SECURITIES AND EXCHANGE COMMISSION |
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Washington, D.C. 20549 |
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FORM 8-K |
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CURRENT REPORT |
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Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
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Date of Report (Date of earliest event reported): August 4, 2017 |
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(Exact name of registrant as specified in its charter) |
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Delaware |
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001-09712 |
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62-1147325 |
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(State or other jurisdiction of |
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(Commission |
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(I.R.S. Employer Identification No.) |
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incorporation or organization) |
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File Number) |
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8410 West Bryn Mawr, Chicago, Illinois 60631 |
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(Address of principal executive offices) (Zip code) |
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Registrant's telephone number, including area code: (773) 399-8900 |
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Not Applicable |
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(Former name or former address, if changed since last report) |
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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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□ |
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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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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). |
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□ |
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Emerging growth company |
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□ |
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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
On August 4, 2017, United States Cellular Corporation (U.S. Cellular) issued a news release announcing its results of operations for the period ended June 30, 2017. 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, nor will any such information or exhibits be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except as expressly set forth by specific reference in such filing.
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.
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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. |
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UNITED STATES CELLULAR CORPORATION |
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(Registrant) |
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Date: |
August 4, 2017 |
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By: |
/s/ Steven T. Campbell |
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Steven T. Campbell |
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Executive Vice President - Finance, |
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Chief Financial Officer and Treasurer |
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(principal financial officer) |
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As previously announced, U.S. Cellular will hold a teleconference August 4, 2017, 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 second quarter 2017 results
Growth in subscribers reflecting lowest ever handset churn
2017 guidance reaffirmed
CHICAGO, (August 4, 2017) — United States Cellular Corporation (NYSE:USM) reported total operating revenues of $963 million for the second quarter of 2017, versus $992 million for the same period one year ago. Net income attributable to U.S. Cellular shareholders and related diluted earnings per share were $12 million and $0.14, respectively, for the second quarter of 2017, compared to $27 million and $0.32, respectively, in the same period one year ago.
“We had a successful quarter building on our number one objective – protecting and growing our customer base,” said Kenneth R. Meyers, U.S. Cellular president and CEO. “Our Total Plans, which include an unlimited data option, have been effective in both attracting new customers and meeting the needs of our current customers.
“Although the current pricing environment and the investments we made in growing our customer base impacted short-term profitability this quarter, we were able to minimize those impacts through our on-going cost management initiatives. Lower roaming rates, continued customer adoption of Equipment Installment Plans, and cost reduction initiatives drove a decrease in cash expenses even as data traffic increased 51% on a year-over-year basis.
“We are continually making enhancements to our already high-quality network to ensure it remains one of our primary competitive advantages. This quarter, our network team successfully completed our first commercial VoLTE launch in Iowa. VoLTE brings benefits such as simultaneous voice and data sessions to customers as well as additional opportunities for roaming revenues. We plan to continue commercial rollouts of VoLTE to additional markets in 2018.”
U.S. Cellular’s current estimates of full-year 2017 results are shown below. Such estimates represent management’s view as of August 4, 2017. 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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2017 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 (1) |
$3,800-$4,000 |
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Unchanged |
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Adjusted OIBDA (1)(2)(3) |
$550-$650 |
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Unchanged |
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Adjusted EBITDA (2) |
$700-$800 |
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Unchanged |
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Capital expenditures |
Approx. |
$500 |
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Unchanged |
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The following table provides a reconciliation of Net Income to Adjusted OIBDA and Adjusted EBITDA for 2017 estimated results, actual results for the six months ended June 30, 2017, and actual results for the year ended December 31, 2016. In providing 2017 estimated results, U.S. Cellular has not completed the below reconciliation to net income because it does not provide guidance for income taxes. Although potentially significant, U.S. Cellular believes that the impact of income taxes cannot be reasonably predicted; therefore, U.S. Cellular is unable to provide such guidance.
