UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2011
OR
¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 001-14157
TELEPHONE AND DATA SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
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Delaware (State or other jurisdiction of incorporation or organization) |
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36-2669023 (I.R.S. Employer Identification No.) |
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30 North LaSalle Street, Chicago, Illinois 60602 (Address of principal executive offices) (Zip Code) | ||
Registrant’s telephone number, including area code: (312) 630-1900
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b‑2 of the Exchange Act.
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Large accelerated filer x |
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Accelerated filer ¨ |
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Non-accelerated filer ¨ (Do not check if a smaller reporting company) |
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Smaller reporting company ¨ |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
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Class |
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Outstanding at March 31, 2011 |
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Common Shares, $.01 par value |
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49,916,535 Shares |
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Special Common Shares, $.01 par value |
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47,174,963 Shares |
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Series A Common Shares, $.01 par value |
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6,517,980 Shares |
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Telephone and Data Systems, Inc. | ||||
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Quarterly Report on Form 10-Q For the Quarterly Period Ended March 31, 2011 | ||||
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Index | ||||
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Part I. Financial Information Item 1. Financial Statements | ||||||||||
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Telephone and Data Systems, Inc. | ||||||||||
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Consolidated Statement of Operations (Unaudited) | ||||||||||
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Three Months Ended March 31, | |||||||||
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(Dollars and shares in thousands, except per share amounts) |
2011 |
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2010 | |||||||
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Operating revenues |
$ |
1,258,681 |
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$ |
1,222,435 |
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Operating expenses |
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Cost of services and products (excluding Depreciation, amortization and accretion expense reported below) |
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486,746 |
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444,532 |
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Selling, general and administrative |
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491,106 |
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481,087 |
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Depreciation, amortization and accretion |
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192,518 |
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189,389 |
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Loss on asset disposals, net |
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1,143 |
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5,431 |
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Total operating expenses |
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1,171,513 |
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1,120,439 |
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Operating income |
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87,168 |
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101,996 |
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Investment and other income (expense) |
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Equity in earnings of unconsolidated entities |
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19,388 |
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24,903 |
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Interest and dividend income |
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2,624 |
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2,441 |
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Interest expense |
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(28,099 |
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(28,958 |
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Other, net |
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80 |
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(190 |
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Total investment and other income (expense) |
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(6,007 |
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(1,804 |
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Income before income taxes |
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81,161 |
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100,192 |
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Income tax expense |
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28,917 |
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37,923 |
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Net income |
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52,244 |
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62,269 |
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Less: Net income attributable to noncontrolling interests, net of tax |
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(10,622 |
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(13,855 |
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Net income attributable to TDS shareholders |
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41,622 |
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48,414 |
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Preferred dividend requirement |
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(12 |
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(12 |
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Net income available to common shareholders |
$ |
41,610 |
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$ |
48,402 |
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Basic weighted average shares outstanding |
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104,025 |
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105,938 |
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Basic earnings per share attributable to TDS shareholders |
$ |
0.40 |
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$ |
0.46 |
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Diluted weighted average shares outstanding |
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104,554 |
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106,250 |
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Diluted earnings per share attributable to TDS shareholders |
$ |
0.40 |
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$ |
0.45 |
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Dividends per share |
$ |
0.1175 |
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$ |
0.1125 |
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The accompanying notes are an integral part of these consolidated financial statements.
