

This guidance represents the views of management as of Feb. 24, 2011 and should not be assumed to be accurate 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.

U.S. Cellular		2011 Estimated Results	2010 Actual Results
U.S. Cellular		2011 Estimated Results	2010 Actual Results
	Service revenues	$4,000 - $4,100 million	$3,913.0 million
	Adjusted OIBDA (1) (3)	$775 - $875 million	$783.1 million
	Operating income (3)	$185 - $285 million	$195.4 million
	Depreciation, amortization and accretion expenses, and losses on asset disposals and impairment of assets (2)	Approx. $590 million	$587.8 million
	Capital expenditures (3)	Approx. $650 million	$583.1 million

TDS Telecom ILEC and CLEC operations:
	Operating revenues	$780 - $810 million	$795.8 million
	Adjusted OIBDA (1)	$260 - $290 million	$275.0 million
	Operating income	$75 - $105 million	$99.8 million
	Depreciation, amortization and accretion expenses, and losses on asset disposals and impairment of assets (2)	Approx. $185 million	$175.2 million
	Capital expenditures (4)	$175 - $200 million	$157.3 million

(1) Adjusted OIBDA is defined as operating income excluding the effects of: depreciation, amortization and accretion (OIBDA); the net gain or loss on asset disposals (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.

(2) 2010 Actual Results include losses on asset disposals and no losses on impairment of assets. The 2011 Estimated Results include only the estimate for Depreciation, amortization and accretion expenses and losses on disposals of assets, and do not include any estimate for losses on impairment of assets (since these cannot be predicted).

(3) This guidance is based on U.S. Cellular’s current plans. New developments or changing competitive conditions in the wireless industry, such as the rate of deployment of 4G Long-term Evolution (“LTE”) technology by other carriers, could affect U.S. Cellular’s LTE deployment plans and, as a result, its capital expenditures and operating expenses.

(4) TDS Telecom will fund its share for projects approved under the American Recovery and Reinvestment Act of 2009 to increase broadband access in unserved areas. Under the Recovery Act, TDS Telecom will receive $105.1 million in federal grants and will provide $30.9 million of its own funds to complete 44 projects over the next 24 to 36 months.

Conference call information

TDS will hold a conference call on Feb. 24, 2011 at 9:30 a.m. CST.

§ Listen to the live call online at http://www.videonewswire.com/event.asp?id=76812 or on the Conference Calls page of www.teldta.com.

§ Listen to the live call by phone at 877/407-8029 (US/Canada), no pass code required.

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 7.2 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 had 12,400 employees as of Dec. 31, 2010. For more information about TDS, visit www.teldta.com.

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		12/31/2010			9/30/2010			6/30/2010			3/31/2010			12/31/2009
Total population
	Consolidated markets (1)		90,468,000			90,468,000			90,468,000			90,468,000			89,712,000
	Consolidated operating markets (1)		46,546,000			46,546,000			46,546,000			46,546,000			46,306,000
Market penetration at end of period
	Consolidated markets (2)		6.7	%		6.7	%		6.8	%		6.8	%		6.8	%
	Consolidated operating markets (2)		13.0	%		13.1	%		13.2	%		13.2	%		13.3	%
All customers
	Total at end of period		6,072,000			6,103,000			6,144,000			6,147,000			6,141,000
	Gross additions		327,000			338,000			349,000			358,000			399,000
	Net additions (losses)		(31,000	)		(41,000	)		(3,000	)		6,000			10,000
	Smartphones sold as a percent of total devices sold (3)		39.6	%		23.6	%		15.8	%		16.6	%		14.7	%
Retail customers
	Total at end of period		5,729,000			5,750,000			5,775,000			5,768,000			5,744,000
	Smartphone penetration (3) (4)		16.6	%		12.0	%		10.1	%		8.9	%		7.5	%
	Gross additions		292,000			301,000			307,000			305,000			354,000
	Net retail additions (losses) (5)		(21,000	)		(25,000	)		7,000			24,000			39,000
	Net postpaid additions (losses)		(10,000	)		(25,000	)		(22,000	)		(9,000	)		26,000
	Net prepaid additions (losses)		(11,000	)		—			29,000			33,000			13,000
Service revenue components (000s)
	Retail service	$	864,905		$	865,766		$	863,836		$	865,039		$	866,866
	Inbound roaming		67,545			72,901			60,902			51,942			61,728
	Other		59,464			44,836			47,838			48,027			56,814
Total service revenues (000s)		$	991,914		$	983,503		$	972,576		$	965,008		$	985,408
	Divided by average customers (000s)		6,081			6,124			6,151			6,137			6,139
	Divided by three months in each quarter		3			3			3			3			3
	Total average monthly revenue per unit (6)	$	54.37		$	53.53		$	52.71		$	52.41		$	53.51
Components of average monthly revenue per customer by revenue type
	Retail service (6)	$	47.41		$	47.12		$	46.81		$	46.98		$	47.07
	Inbound roaming (6)	$	3.70		$	3.97		$	3.30		$	2.82		$	3.35
	Other (6)	$	3.26		$	2.44		$	2.60		$	2.61		$	3.09

