SEC FILE NUMBER
001-14157

  CUSIP NUMBER
879433100

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 12b-25

NOTIFICATION OF LATE FILING


(Check one):    ¨ Form 10-K     ¨ Form 20-F     ¨ Form 11-K     ý Form 10-Q     ¨ Form N-SAR     ¨ Form N-CSR

For Period Ended:     March 31, 2004               
¨ Transition Report on Form 10-K
¨ Transition Report on Form 20-F
¨ Transition Report on Form 11-K
¨ Transition Report on Form 10-Q
¨ Transition Report on Form N-SAR
For the Transition Period Ended:                                       

Nothing in this form shall be construed to imply that the Commission has verified any information contained herein.

If the notification relates to a portion of the filing checked above, identify the Item(s) to which the notification relates:
N/A

PART I — REGISTRANT INFORMATION

Telephone and Data Systems, Inc.

Full Name of Registrant

N/A

Former Name if Applicable

30 North LaSalle Street

Address of Principal Executive Office (Street and Number)

Chicago, Illinois 60602

City, State and Zip Code

PART II — RULES 12b-25(b) AND (c)

If the subject report could not be filed without unreasonable effort or expense and the registrant seeks relief pursuant to Rule 12b-25(b), the following should be completed. (Check box if appropriate) ý

(a) The reason described in reasonable detail in Part III of this form could not be eliminated without unreasonable effort or expense
(b) The subject annual report, semi-annual report, transition report on Form 10-K, Form 20-F, Form 11-K, Form N-SAR or Form N-CSR, or portion thereof, will be filed on or before the fifteenth calendar day following the prescribed due date; or the subject quarterly report or transition report on Form 10-Q, or portion thereof, will be filed on or before the fifth calendar day following the prescribed due date; and
(c) The accountant's statement or other exhibit required by Rule 12b-25(c) has been attached if applicable.

PART III — NARRATIVE

State below in reasonable detail why Forms 10-K, 20-F, 11-K, 10-Q, N-SAR, N-CSR, or the transition report or portion thereof, could not be filed within the prescribed time period.

As disclosed on a Current Report on Form 8-K filed on April 19, 2004, Telephone and Data Systems, Inc. ("TDS") issued a news release announcing that it would restate financial statements for the years ended December 31, 2003 and 2002 and for the interim periods for such years. A copy of such news release is attached hereto as Attachment A. It is necessary for TDS to finalize and complete such restatements before TDS can file the Form 10-Q for the quarter ended March 31, 2004 because financial information to be included in such Form 10-Q depends on the results of such restatements of prior periods. Such restatements cannot be completed by May 10, 2004 and, accordingly, the financial information required to be disclosed in such Form 10-Q cannot be timely prepared without unreasonable effort or expense. TDS intends to file the restatements and Form 10-Q on or prior to May 17, 2004.


PART IV — OTHER INFORMATION

(1) Name and telephone number of person to contact in regard to this notification

D. Michael Jack
(Name) 		608
(Area Code) 		664-8316
(Telephone Number)

(2) Have all other periodic reports required under Section 13 or 15(d) of the Securities Exchange Act of 1934 or Section 30 of the Investment Company Act of 1940 during the preceding 12 months or for such shorter period that the registrant was required to file such report(s) been filed ? If answer is no, identify report(s).
Yes ý No ¨

(3) Is it anticipated that any significant change in results of operations from the corresponding period for the last fiscal year will be reflected by the earnings statements to be included in the subject report or portion thereof?
Yes ý No ¨
If so, attach an explanation of the anticipated change, both narratively and quantitatively, and, if appropriate, state the reasons why a reasonable estimate of the results cannot be made.

The results of operations expected to be reported in the Quarterly Report on Form 10-Q for the period ended March 31, 2004 and a comparison of such results to March 31, 2003, as they are expected to be restated, are attached hereto as Attachment B. However, until the restatement and the Form 10-Q for the Quarter ended March 31, 2004 is filed, there can be no assurance that the final results will not differ materially from such expected results.


