8-K
Array Digital Infrastructure, Inc. (AD)
View as plain text
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 5, 2020
UNITED STATES CELLULAR CORPORATION
(Exact name of registrant as specified in its charter)
| Delaware | 001-09712 | 62-1147325 |
|---|---|---|
| (State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
8410 West Bryn Mawr, Chicago, Illinois 60631
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code: (773) 399-8900
Not Applicable
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | | --- | --- || ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | | --- | --- || ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | | --- | --- || ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | | --- | --- || Securities registered pursuant to Section 12(b) of the Act: | | | | --- | --- | --- | | Title of each class | Trading Symbol | Name of each exchange on which registered | | Common Shares, $1 par value | USM | New York Stock Exchange | | 6.95% Senior Notes due 2060 | UZA | New York Stock Exchange | | 7.25% Senior Notes due 2063 | UZB | New York Stock Exchange | | 7.25% Senior Notes due 2064 | UZC | New York Stock Exchange | | 6.25% Senior Notes due 2069 | UZD | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
| ☐ | Emerging growth company | | --- | --- || ☐ | If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. | | --- | --- |
Item 2.02. Results of Operations and Financial Condition
On November 5, 2020, United States Cellular Corporation (U.S. Cellular) issued a news release announcing its results of operations for the period ended September 30, 2020. A copy of the news release is attached hereto as Exhibit 99.1 and incorporated by reference herein.
The information in this Item 2.02 of Form 8-K is being “furnished” and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section, nor will any such information or exhibits be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except as expressly set forth by specific reference in such filing.
Item 9.01. Financial Statements and Exhibits
(d) The following exhibits are being filed herewith:
| Exhibit Number | Description of Exhibits | ||
|---|---|---|---|
| 99.1 | Earnings Press Release dated November 5, 2020 | ||
| 104 | Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document. | ||
| SIGNATURES | |||
| --- | --- | --- | --- |
| Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. | |||
| UNITED STATES CELLULAR CORPORATION | |||
| (Registrant) | |||
| Date: | November 5, 2020 | By: | /s/ Douglas W. Chambers |
| Douglas W. Chambers | |||
| Executive Vice President, Chief Financial Officer and Treasurer | |||
| (principal financial officer) |
Document
Exhibit 99.1 NEWS RELEASE
As previously announced, UScellular will hold a teleconference November 6, 2020, at 9:00 a.m. CST. Listen to the call live via the Events & Presentations page of investors.uscellular.com.
FOR IMMEDIATE RELEASE
UScellular reports third quarter 2020 results
Strong subscriber and financial results drive guidance raise;
5G and network modernization strategies to provide opportunities
for connecting underserved markets
CHICAGO (November 5, 2020) — United States Cellular Corporation (NYSE:USM) reported total operating revenues of $1,027 million for the third quarter of 2020, versus $1,031 million for the same period one year ago. Service revenues totaled $775 million, versus $774 million for the same period a year ago. Net income attributable to UScellular shareholders and related diluted earnings per share were $85 million and $0.97, respectively, for the third quarter of 2020 compared to $23 million and $0.27, respectively, in the same period one year ago.
“Our strong financial performance this quarter is a testament to the value consumers ascribe to wireless services and UScellular’s unwavering commitment to customer experience," said Laurent Therivel, UScellular President and CEO. "We generated impressive financial and subscriber results, as churn remained low and we saw growth in retail net additions through an increase in connected devices. We had higher ARPU which, combined with maintaining our operational and cost discipline throughout the quarter, helped to drive increases in profitability compared to the same period one year ago. This puts us in a strong position as we approach a very non-traditional holiday selling season and resulted in an increase in our expectations for full-year financial results.
"We are continuing our network modernization programs. On the 5G front, working with Qualcomm Technologies and Ericsson, we successfully completed an extended range 5G millimeter wave data session over a distance of more than 5 kilometers with speeds ranging from 100 Mbps near the edge to 1.8 Gbps closer to the cell site, significantly expanding the reach and speed from prior tests. This accomplishment will enhance our ability to connect communities with fiber-like speeds and better serve our rural customers, connecting them to education, healthcare and entertainment solutions.
