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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 4, 2023
image1a27.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 August 4, 2023, Telephone and Data Systems, Inc. (TDS) issued a news release announcing its results of operations for the period ended June 30, 2023. 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 8.01. Other Events
On August 4, 2023, TDS and United States Cellular Corporation (UScellular), a subsidiary of TDS, announced that the Boards of Directors of both companies have decided to initiate a process to explore a range of strategic alternatives for UScellular. The initiation of this process does not impact the June 30, 2023 financial statements. At this time, TDS cannot predict the ultimate outcome of such process or estimate the potential impact of such process on the financial statements. It is possible that no strategic alternative will ultimately be consummated.
A copy of the news release related to this announcement is attached hereto as Exhibit 99.2 and incorporated by reference herein.
Item 9.01. Financial Statements and Exhibits
(d)   The following exhibits are being filed herewith:
Exhibit Number   Description of Exhibits
99.1  
99.2
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: August 4, 2023 By: /s/ Vicki L. Villacrez
      Vicki L. Villacrez
      Executive Vice President and Chief Financial Officer
     
       
       

EX-99.1 2 tdsq220238kex991.htm EX-99.1 Document

Exhibit 99.1   NEWS RELEASE

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As previously announced, TDS will hold a teleconference on August 4, 2023, at 9:00 a.m. CDT. Listen to the call live via the Events & Presentations page of investors.tdsinc.com.

TDS reports second quarter 2023 results

CHICAGO (August 4, 2023) — Telephone and Data Systems, Inc. (NYSE:TDS) reported total operating revenues of $1,267 million for the second quarter of 2023, versus $1,349 million for the same period one year ago. Net income (loss) attributable to TDS common shareholders and related diluted earnings (loss) per share were $(19) million and $(0.17), respectively, for the second quarter of 2023 compared to $18 million and $0.15, respectively, in the same period one year ago.
2Q 2023 Highlights*

UScellular
•Focused on improving subscriber trajectory to reduce postpaid losses - made progress in reducing postpaid churn
•Executing on growth initiatives
◦Fixed Wireless customers grew 66% to 96,000
◦Tower rental revenues grew 10%
•Reduced debt balance by $150 million in 2Q'23
•Launching 5G Mid-Band network - providing low latency and faster speeds
◦Ended June with availability in parts of Illinois, Iowa, Wisconsin, Maine, Missouri, Nebraska, Oklahoma, Oregon, Virginia and Washington
TDS Telecom
•Delivered 66,000 fiber service addresses through June; remain on track to deliver 175,000 fiber addresses by end of 2023
•Broadband investments driving positive results
◦Residential broadband connections grew 5%
◦Residential broadband revenues grew 8%
◦Residential revenue per connection grew 4%
•Increased full-year Adjusted EBITDA and Adjusted OIBDA guidance due to disciplined spending
•Modestly reduced full-year capital expenditures guidance

* Comparisons are 2Q’22 to 2Q’23 unless otherwise noted

“The TDS Family of Companies continues to execute on its multi-year strategies, while focusing intensely on cost containment,” said LeRoy T. Carlson, Jr., TDS President and CEO. “UScellular has begun deploying mid-band 5G spectrum, and TDS Telecom is making solid progress on its fiber program.

“At UScellular, postpaid handset subscriber trends improved slightly year-over-year driven by improvements in churn, however, subscriber results remained challenged overall as gross additions declined. Two of UScellular’s growth areas, fixed wireless and the tower portfolio, produced year-over-year double-digit increases in gross additions and revenues, respectively. In July, UScellular surpassed 100,000 fixed wireless customers – a key milestone as momentum for the product continues.

“TDS Telecom grew its residential revenue per connection and increased total residential broadband connections for the quarter. TDS Telecom continues to execute its broadband growth strategy through its multi-year fiber expansion program.”

Recent Development: On August 4, 2023, TDS and UScellular announced a process to explore a range of strategic alternatives for UScellular.
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 August 4, 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.

The 2023 Estimated Results shown below do not reflect any anticipated costs, expenses or results of the strategic review referenced above.

