PR Newswire | Nov 4, 2021 04:06PM EDT

11/04 15:05 CDT

TDS reports third quarter 2021 resultsUScellular and TDS Telecom executing on strategic priorities; TDS Telecom has deployed fiber to 40% of its wireline service addresses CHICAGO, Nov. 4, 2021

CHICAGO, Nov. 4, 2021 /PRNewswire/ -- As previously announced, TDS will hold a teleconference November 4, 2021, at 4:00 p.m. CDT. Listen to the call live via the Events & Presentations page ofinvestors.tdsinc.com.

Telephone and Data Systems, Inc. (NYSE:TDS) reported total operating revenues of $1,328 million for the third quarter of 2021, versus $1,324 million for the same period one year ago. Net income attributable to TDS common shareholders and related diluted earnings per share were $28 million and $0.24, respectively, for the third quarter of 2021 compared to $78 million and $0.66, respectively, in the same period one year ago.

"The TDS Enterprise continued to execute on its strategic priorities," said LeRoy T. Carlson, Jr., TDS President and CEO."UScellular is continuing to make improvements in its high-performing network and TDS Telecom is making progress in its new fiber expansion markets.

"At UScellular, the positive impact of postpaid ARPU contributed to growth in retail service revenues. In addition, prepaid results indicate an improving trend as we progress through the year. Our business and government and our tower operations are also gaining momentum towards the growth we believe is achievable in their respective areas. UScellular's 5G and network modernization programs are on track, and we are optimistic on the use of millimeter wave spectrum for fixed wireless access and its potential to serve rural customers. Test trials to validate customer experience and network performance have continued and will provide important insights as we look to bring this service to market.

"TDS Telecom achieved excellent growth in broadband connections, which helped drive higher operating revenues for the quarter. TDS Telecom continues to upsize its fiber program and has deployed fiber to 40% of its wireline service addresses. Now capable of delivering 2Gig internet speeds in select markets, TDS Telecom will offer 2Gig speeds in all of its fiber expansion markets going forward."

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 November 4, 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 Estimated Results



UScellular Previous Current

(Dollars in millions)

Service revenues $3,050-$3,150$3,075-$3,125

Adjusted OIBDA^1 $850-$950 Unchanged

Adjusted EBITDA^1 $1,025-$1,125Unchanged

Capital expenditures $775-$875 $700-$800





TDS Telecom Previous Current

(Dollars in millions)

Total operating revenues$975-$1,025 $990-$1,020

Adjusted OIBDA^1 $290-$320 $295-$315

Adjusted EBITDA^1 $290-$320 $295-$315

Capital expenditures $425-$475 $400-$450

The following tables reconcile EBITDA, Adjusted EBITDA and Adjusted OIBDA to the corresponding GAAP measures, Net income or Income before income taxes. 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.

2021 Estimated Results

UScellular TDS Telecom

(Dollars in millions)

Net income (GAAP) N/A N/A

Add back:

Income tax expense N/A N/A

Income before income taxes (GAAP) $155-$255 $95-$115

Add back:

Interest expense 180 -

Depreciation, amortization and accretion expense675 200

EBITDA (Non-GAAP)^1 $1,010-$1,110$295-$315

Add back or deduct:

(Gain) loss on asset disposals, net 15 -

Adjusted EBITDA (Non-GAAP)^1 $1,025-$1,125$295-$315

Deduct:

Equity in earnings of unconsolidated entities 170 -

Interest and dividend income 5 -

Adjusted OIBDA (Non-GAAP)^1 $850-$950 $295-$315

Actual Results

Nine Months Ended Year Ended September 30, 2021 December 31, 2020

TDS TDS UScellular UScellular Telecom Telecom

(Dollars in millions)

Net income (GAAP) $ 132 $68 $ 233 $100

Add back:

Income tax expense 31 22 17 18

Income before income taxes (GAAP) $ 163 $90 $ 250 $117

Add back:

Interest expense 144 (3) 112 (4)

Depreciation, amortization and accretion expense 510 147 683 203

EBITDA (Non-GAAP)^1 $ 817 $233 $ 1,045 $316

Add back or deduct:

(Gain) loss on asset disposals, net 15 2 25 1

(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) -

Adjusted EBITDA (Non-GAAP)^1 $ 831 $235 $ 1,063 $317

Deduct:

Equity in earnings of unconsolidated entities 137 - 179 -

Interest and dividend income 5 1 8 5

Other, net - (1) - (1)

Adjusted OIBDA (Non-GAAP)^1 $ 689 $235 $ 876 $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 significant recurring^ non-cash charges, gains and losses, and other items as presented above as1 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 September 30, 2021, can be found on TDS' website at investors.tdsinc.com.