“We also continued our ongoing efforts to enhance our brand relevance by refreshing our logo and brand identity with a modern new look. This is a powerful visual signal of how we’re working to expand our brand and business appeal. I am looking forward to continued progress as we close out 2020 and want to thank all of our associates for their support and enthusiasm.”
2020 Estimated Results
UScellular’s current estimates of full-year 2020 results are shown below. Such estimates represent management’s view as of November 5, 2020 and should not be assumed to be current as of any future date. UScellular undertakes no duty to update such estimates, whether as a result of new information, future events, or otherwise. There can be no assurance that final results will not differ materially from estimated results.
| 2020 Estimated Results | ||
|---|---|---|
| Previous | Current | |
| (Dollars in millions) | ||
| Service revenues | $3,000-$3,100 | $3,025-$3,075 |
| Adjusted OIBDA1 | $725-$850 | $800-$875 |
| Adjusted EBITDA1 | $900-$1,025 | $975-$1,050 |
| Capital expenditures | $850-$950 | Unchanged |
The following table provides a reconciliation of Net income to Adjusted OIBDA and Adjusted EBITDA for 2020 estimated results, actual results for the nine months ended September 30, 2020, and actual results for the year ended December 31, 2019. In providing 2020 estimated results, UScellular has not completed the below reconciliation to Net income because it does not provide guidance for income taxes. Although potentially significant, UScellular believes that the impact of income taxes cannot be reasonably predicted; therefore, UScellular is unable to provide such guidance.
| Actual Results | |||||
|---|---|---|---|---|---|
| 2020 Estimated Results | Nine Months Ended<br>September 30, 2020 | Year Ended<br>December 31, 2019 | |||
| (Dollars in millions) | |||||
| Net income (GAAP) | N/A | $ | 227 | $ | 133 |
| Add back: | |||||
| Income tax expense | N/A | 11 | 52 | ||
| Income before income taxes (GAAP) | $165-$240 | $ | 238 | $ | 185 |
| Add back: | |||||
| Interest expense | 110 | 76 | 110 | ||
| Depreciation, amortization and accretion expense | 680 | 516 | 702 | ||
| EBITDA (Non-GAAP)1 | $955-$1,030 | $ | 830 | $ | 997 |
| Add back or deduct: | |||||
| (Gain) loss on asset disposals, net | 20 | 14 | 19 | ||
| (Gain) loss on sale of business and other exit costs, net | — | — | (1) | ||
| (Gain) loss on investments | — | (3) | — | ||
| Adjusted EBITDA (Non-GAAP)1 | $975-$1,050 | $ | 841 | $ | 1,015 |
| Deduct: | |||||
| Equity in earnings of unconsolidated entities | 170 | 137 | 166 | ||
| Interest and dividend income | 5 | 6 | 17 | ||
| Adjusted OIBDA (Non-GAAP)1 | $800-$875 | $ | 698 | $ | 832 |
1EBITDA, Adjusted EBITDA and Adjusted OIBDA are defined as net income adjusted for the items set forth in the reconciliation above. EBITDA, Adjusted EBITDA and Adjusted OIBDA 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. UScellular 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 Adjusted OIBDA as measurements of profitability, and therefore reconciliations to Net income are deemed appropriate. Management believes Adjusted EBITDA and Adjusted OIBDA are useful measures of UScellular’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 UScellular’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 Adjusted OIBDA 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 EBITDA, Adjusted EBITDA and Adjusted OIBDA to the corresponding GAAP measure, Net income or Income before income taxes. Additional information and reconciliations related to Non-GAAP financial measures for September 30, 2020, can be found on UScellular’s website at investors.uscellular.com.
Conference Call Information
UScellular will hold a conference call on November 6, 2020 at 9:00 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/1145/38510.
▪Access the call by phone at (833) 968-2187, conference ID: 7289911.
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 UScellular
United States Cellular Corporation provides a comprehensive range of wireless products and services, excellent customer support, and a high-quality network to customers with 5.0 million connections in 21 states. The Chicago-based company had 5,300 full- and part-time associates as of September 30, 2020. At the end of the third quarter of 2020, Telephone and Data Systems, Inc. owned 82 percent of UScellular. For more information about UScellular, visit uscellular.com.
