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): May 1, 2015
UNITED STATES CELLULAR CORPORATION
(Exact name of registrant as specified in its charter)
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Delaware
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1-9712
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62-1147325
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(State or other jurisdiction of
incorporation or organization)
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(Commission
File Number)
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(I.R.S. Employer Identification No.)
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8410 West Bryn Mawr, Chicago, Illinois
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60631
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(Address of principal executive offices)
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(Zip Code)
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Registrant's telephone number, including
area code: (773) 399-8900
Not Applicable
(Former name or
former address, if changed since last report)
Check the appropriate box below if the
Form 8-K filing is intended to simultaneously satisfy the filing obligation of
the registrant under any of the following provisions (see General Instruction
A.2. below):
¨
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Written communications
pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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¨
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Soliciting material pursuant
to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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¨
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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¨
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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Item 2.02. Results
of Operations and Financial Condition
On May 1, 2015,
United States Cellular Corporation (“U.S. Cellular”) issued a news release announcing
its results of operations for the period ended March 31, 2015. A copy of
the news release is attached hereto as Exhibit 99.1 and incorporated by
reference herein.
The information in
this Item 2.02 of Form 8-K is being furnished and shall not be deemed “filed”
for the purposes of Section 18 of the Securities Exchange Act of 1934, as
amended, or otherwise subject to the liabilities of that Section.
Item 9.01. Financial
Statements and Exhibits
(d) Exhibits:
In accordance with the
provisions of Item 601 of Regulation S-K, any Exhibits filed or furnished
herewith are set forth on the Exhibit Index attached hereto.
Attached as Exhibit
99.2 is a safe harbor cautionary statement under the Private Securities
Litigation Reform Act of 1995.
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.
United States Cellular Corporation
(Registrant)
Date: May 1, 2015
By:
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/s/ Steven T. Campbell
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Steven T. Campbell
Executive Vice President – Finance,
Chief Financial Officer and Treasurer
(principal financial officer)
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EXHIBIT INDEX
The following exhibits are filed
or furnished herewith as noted below.
Exhibit
No.
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Description
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99.1
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Earnings Press Release dated May 1, 2015
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99.2
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Private Securities Litigation Reform Act of 1995 Safe Harbor
Cautionary Statement
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Exhibit 99.l NEWS RELEASE
As previously announced,
U.S. Cellular will hold a teleconference May 1, 2015 at 9:30 a.m. CDT. Listen
to the live call via the Events & Presentations page of investors.uscellular.com.
FOR
IMMEDIATE RELEASE
U.S. cellular reports first quarter 2015 results
Increases guidance for operating cash flow and adjusted
EBITDA
CHICAGO, (May 1, 2015) —
United States Cellular Corporation (NYSE:USM) reported total operating revenues
of $965.2 million for the first quarter of 2015, versus $925.8 million for the same
period one year ago. Net income attributable to U.S. Cellular shareholders and
related diluted earnings per share were $160.1 million and $1.89, respectively,
for the first quarter of 2015, compared to $19.5 million and $0.23,
respectively, in the comparable period one year ago.
“We had another encouraging
quarter at U.S. Cellular, building on the turnaround in customer growth that we
achieved in 2014,” said Kenneth R. Meyers, U.S. Cellular president and CEO. “We
grew our postpaid customer base through strong sales of connected devices and
significantly lower customer churn, and we significantly increased operating
cash flow.
“We are pleased with the strong
adoption of shared data plans and increasing number of devices per account,
which are driving revenue growth. Our 4G LTE network will cover 98 percent of
customers by the end of the year.
“We are focused on continuing to grow our customer base
and increasing revenue and operating cash flow in 2015 by offering innovative
services and exciting devices that run on our high-quality network.”
2015
Estimated Results
U.S. Cellular’s estimates of
full-year 2015 results are shown below. Such estimates represent management’s view
as of May 1, 2015. Such forward‑looking statements should not be assumed
to be current as of any future date. U.S. Cellular undertakes no duty to
update such information, whether as a result of new information, future events
or otherwise. There can be no assurance that final results will not differ
materially from such estimated results.
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2015 Estimated Results
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Current
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Previous
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(Dollars in
millions)
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Total operating
revenues
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$4,000-$4,200
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Unchanged
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Operating cash
flow (1)
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$400-$500
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$350-$450
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Adjusted EBITDA
(1)
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$580-$680
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$530-$630
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Capital
expenditures
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$600
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Unchanged
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(1)
Operating cash flow is defined as
net income, adjusted for the items set forth in the reconciliation below.
