-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, hnWusv0cQfhpTdywsxY7ZO22bG1DuYoOBqpchQCmY+XiTdC5CRQUToHsplijsYMZ guPsc9h59czSIgykdyWynw== 0000912057-94-001431.txt : 19940422 0000912057-94-001431.hdr.sgml : 19940422 ACCESSION NUMBER: 0000912057-94-001431 CONFORMED SUBMISSION TYPE: 424B5 PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 19940421 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TELEPHONE & DATA SYSTEMS INC CENTRAL INDEX KEY: 0000096966 STANDARD INDUSTRIAL CLASSIFICATION: 4813 IRS NUMBER: 362669023 STATE OF INCORPORATION: IA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 424B5 SEC ACT: 1933 Act SEC FILE NUMBER: 033-68456 FILM NUMBER: 94523747 BUSINESS ADDRESS: STREET 1: 30 N LASALLE ST STE 4000 CITY: CHICAGO STATE: IL ZIP: 60602 BUSINESS PHONE: 3126301900 MAIL ADDRESS: STREET 1: 301 S. WESTFIELD RD STREET 2: PO BOX 5158 CITY: MADISON STATE: WI ZIP: 53705-0158 FORMER COMPANY: FORMER CONFORMED NAME: TELEPHONE SYSTEMS INC STOCK OPTION PLANS DATE OF NAME CHANGE: 19741118 FORMER COMPANY: FORMER CONFORMED NAME: TELEPHONE SYSTEMS INC DATE OF NAME CHANGE: 19740509 424B5 1 424B5 PROSPECTUS SUPPLEMENT FILED PURSUANT TO RULE 424(B)(5) (To Prospectus Dated April 21, 1994) Registration No. 33-68456 $150,000,000 TELEPHONE AND DATA SYSTEMS, INC. [LOGO] MEDIUM-TERM NOTES, SERIES C DUE FROM NINE MONTHS TO THIRTY YEARS FROM DATE OF ISSUE Telephone and Data Systems, Inc. ("TDS" or the "Company") may from time to time offer up to $150,000,000 aggregate initial offering price of its Medium-Term Notes, Series C (the "Notes"), subject to reduction as a result of the sale of other securities registered under the Registration Statement to which this Prospectus Supplement relates. Each Note will mature on a day from nine months to thirty years from its date of issue and may be subject to redemption at the option of the Company or repayment at the option of the Holder prior to its maturity. Each Note will bear interest at a fixed rate (a "Fixed Rate Note"), which may be zero in the case of certain Notes issued at a price representing a discount from the principal amount payable at maturity, or at a floating rate (a "Floating Rate Note") as set forth in the applicable Pricing Supplement. Unless otherwise specified in the applicable Pricing Supplement, interest on each Fixed Rate Note will be payable semiannually in arrears on each January 15 and July 15 and at maturity, or upon earlier redemption or repayment. The interest rate or interest rate formula, Issue Price, Maturity Date, Interest Payment Dates, redemption provisions, repayment provisions and certain other terms with respect to each Note will be established at the time of issuance and set forth in a pricing supplement to this Prospectus Supplement (a "Pricing Supplement"). The Notes will be issued only in minimum denominations of $1,000 and any larger amount that is an integral multiple of $1,000. Each Note will be in fully registered form and will be represented either by a global security (a "Book-Entry Note") registered in the name of a nominee of The Depository Trust Company, as Depository, or a certificate issued in definitive form (a "Certificated Note"), as set forth in the applicable Pricing Supplement. Beneficial interests in Book-Entry Notes will be shown on, and transfers thereof will be effected only through, records maintained by the Depository and its participants. Book-Entry Notes will not be issuable as Certificated Notes except under the circumstances described herein. See "Description of Notes--Book-Entry System." THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT, ANY PRICING SUPPLEMENT HERETO, OR THE PROSPECTUS TO WHICH IT RELATES. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. - --------------------------------------------------------------------------------
PRICE TO AGENTS' PROCEEDS TO THE PUBLIC(1) COMMISSIONS(2) COMPANY(2)(3) Per Note............ 100.000% .125%-.750% 99.875%-99.250% Total............... $150,000,000 $187,500-$1,125,000 $149,812,500-$148,875,000 - ---------------------------------------------------------------------------- (1) Unless otherwise specified in the applicable Pricing Supplement, the price to public will be 100% of the principal amount. (2) The Company will pay to Salomon Brothers Inc or Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, each as agent (collectively, the "Agents"), a commission of from .125% to .750% of the principal amount of any Note, depending upon its Maturity Date, sold through such Agent. The Company may also sell Notes to an Agent acting as principal for resale to investors and other purchasers at varying prices related to market prices at the time of resale to be determined by such Agent, or, if so specified in the applicable Pricing Supplement, for resale at a fixed public offering price. Unless otherwise specified in the applicable Pricing Supplement, any Note sold to an Agent as principal will be purchased by such Agent at a price equal to 100% of the principal amount thereof less a percentage of the principal amount equal to the commission applicable to an agency sale of a Note of identical maturity. Unless otherwise specified in the applicable Pricing Supplement, any Note sold to an Agent as principal will be purchased by such Agent at a price equal to 100% of the principal amount thereof less a percentage equal to the commission applicable to an agency sale of a Note of identical maturity, and may be resold by such Agent. In connection with the purchase by any Agent as principal, such Agent may use a selling group and may reallow any portion of the discount or commission payable to such Agent to other dealers or purchasers. (3) Before deduction of expenses payable by the Company estimated at $375,000, including reimbursement of certain expenses of the Agents.
The Notes are being offered on a continuous basis by the Company through the Agents, each of which has agreed to use its reasonable best efforts to solicit orders to purchase Notes. The Company may sell Notes at a discount to any Agent for its own account or for resale to one or more investors and other purchasers at varying prices related to prevailing market prices at the time of resale, as determined by such Agent, or, if so specified in the applicable Pricing Supplement, for resale at a fixed public offering price. The Company also may arrange for Notes to be sold through any Agent acting as principal or may sell Notes directly to investors on its own behalf. The Notes will not be listed on any securities exchange, and there can be no assurance that the Notes offered by this Prospectus Supplement will be sold or that there will be a secondary market for the Notes. The Company reserves the right to withdraw, cancel or modify the offer made hereby without notice. The Company or an Agent may reject any order to purchase Notes, whether or not solicited, in whole or in part. See "Plan of Distribution." SALOMON BROTHERS INC MERRILL LYNCH & CO. The date of this Prospectus Supplement is April 21, 1994. DESCRIPTION OF NOTES The following description of the particular terms of the Notes supplements, and to the extent inconsistent therewith replaces, the description of the general terms and provisions of the Debt Securities (as defined in the accompanying Prospectus) set forth in the Prospectus, to which description reference is hereby made. The following description will apply to each Note unless otherwise specified in the applicable Pricing Supplement. GENERAL The Notes are a single series of Debt Securities to be issued under the indenture dated as of February 1, 1991 (the "Indenture"), between the Company and Harris Trust and Savings Bank, as trustee (the "Trustee"), and will be limited to $150,000,000 in aggregate initial offering price, subject to reduction as a result of the sale of other securities. The Notes will be issued in fully registered form only, without coupons. Each Note will be issued initially as either a Book-Entry Note or a Certificated Note. Except as set forth in the Prospectus under "Description of Debt Securities-Registered Global Securities," Book-Entry Notes will not be issuable as Certificated Notes. See "Book-Entry System" below. The authorized denominations of Notes will be $1,000 and any larger amount that is an integral multiple of $1,000. Each Note will mature on a day from nine months to thirty years from its date of issue, as selected by the purchaser and agreed to by the Company, and may be subject to redemption at the option of the Company or repayment at the option of the Holder prior to its maturity as set forth under "Redemption" and "Repayment and Repurchase." The Pricing Supplement relating to a Note will describe the following terms: (i) whether such Note is a Fixed Rate Note or a Floating Rate Note; (ii) the price (expressed as a percentage of the aggregate principal amount thereof) at which such Note will be issued; (iii) the date on which such Note will be issued (the "Original Issue Date"); (iv) the date on which such Note will mature (whether by acceleration, call for redemption at the option of the Company, repayment at the option of the Holder or otherwise) (each such date, a "Maturity Date"); (v) if such Note is a Fixed Rate Note, the rate per annum at which such Note will bear interest, if any, and the interest payment date or dates, if different from those set forth below under "Fixed Rate Notes"; (vi) if such Note is a Floating Rate Note, the Base Rate, the Initial Interest Rate, the Interest Reset Period, the Interest Reset Dates, the Interest Payment Period, the Interest Payment Dates, the Index Maturity, the Maximum Interest Rate, if any, the Minimum Interest Rate, if any, the Spread, if any, the Spread Multiplier, if any (all as defined below), and any other terms relating to the particular method of calculating the interest rate for such Note; (vii) whether such Note is an Original Issue Discount Note (as defined below), and if so, the yield to maturity; (viii) whether such Note may be redeemed or repaid prior to the Maturity Date and, if so, the provisions relating to such redemption or repayment; (ix) whether such Note will be issued initially as a Book-Entry Note or a Certificated Note; and (x) any other terms of such Note. "Original Issue Discount Note" means (i) any Note that has a stated redemption price at maturity that exceeds the "issue price" of the Note (in general, the first price at which a substantial amount of Notes of the same issue are sold) by an amount equal to or greater than 0.0025 multiplied by the product of the stated redemption price at maturity and the number of complete years to maturity from the Note's Original Issue Date and (ii) any other Note designated by the Company in the Pricing Supplement as issued with original issue discount for United States federal income tax purposes. "Business Day" with respect to any Note means any day, other than a Saturday or Sunday, that is (i) not a day on which banking institutions are authorized or required by law or regulation to be closed in the city of New York and (ii) if such Note is a LIBOR Note (as defined below), is also a London Banking Day. "London Banking Day" with respect to any Note means any day on which dealings in deposits in U.S. dollars are transacted in the London interbank market. PAYMENT OF PRINCIPAL AND INTEREST The principal of and any premium and interest on each Note are payable by the Company in U.S. dollars. Until the Notes are paid or payment thereof is provided for, the Company will, at all times, S-2 maintain a paying agent in The City of New York (a "Paying Agent"), capable of performing the duties described herein to be performed by the Paying Agent. The Company has initially appointed Harris Trust Company of New York, 77 Water Street, New York, N.Y. 10005, to serve as Paying Agent. Unless otherwise specified in the applicable Pricing Supplement, (i) payments of interest on Certificated Notes (other than interest payable at maturity or upon earlier redemption or repayment) will be made, except as provided below, by check mailed to the Holders of such Notes at their addresses appearing on the security register on the applicable Regular Record Date (as defined below) and (ii) payments of interest on Book-Entry Notes will be made in accordance with the Depository's procedures in effect from time to time as described below under "Book-Entry System." However, a Holder of $10,000,000 or more in aggregate principal amount of Certificated Notes of like tenor and terms will be entitled to receive payments by wire transfer of immediately available funds, but only if appropriate wire transfer instructions shall have been received in writing by the Paying Agent not later than ten Business Days prior to the applicable Interest Payment Date. The regular record date (the "Regular Record Date") with respect to any Interest Payment Date for a Note will be the date (whether or not a Business Day) 15 calendar days preceding such Interest Payment Date. Interest payable and punctually paid or duly provided for on any Interest Payment Date will be paid to the person in whose name a Note is registered at the close of business on the Regular Record Date; provided, however, if a Note is issued between a Regular Record Date and the related Interest Payment Date, interest for the period from the Original Issue Date for such Note to such Interest Payment Date will be paid on the next succeeding Interest Payment Date to the registered holder of such Note on the Regular Record Date for such next succeeding Interest Payment Date, provided, further, that interest payable at maturity or upon earlier redemption or repayment will be payable to the person to whom principal shall be payable. Unless otherwise specified in the applicable Pricing Supplement, principal and any premium and interest payable at the maturity of a Note will be paid in immediately available funds upon surrender of such Note at the corporate trust office or agency of the Trustee in the City of New York. Unless otherwise specified in the applicable Pricing Supplement, all percentages resulting from any calculation of the rate of interest on a Note will be rounded, if necessary, to the nearest one hundred-thousandth of a percentage point, with five one-millionths of a percentage point rounded upward. FIXED RATE NOTES Each Fixed Rate Note will bear interest from its Original Issue Date at the rate per annum stated on the face thereof until the principal amount thereof is paid or made available for payment. Unless otherwise set forth in the applicable Pricing Supplement, interest on each Fixed Rate Note will be payable semi-annually in arrears on each January 15 and July 15 and at maturity. Each payment of interest in respect of an Interest Payment Date will include interest accrued through the day before such Interest Payment Date. Interest on Fixed Rate Notes will be computed on the basis of a 360-day year of twelve 30-day months. Any payment required to be made in respect of a Fixed Rate Note on a date that is not a Business Day need not be made on such date, but may be made on the succeeding Business Day with the same force and effect as if made on such date. No interest adjustment will accrue as a result of any such delayed payment. FLOATING RATE NOTES Each Floating Rate Note will bear interest from its Original Issue Date to the first Interest Reset Date for such Note at the Initial Interest Rate set forth on the face thereof and in the applicable Pricing Supplement. Thereafter, the interest rate on such Note for each Interest Reset Period will be determined by reference to an interest rate basis (the "Base Rate"), plus or minus the Spread, if any, and/or multiplied by the Spread Multiplier, if any. The "Spread" is