3
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Telephone and Data Systems, Inc. | ||||||||||
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Consolidated Statement of Cash Flows (Unaudited) | ||||||||||
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Three Months Ended March 31, | |||||||||
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(Dollars in thousands) |
2011 |
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2010 | |||||||
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Cash flows from operating activities |
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Net income |
$ |
52,244 |
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$ |
62,269 |
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Add (deduct) adjustments to reconcile net income to net cash flows from operating activities |
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Depreciation, amortization and accretion |
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192,518 |
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189,389 |
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Bad debts expense |
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14,285 |
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20,245 |
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Stock-based compensation expense |
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9,459 |
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7,444 |
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Deferred income taxes, net |
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47,841 |
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(13,874 |
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Equity in earnings of unconsolidated entities |
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(19,388 |
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(24,903 |
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Distributions from unconsolidated entities |
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8,439 |
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7,243 |
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Loss on asset disposals, net |
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1,143 |
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5,431 |
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Other operating activities |
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2,034 |
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948 |
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Changes in assets and liabilities from operations |
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Accounts receivable |
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8,438 |
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9,648 |
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Inventory |
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2,978 |
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(947 |
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Accounts payable |
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(15,134 |
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(40,676 |
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Customer deposits and deferred revenues |
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10,342 |
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784 |
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Accrued taxes |
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17,590 |
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36,498 |
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Accrued interest |
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16,662 |
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9,212 |
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Other assets and liabilities |
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(87,661 |
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(58,051 |
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261,790 |
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210,660 |
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Cash flows from investing activities |
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Additions to property, plant and equipment |
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(127,463 |
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(146,622 |
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Cash paid for acquisitions and licenses |
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— |
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(21,118 |
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Cash paid for investments |
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— |
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(50,000 |
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Cash received for investments |
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122,785 |
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15,561 |
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Transfer of cash to Restricted cash |
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(282,500 |
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— |
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Other investing activities |
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(1,503 |
) |
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439 |
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(288,681 |
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(201,740 |
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Cash flows from financing activities |
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Repayment of long-term debt |
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(402 |
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(697 |
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Issuance of long-term debt |
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300,000 |
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— |
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TDS Common Shares and Special Common Shares reissued for benefit plans, net of tax payments |
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587 |
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463 |
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U.S. Cellular Common Shares reissued for benefit plans, net of tax payments |
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1,305 |
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486 |
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Repurchase of TDS Common and Special Common Shares |
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(11,603 |
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(14,810 |
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Repurchase of U.S. Cellular Common Shares |
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(17,357 |
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(5,186 |
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Dividends paid |
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(12,197 |
) |
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(11,891 |
) | ||
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Payment of debt issuance costs |
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(9,848 |
) |
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— |
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Distributions to noncontrolling interests |
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(686 |
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(2,284 |
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Other financing activities |
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968 |
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(527 |
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250,767 |
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(34,446 |
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Net increase (decrease) in cash and cash equivalents |
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223,876 |
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(25,526 |
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Cash and cash equivalents |
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Beginning of period |
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368,134 |
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670,992 |
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End of period |
$ |
592,010 |
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$ |
645,466 |
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The accompanying notes are an integral part of these consolidated financial statements.
4
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Telephone and Data Systems, Inc. | ||||||||
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Consolidated Balance Sheet — Assets (Unaudited) | ||||||||
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(Dollars in thousands) |
March 31, 2011 |
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December 31, 2010 | |||||
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Current assets |
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Cash and cash equivalents |
$ |
592,010 |
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$ |
368,134 | ||
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Restricted cash - redemption of 7.6% Series A notes |
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282,500 |
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— | ||
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Short-term investments |
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299,518 |
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|
402,882 | ||
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Accounts receivable |
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Due from customers and agents, less allowances of $25,181 and $28,859, respectively |
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346,184 |
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378,976 | |
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Other, less allowances of $5,131 and $6,148, respectively |
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144,082 |
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133,970 | |
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Inventory |
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113,352 |
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|
116,330 | ||
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Net deferred income tax asset |
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37,079 |
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|
37,079 | ||
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Prepaid expenses |
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87,796 |
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|
76,935 | ||
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Prepaid income taxes |
|
21,026 |
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|
64,386 | ||
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Other current assets |
|
15,516 |
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|
17,384 | ||
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1,939,063 |
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|
1,596,076 |
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Investments |
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Licenses |
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1,460,426 |
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|
1,460,126 | ||
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Goodwill |
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728,455 |
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728,455 | ||
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Other intangible assets, net of accumulated amortization of $121,730 and $119,555, respectively |
|
28,611 |
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|
30,810 | ||
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Investments in unconsolidated entities |
|
206,925 |
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|
197,922 | ||
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Long-term investments |
|
81,570 |
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|
102,185 | ||
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Other investments |
|
8,850 |
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|
8,988 | ||
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|
2,514,837 |
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|
2,528,486 |
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Property, plant and equipment |
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In service and under construction |
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9,501,879 |
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|
9,393,385 | ||
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Less: Accumulated depreciation |
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6,004,370 |
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5,835,051 | ||
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3,497,509 |
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3,558,334 |
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Other assets and deferred charges |
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119,892 |
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|
79,623 | |||
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Total assets |
$ |
8,071,301 |
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$ |
7,762,519 | |||
The accompanying notes are an integral part of these consolidated financial statements.
