Exhibit 99.l NEWS RELEASE
As previously announced, U.S. Cellular will hold a teleconference Oct. 31, 2014 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 third quarter 2014 results
Reports positive net additions
CHICAGO, (Oct. 31, 2014) — United States Cellular Corporation (NYSE:USM) reported total operating revenues of $1,000.4 million for the third quarter of 2014, versus $939.2 million for the same period one year ago. Net loss attributable to U.S. Cellular shareholders and related diluted loss per share were $22.2 million and $0.26 respectively, for the third quarter of 2014, compared to $9.9 million and $0.12, respectively, in the comparable period one year ago.
“Our top strategic priority this year is to grow our customer base,” said Kenneth R. Meyers, U.S. Cellular president and CEO. “We have made significant progress toward that objective with net postpaid customer additions of 52,000 in the quarter.
“Our device and data pricing are resonating with new and existing customers. Growth in both data usage and the adoption of Equipment Installment Plans drove a seven percent increase in total revenues, though margins remain under pressure from higher smartphone subsidies and investment spending to support customer growth.
“As we move into the holiday sales season, I’m confident that we will continue to attract wireless consumers with our strong value proposition that offers a high-quality network experience, competitive devices and plans. Our service levels have dramatically improved and we are providing the outstanding experience our customers expect and deserve.”
1
2014 Estimated Results
U.S. Cellular’s estimates of full-year 2014 results are shown below. Such estimates represent U.S. Cellular’s view as of October 31, 2014. 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.
|
| 2014 Estimated Results | ||
|
| Current |
| Previous |
(Dollars in millions) |
|
|
| |
Total operating revenues | $3,900-$4,000 |
| Unchanged | |
Adjusted income before income taxes (1) | $375-$450 |
| $350-$450 | |
Capital expenditures | $600 |
| $640 | |
(1) Adjusted income before income taxes is defined as income before income taxes, adjusted for the items set forth in the reconciliation below. Adjusted income before income taxes excludes these items in order to show operating results on a more comparable basis from period to period. From time to time, U.S. Cellular may exclude other items from adjusted income before income taxes if such items help reflect operating results on a more comparable basis. U.S. Cellular does not intend to imply that any such items that are excluded are non-recurring, infrequent or unusual; such items may occur in the future. Adjusted income before income taxes is not a measure of financial performance under Generally Accepted Accounting Principles in the United States (“GAAP”) and should not be considered as an alternative to income before income taxes as an indicator of the company’s operating performance or as an alternative to cash flows from operating activities, determined in accordance with GAAP, as an indicator of cash flows or as a measure of liquidity. U.S. Cellular believes adjusted income before income taxes is a useful measure of U.S. Cellular’s operating results before significant recurring non-cash charges, discrete gains and losses, and financing charges (interest expense). The following table provides a reconciliation of income before income taxes to adjusted income before income taxes for 2014 estimated results, nine months ended September 30, 2014 actual results, and year ended December 31, 2013 actual results:
|
|
|
| Actual Results | ||
|
| 2014 Estimated Results |
| Nine Months Ended September 30, 2014 |
| Year Ended December 31, 2013 |
(Dollars in millions) |
|
|
|
|
| |
Income (loss) before income taxes | ($164)-($89) |
| ($24) |
| $258 | |
Depreciation, amortization and accretion expense | $620 |
| $465 |
| $804 | |
(Gain) loss on sale of business and other exit costs, net | ($50) |
| ($28) |
| ($247) | |
(Gain) loss on license sales and exchanges | ($91) |
| ($91) |
| ($255) | |
(Gain) loss on investments | ― |
| ― |
| ($19) | |
Interest expense | $60 |
| $43 |
| $44 | |
Adjusted income before income taxes | $375-$450 |
| $365 |
| $585 | |
2
Conference Call Information
U.S. Cellular will hold a conference call on Oct. 31, 2014 at 9:30 a.m. CDT.
§ Access the live call on the Events & Presentation page of investors.uscellular.com or at http://www.videonewswire.com/event.asp?id=100845.
§ Access the call by phone at 877/407-8029 (US/Canada), no pass code required.
Before the call, certain financial and statistical information to be discussed during the call will be posted to investors.uscellular.com. The call will be archived on the Events & Presentations page of investors.uscellular.com.
