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): May 5, 2017

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))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
□	Emerging growth company
□	If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Item 2.02.Results of Operations and Financial Condition

On May 5, 2017, Telephone and Data Systems, Inc. (“TDS”) issued a news release announcing itsresults of operationsfor the period ended March 31, 2017. 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:	May 5, 2017
		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 May 5, 2017
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 May 5, 2017, at 9:30 a.m. CDT. Listen to the call live via the Events & Presentations page of investors.tdsinc.com.

FOR IMMEDIATE RELEASE

TDS reports firstquarter 2017 results

CHICAGO, (May 5, 2017) — Telephone and Data Systems, Inc. (NYSE:TDS) reported total operating revenues of $1,238 million for the first quarter of 2017, versus $1,254 million for the same period one year ago. Net income attributable to TDS shareholders and related diluted earnings per share were $37 million and $0.33, respectively, for the first quarter of 2017, compared to $8 million and $0.07, respectively, in the same period one year ago.

“TDS businesses started the year by showing a solid first quarter,” saidLeRoy T. Carlson Jr., TDS president and CEO.“U.S. Cellular maintained strong customer loyalty, continued network investments and generated a strong increase in profitability, while TDS Telecom grew both IPTV and broadband connections, increasing both revenue and profitability.

“U.S. Cellular drove exceptionally low levels of postpaid handset churn by providing customers with the network quality, service offerings and product portfolios they want. Our unlimited data plans are achieving rapid adoption and our recent launch of the Samsung Galaxy S8 is progressing well. U.S. Cellular continued enhancing its already high-quality network by investing in Voice over LTE (VoLTE) technology. We are very pleased with the low-band, 600MHz spectrum we are purchasing at reasonable prices for the vast majority of our markets.

“TDS Telecom’s Wireline segment maintained its momentum in IPTV growth by adding new connections and by increasing average revenue per connection. Our Cable segment increased its broadband connections, generating higher residential revenue. Our hosted and managed services company, OneNeck IT Solutions, significantly increased equipment revenues.”

1

2017 Estimated Results

Current estimates of full-year 2017 results for U.S. Cellular, TDS Telecom, and TDS are shown below. Such estimates represent management’s view as of May 5, 2017. 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.

	2017 EstimatedResults
	U.S. Cellular			TDS Telecom			TDS(3)
	Current		Previous	Current		Previous	Current		Previous
(Dollars in millions)
Total operating revenues (1)	$3,800-$4,000		Unchanged	$1,200-$1,250		Unchanged	$5,015-$5,265		Unchanged
Operating cash flow (1)(2)(4)	$550-$650		$500-$650	$300-$340		Unchanged	$855-$995		$805-$995
Adjusted EBITDA (2)	$700-$800		$650-$800	$300-$340		Unchanged	$1,005-$1,145		$955-$1,145
Capital expenditures (Approximately)		$500	Unchanged		$225	Unchanged		$735	Unchanged

The following tables provide reconciliations of Net income to Operating cash flow and Adjusted EBITDA for 2017 estimated results, actual results for the three months ended March 31, 2017, and actual results for theyear ended December 31, 2016. In providing 2017 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.

				2017 EstimatedResults
				U.S. Cellular		TDS Telecom		TDS(3)
(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)		$	(45)-55	$	80-120	$	(25)-115
Add back:
	Interest expense			110		–		165
	Depreciation, amortization and
		accretion expense		630		220		860
EBITDA (Non-GAAP)			$	695-795	$	300-340	$	1,000-1,140
Add back:
	(Gain) loss on sale of business and
		other exit costs, net		–		–		–
	(Gain) loss on license sales and
		exchanges, net		(15)		–		(15)
	(Gain) loss on asset disposals, net			20		–		20
Adjusted EBITDA (Non-GAAP) (2)			$	700-800	$	300-340	$	1,005-1,145
Deduct:
	Equity in earnings of unconsolidated
		entities		140		–		140
	Interest and dividend income;
		other income(1)		10		–		10
Operating cash flow (Non-GAAP)(1)(2)(4)			$	550-650	$	300-340	$	855-995

