PR Newswire | Feb 18, 2021 04:06PM EST

02/18 15:05 CST

TDS reports fourth quarter and full year 2020 results2020 results at UScellular and TDS Telecom provide strong foundation for 2021Provides 2021 guidance CHICAGO, Feb. 18, 2021

CHICAGO, Feb. 18, 2021 /PRNewswire/ --

As previously announced, TDS will hold a teleconferenceonFebruary 19, 2021 at 9:00 a.m. CST. Listen to the call live via the Events & Presentations page of investors.tdsinc.com.

Telephone and Data Systems, Inc. (NYSE:TDS) reported total operating revenues of $1,376 million for the fourth quarter of 2020, versus $1,336 million for the same period one year ago. Net income attributable to TDS shareholders and related diluted earnings per share were $14 million and $0.12, respectively, for the fourth quarter of 2020 compared to $12 million and $0.10, respectively, in the same period one year ago.

TDS reported total operating revenues of $5,225 million and $5,176 million for the years ended 2020 and 2019, respectively. Net income attributable to TDS shareholders and related diluted earnings per share were $226 million and $1.93, respectively, for the year ended 2020 compared to $121 million and $1.03, respectively, for the year ended 2019.

"The TDS Family of Businesses successfully overcame the challenges of 2020, finishing the year with excellent communications services, strong financial performance and heightened awareness of the essential services that TDS and our industry provides," said LeRoy T. Carlson, Jr., TDS President and CEO. "UScellular kept churn low throughout the year, acquired new retail connections, maintained strong cost discipline and produced fine financial results. Under the leadership of our new CEO, Laurent Therivel, UScellular is in a strong position to focus on growth in 2021. TDS Telecom accomplished a transformational year as execution of its broadband-focused strategy enabled it to respond to the seismic shift to remote working and learning, highlighting the importance of high-speed broadband in the home.

"UScellular grew its service revenues, driven primarily by higher ARPU, and customers taking higher-value services and it maintained operational, quality and cost discipline. These factors contributed to increased profitability year-over-year. Significant progress was achieved with both network modernization and deployment of 5G. In 2021, connecting customers, especially in underserved areas, with the highest-quality network continues to be one of UScellular's top priorities and remains a key competitive differentiator. UScellular will also be focused on market share expansion, ramping up business and government customer opportunities that utilize 5G and IoT, enhancing customers' digital experiences, and continuing its network modernization and 5G programs.

"TDS Telecom achieved excellent growth in residential customer connections and strong financial performance in 2020, reflecting the successful execution of its broadband strategy, bolstered by increased consumer demand for broadband services caused by the large shift to remote work and learning. Out-of-territory fiber expansions and customers increasing their data speeds drove higher revenues. Successful efforts to reduce costs enabled TDS Telecom to redirect more resources to important growth opportunities. TDS Telecom's cable segment continued to significantly grow through the Continuum acquisition and increases in broadband penetration. TDS Telecom expanded its deployment of fiber both inside and outside of its traditional markets. Given the positive impacts we are seeing from our fiber investments, TDS Telecom plans to expand its fiber program by doubling the number of service addresses it builds in 2021.

"Our associates showed tremendous focus, resilience and dedication during this incredibly challenging year. I thank each of them. TDS' strong performance is a direct result of their hard and thoughtful work. The TDS Team looks forward to a very successful 2021, and to the progress we will continue to make on our long-term growth initiatives throughout the TDS Family of Businesses."

2021 Estimated Results

TDS' current estimates of full-year 2021 results for UScellular and TDS Telecom are shown below. Such estimates represent management's view as of February 18, 2021 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.

2021 EstimatedActual Results forUScellular Results the Year Ended December 31, 2020

(Dollars in millions)

Service revenues $3,025-$3,125 $3,067

Adjusted OIBDA^1 $800-$950 $876

Adjusted EBITDA^1 $975-$1,125 $1,063

Capital expenditures $775-$875 $940



2021 EstimatedActual Results forTDS Telecom Results the Year Ended December 31, 2020

(Dollars in millions)

Total operating revenues$975-$1,025 $976

Adjusted OIBDA^1 $290-$320 $314

Adjusted EBITDA^1 $290-$320 $317

Capital expenditures $425-$475 $368

The following tables provide reconciliations of Net income to Adjusted OIBDA and Adjusted EBITDA for 2021 estimated results and actual results for the year ended December 31, 2020. In providing 2021 estimated results, TDS has not completed the below reconciliation to Net income because it does not provide guidance for income taxes. Although potentially significant, TDS believes that the impact of income taxes cannot be reasonably predicted; therefore, TDS is unable to provide such guidance.

