Attached files
| file | filename |
|---|---|
| 8-K - UNITED STATES CELLULAR CORP | usm8kcover.htm |
| EX-99.2 - EXHIBIT 99.2 - UNITED STATES CELLULAR CORP | usm8kex992.htm |
Exhibit 99.l NEWS RELEASE
As previously announced, U.S. Cellular will hold a teleconference Feb. 25, 2015 at 9:30 a.m. CST. Listen to the live call via the Events & Presentations page of investors.uscellular.com.
FOR IMMEDIATE RELEASE
U.S. cellular reports fourth quarter 2014 results
Provides 2015 guidance
CHICAGO, (Feb. 25, 2015) — United States Cellular Corporation (NYSE:USM) reported total operating revenues of $1,008.7 million for the fourth quarter of 2014, versus $902.7 million for the same period one year ago. Net income (loss) attributable to U.S. Cellular shareholders and related diluted earnings (loss) per share were $(21.3) million and $(0.25) respectively, for the fourth quarter of 2014, compared to $1.6 million and $0.02, respectively, in the comparable period one year ago.
“We accomplished our top priority in 2014 and grew our customer base,” said Kenneth R. Meyers, U.S. Cellular president and CEO. “U.S. Cellular’s strong value proposition that offers a high-quality network and competitive devices, plans and pricing drove this result, along with customer service that is back to our normal high standards.
“We continued to invest in our network, bringing 4G LTE to 94 percent of our postpaid customers. And to ensure that the company can remain competitive and meet broadband demands, U.S. Cellular and its partners were successful in acquiring valuable spectrum in the most recent auction.
“In 2015, we plan to build upon our 2014 accomplishments. We will continue to invest in our network, further expanding our deployment of 4G LTE and testing new technologies such as Voice over LTE. We also will remain very focused on growing our customer base and increasing revenue driven by smartphone adoption and data monetization, although a continuation of the current aggressive pricing environment could provide a headwind to these efforts. Growing our top line while improving our cost structure should lead to improved profitability.”
1
2015 Estimated Results
U.S. Cellular’s estimates of full-year 2015 results are shown below. Such estimates represent U.S. Cellular’s view as of February 25, 2015. Such forward‑looking statements should not be assumed to be current as of any future date. U.S. Cellular undertakes no duty to update such information, whether as a result of new information, future events or otherwise. There can be no assurance that final results will not differ materially from such estimated results.
U.S. Cellular has changed one of the measures which it uses to present estimates of future operating results. U.S. Cellular previously presented adjusted income before income taxes, defined as income before income taxes, adjusted for: Depreciation, amortization and accretion; net Gain or loss on sale of business and other exit costs (if any); net Gain or loss on license sales and exchanges (if any); net Gain or loss on investments ( if any); and interest expense. U.S. Cellular is now presenting Operating cash flow and Adjusted earnings before interest, taxes, depreciation, amortization and accretion (“Adjusted EBITDA”), as defined below, which it believes are measures which provide a comprehensive view of U.S Cellular’s recurring results of operations.
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(Dollars in millions) |
2015 Estimated Results |
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Actual Results for the Year Ended December 31, 2014 |
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Total operating revenues |
$4,000-$4,200 |
|
$3,893 |
|
|
Operating cash flow (1) |
$350-$450 |
|
$338 |
|
|
Adjusted EBITDA (1) |
$530-$630 |
|
$480 |
|
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Capital expenditures |
$600 |
|
$558 |
|
(1) Operating cash flow is defined as net income, adjusted for the items set forth in the reconciliation below. Adjusted EBITDA is defined as net income, adjusted for the items set forth in the reconciliation below. Operating cash flow and Adjusted EBITDA exclude these items in order to show operating results on a more comparable basis from period to period. From time to time, U.S. Cellular may exclude other items from Operating cash flow and/or Adjusted EBITDA if such items help reflect operating results on a more comparable basis. U.S. Cellular does not intend to imply that any such items that are excluded are non-recurring, infrequent or unusual; such items may occur in the future. Operating cash flow and Adjusted EBITDA are not measures of financial performance under Generally Accepted Accounting Principles in the United States (“GAAP”) and should not be considered as alternatives to net income as indicators of the company’s operating performance or as alternatives to cash flows from operating activities, determined in accordance with GAAP, as indicators of cash flows or as measures of liquidity. U.S. Cellular believes Operating cash flow and Adjusted EBITDA are useful measures of U.S. Cellular’s operating results before significant recurring non-cash charges, gains and losses, and other items as indicated below. The following tables provide a reconciliation to Operating cash flow and Adjusted EBITDA for 2015 estimated results and year ended December 31, 2014 actual results:
2
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2015 Estimated Results (2) |
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Actual Results for the Year Ended December 31, 2014 |
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(Dollars in millions) |
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Net income (loss) (GAAP) |
N/A |
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($47) |
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Add back: |
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Income tax expense (benefit) |
N/A |
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($12) |
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Income (loss) before income taxes (GAAP) |
($10)-$90 |
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($59) |
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Add back: |
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Interest expense |
$85 |
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$57 |
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Depreciation, amortization and accretion expense |
$545 |
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$606 |
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EBITDA |
$620-$720 |
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$605 |
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Add back: |
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(Gain) loss on sale of business and other exit costs, net |
($105) |
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($33) |
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(Gain) loss on license sales and exchanges |
— |
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($113) |
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(Gain) loss on asset disposals, net |
$15 |
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$21 |
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Adjusted EBITDA (3) |
$530-$630 |
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$480 |
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Deduct: |
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Equity in earnings of unconsolidated entities |
($130) |
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($130) |
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Interest and dividend income |
($50) |
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($12) |
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Operating cash flow (4) |
$350-$450 |
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$338 |
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(2) In providing 2015 Estimated Results, U.S. Cellular has not completed the above reconciliation to net income because it does not provide guidance for income taxes. U.S. Cellular believes that the impact of income taxes cannot be reasonably predicted; therefore, the company is unable to provide such guidance. Accordingly, a reconciliation to net income is not available without unreasonable effort.
