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

Exhibit 99.1

NEWS RELEASE

As previously announced, TDS will hold a teleconference May 10, 2010 at 9:30 am CDT. Interested parties may listen to the call live by accessing the Conference Calls page ofwww.teldta.com.

Contact:	Jane W. McCahon, Vice President, Corporate Relations (312) 592-5379jane.mccahon@teldta.com
	Julie D. Mathews, Manager, Investor Relations (312) 592-5341julie.mathews@teldta.com

FOR RELEASE: IMMEDIATE

TDS REPORTS FIRST QUARTER 2010 RESULTS

Note: Comparisons are year over year unless otherwise noted.

1Q 2010 Highlights

Enterprise/TDS Corporate

§Operating revenues were $1.2 billion.

§Repurchased 510,902 TDS special common shares for a total of $14.8 million.

Wireless/U.S. Cellular

§24,000 retail net additions, reflecting a gain of 33,000 prepaid customers and a loss of 9,000 postpay customers.

§Service revenues of $965.2 million decreased 2 percent due to reductions in voice and inbound roaming revenues, offset by higher data revenues.

§28 percent increase in data revenues to $201.3 million, representing 21 percent of total service revenues.

§Retail service ARPU (average revenue per unit) increased to $46.99  from $46.87.

§Retail postpay churn low at 1.4 percent; postpay customers comprised 95 percent of retail customers.

§5 percent increase in cell sites in service to 7,310.

Wireline/TDS Telecom

§16 percent increase in ILEC high-speed data customers.

§13 percent increase in ILEC high-speed data revenues, representing 19 percent of ILEC revenues.

 

§ILEC equivalent access lines remained stable at 778,700, due in part to acquisitions; ILEC physical access lines decreased 5 percent to 530,400.

§Managed IP stations (ILEC and CLEC) grew to 16,600 from 5,100.

CHICAGO – May 10, 2010–Telephone and Data Systems, Inc. [NYSE:TDS, TDS.S]reported operating revenues of $1,222.6 million for the first quarter of 2010, a decrease of 3 percent from $1,258.4 million in the comparable period one year ago.  Net income attributable to TDS shareholders and related diluted earnings per share were $49.1 million and $0.46, respectively, for the first quarter of 2010, compared to $74.5 million and $0.66, respectively, in the comparable period one year ago.

“Both of our businesses are dedicated to ensuring outstanding customer experiences,” said LeRoy T. Carlson, Jr., TDS president and CEO, “and that means a focus on providing excellent data and broadband services. Increased customer use of data in the quarter led to strong growth in wireless data revenues, and U.S. Cellular’s commitment to quality in all aspects of the customer experience reduced retail postpay churn to 1.4 percent. Data revenue growth helped to stabilize profitability in our wireline business, along with benefits from cost-reduction initiatives implemented in 2009. In a highly competitive communications industry, our businesses’ shared focus on superior customer service is an important differentiator.

“U.S. Cellular continues to drive data revenue growth with its broad assortment of smartphones and data-intensive devices, and through its expanded 3G network. This growth has helped to offset a decline in service revenues due to lower voice and inbound roaming revenues. The company made progress on its major enablement initiatives in the quarter, including upgrading its marketing campaign management system to better target key customer segments. Though planned expenses related to these initiatives reduced profitability in the quarter, U.S. Cellular expects that the initiatives will ultimately reduce operational expenses and support its customer-focused strategy over the long term.

“TDS Telecom continued to attract customers to its high-speed data services, which led to a year-over-year increase in data revenues. Value-oriented bundles of voice, high-speed data and video services remained popular and helped to keep churn low. As part of its commitment to bringing critical broadband services to rural communities, TDS Telecom submitted 46 applications, totaling $136 million, to the Rural Utilities Service for the second round of broadband stimulus funding.  To advance our strategy of growing through complementary businesses, TDS recently acquired VISI Incorporated. VISI, based in Minnesota, provides data center services and managed hosting primarily to small and medium sized businesses.

