Registration No. 33-
Registration No. 33-8858
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________
FORM S-3 AND
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)
Iowa 36-2669023
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
30 North LaSalle Street, Suite 4000
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, Jr., President
Telephone and Data Systems, Inc.
30 North LaSalle Street, Suite 4000
Chicago, Illinois 60602
(Name, address, including zip code, of agent for service)
(312) 630-1900
(Telephone number, including area code, of agent for service)
Approximate date of commencement of proposed sale to the public:
From time to time after the Registration Statement becomes
effective.
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. [ ]
CALCULATION OF REGISTRATION FEE
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Proposed Proposed
Title of Maximum Maximum
Shares Amount Offering Aggregate Amount of
to be to be Price Per Offering Registration
Registered Registered Share (1) Price Fee
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Common Shares 500,000 shares(2) $ 38.125 $ 19,062,500 $ 6,574
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(1) Estimated for the Common Shares solely for the purpose of
calculating the registration fee on the basis of the average
of the high and low prices of the Common Shares of the
Company on the American Stock Exchange on May 17, 1995.
(2) In addition, this Registration Statement also covers an
indeterminate amount of additional securities which may be
issued under the above-referenced Plan as a result of stock
splits, stock dividends or similar transactions.
The registrant has filed a Registration Statement on Form S-3
(Registration No. 33-8858) related to the offer and sale of its
Common Shares pursuant to the Telephone and Data Systems, Inc.
Common Share Automatic Dividend Reinvestment and Stock Purchase
Plan. This Registration Statement also represents a Post-
Effective Amendment No. 1 to Form S-3 Registration Statement No.
33-8858. Pursuant to Rule 429 under the Securities Act of 1933,
as amended, the Prospectus contained herein relates to 40,892
Common Shares (as adjusted for stock splits) which remain
unissued under Registration Statement No. 33-8858, as well as the
500,000 Common Shares covered by this Registration Statement.
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PROSPECTUS
TELEPHONE AND DATA SYSTEMS, INC.
COMMON SHARE
AUTOMATIC DIVIDEND REINVESTMENT
AND
STOCK PURCHASE PLAN
Common Shares
($1.00 Par Value)
The Common Share Automatic Dividend Reinvestment and
Stock Purchase Plan, as amended (the "Plan"), of Telephone and
Data Systems, Inc. (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).
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 Date"). 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
Date"). The Investment Dates for optional cash payments will be
the first business trading day of each month.
This Prospectus relates to 500,000 Common Shares
covered by the Registration Statement of which this Prospectus is
a part, as well as 675,000 Common Shares (as adjusted for stock-
splits), of which 40,892 shares remain unissued as of the date of
this Prospectus, registered under Registration Statement No. 33-
8858. It is suggested that this Prospectus be retained for
future reference. Shareholders who do not wish to participate in
the Plan will continue to receive cash dividends, as declared, in
the usual manner.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION 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 18, 1995
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ADDITIONAL INFORMATION
The Company is subject to the informational
requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and in accordance therewith files reports,
proxy statements and other information with the Securities
Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at
the offices of the Commission, at 450 Fifth Street, N.W.,
Judiciary Plaza, Washington D.C. 20549; Chicago Regional Office,
Suite 1400, 500 West Madison Street, Chicago, Illinois 60661; and
New York Regional Office, Seven World Trade Center, 13th Floor,
New York, New York 10048. Copies of such materials can be
obtained from the Public Reference Section of the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. The Company's Common Shares are listed on the American
Stock Exchange, and reports, proxy materials and other
information concerning the Company may be inspected at the office
of the American Stock Exchange, 86 Trinity Place, New York, New
York 10006.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission by
the Company are incorporated as of their respective dates in this
Prospectus by reference:
(a) The Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1994.
(b) The Company's Current Report on Form 8-K, dated
March 15, 1995.
(c) The Company's Quarterly Report on Form 10-Q for
the Quarter Ended March 31, 1995.
(d) The description of the Company's Common Shares
included in the Company's Report on Form 8-A/A-2, dated December
20, 1994.
