CHICAGO, Nov. 4, 2016 /PRNewswire/ -- United States
Cellular Corporation (NYSE:USM) reported total operating revenues
of $1,010 million for the third
quarter of 2016, versus $1,069
million for the same period one year ago. Net income
attributable to U.S. Cellular shareholders and related diluted
earnings per share were $17 million
and $0.20, respectively, for the
third quarter of 2016, compared to $64
million and $0.75,
respectively, in the same period one year ago.
Note: In the third quarter of 2016, U.S. Cellular terminated
a naming rights agreement and recognized a charge of $13 million while, in the third quarter of 2015,
it discontinued its loyalty rewards program and recognized
$58 million in service
revenues.
"U.S. Cellular stayed focused on achieving its long-term
objectives throughout the quarter, despite an extremely competitive
climate. While the year over year comparison of financial
results is impacted by a couple of items, when I look past those
items, I am pleased with the Company's financial performance," said
Kenneth R. Meyers, U.S. Cellular
president and CEO. "We continue to differentiate ourselves
through an unwavering commitment to an exceptional customer
experience, including a high-quality network and outstanding
customer service.
"Customer loyalty remained strong as evidenced by low churn, and
we drove prepaid customer growth significantly as we introduced
more attractive promotions. We are pleased to see continued
smartphone adoption and connected device sales which strengthen the
demand for data. We had the highest pre-sales in U.S. Cellular
history with the iPhone 7 launch, although supply constraints
limited sales in the quarter. We also saw greater adoption of
equipment installment plans (EIP), which generated growth in
equipment revenue and reduced loss on equipment.
"To meet the growing demand for data, we continue to enhance our
high-quality network by investing in technology like Voice over LTE
(VoLTE). We are pleased to report that our buildout is on schedule
as our network team is working toward our first commercial
deployment of VoLTE early next year."
2016 Estimated Results
U.S. Cellular's current
estimates of full-year 2016 results, which are unchanged from the
previous estimates, are shown below. Such estimates represent
management's view as of November 4,
2016. 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.
|
|
2016 Estimated
Results
|
|
|
Current
|
|
Previous
|
(Dollars in
millions)
|
|
|
|
|
Total operating
revenues
|
$3,900-$4,100
|
|
Unchanged
|
Operating cash flow
(1)
|
$525-$650
|
|
Unchanged
|
Adjusted EBITDA
(1)
|
$725-$850
|
|
Unchanged
|
Capital
expenditures
|
Approx.
$
|
500
|
|
Unchanged
|
The following table provides a reconciliation to Operating Cash
Flow and Adjusted EBITDA for 2016 estimated results, and actual
results for the nine months ended September
30, 2016 and year ended December
31, 2015. In providing 2016 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,
U.S. Cellular is unable to provide such guidance.
|
|
|
|
|
|
|
|
Actual
Results
|
|
|
|
|
|
2016
Estimated Results
|
|
|
Nine Months
Ended
September 30, 2016
|
|
|
Year
Ended
December 31,
2015*
|
(Dollars in
millions)
|
|
|
|
|
|
|
|
|
|
Net income
(GAAP)
|
|
|
N/A
|
|
$
|
54
|
|
$
|
247
|
Add back:
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
(benefit)
|
|
|
N/A
|
|
|
39
|
|
|
156
|
Income (loss)
before income taxes
|
|
|
|
|
|
|
|
|
|
|
(GAAP)
|
|
$
|
(5)-120
|
|
$
|
93
|
|
$
|
404
|
Add back:
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
110
|
|
|
84
|
|
|
86
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation, amortization and accretion
expense
|
|
|
615
|
|
|
462
|
|
|
606
|
EBITDA
(Non-GAAP)
|
|
$
|
720-845
|
|
$
|
639
|
|
$
|
1,096
|
Add back
(deduct):
|
|
|
|
|
|
|
|
|
|
|
(Gain) loss on sale
of business and other exit costs,
net
|
|
|
–
|
|
|
–
|
|
|
(114)
|
|
(Gain) loss on
license sales and exchanges,
net
|
|
|
(15)
|
|
|
(16)
|
|
|
(147)
|
|
(Gain) loss on assets
disposals, net
|
|
|
20
|
|
|
16
|
|
|
16
|
Adjusted EBITDA
(Non-GAAP) (1)
|
|
$
|
725-850
|
|
$
|
639
|
|
$
|
852
|
Deduct:
|
|
|
|
|
|
|
|
|
|
|
Equity in earnings of unconsolidated
entities
|
|
|
140
|
|
|
110
|
|
|
140
|
|
Interest and dividend
income
|
|
|
60
|
|
|
41
|
|
|
37
|
Operating cash flow
(Non-GAAP) (1)(2)
|
|
$
|
525-650
|
|
$
|
488
|
|
$
|
675
|
|
|
|
|
|
|
|
|
|
|
|
|
* Includes $58
million of revenue related to termination of the rewards points
program.
