Consolidated Statement of Operations (Parenthetical) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
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Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
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Operating expenses | ||||
Selling, general and administrative, charges from affiliates | $ 22 | $ 20 | $ 61 | $ 60 |
Consolidated Balance Sheet (Parenthetical) - USD ($) $ in Millions |
Sep. 30, 2019 |
Dec. 31, 2018 |
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Accounts receivable | ||
Customer and agent allowances | $ 69 | $ 66 |
Other allowances | $ 1 | $ 2 |
U.S. Cellular shareholders’ equity | ||
Authorized shares (in shares) | 190,000,000 | 190,000,000 |
Issued shares (in shares) | 88,000,000 | 88,000,000 |
Outstanding shares (in shares) | 86,000,000 | 86,000,000 |
Par value | $ 88 | $ 88 |
Variable Interest Entities VIEs | ||
Total VIE assets that can be used to settle only the VIEs' obligations | 927 | 868 |
Total VIE liabilities for which creditors have no recourse | $ 20 | $ 23 |
Series A Common Shares | ||
U.S. Cellular shareholders’ equity | ||
Authorized shares (in shares) | 50,000,000 | 50,000,000 |
Issued shares (in shares) | 33,000,000 | 33,000,000 |
Outstanding shares (in shares) | 33,000,000 | 33,000,000 |
Par value per share (USD per share) | $ 1 | $ 1 |
Par value | $ 33 | $ 33 |
Common Shares | ||
U.S. Cellular shareholders’ equity | ||
Authorized shares (in shares) | 140,000,000 | 140,000,000 |
Issued shares (in shares) | 55,000,000 | 55,000,000 |
Outstanding shares (in shares) | 53,000,000 | 53,000,000 |
Par value per share (USD per share) | $ 1 | $ 1 |
Par value | $ 55 | $ 55 |
Treasury shares (in shares) | 2,000,000 | 2,000,000 |
Consolidated Statement of Changes in Equity - USD ($) $ in Millions |
Total |
Series A Common and Common shares |
Additional paid-in capital |
Treasury shares |
Retained earnings |
Total U.S. Cellular shareholders' equity |
Noncontrolling interests |
---|---|---|---|---|---|---|---|
Cumulative effect of accounting change | $ 174 | $ 173 | $ 173 | $ 1 | |||
Beginning balance at Dec. 31, 2017 | 3,687 | $ 88 | $ 1,552 | $ (120) | 2,157 | 3,677 | 10 |
Net income attributable to U.S. Cellular shareholders | 129 | 129 | 129 | ||||
Net income attributable to noncontrolling interests classified as equity | 2 | 0 | 2 | ||||
Incentive and compensation plans | 7 | 36 | (29) | 7 | |||
Stock-based compensation awards | 26 | 26 | 26 | ||||
Distributions to noncontrolling interests | (2) | 0 | (2) | ||||
Ending balance at Sep. 30, 2018 | 4,023 | 88 | 1,578 | (84) | 2,430 | 4,012 | 11 |
Beginning balance at Jun. 30, 2018 | 3,971 | 88 | 1,569 | (99) | 2,402 | 3,960 | 11 |
Net income attributable to U.S. Cellular shareholders | 36 | 36 | 36 | ||||
Net income attributable to noncontrolling interests classified as equity | 1 | 0 | 1 | ||||
Incentive and compensation plans | 7 | 15 | (8) | 7 | |||
Stock-based compensation awards | 9 | 9 | 9 | ||||
Distributions to noncontrolling interests | (1) | 0 | (1) | ||||
Ending balance at Sep. 30, 2018 | 4,023 | 88 | 1,578 | (84) | 2,430 | 4,012 | 11 |
Cumulative effect of accounting change | 2 | 2 | 2 | ||||
Beginning balance at Dec. 31, 2018 | 4,067 | 88 | 1,590 | (65) | 2,444 | 4,057 | 10 |
Net income attributable to U.S. Cellular shareholders | 109 | 109 | 109 | ||||
Net income attributable to noncontrolling interests classified as equity | 5 | 0 | 5 | ||||
Repurchase of Common Shares | (21) | (21) | (21) | ||||
Incentive and compensation plans | (8) | (1) | 16 | (23) | (8) | ||
Stock-based compensation awards | 33 | 33 | 33 | ||||
Distributions to noncontrolling interests | (2) | 0 | (2) | ||||
Ending balance at Sep. 30, 2019 | 4,185 | 88 | 1,622 | (70) | 2,532 | 4,172 | 13 |
Beginning balance at Jun. 30, 2019 | 4,175 | 88 | 1,615 | (50) | 2,509 | 4,162 | 13 |
Net income attributable to U.S. Cellular shareholders | 23 | 23 | 23 | ||||
Repurchase of Common Shares | (21) | (21) | (21) | ||||
Incentive and compensation plans | 1 | 1 | 0 | 1 | |||
Stock-based compensation awards | 7 | 7 | 7 | ||||
Ending balance at Sep. 30, 2019 | $ 4,185 | $ 88 | $ 1,622 | $ (70) | $ 2,532 | $ 4,172 | $ 13 |
Basis of Presentation |
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Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of Presentation | Note 1 Basis of Presentation United States Cellular Corporation (U.S. Cellular), a Delaware Corporation, is an 82%-owned subsidiary of Telephone and Data Systems, Inc. (TDS). The accounting policies of U.S. Cellular conform to accounting principles generally accepted in the United States of America (GAAP) as set forth in the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC). Unless otherwise specified, references to accounting provisions and GAAP in these notes refer to the requirements of the FASB ASC. The consolidated financial statements include the accounts of U.S. Cellular, subsidiaries in which it has a controlling financial interest, general partnerships in which U.S. Cellular has a majority partnership interest and certain entities in which U.S. Cellular has a variable interest that require consolidation under GAAP. All material intercompany accounts and transactions have been eliminated. The unaudited consolidated financial statements included herein have been prepared by U.S. Cellular pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Certain information and disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. However, U.S. Cellular believes that the disclosures included herein are adequate to make the information presented not misleading. Certain numbers included herein are rounded to millions for ease of presentation; however, certain calculated amounts and percentages are determined using the unrounded numbers. These unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in U.S. Cellular’s Annual Report on Form 10-K (Form 10-K) for the year ended December 31, 2018. The accompanying unaudited consolidated financial statements contain all adjustments (consisting of normal recurring items, unless otherwise disclosed) necessary for the fair statement of U.S. Cellular’s financial position as of September 30, 2019 and December 31, 2018, its results of operations and changes in equity for the three and nine months ended September 30, 2019 and 2018, and its cash flows for the nine months ended September 30, 2019 and 2018. The Consolidated Statement of Comprehensive Income was not included because comprehensive income for the three and nine months ended September 30, 2019 and 2018, equaled net income. These results are not necessarily indicative of the results to be expected for the full year. U.S. Cellular has not changed its significant accounting and reporting policies from those disclosed in its Form 10-K for the year ended December 31, 2018, except as disclosed in Note 8 — Leases. Restricted Cash U.S. Cellular presents restricted cash with cash and cash equivalents in the Consolidated Statement of Cash Flows. The following table provides a reconciliation of Cash and cash equivalents and restricted cash reported in the Consolidated Balance Sheet to the total of the amounts in the Consolidated Statement of Cash Flows as of September 30, 2019 and December 31, 2018.
Recently Issued Accounting Pronouncements Not Yet Adopted In June 2016, the FASB issued Accounting Standards Update 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments (ASU 2016-13). ASU 2016-13 requires entities to use a new forward-looking, expected loss model to estimate credit losses. It also requires additional disclosure relating to the credit quality of trade and other receivables, including information relating to management’s estimate of credit allowances. U.S. Cellular is required to adopt ASU 2016-13 on January 1, 2020, using the modified retrospective approach. Early adoption is permitted; however, U.S. Cellular does not intend to adopt early. The adoption of ASU 2016-13 is not expected to have a significant impact on U.S. Cellular's financial position or results of operations.