(3) Adjusted EBITDA (new measure) equals adjusted income before income taxes (previous measure) excluding gain or loss on asset disposals, net. See Adjusted EBITDA reconciliation for full year 2014, 2013, and 2012 on the company’s website at investors.uscellular.com.
(4) A reconciliation of Operating cash flow (Non-GAAP) to operating income (GAAP) for full year 2014, 2013, and 2012 actual results can be found on the company's website at investors.uscellular.com.
3
Conference Call Information
U.S. Cellular will hold a conference call on Feb. 25, 2015 at 9:30 a.m. CST.
§ Access the live call on the Events & Presentation page of investors.uscellular.com or at http://www.videonewswire.com/event.asp?id=101572.
§ Access the call by phone at 877/407-8029 (US/Canada), no pass code required.
Before the call, certain financial and statistical information to be discussed during the call will be posted to investors.uscellular.com. The call will be archived on the Events & Presentations page of investors.uscellular.com.
About U.S. Cellular
United States Cellular Corporation provides a comprehensive range of wireless products and services, excellent customer support, and a high-quality network to 4.8 million customers in 23 states. The Chicago-based company had 6,600 full- and part-time associates as of Dec. 31, 2014. At the end of the fourth quarter of 2014, Telephone and Data Systems, Inc. owned 84 percent of U.S. Cellular. For more information about U.S. Cellular, visit uscellular.com.
Contacts
Jane McCahon, Vice President, Corporate Relations and Corporate Secretary
312-592-5379
jane.mccahon@tdsinc.com
Julie Mathews, Investor Relations Manager
312-592-5341
julie.mathews@tdsinc.com
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995: All information set forth in this news release, except historical and factual information, represents forward-looking statements. This includes all statements about the company’s plans, beliefs, estimates, and expectations. These statements are based on current estimates, projections, and assumptions, which involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Important factors that may affect these forward-looking statements include, but are not limited to: impacts of any pending acquisition and divestiture transactions, including, but not limited to, the ability to obtain regulatory approvals, successfully complete the transactions and the financial impacts of such transactions; the ability of the company to successfully manage and grow its markets; the overall economy; competition; the ability to obtain or maintain roaming arrangements with other carriers on acceptable terms; the state and federal telecommunications regulatory environment; the value of assets and investments; adverse changes in the ratings afforded TDS and U.S. Cellular debt securities by accredited ratings organizations; industry consolidation; advances in telecommunications technology; uncertainty of access to the capital markets; pending and future litigation; changes in income tax rates, laws, regulations or rulings; changes in customer growth rates, average monthly revenue per user, churn rates, roaming revenue and terms, the availability of wireless devices, or the mix of products and services offered by U.S. Cellular. Investors are encouraged to consider these and other risks and uncertainties that are discussed in the Form 8-K Current Report used by U.S. Cellular to furnish this press release to the Securities and Exchange Commission (“SEC”), which are incorporated by reference herein.
