Document And Entity Information
Document And Entity Information | 9 Months Ended |
Sep. 30, 2015shares | |
Entity Registrant Name | United States Cellular Corporation |
Entity Central Index Key | 821,130 |
Document Type | 10-Q |
Document Period End Date | Sep. 30, 2015 |
Amendment Flag | false |
Current Fiscal Year End Date | --12-31 |
Entity Filer Category | Accelerated Filer |
Document Fiscal Year Focus | 2,015 |
Document Fiscal Period Focus | Q3 |
Trading Symbol | USM |
Common Shares | |
Entity Common Stock, Shares Outstanding | 51,281,644 |
Series A Common Shares | |
Entity Common Stock, Shares Outstanding | 33,005,877 |
Consolidated Statement Of Opera
Consolidated Statement Of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Operating revenues | ||||
Service | $ 895,960 | $ 851,063 | $ 2,548,544 | $ 2,548,149 |
Equipment sales | 172,946 | 149,356 | 461,274 | 335,854 |
Total operating revenues | 1,068,906 | 1,000,419 | 3,009,818 | 2,884,003 |
Operating expenses | ||||
System operations (excluding Depreciation, amortization and accretion reported below) | 198,982 | 199,750 | 585,935 | 567,488 |
Cost of equipment sold | 287,256 | 307,862 | 779,228 | 850,314 |
Selling, general and administrative (including charges from affiliates of $22.0 million and $21.5 million, respectively, for the three months, and $65.7 million and $65.6 million, respectively, for the nine months) | 374,585 | 397,545 | 1,106,524 | 1,197,361 |
Depreciation, amortization and accretion | 152,369 | 148,952 | 450,035 | 465,042 |
(Gain) loss on asset disposals, net | 2,618 | 7,947 | 12,268 | 16,774 |
(Gain) loss on sale of business and other exit costs, net | (643) | (10,283) | (113,825) | (27,694) |
(Gain) loss on license sales and exchanges, net | (23,986) | (146,884) | (91,446) | |
Total operating expenses | 991,181 | 1,051,773 | 2,673,281 | 2,977,839 |
Operating income (loss) | 77,725 | (51,354) | 336,537 | (93,836) |
Investment and other income (expense) | ||||
Equity in earnings of unconsolidated entities | 39,674 | 35,971 | 109,729 | 106,166 |
Interest and dividend income | 9,299 | 3,572 | 25,834 | 6,029 |
Interest expense | (21,121) | (13,514) | (61,239) | (42,712) |
Other, net | 78 | 95 | 274 | 281 |
Total investment and other income | 27,930 | 26,124 | 74,598 | 69,764 |
Income (loss) before income taxes | 105,655 | (25,230) | 411,135 | (24,072) |
Income tax expense (benefit) | 40,634 | (1,459) | 161,214 | 746 |
Net income (loss) | 65,021 | (23,771) | 249,921 | (24,818) |
Less: Net income (loss) attributable to noncontrolling interests, net of tax | 1,427 | (1,606) | 6,911 | (3,346) |
Net income (loss) attributable to U.S. Cellular shareholders | $ 63,594 | $ (22,165) | $ 243,010 | $ (21,472) |
Basic weighted average shares outstanding | 84,333 | 84,233 | 84,224 | 84,262 |
Basic earnings (loss) per share attributable to U.S. Cellular shareholders | $ 0.75 | $ (0.26) | $ 2.89 | $ (0.25) |
Diluted weighted average shares outstanding | 84,947 | 84,233 | 84,869 | 84,262 |
Diluted earnings (loss) per share attributable to U.S. Cellular shareholders | $ 0.75 | $ (0.26) | $ 2.86 | $ (0.25) |
Consolidated Statement Of Oper3
Consolidated Statement Of Operations Parenthetical - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Operating expenses | ||||
Selling, general and administrative, charges from affiliates | $ 22 | $ 21.5 | $ 65.7 | $ 65.6 |
Consolidated Statement of Cash
Consolidated Statement of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Cash flows from operating activities | ||
Net income (loss) | $ 249,921 | $ (24,818) |
Add (deduct) adjustments to reconcile net income (loss) to cash flows from operating activities | ||
Depreciation, amortization and accretion | 450,035 | 465,042 |
Bad debts expense | 78,370 | 74,357 |
Stock-based compensation expense | 18,161 | 16,502 |
Deferred income taxes, net | (20,075) | (14,124) |
Equity in earnings of unconsolidated entities | (109,729) | (106,166) |
Distributions from unconsolidated entities | 45,035 | 74,853 |
(Gain) loss on asset disposals, net | 12,268 | 16,774 |
(Gain) loss on sale of business and other exit costs, net | (113,825) | (27,694) |
(Gain) loss on license sales and exchanges, net | (146,884) | (91,446) |
Noncash interest expense | 1,206 | 845 |
Other operating activities | (391) | 66 |
Changes in assets and liabilities from operations | ||
Accounts receivable | (54,437) | 73,741 |
Equipment installment plans receivable | (95,799) | (131,520) |
Inventory | 90,811 | 53,367 |
Accounts payable | 116,740 | 21,677 |
Customer deposits and deferred revenues | (51,026) | 28,486 |
Accrued taxes | 161,237 | (18,453) |
Accrued interest | 10,814 | 9,140 |
Other assets and liabilities | (86,977) | (89,998) |
Cash flows from operating activities | 555,455 | 330,631 |
Cash flows from investing activities | ||
Cash used for additions to property, plant and equipment | (406,596) | (424,774) |
Cash paid for aquisitions and licenses | (285,656) | (37,978) |
Cash received from divestitures and exchanges | 314,352 | 143,801 |
Cash received for investments | 10,000 | |
Other investing activities | 990 | 804 |
Cash flows from investing activities | (376,910) | (308,147) |
Cash flows from financing activities | ||
Issuance of long-term debt | 225,000 | |
Common shares reissued for benefit plans, net of tax payments | (868) | 1,150 |
Common shares repurchased | (4,070) | (14,698) |
Payment of debt issuance costs | (3,080) | (448) |
Acquisition of assets in common control transaction | (2,437) | (76,298) |
Distributions to noncontrolling interests | (6,097) | (439) |
Other financing activities | (1,740) | (18) |
Cash flows from financing activities | 206,708 | (90,751) |
Net increase (decrease) in cash and cash equivalents | 385,253 | (68,267) |
Cash and cash equivalents | ||
Beginning of period | 211,513 | 342,065 |
End of period | $ 596,766 | $ 273,798 |
Consolidated Balance Sheet
Consolidated Balance Sheet - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Current assets | ||
Cash and cash equivalents | $ 596,766 | $ 211,513 |
Accounts receivable | ||
Customers and agents, less allowances of $41,364 and $37,654, respectively | 561,676 | 466,048 |
Roaming | 27,419 | 23,865 |
Affiliated | 516 | 994 |
Other, less allowances of $741 and $859, respectively | 39,185 | 66,051 |
Inventory, net | 176,259 | 267,068 |
Prepaid expenses | 88,041 | 59,744 |
Net deferred income tax asset | 82,719 | 93,058 |
Other current assets | 18,730 | 90,834 |
Total current assets | 1,591,311 | 1,279,175 |
Assets held for sale | 107,055 | |
Investments | ||
Licenses | 1,834,061 | 1,443,438 |
Goodwill | 369,596 | 370,151 |
Investments in unconsolidated entities | 347,710 | 283,014 |
Total investments | 2,551,367 | 2,096,603 |
Property, plant and equipment | ||
In service and under construction | 7,511,997 | 7,458,740 |
Less: Accumulated depreciation | 4,903,559 | 4,730,523 |
Property, plant and equipment, net | 2,608,438 | 2,728,217 |
Other assets and deferred charges | 187,268 | 276,218 |
Total assets | 6,938,384 | 6,487,268 |
Current liabilities | ||
Current portion of long-term debt | 8,501 | 46 |
Accounts payable | ||
Affiliated | 7,874 | 9,774 |
Trade | 362,268 | 306,845 |
Customer deposits and deferred revenues | 236,568 | 287,562 |
Accrued taxes | 121,177 | 36,652 |
Accrued compensation | 57,547 | 66,162 |
Other current liabilities | 92,617 | 149,853 |
Total current liabilities | 886,552 | 856,894 |
Liabilities held for sale | 20,934 | |
Deferred liabilities and credits | ||
Net deferred income tax liability | 828,563 | 859,867 |
Other deferred liabilities and credits | 287,873 | 284,002 |
Long-term debt | $ 1,368,656 | $ 1,151,819 |
Commitments and contingencies | ||
Noncontrolling interests with redemption features | $ 910 | $ 1,150 |
U.S. Cellular shareholders' equity | ||
Series A Common and Common Shares | 88,074 | 88,074 |
Additional paid-in capital | 1,490,651 | 1,472,558 |
Treasury Shares, at cost | (159,705) | (169,139) |
Retained earnings | 2,135,145 | 1,910,498 |
Total U.S. Cellular shareholders' equity | 3,554,165 | 3,301,991 |
Noncontrolling interests | 11,665 | 10,611 |
Total equity | 3,565,830 | 3,312,602 |
Total liabilities and equity | $ 6,938,384 | $ 6,487,268 |
Consolidated Balance Sheet Pare
Consolidated Balance Sheet Parenthetical - USD ($) shares in Thousands, $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Current assets | ||
Customers and agents, allowances | $ 41,364 | $ 37,654 |
Other, allowances | $ 741 | $ 859 |
U.S. Cellular shareholders' equity | ||
Authorized shares | 190,000 | 190,000 |