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Revenue Recognition |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue Recognition | Note 2 Revenue Recognition Disaggregation of Revenue In the following table, revenue is disaggregated by type of service and timing of revenue recognition. Service revenues are recognized over time and Equipment sales are point in time.
Contract Balances The accounts receivable balance related to amounts billed and not paid on contracts with customers, net of allowances, is shown in the table below.
The following table provides a rollforward of contract assets from contracts with customers, which are recorded in Other current assets and Other assets and deferred charges in the Consolidated Balance Sheet.
The following table provides a rollforward of contract liabilities from contracts with customers, which are recorded in Customer deposits and deferred revenues and Other deferred liabilities and credits in the Consolidated Balance Sheet.
Transaction price allocated to the remaining performance obligations The following table includes estimated service revenues expected to be recognized related to performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period. These estimates represent service revenues to be recognized when wireless services are delivered to customers pursuant to service plan contracts and under certain roaming agreements with other carriers. These estimates are based on contracts in place as of September 30, 2019, and may vary from actual results. As a practical expedient, revenue related to contracts of less than one year, generally month-to-month contracts, are excluded from these estimates.
U.S. Cellular has certain contracts in which it bills an amount equal to a fixed per-unit price multiplied by a variable quantity (e.g., certain roaming agreements with other carriers). Because U.S. Cellular invoices for such items in an amount that corresponds directly with the value of the performance completed to date, U.S. Cellular may recognize revenue in that amount. As a practical expedient, these contracts are excluded from the estimate of future revenues expected to be recognized related to performance obligations that are unsatisfied as of the end of a reporting period. Contract Cost Assets U.S. Cellular expects that incremental commission fees paid as a result of obtaining contracts are recoverable and therefore U.S. Cellular capitalizes these costs. As a practical expedient, costs with an amortization period of one year or less are not capitalized. The contract cost asset balance related to commission fees was $130 million at September 30, 2019, and $139 million at December 31, 2018, and was recorded in Other assets and deferred charges in the Consolidated Balance Sheet. Capitalized commission fees are amortized based on the timing of transfer of the goods or services to which the assets relate, typically the contract term which ranges from fifteen months to thirty months. Amortization of contract cost assets was $27 million and $82 million for the three and nine months ended September 30, 2019, respectively, and $27 million and $81 million for the three and nine months ended September 30, 2018, respectively, and was included in Selling, general and administrative expenses.
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Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Note 3 Fair Value Measurements As of September 30, 2019 and December 31, 2018, U.S. Cellular did not have any material financial or nonfinancial assets or liabilities that were required to be recorded at fair value in its Consolidated Balance Sheet in accordance with GAAP. The provisions of GAAP establish a fair value hierarchy that contains three levels for inputs used in fair value measurements. Level 1 inputs include quoted market prices for identical assets or liabilities in active markets. Level 2 inputs include quoted market prices for similar assets and liabilities in active markets or quoted market prices for identical assets and liabilities in inactive markets. Level 3 inputs are unobservable. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. A financial instrument’s level within the fair value hierarchy is not representative of its expected performance or its overall risk profile and, therefore, Level 3 assets are not necessarily higher risk than Level 2 assets or Level 1 assets. U.S. Cellular has applied the provisions of fair value accounting for purposes of computing the fair value of financial instruments for disclosure purposes as displayed below.
The fair values of Cash and cash equivalents and Short-term investments approximate their book values due to the short-term nature of these financial instruments. Long-term debt excludes lease obligations, other installment arrangements, the current portion of Long-term debt and debt financing costs. The fair value of “Retail” Long-term debt was estimated using market prices for the 7.25% 2063 Senior Notes, 7.25% 2064 Senior Notes and 6.95% Senior Notes. U.S. Cellular’s “Institutional” debt consists of the 6.7% Senior Notes which are traded over the counter. U.S. Cellular’s “Other” debt consists of a senior term loan credit agreement. U.S. Cellular estimated the fair value of its Institutional and Other debt through a discounted cash flow analysis using the interest rates or estimated yield to maturity for each borrowing, which ranged from 3.80% to 5.96% and 5.03% to 6.97% at September 30, 2019 and December 31, 2018, respectively.
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Equipment Installment Plans |
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equipment Installment Plans | Note 4 Equipment Installment Plans U.S. Cellular sells devices to customers under equipment installment plans over a specified time period. For certain equipment installment plans, after a specified period of time or amount of payments, the customer may have the right to upgrade to a new device and have the remaining unpaid equipment installment contract balance waived, subject to certain conditions, including trading in the original device in good working condition and signing a new equipment installment contract. U.S. Cellular values this trade-in right as a guarantee liability. The guarantee liability is initially measured at fair value and is determined based on assumptions including the probability and timing of the customer upgrading to a new device and the fair value of the device being traded-in at the time of trade-in. When a customer exercises the trade-in option, both the outstanding receivable and guarantee liability balances related to the respective device are reduced to zero, and the value of the used device that is received in the transaction is recognized as inventory. If the customer does not exercise the trade-in option at the time of eligibility, U.S. Cellular begins amortizing the liability and records this amortization as additional equipment revenue. As of September 30, 2019 and December 31, 2018, the guarantee liability related to these plans was $9 million and $11 million, respectively, and is reflected in Customer deposits and deferred revenues in the Consolidated Balance Sheet. The following table summarizes equipment installment plan receivables as of September 30, 2019 and December 31, 2018.
U.S. Cellular uses various inputs, including internal data, information from credit bureaus and other sources, to evaluate the credit profiles of its customers. From this evaluation, a credit class is assigned to the customer that determines the number of eligible lines, the amount of credit available, and the down payment requirement, if any. Customers assigned to credit classes requiring no down payment represent a lower risk category, whereas those assigned to credit classes requiring a down payment represent a higher risk category. The balance and aging of the equipment installment plan receivables on a gross basis by credit category were as follows:
Activity for the nine months ended September 30, 2019 and 2018, in the allowance for credit losses for equipment installment plan receivables was as follows:
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Earnings Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | Note 5 Earnings Per Share Basic earnings per share attributable to U.S. Cellular shareholders is computed by dividing Net income attributable to U.S. Cellular shareholders by the weighted average number of Common Shares outstanding during the period. Diluted earnings per share attributable to U.S. Cellular shareholders is computed by dividing Net income attributable to U.S. Cellular shareholders by the weighted average number of Common Shares outstanding during the period adjusted to include the effects of potentially dilutive securities. Potentially dilutive securities primarily include incremental shares issuable upon the exercise of outstanding stock options and the vesting of performance and restricted stock units. The amounts used in computing earnings per common share and the effects of potentially dilutive securities on the weighted average number of Common Shares were as follows:
Certain Common Shares issuable upon the exercise of stock options or vesting of performance and restricted stock units were not included in average diluted shares outstanding for the calculation of Diluted earnings per share attributable to U.S. Cellular shareholders because their effects were antidilutive. The number of such Common Shares excluded was 1 million and less than 1 million for the three and nine months ended September 30, 2019, respectively, and 2 million and 3 million for the three and nine months ended September 30, 2018, respectively.
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Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||
Intangible Assets | Note 6 Intangible Assets Activity related to Licenses for the nine months ended September 30, 2019, is presented below:
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Investments in Unconsolidated Entities |
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Equity Method Investments and Joint Ventures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments in Unconsolidated Entities | Note 7 Investments in Unconsolidated Entities Investments in unconsolidated entities consist of amounts invested in entities in which U.S. Cellular holds a noncontrolling interest. U.S. Cellular’s Investments in unconsolidated entities are accounted for using either the equity method or measurement alternative method as shown in the table below. The measurement alternative method was elected for investments without readily determinable fair values formerly accounted for under the cost method. The carrying value of measurement alternative method investments represents cost minus any impairments plus or minus any observable price changes.