Stock RepurchaseDuring the third quarter of 2021, TDS repurchased 77,489 Common Shares for $2 million and UScellular repurchased 626,410 Common Shares for $20 million.

Conference Call InformationTDS will hold a conference call on November 4, 2021 at 4:00 p.m. Central Time.

* Access the live call on the Events & Presentations page of investors.tdsinc.com or at https://event.on24.com/wcc/r/3192472/D1EB8251CA63A8AE47DD208E6469C968 * Access the call by phone at (833) 968-2187, conference ID: 6753568.

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; broadband, video and voice; and hosted and managed services to approximately 6 million connections nationwide through its businesses, UScellular, TDS Telecom, and OneNeck IT Solutions. Founded in 1969 and headquartered in Chicago, TDS employed approximately 8,900 associates as of September 30, 2021.

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, as updated by any TDS Form 10-Q filed subsequent to such Form 10-K.

For more information about TDS and its subsidiaries, visit:TDS: www.tdsinc.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 9/30/2021 6/30/2021 3/31/2021 12/31/2020 9/30/2020

Retail Connections

Postpaid

Total at end of period 4,391,000 4,399,000 4,406,000 4,412,000 4,401,000

Gross additions 145,000 141,000 143,000 171,000 168,000

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

Smartphones 103,000 98,000 101,000 117,000 98,000

Connected devices 40,000 40,000 39,000 52,000 66,000

Net additions (losses) (8,000) (6,000) (6,000) 11,000 28,000

Feature phones (7,000) (7,000) (9,000) (9,000) (8,000)

Smartphones 2,000 6,000 6,000 12,000 8,000

Connected devices (3,000) (5,000) (3,000) 8,000 28,000

ARPU^1,2 $48.12 $47.74 $47.65 $47.51 $47.10

ARPA^1,3 $125.99 $125.25 $125.25 $124.87 $123.27

Churn rate^4 1.15 %1.11 %1.12 %1.21 %1.06 %

Handsets 0.95 %0.88 %0.92 %1.01 %0.88 %

Connected devices 2.59 %2.69 %2.53 %2.64 %2.35 %

Prepaid

Total at end of period 518,000 507,000 496,000 499,000 506,000

Gross additions 74,000 65,000 62,000 56,000 65,000

Net additions (losses) 11,000 10,000 (3,000) (8,000) 11,000

ARPU^2 $35.05 $35.64 $35.25 $35.15 $35.45

Churn rate^4 4.09 %3.66 %4.37 %4.24 %3.59 %

Total connections at end of period^54,972,000 4,967,000 4,961,000 4,968,000 4,962,000

Market penetration at end of period

Consolidated operating population 31,865,000 31,493,000 31,493,000 31,314,000 31,314,000

Consolidated operating penetration^616 %16 %16 %16 %16 %

Capital expenditures (millions) $185 $148 $125 $320 $216

Total cell sites in service 6,857 6,819 6,802 6,797 6,758

Owned towers 4,274 4,278 4,270 4,271 4,246

^ Q3 2021 Postpaid ARPU and ARPA amounts exclude $9 million of postpaid revenue1 related to a third quarter out-of-period error.

^ Average Revenue Per User (ARPU) - metric is calculated by dividing a revenue2 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 total3 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 disconnect4 service each month. These rates represent the average monthly churn rate for each respective period.

