EX-99 3 tdsq203exhibit991.htm TDS Q203 PRESS RELEASE

Exhibit 99.1

As previously announced, TDS and its subsidiaries will hold a joint teleconference on July 23, 2003, at 10:00 am Chicago time. Interested parties may listen to the call live over the Internet by accessing the conference call page of the Investor Relations section in www.teldta.com.


Contact: Mark A. Steinkrauss, Vice President, Corporate Relations
  (312) 592-5384 mark.steinkrauss@teldta.com

  Ruth E. Venning, Director, Corporate Relations
  (312) 592-5327 ruth.venning@teldta.com

  Julie D. Mathews, Manager, Investor Relations
  (312) 592-5341 julie.mathews@teldta.com


FOR RELEASE: IMMEDIATE

TDS REPORTS SECOND QUARTER RESULTS

July 23, 2003 — Chicago, Illinois — Telephone and Data Systems, Inc. [AMEX:TDS] reported operating revenues of $851.3 million for the second quarter of 2003, up 18% from $720.4 million in the comparable period a year ago. Operating income decreased 24% to $93.5 million from $123.3 million in the second quarter of 2002. Diluted earnings per share was $.35 compared to a diluted loss per share of $16.23 in the second quarter a year ago. In the second quarter of 2002, the company recorded a pre-tax loss of $1,719.1 million related to the writedown in value of marketable equity securities.


President’s Comments

“The second quarter was one of solid growth for both our wireless and wireline businesses,” said LeRoy T. Carlson, Jr., president and chief executive officer. “U.S. Cellular and TDS Telecom both continue to deliver on the promise of superior customer service and satisfaction that make TDS the excellent company it is today.

“U.S. Cellular recorded strong revenue growth, with customer additions of 103,000 and average monthly retail service revenue increasing year over year for the sixth consecutive quarter. At the same time, the postpay churn rate remained very low, pointing to the success of our commitment to customer satisfaction. This solid revenue performance was offset by higher year-over-year expenses associated with opening and servicing new markets, support of higher customer and minutes-of-use levels and higher marketing and retention costs. Additionally, the conversion of the third-party billing system in the Chicago market to U.S. Cellular’s own integrated billing and customer care system added to costs. The conversion will be complete in the third quarter.

“TDS Telecom, our traditional wireline business, continues to be a solid profitable performer, reflecting steady revenue growth. The company’s ILEC added 5,000 access line equivalents as well as growth in long distance and DSL accounts. The company’s CLECs also posted excellent operating results for the quarter, driven by strong access line equivalent growth and a year-over-year reduction in expenses.

“All in all, the second quarter was a solid quarter for TDS, despite the uncertainty that continues to characterize the economic climate. We have every reason to expect continued success in the second half of the year, and we thank all of the 11,000 people who make up TDS for their dedication, care and hard work.”

Outlook

Based on the belief that U.S. Cellular’s planned transaction with AWE will close within thirty days, the companies have reviewed their forward-looking statements. The revised statements for the year 2003, inclusive of costs for the build-out of some AWE markets, are as follows:

U.S. Cellular 2003 Outlook

Net adds 475,000 - 500,000
Service revenues $2.35 - $2.4 billion
Depreciation and amortization $445 - $450 million
Operating income* $170 - $190 million
Capital spending $650 - $670 million

*Includes $27 million in operating expenses related to loss on assets held
for sale related to the planned AWE exchange

ILEC 2003 Outlook

Revenues $635 - $645 million
Depreciation and amortization $135 million
Operating income $170 - $180 million
Capital spending $130 million

CLEC 2003 Outlook
Revenues $210 - $220 million
Depreciation and amortization $35 million
Operating income $(35) - $(25) million
Capital spending $35 million

Financial Initiatives

TDS repurchased 628,600 of its shares during the quarter at an average price of $43.15 per share. Year to date, TDS has repurchased a total of 1,378,900 shares at an average price of $40.95 for $56.5 million. In addition, TDS is redeeming $65.5 million of its Medium-Term Notes at par effective July 28, 2003.

