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EX-99.2 - EX-99.2 - UNITED STATES CELLULAR CORPusmexhibit992.htm
8-K - 8-K - UNITED STATES CELLULAR CORPusm8k.htm

 


Exhibit 99.1   NEWS RELEASE

As previously announced, U.S. Cellular will hold a teleconference February 24, 2017 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 and full year 2016 results

Provides 2017 guidance

 

 

CHICAGO, (February 24, 2017) — United States Cellular Corporation (NYSE:USM) reported total operating revenues of $991 million for the fourth quarter of 2016, versus $987 million for the same period one year ago. Net loss attributable to U.S. Cellular shareholders and related diluted loss per share were $6 million and $0.07, respectively, for the fourth quarter of 2016, compared to $2 million and $0.02, respectively, in the comparable period one year ago. 

U.S. Cellular reported total operating revenues of $3,939 million and $3,997 million for the years ended 2016 and 2015, respectively.  Net income attributable to U.S. Cellular shareholders and related diluted earnings per share were $48 million and $0.56, respectively, for the year ended 2016, compared to $241 million and $2.84, respectively, for the year ended 2015.

For the full year 2016, after adjusting for discrete items, U.S. Cellular generated Operating Cash Flow of $631 million, up 2% from 2015 and Adjusted EBITDA of $829 million, up 4% from 2015.  Discrete items include a $58 million revenue benefit in 2015 related to the discontinuation of the loyalty rewards program and 2016 includes a $13 million expense related to the discontinuation of a naming rights agreement.  A reconciliation can be found on the Company’s website.

"2016 was a year of continued progress for U.S. Cellular," said Kenneth R. Meyers, U.S. Cellular President and CEO. "Our local and personal approach to providing an exceptional customer experience continues to stand out, generating consistently low-levels of phone churn each quarter. As some of the most competitive pricing promotions persist across the industry, we have worked to balance growth and profitability, which enabled us to hit our profitability targets, albeit with slower customer growth. Greater smartphone adoption and increased data usage, combined with strong cost management, helped to offset some of the competitive pricing pressures throughout the year. 

"We continue to invest in our network which is the foundation of our value proposition.  In 2016 we provided additional capacity to handle the 20% growth in data traffic and readied one of our largest markets, Iowa, for VoLTE deployment.  This was accomplished while managing our capital expenditures to the lowest level in 15 years.

"As we look into 2017, we are focusing on building our customer base through our superior network and outstanding customer service, while remaining disciplined in our promotional efforts. We will continue to drive costs out of the business, while capitalizing on opportunities to drive additional revenue via accessory sales, the internet of things, and business and government connections."


 


2017 Estimated Results

U.S. Cellular’s estimates of full-year 2017 results are shown below.  Such estimates represent management’s view as of February 24, 2017.  Such forwardlooking 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.

 

2017 Estimated Results and Actual Results for the Year Ended December 31, 2016

 

 

 

 

 

 

 

 

 

 

Estimate

Actual

(Dollars in millions)

 

 

 

 

 

Total operating revenues (1)

 

$3,800-$4,000

 

 

$

3,939 

Operating cash flow (2)

 

$500-$650

 

 

$

618 

Adjusted EBITDA (2)

 

$650-$800

 

 

$

816 

Capital expenditures

 

Approx. $

500

 

 

$

446 

 

 


The following table provides reconciliation to Operating Cash Flow and Adjusted EBITDA for 2017 estimated results, and actual results for the year ended December 31, 2016.  In providing 2017 Estimated Results, U.S. Cellular has not completed the below reconciliation to net income because it does not provide guidance for income taxes.  Although potentially significant, 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. 

