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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A-1
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1993
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-9712
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UNITED STATES CELLULAR CORPORATION
(Exact name of Registrant as specified in its charter)
______________________________________________________________
Delaware 62-1147325
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State or other jurisdiction(IRS Employer Identification No.)
of incorporation or organization)
8410 West Bryn Mawr, Suite 700, Chicago, Illinois 60631
(Address of principal executive offices) (Zip code)
Registrant's Telephone Number: (312) 399-8900
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
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Common Shares, $1 par value American Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
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Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- -----
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained
herein, and will not be contained, to the best of registrant's
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. X
---
As of March 7, 1994, the aggregate market value of
registrant's Common Shares held by nonaffiliates was
approximately $396.6 million (based upon the closing price of
the Common Shares on March 7, 1994, of $27.625, as reported by
the American Stock Exchange).
The number of shares outstanding of each of the
registrant's classes of common stock, as of March 7, 1994, is
43,739,215 Common Shares, $1 par value, and 33,005,877
Series A Common Shares, $1 par value.
DOCUMENT INCORPORATED BY REFERENCE
Those sections or portions of the registrant's 1993 Annual
Report to Shareholders and of the registrant's Notice of
Annual Meeting of Shareholders and Proxy Statement for its
Annual Meeting of Shareholders to be held May 5, 1994,
described in the cross reference sheet and table of contents
attached hereto are incorporated by reference into Parts II
and III of this report.
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United States Cellular Corporation
----------------------------------
Amendment No. 1
The undersigned registrant hereby amends the following
items in its Annual Report on Form 10-K for the fiscal year
ended December 31, 1993, as set forth in the pages submitted
herewith:
1. Report of Independent Public Accountants.
2. Note 3 of United States Cellular Corporation and
Subsidiaries Notes to Consolidated Financial
Statements.
3. Report of Independent Public Accountants on Financial
Statement Schedules.
4. Compilation Report of Independent Public Accountants on
Combined Financial Statements.
5. Reports of Other Independent Accountants - Report of
Coopers & Lybrand L.L.P. to the Partners of Los Angeles
SMSA Limited Partnership.
6. Note 7 of Los Angeles SMSA Limited Partnership,
Nashville/Clarksville MSA Limited Partnership and Baton
Rouge MSA Limited Partnership Notes to Unaudited
Combined Financial Statements.
7. Exhibit 23.1 Consent of Independent Public Accountants.
8. Exhibit 23.2 Consent of Independent Accountants
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this amendment to be
signed on its behalf by the undersigned, thereunto duly
authorized.
United States Cellular Corporation
(Registrant)
Date: November 7, 1994 By: /s/ KENNETH R. MEYERS
--------------------------
Kenneth R. Meyers
Vice President-Finance and Treasurer
(Chief Financial Officer)
2
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Report of Independent Public Accountants
To the Shareholders and Board of Directors of United States
Cellular Corporation:
We have audited the accompanying consolidated balance sheets
of United States Cellular Corporation (a Delaware corporation
and an 85.1%-owned subsidiary of Telephone and Data Systems,
Inc.) and Subsidiaries as of December 31, 1993 and 1992, and
the related consolidated statements of operations, changes in
common shareholders' equity and cash flows for each of the
three years in the period ended December 31, 1993. These
consolidated financial statements are the responsibility of
the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on
our audits. We did not audit the financial statements of the
Los Angeles SMSA, Baton Rouge MSA and Nashville/Clarksville
MSA limited partnerships. The Company's investment in these
partnerships is reflected in the accompanying financial
statements using the equity method of accounting. The
investment in these limited partnerships represented
$38,447,000 and $33,209,000 (or 3.1% and 3.9%) of total
consolidated assets at December 31, 1993 and 1992
respectively, and the equity in their income represents
$15,364,000, $10,436,000 and $6,242,000 for the years ended
December 31, 1993, 1992 and 1991, respectively, and is
included in the consolidated net (loss) income. The
summarized financial information contained in Note 3 of the
Notes to Consolidated Financial Statements includes financial
information for the aforementioned partnerships. The
financial statements of those limited partnerships were
audited by other auditors whose reports have been furnished to
us and our opinion, insofar as it relates to the amounts
included for those limited partnerships, is based solely on
the reports of the other auditors.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting
principles used and significant estimates made by management,
as well as evaluating the overall financial statement
presentation. We believe that our audits and the reports of
other auditors provide a reasonable basis for our opinion.
