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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 22, 1998
Registration No. 33-8857
Registration No. 33-59435
- - ----------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________
POST-EFFECTIVE AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
____________________
TELEPHONE AND DATA SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
Delaware 36-2669023
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
30 NORTH LASALLE STREET
CHICAGO, ILLINOIS 60602
(312) 630-1900
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
____________________
LeRoy T. Carlson, Chairman with a copy to:
Telephone and Data Systems, Inc. Wilbur C. Delp, Jr., Sidley & Austin
30 North LaSalle Street One First National Plaza
Chicago, Illinois 60602 Chicago, Illinois 60603
(312) 630-1900 (312) 853-7000
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
____________________
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [x]
If any of the securities being registered on this form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities
Act of 1933, other than securities offered only in connection with dividend
or interest reinvestment plans, please check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. // ________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. // ________
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. //
- - ------------------------------------------------------------------------------
<PAGE>
EXPLANATORY NOTE
Pursuant to an Agreement and Plan of Merger (the "Merger
Agreement"), dated as of March 6, 1998, between Telephone and Data Systems,
Inc., an Iowa corporation ("TDS Iowa"), and Telephone and Data Systems, Inc.,
a Delaware corporation ("TDS Delaware"), which had been a wholly-owned
subsidiary of TDS Iowa, TDS Iowa merged with and into TDS Delaware, with TDS
Delaware as the surviving corporation (the "Reincorporation Merger"). In the
Reincorporation Merger, each Common Share, $1.00 par value, of TDS Iowa
issued immediately prior to the Reincorporation Merger was automatically
converted into one issued and fully paid and nonassessable Common Share, $.01
par value, of TDS Delaware, each Series A Common Share, $1.00 par value, of
TDS Iowa issued immediately prior to the Reincorporation Merger was
automatically converted into one issued and fully paid and nonassessable
Series A Common Share, $.01 par value, of TDS Delaware, and each Preferred
Share, without par value, of TDS Iowa issued immediately prior to the
Reincorporation Merger was automatically converted into one issued and fully
paid and nonassessable Preferred Share, $.01 par value, of TDS Delaware with
the same rights, preferences and limitations as set forth in the original
certificate of designation for the series related to such Preferred Share.
The Reincorporation Merger and related transactions are described
in the Proxy Statement of TDS Iowa and Prospectus of TDS Delaware, dated
March 24, 1998, which is incorporated by reference herein. TDS Iowa and its
successor TDS Delaware are herein referred to as "TDS," the "Company" or the
"Registrant."
Pursuant to Rule 414 promulgated under the Securities Act of 1933,
as amended (the "1933 Act"), TDS Delaware hereby adopts Registration
Statements Nos. 33-8857 and 33-59435, as amended hereby, as its own for all
purposes under the 1933 Act and the Securities Exchange Act of 1934, as
amended (the "1934 Act"), as a result of the transaction described above.
This Post-Effective Amendment No. 1 to the Registration Statement
on Form S-3 relates to 337,500 Series A Common Shares of the Registrant,
originally registered on Registration Statement No. 33-8857, for issuance
pursuant to the Company's Series A Common Share Dividend Reinvestment Plan
(the "Series A Plan"), and to 500,000 Common Shares of the Registrant
originally registered on Registration Statement No. 33-59435, for issuance
pursuant to Registrant's Common Share Dividend Reinvestment and Stock
Purchase Plan (the "Common Share Plan"). This post-effective amendment
contains two forms of Prospectus - one which relates to the Series A Plan and
one which relates to the Common Share Plan.
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PROSPECTUS
TELEPHONE AND DATA SYSTEMS, INC.
SERIES A COMMON SHARE
AUTOMATIC DIVIDEND REINVESTMENT PLAN
SERIES A COMMON SHARES
($0.01 PAR VALUE)
The Series A Common Share Automatic Dividend Reinvestment Plan, as
amended (the "Plan"), of Telephone and Data Systems, Inc., a Delaware
corporation (the "Company" or "TDS") provides holders of the Company's Series
A Common Shares with a systematic, economic and convenient method of
investing cash dividends from such shares in newly issued Series A Common
Shares without payment of any brokerage commission or service charge and at a
5% discount from market value (as determined below). This Prospectus relates
to 337,500 Series A Common Shares covered by the Registration Statement of
which this Prospectus is a part.
Participants in the Plan may:
(1) have cash dividends on all of the Series A Common Shares
automatically reinvested, or
(2) have cash dividends on less than all of their Series A Common
Shares automatically invested while continuing to receive the
remainder of their cash dividends.
The price for the Series A Common Shares purchased with reinvested
dividends will be 95% of the average daily high and low sales prices for the
Company's Common Shares on the American Stock Exchange, as reported in THE
WALL STREET JOURNAL, for a period of ten (10) consecutive trading days ending
on the trading day immediately preceding the day on which the purchase is
made. The investment dates for reinvested dividends will be the dividend
payment dates.
___________________________
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR HAS PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
___________________________
The date of this Prospectus is May 22, 1998
<PAGE>
TABLE OF CONTENTS
PAGE
Summary of the Plan .......................................... 3
The Company .................................................. 4
Use of Proceeds .............................................. 5
Series A Common Share Automatic Dividend Reinvestment Plan ... 5
Purpose ...................................................... 5
Advantages ................................................... 6
Administration ............................................... 6
Participation ................................................ 6
Costs ........................................................ 8
Purchases .................................................... 8
Reports to Participants ...................................... 9
Dividends .................................................... 9
Certificates for Shares ...................................... 10
Safekeeping of Shares ........................................ 10
Withdrawal ................................................... 11
Other Information ............................................ 11
Termination by Company ....................................... 14
Legal Matters ................................................ 14
Experts ...................................................... 14
Where You Can Find More Information .......................... 15
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 SAFE HARBOR CAUTIONARY
STATEMENT
THIS PROSPECTUS AND THE DOCUMENTS INCORPORATED BY REFERENCE HEREIN
CONTAIN "FORWARD-LOOKING" STATEMENTS, AS DEFINED IN THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995, THAT ARE BASED ON CURRENT EXPECTATIONS,
ESTIMATES AND PROJECTIONS. STATEMENTS THAT ARE NOT HISTORICAL FACTS,
INCLUDING STATEMENTS ABOUT THE COMPANY'S BELIEFS AND EXPECTATIONS, ARE
FORWARD-LOOKING STATEMENTS. THESE STATEMENTS CONTAIN POTENTIAL RISKS AND
UNCERTAINTIES AND, THEREFORE, ACTUAL RESULTS MAY DIFFER MATERIALLY. THE
COMPANY UNDERTAKES NO OBLIGATION TO UPDATE PUBLICLY ANY FORWARD-LOOKING
STATEMENTS, WHETHER AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR
OTHERWISE.
IMPORTANT FACTORS THAT MAY AFFECT THESE PROJECTIONS OR EXPECTATIONS
INCLUDE, BUT ARE NOT LIMITED TO: CHANGES IN THE OVERALL ECONOMY; CHANGES IN
COMPETITION IN MARKETS IN WHICH THE COMPANY OPERATES; ADVANCES IN
TELECOMMUNICATIONS TECHNOLOGY; CHANGES IN THE TELECOMMUNICATIONS REGULATORY
ENVIRONMENT; PENDING AND FUTURE LITIGATION; AVAILABILITY OF FUTURE FINANCING;
START-UP OF PCS OPERATIONS; AND UNANTICIPATED CHANGES IN GROWTH IN CELLULAR
CUSTOMERS, PENETRATION RATES, CHURN RATES AND THE MIX OF PRODUCTS AND
SERVICES OFFERED IN THE COMPANY'S MARKETS. READERS SHOULD EVALUATE ANY
STATEMENTS IN LIGHT OF THESE IMPORTANT FACTORS.
2
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SUMMARY OF THE PLAN
- PARTICIPATION: TDS record shareholders who own at least one whole Series
A Common Share can participate in the Plan by submitting a completed
Authorization Form. You may obtain Authorization Forms from TDS
Investor Relations at (312) 630-1900. If your shares are held in a
brokerage account, you may participate by having your broker register
the Series A Common Shares in the Plan. No action is required if you
are already participating in the Plan.
- REINVESTMENT OF DIVIDENDS: You can reinvest your cash dividends on all
or a portion of your Series A Common Shares toward the purchase of
additional shares of TDS stock without paying fees.
- PRICE FOR SHARES: The price for the Series A Common Shares purchased
with reinvested dividends will be 95% of the average daily high and low
sales prices for the Company's Common Shares on the American Stock
Exchange, as reported in THE WALL STREET JOURNAL, for a period of ten
(10) consecutive trading days ending on the trading day immediately
preceding the day on which the purchase is made.
- INVESTMENT DATES: The Investment Dates for reinvested dividends will be
the dividend payment dates.
- SAFEKEEPING OF CERTIFICATES: You can transfer to the Agent for
safekeeping your TDS stock certificates representing the Series A Common
Shares on which you are having dividends reinvested under the Plan.
There is no charge for this service. A certificate for any number of
whole shares credited to an account will be sent to you, free of charge,
upon written request.
- WITHDRAWAL FROM THE PLAN: You may withdraw from the Plan at any time by
notifying the Agent in writing. A certificate for the whole Series A
Common Shares credited to your account, along with a cash payment
for any fractional share, will be issued to you. Dividends paid
after withdrawal from the Plan will be paid in cash directly to you,
unless you elect to rejoin the Plan by submitting a new Authorization
Form.
- TRACKING YOUR INVESTMENT: You will receive a statement of your Plan
account with respect to each month in which a transaction takes place.
These statements provide details of the transactions and the share
balance in your program account.
3
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THE COMPANY
TDS is a diversified telecommunications service company with cellular
telephone, local telephone and developing personal communications services
(PCS) operations. The Company's business development strategy is to expand
its existing operations through internal growth and acquisitions and to
explore and develop other telecommunications businesses that management
believes will utilize the Company's expertise in customer-based
telecommunications services.
The Company's Restated Certificate of Incorporation establishes three
tracking groups (the "Tracking Groups"), each of which would be represented
by a different class of common stock ("Tracking Stock"), and one residual
group (the "TDS Group"), which is represented by the Series A Common Shares
and Common Shares of the Company.
The United States Cellular Group Common Shares (the "Cellular Group
Shares"), when issued, are intended to reflect the separate performance of
the United States Cellular Group (the "Cellular Group"), which consists of
the Company's interest in United States Cellular Corporation, a subsidiary of
the Company operating and investing in cellular telephone companies and
properties ("U.S. Cellular").
The TDS Telecommunications Group Common Shares (the "Telecom Group
Shares"), when issued, are intended to reflect the separate performance of
the TDS Telecommunications Group (the "Telecom Group"), which consists of the
Company's interest in TDS Telecommunications Corporation, a subsidiary of the
Company operating landline telephone companies ("TDS Telecom"), and includes
the attribution of certain corporate debt.
The Aerial Communications Group Common Shares (the "Aerial Group
Shares"), when issued, are intended to reflect the separate performance of
the Aerial Communications Group (the "Aerial Group"), which consists of the
Company's interest in Aerial Communications, Inc., a subsidiary of the
Company providing broadband personal communications services ("Aerial").
Pursuant to an Agreement and Plan of Merger (the "Merger Agreement"),
dated as of March 6, 1998, between Telephone and Data Systems, Inc., an Iowa
corporation ("TDS Iowa"), and the Company, which had been a wholly-owned
subsidiary of TDS Iowa, TDS Iowa merged with and into Company, with Company
as the surviving corporation (the "Reincorporation Merger"). In the
Reincorporation Merger, each Common Share, $1.00 par value, of TDS Iowa
issued immediately prior to the Reincorporation Merger was automatically
converted into one issued and fully paid and nonassessable Common Share, $.01
par value, of Company ("Common Shares"), each Series A Common Share, $1.00
par value, of TDS Iowa issued immediately prior to the Reincorporation Merger
was automatically converted into one issued and fully paid and nonassessable
Series A Common Share, $.01 par value, of Company ("Series A Common Shares"),
and each Preferred Share, without par value, of TDS Iowa issued immediately
prior to the Reincorporation Merger was automatically converted into one
issued and fully paid and nonassessable Preferred Share, $.01 par value, of
Company with the same rights, preferences and limitations as set forth in
the original certificate of designation for the series related to such
Preferred Share.
In connection with the Reincorporation Merger, the Company intends to
distribute (the "Distribution") one Cellular Group Share, two-thirds of a
Telecom Group Share and two-thirds of an Aerial Group Share with respect to
each outstanding Series A Common Share and Common Share. There can be no
assurance that the Distribution will be completed or that it will be
completed as currently contemplated.
Upon the completion of the Distribution as contemplated, the Series A
Common Shares and the Common Shares of the Company would represent a common
equity interest in the TDS Group, which would have a Retained Interest of
approximately 20-25% of the common shareholders' equity value of the Company
attributable to each of the Cellular Group, the Telecom Group and the Aerial
Group. Accordingly, the Series A Common Shares and Common Shares of TDS
Delaware are intended to reflect the combined performance of the all of the
Tracking Groups of TDS. In addition, the Series A Common Shares and Common
Shares are intended to reflect the performance of all other interests held by
the TDS Group and the effects of certain corporate operations performed by
the TDS Group. The TDS Group would also include such other assets and
liabilities of the Company as the Board may in the future determine to
attribute to the TDS Group and such other businesses, assets and liabilities
as the Company or any of its subsidiaries may in the future acquire for the
TDS Group, as determined by the Board. Until such time as there are any
issued and outstanding Cellular Group Shares, Telecom Group
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Shares and Aerial Group Shares, all of the Company's equity interest in the
Cellular Group, the Telecom Group and the Aerial Group, respectively, will be
deemed to be held by the TDS Group.
The Company has attempted to reach an agreement with a special committee
of U.S. Cellular relating to the acquisition by TDS of the outstanding shares
of U.S. Cellular which TDS does not own in exchange for Cellular Group
Shares, and to reach an agreement with a special committee of Aerial relating
to the acquisition by TDS of the outstanding shares of Aerial which TDS does
not own in exchange for Aerial Group Shares. There can be no assurance that
TDS will be able to reach agreements relating to such transactions. If TDS
is unable to reach such agreements or otherwise acquire the publicly-held
shares of U.S. Cellular or Aerial, such shares would continue to remain
outstanding.
The Reincorporation Merger, the Distribution and related transactions
are described in the Proxy Statement of TDS Iowa and Prospectus of Company,
dated March 24, 1998, as supplemented, which is part of the Company's
Registration Statement on Form S-4 (Registration No. 333-42535) which is
incorporated by reference herein.
The Company is the successor to TDS Iowa. As noted above, in 1998, TDS
Iowa merged with and into the Company, with the Company surviving the merger.
The Company's corporate headquarters are located at 30 N. LaSalle, Suite
4000, Chicago, Illinois 60602, and its telephone number is (312) 630-1900.
Except where the context otherwise indicates, the term "Company" and "TDS"
include Telephone and Data Systems, Inc., a Delaware corporation, and its
subsidiaries.
