Document And Entity Information
Document And Entity Information - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Jan. 31, 2019 | Jun. 30, 2018 | |
Entity Registrant Name | United States Cellular Corporation | ||
Entity Central Index Key | 821,130 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2018 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Public Float | $ 537 | ||
Document Fiscal Year Focus | 2,018 | ||
Document Fiscal Period Focus | FY | ||
Trading Symbol | USM | ||
Entity Emerging Growth Company | false | ||
Entity Small Business | false | ||
Entity Shell Company | false | ||
Common Shares | |||
Entity Common Stock, Shares Outstanding | 53,299,700 | ||
Series A Common Shares | |||
Entity Common Stock, Shares Outstanding | 33,005,900 |
Consolidated Statement Of Opera
Consolidated Statement Of Operations - USD ($) shares in Millions, $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Operating revenues | |||
Total operating revenues | $ 3,967 | $ 3,890 | $ 3,990 |
Operating expenses | |||
Selling, general and administrative (including charges from affiliates of $86 million, $85 million and $94 million in 2018, 2017 and 2016) | 1,388 | 1,412 | 1,480 |
Depreciation, amortization and accretion | 640 | 615 | 618 |
Loss on impairment of goodwill | 0 | 370 | 0 |
(Gain) loss on asset disposals, net | 10 | 17 | 22 |
(Gain) loss on sale of business and other exit costs, net | 0 | (1) | 0 |
(Gain) loss on license sales and exchanges, net | (18) | (22) | (19) |
Total operating expenses | 3,809 | 4,194 | 3,942 |
Operating income (loss) | 158 | (304) | 48 |
Investment and other income (expense) | |||
Equity in earnings of unconsolidated entities | 159 | 137 | 140 |
Interest and dividend income | 15 | 8 | 6 |
Interest expense | (116) | (113) | (113) |
Other, net | (1) | 0 | 1 |
Total investment and other income | 57 | 32 | 34 |
Income (loss) before income taxes | 215 | (272) | 82 |
Income tax expense (benefit) | 51 | (287) | 33 |
Net income | 164 | 15 | 49 |
Less: Net income attributable to noncontrolling interests, net of tax | 14 | 3 | 1 |
Net income attributable to U.S. Cellular shareholders | $ 150 | $ 12 | $ 48 |
Basic weighted average shares outstanding (in shares) | 86 | 85 | 85 |
Basic earnings per share attributable to U.S. Cellular shareholders (in dollars per share) | $ 1.75 | $ 0.14 | $ 0.56 |
Diluted weighted average shares outstanding (in shares) | 87 | 86 | 85 |
Diluted earnings per share attributable to U.S. Cellular shareholders (in dollars per share) | $ 1.72 | $ 0.14 | $ 0.56 |
Service | |||
Operating revenues | |||
Total operating revenues | $ 2,978 | $ 2,978 | $ 3,081 |
Operating expenses | |||
Cost of goods and services sold | 758 | 732 | 760 |
Equipment sales | |||
Operating revenues | |||
Total operating revenues | 989 | 912 | 909 |
Operating expenses | |||
Cost of goods and services sold | $ 1,031 | $ 1,071 | $ 1,081 |
Consolidated Statement Of Ope_2
Consolidated Statement Of Operations (Parenthetical) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Operating expenses | |||
Selling, general and administrative, charges from affiliates | $ 86 | $ 85 | $ 94 |
Consolidated Statement of Cash
Consolidated Statement of Cash Flows - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Cash flows from operating activities | |||
Net income | $ 164 | $ 15 | $ 49 |
Add (deduct) adjustments to reconcile net income to net cash flows from operating activities | |||
Depreciation, amortization and accretion | 640 | 615 | 618 |
Bad debts expense | 95 | 89 | 96 |
Stock-based compensation expense | 37 | 30 | 26 |
Deferred income taxes, net | (3) | (365) | 6 |
Equity in earnings of unconsolidated entities | (159) | (137) | (140) |
Distributions from unconsolidated entities | 152 | 136 | 93 |
Loss on impairment of goodwill | 0 | 370 | 0 |
(Gain) loss on asset disposals, net | 10 | 17 | 22 |
(Gain) loss on license sales and exchanges, net | (18) | (22) | (19) |
Other operating activities | 3 | 1 | 0 |
Changes in assets and liabilities from operations | |||
Accounts receivable | (39) | (68) | (23) |
Equipment installment plans receivable | (149) | (261) | (246) |
Inventory | (4) | 0 | 8 |
Accounts payable | 3 | (14) | 48 |
Customer deposits and deferred revenues | 7 | (3) | (54) |
Accrued taxes | (39) | 26 | 40 |
Other assets and liabilities | 9 | 40 | (23) |
Net cash provided by operating activities | 709 | 469 | 501 |
Cash flows from investing activities | |||
Cash paid for additions to property, plant and equipment | (512) | (465) | (443) |
Cash paid for licenses | (8) | (189) | (53) |
Cash received for investments | 50 | 0 | 0 |
Cash paid for investments | (17) | (50) | 0 |
Cash received from divestitures and exchanges | 24 | 21 | 21 |
Federal Communications Commission deposit | 0 | 0 | (143) |
Other investing activities | (1) | 0 | 0 |
Net cash used in investing activities | (464) | (683) | (618) |
Cash flows from financing activities | |||
Repayment of long-term debt | (19) | (14) | (11) |
Common shares reissued for benefit plans, net of tax payments | 18 | 1 | 6 |
Common shares repurchased | 0 | 0 | (5) |
Distributions to noncontrolling interests | (6) | (4) | (1) |
Other financing activities | (7) | (3) | (1) |
Net cash used in financing activities | (14) | (20) | (12) |
Net increase (decrease) in cash, cash equivalents and restricted cash | 231 | (234) | (129) |
Cash, cash equivalents and restricted cash | |||
Beginning of period | 352 | 586 | 715 |
End of period | $ 583 | $ 352 | $ 586 |
Consolidated Balance Sheet
Consolidated Balance Sheet - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 | |
Current assets | |||
Cash and cash equivalents | $ 580 | $ 352 | |
Short-term investments | 17 | 50 | |
Accounts receivable | |||
Customers and agents, less allowances of $66 and $55, respectively | 908 | 775 | |
Roaming | 20 | 26 | |
Affiliated | 2 | 1 | |
Other, less allowances of $2 and $1, respectively | 46 | 41 | |
Inventory, net | 142 | 138 | |
Prepaid expenses | 63 | 79 | |
Other current assets | 34 | 21 | |
Total current assets | 1,812 | 1,483 | |
Assets held for sale | 54 | 10 | |
Licenses | 2,186 | 2,223 | |
Investments in unconsolidated entities | 441 | 415 | |
Property, plant and equipment | |||
In service and under construction | 7,778 | 7,628 | |
Less: Accumulated depreciation and amortization | 5,576 | 5,308 | |
Property, plant and equipment, net | 2,202 | 2,320 | |
Other assets and deferred charges | 579 | 390 | |
Total assets | [1] | 7,274 | 6,841 |
Current liabilities | |||
Current portion of long-term debt | 19 | 18 | |
Accounts payable | |||
Affiliated | 9 | 8 | |
Trade | 304 | 302 | |
Customer deposits and deferred revenues | 157 | 185 | |
Accrued taxes | 30 | 56 | |
Accrued compensation | 78 | 74 | |
Other current liabilities | 94 | 90 | |
Total current liabilities | 691 | 733 | |
Liabilities held for sale | 1 | 0 | |
Deferred liabilities and credits | |||
Deferred income tax liability, net | 510 | 461 | |
Other deferred liabilities and credits | 389 | 337 | |
Long-term debt, net | 1,605 | 1,622 | |
Commitments and contingencies | |||
Noncontrolling interests with redemption features | 11 | 1 | |
U.S. Cellular shareholders’ equity | |||
Series A Common and Common Shares Authorized 190 shares (50 Series A Common and 140 Common Shares) Issued 88 shares (33 Series A Common and 55 Common Shares) Outstanding 86 shares (33 Series A Common and 53 Common Shares) and 85 shares (33 Series A Common and 52 Common Shares), respectively Par Value ($1.00 per share)($33 Series A Common and $55 Common Shares) | 88 | 88 | |
Additional paid-in capital | 1,590 | 1,552 | |
Treasury shares, at cost, 2 and 3 Common Shares, respectively | (65) | (120) | |
Retained earnings | 2,444 | 2,157 | |
Total U.S. Cellular shareholders' equity | 4,057 | 3,677 | |
Noncontrolling interests | 10 | 10 | |
Total equity | 4,067 | 3,687 | |
Total liabilities and equity | [1] | $ 7,274 | $ 6,841 |
[1] | The consolidated total assets as of December 31, 2018 and 2017, include assets held by consolidated variable interest entities (VIEs) of $868 million and $785 million, respectively, which are not available to be used to settle the obligations of U.S. Cellular. The consolidated total liabilities as of December 31, 2018 and 2017, include certain liabilities of consolidated VIEs of $23 million and $24 million, respectively, for which the creditors of the VIEs have no recourse to the general credit of U.S. Cellular. See Note 13 — Variable Interest Entities for additional information. |
Consolidated Balance Sheet (Par
Consolidated Balance Sheet (Parenthetical) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Accounts receivable | ||
Customers and agents allowances | $ 66 | $ 55 |
Other allowances | $ 2 | $ 1 |
U.S. Cellular shareholders’ equity | ||
Authorized shares (in shares) | 190,000,000 | 190,000,000 |
Issued shares (in shares) | 88,000,000 | 88,000,000 |
Outstanding shares (in shares) | 86,000,000 | 85,000,000 |
Par value | $ 88 | $ 88 |
Treasury shares (in shares) | 2,000,000 | 3,000,000 |
Variable Interest Entities VIE's | ||
Total VIE assets that can be used to settle only the VIEs' obligations | $ 868 | $ 785 |
Total VIE liabilities for which creditors have no recourse | $ 23 | $ 24 |
Series A Common Shares | ||
U.S. Cellular shareholders’ equity | ||
Authorized shares (in shares) | 50,000,000 | 50,000,000 |
Issued shares (in shares) | 33,000,000 | 33,000,000 |
Outstanding shares (in shares) | 33,000,000 | 33,000,000 |
Par value per share (USD per share) | $ 1 | $ 1 |
Par value | $ 33 | $ 33 |
Common Shares | ||
U.S. Cellular shareholders’ equity | ||
Authorized shares (in shares) | 140,000,000 | 140,000,000 |
Issued shares (in shares) | 55,000,000 | 55,000,000 |
Outstanding shares (in shares) | 53,000,000 | 52,000,000 |
Par value per share (USD per share) | $ 1 | $ 1 |
Par value | $ 55 | $ 55 |
Treasury shares (in shares) | 2,000,000 | 3,000,000 |
Consolidated Statement of Chang
Consolidated Statement of Changes in Equity - USD ($) $ in Millions | 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, 2015 | $ 3,571 | $ 88 | $ 1,497 | $ (157) | $ 2,133 | $ 3,561 | $ 10 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income attributable to U.S. Cellular shareholders | 48 | 48 | 48 | ||||
Net income attributable to noncontrolling interests classified as equity | 2 | 0 | 2 | ||||
Repurchase of Common Shares | (5) | (5) | (5) | ||||
Incentive and compensation plans | 5 | 26 | (21) | 5 | |||
Stock-based compensation awards | 25 | 25 | 25 | ||||
Distributions to noncontrolling interests | (1) | 0 | (1) | ||||
Ending balance at Dec. 31, 2016 | 3,645 | 88 | 1,522 | (136) | 2,160 | 3,634 | 11 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income attributable to U.S. Cellular shareholders | 12 | 12 | 12 | ||||
Net income attributable to noncontrolling interests classified as equity | 3 | 0 | 3 | ||||
Incentive and compensation plans | 1 | 16 | (15) | 1 | |||
Stock-based compensation awards | 30 | 30 | 30 | ||||
Distributions to noncontrolling interests | (4) | 0 | (4) | ||||
Ending balance at Dec. 31, 2017 | 3,687 | 88 | 1,552 | (120) | 2,157 | 3,677 | 10 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Cumulative effect of accounting change | 176 | 175 | 175 | 1 | |||
Net income attributable to U.S. Cellular shareholders | 150 | 150 | 150 | ||||
Net income attributable to noncontrolling interests classified as equity | 2 | 0 | 2 | ||||
Incentive and compensation plans | 18 | 1 | 55 | (38) | 18 | ||
Stock-based compensation awards | 37 | 37 | 37 | ||||
Distributions to noncontrolling interests | (3) | 0 | (3) | ||||
Ending balance at Dec. 31, 2018 | $ 4,067 | $ 88 | $ 1,590 | $ (65) | $ 2,444 | $ 4,057 | $ 10 |
Summary of Significant Accounti
Summary of Significant Accounting Policies and Recent Accounting Pronouncements | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies and Recent Accounting Pronouncements | Summary of Significant Accounting Policies and Recent Accounting Pronouncements United States Cellular Corporation (U.S. Cellular), a Delaware Corporation, is an 82% -owned subsidiary of Telephone and Data Systems, Inc. (TDS). Nature of Operations U.S. Cellular owns, operates and invests in wireless systems throughout the United States. As of December 31, 2018 , U.S. Cellular served customers with 5.0 million total connections. U.S. Cellular has one reportable segment. Principles of Consolidation The accounting policies of U.S. Cellular conform to accounting principles generally accepted in the United States of America (GAAP) as set forth in the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC). Unless otherwise specified, references to accounting provisions and GAAP in these notes refer to the requirements of the FASB ASC. The consolidated financial statements include the accounts of U.S. Cellular, subsidiaries in which 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 requires consolidation under GAAP. See Note 13 — Variable Interest Entities for additional information relating to U.S. Cellular’s VIEs. All material intercompany accounts and transactions have been eliminated. Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect (a) the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and (b) the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates. Significant estimates are involved in accounting for indefinite-lived intangible assets, income taxes and equipment installment plans. Cash, Cash Equivalents and Restricted Cash Cash and cash equivalents include cash and highly liquid investments with original maturities of three months or less. Cash and cash equivalents subject to contractual restrictions are classified as restricted cash. The following table provides a reconciliation of Cash and cash equivalents and restricted cash reported in the Consolidated Balance Sheet to the total of the amounts in the Consolidated Statement of Cash Flows. December 31, 2018 2017 (Dollars in millions) Cash and cash equivalents $ 580 $ 352 Restricted cash included in Other current assets 3 — Cash, cash equivalents and restricted cash in the statement of cash flows $ 583 $ 352 Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable consist primarily of amounts owed by customers for wireless services and equipment sales, including sales of certain devices and accessories under installment plans, by agents for sales of equipment to them and by other wireless carriers whose customers have used U.S. Cellular’s wireless systems. The allowance for doubtful accounts is the best estimate of the amount of probable credit losses related to existing billed and unbilled accounts receivable. The allowance is estimated based on historical experience, account aging and other factors that could affect collectability. Accounts receivable balances are reviewed on either an aggregate or individual basis for collectability depending on the type of receivable. When it is probable that an account balance will not be collected, the account balance is charged against the allowance for doubtful accounts. U.S. Cellular does not have any off-balance sheet credit exposure related to its customers. Inventory Inventory consists primarily of wireless devices stated at the lower of cost, which approximates cost determined on the first-in first-out basis, or net realizable value. Net realizable value is determined by reference to the stand-alone selling price. Licenses Licenses consist of direct and incremental costs incurred in acquiring Federal Communications Commission (FCC) licenses to provide wireless service. U.S. Cellular has determined that wireless licenses are indefinite-lived intangible assets and, therefore, not subject to amortization based on the following factors: ▪ Radio spectrum is not a depleting asset. ▪ The ability to use radio spectrum is not limited to any one technology. ▪ U.S. Cellular and its consolidated subsidiaries are licensed to use radio spectrum through the FCC licensing process, which enables licensees to utilize specified portions of the spectrum for the provision of wireless service. ▪ U.S. Cellular and its consolidated subsidiaries are required to renew their FCC licenses every ten years or, in some cases, every twelve or fifteen years. To date, all of U.S. Cellular’s license renewal applications have been granted by the FCC. Generally, license renewal applications filed by licensees otherwise in compliance with FCC regulations are routinely granted. If, however, a license renewal application is challenged either by a competing applicant for the license or by a petition to deny the renewal application, the license will be renewed if the licensee can demonstrate its entitlement to a “renewal expectancy.” Licensees are entitled to such an expectancy if they can demonstrate to the FCC that they have provided “substantial service” during their license term and have “substantially complied” with FCC rules and policies. U.S. Cellular believes that it is probable that its future license renewal applications will be granted. U.S. Cellular performs its annual impairment assessment of Licenses as of November 1 of each year or more frequently if there are events or circumstances that cause U.S. Cellular to believe the carrying value of Licenses exceeds their fair value on a more likely than not basis. For purposes of its impairment testing of Licenses, U.S. Cellular separated its FCC licenses into eight units of accounting. The eight units of accounting consisted of one unit of accounting for developed operating market licenses (built licenses) and seven geographic non-operating market licenses (unbuilt licenses). U.S. Cellular performed a qualitative impairment assessment in 2018 and a quantitative impairment assessment in 2017 to determine whether the licenses were impaired. Based on the impairment assessments performed, U.S. Cellular did no t have an impairment of its Licenses in 2018 or 2017 . See Note 7 — Intangible Assets for additional details related to Licenses. Investments in Unconsolidated Entities For its equity method investments for which financial information is readily available, U.S. Cellular records its equity in the earnings of the entity in the current period. For its equity method investments for which financial information is not readily available, U.S. Cellular records its equity in the earnings of the entity on a one quarter lag basis. Property, Plant and Equipment U.S. Cellular’s Property, plant and equipment is stated at the original cost of construction or purchase including capitalized costs of certain taxes, payroll-related expenses, interest and estimated costs to remove the assets. Expenditures that enhance the productive capacity of assets in service or extend their useful lives are capitalized and depreciated. Expenditures for maintenance and repairs of assets in service are charged to System operations expense or Selling, general and administrative expense, as applicable. Retirements and disposals of assets are recorded by removing the original cost of the asset (along with the related accumulated depreciation) from plant in service and charging it, together with net removal costs (removal costs less an applicable accrued asset retirement obligation and salvage value realized), to (Gain) loss on asset disposals, net. U.S. Cellular capitalizes certain costs of developing new information systems. Software licenses that qualify for capitalization as an asset are accounted for as the acquisition of an intangible asset and the incurrence of a liability to the extent that the license fees are not fully paid at acquisition. Depreciation and Amortization Depreciation is provided using the straight-line method over the estimated useful life of the related asset. U.S. Cellular depreciates leasehold improvement assets associated with leased properties over periods ranging from one to thirty years; such periods approximate the shorter of the assets’ economic lives or the specific lease terms. Useful lives of specific assets are reviewed throughout the year to determine if changes in technology or other business changes would warrant accelerating the depreciation of those specific assets. There were no material changes to useful lives of property, plant and equipment in 2018 , 2017 or 2016 . See Note 9 — Property, Plant and Equipment for additional details related to useful lives. Impairment of Long-Lived Assets U.S. Cellular reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the assets might be impaired. U.S. Cellular has one asset group for purposes of assessing property, plant and equipment for impairment based on the fact that the individual operating markets are reliant on centrally operated data centers, mobile telephone switching offices and a network operations center. U.S. Cellular operates a single integrated national wireless network. The cash flows generated by this single interdependent network represent the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities. Agent Liabilities U.S. Cellular has relationships with agents, which are independent businesses that obtain customers for U.S. Cellular. At December 31, 2018 and 2017 , U.S. Cellular had accrued $59 million and $61 million , respectively, for amounts due to agents. These amounts are included in Other current liabilities in the Consolidated Balance Sheet. Debt Issuance Costs Debt issuance costs include underwriters’ and legal fees and other charges related to issuing various borrowing instruments and other long–term agreements, and are amortized over the respective term of each instrument. Debt issuance costs related to U.S. Cellular’s revolving credit agreement and receivables securitization agreement are recorded in Other assets and deferred charges in the Consolidated Balance Sheet. All other debt issuance costs are presented as an offset to the related debt obligation in the Consolidated Balance Sheet. Asset Retirement Obligations U.S. Cellular accounts for asset retirement obligations by recording the fair value of a liability for legal obligations associated with an asset retirement in the period in which the obligations are incurred. At the time the liability is incurred, U.S. Cellular records a liability equal to the net present value of the estimated cost of the asset retirement obligation and increases the carrying amount of the related long-lived asset by an equal amount. Until the obligation is fulfilled, U.S. Cellular updates its estimates relating to cash flows required and timing of settlement. U.S. Cellular records the present value of the changes in the future value as an increase or decrease to the liability and the related carrying amount of the long-lived asset. The liability is accreted to future value over a period ending with the estimated settlement date of the respective asset retirement obligation. The carrying amount of the long-lived asset is depreciated over the useful life of the related asset. Upon settlement of the obligation, any difference between the cost to retire the asset and the recorded liability is recognized in the Consolidated Statement of Operations. See Note 10 — Asset Retirement Obligations for additional information. Treasury Shares Common Shares repurchased by U.S. Cellular are recorded at cost as treasury shares and result in a reduction of equity. When treasury shares are reissued, U.S. Cellular determines the cost using the first-in, first-out cost method. The difference between the cost of the treasury shares and reissuance price is included in Additional paid-in capital or Retained earnings. Revenue Recognition Revenues from sales of equipment and products are recognized when control has transferred to the customer. Service revenues are recognized as the related service is provided. See Note 2 — Revenue Recognition for additional information on U.S. Cellular's policies related to Revenues. Advertising Costs U.S. Cellular expenses advertising costs as incurred. Advertising costs totaled $215 million , $211 million and $245 million in 2018 , 2017 and 2016 , respectively. Income Taxes U.S. Cellular is included in a consolidated federal income tax return with other members of the TDS consolidated group. For financial statement purposes, U.S. Cellular and its subsidiaries calculate their income, income taxes and credits as if they comprised a separate affiliated group. Under a tax allocation agreement between TDS and U.S. Cellular, U.S. Cellular remits its applicable income tax payments to TDS. U.S. Cellular had a tax receivable balance with TDS of $14 million as of December 31, 2018 and a tax payable balance with TDS of $23 million as of December 31, 2017 . Deferred taxes are computed using the liability method, whereby deferred tax assets are recognized for future deductible temporary differences and operating loss carryforwards, and deferred tax liabilities are recognized for future taxable temporary differences. Both deferred tax assets and liabilities are measured using the enacted tax rates in effect when the temporary differences are expected to reverse. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. Deferred tax assets are reduced by a valuation allowance when it is more likely than not that some portion or all of the deferred tax assets will not be realized. U.S. Cellular evaluates income tax uncertainties, assesses the probability of the ultimate settlement with the applicable taxing authority and records an amount based on that assessment. Deferred taxes are reported as a net non-current asset or liability by jurisdiction. Any corresponding valuation allowance to reduce the amount of deferred tax assets is also recorded as non-current. See Note 5 — Income Taxes for additional information. Stock-Based Compensation and Other Plans U.S. Cellular has established a long-term incentive plan and a non-employee director compensation plan. These plans are considered compensatory plans and, therefore, recognition of costs for grants made under these plans is required. U.S. Cellular recognizes stock compensation expense based upon the fair value of the specific awards granted using established valuation methodologies. The amount of stock compensation cost recognized on either a straight-line basis or graded attribution method is based on the portion of the award that is expected to vest over the requisite service period, which generally represents the vesting period. Stock-based compensation cost recognized has been reduced for estimated forfeitures. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. See Note 16 — Stock-Based Compensation for additional information. Defined Contribution Plans U.S. Cellular participates in a qualified noncontributory defined contribution pension plan sponsored by TDS; such plan provides pension benefits for the employees of U.S. Cellular and its subsidiaries. Under this plan, pension benefits and costs are calculated separately for each participant and are funded currently. Pension costs were $11 million in 2018 , 2017 and 2016 . U.S. Cellular also participates in a defined contribution retirement savings plan (401(k) plan) sponsored by TDS. Total costs incurred for U.S. Cellular’s contributions to the 401(k) plan were $15 million , $16 million and $16 million in 2018 , 2017 and 2016 , respectively. Recently Issued Accounting Pronouncements In February 2016, the FASB issued Accounting Standards Update 2016-02, Leases (ASU 2016-02) and has since amended the standard with Accounting Standards Update 2018-01, Leases: Land Easement Practical Expedient for Transition to Topic 842 , Accounting Standards Update 2018-10, Codification Improvements to Topic 842, Leases , Accounting Standards Update 2018-11, Leases: Targeted Improvements, and Accounting Standards Update 2018-20, Leases: Narrow-Scope Improvements for Lessors . ASU 2016-02, as amended, requires lessees to record a right-of-use asset and lease liability for almost all leases. This ASU does not substantially impact the lessor accounting model. However, some changes to the lessor accounting guidance were made to align with lessee accounting changes within ASC 842, Leases and certain key aspects of ASC 606, Revenue from Contracts with Customers . U.S. Cellular will adopt ASU 2016-02, as amended, using a modified retrospective method on January 1, 2019. Under this method, a cumulative effect adjustment is recognized upon adoption and the guidance is applied prospectively. U.S. Cellular elected transitional practical expedients for existing leases which eliminated the requirements to reassess existing lease classification and initial direct costs, and whether contracts contain leases. U.S. Cellular also elected the practical expedient related to land easements that allows it to carry forward the accounting treatment for pre-existing land easement agreements. U.S. Cellular has implemented new systems, processes and controls to adopt ASU 2016-02, as amended, and has implemented a new lease management and accounting system to assist in the application of the new standard. Nearly all of U.S. Cellular’s leases are classified as operating leases, although it does have a small number of finance leases. The adoption of ASU 2016-02, as amended, will add approximately $0.9 billion in right-of-use assets and approximately $1.0 billion in lease liabilities to the Consolidated Balance Sheet as of January 1, 2019, with the difference primarily representing accrued rent recognized prior to adoption. The adoption of ASU 2016-02 is not expected to have a material impact on U.S. Cellular's results of operations in 2019. In June 2016, the FASB issued Accounting Standards Update 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments (ASU 2016-13). ASU 2016-13 requires entities to use a new forward-looking, expected loss model to estimate credit losses. It also requires additional disclosure relating to the credit quality of trade and other receivables, including information relating to management’s estimate of credit allowances. U.S. Cellular is required to adopt ASU 2016-13 on January 1, 2020, using the modified retrospective approach. Early adoption is permitted as of January 1, 2019; however, U.S. Cellular does not intend to adopt early. U.S. Cellular is evaluating the effects that adoption of ASU 2016-13 will have on its financial position, results of operations and disclosures. In June 2018, the FASB issued Accounting Standards Update 2018-07, Compensation - Stock Compensation: Improvements to Nonemployee Share-Based Payment Accounting (ASU 2018-07). ASU 2018-07 expands the scope of ASC 718, Compensation—Stock Compensation , which currently only includes share-based payments issued to employees, to also include share-based payments issued to nonemployees for goods and services. U.S. Cellular is required to adopt ASU 2018-07 on January 1, 2019, using the modified retrospective approach. Early adoption is permitted. The adoption of ASU 2018-07 will not have an impact on U.S. Cellular’s financial position or results of operations. In August 2018, the FASB issued Accounting Standards Update 2018-15, Intangibles - Goodwill and Other - Internal-Use Software: Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (ASU 2018-15). ASU 2018-15 aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the existing guidance for capitalizing implementation costs for an arrangement that has a software license. The service element of a hosting arrangement will continue to be expensed as incurred. Any capitalized implementation costs will be amortized over the period of the service contract. U.S. Cellular is required to adopt ASU 2018-15 on January 1, 2020, either retrospectively or prospectively to eligible costs incurred on or after the date that this guidance is first applied. Early adoption is permitted. The adoption of ASU 2018-15 is not expected to have a significant impact on U.S. Cellular's financial position or results of operations. |