Issued shares | 88,074 | 88,074 |
Outstanding shares | 84,288 | 84,080 |
Par value | $ 88,074 | $ 88,074 |
Treasury Shares | ||
U.S. Cellular shareholders' equity | ||
Treasury shares | 3,786 | 3,994 |
Common Shares | ||
U.S. Cellular shareholders' equity | ||
Authorized shares | 140,000 | 140,000 |
Issued shares | 55,068 | 55,068 |
Outstanding shares | 51,282 | 51,074 |
Par value per share | $ 1 | $ 1 |
Par value | $ 55,068 | $ 55,068 |
Common Shares | Treasury Shares | ||
U.S. Cellular shareholders' equity | ||
Treasury shares | 3,786 | 3,994 |
Series A Common Shares | ||
U.S. Cellular shareholders' equity | ||
Authorized shares | 50,000 | 50,000 |
Issued shares | 33,006 | 33,006 |
Outstanding shares | 33,006 | 33,006 |
Par value per share | $ 1 | $ 1 |
Par value | $ 33,006 | $ 33,006 |
Consolidated Statement of Chang
Consolidated Statement of Changes in Equity - USD ($) $ in Thousands | Total | Series A Common and Common Shares | Additional Paid-In Capital | Treasury Shares | Retained Earnings | Total U.S. Cellular Shareholders' Equity | Noncontrolling Interests |
Beginning balance at Dec. 31, 2013 | $ 3,409,597 | $ 88,074 | $ 1,424,729 | $ (164,692) | $ 2,043,095 | $ 3,391,206 | $ 18,391 |
Add (Deduct) | |||||||
Net income (loss) attributable to U.S. Cellular shareholders | (21,472) | (21,472) | (21,472) | ||||
Net income (loss) attributable to noncontrolling interests classified as equity | (3,738) | (3,738) | |||||
Repurchase of Common Shares | (15,124) | (15,124) | (15,124) | ||||
Incentive and compensation plans | 1,040 | 12,755 | (11,715) | 1,040 | |||
Stock-based compensation awards | 15,474 | 15,474 | 15,474 | ||||
Tax windfall (shortfall) from stock awards | (563) | (563) | (563) | ||||
Distributions to noncontrolling interests | (517) | (517) | |||||
Acquisition of assets in common control transaction | (47,126) | 29,141 | (76,267) | (47,126) | |||
Ending balance at Sep. 30, 2014 | 3,337,571 | 88,074 | 1,468,781 | (167,061) | 1,933,641 | 3,323,435 | 14,136 |
Beginning balance at Dec. 31, 2014 | 3,312,602 | 88,074 | 1,472,558 | (169,139) | 1,910,498 | 3,301,991 | 10,611 |
Add (Deduct) | |||||||
Net income (loss) attributable to U.S. Cellular shareholders | 243,010 | 243,010 | 243,010 | ||||
Net income (loss) attributable to noncontrolling interests classified as equity | 1,491 | 1,491 | |||||
Repurchase of Common Shares | (5,362) | (5,362) | (5,362) | ||||
Incentive and compensation plans | (944) | 186 | 14,796 | (15,926) | (944) | ||
Stock-based compensation awards | 17,472 | 17,472 | 17,472 | ||||
Tax windfall (shortfall) from stock awards | (445) | (445) | (445) | ||||
Distributions to noncontrolling interests | (437) | (437) | |||||
Acquisition of assets in common control transaction | (1,552) | 885 | (2,437) | (1,552) | |||
Adjust investment in subsidiaries for noncontrolling interest purchases | (5) | (5) | (5) | ||||
Ending balance at Sep. 30, 2015 | $ 3,565,830 | $ 88,074 | $ 1,490,651 | $ (159,705) | $ 2,135,145 | $ 3,554,165 | $ 11,665 |
Basis of Presentation
Basis of Presentation | 9 Months Ended |
Sep. 30, 2015 | |
Disclosure Text Block | |
Basis of Presentation | 1 . Basis of Presentation United States Cellular Corporation (“U.S. Cellular”), a Delaware corporation, is an 84% - owned subsidiary of Telephone and Data Systems, Inc. (“TDS”). The accounting policies of U.S. Cellular conform to accounting principles generall y accepted in the United States of America (“GAAP”) as set forth in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”). The consolidated financial statements include the accounts of U.S. Cellular, subsidiaries in wh ich it has a controlling financial interest, general partnerships in which U.S. Cellular has a majority partnership interest and certain entities in which U.S. Cellular has a variable interest that require consolidation under GAAP. All material intercompa ny accounts and transactions have been eliminated. Certain prior year amounts have been reclassified to conform to the 2015 presentation. The unaudited consolidated financial statements included herein have been prepared by U.S. Cellular pursuant to the r ules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Ho wever, U.S. Cellular believes that the disclosures included herein are adequate to make the information presented not misleading. These unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements an d the notes thereto included in U.S. Cellular’s Annual Report on Form 10-K (“Form 10-K”) for the year ended December 31, 2014 . The accompanying unaudited consolidated financ ial statements contain all adjustments (consisting of normal recurring items, unless otherwise disclosed) necessary for a fair statement of the financial position as of September 30, 2015 and December 31, 2014 , the results of operations for the three and nine months ended September 30, 2015 and 2014 , and cash flows and changes in equity for the nine months ended September 30, 2015 and 2014 . The Consolidated Statement of Comprehensive Income was not included because comprehensive income for the three and nine months ended September 30, 2015 and 2014 equaled net income f or these periods. These results are not necessarily indicative of the results to be expected for the full year. Recently Issued Accounting Pronouncements In May 2014, the FASB issued Accounting Standards Update 2014-09, Revenue from Contracts with Custome rs (“ASU 2014-09”). ASU 2014-09 outlines a single comprehensive model to use in accounting for revenue arising from contracts with customers. In August 2015, the FASB issued Accounting Standards Update 2015-14, Revenue from Contracts with Customers: Defe rral of the Effective Date, requiring the adoption of ASU 2014-09 on January 1, 2018. Early adoption as of January 1, 2017 is permitted ; however, U.S. Cellular does not intend to adopt early. U.S. Cellular is evaluating the effects that adoption of ASU 2014-09 will have on its financial position, results of opera tions and disclosures. I n August 2014, the FASB issued Accounting Standards Update 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ASU 2014 -15”). ASU 2014-15 requires U.S. Cellular to assess its ability to continue as a going concern each interim and annual reporting period and provide certain disclosures if there is substantial doubt about the entity’s ability to continue as a going concern , including management’s plan to alleviate the substantial doubt. U.S. Cellular is required to adopt the provisions of ASU 2014-15 for the annual period ending December 31, 2016, but early adoption is permitted. The adoption of ASU 2014-15 will not impac t U.S. Cellular’s financial position or results of operations but may impact future disclosures. I n February 2015, the FASB issued Accounting Standards Update 2015-02, Consolidation: Amendments to the Consolidation Analysis (“ASU 2015-02”). ASU 2015-02 si mplifies consolidation accounting by reducing the number of consolidation models. Additionally, ASU 2015-02 changes certain criteria for identifying variable interest entities. U.S. Cellular is required to adopt the provisions of ASU 2015-02 effective Jan uary 1, 2016. Early adoption is permitted. U.S. Cellular expects that certain consolidated subsidiaries that are not defined as variable interest entities under current accounting guidance will be defined as variable interest entities under the provision s of ASU 2015-02. However, U.S. Cellular does not expect the adoption of ASU 2015-02 to change the group of entities which U.S. Cellular is required to consolidate in its financial statements. Accordingly, U.S. Cellular does not expect the adoption of AS U 2015-02 to impact its financial position or results of operations. However, additional disclosures are expected. I n April 2015, the FASB issued Accounting Standards Update 2015-03, Simplifying the Presentation of Debt Issuance Costs (“ASU 2015-03”) , whi ch requires certain debt issuance costs to be presented in the balance sheet as an offset to the related debt obligation. U.S. Cellular is required to apply the provisions of this update effective January 1, 2016 on a retrospective basis. Early adoption i s permitted. In August 2015, the FASB issued Accounting Standards Update 2015-15, Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements, excluding debt issuance costs related to line-of-credit arrangeme nts from the scope of ASU 2015-03. As of September 30, 2015 , U.S. Cellular had $ 27.2 million in debt issuance costs classified as Other assets and deferred charges that, upon adoption of ASU 2015-03 , would be reclassified as an offset