4
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United States Cellular Corporation |
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Total Markets* Summary Operating Data (Unaudited) |
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As of or for the Quarter Ended |
12/31/2014 |
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9/30/2014 |
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6/30/2014 |
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3/31/2014 |
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12/31/2013 |
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Retail Customers |
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Postpaid |
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Total at end of period |
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4,298,000 |
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4,200,000 |
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4,148,000 |
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4,174,000 |
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4,267,000 |
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Gross additions |
|
302,000 |
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|
251,000 |
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|
190,000 |
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|
197,000 |
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|
176,000 |
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Net additions (losses) |
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98,000 |
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52,000 |
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(26,000) |
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(93,000) |
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(71,000) |
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ARPU (1) |
$ |
56.51 |
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$ |
56.37 |
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$ |
56.82 |
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$ |
57.59 |
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$ |
53.53 |
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ARPA (2) |
$ |
136.13 |
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$ |
132.99 |
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$ |
131.95 |
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$ |
132.03 |
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$ |
121.21 |
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Churn rate (3) |
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1.6% |
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1.6% |
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1.7% |
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2.3% |
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1.9% |
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Smartphone penetration (4) |
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59.8% |
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57.9% |
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55.3% |
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53.1% |
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50.8% |
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Prepaid |
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Total at end of period |
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348,000 |
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|
350,000 |
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|
352,000 |
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|
356,000 |
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|
343,000 |
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Gross additions |
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60,000 |
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|
64,000 |
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65,000 |
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85,000 |
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63,000 |
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Net additions (losses) |
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(2,000) |
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(2,000) |
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(4,000) |
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13,000 |
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(26,000) |
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ARPU (1) |
$ |
35.33 |
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$ |
34.40 |
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$ |
34.02 |
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$ |
32.22 |
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$ |
31.66 |
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Churn rate (3) |
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5.9% |
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6.3% |
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6.5% |
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6.9% |
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8.3% |
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Total customers at end of period |
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4,760,000 |
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4,674,000 |
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4,653,000 |
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4,684,000 |
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4,774,000 |
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Billed ARPU (1) |
$ |
53.63 |
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$ |
53.24 |
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$ |
53.36 |
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$ |
53.93 |
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$ |
50.25 |
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Service revenue ARPU (1) |
$ |
60.10 |
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$ |
60.92 |
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$ |
60.32 |
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$ |
60.19 |
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$ |
57.05 |
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Smartphones sold as a percent of total handsets sold |
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86.5% |
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80.8% |
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79.0% |
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78.2% |
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84.5% |
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Total population |
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Consolidated markets (5) |
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50,906,000 |
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54,817,000 |
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54,817,000 |
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54,817,000 |
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58,013,000 |
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Consolidated operating markets (5) |
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31,729,000 |
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31,729,000 |
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31,729,000 |
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31,729,000 |
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31,759,000 |
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Market penetration at end of period |
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Consolidated markets (6) |
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9.4% |
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8.5% |
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8.5% |
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8.5% |
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8.2% |
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Consolidated operating markets (6) |
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15.0% |
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14.7% |
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14.7% |
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14.8% |
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15.0% |
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Capital expenditures (000s) |
$ |
181,655 |
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$ |
142,452 |
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$ |
143,927 |
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$ |
89,581 |
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$ |
208,135 |
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Total cell sites in service |
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6,220 |
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6,209 |
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6,183 |
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6,165 |
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6,975 |
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Owned towers |
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4,281 |
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4,487 |
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4,457 |
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|
4,448 |
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4,448 |
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* Represents U.S. Cellular’s consolidated markets. These results include markets which U. S. Cellular currently consolidates, or previously consolidated in the periods presented, and are not adjusted in prior periods for subsequent divestitures or deconsolidations.
Refer to U.S. Cellular’s Form 8-K filed on February 26, 2014 for pro forma financial information related to the Divestiture Transaction and the NY1 and NY2 Deconsolidation for the three and twelve months ended December 31, 2013, as if the transactions had occurred at the beginning of the period.
5
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United States Cellular Corporation |
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Core* Markets Summary Operating Data (Unaudited) |
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As of or for the Quarter Ended |
12/31/2014 |
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9/30/2014 |
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6/30/2014 |
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3/31/2014 |
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12/31/2013 |
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Retail Customers |
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Postpaid |
