U.S. Cellular Reports Fourth Quarter 2012 Results And 2013 Financial Guidance

U.S. Cellular Reports Fourth Quarter 2012 Results And 2013 Financial Guidance

PR Newswire

CHICAGO, Feb. 26, 2013

CHICAGO, Feb. 26, 2013 /PRNewswire/ --

As previously announced, U.S. Cellular will hold a teleconference Feb. 26,
2013 at 9:30 a.m. CST. Listen to the live call via the Conference Calls page
of www.teldta.com or www.uscellular.com.

United States Cellular Corporation (NYSE: USM) reported service revenues of
$1,008.9 million for the fourth quarter of 2012, versus $1,030.0 million for
the comparable period one year ago. Net loss attributable to U.S. Cellular
shareholders was $39.6 million, or $0.47 per diluted share, for the fourth
quarter of 2012. In the fourth quarter of 2011, net income attributable to
U.S. Cellular shareholders was $2.8 million, or $0.03 per diluted share.

As previously announced on Nov. 7, 2012, U.S. Cellular reached a definitive
agreement to sell its Chicago, St. Louis, central Illinois and three other
markets (the "Divestiture Markets") to subsidiaries of Sprint Nextel
Corporation (NYSE: S) for $480 million (the "Divestiture Transaction"). The
transaction is subject to regulatory approvals and is expected to close in
mid-2013. In the fourth quarter of 2012, U.S. Cellular's operating income was
reduced by $44.5 million due to divestiture-related costs, including a $10.7
million write-down of assets, $12.6 million in employee-related costs,
including severance, and $20 million in accelerated depreciation, amortization
and accretion.

The table below provides pro forma performance highlights for U.S. Cellular's
Total Consolidated Markets, Divestiture Markets, and Core Markets for the
fourth quarter of 2012. Core Markets are the markets that U.S. Cellular will
continue to own upon completion of the Divestiture Transaction.

($ in millions       Total Consolidated  Divestiture Markets  Core Markets (1)
except ARPU)         Markets             (1)
Postpaid gross             241,000             23,000              218,000
additions
Postpaid churn             1.83%               3.35%               1.67%
Postpaid net               (41,000)            (25,000)            (16,000)
additions (losses)
Prepaid net                37,000              (1,000)             38,000
additions (losses)
Service revenues (1)       $1,008.9            $101.4              $907.5
Postpaid ARPU (1)          $54.56              $60.91              $53.92

    Total Consolidated Markets amounts represent GAAP financial measures and
    Divestiture Markets and Core Markets amounts represent non-GAAP financial
(1) measures. U.S. Cellular believes that the amounts under Divestiture
    Markets and Core Markets may be useful to investors and other users of its
    financial information.

The following table highlights the performance of the Core Markets for the
fourth quarter of 2012 and 2011.

                                                                      %
($ in millions except ARPU)                      Q4 2012    Q4 2011   Change
Postpaid gross additions                          218,000    209,000   4%
Postpaid churn                                    1.67%      1.48%     (13%)
Postpaid net additions (losses)                   (16,000)   (2,000)   (>100%)
Prepaid net additions                             38,000     6,000     >100%
Retail net additions                              22,000     4,000     >100%
Service revenues (1)                              $907.5     $917.5    (1%)
Postpaid ARPU (1)                                 $53.92     $52.62    2%
Smartphones sold as % of total devices            62.9%      52.6%     20%
4G/LTE smartphones as % of total smartphones      75%        0%        >100%
sold
Capital expenditures (1)                          $241       $253      (5%)
Cell sites in service                             6,292      6,154     2%
Owned towers                                      3,847      3,755     2%

    The Core Markets amounts for Q4 2012 and Q4 2011 represent non-GAAP
(1) financial measures. U.S. Cellular believes that the amounts under Core
    Markets may be useful to investors and other users of its financial
    information.

