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): May 6, 2009

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

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

30 North LaSalle Street, Suite 4000, Chicago, Illinois	60602
(Address of principal executive offices)	(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 (17 240.14d-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 May 6, 2009, Telephone and Data Systems, Inc. (“TDS”) issued a news release announcing its results of operations for the period ended March 31, 2009. A copy of the news release is attached hereto as Exhibit 99.1 and is incorporated by reference herein.

     The information in this Item 2.02 of 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 9.01. Financial Statements and Exhibits

(d)   Exhibits:

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

     Attached as Exhibit 99.2 is a safe harbor cautionary statement under the Private Securities Litigation Reform Act of 1995.

2

SIGNATURES

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

Telephone and Data Systems, Inc.
(Registrant)

Date: May 6, 2009

By:	/s/ Douglas D. Shuma
	Douglas D. Shuma
	Senior Vice President and Corporate Controller

3

EXHIBIT INDEX

The following exhibits are filed or furnished herewith as noted below.

Exhibit No.
	Description
99.1	Earnings Press Release dated May 6, 2009
99.2	Private Securities Litigation Reform Act of 1995 Safe Harbor Cautionary Statement

4

EX-99

Exhibit 99.1

NEWS RELEASE

As previously announced, TDS^TM will hold a teleconference May 6, 2009 at 10:00 a.m. Chicago time. Interested parties may listen to the call live via the Internet by accessing the Conference Calls page of 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 FIRST QUARTER 2009 RESULTS
Note: Comparisons are year over year unless otherwise noted.

1Q 2009 Highlights

Enterprise/TDS Corporate

§	Operating revenues increased to $1,256.6 million.
§	Repurchased 504,026 TDS Special Common Shares for $12.1 million.

Wireless/U.S. Cellular®

§	2 percent increase in service revenues, to $981.9 million.
§	36 percent increase in data revenues, to $157.0 million, representing 16 percent of service revenues.
§	1 percent increase in ARPU (average monthly service revenue per unit), to $52.54.
§	Postpay churn remained low at 1.5 percent; postpay customers comprised 95 percent of retail customers.
§	8 percent increase in cell sites in service, to 6,942, of which approximately 4,000 are company-owned.
§	Repurchased 367,000 common shares for $13.3 million to offset dilution from employee benefit plans.

Wireline/TDS Telecom®

§	21 percent increase in ILEC high-speed data customers, to 188,100; CLEC high-speed data customers totaled 39,700.
§	18 percent increase in ILEC data revenues, to $25.1 million.
§	ILEC equivalent access lines increased 1 percent to 777,100, due in part to acquisitions; ILEC physical access lines decreased to 556,800.

CHICAGO – May 6, 2009 – Telephone and Data Systems, Inc. [NYSE:TDS, TDS.S] reported operating revenues of $1,256.6 million for the first quarter of 2009, an increase of less than 1 percent from $1,249.1 million in the comparable period one year ago.

“The TDS companies started the year with solid results,” said LeRoy T. Carlson, Jr., TDS president and CEO. “Both our wireless business, U.S. Cellular, and our broadband and wireline business, TDS Telecom, made good progress on their core strategies and had gains in key areas.

“U.S. Cellular added customers in its target postpay segment, which makes up 95 percent of its retail base,” added Carlson. “More U.S. Cellular customers are buying premium handsets and using more data, which increased data revenues and service revenues and resulted in our fourteenth-consecutive quarter of year-over-year ARPU growth.

“U.S. Cellular expects data revenues to continue to grow as it brings 3G speeds to more of its cell sites,” continued Carlson, “and more customers have access to a high-quality and high-speed mobile broadband experience.

“TDS Telecom achieved year-over-year double-digit growth in the number of broadband customers and data revenues in its ILEC business,” said Carlson. “The company's broadband network has been extended so that at the end of the quarter 91 percent of ILEC access lines were able to provide high-speed data. Existing broadband customers continue to migrate to higher data speeds, resulting in higher ARPU. TDS Telecom's consumer service product bundles (including voice, broadband and video) are popular and are helping the company achieve greater customer penetration. The CLEC business is also increasing ARPU, by focusing on managedIP hosted solutions for commercial customers.