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|
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Total at end of period |
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4,298,000 |
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|
4,200,000 |
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|
4,148,000 |
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|
4,174,000 |
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|
4,267,000 |
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|
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Gross additions |
|
302,000 |
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|
251,000 |
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|
190,000 |
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|
197,000 |
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|
176,000 |
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Net additions (losses) |
|
98,000 |
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|
52,000 |
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(26,000) |
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(93,000) |
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(71,000) |
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ARPU (1) |
$ |
56.51 |
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$ |
56.37 |
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$ |
56.82 |
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$ |
57.59 |
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$ |
53.53 |
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ARPA (2) |
$ |
136.13 |
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$ |
132.99 |
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$ |
131.95 |
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$ |
132.03 |
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$ |
121.21 |
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Churn rate (3) |
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1.6% |
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1.6% |
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1.7% |
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2.3% |
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1.9% |
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Smartphone penetration (4) |
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59.8% |
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57.9% |
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55.3% |
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53.1% |
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50.8% |
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Prepaid |
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Total at end of period |
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348,000 |
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|
350,000 |
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|
352,000 |
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|
356,000 |
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|
343,000 |
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Gross additions |
|
60,000 |
|
|
64,000 |
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|
65,000 |
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|
85,000 |
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|
63,000 |
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Net additions (losses) |
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(2,000) |
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|
(2,000) |
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(4,000) |
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|
13,000 |
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(26,000) |
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ARPU (1) |
$ |
35.33 |
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$ |
34.40 |
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$ |
34.02 |
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$ |
32.22 |
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$ |
31.66 |
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Churn rate (3) |
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5.9% |
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6.3% |
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6.5% |
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6.9% |
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8.3% |
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Total customers at end of period |
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4,760,000 |
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4,674,000 |
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4,653,000 |
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4,684,000 |
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4,774,000 |
||
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Billed ARPU (1) |
$ |
53.63 |
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$ |
53.24 |
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$ |
53.36 |
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$ |
53.93 |
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$ |
50.25 |
||
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Service revenue ARPU (1) |
$ |
60.10 |
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$ |
60.92 |
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$ |
60.32 |
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$ |
60.19 |
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$ |
57.05 |
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Smartphones sold as a percent of total handsets sold |
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86.5% |
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80.8% |
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|
79.0% |
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|
78.2% |
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|
84.5% |
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Total population |
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|
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||
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Consolidated markets (5) |
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50,906,000 |
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|
54,817,000 |
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|
54,817,000 |
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|
54,817,000 |
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|
58,013,000 |
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|
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Consolidated operating markets (5) |
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31,729,000 |
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|
31,729,000 |
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|
31,729,000 |
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|
31,729,000 |
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|
31,759,000 |
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Market penetration at end of period |
|
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||
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Consolidated markets (6) |
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9.4% |
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8.5% |
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|
8.5% |
|
|
8.5% |
|
|
8.2% |
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Consolidated operating markets (6) |
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15.0% |
|
|
14.7% |
|
|
14.7% |
|
|
14.8% |
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|
15.0% |
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Capital expenditures (000s) |
$ |
181,655 |
|
$ |
142,452 |
|
$ |
143,927 |
|
$ |
89,581 |
|
$ |
211,247 |
||
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Total cell sites in service |
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6,220 |
|
|
6,209 |
|
|
6,183 |
|
|
6,165 |
|
|
6,161 |
||
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Owned towers |
|
3,951 |
|
|
3,922 |
|
|
3,892 |
|
|
3,883 |
|
|
3,883 |
||
* U.S. Cellular’s Core Markets excludes the results of the Divestiture Markets and NY1 and NY2 Partnerships for the periods presented.
Refer to U.S. Cellular’s Form 8-K filed on February 26, 2014 for pro forma financial information related to the Divestiture Transaction and the NY1 and NY2 Deconsolidation for the three and twelve months ended December 31, 2013, as if the transactions had occurred at the beginning of the period.
(1) Average Revenue Per User (“ARPU”) metrics are calculated by dividing a revenue base by an average number of customers by the number of months in the period. These revenue bases and customer populations are shown below:
a. Postpaid ARPU consists of total postpaid service revenues and postpaid customers.
b. Prepaid ARPU consists of total prepaid service revenues and prepaid customers.
c. Billed ARPU consists of total postpaid, prepaid and reseller service revenues and postpaid, prepaid and reseller customers.
d. Service revenue ARPU consists of total postpaid, prepaid and reseller service revenues, inbound roaming and other service revenues and postpaid, prepaid and reseller customers.
(2) Average Revenue Per Account (“ARPA”) metric is calculated by dividing total postpaid service revenues by the average number of postpaid accounts by the number of months in the period.
(3) Churn metrics represent the percentage of the postpaid or prepaid customers that disconnect service each month. These metrics represent the average monthly postpaid or prepaid churn rate for each respective period.
(4) Smartphones represent wireless devices which run on an Android, Apple, BlackBerry or Windows Mobile operating system, excluding connected devices. Smartphone penetration is calculated by dividing postpaid smartphone customers by total postpaid customers.
(5) The decrease in the population of consolidated markets is due primarily to the divestiture of the majority of the St. Louis area non-operating market license in March 2014, and certain non-operating licenses in North Carolina in December 2014. Total Population is used only to calculate market penetration of consolidated markets and consolidated operating markets, respectively. See footnote (6) below.
(6) Market penetration is calculated by dividing the number of wireless customers at the end of the period by the total population of consolidated markets and consolidated operating markets, respectively, as estimated by Claritas. The increase in consolidated markets penetration is due primarily to a lower denominator as a result of the license divestitures described in footnote (5) above.
