U.S. Cellular Reports Fourth Quarter 2011 Results and 2012 Financial Guidance

Strong smartphone sales drive higher revenues

News provided by

Feb 24, 2012, 08:29 ET

CHICAGO, Feb. 24, 2012 /PRNewswire/ --

Note: Comparisons are year over year unless otherwise noted.

Fourth Quarter Highlights

Smartphones increased to 52.5 percent of total devices sold from 39.6 percent; smartphone customers increased to 30.5 percent of postpaid customers from 16.7 percent.
Postpaid ARPU (average revenue per unit) increased 5 percent to $53.35 from $50.99.
Service revenues increased 4 percent to $1,030.0 million.
Operating income increased $20.4 million to $16.3 million.
Net loss of 13,000 retail customers, reflecting loss of 20,000 postpaid customers and a gain of 7,000 prepaid customers; postpaid customers comprised 95 percent of retail customers.
Cell sites in service increased 3 percent to 7,882.

As previously announced, U.S. Cellular will hold a teleconference Feb. 24, 2012 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 $1,030.0 million for the fourth quarter of 2011, versus $991.9 million for the comparable period one year ago. Net income attributable to U.S. Cellular shareholders and related diluted earnings per share were $2.8 million and $0.03, respectively, for the fourth quarter of 2011, compared to $7.8 million and $0.09, respectively, for the comparable period in 2010.

The fourth quarter of 2011 was impacted by a $6.1 million adjustment that increased tax expense related to prior periods. In the fourth quarter of 2010, income tax expense was reduced by favorable settlements of certain state income tax audits.

For the twelve months ended Dec. 31, 2011, U.S. Cellular reported service revenues of $4,053.8 million, compared to $3,913.0 million in 2010. Net income attributable to U.S. Cellular shareholders for 2011 and related diluted earnings per share were $175.0 million and $2.05, respectively. In 2010, net income attributable to U.S. Cellular shareholders and related diluted earnings per share were $136.1 million and $1.57, respectively.

"In a competitive environment, U.S. Cellular was able to increase revenues and improve operating income," said Mary N. Dillon, U.S. Cellular president and CEO. "However, we fell short on customer growth, so improving our customer performance is our highest priority in 2012."

"We nearly doubled the number of smartphone customers throughout the year, with the strongest increase in the fourth quarter. More than 30 percent of our postpaid customers now have smartphones, and smartphones were more than half of our total devices sold in the fourth quarter. As a result, we saw dramatic increases in data usage and revenues which, along with growth in inbound roaming revenues, helped us increase average total service revenue per customer by six percent for the year. And while we had an overall customer loss in 2011, we had a solid holiday sales season in terms of net retail customer additions. We also kept churn stable for the year, even as we faced significant competitive pressures, and were able to better control costs by balancing promotions and smartphone subsidies.

"We're bringing even more outstanding experiences to our customers this year, rolling out 4G LTE service and devices to more than half of our subscribers by year end. And we'll introduce more devices throughout the year, to provide a wide range of options to meet all of our customers' needs.

"As I mentioned, our top priority is to achieve positive customer additions in 2012. We're focused on attracting new customers through building awareness, increasing our focus on small-to-medium business customers, and looking to expand our points of distribution. We're also committed to cost-effectively managing the network demands caused by the explosive growth in data use, and improving our profitability through several operational initiatives."

Guidance for year ending Dec. 31, 2012

This guidance represents the views of management as of Feb. 24, 2012, and should not be assumed to be current as of any other date. There can be no assurance that final results will not differ materially from this guidance. U.S. Cellular undertakes no legal duty to update such information, whether as a result of new information, future events, or otherwise.

	2012	2011
	Estimated Results (1)	Actual Results
Service revenues	$4,050 - $4,150 million	$4,053.8 million
Operating income	$200 - $300 million	$280.8 million
Depreciation, amortization and accretion expenses, and net gain or loss
on asset disposals and exchanges and loss on impairment of assets (2)	Approx. $600 million	$571.7 million
Adjusted OIBDA (3)	$800 - $900 million	$852.5 million
Capital expenditures	Approx. $850 million	$782.5 million

