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0001051512False00010515122023-02-162023-02-160001051512us-gaap:CommonClassBMember2023-02-162023-02-160001051512tds:PreferredStock1Member2023-02-162023-02-160001051512tds:PreferredStock2Member2023-02-162023-02-16

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K

CURRENT REPORT

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

Date of Report (Date of earliest event reported): February 16, 2023
tds-20230216_g1.jpg
TELEPHONE AND DATA SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
Delaware
  
001-14157
  
36-2669023
(State or other jurisdiction of incorporation)   (Commission File Number)   (IRS Employer Identification No.)
30 North LaSalle Street, Suite 4000, Chicago, Illinois 60602
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code: (312) 630-1900
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐
 Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐
 Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐
 Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐
 Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol Name of each exchange on which registered
Common Shares, $.01 par value TDS New York Stock Exchange
Depositary Shares each representing a 1/1000th interest in a share of 6.625% Series UU Cumulative Redeemable Perpetual Preferred Stock, $.01 par value TDSPrU New York Stock Exchange
Depositary Shares each representing a 1/1000th interest in a share of 6.000% Series VV Cumulative Redeemable Perpetual Preferred Stock, $.01 par value TDSPrV New York Stock Exchange

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


Item 2.02. Results of Operations and Financial Condition
On February 16, 2023, Telephone and Data Systems, Inc. (TDS) issued a news release announcing its results of operations for the period ended December 31, 2022.  A copy of the news release is attached hereto as Exhibit 99.1 and incorporated by reference herein. 
The information in this Item 2.02 of Form 8-K is being “furnished” and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section, nor will any such information or exhibits be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except as expressly set forth by specific reference in such filing.
Item 9.01. Financial Statements and Exhibits
(d)   The following exhibits are being filed herewith:
Exhibit Number   Description of Exhibits
99.1  
     
104 Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document.


SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
    TELEPHONE AND DATA SYSTEMS, INC.
       
Date: February 16, 2023 By: /s/ Vicki L. Villacrez
      Vicki L. Villacrez
      Executive Vice President and Chief Financial Officer

EX-99.1 2 tdsq420228-kex991.htm EX-99.1 Document

Exhibit 99.1 NEWS RELEASE
image1a30.jpg
As previously announced, TDS will hold a teleconference on February 17, 2023 at 9:00 a.m. CST. Listen to the call live via the Events & Presentations page of investors.tdsinc.com.
FOR IMMEDIATE RELEASE
TDS reports fourth quarter and full year 2022 results
Investing in our networks; Provides 2023 guidance

CHICAGO (February 16, 2023) — Telephone and Data Systems, Inc. (NYSE:TDS) reported total operating revenues of $1,357 million for the fourth quarter of 2022, versus $1,372 million for the same period one year ago. Net income (loss) attributable to TDS common shareholders and related diluted earnings (loss) per share were $(43) million and $(0.38), respectively, for the fourth quarter of 2022 compared to $14 million and $0.11, respectively, in the same period one year ago.
TDS reported total operating revenues of $5,413 million and $5,329 million for the years ended 2022 and 2021, respectively. Net income (loss) attributable to TDS common shareholders and related diluted earnings (loss) per share were $(7) million and $(0.07), respectively, for the year ended 2022 compared to $117 million and $1.00, respectively, for the year ended 2021.
“The TDS Family of Companies made significant investments in its businesses in 2022, as we looked to strengthen our customer base, expand into new territories, and enhance our network technologies,” said LeRoy T. Carlson, Jr., TDS President and CEO. “Many of these investments have had a short-term impact on profitability yet are intended to strengthen our competitiveness and improve returns.
“In 2022, UScellular focused on expanding ARPU, improving customer results, and a number of related growth opportunities. We saw success in many areas yet were challenged in customer additions. Looking forward, as UScellular celebrates its 40th anniversary in 2023, it will continue to focus on customer growth, cost optimization, and investing in its network.
“TDS Telecom grew its footprint by 9% and delivered 133,000 new marketable fiber service addresses in 2022—its best year yet in terms of fiber service addresses—bringing our total to 582,000. Going forward, TDS Telecom will continue working toward its long-term fiber investment goal of reaching 1.2 million fiber service addresses by 2026.”
1

