ITTI(TDS) - 2022 Q4 - Annual Report

PART I](index=4&type=section&id=Part%20I) This section provides a comprehensive overview of TDS's business operations, including its wireless and wireline segments, regulatory environment, and human capital resources Item 1. Business TDS operates UScellular (wireless) and TDS Telecom (broadband, video, voice), serving 4.7 million wireless and 1.2 million wireline connections - TDS operates two primary business segments: UScellular (wireless) and TDS Telecom (broadband, video, voice)[11][12] TDS Consolidated Connections (as of Dec 31, 2022) | Segment | Connections (as of Dec 31, 2022) | | :-------- | :--------------------------------- | | UScellular | 4.7 million retail wireless | | TDS Telecom | 1.2 million broadband, video, voice | - TDS is a 'controlled company' under NYSE standards, with over 50% of voting power held by the TDS Voting Trust[11] General Company Overview TDS provides high-quality communications services through UScellular and TDS Telecom, serving millions of connections - TDS provides high-quality communications services, with 4.7 million retail wireless connections and 1.2 million broadband, video, and voice connections as of December 31, 2022[11] - TDS conducts wireless operations through its 84%-owned subsidiary, UScellular, and broadband, video, and voice services through its wholly-owned subsidiary, TDS Telecom[11] UScellular Operations UScellular provides wireless services across 21 states, focusing on network quality, customer service, and 5G deployment - UScellular serves 4.7 million retail connections across 21 states, focusing on a high-quality network, customer service, and competitive offerings with a community focus[15][16] - The company holds wireless spectrum licenses covering approximately 51 million people and actively participates in FCC auctions for additional spectrum[17][18] - UScellular offers postpaid and prepaid wireless services, including home and business internet via fixed wireless access, and a growing suite of IoT solutions[21][23][24] - UScellular operates a multi-faceted distribution program, including retail, direct, telesales, ecommerce, and indirect channels, and faces intense competition from national and regional carriers[29][33] - The company is deploying 5G technology across its markets, utilizing low-band, high-band, and mid-band spectrum to meet increasing data demand and enhance services[36] UScellular Network Infrastructure (as of Dec 31, 2022) | Metric | Value | | :------------ | :-------- | | Cell sites | 6,945 | | Owned towers | 4,336 | TDS Telecom Operations TDS Telecom provides broadband, video, and voice services to 1.2 million connections in 32 states, investing in fiber for high-speed internet - TDS Telecom provides communications services to 1.2 million connections in 32 states, aiming to be the preferred broadband provider through fiber investments[41][42][43] - A key strategic initiative is investing in fiber to deliver broadband speeds up to 8 Gbps in incumbent and new expansion markets[43][49] - The company offers bundled residential services (broadband, video, voice), commercial services (broadband, IP-based, hosted voice/video), and wholesale operations (data/voice traffic, regulatory support)[48][49][50][51] - TDS Telecom competes with various providers (wireline, cable, fiber overbuilders, VoIP, satellite, wireless) based on network reliability, speed, product diversity, and customer service[54][55] TDS — REGULATION TDS's operations are subject to extensive federal, state, and local regulation, primarily by the FCC and state public utility commissions - TDS' operations are subject to federal, state, and local regulation, primarily by the FCC and state public utility commissions[58][59][63] - UScellular's wireless systems are regulated by the FCC, including licensing, technical standards, and acquisitions, with licenses generally granted for ten-year terms[59][60] - TDS Telecom's ILECs are subject to FCC and state commission jurisdiction over interstate and intrastate telecommunications, while CLEC and cable operations face reduced regulation[63][64][65] HUMAN CAPITAL RESOURCES TDS employs approximately 9,300 associates, emphasizing engagement, ethical standards, diversity, and continuous development - As of December 31, 2022, TDS had approximately 9,300 full-time and part-time associates[70] - TDS emphasizes associate engagement, high ethical standards, a diverse and inclusive workforce, and continuous development through training and