10-Q 1 usm-20220930.htm 10-Q usm-20220930
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2022
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                                    to

Commission file number 001-09712
usm-20220930_g1.jpg
UNITED STATES CELLULAR CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware
62-1147325
(State or other jurisdiction of incorporation or organization)(IRS Employer Identification No.)
8410 West Bryn Mawr, Chicago, Illinois 60631
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (773) 399-8900
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common Shares, $1 par valueUSMNew York Stock Exchange
6.25% Senior Notes due 2069UZDNew York Stock Exchange
5.50% Senior Notes due 2070UZENew York Stock Exchange
5.50% Senior Notes due 2070UZFNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes
No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes
No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filerSmaller reporting company
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.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).Yes
No

The number of shares outstanding of each of the issuer's classes of common stock, as of September 30, 2022, is 52,215,600 Common Shares, $1 par value, and 33,005,900 Series A Common Shares, $1 par value.



United States Cellular Corporation
Quarterly Report on Form 10-Q
For the Period Ended September 30, 2022
Index
Page No.


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United States Cellular Corporation
Management’s Discussion and Analysis of
Financial Condition and Results of Operations 
Executive Overview
The following discussion and analysis compares United States Cellular Corporation’s (UScellular) financial results for the three and nine months ended September 30, 2022, to the three and nine months ended September 30, 2021. It should be read in conjunction with UScellular’s interim consolidated financial statements and notes included herein, and with the description of UScellular’s business, its audited consolidated financial statements and Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) included in UScellular’s Annual Report on Form 10-K (Form 10-K) for the year ended December 31, 2021. Certain numbers included herein are rounded to millions for ease of presentation; however, certain calculated amounts and percentages are determined using the unrounded numbers. 
This report contains statements that are not based on historical facts, including the words “believes,” “anticipates,” “estimates,” “expects,” “plans,” “intends,” “projects” and similar expressions. These statements constitute and represent “forward looking statements” as this term is defined in the Private Securities Litigation Reform Act of 1995. Such forward looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, events or developments to be significantly different from any future results, events or developments expressed or implied by such forward looking statements. See Private Securities Litigation Reform Act of 1995 Safe Harbor Cautionary Statement for additional information.
UScellular uses certain “non-GAAP financial measures” and each such measure is identified in the MD&A. A discussion of the reasons UScellular determines these metrics to be useful and reconciliations of these measures to their most directly comparable measures determined in accordance with accounting principles generally accepted in the United States of America (GAAP) are included in the Supplemental Information Relating to Non-GAAP Financial Measures section within the MD&A of this Form 10-Q Report.
1

General
UScellular owns, operates, and invests in wireless markets throughout the United States. UScellular is an 83%-owned subsidiary of Telephone and Data Systems, Inc. (TDS).
OPERATIONS
 
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Serves customers with 4.8 million retail connections including 4.3 million postpaid and 0.5 million prepaid connections
Operates in 21 states
Employs approximately 4,900 associates
4,329 owned towers
6,933 cell sites in service
2

UScellular Mission and Strategy
UScellular’s mission is to connect its customers to what matters most to them. This includes providing exceptional wireless communication services which enhance consumers’ lives, increase the competitiveness of local businesses, and improve the efficiency of government operations in the markets UScellular serves.
UScellular's strategy is to attract and retain customers through a value proposition comprising a high-quality network, outstanding customer service, and competitive devices, plans and pricing - all provided with a community focus. Strategic efforts include:
UScellular offers economical and competitively priced service plans and devices to its customers and is focused on increasing revenues from sales of related products such as device protection plans and from new services such as fixed wireless home internet. In addition, UScellular is focused on increasing revenues from prepaid plans, tower rent revenues and expanding its solutions available to business and government customers.
UScellular continues to enhance its network capabilities, including by deploying 5G technology. 5G technology helps address customers’ growing demand for data services and creates opportunities for new services requiring high speed and reliability as well as low latency. UScellular's 5G deployment is initially focused on mobility services using its low band spectrum. UScellular has acquired high-band and mid-band spectrum, deployed high-band spectrum on a limited basis, and will further deploy high-band and mid-band in the future to further enable the delivery of 5G services. UScellular has launched 5G services in portions of substantially all of its markets and will continue to expand to additional areas in the coming years.
UScellular assesses its existing wireless interests on an ongoing basis with a goal of improving the competitiveness of its operations and maximizing its long-term return on capital. As part of this strategy, UScellular actively seeks attractive opportunities to acquire wireless spectrum, including pursuant to FCC auctions.
3

Terms Used by UScellular
The following is a list of definitions of certain industry terms that are used throughout this document:
5G – fifth generation wireless technology that helps address customers’ growing demand for data services and creates opportunities for new services requiring high speed and reliability as well as low latency.
Account – represents an individual or business financially responsible for one or multiple associated connections. An account may include a variety of types of connections such as handsets and connected devices.
Auctions 105, 107, 108 and 110 – Auction 105 was an FCC auction of 3.5 GHz wireless spectrum licenses that started in July 2020 and concluded in September 2020. Auction 107 was an FCC auction of 3.7-3.98 GHz wireless spectrum licenses that started in December 2020 and concluded in February 2021. Auction 110 was an FCC auction of 3.45-3.55 GHz wireless spectrum licenses that started in October 2021 and concluded in January 2022. Auction 108 is an FCC auction of 2.5 GHz wireless spectrum licenses that started in July 2022 and concluded in August 2022.
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.
Connected Devices – non-handset devices that connect directly to the UScellular network. Connected devices include products such as tablets, wearables, modems, and hotspots.
Coronavirus Aid, Relief, and Economic Security (CARES) Act – economic relief package signed into law on March 27, 2020 to address the public health and economic impacts of COVID-19, including a variety of tax provisions.
EBITDA – refers to earnings before interest, taxes, depreciation, amortization and accretion and is used in the non-GAAP metric Adjusted EBITDA throughout this document. See Supplemental Information Relating to Non-GAAP Financial Measures within this MD&A for additional information.
Free Cash Flow – non-GAAP metric defined as Cash flows from operating activities less Cash paid for additions to property, plant and equipment. See Supplemental Information Relating to Non-GAAP Financial Measures within this MD&A for additional information.
Gross Additions – represents the total number of new connections added during the period, without regard to connections that were terminated during that period.
Net Additions (Losses) – represents the total number of new connections added during the period, net of connections that were terminated during that period.
OIBDA – refers to operating income before depreciation, amortization and accretion and is used in the non-GAAP metric Adjusted OIBDA throughout this document. See Supplemental Information Relating to Non-GAAP Financial Measures within this MD&A for additional information.
Postpaid Average Revenue per Account (Postpaid ARPA) – metric which is calculated by dividing total postpaid service revenues by the average number of postpaid accounts and by the number of months in the period.
Postpaid Average Revenue per User (Postpaid ARPU) – metric which is calculated by dividing total postpaid service revenues by the average number of postpaid connections and by the number of months in the period.
Retail Connections – individual lines of service associated with each device activated by a postpaid or prepaid customer. Connections are associated with all types of devices that connect directly to the UScellular network.
Universal Service Fund (USF) – a system of telecommunications collected fees and support payments managed by the FCC intended to promote universal access to telecommunications services in the United States.
4