In our opinion, based on our audits and the reports of other
auditors, the financial statements referred to above present
fairly, in all material respects, the financial position of
United States Cellular Corporation and Subsidiaries as of
December 31, 1993 and 1992, and the results of their
operations and their cash flows for each of the three years in
the period ended December 31, 1993, in conformity with
generally accepted accounting principles.
As discussed in "Change in Accounting Principle" in Note 1 of
the Notes to Consolidated Financial Statements, the method of
accounting for cellular sales commissions was changed
effective January 1, 1991. As discussed in Note 10 of the
Notes to Consolidated Financial Statements, the method of
accounting for income taxes was changed effective January 1,
1993.
The report of other auditors on the Los Angeles SMSA Limited
Partnership referred to above includes explanatory paragraphs
relating to uncertainties as discussed in Note 3 of the Notes
to Consolidated Financial Statements. The ultimate outcome of
these actions are uncertain at this time. Accordingly, no
accrual for these matters has been made in the consolidated
financial statements.
As discussed in Note 15 of the Notes to the Consolidated
Financial Statements, the Company is a defendant in a lawsuit
involving a joint venture opportunity, a shareholders'
agreement and other related matters. The ultimate outcome
from the litigation cannot presently be determined.
Accordingly, no provision for any liability which may result
has been made in the consolidated financial statements.
Arthur Andersen LLP
Chicago, Illinois
February 7, 1994 (except with respect to the matters discussed
in the fifth, seventh and eighth paragraphs of Note 3, as to
which the date is October 17, 1994.)
3
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Note 3 Investments in Cellular Partnerships
Investments in cellular partnerships consist of amounts
invested in cellular entities in which USM holds a minority or
noncontrolling interest. Investments in cellular partnerships
consist of long-term investments and investments held for sale
or exchange, as follows:
December 31,
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1993 1992
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(Dollars in thousands)
Long-term investments:
Capital contributions, loans and
advances $66,515 $67,941
Cumulative share of partnership
income 52,296 32,994
Cumulative share of partnership
distributions (41,633) (29,934)
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77,178 71,001
Investments Held for Sale or Exchange:
Capital contributions, net of partnership
distributions 12,926 15,405
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Total investment in nonconsolidated
partnerships $90,104 $ 86,406
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USM follows the equity method of accounting for its long-term
investments which recognizes, on a current basis, USM's
proportionate share of the incomes and losses accruing to it
under the terms of its partnership and shareholder agreements.
The equity method is followed for minority interests in
markets that are managed by USM and for certain markets
managed by others.
USM follows the cost method of accounting for its investments
in markets held for sale or exchange, and such investments are
recorded at the lower of cost or market value. It is not
practicable to estimate the fair value of USM's investments in
cellular partnerships held for sale or exchange due to the
lack of quoted market prices and the inability to estimate
fair values without incurring excessive costs. The $12.9
million carrying amount at December 31, 1993, represents
primarily the original cost of the investments, which
management believes is not impaired. USM's unaudited
proportionate share of the incomes or (losses) of cellular
investments accounted for under the cost method and therefore
not included in the Consolidated Statements of Operations were
approximately $838,000, $302,000 and ($354,000) of the years
December 31, 1993, 1992 and 1991, respectively. USM's
proportionate share of all such incomes or (losses) since the
inception of operations or acquisition was ($2.1 million) at
December 31, 1993.
4
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Note 3 Investments in Cellular Partnerships - (Continued)
The following summarizes the unaudited assets, liabilities and
partners' capital, and the results of operations of the
cellular system partnerships in which USM's investments are
accounted for by the equity method.
December 31,
-------------------------
1993 1992
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(Dollars in thousands)
Assets
Current $134,289 $102,644
Due from affiliates 34,156 18,949
Property and other 453,150 419,492
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$621,595 $541,085
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Liabilities and Partners' capital
Current liabilities $110,960 $ 80,776
Due to affiliates 34,363 37,251
Deferred credits 1,296 226
Long-term debt 4,462 20,063
Partner's capital 470,514 402,769
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$621,595 $541,085
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Year Ended December 31,
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1993 1992 1991
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(Dollars in thousands)
Results of Operations
Revenues $ 703,601 $537,813 $447,692
Costs and expenses 518,142 399,409 307,532
Other income (expense) (14,246) (2,531) 1,352
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Net income before cumulative effect of
accounting changes 171,213 135,873 141,512
Cumulative effect of accounting changes 110 (1,495) (4,658)
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Net Income $ 171,323 $134,378 $136,854
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The Los Angeles SMSA Limited Partnership (the"Partnership")
has been named in three separate complaints served by agents
of the competing carrier of the Partnership against the
competitor. The general allegations include violations of
California Unfair Practices Act and price fixing.