programs[70][71][72] TDS — OTHER ITEMS TDS and UScellular file regular reports with the SEC, accessible via their investor relations websites and www.sec.gov - TDS and UScellular file annual, quarterly, and current reports with the SEC, accessible via their respective investor relations websites and www.sec.gov[75](index=75&type=chunk)[76] Item 1A. Risk Factors TDS faces significant risks including intense competition, declining roaming revenues, spectrum acquisition challenges, talent retention, substantial indebtedness, and regulatory, legal, and general operational risks - Intense competition in the wireless industry, including aggressive pricing and 5G deployment, could adversely affect TDS's revenues and increase costs[79][80] - Declining roaming revenues due to industry consolidation and network expansion, along with challenges in securing sufficient radio spectrum, pose significant operational risks[83][86] - TDS's smaller scale relative to larger competitors may limit its ability to compete, influence industry standards, and access content or new devices[90][91][92] - Significant indebtedness and potential inability to access capital on favorable terms could restrict TDS's investment programs, share repurchases, and dividend payments[113][114][115] - Failure to comply with regulatory requirements, uncertainty in support payments, and potential litigation (e.g., radio frequency emissions, intellectual property) are key legal and governance risks[120][121][123][125][126] - Cyber-attacks, economic downturns, and public health emergencies are general risks that could disrupt operations and negatively impact financial results[135][136] Item 1B. Unresolved Staff Comments There are no unresolved staff comments to report for the period - No unresolved staff comments were reported[137] Item 2. Properties TDS's properties are located throughout the United States, with significant gross investments in property, plant, and equipment - TDS's properties are located throughout the United States, including local business offices, cell sites, networks, and data centers[137][138] Gross Investment in Property, Plant and Equipment (as of Dec 31, 2022) | Segment | Gross Investment (Millions USD) | | :------------- | :------------------------------ | | UScellular | $9,334 | | TDS Telecom | $5,312 | | Parent & Other | $325 | Item 3. Legal Proceedings TDS is regularly involved in legal proceedings before regulatory authorities and courts, accruing estimated losses for probable and reasonably estimable outcomes - TDS is involved in legal proceedings before the FCC, other regulatory authorities, and various state and federal courts[140] - Estimated losses from legal proceedings are accrued if probable and reasonably estimable, with assessments reviewed quarterly[140] Item 4. Mine Safety Disclosures This item is not applicable to TDS's operations - Mine Safety Disclosures are not applicable to the registrant[141] PART II](index=23&type=section&id=Part%20II) This section covers TDS's market for common equity, financial condition, results of operations, and related disclosures, including management's discussion and analysis Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities TDS Common Shares are listed on the NYSE, with a history of increasing quarterly cash dividends and an authorized stock repurchase program - TDS Common Shares trade on the NYSE under the symbol 'TDS'[143] - TDS increased its quarterly dividend per Common Share to $0.185 in Q1 2023, marking the 49th consecutive year of dividend increases[144] TDS Common Shares Repurchase Activity (Q4 2022) | Period | Shares Purchased | Average Price Paid per Share ($) | | :--------------------- | :--------------- | :------------------------------- | | October 1 - 31, 2022 | 279,255 | 14.32 | | November 1 - 30, 2022 | 527,894 | 12.03 | | December 1 - 31, 2022 | 351,897 | 10.37 | | Total for Q4 2022 | 1,159,046 | 12.08 | - As of December 31, 2022, $138 million remained authorized under TDS's $250 million stock repurchase program[149][152] Item 6. [Reserved] This item is reserved and contains no information Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations TDS's consolidated operating revenues increased by 2% to $5,413 million in 2022, but operating income decreased by 53% to $122 million, resulting in a net loss of $7 million attributable to common shareholders, driven by higher expenses TDS Consolidated Financial Highlights (2022 vs. 2021) | Metric | 2022 ($ millions) | 2021 ($ millions) | Change (%) | | :----------------------------------------- | :---------------- | :---------------- | :--------- | | Total operating revenues | 5,413 | 5,329 | 2 | | Total operating expenses | 5,291 | 5,068 | 4 | | Operating income | 122 | 261 | (53) | | Net income attributable to TDS shareholders| 62 | 156 | (61) | | Net income (loss) attributable to TDS common shareholders | (7) | 117 | N/M | | Adjusted EBITDA (Non-GAAP) | 1,257 | 1,372 | (8) | | Capital expenditures | 1,285 | 1,201 | 7 | - Net income attributable to TDS common shareholders shifted from a profit of $117 million in 2021 to a loss of $7 million in 2022, primarily due to higher operating and income tax expenses[167] - TDS's mission is to provide outstanding communications services, grow businesses, create associate opportunities, support communities, and build long-term shareholder value, with a focus on exceptional customer experiences[162] - TDS paid $82 million in common share dividends and $69 million in preferred share dividends in 2022, and repurchased 2.75 million Common Shares for $40 million[164] Executive Overview TDS is a diversified telecommunications company serving approximately 6 million connections, focused on growth, associate opportunities, community support, and long-term shareholder value - TDS is a diversified telecommunications company serving approximately 6 million connections nationwide through UScellular (wireless) and TDS Telecom (broadband, video, voice)[160] - The company's strategy focuses on growing businesses, creating opportunities for associates, supporting communities, and building long-term shareholder value through high-quality, data-focused services and superior customer service[162][163] - TDS increased its quarterly dividend per Common Share by 3% in 2022 and again in February 2023, marking 49 consecutive years of increases[164] Terms used by TDS This section defines key industry and financial terms used throughout the document, such as 4G LTE, 5G, ARPU, EBITDA, and Free Cash Flow - This section provides definitions for key industry and financial terms used throughout the document, such as 4G LTE, 5G, ARPU, EBITDA, and Free Cash Flow[166] Results of Operations – TDS Consolidated TDS's consolidated operating revenues increased by 2% to $5,413 million in 2022, but net income attributable to common shareholders turned to a loss of $7 million due to higher expenses TDS Consolidated Operating Results (2022 vs. 2021) | Metric | 2022 ($ millions) | 2021 ($ millions) | Change (%) | | :----------------------------------------- | :---------------- | :---------------- | :--------- | | Operating revenues | 5,413 | 5,329 | 2 | | Operating expenses | 5,291 | 5,068 | 4 | | Operating income | 122 | 261 | (53) | | Equity in earnings of unconsolidated entities | 159 | 182 | (12) | | Interest expense | (174) | (232) | 25 |\ | Income tax expense | 53 | 33 | 59 | | Net income | 72 | 188 | (62) | | Net income attributable to TDS common shareholders | (7) | 117 | N/M | | Adjusted EBITDA (Non-GAAP) | 1,257 | 1,372 | (8) | - The decrease in Net income in 2022 was primarily due to higher operating and income tax expenses, partially offset by increased operating revenues and lower interest expense[176] - Interest expense decreased in 2022 due to a $57 million write-off of unamortized debt issuance costs in 2021, partially offset by increased borrowings and interest rates[169] - Income tax expense increased in 2022 due to the non-recurrence of 2021 tax accrual reductions from expired state statutes of limitations, partially offset by lower pre-tax income[170] UScellular Operations UScellular's operating revenues increased by 1% to $4,169 million in 2022, driven by equipment sales, despite a 39% decline in inbound roaming revenues and increased bad debt expense - UScellular's strategy focuses on attracting and retaining customers through a high-quality network, outstanding customer service, and competitive devices, plans, and pricing, with a community focus[183] UScellular Retail Connections (as of Dec 31) | Category | 2022 | 2021 | | :-------- | :---------- | :---------- | | Postpaid | 4,247,000 | 4,380,000 | | Prepaid | 493,000 | 513,000 | | Total | 4,740,000 | 4,893,000 | - Total postpaid net losses increased in 2022 to (133,000) from (32,000) in 2021, driven by lower gross additions and higher defections due to aggressive industry competition and increased non-pay customers[185] UScellular Postpaid ARPU and ARPA (Year Ended Dec 31) | Metric | 2022 ($) | 2021 ($) | Change (%) | | :---------- | :------- | :------- | :--------- | | Postpaid