Adjusted EBITDA is defined as net income, adjusted for the items set forth in
the reconciliation below. Operating cash flow and Adjusted EBITDA exclude
these items in order to show operating results on a more comparable basis from
period to period. From time to time, U.S. Cellular may exclude other items from
Operating cash flow and/or Adjusted EBITDA if such items help reflect operating
results on a more comparable basis. U.S. Cellular does not intend to imply that
any such items that are excluded are non-recurring, infrequent or unusual; such
items may occur in the future. Operating cash flow and Adjusted EBITDA are not
measures of financial performance under Generally Accepted Accounting
Principles in the United States (“GAAP”) and should not be considered as
alternatives to net income as indicators of the company’s operating performance
or as alternatives to cash flows from operating activities, determined in
accordance with GAAP, as indicators of cash flows or as measures of liquidity.
U.S. Cellular believes Operating cash flow and Adjusted EBITDA are useful
measures of U.S. Cellular’s operating results before significant recurring
non-cash charges, gains and losses, and other items as indicated below. The
following tables provide a reconciliation to Operating cash flow and Adjusted
EBITDA for 2015 estimated results, actual results for the three months ended
March 31, 2015 and 2014 actual results:
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Actual Results
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2015 Estimated
Results (2)
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Three Months Ended
March 31, 2015
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Year Ended
December 31, 2014
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(Dollars in
millions)
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Net income
(loss) (GAAP)
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N/A
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$165
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($47)
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Add back:
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Income tax
expense (benefit)
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N/A
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$108
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($12)
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Income
(loss) before income taxes (GAAP)
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$140-$240
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$273
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($59)
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Add back:
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Interest
expense
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$80
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$20
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$57
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Depreciation,
amortization and accretion expense
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$580
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$147
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$606
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EBITDA
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$800-$900
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$440
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$605
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Add back
(deduct):
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(Gain) loss on
sale of business and other exit costs, net
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($110)
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($111)
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($33)
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(Gain) loss on
license sales and exchanges, net
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($125)
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($123)
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($113)
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(Gain) loss on
assets disposals, net
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$15
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$4
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$21
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Adjusted EBITDA
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$580-$680
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$209
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$480
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Deduct:
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Equity in
earnings of unconsolidated entities
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($130)
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($34)
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($130)
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Interest and
dividend income
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($50)
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($8)
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($12)
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Operating cash
flow (3)
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$400-$500
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$167
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$338
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Note: Totals
may not foot due to rounding differences.
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(2)
In providing 2015
Estimated Results, U.S. Cellular has not completed the above reconciliation to net income because it does not provide guidance
for income taxes. U.S. Cellular believes that the impact of income taxes cannot
be reasonably predicted; therefore, the company is unable to provide such
guidance. Accordingly, a reconciliation to net income is not available without
unreasonable effort.
(3)
A reconciliation of Operating cash
flow (Non-GAAP) to Operating income (GAAP) for March 31, 2015 actual results
can be found on the company's website at investors.uscellular.com.
Conference
Call Information
U.S. Cellular will hold a
conference call on May 1, 2015 at 9:30 a.m. Central Time.
§ Access the live call on the Events & Presentation page
of investors.uscellular.com or at http://www.videonewswire.com/event.asp?id=102201.
§ Access the call by phone at 877/407-8029 (US/Canada),
no pass code required.
Before the call, certain
financial and statistical information to be discussed during the call will be
posted to investors.uscellular.com. The call will be archived on the Events &
Presentations page of investors.uscellular.com.
About U.S. Cellular
United States Cellular
Corporation provides a comprehensive range of wireless products and services,
excellent customer support, and a high-quality network to 4.8 million customers
in 23 states. The Chicago-based company had 6,600 full- and part-time
associates as of March 31, 2015. At the end of the first quarter of 2015,
Telephone and Data Systems, Inc. owned 84 percent of U.S. Cellular. For more
information about U.S. Cellular, visit uscellular.com.