|
Note: Totals may not
foot due to rounding differences.
|
(1)
|
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 measure of
liquidity. TDS 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 TDS'
operating results before significant recurring non-cash charges,
gains and losses, and other items as presented below as they
provide additional relevant and useful information to investors and
other users of TDS' 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.
|
(2)
|
A reconciliation of
Operating cash flow (Non-GAAP) to Operating income (GAAP) for
September 30, 2016 actual results can be found on the company's
website at investors.uscellular.com.
|
Conference Call Information
U.S. Cellular will hold a
conference call on November 4, 2016
at 9:30 a.m. Central Time.
- Access the live call on the Events & Presentations page of
investors.uscellular.com or at
https://www.webcaster4.com/Webcast/Page/1145/17986.
- 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 customers
with 5 million connections in 23 states. The Chicago-based company had 6,300 full- and
part-time associates as of September 30,
2016. At the end of the third quarter of 2016, Telephone and
Data Systems, Inc. owned 83 percent of U.S. Cellular. For more
information about U.S. Cellular, visit uscellular.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 overall
economy; the access to and pricing of unbundled network elements;
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, 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)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of or for the
Quarter Ended
|
9/30/2016
|
|
6/30/2016
|
|
3/31/2016
|
|
|
12/31/2015
|
|
9/30/2015
|
Retail
Connections
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Postpaid
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total at end of
period
|
|
4,484,000
|
|
|
4,490,000
|
|
|
4,454,000
|
|
|
4,409,000
|
|
|
4,341,000
|
|
|
Gross
additions
|
|
174,000
|
|
|
197,000
|
|
|
215,000
|
|
|
240,000
|
|
|
200,000
|
|
|
|
Feature
phones
|
|
10,000
|
|
|
8,000
|
|
|
9,000
|
|
|
10,000
|
|
|
14,000
|
|
|
|
Smartphones
|
|
105,000
|
|
|
107,000
|
|
|
124,000
|
|
|
132,000
|
|
|
119,000
|
|
|
|
Connected
devices
|
|
59,000
|
|
|
82,000
|
|
|
82,000
|
|
|
98,000
|
|
|
67,000
|
|
|
Net additions
(losses)
|
|
(6,000)
|
|
|
36,000
|
|
|
45,000
|
|
|
68,000
|
|
|
17,000
|
|
|
|
Feature
phones
|
|
(20,000)
|
|
|
(21,000)
|
|
|
(25,000)
|
|
|
(25,000)
|
|
|
(28,000)
|
|
|
|
Smartphones
|
|
(7,000)
|
|
|
8,000
|
|
|
20,000
|
|
|
23,000
|
|
|
6,000
|
|
|
|
Connected
devices
|
|
21,000
|
|
|
49,000
|
|
|
50,000
|
|
|
70,000
|
|
|
39,000
|
|
|
ARPU
(1)(8)
|
$
|
47.08
|
|
$
|
47.37
|
|
$
|
48.13
|
|
$
|
51.46
|
|
$
|
58.12
|
|
|
ABPU
(Non-GAAP)(2)(8)
|
$
|
