TDS Reports Second Quarter 2013 Results

                   TDS Reports Second Quarter 2013 Results

Updates TDS Telecom guidance to include Baja Broadband acquisition

PR Newswire

CHICAGO, Aug. 2, 2013

CHICAGO, Aug. 2, 2013 /PRNewswire/ --As previously announced, TDS will hold a
teleconference Aug. 2, 2013 at 9:30 a.m. CDT. Interested parties may listen to
the call live by accessing the Investor Relations page of www.teldta.com.

Telephone and Data Systems, Inc. (NYSE:TDS) reported operating revenues of
$1,228.2 million for the second quarter of 2013, versus $1,323.2 million for
the comparable period one year ago. Net income attributable to TDS
shareholders and related diluted earnings per share were $156.1 million and
$1.42 respectively, for the second quarter of 2013, compared to $42.3 million
and $0.39, respectively, in the comparable period one year ago.

The following significant events occurred during the second quarter of 2013:

  oOn April 3, U.S. Cellular deconsolidated the St. Lawrence Seaway RSA
    Cellular Partnership ("NY1") and the New York RSA 2 Cellular Partnership
    ("NY2"). As a result, the NY1 and NY2 partnerships results are now
    reported using the equity method of accounting for investments in the
    consolidated financial statements. U.S. Cellular has retained the same
    ownership percentage and will continue to report the same percentage of
    income.
  oOn May 16, U.S. Cellular's previously announced transaction to sell its
    Chicago, St. Louis, central Illinois and three other markets (the
    "Divestiture Transaction") closed and U.S. Cellular received $480 million
    in cash and recognized a pre-tax gain of $266.4 million.
  oOn June 25, U.S. Cellular paid a special cash dividend of $5.75 per Common
    Share and Series A Common Share, for an aggregate amount of $482.3
    million. Of the amount paid, TDS received $407.1 million.

"Our businesses have achieved significant strategic milestones so far this
year," said LeRoy T. Carlson, Jr., TDS president and CEO. "At U.S. Cellular,
we divested underperforming markets in May for $480 million, and returned
value to shareholders through a special, one-time dividend. In June, U.S.
Cellular also announced an agreement to monetize non-strategic spectrum at a
significant valuation. Yesterday, we closed the Baja Broadband acquisition
and TDS Telecom began implementing strategies to drive customer penetration in
Baja's markets. This morning, we announced a new $250 million share repurchase
authorization that will enable us to return value to TDS shareholders.

"With the leadership of president and CEO Ken Meyers, U.S. Cellular continues
to execute aggressive strategies to accelerate customer growth and improve its
competitive position. The 4G LTE network expansion is supporting growth in
smartphone penetration and data use, though the corresponding increase in
smartphone subsidies continues to impact profitability. To build the customer
base and reduce churn, U.S. Cellular plans to enhance its device portfolio
with Apple products later this year. U.S. Cellular also recently converted to
a new billing and operation support system that will improve efficiency and
enable faster delivery of new services and products, such as shared data plans
for customers with multiple devices.

"TDS Telecom continued to increase ILEC residential broadband and video
penetration in the quarter, and commercial managedIP connections increased 50
percent year over year. TDS Telecom's revenue growth in the quarter was driven
primarily by our hosted and managed services acquisitions, where we are
focused on offering comprehensive, end-to-end IT solutions for mid-market
customers."

SHARE Repurchase
The TDS board has authorized a $250 million share repurchase program, with no
expiration date. The board authorized management to use its discretion to
make purchases, as market conditions warrant, on the open market or at
negotiated prices in private transactions.

2013 ESTIMATES

Estimates of full-year 2013 results for U.S. Cellular, TDS Telecom and TDS are
shown below. Such estimates represent management's view as of the date of
filing TDS' Form 10-Q for the quarter ended June 30, 2013. Such
forward-looking statements should not be assumed to be current as of any
future date. TDS undertakes no duty to update such information, whether as a
result of new information, future events or otherwise. There can be no
assurance that final results will not differ materially from such estimated
results.

              2013 EstimatedResults (1)
              U.S. Cellular (2)            TDS Telecom            TDS (2)(6)
              Previous      Current        Previous   Current     Previous      Current
(Dollars in
millions)
Adjusted
operating    $3,620-$3,740 $3,615-$3,715  $850-$900 $890-$930  $4,515-$4,685 $4,550-$4,690
revenues (3)
Adjusted
income
before        $595-$715     $600-$700      $220-$250  $230-$260   $810-$960     $830-$960
income taxes
(4)
Capital       Unchanged    $735           $155       $165        $900          $910
expenditures

    These estimates are based on TDS' current plans, which include an
    expansion of the multi-year deployment of 4G LTE technology; such
    expansion includes deployment on 700 MHz in additional markets as well as
(1) deployment on the 850 MHz band to provide additional capacity for future
    growth in data usage, enable potential future 4G LTE roaming, and support
    the sale of Apple products. The financial impacts of selling Apple
    products in 2013 consist of the following:

  oIncreased Adjusted operating revenues resulting from net incremental
    customers added and retained as a result of offering Apple products;
  oDecreased Adjusted income before income taxes as a result of net increases
    in costs, primarily loss on equipment sales as a result of offering Apple
    products; and
  oIncreased Capital expenditures related to the deployment on the 850 MHz
    band to provide additional capacity for future growth in data usage, which
    includes capacity required to accommodate Apple products.

