Registration Number 033-59435-99
Filed Pursuant to 424(b)(3)
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, which we refer to in this Prospectus as the "Plan", is
sponsored by Telephone and Data Systems, Inc., a Delaware corporation and
relates to its Common Shares, par value $.01 per share. The Common Shares are
listed on the American Stock Exchange under the listing symbol "TDS". The Plan
provides eligible holders, as defined in the Plan, of TDS'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 TDS Common Shares have less voting power than its Series A Common
Shares. The Series A Common Shares, which have effective control of TDS, are not
being offered by this Plan. The holders of the TDS Series A Common Shares have
their own Automatic Dividend Reinvestment Plan.
As a Participant in the Plan, you may:
1. have cash dividends on all of your Common Shares and
Preferred Shares automatically reinvested and you have the option of investing
limited additional amounts by making cash payments, or
2. have cash dividends on less than all of your 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 your cash
dividends and you 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 TDS Common
Shares on the American Stock Exchange, as reported in The Wall Street Journal,
for a period of ten 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 TDS's Common Shares on the
American Stock Exchange, as reported in The Wall Street Journal, for a period of
ten 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 November 29, 2000
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TABLE OF CONTENTS
Page
Summary of the Plan...................................................3
Telephone and Data Systems, Inc.......................................4
Use of Proceeds.......................................................4
Common Share Automatic Dividend Reinvestment and Stock Purchase Plan..4
Purpose...............................................................4
Advantages............................................................4
Administration........................................................5
Participation.........................................................5
Costs.................................................................8
Purchases.............................................................8
Optional Cash Payments................................................9
Reports to Participants..............................................10
Dividends............................................................10
Certificates for Shares..............................................10
Safekeeping of Shares................................................11
Withdrawal...........................................................11
Other Information....................................................12
Termination by TDS...................................................15
Legal Matters........................................................15
Experts..............................................................15
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
statements that are not based on historical fact, including the words
"believes," "anticipates," "intends," "expects," and similar words. These
statements constitute "forward-looking" statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Such forward-looking
statements involve known and unknown risks, uncertainties and other factors that
may cause the actual results, events or developments to be significantly
different from any future results, events or developments expressed or implied
by such forward-looking statements. Such factors include:
* general economic and business conditions, both nationally and in the
regions in which TDS operates,
* technology changes,
* competition,
* changes in the telecommunications regulatory environment,
* pending and future litigation,
* acquisitions/divestitures of properties and or licenses,
* changes in customer growth rates, penetration rates, churn rates,
roaming rates and the mix of products and services offered
in our markets, and
* other factors described or incorporated in this Prospectus.
Investors are encouraged to consider these and other risks and uncertainties
that are discussed in documents filed by TDS with the Securities and Exchange
Commission.
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SUMMARY OF THE PLAN
* PARTICIPATION: TDS record shareholders who own ten or more of TDS's
Common Shares and/or ten or more shares of any series of TDS'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 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 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 TDS's Common Shares on the American Stock Exchange, as
reported in The Wall Street Journal, for a period of ten 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 TDS's Common Shares on the American Stock
Exchange, as reported in The Wall Street Journal, for a period of ten
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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TELEPHONE AND DATA SYSTEMS, INC.
TDS is a diversified telecommunications service company that provides
high-quality telecommunications services to more than three million wireless
telephone and wireline telephone customers. TDS's business development strategy
is to expand its existing operations through internal growth and acquisitions.
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 TDS for general corporate
purposes. Until the proceeds are used for these purposes, TDS 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
TDS's Common Share Automatic Dividend Reinvestment and Stock Purchase Plan,
which we refer to as 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 TDS'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 TDS 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 TDS,
the Plan will provide TDS with additional capital funds.
ADVANTAGES
2. What Are The Advantages Of The Plan?
You may purchase Common Shares of TDS with cash dividends on all or
less than all of your TDS Common Shares and/or Preferred Shares registered in
your name, but not less than 10 shares of each class or series. See the Answer
to Question 4. You may also 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 TDS'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.
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ADMINISTRATION
3. Who Administers The Plan?
Computershare Investor Services 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 TDS 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 the
Agent 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 Computershare Investor Services
P.O. Box A3309
Chicago, Illinois 60690-3309
Telephone: 877/337-1575
Agent also acts as dividend disbursing and transfer agent for TDS's
Common Shares.
PARTICIPATION
4. Who Is Eligible To Participate?
Holders of record of ten or more of TDS's Common Shares and/or ten or
more shares of any of TDS's series of Preferred Shares 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 arrangements for their nominee to do so
or must become security owners of record by having a minimum of ten 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 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 TDS to allow such
participation. TDS is not aware of any jurisdiction in which the making of the
offer is not in compliance with valid applicable law. If TDS becomes aware of
any jurisdiction in which the making of the offer would not be in compliance
with valid applicable law, TDS will make a good faith effort to comply with any
such law. If, after such good faith effort, TDS 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 TDS by one or more registered
brokers or dealers which are licensed under the laws of such jurisdiction, as
may be designated by TDS.
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 TDS 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
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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 TDS'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 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 2 or June 1 as the case may be. If the Authorization
Form is received after May 2 or June 1 the dividends payable on June 1 or July 1
as the case may be, will be paid in cash and the 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. If I Am Currently Enrolled In The Plan, Do I Need To Take Any Action,
Or Will My Participation In The Plan Continue?
A Common and/or Preferred Shareholder enrolled in the Plan will
continue to be enrolled in the Plan in accordance with the participation option
previously chosen under the 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 Common Shares held of
record.