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Actual Results |
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2017 Estimated Results |
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Six Months Ended June 30, 2017 |
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Year Ended December 31, 2016 |
(Dollars in millions) |
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Net income (GAAP) |
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N/A |
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$ |
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$ |
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Add back: |
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Income tax expense |
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N/A |
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Income (loss) before income taxes (GAAP) |
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$ |
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$ |
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$ |
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Add back: |
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Interest expense |
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110 |
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Depreciation, amortization and accretion expense |
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620 |
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EBITDA (Non-GAAP) |
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$ |
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$ |
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$ |
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Add back (deduct): |
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(Gain) loss on license sales and exchanges, net |
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(Gain) loss on assets disposals, net |
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20 |
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Adjusted EBITDA (Non-GAAP) (2) |
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$ |
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$ |
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$ |
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Deduct: |
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Equity in earnings of unconsolidated entities |
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140 |
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Interest and dividend income (1) |
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10 |
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Other, net |
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– |
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Adjusted OIBDA (Non-GAAP) (1)(2)(3) |
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$ |
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$ |
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$ |
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Note: Totals may not foot due to rounding differences. |
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(1) |
Equipment installment plan interest income is reflected as a component of Service revenues consistent with an accounting policy change effective January 1, 2017. All prior period numbers have been recast to conform to this accounting change. |
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(2) |
Adjusted EBITDA is defined as net income adjusted for the items set forth in the reconciliation above. Adjusted OIBDA is defined as net income adjusted for the items set forth in the reconciliation above. Adjusted EBITDA and Adjusted OIBDA 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 or Cash flows from operating activities, as indicators of cash flows or as measures of liquidity. U.S. Cellular does not intend to imply that any such items set forth in the reconciliation above are non-recurring, infrequent or unusual; such items may occur in the future. Management uses Adjusted EBITDA and Adjusted OIBDA as measurements of profitability, and therefore reconciliations to Net income are deemed appropriate. Management believes Adjusted EBITDA and Adjusted OIBDA are useful measures of U.S. Cellular’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 U.S. Cellular’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. Adjusted EBITDA shows adjusted earnings before interest, taxes, depreciation, amortization and accretion, and gains and losses, while Adjusted OIBDA reduces this measure further to exclude Equity in earnings of unconsolidated entities and Interest and dividend income in order to more effectively show the performance of operating activities excluding investment activities. The table above reconciles Adjusted EBITDA and Adjusted OIBDA to the corresponding GAAP measure, Net income or Income (loss) before income taxes. |
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(3) |
A reconciliation of Adjusted OIBDA (Non-GAAP) to Operating income (GAAP) for June 30, 2017, actual results can be found on U.S. Cellular’s website at investors.uscellular.com. |
U.S. Cellular will hold a conference call on August 4, 2017 at 9:30 a.m. Central Time.
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 customers with 5 million connections in 23 states. The Chicago-based company had 6,100 full- and part-time associates as of June 30, 2017. At the end of the second quarter of 2017, Telephone and Data Systems, Inc. owned 83 percent of U.S. Cellular. For more information about U.S. Cellular, visit uscellular.com.
Contacts
Jane McCahon, Senior Vice President - Corporate Relations and Corporate Secretary of TDS
312-592-5379
jane.mccahon@tdsinc.com
Julie Mathews, IRC, Director - Investor Relations of TDS
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: intense competition; the ability to execute U.S. Cellular’s business strategy; uncertainties in U.S. Cellular’s future cash flows and liquidity and access to the capital markets; the ability to make payments on U.S. Cellular indebtedness or comply with the terms of debt covenants; impacts of any pending acquisitions/divestitures/exchanges of properties and/or licenses, 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 access to and pricing of unbundled network elements; 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 of U.S. Cellular debt securities by accredited ratings organizations; industry consolidation; advances in telecommunications technology; pending and future litigation; changes in income tax rates, laws, regulations or rulings; 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 services and products 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, which are incorporated by reference herein.