USE OF PROCEEDS
The number of Series A Common Shares that will be sold under the Plan
and the prices at which such shares will be sold cannot now be determined.
The net proceeds from the sale of such shares will be used by the Company for
general corporate purposes of the Company's TDS Group. Until the proceeds
are used for these purposes, the Company may deposit them in interest-bearing
accounts or invest them in certificates of deposit, United States Government
securities or prime commercial paper.
SERIES A COMMON SHARE AUTOMATIC DIVIDEND REINVESTMENT PLAN
The following is a question and answer statement of the provisions of
the Company's Series A Common Share Automatic Dividend Reinvestment Plan (the
"Plan"). Questions and Answers 1 through 31 both explain and constitute the
Plan.
PURPOSE
1. WHAT IS THE PURPOSE OF THE PLAN?
The purpose of the Plan is to provide holders of the Company's Series A
Common Shares with a systematic, economic and convenient method of investing
cash dividends from such shares in newly issued Series A Common Shares of the
Company without payment of any brokerage commission or service charge, and at
a 5% discount from market value (as determined below). Since the additional
Series A Common Shares will be purchased directly from the Company, the Plan
will provide the Company with additional capital funds.
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ADVANTAGES
2. WHAT ARE THE ADVANTAGES OF THE PLAN?
Participants may purchase Series A Common Shares of the Company with
cash dividends on all or less than all of the Company's Series A Common
Shares registered in their names. The price of Series A Common Shares
purchased with cash dividends will be 95% of market value as set forth in the
Answer to Question 13.
No commission or service charge is paid by participants in connection
with purchases under the Plan. Full investment of funds is possible under
the Plan because the Plan permits fractions of shares, as well as full
shares, to be credited to participants' accounts. IN ADDITION, DIVIDENDS IN
RESPECT OF SUCH FRACTIONS, AS WELL AS IN RESPECT OF FULL SHARES, WILL BE
CREDITED TO PARTICIPANTS' ACCOUNTS AND REINVESTED IN THE COMPANY'S SERIES A
COMMON SHARES UNDER THE PLAN. The safekeeping of Series A Common Shares
credited to a participant's account is assured since certificates for such
shares are not issued unless requested by the participant. Regular
statements of account will provide simplified record keeping.
ADMINISTRATION
3. WHO ADMINISTERS THE PLAN?
Harris Trust and Savings Bank (the "Agent") acts as an agent for
participants in the Plan. The Agent keeps a continuing record of each
participant's account, sends periodic statements of account to each participant
with respect to each month in which a transaction takes place and performs other
duties relating to the Plan. Series A Common Shares of the Company purchased
under the Plan will be registered in the name of the Agent or its nominee, as
Agent for each participant in the Plan, and will be credited to the accounts of
the respective participants. Should Harris Trust and Savings Bank resign,
another bank will be asked to serve as the Agent. All communications regarding
the Plan should be sent to the Agent addressed as follows:
Telephone and Data Systems, Inc.
Series A Common Share Automatic Dividend Reinvestment Plan
c/o Harris Trust and Savings Bank
P.O. Box 755
Chicago, Illinois 60690
(telephone: 312/360-5337)
Harris Trust and Savings Bank also acts as dividend disbursing and
transfer agent for the Company's Series A Common Shares.
PARTICIPATION
4. WHO IS ELIGIBLE TO PARTICIPATE?
All holders of record of at least one whole Series A Common Share are
eligible to participate in the Plan. Beneficial owners of Series A Common
Shares which currently are registered in names other than their own (for
example, in the name of a broker or bank nominee) who wish to participate in
the Plan must either make appropriate arrangements for their nominee to do so
or must become security owners of record of Series A Common Shares.
All holders of record of at least one whole Series A Common Share are
eligible to participate in the Plan, unless they are citizens of a state or
foreign jurisdiction in which it would be unlawful for the Company to allow
such participation. The Company is not aware of any jurisdiction in which
the making of the offer is not in compliance with valid applicable law. If
the Company becomes aware of any jurisdiction in which the making of the
offer would not be in compliance with valid applicable law, the Company will
make a good faith effort to comply with any such law. If, after such good
faith effort, the Company cannot comply with any such law, the offer will not
be made to holders of shares residing in any such
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jurisdiction. In those jurisdictions whose securities or blue sky laws
require the offer to be made by a licensed broker or dealer, the offer shall
not be deemed to be made unless it is made on behalf of the Company by one or
more registered brokers or dealers which are licensed under the laws of such
jurisdiction, as may be designated by the Company.
5. HOW DOES A SERIES A COMMON SHAREHOLDER PARTICIPATE?
A holder of Series A Common Shares may join the Plan at any time by
signing an "Authorization Form" and returning it to the Agent. An
Authorization Form and postage paid envelope may be obtained by written
request addressed to the Agent at the above address or by writing or calling
the Company as follows:
Telephone and Data Systems, Inc.
Series A Common Shares Automatic Dividend Reinvestment Plan
30 North LaSalle Street
Suite 4000
Chicago, Illinois 60602
Attn: Investor Relations Coordinator
(telephone: 312/630-1900)
6. WHEN DOES A SERIES A COMMON SHAREHOLDER'S PARTICIPATION START?
SERIES A COMMON SHAREHOLDERS
If an Authorization Form directing dividend reinvestment is received
from a Series A Common Shareholder by the Agent on or before the last
business day of the month preceding the next dividend payment, that dividend
will be applied to the purchase of Series A Common Shares under the Plan. If
the Authorization Form directing dividend reinvestment is received after that
date, dividend reinvestment will begin with the next succeeding payment.
Cash dividends on the Series A Common Shares are ordinarily paid in March,
June, September and December.
For example, if the Company's Board of Directors establishes June 30 as
the payment date for a Series A Common Share cash dividend, then in order to
reinvest the dividends payable on June 30 in new Series A Common Shares under
the Plan, a Series A Common Shareholder's Authorization Form must be received
by the Agent no later than the last business day in May. If the
Authorization Form is received after the last business day in May, the
dividends payable on June 30 will be paid in cash and the Common
Shareholder's participation in the Plan will commence with the next Series A
Common Share cash dividend payment date.
7. WILL A SERIES A COMMON SHAREHOLDER PRESENTLY ENROLLED IN THE SERIES A
COMMON SHARE AUTOMATIC DIVIDEND REINVESTMENT PLAN FOR SHAREHOLDERS OF
TELEPHONE AND DATA SYSTEMS, INC., AN IOWA CORPORATION (THE "TDS-IOWA PLAN")
AUTOMATICALLY BE ENROLLED IN THE PLAN?
Yes. The Company adopted and continued the TDS-Iowa Plan, as amended
hereby, on the effective date of the Reincorporation Merger. A Series A
Common Shareholder enrolled in the TDS-Iowa Plan will continue to be enrolled
in the Plan in accordance with the participation option chosen under the
TDS-Iowa Plan, PROVIDED he or she is a holder of record of at least one whole
Series A Common Share.
If a holder of Series A Common Shares enrolled in the TDS-Iowa Plan does
not wish to participate in the Plan, he or she should withdraw from the Plan
in the manner described in the Answers to Questions 20 and 21. If a holder
of Series A Common Shares wishes to change the nature of his or her
participation from that in the TDS-Iowa Plan, he or she should return an
Authorization Form as described herein. If a holder of Series A Common
Shares enrolled in the TDS-Iowa Plan does not wish to withdraw or change the
nature of his or her participation, he or she will be continued in the Plan
and the cash dividends on those Series A Common Shares owned of record by
that shareholder and designated for reinvestment under the TDS-Iowa Plan will
be used to purchase Series A Common Shares under the Plan at the 5% discount.
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8. WHAT DOES THE AUTHORIZATION FORM PROVIDE?
The Authorization Form provides for the purchase of new Series A Common
Shares through the following investment options offered under the Plan:
FULL REINVESTMENT - Cash dividends Series A Common Shares held of record
by a holder of Series A Common Shares will be invested at 95% of market
value (see the Answer to Question 13).
PARTIAL REINVESTMENT - Cash dividends on less than all of the shares
held of record by a holder of Series A Common Shares will be invested at
95% of market value (see the Answer to Question 13) and the shareholder
will continue to receive cash dividends on the other shares.
CASH DIVIDENDS ON SERIES A COMMON SHARES CREDITED TO THE PARTICIPANT'S
ACCOUNT UNDER THE PLAN (INCLUDING FRACTIONAL SHARES) ARE AUTOMATICALLY
REINVESTED TO PURCHASE ADDITIONAL SERIES A COMMON SHARES NO MATTER WHICH
OPTION IS CHOSEN. The Authorization Form also serves to appoint Harris Trust
and Savings Bank as Agent for the participant.
If a holder of Series A Common Shares has more than one stock account
pursuant to which he or she is eligible to participate in the Plan, A
SEPARATE AUTHORIZATION FORM IS REQUIRED FOR EACH ACCOUNT THAT HE OR SHE
WISHES INCLUDED IN THE PLAN.
9. IS PARTIAL PARTICIPATION POSSIBLE UNDER THE PLAN?
Yes. An eligible shareholder who desires the dividends on only some of
his or her full Series A Common Shares to be invested under the Plan may
indicate such number of shares upon the applicable Authorization Form(s)
under "Partial Dividend Reinvestment."
10. MAY A PARTICIPANT CHANGE HIS OR HER METHOD OF PARTICIPATION AFTER
ENROLLMENT?
Yes. If a shareholder elects to participate through the reinvestment of
dividends but later decides to change the number Series A Common Shares for
which dividends are being reinvested, a new Authorization Form may be
executed and returned to the Agent.
COSTS
11. ARE THERE ANY EXPENSES TO PARTICIPANTS IN CONNECTION WITH PURCHASES
UNDER THE PLAN?
No. Participants will incur no costs. There are no brokerage fees
because Series A Common Shares are purchased directly from the Company. All
costs of administration of the Plan will be paid by the Company.
PURCHASES
12. WHEN ARE THE INVESTMENT DATES?
The Investment Dates for Series A Common Shares purchased under the Plan
with cash dividends on Series A Common Shares are the cash dividend payment
dates. The Company usually pays cash dividends on its Series A Common Shares
in March, June, September and December.
13. HOW WILL THE PURCHASE PRICE OF SERIES A COMMON SHARES BE DETERMINED?
No market exists for the Series A Common Shares. Therefore, the Company
is assuming for purposes hereof that each Series A Common Share has a fair
market value equal to one of the Company's Common Shares because the Series A
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Common Shares are presently convertible into Common Shares on a one-for-one
basis. Accordingly, the price of Series A Common Shares purchased with
reinvested cash dividends will be 95% of the average daily high and low sales
prices for the Company's Common Shares on the American Stock Exchange, as
reported in THE WALL STREET JOURNAL, for a period of ten (10) consecutive
trading days ending on the trading day immediately preceding the Investment
Date. If there is no trading in the Common Shares reported on the American
Stock Exchange for a substantial amount of time during any such trading
period, the purchase price per share shall be determined by the Company on
the basis of such market quotations as it shall deem appropriate. No Series
A Common Shares will be sold by the Company at less than the par value of
such shares.
14. HOW MANY SERIES A COMMON SHARES WILL BE PURCHASED FOR PARTICIPANTS?
The number of Series A Common Shares to be purchased on an Investment
Date will be determined by the amount of each participant's dividends
(including dividends on Series A Common Shares purchased under the Plan) and
the applicable price of the Company's Common Shares. Each participant's
account in the Plan will be credited with the number of Series A Common
Shares, including fractional shares computed to four decimal places, equal to
the amount of the dividends being invested divided by 95% of the applicable
purchase price.
REPORTS TO PARTICIPANTS
15. WHAT REPORTS WILL BE SENT TO PARTICIPANTS IN THE PLAN?
Each participant in the Plan will receive a statement of his or her
account with respect to each month in which a transaction takes place. These
statements are a participant's continuing record of the cost of his or her
purchases. PARTICIPANTS SHOULD RETAIN THESE STATEMENTS FOR INCOME TAX
PURPOSES. Each statement will set forth the following information when
applicable:
(1) The total number of Series A Common Shares registered in the name
of the participant which is participating in the Plan.
(2) The total number of Series A Common Shares which have been
accumulated under the Plan by the Participant but for which certificates have
not been issued (See Answer to Question 17).
(3) The following information for each transaction during the month and
all transactions to date during the current year:
(a) the amount of dividends invested;
(b) the price per share for each transaction;
(c) the number of shares purchased; and
(d) certain tax information.
In addition, each participant will receive copies of communications sent
to every other holder of the Company's Series A Common Shares, including the
Annual Report to Shareholders, Notice of Annual Meeting of Shareholders and
Proxy Statement, and Internal Revenue Service ("IRS") information on Form
1099 for reporting dividend income.
DIVIDENDS
16. WILL PARTICIPANTS BE CREDITED WITH DIVIDENDS ON FRACTIONS OF SHARES?
Yes. Participants will be credited with the amount of dividends
attributable to fractions of shares in their accounts under the Plan and such
dividends will be reinvested.
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CERTIFICATES FOR SHARES
17. WILL CERTIFICATES BE ISSUED FOR SHARES OF SERIES A COMMON SHARES
PURCHASED UNDER THE PLAN?
Normally, certificates for the Company's Series A Common Shares
purchased under the Plan will not be issued to participants. The number of
Series A Common Shares credited to a participant's account under the Plan
will be shown on each statement of account mailed to the participant. This
convenience protects against loss, theft, or destruction of stock
certificates.
Certificates for any number of whole Series A Common Shares credited to
an account under the Plan will be issued upon the written request of the
participant to the Agent and issuance of such certificates will not terminate
participation in the Plan. Any remaining full shares and fraction of a share
will continue to be credited to the participant's Plan account.
Dividends on Plan Series A Common Shares for which a participant
requests and receives a certificate will be reinvested in the Company's
Series A Common Shares at the 5% discount under the Plan and the Series A
Common Shares purchased therewith will be credited to the Participant's Plan
IF the participant continues to own these Series A Common Shares and has
elected full dividend reinvestment of Series A Common Shares on his or her
current Series A Common Share Authorization Form. A participant who
continues to own the Series A Common Shares in question and desires to have
the dividends on these shares reinvested in the Company's Series A Common
Shares but who does not have an existing Authorization Form for Series A
Common Shares or has elected only partial reinvestment of his or her Series A
Common Share dividends on the current Authorization Form will have to execute
a new Authorization Form and return it to the Agent as set forth in the
Answer to Question 10. Otherwise, dividends on these Series A Common Shares
will not be reinvested in the Company's Series A Common Shares at the 5%
discount as they were when they were held for the participant in the Plan.
Rather, the dividends on the Series A Common Shares in question will be paid
to the Shareholder in cash.
Series A Common Shares credited to the account of a participant under
the Plan may not be pledged as collateral otherwise transferred. A
participant who wishes to pledge or transfer such shares must request that
certificates for such shares be issued in his or her name.
Certificates for fractional Series A Common Shares will not be issued
under any circumstances.