These estimates also reflect the impacts of the deconsolidation of certain
partnerships as of April 2013 at U.S. Cellular. These estimates do not
include (i) the reported gain on sale of business and other exit costs, net
(ii) the reported gain on investments, or (iii) the expected gains from
pending spectrum license divestitures. In addition, the estimates also
reflect the impacts of the acquisition of Baja Broadband, LLC as of August 1,
2013 and of a multi-year deployment of IPTV at TDS Telecom. New developments
or changing conditions (such as, but not limited to, regulatory developments,
customer net growth, customer demand for data services, costs to deploy,
agreements for content or franchises, or possible acquisitions, dispositions
or exchanges) could affect TDS' plans and, therefore, its 2013 estimated
results.

(2) These estimates reflect the Divestiture Transaction which closed on May
    16, 2013.

These estimates reflect U.S. Cellular's consolidated results for 2013.
Estimated results reflecting U.S. Cellular's Divestiture Markets and Core
Markets are shown in the table below:

              2013 Estimated Results
              U.S. Cellular Core        U.S. Cellular      U.S. Cellular Consolidated
                                        Divestiture        (5)
              Markets (5)               Markets (5)
              Previous   Current        Previous   Current Previous       Current
(Dollars in
millions)
Adjusted
operating     Unchanged $3,475-$3,575 $145-$165 $140    $3,620-$3,740 $3,615-$3,715
revenues (3)
Adjusted
income        Unchanged $560-$660     $35-$55   $40     $595-$715     $600-$700
beforeincome
taxes (4)
Capital       Unchanged $730           Unchanged  $5      Unchanged     $735
expenditures

    Adjusted operating revenues is a non-GAAP financial measure defined as
    Operating revenues excluding U.S. Cellular Equipment sales revenues. U.S.
    Cellular Equipment sales revenues are excluded from Adjusted operating
    revenues since U.S. Cellular equipment is generally sold at a net loss,
    and such net loss that results from U.S. Cellular Equipment sales revenues
    less U.S. Cellular Cost of equipment sold is viewed as a cost of earning
(3) service revenues for purposes of assessing business results. For purposes
    of developing this guidance, TDS does not calculate an estimate of U.S.
    Cellular Equipment sales revenues. TDS believes this measure provides
    useful information to investors regarding TDS' results of operations.
    Adjusted operating revenues is not a measure of financial performance
    under GAAP and should not be considered as an alternative to Operating
    revenues as an indicator of the Company's operating performance.
    Adjusted income before income taxes is a non-GAAP financial measure
    defined as Income before income taxes, adjusted for: Depreciation,
    amortization and accretion, net Gain or loss on sale of business and other
    exit costs (if any), net Gain or loss on investments (if any), and
    Interest expense. Adjusted income before income taxes excludes these
    items in order to show operating results on a more comparable basis from
    period to period. In the future, TDS may also exclude other items from
    adjusted income before income taxes if such items may help reflect
    operating results on a more comparable basis. TDS does not intend to
(4) imply that any such amounts that are excluded are non-recurring,
    infrequent or unusual; such amounts may occur in the future. Adjusted
    income before income taxes is not a measure of financial performance under
    GAAP and should not be considered as an alternative to Income before
    income taxes as an indicator of the Company's operating performance or as
    an alternative to Cash flows from operating activities, determined in
    accordance with GAAP, as an indicator of cash flows or as a measure of
    liquidity. The following tables provide a reconciliation of Income (loss)
    before income taxes to Adjusted income before income taxes for 2013
    Estimated Results, six months ended June 30, 2013 actual results, and 2012
    actual results:



                 2013 Current Estimated Results
                 U.S.       U.S.
                 Cellular   Cellular     U.S. Cellular    TDS
                 Core       Divestiture                              TDS (6)
                            Markets      Consolidated(5)  Telecom
                 Markets    (2)(5)
                 (5)
(Dollars in
millions)
Income (loss)
before income    ($10)-$90  $30          $20-$120         $25-$55    $30-$160
taxes
Depreciation,
amortization     $540       $250         $790             $205       $1,005
and accretion
expense (7)
(Gain) loss on
sale of
business         —          ($240)       ($240)           —          ($295)
andother exit
costs, net
(Gain) loss on   ($20)      —            ($20)            —          ($15)
investments
Interest         $50        —            $50              —          $105
expense
Adjusted income
beforeincome    $560-$660  $40          $600-$700        $230-$260  $830-$960
taxes



              Actual Results
              Six Months Ended June 30, 2013   Year Ended December 31, 2012
               U.S.           TDS               U.S.           TDS
               Cellular                 TDS     Cellular                 TDS
               Consolidated   Telecom   (6)     Consolidated   Telecom   (6)
               (5)                              (5)
(Dollars in millions)
Income before  $ 282          $ 22      $ 322   $ 205          $ 45      $ 196
income taxes
Depreciation,
amortization   393            98        497     609            193       814
andaccretion
expense (7)
(Gain) loss
on sale of
businessand   (242)          —         (296)   21             —         21
other exit
costs, net
(Gain) loss
on             (19)           —         (15)    4              —         4
investments
Interest       21             (1)       48      42             (1)       87
expense
Adjusted
income         $ 435          $ 119     $ 556   $ 881          $ 237     $
beforeincome                                                            1,122
taxes