to Long-term debt. I n July 2015, the FASB issued Accounting Standards Update 2015-11, Inventory: Simplifying the Measurement of Inventory (“ASU 2015-11 ” ), which requires inventory to be measured at the lower of cost or net realizable value. U.S. Cellular is required to adopt ASU 2015-11 on January 1, 2017. Early adoption is permitted. U.S. Cellular is evaluating the effects that adoption of ASU 2015-11 will have on its financial position and results of operations . In September 2015, the FASB issued Accounting Standards Update 2015-16, Business Combinations: Simplifying the Accounting for Measurement-Period Adjustments (“ASU 2015- 16”). ASU 2015-16 simpl ifies how adjustments are made to provisional amounts recognized in a business combination during the measurement period. U.S. Cellular is required to adopt ASU 2015-16 on January 1, 2016. U.S. Cellular is evaluating the effects that adoption of ASU 2015 -16 will have on its financial position, results of operations, and disclosures. Amounts Collected from Customers and Remitted to Governmental Authorities U.S. Cellular records amounts collected from customers and remitted to governmental authorities net w ithin a tax liability account if the tax is assessed upon the customer and U.S. Cellular merely acts as an agent in collecting the tax on behalf of the imposing governmental authority. If the tax is assessed upon U.S. Cellular, then amounts collected fro m customers as recovery of the tax are recorded in Service revenues and amounts remitted to governmental authorities are recorded in Selling, general and administrative expenses in the Consolidated Statement of Operations. The amounts recorded gross in rev enues that are billed to customers and remitted to governmental authorities totaled $ 18.6 million and $ 59.8 million for the three and nine months ended September 30, 2015 , respectively, and $ 23.1 million and $ 74.8 million for the three and nine months ended September 30, 2014 , respectively. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2015 | |
Disclosure Text Block | |
Fair Value Measurements | 2 . Fair Value Measurements As of September 30, 2015 and December 31, 2014 , U.S. Cellular did not have any financial or nonfinancial assets or liabilities that were required to be recorded at fair value in its Consolidated Balance Sheet in accordance with GAAP. The provisions of GAAP establish a fair value hierarchy that contains three levels for inputs used in fair value measurements. Level 1 inputs include quoted market prices for identical assets or liabilities in active markets. Level 2 inputs include quoted market prices for similar assets and liabilities in active markets or quo ted market prices for identical assets and liabilities in inactive markets. Level 3 inputs are unobservable. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value me asurement. A financial instrument’s level within the fair value hierarchy is not representative of its expected performance or its overall risk profile and, therefore, Level 3 assets are not necessarily higher risk than Level 2 or Level 1 assets. U.S. Ce llular has applied the provisions of fair value accounting for purposes of computing the fair value of financial instruments for disclosure purposes as displayed below. Level within the Fair Value Hierarchy September 30, 2015 December 31, 2014 Book Value Fair Value Book Value Fair Value (Dollars in thousands) Cash and cash equivalents 1 $ 596,766 $ 596,766 $ 211,513 $ 211,513 Long-term debt Retail 2 617,000 624,267 617,000 608,462 Insti tutional 2 532,940 489,375 532,722 513,647 Other 2 216,562 217,371 – – The f air value of Cash and cash equivalents approximates the book value due to the short-term nature of these financial instruments. Long-term debt excludes capital lease obligations and the current portion of Long-term debt. The fair value of “Retail” Long-t erm debt was estimated using market prices for the 6.95% Senior Notes and 7.25% Senior Notes. U.S. Cellular’s “Institutional” debt consists of the 6.7% Senior Notes which are traded over the counter. U.S. Cellular’s “Other” debt consists of a senior term loan credit facility. U.S. Cellular estimated the fair value of its Institutional and Other debt through a discounted cash flow analysis using the interest rates or estimated yield to maturity for each borrowing, which ranged from 2.88% to 7.73% at September 30, 2015 . An estimated yield to maturity of 7.25% was used to estimate fair value of Institutional debt at December 31, 2014 . |
Equipment Installment Plans
Equipment Installment Plans | 9 Months Ended |
Sep. 30, 2015 | |
Disclosure Text Block | |
Equipment Installment Plans | 3 . Equipment Installment Plans U.S. Cellular offers customers the option to purchase certain devices under an equipment installment contract over a period of up to 24 months. Under certain equipment installment plans, the customer has the right to upgrade to a new device after a specified period of time and have the remaining unpaid equipment installment contract balance waived, subject to certain conditions, including trading in the original device in good working condition and signing a new equipment installment contract. U.S. Cellular values this trade-in right as a guarantee liability. The guarantee liability is initially measured at fair value and is determined b ased on assumptions including the probability and timing of the customer upgrading to a new device and the fair value of the device being traded-in at the time of trade-in. As of September 30, 2015 and December 31, 2014 , the guarantee liability related to these plans was $ 91.3 million and $ 57.5 million, respectively, and is reflected in Customer deposits and deferred revenue s in the Consolidated Balance Sheet. U.S. Cellular equipment installment plans do not provide for explicit interest charges. For equipment installment plans with a duration of greater than twelve months, U.S. Cellular imputes interest. The following tab le summarizes unbilled equipment installment plan receivables as of September 30, 2015 and December 31, 2014 . Such amounts are included in the Consolidated Balance Sheet a s Accounts receivable – customers and agents (short-term portion) and Other assets and deferred charges (long-term portion). (Dollars in thousands) September 30, 2015 December 31, 2014 Short-term portion of unbilled equipment installment plan receivables, gross $ 245,218 $ 127,400 Short-term portion of unbilled deferred interest (18,504) (16,365) Short-term portion of unbilled allowance for credit losses (9,326) (3,686) Short-term portion of unbilled equipment installment plan receivables, net $ 217,388 $ 107,349 Long-term portion of unbilled equipment installment plan receivables, gross $ 66,512 $ 89,435 Long-term portion of unbilled deferred interest (819) (2,791) Long-term portion of unbilled allowance for credit losses (4,740) (6,065) Long-term portion of unbilled equipment installment plan receivables, net $ 60,953 $ 80,579 U.S. Cellular assesses the collectability of equipment installment plan receivables based on historical payment experience, account aging and other qualitative factors. To mitigate credit risk, U.S. Cellular requires certain customers who desire to purchase equipment under an installment plan to make a down p ayment. U.S. Cellular recorded out-of-period adjustments during the nine months ended September 30, 2015 due to errors related to equipment installment plan transactions th at were attributable to 2014. U.S. Cellular has determined that these adjustments were not material to the prior quarterly or annual periods, and also were not material to the current period or anticipated full year 2015 results. These equipment installm ent plan adjustments had the impact of reducing Equipment sales revenues by $ 6.2 million and Income before income taxes by $ 5.8 million for the nine months ended September 30, 2015 . These adjustments were made in the first six months of 2015. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2015 | |
Disclosure Text Block | |
Income Taxes | 4 . Income Taxes U.S. Cellular is included in a consolidated federal income tax return and in certain state income tax returns with other members of the TDS consolidated group. For financial statement purposes, U.S. Cellular and its subsidiaries compute their income tax expense as if they comprised a separate affiliated group and were not included in the TDS consolidated group. U.S. Cellular’s overall effecti ve tax rate on Income (loss) before income taxes for the three and nine months ended September 30, 2015 were 38.5% and 39.2% , respectively. The effective tax rates for the three and nine months ended September 30, 2014 were not meaningful due to the relatively low amount of Income (loss) before income taxes and the impact of a $6.4 million tax expense related to a valuatio n allowance recorded against certain state deferred tax assets. U.S. Cellular determined that such deferred tax assets were not reali zable, on a more likely than not basis. |
