8-K

FORM 8-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

CURRENT REPORT

Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 7, 2005

TELEPHONE AND DATA SYSTEMS, INC.
(Exact name of registrant as specified in its charter)

Delaware
(State or other
jurisdiction of
incorporation) 001-14157
(Commission
File Number) 36-2669023
(IRS Employer
Identification No.)

     30 North LaSalle Street, Suite 4000, Chicago, Illinois     
         (Address of principal executive offices)    60602   
(Zip Code)

Registrant's telephone number, including area code: (312) 630-1900

  Not Applicable  
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition.

        On February 9, 2005, Telephone and Data Systems, Inc. issued a news release announcing its earnings for the fourth quarter of 2004. A copy of the news release is attached hereto as Exhibit 99.1. Attached as Exhibit 99.2 is a safe harbor cautionary statement under the Private Securities Litigation Reform Act of 1995.

        The information in this Current Report on Form 8-K is being furnished and shall not be deemed "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section.

Item 2.06. Material Impairments

        On February 7, 2005, the audit committee of Telephone and Data Systems, Inc. approved the recommendation of management and concluded that charges for impairments of $87.9 million for the write down of long-lived assets and $29.4 million for the write off of goodwill at TDS Telecom's competitive local exchange carriers were required. Regulatory actions and competitive developments triggered an impairment review by TDS Telecom of its competitive local exchange carrier operations' long-lived assets and intangible assets, pursuant to Statement of Financial Standards ("SFAS") No. 144, "Accounting for the Impairments or Disposal of Long-Lived Assets" and SFAS No. 142, "Goodwill and Other Intangible Assets." These are non-cash impairment charges and are not expected to result in any future cash expenditures.

        The conclusion that charges for impairments are required at this time and the amount of the impairments is based on judgment and estimates concerning the future and is subject to risks and uncertainties that could cause actual results to differ materially, including, without limitation, the possibility that the actual impairment or cash expenditures could exceed estimates. Additional factors that could cause actual results to differ materially are discussed in our recent filings with the Securities and Exchange Commission, including but not limited to our Form 10-K, Form 10-Qs and Form 8-Ks.

Item 9.01. Financial Statements and Exhibits

(c)       Exhibits:

        In accordance with the provisions of Item 601 of Regulation S-K, any Exhibits filed herewith are set forth on the Exhibit Index attached hereto.

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SIGNATURES

        Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereto duly authorized.

Telephone and Data Systems, Inc.
(Registrant)

Date: February 9, 2005

By:	/s/ D. Michael Jack
	D. Michael Jack
	Senior Vice President and Corporate Controller (Principal Accounting Officer)

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EXHIBIT INDEX

The following exhibits are filed herewith as noted below.

Exhibit Number	Description of Exhibit
99.1	Telephone and Data Systems, Inc.'s news release, dated February 9, 2005, announcing earnings for the fourth quarter of 2004.
99.2	Private Securities Litigation Reform Act of 1995 Safe Harbor Cautionary Statement

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EX-99

Exhibit 99.1

As previously announced, TDS and its subsidiaries will hold a joint teleconference Feb. 9, 2005, at 10:00 a.m. 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
	Julie D. Mathews, Manager, Investor Relations
	(312) 592-5341 julie.mathews@teldta.com

FOR RELEASE: IMMEDIATE

TDS REPORTS FOURTH QUARTER AND YEAR-END OPERATING RESULTS
Records non-cash impairment charge of $117.4 million relating to its
Competitive Local Exchange Carrier Operations

CHICAGO – Feb. 9, 2005 – Telephone and Data Systems, Inc. [AMEX:TDS] reported operating revenues of $946.5 million for the fourth quarter of 2004, up 6 percent from $890.1 million in the comparable period a year ago. Operating loss was $37.9 million in the fourth quarter compared to operating income of $55.6 million in the fourth quarter of 2003. Net loss available to common and diluted loss per share for the quarter were $37.3 million and $0.65 respectively, compared to net income available to common and diluted earnings per share of $25.7 million and $0.44 respectively, in the fourth quarter of 2003.

Fourth Quarter Events

• TDS Telecom recorded a “Loss on Impairment of Assets” of $87.9 million due to a write-down of long-lived tangible assets to include property, plant and equipment. Additionally, TDS Telecom recorded a “Loss on Impairment of Intangible Assets” of $29.4 million due to a write-down of all of the goodwill associated with the CLEC operations. The impairments were related to a number of recently released regulatory rulings impacting wholesale prices and the availability of wholesale services to competitive local exchange carriers, as well as the impact of competition. In the fourth quarter of 2003, TDS Telecom recorded a “Loss on Impairment of Assets” of $4.9 million principally related to expansion properties that were determined to be impaired. The expenses were related to building leasehold improvements and lease obligations.
  
  
• U.S. Cellular recorded a “Gain on Assets Held for Sale” of $10.1 million relating to the sale of two operating markets to ALLTEL Communications, Inc (“ALLTEL”). The ALLTEL transaction closed on Nov. 30, 2004. In the fourth quarter of 2003, U.S. Cellular recorded a “Loss on Assets Held for Sale” of $22.3 million principally related to the sale of its South Texas markets, which closed on Feb. 17, 2004.

