8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 5, 2016
TELEPHONE AND DATA SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
Delaware		001-14157	36-2669023
(State or other jurisdiction of		(Commission	(I.R.S. Employer Identification No.)
incorporation or organization)		File Number)
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 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 August 5, 2016, Telephone and Data Systems, Inc. (“TDS”) issued a news release announcing itsresults of operationsfor the period ended June 30, 2016. A copy of the news release is attached hereto as Exhibit 99.1 and 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, nor will any such information or exhibits be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except as expressly set forth by specific reference in such filing.

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.

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 hereunto duly authorized.
		TELEPHONE AND DATA SYSTEMS, INC.
		(Registrant)
Date:	August 5, 2016
		By:	/s/ Douglas D. Shuma
			Douglas D. Shuma
			Senior Vice President - Finance and Chief Accounting Officer
			(principal financial officer and principal accounting officer)

EXHIBIT INDEX
The following exhibits are filed or furnished herewith as noted below.
Exhibit
No.	Description
99.1	Earnings Press Release dated August 5, 2016
99.2	Private Securities Litigation Reform Act of 1995 Safe Harbor Cautionary Statement

EX-99.1

Exhibit 99.1 NEWS RELEASE

As previously announced, TDS will hold a teleconference Aug. 5, 2016, at 9:30 a.m. CDT. Interested parties may listen to the call live via the Events & Presentations page of investors.tdsinc.com.

FOR IMMEDIATE RELEASE

TDS reports second quarter 2016 results

2016 guidance reaffirmed

CHICAGO, (Aug. 5, 2016) — Telephone and Data Systems, Inc. (NYSE:TDS) reported total operating revenues of $1,283 million for the second quarter of 2016, versus $1,276 million for the comparable period one year ago. Net income attributable to TDS shareholders and related diluted earnings per share were $28million and $0.25, respectively, for the second quarter of 2016, compared to $23 million and $0.21, respectively, in the comparable period one year ago.

“TDS businesses showed continued progress through the quarter,” saidLeRoy T. Carlson, Jr., TDS president and CEO. “U.S. Cellular grew its customers while TDS Telecom achieved growth in IPTV and broadband connections and increased service revenues at OneNeck.  

“U.S. Cellularmaintained momentum in the quarter by increasing connections and driving exceptionally low churn, reflecting our commitment to providing a top quality network and outstanding customer service at every point of customer engagement. U.S. Cellular focused on stronger adoption of equipment installment plans (EIP), which generated strong equipment revenue growth.

“TDS Telecom achieved success in the recent quarter by growing total wireline residential connections, adding IPTV connections and increasing residential revenue per connection. TDS Telecom’s cable segment added residential broadband and voice connections and increased operating revenues. TDS Telecom’s IT service business, OneNeck, generated higher revenues from maintenance and professional services and increased its equipment sales of hardware solutions.”

1

2016 Estimated Results

Current estimates of full-year 2016 results for U.S. Cellular, TDS Telecom, and TDS, which are unchanged from the previous estimates, are shown below. Such estimates represent management’s view as of August 5, 2016. Such forward-looking statements should not be assumed to be current as of any future date. TDS undertakes no duty to update such information, whether as a result of new information, future events, or otherwise. There can be no assurance that final results will not differ materially from such estimated results.

	2016 EstimatedResults
	U.S. Cellular			TDS Telecom			TDS(2)
	Current		Previous	Current		Previous	Current		Previous
(Dollars in millions)
Total operating revenues	$3,900-$4,100		Unchanged	$1,130-$1,180		Unchanged	$5,040-$5,290		Unchanged
Operating cash flow (1)	$525-$650		Unchanged	$270-$310		Unchanged	$800-$965		Unchanged
Adjusted EBITDA (1)	$725-$850		Unchanged	$270-$310		Unchanged	$1,000-$1,165		Unchanged
Capital expenditures (Approximately)	$	500	Unchanged	$	180	Unchanged	$	695	Unchanged

The following tables provide a reconciliation to Operating Cash Flow and Adjusted EBITDA for 2016 estimated results, and actual results for the six months ended June 30, 2016 and year ended December 31, 2015. In providing 2016 estimated results, TDS has not completed the below reconciliation to net income because it does not provide guidance for income taxes.  Although potentially significant, TDS believes that the impact of income taxes cannot be reasonably predicted; therefore, TDS is unable to provide such guidance.

				2016 EstimatedResults
				U.S. Cellular		TDS Telecom		TDS(2)
(Dollars in millions)
Net income (loss) (GAAP)				N/A		N/A		N/A
Add back:
	Income tax expense (benefit)			N/A		N/A		N/A
Income (loss) before income taxes
	(GAAP)		$	(5)-120	$	40-80	$	(25)-140
Add back:
	Interest expense			110		–		165
	Depreciation, amortization and
		accretion expense		610		230		850
EBITDA (Non-GAAP)			$	715-840	$	270-310	$	990-1,155
Add back:
	(Gain) loss on sale of business and
		other exit costs, net		–		–		–
	(Gain) loss on license sales and
		exchanges, net		(10)		–		(10)
		(Gain) loss on asset disposals, net		20		–		20
Adjusted EBITDA (Non-GAAP) (1)			$	725-850	$	270-310	$	1,000-1,165
Deduct:
	Equity in earnings of unconsolidated
		entities		140		–		140
		Interest and dividend income		60		–		60
Operating cash flow (Non-GAAP) (1)			$	525-650	$	270-310	$	800-965