“The TDS companies are building long-term growth and value creation by offering high-demand services and products that run on fast, reliable networks, backed by the security of dedicated customer support organizations,” added Carlson. “In addition, TDS was recently named one of the ‘100 Most Trustworthy Companies’ in the United States by Forbes. We are proud of this distinction.”

Guidance

Guidance for the year ending Dec. 31, 2009 is as follows. Guidance is unchanged from Feb. 26, 2009. There can be no assurance that final results will not differ materially from this guidance.

U.S. Cellular 2009 guidance as of May 6, 2009 is as follows:

Net Retail Customer Additions	75,000-150,000
Service Revenue	$3,900-$4,000 million
Operating Income(1)	$275-$350 million
Depreciation, Amortization & Accretion(1)	Approx. $600 million
Capital Expenditures	Approx. $575 million

TDS Telecom (ILEC and CLEC) 2009 guidance as of May 6, 2009 is as follows:

Operating Revenues	$780-$820 million
Operating Income(1)	$100-$130 million
Depreciation, Amortization & Accretion(1)	Approx. $160 million
Capital Expenditures	Approx. $130 million

(1) Includes losses on disposals of assets.

This guidance represents the views of management as of May 6, 2009 and should not be assumed to be accurate as of any other date. TDS undertakes no legal duty to update such information, whether as a result of new information, future events, or otherwise.

2

Stock Repurchase Summary

The following represents repurchases of both TDS common shares and TDS special common shares.

Repurchase Period	# Shares	Cost (in millions)
2009 (first quarter)	504,026	$	12.1
2008 (full year)	5,861,822	$	199.6
Total 2009 and 2008	6,365,848	$	211.7

Conference call information

TDS will hold a conference call on May 6, 2009 at 10:00 a.m. Chicago time.

• Access the live call online on the Conference Calls page of www.teldta.com or at http://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=67422&eventID=2189425
• Access the call by phone at 800/706-9695 (US/Canada) and use conference ID #96977513.

Before the call, certain financial and statistical information to be discussed during the call will be posted to the Conference Calls page of www.teldta.com, together with reconciliations to generally accepted accounting principles (GAAP) of any non-GAAP information to be disclosed. 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, local and long-distance telephone, and broadband services to nearly 7.4 million customers in 36 states through its business units, U.S. Cellular (wireless) and TDS Telecom (wireline). Founded in 1969 and headquartered in Chicago, TDS employed 12,570 people as of March 31, 2009. For more information about TDS, visit www.teldta.com.

About U.S. Cellular®

United States Cellular Corporation, the nation’s fifth-largest, full-service wireless carrier, provides a comprehensive range of wireless products and services, excellent customer support, and a high-quality network to nearly 6.2 million customers in 26 states. The Chicago-based company employed 8,800 full-time equivalent associates as of March 31, 2009. For more information about U.S. Cellular, visit www.uscellular.com.

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: The ability of U.S. Cellular to successfully grow its markets; the current credit crisis affecting financial markets, and its effects on the overall economy; competition; the access to and pricing of unbundled network elements; the ability to obtain or maintain roaming arrangements with other carriers; 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; and changes in customer growth rates, average monthly revenue per unit, 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 used by TDS to furnish this press release to the SEC, 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