• The company recorded a $39.2 million “Gain on Investments” principally from the sale of investment markets to ALLTEL. Of the gain, the U.S. Cellular investment markets contributed $26.6 million and TDS Telecom’s investment interests contributed $12.9 million.
  
  
• The company recorded a $2 million gain in “Discontinued Operations, net of tax,” or $0.04 diluted gain per share. The gain from discontinued operations relates to certain tax-related issues associated with the merger of Aerial Communications, Inc. with VoiceStream Wireless Corporation in 2000.

President’s Comments
“The fourth quarter capped off what was a very successful year for TDS,” said LeRoy T. Carlson, Jr., president and chief executive officer. “Our companies delivered good operating and financial results, and made significant strides delivering on their strategies during the year.

“During the fourth quarter, U.S. Cellular generated 150,000 net customer additions, continuing its strong net add performance of the last several quarters. Postpay churn remained low, at 1.6 percent for the quarter, testifying to the effectiveness of U.S. Cellular’s customer satisfaction strategy. In addition, despite the divestiture of several markets during the year, service revenue increased 8.5 percent year over year. When adjusted for those divestitures, revenue increased 11 percent year over year.

“U.S. Cellular added to its many accomplishments of 2004 during the fourth quarter. Its three new markets, launched the previous quarter, are all doing well. The company completed its three-year wireless network upgrade to CDMA 1X, which allows it to now offer its popular data services in all of its markets. Those data services continue to perform well, and we expect the strong take rates to continue, as data usage becomes more popular and as U.S. Cellular continues to enhance its data service offerings.

“TDS Telecom’s revenues grew 2 percent during the quarter. Contributing to TDS Telecom’s overall revenue performance was the continued strong growth of its long-distance and high-speed Internet services. Data services are proving an excellent growth driver for the company. And the fourth quarter marked a significant milestone for the ILEC’s popular DSL service when its DSL customer market share topped that of cable modems in the markets where the ILEC offers DSL, based on the company’s perceptual survey. This milestone underscores the progress TDS Telecom is making on being the preferred broadband provider in the markets it serves. And for the year, we are pleased that residential primary access lines at the ILEC were level, positive performance in a wireline industry environment characterized by declining access lines.

“In summary, the fourth quarter concluded what was a very productive year for the TDS businesses. I want to take this opportunity to thank all TDS employees for their hard work throughout the year. Their dedication to providing an outstanding experience for each of our customers is critical to growing our customer base. Our appreciation goes as well to each of TDS’s 6.1 million customers for their business and continued loyalty. Finally, we also appreciate the continued support of our shareholders and debt holders. Of note, TDS’s stock price rose 23 percent during the year, outperforming the broad market indices, and TDS increased its dividend once again, marking the 30^th consecutive year of dividend increases. TDS made significant progress in 2004, and the company is well positioned for another good year in 2005.”

For the Year
For the year, operating revenues were $3.72 billion, up 8% from $3.45 billion in 2003. Operating income decreased 18% to $220.8 million from $267.9 million in 2003, principally attributed to the write-downs at TDS Metrocom. Net income available to common and diluted earnings per share for

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the year were $48.8 million and $0.84 respectively, compared to net income available to common and diluted earnings per share of $46.2 million and $0.79 respectively, in the year 2003.

In 2004, the company recorded a $6.4 million gain in “Discontinued Operations, net of tax” or $0.11 gain per diluted share relating to certain tax-related issues associated with the merger of Aerial Communications, Inc. with VoiceStream Wireless Corporation. In 2003, the company recorded a diluted loss per share of $.03 for discontinued operations relating to certain liabilities associated with the Aerial merger and a diluted loss per share of $.20 for the cumulative effect of an accounting change related to Statement of Financial Accounting Standards (SFAS) No. 143, “Accounting for Asset Retirement Obligations”.

CFO’s Comments
Said Sandra L. Helton, executive vice president and chief financial officer, “2004 was a good year for the company. Our increase in revenues over 2003 were driven by continued strong customer growth at U.S. Cellular and steady performance at TDS Telecom.

“Equally important, we made progress during the year improving the company’s financial position, in line with our commitment to maintain a strong balance sheet and investment-grade credit ratings. Taking advantage of the positive credit market environment, we lengthened the maturity schedules of a portion of U.S. Cellular’s debt. This provides considerable financial flexibility going forward.

“In addition, we worked concertedly during the year to meet the requirements of the Sarbanes-Oxley Act of 2002. While this entailed a great deal of time and effort, we fully support the principles it embodies, which are in complete alignment with TDS’s commitment to financial integrity. The Sarbanes Oxley requirements provided us an opportunity to further improve our financial and operational processes and controls, which will benefit us in the future.

“In sum, TDS is well positioned financially going into 2005. Our balance sheet is strong; we have considerable liquidity to support our businesses; and we have solid investment-grade credit ratings. We look forward to another positive year.”

