Exhibit 12
TELEPHONE AND DATA SYSTEMS, INC.
RATIOS OF EARNINGS TO FIXED CHARGES
For the Year Ended December 31,
(Dollars in Thousands)
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| 2004 |
| 2003 |
| 2002 |
| 2001 |
| 2000 |
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EARNINGS: |
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Income (loss) before income taxes and minority interest |
| $ | 148,613 |
| $ | 121,760 |
| $ | (1,556,654 | ) | $ | (180,633 | ) | $ | 305,963 |
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Add (deduct): |
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Earnings on equity method investments |
| (64,900 | ) | (52,179 | ) | (43,799 | ) | (51,291 | ) | (35,495 | ) | ||||||||||
Distributions from unconsolidated entities |
| 49,234 |
| 45,427 |
| 31,328 |
| 16,644 |
| 34,834 |
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Minority interest in pre-tax income of subsidiaries that do not have fixed charges |
| (9,725 | ) | (11,842 | ) | (14,865 | ) | (9,724 | ) | (6,435 | ) | ||||||||||
|
| 123,222 |
| 103,166 |
| (1,583,990 | ) | (225,004 | ) | 298,867 |
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Add fixed charges: |
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Consolidated interest expense |
| 198,706 |
| 188,069 |
| 157,034 |
| 128,519 |
| 125,369 |
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Interest portion (1/3) of consolidated rent expense |
| 33,798 |
| 29,620 |
| 28,696 |
| 19,398 |
| 18,955 |
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|
| $ | 355,726 |
| $ | 320,855 |
| $ | (1,398,260 | ) | $ | (77,087 | ) | $ | 443,191 |
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FIXED CHARGES: |
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Consolidated interest expense |
| $ | 198,706 |
| $ | 188,069 |
| $ | 157,034 |
| $ | 128,519 |
| $ | 125,369 |
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Interest portion (1/3) of consolidated rent expense |
| 33,798 |
| 29,620 |
| 28,696 |
| 19,398 |
| 18,955 |
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|
| $ | 232,504 |
| $ | 217,689 |
| $ | 185,730 |
| $ | 147,917 |
| $ | 144,324 |
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RATIO OF EARNINGS TO FIXED CHARGES |
| 1.53 |
| 1.47 |
| — | (a) | — | (b) | 3.07 |
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Tax-effected preferred dividends |
| $ | 300 |
| $ | 652 |
| $ | 750 |
| $ | 824 |
| $ | 886 |
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Fixed charges |
| 232,504 |
| 217,689 |
| 185,730 |
| 147,917 |
| 144,324 |
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Fixed charges and preferred dividends |
| $ | 232,804 |
| $ | 218,341 |
| $ | 186,480 |
| $ | 148,741 |
| $ | 145,210 |
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RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED DIVIDENDS |
| 1.53 |
| 1.47 |
| — | (a) | — | (b) | 3.05 |
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(a) Earnings for the year ended December 31, 2002 were insufficient to cover fixed charges by $1,584.0 million and fixed charges and preferred dividends by $1,584.7 million. In the year ended December 31, 2002, TDS recognized a pre-tax loss on marketable securities and other investments of $1,888.4 million as a result of management’s determination that unrealized losses with respect to the investments were other than temporary and the write-off of a note receivable.
(b) Earnings for the year ended December 31, 2001 were insufficient to cover fixed charges by $225.0 million and fixed charges and preferred dividends by $225.8 million. In 2001, TDS recognized a pre-tax loss of $548.3 million primarily as a result of two merger transactions. The conversion of TDS’s investment in common stock of VoiceStream Wireless Corporation into shares of Deutsche Telekom and cash pursuant to a merger of VoiceStream and Deutsche Telekom resulted in a pre-tax loss of $644.9 million. The conversion of TDS’s investment in common stock of Illuminet Holding, Inc into shares of VeriSign, Inc. pursuant to a merger resulted in a pre-tax gain of $96.1 million. The loss and gain, respectively, were the result of the change in the market price of VoiceStream and Illuminet stocks between the time TDS acquired such stock and the date of the merger transactions.