  Telephone and Data Systems, Inc.
(Name of Registrant as Specified in Charter) 		 

Date: May 10, 2004
  By: /s/ D. Michael Jack
D. Michael Jack
Senior Vice President and
Corporate Controller
(Principal Accounting Officer)

Attachment A


Contact: Mark A. Steinkrauss, Vice President-Corporate Relations
  (312) 592-5384 mark.steinkrauss@teldta.com

  Ruth E. Venning, Director-Corporate Relations
  (312) 592-5327 ruth.venning@teldta.com

  Julie D. Mathews, Manager-Investor Relations
  (312) 592-5341 julie.mathews@teldta.com


TDS TO RESTATE 2003 AND 2002 FINANCIAL STATEMENTS FOR NON-CASH ITEMS;
RESCHEDULES DATE OF ANNUAL MEETING OF SHAREHOLDERS
Notes Strong First Quarter Net Adds and Low Churn for U.S. Cellular

FOR RELEASE: IMMEDIATE

CHICAGO –April 19, 2004 – Telephone and Data Systems, Inc. [AMEX:TDS] today announced that it will restate its financial statements for the years ended December 31, 2003 and 2002. The company will also restate interim quarterly financial information for those years. The restatement is expected to reflect only a reclassification between goodwill and licenses for wireless operations and the recording of additional deferred taxes, and non-cash expenses related to these items. The adjustments are not expected to have any effect on revenues, cash or cash flows.

The restatement relates to the implementation of Statement of Financial Accounting Standards (SFAS) 141, “Business Combinations” and SFAS 142, “Goodwill and other Intangible Assets” as well as the application of deferred taxes under SFAS 109, “Accounting for Income Taxes” in connection with licenses and goodwill. After a thorough review, the company determined that it would be appropriate to change its accounting for licenses, goodwill and related deferred taxes under these accounting statements. The restatements involve the reclassification of certain amounts from goodwill to licenses as of January 1, 2002, and recording of the non-cash deferred tax effects resulting from this reclassification. These adjustments resulted in higher license values, which required the company to record a non-cash cumulative effect of an accounting change in 2002 and non-cash impairment charges to licenses in 2003.

The restatement is expected to increase licenses by approximately $230 million, decrease goodwill by approximately $139 million and increase net deferred income tax liability by approximately $91 million as a result of implementation of SFAS 142 on January 1, 2002. In 2002, the cumulative effect of an accounting change will increase the previously reported net loss by approximately $10 million. In 2003, the restatement is expected to decrease the previously reported net income by approximately $14 million.

As a result of the restatements, the company is rescheduling the date of its 2004 annual meeting of shareholders and anticipates that it will be held on June 29, 2004. The meeting was originally scheduled for May 6, 2004.

The company expects to announce operating results for the first quarter of 2004 on April 28, 2004. The company’s wireless operation, U.S. Cellular, had strong net additions from distribution channels in the quarter from all of its major markets with net additions totaling 196,000. The 196,000 net additions do not include 76,000 subscribers transferred to AT&T Wireless Services, Inc. on February 18, 2004, the result of a previously announced sale of wireless properties and customers between U.S. Cellular and AT&T Wireless. The company will revise its full-year guidance on April 28. Additionally, the company recorded post-pay churn in the quarter of 1.3%, which is one of the lowest churn rates for the wireless sector. The company said its wireline operation, TDS Telecom, also performed very well in the quarter. ILEC equivalent access lines increased approximately 9,000 over the comparable quarter a year ago and now total 722,400. CLEC equivalent access lines increased 75,000 over the comparable quarter a year ago and now total 379,000. ILEC and CLEC DSL customers now total 50,000, up 93% from a year ago. The number of ILEC long distance customers grew 32% year-to-year and now total 266,000.



 

The estimated effects of the restatements are preliminary and subject to review by the company’s independent auditors. Although the company is not aware of any circumstances that would cause such amounts to change materially, until the review by its auditors is complete and the restated financial statements are filed with the Securities and Exchange Commission, there can be no assurance that the restated financial statements will not differ materially from these estimates.