Retail postpaid churn rate (7)			1.5	%		1.6	%		1.4	%		1.4	%		1.6	%
Capital expenditures (000s)		$	203,400		$	124,700		$	133,500		$	121,500		$	189,000
Cell sites in service			7,645			7,524			7,416			7,310			7,279

(1) Used only to calculate market penetration of consolidated markets and consolidated operating markets, respectively, which is calculated by dividing customers by the total market population (without duplication of population in overlapping markets).

(2) 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 a Blackberry, Windows Mobile, or Android operating system.

(4) Smartphone penetration is calculated by dividing postpaid customers on smartphone service plans by total postpaid customers.

(5) Calculated by adding net postpaid additions (losses) and net prepaid additions (losses).

(6) Calculated by dividing the components of service revenues by the average customers and number of months in the quarter.

(7) Represents the percentage of the retail postpaid customer base that disconnects service each month. This amount represents the average retail postpaid churn rate for each respective quarterly period.

TELEPHONE AND DATA SYSTEMS, INC. SUMMARY OPERATING DATA (UNAUDITED)


Quarter Ended		12/31/2010		9/30/2010		6/30/2010		3/31/2010		12/31/2009
TDS Telecom
	ILEC:
	Equivalent access lines (1)		767,200		773,800		779,200		778,700		775,900
	Physical access lines (2)		507,700		517,000		525,000		530,400		536,300
	High-speed data customers (3)		227,700		225,400		223,200		217,400		208,300
	Long-distance customers		370,100		370,800		369,100		365,600		362,800
	managedIP stations (4)		3,600		3,100		2,700		2,300		1,900
	Capital expenditures (000s)	$	55,700	$	33,000	$	28,200	$	20,200	$	26,900
	CLEC:
	Equivalent access lines (1)		335,400		338,700		343,100		349,300		355,900
	High-speed data customers (3)		33,100		33,900		35,000		36,000		36,900
	managedIP stations (4)		23,800		20,300		17,000		14,300		12,000
	Capital expenditures (000s)	$	6,200	$	5,500	$	5,400	$	3,200	$	6,800

(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 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 packet 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)
				2010			2009			Amount			Percent
Operating revenues
	U.S. Cellular			$	1,063,150		$	1,060,098		$	3,052		—
	TDS Telecom				199,101			198,048			1,053		1	%
	All Other (1)				3,508			3,764			(256	)	(7	%)
					1,265,759			1,261,910			3,849		—
Operating expenses
	U.S. Cellular
		Expenses excluding depreciation, amortization and accretion			921,778			887,572			34,206		4	%
		Depreciation, amortization and accretion			144,649			146,807			(2,158	)	(1	%)
		Loss on asset disposals, net			2,310			7,528			(5,218	)	(69	%)
		Loss on impairment of intangible assets			—			14,000			(14,000	)	N/M
					1,068,737			1,055,907			12,830		1	%
	TDS Telecom
		Expenses excluding depreciation, amortization and accretion			129,981			129,568			413		—
		Depreciation, amortization and accretion			43,837			42,044			1,793		4	%
		Loss on asset disposals, net			464			649			(185	)	(29	%)
					174,282			172,261			2,021		1	%
	All Other (1)
		Expenses excluding depreciation and amortization			1,677			367			1,310		>100	%
		Depreciation and amortization			2,643			2,757			(114	)	(4	%)
		(Gain) Loss on asset disposals, net			(34	)		119			(153	)	>(100	%)
					4,286			3,243			1,043		32	%