The following table, which is based in part on information provided by third parties, summarizes the combined results of operations of U.S. Cellular’s equity method investments.
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Leases |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases | Note 8 Leases Change in Accounting Policy In February 2016, the FASB issued Accounting Standards Update 2016-02, Leases and has since amended the standard with Accounting Standards Update 2018-01, Leases: Land Easement Practical Expedient for Transition to Topic 842, Accounting Standards Update 2018-10, Codification Improvements to Topic 842, Leases, Accounting Standards Update 2018-11, Leases: Targeted Improvements, and Accounting Standards Update 2018-20, Leases: Narrow-Scope Improvements for Lessors, collectively referred to as ASC 842. This standard replaces the previous lease accounting standard under ASC 840 - Leases and requires lessees to record a right-of-use (ROU) asset and lease liability for the majority of leases. U.S. Cellular adopted the provisions of ASC 842 on January 1, 2019, using a modified retrospective method. Under this method, U.S. Cellular elected to apply the new accounting standard only to the most recent period presented, recognizing the cumulative effect of the accounting change, if any, as an adjustment to the beginning balance of retained earnings. Accordingly, prior periods have not been recast to reflect the new accounting standard. The cumulative effect of applying the provisions of ASC 842 had no material impact on retained earnings. U.S. Cellular elected transitional practical expedients for existing leases which eliminated the requirements to reassess existing lease classification, initial direct costs, and whether contracts contain leases. U.S. Cellular also elected the practical expedient related to land easements that allows it to carry forward the accounting treatment for pre-existing land easement agreements. The cumulative effect of the adoption of ASC 842 on U.S. Cellular’s Consolidated Balance Sheet as of January 1, 2019 is presented below.
In connection with the adoption of ASC 842, U.S. Cellular recorded ROU assets and lease liabilities for its operating leases in its Consolidated Balance Sheet as of January 1, 2019. The amounts for ROU assets and lease liabilities initially were calculated as the discounted value of future lease payments. The difference between the ROU assets and the corresponding lease liabilities at January 1, 2019 as shown in the table above resulted from adjustments to ROU assets to account for various lease prepayments and straight-line expense recognition deferral balances which existed as of December 31, 2018. Finance leases are included in Property, plant and equipment and Long-term debt, net consistent with the presentation under prior accounting standards. Lessee Agreements A lease is generally present in a contract if the lessee controls the use of identified property, plant or equipment for a period of time in exchange for consideration. Nearly all of U.S. Cellular’s leases are classified as operating leases, although it does have a small number of finance leases. U.S. Cellular’s most significant leases are for land and tower spaces, network facilities, retail spaces, and offices. U.S. Cellular has agreements with both lease and nonlease components, which are accounted for separately. As part of the present value calculation for the lease liabilities, U.S. Cellular uses an incremental borrowing rate as the rates implicit in the leases are not readily determinable. The incremental borrowing rates used for lease accounting are based on U.S. Cellular's unsecured rates, adjusted to approximate the rates at which U.S. Cellular would be required to borrow on a collateralized basis over a term similar to the recognized lease term. U.S. Cellular applies the incremental borrowing rates to lease components using a portfolio approach based upon the length of the lease term. The cost of nonlease components in U.S. Cellular’s lease portfolio (e.g., utilities and common area maintenance) are not typically predetermined at lease commencement and are expensed as incurred at their relative standalone price. Variable lease expense occurs when, subsequent to the lease commencement, lease payments are made that were not originally included in the lease liability calculation. U.S. Cellular’s variable lease payments are primarily a result of leases with escalations that are tied to an index. The incremental changes due to the index changes are recorded as variable lease expense and are not included in the ROU assets or lease liabilities. Lease term recognition determines the periods to which expense is allocated and also has a significant impact on the ROU asset and lease liability calculations. Many of U.S. Cellular’s leases include renewal and early termination options. At lease commencement, the lease terms include options to extend the lease when U.S. Cellular is reasonably certain that it will exercise the options. The lease terms do not include early termination options unless U.S. Cellular is reasonably certain to exercise the options. Certain asset classes have similar lease characteristics; therefore, U.S. Cellular has applied the portfolio approach for lease term recognition for its tower space, retail, and certain ground lease asset classes. The following table shows the components of lease cost included in the Consolidated Statement of Operations:
The following table shows supplemental cash flow information related to lease activities:
The following table shows the classification of U.S. Cellular’s operating and finance leases in its Consolidated Balance Sheet:
The table below shows a weighted-average analysis for lease term and discount rate for all leases:
The maturities of lease liabilities are as follows:
Lessor Agreements U.S. Cellular's most significant lessor leases are for tower space. All of U.S. Cellular’s lessor leases are classified as operating leases. A lease is generally present in a contract if the lessee controls the use of identified property, plant, or equipment for a period of time in exchange for consideration. U.S. Cellular’s lessor agreements with lease and nonlease components are generally accounted for separately. Lease term recognition determines the periods to which revenue is allocated over the term of the lease. Many of U.S. Cellular’s leases include renewal and early termination options. At lease commencement, lease terms include options to extend the lease when U.S. Cellular is reasonably certain that lessees will exercise the options. Lease terms would not include periods after the date of a termination option that lessees are reasonably certain to exercise. Variable lease income occurs when, subsequent to the lease commencement, lease payments are received that were not originally included in the lease receivable calculation. U.S. Cellular’s variable lease income is primarily a result of leases with escalations that are tied to an index. The incremental increases due to the index changes are recorded as variable lease income. The following table shows the components of lease income which are included in service revenues in the Consolidated Statement of Operations:
The maturities of expected lease payments to be received are as follows:
Disclosures under ASC 840 As of December 31, 2018, future minimum rental payments required under operating leases and rental receipts expected under operating leases that have noncancellable lease terms in excess of one year were as follows:
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Commitments and Contingencies |
9 Months Ended |
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Sep. 30, 2019 | |
Commitments and Contingencies [Abstract] | |
Commitments and Contingencies | Note 9 Commitments and Contingencies Purchase Obligations On September 27, 2019, U.S. Cellular executed a new Master Service Agreement, Master Statement of Work for Managed Services and certain other documents with Amdocs Tethys Limited, effective October 1, 2019, to continue using the Billing and Operational Support System (B/OSS) and certain support functions offered by Amdocs Tethys Limited. The committed, non-cancellable amount to be paid to Amdocs Tethys Limited with respect to the new agreements is $241 million over five years.