ARPU | 50.14 | 48.03 | 4 | | Postpaid ARPA | 130.39 | 125.92 | 4 | - Postpaid ARPU and ARPA increased by 4% in 2022 due to favorable plan mix, increased cost recovery surcharges, and higher device protection plan revenues, partially offset by promotional discounts[187] UScellular Operating Revenues (2022 vs. 2021) | Revenue Type | 2022 ($ millions) | 2021 ($ millions) | Change (%) | | :---------------- | :---------------- | :---------------- | :--------- | | Retail service | 2,793 | 2,757 | 1 | | Inbound roaming | 67 | 110 | (39) | | Other service | 265 | 248 | 7 | | Equipment sales | 1,044 | 1,007 | 4 | | Total operating revenues | 4,169 | 4,122 | 1 | - Inbound roaming revenues decreased by 39% in 2022 due to lower rates and usage, with further declines expected in 2023[193] - Cost of equipment sold increased by 9% in 2022 due to increased customer upgrades driven by promotional activity and higher average smartphone prices[197] - Selling, general and administrative expenses increased by 5% in 2022, primarily due to a $76 million increase in bad debts expense as customer payment behavior returned to pre-pandemic trends[198][199] TDS Telecom Operations TDS Telecom's operating revenues increased by 1% to $1,020 million in 2022, driven by residential growth, despite declines in commercial and wholesale revenues, with continued fiber investment - TDS Telecom's strategic goal is to be the preferred broadband provider, focusing on fiber deployment in incumbent and expansion markets to offer high-quality, bundled services[202][205] - Service addresses increased by 9% to 1.5 million as of December 31, 2022, with 39% served by fiber (including cable markets)[208] TDS Telecom Residential Connections (as of Dec 31) | Category | 2022 | 2021 | Change (%) | | :------------------- | :-------- | :-------- | :--------- | | Broadband (Total) | 510,000 | 490,300 | 4 | | Video | 135,300 | 141,500 | (4) | | Voice | 291,600 | 303,700 | (4) | | Total Residential | 936,900 | 935,600 | — | - Total connections decreased by 2% due to declines in legacy voice, video, and CLEC connections, partially offset by broadband growth[211] - Residential broadband customers increasingly choose higher speeds, with 72% taking 100 Mbps or greater and 11% choosing 1Gig in 2022[215] TDS Telecom Operating Revenues (2022 vs. 2021) | Revenue Type | 2022 ($ millions) | 2021 ($ millions) | Change (%) | | :---------------- | :---------------- | :---------------- | :--------- | | Residential | 669 | 641 | 4 | | Commercial | 173 | 183 | (5) | | Wholesale | 177 | 181 | (2) | | Total operating revenues | 1,020 | 1,006 | 1 | - Residential revenues increased by 4% due to price increases and broadband connection growth, while commercial revenues decreased by 5% due to declining CLEC connections[222] - Cost of services increased by 3% due to higher employee-related expenses, video programming, and vehicle costs[223] - Depreciation, amortization, and accretion increased by 8% due to higher capital expenditures on new fiber assets and customer-related equipment[225] Liquidity and Capital Resources TDS maintains sufficient liquidity through cash, financing agreements, and operating cash flows, with significant capital expenditures planned for 5G and fiber deployment, while managing sub-investment grade debt ratings - TDS believes existing cash, financing agreements, expected tax refunds, and operating cash flows will provide sufficient liquidity for normal operations and debt service for the next several years[227] - TDS and UScellular had total undrawn borrowing capacity of $499 million and $615 million, respectively, from revolving credit, export credit financing, and receivables securitization agreements as of December 31, 2022[233][234] - TDS and UScellular are required to maintain a Consolidated Interest Coverage Ratio not lower than 3.00 to 1.00 and a Consolidated Leverage Ratio not exceeding 3.75 to 1.00[243] - TDS and UScellular are rated as sub-investment grade issuers by Moody's (Ba1), S&P (BB), and Fitch (BB+), all with stable outlooks as of December 31, 2022[250] Capital Expenditures (2022 vs. 2021) | Segment | 2022 ($ millions) | 2021 ($ millions) | Change (%) | | :------------- | :---------------- | :---------------- | :--------- | | UScellular | 717 | 780 | (8) | | TDS Telecom | 556 | 411 | 35 | | Parent & Other | 12 | 10 | 20 | | Total | 1,285 | 1,201 | 7 | - UScellular's 2023 capital expenditures are projected to be $600-$700 million, primarily for network modernization and 5G