For more information about U.S. Cellular, visit:
U.S. Cellular: www.uscellular.com
Summary Operating Data (Unaudited) |
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As of or for the Quarter Ended |
6/30/2017 |
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3/31/2017 |
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12/31/2016 |
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9/30/2016 |
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6/30/2016 |
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Retail Connections |
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Postpaid |
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Total at end of period |
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Gross additions |
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Feature phones |
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Smartphones |
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Connected devices |
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Net additions (losses) |
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Feature phones |
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Smartphones |
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Connected devices |
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ARPU (1) |
$ |
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$ |
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$ |
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$ |
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$ |
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ABPU (Non-GAAP)(2) |
$ |
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$ |
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$ |
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$ |
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$ |
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ARPA (3) |
$ |
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$ |
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$ |
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$ |
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$ |
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ABPA (Non-GAAP)(4) |
$ |
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$ |
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$ |
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$ |
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$ |
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Churn rate (5) |
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1.13% |
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1.29% |
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1.41% |
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1.34% |
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1.20% |
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Handsets |
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0.91% |
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1.08% |
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1.23% |
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1.22% |
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1.10% |
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Connected devices |
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2.35% |
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2.55% |
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2.49% |
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2.04% |
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1.84% |
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Prepaid |
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Total at end of period |
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Gross additions |
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Net additions (losses) |
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ARPU (1) |
$ |
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$ |
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$ |
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$ |
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$ |
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Churn rate (5) |
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4.93% |
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5.69% |
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5.44% |
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4.84% |
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4.86% |