Reconciliation of U. S. Cellular Service Revenues

(Dollars in thousands)
Quarter Ended Dec. 31, 2003:
Service revenue as reported	$	620,639
Less service revenue attributed to markets sold or traded in 2004		14,962
Pro-forma service revenue for the three months ended Dec. 31, 2003	$	605,677
Service revenue as reported for the three months ended Dec. 31, 2004	$	673,223
Percentage year-over-year service revenue growth
for three months ended Dec. 31, 2004
Based on amounts as reported		8.5%
Based on pro-forma service revenue for the three months ended Dec. 31, 2003		11.2%

The pro-forma numbers above are non-GAAP financial measures as defined by SEC rules. Management believes that they are useful measures to evaluate the company’s performance excluding the divested markets, but they should not be considered as alternatives to GAAP.

As previously announced, TDS and its subsidiaries will hold a joint teleconference Feb. 9, 2005, at 10:00 a.m. Chicago time. Interested parties may listen to the call live over the Internet by accessing http://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=67422&eventID=1004106, or the conference call page of the Investor Relations section of www.teldta.com, or connect by telephone at 888/245-6674 with a pass code of 3521201. The conference call will be archived on the

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conference call section of our web site at www.teldta.com. Prior to the commencement of the call, certain financial and statistical information discussed during the conference call comments will be posted to the web site, together with reconciliations to generally accepted accounting principles (GAAP) of any non-GAAP information to be disclosed. Investors may access this additional information on the conference call page of the Investor Relations section of the TDS web site.

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, local telephone and broadband services. TDS builds value for its shareholders by providing excellent communications services in growing, closely related segments of the telecommunications industry. As of Dec. 31, 2004, the company employed 11,500 people and served 6.1 million customers/units in 36 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 start up the operations of the licensed areas involved in the AT&T Wireless transaction completed in August 2003; the ability of U.S. Cellular to successfully manage and grow the operations of the Chicago MTA and newly launched markets; changes in the overall economy; changes in competition in the markets in which TDS and U.S. Cellular operate; changes due to industry consolidation; advances in telecommunications technology, including Voice over Internet Protocol; the impact of local number portability; changes to access and pricing of unbundled network elements; changes in the telecommunications regulatory environment; changes in the value of investments, including variable prepaid forward contracts; an adverse change in the ratings afforded TDS and U.S. Cellular debt securities by nationally accredited ratings organizations; pending and future litigation; acquisitions/divestitures of properties and/or licenses; and changes in customer growth rates, average monthly service revenue per unit, churn rates, roaming rates and the mix of products and services offered in TDS and U.S. Cellular markets. Investors are encouraged to consider these and other risks and uncertainties that are discussed in the Form 8-K used by TDS to furnish this press release to the Securities and Exchange Commission, which are incorporated by reference herein.

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

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

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TELEPHONE AND DATA SYSTEMS, INC.
SUMMARY OPERATING DATA

Quarter Ended		12/31/2004			9/30/2004			6/30/2004			3/31/2004			12/31/2003
U.S. Cellular:
Consolidated Markets:
Total population (000s) (1)		44,391			45,581			45,581			45,581			46,267
Customer units		4,945,000			4,828,000			4,684,000			4,547,000			4,409,000
Gross customer unit activations		408,000			387,000			365,000			397,000			368,000
Net customer unit activations		150,000			144,000			137,000			196,000			141,000
Market penetration (1)		11.14	%		10.59	%		10.28	%		9.98	%		9.53	%
Cell sites in service		4,856			4,713			4,420			4,122			4,184
Average monthly revenue per unit (2)	$	46.12		$	48.49		$	47.79		$	46.16		$	47.80
Retail service revenue per unit (2)	$	40.55		$	41.51		$	41.58		$	40.26		$	40.64
Inbound roaming revenue per unit (2)	$	2.47		$	3.39		$	3.21		$	3.17		$	3.90
Long-distance/other revenue per unit (2)	$	3.10		$	3.59		$	3.00		$	2.73		$	3.26
Minutes of use (MOU) (3)		568			553			542			491			462
Postpay churn rate per month (4)		1.6	%		1.6	%		1.5	%		1.3	%		1.4	%
Marketing cost per gross
customer unit addition (5)	$	442		$	410		$	392		$	371		$	384
Construction Expenditures (000s)	$	260,358		$	131,648		$	162,579		$	100,535		$	193,413

(1) Market penetration is calculated using 2003 Claritas population estimates for all periods of 2004 and 2002 Claritas estimates for 2003. "Total population" represents the total population of each of U.S. Cellular's consolidated markets, regardless of whether the market has begun marketing operations. The 12/31/04 total population counts exclude the population of the two markets sold to ALLTEL in November 2004. The 9/30/04, 6/30/04 and 3/31/04 total population counts include the population of the market added to consolidated operations as of 1/1/04, but exclude the population of the six markets sold to AT&T Wireless (now Cingular Wireless) in February 2004. The 12/31/03 total population counts exclude the population of the 10 markets transferred to AT&T Wireless (now Cingular Wireless) in August 2003 and include the population of markets acquired from AT&T Wireless (now Cingular Wireless) in that transaction. The population of markets in which U.S. Cellular has deferred the transfer of licenses from AT&T Wireless (now Cingular Wireless) are not included in the total population counts for any period.