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Variable Interest Entities |
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Variable Interest Entities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Variable Interest Entities | Note 10 Variable Interest Entities Consolidated VIEs U.S. Cellular consolidates VIEs in which it has a controlling financial interest as defined by GAAP and is therefore deemed the primary beneficiary. A controlling financial interest will have both of the following characteristics: (a) the power to direct the VIE activities that most significantly impact economic performance; and (b) the obligation to absorb the VIE losses and the right to receive benefits that are significant to the VIE. U.S. Cellular reviews these criteria initially at the time it enters into agreements and subsequently when events warranting reconsideration occur. These VIEs have risks similar to those described in the “Risk Factors” in U.S. Cellular’s Form 10-K for the year ended December 31, 2018. During 2017, U.S. Cellular formed USCC EIP LLC (Seller/Sub-Servicer), USCC Receivables Funding LLC (Transferor) and the USCC Master Note Trust (Trust), collectively the special purpose entities (SPEs), to facilitate a securitized borrowing using its equipment installment plan receivables. Under a Receivables Sale Agreement, U.S. Cellular wholly-owned, majority-owned and unconsolidated entities, collectively referred to as “affiliated entities”, transfer device equipment installment plan contracts to the Seller/Sub-Servicer. The Seller/Sub-Servicer aggregates device equipment installment plan contracts, and performs servicing, collection and all other administrative activities related to accounting for the equipment installment plan contracts. The Seller/Sub-Servicer sells the eligible equipment installment plan receivables to the Transferor, a bankruptcy remote entity, which subsequently sells the receivables to the Trust. The Trust, which is bankruptcy remote and isolated from the creditors of U.S. Cellular, will be responsible for issuing asset-backed variable funding notes (Notes), which are collateralized by the equipment installment plan receivables owned by the Trust. Given that U.S. Cellular has the power to direct the activities of these SPEs, and that these SPEs lack sufficient equity to finance their activities, U.S. Cellular is deemed to have a controlling financial interest in the SPEs and, therefore, consolidates them. All transactions with third parties (e.g., issuance of the asset-backed variable funding notes) will be accounted for as a secured borrowing due to the pledging of equipment installment plan contracts as collateral, significant continuing involvement in the transferred assets, subordinated interests of the cash flows, and continued evidence of control of the receivables. The following VIEs were formed to participate in FCC auctions of wireless spectrum licenses and to fund, establish, and provide wireless service with respect to any FCC wireless spectrum licenses won in the auctions:
These particular VIEs are collectively referred to as designated entities. The power to direct the activities that most significantly impact the economic performance of these VIEs is shared. Specifically, the general partner of these VIEs has the exclusive right to manage, operate and control the limited partnerships and make all decisions to carry on the business of the partnerships. The general partner of each partnership needs the consent of the limited partner, an indirect U.S. Cellular subsidiary, to sell or lease certain wireless spectrum licenses, to make certain large expenditures, admit other partners or liquidate the limited partnerships. Although the power to direct the activities of these VIEs is shared, U.S. Cellular has the most significant level of exposure to the variability associated with the economic performance of the VIEs, indicating that U.S. Cellular is the primary beneficiary of the VIEs. Therefore, in accordance with GAAP, these VIEs are consolidated. U.S. Cellular also consolidates other VIEs that are limited partnerships that provide wireless service. A limited partnership is a variable interest entity unless the limited partners hold substantive participating rights or kick-out rights over the general partner. For certain limited partnerships, U.S. Cellular is the general partner and manages the operations. In these partnerships, the limited partners do not have substantive kick-out or participating rights and, further, such limited partners do not have the authority to remove the general partner. Therefore, these limited partnerships are also recognized as VIEs and are consolidated under the variable interest model. The following table presents the classification and balances of the consolidated VIEs’ assets and liabilities in U.S. Cellular’s Consolidated Balance Sheet.
Unconsolidated VIEs U.S. Cellular manages the operations of and holds a variable interest in certain other limited partnerships, but is not the primary beneficiary of these entities and, therefore, does not consolidate them under the variable interest model. U.S. Cellular’s total investment in these unconsolidated entities was $5 million and $4 million at September 30, 2019 and December 31, 2018, respectively, and is included in Investments in unconsolidated entities in U.S. Cellular’s Consolidated Balance Sheet. The maximum exposure from unconsolidated VIEs is limited to the investment held by U.S. Cellular in those entities. Other Related Matters U.S. Cellular made contributions, loans and/or advances to its VIEs totaling $229 million and $92 million, during the nine months ended September 30, 2019 and 2018, respectively; of which $199 million in 2019 and $66 million in 2018, are related to USCC EIP LLC as discussed above. U.S. Cellular may agree to make additional capital contributions and/or advances to these or other VIEs and/or to their general partners to provide additional funding for operations or the development of wireless spectrum licenses granted in various auctions. U.S. Cellular may finance such amounts with a combination of cash on hand, borrowings under its revolving credit agreement and/or other long-term debt. There is no assurance that U.S. Cellular will be able to obtain additional financing on commercially reasonable terms or at all to provide such financial support. The limited partnership agreements of Advantage Spectrum and King Street Wireless also provide the general partner with a put option whereby the general partner may require the limited partner, a subsidiary of U.S. Cellular, to purchase its interest in the limited partnership. The general partner’s put options related to its interests in King Street Wireless will become exercisable in the fourth quarter of 2019. The general partner’s put options related to its interest in Advantage Spectrum will become exercisable in 2021 and 2022. The greater of the carrying value of the general partner's investment or the value of the put option, net of any borrowings due to U.S. Cellular is recorded as Noncontrolling interests with redemption features in U.S. Cellular’s Consolidated Balance Sheet. Also in accordance with GAAP, minority share of income or changes in the redemption value of the put options, net of interest accrued on the loans, are recorded as a component of Net income attributable to noncontrolling interests, net of tax, in U.S. Cellular’s Consolidated Statement of Operations. During the first quarter of 2018, U.S. Cellular recorded an out-of-period adjustment attributable to 2016 and 2017 due to errors in the application of accounting guidance applicable to the calculation of Noncontrolling interests with redemption features related to King Street Wireless, Inc. This out-of-period adjustment had the impact of increasing Net income attributable to noncontrolling interests, net of tax, by $8 million and decreasing Net income attributable to U.S. Cellular shareholders by $8 million for the nine months ended September 30, 2018. U.S. Cellular determined that this adjustment was not material to any of the periods impacted.
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Basis of Presentation (Policies) |
9 Months Ended |
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Sep. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Principles of Consolidation | The accounting policies of U.S. Cellular conform to accounting principles generally accepted in the United States of America (GAAP) as set forth in the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC). Unless otherwise specified, references to accounting provisions and GAAP in these notes refer to the requirements of the FASB ASC. The consolidated financial statements include the accounts of U.S. Cellular, subsidiaries in which it has a controlling financial interest, general partnerships in which U.S. Cellular has a majority partnership interest and certain entities in which U.S. Cellular has a variable interest that require consolidation under GAAP. All material intercompany accounts and transactions have been eliminated.
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Basis of Accounting | The unaudited consolidated financial statements included herein have been prepared by U.S. Cellular pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Certain information and disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. However, U.S. Cellular believes that the disclosures included herein are adequate to make the information presented not misleading. Certain numbers included herein are rounded to millions for ease of presentation; however, certain calculated amounts and percentages are determined using the unrounded numbers. These unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in U.S. Cellular’s Annual Report on Form 10-K (Form 10-K) for the year ended December 31, 2018. The accompanying unaudited consolidated financial statements contain all adjustments (consisting of normal recurring items, unless otherwise disclosed) necessary for the fair statement of U.S. Cellular’s financial position as of September 30, 2019 and December 31, 2018, its results of operations and changes in equity for the three and nine months ended September 30, 2019 and 2018, and its cash flows for the nine months ended September 30, 2019 and 2018. The Consolidated Statement of Comprehensive Income was not included because comprehensive income for the three and nine months ended September 30, 2019 and 2018, equaled net income. These results are not necessarily indicative of the results to be expected for the full year. U.S. Cellular has not changed its significant accounting and reporting policies from those disclosed in its Form 10-K for the year ended December 31, 2018, except as disclosed in Note 8 — Leases.