About U.S. Cellular
United States Cellular Corporation provides a comprehensive range of wireless products and services, excellent customer support, and a high-quality network to 4.7 million customers in 23 states. The Chicago-based company had 6,500 full- and part-time associates as of Sept. 30, 2014. At the end of the third quarter of 2014, Telephone and Data Systems, Inc. owned 84 percent of U.S. Cellular. For more information about U.S. Cellular, visit uscellular.com.
Contacts
Jane McCahon, Vice President, Corporate Relations and Corporate Secretary
312-592-5379
jane.mccahon@tdsinc.com
Julie Mathews, Investor Relations Manager
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: impacts of any pending acquisition and divestiture transactions, including, but not limited to, the ability to obtain regulatory approvals, successfully complete the transactions and the financial impacts of such transactions; the ability of the company to successfully manage and grow its markets; the overall economy; competition; the ability to obtain or maintain roaming arrangements with other carriers on acceptable terms; the state and federal telecommunications regulatory environment; the value of assets and investments; adverse changes in the ratings afforded TDS and U.S. Cellular debt securities by accredited ratings organizations; industry consolidation; advances in telecommunications technology; uncertainty of access to the capital markets; pending and future litigation; changes in income tax rates, laws, regulations or rulings; acquisitions/divestitures of properties and/or licenses; changes in customer growth rates, average monthly revenue per user, churn rates, roaming revenue and terms, the availability of wireless devices, or the mix of products and services offered by U.S. Cellular. Investors are encouraged to consider these and other risks and uncertainties that are discussed in the Form 8-K Current Report used by U.S. Cellular to furnish this press release to the Securities and Exchange Commission (“SEC”), which are incorporated by reference herein.
3
United States Cellular Corporation | ||||||||||||||||
Total Markets* Summary Operating Data (Unaudited) | ||||||||||||||||
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of or for the Quarter Ended | 9/30/2014 |
| 6/30/2014 |
| 3/31/2014 |
| 12/31/2013 |
| 9/30/2013 | |||||||
Retail Customers |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
| Postpaid |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
| Total at end of period |
| 4,200,000 |
|
| 4,148,000 |
|
| 4,174,000 |
|
| 4,267,000 |
|
| 4,343,000 |
|
| Gross additions |
| 251,000 |
|
| 190,000 |
|
| 197,000 |
|
| 176,000 |
|
| 165,000 |
|
| Net additions (losses) |
| 52,000 |
|
| (26,000) |
|
| (93,000) |
|
| (71,000) |
|
| (60,000) |
|
| ARPU (1) | $ | 56.37 |
| $ | 56.82 |
| $ | 57.59 |
| $ | 53.53 |
| $ | 54.64 |
|
| Churn rate (2) |
| 1.6% |
|
| 1.7% |
|
| 2.3% |
|
| 1.9% |
|
| 1.7% |
|
| Smartphone penetration (3) |
| 57.9% |
|
| 55.3% |
|
| 53.1% |
|
| 50.8% |
|
| 47.1% |
| Prepaid |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
| Total at end of period |
| 350,000 |
|
| 352,000 |
|
| 356,000 |
|
| 343,000 |
|
| 370,000 |
|
| Gross additions |
| 64,000 |
|
| 65,000 |
|
| 85,000 |
|
| 63,000 |
|
| 65,000 |
|
| Net additions (losses) |
| (2,000) |
|
| (4,000) |
|
| 13,000 |
|
| (26,000) |
|
| (11,000) |
|
| ARPU (1) | $ | 34.40 |
| $ | 34.02 |
| $ | 32.22 |
| $ | 31.66 |
| $ | 28.72 |
|
| Churn rate (2) |
| 6.3% |
|
| 6.5% |
|
| 6.9% |
