FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 18, 1997
TELEPHONE AND DATA SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
Iowa 1-8251 36-2669023
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
30 North LaSalle Street, Chicago, Illinois 60602
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (312) 630-1900
Not Applicable
(Former name or former address, if changed since last report)
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Item 5. Other Events.
On December 18, 1997, Telephone and Data Systems, Inc. ("TDS" or the
"Company") today announced a corporate restructuring designed to unlock the
value of TDS's business units for shareholders. The plan, unanimously approved
by the TDS Board of Directors, would create three new classes of common stock,
commonly known as "Tracking Stocks," which are intended to separately reflect
the performance of United States Cellular Corporation [AMEX:USM], Aerial
Communications, Inc. [NASDAQ:AERL] and TDS Telecommunications Corporation, the
Company's cellular, PCS and landline telephone businesses, respectively. The
tracking stocks will be created in connection with a change in the state of
incorporation of the Company from Iowa to Delaware. The plan will be submitted
for approval by shareholders at a special meeting in early 1998.
This Current Report on Form 8-K is being filed for the purpose of
filing the news release issued by the Company relating to such announcement as
an exhibit.
Item 7. Financial Statements and Exhibits
Exhibits
The exhibits accompanying this report are listed in the accompanying
Exhibit Index.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereto duly authorized.
Telephone and Data Systems, Inc.
(Registrant)
Date: December 29, 1997
By: /s/ GREGORY J. WILKINSON
Gregory J. Wilkinson
Vice President and Controller
(principal accounting officer)
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EXHIBIT INDEX
Exhibit Number Description of Exhibit
- -------------- ----------------------
99 News Release dated December 18, 1997
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Exhibit 99
Contacts: Murray L. Swanson Karen M. Stewart
Executive Vice President - Finance Vice President
(312) 630-1900 - Investor Relations
[email protected] (608) 828-8316
[email protected]
FOR RELEASE: IMMEDIATE
TDS ANNOUNCES RESTRUCTURING PLAN TO ENHANCE
SHAREHOLDER VALUE
December 18, 1997, Chicago, Illinois - Telephone and Data Systems, Inc.
[AMEX:TDS] today announced a corporate restructuring designed to unlock the
value of TDS's business units for shareholders. The plan, unanimously approved
by the TDS Board of Directors, would create three new classes of common stock,
commonly known as "Tracking Stocks," which are intended to separately reflect
the performance of United States Cellular Corporation [AMEX:USM], Aerial
Communications, Inc. [NASDAQ:AERL] and TDS Telecommunications Corporation, the
Company's cellular, PCS and landline telephone businesses, respectively. The
tracking stocks will be created in connection with a change in the state of
incorporation of the Company from Iowa to Delaware. The plan will be submitted
for approval by shareholders at a special meeting in early 1998.
LeRoy T. Carlson, Jr. (Ted), TDS's President and CEO, said, "For some time, we
have felt that the price of TDS shares has not fully reflected the inherent
value of each of the business units. By creating three new classes of stock, we
will give shareholders the opportunity to invest in separate securities that
specifically reflect each underlying business. Our plan will improve liquidity
for the publicly traded equity of U.S. Cellular and Aerial, maintain certain tax
consolidation advantages for TDS, sustain our credit capacity and preserve
financial flexibility for TDS management to maximize the long-term growth of
shareholder value."
Subject to TDS shareholder approval and effectiveness of the reincorporation,
TDS has made offers to U.S. Cellular's and Aerial's boards of directors to
acquire all of the publicly traded equity of U.S. Cellular and Aerial in
"roll-up" mergers. Under the TDS offer to U.S. Cellular, the public shareholders
of U.S. Cellular, who currently own 18.9% of the common equity of U.S. Cellular,
would exchange such shares for shares of the TDS tracking stock related to the
business of U.S. Cellular which represent 18.9% of the equity interest in U.S.
Cellular. The TDS offer to Aerial provides that public shareholders of Aerial,
who currently own 17.5% of the common equity of Aerial, would exchange such
shares for shares of the TDS tracking stock related to the business of Aerial
which represent 17.5% of the equity interest in Aerial.
Following shareholder approval and the effectiveness of the reincorporation, TDS
intends to issue TDS Telecom tracking stock in a public offering for cash, which
would represent approximately 15- 25% of the equity value of TDS Telecom.
Proceeds from this offering will be used for general corporate purposes at TDS
Telecom.
Following these transactions, TDS intends to distribute shares of tracking
stock relating to the
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businesses of USM, AERL and TDS Telecom in the form of a stock dividend on a pro
rata basis to holders of Series A Common Shares and Common Shares of TDS. It is
currently expected that this distribution would take place in mid-1998, after
the completion of the TDS Telecom public offering, the USM merger and the AERL
merger.
