EX-99.1 2 usmexhibit991.htm EX-99.1

 


Exhibit 99.1   NEWS RELEASE

 

As previously announced, U.S. Cellular will hold a teleconference August 3, 2018, 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 2018 results

U.S. Cellular raises guidance

 

CHICAGO, (August 3, 2018) — United States Cellular Corporation (NYSE:USM) reported total operating revenues of $974 million for the second quarter of 2018, versus $963 million for the same period one year ago. Net income attributable to U.S. Cellular shareholders and related diluted earnings per share were $49 million and $0.56, respectively, for the second quarter of 2018, compared to $12 million and $0.14, respectively, in the same period one year ago. 

“I’m very pleased with the progress we made this quarter and in the first half of the year," said Kenneth R. Meyers, U.S. Cellular president and CEO. “We generated improved financial results by delivering on our customer satisfaction strategy.  Our efforts produced both revenue growth and improvements in our cost structure.  Combined these factors drove a 25% increase in Adjusted EBITDA in the quarter.  Also these results provided the confidence to raise our 2018 guidance. 

“It’s been a year since we launched our Total Plans, and they continue to be effective in attracting new customers and meeting the needs of our current customers. Both postpaid handset net additions and gross additions increased sequentially, and postpaid handset churn remained exceptionally low. Another driver of customer satisfaction is our high-quality network, which continues to perform well even as data usage increases significantly. Additionally, our network team completed commercial rollouts of VoLTE in our California, Oregon and Washington markets.”

 

 

 

 

 


1

 

 


 


2018 Estimated Results

U.S. Cellular’s current estimates of full-year 2018 results are shown below.  Such estimates represent management’s view as of August 3, 2018.  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.

 

 

2018 Estimated Results

 

 

Current (1)

 

Previous

(Dollars in millions)

 

 

 

 

Total operating revenues

$3,925-$4,025

 

$3,850-$4,050

Adjusted OIBDA (2)(3)

$700-$800

 

$625-$775

Adjusted EBITDA (2)

$850-$950

 

$765-$915

Capital expenditures

$500-$550

 

Unchanged

2

 

 


 


The following table provides a reconciliation of Net income to Adjusted OIBDA and Adjusted EBITDA for 2018 estimated results, actual results for the six months ended June 30, 2018, and actual results for the year ended December 31, 2017.  In providing 2018 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.

 

 

 

 

 

 

 

 

 

Actual Results

 

 

 

 

 

2018 Estimated Results (1)

 

 

Six Months Ended June 30, 2018 (1)

 

 

Year Ended

December 31, 2017

(Dollars in millions)

 

 

 

 

 

 

 

 

 

Net income (GAAP)

 

 

N/A

 

$

107 

 

$

15 

Add back or deduct:

 

 

 

 

 

 

 

 

 

 

Income tax expense (benefit)

 

 

N/A

 

 

40 

 

 

(287)

Income (loss) before income taxes (GAAP)

 

$

110-210 

 

$

147 

 

$

(272)

Add back:

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

110

 

 

58 

 

 

113 

 

Depreciation, amortization and accretion expense

 

 

640

 

 

317 

 

 

615 

EBITDA (Non-GAAP) (2)

 

$

860-960 

 

$

522 

 

$

456 

Add back or deduct:

 

 

 

 

 

 

 

 

 

 

Loss on impairment of goodwill

 

 

– 

 

 

– 

 

 

370 

 

(Gain) loss on asset disposals, net

 

 

10 

 

 

2 

 

 

17 

 

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

 

 

– 

 

 

– 

 

 

(1)

 

(Gain) loss on license sales and exchanges, net

 

 

(20)

 

 

(17)

 

 

(22)

Adjusted EBITDA (Non-GAAP) (2)

 

$

850-950 

 

$

507 

 

$

820 

Deduct:

 

 

 

 

 

 

 

 

 

 

Equity in earnings of unconsolidated entities

 

 

135

 

 

78 

 

 

137 

 

Interest and dividend income

 

 

15

 

 

7 

 

 

8 

 

Other, net

 

 

– 

 

 

(1)

 

 

– 

Adjusted OIBDA (Non-GAAP) (2)(3)

 

$

700-800 

 

$

423 

 

$

675 

 

 

 

 

 

 

 

 

 

 

 

 

Note: Totals may not foot due to rounding differences.

