EX-99.1 2 usm8kex991.htm EXHIBIT 99.1  

 

Exhibit 99.l   NEWS RELEASE

   

 

As previously announced, U.S. Cellular will hold a teleconference May 2, 2014 at 9:30 a.m. CDT.  Listen to the live call via the Events & Presentations pages of investors.teldta.com  or investors.uscellular.com. 

 

FOR IMMEDIATE RELEASE

 

U.S. cellular reports first quarter 2014 results

 

CHICAGO, (May 2, 2014) — United States Cellular Corporation (NYSE:USM) reported service revenues of $853.6 million for the first quarter of 2014, versus $996.3 million for the same period one year ago. Net income attributable to U.S. Cellular shareholders and related diluted earnings per share were $19.5 million and $0.23 respectively, for the first quarter of 2014, compared to $4.9 million and $0.06, respectively, in the comparable period one year ago.

 

Year-over-year comparisons are affected by the divestiture transaction and the deconsolidation of certain partnerships, both in 2013.

 

“With our competitive range of plans and strong smartphone selection, including the iPhone, we have had success attracting new customers and increasing smartphone adoption and data use,” said Kenneth R. Meyers, U.S. Cellular president and CEO. “This is reflected in higher gross customer additions and average revenue per customer. We’re driving our smartphone penetration and data growth strategies by bringing 4G LTE access to 93 percent of our customers in 2014, and offering high-demand devices like the new Samsung Galaxy S5. Network quality is the foundation of our strategy to increase customer additions and build loyalty.

 

“We’ve made significant progress to return service levels to our normally high standards following the billing system conversion.  While churn is still elevated, we are currently seeing improvements in both voluntary and involuntary churn from peak levels back in 2013 and early 2014.  Additionally the new system has already enabled us to deliver more products and services that meet our customers’ needs, like our Shared Connect Plans, new no contract Simple Connect Plans, and device installment contracts.

 

“The industry pricing environment is very dynamic at the present time.  However, we’re confident that we have the right offerings  for our target customers and we’ll continue to price them at competitive levels.  We have a strong financial foundation that will enable us to support our current initiatives and to continue to invest in our future by further expanding and enhancing our network and retail distribution.”

 

2014 Estimated Results

Capital expenditures for 2014 are expected to be approximately $640 million, down from $738 million in 2013.

 

 

1

 

 

 

 

Conference Call Information

U.S. Cellular will hold a conference call on May 2, 2014 at 9:30 a.m. CDT.

§  Access the live call on the Events & Presentation page of investors.uscellular.com  or at www.videonewswire.com/event.asp?id=99006.  

§  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 4.7 million customers in 23 states. The Chicago-based company had 6,800 full- and part-time associates as of March 31, 2014. At the end of the first quarter of 2014, 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@teldta.com

 

Julie Mathews, Investor Relations Manager

312-592-5341

julie.mathews@teldta.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 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.    

 

 

 

2

 

 

 

 

United States Cellular Corporation

Total Markets* Summary Operating Data (Unaudited)

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

As of or for the Quarter Ended

3/31/2014

  

12/31/2013

  

9/30/2013

  

6/30/2013

  

3/31/2013

Retail Customers

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

Postpaid

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

Total at end of period

  

 4,174,000 

  

  

 4,267,000 

  

  

 4,343,000 

  

  

 4,412,000 

  

  

 5,060,000 

  

  

Gross additions

  

 197,000 

  

  

 176,000 

  

  

 165,000 

  

  

 165,000 

  

  

 191,000 

  

  

Net additions (losses)

  

 (93,000) 

  

  

 (71,000) 

  

  

 (60,000) 

  

  

 (120,000) 

  

  

 (74,000) 

  

  

ARPU (1)

$

 57.59 

  

$

 53.53 

  

$

 54.64 

  

$

 54.18 

  

$

 54.85 

  

  

Churn rate (2)

  

2.3%

  

  

1.9%

  

  

1.7%

  

  

2.0%

  

  

1.7%

  

  

Smartphone penetration (3) (4)

  

53.1%

  

  

50.8%

  

  

47.1%

  

  

45.5%

  