All documents filed by TDS pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date of this
Prospectus and prior to the termination of the offering made by
this Prospectus shall be deemed to be incorporated by reference
in this Prospectus and to be a part hereof from the date of
filing of such documents. Any statements contained in a document
incorporated by reference herein shall be deemed to be modified
or superseded for purposes hereof to the extent that a statement
contained herein (or in any other subsequently filed document
which also is incorporated by reference herein) modifies or
supersedes such statement. Any statement so modified or
superseded shall not be deemed to constitute a part hereof except
as so modified or superseded. All information appearing in this
Prospectus is qualified in its entirety by the information and
financial statements (including notes thereto) appearing in the
documents incorporated herein by reference.
THE COMPANY WILL FURNISH WITHOUT CHARGE TO EACH PERSON
TO WHOM THE PROSPECTUS IS DELIVERED, UPON HIS OR HER WRITTEN OR
ORAL REQUEST, A COPY OF ANY OR ALL OF THE DOCUMENTS DESCRIBED
ABOVE UNDER "INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE,"
OTHER THAN EXHIBITS TO SUCH DOCUMENTS (UNLESS SUCH EXHIBITS ARE
SPECIFICALLY INCORPORATED BY REFERENCE INTO SUCH DOCUMENTS).
REQUESTS SHOULD BE DIRECTED TO:
Telephone and Data Systems, Inc.
30 N. LaSalle, Suite 4000
Chicago, Illinois 60602
Attention: Investor Relations Coordinator
(telephone: 312/630-1900)
NO PERSON HAS BEEN AUTHORIZED BY THE COMPANY TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE
CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH THE OFFER
CONTAINED IN THIS PROSPECTUS, AND ANY INFORMATION, DATA, OR
REPRESENTATIONS NOT CONTAINED HEREIN MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO
BUY, SECURITIES BY ANYONE IN ANY JURISDICTION IN WHICH SUCH AN
OFFER OR SOLICITATION WOULD BE UNLAWFUL.
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THE COMPANY
TDS is a diversified telecommunications service company
with cellular telephone, local telephone and radio paging
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 was incorporated in 1968 under the laws of
the State of Iowa. Its 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., an Iowa 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.
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 "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. 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 newly issued 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.
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
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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: 312/461-3310)
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 outstanding series of Preferred Shares are eligible to
participate in the Plan. Beneficial owners of Common Shares and
any outstanding 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 (10) shares of each class or series of securities
they wish to participate in the Plan transferred into their own
name.
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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 Shares 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.
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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 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, 15, 16 and 17.
7. Will a Common Shareholder Presently Enrolled In The
Automatic Dividend Reinvestment and Stock Purchase Plan, as
originally adopted ("Original Plan"), Continue to be
Enrolled In the Plan, as amended?
Yes. A Common Shareholder enrolled in the Original
Plan will continue to be enrolled in the Plan in accordance with
the participation option chosen under the Original 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 Original
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 Original
Plan, he or she should return an Authorization Form as described
herein. If an eligible shareholder enrolled in the Original 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 Original
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.
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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.
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.
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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.
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.
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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 by the last business day of a month will be
invested on the first business trading day of the next month.
Optional payments not received by the last business day will be
deposited and invested at the next succeeding monthly optional
cash payment Investment Date. For example, an optional cash
payment received after the last business day in May will not be
invested until the first business trading day in July. Checks
dated the last day of a month and received prior to that date
will be held by the Agent and deposited at the end of that month.
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 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 AFTER THE
LAST BUSINESS DAY 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 TO THE
LAST BUSINESS DAY 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.
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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:
(1) The total number of Common Shares registered in
the name of the participant which is participating in the Plan.
(2) The total number of Preferred Shares registered in
the name of the participant which is participating in the Plan.
(3) 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).
(4) The following information for each transaction
during the month and all transactions to date during the current
year:
(a) the amount of dividends, and/or optional cash
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 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.
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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 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.
SAFEKEEPING OF SHARES
23. May participants transfer 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 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
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 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 not less than 48 hours 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 less
than 48 hours 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.
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).
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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 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 Common Shares
registered in the participant's name up to the number indicated
on the participant's Authorization Form as the number of Common
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.
If participants who are reinvesting dividends on
outstanding Preferred Shares registered in their names dispose of
a portion of these shares, the Company and Agent will act in the
manner set forth above with respect to the Common Shares.