Contacts
Jane McCahon, Vice President,
Corporate Relations and Corporate Secretary
312-592-5379
jane.mccahon@tdsinc.com
Julie Mathews, Investor
Relations Manager
312-592-5341
julie.mathews@tdsinc.com
Safe Harbor
Statement Under the Private Securities Litigation Reform Act of 1995: All information set forth in this news
release, except historical and factual information, represents forward-looking
statements. This includes all statements about the company’s plans, beliefs,
estimates, and expectations. These statements are based on current estimates,
projections, and assumptions, which involve certain risks and uncertainties
that could cause actual results to differ materially from those in the
forward-looking statements. Important factors that may affect these
forward-looking statements include, but are not limited to: impacts of any
pending acquisition and divestiture transactions, including, but not limited
to, the ability to obtain regulatory approvals, successfully complete the
transactions and the financial impacts of such transactions; the ability of the
company to successfully manage and grow its markets; the overall economy;
competition; the ability to obtain or maintain roaming arrangements with other
carriers on acceptable terms; the state and federal telecommunications regulatory
environment; the value of assets and investments; adverse changes in the
ratings afforded TDS and U.S. Cellular debt securities by accredited ratings
organizations; industry consolidation; advances in telecommunications
technology; uncertainty of access to the capital markets; pending and
future litigation; changes in income tax rates, laws, regulations or rulings;
acquisitions/divestitures of properties and/or licenses; changes in customer
growth rates, average monthly revenue per user, churn rates, roaming revenue
and terms, the availability of wireless devices, or the mix of products and
services offered by U.S. Cellular. Investors are encouraged to consider these
and other risks and uncertainties that are discussed in the Form 8-K Current
Report used by U.S. Cellular to furnish this press release to the Securities
and Exchange Commission (“SEC”), which are incorporated by reference herein.
United States Cellular Corporation
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Summary Operating Data (Unaudited)
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As of or
for the Quarter Ended
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3/31/2015
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12/31/2014
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9/30/2014
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6/30/2014
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3/31/2014
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Retail
Customers
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Postpaid
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Total at end of
period
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4,307,000
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4,298,000
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4,200,000
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4,148,000
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4,174,000
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Gross additions
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200,000
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302,000
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251,000
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190,000
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197,000
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Net additions
(losses)
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9,000
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98,000
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52,000
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(26,000)
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(93,000)
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ARPU (1)
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$
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54.87
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$
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56.51
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$
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56.37
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$
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56.82
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$
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57.59
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ARPA (2)
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$
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134.94
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$
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136.13
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$
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132.99
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$
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131.95
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$
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132.03
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Churn rate (3)
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1.5%
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1.6%
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1.6%
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1.7%
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2.3%
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Smartphone
penetration (4)
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66.9%
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64.8%
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61.7%
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58.4%
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55.8%
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Prepaid
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Total at end of
period
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360,000
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348,000
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350,000
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352,000
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356,000
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Gross additions
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73,000
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60,000
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64,000
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65,000
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85,000
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Net additions
(losses)
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12,000
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(2,000)
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(2,000)
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(4,000)
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13,000
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ARPU (1)
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$
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35.72
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$
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35.33
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$
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34.40
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$
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34.02
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$
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32.22
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Churn rate (3)
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5.8%
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5.9%
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6.3%
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6.5%
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6.9%
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Total
customers at end of period
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4,775,000
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4,760,000
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4,674,000
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4,653,000
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4,684,000
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Billed ARPU
(1)
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$
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52.29
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$
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53.63
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$
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53.24
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$
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53.36
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$
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53.93
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Service
revenue ARPU (1)
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$
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58.01
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$
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60.10
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$
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60.92
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$
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60.32
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$
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60.19
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Smartphones
sold as a percent of total
handsets
sold
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85.7%
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86.5%
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80.8%
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79.0%
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78.2%
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Total
population
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Consolidated
markets (5)
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45,737,000
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50,906,000
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54,817,000
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54,817,000
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54,817,000
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Consolidated
operating markets (5)
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31,814,000
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31,729,000
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31,729,000
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31,729,000
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31,729,000
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Market
penetration at end of period
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Consolidated
markets (6)
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10.4%
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9.4%
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8.5%
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8.5%
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8.5%
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Consolidated operating
markets (6)
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15.0%
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15.0%
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14.7%
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14.7%
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14.8%
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Capital
expenditures (000s)
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$
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66,460
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$
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181,655
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$
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142,452
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$
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143,927
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$
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89,581
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Total cell
sites in service
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6,219
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6,220
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6,209
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6,183
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6,165
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Owned towers
(7)
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3,955
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4,281
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4,487
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4,457
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4,448
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(1)
Average Revenue Per User (“ARPU”)
metrics are calculated by dividing a revenue base by an average number of
customers by the number of months in the period. These revenue bases and
customer populations are shown below:
a.
Postpaid ARPU consists of total
postpaid service revenues and postpaid customers.
b.
Prepaid ARPU consists of total
prepaid service revenues and prepaid customers.
c.
Billed ARPU consists of total
postpaid, prepaid and reseller service revenues and postpaid, prepaid and
reseller customers.
d.
Service revenue ARPU consists of
total postpaid, prepaid and reseller service revenues, inbound roaming and
other service revenues and postpaid, prepaid and reseller customers.
(2)
Average Revenue Per Account
(“ARPA”) metric is calculated by dividing total postpaid service revenues by
the average number of postpaid accounts by the number of months in the period.