(2) Per unit revenue measurements are derived from Service Revenues as reported in Financial Highlights for each respective quarter as follows:

Service Revenues per Financial Highlights	$	673,223	$	691,964	$	662,658	$	619,382	$	620,639
Components:
Retail service revenue during quarter	$	591,972	$	592,411	$	576,541	$	540,228	$	527,626
Inbound roaming revenue during quarter	$	36,027	$	48,402	$	44,516	$	42,499	$	50,653
Long-distance/other revenue during quarter	$	45,224	$	51,151	$	41,601	$	36,655	$	42,360
Divided by average customers during quarter (000s)		4,866		4,757		4,622		4,473		4,328
Divided by three months in each quarter		3		3		3		3		3
Retail service revenue per unit	$	40.55	$	41.51	$	41.58	$	40.26	$	40.64
Inbound roaming revenue per unit	$	2.47	$	3.39	$	3.21	$	3.17	$	3.90
Long-distance/other revenue per unit	$	3.10	$	3.59	$	3.00	$	2.73	$	3.26
Average monthly revenue per unit	$	46.12	$	48.49	$	47.79	$	46.16	$	47.80

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

(4) Postpay churn rate per month is calculated by dividing the average monthly postpay customer disconnects during the quarter by the average postpay customer base for the quarter.

(5) Due to changes in accounting for agent rebates and net customer retention expenses, for all periods shown this measurement is no longer calculable using information from the financial statements as reported. The details of this calculation and a reconciliation to line items reported in Financial Highlights for each respective quarter are shown on U.S. Cellular's web site, along with additional information related to U.S. Cellular's fourth quarter results, at www.uscellular.com.

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TELEPHONE AND DATA SYSTEMS, INC.
SUMMARY OPERATING DATA

Quarter Ended		12/31/2004			9/30/2004			6/30/2004			3/31/2004			12/31/2003
TDS Telecom
ILEC:
Access line equivalents (1)		730,400			725,500			725,600			722,400			722,200
Access lines		652,300			658,200			660,400			660,900			663,800
Dial-up Internet service accounts		101,300			104,800			112,100			113,600			112,900
Digital Subscriber Lines (DSL) customers		41,900			33,000			31,500			27,300			23,600
Long Distance customers (3)		295,000			289,000			280,900			266,300			230,500
Caller I.D. penetration (2)		36.0	%		35.2	%		34.5	%		33.8	%		33.1	%
Voicemail penetration (2)		13.5	%		13.5	%		13.5	%		13.3	%		13.3	%
Construction Expenditures (000s)	$	26,921		$	31,571		$	26,961		$	17,616		$	35,217
CLEC:
Access line equivalents (1)		426,800			412,500			395,600			378,800			364,800
Dial-up Internet service accounts		18,200			19,100			20,300			21,600			22,200
Percent of access lines on-switch		87.9	%		86.8	%		85.7	%		84.5	%		83.5	%
Digital Subscriber Lines (DSL) customers		29,000			27,000			25,000			22,700			20,100
Construction Expenditures (000s)	$	12,928		$	7,198		$	8,596		$	6,456		$	10,086

(1) Access line equivalents are derived by converting high capacity data lines to the estimated capacity of one switched access line.

(2) 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.

(3) Beginning January 1, 2004, the long distance customers reflect those lines that have chosen TDS Telecom as their primary interexchange carrier. Prior to that, a count of customers was used.

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TELEPHONE AND DATA SYSTEMS, INC.
FINANCIAL HIGHLIGHTS
Three Months Ended December 31,
(Unaudited, dollars in thousands, except per share amounts)