2

			Actual Results
			Three Months Ended March 31, 2017						Year ended December 31, 2016
			U.S. Cellular		TDS Telecom		TDS (3)		U.S. Cellular		TDS Telecom		TDS(3)
(Dollars in millions)
Net income (GAAP)			$	28	$	18	$	43	$	49	$	42	$	52
Add back:
	Income tax expense			33		11		34		33		25		40
Income before income taxes
	(GAAP)		$	61	$	29	$	77	$	82	$	67	$	92
Add back:
	Interest expense			28		1		42		113		3		170
	Depreciation, amortization and
		accretion expense		153		56		211		618		224		850
EBITDA (Non-GAAP)			$	242	$	86	$	330	$	813	$	294	$	1,112
Add back:
	(Gain) loss on sale of business and
		other exit costs, net		–		–		–		–		–		(1)
	(Gain) loss on license sales and
		exchanges, net		(17)		–		(17)		(19)		(1)		(20)
	(Gain) loss on asset disposals, net			4		1		4		22		4		27
Adjusted EBITDA (Non-GAAP) (2)			$	229	$	86	$	317	$	816	$	298	$	1,118
Deduct:
	Equity in earnings of unconsolidated
		entities		33		–		32		140		–		140
	Interest and dividend income;
		other income (1)		3		1		4		6		3		11
	Other, net			(1)		–		1		1		–		–
Operating cash flow (Non-GAAP) (1)(2)(4)			$	194	$	85	$	280	$	669	$	295	$	967
Note: Totals may not foot due to rounding differences.

1. Equipment installment plan interest income is reflected as a component of Service revenues consistent with an accounting policy change effective January 1, 2017.  All prior period numbers have been recast to conform to this accounting change. 
2. 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 income or Cash flows from operating activities, as indicators of cash flows or as measures 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 Net income are deemed 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 above 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, and gains and losses, 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 before income taxes.
3. 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.
4. A reconciliation of Operating cash flow (Non-GAAP) to Operating income (GAAP) for March 31, 2017, actual results can be found on the company's website at investors.tdsinc.com.

3

Conference Call Information

TDS will hold a conference call on May 5, 2017 at 9:30 a.m. Central Time.

• Access the live call on the Events & Presentations page of investors.tdsinc.com or athttps://www.webcaster4.com/Webcast/Page/1145/20933.
• 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 10,300 people as of March 31, 2017.

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, Director - Investor Relations

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/divestitures/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 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 of 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 services and products 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

4

United States Cellular Corporation
Summary Operating Data (Unaudited)
As of or for the Quarter Ended					3/31/2017		12/31/2016		9/30/2016			6/30/2016		3/31/2016
Retail Connections
	Postpaid
		Total at end of period				4,455,000		4,482,000		4,484,000		4,490,000		4,454,000
		Gross additions				146,000		187,000		174,000		197,000		215,000
			Feature phones			7,000		7,000		10,000		8,000		9,000
			Smartphones			88,000		109,000		105,000		107,000		124,000
			Connected devices			51,000		71,000		59,000		82,000		82,000
		Net additions (losses)				(27,000)		(2,000)		(6,000)		36,000		45,000
			Feature phones			(19,000)		(21,000)		(20,000)		(21,000)		(25,000)
			Smartphones			(9,000)		(4,000)		(7,000)		8,000		20,000
			Connected devices			1,000		23,000		21,000		49,000		50,000
		ARPU (1)			$	45.42	$	45.19	$	47.08	$	47.37	$	48.13
		ABPU (Non-GAAP)(2)			$	55.82	$	55.43	$	56.79	$	56.09	$	56.06
		ARPA (3)			$	121.88	$	120.67	$	125.31	$	124.91	$	125.36
		ABPA (Non-GAAP)(4)			$	149.78	$	148.02	$	151.16	$	147.90	$	145.99
		Churn rate (5)				1.29%		1.41%		1.34%		1.20%		1.28%
			Handsets			1.08%		1.23%		1.22%		1.10%		1.18%
			Connected devices			2.55%		2.49%		2.04%		1.84%		2.01%
	Prepaid
		Total at end of period				480,000		484,000		480,000		413,000		399,000
		Gross additions				78,000		83,000		132,000		73,000		75,000
		Net additions (losses)				(4,000)		4,000		67,000		14,000		12,000
		ARPU(1)			$	33.66	$	33.25	$	34.39	$	34.58	$	35.51
		Churn rate (5)				5.69%		5.44%		4.84%		4.86%		5.37%
Total connections at end of period (6)						4,996,000		5,031,000		5,030,000		4,973,000		4,926,000
Market penetration at end of period
	Consolidated operating population					32,089,000		31,994,000		31,994,000		31,994,000		31,994,000
	Consolidated operating penetration(7)					16%		16%		16%		16%		15%
Capital expenditures (millions)					$	61	$	171	$	103	$	93	$	79
Total cell sites in service						6,417		6,415		6,374		6,324		6,306
Owned towers						4,041		4,040		4,015		3,988		3,989
(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.  Refer to the end of this release for a reconciliation of this metric to its most comparable GAAP metric.
(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.  Refer to the end of this release for a reconciliation of this metric to its most comparable GAAP metric.
(5)		Churn rate represents the percentage of the connections that disconnect service each month.  These rates represent the average monthly churn rate for each respective period.
(6)		Includes reseller and other 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.

