(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act: | ||||||
Title of each class | Trading Symbol | Name of each exchange on which registered | ||||
Emerging growth company |
☐ | If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. |
Exhibit Number | Description of Exhibits | |
99.1 | ||
99.2 | ||
104 | Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document. |
SIGNATURES | |||
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. | |||
UNITED STATES CELLULAR CORPORATION | |||
(Registrant) | |||
Date: | October 31, 2019 | By: | /s/ Douglas W. Chambers |
Douglas W. Chambers | |||
Senior Vice President, Chief Financial Officer and Treasurer | |||
(principal financial officer) | |||
2019 Estimated Results | ||
Previous | Current | |
(Dollars in millions) | ||
Total operating revenues | $3,900-$4,100 | $3,950-$4,050 |
Adjusted OIBDA1 | $725-$875 | $750-$850 |
Adjusted EBITDA1 | $900-$1,050 | $925-$1,025 |
Capital expenditures | $625-$725 | Unchanged |
Actual Results | ||||||||||
2019 Estimated Results | Nine Months Ended September 30, 2019 | Year Ended December 31, 2018 | ||||||||
(Dollars in millions) | ||||||||||
Net income (GAAP) | N/A | $ | 115 | $ | 164 | |||||
Add back or deduct: | ||||||||||
Income tax expense | N/A | 55 | 51 | |||||||
Income before income taxes (GAAP) | $80-$180 | $ | 170 | $ | 215 | |||||
Add back: | ||||||||||
Interest expense | 115 | 87 | 116 | |||||||
Depreciation, amortization and accretion expense | 710 | 524 | 640 | |||||||
EBITDA (Non-GAAP)1 | $905-$1,005 | $ | 781 | $ | 971 | |||||
Add back or deduct: | ||||||||||
(Gain) loss on asset disposals, net | 20 | 13 | 10 | |||||||
(Gain) loss on sale of business and other exit costs, net | — | (1 | ) | — | ||||||
(Gain) loss on license sales and exchanges, net | — | — | (18 | ) | ||||||
Adjusted EBITDA (Non-GAAP)1 | $925-$1,025 | $ | 793 | $ | 963 | |||||
Deduct: | ||||||||||
Equity in earnings of unconsolidated entities | 160 | 128 | 159 | |||||||
Interest and dividend income | 15 | 14 | 15 | |||||||
Other, net | — | — | (1 | ) | ||||||
Adjusted OIBDA (Non-GAAP)1 | $750-$850 | $ | 651 | $ | 790 |
1 | 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 before income taxes. Additional information and reconciliations related to Non-GAAP financial measures for September 30, 2019, can be found on U.S. Cellular’s website at investors.uscellular.com. |
▪ | Access the live call on the Events & Presentations page of investors.uscellular.com or at https://www.webcaster4.com/Webcast/Page/1145/32152. |
▪ | Access the call by phone at 877-273-7192 (US/Canada), conference ID: 4119859. |
United States Cellular Corporation | |||||||||||||||||||
Summary Operating Data (Unaudited) | |||||||||||||||||||
As of or for the Quarter Ended | 9/30/2019 | 6/30/2019 | 3/31/2019 | 12/31/2018 | 9/30/2018 | ||||||||||||||
Retail Connections | |||||||||||||||||||
Postpaid | |||||||||||||||||||
Total at end of period | 4,395,000 | 4,414,000 | 4,440,000 | 4,472,000 | 4,466,000 | ||||||||||||||
Gross additions | 163,000 | 137,000 | 137,000 | 179,000 | 172,000 | ||||||||||||||
Feature phones | 3,000 | 5,000 | 4,000 | 4,000 | 3,000 | ||||||||||||||
Smartphones | 121,000 | 97,000 | 98,000 | 132,000 | 130,000 | ||||||||||||||
Connected devices | 39,000 | 35,000 | 35,000 | 43,000 | 39,000 | ||||||||||||||
Net additions (losses) | (19,000 | ) | (26,000 | ) | (32,000 | ) | 6,000 | (1,000 | ) | ||||||||||
Feature phones | (11,000 | ) | (10,000 | ) | (13,000 | ) | (11,000 | ) | (14,000 | ) | |||||||||
Smartphones | 9,000 | (1,000 | ) | (1,000 | ) | 31,000 | 29,000 | ||||||||||||
Connected devices | (17,000 | ) | (15,000 | ) | (18,000 | ) | (14,000 | ) | (16,000 | ) | |||||||||
ARPU1 | $ | 46.16 | $ | 45.90 | $ | 45.44 | $ | 45.58 | $ | 45.31 | |||||||||
ARPA2 | $ | 119.87 | $ | 119.46 | $ | 118.84 | $ | 119.60 | $ | 119.42 | |||||||||
Churn rate3 | 1.38 | % | 1.23 | % | 1.26 | % | 1.29 | % | 1.29 | % | |||||||||
Handsets | 1.09 | % | 0.97 | % | 0.99 | % | 1.00 | % | 1.02 | % | |||||||||
Connected devices | 3.44 | % | 3.01 | % | 3.08 | % | 3.20 | % | 3.04 | % | |||||||||
