US Cellular 2012 Annual Report Download - page 26

Cash Flows from Investing Activities
U.S. Cellular makes substantial investments to acquire wireless 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-reducing upgrades of U.S. Cellular’s
networks.
The primary purpose of U.S. Cellular’s construction and expansion expenditures is to provide for
customer and usage growth, to upgrade service and to take advantage of service-enhancing and
cost-reducing technological developments.
Capital expenditures (i.e. additions to property, plant and equipment and system development
expenditures) totaled $836.7 million in 2012, $782.5 million in 2011 and $583.1 million in 2010. Cash
used for additions to property, plant and equipment is reported in the Consolidated Statement of Cash
Flows and excludes amounts accrued in Accounts payable for capital expenditures at December 31 of
the current year, and includes amounts paid in the current period that were accrued at December 31 of
the prior year. Cash used for additions to property, plant and equipment totaled $826.4 million,
$771.8 million and 569.3 million in 2012, 2011 and 2010, respectively. These expenditures were made to
construct new cell sites, build out 4G LTE networks in certain markets, increase capacity in existing cell
sites and switches, develop new and enhance existing office systems such as the new Billing and
Operational Support System (‘‘B/OSS’’) and customer relationship management platforms, and construct
new and remodel existing retail stores.
Cash payments for acquisitions in 2012, 2011 and 2010 were as follows:
Cash Payments for Acquisitions(1) 2012 2011 2010
(Dollars in thousands)
Licenses ........................................ $122,690 $ 4,406 $17,101
Additional interest in operating market ................... — 19,367 —
Total ........................................... $122,690 $23,773 $17,101
(1) Cash amounts paid for the acquisitions may differ from the purchase price due to cash acquired
in the transactions and cash payments remitted in periods subsequent to the respective
transactions.
In March 2012, U.S. Cellular sold the majority of the assets and liabilities of a wireless market for
$49.8 million in cash. See Note 7—Acquisitions, Divestitures and Exchanges in the Notes to
Consolidated Financial Statements for additional information related to this sale.
U.S. Cellular invested $120.0 million, $110.0 million, and $250.3 million in 2012, 2011, and 2010,
respectively, in U.S. Treasury securities and corporate notes with maturities greater than three months
from the acquisition date. U.S. Cellular realized proceeds of $125.0 million, $145.3 million, and
$60.3 million in 2012, 2011, and 2010, respectively, related to the maturities of its investments in U.S.
Treasury securities and corporate notes and, in addition in 2010, certificates of deposit.
Cash Flows from Financing Activities
Cash flows from financing activities primarily reflect repayment of and proceeds from short-term and
long-term debt balances, distributions to noncontrolling interests, cash used to repurchase Common
Shares and cash proceeds from reissuance of Common Shares pursuant to stock-based compensation
plans.
In May 2011, U.S. Cellular issued $342.0 million of 6.95% Senior Notes due 2060, and paid related debt
issuance costs of $11.0 million. The net proceeds from the 6.95% Senior Notes were used primarily to
redeem $330.0 million of U.S. Cellular’s 7.5% Senior Notes in June 2011. The redemption price of the
7.5% Senior Notes was equal to 100% of the principal amount plus accrued and unpaid interest thereon
to the redemption date.
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