5

TDS Telecom
Summary Operating Data (Unaudited)
Quarter Ended			3/31/2017		12/31/2016		9/30/2016		6/30/2016		3/31/2016
TDS Telecom
Wireline
	Residential connections
		Voice(1)		308,200		310,600		314,600		316,800		318,400
		Broadband (2)		228,500		229,500		232,800		232,200		229,100
		IPTV (3)		45,200		45,300		43,600		41,200		38,300
		Wireline residential connections		581,900		585,400		590,900		590,200		585,800
	Total residential revenue per connection (4)		$	45.17	$	44.27	$	44.25	$	43.67	$	43.28
	Commercial connections
		Voice (1)		154,000		157,400		160,900		164,000		167,400
		Broadband(2)		21,200		21,400		21,700		21,900		22,000
		managedIP(5)		150,300		150,900		151,500		149,000		148,500
		Wireline commercial connections		325,500		329,700		334,000		334,900		337,900
	Total Wireline connections			907,400		915,200		924,900		925,100		923,700
Cable
	Cable Connections
		Broadband(6)		137,800		133,700		130,200		125,700		121,700
		Video(7)		97,600		99,000		101,100		102,900		104,600
		Voice(8)		59,000		59,600		59,800		58,900		58,100
		Cable connections		294,300		292,400		291,000		287,600		284,400
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 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)		Billable number of lines into a building for high-speed data services.
(7)		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.
(8)		Billable number of lines into a building for voice services.

TDS Telecom
Capital Expenditures (millions)
Quarter Ended	3/31/2017		12/31/2016		9/30/2016		6/30/2016		3/31/2016
Wireline	$	17	$	26	$	27	$	27	$	27
Cable		9		13		11		17		13
HMS		6		5		2		2		2
	$	33	$	45	$	40	$	46	$	42