    The U.S. Cellular Consolidated amounts represent GAAP financial measures
    and include the results of both the Core Markets and the Divestiture
    Markets. The amounts for Core Markets and Divestiture Markets represent
    non-GAAP financial measures. TDS believes that the amounts for the Core
    Markets and Divestiture Markets may be useful to investors and other users
    of its financial information in evaluating the separate results for the
    Core Markets. Divestiture Markets are comprised of U.S. Cellular's
(5) Chicago, central Illinois, St. Louis and certain Indiana/Michigan/Ohio
    markets. Core Markets are comprised of all other markets in which U.S.
    Cellular conducts business including Peoria, Rockford and certain other
    areas in Illinois, and in Columbia, Joplin, Jefferson City and certain
    other areas in Missouri. Core Markets as defined also includes any other
    income or expenses due to U.S. Cellular's direct or indirect ownership
    interests in other spectrum in the Divestiture Markets which was not
    included in the sale and other retained assets from the Divestiture
    Markets.
    The TDS column includes U.S. Cellular, TDS Telecom and also the impacts of
(6) consolidating eliminations, corporate operations and non-reportable
    segments, all of which are not presented above.
    The 2013 estimated amount for Depreciation, amortization and accretion
    expense in the U.S. Cellular Divestiture Markets includes approximately
    $168 million of incremental accelerated depreciation, amortization and
(7) accretion resulting from the Divestiture Transaction. Actual results for
    the six months ended June 30, 2013 and the year ended December 31, 2012
    include $88 million and $20 million, respectively, of incremental
    accelerated depreciation, amortization and accretion resulting from the
    Divestiture Transaction.



Conference Call Information
TDS will hold a conference call on Aug. 2, 2013 at 9:30 a.m. CDT.

  oAccess the live call on the Investor Relations page of www.teldta.com or
    at http://www.videonewswire.com/event.asp?id=95316.
  oAccess the 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 Investor Relations 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; broadband, TV and voice; and hosted and managed servicesto
approximately 6 million customers nationwide through its business units, U.S.
Cellular, TDS Telecom and TDS Hosted & Managed Services. Founded in 1969 and
headquartered in Chicago, TDS employed 10,700 people as of June 30, 2013.

Visit www.teldta.comfor comprehensive financial information, including
earnings releases, quarterly and annual filings, shareholder information and
more.

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: impacts of the pending acquisition and divestiture transactions,
including, but not limited to, the ability to obtain regulatory approvals,
successfully complete the transaction and the financial impacts of such
transaction; the ability of the company to successfully manage and grow its
markets; the overall economy; competition; the access to and pricing of
unbundled network elements; the ability to obtain or maintain roaming
arrangements with other carriers on acceptable terms; 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; pending and future litigation; changes in income tax rates,
laws, regulations or rulings; acquisitions/divestitures of properties and/or
licenses; changes in customer growth rates, average monthly revenue per user,
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 Current Report used by TDS to furnish this
press release to the Securities and Exchange Commission ("SEC"), which are
incorporated by reference herein.

For more information about TDS and its subsidiaries, visit:

TDS: www.teldta.com
U.S. Cellular: www.uscellular.com
TDS Telecom: www.tdstelecom.com



United States Cellular Corporation
Total Markets Summary Operating Data (Unaudited)
Quarter Ended  6/30/2013     3/31/2013     12/31/2012    9/30/2012     6/30/2012
Retail
Customers
 Postpaid
  Total at end   4,412,000     5,060,000     5,134,000     5,175,000     5,213,000
  of period
  Gross          165,000       191,000       241,000       230,000       199,000
  additions
  Net
  additions      (120,000)     (74,000)      (41,000)      (38,000)      (48,000)
  (losses)
  ARPU (1)     $ 54.18       $ 54.85       $ 54.56       $ 54.34       $ 54.42
  Churn rate     2.0%          1.7%          1.8%          1.7%          1.6%
  (2)
  Smartphone
  penetration    45.5%         43.5%         41.8%         38.6%         36.8%
  (3) (4)
 Prepaid
  Total at end   381,000       446,000       423,000       386,000       329,000
  of period
  Gross          77,000        104,000       107,000       120,000       78,000
  additions
  Net
  additions      (7,000)       23,000        37,000        57,000        20,000
  (losses)
  ARPU (1)     $ 31.69       $ 33.31       $ 33.56       $ 32.97       $ 33.59
  Churn rate     6.8%          6.2%          5.8%          5.9%          6.2%
  (2)
Total
customers at     4,968,000     5,736,000     5,798,000     5,808,000     5,799,000
end of period
Billed ARPU    $ 50.60       $ 51.13       $ 50.94       $ 50.83       $ 50.99
(1)
Service
revenue ARPU   $ 57.45       $ 57.63       $ 58.00       $ 59.57       $ 59.05
(1)
Smartphones
sold as a
percent of       66.0%         61.7%         62.9%         53.0%         51.9%
total devices
sold
Total
population
  Consolidated   84,025,000    93,943,000    93,244,000    92,996,000    92,684,000
  markets (5)
  Consolidated
  operating      31,822,000    47,440,000    46,966,000    46,966,000    46,966,000
  markets (5)
Market
penetration at
end of period
  Consolidated   5.9%          6.1%          6.2%          6.2%          6.3%
  markets (6)
  Consolidated
  operating      15.6%         12.1%         12.3%         12.4%         12.3%
  markets (6)
Capital
expenditures   $ 168,500     $ 118,400     $ 253,100     $ 199,100     $ 183,200
(000s)
Total cell
sites in         7,748         8,027         8,028         7,984         7,932
service
Owned towers     4,411         4,411         4,408         4,377         4,346
in service