Earnings Per Share
Earnings Per Share | 9 Months Ended |
Sep. 30, 2015 | |
Disclosure Text Block | |
Earnings per Share | 5 . Earnings Per Share Basic earnings (loss) per share attributable to U.S. Cellular shareholders is computed by dividing Net income (loss) attributable to U.S. Cellular shareholders by the weighted average number of common shares outstanding during the period. Diluted earnings (loss) per share attributable to U.S. Cellular shareholders is computed by dividing Net income (loss) attributable t o U.S. Cellular shareholders by the weighted average number of common shares outstanding during the period adjusted to include the effects of potentially dilutive securities. Potentially dilutive securities primarily include incremental shares issuable upo n exercise of outstanding stock options and the vesting of restricted stock units The amounts used in computing earnings (loss) per common share and the effects of potentially dilutive securities on the weighted average number of common shares were as foll ows: Three Months Ended Nine Months Ended September 30, September 30, 2015 2014 2015 2014 (Dollars and shares in thousands, except per share amounts) Net income (loss) attributable to U.S. Cellular shareholders $ 63,594 $ (22,165) $ 243,010 $ (21,472) Weighted average number of shares used in basic earnings (loss) per share 84,333 84,233 84,224 84,262 Effects of dilutive securities: Stock options 140 – 151 – Restricted stock units 474 – 494 – Weighted average number of shares used in diluted earnings (loss) per share 84,947 84,233 84,869 84,262 Basic earnings (loss) per share attributable to U.S. Cellular shareholders $ 0.75 $ (0.26) $ 2.89 $ (0.25) Diluted earnings (loss) per share attributable to U.S. Cellular shareholders $ 0.75 $ (0.26) $ 2.86 $ (0.25) Certain Common Shares issuable upon the exercise of stock options or vesting of restricted stock units were not included in average d iluted shares outstanding for the calculation of Diluted earnings (loss) per share attributable to U.S. Cellular shareholders because their effects were antidilutive. The number of such Common Shares excluded, if any, is shown in the table below. Three Months Ended Nine Months Ended September 30, September 30, 2015 2014 2015 2014 (Shares in thousands) Stock options 3,476 3,484 3,120 3,234 Restricted stock units 1 1,226 289 1,189 |
Acquisitions, Divestitures and
Acquisitions, Divestitures and Exchanges | 9 Months Ended |
Sep. 30, 2015 | |
Disclosure Text Block | |
Acquisitions, Divestitures and Exchanges | 6 . Acquisitions, Divestitures and Exchanges Divestiture Transaction On May 16, 2013, pursuant to a Purchase and Sale Agreement, U.S. Cellular sold customers and certain PCS spectrum licenses to subsidiaries of Sprint Corp. fka Sprint Nextel Corporation (“Sprint”) in U.S. Cellular’s Chicago, central Illinois, St. Louis and certain Indiana/Michigan/Ohio markets (“Divestiture Markets”) in consideration for $ 480 million in cash. The Purchase and Sale Agreement also contemplated certain other agreements, together with the Purchase and Sale Agreement collectively referred to as the “Divestiture Transaction.” These agreements require Sprint to reimburse U.S. Cellul ar up to $ 200 million (the “Sprint Cost Reimbursement”) for certain network decommissioning costs, network site lease rent and termination costs, network access termination costs, and employee termination benefits for specified e ngineering employees. As of September 30, 2015 , U.S. Cellular had received a cumulative total of $ 109.3 million pursuant to the Sprint Cost Reimbursement. For the nine months ended September 30, 2015 and 2014 , $ 27.6 million and $ 52.0 million, respectively , of the Sprint Cost Reimbursement had been received and recorded in Cash received from divestitures and exchanges in the Consolidated Statement of Cash Flows. For the nine months ended September 30, 2015 and 2014 , as a result of the Divestiture Transaction, U.S. Cellular recognized gains of $ 6.2 million and $ 28.1 million, res pectively, in (Gain) loss on sale of business and other exit costs, net. For the three months ended September 30, 2015 and 2014 , U.S. Cellular recognized gains of $ 0.3 million and $ 10.4 million, respectively. Other Acquisitions, Divestitures and Exchanges In March 2015, U.S. Cellular exchanged certa in of its unbuilt PCS licenses for certain other PCS licenses located in U.S. Cellular’s existing operating markets and $ 117.0 million of cash. As of the transaction date, the licenses received in the transaction had an estima ted fair value, per a market approach, of $ 43.5 million. A gain of $ 125.2 million was recorded in (Gain) loss on license sales and exchanges, net in the Consolidated Statement of Operations in the first quarter of 2015. An FCC auction of AWS-3 spectrum licenses (“ Auction 97 ”) ended in January 2015. U.S. Cellular participated in Auction 97 indirectly through its limited partnership interest in Advantage Spectrum L.P. (“Advantage Spectrum”). Advanta ge Spectrum was the provisional winning bidder for 124 licenses for an aggregate winning bid of $ 338.3 million, after its designated entity discount of 25 %. Advantage Spect rum’s bid amount, less the initial deposit amount of $ 60.0 million paid in 2014, was paid to the FCC in March 2015. These licenses have not yet been granted by the FCC. See Note 10 — Variable Interest Entities for additional information. In December 2014, U.S. Cellular entered into an agreement with a third party to sell 595 towers and certain related contracts, assets, and li abilities for $ 159.0 million. This agreement and related transaction s are referred to as the “Tower Sale” and were accomplished in two closings. The first closing occurred in December 2014 and included the sale of 236 towers, without tenants, for $ 10.0 million. On this same date, U.S. Cellular received $ 7.5 million in earnest money. At the time of the first closing, a $ 3.8 million gain was recorded. The second closing for the remaining 359 towers, primarily with tenants, took place in January 2015, at which time U.S. Cellular received $ 141.5 million in additio nal cash proceeds and recorded a gain of $ 107.7 million in (Gain) loss on sale of business and other exit costs, net. In September 2014, U.S. Cellular entered into an agreement with a third party to exchange certain PCS and AW S licenses for certain other PCS and AWS licenses and $ 28.0 million of cash. This license exchange was accomplished in two closings. The first closing occurred in December 2014 at which time U.S. Cellular received licenses wi th an estimated fair value, per a market approach, of $ 51.5 million, recorded a $ 21.7 million gain and recorded an $ 18.3 million deferred credit in Other current liabili ties. The license that was transferred to the counterparty in the second closing had a net book value of $ 22.2 million . The second closing occurred in July 2015. At the time of the second closing, U.S. Cellular received $ 28.0 million in cash and recognized the deferred credit from the first closing , resulting in a total gain of $ 24.1 million recorded on this part of the license exchange. |
Intangible Assets
Intangible Assets | 9 Months Ended |
Sep. 30, 2015 | |
Disclosure Text Block | |
Intangible Assets | 7 . Intangible Assets Changes in U.S. Cellular’s Licenses for the nine months ended September 30, 2015 are presented below. There were no significant changes to Goodwill during the nine months ended September 30, 2015 . Licenses (Dollars in thousands) Balance December 31, 2014 $ 1,443,438 Acquisitions (1) 345,656 Exchanges (2) 43,485 Other 1,482 Balance September 30, 2015 $ 1,834,061 (1) Amount includes payments totaling $338.3 million made by Advantage Spectrum to the FCC for licenses in which it was the provisional winning bidder in Auction 97. See Note 6 — Acquisitions, Divestitures and Exchanges, and Note 10 — Variable Interest Entities for further information. (2) Amount represents licenses received in the March 2015 PCS license exchange. See Note 6 — Acquisitions, Divestitures and Exchanges for further information. Licenses disposed of in this exchange and the exchange that closed in July 2015 were previously removed from the Licenses balance and reflected in Assets held for sale in the Consolidated Balance Sheet as of December 31, 2014. |