(1)	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 developments or changing conditions (such as customer net growth, customer demand for data services or possible acquisitions, dispositions, or exchanges) could affect U.S. Cellular's plans and, therefore, its 2012 estimated results.
(2)	2011 Actual Results include gains on asset disposals and exchanges, net of $1.9 million. The 2012 Estimated Results include only Depreciation, amortization and accretion expenses; such estimated results do not include net gains or losses on disposals and exchanges of assets or losses on impairment of assets (since such transactions and their effects cannot be predicted).
(3)	Adjusted OIBDA is defined as operating income excluding the effects of Depreciation, amortization and accretion (OIBDA): the net gain or loss on asset disposals and exchanges (if any); and the loss on impairment of assets (if any). This measure also may be commonly referred to by management as operating cash flow. This measure should not be confused with cash flows from operating activities, which is a component of the Consolidated Statement of Cash Flows. Adjusted OIBDA excludes the net gain or loss on asset disposals and exchanges (if any) and loss on impairment of assets (if any), in order to show operating results on a more comparable basis from period to period. TDS does not intend to imply that any of such amounts that are excluded are non-recurring, infrequent or unusual and, accordingly, they may be incurred in the future. TDS believes this measure provides useful information to investors regarding TDS' 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.

Conference call information

U.S. Cellular will hold a conference call on Feb. 24, 2012 at 9:30 a.m. CST.

Listen to the live call online at http://www.videonewswire.com/event.asp?id=85230 or on the Conference Calls page of uscellular.com.
Listen to the call by phone at 877/869-3847 (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, the nation's seventh-largest wireless carrier, provides a comprehensive range of wireless products and services, excellent customer support, and a high-quality network to 5.9 million customers in 26 states. The Chicago-based company had 8,700 full- and part-time associates as of Dec. 31, 2011. 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: The ability of the company to successfully grow its markets; changes in the overall economy, competition, the state and federal telecommunications regulatory environment, and the value of assets and investments; adverse changes in the ratings afforded the company's debt securities by accredited ratings organizations; industry consolidation; advances in telecommunications technology; uncertainty of access to the capital markets; risks and uncertainties relating to possible future restatements; 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 unit, churn rates, roaming revenue and terms, the availability of handset devices and 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 used by U.S. Cellular to furnish this press release to the SEC, which are incorporated by reference herein.

For more information about U.S. Cellular, visit uscellular.com.


UNITED STATES CELLULAR CORPORATION
SUMMARY OPERATING DATA (UNAUDITED)

Quarter Ended			12/31/2011		9/30/2011		6/30/2011		3/31/2011		12/31/2010
Total population
	Consolidated markets (1)		91,965,000		91,965,000		91,204,000		91,090,000		90,468,000
	Consolidated operating markets (1)		46,888,000		46,888,000		46,888,000		46,774,000		46,546,000
Market penetration at end of period
	Consolidated markets (2)		6.4%		6.5%		6.5%		6.6%		6.7%
	Consolidated operating markets (2)		12.6%		12.7%		12.7%		12.9%		13.0%
All customers
	Total at end of period		5,891,000		5,932,000		5,968,000		6,033,000		6,072,000
	Gross additions		306,000		299,000		257,000		293,000		327,000
	Net additions (losses)		(41,000)		(36,000)		(70,000)		(39,000)		(31,000)
	Smartphones sold as a percent of
	total devices sold (3)		52.5%		39.9%		39.6%		42.5%		39.6%
Retail customers
	Total at end of period		5,608,000		5,621,000		5,644,000		5,698,000		5,729,000
	Smartphone penetration (3) (4)		30.5%		26.2%		23.1%		20.3%		16.7%
	Gross additions		298,000		284,000		226,000		256,000		292,000
	Net retail additions (losses) (5)		(13,000)		(23,000)		(58,000)		(31,000)		(21,000)
	Net postpaid additions (losses)		(20,000)		(34,000)		(41,000)		(22,000)		(10,000)
	Net prepaid additions (losses)		7,000		11,000		(17,000)		(9,000)		(11,000)
Service revenue components (000s)
	Retail service	$	882,091	$	871,199	$	868,630	$	864,602	$	864,905
	Inbound roaming		93,353		107,810		82,760		64,386		67,545
	Other		54,601		57,600		50,640		56,125		59,464
Total service revenues (000s)		$	1,030,045	$	1,036,609	$	1,002,030	$	985,113	$	991,914
Total ARPU (6)			58.13	$	58.09	$	55.69	$	54.29	$	54.37
Billed ARPU (7)			49.78	$	48.82	$	48.27	$	47.65	$	47.41
Postpaid ARPU (8)		$	53.35	$	52.41	$	51.84	$	51.21	$	50.99
Postpaid churn rate (9)			1.6%		1.5%		1.4%		1.4%		1.5%
Capital expenditures (000s)		$	276,400	$	248,000	$	162,100	$	95,900	$	203,400
Cell sites in service			7,882		7,828		7,770		7,663		7,645