United States Cellular Corporation
Core Markets Summary Operating Data (Unaudited)
Excludes NY1 & NY2
Quarter Ended  6/30/2013     3/31/2013     12/31/2012    9/30/2012     6/30/2012
Retail
Customers
 Postpaid
  Total at end   4,412,000     4,463,000     4,496,000     4,515,000     4,538,000
  of period
  Gross          165,000       176,000       208,000       196,000       167,000
  additions
  Net
  additions      (53,000)      (33,000)      (19,000)      (23,000)      (30,000)
  (losses)
  ARPU (1)     $ 54.44       $ 54.21       $ 53.91       $ 53.67       $ 53.73
  Churn rate     1.6%          1.6%          1.7%          1.6%          1.4%
  (2)
  Smartphone
  penetration    45.5%         43.0%         41.1%         37.8%         36.0%
  (3) (4)
 Prepaid
  Total at end   381,000       373,000       342,000       305,000       246,000
  of period
  Gross          76,000        91,000        87,000        99,000        60,000
  additions
  Net
  additions      8,000         31,000        37,000        59,000        23,000
  (losses)
  ARPU (1)     $ 31.65       $ 32.92       $ 33.21       $ 32.97       $ 33.23
  Churn rate     6.0%          5.6%          5.1%          4.8%          5.4%
  (2)
Total
customers at     4,968,000     5,005,000     5,022,000     5,012,000     4,989,000
end of period
Billed ARPU    $ 50.98       $ 50.93       $ 50.71       $ 50.59       $ 50.71
(1)
Service
revenue ARPU   $ 57.88       $ 57.14       $ 57.67       $ 59.34       $ 58.89
(1)
Smartphones
sold as a
percent of       66.1%         62.1%         62.9%         53.0%         52.0%
total devices
sold
Total
population
  Consolidated   84,025,000    84,025,000    83,384,000    82,595,000    82,283,000
  markets (5)
  Consolidated
  operating      31,822,000    31,822,000    31,445,000    31,110,000    31,110,000
  markets (5)
Market
penetration at
end of period
  Consolidated   5.9%          6.0%          6.0%          6.1%          6.1%
  markets (6)
  Consolidated
  operating      15.6%         15.7%         16.0%         16.1%         16.0%
  markets (6)
Capital
expenditures   $ 171,200     $ 113,300     $ 241,400     $ 184,100     $ 163,600
(000s)
Total cell
sites in         6,113         6,113         6,130         6,089         6,041
service
Owned towers     3,844         3,846         3,847         3,818         3,787
in service

    ARPU metrics are calculated by dividing a revenue base by an average
(1) number of customers by the number of months in the period. These revenue
    bases and customer populations are shown below:
    a.            Postpaid ARPU consists of total postpaid service revenues
                  and postpaid customers.
    b.            Prepaid ARPU consists of total prepaid service revenues and
                  prepaid customers.
    c.            Billed ARPU consists of total retail service revenues and
                  postpaid, prepaid and reseller customers.
                  Service revenue ARPU consists of total retail service
    d.            revenues, inbound roaming and other service revenues and
                  postpaid, prepaid and reseller customers.
    Churn metrics represent the percentage of the postpaid or prepaid
(2) customers that disconnect service each month. These metrics represent the
    average monthly postpaid or prepaid churn rate for each respective period.
(3) Smartphones represent wireless devices which run on an Android^TM,
    BlackBerry® or Windows Mobile® operating system, excluding tablets.
(4) Smartphone penetration is calculated by dividing postpaid smartphone
    customers by total postpaid customers.
    Used only to calculate market penetration of consolidated and core markets
(5) and consolidated and core operating markets, respectively. See footnote
    (6)below.
    Market penetration is calculated by dividing the number of wireless
(6) customers at the end of the period by the total population of consolidated
    and core markets and consolidated and core operating markets,
    respectively, as estimated by Claritas®.



TDS Telecom
Summary Operating Data (Unaudited)
Quarter Ended           6/30/2013  3/31/2013  12/31/2012  9/30/2012  6/30/2012
TDS Telecom
ILEC:
    Residential
    Connections
     Physical access    342,200    345,500    350,100     355,800    360,100
     lines (1)
     Broadband          224,500    221,900    221,700     223,100    222,400
     connections (2)
     IPTV customers     10,500     9,000      7,900       6,700      5,600
      ILEC
     residential        577,200    576,400    579,700     585,600    588,100
     connections
    Commercial
    Connections
     Physical access    104,100    106,000    107,600     109,800    111,100
     lines (1)
     Broadband          18,500     18,400     18,500      18,500     18,400
     connections (2)
     managedIP          19,900     18,400     17,200      15,000     13,200
     connections (3)
      ILEC commercial 142,500    142,800    143,300     143,300    142,700
     connections
CLEC:
    Residential
    Connections
     Physical access    21,800     23,000     24,600      26,200     27,900
     lines (1)
     Broadband          7,200      7,700      8,200       8,900      9,500
     connections (2)
      CLEC
     residential        29,000     30,700     32,800      35,100     37,400
     connections
    Commercial
    Connections
     Physical access    125,000    129,700    135,500     140,300    145,100
     lines (1)
     Broadband          9,700      10,400     11,200      12,000     12,800
     connections (2)
     managedIP          92,000     85,000     77,400      69,500     61,400
     connections (3)
      CLEC commercial 226,700    225,100    224,100     221,800    219,300
     connections
Total ILEC and CLEC     975,400    975,000    979,900     985,800    987,500
Customer Connections

(1) Individual circuits connecting customers to TDS Telecom's central office
    facilities.
(2) The number of customers provided high-capacity data circuits via various
    technologies, including DSL and dedicated Internet circuit technologies.
(3) The number of telephone handsets, data lines and IP trunks providing
    communications using IP networking technology.