2

			Actual Results
			Six Months Ended June 30, 2016						Year ended December 31, 2015
			U.S. Cellular		TDS Telecom		TDS (2)		U.S. Cellular*		TDS Telecom		TDS(2)*
(Dollars in millions)
Net income (GAAP)			$	37	$	25	$	42	$	247	$	46	$	263
Add back:
	Income tax expense			23		16		31		156		35		172
Income before income taxes
	(GAAP)		$	60	$	41	$	73	$	404	$	81	$	435
Add back:
	Interest expense			56		1		85		86		1		142
	Depreciation, amortization and
		accretion expense		307		112		422		606		228		844
EBITDA (Non-GAAP)			$	423	$	154	$	580	$	1,096	$	310	$	1,421
Add back:
	(Gain) loss on sale of business and
		other exit costs, net		–		–		–		(114)		(10)		(136)
	(Gain) loss on license sales and
		exchanges, net		(9)		–		(9)		(147)		–		(147)
	(Gain) loss on asset disposals, net			10		2		12		16		6		22
Adjusted EBITDA (Non-GAAP) (1)			$	424	$	156	$	583	$	852	$	306	$	1,160
Deduct:
	Equity in earnings of unconsolidated
		entities		72		–		72		140		–		140
	Interest and dividend income			27		2		29		37		2		39
Operating cash flow (Non-GAAP) (1)(3)			$	325	$	155	$	482	$	675	$	304	$	981
* Includes $58 million of revenue related to termination of the rewards points program.
Note: Totals may not foot due to rounding differences.

1. Adjusted EBITDA (earnings before interest, taxes, depreciation, amortization and accretion) is defined as net income adjusted for the items set forth in the reconciliation above.  Operating cash flow is defined as net income adjusted for the items set forth in the reconciliation above.  Adjusted EBITDA and Operating cash flow are not measures of financial performance under Generally Accepted Accounting Principles in the United States (“GAAP”) and should not be considered as alternatives to Net incomes, as indicators of cash flows or as measure of liquidity.  TDS does not intend to imply that any such items set forth in the reconciliation above are non-recurring, infrequent or unusual; such items may occur in the future.  Management uses Adjusted EBITDA and Operating cash flow as measurements of profitability, and therefore reconciliations to applicable GAAP income measures are deemed most appropriate.  Management believes Adjusted EBITDA and Operating cash flow are useful measures of TDS’ operating results before significant recurring non-cash charges, gains and losses, and other items as presented below as they provide additional relevant and useful information to investors and other users of TDS’ financial data in evaluating the effectiveness of its operations and underlying business trends in a manner that is consistent with management’s evaluation of business performance.  Adjusted EBITDA shows adjusted earnings before interest, taxes, depreciation, amortization and accretion, while Operating cash flow reduces this measure further to exclude Equity in earnings of unconsolidated entities and Interest and dividend income in order to more effectively show the performance of operating activities excluding investment activities.  The table above reconciles Adjusted EBITDA and Operating cash flow to the corresponding GAAP measure, Net income or Income (loss) before incomes taxes.
2. The TDS column includes U.S. Cellular, TDS Telecom and also the impacts of consolidating eliminations, corporate operations and non-reportable segments, all of which are not presented above.
3. A reconciliation of Operating cash flow (Non-GAAP) to operating income (GAAP) for June 30, 2016 actual results can be found on the company's website at investors.tdsinc.com.

3

Stock Repurchase Summary

TDS began repurchasing stock under its $250 million repurchase authorization on Aug. 5, 2013. The following represents repurchases of TDS Common Shares.

Repurchase Period	# Shares	Cost (in millions)
2016 (year-to-date through June 30, 2016)	111,700	$	3
2015 (full year)	–	$	–
Total	111,700	$	3

4

Conference Call Information

TDS will hold a conference call on August 5, 2016 at 9:30 a.m. Central Time.

• Access the live call on the Events & Presentations page of investors.tdsinc.com or at https://www.webcaster4.com/Webcast/Page/1145/16520.
• Access the call by phone at 877/407-8029 (US/Canada), no pass code required.

Before the call, certain financial and statistical information to be discussed during the call will be posted to investors.tdsinc.com. The call will be archived on the Events & Presentations page of investors.tdsinc.com.

About TDS

Telephone and Data Systems, Inc. (TDS), a Fortune 500® company, provides wireless; cable and wireline broadband, TV and voice; and hosted and managed servicesto approximately 6 million customers nationwide through its businesses, U.S. Cellular, TDS Telecom, OneNeck IT Solutions, and BendBroadband. Founded in 1969 and headquartered in Chicago, TDS employed 10,400 people as of June 30, 2016.

Visit www.tdsinc.com for comprehensive financial information, including earnings releases, quarterly and annual filings, shareholder information and more.

Contacts

Jane McCahon, Senior Vice President, Corporate Relations and Corporate Secretary

312-592-5379

jane.mccahon@tdsinc.com

Julie Mathews, IRC, Investor Relations Director

312-592-5341

julie.mathews@tdsinc.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: intense competition; the ability to execute TDS’ business strategy; uncertainties in TDS’ future cash flows and liquidity and access to the capital markets; the ability to make payments on TDS and U.S. Cellular indebtedness or comply with the terms of debt covenants; impacts of any pending acquisitions/divestures/exchanges of properties and/or licenses, including, but not limited to, the ability to obtain regulatory approvals, successfully complete the transactions and the financial impacts of such transactions; the ability of the company to successfully manage and grow its markets; the overall economy; the access to and pricing of unbundled network elements; the ability to obtain or maintain roaming arrangements with other carriers on acceptable terms; the state and federal telecommunications regulatory environment; the value of assets and investments; adverse changes in the ratings afforded TDS and U.S. Cellular debt securities by accredited ratings organizations; industry consolidation; advances in telecommunications technology; pending and future litigation; changes in income tax rates, laws, regulations or rulings; changes in customer growth rates, average monthly revenue per user, churn rates, roaming revenue and terms, the availability of wireless devices, or the mix of products and services offered by U.S. Cellular and TDS Telecom. Investors are encouraged to consider these and other risks and uncertainties that are discussed in the Form 8-K Current Report used by TDS to furnish this press release to the Securities and Exchange Commission, which are incorporated by reference herein.