the number of basis points (one basis point equals one-hundredth of a percentage point) that may be specified in the applicable Pricing Supplement as being applicable to such Note, and the "Spread Multiplier" is the percentage that may be specified in the applicable Pricing Supplement as being applicable to such Note. The applicable Pricing Supplement S-3 will designate one or more of the following Base Rates as applicable to a Floating Rate Note: (i) the Commercial Paper Rate (a "Commercial Paper Rate Note"), (ii) LIBOR (a "LIBOR Note"), (iii) the Treasury Rate (a "Treasury Rate Note"), or (iv) such other Base Rate or formula as set forth in such Pricing Supplement and in such Note. The "Index Maturity" for any Note is the period to maturity of the instrument or obligation from which the Base Rate is calculated. As specified in the applicable Pricing Supplement, a Floating Rate Note may also have either or both of the following (in each case expressed as a rate per annum on a simple interest basis): (i) a maximum rate at which interest may accrue during any interest period ("Maximum Interest Rate") and (ii) a minimum rate at which interest may accrue during any interest period ("Minimum Interest Rate"). In addition to any such Maximum Interest Rate, the interest rate on a Floating Rate Note will in no event be higher than the maximum rate permitted by applicable law, as the same may be modified by United States law of general application. Under New York law, the maximum rate of interest is 25% per annum on a simple interest basis. This limit may not apply to Notes in which $2,500,000 or more has been invested. The interest rate on each Floating Rate Note will be reset daily, weekly, monthly, quarterly, semi-annually or annually (such period being the "Interest Reset Period" for such Note and the first day of each Interest Reset Period being an "Interest Reset Date"), as specified in the applicable Pricing Supplement. Unless otherwise specified in the applicable Pricing Supplement, the Interest Reset Dates will be, in the case of Floating Rate Notes that reset daily, each Business Day; in the case of Floating Rate Notes (other than Treasury Rate Notes) that reset weekly, Wednesday of each week; in the case of Treasury Rate Notes that reset weekly, Tuesday of each week; in the case of Floating Rate Notes that reset monthly, the third Wednesday of each month; in the case of Floating Rate Notes that reset quarterly, the third Wednesday of March, June, September and December of each year; in the case of Floating Rate Notes that reset semi-annually, the third Wednesday of each of two months of each year specified in the applicable Pricing Supplement; and in the case of Floating Rate Notes that reset annually, the third Wednesday of one month of each year specified in the applicable Pricing Supplement. If an Interest Reset Date for any Floating Rate Note would otherwise be a day that is not a Business Day, such Interest Reset Date will be postponed to the succeeding Business Day, except that in the case of a LIBOR Note, if such Business Day is in the succeeding calendar month, such Interest Reset Date will be the preceding Business Day. If a Treasury bill auction (as described below) will be held on any day that would otherwise be an Interest Reset Date for a Treasury Rate Note, then such Interest Reset Date will instead be the Business Day following such auction date. Interest on each Floating Rate Note will be payable monthly, quarterly, semiannually, or annually (the "Interest Payment Period"), as specified in the applicable Pricing Supplement. Unless otherwise indicated in the applicable Pricing Supplement and except as provided below, the date or dates on which interest will be payable (each an "Interest Payment Date") will be, in the case of Floating Rate Notes with a monthly Interest Payment Period, the third Wednesday of each month; in the case of Floating Rate Notes with a quarterly Interest Payment Period, the third Wednesday of March, June, September, and December of each year; in the case of Floating Rate Notes with a semi-annual Interest Payment Period, the third Wednesday of each of two months of each year specified in the applicable Pricing Supplement; and in the case of Floating Rate Notes with an annual Interest Payment Period, the third Wednesday of one month of each year specified in the applicable Pricing Supplement. If such an Interest Payment Date (other than at maturity) would otherwise be a day that is not a Business Day, such Interest Payment Date will be postponed to the succeeding Business Day, except that in the case of a LIBOR Note, if such Business Day is in the succeeding calendar month, such Interest Payment Date will be the preceding Business Day. If the Maturity Date is a date that is not a Business Day, any payment required to be made in respect of a Floating Rate Note need not be made on such date, but may be made on the succeeding Business Day with the same force and effect as if made on such date. No interest adjustment will result from such delayed or, in the case of a LIBOR Note, accelerated payments. Interest payments on each Interest Payment Date in respect of Floating Rate Notes (except in the case of Floating Rate Notes that reset daily or weekly) will be the accrued interest from and including the Original Issue Date or the last date to which interest has been paid to but excluding the applicable S-4 Interest Payment Date. In the case of Floating Rate Notes that reset daily or weekly, interest payments on each Interest Payment Date will be the accrued interest from and including the Original Issue Date or the last date to which interest has been paid to and including the Regular Record Date preceding the applicable Interest Payment Date. At maturity, interest payable will include interest accrued to but excluding the Maturity Date. With respect to a Floating Rate Note, accrued interest will be calculated by multiplying the principal amount of such Note by an accrued interest factor. Such accrued interest factor will be computed by adding the interest factors calculated for each day in the period for which accrued interest is being calculated. The interest factor (expressed as a decimal) for each such day is computed by dividing the interest rate in effect on such day by the actual number of days in the year, in the case of Treasury Rate Notes, and by 360, in the case of other Floating Rate Notes. The interest rate in effect on each day with respect to a Floating Rate Note will be (i) if such day is an Interest Reset Date, the interest rate with respect to the Interest Determination Date (as defined below) pertaining to such Interest Reset Date, or (ii) if such day is not an Interest Reset Date, the interest rate with respect to the Interest Determination Date pertaining to the preceding Interest Reset Date, subject in either case to any adjustment by a Spread and/or a Spread Multiplier and to any Maximum or Minimum Interest Rate limitation. In all such cases, however, (i) the interest rate in effect for the period from the Original Issue Date to the first Interest Reset Date set forth in the Pricing Supplement with respect to such Note will be the "Initial Interest Rate" specified in the applicable Pricing Supplement; and (ii) the interest rate in effect for the ten calendar days prior to maturity will be that in effect on the tenth calendar day preceding such maturity. The "Interest Determination Date" pertaining to an Interest Reset Date for a Commercial Paper Rate Note will be the second Business Day preceding such Interest Reset Date. The Interest Determination Date pertaining to an Interest Reset Date for a LIBOR Note will be the second London Banking Day preceding such Interest Reset Date. The Interest Determination Date pertaining to an Interest Reset Date for a Treasury Rate Note will be the day of the week in which such Interest Reset Date falls on which Treasury bills of the Index Maturity specified on the face of such Treasury Rate Note are auctioned. Treasury bills are normally sold at auction on Monday of each week. If such day is a legal holiday, the auction is normally held on the following Tuesday, except that such auction may be held on the preceding Friday. If, as the result of a legal holiday, an auction is so held on the preceding Friday, such Friday will be the Interest Determination Date pertaining to the Interest Reset Date occurring in the succeeding week. Unless otherwise specified in the applicable Pricing Supplement, the "Calculation Date", if applicable, pertinent to any Interest Determination Date will be the earlier of (i) the tenth calendar day after such Interest Determination Date, or, if such day is not a Business Day, the next succeeding Business Day or (ii) the Business Day immediately preceding the applicable Interest Payment Date or the Maturity Date, as the case may be. Unless otherwise specified in the applicable Pricing Supplement, Harris Trust and Savings Bank will be the calculation agent (the "Calculation Agent") for each Floating Rate Note. Upon the request of the Holder of any Floating Rate Note, the Calculation Agent will provide the interest rate then in effect and, if determined, the interest rate that will become effective on the next Interest Reset Date with respect to such Floating Rate Note. COMMERCIAL PAPER RATE NOTES Commercial Paper Rate Notes will bear interest at the rates (calculated with reference to the Commercial Paper Rate and the Spread and/or Spread Multiplier, if any) specified in the Commercial Paper Rate Notes and in the applicable Pricing Supplement. Unless otherwise specified in the applicable Pricing Supplement, "Commercial Paper Rate" means, with respect to an Interest Determination Date, the Money Market Yield (as defined below) of the rate on such Interest Determination Date for commercial paper having the Index Maturity specified in the applicable Pricing Supplement as published by the Board of Governors of the Federal Reserve System in "Statistical Release H.15(519), Selected Interest Rates," or any successor publication of the Board of S-5 Governors of the Federal Reserve System ("H.15(519)"), under the heading "Commercial Paper." If such rate is not so published by 9:00 a.m., New York City time, on the Calculation Date pertaining to such Interest Determination Date, the Commercial Paper Rate will be the Money Market Yield on such Interest Determination Date of the rate for commercial paper of the Index Maturity specified in the applicable Pricing Supplement as published by the Federal Reserve Bank of New York in its daily statistical release "Composite 3:30 P.M. Quotation for U.S. Government Securities" ("Composite Quotations") under the heading "Commercial Paper". If by 3:00 p.m., New York City time, on such Calculation Date such rate is not yet published in either H.15(519) or in Composite Quotations, the Commercial Paper Rate for such Interest Determination Date will be calculated by the Calculation Agent and will be the Money Market Yield of the arithmetic mean of the offered rates, as of 11:00 a.m., New York City time, on such Interest Determination Date of three leading dealers of commercial paper in the City of New York selected by the Calculation Agent for commercial paper of the Index Maturity specified in the applicable Pricing Supplement placed for an industrial issuer whose bond rating is "AA" or the equivalent by a nationally recognized rating agency. However, if such dealers are not so quoting such rates, the Commercial Paper Rate for such Interest Determination Date with respect to any Commercial Paper Rate Note will be the interest rate in effect on such Note on such Interest Determination Date. "Money Market Yield" will be a yield calculated in accordance with the following formula: D x 360 Money Market Yield = 360 - (D x M) x 100 where "D" refers to the applicable per annum rate for commercial paper quoted on a bank discount basis and expressed as a decimal, and "M" refers to the actual number of days in the interest period for which interest is being calculated. LIBOR NOTES LIBOR Notes will bear interest at the rates (calculated with reference to LIBOR and the Spread or Spread Multiplier, if any) specified in the LIBOR Notes and in the applicable Pricing Supplement. Unless otherwise specified in the applicable Pricing Supplement, "LIBOR" will be determined by the Calculation Agent as follows: (i) With respect to an Interest Determination Date, LIBOR will be determined on the basis of the offered rate for deposits in U.S. dollars commencing on the second London Banking Day following such Interest Determination Date and having the Index Maturity specified in the applicable Pricing Supplement, as such rates appear on the Reuters Screen LIBO Page at approximately 11:00 a.m., London time, on such Interest Determination Date. "Reuters Screen LIBO Page" means the display designated as page "LIBO" on the Reuters Monitor Money Rates Service (or such other page as may replace the LIBO page on that service for the purpose of displaying London interbank offered rates of major banks). If at least two such offered rates appear on the Reuters Screen LIBO Page, LIBOR for such Interest Determination Date will be the arithmetic mean of such offered rates as determined by the Calculation Agent. (ii) If fewer than two offered rates appear on the Reuters Screen LIBO Page on such Interest Determination Date, LIBOR will be determined by the Calculation Agent as follows: the Calculation Agent will select four major banks in the London interbank market and will ascertain the rates at which deposits in U.S. dollars (having the Index Maturity specified in the applicable Pricing Supplement, commencing on the second London Banking Day following such Interest Determination Date and in a principal amount equal to an amount of not less than U.S. $1,000,000 that is representative of a single transaction in such market at such time) are offered at approximately 11:00 a.m., London time, on such Interest Determination Date, to prime banks in the London interbank market. The Calculation Agent will request the principal London office of each of such banks to provide a quotation of its rate. If at least two such quotations are provided, LIBOR for such Interest Determination Date will be the arithmetic mean of such quotations. If fewer than two such quotations are provided, LIBOR for such Interest Determination Date will be the arithmetic mean of rates quoted by three major banks in the city of New York selected by the Calculation Agent at approximately S-6 11:00 a.m., New York City time, on such Interest Determination Date for loans in U.S. dollars to leading European banks, having the Index Maturity specified in the applicable Pricing Supplement, commencing on the second London Banking Day following such Interest Determination Date and in a principal amount equal to an amount of not less than U.S. $1,000,000 that is representative of a single transaction in such market at such time. However, if fewer than three such banks are so quoting such rates, LIBOR for such Interest Determination Date with respect to any LIBOR Note will be the interest rate in effect on such Note on such Interest Determination Date. TREASURY RATE NOTES Treasury Rate Notes will bear interest at the rates (calculated with reference to the Treasury Rate and the Spread or Spread Multiplier, if any) specified in the Treasury Rate Notes and in the applicable Pricing Supplement. Unless otherwise specified in the applicable Pricing Supplement, "Treasury Rate" means, with respect to an Interest Determination Date, the rate for the auction held on such Interest Determination Date of direct obligations of the United States ("Treasury bills") having the