5
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Telephone and Data Systems, Inc. | |||||||||||
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Consolidated Balance Sheet — Liabilities and Equity (Unaudited) | |||||||||||
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(Dollars and shares in thousands) |
March 31, 2011 |
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December 31, 2010 | ||||||||
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Current liabilities |
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Current portion of long-term debt |
$ |
284,166 |
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$ |
1,711 |
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Accounts payable |
|
329,522 |
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|
344,355 |
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Customer deposits and deferred revenues |
|
182,123 |
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|
171,781 |
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Accrued interest |
|
19,322 |
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|
2,718 |
| |||
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Accrued taxes |
|
42,504 |
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|
46,110 |
| |||
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Accrued compensation |
|
67,124 |
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|
99,020 |
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Other current liabilities |
|
101,768 |
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|
144,938 |
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|
1,026,529 |
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|
810,633 |
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Deferred liabilities and credits |
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| ||||
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Net deferred income tax liability |
|
634,544 |
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|
585,468 |
| |||
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Other deferred liabilities and credits |
|
408,378 |
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|
404,892 |
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Long-term debt |
|
1,517,176 |
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|
1,499,862 |
| ||||
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Commitments and contingencies |
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Noncontrolling interests with redemption features |
|
894 |
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|
855 |
| ||||
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Equity |
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TDS shareholders’ equity |
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| |||
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Series A Common, Special Common and Common Shares |
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Authorized 290,000 shares (25,000 Series A Common, 165,000 Special Common and 100,000 Common Shares) |
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| |
|
|
|
|
Issued 127,053 shares (6,518 Series A Common, 63,442 Special Common and 57,093 Common Shares) and 127,045 shares (6,510 Series A Common, 63,442 Special Common and 57,093 Common Shares), respectively |
|
|
|
|
|
|
| |
|
|
|
|
Outstanding 103,610 shares (6,518 Series A Common, 47,175 Special Common and 49,917 Common Shares) and 103,936 shares (6,510 Series A Common, 47,531 Special Common and 49,895 Common Shares), respectively |
|
|
|
|
|
|
| |
|
|
|
|
Par Value ($.01 per share) ($65 Series A Common, $634 Special Common and $571 Common Shares) |
|
1,270 |
|
|
|
1,270 |
| |
|
|
|
Capital in excess of par value |
|
2,113,848 |
|
|
|
2,107,929 |
| ||
|
|
|
Special Common and Common Treasury shares at cost: |
|
|
|
|
|
|
| ||
|
|
|
|
Treasury shares 23,443 (16,267 Special Common and 7,176 Common Shares) and 23,109 (15,911 Special Common and 7,198 Common Shares), respectively |
|
(748,063 |
) |
|
|
(738,695 |
) | |
|
|
|
Accumulated other comprehensive loss |
|
(3,159 |
) |
|
|
(3,208 |
) | ||
|
|
|
Retained earnings |
|
2,475,301 |
|
|
|
2,446,626 |
| ||
|
|
|
|
Total TDS shareholders’ equity |
|
3,839,197 |
|
|
|
3,813,922 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred shares |
|
830 |
|
|
|
830 |
| |||
|
|
Noncontrolling interests |
|
643,753 |
|
|
|
646,057 |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity |
|
4,483,780 |
|
|
|
4,460,809 |
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and equity |
$ |
8,071,301 |
|
|
$ |
7,762,519 |
| ||||
The accompanying notes are an integral part of these consolidated financial statements.