Upon completion of these transactions, U.S. Cellular and Aerial, as well as TDS
Telecom, will be wholly owned subsidiaries of TDS, and approximately 80% of the
equity value of each subsidiary will be publicly traded in the form of TDS
tracking stocks. Approximately 20% of the equity value of each subsidiary will
initially be retained by TDS along with all other interests held by TDS, which
will continue to be represented by the Common Shares and the Series A Common
Shares of TDS. Upon completion of these transactions, holders of TDS Common
Shares will become entitled to elect one additional director to the TDS Board of
Directors.
Mr. Carlson continued, "This plan also will give shareholders the opportunity to
invest in all of TDS's businesses, or any one or more of our businesses
individually, depending on their investment objectives. We currently have three
companies that are at very different stages of development. U.S. Cellular has
grown at an explosive rate over the past several years, becoming the major
contributor of cash flow and valuation to TDS. TDS Telecom, our historically
strong profit and cash flow generator, is well positioned within its territories
and is beginning to leverage its strengths into new markets and a much broader
product line. Aerial Communications, our newest business, is in a start-up mode
and will require cash, rather than generate it, over the next few years. These
three businesses, with their different cycles of development, may offer
different investors the investment characteristics they desire. Investors and
analysts value each of these businesses separately, and now our shareholders
will have the opportunity to decide which of these investments appeals to them."
Immediately after the distribution of the tracking stocks, holders of TDS Common
and Series A Common Shares will continue to receive an aggregate dividend which
is at least equal to the aggregate dividend which such shareholders currently
receive from the Company. The aggregate dividend will consist of the dividend
paid on TDS Common and TDS Series A Common Shares, which will equal
approximately 25% of the current dividend paid to these shares, and the dividend
paid on the Telecom Group Tracking Shares, which will equal approximately 75% of
the current dividend paid on TDS Common and Series A Common Shares. TDS does not
currently anticipate paying dividends on the tracking stocks related to the
businesses of U.S. Cellular or Aerial Communications.
TDS is filing an application to list each of the tracking stocks on the AMEX.
The Common Shares of TDS would continue to be listed on the AMEX under the
symbol "TDS."
TDS has filed a preliminary proxy statement and a registration statement with
respect to the proposed transaction with the U.S. Securities and Exchange
Commission ("SEC"), which is subject to review by the SEC. This announcement
does not constitute an offer to sell or the solicitation of an offer to buy any
securities, nor does it constitute the solicitation of a proxy from shareholders
by TDS, which will be made only by means of a proxy statement/prospectus once
the registration statement becomes effective, in compliance with the Securities
Act of 1933, the Securities Exchange Act of 1934 and the rules of the SEC.
In addition to shareholder approval, the transaction will be subject to various
federal and state regulatory approvals.
TDS is a Chicago-based telecommunications company with established cellular
telephone, local telephone and radio paging operations and developing PCS
operations. TDS strives to build value
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for its shareholders by providing excellent communications services in
attractive, closely related segments of the telecommunications industry.
Headquartered in Chicago, USM manages and invests in cellular systems throughout
the United States. As of October 31, USM owned interests representing
approximately 25.9 million pops, making it the eighth largest cellular telephone
company in the United States based on pops. USM managed operational systems
serving 142 markets as of that date.
Aerial Communications, headquartered in Chicago, holds licenses to provide PCS
service in areas covering 27.6 million of the U.S. population. Aerial's markets
include Columbus, Ohio; Houston, Minneapolis, Kansas City, Pittsburgh and Tampa,
where the Company employs Global Systems for Mobile Communications ("GSM")
technology, the world's most popular.
TDS Telecom, headquartered in Madison, Wisconsin, is the tenth-largest non-Bell
telephone company in the United States. TDS Telecom provides local telephone
service to over one million people through approximately 507,000 access lines in
rural, small-town and suburban areas in 28 states. TDS Telecom's newer business
ventures include internet access, structured wiring engineering and competitive
local exchange telephone services.
Internet Home Pages: TDS http://www.teldta.com
USM http://www.uscc.com
AERL http://www.aerial1.com
TDS Telecom http://www.tdstelecom.com
Private Securities Litigation Reform Act of 1995 Safe Harbor Cautionary
Statement: This announcement contains "forward-looking" statements, as defined
in the Private Securities Litigation Reform Act of 1995, that are based on
current expectations, estimates and projections. Statements that are not
historical facts, including statements about the Company's beliefs and
expectations are forward-looking statements. These statements contain potential
risks and uncertainties and, therefore, actual results may differ materially.
The Company undertakes no obligation to update publicly any forward-looking
statements, whether as a result of new information, future events or otherwise.
Important factors that may affect these projections or expectations include, but
are not limited to: changes in the overall economy; changes in competition in
markets in which the Company operates; advances in telecommunications
technology; changes in the telecommunications regulatory environment; pending
and future litigation; availability of future financing; start-up of PCS
operations; and unanticipated changes in growth in cellular customers,
penetration rates, churn rates and the mix of products and services offered in
the Company's markets. Readers should evaluate any statements in light of these
important factors.
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