6

Telephone and Data Systems, Inc.
Consolidated Statement of Operations Highlights
(Unaudited)
				Three Months Ended March 31,
				2017		2016		2017 vs. 2016
								Increase (Decrease)
(Dollars and shares in millions, except per share amounts)
Operating revenues
	U.S. Cellular (1)			$	936	$	969	$	(33)	(3)%
	TDS Telecom				299		281		17	6%
	All Other (2)				3		4		(1)	(8)%
					1,238		1,254		(16)	(1)%
Operating expenses
	U.S. Cellular
		Expenses excluding depreciation, amortization and
			accretion		742		801		(59)	(7)%
		Depreciation, amortization and accretion			153		153		–	1%
		(Gain) loss on asset disposals, net			4		5		(1)	(28)%
		(Gain) loss on license sales and exchanges, net			(17)		–		(17)	N/M
					882		959		(77)	(8)%
	TDS Telecom
		Expenses excluding depreciation, amortization and
			accretion		213		205		8	4%
		Depreciation, amortization and accretion			56		58		(2)	(4)%
		(Gain) loss on asset disposals, net			1		1		–	(27)%
					270		264		6	2%
	All Other(1)
		Expenses excluding depreciation and amortization			3		4		(1)	(42)%
		Depreciation and amortization			2		1		1	(11)%
		(Gain) loss on asset disposals, net			(1)		–		(1)	90%
					4		5		(1)	(27)%
			Total operating expenses		1,156		1,228		(72)	(6)%
Operating income (loss)
	U.S. Cellular (1)				54		10		44	>100%
	TDS Telecom				29		17		12	70%
	All Other (2)				(1)		(1)		–	97%
					82		26		56	>100%
Investment and other income (expense)
	Equity in earnings of unconsolidated entities				32		35		(3)	(8)%
	Interest and dividend income (1)				4		3		1	63%
	Interest expense				(42)		(41)		(1)	(1)%
	Other, net				1		–		1	>100%
		Total investment and other income (1)			(5)		(3)		(2)	(33)%
Income before income taxes					77		23		54	>100%
	Income tax expense				34		13		21	>100%
Net income					43		10		33	>100%
	Less: Net income attributable to noncontrolling
		interests, net of tax			6		2		4	>100%
Net income attributable to TDS shareholders					37		8		29	>100%
	TDS Preferred dividend requirement				–		–		–	-
Net income available to common shareholders				$	37	$	8	$	29	>100%
Basic weighted average shares outstanding					110		109		1	1%
Basic earnings per share attributable to TDS shareholders				$	0.34	$	0.07	$	0.26	>100%
Diluted weighted average shares outstanding					112		110		2	1%
Diluted earnings per share attributable to TDS shareholders				$	0.33	$	0.07	$	0.26	>100%
N/M – Percentage change not meaningful
(1)	Equipment installment plan interest income is reflected as a component of Service revenues consistent with an accounting policy change effective January 1, 2017.  All prior period numbers have been recast to conform to this accounting change.
(2)	Consists of TDS corporate, intercompany eliminations and all other business operations not included in the U.S. Cellular and TDS Telecom segments.

7

Telephone and Data Systems, Inc.

Consolidated Statement of Cash Flows

(Unaudited)

				Three Months Ended
				March 31,
				2017		2016
(Dollars in millions)
Cash flows from operating activities
	Net income			$	43	$	10
	Add (deduct) adjustments to reconcile net income to net cash flows
	from operating activities
		Depreciation, amortization and accretion			211		212
		Bad debts expense			24		19
		Stock-based compensation expense			11		9
		Deferred income taxes, net			(1)		5
		Equity in earnings of unconsolidated entities			(32)		(35)
		Distributions from unconsolidated entities			11		14
		(Gain) loss on asset disposals, net			4		6
		(Gain) loss on license sales and exchanges, net			(17)		–
		Noncash interest expense			1		1
	Changes in assets and liabilities from operations
		Accounts receivable			28		20
		Equipment installment plans receivable			(44)		(41)
		Inventory			–		(1)
		Accounts payable			(75)		39
		Customer deposits and deferred revenues			(12)		(6)
		Accrued taxes			33		63
		Accrued interest			9		9
		Other assets and liabilities			(57)		(78)
			Net cash provided by operating activities		137		246
Cash flows from investing activities
	Cash paid for additions to property, plant and equipment				(127)		(159)
	Cash paid for acquisitions and licenses				(14)		–
	Cash received from divestitures and exchanges				16		2
			Net cash used in investing activities		(125)		(157)
Cash flows from financing activities
	Repayment of long-term debt				(3)		(3)
	TDS Common Shares reissued for benefit plans, net of tax payments				1		–
	U.S. Cellular Common Shares reissued for benefit plans, net of tax payments				3		1
	Repurchase of TDS Common Shares				–		(3)
	Repurchase of U.S. Cellular Common Shares				–		(2)
	Dividends paid to TDS shareholders				(17)		(16)
	Other financing activities				–		3
			Net cash used in financing activities		(16)		(20)
Net increase (decrease) in cash and cash equivalents					(4)		69
Cash and cash equivalents
	Beginning of period				900		985
	End of period			$	896	$	1,054

