8-K

 

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):  November 1, 2013

UNITED STATES CELLULAR CORPORATION
 (Exact name of registrant as specified in its charter)

Delaware	1-9712	62-1147325
(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(I.R.S. Employer Identification No.)
8410 West Bryn Mawr, Chicago, Illinois		60631
(Address of principal executive offices)		(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 (see General Instruction A.2. below):

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

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

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

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

Item 2.02.  Results of Operations and Financial Condition

On November 1, 2013, United States Cellular Corporation (“U.S. Cellular”) issued a news release announcing its results of operations for the period ended September 30, 2013.  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:  November 1, 2013

By:	/s/ Steven T. Campbell
	Steven T. Campbell Executive Vice President – Finance, Chief Financial Officer and Treasurer (principal financial officer)

EXHIBIT INDEX

The following exhibits are filed or furnished herewith as noted below.

Exhibit No.	Description
99.1	Earnings Press Release dated November 1, 2013
99.2	Private Securities Litigation Reform Act of 1995 Safe Harbor Cautionary Statement

EX-99.1

 

Exhibit 99.l   NEWS RELEASE

 

As previously announced, U.S. Cellular will hold a teleconference November 1, 2013 at 9:30 a.m. CDT.  Listen to the live call via the Conference Calls page of teldta.com or uscellular.com. 

Contact:    Jane W. McCahon, Vice President, Corporate Relations and Corporate Secretary

                    (312) 592-5379; jane.mccahon@teldta.com 

                    Julie D. Mathews, Manager, Investor Relations

                    (312) 592-5341; julie.mathews@teldta.com 

FOR RELEASE: IMMEDIATE

U.S. cellular Reports third QUARTER 2013 RESULTS

CHICAGO – November 1, 2013 – United States Cellular Corporation [NYSE:USM] reported service revenues of $862.3 million for the third quarter of 2013, versus $1,036.4 million for the comparable period one year ago. Net income (loss) attributable to U.S. Cellular shareholders and related diluted earnings (loss) per share were $(9.9) million and $(0.12) respectively, for the third quarter of 2013, compared to $35.5 million and $0.42, respectively, in the comparable period one year ago.

“We have continued to execute on our strategies to improve U.S. Cellular's competitive position and financial foundation,” said Kenneth R. Meyers, U.S. Cellular president and CEO. “We’re close to bringing 4G LTE to nearly 90 percent of our customers, we have a new billing system in place, and we plan to expand our device portfolio with the launch of the Apple iPhone and iPad on November 8, supported by our recently introduced shared data plans for consumers and businesses.Regrettably, the billing system implementation impacted our ability to provide high-quality service to every customer for a period of time.  However, we have made substantial progress in resolving the issues, and we expect the system to provide significant benefits over the long term.

“I believe we’re positioned well to achieve improved customer growth in the future, with a fast 4G LTE network, a competitive selection of devices and plans, and effective distribution through our company- and agent-owned stores, uscellular.com, and our national retail partners.

“We have been successful in our sales of non-strategic spectrum, with deals signed or closed generating pre-tax cash proceeds of over $400 million.”

2013 ESTIMATES

U.S. Cellular’s estimates of full-year 2013 results are shown below.  Such estimates represent U.S. Cellular’s views as of the date of filing U.S. Cellular’s Form 10-Q for the quarter ended September 30, 2013.  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.

	2013 Estimated Results (1)
	Core Markets (2)		Divestiture Markets (2)(3)		U.S. Cellular Consolidated (2)(3)
	Previous	Current	Previous	Current	Previous	Current
(Dollars in millions)
Service revenues	$3,475 - $3,575	$3,450 - $3,500	$140	Unchanged	$3,615-$3,715	$3,590-$3,640
Adjusted income before   income taxes (4)	$560 - $660	Unchanged	$40	Unchanged	$600-$700	Unchanged
Capital expenditures	$730	Unchanged	$5	Unchanged	$735	Unchanged

1

(1)These estimates are based on U.S. Cellular’s current plans, which include an expansion of the multi-year deployment of 4G LTE technology; such expansion includes deployment on 700 MHz in additional markets as well as deployment on the 850 MHz band to provide additional capacity for future growth in data usage, enable potential future 4G LTE roaming, and support the sale of Apple products.  The financial impacts of selling Apple products in 2013 consist of the following:

·Increased Service revenues resulting from net incremental customers added and retained as a result of offering Apple products;

·Decreased Adjusted income before income taxes as a result of net increases in costs, primarily loss on equipment sales as a result of offering Apple products; and

·Increased Capital expenditures related to the deployment on the 850 MHz band to provide additional capacity for future growth in data usage, which includes capacity required to accommodate Apple products.

