Exhibit 99
UNITED STATES CELLULAR CORPORATION
PRO FORMA FINANCIAL INFORMATION
United States Cellular Corporation (AMEX symbol "USM") is referred to in
this exhibit as the "Company." The Company is an 85.1%-owned subsidiary of
Telephone and Data Systems, Inc. ("TDS").
From January 1 through December 31, 1993, the Company acquired controlling
interests in 25 cellular markets and several additional minority cellular
interests representing a total of approximately 3.8 million population
equivalents. The total consideration paid for these acquisitions was
approximately $284.6 million, consisting of 5.7 million Common Shares, 75,000
Series A Common Shares, the obligation to issue 140,000 Common Shares in the
future, an increase in the Company's revolving credit agreement with TDS (the
"Revolving Credit Agreement") of $101.5 million, 29,000 shares of subsidiary
preferred stock, cash and Common Shares issued by TDS totaling $9.4 million
(treated as an equity contribution to the Company), and $12.7 million in cash
paid by the Company. Of this consideration, the debt under the Revolving Credit
Agreement, most of the Common Shares and all of the Series A Common Shares were
issued to TDS to reimburse TDS for TDS Common Shares issued and cash paid to
third parties.
As of December 31, 1993, the Company had pending agreements to acquire
controlling interests in nine cellular markets and a minority interest in one
additional market representing a total of approximately 1.2 million population
equivalents. The total consideration to be paid for the acquisitions described
in this paragraph, valued at the time such agreements were entered into, is
approximately $128.4 million. If these acquisitions are completed as planned,
the Company will issue approximately 3.7 million Common Shares, will increase
the balance outstanding under the Revolving Credit Agreement by $400,000, will
pay approximately $4.5 million in cash (expected to be funded by an additional
increase in the Revolving Credit Agreement) and TDS will pay $700,000 in cash
(to be treated as an equity contribution to the Company).
Pursuant to Rule 3-05 and Rule 11-01 of Regulation S-X, the completed and
pending acquisitions of businesses described in the foregoing paragraphs are not
individually significant. The following pro forma financial information is
included pursuant to Article 11 of Regulation S-X:
ITEM
United States Cellular Corporation Unaudited Condensed Pro Forma
Consolidated Financial Statements
Unaudited Condensed Pro Forma Consolidated Balance Sheet
as of December 31, 1993
Unaudited Condensed Pro Forma Consolidated Statement of
Operations for the Year Ended December 31, 1993
Notes to Unaudited Condensed Pro Forma Consolidated
Financial Statements
UNITED STATES CELLULAR CORPORATION AND SUBSIDIARIES
CONDENSED PRO FORMA CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1993
UNAUDITED
(IN THOUSANDS)
ASSETS
COMBINED PRO FORMA
COMPLETED ADJUSTMENTS PRO FORMA
USM AND PENDING INCREASE USM
CONSOLIDATED (a) ACQUISITIONS (DECREASE) CONSOLIDATED
---------------- ------------ ------------ ------------
CURRENT ASSETS $ 46,033 $1,829 $ (71)(1) $ 47,791
---------- ------ -------- ----------
PROPERTY, PLANT AND EQUIPMENT
In service 306,118 8,557 - 314,675
Less accumulated depreciation 59,704 2,122 - 61,826
---------- ------ -------- ----------
246,414 6,435 - 252,849
---------- ------ -------- ----------
INVESTMENTS
Cellular partnerships 90,104 - (1,466)(1) 88,638
Licenses, net of amortization 824,491 619 129,885 (1) 954,995
Marketable equity securities 17,584 - - 17,584
Other 7,701 - - 7,701
---------- ------ -------- ----------
939,880 619 128,419 1,068,918
---------- ------ -------- ----------
OTHER ASSETS AND DEFERRED CHARGES 13,069 652 - 13,721
---------- ------ -------- ----------
$1,245,396 $9,535 $128,348 $1,383,279
---------- ------ -------- ----------
---------- ------ -------- ----------
The accompanying notes to condensed pro forma consolidated financial statements
are an integral part of this statement.
UNITED STATES CELLULAR CORPORATION AND SUBSIDIARIES
CONDENSED PRO FORMA CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1993
UNAUDITED
(IN THOUSANDS)
STOCKHOLDERS' EQUITY AND LIABILITIES
COMBINED PRO FORMA
COMPLETED ADJUSTMENTS PRO FORMA
USM AND PENDING INCREASE USM
CONSOLIDATED (a) ACQUISITIONS (DECREASE) CONSOLIDATED
---------------- ------------ ----------- ------------
CURRENT LIABILITIES $ 74,419 $ 2,124 $ (595)(1) $ 75,948
---------- ------- -------- ----------
NOTES PAYABLE - 3,800 - 3,800
---------- ------- -------- ----------
REVOLVING CREDIT AGREEMENT-TDS 141,524 - 4,889 (1) 146,413
---------- ------- -------- ----------
LONG-TERM DEBT, excluding current portion 51,130 2,517 - 53,647
---------- ------- -------- ----------
DEFERRED LIABILITIES AND CREDITS 3,768 1,593 - 5,361
---------- ------- -------- ----------
REDEEMABLE PREFERRED STOCK, excluding
current portion 18,828 - - 18,828
---------- ------- -------- ----------
MINORITY INTEREST 15,599 - - 15,599
---------- ------- -------- ----------
COMMON STOCKHOLDERS' EQUITY
Common Shares, par value $1 per share 36,960 10 3,696 (1) 40,666
Series A Common Shares, par value $1 per share 33,006 - - 33,006
Additional paid in capital 867,947 2,536 117,313 (1) 987,796
Common Shares issuable, 5,529,557 shares 103,266 - - 103,266
Retained (deficit) (101,051) (3,045) 3,045 (1) (101,051)
---------- ------- -------- ----------
Total common stockholders' equity 940,128 (499) 124,054 1,063,683
---------- ------- -------- ----------
$1,245,396 $ 9,535 $128,348 $1,383,279
---------- ------- -------- ----------
---------- ------- -------- ----------
The accompanying notes to condensed pro forma consolidated financial statements
are an integral part of this statement.