deployment[255] - TDS Telecom's 2023 capital expenditures are projected to be $500-$550 million, mainly for fiber deployment and infrastructure maintenance[256] - TDS repurchased 2.75 million Common Shares for $40 million in 2022, with $138 million remaining under authorization. UScellular repurchased 1.59 million Common Shares for $43 million[261][262] Consolidated Cash Flow Analysis In 2022, net cash from operating activities was $1,155 million, while investing activities used $1,783 million, primarily for property and spectrum, and financing activities provided $613 million - In 2022, net cash provided by operating activities was $1,155 million, driven by net income and non-cash adjustments, partially offset by working capital changes[269] - Cash flows used for investing activities totaled $1,783 million in 2022, including $1,161 million for property, plant, and equipment and $585 million for wireless spectrum licenses[270] - Cash flows provided by financing activities were $613 million in 2022, primarily from term loan and export credit financing borrowings, partially offset by debt repayments, dividends, and share repurchases[271] - In 2021, net cash provided by operating activities was $1,103 million, while cash flows used for investing activities were $2,462 million, largely due to $1,322 million for wireless spectrum licenses[272][273] Consolidated Balance Sheet Analysis TDS's balance sheet reflects a $90 million increase in inventory, a $125 million decrease in income taxes receivable, and a $232 million increase in other current liabilities in 2022, with long-term debt increasing to $3,731 million - Inventory, net, increased by $90 million in 2022 to support promotions and ensure adequate device supply[276] - Income taxes receivable decreased by $125 million due to a federal income tax refund related to the 2020 net operating loss carryback[277] - Other current liabilities increased by $232 million, primarily due to an increase in the short-term accrual for Auction 107 relocation fees, EIP receivables repurchase agreement borrowings, and software license agreement accruals[279] Long-term Debt, Net Changes (2022) | Activity | Amount ($ millions) | | :---------------------------------------- | :------------------ | | Balance at December 31, 2021 | 2,928 | | Borrowings under Term Loan Agreements | 800 | | Borrowings under Export Credit Financing | 200 | | Repayments under Receivables Securitization | (250) | | Balance at December 31, 2022 | 3,731 | Application of Critical Accounting Policies and Estimates Critical accounting policies involve significant management judgments and estimates for intangible asset impairment (Licenses and Goodwill) and income taxes, with annual qualitative assessments performed - Critical accounting policies include intangible asset impairment (Licenses and Goodwill) and income taxes, which involve significant management judgments and estimates[282][283][289] - UScellular performs annual qualitative impairment assessments for wireless spectrum licenses, concluding in 2022 and 2021 that fair value exceeded carrying value[285][286] - TDS Telecom also performs annual qualitative impairment assessments for Goodwill, concluding no impairment in 2022 or 2021[287][288] - Income tax estimates involve calculating current and deferred tax liabilities, assessing the realization of deferred tax assets, and recognizing tax benefits from uncertain positions[290][291] Regulatory Matters TDS is impacted by FCC regulations, including the 5G Fund for Rural America, and UScellular has acquired 874 wireless spectrum licenses for approximately $1,870 million in recent auctions - The FCC established the 5G Fund for Rural America to distribute up to $9 billion over ten years for 5G wireless broadband, replacing the Phase II Connect America Mobility Fund[293] - UScellular was a provisional winning bidder in multiple FCC spectrum auctions (105, 107, 110, 108) from 2020-2022, acquiring a total of 874 wireless spectrum licenses for approximately $1,870 million[295][296][297][298] - UScellular expects to be obligated to pay approximately $185 million in total from 2021 through 2024 for Auction 107 relocation costs and incentive payments, with spectrum access not expected until late 2023[296] Private Securities Litigation Reform Act of 1995 Safe Harbor Cautionary Statement This section provides a safe harbor cautionary statement regarding forward-looking statements, advising readers to consider detailed risk factors as actual results may differ significantly