 

 

 

 

 

2017 Estimated Results

 

 

Actual Results for the Year Ended

December 31, 2016

(Dollars in millions)

 

 

 

 

 

 

Net income (loss) (GAAP)

 

 

N/A

 

$

49 

Add back:

 

 

 

 

 

 

 

Income tax expense (benefit)

 

 

N/A

 

 

33 

Income (loss) before income taxes (GAAP)

 

$

(110)-40

 

$

82 

Add back:

 

 

 

 

 

 

 

Interest expense

 

 

110 

 

 

113 

 

Depreciation, amortization and accretion expense

 

 

630 

 

 

618 

EBITDA (Non-GAAP)

 

$

630-780 

 

$

813 

Add back (deduct):

 

 

 

 

 

 

 

(Gain) loss on sale of business and

 

 

 

 

 

 

 

 

other exit costs, net

 

 

 

 

 

 

 

(Gain) loss on license sales and exchanges, net

 

 

 

 

 

(19)

 

(Gain) loss on assets disposals, net

 

 

20 

 

 

22 

Adjusted EBITDA (Non-GAAP) (2)

 

$

650-800 

 

$

816 

Deduct:

 

 

 

 

 

 

 

Equity in earnings of unconsolidated entities

 

 

140 

 

 

140 

 

Interest and dividend income(1)

 

 

10 

 

 

57 

 

Other, net

 

 

 

 

 

1 

Operating cash flow (Non-GAAP) (2)(3)

 

$

500-650 

 

$

618 

 

 

 

 

 

 

 

 

 

Note: Totals may not foot due to rounding differences.

 

  1. In 2016, Imputed interest related to equipment installment plans was recorded in Interest and dividend income.  Beginning in 2017, imputed interest will be recorded in service revenues.  The company recorded $51 million in imputed interest in 2016.
  2. Adjusted EBITDA (earnings before interest, taxes, depreciation, amortization and accretion) is defined as net income adjusted for the items set forth in the reconciliation above.  Operating cash flow is defined as net income adjusted for the items set forth in the reconciliation above.  Adjusted EBITDA and Operating cash flow 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 or Cash flows from operating activities, as indicators of cash flows or as measures of liquidity.  U.S. Cellular does not intend to imply that any such items set forth in the reconciliation above are non-recurring, infrequent or unusual; such items may occur in the future.  Management uses Adjusted EBITDA and Operating cash flow as measurements of profitability, and therefore reconciliations to applicable GAAP income measures are deemed appropriate.  Management believes Adjusted EBITDA and Operating cash flow are useful measures of U.S. Cellular’s operating results before significant recurring non-cash charges, gains and losses, and other items as presented above as they provide additional relevant and useful information to investors and other users of U.S. Cellular’s financial data in evaluating the effectiveness of its operations and underlying business trends in a manner that is consistent with management’s evaluation of business performance.  Adjusted EBITDA shows adjusted earnings before interest, taxes, depreciation, amortization and accretion, and gains and losses, while Operating cash flow reduces this measure further to exclude Equity in earnings of unconsolidated entities and Interest and dividend income in order to more effectively show the performance of operating activities excluding investment activities.  The table above reconciles Adjusted EBITDA and Operating cash flow to the corresponding GAAP measure, Net income or Income (loss) before income taxes.   
  3. A reconciliation of Operating cash flow (Non-GAAP) to Operating income (GAAP) for full year 2016, 2015 and 2014 actual results can be found on the Guidance and Reconciliation page of the company's website at investors.uscellular.com.

 


Conference Call Information

U.S. Cellular will hold a conference call on February 24, 2017 at 9:30 a.m. Central Time.

  • Access the live call on the Events & Presentation page of investors.uscellular.com or at https://www.webcaster4.com/Webcast/Page/1145/19842.
  • 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 5 million connections in 23 states. The Chicago-based company had 6,300 full- and part-time associates as of December 31, 2016. At December 31, 2016, Telephone and Data Systems, Inc. owned 83 percent of U.S. Cellular. For more information about U.S. Cellular, visit uscellular.com.

Contacts

Jane McCahon, Senior Vice President - Corporate Relations and Corporate Secretary of TDS

312-592-5379

jane.mccahon@tdsinc.com

 

Julie Mathews, IRC, Director - Investor Relations of TDS

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: intense competition; the ability to execute U.S. Cellular’s business strategy; uncertainties in U.S. Cellular’s future cash flows and liquidity and access to the capital markets; the ability to make payments on U.S. Cellular indebtedness or comply with the terms of debt covenants; impacts of any pending acquisitions/divestitures/exchanges of properties and/or licenses,  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 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 U.S. Cellular debt securities by accredited ratings organizations; industry consolidation; advances in telecommunications technology; 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.   