TDS Telecom
Capital Expenditures (000s)
Quarter Ended   6/30/2013    3/31/2013    12/31/2012    9/30/2012    6/30/2012
ILEC          $ 29,400     $ 22,400     $ 43,400      $ 33,700     $ 32,500
CLEC            3,900        5,500        6,100         5,400        4,900
HMS             2,300        2,600        2,300         4,400        5,500
              $ 35,600     $ 30,500     $ 51,800      $ 43,500     $ 42,900



Telephone and Data Systems, Inc.
Consolidated Statement of Operations Highlights
Three Months Ended June 30,
(Unaudited, dollars and shares in thousands, except per share amounts)
                                                        Increase/ (Decrease)
                              2013         2012         Amount       Percent
Operating revenues
 U.S. Cellular                $ 995,130    $ 1,104,400  $  (109,270)  (10%)
 TDS Telecom                    223,460      208,519       14,941     7%
 All Other (1)                  9,576        10,250        (674)      (7%)
                                1,228,166    1,323,169     (95,003)   (7%)
Operating expenses
 U.S. Cellular
   Expenses excluding
   depreciation, amortization   813,464      869,980       (56,516)   (6%)
   and accretion
   Depreciation, amortization   202,580      147,555       55,025     37%
   and accretion
   Loss on asset disposals,     9,018        2,702         6,316      >100%
   net
   (Gain) loss on sale of
   business and other exit      (249,024)    —             (249,024)  N/M
   costs, net
                                776,038      1,020,237     (244,199)  (24%)
 TDS Telecom
   Expenses excluding
   depreciation, amortization   162,954      148,983       13,971     9%
   and accretion
   Depreciation, amortization   48,756       47,945        811        2%
   and accretion
   (Gain) loss on asset         (682)        306           (988)      >(100%)
   disposals, net
                                211,028      197,234       13,794     7%
 All Other (1)
   Expenses excluding
   depreciation and             10,033       11,111        (1,078)    (10%)
   amortization
   Depreciation and             2,867        3,009         (142)      (5%)
   amortization
   Loss on impairment of        —            515           (515)      N/M
   assets
   Gain on asset disposals,     (17)         (13)          (4)        (31%)
   net
   (Gain) loss on sale of
   business and other exit      (54,010)     —             (54,010)   N/M
   costs, net
                                (41,127)     14,622        (55,749)   >(100%)
         Total operating        945,939      1,232,093     (286,154)  (23%)
         expenses
Operating income (loss)
 U.S. Cellular                  219,092      84,163        134,929    >100%
 TDS Telecom                    12,432       11,285        1,147      10%
 All Other (1)                 50,703       (4,372)       55,075     >(100%)
                                282,227      91,076        191,151    >100%
Investment and other income
(expense)
 Equity in earnings of          35,605       25,392        10,213     40%
 unconsolidated entities
 Interest and dividend income   2,600        2,352         248        11%
 Gain (loss) on investments     14,518       (3,728)       18,246     >(100%)
 Interest expense               (23,749)     (23,139)      (610)      (3%)
 Other, net                     (197)        (249)         52         21%
   Total investment and other   28,777       628           28,149     >100%
   income
Income before income taxes      311,004      91,704        219,300    >100%
 Income tax expense             132,607      35,765        96,842     >100%
Net income                      178,397      55,939        122,458    >100%
 Less: Net income
 attributable to                (22,320)     (13,602)      (8,718)    (64%)
 noncontrolling interests,
 net of tax
Net income attributable to      156,077      42,337        113,740    >100%
TDS shareholders
 Preferred dividend             (12)         (12)          —          —
 requirement
Net income available to       $ 156,065    $ 42,325     $  113,740    >100%
common shareholders
Basic weighted average shares   108,385      108,732       (347)      —
outstanding
Basic earnings per share
attributable to TDS           $ 1.44       $ 0.39       $  1.05       >100%
shareholders
Diluted weighted average        108,913      109,022       (109)      —
shares outstanding
Diluted earnings per share
attributable to TDS           $ 1.42       $ 0.39       $  1.03       >100%
shareholders

    Consists of Non-Reportable Segment, corporate operations and intercompany
    eliminations between U.S. Cellular, TDS Telecom, the Non-Reportable
(1) Segment and corporate operations. TDS recognized an incremental $53.5
    million upon closing of the Divesture Transaction as a result of lower
    asset basis in assets disposed.
N/M – Percentage change not meaningful