(1)	Used only to calculate market penetration of consolidated markets and consolidated operating markets, respectively. See footnote (2) below.
(2)	Market Penetration is calculated by dividing the number of wireless 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).
(6)	Total ARPU - Average monthly service revenue per customer includes retail 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.
(7)	Billed ARPU - Average monthly billed revenue per customer is calculated by dividing total retail service revenues by the number of months in the period and by the average total customers during the period. Retail service revenues include revenues attributable to postpaid, prepaid and reseller customers.
(8)	Postpaid ARPU - Average monthly revenue per postpaid customer is calculated by 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.
(9)	Represents the percentage of the postpaid customer base that disconnects 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)
			2011		2010		Amount		Percent
Operating revenues
	Service		$	1,030,045	$	991,914	$	38,131	4%
	Equipment sales			69,588		71,236		(1,648)	(2%)
		Total operating revenues		1,099,633		1,063,150		36,483	3%

Operating expenses
	System operations (excluding Depreciation, amortization
		and accretion reported below)		242,123		216,254		25,869	12%
	Cost of equipment sold			225,835		230,620		(4,785)	(2%)
	Selling, general and administrative (1)(2)			469,515		474,904		(5,389)	(1%)
	Depreciation, amortization and accretion			141,976		143,124		(1,148)	(1%)
	Loss on asset disposals, net			3,868		2,310		1,558	67%
		Total operating expenses		1,083,317		1,067,212		16,105	2%

Operating income (loss)				16,316		(4,062)		20,378	>100

Investment and other income (expense)
	Equity in earnings of unconsolidated entities			18,277		22,900		(4,623)	(20%)
	Interest and dividend income			929		824		105	13%
	Loss on investment			(2,000)		—		(2,000)	N/M
	Interest expense (1)			(13,709)		(12,637)		(1,072)	(8%)
	Other, net			(631)		285		(916)	>100
		Total investment and other income (expense)		2,866		11,372		(8,506)	(75%)

Income before income taxes				19,182		7,310		11,872	>100
	Income tax expense (benefit) (2)			11,307		(6,698)		18,005	>100

Net income				7,875		14,008		(6,133)	(44%)
	Less: Net income attributable to noncontrolling interests,
		net of tax		(5,074)		(6,226)		1,152	19%
Net income attributable to U.S. Cellular shareholders			$	2,801	$	7,782	$	(4,981)	(64%)

Basic weighted average shares outstanding				84,559		85,668		(1,109)	(1%)
Basic earnings per share attributable to
	U.S. Cellular shareholders		$	0.03	$	0.09	$	(0.06)	(67%)

Diluted weighted average shares outstanding				85,005		86,190		(1,185)	(1%)
Diluted earnings per share attributable to
	U.S. Cellular shareholders		$	0.03	$	0.09	$	(0.06)	(67%)

(1)	During the quarter ended December 31, 2010, U.S. Cellular recorded adjustments to reduce its liability for transactional taxes in the amount of $5.8 million. Of this amount, $2.7 million and $3.1 million reduced Selling, general and administration expenses and Interest expense, respectively, in the quarter ended December 31, 2010. These transactional taxes related to periods from 2002 through the first quarter of 2010. This adjustment reflects a change in U.S. Cellular's estimate of its liability for transactional taxes and interest and the actual amounts due and settled with the taxing authorities of taxes and interest.
(2)	During the quarter ended December 31, 2011, U.S. Cellular recorded an immaterial adjustment to correct its liabilities and prepaid expense related to property taxes for errors occurring primarily prior to 2009. This adjustment reduced Selling, general and administrative expenses by $5.4 million in the quarter. U.S. Cellular also recorded an immaterial adjustment to correct its deferred tax balances related to a difference in the tax basis in certain partnerships for errors occurring prior to 2009. This adjustment increased Income tax expense by $6.1 million in the quarter. U.S. Cellular also recorded other immaterial adjustments to correct errors in prior periods which, together with the foregoing adjustments, reduced Net income attributable to U.S. Cellular shareholders by a net of $6.4 million. The correction of such errors in the fourth quarter of 2011 did not have a material effect on any prior periods, the full year ended December 31, 2011, or the trend in earnings.

