EX-12 3 exhibit12.htm EX-12

|  |  |  |  |  |  |  |  |  |  |  |  | Exhibit 12
TELEPHONE AND DATA SYSTEMS, INC. RATIO OF EARNINGS TO FIXED CHARGES (1)
For the Year Ended December 31,
(Dollars in thousands) | 2014 |  | 2013 |  | 2012 |  | 2011 |  | 2010
EARNINGS: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Income (loss) before income taxes (2) | $ | (152,224) |  | $ | 292,864 |  | $ | 196,235 |  | $ | 363,745 |  | $ | 285,774
Add (deduct): |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Equity in earnings of unconsolidated entities |  | (131,965) |  |  | (132,714) |  |  | (92,867) |  |  | (82,538) |  |  | (98,074)
| Distributions from unconsolidated entities |  | 112,349 |  |  | 127,929 |  |  | 84,884 |  |  | 92,231 |  |  | 100,845
| Amortization of capitalized interest |  | 7,142 |  |  | 4,638 |  |  | 1,676 |  |  | 1,109 |  |  | 867
| Income attributable to noncontrolling interests in subsidiaries that do not have fixed charges |  | (1,361) |  |  | (5,651) |  |  | (25,709) |  |  | (22,004) |  |  | (21,938)
|  |  |  | (166,059) |  |  | 287,066 |  |  | 164,219 |  |  | 352,543 |  |  | 267,474
Add fixed charges: |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Consolidated interest expense (3) |  | 111,397 |  |  | 98,811 |  |  | 86,745 |  |  | 118,201 |  |  | 116,810
| Interest portion (1/3) of consolidated rent expense |  | 61,909 |  |  | 66,698 |  |  | 71,505 |  |  | 65,470 |  |  | 62,983
|  |  | $ | 7,247 |  | $ | 452,575 |  | $ | 322,469 |  | $ | 536,214 |  | $ | 447,267
FIXED CHARGES: |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Consolidated interest expense (3) | $ | 111,397 |  | $ | 98,811 |  | $ | 86,745 |  | $ | 118,201 |  | $ | 116,810
| Capitalized interest |  | 10,295 |  |  | 22,206 |  |  | 21,369 |  |  | 14,321 |  |  | 4,825
| Interest portion (1/3) of consolidated rent expense |  | 61,909 |  |  | 66,698 |  |  | 71,505 |  |  | 65,470 |  |  | 62,983
|  |  | $ | 183,601 |  | $ | 187,715 |  | $ | 179,619 |  | $ | 197,992 |  | $ | 184,618
RATIO OF EARNINGS TO FIXED CHARGES |  | * |  |  | 2.41 |  |  | 1.80 |  |  | 2.71 |  |  | 2.42
| Tax-effected preferred dividends | $ | 62 |  | $ | 78 |  | $ | 78 |  | $ | 71 |  | $ | 75
| Fixed charges |  | 183,601 |  |  | 187,715 |  |  | 179,619 |  |  | 197,992 |  |  | 184,618
|  | Fixed charges and preferred dividends | $ | 183,663 |  | $ | 187,793 |  | $ | 179,697 |  | $ | 198,063 |  | $ | 184,693
RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED DIVIDENDS |  | * |  |  | 2.41 |  |  | 1.79 |  |  | 2.71 |  |  | 2.42
(1) | Considering, among other things, recent significant divestitures and an increasing amount of rental income in proportion to gross rent expense, TDS revised its approach in 2014 in calculating the above ratios to use gross rent expense, rather than net rent expense, for estimating the interest portion of rent expense. Prior years have been revised to conform to the 2014 presentation.
(2) | Includes non-cash charges related to losses on impairment of $87.8 million in 2014 and $0.5 million in 2012.
| Includes gain on sale of business and other exit costs, net of $15.8 million and $300.7 million in 2014 and 2013, respectively, and loss on sale of business and other exit costs, net of $21.1 million in 2012.
| Includes gain on license sales and exchanges of $113.0 million in 2014, $255.5 million in 2013 and $11.8 million in 2011.
| Includes gain on investments of $14.5 million in 2013 and $24.1 million in 2011 and loss on investments of $3.7 million in 2012.
(3) | Interest expense on income tax contingencies is not included in fixed charges.
* | Earnings for the year ended December 31, 2014 were inadequate to cover fixed charges by $176.4 million, and fixed charges and preferred dividends by $176.4 million.