"Our aggressive sales and marketing strategies in the fourth quarter drove a
strong increase in smartphone penetration, and encouraged more customers in
more markets to migrate to 4G LTE," said Mary N. Dillon, U.S. Cellular
president and CEO. "The announcement of the Divestiture Transaction resulted
in an anticipated increase in postpaid churn and lower net additions in the
Divestiture Markets. In our Core Markets, however, we had positive net retail
additions in the quarter. The improved results were driven by prepaid
additions, as postpaid additions continued to be negatively impacted by
elevated churn.

"Smartphones were 63 percent of the devices we sold in our Core Markets during
the quarter, and the number of 4G LTE smartphones sold nearly doubled from the
third quarter. Although revenue from customers increased, overall service
revenues declined due to reduced regulatory support revenues and lower roaming
revenues as a result of lower negotiated rates. The lower negotiated rates
also had a positive effect on roaming expense. Profitability was impacted by
the lower service revenues and higher subsidies for 4G LTE smartphones in
particular. As customers migrate to the more efficient 4G LTE network, we
expect longer-term benefits, including growth in ARPU and lower capital
expenditures for our legacy networks."

"We are moving forward rapidly on our strategies to differentiate our
outstanding customer experience even further from our competitors. We're
integrating and enhancing all of our channels to provide seamless shopping,
and looking for more opportunities to expand distribution and be where our
customers want to shop. As we continue to invest in our future through
expanded 4G LTE access and devices, as well as the implementation of our new
billing and operational system, we're also simplifying our operations and
processes to increase efficiency and reduce complexity and cost.

"As we move through the regulatory approval process for the Divestiture
Transaction, we're maintaining high-quality service and support for our
customers in these markets, helping many of our associates to transition to
new roles at U.S. Cellular, and preparing for a smooth transition later in
2013."

2013 ESTIMATES

U.S. Cellular's estimates of full-year 2013 results are shown below. Such
estimates represent U.S. Cellular's views as of the date of filing of U.S.
Cellular's Form10-K for the year ended December31, 2012. Such
forward‑looking statements should not be assumed to be current as of any
future date. U.S. Cellular undertakes no duty to update such information
whether as a result of new information, future events or otherwise. There can
be no assurance that final results will not differ materially from such
estimated results.

U.S. Cellular has changed the measures which it uses to present estimates of
operating results. U.S. Cellular previously presented Adjusted OIBDA, defined
as operating income excluding the effects of: depreciation, amortization and
accretion (OIBDA); the loss on impairment of assets; and the net gain or loss
on asset disposals and exchanges. U.S. Cellular believes Adjusted income
before income taxes, as defined below, is a measure which provides a more
comprehensive and meaningful view of U.S. Cellular's recurring results of
operations.

                             2013 EstimatedResults (1)
                             Core          Divestiture     U.S. Cellular
                             Markets (2)   Markets (2)(3)  Consolidated (2)(3)
(Dollars in millions)
Service revenues             $3,600 -      $165 - $185     $3,765 - $3,885
                             $3,700
Adjusted income before       $765 - $865   $15 - $35       $780 - $900
income taxes (4)
Capital expenditures         Approx. $600  —               Approx. $600