For more information about U.S. Cellular, visit:

U.S. Cellular: www.uscellular.com


 


United States Cellular Corporation

Summary Operating Data (Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter Ended

12/31/2016

 

9/30/2016

 

6/30/2016

 

3/31/2016

 

12/31/2015

Retail Connections

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Postpaid

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total at end of period

 

4,482,000 

 

 

4,484,000 

 

 

4,490,000 

 

 

4,454,000 

 

 

4,409,000 

 

 

Gross additions

 

187,000 

 

 

174,000 

 

 

197,000 

 

 

215,000 

 

 

240,000 

 

 

 

Feature phones

 

7,000 

 

 

10,000 

 

 

8,000 

 

 

9,000 

 

 

10,000 

 

 

 

Smartphones

 

109,000 

 

 

105,000 

 

 

107,000 

 

 

124,000 

 

 

132,000 

 

 

 

Connected devices

 

71,000 

 

 

59,000 

 

 

82,000 

 

 

82,000 

 

 

98,000 

 

 

Net additions (losses)

 

(2,000)

 

 

(6,000)

 

 

36,000 

 

 

45,000 

 

 

68,000 

 

 

 

Feature phones

 

(21,000)

 

 

(20,000)

 

 

(21,000)

 

 

(25,000)

 

 

(25,000)

 

 

 

Smartphones

 

(4,000)

 

 

(7,000)

 

 

8,000 

 

 

20,000 

 

 

23,000 

 

 

 

Connected devices

 

23,000 

 

 

21,000 

 

 

49,000 

 

 

50,000 

 

 

70,000 

 

 

ARPU (1)

$

45.19 

 

$

47.08 

 

$

47.37 

 

$

48.13 

 

$

51.46 

 

 

ABPU (Non-GAAP)(2)

$

55.43 

 

$

56.79 

 

$

56.09 

 

$

56.06 

 

$

58.57 

 

 

ARPA (3)

$

120.67 

 

$

125.31 

 

$

124.91 

 

$

125.36 

 

$

131.96 

 

 

ABPA (Non-GAAP)(4)

$

148.02 

 

$

151.16 

 

$

147.90 

 

$

145.99 

 

$

150.19 

 

 

Churn rate (5)

 

1.41%

 

 

1.34%

 

 

1.20%

 

 

1.28%

 

 

1.31%

 

 

 

Handsets

 

1.23%

 

 

1.22%

 

 

1.10%

 

 

1.18%

 

 

1.23%

 

 

 

Connected devices

 

2.49%

 

 

2.04%

 

 

1.84%

 

 

2.01%

 

 

1.95%

 

 

Smartphone penetration (6)

 

79%

 

 

78%

 

 

77%

 

 

75%

 

 

74%

 

Prepaid

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total at end of period

 

484,000 

 

 

480,000 

 

 

413,000 

 

 

399,000 

 

 

387,000 

 

 

Gross additions

 

83,000 

 

 

132,000 

 

 

73,000 

 

 

75,000 

 

 

69,000 

 

 

Net additions

 

4,000 

 

 

67,000 

 

 

14,000 

 

 

12,000 

 

 

7,000 

 

 

ARPU (1)

$

33.25 

 

$

34.39 

 

$

34.58 

 

$

35.51 

 

$

35.54 

 

 

Churn rate (5)

 

5.44%

 

 

4.84%

 

 

4.86%

 

 

5.37%

 

 

5.40%

Total connections at end of period (7)

 

5,031,000 

 

 

5,030,000 

 

 

4,973,000 

 

 

4,926,000 

 

 

4,876,000 

Smartphones sold as a percent of total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

handsets sold

 

93%

 

 

92%

 

 

91%

 

 

92%

 