“Both of our businesses are increasingly well-positioned to capitalize on the growing customer interest in wireless data and wireline broadband services. U.S. Cellular plans to make 3G speeds available to 98 percent of its customers by the end of this summer, while it continues to develop its 4G/LTE rollout plans. Ninety-three percent of TDS Telecom’s ILEC access lines are equipped for broadband services, and the company is focused on increasing the broadband speeds offered to customers. Both businesses have the support and financial strength to move forward with their customer-focused strategies.”

Guidance

Guidance for the year ending Dec. 31, 2010 is shown below compared to previous guidance provided on Feb. 25, 2010. The company has commenced guidance for adjusted OIBDA. There can be no assurance that final results will not differ materially from this guidance.

		Current guidance	Previous guidance
U.S. Cellular 2010 guidance as of May 10, 2010 is as follows:
	Service revenue	$3,975-$4,075 million	Unchanged
	Adjusted OIBDA (1)	$850-$950 million	N/A
	Operating income	$250-$350 million	Unchanged
	Depreciation, amortization and accretion (2)	Approx. $600 million	Unchanged
	Capital expenditures	Approx. $600 million	Unchanged
TDS Telecom (ILEC and CLEC) 2010 guidance as of May 10, 2010 is as follows:
	Operating revenues	$760-$790 million	$740-$780 million
	Adjusted OIBDA (1)	$250-$275 million	N/A
	Operating income	$80-$105 million	$70-$100 million
	Depreciation, amortization and accretion (2)	Approx. $170 million	Unchanged
	Capital expenditures	Approx. $155 million	Approx. $140 million

(1)Defined as operating income excluding the effects of: depreciation, amortization and accretion (OIBDA); the net gain or loss on asset disposals (if any); and the loss on impairment of intangible assets (if any).  This amount may also be commonly referred to by management as operating cash flow. This amount should not be confused with cash flows from operating activities, which is a component of the consolidated statement of cash flows. TDS did not previously provide guidance on adjusted OIBDA.

(2)Includes estimated losses on disposals of assets but does not include an estimate for loss on impairment of intangible assets since this cannot be predicted.

This guidance represents the views of management as of May 10, 2010 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.

2

 

Stock repurchase summary

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

Repurchase Period	# Shares	Cost (in millions)
2010 (first quarter)	510,902	$	14.8
2009 (full year)	6,374,741	$	176.6
2008 (full year)	5,861,822	$	199.6
Total	12,747,465	$	391.0

Conference call information

TDS will hold a conference call on May 10, 2010at 9:30 a.m. CDT.

§Access the live call on the Conference Calls page ofwww.teldta.com or athttp://ir.teldta.com/phoenix.zhtml?p=irol-eventDetails&c=67422&eventID=3055234.

§Access the call by phone at 866-871-4351 (US/Canada) and use conference ID #72053512.

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 12,300 people as of March 31, 2010.

Visitwww.teldta.com for comprehensive financial information,including earnings releases, quarterly and annual filings, shareholder information and more.

About U.S. Cellular

United States Cellular Corporation, the nation’s sixth-largest wireless carrier, provides a comprehensive range of wireless products and services, excellent customer support and a high-quality network to approximately 6.1 million customers in 26 states. The Chicago-based company employed 8,900 full-time equivalent associates as of March 31, 2010.                      

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: The ability of the company to successfully grow its markets; the overall economy; competition; the access to and pricing of unbundled network elements; the ability to obtain or 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.

For more information about TDS and its subsidiaries, visit:

TDS: www.teldta.com

U.S. Cellular:www.uscellular.com

TDS Telecom:www.tdstelecom.com

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UNITED STATES CELLULAR CORPORATION SUMMARY OPERATING DATA
Quarter Ended			3/31/2010			12/31/2009			9/30/2009			6/30/2009			3/31/2009
Total population
	Consolidated markets (1)			90,468,000			89,712,000			85,118,000			83,726,000			83,726,000
	Consolidated operating markets (1)			46,546,000			46,306,000			46,306,000			46,306,000			46,306,000
Market penetration at end of period
	Consolidated markets (2)			6.8	%		6.8	%		7.2	%		7.4	%		7.5	%
	Consolidated operating markets (2)			13.2	%		13.3	%		13.2	%		13.3	%		13.5	%
All customers
	Total at end of period			6,147,000			6,141,000			6,131,000			6,155,000			6,243,000
	Gross additions			358,000			399,000			386,000			317,000			404,000
	Net additions (losses)			6,000			10,000			(24,000	)		(88,000	)		47,000
Retail customers
	Total at end of period			5,768,000			5,744,000			5,705,000			5,711,000			5,770,000
	Gross additions			305,000			354,000			351,000			286,000			366,000
	Net retail additions (losses) (3)			24,000			39,000			(6,000	)		(59,000	)		63,000
		Net postpay additions (losses)		(9,000	)		26,000			8,000			(32,000	)		60,000
		Net prepaid additions (losses)		33,000			13,000			(14,000	)		(27,000	)		3,000
Service revenues components (000s)
	Voice and other retail service		$	663,939		$	676,554		$	690,106		$	708,609		$	718,885
	Data service			201,280			189,759			174,286			161,955			156,954
	Total retail service		$	865,219		$	866,313		$	864,392		$	870,564		$	875,839
	Inbound roaming			51,942			61,728			68,767			62,223			60,057
	Other			48,027			56,814			50,289			41,323			47,719
Total service revenues (000s)(4)			$	965,188		$	984,855		$	983,448		$	974,110		$	983,615
	Divided by average customers (000s)			6,137			6,139			6,138			6,199			6,229
	Divided by three months in each quarter			3			3			3			3			3
Average monthly revenue per unit (5)			$	52.42		$	53.48		$	53.41		$	52.38		$	52.64
	Voice and other retail service (5)		$	36.06		$	36.75		$	37.48		$	38.11		$	38.47
	Data service (5)		$	10.93		$	10.30		$	9.46		$	8.71		$	8.40
	Total retail service (5)		$	46.99		$	47.05		$	46.94		$	46.82		$	46.87
	Inbound roaming (5)		$	2.82		$	3.35		$	3.73		$	3.35		$	3.21
	Other (5)		$	2.61		$	3.08		$	2.74		$	2.21		$	2.56
Postpay churn rate (6)				1.4	%		1.6	%		1.7	%		1.7	%		1.5	%
Capital expenditures (000s)			$	121,500		$	189,000		$	128,900		$	91,200		$	137,700
Cell sites in service				7,310			7,279			7,161			7,043			6,942

(1)Used only to calculate 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 consolidated markets and consolidated operating markets, respectively, as estimated by Claritas.

(3)Calculated by adding net postpay additions (losses) and net prepaid additions (losses).

(4)U.S. Cellular revised previously reported Service revenues for all quarterly periods in 2009 to reflect certain corrections. See “Revision of Prior Period Amounts” section for additonal details. Previously reported Service revenues were $986.3 million, $984.9 million, $974.8 million and $981.9 million for the three month periods ended December 31, September 30, June 30 and March 31, 2009, respectively.

(5)Calculated by dividing the components of service revenues by the average customers and number of months in the quarter.

(6)Calculated by dividing the total postpay customer disconnects during the quarter by the average postpay customer base for the quarter.

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TELEPHONE AND DATA SYSTEMS, INC. SUMMARY OPERATING DATA
Quarter Ended		3/31/2010		12/31/2009		9/30/2009		6/30/2009		3/31/2009
TDS Telecom
ILEC
	Equivalent access lines (1)		778,700		775,900		772,700		775,800		777,100
	Physical access lines (2)		530,400		536,300		539,400		548,000		556,800
	High-speed data customers (3)		217,400		208,300		202,100		197,100		188,100
	Long-distance customers		365,600		362,800		356,500		354,100		348,900
	Managed IP stations (4)		2,300		1,900		1,500		1,200		1,000
	Capital expenditures (000s)	$	20,200	$	26,900	$	23,800	$	26,200	$	21,400
CLEC
	Equivalent access lines (1)		349,300		355,900		364,100		372,300		381,100
	High-speed data customers (3)		36,000		36,900		37,600		38,700		39,700
	Managed IP stations (4)		14,300		12,000		9,600		6,400		4,100
	Capital expenditures (000s)	$	3,200	$	6,800	$	4,700	$	5,700	$	5,000

(1)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)Individual circuits connecting customers to a telephone company’s central office facilities.