2023 Estimated Results
UScellular Previous Current
(Dollars in millions)    
Service revenues $3,050-$3,150 $3,025-$3,075
Adjusted OIBDA1
 $725-$875 $750-$850
Adjusted EBITDA1
 $875-$1,025 $925-$1,025
Capital expenditures $600-$700 Unchanged
TDS Telecom Previous Current
(Dollars in millions)    
Total operating revenues $1,030-$1,060 Unchanged
Adjusted OIBDA1
 $260-$290 $270-$300
Adjusted EBITDA1
 $260-$290 $270-$300
Capital expenditures $500-$550 $475-$525

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.
  2023 Estimated Results
UScellular TDS Telecom
(Dollars in millions)    
Net income (GAAP) N/A N/A
Add back:    
Income tax expense N/A N/A
Income before income taxes (GAAP) $50-$150 $40-$70
Add back:    
Interest expense 200  — 
Depreciation, amortization and accretion expense 655  230 
EBITDA (Non-GAAP)1
 $905-$1,005 $270-$300
Add back or deduct:    
(Gain) loss on asset disposals, net 20  — 
Adjusted EBITDA (Non-GAAP)1
 $925-$1,025 $270-$300
Deduct:    
Equity in earnings of unconsolidated entities 160  — 
Interest and dividend income 15  — 
Adjusted OIBDA (Non-GAAP)1
 $750-$850 $270-$300
2

  Actual Results
  Six Months Ended
June 30, 2023		 Year Ended
December 31, 2022
  UScellular TDS
Telecom		 UScellular
TDS
Telecom
(Dollars in millions)        
Net income (GAAP) $ 20  $ 15  $ 35  $ 53 
Add back:        
Income tax expense 29  5  37  23 
Income before income taxes (GAAP) $ 49  $ 21  $ 72  $ 76 
Add back:        
Interest expense 99  (4) 163  (7)
Depreciation, amortization and accretion expense 330  119  700  215 
EBITDA (Non-GAAP)1
 $ 478  $ 136  $ 935  $ 284 
Add back or deduct:        
Loss on impairment of licenses —  —  3  — 
(Gain) loss on asset disposals, net 13  3  19  7 
(Gain) loss on sale of business and other exit costs, net —  —  (1) — 
Adjusted EBITDA (Non-GAAP)1
 $ 491  $ 139  $ 956  $ 291 
Deduct:        
Equity in earnings of unconsolidated entities 82  —  158  — 
Interest and dividend income 5  2  8  2 
Other, net —  1  —  1 
Adjusted OIBDA (Non-GAAP)1
 $ 404  $ 136  $ 790  $ 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 June 30, 2023, can be found on TDS' website at investors.tdsinc.com.
3

