EX-99.1 2 a06-12547_1ex99d1.htm EX-99

 

Exhibit 99.1

Contact:                           Kenneth R. Meyers, Executive Vice President, Finance, U.S. Cellular
(773) 399-8900  kmeyers@uscellular.com

Mark A. Steinkrauss, Vice President, Corporate Relations, TDS
(312) 592-5384  mark.steinkrauss@teldta.com

FOR RELEASE: IMMEDIATE

U.S. CELLULAR REPORTS FOURTH QUARTER 2005 RESULTS;

UPDATES 2006 GUIDANCE

CHICAGO — July 28, 2006 - United States Cellular Corporation [AMEX:USM] reported service revenues of $738.7 million for the fourth quarter of 2005, up 11 percent from $663 million, as restated, for the comparable period one year ago. The company recorded operating income of $71.6 million during the quarter, up 86 percent compared to $38.4 million for the fourth quarter of 2004, as restated. Net income and basic earnings per share were $42.5 million and $0.49, respectively, compared to net income and basic earnings per share of $38.1 million and $0.44, respectively, as restated, for the comparable period one year ago.

On Dec. 19, 2005, U.S. Cellular completed an exchange of wireless assets with ALLTEL Communications, Inc. Under the agreement, U.S. Cellular received 146,000 total customers in Kansas and Nebraska while ALLTEL received 92,000 total customers in Idaho and $58.1 million in cash, including a preliminary working capital adjustment. In addition to customers, both companies received 850 MHz spectrum, cell sites, retail stores and agents.  U.S. Cellular recorded a fourth quarter 2005 pre-tax gain of $44.7 million on the exchange.

 In the fourth quarter of 2004, U.S. Cellular recorded a “Gain on sales of assets,” included in operating income, of $10.1 million related to the sale of two operating markets to ALLTEL.

Fourth Quarter Highlights

•                    Total U.S. Cellular customers increased 11 percent year over year to 5,482,000 customers while retail customers increased 10 percent to 4,927,000.

•                    U.S. Cellular recorded a postpay churn rate of 1.6 percent in the fourth quarter. For the full year 2005, U.S. Cellular’s postpay churn rate was 1.5 percent. 2005 marks the tenth consecutive year that U.S. Cellular’s postpay churn rate has remained below 2 percent.

U.S. Cellular filed its Annual Report (Form 10-K) for the year ended December 31, 2005, with the Securities and Exchange Commission earlier today.



 

On Nov. 10, 2005, U.S. Cellular announced that it would restate financial results for several prior periods. U.S. Cellular completed and filed its restatement on April 26, 2006.  The time spent completing the restatement caused the company to be late with its other SEC filings. 

U.S. Cellular has not filed its Form 10-Q for the quarter ended March 31, 2006 on a timely basis.  As a result, U.S. Cellular is not in compliance with American Stock Exchange (AMEX) listing standards.  U.S. Cellular has been granted an extension until Nov. 14, 2006 to regain compliance with AMEX listing standards resulting from delayed filings with the SEC and delayed distribution of its 2005 annual report to shareholders.

In addition, U.S. Cellular has received extended waivers from its lenders under credit agreements and from counterparties under certain forward contracts provided that that it files its Forms 10-K for the year ended Dec. 31, 2005 by Aug. 31, 2006, its Forms 10-Q for the quarter ended March 31, 2006 within 30 days of filing the 2005 Form 10-K, and its Forms 10-Q for the quarter ended June 30, 2006 within 45 days of filing the first quarter Form 10-Q. U.S. Cellular expects to file its Forms 10-Q for the quarter ended Sept. 30, 2006 on or before the extended due date of Nov. 14, 2006.

Certain financial and statistical information will be posted to the U.S. Cellular Web site, together with reconciliations to generally accepted accounting principles (GAAP) of certain non-GAAP disclosures.  Investors may access this additional information on the Investor Relations- Financial Information – Guidance & Reconciliations page of the U.S. Cellular Web site.

