Telephone and Data Systems (TDS) 8-K Results of Operations and Financial Condition

Exhibit 99.1

As previously announced, TDS^TMwill hold a teleconference Aug. 6, 2009 at 10:00 a.m. Chicago time.  Interested parties may listen to the call live by accessing the Conference Calls page ofwww.teldta.com.

Contact:	Mark A. Steinkrauss, Vice President, Corporate Relations (312) 592-5384mark.steinkrauss@teldta.com
	Julie D. Mathews, Manager, Investor Relations (312) 592-5341julie.mathews@teldta.com

FOR RELEASE: IMMEDIATE

TDS REPORTS SECOND QUARTER 2009 RESULTS

Note: Comparisons are year over year unless otherwise noted.

2Q 2009 Highlights

Enterprise/TDS Corporate

§	Operating revenues were $1,242.5 million.
§	3 percent increase in operating income, to $154.6 million.
§	Repurchased 2,684,267 TDS special common shares for $73.9 million.

Wireless/U.S. Cellular®

§	Service revenues were $974.8 million, which includes a $22.0 million loss in inbound roaming revenues.
§	31 percent increase in data revenues, to $162.0 million, representing 17 percent of service revenues.
§	ARPU (average monthly service revenue per unit) was $52.41.
§	20 percent increase in operating income, to $140.9 million.
§	Postpay churn was 1.7 percent; postpay customers comprised 95 percent of retail customers.
§	7 percent increase in cell sites in service, to 7,043.
§	Repurchased 140,000 common shares for $6.0 million to offset dilution from employee benefit plans.

Wireline/TDS Telecom®

§	20 percent increase in ILEC high-speed data customers, to 197,100; CLEC high-speed data customerstotaled 38,700.
§	17 percent increase in ILEC data revenues, to $25.5 million.
§	ILEC equivalent access lines increased less than 1 percent to 775,800, due in part to acquisitions; ILECphysical access lines decreased to 548,000.

 

CHICAGO – Aug. 6, 2009– Telephone and Data Systems, Inc. [NYSE:TDS, TDS.S] reported operating revenues of $1,242.5 million for the second quarter of 2009, a decrease of 3 percent from $1,274.4 million in the comparable period one year ago. The company recorded operating income of $154.6 million, up 3 percent from $149.7 million in the second quarter of 2008.

“These are challenging times for the national economy and for many of our customers,” said LeRoy T. Carlson, Jr., TDS president and CEO. “In many of our markets, unemployment is high and some customers are seeking to economize on their communications services. While TDS’ revenue was down modestly in the quarter, the company increased its operating income by controlling spending. TDS remains very strong financially, with more than $800 million in cash and short-term investments, some of which the company is using to repurchase TDS shares.

“Data services continue to be a focal point for growth at U.S. Cellular and TDS Telecom,” continued Carlson. “Data revenue at U.S. Cellular grew 31 percent, despite a net loss of retail customers. Operating income also increased, overcoming an expected and sizeable reduction in inbound roaming revenue. U.S. Cellular continues to invest in a more data-centric future by expanding its 3G network, which will reach 70 percent of its customers by year end. The company is also making progress on several major, long-term growth initiatives, which are expected to create deeper customer relationships through improved billing and operational support, a new customer relationship management system, and an updated online sales and support platform.

“TDS Telecom is making good progress on its strategy of being the preferred broadband provider in its markets,” added Carlson. “The ILEC achieved 20 percent growth in high-speed data customers and a 17 percent increase in related revenue. While TDS Telecom continues to experience a decline in physical access lines, the company is moderating the impact of this trend by making significant gains in the number of customers who have its triple play bundles of voice, high-speed data, and DISH® Network services. Triple play customers are much less likely to churn than customers with fewer services. Additionally, TDS Telecom is expanding the availability of itsmanagedIP hosted services, and the company now has 7600 stations in service providing data and voice communications solutions.”