56.79
|
|
$
|
56.09
|
|
$
|
56.06
|
|
$
|
58.57
|
|
$
|
63.88
|
|
|
ARPA
(3)(8)
|
$
|
125.31
|
|
$
|
124.91
|
|
$
|
125.36
|
|
$
|
131.96
|
|
$
|
147.00
|
|
|
ABPA
(Non-GAAP)(4)(8)
|
$
|
151.16
|
|
$
|
147.90
|
|
$
|
145.99
|
|
$
|
150.19
|
|
$
|
161.57
|
|
|
Churn rate
(5)
|
|
1.34%
|
|
|
1.20%
|
|
|
1.28%
|
|
|
1.31%
|
|
|
1.41%
|
|
|
|
Handsets
|
|
1.22%
|
|
|
1.10%
|
|
|
1.18%
|
|
|
1.23%
|
|
|
1.33%
|
|
|
|
Connected
devices
|
|
2.04%
|
|
|
1.84%
|
|
|
2.01%
|
|
|
1.95%
|
|
|
2.20%
|
|
|
Smartphone
penetration (6)
|
|
78%
|
|
|
77%
|
|
|
75%
|
|
|
74%
|
|
|
72%
|
|
Prepaid
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total at end of
period
|
|
480,000
|
|
|
413,000
|
|
|
399,000
|
|
|
387,000
|
|
|
380,000
|
|
|
Gross
additions
|
|
132,000
|
|
|
73,000
|
|
|
75,000
|
|
|
69,000
|
|
|
71,000
|
|
|
Net additions
(losses)
|
|
67,000
|
|
|
14,000
|
|
|
12,000
|
|
|
7,000
|
|
|
12,000
|
|
|
ARPU (1)
|
$
|
34.39
|
|
$
|
34.58
|
|
$
|
35.51
|
|
$
|
35.54
|
|
$
|
35.64
|
|
|
Churn rate
(5)
|
|
4.84%
|
|
|
4.86%
|
|
|
5.37%
|
|
|
5.40%
|
|
|
5.24%
|
Total connections
at end of period (9)
|
|
5,030,000
|
|
|
4,973,000
|
|
|
4,926,000
|
|
|
4,876,000
|
|
|
4,807,000
|
Smartphones sold
as a percent of total handsets sold
|
|
92%
|
|
|
91%
|
|
|
92%
|
|
|
91%
|
|
|
87%
|
Market penetration
at end of period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
operating population
|
|
31,994,000
|
|
|
31,994,000
|
|
|
31,994,000
|
|
|
31,967,000
|
|
|
31,814,000
|
|
Consolidated
operating penetration (7)
|
|
16%
|
|
|
16%
|
|
|
15%
|
|
|
15%
|
|
|
15%
|
Capital
expenditures (millions)
|
$
|
103
|
|
$
|
93
|
|
$
|
79
|
|
$
|
198
|
|
$
|
135
|
Total cell sites
in service
|
|
6,374
|
|
|
6,324
|
|
|
6,306
|
|
|
6,297
|
|
|
6,246
|
Owned
towers
|
|
4,015
|
|
|
3,988
|
|
|
3,989
|
|
|
3,978
|
|
|
3,957
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Average Revenue Per
User ("ARPU") - metric is 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 is 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 is 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 is 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)
|
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.
|
(8)
|
The quarter ended
September 30, 2015 results include the recognition of $58 million
in revenue due to the discontinuation of the loyalty rewards points
program. The discontinuation had the effect of increasing
ARPU/ABPU and ARPA/ABPA by $4.48 and $11.34 for the three months
ended September 2015, respectively.
|
(9)
|
Includes reseller and
other connections.
|
United States
Cellular Corporation
|
Consolidated
Statement of Operations Highlights
|
(Unaudited)
|
|
|
|
|
Three Months Ended
September 30,
|
|
|
|
2016
|
|
2015
|
|
2016 vs.