Stock Repurchase
During the second quarter of 2023, TDS repurchased 255,090 of its Common Shares for $3 million.
Conference Call Information
TDS will hold a conference call on August 4, 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/745533112
▪Access the call by phone at (888)330-2384, conference ID: 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 approximately 9,100 associates as of June 30, 2023.
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: whether any strategic alternatives for UScellular will be successfully identified or completed; whether any such strategic alternative will result in additional value for TDS or its shareholders and whether the process will have an adverse impact on TDS’ businesses; 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; control by the TDS Voting Trust; disruption in credit or other financial markets; deterioration of U.S. or global economic conditions; and 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, as updated by any TDS Form 10-Q filed subsequent to such 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 6/30/2023 3/31/2023 12/31/2022 9/30/2022 6/30/2022
Retail Connections          
Postpaid          
Total at end of period 4,194,000  4,223,000  4,247,000  4,264,000  4,296,000 
Gross additions 125,000  137,000  154,000  151,000  128,000 
Handsets 83,000  93,000  105,000  107,000  94,000 
Connected devices 42,000  44,000  49,000  44,000  34,000 
Net additions (losses) (28,000) (24,000) (17,000) (31,000) (40,000)
Handsets (29,000) (25,000) (20,000) (22,000) (31,000)
Connected devices 1,000  1,000  3,000  (9,000) (9,000)
ARPU1
 $ 50.64  $ 50.66  $ 50.60  $ 50.21  $ 50.07 
ARPA2
 $ 130.19  $ 130.77  $ 130.97  $ 130.27  $ 130.43 
Handset upgrade rate3
 4.8  % 4.9  % 7.0  % 8.1  % 6.0  %
Churn rate4
 1.21  % 1.27  % 1.35  % 1.42  % 1.30  %
Handsets 1.01  % 1.06  % 1.12  % 1.15  % 1.10  %
Connected devices 2.65  % 2.78  % 2.99  % 3.40  % 2.73  %
Prepaid
Total at end of period 462,000  470,000  493,000  493,000  490,000 
Gross additions 50,000  43,000  61,000  62,000  56,000 
Net additions (losses) (8,000) (23,000) —  2,000  (4,000)
ARPU1
 $ 33.86  $ 33.19  $ 33.34  $ 35.04  $ 35.25 
Churn rate4
 4.18  % 4.63  % 4.11  % 4.07  % 4.07  %
Market penetration at end of period
Consolidated operating population 32,350,000  32,350,000  32,370,000  32,370,000  32,370,000 
Consolidated operating penetration5
 15  % 15  % 15  % 15  % 15  %
Capital expenditures (millions) $ 143  $ 208  $ 176  $ 136  $ 268 
Total cell sites in service 6,952  6,950  6,945  6,933  6,916 
Owned towers 4,341  4,338  4,336  4,329  4,323 

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.
3Handset upgrade rate calculated as total handset upgrade transactions divided by average postpaid handset connections.
4Churn rate represents the percentage of the connections that disconnect service each month. These rates represent the average monthly churn rate for each respective period.
5Market 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 6/30/2023 3/31/2023 12/31/2022 9/30/2022 6/30/2022
Residential connections          
Broadband
Wireline, Incumbent 249,200  247,900  249,100  252,600  252,700 
Wireline, Expansion 70,200  62,800  56,100  49,400  44,100 
Cable 204,200  204,700  204,800  204,500  204,000 
Total Broadband 523,600  515,400  510,000  506,500  500,800 
Video 132,300  132,600  135,300  136,600  137,400 
Voice 288,200  289,200  291,600  295,500  298,300 
Total Residential connections 944,100  937,200  936,900  938,600  936,500 
Commercial connections 223,300  229,800  236,000  242,800  250,700 
Total connections 1,167,400  1,167,000  1,173,000  1,181,400  1,187,200 
Residential revenue per connection1
 $ 61.97  $ 60.24  $ 59.91  $ 60.32  $ 59.67 
Capital expenditures (millions) $ 132  $ 130  $ 165  $ 166  $ 120 
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
June 30,		 Six Months Ended
June 30,
  2023 2022 2023
vs. 2022		 2023 2022 2023
vs. 2022
(Dollars and shares in millions, except per share amounts)            
Operating revenues            
UScellular $ 957  $ 1,027  (7) % $ 1,942  $ 2,037  (5) %
TDS Telecom 257  256  1  % 510  507  1  %
All Other1
 53  66  (19) % 118  120  (2) %
  1,267  1,349  (6) % 2,570  2,664  (4) %
Operating expenses            
UScellular            
Expenses excluding depreciation, amortization and accretion 759  806  (6) % 1,538  1,573  (2) %
Depreciation, amortization and accretion 161  172  (7) % 330  342  (4) %
Loss on impairment of licenses —  3  N/M —  3  N/M
(Gain) loss on asset disposals, net 3  6  (44) % 13  8  73  %
  923  987  (7) % 1,881  1,926  (2) %
TDS Telecom            
Expenses excluding depreciation, amortization and accretion 189  180  5  % 374  349  7  %
Depreciation, amortization and accretion 60  52  15  % 119  106  12  %
(Gain) loss on asset disposals, net 2  1  N/M 3  1  N/M
  251  233  8  % 496  456  9  %
All Other1
            