Equity in earnings of unconsolidated entities

In the quarter, TDS recorded a $7.1 million loss on impairment related to a decline in the fair value of an equity method investment. The loss is recorded in Equity in earnings of unconsolidated entities on the consolidated statement of operations.

Guidance

Guidance for the year ending Dec. 31, 2009 is as follows. There can be no assurance that final results will not differ materially from this guidance.

U.S. Cellular 2009 guidance as of Aug. 6, 2009 is as follows: 

Net retail customer additions(1)	—
Service revenue	$3,900-$3,950 million
Operating income(2)	$300-$375 million
Depreciation, amortization and accretion(2)	Approx. $600 million
Capital expenditures	Approx. $575 million

TDS Telecom (ILEC and CLEC) 2009 guidance as of Aug. 6, 2009 is as follows:

Operating revenues	$775-$800 million
Operating income(2)	$85-$105 million
Depreciation, amortization and accretion(2)	Approx. $165 million
Capital expenditures	Approx. $125 million

(1)	U.S. Cellular has withdrawn its net retail customer additions guidance for the remainder of 2009 due to uncertainty related to the weak economy and consumer purchasing intentions.
(2)	Includes losses on disposals of assets.

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This guidance represents the views of management as of Aug. 6, 2009 and should not be assumed to be accurate as of any other date. TDS undertakes no legal duty to update such information, whether as a result of new information, future events, or otherwise.

Stock repurchase summary

The following represents repurchases of both TDS common shares and TDS special common shares.

Repurchase Period	# Shares	Cost (in millions)
2009 (second quarter)	2,684,267	$	73.9
2009 (first quarter)	504,026	$	12.1
2008 (full year)	5,861,822	$	199.6
Total 2009 and 2008	9,050,115	$	285.6

Conference call information

TDS will hold a conference call on Aug. 6, 2009 at 10:00 a.m. Chicago time.

§	Access the live call on the Conference Calls page ofwww.teldta.comor athttp://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=67422&eventID=2355543
§	Access the call by phone at 800/706-9695 (US/Canada) and use conference ID #22679990.

Before the call, certain financial and statistical information to be discussed during the call will be posted to the Conference Calls page ofwww.teldta.com, together with reconciliations to generally accepted accounting principles (GAAP) of any non-GAAP information to be disclosed. The call will be archived on the Conference Calls page ofwww.teldta.com.

About TDS

Telephone and Data Systems, Inc. (TDS), a Fortune 500® company, provides wireless, local and long-distance telephone, and broadband services to approximately 7.3 million customers in 36 states through its business units, U.S. Cellular (wireless) and TDS Telecom (wireline). Founded in 1969 and headquartered in Chicago, TDS employed 12,400 people as of June 30, 2009. For more information about TDS, visitwww.teldta.com.

About U.S. Cellular®

United States Cellular Corporation, the nation’s fifth-largest, full-service wireless carrier, provides a comprehensive range of wireless products and services, excellent customer support, and a high-quality network to approximately 6.2 million customers in 26 states. The Chicago-based company employed 8,700 full-time equivalent associates as of June 30, 2009. For more information about U.S. Cellular, visitwww.uscellular.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 uncertaintiesthat 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: The ability of the company to successfully grow its markets; the current credit crisis affecting financial markets, and its effects on the overall economy; competition; the access to and pricing of unbundled network elements; the ability to obtain o r maintain roaming arrangements with other carriers; the state and federal telecommunications regulatory environment; the value of assets and investments; adverse changes in the ratings afforded TDS and U.S. Cellular debt securities by accredited ratings organizations; industry consolidation; advances in telecommunications technology; uncertainty of access to the capital markets; pending and future litigation; changes in income tax rates, laws, regulations or rulings; acquisitions/divestitures of properties and/or licenses; and changes in customer growth rates, average monthly revenue per unit, churn rates, roaming revenue and terms, the availability of handset devices, or the mix of products and services offered by U.S. Cellular and TDS Telecom. Investors are encouraged to consider these and other risks and uncertainties that are discussed in the Form 8-K used by TDS to furnish this press release to the SEC, which are incorporated by reference herein.