Prepaid | |||||||||||||||||||
Total at end of period | 510,000 | 500,000 | 503,000 | 516,000 | 528,000 | ||||||||||||||
Gross additions | 70,000 | 61,000 | 61,000 | 66,000 | 80,000 | ||||||||||||||
Net additions (losses) | 9,000 | (2,000 | ) | (13,000 | ) | (12,000 | ) | 1,000 | |||||||||||
ARPU1 | $ | 34.35 | $ | 34.43 | $ | 33.44 | $ | 32.80 | $ | 32.09 | |||||||||
Churn rate3 | 4.03 | % | 4.20 | % | 4.92 | % | 4.98 | % | 4.98 | % | |||||||||
Total connections at end of period4 | 4,957,000 | 4,967,000 | 4,995,000 | 5,041,000 | 5,050,000 | ||||||||||||||
Market penetration at end of period | |||||||||||||||||||
Consolidated operating population | 31,310,000 | 31,310,000 | 31,310,000 | 31,469,000 | 31,469,000 | ||||||||||||||
Consolidated operating penetration5 | 16 | % | 16 | % | 16 | % | 16 | % | 16 | % | |||||||||
Capital expenditures (millions) | $ | 170 | $ | 195 | $ | 102 | $ | 242 | $ | 118 | |||||||||
Total cell sites in service | 6,554 | 6,535 | 6,506 | 6,531 | 6,506 | ||||||||||||||
Owned towers | 4,123 | 4,116 | 4,106 | 4,129 | 4,119 |
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: |
• | Postpaid ARPU consists of total postpaid service revenues and postpaid connections. |
• | Prepaid ARPU consists of total prepaid service revenues and prepaid connections. |
2 | 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. |
3 | 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. |
4 | Includes reseller and other connections. |
5 | 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. |
United States Cellular Corporation | |||||||||||||||||||||
Consolidated Statement of Operations Highlights | |||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||
2019 | 2018 | 2019 vs. 2018 | 2019 | 2018 | 2019 vs. 2018 | ||||||||||||||||
(Dollars and shares in millions, except per share amounts) | |||||||||||||||||||||
Operating revenues | |||||||||||||||||||||
Service | $ | 774 | $ | 759 | 2 | % | $ | 2,272 | $ | 2,224 | 2 | % | |||||||||
Equipment sales | 257 | 242 | 6 | % | 698 | 692 | 1 | % | |||||||||||||
Total operating revenues | 1,031 | 1,001 | 3 | % | 2,970 | 2,916 | 2 | % | |||||||||||||
Operating expenses | |||||||||||||||||||||
System operations (excluding Depreciation, amortization and accretion reported below) | 199 | 200 | (1 | )% | 568 | 566 | – | ||||||||||||||
Cost of equipment sold | 266 | 258 | 3 | % | 724 | 716 | 1 | % | |||||||||||||
Selling, general and administrative | 358 | 346 | 3 | % | 1,027 | 1,014 | 1 | % | |||||||||||||
Depreciation, amortization and accretion | 181 | 160 | 13 | % | 524 | 478 | 10 | % | |||||||||||||
(Gain) loss on asset disposals, net | 5 | 3 | 66 | % | 13 | 5 | N/M | ||||||||||||||
(Gain) loss on sale of business and other exit costs, net | — | — | N/M | (1 | ) | — | N/M | ||||||||||||||
(Gain) loss on license sales and exchanges, net | 2 | — | N/M | — | (18 | ) | 98 | % | |||||||||||||
Total operating expenses | 1,011 | 967 | 5 | % | 2,855 | 2,761 | 3 | % | |||||||||||||
Operating income | 20 | 34 | (40 | )% | 115 | 155 | (26 | )% | |||||||||||||
Investment and other income (expense) | |||||||||||||||||||||
Equity in earnings of unconsolidated entities | 44 | 42 | 5 | % | 128 | 120 | 7 | % | |||||||||||||
Interest and dividend income | 4 | 4 | 4 | % | 14 | 10 | 40 | % | |||||||||||||
Interest expense | (29 | ) | (29 | ) | 1 | % | (87 | ) | (87 | ) | – | ||||||||||
Total investment and other income | 19 | 17 | 12 | % | 55 | 43 | 27 | % | |||||||||||||
Income before income taxes | 39 | 51 | (23 | )% | 170 | 198 | (14 | )% | |||||||||||||
Income tax expense | 15 | 14 | 2 | % | 55 | 55 | 1 | % | |||||||||||||
Net income | 24 | 37 | (33 | )% | 115 | 143 | (20 | )% | |||||||||||||
Less: Net income attributable to noncontrolling interests, net of tax | 1 | 1 | 29 | % | 6 | 14 | (61 | )% | |||||||||||||
Net income attributable to U.S. Cellular shareholders | $ | 23 | $ | 36 | (34 | )% | $ | 109 | $ | 129 | (15 | )% | |||||||||
Basic weighted average shares outstanding | 86 | 86 | 1 | % | 87 | 85 | 1 | % | |||||||||||||