UScellular TDS Telecom

Estimate ActualEstimate Actual

(Dollars in millions)

Net income (GAAP) N/A $233 N/A $100

Add back:

Income tax expense N/A 17 N/A 18

Income before income taxes (GAAP) $135-$285 $250 $80-$110 $117

Add back:

Interest expense 135 112 - (4)

Depreciation, amortization and accretion expense 685 683 210 203

EBITDA (Non-GAAP)^1 $955-$1,105$1,045$290-$320$316

Add back or deduct:

(Gain) loss on asset disposals, net 20 25 - 1

(Gain) loss on license sales and exchanges, net - (5) - -

(Gain) loss on investments - (2) - -

Adjusted EBITDA (Non-GAAP)^1 $975-$1,125$1,063$290-$320$317

Deduct:

Equity in earnings of unconsolidated entities 170 179 - -

Interest and dividend income 5 8 - 5

Other, net - - - (1)

Adjusted OIBDA (Non-GAAP)^1 $800-$950 $876 $290-$320$314

Numbers may not foot due to rounding.

EBITDA, 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^1 significant recurring non-cash charges, gains and losses, and other items as presented above as they provide additional relevant and useful information to investors and other users of TDS' financial data in evaluating the effectiveness of its operations and underlying business trends in a manner that is consistent with management's evaluation of business performance. Adjusted EBITDA shows adjusted earnings before interest, taxes, depreciation, amortization and accretion, and gains and losses, while Adjusted OIBDA reduces this measure further to exclude Equity in earnings of unconsolidated entities and Interest and dividend income in order to more effectively show the performance of operating activities excluding investment activities. The table above reconciles EBITDA, Adjusted EBITDA and Adjusted OIBDA to the corresponding GAAP measure, Net income or Income before income taxes. Additional information and reconciliations related to Non-GAAP financial measures for December 31, 2020, can be found on TDS' website at investors.tdsinc.com.

Conference Call InformationTDS will hold a conference call on February 19, 2021 at 9:00 a.m. Central Time.

* Access the live call on the Events & Presentations page of investors.tdsinc.com or at https://www.webcaster4.com/Webcast/Page/1145/40052 * Access the call by phone at 833-968-2187 (US/Canada), conference ID: 5593349

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 TDSTelephone and Data Systems, Inc. (TDS), a Fortune 1000(r) company, provides wireless; cable and wireline broadband, video and voice; and hosted and managed services to approximately 6 million connections nationwide through its businesses, UScellular, TDS Telecom, BendBroadband and OneNeck IT Solutions. Founded in 1969 and headquartered in Chicago, TDS employed 9,200 people as of December 31, 2020.

Visit investors.tdsinc.com for comprehensive financial information, including earnings releases, quarterly and annual filings, shareholder information and more.

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995:All information set forth in this news release, except historical and factual information, represents forward-looking statements. This includes all statements about the company's plans, beliefs, estimates, and expectations. These statements are based on current estimates, projections, and assumptions, which involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Important factors that may affect these forward-looking statements include, but are not limited to: intense competition; the ability to obtain or maintain roaming arrangements with other carriers on acceptable terms; 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; uncertainties in TDS' future cash flows and liquidity and access to the capital markets; the ability to make payments on TDS and UScellular indebtedness or comply with the terms of debt covenants; conditions in the U.S. telecommunications industry; the value of assets and investments; the state and federal regulatory environment; pending and future litigation; cyber-attacks or other breaches of network or information technology security; disruption in credit or other financial markets; deterioration of U.S. or global economic conditions; the impact, duration and severity of public health emergencies, such as the COVID-19 pandemic. Investors are encouraged to consider these and other risks and uncertainties that are more fully described under "Risk Factors" in the most recent filing of TDS' Form 10-K.