 

 

 

 

 

 

 

 

 

 

 

 

(1)

As of January 1, 2018, U.S. Cellular adopted the new revenue recognition standard, ASC 606, using a modified retrospective approach.  Under this method, the new accounting standard is applied only to the most recent period presented.  As a result, 2018 amounts include the impacts of ASC 606, but 2017 amounts remain as previously reported.

 

 

 

(2)

EBITDA, Adjusted EBITDA and Adjusted OIBDA are defined as net income adjusted for the items set forth in the reconciliation above.  EBITDA, 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 EBITDA, Adjusted EBITDA and Adjusted OIBDA to the corresponding GAAP measure, Net income or Income (loss) before income taxes.

 

 

 

 

 

 

 

 

 

 

 

 

(3)

Additional information and reconciliations related to Non-GAAP financial measures for June 30, 2018, can be found on U.S. Cellular’s website at investors.uscellular.com.

 


3

 

 


 


Conference Call Information

U.S. Cellular will hold a conference call on August 3, 2018 at 9:30 a.m. Central Time.

 

  • Access the live call on the Events & Presentations page of investors.uscellular.com or at https://www.webcaster4.com/Webcast/Page/1145/26840.
  • Access the call by phone at 877-273-7192 (US/Canada), conference ID: 3387588.

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 5.1 million connections in 22 states. The Chicago-based company had 5,700 full- and part-time associates as of June 30, 2018. At the end of the second quarter of 2018, Telephone and Data Systems, Inc. owned 83 percent of U.S. Cellular. For more information about U.S. Cellular, visit uscellular.com.

Contacts

Jane W. McCahon, Senior Vice President - Corporate Relations and Corporate Secretary of TDS

312-592-5379

jane.mccahon@tdsinc.com

 

Julie D. 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

 

 

 


4

 

 



 


United States Cellular Corporation

Summary Operating Data (Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of or for the Quarter Ended

6/30/2018(1)

 

3/31/2018(1)

 

12/31/2017

 

 

9/30/2017

 

6/30/2017

Retail Connections

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Postpaid

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total at end of period

 

4,468,000 

 

 

4,481,000 

 

 

4,518,000 

 

 

4,513,000 

 

 

4,478,000 

 

 

Gross additions

 

146,000 

 

 

129,000 

 

 

177,000 

 

 

191,000 

 

 

174,000 

 

 

 

Feature phones

 

5,000 

 

 

5,000 

 

 

5,000 

 

 

7,000 

 

 

7,000 

 

 

 

Smartphones

 

106,000 

 

 

91,000 

 

 

128,000 

 

 

132,000 

 

 

116,000 

 

 

 

Connected devices

 

35,000 

 

 

33,000 

 

 

44,000 

 

 

52,000 

 

 

51,000 

 

 

Net additions (losses)

 

(13,000)

 

 

(37,000)

 

 

5,000 

 

 

35,000 

 

 

23,000 

 

 

 

Feature phones

 

(12,000)

 

 

(15,000)

 

 

(15,000)

 

 

(15,000)

 

 

(15,000)

 

 

 

Smartphones

 

17,000 

 

 

(1,000)

 

 

33,000 

 

 

44,000 

 

 

34,000 

 

 

 

Connected devices

 

(18,000)

 

 

(21,000)

 

 

(13,000)

 

 

6,000 

 

 

4,000 

 

 

ARPU (2)

$

44.74 

 

$

44.34 

 

$

44.12 

 

$

43.41 

 

$

44.60 

 

 

ABPU (Non-GAAP)(3)

$

57.75 

 

$

57.10 

 

$

56.69 

 

$

54.71 

 

$

55.19 

 

 

ARPA (4)

$

118.57 

 

$

118.22 

 

$

118.05 

 

$

116.36 

 

$

119.73 

 

 

ABPA (Non-GAAP)(5)

$

153.03 

 

$

152.26 

 

$

151.68 

 

$

146.65 

 

$

148.15 

 

 

Churn rate (6)

 

1.19%

 

 

1.23%

 

 

1.27%

 

 

1.16%

 

 

1.13%

 

 

 

Handsets

 

0.92%

 

 