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Total connections at end of period (6) |
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Market penetration at end of period |
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Consolidated operating population |
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Consolidated operating penetration (7) |
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16% |
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16% |
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16% |
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16% |
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16% |
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Capital expenditures (millions) |
$ |
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$ |
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$ |
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$ |
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$ |
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Total cell sites in service |
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Owned towers |
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(1) |
Average Revenue Per User (ARPU) - metric is calculated by dividing a revenue base by an average number of connections and by the number of months in the period. These revenue bases and connection populations are shown below: |
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▪ |
Postpaid ARPU consists of total postpaid service revenues and postpaid connections. |
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▪ |
Prepaid ARPU consists of total prepaid service revenues and prepaid connections. |
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(2) |
Average Billings Per User (ABPU) - non-GAAP metric is calculated by dividing total postpaid service revenues plus equipment installment plan billings by the average number of postpaid connections and by the number of months in the period. Refer to the end of this release for a reconciliation of this metric to its most comparable GAAP metric. |
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(3) |
Average Revenue Per Account (ARPA) - metric is calculated by dividing total postpaid service revenues by the average number of postpaid accounts and by the number of months in the period. |
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(4) |
Average Billings Per Account (ABPA) - non-GAAP metric is calculated by dividing total postpaid service revenues plus equipment installment plan billings by the average number of postpaid accounts and by the number of months in the period. Refer to the end of this release for a reconciliation of this metric to its most comparable GAAP metric. |
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(5) |
Churn rate represents the percentage of the connections that disconnect service each month. These rates represent the average monthly churn rate for each respective period. |
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(6) |
Includes reseller and other connections. |
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(7) |
Market penetration is calculated by dividing the number of wireless connections at the end of the period by the total population of consolidated operating markets as estimated by Nielsen. |
Consolidated Statement of Operations Highlights |
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(Unaudited) |
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Three Months Ended June 30, |
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2017 |
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2016 |
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2017 vs. 2016 |
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Increase (Decrease) |
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(Dollars and shares in millions, except per share amounts) |
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Operating revenues |
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Service(1) |
$ |
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$ |
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$ |
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(4)% |
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Equipment sales |
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2% |
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Total operating revenues(1) |
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(3)% |