							Increase (Decrease)
	2004			2003			Amount			Percent
Operating Revenues
U.S. Cellular	$	719,531		$	668,096		$	51,435			7.7%
TDS Telecom		226,978			222,041			4,937			2.2%
		946,509			890,137			56,372			6.3%
Operating Expenses
U.S. Cellular
Expenses excluding depreciation, amortization            and accretion		553,620			507,074			46,546			9.2%
Depreciation, amortization and accretion		134,391			114,428			19,963			17.4%
(Gain) loss on assets held for sale		(10,081	)		22,289			(32,370	)		N/M
		677,930			643,791			34,139			5.3%
TDS Telecom
Expenses excluding depreciation and amortization		144,856			144,914			(58	)		(0.0%	)
Depreciation and amortization		44,240			40,937			3,303			8.1%
Loss on impairment of intangible assets		29,440			—			29,440			N/M
Loss on impairment of assets		87,910			4,914			82,996			N/M
		306,446			190,765			115,681			60.6%
Total Operating Expenses		984,376			834,556			149,820			18.0%
Operating Income (Loss)
U.S. Cellular		41,601			24,305			17,296			71.2%
TDS Telecom		(79,468	)		31,276			(110,744	)		N/M
		(37,867	)		55,581			(93,448	)		(168.1%	)
Other Income (Expense)
Investment income		16,882			15,243			1,639			10.8%
Interest and dividend income		13,386			5,095			8,291			162.7%
Gain (loss) on investments		39,175			(1,700	)		40,875			N/M
Interest expense		(51,328	)		(42,434	)		(8,894	)		(21.0%	)
Other income (expense), net		(282	)		2,533			(2,815	)		(111.1%	)
		17,833			(21,263	)		39,096			183.9%
Income (Loss) Before Income Taxes and Minority Interest		(20,034	)		34,318			(54,352	)		(158.4%	)
Income tax expense		9,405			2,904			6,501			N/M
Income (Loss) Before Minority Interest		(29,439	)		31,414			(60,853	)		(193.7%	)
Minority share of income		(9,845	)		(5,624	)		(4,221	)		(75.1%	)
Income (Loss) From Continuing Operations		(39,284	)		25,790			(65,074	)		N/M
Discontinued Operations, net of tax		2,011			—			2,011			N/M
Net Income (Loss)		(37,273	)		25,790			(63,063	)		N/M
Preferred dividend requirement		(51	)		(104	)		53			N/M
Net Income (Loss) Available to Common	$	(37,324	)	$	25,686		$	(63,010	)		N/M
Basic Weighted Average Common Shares     Outstanding (000s)		57,423			57,397			26			0.0%
Basic Earnings (Loss) Per Share
Income (Loss) from Continuing Operations	$	(0.69	)	$	0.45		$	(1.14	)		N/M
Discontinued Operations		0.04			—			0.04			N/M
	$	(0.65	)	$	0.45		$	(1.10	)		N/M
Diluted Weighted Average Common Shares     Outstanding (000s)		57,423			57,726			(303	)		(0.5%	)
Diluted Earnings (Loss) Per Share
Income (Loss) from Continuing Operations	$	(0.69	)	$	0.44		$	(1.13	)		N/M
Discontinued Operations		0.04			—			0.04			N/M
	$	(0.65	)	$	0.44		$	(1.09	)		N/M

N/M - Percentage change not meaningful

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TELEPHONE AND DATA SYSTEMS, INC.
FINANCIAL HIGHLIGHTS
Year Ended December 31,
(Unaudited, dollars in thousands, except per share amounts)

							Increase (Decrease)
	2004			2003			Amount			Percent
Operating Revenues
U.S. Cellular	$	2,837,619		$	2,582,783		$	254,836			9.9%
TDS Telecom		882,770			862,433			20,337			2.4%
		3,720,389			3,445,216			275,173			8.0%
Operating Expenses
U.S. Cellular
Expenses excluding depreciation, amortization            and accretion		2,172,721			1,935,964			236,757			12.2%
Depreciation, amortization and accretion		497,942			432,333			65,609			15.2%
Loss on impairment of intangible assets		—			49,595			(49,595	)		N/M
(Gain) loss on assets held for sale		(10,806	)		45,908			(56,714	)		N/M
		2,659,857			2,463,800			196,057			8.0%
TDS Telecom
Expenses excluding depreciation and amortization		552,417			545,215			7,202			1.3%
Depreciation and amortization		170,014			163,399			6,615			4.0%
Loss on impairment of intangible assets		29,440			—			29,440			N/M
Loss on impairment of assets		87,910			4,914			82,996			N/M
		839,781			713,528			126,253			17.7%
Total Operating Expenses		3,499,638			3,177,328			322,310			10.1%
Operating Income
U.S. Cellular		177,762			118,983			58,779			49.4%
TDS Telecom		42,989			148,905			(105,916	)		(71.1%	)
		220,751			267,888			(47,137	)		(17.6%	)
Other Income (Expense)
Investment income		69,623			53,154			16,469			31.0%
Interest and dividend income		27,755			19,918			7,837			39.3%
Gain (loss) on investments		36,854			(10,200	)		47,054			N/M
Interest expense		(198,706	)		(171,391	)		(27,315	)		(15.9%	)
Minority interest in income of subsidiary trust		—			(16,678	)		16,678			N/M
Other income (expense), net		(6,931	)		(11,955	)		5,024			42.0%
		(71,405	)		(137,152	)		65,747			47.9%
Income From Continuing Operations Before Income Taxes
and Minority Interest		149,346			130,736			18,610			14.2%
Income tax expense		78,651			50,350			28,301			56.2%
Income From Continuing Operations Before Minority    Interest		70,695			80,386			(9,691	)		(12.1%	)
Minority share of income		(28,053	)		(20,380	)		(7,673	)		(37.6%	)
Income From Continuing Operations		42,642			60,006			(17,364	)		(28.9%	)
Discontinued Operations, net of tax		6,362			(1,609	)		7,971			N/M
Income Before Cumulative Effect of Accounting Change		49,004			58,397			(9,393	)		(16.1%	)
Cumulative Effect of Accounting Change, net of tax and
minority interest		—			(11,789	)		11,789			N/M
Net Income		49,004			46,608			2,396			5.1%
Preferred dividend requirement		(203	)		(417	)		214			N/M
Net Income Available to Common	$	48,801		$	46,191		$	2,610			5.7%
Basic Weighted Average Common Shares     Outstanding (000s)		57,296			57,721			(425	)		(0.7%	)
Basic Earnings (Loss) Per Share
Income from Continuing Operations	$	0.74		$	1.03		$	(0.29	)		(28.2%	)
Discontinued Operations		0.11			(0.03	)		0.14			N/M
Cumulative Effect of Accounting Change		—			(0.20	)		0.20			N/M
	$	0.85		$	0.80		$	0.05			6.2%
Diluted Average Common Shares     Outstanding (000s)		57,567			57,875			(308	)		(0.5%	)
Diluted Earnings (Loss) Per Share
Income from Continuing Operations	$	0.73		$	1.02		$	(0.29	)		(28.4%	)
Discontinued Operations		0.11			(0.03	)		0.14			N/M
Cumulative Effect of Accounting Change		—			(0.20	)		0.20			N/M
	$	0.84		$	0.79		$	0.05			6.3%