(3)
Churn metrics represent the
percentage of the postpaid or prepaid customers that disconnect service each
month. These metrics represent the average monthly postpaid or prepaid churn
rate for each respective period.
(4)
Smartphones represent wireless
devices which run on an Android, Apple, BlackBerry or Windows Mobile operating
system, excluding connected devices. Smartphone penetration is calculated by
dividing postpaid smartphone customers by total postpaid handset customers.
(5)
The decrease in the population of
Consolidated markets is due primarily to the license exchange transactions of certain
non-operating licenses in North Carolina in December 2014 and Illinois and
Indiana in March 2015. Total Population is used only to calculate market
penetration of consolidated markets and consolidated operating markets,
respectively. See footnote (6) below.
(6)
Market penetration is calculated by
dividing the number of wireless customers at the end of the period by the total
population of consolidated markets and consolidated operating markets,
respectively, as estimated by Claritas. The increase in consolidated markets penetration
is due primarily to a lower denominator as a result of the license divestitures
described in footnote (5) above.
(7)
During the quarters ended March 31,
2015 and December 31, 2014, sold 359 and 236 towers, respectively, in divested
markets.
United States Cellular Corporation
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Consolidated Statement of Operations
Highlights
|
Three Months Ended March 31,
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(Unaudited, dollars and shares in
thousands, except per share amounts)
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Change
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2015
|
|
2014
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Amount
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Percent
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Operating
revenues
|
|
|
|
|
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|
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Service
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$
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828,211
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$
|
853,613
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$
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(25,402)
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(3%)
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Equipment sales
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137,034
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72,198
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64,836
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90%
|
|
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Total operating
revenues
|
|
965,245
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|
|
925,811
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39,434
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4%
|
|
|
|
|
|
|
|
|
|
|
|
|
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Operating
expenses
|
|
|
|
|
|
|
|
|
|
|
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System
operations (excluding Depreciation, amortization and accretion
reported
below)
|
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190,677
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|
180,607
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|
10,070
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6%
|
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Cost of
equipment sold
|
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238,301
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|
270,474
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(32,173)
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(12%)
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Selling, general
and administrative
|
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368,968
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|
395,564
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(26,596)
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(7%)
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Depreciation,
amortization and accretion
|
|
147,085
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|
|
167,753
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(20,668)
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(12%)
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|
(Gain) loss on
asset disposals, net
|
|
4,251
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|
|
1,934
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|
|
2,317
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|
>100%
|
|
(Gain) loss on
sale of business and other exit costs, net
|
|
(111,477)
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|
|
(6,900)
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|
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(104,577)