    These estimates are based on U.S. Cellular's current plans, which include
    a multi-year deployment of 4G LTE technology which commenced in 2011. New
(1) developments or changing conditions (such as, but not limited to,
    regulatory developments, customer net growth, customer demand for data
    services or possible acquisitions, dispositions or exchanges) could affect
    U.S. Cellular's plans and, therefore, its 2013 estimated results.
    The U.S. Cellular Consolidated amounts represent GAAP financial measures
    and include the results of both the Core Markets and the Divestiture
    Markets. As used herein, "Core Markets" represents U.S. Cellular's total
(2) Consolidated Markets excluding the Divestiture Markets. The Core Markets
    and Divestiture Markets amounts represent non-GAAP financial measures.
    U.S. Cellular believes that the Core Markets and Divestiture Markets
    amounts may be useful to investors and other users of its financial
    information in evaluating the pro forma results for the Core Markets.
    These estimates assume the Divestiture Transaction closes July 1, 2013.
(3) Actual effects could vary significantly from these estimates as a result
    of a change in the expected timing of the Divestiture Transaction.
    Adjusted income before income taxes is a non-GAAP financial measure
    defined as income before: Income taxes, Depreciation, amortization and
    accretion, net Gain or loss on sale of business and other exit costs, and
    Interest expense. Adjusted income before income taxes is not a measure of
    financial performance under GAAP and should not be considered as an
    alternative to Income before income taxes as an indicator of the Company's
    operating performance or as an alternative to cash flows from operating
(4) activities, determined in accordance with GAAP, as an indicator of cash
    flows or as a measure of liquidity. U.S. Cellular believes Adjusted
    income before income taxes is a meaningful measure of U.S. Cellular's
    operating results before significant recurring non-cash charges, discrete
    gains and losses and financing charges (Interest expense). The following
    tables provide a reconciliation of Income before income taxes to Adjusted
    income before income taxes for 2013 Estimated Results and 2012, 2011and
    2010 actual results:

                                2013 Estimated Results
                                Core           Divestiture       U.S. Cellular
                                Markets (2)    Markets (2)(3)    Consolidated
                                                                 (2)(3)
    (Dollars in millions)
    Income before income        $165-$265      ($180)-($160)     ($15)-$105
    taxes (5)
    Depreciation,
    amortization and            Approx.        Approx. $195      Approx. $740
                                $545
     accretion expense (6)
    Interest expense            Approx. $55    —                 Approx. $55
    Adjusted income before      $765 - $865    $15 - $35         $780 - $900
    income taxes
                                U.S. Cellular Consolidated Actual Results
    Year Ended December 31,     2012           2011              2010
    (Dollars in millions)
    Income before income    $   205.1        $ 312.8           $ 241.1
    taxes
    Depreciation,
    amortization and            608.6          573.6             571.0

     accretion expense (6)
    (Gain) loss on sale of
    business and other exit     21.0           -                 -
    costs, net
    Interest expense            42.4           65.6              61.6
    Adjusted income before  $   877.1        $ 952.0           $ 873.7
    income taxes
    This amount does not include any estimate for (Gain) loss on sale of
(5) business and other exit costs, net, as the timing of such amount is not
    readily estimable.
    The 2013 estimated amounts for depreciation, amortization and accretion
    expense in the Divestiture Markets include approximately $120 million of
(6) incremental accelerated depreciation resulting from the Divestiture
    Transaction. The 2012 actual results include $20.1 million of incremental
    accelerated depreciation resulting from the Divestiture Transaction.

Conference Call Information

U.S. Cellular will hold a conference call on Feb. 26, 2013 at 9:30 a.m. CST.

  oAccess the live call on the Conference Calls page of uscellular.com or at
    http://ir.teldta.com/phoenix.zhtml?c=67422&p=irol-eventDetails&EventId=4917451.
  oAccess 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 the Conference Calls page of uscellular.com.
The call will be archived on the Conference Calls page of 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 5.8 million customers in 26 states. The Chicago-based company had 8,100
full- and part-time associates as of Dec. 31, 2012. At the end of the year,
Telephone and Data Systems, Inc. owned 84 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: impacts of the Divestiture Transaction including, but not limited
to, the ability to obtain regulatory approvals, successfully complete the
transaction and the financial impacts of such transaction; the ability of the
company to successfully manage and grow its markets; the overall economy;
competition; the ability to obtain or maintain roaming arrangements with other
carriers on acceptable terms; the state and federal telecommunications
regulatory environment; the value of assets and investments; adverse changes
in the ratings afforded our debt securities by accredited ratings
organizations; industry consolidation; advances in telecommunications
technology; uncertainty of access to the capital markets; pending and future
litigation; changes in income tax rates, laws, regulations or rulings;
acquisitions/divestitures of properties and/or licenses; and changes in
customer growth rates, average monthly revenue per user, churn rates, roaming
revenue and terms, the availability of handset devices, or the mix of products
and services offered by the company. 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 uscellular.com.