|
| 8.3% |
|
| 6.8% |
Total customers at end of period |
| 4,674,000 |
|
| 4,653,000 |
|
| 4,684,000 |
|
| 4,774,000 |
|
| 4,875,000 | ||
Billed ARPU (1) | $ | 53.24 |
| $ | 53.36 |
| $ | 53.93 |
| $ | 50.25 |
| $ | 50.92 | ||
Service revenue ARPU (1) | $ | 60.92 |
| $ | 60.32 |
| $ | 60.19 |
| $ | 57.05 |
| $ | 58.36 | ||
Smartphones sold as a percent of total devices sold |
| 73.3% |
|
| 72.6% |
|
| 73.0% |
|
| 79.6% |
|
| 65.2% | ||
Total population |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
|
| Consolidated markets (4) |
| 54,817,000 |
|
| 54,817,000 |
|
| 54,817,000 |
|
| 58,013,000 |
|
| 84,025,000 |
|
| Consolidated operating markets (4) |
| 31,729,000 |
|
| 31,729,000 |
|
| 31,729,000 |
|
| 31,759,000 |
|
| 31,822,000 |
Market penetration at end of period |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
|
| Consolidated markets (5) |
| 8.5% |
|
| 8.5% |
|
| 8.5% |
|
| 8.2% |
|
| 5.8% |
|
| Consolidated operating markets (5) |
| 14.7% |
|
| 14.7% |
|
| 14.8% |
|
| 15.0% |
|
| 15.3% |
Capital expenditures (000s) | $ | 142,452 |
| $ | 143,927 |
| $ | 89,581 |
| $ | 208,135 |
| $ | 242,459 | ||
Total cell sites in service |
| 6,209 |
|
| 6,183 |
|
| 6,165 |
|
| 6,975 |
|
| 7,687 | ||
Owned towers |
| 4,487 |
|
| 4,457 |
|
| 4,448 |
|
| 4,448 |
|
| 4,422 | ||
* Represents U.S. Cellular’s consolidated markets. These results include markets which U. S. Cellular currently consolidates, or previously consolidated in the periods presented, and are not adjusted in prior periods for subsequent divestitures or deconsolidations.
Refer to U.S. Cellular’s Form 8-K filed on November 1, 2013 for pro forma financial information related to the Divestiture Transaction and the NY1 and NY2 Deconsolidation for the three and nine months ended September 30, 2013, as if the transactions had occurred at the beginning of the period.
4
United States Cellular Corporation | ||||||||||||||||
Core* Markets Summary Operating Data (Unaudited) | ||||||||||||||||
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|
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|
|
|
|
|
|
|
|
|
|
|
As of or for the Quarter Ended | 9/30/2014 |
| 6/30/2014 |
| 3/31/2014 |
| 12/31/2013 |
| 9/30/2013 | |||||||
Retail Customers |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
| Postpaid |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
| Total at end of period |
| 4,200,000 |
|
| 4,148,000 |
|
| 4,174,000 |
|
| 4,267,000 |
|
| 4,343,000 |
|
| Gross additions |
| 251,000 |
|
| 190,000 |
|
| 197,000 |
|
| 176,000 |
|
| 165,000 |
|
| Net additions (losses) |
| 52,000 |
|
| (26,000) |
|
| (93,000) |
|
| (71,000) |
|
| (60,000) |
|
| ARPU (1) | $ | 56.37 |
| $ | 56.82 |
| $ | 57.59 |
| $ | 53.53 |
| $ | 54.64 |
|
| Churn rate (2) |
| 1.6% |
|
| 1.7% |
|
| 2.3% |
|
| 1.9% |
|
| 1.7% |
|
| Smartphone penetration (3) |
| 57.9% |
|
| 55.3% |
|
| 53.1% |
|
| 50.8% |
|
| 47.1% |
| Prepaid |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
| Total at end of period |
| 350,000 |
|
| 352,000 |
|
| 356,000 |
|
| 343,000 |
|
| 370,000 |
|
| Gross additions |
| 64,000 |
|
| 65,000 |
|
| 85,000 |
|
| 63,000 |
|
| 65,000 |
|
| Net additions (losses) |
| (2,000) |
|
| (4,000) |
|
| 13,000 |
|
| (26,000) |
|
| (11,000) |
|
| ARPU (1) | $ | 34.40 |
| $ | 34.02 |
| $ | 32.22 |
| $ | 31.66 |
| $ | 28.72 |
|
| Churn rate (2) |
| 6.3% |
|
| 6.5% |
|
| 6.9% |
|
| 8.3% |
|
| 6.8% |
Total customers at end of period |
| 4,674,000 |
|
| 4,653,000 |
|
| 4,684,000 |
|
| 4,774,000 |
|
| 4,875,000 | ||