2023 Estimated Results

TDS’ current estimates of full-year 2023 results for UScellular and TDS Telecom are shown below. Such estimates represent management’s view as of February 16, 2023 and should not be assumed to be current as of any future date. TDS undertakes no duty to update such estimates, whether as a result of new information, future events, or otherwise. There can be no assurance that final results will not differ materially from estimated results.

UScellular 2023 Estimated Results ` Actual Results for
the Year Ended
December 31, 2022
(Dollars in millions)    
Service revenues $3,050-$3,150 $3,125
Adjusted OIBDA1
 $725-$875 $790
Adjusted EBITDA1
 $875-$1,025 $956
Capital expenditures $600-$700 $717
TDS Telecom 2023 Estimated Results Actual Results for
the Year Ended
December 31, 2022
(Dollars in millions)
Total operating revenues $1,030-$1,060 $1,020
Adjusted OIBDA1
 $260-$290 $288
Adjusted EBITDA1
 $260-$290 $291
Capital expenditures $500-$550 $556
2

The following tables reconcile EBITDA, Adjusted EBITDA, and Adjusted OIBDA to the corresponding GAAP measures, Net income or Income before income taxes. In providing 2023 estimated results, TDS has not completed the below reconciliation to Net income because it does not provide guidance for income taxes. Although potentially significant, TDS believes that the impact of income taxes cannot be reasonably predicted; therefore, TDS is unable to provide such guidance.
UScellular TDS Telecom
2023 Estimated Results Actual Results for
the Year Ended
December 31, 2022		 2023 Estimated Results Actual Results for
the Year Ended
December 31, 2022
(Dollars in millions)    
Net income (GAAP) N/A $35  N/A $53 
Add back:    
Income tax expense N/A 37 
N/A
 23 
Income before income taxes (GAAP) $10-$160 $72  $40-$70 $76 
Add back:
Interest expense 205 163  — (7)
Depreciation, amortization and accretion expense 645 700  220 215 
EBITDA (Non-GAAP)1
 $860-$1,010 $935  $260-$290 $284 
Add back or deduct:
Loss on impairment of licenses — 3  — — 
(Gain) loss on asset disposals, net 15 19  — 7 
(Gain) loss on sale of business and other exit costs, net — (1) — — 
Adjusted EBITDA (Non-GAAP)1
 $875-$1,025 $956  $260-$290 $291 
Deduct:
Equity in earnings of unconsolidated entities 145 158  — — 
Interest and dividend income 5 8  — 2 
Other, net — —  — 1 
Adjusted OIBDA (Non-GAAP)1
 $725-$875 $790  $260-$290 $288 
Numbers may not foot due to rounding.
1EBITDA, Adjusted EBITDA, and Adjusted OIBDA are defined as net income adjusted for the items set forth in the reconciliation above. EBITDA, Adjusted EBITDA, and Adjusted OIBDA are not measures of financial performance under Generally Accepted Accounting Principles in the United States (GAAP) and should not be considered as alternatives to Net income or Cash flows from operating activities, as indicators of cash flows or as measures of liquidity. TDS does not intend to imply that any such items set forth in the reconciliation above are non-recurring, infrequent or unusual; such items may occur in the future. Management uses Adjusted EBITDA and Adjusted OIBDA as measurements of profitability, and therefore reconciliations to Net income are deemed appropriate. Management believes Adjusted EBITDA and Adjusted OIBDA are useful measures of TDS’ operating results before significant recurring non-cash charges, gains and losses, and other items as presented above as they provide additional relevant and useful information to investors and other users of TDS’ financial data in evaluating the effectiveness of its operations and underlying business trends in a manner that is consistent with management’s evaluation of business performance. Adjusted EBITDA shows adjusted earnings before interest, taxes, depreciation, amortization and accretion, and gains and losses, while Adjusted OIBDA reduces this measure further to exclude Equity in earnings of unconsolidated entities and Interest and dividend income in order to more effectively show the performance of operating activities excluding investment activities. The table above reconciles EBITDA, Adjusted EBITDA, and Adjusted OIBDA to the corresponding GAAP measure, Net income or Income before income taxes. Additional information and reconciliations related to Non-GAAP financial measures for December 31, 2022, can be found on TDS' website at investors.tdsinc.com.
3