Expenses excluding depreciation and amortization 56  61  (7) % 124  116  6  %
Depreciation and amortization 4  5  3  % 7  8  (2) %
  60  66  (7) % 131  124  6  %
Total operating expenses 1,234  1,286  (4) % 2,508  2,506  —
Operating income (loss)            
UScellular 34  40  (13) % 61  111  (45) %
TDS Telecom 7  23  (71) % 15  51  (72) %
All Other1
 (8) —  N/M (14) (4) N/M
  33  63  (47) % 62  158  (61) %
Investment and other income (expense)
Equity in earnings of unconsolidated entities 38  38  1  % 82  83  (1) %
Interest and dividend income 6  5  10  % 11  7  61  %
Interest expense (62) (40) (54) % (116) (72) (59) %
Other, net —  —  (34) % 1  —  26  %
Total investment and other income (expense) (18) 3  N/M (22) 18  N/M
Income before income taxes 15  66  (77) % 40  176  (77) %
Income tax expense 15  27  (43) % 28  65  (56) %
Net income —  39  (100) % 12  111  (90) %
Less: Net income attributable to noncontrolling interests, net of tax 2  4  (63) % 6  15  (67) %
Net income (loss) attributable to TDS shareholders (2) 35  N/M 6  96  (93) %
TDS Preferred Share dividends 17  17  — 35  35  —
Net income (loss) attributable to TDS common shareholders $ (19) $ 18  N/M $ (29) $ 61  N/M
Basic weighted average shares outstanding 113  115  (2) % 113  115  (2) %
Basic earnings (loss) per share attributable to TDS common shareholders $ (0.17) $ 0.15  N/M $ (0.25) $ 0.53  N/M
Diluted weighted average shares outstanding 113  116  (3) % 113  116  (3) %
Diluted earnings (loss) per share attributable to TDS common shareholders $ (0.17) $ 0.15  N/M $ (0.25) $ 0.52  N/M
N/M - Percentage change not meaningful.
Numbers may not foot due to rounding.
1Consists 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)
Six Months Ended
June 30,
  2023 2022
(Dollars in millions)    
Cash flows from operating activities
Net income $ 12  $ 111 
Add (deduct) adjustments to reconcile net income to net cash flows from operating activities
Depreciation, amortization and accretion 456  456 
Bad debts expense 53  54 
Stock-based compensation expense 14  23 
Deferred income taxes, net 22  52 
Equity in earnings of unconsolidated entities (82) (83)
Distributions from unconsolidated entities 78  80 
Loss on impairment of licenses —  3 
(Gain) loss on asset disposals, net 16  9 
Other operating activities 4  3 
Changes in assets and liabilities from operations
Accounts receivable 19  (25)
Equipment installment plans receivable 7  (25)
Inventory 52  (35)
Accounts payable (124) (6)
Customer deposits and deferred revenues (9) 7 
Accrued taxes 56  131 
Accrued interest (1) 1 
Other assets and liabilities (59) (22)
Net cash provided by operating activities 514  734 
     
Cash flows from investing activities
Cash paid for additions to property, plant and equipment (629) (526)
Cash paid for intangible assets (8) (585)
Advance payments for license acquisitions —  (1)
Other investing activities 8  (10)
Net cash used in investing activities (629) (1,122)
     
Cash flows from financing activities
Issuance of long-term debt 391  776 
Repayment of long-term debt (209) (228)
Issuance of short-term debt —  60 
Repayment of short-term debt (60) — 
TDS Common Shares reissued for benefit plans, net of tax payments (3) (4)
UScellular Common Shares reissued for benefit plans, net of tax payments (6) (5)
Repurchase of TDS Common Shares (6) (20)
Repurchase of UScellular Common Shares —  (18)
Dividends paid to TDS shareholders (76) (76)
Distributions to noncontrolling interests (2) (2)
Cash paid for software license agreements (20) (3)
Other financing activities —  (1)
Net cash provided by financing activities 9  479 
Net increase (decrease) in cash, cash equivalents and restricted cash (106) 91 
Cash, cash equivalents and restricted cash
Beginning of period 399  414 
End of period $ 293  $ 505 
8