Billed ARPU (1) | $ | 53.24 |
| $ | 53.36 |
| $ | 53.93 |
| $ | 50.25 |
| $ | 50.92 | ||
Service revenue ARPU (1) | $ | 60.92 |
| $ | 60.32 |
| $ | 60.19 |
| $ | 57.05 |
| $ | 58.36 | ||
Smartphones sold as a percent of total devices sold |
| 73.3% |
|
| 72.6% |
|
| 73.0% |
|
| 79.6% |
|
| 65.2% | ||
Total population |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
|
| Consolidated markets (4) |
| 54,817,000 |
|
| 54,817,000 |
|
| 54,817,000 |
|
| 58,013,000 |
|
| 84,025,000 |
|
| Consolidated operating markets (4) |
| 31,729,000 |
|
| 31,729,000 |
|
| 31,729,000 |
|
| 31,759,000 |
|
| 31,822,000 |
Market penetration at end of period |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
|
| Consolidated markets (5) |
| 8.5% |
|
| 8.5% |
|
| 8.5% |
|
| 8.2% |
|
| 5.8% |
|
| Consolidated operating markets (5) |
| 14.7% |
|
| 14.7% |
|
| 14.8% |
|
| 15.0% |
|
| 15.3% |
Capital expenditures (000s) | $ | 142,452 |
| $ | 143,927 |
| $ | 89,581 |
| $ | 211,247 |
| $ | 239,332 | ||
Total cell sites in service |
| 6,209 |
|
| 6,183 |
|
| 6,165 |
|
| 6,161 |
|
| 6,127 | ||
Owned towers |
| 3,922 |
|
| 3,892 |
|
| 3,883 |
|
| 3,883 |
|
| 3,857 | ||
* U.S. Cellular’s Core Markets excludes the results of the Divestiture Markets and NY1 and NY2 Partnerships for the periods presented.
Refer to U.S. Cellular’s Form 8-K filed on November 1, 2013 for pro forma financial information related to the Divestiture Transaction and the NY1 and NY2 Deconsolidation for the three and nine months ended September 30, 2013, as if the transactions had occurred at the beginning of the period.
(1) ARPU metrics are calculated by dividing a revenue base by an average number of customers by the number of months in the period. These revenue bases and customer populations are shown below:
a. Postpaid ARPU consists of total postpaid service revenues and postpaid customers.
b. Prepaid ARPU consists of total prepaid service revenues and prepaid customers.
c. Billed ARPU consists of total retail service or “billed” revenues (total postpaid, prepaid and reseller service revenues) and postpaid, prepaid and reseller customers.
d. Service revenue ARPU consists of total retail service revenues, inbound roaming and other service revenues and postpaid, prepaid and reseller customers.
(2) Churn metrics represent the percentage of the postpaid or prepaid customers that disconnect service each month. These metrics represent the average monthly postpaid or prepaid churn rate for each respective period.
(3) Smartphones represent wireless devices which run on an Android, Apple, BlackBerry or Windows Mobile operating system, excluding tablets. Smartphone penetration is calculated by dividing postpaid smartphone customers by total postpaid customers.
(4) The decrease in the population of Consolidated markets is due primarily to the divestiture of the Mississippi Valley non-operating license in October 2013 and the majority of the St. Louis area non-operating market license in March 2014. Total Population is used only to calculate market penetration of consolidated markets and consolidated operating markets, respectively. See footnote (5) below.
(5) Market penetration is calculated by dividing the number of wireless customers at the end of the period by the total population of consolidated markets and consolidated operating markets, respectively, as estimated by Claritas. The increase in penetration is due primarily to a lower denominator as a result of the license divestitures described in footnote (4) above.