N/M - Percentage change not meaningful

8

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

ASSETS

	December 31, 2004		December 31, 2003
Current Assets
Cash and cash equivalents	$	1,168,581	$	937,651
Accounts receivable from customers and other		440,075		409,671
Prepaid expenses		44,014		32,766
Deferred income tax asset		36,040		19,396
Materials and supplies		91,556		87,270
Other current assets		29,951		18,192
		1,810,217		1,504,946
Investments
Licenses		1,186,764		1,189,326
License rights		42,037		42,037
Goodwill		823,259		887,937
Customer lists		24,915		24,448
Marketable equity securities		3,398,804		2,772,410
Investments in unconsolidated entities		206,763		214,885
Notes receivable		4,885		6,476
Other investments		18,154		15,439
		5,705,581		5,152,958
Property, Plant and Equipment, net
U.S. Cellular		2,439,719		2,271,254
TDS Telecom		945,762		1,079,732
		3,385,481		3,350,986
Other Assets and Deferred Charges		92,562		83,925
Assets of Operations Held for Sale		—		100,523
	$	10,993,841	$	10,193,338

NOTE: Certain December 31, 2003 amounts have been changed to conform to current period presentation.

9a

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

LIABILITIES AND STOCKHOLDERS' EQUITY

	December 31, 2004			December 31, 2003
Current Liabilities
Current portion of long-term debt	$	38,787		$	23,712
Notes payable		30,000			—
Accounts payable		323,256			361,010
Customer deposits and deferred revenues		119,380			108,372
Accrued interest		27,936			31,884
Accrued taxes		91,332			46,107
Accrued compensation		71,707			69,290
Other current liabilities		53,991			56,570
		756,389			696,945
Deferred Liabilities and Credits
Net deferred income tax liability		1,466,649			1,285,024
Derivative Liability		1,210,500			712,252
Asset retirement obligation		137,534			124,501
Other		64,608			119,076
		2,879,291			2,240,853
Long-term Debt, excluding current portion
Long-term debt		1,974,599			1,994,913
Forward contracts		1,689,644			1,672,762
		3,664,243			3,667,675
Minority Interest in Subsidiaries		499,306			502,702
Liabilities of Operations Held for Sale		—			2,427
Preferred Shares		3,864			3,864
Common Stockholders' Equity
Common Shares, $.01 par value		564			563
Series A Common Shares, $.01 par value		64			64
Capital in excess of par value		1,823,161			1,843,468
Treasury Shares		(449,173	)		(493,714	)
Accumulated other comprehensive income		373,505			296,820
Retained earnings		1,442,627			1,431,671
		3,190,748			3,078,872
	$	10,993,841		$	10,193,338

NOTE: Certain December 31, 2003 amounts have been changed to conform to current period presentation.

9b

BALANCE SHEET HIGHLIGHTS
DECEMBER 31, 2004
(Unaudited, dollars in thousands)