N/M – Percentage change not meaningful


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)
			2011		2010		Amount		Percent
Operating revenues
	Service		$	4,053,797	$	3,913,001	$	140,796	4%
	Equipment sales			289,549		264,680		24,869	9%
		Total operating revenues		4,343,346		4,177,681		165,665	4%

Operating expenses
	System operations (excluding Depreciation, amortization								9%
		and accretion reported below)		929,379		854,931		74,448
	Cost of equipment sold			782,300		742,981		39,319	5%
	Selling, general and administrative			1,779,203		1,796,624		(17,421)	(1%)
	Depreciation, amortization and accretion			573,557		570,955		2,602	—
	(Gain) loss on asset disposals and exchanges, net			(1,873)		10,717		(12,590)	>100
		Total operating expenses		4,062,566		3,976,208		86,358	2%

Operating income				280,780		201,473		79,307	39%

Investment and other income (expense)
	Equity in earnings of unconsolidated entities			83,566		97,318		(13,752)	(14%)
	Interest and dividend income			3,395		3,808		(413)	(11%)
	Gain on investment			11,373		—		11,373	N/M
	Interest expense			(65,614)		(61,555)		(4,059)	(7%)
	Other, net			(678)		72		(750)	>100
		Total investment and other income (expense)		32,042		39,643		(7,601)	(19%)

Income before income taxes				312,822		241,116		71,706	30%
	Income tax expense			114,078		81,958		32,120	39%

Net income				198,744		159,158		39,586	25%
	Less: Net income attributable to noncontrolling interests,
		net of tax		(23,703)		(23,084)		(619)	(3%)
Net income attributable to U.S. Cellular shareholders			$	175,041	$	136,074	$	38,967	29%

Basic weighted average shares outstanding				84,877		86,128		(1,251)	(1%)
Basic earnings per share attributable to
	U.S. Cellular shareholders		$	2.06	$	1.58	$	0.48	30%

Diluted weighted average shares outstanding				85,335		86,518		(1,183)	(1%)
Diluted earnings per share attributable to
	U.S. Cellular shareholders		$	2.05	$	1.57	$	0.48	31%

N/M – Percentage change not meaningful


UNITED STATES CELLULAR CORPORATION
CONSOLIDATED BALANCE SHEET HIGHLIGHTS
(Unaudited, dollars in thousands)

ASSETS


		December 31,		December 31,
		2011		2010 (1)
Current assets
	Cash and cash equivalents	$	424,155	$	276,915
	Short-term investments		127,039		146,586
	Accounts receivable from customers and other		441,821		424,019
	Inventory		127,056		112,279
	Income taxes receivable		74,791		41,397
	Prepaid expenses		55,980		53,356
	Net deferred income tax asset		31,905		26,757
	Other current assets		10,096		10,804
			1,292,843		1,092,113

Assets held for sale			49,647		—

Investments
	Licenses		1,470,769		1,452,101
	Goodwill		494,737		494,737
	Customer lists, net		314		759
	Investments in unconsolidated entities		138,096		160,847
	Notes and interest receivable--long-term		1,921		4,070
	Long-term investments		30,057		46,033
			2,135,894		2,158,547

Property, plant and equipment
	In service and under construction		7,008,449		6,340,537
	Less: accumulated depreciation		4,218,147		3,766,015
			2,790,302		2,574,522

Other assets and deferred charges			59,290		50,367


Total assets		$	6,327,976	$	5,875,549

(1)	Amounts have been adjusted. See "Revision of Prior Period Amounts" section for additional details.