  

43.5%

  

Prepaid

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

Total at end of period

  

 356,000 

  

  

 343,000 

  

  

 370,000 

  

  

 381,000 

  

  

 446,000 

  

  

Gross additions

  

 85,000 

  

  

 63,000 

  

  

 65,000 

  

  

 77,000 

  

  

 104,000 

  

  

Net additions (losses)

  

 13,000 

  

  

 (26,000) 

  

  

 (11,000) 

  

  

 (7,000) 

  

  

 23,000 

  

  

ARPU (1)

$

 32.22 

  

$

 31.66 

  

$

 28.72 

  

$

 31.69 

  

$

 33.31 

  

  

Churn rate (2)

  

6.9%

  

  

8.3%

  

  

6.8%

  

  

6.8%

  

  

6.2%

Total customers at end of period

  

 4,684,000 

  

  

 4,774,000 

  

  

 4,875,000 

  

  

 4,968,000 

  

  

 5,736,000 

Billed ARPU (1)

$

 53.93 

  

$

 50.25 

  

$

 50.92 

  

$

 50.60 

  

$

 51.13 

Service revenue ARPU (1)

$

 60.19 

  

$

 57.05 

  

$

 58.36 

  

$

 57.45 

  

$

 57.63 

Smartphones sold as a percent of total

  devices sold

  

73.0%

  

  

79.6%

  

  

65.2%

  

  

66.0%

  

  

61.7%

Total population

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

Consolidated markets (5)

  

 54,817,000 

  

  

 58,013,000 

  

  

 84,025,000 

  

  

 84,025,000 

  

  

 93,943,000 

  

  

Consolidated operating markets (5)

  

 31,729,000 

  

  

 31,759,000 

  

  

 31,822,000 

  

  

 31,822,000 

  

  

 47,440,000 

Market penetration at end of period

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

Consolidated markets (6)

  

8.5%

  

  

8.2%

  

  

5.8%

  

  

5.9%

  

  

6.1%

  

  

Consolidated operating markets (6)

  

14.8%

  

  

15.0%

  

  

15.3%

  

  

15.6%

  

  

12.1%

Capital expenditures (000s)

$

 89,581 

  

$

 208,135 

  

$

 242,459 

  

$

 168,497 

  

$

 118,410 

Total cell sites in service

  

 6,165 

  

  

 6,975 

  

  

 7,687 

  

  

 7,748 

  

  

 8,027 

Owned towers

  

 4,448 

  

  

 4,448 

  

  

 4,422 

  

  

 4,411 

  

  

 4,411 

 

*         Represents U.S. Cellular’s consolidated markets. These results include markets which U. S. Cellular currently consolidates, or previously consolidated in the periods presented, and is not adjusted in prior periods for subsequent divestitures or deconsolidations.

 

Refer to U.S. Cellular’s Form 8-K filed on May 3, 2013 for pro forma financial information related to the Divestiture Transaction and the NY1 and NY2 Deconsolidation for the three months ended March 31, 2013, as if the transactions had occurred at the beginning of the period.

 

 

3

 

 

 

 

United States Cellular Corporation

Core* Markets Summary Operating Data (Unaudited)

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

As of or for the Quarter Ended

3/31/2014

  

12/31/2013

  

9/30/2013

  

6/30/2013

  

3/31/2013

Retail Customers

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

Postpaid

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

Total at end of period

  

 4,174,000 

  

  

 4,267,000 

  

  

 4,343,000 

  

  

 4,412,000 

  

  

 4,463,000 

  

  

Gross additions

  

 197,000 

  

  

 176,000 

  

  

 165,000 

  

  

 165,000 

  

  

 176,000 

  

  

Net additions (losses)

  

 (93,000) 

  

  

 (71,000) 

  

  

 (60,000) 

  

  

 (53,000) 

  

  

 (33,000) 

  

  

ARPU (1)

$

 57.59 

  

$

 53.53 

  

$

 54.64 

  

$

 54.44 

  

$

 54.21 

  

  

Churn rate (2)

  

2.3%

  

  

1.9%

  

  

1.7%

  

  

1.6%

  