6
|
Telephone and Data Systems, Inc. Consolidated Statement of Changes in Equity (Unaudited) | |||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TDS Shareholders |
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||
|
(Dollars in thousands) |
Series A Common, Special Common and Common Shares |
|
Capital in Excess of Par Value |
|
Special Common and Common Treasury Shares |
|
Accumulated Other Comprehensive Income (Loss) |
|
Retained Earnings |
|
Total TDS Shareholders’ Equity |
|
Preferred Shares |
|
Non controlling Interests |
|
Total Equity | ||||||||||||||||
|
December 31, 2010 |
$ |
1,270 |
|
$ |
2,107,929 |
|
|
$ |
(738,695 |
) |
|
$ |
(3,208 |
) |
|
$ |
2,446,626 |
|
|
$ |
3,813,922 |
|
|
$ |
830 |
|
$ |
646,057 |
|
|
$ |
4,460,809 |
|
|
Add (Deduct) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to TDS shareholders |
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
41,622 |
|
|
|
41,622 |
|
|
|
— |
|
|
— |
|
|
|
41,622 |
|
|
Net income attributable to noncontrolling interests classified as equity |
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
10,583 |
|
|
|
10,583 |
|
|
Changes related to retirement plan |
|
— |
|
|
— |
|
|
|
— |
|
|
|
49 |
|
|
|
— |
|
|
|
49 |
|
|
|
— |
|
|
— |
|
|
|
49 |
|
|
Common, Special Common and Series A Common Shares dividends |
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(12,185 |
) |
|
|
(12,185 |
) |
|
|
— |
|
|
— |
|
|
|
(12,185 |
) |
|
Preferred dividend requirement |
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(12 |
) |
|
|
(12 |
) |
|
|
— |
|
|
— |
|
|
|
(12 |
) |
|
Repurchase of shares |
|
— |
|
|
— |
|
|
|
(11,603 |
) |
|
|
— |
|
|
|
— |
|
|
|
(11,603 |
) |
|
|
— |
|
|
— |
|
|
|
(11,603 |
) |
|
Dividend reinvestment plan |
|
— |
|
|
32 |
|
|
|
1,238 |
|
|
|
— |
|
|
|
(295 |
) |
|
|
975 |
|
|
|
— |
|
|
— |
|
|
|
975 |
|
|
Incentive and compensation plans |
|
— |
|
|
489 |
|
|
|
997 |
|
|
|
— |
|
|
|
(455 |
) |
|
|
1,031 |
|
|
|
— |
|
|
— |
|
|
|
1,031 |
|
|
Adjust investment in subsidiaries for repurchases, issuances, and other compensation plans |
|
— |
|
|
1,985 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,985 |
|
|
|
— |
|
|
(12,201 |
) |
|
|
(10,216 |
) |
|
Stock-based compensation awards (1) |
|
— |
|
|
3,667 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
3,667 |
|
|
|
— |
|
|
— |
|
|
|
3,667 |
|
|
Tax windfall (shortfall) from stock awards (2) |
|
— |
|
|
(254 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(254 |
) |
|
|
— |
|
|
— |
|
|
|
(254 |
) |
|
Distributions to noncontrolling interests |
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
(686 |
) |
|
|
(686 |
) |
|
March 31, 2011 |
$ |
1,270 |
|
$ |
2,113,848 |
|
|
$ |
(748,063 |
) |
|
$ |
(3,159 |
) |
|
$ |
2,475,301 |
|
|
$ |
3,839,197 |
|
|
$ |
830 |
|
$ |
643,753 |
|
|
$ |
4,483,780 |
|
|
Telephone and Data Systems, Inc. Consolidated Statement of Changes in Equity (Unaudited) | ||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TDS Shareholders |