For more information about TDS and its subsidiaries, visit:

TDS: www.tdsinc.com

U.S. Cellular: www.uscellular.com

TDS Telecom: www.tdstelecom.com

OneNeck IT Solutions: www.oneneck.com

5

United States Cellular Corporation
Summary Operating Data (Unaudited)
As of or for the Quarter Ended					6/30/2016		3/31/2016		12/31/2015			9/30/2015		6/30/2015
Retail Connections
	Postpaid
		Total at end of period				4,490,000		4,454,000		4,409,000		4,341,000		4,324,000
		Gross additions				197,000		215,000		240,000		200,000		191,000
			Feature phones			8,000		9,000		10,000		14,000		15,000
			Smartphones			107,000		124,000		132,000		119,000		115,000
			Connected devices			82,000		82,000		98,000		67,000		61,000
		Net additions (losses)				36,000		45,000		68,000		17,000		17,000
			Feature phones			(21,000)		(25,000)		(25,000)		(28,000)		(26,000)
			Smartphones			8,000		20,000		23,000		6,000		7,000
			Connected devices			49,000		50,000		70,000		39,000		36,000
		ARPU (1)(8)			$	47.37	$	48.13	$	51.46	$	58.12	$	53.62
		ABPU (Non-GAAP)*(2)(8)			$	56.09	$	56.06	$	58.57	$	63.88	$	58.06
		ARPA (3)(8)			$	124.91	$	125.36	$	131.96	$	147.00	$	133.85
		ABPA (Non-GAAP)*(4)(8)			$	147.90	$	145.99	$	150.19	$	161.57	$	144.94
		Churn rate (5)				1.20%		1.28%		1.31%		1.41%		1.34%
			Handsets			1.10%		1.18%		1.23%		1.33%		1.26%
			Connected devices			1.84%		2.01%		1.95%		2.20%		2.13%
		Smartphone penetration (6)				77%		75%		74%		72%		69%
	Prepaid
		Total at end of period				413,000		399,000		387,000		380,000		368,000
		Gross additions				73,000		75,000		69,000		71,000		65,000
		Net additions (losses)				14,000		12,000		7,000		12,000		8,000
		ARPU(1)			$	34.58	$	35.51	$	35.54	$	35.64	$	35.98
		Churn rate (5)				4.86%		5.37%		5.40%		5.24%		5.22%
Total connections at end of period (9)						4,973,000		4,926,000		4,876,000		4,807,000		4,779,000
Smartphones sold as a percent of total
	handsets sold					91%		92%		91%		87%		87%
Market penetration at end of period
	Consolidated operating population					31,994,000		31,994,000		31,967,000		31,814,000		31,814,000
	Consolidated operating penetration(7)					16%		15%		15%		15%		15%
Capital expenditures (millions)					$	93	$	79	$	198	$	135	$	134
Total cell sites in service						6,324		6,306		6,297		6,246		6,223
Owned towers						3,988		3,989		3,978		3,957		3,940
*		See Non-GAAP reconciliation at end.
(1)		Average Revenue Per User (“ARPU”) - metric is calculated by dividing a revenue base by an average number of connections and by the number of months in the period.  These revenue bases and connection populations are shown below:
			▪	Postpaid ARPU consists of total postpaid service revenues and postpaid connections.
			▪	Prepaid ARPU consists of total prepaid service revenues and prepaid connections.
(2)		Average Billings Per User (“ABPU”) - non-GAAP metric is calculated by dividing total postpaid service revenues plus equipment installment plan billings by the average number of postpaid connections and by the number of months in the period.
(3)		Average Revenue Per Account (“ARPA”) - metric is calculated by dividing total postpaid service revenues by the average number of postpaid accounts and by the number of months in the period.
(4)		Average Billings Per Account (“ABPA”) - non-GAAP metric is calculated by dividing total postpaid service revenues plus equipment installment plan billings by the average number of postpaid accounts and by the number of months in the period.
(5)		Churn metrics represents the percentage of the connections that disconnect service each month.  These rates represent the average monthly churn rate for each respective period.
(6)		Smartphones represent wireless devices which run on an Android, Apple, BlackBerry or Windows Mobile operating system, excluding connected devices. Smartphone penetration is calculated by dividing postpaid smartphone connections by postpaid handset connections.
(7)		Market penetration is calculated by dividing the number of wireless connections at the end of the period by the total population of consolidated operating markets as estimated by Nielsen.
(8)		The quarter ended September 30, 2015 results include the recognition of $58 million in revenue due to the termination of the rewards program.
(9)		Includes reseller and other connections.