U.S. Cellular updated its 2006 guidance as of July 28, 2006 and it is as follows.  There can be no assurance that final results will not differ materially from this guidance.

 

Net Retail Customer Additions

 

370,000 – 400,000

Service Revenues

 

Approx. $3.2 billion

Operating Income

 

$250 – 300 million

Depreciation, Amortization & Accretion

 

$585 million

Capital Expenditures

 

$580 - $610 million

 

About U.S. Cellular

As of Dec. 31, 2005, U.S. Cellular Corporation, the nation's sixth-largest wireless service carrier, provided wireless service to 5.5 million customers in 26 states.  The Chicago-based company operates on a customer satisfaction strategy, meeting customer needs by providing a comprehensive range of wireless products and services, superior customer support and a high-quality network.

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995: All information set forth in this news release, except historical and factual information, represents forward-looking statements. This includes all statements about the company’s plans, beliefs, estimates and expectations. These statements are based on current estimates and projections, which involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Important factors that may affect these forward-looking statements include, but are not limited to:  The ability of the company to successfully manage and grow the operations of the Chicago MTA and newly launched markets; changes in competition in the markets in which the company operates; changes in the overall economy; changes due to industry consolidation; advances in telecommunications technology; changes in the telecommunications regulatory environment; changes in the value of investments, including variable prepaid forward contracts; an adverse change in the ratings afforded our debt securities by accredited ratings organizations; possible future restatements; pending and future litigation; acquisitions/divestitures of properties and/or licenses; and changes in customer growth rates,  average monthly revenue per unit, churn rates, roaming rates and the mix of products and services offered in the company’s markets. Investors are encouraged to consider these and other risks and uncertainties that are discussed in the Form 8-K used by U.S. Cellular to furnish this press release to the SEC, which are incorporated by reference herein.

For more information about U.S. Cellular, visit: www.uscellular.com.

 

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2



 

UNITED STATES CELLULAR CORPORATION

SUMMARY OPERATING DATA

 

Quarter Ended

 

12/31/2005

 

9/30/2005

 

6/30/2005

 

3/31/2005

 

12/31/2004

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated Markets:

 

 

 

 

 

 

 

 

 

 

 

Total population (000s) (1)

 

45,244

 

44,690

 

44,690

 

44,576

 

44,391

 

All customers -

 

 

 

 

 

 

 

 

 

 

 

Customer units

 

5,482,000

 

5,303,000

 

5,227,000

 

5,127,000

 

4,945,000

 

Gross customer unit activations

 

419,000

 

355,000

 

340,000

 

426,000

 

408,000

 

Net customer unit activations

 

125,000

 

76,000

 

94,000

 

182,000

 

150,000

 

Market penetration (1)

 

12.12

%

11.87

%

11.70

%

11.50

%

11.14

%

Retail customers -

 

 

 

 

 

 

 

 

 

 

 

Customer units

 

4,927,000

 

4,765,000

 

4,688,000

 

4,601,000

 

4,478,000

 

Gross customer unit activations

 

392,000

 

346,000

 

317,000

 

365,000

 

358,000

 

Net customer unit activations

 

130,000

 

77,000

 

81,000

 

123,000

 

105,000

 

 

 

 

 

 

 

 

 

 

 

 

 

Cell sites in service

 

5,428

 

5,149

 

5,034

 

4,899

 

4,856

 

Average monthly revenue per unit (2)

 

$

45.94

 

$

46.19

 

$

44.52

 

$

44.46

 

$

45.41

 

Retail service revenue per unit (2)

 

$

40.19

 

$

40.25

 

$

39.40

 

$

39.20

 

$

39.93

 

Inbound roaming revenue per unit (2)

 

$

2.31

 

$

2.70

 

$

2.27

 

$

1.98

 

$

2.38

 

Long-distance/other revenue per unit (2)

 

$

3.44

 

$

3.24

 

$

2.85

 

$

3.28

 

$

3.10

 

Minutes of use (MOU) (3)

 

648

 

639

 

627

 

584

 

568

 

Postpay churn rate per month (4)