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.
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 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 and the shares distributed to such participant
will instead be credited to the participant's plan 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.
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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.
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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
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
financial condition of the Company and other factors.
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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.
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of Telephone and Data
Systems, Inc. ("TDS") consists of 100,000,000 Common Shares,
$1.00 par value ("Common Shares"), 25,000,000 Series A Common
Shares, $1.00 par value ("Series A Common Shares"), and 5,000,000
Preferred Shares, without par value ("Preferred Shares"). Only
the Common Shares are being offered by this Prospectus. However,
considering the relationships and interdependence of all classes
of stock, this description discusses the rights of all classes.
Voting Trust
A substantial majority of TDS's outstanding Series A
Common Shares are held in a voting trust which expires on June
30, 2009. The voting trust was created to facilitate the
long standing relationships among the trustees' certificate
holders. By virtue of the number of shares held by them, the
voting trustees have the power to elect 75% of the Directors and
control a majority of the voting power of TDS in matters other
than the election of directors. The trustees of the voting trust
are LeRoy T. Carlson, Jr., a director and the President of TDS,
Walter C.D. Carlson, a director of TDS, Letitia G. Carlson,
Melanie J. Heald and Donald C. Nebergall, a director of TDS.
Preferred Shares
The Board of Directors of TDS is authorized by the
Articles of Incorporation of TDS to issue Preferred Shares from
time to time in series and to establish as to each series the
designation and number of shares to be issued, the dividend rate,
the redemption price and terms, if any, the amount payable upon
voluntary or involuntary dissolution of TDS, sinking fund
provisions, if any, voting rights, if any, and the terms of
conversion into Common Shares, if provided for.
Voting Rights
With respect to the election of directors, the holders
of Common Shares, and the holders of Preferred Shares issued
before October 31, 1981, voting as a group, are entitled to elect
25% of the Board of Directors of TDS, rounded up to the nearest
whole number. The holders of Series A Common Shares, and the
holders of Preferred Shares issued after October 31, 1981, voting
as a group, are entitled to elect the remaining members of the
Board of Directors of TDS. The Board of Directors currently
consists of eleven directors. Accordingly, the holders of Common
Shares and the holders of Preferred Shares issued before October
31, 1981, are entitled to elect three directors, and the holders
of Series A Common Shares and the holders of Preferred Shares
issued after October 31, 1981, are entitled to elect eight
directors.
The holders of Common Shares are entitled to one vote
per share and the holders of Series A Common Shares are entitled
to ten votes per share. The holders of each series of Preferred
Shares are entitled to such votes as may be specified in the
certificate of designation for such series. The holders of
Common Shares, Series A Common Shares and Preferred Shares vote
as a single group, except with respect to the election of
directors as discussed above and with respect to certain
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amendments to the Articles of Incorporation (e.g., amendments
which are adverse to the holders of a class), as to which the
Iowa Business Corporation Act grants class voting rights.
If the number of Series A Common Shares issued and
outstanding at any time falls below 500,000 (because of the
conversion of Series A Common Shares or otherwise), the holders
of Series A Common Shares would lose the right to vote as a
separate group (with the holders of Preferred Shares issued after
October 31, 1981) in the election of approximately 75% of the
directors, and thereafter the holders of Series A Common Shares
(with ten votes per share) would vote with the holders of Common
Shares (with one vote per share) and all holders of Preferred
Shares which have voting rights as a single group in the election
of all directors. Management of TDS believes it is unlikely that
the number of outstanding Series A Common Shares will fall below
500,000, because more than 6,000,000 Series A Common Shares are
held in the voting trust described above, and the trustees of the
voting trust have indicated that they have no present intention
of converting Series A Common Shares into Common Shares.
Dividends and Other Distributions
Subject to the satisfaction of all Preferred Share
dividend preference and redemption provisions, holders of Common
Shares are entitled to receive such dividends as may be declared
from time to time by the Board of Directors. Unless the same, or
greater, dividends, on a per share basis, are declared and paid
at the same time on the Common Shares, no dividends may be
declared or paid on the Series A Common Shares.