Operational Overview
usm-20220930_g4.jpg

As of September 30,20222021
Retail Connections – End of Period
Postpaid4,264,000 4,391,000
Prepaid493,000 518,000
Total4,757,000 4,909,000

Q3 2022
Q3 2021
Q3 2022 vs. Q3 2021
YTD 2022
YTD 2021
YTD 2022 vs. YTD 2021
Postpaid Activity and Churn
Gross Additions
Handsets107,000 105,000 %292,000 309,000 (6)%
Connected Devices44,000 40,000 10 %113,000 118,000 (4)%
Total Gross Additions151,000 145,000 %405,000 427,000 (5)%
Net Additions (Losses)
Handsets(22,000)(5,000)N/M(89,000)(8,000)N/M
Connected Devices(9,000)(3,000)N/M(26,000)(11,000)N/M
Total Net Additions (Losses)(31,000)(8,000)N/M(115,000)(19,000)N/M
Churn
Handsets1.15 %0.95 %1.12 %0.92 %
Connected Devices3.40 %2.59 %2.94 %2.60 %
Total Churn1.42 %1.15 %1.34 %1.13 %
N/M - Percentage change not meaningful
Total postpaid handset net losses increased for the three and nine months ended September 30, 2022, when compared to the same period last year due primarily to higher defections resulting from aggressive industry-wide competition and an increase in non-pay customers.
Total postpaid connected device net losses increased for the three and nine months ended September 30, 2022, when compared to the same period last year due primarily to higher defections of devices activated by schools and local municipalities during the pandemic, which were partly funded by various government subsidies which have since ended.
Macroeconomic factors have caused some supply chain disruption and delays, including constraints on certain devices. These supply constraints are due primarily to component availability, resulting in extended lead times and additional uncertainty, which may negatively impact UScellular in future periods.

5

Postpaid Revenue
Three Months Ended
September 30,
Nine Months Ended
September 30,
202220212022 vs. 2021202220212022 vs. 2021
Average Revenue Per User (ARPU)
$50.21 $48.12 4 %$49.99 $47.83  %
Average Revenue Per Account (ARPA)
$130.27 $125.99 3 %$130.20 $125.50  %
Postpaid ARPU and Postpaid ARPA increased for the three and nine months ended September 30, 2022, when compared to the same period last year, due to (i) favorable plan and product offering mix, (ii) an increase in cost recovery surcharges, (iii) other price plan products and fees and (iv) an increase in device protection plan revenues. These increases were partially offset by an increase in promotional discounts.
2021 Postpaid ARPU and ARPA amounts exclude $9 million of postpaid revenue related to a third quarter out-of-period error. See Note 2 — Revenue Recognition in the Notes to Consolidated Financial Statements for additional information.
6

Financial Overview
Three Months Ended
September 30,
Nine Months Ended
September 30,
202220212022 vs. 2021202220212022 vs. 2021
(Dollars in millions)
 
 
 
Retail service1
$696 $697 $2,098 $2,064 %
Inbound roaming17 30 (43)%56 86 (36)%
Other1
68 61 11 %197 183 %
Service revenues781 788 (1)%2,351 2,333 %
Equipment sales302 228 32 %769 720 %
Total operating revenues1,083 1,016 %3,120 3,053 %
System operations (excluding Depreciation, amortization and accretion reported below)197 205 (4)%574 594 (3)%
Cost of equipment sold354 252 40 %887 786 13 %
Selling, general and administrative369 346 %1,032 984 %
Depreciation, amortization and accretion177 160 10 %520 510 %
Loss on impairment of licenses — 3 — N/M
(Gain) loss on asset disposals, net1 (89)%9 15 (43)%
(Gain) loss on sale of business and other exit costs, net — %(1)(1)40 %
Total operating expenses1,098 971 13 %3,024 2,888 %
Operating income (loss)$(15)$45 N/M$96 $165 (42)%
Net income (loss)$(12)$35 N/M$62 $132 (53)%
Adjusted OIBDA (Non-GAAP)2
$163 $213 (23)%$627 $689 (9)%
Adjusted EBITDA (Non-GAAP)2
$205 $262 (22)%$754 $831 (9)%
Capital expenditures3
$136 $185 (27)%$541 $458 18 %
N/M - Percentage change not meaningful
1For the three and nine months ended September 30, 2021, amounts have been adjusted to reclassify $2 million and $5 million, respectively, of Internet of Things (IoT) and Reseller revenues from Retail service to Other.
2Refer to Supplemental Information Relating to Non-GAAP Financial Measures within this MD&A for a reconciliation of this measure.
3Refer to Liquidity and Capital Resources within this MD&A for additional information on Capital expenditures.
7

Operating Revenues
Three Months Ended September 30, 2022 and 2021
(Dollars in millions)
usm-20220930_g5.jpg
Operating Revenues
Nine Months Ended September 30, 2022 and 2021
(Dollars in millions)
usm-20220930_g6.jpg
Service revenues consist of:
Retail Service - Postpaid and prepaid charges for voice, data and value-added services and cost recovery surcharges
Inbound Roaming - Charges to other wireless carriers whose customers use UScellular’s wireless systems when roaming
Other Service - Amounts received from the Federal USF, tower rental revenues, miscellaneous other service revenues and Internet of Things (IoT)
Equipment revenues consist of:
Sales of wireless devices and related accessories to new and existing customers, agents, and third-party distributors
Key components of changes in the statement of operations line items were as follows:
Total operating revenues
Retail service revenues decreased for the three months ended September 30, 2022 partially due to a $9 million out-of-period error that increased revenue recognized in the three months ended September 30, 2021. Excluding this impact, retail service revenues increased primarily as a result of an increase in Postpaid ARPU as previously discussed in the Operational Overview section, partially offset by a decrease in average postpaid connections.
Retail service revenues increased for the nine months ended September 30, 2022 as a result of an increase in Postpaid ARPU, partially offset by a decrease in average postpaid connections, as well as a $9 million out-of-period error that increased revenue recognized in the nine months ended September 30, 2021. See Note 2 — Revenue Recognition in the Notes to Consolidated Financial Statements for additional information.
Inbound roaming revenues decreased for the three and nine months ended September 30, 2022, primarily driven by lower data revenues resulting from lower rates, partially offset by higher usage. UScellular expects inbound roaming revenues to continue to decline for the remainder of 2022 relative to prior year levels.
Other service revenues increased for the three and nine months ended September 30, 2022, resulting from increases in tower rental revenues, miscellaneous revenues, and IoT revenues.
Equipment sales revenues increased for the three and nine months ended September 30, 2022, due primarily to increased customer upgrades driven by more promotional activity, combined with a higher average price of new smartphone sales.
8