For more information about TDS and its subsidiaries, visit:TDS: www.tdsinc.comUScellular: www.uscellular.comTDS Telecom: www.tdstelecom.comOneNeck IT Solutions: www.oneneck.com

United States Cellular Corporation

Summary Operating Data (Unaudited)



As of or for the Quarter Ended 12/31/2020 9/30/2020 6/30/2020 3/31/2020 12/31/2019

Retail Connections

Postpaid

Total at end of period 4,412,000 4,401,000 4,372,000 4,359,000 4,383,000

Gross additions 171,000 168,000 129,000 132,000 170,000

Feature phones 2,000 4,000 3,000 2,000 2,000

Smartphones 117,000 98,000 82,000 88,000 128,000

Connected devices 52,000 66,000 44,000 42,000 40,000

Net additions (losses) 11,000 28,000 12,000 (26,000) (12,000)

Feature phones (9,000) (8,000) (8,000) (10,000) (11,000)

Smartphones 12,000 8,000 11,000 (10,000) 13,000

Connected devices 8,000 28,000 9,000 (6,000) (14,000)

ARPU^1 $47.51 $47.10 $46.24 $47.23 $46.57

ARPA^2 $124.87 $123.27 $120.70 $122.92 $120.99

Churn rate^3 1.21 %1.06 %0.89 %1.21 %1.38 %

Handsets 1.01 %0.88 %0.71 %0.95 %1.11 %

Connected devices 2.64 %2.35 %2.24 %3.11 %3.44 %

Prepaid

Total at end of period 499,000 506,000 496,000 494,000 506,000

Gross additions 56,000 65,000 62,000 57,000 63,000

Net additions (losses) (8,000) 11,000 2,000 (12,000) (3,000)

ARPU^1 $35.15 $35.45 $34.89 $34.07 $34.11

Churn rate^3 4.24 %3.59 %4.05 %4.67 %4.40 %

Total connections at end of period^44,968,000 4,962,000 4,919,000 4,903,000 4,941,000

Market penetration at end of period

Consolidated operating population 31,314,000 31,314,000 31,292,000 31,292,000 30,740,000

Consolidated operating penetration^516 %16 %16 %16 %16 %

Capital expenditures (millions) $320 $216 $168 $236 $243

Total cell sites in service 6,797 6,758 6,673 6,629 6,578

Owned towers 4,271 4,246 4,208 4,184 4,166

Due to rounding, the sum of quarterly results may not equal the total for theyear.

Average Revenue Per User (ARPU) - metric is calculated by dividing a revenue^1 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.

^ Average Revenue Per Account (ARPA) - metric is calculated by dividing total2 postpaid service revenues by the average number of postpaid accounts and by the number of months in the period.

^ Churn rate represents the percentage of the connections that disconnect3 service each month. These rates represent the average monthly churn rate for each respective period.

^ Includes reseller and other connections.4

^ Market penetration is calculated by dividing the number of wireless5 connections at the end of the period by the total estimated population of consolidated operating markets.

TDS Telecom

Summary Operating Data (Unaudited)



As of or for the Quarter Ended 12/31/20209/30/20206/30/20203/31/202012/31/2019

TDS Telecom

Wireline

Residential connections

Voice^1 256,900 260,000 261,800 259,100 262,100

Broadband^2 262,900 260,700 255,100 242,700 241,300

Video^3 63,000 62,300 61,400 59,000 58,500

Wireline residential connections 582,800 583,000 578,300 560,700 561,900



Total residential revenue per connection^4 $ 51.33 $51.45 $49.73 $50.12 $ 49.11



Commercial connections

Voice^1 106,700 109,400 112,400 114,400 117,800

Broadband^2 21,000 20,800 20,700 20,500 20,400

managedIP^5 111,400 114,900 115,500 118,300 121,200

Video^3 200 200 200 100 100

Wireline commercial connections 239,400 245,400 248,700 253,400 259,600



Total Wireline connections 822,200 828,400 827,000 814,200 821,500



Cable

Cable residential and commercial connections

Broadband^6 209,400 206,200 203,700 196,800 193,500

Video^7 100,800 101,800 103,400 105,100 106,600

Voice^8 66,800 67,700 69,000 68,900 69,500

managedIP^5 1,900 1,800 1,800 1,400 1,300

Total Cable connections 378,900 377,400 378,000 372,300 370,900



Numbers may not foot due to rounding.