As a result of the restatements, previously reported consolidated financial statements for the years ended December 31, 2003 and 2002, including the reports of the independent auditors, and the interim quarterly financial statements for those years, should not be relied upon. The company intends to file an amendment to its 2003 Form 10-K as promptly as possible. It will include restated financial statements and financial information for each of the years ended December 31, 2003 and 2002, including restated interim quarterly financial information for those years.

Telephone and Data Systems, Inc., a FORTUNE 500 company, is a diversified telecommunications corporation founded in 1969. Through its strategic business units, U.S. Cellular and TDS Telecom, TDS operates primarily by providing wireless and wireline service. TDS builds value for its shareholders by providing excellent communications services in growing, closely related segments of the telecommunications industry. As of March 31, 2004, the company employed approximately 10,700 people and served approximately 5.7 million customers/units in 36 states. For more information, visit www.teldta.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 and projections, 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: changes in circumstances or events that may affect the ability of USM to start up the operations of the licensed areas involved in the AWE transaction completed in August 2003; the ability of USM to successfully manage and grow the operations of the Chicago MTA; changes in the overall economy; changes in competition in the markets in which TDS and USM operate; advances in telecommunications technology; changes brought about by the implementation of local number portability; changes in the telecommunications regulatory environment; changes in the value of investments, including variable prepaid forward contracts; changes in the capital markets that could adversely impact the availability, cost and terms of financing; an adverse change in the ratings afforded TDS and USM debt securities by nationally accredited ratings organizations; pending and future litigation; acquisitions/divestitures of properties and/or licenses; changes in customer growth rates, average service revenue per unit, churn rates, roaming rates and the mix of products and services offered in TDS and USM markets. Investors are encouraged to consider these and other risks and uncertainties that are discussed in documents filed by TDS with the SEC.



 

Attachment B

As previously announced, TDS and its subsidiaries will hold a joint teleconference April 28, 2004 at 9:00 a.m. Chicago time. Interested parties may listen to the call live over the Internet by accessing the conference call page of the Investor Relations section in www.teldta.com.


Contact: Mark A. Steinkrauss, Vice President, Corporate Relations
  (312) 592-5384 mark.steinkrauss@teldta.com

  Ruth E. Venning, Director, Corporate Relations
  (312) 592-5327 ruth.venning@teldta.com

  Julie D. Mathews, Manager, Investor Relations
  (312) 592-5341 julie.mathews@teldta.com


FOR RELEASE: IMMEDIATE

TDS REPORTS SOLID FIRST QUARTER RESULTS

April 28, 2004 — Chicago, Illinois – Telephone and Data Systems, Inc. [AMEX:TDS] reported operating revenues of $870.5 million for the first quarter of 2004, up 7% from $815.3 million in the comparable period a year ago, as restated. Operating income was $73.2 million in the first quarter compared to $35.7 million in the first quarter of 2003, as restated. Net income available to common and diluted earnings per share for the quarter were $19.6 million and $0.34 respectively, compared to net loss available to common and diluted loss per share of $15.9 million and $0.27 respectively, in the first quarter of 2003, as restated. In the first quarter of 2003, TDS recorded a pre-tax loss of $21.6 million ($13.6 million net of income taxes of $5 million and minority interest of $3 million), as restated, related to the difference between the fair value and book value of U.S. Cellular’s Florida and Georgia assets that were exchanged with AT&T Wireless. Also, the company recorded the cumulative effect of an accounting change, net of tax, related to the implementation of Statement of Financial Accounting Standards (SFAS) 143, “Accounting for Asset Retirement Obligations,” which reduced net income by $11.8 million.

President’s Comments
“We had an excellent start to the year with good performance from our business units. The team at U.S. Cellular, our wireless operation, started off the year with very strong results. Net customer additions from distribution channels totaled 196,000, and service revenues increased 10% during the quarter. Postpay churn was an impressive 1.3%, the lowest in the company’s history since we started tracking the number and among the very best in the industry,” said LeRoy T. Carlson, Jr., president and chief executive officer.

