US Cellular 2010 Annual Report Download - page 24

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Free Cash Flow
The following table presents Free cash flow. 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 capital expenditures.
2010 2009 2008
(Dollars in thousands)
Cash flows from operating activities ................. $874,289 $ 881,808 $ 922,777
Capital expenditures ............................ (583,134) (546,758) (585,590)
Free cash flow(1) ............................... $291,155 $ 335,050 $ 337,187
(1) Free cash flow is defined as Cash flows from operating activities less Capital expenditures. Free
cash flow is a non-GAAP financial measure.
See Cash flows from Operating Activities and Cash flows from Investing Activities for details on the
changes to the components of Free cash flow.
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 2010, U.S. Cellular had Cash and cash equivalents, Short-term investments and
Long-term investments totaling $487.0 million, as discussed in more detail below. U.S. Cellular believes
that existing cash and investments balances, expected cash flows from operating activities and funds
available under its revolving credit facility provide substantial liquidity and financial flexibility for U.S.
Cellular to meet its normal financing needs (including working capital, construction and development
expenditures, and share repurchases under its approved program) for the foreseeable future. In addition,
U.S. Cellular may have access to public and private capital markets to help meet its financing needs.
Consumer spending significantly impacts U.S. Cellular’s operations and performance. Factors that
influence levels of consumer spending include: unemployment rates, increases in fuel and other energy
costs, conditions in residential real estate and mortgage markets, labor and health care costs, access to
credit, consumer confidence and other macroeconomic factors. Changes in these and other economic
factors could have a material adverse effect on demand for U.S. Cellular’s products and services and on
U.S. Cellular’s financial condition and results of operations.
U.S. Cellular cannot provide assurances that circumstances that could have a material adverse effect on
its liquidity or capital resources will not occur. Economic conditions, changes in financial markets or
other factors could restrict U.S. Cellular’s liquidity and availability of financing on terms and prices
acceptable to U.S. Cellular, which could require U.S. Cellular to reduce its construction, development,
acquisition or share repurchase programs. Such reductions could have a material adverse effect on U.S.
Cellular’s business, financial condition or results of operations.
Cash and Cash Equivalents
At December 31, 2010, U.S. Cellular had $294.4 million in cash and cash equivalents, which included
cash and short-term, highly liquid investments with original maturities of three months or less. The
primary objective of U.S. Cellular’s cash and cash equivalents investment activities is to preserve
principal. At December 31, 2010, the majority of U.S. Cellular’s cash and cash equivalents was held in
money market funds that invest exclusively in U.S. Treasury securities or in repurchase agreements fully
collateralized by such obligations. U.S. Cellular monitors the financial viability of the money market funds
and direct investments in which it invests and believes that the credit risk associated with these
investments is low.
Short-term and Long-term Investments
At December 31, 2010, U.S. Cellular had $146.6 million in Short-term investments and $46.0 million in
Long-term investments. Short-term and Long-term investments consist of certificates of deposit
(short-term only), U.S. treasuries and corporate notes, all of which are designated as held-to-maturity
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