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Operating expenses |
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System operations (excluding Depreciation, amortization and accretion reported below) |
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(2)% |
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Cost of equipment sold |
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(1)% |
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Selling, general and administrative |
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(2)% |
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Depreciation, amortization and accretion |
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- |
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(Gain) loss on asset disposals, net |
|
|
|
|
|
|
6% |
||||
|
(Gain) loss on license sales and exchanges, net |
|
|
|
|
|
|
81% |
||||
|
|
Total operating expenses |
|
|
|
|
|
|
(1)% |
|||
|
|
|
|
|
|
|
|
|
|
|||
Operating income(1) |
|
|
|
|
|
|
(82)% |
|||||
|
|
|
|
|
|
|
|
|
|
|||
Investment and other income (expense) |
|
|
|
|
|
|
|
|||||
|
Equity in earnings of unconsolidated entities |
|
|
|
|
|
|
(9)% |
||||
|
Interest and dividend income(1) |
|
|
|
|
|
|
29% |
||||
|
Interest expense |
|
|
|
|
|
|
(1)% |
||||
|
Other, net |
|
|
|
|
|
|
(56)% |
||||
|
|
Total investment and other income(1) |
|
|
|
|
|
|
(32)% |
|||
|
|
|
|
|
|
|
|
|
|
|||
Income before income taxes |
|
|
|
|
|
|
(70)% |
|||||
|
Income tax expense |
|
|
|
|
|
|
(97)% |
||||
Net income |
|
|
|
|
|
|
(57)% |
|||||
|
Less: Net income attributable to noncontrolling interests, net of tax |
|
|
|
|
|
|
>100% |
||||
Net income attributable to U.S. Cellular shareholders |
$ |
|
$ |
|
$ |
|
(58)% |
|||||
|
|
|
|
|
|
|
|
|
||||
Basic weighted average shares outstanding |
|
|
|
|
|
|
- |
|||||
Basic earnings per share attributable to U.S. Cellular shareholders |
$ |
|
$ |
|
$ |
|
(56)% |
|||||
|
|
|
|
|
|
|
|
|
|
|||
Diluted weighted average shares outstanding |
|
|
|
|
|
|
- |
|||||
Diluted earnings per share attributable to U.S. Cellular shareholders |
$ |
|
$ |
|
$ |
|
(56)% |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
Equipment installment plan interest income is reflected as a component of Service revenues consistent with an accounting policy change effective January 1, 2017. All prior period numbers have been recast to conform to this accounting change. |
Consolidated Statement of Operations Highlights |
||||||||||||
(Unaudited) |
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, |
|||||||||
|
|
|
2017 |
|
2016 |
|
2017 vs. 2016 |
|||||
|
|
|
|
|
Increase (Decrease) |
|||||||
(Dollars and shares in millions, except per share amounts) |
|
|
|
|
|
|
|
|
|
|
||
Operating revenues |
|
|
|
|
|
|
|
|
|
|
||
|
Service(1) |
$ |
|
$ |
|
$ |
|
(4)% |
||||
|
Equipment sales |
|
|
|
|
|
|
(1)% |
||||
|
|
Total operating revenues(1) |
|
|
|
|
|
|
(3)% |
|||
|
|
|
|
|
|
|
|
|
|
|||
Operating expenses |
|
|
|
|
|
|
|
|||||
|
System operations (excluding Depreciation, amortization |
|
|
|
|
|
|
|
||||
|
|
and accretion reported below) |
|
|
|
|
|
|
(3)% |
|||
|
Cost of equipment sold |
|
|
|
|
|
|
(6)% |
||||
|
Selling, general and administrative |
|
|
|
|
|
|
(4)% |
||||
|
Depreciation, amortization and accretion |
|
|
|
|
|
|
- |
||||
|
(Gain) loss on asset disposals, net |
|
|
|
|
|
|
(12)% |
||||
|
(Gain) loss on license sales and exchanges, net |
|
|
|
|
|
|
>(100)% |
||||
|
|
Total operating expenses |
|
|
|
|
|
|
(4)% |
|||
|
|
|
|
|
|
|
|
|
|
|||
Operating income(1) |
|
|
|
|
|
|
45% |
|||||
|
|
|
|
|
|
|
|
|
|
|||
Investment and other income (expense) |
|
|
|
|
|
|
|
|||||
|
Equity in earnings of unconsolidated entities |
|
|
|
|
|
|
(8)% |
||||
|
Interest and dividend income(1) |
|
|
|
|
|
|
38% |
||||
|
Interest expense |
|
|
|
|
|
|
(1)% |
||||
|
Other, net |
|
|
|
|
|
|
(23)% |
||||
|
|
Total investment and other income(1) |
|
|
|
|
|
|
(27)% |
|||
|
|
|
|
|
|
|
|
|
|
|||
Income before income taxes |
|
|
|
|
|
|
22% |
|||||
|
Income tax expense |
|
|
|
|
|
|
43% |
||||
Net income |
|
|
|
|
|
|
8% |
|||||
|
Less: Net income attributable to noncontrolling interests, net of tax |
|
|
|
|
|
|
>100% |
||||
Net income attributable to U.S. Cellular shareholders |
$ |
|
$ |
|
$ |
|
5% |
|||||
|
|
|
|
|
|
|
|
|
||||
Basic weighted average shares outstanding |
|
|
|
|
|
|
- |
|||||
Basic earnings per share attributable to |
|
|
|
|
|
|
|
|||||
|
U.S. Cellular shareholders |
$ |
|
$ |
|
$ |
|
5% |
||||
|
|
|
|
|
|
|
|
|
|
|||