6

TDS Telecom
Summary Operating Data (Unaudited)
Quarter Ended			6/30/2016		3/31/2016		12/31/2015		9/30/2015		6/30/2015
TDS Telecom
Wireline
	Residential connections
		Voice(1)		316,800		318,400		319,800		325,900		329,000
		Broadband (2)		232,200		229,100		228,500		231,600		231,200
		IPTV (3)		41,200		38,300		34,400		30,300		27,900
		Wireline residential connections		590,200		585,800		582,700		587,800		588,100
	Total residential revenue per connection (4)		$	43.67	$	43.28	$	41.24	$	42.83	$	42.10
	Commercial connections
		Voice (1)		164,000		167,400		171,500		176,700		181,800
		Broadband(2)		21,900		22,000		22,400		23,000		23,700
		managedIP(5)		149,000		148,500		147,100		145,900		145,100
		Wireline commercial connections		334,900		337,900		341,000		345,600		350,600
	Total Wireline connections			925,100		923,700		923,700		933,400		938,700
Cable
	Cable Connections
		Video(6)		102,900		104,600		106,800		108,300		109,100
		Broadband(7)		125,700		121,700		117,100		114,600		112,300
		Voice(8)		58,900		58,100		56,400		54,000		51,500
		Cable connections		287,600		284,400		280,300		276,900		272,900
Numbers may not foot due to rounding.
(1)		The individual circuits connecting a customer to Wireline’s central office facilities.
(2)		The number of Wireline customers provided high-capacity data circuits via various technologies, including DSL and dedicated internet circuit technologies.
(3)		The number of Wireline customers provided video services using IP networking technology.
(4)		Total residential revenue per connection is calculated by dividing total Wireline residential revenue by the average number of total Wireline residential connections and by the number of months in the period.
(5)		The number of telephone handsets, data lines and IP trunks providing communications using IP networking technology.
(6)		Generally, a home or business receiving video programming counts as one video connection. In counting bulk residential or commercial connections, such as an apartment building or hotel, connections are counted based on the number of units/rooms within the building receiving service.
(7)		Billable number of lines into a building for high-speed data services.
(8)		Billable number of lines into a building for voice services.

TDS Telecom
Capital Expenditures (millions)
Quarter Ended	6/30/2016		3/31/2016		12/31/2015		9/30/2015		6/30/2015
Wireline	$	27	$	27	$	50	$	38	$	32
Cable		17		13		15		13		12
HMS		2		2		8		5		9
	$	46	$	42	$	73	$	56	$	53

7

Telephone and Data Systems, Inc.
Consolidated Statement of Operations Highlights
(Unaudited)
				Three Months Ended June 30,
				2016		2015		2016 vs. 2015
								Increase (Decrease)
(Dollars and shares in millions, except per share amounts)
Operating revenues
	U.S. Cellular			$	980	$	976	$	4	-
	TDS Telecom				300		295		5	2%
	All Other (1)				3		5		(2)	(40)%
					1,283		1,276		7	1%
Operating expenses
	U.S. Cellular
		Expenses excluding depreciation, amortization and
			accretion		812		814		(2)	-
		Depreciation, amortization and accretion			154		151		3	2%
		(Gain) loss on asset disposals, net			5		5		–	(12)%
		(Gain) loss on sale of business and other exit costs, net			–		(2)		2	N/M
		(Gain) loss on license sales and exchanges, net			(9)		–		(9)	>(100)%
					962		968		(6)	(1)%
	TDS Telecom
		Expenses excluding depreciation, amortization and
			accretion		221		216		4	2%
		Depreciation, amortization and accretion			54		57		(3)	(6)%
		(Gain) loss on asset disposals, net			1		(1)		2	>100%
		(Gain) loss on sale of business and other exit costs, net			–		(3)		3	>100%
					275		269		6	2%
	All Other(1)
		Expenses excluding depreciation and amortization			3		4		(1)	(49)%
		Depreciation and amortization			2		3		(1)	(52)%
		(Gain) loss on asset disposals, net			–		1		(1)	>100%
		(Gain) loss on sale of business and other exit costs, net (2)			–		(1)		1	100%
					5		7		(2)	(45)%
			Total operating expenses		1,242		1,244		(2)	-
Operating income (loss)
	U.S. Cellular				18		8		10	>100%
	TDS Telecom				24		26		(1)	(5)%
	All Other (1)				(1)		(2)		–	61%
					41		32		9	28%
Investment and other income (expense)
	Equity in earnings of unconsolidated entities				36		35		1	3%
	Interest and dividend income				15		10		5	52%
	Interest expense				(43)		(34)		(9)	(26)%
	Other, net				1		1		–	>(100)%
		Total investment and other income			9		12		(3)	(25)%
Income before income taxes					50		44		6	14%
	Income tax expense				18		18		–	4%
Net income					32		26		6	20%
	Less: Net income attributable to noncontrolling
		interests, net of tax			4		3		1	18%
Net income attributable to TDS shareholders					28		23		5	21%
	TDS Preferred dividend requirement				–		–		–	-
Net income available to common shareholders				$	28	$	23	$	5	21%
Basic weighted average shares outstanding					109		108		1	1%
Basic earnings per share attributable to TDS shareholders				$	0.25	$	0.21	$	0.04	19%
Diluted weighted average shares outstanding					111		110		1	1%
Diluted earnings per share attributable to TDS shareholders				$	0.25	$	0.21	$	0.04	19%
(1)	Consists of TDS corporate, intercompany eliminations and all other business operations not included in the U.S. Cellular and TDS Telecom segments.
N/M – Percentage change not meaningful