In recent periods, wireless service providers have increased promotional aggressiveness to attract new customers and retain existing customers. Operating revenues and Operating income (loss) may be negatively impacted in future periods by the competitive response to offer increased promotional discounts to new and existing customers.
Systems operations expenses
System operations expenses decreased for the three and nine months ended September 30, 2022, due primarily to decreases in roaming and customer usage expenses, partially offset by an increase in maintenance, utility, and cell site expenses.
Cost of equipment sold
Cost of equipment sold increased for the three and nine months ended September 30, 2022, due primarily to increased customer upgrades driven by more promotional activity, combined with higher average cost per unit sold.
Selling, general and administrative expenses
Selling, general and administrative expenses increased for the three and nine months ended September 30, 2022, due primarily to increases in bad debts expense, partially offset by a decrease in advertising expense.
Bad debts expense was $42 million and $13 million for the three months ended September 30, 2022 and 2021, respectively, and $93 million and $34 million for the nine months ended September 30, 2022 and 2021, respectively, as customer payment behavior and the corresponding rate of involuntary churn, which had been favorable in the prior year due to the continuing impacts of the pandemic, which included government stimulus payments and higher consumer savings rates, returned to pre-pandemic trends in the 2022 periods. In addition, customers have purchased higher priced devices in recent periods, which has resulted in higher write-off amounts per uncollectible account in the 2022 periods relative to the corresponding 2021 periods.
Depreciation, amortization and accretion
Depreciation, amortization and accretion increased for the three and nine months ended September 30, 2022 due to increased capital expenditures in recent years relative to historical periods.
Components of Other Income (Expense)
Three Months Ended
September 30,
Nine Months Ended
September 30,
202220212022 vs. 2021202220212022 vs. 2021
(Dollars in millions)
Operating income (loss)$(15)$45 N/M$96 $165 (42)%
Equity in earnings of unconsolidated entities40 48 (17)%122 137 (11)%
Interest and dividend income2 37 %5 11 %
Interest expense(42)(45)%(115)(144)20 %
Total investment and other income (expense) N/M12 (2)N/M
Income (loss) before income taxes(15)49 N/M108 163 (34)%
Income tax expense (benefit)(3)14 N/M46 31 48 %
Net income (loss)(12)35 N/M62 132 (53)%
Less: Net income (loss) attributable to noncontrolling interests, net of tax (38)%4 12 %
Net income (loss) attributable to UScellular shareholders$(12)$34 N/M$58 $128 (55)%
N/M - Percentage change not meaningful
Equity in earnings of unconsolidated entities
Equity in earnings of unconsolidated entities represents UScellular’s share of net income from entities in which it has a noncontrolling interest and that are accounted for using the equity method or the net asset value practical expedient. UScellular’s investment in the Los Angeles SMSA Limited Partnership (LA Partnership) contributed pretax income of $18 million and $22 million for the three months ended September 30, 2022 and 2021, respectively and $52 million and $63 million for the nine months ended September 30, 2022 and 2021, respectively. See Note 8 — Investments in Unconsolidated Entities in the Notes to Consolidated Financial Statements for additional information.
9

Interest expense
Interest expense decreased for the three and nine months ended September 30, 2022, due primarily to the write-off of unamortized debt issuance costs related to Senior Notes redeemed during 2021 and replaced by other debt facilities with lower interest rates.
Income tax expense
Income tax expense decreased for the three months ended September 30, 2022 due primarily to the decrease in Income (loss) before income taxes.
Income tax expense increased for the nine months ended September 30, 2022 due primarily to the 2021 reduction of tax accruals resulting from expiration of state statutes of limitations of prior tax years, which did not recur in 2022. This was partially offset by the tax effect of the decrease in Income (loss) before income taxes.
During the nine months ended September 30, 2022, UScellular received a federal income tax refund of $123 million related to the 2020 net operating loss carryback enabled by the CARES Act.
10

Liquidity and Capital Resources
Sources of Liquidity
UScellular operates a capital-intensive business. In the past, UScellular’s existing cash and investment balances, funds available under its financing agreements, and cash flows from operating and certain investing and financing activities, including sales of assets or businesses, provided sufficient liquidity and financial flexibility for UScellular to meet its normal day-to-day operating needs and debt service requirements, to finance the build-out and enhancement of markets and to fund acquisitions, primarily of wireless spectrum licenses. There is no assurance that this will be the case in the future. See Market Risk for additional information regarding maturities of long-term debt.
UScellular has incurred negative free cash flow at times in the past and this could occur in the future. However, UScellular believes that existing cash and investment balances, funds available under its financing agreements and expected cash flows from operating and investing activities will provide sufficient liquidity for UScellular to meet its normal day-to-day operating needs and debt service requirements for the foreseeable future. UScellular will continue to monitor the rapidly changing business and market conditions and plans to take appropriate actions, as necessary, to meet its liquidity needs.
UScellular may require substantial additional capital for, among other uses, funding day-to-day operating needs including working capital, acquisitions of providers of wireless telecommunications services, wireless spectrum license acquisitions, capital expenditures, agreements to purchase goods or services, leases, debt service requirements, repurchases of shares, or making additional investments. It may be necessary from time to time to increase the size of the existing credit facilities, to put in place new credit agreements, or to obtain other forms of financing in order to fund potential expenditures.
Cash and Cash Equivalents
Cash and cash equivalents include cash and money market investments. The primary objective of UScellular's Cash and cash equivalents investment activities is to preserve principal.