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Recently Adopted Accounting Pronouncements and Recently Issued Accounting Pronouncements Not Yet Adopted | In June 2016, the FASB issued Accounting Standards Update 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments (ASU 2016-13). ASU 2016-13 requires entities to use a new forward-looking, expected loss model to estimate credit losses. It also requires additional disclosure relating to the credit quality of trade and other receivables, including information relating to management’s estimate of credit allowances. U.S. Cellular is required to adopt ASU 2016-13 on January 1, 2020, using the modified retrospective approach. Early adoption is permitted; however, U.S. Cellular does not intend to adopt early. The adoption of ASU 2016-13 is not expected to have a significant impact on U.S. Cellular's financial position or results of operations. In February 2016, the FASB issued Accounting Standards Update 2016-02, Leases and has since amended the standard with Accounting Standards Update 2018-01, Leases: Land Easement Practical Expedient for Transition to Topic 842, Accounting Standards Update 2018-10, Codification Improvements to Topic 842, Leases, Accounting Standards Update 2018-11, Leases: Targeted Improvements, and Accounting Standards Update 2018-20, Leases: Narrow-Scope Improvements for Lessors, collectively referred to as ASC 842. This standard replaces the previous lease accounting standard under ASC 840 - Leases and requires lessees to record a right-of-use (ROU) asset and lease liability for the majority of leases. U.S. Cellular adopted the provisions of ASC 842 on January 1, 2019, using a modified retrospective method. Under this method, U.S. Cellular elected to apply the new accounting standard only to the most recent period presented, recognizing the cumulative effect of the accounting change, if any, as an adjustment to the beginning balance of retained earnings. Accordingly, prior periods have not been recast to reflect the new accounting standard. The cumulative effect of applying the provisions of ASC 842 had no material impact on retained earnings.
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Revenue From Contract With Customer | As a practical expedient, revenue related to contracts of less than one year, generally month-to-month contracts, are excluded from these estimates. U.S. Cellular has certain contracts in which it bills an amount equal to a fixed per-unit price multiplied by a variable quantity (e.g., certain roaming agreements with other carriers). Because U.S. Cellular invoices for such items in an amount that corresponds directly with the value of the performance completed to date, U.S. Cellular may recognize revenue in that amount. As a practical expedient, these contracts are excluded from the estimate of future revenues expected to be recognized related to performance obligations that are unsatisfied as of the end of a reporting period. As a practical expedient, costs with an amortization period of one year or less are not capitalized.
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Lessee Agreements | A lease is generally present in a contract if the lessee controls the use of identified property, plant or equipment for a period of time in exchange for consideration. Nearly all of U.S. Cellular’s leases are classified as operating leases, although it does have a small number of finance leases. U.S. Cellular’s most significant leases are for land and tower spaces, network facilities, retail spaces, and offices. U.S. Cellular has agreements with both lease and nonlease components, which are accounted for separately. As part of the present value calculation for the lease liabilities, U.S. Cellular uses an incremental borrowing rate as the rates implicit in the leases are not readily determinable. The incremental borrowing rates used for lease accounting are based on U.S. Cellular's unsecured rates, adjusted to approximate the rates at which U.S. Cellular would be required to borrow on a collateralized basis over a term similar to the recognized lease term. U.S. Cellular applies the incremental borrowing rates to lease components using a portfolio approach based upon the length of the lease term. The cost of nonlease components in U.S. Cellular’s lease portfolio (e.g., utilities and common area maintenance) are not typically predetermined at lease commencement and are expensed as incurred at their relative standalone price. Variable lease expense occurs when, subsequent to the lease commencement, lease payments are made that were not originally included in the lease liability calculation. U.S. Cellular’s variable lease payments are primarily a result of leases with escalations that are tied to an index. The incremental changes due to the index changes are recorded as variable lease expense and are not included in the ROU assets or lease liabilities. Lease term recognition determines the periods to which expense is allocated and also has a significant impact on the ROU asset and lease liability calculations. Many of U.S. Cellular’s leases include renewal and early termination options. At lease commencement, the lease terms include options to extend the lease when U.S. Cellular is reasonably certain that it will exercise the options. The lease terms do not include early termination options unless U.S. Cellular is reasonably certain to exercise the options. Certain asset classes have similar lease characteristics; therefore, U.S. Cellular has applied the portfolio approach for lease term recognition for its tower space, retail, and certain ground lease asset classes.
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Lessor Agreements | U.S. Cellular's most significant lessor leases are for tower space. All of U.S. Cellular’s lessor leases are classified as operating leases. A lease is generally present in a contract if the lessee controls the use of identified property, plant, or equipment for a period of time in exchange for consideration. U.S. Cellular’s lessor agreements with lease and nonlease components are generally accounted for separately. Lease term recognition determines the periods to which revenue is allocated over the term of the lease. Many of U.S. Cellular’s leases include renewal and early termination options. At lease commencement, lease terms include options to extend the lease when U.S. Cellular is reasonably certain that lessees will exercise the options. Lease terms would not include periods after the date of a termination option that lessees are reasonably certain to exercise. Variable lease income occurs when, subsequent to the lease commencement, lease payments are received that were not originally included in the lease receivable calculation. U.S. Cellular’s variable lease income is primarily a result of leases with escalations that are tied to an index. The incremental increases due to the index changes are recorded as variable lease income.
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Variable Interest Entities | U.S. Cellular consolidates VIEs in which it has a controlling financial interest as defined by GAAP and is therefore deemed the primary beneficiary. A controlling financial interest will have both of the following characteristics: (a) the power to direct the VIE activities that most significantly impact economic performance; and (b) the obligation to absorb the VIE losses and the right to receive benefits that are significant to the VIE. U.S. Cellular reviews these criteria initially at the time it enters into agreements and subsequently when events warranting reconsideration occur. These VIEs have risks similar to those described in the “Risk Factors” in U.S. Cellular’s Form 10-K for the year ended December 31, 2018.
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Basis of Presentation (Tables) |
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Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of cash, cash equivalents and restricted cash | The following table provides a reconciliation of Cash and cash equivalents and restricted cash reported in the Consolidated Balance Sheet to the total of the amounts in the Consolidated Statement of Cash Flows as of September 30, 2019 and December 31, 2018.
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Revenue Recognition (Tables) |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of Revenue | In the following table, revenue is disaggregated by type of service and timing of revenue recognition. Service revenues are recognized over time and Equipment sales are point in time.
1 Revenue line items in this table will not agree to amounts presented in the Consolidated Statement of Operations as the amounts in this table only include revenue resulting from contracts with customers.
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Contract with Customer, Assets and Liabilities | The accounts receivable balance related to amounts billed and not paid on contracts with customers, net of allowances, is shown in the table below.
The following table provides a rollforward of contract assets from contracts with customers, which are recorded in Other current assets and Other assets and deferred charges in the Consolidated Balance Sheet.
The following table provides a rollforward of contract liabilities from contracts with customers, which are recorded in Customer deposits and deferred revenues and Other deferred liabilities and credits in the Consolidated Balance Sheet.
1 The Balance at December 31, 2018 differs from the amount reported in Note 2 — Revenue Recognition of the 2018 Form 10-K, as the previously reported amount included certain lease-related balances that did not result from contracts with customers.
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Remaining Performance Obligations | The following table includes estimated service revenues expected to be recognized related to performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period. These estimates represent service revenues to be recognized when wireless services are delivered to customers pursuant to service plan contracts and under certain roaming agreements with other carriers. These estimates are based on contracts in place as of September 30, 2019, and may vary from actual results. As a practical expedient, revenue related to contracts of less than one year, generally month-to-month contracts, are excluded from these estimates.
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Fair Value Measurements (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair value measurements | U.S. Cellular has applied the provisions of fair value accounting for purposes of computing the fair value of financial instruments for disclosure purposes as displayed below.
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Equipment Installment Plans (Tables) |
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equipment installment plan receivables | The following table summarizes equipment installment plan receivables as of September 30, 2019 and December 31, 2018.