8

Telephone and Data Systems, Inc.
Consolidated Statement of Operations Highlights
(Unaudited)
				Six Months Ended June 30,
				2016		2015		2016 vs. 2015
								Increase (Decrease)
(Dollars and shares in millions, except per share amounts)
Operating revenues
	U.S. Cellular			$	1,938	$	1,941	$	(3)	-
	TDS Telecom				581		575		6	1%
	All Other (1)				7		12		(5)	(45)%
					2,526		2,528		(2)	-
Operating expenses
	U.S. Cellular
		Expenses excluding depreciation, amortization and
			accretion		1,613		1,610		3	-
		Depreciation, amortization and accretion			307		298		9	3%
		(Gain) loss on asset disposals, net			10		10		–	2%
		(Gain) loss on sale of business and other exit costs, net			–		(113)		113	100%
		(Gain) loss on license sales and exchanges, net			(9)		(123)		114	93%
					1,921		1,682		239	14%
	TDS Telecom
		Expenses excluding depreciation, amortization and
			accretion		426		417		10	2%
		Depreciation, amortization and accretion			112		114		(2)	(2)%
		(Gain) loss on asset disposals, net			2		–		2	>100%
		(Gain) loss on sale of business and other exit costs, net			–		(3)		3	>100%
					540		528		12	2%
	All Other (1)
		Expenses excluding depreciation and amortization			5		10		(5)	(54)%
		Depreciation and amortization			3		6		(3)	(40)%
		(Gain) loss on sale of business and other exit costs, net(2)			–		(13)		13	100%
					8		3		5	>100%
			Total operating expenses		2,469		2,213		256	12%
Operating income (loss)
	U.S. Cellular (3)				17		259		(242)	(93)%
	TDS Telecom				41		47		(6)	(12)%
	All Other (1)				(1)		9		(10)	>(100)%
					57		315		(258)	(82)%
Investment and other income (expense)
	Equity in earnings of unconsolidated entities				72		70		2	2%
	Interest and dividend income				29		19		10	58%
	Interest expense				(85)		(68)		(17)	(25)%
		Total investment and other income			16		21		(5)	(24)%
Income before income taxes					73		336		(263)	(78)%
	Income tax expense				31		134		(103)	(77)%
Net income					42		202		(160)	(79)%
	Less: Net income attributable to noncontrolling interests,
		net of tax			6		33		(27)	(82)%
Net income attributable to TDS shareholders					36		169		(133)	(79)%
	TDS Preferred dividend requirement				–		–		–	-
Net income available to common shareholders				$	36	$	169	$	(133)	(79)%
Basic weighted average shares outstanding					109		108		1	1%
Basic earnings per share attributable to TDS shareholders				$	0.33	$	1.56	$	(1.23)	(79)%
Diluted weighted average shares outstanding					111		109		2	1%
Diluted earnings per share attributable to TDS shareholders				$	0.32	$	1.53	$	(1.21)	(79)%
(1)	Consists of TDS corporate, intercompany eliminations and all other business operations not included in the U.S. Cellular and TDS Telecom segments.
(2)	Compared to U.S. Cellular, TDS recognized an incremental gain of $12 million on the tower sale as a result of a lower basis in the assets disposed in 2015.
(3)	Year-over-year comparisons are affected by gains of $252 million from sales and exchanges of businesses and licenses in 2015.
N/M – Percentage change not meaningful

9

Telephone and Data Systems, Inc.
Consolidated Statement of Cash Flows
(Unaudited)
					Six Months Ended June 30,
					2016		2015
(Dollars in millions)
Cash flows from operating activities
	Net income				$	42	$	202
		Add (deduct) adjustments to reconcile net income to net cash flows from operating activities
			Depreciation, amortization and accretion			422		418
			Bad debts expense			46		55
			Stock-based compensation expense			18		18
			Deferred income taxes, net			8		(41)
			Equity in earnings of unconsolidated entities			(72)		(70)
			Distributions from unconsolidated entities			30		27
			(Gain) loss on asset disposals, net			12		10
			(Gain) loss on sale of business and other exit costs, net			–		(129)
			(Gain) loss on license sales and exchanges, net			(9)		(123)
			Noncash interest expense			2		1
			Other operating activities			(3)		–
		Changes in assets and liabilities from operations
			Accounts receivable			(6)		(18)
			Equipment installment plans receivable			(94)		(65)
			Inventory			(26)		127
			Accounts payable			32		30
			Customer deposits and deferred revenues			(18)		(7)
			Accrued taxes			76		191
			Accrued interest			(1)		–
			Other assets and liabilities			(59)		(88)
				Net cash provided by operating activities		400		538
Cash flows from investing activities
	Cash used for additions to property, plant and equipment					(281)		(359)
	Cash paid for acquisitions and licenses					(46)		(281)
	Cash received from divestitures and exchanges					17		292
	Federal Communications Commission deposit					(143)		–
	Other investing activities					1		2
				Net cash used in investing activities		(452)		(346)
Cash flows from financing activities
	Repayment of long-term debt					(6)		–
	Issuance of long-term debt					2		–
	TDS Common Shares reissued for benefit plans, net of tax payments					–		10
	U.S. Cellular Common Shares reissued for benefit plans, net of tax payments					3		(2)
	Repurchase of TDS Common Shares					(3)		–
	Repurchase of U.S. Cellular Common Shares					(2)		(2)
	Dividends paid to TDS shareholders					(32)		(31)
	Payment of debt issuance costs					(4)		(3)
	Distributions to noncontrolling interests					(1)		(6)
	Other financing activities					9		2
				Net cash provided by financing activities		(34)		(32)
Net increase (decrease) in cash and cash equivalents						(86)		160
Cash and cash equivalents
	Beginning of period					985		472
	End of period				$	899	$	632