5
United States Cellular Corporation | ||||||||||||
Consolidated Statement of Operations Highlights | ||||||||||||
Three Months Ended September 30, | ||||||||||||
(Unaudited, dollars and shares in thousands, except per share amounts) | ||||||||||||
|
|
|
|
|
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|
|
| Change | |||
|
|
| 2014 |
| 2013 |
| Amount |
| Percent | |||
Operating revenues |
|
|
|
|
|
|
|
|
|
| ||
| Service | $ | 851,063 |
| $ | 862,330 |
| $ | (11,267) |
| (1%) | |
| Equipment sales |
| 149,356 |
|
| 76,906 |
|
| 72,450 |
| 94% | |
|
| Total operating revenues |
| 1,000,419 |
|
| 939,236 |
|
| 61,183 |
| 7% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
|
|
|
|
|
|
|
| ||
| System operations (excluding Depreciation, amortization and accretion reported below) |
| 199,750 |
|
| 177,431 |
|
| 22,319 |
| 13% | |
| Cost of equipment sold |
| 307,862 |
|
| 193,392 |
|
| 114,470 |
| 59% | |
| Selling, general and administrative |
| 397,545 |
|
| 410,468 |
|
| (12,923) |
| (3%) | |
| Depreciation, amortization and accretion |
| 148,952 |
|
| 200,985 |
|
| (52,033) |
| (26%) | |
| (Gain) loss on asset disposals, net |
| 7,947 |
|
| 1,701 |
|
| 6,246 |
| >100% | |
| (Gain) loss on sale of business and other exit costs, net |
| (10,283) |
|
| (1,534) |
|
| (8,749) |
| >100% | |
|
| Total operating expenses |
| 1,051,773 |
|
| 982,443 |
|
| 69,330 |
| 7% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss) |
| (51,354) |
|
| (43,207) |
|
| (8,147) |
| (19%) | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment and other income (expense) |
|
|
|
|
|
|
|
|
|
| ||
| Equity in earnings of unconsolidated entities |
| 35,971 |
|
| 37,360 |
|
| (1,389) |
| (4%) | |
| Interest and dividend income |
| 3,572 |
|
| 1,095 |
|
| 2,477 |
| >100% | |
| Interest expense |
| (13,514) |
|
| (11,329) |
|
| (2,185) |
| (19%) | |
| Other, net |
| 95 |
|
| 47 |
|
| 48 |
| >100% | |
|
| Total investment and other income |
| 26,124 |
|
| 27,173 |
|
| (1,049) |
| (4%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes |
| (25,230) |
|
| (16,034) |
|
| (9,196) |
| (57%) | ||
| Income tax expense (benefit) |
| (1,459) |
|
| (6,433) |
|
| 4,974 |
| 77% | |
Net income (loss) |
| (23,771) |
|
| (9,601) |
|
| (14,170) |
| >100% | ||
| Less: Net income (loss) attributable to noncontrolling interests, net of tax |
| (1,606) |
|
| 258 |
|
| (1,864) |
| >(100%) | |
Net income (loss) attributable to U.S. Cellular shareholders | $ | (22,165) |
| $ | (9,859) |
| $ | (12,306) |
| >100% | ||
|
|
|
|
|
|
|
|
|
|
|
| |
Basic weighted average shares outstanding |
| 84,233 |
|
| 84,005 |
|
| 228 |
| — | ||
Basic earnings (loss) per share attributable to U.S. Cellular shareholders | $ | (0.26) |
| $ | (0.12) |
| $ | (0.14) |
| >100% | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted average shares outstanding |
| 84,233 |
|
| 84,005 |
|
| 228 |
| — | ||
Diluted earnings (loss) per share attributable to U.S. Cellular shareholders | $ | (0.26) |
| $ | (0.12) |
| $ | (0.14) |
| >100% | ||
6
United States Cellular Corporation | ||||||||||||
Consolidated Statement of Operations Highlights | ||||||||||||
Nine Months Ended September 30, | ||||||||||||
(Unaudited, dollars and shares in thousands, except per share amounts) | ||||||||||||
|
|
|
|
|
|
|
|
| Change | |||
|
|
| 2014 |
| 2013 |
| Amount |
| Percent | |||
Operating revenues |
|
|
|
|
|
|
|
|
|
| ||
| Service | $ | 2,548,149 |
| $ | 2,769,645 |