An institution that is required by law to maintain physical possession
of certificates may request a special arrangement regarding the issuance of
certificates for Series A Common Shares purchased under the Plan. This
request should be sent to the Agent (see Answer to Question 3).
18. IN WHOSE NAME WILL CERTIFICATES BE ISSUED?
Accounts under the Plan are maintained in the names in which
certificates of the participants were registered at the time they entered the
Plan. Consequently, certificates for whole shares issued upon the request of
participants will be similarly registered.
SAFEKEEPING OF SHARES
19. MAY PARTICIPANTS TRANSFER SERIES A COMMON SHARES WHICH ARE DESIGNATED
FOR PARTICIPATION IN THE PLAN TO THE AGENT FOR SAFEKEEPING?
Yes. Participants may transfer to the Agent for safekeeping
certificates representing Series A Common Shares registered in their name.
These shares will be credited to the participants' accounts under the Plan
along with shares purchased for them under the Plan. There is no charge for
this service. The stock certificates should be sent by registered mail,
return receipt requested and properly insured, to the Agent. Certificates
should not be endorsed.
Dividends will be reinvested in shares represented by the certificates
transferred to the Agent.
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WITHDRAWAL
20. WHEN MAY A PARTICIPANT WITHDRAW FROM THE PLAN?
A participant may withdraw from the Plan at any time by notifying the
Agent in writing. If the notice of termination is received by the Agent
prior to the fifth business day preceding the record date for the next Series
A Common Share cash dividend, the amount of that dividend will be paid to the
withdrawing participant. If the notice of termination is received by the
Agent on or after the fifth business day preceding the record date for the
next Series A Common Share cash dividend, the next dividend will be
reinvested and subsequent dividends will be paid in cash.
Dividends paid after withdrawal from the Plan will be paid in cash
directly to the shareholder unless he or she elects to rejoin the Plan, which
the shareholder may do as set forth in the Answer to Question 22.
21. WHAT HAPPENS WHEN A PARTICIPANT WITHDRAWS FROM THE PLAN OR THE PLAN IS
TERMINATED?
When a participant withdraws from the Plan, or ceases to be a
shareholder of record, or ceases to be an eligible shareholder, or upon
termination of the Plan by the Company, a certificate for the whole Series A
Common Shares credited to his or her account under the Plan will be issued
and a cash payment will be made for any fractional share. This cash payment
will be based on the closing price of the Company's Common Shares on the
American Stock Exchange as of the date the written request for withdrawal is
received, or the participant ceases to be a shareholder of record, or the
participant ceases to be an eligible shareholder, or the Plan is terminated,
whichever is applicable, or if no trading occurs on such date, the next day
on which the Common Shares are traded.
OTHER INFORMATION
22. WHEN MAY A SHAREHOLDER REJOIN THE PLAN?
Generally, a shareholder may rejoin the Plan at any time, provided he or
she is an eligible shareholder, by submitting a new Authorization Form.
However, the Company reserves the right to reject any Authorization Form from
a previous participant on the grounds of repeated joinings and withdrawals
from Plan participation. Such reservation is intended to minimize
administrative expenses and to encourage use of the Plan as a long-term
investment service.
23. WHAT HAPPENS IF A PARTICIPANT SELLS OR TRANSFERS ALL OF HIS OR HER
SERIES A COMMON SHARES?
If a participant ceases to be a shareholder of record holding at least
one whole Series A Common Share, a cash payment will be made for any
fractional share remaining in the Plan. Thereafter, the shareholder may
rejoin the Plan as set forth in the Answer to Question 22 if he or she is or
becomes a holder of at least one whole Series A Common Share.
24. WHAT HAPPENS WHEN A PARTICIPANT WHO IS REINVESTING DIVIDENDS ON ALL OR
LESS THAN ALL OF THE SHARES REGISTERED IN HIS OR HER NAME SELLS OR
TRANSFERS A PORTION OF SUCH SHARES?
If a participant who is reinvesting dividends on all or only a portion
of Series A Common Shares registered in his or her name disposes of a portion
of such shares, the Company will continue to reinvest dividends on the
remainder of the Series A Common Shares registered in the participant's name
up to the number indicated on the participant's Authorization Form as the
number of Series A Common Shares for which dividends are to be reinvested,
PROVIDED the participant continues to hold at least one whole Series A Common
Share. For example, if a participant authorized the Company to reinvest
dividends on 50 Series A Common Shares of a total of 100 Series A Common
Shares registered in his or her name, and then disposes of 25 Series A Common
Shares, the Company would continue to reinvest dividends on 50 of the
remaining 75 shares.
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25. DOES PARTICIPATION IN THE PLAN INVOLVE RISK?
The Plan itself creates no risk. The risk to participants is the same
as with any other investment in the Company's Series A Common Shares. It
should be recognized that since investment prices are determined as an
average of the daily high and low sales prices for a period of ten (10)
consecutive trading dates on which the Company's Common Shares are traded
(see Answer to Question 13), a participant loses any advantage otherwise
available from being able to select the timing of his or her investment.
PARTICIPANTS MUST RECOGNIZE THAT NEITHER THE COMPANY NOR THE AGENT CAN ASSURE
A PROFIT OR PROTECT AGAINST A LOSS ON THE SHARES PURCHASED UNDER THE PLAN.
SHAREHOLDERS ARE REFERRED TO THE RISK FACTORS DESCRIBED IN THE COMPANY'S
PROSPECTUS DATED MARCH 24, 1998 WHICH IS A PART OF THE COMPANY'S REGISTRATION
STATEMENT ON FORM S-4 (REGISTRATION NO. 333-42535), WHICH IS INCORPORATED BY
REFERENCE HEREIN.
26. WHAT HAPPENS IF THE COMPANY ISSUES A STOCK DIVIDEND, DECLARES A STOCK
SPLIT OR HAS A RIGHTS OFFERING?
Any Series A Common Shares distributed by the Company as a stock
dividend on shares credited to a participant's Plan account, or upon any
split of such shares, will be credited to the participant's Plan account.
Stock dividends distributed on Series A Common Shares in shares of any other
class of capital stock will be mailed directly to the shareholder in the same
manner as to shareholders not participating in the Plan. However, if a
dividend reinvestment plan or bookkeeping entry facility is established for
the shares of such other capital stock distributed as a dividend, the
participant will automatically become a participant of such dividend
reinvestment plan or bookkeeping entry facility and the shares distributed to
such participant will instead be credited to the participant's account. In a
rights offering, a participant's entitlement will be based upon his or her
total holdings, including shares credited to the participant's account under
the Plan. Rights certificates will be issued for the number of whole Series
A Common Shares only, however, and rights based on a fraction of a Series A
Common Share held in a participant's Plan account will be sold for the
participant's account and the net proceeds will be forwarded to the
participant.
27. HOW WILL A PARTICIPANT'S SHARES BE VOTED AT SHAREHOLDERS' MEETINGS?
All Series A Common Shares held in the Plan for a participant will be
voted as the participant directs on a proxy or voting instruction form which
will be furnished to the participant. If the participant does not return the
proxy or form to the Agent, the Agent will not vote the participant's Plan
shares.
28. WHAT ARE THE FEDERAL INCOME TAX CONSEQUENCES OF PARTICIPATION IN THE
PLAN?
The following discussion sets forth the general Federal income tax
consequences for participants in the Plan. However, the discussion is not
intended to be an exhaustive treatment of such tax consequences. For
example, the discussion does not address the treatment of stock dividends,
stock splits or a rights offering to participants in the Plan. It also does
not address differences in tax treatment with respect to participants who do
not hold the Series A Common Shares as capital assets. Because the tax laws
are complex and constantly changing, participants are urged to consult their
own tax advisors regarding the tax consequences of participating in the Plan
(including the effects of any applicable state, local or foreign tax laws)
and for rules regarding the tax basis in special cases such as the death of a
participant or a gift of Series A Common Shares held under the Plan and for
other tax consequences. Future legislative changes or changes in
administrative or judicial interpretation, some or all of which may be
retroactive, could significantly alter the Federal income tax treatment
discussed herein.
In general, participants in the Plan who elect to reinvest cash
dividends will be treated, for Federal income tax purposes, as having
received, on the dividend payment date, a distribution in an amount equal to
the fair market value on the dividend payment date of the Series A Common
Shares purchased with reinvested dividends (rather than a distribution in the
amount of cash otherwise payable to the participant). It should be noted
that the fair market value of the Series A Common Shares on the dividend
payment date is likely to differ from the price paid for the Series A Common
Shares under the Plan because the price paid for such shares will be only 95%
of the market value described in Question 13. Moreover, as described in
Question 13, such market value is based on the average of the high and low
sales prices for the Company's
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Common Shares over a ten-day period preceding the dividend payment date,
rather than the reported sales prices on the dividend payment date itself.
Furthermore, such market value is based on the assumption that each Series A
Common Share has a fair market value equal to one of the Company's Common
Shares, and there can be no assurance that the Internal Revenue Service
("IRS") will agree with that assumption. Participants should not be treated
as receiving an additional distribution based upon their pro rata share of
the Plan administration costs paid by the Company; however, there can be no
assurance that the IRS will agree with this position. The Company has no
present plans to seek formal advice from the IRS on this issue.
Generally, the distribution described above (the fair market value, on
the dividend payment date, of the Series A Common Shares purchased with
reinvested dividends) will be taxable to participants as ordinary dividend
income to the extent of the Company's current or accumulated earnings and
profits for Federal income tax purposes. The amount of the distribution in
excess of such earnings and profits will reduce a participant's tax basis in
the Series A Common Shares with respect to which such distribution was
received, and, to the extent in excess of such basis, result in capital gain.
Certain corporate participants may be entitled to a dividends received
deduction with respect to amounts treated as ordinary dividend income.
Corporate participants should consult their own tax advisors regarding their
eligibility for and the extent of such deduction.
Tax information will be shown on the statements of account sent to
participants which participants should retain for tax purposes. These
statements are important for computing the tax basis of Series A Common
Shares acquired under the Plan. The Form 1099 which each participant will
receive annually will include the income which (based on the Company's
determination of the fair market value of the Series A Common Shares on the
dividend payment date, assuming each Series A Common Share has a fair market
value on the dividend payment date equal to one of the Company's Common
Shares on that date) is deemed to result from the receipt of the Series A
Common Shares under the Plan.
As a general rule, the tax basis of shares (or any fraction of a share)
purchased with reinvested dividends will equal the fair market value of such
shares (or fractional share) on the dividend payment date.
The holding period for Series A Common Shares (or a fraction thereof)
received as a result of reinvestment of dividends under the Plan will begin
on the day following the purchase date.
Participants will generally not realize any taxable income when they
receive certificates for whole Series A Common Shares credited to their
accounts under the Plan, either upon their request for certificates for
certain of those shares, upon ceasing to be a shareholder of record, upon
ceasing to be an eligible shareholder, or upon withdrawal from or termination
of the Plan. However, a participant may realize a gain or loss when Series A
Common Shares acquired under the Plan are subsequently sold. In addition,
participants may realize gain or loss when they receive a cash adjustment for
fractional shares credited to their accounts upon withdrawal from or
termination of the Plan. The amount of such gain or loss will be the
difference between the amount which the participant receives for his or her
shares or fractional share, and his or her tax basis therefor (with special
rules applying to determine the basis allocable to shares that are not
specifically identified when the Participant sells less than all of his or
her shares). Such gain or loss will generally be capital gain or loss, and
will be long-term capital gain or loss if the holding period for such shares
or fractional shares exceeds one year. The excess of net long-term capital
gains over net short-term capital losses is taxed at a lower rate than
ordinary income for certain taxpayers. The distinction between capital gain
or loss and ordinary income and loss is also relevant for purposes of, among
other things, limitations on the deductibility of capital losses. Any loss
may be disallowed under the "wash sale" rules to the extent the shares
disposed of are replaced (through the Plan or otherwise) during the 61-day
period beginning 30 days before and ending 30 days after the date of
disposition.
29. WHAT PROVISION IS MADE FOR SHAREHOLDERS (FOREIGN AND DOMESTIC) WHOSE
DIVIDENDS ARE SUBJECT TO INCOME TAX WITHHOLDING?
In the case of foreign shareholders who elect to have their dividends
reinvested and whose dividends are subject to United States income tax
withholding, the Agent will invest in the Company's Series A Common Shares an
amount equal to the dividends of such foreign participants less the amount of
tax required to be withheld.
Under certain circumstances, the Company may be required to
backup-withhold income tax on the dividends of participating domestic
shareholders, including those domestic shareholders who do not accurately
report their dividend
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income, fail to provide the Company with their taxpayer identification
number, provide the Company with an incorrect taxpayer identification number
or fail to provide the Company with a certificate setting forth that they are
not subject to backup withholding. If this should occur, thirty-one percent
(31%) of the dividend income, or such other percentage as may be required
from time to time, will be withheld.
The statements of account sent to participants will indicate the amount
of any income tax withheld. The Company cannot refund amounts withheld.
Participants subject to withholding should contact their tax advisors or the
IRS for additional information.
30. WHAT ARE THE RESPONSIBILITIES OF THE SHAREHOLDERS' AGENT AND THE COMPANY
UNDER THE PLAN?
In performing their duties under the Plan, the Agent and the Company
will at all times act in the best interests of the participants. However,
they will not be liable for any act performed in good faith, or for any good
faith omission to act, including, without limitation, any claims of liability
arising out of failure to terminate a participant's account upon such
participant's death prior to receipt of notice in writing of such death.
Although the Plan contemplates the continuation of quarterly Series A
Common Share dividend payments, the payment of future Series A Common Share
dividends will depend upon future earnings, the amount available for payment
of dividends by the TDS Group and the Company, the financial condition of the
TDS Group, the Company and other factors.
TERMINATION BY COMPANY
31. MAY THE PLAN BE CHANGED OR DISCONTINUED?
The Company reserves the right to suspend, modify or terminate the Plan
at any time. All participants will receive notice of such suspension,
modification or termination.
LEGAL MATTERS
Certain legal matters relating to the securities offered hereby will be
passed upon for the Company by Sidley & Austin, Chicago, Illinois. The
Company is controlled by a voting trust. Walter C.D. Carlson, a trustee and
beneficiary of such voting trust and a director of the Company and certain
subsidiaries of the Company, Michael G. Hron, the Secretary of the Company
and certain subsidiaries of the Company, William S. DeCarlo, the Assistant
Secretary of the Company, Stephen P. Fitzell, the Secretary of certain
subsidiaries of the Company, and Sherry S. Treston, the Assistant Secretary
of certain subsidiaries of the Company, are partners of Sidley & Austin.
EXPERTS
The audited consolidated financial statements of the Company and its
Subsidiaries incorporated by reference in this Prospectus have been audited
by Arthur Andersen LLP independent public accountants, as indicated in their
reports with respect thereto, and have been so incorporated by reference
herein in reliance upon the authority of said firm as experts in accounting
and auditing in giving said reports.