(3)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)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 March 31, (Unaudited, dollars and shares in thousands, except per share amounts)
										Increase/ (Decrease)
				2010			2009 (1)			Amount			Percent
Operating revenues
	U.S. Cellular			$	1,024,037		$	1,054,505		$	(30,468	)	(3	)%
	TDS Telecom				195,505			199,302			(3,797	)	(2	)%
	All Other (2)				3,073			4,580			(1,507	)	(33	)%
					1,222,615			1,258,387			(35,772	)	(3	)%
Operating expenses
	U.S. Cellular
		Expenses excluding depreciation, amortization and accretion			796,843			793,743			3,100		—
		Depreciation, amortization and accretion			143,233			137,878			5,355		4	%
		Loss on asset disposals, net			5,176			3,945			1,231		31	%
					945,252			935,566			9,686		1	%
	TDS Telecom
		Expenses excluding depreciation, amortizationand accretion			125,865			130,745			(4,880	)	(4	)%
		Depreciation, amortization and accretion			43,423			41,863			1,560		4	%
		Loss on asset disposals, net			345			215			130		60	%
					169,633			172,823			(3,190	)	(2	)%
	All Other (1)
		Expenses excluding depreciation and amortization			1,930			6,358			(4,428	)	(70	)%
		Depreciation and amortization			2,733			3,252			(519	)	(16	)%
		Loss on asset disposals, net			(90	)		10			(100	)	>(100	)%
					4,573			9,620			(5,047	)	(52	)%
			Total operating expenses		1,119,458			1,118,009			1,449		—
Operating income (loss)
	U.S. Cellular				78,785			118,939			(40,154	)	(34	)%
	TDS Telecom				25,872			26,479			(607	)	(2	)%
	All Other (1)				(1,500	)		(5,040	)		3,540		70	%
					103,157			140,378			(37,221	)	(27	)%
Investment and other income (expense)
	Equity in earnings of unconsolidated entities				24,903			25,337			(434	)	(2	)%
	Interest and dividend income				2,441			2,072			369		18	%
	Interest expense				(28,720	)		(30,370	)		1,650		5	%
	Other, net				(190	)		499			(689	)	>(100	)%
			Total investment and other income (expense)		(1,566	)		(2,462	)		896		36	%
Income before income taxes					101,591			137,916			(36,325	)	(26	)%
	Income tax expense				38,465			42,106			(3,641	)	(9	)%
Net income					63,126			95,810			(32,684	)	(34	)%
	Less: Net income attributable to noncontrolling interests, net of tax				(14,011	)		(21,350	)		7,339		34	%
Net income attributable to TDS shareholders					49,115			74,460			(25.345	)	(34	)%
	Preferred dividend requirement				(12	)		(13	)		1		8	%
Net income available to common shareholders				$	49,103		$	74,447		$	(25,344	)	(34	)%
Basic weighted average shares outstanding					105,938			112,238			(6,300	)	(6	)%
Basic earnings per share attributable to TDS shareholders				$	0.46		$	0.66		$	(0.20	)	(30	)%
Diluted weighted average shares outstanding					106,250			112,427			(6,177	)	(5	)%
Diluted earnings per share attributable to TDS shareholders				$	0.46		$	0.66		$	(0.20	)	(30	)%

(1)Amounts have been revised. See “Revision of Prior Period Amounts” section for additional details.

(2)Consists of a non-reportable segment (Suttle-Straus printing and distribution operations), corporate operations, intercompany eliminations and corporate investments.

