Form 8-K - Current report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 16, 2024

UNITED STATES CELLULAR CORPORATION

(Exact name of registrant as specified in its charter)

Delaware

001-09712

62-1147325

(State or other jurisdiction of incorporation)

(Commission File Number)

(I.R.S. Employer Identification No.)

8410 West Bryn Mawr, Chicago, Illinois 60631

(Address of principal executive offices and zip code)

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:


☐			Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)


☐			Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)


☐			Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))


☐			Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which registered

Common Shares, $1 par value

USM

New York Stock Exchange

6.25% Senior Notes due 2069

UZD

New York Stock Exchange

5.50% Senior Notes due 2070

UZE

New York Stock Exchange

5.50% Senior Notes due 2070

UZF

New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).


☐			Emerging growth company


☐			If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Item 2.02. Results of Operations and Financial Condition

As previously announced, on May 24, 2024, Telephone and Data Systems, Inc. (TDS), United States Cellular Corporation (UScellular), T-Mobile US, Inc. (T-Mobile) and USCC Wireless Holdings, LLC entered into a Securities Purchase Agreement (Purchase Agreement) pursuant to which, among other items, UScellular has agreed to sell its wireless operations and select spectrum assets to T-Mobile for $4.4 billion, payable in cash and the assumption of certain debt, subject to certain potential adjustments as further described in the Purchase Agreement (Transaction).

In its Annual Report on Form 10-K for the year ended December 31, 2023 and its Quarterly Report on Form 10-Q for the quarter ended March 31, 2024, UScellular reported its operations in one reportable segment.

Due to the planned disposal of the UScellular wireless operations pursuant to the Purchase Agreement, UScellular is disaggregating its reportable segments to provide relevant financial information for both internal reporting and external reporting purposes. Effective for the quarter ending June 30, 2024, UScellular will have two reportable segments:

•“Wireless”: Operation of wireless network and provision of wireless services in markets throughout the United States

•“Towers”: Operation of owned cell towers to lease space to wireless carriers, including the Wireless business as well as third-party carriers

UScellular is providing updated financial information in Exhibit 99.1 to report historical financial performance under the new segment structure for the quarterly and annual periods of 2022, 2023 and 2024. This information includes certain non-GAAP financial measures that are useful in evaluating the effectiveness of operations and underlying business trends in a manner that is consistent with management’s evaluation of business performance.

UScellular intends to begin reporting its financial results based on the new segment structure with the filing of its Quarterly Report on Form 10-Q for the quarter ending June 30, 2024, with prior periods reported accordingly.

Item 7.01. Regulation FD Disclosure

UScellular made available an investor presentation to provide additional details on its tower operations in the context of the Transaction. A copy of the investor presentation is furnished herewith as Exhibit 99.2.

Item 9.01. Financial Statements and Exhibits

(d) Exhibits


Exhibit Number						Description of Exhibits
99.1						Supplemental segment financial information (furnished pursuant to Item 2.02 of this Current Report on Form 8-K).
99.2						Investor Presentation, dated July 16, 2024 (furnished pursuant to Item 7.01 of this Current Report on Form 8-K).
104						Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document.


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 hereunto duly authorized.

		UNITED STATES CELLULAR CORPORATION


Date:	July 16, 2024	By:	/s/ Douglas W. Chambers
			Douglas W. Chambers
			Executive Vice President, Chief Financial Officer and Treasurer

Exhibit 99.1

United States Cellular Corporation

Financial Highlights by Segment

(Unaudited)


UScellular Consolidated	Q1 2024
(Dollars in millions)
Operating revenues
Service1	$	754
Equipment sales	196
Total operating revenues	950
System operations (excluding Depreciation, amortization and accretion reported below)	182
Cost of equipment sold	216
Selling, general and administrative	331
Depreciation, amortization and accretion	165

(Gain) loss on asset disposals, net	6

(Gain) loss on license sales and exchanges, net	(1)
Operating income	51
Equity in earnings of unconsolidated entities	42
Interest and dividend income	2

Interest expense	(43)

Income before income taxes	52
Income tax expense	28
Net income	24
Add back:
Depreciation, amortization and accretion	165
Expenses related to strategic alternatives review	7

(Gain) loss on asset disposals, net	6

(Gain) loss on license sales and exchanges, net	(1)

Interest expense	43
Income tax expense	28
Adjusted EBITDA (Non-GAAP)2	$	272


Wireless	Q1 2024
(Dollars in millions)
Operating revenues
Service	$	729
Equipment sales	196
Total operating revenues	925
System operations (excluding Depreciation, amortization and accretion reported below)	197
Cost of equipment sold	216
Selling, general and administrative	324
Depreciation, amortization and accretion	154

(Gain) loss on asset disposals, net	6

(Gain) loss on license sales and exchanges, net	(1)
Operating income	29








Add back:
Depreciation, amortization and accretion	154
Expenses related to strategic alternatives review	7

(Gain) loss on asset disposals, net	6

(Gain) loss on license sales and exchanges, net	(1)