3

UNITED STATES CELLULAR CORPORATION
SUMMARY OPERATING DATA
Quarter Ended	3/31/2009			12/31/2008			9/30/2008			6/30/2008			3/31/2008
Total Population:
Consolidated markets (1)		83,726,000			83,014,000			82,875,000			82,875,000			82,846,000
Consolidated operating markets (1)		46,306,000			46,009,000			45,493,000			45,493,000			45,262,000
All customers:
Total at end of period		6,243,000			6,196,000			6,176,000			6,194,000			6,175,000
Gross additions		404,000			395,000			367,000			365,000			408,000
Net additions (losses)		47,000			20,000			(18,000	)		16,000			73,000
Market penetration at end of period:
Consolidated markets (2)		7.5	%		7.5	%		7.5	%		7.5	%		7.5	%
Consolidated operating markets (2)		13.5	%		13.5	%		13.6	%		13.6	%		13.6	%
Retail customers:
Total at end of period		5,770,000			5,707,000			5,674,000			5,677,000			5,640,000
Gross additions		366,000			352,000			325,000			318,000			360,000
Net postpay additions		60,000			41,000			12,000			33,000			72,000
Net prepay additions (losses)		3,000			(8,000	)		(15,000	)		1,000			13,000
Cell sites in service		6,942			6,877			6,716			6,596			6,452
Average monthly revenue per unit (3)	$	52.54		$	52.71		$	54.59		$	53.27		$	52.24
Retail service revenue per unit (3) (5)	$	46.78		$	46.43		$	46.97		$	46.53		$	46.18
Inbound roaming revenue per unit (3) (5)	$	3.21		$	4.25		$	5.03		$	4.54		$	3.95
Other revenue per unit (3) (5)	$	2.55		$	2.03		$	2.59		$	2.20		$	2.11
Postpay churn rate (4)		1.5	%		1.6	%		1.6	%		1.4	%		1.4	%
Construction expenditures (000s)	$	137,700		$	190,000		$	146,100		$	137,800		$	111,700

(1)	“Total population of consolidated markets” and “Total population of consolidated operating markets” are used only for the purposes of calculating market penetration of consolidated markets and consolidated operating markets, respectively, which is calculated by dividing customers by the total market population (without duplication of population in overlappingmarkets).
(2)	Calculated by dividing the number of wireless customers at the end of the period by the total population of consolidated markets and consolidated operating markets, respectively, as estimated by Claritas.
(3)	Per unit revenue measurements are derived from Service Revenues as reported in Financial Highlights for each respective quarter as follows:

Service Revenues (000s)	$	981,874	$	976,952	$	1,013,928	$	987,352	$	962,094
Components:
Retail service revenue (000s)		874,098		860,503		872,397		862,392		850,470
Inbound roaming revenue (000s)		60,057		78,768		93,472		84,201		72,755
Other revenue (000s)		47,719		37,681		48,059		40,759		38,869
Divided by average customers (000s)		6,229		6,178		6,191		6,178		6,139
Divided by three months in each quarter		3		3		3		3		3
Average monthly revenue per unit	$	52.54	$	52.71	$	54.59	$	53.27	$	52.24
Retail service revenue per unit	$	46.78	$	46.43	$	46.97	$	46.53	$	46.18
Inbound roaming revenue per unit	$	3.21	$	4.25	$	5.03	$	4.54	$	3.95
Other revenue per unit	$	2.55	$	2.03	$	2.59	$	2.20	$	2.11

(4)	Postpay churn rate is calculated by dividing the total postpay customer disconnects during the quarter by the average postpay customer base for the quarter.
(5)	Long-distance revenue was reclassified in the fourth quarter of 2008 from Long-distance/Other revenue to Retail service revenue and Inbound roaming revenue. Previous quarters have been adjusted to reflect this change.
4

 

TELEPHONE AND DATA SYSTEMS, INC.
SUMMARY OPERATING DATA
Quarter Ended	3/31/2009		12/31/2008		9/30/2008		6/30/2008		3/31/2008
TDS Telecom
ILEC:
Access line equivalents(1)		777,100		776,700		773,700		774,300		767,100
Physical access lines(2)		556,800		566,200		568,900		577,000		579,200
High-speed data customers(3)		188,100		178,300		171,300		164,400		155,000
Managed IP stations(4)		1,000		600		500		300		200
Long-distance customers		348,900		347,000		346,600		346,100		344,900
Construction expenditures (000s)	$	21,400	$	50,200	$	33,300	$	22,800	$	14,600
CLEC:
Access line equivalents (1)		381,000		393,000		402,600		417,200		426,700
High-speed data customers		39,700		40,800		41,900		43,100		43,700
Managed IP stations(4)		4,100		2,100		600		500		400
Construction expenditures (000s)	$	5,000	$	7,200	$	4,500	$	4,700	$	3,500