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Telephone and Data Systems, Inc. Consolidated Balance Sheet Highlights (Unaudited, dollars in thousands)
ASSETS
		March 31, 2010		December 31, 2009 (1)
Current assets
	Cash and cash equivalents	$	645,466	$	670,992
	Short-term investments		148,364		113,275
	Accounts receivable from customers and other		486,778		515,443
	Inventory		157,935		156,987
	Other current assets		200,522		190,974
			1,639,065		1,647,671
Investments
	Licenses		1,446,825		1,443,025
	Goodwill		713,013		707,840
	Other intangible assets		31,823		26,589
	Investments in unconsolidated entities		221,112		203,799
	Other investments		9,627		9,785
			2,422,400		2,391,038
Property, plant and equipment, net
	U.S. Cellular		2,578,460		2,601,338
	TDS Telecom		871,232		880,378
	Other		25,963		26,129
			3,475,655		3,507,845
Other assets and deferred charges			64,651		65,759
Total assets		$	7,601,771	$	7,612,313

(1)Amounts have been revised. See “Revision of Prior Period Amounts” section for additional details.

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Telephone and Data Systems, Inc. Consolidated Balance Sheet Highlights (Unaudited, dollars in thousands)
LIABILITIES AND STOCKHOLDERS’ EQUITY
				March 31, 2010			December 31, 2009 (1)
Current liabilities
	Current portion of long-term debt			$	2,277		$	2,509
	Accounts payable				307,423			347,348
	Customer deposits and deferred revenues				166,080			164,451
	Accrued interest				21,330			12,227
	Accrued taxes				99,432			57,087
	Accrued compensation				62,021			93,524
	Other current liabilities				99,023			117,081
					757,586			794,227
Deferred liabilities and credits
	Net deferred income tax liability				506,453			516,919
	Other deferred liabilities and credits				371,698			373,862
					878,151			890,781
Long-term debt					1,492,666			1,492,908
Noncontrolling interests with redemption features					752			727
Equity
	TDS shareholders’ 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			2,095,636			2,088,807
		Treasury shares, at cost:
			Common Shares		(216,249	)		(217,381	)
			Special Common Shares		(477,140	)		(464,268	)
		Accumulated other comprehensive loss			(2,966	)		(2,710	)
		Retained earnings			2,399,321			2,363,759
			Total TDS shareholders’ equity		3,799,872			3,769,477
	Preferred shares				831			832
	Noncontrolling interests				671,913			663,361
		Total equity			4,472,616			4,433,670
Total liabilities and equity				$	7,601,771		$	7,612,313

(1)Amounts have been revised. See “Revision of Prior Period Amounts” section for additional details.

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Telephone and Data Systems, Inc. Balance Sheet Highlights Three Months Ended March 31, 2010 (Unaudited, dollars in thousands)
			U.S. Cellular		TDS Telecom		TDS Corporate & Other			Intercompany Eliminations			TDS Consolidated
Cash and cash equivalents			$	289,658	$	33,691	$	322,117		$	—		$	645,466
Affiliated cash investments				—		310,856		—			(310,856	)		—
Short-term investments				25,534		97,510		25,320			—			148,364
Notes receivable—affiliates				—		—		8,809			(8,809	)		—
			$	315,192	$	442,057	$	356,246		$	(319,665	)	$	793,830
Licenses, goodwill and other intangibles			$	1,936,429	$	451,282	$	(196,050	)	$	—		$	2,191,661
Investment in unconsolidated entities				178,903		3,661		45,120			(6,572	)		221,112
Other investments				4,179		2,072		3,376			—			9,627
			$	2,119,511	$	457,015	$	(147,554	)	$	(6,572	)	$	2,422,400
Property, plant and equipment, net			$	2,578,460	$	871,232	$	25,963		$	—		$	3,475,655
Notes payable—affiliates			$	—	$	8,809	$	310,856		$	(319,665	)	$	—
Long-term debt
	Current portion		$	84	$	391	$	1,802		$	—		$	2,277
	Non-current portion			867,662		2,181		622,823			—			1,492,666
		Total	$	867,746	$	2,572	$	624,625		$	—		$	1,494,943
Preferred shares			$	—	$	—	$	831		$	—		$	831
Capital expenditures
	Quarter ended 3/31/2010		$	121,514	$	23,376	$	1,732		$	—		$	146,622