Basic earnings per share attributable to U.S. Cellular shareholders | $ | 0.27 | $ | 0.42 | (35 | )% | $ | 1.26 | $ | 1.51 | (16 | )% | |||||||||
Diluted weighted average shares outstanding | 88 | 87 | 1 | % | 88 | 86 | 2 | % | |||||||||||||
Diluted earnings per share attributable to U.S. Cellular shareholders | $ | 0.27 | $ | 0.41 | (35 | )% | $ | 1.24 | $ | 1.49 | (17 | )% |
United States Cellular Corporation | |||||||
Consolidated Statement of Cash Flows | |||||||
(Unaudited) | |||||||
Nine Months Ended September 30, | |||||||
2019 | 2018 | ||||||
(Dollars in millions) | |||||||
Cash flows from operating activities | |||||||
Net income | $ | 115 | $ | 143 | |||
Add (deduct) adjustments to reconcile net income to net cash flows from operating activities | |||||||
Depreciation, amortization and accretion | 524 | 478 | |||||
Bad debts expense | 77 | 67 | |||||
Stock-based compensation expense | 32 | 26 | |||||
Deferred income taxes, net | (34 | ) | (4 | ) | |||
Equity in earnings of unconsolidated entities | (128 | ) | (120 | ) | |||
Distributions from unconsolidated entities | 99 | 90 | |||||
(Gain) loss on asset disposals, net | 13 | 5 | |||||
(Gain) loss on sale of business and other exit costs, net | (1 | ) | — | ||||
(Gain) loss on license sales and exchanges, net | — | (18 | ) | ||||
Other operating activities | 3 | 2 | |||||
Changes in assets and liabilities from operations | |||||||
Accounts receivable | (35 | ) | (1 | ) | |||
Equipment installment plans receivable | (42 | ) | (88 | ) | |||
Inventory | 3 | 15 | |||||
Accounts payable | (4 | ) | 21 | ||||
Customer deposits and deferred revenues | (1 | ) | (5 | ) | |||
Accrued taxes | 81 | 1 | |||||
Accrued interest | 9 | 9 | |||||
Other assets and liabilities | (24 | ) | (21 | ) | |||
Net cash provided by operating activities | 687 | 600 | |||||
Cash flows from investing activities | |||||||
Cash paid for additions to property, plant and equipment | (439 | ) | (277 | ) | |||
Cash paid for licenses | (257 | ) | (2 | ) | |||
Cash received from investments | 29 | 50 | |||||
Cash paid for investments | (11 | ) | — | ||||
Cash received from divestitures and exchanges | 32 | 23 | |||||
Other investing activities | (1 | ) | 3 | ||||
Net cash used in investing activities | (647 | ) | (203 | ) | |||
Cash flows from financing activities | |||||||
Repayment of long-term debt | (14 | ) | (14 | ) | |||
Common Shares reissued for benefit plans, net of tax payments | (8 | ) | 7 | ||||
Repurchase of Common Shares | (21 | ) | — | ||||
Distributions to noncontrolling interests | (3 | ) | (5 | ) | |||
Other financing activities | (2 | ) | (5 | ) | |||
Net cash used in financing activities | (48 | ) | (17 | ) | |||
Net increase (decrease) in cash, cash equivalents and restricted cash | (8 | ) | 380 | ||||
Cash, cash equivalents and restricted cash | |||||||
Beginning of period | 583 | 352 | |||||
End of period | $ | 575 | $ | 732 |
United States Cellular Corporation | |||||||
Consolidated Balance Sheet Highlights | |||||||
(Unaudited) | |||||||
ASSETS | |||||||
September 30, 20191 | December 31, 2018 | ||||||
(Dollars in millions) | |||||||
Current assets | |||||||
Cash and cash equivalents | $ | 570 | $ | 580 | |||
Short-term investments | — | 17 | |||||
Accounts receivable | 993 | 976 | |||||
Inventory, net | 139 | 142 | |||||
Prepaid expenses | 49 | 63 | |||||
Other current assets | 19 | 34 | |||||
Total current assets | 1,770 | 1,812 | |||||
Assets held for sale | 9 | 54 | |||||
Licenses | 2,461 | 2,186 | |||||
Investments in unconsolidated entities | 471 | 441 | |||||
Property, plant and equipment, net | 2,144 | 2,202 | |||||
Operating lease right-of-use assets | 897 | — | |||||
Other assets and deferred charges | 539 | 579 | |||||
Total assets | $ | 8,291 | $ | 7,274 |
United States Cellular Corporation | |||||||
Consolidated Balance Sheet Highlights | |||||||
(Unaudited) | |||||||
LIABILITIES AND EQUITY | |||||||
September 30, 20191 | December 31, 2018 | ||||||
(Dollars in millions, except per share amounts) | |||||||
Current liabilities | |||||||