^ Includes reseller and other connections.5

^ Market penetration is calculated by dividing the number of wireless6 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 9/30/2021 6/30/2021 3/31/2021 12/31/20209/30/2020

Residential connections

Broadband^1

Wireline, Incumbent 252,100 249,200 243,700 242,500 243,400

Wireline, Expansion 32,600 28,300 24,100 20,400 17,300

Cable 202,700 201,200 199,500 196,400 193,300

Total Broadband 487,400 478,700 467,300 459,300 454,000

Video^2

Wireline 65,900 64,800 63,000 63,000 62,300

Cable 77,200 78,400 79,600 81,400 82,300

Total Video 143,100 143,200 142,700 144,400 144,500

Voice^3

Wireline 252,100 254,200 255,000 256,900 260,000

Cable 54,200 54,000 53,700 53,900 54,400

Total Voice 306,300 308,100 308,700 310,800 314,400

Total Residential connections 936,800 930,100 918,700 914,400 913,000

Commercial connections

Broadband^1 35,400 34,900 34,400 34,000 33,700

Video^2 18,200 19,100 19,400 19,700 19,700

Voice^3 111,500 114,300 116,500 119,700 122,700

ManagedIP^4 103,900 106,200 108,500 113,300 116,700

Total Commercial connections 269,000 274,400 278,800 286,700 292,900

Total connections 1,205,7001,204,5001,197,4001,201,1001,205,900



Residential revenue per connection^5$ 57.75$ 57.66$ 56.97$ 55.66 $ 55.66



Capital expenditures (millions) $ 91 $ 99 $ 70 $ 147 $ 92

Numbers may not foot due to rounding.

^ The individual customers provided high-speed internet access through various1 transmission technologies, including fiber, DSL, dedicated internet circuit technologies or cable modem service.

^ The individual customers provided video services.2

^ The individual circuits connecting a customer to TDS' central office3 facilities that provide voice services or the billable number of lines into a building for voice services.

^ The number of telephone handsets, data lines and IP trunks providing4 communications using IP networking technology.

^ Total residential revenue per connection is calculated by dividing total5 residential revenue by the average number of residential connections and by the number of months in the period.

Telephone and Data Systems, Inc.

Consolidated Statement of Operations Highlights

(Unaudited)



Three Months Ended Nine Months Ended September 30, September 30,

2021 2021 2021 2020 2021 2020 vs. 2020 vs. 2020

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

Operating revenues

UScellular^1 $1,016$1,027(1) % $3,053$2,9643 %

TDS Telecom 252 247 2 % 752 728 3 %

All Other^2 60 50 22 % 152 157 (3) %

1,328 1,324 - 3,957 3,849 3 %

Operating expenses

UScellular

Expenses excluding depreciation, amortization and accretion 803 795 1 % 2,364 2,266 4 %

Depreciation, amortization and accretion 160 161 - 510 516 (1) %

(Gain) loss on asset disposals, net 8 6 29 % 15 14 7 %

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

971 962 1 % 2,888 2,796 3 %

TDS Telecom

Expenses excluding depreciation, amortization and accretion 175 169 3 % 517 488 6 %

Depreciation, amortization and accretion 49 49 (1) % 147 152 (4) %

(Gain) loss on asset disposals, net 1 - 50 % 2 1 N/M

224 219 2 % 665 641 4 %

All Other^2

Expenses excluding depreciation and amortization 60 50 19 % 153 157 (3) %

Depreciation and amortization 4 7 (20) % 13 17 (18) %

(Gain) loss on asset disposals, net (1) - N/M - - (90) %

64 56 15 % 167 174 (4) %

Total operating expenses 1,259 1,237 2 % 3,720 3,611 3 %

Operating income (loss)

UScellular 45 65 (31) % 165 168 (2) %

TDS Telecom 27 28 (3) % 87 87 (1) %

All Other^2 (3) (6) 40 % (15) (17) 14 %

69 87 (21) % 237 238 -

Investment and other income (expense)