Cash and Cash Equivalents
(Dollars in millions)
usm-20220930_g7.jpg





The majority of UScellular’s Cash and cash equivalents are held in bank deposit accounts and in money market funds that purchase only debt issued by the U.S. Treasury or U.S. government agencies. Refer to the Consolidated Cash Flow Analysis for additional information related to changes in Cash and cash equivalents.
In addition to Cash and cash equivalents, UScellular had undrawn borrowing capacity from the following debt facilities at September 30, 2022. See the Financing section below for further details.
(Dollars in millions)
Revolving Credit Agreement$300 
Receivables Securitization Agreement250 
Repurchase Agreement140 
Total undrawn borrowing capacity$690 
11

Financing
Revolving Credit Agreement
UScellular has an unsecured revolving credit agreement with a maximum borrowing capacity of $300 million. Amounts under the revolving credit agreement may be borrowed, repaid and reborrowed from time to time until maturity in July 2026. During the nine months ended September 30, 2022, UScellular borrowed and repaid $75 million under its revolving credit agreement. As of September 30, 2022, there were no outstanding borrowings under the revolving credit agreement, and UScellular's unused borrowing capacity was $300 million.
Term Loan Agreements
UScellular has term loan agreements with maximum borrowing capacities of $800 million. The maturity dates for the term loan agreements range from July 2026 to July 2031. During the nine months ended September 30, 2022, UScellular borrowed $500 million under its term loan credit agreements. As of September 30, 2022, UScellular has borrowed the full amount available under the agreements and the outstanding borrowings were $797 million.
Export Credit Financing Agreement
In December 2021, UScellular entered into a $150 million term loan credit facility with Export Development Canada to finance (or refinance) imported equipment, including equipment purchased prior to entering the term loan credit facility agreement. During the nine months ended September 30, 2022, UScellular borrowed $150 million, which is the full amount available under the agreement and is due in January 2027.
Receivables Securitization Agreement
UScellular, through its subsidiaries, has a receivables securitization agreement to permit securitized borrowings using its equipment installment plan receivables. In March 2022, UScellular amended the agreement to extend the maturity date to March 2024. Amounts under the agreement may be borrowed, repaid and reborrowed from time to time until the maturity date. During the nine months ended September 30, 2022, UScellular repaid $250 million under the agreement. As of September 30, 2022, the outstanding borrowings under the agreement were $200 million and the unused borrowing capacity under the agreement was $250 million, subject to sufficient collateral to satisfy the asset borrowing base provisions of the agreement.
Repurchase Agreement
In January 2022, UScellular, through a subsidiary (the repo subsidiary), entered into a repurchase agreement to borrow up to $200 million, subject to the availability of eligible equipment installment plan receivables and the agreement of the lender. The transaction is accounted for as a one-month secured borrowing. The expiration date of the repurchase agreement is in January 2023. During the nine months ended September 30, 2022, the repo subsidiary borrowed $110 million and repaid $50 million under the repurchase agreement. As of September 30, 2022, the outstanding borrowings under the agreement were $60 million and the unused borrowing capacity was $140 million.
Financial Covenants
UScellular believes that it was in compliance with all of the financial covenants and requirements set forth in its revolving credit agreement, term loan credit agreements, export credit financing agreement and receivables securitization agreement as of September 30, 2022.
Other Long-Term Financing
UScellular has an effective shelf registration statement on Form S-3 to issue senior or subordinated debt securities, preferred shares and depositary shares.
See Note 10 — Debt in the Notes to Consolidated Financial Statements for additional information related to the financing agreements.
12

Capital Expenditures
Capital expenditures (i.e., additions to property, plant and equipment and system development expenditures; excludes wireless spectrum license additions), which include the effects of accruals and capitalized interest, for the nine months ended September 30, 2022 and 2021, were as follows:

Capital Expenditures
(Dollars in millions)
usm-20220930_g8.jpg




Capital expenditures for the full year 2022 are expected to be between $700 million and $800 million. These expenditures are expected to be used principally for the following purposes:
Continue network modernization and 5G deployment;
Enhance and maintain UScellular's network coverage, including providing additional speed and capacity to accommodate increased data usage by current customers; and
Invest in information technology to support existing and new services and products.
Macroeconomic factors may impact the acquisition or cost of products and materials as well as contribute to internal and external labor shortages.
UScellular intends to finance its capital expenditures for 2022 using primarily Cash flows from operating activities, existing cash balances and, as required, additional debt financing from its existing agreements and/or other forms of financing.
Acquisitions, Divestitures and Exchanges
UScellular may be engaged from time to time in negotiations (subject to all applicable regulations) relating to the acquisition, divestiture or exchange of companies, properties or wireless spectrum licenses (including pursuant to FCC auctions). In general, UScellular may not disclose such transactions until there is a definitive agreement.
Other Obligations
UScellular will require capital for future spending on existing contractual obligations, including long-term debt obligations; lease commitments; commitments for device purchases, network facilities and transport services; agreements for software licensing; long-term marketing programs; commitments for wireless spectrum licenses acquired through FCC auctions; and other agreements to purchase goods or services.
Variable Interest Entities
UScellular consolidates certain “variable interest entities” as defined under GAAP. See Note 11 — Variable Interest Entities in the Notes to Consolidated Financial Statements for additional information related to these variable interest entities. UScellular may elect to make additional capital contributions and/or advances to these variable interest entities in future periods in order to fund their operations.
Common Share Repurchase Program
During the nine months ended September 30, 2022, UScellular repurchased 1,011,177 Common Shares for $29 million at an average cost per share of $28.53. As of September 30, 2022, the total cumulative amount of UScellular Common Shares authorized to be repurchased is 2,506,000. For additional information related to the current repurchase authorization, see Unregistered Sales of Equity Securities and Use of Proceeds.
13

Consolidated Cash Flow Analysis
UScellular operates a capital-intensive business. UScellular makes substantial investments to acquire wireless spectrum licenses and properties and to construct and upgrade wireless telecommunications networks and facilities as a basis for creating long-term value for shareholders. In recent years, rapid changes in technology and new opportunities have required substantial investments in potentially revenue‑enhancing and cost-saving upgrades to UScellular’s networks. Cash flows may fluctuate from quarter to quarter and year to year due to seasonality, timing and other factors. The following discussion summarizes UScellular's cash flow activities for the nine months ended September 30, 2022 and 2021.
2022 Commentary
UScellular’s Cash, cash equivalents and restricted cash increased $90 million. Net cash provided by operating activities was $652 million due to net income of $62 million adjusted for non-cash items of $557 million, distributions received from unconsolidated entities of $100 million, including $37 million in distributions from the LA Partnership, and changes in working capital items which decreased net cash by $67 million. The working capital changes were primarily driven by an increase in customer and agent receivables and increases in inventory purchases, partially offset by a federal income tax refund of $123 million received during the first quarter.
Cash flows used for investing activities were $976 million, which included payments for wireless spectrum licenses of $575 million and payments for property, plant and equipment of $409 million. Cash payments for property, plant and equipment are lower than the total capital expenditures in the nine months ended September 30, 2022 due primarily to future obligations of certain software license agreements that are recorded as current year capital expenditures but are paid over time.
Cash flows provided by financing activities were $414 million, due primarily to $500 million borrowed under the term loan facilities, $150 million borrowed under the export credit financing agreement, $110 million borrowed under the EIP receivables repurchase agreement, and $75 million borrowed under the revolving credit agreement. These were partially offset by $250 million of repayments on the receivables securitization agreement, a $75 million repayment on the revolving credit agreement, a $50 million repayment on the EIP receivables repurchase agreement and the repurchase of $28 million of Common Shares.
2021 Commentary
UScellular’s Cash, cash equivalents and restricted cash decreased $1,028 million. Net cash provided by operating activities was $667 million due to net income of $132 million adjusted for non-cash items of $519 million and distributions received from unconsolidated entities of $106 million, including $32 million in distributions from the LA Partnership. This was partially offset by changes in working capital items which decreased net cash by $90 million. The working capital changes were primarily influenced by a decrease to accrued taxes and the timing of vendor payments and an increase in customer and agent receivables.
Cash flows used for investing activities were $1,732 million, which included payments for wireless spectrum licenses of $1,283 million and payments for property, plant and equipment of $456 million.
Cash flows provided by financing activities were $37 million, due primarily to the issuance of $500 million of 5.5% Senior Notes, $500 million borrowed under the receivables securitization agreement, and $217 million borrowed under the term loan. These were partially offset by the redemption of $917 million of UScellular Senior Notes, a $200 million repayment on the receivables securitization agreement, the repurchase of $21 million of Common Shares and payment of debt issuance costs of $20 million.
14