Index Maturity specified in the applicable Pricing Supplement as published in H.15(519) under the heading "U.S. Government Securities-Treasury bills-auction average (investment)". If such rate is not so published by 9:00 a.m., New York City time, on the Calculation Date pertaining to such Interest Determination Date, the Treasury Rate will be the auction average rate (expressed as a bond equivalent on the basis of a year of 365 or 366 days, as applicable, and applied on a daily basis) on such Interest Determination Date as otherwise announced by the United States Department of the Treasury, provided that if by 3:00 p.m., New York City time, on such Calculation Date, such rate is not yet published or reported as provided above or if no such auction is held on such Interest Determination Date, then the Treasury Rate for such Interest Determination Date will be calculated by the Calculation Agent and will be a yield to maturity (expressed as a bond equivalent on the basis of a year of 365 or 366 days, as applicable, and applied on a daily basis) of the arithmetic mean of the secondary market bid rates, as of approximately 3:30 p.m., New York City time, on such Interest Determination Date, of three leading primary United States government securities dealers selected by the Calculation Agent for the issue of Treasury bills with a remaining maturity closest to the Index Maturity specified in the applicable Pricing Supplement. However, if such dealers are not so quoting such rates, the Treasury Rate for such Interest Determination Date with respect to any Treasury Rate Note will be the interest rate in effect on such Interest Determination Date. BOOK-ENTRY SYSTEM Upon issuance, all Fixed Rate Book-Entry Notes having the same Original Issue Date, interest rate, Interest Payment Dates, redemption provisions (if any), repayment provisions (if any) and Maturity Date will be represented by a single Global Security. Upon issuance, all Floating Rate Book-Entry Notes having the same Original Issue Date, Initial Interest Rate, Base Rate, Interest Reset Period, Interest Reset Dates, Interest Payment Period, Interest Payment Dates, Index Maturity, Spread or Spread Multiplier (if any), Minimum Interest Rate (if any), Maximum Interest Rate (if any), redemption provisions (if any), repayment provisions (if any) and Maturity Date will be represented by a single Global Security. Each Global Security representing Book-Entry Notes will be deposited with, or on behalf of, The Depository Trust Company, New York, New York (the "Depository"), and registered in the name of a nominee of the Depository. Book-Entry Notes will not be exchangeable for Certificated Notes, provided that if the Depository is at any time unwilling or unable to continue as depository and a successor depository is not appointed by the Company within 90 days, the Company will issue Certificated Notes in exchange for the Global Security or Securities representing Book-Entry Notes. In addition, the Company may at any time and in its sole discretion determine not to have any Book-Entry Notes represented by one or more Global Security or Securities, and in such event, will issue Certificated Notes in exchange for the Global Security or Securities representing such Book-Entry Notes. The Depository has advised the Company and the Agents as follows: the Depository is a limited-purpose trust company organized under the laws of the state of New York, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities S-7 Exchange Act of 1934, as amended. The Depository was created to hold securities of its participants and to facilitate the clearance and settlement of securities transactions among its participants in such securities through electronic book-entry changes in accounts of the participants, thereby eliminating the need for physical movement of securities certificates. The Depository's participants include securities brokers and dealers (including each of the Agents, banks, trust companies, clearing corporations and certain other organizations, some of whom (and/or their representatives) own the Depository). Access to the Depository's book-entry system is also available to others, such as banks, brokers, dealers, and trust companies, that clear through or maintain a custodial relationship with a participant, either directly or indirectly. A further description of the Depository's procedures with respect to Global Securities representing Book-Entry Notes is set forth in the Prospectus under "Description of Debt Securities--Registered Global Securities". The Depository has confirmed to the Company, the Agents and the Trustee that it intends to follow such procedures. REDEMPTION The Pricing Supplement relating to each Note will indicate either that such Note cannot be redeemed prior to its Maturity Date or that such Note will be redeemable at the option of the Company on a date or dates specified prior to such Maturity Date at a price or prices as set forth in the applicable Pricing Supplement, together with accrued interest to the date fixed for such redemption. The Company may redeem any of the Notes that are redeemable and remain outstanding either in whole or from time to time in part, upon not less than 30 nor more than 60 days' notice. If less than all the Notes of like tenor and terms (a "Tranche") are to be redeemed, the Trustee shall select the particular Notes of such Tranche to be redeemed pro rata or by lot or by a method that complies with the applicable legal and securities exchange requirements, if any, and that the Trustee considers fair and appropriate and in accordance with the methods generally used at the time of selection by fiduciaries in similar circumstances. Notes may be redeemed in part in multiples equal to the minimum authorized denomination therefor or any multiple thereof. If less than all Notes of unlike tenor and terms are to be redeemed, the particular Tranche of Notes to be redeemed shall be selected by the Company. Unless otherwise specified in the applicable Pricing Supplement, the Notes will not be subject to any sinking fund. REPAYMENT AND REPURCHASE The Pricing Supplement relating to each Note will indicate either that such Note cannot be repaid prior to its Maturity Date or that the Note will be repayable at the option of the Holder on a date or dates specified prior to such Maturity Date at a price or prices as set forth in the applicable Pricing Supplement, together with accrued interest to the date of repayment. In order for a Note to be repaid prior to its Maturity Date, the Paying Agent must receive, at least 30 days but not more than 60 days prior to the repayment date, (i) the Note with the form entitled "Option to Elect Repayment" on the reverse of the Note duly completed or (ii) a telegram, telex, facsimile transmission, or a letter from a member of a national securities exchange, the National Association of Securities Dealers, Inc., or a commercial bank or trust company in the United States of America. The notice referred to in clause (ii) must set forth the name of the Holder of the Note, the principal amount of the Note, the principal amount of the Note to be repaid, the certificate number or a description of the tenor and terms of the Note, a statement that the option to elect repayment is being exercised thereby, and a guarantee that the Note to be repaid, together with the duly completed form entitled "Option to Elect Repayment" on the reverse of such Note, will be received by the Paying Agent not later than five Business Days after the date of such telegram, telex, facsimile transmission or letter. Additionally, in such case, such Note and form duly completed must be received by the Paying Agent by such fifth Business Day. Exercise of such repayment option will be irrevocable. The repayment option may be exercised by the Holder of a Note for less than the entire principal amount of the Note, but in that event the principal amount of the Note remaining outstanding after repayment must be in an authorized denomination. S-8 If a Note is represented by a Global Security, the Depository's nominee will be the holder of such Note and therefore will be the only entity that can exercise a right to repayment. In order to ensure that the Depository's nominee will timely exercise a right to repayment with respect to a particular Note, the beneficial owner of such Note must instruct the broker or other direct or indirect participant through which it holds an interest in such Note to notify the Depository of its desire to exercise a right to repayment. Different firms have different cut-off times for accepting instructions from their customers and, accordingly, each beneficial owner should consult the broker or other direct or indirect participant through which it holds an interest in a Note in order to ascertain the cut-off time by which such an instruction must be given in order for timely notice to be delivered to the Depository. Notwithstanding anything in this Prospectus Supplement to the contrary, unless otherwise specified in the applicable Pricing Supplement, if a Note is an Original Issue Discount Note, the amount payable on such Note in the event of redemption or repayment prior to its Stated Maturity Date shall be the Amortized Face Amount of such Note as of the date of redemption or the date of repayment, as the case may be. The "Amortized Face Amount" of an Original Issue Discount Note shall be the amount equal to (i) the Issue Price set forth in the applicable Pricing Supplement plus (ii) the portion of the difference between the Issue Price and the principal amount of such Note that has accrued at the yield to maturity set forth in the Pricing Supplement (computed in accordance with generally accepted United States bond yield computation principles) to such date of redemption or repayment, but in no event shall the Amortized Face Amount of an Original Issue Discount Note exceed its principal amount. If applicable, the Company will comply with the requirements of Rule 14e-1 under the Securities Exchange Act of 1934, as amended, and any other securities laws or regulations in connection with any such repayment. The Company may at any time purchase Notes at any price in the open market or otherwise. Notes so purchased by the Company may, at its discretion, be held, resold or surrendered to the Trustee for cancellation. Except to the extent that covenants of TDS described in the Prospectus under the caption "Certain Covenants of TDS" may provide, neither the Indenture nor the Notes contain any covenants or other provisions designed to afford Holders of the Notes protection in the event of a highly leveraged transaction, change in credit rating or other similar occurrence, involving TDS or any Subsidiary. UNITED STATES TAXATION The following summary of the principal anticipated United States federal income tax consequences of the acquisition, ownership, and disposition of certain Notes by a beneficial owner of a Note is based upon the advice of Sidley & Austin. This summary is based on the Internal Revenue Code of 1986, as amended to the date hereof (the "Code"), administrative pronouncements, judicial decisions, and existing, proposed and temporary Treasury Regulations, changes to any of which subsequent to the date of this Prospectus Supplement may affect the tax consequences described herein. The following discussion does not purport to deal with the federal tax consequences applicable to all categories of investors. In particular, the discussion does not deal with persons in special tax situations, such as dealers in securities, insurance companies, banks, regulated persons or tax-exempt bodies. Except as specifically discussed below, this discussion deals only with Notes held as capital assets within the meaning of Section 1221 of the Code. Investors should consult their own tax advisers with respect to the federal, state, local or other tax consequences to them of owning the Notes in light of their particular circumstances. THE FOLLOWING SUMMARY APPLIES ONLY TO FIXED RATE NOTES THAT (I) HAVE A FIXED MATURITY DATE OF MORE THAN ONE YEAR FROM THE DATE OF ISSUE AND (II) ARE NOT ORIGINAL ISSUE DISCOUNT NOTES (AS DEFINED ABOVE UNDER "DESCRIPTION OF NOTES--GENERAL"). THE PRINCIPAL ANTICIPATED UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF ANY ACQUISITION, OWNERSHIP AND DISPOSITION OF NOTES OTHER THAN SUCH NOTES WILL BE SET FORTH IN AN APPLICABLE PRICING SUPPLEMENT. INVESTORS SHOULD, THEREFORE, CONSULT THE APPLICABLE PRICING SUPPLEMENT FOR A SUMMARY OF THE ANTICIPATED UNITED STATES FEDERAL S-9 INCOME TAX CONSEQUENCES RELATING TO NOTES OTHER THAN NOTES DESCRIBED IN THE FIRST SENTENCE OF THIS PARAGRAPH, INCLUDING FLOATING RATE NOTES, NOTES HAVING A FIXED MATURITY DATE OF ONE YEAR OR LESS FROM THE DATE OF ISSUE, AND ORIGINAL ISSUE DISCOUNT NOTES. For purposes of the following discussion, the term "United States person" means a person or entity who or which is for United States federal income tax purposes (i) a citizen or resident of the United States, (ii) a corporation or partnership created or organized under the laws of the United States or any state or (iii) an estate or trust the income of which is subject to the United States federal income taxation regardless of its source. The term also includes certain former citizens of the United States whose income and gain on the Notes will be subject to United States taxation. UNITED STATES HOLDERS PAYMENTS OF INTEREST Interest on a Note will be taxable to a beneficial owner of a Note that is a United States person (a "United States Holder") as ordinary income at the time it accrues or is received in accordance with the United States Holder's method of accounting for federal income tax purposes. SALE AND RETIREMENT OF NOTES Upon a sale, exchange or retirement of a Note, a United States Holder will recognize gain or loss equal to the difference between the amount realized (not including any amount attributable to accrued but unpaid interest) and such Holder's adjusted tax basis in the Note. Except as described in the next paragraph, such gain or loss will be a capital gain or loss, and will be a long-term capital gain or loss if at the time of sale, exchange or retirement the United States Holder has held the Note for more than one year. To the extent attributable to accrued but unpaid interest, the amount realized by the United States Holder will be treated as a payment of interest. See "Payments of Interest," above. A United States Holder's adjusted tax basis in a Note will equal such Holder's initial tax basis for the Note (which does not include any amount attributable to accrued but unpaid interest), increased by the amount of any market discount previously included in income by such Holder with respect to such Note (as described below) and reduced by any amortized bond premium (as described below) and any principal payments received by such Holder. If a United States Holder who was not an original purchaser has an initial tax basis for a Note that is less than its principal amount, the Note may be considered to have "market discount" equal to the difference between the Holder's initial tax basis and the Note's principal amount (unless such difference is less than a specified DE MINIMIS amount, in which case the market discount will be considered to be zero). As a general matter, payments of principal on such a Note, and any gain realized on the sale, exchange or retirement of such a Note, will be taxable as ordinary income to the extent of market discount accrued while the Holder held the Note. If such a Note is disposed of in a nontaxable transaction (other than certain nonrecognition transactions specified in regulations yet to be issued), accrued market discount will be