6
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United States Cellular Corporation |
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Consolidated Statement of Operations Highlights |
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Three Months Ended December 31, |
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(Unaudited, dollars and shares in thousands, except per share amounts) |
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Change |
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2014 |
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2013 |
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Amount |
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Percent |
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Operating revenues |
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|
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|
Service |
$ |
849,788 |
|
$ |
825,128 |
|
$ |
24,660 |
|
3% |
|
|
|
Equipment sales |
|
158,956 |
|
|
77,596 |
|
|
81,360 |
|
>100% |
|
|
|
|
Total operating revenues |
|
1,008,744 |
|
|
902,724 |
|
|
106,020 |
|
12% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
|
|
|
|
|
|
|
|
||
|
|
System operations (excluding Depreciation, amortization and accretion reported below) |
|
202,423 |
|
|
177,438 |
|
|
24,985 |
|
14% |
|
|
|
Cost of equipment sold |
|
342,355 |
|
|
346,847 |
|
|
(4,492) |
|
(1%) |
|
|
|
Selling, general and administrative |
|
394,553 |
|
|
442,720 |
|
|
(48,167) |
|
(11%) |
|
|
|
Depreciation, amortization and accretion |
|
140,955 |
|
|
210,371 |
|
|
(69,416) |
|
(33%) |
|
|
|
(Gain) loss on asset disposals, net |
|
4,695 |
|
|
14,453 |
|
|
(9,758) |
|
(68%) |
|
|
|
(Gain) loss on sale of business and other exit costs, net |
|
(5,136) |
|
|
(3,140) |
|
|
(1,996) |
|
(64%) |
|
|
|
(Gain) loss on sale of license sales and exchanges |
|
(21,547) |
|
|
(255,479) |
|
|
233,932 |
|
92% |
|
|
|
|
Total operating expenses |
|
1,058,298 |
|
|
933,210 |
|
|
125,088 |
|
13% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss |
|
(49,554) |
|
|
(30,486) |
|
|
(19,068) |
|
(63%) |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment and other income (expense) |
|
|
|
|
|
|
|
|
|
|
||
|
|
Equity in earnings of unconsolidated entities |
|
23,598 |
|
|
32,152 |
|
|
(8,554) |
|
(27%) |
|
|
|
Interest and dividend income |
|
6,119 |
|
|
994 |
|
|
5,125 |
|
>100% |
|
|
|
Gain (loss) on investments |
|
— |
|
|
29 |
|
|
(29) |
|
N/M |
|
|
|
Interest expense |
|
(14,674) |
|
|
(11,570) |
|
|
(3,104) |
|
(27%) |
|
|
|
Other, net |
|
(121) |
|
|
135 |
|
|
(256) |
|
>(100%) |
|
|
|
|
Total investment and other income (expense) |
|
14,922 |
|
|
21,740 |
|
|
(6,818) |
|
(31%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income taxes |
|
(34,632) |
|
|
(8,746) |
|
|
(25,886) |
|
>(100%) |
||
|
|
Income tax expense (benefit) |
|
(12,528) |
|
|
(8,484) |
|
|
(4,044) |
|
(48%) |
|
|
Net loss |
|
(22,104) |
|
|
(262) |
|
|
(21,842) |
|
>(100%) |
||
|
|
Less: Net income (loss) attributable to noncontrolling interests, net of tax |
|
(764) |
|
|
(1,854) |
|
|
1,090 |
|
59% |
|
|
Net income (loss) attributable to U.S. Cellular shareholders |
$ |
(21,340) |
|
$ |
1,592 |
|
$ |
(22,932) |
|
>(100%) |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic weighted average shares outstanding |
|
84,066 |
|
|
84,181 |
|
|
(115) |
|
— |
||
|
Basic earnings (loss) per share attributable to U.S. Cellular shareholders |
$ |
(0.25) |
|
$ |
0.02 |
|
$ |
(0.27) |
|
>(100%) |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted average shares outstanding |
|
84,066 |
|
|
85,033 |
|
|
(967) |
|
(1%) |
||
|
Diluted earnings (loss) per share attributable to U.S. Cellular shareholders |
$ |
(0.25) |
|
$ |
0.02 |
|
$ |
(0.27) |
|
>(100%) |
||
7
|
United States Cellular Corporation |
||||||||||||
|
Consolidated Statement of Operations Highlights |
||||||||||||
|
Twelve Months Ended December 31, |
||||||||||||
|
(Unaudited, dollars and shares in thousands, except per share amounts) |
||||||||||||
|
|
|
|
|
|
|
|
|
|
Change |
|||
|
|
|
|
2014 |
|
2013 |
|
Amount |
|
Percent |
|||
|
Operating revenues |
|
|
|
|