			Total operating expenses		1,247,305			1,231,411			15,894		1	%
Operating income (loss)
	U.S. Cellular				(5,587	)		4,191			(9,778	)	>(100	%)
	TDS Telecom				24,819			25,787			(968	)	(4	%)
	All Other (1)				(778	)		521			(1,299	)	>(100	%)
					18,454			30,499			(12,045	)	(39	%)
Investment and other income (expense)
	Equity in earnings of unconsolidated entities				23,027			23,698			(671	)	(3	%)
	Interest and dividend income				2,608			2,686			(78	)	(3	%)
	Interest expense				(28,700	)		(32,311	)		3,611		11	%
	Other, net				468			496			(28	)	(6	%)
		Total investment and other income (expense)			(2,597	)		(5,431	)		2,834		52	%
Income before income taxes					15,857			25,068			(9,211	)	(37	%)
	Income tax expense (benefit)				(5,884	)		8,388			(14,272	)	>(100	%)
Net income					21,741			16,680			5,061		30	%
	Less: Net (income) attributable to noncontrolling interests, net of tax				(7,211	)		(4,951	)		(2,260	)	(46	%)
Net income attributable to TDS shareholders					14,530			11,729			2,801		24	%
	Preferred dividend requirement				(12	)		(13	)		1		8	%
Net income available to common				$	14,518		$	11,716		$	2,802		24	%

Basic weighted average shares outstanding					104,070			106,166			(2,096	)	(2	%)
Basic earnings per share attributable to TDS shareholders				$	0.14		$	0.11		$	0.03		27	%
Diluted weighted average shares outstanding					104,604			106,489			(1,885	)	(2	%)
Diluted earnings per share attributable to TDS shareholders				$	0.14		$	0.11		$	0.03		27	%

(1) Consists of Suttle Straus printing and distribution operations, corporate operations and intercompany eliminations.

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)
				2010			2009			Amount			Percent
Operating revenues
	U.S. Cellular			$	4,177,681		$	4,213,880		$	(36,199	)	(1	%)
	TDS Telecom				795,842			789,852			5,990		1	%
	All Other(1)				13,306			16,211			(2,905	)	(18	%)
					4,986,829			5,019,943			(33,114	)	(1	%)
Operating expenses
	U.S. Cellular
		Expenses excluding depreciation, amortization and accretion			3,394,536			3,293,251			101,285		3	%
		Depreciation, amortization and accretion			577,054			569,514			7,540		1	%
		Loss on asset disposals, net			10,717			16,169			(5,452	)	(34	%)
		Loss on impairment of intangible assets			—			14,000			(14,000	)	N/M
					3,982,307			3,892,934			89,373		2	%
	TDS Telecom
		Expenses excluding depreciation, amortization and accretion			520,823			526,650			(5,827	)	(1	%)
		Depreciation, amortization and accretion			174,054			167,316			6,738		4	%
		Loss on asset disposals, net			1,131			2,401			(1,270	)	(53	%)
					696,008			696,367			(359	)	—
	All Other (1)
		Expenses excluding depreciation and amortization			7,967			15,193			(7,226	)	(48	%)
		Depreciation and amortization			10,640			11,996			(1,356	)	(11	%)
		Loss on asset disposals, net			(85	)		188			(273	)	>(100	%)
					18,522			27,377			(8,855	)	(32	)%

			Total operating expenses		4,696,837			4,616,678			80,159		2	%
Operating income (loss)
	U.S. Cellular				195,374			320,946			(125,572	)	(39	%)
	TDS Telecom				99,834			93,485			6,349		7	%
	All Other (1)				(5,216	)		(11,166	)		5,950		53	%
					289,992			403,265			(113,273	)	(28	%)
Investment and other income (expense)
	Equity in earnings of unconsolidated entities				98,074			90,732			7,342		8	%
	Interest and dividend income				10,508			11,121			(613	)	(6	%)
	Interest expense				(115,220	)		(126,209	)		10,989		9	%
	Other, net				(2,089	)		2,000			(4,089	)	>(100	%)
		Total investment and other income (expense)			(8,727	)		(22,356	)		13,629		61	%
Income before income taxes					281,265			380,909			(99,644	)	(26	%)
	Income tax expense				92,283			133,800			(41,517	)	(31	%)
Net income					188,982			247,109			(58,127	)	(24	%)
	Less: Net (income) attributable to noncontrolling interests, net of tax				(45,126	)		(58,144	)		13,018		22	%
Net income attributable to TDS shareholders					143,856			188,965			(45,109	)	(24	%)
	Preferred dividend requirement				(50	)		(51	)		1		2	%
Net income available to common				$	143,806		$	188,914		$	(45,108	)	(24	%)

Basic weighted average shares outstanding					105,111			109,339			(4,228	)	(4	%)
Basic earnings per share attributable to TDS shareholders				$	1.37		$	1.73		$	(0.36	)	(21	%)
Diluted weighted average shares outstanding					105,506			109,577			(4,071	)	(4	%)
Diluted earnings per share attributable to TDS shareholders				$	1.36		$	1.72		$	(0.36	)	(21	%)

(1) Consists of Suttle-Straus printing and distribution operations, corporate operations and intercompany eliminations.