Diluted weighted average shares outstanding |
|
|
|
|
|
|
1% |
|||||
Diluted earnings per share attributable to |
|
|
|
|
|
|
|
|||||
|
U.S. Cellular shareholders |
$ |
|
$ |
|
$ |
|
2% |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
Equipment installment plan interest income is reflected as a component of Service revenues consistent with an accounting policy change effective January 1, 2017. All prior period numbers have been recast to conform to this accounting change. |
United States Cellular Corporation
Consolidated Statement of Cash Flows
(Unaudited)
|
|
|
|
Six Months Ended |
|||||
|
|
|
|
|
June 30, |
||||
|
2017 |
|
2016 |
||||||
(Dollars in millions) |
|
|
|
|
|
||||
Cash flows from operating activities |
|
|
|
|
|
||||
|
Net income |
$ |
|
$ |
|||||
|
Add (deduct) adjustments to reconcile net income to net cash flows |
|
|
|
|||||
|
|
from operating activities |
|
|
|
||||
|
|
|
Depreciation, amortization and accretion |
|
|
|
|||
|
|
|
Bad debts expense |
|
|
|
|||
|
|
|
Stock-based compensation expense |
|
|
|
|||
|
|
|
Deferred income taxes, net |
|
|
|
|||
|
|
|
Equity in earnings of unconsolidated entities |
|
|
|
|||
|
|
|
Distributions from unconsolidated entities |
|
|
|
|||
|
|
|
(Gain) loss on asset disposals, net |
|
|
|
|||
|
|
|
(Gain) loss on license sales and exchanges, net |
|
|
|
|||
|
|
|
Noncash interest expense |
|
|
|
|||
|
|
|
Other operating activities |
|
|
|
|||
|
Changes in assets and liabilities from operations |
|
|
|
|||||
|
|
|
Accounts receivable |
|
|
|
|||
|
|
|
Equipment installment plans receivable |
|
|
|
|||
|
|
|
Inventory |
|
|
|
|||
|
|
|
Accounts payable |
|
|
|
|||
|
|
|
Customer deposits and deferred revenues |
|
|
|
|||
|
|
|
Accrued taxes |
|
|
|
|||
|
|
|
Accrued interest |
|
|
|
|||
|
|
|
Other assets and liabilities |
|
|
|
|||
|
|
|
|
Net cash provided by operating activities |
|
|
|
||
|
|
|
|
|
|
|
|
||
Cash flows from investing activities |
|
|
|
||||||
|
Cash paid for additions to property, plant and equipment |
|
|
|
|||||
|
Cash paid for licenses |
|
|
|
|||||
|
Cash received from divestitures and exchanges |
|
|
|
|||||
|
Federal Communications Commission deposit |
|
|
|
|||||
|
Other investing activities |
|
|
|
|||||
|
|
|
|
Net cash used in investing activities |
|
|
|
||
|
|
|
|
|
|
|
|
||
Cash flows from financing activities |
|
|
|
||||||
|
Repayment of long-term debt |
|
|
|
|||||
|
Common shares reissued for benefit plans, net of tax payments |
|
|
|
|||||
|
Common shares repurchased |
|
|
|
|||||
|
Payment of debt issuance costs |
|
|
|
|||||
|
Distributions to noncontrolling interests |
|
|
|
|||||
|
Other financing activities |
|
|
|
|||||
|
|
|
|
Net cash used in financing activities |
|
|
|
||
|
|
|
|
|
|
|
|
||
Net decrease in cash and cash equivalents |
|
|
|
||||||
|
|
|
|
|
|
|
|
||
Cash and cash equivalents |
|
|
|
||||||
|
Beginning of period |
|
|
|
|||||
|
End of period |
$ |
|
$ |
Consolidated Balance Sheet Highlights |
|||||||
(Unaudited) |
|||||||
|
|
|
|
|
|
|
|
ASSETS |
|||||||
|
|
|
|
|
|
|
|
|
|
|
June 30, |
December 31, |
|||
|
|
|
2017 |
|
2016 |
||
(Dollars in millions) |
|
|
|
|
|
||
Current assets |
|
||||||
|
Cash and cash equivalents |
$ |
$ |
||||
|
Accounts receivable from customers and others, net |
|
|||||
|
Inventory, net |
|
|||||
|
Prepaid expenses |
|
|||||
|
Other current assets |
|
|||||
|
|
Total current assets |
|
||||
|
|
|
|
||||
Assets held for sale |
|
||||||
|
|
|
|
||||
Licenses |
|
||||||
Goodwill |
|
||||||
Investments in unconsolidated entities |
|
||||||
|
|
|
|
||||
Property, plant and equipment |
|
||||||
|
In service and under construction |
|
|||||
|
Less: Accumulated depreciation and amortization |
|
|||||
|
|
Property, plant and equipment, net |
|
||||
|
|
|
|
||||
Other assets and deferred charges |
|
||||||
|
|
|
|
||||
Total assets |
$ |
$ |
Consolidated Balance Sheet Highlights |
|||||||
(Unaudited) |
|||||||
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY |
|||||||
|
|
|
|
|
|
|
|
|
|
|
June 30, |
December 31, |
|||
|
|
|
2017 |
|
2016 |
||
(Dollars and shares in millions, except per share amounts) |
|
|
|
|
|
||
Current liabilities |
|
|
|
|
|
||
|
Current portion of long-term debt |
$ |
$ |
||||
|
Accounts payable |
|
|||||
|
|
Affiliated |
|
||||
|
|
Trade |
|
||||
|
Customer deposits and deferred revenues |
|
|||||
|
Accrued taxes |
|
|||||
|
Accrued compensation |
|
|||||
|
Other current liabilities |
|
|||||
|
|
Total current liabilities |
|
||||
|
|
|
|
||||
Deferred liabilities and credits |
|