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For more information about TDS and its subsidiaries, visit:

TDS:www.teldta.com
USM:www.uscellular.com
TDS Telecom:www.tdstelecom.com

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UNITED STATES CELLULAR CORPORATION SUMMARY OPERATING DATA
Quarter Ended		6/30/2009			3/31/2009			12/31/2008			9/30/2008			6/30/2008
Total Population:
Consolidated markets(1)			83,726,000			83,726,000			83,014,000			82,875,000			82,875,000
Consolidated operating markets(1)			46,306,000			46,306,000			46,009,000			45,493,000			45,493,000
All customers:
Total at end of period			6,155,000			6,243,000			6,196,000			6,176,000			6,194,000
Gross additions			317,000			404,000			395,000			367,000			365,000
Net additions (losses)			(88,000	)		47,000			20,000			(18,000	)		16,000
Market penetration at end of period:
Consolidated markets(2)			7.4	%		7.5	%		7.5	%		7.5	%		7.5	%
Consolidated operating markets(2)			13.3	%		13.5	%		13.5	%		13.6	%		13.6	%
Retail customers:
Total at end of period			5,711,000			5,770,000			5,707,000			5,674,000			5,677,000
Gross additions			286,000			366,000			352,000			325,000			318,000
Net postpay additions (losses)			(32,000	)		60,000			41,000			12,000			33,000
Net prepay additions (losses)			(27,000	)		3,000			(8,000	)		(15,000	)		1,000
Cell sites in service			7,043			6,942			6,877			6,716			6,596
Average monthly revenue per unit(3)		$	52.41		$	52.54		$	52.71		$	54.59		$	53.27
Retail service revenue per unit(3)(5)		$	46.85		$	46.78		$	46.43		$	46.97		$	46.53
Inbound roaming revenue per unit(3)(5)		$	3.35		$	3.21		$	4.25		$	5.03		$	4.54
Other revenue per unit(3)(5)		$	2.21		$	2.55		$	2.03		$	2.59		$	2.20
Postpay churn rate(4)			1.7	%		1.5	%		1.6	%		1.6	%		1.4	%
Construction expenditures (000s)		$	91,200		$	137,700		$	190,000		$	146,100		$	137,800
(1)	“Total population of consolidated markets” and “Total population of consolidated operating markets” are used only for the purposes of calculating market penetration of consolidated markets and consolidated operating markets, respectively, which is calculated by dividing customers by the total market population (without duplication of population in overlapping markets).
(2)	Calculated by dividing the number of wireless customers at the end of the period by the total population of consolidatedmarkets and consolidated operating markets, respectively, as estimated by Claritas.
(3)	Per unit revenue measurements are derived from Service Revenues as reported in Financial Highlights for each respective quarter as follows:
Service revenue (000s)		$	974,755		$	981,874		$	976,952		$	1,013,928		$	987,352
Components:
Retail service revenue (000s)			871,209			874,098			860,503			872,397			862,392
Inbound roaming revenue (000s)			62,223			60,057			78,768			93,472			84,201
Other revenue (000s)			41,323			47,719			37,681			48,059			40,759
Divided by average customers (000s)			6,199			6,229			6,178			6,191			6,178
Divided by three months in each quarter			3			3			3			3			3
Average monthly revenue per unit		$	52.41		$	52.54		$	52.71		$	54.59		$	53.27
Retail service revenue per unit		$	46.85		$	46.78		$	46.43		$	46.97		$	46.53
Inbound roaming revenue per unit		$	3.35		$	3.21		$	4.25		$	5.03		$	4.54
Other revenue per unit		$	2.21		$	2.55		$	2.03		$	2.59		$	2.20
(4)	Postpay churn rate is calculated by dividing the total postpay customer disconnects during the quarter by the average postpay customer base for the quarter.
(5)	Long-distance revenue was reclassified in the fourth quarter of 2008 from Other revenue to Retail service revenue andInbound roaming revenue. Previous quarters have been adjusted to reflect this change.