United States Cellular Corporation
Total Markets Summary Operating Data (Unaudited)
Quarter Ended   12/31/2012    9/30/2012     6/30/2012     3/31/2012     12/31/2011
Total
population
 Consolidated   93,244,000    92,996,000    92,684,000    92,684,000    91,965,000
 markets (1)
 Consolidated
 operating      46,966,000    46,966,000    46,966,000    46,966,000    46,888,000
 markets (1)
Market
penetration
at end of
period
 Consolidated   6.2%          6.2%          6.3%          6.3%          6.4%
 markets (2)
 Consolidated
 operating      12.3%         12.4%         12.3%         12.4%         12.6%
 markets (2)
All customers
 Total at end   5,798,000     5,808,000     5,799,000     5,837,000     5,891,000
 of period
 Gross          363,000       364,000       290,000       285,000       306,000
 additions
 Net
 additions      (10,000)      9,000         (38,000)      (49,000)      (41,000)
 (losses)
 Smartphones
 sold as a
 percent
                62.9%         53.0%         51.9%         54.1%         52.5%
  of total
 devices sold
 (3)
Retail
customers
 Total at end   5,557,000     5,561,000     5,542,000     5,570,000     5,608,000
 of period
 Postpaid
 smartphone     41.8%         38.6%         36.8%         34.4%         30.5%
 penetration
 (3) (4)
 Gross          348,000       350,000       277,000       273,000       298,000
 additions
 Net retail
 additions      (4,000)       19,000        (28,000)      (34,000)      (13,000)
 (losses) (5)
  Net
 postpaid       (41,000)      (38,000)      (48,000)      (38,000)      (20,000)
 additions
 (losses)
  Net
 prepaid        37,000        57,000        20,000        4,000         7,000
 additions
 (losses)
Service
revenue
components
(000s)
 Retail       $ 886,014     $ 884,219     $ 889,219     $ 888,527     $ 882,091
 service
 Inbound        76,090        106,132       86,363        80,132        93,353
 roaming
 Other          46,820        46,019        54,160        55,161        54,601
Total service
revenues      $ 1,008,924   $ 1,036,370   $ 1,029,742   $ 1,023,820   $ 1,030,045
(000s)
Total ARPU    $ 58.00       $ 59.57       $ 59.05       $ 58.21       $ 58.13
(6)
Billed ARPU   $ 50.94       $ 50.83       $ 50.99       $ 50.52       $ 49.78
(7)
Postpaid ARPU $ 54.56       $ 54.34       $ 54.42       $ 54.00       $ 53.35
(8)
Postpaid
churn rate      1.8%          1.7%          1.6%          1.6%          1.6%
(9)
Capital
expenditures  $ 253,100     $ 199,100     $ 183,200     $ 201,300     $ 276,400
(000s)
Cell sites in   8,028         7,984         7,932         7,875         7,882
service