N/M – Percentage change not meaningful

TELEPHONE AND DATA SYSTEMS, INC. CONSOLIDATED BALANCE SHEET HIGHLIGHTS (Unaudited, dollars in thousands)



ASSETS


		December 31, 2010		December 31, 2009
		December 31, 2010		December 31, 2009
Current assets
	Cash and cash equivalents	$	368,134	$	670,992
	Short-term investments		402,882		113,275
	Accounts receivable from customers and other		512,946		515,443
	Inventory		116,330		156,987
	Net deferred income tax asset		37,079		29,874
	Prepaid expenses		76,935		94,336
	Prepaid taxes		64,386		3,718
	Other current assets		17,384		63,046
			1,596,076		1,647,671

Investments
	Licenses		1,460,126		1,443,025
	Goodwill		728,455		707,840
	Other intangible assets		30,810		26,589
	Investments in unconsolidated entities		197,922		203,799
	Long-term investments		102,185		—
	Other investments		8,988		9,785
			2,528,486		2,391,038

Property, plant and equipment, net
	U.S. Cellular		2,615,072		2,601,338
	TDS Telecom		909,951		880,378
	Other		33,311		26,129
			3,558,334		3,507,845

Other assets and deferred charges			79,623		65,759

Total assets		$	7,762,519	$	7,612,313

TELEPHONE AND DATA SYSTEMS, INC. CONSOLIDATED BALANCE SHEET HIGHLIGHTS (Unaudited, dollars in thousands)



LIABILITIES AND EQUITY


				December 31, 2010			December 31, 2009
				December 31, 2010			December 31, 2009
Current liabilities
		Current portion of long-term debt		$	1,711		$	2,509
		Accounts payable			344,355			347,348
		Customer deposits and deferred revenues			171,781			164,451
		Accrued interest			2,718			12,227
		Accrued taxes			46,110			62,568
		Accrued compensation			99,020			93,524
		Other current liabilities			144,938			117,081
					810,633			799,708

Deferred liabilities and credits
		Net deferred income tax liability			585,468			517,762
		Other deferred liabilities and credits			404,892			373,862

Long-term debt					1,499,862			1,492,908

Noncontrolling interests with redemption features					855			727

Equity
	TDS shareholders’ equity
		Series A Common, Special Common and Common Shares, par value $.01			1,270			1,270
		Capital in excess of par value			2,107,929			2,088,807
		Special Common and Common Treasury shares, at cost			(738,695	)		(681,649	)
		Accumulated other comprehensive loss			(3,208	)		(2,710	)
		Retained earnings			2,446,626			2,358,580
			Total TDS shareholders’ equity		3,813,922			3,764,298

Preferred shares					830			832
Noncontrolling interests					646,057			662,216

		Total equity			4,460,809			4,427,346

Total liabilities and equity				$	7,762,519		$	7,612,313

BALANCE SHEET HIGHLIGHTS December 31, 2010 (Unaudited, dollars in thousands)




			U.S. Cellular		TDS Telecom		TDS Corporate & Other			Intercompany Eliminations			TDS Consolidated
			U.S. Cellular		TDS Telecom		TDS Corporate & Other			Intercompany Eliminations			TDS Consolidated
Cash and cash equivalents			$	294,426	$	7,285	$	66,423		$	―		$	368,134
Affiliated cash investments				―		341,797		―			(341,797	)		―
Short-term investments				146,586		97,020		159,276			―			402,882
			$	441,012	$	446,102	$	225,699		$	(341,797	)	$	771,016

Licenses, goodwill and other intangible assets			$	1,947,597	$	464,854	$	(193,059	)	$	―		$	2,219,392
Investment in unconsolidated entities				160,847		3,806		41,028			(7,759	)		197,922
Long-term and other investments				50,103		1,541		59,528			―			111,172
			$	2,158,547	$	470,201	$	(92,503	)	$	(7,759	)	$	2,528,486


Property, plant and equipment, net			$	2,615,072	$	909,951	$	33,311		$	―		$	3,558,334

Long-term debt:
	Current portion		$	101	$	330	$	1,280		$	―		$	1,711
	Non-current portion			867,941		1,953		629,968			―			1,499,862
		Total	$	868,042	$	2,283	$	631,248		$	―		$	1,501,573

Preferred shares			$	―	$	―	$	830		$	―		$	830

Telephone and Data Systems, Inc.