Adjusted EBITDA (Non-GAAP)2	$	195


Towers	Q1 2024
(Dollars in millions)
Operating revenues
Service - Third-Party	$	25
Service - Intracompany	33
Total operating revenues	58
System operations (excluding Depreciation, amortization and accretion reported below)	18

Selling, general and administrative	7
Depreciation, amortization and accretion	11




Operating income	22








Add back:
Depreciation, amortization and accretion	11







Adjusted EBITDA (Non-GAAP)2	$	33


UScellular Consolidated	Q1 2023		Q2 2023		Q3 2023		Q4 2023		Full Year 2023
(Dollars in millions)
Operating revenues
Service1	$	767	$	760	$	762	$	755	$	3,044
Equipment sales	219		197		201		245		862
Total operating revenues	986		957		963		1,000		3,906
System operations (excluding Depreciation, amortization and accretion reported below)	182		190		185		183		740
Cost of equipment sold	253		228		228		280		988
Selling, general and administrative	345		341		333		349		1,368
Depreciation, amortization and accretion	170		161		159		166		656

(Gain) loss on asset disposals, net	10		3		1		3		17

(Gain) loss on license sales and exchanges, net	—		—		—		(2)		(2)
Operating income	26		34		57		21		139
Equity in earnings of unconsolidated entities	44		38		40		37		158
Interest and dividend income	2		3		3		2		10

Interest expense	(47)		(51)		(50)		(49)		(196)

Income before income taxes	25		24		50		11		111
Income tax expense (benefit)	11		19		27		(4)		53
Net income	14		5		23		15		58
Add back:
Depreciation, amortization and accretion	170		161		159		166		656
Expenses related to strategic alternatives review	—		—		3		6		8

(Gain) loss on asset disposals, net	10		3		1		3		17

(Gain) loss on license sales and exchanges, net	—		—		—		(2)		(2)

Interest expense	47		51		50		49		196
Income tax expense (benefit)	11		19		27		(4)		53
Adjusted EBITDA (Non-GAAP)2	$	252	$	239	$	263	$	233	$	986


Wireless	Q1 2023		Q2 2023		Q3 2023		Q4 2023		Full Year 2023
(Dollars in millions)
Operating revenues
Service	$	742	$	735	$	737	$	730	$	2,943
Equipment sales	219		197		201		245		862
Total operating revenues	961		932		938		975		3,805
System operations (excluding Depreciation, amortization and accretion reported below)	197		203		199		197		794
Cost of equipment sold	253		228		228		280		988
Selling, general and administrative	336		333		324		340		1,334
Depreciation, amortization and accretion	158		149		148		155		610

(Gain) loss on asset disposals, net	10		3		1		5		19

(Gain) loss on license sales and exchanges, net	—		—		—		(2)		(2)
Operating income	7		16		38		—		62








Add back:
Depreciation, amortization and accretion	158		149		148		155		610
Expenses related to strategic alternatives review	—		—		3		6		8

(Gain) loss on asset disposals, net	10		3		1		5		19

(Gain) loss on license sales and exchanges, net	—		—		—		(2)		(2)



Adjusted EBITDA (Non-GAAP)2	$	175	$	168	$	190	$	164	$	697


Towers	Q1 2023		Q2 2023		Q3 2023		Q4 2023		Full Year 2023
(Dollars in millions)
Operating revenues
Service - Third-Party	$	25	$	25	$	25	$	25	$	101
Service - Intracompany	32		32		32		32		127
Total operating revenues	57		57		57		57		228
System operations (excluding Depreciation, amortization and accretion reported below)	17		19		18		18		73

Selling, general and administrative	9		8		9		9		34
Depreciation, amortization and accretion	12		12		11		11		46

(Gain) loss on asset disposals, net	—		—		—		(2)		(2)


Operating income	19		18		19		21		77








Add back:
Depreciation, amortization and accretion	12		12		11		11		46

(Gain) loss on asset disposals, net	—		—		—		(2)		(2)





Adjusted EBITDA (Non-GAAP)2	$	31	$	30	$	30	$	30	$	121


UScellular Consolidated	Q1 2022		Q2 2022		Q3 2022		Q4 2022		Full Year 2022
(Dollars in millions)
Operating revenues
Service1	$	787	$	783	$	781	$	774	$	3,125
Equipment sales	223		244		302		274		1,044
Total operating revenues	1,010		1,027		1,083		1,048		4,169
System operations (excluding Depreciation, amortization and accretion reported below)	185		192		197		181		755
Cost of equipment sold	257		275		354		330		1,216
Selling, general and administrative	325		339		369		374		1,408
Depreciation, amortization and accretion	171		172		177		179		700
Loss on impairment of licenses	—		3		—		—		3
(Gain) loss on asset disposals, net	2		6		1		11		19
(Gain) loss on sale of business and other exit costs, net	(1)		—		—		—		(1)