10

Telephone and Data Systems, Inc.
Consolidated Balance Sheet Highlights
(Unaudited)
ASSETS
			June 30,		December 31,
			2016		2015
(Dollars in millions)
Current assets
	Cash and cash equivalents		$	899	$	985
	Accounts receivable from customers and others, net			824		803
	Inventory, net			184		158
	Prepaid expenses			121		112
	Income taxes receivable			6		70
	Other current assets			31		30
		Total current assets		2,065		2,158
Assets held for sale				23		–
Licenses				1,864		1,844
Goodwill				766		766
Franchise rights				244		244
Other intangible assets, net				39		47
Investments in unconsolidated entities				446		402
Property, plant and equipment, net				3,613		3,764
Other assets and deferred charges				366		197
Total assets			$	9,426	$	9,422

11

Telephone and Data Systems, Inc.
Consolidated Balance Sheet Highlights
(Unaudited)
LIABILITIES AND EQUITY
				June 30,		December 31,
				2016		2015
(Dollars in millions)
Current liabilities
	Current portion of long-term debt			$	14	$	14
	Accounts payable				362		349
	Customer deposits and deferred revenues				269		288
	Accrued interest				11		12
	Accrued taxes				50		41
	Accrued compensation				96		113
	Other current liabilities				96		127
		Total current liabilities			898		944
Deferred liabilities and credits
	Deferred income tax liability, net				908		900
	Other deferred liabilities and credits				447		433
Long-term debt					2,436		2,440
Noncontrolling interests with redemption features					1		1
Equity
	TDS shareholders' equity
		Series A Common and Common Shares, par value $.01			1		1
		Capital in excess of par value			2,363		2,365
		Treasury shares, at cost			(717)		(727)
		Accumulated other comprehensive income (loss)			–		–
		Retained earnings			2,487		2,487
			Total TDS shareholders' equity		4,134		4,126
	Preferred shares				1		1
	Noncontrolling interests				601		577
		Total equity			4,736		4,704
Total liabilities and equity				$	9,426	$	9,422

12

Balance Sheet Highlights
(Unaudited)
		June 30, 2016
		U.S.		TDS		TDS Corporate		Intercompany		TDS
		Cellular		Telecom		& Other		Eliminations		Consolidated
(Dollars in millions)
Cash and cash equivalents		$	621	$	40	$	238	$	–	$	899
Affiliated cash investments			–		359		–		(359)		–
		$	621	$	399	$	238	$	(359)	$	899
Licenses, goodwill and other intangible
	assets	$	2,224	$	828	$	(138)	$	–	$	2,913
Investment in unconsolidated entities			407		4		40		(6)		446
		$	2,631	$	832	$	(98)	$	(6)	$	3,359
Property, plant and equipment, net		$	2,510	$	1,078	$	25	$	–	$	3,613
Long-term debt:
	Current portion	$	11	$	–	$	3	$	–	$	14
	Non-current portion		1,623		1		812		–		2,436
		$	1,634	$	1	$	815	$	–	$	2,450

13

TDS Telecom Highlights
(Unaudited)
			Three Months Ended June 30,
			2016		2015		2016 vs. 2015
							Increase (Decrease)
Wireline
Operating revenues
	Residential		$	77	$	74	$	3	4%
	Commercial			53		55		(2)	(4)%
	Wholesale			44		46		(1)	(3)%
		Total service revenues		175		175		–	-
	Equipment sales			–		1		–	(11)%
				175		176		(1)	-
Operating expenses
	Cost of services			64		63		1	-
	Cost of equipment sold			–		1		(1)	(22)%
	Selling, general and administrative expenses			49		49		–	-
	Depreciation, amortization and accretion			37		41		(4)	(10)%
	(Gain) loss on asset disposals, net			1		1		–	(43)%
	(Gain) loss on sale of business and other exit costs, net			–		(3)		3	>100%
				151		152		(1)	(1)%
	Operating income		$	25	$	24	$	(1)	1%
Cable
Operating revenues
	Residential		$	36	$	35	$	1	3%
	Commercial			9		10		–	(3)%
		Total service revenues		45		45		1	2%
Operating expenses
	Cost of services			24		20		4	19%
	Selling, general and administrative expenses			12		14		(2)	(11)%
	Depreciation, amortization and accretion			9		9		–	5%
	(Gain) loss on asset disposals, net			–		(2)		2	>100%
				46		41		5	12%
	Operating income		$	–	$	4	$	(4)	>(100)%
HMS
Operating revenues
	Service revenues		$	33	$	29	$	3	11%
	Equipment sales			47		46		1	3%
				80		76		4	6%
Operating expenses
	Cost of services			19		22		(3)	(13)%
	Cost of equipment sold			39		39		–	1%
	Selling, general and administrative expenses			15		11		4	33%
	Depreciation, amortization and accretion			7		7		1	11%
				80		78		2	2%
	Operating (loss)		$	–	$	(3)	$	2	99%
Intercompany revenues			$	(1)	$	(1)	$	–	20%
Intercompany expenses				(1)		(1)		–	20%
Total TDS Telecom operating income			$	24	$	26	$	(1)	(5)%
Numbers may not foot due to rounding.