Revenue Recognition
Revenue Recognition | 12 Months Ended |
Dec. 31, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition | Revenue Recognition Change in Accounting Policy In May 2014, the FASB issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers and has since amended the standard with Accounting Standards Update 2015-14, Revenue from Contracts with Customers: Deferral of the Effective Date , Accounting Standards Update 2016-08, Revenue from Contracts with Customers: Principal versus Agent Considerations (Reporting Revenue Gross versus Net), Accounting Standards Update 2016-10, Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing , Accounting Standards Update 2016-12, Revenue from Contracts with Customers: Narrow-Scope Improvements and Practical Expedients, and Accounting Standards Update 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers, collectively referred to hereinafter as ASU 2014-09. These standards replace existing revenue recognition rules with a single comprehensive model to use in accounting for revenue arising from contracts with customers. In February 2017, the FASB issued Accounting Standards Update 2017-05, Other Income – Gains and Losses from the Derecognition of Nonfinancial Assets: Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets (ASU 2017-05). ASU 2017-05 clarifies how entities account for the derecognition of a nonfinancial asset and adds guidance for partial sales of nonfinancial assets. U.S. Cellular adopted the provisions of ASU 2014-09 and ASU 2017-05 and applied them to all contracts as of January 1, 2018, using a modified retrospective method. Under this method, the new accounting standard is applied only to the most recent period presented, recognizing the cumulative effect of the accounting change as an adjustment to the beginning balance of retained earnings. Accordingly, prior periods have not been recast to reflect the new accounting standard. The cumulative effect of applying the provisions of ASU 2014-09 resulted in an increase of $175 million in retained earnings as of January 1, 2018. ASU 2017-05 had no impact to retained earnings as of January 1, 2018. As a practical expedient, U.S. Cellular groups similar contracts or similar performance obligations together into portfolios of contracts or performance obligations if doing so does not result in a significant difference from applying the new accounting standard to the individual contracts. U.S. Cellular applies this grouping method for the following types of transactions: device activation fees, contract acquisition costs, and certain customer promotions. Contract portfolios will be recognized over the respective expected customer lives or terms of the contracts. The line items impacted by the adoption of ASU 2014-09 and ASU 2017-05 in the Consolidated Statement of Operations and the Consolidated Balance Sheet are presented below. Consolidated Statement of Operations Year Ended December 31, 2018 Results under prior accounting standards Adjustment As reported (Dollars in millions, except per share amounts) Operating revenues Service $ 3,086 $ (108 ) $ 2,978 Equipment sales 894 95 989 Total operating revenues 3,980 (13 ) 3,967 Cost of equipment sold 1,030 1 1,031 Selling, general and administrative 1,393 (5 ) 1,388 (Gain) loss on license sales and exchanges, net (17 ) (1 ) (18 ) Total operating expenses 3,815 (6 ) 3,809 Operating income (loss) 166 (8 ) 158 Income (loss) before income taxes 223 (8 ) 215 Income tax expense (benefit) 53 (2 ) 51 Net income 170 (6 ) 164 Net income attributable to U.S. Cellular shareholders 156 (6 ) 150 Basic earnings per share attributable to U.S. Cellular shareholders $ 1.81 $ (0.06 ) $ 1.75 Diluted earnings per share attributable to U.S. Cellular shareholders $ 1.79 $ (0.07 ) $ 1.72 Numbers may not foot due to rounding. The decrease in Service revenues and the increase in Equipment sales revenues are driven primarily by differences in the timing and classification of revenue recognized for certain arrangements with multiple performance obligations and ceasing to record deferred imputed interest and the resulting interest income on equipment installment contracts. Under prior accounting standards, revenues were allocated to deliverables using the relative selling price method, where consideration was allocated to each element on the basis of its relative selling price. Revenue recognized for the delivered items was limited to the amount due from the customer that was not contingent upon the delivery of additional products or services. Under ASU 2014-09, the revenue allocation of the transaction price is based on the relative standalone selling prices of the individual performance obligations in the customer’s contract, and the resulting revenue attributable to each is recognized as control over the performance obligation is transferred to the customer. This has resulted in increased Equipment sales revenues as more revenue is allocated to discounted equipment than under prior accounting standards. Under prior accounting standards, U.S. Cellular deferred imputed interest related to equipment installment plan receivable contracts that exceeded twelve months, and recognized the corresponding interest income over the contract period in Service revenues. Under the provisions of ASU 2014-09, U.S. Cellular has determined that equipment installment plan contracts do not contain a significant financing component, and accordingly, U.S. Cellular ceased recording deferred imputed interest and the resulting interest income on equipment installment contracts upon the adoption of ASU 2014-09. Cost of equipment sold increased due to a change in timing of recognition of cost of goods sold in the agent channel. Under prior accounting standards, Equipment sales to agents and the related Cost of equipment sold were recognized when equipment was sold through from the agent to end user customers. In accordance with the provisions of ASU 2014-09, such amounts are recognized when U.S. Cellular delivers the equipment to the agent. Fluctuations in Selling, general and administrative expenses are due to the capitalization and amortization of contract acquisition and contract fulfillment costs under ASU 2014-09. Under ASU 2017-05, (Gain) loss on license sales and exchanges, net is calculated by subtracting the carrying amount of the distinct asset being disposed from the consideration measured and allocated to that distinct asset. With respect to license exchange transactions, the consideration, or transaction price, is the fair value of the licenses received. Under prior accounting standards, the transaction price was typically the fair value of the licenses surrendered. Consolidated Balance Sheet As of December 31, 2018 Results under prior accounting standards Adjustment As reported (Dollars in millions) Accounts receivable Customers and agents, less allowances $ 844 $ 64 $ 908 Prepaid expenses 88 (25 ) 63 Other current assets 31 3 34 Total current assets 1,769 43 1,812 Licenses 2,185 1 2,186 Investments in unconsolidated entities 424 17 441 Other assets and deferred charges 418 161 579 Total assets 7,052 222 7,274 Customer deposits and deferred revenues 178 (21 ) 157 Other current liabilities 90 4 94 Total current liabilities 708 (17 ) 691 Deferred income tax liability, net 459 51 510 Other deferred liabilities and credits 371 18 389 Retained earnings 2,275 169 2,444 Total U.S. Cellular shareholders' equity 3,888 169 4,057 Noncontrolling interests 9 1 10 Total equity 3,897 170 4,067 Total liabilities and equity $ 7,052 $ 222 $ 7,274 Numbers may not foot due to rounding. As a result of adoption of ASU 2014-09, U.S. Cellular recorded short-term and long-term contract assets and contract liabilities in its Consolidated Balance Sheet as of December 31, 2018 . Under ASU 2014-09, the timing of recognition of revenue for each performance obligation may differ from the timing of the customer billing, creating a contract asset or contract liability. See Contract Balances below for additional information. Contract assets are included in Other current assets if short-term in nature or Other assets and deferred charges if long-term in nature. Short-term contract liabilities are classified as Customer deposits and deferred revenues and long-term contract liabilities are included in Other deferred liabilities and credits. Accounts receivable increased as a result of U.S. Cellular ceasing to record deferred imputed interest. Certain prepaid expenses decreased due to a change in timing of recognition of sales of equipment to agents. Investments in unconsolidated entities increased due to the cumulative effect of applying the provisions of ASU 2014-09 to certain of U.S. Cellular’s equity method investments as of January 1, 2018. Deferred income tax liabilities, net, increased due to the provisions of ASU 2014-09 increasing the net basis of assets on a U.S. GAAP basis, without a corresponding increase in tax basis. Contract cost assets have also been created as a result of ASU 2014-09 due to capitalization of costs to obtain a new contract. See Contract Cost Assets below for additional information. Nature of goods and services The following is a description of principal activities from which U.S. Cellular generates its revenues. Services and products Nature, timing of satisfaction of performance obligations, and significant payment terms Wireless services Wireless service includes voice, messaging and data services. Revenue is recognized in Service revenues as wireless service is provided to the customer. Wireless services generally are billed and paid in advance on a monthly basis. Wireless devices and accessories U.S. Cellular offers a comprehensive range of wireless devices such as handsets, tablets, mobile hotspots, home phones and routers for use by its customers, as well as accessories. U.S. Cellular also sells wireless devices to agents and other third-party distributors for resale. U.S. Cellular frequently discounts wireless devices sold to new and current customers. U.S. Cellular also offers customers the option to purchase certain devices and accessories under installment contracts over a specified time period. For certain equipment installment plans, after a specified period of time, the customer may have the right to upgrade to a new device. Such upgrades require the customer to enter into an equipment installment contract for the new device, and transfer the existing device to U.S. Cellular. U.S. Cellular recognizes revenue in Equipment sales revenues when control of the device or accessory is transferred to the customer, which is generally upon delivery. Wireless roaming U.S. Cellular receives roaming revenues when other wireless carriers’ customers use U.S. Cellular’s wireless systems. U.S. Cellular recognizes revenue in Service revenues when the roaming service is provided to the other carrier’s customer. Wireless Eligible Telecommunications Carrier (ETC) Revenues Telecommunications companies may be designated by states, or in some cases by the FCC, as an ETC to receive support payments from the Universal Service Fund if they provide specified services in “high cost” areas. ETC revenues recognized in the reporting period represent the amounts which U.S. Cellular is entitled to receive for such period, as determined and approved in connection with U.S. Cellular’s designation as an ETC in various states. Wireless tower rents U.S. Cellular receives tower rental revenues when another carrier leases tower space on a U.S. Cellular owned tower. U.S. Cellular recognizes revenue in Service revenues in the period during which the services are provided. Activation fees U.S. Cellular charges its end customers activation fees in connection with the sale of certain services and equipment. Activation fees are deferred and recognized over the period benefitted. Significant Judgments Revenues from sales of equipment are recognized when control has transferred to the customer. Service revenues are recognized as the related service is provided. Services are deemed to be highly interrelated when the method and timing of transfer and performance risk are the same. Highly interrelated services that are determined to not be distinct have been grouped into a single performance obligation. Each month of services promised is a performance obligation. The series of monthly service performance obligations promised over the course of the contract are combined into a single performance obligation for purposes of the allocation. U.S. Cellular has made judgments regarding transaction price, including but not limited to issues relating to variable consideration, time value of money and returns. When determined to be significant in the context of the contract, these items are considered in the valuation of transaction price at contract inception or modification, as appropriate. Multiple Performance Obligations U.S. Cellular sells bundled service and equipment offerings. In these instances, U.S. Cellular recognizes its revenue based on the relative standalone selling prices for each distinct service or equipment performance obligation, or bundles thereof. U.S. Cellular estimates the standalone selling price of the device or accessory to be its retail price excluding discounts. U.S. Cellular estimates the standalone selling price of wireless service to be the price offered to customers on month-to-month contracts. Equipment Installment Plans Equipment revenue under equipment installment plan contracts is recognized at the time the device is delivered to the customer for the amount allocated to the equipment under ASU 2014-09. Incentives Discounts and incentives that are deemed cash are recognized as a reduction of Operating revenues concurrently with the associated revenue. U.S. Cellular issues rebates to its agents and end customers. These incentives are recognized as a reduction to revenue at the time the corresponding revenue is recognized . The total potential rebates and incentives are reduced by U.S. Cellular’s estimate of rebates that will not be redeemed by customers based on historical experience of such redemptions. From time to time, U.S. Cellular may offer certain promotions to incentivize customers to switch to, or to purchase additional services from, U.S. Cellular. Under these types of promotions, an eligible customer may receive an incentive in the form of a discount off additional services purchased shown as a rebate or credit to the customer’s monthly bill. U.S. Cellular accounts for the future discounts as material rights at the time of the initial transaction by allocating and deferring a portion of service and equipment revenue based on the relative proportion of the future discounts in comparison to the aggregate initial purchase. The deferred revenue will be recognized as service revenue in future periods. Amounts Collected from Customers and Remitted to Governmental Authorities U.S. Cellular records amounts collected from customers and remitted to governmental authorities on a net basis within 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 from 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 revenues that are billed to customers and remitted to governmental authorities totaled $67 million , $58 million and $64 million for 2018 , 2017 and 2016 , respectively. Disaggregation of Revenue In the following table, revenue is disaggregated by type of service and timing of revenue recognition. Service revenues are recognized over time and Equipment sales are point in time. Year Ended (Dollars in millions) Revenues from contracts with customers: Retail service $ 2,623 Inbound roaming 154 Other service 135 Service revenues from contracts with customers 2,912 Equipment sales 989 Total revenues from contracts with customers 1 $ 3,901 1 These amounts do not include revenues outside the scope of ASU 2014-09; therefore, revenue line items in this table will not agree to amounts presented in the Consolidated Statement of Operations. Contract Balances For contracts that involve multiple element service and equipment offerings, the transaction price is allocated to each performance obligation based on its relative standalone selling price. When payment is collected in advance of delivery of goods or services, a contract liability is recorded. A contract asset is recorded when revenue is recognized in advance of U.S. Cellular’s right to receive consideration. Once there is an unconditional right to receive the consideration, U.S. Cellular bills the customer under the terms of the respective contract and the amounts are recorded as receivables. U.S. Cellular recognizes Equipment sales revenue when the equipment is delivered to the customer and a corresponding contract asset or liability is recorded for the difference between the amount of revenue recognized and the amount billed to the customer in cases where discounts are offered. The contract asset or liability is reduced over the contract term as service is provided and billed to the customer. The accounts receivable balance related to amounts billed and not paid on contracts with customers, net of allowances, is shown in the table below. Bad debts expense recognized for the year ended December 31, 2018 , related to receivables was $94 million . December 31, 2018 (Dollars in millions) Accounts receivable Customer and agents $ 908 Roaming 20 Other 32 Total 1 $ 960 1 These amounts do not include accounts receivable related to revenues outside the scope of ASU 2014-09; therefore, accounts receivable line items presented in this table will not agree to amounts presented in the Consolidated Balance Sheet. The following table provides a rollforward of contract assets from contracts with customers, which are recorded in Other current assets and Other assets and deferred charges in the Consolidated Balance Sheet. Contract Assets (Dollars in millions) Balance at December 31, 2017 $ — Change in accounting policy 26 Contract additions 23 Terminated contracts (1 ) Reclassified to receivables (39 ) Balance at December 31, 2018 $ 9 The following table provides a rollforward of contract liabilities from contracts with customers, which are recorded in Customer deposits and deferred revenues and Other deferred liabilities and credits in the Consolidated Balance Sheet. Contract Liabilities (Dollars in millions) Balance at December 31, 2017 $ — Change in accounting policy - Deferred revenues reclassification 1 167 Change in accounting policy - Retained earnings impact (21 ) Contract additions 154 Terminated contracts (2 ) Revenue recognized (135 ) Balance at December 31, 2018 $ 163 1 This amount represents U.S. Cellular's obligation to transfer goods or services to customers for which it had received payment and classified as deferred revenue at December 31, 2017. Transaction price allocated to the remaining performance obligations The following table includes estimated service revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period. These estimates represent service revenue to be recognized when wireless services are delivered to customers pursuant to service plan contracts. These estimates are based on contracts in place as of December 31, 2018 , and may vary from actual results due to future contract modifications. As a practical expedient, revenue related to contracts of less than one year, generally month-to-month contracts, are excluded from these estimates. Service Revenue (Dollars in millions) 2019 $ 236 2020 47 Thereafter 15 Total $ 298 U.S. Cellular has certain contracts in which it bills an amount equal to a fixed per-unit price multiplied by a variable quantity (e.g., roaming agreements with other carriers). Because U.S. Cellular invoices for such items in an amount that corresponds directly with the value of the performance completed to date, U.S. Cellular may recognize revenue in that amount. As a practical expedient, these contracts are excluded from the estimate of future revenues expected to be recognized related to performance obligations that are unsatisfied as of the end of a reporting period. Contract Cost Assets U.S. Cellular expects that incremental commission fees paid as a result of obtaining contracts are recoverable and therefore U.S. Cellular capitalizes these costs. As a practical expedient, costs with an amortization period of one year or less are not capitalized. The contract cost asset balance related to commission fees was $139 million at December 31, 2018 , and was recorded in Other assets and deferred charges in the Consolidated Balance Sheet. Capitalized commission fees are amortized based on the transfer of the goods or services to which the assets relate, typically the contract term which ranges from fourteen months to thirty months. Amortization of contract cost assets was $108 million for the year ended December 31, 2018 , and was included in Selling, general and administrative expense. There was no impairment loss recognized for the year ended December 31, 2018 , related to contract cost assets. |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements As of December 31, 2018 and 2017 , U.S. Cellular did not have any material 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 quoted 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 measurement. 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 assets or Level 1 assets. U.S. Cellular 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 December 31, 2018 December 31, 2017 Book Value Fair Value Book Value Fair Value (Dollars in millions) Cash and cash equivalents 1 $ 580 $ 580 $ 352 $ 352 Short-term investments 1 17 17 50 50 Long-term debt Retail 2 917 850 917 939 Institutional 2 534 531 534 522 Other 2 180 180 191 191 The fair values of Cash and cash equivalents and Short-term investments approximate their book values due to the short-term nature of these financial instruments. Long-term debt excludes capital lease obligations, other installment arrangements, the current portion of Long-term debt and debt financing costs. The fair value of “Retail” Long-term debt was estimated using market prices for the 7.25% 2063 Senior Notes, 7.25% 2064 Senior Notes and 6.95% 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 agreement. 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 5.03% to 6.97% and 4.74% to 7.13% at December 31, 2018 and 2017 , respectively. |
Equipment Installment Plans
Equipment Installment Plans | 12 Months Ended |
Dec. 31, 2018 | |
Receivables [Abstract] | |