TDS, a FORTUNE 500 company, is a diversified telecommunications corporation founded in 1969. Through its strategic business units, U.S. Cellular and TDS Telecom, TDS operates primarily by providing wireless and local telephone service. TDS builds value for its shareholders by providing excellent communications services in growing, closely related segments of the telecommunications industry. The company currently employs approximately 11,000 people and serves approximately 5.4 million customers/units in 35 states.

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 and projections, 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: changes in circumstances or events that may affect the ability of USM to acquire or, if it acquires, to start up the

2


operations of the properties involved in the AWE transaction; the ability of USM to successfully manage and grow the operations of the Chicago MTA; changes in the overall economy; changes in competition in the markets in which TDS operates; advances in telecommunications technology; changes brought about by the implementation of wireless number portability; changes in the telecommunications regulatory environment; changes in the value of investments, including variable prepaid forward contracts; changes in the capital markets that could adversely impact the availability, cost and terms of financing; an adverse change in the ratings afforded our debt securities by nationally accredited ratings organizations; pending and future litigation; acquisitions/divestitures of properties and/or licenses; changes in customer growth rates, average service revenue per unit, churn rates, roaming rates and the mix of products and services offered in TDS and USM markets. Investors are encouraged to consider these and other risks and uncertainties that are discussed in documents filed by TDS with the SEC.

As previously announced, TDS and its subsidiaries will hold a joint teleconference on July 23, 2003, at 10:00 am Chicago time. Interested parties may listen to the call live over the Internet at http://www.firstcallevents.com/service/ajwz384465118gf12.html or connect by telephone at 888/245-6674 Conference ID#1621715 for TDS and USM. The conference call will be archived on the conference call section of our Web site at www.teldta.com. Certain financial and statistical information contained in the conference call presentation will be posted to the web site, together with reconciliations of GAAP to any non-GAAP information to be disclosed, prior to the commencement of the call. Investors may access this additional information on the conference call page of the Investor Relations section of the TDS web site.

For more information about TDS and its subsidiaries, visit the web sites at:

TDS: http://www.teldta.com TDS Telecom: http://www.tdstelecom.com
USM: http://www.uscellular.com TDS Metrocom http://www.tdsmetro.com

3

TELEPHONE AND DATA SYSTEMS, INC.
SUMMARY OPERATING DATA


Quarter Ended      6/30/03    3/31/03    12/31/02    9/30/02    6/30/02  
U.S. Cellular:  
Consolidated Markets:  
    Total population (000s) (1)    41,288    41,288    41,048    41,048    30,384  
    Customer units    4,343,000    4,240,000    4,103,000    3,943,000    3,547,000  
    Net customer unit activations    103,000    137,000    160,000    76,000    43,000  
    Market penetration (1)    10.52 %  10.27 %  10.00 %  9.61 %  11.67 %
    Markets in operation (2)    150    149    149    149    148  
    Cell sites in service    4,106    3,987    3,914    3,750    3,145  
    Average monthly revenue per unit   $ 47.38   $ 45.05   $ 47.91   $ 49.31   $ 47.48  
       Retail service revenue per unit   $ 38.69   $ 37.05   $ 38.69   $ 38.95   $ 37.93  
       Inbound roaming revenue per unit   $ 4.41   $ 4.36   $ 5.37   $ 6.52   $ 5.90  
       Long-distance/other revenue per unit   $ 4.28   $ 3.64   $ 3.85   $ 3.84   $ 3.65  
    Minutes of use (MOU) (3)    424    377    359    327    280  
    Postpay churn rate per month    1.5 %  1.6 %  1.8 %  2.0 %  1.7 %
    Marketing cost per gross  
       customer unit addition (4)   $ 378   $ 358   $ 369   $ 348   $ 386  
    Construction Expenditures (000s)   $ 163,076   $ 140,926   $ 281,615   $ 192,256   $ 156,699  
 