(1)	Equivalent access lines are the sum of physical access lines and high-capacity data lines adjusted to estimate the equivalent number of physical access lines in terms of capacity plus the number of managed IP stations.
(2)	A physical access line is the individual circuit connecting a customer to a telephone company's central office facilities.
(3)	High-speed data customers are the number of customers provided high capacity data circuits via various technologies including digital subscriber line (“DSL”), managed Internet Protocol (“Managed IP”), and dedicated Internet circuit technologies.
(4)	Managed IP stations are the number of telephone handsets provided communications using packet networking technology.
5

   

TELEPHONE AND DATA SYSTEMS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS HIGHLIGHTS Three Months Ended March 31, (Unaudited, dollars and shares in thousands, except per share amounts)
							Increase/ (Decrease)
	2009			2008			Amount			Percent
Operating revenues
U.S. Cellular	$	1,052,764		$	1,037,856		$	14,908		1	%
TDS Telecom		199,302			206,076			(6,774	)	(3	)%
All Other(1)		4,580			5,169			(589	)	(11	)%
		1,256,646			1,249,101			7,545		1	%
Operating expenses
U.S. Cellular
Expenses excluding depreciation, amortization and accretion		798,152			772,687			25,465		3	%
Depreciation, amortization and accretion		137,651			142,530			(4,879	)	(3	)%
Loss on asset disposals, net		2,191			3,673			(1,482	)	(40	)%
		937,994			918,890			19,104		2	%
TDS Telecom
Expenses excluding depreciation, amortization and accretion		130,745			128,806			1,939		2	%
Depreciation, amortization and accretion		41,863			39,508			2,355		6	%
Loss on asset disposals, net		215			(21	)		236		N/M
		172,823			168,293			4,530		3	%
All Other(1)
Expenses excluding depreciation and amortization		6,358			4,189			2,169		52	%
Depreciation and amortization		3,252			4,120			(868	)	(21	)%
Loss on asset disposals, net		10			---			10		N/M
		9,620			8,309			1,311		16	%
Total operating expenses		1,120,437			1,095,492			24,945		2	%
Operating income (loss)
U.S. Cellular		114,770			118,966			(4,196	)	(4	)%
TDS Telecom		26,479			37,783			(11,304	)	(30	)%
All Other (1)		(5,040	)		(3,140	)		(1,900	)	(61	)%
		136,209			153,609			(17,400	)	(11	)%
Investment and other income (expense)
Equity in earnings of unconsolidated entities		25,337			21,470			3,867		18	%
Interest and dividend income		2,072			9,746			(7,674	)	(79	)%
Interest expense		(30,105	)		(41,380	)		11,275		27	%
Loss on investments and financial instruments		---			(3,490	)		3,490		N/M
Other, net		499			(199	)		698		N/M
Total investment and other income (expense)		(2,197	)		(13,853	)		11,656		84	%
Income before income taxes		134,012			139,756			(5,744	)	(4	)%
Income tax expense		40,638			49,251			(8,613	)	(17	)%
Net income		93,374			90,505			2,869		3	%
Less: Net income attributable to noncontrolling interests, net of tax		(21,366	)		(17,018	)		(4,348	)	(26	)%
Net income attributable to TDS		72,008			73,487			(1,479	)	(2	)%
Preferred dividend requirement		(13	)		(13	)		---		0	%
Net income available to common	$	71,995		$	73,474		$	(1,479	)	(2	)%
Basic weighted average shares outstanding		112,238			117,570			(5,332	)	(5	)%
Basic earnings per share attributable to TDS shareholders	$	0.64		$	0.62		$	0.02		3	%
Diluted weighted average shares outstanding		112,427			118,191			(5,764	)	(5	)%
Diluted earnings per share attributable to TDS shareholders	$	0.64		$	0.62		$	0.02		3	%
(1) Consists of Suttle-Straus printing and distribution operations, corporate operations and intercompany eliminations. N/M - Percentage change not meaningful
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TELEPHONE AND DATA SYSTEMS, INC.
CONSOLIDATED BALANCE SHEET HIGHLIGHTS
(Unaudited, dollars in thousands)
ASSETS
	March 31,		December 31,
	2009		2008
Current assets
Cash and cash equivalents	$	756,267	$	777,309
Short-term investments		53,688		27,705
Accounts receivable from customers and other		502,893		516,849
Inventory		113,384		122,377
Other current assets		148,740		184,696
		1,574,972		1,628,936
Investments
Licenses		1,453,690		1,441,440
Goodwill		707,840		707,079
Customer lists		30,978		34,032
Investments in unconsolidated entities		224,585		205,768
Other investments		10,385		10,623
		2,427,478		2,398,942
Property, plant and equipment, net
U.S. Cellular		2,622,805		2,620,376
TDS Telecom		904,471		918,454
Other		28,797		30,094
		3,556,073		3,568,924
Other assets and deferred charges		95,656		55,614
Total assets	$	7,654,179	$	7,652,416
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TELEPHONE AND DATA SYSTEMS, INC. CONSOLIDATED BALANCE SHEET HIGHLIGHTS (Unaudited, dollars in thousands)
LIABILITIES AND STOCKHOLDERS' EQUITY
	March 31, 2009			December 31, 2008
Current liabilities
Current portion of long-term debt	$	17,431		$	15,337
Accounts payable		271,141			319,575
Customer deposits and deferred revenues		173,278			174,101
Accrued interest		23,593			14,236
Accrued taxes		31,252			25,192
Accrued compensation		70,387			90,512
Other current liabilities		115,759			134,334
		702,841			773,287
Deferred liabilities and credits
Net deferred income tax liability		477,490			471,623
Other deferred liabilities and credits		373,900			368,045
		851,390			839,668
Long-term debt		1,619,403			1,621,422
Noncontrolling interests with redemption features		612			589
Preferred shares		852			852
Equity
TDS stockholders' equity
Common Shares, par value $.01		571			571
Special Common Shares, par value $.01		634			634
Series A Common Shares, par value $.01		65			65
Capital in excess of par value		2,071,654			2,066,597
Treasury shares, at cost:
Common Shares		(162,838	)		(163,017	)
Special Common Shares		(360,464	)		(350,091	)
Accumulated other comprehensive loss		(16,365	)		(16,812	)
Retained earnings		2,288,917			2,229,540
Total TDS stockholders' equity		3,822,174			3,767,487
Noncontrolling interests		656,907			649,111
Total equity		4,479,081			4,416,598
Total liabilities and equity	$	7,654,179		$	7,652,416
8