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>100%
|
|
(Gain) loss on
license sales and exchanges, net
|
|
(122,873)
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|
|
(91,446)
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|
|
(31,427)
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|
(34%)
|
|
|
Total operating
expenses
|
|
714,932
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|
|
917,986
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|
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(203,054)
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(22%)
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|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
|
250,313
|
|
|
7,825
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|
|
242,488
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|
>100%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment
and other income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
Equity in
earnings of unconsolidated entities
|
|
34,471
|
|
|
37,075
|
|
|
(2,604)
|
|
(7%)
|
|
Interest and
dividend income
|
|
7,566
|
|
|
884
|
|
|
6,682
|
|
>100%
|
|
Interest expense
|
|
(19,964)
|
|
|
(14,862)
|
|
|
(5,102)
|
|
(34%)
|
|
Other, net
|
|
105
|
|
|
86
|
|
|
19
|
|
22%
|
|
|
Total investment
and other income
|
|
22,178
|
|
|
23,183
|
|
|
(1,005)
|
|
(4%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before
income taxes
|
|
272,491
|
|
|
31,008
|
|
|
241,483
|
|
>100%
|
|
Income tax
expense
|
|
107,501
|
|
|
12,604
|
|
|
94,897
|
|
>100%
|
Net income
|
|
164,990
|
|
|
18,404
|
|
|
146,586
|
|
>100%
|
|
Less: Net income
(loss) attributable to noncontrolling interests, net of tax
|
|
4,926
|
|
|
(1,078)
|
|
|
6,004
|
|
>(100%)
|
Net income
attributable to U.S. Cellular shareholders
|
$
|
160,064
|
|
$
|
19,482
|
|
$
|
140,582
|
|
>100%
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
weighted average shares outstanding
|
|
84,042
|
|
|
84,213
|
|
|
(171)
|
|
—
|
Basic
earnings per share attributable to U.S. Cellular shareholders
|
$
|
1.90
|
|
$
|
0.23
|
|
$
|
1.67
|
|
>100%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
weighted average shares outstanding
|
|
84,838
|
|
|
85,065
|
|
|
(227)
|
|
—
|
Diluted
earnings per share attributable to U.S. Cellular shareholders
|
$
|
1.89
|
|
$
|
0.23
|
|
$
|
1.66
|
|
>100%
|
United States Cellular Corporation
|
Consolidated Balance Sheet Highlights
|
(Unaudited, dollars in thousands)
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
December 31,
|
|
|
2015
|
|
2014
|
Current
assets
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
336,893
|
|
$
|
211,513
|
|
Accounts
receivable from customers and others
|
|
558,998
|
|
|
556,958
|
|
Inventory, net
|
|
164,900
|
|
|
267,068
|
|
Prepaid expenses
|
|
69,702
|
|
|
59,744
|
|
Net deferred
income tax asset
|
|
77,246
|
|
|
93,058
|
|
Other current
assets
|
|
18,112
|
|
|
90,834
|
|
|
|
1,225,851
|
|
|
1,279,175
|
|
|
|
|
|
|
|
Assets held
for sale
|
|
22,203
|
|
|
107,055
|
|
|
|
|
|
|
|
Investments
|
|
|
|
|
|
|
Licenses
|
|
1,827,102
|
|
|
1,443,438
|
|
Goodwill
|
|
370,151
|
|
|
370,151
|
|
Investments in unconsolidated
entities
|
|
304,501
|
|
|
283,014
|
|
|
|
2,501,754
|
|
|
2,096,603
|
|
|
|
|
|
|
|
Property,
plant and equipment
|
|
|
|
|
|
|
In service and
under construction
|
|
7,426,410
|
|
|
7,458,740
|
|
Less:
Accumulated depreciation
|
|
4,781,293
|
|
|
4,730,523
|
|
|
|
2,645,117
|
|
|
2,728,217
|
|
|
|
|
|
|
|
Other assets
and deferred charges
|
|
211,453
|
|
|
276,218
|
|
|
|
|
|
|
|
Total assets
|
$
|
6,606,378
|
|
$
|
6,487,268
|
United States Cellular Corporation
|
Consolidated Balance Sheet Highlights
|
(Unaudited, dollars in thousands)
|
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
December 31,
|
|
|
|
2015
|
|
2014
|
Current
liabilities
|
|
|
|
|
|
|
Current portion
of long-term debt
|
$
|
57
|
|
$
|
46
|
|
Accounts payable
|
|
|
|
|
|
|
|
Affiliated
|
|
8,044
|
|
|
9,774
|
|
|
Trade
|
|
245,170
|
|
|
306,845
|
|
Customer
deposits and deferred revenues
|
|
301,419
|
|
|
287,562
|
|
Accrued taxes
|
|
139,407
|
|
|
36,652
|
|
Accrued
compensation
|
|
36,957
|
|
|
66,162
|
|
Other current
liabilities
|
|
130,780
|
|
|
149,853
|
|
|
|
|
861,834
|
|
|
856,894
|
|
|
|
|
|
|
|
|
Liabilities
held for sale
|
|
---
|
|
|
20,934
|
|
|
|
|
|
|
|
|
Deferred
liabilities and credits
|
|
|
|
|
|
|
Net deferred
income tax liability
|
|
816,999
|
|
|
859,867
|
|
Other deferred
liabilities and credits
|
|
295,287
|
|
|
284,002
|
|
|
|
|
|
|
|
|
Long-term
debt
|
|
1,151,901
|
|
|
1,151,819
|
|
|
|
|
|
|
|
|
Noncontrolling
interests with redemption features
|
|
6,619
|
|
|
1,150
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
U.S. Cellular
shareholders' equity
|
|
|
|
|
|
|
Series A Common
and Common Shares, par value $1 per share
|
|
88,074
|
|
|
88,074
|
|
Additional
paid-in capital
|
|
1,478,910
|
|
|
1,472,558
|
|
Treasury shares
|
|
(170,544)
|
|
|
(169,139)
|
|
Retained
earnings
|
|
2,067,455
|
|
|
1,910,498
|
|
|
Total U.S.