Equity in earnings of unconsolidated entities 48 48 - 138 138 -

Interest and dividend income 3 4 (30) % 9 12 (24) %

Gain (loss) on investments - 3 N/M - 3 N/M

Interest expense (54) (43) (24) % (193) (119) (63) %

Other, net - - 19 % (1) (1) 13 %

Total investment and other income (expense) (3) 12 N/M (47) 33 N/M

Income before income taxes 66 99 (33) % 190 271 (30) %

Income tax expense 19 6 N/M 38 17 N/M

Net income 47 93 (50) % 152 254 (40) %

Less: Net income attributable to noncontrolling interests, net of tax7 15 (55) % 26 42 (37) %

Net income attributable to TDS shareholders 40 78 (49) % 126 212 (41) %

TDS Preferred Share dividends 12 - N/M 21 - N/M

Net income attributable to TDS common shareholders $28 $78 (64) % $105 $212 (51) %



Basic weighted average shares outstanding 115 114 - 115 114 -

Basic earnings per share attributable to TDS common shareholders $0.24 $0.68 (64) % $0.91 $1.85 (51) %



Diluted weighted average shares outstanding 116 115 1 % 116 115 -

Diluted earnings per share attributable to TDS common shareholders $0.24 $0.66 (64) % $0.89 $1.81 (51) %

N/M - Percentage change not meaningful.

Numbers may not foot due to rounding.

^ During the three months ended September 30, 2021, UScellular recorded a $91 million out-of-period error, which increased Service revenue by $9 million for the three and nine months ended September 30, 2021.

^ Consists of TDS corporate, intercompany eliminations and all other business2 operations not included in the UScellular and TDS Telecom segments.

Telephone and Data Systems, Inc.

Consolidated Statement of Cash Flows

(Unaudited)



Nine Months Ended September 30,

2021 2020

(Dollars in millions)

Cash flows from operating activities

Net income $ 152$254

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

Depreciation, amortization and accretion 670 685

Bad debts expense 36 55

Stock-based compensation expense 35 39

Deferred income taxes, net 55 217

Equity in earnings of unconsolidated entities (138) (138)

Distributions from unconsolidated entities 107 118

(Gain) loss on asset disposals, net 17 15

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

(Gain) loss on investments - (3)

Other operating activities 51 1

Changes in assets and liabilities from operations

Accounts receivable 26 26

Equipment installment plans receivable (44) 13

Inventory 12 2

Accounts payable (56) 95

Customer deposits and deferred revenues 13 (21)

Accrued taxes (43) (156)

Accrued interest 4 14

Other assets and liabilities (33) (50)

Net cash provided by operating activities 863 1,166



Cash flows from investing activities

Cash paid for additions to property, plant and equipment (726) (914)

Cash paid for intangible assets (1,268)(169)

Cash received from investments 3 1

Cash paid for investments - (1)

Cash received from divestitures and exchanges 2 1

Advance payments for license acquisitions (20) -

Other investing activities 3 4

Net cash used in investing activities (2,006)(1,078)



Cash flows from financing activities

Issuance of long-term debt 1,418 675

Repayment of long-term debt (1,884)(8)

Issuance of TDS Preferred Shares 1,110 -

TDS Common Shares reissued for benefit plans, net of tax payments (5) (3)

UScellular Common Shares reissued for benefit plans, net of tax payments (16) (11)

Repurchase of TDS Common Shares (4) (14)

Repurchase of UScellular Common Shares (21) (23)

Dividends paid to TDS shareholders (81) (58)

Payment of debt and equity issuance costs (59) (23)

Distributions to noncontrolling interests (2) (2)

Other financing activities (4) 1

Net cash provided by financing activities 452 534



Net increase (decrease) in cash, cash equivalents and restricted cash (691) 622



Cash, cash equivalents and restricted cash

Beginning of period 1,452 474

End of period $ 761$1,096

Telephone and Data Systems, Inc.

Consolidated Balance Sheet Highlights

(Unaudited)



ASSETS



September 30, 2021December 31, 2020

(Dollars in millions)

Current assets

Cash and cash equivalents $ 725 $ 1,429

Short-term investments - 3

Accounts receivable, net 1,083 1,112

Inventory, net 142 154

Prepaid expenses 104 105

Income taxes receivable 187 187

Other current assets 56 36

Total current assets 2,297 3,026



Assets held for sale 3 2



Licenses 4,111 2,638



Goodwill 547 547



Other intangible assets, net 202 213



Investments in unconsolidated entities509 477



Property, plant and equipment, net 4,108 3,972



Operating lease right-of-use assets 1,021 998



Other assets and deferred charges 648 652



Total assets $ 13,446 $ 12,525

Telephone and Data Systems, Inc.