Telephone and Data Systems, Inc.
Consolidated Statement of Operations Highlights
Six Months Ended June 30,
(Unaudited, dollars and shares in thousands, except per share amounts)
                                                        Increase/ (Decrease)
                              2013         2012         Amount       Percent
Operating revenues
 U.S. Cellular                $ 2,076,876  $ 2,196,521  $  (119,645)  (5%)
 TDS Telecom                    440,521      412,594       27,927     7%
 All Other (1)                  19,342       19,845        (503)      (3%)
                                2,536,739    2,628,960     (92,221)   (4%)
Operating expenses
 U.S. Cellular
   Expenses excluding
   depreciation, amortization   1,691,534    1,732,424     (40,890)   (2%)
   and accretion
   Depreciation, amortization   392,425      294,240       98,185     33%
   and accretion
   Loss on asset disposals,     14,452       4,705         9,747      >100%
   net
   (Gain) loss on sale of
   business and other exit      (242,093)    (4,213)       (237,880)  >100%
   costs, net
                                1,856,318    2,027,156     (170,838)  (8%)
 TDS Telecom
   Expenses excluding
   depreciation, amortization   322,440      292,403       30,037     10%
   and accretion
   Depreciation, amortization   98,247       95,388        2,859      3%
   and accretion
   (Gain) loss on asset         (489)        426           (915)      >(100%)
   disposals, net
                                420,198      388,217       31,981     8%
 All Other (1)
   Expenses excluding
   depreciation and             19,272       22,057        (2,785)    (13%)
   amortization
   Depreciation and             5,608        6,315         (707)      (11%)
   amortization
   Loss on impairment of        —            515           (515)      N/M
   assets
   Gain on asset disposals,     (28)         (18)          (10)       (56%)
   net
   (Gain) loss on sale of
   business and other exit      (54,010)     —             (54,010)   N/M
   costs, net
                                (29,158)     28,869        (58,027)   >(100%)
         Total operating        2,247,358    2,444,242     (196,884)  (8%)
         expenses
Operating income (loss)
 U.S. Cellular                  220,558      169,365       51,193     30%
 TDS Telecom                    20,323       24,377        (4,054)    (17%)
 All Other (1)                 48,500       (9,024)       57,524     >(100%)
                                289,381      184,718       104,663    57%
Investment and other income
(expense)
 Equity in earnings of          62,694       48,781        13,913     29%
 unconsolidated entities
 Interest and dividend income   4,178        4,535         (357)      (8%)
 Gain (loss) on investments     14,518       (3,728)       18,246     >(100%)
 Interest expense               (48,247)     (47,603)      (644)      (1%)
 Other, net                     (351)        (21)          (330)      >100%
   Total investment and other   32,792       1,964         30,828     >100%
   income
Income before income taxes      322,173      186,682       135,491    73%
 Income tax expense             136,787      63,177        73,610     >100%
Net income                      185,386      123,505       61,881     50%
 Less: Net income
 attributable to                (27,890)     (28,914)      1,024      4%
 noncontrolling interests,
 net of tax
Net income attributable to      157,496      94,591        62,905     67%
TDS shareholders
 Preferred dividend             (25)         (25)          —          —
 requirement
Net income available to       $ 157,471    $ 94,566     $  62,905     67%
common shareholders
Basic weighted average shares   108,320      108,693       (373)      —
outstanding
Basic earnings per share
attributable to TDS           $ 1.45       $ 0.87       $  0.58       67%
shareholders
Diluted weighted average        108,827      108,964       (137)      —
shares outstanding
Diluted earnings per share
attributable to TDS           $ 1.44       $ 0.86       $  0.58       67%
shareholders

    Consists of Non-Reportable Segment, corporate operations and intercompany
    eliminations between U.S. Cellular, TDS Telecom, the Non-Reportable
(1) Segment and corporate operations. TDS recognized an incremental $53.5
    million upon closing of the Divesture Transaction as a result of lower
    asset basis in assets disposed.
N/M – Percentage change not meaningful



Telephone and Data Systems, Inc.
Consolidated Balance Sheet Highlights
(Unaudited, dollars in thousands)
ASSETS
                                               June 30,    December 31,
                                               2013         2012
Current assets
 Cash and cash equivalents                     $ 1,246,415  $  740,481
 Short-term investments                          110,352       115,700
 Accounts receivable from customers and others   485,596       574,328
 Inventory                                       168,700       160,692
 Net deferred income tax asset                   56,822        43,411
 Prepaid expenses                                93,383        86,385
 Income taxes receivable                         9             9,625
 Other current assets                            32,375        32,815
                                                 2,193,652     1,763,437
Assets held for sale                             78,389        163,242
Investments
 Licenses                                        1,418,832     1,480,039
 Goodwill                                        759,885       797,194
 Other intangible assets, net                    52,592        58,522
 Investments in unconsolidated entities          312,046       179,921
 Long-term investments                           40,120        50,305
 Other investments                               738           824
                                                 2,584,213     2,566,805
Property, plant and equipment, net
 U.S. Cellular                                   2,823,509     3,022,588
 TDS Telecom                                     906,904       934,188
 Other                                           38,520        40,490
                                                 3,768,933     3,997,266
Other assets and deferred charges                129,578       133,150
Total assets                                   $ 8,754,765  $  8,623,900



Telephone and Data Systems, Inc.
Consolidated Balance Sheet Highlights
(Unaudited, dollars in thousands)
LIABILITIES AND EQUITY
                                                   June 30,    December 31,
                                                   2013         2012
Current liabilities
    Current portion of long-term debt              $ 1,899      $  1,233
    Accounts payable                                 393,906       377,291
    Customer deposits and deferred revenues          228,259       222,345
    Accrued interest                                 8,599         6,565
    Accrued taxes                                    190,836       48,237
    Accrued compensation                             95,677        134,932
    Other current liabilities                        114,910       134,005
                                                     1,034,086     924,608
Liabilities held for sale                            559           19,594
Deferred liabilities and credits
    Net deferred income tax liability                855,623       862,580
    Other deferred liabilities and credits           460,991       438,727
Long-term debt                                       1,720,642     1,721,571
Noncontrolling interests with redemption features    512           493
Equity
  TDS shareholders' equity
    Series A Common and Common Shares, par value     1,327         1,327
    $.01
    Capital in excess of par value                   2,299,091     2,304,122
    Treasury shares, at cost                         (738,397)     (750,099)
    Accumulated other comprehensive loss             (8,438)       (8,132)
    Retained earnings                                2,586,567     2,464,318
             Total TDS shareholders' equity        4,140,150     4,011,536
  Preferred shares                                   825           825
  Noncontrolling interests                           541,377       643,966
    Total equity                                     4,682,352     4,656,327
Total liabilities and equity                       $ 8,754,765  $  8,623,900