2015
|
|
|
|
|
|
Increase
(Decrease)
|
(Dollars and shares
in millions, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
Operating
revenues
|
|
|
|
|
|
|
|
|
|
|
|
Service
|
$
|
771
|
|
$
|
896
|
|
$
|
(125)
|
|
(14)%
|
|
Equipment
sales
|
|
239
|
|
|
173
|
|
|
66
|
|
38%
|
|
|
Total operating
revenues
|
|
1,010
|
|
|
1,069
|
|
|
(59)
|
|
(6)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
|
|
|
|
|
|
|
System operations
(excluding Depreciation, amortization and accretion reported below)
|
|
196
|
|
|
199
|
|
|
(3)
|
|
(1)%
|
|
Cost of equipment
sold
|
|
280
|
|
|
287
|
|
|
(7)
|
|
(2)%
|
|
Selling, general and
administrative
|
|
370
|
|
|
375
|
|
|
(5)
|
|
(1)%
|
|
Depreciation,
amortization and accretion
|
|
155
|
|
|
152
|
|
|
3
|
|
2%
|
|
(Gain) loss on asset
disposals, net
|
|
7
|
|
|
3
|
|
|
4
|
|
>100%
|
|
(Gain) loss on sale
of business and other exit costs, net
|
|
–
|
|
|
(1)
|
|
|
1
|
|
N/M
|
|
(Gain) loss on
license sales and exchanges, net
|
|
(7)
|
|
|
(24)
|
|
|
17
|
|
70%
|
|
|
Total operating
expenses
|
|
1,001
|
|
|
991
|
|
|
10
|
|
1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
|
9
|
|
|
78
|
|
|
(69)
|
|
(88)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment and
other income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
Equity in earnings of
unconsolidated entities
|
|
38
|
|
|
40
|
|
|
(2)
|
|
(5)%
|
|
Interest and dividend
income
|
|
14
|
|
|
9
|
|
|
5
|
|
51%
|
|
Interest
expense
|
|
(28)
|
|
|
(21)
|
|
|
(7)
|
|
(32)%
|
|
Other, net
|
|
–
|
|
|
–
|
|
|
–
|
|
20%
|
|
|
Total investment and
other income
|
|
24
|
|
|
28
|
|
|
(4)
|
|
(14)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before
income taxes
|
|
33
|
|
|
106
|
|
|
(73)
|
|
(69)%
|
|
Income tax
expense
|
|
15
|
|
|
41
|
|
|
(26)
|
|
(63)%
|
Net
income
|
|
18
|
|
|
65
|
|
|
(47)
|
|
(73)%
|
|
Less: Net income
attributable to noncontrolling interests, net of tax
|
|
1
|
|
|
1
|
|
|
–
|
|
(53)%
|
Net income
attributable to U.S. Cellular shareholders
|
$
|
17
|
|
$
|
64
|
|
$
|
(47)
|
|
(73)%
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic weighted
average shares outstanding
|
|
85
|
|
|
84
|
|
|
1
|
|
1%
|
Basic earnings per
share attributable to
U.S.
Cellular shareholders
|
$
|
0.20
|
|
$
|
0.75
|
|
$
|
(0.55)
|
|
(73)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted
average shares outstanding
|
|
85
|
|
|
85
|
|
|
–
|
|
-
|
Diluted earnings
per share attributable to
U.S.
Cellular shareholders
|
$
|
0.20
|
|
$
|
0.75
|
|
$
|
(0.55)
|
|
(73)%
|
United States
Cellular Corporation
|
Consolidated
Statement of Operations Highlights
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
September 30,
|
|
|
|
2016
|
|
2015
|
|
2016 vs.