These estimates also reflect the impacts of the deconsolidation of certain partnerships as of April 2013.  These estimates do not include (i) the reported gain on sale of business and other exit costs, net (ii) the reported gain on investments, or (iii) the actual or expected gains from spectrum license divestitures.  New developments or changing conditions (such as, but not limited to, regulatory developments, customer net growth, customer demand for data services or possible acquisitions, dispositions or exchanges) could affect U.S. Cellular’s plans and, therefore, its 2013 estimated results.

(2)The U.S. Cellular Consolidated amounts represent GAAP financial measures and include the results of both the Core Markets and the Divestiture Markets.  The amounts for the Core Markets and Divestiture Markets represent non-GAAP financial measures.  U.S. Cellular believes that the amounts for the Core Markets and Divestiture Markets may be useful to investors and other users of its financial information in evaluating the separate results for the Core Markets.  Divestiture Markets are comprised of U.S. Cellular's Chicago, central Illinois, St. Louis and certain Indiana/Michigan/Ohio markets.  Core Markets are comprised of all other markets in which U.S. Cellular conducts business including Peoria, Rockford and certain other areas in Illinois, and in Columbia, Joplin, Jefferson City and certain other areas in Missouri.  Core Markets as defined also includes any other income or expenses due to U.S. Cellular’s direct or indirect ownership interests in other spectrum in the Divestiture Markets which was not included in the sale and other retained assets from the Divestiture Markets.

(3)These estimates reflect the Divestiture Transaction which closed on May 16, 2013.

(4)Adjusted income before income taxes is a non-GAAP financial measure defined as Income before income taxes, adjusted for the items set forth in the reconciliation below.  Adjusted income before income taxes excludes these items in order to show operating results on a more comparable basis from period to period.  In addition, U.S. Cellular may also exclude other items from adjusted income before income taxes if such items help reflect operating results on a more comparable basis.  U.S. Cellular does not intend to imply that any such amounts that are excluded are non-recurring, infrequent or unusual; such amounts may occur in the future.  Adjusted income before income taxes is not a measure of financial performance under GAAP and should not be considered as an alternative to Income before income taxes as an indicator of the Company’s operating performance or as an alternative to Cash flows from operating activities, determined in accordance with GAAP, as an indicator of cash flows or as a measure of liquidity.  U.S. Cellular believes Adjusted income before income taxes is a useful measure of U.S. Cellular’s operating results before significant recurring non-cash charges, discrete gains and losses and financing charges (Interest expense).  The following tables provide a reconciliation of Income (loss) before income taxes to Adjusted income before income taxes for 2013 Estimated Results, nine months ended September 30, 2013 actual results, and 2012 actual results:

	2013 Estimated Results
	Core Markets (2)	Divestiture Markets (2)(3)		U.S. Cellular Consolidated (2)(3)
(Dollars in millions)
Income (loss) before income taxes	$315-$415	$35		$350-$450
Depreciation, amortization and accretion expense (5)	$540	$250		$790
(Gain) loss on sale of business and other exit    costs, net	—	($245)		($245)
(Gain) loss from spectrum license divestitures	($325)	—		($325)
(Gain) loss on investments	($20)	—		($20)
Interest expense	$50	—		$50
Adjusted income before income taxes	$560-$660	$40		$600-$700
	U.S. Cellular Consolidated Actual Results
		Nine Months Ended September 30, 2013		Year Ended December 31, 2012
Income before income taxes		$	266	$	205
Depreciation, amortization and accretion expense (5)			593		609
(Gain) loss on sale of business and other exit costs, net			(244)		21
(Gain) loss from spectrum license divestitures			—		—
(Gain) loss on investments			(18)		4
Interest expense			33		42
Adjusted income before income taxes		$	630	$	881

2

(5)The 2013 estimated amount for Depreciation, amortization and accretion expense in the Divestiture Markets includes approximately $171 million of incremental accelerated depreciation, amortization and accretion resulting from the Divestiture Transaction.  Actual results for the nine months ended September 30, 2013 and the year ended December 31, 2012 include $134 million and $20 million, respectively, of incremental accelerated depreciation, amortization and accretion resulting from the Divestiture Transaction.