Telephone and Data Systems, Inc.
Consolidated Balance Sheet Highlights
(Unaudited)
ASSETS
 
  June 30, 2023 December 31, 2022
(Dollars in millions)    
Current assets    
Cash and cash equivalents $ 251  $ 360 
Accounts receivable, net 1,107  1,181 
Inventory, net 216  268 
Prepaid expenses 104  102 
Income taxes receivable 5  59 
Other current assets 63  58 
Total current assets 1,746  2,028 
Assets held for sale 16  26 
Licenses 4,704  4,699 
Goodwill 547  547 
Other intangible assets, net 193  204 
Investments in unconsolidated entities 500  495 
Property, plant and equipment, net
 4,932  4,760 
Operating lease right-of-use assets 988  995 
Other assets and deferred charges 780  796 
Total assets $ 14,406  $ 14,550 
9

Telephone and Data Systems, Inc.
Consolidated Balance Sheet Highlights
(Unaudited)
LIABILITIES AND EQUITY
  June 30, 2023 December 31, 2022
(Dollars in millions, except per share amounts)    
Current liabilities    
Current portion of long-term debt $ 60  $ 19 
Accounts payable 364  506 
Customer deposits and deferred revenues 278  285 
Accrued interest 12  12 
Accrued taxes 45  46 
Accrued compensation 104  144 
Short-term operating lease liabilities 147  146 
Other current liabilities 268  356 
Total current liabilities 1,278  1,514 
Deferred liabilities and credits    
Deferred income tax liability, net 987  969 
Long-term operating lease liabilities 900  908 
Other deferred liabilities and credits 820  813 
Long-term debt, net 3,872  3,731 
Noncontrolling interests with redemption features 12  12 
Equity    
TDS shareholders' equity    
Series A Common and Common Shares, par value $0.01 per share 1  1 
Capital in excess of par value 2,532  2,551 
Preferred Shares, par value $0.01 per share 1,074  1,074 
Treasury shares, at cost (466) (481)
Accumulated other comprehensive income 5  5 
Retained earnings 2,606  2,699 
Total TDS shareholders' equity 5,752  5,849 
Noncontrolling interests 785  754 
Total equity 6,537  6,603 
Total liabilities and equity $ 14,406  $ 14,550 
10

Balance Sheet Highlights
(Unaudited)
  June 30, 2023
  TDS TDS Corporate Intercompany TDS
  UScellular Telecom & Other Eliminations Consolidated
(Dollars in millions)          
Cash and cash equivalents $ 186  $ 73  $ 69  $ (77) $ 251 
Licenses, goodwill and other intangible assets $ 4,694  $ 744  $ 6  $ —  $ 5,444 
Investment in unconsolidated entities 457  4  47  (8) 500 
  $ 5,151  $ 748  $ 53  $ (8) $ 5,944 
Property, plant and equipment, net $ 2,640  $ 2,203  $ 89  $ —  $ 4,932 
Long-term debt, net:
Current portion $ 54  $ —  $ 6  $ —  $ 60 
Non-current portion 3,105  3  764  —  3,872 
  $ 3,159  $ 3  $ 770  $ —  $ 3,932 
11

TDS Telecom Highlights
(Unaudited)
  Three Months Ended
June 30,		 Six Months Ended
June 30,
  2023 2022 2023
vs. 2022		 2023 2022 2023
vs. 2022
(Dollars in millions)            
Operating revenues            
Residential
Wireline, Incumbent $ 89  $ 88  1  % $ 175  $ 173  1  %
Wireline, Expansion 18  12  48  % 33  22  46  %
Cable 68  68  1  % 136  135  1  %
Total residential 175  168  4  % 344  330  4  %
Commercial 39  44  (10) % 80  87  (8) %
Wholesale 43  45  (4) % 86  89  (4) %
Total service revenues 257  256  1  % 510  507  1  %
Equipment revenues —  —  (5) % —  1  (17) %
Total operating revenues 257  256  1  % 510  507  1  %
Cost of services 108  103  5  % 212  199  7  %
Cost of equipment and products —  —  24  % —  —  (10) %
Selling, general and administrative expenses 81  77  5  % 162  150  8  %
Depreciation, amortization and accretion 60  52  15  % 119  106  12  %
(Gain) loss on asset disposals, net 2  1  N/M 3  1  N/M
Total operating expenses 251  233  8  % 496  456  9  %
 