In the case of stock dividends, the Articles of
Incorporation provide that Common Shares may be paid to holders
of Common Shares and proportionately to holders of Series A
Common Shares; Series A Common Shares may be paid to holders of
Common Shares and proportionately to holders of Series A Common
Shares; and Common Shares may be paid to holders of Common Shares
and Series A Common Shares may be paid proportionately to holders
of Series A Common Shares. The Board of Directors is authorized
to permit both the holders of Common Shares and Series A Common
Shares to elect to receive cash in lieu of stock.
Upon liquidation, holders of Common Shares and Series A
Common Shares are entitled to receive a pro rata share of all
assets available to shareholders after payment to holders of the
Preferred Shares of the liquidation value thereof, plus a sum
equal to the amount of all accumulated and unpaid dividends
thereon at the dividend rate fixed for each series of cumulative
Preferred Shares by the Board of Directors.
The Articles of Incorporation provide that if a TDS
subsidiary has classes of capital stock with relative rights,
preferences and limitations vis-a-vis each other that, in the
judgment of the Board of Directors, are similar in all material
respects to the relative rights, preferences and limitations of
the Common Shares vis-a-vis the Series A Common Shares, except
for certain limited matters, then the Board of Directors will
distribute the subsidiary shares in a dividend or upon
liquidation to the extent practicable by distributing the
subsidiary shares which correspond to the Common Shares, to the
holders of Common Shares, and the subsidiary shares which
correspond to the Series A Common Shares, to the holders of
Series A Common Shares, provided that the same number of shares
of subsidiary common stock on a combined basis must be
distributed per Series A Common Share and Common Share.
Preemptive Rights
The holders of Series A Common Shares have a preemptive
right to purchase any additional Series A Common Shares sold for
cash, including treasury shares. Holders of Common Shares and
Preferred Shares have no preemptive rights under the Articles of
Incorporation.
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Conversion Rights
The Common Shares have no conversion rights. The
Series A Common Shares are convertible, on a share for share
basis, into Common Shares. Certain series of Preferred Shares
are convertible into Common Shares or other securities.
Other Rights
The Common Shares and Series A Common Shares have no
redemption or sinking fund provisions. Certain series of
Preferred Shares have mandatory redemption features and certain
series of Preferred Shares are redeemable at the option of TDS.
Provisions of Articles of Incorporation Having a Potential Anti-
Takeover Effect
As discussed above, the voting trust has the power to
elect 75% of the directors and controls a majority of the voting
power of TDS.
The Articles of Incorporation of TDS provide for the
Board of Directors to be divided into three classes. Each class
is elected for a three year term.
The Articles of Incorporation of TDS also explicitly
permit the Board of Directors to consider a variety of factors in
exercising its business judgment in determining what action is in
the best interests of TDS and its shareholders in responding to
any tender offer for any equity security of TDS and certain other
proposed transactions.
The existence of the voting trust and the provisions of
the Articles of Incorporation summarized above may tend to deter
any potential unsolicited or hostile takeover attempts or other
efforts to effect a change in control of TDS and may make it more
difficult for some shareholders to sell shares of TDS at higher
than market prices.
General
The Common Shares are listed for trading on the
American Stock Exchange.
All issued and outstanding Common Shares, Series A
Common Shares and Preferred Shares are fully paid and
nonassessable.
The Transfer Agent and Registrar for the Common Shares,
Series A Common Shares and Preferred Shares is Harris Trust and
Savings Bank, Chicago, Illinois.
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, 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.
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EXPERTS
The audited consolidated financial statements of
Telephone and Data Systems, Inc. and 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 Telephone
and Data Systems, Inc. and 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.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Iowa Business Corporation Act, as amended, provides
for indemnification of directors and officers in a variety of
circumstances, which may include liabilities under the Securities
Act of 1933, as amended (the "1933 Act"). The Company's Bylaws
provide for indemnification of the Company's directors and
officers (and those serving in such capacity with a consolidated
subsidiary or other entity at the request of the Board of
Directors of the Company) in the circumstances and to the extent
permitted by the Iowa Business Corporation Act, as amended.