includible as ordinary income to the United States Holder as if such holder had sold the Note at its then fair market value. Market discount generally accrues on a straight-line basis over the remaining term of a Note except that, at the election of the United States Holder, market discount may accrue on a constant yield basis. In addition, a United States Holder may be required to defer all or a portion of interest paid or accrued on indebtedness incurred to purchase or carry such a Note. A Holder may elect to include market discount in income as it accrues (either on a straight-line basis or, if the United States Holder so elects, on a constant yield basis), in which case the foregoing rules generally will not apply. If a United States Holder has an initial tax basis for a Note that is greater than its principal amount, the Note may be considered to have "bond premium." Subject to certain limitations, the Holder may elect to amortize such premium (as an offset to interest income) over the remaining life of the Note under a constant yield basis. S-10 NON-UNITED STATES HOLDERS Under the United States federal income tax laws as in effect on the date of this Prospectus Supplement and subject to the discussion of backup withholding below, payments of principal (and premium, if any) and interest by the Company or its agent (acting in its capacity as such) to any Holder of a Note who is not a United States person (a "Non-United States Holder") will not be subject to a United States federal withholding tax; PROVIDED, HOWEVER, that, in the case of interest, (i) such Holder does not actually or constructively own 10% or more of the total combined voting power of all classes of stock of the Company entitled to vote, (ii) such Holder is not a controlled foreign corporation for United States tax purposes that is related, directly or indirectly, to the Company through stock ownership, (iii) such Holder is not a bank receiving interest described in Section 881(c)(3)(A) of the Code, and (iv) either (A) the beneficial owner of the Note certifies to the Company or its agent, under penalties of perjury, that the beneficial owner is a Non-United States Holder and provides the beneficial owner's name and address, or (B) a securities clearing organization, bank or other financial institution that holds customers' securities in the ordinary course of its trade or business (a "financial institution") and holds the Note certifies to the Company or its agent under penalties of perjury that such statement has been received from the beneficial owner by it or by a financial institution and furnishes the payor with a copy thereof. The certificate may be made on a United States Internal Revenue Service Form W-8 or substantially similar form, and must be renewed in accordance with rules set out in applicable Treasury Regulations. If a Non-United States Holder is engaged in a trade or business in the United States and interest on the Note is effectively connected with the conduct of such trade or business, such Holder, although exempt from the withholding tax discussed in the preceding paragraph, may be subject to United States federal income tax on such interest in the same manner as if it were a United States Holder. In lieu of the certificate described in the preceding paragraph, such a Holder must provide the payor with a properly executed Internal Revenue Service Form 4224 to claim an exemption from United States federal withholding tax. However, such a Holder of a Note may still be required to provide the certification described in the preceding paragraph in order to obtain an exemption from "backup" withholding, discussed below. Any capital gain realized upon a sale, exchange or retirement of a Note by a Non-United States Holder will not be subject to United States federal income or withholding taxes unless (i) such gain is effectively connected with a United States trade or business of the Non-United States Holder, or (ii) in the case of an individual, such Non-United States Holder is present in the United States for 183 days or more in the taxable year of the sale, exchange or retirement and certain other requirements are met. If a Holder is a foreign corporation engaged in a United States trade or business, under certain circumstances it might be subject to an additional branch profits tax at a rate of 30% (or lower treaty rate) with respect to income and gain realized with respect to a Note. Notes held by an individual who is neither a citizen nor a resident of the United States for United States federal estate tax purposes at the time of such individual's death will not be subject to United States federal estate tax, provided that the income from such Notes was not or would not have been effectively connected with a United States trade or business of such individual and that such individual qualified for the exemption from United States federal withholding tax (without regard to the certification requirements) that is described above. BACKUP WITHHOLDING AND INFORMATION REPORTING For each calendar year in which the Notes are outstanding, the Company is required to provide the Internal Revenue Service with certain information, including each Holder's name, address and taxpayer identification number (either the Holder's Social Security number or its employer identification number, as the case may be), the aggregate amount of principal and interest paid to that Holder during the calendar year and the amount of tax withheld, if any. This obligation, however, does not apply with respect to certain United States Holders, including corporations, tax-exempt organizations, qualified pension and profit-sharing trusts and individual retirement accounts. S-11 In the event that a United States Holder subject to the reporting requirements described above (i) fails to furnish its taxpayer identification number, (ii) furnishes an incorrect taxpayer identification number, (iii) is notified by the Internal Revenue Service that it has failed to properly report payments of interest and dividends or (iv) under certain circumstances, fails to certify, under penalties of perjury, that it has furnished a correct taxpayer identification number and has not been notified by the Internal Revenue Service that it is subject to backup withholding for failure to report interest and dividend payments, the Company, the Trustee, the Paying Agent, any other agent of the Company or a broker may be required to "backup" withhold a tax equal to 31% of each payment of interest and principal (and premium, if any) on the Notes. This tax is not an additional tax and may be credited against the Holder's United States federal income tax liability, provided that the required information is furnished to the Internal Revenue Service. Under current Treasury Regulations, backup withholding will not apply to payments made by the Company or any agent thereof (in its capacity as such) to a Non-United States Holder of a Note with respect to which the Holder has provided the required certification that it is not a United States person as set forth in clause (iv) in the first paragraph under "Non-United States Holders", or has otherwise established an exemption (provided that neither the Company nor any such agent has actual knowledge that the Holder is a United States person or that the conditions of any exemption are not in fact satisfied). The Company will, when required, report to Non-United States Holders and the Internal Revenue Service the amount of any interest paid on the Notes in each calendar year and the amounts of tax withheld, if any, with respect to such payments. Payment of the proceeds from the sale of a Note to or through a foreign office of a broker will not be subject to information reporting or backup withholding, except that information reporting (but not backup withholding) will apply if the broker is a United States person, a controlled foreign corporation for United States tax purposes or a foreign person 50% or more of whose gross income from all sources for the three-year period ending with the close of its taxable year preceding the payment was effectively connected with a United States trade or business, unless the broker has documentary evidence in its records that the Holder is a Non-United States Holder and certain other conditions are met, or the Holder otherwise establishes an exemption. Payment of the proceeds from a sale of a Note to or through the United States office of a broker is subject to information reporting and backup withholding unless the Holder or beneficial owner certifies as to its Non-United States Holder status or otherwise establishes an exemption from information reporting and backup withholding. THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A HOLDER'S PARTICULAR SITUATION. HOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE TAX CONSEQUENCES TO THEM OF OWNERSHIP AND DISPOSITION OF THE NOTES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE EFFECT OF CHANGES IN FEDERAL OR OTHER TAX LAWS. PLAN OF DISTRIBUTION The Notes are being offered on a continuous basis by the Company through the Agents, each of which has agreed to use its reasonable best efforts to solicit purchasers of the Notes. The Company will pay each Agent a commission of from .125% to .750% of the principal amount of each Note sold through such Agent, depending upon the Maturity Date of such Note. The Company may sell Notes to any of the Agents acting as principal at prices to be agreed upon at the time of sale or, if so agreed, at a fixed public offering price. Unless otherwise specified in the applicable Pricing Supplement, any Note sold to an Agent as principal will be purchased by such Agent at a price equal to 100% of the principal amount thereof less a percentage of the principal amount equal to the commission applicable to an agency sale of a Note of identical maturity. Such Notes may be resold to investors or other purchasers at varying prices related to prevailing market prices at the time of resale, to be determined by such Agent. In connection with the purchase of Notes by any Agent, as principal, such Agent may sell such Notes to or through dealers, who may resell such Notes to investors or other purchasers. Such Agent, in its sole discretion, may reallow any or all of the discount or commission payable to such Agent to other dealers S-12 or purchasers. After the initial public offering of Notes, the public offering price (in the case of Notes to be resold at a fixed public offering price), the concession and the discount may be changed. In addition, the Company may also sell Notes directly to investors on its own behalf. In the case of sales made directly by the Company, no commission will be payable. The Company has agreed to reimburse the Agents for certain expenses. The Company will have the sole right to accept offers to purchase Notes and may reject any proposed purchases of Notes in whole or in part. Each Agent will have the right, in its discretion reasonably exercised, to reject in whole or in part any offer to purchase Notes received by such Agent. No Note will have an established trading market when issued. The Notes will not be listed on any securities exchange. Either or both of the Agents may make a market in the Notes, but the Agents are not obligated to do so and may discontinue any market-making at any time without notice. There can be no assurance of a secondary market for any Notes, or that the Notes will be sold. Salomon Brothers Inc and Merrill Lynch & Co., and certain respective affiliates thereof, engage in transactions with and perform services for the Company in the ordinary course of business. The Company has agreed to indemnify each Agent against certain liabilities, including liabilities under the Securities Act of 1933, as amended, or to contribute to payments that each Agent may be required to make in respect thereof. Each Agent, whether acting as agent or principal, may be deemed to be an "underwriter" within the meaning of the Securities Act of 1933, as amended. LEGAL MATTERS The validity of the Debt Securities offered hereby will be passed upon for TDS by Sidley & Austin, Chicago, Illinois, and certain legal matters will be passed upon for any underwriters, dealers or agents by Mayer, Brown & Platt, Chicago, Illinois. Sidley & Austin also acts as counsel for USM. Walter C.D. Carlson and Michael G. Hron, a Director and Secretary, respectively, of TDS, are members of Sidley & Austin. Mr. Carlson is also a trustee of the voting trust that controls TDS and USM. Mayer, Brown & Platt from time to time acts as counsel in certain matters for TDS. Debora de Hoyos, wife of Walter C.D. Carlson, is a partner of Mayer, Brown & Platt. S-13 TELEPHONE AND DATA SYSTEMS, INC. [LOGO] DEBT SECURITIES --------- Telephone and Data Systems, Inc. ("TDS" or the "Company") may from time to time offer debentures, notes and/or other unsecured evidences of indebtedness (the "Debt Securities") at an aggregate initial offering price not to exceed U.S. $300,000,000 or its equivalent in any other currency or units based on or relating to foreign currencies. The Debt Securities may be offered in one or more series in amounts, at prices and on terms to be determined at the time of sale. The accompanying Prospectus Supplement sets forth with regard to the series of Debt Securities in respect of which this Prospectus is being delivered (the "Offered Securities") the specific designation, aggregate principal amount, denomination (which may be in United States dollars, in any other currency or in units based on or relating to foreign currencies), maturity, rate (which may be fixed or variable) and time of payment of interest, if any, any subordination of the Offered Securities to other indebtedness of the Company, any terms for redemption at the option of TDS or the holder, any terms for sinking fund payments, any listing on a securities exchange, the initial public offering price and any other terms in connection with the offering and sale of the Offered Securities. The Debt Securities may be issued in registered form, in bearer form with coupons attached or both. In addition, all or a portion of the Debt Securities of any series may be issuable in permanent registered global form which will be exchangeable only under certain conditions for definitive Debt Securities. TDS may sell Debt Securities to or through underwriters or dealers, and also may sell Debt Securities to other purchasers directly or through agents. The accompanying Prospectus Supplement sets forth the names of any underwriters, dealers or agents involved in the sale of the Offered Securities, the principal amounts, if any, to be purchased by underwriters and the compensation of such underwriters, dealers or agents. -------------- THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. -------------- THE DATE OF THIS PROSPECTUS IS APRIL 21, 1994. AVAILABLE INFORMATION TDS is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance therewith files reports, proxy statements and other information with the Securities and Exchange Commission (the "Commission"). Such reports, proxy statements and other information can be inspected and copied at the public reference facilities of the Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549; New York Regional Office, Public Reference Room, 7 World Trade Center, 13th Floor, New York, New York 10048; and Chicago Regional Office, Suite 1400, 500 West Madison Street, Chicago, Illinois 60661. Copies of such material can be obtained from the Public Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. TDS's Common Shares are listed on the American Stock Exchange, and reports, proxy statements and other information concerning TDS may be inspected at the office of the American Stock Exchange, Inc., 86 Trinity Place, New York, New York 10006. This Prospectus does not contain all of the information set forth in the Registration Statement, certain parts of which are omitted in accordance with the rules and regulations of the Commission. The Registration Statement and any amendments thereto, including exhibits filed as a part thereof, are available for inspection and copying as set forth above. DOCUMENTS INCORPORATED BY REFERENCE The following documents heretofore filed by TDS with the Commission under the Exchange Act are incorporated herein by reference: (a) the Company's Annual Report on Form 10-K for the year ended December 31, 1993; (b) the Company's Current Reports on Form 8-K dated January 19, 1994, February 7, 1994 and March 30, 1994 and (c) the Company's Form 8-A filed November 2, 1981, as amended by Form 8, dated February 5, 1992, which includes a description of the Company's Common Shares, as amended. All documents filed by TDS pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus and prior to the termination of the offering made by this Prospectus shall be deemed to be incorporated by reference in this Prospectus and to be a part hereof from the date of filing of such documents. Any statement contained in a document incorporated by reference herein shall be deemed to be modified or superseded for purposes hereof to the extent that a statement contained herein (or in any other subsequently filed document which also is incorporated by reference herein) modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed to constitute a part hereof except as so modified or superseded. All information appearing in this Prospectus is qualified in its entirety by the information and financial statements (including notes thereto) appearing in the documents incorporated herein by reference. THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS (OTHER THAN EXHIBITS THERETO) ARE AVAILABLE WITHOUT CHARGE, UPON WRITTEN OR ORAL REQUEST BY ANY PERSON TO WHOM THIS PROSPECTUS HAS BEEN DELIVERED, FROM SHAREHOLDER SERVICES, TELEPHONE AND DATA SYSTEMS, INC., 30 NORTH LASALLE STREET, 40TH FLOOR, CHICAGO, ILLINOIS 60602 (TELEPHONE 312-630-1900). 