 

1.6

%

1.5

%

1.4

%

1.5

%

1.6

%

Marketing cost per gross customer unit addition (5)

 

$

498

 

$

491

 

$

461

 

$

396

 

$

440

 

Construction Expenditures (000s)

 

$

201,700

 

$

128,300

 

$

143,800

 

$

112,800

 

$

261,500

 

(1)             Market penetration is calculated using 2004 Claritas population estimates for all periods of 2005 and 2003 Claritas estimates for all periods of 2004. “Total population” represents the total population of each of U.S. Cellular’s consolidated markets, regardless of whether the market has begun marketing operations. The 12/31/05, 9/30/05 and 6/30/05 total population counts include the population of the market acquired from Cingular Wireless in April 2005. The total population counts on and after 12/31/04 exclude the population of the two markets sold to ALLTEL in November 2004. The population of markets in which U.S. Cellular has deferred the transfer of licenses from AT&T Wireless (now Cingular Wireless) are not included in the total population counts for any period, nor are the population counts of markets for which Carroll Wireless, L.P., a consolidated U.S. Cellular subsidiary, was the winning bidder in the Federal Communications Commission’s Auction 58 that concluded in February 2005. The total population counts for 12/31/05 exclude the population of the two markets divested to ALLTEL in December 2005, and include the population of the 15 markets acquired in the same transaction.

(2)             Per unit revenue measurements are derived from Service Revenues as reported in Financial Highlights for each respective quarter as follows:

Service Revenues per Financial Highlights

 

$

738,682

 

$

729,504

 

$

691,746

 

$

671,639

 

$

662,955

 

Components:

 

 

 

 

 

 

 

 

 

 

 

Retail service revenue during quarter

 

$

646,178

 

$

635,610

 

$

612,159

 

$

592,167

 

$

582,950

 

Inbound roaming revenue during quarter

 

$

37,184

 

$

42,654

 

$

35,313

 

$

29,875

 

$

34,812

 

Long-distance/other revenue during quarter

 

$

55,320

 

$

51,240

 

$

44,274

 

$

49,597

 

$

45,193

 

 

 

 

 

 

 

 

 

 

 

 

 

Divided by average customers during quarter (000s)

 

5,360

 

5,264

 

5,179

 

5,035

 

4,866

 

Divided by three months in each quarter

 

3

 

3

 

3

 

3

 

3

 

 

 

 

 

 

 

 

 

 

 

 

 

Average monthly revenue per unit

 

$

45.94

 

$

46.19

 

$

44.52

 

$

44.46

 

$

45.41

 

Retail service revenue per unit

 

$

40.19

 

$

40.25

 

$

39.40

 

$

39.20

 

$

39.93

 

Inbound roaming revenue per unit

 

$

2.31

 

$

2.70

 

$

2.27

 

$

1.98

 

$

2.38

 

Long-distance/other revenue per unit

 

$

3.44

 

$

3.24

 

$

2.85

 

$

3.28

 

$

3.10

 

 

(3)             Average monthly local minutes of use per customer (without roaming).

(4)             Postpay churn rate per month is calculated by dividing the average monthly postpay customer disconnects during the quarter by the average postpay customer base for the quarter.

(5)             This measurement is not calculable using information from the financial statements as reported. The details of this calculation and a reconciliation to line items reported in Financial Highlights for each respective quarter are shown on U.S. Cellular’s web site, along with additional information related to U.S. Cellular’s fourth quarter results, at www.uscellular.com.