0.97%

 

 

1.00%

 

 

0.96%

 

 

0.91%

 

 

 

Connected devices

 

2.85%

 

 

2.79%

 

 

2.84%

 

 

2.33%

 

 

2.35%

 

Prepaid

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total at end of period

 

527,000 

 

 

525,000 

 

 

519,000 

 

 

515,000 

 

 

484,000 

 

 

Gross additions

 

78,000 

 

 

88,000 

 

 

83,000 

 

 

102,000 

 

 

73,000 

 

 

Net additions

 

2,000 

 

 

6,000 

 

 

4,000 

 

 

31,000 

 

 

3,000 

 

 

ARPU (2)

$

32.32 

 

$

31.78 

 

$

32.42 

 

$

33.12 

 

$

33.52 

 

 

Churn rate (6)

 

4.83%

 

 

5.27%

 

 

5.09%

 

 

4.75%

 

 

4.93%

Total connections at end of period (7)

 

5,051,000 

 

 

5,063,000 

 

 

5,096,000 

 

 

5,089,000 

 

 

5,023,000 

Market penetration at end of period

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated operating population

 

31,469,000 

 

 

31,469,000 

 

 

31,834,000 

 

 

31,834,000 

 

 

32,089,000 

 

Consolidated operating penetration (8)

 

16%

 

 

16%

 

 

16%

 

 

16%

 

 

16%

Capital expenditures (millions)

$

86 

 

$

70 

 

$

213 

 

$

112 

 

$

84 

Total cell sites in service

 

6,478 

 

 

6,473 

 

 

6,460 

 

 

6,436 

 

 

6,421 

Owned towers

 

4,105 

 

 

4,099 

 

 

4,080 

 

 

4,051 

 

 

4,044 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

As of January 1, 2018, U.S. Cellular adopted the new revenue recognition standard, ASC 606, using a modified retrospective approach.  Under this method, the new accounting standard is applied only to the most recent period presented.  As a result, 2018 amounts include the impacts of ASC 606, but 2017 amounts remain as previously reported.

(2)

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:

 

 

 

▪

Postpaid ARPU consists of total postpaid service revenues and postpaid connections.

 

 

 

▪

Prepaid ARPU consists of total prepaid service revenues and prepaid connections.

(3)

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.

(4)

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.

(5)

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.

(6)

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.

(7)

Includes reseller and other connections.

(8)

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.


5

 

 



 


 

United States Cellular Corporation

Consolidated Statement of Operations Highlights

(Unaudited)

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

June 30,

 

June 30,

 

 

2018 (1)

 

 

2017

 

2018 vs. 2017

 

 

2018 (1)

 

 

2017

 

2018 vs. 2017

(Dollars and shares in millions, except per share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service

$

741 

 

$

740 

 

-

 

$

1,465 

 

$

1,486 

 

(1)%

 

Equipment sales

 

233 

 

 

223 

 

5%

 

 

450 

 

 

413 

 

9%

 

 

Total operating revenues

 

974 

 

 

963 

 

1%

 

 

1,915 

 

 

1,899 

 

1%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

System operations (excluding Depreciation,

   amortization and accretion reported below)

 

187 

 

 

189 

 

(1)%

 

 

365 

 

 

364 

 

-

 

Cost of equipment sold

 

240 

 

 

260 

 

(8)%

 

 

459 

 

 

488 

 

(6)%

 

Selling, general and administrative

 

342 

 

 

351 

 

(2)%

 

 

668 

 

 

691 

 

(3)%

 

Depreciation, amortization and accretion

 

159 

 

 

155 

 

3%

 

 

317 

 

 

307 

 

3%

 

(Gain) loss on asset disposals, net

 

1 

 

 

5 

 

(84)%

 

 

2 

 

 

9 

 

(75)%

 

(Gain) loss on license sales and exchanges, net

 

(11)

 

 

(2)

 

>(100)%

 

 

(17)

 

 

(19)

 

8%

 

 

Total operating expenses

 

918 

 

 

958 

 

(4)%

 

 

1,794 

 

 

1,840 

 

(2)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

56 

 

 

5 

 

>100%

 

 

121 

 

 

59 

 

>100%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment and other income (expense)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity in earnings of unconsolidated entities

 