Stock Repurchase
During the fourth quarter of 2022, TDS repurchased 1,159,046 of its Common Shares for $14 million and UScellular repurchased 578,607 of its Common Shares for $14 million.
Conference Call Information
TDS will hold a conference call on February 17, 2023 at 9:00 a.m. Central Time.
•Access the live call on the Events & Presentations page of investors.tdsinc.com or at
https://events.q4inc.com/attendee/661339725
•Access the call by phone at (888) 330-2384 (US/Canada), passcode: 1328528
Before the call, certain financial and statistical information to be discussed during the call will be posted to investors.tdsinc.com. The call will be archived on the Events & Presentations page of investors.tdsinc.com.
About TDS
Telephone and Data Systems, Inc. (TDS), a Fortune 1000® company, provides wireless; broadband, video and voice; and hosted and managed services to approximately 6 million connections nationwide through its businesses, UScellular, TDS Telecom and OneNeck IT Solutions. Founded in 1969 and headquartered in Chicago, TDS employed 9,300 people as of December 31, 2022.
Visit investors.tdsinc.com for comprehensive financial information, including earnings releases, quarterly and annual filings, shareholder information and more.
Contacts
Colleen Thompson, Vice President - Corporate Relations
colleen.thompson@tdsinc.com
Julie Mathews, IRC, Director - Investor Relations
julie.mathews@tdsinc.com
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995: All information set forth in this news release, except historical and factual information, represents forward-looking statements. This includes all statements about the company’s plans, beliefs, estimates, and expectations. These statements are based on current estimates, projections, and assumptions, which involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Important factors that may affect these forward-looking statements include, but are not limited to: intense competition; the ability to obtain or maintain roaming arrangements with other carriers on acceptable terms and changes in roaming practices; the ability to obtain access to adequate radio spectrum to meet current or anticipated future needs, including participation in FCC auctions; the ability to attract people of outstanding talent throughout all levels of the organization; TDS' smaller scale relative to larger competitors; changes in demand, consumer preferences and perceptions, price competition, or churn rates; advances in technology; impacts of costs, integration problems or other factors associated with acquisitions, divestitures or exchanges of properties or wireless spectrum licenses and/or expansion of TDS’ businesses; the ability of the company to successfully construct and manage its networks; difficulties involving third parties with which TDS does business; uncertainties in TDS’ future cash flows and liquidity and access to the capital markets; the ability to make payments on TDS and UScellular indebtedness or comply with the terms of debt covenants; conditions in the U.S. telecommunications industry; the value of assets and investments; the state and federal regulatory environment; pending and future litigation; cyber-attacks or other breaches of network or information technology security; disruption in credit or other financial markets; deterioration of U.S. or global economic conditions; the impact, duration and severity of public health emergencies. Investors are encouraged to consider these and other risks and uncertainties that are more fully described under “Risk Factors” in the most recent filing of TDS’ Form 10-K.
For more information about TDS and its subsidiaries, visit:
TDS: www.tdsinc.com
UScellular: www.uscellular.com
TDS Telecom: www.tdstelecom.com
OneNeck IT Solutions: www.oneneck.com
4