|
|
|
|
|
|
||
|
|
Service |
$ |
3,397,937 |
|
$ |
3,594,773 |
|
$ |
(196,836) |
|
(5%) |
|
|
|
Equipment sales |
|
494,810 |
|
|
324,063 |
|
|
170,747 |
|
53% |
|
|
|
|
Total operating revenues |
|
3,892,747 |
|
|
3,918,836 |
|
|
(26,089) |
|
(1%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
|
|
|
|
|
|
|
|
||
|
|
System operations (excluding Depreciation, amortization and accretion reported below) |
|
769,911 |
|
|
763,435 |
|
|
6,476 |
|
1% |
|
|
|
Cost of equipment sold |
|
1,192,669 |
|
|
999,000 |
|
|
193,669 |
|
19% |
|
|
|
Selling, general and administrative |
|
1,591,914 |
|
|
1,677,395 |
|
|
(85,481) |
|
(5%) |
|
|
|
Depreciation, amortization and accretion |
|
605,997 |
|
|
803,781 |
|
|
(197,784) |
|
(25%) |
|
|
|
(Gain) loss on asset disposals, net |
|
21,469 |
|
|
30,606 |
|
|
(9,137) |
|
(30%) |
|
|
|
(Gain) loss on sale of business and other exit costs, net |
|
(32,830) |
|
|
(246,767) |
|
|
213,937 |
|
87% |
|
|
|
(Gain) loss on license sales and exchanges |
|
(112,993) |
|
|
(255,479) |
|
|
142,486 |
|
56% |
|
|
|
|
Total operating expenses |
|
4,036,137 |
|
|
3,771,971 |
|
|
264,166 |
|
7% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss) |
|
(143,390) |
|
|
146,865 |
|
|
(290,255) |
|
>(100%) |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment and other income (expense) |
|
|
|
|
|
|
|
|
|
|
||
|
|
Equity in earnings of unconsolidated entities |
|
129,764 |
|
|
131,949 |
|
|
(2,185) |
|
(2%) |
|
|
|
Interest and dividend income |
|
12,148 |
|
|
3,961 |
|
|
8,187 |
|
>100% |
|
|
|
Gain (loss) on investments |
|
— |
|
|
18,556 |
|
|
(18,556) |
|
N/M |
|
|
|
Interest expense |
|
(57,386) |
|
|
(43,963) |
|
|
(13,423) |
|
(31%) |
|
|
|
Other, net |
|
160 |
|
|
288 |
|
|
(128) |
|
(44%) |
|
|
|
|
Total investment and other income (expense) |
|
84,686 |
|
|
110,791 |
|
|
(26,105) |
|
(24%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes |
|
(58,704) |
|
|
257,656 |
|
|
(316,360) |
|
>(100%) |
||
|
|
Income tax expense (benefit) |
|
(11,782) |
|
|
113,134 |
|
|
(124,916) |
|
>(100%) |
|
|
Net income (loss) |
|
(46,922) |
|
|
144,522 |
|
|
(191,444) |
|
>(100%) |
||
|
|
Less: Net income (loss) attributable to noncontrolling interests, net of tax |
|
(4,110) |
|
|
4,484 |
|
|
(8,594) |
|
>(100%) |
|
|
Net income (loss) attributable to U.S. Cellular shareholders |
$ |
(42,812) |
|
$ |
140,038 |
|
$ |
(182,850) |
|
>(100%) |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic weighted average shares outstanding |
|
84,213 |
|
|
83,968 |
|
|
245 |
|
— |
||
|
Basic earnings (loss) per share attributable to U.S. Cellular shareholders |
$ |
(0.51) |
|
$ |
1.67 |
|
$ |
(2.18) |
|
>(100%) |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted average shares outstanding |
|
84,213 |
|
|
84,730 |
|
|
(517) |
|
(1%) |
||
|
Diluted earnings (loss) per share attributable to U.S. Cellular shareholders |
$ |
(0.51) |
|
$ |
1.65 |
|
$ |
(2.16) |
|
>(100%) |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Special dividend per share to U.S. Cellular shareholders |
$ |
— |
|
$ |
5.75 |
|
$ |
(5.75) |
|
N/M |
||
8
|
United States Cellular Corporation |
||||||
|
Consolidated Balance Sheet Highlights |
||||||
|
(Unaudited, dollars in thousands) |
||||||
|
|
|
|
|
|
|
|
|
ASSETS |
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
December 31, |
||
|
|
|
2014 |
|
2013 |
||
|
Current assets |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
$ |
211,513 |
|
$ |
342,065 |
|
|
Short-term investments |
|
— |
|
|
50,104 |
|
|
Accounts receivable from customers and others |
|
556,958 |
|
|
586,595 |
|
|
Inventory, net |
|
267,068 |
|
|
238,188 |
|
|
Prepaid expenses |
|
59,744 |
|
|
65,596 |
|
|
Net deferred income tax asset |
|
93,058 |
|
|
99,105 |
|
|
Other current assets |
|
90,834 |
|
|
19,538 |
|
|
|
|
1,279,175 |
|
|
1,401,191 |
|
|
|
|
|
|
|
|
|
Assets held for sale |
|
107,055 |
|
|
16,027 |
|
|
|
|
|
|
|
|
|
|
Investments |
|
|
|
|
|
|
|
|
Licenses |
|
1,443,438 |
|
|
1,401,126 |
|
|
Goodwill |
|
370,151 |
|
|
387,524 |
|
|
Investments in unconsolidated entities |
|
283,014 |
|
|
265,585 |
|
|
|
|
2,096,603 |
|
|
2,054,235 |
|
|
|
|
|
|
|
|
|