“At TDS Telecom, our wireline operation, total equivalent access lines in our ILEC and CLEC wireline operations increased 83,500 lines, or 8% year to year, and grew by 14,200 lines, or 1.3% from the previous quarter. Additionally, TDS Telecom recorded improved profitability in both its ILEC and CLEC businesses during the quarter.


“Our ILEC and CLEC DSL customers now total 50,000 with excellent prospects for continued growth during the year. We also continue to see strong growth in the number of ILEC long-distance lines, which now total 266,000.

“Our businesses recorded strong results in the quarter and we look forward to continued progress during the remainder of the year,” concluded Carlson.

Other Matters
During the first quarter, TDS repurchased 40,300 shares of stock at an average price of $69.82 for $2.8 million.

The tax rate in the first quarter was 46.4%. This includes a tax expense of $2.5 million related to sale of the South Texas markets to AT&T Wireless.

As previously announced, TDS and its subsidiaries will hold a joint teleconference on April 28, 2004, at 9:00 a.m. Chicago time. Interested parties may listen to the call live over the Internet at: http://www.firstcallevents.com/service/ajwz405201898gf12.html or connect by telephone at 888/245-6674 with a pass code of 6960621. The conference call will be archived on the conference call section of our web site at www.teldta.com. Certain financial and statistical information contained in the conference call presentation will be posted to the web site, together with reconciliations to generally accepted accounting principles (GAAP) of any non-GAAP information to be disclosed, prior to the commencement of the call. Investors may access this additional information on the conference call page of the Investor Relations section of the TDS web site.

TDS, a FORTUNE 500 company, is a diversified telecommunications corporation founded in 1969. Through its strategic business units, U.S. Cellular and TDS Telecom, TDS operates primarily by providing wireless and local telephone service. TDS builds value for its shareholders by providing excellent communications services in growing, closely related segments of the telecommunications industry. As of March 31, 2004, the company employed 10,700 people and served 5.6 million customers/units in 36 states.

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 and projections, 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: changes in circumstances or events that may affect the ability of USM to start up the operations of the licensed areas involved in the AT&T Wireless transaction completed in August 2003; the ability of U.S. Cellular to successfully manage and grow the operations of the Chicago MTA; changes in the overall economy; changes in competition in the markets in which TDS and U.S. Cellular operate; advances in telecommunications technology; changes brought about by the implementation of local number portability; changes in the telecommunications regulatory environment; changes in the value of investments, including variable prepaid forward contracts; changes in the capital markets that could adversely impact the availability, cost and terms of financing; an adverse change in the ratings afforded TDS and U.S. Cellular debt securities by nationally accredited ratings organizations; pending and future litigation; acquisitions/divestitures of properties and/or licenses; changes in customer growth rates, average service revenue per unit, churn rates, roaming rates and the mix of products and services offered in TDS and U.S. Cellular markets. Investors are encouraged to consider these and other risks and uncertainties that are discussed in documents filed by TDS with the Securities and Exchange Commission.

2

For more information about TDS and its subsidiaries, visit the web sites at:


TDS: http://www.teldta.com TDS Telecom: http://www.tdstelecom.com
USM: http://www.uscellular.com TDS Metrocom http://www.tdsmetro.com




3

TELEPHONE AND DATA SYSTEMS, INC.
SUMMARY OPERATING DATA


Quarter Ended      3/31/2004    12/31/2003    9/30/2003    6/30/2003    3/31/2003  
U.S. Cellular:  
Consolidated Markets:  
    Total population (000s) (1)    45,581    46,267    45,817    41,288    41,288  
    Customer units    4,547,000    4,409,000    4,268,000    4,343,000    4,240,000  
    Net customer unit activations    196,000    141,000    66,000    103,000    137,000  
    Market penetration (1)    9.98 %  9.53 %  9.32 %  10.52 %  10.27 %
    Cell sites in service    4,122    4,184    4,082    4,106    3,987  
    Average monthly revenue per unit (2)   $ 46.16   $ 47.80   $ 49.05   $ 47.38   $ 45.05  
       Retail service revenue per unit (2)   $ 40.26   $ 40.64   $ 40.68   $ 39.69   $ 37.68  
       Inbound roaming revenue per unit (2)   $ 3.17   $ 3.90   $ 4.65   $ 4.41   $ 4.36  
       Long-distance/other revenue per unit (2)   $ 2.73   $ 3.26   $ 3.72   $ 3.28   $ 3.01  
    Minutes of use (MOU) (3)    491    462    435    424    377  
    Postpay churn rate per month(4)    1.3 %  1.4 %  1.6 %  1.5 %  1.6 %
    Marketing cost per gross  
       customer unit addition (5)   $ 371   $ 384   $ 405   $ 378   $ 358  
    Construction Expenditures (000s)   $ 100,535   $ 193,413   $ 135,111   $ 163,076   $ 140,926  