2015
|
|
|
|
|
|
Increase
(Decrease)
|
(Dollars and shares
in millions, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
Operating
revenues
|
|
|
|
|
|
|
|
|
|
|
|
Service
|
$
|
2,293
|
|
$
|
2,549
|
|
$
|
(256)
|
|
(10)%
|
|
Equipment
sales
|
|
655
|
|
|
461
|
|
|
194
|
|
42%
|
|
|
Total operating
revenues
|
|
2,948
|
|
|
3,010
|
|
|
(62)
|
|
(2)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
|
|
|
|
|
|
|
System operations
(excluding Depreciation, amortization and accretion reported below)
|
|
572
|
|
|
586
|
|
|
(14)
|
|
(2)%
|
|
Cost of equipment
sold
|
|
799
|
|
|
779
|
|
|
20
|
|
2%
|
|
Selling, general and
administrative
|
|
1,089
|
|
|
1,107
|
|
|
(18)
|
|
(2)%
|
|
Depreciation,
amortization and accretion
|
|
462
|
|
|
450
|
|
|
12
|
|
3%
|
|
(Gain) loss on asset
disposals, net
|
|
16
|
|
|
12
|
|
|
4
|
|
33%
|
|
(Gain) loss on sale
of business and other exit costs, net
|
|
–
|
|
|
(114)
|
|
|
114
|
|
100%
|
|
(Gain) loss on
license sales and exchanges, net
|
|
(16)
|
|
|
(147)
|
|
|
131
|
|
89%
|
|
|
Total operating
expenses
|
|
2,922
|
|
|
2,673
|
|
|
249
|
|
9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
|
26
|
|
|
337
|
|
|
(311)
|
|
(92)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment and
other income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
Equity in earnings of
unconsolidated entities
|
|
110
|
|
|
110
|
|
|
–
|
|
-
|
|
Interest and dividend
income
|
|
41
|
|
|
26
|
|
|
15
|
|
59%
|
|
Interest
expense
|
|
(84)
|
|
|
(61)
|
|
|
(23)
|
|
(37)%
|
|
Other, net
|
|
–
|
|
|
(1)
|
|
|
1
|
|
26%
|
|
|
Total investment and
other income
|
|
67
|
|
|
74
|
|
|
(7)
|
|
(10)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before
income taxes
|
|
93
|
|
|
411
|
|
|
(318)
|
|
(77)%
|
|
Income tax
expense
|
|
39
|
|
|
161
|
|
|
(122)
|
|
(76)%
|
Net
income
|
|
54
|
|
|
250
|
|
|
(196)
|
|
(78)%
|
|
Less: Net income
attributable to noncontrolling interests, net of tax
|
|
1
|
|
|
7
|
|
|
(6)
|
|
(84)%
|
Net income
attributable to U.S. Cellular shareholders
|
$
|
53
|
|
$
|
243
|
|
$
|
(190)
|
|
(78)%
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic weighted
average shares outstanding
|
|
85
|
|
|
84
|
|
|
1
|
|
1%
|
Basic earnings per
share attributable to
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Cellular
shareholders
|
$
|
0.63
|
|
$
|
2.89
|
|
$
|
(2.26)
|
|
(78)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted
average shares outstanding
|
|
85
|
|
|
85
|
|
|
–
|
|
-
|
Diluted earnings
per share attributable to
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Cellular
shareholders
|
$
|
0.63
|
|
$
|
2.86
|
|
$
|
(2.23)
|
|
(78)%
|
United States
Cellular Corporation
|
Consolidated
Statement of Cash Flows
|
(Unaudited)
|
|
|
|
|
|
|
Nine Months Ended
September 30,
|
|
2016
|
|
2015
|
(Dollars in
millions)
|
|
|
|
|
|
Cash flows from
operating activities
|
|
|
|
|
|
|
Net income
|
$
|
54
|
|
$
|
250
|
|
Add (deduct)