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TDS Telecom Highlights Three Months Ended March 31, (Unaudited, dollars in thousands)
									Increase (Decrease)
			2010			2009			Amount			Percent
Local Telephone Operations
	Operating revenues
		Voice	$	44,558		$	48,578		$	(4,020	)	(8	)%
		Data		28,298			25,060			3,238		13	%
		Network access		67,942			67,831			111		—
		Miscellaneous		9,358			8,718			640		7	%
				150,156			150,187			(31	)	—
	Operating expenses
		Cost of services and products		46,492			47,684			(1,192	)	(2	)%
		Selling, general and administrative expenses		41,737			41,029			708		2	%
		Depreciation, amortization and accretion		37,058			36,086			972		3	%
		Loss on asset disposals, net		260			138			122		88	%
				125,547			124,937			610		—
	Operating income		$	24,609		$	25,250		$	(641	)	(3	)%
Competitive Local Exchange Carrier Operations
		Revenues	$	47,743		$	51,189		$	(3,446	)	(7	)%
		Expenses excluding depreciation, amortization and accretion		40,030			44,106			(4,076	)	(9	)%
		Depreciation, amortization and accretion		6,365			5,777			588		10	%
		Loss on asset disposals, net		85			77			8		10	%
				46,480			49,960			(3,480	)	(7	)%
	Operating income		$	1,263		$	1,229		$	34		3	%
Intercompany revenues			$	(2,394	)	$	(2,074	)	$	(320	)	(15	)%
Intercompany expenses				(2,394	)		(2,074	)		(320	)	(15	)%
				—			—			—
Total TDS Telecom operating income			$	25,872		$	26,479		$	(607	)	(2	)%

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Telephone and Data Systems, Inc. Consolidated Statement of Cash Flows (Unaudited)
				Three Months Ended March 31,
				2010			2009 (1)
				(Dollars in thousands)
Cash flows from operating activities
	Net income			$	63,126		$	95,810
	Add (deduct) adjustments to reconcile net income to net cash flows from operating activities
			Depreciation, amortization and accretion		189,389			182,993
			Bad debts expense		20,245			20,303
			Stock-based compensation expense		7,444			5,556
			Deferred income taxes, net		(13,874	)		5,603
			Equity in earnings of unconsolidated entities		(24,903	)		(25,337	)
			Distributions from unconsolidated entities		7,243			6,029
			Loss on asset disposals, net		5,431			4,170
			Other operating activities		948			52
		Changes in assets and liabilities from operations
			Accounts receivable		9,648			(10,936	)
			Inventory		(947	)		7,720
			Accounts payable		(40,676	)		(48,271	)
			Customer deposits and deferred revenues		784			(1,010	)
			Accrued taxes		35,641			34,893
			Accrued interest		9,212			9,358
			Other assets and liabilities		(58,051	)		(63,683	)
					210,660			223,250
Cash flows from investing activities
	Additions to property, plant and equipment				(146,622	)		(165,236	)
	Cash paid for acquisitions and licenses				(21,118	)		(14,582	)
	Cash paid for investments				(50,000	)		(26,248	)
	Cash received for investments				15,561			—
	Other investing activities				439			1,010
					(201,740	)		(205,056	)
Cash flows from financing activities
	Repayment of long-term debt				(697	)		(993	)
	TDS Common Shares and Special Common Shares reissued for benefit plans, net of tax payments				463			383
	U.S. Cellular Common Shares reissued for benefit plans, net of tax payments				486			356
	Repurchase of TDS Special Common Shares				(14,810	)		(12,237	)
	Repurchase of U.S. Cellular Common Shares				(5,186	)		(13,291	)
	Dividends paid				(11,891	)		(12,057	)
	Distributions to noncontrolling interests				(2,284	)		(1,458	)
	Other financing activities				(527	)		61
					(34,446	)		(39,236	)
Net decrease in cash and cash equivalents					(25,526	)		(21,042	)
Cash and cash equivalents
	Beginning of period				670,992			777,309
	End of period			$	645,466		$	756,267

(1)Amounts have been revised. See “Revision of Prior Period Amounts” section for additional details.