On November 24, 1993, a class action suit was filed against
the Partnership and another cellular carrier alleging
conspiracy to fix the price of cellular service in violation
of state and federal antitrust laws. The plaintiffs are
seeking substantial monetary damages and injunctive relief in
excess of $100 million.
On July 18, 1994, the Partnership was served with a class
action suit on behalf of the Partnership's contract Agents and
Dealers. The complaint alleges "predatory practices" and
seeks damages in excess of $1.6 million per agent and dealer,
plus statutory treble damages.
On October 17, 1994, a class action suit was filed against the
Partnership. The suit alleges a conspiracy with a competing
carrier to fix the prices of cellular service in violation of
federal antitrust laws. The plaintiffs are seeking damages
for the class of an unspecified sum.
The ultimate outcome of these actions is uncertain at this
time. Accordingly, no accrual for these matters has been
made.
5
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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULES
To the Shareholders and Board of Directors of
UNITED STATES CELLULAR CORPORATION:
We have audited in accordance with generally accepted
auditing standards, the consolidated financial statements
included in United States Cellular Corporation and
Subsidiaries Annual Report to Shareholders incorporated by
reference in this Form 10-K, and have issued our report
thereon dated February 7, 1994 (except with respect to the
matters discussed in the fifth, seventh and eighth paragraphs
of Note 3 of the Notes to Consolidated Financial Statements,
as to which the date is October 17, 1994). Our report on the
consolidated financial statements includes explanatory
paragraphs with respect to the change in the method of
accounting for cellular sales commissions and with respect to
the change in the method of accounting for income taxes as
discussed in Note 1 and Note 10, respectively, of the Notes to
Consolidated Financial Statements and the uncertainties
discussed in Note 3 of the Notes to Consolidated Financial
Statements; and an explanatory paragraph calling attention to
certain litigation as discussed in Note 15 of the Notes to
Consolidated Financial Statements.
Our audits were made for the purpose of forming an opinion
on those financial statements taken as a whole. The financial
statement schedules listed in Item 14(a)(2) are the
responsibility of the Company's management and are presented
for purposes of complying with the Securities and Exchange
Commission's rules and are not part of the basic financial
statements. These financial statement schedules have been
subjected to the auditing procedures applied in the audits of
the basic financial statements and, in our opinion, fairly
state in all material respects the financial data required to
be set forth therein in relation to the basic financial
statements taken as a whole.
ARTHUR ANDERSEN LLP
Chicago, Illinois
February 7, 1994 (except with respect to the matters discussed
in the fifth, seventh and eighth paragraphs of Note 3 of the
Notes to Consolidated Financial Statements, as to which the
date is October 17, 1994)
6
<PAGE>
COMPILATION REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Board of Directors of
UNITED STATES CELLULAR CORPORATION:
The accompanying combined balance sheets of the Los Angeles
SMSA Limited Partnership, the Nashville/Clarksville MSA
Limited Partnership and the Baton Rouge MSA Limited
Partnership as of December 31, 1993 and 1992 and the related
combined statements of operations, changes in partners'
capital, and cash flows for each of the three years in the
period ended December 31, 1993, have been prepared from the
separate financial statements, which are not presented
separately herein, of the Los Angeles SMSA,
Nashville/Clarksville MSA and Baton Rouge MSA limited
partnerships, as described in Note 1. We have reviewed for
compilation only the accompanying combined financial
statements, and, in our opinion, those statements have been
properly compiled from the amounts and notes of the underlying
separate financial statements of the Los Angeles SMSA,
Nashville/Clarksville MSA and Baton Rouge MSA limited
partnerships, on the basis described in Note 1.
The statements for the Los Angeles SMSA,
Nashville/Clarksville MSA and Baton Rouge MSA limited
partnerships were audited by other auditors as set forth in
their reports included on pages 40 through 43. The report of
the other auditors of the Los Angeles SMSA Limited Partnership
contains explanatory paragraphs with respect to the
uncertainties discussed in the third, fourth, fifth and sixth
paragraphs of Note 7. We have not been engaged to audit either
the separate financial statements of the aforementioned
limited partnerships or the related combined financial
statements in accordance with generally accepted auditing
standards and to render an opinion as to the fair presentation
of such financial statements in accordance with generally
accepted accounting principles.