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Equipment installment plan receivables credit categories | The balance and aging of the equipment installment plan receivables on a gross basis by credit category were as follows:
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Equipment installment plans allowance for credit losses | Activity for the nine months ended September 30, 2019 and 2018, in the allowance for credit losses for equipment installment plan receivables was as follows:
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Earnings Per Share (Tables) |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings per share | The amounts used in computing earnings per common share and the effects of potentially dilutive securities on the weighted average number of Common Shares were as follows:
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Intangible Assets (Tables) |
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Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||
Licenses | Activity related to Licenses for the nine months ended September 30, 2019, is presented below:
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Investments in Unconsolidated Entities (Tables) |
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Equity Method Investments and Joint Ventures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity and measurement alternative method investments | U.S. Cellular’s Investments in unconsolidated entities are accounted for using either the equity method or measurement alternative method as shown in the table below. The measurement alternative method was elected for investments without readily determinable fair values formerly accounted for under the cost method. The carrying value of measurement alternative method investments represents cost minus any impairments plus or minus any observable price changes.
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Equity method investments, summarized results of operations | The following table, which is based in part on information provided by third parties, summarizes the combined results of operations of U.S. Cellular’s equity method investments.
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Leases (Tables) |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of new accounting pronouncements and changes in accounting principles | The cumulative effect of the adoption of ASC 842 on U.S. Cellular’s Consolidated Balance Sheet as of January 1, 2019 is presented below.
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Components of lease expense | The following table shows the components of lease cost included in the Consolidated Statement of Operations:
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Supplemental cash flow information related to leases | The following table shows supplemental cash flow information related to lease activities:
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Supplemental balance sheet information related to leases | The following table shows the classification of U.S. Cellular’s operating and finance leases in its Consolidated Balance Sheet:
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Schedule of weighted average remaining lease term and weighted average discount rate related to leases | The table below shows a weighted-average analysis for lease term and discount rate for all leases:
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Maturities of lease liabilities | The maturities of lease liabilities are as follows:
1 Lease payments exclude $11 million of legally binding lease payments for leases signed but not yet commenced.
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Lease income | The following table shows the components of lease income which are included in service revenues in the Consolidated Statement of Operations:
1 During the third quarter of 2019, U.S. Cellular recorded an out-of-period adjustment attributable to 2009 through the second quarter of 2019 due to errors in the timing of recognition of revenue for certain tower leases. This out-of-period adjustment had the impact of increasing operating lease income by $5 million for the three and nine months ended September 30, 2019. U.S. Cellular determined that this adjustment was not material to any of the periods impacted.
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Maturities of expected lease revenues | The maturities of expected lease payments to be received are as follows:
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Lease commitments | As of December 31, 2018, future minimum rental payments required under operating leases and rental receipts expected under operating leases that have noncancellable lease terms in excess of one year were as follows:
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Variable Interest Entities (Tables) |
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Variable Interest Entities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Consolidated VIE assets and liabilities | The following table presents the classification and balances of the consolidated VIEs’ assets and liabilities in U.S. Cellular’s Consolidated Balance Sheet.
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Basis of Presentation - Narrative (Details) |
Sep. 30, 2019 |
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TDS | U.S. Cellular | |
Basis of Presentation [Line Items] | |
Ownership percentage | 82.00% |
Basis of Presentation - Restricted Cash, Cash Equivalents and Restricted Cash (Details) - USD ($) $ in Millions |
Sep. 30, 2019 |
Dec. 31, 2018 |
Sep. 30, 2018 |
Dec. 31, 2017 |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Cash and cash equivalents | $ 570 | $ 580 | ||
Restricted cash included in Other current assets | 5 | 3 | ||
Cash, cash equivalents and restricted cash in the statement of cash flows | $ 575 | $ 583 | $ 732 | $ 352 |
Revenue Recognition - Disaggregation Of Revenue (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
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Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
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Disaggregation of revenue | ||||
Revenue from contracts with customers | $ 1,008 | $ 985 | $ 2,915 | $ 2,867 |
Transferred over time | ||||
Disaggregation of revenue | ||||
Revenue from contracts with customers | 751 | 743 | 2,217 | 2,175 |
Transferred over time | Retail service | ||||
Disaggregation of revenue | ||||
Revenue from contracts with customers | 663 | 659 | 1,984 | 1,960 |
Transferred over time | Inbound roaming | ||||
Disaggregation of revenue | ||||
Revenue from contracts with customers | 54 | 50 | 132 | 116 |
Transferred over time | Other service | ||||
Disaggregation of revenue | ||||
Revenue from contracts with customers | 34 | 34 | 101 | 99 |
Transferred at point in time | Equipment sales | ||||
Disaggregation of revenue | ||||
Revenue from contracts with customers | $ 257 | $ 242 | $ 698 | $ 692 |
Revenue Recognition - Accounts Receivable (Details) - USD ($) $ in Millions |
Sep. 30, 2019 |
Dec. 31, 2018 |
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Accounts receivable | ||
Customers and agents | $ 899 | $ 908 |
Roaming | 34 | 20 |
Other | 60 | 46 |
Accounts receivable from contract with customer | ||
Accounts receivable | ||
Customers and agents | 899 | 908 |
Roaming | 34 | 20 |
Other | 56 | 32 |
Total | $ 989 | $ 960 |
Revenue Recognition - Contract Assets (Details) $ in Millions |
9 Months Ended |
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Sep. 30, 2019
USD ($)
| |
Contract Assets | |
Balance, beginning of period | $ 9 |
Contract additions | 9 |
Reclassified to receivables | (11) |
Balance, end of period | $ 7 |
Revenue Recognition - Contract Liabilities (Details) $ in Millions |
9 Months Ended |
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Sep. 30, 2019
USD ($)
| |
Contract Liabilities | |
Balance, beginning of period | $ 147 |
Contract additions | 78 |
Terminated contracts | (6) |
Revenue recognized | (61) |
Balance, end of period | $ 158 |
Revenue Recognition - Performance Obligations (Details) $ in Millions |
Sep. 30, 2019
USD ($)
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Revenue from Contract with Customer [Abstract] | |
Remaining performance obligation amount | $ 467 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-10-01 | |