Conference Call Information

U.S. Cellular will hold a conference call on November 1, 2013 at 9:30 a.m. CDT.

§Access the live call on the Conference Calls page of uscellular.com or at http://www.videonewswire.com/event.asp?id=96657.

§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 the Conference Calls page of uscellular.com. The call will be archived on the Conference Calls page of 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 4.9 million customers in 23 states. The Chicago-based company had 6,000 full- and part-time associates as of September 30, 2013. At the end of the third quarter of 2013, Telephone and Data Systems, Inc. owned 84 percent of U.S. Cellular. For more information about U.S. Cellular, visit uscellular.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 transaction and the financial impacts of such transaction; 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 handset 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.

For more information about U.S. Cellular, visit uscellular.com. 

3

United States Cellular Corporation
Total Markets Summary Operating Data (Unaudited)
Quarter Ended			9/30/2013		6/30/2013		3/31/2013		12/31/2012		9/30/2012
Retail Customers
	Postpaid
		Total at end of period		4,343,000		4,412,000		5,060,000		5,134,000		5,175,000
		Gross additions		165,000		165,000		191,000		241,000		230,000
		Net additions (losses)		(60,000)		(120,000)		(74,000)		(41,000)		(38,000)
		ARPU (1)	$	54.64	$	54.18	$	54.85	$	54.56	$	54.34
		Churn rate (2)		1.7%		2.0%		1.7%		1.8%		1.7%
		Smartphone penetration (3) (4)		47.1%		45.5%		43.5%		41.8%		38.6%
	Prepaid
		Total at end of period		370,000		381,000		446,000		423,000		386,000
		Gross additions		65,000		77,000		104,000		107,000		120,000
		Net additions (losses)		(11,000)		(7,000)		23,000		37,000		57,000
		ARPU (1)	$	28.72	$	31.69	$	33.31	$	33.56	$	32.97
		Churn rate (2)		6.8%		6.8%		6.2%		5.8%		5.9%
Total customers at end of period				4,875,000		4,968,000		5,736,000		5,798,000		5,808,000
Billed ARPU (1)			$	50.92	$	50.60	$	51.13	$	50.94	$	50.83
Service revenue ARPU (1)			$	58.36	$	57.45	$	57.63	$	58.00	$	59.57
Smartphones sold as a percent of total   devices sold				65.2%		66.0%		61.7%		62.9%		53.0%
Total population
		Consolidated markets (5)		84,025,000		84,025,000		93,943,000		93,244,000		92,996,000
		Consolidated operating markets (5)		31,822,000		31,822,000		47,440,000		46,966,000		46,966,000
Market penetration at end of period
		Consolidated markets (6)		5.8%		5.9%		6.1%		6.2%		6.2%
		Consolidated operating markets (6)		15.3%		15.6%		12.1%		12.3%		12.4%
Capital expenditures (000s)			$	242,500	$	168,500	$	118,400	$	253,100	$	199,100
Total cell sites in service				7,687		7,748		8,027		8,028		7,984
Owned towers in service				4,422		4,411		4,411		4,408		4,377