(1) Used only to calculate market penetration of consolidated markets and
    consolidated operating markets, respectively. See footnote (2) below.
    Market Penetration is calculated by dividing the number of wireless
(2) customers at the end of the period by the total population of consolidated
    markets and consolidated operating markets, respectively, as estimated by
    Claritas®.
(3) Smartphones represent wireless devices which run on an Android™,
    BlackBerry®, or Windows Mobile® operating system, excluding tablets.
(4) Smartphone penetration is calculated by dividing postpaid smartphone
    customers by total postpaid customers.
(5) Includes net postpaid additions (losses) and net prepaid additions
    (losses).
    Total ARPU - Average monthly service revenue per user includes retail
(6) service, inbound roaming and other service revenues and is calculated by
    dividing total service revenues by the number of months in the period and
    by the average total customers during the period.
    Billed ARPU - Average monthly billed revenue per user is calculated by
    dividing total retail service revenues by the number of months in the
(7) period and by the average total customers during the period. Retail
    service revenues include revenues attributable to postpaid, prepaid and
    reseller customers.
    Postpaid ARPU - Average monthly revenue per postpaid user is calculated by
(8) dividing total retail service revenues from postpaid customers by the
    number of months in the period and by the average postpaid customers
    during the period.
    Represents the percentage of the postpaid customer base that disconnects
(9) service each month. This amount represents the average postpaid churn rate
    for each respective quarterly period.

United States Cellular Corporation
Consolidated Statement of Operations Highlights
Three Months Ended December 31,
(Unaudited, dollars and shares in thousands, except per share amounts)
                                                            Increase
                                                           (Decrease)
                                 2012         2011         Amount      Percent
Operating revenues
 Service                         $ 1,008,924  $ 1,030,045  $ (21,121)  (2%)
 Equipment sales                   106,282      69,588       36,694    53%
     Total operating revenues      1,115,206    1,099,633    15,573    1%
Operating expenses
 System operations (excluding
 Depreciation, amortization and    221,169      242,123      (20,954)  (9%)
 accretionreported below)
 Cost of equipment sold            309,182      228,085      81,097    36%
 Selling, general and              449,110      467,265      (18,155)  (4%)
 administrative
 Depreciation, amortization and    169,242      141,976      27,266    19%
 accretion
 Loss on asset disposals and       2,121        3,868        (1,747)   (45%)
 exchanges, net
 (Gain) loss on sale of business   25,170       -            25,170    N/M
 and other exit costs, net
     Total operating expenses      1,175,994    1,083,317    92,677    9%
Operating income (loss)            (60,788)     16,316       (77,104)  >(100%)
Investment and other income
(expense)
 Equity in earnings of             18,780       18,277       503       3%
 unconsolidated entities
 Interest and dividend income      821          929          (108)     (12%)
 Gain (loss) on investment         10           (2,000)      2,010     >(100%)
 Interest expense                  (7,121)      (13,709)     6,588     48%
 Other, net                        327          (631)        958       >(100%)
     Total investment and other    12,817       2,866        9,951     >100%
     income (expense)
Income (loss) before income        (47,971)     19,182       (67,153)  >(100%)
taxes
 Income tax expense (benefit)      (18,647)     11,307       (29,954)  >(100%)
Net income (loss)                  (29,324)     7,875        (37,199)  >(100%)
 Less: Net income attributable
 to noncontrolling interests,      (10,298)     (5,074)      (5,224)   >100%
 net of tax
Net income (loss) attributable   $ (39,622)   $ 2,801      $ (42,423)  >(100%)
to U.S. Cellular shareholders
Basic weighted average shares      84,568       84,559       9         -
outstanding
Basic earnings (loss) per share
attributable to U.S. Cellular    $ (0.47)     $ 0.03       $ (0.50)    >(100%)
shareholders
Diluted weighted average shares    84,568       85,005       (437)     (1%)
outstanding
Diluted earnings (loss) per
share attributable to U.S.       $ (0.47)     $ 0.03       $ (0.50)    >(100%)
Cellular shareholders