Contacts
Jane W. McCahon, Senior Vice President - Corporate Relations and Corporate Secretary of TDS
jane.mccahon@tdsinc.com
Julie D. Mathews, IRC, Director - Investor Relations of TDS
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: the impact, duration and severity of the COVID-19 pandemic; intense competition; the ability to execute UScellular’s business strategy; uncertainties in UScellular’s future cash flows and liquidity and access to the capital markets; the ability to make payments on UScellular indebtedness or comply with the terms of debt covenants; the ability to obtain or maintain roaming arrangements with other carriers on acceptable terms; the ability to obtain access to adequate radio spectrum to meet current or anticipated future needs, including participation in FCC auctions; the state and federal regulatory environment; the ability to attract people of outstanding talent throughout all levels of the organization; conditions in the U.S. telecommunications industry; UScellular's smaller scale relative to larger competitors; changes in demand, consumer preferences, price competition, or churn rates; advances in technology; the value of assets and investments; impacts of costs, integration problems or other factors associated with acquisitions, divestitures or exchanges of properties or licenses and/or expansion of UScellular's businesses; the ability of the company to successfully construct and manage its networks; difficulties involving third parties; cyber-attacks or other breaches of network or information technology security; changes in facts and circumstances that could require UScellular to record adjustments to amounts reflected in the financial statements; disruption in credit or other financial markets; deterioration of U.S. or global economic conditions; pending and future litigation; potential conflicts of interests between TDS and UScellular. Investors are encouraged to consider these and other risks and uncertainties that are more fully described under “Risk Factors” in the most recent filing of UScellular's Form 10-K, as updated by any UScellular Form 10-Q filed subsequent to such Form 10-K.
The impact of the COVID-19 pandemic on UScellular's business is uncertain, but depending on its duration and severity it could have a material adverse effect on UScellular's business, financial condition or results of operations.
The impact of the global spread of COVID-19 on UScellular's future operations is uncertain. Public health emergencies, such as COVID-19, pose the risk that UScellular or its associates, agents, partners and suppliers may be unable to conduct business activities for an extended period of time and/or provide the level of service expected. UScellular's ability to attract customers, maintain an adequate supply chain and execute on its business strategies and initiatives could be negatively impacted by this outbreak. Additionally, COVID-19 has caused and could continue to cause increased unemployment, economic downturn and credit market deterioration, all of which could negatively impact UScellular. The extent of the impact of COVID-19 on UScellular's business, financial condition and results of operations will depend on future circumstances, including the severity of the disease, the duration of the outbreak, actions taken by governmental authorities and other possible direct and indirect consequences, all of which are uncertain and cannot be predicted.
For more information about UScellular, visit: www.uscellular.com
| United States Cellular Corporation | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Summary Operating Data (Unaudited) | |||||||||||||||