Balance Sheet Highlights
June 30, 2013
(Unaudited, dollars in thousands)
               U.S.         TDS        TDS          Intercompany  TDS
                                       Corporate
               Cellular     Telecom    & Other      Eliminations  Consolidated
Cash and cash  $ 467,421    $ 92,257   $ 686,737    $  ―         $  1,246,415
equivalents
Affiliated
cash             ―           397,972    ―            (397,972)     ―
investments
Short-term       110,352      ―         ―            ―            110,352
investments
               $ 577,773    $ 490,229  $ 686,737    $  (397,972)  $  1,356,767
Licenses,
goodwill and
other          $ 1,783,572  $ 577,367  $ (129,630)  $  ―         $  2,231,309
intangible
assets
Investment in
unconsolidated   276,363      3,809      38,985        (7,111)       312,046
entities
Long-term and
other            40,120       738        ―            ―            40,858
investments
               $ 2,100,055  $ 581,914  $ (90,645)   $  (7,111)    $  2,584,213
Property,
plant and      $ 2,823,509  $ 906,904  $ 38,520     $  ―         $  3,768,933
equipment, net
Long-term
debt:
   Current     $ 100        $ 70       $ 1,729      $  ―         $  1,899
   portion
   Non-current   879,121      724        840,797       ―            1,720,642
   portion
       Total   $ 879,221    $ 794      $ 842,526    $  ―         $  1,722,541
Preferred      $ ―         $ ―       $ 825        $  ―         $  825
shares



Telephone and Data Systems, Inc.
Schedule of Cash and Cash Equivalents and Investments
(Unaudited, dollars in thousands)
The following table presents TDS' cash and cash equivalents and investments at
June 30, 2013 and December 31, 2012.
                                      June 30,              December 31,
                                      2013                  2012
Cash and cash equivalents             $    1,246,415        $      740,481
Amounts included in short-term
investments (1) (2)
           U.S. Treasury Notes             110,352                 115,700
Amounts included in long-term
investments (1) (3)
           U.S. Treasury Notes             40,120                  50,305
Total cash and cash equivalents and   $    1,396,887        $      906,486
investments

(1) Designated as held-to-maturity investments and are recorded at amortized
    cost in the Consolidated Balance Sheet.
(2) Maturities are less than twelve months from the respective balance sheet
    dates.
(3) At June 30, 2013, maturities range between 17 and 18 months.



Telephone and Data Systems, Inc.
Consolidated Statement of Cash Flows
Six Months Ended June 30,
(Unaudited, dollars in thousands)
                                                     2013         2012
Cash flows from operating activities
 Net income                                          $ 185,386    $ 123,505
  Add (deduct) adjustments to reconcile net income
  to net cash flowsfrom operating activities
               Depreciation, amortization and          496,280      395,943
               accretion
               Bad debts expense                       35,187       33,626
               Stock-based compensation expense        12,902       20,955
               Deferred income taxes, net              (21,246)     29,929
               Equity in earnings of unconsolidated    (62,694)     (48,781)
               entities
               Distributions from unconsolidated       47,635       6,973
               entities
               Loss on impairment of assets            —            515
               Loss on asset disposals, net            13,935       5,074
               (Gain) loss on sale of business and     (296,103)    (4,174)
               other exit costs, net
               (Gain) loss on investments              (14,518)     3,728
               Noncash interest expense                997          1,728
               Other operating activities              505          1,010
  Changes in assets and liabilities from operations
               Accounts receivable                     (5,781)      (10,197)
               Inventory                               (8,105)      (58,467)
               Accounts payable                        58,204       (23,336)
               Customer deposits and deferred          7,897        22,786
               revenues
               Accrued taxes                           150,425      89,433
               Accrued interest                        2,172        (1,823)
               Other assets and liabilities            (81,586)     (81,517)
                                                       521,492      506,910
Cash flows from investing activities
 Cash used for additions to property, plant and        (384,281)    (501,211)
 equipment
 Cash paid for acquisitions and licenses               (14,150)     (52,213)
 Cash received from divestitures                       480,000      50,036
 Cash paid for investments                             —            (45,000)
 Cash received for investments                         15,000       128,444
 Other investing activities                            14,127       (8,916)
                                                       110,696      (428,860)
Cash flows from financing activities
 Repayment of long-term debt                           (605)        (952)
 Issuance of long-term debt                            —            358
 TDS Common Shares and Special Common Shares           776          (39)
 reissued for benefit plans, net of tax payments
 U.S. Cellular Common Shares reissued for benefit      (2,206)      (2,465)
 plans, net of tax payments
 Repurchase of U.S. Cellular Common Shares             (18,425)     —
 Dividends paid to TDS shareholders                    (27,598)     (26,610)
 U.S. Cellular dividends paid to noncontrolling        (75,235)     —
 public shareholders
 Payment of debt issuance costs                        (23)         —
 Distributions to noncontrolling interests             (3,292)      (643)
 Other financing activities                            354          2,790
                                                       (126,254)    (27,561)
Net increase in cash and cash equivalents              505,934      50,489
Cash and cash equivalents
 Beginning of period                                   740,481      563,275
 End of period                                       $ 1,246,415  $ 613,764