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 and
controlling persons of the Company pursuant to the foregoing
provisions, or otherwise, the Company has been advised that in
the opinion of the Securities and Exchange 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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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The expenses in connection with the issuance and distribution of
the securities
being registered are:
Securities and Exchange Commission
Registration Fee . . . . . . . . . . . . . . . . $ 6,574
American Stock Exchange Listing Fees . . . . . . 10,000
Legal Fees and Expenses . . . . . . . . . . . . . 15,000*
Printing . . . . . . . . . . . . . . . . . . . . 1,500*
Administrative and Mailing Costs . . . . . . . . 5,000*
Miscellaneous . . . . . . . . . . . . . . . . . . 1,926*
---------
$ 40,000
=========
---------------------
* Estimated
Item 15. Indemnification of Directors and Officers.
------------------------------------------
The Iowa Business Corporation Act, as amended, provides
for indemnification of directors and officers in a variety of
circumstances, which may include liabilities under the Securities
Act of 1933, as amended (the "1933 Act"). The Company's By-Laws
provide for indemnification of the Company's directors and
officers (and those serving in such capacity with a consolidated
subsidiary or other entity at the request of the Board of
Directors of the Company) in the circumstances and, to the extent
permitted by the Iowa Business Corporation Act, as amended.
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 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.
II-1
<PAGE>
Item 16. Exhibits.
--------
The following documents are filed herewith or incorporated
herein by reference.
Exhibit
No. Description
------- -----------
4.1 Articles of Incorporation, as amended, of the Company
(Incorporated herein by reference to Exhibit 1 to the
Company's Report on Form 8-A/A-2, dated December 20,
1994).
4.2 Bylaws of the Company (Incorporated herein by reference to
Exhibit 2 to the Company's Report on Form 8-A/A-2, dated
December 20, 1994).
5 Opinion of Counsel.
23.1 Consent of Independent Public Accountants.
23.2 Consents of Independent Accountants.
23.3 Consent of Counsel (contained in Exhibit 5).
99.1 Telephone and Data Systems, Inc. Common Share Automatic
Dividend Reinvestment and Stock Purchase Plan (included in
the Prospectus 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;
(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.
II-2
<PAGE>
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.
II-3
<PAGE>
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
18th day of May, 1995.
TELEPHONE AND DATA SYSTEMS, INC.
By: /s/ LeRoy T. Carlson, Jr.
------------------------------
LeRoy T. Carlson, Jr.
President
Pursuant to the requirements of the Securities Act of
1933, this Registration Statement or Amendment has been signed by
the following persons in the capacities indicated and on the 18th
day of May, 1995.
/s/LeRoy T. Carlson Chairman and Director
----------------------------
LeRoy T. Carlson
/s/LeRoy T. Carlson, Jr. President and Director (Chief
---------------------------- Executive Officer)
LeRoy T. Carlson, Jr.
/s/Murray L. Swanson Executive Vice President-
---------------------------- Finance and Director (Chief
Murray L. Swanson Financial Officer)
/s/Rudolph E. Hornacek Director
----------------------------
Rudolph E. Hornacek
/s/James Barr III Director
----------------------------
James Barr III
/s/Lester O. Johnson Director
----------------------------
Lester O. Johnson
/s/Donald C. Nebergall Director
----------------------------
Donald C. Nebergall
/s/Herbert S. Wander Director
----------------------------
Herbert S. Wander
/s/Walter C.D. Carlson Director
----------------------------
Walter C.D. Carlson
/s/Donald R. Brown Director
----------------------------
Donald R. Brown
/s/Robert J. Collins Director
----------------------------
Robert J. Collins
/s/Gregory J. Wilkinson Vice President and Controller
---------------------------- (Principal Accounting Officer)
Gregory J. Wilkinson
<PAGE>
EXHIBIT INDEX
The following documents are filed herewith or incorporated herein
by reference.
Exhibit
No. Description
------- -----------
4.1 Articles of Incorporation, as amended, of the Company
(Incorporated herein by reference to Exhibit 1 to the
Company's Report on Form 8-A/A-2, dated December 20,
1994).
4.2 Bylaws of the Company (Incorporated herein by reference
to Exhibit 2 to the Company's Report on Form 8-A/A-2,
dated December 20, 1994).
5 Opinion of Counsel.
23.1 Consent of Independent Public Accountants.
23.2 Consents of Independent Accountants.
23.3 Consent of Counsel (contained in Exhibit 5).
99.1 Telephone and Data Systems, Inc. Common Share Automatic
Dividend Reinvestment and Stock Purchase Plan (included
in the Prospectus which is a part of this Registration
Statement).