| As of or for the Quarter Ended | 9/30/2020 | 6/30/2020 | 3/31/2020 | 12/31/2019 | 9/30/2019 | ||||||||||
| Retail Connections | |||||||||||||||
| Postpaid | |||||||||||||||
| Total at end of period | 4,401,000 | 4,372,000 | 4,359,000 | 4,383,000 | 4,395,000 | ||||||||||
| Gross additions | 168,000 | 129,000 | 132,000 | 170,000 | 163,000 | ||||||||||
| Feature phones | 4,000 | 3,000 | 2,000 | 2,000 | 3,000 | ||||||||||
| Smartphones | 98,000 | 82,000 | 88,000 | 128,000 | 121,000 | ||||||||||
| Connected devices | 66,000 | 44,000 | 42,000 | 40,000 | 39,000 | ||||||||||
| Net additions (losses) | 28,000 | 12,000 | (26,000) | (12,000) | (19,000) | ||||||||||
| Feature phones | (8,000) | (8,000) | (10,000) | (11,000) | (11,000) | ||||||||||
| Smartphones | 8,000 | 11,000 | (10,000) | 13,000 | 9,000 | ||||||||||
| Connected devices | 28,000 | 9,000 | (6,000) | (14,000) | (17,000) | ||||||||||
| ARPU1 | $ | 47.10 | $ | 46.24 | $ | 47.23 | $ | 46.57 | $ | 46.16 | |||||
| ARPA2 | $ | 123.27 | $ | 120.70 | $ | 122.92 | $ | 120.99 | $ | 119.87 | |||||
| Churn rate3 | 1.06 | % | 0.89 | % | 1.21 | % | 1.38 | % | 1.38 | % | |||||
| Handsets | 0.88 | % | 0.71 | % | 0.95 | % | 1.11 | % | 1.09 | % | |||||
| Connected devices | 2.35 | % | 2.24 | % | 3.11 | % | 3.44 | % | 3.44 | % | |||||
| Prepaid | |||||||||||||||
| Total at end of period | 506,000 | 496,000 | 494,000 | 506,000 | 510,000 | ||||||||||
| Gross additions | 65,000 | 62,000 | 57,000 | 63,000 | 70,000 | ||||||||||
| Net additions (losses) | 11,000 | 2,000 | (12,000) | (3,000) | 9,000 | ||||||||||
| ARPU1 | $ | 35.45 | $ | 34.89 | $ | 34.07 | $ | 34.11 | $ | 34.35 | |||||
| Churn rate3 | 3.59 | % | 4.05 | % | 4.67 | % | 4.40 | % | 4.03 | % | |||||
| Total connections at end of period4 | 4,962,000 | 4,919,000 | 4,903,000 | 4,941,000 | 4,957,000 | ||||||||||
| Market penetration at end of period | |||||||||||||||
| Consolidated operating population | 31,314,000 | 31,292,000 | 31,292,000 | 30,740,000 | 31,310,000 | ||||||||||
| Consolidated operating penetration5 | 16 | % | 16 | % | 16 | % | 16 | % | 16 | % | |||||
| Capital expenditures (millions) | $ | 216 | $ | 168 | $ | 236 | $ | 243 | $ | 170 | |||||
| Total cell sites in service | 6,758 | 6,673 | 6,629 | 6,578 | 6,554 | ||||||||||
| Owned towers | 4,246 | 4,208 | 4,184 | 4,166 | 4,123 |
1Average 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.
2Average 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.
3Churn rate represents the percentage of the connections that disconnect service each month. These rates represent the average monthly churn rate for each respective period.
4Includes reseller and other connections.
5Market 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<br>September 30, | Nine Months Ended<br>September 30, | |||||||||||
| 2020 | 2019 | 2020<br>vs. 2019 | 2020 | 2019 | 2020<br>vs. 2019 | |||||||
| (Dollars and shares in millions, except per share amounts) | ||||||||||||
| Operating revenues | ||||||||||||
| Service | $ | 775 | $ | 774 | – | $ | 2,290 | $ | 2,272 | 1 | % | |
| Equipment sales | 252 | 257 | (2) | % | 674 | 698 | (3) | % | ||||
| Total operating revenues | 1,027 | 1,031 | – | 2,964 | 2,970 | – | ||||||
| Operating expenses | ||||||||||||
| System operations (excluding Depreciation, amortization and accretion reported below) | 203 | 199 | 2 | % | 580 | 568 | 2 | % | ||||
| Cost of equipment sold | 257 | 266 | (4) | % | 692 | 724 | (4) | % | ||||
| Selling, general and administrative | 335 | 358 | (6) | % | 994 | 1,027 | (3) | % | ||||
| Depreciation, amortization and accretion | 161 | 181 | (11) | % | 516 | 524 | (2) | % | ||||
| (Gain) loss on asset disposals, net | 6 | 5 | 15 | % | 14 | 13 | 10 | % | ||||