40 

 

 

33 

 

20%

 

 

78 

 

 

66 

 

18%

 

Interest and dividend income

 

3 

 

 

2 

 

63%

 

 

7 

 

 

5 

 

45%

 

Interest expense

 

(29)

 

 

(28)

 

(2)%

 

 

(58)

 

 

(56)

 

(3)%

 

Other, net

 

– 

 

 

– 

 

>100%

 

 

(1)

 

 

(1)

 

14%

 

 

Total investment and other income

 

14 

 

 

7 

 

>100%

 

 

26 

 

 

14 

 

85%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

70 

 

 

12 

 

>100%

 

 

147 

 

 

73 

 

>100%

 

Income tax expense

 

18 

 

 

– 

 

>100%

 

 

40 

 

 

33 

 

21%

Net income

 

52 

 

 

12 

 

>100%

 

 

107 

 

 

40 

 

>100%

 

Less: Net income attributable to noncontrolling

   interests, net of tax

 

3 

 

 

– 

 

>100%

 

 

14 

 

 

2 

 

>100%

Net income attributable to U.S. Cellular

   shareholders

$

49 

 

$

12 

 

>100%

 

$

93 

 

$

38 

 

>100%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic weighted average shares outstanding

 

86 

 

 

85 

 

1%

 

 

85 

 

 

85 

 

-

Basic earnings per share attributable to

   U.S. Cellular shareholders

$

0.57 

 

$

0.14 

 

>100%

 

$

1.09 

 

$

0.45 

 

>100%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted weighted average shares outstanding

 

86 

 

 

86 

 

1%

 

 

86 

 

 

86 

 

1%

Diluted earnings per share attributable to

   U.S. Cellular shareholders

$

0.56 

 

$

0.14 

 

>100%

 

$

1.08 

 

$

0.44 

 

>100%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

As of January 1, 2018, U.S. Cellular adopted the new revenue recognition standard, ASC 606, using a modified retrospective approach. Under this method, the new accounting standard is applied only to the most recent period presented. As a result, 2018 amounts include the impacts of ASC 606, but 2017 amounts remain as previously reported.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



6

 

 


 


United States Cellular Corporation

Consolidated Statement of Cash Flows

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 30,

2018 (1)

 

2017

(Dollars in millions)

 

 

 

 

 

Cash flows from operating activities

 

 

 

 

 

 

Net income

$

107 

 

$

40 

 

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

 

 

 

 

 

 

 

from operating activities

 

 

 

 

 

 

 

 

Depreciation, amortization and accretion

 

317 

 

 

307 

 

 

 

Bad debts expense

 

40 

 

 

47 

 

 

 

Stock-based compensation expense

 

17 

 

 

14 

 

 

 

Deferred income taxes, net

 

9 

 

 

(27)

 

 

 

Equity in earnings of unconsolidated entities

 

(78)

 

 

(66)

 

 

 

Distributions from unconsolidated entities

 

70 

 

 

65 

 

 

 

(Gain) loss on asset disposals, net

 

2 

 

 

9 

 

 

 

(Gain) loss on license sales and exchanges, net

 

(17)

 

 

(19)

 

 

 

Noncash interest

 

2 

 

 

1 

 

Changes in assets and liabilities from operations

 

 

 

 

 

 

 

 

Accounts receivable

 

43 

 

 

(5)

 

 

 

Equipment installment plans receivable

 

(47)

 

 

(107)

 

 

 

Inventory

 

(3)

 

 

(2)

 

 

 

Accounts payable

 

(35)

 

 

(53)

 

 

 

Customer deposits and deferred revenues

 

(23)

 

 

(6)

 

 

 

Accrued taxes

 

6 

 

 

45 

 

 

 

Other assets and liabilities

 

(45)

 

 

(23)

 

 

 

 

Net cash provided by operating activities

 

365 

 

 

220 

 

 

 

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

 

Cash paid for additions to property, plant and equipment

 

(173)

 

 

(155)

 

Cash paid for licenses

 

(2)

 

 

(189)

 

Cash received for investments

 

50 

 

 

– 

 

Cash received from divestitures and exchanges

 

21 

 

 

17 

 

Other investing activities

 

3 

 

 

– 

 

 

 

 