United States Cellular Corporation
Consolidated Statement of Operations Highlights
Twelve Months Ended December 31,
(Unaudited, dollars and shares in thousands, except per share amounts)
                                                     Increase (Decrease)
                          2012         2011         Amount           Percent
Operating revenues
 Service                  $ 4,098,856  $ 4,053,797  $   45,059       1%
 Equipment sales            353,228      289,549        63,679       22%
      Total operating       4,452,084    4,343,346      108,738      3%
      revenues
Operating expenses
 System operations
 (excluding Depreciation,
 amortization and           946,805      929,379        17,426       2%
 accretionreported
 below)
 Cost of equipment sold     935,947      791,802        144,145      18%
 Selling, general and       1,764,933    1,769,701      (4,768)      -
 administrative
 Depreciation,
 amortization and           608,633      573,557        35,076       6%
 accretion
 (Gain) loss on asset
 disposals and exchanges,   18,088       (1,873)        19,961       >(100%)
 net
 (Gain) loss on sale of
 business and other exit    21,022       -              21,022       N/M
 costs, net
      Total operating       4,295,428    4,062,566      232,862      6%
      expenses
Operating income            156,656      280,780        (124,124)    (44%)
Investment and other
income (expense)
 Equity in earnings of      90,364       83,566         6,798        8%
 unconsolidated entities
 Interest and dividend      3,644        3,395          249          7%
 income
 Gain (loss) on             (3,718)      11,373         (15,091)     >(100%)
 investment
 Interest expense           (42,393)     (65,614)       23,221       35%
 Other, net                 500          (678)          1,178        >(100%)
      Total investment
      and other income      48,397       32,042         16,355       51%
      (expense)
Income before income        205,053      312,822        (107,769)    (34%)
taxes
 Income tax expense         63,977       114,078        (50,101)     (44%)
Net income                  141,076      198,744        (57,668)     (29%)
 Less: Net income
 attributable to            (30,070)     (23,703)       (6,367)      (27%)
 noncontrolling
 interests, net of tax
Net income attributable
to U.S. Cellular          $ 111,006    $ 175,041    $   (64,035)     (37%)
shareholders
Basic weighted average      84,645       84,877         (232)        -
shares outstanding
Basic earnings per share
attributable to U.S.      $ 1.31       $ 2.06       $   (0.75)       (36%)
Cellular shareholders
Diluted weighted average    85,067       85,335         (268)        -
shares outstanding
Diluted earnings per
share attributable to     $ 1.30       $ 2.05       $   (0.75)       (37%)
U.S. Cellular
shareholders

United States Cellular Corporation
Consolidated Balance Sheet Highlights
(Unaudited, dollars in thousands)
ASSETS
                                               December 31,  December 31,
                                               2012           2011
Current assets
 Cash and cash equivalents                     $  378,358     $  424,155
 Short-term investments                           100,676        127,039
 Accounts receivable from customers and others    445,220        441,821
 Inventory                                        155,886        127,056
 Income taxes receivable                          1,612          74,791
 Prepaid expenses                                 62,560         55,980
 Net deferred income tax asset                    35,419         31,905
 Other current assets                             16,745         10,096
                                                  1,196,476      1,292,843
Assets held for sale                              216,763        49,647
Investments
 Licenses                                         1,456,794      1,470,769
 Goodwill                                         421,743        494,737
 Customer lists, net                              102            314
 Investments in unconsolidated entities           144,531        138,096
 Notes and interest receivable—long-term          -              1,921
 Long-term investments                            50,305         30,057
                                                  2,073,475      2,135,894
Property, plant and equipment
 In service and under construction                7,478,428      7,008,449
 Less: accumulated depreciation                   4,455,840      4,218,147
                                                  3,022,588      2,790,302
Other assets and deferred charges                 78,148         59,290
Total assets                                   $  6,587,450   $  6,327,976