Future consolidated financial statements of the Company and its
Subsidiaries and the reports thereon of Arthur Andersen LLP also will be
incorporated by reference in this Prospectus in reliance upon the authority
of that firm as experts in giving those reports to the extent that such firm
has examined those financial statements and consented to the use of their
reports thereon.
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WHERE YOU CAN FIND MORE INFORMATION
The Company files reports, proxy statements and other information with
the Securities Exchange Commission (the "SEC"). You may inspect and copy
such reports, proxy statements and other information at the public reference
facilities maintained by the SEC at Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Judiciary Plaza, Washington D.C. 20549. Please call the SEC at
1-800-SEC-0330 for further information. Such materials may also be accessed
electronically by means of the SEC's web site at http://www.sec.gov.
The Company filed a Registration Statement related to the offering
described in this Prospectus. As allowed by SEC rules, this Prospectus does
not contain all of the information which you can find in the Registration
Statement. You are referred to the Registration Statement and the Exhibits
thereto for further information. This document is qualified in its entirety
by such other information.
The SEC allows us to "incorporate by reference" information into this
Prospectus, which means that we can disclose important information to you by
referring to another document filed separately with the SEC. The information
incorporated by reference is deemed to be a part of this Prospectus, except
for any information superseded by information in this Prospectus. This
Prospectus incorporates by reference the documents set forth below that have
been previously filed with the SEC. These documents contain important
information about the Company's business and finances.
1. TDS's Annual Report on Form 10-K for the year ended December 31,
1997;
2. TDS's Quarterly Report on Form 10-Q for the quarter ended March 31,
1998;
3. TDS's Current Reports on Form 8-K, reporting events on January 28,
February 10, March 24, April 17, April 21 and April 27, 1998;
4. The Company's Prospectus dated March 24, 1998, which is part of its
Registration Statement on Form S-4 (Registration Number 333-42535);
and
5. The Company's Report on Form 8-A/A-3 dated May 22, 1998, which
includes a description of the Company's capital stock.
This Prospectus also incorporates by reference additional documents that
may be filed by the Company with the SEC between the date of this Prospectus
and the date our offering is completed.
YOU MAY OBTAIN COPIES OF SUCH DOCUMENTS WHICH ARE INCORPORATED BY
REFERENCE IN THIS PROSPECTUS (OTHER THAN EXHIBITS THERETO WHICH ARE NOT
SPECIFICALLY INCORPORATED BY REFERENCE HEREIN), WITHOUT CHARGE, UPON WRITTEN
OR ORAL REQUEST TO INVESTOR RELATIONS, TELEPHONE AND DATA SYSTEMS, INC., 30
N. LASALLE STREET, CHICAGO, IL 60602, (312) 630-1900. IN ORDER TO ENSURE
TIMELY DELIVERY OF DOCUMENTS, ANY REQUEST THEREFOR SHOULD BE MADE NOT LATER
THAN FIVE BUSINESS DAYS PRIOR TO MAKING AN INVESTMENT DECISION.
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU
WITH INFORMATION THAT IS DIFFERENT FROM WHAT IS CONTAINED IN THIS PROSPECTUS.
YOU SHOULD NOT ASSUME THAT THE INFORMATION CONTAINED IN THE PROSPECTUS IS
ACCURATE AS OF ANY DATE OTHER THAN THE DATE OF SUCH PROSPECTUS, AND NEITHER
THE MAILING OF THE PROSPECTUS TO SHAREHOLDERS NOR THE ISSUANCE OF ANY
SECURITIES HEREUNDER SHALL CREATE ANY IMPLICATION TO THE CONTRARY. THIS
PROSPECTUS DOES NOT OFFER TO BUY OR SELL ANY SECURITIES IN ANY JURISDICTION
WHERE IT IS UNLAWFUL TO DO SO.
15
<PAGE>
PROSPECTUS
TELEPHONE AND DATA SYSTEMS, INC.
COMMON SHARE
AUTOMATIC DIVIDEND REINVESTMENT
AND
STOCK PURCHASE PLAN
COMMON SHARES
($0.01 PAR VALUE)
The Common Share Automatic Dividend Reinvestment and Stock Purchase
Plan, as amended (the "Plan"), of Telephone and Data Systems, Inc., a
Delaware corporation (the "Company" or "TDS") provides ELIGIBLE holders (as
defined in the Plan) of the Company's Common Shares and Preferred Shares with
a systematic, economic and convenient method of investing cash dividends from
such shares and/or limited optional cash payments in newly issued Common
Shares without payment of any brokerage commission or service charge and, in
the case of reinvested cash dividends, at a 5% discount from market value (as
determined below). This Prospectus relates to 500,000 Common Shares covered
by the Registration Statement of which this Prospectus is a part.
The Company's Common Shares have less voting power than its Series A
Common Shares. The Series A Common Shares, which have effective control of
the Company, ARE NOT BEING OFFERED BY THIS PLAN. The holders of the
Company's Series A Common Shares have their own Automatic Dividend
Reinvestment Plan.
Participants in the Plan may:
(1) have cash dividends on all of the Common Shares and Preferred
Shares automatically reinvested and have the option of investing limited
additional amounts by making cash payments, or
(2) have cash dividends on less than all of their Common Shares
and Preferred Shares (but not less than 10 shares of each class or
series) automatically invested while continuing to receive the remainder
of their cash dividends and have the option of investing limited
additional amounts by making cash payments, or
(3) invest only by making optional cash payments of not less than
$10 per payment or more than $5,000 per quarter.
The price for the Common Shares purchased with reinvested dividends will
be 95% of the average daily high and low sales prices for the Company's
Common Shares on the American Stock Exchange, as reported in THE WALL STREET
JOURNAL, for a period of ten (10) consecutive trading days ending on the
trading day immediately preceding the day on which the purchase is made. The
investment dates for reinvested dividends will be the dividend payment dates.
The price of the Common Shares purchased with optional cash payments will be
100% of the average of the daily high and low sales prices for the Company's
Common Shares on the American Stock Exchange, as reported in THE WALL STREET
JOURNAL, for a period of ten (10) consecutive trading days ending on the
trading day immediately preceding the day on which the purchase is made. The
investment dates for optional cash payments will be the first business
trading day of each month.
_________________________
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR HAS PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
_________________________
The date of this Prospectus is May 22, 1998
<PAGE>
TABLE OF CONTENTS
PAGE
Summary of the Plan ................................................. 3
The Company ......................................................... 4
Use of Proceeds ..................................................... 5
Common Share Automatic Dividend Reinvestment and Stock Purchase Plan. 5
Purpose ............................................................. 5
Advantages .......................................................... 6
Administration ...................................................... 6
Participation ....................................................... 6
Costs ............................................................... 9
Purchases ........................................................... 9
Optional Cash Payments............................................... 10
Reports to Participants ............................................. 11
Dividends ........................................................... 12
Certificates for Shares ............................................. 12
Safekeeping of Shares ............................................... 13
Withdrawal .......................................................... 13
Other Information ................................................... 13
Termination by Company .............................................. 16
Legal Matters ....................................................... 16
Experts ............................................................. 17
Where You Can Find More Information ................................. 17
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 SAFE HARBOR CAUTIONARY
STATEMENT
THIS PROSPECTUS AND THE DOCUMENTS INCORPORATED BY REFERENCE HEREIN
CONTAIN "FORWARD-LOOKING" STATEMENTS, AS DEFINED IN THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995, THAT ARE BASED ON CURRENT EXPECTATIONS,
ESTIMATES AND PROJECTIONS. STATEMENTS THAT ARE NOT HISTORICAL FACTS,
INCLUDING STATEMENTS ABOUT THE COMPANY'S BELIEFS AND EXPECTATIONS, ARE
FORWARD-LOOKING STATEMENTS. THESE STATEMENTS CONTAIN POTENTIAL RISKS AND
UNCERTAINTIES AND, THEREFORE, ACTUAL RESULTS MAY DIFFER MATERIALLY. THE
COMPANY UNDERTAKES NO OBLIGATION TO UPDATE PUBLICLY ANY FORWARD-LOOKING
STATEMENTS, WHETHER AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR
OTHERWISE.
IMPORTANT FACTORS THAT MAY AFFECT THESE PROJECTIONS OR EXPECTATIONS
INCLUDE, BUT ARE NOT LIMITED TO: CHANGES IN THE OVERALL ECONOMY; CHANGES IN
COMPETITION IN MARKETS IN WHICH THE COMPANY OPERATES; ADVANCES IN
TELECOMMUNICATIONS TECHNOLOGY; CHANGES IN THE TELECOMMUNICATIONS REGULATORY
ENVIRONMENT; PENDING AND FUTURE LITIGATION; AVAILABILITY OF FUTURE FINANCING;
START-UP OF PCS OPERATIONS; AND UNANTICIPATED CHANGES IN GROWTH IN CELLULAR
CUSTOMERS, PENETRATION RATES, CHURN RATES AND THE MIX OF PRODUCTS AND
SERVICES OFFERED IN THE COMPANY'S MARKETS. READERS SHOULD EVALUATE ANY
STATEMENTS IN LIGHT OF THESE IMPORTANT FACTORS.
2
<PAGE>
SUMMARY OF THE PLAN
- PARTICIPATION: TDS record shareholders who own ten (10) or more of the
Company's Common Shares and/or ten (10) or more shares of any series of
the Company's Preferred Shares can participate in the Plan by
submitting a completed Authorization Form. You may obtain
Authorization Forms from TDS Investor Relations at (312) 630-1900. If
your shares are held in a brokerage account,you may participate by
having your broker register a minimum of ten (10) shares in the Plan.
No action is required if you are already participating in the Plan.
- REINVESTMENT OF DIVIDENDS: You can reinvest your cash dividends on all or
a portion of your Common and/or Preferred Shares (but not less than
ten (10) shares of each class or series of participating securities)
toward the purchase of additional shares of TDS stock without paying
fees.
- OPTIONAL CASH INVESTMENTS: After you are enrolled in the Plan, you can
buy additional TDS Common Shares without paying fees. You can invest a
minimum of $10 per payment up to a maximum of $5,000 in any one quarter.
You can pay by check or money order payable to the Agent for the Plan,
and any optional cash payment received prior to the fifth business day
prior to the end of a month will be invested on the first business
trading day of the next month.
- PRICE FOR SHARES: The price for the Common Shares purchased with
reinvested dividends will be 95% of the average daily high and low sales
prices for the Company's Common Shares on the American Stock Exchange, as
reported in THE WALL STREET JOURNAL, for a period of ten (10) consecutive
trading days ending on the trading day immediately preceding the day on
which the purchase is made. The price of the Common Shares purchased with
optional cash payments will be 100% of the average of the daily high and
low sales prices for the Company's Common Shares on the American Stock
Exchange, as reported in THE WALL STREET JOURNAL, for a period of ten (10)
consecutive trading days ending on the trading day immediately preceding
the day on which the purchase is made.
- INVESTMENT DATES: The Investment Dates for reinvested dividends will be
the dividend payment dates. The Investment Dates for optional cash
payments will be the first business trading day of each month.
- SAFEKEEPING OF CERTIFICATES: You can transfer to the Agent for
safekeeping your TDS stock certificates representing the Common Shares on
which you are having dividends reinvested under the Plan. There is no
charge for this service. A certificate for any number of whole shares
credited to an account will be sent to you, free of charge, upon written
request.
- WITHDRAWAL FROM THE PLAN: You may withdraw from the Plan at any time by
notifying the Agent in writing. A certificate for the whole Common
Shares credited to your account, along with a cash payment for any
fractional share, will be issued to you. Dividends paid after
withdrawal from the Plan will be paid in cash directly to you, unless
you elect to rejoin the Plan by submitting a new Authorization Form.
- TRACKING YOUR INVESTMENT: You will receive a statement of your Plan
account with respect to each month in which a transaction takes place.
These statements provide details of the transactions and the share balance
in your program account.
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THE COMPANY
TDS is a diversified telecommunications service company with cellular
telephone, local telephone and developing personal communications services
(PCS) operations. The Company's business development strategy is to expand
its existing operations through internal growth and acquisitions and to
explore and develop other telecommunications businesses that management
believes will utilize the Company's expertise in customer-based
telecommunications services.
The Company's Restated Certificate of Incorporation establishes three
tracking groups (the "Tracking Groups"), each of which would be represented
by a different class of common stock ("Tracking Stock"), and one residual
group (the "TDS Group"), which is represented by the Series A Common Shares
and Common Shares of the Company.
The United States Cellular Group Common Shares (the "Cellular Group
Shares"), when issued, are intended to reflect the separate performance of
the United States Cellular Group (the "Cellular Group"), which consists of
the Company's interest in United States Cellular Corporation, a subsidiary of
the Company operating and investing in cellular telephone companies and
properties ("U.S. Cellular").
The TDS Telecommunications Group Common Shares (the "Telecom Group
Shares"), when issued, are intended to reflect the separate performance of
the TDS Telecommunications Group (the "Telecom Group"), which consists of the
Company's interest in TDS Telecommunications Corporation, a subsidiary of the
Company operating landline telephone companies ("TDS Telecom"), and includes
the attribution of certain corporate debt.
The Aerial Communications Group Common Shares (the "Aerial Group
Shares"), when issued, are intended to reflect the separate performance of
the Aerial Communications Group (the "Aerial Group"), which consists of the
Company's interest in Aerial Communications, Inc., a subsidiary of the
Company providing broadband personal communications services ("Aerial").
Pursuant to an Agreement and Plan of Merger (the "Merger Agreement"),
dated as of March 6, 1998, between Telephone and Data Systems, Inc., an Iowa
corporation ("TDS Iowa"), and the Company, which had been a wholly-owned
subsidiary of TDS Iowa, TDS Iowa merged with and into Company, with Company
as the surviving corporation (the "Reincorporation Merger"). In the
Reincorporation Merger, each Common Share, $1.00 par value, of TDS Iowa
issued immediately prior to the Reincorporation Merger was automatically
converted into one issued and fully paid and nonassessable Common Share, $.01
par value, of Company ("Common Shares"), each Series A Common Share, $1.00
par value, of TDS Iowa issued immediately prior to the Reincorporation Merger
was automatically converted into one issued and fully paid and nonassessable
Series A Common Share, $.01 par value, of Company ("Series A Common Shares"),
and each Preferred Share, without par value, of TDS Iowa issued immediately
prior to the Reincorporation Merger was automatically converted into one
issued and fully paid and nonassessable Preferred Share, $.01 par value, of
Company with the same rights, preferences and limitations as set forth in
the original certificate of designation for the series related to such
Preferred Share.
In connection with the Reincorporation Merger, the Company intends to
distribute (the "Distribution") one Cellular Group Share, two-thirds of a
Telecom Group Share and two-thirds of an Aerial Group Share with respect to
each outstanding Series A Common Share and Common Share. There can be no
assurance that the Distribution will be completed or that it will be
completed as currently contemplated.