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TELEPHONE AND DATA SYSTEMS, INC. SUMMARY OPERATING DATA
Quarter Ended		6/30/2009		3/31/2009		12/31/2008		9/30/2008		6/30/2008
TDS Telecom
	ILEC:
	Equivalent access lines(1)		775,800		777,100		776,700		773,700		774,300
	Physical access lines(2)		548,000		556,800		566,200		568,900		577,000
	High-speed data customers(3)		197,100		188,100		178,300		171,300		164,400
	Managed IP stations(4)		1,200		1,000		600		500		300
	Long-distance customers		354,100		348,900		347,000		346,600		346,100
	Construction expenditures (000s)	$	26,200	$	21,400	$	50,200	$	33,300	$	22,800
	CLEC:
	Equivalent access lines(1)		372,300		381,000		393,000		402,600		417,200
	High-speed data customers		38,700		39,700		40,800		41,900		43,100
	Managed IP stations(4)		6,400		4,100		2,100		600		500
	Construction expenditures (000s)	$	5,700	$	5,000	$	7,200	$	4,500	$	4,700
(1)	Equivalent access lines are the sum of physical access lines and high-capacity data lines adjusted to estimate the equivalent number of physical access lines in terms of capacity plus the number of managed IP stations.
(2)	A physical access line is the individual circuit connecting a customer to a telephone company’s central office facilities.
(3)	High-speed data customers are the number of customers provided high capacity data circuits via various technologies including digital subscriber line (“DSL”), managed Internet Protocol (“Managed IP”), and dedicated Internet circuit technologies.
(4)	Managed IP stations are the number of telephone handsets providing communications using packet networking technology.

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Telephone And Data Systems, Inc. Consolidated Statement of Operations Highlights Three Months Ended June 30, (Unaudited, dollars and shares in thousands, except per share amounts)
								Increase/ (Decrease)
		2009			2008			Amount			Percent
Operating revenues
U.S. Cellular		$	1,042,550		$	1,060,592		$	(18,042	)	(2	)%
TDS Telecom			195,960			207,424			(11,464	)	(6	)%
All Other(1)			3,967			6,335			(2,368	)	(37	)%
			1,242,477			1,274,351			(31,874	)	(3	)%
Operating expenses
U.S. Cellular
Expenses excluding depreciation, amortization and accretion			760,931			791,213			(30,282	)	(4	)%
Depreciation, amortization and accretion			138,614			145,258			(6,644	)	(5	)%
Loss on asset disposals, net			2,086			6,219			(4,133	)	(66	)%
			901,631			942,690			(41,059	)	(4	)%
TDS Telecom
Expenses excluding depreciation, amortization and accretion			135,818			132,911			2,907		2	%
Depreciation, amortization and accretion			41,663			39,071			2,592		7	%
Loss on asset disposals, net			402			219			183		84	%
			177,883			172,201			5,682		3	%
All Other(1)
Expenses excluding depreciation and amortization			5,283			6,020			(737	)	(12	)%
Depreciation and amortization			3,072			3,697			(625	)	(17	)%
Loss on asset disposals, net			8			—			8		N/M
			8,363			9,717			(1,354	)	(14	)%
Total operating expenses			1,087,877			1,124,608			(36,731	)	(3	)%
Operating income (loss)
U.S. Cellular			140,919			117,902			23,017		20	%
TDS Telecom			18,077			35,223			(17,146	)	(49	)%
All Other(1)			(4,396	)		(3,382	)		(1,014	)	(30	)%
			154,600			149,743			4,857		3	%
Investment and other income (expense)
Equity in earnings of unconsolidated entities			18,363			22,909			(4,546	)	(20	)%
Interest and dividend income			2,902			17,455			(14,553	)	(83	)%
Gain on investments and financial instruments			—			3,088			(3,088	)	N/M
Interest expense			(32,245	)		(35,570	)		3,325		9	%
Other, net			(25	)		1,902			(1,927	)	N/M
Total investment and other income (expense)			(11,005	)		9,784			(20,789	)	N/M
Income before income taxes			143,595			159,527			(15,932	)	(10	)%
Income tax expense			53,036			53,261			(225	)	—
Net income			90,559			106,266			(15,707	)	(15	)%
Less: Net income attributable to noncontrolling interests, net of tax			(20,828	)		(18,509	)		(2,319	)	(13	)%
Net income attributable to TDS			69,731			87,757			(18,026	)	(21	)%
Preferred dividend requirement			(13	)		(13	)		—		—
Net income available to common		$	69,718		$	87,744		$	(18,026	)	(21	)%
Basic weighted average shares outstanding			110,741			116,267			(5,526	)	(5	)%
Basic earnings per share attributable to TDS shareholders		$	0.63		$	0.75		$	(0.12	)	(16	)%
Diluted weighted average shares outstanding			110,971			116,814			(5,843	)	(5	)%
Diluted earnings per share attributable to TDS shareholders		$	0.63		$	0.75		$	(0.12	)	(16	)%
(1)	Consists of Suttle Straus printing and distribution operations, corporate operations and intercompany eliminations.
N/M — Percentage change not meaningful