Consolidated Balance Sheet Analysis
The following discussion addresses certain captions in the consolidated balance sheet and changes therein. This discussion is intended to highlight the significant changes and is not intended to fully reconcile the changes. Notable balance sheet changes during 2022 were as follows:
Inventory, net
Inventory, net increased $70 million due primarily to increased inventory levels to support new promotions and ensure adequate device supply.
Income taxes receivable
Income taxes receivable decreased $122 million due primarily to a federal income tax refund received related to the 2020 net operating loss carryback enabled by the CARES Act.
Other current liabilities
Other current liabilities increased $187 million due primarily to an increase in the short-term accrual for Auction 107 relocation fees, net borrowings under the EIP receivables repurchase agreement and accruals related to software license agreements.
Other deferred liabilities and credits
Other deferred liabilities and credits increased $88 million due primarily to accruals related to software license agreements.
Long-term debt, net
The following table presents the components of the $387 million increase in Long-term debt, net:
Long-term debt, net
(Dollars in millions)
Balance at December 31, 2021$2,728 
Borrowings under Revolving Credit Agreements75 
Borrowings under Term Loan Agreements500 
Borrowings under Export Credit Financing Agreement150 
Repayments under Revolving Credit Agreements(75)
Repayments under Receivables Securitization Agreement(250)
Other(13)
Balance at September 30, 2022$3,115 
15

Supplemental Information Relating to Non-GAAP Financial Measures
UScellular sometimes uses information derived from consolidated financial information but not presented in its financial statements prepared in accordance with GAAP to evaluate the performance of its business. Specifically, UScellular has referred to the following measures in this Form 10-Q Report:
EBITDA
Adjusted EBITDA
Adjusted OIBDA
Free cash flow

These measures are considered “non-GAAP financial measures” under U.S. Securities and Exchange Commission Rules. Following are explanations of each of these measures.
EBITDA, Adjusted EBITDA and Adjusted OIBDA
EBITDA, Adjusted EBITDA and Adjusted OIBDA are defined as net income (loss) adjusted for the items set forth in the reconciliation below. EBITDA, Adjusted EBITDA and Adjusted OIBDA are not measures of financial performance under GAAP and should not be considered as alternatives to Net income (loss) 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 below 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 applicable GAAP income measures 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 below 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 following table reconciles EBITDA, Adjusted EBITDA and Adjusted OIBDA to the corresponding GAAP measures, Net income (loss) and Operating income (loss).
Three Months Ended
September 30,
Nine Months Ended
September 30,
2022202120222021
(Dollars in millions)
Net income (loss) (GAAP)$(12)$35 $62 $132 
Add back:
Income tax expense (benefit)(3)14 46 31 
Interest expense42 45 115 144 
Depreciation, amortization and accretion177 160 520 510 
EBITDA (Non-GAAP)204 254 743 817 
Add back or deduct:
Loss on impairment of licenses — 3 — 
(Gain) loss on asset disposals, net1 9 15 
(Gain) loss on sale of business and other exit costs, net — (1)(1)
Adjusted EBITDA (Non-GAAP)205 262 754 831 
Deduct:
Equity in earnings of unconsolidated entities40 48 122 137 
Interest and dividend income2 5 
Adjusted OIBDA (Non-GAAP)163 213 627 689 
Deduct:
Depreciation, amortization and accretion177 160 520 510 
Loss on impairment of licenses — 3 — 
(Gain) loss on asset disposals, net1 9 15 
(Gain) loss on sale of business and other exit costs, net — (1)(1)
Operating income (loss) (GAAP)$(15)$45 $96 $165 
16

Free Cash Flow
The following table presents Free cash flow, which is defined as Cash flows from operating activities less Cash paid for additions to property, plant and equipment. Free 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. 
Nine Months Ended
September 30,
20222021
(Dollars in millions)
Cash flows from operating activities (GAAP)$652 $667 
Less: Cash paid for additions to property, plant and equipment409 456 
Free cash flow (Non-GAAP)$243 $211 
17