Upon the completion of the Distribution as contemplated, the Series A
Common Shares and the Common Shares of the Company would represent a common
equity interest in the TDS Group, which would have a Retained Interest of
approximately 20-25% of the common shareholders' equity value of the Company
attributable to each of the Cellular Group, the Telecom Group and the Aerial
Group. Accordingly, the Series A Common Shares and Common Shares of TDS
Delaware are intended to reflect the combined performance of the all of the
Tracking Groups of TDS. In addition, the Series A Common Shares and Common
Shares are intended to reflect the performance of all other interests held by
the TDS Group and the effects of certain corporate operations performed by
the TDS Group. The TDS Group would also include such other assets and
liabilities of the Company as the Board may in the future determine to
attribute to the TDS Group and such other businesses, assets and liabilities
as the Company or any of its subsidiaries may in the future acquire for the
TDS Group, as determined by the Board. Until such time as there are any
issued and outstanding Cellular Group Shares, Telecom Group
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Shares and Aerial Group Shares, all of the Company's equity interest in the
Cellular Group, the Telecom Group and the Aerial Group, respectively, will be
deemed to be held by the TDS Group.
The Company has attempted to reach an agreement with a special committee
of U.S. Cellular relating to the acquisition by TDS of the outstanding shares
of U.S. Cellular which TDS does not own in exchange for Cellular Group
Shares, and to reach an agreement with a special committee of Aerial relating
to the acquisition by TDS of the outstanding shares of Aerial which TDS does
not own in exchange for Aerial Group Shares. There can be no assurance that
TDS will be able to reach agreements relating to such transactions. If TDS
is unable to reach such agreements or otherwise acquire the publicly-held
shares of U.S. Cellular or Aerial, such shares would continue to remain
outstanding.
The Reincorporation Merger, the Distribution and related transactions
are described in the Proxy Statement of TDS Iowa and Prospectus of Company,
dated March 24, 1998, as supplemented, which is part of the Company's
Registration Statement on Form S-4 (Registration No. 333-42535, which is
incorporated by reference herein.
The Company is the successor to TDS Iowa. As noted above, in 1998, TDS
Iowa merged with and into the Company, with the Company surviving the merger.
The Company's corporate headquarters are located at 30 N. LaSalle, Suite
4000, Chicago, Illinois 60602, and its telephone number is (312) 630-1900.
Except where the context otherwise indicates, the term "Company" and "TDS"
include Telephone and Data Systems, Inc., a Delaware corporation, and its
subsidiaries.
USE OF PROCEEDS
The number of Common Shares that will be sold under the Plan and the
prices at which such shares will be sold cannot now be determined. The net
proceeds from the sale of such shares will be used by the Company for general
corporate purposes of the Company's TDS Group. Until the proceeds are used
for these purposes, the Company may deposit them in interest-bearing accounts
or invest them in certificates of deposit, United States Government
securities or prime commercial paper.
COMMON SHARE AUTOMATIC DIVIDEND REINVESTMENT
AND STOCK PURCHASE PLAN
The following is a question and answer statement of the provisions of
the Company's Common Share Automatic Dividend Reinvestment and Stock Purchase
Plan (the "Plan"). Questions and Answers 1 through 35 both explain and
constitute the Plan.
PURPOSE
1. WHAT IS THE PURPOSE OF THE PLAN?
The purpose of the Plan is to provide eligible holders, as defined in
the Answer to Question 4, of the Company's Common Shares and Preferred
Shares, with a systematic, economic and convenient method of investing cash
dividends from such shares and/or limited optional cash payments in Common
Shares of the Company without payment of any brokerage commission or service
charge, and, in the case of reinvested cash dividends, at a 5% discount from
market value (as determined below). Since the additional Common Shares will
be purchased directly from the Company, the Plan will provide the Company
with additional capital funds.
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ADVANTAGES
2. WHAT ARE THE ADVANTAGES OF THE PLAN?
Participants may purchase Common Shares of the Company with cash
dividends on all or less than all of the Company's Common Shares and/or
Preferred Shares registered in their names (but not less than 10 shares of
each class or series). See the Answer to Question 4. Participants also may
purchase Common Shares as often as monthly with optional cash payments of not
less than $10 per payment, nor more than an aggregate of $5,000 per quarter.
The price of Common Shares purchased with cash dividends will be 95% of
market value as set forth in the Answer to Question 13, and the price of
Common Shares purchased with optional cash payments will be 100% of market
value as set forth in the Answer to Question 13.
No commission or service charge is paid by participants in connection
with purchases under the Plan. Full investment of funds is possible under
the Plan because the Plan permits fractions of shares, as well as full
shares, to be credited to participants' accounts. IN ADDITION, DIVIDENDS IN
RESPECT OF SUCH FRACTIONS, AS WELL AS IN RESPECT OF FULL SHARES, WILL BE
CREDITED TO PARTICIPANTS' ACCOUNTS AND REINVESTED IN THE COMPANY'S COMMON
SHARES UNDER THE PLAN. The safekeeping of Common Shares credited to a
participant's account is assured since certificates for such shares are not
issued unless requested by the participant. Regular statements of account
will provide simplified record keeping.
ADMINISTRATION
3. WHO ADMINISTERS THE PLAN?
Harris Trust and Savings Bank (the "Agent") acts as an agent for
participants in the Plan. The Agent keeps a continuing record of each
participant's account, sends periodic statements of account to each
participant with respect to each month in which a transaction takes place and
performs other duties relating to the Plan. Common Shares of the Company
purchased under the Plan will be registered in the name of the Agent or its
nominee, as Agent for each participant in the Plan, and will be credited to
the accounts of the respective participants. Should Harris Trust and Savings
Bank resign, another bank will be asked to serve as the Agent. All
communications regarding the Plan should be sent to the Agent addressed as
follows:
Telephone and Data Systems, Inc.
Common Share Automatic Dividend Reinvestment
and Stock Purchase Plan
c/o Harris Trust and Savings Bank
P.O. Box 755
Chicago, Illinois 60690
(telephone: 312/360-5337)
Harris Trust and Savings Bank also acts as dividend disbursing and
transfer agent for the Company's Common Shares.
PARTICIPATION
4. WHO IS ELIGIBLE TO PARTICIPATE?
Holders of record of ten (10) or more of the Company's Common Shares
and/or ten (10) or more shares of any of the Company's series of Preferred
Shares which were originally issued prior to the Reincorporation Merger (and
any subsequently issued Preferred Shares attributed to the TDS Group) are
eligible to participate in the Plan. Beneficial owners of Common Shares and
any series of Preferred Shares which currently are registered in names other
than their own (for example, in the name of a broker or bank nominee) who
wish to participate in the Plan must either make appropriate
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arrangements for their nominee to do so or must become security owners of
record by having a minimum of ten (10) shares of each class or series of
securities they wish to participate in the Plan transferred into their own
name.
All holders of record of ten (10) or more of each of the above
securities are eligible to participate in the Plan, unless they are citizens
of a state or foreign jurisdiction in which it would be unlawful for the
Company to allow such participation. The Company is not aware of any
jurisdiction in which the making of the offer is not in compliance with valid
applicable law. If the Company becomes aware of any jurisdiction in which
the making of the offer would not be in compliance with valid applicable law,
the Company will make a good faith effort to comply with any such law. If,
after such good faith effort, the Company cannot comply with any such law,
the offer will not be made to holders of shares residing in any such
jurisdiction. In those jurisdictions whose securities or blue sky laws
require the offer to be made by a licensed broker or dealer, the offer shall
not be deemed to be made unless it is made on behalf of the Company by one or
more registered brokers or dealers which are licensed under the laws of such
jurisdiction, as may be designated by the Company.
5. HOW DOES AN ELIGIBLE SHAREHOLDER PARTICIPATE?
An eligible shareholder may join the Plan at any time by signing an
"Authorization Form" and returning it to the Agent. An Authorization Form
and postage paid envelope may be obtained by written request addressed to the
Agent at the above address or by writing or calling the Company as follows:
Telephone and Data Systems, Inc.
Common Share Automatic Dividend Reinvestment
and Stock Purchase Plan
30 N. LaSalle, Suite 4000
Chicago, Illinois 60602
Attn: Investor Relations Coordinator
(telephone: 312/630-1900)
6. WHEN DOES AN ELIGIBLE SHAREHOLDER'S PARTICIPATION START?
COMMON SHAREHOLDERS
If an Authorization Form directing dividend reinvestment is received
from a Common Shareholder by the Agent on or before the last business day of
the month preceding the next dividend payment, that dividend will be applied
to the purchase of Common Shares under the Plan. If the Authorization Form
directing dividend reinvestment is received after that date, dividend
reinvestment will begin with the next succeeding payment. Cash dividends on
the Common Shares are ordinarily paid in March, June, September and December.
For example, if the Company's Board of Directors establishes June 30 as
the payment date for a Common Share cash dividend, then in order to reinvest
the dividends payable on June 30 in new Common Shares under the Plan, a
Common Shareholder's Authorization Form must be received by the Agent no
later than the last business day in May. If the Authorization Form is
received after the last business day in May, the dividends payable on June 30
will be paid in cash and the Common Shareholder's participation in the Plan
will commence with the next Common Share cash dividend payment date.
PREFERRED SHAREHOLDERS
If an Authorization Form directing dividend reinvestment is received
from a Preferred Shareholder on or before the 30th day preceding the next
dividend payment, that dividend will be applied to the purchase of Common
Shares under the Plan. If the Authorization Form directing dividend
reinvestment is received after that date, dividend reinvestment will begin
with the next succeeding cash dividend payment.
For example, for holders of Preferred Shares with cash dividends payable
on June 1 or July 1 or July 15 to reinvest cash dividends payable on these
dates in new Common Shares under the Plan, an Authorization Form must be
received by the Agent no later than May 3 or June 2 or June 16, as the case
may be. If the Authorization Form is received after May 3 or June 2 or June
16, the dividends payable on June 1 or July 1 or July 15, as the case may be,
will be paid in cash and the
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Preferred Shareholder's participation in the Plan will commence with the next
applicable Preferred Share cash dividend payment date.
OPTIONAL CASH PAYMENTS
Optional cash payments may be made at any time upon or after enrollment
in the Plan and will be used to purchase new Common Shares for the
participant's account under the Plan as set forth in the Answers to Questions
12, 13, 15, 16, 17 and 18.
7. WILL A COMMON SHAREHOLDER PRESENTLY ENROLLED IN THE COMMON SHARE
AUTOMATIC DIVIDEND REINVESTMENT PLAN AND STOCK PURCHASE PLAN FOR
SHAREHOLDERS OF TELEPHONE AND DATA SYSTEMS, INC., AN IOWA CORPORATION
(THE "TDS-IOWA PLAN") CONTINUE TO BE ENROLLED IN THE PLAN?
Yes. The Company adopted and continued the TDS-Iowa Plan, as amended
hereby, on the effective date of the Reincorporation Merger. A Common
Shareholder enrolled in the TDS-Iowa Plan will continue to be enrolled in the
Plan in accordance with the participation option chosen under the TDS-Iowa
Plan, PROVIDED he or she is an eligible shareholder as set forth in the
Answer to Question 4, and thus entitled to participate in the Plan, and is
investing dividends on a minimum of ten (10) Common Shares held of record.
If an eligible shareholder enrolled in the TDS-Iowa Plan does not wish
to participate in the Plan, he or she should withdraw from the Plan in the
manner described in the Answers to Questions 24 and 25. If an eligible
shareholder wishes to change the nature of his or her participation from that
in the TDS-Iowa Plan, he or she should return an Authorization Form as
described herein. If an eligible shareholder enrolled in the TDS-Iowa Plan
does not wish to withdraw or change the nature of his or her participation,
he or she will be continued in the Plan, the cash dividends on those Common
Shares owned of record by that shareholder and designated for reinvestment
under the TDS-Iowa Plan and those Common Shares held for the Shareholder in
the TDS Share Owner's Account will be used to purchase Common Shares under
the Plan at the 5% discount, and he or she may continue to make optional
payments of at least $10 per payment up to a maximum of $5,000 per quarter.
8. WHAT DOES THE AUTHORIZATION FORM PROVIDE?
The Authorization Form provides for the purchase of new Common Shares
through the following investment options offered under the Plan:
FULL REINVESTMENT - Cash dividends on all shares (Common and/or
Preferred) held of record by an ELIGIBLE shareholder will be invested at
95% of market value (see the Answer to Question 13). Optional cash
payments of at least $10 per payment may also be invested at 100% of the
market value, up to an aggregate of $5,000 per quarter.
PARTIAL REINVESTMENT - Cash dividends on less than all of the shares
(but not less than 10 shares of each class or series of participating
securities) held of record by an ELIGIBLE shareholder will be invested at
95% of market value (see the Answer to Question 13) and the shareholder
will continue to receive cash dividends on the other shares. Optional cash
payments of at least $10 per payment may also be invested at 100% of the
market value, up to an aggregate of $5,000 per quarter.
OPTIONAL PAYMENTS ONLY - Optional cash payments may be made of not less
than $10 per payment and not more than an aggregate of $5,000 per quarter
at 100% of market value (see Answer to Question 13).
CASH DIVIDENDS ON COMMON SHARES CREDITED TO THE PARTICIPANT'S ACCOUNT
UNDER THE PLAN (INCLUDING FRACTIONAL SHARES) ARE AUTOMATICALLY REINVESTED TO
PURCHASE ADDITIONAL COMMON SHARES NO MATTER WHICH OPTION IS CHOSEN. The
Authorization Form also serves to appoint Harris Trust and Savings Bank as
Agent for the participant.
If a shareholder holds more than one class or series of securities or
has more than one stock account pursuant to which he or she is eligible to
participate in the Plan (see the Answer to Question 4), A SEPARATE
AUTHORIZATION FORM IS REQUIRED FOR EACH CLASS AND SERIES OF SECURITIES AND
EACH ACCOUNT THAT HE OR SHE WISHES INCLUDED IN THE PLAN.
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9. IS PARTIAL PARTICIPATION POSSIBLE UNDER THE PLAN?
Yes. An eligible shareholder who desires the dividends on only some of
his or her full shares (Common and/or Preferred) to be invested under the
Plan may indicate such number of shares upon the applicable Authorization
Form(s) under "Partial Dividend Reinvestment" provided that in no event may
an eligible shareholder elect to invest dividends on less than ten (10) such
shares (see Answer to Question 4).
10. MAY A PARTICIPANT CHANGE HIS OR HER METHOD OF PARTICIPATION AFTER
ENROLLMENT?
Yes. If a shareholder elects to participate pursuant to the optional
cash payment option only but later decides to enroll in either the full or
partial reinvestment option, a new Authorization Form may be executed and
returned to the Agent. If a shareholder elects to participate through the
reinvestment of dividends but later decides to change the class or series of
securities or number of shares (but not less than ten (10) shares) for which
dividends are being reinvested or to participate pursuant to the optional
cash payment option only, a new Authorization Form may be executed and
returned to the Agent. IT SHOULD BE REMEMBERED THAT, EVEN IF A SHAREHOLDER
IS ENROLLED ONLY PURSUANT TO THE OPTIONAL CASH PAYMENT OPTION, THE AGENT WILL
REINVEST DIVIDENDS ON ALL SHARES CREDITED TO THE SHAREHOLDER'S PLAN ACCOUNT
IN NEW COMMON SHARES.