2 THE COMPANY* Telephone and Data Systems, Inc. (the "Company" or "TDS") is a diversified telecommunications service company with established local telephone, cellular telephone and radio paging operations. TDS was incorporated in Iowa in 1968. TDS's executive offices are located at Suite 4000, 30 North LaSalle Street, Chicago, Illinois 60602. Its telephone number is (312) 630-1900. TDS's Common Shares are listed on the American Stock Exchange under the symbol "TDS." At December 31, 1993, the Company provided services to 1,078,100 consolidated telephone access lines, cellular telephones and radio pagers in 37 states and the District of Columbia. The Company's business development strategy is to expand its existing operations through internal growth and acquisitions and to explore and develop other telecommunications businesses that management believes will utilize the Company's expertise in customer-based telecommunications services. TELEPHONE OPERATIONS TDS Telecommunications Corporation ("TDS Telecom") is a wholly owned subsidiary of TDS through which substantially all of the Company's telephone operations are or will be conducted. At December 31, 1993, the Company's 94 telephone subsidiaries, ranging in size from less than 500 to more than 40,000 access lines, served a total of approximately 356,200 access lines in 29 states. TDS Telecom provides modern, high-quality local and long-distance telephone service. Local service is provided by TDS Telecom's operating telephone subsidiaries. Long-distance or toll service is provided through connections with long-distance carriers, primarily AT&T and the Regional Bell Operating Companies. TDS pursues an active program of acquiring operating telephone companies. Between January 1, 1989, and December 31, 1993, TDS acquired 29 telephone companies serving a total of 59,600 access lines. TDS continually evaluates acquisition opportunities and is currently engaged in negotiations to acquire additional telephone companies. Future growth in telephone operations is expected to be derived from internal growth in access lines, from the acquisition of additional telephone companies and from offering to its customers additional telecommunications products and services, including enhanced services. CELLULAR TELEPHONE OPERATIONS TDS conducts substantially all of its cellular operations through United States Cellular Corporation (AMEX symbol "USM"), which is engaged through subsidiaries and joint ventures primarily in the acquisition of interests in and the development and operation of cellular systems. As of December 31, 1993, USM owned or had the right to acquire cellular interests representing approximately 23.7 million population equivalents in 205 markets in 37 states. - ------------------------ * As used in this Prospectus, unless the context indicates otherwise: (i) references to "TDS" refer to Telephone and Data Systems, Inc., an Iowa corporation; (ii) references to the "Company" refer to TDS and its subsidiaries, collectively; (iii) references to "USM" refer to United States Cellular Corporation (a subsidiary of which TDS owns over 80% of the combined total of all outstanding classes of capital stock, representing over 95% of their combined voting power) and USM's subsidiaries; (iv) references to "APP" refer to American Paging, Inc. (a subsidiary of which TDS owns 82.5% of the combined total of all the outstanding classes of capital stock, representing 98.5% of their combined voting power) and APP's subsidiaries; (v) references to "MSA" or to a particular city refer to the Metropolitan Statistical Area, as designated by the U.S. Office of Management and Budget and used by the Federal Communications Commission ("FCC") in designating metropolitan cellular market areas; (vi) references to "RSA" refer to the Rural Service Area, as used by the FCC in designating non-MSA cellular market areas; (vii) references to cellular "markets" refer to MSAs, RSAs or both; and (viii) references to "population equivalents" refer to the population of a market, based on 1993 Donnelley Marketing Service Estimates, multiplied by the percentage interests that the Company owns or has the right to acquire in the revenues of an entity licensed or designated to receive a license ("licensee") by the FCC to construct or operate a cellular system in a given market. 3 USM plans to continue to acquire additional cellular interests in markets that strengthen its position, while at the same time considering the disposition of interests in some markets that do not fit well with its long-term plans. USM is currently negotiating agreements for the acquisition of substantial additional cellular interests. RADIO PAGING OPERATIONS American Paging, Inc. (AMEX symbol "APP"), is a majority-owned subsidiary of TDS through which substantially all of the Company's radio paging operations are conducted. At December 31, 1993, APP offered paging services through 17 customer operations centers. APP is expanding the geographic coverage of its individual paging systems and is initiating new services, such as voice-mail, as they become practicable. At December 31, 1993, APP had approximately 460,900 pagers in service. Its systems have the capacity to serve a substantial number of additional customers. OTHER SUBSIDIARIES Other subsidiaries of the Company provide engineering and technical management consulting services (American Communications Consultants, Inc.); data processing and related services (TDS Computing Services, Inc.); graphic communications services (Suttle Press, Inc.); and telemessaging services (Integrated Communications Services, Inc.). USE OF PROCEEDS Unless otherwise indicated in the Prospectus Supplement, the net proceeds to be received by TDS from the sale of Debt Securities offered by this Prospectus will be used by TDS principally in connection with its acquisition, construction and development programs, including reduction of short-term debt incurred in connection therewith, and may also be used for working capital, to reduce existing long-term debt, to provide additional investments in TDS's subsidiaries, and for other corporate purposes or otherwise as described in the Prospectus Supplement. Until the proceeds are used for these purposes, TDS may deposit them in interest-bearing accounts or invest them in short-term investment securities. CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES The following table sets forth the historical ratios of earnings to fixed charges for the Company for each of the years ended December 31, 1989 through 1993.
YEAR ENDED DECEMBER 31, - ----------------------------------------------------- 1993 1992 1991 1990 1989 - --------- --------- --------- --------- --------- 2.15x 2.77x 1.85x 2.52x 1.65x
For purposes of calculating this ratio, earnings consist of net income from continuing operations plus income taxes from continuing operations, fixed charges from continuing operations, estimated interest portion of rentals, distributions from minority investments and amortization of non-utility capitalized interest, less equity in undistributed earnings of unconsolidated investments, minority share of losses and non-utility capitalized interest. Fixed charges consist of interest expense, estimated interest portion of rentals and preferred dividends of majority-owned subsidiaries. DESCRIPTION OF DEBT SECURITIES The Debt Securities will be issued in most cases under an Indenture dated February 1, 1991 (the "Indenture") between TDS and Harris Trust and Savings Bank, as Trustee (the "Trustee"), the form of which is incorporated by reference as an exhibit to the Registration Statement of which this Prospectus is a part. Any subordinated Debt Securities would be issued under a separate indenture which would be filed as an exhibit to the Registration Statement by post-effective amendment and would be described in a Prospectus Supplement. The following statements with respect to the Indenture and the Securities (as hereinafter defined) are brief summaries of certain provisions of the Indenture and do not purport to be complete; such statements are subject to the detailed referenced provisions of the Indenture, including the definition of capitalized terms used under this caption. Wherever particular sections or defined terms of the Indenture are referred to, such sections or defined terms are incorporated herein by reference as part of the statement made, and the statement is qualified in its entirety by such reference. The term "Securities", as used under this caption, refers to all securities issued under the Indenture, including the Debt Securities. 4 GENERAL The Indenture does not limit the aggregate principal amount of Securities (which may include debentures, notes and other unsecured evidences of indebtedness) which may be issued thereunder, and Securities may be issued thereunder from time to time in one or more series and may be denominated and payable in foreign currencies or units based on or relating to foreign currencies, including European Currency Units. Special United States federal income tax considerations applicable to any Securities so denominated will be described in the Prospectus Supplement relating thereto. Unless otherwise indicated in the applicable Prospectus Supplement, the Indenture also permits TDS to increase the principal amount of any series of Securities previously issued and to issue such increased principal amount. (Section 2.3) The Prospectus Supplement will set forth the following terms relating to the Offered Securities: (1) the specific designation of the Offered Securities; (2) any limit on the aggregate principal amount of the Offered Securities; (3) the date or dates, if any, on which the Offered Securities will mature; (4) the rate or rates per annum (which may be fixed or variable) at which the Offered Securities will bear interest, if any, the date or dates on which any such interest will be payable and the Record Dates for any interest payable on the Offered Securities which are Registered Securities; (5) any subordination of the Offered Securities to other indebtedness of the Company; (6) any mandatory or optional redemption or sinking fund provisions, including the period or periods within which, the price or prices at which and the terms and conditions upon which the Offered Securities may be redeemed or purchased at the option of TDS or otherwise; (7) whether the Offered Securities will be issuable in registered form or bearer form or both, and, if issuable in bearer form, the restrictions as to the offer, sale and delivery of the Offered Securities in bearer form and as to exchanges between registered and bearer form; (8) whether the Offered Securities will be issuable in the form of one or more temporary or permanent Global Securities and, if so, the identity of the Depository for such Global Securities; (9) the denominations of $1,000 and any multiple thereof, and the denominations in which any of the Offered Securities which are in bearer form will be issuable, if other than the denominations of $1,000 and $5,000; (10) each office or agency where the principal of and any premium and interest on the Offered Securities will be payable, and each office or agency where the Offered Securities may be presented for registration of transfer or exchange; (11) if other than United States dollars, the foreign currency or the units based on or relating to foreign currencies in which the Offered Securities are denominated and/or in which the payment of the principal of and any premium and interest on the Offered Securities will or may be payable; (12) any applicable United States federal income tax consequences; and (13) any other terms of the Offered Securities (which terms shall not adversely affect the interests of any Holders of Securities then Outstanding), including additions to or deletions from the covenants and events of default with respect to the Offered Securities. Securities may be issued under the Indenture bearing no interest or interest at a rate below the prevailing market rate at the time of issuance, to be offered and sold at a discount below their stated principal amount. United States federal income tax consequences and other special considerations applicable to any such discounted Securities or to other Securities offered and sold at par which are treated as having been issued at a discount for United States federal income tax purposes will be described in the Prospectus Supplement relating thereto. The Securities and any coupons appertaining thereto will be unsecured and will rank PARI PASSU with all other unsecured and unsubordinated indebtedness of TDS. However, since TDS is a holding company, the right of TDS, and hence the right of the creditors of TDS (including the Holders of Securities), to participate in any distribution of the assets of any subsidiary upon its liquidation or reorganization or otherwise is necessarily subject to the prior claims of creditors of such subsidiary, except to the extent that claims of TDS as a creditor of such subsidiary may be recognized. There is no restriction in the Indenture against subsidiaries of TDS incurring secured or unsecured indebtedness or issuing secured or unsecured securities. The ability of TDS to make payments of principal and interest on the Debt Securities will be dependent upon the payment to it by its subsidiaries of dividends, loans or advances. As more fully set forth in the notes to the Company's financial statements, such payments by TDS's regulated telephone company subsidiaries are subject to legal and contractual restrictions, primarily contained in the mortgages granted by certain such subsidiaries to the Rural Electrification Administration. 