Application of Critical Accounting Policies and Estimates
UScellular prepares its consolidated financial statements in accordance with GAAP. UScellular’s significant accounting policies are discussed in detail in Note 1 — Summary of Significant Accounting Policies, Note 2 — Revenue Recognition and Note 10 — Leases in the Notes to Consolidated Financial Statements and UScellular’s Application of Critical Accounting Policies and Estimates is discussed in detail in Management’s Discussion and Analysis of Financial Condition and Results of Operations, both of which are included in UScellular’s Form 10-K for the year ended December 31, 2021. 
Regulatory Matters
Spectrum Auctions
On March 2, 2020, the FCC released a Public Notice establishing procedures for an auction offering wireless spectrum licenses in the 3.5 GHz band (Auction 105). On September 2, 2020, the FCC announced by way of public notice that UScellular was the provisional winning bidder for 243 wireless spectrum licenses for a purchase price of $14 million. On July 15, 2022, the FCC released a Consent Decree related to its spectrum aggregation and ownership attribution rules in which UScellular agreed to relinquish its rights to 27 wireless spectrum licenses awarded in Auction 105 and subsequently received a full refund of $2 million. The remaining 216 wireless spectrum licenses were granted by the FCC on July 26, 2022.
On August 7, 2020, the FCC released a Public Notice establishing procedures for an auction offering wireless spectrum licenses in the 3.7-3.98 GHz bands (Auction 107). On February 24, 2021, the FCC announced by way of public notice that UScellular was the provisional winning bidder for 254 wireless spectrum licenses for $1,283 million. UScellular paid $30 million of this amount in 2020 and the remainder in March 2021. The wireless spectrum licenses from Auction 107 were granted by the FCC in July 2021. Additionally, UScellular expects to be obligated to pay approximately $185 million in total from 2021 through 2024 related to relocation costs and accelerated relocation incentive payments. Such additional costs were accrued and capitalized at the time the licenses were granted, and adjusted as necessary if the estimated obligation changes. UScellular paid $36 million and $8 million related to the additional costs in October 2021 and September 2022, respectively. The spectrum must be cleared by incumbent providers before UScellular can access it. UScellular does not expect to have access to this spectrum until late 2023.
On June 9, 2021, the FCC released a Public Notice establishing procedures for an auction offering wireless spectrum licenses in the 3.45-3.55 GHz band (Auction 110). On January 14, 2022, the FCC announced by way of public notice that UScellular was the provisional winning bidder for 380 wireless spectrum licenses for $580 million. UScellular paid $20 million of this amount in 2021 and the remainder in January and February 2022. The wireless spectrum licenses from Auction 110 were granted by the FCC on May 4, 2022.
On March 21, 2022, the FCC released a Public Notice establishing procedures for an auction offering wireless spectrum licenses in the 2.5 GHz band (Auction 108). On September 1, 2022, the FCC announced by way of public notice that UScellular was the provisional winning bidder for 34 wireless spectrum licenses for $3 million. The wireless spectrum licenses from Auction 108 have not yet been granted by the FCC.
18

Private Securities Litigation Reform Act of 1995
Safe Harbor Cautionary Statement

This Form 10-Q, including exhibits, contains statements that are not based on historical facts and represent forward-looking statements, as this term is defined in the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, that address activities, events or developments that UScellular intends, expects, projects, believes, estimates, plans or anticipates will or may occur in the future are forward-looking statements. The words “believes,” “anticipates,” “estimates,” “expects,” “plans,” “intends,” “projects” and similar expressions are intended to identify these forward-looking statements, but are not the exclusive means of identifying them. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, events or developments to be significantly different from any future results, events or developments expressed or implied by such forward-looking statements. Such risks, uncertainties and other factors include, but are not limited to, those set forth below, as more fully described under “Risk Factors” in UScellular’s Form 10-K for the year ended December 31, 2021 and in this Form 10-Q. Each of the following risks could have a material adverse effect on UScellular’s business, financial condition or results of operations. However, such factors are not necessarily all of the important factors that could cause actual results, performance or achievements to differ materially from those expressed in, or implied by, the forward-looking statements contained in this document. Other unknown or unpredictable factors also could have material adverse effects on future results, performance or achievements. UScellular undertakes no obligation to update publicly any forward-looking statements whether as a result of new information, future events or otherwise. You should carefully consider the Risk Factors in UScellular’s Form 10-K for the year ended December 31, 2021, the following factors and other information contained in, or incorporated by reference into, this Form 10-Q to understand the material risks relating to UScellular’s business, financial condition or results of operations.
Operational Risk Factors
Intense competition involving products, services, pricing, promotions and network speed and technologies could adversely affect UScellular’s revenues or increase its costs to compete.
Changes in roaming practices or other factors could cause UScellular's roaming revenues to decline from current levels, roaming expenses to increase from current levels and/or impact UScellular's ability to service its customers in geographic areas where UScellular does not have its own network, which could have an adverse effect on UScellular's business, financial condition or results of operations.
A failure by UScellular to obtain access to adequate radio spectrum to meet current or anticipated future needs and/or to accurately predict future needs for radio spectrum could have an adverse effect on UScellular’s business, financial condition or results of operations.
An inability to attract people of outstanding talent throughout all levels of the organization, to develop their potential through education and assignments, and to retain them by keeping them engaged, challenged and properly rewarded could have an adverse effect on UScellular's business, financial condition or results of operations.
UScellular’s smaller scale relative to larger competitors that may have greater financial and other resources than UScellular could cause UScellular to be unable to compete successfully, which could adversely affect its business, financial condition or results of operations.
Changes in various business factors, including changes in demand, consumer preferences and perceptions, price competition, churn from customer switching activity and other factors, could have an adverse effect on UScellular’s business, financial condition or results of operations.
Advances or changes in technology could render certain technologies used by UScellular obsolete, could put UScellular at a competitive disadvantage, could reduce UScellular’s revenues or could increase its costs of doing business.
Complexities associated with deploying new technologies present substantial risk and UScellular investments in unproven technologies may not produce the benefits that UScellular expects.
Costs, integration problems or other factors associated with acquisitions, divestitures or exchanges of properties or wireless spectrum licenses and/or expansion of UScellular’s business could have an adverse effect on UScellular’s business, financial condition or results of operations.
A failure by UScellular to complete significant network construction and systems implementation activities as part of its plans to improve the quality, coverage, capabilities and capacity of its network, support and other systems and infrastructure could have an adverse effect on its operations.
Difficulties involving third parties with which UScellular does business, including changes in UScellular's relationships with or financial or operational difficulties, including supply chain disruptions, of key suppliers or independent agents and third-party national retailers who market UScellular’s services, could adversely affect UScellular's business, financial condition or results of operations.
A failure by UScellular to maintain flexible and capable telecommunication networks or information technologies, or a material disruption thereof, could have an adverse effect on UScellular’s business, financial condition or results of operations.
19