| (Gain) loss on sale of business and other exit costs, net | — | — | N/M | — | (1) | N/M | ||||||
| (Gain) loss on license sales and exchanges, net | — | 2 | N/M | — | — | N/M | ||||||
| Total operating expenses | 962 | 1,011 | (5) | % | 2,796 | 2,855 | (2) | % | ||||
| Operating income | 65 | 20 | N/M | 168 | 115 | 46 | % | |||||
| Investment and other income (expense) | ||||||||||||
| Equity in earnings of unconsolidated entities | 48 | 44 | 10 | % | 137 | 128 | 7 | % | ||||
| Interest and dividend income | 2 | 4 | (59) | % | 6 | 14 | (55) | % | ||||
| Gain (loss) on investments | 3 | — | N/M | 3 | — | N/M | ||||||
| Interest expense | (29) | (29) | – | (76) | (87) | 11 | % | |||||
| Total investment and other income | 24 | 19 | 27 | % | 70 | 55 | 27 | % | ||||
| Income before income taxes | 89 | 39 | N/M | 238 | 170 | 40 | % | |||||
| Income tax expense | 4 | 15 | (78) | % | 11 | 55 | (80) | % | ||||
| Net income | 85 | 24 | N/M | 227 | 115 | 98 | % | |||||
| Less: Net income attributable to noncontrolling interests, net of tax | — | 1 | (28) | % | 3 | 6 | (47) | % | ||||
| Net income attributable to UScellular shareholders | $ | 85 | $ | 23 | N/M | $ | 224 | $ | 109 | N/M | ||
| Basic weighted average shares outstanding | 86 | 86 | (1) | % | 86 | 87 | (1) | % | ||||
| Basic earnings per share attributable to UScellular shareholders | $ | 0.98 | $ | 0.27 | N/M | $ | 2.60 | $ | 1.26 | N/M | ||
| Diluted weighted average shares outstanding | 88 | 88 | (1) | % | 87 | 88 | (1) | % | ||||
| Diluted earnings per share attributable to UScellular shareholders | $ | 0.97 | $ | 0.27 | N/M | $ | 2.56 | $ | 1.24 | N/M |
N/M - Percentage change not meaningful
| United States Cellular Corporation | ||||
|---|---|---|---|---|
| Consolidated Statement of Cash Flows | ||||
| (Unaudited) | ||||
| Nine Months Ended<br>September 30, | ||||
| 2020 | 2019 | |||
| (Dollars in millions) | ||||
| Cash flows from operating activities | ||||
| Net income | $ | 227 | $ | 115 |
| Add (deduct) adjustments to reconcile net income to net cash flows from operating activities | ||||
| Depreciation, amortization and accretion | 516 | 524 | ||
| Bad debts expense | 52 | 77 | ||
| Stock-based compensation expense | 25 | 32 | ||
| Deferred income taxes, net | 158 | (34) | ||
| Equity in earnings of unconsolidated entities | (137) | (128) | ||
| Distributions from unconsolidated entities | 118 | 99 | ||
| (Gain) loss on asset disposals, net | 14 | 13 | ||
| (Gain) loss on sale of business and other exit costs, net | — | (1) | ||
| (Gain) loss on investments | (3) | — | ||
| Other operating activities | 1 | 3 | ||
| Changes in assets and liabilities from operations | ||||
| Accounts receivable | 31 | (35) | ||
| Equipment installment plans receivable | 13 | (42) | ||
| Inventory | 5 | 3 | ||
| Accounts payable | 77 | (4) | ||
| Customer deposits and deferred revenues | (23) | (1) | ||
| Accrued taxes | (102) | 81 | ||
| Accrued interest | 14 | 9 | ||
| Other assets and liabilities | (36) | (24) | ||
| Net cash provided by operating activities | 950 | 687 | ||
| Cash flows from investing activities | ||||
| Cash paid for additions to property, plant and equipment | (690) | (439) | ||
| Cash paid for licenses | (169) | (257) | ||
| Cash received from investments | 1 | 29 | ||
| Cash paid for investments | (1) | (11) | ||
| Cash received from divestitures and exchanges | 1 | 32 | ||
| Other investing activities | 3 | (1) | ||
| Net cash used in investing activities | (855) | (647) | ||
| Cash flows from financing activities | ||||
| Issuance of long-term debt | 625 | — | ||
| Repayment of long-term debt | (6) | (14) | ||
| Common Shares reissued for benefit plans, net of tax payments | (12) | (8) | ||