5 The Indenture does not contain covenants or other provisions designed to afford Holders of Securities protection in the event of a highly leveraged transaction, change in credit rating or other similar occurrence. EXCHANGE AND TRANSFER Securities may be presented for exchange and registered Securities may be presented for registration of transfer at the offices and subject to the restrictions set forth therein and in the applicable Prospectus Supplement without service charge, but upon payment of any taxes or other governmental charges due in connection therewith, subject to any applicable limitations contained in the Indenture. TDS has appointed the Trustee as Security Registrar. Securities in bearer form and the coupons appertaining thereto, if any, will be transferable by delivery. (Sections 2.8 and 3.2) PAYMENT Unless otherwise indicated in the applicable Prospectus Supplement, payment of the principal of and the premium and interest, if any, on all Securities (other than a Registered Global Security) in registered form will be made at the office or agency of the Trustee in the Borough of Manhattan, The City of New York, except that, at the option of TDS, payment of any interest may be made (i) by check mailed to the address of the Person entitled thereto as such address shall appear in the Security Register or (ii) by wire transfer to an account maintained by the Person entitled thereto as specified in the Security Register. (Sections 3.1 and 3.2) Unless otherwise indicated in the applicable Prospectus Supplement, payment of any interest due on Securities in registered form will be made to the Persons in whose name such Registered Securities are registered at the close of business on the Record Date for such interest payments. (Section 2.7) REGISTERED GLOBAL SECURITIES The registered Securities of a particular series may be issued in the form of one or more Registered Global Securities which will be deposited with a Depository, or its nominee, each of which will be identified in the Prospectus Supplement relating to such series. Unless and until exchanged, in whole or in part, for Securities in definitive registered form, a Registered Global Security may not be transferred except as a whole by the Depository for such Registered Global Security to a nominee of such Depository, by a nominee of such Depository to such Depository or another nominee of such Depository or by such Depository or any such nominee to a successor of such Depository or a nominee of such successor. (Section 2.8) The specific terms of the depository arrangement with respect to any portion of a particular series of Securities to be represented by a Registered Global Security will be described in the Prospectus Supplement relating to such series. TDS anticipates that the following provisions will apply to all depository arrangements. Upon the issuance of a Registered Global Security, the Depository therefor or its nominee will credit, on its book entry and registration system, the respective principal amounts of the Securities represented by such Registered Global Security to the accounts of such persons having accounts with such Depository ("participants") as shall be designated by the underwriters or agents participating in the distribution of such Securities or by TDS if such Securities are offered and sold directly by TDS. Ownership of beneficial interests in a Registered Global Security will be limited to participants or persons that may hold beneficial interests through participants. Ownership of beneficial interests in a Registered Global Security will be shown on, and the transfer of such ownership will be effected only through, records maintained by the Depository therefor or its nominee (with respect to beneficial interests of participants) or by participants or persons that hold through participants (with respect to interests of persons other than participants). The laws of some states require certain purchasers of securities to take physical delivery thereof in definitive form. Such depository arrangements and such laws may impair the ability to transfer beneficial interests in a Registered Global Security. So long as the Depository for a Registered Global Security or its nominee is the registered owner thereof, such Depository or such nominee, as the case may be, will be considered the sole owner or Holder of the Securities represented by such Registered Global Security for all purposes under the Indenture. Except as provided below, owners of beneficial interests in a Registered Global Security will 6 not be entitled to have Securities of the series represented by such Registered Global Security registered in their names, will not receive or be entitled to receive physical delivery of Securities of such series in definitive form and will not be considered the owners or Holders thereof under the Indenture. Principal, premium, if any, and interest payments on a Registered Global Security registered in the name of a Depository or its nominee will be made to such Depository or nominee, as the case may be, as the registered owner of such Registered Global Security. None of TDS, the Trustee or any paying agent for Securities of the series represented by such Registered Global Security will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial interests in such Registered Global Security or for maintaining, supervising or reviewing any records relating to such beneficial interests. TDS expects that the Depository for a Registered Global Security or its nominee, upon receipt of any payment of principal, premium or interest, will immediately credit participants' accounts with payments in amounts proportionate to their respective beneficial interests in the principal amounts of such Registered Global Security as shown on the records of such Depository or its nominee. TDS also expects that payments by participants to owners of beneficial interests in such Registered Global Security held through such participants will be governed by standing instructions and customary practices, as is now the case with securities held for the accounts of customers registered in "street name", and will be the responsibility of such participants. If the Depository for a Registered Global Security representing Securities of a particular series is at any time unwilling or unable to continue as Depository and a successor Depository is not appointed by TDS within 90 days, TDS will issue Securities of such series in definitive form in exchange for such Registered Global Security. In addition, TDS may at any time and in its sole discretion determine not to have the Securities of a particular series represented by one or more Registered Global Securities and, in such event, will issue Securities of such series in definitive form in exchange for all of the Registered Global Securities representing Securities of such series. CERTAIN COVENANTS OF TDS Under the Indenture, TDS has agreed that it will not engage in certain transactions, as described below. LIMITATION ON SECURED DEBT. TDS will not create or incur any Secured Debt without in either case effectively providing that Debt Securities (together with, if TDS shall so determine, any other Debt of or guaranteed by TDS ranking equally with the Debt Securities) shall be secured equally and ratably with (or, at the option of TDS, prior to) such Secured Debt, with certain stated exceptions. These exceptions permit (a) Secured Debt (i) in respect of Liens on property existing at the time such property is acquired by TDS, (ii) in respect of Liens created upon or within 270 days following the acquisition or construction of property (including any improvements to existing property) to secure the payment of all or part of the purchase price thereof, or (iii) incurred by TDS prior to, at the time of or within 270 days following the acquisition of property which is subject to a related Lien, which Secured Debt is incurred for the purpose of financing all or part of the purchase price thereof, provided that no such Lien applies to any property theretofore owned by TDS (including property transferred by TDS to any subsidiary of TDS in contemplation of or in connection with the creation of such Lien) or to any property of TDS other than the property so acquired (other than, in the case of construction or improvement, any theretofore unimproved real property or portion thereof on which the property so constructed, or the improvement, is located); (b) Secured Debt in respect of Liens on property of a Person (i) existing at the time such Person is merged into or consolidated with TDS or at the time of a sale, lease or other disposition of the properties of a Person as an entirety or substantially as an entirety to TDS, (ii) resulting from such merger, consolidation, sale, lease or disposition by virtue of any Lien on property granted by TDS prior to such merger, consolidation, sale, lease or disposition (and not in contemplation thereof or in connection therewith) which applies to after-acquired property of TDS or (iii) resulting from such merger, consolidation, sale, lease or disposition pursuant to a Lien or contractual provision granted or entered into by such Person prior to such merger, consolidation, sale, lease or disposition (and not at the request of TDS); PROVIDED, HOWEVER, that any such Lien referred to in clause (i) shall not apply to any property of TDS other than the property subject thereto at the time such Person or properties were acquired and any such Lien referred to in clause (ii) or (iii) shall not apply to any property of TDS other than the property so acquired; (c) Liens existing at the date of the Indenture; (d) Liens in favor of a government or governmental entity to 7 secure partial progress, advance or other payments, or other obligations, or to secure any Debt incurred for the purpose of financing all or any part of the cost of acquiring, constructing or improving the property subject thereto (including, without limitation, Liens incurred in connection with industrial revenue, pollution control, private activity bond or similar financing); (e) Liens arising by reason of deposits with, or the giving of any form of security to, any governmental agency or any body created or approved by law or governmental regulation, which Lien is required by law or governmental regulation as a condition to the transaction of any business or the exercise of any privilege, franchise, license or permit; (f) Liens for taxes, assessments or governmental charges or levies not yet delinquent or governmental charges or levies already delinquent, the validity of which charge or levy is being contested in good faith and for which any reserves required in accordance with generally accepted accounting principles have been established; (g) Liens (including judgment liens) arising in connection with legal proceedings so long as such proceedings are being contested in good faith and, in the case of judgment liens, execution thereon is stayed and for which any reserves required in accordance with generally accepted accounting principles have been established; and (h) Secured Debt secured by any extension, renewal or replacement (or successive extensions, renewals or replacements) of any Liens referred to in the foregoing clauses (a) to (g), inclusive (provided that the principal amount of Secured Debt secured thereby does not exceed the principal amount of such Debt immediately prior to such extension, renewal or replacement, and that any Lien created in connection therewith is limited to all or part of the property (plus improvements to such property) which secured the Secured Debt so extended, renewed or replaced). The foregoing restrictions do not apply if, immediately after the incurrence of such Secured Debt (giving effect to the application of the proceeds therefrom), the aggregate principal amount of Secured Debt (other than Secured Debt described in clauses (a) to (h), inclusive, of the immediately preceding paragraph), plus the aggregate amount of Capitalized Rent in respect of Sale and Leaseback Transactions (other than Sale and Leaseback Transactions the proceeds of which are or will be applied as described in clauses (a) to (e) inclusive, under "Limitation on Sale and Leaseback Transactions" below), would not exceed 10% of Consolidated Capitalization. (Sections 1.1 and 3.6) LIMITATION ON SALE AND LEASEBACK TRANSACTIONS. TDS will not enter into any Sale and Leaseback Transaction unless immediately after the completion of such Sale and Leaseback Transaction (giving effect to the application of the proceeds therefrom), the aggregate amount of Capitalized Rent in respect of Sale and Leaseback Transactions (other than Sale and Leaseback Transactions described in clauses (a) to (e), inclusive, of the immediately succeeding paragraph), plus the aggregate principal amount of Secured Debt (other than Secured Debt described in clauses (a) to (h), inclusive, under "Limitation on Secured Debt" above), would not exceed 10% of Consolidated Capitalization. The foregoing restrictions do not apply to, and there shall be excluded in computing the aggregate amount of Capitalized Rent for the purpose of such restrictions, the following Sale and Leaseback Transactions: (a) any Sale and Leaseback Transaction entered into to finance the payment of all or any part of the purchase price of property acquired or constructed by TDS (including any improvements to existing property) or entered into prior to, at the time of or within 270 days after the acquisition or construction of such property, which Sale and Leaseback Transaction is entered into for the purpose of financing all or part of the purchase or construction price thereof; PROVIDED, HOWEVER, that in the case of any such acquisition, such Sale and Leaseback Transaction shall not involve any property transferred by TDS to a subsidiary thereof in contemplation of or in connection with such Sale and Leaseback Transaction or involve any property of TDS other than the property so acquired (other than, in the case of construction or improvement, any theretofore unimproved real property or portion thereof on which the property so constructed, or the improvement, is located); (b) any Sale and Leaseback Transaction involving property of a Person existing at the time such Person is merged into or consolidated with TDS or at the time of a sale, lease or other disposition of the properties of a Person as an entirety or substantially as an entirety to TDS; (c) any Sale and Leaseback Transaction in which the lessor is a government or governmental entity and which Sale and Leaseback Transaction is entered into to secure partial progress, advance or other payments, or other obligations, pursuant to any contract or statute or to secure any Debt incurred for the purpose of financing all or any part of the cost of constructing or improving the property subject to such Sale and Leaseback Transaction (including, without limitation, Sale and Leaseback Transactions incurred in connection with pollution control, industrial revenue, 8 private activity bond or similar financing); (d) any Sale and Leaseback Transaction involving the extension, renewal or replacement (or successive extensions, renewals or replacements) in whole or in part of a lease pursuant to a Sale and Leaseback Transaction referred to in the foregoing clauses (a) to (c), inclusive; PROVIDED, HOWEVER, that such lease extension, renewal or replacement shall be limited to all or any part of the same property leased under the lease so extended, renewed or replaced (plus improvements to