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Telephone and Data Systems, Inc. Financial Measures and Reconciliations (Unaudited, dollars in thousands)
Three Months Ended March 31, 2010			U.S. Cellular		TDS Telecom (1)		All Other (2)			Consolidated Total
Operating revenues			$	1,024,037	$	195,505	$	3,073		$	1,222,615
Deduct:
	U.S. Cellular equipment sales revenue			58,849
		Service revenues	$	965,188
Operating income			$	78,785	$	25,872	$	(1,500	)	$	103,157
Add:
	Depreciation, amortization and accretion			143,233		43,423		2,733			189,389
	(Gain) Loss on asset disposals			5,176		345		(90	)		5,431
		Adjusted OIBDA (3) (6)	$	227,194	$	69,640	$	1,143		$	297,977
		Adjusted OIBDA margin (4)		23.5%		35.6%
Three Months Ended March 31, 2009			U.S. Cellular (7)		TDS Telecom (1)		All Other (2)			Consolidated Total (7)
Operating revenues			$	1,054,505	$	199,302	$	4,580		$	1,258,387
Deduct:
	U.S. Cellular equipment sales revenue			70,890
		Service revenues	$	983,615
Operating income			$	118,939	$	26,479	$	(5,040	)	$	140,378
Add (Deduct):
	Depreciation, amortization and accretion			137,878		41,863		3,252			182,993
	Loss on asset disposals			3,945		215		10			4,170
		Adjusted OIBDA (3) (6)	$	260,762	$	68,557	$	(1,778	)	$	327,541
		Adjusted OIBDA margin (4)		26.5%		34.4%
			TDS Consolidated
Three Months Ended March 31,			2010		2009
Cash flows from operating activities			$	210,660	$	223,250				��
Deduct:
	Capital expenditures			146,622		165,236
		Free cash flow (5)	$	64,038	$	58,014

(1)Includes ILEC and CLEC intercompany eliminations.

(2)Consists of a non-reportable segment (Suttle Straus), corporate operations, intercompany eliminations between U.S. Cellular, TDS Telecom and corporate investments. Amounts in this column are presented only to reconcile to consolidated totals and may not otherwise be meaningful.

(3)Adjusted OIBDA is a segment measure reported to the chief operating decision maker for purposes of making decisions about allocating resources to the segments and assessing their performance.  Adjusted OIBDA is defined as operating income excluding the effects of: depreciation, amortization and accretion (OIBDA); the net gain or loss on asset disposals (if any); and the loss on impairment of intangible assets (if any).  This amount may also be commonly referred to by management as operating cash flow. This amount should not be confused with Cash flows from operating activities, which is a component of the consoli dated statement of cash flows. 

(4)Defined as Adjusted OIBDA divided by service revenues (U.S. Cellular) and operating revenues (TDS Telecom).  Equipment revenues are excluded from the denominator of the U.S. Cellular calculation since equipment is generally sold at a net negative margin, and the equipment subsidy is effectively a cost for purposes of assessing business results.   TDS believes that this calculation method is consistent with the method used by certain investors to assess U.S. Cellular’s business results.  Adjusted OIBDA margin may also be commonly referred to by management as operating cash flow margin.

(5)Defined as cash flows from operating activities minus capital expenditures. Free cash flow is a Non-GAAP financial measure.  TDS believes that free cash flow as reported by TDS is useful to investors and other users of its financial information in evaluating the amount of cash generated by business operations, after consideration of capital expenditures.

(6)Excludes the net gain or loss on asset disposals and loss on impairment of intangible assets, if any, in order to show operating results on a more comparable basis from period to period.  TDS does not intend to imply that any of such amounts that are excluded are non-recurring, infrequent or unusual.  Accordingly, you should be aware that TDS may incur such amounts in the future.  

(7)Previously reported GAAP amounts have been revised. See “Revision of Prior Period Amounts” section for additional details.