  

1.6%

  

  

Smartphone penetration (3) (4)

  

53.1%

  

  

50.8%

  

  

47.1%

  

  

45.5%

  

  

43.0%

  

Prepaid

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

Total at end of period

  

 356,000 

  

  

 343,000 

  

  

 370,000 

  

  

 381,000 

  

  

 373,000 

  

  

Gross additions

  

 85,000 

  

  

 63,000 

  

  

 65,000 

  

  

 76,000 

  

  

 91,000 

  

  

Net additions (losses)

  

 13,000 

  

  

 (26,000) 

  

  

 (11,000) 

  

  

 8,000 

  

  

 31,000 

  

  

ARPU (1)

$

 32.22 

  

$

 31.66 

  

$

 28.72 

  

$

 31.65 

  

$

 32.92 

  

  

Churn rate (2)

  

6.9%

  

  

8.3%

  

  

6.8%

  

  

6.0%

  

  

5.6%

Total customers at end of period

  

 4,684,000 

  

  

 4,774,000 

  

  

 4,875,000 

  

  

 4,968,000 

  

  

 5,005,000 

Billed ARPU (1)

$

 53.93 

  

$

 50.25 

  

$

 50.92 

  

$

 50.98 

  

$

 50.93 

Service revenue ARPU (1)

$

 60.19 

  

$

 57.05 

  

$

 58.36 

  

$

 57.88 

  

$

 57.14 

Smartphones sold as a percent of total

  devices sold

  

73.0%

  

  

79.6%

  

  

65.2%

  

  

66.1%

  

  

62.1%

Total population

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

Consolidated markets (5)

  

 54,817,000 

  

  

 58,013,000 

  

  

 84,025,000 

  

  

 84,025,000 

  

  

 84,025,000 

  

  

Consolidated operating markets (5)

  

 31,729,000 

  

  

 31,759,000 

  

  

 31,822,000 

  

  

 31,822,000 

  

  

 31,822,000 

Market penetration at end of period

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

Consolidated markets (6)

  

8.5%

  

  

8.2%

  

  

5.8%

  

  

5.9%

  

  

6.0%

  

  

Consolidated operating markets (6)

  

14.8%

  

  

15.0%

  

  

15.3%

  

  

15.6%

  

  

15.7%

Capital expenditures (000s)

$

 89,581 

  

$

 211,247 

  

$

 239,332 

  

$

 171,166 

  

$

 107,907 

Total cell sites in service

  

 6,165 

  

  

 6,161 

  

  

 6,127 

  

  

 6,113 

  

  

 6,113 

Owned towers

  

 3,883 

  

  

 3,883 

  

  

 3,857 

  

  

 3,846 

  

  

 3,846 

 

*      U.S. Cellular’s Core Markets excludes the results of the Divestiture Markets and NY1 and NY2 Partnerships for the periods presented.

 

Refer to U.S. Cellular’s Form 8-K filed on May 3, 2013 for pro forma financial information related to the Divestiture Transaction and the NY1 and NY2 Deconsolidation for the three months ended March 31, 2013, as if the transactions had occurred at the beginning of the period.

 

(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, Apple, 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 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.

   

 

 

4

 

 

 

United States Cellular Corporation

Consolidated Statement of Operations Highlights

Three Months Ended March 31,

(Unaudited, dollars and shares in thousands, except per share amounts)

  

  

  

  

  

  

  

  

  

      Change

  

  

  

2014 

  

2013 

  

Amount

  

Percent

Operating revenues

  

  

  

  

  

  

  

  

  

  

  

Service

$

 853,613 

  

$

 996,349 

  

$

 (142,736) 

  

(14%)

  

Equipment sales

  

 72,198 

  

  

 85,397 

  

  

 (13,199) 

  

(15%)

  

  

Total operating revenues

  

 925,811 

  

  

 1,081,746 

  

  

 (155,935) 

  

(14%)

  

  

  

  

  

  

  

  

  

  

  

  

  

Operating expenses

  

  

  

  

  

  

  

  

  

  

  

System operations (excluding Depreciation, amortization and accretion

  reported below)

  

 180,607 

  