 

BALANCE SHEET HIGHLIGHTS March 31, 2009 (Unaudited, dollars in thousands)
					TDS Corporate & Other
	U.S. Cellular		TDS Telecom					Intercompany Eliminations			TDS Consolidated
Cash and cash equivalents	$	191,797	$	2,579	$	561,891		$	---		$	756,267
Affiliated cash investments		---		577,768		---			(577,768	)		---
Notes receivable--affiliates		---		---		253,582			(253,582	)		---
	$	191,797	$	580,347	$	815,473		$	(831,350	)	$	756,267
Licenses, goodwill and customer lists	$	1,948,058	$	436,916	$	(192,466	)	$	---		$	2,192,508
Investment in unconsolidated entities		175,571		6,521		47,254			(4,761	)		224,585
Other investments		4,265		2,574		3,546			---			10,385
	$	2,127,894	$	446,011	$	(141,666	)	$	(4,761	)	$	2,427,478
Property, plant and equipment, net	$	2,622,805	$	904,471	$	28,797		$	---		$	3,556,073
Notes payable--affiliates	$	---	$	253,582	$	577,768		$	(831,350	)	$	---
Long-term debt:
Current portion	$	10,086	$	428	$	6,917		$	---		$	17,431
Non-current portion		997,534		2,568		619,301			---			1,619,403
Total	$	1,007,620	$	2,996	$	626,218		$	---		$	1,636,834
Preferred shares	$	---	$	---	$	852		$	---		$	852
Construction expenditures:
Quarter ended 3/31/09	$	137,700	$	26,400	$	1,100		$	---		$	165,200
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TDS Telecom Highlights Three Months Ended March 31, (Unaudited, dollars in thousands)
							Increase (Decrease)
	2009			2008			Amount			Percent
Local Telephone Operations
Operating Revenues
Voice	$	48,578		$	51,576		$	(2,998	)	(6	)%
Data		25,060			21,186			3,874		18	%
Network access		67,831			70,082			(2,251	)	(3	)%
Miscellaneous		8,718			8,971			(253	)	(3	)%
		150,187			151,815			(1,628	)	(1	)%
Operating Expenses
Cost of services and products		47,684			44,834			2,850		6	%
Selling, general and administrative expenses		41,029			42,481			(1,452	)	(3	)%
Depreciation, amortization and accretion		36,086			33,624			2,462		7	%
Loss on asset disposals, net		138			(21	)		159		N/M
		124,937			120,918			4,019		3	%
Operating Income	$	25,250		$	30,897		$	(5,647	)	(18	)%
Competitive Local Exchange Carrier Operations
Revenues	$	51,189		$	56,129		$	(4,940	)	(9	)%
Expenses excluding depreciation, amortization and accretion		44,106			43,359			747		2	%
Depreciation, amortization and accretion		5,777			5,884			(107	)	(2	)%
Loss on asset disposals, net		77			---			77		N/M
		49,960			49,243			717		1	%
Operating Income	$	1,229		$	6,886		$	(5,657	)	(82	)%
Intercompany revenues	$	(2,074	)	$	(1,868	)	$	(206	)	N/M
Intercompany expenses		(2,074	)		(1,868	)		(206	)	N/M
		---			---			---
Total TDS Telecom Operating Income	$	26,479		$	37,783		$	(11,304	)	(30	)%
N/M - Percentage change not meaningful.
10