	U.S. Cellular		TDS Telecom		TDS Corporate & Other		Intercompany Eliminations			TDS Consolidated
Cash and cash equivalents	$	40,863	$	409,411	$	718,307	$	—		$	1,168,581
Affiliated cash investments		59		531,276		—		(531,335	)		—
Notes receivable—affiliates		—		—		345,126		(345,126	)		—
	$	40,922	$	940,687	$	1,063,433	$	(876,461	)	$	1,168,581
Licenses, goodwill and customer lists	$	1,679,634	$	397,341	$	—	$	—		$	2,076,975
Marketable equity securities		282,829		76,113		3,039,862		—			3,398,804
Investment in unconsolidated entities		162,764		19,721		31,968		(7,690	)		206,763
Notes receivable		4,885		—		—		—			4,885
Long-term notes receivable - affiliates		—		—		400		(400	)		—
Other investments		—		14,778		3,376		—			18,154
	$	2,130,112	$	507,953	$	3,075,606	$	(8,090	)	$	5,705,581
Property, Plant and
Equipment, net	$	2,439,719	$	945,762	$	—	$	—		$	3,385,481
Notes payable: external	$	30,000	$	—	$	—	$	—		$	30,000
cash management		—		—		531,335		(531,335	)		—
intercompany		—		345,126		—		(345,126	)		—
	$	30,000	$	345,126	$	531,335	$	(876,461	)	$	30,000
Forward contracts	$	159,856	$	41,182	$	1,488,606	$	—		$	1,689,644
Long-term Debt:
Current portion	$	—	$	19,237	$	19,550	$	—		$	38,787
Affiliated		—		400		—		(400	)		—
Non-current portion		1,000,930		224,801		748,868		—			1,974,599
Total	$	1,000,930	$	244,438	$	768,418	$	(400	)	$	2,013,386
Preferred Shares	$	—	$	—	$	3,864	$	—		$	3,864
Construction expenditures:
Quarter ended 12/31/04	$	260,358	$	39,849	$	1,371				$	301,578
Year ended 12/31/04	$	655,120	$	138,247	$	4,885				$	798,252

10

TDS Telecom Highlights
Three Months Ended December 31,
(Unaudited, dollars in thousands)

							Increase (Decrease)
	2004			2003			Amount			Percent
Local Telephone Operations
Operating Revenues
Local service	$	51,786		$	50,389		$	1,397			2.8%
Network access and long-distance		93,976			93,777			199			0.2%
Miscellaneous		24,849			24,564			285			1.2%
		170,611			168,730			1,881			1.1%
Operating Expenses
Network operations		45,918			48,123			(2,205	)		(4.6%	)
Customer operations		25,386			25,740			(354	)		(1.4%	)
Corporate expenses		19,215			22,827			(3,612	)		(15.8%	)
Depreciation and amortization		34,026			32,237			1,789			5.5%
Loss on impairment of assets		—			351			(351	)		N/M
		124,545			129,278			(4,733	)		(3.7%	)
Operating Income	$	46,066		$	39,452		$	6,614			16.8%
Competitive Local Exchange Carrier Operations
Revenues	$	57,653		$	55,115		$	2,538			4.6%
Expenses excluding depreciation and amortization		55,623			50,028			5,595			11.2%
Depreciation and amortization		10,214			8,700			1,514			17.4%
Loss on impairment of intangible assets		29,440			—			29,440			N/M
Loss on impairment of assets		87,910			4,563			83,347			N/M
		183,187			63,291			119,896			189.4%
Operating (Loss)	$	(125,534	)	$	(8,176	)	$	(117,358	)		N/M
Intercompany revenues	$	(1,286	)	$	(1,804	)	$	518			N/M
Intercompany expenses		(1,286	)		(1,804	)		518			N/M
		—			—			—			N/M
Total TDS Telecom Operating Income (Loss)	$	(79,468	)	$	31,276		$	(110,744	)		N/M

N/M - Percentage change not meaningful.

11

TDS Telecom Highlights
Year Ended December 31,
(Unaudited, dollars in thousands)

							Increase (Decrease)
	2004			2003			Amount			Percent
Local Telephone Operations
Operating Revenues
Local service	$	204,564		$	199,552		$	5,012			2.5%
Network access and long-distance		363,352			362,917			435			0.1%
Miscellaneous		90,606			90,313			293			0.3%
		658,522			652,782			5,740			0.9%
Operating Expenses
Network operations		164,824			167,342			(2,518	)		(1.5%	)
Customer operations		93,939			95,221			(1,282	)		(1.3%	)
Corporate expenses		81,012			84,950			(3,938	)		(4.6%	)
Depreciation and amortization		131,665			130,036			1,629			1.3%
Loss on impairment of assets		—			351			(351	)		N/M
		471,440			477,900			(6,460	)		(1.4%	)
Operating Income	$	187,082		$	174,882		$	12,200			7.0%
Competitive Local Exchange Carrier Operations
Revenues	$	228,692		$	213,501		$	15,191			7.1%
Expenses excluding depreciation and amortization		217,086			201,552			15,534			7.7%
Depreciation and amortization		38,349			33,363			4,986			14.9%
Loss on impairment of intangible assets		29,440			—			29,440			N/M
Loss on impairment of assets		87,910			4,563			83,347			N/M
		372,785			239,478			133,307			55.7%
Operating (Loss)	$	(144,093	)	$	(25,977	)	$	(118,116	)		N/M
Intercompany revenues	$	(4,444	)	$	(3,850	)	$	(594	)		N/M
Intercompany expenses		(4,444	)		(3,850	)		(594	)		N/M
		—			—			—			N/M
Total TDS Telecom Operating Income	$	42,989		$	148,905		$	(105,916	)		(71.1%	)

N/M - Percentage change not meaningful.