^ The individual circuits connecting a customer to Wireline's central office1 facilities that provide voice services.

^ The number of Wireline customers provided high-capacity data circuits via2 various technologies, including DSL and dedicated internet circuit technologies.

^ The number of Wireline customers provided video services.3

^ Total residential revenue per connection is calculated by dividing total4 Wireline residential revenue by the average number of Wireline residential connections and by the number of months in the period.

^ The number of telephone handsets, data lines and IP trunks providing5 communications using IP networking technology.

^ Billable number of lines into a building for high-speed data services.6

Generally, a home or business receiving video programming counts as one^ video connection. In counting bulk residential or commercial connections,7 such as an apartment building or hotel, connections are counted based on the number of units/rooms within the building receiving service.

^ Billable number of lines into a building for voice services.8

TDS Telecom

Capital Expenditures (Unaudited)



Quarter Ended 12/31/20209/30/20206/30/20203/31/202012/31/2019

(Dollars in millions)

Wireline $ 122 $74 $58 $39 $ 98

Cable 25 18 17 15 26

Total TDS Telecom $ 147 $92 $75 $54 $ 124

Telephone and Data Systems, Inc.

Consolidated Statement of Operations Highlights

(Unaudited)



Three Months Ended Year Ended December 31, December 31,

2020 2019 2020 2020 2019 2020 vs. 2019 vs. 2019

(Dollars and shares in millions, except per share amounts)

Operating revenues

UScellular $1,073$1,0522 % $4,037$4,022-

TDS Telecom 248 235 6 % 976 930 5 %

All Other^1 55 49 10 % 212 224 (6) %

1,376 1,336 3 % 5,225 5,176 1 %

Operating expenses

UScellular

Expenses excluding depreciation, amortization and accretion 895 871 3 % 3,161 3,190 (1) %

Depreciation, amortization and accretion 168 178 (6) % 683 702 (3) %

(Gain) loss on asset disposals, net 11 6 91 % 25 19 36 %

(Gain) loss on sale of business and other exit costs, net - - N/M - (1) N/M

(Gain) loss on license sales and exchanges, net (5) - N/M (5) - N/M

1,069 1,055 1 % 3,864 3,910 (1) %

TDS Telecom

Expenses excluding depreciation, amortization and accretion 175 162 8 % 663 629 5 %

Depreciation, amortization and accretion 50 51 (1) % 203 200 1 %

(Gain) loss on asset disposals, net - - 38 % 1 (7) N/M

226 213 6 % 866 823 5 %

All Other^1

Expenses excluding depreciation and amortization 55 53 3 % 211 235 (10) %

Depreciation and amortization 6 7 (22) % 23 30 (23) %

(Gain) loss on asset disposals, net - - N/M 1 - 19 %

60 60 - 236 264 (11) %

Total operating expenses 1,355 1,328 2 % 4,966 4,997 (1) %

Operating income (loss)

UScellular 4 (3) N/M 173 112 54 %

TDS Telecom 23 21 6 % 110 107 3 %

All Other^1 (6) (11) 47 % (24) (40) 41 %

21 8 N/M 259 179 45 %

Investment and other income (expense)

Equity in earnings of unconsolidated entities 43 39 11 % 181 168 8 %

Interest and dividend income 3 5 (33) % 15 29 (49) %

Gain (loss) on investments (1) - N/M 2 - N/M

Interest expense (50) (37) (36) % (168) (165) (2) %

Other, net - (1) N/M (1) - N/M

Total investment and other income (5) 6 N/M 29 32 (10) %

Income before income taxes 16 14 13 % 288 211 36 %

Income tax expense - (1) N/M 19 64 (71) %

Net income 16 15 4 % 269 147 83 %

Less: Net income attributable to noncontrolling interests, net of tax2 3 (44) % 43 26 70 %

Net income attributable to TDS shareholders $14 $12 18 % $226 $121 86 %



Basic weighted average shares outstanding 114 115 - 114 114 -

Basic earnings per share attributable to TDS shareholders $0.12 $0.10 19 % $1.97 $1.06 86 %



Diluted weighted average shares outstanding 115 116 - 115 116 -

Diluted earnings per share attributable to TDS shareholders $0.12 $0.10 21 % $1.93 $1.03 87 %

N/M - Percentage change not meaningful.