 

Telephone and Data Systems, Inc. Consolidated Statement of Cash Flows (Unaudited)
	Three Months Ended March 31,
	2009			2008
	(Dollars in thousands)
Cash flows from operating activities
Net income	$	93,374		$	90,505
Add (deduct) adjustments to reconcile net income to net cash flows from operating activities
Depreciation, amortization and accretion		182,766			186,158
Bad debts expense		20,303			20,405
Stock-based compensation expense		5,556			3,116
Deferred income taxes, net		4,934			(102,540	)
Loss on investments and financial instruments, net		---			3,490
Equity in earnings of unconsolidated entities		(25,337	)		(21,470	)
Distributions from unconsolidated entities		6,029			7,047
Loss on asset disposals, net		2,416			3,652
Noncash interest expense		96			5,319
Excess tax benefit from stock awards		(3	)		(1,138	)
Other operating activities		(41	)		189
Changes in assets and liabilities from operations
Accounts receivable		(6,272	)		(10,156	)
Inventory		7,720			(15,485	)
Accounts payable		(48,271	)		(14,529	)
Customer deposits and deferred revenues		(823	)		6,162
Accrued taxes		34,865			149,349
Accrued interest		9,358			5,807
Other assets and liabilities		(63,420	)		(46,882	)
		223,250			268,999
Cash flows from investing activities
Additions to property, plant and equipment		(165,236	)		(132,465	)
Cash paid for acquisitions and licenses		(14,582	)		(107,685	)
Cash received from divestitures		---			6,838
Proceeds from disposition of investments		---			48,619
Cash paid for short-term investments		(26,248	)		---
Other investing activities		1,010			371
		(205,056	)		(184,322	)
Cash flows from financing activities
Repayment of long-term debt		(993	)		(928	)
TDS Common Shares and Special Common Shares reissued for benefit plans, net of tax payments		383			1,103
U.S. Cellular Common Shares reissued for benefit plans, net of tax payments		356			(2,526	)
Excess tax benefit from stock awards		3			1,138
Repurchase of TDS Special Common Shares		(12,237	)		(40,584	)
Repurchase of U.S. Cellular Common Shares		(13,291	)		(6,201	)
Dividends paid		(12,057	)		(13	)
Distributions to noncontrolling interests		(1,458	)		(2,588	)
Other financing activities		58			1,262
		(39,236	)		(49,337	)
Net increase (decrease) in cash and cash equivalents		(21,042	)		35,340
Cash and cash equivalents -
Beginning of period		777,309			1,174,446
End of period	$	756,267		$	1,209,786
11

EX-99

Exhibit 99.2

PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
SAFE HARBOR CAUTIONARY STATEMENT