Consolidated Balance Sheet Highlights

(Unaudited)



LIABILITIES AND EQUITY



September 30, 2021December 31, 2020

(Dollars in millions, except per share amounts)

Current liabilities

Current portion of long-term debt $194 $5

Accounts payable 466 508

Customer deposits and deferred revenues 207 193

Accrued interest 20 16

Accrued taxes 46 69

Accrued compensation 112 132

Short-term operating lease liabilities 139 129

Other current liabilities 104 101

Total current liabilities 1,288 1,153



Liabilities held for sale - 1



Deferred liabilities and credits

Deferred income tax liability, net 919 863

Long-term operating lease liabilities 947 940

Other deferred liabilities and credits 750 541



Long-term debt, net 2,804 3,424



Noncontrolling interests with redemption features 10 10



Equity

TDS shareholders' equity

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

Capital in excess of par value 2,478 2,482

Preferred Shares, par value $0.01 per share 1,074 -

Treasury shares, at cost (459) (477)

Accumulated other comprehensive loss (2) (4)

Retained earnings 2,819 2,802

Total TDS shareholders' equity 5,911 4,804



Noncontrolling interests 817 789



Total equity 6,728 5,593



Total liabilities and equity $13,446 $12,525

Balance Sheet Highlights

(Unaudited)



September 30, 2021

TDS TDS IntercompanyTDS Corporate

UScellularTelecom & Other EliminationsConsolidated

(Dollars in millions)

Cash and cash equivalents $ 231 $153 $ 500 $ (159) $ 725



Licenses, goodwill and other intangible assets$ 4,102 $751 $ 7 $ - $ 4,860

Investment in unconsolidated entities 466 4 46 (7) 509

$ 4,568 $755 $ 53 $ (7) $ 5,369



Property, plant and equipment, net $ 2,457 $1,559$ 92 $ - $ 4,108



Long-term debt, net:

Current portion $ 3 $- $ 191 $ - $ 194

Non-current portion 2,604 4 196 - 2,804

$ 2,607 $4 $ 387 $ - $ 2,998

TDS Telecom Highlights

(Unaudited)



Three Months Ended Nine Months Ended September 30, September 30,

2021 2021 2021 2020 2021 2020 vs. 2020 vs. 2020

(Dollars in millions)

Operating revenues

Residential

Wireline, Incumbent $87$853 %$258$2465 %

Wireline, Expansion 9 5 73 %24 13 77 %

Cable 66 62 6 %197 182 8 %

Total residential 162 152 6 %479 441 8 %

Commercial 45 48 (6) %138 146 (5) %

Wholesale 44 46 (5) %135 140 (4) %

Total service revenues 251 247 2 %751 727 3 %

Equipment revenues - - (44) %1 1 (15) %

Total operating revenues 252 247 2 %752 728 3 %



Cost of services 102 100 3 %301 287 5 %

Cost of equipment and products - - (36) %- 1 (17) %

Selling, general and administrative expenses72 69 5 %216 200 8 %

Depreciation, amortization and accretion 49 49 (1) %147 152 (4) %

(Gain) loss on asset disposals, net 1 - 50 %2 1 N/M

Total operating expenses 224 219 2 %665 641 4 %



Operating income $27$28(3) %$87 $87 (1) %

N/M - Percentage change not meaningful

Numbers may not foot due to rounding.

Telephone and Data Systems, Inc.

Financial Measures and Reconciliations

(Unaudited)



Free Cash Flow



Three Months EndedNine Months Ended September 30, September 30,

2021 2020 2021 2020

(Dollars in millions)

Cash flows from operating activities (GAAP) $384 $359 $863 $1,166

Less: Cash paid for additions to property, plant and equipment270 304 726 914

Free cash flow (Non-GAAP)^1 $114 $54 $137 $252

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, Inc.