Financial Risk Factors
Uncertainty in UScellular’s future cash flow and liquidity or the inability to access capital, deterioration in the capital markets, changes in interest rates, other changes in UScellular’s performance or market conditions, changes in UScellular’s credit ratings or other factors could limit or restrict the availability of financing on terms and prices acceptable to UScellular, which could require UScellular to reduce its construction, development or acquisition programs, reduce the amount of wireless spectrum licenses acquired, and/or reduce or cease share repurchases.
UScellular has a significant amount of indebtedness which could adversely affect its financial performance and in turn adversely affect its ability to make payments on its indebtedness, comply with terms of debt covenants and incur additional debt.
UScellular’s assets and revenue are concentrated in the U.S. wireless telecommunications industry. Consequently, its operating results may fluctuate based on factors related primarily to conditions in this industry.
UScellular has significant investments in entities that it does not control. Losses in the value of such investments could have an adverse effect on UScellular’s financial condition or results of operations.
Regulatory, Legal and Governance Risk Factors
Failure by UScellular to timely or fully comply with any existing applicable legislative and/or regulatory requirements or changes thereto could adversely affect UScellular’s business, financial condition or results of operations.
UScellular receives significant regulatory support, and is also subject to numerous surcharges and fees from federal, state and local governments – the applicability and the amount of the support and fees are subject to great uncertainty, including the ability to pass through certain fees to customers, and this uncertainty could have an adverse effect on UScellular’s business, financial condition or results of operations.
Settlements, judgments, restraints on its current or future manner of doing business and/or legal costs resulting from pending and future litigation could have an adverse effect on UScellular’s business, financial condition or results of operations.
The possible development of adverse precedent in litigation or conclusions in professional studies to the effect that radio frequency emissions from wireless devices and/or cell sites cause harmful health consequences, including cancer or tumors, or may interfere with various electronic medical devices or frequencies used by other industries, could have an adverse effect on UScellular's business, financial condition or results of operations.
Claims of infringement of intellectual property and proprietary rights of others, primarily involving patent infringement claims, could prevent UScellular from using necessary technology to provide products or services or subject UScellular to expensive intellectual property litigation or monetary penalties, which could have an adverse effect on UScellular’s business, financial condition or results of operations.
There are potential conflicts of interests between TDS and UScellular.
Certain matters, such as control by TDS and provisions in the UScellular Restated Certificate of Incorporation, may serve to discourage or make more difficult a change in control of UScellular or have other consequences.
General Risk Factors
UScellular has experienced, and in the future expects to experience, cyber-attacks or other breaches of network or information technology security of varying degrees on a regular basis, which could have an adverse effect on UScellular's business, financial condition or results of operations.
Disruption in credit or other financial markets, a deterioration of U.S. or global economic conditions or other events could, among other things, impede UScellular’s access to or increase the cost of financing its operating and investment activities and/or result in reduced revenues and lower operating income and cash flows, which would have an adverse effect on UScellular’s business, financial condition or results of operations.
The impact of public health emergencies, such as the COVID-19 pandemic, on UScellular's business is uncertain, but depending on duration and severity could have a material adverse effect on UScellular's business, financial condition or results of operations.
20

Risk Factors
In addition to the information set forth in this Form 10-Q, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in UScellular’s Form 10-K for the year ended December 31, 2021, which could materially affect UScellular’s business, financial condition or future results. The risks described in this Form 10-Q and the Form 10-K for the year ended December 31, 2021, may not be the only risks that could affect UScellular. Additional unidentified or unrecognized risks and uncertainties could materially adversely affect UScellular’s business, financial condition and/or operating results. Subject to the foregoing, UScellular has not identified for disclosure any material changes to the risk factors as previously disclosed in UScellular’s Form 10-K for the year ended December 31, 2021.
Quantitative and Qualitative Disclosures about Market Risk
Market Risk
As of September 30, 2022, approximately 60% of UScellular's long-term debt was in fixed-rate senior notes and approximately 40% in variable-rate debt. Fluctuations in market interest rates can lead to volatility in the fair value of fixed-rate notes and interest expense on variable-rate debt.
The following table presents the scheduled principal payments on long-term debt, lease obligations, and the related weighted average interest rates by maturity dates at September 30, 2022.
Principal Payments Due by Period
Long-Term Debt Obligations1
Weighted-Avg. Interest Rates on Long-Term Debt Obligations2
(Dollars in millions)
Remainder of 2022$5.4 %
202313 4.7 %
202413 4.7 %
202513 4.7 %
2026283 4.3 %
Thereafter2,671 5.8 %
Total$2,994 5.6 %
1The total long-term debt obligation differs from Long-term debt in the Consolidated Balance Sheet due to unamortized debt issuance costs on all non-revolving debt instruments, unamortized discounts related to the 6.7% Senior Notes, and outstanding borrowings under the receivables securitization agreement, which principal repayments are not scheduled but are instead based on actual receivable collections.
2Represents the weighted average stated interest rates at September 30, 2022, for debt maturing in the respective periods.
See Note 3 — Fair Value Measurements in the Notes to Consolidated Financial Statements for additional information related to the fair value of UScellular’s Long-term debt as of September 30, 2022.
21

Financial Statements
United States Cellular Corporation
Consolidated Statement of Operations
(Unaudited)
 
Three Months Ended
September 30,
Nine Months Ended
September 30,
2022202120222021
(Dollars and shares in millions, except per share amounts)
Operating revenues
Service$781 $788 $2,351 $2,333 
Equipment sales302 228 769 720 
Total operating revenues1,083 1,016 3,120 3,053 
Operating expenses
System operations (excluding Depreciation, amortization and accretion reported below)197 205 574 594 
Cost of equipment sold354 252 887 786 
Selling, general and administrative369 346 1,032 984 
Depreciation, amortization and accretion177 160 520 510 
Loss on impairment of licenses  3  
(Gain) loss on asset disposals, net1 8 9 15 
(Gain) loss on sale of business and other exit costs, net  (1)(1)
Total operating expenses1,098 971 3,024 2,888 
Operating income (loss)(15)45 96 165 
Investment and other income (expense)
Equity in earnings of unconsolidated entities40 48 122 137 
Interest and dividend income2 1 5 5 
Interest expense(42)(45)(115)(144)
Total investment and other income (expense) 4 12 (2)
Income (loss) before income taxes(15)49 108 163 
Income tax expense (benefit)(3)14 46 31 
Net income (loss)(12)35 62 132 
Less: Net income attributable to noncontrolling interests, net of tax 1 4 4 
Net income (loss) attributable to UScellular shareholders$(12)$34 $58 $128 
Basic weighted average shares outstanding85 86 86 87 
Basic earnings (loss) per share attributable to UScellular shareholders$(0.15)$0.39 $0.68 $1.48 


Diluted weighted average shares outstanding85 87 87 88 
Diluted earnings (loss) per share attributable to UScellular shareholders$(0.15)$0.38 $0.67 $1.46 
The accompanying notes are an integral part of these consolidated financial statements.
22