| $ | (221,496) |
| (8%) | |
| Equipment sales |
| 335,854 |
|
| 246,467 |
|
| 89,387 |
| 36% | |
|
| Total operating revenues |
| 2,884,003 |
|
| 3,016,112 |
|
| (132,109) |
| (4%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
|
|
|
|
|
|
|
| ||
| System operations (excluding Depreciation, amortization and accretion reported below) |
| 567,488 |
|
| 585,997 |
|
| (18,509) |
| (3%) | |
| Cost of equipment sold |
| 850,314 |
|
| 652,153 |
|
| 198,161 |
| 30% | |
| Selling, general and administrative |
| 1,197,361 |
|
| 1,234,675 |
|
| (37,314) |
| (3%) | |
| Depreciation, amortization and accretion |
| 465,042 |
|
| 593,410 |
|
| (128,368) |
| (22%) | |
| (Gain) loss on asset disposals, net |
| 16,774 |
|
| 16,153 |
|
| 621 |
| 4% | |
| (Gain) loss on sale of business and other exit costs, net |
| (27,694) |
|
| (243,627) |
|
| 215,933 |
| 89% | |
| (Gain) loss on license sales and exchanges |
| (91,446) |
|
| — |
|
| (91,446) |
| N/M | |
|
| Total operating expenses |
| 2,977,839 |
|
| 2,838,761 |
|
| 139,078 |
| 5% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss) |
| (93,836) |
|
| 177,351 |
|
| (271,187) |
| >(100%) | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment and other income (expense) |
|
|
|
|
|
|
|
|
|
| ||
| Equity in earnings of unconsolidated entities |
| 106,166 |
|
| 99,797 |
|
| 6,369 |
| 6% | |
| Interest and dividend income |
| 6,029 |
|
| 2,967 |
|
| 3,062 |
| >100% | |
| Gain (loss) on investments |
| — |
|
| 18,527 |
|
| (18,527) |
| N/M | |
| Interest expense |
| (42,712) |
|
| (32,393) |
|
| (10,319) |
| (32%) | |
| Other, net |
| 281 |
|
| 153 |
|
| 128 |
| 84% | |
|
| Total investment and other income |
| 69,764 |
|
| 89,051 |
|
| (19,287) |
| (22%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes |
| (24,072) |
|
| 266,402 |
|
| (290,474) |
| >(100%) | ||
| Income tax expense |
| 746 |
|
| 121,618 |
|
| (120,872) |
| (99%) | |
Net income (loss) |
| (24,818) |
|
| 144,784 |
|
| (169,602) |
| >(100%) | ||
| Less: Net income (loss) attributable to noncontrolling interests, net of tax |
| (3,346) |
|
| 6,338 |
|
| (9,684) |
| >(100%) | |
Net income (loss) attributable to U.S. Cellular shareholders | $ | (21,472) |
| $ | 138,446 |
| $ | (159,918) |
| >(100%) | ||
|
|
|
|
|
|
|
|
|
|
|
| |
Basic weighted average shares outstanding |
| 84,262 |
|
| 83,897 |
|
| 365 |
| — | ||
Basic earnings (loss) per share attributable to U.S. Cellular shareholders | $ | (0.25) |
| $ | 1.65 |
| $ | (1.90) |
| >(100%) | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted average shares outstanding |
| 84,262 |
|
| 84,676 |
|
| (414) |
| — | ||
Diluted earnings (loss) per share attributable to U.S. Cellular shareholders | $ | (0.25) |
| $ | 1.64 |
| $ | (1.89) |
| >(100%) | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
Special dividend per share to U.S. Cellular shareholders | $ | — |
| $ | 5.75 |
| $ | (5.75) |
| N/M | ||
7
United States Cellular Corporation | ||||||
Consolidated Balance Sheet Highlights | ||||||
(Unaudited, dollars in thousands) | ||||||
|
|
|
|
|
|
|
ASSETS | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| September 30, |
| December 31, | ||
|
| 2014 |
| 2013 | ||
Current assets |
|
|
|
|
| |
| Cash and cash equivalents | $ | 273,798 |
| $ | 342,065 |
| Short-term investments |
| 40,014 |
|
| 50,104 |
| Accounts receivable from customers and others |
| 516,373 |
|
| 586,595 |
| Inventory, net |
| 184,822 |
|
| 238,188 |