Numbers may not foot due to rounding.

^ Consists of TDS corporate, intercompany eliminations and all other business1 operations not included in the UScellular and TDS Telecom segments.

Telephone and Data Systems, Inc.

Consolidated Statement of Cash Flows

(Unaudited)



Year Ended December 31, 2020 2019

(Dollars in millions)

Cash flows from operating activities

Net income $269 $ 147

Add (deduct) adjustments to reconcile net income to net cash flows from operating activities

Depreciation, amortization and accretion 909 932

Bad debts expense 77 112

Stock-based compensation expense 53 59

Deferred income taxes, net 190 34

Equity in earnings of unconsolidated entities (181) (168)

Distributions from unconsolidated entities 189 162

(Gain) loss on asset disposals, net 27 12

(Gain) loss on sale of business and other exit costs, net - (1)

(Gain) loss on license sales and exchanges, net (5) -

(Gain) loss on investments (2) -

Other operating activities 3 4

Changes in assets and liabilities from operations

Accounts receivable (16) (49)

Equipment installment plans receivable (54) (97)

Inventory 12 (19)

Accounts payable 173 (60)

Customer deposits and deferred revenues 4 (9)

Accrued taxes (120) (17)

Other assets and liabilities 4 (26)

Net cash provided by operating activities 1,532 1,016



Cash flows from investing activities

Cash paid for additions to property, plant and equipment (1,338)(957)

Cash paid for acquisitions and licenses (172) (346)

Cash received from investments 1 29

Cash paid for investments (3) (11)

Cash received from divestitures and exchanges 26 41

Advance payments for license acquisitions (30) (5)

Other investing activities 5 -

Net cash used in investing activities (1,511)(1,249)



Cash flows from financing activities

Issuance of long-term debt 1,250 -

Repayment of long-term debt (110) (118)

TDS Common Shares reissued for benefit plans, net of tax payments (3) (6)

UScellular Common Shares reissued for benefit plans, net of tax payments (11) (9)

Repurchase of TDS Common Shares (14) -

Repurchase of UScellular Common Shares (23) (21)

Dividends paid to TDS shareholders (78) (75)

Payment of debt issuance costs (41) (1)

Distributions to noncontrolling interests (2) (4)

Payments to acquire additional interest in subsidiaries (11) -

Other financing activities - 14

Net cash provided by (used in) financing activities 957 (220)



Net increase (decrease) in cash, cash equivalents and restricted cash 978 (453)



Cash, cash equivalents and restricted cash

Beginning of period 474 927

End of period $1,452$ 474

Telephone and Data Systems, Inc.

Consolidated Balance Sheet Highlights

(Unaudited)



ASSETS



December 31, 2020 2019

(Dollars in millions)

Current assets

Cash and cash equivalents $1,429 $465

Short-term investments 3 -

Accounts receivable, net 1,112 1,124

Inventory, net 154 169

Prepaid expenses 105 98

Income taxes receivable 187 36

Other current assets 36 29

Total current assets 3,026 1,921



Assets held for sale 2 -



Licenses 2,638 2,480



Goodwill 547 547



Other intangible assets, net 213 239



Investments in unconsolidated entities477 488



Property, plant and equipment, net 3,972 3,527



Operating lease right-of-use assets 998 972



Other assets and deferred charges 652 607



Total assets $12,525$10,781

Telephone and Data Systems, Inc.