4

United States Cellular Corporation
Core Markets Summary Operating Data (Unaudited)
Excludes NY1 & NY2
Quarter Ended			9/30/2013		6/30/2013		3/31/2013		12/31/2012		9/30/2012
Retail Customers
	Postpaid
		Total at end of period		4,343,000		4,412,000		4,463,000		4,496,000		4,515,000
		Gross additions		165,000		165,000		176,000		208,000		196,000
		Net additions (losses)		(60,000)		(53,000)		(33,000)		(19,000)		(23,000)
		ARPU (1)	$	54.64	$	54.44	$	54.21	$	53.91	$	53.67
		Churn rate (2)		1.7%		1.6%		1.6%		1.7%		1.6%
		Smartphone penetration (3) (4)		47.1%		45.5%		43.0%		41.1%		37.8%
	Prepaid
		Total at end of period		370,000		381,000		373,000		342,000		305,000
		Gross additions		65,000		76,000		91,000		87,000		99,000
		Net additions (losses)		(11,000)		8,000		31,000		37,000		59,000
		ARPU (1)	$	28.72	$	31.65	$	32.92	$	33.21	$	32.97
		Churn rate (2)		6.8%		6.0%		5.6%		5.1%		4.8%
Total customers at end of period				4,875,000		4,968,000		5,005,000		5,022,000		5,012,000
Billed ARPU (1)			$	50.92	$	50.98	$	50.93	$	50.71	$	50.59
Service revenue ARPU (1)			$	58.36	$	57.88	$	57.14	$	57.67	$	59.34
Smartphones sold as a percent of total   devices sold				65.2%		66.1%		62.1%		62.9%		53.0%
Total population
		Consolidated markets (5)		84,025,000		84,025,000		84,025,000		83,384,000		82,595,000
		Consolidated operating markets (5)		31,822,000		31,822,000		31,822,000		31,445,000		31,110,000
Market penetration at end of period
		Consolidated markets (6)		5.8%		5.9%		6.0%		6.0%		6.1%
		Consolidated operating markets (6)		15.3%		15.6%		15.7%		16.0%		16.1%
Capital expenditures (000s)			$	239,300	$	171,200	$	113,300	$	241,400	$	184,100
Total cell sites in service				6,127		6,113		6,113		6,130		6,089
Owned towers in service				3,859		3,844		3,846		3,847		3,818

(1)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 retail service revenues, inbound roaming and other service revenues and postpaid, prepaid and reseller customers.

(2)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.

(3)Smartphones represent wireless devices which run on an Android^TM, BlackBerry® or Windows Mobile® operating system, excluding tablets.

(4)Smartphone penetration is calculated by dividing postpaid smartphone customers by total postpaid customers.

(5)Used only to calculate market penetration of consolidated and core markets and consolidated and core 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 and core markets and consolidated and core operating markets, respectively, as estimated by Claritas®.

5

		United States Cellular Corporation
		Consolidated Statement of Operations Highlights
		Three Months Ended September 30,
		(Unaudited, dollars and shares in thousands, except per share amounts)
							Increase (Decrease)
			2013		2012		Amount		Percent
Operating revenues
	Service		$	862,330	$	1,036,370	$	(174,040)	(17%)
	Equipment sales			76,906		103,987		(27,081)	(26%)
		Total operating revenues		939,236		1,140,357		(201,121)	(18%)
Operating expenses
	System operations (excluding Depreciation, amortization and accretion   reported below)			177,431		249,245		(71,814)	(29%)
	Cost of equipment sold			193,392		248,029		(54,637)	(22%)
	Selling, general and administrative			410,468		438,526		(28,058)	(6%)
	Depreciation, amortization and accretion			200,985		145,151		55,834	38%
	Loss on asset disposals, net			1,701		11,262		(9,561)	(85%)
	(Gain) loss on sale of business and other exit costs, net			(1,534)		65		(1,599)	>(100%)
		Total operating expenses		982,443		1,092,278		(109,835)	(10%)
Operating income (loss)				(43,207)		48,079		(91,286)	>(100%)
Investment and other income (expense)
	Equity in earnings of unconsolidated entities			37,360		24,816		12,544	51%
	Interest and dividend income			1,095		935		160	17%
	Interest expense			(11,329)		(9,501)		(1,828)	(19%)
	Other, net			47		200		(153)	(77%)
		Total investment and other income (expense)		27,173		16,450		10,723	65%
Income (loss) before income taxes				(16,034)		64,529		(80,563)	>(100%)
	Income tax expense (benefit)			(6,433)		22,389		(28,822)	>(100%)
Net income (loss)				(9,601)		42,140		(51,741)	>(100%)
	Less: Net income attributable to noncontrolling interests, net of tax			258		6,689		(6,431)	(96%)
Net income (loss) attributable to U.S. Cellular shareholders			$	(9,859)	$	35,451	$	(45,310)	>(100%)
Basic weighted average shares outstanding				84,005		84,737		(732)	(1%)
Basic earnings (loss) per share attributable to U.S. Cellular shareholders			$	(0.12)	$	0.42	$	(0.54)	>(100%)
Diluted weighted average shares outstanding				84,005		85,348		(1,343)	(2%)
Diluted earnings (loss) per share attributable to U.S. Cellular shareholders			$	(0.12)	$	0.42	$	(0.54)	>(100%)