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||
|
(Dollars in thousands) |
Series A Common, Special Common and Common Shares |
|
Capital in Excess of Par Value |
|
Special Common and Common Treasury Shares |
|
Accumulated Other Comprehensive Income (Loss) |
|
Retained Earnings |
|
Total TDS Shareholders’ Equity |
|
Preferred Shares |
|
Non controlling Interests |
|
Total Equity | |||||||||||||||||
|
December 31, 2009 |
$ |
1,270 |
|
$ |
2,088,807 |
|
|
$ |
(681,649 |
) |
|
$ |
(2,710 |
) |
|
$ |
2,358,580 |
|
|
$ |
3,764,298 |
|
|
$ |
832 |
|
|
$ |
662,216 |
|
|
$ |
4,427,346 |
|
|
Add (Deduct) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to TDS shareholders |
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
48,414 |
|
|
|
48,414 |
|
|
|
— |
|
|
|
— |
|
|
|
48,414 |
|
|
Net income attributable to noncontrolling interests classified as equity |
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
13,830 |
|
|
|
13,830 |
|
|
Changes related to retirement plan |
|
— |
|
|
— |
|
|
|
— |
|
|
|
(256 |
) |
|
|
— |
|
|
|
(256 |
) |
|
|
— |
|
|
|
— |
|
|
|
(256 |
) |
|
Common, Special Common and Series A Common Shares dividends |
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(11,879 |
) |
|
|
(11,879 |
) |
|
|
— |
|
|
|
— |
|
|
|
(11,879 |
) |
|
Preferred dividend requirement |
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(12 |
) |
|
|
(12 |
) |
|
|
— |
|
|
|
— |
|
|
|
(12 |
) |
|
Repurchase of shares |
|
— |
|
|
— |
|
|
|
(14,810 |
) |
|
|
— |
|
|
|
— |
|
|
|
(14,810 |
) |
|
|
(1 |
) |
|
|
— |
|
|
|
(14,811 |
) |
|
Dividend reinvestment plan |
|
— |
|
|
— |
|
|
|
1,263 |
|
|
|
— |
|
|
|
(318 |
) |
|
|
945 |
|
|
|
— |
|
|
|
— |
|
|
|
945 |
|
|
Incentive and compensation plans |
|
— |
|
|
433 |
|
|
|
1,807 |
|
|
|
— |
|
|
|
(1,344 |
) |
|
|
896 |
|
|
|
— |
|
|
|
— |
|
|
|
896 |
|
|
Adjust investment in subsidiaries for repurchases, issuances and other compensation plans |
|
— |
|
|
2,838 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2,838 |
|
|
|
— |
|
|
|
(3,150 |
) |
|
|
(312 |
) |
|
Stock-based compensation awards (1) |
|
— |
|
|
3,614 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
3,614 |
|
|
|
— |
|
|
|
— |
|
|
|
3,614 |
|
|
Tax windfall (shortfall) from from stock awards (2) |
|
— |
|
|
(56 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(56 |
) |
|
|
— |
|
|
|
— |
|
|
|
(56 |
) |
|
Distributions to noncontrolling interests |
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(2,284 |
) |
|
|
(2,284 |
) |
|
March 31, 2010 |
$ |
1,270 |
|
$ |
2,095,636 |
|
|
$ |
(693,389 |
) |
|
$ |
(2,966 |
) |
|
$ |
2,393,441 |
|
|
$ |
3,793,992 |
|
|
$ |
831 |
|
|
$ |
670,612 |
|
|
$ |
4,465,435 |
|
(1) Reflects TDS Corporate and TDS Telecom’s current year stock-based compensation awards impact on Capital in excess of par value. U.S. Cellular’s amounts are included in Adjust investment in subsidiaries for repurchases, issuances and other compensation plans.