TDS Telecom  
    ILEC:  
    Access line equivalents (5)    718,800    713,800    711,200    714,400    706,000  
    Growth in equivalent ILEC access lines  
       from prior quarter-end:  
           Acquisitions    --    --    --    7,800    19,200  
           Internal growth    5,000    2,600    (3,200 )  600    5,800  
    Access lines    669,600    669,900    672,400    677,400    671,900  
    Average monthly revenue  
       per access line equivalent   $ 74.35   $ 74.68   $ 76.34   $ 74.39   $ 74.58  
    Internet service accounts    116,700    118,100    117,600    118,400    118,000  
    Digital Subscriber Lines (DSL) customers    16,200    12,800    9,100    8,100    6,500  
    Long Distance customers    211,900    202,100    197,500    189,200    176,300  
    Caller I.D. penetration (6)    31.8 %  31.3 %  30.9 %  30.3 %  29.6 %
    Voicemail penetration (6)    13.3 %  13.2 %  13.4 %  13.5 %  13.4 %
    Construction Expenditures (000s)   $ 29,288   $ 15,412   $ 35,540   $ 36,484   $ 25,268  
    CLEC:  
    Access line equivalents - total CLECs (5)    323,600    303,900    291,400    273,100    243,900  
       TDS Metrocom    242,300    227,500    220,200    206,200    180,900  
       USLink    81,300    76,400    71,200    66,900    63,000  
    Internet service accounts    23,900    24,500    24,700    24,700    24,600  
    Percent of access lines on-switch:  
       TDS Metrocom    100.0 %  100.0 %  100.0 %  100.0 %  100.0 %
       U.S. Link    23.1 %  20.7 %  20.6 %  20.2 %  20.5 %
    Digital Subscriber Lines (DSL):  
       TDS Metrocom    14,100    13,100    11,800    10,300    9,100  
    Construction Expenditures (000s)   $ 5,504   $ 3,705   $ 16,216   $ 9,653   $ 16,991  

(1)

Market penetration is calculated using 2002 Claritas population estimates for 6/30/03 and 3/31/03 and 2001 Claritas estimates for all other periods. "Total population" represents the total incremental population of each of U.S. Cellular's consolidated markets, regardless of whether the market has begun marketing operations.

(2)

Represents only those markets which have begun marketing operations.

(3)

Average monthly local minutes of use per customer (without roaming).

(4)

Due to changes in accounting for agent rebates, for all periods shown this measurement is no longer calculable using information from the financial statements as reported.

(5)

Access line equivalents are derived by converting high capacity data lines to the estimated capacity of one switched access line. Basic rate ISDN = 2 DS0s; Primary rate ISDN = 23 DS0s; T1 = 24 DS0s; Trunk Lines = 1; DSLs = 1

(6)

Caller I.D. and Voicemail penetration is the total residential and business one-party customers purchasing the service divided by the total of these lines equipped for the service.


4

TELEPHONE AND DATA SYSTEMS, INC.
FINANCIAL HIGHLIGHTS
Three Months Ended June 30,
 (Unaudited, dollars in thousands, except per share amounts)