6

United States Cellular Corporation
Consolidated Statement of Operations Highlights
Nine Months Ended September 30,
(Unaudited, dollars and shares in thousands, except per share amounts)
							Increase (Decrease)
			2013		2012		Amount		Percent
Operating revenues
	Service		$	2,769,645	$	3,089,932	$	(320,287)	(10%)
	Equipment sales			246,467		246,946		(479)	—
		Total operating revenues		3,016,112		3,336,878		(320,766)	(10%)
Operating expenses
	System operations (excluding Depreciation, amortization and accretion   reported below)			585,997		725,636		(139,639)	(19%)
	Cost of equipment sold			652,153		626,765		25,388	4%
	Selling, general and administrative			1,234,675		1,315,823		(81,148)	(6%)
	Depreciation, amortization and accretion			593,410		439,391		154,019	35%
	Loss on asset disposals, net			16,153		15,967		186	1%
	(Gain) loss on sale of business and other exit costs, net			(243,627)		(4,148)		(239,479)	>100%
		Total operating expenses		2,838,761		3,119,434		(280,673)	(9%)
Operating income				177,351		217,444		(40,093)	(18%)
Investment and other income (expense)
	Equity in earnings of unconsolidated entities			99,797		71,584		28,213	39%
	Interest and dividend income			2,967		2,823		144	5%
	Gain (loss) on investments			18,527		(3,728)		22,255	>(100%)
	Interest expense			(32,393)		(35,272)		2,879	8%
	Other, net			153		173		(20)	(12%)
		Total investment and other income		89,051		35,580		53,471	>100%
Income before income taxes				266,402		253,024		13,378	5%
	Income tax expense			121,618		82,624		38,994	47%
Net income				144,784		170,400		(25,616)	(15%)
	Less: Net income attributable to noncontrolling interests, net of tax			6,338		19,772		(13,434)	(68%)
Net income attributable to U.S. Cellular shareholders			$	138,446	$	150,628	$	(12,182)	(8%)
Basic weighted average shares outstanding				83,897		84,671		(774)	(1%)
Basic earnings per share attributable to U.S. Cellular shareholders			$	1.65	$	1.78	$	(0.13)	(7%)
Diluted weighted average shares outstanding				84,676		85,261		(585)	(1%)
Diluted earnings per share attributable to U.S. Cellular shareholders			$	1.64	$	1.77	$	(0.13)	(7%)

7

United States Cellular Corporation
Consolidated Balance Sheet Highlights
(Unaudited, dollars in thousands)
ASSETS
		September 30,		December 31,
		2013		2012
Current assets
	Cash and cash equivalents	$	183,101	$	378,358
	Short-term investments		45,162		100,676
	Accounts receivable from customers and others		560,915		445,220
	Inventory		142,560		155,886
	Income taxes receivable		—		1,612
	Prepaid expenses		71,047		62,560
	Net deferred income tax asset		54,475		35,419
	Other current assets		19,051		16,745
			1,076,311		1,196,476
Assets held for sale			78,413		216,763
Investments
	Licenses		1,397,888		1,456,794
	Goodwill		387,360		421,743
	Customer lists, net		—		102
	Investments in unconsolidated entities		309,481		144,531
	Long-term investments		40,099		50,305
			2,134,828		2,073,475
Property, plant and equipment
	In service and under construction		7,571,429		7,478,428
	Less: Accumulated depreciation		4,696,836		4,455,840
			2,874,593		3,022,588
Other assets and deferred charges			95,709		78,148
Total assets		$	6,259,854	$	6,587,450