 

91%

Market penetration at end of period

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated operating population

 

31,994,000 

 

 

31,994,000 

 

 

31,994,000 

 

 

31,994,000 

 

 

31,967,000 

 

Consolidated operating penetration (8)

 

16%

 

 

16%

 

 

16%

 

 

15%

 

 

15%

Capital expenditures (millions)

$

171 

 

$

103 

 

$

93 

 

$

79 

 

$

198 

Total cell sites in service

 

6,415 

 

 

6,374 

 

 

6,324 

 

 

6,306 

 

 

6,297 

Owned towers

 

4,040 

 

 

4,015 

 

 

3,988 

 

 

3,989 

 

 

3,978 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Average Revenue Per User (“ARPU”) - metric calculated by dividing a revenue base by an average number of connections and by the number of months in the period.  These revenue bases and connection populations are shown below:

 

 

 

Postpaid ARPU consists of total postpaid service revenues and postpaid connections.

 

 

 

Prepaid ARPU consists of total prepaid service revenues and prepaid connections.

(2)

Average Billings Per User (“ABPU”) - non-GAAP metric calculated by dividing total postpaid service revenues plus equipment installment plan billings by the average number of postpaid connections and by the number of months in the period.  Refer to the end of this release for a reconciliation of this metric to its most comparable GAAP metric.

(3)

Average Revenue Per Account (“ARPA”) - metric calculated by dividing total postpaid service revenues by the average number of postpaid accounts and by the number of months in the period.

(4)

Average Billings Per Account (“ABPA”) - non-GAAP metric calculated by dividing total postpaid service revenues plus equipment installment plan billings by the average number of postpaid accounts and by the number of months in the period.  Refer to the end of this release for a reconciliation of this metric to its most comparable GAAP metric.

(5)

Churn rate represents the percentage of the connections that disconnect service each month.  These rates represent the average monthly churn rate for each respective period.

(6)

Smartphone penetration is calculated by dividing postpaid smartphone connections by postpaid handset connections.

(7)

Includes reseller and other connections.

(8)

Market penetration is calculated by dividing the number of wireless connections at the end of the period by the total population of consolidated operating markets as estimated by Nielsen.


 


United States Cellular Corporation

Consolidated Statement of Operations Highlights

(Unaudited)

 

 

 

Three Months Ended December 31,

 

 

 

 

 

2016 vs. 2015

 

 

 

2016

 

2015

 

Increase (Decrease)

(Dollars and shares in millions, except per share amounts)

 

 

 

 

 

 

 

 

 

 

Operating revenues

 

 

 

 

 

 

 

 

 

 

 

Service

$

737 

 

$

802 

 

$

(65)

 

(8)%

 

Equipment sales

 

254 

 

 

185 

 

 

69 

 

37%

 

 

Total operating revenues

 

991 

 

 

987 

 

 

4 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

System operations (excluding Depreciation, amortization

   and accretion reported below)

 

188 

 

 

189 

 

 

(1)

 

-

 

Cost of equipment sold

 

283 

 

 

274 

 

 

9 

 

3%

 

Selling, general and administrative

 

390 

 

 

388 

 

 

2 

 

1%

 

Depreciation, amortization and accretion

 

156 

 

 

156 

 

 

 

 

-

 

(Gain) loss on asset disposals, net

 

6 

 

 

4 

 

 

2 

 

43%

 

(Gain) loss on license sales and exchanges, net

 

(3)

 

 

 

 

 

(3)

 

N/M

 

 

Total operating expenses

 

1,020 

 

 

1,011 

 

 

9 

 

1%

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating loss

 

(29)

 

 

(24)

 

 

(5)

 

(21)%

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment and other income (expense)

 

 

 

 

 

 

 

 

 

 

 

Equity in earnings of unconsolidated entities

 

30 

 

 

30 

 

 

 

 

-

 

Interest and dividend income

 

16 

 

 

10 

 

 

6 

 

53%

 

Interest expense

 

(29)

 

 

(25)

 

 

(4)

 

17%

 