Cellular shareholders' equity
|
|
3,463,895
|
|
|
3,301,991
|
|
|
|
|
|
|
|
|
Noncontrolling
interests
|
|
9,843
|
|
|
10,611
|
|
|
|
|
|
|
|
|
|
Total equity
|
|
3,473,738
|
|
|
3,312,602
|
|
|
|
|
|
|
|
|
Total
liabilities and equity
|
$
|
6,606,378
|
|
$
|
6,487,268
|
United States Cellular Corporation
|
Consolidated Statement of Cash Flows
|
Three Months Ended March 31,
|
(Unaudited, dollars in thousands)
|
|
|
|
|
|
|
2015
|
|
2014
|
Cash flows
from operating activities
|
|
|
|
|
|
|
Net income
(loss)
|
$
|
164,990
|
|
$
|
18,404
|
|
Add (deduct)
adjustments to reconcile net income to cash flows from
operating
activities
|
|
|
|
|
|
|
|
|
Depreciation,
amortization and accretion
|
|
147,085
|
|
|
167,753
|
|
|
|
Bad debts
expense
|
|
29,132
|
|
|
20,492
|
|
|
|
Stock-based
compensation expense
|
|
5,740
|
|
|
4,955
|
|
|
|
Deferred income
taxes, net
|
|
(26,166)
|
|
|
(4,817)
|
|
|
|
Equity in
earnings of unconsolidated entities
|
|
(34,471)
|
|
|
(37,075)
|
|
|
|
Distributions
from unconsolidated entities
|
|
12,985
|
|
|
12,818
|
|
|
|
(Gain) loss on
asset disposals, net
|
|
4,251
|
|
|
1,934
|
|
|
|
(Gain) loss on
sale of business and other exit costs, net
|
|
(111,477)
|
|
|
(6,900)
|
|
|
|
(Gain) loss on
license sales and exchanges, net
|
|
(122,873)
|
|
|
(91,446)
|
|
|
|
Noncash interest
expense
|
|
386
|
|
|
269
|
|
|
|
Other operating
activities
|
|
—
|
|
|
47
|
|
Changes in
assets and liabilities from operations
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
(1,437)
|
|
|
79,586
|
|
|
|
Equipment
installment plans receivable
|
|
(36,498)
|
|
|
2,394
|
|
|
|
Inventory
|
|
102,167
|
|
|
19,306
|
|
|
|
Accounts payable
|
|
(18,691)
|
|
|
(40,557)
|
|
|
|
Customer
deposits and deferred revenues
|
|
13,419
|
|
|
(1,510)
|
|
|
|
Accrued taxes
|
|
189,387
|
|
|
(15,403)
|
|
|
|
Accrued interest
|
|
9,504
|
|
|
9,182
|
|
|
|
Other assets and
liabilities
|
|
(71,955)
|
|
|
(75,896)
|
|
|
|
|
|
255,478
|
|
|
63,536
|
|
|
|
|
|
|
|
|
|
Cash flows from
investing activities
|
|
|
|
|
|
|
Cash used for
additions to property, plant and equipment
|
|
(116,079)
|
|
|
(109,498)
|
|
Cash paid for
acquisitions and licenses
|
|
(279,656)
|
|
|
(9,135)
|
|
Cash received
from divestitures and exchanges
|
|
274,111
|
|
|
103,042
|
|
Cash received
for investments
|
|
—
|
|
|
10,000
|
|
Other investing
activities
|
|
1,151
|
|
|
584
|
|
|
|
|
|
(120,473)
|
|
|
(5,007)
|
|
|
|
|
|
|
|
|
|
Cash flows
from financing activities
|
|
|
|
|
|
|
Common shares
reissued for benefit plans, net of tax payments
|
|
487
|
|
|
316
|
|
Common shares
repurchased
|
|
(2,302)
|
|
|
(2,000)
|
|
Payment of debt
issuance costs
|
|
(3,018)
|
|
|
—
|
|
Acquisition of
towers in common control transaction
|
|
(2,437)
|
|
|
—
|
|
Distributions to
noncontrolling interests
|
|
(225)
|
|
|
(346)
|
|
Other financing
activities
|
|
(2,130)
|
|
|
(23)
|
|
|
|
|
|
(9,625)
|
|
|
(2,053)
|
|
|
|
|
|
|
|
|
|
Net increase
in cash and cash equivalents
|
|
125,380
|
|
|
56,476
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
|
|
|
|
|
Beginning of
period
|
|
211,513
|
|
|
342,065
|
|
End of period
|
$
|
336,893
|
|
$
|
398,541
|
United States Cellular Corporation
|
Financial Measures and Reconciliations
|
(Unaudited, dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
March 31,
|
|
|
|
2015
|
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
Cash flows
from operating activities
|
|
$
|
255,478
|
|
$
|
63,536
|
|
Add: Sprint
Cost Reimbursement
|
|
|
15,712
|
|
|
11,254
|
|
Less: Cash
used for additions to property, plant and equipment
|
|
|
116,079
|
|
|
109,498
|
|
|
Adjusted free
cash flow (1)
|
|
$
|
155,111
|
|
$
|
(34,708)
|
(1)
Adjusted free cash flow is defined
as Cash flows from operating activities (which includes cash outflows related
to the Sprint decommissioning), as adjusted for cash proceeds from the Sprint
Cost Reimbursement (which are included in Cash flows from investing activities
in the Consolidated Statement of Cash Flows), less Cash used for additions to
property, plant and equipment. Adjusted free cash flow is a non-GAAP financial
measure which U.S. Cellular believes may be useful to investors and other users
of its financial information in evaluating the amount of cash generated by
business operations (including cash proceeds from the Sprint Cost Reimbursement),
after Cash used for additions to property, plant and equipment.