from projections - This section serves as a safe harbor cautionary statement, indicating that the report contains forward-looking statements subject to known and unknown risks and uncertainties[300][301] - Readers are advised to consider the detailed risk factors, as actual results may differ significantly from projections[301] Market Risk TDS is exposed to interest rate fluctuations as approximately 50% of its long-term debt is variable-rate, with an estimated fair value of $3,047 million at December 31, 2022 - As of December 31, 2022, approximately 50% of TDS's long-term debt was fixed-rate senior notes and 50% was variable-rate debt, exposing the company to interest rate fluctuations[308] Scheduled Principal Payments on Long-Term Debt (as of Dec 31, 2022) | Year | Principal Payments ($ millions) | | :-------- | :------------------------------ | | 2023 | 19 | | 2024 | 26 | | 2025 | 26 | | 2026 | 275 | | 2027 | 218 | | Thereafter| 2,983 | | Total | 3,547 | - The estimated fair value of long-term debt obligations (excluding leases) was $3,047 million at December 31, 2022, compared to a book value of $3,789 million[310] Supplemental Information Relating to Non-GAAP Financial Measures TDS uses non-GAAP financial measures like EBITDA, Adjusted EBITDA, and Free Cash Flow to evaluate business performance, providing insights into operating results before significant non-cash charges - TDS uses non-GAAP financial measures like EBITDA, Adjusted EBITDA, and Adjusted OIBDA to evaluate business performance, providing insights into operating results before significant non-cash charges and other items[312][313][315] TDS Consolidated Adjusted EBITDA Reconciliation (2022 vs. 2021) | Metric | 2022 ($ millions) | 2021 ($ millions) | | :----------------------------------------- | :---------------- | :---------------- | | Net income (GAAP) | 72 | 188 | | Add back: Income tax expense | 53 | 33 | | Add back: Interest expense | 174 | 232 | | Add back: Depreciation, amortization and accretion | 929 | 895 | | EBITDA (Non-GAAP) | 1,228 | 1,348 | | Add back or deduct: Loss on impairment of licenses | 3 | — | | Add back or deduct: (Gain) loss on asset disposals, net | 27 | 26 | | Add back or deduct: (Gain) loss on sale of business and other exit costs, net | (1) | (2) | | Adjusted EBITDA (Non-GAAP) | 1,257 | 1,372 | TDS Consolidated Free Cash Flow Reconciliation (2022 vs. 2021) | Metric | 2022 ($ millions) | 2021 ($ millions) | | :----------------------------------------- | :---------------- | :---------------- | | Cash flows from operating activities (GAAP)| 1,155 | 1,103 | | Cash paid for additions to property, plant and equipment | (1,161) | (1,131) | | Cash paid for software license agreements | (23) | (9) | | Free cash flow (Non-GAAP) | (29) | (37) | Item 7A. Quantitative and Qualitative Disclosures About Market Risk This section refers to the 'Market Risk' discussion within Item 7, detailing TDS's exposure to interest rate fluctuations on its long-term debt and the fair value of these obligations - This item refers to the 'Market Risk' section in Item 7 for disclosures on quantitative and qualitative market risks[321] Item 8. Financial Statements and Supplementary Data This section presents the audited consolidated financial statements for 2022, 2021, and 2020, including statements of operations, balance sheets, cash flows, and comprehensive notes, along with management's responsibility and the independent auditor's report - The consolidated financial statements include the Statement of Operations, Comprehensive Income, Cash Flows, Balance Sheets, and Changes in Equity for the periods ended December 31, 2022, 2021, and 2020[324][326][329][332][335][338][340][342] - Key financial results for 2022 include total operating revenues of $5,413 million, operating income of $122 million, and a net loss attributable to TDS common shareholders of $7 million[324] - The Notes to Consolidated Financial Statements provide detailed information on accounting policies, revenue recognition, debt, equity, and segment performance[344] - The report includes management's responsibility statement for financial statements and internal control, and an unqualified opinion from PricewaterhouseCoopers LLP[544][549] Financial Statements This section includes the Consolidated Statement of Operations, Balance Sheet, and Cash Flows for the years ended December 31, 2022, 2021, and 2020, presenting key financial performance and position Consolidated Statement of Operations (Year Ended Dec 31) | (Dollars in