If an eligible shareholder currently enrolled in the 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, he or she
should return an Authorization Form as described herein. If an eligible
shareholder enrolled in the 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 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.
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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 Common and/or Preferred
Shares 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 Computershare Investor Services 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.
9. Is Partial Participation Possible Under The Plan?
Yes. An eligible shareholder who desires the dividends on only some of
his or her full Common and/or Preferred Shares 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 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 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.
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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 TDS. All costs of
administration of the Plan will be paid by TDS.
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. TDS 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.
TDS's various outstanding series of Preferred Shares generally pay
dividends in cycles of January 1, April 1, July 1 and October 1 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 TDS's Common Shares are traded on the
American Stock Exchange.
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 TDS's Common
Shares on the American Stock Exchange, as reported in The Wall Street Journal,
for a period of ten 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 TDS on the basis of such market quotations as it shall deem appropriate. No
Common Shares will be sold by TDS 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 TDS's Common Shares on
the American Stock Exchange, as reported in The Wall Street Journal, for a
period of ten 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 TDS on the
basis of such market quotations as it shall deem appropriate. No Common Shares
will be sold by TDS at less than the par value of such shares.
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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 TDS'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 TDS, 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 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 Computershare Investor Services,
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 TDS 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.
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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:
1. the amount of dividends, and/or optional cash invested;
2. the price per Common Share for each transaction;
3. the number of Common Shares purchased; and
4. certain tax information.
In addition, each participant will receive copies of communications
sent to every other holder of TDS's Common Shares, including the Annual Report
to Shareholders, Notice of Annual Meeting of Shareholders and Proxy Statement,
and 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 Common Shares Purchased Under The Plan?
Normally, certificates for TDS'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.
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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 TDS'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 TDS'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 TDS'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.
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
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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 TDS, 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 TDS'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, TDS 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.
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 TDS, 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,
TDS 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
TDS 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, TDS 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 TDS'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 consecutive trading dates on which TDS'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 TDS NOR THE AGENT CAN
ASSURE A PROFIT OR PROTECT AGAINST A LOSS ON THE SHARES PURCHASED UNDER THE
PLAN.
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SHAREHOLDERS ARE REFERRED TO THE RISK FACTORS DESCRIBED IN TDS'S
PROSPECTUS DATED SEPTEMBER 26, 2000 WHICH IS A PART OF TDS'S REGISTRATION
STATEMENT ON FORM S-4, REGISTRATION NO. 033-64293, WHICH IS INCORPORATED BY
REFERENCE HEREIN.
30. What Happens If TDS Issues A Stock Dividend, Declares A Stock Split Or
Has A Rights Offering?
Any Common Shares distributed by TDS 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.
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 TDS; however, there can be no assurance that the
IRS will agree with this position. TDS 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 TDS'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 CommonShares 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.
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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 TDS 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 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 TDS'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, TDS 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 TDS with their taxpayer identification number, provide TDS with
an incorrect taxpayer identification number or fail to provide TDS with a
certificate setting forth that they are not subject to backup withholding. If
this should occur, 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. TDS 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 TDS Under
The Plan?
In performing their duties under the Plan, the Agent and TDS 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.
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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 TDS, the financial condition of TDS and other factors.
TERMINATION BY TDS
35. May The Plan Be Changed Or Discontinued?
TDS 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 by
this Prospectus have been passed upon for TDS by Sidley & Austin, Chicago,
Illinois. TDS is controlled by a voting trust. Walter C.D. Carlson, a trustee
and beneficiary of the voting trust and a director of TDS and U.S. Cellular,
Michael G. Hron, the General Counsel and an Assistant Secretary of TDS and U.S.
Cellular and the Secretary or Assistant Secretary of certain subsidiaries of
TDS, William S. DeCarlo, an Assistant Secretary of TDS and certain subsidiaries
of TDS, and Stephen P. Fitzell, an Assistant Secretary of certain subsidiaries
of TDS, are partners of Sidley & Austin.
EXPERTS
The audited consolidated financial statements and schedules of TDS
incorporated by reference in this Prospectus have been audited by Arthur
Andersen LLP, independent public accountants, as indicated in their reports
incorporated by reference herein. The financial statements and schedules
referred to above have been incorporated by reference in reliance upon the
authority of such firms as experts in accounting and auditing in giving said
reports.
WHERE YOU CAN FIND MORE INFORMATION
TDS files reports, proxy statements and other information with
the Securities and Exchange Commission ("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., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for
further information. Such materials also may be accessed electronically by means
of the SEC's web site at http://www.sec.gov.
TDS 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 entirely 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 you to another document filed separately with the SEC. The information
incorporated by reference is deemed to be 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 TDS's business and finances.
1. TDS's Annual Report on Form 10-K for the year ended December 31, 1999;
2. TDS's Quarterly Reports on Form 10-Q for the quarters ended March 31,
June 30, and September 30, 2000;
3. TDS's Current Report on Form 8-K reporting events on May 4,
November 20, and November 24, 2000; and
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4. TDS's Report on Form 8-A/A-3 dated May 22, 1998, which includes a
description of TDS's capital stock.
5. TDS's Prospectus dated September 26, 2000.
This Prospectus also incorporates by reference additional documents
that may be filed by TDS 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, Suite 4000, 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 this Prospectus is accurate
as of any date other than the date of such Prospectus, and neither the mailing
of this 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 securities in any jurisdiction where it is unlawful to do so.
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