As discussed in "Change in Accounting Principle" in Note 2,
the method of accounting for cellular sales commissions was
changed effective January 1, 1991, for the
Nashville/Clarksville MSA Limited Partnership and the Baton
Rouge MSA Limited Partnership.
ARTHUR ANDERSEN LLP
Chicago, Illinois
February 11, 1994 (except with respect to the matters
discussed in the third, fifth and sixth paragraphs of Note 7,
as to which the date is October 17, 1994.)
7
<PAGE>
REPORTS OF OTHER INDEPENDENT ACCOUNTANTS
To The Partners of
LOS ANGELES SMSA LIMITED PARTNERSHIP:
We have audited the balance sheets of Los Angeles SMSA
Limited Partnership as of December 31, 1993 and 1992, and the
related statements of operations, partners' capital and cash
flows for each of the three years in the period ended
December 31, 1993; such financial statements are not included
separately herein. These financial statements are the
responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that we
plan and perform an audit to obtain reasonable assurance about
whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial
position of Los Angeles SMSA Limited Partnership as of
December 31, 1993 and 1992, and results of its operations and
its cash flows for each of the three years in the period ended
December 31, 1993 in conformity with generally accepted
accounting principles.
As discussed in Note 9 to the financial statements, the
Partnership has been named in three separate complaints served
by cellular agents. The outcome of these matters is uncertain
and, accordingly, no accrual for these matters has been made
in the financial statements.
In addition, as discussed in Note 9, three class action
suits were filed against the Partnership alleging violations
of state and federal antitrust laws. The outcome of these
matters is uncertain and, accordingly, no accrual for these
matters has been made in the financial statements.
COOPERS & LYBRAND L.L.P
Newport Beach, California
February 4, 1994, except for the information presented in
paragraphs three, five and six of Note 9, as to which the date
is October 17, 1994.
8
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LOS ANGELES SMSA LIMITED PARTNERSHIP
NASHVILLE/CLARKSVILLE MSA LIMITED PARTNERSHIP
BATON ROUGE MSA LIMITED PARTNERSHIP
NOTES TO UNAUDITED COMBINED FINANCIAL STATEMENTS
7. Contingencies and Commitments:
On June 28, 1993, an applicant for an unserved area license
in the Los Angeles market filed an informal objection with the
FCC to one of the Partnerships' System Information Update map.
The applicant claims the Partnership was not legally
authorized to provide service in parts of its described
service area. The applicant requests that the FCC correct the
Partnership's service area to eliminate such areas and
suggests the FCC impose "such sanctions as it deems
appropriate." The Partnership filed a response with the FCC
in which it reported that, in its review of the applicant's
allegations, it found certain errors that were made in its
filings but disputed any of these were intentional. The FCC
could assess penalties against the Partnership for
nonconformance with its license. The outcome of this matter
remains uncertain and, accordingly, the Partnership has not
recorded an accrual. The Partnership intends to defend its
position vigorously.
The Partnership filed for its 10-year license renewal for
the Los Angeles market on August 30, 1993. The Partnership is
currently operating with FCC authority while the renewal
application is pending resolution of the FCC's decision on
claims mentioned above. The Partnership fully expects that
its license will be renewed.
One of the Partnerships has been named in three separate
complaints served by agents of the competing carrier of the
Partnership against the competitor. The general allegations
include violations of California Unfair Practices Act and
price fixing. The ultimate outcome of these actions is
uncertain at this time. Accordingly, no accrual for these
contingencies has been made. The Partnership intends to defend
its position vigorously.
On November 24, 1993, a class action suit was filed against
one of the Partnerships and another cellular carrier alleging
conspiracy to fix the price of cellular service in violation
of state and federal antitrust laws. The plaintiffs are
seeking substantial monetary damages and injunctive relief in
excess of $100 million. The outcome of this matter is
uncertain and, accordingly, the Partnership has not recorded
an accrual. The Partnership intends to defend its position
vigorously.
On July 18, 1994, one of the Partnerships was served with a
class action suit on behalf of the Partnership's contract
Agents and Dealers. The complaint alleges "predatory
practices" and seeks damages in excess of $1.6 million per
agent and dealer, plus statutory treble damages. The outcome
of this matter is uncertain and, accordingly, the Partnership
has not recorded an accrual. The Partnership intends to
defend its position vigorously.