Net cash used in investing activities

 

(101)

 

 

(327)

 

 

 

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

 

Repayment of long-term debt

 

(10)

 

 

(6)

 

Payment of debt issuance costs

 

(1)

 

 

– 

 

Distributions to noncontrolling interests

 

(4)

 

 

(2)

 

Other financing activities

 

(4)

 

 

1 

 

 

 

 

Net cash used in financing activities

 

(19)

 

 

(7)

 

 

 

 

 

 

 

 

 

 

Net increase (decrease) in cash, cash equivalents and restricted cash

 

245 

 

 

(114)

 

 

 

 

 

 

 

 

 

 

Cash, cash equivalents and restricted cash

 

 

 

 

 

 

Beginning of period

 

352 

 

 

586 

 

End of period

$

597 

 

$

472 

 

 

 

 

 

 

 

 

 

 

(1)

As of January 1, 2018, U.S. Cellular adopted the new revenue recognition standard, ASC 606, using a modified retrospective approach. Under this method, the new accounting standard is applied only to the most recent period presented. As a result, 2018 amounts include the impacts of ASC 606, but 2017 amounts remain as previously reported.

 

 

 


7

 

 


 


United States Cellular Corporation

Consolidated Balance Sheet Highlights

(Unaudited)

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

June 30,

 

December 31,

 

 

 

2018 (1)

 

2017

(Dollars in millions)

 

 

 

 

 

Current assets

 

 

 

 

 

 

Cash and cash equivalents

$

596 

 

$

352 

 

Short-term investments

 

– 

 

 

50 

 

Accounts receivable

 

875 

 

 

843 

 

Inventory, net

 

141 

 

 

138 

 

Prepaid expenses

 

63 

 

 

79 

 

Other current assets

 

34 

 

 

21 

 

 

Total current assets

 

1,709 

 

 

1,483 

 

 

 

 

 

 

 

 

Assets held for sale

 

1 

 

 

10 

 

 

 

 

 

 

 

 

Licenses

 

2,231 

 

 

2,223 

 

 

 

 

 

 

 

 

Investments in unconsolidated entities

 

439 

 

 

415 

 

 

 

 

 

 

 

 

Property, plant and equipment, net

 

2,159 

 

 

2,320 

 

 

 

 

 

 

 

 

Other assets and deferred charges

 

536 

 

 

390 

 

 

 

 

 

 

 

 

Total assets

$

7,075 

 

$

6,841 

 



8

 

 


 


United States Cellular Corporation

Consolidated Balance Sheet Highlights

(Unaudited)

 

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

 

 

 

 

June 30,

 

December 31,

 

 

 

2018 (1)

 

2017

(Dollars in millions, except per share amounts)

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Current portion of long-term debt

$

18 

 

$

18 

 

Accounts payable

 

257 

 

 

310 

 

Customer deposits and deferred revenues

 

127 

 

 

185 

 

Accrued taxes

 

58 

 

 

56 

 

Accrued compensation

 

48 

 

 

74 

 

Other current liabilities

 

82 

 

 

90 

 

 

Total current liabilities

 

590 

 

 

733 

 

 

 

 

 

 

 

 

Deferred liabilities and credits

 

 

 

 

 

 

Deferred income tax liability, net

 

522 

 

 

461 

 

Other deferred liabilities and credits

 

367 

 

 

337 

 

 

 

 

 

 

 

 

Long-term debt, net

 

1,614 

 

 

1,622 

 

 

 

 

 

 

 

 

Noncontrolling interests with redemption features

 

11 

 

 

1 

 

 

 

 

 

 

 

 

Equity

 

 

 

 

 

U.S. Cellular shareholders’ equity

 

 

 

 

 

 

Series A Common and Common Shares, par value $1 per share

 

88 

 

 

88 

 

Additional paid-in capital

 

1,569 

 

 

1,552 

 

Treasury shares

 

(99)

 

 

(120)

 

Retained earnings

 

2,402 

 

 

2,157 

 

 

Total U.S. Cellular shareholders’ equity

 

3,960 

 

 

3,677 

 

 

 

 

 

 

 

 

Noncontrolling interests

 

11 

 

 

10 

 

 

 

 

 

 

 

 

 

Total equity

 

3,971 

 

 

3,687 

 

 

 

 

 

 

 

 

Total liabilities and equity

$

7,075 

 

$

6,841 

 

 

 

 

 

 

 

 

(1)

As of January 1, 2018, U.S. Cellular adopted the new revenue recognition standard, ASC 606, using a modified retrospective approach.  Under this method, the new accounting standard is applied only to the most recent period presented.  As a result, 2018 amounts include the impacts of ASC 606, but 2017 amounts remain as previously reported.