United States Cellular Corporation
Consolidated Statement of Cash Flows
(Unaudited)
Nine Months Ended
September 30,
20222021
(Dollars in millions)
Cash flows from operating activities
Net income$62 $132 
Add (deduct) adjustments to reconcile net income to net cash flows from operating activities
Depreciation, amortization and accretion520 510 
Bad debts expense93 34 
Stock-based compensation expense18 20 
Deferred income taxes, net31 47 
Equity in earnings of unconsolidated entities(122)(137)
Distributions from unconsolidated entities100 106 
Loss on impairment of licenses3  
(Gain) loss on asset disposals, net9 15 
(Gain) loss on sale of business and other exit costs, net(1)(1)
Other operating activities6 31 
Changes in assets and liabilities from operations
Accounts receivable(54)19 
Equipment installment plans receivable(131)(44)
Inventory(71)10 
Accounts payable(7)(33)
Customer deposits and deferred revenues27 10 
Accrued taxes134 (36)
Accrued interest10 7 
Other assets and liabilities25 (23)
Net cash provided by operating activities652 667 
Cash flows from investing activities
Cash paid for additions to property, plant and equipment(409)(456)
Cash paid for licenses(575)(1,263)
Cash received from investments 3 
Cash received from divestitures and exchanges8 2 
Advance payments for license acquisitions (20)
Other investing activities 2 
Net cash used in investing activities(976)(1,732)
Cash flows from financing activities
Issuance of long-term debt725 1,217 
Repayment of long-term debt(327)(1,117)
Issuance of short-term debt110  
Repayment of short-term debt(50) 
Common Shares reissued for benefit plans, net of tax payments(5)(16)
Repurchase of Common Shares(28)(21)
Payment of debt issuance costs(1)(20)
Distributions to noncontrolling interests(3)(2)
Other financing activities(7)(4)
Net cash provided by financing activities414 37 
Net increase (decrease) in cash, cash equivalents and restricted cash90 (1,028)
Cash, cash equivalents and restricted cash
Beginning of period199 1,291 
End of period$289 $263 

The accompanying notes are an integral part of these consolidated financial statements.
23

United States Cellular Corporation
Consolidated Balance Sheet — Assets
(Unaudited)
September 30, 2022December 31, 2021
(Dollars in millions)
Current assets
Cash and cash equivalents$254 $156 
Accounts receivable
Customers and agents, less allowances of $66 and $57, respectively
987 976 
Roaming7 7 
Other, less allowances of $2 and $2, respectively
81 63 
Inventory, net243 173 
Prepaid expenses61 58 
Income taxes receivable1 123 
Other current assets41 49 
Total current assets1,675 1,605 
Assets held for sale29 18 
Licenses4,680 4,088 
Investments in unconsolidated entities461 439 
Property, plant and equipment
In service and under construction9,410 9,056 
Less: Accumulated depreciation and amortization6,779 6,450 
Property, plant and equipment, net2,631 2,606 
Operating lease right-of-use assets932 959 
Other assets and deferred charges648 626 
Total assets1
$11,056 $10,341 
The accompanying notes are an integral part of these consolidated financial statements.
24

United States Cellular Corporation
Consolidated Balance Sheet — Liabilities and Equity
(Unaudited)
September 30, 2022December 31, 2021
(Dollars and shares in millions, except per share amounts)
Current liabilities
Current portion of long-term debt$11 $3 
Accounts payable
Affiliated8 14 
Trade340 346 
Customer deposits and deferred revenues218 191 
Accrued taxes36 33 
Accrued compensation62 83 
Short-term operating lease liabilities133 129 
Other current liabilities291 104 
Total current liabilities1,099 903 
Deferred liabilities and credits
Deferred income tax liability, net705 674 
Long-term operating lease liabilities859 889 
Other deferred liabilities and credits661 573 
Long-term debt, net3,115 2,728 
Commitments and contingencies
Noncontrolling interests with redemption features12 11 
Equity
UScellular shareholders’ equity
Series A Common and Common Shares
Authorized 190 shares (50 Series A Common and 140 Common Shares)
Issued 88 shares (33 Series A Common and 55 Common Shares)
Outstanding 85 shares (33 Series A Common and 52 Common Shares) and 86 shares (33 Series A Common and 53 Common Shares), respectively
Par Value ($1.00 per share) ($33 Series A Common and $55 Common Shares)
88 88 
Additional paid-in capital1,696 1,678 
Treasury shares, at cost, 3 and 2 Common Shares, respectively
(85)(68)
Retained earnings2,890 2,849 
Total UScellular shareholders' equity4,589 4,547 
Noncontrolling interests16 16 
Total equity4,605 4,563 
Total liabilities and equity1
$11,056 $10,341 

The accompanying notes are an integral part of these consolidated financial statements.

1     The consolidated total assets as of September 30, 2022 and December 31, 2021, include assets held by consolidated variable interest entities (VIEs) of $1,269 million and $1,482 million, respectively, which are not available to be used to settle the obligations of UScellular. The consolidated total liabilities as of September 30, 2022 and December 31, 2021, include certain liabilities of consolidated VIEs of $23 million for which the creditors of the VIEs have no recourse to the general credit of UScellular. See Note 11 — Variable Interest Entities for additional information.
25

United States Cellular Corporation
Consolidated Statement of Changes in Equity
(Unaudited)
UScellular Shareholders
Series A
Common and
Common
shares
Additional
paid-in
capital
Treasury
shares
Retained
earnings
Total
UScellular
shareholders'
equity
Noncontrolling
interests
Total equity
(Dollars in millions)
June 30, 2022$88 $1,692 $(75)$2,903 $4,608 $16 $4,624 
Net income (loss) attributable to UScellular shareholders— — — (12)(12)— (12)
Net income attributable to noncontrolling interests classified as equity
— — — —  1 1 
Repurchase of Common Shares— — (10)— (10)— (10)
Incentive and compensation plans— 4 — (1)3 — 3 
Distributions to noncontrolling interests— — — —  (1)(1)
September 30, 2022$88 $1,696 $(85)$2,890 $4,589 $16 $4,605 
The accompanying notes are an integral part of these consolidated financial statements.
26

United States Cellular Corporation
Consolidated Statement of Changes in Equity
(Unaudited)
UScellular Shareholders
Series A
Common and
Common
shares
Additional
paid-in
capital
Treasury
shares
Retained
earnings
Total
UScellular
shareholders'
equity
Noncontrolling
interests
Total equity
(Dollars in millions)
June 30, 2021$88 $1,663 $(42)$2,794 $4,503 $16 $4,519 
Net income attributable to UScellular shareholders— — — 34 34 — 34 
Net income attributable to noncontrolling interests classified as equity
— — — —  1 1 
Repurchase of Common Shares— — (19)— (19)— (19)
Incentive and compensation plans— 8 3 (6)5 — 5 
Distributions to noncontrolling interests— — — —  (1)(1)
September 30, 2021$88 $1,671 $(58)$2,822 $4,523 $16 $4,539 

The accompanying notes are an integral part of these consolidated financial statements.
27

United States Cellular Corporation
Consolidated Statement of Changes in Equity
(Unaudited)
UScellular Shareholders
Series A
Common and
Common
shares
Additional
paid-in
capital
Treasury
shares
Retained
earnings
Total
UScellular
shareholders'
equity
Noncontrolling
interests
Total equity
(Dollars in millions)
December 31, 2021$88 $1,678 $(68)$2,849 $4,547