8

Telephone and Data Systems, Inc.
Consolidated Balance Sheet Highlights
(Unaudited)
ASSETS
			March 31,		December 31,
			2017		2016
(Dollars in millions)
Current assets
	Cash and cash equivalents		$	896	$	900
	Accounts receivable from customers and others, net			829		851
	Inventory, net			151		151
	Prepaid expenses			116		115
	Income taxes receivable			3		10
	Other current assets			30		32
		Total current assets		2,025		2,059
Assets held for sale				5		8
Licenses				1,904		1,895
Goodwill				770		766
Franchise rights				244		244
Other intangible assets, net				31		33
Investments in unconsolidated entities				472		451
Other investments				–		1
Property, plant and equipment, net				3,449		3,555
Other assets and deferred charges				449		434
Total assets			$	9,349	$	9,446

9

Telephone and Data Systems, Inc.
Consolidated Balance Sheet Highlights
(Unaudited)
LIABILITIES AND EQUITY
				March 31,		December 31,
				2017		2016
(Dollars and shares in millions, except per share amounts)
Current liabilities
	Current portion of long-term debt			$	12	$	12
	Accounts payable				260		365
	Customer deposits and deferred revenues				217		229
	Accrued interest				20		11
	Accrued taxes				67		44
	Accrued compensation				77		127
	Other current liabilities				85		99
		Total current liabilities			738		887
Deferred liabilities and credits
	Deferred income tax liability, net				921		922
	Other deferred liabilities and credits				467		453
Long-term debt, net					2,431		2,433
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			2,394		2,386
		Treasury shares, at cost			(693)		(698)
		Accumulated other comprehensive income			–		1
		Retained earnings			2,473		2,454
			Total TDS shareholders' equity		4,175		4,144
	Preferred shares				1		1
	Noncontrolling interests				615		605
		Total equity			4,791		4,750
Total liabilities and equity				$	9,349	$	9,446

10

Balance Sheet Highlights
(Unaudited)
		March 31, 2017
		U.S.		TDS		TDS Corporate		Intercompany		TDS
		Cellular		Telecom		& Other		Eliminations		Consolidated
(Dollars in millions)
Cash and cash equivalents		$	572	$	21	$	303	$	–	$	896
Affiliated cash investments			–		472		–		(472)		–
		$	572	$	493	$	303	$	(472)	$	896
Licenses, goodwill and other intangible
	assets	$	2,265	$	823	$	(139)	$	–	$	2,949
Investment in unconsolidated entities			434		4		40		(6)		472
		$	2,699	$	827	$	(99)	$	(6)	$	3,421
Property, plant and equipment, net		$	2,377	$	1,047	$	26	$	(1)	$	3,449
Long-term debt:
	Current portion	$	11	$	–	$	1	$	–	$	12
	Non-current portion		1,616		2		813		–		2,431
		$	1,627	$	2	$	814	$	–	$	2,443