<PAGE>
EXHIBIT 5
SIDLEY & AUSTIN
ONE FIRST NATIONAL PLAZA
CHICAGO, ILLINOIS 60603
May 18, 1995
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., an
Iowa corporation (the "Company"), and have represented the
Company in connection with the Form S-3 Registration Statement
and Post-Effective Amendment No. 1 to Form S-3 Registration
Statement, File No. 33-8858 (collectively, the "Registration
Statement") being filed by the Company with the Securities and
Exchange Commission under the Securities Act of 1933, as amended
(the "Securities Act"), with respect to the offer and sale of
500,000 shares, par value $1.00 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 "Plan").
In rendering this opinion, we have examined and relied
upon a copy of the Plan, the Registration Statement and the
Prospectus included therein. 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 Iowa; and
2. The Common Shares will be legally issued, fully
paid and nonassessable when: (i) the Registration Statement shall
have become effective under the Securities Act; (ii) the Common
Shares
<PAGE>
Telephone and Data Systems, Inc.
May 18, 1995
Page 2
shall have been duly issued and sold in the manner contemplated
by the Plan; and (iii) certificates representing the Common
Shares shall have been duly executed, countersigned and
registered and duly delivered to the purchasers thereof against
payment of the agreed consideration therefor.
Except as expressly stated in the next sentence, this
opinion is limited to the Securities Act. Insofar as the
opinions expressed herein relate to matters governed by the laws
of the State of Iowa, we have not made an independent examination
of such laws, but have relied exclusively as to such laws,
subject to the exceptions, qualifications and limitations therein
expressed, upon the attached opinion of Nyemaster, Goode,
McLaughlin, Voigts, West, Hansell & O'Brien, P.C. of Des Moines,
Iowa.
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, 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>
NYEMASTER, GOODE, McLAUGHLIN, VOIGTS,
WEST, HANSELL & O'BRIEN
1900 Hub Tower
699 Walnut Street
Des Moines, Iowa 50309
(515) 283-3100
May 18, 1995
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
Re: Telephone and Data Systems, Inc.
Registration Statement on Forms S-3
-----------------------------------
Ladies and Gentlemen:
We have acted as your Iowa counsel with respect to the
Registration Statement on Form S-3 and Post-Effective Amendment
No. 1 to Form S-3 Registration Statement (the "Registration
Statement") being filed by Telephone and Data Systems, Inc. (the
"Company") with the Securities and Exchange Commission under the
Securities Act of 1933, as amended (the "Securities Act"),
relating to the registration of 500,000 Common Shares, $1.00 par
value, of the Company (the "Shares") to be offered and sold
pursuant to the terms of the Telephone and Data Systems, Inc.
Common Share Automatic Dividend Reinvestment and Stock Purchase
Plan (the "Plan").
In rendering our opinion, we have examined and relied
upon a copy of the Plan, the Prospectus relating to the Plan and
the Registration Statement. We have also examined such records,
documents and questions of law as we have considered relevant and
necessary as a basis for this opinion. As to matters of fact
material to our opinions, we have with your agreement relied upon
certificates of officers of the Company. We have assumed with
your agreement the authenticity of all documents submitted to us
as originals, the conformity with the original documents of any
copies submitted to us for our examination and the authenticity
of the original of any such copies.
Based on the foregoing, and subject to the foregoing
qualifications and limitations, it is our opinion that:
1. The Company is duly incorporated and validly
existing under the laws of the State of Iowa.
2. The Shares will be legally issued, fully paid and
non-assessable when: (i) the Registration Statement shall have
become effective under the Securities Act; (ii) the Shares shall
have been duly issued and sold in the manner contemplated by the
Plan, and (iii) certificates representing the Shares shall have
been duly executed, countersigned and registered and duly
delivered to the purchasers thereof against payment of the agreed
consideration therefor.
We are admitted to the Bar of the State of Iowa, and
express no opinion herein as to the laws of any other
jurisdiction, including the laws of the United States of America.