Other, net

 

1 

 

 

1 

 

 

 

 

(13)%

 

 

Total investment and other income

 

18 

 

 

16 

 

 

2 

 

9%

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss before income taxes

 

(11)

 

 

(8)

 

 

(3)

 

(49)%

 

Income tax benefit

 

(6)

 

 

(5)

 

 

(1)

 

(24)%

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

(5)

 

 

(3)

 

 

(2)

 

(95)%

 

Less: Net income (loss) attributable to noncontrolling

     interests, net of tax

 

1 

 

 

(1)

 

 

2 

 

>(100)%

Net loss attributable to U.S. Cellular shareholders

$

(6)

 

$

(2)

 

$

(4)

 

>(100)%

 

 

 

 

 

 

 

 

 

 

 

 

Basic weighted average shares outstanding

 

85 

 

 

84 

 

 

1 

 

1%

Basic loss per share attributable to

   U.S. Cellular shareholders

$

(0.07)

 

$

(0.02)

 

$

(0.05)

 

>(100)%

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted weighted average shares outstanding

 

85 

 

 

84 

 

 

1 

 

1%

Diluted loss per share attributable to

   U.S. Cellular shareholders

$

(0.07)

 

$

(0.02)

 

$

(0.05)

 

>(100)%

 

N/M - Percentage change not meaningful

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 


United States Cellular Corporation

Consolidated Statement of Operations Highlights

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended December 31,

 

 

 

 

 

2016 vs. 2015

 

 

 

2016

 

2015

 

Increase (Decrease)

(Dollars and shares in millions, except per share amounts)

 

 

 

 

 

 

 

 

 

 

Operating revenues

 

 

 

 

 

 

 

 

 

 

 

Service

$

3,030 

 

$

3,350 

 

$

(320)

 

(10)%

 

Equipment sales

 

909 

 

 

647 

 

 

262 

 

41%

 

 

Total operating revenues

 

3,939 

 

 

3,997 

 

 

(58)

 

(1)%

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

System operations (excluding Depreciation, amortization

   and accretion reported below)

 

760 

 

 

775 

 

 

(15)

 

(2)%

 

Cost of equipment sold

 

1,081 

 

 

1,053 

 

 

28 

 

3%

 

Selling, general and administrative

 

1,480 

 

 

1,494 

 

 

(14)

 

(1)%

 

Depreciation, amortization and accretion

 

618 

 

 

607 

 

 

11 

 

2%

 

(Gain) loss on asset disposals, net

 

22 

 

 

16 

 

 

6 

 

36%

 

(Gain) loss on sale of business and other exit costs, net

 

 

 

 

(114)

 

 

114 

 

100%

 

(Gain) loss on license sales and exchanges, net

 

(19)

 

 

(147)

 

 

128 

 

87%

 

 

Total operating expenses

 

3,942 

 

 

3,684 

 

 

258 

 

7%

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income (loss)

 

(3)

 

 

313 

 

 

(316)

 

>(100)%

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment and other income (expense)

 

 

 

 

 

 

 

 

 

 

 

Equity in earnings of unconsolidated entities

 

140 

 

 

140 

 

 

 

 

-

 

Interest and dividend income

 

57 

 

 

36 

 

 

21 

 

57%

 

Interest expense

 

(113)

 

 

(86)

 

 

(27)

 

(31)%

 

Other, net

 

1 

 

 

1 

 

 

 

 

10%

 

 

Total investment and other income

 

85 

 

 

91 

 

 

(6)

 

(7)%

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

82 

 

 

404 

 

 

(322)

 

(80)%

 

Income tax expense

 

33 

 

 

157 

 

 

(124)

 

(79)%

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

49 

 

 

247 

 

 

(198)

 

(80)%

 

Less: Net income attributable to noncontrolling

     interests, net of tax

 

1 

 

 

6 

 

 

(5)

 

(71)%

Net income attributable to U.S. Cellular shareholders

$

48 

 

$

241 

 

$

(193)

 

(80)%

 

 

 

 

 

 