Current portion of long-term debt | $ | 19 | $ | 19 | |||
Accounts payable | 337 | 313 | |||||
Customer deposits and deferred revenues | 155 | 157 | |||||
Accrued taxes | 88 | 30 | |||||
Accrued compensation | 68 | 78 | |||||
Short-term operating lease liabilities | 104 | — | |||||
Other current liabilities | 78 | 94 | |||||
Total current liabilities | 849 | 691 | |||||
Liabilities held for sale | 1 | 1 | |||||
Deferred liabilities and credits | |||||||
Deferred income tax liability, net | 477 | 510 | |||||
Long-term operating lease liabilities | 864 | — | |||||
Other deferred liabilities and credits | 312 | 389 | |||||
Long-term debt, net | 1,592 | 1,605 | |||||
Noncontrolling interests with redemption features | 11 | 11 | |||||
Equity | |||||||
U.S. Cellular shareholders’ equity | |||||||
Series A Common and Common Shares, par value $1 per share | 88 | 88 | |||||
Additional paid-in capital | 1,622 | 1,590 | |||||
Treasury shares | (70 | ) | (65 | ) | |||
Retained earnings | 2,532 | 2,444 | |||||
Total U.S. Cellular shareholders’ equity | 4,172 | 4,057 | |||||
Noncontrolling interests | 13 | 10 | |||||
Total equity | 4,185 | 4,067 | |||||
Total liabilities and equity | $ | 8,291 | $ | 7,274 |
1 | As of January 1, 2019, U.S. Cellular adopted the new lease accounting standard, ASC 842, using a modified retrospective method. Under this method, the new accounting standard is applied only to the most recent period presented. As a result, 2019 amounts include the impacts of ASC 842, but 2018 amounts remain as previously reported. |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
(Dollars in millions) | |||||||||||||||
Cash flows from operating activities (GAAP) | $ | 211 | $ | 235 | $ | 687 | $ | 600 | |||||||
Less: Cash paid for additions to property, plant and equipment | 157 | 103 | 439 | 277 | |||||||||||
Free cash flow (Non-GAAP)1 | $ | 54 | $ | 132 | $ | 248 | $ | 323 |
1 | 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. |
Three Months Ended September 30, | |||||||
2019 | 2018 | ||||||
(Dollars in millions) | |||||||
Net income (GAAP) | $ | 24 | $ | 37 | |||
Add back: | |||||||
Income tax expense | 15 | 14 | |||||
Interest expense | 29 | 29 | |||||
Depreciation, amortization and accretion | 181 | 160 | |||||
EBITDA (Non-GAAP) | 249 | 240 | |||||
Add back or deduct: | |||||||
(Gain) loss on asset disposals, net | 5 | 3 | |||||
(Gain) loss on license sales and exchanges, net | 2 | — | |||||
Adjusted EBITDA (Non-GAAP) | 256 | 243 | |||||
Deduct: | |||||||
Equity in earnings of unconsolidated entities | 44 | 42 | |||||
Interest and dividend income | 4 | 4 | |||||
Adjusted OIBDA (Non-GAAP) | 208 | 197 | |||||
Deduct: | |||||||
Depreciation, amortization and accretion | 181 | 160 | |||||
(Gain) loss on asset disposals, net | 5 | 3 | |||||
(Gain) loss on license sales and exchanges, net | 2 | — | |||||
Operating income (GAAP) | $ | 20 | $ | 34 |
▪ | Intense competition in the markets in which U.S. Cellular operates could adversely affect U.S. Cellular’s revenues or increase its costs to compete. |
▪ | A failure by U.S. Cellular to successfully execute its business strategy (including planned acquisitions, spectrum acquisitions, divestitures and exchanges) or allocate resources or capital effectively could have an adverse effect on U.S. Cellular’s business, financial condition or results of operations. |
▪ | Uncertainty in U.S. Cellular’s future cash flow and liquidity or the inability to access capital, deterioration in the capital markets, other changes in U.S. Cellular’s performance or market conditions, changes in U.S. Cellular’s credit ratings or other factors could limit or restrict the availability of financing on terms and prices acceptable to U.S. Cellular, which could require U.S. Cellular to reduce its construction, development or acquisition programs, reduce the amount of spectrum licenses acquired, and/or reduce or cease share repurchases. |
▪ | U.S. Cellular has a significant amount of indebtedness which could adversely affect its financial performance and in turn adversely affect its ability to make payments on its indebtedness, comply with terms of debt covenants and incur additional debt. |