Equipment Installment Plans | Equipment Installment Plans U.S. Cellular sells devices to customers under equipment installment plans over a specified time period. For certain equipment installment plans, after a specified period of time or amount of payments, the customer may have the right to upgrade to a new device 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 based 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. When a customer exercises the trade-in option, both the outstanding receivable and guarantee liability balances related to the respective device are reduced to zero, and the value of the used device that is received in the transaction is recognized as inventory. If the customer does not exercise the trade-in option at the time of eligibility, U.S. Cellular begins amortizing the liability and records this amortization as additional equipment revenue. As of December 31, 2018 and 2017 , the guarantee liability related to these plans was $11 million and $15 million , respectively, and is reflected in Customer deposits and deferred revenues in the Consolidated Balance Sheet. The following table summarizes equipment installment plan receivables as of December 31, 2018 and 2017 . December 31, 2018 2017 (Dollars in millions) Equipment installment plan receivables, gross $ 974 $ 873 Deferred interest — (80 ) Equipment installment plan receivables, net of deferred interest 974 793 Allowance for credit losses (70 ) (65 ) Equipment installment plan receivables, net $ 904 $ 728 Net balance presented in the Consolidated Balance Sheet as: Accounts receivable — Customers and agents (Current portion) $ 565 $ 428 Other assets and deferred charges (Non-current portion) 339 300 Equipment installment plan receivables, net $ 904 $ 728 U.S. Cellular uses various inputs, including internal data, information from credit bureaus and other sources, to evaluate the credit profiles of its customers. From this evaluation, a credit class is assigned to the customer that determines the number of eligible lines, the amount of credit available, and the down payment requirement, if any. Customers assigned to credit classes requiring no down payment represent a lower risk category, whereas those assigned to credit classes requiring a down payment represent a higher risk category. The balance and aging of the equipment installment plan receivables on a gross basis by credit category were as follows: December 31, 2018 December 31, 2017 Lower Risk Higher Risk Total Lower Risk Higher Risk Total (Dollars in millions) Unbilled $ 904 $ 17 $ 921 $ 807 $ 20 $ 827 Billed — current 35 1 36 31 1 32 Billed — past due 15 2 17 12 2 14 Equipment installment plan receivables, gross $ 954 $ 20 $ 974 $ 850 $ 23 $ 873 The activity in the allowance for credit losses for equipment installment plan receivables was as follows: 2018 2017 (Dollars in millions) Allowance for credit losses, beginning of year $ 65 $ 50 Bad debts expense 64 62 Write-offs, net of recoveries (59 ) (47 ) Allowance for credit losses, end of year $ 70 $ 65 U.S. Cellular recorded out-of-period adjustments in 2016 due to errors related to equipment installment plan transactions occurring in 2015. These adjustments had the impact of increasing Equipment sales revenues by $2 million , decreasing bad debts expense, which is a component of Selling, general and administrative expense, by $2 million and increasing Income before income taxes by $4 million in 2016. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 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 current income taxes balances at December 31, 2018 and 2017 , were as follows: December 31, 2018 2017 (Dollars in millions) Federal income taxes receivable (payable) $ 15 $ (22 ) Net state income taxes receivable (payable) — (1 ) Income tax expense (benefit) is summarized as follows: Year Ended December 31, 2018 2017 2016 (Dollars in millions) Current Federal $ 48 $ 68 $ 29 State 6 10 (2 ) Deferred Federal (5 ) (354 ) 1 State 2 (11 ) 5 Total income tax expense (benefit) $ 51 $ (287 ) $ 33 In December 2017, the Tax Act was signed into law. Following the guidance of the FASB's Accounting Standards Update 2018-05, Income Taxes: Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118 , Income tax expense (benefit) for the year ended December 31, 2017, included a provisional estimate for the impact of the Tax Act on U.S. Cellular's 2017 depreciation deduction. During 2018, U.S. Cellular completed a full analysis of depreciation deductions related to fixed assets placed in service during 2017 and Income tax expense (benefit) for 2018 included a benefit of $4 million related to this adjustment. A reconciliation of U.S. Cellular’s income tax expense computed at the statutory rate to the reported income tax expense, and the statutory federal income tax expense rate to U.S. Cellular’s effective income tax expense rate is as follows: Year Ended December 31, 2018 2017 2016 Amount Rate Amount Rate Amount Rate (Dollars in millions) Statutory federal income tax expense and rate $ 45 21.0 % $ (95 ) 35.0 % $ 29 35.0 % State income taxes, net of federal benefit 1 9 4.0 (4 ) 1.4 3 3.6 Effect of noncontrolling interests (1 ) (0.4 ) (2 ) 0.8 (1 ) (1.1 ) Federal income tax rate change 2 (4 ) (2.0 ) (254 ) 93.3 — — Change in federal valuation allowance 3 (1 ) (0.3 ) (5 ) 1.9 3 2.8 Goodwill impairment 4 — — 71 (26.2 ) — — Nondeductible compensation 4 1.8 4 (1.5 ) 1 1.4 Other differences, net (1 ) (0.4 ) (2 ) 0.8 (2 ) (2.0 ) Total income tax expense (benefit) and rate $ 51 23.7 % $ (287 ) 105.5 % $ 33 39.7 % 1 State income taxes, net of federal benefit, include changes in unrecognized tax benefits as well as adjustments to the valuation allowance. 2 The Tax Act reduced the federal income tax rate from 35% to 21% for years after 2017. The $4 million tax benefit in 2018 relates primarily to finalizing the analysis for 2017 depreciation deductions as described above. The $254 million tax benefit in 2017 related to adjusting the deferred tax liability to the lower tax rate upon enactment of the Tax Act. 3 Change in federal valuation allowance in 2018 includes a change in judgment related to net operating loss carryforwards that are now realizable due to an internal restructuring, offset by current year interest expense carryforwards not expected to be realized. 4 Goodwill impairment reflects an adjustment to increase 2017 income tax expense by $71 million related to a portion of the impaired goodwill that is not amortizable for income tax purposes. See Note 7 — Intangible Assets for additional information related to the goodwill impairment. Significant components of U.S. Cellular’s deferred income tax assets and liabilities at December 31, 2018 and 2017 , were as follows: December 31, 2018 2017 (Dollars in millions) Deferred tax assets Net operating loss (NOL) carryforwards $ 96 $ 103 Stock-based compensation 16 20 Compensation and benefits - other 5 5 Deferred rent 20 21 Other 73 59 Total deferred tax assets 210 208 Less valuation allowance (75 ) (77 ) Net deferred tax assets 135 131 Deferred tax liabilities Property, plant and equipment 256 276 Licenses/intangibles 207 192 Partnership investments 133 123 Other 49 — Total deferred tax liabilities 645 591 Net deferred income tax liability $ 510 $ 460 Presented in the Consolidated Balance Sheet as: Deferred income tax liability, net $ 510 $ 461 Other assets and deferred charges — (1 ) Net deferred income tax liability $ 510 $ 460 At December 31, 2018 , U.S. Cellular and certain subsidiaries had $1,911 million of state NOL carryforwards (generating a $84 million deferred tax asset) available to offset future taxable income. The state NOL carryforwards expire between 2019 and 2038 . Certain subsidiaries had federal NOL carryforwards (generating a $12 million deferred tax asset) available to offset their future taxable income. The federal NOL carryforwards generally expire between 2019 and 2037 , with the exception of federal NOLs generated after 2017, which do not expire. A valuation allowance was established for certain state NOL carryforwards and federal NOL carryforwards since it is more likely than not that a portion of such carryforwards will expire before they can be utilized. A summary of U.S. Cellular’s deferred tax asset valuation allowance is as follows: 2018 2017 2016 (Dollars in millions) Balance at beginning of year $ 77 $ 65 $ 55 Charged to income tax expense 5 12 10 Charged to Retained earnings (7 ) — — Balance at end of year $ 75 $ 77 $ 65 A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows: 2018 2017 2016 (Dollars in millions) Unrecognized tax benefits balance at beginning of year $ 47 $ 43 $ 39 Additions for tax positions of current year 6 6 12 Additions for tax positions of prior years 1 1 3 Reductions for tax positions of prior years — (1 ) (1 ) Reductions for lapses in statutes of limitations (6 ) (2 ) (10 ) Unrecognized tax benefits balance at end of year $ 48 $ 47 $ 43 Unrecognized tax benefits are included in Accrued taxes and Other deferred liabilities and credits in the Consolidated Balance Sheet. If these benefits were recognized, they would have reduced income tax expense in 2018 , 2017 and 2016 by $38 million , $38 million and $29 million , respectively, net of the federal benefit from state income taxes. U.S. Cellular recognizes accrued interest and penalties related to unrecognized tax benefits in Income tax expense (benefit). The amounts charged to income tax expense related to interest and penalties resulted in a benefit of less than $1 million in 2018 , an expense of $3 million in 2017 and a benefit of $2 million in 2016 . Net accrued liabilities for interest and penalties were $19 million and $19 million at December 31, 2018 and 2017 , respectively, and are included in Other deferred liabilities and credits in the Consolidated Balance Sheet. U.S. Cellular is included in TDS’ consolidated federal and certain state income tax returns. U.S. Cellular also files certain state and local income tax returns separately from TDS. With only limited exceptions, TDS is no longer subject to federal and state income tax audits for the years prior to 2013 . |
Earnings Per Share
Earnings Per Share | 12 Months Ended |
Dec. 31, 2018 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share Basic earnings per share attributable to U.S. Cellular shareholders is computed by dividing Net income attributable to U.S. Cellular shareholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share attributable to U.S. Cellular shareholders is computed by dividing Net income attributable to 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 upon the exercise of outstanding stock options and the vesting of performance and restricted stock units. The amounts used in computing earnings per common share and the effects of potentially dilutive securities on the weighted average number of common shares were as follows: Year Ended December 31, 2018 2017 2016 (Dollars and shares in millions, except per share amounts) Net income attributable to U.S. Cellular shareholders $ 150 $ 12 $ 48 Weighted average number of shares used in basic earnings per share 86 85 85 Effects of dilutive securities 1 1 — Weighted average number of shares used in diluted earnings per share 87 86 85 Basic earnings per share attributable to U.S. Cellular shareholders $ 1.75 $ 0.14 $ 0.56 Diluted earnings per share attributable to U.S. Cellular shareholders $ 1.72 $ 0.14 $ 0.56 Certain Common Shares issuable upon the exercise of stock options or vesting of performance and restricted stock units were not included in average diluted shares outstanding for the calculation of Diluted earnings per share attributable to U.S. Cellular shareholders because their effects were antidilutive. The number of such Common Shares excluded was 2 million shares, 3 million shares and 3 million shares for 2018 , 2017 and 2016 , respectively. |
Intangible Assets
Intangible Assets | 12 Months Ended |
Dec. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | Intangible Assets Licenses On occasion, U.S. Cellular reviews attractive opportunities to acquire additional wireless spectrum, including pursuant to FCC auctions. U.S. Cellular also may seek to divest outright or include in exchanges wireless spectrum that is not strategic to its long-term success. Activity related to U.S. Cellular's Licenses is presented below. 2018 2017 (Dollars in millions) Balance at beginning of year $ 2,223 $ 1,886 Acquisitions 8 331 Transferred to Assets held for sale 1 (51 ) (10 ) Divestitures (11 ) — Exchanges - Licenses received 18 25 Exchanges - Licenses surrendered (1 ) (9 ) Balance at end of year $ 2,186 $ 2,223 1 Licenses classified as Assets held for sale in 2018 are included in transactions which closed in the first quarter of 2019. Auction 1002 In July 2016, the FCC announced U.S. Cellular as a qualified bidder in the FCC's forward auction of 600 MHz spectrum licenses, referred to as Auction 1002. Prior to commencement of the forward auction, U.S. Cellular made an upfront payment to the FCC of $143 million in June 2016 to establish its initial bidding eligibility. In April 2017, the FCC announced by way of public notice that U.S. Cellular was the winning bidder for 188 licenses for an aggregate purchase price of $329 million . U.S. Cellular paid the remaining $186 million to the FCC and was granted the licenses during the second quarter of 2017. Goodwill Interim Impairment Assessment Based on 2017 developments, including wireless expansion plans announced by other companies and the results of the FCC’s forward auction of 600 MHz spectrum licenses and other FCC actions, U.S. Cellular anticipated increased competition for customers in its primary operating markets from new and existing market participants over the long term. In addition, the widening adoption of unlimited data plans and other data pricing constructs across the industry, including U.S. Cellular’s introduction of unlimited plans in 2017, may limit the industry’s ability to monetize future growth in data usage. These factors when assessed and considered as part of U.S. Cellular’s annual planning process conducted in the third quarter of each year caused management to revise its long-range financial forecast in the third quarter of 2017. Based on the factors noted above, management identified a triggering event and performed a quantitative goodwill impairment test on an interim basis. U.S. Cellular used a one-step quantitative approach that compared the fair value of the U.S. Cellular reporting unit to its carrying value. A discounted cash flow approach was used to value the reporting unit, using value drivers and risks specific to U.S. Cellular and the industry and current economic factors. The cash flow estimates incorporated certain assumptions that market participants would use in their estimates of fair value and may not be indicative of U.S. Cellular specific assumptions. However, the discount rate used in the analysis considers any additional risk a market participant might place on integrating the U.S. Cellular reporting unit into its operations. The results of the interim goodwill impairment test indicated that the carrying value of the U.S. Cellular reporting unit exceeded its fair value. Therefore, U.S. Cellular recognized a loss on impairment of goodwill of $370 million to reduce the carrying value of goodwill to zero in the third quarter of 2017. |
Investments in Unconsolidated E
Investments in Unconsolidated Entities | 12 Months Ended |
Dec. 31, 2018 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Investments in Unconsolidated Entities | Investments in Unconsolidated Entities Investments in unconsolidated entities consist of amounts invested in entities in which U.S. Cellular holds a noncontrolling interest. On January 1, 2018, U.S. Cellular adopted Accounting Standards Update 2016-01, Financial Instruments – Overall: Recognition and Measurement of Financial Assets and Financial Liabilities (ASU 2016-01) using the modified retrospective approach. The adoption of ASU 2016-01 did not have a significant impact on U.S. Cellular's financial position or results of operations. U.S. Cellular's Investments in unconsolidated entities are accounted for using either the equity method or measurement alternative method as shown in the table below. The measurement alternative method was elected for investments without readily determinable fair values formerly accounted for under the cost method. The measurement alternative value represents cost minus any impairments plus or minus any observable price changes. U.S. Cellular did not have an impairment or observable price change related to these investments in 2018 . December 31, 2018 2017 (Dollars in millions) Equity method investments: Capital contributions, loans, advances and adjustments $ 105 $ 105 Cumulative share of income 1,892 1,717 Cumulative share of distributions (1,563 ) (1,411 ) Total equity method investments 434 411 Measurement alternative method investments 7 4 Total investments in unconsolidated entities $ 441 $ 415 The following tables, which are based on information provided in part by third parties, summarize the combined assets, liabilities and equity, and results of operations of U.S. Cellular’s equity method investments: December 31, 2018 2017 (Dollars in millions) Assets Current $ 882 $ 668 Due from affiliates 379 323 Property and other 4,962 4,804 Total assets $ 6,223 $ 5,795 Liabilities and Equity Current liabilities $ 434 $ 435 Deferred credits 178 176 Long-term liabilities 217 199 Long-term capital lease obligations — 1 Partners' capital and shareholders' equity 5,394 4,984 Total liabilities and equity $ 6,223 $ 5,795 Year Ended December 31, 2018 2017 2016 (Dollars in millions) Results of Operations Revenues $ 6,777 $ 6,562 $ 6,747 Operating expenses 4,965 4,965 5,047 Operating income 1,812 1,597 1,700 Other income (expense), net 11 (1 ) (11 ) Net income $ 1,823 $ 1,596 $ 1,689 |
Property, Plant and Equipment
Property, Plant and Equipment | 12 Months Ended |
Dec. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment | Property, Plant and Equipment Property, plant and equipment in service and under construction, and related accumulated depreciation and amortization, as of December 31, 2018 and 2017 , were as follows: December 31, Useful Lives (Years) 2018 2017 (Dollars in millions) Land N/A $ 35 $ 36 Buildings 20 296 297 Leasehold and land improvements 1-30 1,210 1,178 Cell site equipment 7-25 3,460 3,411 Switching equipment 5-8 1,018 988 Office furniture and equipment 3-5 285 389 Other operating assets and equipment 3-5 51 57 System development 1-7 1,149 1,060 Work in process N/A 274 212 Total property, plant and equipment, gross 7,778 7,628 Accumulated depreciation and amortization (5,576 ) (5,308 ) Total property, plant and equipment, net $ 2,202 $ 2,320 Depreciation and amortization expense totaled $627 million , $604 million and $607 million in 2018 , 2017 and 2016 , respectively. In 2018 , 2017 and 2016 , (Gain) loss on asset disposals, net included charges of $10 million , $17 million and $22 million , respectively, related to disposals of assets, trade-ins of older assets for replacement assets and other retirements of assets from service in the normal course of business. |
Asset Retirement Obligation
Asset Retirement Obligation | 12 Months Ended |
Dec. 31, 2018 | |
Asset Retirement Obligation [Abstract] | |
Asset Retirement Obligation | Asset Retirement Obligations U.S. Cellular is subject to asset retirement obligations associated with its leased cell sites, switching office sites, retail store sites and office locations. Asset retirement obligations generally include obligations to restore leased land, towers, retail store and office premises to their pre-lease conditions. These obligations are included in Other deferred liabilities and credits in the Consolidated Balance Sheet. In 2018 and 2017 , U.S. Cellular performed a review of the assumptions and estimated costs related to its asset retirement obligations. The results of the reviews (identified as Revisions in estimated cash outflows) and other changes in asset retirement obligations during 2018 and 2017 , were as follows: 2018 2017 (Dollars in millions) Balance at beginning of year $ 183 $ 174 Additional liabilities accrued 2 1 Revisions in estimated cash outflows 8 (3 ) Disposition of assets (1 ) (1 ) Accretion expense 12 12 Transferred to Liabilities held for sale (1 ) — Balance at end of year $ 203 $ 183 |
Debt
Debt | 12 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
Debt | Debt Revolving Credit Agreement At December 31, 2018 , U.S. Cellular had a revolving credit agreement available for general corporate purposes, including spectrum purchases and capital expenditures. In May 2018 , U.S. Cellular entered into a new $300 million revolving credit agreement with certain lenders and other parties. As a result of the new agreement, U.S. Cellular’s previous revolving credit agreement due to expire in June 2021 was terminated. Amounts under the revolving credit agreement may be borrowed, repaid and reborrowed from time to time until maturity in May 2023 . As of December 31, 2018 , there were no outstanding borrowings under the revolving credit agreement, except for letters of credit. Interest expense representing commitment fees on the unused portion of the revolving line of credit was $1 million in each of 2018 , 2017 and 2016 . The commitment fees are based on the unsecured senior debt ratings assigned to U.S. Cellular by certain ratings agencies. The following table summarizes the revolving credit agreement as of December 31, 2018 : (Dollars in millions) Maximum borrowing capacity $ 300 Letters of credit outstanding $ 2 Amount borrowed $ — Amount available for use $ 298 Borrowings under the revolving credit agreement bear interest either at a London Inter-bank Offered Rate ( LIBOR) plus 1.75% or at an alternative Base Rate as defined in the revolving credit agreement plus 0.75% , at U.S. Cellular’s option. U.S. Cellular may select a borrowing period of either one, two, three or six months (or other period of twelve months or less if requested by U.S. Cellular and approved by the lenders). U.S. Cellular’s credit spread and commitment fees on its revolving credit agreement may be subject to increase if its current credit rating from nationally recognized credit rating agencies is lowered, and may be subject to decrease if the rating is raised. In connection with U.S. Cellular’s revolving credit agreement, TDS and U.S. Cellular entered into a subordination agreement dated May 10, 2018 , together with the administrative agent for the lenders under U.S. Cellular’s revolving credit agreement. Pursuant to this subordination agreement, (a) any consolidated funded indebtedness from U.S. Cellular to TDS will be unsecured and (b) any (i) consolidated funded indebtedness from U.S. Cellular to TDS (other than “refinancing indebtedness” as defined in the subordination agreement) in excess of $105 million and (ii) refinancing indebtedness in excess of $250 million will be subordinated and made junior in right of payment to the prior payment in full of obligations to the lenders under U.S. Cellular’s revolving credit agreement. As of December 31, 2018 , U.S. Cellular had no outstanding consolidated funded indebtedness or refinancing indebtedness that was subordinated to the revolving credit agreement pursuant to the subordination agreement. The continued availability of the revolving credit agreement requires U.S. Cellular to comply with certain negative and affirmative covenants, maintain certain financial ratios and make representations regarding certain matters at the time of each borrowing. The revolving credit agreement includes the following financial covenants: ▪ Consolidated Interest Coverage Ratio may not be less than 3.00 to 1.00 as of the end of any fiscal quarter. ▪ Consolidated Leverage Ratio may not be greater than the ratios indicated as of the end of any fiscal quarter for each period specified below: Period Ratios From the agreement date of May 10, 2018 through June 30, 2019 3.25 to 1.00 From July 1, 2019 and thereafter 3.00 to 1.00 Certain U.S. Cellular wholly-owned subsidiaries have jointly and severally unconditionally guaranteed the payment and performance of the obligations of U.S. Cellular under the revolving credit agreement pursuant to a guaranty dated May 10, 2018 . Other subsidiaries that meet certain criteria will be required to provide a similar guaranty in the future. U.S. Cellular believes it was in compliance with all of the financial and other covenants and requirements set forth in its revolving credit agreement as of December 31, 2018 . Term Loan In July 2015 , U.S. Cellular borrowed $225 million on a senior term loan credit agreement in two separate draws. This agreement was entered into in January 2015, amended and restated in June 2016, and further amended in May 2018 . The interest rate on outstanding borrowings is reset at one, three or six month intervals at a rate of LIBOR plus 250 basis points. This credit agreement 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 are due and payable in quarterly installments of $3 million beginning in March 2016 through December 2021, and the remaining unpaid balance will be due and payable in January 2022 . The senior term loan credit agreement contains financial covenants and subsidiary guarantees that are consistent with the revolving credit agreements described above. This agreement was entered into for general corporate purposes, including working capital, spectrum purchases and capital expenditures. U.S. Cellular believes that it was in compliance with all of the financial and other covenants and requirements set forth in its term loan credit agreement as of December 31, 2018 . In connection with U.S. Cellular’s term loan credit agreement, TDS and U.S. Cellular entered into a subordination agreement in June 2016 together with the administrative agent for the lenders under U.S. Cellular’s term loan credit agreement, which is substantially the same as the subordination agreement for U.S. Cellular as described above under the “Revolving Credit Agreement.” As of December 31, 2018 , U.S. Cellular had no outstanding consolidated funded indebtedness or refinancing indebtedness that was subordinated to the term loan agreement pursuant to this subordination agreement. Receivables Securitization Agreement In December 2017, U.S. Cellular, through its subsidiaries, entered into a $200 million credit agreement to permit securitized borrowings using its equipment installment receivables for general corporate purposes, including acquisitions, spectrum purchases and capital expenditures. In connection with the receivables securitization agreement, U.S. Cellular formed a wholly-owned subsidiary, USCC Master Note Trust (Trust), which qualifies as a bankruptcy remote entity. Under the terms of the agreement, U.S. Cellular, through its subsidiaries, transfers eligible equipment installment receivables to the Trust. The Trust then utilizes the transferred assets as collateral for notes payables issued to third party financial institutions. Since U.S. Cellular retains effective control of the transferred assets in the Trust, any activity associated with this receivables securitization agreement will be treated as a secured borrowing. Therefore, U.S. Cellular will continue to report equipment installment receivables and any related balances on the Consolidated Balance Sheet. Cash received from borrowings under the receivables securitization agreement will be reported as Debt. Refer to Note 13 — Variable Interest Entities for additional information. U.S. Cellular entered into a performance guaranty whereby U.S. Cellular guarantees the performance of certain wholly-owned subsidiaries of U.S. Cellular under the receivables securitization agreement. Amounts under the receivables securitization agreement may be borrowed, repaid and reborrowed from time to time until maturity in December 2019, which may be extended from time to time as specified therein. As of December 31, 2018 , there were no outstanding borrowings under the receivables securitization agreement, and the entire unused capacity of $200 million was available, subject to sufficient collateral to satisfy the asset borrowing base provisions of the agreement. As of December 31, 2018 , the Trust held $63 million of assets available to be pledged as collateral for the receivables securitization agreement. The continued availability of the receivables securitization agreement requires U.S. Cellular to comply with certain negative and affirmative covenants, maintain certain financial ratios and provide representations on certain matters at the time of each borrowing. The covenants include the same financial covenants for U.S. Cellular as described above under the “Revolving Credit Agreement.” U.S. Cellular believes that it was in compliance as of December 31, 2018 , with all of the financial covenants and requirements set forth in its receivables securitization agreement. Other Long-Term Debt Long-term debt as of December 31, 2018 and 2017 , was as follows: December 31, 2018 December 31, 2017 Issuance date Maturity date Call date (any time on or after) Principal Amount Less Unamortized discount and debt issuance costs Total Principal Amount Less Unamortized discount and debt issuance costs Total (Dollars in millions) Unsecured Senior Notes 6.700% Dec 2003 Dec 2033 Dec 2003 $ 544 $ 14 $ 530 $ 544 $ 15 $ 529 6.950% May 2011 May 2060 May 2016 342 11 331 342 11 331 7.250% Dec 2014 Dec 2063 Dec 2019 275 10 265 275 10 265 7.250% Nov 2015 Dec 2064 Dec 2020 300 10 290 300 10 290 Term Loan Jul 2015 Jan 2022 191 1 190 203 2 201 Capital lease obligations 5 — 5 4 — 4 Installment payment agreement 14 1 13 21 1 20 Total long-term debt $ 1,671 $ 47 $ 1,624 $ 1,689 $ 49 $ 1,640 Long-term debt, current $ 19 $ 18 Long-term debt, noncurrent $ 1,605 $ 1,622 U.S. Cellular may redeem its 6.95% Senior Notes, 7.25% 2063 Senior Notes and 7.25% 2064 Senior Notes, in whole or in part at any time after the respective call date, at a redemption price equal to 100% of the principal amount redeemed plus accrued and unpaid interest. U.S. Cellular may redeem the 6.7% Senior Notes, in whole or in part, at any time prior to maturity at a redemption price equal to the greater of (a) 100% of the principal amount of such notes, plus accrued and unpaid interest, or (b) the sum of the present values of the remaining scheduled payments of principal and interest thereon discounted to the redemption date on a semi-annual basis at the Treasury Rate plus 30 basis points. Interest on the Senior Notes outstanding at December 31, 2018 , is payable quarterly, with the exception of the 6.7% Senior Notes for which interest is payable semi-annually. The annual requirements for principal payments on long-term debt are approximately $19 million , $19 million , $11 million , $158 million and less than $1 million for the years 2019 through 2023, respectively. The covenants associated with U.S. Cellular’s long-term debt obligations, among other things, restrict U.S. Cellular’s ability, subject to certain exclusions, to incur additional liens, enter into sale and leaseback transactions, and sell, consolidate or merge assets. U.S. Cellular’s long-term debt notes do not contain any provisions resulting in acceleration of the maturities of outstanding debt in the event of a change in U.S. Cellular’s credit rating. However, a downgrade in U.S. Cellular’s credit rating could adversely affect its ability to obtain long-term debt financing in the future. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Purchase Obligations U.S. Cellular has obligations payable under non-cancellable contracts, commitments for device purchases, network facilities and transport services, agreements for software licensing, long-term marketing programs, as well as certain agreements to purchase goods or services. Where applicable, U.S. Cellular calculates its obligation based on termination fees that can be paid to exit the contract. Future minimum payments required under these commitments as of December 31, 2018 are as follows: Purchase Obligations (Dollars in millions) 2019 $ 1,296 2020 112 2021 68 2022 33 2023 12 Thereafter 24 Total $ 1,545 Subsequent to December 31, 2018, U.S. Cellular committed to purchase assets from a third party in the amount of $129 million , subject to regulatory approval. This amount is not included in the 2019 purchase obligations above, which are stated as of December 31, 2018. Lease Commitments U.S. Cellular and its subsidiaries have leases for office space, retail store sites, cell sites and equipment which are accounted for as operating leases. Certain leases have renewal options and/or fixed rental increases. Renewal options that are reasonably assured of exercise are included in determining the lease term. Any rent abatements or lease incentives, in addition to fixed rental increases, are included in the calculation of rent expense and calculated on a straight-line basis over the defined lease term. Rent expense totaled $173 million , $166 million and $161 million in 2018 , 2017 and 2016 , respectively. U.S. Cellular and its subsidiaries are also the lessors for tower space which are accounted for as operating leases. The leased assets are included in Property, plant and equipment on the Consolidated Balance Sheet. As of December 31, 2018 , future minimum rental payments required under operating leases and rental receipts expected under operating leases that have noncancellable lease terms in excess of one year were as follows: Operating Leases Future Minimum Rental Payments Operating Leases Future Minimum Rental Receipts (Dollars in millions) 2019 $ 154 $ 58 2020 143 47 2021 128 34 2022 112 22 2023 97 10 Thereafter 769 3 Total $ 1,403 $ 174 Indemnifications U.S. Cellular enters into agreements in the normal course of business that provide for indemnification of counterparties. The terms of the indemnifications vary by agreement. The events or circumstances that would require U.S. Cellular to perform under these indemnities are transaction specific; however, these agreements may require U.S. Cellular to indemnify the counterparty for costs and losses incurred from litigation or claims arising from the underlying transaction. U.S. Cellular is unable to estimate the maximum potential liability for these types of indemnifications as the amounts are dependent on the outcome of future events, the nature and likelihood of which cannot be determined at this time. Historically, U.S. Cellular has not made any significant indemnification payments under such agreements. Legal Proceedings U.S. Cellular is involved or may be involved from time to time in legal proceedings before the FCC, other regulatory authorities, and/or various state and federal courts. If U.S. Cellular believes that a loss arising from such legal proceedings is probable and can be reasonably estimated, an amount is accrued in the financial statements for the estimated loss. If only a range of loss can be determined, the best estimate within that range is accrued; if none of the estimates within that range is better than another, the low end of the range is accrued. The assessment of the expected outcomes of legal proceedings is a highly subjective process that requires judgments about future events. The legal proceedings are reviewed at least quarterly to determine the adequacy of accruals and related financial statement disclosures. The ultimate outcomes of legal proceedings could differ materially from amounts accrued in the financial statements. U.S. Cellular has recorded no accrual and $1 million with respect to legal proceedings and unasserted claims as of December 31, 2018 and 2017 , respectively. U.S. Cellular has not accrued any amount for legal proceedings if it cannot estimate the amount of the possible loss or range of loss. U.S. Cellular is unable to estimate any contingent loss in excess of the amounts accrued. The United States Department of Justice (DOJ) has notified U.S. Cellular and its parent, TDS, that it is conducting inquiries of U.S. Cellular and TDS under the federal False Claims Act. The DOJ is investigating U.S. Cellular’s participation in spectrum auctions 58, 66, 73 and 97 conducted by the FCC. U.S. Cellular is a limited partner in several limited partnerships which qualified for the 25% bid credit in each auction. TDS and U.S. Cellular are cooperating with the DOJ’s review. TDS and U.S. Cellular believe that U.S. Cellular’s arrangements with the limited partnerships and the limited partnerships’ participation in the FCC auctions complied with applicable law and FCC rules. At this time, U.S. Cellular cannot predict the outcome of this review. |
Variable Interest Entities
Variable Interest Entities | 12 Months Ended |
Dec. 31, 2018 | |
Variable Interest Entities [Abstract] | |
Variable Interest Entities | Variable Interest Entities Consolidated VIEs U.S. Cellular consolidates VIEs in which it has a controlling financial interest as defined by GAAP and is therefore deemed 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 performance and (b) the obligation to absorb the 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 events warranting reconsideration occur. These VIEs have risks similar to those described in the “Risk Factors” in U.S. Cellular’s Form 10-K for the year ended December 31, 2018 . During 2017, U.S. Cellular formed USCC EIP LLC (Seller/Sub-Servicer), USCC Receivables Funding LLC (Transferor) and the Trust, collectively the special purpose entities (SPEs), to facilitate a securitized borrowing using its equipment installment plan receivables. Under a Receivables Sale Agreement, U.S. Cellular wholly-owned, majority-owned and unconsolidated entities, collectively referred to as “affiliated entities”, will transfer device equipment installment plan contracts to the Seller/Sub-Servicer. The Seller/Sub-Servicer will aggregate device equipment installment plan contracts, and perform servicing, collection and all other administrative activities related to accounting for the equipment installment plan contracts. The Seller/Sub-Servicer will sell the eligible equipment installment plan receivables to the Transferor, a bankruptcy remote entity, which will subsequently sell the receivables to the Trust. The Trust, which is bankruptcy remote and isolated from the creditors of U.S. Cellular, will be responsible for issuing asset-backed variable funding notes (Notes), which are collateralized by the equipment installment plan receivables owned by the Trust. Given that U.S. Cellular has the power to direct the activities of these SPEs, and that these SPEs lack sufficient equity to finance their activities, U.S. Cellular is deemed to have a controlling financial interest in the SPEs and, therefore, consolidates them. All transactions with third parties (e.g., issuance of the asset-backed variable funding notes) will be accounted for as a secured borrowing due to the pledging of equipment installment plan contracts as collateral, significant continuing involvement in the transferred assets, subordinated interests of the cash flows, and continued evidence of control of the receivables. Refer to Note 11 — Debt , Receivables Securitization Agreement for additional details regarding the securitization agreement for which these entities were established. The following VIEs were formed to participate in FCC auctions of wireless spectrum and to fund, establish, and provide wireless service with respect to any FCC licenses won in the auctions: ▪ Advantage Spectrum, L.P. (Advantage Spectrum) and Sunshine Spectrum, Inc., the general partner of Advantage Spectrum; and ▪ King Street Wireless, L.P. (King Street Wireless) and King Street Wireless, Inc., the general partner of King Street Wireless. These particular VIEs are collectively referred to as designated entities. The power to direct the activities that most significantly impact the economic performance of these VIEs is shared. Specifically, the general partner of these VIEs has the exclusive right to manage, operate and control the limited partnerships and make all decisions to carry on the business of the partnerships. The general partner of each partnership needs the consent of the limited partner, an indirect U.S. Cellular subsidiary, to sell or lease certain licenses, to make certain large expenditures, admit other partners or liquidate the limited partnerships. Although the power to direct the activities of these VIEs is shared, U.S. Cellular has the most significant level of exposure to the variability associated with the economic performance of the VIEs, indicating that U.S. Cellular is the primary beneficiary of the VIEs. Therefore, in accordance with GAAP, these VIEs are consolidated. During 2018, U.S. Cellular received liquidating distributions from Aquinas Wireless, L.P. (Aquinas Wireless). Subsequent to the final distribution date, Aquinas Wireless had no remaining assets and was dissolved. U.S. Cellular also consolidates other VIEs that are limited partnerships that provide wireless service. A limited partnership is a variable interest entity unless the limited partners hold substantive participating rights or kick-out rights over the general partner. For certain limited partnerships, U.S. Cellular is the general partner and manages the operations. In these partnerships, the limited partners do not have substantive kick-out or participating rights and, further, such limited partners do not have the authority to remove the general partner. Therefore, these limited partnerships are also recognized as VIEs and are consolidated under the variable interest model. The following table presents the classification and balances of the consolidated VIEs’ assets and liabilities in U.S. Cellular’s Consolidated Balance Sheet. December 31, 2018 2017 (Dollars in millions) Assets Cash and cash equivalents $ 9 $ 3 Short-term investments 17 — Accounts receivable 611 476 Inventory, net 5 5 Other current assets 6 3 Assets held for sale 4 — Licenses 652 655 Property, plant and equipment, net 94 99 Other assets and deferred charges 349 303 Total assets $ 1,747 $ 1,544 Liabilities Current liabilities $ 34 $ 39 Liabilities held for sale 1 — Deferred liabilities and credits 16 13 Total liabilities $ 51 $ 52 Unconsolidated VIEs U.S. Cellular manages the operations of and holds a variable interest in certain other limited partnerships, but is not the primary beneficiary of these entities and, therefore, does not consolidate them under the variable interest model. U.S. Cellular’s total investment in these unconsolidated entities was $4 million at December 31, 2018 and 2017 , and is included in Investments in unconsolidated entities in U.S. Cellular’s Consolidated Balance Sheet. The maximum exposure from unconsolidated VIEs is limited to the investment held by U.S. Cellular in those entities. Other Related Matters U.S. Cellular made contributions, loans and/or advances to its VIEs totaling $152 million , $821 million and $98 million during 2018 , 2017 and 2016 , respectively; of which $116 million in 2018 and $790 million in 2017 are related to USCC EIP LLC as discussed above. U.S. Cellular may agree to make additional capital contributions and/or advances to these or other VIEs and/or to their general partners to provide additional funding for operations or the development 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 able to obtain additional financing on commercially reasonable terms or at all to provide such financial support. The limited partnership agreements of Advantage Spectrum and King Street Wireless also provide the general partner with a put option whereby the general partner may require the limited partner, a subsidiary of U.S. Cellular, to purchase its interest in the limited partnership. The general partner’s put options related to its interests in King Street Wireless will become exercisable in 2019. The general partner’s put options related to its interest in Advantage Spectrum will become exercisable in 2021 and 2022. The greater of the carrying value of the general partner's investment or the value of the put option, net of any borrowings due to U.S. Cellular is recorded as Noncontrolling interests with redemption features in U.S. Cellular’s Consolidated Balance Sheet. Also in accordance with GAAP, minority share of income or changes in the redemption value of the put options, net of interest accrued on the loans, are recorded as a component of Net income attributable to noncontrolling interests, net of tax, in U.S. Cellular’s Consolidated Statement of Operations. During the first quarter of 2018, U.S. Cellular recorded an out-of-period adjustment attributable to 2016 and 2017 due to errors in the application of accounting guidance applicable to the calculation of Noncontrolling interests with redemption features related to King Street Wireless, Inc. This out-of-period adjustment had the impact of increasing Net income attributable to noncontrolling interests, net of tax, by $8 million and decreasing Net income attributable to U.S. Cellular shareholders by $8 million in 2018 . U.S. Cellular determined that this adjustment was not material to any of the periods impacted. |
Noncontrolling Interests
Noncontrolling Interests | 12 Months Ended |
Dec. 31, 2018 | |
Noncontrolling Interest [Abstract] | |
Noncontrolling Interests | Noncontrolling Interests U.S. Cellular’s consolidated financial statements include certain noncontrolling interests that meet the GAAP definition of mandatorily redeemable financial instruments. These mandatorily redeemable noncontrolling interests represent interests held by third parties in consolidated partnerships, where the terms of the underlying partnership agreement provide for a defined termination date at which time the assets of the subsidiary are to be sold, the liabilities are to be extinguished and the remaining net proceeds are to be distributed to the noncontrolling interest holders and U.S. Cellular in accordance with the respective partnership agreements. The termination dates of these mandatorily redeemable noncontrolling interests range from 2085 to 2092 . The estimated aggregate amount that would be due and payable to settle all of these noncontrolling interests, assuming an orderly liquidation of the finite-lived consolidated partnerships on December 31, 2018 , net of estimated liquidation costs, is $26 million . This amount excludes redemption amounts recorded in Noncontrolling interests with redemption features in the Consolidated Balance Sheet. The estimate of settlement value was based on certain factors and assumptions which are subjective in nature. Changes in those factors and assumptions could result in a materially larger or smaller settlement amount. The corresponding carrying value of the mandatorily redeemable noncontrolling interests in finite-lived consolidated partnerships at December 31, 2018 , was $11 million , and is included in Noncontrolling interests in the Consolidated Balance Sheet. The excess of the aggregate settlement value over the aggregate carrying value of these mandatorily redeemable noncontrolling interests is due primarily to the unrecognized appreciation of the noncontrolling interest holders’ share of the underlying net assets in the consolidated partnerships. Neither the noncontrolling interest holders’ share, nor U.S. Cellular’s share, of the appreciation of the underlying net assets of these subsidiaries is reflected in the consolidated financial statements. |
Common Shareholders' Equity
Common Shareholders' Equity | 12 Months Ended |
Dec. 31, 2018 | |
Stockholders' Equity Note [Abstract] | |
Common Shareholder's Equity | Common Shareholders’ Equity Series A Common Shares Series A Common Shares are convertible on a share-for-share basis into Common Shares. In matters other than the election of directors, each Series A Common Share is entitled to ten votes per share, compared to one vote for each Common Share. The Series A Common Shares are entitled to elect 75% of the directors (rounded down), and the Common Shares elect 25% of the directors (rounded up). As of December 31, 2018 , a majority of U.S. Cellular’s outstanding Common Shares and all of U.S. Cellular’s outstanding Series A Common Shares were held by TDS. Common Share Repurchase Program In November 2009, U.S. Cellular announced by Form 8-K that 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. In December 2016, the U.S. Cellular Board amended this authorization to provide that, beginning on January 1, 2017, the authorized repurchase amount with respect to a particular year will be any amount from zero to 1,300,000 Common Shares, as determined by the Pricing Committee of the Board of Directors, and that if the Pricing Committee did not specify an amount for any year, such amount would be zero for such year. The Pricing Committee has not specified any increase in the authorization since that time. The Pricing Committee also was authorized to decrease the cumulative amount of the authorization at any time, but has not taken any action to do so at this time. As of December 31, 2018 , the total cumulative amount of Common Shares authorized to be purchased is 5,901,000 . The authorization provides that share repurchases will be made pursuant to open market purchases, block purchases, private purchases, or otherwise, depending on market prices and other conditions. This authorization does not have an expiration date. Pursuant to certain employee and non-employee benefit plans, U.S. Cellular reissued the following Treasury Shares: Year Ended December 31, 2018 2017 2016 (Shares in millions) Treasury Shares Reissued 1 — 1 Tax-Deferred Savings Plan At December 31, 2018 , U.S. Cellular has reserved 67,000 Common Shares for issuance under the TDS Tax-Deferred Savings Plan, a qualified profit‑sharing plan pursuant to Sections 401(a) and 401(k) of the Internal Revenue Code. Participating employees have the option of investing their contributions in a U.S. Cellular Common Share fund, a TDS Common Share fund or certain unaffiliated funds. |
Stock-Based Compensation
Stock-Based Compensation | 12 Months Ended |
Dec. 31, 2018 | |
Share-based Compensation [Abstract] | |
Stock-Based Compensation | 16 Stock-Based Compensation U.S. Cellular has established the following stock‑based compensation plans: Long-Term Incentive Plans and a Non-Employee Director compensation plan. Under the U.S. Cellular Long-Term Incentive Plans, U.S. Cellular may grant fixed and performance based incentive and non-qualified stock options, restricted stock, restricted stock units, and deferred compensation stock unit awards to key employees. At December 31, 2018 , the only types of awards outstanding are fixed non-qualified stock option awards, restricted stock unit awards, performance share awards and deferred compensation stock unit awards. Under the Non-Employee Director compensation plan, U.S. Cellular may grant Common Shares to members of the Board of Directors who are not employees of U.S. Cellular or TDS. At December 31, 2018 , U.S. Cellular had reserved 13,286,000 Common Shares for equity awards granted and to be granted under the Long-Term Incentive Plans and 137,000 Common Shares for issuance under the Non-Employee Director compensation plan. U.S. Cellular uses treasury stock to satisfy requirements for Common Shares issued pursuant to its various stock-based compensation plans. Long-Term Incentive Plans – Stock Options Stock options granted to key employees are exercisable over a specified period not in excess of ten years. Stock options generally vest over a period of three years from the date of grant. Stock options outstanding at December 31, 2018 , expire between 2019 and 2026 . However, vested stock options typically expire 30 days after the effective date of an employee’s termination of employment for reasons other than retirement. Employees who leave at the age of retirement have 90 days (or one year if they satisfy certain requirements) within which to exercise their vested stock options. The exercise price of options equals the market value of U.S. Cellular Common Shares on the date of grant. U.S. Cellular did not grant stock option awards in 2018 or 2017 . U.S. Cellular estimated the fair value of stock options granted during 2016 using the Black-Scholes valuation model and the assumptions shown in the table below. 2016 Expected life 4.7 years Expected annual volatility rate 30.5 % Dividend yield — % Risk-free interest rate 1.2 % Estimated annual forfeiture rate 9.4 % Pre-vesting forfeitures and expected life are estimated based on historical experience related to similar awards, giving consideration to the contractual terms of the stock-based awards, vesting schedules and expectations of future employee behavior. U.S. Cellular believes that its historical experience provides the best estimates of future pre-vesting forfeitures and future expected life. The expected volatility assumption is based on the historical volatility of U.S. Cellular’s common stock over a period commensurate with the expected life. The dividend yield assumption is zero because U.S. Cellular has never paid a dividend, except a special cash dividend in June 2013, and has expressed its intention to retain all future earnings in the business. The risk-free interest rate assumption is determined using the U.S. Treasury Yield Curve Rate with a term length that approximates the expected life of the stock options. The fair value of options is recognized as compensation cost using an accelerated attribution method over the requisite service periods of the awards, which is generally the vesting period. A summary of U.S. Cellular stock options outstanding (total and portion exercisable) and changes during 2018 is presented in the table below: Common Share Options Number of Options Weighted Average Exercise Price Aggregate Intrinsic Value (in millions) Weighted Average Remaining Contractual Life (in years) Outstanding at December 31, 2017 3,495,000 $ 41.10 (2,475,000 exercisable) $ 40.79 Exercised (2,318,000 ) $ 39.45 Forfeited (19,000 ) $ 43.12 Expired (352,000 ) $ 47.29 Outstanding at December 31, 2018 806,000 $ 43.10 $ 7 6.0 (420,000 exercisable) $ 42.39 $ 4 5.7 The weighted average grant date fair value per share of the U.S. Cellular stock options granted in 2016 was $12.77 . The aggregate intrinsic value of U.S. Cellular stock options exercised in 2018 , 2017 and 2016 was $19 million , $1 million and $4 million , respectively. The aggregate intrinsic value at December 31, 2018 , presented in the table above represents the total pre-tax intrinsic value (the difference between U.S. Cellular’s closing stock price and the exercise price multiplied by the number of in-the-money options) that would have been received by option holders had all options been exercised on December 31, 2018 . Long-Term Incentive Plans – Restricted Stock Units Restricted stock unit awards granted to key employees generally vest after three years . The restricted stock unit awards currently outstanding were granted in 2016 , 2017 and 2018 and will vest in 2019 , 2020 and 2021 , respectively. U.S. Cellular estimates the fair value of restricted stock units based on the closing market price of U.S. Cellular shares on the date of grant. The fair value is then recognized as compensation cost on a straight-line basis over the requisite service periods of the awards, which is generally the vesting period. A summary of U.S. Cellular nonvested restricted stock units at December 31, 2018 , and changes during the year then ended is presented in the table below: Common Restricted Stock Units Number Weighted Average Grant Date Fair Value Nonvested at December 31, 2017 1,483,000 $ 39.67 Granted 559,000 $ 38.19 Vested (395,000 ) $ 37.30 Forfeited (78,000 ) $ 39.78 Nonvested at December 31, 2018 1,569,000 $ 39.74 The total fair value of restricted stock units that vested during 2018 , 2017 and 2016 was $16 million , $11 million and $15 million , respectively. The weighted average grant date fair value per share of the restricted stock units granted in 2018 , 2017 and 2016 was $38.19 , $38.04 and $43.32 , respectively. Long-Term Incentive Plans – Performance Share Awards (Performance Shares) Beginning in 2017, U.S. Cellular granted performance shares, specifically performance stock units, to key employees. The performance shares vest after three years. Each recipient may be entitled to shares of U.S. Cellular common stock equal to 50% to 200% of a communicated target award depending on the achievement of predetermined performance-based operating targets over the performance period, which is a one year period beginning on January 1 in the year of grant to December 31 in the year of grant. The remaining time through the end of the vesting period is considered the “time-based period”. Performance-based operating targets include Simple Free Cash Flow, Consolidated Total Operating Revenues and Postpaid Handset Voluntary Defections. Subject to vesting during the time-based period, the performance share award agreement provides that in no event shall the award be less than 50% of the target opportunity as of the grant date. The performance shares awards currently outstanding that were granted in 2017 and 2018 and will vest in 2020 and 2021 , respectively. U.S. Cellular estimates the fair value of performance shares using U.S. Cellular’s closing stock price on the date of grant. An estimate of the number of performance shares expected to vest based upon achieving the performance-based operating targets is made and the aggregate fair value is expensed on a straight-line basis over the requisite service period. Each reporting period, during the performance period, the estimate of the number of performance shares expected to vest is reviewed and stock compensation expense is adjusted as appropriate to reflect the revised estimate of the aggregate fair value of the performance shares expected to vest. A summary of U.S. Cellular’s nonvested performance shares and changes during 2018 is presented in the table below: Common Performance Shares Number Weighted Average Grant Date Fair Value Nonvested at December 31, 2017 342,000 $ 36.92 Granted 357,000 $ 38.81 Change in units based on approved performance factors 111,000 $ 36.92 Forfeited (42,000 ) $ 37.37 Nonvested at December 31, 2018 768,000 $ 37.78 No performance shares vested during 2018 or 2017 . The weighted average grant date fair value per share of the performance shares granted in 2018 and 2017 was $38.81 and $36.92 , respectively. Long-Term Incentive Plans – Deferred Compensation Stock Units Certain U.S. Cellular employees may elect to defer receipt of all or a portion of their annual bonuses and to receive a company matching contribution on the amount deferred. All bonus compensation that is deferred by employees electing to participate is immediately vested and is deemed to be invested in U.S. Cellular Common Share stock units. The amount of U.S. Cellular’s matching contribution depends on the portion of the annual bonus that is deferred. Participants receive a 25% match for amounts deferred up to 50% of their total annual bonus and a 33% match for amounts that exceed 50% of their total annual bonus; such matching contributions also are deemed to be invested in U.S. Cellular Common Share stock units and vest over three years. The total fair value of deferred compensation stock units that vested during 2018 , 2017 and 2016 was less than $1 million in each respective year. The weighted average grant date fair value per share of the deferred compensation stock units granted in 2018 , 2017 and 2016 was $40.72 , $36.02 and $41.31 , respectively. As of December 31, 2018 , there were 33,000 vested but unissued deferred compensation stock units valued at $2 million . Compensation of Non-Employee Directors U.S. Cellular issued 18,000 , 15,000 and 13,000 Common Shares in 2018 , 2017 and 2016 , respectively, under its Non-Employee Director compensation plan. Stock‑Based Compensation Expense The following table summarizes stock‑based compensation expense recognized during 2018 , 2017 and 2016 : Year Ended December 31, 2018 2017 2016 (Dollars in millions) Stock option awards $ 2 $ 6 $ 11 Restricted stock unit awards 21 19 14 Performance share awards 13 4 — Awards under Non-Employee Director compensation plan 1 1 1 Total stock-based compensation expense, before income taxes 37 30 26 Income tax benefit (9 ) (11 ) (10 ) Total stock-based compensation expense, net of income taxes $ 28 $ 19 $ 16 The following table provides a summary of the classification of stock-based compensation expense included in the Consolidated Statement of Operations for the years ended: December 31, 2018 2017 2016 (Dollars in millions) Selling, general and administrative expense $ 33 $ 27 $ 23 System operations expense 4 3 3 Total stock-based compensation expense $ 37 $ 30 $ 26 At December 31, 2018 , unrecognized compensation cost for all U.S. Cellular stock‑based compensation awards was $33 million and is expected to be recognized over a weighted average period of 1.6 years . U.S. Cellular’s tax benefits realized from the exercise of stock options and the vesting of other awards totaled $9 million in 2018 . |