millions) | 2022 | 2021 | 2020 | | :-------------------- | :---- | :---- | :---- | | Total operating revenues | 5,413 | 5,329 | 5,225 | | Total operating expenses | 5,291 | 5,068 | 4,966 | | Operating income | 122 | 261 | 259 | | Income before income taxes | 125 | 221 | 288 | | Net income | 72 | 188 | 269 | | Net income (loss) attributable to TDS common shareholders | (7) | 117 | 226 | | Basic earnings (loss) per share | (0.07)| 1.03 | 1.97 | | Diluted earnings (loss) per share | (0.07)| 1.00 | 1.93 | Consolidated Balance Sheet (as of Dec 31) | (Dollars in millions) | 2022 | 2021 | | :-------------------- | :----- | :----- | | Total current assets | 2,028 | 2,044 | | Licenses | 4,699 | 4,097 | | Goodwill | 547 | 547 | | Property, plant and equipment, net | 4,760 | 4,361 | | Total assets | 14,550 | 13,493 | | Total current liabilities | 1,514 | 1,180 | | Long-term debt, net | 3,731 | 2,928 | | Total liabilities and equity | 14,550 | 13,493 | Consolidated Statement of Cash Flows (Year Ended Dec 31) | (Dollars in millions) | 2022 | 2021 | 2020 | | :-------------------- | :----- | :----- | :----- | | Net cash provided by operating activities | 1,155 | 1,103 | 1,532 | | Net cash used in investing activities | (1,783)| (2,462)| (1,511)| | Net cash provided by financing activities | 613 | 321 | 957 | | Net increase (decrease) in cash, cash equivalents and restricted cash | (15) | (1,038)| 978 | | Cash, cash equivalents and restricted cash, End of period | 399 | 414 | 1,452 | Notes to Consolidated Financial Statements These notes provide detailed information on TDS's significant accounting policies, revenue recognition, income taxes, intangible assets, debt agreements, stock-based compensation, and segment performance - Note 1 outlines significant accounting policies, including principles of consolidation, use of estimates, cash and cash equivalents, accounts receivable, inventory, and intangible assets[345][347][348][349][351][354][356][359] - Note 2 details revenue recognition policies for wireless services, devices, roaming, ETC revenues, tower rents, activation fees, wireline/cable services, wholesale revenues, and IT hardware/hosted services[380] - Note 4 summarizes equipment installment plan receivables, with a gross balance of $1,211 million and a net balance of $1,115 million as of December 31, 2022[404][405] - Note 5 provides income tax details, showing a total income tax expense of $53 million in 2022 and deferred tax assets of $720 million (net of valuation allowance) and liabilities of $1,685 million[408][410] - Note 7 details intangible assets, with Licenses totaling $4,699 million and Goodwill at $547 million as of December 31, 2022, including significant acquisitions from FCC spectrum auctions[419][423][425] - Note 12 outlines debt agreements, including revolving credit, term loans, export credit financing, and receivables securitization, with total long-term debt of $3,750 million (net of discounts) as of December 31, 2022[441][443][445][448][456] - Note 18 summarizes stock-based compensation expense, totaling $42 million before income taxes in 2022, for stock options, restricted stock units, and performance share units[494] - Note 19 provides segment information, detailing operating revenues, expenses, and capital expenditures for UScellular and TDS Telecom[532][533][534] Reports of Management Management is responsible for preparing the consolidated financial statements in accordance with GAAP, and PricewaterhouseCoopers LLP issued an unqualified opinion - Management is responsible for preparing the consolidated financial statements in accordance with GAAP and for their integrity and objectivity[544] - PricewaterhouseCoopers LLP audited the consolidated financial statements and expressed an unqualified opinion[545] Report of Independent Registered Public Accounting Firm PricewaterhouseCoopers LLP issued an unqualified opinion on TDS's consolidated financial statements and internal control, identifying revenue recognition for UScellular as a critical audit matter - PricewaterhouseCoopers LLP issued an unqualified opinion on TDS's consolidated financial statements and the effectiveness of its internal control over financial reporting as of December 31, 2022[549] - A critical audit matter identified was revenue recognition for retail service and equipment and product sales for the UScellular segment, due to the high degree of auditor effort required[555][556][557] Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure No changes in or disagreements with