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United States Cellular Corporation
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(3) Churn metrics represent the percentage of the postpaid or prepaid customers that disconnects
service each month. These metrics represent the average monthly postpaid or prepaid churn rate for
each respective period.
(4) Smartphones represent wireless devices which run on an Android, Apple, BlackBerry or Windows
Mobile operating system, excluding connected devices. Smartphone penetration is calculated by
dividing postpaid smartphone customers by total postpaid customers.
(5) The decrease in the population of consolidated markets is due primarily to the divestiture of the
Mississippi Valley non-operating license in October 2013, the majority of the St. Louis area
non-operating market license in March 2014, and certain non-operating licenses in North Carolina in
December 2014. Total Population is used only to calculate market penetration of consolidated
markets and consolidated operating markets, respectively. See footnote (6) below.
(6) 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. The increase in consolidated markets penetration is due
primarily to a lower denominator as a result of the license divestitures described in footnote
(5) above.
Components of Operating Income (Loss)
Increase/ Percentage Increase/ Percentage
Year Ended December 31, 2014 (Decrease) Change 2013 (Decrease) Change 2012
(Dollars in thousands)
Retail service ........... $3,012,984 $(152,512) (5)% $3,165,496 $(382,483) (11)% $3,547,979
Inbound roaming ........ 224,090 (39,096) (15)% 263,186 (85,531) (25)% 348,717
Other ................. 160,863 (5,228) (3)% 166,091 (36,069) (18)% 202,160
Service revenues ....... 3,397,937 (196,836) (5)% 3,594,773 (504,083) (12)% 4,098,856
Equipment sales ......... 494,810 170,747 53% 324,063 (29,165) (8)% 353,228
Total operating revenues . . 3,892,747 (26,089) (1)% 3,918,836 (533,248) (12)% 4,452,084
System operations
(excluding Depreciation,
amortization and accretion
reported below) ........ 769,911 6,476 1% 763,435 (183,370) (19)% 946,805
Cost of equipment sold .... 1,192,669 193,669 19% 999,000 63,053 7% 935,947
Selling, general and
administrative ......... 1,591,914 (85,481) (5)% 1,677,395 (87,538) (5)% 1,764,933
Depreciation, amortization
and accretion ......... 605,997 (197,784) (25)% 803,781 195,148 32% 608,633
(Gain) loss on asset
disposals, net ......... 21,469 9,137 30% 30,606 (12,518) (69)% 18,088
(Gain) loss on sale of
business and other exit
costs, net ............ (32,830) (213,937) (87)% (246,767) 267,789 >100% 21,022
(Gain) loss on license sales
and exchanges ........ (112,993) (142,486) (56)% (255,479) 255,479 N/M —
Total operating expenses . 4,036,137 264,166 7% 3,771,971 (523,457) (12)% 4,295,428
Operating income (loss) .... $(143,390) $(290,255) >(100)% $ 146,865 $ (9,791) (6)% $ 156,656
N/M—Percentage change not meaningful
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