adjustments to reconcile net income to cash flows from operating
activities
|
|
|
|
|
|
|
|
|
Depreciation,
amortization and accretion
|
|
462
|
|
|
450
|
|
|
|
Bad debts
expense
|
|
69
|
|
|
78
|
|
|
|
Stock-based
compensation expense
|
|
19
|
|
|
18
|
|
|
|
Deferred income
taxes, net
|
|
11
|
|
|
(20)
|
|
|
|
Equity in earnings of
unconsolidated entities
|
|
(110)
|
|
|
(110)
|
|
|
|
Distributions from
unconsolidated entities
|
|
55
|
|
|
45
|
|
|
|
(Gain) loss on asset
disposals, net
|
|
16
|
|
|
12
|
|
|
|
(Gain) loss on sale
of business and other exit costs, net
|
|
–
|
|
|
(114)
|
|
|
|
(Gain) loss on
license sales and exchanges, net
|
|
(16)
|
|
|
(147)
|
|
|
|
Noncash interest
expense
|
|
1
|
|
|
1
|
|
|
|
Other operating
activities
|
|
(2)
|
|
|
–
|
|
Changes in assets and
liabilities from operations
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
1
|
|
|
(54)
|
|
|
|
Equipment installment
plans receivable
|
|
(160)
|
|
|
(96)
|
|
|
|
Inventory
|
|
2
|
|
|
91
|
|
|
|
Accounts
payable
|
|
45
|
|
|
117
|
|
|
|
Customer deposits and
deferred revenues
|
|
(41)
|
|
|
(51)
|
|
|
|
Accrued
taxes
|
|
38
|
|
|
161
|
|
|
|
Accrued
interest
|
|
7
|
|
|
11
|
|
|
|
Other assets and
liabilities
|
|
(36)
|
|
|
(87)
|
|
|
|
|
Net cash provided by
operating activities
|
|
415
|
|
|
555
|
|
|
|
|
|
|
|
|
|
|
Cash flows from
investing activities
|
|
|
|
|
|
|
Cash paid for
additions to property, plant and equipment
|
|
(280)
|
|
|
(407)
|
|
Cash paid for
acquisitions and licenses
|
|
(46)
|
|
|
(286)
|
|
Cash received from
divestitures and exchanges
|
|
20
|
|
|
314
|
|
Federal
Communications Commission deposit
|
|
(143)
|
|
|
–
|
|
Other investing
activities
|
|
–
|
|
|
2
|
|
|
|
|
Net cash used in
investing activities
|
|
(449)
|
|
|
(377)
|
|
|
|
|
|
|
|
|
|
|
Cash flows from
financing activities
|
|
|
|
|
|
|
Issuance of long-term
debt
|
|
–
|
|
|
225
|
|
Repayment of
long-term debt
|
|
(8)
|
|
|
–
|
|
Common shares
reissued for benefit plans, net of tax payments
|
|
4
|
|
|
(1)
|
|
Common shares
repurchased
|
|
(2)
|
|
|
(4)
|
|
Payment of debt
issuance costs
|
|
(2)
|
|
|
(3)
|
|
Acquisition of assets
in common control transaction
|
|
–
|
|
|
(2)
|
|
Distributions to
noncontrolling interests
|
|
(1)
|
|
|
(6)
|
|
Other financing
activities
|
|
2
|
|
|
(2)
|
|
|
|
|
Net cash provided by
(used in) financing activities
|
|
(7)
|
|
|
207
|
|
|
|
|
|
|
|
|
|
|
Net increase
(decrease) in cash and cash equivalents
|
|
(41)
|
|
|
385
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
|
|
|
|
|
Beginning of
period
|
|
715
|
|
|
212
|
|
End of
period
|
$
|
674
|
|
$
|
597
|
United States
Cellular Corporation
|
Consolidated
Balance Sheet Highlights
|
(Unaudited)
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
September
30,
|
|
December
31,
|
|
|
|
2016
|
|
2015
|
(Dollars in
millions)
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
674
|
|
$
|
715
|
|
Accounts receivable
from customers and others, net
|