COSTS
11. ARE THERE ANY EXPENSES TO PARTICIPANTS IN CONNECTION WITH PURCHASES
UNDER THE PLAN?
No. Participants will incur no costs. There are no brokerage fees
because Common Shares are purchased directly from the Company. All costs of
administration of the Plan will be paid by the Company.
PURCHASES
12. WHEN ARE THE PURCHASE OR INVESTMENT DATES?
COMMON SHARE CASH DIVIDENDS
The Investment Dates for Common Shares purchased under the Plan with
cash dividends on Common Shares are the cash dividend payment dates. The
Company usually pays cash dividends on its Common Shares in March, June,
September and December.
PREFERRED SHARE CASH DIVIDENDS
The Investment Dates for Common Shares purchased under the Plan with
cash dividends on Preferred Shares are the dividend payment dates for the
series of Preferred Shares whose dividends are being reinvested.
The Company's various outstanding series of Preferred Shares generally
pay dividends in cycles of January 1, April 1, July 1 and October 1 or
January 15, April 15, July 15 and October 15 or March 1, June 1, September 1
and December 1.
OPTIONAL CASH PAYMENTS
The Investment Date for any optional cash payment is the first business
day of each calendar month on which the Company's Common Shares are traded on
the American Stock Exchange.
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13. HOW WILL THE PURCHASE PRICE OF COMMON SHARES BE DETERMINED?
DIVIDEND REINVESTMENT PURCHASE PRICE
The price of Common Shares purchased with reinvested cash dividends will
be 95% of the average daily high and low sales prices for the Company's
Common Shares on the American Stock Exchange, as reported in THE WALL STREET
JOURNAL, for a period of ten (10) consecutive trading days ending on the
trading day immediately preceding the Investment Date. If there is no
trading in the Common Shares reported on the American Stock Exchange for a
substantial amount of time during any such trading period, the purchase price
per share shall be determined by the Company on the basis of such market
quotations as it shall deem appropriate. No Common Shares will be sold by
the Company at less than the par value of such shares.
OPTIONAL CASH PAYMENT PURCHASE PRICE
The price of Common Shares purchased with optional cash payments will be
the average of the daily high and low sales prices for the Company's Common
Shares on the American Stock Exchange, as reported in THE WALL STREET
JOURNAL, for a period of ten (10) consecutive trading days ending on the
trading day immediately preceding the Investment Date. If there is no
trading in the shares reported on the American Stock Exchange for a
substantial amount of time during any such trading period, the purchase price
per share shall be determined by the Company on the basis of such market
quotations as it shall deem appropriate. No Common Shares will be sold by
the Company at less than the par value of such shares.
14. HOW MANY COMMON SHARES WILL BE PURCHASED FOR PARTICIPANTS?
The number of Common Shares to be purchased on an Investment Date will
be determined by the amount of each participant's dividends (including
dividends on Common Shares purchased under the Plan) and/or optional cash
payments being invested and the applicable price of the Company's Common
Shares. Each participant's account in the Plan will be credited with the
number of Common Shares, including fractional shares computed to four decimal
places, equal to the amount of the dividends being invested divided by 95% of
the applicable purchase price and/or the total amount of any optional cash
payments being invested divided by 100% of the applicable purchase price.
OPTIONAL CASH PAYMENTS
15. HOW IS THE OPTIONAL CASH PAYMENT APPLIED TO THE PURCHASE OF COMMON
SHARES?
Only shareholders who submit a signed Authorization Form are eligible to
make optional cash purchases. Optional payments received prior to the fifth
business day prior to the end of a month will be invested on the first
business trading day of the next month. Optional payments not received prior
to the fifth business day prior to the end of the month will be deposited and
invested at the next succeeding monthly optional cash payment Investment
Date. For example, an optional cash payment received in the last five
business days in May will not be invested until the first business trading
day in July.
16. HOW ARE THE OPTIONAL CASH PAYMENTS MADE?
The option to make cash payments of not less than $10 per payment and
not more than an aggregate of $5,000 per quarter is available to each
participant. Cash payments should be sent directly to the Agent. Payments of
less than $10 or any amount over $5,000 in the aggregate in any quarter will
be returned to the shareholder. For example, if the Agent receives optional
cash payments of $2,000 in January, $1,500 in February and $2,000 in March,
the $5,500 received for the quarter exceeds the $5,000 limit. Therefore,
$500 will be refunded.
If any holders of record or beneficial owners are affiliates or acting in
concert or as a group (based on the good faith judgment of the Company), such
record holders or beneficial owners will be treated as one participant for
purposes of the optional cash payments under the Plan. Consequently, such group
will be limited to cash payments of not more than an aggregate of $5,000 per
quarter. Any payments over $5,000 in the aggregate in any quarter will be
returned to such group. If such group does not properly designate how any
optional cash payment up to $5,000 per quarter should be allocated
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among persons in the group, such payment will also be returned. An affiliate
of a person is a person that, directly or indirectly, through one or more
intermediaries, controls, is controlled by or is under common control with
such person.
An optional cash payment may be made by a participant when enrolling by
enclosing a check or money order payable to Harris Trust and Savings Bank,
Agent for the Plan, with the Authorization Form. Thereafter, optional cash
payments may be made through the use of cash payment forms sent to
participants as part of their statements. The same amount of money need not
be sent each quarter, and there is no obligation to make an optional cash
payment each quarter.
17. WHEN SHOULD THE OPTIONAL CASH PAYMENT BE MADE?
Optional cash payments will be invested on the first business trading
day of each month (see the Answer to Question 12). ANY OPTIONAL CASH PAYMENT
RECEIVED BY THE COMPANY ON OR AFTER THE FIFTH BUSINESS DAY PRIOR TO THE END
OF THE MONTH WILL BE HELD BY THE AGENT UNTIL THE NEXT SUCCEEDING MONTH'S
OPTIONAL CASH PAYMENT INVESTMENT DATE. (See Answer to Question 15). SINCE
INTEREST WILL NOT BE PAID BY THE AGENT ON OPTIONAL CASH PAYMENTS, IT IS
SUGGESTED THAT THESE PAYMENTS SHOULD BE SENT TO THE AGENT AS NEAR IN TIME
PRIOR TO THE FIFTH BUSINESS DAY PRIOR TO THE END OF THE MONTH AS POSSIBLE
ALLOWING ADEQUATE TIME FOR MAILING.
18. MAY OPTIONAL CASH PAYMENTS BE RETURNED TO A PARTICIPANT?
Optional cash payments received by the Agent will be returned to a
participant upon written request by such participant received by the Agent at
least 48 hours prior to the Investment Date.
REPORTS TO PARTICIPANTS
19. WHAT REPORTS WILL BE SENT TO PARTICIPANTS IN THE PLAN?
Each participant in the Plan will receive a statement of his or her
account with respect to each month in which a transaction takes place. These
statements are a participant's continuing record of the cost of his or her
purchases. PARTICIPANTS SHOULD RETAIN THESE STATEMENTS FOR INCOME TAX
PURPOSES. Each statement will set forth the following information when
applicable:
(a) The total number of Common Shares registered in the name of the
participant which is participating in the Plan.
(b) The total number of Preferred Shares registered in the name of the
participant which is participating in the Plan.
(c) The total number of Common Shares which have been accumulated under
the Plan by the Participant but for which certificates have not been issued
(See Answer to Question 21).
(d) The following information for each transaction during the month and
all transactions to date during the current year:
(i) the amount of dividends, and/or optional cash invested;
(ii) the price per Common Share for each transaction;
(iii) the number of Common Shares purchased; and
(iv) certain tax information.
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In addition, each participant will receive copies of communications sent
to every other holder of the Company's Common Shares, including the Annual
Report to Shareholders, Notice of Annual Meeting of Shareholders and Proxy
Statement, and Internal Revenue Service ("IRS") information on Form 1099 for
reporting dividend income.
DIVIDENDS
20. WILL PARTICIPANTS BE CREDITED WITH DIVIDENDS ON FRACTIONS OF SHARES?
Yes. Participants will be credited with the amount of dividends
attributable to fractions of shares in their accounts under the Plan and such
dividends will be reinvested.
CERTIFICATES FOR SHARES
21. WILL CERTIFICATES BE ISSUED FOR SHARES OF COMMON SHARES PURCHASED UNDER
THE PLAN?
Normally, certificates for the Company's Common Shares purchased under
the Plan will not be issued to participants. The number of Common Shares
credited to a participant's account under the Plan will be shown on each
statement of account mailed to the participant. This convenience protects
against loss, theft, or destruction of stock certificates.
Certificates for any number of whole Common Shares credited to an
account under the Plan will be issued upon the written request of the
participant to the Agent and issuance of such certificates will not terminate
participation in the Plan. Any remaining full shares and fraction of a share
will continue to be credited to the participant's Plan account.
Dividends on Plan Common Shares for which a participant requests and
receives a certificate will be reinvested in the Company's Common Shares at
the 5% discount under the Plan and the Common Shares purchased therewith will
be credited to the Participant's Plan IF the participant continues to own
these Common Shares and has elected full dividend reinvestment of Common
Shares on his or her current Common Share Authorization Form. A participant
who continues to own the Common Shares in question and desires to have the
dividends on these shares reinvested in the Company's Common Shares but who
does not have an existing Authorization Form for Common Shares or has elected
only partial reinvestment of his or her Common Share dividends on the current
Authorization Form will have to execute a new Authorization Form and return
it to the Agent as set forth in the Answer to Question 10. Otherwise,
dividends on these Common Shares will not be reinvested in the Company's
Common Shares at the 5% discount as they were when they were held for the
participant in the Plan. Rather, the dividends on the Common Shares in
question will be paid to the Shareholder in cash.
Common Shares credited to the account of a participant under the Plan
may not be pledged as collateral otherwise transferred. A participant who
wishes to pledge or transfer such shares must request that certificates for
such shares be issued in his or her name.
Certificates for fractional shares will not be issued under any
circumstances.
An institution that is required by law to maintain physical possession
of certificates may request a special arrangement regarding the issuance of
certificates for Common Shares purchased under the Plan. This request should
be sent to the Agent (see Answer to Question 3).
22. IN WHOSE NAME WILL CERTIFICATES BE ISSUED?
Accounts under the Plan are maintained in the names in which certificates
of the participants were registered at the time they entered the Plan.
Consequently, certificates for whole shares issued upon the request of
participants will be similarly registered.
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SAFEKEEPING OF SHARES
23. MAY PARTICIPANTS TRANSFER SHARES WHICH ARE DESIGNATED FOR PARTICIPATION
IN THE PLAN TO THE AGENT FOR SAFEKEEPING?
Yes. Participants may transfer to the Agent for safekeeping
certificates representing Common Shares registered in their names. These
shares will be credited to the participants' accounts under the Plan along
with shares purchased for them under the Plan. There is no charge for this
service. The stock certificates should be sent by registered mail, return
receipt requested and properly insured, to the Agent. Certificates should
not be endorsed.
Dividends will be reinvested in shares represented by the certificates
transferred to the Agent.
WITHDRAWAL
24. WHEN MAY A PARTICIPANT WITHDRAW FROM THE PLAN?
A participant may withdraw from the Plan at any time by notifying the
Agent in writing. If the notice of termination is received by the Agent
prior to the fifth business day preceding the record date for the next Common
Share cash dividend or prior to the 14th day preceding the next applicable
Preferred Share cash dividend, as the case may be, the amount of that
dividend will be paid to the withdrawing participant, and any optional cash
payment which would otherwise have been invested on such Investment Date will
be returned to the withdrawing participant, provided that the notification of
termination is received more than five business days prior to the Investment
Date on which that optional cash payment would have been invested. If the
notice of termination is received by the Agent on or after the record date
for the next Common Share cash dividend or on or after the 14th day preceding
the next applicable Preferred Share cash dividend, as the case may be, the
next dividend will be reinvested and subsequent dividends will be paid in
cash. If notification of termination is received during the five business
days prior to the Investment Date on which an optional cash payment would be
invested, that cash payment will be invested.
Dividends paid after withdrawal from the Plan will be paid in cash
directly to the shareholder unless he or she elects to rejoin the Plan, which
the shareholder may do as set forth in the Answer to Question 26.
25. WHAT HAPPENS WHEN A PARTICIPANT WITHDRAWS FROM THE PLAN OR THE PLAN IS
TERMINATED?
When a participant withdraws from the Plan, or ceases to be a
shareholder of record, or ceases to be an eligible shareholder, or upon
termination of the Plan by the Company, a certificate for the whole Common
Shares credited to his or her account under the Plan will be issued and a
cash payment will be made for any fractional share. This cash payment will
be based on the closing price of the Company's Common Shares on the American
Stock Exchange as of the date the written request for withdrawal is received,
or the participant ceases to be a shareholder of record, or the participant
ceases to be an eligible shareholder, or the Plan is terminated, whichever is
applicable, or if no trading occurs on such date, the next day on which the
Common Shares are traded.
OTHER INFORMATION
26. WHEN MAY A SHAREHOLDER REJOIN THE PLAN?
Generally, a shareholder may rejoin the Plan at any time, provided he or
she is an eligible shareholder, by submitting a new Authorization Form.
However, the Company reserves the right to reject any Authorization Form from
a previous participant on the grounds of repeated joinings and withdrawals
from Plan participation. Such reservation is intended to minimize
administrative expenses and to encourage use of the Plan as a long-term
investment service.
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27. WHAT HAPPENS IF A PARTICIPANT SELLS OR TRANSFERS ALL OF HIS OR HER
REGISTERED STOCK (OR CEASES TO BE AN ELIGIBLE SHAREHOLDER)?
If a participant ceases to be a shareholder of record holding a
certificate for shares on the books of the Company (or ceases to be an
eligible shareholder as set forth in the Answer to Question 4), a certificate
for the whole Common Shares credited to his or her account under the Plan
will be issued and a cash payment will be made for any fractional share.
Thereafter, the shareholder may rejoin the Plan as set forth in the Answer to
Question 26 if he or she is or becomes an eligible shareholder (see the
Answer to Question 4).
28. WHAT HAPPENS WHEN A PARTICIPANT WHO IS REINVESTING DIVIDENDS ON ALL OR
LESS THAN ALL OF THE SHARES REGISTERED IN HIS OR HER NAME SELLS OR
TRANSFERS A PORTION OF SUCH SHARES?
If a participant who is reinvesting dividends on all or only a portion
of shares registered in his or her name disposes of a portion of such shares,
the Company will continue to reinvest dividends on the remainder of the
shares registered in the participant's name up to the number indicated on the
participant's Authorization Form as the number of shares for which dividends
are to be reinvested, PROVIDED the participant remains an eligible
shareholder as set forth in the Answer to Question 4. For example, if a
participant authorized the Company to reinvest dividends on 50 Common Shares
of a total of 100 Common Shares registered in his or her name, and then
disposes of 25 Common Shares, the Company would continue to reinvest
dividends on 50 of the remaining 75 shares. IF THE PARTICIPANT DISPOSES OF 95
COMMON SHARES, HE OR SHE WOULD NO LONGER BE ELIGIBLE FOR PARTICIPATION IN THE
PLAN (see the Answer to Question 4) and a certificate for the whole Common
Shares credited to his or her account under the Plan would be issued and a
cash payment would be made for any fractional share remaining in the account.