UNITED STATES CELLULAR CORPORATION
CONSOLIDATED BALANCE SHEET HIGHLIGHTS
(Unaudited, dollars in thousands)

LIABILITIES AND EQUITY


			December 31,		December 31,
			2011		2010 (1)
Current liabilities
	Current portion of long-term debt		$	127	$	101
	Accounts payable
		Affiliated		12,183		10,791
		Trade		303,779		264,090
	Customer deposits and deferred revenues			181,355		146,428
	Accrued taxes			34,095		39,299
	Accrued compensation			69,551		65,952
	Other current liabilities			121,190		121,823
				722,280		648,484

Liabilities held for sale				1,051		—

Deferred liabilities and credits
	Net deferred income tax liability			799,190		583,444
	Other deferred liabilities and credits			248,213		234,855

Long-term debt				880,320		867,941

Commitments and contingencies

Noncontrolling interests with redemption features				1,005		855

Equity
U.S. Cellular shareholders' equity
	Series A Common and Common Shares, par value $1 per share			88,074		88,074
	Additional paid-in capital			1,387,341		1,368,487
	Treasury shares			(152,817)		(105,616)
	Retained earnings			2,297,363		2,135,507
		Total U.S. Cellular shareholders equity		3,619,961		3,486,452

Noncontrolling interests				55,956		53,518

	Total equity			3,675,917		3,539,970

Total liabilities and equity			$	6,327,976	$	5,875,549

(1)	Amounts have been adjusted. See "Revision of Prior Period Amounts" section for additional details.

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, 2011 and December 31, 2010.
			December 31,		December 31,
			2011		2010

	Cash and cash equivalents (1)		$	424,155	$	276,915
	Amounts included in short-term investments (2)(3)
		Government-backed securities (4)		127,039		146,336
		Certificates of deposit		—		250
			$	127,039	$	146,586
	Amounts included in long-term investments (2)(5)
		Government-backed securities (4)	$	30,057	$	46,033

(1)	Amounts have been adjusted. See "Revision of Prior Period Amounts" section for additional details.
(2)	Designated as held-to-maturity investments and are recorded at amortized cost on the consolidated balance sheet.
(3)	Maturities are less than twelve months from the respective balance sheet dates.
(4)	Includes U.S. treasuries and corporate notes guaranteed under the Federal Deposit Insurance Corporation's Temporary Liquidity Guarantee Program.
(5)	At December 31, 2011, maturities range between 18 and 21 months from the balance sheet date.


UNITED STATES CELLULAR CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
Twelve Months Ended December 31,
(Unaudited, dollars in thousands)

				2011		2010 (1)
Cash flows from operating activities
	Net income			$	198,744	$	159,158
	Add (deduct) adjustments to reconcile net income
		to net cash flows from operating activities
			Depreciation, amortization and accretion		573,557		570,955
			Bad debts expense		62,157		76,292
			Stock-based compensation expense		20,183		18,044
			Deferred income taxes, net		203,264		73,727
			Equity in earnings of unconsolidated entities		(83,566)		(97,318)
			Distributions from unconsolidated entities		91,768		100,359
			(Gain) loss on asset disposals and exchanges, net		(1,873)		10,717
			Gain on investment		(11,373)		—
			Noncash interest expense		10,040		2,540
			Other operating activities		102		(2,483)
	Changes in assets and liabilities from operations
			Accounts receivable		(82,175)		(75,252)
			Inventory		(14,640)		40,277
			Accounts payable - trade		28,410		(52,568)
			Accounts payable - affiliate		1,392		(3,940)
			Customer deposits and deferred revenues		34,927		6,180
			Accrued taxes		(39,984)		(70,057)
			Accrued interest		225		204
			Other assets and liabilities		(3,296)		77,552
					987,862		834,387

Cash flows from investing activities
	Cash used for additions to property, plant and equipment				(771,798)		(569,323)
	Cash received from divestitures				(23,773)		(17,101)
	Cash paid for investments				(110,000)		(250,250)
	Cash received for investments				145,250		60,330
	Other investing activities				718		(953)
					(759,603)		(777,297)

Cash flows from financing activities
	Repayment of long-term debt				(330,338)		(316)
	Issuance of long-term debt				342,000		—
	Common shares reissued for benefit plans, net of tax payments				1,935		509
	Common shares repurchased				(62,294)		(52,827)
	Payment of debt issuance costs				(11,400)		(2,229)
	Distributions to noncontrolling interests				(21,094)		(19,631)
	Payments to acquire additional interest in subsidiaries				—		(8,786)
	Other financing activities				172		114
					(81,019)		(83,166)

Net increase (decrease) in cash and cash equivalents					147,240		(26,076)

Cash and cash equivalents
	Beginning of period				276,915		302,991
	End of period			$	424,155	$	276,915

(1)	Amounts have been adjusted. See "Revision of Prior Period Amounts" section for additional details.