3



 

UNITED STATES CELLULAR CORPORATION
FINANCIAL HIGHLIGHTS
Three Months Ended December 31,
(Unaudited, dollars in thousands, except per share amounts)

 

 

 

 

 

2004

 

Increase (Decrease)

 

 

 

2005

 

(As Restated)

 

Amount

 

Percent

 

Operating Revenues

 

 

 

 

 

 

 

 

 

Service

 

$

738,682

 

$

662,955

 

$

75,727

 

11.4

%

Equipment sales

 

48,663

 

46,188

 

2,475

 

5.4

%

Total Operating Revenues

 

787,345

 

709,143

 

78,202

 

11.0

%

Operating Expenses

 

 

 

 

 

 

 

 

 

System operations (excluding depreciation shown below)

 

157,549

 

126,643

 

30,906

 

24.4

%

Cost of equipment sold

 

137,057

 

129,451

 

7,606

 

5.9

%

Selling, general and administrative

 

337,558

 

290,243

 

47,315

 

16.3

%

Depreciation, amortization and accretion

 

128,212

 

134,453

 

(6,241

)

(4.6

%)

(Gain) on sales of assets

 

(44,660

)

(10,081

)

(34,579

)

N/M

 

Total Operating Expenses

 

715,716

 

670,709

 

45,007

 

6.7

%

 

 

 

 

 

 

 

 

 

 

Operating Income

 

71,629

 

38,434

 

33,195

 

86.4

%

 

 

 

 

 

 

 

 

 

 

Investment and Other Income (Expense)

 

 

 

 

 

 

 

 

 

Investment income

 

18,424

 

15,675

 

2,749

 

17.5

%

Interest and dividend income

 

4,684

 

7,608

 

(2,924

)

(38.4

%)

Interest (expense)

 

(21,563

)

(21,304

)

(259

)

(1.2

%)

Gain (loss) on investments

 

(5,400

)

27,621

 

(33,021

)

N/M

 

Other (expense), net

 

337

 

203

 

134

 

66.0

%

 

 

(3,518

)

29,803

 

(33,321

)

(111.8

%)

Income Before Income Taxes and Minority Interest

 

68,111

 

68,237

 

(126

)

(0.2

%)

Income tax expense

 

22,959

 

27,341

 

(4,382

)

(16.0

%)

Income Before Minority Interest

 

45,152

 

40,896

 

4,256

 

10.4

%

Minority share of income

 

(2,666

)

(2,807

)

141

 

5.0

%

Net Income

 

$

42,486

 

$

38,089

 

$

4,397

 

11.5

%

 

 

 

 

 

 

 

 

 

 

Basic Weighted Average Common Shares Outstanding (000s)

 

87,073

 

86,344

 

729

 

0.8

%

Basic Earnings Per Share

 

$

0.49

 

$

0.44

 

0.05

 

11.4

%

 

 

 

 

 

 

 

 

 

 

Diluted Weighted Average Common Shares Outstanding (000s)

 

87,729

 

86,890

 

839

 

1.0

%

Diluted Earnings Per Share

 

$

0.48

 

$

0.44

 

$

0.04

 

9.1

%

 

4



 

UNITED STATES CELLULAR CORPORATION
FINANCIAL HIGHLIGHTS
Year Ended December 31,
(Unaudited, dollars in thousands, except per share amounts)

 

 

 

 

 

2004

 

Increase (Decrease)

 

 

 

2005

 

(As Restated)

 

Amount

 

Percent

 

Operating Revenues

 

 

 

 

 

 

 

 

 

Service

 

$

2,831,571

 

$

2,616,946

 

$

214,625

 

8.2

%

Equipment sales

 

204,316

 

191,255

 

13,061

 

6.8

%

Total Operating Revenues

 

3,035,887

 

2,808,201

 

227,686

 

8.1

%

Operating Expenses

 

 

 

 

 

 

 

 

 

System operations (excluding depreciation shown below)

 

602,360

 

562,690

 

39,670

 

7.1

%

Cost of equipment sold

 

511,939

 

486,605

 

25,334

 

5.2

%

Selling, general and administrative

 

1,212,874

 

1,088,181

 

124,693

 

11.5

%

Depreciation, amortization and accretion

 

509,072

 

498,202

 

10,870

 

2.2

%

(Gain) on sales of assets

 

(44,660

)

(10,806

)

(33,854

)

N/M

 

Total Operating Expenses

 

2,791,585

 

2,624,872

 

166,713

 

6.4

%

 

 

 

 

 

 

 

 

 

 

Operating Income

 

