US Cellular 2014 Annual Report Download - page 27

Download and view the complete annual report

Please find page 27 of the 2014 US Cellular annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 92

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92

United States Cellular Corporation
Management’s Discussion and Analysis of Financial Condition and Results of Operations
U.S. Cellular believes that it was in compliance as of December 31, 2014 with all financial covenants and
other requirements set forth in its long-term debt indentures. U.S. Cellular has not failed to make nor
does it expect to fail to make any scheduled payment of principal or interest under such indentures.
The long-term debt principal payments due for the next five years represent less than 1% of the total
long-term debt obligation at December 31, 2014. Refer to Market Risk—Long-Term Debt for additional
information regarding required principal payments and the weighted average interest rates related to U.S.
Cellular’s Long-term debt.
U.S. Cellular, at its discretion, may from time to time seek to retire or purchase its outstanding debt
through cash purchases and/or exchanges for other securities, in open market purchases, privately
negotiated transactions, tender offers, exchange offers or otherwise. Such repurchases or exchanges, if
any, will depend on prevailing market conditions, liquidity requirements, contractual restrictions and other
factors. The amounts involved may be material.
See Note 11—Debt in the Notes to Consolidated Financial Statements for additional information on
Long-term financing.
Credit Rating
In certain circumstances, U.S. Cellular’s interest cost on its revolving credit and term loan facilities may
be subject to increase if its current credit ratings from nationally recognized credit rating agencies are
lowered, and may be subject to decrease if the ratings are raised. U.S. Cellular’s facilities do not cease
to be available nor do the maturity dates accelerate solely as a result of a downgrade in credit rating.
However, a downgrade U.S. Cellular’s credit rating could adversely affect its ability to renew the facilities
or obtain access to other credit facilities in the future.
In 2014, nationally recognized credit rating agencies downgraded the U.S. Cellular corporate and senior
debt credit ratings. After these downgrades, U.S. Cellular is rated at sub-investment grade. U.S. Cellular’s
credit ratings as of December 31, 2014, and the dates such ratings were issued/re-affirmed were as
follows:
Moody’s (issued November 26, 2014) Ba1 —negative outlook
Standard & Poor’s (issued November 24, 2014) BB —stable outlook
Fitch Ratings (re-affirmed November 24, 2014) BB+ —stable outlook
Capital Expenditures
U.S. Cellular’s capital expenditures for 2015 are expected to be approximately $600 million. These
expenditures are expected to be for the following general purposes:
• Expand and enhance network coverage, including providing additional capacity to accommodate
increased network usage, principally data usage, by current customers;
• Continue to deploy 4G LTE technology in certain markets;
• Expand and enhance the retail store network; and
• Develop and enhance office systems.
U.S. Cellular plans to finance its capital expenditures program for 2015 using primarily Cash flows from
operating activities and, as necessary, existing cash balances, short-term investments, borrowings under
its revolving credit agreement, term loan and/or other long-term debt.
Acquisitions, Divestitures and Exchanges
U.S. Cellular assesses its existing wireless interests on an ongoing basis with a goal of improving the
competitiveness of its operations and maximizing its long-term return on investment. As part of this
19