Consolidated Balance Sheet Highlights

(Unaudited)



LIABILITIES AND EQUITY



December 31, 2020 2019

(Dollars in millions, except per share amounts)

Current liabilities

Current portion of long-term debt $5 $10

Accounts payable 508 374

Customer deposits and deferred revenues 193 189

Accrued interest 16 11

Accrued taxes 69 41

Accrued compensation 132 121

Short-term operating lease liabilities 129 116

Other current liabilities 101 100

Total current liabilities 1,153 962



Liabilities held for sale 1 -



Deferred liabilities and credits

Deferred income tax liability, net 863 676

Long-term operating lease liabilities 940 931

Other deferred liabilities and credits 541 481



Long-term debt, net 3,424 2,316



Noncontrolling interests with redemption features 10 11



Equity

TDS shareholders' equity

Series A Common and Common Shares, par value $0.01 per share1 1

Capital in excess of par value 2,482 2,468

Treasury shares, at cost (477) (479)

Accumulated other comprehensive loss (4) (9)

Retained earnings 2,802 2,672

Total TDS shareholders' equity 4,804 4,653



Noncontrolling interests 789 751



Total equity 5,593 5,404



Total liabilities and equity $12,525$10,781

Balance Sheet Highlights

(Unaudited)



December 31, 2020

TDS TDS IntercompanyTDS UScellular Corporate Telecom EliminationsConsolidated & Other

(Dollars in millions)

Cash and cash equivalents $ 1,271 $178 $ 170 $ (190) $ 1,429



Licenses, goodwill and other intangible assets$ 2,629 $761 $ 8 $ - $ 3,398

Investment in unconsolidated entities 435 4 45 (7) 477

$ 3,064 $765 $ 53 $ (7) $ 3,875



Property, plant and equipment, net $ 2,466 $1,408$ 98 $ - $ 3,972



Long-term debt, net:

Current portion $ 2 $- $ 3 $ - $ 5

Non-current portion 2,489 4 931 - 3,424

$ 2,491 $4 $ 934 $ - $ 3,429

TDS Telecom Highlights

(Unaudited)



Three Months Ended Year Ended December 31, December 31,

2020 2019 2020 vs.2020 2019 2020 vs. 2019 2019

(Dollars in millions)

Wireline

Operating revenues

Residential $90$838 % $349$3286 %

Commercial 37 40 (8) % 152 168 (9) %

Wholesale 46 47 (3) % 182 186 (2) %

Total service revenues 173 171 1 % 684 682 -

Equipment and product sales - - (34) % 1 1 (31) %

173 171 1 % 685 683 -

Operating expenses

Cost of services 72 68 5 % 269 263 2 %

Cost of equipment and products - - (55) % 1 1 (36) %

Selling, general and administrative expenses 51 50 1 % 199 199 -

Expenses excluding depreciation, amortization and accretion123 119 3 % 468 463 1 %

Depreciation, amortization and accretion 30 33 (9) % 124 132 (6) %

(Gain) loss on asset disposals, net - - N/M - (8) N/M

154 153 1 % 593 587 1 %

Operating income $19$185 % $92 $96 (4) %



Cable

Operating revenues

Residential $63$5319 % $245$20520 %

Commercial 13 11 15 % 47 43 10 %

76 64 18 % 292 247 18 %

Operating expenses

Cost of services 33 26 24 % 123 105 17 %

Selling, general and administrative expenses 19 17 12 % 72 62 16 %

Expenses excluding depreciation, amortization and accretion52 44 19 % 195 167 17 %

Depreciation, amortization and accretion 20 17 16 % 78 68 15 %

(Gain) loss on asset disposals, net - - (87) % 1 1 (26) %

72 61 18 % 274 236 16 %

Operating income $4 $3 17 % $18 $11 60 %



Total TDS Telecom operating income $23$216 % $110$1073 %

N/M - Percentage change not meaningful.

Numbers may not foot due to rounding.

Telephone and Data Systems, Inc.

Financial Measures and Reconciliations



Free Cash Flow



Three Months EndedYear Ended December 31, December 31,

2020 2019 2020 2019

(Dollars in millions)

Cash flows from operating activities (GAAP) $366 $142 $1,532$1,016

Less: Cash paid for additions to property, plant and equipment424 326 1,338 957

Free cash flow (Non-GAAP)^1 $(58)$(184) $194 $59

Free cash flow is a non-GAAP financial measure which TDS believes may be^ useful to investors and other users of its financial information in1 evaluating liquidity, specifically, the amount of net cash generated by business operations after deducting Cash paid for additions to property, plant and equipment.

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SOURCE Telephone and Data Systems