Schedule of Cash and Cash Equivalents and Investments

(Unaudited, dollars in thousands)

In an effort to improve investment returns, during 2010, TDS elected to use a portion of its cash balance to directly purchase U.S. treasury securities and securities insured by the Federal Deposit Insurance Corporation (“FDIC”). The maturity dates of such direct investments were staggered in order to maintain cash balances and liquidity at targeted levels. TDS also continues to invest in certificates of deposit that are insured by the FDIC. The following table presents TDS’ cash and cash equivalents; and investments in government-backed securities and certificates of deposit at December 31, 2010 and December 31, 2009.

		December 31, 2010		December 31, 2009
		December 31, 2010		December 31, 2009

Cash and cash equivalents		$	368,134	$	670,992
Amounts included in short-term investments (1) (2)
	Government-backed securities (3)		305,612		—
	Certificates of deposit (4)		97,270		113,275
		$	402,882	$	113,275

Amounts included in long-term investments (1) (5)
	Government-backed securities (3)	$	102,185	$	—

(1) Designated as held-to-maturity investments and are recorded at amortized cost on 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 that are guaranteed under the FDIC’s Temporary Liquidity Guarantee Program.

(4) TDS’ investments in certificates of deposits are insured by the FDIC.

(5) Maturities range between 14 and 24 months from the balance sheet date.

TDS TELECOM HIGHLIGHTS Three Months Ended December 31, (Unaudited, dollars in thousands)



			2010			2009			Increase/(Decrease)
			2010			2009			Amount			Percent
Local Telephone Operations
	Operating revenues
		Voice	$	43,880		$	45,304		$	(1,424	)	(3	%)
		Data		33,265			26,965			6,300		23	%
		Network access		68,039			69,364			(1,325	)	(2	%)
		Miscellaneous		10,410			9,840			570		6	%
				155,594			151,473			4,121		3	%
	Operating expenses
		Cost of services and products		48,684			47,588			1,096		2	%
		Selling, general and administrative expenses		43,921			42,996			925		2	%
		Depreciation, amortization and accretion		37,942			35,873			2,069		6	%
		Loss on asset disposals		425			456			(31	)	(7	%)
				130,972			126,913			4,059		3	%

	Operating income		$	24,622		$	24,560		$	62		—

Competitive Local Exchange Carrier Operations
		Revenues	$	45,878		$	48,940		$	(3,062	)	(6	%)

		Expenses excluding depreciation, amortization and accretion		39,747			41,349			(1,602	)	(4	%)
		Depreciation, amortization and accretion		5,895			6,171			(276	)	(4	%)
		Loss on asset disposals		39			193			(154	)	(80	%)
				45,681			47,713			(2,032	)	(4	%)

	Operating income		$	197		$	1,227		$	(1,030	)	(84	%)

Intercompany revenues			$	(2,371	)	$	(2,365	)	$	(6	)	—
Intercompany expenses				(2,371	)		(2,365	)		(6	)	—
				―			―			―		—

Total TDS Telecom operating income			$	24,819		$	25,787		$	(968	)	(4	%)

TDS TELECOM HIGHLIGHTS Twelve Months Ended December 31, (Unaudited, dollars in thousands)



			2010			2009			Increase/(Decrease)
			2010			2009			Amount			Percent
Local Telephone Operations
	Operating revenues
		Voice	$	179,539		$	187,223		$	(7,684	)	(4	%)
		Data		126,029			103,682			22,347		22	%
		Network access		271,964			271,276			688		―
		Miscellaneous		39,862			37,346			2,516		7	%
				617,394			599,527			17,867		3	%
	Operating expenses
		Cost of services and products		196,298			194,030			2,268		1	%
		Selling, general and administrative expenses		173,020			170,505			2,515		1	%
		Depreciation, amortization and accretion		149,375			142,913			6,462		5	%
		Loss on asset disposals		769			1,949			(1,180	)	(61	%)
				519,462			509,397			10,065		2	%