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Telephone and Data Systems, Inc. Consolidated Statements of Operations Highlights Six Months Ended June 30, (Unaudited, dollars and shares in thousands, except per share amounts)
								Increase/ (Decrease)
		2009			2008			Amount			Percent
Operating revenues
U.S. Cellular		$	2,095,314		$	2,098,448		$	(3,134	)	—
TDS Telecom			395,262			413,500			(18,238	)	(4	)%
All Other(1)			8,547			11,504			(2,957	)	(26	)%
			2,499,123			2,523,452			(24,329	)	(1	)%
Operating expenses
U.S. Cellular
Expenses excluding depreciation, amortization and accretion			1,559,083			1,563,900			(4,817	)	—
Depreciation, amortization and accretion			276,265			287,788			(11,523	)	(4	)%
Loss on asset disposals, net			4,277			9,892			(5,615	)	(57	)%
			1,839,625			1,861,580			(21,955	)	(1	)%
TDS Telecom
Expenses excluding depreciation, amortization and accretion			266,563			261,717			4,846		2	%
Depreciation, amortization and accretion			83,526			78,579			4,947		6	%
Loss on asset disposals, net			617			198			419		N/M
			350,706			340,494			10,212		3	%
All Other(1)
Expenses excluding depreciation and amortization			11,641			10,209			1,432		14	%
Depreciation and amortization			6,324			7,817			(1,493	)	(19	)%
Loss on asset disposals, net			18			—			18		N/M
			17,983			18,026			(43	)	—
Total operating expenses			2,208,314			2,220,100			(11,786	)	(1	)%
Operating income (loss)
U.S. Cellular			255,689			236,868			18,821		8	%
TDS Telecom			44,556			73,006			(28,450	)	(39	)%
All Other(1)			(9,436	)		(6,522	)		(2,914	)	(45	)%
			290,809			303,352			(12,543	)	(4	)%
Investment and other income (expense)
Equity in earnings of unconsolidated entities			43,700			44,379			(679	)	(2	)%
Interest and dividend income			4,974			27,201			(22,227	)	(82	)%
Interest expense			(62,350	)		(76,950	)		14,600		19	%
Loss on investments and financial instruments			—			(402	)		402		N/M
Other, net			474			1,703			(1,229	)	(72	)%
Total investment and other income (expense)			(13,202	)		(4,069	)		(9,133	)	N/M
Income before income taxes			277,607			299,283			(21,676	)	(7	)%
Income tax expense			93,674			102,512			(8,838	)	(9	)%
Net income			183,933			196,771			(12,838	)	(7	)%
Less: Net income attributable to noncontrolling interests,net of tax			(42,194	)		(35,527	)		(6,667	)	(19	)%
Net income attributable to TDS			141,739			161,244			(19,505	)	(12	)%
Preferred dividend requirement			(26	)		(26	)		—		—
Net income available to common		$	141,713		$	161,218		$	(19,505	)	(12	)%
Basic weighted average shares outstanding			111,486			116,919			(5,433	)	(5	)%
Basic earnings per share attributable to TDS shareholders		$	1.27		$	1.38		$	(0.11	)	(8	)%
Diluted weighted average shares outstanding			111,698			117,500			(5,802	)	(5	)%
Diluted earnings per share attributable to TDS shareholders		$	1.27		$	1.37		$	(0.10	)	(7	)%
(1)	Consists of Suttle-Straus printing and distribution operations, corporate operations and intercompany eliminations.
N/M — Percentage change not meaningful