  

 216,299 

  

  

 (35,692) 

  

(17%)

  

Cost of equipment sold

  

 270,474 

  

  

 241,691 

  

  

 28,783 

  

12%

  

Selling, general and administrative

  

 395,564 

  

  

 420,080 

  

  

 (24,516) 

  

(6%)

  

Depreciation, amortization and accretion

  

 167,753 

  

  

 189,845 

  

  

 (22,092) 

  

(12%)

  

(Gain) loss on asset disposals, net

  

 1,934 

  

  

 5,434 

  

  

 (3,500) 

  

(64%)

  

(Gain) loss on sale of business and other exit costs, net

  

 (6,900) 

  

  

 6,931 

  

  

 (13,831) 

  

>(100%)

  

(Gain) loss on license sales and exchanges

  

 (91,446) 

  

  

 —  

  

  

 (91,446) 

  

N/M

  

  

Total operating expenses

  

 917,986 

  

  

 1,080,280 

  

  

 (162,294) 

  

(15%)

  

  

  

  

  

  

  

  

  

  

  

  

  

Operating income

  

 7,825 

  

  

 1,466 

  

  

 6,359 

  

>100%

  

  

  

  

  

  

  

  

  

  

  

  

  

Investment and other income (expense)

  

  

  

  

  

  

  

  

  

  

  

Equity in earnings of unconsolidated entities

  

 37,075 

  

  

 26,835 

  

  

 10,240 

  

38%

  

Interest and dividend income

  

 884 

  

  

 903 

  

  

 (19) 

  

(2%)

  

Interest expense

  

 (14,862) 

  

  

 (10,910) 

  

  

 (3,952) 

  

(36%)

  

Other, net

  

 86 

  

  

 (215) 

  

  

 301 

  

>(100%)

  

  

Total investment and other income

  

 23,183 

  

  

 16,613 

  

  

 6,570 

  

40%

  

  

  

  

  

  

  

  

  

  

  

  

  

Income before income taxes

  

 31,008 

  

  

 18,079 

  

  

 12,929 

  

72%

  

Income tax expense

  

 12,604 

  

  

 7,369 

  

  

 5,235 

  

71%

Net income

  

 18,404 

  

  

 10,710 

  

  

 7,694 

  

72%

  

Less: Net income (loss) attributable to noncontrolling interests, net of tax

  

 (1,078) 

  

  

 5,796 

  

  

 (6,874) 

  

>(100%)

Net income attributable to U.S. Cellular shareholders

$

 19,482 

  

$

 4,914 

  

$

 14,568 

  

>100%

  

  

  

  

  

  

  

  

  

  

  

  

Basic weighted average shares outstanding

  

 84,213 

  

  

 83,838 

  

  

 375 

  

—

Basic earnings per share attributable to U.S. Cellular shareholders

$

 0.23 

  

$

 0.06 

  

$

 0.17 

  

>100%

  

  

  

  

  

  

  

  

  

  

  

  

  

Diluted weighted average shares outstanding

  

 85,065 

  

  

 84,588 

  

  

 477 

  

1%

Diluted earnings per share attributable to U.S. Cellular shareholders

$

 0.23 

  

$

 0.06 

  

$

 0.17 

  

>100%

 

 

5

 

 

 

 

United States Cellular Corporation

Consolidated Balance Sheet Highlights

(Unaudited, dollars in thousands)

  

  

  

  

  

  

  

ASSETS

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

March 31,

  

December 31,

  

  

2014 

  

2013 

Current assets

  

  

  

  

  

  

Cash and cash equivalents

$

 398,541 

  

$

 342,065 

  

Short-term investments

  

 40,056 

  

  

 50,104 

  

Accounts receivable from customers and others

  

 484,471 

  

  

 586,595 

  

Inventory, net

  

 218,882 

  

  

 238,188 

  

Prepaid expenses

  

 65,510 

  

  

 65,596 

  

Net deferred income tax asset

  

 99,105 

  

  

 99,105 

  

Other current assets

  

 19,702 

  

  

 19,538 

  

  

  

 1,326,267 

  

  

 1,401,191 

  

  