▪ | Changes in roaming practices or other factors could cause U.S. Cellular's roaming revenues to decline from current levels, roaming expenses to increase from current levels and/or impact U.S. Cellular's ability to service its customers in geographic areas where U.S. Cellular does not have its own network, which could have an adverse effect on U.S. Cellular's business, financial condition or results of operations. |
▪ | A failure by U.S. Cellular to obtain access to adequate radio spectrum to meet current or anticipated future needs and/or to accurately predict future needs for radio spectrum could have an adverse effect on U.S. Cellular’s business, financial condition or results of operations. |
▪ | To the extent conducted by the FCC, U.S. Cellular may participate in FCC auctions for additional spectrum or for funding in certain Universal Service programs in the future directly or indirectly and, during certain periods, will be subject to the FCC’s anti-collusion rules, which could have an adverse effect on U.S. Cellular. |
▪ | Failure by U.S. Cellular to timely or fully comply with any existing applicable legislative and/or regulatory requirements or changes thereto could adversely affect U.S. Cellular’s business, financial condition or results of operations. |
▪ | An inability to attract people of outstanding talent throughout all levels of the organization, to develop their potential through education and assignments, and to retain them by keeping them engaged, challenged and properly rewarded could have an adverse effect on U.S. Cellular's business, financial condition or results of operations. |
▪ | U.S. Cellular’s assets and revenue are concentrated in the U.S. wireless telecommunications industry. Consequently, its operating results may fluctuate based on factors related primarily to conditions in this industry. |
▪ | U.S. Cellular’s smaller scale relative to larger competitors that may have greater financial and other resources than U.S. Cellular could cause U.S. Cellular to be unable to compete successfully, which could adversely affect its business, financial condition or results of operations. |
▪ | Changes in various business factors, including changes in demand, customer preferences and perceptions, price competition, churn from customer switching activity and other factors, could have an adverse effect on U.S. Cellular’s business, financial condition or results of operations. |
▪ | Advances or changes in technology could render certain technologies used by U.S. Cellular obsolete, could put U.S. Cellular at a competitive disadvantage, could reduce U.S. Cellular’s revenues or could increase its costs of doing business. |
▪ | Complexities associated with deploying new technologies present substantial risk and U.S. Cellular investments in unproven technologies may not produce the benefits that U.S. Cellular expects. |
▪ | U.S. Cellular receives regulatory support and is subject to numerous surcharges and fees from federal, state and local governments, and the applicability and the amount of the support and fees are subject to great uncertainty, which could have an adverse effect on U.S. Cellular’s business, financial condition or results of operations. |
▪ | Performance under device purchase agreements could have a material adverse impact on U.S. Cellular's business, financial condition or results of operations. |
▪ | Changes in U.S. Cellular’s enterprise value, changes in the market supply or demand for wireless licenses, adverse developments in the business or the industry in which U.S. Cellular is involved and/or other factors could require U.S. Cellular to recognize impairments in the carrying value of its licenses and/or physical assets. |
▪ | Costs, integration problems or other factors associated with acquisitions, divestitures or exchanges of properties or licenses and/or expansion of U.S. Cellular’s business could have an adverse effect on U.S. Cellular’s business, financial condition or results of operations. |