	Operating income		$	97,932		$	90,130		$	7,802		9	%

Competitive Local Exchange Carrier Operations
		Revenues	$	187,984		$	199,375		$	(11,391	)	(6	%)

		Expenses excluding depreciation, amortization and accretion		161,041			171,165			(10,124	)	(6	%)
		Depreciation, amortization and accretion		24,679			24,403			276		1	%
		Loss on asset disposals		362			452			(90	)	(20	%)
				186,082			196,020			(9,938	)	(5	%)

	Operating income		$	1,902		$	3,355		$	(1,453	)	(43	%)

Intercompany revenues			$	(9,536	)	$	(9,050	)	$	(486	)	(5	%)
Intercompany expenses				(9,536	)		(9,050	)		(486	)	(5	%)
				―			―			―		―

Total TDS Telecom operating income			$	99,834		$	93,485		$	6,349		7	%

TELEPHONE AND DATA SYSTEMS, INC. CONSOLIDATED STATEMENT OF CASH FLOWS Twelve Months Ended December 31, (Unaudited, dollars in thousands)



				2010			2009
Cash flows from operating activities
	Net income			$	188,982		$	247,109
		Add (deduct) adjustments to reconcile net income to net cash flows from operating activities
			Depreciation, amortization and accretion		761,748			748,826
			Bad debts expense		83,098			115,989
			Stock-based compensation expense		35,128			32,486
			Deferred income taxes, net		74,074			34,275
			Equity in earnings of unconsolidated entities		(98,074	)		(90,732	)
			Distributions from unconsolidated entities		100,845			91,587
			Loss on impairment of intangible assets		—			14,000
			Loss on asset disposals, net		11,763			18,758
			Noncash interest expense		9,733			4,412
			Excess tax benefit from stock awards		(117	)		(25	)
			Other operating activities		500			(46	)
		Changes in assets and liabilities
			Accounts receivable		(79,182	)		(115,087	)
			Inventory		40,657			(34,566	)
			Accounts payable		(4,016	)		29,646
			Customer deposits and deferred revenues		6,478			(8,763	)
			Accrued taxes		(95,872	)		61,630
			Accrued interest		(9,270	)		(2,009	)
			Other assets and liabilities		95,470			(44,896	)
					1,121,945			1,102,594

Cash flows from investing activities
	Additions to property, plant and equipment				(755,032	)		(671,165	)
	Cash paid for acquisitions and licenses				(81,691	)		(29,276	)
	Cash received from divestitures				—			50
	Cash paid for investments				(493,750	)		(109,230	)
	Cash received from investments				106,255			23,660
	Other investing activities				370			4,515
					(1,223,848	)		(781,446	)

Cash flows from financing activities
	Issuance of long-tem debt				225,648			—
	Repayment of long-term debt				(220,249	)		(143,078	)
	TDS Common Shares and Special Common Shares reissued for benefit plans, net of tax payments				309			819
	U.S. Cellular Common Shares reissued for benefit plans, net of tax payments				509			(82	)
	Excess tax benefit from stock awards				117			25
	Repurchase of TDS Common and Special Common Shares				(68,053	)		(178,536	)
	Repurchase of U.S. Cellular Common Shares				(52,827	)		(33,585	)
	Dividends paid				(47,202	)		(46,798	)
	Payment of debt issuance costs				(12,533	)		(10,079	)
	Distributions to noncontrolling interests				(19,630	)		(17,533	)
	Payments to acquire additional interest in subsidiaries				(9,248	)		(285	)
	Other financing activities				2,204			1,667
					(200,955	)		(427,465	)

Net decrease in cash and cash equivalents					(302,858	)		(106,317	)
Cash and cash equivalents
	Beginning of period				670,992			777,309
	End of period			$	368,134		$	670,992

Telephone and Data Systems, Inc. Financial Measures and Reconciliation (Unaudited, dollars in thousands)

Three Months Ended December 31, 2010					U.S. Cellular			TDS Telecom (1)			All Other (2)			Consolidated 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)					(5,587	)		24,819			(778	)		18,454
	Add (Deduct):
		Depreciation, amortization and accretion				144,649			43,837			2,643			191,129
		Loss on impairment of intangible assets				—			—			—			—
		(Gain) Loss on asset disposals				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	%