||||||
|
Deferred income tax liability, net |
|
|||||
|
Other deferred liabilities and credits |
|
|||||
|
|
|
|
||||
Long-term debt, net |
|
||||||
|
|
|
|
||||
Noncontrolling interests with redemption features |
|
||||||
|
|
|
|
||||
Equity |
|
||||||
U.S. Cellular shareholders’ equity |
|
||||||
|
Series A Common and Common Shares, par value $1 per share |
|
|||||
|
Additional paid-in capital |
|
|||||
|
Treasury shares |
|
|||||
|
Retained earnings |
|
|||||
|
|
Total U.S. Cellular shareholders’ equity |
|
||||
|
|
|
|
||||
Noncontrolling interests |
|
||||||
|
|
|
|
||||
|
Total equity |
|
|||||
|
|
|
|
||||
Total liabilities and equity |
$ |
$ |
Financial Measures and Reconciliations |
||||||||||||||
(Unaudited) |
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free Cash Flow |
||||||||||||||
|
|
|
|
Three Months Ended |
|
Six Months Ended |
||||||||
|
|
|
|
June 30, |
|
June 30, |
||||||||
|
|
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
||
(Dollars in millions) |
|
|
|
|
|
|
|
|
|
|
|
|||
Cash flows from operating activities (GAAP) |
|
$ |
|
$ |
|
$ |
|
$ |
||||||
Less: Cash paid for additions to property, plant and equipment |
|
|
|
|
|
|
|
|
||||||
|
|
Free cash flow (Non-GAAP) (1) |
|
$ |
|
$ |
|
$ |
|
$ |
||||
|
|
|
|
|
|
|
|
|
|
|
||||
(1) |
Management uses Free cash flow as a liquidity measure and it is defined as Cash flows from operating activities less Cash paid 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 liquidity, specifically, the amount of net cash generated by business operations after deducting Cash paid for additions to property, plant and equipment. |
Postpaid ABPU and Postpaid ABPA
U.S. Cellular presents Postpaid ABPU and Postpaid ABPA to reflect the revenue shift from Service revenues to Equipment sales resulting from the increased adoption of equipment installment plans. Postpaid ABPU and Postpaid ABPA, as previously defined, are non-GAAP financial measures which U.S. Cellular believes are useful to investors and other users of its financial information in showing trends in both service and equipment sales revenues received from customers.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Quarter Ended |
|
6/30/2017 |
|
|
3/31/2017 |
|
|
12/31/2016 |
|
|
9/30/2016 |
|
|
6/30/2016 |
||
(Dollars and connection counts in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Calculation of Postpaid ARPU |
|
|
|
|
|
|
|
|
|
|
||||||
Postpaid service revenues |
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|||||||
Average number of postpaid connections |
|
|
|
|
|
|
|
|
|
|||||||
Number of months in period |
|
|
|
|
|
|
|
|
|
|||||||
|
Postpaid ARPU (GAAP metric) |
$ |
|
$ |
|
$ |
|
$ |
|
$ |
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Calculation of Postpaid ABPU |
|
|
|
|
|
|
|
|
|
|||||||
Postpaid service revenues |
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|||||||
Equipment installment plan billings |
|
|
|
|
|
|
|
|
|
|||||||
|
Total billings to postpaid connections |
$ |
|
$ |
|
$ |
|
$ |
|
$ |
||||||
Average number of postpaid connections |
|
|
|
|
|
|
|
|
|
|||||||
Number of months in period |
|
|
|
|
|
|
|
|
|
|||||||
|
Postpaid ABPU (Non-GAAP metric) |
$ |
|
$ |
|
$ |
|
$ |
|
$ |
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Calculation of Postpaid ARPA |
|
|
|
|
|
|
|
|
|
|||||||
Postpaid service revenues |
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|||||||
Average number of postpaid accounts |
|
|
|
|
|
|
|
|
|
|||||||
Number of months in period |
|
|
|
|
|
|
|
|
|
|||||||
|
Postpaid ARPA (GAAP metric) |
$ |
|
$ |
|
$ |
|
$ |
|
$ |
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Calculation of Postpaid ABPA |
|
|
|
|
|
|
|
|
|
|||||||
Postpaid service revenues |
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|||||||
Equipment installment plan billings |
|
|
|
|
|
|
|
|
|
|||||||
|
Total billings to postpaid accounts |
$ |
|
$ |
|
$ |
|
$ |
|
$ |
||||||
Average number of postpaid accounts |
|
|
|
|
|
|
|
|
|
|||||||
Number of months in period |
|
|
|
|
|
|
|
|
|
|||||||
|
Postpaid ABPA (Non-GAAP metric) |
$ |
|
$ |
|
$ |
|
$ |
|
$ |
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 described 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. Each of the following risks could have a material adverse effect on U.S. Cellular’s business, financial condition or results of operations. 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, financial condition or results of operations.
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