Supplemental Cash Flow Disclosu
Supplemental Cash Flow Disclosures | 12 Months Ended |
Dec. 31, 2018 | |
Supplemental Cash Flow Information [Abstract] | |
Supplemental Cash Flow Disclosures | Supplemental Cash Flow Disclosures Following are supplemental cash flow disclosures regarding interest paid and income taxes paid. Year Ended December 31, 2018 2017 2016 (Dollars in millions) Interest paid $ 113 $ 111 $ 113 Income taxes paid, net of refunds received 90 55 (11 ) Following are supplemental cash flow disclosures regarding transactions related to stock-based compensation awards. In certain situations, U.S. Cellular withholds shares that are issuable upon the exercise of stock options or the vesting of restricted shares to cover, and with a value equivalent to, the exercise price and/or the amount of taxes required to be withheld from the stock award holder at the time of the exercise or vesting. U.S. Cellular then pays the amount of the required tax withholdings to the taxing authorities in cash. Year Ended December 31, 2018 2017 2016 (Dollars in millions) Common Shares withheld 1,549,800 144,755 308,010 Aggregate value of Common Shares withheld $ 73 $ 6 $ 13 Cash receipts upon exercise of stock options 29 5 12 Cash disbursements for payment of taxes (11 ) (4 ) (6 ) Net cash receipts from exercise of stock options and vesting of other stock awards $ 18 $ 1 $ 6 |
Certain Relationships and Relat
Certain Relationships and Related Transactions | 12 Months Ended |
Dec. 31, 2018 | |
Related Party Transactions [Abstract] | |
Certain Relationships and Related Transactions | Certain Relationships and Related Transactions The following persons are partners of Sidley Austin LLP, the principal law firm of U.S. Cellular and its subsidiaries: Walter C.D. Carlson, a director of U.S. Cellular, a director and non-executive Chairman of the Board of Directors of TDS and a trustee and beneficiary of a voting trust that controls TDS; William S. DeCarlo, the General Counsel of TDS and an Assistant Secretary of TDS and certain subsidiaries of TDS; and Stephen P. Fitzell, the General Counsel of U.S. Cellular and TDS Telecommunications LLC and an Assistant Secretary of U.S. Cellular and certain other subsidiaries of TDS. Walter C.D. Carlson does not provide legal services to TDS, U.S. Cellular or their subsidiaries. U.S. Cellular and its subsidiaries incurred legal costs from Sidley Austin LLP of $5 million , $7 million and $6 million in 2018 , 2017 and 2016 , respectively. U.S. Cellular is billed for all services it receives from TDS, pursuant to the terms of various agreements between it and TDS. These billings are included in U.S. Cellular's Selling, general and administrative expenses. Some of these agreements were established at a time prior to U.S. Cellular's initial public offering when TDS owned more than 90% of U.S. Cellular's outstanding capital stock and may not reflect terms that would be obtainable from an unrelated third party through arms-length negotiations. Billings from TDS and certain of its subsidiaries to U.S. Cellular are based on expenses specifically identified to U.S. Cellular and on allocations of common expenses. Such allocations are based on the relationship of U.S. Cellular's assets, employees, investment in property, plant and equipment and expenses relative to all subsidiaries in the TDS consolidated group. Management believes the method TDS uses to allocate common expenses is reasonable and that all expenses and costs applicable to U.S. Cellular are reflected in its financial statements. Billings to U.S. Cellular from TDS totaled $86 million , $85 million and $94 million in 2018 , 2017 and 2016 , respectively. The Audit Committee of the Board of Directors of U.S. Cellular is responsible for the review and evaluation of all related-party transactions as such term is defined by the rules of the New York Stock Exchange. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies and Recent Accounting Pronouncements (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | The accounting policies of U.S. Cellular conform to accounting principles generally accepted in the United States of America (GAAP) as set forth in the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC). Unless otherwise specified, references to accounting provisions and GAAP in these notes refer to the requirements of the FASB ASC. The consolidated financial statements include the accounts of U.S. Cellular, subsidiaries in which 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 requires consolidation under GAAP. See Note 13 — Variable Interest Entities for additional information relating to U.S. Cellular’s VIEs. All material intercompany accounts and transactions have been eliminated. |
Use of Estimates | The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect (a) the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and (b) the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates. Significant estimates are involved in accounting for indefinite-lived intangible assets, income taxes and equipment installment plans. |
Cash, Cash Equivalents and Restricted Cash | Cash and cash equivalents include cash and highly liquid investments with original maturities of three months or less. Cash and cash equivalents subject to contractual restrictions are classified as restricted cash. |
Accounts Receivable | Accounts receivable consist primarily of amounts owed by customers for wireless services and equipment sales, including sales of certain devices and accessories under installment plans, by agents for sales of equipment to them and by other wireless carriers whose customers have used U.S. Cellular’s wireless systems. |
Allowance for Doubtful Accounts | The allowance for doubtful accounts is the best estimate of the amount of probable credit losses related to existing billed and unbilled accounts receivable. The allowance is estimated based on historical experience, account aging and other factors that could affect collectability. Accounts receivable balances are reviewed on either an aggregate or individual basis for collectability depending on the type of receivable. When it is probable that an account balance will not be collected, the account balance is charged against the allowance for doubtful accounts. U.S. Cellular does not have any off-balance sheet credit exposure related to its customers. |
Inventory | Inventory consists primarily of wireless devices stated at the lower of cost, which approximates cost determined on the first-in first-out basis, or net realizable value. Net realizable value is determined by reference to the stand-alone selling price. |
Licenses | Licenses consist of direct and incremental costs incurred in acquiring Federal Communications Commission (FCC) licenses to provide wireless service. U.S. Cellular has determined that wireless licenses are indefinite-lived intangible assets and, therefore, not subject to amortization based on the following factors: ▪ Radio spectrum is not a depleting asset. ▪ The ability to use radio spectrum is not limited to any one technology. ▪ U.S. Cellular and its consolidated subsidiaries are licensed to use radio spectrum through the FCC licensing process, which enables licensees to utilize specified portions of the spectrum for the provision of wireless service. ▪ U.S. Cellular and its consolidated subsidiaries are required to renew their FCC licenses every ten years or, in some cases, every twelve or fifteen years. To date, all of U.S. Cellular’s license renewal applications have been granted by the FCC. Generally, license renewal applications filed by licensees otherwise in compliance with FCC regulations are routinely granted. If, however, a license renewal application is challenged either by a competing applicant for the license or by a petition to deny the renewal application, the license will be renewed if the licensee can demonstrate its entitlement to a “renewal expectancy.” Licensees are entitled to such an expectancy if they can demonstrate to the FCC that they have provided “substantial service” during their license term and have “substantially complied” with FCC rules and policies. U.S. Cellular believes that it is probable that its future license renewal applications will be granted. U.S. Cellular performs its annual impairment assessment of Licenses as of November 1 of each year or more frequently if there are events or circumstances that cause U.S. Cellular to believe the carrying value of Licenses exceeds their fair value on a more likely than not basis. For purposes of its impairment testing of Licenses, U.S. Cellular separated its FCC licenses into eight units of accounting. The eight units of accounting consisted of one unit of accounting for developed operating market licenses (built licenses) and seven geographic non-operating market licenses (unbuilt licenses). U.S. Cellular performed a qualitative impairment assessment in 2018 and a quantitative impairment assessment in 2017 to determine whether the licenses were impaired. Based on the impairment assessments performed, U.S. Cellular did no t have an impairment of its Licenses in 2018 or 2017 . See Note 7 — Intangible Assets for additional details related to Licenses. |
Investments in Unconsolidated Entities | For its equity method investments for which financial information is readily available, U.S. Cellular records its equity in the earnings of the entity in the current period. For its equity method investments for which financial information is not readily available, U.S. Cellular records its equity in the earnings of the entity on a one quarter lag basis. |
Property, Plant and Equipment | U.S. Cellular’s Property, plant and equipment is stated at the original cost of construction or purchase including capitalized costs of certain taxes, payroll-related expenses, interest and estimated costs to remove the assets. Expenditures that enhance the productive capacity of assets in service or extend their useful lives are capitalized and depreciated. Expenditures for maintenance and repairs of assets in service are charged to System operations expense or Selling, general and administrative expense, as applicable. Retirements and disposals of assets are recorded by removing the original cost of the asset (along with the related accumulated depreciation) from plant in service and charging it, together with net removal costs (removal costs less an applicable accrued asset retirement obligation and salvage value realized), to (Gain) loss on asset disposals, net. U.S. Cellular capitalizes certain costs of developing new information systems. Software licenses that qualify for capitalization as an asset are accounted for as the acquisition of an intangible asset and the incurrence of a liability to the extent that the license fees are not fully paid at acquisition. |
Depreciation and Amortization | Depreciation is provided using the straight-line method over the estimated useful life of the related asset. U.S. Cellular depreciates leasehold improvement assets associated with leased properties over periods ranging from one to thirty years; such periods approximate the shorter of the assets’ economic lives or the specific lease terms. Useful lives of specific assets are reviewed throughout the year to determine if changes in technology or other business changes would warrant accelerating the depreciation of those specific assets. There were no material changes to useful lives of property, plant and equipment in 2018 , 2017 or 2016 . See Note 9 — Property, Plant and Equipment for additional details related to useful lives. |
Impairment of Long-Lived Assets | U.S. Cellular reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the assets might be impaired. U.S. Cellular has one asset group for purposes of assessing property, plant and equipment for impairment based on the fact that the individual operating markets are reliant on centrally operated data centers, mobile telephone switching offices and a network operations center. U.S. Cellular operates a single integrated national wireless network. The cash flows generated by this single interdependent network represent the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities. |
Agent Liabilities | U.S. Cellular has relationships with agents, which are independent businesses that obtain customers for U.S. Cellular. At December 31, 2018 and 2017 , U.S. Cellular had accrued $59 million and $61 million , respectively, for amounts due to agents. These amounts are included in Other current liabilities in the Consolidated Balance Sheet. |
Debt Issuance Costs | Debt issuance costs include underwriters’ and legal fees and other charges related to issuing various borrowing instruments and other long–term agreements, and are amortized over the respective term of each instrument. Debt issuance costs related to U.S. Cellular’s revolving credit agreement and receivables securitization agreement are recorded in Other assets and deferred charges in the Consolidated Balance Sheet. All other debt issuance costs are presented as an offset to the related debt obligation in the Consolidated Balance Sheet. |
Asset Retirement Obligations | U.S. Cellular accounts for asset retirement obligations by recording the fair value of a liability for legal obligations associated with an asset retirement in the period in which the obligations are incurred. At the time the liability is incurred, U.S. Cellular records a liability equal to the net present value of the estimated cost of the asset retirement obligation and increases the carrying amount of the related long-lived asset by an equal amount. Until the obligation is fulfilled, U.S. Cellular updates its estimates relating to cash flows required and timing of settlement. U.S. Cellular records the present value of the changes in the future value as an increase or decrease to the liability and the related carrying amount of the long-lived asset. The liability is accreted to future value over a period ending with the estimated settlement date of the respective asset retirement obligation. The carrying amount of the long-lived asset is depreciated over the useful life of the related asset. Upon settlement of the obligation, any difference between the cost to retire the asset and the recorded liability is recognized in the Consolidated Statement of Operations. |
Treasury Shares | Common Shares repurchased by U.S. Cellular are recorded at cost as treasury shares and result in a reduction of equity. When treasury shares are reissued, U.S. Cellular determines the cost using the first-in, first-out cost method. The difference between the cost of the treasury shares and reissuance price is included in Additional paid-in capital or Retained earnings. |
Revenue Recognition | Revenues from sales of equipment and products are recognized when control has transferred to the customer. Service revenues are recognized as the related service is provided. U.S. Cellular has certain contracts in which it bills an amount equal to a fixed per-unit price multiplied by a variable quantity (e.g., roaming agreements with other carriers). Because U.S. Cellular invoices for such items in an amount that corresponds directly with the value of the performance completed to date, U.S. Cellular may recognize revenue in that amount. As a practical expedient, these contracts are excluded from the estimate of future revenues expected to be recognized related to performance obligations that are unsatisfied as of the end of a reporting period. The following is a description of principal activities from which U.S. Cellular generates its revenues. Services and products Nature, timing of satisfaction of performance obligations, and significant payment terms Wireless services Wireless service includes voice, messaging and data services. Revenue is recognized in Service revenues as wireless service is provided to the customer. Wireless services generally are billed and paid in advance on a monthly basis. Wireless devices and accessories U.S. Cellular offers a comprehensive range of wireless devices such as handsets, tablets, mobile hotspots, home phones and routers for use by its customers, as well as accessories. U.S. Cellular also sells wireless devices to agents and other third-party distributors for resale. U.S. Cellular frequently discounts wireless devices sold to new and current customers. U.S. Cellular also offers customers the option to purchase certain devices and accessories under installment contracts over a specified time period. For certain equipment installment plans, after a specified period of time, the customer may have the right to upgrade to a new device. Such upgrades require the customer to enter into an equipment installment contract for the new device, and transfer the existing device to U.S. Cellular. U.S. Cellular recognizes revenue in Equipment sales revenues when control of the device or accessory is transferred to the customer, which is generally upon delivery. Wireless roaming U.S. Cellular receives roaming revenues when other wireless carriers’ customers use U.S. Cellular’s wireless systems. U.S. Cellular recognizes revenue in Service revenues when the roaming service is provided to the other carrier’s customer. Wireless Eligible Telecommunications Carrier (ETC) Revenues Telecommunications companies may be designated by states, or in some cases by the FCC, as an ETC to receive support payments from the Universal Service Fund if they provide specified services in “high cost” areas. ETC revenues recognized in the reporting period represent the amounts which U.S. Cellular is entitled to receive for such period, as determined and approved in connection with U.S. Cellular’s designation as an ETC in various states. Wireless tower rents U.S. Cellular receives tower rental revenues when another carrier leases tower space on a U.S. Cellular owned tower. U.S. Cellular recognizes revenue in Service revenues in the period during which the services are provided. Activation fees U.S. Cellular charges its end customers activation fees in connection with the sale of certain services and equipment. Activation fees are deferred and recognized over the period benefitted. Significant Judgments Revenues from sales of equipment are recognized when control has transferred to the customer. Service revenues are recognized as the related service is provided. Services are deemed to be highly interrelated when the method and timing of transfer and performance risk are the same. Highly interrelated services that are determined to not be distinct have been grouped into a single performance obligation. Each month of services promised is a performance obligation. The series of monthly service performance obligations promised over the course of the contract are combined into a single performance obligation for purposes of the allocation. U.S. Cellular has made judgments regarding transaction price, including but not limited to issues relating to variable consideration, time value of money and returns. When determined to be significant in the context of the contract, these items are considered in the valuation of transaction price at contract inception or modification, as appropriate. As a practical expedient, revenue related to contracts of less than one year, generally month-to-month contracts, are excluded from these estimates. U.S. Cellular adopted the provisions of ASU 2014-09 and ASU 2017-05 and applied them to all contracts as of January 1, 2018, using a modified retrospective method. Under this method, the new accounting standard is applied only to the most recent period presented, recognizing the cumulative effect of the accounting change as an adjustment to the beginning balance of retained earnings. As a practical expedient, U.S. Cellular groups similar contracts or similar performance obligations together into portfolios of contracts or performance obligations if doing so does not result in a significant difference from applying the new accounting standard to the individual contracts. U.S. Cellular applies this grouping method for the following types of transactions: device activation fees, contract acquisition costs, and certain customer promotions. Contract portfolios will be recognized over the respective expected customer lives or terms of the contracts. As a practical expedient, costs with an amortization period of one year or less are not capitalized. Multiple Performance Obligations U.S. Cellular sells bundled service and equipment offerings. In these instances, U.S. Cellular recognizes its revenue based on the relative standalone selling prices for each distinct service or equipment performance obligation, or bundles thereof. U.S. Cellular estimates the standalone selling price of the device or accessory to be its retail price excluding discounts. U.S. Cellular estimates the standalone selling price of wireless service to be the price offered to customers on month-to-month contracts. Equipment Installment Plans Equipment revenue under equipment installment plan contracts is recognized at the time the device is delivered to the customer for the amount allocated to the equipment under ASU 2014-09. Incentives Discounts and incentives that are deemed cash are recognized as a reduction of Operating revenues concurrently with the associated revenue. U.S. Cellular issues rebates to its agents and end customers. These incentives are recognized as a reduction to revenue at the time the corresponding revenue is recognized . The total potential rebates and incentives are reduced by U.S. Cellular’s estimate of rebates that will not be redeemed by customers based on historical experience of such redemptions. From time to time, U.S. Cellular may offer certain promotions to incentivize customers to switch to, or to purchase additional services from, U.S. Cellular. Under these types of promotions, an eligible customer may receive an incentive in the form of a discount off additional services purchased shown as a rebate or credit to the customer’s monthly bill. U.S. Cellular accounts for the future discounts as material rights at the time of the initial transaction by allocating and deferring a portion of service and equipment revenue based on the relative proportion of the future discounts in comparison to the aggregate initial purchase. The deferred revenue will be recognized as service revenue in future periods. Amounts Collected from Customers and Remitted to Governmental Authorities U.S. Cellular records amounts collected from customers and remitted to governmental authorities on a net basis within 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 from 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 revenues that are billed to customers and remitted to governmental authorities totaled $67 million , $58 million and $64 million for 2018 , 2017 and 2016 , respectively. |
New Accounting Pronouncements | In February 2016, the FASB issued Accounting Standards Update 2016-02, Leases (ASU 2016-02) and has since amended the standard with Accounting Standards Update 2018-01, Leases: Land Easement Practical Expedient for Transition to Topic 842 , Accounting Standards Update 2018-10, Codification Improvements to Topic 842, Leases , Accounting Standards Update 2018-11, Leases: Targeted Improvements, and Accounting Standards Update 2018-20, Leases: Narrow-Scope Improvements for Lessors . ASU 2016-02, as amended, requires lessees to record a right-of-use asset and lease liability for almost all leases. This ASU does not substantially impact the lessor accounting model. However, some changes to the lessor accounting guidance were made to align with lessee accounting changes within ASC 842, Leases and certain key aspects of ASC 606, Revenue from Contracts with Customers . U.S. Cellular will adopt ASU 2016-02, as amended, using a modified retrospective method on January 1, 2019. Under this method, a cumulative effect adjustment is recognized upon adoption and the guidance is applied prospectively. U.S. Cellular elected transitional practical expedients for existing leases which eliminated the requirements to reassess existing lease classification and initial direct costs, and whether contracts contain leases. U.S. Cellular also elected the practical expedient related to land easements that allows it to carry forward the accounting treatment for pre-existing land easement agreements. U.S. Cellular has implemented new systems, processes and controls to adopt ASU 2016-02, as amended, and has implemented a new lease management and accounting system to assist in the application of the new standard. Nearly all of U.S. Cellular’s leases are classified as operating leases, although it does have a small number of finance leases. The adoption of ASU 2016-02, as amended, will add approximately $0.9 billion in right-of-use assets and approximately $1.0 billion in lease liabilities to the Consolidated Balance Sheet as of January 1, 2019, with the difference primarily representing accrued rent recognized prior to adoption. The adoption of ASU 2016-02 is not expected to have a material impact on U.S. Cellular's results of operations in 2019. In June 2016, the FASB issued Accounting Standards Update 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments (ASU 2016-13). ASU 2016-13 requires entities to use a new forward-looking, expected loss model to estimate credit losses. It also requires additional disclosure relating to the credit quality of trade and other receivables, including information relating to management’s estimate of credit allowances. U.S. Cellular is required to adopt ASU 2016-13 on January 1, 2020, using the modified retrospective approach. Early adoption is permitted as of January 1, 2019; however, U.S. Cellular does not intend to adopt early. U.S. Cellular is evaluating the effects that adoption of ASU 2016-13 will have on its financial position, results of operations and disclosures. In June 2018, the FASB issued Accounting Standards Update 2018-07, Compensation - Stock Compensation: Improvements to Nonemployee Share-Based Payment Accounting (ASU 2018-07). ASU 2018-07 expands the scope of ASC 718, Compensation—Stock Compensation , which currently only includes share-based payments issued to employees, to also include share-based payments issued to nonemployees for goods and services. U.S. Cellular is required to adopt ASU 2018-07 on January 1, 2019, using the modified retrospective approach. Early adoption is permitted. The adoption of ASU 2018-07 will not have an impact on U.S. Cellular’s financial position or results of operations. In August 2018, the FASB issued Accounting Standards Update 2018-15, Intangibles - Goodwill and Other - Internal-Use Software: Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (ASU 2018-15). ASU 2018-15 aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the existing guidance for capitalizing implementation costs for an arrangement that has a software license. The service element of a hosting arrangement will continue to be expensed as incurred. Any capitalized implementation costs will be amortized over the period of the service contract. U.S. Cellular is required to adopt ASU 2018-15 on January 1, 2020, either retrospectively or prospectively to eligible costs incurred on or after the date that this guidance is first applied. Early adoption is permitted. The adoption of ASU 2018-15 is not expected to have a significant impact on U.S. Cellular's financial position or results of operations. In May 2014, the FASB issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers and has since amended the standard with Accounting Standards Update 2015-14, Revenue from Contracts with Customers: Deferral of the Effective Date , Accounting Standards Update 2016-08, Revenue from Contracts with Customers: Principal versus Agent Considerations (Reporting Revenue Gross versus Net), Accounting Standards Update 2016-10, Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing , Accounting Standards Update 2016-12, Revenue from Contracts with Customers: Narrow-Scope Improvements and Practical Expedients, and Accounting Standards Update 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers, collectively referred to hereinafter as ASU 2014-09. These standards replace existing revenue recognition rules with a single comprehensive model to use in accounting for revenue arising from contracts with customers. In February 2017, the FASB issued Accounting Standards Update 2017-05, Other Income – Gains and Losses from the Derecognition of Nonfinancial Assets: Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets (ASU 2017-05). ASU 2017-05 clarifies how entities account for the derecognition of a nonfinancial asset and adds guidance for partial sales of nonfinancial assets. U.S. Cellular adopted the provisions of ASU 2014-09 and ASU 2017-05 and applied them to all contracts as of January 1, 2018, using a modified retrospective method. Under this method, the new accounting standard is applied only to the most recent period presented, recognizing the cumulative effect of the accounting change as an adjustment to the beginning balance of retained earnings. Accordingly, prior periods have not been recast to reflect the new accounting standard. The cumulative effect of applying the provisions of ASU 2014-09 resulted in an increase of $175 million in retained earnings as of January 1, 2018. ASU 2017-05 had no impact to retained earnings as of January 1, 2018. Investments in unconsolidated entities consist of amounts invested in entities in which U.S. Cellular holds a noncontrolling interest. On January 1, 2018, U.S. Cellular adopted Accounting Standards Update 2016-01, Financial Instruments – Overall: Recognition and Measurement of Financial Assets and Financial Liabilities (ASU 2016-01) using the modified retrospective approach. The adoption of ASU 2016-01 did not have a significant impact on U.S. Cellular's financial position or results of operations. |