<PAGE>
Sidley & Austin
May 18, 1995
Page 2
Except as expressly set forth herein, we express no
opinion, and no opinion is implied or may be inferred, in
connection with the Registration Statement or the issuance of the
Shares. Without limiting the generality of the foregoing, we
express no opinion with respect to the Securities or blue sky
laws of the various states.
This opinion is being delivered solely for the benefit
of the persons to whom it is addressed; accordingly, it may not
be quoted, filed with any governmental authority or other
regulatory agency or otherwise circulated or utilized for any
other purpose without our prior written consent. Sidley & Austin
may refer to or quote from this opinion in its discretion in
connection with opinions it may be requested or required to give
in connection with the Registration Statement.
The undersigned law firm also hereby consents to the
filing of this opinion as an Exhibit to the Registration
Statement and to the use of its name in the Registration
Statement.
Very truly yours,
NYEMASTER, GOODE, McLAUGHLIN,
VOIGTS, WEST, HANSELL & O'BRIEN,
P.C.
By: /s/ Mark C. Dickinson
------------------------------
Mark C. Dickinson
<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 and Post-
Effective Amendment No. 1 to Form S-3 Registration Statement of
Telephone and Data Systems, Inc. of our report dated February 7,
1995 (except with respect to the matters discussed in Note 12 and
Note 14, as to which the date is March 14, 1995), 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,
1994, to the incorporation by reference in this Form S-3 and
Post-Effective Amendment No. 1 to Form S-3 Registration Statement
of our report dated February 7, 1995 (except with respect to the
matters discussed in Note 12 and Note 14, as to which the date is
March 14, 1995), 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,
1994, and to the incorporation by reference in this Form S-3 and
Post-Effective Amendment No. 1 to Form S-3 Registration Statement
of our compilation report dated February 17, 1995, on the
combined financial statements of the Los Angeles SMSA Limited
Partnership, the Nashville/Clarksville MSA Limited Partnership
and the Baton Rouge MSA Limited Partnership, included in the
Telephone and Data Systems, Inc. Form 10-K for the year ended
December 31, 1994. We also consent to all references to our Firm
included in this Form S-3 and Post-Effective Amendment No. 1 to
Form S-3 Registration Statement.
ARTHUR ANDERSEN LLP
Chicago, Illinois
May 12, 1995
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in
this Form S-3 and Post-Effective Amendment No. 1 to Form S-3
Registration Statement of Telephone and Data Systems, Inc. of our
report, which includes explanatory paragraphs relating to
contingencies, dated February 17, 1995, on our audits of the
financial statements of the Los Angeles SMSA Limited Partnership
as of December 31, 1994 and 1993, and for each of the three years
in the period ended December 31, 1994, included in the Telephone
and Data Systems, Inc. Annual Report on Form 10-K for the year
ended December 31, 1994; such financial statements were not
included separately in such Form 10-K.
COOPERS & LYBRAND L.L.P.
Newport Beach, California
May 11, 1995
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in
this Form S-3 and Post-Effective Amendment No. 1 to Form S-3
Registration Statement of Telephone and Data Systems, Inc. of our
reports dated February 10, 1995, February 11, 1994, and February
11, 1993, on our audits of the financial statements of the
Nashville/Clarksville MSA Limited Partnership as of December 31,
1994, 1993, and 1992, and for the years ended December 31, 1994,
1993 and 1992, included in the Telephone and Data Systems, Inc.
Annual Report on Form 10-K for the year ended December 31, 1994;
such financial statements were not included separately in such
Form 10-K.
COOPERS & LYBRAND L.L.P.
Atlanta, Georgia
May 11, 1995
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in
this Form S-3 and Post-Effective Amendment No. 1 to Form S-3
Registration Statement of Telephone and Data Systems, Inc. of our
reports dated February 10, 1995, February 11, 1994, and February
11, 1993, respectively, on our audits of the financial statements
of the Baton Rouge MSA Limited Partnership as of December 31,
1994, 1993, and 1992, and for the years ended December 31, 1994,
1993 and 1992, included in the Telephone and Data Systems, Inc.
Annual Report on Form 10-K for the year ended December 31, 1994;
such financial statements were not included separately in such
Form 10-K.
COOPERS & LYBRAND L.L.P.
Atlanta, Georgia
May 11, 1995
<PAGE>