Operating income $ 7  $ 23  (71) % $ 15  $ 51  (72) %
N/M - Percentage change not meaningful.
Numbers may not foot due to rounding.
12

Telephone and Data Systems, Inc.
Financial Measures and Reconciliations
(Unaudited)
Free Cash Flow
  Three Months Ended
June 30,		 Six Months Ended
June 30,
  2023 2022 2023 2022
(Dollars in millions)        
Cash flows from operating activities (GAAP) $ 469  $ 352  $ 514  $ 734 
Cash paid for additions to property, plant and equipment (298) (256) (629) (526)
Cash paid for software license agreements (12) —  (20) (3)
Free cash flow (Non-GAAP)1
 $ 159  $ 96  $ (135) $ 205 
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.
13
EX-99.2 3 tdsq220238kex992.htm EX-99.2 Document

Exhibit 99.2
tdslogoa.jpg
usmlogoa.jpg

Telephone and Data Systems and UScellular Announce Exploration of Strategic Alternatives for UScellular

CHICAGO (August 4, 2023) – The boards of directors of Telephone and Data Systems, Inc. (“TDS”) (NYSE: TDS) and United States Cellular Corporation (“UScellular”) (NYSE: USM) have each decided to initiate a process to explore strategic alternatives for UScellular. The comprehensive process will explore a range of strategic alternatives.

“The TDS board believes that now is the right time for a comprehensive review of strategic alternatives for UScellular. We will pursue the pathway that is in the best interest of shareholders,” said Walter C.D. Carlson, Chairman of the TDS Board.

“The UScellular leadership team and I fully support the decision to review strategic alternatives for UScellular. We will remain focused on executing our plan and fulfilling our mission of connecting people to what matters most," said Laurent Therivel, Chief Executive Officer of UScellular.

TDS has retained Citi as its financial advisor and has retained legal counsel in connection with the review of strategic alternatives for UScellular. In connection with the review, the UScellular independent directors, as authorized by the UScellular board, have retained a financial advisor and legal counsel.

There is no deadline or definitive timetable set for completion of the strategic review, and there can be no assurance regarding the results or outcome of this review. TDS and UScellular do not intend to comment further on this strategic review process, and will make further announcements in accordance with their respective ongoing disclosure obligations and pursuant to applicable laws and regulations.

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 9,100 people as of June 30, 2023.

About UScellular
United States Cellular Corporation provides a comprehensive range of wireless products and services, excellent customer support, and a high-quality network to customers with 4.7 million retail connections in 21 states. The Chicago-based company had 4,600 full- and part-time associates as of June 30, 2023. At the end of the second quarter of 2023, Telephone and Data Systems, Inc. owned 83 percent of UScellular.

For more information about TDS and UScellular, visit:
TDS: www.tdsinc.com
UScellular: www.uscellular.com
TDS Telecom: www.tdstelecom.com
OneNeck IT Solutions: www.oneneck.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 TDS’ and UScellular’s (collectively, the “Companies”) plans, beliefs, estimates, and expectations, including with respect to the exploration of strategic alternatives for UScellular. These statements are based on current intentions and expectations, 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: whether any strategic alternative for UScellular will be successfully identified or completed, whether any such strategic alternative will result in additional value for the Companies and their respective shareholders and whether the process will have an adverse impact on the business of the Companies. 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 Form 10-K by either of the Companies, as updated by either Company in any Form 10-Q filed subsequent to any such Form 10-K.

Contacts
Media: FGS Global
Bryan Locke, Jim Finkle, Amy Corser – TDS@FGSGlobal.com
Investors: Colleen Thompson – Colleen.Thompson@tdsinc.com
Julie Mathews – Julie.Mathews@tdsinc.com