Property, plant and equipment |
|
|
|
|
|
|
|
|
In service and under construction |
|
7,458,740 |
|
|
7,717,512 |
|
|
Less: Accumulated depreciation |
|
4,730,523 |
|
|
4,860,992 |
|
|
|
|
2,728,217 |
|
|
2,856,520 |
|
|
|
|
|
|
|
|
|
Other assets and deferred charges |
|
276,218 |
|
|
117,735 |
|
|
|
|
|
|
|
|
|
|
Total assets |
$ |
6,487,268 |
|
$ |
6,445,708 |
|
9
|
United States Cellular Corporation |
|||||||
|
Consolidated Balance Sheet Highlights |
|||||||
|
(Unaudited, dollars in thousands) |
|||||||
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY |
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
December 31, |
||
|
|
|
|
2014 |
|
2013 |
||
|
Current liabilities |
|
|
|
|
|
||
|
|
Current portion of long-term debt |
$ |
46 |
|
$ |
166 |
|
|
|
Accounts payable |
|
|
|
|
|
|
|
|
|
Affiliated |
|
9,774 |
|
|
11,243 |
|
|
|
Trade |
|
306,845 |
|
|
405,583 |
|
|
Customer deposits and deferred revenues |
|
287,562 |
|
|
256,740 |
|
|
|
Accrued taxes |
|
36,652 |
|
|
73,820 |
|
|
|
Accrued compensation |
|
66,162 |
|
|
66,566 |
|
|
|
Other current liabilities |
|
149,853 |
|
|
192,055 |
|
|
|
|
|
|
856,894 |
|
|
1,006,173 |
|
|
|
|
|
|
|
|
|
|
Liabilities held for sale |
|
20,934 |
|
|
— |
||
|
|
|
|
|
|
|
|
|
|
Deferred liabilities and credits |
|
|
|
|
|
||
|
|
Net deferred income tax liability |
|
859,867 |
|
|
836,297 |
|
|
|
Other deferred liabilities and credits |
|
284,002 |
|
|
315,073 |
|
|
|
|
|
|
|
|
|
|
|
Long-term debt |
|
1,151,819 |
|
|
878,032 |
||
|
|
|
|
|
|
|
|
|
|
Noncontrolling interests with redemption features |
|
1,150 |
|
|
536 |
||
|
|
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
||
|
U.S. Cellular shareholders' equity |
|
|
|
|
|
||
|
|
Series A Common and Common Shares, par value $1 per share |
|
88,074 |
|
|
88,074 |
|
|
|
Additional paid-in capital |
|
1,472,558 |
|
|
1,424,729 |
|
|
|
Treasury shares |
|
(169,139) |
|
|
(164,692) |
|
|
|
Retained earnings |
|
1,910,498 |
|
|
2,043,095 |
|
|
|
|
Total U.S. Cellular shareholders' equity |
|
3,301,991 |
|
|
3,391,206 |
|
|
|
|
|
|
|
|
|
|
Noncontrolling interests |
|
10,611 |
|
|
18,391 |
||
|
|
|
|
|
|
|
|
|
|
|
Total equity |
|
3,312,602 |
|
|
3,409,597 |
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and equity |
$ |
6,487,268 |
|
$ |
6,445,708 |
||
10
United States Cellular Corporation
Schedule of Cash and Cash Equivalents and Investments
(Unaudited, dollars in thousands)
The following table presents U.S. Cellular’s cash and cash equivalents and investments at December 31, 2014 and December 31, 2013.
|
|
|
December 31, |
|
December 31, |
||
|
|
2014 |
|
2013 |
|||
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
$ |
211,513 |
|
$ |
342,065 |
|
|
|
|
|
|
|
|
|
|
Amounts included in short-term investments (1)(2) |
|
|
|
|
|
|
|
|
U.S. Treasury Notes |
|
— |
|
|
50,104 |
|
|
|
|
|
|
|
|
|
Total cash and cash equivalents and investments |
$ |
211,513 |
|
$ |
392,169 |
|
(1) Designated as held-to-maturity investments and are recorded at amortized cost in the Consolidated Balance Sheet.
(2) Maturities are less than twelve months from the respective balance sheet dates.
11
|
United States Cellular Corporation |
||||||||
|
Consolidated Statement of Cash Flows |
||||||||
|
Twelve Months Ended December 31, |
||||||||
|
(Unaudited, dollars in thousands) |
||||||||
|
|
|
|
|
|
||||
|
|
2014 |
|
2013 |
|||||
|
Cash flows from operating activities |
|
|
|
|
|
|||
|
|
Net income (loss) |
$ |
(46,922) |
|
$ |
144,522 |
||
|
|
Add (deduct) adjustments to reconcile net income to cash flows from operating activities |
|
|
|
|
|
||
|
|
|
|
Depreciation, amortization and accretion |
|
605,997 |
|
|
803,781 |
|
|
|
|
Bad debts expense |
|
101,282 |
|
|
98,864 |
|
|
|
|
Stock-based compensation expense |
|
22,383 |
|
|
15,844 |
|
|
|
|
Deferred income taxes, net |
|
57,604 |
|
|
(75,348) |
|
|
|
|
Equity in earnings of unconsolidated entities |
|
(129,764) |
|
|
(131,949) |
|
|
|
|
Distributions from unconsolidated entities |
|
112,336 |
|
|
125,660 |
|
|
|
|
(Gain) loss on asset disposals, net |
|
21,469 |
|
|
30,606 |
|
|
|
|
(Gain) loss on sale of business and other exit costs, net |