 

 

 

 

 

 

Basic weighted average shares outstanding

 

85 

 

 

84 

 

 

1 

 

1%

Basic earnings per share attributable to

   U.S. Cellular shareholders

$

0.56 

 

$

2.86 

 

$

(2.30)

 

(80)%

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted weighted average shares outstanding

 

85 

 

 

85 

 

 

 

 

1%

Diluted earnings per share attributable to

   U.S. Cellular shareholders

$

0.56 

 

$

2.84 

 

$

(2.28)

 

(80)%

 

N/M - Percentage change not meaningful

 


 


United States Cellular Corporation

Consolidated Statement of Cash Flows

(Unaudited)

 

 

 

 

Year Ended December 31,

 

2016

 

2015

(Dollars in millions)

 

 

 

 

 

Cash flows from operating activities

 

 

 

 

 

 

Net income

$

49 

 

$ 

247 

 

Add (deduct) adjustments to reconcile net income (loss) to net

 

 

 

 

 

 

   cash flows from operating activities

 

 

 

 

 

 

 

Depreciation, amortization and accretion

 

618 

 

 

607 

 

 

Bad debts expense

 

96 

 

 

106 

 

 

Stock-based compensation expense

 

26 

 

 

25 

 

 

Deferred income taxes, net

 

6 

 

 

55 

 

 

Equity in earnings of unconsolidated entities

 

(140)

 

 

(140)

 

 

Distributions from unconsolidated entities

 

93 

 

 

60 

 

 

(Gain) loss on asset disposals, net

 

22 

 

 

16 

 

 

(Gain) loss on sale of business and other exit costs, net

 

 

 

 

(114)

 

 

(Gain) loss on license sales and exchanges, net

 

(19)

 

 

(147)

 

 

Noncash interest expense

 

2 

 

 

2 

 

 

Other operating activities

 

(2)

 

 

 

 

Changes in assets and liabilities from operations

 

 

 

 

 

 

 

Accounts receivable

 

(23)

 

 

(96)

 

 

Equipment installment plans receivable

 

(246)

 

 

(134)

 

 

Inventory

 

8 

 

 

118 

 

 

Accounts payable

 

48 

 

 

5 

 

 

Customer deposits and deferred revenues

 

(54)

 

 

(37)

 

 

Accrued taxes

 

40 

 

 

34 

 

 

Accrued interest

 

(2)

 

 

4 

 

 

Other assets and liabilities

 

(21)

 

 

(56)

 

 

 

Net cash provided by operating activities

 

501 

 

 

555 

 

 

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

 

Cash paid for additions to property, plant and equipment

 

(443)

 

 

(581)

 

Cash paid for acquisitions and licenses

 

(53)

 

 

(286)

 

Cash received from divestitures and exchanges

 

21 

 

 

317 

 

Federal Communications Commission deposit

 

(143)

 

 

 

 

Other investing activities

 

 

 

 

1 

 

 

 

Net cash used in investing activities

 

(618)

 

 

(549)

 

 

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

 

Issuance of long-term debt

 

 

 

 

525 

 

Repayment of long-term debt

 

(11)

 

 

 

 

Common shares reissued for benefit plans, net of tax payments

 

6 

 

 

2 

 

Common shares repurchased

 

(5)

 

 

(6)

 

Payment of debt issuance costs

 

(2)

 

 

(13)

 

Acquisition of towers in common control transaction

 

 

 

 

(2)

 

Distributions to noncontrolling interests

 

(1)

 

 

(6)

 

Payments to acquire additional interest in subsidiaries

 

 

 

 

(2)

 

Other financing activities

 

1 

 

 

(1)

 

 

 

Net cash provided by (used in) financing activities

 

(12)

 

 

497 

 

 

 

 

 

 

 

 

 

Net increase (decrease) in cash and cash equivalents

 

(129)

 

 

503 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

 

 

 

 

Beginning of period

 

715 

 

 

212 

 

End of period

$

586 

 

$ 

715 


 


United States Cellular Corporation

Consolidated Balance Sheet Highlights

(Unaudited)