United States Cellular Corporation
Summary Operating Data (Unaudited)
As of or for the Quarter Ended 12/31/2022 9/30/2022 6/30/2022 3/31/2022 12/31/2021
Retail Connections          
Postpaid          
Total at end of period 4,247,000  4,264,000  4,296,000  4,335,000  4,380,000 
Gross additions 154,000  151,000  128,000  126,000  165,000 
Feature phones 6,000  5,000  4,000  2,000  3,000 
Smartphones 99,000  102,000  90,000  89,000  122,000 
Connected devices 49,000  44,000  34,000  35,000  40,000 
Net additions (losses) (17,000) (31,000) (40,000) (44,000) (12,000)
Feature phones (6,000) (6,000) (8,000) (10,000) (7,000)
Smartphones (14,000) (16,000) (23,000) (26,000) 5,000 
Connected devices 3,000  (9,000) (9,000) (8,000) (10,000)
ARPU1
 $ 50.60  $ 50.21  $ 50.07  $ 49.71  $ 48.62 
ARPA2
 $ 130.97  $ 130.27  $ 130.43  $ 129.93  $ 127.14 
Churn rate3
 1.35  % 1.42  % 1.30  % 1.30  % 1.35  %
Handsets 1.12  % 1.15  % 1.10  % 1.10  % 1.10  %
Connected devices 2.99  % 3.40  % 2.73  % 2.70  % 3.08  %
Prepaid
Total at end of period 493,000  493,000  490,000  495,000  513,000 
Gross additions 61,000  62,000  56,000  55,000  63,000 
Net additions (losses) —  2,000  (4,000) (18,000) (5,000)
ARPU1
 $ 33.34  $ 35.04  $ 35.25  $ 34.59  $ 34.53 
Churn rate3
 4.11  % 4.07  % 4.07  % 4.84  % 4.39  %
Market penetration at end of period
Consolidated operating population 32,370,000  32,370,000  32,370,000  32,370,000  32,127,000 
Consolidated operating penetration4
 15  % 15  % 15  % 15  % 15  %
Capital expenditures (millions) $ 176  $ 136  $ 268  $ 137  $ 321 
Total cell sites in service 6,945  6,933  6,916  6,899  6,898 
Owned towers 4,336  4,329  4,323  4,310  4,301 
Due to rounding, the sum of quarterly results may not equal the total for the year.
1Average Revenue Per User (ARPU) - metric is calculated by dividing a revenue base by an average number of connections and by the number of months in the period. These revenue bases and connection populations are shown below:
•Postpaid ARPU consists of total postpaid service revenues and postpaid connections.
•Prepaid ARPU consists of total prepaid service revenues and prepaid connections.
2Average Revenue Per Account (ARPA) - metric is calculated by dividing total postpaid service revenues by the average number of postpaid accounts and by the number of months in the period.
3Churn rate represents the percentage of the connections that disconnect service each month. These rates represent the average monthly churn rate for each respective period.
4Market penetration is calculated by dividing the number of wireless connections at the end of the period by the total estimated population of consolidated operating markets.
5

TDS Telecom
Summary Operating Data (Unaudited)
As of or for the Quarter Ended 12/31/2022 9/30/2022 6/30/2022 3/31/2022 12/31/2021
Residential connections          
Broadband
Wireline, Incumbent 249,100  252,600  252,700  250,100  250,200 
Wireline, Expansion 56,100  49,400  44,100  40,600  36,900 
Cable 204,800  204,500  204,000  204,600  203,200 
Total Broadband 510,000  506,500  500,800  495,200  490,300 
Video 135,300  136,600  137,400  140,000  141,500 
Voice 291,600  295,500  298,300  301,700  303,700 
Total Residential connections 936,900  938,600  936,500  936,900  935,600 
Commercial connections 236,000  242,800  250,700  260,000  264,300 
Total connections 1,173,000  1,181,400  1,187,200  1,196,900  1,199,900 
Residential revenue per connection1
 $ 59.91  $ 60.32  $ 59.67  $ 57.95  $ 57.86 
Capital expenditures (millions) $ 165  $ 166  $ 120  $ 105  $ 151 
Numbers may not foot due to rounding.
1Total residential revenue per connection is calculated by dividing total residential revenue by the average number of residential connections and by the number of months in the period.
6