(1) Market penetration is calculated using 2003 Claritas population estimates for 3/31/04 and 2002 Claritas estimates for 2003. "Total population" represents the total population of each of U.S. Cellular's consolidated markets, regardless of whether the market has begun marketing operations. The 3/31/04 total population counts include the population of the market added to consolidated operations as of 1/1/04, but exclude the population of the six markets sold to AT&T Wireless in February 2004. The 12/31/03 and 9/30/03 total population counts exclude the population of the 10 markets transferred to AT&T Wireless in August 2003 and include the population of markets acquired from AT&T Wireless in that transaction. The population of markets in which U.S. Cellular has deferred the transfer of licenses from AT&T Wireless are not included in the total population counts for any period.
(2) Per unit revenue measurements are derived from Service Revenues as reported in Financial Highlights for each respective quarter as follows:
    Service Revenues per Financial Highlights   $619,382   $620,639   $628,440   $610,109   $564,601  
    Components:  
        Retail service revenue during quarter   $ 540,228   $ 527,626   $ 521,247   $ 511,106   $ 472,308  
        Inbound roaming revenue during quarter   $42,499   $50,653   $59,638   $56,840   $54,606  
        Long-distance/other revenue during quarter   $36,655   $42,360   $47,555   $42,163   $37,687  
 
    Divided by average customers during quarter (000s)    4,473    4,328    4,271    4,292    4,178  
    Divided by three months in each quarter    3    3    3    3    3  
   
    Retail service revenue per unit   $ 40.26   $ 40.64   $ 40.68   $ 39.69   $ 37.68  
    Inbound roaming revenue per unit   $ 3.17   $ 3.90   $ 4.65   $ 4.41   $ 4.36  
    Long-distance/other revenue per unit   $ 2.73   $ 3.26   $ 3.72   $ 3.28   $ 3.01  
        Average monthly revenue per unit   $ 46.16   $ 47.80   $ 49.05   $ 47.38   $ 45.05  

(3) Average monthly local minutes of use per customer (without roaming).
(4) Postpay churn rate per month is calculated by dividing the average monthly postpay customer disconnects during the quarter by the average postpay customer base for the quarter.
(5) Due to changes in accounting for agent rebates and net customer retention expenses, for all periods shown this measurement is no longer calculable using information from the financial statements as reported. The details of this calculation and a reconciliation to line items reported in Financial Highlights for each respective quarter are shown on U.S. Cellular's web site, along with additional information related to U.S. Cellular's first quarter results, at www.uscellular.com.

4

TELEPHONE AND DATA SYSTEMS, INC.
SUMMARY OPERATING DATA


Quarter Ended      3/31/2004    12/31/2003    9/30/2003    6/30/2003    3/31/2003  
TDS Telecom  
    ILEC:  
    Access line equivalents (1)    722,400    722,200    721,600    718,800    713,800  
    Growth in equivalent ILEC access lines  
       from prior quarter-end:  
           Internal growth    200    600    2,800    5,000    2,600  
    Access lines    660,900    663,800    668,200    669,600    669,900  
    Internet service accounts    113,600    112,900    115,600    116,700    118,100  
    Digital Subscriber Lines (DSL) customers    27,300    23,600    19,300    16,200    12,800  
    Long Distance customers (3)    266,300    230,500    218,600    211,900    202,100  
    Caller I.D. penetration (2)    33.8 %  33.1 %  32.4 %  31.8 %  31.3 %
    Voicemail penetration (2)    13.3 %  13.3 %  13.4 %  13.3 %  13.2 %
    Construction Expenditures (000s)   $ 17,616   $ 35,217   $ 32,007   $ 29,288   $ 15,412  
    CLEC:  
    Access line equivalents    378,800    364,800    346,500    323,600    303,900  
    Internet service accounts    21,600    22,200    23,600    23,900    24,500  
    Percent of access lines on-switch    84.5 %  83.5 %  82.2 %  80.7 %  80.1 %
    Digital Subscriber Lines (DSL)    22,700    20,100    17,600    14,100    13,100  
    Construction Expenditures (000s)   $ 6,456   $ 10,086   $ 7,999   $ 5,504   $ 3,705  