Increase (Decrease)
2003 2002 Amount Percent
Operating Revenues                    
     U.S. Cellular   $ 639,810   $ 524,339   $ 115,471    22.0%
     TDS Telecom    211,477    196,104    15,373    7.8%
     851,287    720,443    130,844    18.2%
Operating Expenses  
     U.S. Cellular  
         Expenses excluding Depreciation and Amortization    478,580    346,658    131,922    38.1%
         Depreciation and Amortization    103,271    76,409    26,862    35.2%
         Loss on Assets Held for Sale    3,500    --    3,500    N/M  
     585,351    423,067    162,284    38.4%
     TDS Telecom  
         Expenses excluding Depreciation and Amortization    132,183    134,857    (2,674 )  (2.0% )
         Depreciation and Amortization    40,208    39,227    981    2.5%
     172,391    174,084    (1,693 )  (1.0% )
            Total Operating Expenses    757,742    597,151    160,591    26.9%
Operating Income  
     U.S. Cellular    54,459    101,272    (46,813 )  (46.2% )
     TDS Telecom    39,086    22,020    17,066    77.5%
     93,545    123,292    (29,747 )  (24.1% )
Investment and Other Income  
     Interest and Dividend Income    6,069    48,167    (42,098 )  (87.4% )
     Investment Income    13,517    7,752    5,765    74.4%
     (Loss) on Marketable Securities and Other Investments    (5,000 )  (1,719,126 )  1,714,126    N/M  
     Other Income (Expense), Net    (7,097 )  (1,223 )  (5,874 )  N/M  
     7,489    (1,664,430 )  1,671,919    N/M  
Income (Loss) Before Interest and Income Taxes    101,034    (1,541,138 )  1,642,172    N/M  
     Interest Expense    43,996    29,095    14,901    51.2%
     Minority Interest in Income of Subsidiary Trust    6,202    6,202    --    N/M  
Income (Loss) Before Income Taxes    50,836    (1,576,435 )  1,627,271    N/M  
     Income Tax Expense    24,214    (609,530 )  633,744    N/M  
Income (Loss) Before Minority Interest    26,622    (966,905 )  993,527    N/M  
     Minority Share of (Income), net of tax    (6,466 )  15,115    (21,581 )  N/M  
Net Income (Loss)    20,156    (951,790 )  971,946    N/M  
     Preferred Dividend Requirement    (104 )  (106 )  2    N/M  
Net Income (Loss) Available to Common   $ 20,052   $ (951,896 ) $ 971,948    N/M  
 
Basic Average Common Shares Outstanding (000s)    57,474    58,639    (1,165 )  (2.0% )
Basic Earnings (Loss) Per Share   $ 0.35   $ (16.23 ) $ 16.58    N/M  
 
Diluted Average Common Shares Outstanding (000s)    57,671    58,639    (968 )  (1.7% )
Diluted Earnings (Loss) Per Share   $ 0.35   $ (16.23 ) $ 16.58    N/M  

N/M - Percentage change not meaningful


5

TELEPHONE AND DATA SYSTEMS, INC.
FINANCIAL HIGHLIGHTS
Six Months Ended June 30,
 (Unaudited, dollars in thousands, except per share amounts)