Investments in Unconsolidated E
Investments in Unconsolidated Entities | 9 Months Ended |
Sep. 30, 2015 | |
Disclosure Text Block | |
Investments in Unconsolidated Entities | 8 . Investments in Unconsolidated Entities Investments in unconsolidated entities consist of amounts invested in wireless entities in which U.S. Cellular holds a noncontrolling interest. These investments are accounted for using either the equity or cost method. The following table, which is based on information provided in part by third parties, summarizes the combined results of operations of U.S. Cellular’s equi ty method investments. Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 (Dollars in thousands) Revenues $ 1,733,402 $ 1,643,734 $ 5,184,186 $ 4,861,057 Operating expenses 1,263,320 1,225,417 3,826,798 3,540,783 Operating income 470,082 418,317 1,357,388 1,320,274 Other income (loss), net (9,843) 1,651 (15,466) 4,077 Net income $ 460,239 $ 419,968 $ 1,341,922 $ 1,324,351 |
Debt
Debt | 9 Months Ended |
Sep. 30, 2015 | |
Disclosure Text Block | |
Debt | 9 . Debt In January 2015, U.S. Cellular entered into a senior term loan credit facility. In July 2015, U.S. Cellular borrowed the full amount of $225 million available under this facility in two separate draws at an overall interest rate of 2.88%. The interest rate on outstanding borrowings will be reset at three and six month in tervals at a rate of LIBOR plus 250 basis points. This credit facility provides for the draws to be continued on a long-term basis under terms that are readily determinable. U.S. Cellular has the ability and intent to carry the debt for the duration of the agreement. Principal reductions will be due and payable in quarterly installments of $2.8 million beginning in March 2016 through December 2021, and the remaining unpaid balance will be due and payable in January 2022. These funds will be used for general corporate purposes, including working capital, spectrum purchases and capital expenditures. |
Variable Interest Entities
Variable Interest Entities | 9 Months Ended |
Sep. 30, 2015 | |
Disclosure Text Block | |
Variable Interest Entities | 10 . Variable Interest Entities U.S. Cellular consolidates variable interest entities (“VIEs”) in which it has a controlling financial interest and is the primary beneficiary. A controlling financial interest will have both of the following characteristics: (a) the power to direct the VIE activities that most significantly impact economic performan ce and (b) the obligation to absorb VIE losses and the right to receive benefits that are significant to the VIE. U.S. Cellular reviews these criteria initially at the time it enters into agreements and subsequently when reconsideration events occur. Cons olidated VIEs As of September 30, 2015 , U.S. Cellular holds a variable interest in and consolidates the following VIEs: Advantage Spectrum and Frequency Advantage L.P., the general partner of Advantage Spectrum; Aq uinas Wireless L.P. (“Aquinas Wireless”); and King Street Wireless L.P. (“King Street Wireless”) and King Street Wireless, Inc., the general partner of King Street Wireless. The power to direct the activities that most significantly impact the economic pe rformance of Advantage Spectrum, Aquinas Wireless and King Street Wireless (collectively, the “limited partnerships”) is shared. Specifically, the general partner of these VIEs has the exclusive right to manage, operate and control the limited partnership s and make all decisions to carry on the business of the partnerships; however, the general partner of each partnership needs the consent of the limited partner, a U.S. Cellular subsidiary, to sell or lease certain licenses, to make certain large expenditu res, admit other partners or liquidate the limited partnerships. Although the power to direct the activities of the VIEs is shared, U.S. Cellular has a disproportionate level of exposure to the variability associated with the economic performance of the V IEs, indicating that U.S. Cellular is the primary beneficiary of the VIEs. Accordingly, these VIEs are consolidated. The following table presents the classification of the consolidated VIEs’ assets and liabilities in U.S. Cellular’s Consolidated Balance Sheet. September 30, December 31, 2015 2014 (Dollars in thousands) Assets Cash and cash equivalents $ 1,681 $ 2,588 Other current assets 175 278 Licenses (1) 648,661 312,977 Property, plant and equipment, net 8,635 10,671 Other assets and deferred charges 324 60,059 Total assets $ 659,476 $ 386,573 Liabilities Current liabilities $ 1 $ 110 Deferred liabilities and credits 494 622 Total liabilities $ 495 $ 732 (1) At September 30, 2015, includes payments totaling $338.3 million made by Advantage Spectrum to the FCC as described below. Other Related Matters In March 2015, King Street Wireless made a $ 60.0 million distribution to its investors. Of this distribution, $ 6.0 million was provided to King Street Wireless, Inc. and $ 54.0 million was provided to U.S. Cellular. FCC Auction 97 ended in Janua ry 2015. U.S. Cellular participated in Auction 97 indirectly through its interest in Advantage Spectrum. A subsidiary of U.S. Cellular is a limited partner in Advantage Spectrum. Advantage Spectrum qualified as a “designated entity,” and thereby was eli gible for bid credits with respect to spectrum purchased in Auction 97. Advantage Spectrum was the winning bidder for 124 licenses for an aggregate bid of $ 338.3 million, after its designated entity discount of 25 %. This amount is classified as Licenses in U.S. Cellular’s Consolidated Balance Sheet. Advantage Spectrum’s bid amount, less the initial deposit of $ 60.0 million paid in 2014, plus ce rtain other charges totaling $ 2.3 million, were paid to the FCC in March 2015. To help fund this payment, U.S. Cellular made loans and capital contributions to Advantage Spectrum and Frequency Advantage totaling $ 280.6 million during the nine months ended September 30, 2015 . There were no capital contributions, loans or advances made to U.S. Cellular’s VIEs during t he nine months ended September 30, 2014 . Advantage Spectrum, Aquinas Wireless and King Street Wireless were formed to participate in FCC auctions of wireless spectrum and t o fund, establish, and provide wireless service with respect to any FCC licenses won in the auctions. As such, these entities have risks similar to those described in the “Risk Factors” in U.S. Cellular’s Form 10-K for the year ended December 31, 2014 . U.S. Cellular may agree to make additional capital contributions and/or advances to Advantage Spectrum, Aquinas Wireless or King Street Wireless and/or to their general partners to provide additional funding for the d evelopment of licenses granted in various auctions. U.S. Cellular may finance such amounts with a combination of cash on hand, borrowings under its revolving credit agreement and/or other long-term debt. There is no assurance that U.S. Cellular will be ab le to obtain additional financing on commercially reasonable terms or at all to provide such financial support. During the three and nine-months ended September 30, 2015, U.S. Cellular recorded out-of-period adjustments attributable to the third quarter of 2013 through the second quarter of 2015 related to an agreement with King Street Wireless. U.S. Cellular has determined that these adjustments were not material to the prior quarterly or annual periods, and also were not material to the current period or anticipated full year 2015 results. As a result of these out-of-period adjustments, for the three and nine months ended September 30, 2015, Net income decreased by $ 3.2 million and $ 2.8 million, a nd Net income attributable to U.S. Cellular shareholders decreased by $ 4.5 million and $ 4.0 million, respectively. |
Common Share Repurchases
Common Share Repurchases | 9 Months Ended |
Sep. 30, 2015 | |
Disclosure Text Block | |
Common Share Repurchases | 11 . Common Share Repurchases On November 17, 2009, the Board of Directors of U.S. Cellular authorized the repurchase of up to 1,300,000 Common Shares on an annual basis beginning in 2009 and continuing each year thereafter, on a cumulative basis. These purchases will be made pursuant to open market purchases, block purchases, private purchases or otherwise, depending on market conditions . This authorization does not have an expiration date . Share repurchases made under this authorization were as follows: Nine Months Ended September 30, 2015 2014 (Dollar amounts and shares in thousands, except per share data) Number of shares 154 384 Average cost per share $ 34.85 $ 39.37 Amount $ 5,362 $ 15,124 |