Telephone and Data Systems, Inc.
Consolidated Statement of Operations Highlights
(Unaudited)
  Three Months Ended
December 31,		 Year Ended
December 31,
  2022 2021 2022
vs. 2021		 2022 2021 2022
vs. 2021
(Dollars and shares in millions, except per share amounts)            
Operating revenues            
UScellular $ 1,048  $ 1,068  (2) % $ 4,169  $ 4,122  1  %
TDS Telecom 257  254  1  % 1,020  1,006  1  %
All Other1
 52  50  4  % 224  201  11  %
  1,357  1,372  (1) % 5,413  5,329  2  %
Operating expenses          
UScellular            
Expenses excluding depreciation, amortization and accretion 885  887  — 3,379  3,253  4  %
Depreciation, amortization and accretion 179  169  7  % 700  678  3  %
Loss on impairment of licenses —  —  — 3  —  N/M
(Gain) loss on asset disposals, net 11  8  28  % 19  23  (18) %
(Gain) loss on sale of business and other exit costs, net —  (1) 78  % (1) (2) 52  %
  1,075  1,063  1  % 4,100  3,952  4  %
TDS Telecom            
Expenses excluding depreciation, amortization and accretion 192  179  8  % 732  696  5  %
Depreciation, amortization and accretion 56  52  8  % 215  198  8  %
(Gain) loss on asset disposals, net 3  1  N/M 7  2  N/M
  252  231  9  % 954  896  6  %
All Other1
            
Expenses excluding depreciation and amortization 52  49  7  % 222  200  11  %
Depreciation and amortization 3  5  (25) % 14  19  (22) %
(Gain) loss on asset disposals, net —  —  N/M 1  1  N/M
  56  54  4  % 237  220  8  %
Total operating expenses 1,383  1,348  3  % 5,291  5,068  4  %
Operating income (loss)            
UScellular (27) 5  N/M 69  170  (59) %
TDS Telecom 5  23  (78) % 66  110  (40) %
All Other1
 (4) (4) (7) % (13) (19) 27  %
  (26) 24  N/M 122  261  (53) %
Investment and other income (expense)
Equity in earnings of unconsolidated entities 36  43  (16) % 159  182  (12) %
Interest and dividend income 7  3  N/M 17  11  45  %
Interest expense (55) (39) (41) % (174) (232) 25  %
Other, net —  —  N/M 1  (1) N/M
Total investment and other income (expense) (12) 7  N/M 3  (40) N/M
Income (loss) before income taxes (38) 31  N/M 125  221  (44) %
Income tax expense (benefit) (8) (5) (54) % 53  33  59  %
Net income (loss) (30) 36  N/M 72  188  (62) %
Less: Net income (loss) attributable to noncontrolling interests, net of tax (4) 5  N/M 10  32  (69) %
Net income (loss) attributable to TDS shareholders (26) 31  N/M 62  156  (61) %
TDS Preferred Share dividends 17  17  — 69  39  79  %
Net income (loss) attributable to TDS common shareholders $ (43) $ 14  N/M $ (7) $ 117  N/M
Basic weighted average shares outstanding 113  115  (1) % 114  115  (1) %
Basic earnings (loss) per share attributable to TDS common shareholders $ (0.38) $ 0.12  N/M $ (0.07) $ 1.03  N/M
Diluted weighted average shares outstanding 113  116  (2) % 114  116  (1) %
Diluted earnings (loss) per share attributable to TDS common shareholders $ (0.38) $ 0.11  N/M $ (0.07) $ 1.00  N/M
N/M - Percentage change not meaningful.
Numbers may not foot due to rounding.
1    Consists of TDS corporate, intercompany eliminations and all other business operations not included in the UScellular and TDS Telecom segments.
7