Exhibit 99.2
PRIVATE SECURITIES LITIGATION REFORM ACT
OF 1995
SAFE HARBOR CAUTIONARY STATEMENT
This Form 8-K and/or press
release attached to this Form 8-K contain statements that are not based on
historical facts and represent forward-looking statements, as this term is
defined in the Private Securities Litigation Reform Act of 1995. All
statements, other than statements of historical facts, that address activities,
events or developments that U.S. Cellular intends, expects, projects, believes,
estimates, plans or anticipates will or may occur in the future are
forward-looking statements. The words “believes,” “anticipates,”
“estimates,” “expects,” “plans,” “intends,” “projects” and similar expressions
are intended to identify these forward-looking statements, but are not the
exclusive means of identifying them. Such forward‑looking statements
involve known and unknown risks, uncertainties and other factors that may cause
actual results, events or developments to be significantly different from any
future results, events or developments expressed or implied by such forward‑looking
statements. Such risks, uncertainties and other factors include those set
forth below, as more fully discussed under “Risk Factors” in the most recent
filing of U.S. Cellular’s Form 10-K, as updated by any U.S. Cellular Form 10-Q
filed subsequent to such Form 10-K. However, such factors are not
necessarily all of the important factors that could cause actual results,
performance or achievements to differ materially from those expressed in, or
implied by, the forward-looking statements contained in this document.
Other unknown or unpredictable factors also could have material adverse effects
on future results, performance or achievements. U.S. Cellular undertakes
no obligation to update publicly any forward-looking statements whether as a
result of new information, future events or otherwise. You should
carefully consider the Risk Factors in the most recent filing of U.S.
Cellular’s Form 10-K, as updated by any U.S. Cellular Form 10-Q filed
subsequent to such Form 10-K, the following factors and other information
contained in, or incorporated by reference into, this Form 8-K and/or press
release attached to this Form 8-K to understand the material risks relating to U.S.
Cellular’s business.
·
Intense competition in the markets in which U.S. Cellular
operates could adversely affect U.S. Cellular’s revenues or increase its costs
to compete.
·
A failure by U.S. Cellular to successfully execute its
business strategy (including planned acquisitions, divestitures and exchanges)
or allocate resources or capital could have an adverse effect on U.S.
Cellular’s business, financial condition or results of operations.
·
U.S. Cellular offers customers the option to purchase
certain devices under installment contracts, which creates certain risks and
uncertainties which could have an adverse impact on U.S. Cellular's financial
condition or results of operations.
·
Changes in roaming practices or other factors could cause
U.S. Cellular's roaming revenues to decline from current levels and/or impact
U.S. Cellular's ability to service its customers in geographic areas where U.S.
Cellular does not have its own network, which could have an adverse effect on
U.S. Cellular's business, financial condition or results of operations.
·
A failure by U.S. Cellular to obtain access to adequate
radio spectrum to meet current or anticipated future needs and/or to accurately
predict future needs for radio spectrum could have an adverse effect on U.S. Cellular’s
business, financial condition or results of operations.
·
To the extent conducted by the Federal Communications
Commission (“FCC”), U.S. Cellular is likely to participate in FCC auctions of
additional spectrum in the future as an applicant or as a noncontrolling
partner in another auction applicant and, during certain periods, will be
subject to the FCC’s anti-collusion rules, which could have an adverse effect
on U.S. Cellular.
·
Changes in the regulatory environment or a failure by
U.S. Cellular to timely or fully comply with any applicable regulatory
requirements could adversely affect U.S. Cellular’s business, financial
condition or results of operations.
·
An inability to attract people of outstanding potential,
to develop their potential through education and assignments, and to retain
them by keeping them engaged, challenged and properly rewarded could have an
adverse effect on U.S. Cellular's business, financial condition or results of
operations.
·
U.S. Cellular’s assets are concentrated in the
U.S. wireless telecommunications industry. As a result, its results of
operations may fluctuate based on factors related primarily to conditions in
this industry.
·
U.S. Cellular’s lower scale relative to larger
competitors could adversely affect its business, financial condition or results
of operations.