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Telephone and Data Systems, Inc. Consolidated Balance Sheet Highlights (Unaudited, dollars in thousands)
ASSETS
	June 30, 2009		December 31, 2008
Current assets
Cash and cash equivalents	$	664,757	$	777,309
Short-term investments		136,495		27,705
Accounts receivable from customers and other		541,228		516,849
Inventory		130,963		122,377
Other current assets		182,359		184,696
		1,655,802		1,628,936
Investments
Licenses		1,453,526		1,441,440
Goodwill		707,840		707,079
Customer lists		28,189		34,032
Investments in unconsolidated entities		234,409		205,768
Other investments		10,177		10,623
		2,434,141		2,398,942
Property, plant and equipment, net
U.S. Cellular		2,578,002		2,620,376
TDS Telecom		894,796		918,454
Other		29,812		30,094
		3,502,610		3,568,924
Other assets and deferred charges		65,179		55,614
Total assets	$	7,657,732	$	7,652,416

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Telephone and Data Systems, Inc. Cconsolidated Balance Sheet Highlights (Unaudited, dollars in thousands)
LIABILITIES AND STOCKHOLDERS' EQUITY
	June 30, 2009			December 31, 2008
Current liabilities
Current portion of long-term debt	$	17,427		$	15,337
Accounts payable		258,484			319,575
Customer deposits and deferred revenues		169,277			174,101
Accrued interest		14,749			14,236
Accrued taxes		39,618			25,192
Accrued compensation		66,492			90,512
Other current liabilities		114,915			134,334
		680,962			773,287
Deferred liabilities and credits
Net deferred income tax liability		485,290			471,623
Other deferred liabilities and credits		383,507			368,045
		868,797			839,668
Long-term debt		1,619,341			1,621,422
Noncontrolling interests with mandatory redemption features		640			589
Equity
TDS stockholders’ equity
Common Shares, par value $.01		571			571
Special Common Shares, par value $.01		634			634
Series A Common Shares, par value $.01		65			65
Capital in excess of par value		2,075,420			2,066,597
Treasury shares, at cost:
Common Shares		(162,713	)		(163,017	)
Special Common Shares		(433,440	)		(350,091	)
Accumulated other comprehensive loss		(13,309	)		(16,812	)
Retained earnings		2,346,702			2,229,540
Total TDS stockholders' equity		3,813,930			3,767,487
Nonredeemable preferred shares		852			852
Noncontrolling interests		673,210			649,111
Total equity		4,487,992			4,417,450
Total liabilities and equity	$	7,657,732		$	7,652,416