(2) Reflects tax windfalls/(shortfalls) associated with the exercise of options and the vesting of restricted stock awards of TDS Common Shares and TDS Special Common Shares. U.S. Cellular’s tax windfalls/(shortfalls) associated with the exercise of options and vesting of restricted stock awards of U.S. Cellular are included in Adjust investment in subsidiaries for repurchases, issuances, and other compensation plans.
The accompanying notes are an integral part of these consolidated financial statements.
8
|
Telephone and Data Systems, Inc. | ||||||||
|
|
|
|
|
|
|
|
|
|
|
Consolidated Statement of Comprehensive Income (Unaudited) | ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, | |||||||
|
(Dollars in thousands) |
2011 |
|
2010 | |||||
|
|
|
|
|
|
|
| ||
|
Net income |
$ |
52,244 |
|
|
$ |
62,269 |
| |
|
Net change in accumulated other comprehensive income |
|
|
|
|
|
|
| |
|
|
Changes related to retirement plan |
|
49 |
|
|
|
(256 |
) |
|
Comprehensive income |
|
52,293 |
|
|
|
62,013 |
| |
|
Less: Comprehensive income attributable to noncontrolling interests |
|
(10,622 |
) |
|
|
(13,855 |
) | |
|
Comprehensive income attributable to TDS shareholders |
$ |
41,671 |
|
|
$ |
48,158 |
| |
The accompanying notes are an integral part of these consolidated financial statements.
9
Telephone and Data Systems, Inc.
Notes to Consolidated Financial Statements
1. Basis of Presentation
The accounting policies of Telephone and Data Systems, Inc. (“TDS”) conform to accounting principles generally accepted in the United States of America (“GAAP”) as set forth in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”). The consolidated financial statements include the accounts of TDS and its majority-owned subsidiaries, including TDS’ 83%-owned wireless telephone subsidiary, United States Cellular Corporation (“U.S. Cellular”), TDS’ 100%-owned wireline telephone subsidiary, TDS Telecommunications Corporation (“TDS Telecom”) and TDS’ majority-owned printing and distribution company, Suttle-Straus, Inc. In addition, the consolidated financial statements include certain entities in which TDS has a variable interest that require consolidation under GAAP. All material intercompany accounts and transactions have been eliminated. Certain prior year amounts have been reclassified to conform to the 2011 presentation.
The consolidated financial statements included herein have been prepared by TDS, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. However, TDS believes that the disclosures included herein are adequate to make the information presented not misleading. These consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in TDS’ Annual Report on Form 10-K (“Form 10-K”) for the year ended December 31, 2010.
The accompanying unaudited consolidated financial statements contain all adjustments (consisting of only normal recurring items, unless otherwise disclosed) necessary to present fairly the financial position as of March 31, 2011 and December 31, 2010, the results of operations, cash flows, changes in equity and changes in comprehensive income for the three months ended March 31, 2011 and 2010. The results of operations, cash flows, changes in equity and changes in comprehensive income for the three months ended March 31, 2011 are not necessarily indicative of the results expected for the full year.
2. Fair Value Measurements
As of March 31, 2011 and December 31, 2010, TDS did not have any financial assets or liabilities that were required to be recorded at fair value in its Consolidated Balance Sheet in accordance with GAAP. However, TDS has applied the provisions of fair value accounting for purposes of computing the fair value of financial instruments for disclosure purposes as displayed below.
|
|
March 31, 2011 |
|
December 31, 2010 | |||||||||
|
|
|
Book Value |
|
Fair Value |
|
Book Value |
|
Fair Value | ||||
|
(Dollars in thousands) |
|
|
|
|
|
|
|
|
|
| ||