14

TDS Telecom Highlights
(Unaudited)
			Six Months Ended June 30,
			2016		2015		2016 vs. 2015
							Increase (Decrease)
(Dollars in millions)
Wireline
Operating revenues
	Residential		$	153	$	149	$	4	3%
	Commercial			107		111		(4)	(4)%
	Wholesale			87		91		(4)	(4)%
		Total service revenues		347		351		(4)	(1)%
	Equipment sales			1		1		–	2%
				348		352		(4)	(1)%
Operating expenses
	Cost of services			126		125		1	-
	Cost of equipment sold			1		1		–	(15)%
	Selling, general and administrative expenses			98		95		3	3%
	Depreciation, amortization and accretion			78		83		(5)	(6)%
	(Gain) loss on asset disposals, net			1		2		(1)	(35)%
	(Gain) loss on sale of business and other exit costs, net			–		(3)		3	>100%
				304		303		1	-
	Operating income		$	45	$	49	$	(5)	(9)%
Cable
Operating revenues
	Residential		$	72	$	70	$	2	2%
	Commercial			19		18		1	3%
		Total service revenues		90		88		3	2%
Operating expenses
	Cost of services			46		40		6	15%
	Selling, general and administrative expenses			24		26		(2)	(7)%
	Depreciation, amortization and accretion			18		18		–	5%
	(Gain) loss on asset disposals, net			1		(1)		2	>100%
				90		83		7	8%
	Operating income		$	1	$	5	$	(5)	(90)%
HMS
Operating revenues
	Service revenues		$	62	$	58	$	4	7%
	Equipment sales			82		79		4	5%
				144		137		8	6%
Operating expenses
	Cost of services			40		42		(2)	(4)%
	Cost of equipment sold			68		66		3	4%
	Selling, general and administrative expenses			25		24		2	6%
	Depreciation, amortization and accretion			15		13		2	12%
				148		144		4	3%
	Operating (loss)		$	(4)	$	(8)	$	4	46%
Intercompany revenues			$	(2)	$	(2)	$	–	(2)%
Intercompany expenses				(2)		(2)		–	(2)%
Total TDS Telecom operating income			$	41	$	47	$	(6)	(12)%
Numbers may not foot due to rounding.

15

Telephone and Data Systems, Inc.
Financial Measures and Reconciliations
(Unaudited)
Free Cash Flow and Adjusted Free Cash Flow
		Three Months Ended June 30,				Six Months Ended June 30,
		2016		2015		2016		2015
(Dollars in millions)
Cash flows from operating activities (GAAP)		$	154	$	183	$	400	$	538
Less: Cash used for additions to property, plant and equipment			122		193		281		359
	Free cash flow		32		(10)		119		179
Add: Sprint Cost Reimbursement			2		7		4		23
	Adjusted free cash flow (Non-GAAP)(1)	$	34	$	(3)	$	123	$	202
(1)	Management uses Free cash flow as a liquidity measure and it is defined as Cash flows from operating activities less Cash paid for additions to property, plant and equipment.  Adjusted free cash flow is defined as Cash flows from operating activities (which includes cash outflows related to the Sprint decommissioning), as adjusted for cash proceeds from the Sprint Cost Reimbursement (which are included in Cash flows from investing activities in the Consolidated Statement of Cash Flows), less Cash paid for additions to property, plant and equipment.  Sprint decommissioning and Sprint Cost Reimbursement are further defined and discussed in our Annual Report on Form 10-K for the year ended December 31, 2015.  Free cash flow and Adjusted free cash flow are non-GAAP financial measures which TDS believes may be useful to investors and other users of its financial information in evaluating the amount of cash generated by business operations (including cash proceeds from the Sprint Cost Reimbursement), after Cash paid for additions to property, plant and equipment.

Postpaid ABPU and Postpaid ABPA

U.S. Cellular presents Postpaid ABPU and Postpaid ABPA to reflect the revenue shift from Service revenues to Equipment and product sales resulting from the increased adoption of equipment installment plans.  Postpaid ABPU and Postpaid ABPA, as previously defined, are non-GAAP financial measure which U.S. Cellular believes are useful to investors and other users of its financial information in showing trends in both service and equipment revenues received from customers.

		Three Months Ended June 30,				Six Months Ended June 30,
		2016		2015		2016		2015
(Dollars and connection counts in millions)
Calculation of Postpaid ARPU
Postpaid service revenues		$	636	$	694	$	1,275	$	1,401
Average number of postpaid connections			4.48		4.31		4.45		4.31
Number of months in period			3		3		6		6
	Postpaid ARPU (GAAP metric)	$	47.37	$	53.62	$	47.76	$	54.24
Calculation of Postpaid ABPU
Postpaid service revenues		$	636	$	694	$	1,275	$	1,401
Equipment installment plan billings			118		58		223		104
	Total billings to postpaid connections	$	754	$	752	$	1,498	$	1,505
Average number of postpaid connections			4.48		4.31		4.45		4.31
Number of months in period			3		3		6		6
	Postpaid ABPU (Non-GAAP metric)	$	56.09	$	58.06	$	56.08	$	58.28
Calculation of Postpaid ARPA
Postpaid service revenues		$	636	$	694	$	1,275	$	1,401
Average number of postpaid accounts			1.70		1.73		1.70		1.74
Number of months in period			3		3		6		6
	Postpaid ARPA (GAAP metric)	$	124.91	$	133.85	$	125.13	$	134.39
Calculation of Postpaid ABPA
Postpaid service revenues		$	636	$	694	$	1,275	$	1,401
Equipment installment plan billings			118		58		223		104
	Total billings to postpaid accounts	$	754	$	752	$	1,498	$	1,505
Average number of postpaid accounts			1.70		1.73		1.70		1.74
Number of months in period			3		3		6		6
	Postpaid ABPA (Non-GAAP metric)	$	147.90	$	144.94	$	146.95	$	144.40