Increase (Decrease)
2003 2002 Amount Percent
Operating Revenues                    
     U.S. Cellular   $ 1,235,724   $ 1,002,759   $ 232,965   23.2% 
     TDS Telecom    422,981    382,881    40,100   10.5% 
     1,658,705    1,385,640    273,065   19.7% 
Operating Expenses  
     U.S. Cellular  
        Expenses excluding Depreciation and Amortization    947,680    672,650    275,030   40.9% 
        Depreciation and Amortization    212,774    149,161    63,613   42.6% 
        Loss on Assets Held for Sale    27,000    --    27,000   N/M 
     1,187,454    821,811    365,643   44.5% 
     TDS Telecom  
        Expenses excluding Depreciation and Amortization    261,982    256,796    5,186   2.0% 
        Depreciation and Amortization    81,858    78,374    3,484   4.4% 
     343,840    335,170    8,670   2.6% 
           Total Operating Expenses    1,531,294    1,156,981    374,313   32.4% 
Operating Income  
     U.S. Cellular    48,270    180,948    (132,678 ) (73.3%)
     TDS Telecom    79,141    47,711    31,430   65.9% 
     127,411    228,659    (101,248 ) (44.3%)
Investment and Other Income  
     Interest and Dividend Income    10,397    50,234    (39,837 ) (79.3%)
     Investment Income    26,267    18,789    7,478   39.8% 
     (Loss) on Marketable Securities and Other Investments    (8,500 )  (1,756,526 )  1,748,026   N/M 
     Other Income (Expense), Net    (5,938 )  (17 )  (5,921 ) N/M 
     22,226    (1,687,520 )  1,709,746   N/M 
Income (Loss) Before Interest and Income Taxes     149,637    (1,458,861 )  1,608,498   N/M 
     Interest Expense    87,353    58,719    28,634   48.8% 
     Minority Interest in Income of Subsidiary Trust    12,405    12,405    --   N/M 
Income (Loss) Before Income Taxes     49,879    (1,529,985 )  1,579,864   N/M 
     Income Tax Expense    28,069    (587,118 )  615,187   N/M 
Income (Loss) Before Minority Interest     21,810    (942,867 )  964,677   N/M 
     Minority Share of (Income), net of tax    (6,654 )  5,087    (11,741 ) N/M 
Income (Loss) Before Cumulative Effect of
   Accounting Change		    15,156    (937,780 )  952,936   N/M 
Cumulative Effect of Accounting Change    --    3,366    (3,366 ) N/M 
Net Income (Loss)    15,156    (934,414 )  949,570   N/M 
     Preferred Dividend Requirement    (209 )  (218 )  9   N/M 
Net Income (Loss) Available to Common   $ 14,947   $ (934,632 ) $ 949,579   N/M 
Basic Average Common Shares Outstanding (000s)    58,034    58,619    (585 ) (1.0%)
Basic Earnings (Loss) Per Share  
     Income (Loss) Before Cumulative Effect of
        Accounting Change		   $ 0.26   $ (16.00 ) $ 16.26   N/M 
     Cumulative Effect of Accounting Change    --    0.06    (0.06 ) N/M 
    $ 0.26   $ (15.94 ) $ 16.20   N/M 
Diluted Average Common Shares Outstanding (000s)    58,062    58,619    (557 ) (1.0%)
Diluted Earnings (Loss) Per Share  
     Income (Loss) Before Cumulative Effect of
        Accounting Change		   $ 0.26   $ (16.00 ) $ 16.26   N/M 
     Cumulative Effect of Accounting Change    --    0.06    (0.06 ) N/M 
    $ 0.26   $ (15.94 ) $ 16.20   N/M 

N/M - Percentage change not meaningful

6

TELEPHONE AND DATA SYSTEMS, INC.
CONSOLIDATED BALANCE SHEET HIGHLIGHTS
(Unaudited, dollars in thousands)

ASSETS


June 30,
2003		 December 31,
2002
Current Assets            
    Cash and cash equivalents   $ 1,289,642   $ 1,298,936  
    Accounts receivable from customers and other    395,136    448,033  
    Federal Income Tax receivable    --    40,000  
    Materials and supplies, at average cost, and  
       other current assets    219,930    161,043  
     1,904,708    1,948,012  
Investments  
    Wireless license costs, net    979,759    1,038,556  
    Goodwill, net    1,005,029    1,106,451  
    Intangible Assets    31,111    40,087  
    Marketable equity securities    2,300,233    1,944,939  
    Investments in unconsolidated entities    215,121    205,995  
    Notes Receivable    6,476    7,287  
    Other investments    15,139    14,914  
     4,552,868    4,358,229  
Property, Plant and Equipment, net  
    U.S. Cellular    2,161,740    2,148,432  
    TDS Telecom    1,050,385    1,047,811  
     3,212,125    3,196,243  
Other Assets and Deferred Charges  
    Derivative Asset    --    2,630  
    Other Assets and Deferred Charges    96,458    96,914  
     96,458    99,544  
 
Assets Held for Sale    223,876    --  
 
    $ 9,990,035   $ 9,602,028  

7a

TELEPHONE AND DATA SYSTEMS, INC.
CONSOLIDATED BALANCE SHEET HIGHLIGHTS
(Unaudited, dollars in thousands)