UNITED STATES CELLULAR CORPORATION AND SUBSIDIARIES
CONDENSED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1993
UNAUDITED
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
COMBINED PRO FORMA
COMPLETED ADJUSTMENTS PRO FORMA
USM AND PENDING INCREASE USM
CONSOLIDATED ACQUISITIONS(b) (DECREASE) CONSOLIDATED
------------ --------------- ----------- ------------
OPERATING REVENUES
Service $236,749 $17,528 $ - $254,277
Equipment sales 10,510 966 - 11,476
-------- ------- ------- --------
Total Operating Revenues 247,259 18,494 - 265,753
-------- ------- ------- --------
OPERATING EXPENSES
System operations 67,251 7,776 - 75,027
Marketing and selling 43,478 2,227 - 45,705
Cost of equipment sold 25,688 1,602 - 27,290
General and administrative 74,471 9,159 - 83,630
Depreciation and amortization 45,027 2,419 4,255 (3) 51,701
-------- ------- ------- --------
Total Operating Expenses 255,915 23,183 4,255 283,353
-------- ------- ------- --------
OPERATING (LOSS) BEFORE MINORITY SHARE (8,656) (4,689) (4,255) (17,600)
Minority share of operating (income) (3,496) - 76 (2) (3,420)
-------- ------- ------- --------
OPERATING (LOSS) (12,152) (4,689) (4,179) (21,020)
-------- ------- ------- --------
INVESTMENT AND OTHER INCOME
Investment income 16,922 - 896 (4) 17,818
Amortization of license and deferred costs
related to investments (917) - (28)(3) (945)
Interest income 2,652 119 (351)(5) 2,420
Other (expense), net (915) (79) - (994)
Gain on sale of cellular interests 4,851 - - 4,851
-------- ------- ------- --------
Total Investment and Other Income 22,593 40 517 23,150
-------- ------- ------- --------
INCOME (LOSS) BEFORE INTEREST AND
INCOME TAXES 10,441 (4,649) (3,662) 2,130
Interest expense 33,190 2,213 (351)(5) 36,332
1,280 (6)
-------- ------- ------- --------
(LOSS) BEFORE INCOME TAXES (22,749) (6,862) (4,591) (34,202)
Income tax expense 2,692 - - (7) 2,692
-------- ------- ------- --------
NET (LOSS) $(25,441) $(6,862) $(4,591) $(36,894)
-------- ------- ------- --------
-------- ------- ------- --------
WEIGHTED AVERAGE COMMON SHARES 57,152 6,448 63,600
-------- ------- --------
-------- ------- --------
(LOSS) PER COMMON SHARE $ (.45) $ (.58)
-------- --------
-------- --------
The accompanying notes to condensed pro forma consolidated financial statements
are an integral part of this statement.
UNITED STATES CELLULAR CORPORATION
NOTES TO CONDENSED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(a) Includes the balance sheets of the entities discussed in the second
paragraph of this exhibit.
(b) Includes the income statements of the entities discussed in the second
paragraph of this exhibit prior to the date of acquisition by the Company, as
well as each of the income statements of the entities for which acquisition by
the Company is pending as of the date of this Form 10-K.
(c) The pro forma adjustments are described in the following paragraphs:
(1) Reflects the Company's acquisition of the cellular interests described
in the third paragraph of this exhibit. Also reflects the elimination of the
equity of these interests in purchase transactions and the allocation of the
purchase price to cellular license acquisition costs (in thousands).
Purchase price (aggregate) $128,445
Plus: acquired companies' negative equity at
December 31, 1993 1,440
--------
Purchase price to be allocated $129,885
--------
--------
Purchase price in excess of book value--
Cellular operations--consolidated $ 60,869
Cellular operations--equity method 69,016
--------
$129,885
--------
--------
The pro forma allocations of the purchase prices to the acquired entities'
assets as set forth above are based upon preliminary estimates of the values of
those assets.
(2) Reflects the minority shareholders' portion of acquired companies' net
income and the elimination of the minority shareholders' portion of net income
of companies in which the Company acquired additional minority interests.
(3) Reflects the amortization of assumed costs in excess of book value.
All excess cost amounts are assumed to be amortized over 40 years.
(4) Reflects the elimination of the equity-method losses of acquired
entities which are consolidated in the Pro Forma Consolidated Statements of
Operations.
(5) Reflects the elimination of intercompany interest income and interest
expense between the Company and several acquired entities. The acquired
entities were previously accounted for by the equity method of accounting (see
Note 4).
(6) Reflects the estimated interest expense incurred as a result of
increases in the Revolving Credit Agreement in connection with the acquisitions
included in the Condensed Pro Forma Consolidated Statements of Operations.
(7) The Company is included in a consolidated federal income tax return
with other members of the TDS consolidated group. TDS and the Company entered
into a Tax Allocation Agreement (the "Agreement") effective July 1, 1987. The
Agreement provides, among other things, that the Company and its subsidiaries be
included in a consolidated federal income tax return with the TDS affiliated
group unless TDS requests otherwise. The Company and its subsidiaries calculate
their losses and credits as if they comprised a separate affiliated group.
Under the Agreement, the Company is able to carry forward its losses and credits
and use them to offset any future income tax liabilities to TDS. Accordingly,
no pro forma income tax benefits arising from the pro forma effects of
acquisitions have been recorded in the Condensed Pro Forma Consolidated
Statements of Operations.