On October 17, 1994, a class action suit was filed against
one of the Partnerships. The suit alleges a conspiracy with a
competing carrier to fix the prices of cellular service in
violation of federal antitrust laws. The plaintiffs are
seeking damages for the class of an unspecified sum. The
outcome of this matter is uncertain and, accordingly, the
Partnership has not recorded an accrual. The Partnership
intends to defend its position vigorously.
One of the Partnerships is a party to various other
lawsuits arising in the ordinary course of business. In the
opinion of management, based on a review of such litigation
with legal counsel, any losses resulting from these actions
are not expected to materially impact the financial condition
of the Partnership.
Two of the Partnerships provide cellular service and sell
cellular telephones to diversified groups of consumers within
concentrated geographical areas. The general partner performs
credit evaluations of the Partnerships' customers and
generally does not require collateral. Receivables are
generally due within 30 days. Credit losses related to
customers have been within management's expectations.
9
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LOS ANGELES SMSA LIMITED PARTNERSHIP
NASHVILLE/CLARKSVILLE MSA LIMITED PARTNERSHIP
BATON ROUGE MSA LIMITED PARTNERSHIP
NOTES TO UNAUDITED COMBINED FINANCIAL STATEMENTS - (Continued)
One of the Partnerships purchases substantially all of its
equipment from one supplier.
The General Partner of two of the Partnerships entered into
agreements with an equipment vendor on behalf of the
Partnerships to replace the Partnerships' cellular equipment
with new cellular technology which will support both analog
and digital voice transmissions.
10
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Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to
the incorporation by reference in this Form 10-K, of United
States Cellular Corporation of our report dated February 7,
1994 (except with respect to the matters discussed in the
fifth, seventh and eighth paragraphs of Note 3, as to which
the date is October 17, 1994), on the consolidated financial
statements of United States Cellular Corporation and
Subsidiaries (the "Company") included in the Company's 1993
Annual Report to Shareholders, to the inclusion in this Form
10-K, of our report dated February 7, 1994 (except with
respect to the matters discussed in the fifth, seventh and
eighth paragraphs of Note 3, as to which the date is October
17, 1994), on the financial statement schedules of the
Company, and to the inclusion of our compilation report dated
February 11, 1994 (except with respect to the matters
discussed in the third, fifth and sixth paragraphs of Note 7,
as to which the date is October 17, 1994), on the combined
financial statements of the Los Angeles SMSA Limited
Partnership, the Nashville/Clarksville MSA Limited Partnership
and the Baton Rouge MSA Limited Partnership, and to the
incorporation of such reports into the Company's previously
filed S-4 Registration Statement, File No. 33-41826, and into
the Company's previously filed S-8 Registration Statements,
File No. 33-30327, File No. 33-38129, File No. 33-42558, and
File No. 33-53940.
ARTHUR ANDERSEN LLP
Chicago, Illinois
November 2, 1994
<PAGE>
Exhibit 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the inclusion in this Form 10-K/A-1,
of United States Cellular Corporation of our report, which
includes explanatory paragraphs relating to contigencies,
dated February 4, 1994, except for the information presented
in paragraphs three, five and six of Note 9, as to which the
date is October 17, 1994, on our audits of the financial
statements of the Los Angeles SMSA Limited Partnership as of
December 31, 1993 and 1992, and for each of the three years in
the period ended December 31, 1993; such financial statements
are not included separately in this Form 10-K/A-1.
COOPERS & LYBRAND L.L.P.
Newport Beach, California
November 2, 1994
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the inclusion in this Form 10-K, of
United States Cellular Corporation of our reports dated
February 11, 1994, February 11, 1993 and February 10, 1992,
respectively, on our audits of the financial statements of the
Nashville/Clarksville MSA Limited Partnership as of December
31, 1993, 1992 and 1991, and for the years ended December 31,
1993, 1992 and 1991; such financial statements are not
included separately in this Form 10-K.
COOPERS & LYBRAND L.L.P.
Atlanta, Georgia
November 2, 1994
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the inclusion in this Form 10-K, of
United States Cellular Corporation of our reports dated
February 11, 1994, February 11, 1993 and February 11, 1992,
respectively, on our audits of the financial statements of the
Baton Rouge MSA Limited Partnership as of December 31, 1993,
1992 and 1991, and for the years ended December 31, 1993, 1992
and 1991; such financial statements are not included
separately in this Form 10-K.
COOPERS & LYBRAND L.L.P.
Atlanta, Georgia
November 2, 1994
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