| Prepaid expenses |
| 62,158 |
|
| 65,596 |
| Net deferred income tax asset |
| 97,856 |
|
| 99,105 |
| Other current assets |
| 23,237 |
|
| 19,538 |
|
|
| 1,198,258 |
|
| 1,401,191 |
|
|
|
|
|
|
|
Assets held for sale |
| 68,288 |
|
| 16,027 | |
|
|
|
|
|
|
|
Investments |
|
|
|
|
| |
| Licenses |
| 1,390,672 |
|
| 1,401,126 |
| Goodwill |
| 387,524 |
|
| 387,524 |
| Investments in unconsolidated entities |
| 296,900 |
|
| 265,585 |
|
|
| 2,075,096 |
|
| 2,054,235 |
|
|
|
|
|
|
|
Property, plant and equipment |
|
|
|
|
| |
| In service and under construction |
| 7,647,406 |
|
| 7,717,512 |
| Less: Accumulated depreciation |
| 4,900,957 |
|
| 4,860,992 |
|
|
| 2,746,449 |
|
| 2,856,520 |
|
|
|
|
|
|
|
Other assets and deferred charges |
| 168,984 |
|
| 117,735 | |
|
|
|
|
|
|
|
Total assets | $ | 6,257,075 |
| $ | 6,445,708 | |
8
United States Cellular Corporation | |||||||
Consolidated Balance Sheet Highlights | |||||||
(Unaudited, dollars in thousands) | |||||||
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY | |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| September 30, |
| December 31, | ||
|
|
| 2014 |
| 2013 | ||
Current liabilities |
|
|
|
|
| ||
| Current portion of long-term debt | $ | 46 |
| $ | 166 | |
| Accounts payable |
|
|
|
|
| |
|
| Affiliated |
| 10,367 |
|
| 11,243 |
|
| Trade |
| 395,484 |
|
| 405,583 |
| Customer deposits and deferred revenues |
| 294,377 |
|
| 256,740 | |
| Accrued taxes |
| 55,091 |
|
| 73,820 | |
| Accrued compensation |
| 57,573 |
|
| 66,566 | |
| Other current liabilities |
| 132,294 |
|
| 192,055 | |
|
|
|
| 945,232 |
|
| 1,006,173 |
|
|
|
|
|
|
|
|
Deferred liabilities and credits |
|
|
|
|
| ||
| Net deferred income tax liability |
| 790,618 |
|
| 836,297 | |
| Other deferred liabilities and credits |
| 305,891 |
|
| 315,073 | |
|
|
|
|
|
|
|
|
Long-term debt |
| 876,756 |
|
| 878,032 | ||
|
|
|
|
|
|
|
|
Noncontrolling interests with redemption features |
| 1,007 |
|
| 536 | ||
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
| ||
U.S. Cellular shareholders' equity |
|
|
|
|
| ||
| Series A Common and Common Shares, par value $1 per share |
| 88,074 |
|
| 88,074 | |
| Additional paid-in capital |
| 1,468,781 |
|
| 1,424,729 | |
| Treasury shares |
| (167,061) |
|
| (164,692) | |
| Retained earnings |
| 1,933,641 |
|
| 2,043,095 | |
|
| Total U.S. Cellular shareholders' equity |
| 3,323,435 |
|
| 3,391,206 |
|
|
|
|
|
|
|
|
Noncontrolling interests |
| 14,136 |
|
| 18,391 | ||
|
|
|
|
|
|
|
|
| Total equity |
| 3,337,571 |
|
| 3,409,597 | |
|
|
|
|
|
|
|
|
Total liabilities and equity | $ | 6,257,075 |
| $ | 6,445,708 | ||
9
United States Cellular Corporation
Schedule of Cash and Cash Equivalents and Investments
(Unaudited, dollars in thousands)
The following table presents U.S. Cellular’s cash and cash equivalents and investments at September 30, 2014 and December 31, 2013.
|
| September 30, |
| December 31, | ||
| 2014 |
| 2013 | |||
|
|
|
|
|
|
|
Cash and cash equivalents | $ | 273,798 |
| $ | 342,065 | |
|
|
|
|
|
|
|
Amounts included in short-term investments (1)(2) |
|
|
|
|
| |
| U.S. Treasury Notes |
| 40,014 |
|
| 50,104 |
|
|
|
|
|
|
|
Total cash and cash equivalents and investments | $ | 313,812 |
| $ | 392,169 | |
(1) Designated as held-to-maturity investments and are recorded at amortized cost in the Consolidated Balance Sheet.
(2) Maturities are less than twelve months from the respective balance sheet dates.