This Form 8-K and/or press release attached to this Form 8-K contain statements that are not based on historical facts and represent forward-looking statements, as this term is defined in the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, that address activities, events or developments that TDS intends, expects, projects, believes, estimates, plans or anticipates will or may occur in the future are forward-looking statements. The words “believes,” “anticipates,” “estimates,” “expects,” “plans,” “intends,” “projects” and similar expressions are intended to identify these forward-looking statements, but are not the exclusive means of identifying them. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause 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 risks, uncertainties and other factors include those set forth below, as more fully discussed under “Risk Factors” in the most recent filing of TDS’ Form 10-K, as updated by any TDS Form 10-Q filed subsequent to such Form 10-K. However, such factors are not necessarily all of the important factors that could cause actual results, performance or achievements to differ materially from those expressed in, or implied by, the forward-looking statements contained in this document. Other unknown or unpredictable factors also could have material adverse effects on future results, performance or achievements. TDS undertakes no obligation to update publicly any forward-looking statements whether as a result of new information, future events or otherwise. You should carefully consider the Risk Factors in the most recent filing of TDS’ Form 10-K, as updated by any TDS Form 10-Q filed subsequent to such Form 10-K, the following factors and other information contained in, or incorporated by reference into, this Form 8-K and/or press release attached to this Form 8-K to understand the material risks relating to TDS’ business.

Intense competition in the markets in which TDS operates could adversely affect TDS' revenues or increase its costs to compete.

A failure by TDS' service offerings to meet customer expectations could limit TDS' ability to attract and retain customers and could have an adverse effect on TDS' operations.

TDS' system infrastructure may not be capable of supporting changes in technologies and services expected by customers, which could result in lost customers and revenues.

An inability to obtain or maintain roaming arrangements with other carriers on terms that are acceptable to TDS could have an adverse effect on TDS' business, financial condition or results of operations.

TDS currently receives a significant amount of roaming revenues. As a result of recent acquisitions by other companies in the wireless industry, TDS' roaming revenues have declined. TDS anticipates that this trend will increase over the next several quarters. Further industry consolidation and continued< /FONT> build outs by existing and new wireless carriers could cause roaming revenues to decline even more, which would have an adverse effect on TDS' business, financial condition and results of operations.

A failure by TDS to obtain access to adequate radio spectrum could have an adverse effect on TDS' business and operations.

To the extent conducted by the FCC, TDS is likely to participate in FCC auctions of additional spectrum in the future as an applicant or as a non-controlling partner in another auction applicant and, during certain periods, will be subject to the FCC’s anti-collusion rules, which could have an adverse effect on TDS.

An inability to attract and/or retain management, technical, sales and other personnel could have an adverse effect on TDS' business, financial condition or results of operations.

TDS' assets are concentrated in the U.S. wireless telecommunications industry. As a result, its results of operations may fluctuate based on factors related entirely to conditions in this industry.

The completion of acquisitions has led to increased consolidation in the wireless telecommunications industry. TDS' lower scale relative to larger wireless carriers has in the past and could in the future prevent or delay its access to new products including handsets, new technology and/or new content and applications which could adversely affect TDS' ability to attract and retain customers and, as a result, could adversely affect its business, financial condition or< /FONT> results of operations.

Inability to manage its supply chain or inventory successfully could have an adverse effect on TDS' business, financial condition or results of operations.

  < /TR>

Changes in general economic and business conditions, both nationally and in the markets in which TDS operates, could have an adverse effect on TDS' business, financial condition or results of operations.

Changes in various business factors could have an adverse effect on TDS' business, financial condition or results of operations.

Advances or changes in telecommunications technology, such as Voice over Internet Protocol ("VoIP"), High-Speed Packet Access, WiMAX or Long-Term Evolution ("LTE"), could render certain technologies used by TDS obsolete, could reduce TDS' revenues or could increase its costs of doing business.

Changes in TDS' enterprise value, changes in the market supply or demand for wireless licenses, adverse developments in the business or the industry in which TDS is involved and/or other factors could require TDS to recognize impairments in the carrying value of its license costs, goodwill, customer lists and/or physical assets.

Costs, integration problems or other factors associated with acquisitions/divestitures of properties or licenses and/or expansion of TDS' business could have an adverse effect on TDS' business, financial condition or results of operations.