  

  

  

  

  

Assets held for sale

  

 —  

  

  

 16,027 

  

  

  

  

  

  

  

Investments

  

  

  

  

  

  

Licenses

  

 1,425,945 

  

  

 1,401,126 

  

Goodwill

  

 387,524 

  

  

 387,524 

  

Investments in unconsolidated entities

  

 289,842 

  

  

 265,585 

  

  

  

 2,103,311 

  

  

 2,054,235 

  

  

  

  

  

  

  

Property, plant and equipment

  

  

  

  

  

  

In service and under construction

  

 7,715,292 

  

  

 7,717,512 

  

Less: Accumulated depreciation

  

 4,939,072 

  

  

 4,860,992 

  

  

  

 2,776,220 

  

  

 2,856,520 

  

  

  

  

  

  

  

Other assets and deferred charges

  

 132,536 

  

  

 117,735 

  

  

  

  

  

  

  

Total assets

$

 6,338,334 

  

$

 6,445,708 

 

 

6

 

 

 

 

United States Cellular Corporation

Consolidated Balance Sheet Highlights

(Unaudited, dollars in thousands)

  

  

  

  

  

  

  

  

LIABILITIES AND EQUITY

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

March 31,

  

December 31,

  

  

  

2014 

  

2013 

Current liabilities

  

  

  

  

  

  

Current portion of long-term debt

$

 166 

  

$

 166 

  

Accounts payable

  

  

  

  

  

  

  

Affiliated

  

 9,266 

  

  

 11,243 

  

  

Trade

  

 347,459 

  

  

 405,583 

  

Customer deposits and deferred revenues

  

 255,230 

  

  

 256,740 

  

Accrued taxes

  

 58,574 

  

  

 73,820 

  

Accrued compensation

  

 35,930 

  

  

 66,566 

  

Other current liabilities

  

 161,446 

  

  

 192,055 

  

  

  

  

 868,071 

  

  

 1,006,173 

  

  

  

  

  

  

  

  

Deferred liabilities and credits

  

  

  

  

  

  

Net deferred income tax liability

  

 830,960 

  

  

 836,297 

  

Other deferred liabilities and credits

  

 330,467 

  

  

 315,073 

  

  

  

  

  

  

  

  

Long-term debt

  

 878,127 

  

  

 878,032 

  

  

  

  

  

  

  

  

Noncontrolling interests with redemption features

  

 543 

  

  

 536 

  

  

  

  

  

  

  

  

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

  

 1,429,148 

  

  

 1,424,729 

  

Treasury shares

  

 (165,577) 

  

  

 (164,692) 

  

Retained earnings

  

 2,061,561 

  

  

 2,043,095 

  

  

Total U.S. Cellular shareholders' equity

  

 3,413,206 

  

  

 3,391,206 

  

  

  

  

  

  

  

  

Noncontrolling interests

  

 16,960 

  

  

 18,391 

  

  

  

  

  

  

  

  

  

Total equity

  

 3,430,166 

  

  

 3,409,597 

  

  

  

  

  

  

  

  

Total liabilities and equity

$

 6,338,334 

  

$

 6,445,708 

 

 

7

 

 

 

 

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 March 31, 2014 and December 31, 2013.

 

  

  

March 31,

  

December 31,

  

2014 

  

2013 

  

  

  

  

  

  

  

Cash and cash equivalents

$

398,541 

  

$

342,065 

  

  

  

  

  

  

  

Amounts included in short-term investments (1)(2)

  

  

  

  

  

  

U.S. Treasury Notes

  

40,056 

  

  

50,104 

  

  

  

  

  

  

  

Total cash and cash equivalents and investments

$

438,597 

  

$

392,169 

 

(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.