LIABILITIES AND STOCKHOLDERS’ EQUITY


June 30,
2003		 December 31,
2002
Current Liabilities            
    Current portion of long-term debt   $ 84,861   $ 64,482  
    Notes payable    605,352    461,792  
    Accounts payable    274,218    361,758  
    Advance billings and customer deposits    106,312    95,922  
    Accrued interest    33,110    31,751  
    Accrued taxes    41,552    34,413  
    Accrued compensation    49,750    58,678  
    Other current liabilities    50,339    58,370  
     1,245,494    1,167,166  
Deferred Liabilities and Credits  
    Deferred taxes    1,238,100    1,170,505  
    Derivative Liability    302,946    61,160  
    Asset Retirement Obligation    33,809    --  
    Other    59,369    55,645  
     1,634,224    1,287,310  
Long-term Debt, excluding current portion  
    Prepaid Forward Contracts    1,664,595    1,656,616  
    Other Long-term Debt    1,567,315    1,641,624  
     3,231,910    3,298,240  
Minority Interest    498,471    489,735  
Company-Obligated Mandatorily Redeemable Preferred  
    Securities of Subsidiary Trust Holding Solely  
    Company Subordinated Debentures    300,000    300,000  
Liabilities Related to Assets Held for Sale    9,005    --  
Preferred Shares     6,704    6,954  
Common Stockholders' Equity  
    Common Shares, $.01 par value    561    559  
    Series A Common Shares, $.01 par value    64    66  
    Capital in excess of par value    1,834,365    1,832,806  
    Treasury Shares    (460,298 )  (404,169 )
    Accumulated other comprehensive income    260,906    191,704  
    Retained earnings    1,428,629    1,431,657  
     3,064,227    3,052,623  
 
    $ 9,990,035   $ 9,602,028  

7b

BALANCE SHEET HIGHLIGHTS
JUNE 30, 2003
(Unaudited, dollars in thousands)



U.S.
Cellular
TDS
Telecom 		TDS Corporate
& Other
Intercompany
Eliminations
TDS
Consolidated
Cash and Cash Equivalents     $ 24,966   $ 403,615   $ 861,061   $ --   $ 1,289,642  
Affiliated Cash Investments    723    351,178    --    (351,901 )  --  
Notes Receivable--Affiliates    --    --    445,850    (445,850 )  --  
    $ 25,689   $ 754,793   $ 1,306,911   $ (797,751 ) $ 1,289,642  
   
Cellular License, Goodwill  
  and Intangibles, net   $ 1,558,533   $ 457,366   $ --   $ --   $ 2,015,899  
Marketable Equity Securities    202,879    54,739    2,042,615    --    2,300,233  
Investment in Unconsolidated Entities    171,214    19,069    32,535    (7,697 )  215,121  
Notes Receivable    6,476    --    --    --    6,476  
Long-term Notes Receivable - Affiliates    --    --    105,400    (105,400 )  --  
Other Investments    --    15,139    --    --    15,139  
    $ 1,939,102   $ 546,313   $ 2,180,550   $ (113,097 ) $ 4,552,868  
   
Property, Plant and  
  Equipment, net   $ 2,161,740   $ 1,050,385   $ --   $ --   $ 3,212,125  
  
Notes Payable:
               external		   $ 605,000   $ --   $ 352   $ --   $ 605,352  
               cash management    --    --    351,901    (351,901 )  --  
               intercompany    --    445,850    --    (445,850 )  --  
    $ 605,000   $ 445,850   $ 352,253   $ (797,751 ) $ 605,352  
   
Prepaid Forward Contracts   $ 159,856   $ 41,182   $ 1,463,557   $ --   $ 1,664,595  
   
Long-term Debt:  
  Current Portion   $ --   $ 17,871   $ 66,990   $ --   $ 84,861  
  Affiliated    105,000    400    --    (105,400 )  --  
  Non-current Portion    546,065    254,385    766,865    --    1,567,315  
     Total   $ 651,065   $ 272,656   $ 833,855   $ (105,400 ) $ 1,652,176  
   
Trust Originated Preferred Securities   $ --   $ --   $ 300,000   $ --   $ 300,000  
   