Revenue from Contract with Customer [Abstract] | |
Remaining performance obligation amount | $ 119 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Expected timing of remaining performance obligation, period | 3 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-01-01 | |
Revenue from Contract with Customer [Abstract] | |
Remaining performance obligation amount | $ 111 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Expected timing of remaining performance obligation, period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-01 | |
Revenue from Contract with Customer [Abstract] | |
Remaining performance obligation amount | $ 237 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Expected timing of remaining performance obligation, period |
Revenue Recognition - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | |||
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Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
Dec. 31, 2018 |
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Capitalized Contract Cost | |||||
Capitalized contract cost related to commission fees | $ 130 | $ 130 | $ 139 | ||
Amortization of contract cost assets | $ 27 | $ 27 | $ 82 | $ 81 | |
Minimum | |||||
Capitalized Contract Cost | |||||
Capitalized contract cost, amortization period | 15 months | 15 months | |||
Maximum | |||||
Capitalized Contract Cost | |||||
Capitalized contract cost, amortization period | 30 months | 30 months |
Fair Value Measurements (Details) - USD ($) $ in Millions |
Sep. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Financial Instruments | ||
Cash and cash equivalents | $ 570 | $ 580 |
Short-term investments | $ 0 | 17 |
7.25% 2063 Senior Notes | ||
Financial Instruments | ||
Interest rate | 7.25% | |
7.25% 2064 Senior Notes | ||
Financial Instruments | ||
Interest rate | 7.25% | |
6.95% Senior Notes | ||
Financial Instruments | ||
Interest rate | 6.95% | |
6.7% Senior Notes | ||
Financial Instruments | ||
Interest rate | 6.70% | |
Book Value | ||
Financial Instruments | ||
Cash and cash equivalents | $ 570 | 580 |
Short-term investments | 0 | 17 |
Book Value | Retail | ||
Financial Instruments | ||
Long-term debt | 917 | 917 |
Book Value | Institutional | ||
Financial Instruments | ||
Long-term debt | 534 | 534 |
Book Value | Other | ||
Financial Instruments | ||
Long-term debt | 172 | 180 |
Fair Value | Level 1 | ||
Financial Instruments | ||
Cash and cash equivalents | 570 | 580 |
Short-term investments | 0 | 17 |
Fair Value | Level 2 | Retail | ||
Financial Instruments | ||
Long-term debt | 953 | 850 |
Fair Value | Level 2 | Institutional | ||
Financial Instruments | ||
Long-term debt | 583 | 531 |
Fair Value | Level 2 | Other | ||
Financial Instruments | ||
Long-term debt | $ 172 | $ 180 |
Interest rate | Institutional and Other | Minimum | ||
Financial Instruments | ||
Fair value assumption, interest rate | 3.80% | 5.03% |
Interest rate | Institutional and Other | Maximum | ||
Financial Instruments | ||
Fair value assumption, interest rate | 5.96% | 6.97% |
Equipment Installment Plans - Narrative (Details) - USD ($) $ in Millions |
Sep. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Receivables [Abstract] | ||
Guarantee liability | $ 9 | $ 11 |
Equipment Installment Plans - EIP Receivables (Details) - USD ($) $ in Millions |
Sep. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Equipment installment plan receivables, gross | $ 975 | $ 974 |
Allowance for credit losses | (82) | (77) |
Equipment installment plan receivables, net | 893 | 897 |
Accounts receivable — Customers and agents (Current portion) | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Equipment installment plan receivables, net | 574 | 560 |
Other assets and deferred charges (Non-current portion) | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Equipment installment plan receivables, net | $ 319 | $ 337 |
Equipment Installment Plans - Gross Receivables by Credit Category (Details) - USD ($) $ in Millions |
Sep. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Equipment installment plan receivables, gross | $ 975 | $ 974 |
Unbilled | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Equipment installment plan receivables | 907 | 921 |
Billed | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Equipment installment plan receivables | 45 | 36 |
Equipment installment plan receivables, past due | 23 | 17 |
Lower Risk | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Equipment installment plan receivables, gross | 963 | 954 |
Lower Risk | Unbilled | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Equipment installment plan receivables | 898 | 904 |
Lower Risk | Billed | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Equipment installment plan receivables | 44 | 35 |
Equipment installment plan receivables, past due | 21 | 15 |
Higher Risk | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Equipment installment plan receivables, gross | 12 | 20 |
Higher Risk | Unbilled | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Equipment installment plan receivables | 9 | 17 |
Higher Risk | Billed | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Equipment installment plan receivables | 1 | 1 |
Equipment installment plan receivables, past due | $ 2 | $ 2 |
Equipment Installment Plans - Allowance for Credit Losses (Details) - USD ($) $ in Millions |
9 Months Ended | |
---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
|
Allowance for credit losses | ||
Allowance for credit losses, beginning of period | $ 77 | |
Allowance for credit losses, end of period | 82 | |
Equipment Installment Plan Receivable | ||
Allowance for credit losses | ||
Allowance for credit losses, beginning of period | 77 | $ 65 |
Bad debts expense | 60 | 49 |
Write-offs, net of recoveries | (55) | (41) |
Allowance for credit losses, end of period | $ 82 | $ 73 |
Earnings Per Share - Reconciliation (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
|
Earnings Per Share [Abstract] | ||||
Net income attributable to U.S. Cellular shareholders | $ 23 | $ 36 | $ 109 | $ 129 |
Weighted average number of shares used in basic earnings per share (in shares) | 86 | 86 | 87 | 85 |
Effects of dilutive securities (in shares) | 2 | 1 | 1 | 1 |
Weighted average number of shares used in diluted earnings per share (in shares) | 88 | 87 | 88 | 86 |
Basic earnings per share attributable to U.S. Cellular shareholders (USD per share) | $ 0.27 | $ 0.42 | $ 1.26 | $ 1.51 |
Diluted earnings per share attributable to U.S. Cellular shareholders (USD per share) | $ 0.27 | $ 0.41 | $ 1.24 | $ 1.49 |
Earnings Per Share - Narrative (Details) - shares shares in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
|
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities (in shares) | 1 | 2 | 3 | |
Maximum | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities (in shares) | 1 |
Intangible Assets (Details) - Licenses $ in Millions |
9 Months Ended |
---|---|
Sep. 30, 2019
USD ($)
| |
Licenses | |
Balance, beginning of period | $ 2,186 |
Acquisitions | 259 |
Transferred to Assets held for sale | (10) |
Exchanges - Licenses received | 26 |
Balance, end of period | $ 2,461 |
Intangible Assets - Narrative (Details) $ in Millions |
9 Months Ended |
---|---|
Sep. 30, 2019
USD ($)
license
| |
Licenses | |
Total winning bid | $ | $ 256 |
Auction 101 | |
Licenses | |
Licenses won | 408 |
Auction 102 | |
Licenses | |
Licenses won | 282 |
Investments in Unconsolidated Entities - Schedule of Investments (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
Dec. 31, 2018 |
|
Equity Method Investments and Joint Ventures [Abstract] | |||||
Equity method investments | $ 464 | $ 464 | $ 434 | ||
Measurement alternative method investments | 7 | 7 | 7 | ||
Total investments in unconsolidated entities | 471 | 471 | $ 441 | ||
Equity method investments, combined income statements | |||||
Revenues | 1,714 | $ 1,693 | 5,058 | $ 5,005 | |
Operating expenses | 1,241 | 1,229 | 3,644 | 3,635 | |
Operating income | 473 | 464 | 1,414 | 1,370 | |
Other income (expense), net | (1) | (2) | (3) | (2) | |
Net income | $ 472 | $ 462 | $ 1,411 | $ 1,368 |
Leases - Narrative (Details) $ in Millions |
Sep. 30, 2019
USD ($)
|
---|---|
Minimum | ASC 842 | Retained earnings | |
Leases | |
Cumulative effect of accounting change | $ 0 |
Leases - Consolidated Balance Sheet (Details) - USD ($) $ in Millions |