Fair Value Measurements (Table)
Fair Value Measurements (Table) | 9 Months Ended |
Sep. 30, 2015 | |
Fair Value Disclosures | |
Fair value measurements | Level within the Fair Value Hierarchy September 30, 2015 December 31, 2014 Book Value Fair Value Book Value Fair Value (Dollars in thousands) Cash and cash equivalents 1 $ 596,766 $ 596,766 $ 211,513 $ 211,513 Long-term debt Retail 2 617,000 624,267 617,000 608,462 Insti tutional 2 532,940 489,375 532,722 513,647 Other 2 216,562 217,371 – – |
Equipment Installment Plans (Ta
Equipment Installment Plans (Table) | 9 Months Ended |
Sep. 30, 2015 | |
Equipment Installment Plans | |
Equipment installment plans | (Dollars in thousands) September 30, 2015 December 31, 2014 Short-term portion of unbilled equipment installment plan receivables, gross $ 245,218 $ 127,400 Short-term portion of unbilled deferred interest (18,504) (16,365) Short-term portion of unbilled allowance for credit losses (9,326) (3,686) Short-term portion of unbilled equipment installment plan receivables, net $ 217,388 $ 107,349 Long-term portion of unbilled equipment installment plan receivables, gross $ 66,512 $ 89,435 Long-term portion of unbilled deferred interest (819) (2,791) Long-term portion of unbilled allowance for credit losses (4,740) (6,065) Long-term portion of unbilled equipment installment plan receivables, net $ 60,953 $ 80,579 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Earnings Per Share | |
Earnings per share | Three Months Ended Nine Months Ended September 30, September 30, 2015 2014 2015 2014 (Dollars and shares in thousands, except per share amounts) Net income (loss) attributable to U.S. Cellular shareholders $ 63,594 $ (22,165) $ 243,010 $ (21,472) Weighted average number of shares used in basic earnings (loss) per share 84,333 84,233 84,224 84,262 Effects of dilutive securities: Stock options 140 – 151 – Restricted stock units 474 – 494 – Weighted average number of shares used in diluted earnings (loss) per share 84,947 84,233 84,869 84,262 Basic earnings (loss) per share attributable to U.S. Cellular shareholders $ 0.75 $ (0.26) $ 2.89 $ (0.25) Diluted earnings (loss) per share attributable to U.S. Cellular shareholders $ 0.75 $ (0.26) $ 2.86 $ (0.25) |
Summary of antidilutive shares | Three Months Ended Nine Months Ended September 30, September 30, 2015 2014 2015 2014 (Shares in thousands) Stock options 3,476 3,484 3,120 3,234 Restricted stock units 1 1,226 289 1,189 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Licenses | |
Licenses | Licenses (Dollars in thousands) Balance December 31, 2014 $ 1,443,438 Acquisitions (1) 345,656 Exchanges (2) 43,485 Other 1,482 Balance September 30, 2015 $ 1,834,061 (1) Amount includes payments totaling $338.3 million made by Advantage Spectrum to the FCC for licenses in which it was the provisional winning bidder in Auction 97. See Note 6 — Acquisitions, Divestitures and Exchanges, and Note 10 — Variable Interest Entities for further information. (2) Amount represents licenses received in the March 2015 PCS license exchange. See Note 6 — Acquisitions, Divestitures and Exchanges for further information. Licenses disposed of in this exchange and the exchange that closed in July 2015 were previously removed from the Licenses balance and reflected in Assets held for sale in the Consolidated Balance Sheet as of December 31, 2014. |
Investment in Unconsolidated En
Investment in Unconsolidated Entities (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Equity Method Investment, Summarized Financial Information | |
Equity method investments, summarized financial position | Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 (Dollars in thousands) Revenues $ 1,733,402 $ 1,643,734 $ 5,184,186 $ 4,861,057 Operating expenses 1,263,320 1,225,417 3,826,798 3,540,783 Operating income 470,082 418,317 1,357,388 1,320,274 Other income (loss), net (9,843) 1,651 (15,466) 4,077 Net income $ 460,239 $ 419,968 $ 1,341,922 $ 1,324,351 |
Variable Interest Entities (Tab
Variable Interest Entities (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Variable Interest Entities VIEs | |
Consolidated VIE assets and liabilities | September 30, December 31, 2015 2014 (Dollars in thousands) Assets Cash and cash equivalents $ 1,681 $ 2,588 Other current assets 175 278 Licenses (1) 648,661 312,977 Property, plant and equipment, net 8,635 10,671 Other assets and deferred charges 324 60,059 Total assets $ 659,476 $ 386,573 Liabilities Current liabilities $ 1 $ 110 Deferred liabilities and credits 494 622 Total liabilities $ 495 $ 732 (1) At September 30, 2015, includes payments totaling $338.3 million made by Advantage Spectrum to the FCC as described below. |
Common Share Repurchases (Table
Common Share Repurchases (Table) | 9 Months Ended |
Sep. 30, 2015 | |
Common Share Repurchases | |
Share repurchases | Nine Months Ended September 30, 2015 2014 (Dollar amounts and shares in thousands, except per share data) Number of shares 154 384 Average cost per share $ 34.85 $ 39.37 Amount $ 5,362 $ 15,124 |
Basis of Presentation (Details)
Basis of Presentation (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Basis of Presentation | ||||
Amounts recorded gross in revenues that are billed to customers and remitted to governmental authorities | $ 18.6 | $ 23.1 | $ 59.8 | $ 74.8 |
Long-term notes | ||||
Basis of Presentation | ||||
Debt issuance costs, net | $ 27.2 | $ 27.2 | ||
TDS | ||||
Basis of Presentation | ||||
TDS ownership of U.S. Cellular | 84.00% | 84.00% |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Dec. 31, 2013 | |
Financial Instruments | ||||
Cash and cash equivalents | $ 596,766 | $ 211,513 | $ 273,798 | $ 342,065 |
Institutional | ||||
Financial Instruments | ||||
Fair value assumption, interest rate | 7.25% | |||
Institutional | Minimum | ||||
Financial Instruments | ||||
Fair value assumption, interest rate | 2.88% | |||
Institutional | Maximum | ||||
Financial Instruments | ||||
Fair value assumption, interest rate | 7.73% | |||
Fair Value | Level 1 | ||||
Financial Instruments | ||||
Cash and cash equivalents | $ 596,766 | $ 211,513 | ||
Fair Value | Level 2 | Retail | ||||
Financial Instruments | ||||
Long-term debt | 624,267 | 608,462 | ||
Fair Value | Level 2 | Institutional | ||||
Financial Instruments | ||||
Long-term debt | 489,375 | 513,647 | ||
Fair Value | Level 2 | Other | ||||
Financial Instruments | ||||
Long-term debt | 217,371 | |||
Book Value | ||||
Financial Instruments | ||||
Cash and cash equivalents | 596,766 | 211,513 | ||
Book Value | Retail | ||||
Financial Instruments | ||||
Long-term debt | 617,000 | 617,000 | ||
Book Value | Institutional | ||||
Financial Instruments | ||||
Long-term debt | 532,940 | $ 532,722 | ||
Book Value | Other | ||||
Financial Instruments | ||||
Long-term debt | $ 216,562 |
Equipment Installment Plans (De
Equipment Installment Plans (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Equipment installment plan receivables | |||||
Equipment installment plan payment period | 24 months | ||||
Guarantee liability | $ 91,300 | $ 91,300 | $ 57,500 | ||
Accounting Changes And Error Corrections [Abstract] | |||||
Equipment sales | 172,946 | $ 149,356 | 461,274 | $ 335,854 | |
Income before income taxes | 105,655 | $ (25,230) | $ 411,135 | $ (24,072) | |
Adjustment | |||||
Accounting Changes And Error Corrections [Abstract] | |||||
Immaterial Error Correction | U.S. Cellular recorded out-of-period adjustments during the nine months ended September 30, 2015 due to errors related to equipment installment plan transactions that were attributable to 2014. U.S. Cellular has determined that these adjustments were not material to the prior quarterly or annual periods, and also were not material to the current period or anticipated full year 2015 results. These equipment installment plan adjustments had the impact of reducing Equipment sales revenues by $6.2 million and Income before income taxes by $5.8 million for the nine months ended September 30, 2015. These adjustments were made in the first six months of 2015. | ||||
Equipment sales | $ 6,200 | ||||
Income before income taxes | 5,800 | ||||
Short-term | |||||
Equipment installment plan receivables | |||||
Unbilled equipment installment plan receivables, gross | 245,218 | 245,218 | 127,400 | ||