Advertising Costs | U.S. Cellular expenses advertising costs as incurred. Advertising costs totaled $215 million , $211 million and $245 million in 2018 , 2017 and 2016 , respectively. |
Income Taxes | U.S. Cellular is included in a consolidated federal income tax return with other members of the TDS consolidated group. For financial statement purposes, U.S. Cellular and its subsidiaries calculate their income, income taxes and credits as if they comprised a separate affiliated group. Under a tax allocation agreement between TDS and U.S. Cellular, U.S. Cellular remits its applicable income tax payments to TDS. U.S. Cellular had a tax receivable balance with TDS of $14 million as of December 31, 2018 and a tax payable balance with TDS of $23 million as of December 31, 2017 . Deferred taxes are computed using the liability method, whereby deferred tax assets are recognized for future deductible temporary differences and operating loss carryforwards, and deferred tax liabilities are recognized for future taxable temporary differences. Both deferred tax assets and liabilities are measured using the enacted tax rates in effect when the temporary differences are expected to reverse. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. Deferred tax assets are reduced by a valuation allowance when it is more likely than not that some portion or all of the deferred tax assets will not be realized. U.S. Cellular evaluates income tax uncertainties, assesses the probability of the ultimate settlement with the applicable taxing authority and records an amount based on that assessment. Deferred taxes are reported as a net non-current asset or liability by jurisdiction. Any corresponding valuation allowance to reduce the amount of deferred tax assets is also recorded as non-current. |
Stock-Based Compensation and Other Plans | U.S. Cellular has established a long-term incentive plan and a non-employee director compensation plan. These plans are considered compensatory plans and, therefore, recognition of costs for grants made under these plans is required. U.S. Cellular recognizes stock compensation expense based upon the fair value of the specific awards granted using established valuation methodologies. The amount of stock compensation cost recognized on either a straight-line basis or graded attribution method is based on the portion of the award that is expected to vest over the requisite service period, which generally represents the vesting period. Stock-based compensation cost recognized has been reduced for estimated forfeitures. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. See Note 16 — Stock-Based Compensation for additional information. |
Defined Contribution Plans | U.S. Cellular participates in a qualified noncontributory defined contribution pension plan sponsored by TDS; such plan provides pension benefits for the employees of U.S. Cellular and its subsidiaries. Under this plan, pension benefits and costs are calculated separately for each participant and are funded currently. Pension costs were $11 million in 2018 , 2017 and 2016 . U.S. Cellular also participates in a defined contribution retirement savings plan (401(k) plan) sponsored by TDS. Total costs incurred for U.S. Cellular’s contributions to the 401(k) plan were $15 million , $16 million and $16 million in 2018 , 2017 and 2016 , respectively. |
Legal proceedings | U.S. Cellular is involved or may be involved from time to time in legal proceedings before the FCC, other regulatory authorities, and/or various state and federal courts. If U.S. Cellular believes that a loss arising from such legal proceedings is probable and can be reasonably estimated, an amount is accrued in the financial statements for the estimated loss. If only a range of loss can be determined, the best estimate within that range is accrued; if none of the estimates within that range is better than another, the low end of the range is accrued. The assessment of the expected outcomes of legal proceedings is a highly subjective process that requires judgments about future events. The legal proceedings are reviewed at least quarterly to determine the adequacy of accruals and related financial statement disclosures. The ultimate outcomes of legal proceedings could differ materially from amounts accrued in the financial statements. |
Variable Interest Entities | U.S. Cellular consolidates VIEs in which it has a controlling financial interest as defined by GAAP and is therefore deemed 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 performance and (b) the obligation to absorb the 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 events warranting reconsideration occur. These VIEs have risks similar to those described in the “Risk Factors” in U.S. Cellular’s Form 10-K for the year ended December 31, 2018 . |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies and Recent Accounting Pronouncements (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Restrictions on cash and cash equivalents | The following table provides a reconciliation of Cash and cash equivalents and restricted cash reported in the Consolidated Balance Sheet to the total of the amounts in the Consolidated Statement of Cash Flows. December 31, 2018 2017 (Dollars in millions) Cash and cash equivalents $ 580 $ 352 Restricted cash included in Other current assets 3 — Cash, cash equivalents and restricted cash in the statement of cash flows $ 583 $ 352 |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of new accounting pronouncements and changes in accounting principles | The line items impacted by the adoption of ASU 2014-09 and ASU 2017-05 in the Consolidated Statement of Operations and the Consolidated Balance Sheet are presented below. Consolidated Statement of Operations Year Ended December 31, 2018 Results under prior accounting standards Adjustment As reported (Dollars in millions, except per share amounts) Operating revenues Service $ 3,086 $ (108 ) $ 2,978 Equipment sales 894 95 989 Total operating revenues 3,980 (13 ) 3,967 Cost of equipment sold 1,030 1 1,031 Selling, general and administrative 1,393 (5 ) 1,388 (Gain) loss on license sales and exchanges, net (17 ) (1 ) (18 ) Total operating expenses 3,815 (6 ) 3,809 Operating income (loss) 166 (8 ) 158 Income (loss) before income taxes 223 (8 ) 215 Income tax expense (benefit) 53 (2 ) 51 Net income 170 (6 ) 164 Net income attributable to U.S. Cellular shareholders 156 (6 ) 150 Basic earnings per share attributable to U.S. Cellular shareholders $ 1.81 $ (0.06 ) $ 1.75 Diluted earnings per share attributable to U.S. Cellular shareholders $ 1.79 $ (0.07 ) $ 1.72 Numbers may not foot due to rounding. Consolidated Balance Sheet As of December 31, 2018 Results under prior accounting standards Adjustment As reported (Dollars in millions) Accounts receivable Customers and agents, less allowances $ 844 $ 64 $ 908 Prepaid expenses 88 (25 ) 63 Other current assets 31 3 34 Total current assets 1,769 43 1,812 Licenses 2,185 1 2,186 Investments in unconsolidated entities 424 17 441 Other assets and deferred charges 418 161 579 Total assets 7,052 222 7,274 Customer deposits and deferred revenues 178 (21 ) 157 Other current liabilities 90 4 94 Total current liabilities 708 (17 ) 691 Deferred income tax liability, net 459 51 510 Other deferred liabilities and credits 371 18 389 Retained earnings 2,275 169 2,444 Total U.S. Cellular shareholders' equity 3,888 169 4,057 Noncontrolling interests 9 1 10 Total equity 3,897 170 4,067 Total liabilities and equity $ 7,052 $ 222 $ 7,274 Numbers may not foot due to rounding. |
Schedule of Multiple-deliverable Arrangements | The following is a description of principal activities from which U.S. Cellular generates its revenues. Services and products Nature, timing of satisfaction of performance obligations, and significant payment terms Wireless services Wireless service includes voice, messaging and data services. Revenue is recognized in Service revenues as wireless service is provided to the customer. Wireless services generally are billed and paid in advance on a monthly basis. Wireless devices and accessories U.S. Cellular offers a comprehensive range of wireless devices such as handsets, tablets, mobile hotspots, home phones and routers for use by its customers, as well as accessories. U.S. Cellular also sells wireless devices to agents and other third-party distributors for resale. U.S. Cellular frequently discounts wireless devices sold to new and current customers. U.S. Cellular also offers customers the option to purchase certain devices and accessories under installment contracts over a specified time period. For certain equipment installment plans, after a specified period of time, the customer may have the right to upgrade to a new device. Such upgrades require the customer to enter into an equipment installment contract for the new device, and transfer the existing device to U.S. Cellular. U.S. Cellular recognizes revenue in Equipment sales revenues when control of the device or accessory is transferred to the customer, which is generally upon delivery. Wireless roaming U.S. Cellular receives roaming revenues when other wireless carriers’ customers use U.S. Cellular’s wireless systems. U.S. Cellular recognizes revenue in Service revenues when the roaming service is provided to the other carrier’s customer. Wireless Eligible Telecommunications Carrier (ETC) Revenues Telecommunications companies may be designated by states, or in some cases by the FCC, as an ETC to receive support payments from the Universal Service Fund if they provide specified services in “high cost” areas. ETC revenues recognized in the reporting period represent the amounts which U.S. Cellular is entitled to receive for such period, as determined and approved in connection with U.S. Cellular’s designation as an ETC in various states. Wireless tower rents U.S. Cellular receives tower rental revenues when another carrier leases tower space on a U.S. Cellular owned tower. U.S. Cellular recognizes revenue in Service revenues in the period during which the services are provided. Activation fees U.S. Cellular charges its end customers activation fees in connection with the sale of certain services and equipment. Activation fees are deferred and recognized over the period benefitted. |
Disaggregation of revenue | In the following table, revenue is disaggregated by type of service and timing of revenue recognition. Service revenues are recognized over time and Equipment sales are point in time. Year Ended (Dollars in millions) Revenues from contracts with customers: Retail service $ 2,623 Inbound roaming 154 Other service 135 Service revenues from contracts with customers 2,912 Equipment sales 989 Total revenues from contracts with customers 1 $ 3,901 1 These amounts do not include revenues outside the scope of ASU 2014-09; therefore, revenue line items in this table will not agree to amounts presented in the Consolidated Statement of Operations. |
Contract with customer, Assets and Liabilities | The accounts receivable balance related to amounts billed and not paid on contracts with customers, net of allowances, is shown in the table below. Bad debts expense recognized for the year ended December 31, 2018 , related to receivables was $94 million . December 31, 2018 (Dollars in millions) Accounts receivable Customer and agents $ 908 Roaming 20 Other 32 Total 1 $ 960 1 These amounts do not include accounts receivable related to revenues outside the scope of ASU 2014-09; therefore, accounts receivable line items presented in this table will not agree to amounts presented in the Consolidated Balance Sheet. The following table provides a rollforward of contract assets from contracts with customers, which are recorded in Other current assets and Other assets and deferred charges in the Consolidated Balance Sheet. Contract Assets (Dollars in millions) Balance at December 31, 2017 $ — Change in accounting policy 26 Contract additions 23 Terminated contracts (1 ) Reclassified to receivables (39 ) Balance at December 31, 2018 $ 9 The following table provides a rollforward of contract liabilities from contracts with customers, which are recorded in Customer deposits and deferred revenues and Other deferred liabilities and credits in the Consolidated Balance Sheet. Contract Liabilities (Dollars in millions) Balance at December 31, 2017 $ — Change in accounting policy - Deferred revenues reclassification 1 167 Change in accounting policy - Retained earnings impact (21 ) Contract additions 154 Terminated contracts (2 ) Revenue recognized (135 ) Balance at December 31, 2018 $ 163 1 This amount represents U.S. Cellular's obligation to transfer goods or services to customers for which it had received payment and classified as deferred revenue at December 31, 2017. |
Remaining performance obligation | The following table includes estimated service revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period. These estimates represent service revenue to be recognized when wireless services are delivered to customers pursuant to service plan contracts. These estimates are based on contracts in place as of December 31, 2018 , and may vary from actual results due to future contract modifications. As a practical expedient, revenue related to contracts of less than one year, generally month-to-month contracts, are excluded from these estimates. Service Revenue (Dollars in millions) 2019 $ 236 2020 47 Thereafter 15 Total $ 298 |
Fair Value Measurements (Table)
Fair Value Measurements (Table) | 12 Months Ended |
Dec. 31, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair value measurements | U.S. Cellular 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 December 31, 2018 December 31, 2017 Book Value Fair Value Book Value Fair Value (Dollars in millions) Cash and cash equivalents 1 $ 580 $ 580 $ 352 $ 352 Short-term investments 1 17 17 50 50 Long-term debt Retail 2 917 850 917 939 Institutional 2 534 531 534 522 Other 2 180 180 191 191 |
Equipment Installment Plans (Ta
Equipment Installment Plans (Table) | 12 Months Ended |
Dec. 31, 2018 | |
Receivables [Abstract] | |
Equipment installment plan receivables | The following table summarizes equipment installment plan receivables as of December 31, 2018 and 2017 . December 31, 2018 2017 (Dollars in millions) Equipment installment plan receivables, gross $ 974 $ 873 Deferred interest — (80 ) Equipment installment plan receivables, net of deferred interest 974 793 Allowance for credit losses (70 ) (65 ) Equipment installment plan receivables, net $ 904 $ 728 Net balance presented in the Consolidated Balance Sheet as: Accounts receivable — Customers and agents (Current portion) $ 565 $ 428 Other assets and deferred charges (Non-current portion) 339 300 Equipment installment plan receivables, net $ 904 $ 728 |
Equipment installment plan receivables credit categories | The balance and aging of the equipment installment plan receivables on a gross basis by credit category were as follows: December 31, 2018 December 31, 2017 Lower Risk Higher Risk Total Lower Risk Higher Risk Total (Dollars in millions) Unbilled $ 904 $ 17 $ 921 $ 807 $ 20 $ 827 Billed — current 35 1 36 31 1 32 Billed — past due 15 2 17 12 2 14 Equipment installment plan receivables, gross $ 954 $ 20 $ 974 $ 850 $ 23 $ 873 |
Equipment installment plans allowance for credit losses | The activity in the allowance for credit losses for equipment installment plan receivables was as follows: 2018 2017 (Dollars in millions) Allowance for credit losses, beginning of year $ 65 $ 50 Bad debts expense 64 62 Write-offs, net of recoveries (59 ) (47 ) Allowance for credit losses, end of year $ 70 $ 65 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Income taxes receivable (payable) | U.S. Cellular’s current income taxes balances at December 31, 2018 and 2017 , were as follows: December 31, 2018 2017 (Dollars in millions) Federal income taxes receivable (payable) $ 15 $ (22 ) Net state income taxes receivable (payable) — (1 ) |
Income tax expense (benefit) | Income tax expense (benefit) is summarized as follows: Year Ended December 31, 2018 2017 2016 (Dollars in millions) Current Federal $ 48 $ 68 $ 29 State 6 10 (2 ) Deferred Federal (5 ) (354 ) 1 State 2 (11 ) 5 Total income tax expense (benefit) $ 51 $ (287 ) $ 33 |
Income tax reconciliation | A reconciliation of U.S. Cellular’s income tax expense computed at the statutory rate to the reported income tax expense, and the statutory federal income tax expense rate to U.S. Cellular’s effective income tax expense rate is as follows: Year Ended December 31, 2018 2017 2016 Amount Rate Amount Rate Amount Rate (Dollars in millions) Statutory federal income tax expense and rate $ 45 21.0 % $ (95 ) 35.0 % $ 29 35.0 % State income taxes, net of federal benefit 1 9 4.0 (4 ) 1.4 3 3.6 Effect of noncontrolling interests (1 ) (0.4 ) (2 ) 0.8 (1 ) (1.1 ) Federal income tax rate change 2 (4 ) (2.0 ) (254 ) 93.3 — — Change in federal valuation allowance 3 (1 ) (0.3 ) (5 ) 1.9 3 2.8 Goodwill impairment 4 — — 71 (26.2 ) — — Nondeductible compensation 4 1.8 4 (1.5 ) 1 1.4 Other differences, net (1 ) (0.4 ) (2 ) 0.8 (2 ) (2.0 ) Total income tax expense (benefit) and rate $ 51 23.7 % $ (287 ) 105.5 % $ 33 39.7 % 1 State income taxes, net of federal benefit, include changes in unrecognized tax benefits as well as adjustments to the valuation allowance. 2 The Tax Act reduced the federal income tax rate from 35% to 21% for years after 2017. The $4 million tax benefit in 2018 relates primarily to finalizing the analysis for 2017 depreciation deductions as described above. The $254 million tax benefit in 2017 related to adjusting the deferred tax liability to the lower tax rate upon enactment of the Tax Act. 3 Change in federal valuation allowance in 2018 includes a change in judgment related to net operating loss carryforwards that are now realizable due to an internal restructuring, offset by current year interest expense carryforwards not expected to be realized. 4 Goodwill impairment reflects an adjustment to increase 2017 income tax expense by $71 million related to a portion of the impaired goodwill that is not amortizable for income tax purposes. See Note 7 — Intangible Assets for additional information related to the goodwill impairment. |
Deferred income tax assets and liabilities | Significant components of U.S. Cellular’s deferred income tax assets and liabilities at December 31, 2018 and 2017 , were as follows: December 31, 2018 2017 (Dollars in millions) Deferred tax assets Net operating loss (NOL) carryforwards $ 96 $ 103 Stock-based compensation 16 20 Compensation and benefits - other 5 5 Deferred rent 20 21 Other 73 59 Total deferred tax assets 210 208 Less valuation allowance (75 ) (77 ) Net deferred tax assets 135 131 Deferred tax liabilities Property, plant and equipment 256 276 Licenses/intangibles 207 192 Partnership investments 133 123 Other 49 — Total deferred tax liabilities 645 591 Net deferred income tax liability $ 510 $ 460 Presented in the Consolidated Balance Sheet as: Deferred income tax liability, net $ 510 $ 461 Other assets and deferred charges — (1 ) Net deferred income tax liability $ 510 $ 460 |
Deferred tax valuation allowance | A summary of U.S. Cellular’s deferred tax asset valuation allowance is as follows: 2018 2017 2016 (Dollars in millions) Balance at beginning of year $ 77 $ 65 $ 55 Charged to income tax expense 5 12 10 Charged to Retained earnings (7 ) — — Balance at end of year $ 75 $ 77 $ 65 |
Income tax unrecognized benefits summary | A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows: 2018 2017 2016 (Dollars in millions) Unrecognized tax benefits balance at beginning of year $ 47 $ 43 $ 39 Additions for tax positions of current year 6 6 12 Additions for tax positions of prior years 1 1 3 Reductions for tax positions of prior years — (1 ) (1 ) Reductions for lapses in statutes of limitations (6 ) (2 ) (10 ) Unrecognized tax benefits balance at end of year $ 48 $ 47 $ 43 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Earnings Per Share [Abstract] | |
Earnings per share | The amounts used in computing earnings per common share and the effects of potentially dilutive securities on the weighted average number of common shares were as follows: Year Ended December 31, 2018 2017 2016 (Dollars and shares in millions, except per share amounts) Net income attributable to U.S. Cellular shareholders $ 150 $ 12 $ 48 Weighted average number of shares used in basic earnings per share 86 85 85 Effects of dilutive securities 1 1 — Weighted average number of shares used in diluted earnings per share 87 86 85 Basic earnings per share attributable to U.S. Cellular shareholders $ 1.75 $ 0.14 $ 0.56 Diluted earnings per share attributable to U.S. Cellular shareholders $ 1.72 $ 0.14 $ 0.56 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Licenses | Activity related to U.S. Cellular's Licenses is presented below. 2018 2017 (Dollars in millions) Balance at beginning of year $ 2,223 $ 1,886 Acquisitions 8 331 Transferred to Assets held for sale 1 (51 ) (10 ) Divestitures (11 ) — Exchanges - Licenses received 18 25 Exchanges - Licenses surrendered (1 ) (9 ) Balance at end of year $ 2,186 $ 2,223 1 Licenses classified as Assets held for sale in 2018 are included in transactions which closed in the first quarter of 2019. |
Investments in Unconsolidated_2
Investments in Unconsolidated Entities (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Equity and cost method investments | U.S. Cellular's Investments in unconsolidated entities are accounted for using either the equity method or measurement alternative method as shown in the table below. The measurement alternative method was elected for investments without readily determinable fair values formerly accounted for under the cost method. The measurement alternative value represents cost minus any impairments plus or minus any observable price changes. U.S. Cellular did not have an impairment or observable price change related to these investments in 2018 . December 31, 2018 2017 (Dollars in millions) Equity method investments: Capital contributions, loans, advances and adjustments $ 105 $ 105 Cumulative share of income 1,892 1,717 Cumulative share of distributions (1,563 ) (1,411 ) Total equity method investments 434 411 Measurement alternative method investments 7 4 Total investments in unconsolidated entities $ 441 $ 415 |
Equity method investments, summarized financial position | The following tables, which are based on information provided in part by third parties, summarize the combined assets, liabilities and equity, and results of operations of U.S. Cellular’s equity method investments: December 31, 2018 2017 (Dollars in millions) Assets Current $ 882 $ 668 Due from affiliates 379 323 Property and other 4,962 4,804 Total assets $ 6,223 $ 5,795 Liabilities and Equity Current liabilities $ 434 $ 435 Deferred credits 178 176 Long-term liabilities 217 199 Long-term capital lease obligations — 1 Partners' capital and shareholders' equity 5,394 4,984 Total liabilities and equity $ 6,223 $ 5,795 |
Equity method investments, summarized results of operations | Year Ended December 31, 2018 2017 2016 (Dollars in millions) Results of Operations Revenues $ 6,777 $ 6,562 $ 6,747 Operating expenses 4,965 4,965 5,047 Operating income 1,812 1,597 1,700 Other income (expense), net 11 (1 ) (11 ) Net income $ 1,823 $ 1,596 $ 1,689 |
Property, Plant and Equipment (
Property, Plant and Equipment (Table) | 12 Months Ended |
Dec. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
Property, plant and equipment | Property, plant and equipment in service and under construction, and related accumulated depreciation and amortization, as of December 31, 2018 and 2017 , were as follows: December 31, Useful Lives (Years) 2018 2017 (Dollars in millions) Land N/A $ 35 $ 36 Buildings 20 296 297 Leasehold and land improvements 1-30 1,210 1,178 Cell site equipment 7-25 3,460 3,411 Switching equipment 5-8 1,018 988 Office furniture and equipment 3-5 285 389 Other operating assets and equipment 3-5 51 57 System development 1-7 1,149 1,060 Work in process N/A 274 212 Total property, plant and equipment, gross 7,778 7,628 Accumulated depreciation and amortization (5,576 ) (5,308 ) Total property, plant and equipment, net $ 2,202 $ 2,320 |
Asset Retirement Obligation (Ta
Asset Retirement Obligation (Table) | 12 Months Ended |
Dec. 31, 2018 | |
Asset Retirement Obligation [Abstract] | |
Asset retirement obligations | In 2018 and 2017 , U.S. Cellular performed a review of the assumptions and estimated costs related to its asset retirement obligations. The results of the reviews (identified as Revisions in estimated cash outflows) and other changes in asset retirement obligations during 2018 and 2017 , were as follows: 2018 2017 (Dollars in millions) Balance at beginning of year $ 183 $ 174 Additional liabilities accrued 2 1 Revisions in estimated cash outflows 8 (3 ) Disposition of assets (1 ) (1 ) Accretion expense 12 12 Transferred to Liabilities held for sale (1 ) — Balance at end of year $ 203 $ 183 |
Debt (Table)
Debt (Table) | 12 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
Revolving credit facilities | The following table summarizes the revolving credit agreement as of December 31, 2018 : (Dollars in millions) Maximum borrowing capacity $ 300 Letters of credit outstanding $ 2 Amount borrowed $ — Amount available for use $ 298 |
Financial covenants | The revolving credit agreement includes the following financial covenants: ▪ Consolidated Interest Coverage Ratio may not be less than 3.00 to 1.00 as of the end of any fiscal quarter. ▪ Consolidated Leverage Ratio may not be greater than the ratios indicated as of the end of any fiscal quarter for each period specified below: Period Ratios From the agreement date of May 10, 2018 through June 30, 2019 3.25 to 1.00 From July 1, 2019 and thereafter 3.00 to 1.00 |