(1) Access line equivalents are derived by converting high capacity data lines to the estimated capacity of one switched access line.
(2) Caller I.D. and Voicemail penetration is the total residential and business one-party customers purchasing the service divided by the total of these lines equipped for the service.
(3) Beginning January 1, 2004, the long distance customers reflect those lines that have chosen TDS Telecom as their primary interexchange carrier. Prior to that, a count of customers was used.



5

TELEPHONE AND DATA SYSTEMS, INC.
FINANCIAL HIGHLIGHTS
 Three Months Ended March 31,
(Unaudited, dollars in thousands, except per share amounts)


Increase (Decrease)
2003
2004 Restated Amount Percent
Operating Revenues                    
     U.S. Cellular   $ 657,650   $ 603,774   $ 53,876    8.9%
     TDS Telecom    212,862    211,504    1,358    0.6%
     870,512    815,278    55,234    6.8%
Operating Expenses  
     U.S. Cellular  
        Expenses excluding Depreciation, Amortization
          and Accretion		    515,617    476,960    38,657    8.1%
        Depreciation, Amortization and Accretion    113,894    109,577    4,317    3.9%
        Loss (Adjustment) on Assets Held for Sale    (143 )  21,561    (21,704 )  N/M  
     629,368    608,098    21,270    3.5%
     TDS Telecom  
        Expenses excluding Depreciation and Amortization    126,419    129,799    (3,380 )  (2.6% )
        Depreciation and Amortization    41,558    41,650    (92 )  (0.2% )
     167,977    171,449    (3,472 )  (2.0% )
          Total Operating Expenses    797,345    779,547    17,798    2.3%
Operating Income  
     U.S. Cellular    28,282    (4,324 )  32,606    N/M  
     TDS Telecom    44,885    40,055    4,830    12.1%
     73,167    35,731    37,436    N/M  
Other Income (Expense)  
     Interest and Dividend Income    2,896    4,328    (1,432 )  (33.1% )
     Investment Income    14,630    12,750    1,880    14.7%
     (Loss) on Investments    —    (3,500 )  3,500    N/M  
     Interest (Expense)    (46,821 )  (43,357 )  (3,464 )  (8.0% )
     Minority Interest in Income of Subsidiary Trust    —    (6,203 )  6,203    N/M  
     Other Income (Expense), Net    (527 )  1,159    (1,686 )  N/M  
     (29,822 )  (34,823 )  5,001    14.4%
Income Before Income Taxes    43,345    908    42,437    N/M  
     Income Tax Expense    20,105    4,585    15,520    N/M  
Income Before Minority Interest    23,240    (3,677 )  26,917    N/M  
     Minority Share of (Income), net of tax    (3,508 )  (368 )  (3,140 )  N/M  
Income (Loss) Before Cumulative Effect of
   Accounting Change		    19,732    (4,045 )  23,777    N/M  
Cumulative Effect of Accounting Change    —    (11,789 )  11,789    N/M  
Net Income (Loss)    19,732    (15,834 )  35,566    N/M  
     Preferred Dividend Requirement    (104 )  (104 )  —    N/M  
Net Income (Loss) Available to Common   $ 19,628   $ (15,938 ) $ 35,566    N/M  
 