16

EX-99.2

Exhibit 99.2

PRIVATE SECURITIES LITIGATION REFORMACT OF 1995

SAFE HARBOR CAUTIONARY STATEMENT

This Form8-K and/or press release attached to this Form8-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 described under “Risk Factors” in the most recent filing of TDS’ Form10-K, as updated by any TDS Form10-Q filed subsequent to such Form10-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’ Form10-K, as updated by any TDS Form10-Q filed subsequent to such Form10-K, the following factors and other information contained in, or incorporated by reference into, this Form8-K and/or press release attached to this Form8-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 to successfully execute its business strategy (including planned acquisitions, spectrum acquisitions, divestitures and exchanges) or allocate resources or capital could have an adverse effect on TDS’ business, financial condition or results of operations.
• Uncertainty in TDS’ future cash flow and liquidity or in the ability to access capital, deterioration in the capital markets, other changes in TDS’ performance or 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, reduce the acquisition of spectrum licenses, and/or reduce or cease share repurchases and/or the payment of dividends.
• TDS has a significant amount of indebtedness which could adversely affect its financial performance and in turn adversely affect its ability to make payments on its indebtedness, comply with terms of debt covenants and incur additional debt.
• Changes in roaming practices or other factors could cause TDS’ roaming revenues to decline from current levels, roaming expenses to increase from current levels and/or impact TDS’ ability to service its customers in geographic areas where TDS does not have its own network, which could have an adverse effect on TDS’ business, financial condition or results of operations.
• A failure by TDS to obtain access to adequate radio spectrum to meet current or anticipated future needs and/or to accurately predict future needs for radio spectrum could have an adverse effect on TDS’ business, financial condition or results of operations.
• To the extent conducted by the FCC, TDS may participate in FCC auctions of additional spectrum in the future directly or indirectly and, during certain periods, will be subject to the FCC’s anti-collusion rules, which could have an adverse effect on TDS.
• Changes in the regulatory environment or a failure by TDS to timely or fully comply with any applicable regulatory requirements could adversely affect TDS’ business, financial condition or results of operations.
• An inability to attract people of outstanding potential, to develop their potential through education and assignments, and to retain them by keeping them engaged, challenged and properly rewarded could have an adverse effect on TDS' business, financial condition or results of operations.
• TDS’ assets are concentrated primarily in the U.S. telecommunications industry. Consequently, its operating results may fluctuate based on factors related primarily to conditions in this industry.
• TDS’ smaller scale relative to larger competitors that may have much greater financial and other resources than TDS could cause TDS to be unable to compete successfully, which could adversely affect its business, financial condition or results of operations.

• Changes in various business factors, including changes in demand, customer preferences and perceptions, price competition, churn from customer switching activity and other factors, could have an adverse effect on TDS’ business, financial condition or results of operations.
• Advances or changes in technology could render certain technologies used by TDS obsolete, could put TDS at a competitive disadvantage, could reduce TDS’ revenues or could increase its costs of doing business.
• Complexities associated with deploying new technologies present substantial risk and TDS’ investments in unproven technologies may not produce the benefits that TDS expects.
• TDS receives regulatory support and is subject to numerous surcharges and fees from federal, state and local governments, and the applicability and the amount of the support and fees are subject to great uncertainty.
• Performance under device purchase agreements could have a material adverse impact on TDS' business, financial condition or results of operations.
• Changes in TDS’ enterprise value, changes in the market supply or demand for wireless licenses, wireline or cable markets or IT service providers, adverse developments in the businesses or the industries in which TDS is involved and/or other factors could require TDS to recognize impairments in the carrying value of its licenses, goodwill, franchise rights and/or physical assets.
• Costs, integration problems or other factors associated with acquisitions, divestitures or exchanges of properties or licenses and/or expansion of TDS’ businesses could have an adverse effect on TDS’ business, financial condition or results of operations.
• TDS offers customers the option to purchase certain devices under installment contracts which, compared to fixed-term service contracts, includes risks that TDS may possibly incur greater churn, lower cash flows, increased costs and/or increased bad debts expense due to differences in contract terms, which could have an adverse impact on TDS' financial condition or results of operations.
• 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 networks and support systems could have an adverse effect on its operations.
• Difficulties involving third parties with which TDS does business, including changes in TDS’ relationships with or financial or operational difficulties of key suppliers or independent agents and third party national retailers who market TDS’ services, 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 failure by TDS to maintain flexible and capable telecommunication networks or information technology, or a material disruption thereof, could have an adverse effect on TDS’ business, financial condition or results of operations.
• TDS has experienced and, in the future, expects to experience cyber-attacks or other breaches of network or information technology security of varying degrees on a regular basis, which could have an adverse effect on TDS' business, financial condition or results of operations.
• The market price of TDS’ Common Shares is subject to fluctuations due to a variety of factors.
• Changes in facts or circumstances, including new or additional information, could require TDS to record charges in excess of amounts accrued in the financial statements, which could have an adverse effect on TDS’ business, financial condition or results of operations.
• Disruption in credit or other financial markets, a deterioration of U.S. or global economic conditions or other events 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’ business, 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’ business, financial condition or results of operations.
• The possible development of adverse precedent in litigation or conclusions in professional studies to the effect that radio frequency emissions from wireless 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’ wireless 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 products or 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.
• Any of the foregoing events or other events could cause revenues, earnings, capital expenditures and/or any other financial or statistical information to vary from TDS’ forward-looking estimates by a material amount.