Long-term debt | Long-term debt as of December 31, 2018 and 2017 , was as follows: December 31, 2018 December 31, 2017 Issuance date Maturity date Call date (any time on or after) Principal Amount Less Unamortized discount and debt issuance costs Total Principal Amount Less Unamortized discount and debt issuance costs Total (Dollars in millions) Unsecured Senior Notes 6.700% Dec 2003 Dec 2033 Dec 2003 $ 544 $ 14 $ 530 $ 544 $ 15 $ 529 6.950% May 2011 May 2060 May 2016 342 11 331 342 11 331 7.250% Dec 2014 Dec 2063 Dec 2019 275 10 265 275 10 265 7.250% Nov 2015 Dec 2064 Dec 2020 300 10 290 300 10 290 Term Loan Jul 2015 Jan 2022 191 1 190 203 2 201 Capital lease obligations 5 — 5 4 — 4 Installment payment agreement 14 1 13 21 1 20 Total long-term debt $ 1,671 $ 47 $ 1,624 $ 1,689 $ 49 $ 1,640 Long-term debt, current $ 19 $ 18 Long-term debt, noncurrent $ 1,605 $ 1,622 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Purchase Obligations | Future minimum payments required under these commitments as of December 31, 2018 are as follows: Purchase Obligations (Dollars in millions) 2019 $ 1,296 2020 112 2021 68 2022 33 2023 12 Thereafter 24 Total $ 1,545 |
Lease Commitments | As of December 31, 2018 , future minimum rental payments required under operating leases and rental receipts expected under operating leases that have noncancellable lease terms in excess of one year were as follows: Operating Leases Future Minimum Rental Payments Operating Leases Future Minimum Rental Receipts (Dollars in millions) 2019 $ 154 $ 58 2020 143 47 2021 128 34 2022 112 22 2023 97 10 Thereafter 769 3 Total $ 1,403 $ 174 |
Variable Interest Entities (Tab
Variable Interest Entities (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Variable Interest Entities [Abstract] | |
Consolidated VIE assets and liabilities | The following table presents the classification and balances of the consolidated VIEs’ assets and liabilities in U.S. Cellular’s Consolidated Balance Sheet. December 31, 2018 2017 (Dollars in millions) Assets Cash and cash equivalents $ 9 $ 3 Short-term investments 17 — Accounts receivable 611 476 Inventory, net 5 5 Other current assets 6 3 Assets held for sale 4 — Licenses 652 655 Property, plant and equipment, net 94 99 Other assets and deferred charges 349 303 Total assets $ 1,747 $ 1,544 Liabilities Current liabilities $ 34 $ 39 Liabilities held for sale 1 — Deferred liabilities and credits 16 13 Total liabilities $ 51 $ 52 |
Common Shareholders' Equity (Ta
Common Shareholders' Equity (Table) | 12 Months Ended |
Dec. 31, 2018 | |
Stockholders' Equity Note [Abstract] | |
Common shareholders' equity | Pursuant to certain employee and non-employee benefit plans, U.S. Cellular reissued the following Treasury Shares: Year Ended December 31, 2018 2017 2016 (Shares in millions) Treasury Shares Reissued 1 — 1 |
Stock-Based Compensation (Table
Stock-Based Compensation (Table) | 12 Months Ended |
Dec. 31, 2018 | |
Share-based Compensation [Abstract] | |
Stock-based compensation, fair value assumptions | U.S. Cellular did not grant stock option awards in 2018 or 2017 . U.S. Cellular estimated the fair value of stock options granted during 2016 using the Black-Scholes valuation model and the assumptions shown in the table below. 2016 Expected life 4.7 years Expected annual volatility rate 30.5 % Dividend yield — % Risk-free interest rate 1.2 % Estimated annual forfeiture rate 9.4 % |
Summary of stock options | A summary of U.S. Cellular stock options outstanding (total and portion exercisable) and changes during 2018 is presented in the table below: Common Share Options Number of Options Weighted Average Exercise Price Aggregate Intrinsic Value (in millions) Weighted Average Remaining Contractual Life (in years) Outstanding at December 31, 2017 3,495,000 $ 41.10 (2,475,000 exercisable) $ 40.79 Exercised (2,318,000 ) $ 39.45 Forfeited (19,000 ) $ 43.12 Expired (352,000 ) $ 47.29 Outstanding at December 31, 2018 806,000 $ 43.10 $ 7 6.0 (420,000 exercisable) $ 42.39 $ 4 5.7 |
Summary of nonvested restricted stock units | A summary of U.S. Cellular nonvested restricted stock units at December 31, 2018 , and changes during the year then ended is presented in the table below: Common Restricted Stock Units Number Weighted Average Grant Date Fair Value Nonvested at December 31, 2017 1,483,000 $ 39.67 Granted 559,000 $ 38.19 Vested (395,000 ) $ 37.30 Forfeited (78,000 ) $ 39.78 Nonvested at December 31, 2018 1,569,000 $ 39.74 |
Summary of nonvested performance share awards | A summary of U.S. Cellular’s nonvested performance shares and changes during 2018 is presented in the table below: Common Performance Shares Number Weighted Average Grant Date Fair Value Nonvested at December 31, 2017 342,000 $ 36.92 Granted 357,000 $ 38.81 Change in units based on approved performance factors 111,000 $ 36.92 Forfeited (42,000 ) $ 37.37 Nonvested at December 31, 2018 768,000 $ 37.78 |
Stock-based compensation | The following table summarizes stock‑based compensation expense recognized during 2018 , 2017 and 2016 : Year Ended December 31, 2018 2017 2016 (Dollars in millions) Stock option awards $ 2 $ 6 $ 11 Restricted stock unit awards 21 19 14 Performance share awards 13 4 — Awards under Non-Employee Director compensation plan 1 1 1 Total stock-based compensation expense, before income taxes 37 30 26 Income tax benefit (9 ) (11 ) (10 ) Total stock-based compensation expense, net of income taxes $ 28 $ 19 $ 16 |
Stock-based compensation, allocation by financial statement line item | The following table provides a summary of the classification of stock-based compensation expense included in the Consolidated Statement of Operations for the years ended: December 31, 2018 2017 2016 (Dollars in millions) Selling, general and administrative expense $ 33 $ 27 $ 23 System operations expense 4 3 3 Total stock-based compensation expense $ 37 $ 30 $ 26 |
Supplemental Cash Flow Disclo_2
Supplemental Cash Flow Disclosures (Table) | 12 Months Ended |
Dec. 31, 2018 | |
Supplemental Cash Flow Information [Abstract] | |
Supplemental cash flow disclosures | Following are supplemental cash flow disclosures regarding interest paid and income taxes paid. Year Ended December 31, 2018 2017 2016 (Dollars in millions) Interest paid $ 113 $ 111 $ 113 Income taxes paid, net of refunds received 90 55 (11 ) |
Stock-based compensation supplemental cash flows | Following are supplemental cash flow disclosures regarding transactions related to stock-based compensation awards. In certain situations, U.S. Cellular withholds shares that are issuable upon the exercise of stock options or the vesting of restricted shares to cover, and with a value equivalent to, the exercise price and/or the amount of taxes required to be withheld from the stock award holder at the time of the exercise or vesting. U.S. Cellular then pays the amount of the required tax withholdings to the taxing authorities in cash. Year Ended December 31, 2018 2017 2016 (Dollars in millions) Common Shares withheld 1,549,800 144,755 308,010 Aggregate value of Common Shares withheld $ 73 $ 6 $ 13 Cash receipts upon exercise of stock options 29 5 12 Cash disbursements for payment of taxes (11 ) (4 ) (6 ) Net cash receipts from exercise of stock options and vesting of other stock awards $ 18 $ 1 $ 6 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies and Recent Accounting Pronouncements - Narrative (Details) connection in Millions | 12 Months Ended | ||||
Dec. 31, 2018USD ($)connectionasset_groupunitsegment | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Jan. 01, 2019USD ($) | May 04, 1988 | |
Accounting Policy Disclosures [Line Items] | |||||
Number of connections | connection | 5 | ||||
Number of reportable segments | segment | 1 | ||||
FCC Licenses, period of renewal | 12 years | ||||
FCC Licenses, number of accounting units | unit | 8 | ||||
FCC Licenses, number of accounting units, built licenses | unit | 1 | ||||
FCC Licenses, number of accounting units, unbuilt licenses | unit | 7 | ||||
Asset groups | asset_group | 1 | ||||
Agent liability | $ 59,000,000 | $ 61,000,000 | |||
Advertising costs | $ 215,000,000 | 211,000,000 | $ 245,000,000 | ||
Accounting Standards Update 2016-02 | Pro Forma | |||||
Accounting Policy Disclosures [Line Items] | |||||
Right-of-use asset | $ 900,000,000 | ||||
Operating lease liability | $ 1,000,000,000 | ||||
Minimum | |||||
Accounting Policy Disclosures [Line Items] | |||||
FCC Licenses, period of renewal | 10 years | ||||
Maximum | |||||
Accounting Policy Disclosures [Line Items] | |||||
FCC Licenses, period of renewal | 15 years | ||||
Leasehold and land improvements | Minimum | |||||
Accounting Policy Disclosures [Line Items] | |||||
Useful life | 1 year | ||||
Leasehold and land improvements | Maximum | |||||
Accounting Policy Disclosures [Line Items] | |||||
Useful life | 30 years | ||||
Pension | |||||
Accounting Policy Disclosures [Line Items] | |||||
Defined contribution cost | $ 11,000,000 | 11,000,000 | 11,000,000 | ||
401(k) | |||||
Accounting Policy Disclosures [Line Items] | |||||
Defined contribution cost | 15,000,000 | 16,000,000 | $ 16,000,000 | ||
TDS | |||||
Accounting Policy Disclosures [Line Items] | |||||
Income taxes receivable | 14,000,000 | ||||
Income taxes payable | 23,000,000 | ||||
Licenses | |||||
Accounting Policy Disclosures [Line Items] | |||||
Impairment of intangible assets | $ 0 | $ 0 | |||
U.S. Cellular | TDS | |||||
Accounting Policy Disclosures [Line Items] | |||||
TDS ownership of U.S. Cellular | 82.00% | ||||
U.S. Cellular | TDS | Minimum | |||||
Accounting Policy Disclosures [Line Items] | |||||
TDS ownership of U.S. Cellular | 90.00% |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies and Recent Accounting Pronouncements - Restricted Cash, Cash Equivalents and Restricted Cash (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Accounting Policies [Abstract] | ||||
Cash and cash equivalents | $ 580 | $ 352 | ||
Restricted cash included in Other current assets | 3 | 0 | ||
Cash, cash equivalents and restricted cash in the statement of cash flows | $ 583 | $ 352 | $ 586 | $ 715 |
Revenue Recognition - Narrative
Revenue Recognition - Narrative (Details) - USD ($) | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Jan. 01, 2018 | |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Change in accounting policy | $ 176,000,000 | |||
Amounts recorded gross in revenues that are billed to customers and remitted to governmental authorities | $ 67,000,000 | 58,000,000 | $ 64,000,000 | |
Bad debts expense | 95,000,000 | 89,000,000 | $ 96,000,000 | |
Capitalized contract cost | ||||
Capitalized contract cost related to commission fees | 139,000,000 | |||
Amortization of contract cost assets | 108,000,000 | |||
Impairment of capitalized contract cost | $ 0 | |||
Minimum | ||||
Capitalized contract cost | ||||
Capitalized contract cost, amortization period | 14 months | |||
Maximum | ||||
Capitalized contract cost | ||||
Capitalized contract cost, amortization period | 30 months | |||
Revenue from contract with customer | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Bad debts expense | $ 94,000,000 | |||
Retained earnings | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Change in accounting policy | $ 175,000,000 | |||
ASU 2014-09 | Retained earnings | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Change in accounting policy | $ 175,000,000 |
Revenue Recognition - Consolida
Revenue Recognition - Consolidated Statement Of Operations (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Operating revenues | |||
Total operating revenues | $ 3,967 | $ 3,890 | $ 3,990 |
Selling, general and administrative | 1,388 | 1,412 | 1,480 |
(Gain) loss on license sales and exchanges, net | (18) | (22) | (19) |
Total operating expenses | 3,809 | 4,194 | 3,942 |
Operating income (loss) | 158 | (304) | 48 |
Income (loss) before income taxes | 215 | (272) | 82 |
Income tax expense (benefit) | 51 | (287) | 33 |
Net income | 164 | 15 | 49 |
Net income attributable to U.S. Cellular shareholders | $ 150 | $ 12 | $ 48 |
Basic earnings per share attributable to U.S. Cellular shareholders (in dollars per share) | $ 1.75 | $ 0.14 | $ 0.56 |
Diluted earnings per share attributable to U.S. Cellular shareholders (in dollars per share) | $ 1.72 | $ 0.14 | $ 0.56 |
Service | |||
Operating revenues | |||
Total operating revenues | $ 2,978 | $ 2,978 | $ 3,081 |
Cost of equipment sold | 758 | 732 | 760 |
Equipment sales | |||
Operating revenues | |||
Total operating revenues | 989 | 912 | 909 |
Cost of equipment sold | 1,031 | $ 1,071 | $ 1,081 |
Results under prior accounting standards | |||
Operating revenues | |||
Total operating revenues | 3,980 | ||
Selling, general and administrative | 1,393 | ||
(Gain) loss on license sales and exchanges, net | (17) | ||
Total operating expenses | 3,815 | ||
Operating income (loss) | 166 | ||
Income (loss) before income taxes | 223 | ||
Income tax expense (benefit) | 53 | ||
Net income | 170 | ||
Net income attributable to U.S. Cellular shareholders | $ 156 | ||
Basic earnings per share attributable to U.S. Cellular shareholders (in dollars per share) | $ 1.81 | ||
Diluted earnings per share attributable to U.S. Cellular shareholders (in dollars per share) | $ 1.79 | ||
Results under prior accounting standards | Service | |||
Operating revenues | |||
Total operating revenues | $ 3,086 | ||
Results under prior accounting standards | Equipment sales | |||
Operating revenues | |||
Total operating revenues | 894 | ||
Cost of equipment sold | 1,030 | ||
Adjustment | ASU 2014-09 | |||
Operating revenues | |||
Total operating revenues | (13) | ||
Selling, general and administrative | (5) | ||
(Gain) loss on license sales and exchanges, net | (1) | ||
Total operating expenses | (6) | ||
Operating income (loss) | (8) | ||
Income (loss) before income taxes | (8) | ||
Income tax expense (benefit) | (2) | ||
Net income | (6) | ||
Net income attributable to U.S. Cellular shareholders | $ (6) | ||
Basic earnings per share attributable to U.S. Cellular shareholders (in dollars per share) | $ (0.06) | ||
Diluted earnings per share attributable to U.S. Cellular shareholders (in dollars per share) | $ (0.07) | ||
Adjustment | ASU 2014-09 | Service | |||
Operating revenues | |||
Total operating revenues | $ (108) | ||
Adjustment | ASU 2014-09 | Equipment sales | |||
Operating revenues | |||
Total operating revenues | 95 | ||
Cost of equipment sold | $ 1 |
Revenue Recognition - Consoli_2
Revenue Recognition - Consolidated Balance Sheet (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Accounts receivable | |||||
Customers and agents, less allowances | $ 908 | $ 775 | |||
Prepaid expenses | 63 | 79 | |||
Other current assets | 34 | 21 | |||
Total current assets | 1,812 | 1,483 | |||
Licenses | 2,186 | 2,223 | |||
Investments in unconsolidated entities | 441 | 415 | |||
Other assets and deferred charges | 579 | 390 | |||
Total assets | [1] | 7,274 | 6,841 | ||
Customer deposits and deferred revenues | 157 | 185 | |||
Other current liabilities | 94 | 90 | |||
Total current liabilities | 691 | 733 | |||
Deferred income tax liability, net | 510 | 461 | |||
Other deferred liabilities and credits | 389 | 337 | |||
Retained earnings | 2,444 | 2,157 | |||
Total U.S. Cellular shareholders' equity | 4,057 | 3,677 | |||
Noncontrolling interests | 10 | 10 | |||
Total equity | 4,067 | 3,687 | $ 3,645 | $ 3,571 | |
Total liabilities and equity | [1] | 7,274 | $ 6,841 | ||
Results under prior accounting standards | |||||
Accounts receivable | |||||
Customers and agents, less allowances | 844 | ||||
Prepaid expenses | 88 | ||||
Other current assets | 31 | ||||
Total current assets | 1,769 | ||||
Licenses | 2,185 | ||||
Investments in unconsolidated entities | 424 | ||||
Other assets and deferred charges | 418 | ||||
Total assets | 7,052 | ||||
Customer deposits and deferred revenues | 178 | ||||
Other current liabilities | 90 | ||||
Total current liabilities | 708 | ||||
Deferred income tax liability, net | 459 | ||||
Other deferred liabilities and credits | 371 | ||||
Retained earnings | 2,275 | ||||
Total U.S. Cellular shareholders' equity | 3,888 | ||||
Noncontrolling interests | 9 | ||||
Total equity | 3,897 | ||||
Total liabilities and equity | 7,052 | ||||
Adjustment | ASU 2014-09 | |||||
Accounts receivable | |||||
Customers and agents, less allowances | 64 | ||||
Prepaid expenses | (25) | ||||
Other current assets | 3 | ||||
Total current assets | 43 | ||||
Licenses | 1 | ||||
Investments in unconsolidated entities | 17 | ||||
Other assets and deferred charges | 161 | ||||
Total assets | 222 | ||||
Customer deposits and deferred revenues | (21) | ||||
Other current liabilities | 4 | ||||
Total current liabilities | (17) | ||||
Deferred income tax liability, net | 51 | ||||
Other deferred liabilities and credits | 18 | ||||
Retained earnings | 169 | ||||
Total U.S. Cellular shareholders' equity | 169 | ||||
Noncontrolling interests | 1 | ||||
Total equity | 170 | ||||
Total liabilities and equity | $ 222 | ||||
[1] | The consolidated total assets as of December 31, 2018 and 2017, include assets held by consolidated variable interest entities (VIEs) of $868 million and $785 million, respectively, which are not available to be used to settle the obligations of U.S. Cellular. The consolidated total liabilities as of December 31, 2018 and 2017, include certain liabilities of consolidated VIEs of $23 million and $24 million, respectively, for which the creditors of the VIEs have no recourse to the general credit of U.S. Cellular. See Note 13 — Variable Interest Entities for additional information. |
Revenue Recognition - Disaggreg
Revenue Recognition - Disaggregation Of Revenue (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2018USD ($) | |
Disaggregation of Revenue [Line Items] | |
Revenue from contracts with customers | $ 3,901 |
Transferred over time | |
Disaggregation of Revenue [Line Items] | |
Revenue from contracts with customers | 2,912 |
Transferred over time | Retail service | |
Disaggregation of Revenue [Line Items] | |
Revenue from contracts with customers | 2,623 |
Transferred over time | Inbound roaming | |
Disaggregation of Revenue [Line Items] | |
Revenue from contracts with customers | 154 |
Transferred over time | Other service | |
Disaggregation of Revenue [Line Items] | |
Revenue from contracts with customers | 135 |
Transferred at point in time | Equipment sales | |
Disaggregation of Revenue [Line Items] | |
Revenue from contracts with customers | $ 989 |
Revenue Recognition - Accounts
Revenue Recognition - Accounts Receivable (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Accounts receivable | ||
Customer and agents | $ 908 | $ 775 |
Roaming | 20 | 26 |
Other | 46 | $ 41 |
Accounts receivable from contract with customer | ||
Accounts receivable | ||
Customer and agents | 908 | |
Roaming | 20 | |
Other | 32 | |
Total | $ 960 |
Revenue Recognition - Contract
Revenue Recognition - Contract Asset (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Jan. 01, 2018 | Dec. 31, 2017 | |
Contract Assets | |||
Balance at December 31, 2017 | $ 0 | ||
Change in accounting policy | $ 176 | ||
Contract additions | 23 | ||
Terminated contracts | (1) | ||
Reclassified to receivables | (39) | ||
Balance at December 31, 2018 | $ 9 | ||
Difference between Revenue Guidance in Effect before and after Topic 606 | |||
Contract Assets | |||
Change in accounting policy | $ 26 |
Revenue Recognition - Contrac_2
Revenue Recognition - Contract Liabilities (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2018 | Jan. 01, 2018 | |
Contract Liabilities | ||
Balance at December 31, 2017 | $ 0 | |
Change in accounting policy - Deferred revenues reclassification | $ 167 | |
Change in accounting policy - Retained earnings impact | $ (21) | |
Contract additions | 154 | |
Terminated contracts | (2) | |
Revenue recognized | (135) | |
Balance at December 31, 2018 | $ 163 |
Revenue Recognition - Performan
Revenue Recognition - Performance Obligations (Details) $ in Millions | Dec. 31, 2018USD ($) |
Revenue from Contract with Customer [Abstract] | |
Remaining performance obligation amount | $ 298 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-01-01 | |
Revenue from Contract with Customer [Abstract] | |
Remaining performance obligation amount | $ 236 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Expected timing of remaining performance obligation, period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-01-01 | |
Revenue from Contract with Customer [Abstract] | |
Remaining performance obligation amount | $ 47 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Expected timing of remaining performance obligation, period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-01 | |
Revenue from Contract with Customer [Abstract] | |
Remaining performance obligation amount | $ 15 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Expected timing of remaining performance obligation, period |
Fair Value Measurements - Finan
Fair Value Measurements - Financial Instruments (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Financial Instruments | ||
Cash and cash equivalents | $ 580 | $ 352 |
Short-term investments | 17 | 50 |
Book Value | ||
Financial Instruments | ||
Cash and cash equivalents | 580 | 352 |
Short-term investments | 17 | 50 |
Book Value | Retail | ||
Financial Instruments | ||
Long-term debt | 917 | 917 |
Book Value | Institutional | ||
Financial Instruments | ||
Long-term debt | 534 | 534 |
Book Value | Other | ||
Financial Instruments | ||
Long-term debt | 180 | 191 |
Fair Value | Level 1 | ||
Financial Instruments | ||
Cash and cash equivalents | 580 | 352 |
Short-term investments | 17 | 50 |
Fair Value | Level 2 | Retail | ||
Financial Instruments | ||
Long-term debt | 850 | 939 |
Fair Value | Level 2 | Institutional | ||
Financial Instruments | ||
Long-term debt | 531 | 522 |
Fair Value | Level 2 | Other | ||
Financial Instruments | ||
Long-term debt | $ 180 | $ 191 |
Fair Value Measurements - Narra
Fair Value Measurements - Narrative (Details) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Retail | Minimum | ||
Debt Instrument [Line Items] | ||
Fair value assumption, interest rate | 5.03% | 4.74% |
Retail | Maximum | ||
Debt Instrument [Line Items] | ||
Fair value assumption, interest rate | 6.97% | 7.13% |
7.25% 2063 Senior Notes | ||
Debt Instrument [Line Items] | ||
Interest rate on debt | 7.25% | |
7.25% 2064 Senior Notes | ||
Debt Instrument [Line Items] | ||
Interest rate on debt | 7.25% | |
6.95% Senior Notes | ||
Debt Instrument [Line Items] | ||
Interest rate on debt | 6.95% | |
6.7% Senior Notes | ||
Debt Instrument [Line Items] | ||
Interest rate on debt | 6.70% |
Equipment Installment Plans - N
Equipment Installment Plans - Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2018 | Dec. 31, 2017 | |
Receivables [Abstract] | |||
Guarantee liability | $ 11 | $ 15 | |
Equipment installment plans out-of-period adjustment | Equipment sales revenues | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Out-of-period adjustment | $ 2 | ||
Equipment installment plans out-of-period adjustment | Selling, general and administrative expense | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Out-of-period adjustment | (2) | ||
Equipment installment plans out-of-period adjustment | Income before income taxes | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Out-of-period adjustment | $ 4 |
Equipment Installment Plans - E
Equipment Installment Plans - EIP Receivables (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Equipment installment plan receivables, gross | $ 974 | $ 873 |
Deferred interest | 0 | (80) |
Equipment installment plan receivables, net of deferred interest | 974 | 793 |
Allowance for credit losses | (70) | (65) |
Equipment installment plan receivables, net | 904 | 728 |
Accounts receivable — Customers and agents (Current portion) | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Equipment installment plan receivables, net | 565 | 428 |
Other assets and deferred charges (Non-current portion) | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Equipment installment plan receivables, net | $ 339 | $ 300 |
Equipment Installment Plans - G
Equipment Installment Plans - Gross Receivables by Credit Category (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Financing Receivable, Recorded Investment [Line Items] | ||
Equipment installment plan receivables, gross | $ 974 | $ 873 |
Unbilled | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Equipment installment plan receivables | 921 | 827 |
Billed | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Equipment installment plan receivables | 36 | 32 |
Equipment installment plan receivables, past due | 17 | 14 |
Lower Risk | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Equipment installment plan receivables, gross | 954 | 850 |
Lower Risk | Unbilled | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Equipment installment plan receivables | 904 | 807 |
Lower Risk | Billed | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Equipment installment plan receivables | 35 | 31 |
Equipment installment plan receivables, past due | 15 | 12 |
Higher Risk | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Equipment installment plan receivables, gross | 20 | 23 |
Higher Risk | Unbilled | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Equipment installment plan receivables | 17 | 20 |
Higher Risk | Billed | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Equipment installment plan receivables | 1 | 1 |
Equipment installment plan receivables, past due | $ 2 | $ 2 |
Equipment Installment Plans - A
Equipment Installment Plans - Allowance for Credit Losses (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Allowance for credit losses | ||
Allowance for credit losses, beginning of year | $ 65 | |
Allowance for credit losses, end of year | 70 | $ 65 |
Equipment installment plan receivable | ||
Allowance for credit losses | ||
Allowance for credit losses, beginning of year | 65 | 50 |
Bad debts expense | 64 | 62 |
Write-offs, net of recoveries | (59) | (47) |
Allowance for credit losses, end of year | $ 70 | $ 65 |
Income Taxes - Balances (Detail
Income Taxes - Balances (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Federal | ||
Income Tax [Line Items] | ||
Income taxes receivable | $ 15 | |
Income taxes payable | $ (22) | |
State | ||
Income Tax [Line Items] | ||
Income taxes receivable | $ 0 | |
Income taxes payable | $ (1) |
Income Taxes - Expense (Benefit
Income Taxes - Expense (Benefit) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Current | |||
Current federal income tax expense | $ 48 | $ 68 | $ 29 |
Current state income tax expense (benefit) | 6 | 10 | (2) |
Deferred | |||
Deferred federal income tax expense (benefit) | (5) | (354) | 1 |
Deferred state income tax expense (benefit) | 2 | (11) | 5 |
Total income tax expense (benefit) | $ 51 | $ (287) | $ 33 |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Income Tax [Line Items] | |||
Income tax benefit, adjustment | $ 4 | ||
Other income tax disclosures | |||
Effect of unrecognized tax benefit on income tax expense | 38 | $ 38 | $ 29 |
Interest and penalties expense related to unrecognized income tax expense (benefit) | 3 | $ (2) | |
Net accrued interest and penalties | 19 | $ 19 | |
Maximum | |||
Other income tax disclosures | |||
Interest and penalties expense related to unrecognized income tax expense (benefit) | (1) | ||
State | |||
Other income tax disclosures | |||
State NOL carryforwards | 1,911 | ||
Deferred tax asset for State NOL carryforwards | 84 | ||
Federal | |||
Other income tax disclosures | |||
Deferred tax asset for Federal NOL carryforward | $ 12 |
Income Taxes - Expense Reconcil
Income Taxes - Expense Reconciliation (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Amount | |||
Statutory federal income tax expense and rate | $ 45 | $ (95) | $ 29 |
State income taxes, net of federal benefit | 9 | (4) | 3 |
Effect of noncontrolling interests | (1) | (2) | (1) |
Federal income tax rate change | (4) | (254) | 0 |
Change in federal valuation allowance | (1) | (5) | 3 |
Goodwill impairment | 0 | 71 | 0 |
Nondeductible compensation | 4 | 4 | 1 |
Other differences, net | (1) | (2) | (2) |
Total income tax expense (benefit) | $ 51 | $ (287) | $ 33 |
Rate | |||
Statutory federal income tax rate | 21.00% | 35.00% | 35.00% |
State income taxes, net of federal benefit | 4.00% | 1.40% | 3.60% |
Effect of noncontrolling interests | (0.40%) | 0.80% | (1.10%) |
Federal income tax rate change | (2.00%) | 93.30% | 0.00% |
Change in federal valuation allowance | (0.30%) | 1.90% | 2.80% |
Goodwill impairment | 0.00% | (26.20%) | 0.00% |
Nondeductible compensation | 1.80% | (1.50%) | 1.40% |
Other differences, net | (0.40%) | 0.80% | (2.00%) |
Total income tax rate | 23.70% | 105.50% | 39.70% |