Telephone and Data Systems, Inc.
Consolidated Statement of Cash Flows
(Unaudited)
Year Ended December 31, 2022 2021
(Dollars in millions)    
Cash flows from operating activities
Net income $ 72  $ 188 
Add (deduct) adjustments to reconcile net income to net cash flows from operating activities
Depreciation, amortization and accretion 929  895 
Bad debts expense 138  60 
Stock-based compensation expense 42  49 
Deferred income taxes, net 47  52 
Equity in earnings of unconsolidated entities (159) (182)
Distributions from unconsolidated entities 145  180 
Loss on impairment of licenses 3  — 
(Gain) loss on asset disposals, net 27  26 
(Gain) loss on sale of business and other exit costs, net (1) (2)
Other operating activities 10  61 
Changes in assets and liabilities from operations
Accounts receivable (69) (22)
Equipment installment plans receivable (199) (116)
Inventory (90) (25)
Accounts payable 32  (69)
Customer deposits and deferred revenues 48  43 
Accrued taxes 127  (49)
Other assets and liabilities 53  14 
Net cash provided by operating activities 1,155  1,103 
     
Cash flows from investing activities
Cash paid for additions to property, plant and equipment (1,161) (1,131)
Cash paid for licenses and other intangible assets (614) (1,308)
Cash received from divestitures and exchanges 8  3 
Advance payments for license acquisitions —  (20)
Other investing activities (16) (6)
Net cash used in investing activities (1,783) (2,462)
     
Cash flows from financing activities
Issuance of long-term debt 1,154  1,543 
Repayment of long-term debt (332) (2,081)
Issuance of short-term debt 110  — 
Repayment of short-term debt (50) — 
Issuance of TDS Preferred Shares —  1,110 
TDS Common Shares reissued for benefit plans, net of tax payments (4) (5)
UScellular Common Shares reissued for benefit plans, net of tax payments (5) (16)
Repurchase of TDS Common Shares (40) (8)
Repurchase of UScellular Common Shares (43) (31)
Dividends paid to TDS shareholders (151) (119)
Payment of debt and equity issuance costs (2) (62)
Distributions to noncontrolling interests (3) (3)
Cash paid for software license agreements (23) (9)
Other financing activities 2  2 
Net cash provided by financing activities 613  321 
Net increase (decrease) in cash, cash equivalents and restricted cash (15) (1,038)
Cash, cash equivalents and restricted cash
Beginning of period 414  1,452 
End of period $ 399  $ 414 
8

Telephone and Data Systems, Inc.
Consolidated Balance Sheet Highlights
(Unaudited)

ASSETS
December 31, 2022 2021
(Dollars in millions)    
Current assets    
Cash and cash equivalents $ 360  $ 367 
Accounts receivable, net 1,181  1,151 
Inventory, net 268  178 
Prepaid expenses 102  103 
Income taxes receivable 59  184 
Other current assets 58  61 
Total current assets 2,028  2,044 
Assets held for sale 26  18 
Licenses 4,699  4,097 
Goodwill 547  547 
Other intangible assets, net 204  197 
Investments in unconsolidated entities 495  479 
Property, plant and equipment, net
 4,760  4,361 
Operating lease right-of-use assets 995  1,040 
Other assets and deferred charges 796  710 
Total assets $ 14,550  $ 13,493 
9

Telephone and Data Systems, Inc.
Consolidated Balance Sheet Highlights
(Unaudited)