|
688
|
|
|
672
|
|
Inventory,
net
|
|
140
|
|
|
149
|
|
Prepaid
expenses
|
|
80
|
|
|
81
|
|
Other current
assets
|
|
25
|
|
|
55
|
|
|
Total current
assets
|
|
1,607
|
|
|
1,672
|
|
|
|
|
|
|
|
|
Assets held for
sale
|
|
16
|
|
|
–
|
|
|
|
|
|
|
|
|
Licenses
|
|
1,866
|
|
|
1,834
|
Goodwill
|
|
370
|
|
|
370
|
Investments in
unconsolidated entities
|
|
420
|
|
|
363
|
|
|
|
|
|
|
|
|
Property, plant
and equipment
|
|
|
|
|
|
|
In service and under
construction
|
|
7,609
|
|
|
7,669
|
|
Less: Accumulated
depreciation
|
|
5,151
|
|
|
5,020
|
|
|
Property, plant and
equipment, net
|
|
2,458
|
|
|
2,649
|
|
|
|
|
|
|
|
|
Other assets and
deferred charges
|
|
367
|
|
|
172
|
|
|
|
|
|
|
|
|
Total
assets
|
$
|
7,104
|
|
$
|
7,060
|
United States
Cellular Corporation
|
Consolidated
Balance Sheet Highlights
|
(Unaudited)
|
|
|
|
|
|
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
September
30,
|
|
December
31,
|
|
|
|
2016
|
|
2015
|
(Dollars in
millions)
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
Current portion of
long-term debt
|
$
|
11
|
|
$
|
11
|
|
Accounts
payable
|
|
|
|
|
|
|
|
Affiliated
|
|
9
|
|
|
10
|
|
|
Trade
|
|
300
|
|
|
275
|
|
Customer deposits and
deferred revenues
|
|
204
|
|
|
251
|
|
Accrued
taxes
|
|
29
|
|
|
28
|
|
Accrued
compensation
|
|
64
|
|
|
68
|
|
Other current
liabilities
|
|
78
|
|
|
105
|
|
|
Total current
liabilities
|
|
695
|
|
|
748
|
|
|
|
|
|
|
|
|
Deferred
liabilities and credits
|
|
|
|
|
|
|
Deferred income tax
liability, net
|
|
831
|
|
|
821
|
|
Other deferred
liabilities and credits
|
|
311
|
|
|
290
|
|
|
|
|
|
|
|
|
Long-term
debt
|
|
1,621
|
|
|
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
|
|
1,516
|
|
|
1,497
|
|
Treasury
shares
|
|
(136)
|
|
|
(157)
|
|
Retained
earnings
|
|
2,167
|
|
|
2,133
|
|
|
Total U.S. Cellular
shareholders' equity
|
|
3,635
|
|
|
3,561
|
|
|
|
|
|
|
|
|
Noncontrolling
interests
|
|
10
|
|
|
10
|
|
|
|
|
|
|
|
|
|
Total
equity
|
|
3,645
|
|
|
3,571
|
|
|
|
|
|
|
|
|
Total liabilities
and equity
|
$
|
7,104
|
|
$
|
7,060
|
United States
Cellular Corporation
|
Financial Measures
and Reconciliations
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free Cash Flow and
Adjusted Free Cash Flow
|
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
|
|
|
September
30,
|
|
September
30,
|
|
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
(Dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from
operating activities (GAAP)
|
|
$
|
155
|
|
$
|
131
|
|
$
|
415
|
|
$
|
555
|
Less: Cash used for
additions to property, plant and equipment
|
|
|
102
|
|
|
147
|
|
|
280
|
|
|
407
|
|
|
Free cash
flow
|
|
|
53
|
|
|
(16)
|
|
|
135
|
|
|
148
|
Add: Sprint Cost
Reimbursement
|
|
|
2
|
|
|
4
|
|
|
5
|
|
|
28
|
|
Adjusted free cash
flow (Non-GAAP) (1)
|
|
$
|
55
|
|
$
|
(12)
|
|
$
|
140
|
|
$
|
176
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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, 2015.