Unbilled deferred interest | (18,504) | (18,504) | (16,365) | ||
Unbilled allowance for credit losses | (9,326) | (9,326) | (3,686) | ||
Unbilled equipment installment plan receivables, net | 217,388 | 217,388 | 107,349 | ||
Long-term | |||||
Equipment installment plan receivables | |||||
Unbilled equipment installment plan receivables, gross | 66,512 | 66,512 | 89,435 | ||
Unbilled deferred interest | (819) | (819) | (2,791) | ||
Unbilled allowance for credit losses | (4,740) | (4,740) | (6,065) | ||
Unbilled equipment installment plan receivables, net | $ 60,953 | $ 60,953 | $ 80,579 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2015 | Sep. 30, 2014 | |
Income Tax Disclosure | |||
Effective income tax rate | 38.50% | 39.20% | |
Deferred tax asset valuation allowance | State | |||
Valuation Allowance | |||
Increase (decrease) in valuation allowance | $ 6.4 |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Earnings per share | ||||
Net income (loss) attributable to U.S. Cellular shareholders | $ 63,594 | $ (22,165) | $ 243,010 | $ (21,472) |
Weighted average number of shares used in basic earnings (loss) per share | ||||
Weighted average number of shares used in basic earnings (loss) per share | 84,333 | 84,233 | 84,224 | 84,262 |
Effects of dilutive securities: | ||||
Stock options | 140 | 151 | ||
Restricted stock units | 474 | 494 | ||
Weighted average number of shares used in diluted earnings (loss) per share | 84,947 | 84,233 | 84,869 | 84,262 |
Earnings per share, Other disclosures | ||||
Basic earnings (loss) per share attributable to U.S. Cellular shareholders | $ 0.75 | $ (0.26) | $ 2.89 | $ (0.25) |
Diluted earnings (loss) per share attributable to U.S. Cellular shareholders | $ 0.75 | $ (0.26) | $ 2.86 | $ (0.25) |
Stock Options | ||||
Earnings per share, Other disclosures | ||||
Antidilutive securities | 3,476 | 3,484 | 3,120 | 3,234 |
Restricted Stock Units | ||||
Earnings per share, Other disclosures | ||||
Antidilutive securities | 1 | 1,226 | 289 | 1,189 |
Acquisitions, Divestitures an31
Acquisitions, Divestitures and Exchanges, acquisitions (Details) - USD ($) $ in Millions | 9 Months Ended | 12 Months Ended |
Sep. 30, 2015 | Dec. 31, 2014 | |
Acquisitions, divestitures and exchanges | ||
Total winning bid | $ 338.3 | |
License Acquisitions | Auction 97 | ||
Acquisitions, divestitures and exchanges | ||
Description of acquired entity | An FCC auction of AWS-3 spectrum licenses (“Auction 97”) ended in January 2015. U.S. Cellular participated in Auction 97 indirectly through its limited partnership interest in Advantage Spectrum L.P. (“Advantage Spectrum”). Advantage Spectrum was the provisional winning bidder for 124 licenses for an aggregate winning bid of $338.3 million, after its designated entity discount of 25%. Advantage Spectrum’s bid amount, less the initial deposit amount of $60.0 million paid in 2014, was paid to the FCC in March 2015. These licenses have not yet been granted by the FCC. See Note 10 — Variable Interest Entities for additional information. | |
Federal Communications Commission deposit | $ 60 | |
Licenses won | 124 | |
Total winning bid | $ 338.3 | |
Designated entity auction discount | 25.00% |
Acquisitions, Divestitures an32
Acquisitions, Divestitures and Exchanges, divestitures (Details) $ in Thousands | May. 16, 2013USD ($) | Jan. 31, 2015USD ($) | Dec. 31, 2014USD ($) | Sep. 30, 2015USD ($) | Sep. 30, 2014USD ($) | Sep. 30, 2015USD ($) | Sep. 30, 2014USD ($) | Sep. 30, 2015USD ($) | Dec. 31, 2015USD ($) |
Divestiture Financial Impacts | |||||||||
Cash received from divestitures and exchanges | $ 314,352 | $ 143,801 | |||||||
(Gain) loss on sale of business and other exit costs, net | $ (643) | $ (10,283) | $ (113,825) | (27,694) | |||||
Divestiture transaction | |||||||||
Divestitures | |||||||||
Business divestiture description | On May 16, 2013, pursuant to a Purchase and Sale Agreement, U.S. Cellular sold customers and certain PCS spectrum licenses to subsidiaries of Sprint Corp. fka Sprint Nextel Corporation (“Sprint”) in U.S. Cellular’s Chicago, central Illinois, St. Louis and certain Indiana/Michigan/Ohio markets (“Divestiture Markets”) in consideration for $480 million in cash. The Purchase and Sale Agreement also contemplated certain other agreements, together with the Purchase and Sale Agreement collectively referred to as the “Divestiture Transaction.” These agreements require Sprint to reimburse U.S. Cellular up to $200 million (the “Sprint Cost Reimbursement”) for certain network decommissioning costs, network site lease rent and termination costs, network access termination costs, and employee termination benefits for specified engineering employees. | ||||||||
Divestiture Financial Impacts | |||||||||
Cash received from divestitures and exchanges | $ 480,000 | ||||||||
(Gain) loss on sale of business and other exit costs, net | $ (300) | $ (10,400) | $ (6,200) | (28,100) | |||||
Tower sale | |||||||||
Divestitures | |||||||||
Business divestiture description | In December 2014, U.S. Cellular entered into an agreement with a third party to sell 595 towers and certain related contracts, assets, and liabilities for $159.0 million. This agreement and related transactions are referred to as the “Tower Sale” and were accomplished in two closings. The first closing occurred in December 2014 and included the sale of 236 towers, without tenants, for $10.0 million. On this same date, U.S. Cellular received $7.5 million in earnest money. At the time of the first closing, a $3.8 million gain was recorded. The second closing for the remaining 359 towers, primarily with tenants, took place in January 2015, at which time U.S. Cellular received $141.5 million in additional cash proceeds and recorded a gain of $107.7 million in (Gain) loss on sale of business and other exit costs, net. | ||||||||
Number of towers | 595 | 595 | 595 | ||||||
Divestiture Financial Impacts | |||||||||
Cash received from divestitures and exchanges | $ 159,000 | ||||||||
Tower sale - first closing | |||||||||
Divestitures | |||||||||
Number of towers | 236 | ||||||||
Divestiture Financial Impacts | |||||||||
Cash received from divestitures and exchanges | $ 10,000 | ||||||||
(Gain) loss on sale of business and other exit costs, net | (3,800) | ||||||||
Tower sale - second closing | |||||||||
Divestitures | |||||||||
Number of towers | 359 | ||||||||
Divestiture Financial Impacts | |||||||||
Cash received from divestitures and exchanges | $ 141,500 | ||||||||
(Gain) loss on sale of business and other exit costs, net | $ (107,700) | ||||||||
Sprint Cost Reimbursement | Divestiture transaction | |||||||||
Divestiture Financial Impacts | |||||||||
Cash received from divestitures and exchanges | $ 27,600 | $ 52,000 | $ 109,300 | ||||||
Sprint Cost Reimbursement | Maximum | Expected event | Divestiture transaction | |||||||||
Divestiture Financial Impacts | |||||||||
Cash received from divestitures and exchanges | $ 200,000 | ||||||||
Earnest money received | Tower sale - first closing | |||||||||
Divestiture Financial Impacts | |||||||||
Cash received from divestitures and exchanges | $ 7,500 |
Acquisitions, Divestitures an33
Acquisitions, Divestitures and Exchanges, exchanges (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
Jul. 31, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2015 | Sep. 30, 2015 | Sep. 30, 2014 | |
Exchanges | ||||||
(Gain) loss on license sales and exchanges, net | $ (23,986) | $ (146,884) | $ (91,446) | |||
Cash received from divestitures and exchanges | 314,352 | $ 143,801 | ||||
Other current liabilities | $ 149,853 | 92,617 | $ 92,617 | |||
PCS and AWS license exchange | ||||||
Exchanges | ||||||
Asset exchange description | In September 2014, U.S. Cellular entered into an agreement with a third party to exchange certain PCS and AWS licenses for certain other PCS and AWS licenses and $28.0 million of cash. This license exchange was accomplished in two closings. The first closing occurred in December 2014 at which time U.S. Cellular received licenses with an estimated fair value, per a market approach, of $51.5 million, recorded a $21.7 million gain and recorded an $18.3 million deferred credit in Other current liabilities. The license that was transferred to the counterparty in the second closing had a net book value of $22.2 million. The second closing occurred in July 2015. At the time of the second closing, U.S. Cellular received $28.0 million in cash and recognized the deferred credit from the first closing, resulting in a total gain of $24.1 million recorded on this part of the license exchange. | |||||