8

United States Cellular Corporation
Consolidated Balance Sheet Highlights
(Unaudited, dollars in thousands)
LIABILITIES AND EQUITY
			September 30,		December 31,
			2013		2012
Current liabilities
	Current portion of long-term debt		$	102	$	92
	Accounts payable
		Affiliated		11,069		10,725
		Trade		334,047		310,936
	Customer deposits and deferred revenues			212,733		192,113
	Accrued taxes			102,510		35,834
	Accrued compensation			58,282		90,418
	Other current liabilities			133,637		114,881
				852,380		754,999
Liabilities held for sale				471		19,594
Deferred liabilities and credits
	Net deferred income tax liability			829,247		849,818
	Other deferred liabilities and credits			294,675		288,441
Long-term debt				878,939		878,858
Noncontrolling interests with redemption features				540		493
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			1,421,261		1,412,453
	Treasury shares			(168,454)		(165,724)
	Retained earnings			2,042,254		2,399,052
		Total U.S. Cellular shareholders' equity		3,383,135		3,733,855
Noncontrolling interests				20,467		61,392
	Total equity			3,403,602		3,795,247
Total liabilities and equity			$	6,259,854	$	6,587,450

9

United States Cellular Corporation

Schedule of Cash and Cash Equivalents and Investments

(Unaudited, dollars in thousands)

The following table presents U.S. Cellular’s cash and cash equivalents and investments at September 30, 2013 and December 31, 2012.

		September 30,		December 31,
		2013		2012
Cash and cash equivalents		$	183,101	$	378,358
Amounts included in short-term investments (1)(2)
	U.S. Treasury Notes		45,162		100,676
Amounts included in long-term investments (1)(3)
	U.S. Treasury Notes		40,099		50,305
Total cash and cash equivalents and investments		$	268,362	$	529,339

(1)Designated as held-to-maturity investments and are recorded at amortized cost on the Consolidated Balance Sheet.

(2)Maturities are less than twelve months from the respective balance sheet dates.

(3)At September 30, 2013, maturities range between 14 and 15 months.

10

United States Cellular Corporation
Consolidated Statement of Cash Flows
Nine Months Ended September 30,
(Unaudited, dollars in thousands)
			2013		2012
Cash flows from operating activities
	Net income		$	144,784	$	170,400
	Add (deduct) adjustments to reconcile net income to net cash flows from   operating activities
		Depreciation, amortization and accretion		593,410		439,391
		Bad debts expense		52,184		51,293
		Stock-based compensation expense		11,143		15,924
		Deferred income taxes, net		(38,515)		52,865
		Equity in earnings of unconsolidated entities		(99,797)		(71,584)
		Distributions from unconsolidated entities		49,612		45,211
		Loss on asset disposals, net		16,153		15,967
		(Gain) loss on sale of business and other exit costs, net		(243,627)		(4,148)
		(Gain) loss on investments		(18,527)		3,728
		Noncash interest expense		792		1,331
		Other operating activities		590		863
	Changes in assets and liabilities from operations
		Accounts receivable		(214,114)		(67,302)
		Inventory		13,236		(69,423)
		Accounts payable - trade		32,202		(28,902)
		Accounts payable - affiliate		345		(4,785)
		Customer deposits and deferred revenues		22,538		26,687
		Accrued taxes		45,780		99,556
		Accrued interest		9,385		9,508
		Other assets and liabilities		(81,341)		(77,821)
				296,233		608,759
Cash flows from investing activities
	Cash used for additions to property, plant and equipment			(522,180)		(611,431)
	Cash paid for licenses			(16,540)		(57,957)
	Cash received from divestitures			484,300		49,932
	Cash paid for investments			—		(45,000)
	Cash received for investments			65,000		50,000
	Other investing activities			583		(5,030)
				11,163		(619,486)
Cash flows from financing activities
	Repayment of long-term debt			(393)		(343)
	Common shares reissued for benefit plans, net of tax payments			2,840		(2,299)
	Common shares repurchased			(18,544)		—
	Dividends paid			(482,270)		—
	Distributions to noncontrolling interests			(3,447)		(1,491)
	Other financing activities			(839)		284
				(502,653)		(3,849)
Net decrease in cash and cash equivalents				(195,257)		(14,576)
Cash and cash equivalents
	Beginning of period			378,358		424,155
	End of period		$	183,101	$	409,579

11

United States Cellular Corporation
Financial Measures and Reconciliations
(Unaudited, dollars in thousands)
			Three Months Ended				Nine Months Ended
			September 30,				September 30,
				2013		2012		2013		2012
	Cash flows from operating activities		$	(152,352)	$	196,522	$	296,233	$	608,759
	Deduct:
	Cash used for additions to property, plant   and equipment			199,023		181,206		522,180		611,431
		Free cash flow (1)	$	(351,375)	$	15,316	$	(225,947)	$	(2,672)

(1)Free cash flow is defined as Cash flows from operating activities less Cash used for additions to property, plant and equipment. Free cash flow is a non-GAAP financial measure. U.S. Cellular believes that free cash flow as reported by U.S. Cellular may be useful to investors and other users of its financial information in evaluating the amount of cash generated by business operations, after consideration of capital expenditures.

