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TELEPHONE & DATA SYSTEMS REPORTS FIRST QUARTER REVENUES OF MORE THAN $100 MILLION, NET INCOME OF $13.4 MILLION AND EARNINGS PER SHARE OF $.35

TELEPHONE & DATA SYSTEMS REPORTS FIRST QUARTER REVENUES OF MORE THAN $100 MILLION, NET INCOME OF $13.4 MILLION AND EARNINGS PER SHARE OF $.35
 CHICAGO, May 7 /PRNewswire/ -- Telephone and Data Systems, Inc. (TDS) reported excellent growth in customers, revenues, operating income, operating cash flow and net income for the first quarter of 1992. Total consolidated customers served increased 18.3 percent as compared to the first quarter of 1991. Consolidated revenues increased 30.5 percent to $100.6 million. Operating income climbed 47.2 percent to $14.6 million, while operating cash flow was up 39.7 percent to $35.4 million. Net income before the cumulative effect of a change in accounting principle soared 130 percent to $13.4 million, reflecting both operations and gains from sales of cellular properties. Earnings per share before the cumulative effect of a change in accounting principle rose to $.35 in 1992 from $.18 in 1991, while weighted average common shares outstanding increased 18.0 percent.
 Rapid growth in customers during 1991 fueled substantial revenue increases in all three of TDS' primary business units as shown in the accompanying table. Excluding the effects of acquisitions, cellular and paging customer units served increased at a slower pace during the first quarter of 1992 than during the first quarter of 1991 as United States Cellular Corp. (AMEX: USM) and American Paging implemented new marketing and pricing programs designed to enhance revenue, reduce marketing and selling costs and improve customer retention.
 GROWTH IN CUSTOMERS AND REVENUES
 (First Quarter 1992 Compared To First Quarter 1991)
 CUSTOMERS PERCENT REVENUES PERCENT
 INCREASE (in Millions) INCREASE
 TDS Telecom 27,000 9.6 $ 8.6 17.4
 U.S. Cellular 45,100 71.0 $13.3 75.8
 American Paging 30,800 14.2 $ 1.7 16.6
 Consolidated 102,900 18.3 $23.5 30.5
 Operating results reflect primarily growth in the number of customers served and acquisitions. The seven local exchange companies acquired since the first quarter of 1991 added $866,000 to TDS Telecom's operating income, while a nonrecurring directory revenue settlement added $1.8 million. Growth in U.S. Cellular's operating income and cash flow reflect steady progress toward completion of initial construction in Rural Service Areas (RSAs) by mid-year 1992 and unusually low marketing costs due to lower than anticipated first quarter 1992 customer additions. Cellular operating income also reflects a shift to amortizing license costs over 40 years, up from 20 in 1991, to conform to industry practices. American Paging contributed improved operating income and cash flow.
 GROWTH IN OPERATING RESULTS
 (First Quarter 1992 Compared To First Quarter 1991)
 Dollars in Millions
 OPERATING PERCENT OPERATING PERCENT
 INCOME INCREASE CASH FLOW INCREASE
 TDS Telecom $3.5 22.9 $ 5.3 20.6
 U.S. Cellular $1.0 26.5 $ 4.2 626.8
 American Paging $0.2 10.6 $ 0.6 187.5
 Consolidated $4.7 47.2 $10.1 39.7
 Changes in interest income, interest expense and income taxes all decreased net income. Interest and dividend income declined, reflecting primarily lower overall interest rates. Sales of $100 million of medium term notes during 1991 and the issuance of additional short-term debt combined to produce sharply higher interest costs during the first quarter of 1992. The effective income tax rate increased to 43 percent for the first quarter of 1992 from 38 percent for the same period in 1991.
 Net income was increased substantially by a net gain of $6.9 million resulting from the exchange of interests in five cellular markets (majority interests in two RSAs and minority interests in two Metropolitan Statistical Areas, or MSAs) and the sale of a minority interest in another MSA. As a result of these gains, USM reported $14.9 million of additional income for the first quarter of 1992 and TDS recognized $2.7 million as USM's minority shareholders interest in such income. Net income and earnings per share for 1991 were reduced by a change in accounting principle at United States Cellular Corp. The company changed its method of accounting for sales commissions from capitalizing and amortizing over 36 months to expensing in the period incurred. Overall, excluding significant nonrecurring items, net income available to common and earnings per share were approximately $5.1 million and $.14 for the first quarter of 1992 as compared to $5.4 million and $.17 for the first quarter of 1991.
 NET INCOME AVAILABLE TO COMMON
 (First Quarter 1992 Compared To First Quarter 1991)
 (Dollars in millions, except earnings per share amounts)
 1992 1991
 As reported $13.0 $0.5
 Nonrecurring items (estimated net of tax):
 Cumulative effect of
 accounting change -- 5.0
 Gain on sales or exchanges of
 cellular interests (net of
 USM minority share) (6.9) (0.1)
 TDS Telecom directory
 revenue settlement (1.0)
 EXCLUDING NONRECURRING ITEMS $ 5.1 $ 5.4
 Earnings per share, excluding
 nonrecurring items $.14 $.17
 -0- 5/7/92
 /CONTACT: Murray L. Swanson, executive vice president-finance of TDS, 312-630-1900. Out of town media please call collect/
 /FIRST ADD TO FOLLOW/
 (TDS) CO: Telephone and Data Systems, Inc. ST: Illinois IN: TLS SU: ERN


SM -- NY073 -- 7655 05/07/92 13:03 EDT
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Date:May 7, 1992
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