Basic Average Common Shares Outstanding (000s)    57,168    58,594    (1,426 )  (2.4% )
Basic Earnings (Loss) Per Share  
     Income (Loss) Before Cumulative Effect of
        Accounting Change		   $ 0.34   $ (0.07 ) $ 0.41    N/M  
     Cumulative Effect of Accounting Change    —    (0.20 )  0.20    N/M  
    $ 0.34   $ (0.27 ) $ 0.61    N/M  
 
Diluted Average Common Shares Outstanding (000s)    57,424    58,594    (1,170 )  (2.0% )
Diluted Earnings (Loss) Per Share  
     Income (Loss) Before Cumulative Effect of
        Accounting Change		   $ 0.34   $ (0.07 ) $ 0.41    N/M  
     Cumulative Effect of Accounting Change    —    (0.20 )  0.20    N/M  
    $ 0.34   $ (0.27 ) $ 0.61    N/M  

N/M - Percentage change not meaningful

6

TELEPHONE AND DATA SYSTEMS, INC.
CONSOLIDATED BALANCE SHEET HIGHLIGHTS
(Unaudited, dollars in thousands)

ASSETS



March 31,
2004		 December 31,
2003
Restated
Current Assets            
    Cash and cash equivalents   $ 1,054,520   $ 937,651  
    Accounts receivable from customers and other    396,029    409,671  
    Materials and supplies, at average cost, and other current assets    150,298    157,624  
     1,600,847    1,504,946  
   
Investments  
    Wireless license costs, net    1,196,774    1,193,798  
    Wireless license rights    42,037    42,037  
    Goodwill, net    890,931    887,937  
    Intangible Assets    34,287    24,448  
    Marketable equity securities    2,721,985    2,772,410  
    Investments in unconsolidated entities    218,816    214,885  
    Notes Receivable    5,400    6,476  
    Other investments    17,168    15,439  
     5,127,398    5,157,430  
   
Property, Plant and Equipment, net  
    U.S. Cellular    2,263,910    2,271,254  
    TDS Telecom    1,064,219    1,079,732  
     3,328,129    3,350,986  
   
Other Assets and Deferred Charges    85,696    83,925  
   
Assets Held for Sale    —    100,523  
   
    $ 10,142,070   $ 10,197,810  

7a

TELEPHONE AND DATA SYSTEMS, INC.
CONSOLIDATED BALANCE SHEET HIGHLIGHTS
(Unaudited, dollars in thousands)

LIABILITIES AND STOCKHOLDERS' EQUITY


March 31,
2004		 December 31,
2003
Restated
Current Liabilities            
    Current portion of long-term debt   $ 23,712   $ 23,712  
    Notes payable    85,000    —  
    Accounts payable    278,692    361,010  
    Advance billings and customer deposits    115,976    108,372  
    Accrued interest    29,922    31,884  
    Accrued taxes    52,187    44,889  
    Accrued compensation    39,676    69,290  
    Other current liabilities    50,076    57,788  
     675,241    696,945  
Deferred Liabilities and Credits  
    Deferred taxes    1,321,845    1,286,790  
    Derivative Liability    613,216    712,252  
    Asset Retirement Obligation    125,597    124,501  
    Other    121,036    119,076  
     2,181,694    2,242,619  
Long-term Debt, excluding current portion  
    Prepaid Forward Contracts    1,676,914    1,672,762  
    Other Long-term Debt    1,992,396    1,994,913  
     3,669,310    3,667,675  
   
Minority Interest    481,665    503,186  
   
Liabilities Related to Assets Held for Sale    —    2,427  
   
Preferred Shares    3,864    3,864  
   
Common Stockholders' Equity  
    Common Shares, $.01 par value    563    563  
    Series A Common Shares, $.01 par value    64    64  
    Capital in excess of par value    1,835,588    1,843,468  
    Treasury Shares    (475,836 )  (493,714 )
    Accumulated other comprehensive income    325,795    296,820  
    Retained earnings    1,444,122    1,433,893  
     3,130,296    3,081,094  
   
    $ 10,142,070   $ 10,197,810  

7b

BALANCE SHEET HIGHLIGHTS
March 31, 2004
(Unaudited, dollars in thousands)