10
United States Cellular Corporation | ||||||||
Consolidated Statement of Cash Flows | ||||||||
Nine Months Ended September 30, | ||||||||
(Unaudited, dollars in thousands) | ||||||||
|
|
|
|
| ||||
| 2014 |
| 2013 | |||||
Cash flows from operating activities |
|
|
|
|
| |||
| Net income (loss) | $ | (24,818) |
| $ | 144,784 | ||
| Add (deduct) adjustments to reconcile net income to cash flows from operating activities |
|
|
|
|
| ||
|
|
| Depreciation, amortization and accretion |
| 465,042 |
|
| 593,410 |
|
|
| Bad debts expense |
| 74,357 |
|
| 52,184 |
|
|
| Stock-based compensation expense |
| 16,502 |
|
| 11,143 |
|
|
| Deferred income taxes, net |
| (14,124) |
|
| (38,515) |
|
|
| Equity in earnings of unconsolidated entities |
| (106,166) |
|
| (99,797) |
|
|
| Distributions from unconsolidated entities |
| 74,853 |
|
| 49,612 |
|
|
| (Gain) loss on asset disposals, net |
| 16,774 |
|
| 16,153 |
|
|
| (Gain) loss on sale of business and other exit costs, net |
| (27,694) |
|
| (243,627) |
|
|
| (Gain) loss on investments |
| — |
|
| (18,527) |
|
|
| (Gain) loss on license sales and exchanges |
| (91,446) |
|
| — |
|
|
| Noncash interest expense |
| 845 |
|
| 792 |
|
|
| Other operating activities |
| 66 |
|
| 590 |
| Changes in assets and liabilities from operations |
|
|
|
|
| ||
|
|
| Accounts receivable |
| (4,790) |
|
| (214,114) |
|
|
| Inventory |
| 53,367 |
|
| 13,236 |
|
|
| Accounts payable - trade |
| 23,436 |
|
| 32,202 |
|
|
| Accounts payable - affiliate |
| (1,759) |
|
| 345 |
|
|
| Customer deposits and deferred revenues |
| 37,636 |
|
| 22,538 |
|
|
| Accrued taxes |
| (18,453) |
|
| 45,780 |
|
|
| Accrued interest |
| 9,140 |
|
| 9,385 |
|
|
| Other assets and liabilities |
| (152,137) |
|
| (81,341) |
|
|
|
|
| 330,631 |
|
| 296,233 |
|
|
|
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
| |||
| Cash used for additions to property, plant and equipment |
| (424,774) |
|
| (522,180) | ||
| Cash paid for acquisitions and licenses |
| (37,978) |
|
| (16,540) | ||
| Cash received from divestitures |
| 143,801 |
|
| 484,300 | ||
| Cash received for investments |
| 10,000 |
|
| 65,000 | ||
| Other investing activities |
| 804 |
|
| 583 | ||
|
|
|
|
| (308,147) |
|
| 11,163 |
|
|
|
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
| |||
| Repayment of long-term debt |
| (38) |
|
| (393) | ||
| Common shares reissued for benefit plans, net of tax payments |
| 1,150 |
|
| 2,840 | ||
| Common shares repurchased |
| (14,698) |
|
| (18,544) | ||
| Acquisition of licenses in common control transaction |
| (76,298) |
|
| — | ||
| Dividends paid |
| — |
|
| (482,270) | ||
| Distributions to noncontrolling interests |
| (439) |
|
| (3,447) | ||
| Other financing activities |
| (428) |
|
| (839) | ||
|
|
|
|
| (90,751) |
|
| (502,653) |
|
|
|
|
|
|
|
|
|
Net decrease in cash and cash equivalents |
| (68,267) |
|
| (195,257) | |||
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
|
|
|
| |||
| Beginning of period |
| 342,065 |
|
| 378,358 | ||
| End of period | $ | 273,798 |
| $ | 183,101 | ||
11
United States Cellular Corporation | ||||||||||||||
Financial Measures and Reconciliations | ||||||||||||||
(Unaudited, dollars in thousands) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Three Months Ended |
| Nine Months Ended | ||||||||
|
|
|
| September 30, |
| September 30, | ||||||||
|
|
| 2014 |
|
| 2013 |
|
| 2014 |
|
| 2013 | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Cash flows from operating activities |
| $ | 117,771 |
| $ | (152,352) |
| $ | 330,631 |
| $ | 296,233 | |
| Add: Sprint Cost Reimbursement |
|
| 17,896 |
|
| 1,131 |
|
| 52,012 |
|
| 1,131 | |
| Less: Cash used for additions to property, plant and equipment |
|
| 162,377 |
|
| 199,023 |
|
| 424,774 |
|
| 522,180 | |
|
| Adjusted free cash flow (1) |
| $ | (26,710) |
| $ | (350,244) |
| $ | (42,131) |
| $ | (224,816) |
(1) Adjusted free cash flow is defined as Cash flows from operating activities (which includes cash outflows related to the Sprint decommissioning), as adjusted for cash proceeds from the Sprint Cost Reimbursement (which are included in Cash flows from investing activities in the Consolidated Statement of Cash Flows), less Cash used for additions to property, plant and equipment. Adjusted free cash flow is a non-GAAP financial measure which U.S. Cellular believes may be useful to investors and other users of its financial information in evaluating the amount of cash generated by business operations (including cash proceeds from the Sprint Cost Reimbursement), after Cash used for additions to property, plant and equipment.
12