PCS and AWS license exchange - first closing | ||||||
Exchanges | ||||||
(Gain) loss on license sales and exchanges, net | (21,700) | |||||
Fair value | 51,500 | |||||
Other current liabilities | $ 18,300 | |||||
PCS and AWS license exchange - second closing | ||||||
Exchanges | ||||||
(Gain) loss on license sales and exchanges, net | $ (24,100) | |||||
Cash received from divestitures and exchanges | $ 28,000 | |||||
Licenses | $ 22,200 | $ 22,200 | ||||
PCS license exchange | ||||||
Exchanges | ||||||
Asset exchange description | In March 2015, U.S. Cellular exchanged certain of its unbuilt PCS licenses for certain other PCS licenses located in U.S. Cellular’s existing operating markets and $117.0 million of cash. As of the transaction date, the licenses received in the transaction had an estimated fair value, per a market approach, of $43.5 million. A gain of $125.2 million was recorded in (Gain) loss on license sales and exchanges, net in the Consolidated Statement of Operations in the first quarter of 2015. | |||||
(Gain) loss on license sales and exchanges, net | $ (125,200) | |||||
Fair value | 43,500 | |||||
Cash received from divestitures and exchanges | $ 117,000 |
Intangible Assets (Details)
Intangible Assets (Details) $ in Thousands | 9 Months Ended | |
Sep. 30, 2015USD ($) | ||
Licenses | ||
Balance, beginning of period | $ 1,443,438 | |
Acquisitions | 345,656 | [1] |
Exchanges | 43,485 | [2] |
Other | 1,482 | |
Balance, end of period | 1,834,061 | |
Total winning bid | $ 338,300 | |
[1] | Amount includes payments totaling $338.3 million made by Advantage Spectrum to the FCC for licenses in which it was the provisional winning bidder in Auction 97. See Note 6 — Acquisitions, Divestitures and Exchanges, and Note 10 — Variable Interest Entities for further information. | |
[2] | Amount represents licenses received in the March 2015 PCS license exchange. See Note 6 — Acquisitions, Divestitures and Exchanges for further information. Licenses disposed of in this exchange and the exchange that closed in July 2015 were previously removed from the Licenses balance and reflected in Assets held for sale in the Consolidated Balance Sheet as of December 31, 2014. |
Investments in Unconsolidated35
Investments in Unconsolidated Entities (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Equity method investments, combined income statements | ||||
Revenues | $ 1,733,402 | $ 1,643,734 | $ 5,184,186 | $ 4,861,057 |
Operating expenses | 1,263,320 | 1,225,417 | 3,826,798 | 3,540,783 |
Operating income | 470,082 | 418,317 | 1,357,388 | 1,320,274 |
Other income (loss), net | (9,843) | 1,651 | (15,466) | 4,077 |
Net income | $ 460,239 | $ 419,968 | $ 1,341,922 | $ 1,324,351 |
Debt, term loan facility (Detai
Debt, term loan facility (Details) - U.S. Cellular Term loan facility - USD ($) $ in Millions | 9 Months Ended | 12 Months Ended |
Sep. 30, 2015 | Dec. 31, 2016 | |
Term loan | ||
Maturity date | Jan. 21, 2022 | |
Proceeds from Term Loan borrowings | $ 225 | |
Frequency of periodic Term Loan payment | quarterly | |
Contractual spread | 2.50% | |
Interest rate on debt | 2.88% | |
Expected event | ||
Term loan | ||
Term Loan periodic payment amount | $ 2.8 |
Variable Interest Entities (Det
Variable Interest Entities (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||
Mar. 31, 2015 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | |||
Assets | |||||||||
Cash and cash equivalents | $ 596,766 | $ 273,798 | $ 596,766 | $ 273,798 | $ 211,513 | $ 342,065 | |||
Other current assets | 18,730 | 18,730 | 90,834 | ||||||
Licenses | 1,834,061 | 1,834,061 | 1,443,438 | ||||||
Property, plant and equipment, net | 2,608,438 | 2,608,438 | 2,728,217 | ||||||
Other assets and deferred charges | 187,268 | 187,268 | 276,218 | ||||||
Liabilities | |||||||||
Current liabilities | 886,552 | 886,552 | 856,894 | ||||||
Variable Interest Entities, Other Disclosures | |||||||||
Total winning bid | 338,300 | 338,300 | |||||||
Accounting Changes And Error Corrections [Abstract] | |||||||||
Net income (loss) | 65,021 | (23,771) | 249,921 | (24,818) | |||||
Net income (loss) attributable to U.S. Cellular shareholders | 63,594 | $ (22,165) | $ 243,010 | $ (21,472) | |||||
Adjustment | |||||||||
Accounting Changes And Error Corrections [Abstract] | |||||||||
Immaterial Error Correction | U.S. Cellular recorded out-of-period adjustments during the nine months ended September 30, 2015 due to errors related to equipment installment plan transactions that were attributable to 2014. U.S. Cellular has determined that these adjustments were not material to the prior quarterly or annual periods, and also were not material to the current period or anticipated full year 2015 results. These equipment installment plan adjustments had the impact of reducing Equipment sales revenues by $6.2 million and Income before income taxes by $5.8 million for the nine months ended September 30, 2015. These adjustments were made in the first six months of 2015. | ||||||||
Variable Interest Entities (VIE's) | |||||||||
Assets | |||||||||
Cash and cash equivalents | 1,681 | $ 1,681 | 2,588 | ||||||
Other current assets | 175 | 175 | 278 | ||||||
Licenses | 648,661 | [1] | 648,661 | [1] | 312,977 | ||||
Property, plant and equipment, net | 8,635 | 8,635 | 10,671 | ||||||
Other assets and deferred charges | 324 | 324 | 60,059 | ||||||
Total assets | 659,476 | 659,476 | 386,573 | ||||||
Liabilities | |||||||||
Current liabilities | 1 | 1 | 110 | ||||||
Deferred liabilities and credits | 494 | 494 | 622 | ||||||
Total liabilities | 495 | 495 | 732 | ||||||
Variable Interest Entities, Other Disclosures | |||||||||
Capital contributions, loans or advances | 280,600 | ||||||||
Advantage Spectrum L.P. | |||||||||
Variable Interest Entities, Other Disclosures | |||||||||
Federal Communications Commission deposit | $ 60,000 | ||||||||
Total winning bid | 338,300 | 338,300 | |||||||
Other auction charges | $ 2,300 | $ 2,300 | |||||||
Designated entity auction discount | 25.00% | 25.00% | |||||||
Licenses won | 124 | 124 | |||||||
King Street Wireless L.P. | |||||||||
Variable Interest Entities, Other Disclosures | |||||||||
Cash distributions paid | $ 60,000 | ||||||||
King Street Wireless, L.P. distribution paid to U.S. Cellular | 54,000 | ||||||||
King Street Wireless, L.P. distribution paid to King Street Wireless, Inc. | $ 6,000 | ||||||||
King Street Wireless L.P. | Adjustment | |||||||||
Accounting Changes And Error Corrections [Abstract] | |||||||||
Immaterial Error Correction | During the three and nine-months ended September 30, 2015, U.S. Cellular recorded out-of-period adjustments attributable to the third quarter of 2013 through the second quarter of 2015 related to an agreement with King Street Wireless. U.S. Cellular has determined that these adjustments were not material to the prior quarterly or annual periods, and also were not material to the current period or anticipated full year 2015 results. As a result of these out-of-period adjustments, for the three and nine months ended September 30, 2015, Net income decreased by $3.2 million and $2.8 million, and Net income attributable to U.S. Cellular shareholders decreased by $4.5 million and $4.0 million, respectively. | ||||||||
Net income (loss) | $ 3,200 | $ 2,800 | |||||||
Net income (loss) attributable to U.S. Cellular shareholders | $ 4,500 | $ 4,000 | |||||||
[1] | At September 30, 2015, includes payments totaling $338.3 million made by Advantage Spectrum to the FCC as described below. |
Common Share Repurchases (Detai
Common Share Repurchases (Details) - USD ($) $ / shares in Units, $ in Thousands | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Share repurchases | ||
Amount | $ 5,362 | $ 15,124 |
Treasury Shares | ||
Share repurchases | ||
Amount | $ 5,362 | $ 15,124 |
Common Shares | Treasury Shares | ||
Share repurchases | ||
Number of shares acquired | 154,000 | 384,000 |
Average cost per share | $ 34.85 | $ 39.37 |
Amount | $ 5,362 | $ 15,124 |
Common share repurchase authorization | On November 17, 2009, the Board of Directors of U.S. Cellular authorized the repurchase of up to 1,300,000 Common Shares on an annual basis beginning in 2009 and continuing each year thereafter, on a cumulative basis. These purchases will be made pursuant to open market purchases, block purchases, private purchases or otherwise, depending on market conditions. This authorization does not have an expiration date. | |
Repurchase authorization, additional number of shares | 1,300,000 | |
Repurchase expiration | does not have an expiration date |