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Telephone and Data Systems, Inc. Balance Sheet Highlights June 30, 2009 (Unaudited, dollars in thousands)
	U.S. Cellular		TDS Telecom		TDS Corporate & Other			Intercompany Eliminations			TDS Consolidated
Cash and cash equivalents	$	275,920	$	29,939	$	358,898		$	—		$	664,757
Affiliated cash investments		—		480,631		—			(480,631	)		—
Notes receivable—affiliates		—		—		253,582			(253,582	)		—
	$	275,920	$	510,570	$	612,480		$	(734,213	)	$	664,757
Licenses, goodwill and customer lists	$	1,946,703	$	436,376	$	(193,524	)	$	—		$	2,189,555
Investment in unconsolidated entities		192,445		3,659		43,684			(5,379	)		234,409
Other investments		4,231		2,452		3,494			—			10,177
	$	2,143,379	$	442,487	$	(146,346	)	$	(5,379	)	$	2,434,141
Property, plant and equipment, net	$	2,578,002	$	894,796	$	29,812		$	—		$	3,502,610
Notes payable—affiliates	$	—	$	253,582	$	480,631		$	(734,213	)	$	—
Long-term debt:
Current portion	$	10,088	$	428	$	6,911		$	—		$	17,427
Non-current portion		997,651		2,452		619,238			—			1,619,341
Total	$	1,007,739	$	2,880	$	626,149		$	—		$	1,636,768
Nonredeemable preferred shares	$	—	$	—	$	852		$	—		$	852
Construction expenditures:
Quarter ended 6/30/09	$	91,200	$	31,900	$	2,500		$	—		$	125,600
Six months ended 6/30/09	$	228,900	$	58,300	$	3,600		$	—		$	290,800

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TDS Telecom Highlights Three Months Ended June 30, (Unaudited, dollars in thousands)
							Increase (Decrease)
	2009			2008			Amount			Percent
Local Telephone Operations
Operating revenues
Voice	$	46,879		$	50,925		$	(4,046	)	(8	)%
Data		25,491			21,738			3,753		17	%
Network access		67,118			70,727			(3,609	)	(5	)%
Miscellaneous		8,720			9,809			(1,089	)	(11	)%
		148,208			153,199			(4,991	)	(3	)%
Operating expenses
Cost of services and products		48,406			46,873			1,533		3	%
Selling, general and administrative expenses		45,828			41,416			4,412		11	%
Depreciation, amortization and accretion		35,302			33,502			1,800		5	%
Loss on asset disposals, net		283			(25	)		308		N/M
		129,819			121,766			8,053		7	%
Operating income	$	18,389		$	31,433		$	(13,044	)	(41	)%
Competitive Local Exchange Carrier Operations
Revenues	$	50,093		$	55,888		$	(5,795	)	(10	)%
Expenses excluding depreciation, amortization and accretion		43,925			46,285			(2,360	)	(5	)%
Depreciation, amortization and accretion		6,361			5,569			792		14	%
Loss on asset disposals, net		119			244			(125	)	(51	)%
		50,405			52,098			(1,693	)	(3	)%
Operating income (loss)	$	(312	)	$	3,790		$	(4,102	)	N/M
Intercompany revenues	$	(2,341	)	$	(1,663	)	$	(678	)	(41	)%
Intercompany expenses		(2,341	)		(1,663	)		(678	)	(41	)%
		—			—			—
Total TDS Telecom operating income	$	18,077		$	35,223		$	(17,146	)	(49	)%
N/M — Percentage change not meaningful.