U.S.
Cellular
TDS
Telecom 		TDS Corporate
& Other
Intercompany
Eliminations
TDS
Consolidated
Cash and Cash Equivalents     $ 35,005   $ 339,732   $ 679,783   $ —   $ 1,054,520  
Affiliated Cash Investments    30    449,197    —    (449,227 )  —  
Notes Receivable--Affiliates    —    —    381,340    (381,340 )  —  
    $ 35,035   $ 788,929   $ 1,061,123   $ (830,567 ) $ 1,054,520  
   
Cellular License, Goodwill and Intangibles, net   $ 1,706,348   $ 457,681   $ —   $ —   $ 2,164,029  
Marketable Equity Securities    248,403    68,095    2,405,487    —    2,721,985  
Investment in Unconsolidated Entities    174,297    19,780    33,657    (8,918 )  218,816  
Notes Receivable    5,400    —    —    —    5,400  
Long-term Notes Receivable - Affiliates    —    —    400    (400 )  —  
Other Investments    —    15,167    2,001    —    17,168  
     $ 2,134,448   $ 560,723   $ 2,441,545   $ (9,318 ) $ 5,127,398  
   
Property, Plant and  
  Equipment, net   $ 2,263,910   $ 1,064,219   $ —   $ —   $ 3,328,129  
   
Notes Payable: external   $ 85,000   $ —   $ —   $ —   $ 85,000  
                            cash management    —    —    449,227    (449,227 )  —  
                            intercompany    —    381,340    —    (381,340 )  —  
     $ 85,000   $ 381,340   $ 449,227   $ (830,567 ) $ 85,000  
   
Prepaid Forward Contracts   $ 159,856   $ 41,182   $ 1,475,876   $ —   $ 1,676,914  
   
Long-term Debt:  
  Current Portion   $ 3,000   $ 18,474   $ 2,238   $ —   $ 23,712  
  Affiliated    —    400    —    (400 )  —  
  Non-current Portion    986,908    240,912    764,576    —    1,992,396  
     Total   $ 989,908   $ 259,786   $ 766,814   $ (400 ) $ 2,016,108  
   
Preferred Shares   $ —   $ —   $ 3,864   $ —   $ 3,864  
   
Construction Expenditures:  
   Quarter Ended 3/31/04   $ 100,535   $ 24,072   $ 1,019     $ 125,626  

8

TDS Telecom Highlights
Three Months Ended March 31
 (Unaudited, dollars in thousands)


Increase (Decrease)
2004 2003 Amount Percent
Local Telephone Operations                    
        Operating Revenues  
            Local Service   $ 50,427   $ 49,051   $ 1,376    2.8%
            Network Access and Long-Distance    88,187    89,652    (1,465 )  (1.6% )
            Miscellaneous    20,505    20,894    (389 )  (1.9% )
     159,119    159,597    (478 )  (0.3% )
        Operating Expenses  
            Network Operations    34,517    38,145    (3,628 )  (9.5% )
            Customer Operations    23,180    22,170    1,010    4.6%
            Corporate Expenses    20,231    20,247    (16 )  (0.1% )
            Depreciation and Amortization    32,547    33,619    (1,072 )  (3.2% )
     110,475    114,181    (3,706 )  (3.2% )
    
        Operating Income   $ 48,644   $ 45,416   $ 3,228    7.1%
Competitive Local Exchange Carrier Operations  
        Revenues   $ 54,736   $ 52,439   $ 2,297    4.4%
        Expenses excluding Depreciation and Amortization    49,484    49,769    (285 )  (0.6% )
        Depreciation and Amortization    9,011    8,031    980    12.2%
     58,495    57,800    695    1.2%
   
        Operating (Loss)   $ (3,759 ) $ (5,361 ) $ 1,602    29.9%
   
Intercompany Revenues   $ (993 ) $ (532 ) $ (461 )  N/M  
Intercompany Expenses    (993 )  (532 )  (461 )  N/M  
       —    —    —    N/M  
   
Total TDS Telecom Operating Income   $ 44,885   $ 40,055   $ 4,830    12.1%

N/M - Percentage change not meaningful.


9