29. DOES PARTICIPATION IN THE PLAN INVOLVE RISK?
The Plan itself creates no risk. The risk to participants is the same
as with any other investment in the Company's Common Shares. It should be
recognized that since investment prices are determined as an average of the
daily high and low sales prices for a period of ten (10) consecutive trading
dates on which the Company's Common Shares are traded (see Answer to Question
13), a participant loses any advantage otherwise available from being able to
select the timing of his or her investment. PARTICIPANTS MUST RECOGNIZE THAT
NEITHER THE COMPANY NOR THE AGENT CAN ASSURE A PROFIT OR PROTECT AGAINST A
LOSS ON THE SHARES PURCHASED UNDER THE PLAN.
SHAREHOLDERS ARE REFERRED TO THE RISK FACTORS DESCRIBED IN THE COMPANY'S
PROSPECTUS DATED MARCH 24, 1998 WHICH IS A PART OF THE COMPANY'S REGISTRATION
STATEMENT ON FORM S-4 (REGISTRATION NO. 333-42535), WHICH IS INCORPORATED BY
REFERENCE HEREIN.
30. WHAT HAPPENS IF THE COMPANY ISSUES A STOCK DIVIDEND, DECLARES A STOCK
SPLIT OR HAS A RIGHTS OFFERING?
Any Common Shares distributed by the Company as a stock dividend on
shares credited to a participant's Plan account, or upon any split of such
shares, will be credited to the participant's Plan account.
Stock dividends distributed on Common Shares in shares of any other
class of capital stock will be mailed directly to the shareholder in the same
manner as to shareholders not participating in the Plan. However, if a
dividend reinvestment plan or bookkeeping entry facility is established for
the shares of such other capital stock distributed as a dividend, the
participant will automatically become a participant of such dividend
reinvestment plan or bookkeeping entry facility and the shares distributed to
such participant will instead be credited to the participant's account. In a
rights offering, a participant's entitlement will be based upon his or her
total holdings, including shares credited to the participant's account under
the Plan. Rights certificates will be issued for the number of whole Common
Shares only, however, and rights based on a fraction of a Common Share held
in a participant's Plan account will be sold for the participant's account
and the net proceeds will be treated as an optional cash payment.
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31. HOW WILL A PARTICIPANT'S SHARES BE VOTED AT SHAREHOLDERS' MEETINGS?
All Common Shares held in the Plan for a participant will be voted as
the participant directs on a proxy or voting instruction form which will be
furnished to the participant. If the participant does not return the proxy
or form to the Agent, the Agent will not vote the participant's Plan shares.
32. WHAT ARE THE FEDERAL INCOME TAX CONSEQUENCES OF PARTICIPATION IN THE
PLAN?
The following discussion sets forth the general Federal income tax
consequences for participants in the Plan. However, the discussion is not
intended to be an exhaustive treatment of such tax consequences. For
example, the discussion does not address the treatment of stock dividends,
stock splits or a rights offering to participants in the Plan. It also does
not address differences in tax treatment with respect to participants who do
not hold the Common Shares as capital assets. Because the tax laws are
complex and constantly changing, participants are urged to consult their own
tax advisors regarding the tax consequences of participating in the Plan
(including the effects of any applicable state, local or foreign tax laws)
and for rules regarding the tax basis in special cases such as the death of a
participant or a gift of Common Shares held under the Plan and for other tax
consequences. Future legislative changes or changes in administrative or
judicial interpretation, some or all of which may be retroactive, could
significantly alter the Federal income tax treatment discussed herein.
In general, participants in the Plan who elect to reinvest cash
dividends will be treated, for Federal income tax purposes, as having
received, on the dividend payment date, a distribution in an amount equal to
the fair market value on the dividend payment date of the Common Shares
purchased with reinvested dividends (rather than a distribution in the amount
of cash otherwise payable to the participant). Participants should not be
treated as receiving an additional distribution based upon their pro rata
share of the Plan administration costs paid by the Company; however, there
can be no assurance that the Internal Revenue Service ("IRS") will agree with
this position. The Company has no present plans to seek formal advice from
the IRS on this issue.
Generally, the distribution described above (the fair market value of
the Common Shares purchased with reinvested dividends) will be taxable to
participants as ordinary dividend income to the extent of the Company's
current or accumulated earnings and profits for Federal income tax purposes.
The amount of the distribution in excess of such earnings and profits will
reduce a participant's tax basis in the Common Shares with respect to which
such distribution was received, and, to the extent in excess of such basis,
result in capital gain. Certain corporate participants may be entitled to a
dividends received deduction with respect to amounts treated as ordinary
dividend income. Corporate participants should consult their own tax advisors
regarding their eligibility for and the extent of such deduction.
Tax information will be shown on the statements of account sent to
participants which participants should retain for tax purposes. These
statements are important for computing the tax basis of Common Shares
acquired under the Plan. The Form 1099 which each participant will receive
annually will include the income which is deemed to result from the receipt
of the Common Shares under the Plan.
As a general rule, the tax basis of shares (or any fraction of a share)
purchased with reinvested dividends will equal the fair market value of such
shares (or fractional share) as reported to participants on their statements.
A participant should not be treated as having received a distribution
from the Company as the result of making an optional cash payment under the
Plan. The tax basis of shares (or any fraction thereof) purchased with
optional cash payments will be the amount of such cash payment.
The holding period for Common Shares (or a fraction thereof) received as
a result of reinvestment of dividends under the Plan or through optional cash
payments will begin on the day following the purchase date.
Participants will generally not realize any taxable income when they
receive certificates for whole Common Shares credited to their accounts under
the Plan, either upon their request for certificates for certain of those
shares, upon ceasing to be a shareholder of record, upon ceasing to be an
eligible shareholder, or upon withdrawal from or termination of the Plan.
However, a participant may realize a gain or loss when Common Shares acquired
under the Plan are subsequently sold. In addition, participants may realize
gain or loss when they receive a cash adjustment for fractional shares
credited to their accounts upon withdrawal from or termination of the Plan.
The amount of such gain or loss will be the difference between
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the amount which the participant receives for his or her shares or fractional
share, and his or her tax basis therefor (with special rules applying to
determine the basis allocable to shares that are not specifically identified
when the Participant sells less than all of his or her shares). Such gain or
loss will generally be capital gain or loss, and will be long-term capital
gain or loss if the holding period for such shares or fractional shares
exceeds one year. The excess of net long-term capital gains over net
short-term capital losses is taxed at a lower rate than ordinary income for
certain taxpayers. The distinction between capital gain or loss and ordinary
income and loss is also relevant for purposes of, among other things,
limitations on the deductibility of capital losses. Any loss may be
disallowed under the "wash sale" rules to the extent the shares disposed of
are replaced (through the Plan or otherwise) during the 61-day period
beginning 30 days before and ending 30 days after the date of disposition.
33. WHAT PROVISION IS MADE FOR SHAREHOLDERS (FOREIGN AND DOMESTIC) WHOSE
DIVIDENDS ARE SUBJECT TO INCOME TAX WITHHOLDING?
In the case of foreign shareholders who elect to have their dividends
reinvested and whose dividends are subject to United States income tax
withholding, the Agent will invest in the Company's Common Shares an amount
equal to the dividends of such foreign participants less the amount of tax
required to be withheld. Optional cash payments received from foreign
shareholders must be in United States currency and will be invested in the
same way as optional cash payments from other participants.
Under certain circumstances, the Company may be required to
backup-withhold income tax on the dividends of participating domestic
shareholders, including those domestic shareholders who do not accurately
report their dividend income, fail to provide the Company with their taxpayer
identification number, provide the Company with an incorrect taxpayer
identification number or fail to provide the Company with a certificate
setting forth that they are not subject to backup withholding. If this
should occur, thirty-one percent (31%) of the dividend income, or such other
percentage as may be required from time to time, will be withheld.
The statements of account sent to participants will indicate the amount
of any income tax withheld. The Company cannot refund amounts withheld.
Participants subject to withholding should contact their tax advisors or the
IRS for additional information.
34. WHAT ARE THE RESPONSIBILITIES OF THE SHAREHOLDERS' AGENT AND THE COMPANY
UNDER THE PLAN?
In performing their duties under the Plan, the Agent and the Company
will at all times act in the best interests of the participants. However,
they will not be liable for any act performed in good faith, or for any good
faith omission to act, including, without limitation, any claims of liability
arising out of failure to terminate a participant's account upon such
participant's death prior to receipt of notice in writing of such death.
Although the Plan contemplates the continuation of quarterly Common
Share dividend payments, the payment of future Common Share dividends will
depend upon future earnings, the amount available for the payment of
dividends by the TDS Group and the Company, the financial condition of the
TDS Group, the Company and other factors.
TERMINATION BY COMPANY
35. MAY THE PLAN BE CHANGED OR DISCONTINUED?
The Company reserves the right to suspend, modify or terminate the Plan
at any time. All participants will receive notice of such suspension,
modification or termination.
LEGAL MATTERS
Certain legal matters relating to the securities offered hereby will be
passed upon for the Company by Sidley & Austin, Chicago, Illinois. The
Company is controlled by a voting trust. Walter C.D. Carlson, a trustee and
beneficiary of
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such voting trust and a director of the Company and certain subsidiaries of
the Company, Michael G. Hron, the Secretary of the Company and certain
subsidiaries of the Company, William S. DeCarlo, the Assistant Secretary of
the Company and certain subsidiaries of the Company, Stephen P. Fitzell, the
Secretary of certain subsidiaries of the Company, and Sherry S. Treston, the
Assistant Secretary of certain subsidiaries of the Company, are partners of
Sidley & Austin.
EXPERTS
The audited consolidated financial statements of the Company and its
Subsidiaries incorporated by reference in this Prospectus have been audited
by Arthur Andersen LLP independent public accountants, as indicated in their
reports with respect thereto, and have been so incorporated by reference
herein in reliance upon the authority of said firm as experts in accounting
and auditing in giving said reports.
Future consolidated financial statements of the Company and its
Subsidiaries and the reports thereon of Arthur Andersen LLP also will be
incorporated by reference in this Prospectus in reliance upon the authority
of that firm as experts in giving those reports to the extent that such firm
has examined those financial statements and consented to the use of their
reports thereon.
WHERE YOU CAN FIND MORE INFORMATION
The Company files reports, proxy statements and other information with
the Securities Exchange Commission (the "SEC"). You may inspect and copy
such reports, proxy statements and other information at the public reference
facilities maintained by the SEC at Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Judiciary Plaza, Washington D.C. 20549. Please call the SEC at
1-800-SEC-0330 for further information. Such materials may also be accessed
electronically by means of the SEC's web site at http://www.sec.gov.
The Company filed a Registration Statement related to the offering
described in this Prospectus. As allowed by SEC rules, this Prospectus does
not contain all of the information which you can find in the Registration
Statement. You are referred to the Registration Statement and the Exhibits
thereto for further information. This document is qualified in its entirety
by such other information.
The SEC allows us to "incorporate by reference" information into this
Prospectus, which means that we can disclose important information to you by
referring to another document filed separately with the SEC. The information
incorporated by reference is deemed to be a part of this Prospectus, except
for any information superseded by information in this Prospectus. This
Prospectus incorporates by reference the documents set forth below that have
been previously filed with the SEC. These documents contain important
information about the Company's business and finances.
1. TDS's Annual Report on Form 10-K for the year ended December 31,
1997;
2. TDS's Quarterly Report on Form 10-Q for the quarter ended March 31,
1998;
3. TDS's Current Reports on Form 8-K, reporting events on January 28,
February 10, March 24, April 17, April 21 and April 27, 1998;
4. The Company's Prospectus dated March 24, 1998, which is part of its
Registration Statement on Form S-4 (Registration Number 333-42535);
and
5. The Company's Report on Form 8-A/A-3 dated May 22, 1998, which
includes a description of the Company's capital stock.
This Prospectus also incorporates by reference additional documents that
may be filed by the Company with the SEC between the date of this Prospectus
and the date our offering is completed.
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YOU MAY OBTAIN COPIES OF SUCH DOCUMENTS WHICH ARE INCORPORATED BY
REFERENCE IN THIS PROSPECTUS (OTHER THAN EXHIBITS THERETO WHICH ARE NOT
SPECIFICALLY INCORPORATED BY REFERENCE HEREIN), WITHOUT CHARGE, UPON WRITTEN
OR ORAL REQUEST TO INVESTOR RELATIONS, TELEPHONE AND DATA SYSTEMS, INC., 30
N. LASALLE STREET, CHICAGO, IL 60602, (312) 630-1900. IN ORDER TO ENSURE
TIMELY DELIVERY OF DOCUMENTS, ANY REQUEST THEREFOR SHOULD BE MADE NOT LATER
THAN FIVE BUSINESS DAYS PRIOR TO MAKING AN INVESTMENT DECISION.
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU
WITH INFORMATION THAT IS DIFFERENT FROM WHAT IS CONTAINED IN THIS PROSPECTUS.
YOU SHOULD NOT ASSUME THAT THE INFORMATION CONTAINED IN THE PROSPECTUS IS
ACCURATE AS OF ANY DATE OTHER THAN THE DATE OF SUCH PROSPECTUS, AND NEITHER
THE MAILING OF THE PROSPECTUS TO SHAREHOLDERS NOR THE ISSUANCE OF ANY
SECURITIES HEREUNDER SHALL CREATE ANY IMPLICATION TO THE CONTRARY. THIS
PROSPECTUS DOES NOT OFFER TO BUY OR SELL ANY SECURITIES IN ANY JURISDICTION
WHERE IT IS UNLAWFUL TO DO SO.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Previously disclosed in the original Registration Statement.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Restated Certificate of Incorporation provides that TDS shall
indemnify directors and officers of TDS, its consolidated subsidiaries and
certain other related entities generally in the same manner and to the extent
permitted by the Delaware General Corporation Law, as more specifically
provided in the Restated Bylaws of TDS. The Restated Bylaws provide for
indemnification and permit the advancement of expenses by TDS generally in
the same manner and to the extent permitted by the Delaware General
Corporation Law, subject to compliance with certain requirements and
procedures specified in the Restated Bylaws. In general, the Restated Bylaws
require that any person seeking indemnification must provide TDS with
sufficient documentation as described in the Restated Bylaws and, if an
undertaking to return advances is required, to deliver an undertaking in the
form prescribed by TDS and provide security for such undertaking if
considered necessary by TDS. In addition, the Restated Bylaws specify that,
except to the extent required by law, TDS does not intend to provide
indemnification to persons under certain circumstances, such as where the
person was not acting the interests of TDS or was otherwise involved in a
crime or tort against TDS.