United States Cellular Corporation
Consolidated Balance Sheet Highlights
(Unaudited, dollars in thousands)
LIABILITIES AND EQUITY
                                                 December 31,  December 31,
                                                 2012           2011
Current liabilities
 Current portion of long-term debt               $  92          $  127
 Accounts payable
         Affiliated                                 10,725         12,183
         Trade                                      310,936        303,779
 Customer deposits and deferred revenues            192,113        181,355
 Accrued taxes                                      35,834         34,095
 Accrued compensation                               90,418         69,551
 Other current liabilities                          114,881        121,190
                                                    754,999        722,280
Liabilities held for sale                           19,594         1,051
Deferred liabilities and credits
 Net deferred income tax liability                  849,818        799,190
 Other deferred liabilities and credits             288,441        248,213
Long-term debt                                      878,858        880,320
Noncontrolling interests with redemption            493            1,005
features
Equity
U.S. Cellular shareholders' equity
 Series A Common and Common Shares, par value $1    88,074         88,074
 per share
 Additional paid-in capital                         1,412,453      1,387,341
 Treasury shares                                    (165,724)      (152,817)
 Retained earnings                                  2,399,052      2,297,363
         Total U.S. Cellular shareholders'          3,733,855      3,619,961
         equity
Noncontrolling interests                            61,392         55,956
 Total equity                                       3,795,247      3,675,917
Total liabilities and equity                     $  6,587,450   $  6,327,976

United States Cellular Corporation
Schedule of Cash and Cash Equivalents and Investments
(Unaudited, dollars in thousands)
The following table presents U.S. Cellular's cash and cash equivalents and
investments at December 31, 2012 and December 31, 2011.
                                          December 31,        December 31,
                                          2012                2011
Cash and cash equivalents                 $     378,358       $     424,155
Amounts included in short-term
investments (1)(2)
            Government-backed securities        100,676             127,039
            (3)
Amounts included in long-term investments
(1)(4)
            Government-backed securities        50,305              30,057
            (3)
Total cash and cash equivalents and       $     529,339       $     581,251
investments

(1) Designated as held-to-maturity investments and are recorded at amortized
    cost on the Consolidated Balance Sheet.
(2) Maturities are less than twelve months from the respective balance sheet
    dates.
    Includes U.S. treasury securities and corporate notes guaranteed under the
(3) Federal Deposit Insurance Corporation's Temporary Liquidity Guarantee
    Program.
(4) Maturities range between 14 and 23 months from the balance sheet date.

United States Cellular Corporation
Consolidated Statement of Cash Flows
Twelve Months Ended December 31,
(Unaudited, dollars in thousands)
                                                     2012         2011
Cash flows from operating activities
 Net income                                          $ 141,076    $ 198,744
 Add (deduct) adjustments to reconcile net income to
 net cash flows fromoperating activities
              Depreciation, amortization and           608,633      573,557
              accretion
              Bad debts expense                        67,372       62,157
              Stock-based compensation expense         21,466       20,183
              Deferred income taxes, net               49,244       203,264
              Equity in earnings of unconsolidated     (90,364)     (83,566)
              entities
              Distributions from unconsolidated        84,417       91,768
              entities
              (Gain) loss on asset disposals and       18,088       (1,873)
              exchanges, net
              (Gain) loss on sale of business and      21,022       -
              other exit costs, net
              (Gain) loss on investment                3,718        (11,373)
              Noncash interest expense                 (1,822)      10,040
              Other operating activities               546          102
 Changes in assets and liabilities from operations
              Accounts receivable                      (64,816)     (82,175)
              Inventory                                (28,786)     (14,640)
              Accounts payable - trade                 (4,977)      28,410
              Accounts payable - affiliate             (1,458)      1,392
              Customer deposits and deferred           30,353       34,927
              revenues
              Accrued taxes                            73,064       (39,984)
              Accrued interest                         167          225
              Other assets and liabilities             (27,652)     (3,296)
                                                       899,291      987,862
Cash flows from investing activities
 Cash used for additions to property, plant and        (826,400)    (771,798)
 equipment
 Cash paid for acquisitions and licenses               (122,690)    (23,773)
 Cash paid for investments                             (120,000)    (110,000)
 Cash received for divestitures                        49,932       -
 Cash received for investments                         125,000      145,250
 Other investing activities                            (2,453)      718
                                                       (896,611)    (759,603)
Cash flows from financing activities
 Repayment of long-term debt                           (145)        (330,338)
 Issuance of long-term debt                            -            342,000
 Common shares reissued for benefit plans, net of      (2,205)      1,935
 tax payments
 Common shares repurchased                             (20,045)     (62,294)
 Payment of debt issuance costs                        (514)        (11,400)
 Distributions to noncontrolling interests             (22,970)     (21,094)
 Payments to acquire additional interest in            (3,167)      -
 subsidiaries
 Other financing activities                            569          172
                                                       (48,477)     (81,019)
Net increase (decrease) in cash and cash equivalents   (45,797)     147,240
Cash and cash equivalents
 Beginning of period                                   424,155      276,915
 End of period                                       $ 378,358    $ 424,155