LIABILITIES AND EQUITY
December 31, 2022 2021
(Dollars in millions, except per share amounts)    
Current liabilities    
Current portion of long-term debt $ 19  $ 6 
Accounts payable 506  481 
Customer deposits and deferred revenues 285  236 
Accrued interest 12  10 
Accrued taxes 46  45 
Accrued compensation 144  137 
Short-term operating lease liabilities 146  141 
Other current liabilities 356  124 
Total current liabilities 1,514  1,180 
Deferred liabilities and credits    
Deferred income tax liability, net 969  921 
Long-term operating lease liabilities 908  960 
Other deferred liabilities and credits 813  759 
Long-term debt, net 3,731  2,928 
Noncontrolling interests with redemption features 12  11 
Equity    
TDS shareholders' equity    
Series A Common and Common Shares, par value $0.01 per share 1  1 
Capital in excess of par value 2,551  2,496 
Preferred Shares, par value $0.01 per share 1,074  1,074 
Treasury shares, at cost (481) (461)
Accumulated other comprehensive income 5  5 
Retained earnings 2,699  2,812 
Total TDS shareholders' equity 5,849  5,927 
Noncontrolling interests 754  807 
Total equity 6,603  6,734 
Total liabilities and equity $ 14,550  $ 13,493 
10

Balance Sheet Highlights
(Unaudited)
  December 31, 2022
  UScellular
TDS
Telecom
TDS Corporate
& Other
Intercompany
Eliminations
TDS
Consolidated
(Dollars in millions)          
Cash and cash equivalents $ 273  $ 104  $ 95  $ (112) $ 360 
Licenses, goodwill and other intangible assets $ 4,690  $ 755  $ 5  $ —  $ 5,450 
Investment in unconsolidated entities 452  4  46  (7) 495 
  $ 5,142  $ 759  $ 51  $ (7) $ 5,945 
Property, plant and equipment, net $ 2,624  $ 2,047  $ 89  $ —  $ 4,760 
Long-term debt, net:
Current portion $ 13  $ —  $ 6  $ —  $ 19 
Non-current portion 3,187  3  541  —  3,731 
  $ 3,200  $ 3  $ 547  $ —  $ 3,750 
11

TDS Telecom Highlights
(Unaudited)
  Three Months Ended
December 31,		 Year Ended
December 31,
  2022 2021 2022 vs. 2021 2022 2021 2022 vs. 2021
(Dollars in millions)            
Operating revenues            
Residential
Wireline, Incumbent $ 87  $ 86  1  % $ 350  $ 345  1  %
Wireline, Expansion 14  10  42  % 49  34  46  %
Cable 67  66  1  % 270  263  3  %
Total residential 168  162  4  % 669  641  4  %
Commercial 43  45  (5) % 173  183  (5) %
Wholesale 45  46  (2) % 177  181  (2) %
Total service revenues 256  254  1  % 1,019  1,005  1  %
Equipment revenues —  —  5  % 1  1  (5) %
Total operating revenues 257  254  1  % 1,020  1,006  1  %
           
Cost of services 110  103  6  % 418  404  3  %
Cost of equipment and products —  —  (58) % 1  1  (2) %
Selling, general and administrative expenses 83  75  10  % 313  291  8  %
Depreciation, amortization and accretion 56  52  8  % 215  198  8  %
(Gain) loss on asset disposals, net 3  1  N/M 7  2  N/M
Total operating expenses 252  231  9  % 954  896  6  %
Operating income $ 5  $ 23  (78) % $ 66  $ 110  (40) %
N/M - Percentage change not meaningful.
Numbers may not foot due to rounding.
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Telephone and Data Systems, Inc.
Financial Measures and Reconciliations

Free Cash Flow
  Three Months Ended
December 31,		 Year Ended
December 31,
  2022 2021 2022 2021
(Dollars in millions)        
Cash flows from operating activities (GAAP) $ 255  $ 239  $ 1,155  $ 1,103 
Cash paid for additions to property, plant and equipment (367) (404) (1,161) (1,131)
Cash paid for software license agreements (18) (5) (23) (9)
Free cash flow (Non-GAAP)1
 $ (130) $ (170) $ (29) $ (37)
1Free cash flow is a non-GAAP financial measure which TDS believes may be useful to investors and other users of its financial information in evaluating liquidity, specifically, the amount of net cash generated by business operations after deducting Cash paid for additions to property, plant and equipment and Cash paid for software license agreements.
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