TDS Telecom Highlights
Three Months Ended June 30,
(Unaudited, dollars in thousands)
                                                          Increase (Decrease)
                                    2013       2012       Amount      Percent
Local Telephone Operations
  Operating revenues
    Residential                     $ 69,516   $ 70,082   $  (566)    (0)
    Commercial                        24,266     24,201      65       —
    Wholesale                         48,691     49,769      (1,078)  (2%)
                                      142,473    144,052     (1,579)  (1%)
  Operating expenses
    Cost of services and products     46,621     47,180      (559)    (0)
    Selling, general and              41,274     43,216      (1,942)  (4%)
    administrative expenses
    Depreciation, amortization and    37,972     37,834      138      —
    accretion
    (Gain) loss on asset disposals    (850)      136         (986)    >(100)%
    and exchanges, net
                                      125,017    128,366     (3,349)  (3%)
  Operating income                  $ 17,456   $ 15,686   $  1,770    11%
Competitive Local Exchange Carrier
Operations
  Operating revenues
    Residential                     $ 3,395    $ 4,338    $  (943)    (22%)
    Commercial                        35,022     34,905      117      —
    Wholesale                         3,716      4,957       (1,241)  (25%)
                                      42,133     44,200      (2,067)  (5%)
  Operating expenses
    Cost of services and products     22,183     22,702      (519)    (2%)
    Selling, general and              15,850     16,769      (919)    (5%)
    administrative expenses
    Depreciation, amortization and    5,221      5,466       (245)    (4%)
    accretion
    Loss on asset disposals and       85         72          13       18%
    exchanges, net
                                      43,339     45,009      (1,670)  (4%)
  Operating loss                    $ (1,206)  $ (809)    $  (397)    (49%)
Hosted and Managed Services
Operations
    Revenues                        $ 41,374   $ 22,876   $  18,498   81%
  Operating expenses
    Cost of services and products     30,185     15,090      15,095   >100%
    Selling, general and              9,361      6,635       2,726    41%
    administrative expenses
    Depreciation, amortization and    5,563      4,645       918      20%
    accretion
    Loss on asset disposals and       83         98          (15)     (15%)
    exchanges, net
                                      45,192     26,468      18,724   71%
  Operating loss                    $ (3,818)  $ (3,592)  $  (226)    (6%)
Intercompany revenues               $ (2,520)  $ (2,609)  $  89       3%
Intercompany expenses                 (2,520)    (2,609)     89       3%
Total TDS Telecom operating income  $ 12,432   $ 11,285   $  1,147    10%



TDS Telecom Highlights
Six Months Ended June 30,
(Unaudited, dollars in thousands)
                                                          Increase (Decrease)
                                    2013       2012       Amount      Percent
Local Telephone Operations
  Operating revenues
    Residential                     $ 138,902  $ 139,481  $  (579)    —
    Commercial                        48,550     48,331      219      —
    Wholesale                         96,541     101,305     (4,764)  (5%)
                                      283,993    289,117     (5,124)  (2%)
  Operating expenses
    Cost of services and products     94,216     96,348      (2,132)  (2%)
    Selling, general and              83,113     84,730      (1,617)  (2%)
    administrative expenses
    Depreciation, amortization and    76,548     75,612      936      1%
    accretion
    (Gain) loss on asset disposals    (728)      202         (930)    >(100)%
    and exchanges, net
                                      253,149    256,892     (3,743)  (1%)
  Operating income                  $ 30,844   $ 32,225   $  (1,381)  (4%)
Competitive Local Exchange Carrier
Operations
  Operating revenues
    Residential                     $ 7,013    $ 9,126    $  (2,113)  (23%)
    Commercial                        70,130     69,246      884      1%
    Wholesale                         7,544      9,872       (2,328)  (24%)
                                      84,687     88,244      (3,557)  (4%)
  Operating expenses
    Cost of services and products     44,145     45,266      (1,121)  (2%)
    Selling, general and              31,782     33,029      (1,247)  (4%)
    administrative expenses
    Depreciation, amortization and    10,668     10,955      (287)    (3%)
    accretion
    Loss on asset disposals and       126        125         1        1%
    exchanges, net
                                      86,721     89,375      (2,654)  (3%)
  Operating loss                    $ (2,034)  $ (1,131)  $  (903)    (80%)
Hosted and Managed Services
Operations
    Revenues                        $ 76,938   $ 40,434   $  36,504   90%
  Operating expenses
    Cost of services and products     54,999     24,864      30,135   >100%
    Selling, general and              19,282     13,367      5,915    44%
    administrative expenses
    Depreciation, amortization and    11,031     8,821       2,210    25%
    accretion
    Loss on asset disposals and       113        99          14       14%
    exchanges, net
                                      85,425     47,151      38,274   81%
  Operating loss                    $ (8,487)  $ (6,717)  $  (1,770)  (26%)
Intercompany revenues               $ (5,097)  $ (5,201)  $  104      2%
Intercompany expenses                 (5,097)    (5,201)     104      2%
Total TDS Telecom operating income  $ 20,323   $ 24,377   $  (4,054)  (17%)



Telephone and Data Systems, Inc.
Financial Measures and Reconciliations
(Unaudited, dollars in thousands)
                                  TDS Consolidated
                                  Three Months Ended     Six Months Ended
                                  June 30,               June 30,
                                  2013       2012        2013       2012
 Cash flows from operating        $ 275,140  $ 224,665   $ 521,492  $ 506,910
 activities
 Deduct:
 Cash used for additions to         207,963    258,600     384,281    501,211
 property, plant and equipment
       Free cash flow (1)         $ 67,177   $ (33,935)  $ 137,211  $ 5,699

    Free cash flow is defined as Cash flows from operating activities less
    Cash used for additions to property, plant and equipment. Free cash flow
(1) 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.



SOURCE Telephone and Data Systems, Inc.

Website: http://www.teldta.com
Contact: Jane W. McCahon, Vice President, Corporate Relations and Corporate
Secretary, (312) 592-5379; jane.mccahon@teldta.com; or Julie D. Mathews,
Manager, Investor Relations, (312) 592-5341; julie.mathews@teldta.com
 
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