Sep. 30, 2019 |
Jan. 01, 2019 |
Dec. 31, 2018 |
---|---|---|---|
Leases - Consolidated Balance Sheet | |||
Prepaid expenses | $ 49 | $ 50 | $ 63 |
Operating lease right-of-use assets | 897 | 899 | 0 |
Other assets and deferred charges | 539 | 567 | 579 |
Short-term operating lease liabilities | 104 | 101 | 0 |
Other current liabilities | 78 | 86 | 94 |
Long-term operating lease liabilities | 864 | 878 | 0 |
Other deferred liabilities and credits | $ 312 | 292 | $ 389 |
ASC 842 Adjustment | |||
Leases - Consolidated Balance Sheet | |||
Prepaid expenses | (13) | ||
Operating lease right-of-use assets | 899 | ||
Other assets and deferred charges | (12) | ||
Short-term operating lease liabilities | 101 | ||
Other current liabilities | (8) | ||
Long-term operating lease liabilities | 878 | ||
Other deferred liabilities and credits | $ (97) |
Leases - Lease Cost (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended |
---|---|---|
Sep. 30, 2019 |
Sep. 30, 2019 |
|
Lease, Cost [Abstract] | ||
Operating lease cost | $ 42 | $ 121 |
Amortization of ROU assets | 0 | 1 |
Variable lease cost | 2 | 6 |
Total lease cost | $ 44 | $ 128 |
Leases - Supplemental Cash Flow Information (Details) $ in Millions |
9 Months Ended |
---|---|
Sep. 30, 2019
USD ($)
| |
Cash paid for amounts included in the measurement of lease liabilities: | |
Operating cash flows from operating leases | $ 116 |
ROU assets obtained in exchange for lease obligations: | |
Operating leases | $ 90 |
Leases - Classification of Operating and Finance Leases (Details) - USD ($) $ in Millions |
Sep. 30, 2019 |
Jan. 01, 2019 |
Dec. 31, 2018 |
---|---|---|---|
Operating Leases | |||
Operating lease right-of-use assets | $ 897 | $ 899 | $ 0 |
Short-term operating lease liabilities | 104 | 101 | 0 |
Long-term operating lease liabilities | 864 | $ 878 | 0 |
Total operating lease liabilities | 968 | ||
Finance Leases | |||
Property, plant and equipment | 8,088 | 7,778 | |
Less: Accumulated depreciation and amortization | 5,944 | 5,576 | |
Property, plant and equipment, net | 2,144 | 2,202 | |
Current portion of long-term debt | 19 | 19 | |
Long-term debt, net | 1,592 | $ 1,605 | |
Total finance lease liabilities | 4 | ||
Operating leases | |||
Operating Leases | |||
Operating lease right-of-use assets | 897 | ||
Short-term operating lease liabilities | 104 | ||
Long-term operating lease liabilities | 864 | ||
Total operating lease liabilities | 968 | ||
Finance leases | |||
Finance Leases | |||
Property, plant and equipment | 7 | ||
Less: Accumulated depreciation and amortization | 4 | ||
Property, plant and equipment, net | 3 | ||
Current portion of long-term debt | 1 | ||
Long-term debt, net | 3 | ||
Total finance lease liabilities | $ 4 |
Leases - Lease Term and Discount Rate (Details) |
Sep. 30, 2019 |
---|---|
Weighted Average Remaining Lease Term | |
Operating leases | 13 years |
Finance leases | 25 years |
Weighted Average Discount Rate | |
Operating leases | 4.50% |
Finance leases | 7.00% |
Leases - Maturities of Lease Liabilities (Details) $ in Millions |
Sep. 30, 2019
USD ($)
|
---|---|
Operating Leases Future Minimum Rental Payments | |
Remainder of 2019 | $ 27 |
2020 | 154 |
2021 | 139 |
2022 | 123 |
2023 | 108 |
Thereafter | 788 |
Total lease payments | 1,339 |
Less: Imputed interest | 371 |
Present value of lease liabilities | 968 |
Finance Leases | |
Remainder of 2019 | 0 |
2020 | 1 |
2021 | 0 |
2022 | 0 |
2023 | 1 |
Thereafter | 11 |
Total lease payments | 13 |
Less: Imputed interest | 9 |
Present value of lease liabilities | 4 |
Legally binding lease payments for leases signed but not yet commenced | $ 11 |
Leases - Components of Lease Income (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended |
---|---|---|
Sep. 30, 2019 |
Sep. 30, 2019 |
|
Leases | ||
Operating lease income1 | $ 23 | $ 55 |
Tower leases out of period adjustment | ||
Leases | ||
Immaterial error correction | During the third quarter of 2019, U.S. Cellular recorded an out-of-period adjustment attributable to 2009 through the second quarter of 2019 due to errors in the timing of recognition of revenue for certain tower leases. This out-of-period adjustment had the impact of increasing operating lease income by $5 million for the three and nine months ended September 30, 2019. U.S. Cellular determined that this adjustment was not material to any of the periods impacted. | |
Other service revenues | Tower leases out of period adjustment | ||
Leases | ||
Out-of-period adjustment | $ 5 | $ 5 |
Leases - Maturities of Expected Lease Revenues (Details) $ in Millions |
Sep. 30, 2019
USD ($)
|
---|---|
Leases [Abstract] | |
Remainder of 2019 | $ 11 |
2020 | 60 |
2021 | 48 |
2022 | 36 |
2023 | 23 |
Thereafter | 12 |
Total future lease maturities | $ 190 |
Leases - Minimum Lease Obligations (Details) $ in Millions |
Dec. 31, 2018
USD ($)
|
---|---|
Operating Leases Future Minimum Rental Payments | |
2019 | $ 154 |
2020 | 143 |
2021 | 128 |
2022 | 112 |
2023 | 97 |
Thereafter | 769 |
Total | 1,403 |
Operating Leases Future Minimum Rental Receipts | |
2019 | 58 |
2020 | 47 |
2021 | 34 |
2022 | 22 |
2023 | 10 |
Thereafter | 3 |
Total | $ 174 |
Commitments and Contingencies (Details) |
9 Months Ended |
---|---|
Sep. 30, 2019
USD ($)
| |
Amdocs Tethys Limited | |
Purchase Commitments | |
Purchase commitment | $ 241 |
Variable Interest Entities - Consolidataed Balance Sheet (Details) - USD ($) $ in Millions |
Sep. 30, 2019 |
Jan. 01, 2019 |
Dec. 31, 2018 |
---|---|---|---|
Assets | |||
Cash and cash equivalents | $ 570 | $ 580 | |
Short-term investments | 0 | 17 | |
Accounts receivable | 899 | 908 | |
Inventory, net | 139 | 142 | |
Other current assets | 19 | 34 | |
Assets held for sale | 9 | 54 | |
Licenses | 2,461 | 2,186 | |
Property, plant and equipment, net | 2,144 | 2,202 | |
Operating lease right-of-use assets | 897 | $ 899 | 0 |
Other assets and deferred charges | 539 | 567 | 579 |
Liabilities | |||
Current liabilities | 849 | 691 | |
Liabilities held for sale | 1 | 1 | |
Long-term operating lease liabilities | 864 | $ 878 | 0 |
Consolidated Variable Interest Entities | |||
Assets | |||
Cash and cash equivalents | 29 | 9 | |
Short-term investments | 0 | 17 | |
Accounts receivable | 625 | 611 | |
Inventory, net | 4 | 5 | |
Other current assets | 6 | 6 | |
Assets held for sale | 0 | 4 | |
Licenses | 649 | 652 | |
Property, plant and equipment, net | 95 | 94 | |
Operating lease right-of-use assets | 42 | 0 | |
Other assets and deferred charges | 329 | 349 | |
Total assets | 1,779 | 1,747 | |
Liabilities | |||
Current liabilities | 34 | 34 | |
Liabilities held for sale | 0 | 1 | |
Long-term operating lease liabilities | 38 | 0 | |
Other deferred liabilities and credits | 13 | 16 | |
Total liabilities | $ 85 | $ 51 |
Variable Interest Entities - Narrative (Details) - USD ($) $ in Millions |
9 Months Ended | ||
---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Dec. 31, 2018 |
|
Variable Interest Entity [Line Items] | |||
Investments in unconsolidated entities, maximum exposure | $ 5 | $ 4 | |
Capital contributions, loans or advances | $ 229 | $ 92 | |
King Street Wireless out-of-period adjustment | |||
Variable Interest Entity [Line Items] | |||
Immaterial error correction | During the first quarter of 2018, U.S. Cellular recorded an out-of-period adjustment attributable to 2016 and 2017 due to errors in the application of accounting guidance applicable to the calculation of Noncontrolling interests with redemption features related to King Street Wireless, Inc. This out-of-period adjustment had the impact of increasing Net income attributable to noncontrolling interests, net of tax, by $8 million and decreasing Net income attributable to U.S. Cellular shareholders by $8 million for the nine months ended September 30, 2018. U.S. Cellular determined that this adjustment was not material to any of the periods impacted. | ||
Net income attributable to noncontrolling interests, net of tax | King Street Wireless out-of-period adjustment | |||
Variable Interest Entity [Line Items] | |||
Out-of-period adjustment | 8 | ||
Net income attributable to U.S. Cellular shareholders | King Street Wireless out-of-period adjustment | |||
Variable Interest Entity [Line Items] | |||
Out-of-period adjustment | (8) | ||
USCC EIP LLC | |||
Variable Interest Entity [Line Items] | |||
Capital contributions, loans or advances | $ 199 | $ 66 |