Operating income (loss)	71		40		(15)		(27)		69
Equity in earnings of unconsolidated entities	45		37		40		36		158
Interest and dividend income	1		3		2		3		8

Interest expense	(33)		(40)		(42)		(49)		(163)

Income (loss) before income taxes	84		40		(15)		(37)		72
Income tax expense (benefit)	32		18		(3)		(9)		37
Net income (loss)	52		22		(12)		(28)		35
Add back:
Depreciation, amortization and accretion	171		172		177		179		700

Loss on impairment of licenses	—		3		—		—		3
(Gain) loss on asset disposals, net	2		6		1		11		19
(Gain) loss on sale of business and other exit costs, net	(1)		—		—		—		(1)


Interest expense	33		40		42		49		163
Income tax expense (benefit)	32		18		(3)		(9)		37
Adjusted EBITDA (Non-GAAP)2	$	289	$	261	$	205	$	202	$	956


Wireless	Q1 2022		Q2 2022		Q3 2022		Q4 2022		Full Year 2022
(Dollars in millions)
Operating revenues
Service	$	765	$	760	$	758	$	750	$	3,032
Equipment sales	223		244		302		274		1,044
Total operating revenues	988		1,004		1,060		1,024		4,076
System operations (excluding Depreciation, amortization and accretion reported below)	200		205		209		194		807
Cost of equipment sold	257		275		354		330		1,216
Selling, general and administrative	318		331		361		366		1,376
Depreciation, amortization and accretion	159		161		166		167		655
Loss on impairment of licenses	—		3		—		—		3
(Gain) loss on asset disposals, net	2		6		1		11		19
(Gain) loss on sale of business and other exit costs, net	(1)		—		—		—		(1)

Operating income (loss)	53		23		(31)		(44)		1








Add back:
Depreciation, amortization and accretion	159		161		166		167		655

Loss on impairment of licenses	—		3		—		—		3
(Gain) loss on asset disposals, net	2		6		1		11		19
(Gain) loss on sale of business and other exit costs, net	(1)		—		—		—		(1)




Adjusted EBITDA (Non-GAAP)2	$	213	$	193	$	136	$	134	$	677


Towers	Q1 2022		Q2 2022		Q3 2022		Q4 2022		Full Year 2022
(Dollars in millions)
Operating revenues
Service - Third-Party	$	22	$	23	$	23	$	24	$	93
Service - Intracompany	31		31		31		31		123
Total operating revenues	53		54		54		55		216
System operations (excluding Depreciation, amortization and accretion reported below)	16		18		19		18		71

Selling, general and administrative	7		8		8		8		32
Depreciation, amortization and accretion	12		11		11		12		45




Operating income	18		17		16		17		68








Add back:
Depreciation, amortization and accretion	12		11		11		12		45








Adjusted EBITDA (Non-GAAP)2	$	30	$	28	$	27	$	29	$	113

Numbers may not foot due to rounding.

1Consolidated amounts include elimination of intracompany charges for the use of company-owned towers by the Wireless segment.

2Adjusted earnings before interest, taxes, depreciation, amortization and accretion (Adjusted EBITDA) is a segment measure reported to the chief operating decision maker for purposes of assessing the segments' performance. Adjusted EBITDA is defined as net income, adjusted for the items set forth in the reconciliation above. UScellular believes Adjusted EBITDA is a useful measure of UScellular’s operating results before significant recurring non-cash charges, gains and losses, and other items as presented above as they provide additional relevant and useful information to investors and other users of UScellular's financial data in evaluating the effectiveness of its operations and underlying business trends in a manner that is consistent with management's evaluation of business performance.

Exhibit 99.2

Document and Entity Information Document	Jul. 16, 2024
Entity Central Index Key	0000821130
Entity Emerging Growth Company	false
Pre-commencement Issuer Tender Offer	false
Pre-commencement Tender Offer	false
Soliciting Material	false
Written Communications	false
Document Type	8-K
Document Period End Date	Jul. 16, 2024
Entity Incorporation, State or Country Code	DE
Entity Registrant Name	UNITED STATES CELLULAR CORPORATION
Entity File Number	001-09712
Entity Tax Identification Number	62-1147325
Entity Address, Address Line One	8410 West Bryn Mawr
Entity Address, City or Town	Chicago
Entity Address, State or Province	IL
Entity Address, Postal Zip Code	60631
City Area Code	(773)
Local Phone Number	399-8900
Amendment Flag	false
Common Shares
Title of 12(b) Security	Common Shares, $1 par value
Trading Symbol	USM
Security Exchange Name	NYSE
6.25% Senior Notes
Title of 12(b) Security	6.25% Senior Notes due 2069
Trading Symbol	UZD
Security Exchange Name	NYSE
5.50% Senior Notes
Title of 12(b) Security	5.50% Senior Notes due 2070
Trading Symbol	UZE
Security Exchange Name	NYSE
5.50% Senior Notes
Title of 12(b) Security	5.50% Senior Notes due 2070
Trading Symbol	UZF
Security Exchange Name	NYSE