Three Months Ended December 31, 2009					U.S. Cellular			TDS Telecom (1)			All Other (2)			Consolidated Total
	Operating revenues				$	1,060,098		$	198,048		$	3,764		$	1,261,910
	Deduct:
		U.S. Cellular equipment sales revenue				74,690
			Service revenues			985,408

	Operating income (loss)					4,191			25,787			521			30,499
	Add:
		Depreciation, amortization and accretion				146,807			42,044			2,757			191,608
		Loss on impairment of intangible assets				14,000			—			—			14,000
		Loss on asset disposals				7,528			649			119			8,296
			Adjusted OIBDA (3)		$	172,526		$	68,480		$	3,397		$	244,403

			Adjusted OIBDA margin (4)			17.5	%		34.6	%

				TDS Consolidated
Three Months Ended December 31,					2010			2009
	Cash flows from operating activities				$	357,165		$	302,643
	Deduct:
		Capital expenditures				268,894			220,571
			Free cash flow (5)		$	88,271		$	82,072

Telephone and Data Systems, Inc. Financial Measures and Reconciliation (Unaudited, dollars in thousands)

Twelve Months Ended December 31, 2010					U.S. Cellular			TDS Telecom (1)			All Other (2)			Consolidated Total

	Operating revenues				$	4,177,681		$	795,842		$	13,306		$	4,986,829
	Deduct:
		U.S. Cellular equipment sales revenue				264,680
			Service revenues			3,913,001

	Operating income (loss)					195,374			99,834			(5,216	)		289,992
	Add (Deduct):
		Depreciation, amortization and accretion				577,054			174,054			10,640			761,748
		Loss on impairment of intangible assets				—			—			—			—
		(Gain) Loss on asset disposals				10,717			1,131			(85	)		11,763
			Adjusted OIBDA (3)		$	783,145		$	275,019		$	5,339		$	1,063,503

			Adjusted OIBDA margin (4)			20.0	%		34.6	%


Twelve Months Ended December 31, 2009					U.S. Cellular			TDS Telecom (1)			All Other (2)			Consolidated Total
	Operating revenues				$	4,213,880		$	789,852		$	16,211		$	5,019,943
	Deduct:
		U.S. Cellular equipment sales revenue				286,752
			Service revenues			3,927,128

	Operating income (loss)					320,946			93,485			(11,166	)		403,265
	Add:
		Depreciation, amortization and accretion				569,514			167,316			11,996			748,826
		Loss on impairment of intangible assets				14,000			—			—			14,000
		Loss on asset disposals				16,169			2,401			188			18,758
			Adjusted OIBDA (3)		$	920,629		$	263,202		$	1,018		$	1,184,849

			Adjusted OIBDA margin (4)			23.4	%		33.3	%

				TDS Consolidated
Twelve Months Ended December 31,					2010			2009
	Cash flows from operating activities				$	1,121,945		$	1,102,594
	Deduct:
		Capital expenditures				755,332			671,165
			Free cash flow (5)		$	366,913		$	431,429

(1) Includes ILEC and CLEC intercompany eliminations.

(2) Consists of a non-reportable segment (Suttle-Straus), corporate operations and, intercompany eliminations between U.S. Cellular, TDS Telecom and corporate investments. Amounts in this column are presented only to reconcile to consolidated totals and may not otherwise be meaningful.

(3) 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. Adjusted OIBDA is defined as operating income excluding the effects of: depreciation, amortization and accretion (OIBDA); the net gain or loss on asset disposals (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 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.

(4) Adjusted OIBDA margin is defined as adjusted OIBDA divided by service revenues (U.S. Cellular) and operating revenues (TDS Telecom). Equipment revenues are excluded from the denominator of the U.S. Cellular calculation since equipment is generally sold at a net negative margin, and the net equipment subsidy is effectively a cost for purposes of assessing business results and is already reflected in adjusted OIBDA. TDS believes that this calculation method is consistent with the method used by certain investors to assess U.S. Cellular’s business results. Adjusted OIBDA margin may also be commonly referred to by management as operating cash flow margin.

(5) Free cash flow is defined as cash flows from operating activities minus capital expenditures. Free cash flow is a non-GAAP financial measure. TDS believes that free cash flow as reported by TDS is useful to investors and other users of its financial information in evaluating the amount of cash generated by business operations, after consideration of capital expenditures.

Attached files

TELEPHONE & DATA SYSTEMS INC /DE/ Reports

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