Under the Delaware General Corporation Law, directors and officers,
as well as other employees or persons, may be indemnified against judgments,
fines and amounts paid in settlement in connection with specified actions,
suits or proceedings, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation - a
"derivative action"), and against expenses (including attorney's fees) in any
action (including a derivative action), if they acted in good faith and in a
manner they reasonably believed to be in or not opposed to the best interests
of the corporation and, with respect to any criminal action or proceeding,
had no reasonable cause to believe their conduct was unlawful. However, in
the case of a derivative action, a person cannot be indemnified for expenses
in respect of any matter as to which the person is adjudged to be liable to
the corporation unless and to the extent a court determines that such person
is fairly and reasonably entitled to indemnity for such expenses.
Delaware law also provides that, to the extent a director, officer,
employee or agent of a corporation has been successful on the merits or
otherwise in defense of any action or matter, the corporation must indemnify
such party against expenses (including attorneys' fees) actually and
reasonably incurred by such party in connection therewith.
Expenses incurred by a director or officer in defending any action
may be paid by a Delaware corporation in advance of the final disposition of
the action upon receipt of an undertaking by or on behalf of such director or
officer to repay such amount if it is ultimately determined that such party
is not entitled to be indemnified by the corporation.
The Delaware General Corporation Law provides that the
indemnification and advancement of expenses provided thereby are not
exclusive of any other rights granted by bylaws, agreements or otherwise, and
provides that a corporation shall have the power to purchase and maintain
insurance on behalf of any person, whether or not the corporation would have
the power to indemnify such person under Delaware law.
The Company has directors' and officers' liability insurance which
provides, subject to certain policy limits, deductible amounts and
exclusions, coverage for all persons who have been, are or may in the future
be, directors or officers of the Company, against amounts which such persons
must pay resulting from claims against them by reason of their being such
directors or officers during the policy period for certain breaches of duty,
omissions or other acts done or wrongfully attempted or alleged.
Insofar as indemnification for liabilities arising under the 1933
Act may be permitted to directors, officers or persons controlling the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been informed that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
1933 Act and therefore unenforceable. In the event that a claim for
indemnification against such liabilities (other than the
II-1
payment by the registrant of expenses incurred or paid by a director, officer
or controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the 1933 Act and will be governed by the final
adjudication of such issue.
ITEM 16. EXHIBITS.
The following documents are filed herewith or incorporated herein
by reference.
Exhibit
No. Description
- - ------- -----------
4.1 Restated Certificate of Incorporation of the Registrant,
is hereby incorporated by reference to Exhibit 3.1 to the
Registrant's Registration Statement on Form 8-A/A-3)
4.2 Restated Bylaws of the Registrant, are hereby
incorporated by reference to Exhibit 3.2 to the
Registrant's Registration Statement on Form 8-A/A-3)
5 Opinion of Counsel
23.1 Consent of Independent Accountants
23.2 Consent of Counsel (contained in Exhibit 5)
24 Powers of Attorney (included on Signature Page)
99.1 Telephone and Data Systems, Inc. Series A Common Share
Automatic Dividend Reinvestment Plan (included in
the Prospectus related to the Series A Plan which
is a part of this Registration Statement)
99.2 Telephone and Data Systems, Inc. Common Share Automatic
Dividend Reinvestment and Stock Purchase Plan (included
in the Prospectus related to the Common Share Plan which
is a part of this Registration Statement)
ITEM 17. UNDERTAKINGS.
The Company hereby undertakes:
1. To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(a) To include any prospectus required by Section 10(a)(3) of
the 1933 Act;
(b) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high
end of the estimated maximum offering range may be reflected
in the form of prospectus filed with the Commission pursuant
to Rule 424(b) if, in the aggregate, the changes in volume
and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration
statement; and
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(c) To include any material information with respect to the plan
of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
PROVIDED, HOWEVER, that paragraphs 1.(a) and 1.(b) do not apply
if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports
filed by the Company pursuant to Section 13 or Section 15(d) of
the 1934 Act that are incorporated by reference in the
registration statement.
2. That, for the purpose of determining any liability under the 1933
Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall
be deemed to be the initial BONA FIDE offering thereof.
3. To remove from registration by means of a post-effective
amendment any of the securities being registered hereby which
remain unsold at the termination of the offering.
4. That, for the purposes of determining any liability under the
1933 Act, each filing of the Company's Annual Report pursuant to
Section 13(a) or Section 15(d) of the 1934 Act (and, where
applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the 1934 Act) that is
incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial BONA FIDE offering
hereof.
5. That, insofar as indemnification for liabilities arising under
the 1933 Act may be permitted to directors, officers and
controlling persons of the Company pursuant to the foregoing
provisions, or otherwise, the Company has been advised that in
the opinion of the Commission such indemnification is against
public policy as expressed in the 1933 Act and is, therefore,
unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Company
of expenses incurred or paid by a director, officer or
controlling person of the Company in the successful defense of
any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities
being registered, the Company will, unless in the opinion of its
counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as
expressed in the 1933 Act and will be governed by the final
adjudication of such issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement or Amendment to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Chicago, State of
Illinois, on the 22nd day of May, 1998.
TELEPHONE AND DATA SYSTEMS, INC.
By: /s/ LeRoy T. Carlson
---------------------------
LeRoy T. Carlson, CHAIRMAN
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints LeRoy
T. Carlson and LeRoy T. Carlson, Jr., and each of them individually, as his
true and lawful attorney-in-fact and agent, with full power of substitution
and resubstitution for him and in his name, place and stead, in any and all
capacities to sign any and all amendments (including post-effective
amendments) to this Registration Statement, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, and to take such actions in, and file
with the appropriate applications, statements, consents and other documents
as may be necessary or expedient to register securities of the Registrant for
sale, granting unto said attorney-in-fact and agent full power and authority
to do so and perform each and every act and thing requisite or necessary to
be done in and about the premises, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all the said
attorney-in-fact and agent or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof and the
registrant hereby confers like authority on its behalf.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement or Amendment has been signed below by the
following persons in the capacities and on the 22nd day of May, 1998.
Signature Title
/s/LeRoy T. Carlson
---------------------------- CHAIRMAN AND DIRECTOR
LeRoy T. Carlson
/s/LeRoy T. Carlson, Jr.
---------------------------- PRESIDENT AND DIRECTOR (CHIEF EXECUTIVE
LeRoy T. Carlson, Jr. OFFICER)
/s/Murray L. Swanson
---------------------------- EXECUTIVE VICE PRESIDENT - FINANCE AND
Murray L. Swanson DIRECTOR (PRINCIPAL FINANCIAL OFFICER)
/s/James Barr III
---------------------------- DIRECTOR
James Barr III
/s/Rudolph E. Hornacek
---------------------------- DIRECTOR
Rudolph E. Hornacek
/s/Donald C. Nebergall
---------------------------- DIRECTOR
Donald C. Nebergall
PAGE 1 OF 2 SIGNATURE PAGES TO POST-EFFECTIVE AMENDMENT NO. 1
TO SERIES A AND COMMON SHARE DIVIDEND REINVESTMENT PLAN
REGISTRATION STATEMENTS ON FORM S-3
<PAGE>
/s/Herbert S. Wander
---------------------------- DIRECTOR
Herbert S. Wander
/s/Walter C.D. Carlson
---------------------------- DIRECTOR
Walter C.D. Carlson
/s/Letitia C.G. Carlson
---------------------------- DIRECTOR
Letitia C.G. Carlson
/s/Donald R. Brown
---------------------------- DIRECTOR
Donald R. Brown
---------------------------- DIRECTOR
George W. Off
/s/Martin L. Solomon
---------------------------- DIRECTOR
Martin L. Solomon
/s/ Gregory J. Wilkinson
---------------------------- VICE PRESIDENT AND CONTROLLER (PRINCIPAL
Gregory J. Wilkinson ACCOUNTING OFFICER)
PAGE 2 OF 2 SIGNATURE PAGES TO POST-EFFECTIVE AMENDMENT NO. 1
TO SERIES A AND COMMON SHARE DIVIDEND REINVESTMENT PLAN
REGISTRATION STATEMENTS ON FORM S-3
<PAGE>
EXHIBIT INDEX
The following documents are filed herewith or incorporated herein by
reference.
Exhibit
No. Description
- - -------- -----------
4.1 Restated Certificate of Incorporation of the Registrant,
is hereby incorporated by reference to Exhibit 3.1 to the
Registrant's Registration Statement on Form 8-A/A-3)
4.2 Restated Bylaws of the Registrant, are hereby
incorporated by reference to Exhibit 3.2 to the
Registrant's Registration Statement on Form 8-A/A-3)
5 Opinion of Counsel
23.1 Consent of Independent Accountants
23.2 Consent of Counsel (contained in Exhibit 5)
24 Powers of Attorney (included on Signature Page)
99.1 Telephone and Data Systems, Inc. Series A Common Share
Automatic Dividend Reinvestment Plan (included in the
Prospectus related to the Series A Plan which is a part
of this Registration Statement)
99.2 Telephone and Data Systems, Inc. Common Share Automatic
Dividend Reinvestment and Stock Purchase Plan (included
in the Prospectus related to the Common Share Plan which
is a part of this Registration Statement)
<PAGE>
EXHIBIT 5
SIDLEY & AUSTIN
ONE FIRST NATIONAL PLAZA
CHICAGO, ILLINOIS 60603
(312) 853-7000
May 22, 1998
Telephone and Data Systems, Inc.
Suite 4000
30 North LaSalle Street
Chicago, Illinois 60602
Re: Telephone and Data Systems, Inc.
REGISTRATION STATEMENT ON FORM S-3
Gentlemen:
We are counsel to Telephone and Data Systems, Inc., a Delaware
corporation (the "Company"), and have represented the Company in connection
with the Post-Effective Amendment No. 1 (the "Amendment") to the Company's
Registration Statements on Form S-3, Registration Nos. 33-8857 and 33-59435
(the "Registration Statements"), being filed by the Company with the
Securities and Exchange Commission pursuant to Rule 414 promulgated under the
Securities Act of 1933, as amended (the "Securities Act"). The Registration
Statements relate to the offer and sale of (i) up to 337,500 Series A Common
Shares, par value $0.01 per share ("Series A Shares"), of the Company
pursuant to the Series A Common Share Automatic Dividend Reinvestment Plan
(the "Series A Plan"), and (ii) up to 500,000 Common Shares, par value $0.01
per share (the "Common Shares"), of the Company pursuant to the Telephone and
Data Systems, Inc. Common Share Automatic Dividend Reinvestment and Stock
Purchase Plan (the "Common Share Plan").
In rendering this opinion, we have examined and relied upon a copy
of the Series A Plan, the Common Share Plan, the Amendment, the Registration
Statements and the Prospectus related to each of the Series A Plan and the
Common Share Plan. We have also examined and relied upon originals, or
copies of originals certified to our satisfaction, of such agreements,
documents, certificates and other statements of governmental officials and
other instruments, have examined such questions of law and have satisfied
ourselves as to such matters of fact as we have considered relevant and
necessary as a basis for this opinion. We have assumed the authenticity of
all documents submitted to us as originals, the genuineness of all
signatures, the legal capacity of all natural persons and the conformity with
the original documents of any copies thereof submitted to us for our
examination.
Based on the foregoing, we are of the opinion that:
1. The Company is duly incorporated and validly existing under the
laws of the State of Delaware.
2. Each Series A Share will be legally issued, fully paid and
nonassessable when: (i) the Amendment shall have become effective under the
Securities Act; (ii) such Series A Share shall have been duly issued and sold
in the manner contemplated by the Series A Plan; and (iii) a certificate
representing such Series A Share shall have been duly executed, countersigned
and registered and duly delivered to the purchaser thereof (not less than the
par value thereof) against payment of the agreed consideration therefor in
accordance with the terms of the Series A Plan.
<PAGE>
Telephone and Data Systems, Inc.
May 22, 1998
Page 2
3. Each Common Share will be legally issued, fully paid and
nonassessable when: (i) the Amendment shall have become effective under the
Securities Act; (ii) such Common Share shall have been duly issued and sold
in the manner contemplated by the Common Share Plan; and (iii) a certificate
representing such Common Share shall have been duly executed, countersigned
and registered and duly delivered to the purchaser thereof (not less than the
par value thereof) against payment of the agreed consideration therefor in
accordance with the terms of the Common Share Plan.
This opinion is limited to the General Corporation Law of the State
of Delaware and to the Securities Act. We do not find it necessary for the
purposes of this opinion to cover, and accordingly we express no opinion as
to, the application of the securities or "Blue Sky" laws of the various
states to the sale of the Common Shares.
The Company is controlled by a voting trust. Walter C.D. Carlson,
a trustee and beneficiary of the voting trust and a director of the Company
and certain subsidiaries of the Company, Michael G. Hron, the Secretary of
the Company and certain subsidiaries of the Company, William S. DeCarlo, the
Assistant Secretary of the Company and certain subsidiaries of the Company,
Stephen P. Fitzell, the Secretary of certain subsidiaries of the Company, and
Sherry S. Treston, the Assistant Secretary of certain subsidiaries of the
Company, are partners of this Firm.
We hereby consent to the filing of this opinion as an exhibit to
the Registration Statement and to all references to our Firm in or made a
part of the Registration Statement.
Very truly yours,
SIDLEY & AUSTIN
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Form S-3 Registration Statement of Telephone and Data
Systems, Inc. of our report dated January 28, 1998 (except with respect to
the matters discussed in Note 5, "American Paging Merger"; and in Note 16, as
to which the date is February 18, 1998) on the consolidated financial
statements of Telephone and Data systems, Inc. and Subsidiaries, incorporated
by reference in the Telephone and Data systems, Inc. Form 10-K for the year
ended December 31, 1997 and to the incorporation by reference in this Form
S-3 Registration Statement of our report dated January 28, 1998, (except with
respect to the matter discussed in Note 5, "American Paging Merger"; and in
Note 16, as to which the date is February 18, 1998) on the financial
statement schedules of Telephone and Data Systems, Inc., included in the
Telephone and Data Systems, Inc. Form 10-K for the year ended December 31,
1997. We also consent to the incorporation by reference of our reports dated
January 28, 1998 on the financial statements of the United States Cellular
Group, the TDS Telecommunications Group and the TDS Group for the year ended
December 31, 1997, our report dated January 28, 1998 (except with respect to
the matters discussed in Note 10, as to which the date is February 5, 1998)
on the financial statements of the Aerial Communications Group and our report
dated January 28, 1998 (except with respect to the matters discussed in Note
5, "American Paging Merger"; and in Note 16, as to which the date is February
18, 1998) on the consolidated financial statements of Telephone and Data
Systems, Inc. and Subsidiaries for the year ended December 31, 1997, included
in the Telephone and Data Systems Inc. Proxy Statement/Prospectus on Form
S-4, as amended. We also consent to all references to our Firm included in
this Registration Statement.
ARTHUR ANDERSEN LLP
Chicago, Illinois
May 22, 1998