accountants on accounting and financial disclosure were reported - No unresolved staff comments were reported[561] Item 9A. Controls and Procedures TDS's management concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2022, with no material changes during Q4 2022 - TDS's disclosure controls and procedures were effective as of December 31, 2022, at the reasonable assurance level[563] - Management concluded that TDS maintained effective internal control over financial reporting as of December 31, 2022, based on the 2013 COSO framework[566] - No material changes in internal control over financial reporting occurred during the fourth quarter of 2022[568] Item 9B. Other Information No other information was reported under this item - No other information was reported under this item[569] Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections This item is not applicable to TDS's operations - Disclosure regarding foreign jurisdictions that prevent inspections is not applicable[570] PART III](index=105&type=section&id=Part%20III) This section incorporates by reference information on directors, executive officers, corporate governance, executive compensation, security ownership, related transactions, and accountant fees from the Proxy Statement Item 10. Directors, Executive Officers and Corporate Governance Information regarding directors, executive officers, and corporate governance is incorporated by reference from the company's Proxy Statement - Information on Directors, Executive Officers, and Corporate Governance is incorporated by reference from the Proxy Statement[572] Item 11. Executive Compensation Information regarding executive compensation is incorporated by reference from the company's Proxy Statement - Information on Executive Compensation is incorporated by reference from the Proxy Statement[572] Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Information regarding security ownership of certain beneficial owners and management, and related stockholder matters, is incorporated by reference from the company's Proxy Statement - Information on Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters is incorporated by reference from the Proxy Statement[572] Item 13. Certain Relationships and Related Transactions, and Director Independence Information regarding certain relationships and related transactions, and director independence, is incorporated by reference from the company's Proxy Statement - Information on Certain Relationships and Related Transactions, and Director Independence is incorporated by reference from the Proxy Statement[573] Item 14. Principal Accountant Fees and Services Information regarding principal accountant fees and services is incorporated by reference from the company's Proxy Statement - Information on Principal Accountant Fees and Services is incorporated by reference from the Proxy Statement[573] PART IV](index=106&type=section&id=Part%20IV) This section details the exhibits and financial statement schedules filed as part of the report, along with the required signatures, affirming compliance with SEC regulations Item 15. Exhibits and Financial Statement Schedules This section lists the financial statements and a comprehensive array of exhibits, including charter documents, debt indentures, credit agreements, and compensation plans, all incorporated by reference - The financial statements included are the Consolidated Statement of Operations, Comprehensive Income, Cash Flows, Balance Sheet, and Changes in Equity[575] - The report incorporates by reference various exhibits, including TDS's Restated Certificate of Incorporation, Amended and Restated Bylaws, Indentures for Senior Debt Securities, and Credit Agreements[576][577][578] - Compensatory plans and arrangements, such as Long-Term Incentive Plans and Deferred Compensation Programs, are identified and incorporated by reference[575][578][579][580][581] Item 16. Form 10-K Summary This item indicates that no Form 10-K Summary is provided - No Form 10-K Summary is provided[583] Signatures The report is duly signed by TDS's President and CEO, Principal Financial Officer, and Principal Accounting Officer, along with the Board of Directors, affirming compliance with the Securities Exchange Act of 1934 - The report is signed by the President and CEO, Principal Financial Officer, and Principal Accounting Officer of Telephone and Data Systems, Inc[587] - The Board of Directors also signed the report, affirming compliance with the Securities Exchange Act of 1934[588][589]