·
Changes in various business factors could have an adverse
effect on U.S. Cellular’s business, financial condition or results of
operations.
·
Advances or changes in technology could render certain technologies
used by U.S. Cellular obsolete, could put U.S. Cellular at a competitive
disadvantage, could reduce U.S. Cellular’s revenues or could increase its
costs of doing business.
·
Complexities associated with deploying new technologies
present substantial risk.
·
U.S. Cellular is subject to numerous surcharges and fees
from federal, state and local governments, and the applicability and the amount
of these fees are subject to great uncertainty.
·
Performance under device purchase agreements could have a
material adverse impact on U.S. Cellular's business, financial condition or
results of operations.
·
Changes in U.S. Cellular’s enterprise value, changes
in the market supply or demand for wireless licenses, adverse developments in
the business or the industry in which U.S. Cellular is involved and/or
other factors could require U.S. Cellular to recognize impairments in the
carrying value of its licenses, goodwill and/or physical assets.
·
Costs, integration problems or other factors associated
with acquisitions, divestitures or exchanges of properties or licenses and/or
expansion of U.S. Cellular’s business could have an adverse effect on
U.S. Cellular’s business, financial condition or results of operations.
·
U.S. Cellular’s investments in unproven technologies
may not produce the benefits that U.S. Cellular expects.
·
A failure by U.S. Cellular to complete significant
network construction and systems implementation activities as part of its plans
to improve the quality, coverage, capabilities and capacity of its network,
support and other systems and infrastructure could have an adverse effect on
its operations.
·
Difficulties involving third parties with which U.S.
Cellular does business, including changes in U.S. Cellular's relationships with
or financial or operational difficulties of key suppliers or independent agents
and third party national retailers who market U.S. Cellular services, could
adversely affect U.S. Cellular’s business, financial condition or results
of operations.
·
U.S. Cellular has significant investments in
entities that it does not control. Losses in the value of such investments
could have an adverse effect on U.S. Cellular’s financial condition or
results of operations.
·
A failure by U.S. Cellular to maintain flexible and
capable telecommunication networks or information technology, or a material
disruption thereof, could have an adverse effect on U.S. Cellular’s business,
financial condition or results of operations.
·
Cyber-attacks or other breaches of network or information
technology security could have an adverse effect on U.S. Cellular's business,
financial condition or results of operations.
·
The market price of U.S. Cellular’s Common Shares is
subject to fluctuations due to a variety of factors.
·
Changes in facts or circumstances, including new or
additional information, could require U.S. Cellular to record charges in
excess of amounts accrued in the financial statements, which could have an
adverse effect on U.S. Cellular’s business, financial condition or results
of operations.
·
Disruption in credit or other financial markets, a
deterioration of U.S. or global economic conditions or other events could,
among other things, impede U.S. Cellular’s access to or increase the cost of
financing its operating and investment activities and/or result in reduced
revenues and lower operating income and cash flows, which would have an adverse
effect on U.S. Cellular’s business, financial condition or results of
operations.
·
Uncertainty of U.S. Cellular’s ability to access capital,
deterioration in the capital markets, other changes in market conditions,
changes in U.S. Cellular’s credit ratings or other factors could limit or
restrict the availability of financing on terms and prices acceptable to
U.S. Cellular, which could require U.S. Cellular to reduce its
construction, development or acquisition programs.
·
Settlements, judgments, restraints on its current or
future manner of doing business and/or legal costs resulting from pending and
future litigation could have an adverse effect on U.S. Cellular’s
business, financial condition or results of operations.
·
The possible development of adverse precedent in
litigation or conclusions in professional studies to the effect that radio
frequency emissions from wireless devices and/or cell sites cause harmful
health consequences, including cancer or tumors, or may interfere with various
electronic medical devices such as pacemakers, could have an adverse effect on
U.S. Cellular’s business, financial condition or results of operations.
·
Claims of infringement of intellectual property and
proprietary rights of others, primarily involving patent infringement claims,
could prevent U.S. Cellular from using necessary technology to provide products
or services or subject U.S. Cellular to expensive intellectual property
litigation or monetary penalties, which could have an adverse effect on U.S.
Cellular’s business, financial condition or results of operations.
·
There are potential conflicts of interests between TDS
and U.S. Cellular.
·
Certain matters, such as control by TDS and provisions in
the U.S. Cellular Restated Certificate of Incorporation, may serve to
discourage or make more difficult a change in control of U.S. Cellular.
·
Any of the foregoing events or other events could cause
revenues, earnings, capital expenditures and/or any other financial or
statistical information to vary from U.S. Cellular’s forward-looking
estimates by a material amount.
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