|
(32,830) |
|
|
(246,767) |
|
|
|
|
(Gain) loss on license sales and exchanges |
|
(112,993) |
|
|
(255,479) |
|
|
|
|
(Gain) loss on investments |
|
— |
|
|
(18,556) |
|
|
|
|
Noncash interest expense |
|
1,155 |
|
|
1,059 |
|
|
|
|
Other operating activities |
|
26 |
|
|
646 |
|
|
Changes in assets and liabilities from operations |
|
|
|
|
|
||
|
|
|
|
Accounts receivable |
|
12,547 |
|
|
(291,168) |
|
|
|
|
Equipment installment plans receivable |
|
(188,829) |
|
|
(591) |
|
|
|
|
Inventory |
|
(28,878) |
|
|
(82,422) |
|
|
|
|
Accounts payable - trade |
|
(95,587) |
|
|
85,199 |
|
|
|
|
Accounts payable - affiliate |
|
(2,590) |
|
|
147 |
|
|
|
|
Customer deposits and deferred revenues |
|
33,524 |
|
|
66,344 |
|
|
|
|
Accrued taxes |
|
(99,483) |
|
|
30,037 |
|
|
|
|
Accrued interest |
|
1,307 |
|
|
273 |
|
|
|
|
Other assets and liabilities |
|
(59,412) |
|
|
(9,805) |
|
|
|
|
|
|
172,342 |
|
|
290,897 |
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
|
|||
|
|
Cash used for additions to property, plant and equipment |
|
(605,083) |
|
|
(717,862) |
||
|
|
Cash paid for acquisitions and licenses |
|
(38,150) |
|
|
(16,540) |
||
|
|
Cash received from divestitures |
|
179,842 |
|
|
811,120 |
||
|
|
Cash received for investments |
|
50,000 |
|
|
100,000 |
||
|
|
Federal Communications Commission deposit |
|
(60,000) |
|
|
— |
||
|
|
Other investing activities |
|
2,619 |
|
|
(3,969) |
||
|
|
|
|
|
|
(470,772) |
|
|
172,749 |
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
|
|||
|
|
Issuance of long-term debt |
|
275,000 |
|
|
— |
||
|
|
Repayment of borrowing under revolving credit facility |
|
(150,000) |
|
|
— |
||
|
|
Borrowing under revolving credit facility |
|
150,000 |
|
|
— |
||
|
|
Common shares reissued for benefit plans, net of tax payments |
|
830 |
|
|
5,784 |
||
|
|
Common shares repurchased |
|
(18,943) |
|
|
(18,544) |
||
|
|
Payment of debt issuance costs |
|
(9,644) |
|
|
(23) |
||
|
|
Acquisition of licenses in common control transaction |
|
(76,298) |
|
|
— |
||
|
|
Dividends paid |
|
— |
|
|
(482,270) |
||
|
|
Distributions to noncontrolling interests |
|
(3,056) |
|
|
(3,766) |
||
|
|
Payments to acquire additional interest in subsidiaries |
|
— |
|
|
(1,005) |
||
|
|
Other financing activities |
|
(11) |
|
|
(115) |
||
|
|
|
|
|
|
167,878 |
|
|
(499,939) |
|
|
|
|
|
|
|
|
|
|
|
Net decrease in cash and cash equivalents |
|
(130,552) |
|
|
(36,293) |
|||
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
|
|
|
|
|||
|
|
Beginning of period |
|
342,065 |
|
|
378,358 |
||
|
|
End of period |
$ |
211,513 |
|
$ |
342,065 |
||
12
|
United States Cellular Corporation |
||||||||||||||
|
Financial Measures and Reconciliations |
||||||||||||||
|
(Unaudited, dollars in thousands) |
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Twelve Months Ended |
||||||||
|
|
|
|
|
December 31, |
|
December 31, |
||||||||
|
|
|
|
2014 |
|
|
2013 |
|
|
2014 |
|
|
2013 |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from operating activities |
|
$ |
(158,289) |
|
$ |
(5,336) |
|
$ |
172,342 |
|
$ |
290,897 |
|
|
|
Add: Sprint Cost Reimbursement |
|
|
19,085 |
|
|
9,429 |
|
|
71,097 |
|
|
10,560 |
|
|
|
Less: Cash used for additions to property, plant and equipment |
|
|
180,309 |
|
|
195,682 |
|
|
605,083 |
|
|
717,862 |
|
|
|
|
Adjusted free cash flow (1) |
|
$ |
(319,513) |
|
$ |
(191,589) |
|
$ |
(361,644) |
|
$ |
(416,405) |
(1) Adjusted free cash flow is defined as Cash flows from operating activities (which includes cash outflows related to the Sprint decommissioning), as adjusted for cash proceeds from the Sprint Cost Reimbursement (which are included in Cash flows from investing activities in the Consolidated Statement of Cash Flows), less Cash used for additions to property, plant and equipment. Adjusted free cash flow is a non-GAAP financial measure which U.S. Cellular believes may be useful to investors and other users of its financial information in evaluating the amount of cash generated by business operations (including cash proceeds from the Sprint Cost Reimbursement), after Cash used for additions to property, plant and equipment.
13