Income Taxes - Components of De
Income Taxes - Components of Deferred Income Tax (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Deferred tax assets | ||
Net operating loss (NOL) carryforwards | $ 96 | $ 103 |
Stock-based compensation | 16 | 20 |
Compensation and benefits - other | 5 | 5 |
Deferred rent | 20 | 21 |
Other | 73 | 59 |
Total deferred tax assets | 210 | 208 |
Less valuation allowance | (75) | (77) |
Net deferred tax assets | 135 | 131 |
Deferred tax liabilities | ||
Property, plant and equipment | 256 | 276 |
Licenses/intangibles | 207 | 192 |
Partnership investments | 133 | 123 |
Other | 49 | 0 |
Total deferred tax liabilities | 645 | 591 |
Net deferred income tax liability | 510 | 460 |
Deferred income tax liability, net | ||
Deferred tax liabilities | ||
Net deferred income tax liability | 510 | 461 |
Other assets and deferred charges | ||
Deferred tax liabilities | ||
Net deferred income tax liability | $ 0 | $ (1) |
Income Taxes - Deferred Tax Val
Income Taxes - Deferred Tax Valuation Allowance (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Deferred tax valuation allowance, rollfoward | |||
Balance at beginning of year | $ 77 | ||
Balance at end of year | 75 | $ 77 | |
Deferred tax asset valuation allowance | |||
Deferred tax valuation allowance, rollfoward | |||
Balance at beginning of year | 77 | 65 | $ 55 |
Charged to income tax expense | 5 | 12 | 10 |
Charged to Retained earnings | (7) | 0 | 0 |
Balance at end of year | $ 75 | $ 77 | $ 65 |
Income Taxes - Unrecognized Tax
Income Taxes - Unrecognized Tax Benefits (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Summary of unrecognized income tax benefits | |||
Unrecognized tax benefits balance at beginning of year | $ 47 | $ 43 | $ 39 |
Additions for tax positions of current year | 6 | 6 | 12 |
Additions for tax positions of prior years | 1 | 1 | 3 |
Reductions for tax positions of prior years | 0 | (1) | (1) |
Reductions for lapses in statutes of limitations | (6) | (2) | (10) |
Unrecognized tax benefits balance at end of year | $ 48 | $ 47 | $ 43 |
Earnings Per Share - Reconcilia
Earnings Per Share - Reconciliation (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Earnings Per Share, Basic [Abstract] | |||
Net income attributable to U.S. Cellular shareholders | $ 150 | $ 12 | $ 48 |
Weighted average number of shares used in basic earnings per share (in shares) | 86 | 85 | 85 |
Effects of dilutive securities (in shares) | 1 | 1 | 0 |
Weighted average number of shares used in diluted earnings per share (in shares) | 87 | 86 | 85 |
Basic earnings per share attributable to U.S. Cellular shareholders (in dollars per share) | $ 1.75 | $ 0.14 | $ 0.56 |
Diluted earnings per share attributable to U.S. Cellular shareholders (in dollars per share) | $ 1.72 | $ 0.14 | $ 0.56 |
Earnings Per Share - Narrative
Earnings Per Share - Narrative (Details) - shares shares in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Earnings Per Share [Abstract] | |||
Antidilutive securities (in shares) | 2 | 3 | 3 |
Intangible Assets - Schedules (
Intangible Assets - Schedules (Details) - Licenses - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Indefinite-lived Intangible Assets [Line Items] | ||
Balance at beginning of year | $ 2,223 | $ 1,886 |
Acquisitions | 8 | 331 |
Transferred to Assets held for sale | (51) | (10) |
Divestitures | (11) | 0 |
Exchanges - Licenses received | 18 | 25 |
Exchanges - Licenses surrendered | (1) | (9) |
Balance at end of year | $ 2,186 | $ 2,223 |
Intangible Assets - Narrative (
Intangible Assets - Narrative (Details) | 1 Months Ended | 3 Months Ended | ||
Apr. 30, 2017USD ($)license | Jun. 30, 2016USD ($) | Sep. 30, 2017USD ($) | Jun. 30, 2017USD ($) | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
FCC upfront payment | $ 143,000,000 | |||
Licenses won | license | 188 | |||
Aggregate purchase price of licenses | $ 329,000,000 | |||
Remaining payment made | $ 186,000,000 | |||
Goodwill | ||||
Loss on impairment | $ 370,000,000 | |||
Goodwill | $ 0 |
Investments in Unconsolidated_3
Investments in Unconsolidated Entities (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Equity method investments: | |||
Capital contributions, loans, advances and adjustments | $ 105 | $ 105 | |
Cumulative share of income | 1,892 | 1,717 | |
Cumulative share of distributions | (1,563) | (1,411) | |
Total equity method investments | 434 | 411 | |
Measurement alternative method investments | 7 | 4 | |
Total investments in unconsolidated entities | 441 | 415 | |
Assets | |||
Current | 882 | 668 | |
Due from affiliates | 379 | 323 | |
Property and other | 4,962 | 4,804 | |
Total assets | 6,223 | 5,795 | |
Liabilities and Equity | |||
Current liabilities | 434 | 435 | |
Deferred credits | 178 | 176 | |
Long-term liabilities | 217 | 199 | |
Long-term capital lease obligations | 0 | 1 | |
Partners' capital and shareholders' equity | 5,394 | 4,984 | |
Total liabilities and equity | 6,223 | 5,795 | |
Results of Operations | |||
Revenues | 6,777 | 6,562 | $ 6,747 |
Operating expenses | 4,965 | 4,965 | 5,047 |
Operating income | 1,812 | 1,597 | 1,700 |
Other income (expense), net | 11 | (1) | (11) |
Net income | $ 1,823 | $ 1,596 | $ 1,689 |
Property, Plant and Equipment_2
Property, Plant and Equipment (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Property, Plant and Equipment [Line Items] | |||
Land | $ 35 | $ 36 | |
Buildings | 296 | 297 | |
Leasehold and land improvements | 1,210 | 1,178 | |
Cell site equipment | 3,460 | 3,411 | |
Switching equipment | 1,018 | 988 | |
Office furniture and equipment | 285 | 389 | |
Other operating assets and equipment | 51 | 57 | |
System development | 1,149 | 1,060 | |
Work in process | 274 | 212 | |
Total property, plant and equipment, gross | 7,778 | 7,628 | |
Accumulated depreciation and amortization | (5,576) | (5,308) | |
Property, plant and equipment, net | 2,202 | 2,320 | |
Depreciation and amortization expense | 627 | 604 | $ 607 |
Loss on asset disposals | $ 10 | $ 17 | $ 22 |
Buildings | |||
Property, Plant and Equipment [Line Items] | |||
Useful life | 20 years | ||
Leasehold and land improvements | Minimum | |||
Property, Plant and Equipment [Line Items] | |||
Useful life | 1 year | ||
Leasehold and land improvements | Maximum | |||
Property, Plant and Equipment [Line Items] | |||
Useful life | 30 years | ||
Cell site equipment | Minimum | |||
Property, Plant and Equipment [Line Items] | |||
Useful life | 7 years | ||
Cell site equipment | Maximum | |||
Property, Plant and Equipment [Line Items] | |||
Useful life | 25 years | ||
Switching equipment | Minimum | |||
Property, Plant and Equipment [Line Items] | |||
Useful life | 5 years | ||
Switching equipment | Maximum | |||
Property, Plant and Equipment [Line Items] | |||
Useful life | 8 years | ||
Office furniture and equipment | Minimum | |||
Property, Plant and Equipment [Line Items] | |||
Useful life | 3 years | ||
Office furniture and equipment | Maximum | |||
Property, Plant and Equipment [Line Items] | |||
Useful life | 5 years | ||
Other operating assets and equipment | Minimum | |||
Property, Plant and Equipment [Line Items] | |||
Useful life | 3 years | ||
Other operating assets and equipment | Maximum | |||
Property, Plant and Equipment [Line Items] | |||
Useful life | 5 years | ||
System development | Minimum | |||
Property, Plant and Equipment [Line Items] | |||
Useful life | 1 year | ||
System development | Maximum | |||
Property, Plant and Equipment [Line Items] | |||
Useful life | 7 years |
Asset Retirement Obligation (De
Asset Retirement Obligation (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Asset Retirement Obligation [Abstract] | ||
Balance at beginning of year | $ 183 | $ 174 |
Additional liabilities accrued | 2 | 1 |
Revisions in estimated cash outflows | 8 | (3) |
Disposition of assets | (1) | (1) |
Accretion expense | 12 | 12 |
Transferred to Liabilities held for sale | (1) | 0 |
Balance at end of year | $ 203 | $ 183 |
Debt - Revolving Credit Facilit
Debt - Revolving Credit Facilities (Details) | 12 Months Ended | |||
Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Jul. 01, 2019 | |
U.S. Cellular Revolving credit facility | ||||
Debt Instrument [Line Items] | ||||
Unused commitment fees | $ 1,000,000 | $ 1,000,000 | $ 1,000,000 | |
Revolving credit | ||||
Maximum borrowing capacity | 300,000,000 | |||
Letters of credit outstanding | 2,000,000 | |||
Amounts borrowed | 0 | |||
Amount available for use | $ 298,000,000 | |||
Consolidated interest coverage ratio | 3 | |||
Consolidated leverage ratio | 3.25 | |||
U.S. Cellular Revolving credit facility | Future period | ||||
Revolving credit | ||||
Consolidated leverage ratio | 3 | |||
U.S. Cellular Revolving credit facility | LIBOR rate | ||||
Revolving credit | ||||
Contractual spread | 1.75% | |||
U.S. Cellular Revolving credit facility | Alternative Base Rate | ||||
Revolving credit | ||||
Contractual spread | 0.75% | |||
Subordinated Agreement | Maximum | ||||
Revolving credit | ||||
Consolidated funded indebtedness | $ 105,000,000 | |||
Refinancing indebtedness | 250,000,000 | |||
Subordinated Agreement | U.S. Cellular Revolving credit facility | ||||
Revolving credit | ||||
Refinancing indebtedness | $ 0 |
Debt - Term Loan Facility (Deta
Debt - Term Loan Facility (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Jul. 31, 2015 | |
Long-term debt | |||
Principal amount | $ 1,671,000,000 | $ 1,689,000,000 | |
U.S. Cellular Term loan facility | |||
Long-term debt | |||
Principal amount | 191,000,000 | $ 203,000,000 | $ 225,000,000 |
Term Loan periodic payment amount | 3,000,000 | ||
Subordinated Agreement | U.S. Cellular Term loan facility | |||
Debt Instrument [Line Items] | |||
Consolidated funded indebtedness | 0 | ||
Refinancing indebtedness | $ 0 | ||
LIBOR rate | U.S. Cellular Term loan facility | |||
Debt Instrument [Line Items] | |||
Contractual spread | 2.50% |
Debt - Receivables Securitizati
Debt - Receivables Securitization Agreement (Details) - Receivables securitization facility - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Debt Instrument [Line Items] | ||
Maximum borrowing capacity | $ 200 | $ 200 |
Amounts borrowed | 0 | |
Available for pledge as collateral | $ 63 |
Debt - Long-term Debt (Details)
Debt - Long-term Debt (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Jul. 31, 2015 | |
Long-term debt | |||
Principal amount | $ 1,671,000,000 | $ 1,689,000,000 | |
Unamortized discount and debt issuance costs | 47,000,000 | 49,000,000 | |
Total long-term debt | 1,624,000,000 | 1,640,000,000 | |
Current portion of long-term debt | 19,000,000 | 18,000,000 | |
Long-term debt, net | 1,605,000,000 | 1,622,000,000 | |
Long-term debt maturities | |||
Scheduled principal payments 2019 | 19,000,000 | ||
Scheduled principal payments 2020 | 19,000,000 | ||
Scheduled principal payments 2021 | 11,000,000 | ||
Scheduled principal payments 2022 | 158,000,000 | ||
Scheduled principal payments 2023 (less than) | $ 1,000,000 | ||
6.7% Senior Notes | |||
Long-term debt | |||
Interest rate on debt | 6.70% | ||
Redemption price, percentage | 100.00% | ||
Principal amount | $ 544,000,000 | 544,000,000 | |
Unamortized discount and debt issuance costs | 14,000,000 | 15,000,000 | |
Long term debt | $ 530,000,000 | 529,000,000 | |
6.95% Senior Notes | |||
Long-term debt | |||
Interest rate on debt | 6.95% | ||
Principal amount | $ 342,000,000 | 342,000,000 | |
Unamortized discount and debt issuance costs | 11,000,000 | 11,000,000 | |
Long term debt | $ 331,000,000 | 331,000,000 | |
7.25% 2063 Senior Notes | |||
Long-term debt | |||
Interest rate on debt | 7.25% | ||
Principal amount | $ 275,000,000 | 275,000,000 | |
Unamortized discount and debt issuance costs | 10,000,000 | 10,000,000 | |
Long term debt | $ 265,000,000 | 265,000,000 | |
7.25% 2064 Senior Notes | |||
Long-term debt | |||
Interest rate on debt | 7.25% | ||
Principal amount | $ 300,000,000 | 300,000,000 | |
Unamortized discount and debt issuance costs | 10,000,000 | 10,000,000 | |
Long term debt | $ 290,000,000 | 290,000,000 | |
Callable Notes | |||
Long-term debt | |||
Redemption price, percentage | 100.00% | ||
U.S. Cellular Term loan facility | |||
Long-term debt | |||
Principal amount | $ 191,000,000 | 203,000,000 | $ 225,000,000 |
Unamortized discount and debt issuance costs | 1,000,000 | 2,000,000 | |
Long term debt | 190,000,000 | 201,000,000 | |
Capital lease obligations | |||
Long-term debt | |||
Principal amount | 5,000,000 | 4,000,000 | |
Unamortized discount and debt issuance costs | 0 | 0 | |
Capital lease obligations | 5,000,000 | 4,000,000 | |
Installment payment agreement | |||
Long-term debt | |||
Principal amount | 14,000,000 | 21,000,000 | |
Unamortized discount and debt issuance costs | 1,000,000 | 1,000,000 | |
Long term debt | $ 13,000,000 | $ 20,000,000 |
Commitments And Contingencies -
Commitments And Contingencies - Purchase Obligations (Details) $ in Millions | Dec. 31, 2018USD ($) |
Purchase Obligations | |
2,019 | $ 1,296 |
2,020 | 112 |
2,021 | 68 |
2,022 | 33 |
2,023 | 12 |
Thereafter | 24 |
Total | $ 1,545 |
Commitments and Contingencies_2
Commitments and Contingencies - Narrative (Details) - USD ($) | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Feb. 22, 2019 | |
Operating Leases, Rent Expense | ||||
Rent expense | $ 173,000,000 | $ 166,000,000 | $ 161,000,000 | |
Loss Contingency, Estimate [Abstract] | ||||
Accrual for legal proceedings and unasserted claims | $ 0 | $ 1,000,000 | ||
Percent of bid credit in each auction | 25.00% | |||
Subsequent Event | ||||
Long-term Purchase Commitment [Line Items] | ||||
Commitment to purchase assets | $ 129,000,000 |
Commitments and Contingencies_3
Commitments and Contingencies - Minimum lease obligations (Details) $ in Millions | Dec. 31, 2018USD ($) |
Operating Leases Future Minimum Rental Payments | |
2,019 | $ 154 |
2,020 | 143 |
2,021 | 128 |
2,022 | 112 |
2,023 | 97 |
Thereafter | 769 |
Total | 1,403 |
Operating Leases Future Minimum Rental Receipts | |
2,019 | 58 |
2,020 | 47 |
2,021 | 34 |
2,022 | 22 |
2,023 | 10 |
Thereafter | 3 |
Total | $ 174 |
Variable Interest Entities - As
Variable Interest Entities - Asstes and Liabilities (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Assets | ||
Cash and cash equivalents | $ 580 | $ 352 |
Short-term investments | 17 | 50 |
Customers and agents, less allowances | 908 | 775 |
Inventory, net | 142 | 138 |
Other current assets | 34 | 21 |
Assets held for sale | 54 | 10 |
Licenses | 2,186 | 2,223 |
Property, plant and equipment, net | 2,202 | 2,320 |
Other assets and deferred charges | 579 | 390 |
Liabilities | ||
Current liabilities | 691 | 733 |
Liabilities held for sale | 1 | 0 |
Consolidated Variable Interest Entities | ||
Assets | ||
Cash and cash equivalents | 9 | 3 |
Short-term investments | 17 | 0 |
Customers and agents, less allowances | 611 | 476 |
Inventory, net | 5 | 5 |
Other current assets | 6 | 3 |
Assets held for sale | 4 | 0 |
Licenses | 652 | 655 |
Property, plant and equipment, net | 94 | 99 |
Other assets and deferred charges | 349 | 303 |
Total assets | 1,747 | 1,544 |
Liabilities | ||
Current liabilities | 34 | 39 |
Liabilities held for sale | 1 | 0 |
Deferred liabilities and credits | 16 | 13 |
Total liabilities | $ 51 | $ 52 |
Variable Interest Entities - Na
Variable Interest Entities - Narrative (Details) - USD ($) | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | ||
Variable Interest Entity [Line Items] | ||||
Assets | [1] | $ 7,274,000,000 | $ 6,841,000,000 | |
Variable Interest Entities, Other Disclosures | ||||
Investments in unconsolidated entities | 441,000,000 | 415,000,000 | ||
Capital contributions, loans or advances | 152,000,000 | 821,000,000 | $ 98,000,000 | |
Net income attributable to U.S. Cellular shareholders | King Street Wireless out of period adjustment | ||||
Variable Interest Entities, Other Disclosures | ||||
Out-of-period adjustment | (8,000,000) | |||
Net income attributable to noncontrolling interests, net tax | King Street Wireless out of period adjustment | ||||
Variable Interest Entities, Other Disclosures | ||||
Out-of-period adjustment | 8,000,000 | |||
Aquinas Wireless | ||||
Variable Interest Entity [Line Items] | ||||
Assets | 0 | |||
Unconsolidated Variable Interest Entities | ||||
Variable Interest Entities, Other Disclosures | ||||
Investments in unconsolidated entities | 4,000,000 | 4,000,000 | ||
USCC EIP LLC | ||||
Variable Interest Entities, Other Disclosures | ||||
Capital contributions, loans or advances | $ 116,000,000 | $ 790,000,000 | ||
[1] | The consolidated total assets as of December 31, 2018 and 2017, include assets held by consolidated variable interest entities (VIEs) of $868 million and $785 million, respectively, which are not available to be used to settle the obligations of U.S. Cellular. The consolidated total liabilities as of December 31, 2018 and 2017, include certain liabilities of consolidated VIEs of $23 million and $24 million, respectively, for which the creditors of the VIEs have no recourse to the general credit of U.S. Cellular. See Note 13 — Variable Interest Entities for additional information. |
Noncontrolling Interests (Detai
Noncontrolling Interests (Details) $ in Millions | Dec. 31, 2018USD ($) |
Noncontrolling Interest [Abstract] | |
Settlement value of mandatorily redeemable noncontrolling interests | $ 26 |
Carrying value of mandatorily redeemable noncontrolling interests | $ 11 |
Common Shareholders' Equity (De
Common Shareholders' Equity (Details) | Jan. 01, 2017shares | Nov. 30, 2009shares | Dec. 31, 2018voteshares | Dec. 31, 2017shares | Dec. 31, 2016shares |
Series A Common Shares | |||||
Class of Stock [Line Items] | |||||
Number of votes | vote | 10 | ||||
Voting rights for number of board of directors | 75% | ||||
Common Shares | |||||
Class of Stock [Line Items] | |||||
Number of votes | vote | 1 | ||||
Voting rights for number of board of directors | 25% | ||||
Common Shares | 401(k) | |||||
Share repurchases | |||||
Shares reserved (in shares) | 67,000 | ||||
Common Shares | Treasury shares | |||||
Class of Stock [Line Items] | |||||
Repurchase authorization, cumulative shares authorized (in shares) | 5,901,000 | ||||
Common shareholders' equity, other disclosures | |||||
Shares reissued (in shares) | 1,000,000 | 0 | 1,000,000 | ||
Common Shares | Treasury shares | Minimum | |||||
Class of Stock [Line Items] | |||||
Repurchase authorization, additional number of shares per year (in shares) | 0 | ||||
Common Shares | Treasury shares | Maximum | |||||
Class of Stock [Line Items] | |||||
Repurchase authorization, additional number of shares per year (in shares) | 1,300,000 | 1,300,000 |
Stock-Based Compensation - Over
Stock-Based Compensation - Overview (Details) - U S Cellular - Common Shares | Dec. 31, 2018shares |
Long-Term Incentive Plans | |
Stock-based compensation, overview | |
Shares reserved (in shares) | 13,286,000 |
Non-Employee Directors' Plan | |
Stock-based compensation, overview | |
Shares reserved (in shares) | 137,000 |
Stock-Based Compensation - Stoc
Stock-Based Compensation - Stock Options and Valuation Model (Details) - Common Shares - Stock Options - Long-Term Incentive Plans - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Award vesting period | 3 years | ||
Black Scholes valuation model assumptions | |||
Expected life | 4 years 8 months 12 days | ||
Expected annual volatility rate | 30.50% | ||
Dividend yield | 0.00% | ||
Risk-free interest rate | 1.20% | ||
Estimated annual forfeiture rate | 9.40% | ||
Stock compensation, stock option rollforward schedule, number of options | |||
Outstanding, begin of period (in shares) | 3,495,000 | ||
Exercisable options, beginning of period (in shares) | 2,475,000 | ||
Exercised options (in shares) | (2,318,000) | ||
Forfeited options (in shares) | (19,000) | ||
Expired options (in shares) | (352,000) | ||
Outstanding, end of period (in shares) | 806,000 | 3,495,000 | |
Exercisable options, ending of period (in shares) | 420,000 | 2,475,000 | |
Stock compensation, stock option rollforward schedule, other information | |||
Options outstanding, begin of period - weighted average exercise price (USD per share) | $ 41.10 | ||
Options exercisable, begin of period - weighted average exercise price (USD per share) | 40.79 | ||
Options exercised, weighted average exercise price (USD per share) | 39.45 | ||
Options forfeited, weighted average exercise price (USD per share) | 43.12 | ||
Options expired, weighted average exercise price (USD per share) | 47.29 | ||
Options outstanding, end of period - weighted average exercise price (USD per share) | 43.10 | $ 41.10 | |
Options exercisable, end of period - weighted average exercise price (USD per share) | $ 42.39 | $ 40.79 | |
Aggregate intrinsic value, options outstanding | $ 7 | ||
Aggregate intrinsic value, options exercisable | $ 4 | ||
Weighted average remaining contractual life, outstanding | 6 years | ||
Weighted average remaining contractual life, exercisable | 5 years 8 months 12 days | ||
Options granted, weighted average grant date fair value | $ 12.77 | ||
Aggregate intrinsic value, options exercised | $ 19 | $ 1 | $ 4 |
Terminated Employees | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expiration period | 30 days | ||
Minimum | Retired Employees | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expiration period | 90 days | ||
Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expiration period | 10 years | ||
Maximum | Retired Employees | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expiration period | 1 year |
Stock-Based Compensation - Rest
Stock-Based Compensation - Restricted Stock Units (Details) - Common Shares - Long-Term Incentive Plans - Restricted Stock Units - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Award vesting period | 3 years | ||
Stock based compensation, Nonvested shares rollforward, number of shares | |||
Nonvested stock units, begin of period - Number of shares (in shares) | 1,483,000 | ||
Granted number of shares (in shares) | 559,000 | ||
Vested number of shares (in shares) | (395,000) | ||
Forfeited number of shares (in shares) | (78,000) | ||
Nonvested stock units, end of period - Number of shares (in shares) | 1,569,000 | 1,483,000 | |
Stock based compensation, Nonvested shares weighted average grant date fair value | |||
Nonvested stock units - begin of period weighted average grant date fair value (USD per share) | $ 39.67 | ||
Granted weighted average grant date fair value (USD per share) | 38.19 | $ 38.04 | $ 43.32 |
Vested weighted average grant date fair value (USD per share) | 37.30 | ||
Forfeited weighted average grant date fair value (USD per share) | 39.78 | ||
Nonvested stock units - end of period weighted average grant date fair value (USD per share) | $ 39.74 | $ 39.67 | |
Fair value of vested stock units | $ 16 | $ 11 | $ 15 |
Stock-Based Compensation - Perf
Stock-Based Compensation - Performance and Deferred Stock Units (Details) - Common Shares - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Long-Term Incentive Plans | Performance Shares | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Award vesting period | 3 years | ||
Stock based compensation, Nonvested shares rollforward, number of shares | |||
Nonvested stock units, begin of period - Number of shares (in shares) | 342,000 | ||
Granted number of shares (in shares) | 357,000 | ||
Change in units based on approved performance factors number of shares | 111,000 | ||
Forfeited number of shares (in shares) | (42,000) | ||
Nonvested stock units, end of period - Number of shares (in shares) | 768,000 | 342,000 | |
Stock based compensation, Nonvested shares weighted average grant date fair value | |||
Nonvested stock units - begin of period weighted average grant date fair value (USD per share) | $ 36.92 | ||
Granted weighted average grant date fair value (USD per share) | 38.81 | $ 36.92 | |
Change in units based on approved performance factors weighted average grant date fair value | 36.92 | ||
Forfeited weighted average grant date fair value (USD per share) | 37.37 | ||
Nonvested stock units - end of period weighted average grant date fair value (USD per share) | $ 37.78 | $ 36.92 | |
Fair value of vested stock units | $ 0 | $ 0 | |
Long-Term Incentive Plans | Performance Shares | Minimum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Performance share awards target | 50.00% | ||
Long-Term Incentive Plans | Performance Shares | Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Performance share awards target | 200.00% | ||
Long-Term Incentive Plans | Deferred Compensation Stock Units | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Award vesting period | 3 years | ||
Stock based compensation, Nonvested shares weighted average grant date fair value | |||
Granted weighted average grant date fair value (USD per share) | $ 40.72 | $ 36.02 | $ 41.31 |
Percent of match up to 50% from annual bonus | 25.00% | ||
Percent of employee contribution to get 33 percent match | 50.00% | ||
Percent of match above 50% from annual bonus | 33.00% | ||
Vested number of shares, unissued | 33,000 | ||
Vested number of shares, unissued, fair value | $ 2,000,000 | ||
Long-Term Incentive Plans | Deferred Compensation Stock Units | Maximum | |||
Stock based compensation, Nonvested shares weighted average grant date fair value | |||
Fair value of vested stock units | $ 1,000,000 | $ 1,000,000 | $ 1,000,000 |
U S Cellular | Non-Employee Directors' Plan | |||
Stock based compensation, Nonvested shares weighted average grant date fair value | |||
Shares issued (in shares) | 18,000 | 15,000 | 13,000 |
Stock-Based Compensation - Expe
Stock-Based Compensation - Expense (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Stock based compensation expense | |||
Total stock-based compensation expense, before income taxes | $ 37 | $ 30 | $ 26 |
Income tax benefit | (9) | (11) | (10) |
Total stock-based compensation expense, net of income taxes | 28 | 19 | 16 |
Unrecognized compensation cost for all stock-based compensation awards | $ 33 | ||
Weighted average period for recognition of unrecognized compensation cost for all stock-based compensation awards | 1 year 7 months 6 days | ||
Tax benefit from exercise of stock options and other awards | $ 9 | ||
Selling, general and administrative expense | |||
Stock based compensation expense | |||
Total stock-based compensation expense, before income taxes | 33 | 27 | 23 |
System operations expense | |||
Stock based compensation expense | |||
Total stock-based compensation expense, before income taxes | 4 | 3 | 3 |
Long-Term Incentive Plans | Stock Options | |||
Stock based compensation expense | |||
Total stock-based compensation expense, before income taxes | 2 | 6 | 11 |
Long-Term Incentive Plans | Restricted Stock Units | |||
Stock based compensation expense | |||
Total stock-based compensation expense, before income taxes | 21 | 19 | 14 |
Long-Term Incentive Plans | Performance Shares | |||
Stock based compensation expense | |||
Total stock-based compensation expense, before income taxes | 13 | 4 | 0 |
Non-Employee Directors' Plan | |||
Stock based compensation expense | |||
Total stock-based compensation expense, before income taxes | $ 1 | $ 1 | $ 1 |
Supplemental Cash Flow Disclo_3
Supplemental Cash Flow Disclosures (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Supplemental Cash Flow [Line Items] | |||
Interest paid | $ 113 | $ 111 | $ 113 |
Income taxes paid, net of refunds received | 90 | 55 | (11) |
Cash receipts upon exercise of stock options | 29 | 5 | 12 |
Cash disbursements for payment of taxes | (11) | (4) | (6) |
Net cash receipts from exercise of stock options and vesting of other stock awards | $ 18 | $ 1 | $ 6 |
Common Shares | |||
Supplemental Cash Flow [Line Items] | |||
Common Shares withheld (in shares) | 1,549,800 | 144,755 | 308,010 |
Aggregate value of Common Shares withheld | $ 73 | $ 6 | $ 13 |
Certain Relationships and Rel_2
Certain Relationships and Related Transactions (Details) - USD ($) $ in Millions | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | May 04, 1988 | |
Related Party Transaction [Line Items] | ||||
Billings to U.S. Cellular from TDS | $ 86 | $ 85 | $ 94 | |
TDS | U.S. Cellular | ||||
Related Party Transaction [Line Items] | ||||
TDS ownership percentage | 82.00% | |||
TDS | U.S. Cellular | Minimum | ||||
Related Party Transaction [Line Items] | ||||
TDS ownership percentage | 90.00% | |||
Sidley Austin LLP | ||||
Related Party Transaction [Line Items] | ||||
Legal expense | $ 5 | 7 | 6 | |
TDS | ||||
Related Party Transaction [Line Items] | ||||
Billings to U.S. Cellular from TDS | $ 86 | $ 85 | $ 94 |