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Revision of Prior Period Amounts

In preparing its financial statements for the three months ended March 31, 2010, TDS discovered certain errors related to accounting for service revenues and sales tax liabilities. These errors resulted in the overstatement of operating revenues and understatement of sales tax liabilities for 2009, 2008 and 2007. In accordance withSEC Staff Accounting Bulletin Nos. 99 and 108 (“SAB 99 and SAB 108”), TDS evaluated these errors and determined that they were immaterial to each of the reporting periods affected and, therefore, amendment of previously filed reports was not required. However, if the adjustments to correct the cumulative errors had been recorded in the first quarter 2010, TDS believes the impact would have been significant to the first quarter and would impact comparisons to prior periods. As permitted by SAB 108, TDS revised in the current filing and plans to revise in the next filings of its quarterly and annual consolidated financial statements previously reported annual and quarterly results for 2009, 2008 and 2007 for these immaterial amounts. In addition to recording these adjustments, TDS recorded and plans to record other adjustments to prior-year amounts to correct other immaterial items, which include adjustments related to rent expense, as disclosed in TDS’ 2009 Form 10-K.

The Consolidated Balance Sheet at December 31, 2009 was revised to reflect the cumulative effect of these errors which resulted in a decrease to Retained earnings of $7.8 million.  Also, in accordance with SAB 108, the Consolidated Statement of Operations and the Consolidated Statement of Cash Flows have been revised as follows:

Consolidated Statement of Operations — Three Months Ended March 31, 2009
	(Dollars in thousands)	As previously reported			Adjustment			Revised
	Operating revenues	$	1,256,646		$	1,741		$	1,258,387
	Total operating expenses		1,120,437			(2,428	)		1,118,009
	Operating income		136,209			4,169			140,378
	Interest expense		(30,105	)		(265	)		(30,370	)
	Total investment and other income (expense)		(2,197	)		(265	)		(2,462	)
	Income before income taxes		134,012			3,904			137,916
	Income tax expense		40,638			1,468			42,106
	Net income		93,374			2,436			95,810
	Net income attributable to noncontrolling interests, net of tax		(21,366	)		16			(21,350	)
	Net income attributable to TDS shareholders		72,008			2,452			74,460
	Net income available to common shareholders		71,995			2,452			74,447
	Basic earnings attributable to TDS shareholders		0.64			0.02			0.66
	Diluted earnings attributable to TDS shareholders		0.64			0.02			0.66
Consolidated Balance Sheet — December 31, 2009
	(Dollars in thousands)	As previously reported			Adjustment			Revised
	Accounts receivable from customers and others	$	511,914		$	3,529		$	515,443
	Total current assets		1,644,142			3,529			1,647,671
	Total asssets		7,608,784			3,529			7,612,313
	Customer deposits and deferred revenues		167,963			(3,512	)		164,451
	Accrued taxes		39,644			17,443			57,087
	Total current liabilities		780,296			13,931			794,227
	Net deferred income tax liability		517,762			(843	)		516,919
	Total deferred liabilities and credits		891,624			(843	)		890,781
	Retained earnings		2,371,587			(7,828	)		2,363,759
	Total TDS shareholders’ equity		3,777,305			(7,828	)		3,769,477
	Noncontrolling interests		665,092			(1,731	)		663,361
	Total equity		4,443,229			(9,559	)		4,433,670
	Total liabilities and equity		7,608,784			3,529			7,612,313

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Consolidated Statement of Cash Flows — Three Months Ended March 31, 2009
	(Dollars in thousands)	As previously reported			Adjustment			Revised
	Net income	$	93,374		$	2,436		$	95,810
	Depreciation, amortization and accretion		182,766			227			182,993
	Deferred income taxes, net		4,934			669			5,603
	Loss on asset disposals		2,416			1,754			4,170
	Change in accounts receivable		(6,272	)		(4,664	)		(10,936	)
	Change in customer deposits and deferred revenues		(823	)		(187	)		(1,010	)
	Change in accrued taxes		34,865			28			34,893
	Change in other assets and liabilities		(63,420	)		(263	)		(63,683	)
	Cash flows from operating activities		223,250			—			223,250

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