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

December 31,

 

December 31,

 

 

2016

 

2015

(Dollars in millions)

 

 

 

 

 

Current assets

 

 

 

 

 

 

Cash and cash equivalents

$

586 

 

$

715 

 

Accounts receivable from customers and others, net

 

727 

 

 

672 

 

Inventory, net

 

138 

 

 

149 

 

Prepaid expenses

 

84 

 

 

81 

 

Other current assets

 

23 

 

 

55 

 

Total current assets

 

1,558 

 

 

1,672 

 

 

 

 

 

 

 

Assets held for sale

 

8 

 

 

 

 

 

 

 

 

 

 

Licenses

 

1,886 

 

 

1,834 

Goodwill

 

370 

 

 

370 

Investments in unconsolidated entities

 

413 

 

 

363 

 

 

 

 

 

 

 

Property, plant and equipment

 

 

 

 

 

 

In service and under construction

 

7,712 

 

 

7,669 

 

Less: Accumulated depreciation

 

5,242 

 

 

5,020 

 

          Property, plant and equipment, net

 

2,470 

 

 

2,649 

 

 

 

 

 

 

 

Other assets and deferred charges

 

405 

 

 

172 

 

 

 

 

 

 

 

Total assets

$

7,110 

 

$

7,060 

 

 

 

 

 

 

 

 


 


United States Cellular Corporation

Consolidated Balance Sheet Highlights

(Unaudited)

 

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

 

 

 

 

December 31,

 

December 31,

 

 

 

2016

 

2015

(Dollars and shares in millions, except per share amounts)

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Current portion of long-term debt

$

11 

 

$

11 

 

Accounts payable

 

 

 

 

 

 

 

Affiliated

 

12 

 

 

10 

 

 

Trade

 

309 

 

 

275 

 

Customer deposits and deferred revenues

 

190 

 

 

251 

 

Accrued taxes

 

39 

 

 

28 

 

Accrued compensation

 

73 

 

 

68 

 

Other current liabilities

 

84 

 

 

105 

 

 

Total current liabilities

 

718 

 

 

748 

 

 

 

 

 

 

 

 

Deferred liabilities and credits

 

 

 

 

 

 

Net deferred income tax liability, net

 

826 

 

 

821 

 

Other deferred liabilities and credits

 

302 

 

 

290 

 

 

 

 

 

 

 

 

Long-term debt, net

 

1,618 

 

 

1,629 

 

 

 

 

 

 

 

 

Noncontrolling interests with redemption features

 

1 

 

 

1 

 

 

 

 

 

 

 

 

Equity

 

 

 

 

 

U.S. Cellular shareholders' equity

 

 

 

 

 

 

Series A Common and Common Shares, par value $1 per share

 

88 

 

 

88 

 

Additional paid-in capital

 

1,522 

 

 

1,497 

 

Treasury shares

 

(136)

 

 

(157)

 

Retained earnings

 

2,160 

 

 

2,133 

 

 

Total U.S. Cellular shareholders' equity

 

3,634 

 

 

3,561 

 

 

 

 

 

 

 

 

Noncontrolling interests

 

11 

 

 

10 

 

 

 

 

 

 

 

 

 

Total equity

 

3,645 

 

 

3,571 

 

 

 

 

 

 

 

 

Total liabilities and equity

$

7,110 

 

$

7,060 

 

 

 

 

 

 

 

 

 

 


 


United States Cellular Corporation

Financial Measures and Reconciliations

(Unaudited)

Free Cash Flow and Adjusted Free Cash Flow

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Year Ended

 

 

 

 

December 31,

 

December 31,

 

 

 

2016

 

 

2015

 

 

2016

 

 

2015

(Dollars in millions)

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows from operating activities (GAAP)

 

$

86 

 

$

 

 

$

501 

 

$

555 

Less: Cash used for additions to property, plant

     and equipment

 

 

163 

 

 

174 

 

 

443 

 

 

581 

 

 

Free cash flow

 

 

(77)

 

 

(174)