such property); and (e) any Sale and Leaseback Transaction the net proceeds of which are at least equal to the fair value (as determined by the Board of Directors of TDS) of the property leased pursuant to such Sale and Leaseback Transaction, so long as within 270 days of the effective date of such Sale and Leaseback Transaction, TDS applies (or irrevocably commits to an escrow account for the purpose or purposes hereinafter mentioned) an amount equal to the net proceeds of such Sale and Leaseback Transaction to either (x) the purchase of other property having a fair value at least equal to the fair value of the property leased in such Sale and Leaseback Transaction and having a similar utility and function, or (y) the retirement or repayment (other than any mandatory retirement or repayment at maturity) of (i) Securities, (ii) other Funded Debt of TDS which ranks prior to or on a parity with the Securities or (iii) indebtedness of any subsidiary of TDS maturing by its terms more than one year from its date of issuance (notwithstanding that any portion of such indebtedness is included in current liabilities) or preferred stock of any subsidiary of TDS (other than any such indebtedness owed to or preferred stock owned by TDS or any subsidiary of TDS); PROVIDED, HOWEVER, that in lieu of applying an amount equivalent to all or any part of such net proceeds to such retirement or repayment (or committing such an amount to an escrow account for such purpose), TDS may deliver to the Trustee Outstanding Securities and thereby reduce the amount to be applied pursuant to (y) of this clause (e) by an amount equivalent to the aggregate principal amount of the Securities so delivered. CERTAIN DEFINITIONS "CAPITAL STOCK" means and includes any and all shares, interests, participations or other equivalents (however designated) of ownership in a corporation or other Person. "CAPITALIZATION" means with respect to a Person the total of (a) Funded Debt, (b) the par value or, in the case of Capital Stock with no par value, a value stated on the books, of all outstanding shares of Capital Stock, (c) the paid-in surplus and retained earnings (or minus the net surplus deficit, as the case may be), (d) deferred taxes and deferred investment tax credits, (e) Capitalized Rent, and (f) minority interests in subsidiaries of such Person. "CAPITALIZED RENT" means the present value (discounted semi-annually at a discount rate equal to the weighted average rate of interest borne by the Debt Securities then Outstanding) of the total net amount of rent payable for the remaining term of any lease of property by TDS (including any period for which such lease has been extended); PROVIDED, HOWEVER, that no such rental obligation shall be deemed to be Capitalized Rent unless the lease resulted from a Sale and Leaseback Transaction. The total net amount of rent payable under any lease for any period shall be the total amount of the rent payable by the lessee with respect to such period but shall not include amounts required to be paid on account of maintenance and repairs, insurance, taxes, assessments, water rates, sewer rates and similar charges. "CONSOLIDATED CAPITALIZATION" means the Capitalization of TDS and its Subsidiaries determined on a consolidated basis at the end of TDS's then most recently reported fiscal year or quarter, as the case may be, including minority interests in Subsidiaries. "DEBT" means with respect to a Person all obligations of such Person for borrowed money and all such obligations of any other Person for borrowed money guaranteed by such Person. "FUNDED DEBT" means any Debt maturing by its terms more than one year from its date of issuance (notwithstanding that any portion of such Debt is included in current liabilities). "LIEN" means any mortgage, pledge, security interest, lien, charge or other encumbrance. "OUTSTANDING" means, subject to certain exceptions, all Debt Securities issued under the Indenture, except those theretofore cancelled by the Trustee or delivered to it for cancellation, defeased in accordance with the Indenture, paid in full, or in respect of which substitute Debt Securities have been authenticated and delivered by the Trustee. 9 "PERSON" means any individual, corporation, partnership, joint venture, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof. "PROPERTY" means any directly-held interest of a Person in any kind of property or asset, whether real, personal or mixed and whether tangible or intangible, and includes Capital Stock of a subsidiary or other Person. "SALE AND LEASEBACK TRANSACTION" means any arrangement with any Person other than a Tax Consolidated Subsidiary providing for the leasing (as lessee) by TDS of any property (except for temporary leases for a term, including any renewal thereof, of not more than three years (provided that any such temporary lease may be for a term of up to five years if (a) the Board of Directors of TDS reasonably finds such term to be in the best interest of TDS and (b) the primary purpose of the transaction of which such lease is a part is not to provide funds to or financing for TDS)), which property has been or is to be sold or transferred by TDS (i) to any subsidiary of TDS in contemplation of or in connection with such arrangement or (ii) to such other Person. "SECURED DEBT" means Debt of TDS secured by any Lien on property (including Capital Stock or indebtedness of subsidiaries of TDS) owned by TDS. "SUBSIDIARY" means a Person which is consolidated with TDS in accordance with generally accepted accounting principles. "TAX CONSOLIDATED SUBSIDIARY" means a subsidiary of TDS with which, at the time a Sale and Leaseback Transaction is entered into by TDS, TDS would be entitled to file a consolidated federal income tax return. EVENTS OF DEFAULT The occurrence of any of the following events with respect to the Securities of any series will constitute an "Event of Default" with respect to the Securities of such series: (a) default for 30 days in the payment of any interest on any of the Securities of such series; (b) default in the payment of any of the principal of or the premium, if any, on any of the Securities of such series, whether at maturity, upon redemption, by declaration or otherwise; (c) default in the deposit of any sinking fund payment in respect of any Securities of such series; (d) default for 90 days by TDS in the observance or performance of any other covenant or agreement contained in the Indenture relating to the Securities of such series after written notice thereof as provided in the Indenture; (e) (i) an event of default occurs under any instrument under which there is outstanding, or by which there may be secured or evidenced, any indebtedness of TDS for money borrowed (other than non-recourse indebtedness) which results in acceleration of, or non-payment at maturity (after giving effect to any applicable grace period) of such indebtedness in an aggregate amount exceeding the greater of $15,000,000 or 2% of Consolidated Capitalization, in which case TDS shall immediately give notice to the Trustee of such acceleration or non-payment, and (ii) there shall have been a failure to cure such default or to discharge such indebtedness within ten days after notice thereof to TDS by the Trustee or to TDS and the Trustee by the Holders of at least 25% in aggregate principal amount of the Securities then Outstanding; PROVIDED that no such Event of Default described in this clause (e) shall exist as long as TDS is contesting any such default or acceleration in good faith and by appropriate proceedings; or (f) certain events of bankruptcy, insolvency or reorganization relating to TDS. (Section 5.1) Different Events of Default may be prescribed for the benefit of the Holders of a particular series of Securities and will be described in the Prospectus Supplement or Pricing Supplement relating thereto. If an Event of Default due to a default in the payment of the principal of or the premium or interest, if any, on, or in the deposit of any sinking fund payment with respect to, any series of Securities shall have occurred and be continuing, either the Trustee or the Holders of not less than 25% in aggregate principal amount of the Securities of such series then Outstanding may declare the principal of all Securities of such series and the interest, if any, accrued thereon to be due and payable immediately. If an Event of Default due to a default in the observance or performance of any other covenant or agreement of TDS contained in the Indenture and applicable to the Securities of one or more (but less than all) series then Outstanding shall have occurred and be continuing, either the Trustee or the Holders of not less than 25% in aggregate principal amount of the Securities of the affected series then Outstanding (voting as one class) may declare the principal of all Securities of each such affected series and the interest, if any, accrued thereon to be due and payable immediately. If an Event of Default due to a default in the 10 observance or performance of any other covenant or agreement of TDS contained in the Indenture applicable to all Securities then Outstanding or due to the acceleration or non-payment at maturity of certain indebtedness of TDS shall have occurred and be continuing, either the Trustee or the Holders of not less than 25% in aggregate principal amount of all Securities then Outstanding (voting as one class) may declare the principal of all Securities and the interest, if any, accrued thereon to be due and payable immediately. If an Event of Default due to certain acts of bankruptcy, insolvency or reorganization of TDS shall have occurred and be continuing, the principal and interest on all the Securities then Outstanding shall thereby become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Securityholders. Upon certain conditions, any such declarations may be rescinded and annulled if all Events of Default, other than the nonpayment of accelerated principal, with respect to the Securities of all such affected series then Outstanding shall have been cured or waived as provided in the Indenture by the Holders of a majority in aggregate principal amount of the Securities of the affected series then Outstanding (voting as one class, except in the case of Events of Default described in clauses (a), (b) and (c) of the preceding paragraph, as to which each series so affected will vote as a separate class). See "Modification of the Indenture" below. Reference is made to the Prospectus Supplement relating to any series of Original Issue Discount Securities for the particular provisions relating to the acceleration of a portion of the principal amount thereof upon the occurrence and continuance of an Event of Default with respect thereto. (Section 5.1) The Indenture provides that, subject to the duty of the Trustee to act with the requisite standard of care, in case a default with respect to a series of Securities shall have occurred and be continuing, the Trustee will be under no obligation to exercise any of its rights or powers under the Indenture at the request, order or direction of the Holders of the Securities, unless such Holders shall have offered to the Trustee reasonable indemnity. (Sections 5.6 and 6.2) Subject to such provisions for indemnity and certain other limitations contained in the Indenture, the Holders of a majority in the aggregate principal amount of the Securities of each affected series then Outstanding will have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee, with respect to the Securities of such affected series. (Section 5.9) The Indenture provides that no Holder of Securities may institute any action against TDS under the Indenture (except actions for payment of overdue principal, premium or interest) unless such Holder previously shall have given to the Trustee written notice of default and continuance thereof and unless the Holders of not less than 25% in aggregate principal amount of the Securities of the affected series then Outstanding (voting as one class) shall have requested the Trustee to institute such action and shall have offered the Trustee reasonable indemnity, the Trustee shall not have instituted such action within 60 days of such request and the Trustee shall not have received direction inconsistent with such request by the Holders of a majority in aggregate principal amount of the Securities of the affected series then Outstanding (voting as one class). (Sections 5.6 and 5.9) The Indenture requires TDS to furnish to the Trustee annually a statement as to the performance of TDS's covenants under the Indenture. (Section 3.5) The Indenture provides that the Trustee may withhold notice to the Holders of the Securities of any series of any default affecting such series (except defaults as to payment of principal, premium or interest on the Securities of such series or as to sinking fund payments) if it considers such withholding to be in the interests of the Holders of the Securities of such series. (Section 5.11) CONSOLIDATION, MERGER OR SALE OF ASSETS TDS may consolidate with or merge into, or sell, lease or convey its property as an entirety or substantially as an entirety to, any other entity if (a) such entity assumes the obligations of TDS under the Securities and the Indenture; (b)(i) such entity is organized and existing under the laws of the United States or any state thereof or the District of Columbia; or (ii) such entity is organized and existing under the laws of Canada, Japan, Australia, New Zealand, any nation in Western Europe, or any political subdivision of any thereof and such entity undertakes to pay to the Holders of Securities any additional amounts as may be necessary in order that every net payment of principal of and interest, if any, on the Securities, after withholding for or on account of any present or future tax, assessment or governmental charge imposed upon such Holder (except for a tax, assessment or charge imposed solely as a result of a connection between the recipient and the jurisdiction imposing such tax, assessment or charge) by 11 reason of or as a result of such payment being made by an entity which is not an entity existing under the laws of the United States or any state thereof or the District of Columbia, will not be less than the amount provided for in the Securities to be then due and payable; (c) upon request by the Trustee, TDS delivers to the Trustee certain certificates and opinions specified in the Indenture; (d) immediately after giving effect to such transaction (and treating any Secured Debt or Sale and Leaseback Transaction which becomes an obligation of the resulting, surviving or transferee Person as a result of such transaction as having been incurred or entered into by such Person at the time of such transaction), no Event of Default (or event which, after notice or lapse of time or both, would be an Event of Default) shall exist and (e) upon such consolidation, merger, sale, lease or conveyance any property owned by TDS immediately prior thereto would become subject to any Lien (unless such Lien would be permitted by the provisions described above under "Limitation on Secured Debt"), the Securities must be secured (together with, if TDS shall so determine, any other Debt ranking equally with or prior to the Securities incurred, assumed or guaranteed by TDS, whether then or thereafter existing) by a direct Lien on such property prior to all Liens other than any theretofore existing thereon. (Sections 9.1 and 9.2). The covenant phrase "substantially as an entirety" is not defined in the Indenture, and the Company is unaware of an established meaning or quantification of the phrase under Illinois law, which is the law