 

 

8

 

 

 

 

United States Cellular Corporation

Consolidated Statement of Cash Flows

Three Months Ended March 31,

(Unaudited, dollars in thousands)

  

  

  

  

  

  

2014 

  

2013 

Cash flows from operating activities

  

  

  

  

  

  

Net income

$

 18,404 

  

$

 10,710 

  

Add (deduct) adjustments to reconcile net income to net cash flows from

  operating activities

  

  

  

  

  

  

  

  

Depreciation, amortization and accretion

  

 167,753 

  

  

 189,845 

  

  

  

Bad debts expense

  

 20,492 

  

  

 16,910 

  

  

  

Stock-based compensation expense

  

 4,955 

  

  

 5,036 

  

  

  

Deferred income taxes, net

  

 (4,817) 

  

  

 7,048 

  

  

  

Equity in earnings of unconsolidated entities

  

 (37,075) 

  

  

 (26,835) 

  

  

  

Distributions from unconsolidated entities

  

 12,818 

  

  

 5,836 

  

  

  

(Gain) loss on asset disposals, net

  

 1,934 

  

  

 5,434 

  

  

  

(Gain) loss on sale of business and other exit costs, net

  

 (6,900) 

  

  

 6,931 

  

  

  

(Gain) loss on license sales and exchanges

  

 (91,446) 

  

  

 —  

  

  

  

Noncash interest expense

  

 269 

  

  

 262 

  

  

  

Other operating activities

  

 47 

  

  

 250 

  

Changes in assets and liabilities from operations

  

  

  

  

  

  

  

  

Accounts receivable

  

 81,980 

  

  

 33,611 

  

  

  

Inventory

  

 19,306 

  

  

 16,750 

  

  

  

Accounts payable - trade

  

 (38,245) 

  

  

 4,644 

  

  

  

Accounts payable - affiliate

  

 (2,312) 

  

  

 (1,933) 

  

  

  

Customer deposits and deferred revenues

  

 (1,510) 

  

  

 8,862 

  

  

  

Accrued taxes

  

 (15,403) 

  

  

 6,175 

  

  

  

Accrued interest

  

 9,182 

  

  

 9,201 

  

  

  

Other assets and liabilities

  

 (75,896) 

  

  

 (75,122) 

  

  

  

  

  

 63,536 

  

  

 223,615 

  

  

  

  

  

  

  

  

  

Cash flows from investing activities

  

  

  

  

  

  

Cash used for additions to property, plant and equipment

  

 (109,498) 

  

  

 (151,024) 

  

Cash paid for acquisitions and licenses

  

 (9,135) 

  

  

 (14,150) 

  

Cash received from divestitures

  

 103,042 

  

  

 — 

  

Cash received for investments

  

 10,000 

  

  

 — 

  

Other investing activities

  

 584 

  

  

3,654 

  

  

  

  

  

 (5,007) 

  

  

 (161,520) 

  

  

  

  

  

  

  

  

  

Cash flows from financing activities

  

  

  

  

  

  

Repayment of long-term debt

  

 (23) 

  

  

 (61) 

  

Common shares reissued for benefit plans, net of tax payments

  

 316 

  

  

 123 

  

Common shares repurchased

  

 (2,000) 

  

  

 (18,425) 

  

Distributions to noncontrolling interests

  

 (346) 

  

  

 (2,396) 

  

Other financing activities

  

 —  

  

  

 2 

  

  

  

  

  

 (2,053) 

  

  

 (20,757) 

  

  

  

  

  

  

  

  

  

Net increase in cash and cash equivalents

  

 56,476 

  

  

 41,338 

  

  

  

  

  

  

  

  

  

Cash and cash equivalents

  

  

  

  

  

  

Beginning of period

  

 342,065 

  

  

 378,358 

  

End of period

$

 398,541 

  

$

 419,696 

 

 

9

 

 

 

 

United States Cellular Corporation

Financial Measures and Reconciliations

(Unaudited, dollars in thousands)

  

  

  

  

  

  

  

  

  

Three months ended March 31,

  

  

2014 

  

  

2013 

  

  

  

  

  

  

  

  

  

  

Cash flows from operating activities

  

$

 63,536 

  

$

 223,615 

  

Deduct:

  

  

  

  

  

  

  

Cash used for additions to property, plant and equipment

  

  

 109,498 

  

  

 151,024 

  

  

Free cash flow (1)

  

$

 (45,962) 

  

$

 72,591 

 

(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 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, after Cash used for additions to property, plant and equipment.

 

 

 

10