United States Cellular Corporation
Financial Measures and Reconciliations
(Unaudited, dollars in thousands)
                        Three Months Ended December  Twelve Months Ended
                        31,                          December 31,
                           2012           2011         2012         2011
Service revenues        $  1,008,924    $ 1,030,045  $ 4,098,856  $ 4,053,797
Operating income           (60,788)       16,316       156,656      280,780
(loss)
Add:
 Depreciation,
 amortization and          169,242        141,976      608,633      573,557
 accretion
 Loss on impairment of     -              -            -            -
 assets
 (Gain) loss on asset
 disposals and             2,121          3,868        18,088       (1,873)
 exchanges, net
 (Gain) loss on sale
 of business and other     25,170         -            21,022       -
 exit costs, net
    Adjusted OIBDA (1)  $  135,745      $ 162,160    $ 804,399    $ 852,464
    Adjusted OIBDA         13.5%          15.7%        19.6%        21.0%
    margin (2)
                           2012           2011         2012         2011
Cash flows from         $  290,857      $ 249,041    $ 899,291    $ 987,862
operating activities
Deduct:
Cash used for
additions to property,
plant and                  214,969        309,471      826,400      771,798

 equipment
    Free cash flow (3)  $  75,888       $ (60,430)   $ 72,891     $ 216,064

    Adjusted OIBDA is defined as operating income excluding the effects of:
    depreciation, amortization and accretion (OIBDA); the loss on impairment
(1) of assets (if any); the net gain or loss on asset disposals and exchanges
    (if any); and the net gain or loss on sale of business and other exit
    costs (if any).
    Adjusted OIBDA margin is defined as adjusted OIBDA divided by service
    revenues. Equipment revenues are excluded from the denominator of the
    calculation since equipment is generally sold at a net loss, and such net
    loss is included in adjusted OIBDA as a cost of earning service revenues
    for purposes of assessing business results. U.S. Cellular believes that
(2) this calculation method is consistent with the method used by certain
    investors to assess U.S. Cellular's business results. Adjusted OIBDA
    margin may also be commonly referred to by management as operating cash
    flow margin. U.S. Cellular believes this measure provides useful
    information to investors regarding U.S. Cellular's financial condition and
    results of operations because it highlights certain key cash and non-cash
    items and their impacts on cash flows from operating activities.
    Free cash flow is defined as cash flows from operating activities less
    Cash used for additions to property, plant and equipment. Free cash flow
    is a non-GAAP financial measure. U.S. Cellular believes that free cash
(3) flow asreported by U.S. Cellular may be useful to investors and other
    users of its financial information in evaluating the amount of cash
    generated by business operations, after consideration of capital
    expenditures.

SOURCE United States Cellular Corporation

Website: http://www.uscellular.com
Contact: Jane W. McCahon, Vice President, Corporate Relations and Corporate
Secretary, +1-312-592-5379; jane.mccahon@teldta.com, or Julie D. Mathews,
Manager, Investor Relations, +1-312-592-5341; julie.mathews@teldta.com
 
Press spacebar to pause and continue. Press esc to stop.