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TDS Telecom Highlights Six Months Ended June 30, (Unaudited, dollars in thousands)
							Increase (Decrease)
	2009			2008			Amount			Percent
Local Telephone Operations
Operating revenues
Voice	$	95,457		$	102,501		$	(7,044	)	(7	)%
Data		50,551			42,924			7,627		18	%
Network access		134,949			140,809			(5,860	)	(4	)%
Miscellaneous		17,438			18,780			(1,342	)	(7	)%
		298,395			305,014			(6,619	)	(2	)%
Operating expenses
Cost of services and products		96,090			91,707			4,383		5	%
Selling, general and administrative expenses		86,857			83,897			2,960		4	%
Depreciation, amortization and accretion		71,388			67,126			4,262		6	%
Loss on asset disposals, net		421			(46	)		467		N/M
		254,756			242,684			12,072		5	%
Operating income	$	43,639		$	62,330		$	(18,691	)	(30	)%
Competitive Local Exchange Carrier Operations
Revenues	$	101,282		$	112,017		$	(10,735	)	(10	)%
Expenses excluding depreciation, amortization and accretion		88,031			89,644			(1,613	)	(2	)%
Depreciation, amortization and accretion		12,138			11,453			685		6	%
Loss on asset disposals, net		196			244			(48	)	(20	)%
		100,365			101,341			(976	)	(1	)%
Operating income	$	917		$	10,676		$	(9,759	)	(91	)%
Intercompany revenues	$	(4,415	)	$	(3,531	)	$	(884	)	(25	)%
Intercompany expenses		(4,415	)		(3,531	)		(884	)	(25	)%
		—			—			—
Total TDS Telecom operating income	$	44,556		$	73,006		$	(28,450	)	(39	)%
N/M — Percentage change not meaningful.

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Telephone and Data Systems, Inc. Consolidated Statement of Cash Flows (Unaudited)
	Six Months Ended June 30,
	2009			2008
	(Dollars in thousands)
Cash flows from operating activities
Net income	$	183,933		$	196,771
Add (deduct) adjustments to reconcile net income to net cash flowsfrom operating activities
Depreciation, amortization and accretion		366,115			374,184
Bad debts expense		42,761			36,806
Stock-based compensation expense		14,394			9,022
Deferred income taxes, net		16,237			(316,269	)
Loss on investments and financial instruments, net		—			402
Equity in earnings of unconsolidated entities		(43,700	)		(44,379	)
Distributions from unconsolidated entities		13,239			45,810
Loss on asset disposals, net		4,912			10,090
Noncash interest expense		2,170			7,930
Excess tax benefit from stock awards		(4	)		(1,706	)
Other operating activities		(41	)		(2,103	)
Changes in assets and liabilities from operations
Accounts receivable		(62,870	)		(59,440	)
Inventory		(9,928	)		(20,830	)
Accounts payable		(63,963	)		(4,171	)
Customer deposits and deferred revenues		(4,824	)		10,303
Accrued taxes		56,741			304,231
Accrued interest		513			(3,780	)
Other assets and liabilities		(71,724	)		(47,432	)
		443,961			495,439
Cash flows from investing activities
Additions to property, plant and equipment		(290,821	)		(299,061	)
Cash paid for acquisitions and licenses		(15,042	)		(334,350	)
Cash received from divestitures		50			6,838
Proceeds from disposition of investments		—			226,644
Cash paid to settle derivative liabilities		—			(17,404	)
Cash paid for short-term investments		(109,055	)		—
Other investing activities		1,990			(934	)
		(412,878	)		(418,267	)
Cash flows from financing activities
Issuance of notes payable		—			100,000
Repayment of notes payable		—			(50,000	)
Repayment of variable prepaid forward contracts		—			(47,357	)
Repayment of long-term debt		(1,655	)		(6,442	)
TDS Common Shares and Special Common Shares reissued for benefit plans, net of tax payments		743			1,494
U.S. Cellular Common Shares reissued for benefit plans, net of tax payments		(405	)		(1,878	)
Excess tax benefit from stock awards		4			1,706
Repurchase of TDS Special Common Shares		(86,565	)		(83,013	)
Repurchase of U.S. Cellular Common Shares		(19,332	)		(14,516	)
Dividends paid		(23,814	)		(23,922	)
Payment of debt issuance costs		(9,959	)		—
Distributions to noncontrolling interests		(3,417	)		(4,594	)
Other financing activities		765			2,067
		(143,635	)		(126,455	)
Net decrease in cash and cash equivalents		(112,552	)		(49,283	)
Cash and cash equivalents —
Beginning of period		777,309			1,174,446
End of period	$	664,757		$	1,125,163

14