12

EX-99

Exhibit 99.2

PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
SAFE HARBOR CAUTIONARY STATEMENT

The earnings release attached to this Form 8-K contains statements that are not based on historical fact, including the words "believes," "anticipates," "intends," "expects," and similar words. These statements constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, events or developments to be significantly different from any future results, events or developments expressed or implied by such forward-looking statements. Such factors include the following:

• Increases in the level of competition in the markets in which TDS operates, or wireless for wireline substitution, could adversely affect TDS's revenues or increase its costs to compete.
  
  
• Consolidation in the wireless industry may create stronger competitors both operationally and financially which could adversely affect TDS's revenues and increase its costs to compete.
  
  
• Advances or changes in telecommunications technology, such as Voice Over Internet Protocol, could render certain technologies used by TDS obsolete, could reduce TDS's revenues or could increase TDS's cost of doing business.
  
  
• Changes in the telecommunications regulatory environment, or a failure to timely or fully comply with any regulatory requirements, such as wireless number portability, local number portability and E-911 services, could adversely affect TDS's financial condition, results of operations or ability to do business.
  
  
• Changes in the telecommunications regulatory environment, including the effects of potential changes in the rules governing universal service funding and potential changes in the amounts or methods of intercarrier compensation, could have a material adverse effect on TDS's financial condition, results of operations and cash flows.
  
  
• Changes in U.S. Cellular's enterprise value, changes in the supply or demand of the market for wireless licenses or telephone companies, adverse developments in the TDS businesses or the industries in which TDS is involved and/or other factors could require TDS to recognize impairments in the carrying value of TDS's license costs, goodwill and/or physical assets.
  
  
• Changes in accounting standards or TDS's accounting policies, estimates and/or in the assumptions underlying the accounting estimates could have a material effect on TDS's financial condition, changes in financial condition and results of operations.
  
  
• Settlement, judgments, restraints on its current or future manner of doing business and/or legal costs resulting from pending and future litigation could have an adverse effect on TDS's financial condition, results of operations or ability to do business.
  
  
• Costs, integration problems or other factors associated with acquisitions / divestitures of properties and/or licenses could have an adverse effect on TDS's financial condition or results of operations.
  
  
• Changes in prices, the number of customers, average revenue per unit, penetration rates, churn rates, selling expenses, net customer retention costs associated with wireless number portability and local number portability, roaming rates, access minutes of use, the mix of products and services offered or other business factors could have an adverse effect on TDS's business operations.
  
  

• Changes in roaming partners' rates, and the ability to provide voice and data services on other carriers' networks could have an adverse effect on TDS's operations.
  
  
• Changes in competitive factors with national and global wireless carriers could result in product and cost disadvantages and could have an adverse effect on TDS's operations.
  
  
• Lack of standards and roaming agreements for wireless data products could place U.S. Cellular's data services offerings at a disadvantage to those offered by other wireless carriers with more nationwide service territories.
  
  
• Changes in guidance or interpretations of accounting requirements, changes in industry practice or changes in management assumptions could require amendments to or restatements of disclosures or financial information included in this or prior filings with the SEC.
  
  
• Uncertainty of access to capital for telecommunications companies, deterioration in the capital markets, other changes in market conditions, changes in TDS's credit ratings or other factors could limit or restrict the availability of financing on terms and prices acceptable to TDS, which could require TDS to reduce its construction, development and acquisition programs.
  
  
• Changes in income tax rates, tax laws, regulations or rulings, or federal and state tax assessments could have an adverse effect on TDS's financial condition and results of operations.
  
  
• War, conflicts, hostilities and/or terrorist attacks could have an adverse effect on TDS's businesses.
  
  
• Changes in general economic and business conditions, both nationally and in the markets in which TDS operates, including difficulties by telecommunications companies, could have an adverse effect on TDS's businesses.
  
  
• Changes in facts or circumstances, including new or additional information that affects the calculation of accrued liabilities for contingent obligations under guarantees, indemnities or otherwise, could require TDS to record charges in excess of amounts accrued on the financial statements, if any, which could have an adverse effect on TDS's financial condition and results of operations.
  
  
• A material weakness in the effectiveness of internal control over financial reporting and/or in disclosure controls and procedures could result in inaccurate financial statements or other disclosures or permit fraud, which could have an adverse effect on TDS's business, results of operations and financial condition.
  
  
• The possible development of adverse precedent in litigation or conclusions in professional studies to the effect that radio frequency emissions from handsets, wireless data devices and/or cell sites cause harmful health consequences, including cancer or tumors, or may interfere with various electronic medical devices such as pacemakers, could have a material adverse effect on TDS's wireless business operations, TDS's financial condition and results of operations.
  
  
• Any of the foregoing events or other events could cause revenues, customer additions, operating income, capital expenditures and or any other financial or statistical information to vary from TDS's forward estimates included herin by a material amount.
  
  

TDS undertakes no obligation to update publicly any forward-looking statements whether as a result of new information, future events or otherwise. Readers should evaluate any statements in light of these important factors.