 

 

58 

 

 

(26)

Add: Sprint Cost Reimbursement

 

 

1 

 

 

2 

 

 

7 

 

 

30 

 

Adjusted free cash flow (Non-GAAP) (1) 

 

$

(76)

 

$

(172)

 

$

65 

 

$

4 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Management uses Free cash flow as a liquidity measure and it is defined as Cash flows from operating activities less Cash paid for additions to property, plant and equipment.  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 paid for additions to property, plant and equipment.  Sprint decommissioning and Sprint Cost Reimbursement are further defined and discussed in our Annual Report on Form 10-K for the year ended December 31, 2016.  Free cash flow and Adjusted free cash flow are non-GAAP financial measures 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 paid for additions to property, plant and equipment.

 

Postpaid ABPU and Postpaid ABPA

U.S. Cellular presents Postpaid ABPU and Postpaid ABPA to reflect the revenue shift from Service revenues to Equipment sales resulting from the increased adoption of equipment installment plans.  Postpaid ABPU and Postpaid ABPA, as previously defined, are non-GAAP financial measures which U.S. Cellular believes are useful to investors and other users of its financial information in showing trends in both service and equipment revenues received from customers.

For the Quarter Ended

 

12/31/2016

 

 

9/30/2016

 

 

6/30/2016

 

 

3/31/2016

 

 

12/31/2015

(Dollars and connection counts in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Calculation of Postpaid ARPU

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Postpaid service revenues

$

607 

 

$

635 

 

$

636 

 

$

639 

 

$

674 

Average number of postpaid connections

 

4.48 

 

 

4.49 

 

 

4.48 

 

 

4.43 

 

 

4.37 

Number of months in period

 

3 

 

 

3 

 

 

3 

 

 

3 

 

 

3 

 

Postpaid ARPU (GAAP metric)

$

45.19 

 

$

47.08 

 

$

47.37 

 

$

48.13 

 

$

51.46 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Calculation of Postpaid ABPU

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Postpaid service revenues

$

607 

 

$

635 

 

$

636 

 

$

639 

 

$

674 

Equipment installment plan billings

 

138 

 

 

131 

 

 

118 

 

 

105 

 

 

93 

 

Total billings to postpaid connections

$

745 

 

$

766 

 

$

754 

 

$

744 

 

$

767 

Average number of postpaid connections

 

4.48 

 

 

4.49 

 

 

4.48 

 

 

4.43 

 

 

4.37 

Number of months in period

 

3 

 

 

3 

 

 

3 

 

 

3 

 

 

3 

 

Postpaid ABPU (Non-GAAP metric)

$

55.43 

 

$

56.79 

 

$

56.09 

 

$

56.06 

 

$

58.57 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Calculation of Postpaid ARPA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Postpaid service revenues

$

607 

 

$

635 

 

$

636 

 

$

639 

 

$

674 

Average number of postpaid accounts

 

1.68 

 

 

1.69 

 

 

1.70 

 

 

1.70 

 

 

1.70 

Number of months in period

 

3 

 

 

3 

 

 

3 

 

 

3 

 

 

3 

 

Postpaid ARPA (GAAP metric)

$

120.67 

 

$

125.31 

 

$

124.91 

 

$

125.36 

 

$

131.96 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Calculation of Postpaid ABPA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Postpaid service revenues

$

607 

 

$

635 

 

$

636 

 

$

639 

 

$

674 

Equipment installment plan billings

 

138 

 

 

131 

 

 

118 

 

 

105 

 

 

93 

 

Total billings to postpaid accounts

$

745 

 

$

766 

 

$

754 

 

$

744 

 

$

767 

Average number of postpaid accounts

 

1.68 

 

 

1.69 

 

 

1.70 

 

 

1.70 

 

 

1.70 

Number of months in period

 

3 

 

 

3 

 

 

3 

 

 

3 

 

 

3 

 

Postpaid ABPA (Non-GAAP metric)

$

148.02 

 

$

151.16 

 

$

147.90 

 

$

145.99 

 

$

150.19