11

TDS Telecom Highlights
(Unaudited)
			Three Months Ended March 31,
							2017 vs. 2016
			2017		2016		Increase (Decrease)
(Dollars in millions)
Wireline
Operating revenues
	Residential		$	79	$	76	$	3	4%
	Commercial			51		54		(3)	(6)%
	Wholesale			49		43		6	15%
		Total service revenues		179		173		6	4%
	Equipment sales			–		–		–	(37)%
				179		173		6	3%
Operating expenses
	Cost of services			63		62		1	2%
	Cost of equipment sold			1		1		–	6%
	Selling, general and administrative expenses			48		48		(1)	(2)%
	Expenses excluding depreciation, amortization and
		accretion		111		111		–	-
	Depreciation, amortization and accretion			39		42		(3)	(6)%
				150		153		(2)	(2)%
	Operating income		$	29	$	20	$	8	41%
Cable
Operating revenues
	Residential		$	41	$	35	$	5	15%
	Commercial			9		10		(1)	(8)%
				49		45		4	10%
Operating expenses
	Cost of services			24		22		2	8%
	Selling, general and administrative expenses			13		12		–	3%
	Expenses excluding depreciation, amortization and
		accretion		36		34		2	6%
	Depreciation, amortization and accretion			10		9		1	10%
	(Gain) loss on asset disposals, net			–		1		–	(23)%
				47		44		3	6%
	Operating income		$	2	$	1	$	2	>100%
HMS
Operating revenues
	Service revenues		$	29	$	29	$	–	(1)%
	Equipment sales			43		35		7	21%
				71		64		7	11%
Operating expenses
	Cost of services			20		21		(1)	(3)%
	Cost of equipment sold			36		29		6	21%
	Selling, general and administrative expenses			11		11		–	1%
	Expenses excluding depreciation, amortization and
		accretion		67		61		6	9%
	Depreciation, amortization and accretion			7		7		–	(6)%
				74		68		5	8%
	Operating loss		$	(2)	$	(4)	$	2	43%
Intercompany revenues			$	(1)	$	(1)	$	–	(2)%
Intercompany expenses				(1)		(1)		–	(2)%
Total TDS Telecom operating income			$	29	$	17	$	12	70%
Numbers may not foot due to rounding.

12

Telephone and Data Systems, Inc.
Financial Measures and Reconciliations
Free Cash Flow
		Three Months Ended March 31,
		2017		2016
(Dollars in millions)
Cash flows from operating activities (GAAP)		$	137	$	246
Less: Cash paid for additions to property, plant and equipment			127		159
	Free cash flow (1)	$	10	$	87
(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.  Free cash flow is a non-GAAP financial measure which TDS believes may be useful to investors and other users of its financial information in evaluating liquidity, specifically, the amount of cash generated by business operations, 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 measures which U.S. Cellular believes are useful to investors and other users of its financial information in showing trends in both service and equipment and product sales revenues received from customers.

For the Quarter Ended			3/31/2017		12/31/2016		9/30/2016		6/30/2016		3/31/2016
(Dollars and connection counts in millions)
Calculation of Postpaid ARPU
Postpaid service revenues		$	608	$	607	$	635	$	636	$	639
Average number of postpaid connections			4.46		4.48		4.49		4.48		4.43
Number of months in period			3		3		3		3		3
	Postpaid ARPU (GAAP metric)	$	45.42	$	45.19	$	47.08	$	47.37	$	48.13
Calculation of Postpaid ABPU
Postpaid service revenues		$	608	$	607	$	635	$	636	$	639
Equipment installment plan billings			139		138		131		118		105
	Total billings to postpaid connections	$	747	$	745	$	766	$	754	$	744
Average number of postpaid connections			4.46		4.48		4.49		4.48		4.43
Number of months in period			3		3		3		3		3
	Postpaid ABPU (Non-GAAP metric)	$	55.82	$	55.43	$	56.79	$	56.09	$	56.06
Calculation of Postpaid ARPA
Postpaid service revenues		$	608	$	607	$	635	$	636	$	639
Average number of postpaid accounts			1.66		1.68		1.69		1.70		1.70
Number of months in period			3		3		3		3		3
	Postpaid ARPA (GAAP metric)	$	121.88	$	120.67	$	125.31	$	124.91	$	125.36
Calculation of Postpaid ABPA
Postpaid service revenues		$	608	$	607	$	635	$	636	$	639
Equipment installment plan billings			139		138		131		118		105
	Total billings to postpaid accounts	$	747	$	745	$	766	$	754	$	744
Average number of postpaid accounts			1.66		1.68		1.69		1.70		1.70
Number of months in period			3		3		3		3		3
	Postpaid ABPA (Non-GAAP metric)	$	149.78	$	148.02	$	151.16	$	147.90	$	145.99

13

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. Each of the following risks could have a material adverse effect on TDS’ business, financial condition or results of operations.  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, financial condition or results of operations.

• 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.
• Failure by TDS to timely or fully comply with any existing applicable legislative and/or regulatory requirements or changes thereto 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 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, which could have an adverse effect on TDS’ business, financial condition or results of operations.
• 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 network, support and other systems and infrastructure 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..