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
|
|
9/30/2016
|
|
|
6/30/2016
|
|
|
3/31/2016
|
|
|
12/31/2015
|
|
|
9/30/2015
|
(Dollars and
connection counts in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Calculation of
Postpaid ARPU
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Postpaid service
revenues
|
$
|
635
|
|
$
|
636
|
|
$
|
639
|
|
$
|
674
|
|
$
|
755
|
Average number of
postpaid connections
|
|
4.49
|
|
|
4.48
|
|
|
4.43
|
|
|
4.37
|
|
|
4.33
|
Number of months in
period
|
|
3
|
|
|
3
|
|
|
3
|
|
|
3
|
|
|
3
|
|
Postpaid ARPU
(GAAP metric)
|
$
|
47.08
|
|
$
|
47.37
|
|
$
|
48.13
|
|
$
|
51.46
|
|
$
|
58.12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Calculation of
Postpaid ABPU
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Postpaid service
revenues
|
$
|
635
|
|
$
|
636
|
|
$
|
639
|
|
$
|
674
|
|
$
|
755
|
Equipment installment
plan billings
|
|
131
|
|
|
118
|
|
|
105
|
|
|
93
|
|
|
75
|
|
Total billings to
postpaid connections
|
$
|
766
|
|
$
|
754
|
|
$
|
744
|
|
$
|
767
|
|
$
|
830
|
Average number of
postpaid connections
|
|
4.49
|
|
|
4.48
|
|
|
4.43
|
|
|
4.37
|
|
|
4.33
|
Number of months in
period
|
|
3
|
|
|
3
|
|
|
3
|
|
|
3
|
|
|
3
|
|
Postpaid ABPU
(Non-GAAP metric)
|
$
|
56.79
|
|
$
|
56.09
|
|
$
|
56.06
|
|
$
|
58.57
|
|
$
|
63.88
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Calculation of
Postpaid ARPA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Postpaid service
revenues
|
$
|
635
|
|
$
|
636
|
|
$
|
639
|
|
$
|
674
|
|
$
|
755
|
Average number of
postpaid accounts
|
|
1.69
|
|
|
1.70
|
|
|
1.70
|
|
|
1.70
|
|
|
1.71
|
Number of months in
period
|
|
3
|
|
|
3
|
|
|
3
|
|
|
3
|
|
|
3
|
|
Postpaid ARPA
(GAAP metric)
|
$
|
125.31
|
|
$
|
124.91
|
|
$
|
125.36
|
|
$
|
131.96
|
|
$
|
147.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Calculation of
Postpaid ABPA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Postpaid service
revenues
|
$
|
635
|
|
$
|
636
|
|
$
|
639
|
|
$
|
674
|
|
$
|
755
|
Equipment installment
plan billings
|
|
131
|
|
|
118
|
|
|
105
|
|
|
93
|
|
|
75
|
|
Total billings to
postpaid accounts
|
$
|
766
|
|
$
|
754
|
|
$
|
744
|
|
$
|
767
|
|
$
|
830
|
Average number of
postpaid accounts
|
|
1.69
|
|
|
1.70
|
|
|
1.70
|
|
|
1.70
|
|
|
1.71
|
Number of months in
period
|
|
3
|
|
|
3
|
|
|
3
|
|
|
3
|
|
|
3
|
|
Postpaid ABPA
(Non-GAAP metric)
|
$
|
151.16
|
|
$
|
147.90
|
|
$
|
145.99
|
|
$
|
150.19
|
|
$
|
161.57
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/us-cellular-reports-third-quarter-2016-results-300357597.html
SOURCE United States Cellular Corporation