12

EX-99.2

 

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.

·A failure by U.S. Cellular’s service offerings to meet customer expectations could limit U.S. Cellular’s ability to attract and retain customers and could have an adverse effect on U.S. Cellular’s business, financial condition or results of operations.

·A failure by U.S. Cellular to produce and deliver accurate and timely billing statements to customers could have an adverse effect on U.S. Cellular's business, financial condition or results of operations.

·U.S. Cellular’s system infrastructure may not be capable of supporting changes in technologies and services expected by customers, which could result in lost customers and revenues.

·An inability to obtain or maintain roaming arrangements with other carriers on terms that are acceptable to U.S. Cellular could have an adverse effect on U.S. Cellular’s business, financial condition or results of operations.

·U.S. Cellular currently receives a significant amount of roaming revenues.  Further consolidation within the wireless industry, continued network build-outs by other wireless carriers and/or the inability to negotiate 4G LTE roaming agreements with other operators could cause roaming revenues to decline from current levels, which would 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.

1

·Changes in Universal Service Fund (“USF”) funding and/or intercarrier compensation could have an adverse impact on U.S. Cellular’s business, financial condition or results of operations.

·An inability to attract and/or retain highly competent management, technical, sales and other personnel 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.

·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 license costs, goodwill and/or physical assets.

·U.S. Cellular enters into commitments to purchase devices from vendors, the terms of which may span multiple years, including an agreement with Apple to purchase Apple iPhone products over a three-year period beginning in November 2013.  If U.S. Cellular is unable to sell such committed devices at the rates and prices it projects, such differences could have a material adverse impact on U.S. Cellular's business, financial condition or results of operations.

·Costs, integration problems or other factors associated with acquisitions/divestitures 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.

·A significant portion of U.S. Cellular’s revenues is derived from customers who buy services through independent agents who market U.S. Cellular’s services on a commission basis. If U.S. Cellular’s relationships with these agents are seriously harmed, its business, financial condition or results of operations could be adversely affected.

·U.S. Cellular’s investments in technologies which are unproven 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 and support systems could have an adverse effect on its operations.

·Financial difficulties (including bankruptcy proceedings) or other operational difficulties of any of U.S. Cellular’s key suppliers, termination or impairment of U.S. Cellular’s relationships with such suppliers, or a failure by U.S. Cellular to manage its supply chain effectively could result in delays or termination of U.S. Cellular’s receipt of required equipment or services, or could result in excess quantities of required equipment or services, any of which 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, including breaches of network or information technology security, could have an adverse effect on U.S. Cellular’s business, financial condition or results of operations.

2

·Wars, conflicts, hostilities and/or terrorist attacks or equipment failures, power outages, natural disasters or other events 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.

·Identification of errors in financial information or disclosures could require amendments to or restatements of financial information or disclosures included in this or prior filings with the Securities and Exchange Commission (“SEC”). Such amendments or restatements and related matters, including resulting delays in filing periodic reports with the SEC, could have an adverse effect on U.S. Cellular’s business, financial condition or results of operations.

·The existence of material weaknesses in the effectiveness of internal control over financial reporting could result in inaccurate financial statements or other disclosures or failure to prevent fraud, which could have an adverse effect on U.S. Cellular’s business, financial condition or results of operations.

·Changes in facts or circumstances, including new or additional information that affects the calculation of potential liabilities for contingent obligations under guarantees, indemnities, claims, litigation or otherwise, could require U.S. Cellular to record charges in excess of amounts accrued in the financial statements, if any, 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.

U.S. Cellular undertakes no obligation to update publicly any forward-looking statements whether as a result of new information, future events or otherwise.  Readers should evaluate any statements in light of these important factors.

3