▪ | A failure by U.S. Cellular to complete significant network construction and systems implementation activities as part of its plans to improve the quality, coverage, capabilities and capacity of its network, support and other systems and infrastructure could have an adverse effect on its operations. |
▪ | Difficulties involving third parties with which U.S. Cellular does business, including changes in U.S. Cellular's relationships with or financial or operational difficulties of key suppliers or independent agents and third party national retailers who market U.S. Cellular’s services, could adversely affect U.S. Cellular’s business, financial condition or results of operations. |
▪ | U.S. Cellular has significant investments in entities that it does not control. Losses in the value of such investments could have an adverse effect on U.S. Cellular’s financial condition or results of operations. |
▪ | A failure by U.S. Cellular to maintain flexible and capable telecommunication networks or information technology, or a material disruption thereof, could have an adverse effect on U.S. Cellular’s business, financial condition or results of operations. |
▪ | U.S. Cellular has experienced and, in the future, expects to experience cyber-attacks or other breaches of network or information technology security of varying degrees on a regular basis, which could have an adverse effect on U.S. Cellular's business, financial condition or results of operations. |
▪ | Changes in facts or circumstances, including new or additional information, could require U.S. Cellular to record adjustments to amounts reflected in the financial statements, which could have an adverse effect on U.S. Cellular’s business, financial condition or results of operations. |
▪ | Disruption in credit or other financial markets, a deterioration of U.S. or global economic conditions or other events could, among other things, impede U.S. Cellular’s access to or increase the cost of financing its operating and investment activities and/or result in reduced revenues and lower operating income and cash flows, which would have an adverse effect on U.S. Cellular’s business, financial condition or results of operations. |
▪ | Settlements, judgments, restraints on its current or future manner of doing business and/or legal costs resulting from pending and future litigation could have an adverse effect on U.S. Cellular’s business, financial condition or results of operations. |
▪ | The possible development of adverse precedent in litigation or conclusions in professional studies to the effect that radio frequency emissions from wireless devices and/or cell sites cause harmful health consequences, including cancer or tumors, or may interfere with various electronic medical devices such as pacemakers, could have an adverse effect on U.S. Cellular’s business, financial condition or results of operations. |
▪ | Claims of infringement of intellectual property and proprietary rights of others, primarily involving patent infringement claims, could prevent U.S. Cellular from using necessary technology to provide products or services or subject U.S. Cellular to expensive intellectual property litigation or monetary penalties, which could have an adverse effect on U.S. Cellular’s business, financial condition or results of operations. |
▪ | There are potential conflicts of interests between TDS and U.S. Cellular. |
▪ | Certain matters, such as control by TDS and provisions in the U.S. Cellular Restated Certificate of Incorporation, may serve to discourage or make more difficult a change in control of U.S. Cellular or have other consequences. |
▪ | The market price of U.S. Cellular’s Common Shares is subject to fluctuations due to a variety of factors. |
▪ | Any of the foregoing events or other events could cause revenues, earnings, capital expenditures and/or any other financial or statistical information to vary from U.S. Cellular’s forward-looking estimates by a material amount. |
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