9

 

 


 


United States Cellular Corporation

Financial Measures and Reconciliations

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

Free Cash Flow

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

June 30,

 

June 30,

 

 

2018

 

2017

 

 

2018

 

2017

(Dollars in millions)

 

 

 

 

Cash flows from operating activities (GAAP)

$

178 

$

159 

 

$

365 

$

220 

Less: Cash paid for additions to property, plant and equipment

 

98 

 

67 

 

 

173 

 

155 

 

 

Free cash flow (Non-GAAP) (1)

$

80 

$

92 

 

$

192 

$

65 

 

 

 

 

 

 

 

 

 

 

 

 

(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 herein, 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

 

6/30/2018(1)

 

 

3/31/2018(1)

 

 

12/31/2017

 

 

9/30/2017

 

 

6/30/2017

(Dollars and connection counts in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Calculation of Postpaid ARPU

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Postpaid service revenues

$

600 

 

$

598 

 

$

598 

 

$

586 

 

$

597 

Average number of postpaid connections

 

4.47 

 

 

4.50 

 

 

4.52 

 

 

4.50 

 

 

4.47 

Number of months in period

 

3 

 

 

3 

 

 

3 

 

 

3 

 

 

3 

 

Postpaid ARPU (GAAP metric)

$

44.74 

 

$

44.34 

 

$

44.12 

 

$

43.41 

 

$

44.60 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Calculation of Postpaid ABPU

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Postpaid service revenues

$

600 

 

$

598 

 

$

598 

 

$

586 

 

$

597 

Equipment installment plan billings

 

174 

 

 

172 

 

 

170 

 

 

152 

 

 

142 

 

Total billings to postpaid connections

$

774 

 

$

770 

 

$

768 

 

$

738 

 

$

739 

Average number of postpaid connections

 

4.47 

 

 

4.50 

 

 

4.52 

 

 

4.50 

 

 

4.47 

Number of months in period

 

3 

 

 

3 

 

 

3 

 

 

3 

 

 

3 

 

Postpaid ABPU (Non-GAAP metric)

$

57.75 

 

$

57.10 

 

$

56.69 

 

$

54.71 

 

$

55.19 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Calculation of Postpaid ARPA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Postpaid service revenues

$

600 

 

$

598 

 

$

598 

 

$

586 

 

$

597 

Average number of postpaid accounts

 

1.69 

 

 

1.69 

 

 

1.69 

 

 

1.68 

 

 

1.66 

Number of months in period

 

3 

 

 

3 

 

 

3 

 

 

3 

 

 

3 

 

Postpaid ARPA (GAAP metric)

$

118.57 

 

$

118.22 

 

$

118.05 

 

$

116.36 

 

$

119.73 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Calculation of Postpaid ABPA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Postpaid service revenues

$

600 

 

$

598 

 

$

598 

 

$

586 

 

$

597 

Equipment installment plan billings

 

174 

 

 

172 

 

 

170 

 

 

152 

 

 

142 

 

Total billings to postpaid accounts

$

774 

 

$

770 

 

$

768 

 

$

738 

 

$

739 

Average number of postpaid accounts

 

1.69 

 

 

1.69 

 

 

1.69 

 

 

1.68 

 

 

1.66 

Number of months in period

 

3 

 

 

3 

 

 

3 

 

 

3 

 

 

3 

 

Postpaid ABPA (Non-GAAP metric)

$

153.03 

 

$

152.26 

 

$

151.68 

 

$

146.65 

 

$

148.15 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

As of January 1, 2018, U.S. Cellular adopted the new revenue recognition standard, ASC 606, using a modified retrospective approach. Under this method, the new accounting standard is applied only to the most recent period presented. As a result, 2018 amounts include the impacts of ASC 606, but 2017 amounts remain as previously reported.

 


10