Preferred Shares   $ --   $ --   $ 6,704   $ --   $ 6,704  
   
  Total Outstanding Debt and  
        Preferred Shares   $ 1,415,921   $ 759,688   $ 2,956,369   $ (903,151 ) $ 4,228,827  
   
Construction Expenditures:  
   Quarter Ended 6/30/03   $ 163,076   $ 34,792   $ 1,672        $ 199,540  
   Six Months Ended 6/30/03   $ 304,002   $ 53,909   $ 3,012        $ 360,923  

8

TDS Telecom Highlights
Three Months Ended June 30,
(Unaudited, dollars in thousands)

Increase (Decrease)
2003 2002 Amount Percent
Local Telephone Operations                    
       Operating Revenues  
           Local Service   $ 49,742   $ 47,432   $ 2,310    4.9%
           Network Access and Long-Distance    88,438    85,885    2,553    3.0%
           Miscellaneous    21,625    21,734    (109 )  (0.5% )
     159,805    155,051    4,754    3.1%
       Operating Expenses  
           Network Operations    39,834    33,997    5,837    17.2%
           Customer Operations    23,588    22,435    1,153    5.1%
           Corporate Expenses    21,028    27,416    (6,388 )  (23.3% )
           Depreciation and Amortization    32,121    32,047    74    0.2%
     116,571    115,895    676    0.6%
   
       Operating Income   $ 43,234   $ 39,156   $ 4,078    10.4%
   
Competitive Local Exchange Carrier Operations  
       Revenues   $ 52,479   $ 41,762   $ 10,717    25.7%
   
       Expenses excluding Depreciation and Amortization    48,540    51,718    (3,178 )  (6.1% )
       Depreciation and Amortization    8,087    7,180    907    12.6%
     56,627    58,898    (2,271 )  (3.9% )
   
       Operating (Loss)    $ (4,148 ) $ (17,136 ) $ 12,988    75.8%
   
Intercompany Revenues   $ (807 ) $ (709 ) $ (98 )  (13.8% )
Intercompany Expenses    (807 )  (709 )  (98 )  (13.8% )
     --    --    --    N/M  
   
Total TDS Telecom Operating Income   $ 39,086   $ 22,020   $ 17,066    77.5%

N/M - Percentage change not meaningful.

9

TDS Telecom Highlights
Six Months Ended June 30,
(Unaudited, dollars in thousands)

Increase (Decrease)
2003 2002 Amount Percent
Local Telephone Operations                    
       Operating Revenues  
           Local Service   $ 98,793   $ 94,275   $ 4,518    4.8%
           Network Access and Long-Distance    178,090    168,969    9,121    5.4%
           Miscellaneous    42,519    41,328    1,191    2.9%
     319,402    304,572    14,830    4.9%
       Operating Expenses  
           Network Operations    77,979    65,694    12,285    18.7%
           Customer Operations    45,758    44,005    1,753    4.0%
           Corporate Expenses    41,275    50,698    (9,423 )  (18.6% )
           Depreciation and Amortization    65,740    64,502    1,238    1.9%
     230,752    224,899    5,853    2.6%
   
       Operating Income   $ 88,650   $ 79,673   $ 8,977    11.3%
   
Competitive Local Exchange Carrier Operations  
       Revenues   $ 104,918   $ 79,516   $ 25,402    31.9%
   
       Expenses excluding Depreciation and Amortization    98,309    97,606    703    0.7%
       Depreciation and Amortization    16,118    13,872    2,246    16.2%
     114,427    111,478    2,949    2.6%
   
       Operating (Loss)   $ (9,509 ) $ (31,962 ) $ 22,453    70.2%
   
Intercompany Revenues   $ (1,339 ) $ (1,207 ) $ (132 )  (10.9% )
Intercompany Expenses    (1,339 )  (1,207 )  (132 )  (10.9% )
     --    --    --    N/M  
   
Total TDS Telecom Operating Income   $ 79,141   $ 47,711   $ 31,430    65.9%

N/M - Percentage change not meaningful.

10