A significant portion of TDS' revenues is derived from customers who buy services through independent agents who market TDS' services on a commission basis. If TDS' relationships with these agents are seriously harmed, its revenues could be adversely affected.

TDS' investments in technologies which are unproven or for which success has not yet been demonstrated may not produce the benefits that TDS expects.

A failure by TDS to complete significant network construction and systems implementation activities as part of its plans to improve the quality, coverage, capabilities and capacity of its network and support systems could have an adverse effect on its operations.

Financial difficulties (including bankruptcy proceedings) of TDS' key suppliers or vendors, termination or impairment of TDS' relationships with such suppliers or vendors, or a failure by TDS to manage its supply chain effectively could result in delays or termination of TDS' receipt of required equipment or services, or could result in excess quantities of required equipment or services, any of which could adversely affect TDS' business, financial condition or results of operations.

TDS has significant investments in entities that it does not control. Losses in the value of such investments could have an adverse effect on TDS' financial condition or results of operations.

A material disruption in TDS' telecommunication networks or information technology, including breaches of network or information technology security, could have an adverse effect on TDS' business, financial condition or results of operations.

Wars, conflicts, hostilities and/or terrorist attacks or equipment failures, power outages, natural disasters or other events could have an adverse effect on TDS' business, financial condition or results of operations.

The market price of TDS' Common Shares and Special Common Shares are subject to fluctuations due to a variety of factors.

Changes in interpretations of accounting requirements, changes in industry practice, identification of errors or changes in management assumptions could require amendments to or restatements of financial information or disclosures included in this or prior filings with the SEC.

Restatements of financial statements by TDS and related matters, including resulting delays in filing periodic reports with the SEC, could have an adverse effect on TDS' business, financial condition or results of operations.

The existence of material weaknesses in the effectiveness of internal control over financial reporting could result in inaccurate financial statements or other disclosures or failure to prevent fraud, which could have an adverse effect on TDS' business, financial condition or results of operations.

Changes in facts or circumstances, including new or additional information that affects the calculation of potential liabilities for contingent obligations under guarantees, indemnities or otherwise, could require TDS to record charges in excess of amounts accrued in the financial statements, if any, which could have an adverse effect on TDS' financial condition or results of operations.

 

Early redemptions or repurchases of debt, issuances of debt, changes in operating leases, changes in purchase obligations or other factors or developments could cause the amounts reported under Contractual Obligations in TDS' most recent Annual Report on Form 10-K, as updated by the Quarterly Reports on Form 10-Q, to be different from the amounts actually incurred.

An increase in the amount of TDS' debt in the future could subject TDS to higher interest costs and restrictions on its financing, investing and operating activities and could decrease its net income and cash flows.

Recent market events and conditions, including disruption in credit and other financial markets and the deterioration of U.S. and global economic conditions, could, among other things, impede TDS' access to or increase the cost of financing its operating and investment activities and/or result in reduced revenues and lower operating income and cash flows, which would have an adverse effect on TDS' financial condition or results of operations.

Uncertainty of access to capital for telecommunications companies, deterioration in the capital markets, other changes in market conditions, changes in TDS' 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 or acquisition programs.

Changes in the regulatory environment or a failure by TDS to timely or fully comply with any applicable regulatory requirements could adversely affect TDS' financial condition, results of operations or ability to do business.

Changes in USF funding and/or intercarrier compensation could have a material adverse impact on TDS' financial position or results of operations.

Changes in income tax rates, laws, regulations or rulings, or federal or state tax assessments could have an adverse effect on TDS' financial condition or results of operations.

Settlements, 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' financial condition, results of operations or ability to do business.

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 an adverse effect on TDS' business, financial condition or results of operations.

Claims of infringement of intellectual property and proprietary rights of others, primarily involving patent infringement claims, could prevent TDS from using necessary technology to provide services or subject TDS to expensive intellectual property litigation or monetary penalties, which could have an adverse effect on TDS business, financial condition or results of operations.

Certain matters, such as control by the TDS Voting Trust and provisions in the TDS Restated Certificate of Incorporation, may serve to discourage or make more difficult a change in control of TDS.

A failure by TDS to successfully execute its business strategy could have an adverse effect on TDS' business, financial condition or 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' forward-looking estimates by a material amount.