United States Cellular Corporation
Financial Measures and Reconciliations
(Unaudited, dollars in thousands)

			Three Months Ended December 31,				Twelve Months Ended December 31,
				2011		2010		2011		2010

Service revenues			$	1,030,045	$	991,914	$	4,053,797	$	3,913,001

Operating income (loss)				16,316		(4,062)		280,780		201,473
Add:
	Depreciation, amortization and
		accretion		141,976		143,124		573,557		570,955
	(Gain) loss on asset disposals			3,868		2,310		(1,873)		10,717
		Adjusted OIBDA (1)	$	162,160	$	141,372	$	852,464	$	783,145

		Adjusted OIBDA margin (2)		15.7%		14.3%		21.0%		20.0%


				2011		2010 (4)		2011		2010 (4)
Cash flows from operating activities			$	249,041	$	244,229	$	987,862	$	834,387
Deduct:
Cash used for additions to property,
	plant and equipment			309,471		165,719		771,798		569,323
		Free cash flow (3)	$	(60,430)	$	78,510	$	216,064	$	265,064

(1)	Adjusted OIBDA is defined as operating income excluding the effects of: depreciation, amortization, and accretion (OIBDA); the net gain or loss on asset disposals and exchanges (if any); and the loss on impairment of assets (if any). This measure also may be commonly referred to by management as operating cash flow. This measure should not be confused with cash flows from operating activities, which is a component of the consolidated statement of cash flows. Adjusted OIBDA excludes the net gain or loss on asset disposals and exchanges and loss on impairment of assets, if any, in order to show operating results on a more comparable basis from period to period. U.S. Cellular does not intend to imply that any of such amounts that are excluded are non-recurring, infrequent or unusual, and accordingly, they may be incurred in the future.
(2)	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 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.
(3)	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 flow as reported 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.
(4)	Amounts have been adjusted. See "Revision of Prior Period Amounts" section for additional details.

REVISION OF PRIOR PERIOD AMOUNTS

In preparing its Consolidated Statement of Cash Flows for the year ended December 31, 2011, U.S. Cellular discovered certain errors related to the classification of outstanding checks with the right of offset and related to the classification of Accounts payable for Additions to property, plant and equipment as non-cash investing activities for purposes of preparing the Consolidated Statement of Cash Flows. These errors resulted in the misstatement of Cash and Accounts payable as of December 31, 2010 and each quarterly period in 2011, and the misstatement of Cash flows from operating activities and Cash flows from investing activities for the years ended December 31, 2010 and 2009 and each of the quarterly periods in 2011 and 2010. In accordance with SEC Staff Accounting Bulletin Nos. 99 and 108 ("SAB 99" and "SAB 108"), U.S. Cellular evaluated these errors and determined that they were immaterial to each of the reporting periods affected and, therefore, amendments of previously filed reports were not required. However, in order to provide consistency in the Consolidated Statement of Cash Flows and as permitted by SAB 108, revisions for these immaterial amounts to previously reported annual amounts are reflected in the financial information herein and will be reflected in future filings containing such financial information as permitted by SAB 108.

In accordance with SAB 108, the Consolidated Balance Sheet and the Consolidated Statement of Cash Flows have been revised as follows:


Consolidated Balance Sheet -- December 31, 2010

		As previously
	(Dollars in thousands)	reported (1)			Adjustment		Revised

	Cash and cash equivalents	$	294,426	$	(17,511)	$	276,915
	Total current assets		1,109,624		(17,511)		1,092,113
	Total assets		5,893,060		(17,511)		5,875,549
	Accounts payable		281,601		(17,511)		264,090
	Total current liabilities		665,995		(17,511)		648,484
	Total liabilities and equity		5,893,060		(17,511)		5,875,549


Consolidated Statement of Cash Flows -- Year Ended December 31, 2010

		As previously
	(Dollars in thousands)	reported (1)			Adjustment		Revised

	Change in Accounts payable - trade	$	(14,660)	$	(37,908)	$	(52,568)
	Change in Other assets and liabilities		79,546		(1,994)		77,552
	Cash flows from operating activities		874,289		(39,902)		834,387
	Cash used for additions to property, plant and equipment		(583,134)		13,811		(569,323)
	Cash flows used in investing activities		(791,108)		13,811		(777,297)
	Net increase (decrease) in cash and cash equivalents		15		(26,091)		(26,076)