US Cellular 2012 Annual Report Download - page 27

U.S. Cellular repurchased Common Shares for $20.0 million, $62.3 million and $52.8 million in 2012,
2011 and 2010, respectively. See Note 14—Common Shareholders’ Equity in the Notes to Consolidated
Financial Statements for additional information related to these transactions.
Free Cash Flow
The following table presents Free cash flow. 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 Cash used for additions to property, plant and equipment.
2012 2011 2010
(Dollars in thousands)
Cash flows from operating activities ................. $899,291 $ 987,862 $ 834,387
Cash used for additions to property, plant and equipment . (826,400) (771,798) (569,323)
Free cash flow ................................. $ 72,891 $ 216,064 $ 265,064
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
U.S. Cellular believes that existing cash and investment balances, funds available under its revolving
credit facilities and expected cash flows from operating and investing activities 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 approved programs)
for the foreseeable future. In addition, U.S. Cellular may access public and private capital markets to help
meet its financing needs.
U.S. Cellular’s profitability historically has been lower in the fourth quarter as a result of significant
promotional spending during the holiday season. Changes in these or 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, 2012, U.S. Cellular had $378.4 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, 2012, 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, 2012, U.S. Cellular had $100.7 million in Short-term investments and $50.3 million in
Long-term investments. Short-term and Long-term investments consist primarily of U.S. Treasury
securities which are designated as held-to-maturity investments and recorded at amortized cost in the
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