governing construction of the Indenture. A Holder may bear the burden of establishing the meaning of the phrase "substantially as an entirety." MODIFICATION OF THE INDENTURE The Indenture permits TDS and the Trustee to enter into supplemental indentures without the consent of the Holders of the Securities to: (a) subject to compliance with TDS's covenants described above under "Certain Covenants of TDS--Limitation on Secured Debt", secure the Securities of one or more series, (b) add guarantees with respect to the Securities of one or more series, (c) evidence the assumption by a successor Person of the obligations of TDS under the Indenture and the Securities then Outstanding, (d) add covenants for the protection of the Holders of the Securities, (e) cure any ambiguity or correct any inconsistency in the Indenture, (f) establish the form and terms of the Securities of any series, (g) evidence the acceptance of appointment by a successor Trustee, (h) subject to compliance with certain requirements of the Indenture, provide for uncertificated Securities in addition to or in place of certificated Securities and (i) comply with any requirements of the Securities and Exchange Commission in connection with qualifying the Indenture under the Trust Indenture Act of 1939, as amended. (Section 8.1) The Indenture also permits TDS and the Trustee, with the consent of the Holders of not less than a majority in aggregate principal amount of the Securities of all series then Outstanding and affected (voting as one class), to add any provisions to, or change in any manner or eliminate any of the provisions of, the Indenture or modify in any manner the rights of the Holders of the Securities of each such affected series; PROVIDED, HOWEVER, that TDS and the Trustee may not, without the consent of the Holder of each Security then Outstanding and affected thereby: (a) extend the time of payment of the principal (or any installment) of any Security, or reduce the principal amount thereof, or reduce the rate, alter the method of computation of the rate or extend the time of payment of interest thereon, or reduce any amount payable on the redemption thereof, or change the currency in which the principal thereof or the interest thereon is payable, or reduce the amount payable on any Original Issue Discount Security upon acceleration or provable in bankruptcy, or alter certain provisions of the Indenture relating to Securities not denominated in United States dollars, or impair the right to institute suit for the enforcement of any payment on any Security when due; or (b) reduce the percentage in principal amount of the Securities of the affected series, the consent of whose Holders is required for any such modification or for any waiver provided for in the Indenture. (Section 8.2) Prior to the acceleration of the maturity of any Securities, the Holders of a majority in aggregate principal amount of the Securities of all series at the time Outstanding with respect to which a default or an Event of Default shall have occurred and be continuing (voting as one class) may on behalf of the Holders of all such affected Securities waive any past default or Event of Default and its consequences, except a default or an Event of Default in respect of a covenant or provision of the Indenture or of any Security which cannot be modified or amended without the consent of the Holder of each Security affected. 12 DEFEASANCE AND DISCHARGE The Indenture provides that, at the option of TDS, (a) TDS will be discharged from any and all obligations in respect of the Securities of a particular series then Outstanding (except for certain obligations to register the transfer of or exchange the Securities of such series, to replace stolen, lost or mutilated Securities of such series, to maintain paying agencies, in the event that the Trustee is not the Security Registrar, to furnish the Trustee with the names and addresses of the Holders of Registered Securities of each series, to cause any successor Person substituted for TDS in accordance with the Indenture to assume TDS's obligations thereunder and with respect to the Securities, to comply with certain covenants described under "Consolidation, Merger or Sale of Assets" and to maintain the trust described below), or (b) TDS need not comply with certain covenants of the Indenture (including certain of those described under "Certain Covenants of TDS" and "Consolidation, Merger or Sale of Assets"), in each case if TDS irrevocably deposits in trust with the Trustee money, and/or securities of the government which issued the currency in which the Securities of such series are payable or securities backed by the full faith and credit of such government which, through the payment of the principal thereof and the interest thereon in accordance with their terms, will provide money in an amount sufficient to pay all the principal of (and premium, if any) and interest on the Securities of such series on the stated maturity of such Securities in accordance with the terms thereof. To exercise such option, TDS is required, among other things, to deliver to the Trustee an opinion of independent counsel of nationally recognized standing in matters of federal income tax law to the effect that the exercise of such option would not cause the Holders of the Securities of such series to recognize income, gain or loss for United States federal income tax purposes as a result of such defeasance, and such Holders will be subject to United States federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such defeasance had not occurred, and, in the case of a discharge as described in clause (a) of the preceding sentence, such opinion states that either (A) there has been a change in the applicable federal income tax law to the foregoing effect or (B) TDS has received a private letter ruling from the Internal Revenue Service or there has been published a revenue ruling to the foregoing effect. (Section 10.1) In the event TDS exercises its option to effect a covenant defeasance with respect to the Securities of any series as described in the preceding paragraph and the Securities of such series are thereafter declared due and payable because of the occurrence of any Event of Default other than an Event of Default caused by failing to comply with the covenants which are defeased, and the amount of money and securities on deposit with the Trustee would be insufficient to pay amounts due on the Securities of such series at the time of their accelerated maturity, TDS would remain liable for such amounts. If the Trustee or paying agent is unable to apply any money or Government Obligation in accordance with the foregoing provisions by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, TDS's obligations under the Indenture and the Securities shall be revived and reinstated as though no deposit had occurred pursuant to such provisions until such time as the Trustee or paying agent is permitted to apply all such money or Government Obligations in accordance therewith; PROVIDED, HOWEVER, that, if TDS has made any payment of interest on or principal of any Securities because of the reinstatement of its obligations, TDS shall be entitled, at its election, (a) to receive from the Trustee or paying agent, as applicable, that portion of such money or Government Obligations equal to the amount of such payment or (b) to be subrogated to the rights of the Holders of such Securities to receive such payment from the money or Government Obligations held by the Trustee or paying agent. GOVERNING LAW The Indenture and the Notes issued thereunder will be governed by the laws of the State of Illinois. CONCERNING THE TRUSTEE Harris Trust and Savings Bank, the trustee under the Indenture, is one of a number of banks with which TDS and its subsidiaries maintain ordinary banking relationships, including, in certain cases, credit facilities. Harris Trust and Savings Bank also serves as transfer agent for the Common Shares, Series A Common Shares and Preferred Shares of TDS and the Common Shares of USM and APP. Harris Trust and Savings Bank is also trustee with respect to Medium-Term Notes, Series A and B, of TDS. 13 PLAN OF DISTRIBUTION TDS may sell Debt Securities being offered hereby: (i) directly to purchasers, (ii) through agents, (iii) through underwriters and (iv) through dealers. Offers to purchase Debt Securities may be solicited by agents designated by TDS from time to time. Any such agent, who may be deemed to be an underwriter as that term is defined in the Securities Act, involved in the offer or sale of the Debt Securities in respect of which this Prospectus is delivered will be named, and any commissions payable by TDS to such agent will be set forth, in the Prospectus Supplement. Unless otherwise indicated in the Prospectus Supplement, any such agent will be acting on a best efforts basis for the period of its appointment. If underwriters are utilized in the sale, TDS will execute an underwriting agreement with such underwriters at the time of sale to them and the names of the underwriters and the terms of the transaction will be set forth in the Prospectus Supplement, which will be used by the underwriters to make resales of the Debt Securities in respect of which this Prospectus is delivered to the public. Any underwriters will acquire Debt Securities for their own account and may resell such Debt Securities from time to time in one or more transactions, including negotiated transactions, at fixed public offering prices or at varying prices determined at the time of sale. Debt Securities may be offered to the public either through underwriting syndicates represented by managing underwriters, or directly by the managing underwriters. Only underwriters named in the Prospectus Supplement are deemed to be underwriters in connection with the Debt Securities offered thereby. If any underwriters are utilized in the sale of the Debt Securities, the underwriting agreement will provide that the obligations of the underwriters are subject to certain conditions precedent and that the underwriters with respect to a sale of Debt Securities will be obligated to purchase all such Debt Securities, if any are purchased. If a dealer is utilized in the sale of the Debt Securities in respect of which this Prospectus is delivered, TDS will sell such Debt Securities to the dealer, as principal. The dealer may then resell such Debt Securities to the public at varying prices to be determined by such dealer at the time of resale. Agents, underwriters and dealers may be entitled under agreements entered into with TDS to indemnification by TDS against certain civil liabilities, including liabilities under the Securities Act, or to contribution with respect to payments which the agents, underwriters or dealers may be required to make in respect thereof. Agents, underwriters and dealers may be customers of, engage in transactions with, or perform services for TDS in the ordinary course of business. Offers to purchase Debt Securities may be solicited directly by TDS and sales thereof may be made by TDS directly to institutional investors or others. The terms of any such sales will be described in the Prospectus Supplement relating thereto. If so indicated in the Prospectus Supplement, TDS will authorize agents and underwriters to solicit offers by certain institutions to purchase Debt Securities from TDS at the public offering price set forth in the Prospectus Supplement pursuant to Delayed Delivery Contracts ("Contracts") providing for payment and delivery on the date stated in the Prospectus Supplement. Each Contract will be for an amount not less than, and unless TDS otherwise agrees the aggregate principal amount of Debt Securities sold pursuant to Contracts shall be not less nor more than, the respective amounts stated in the Prospectus Supplement. Institutions with whom Contracts, when authorized, may be made include commercial and savings banks, insurance companies, pension funds, investment companies, educational and charitable institutions and other institutions, but shall in all cases be subject to the approval of TDS. Contracts will not be subject to any conditions except that the purchase by an institution of the Debt Securities covered by its Contract shall not at the time of delivery be prohibited under the laws of any jurisdiction in the United States to which such institution is subject. A commission indicated in the Prospectus Supplement will be paid to underwriters and agents soliciting purchases of Debt Securities pursuant to Contracts accepted by TDS. The place and time of delivery for the Debt Securities in respect of which this Prospectus is delivered are set forth in the accompanying Prospectus Supplement. 14 LEGAL MATTERS The validity of the Debt Securities offered hereby will be passed upon for TDS by Sidley & Austin, Chicago, Illinois. Walter C. D. Carlson and Michael G. Hron, a Director and Secretary, respectively, of TDS, are members of that law firm. Mr. Carlson is also a trustee of a voting trust which controls TDS. EXPERTS The audited consolidated financial statements and schedules of TDS incorporated by reference in this Prospectus have been audited by Arthur Andersen & Co., independent public accountants, as indicated in their reports incorporated by reference herein. Reference is made to the above said reports which include explanatory paragraphs with respect to the changes in the methods of accounting for cellular sales commissions, postretirement benefits other than pensions and income taxes and with respect to uncertainties related to certain legal proceedings in which TDS is a defendant. The combined financial statements of the Los Angeles SMSA Limited Partnership, the Nashville/Clarksville MSA Limited Partnership and the Baton Rouge MSA Limited Partnership incorporated by reference in this Prospectus have been reviewed for compilation by Arthur Andersen & Co., as indicated in their report incorporated by reference herein. Reference is made to the above said report which includes explanatory paragraphs with respect to a contingency and a change in accounting method. The reports of other independent accountants, one of which includes an explanatory paragraph relating to a contingency, on the underlying financial statements which have been combined are incorporated by reference herein. The financial statements and schedules referred to above have been incorporated by reference in reliance upon the authority of such firms as experts in accounting and auditing in giving said reports. 15 NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF. THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS DO NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANY PERSON IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. -------------- TABLE OF CONTENTS
PAGE ---- PROSPECTUS SUPPLEMENT Description of Notes.................... S-2 United States Taxation.................. S-9 Plan of Distribution.................... S-12 Legal Matters........................... S-13 PROSPECTUS Available Information................... 2 Documents Incorporated by Reference..... 2 The Company............................. 3 Use of Proceeds......................... 4 Consolidated Ratio of Earnings to Fixed Charges................................ 4 Description of Debt Securities.......... 4 Plan of Distribution.................... 14 Legal Matters........................... 15 Experts................................. 15
$150,000,000 TELEPHONE AND DATA SYSTEMS, INC. MEDIUM-TERM NOTES SERIES C DUE FROM NINE MONTHS TO THIRTY YEARS FROM DATE OF ISSUE [LOGO] SALOMON BROTHERS INC MERRILL LYNCH & CO. PROSPECTUS SUPPLEMENT DATED APRIL 21, 1994 -----END PRIVACY-ENHANCED MESSAGE-----