| Repurchase of Common Shares | (23) | (21) | ||
| Payment of debt issuance costs | (20) | (1) | ||
| Distributions to noncontrolling interests | (2) | (3) | ||
| Other financing activities | — | (1) | ||
| Net cash provided by (used in) financing activities | 562 | (48) | ||
| Net increase (decrease) in cash, cash equivalents and restricted cash | 657 | (8) | ||
| Cash, cash equivalents and restricted cash | ||||
| Beginning of period | 291 | 583 | ||
| End of period | $ | 948 | $ | 575 |
| United States Cellular Corporation | ||||
| --- | --- | --- | --- | --- |
| Consolidated Balance Sheet Highlights | ||||
| (Unaudited) | ||||
| ASSETS | ||||
| September 30, 2020 | December 31, 2019 | |||
| (Dollars in millions) | ||||
| Current assets | ||||
| Cash and cash equivalents | $ | 931 | $ | 285 |
| Accounts receivable, net | 945 | 1,010 | ||
| Inventory, net | 157 | 162 | ||
| Prepaid expenses | 54 | 50 | ||
| Income taxes receivable | 174 | 46 | ||
| Other current assets | 28 | 20 | ||
| Total current assets | 2,289 | 1,573 | ||
| Assets held for sale | 19 | — | ||
| Licenses | 2,628 | 2,471 | ||
| Investments in unconsolidated entities | 467 | 447 | ||
| Property, plant and equipment, net | 2,322 | 2,207 | ||
| Operating lease right-of-use assets | 919 | 900 | ||
| Other assets and deferred charges | 536 | 566 | ||
| Total assets | $ | 9,180 | $ | 8,164 |
| United States Cellular Corporation | ||||
| --- | --- | --- | --- | --- |
| Consolidated Balance Sheet Highlights | ||||
| (Unaudited) | ||||
| LIABILITIES AND EQUITY | ||||
| September 30, 2020 | December 31, 2019 | |||
| (Dollars in millions, except per share amounts) | ||||
| Current liabilities | ||||
| Current portion of long-term debt | $ | 2 | $ | 8 |
| Accounts payable | 313 | 304 | ||
| Customer deposits and deferred revenues | 126 | 148 | ||
| Accrued taxes | 44 | 30 | ||
| Accrued compensation | 63 | 76 | ||
| Short-term operating lease liabilities | 113 | 105 | ||
| Other current liabilities | 69 | 79 | ||
| Total current liabilities | 730 | 750 | ||
| Deferred liabilities and credits | ||||
| Deferred income tax liability, net | 665 | 507 | ||
| Long-term operating lease liabilities | 877 | 865 | ||
| Other deferred liabilities and credits | 364 | 319 | ||
| Long-term debt, net | 2,108 | 1,502 | ||
| Noncontrolling interests with redemption features | 10 | 11 | ||
| Equity | ||||
| UScellular shareholders’ equity | ||||
| Series A Common and Common Shares, par value $1.00 per share | 88 | 88 | ||
| Additional paid-in capital | 1,654 | 1,629 | ||
| Treasury shares | (67) | (70) | ||
| Retained earnings | 2,736 | 2,550 | ||
| Total UScellular shareholders’ equity | 4,411 | 4,197 | ||
| Noncontrolling interests | 15 | 13 | ||
| Total equity | 4,426 | 4,210 | ||
| Total liabilities and equity | $ | 9,180 | $ | 8,164 |
United States Cellular Corporation
Financial Measures and Reconciliations
(Unaudited)
Free Cash Flow
| Three Months Ended<br>September 30, | Nine Months Ended<br>September 30, | |||||||
|---|---|---|---|---|---|---|---|---|
| 2020 | 2019 | 2020 | 2019 | |||||
| (Dollars in millions) | ||||||||
| Cash flows from operating activities (GAAP) | $ | 257 | $ | 211 | $ | 950 | $ | 687 |
| Less: Cash paid for additions to property, plant and equipment | 219 | 157 | 690 | 439 | ||||
| Free cash flow (Non-GAAP)1 | $ | 38 | $ | 54 | $ | 260 | $ | 248 |
1Free cash flow is a non-GAAP financial measure which UScellular believes may be useful to investors and other users of its financial information in evaluating liquidity, specifically, the amount of net cash generated by business operations after deducting Cash paid for additions to property, plant and equipment.
9