244,302

 

183,329

 

60,973

 

33.3

%

 

 

 

 

 

 

 

 

 

 

Investment and Other Income (Expense)

 

 

 

 

 

 

 

 

 

Investment income

 

68,433

 

63,758

 

4,675

 

7.3

%

Interest and dividend income

 

11,440

 

10,764

 

676

 

6.3

%

Interest (expense)

 

(84,867

)

(86,241

)

1,374

 

1.6

%

Gain (loss) on investments

 

(4,849

)

25,791

 

(30,640

)

(118.8

%)

Other (expense), net

 

(199

)

(2,576

)

2,377

 

92.3

%

 

 

(10,042

)

11,496

 

(21,538

)

(187.4

%)

Income Before Income Taxes and Minority Interest

 

234,260

 

194,825

 

39,435

 

20.2

%

Income tax expense

 

88,404

 

74,678

 

13,726

 

18.4

%

Income Before Minority Interest

 

145,856

 

120,147

 

25,709

 

21.4

%

Minority share of income

 

(11,108

)

(10,631

)

(477

)

(4.5

%)

Net Income

 

$

134,748

 

$

109,516

 

$

25,232

 

23.0

%

 

 

 

 

 

 

 

 

 

 

Basic Weighted Average Common Shares Outstanding (000s)

 

86,775

 

86,244

 

531

 

0.6

%

Basic Earnings Per Share

 

$

1.55

 

$

1.27

 

$

0.28

 

22.0

%

 

 

 

 

 

 

 

 

 

 

Diluted Weighted Average Common Shares Outstanding (000s)

 

87,464

 

86,736

 

728

 

0.8

%

Diluted Earnings Per Share

 

$

1.54

 

$

1.26

 

$

0.28

 

22.2

%

 

N/M - Percentage change not meaningful

5



 

UNITED STATES CELLULAR CORPORATION
CONSOLIDATED BALANCE SHEET HIGHLIGHTS
(Unaudited, dollars in thousands)

ASSETS

 

 

 

 

December 31, 2004

 

 

 

December 31, 2005

 

(As Restated)

 

Current Assets

 

 

 

 

 

Cash and cash equivalents

 

$

29,003

 

$

41,062

 

Accounts receivable from customers and other

 

367,510

 

316,436

 

Inventory

 

92,748

 

76,918

 

Prepaid expenses

 

31,026

 

31,764

 

Deferred income tax asset

 

8,218

 

73,216

 

Other current assets

 

15,145

 

24,951

 

 

 

543,650

 

564,347

 

 

 

 

 

 

 

Investments

 

 

 

 

 

Licenses

 

1,362,263

 

1,228,801

 

Goodwill

 

471,617

 

445,212

 

Customer lists

 

49,318

 

24,915

 

Marketable equity securities

 

225,387

 

282,829

 

Investments in unconsolidated entities

 

170,337

 

155,519

 

Notes and interest receivable—long-term

 

4,707

 

4,885

 

 

 

2,283,629

 

2,142,161

 

 

 

 

 

 

 

Property, Plant and Equipment

 

 

 

 

 

In service and under construction

 

4,653,292

 

4,133,471

 

Less accumulated depreciation

 

2,076,528

 

1,692,751

 

 

 

2,576,764

 

2,440,720

 

 

 

 

 

 

 

Other Assets and Deferred Charges

 

29,985

 

32,807

 

 

 

 

 

 

 

Total Assets

 

$

5,434,028

 

$

5,180,035

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

December 31, 2004

 

 

 

December 31, 2005

 

(As Restated)

 

Current Liabilities

 

 

 

 

 

Notes payable

 

$

135,000

 

$

30,000

 

Accounts payable

 

 

 

 

 

Affiliates

 

7,239

 

5,314

 

Trade

 

298,397

 

259,167

 

Customer deposits and deferred revenues

 

106,180

 

104,394

 

Accrued taxes

 

38,627

 

80,512

 

Accrued compensation

 

42,865

 

49,116

 

Other current liabilities

 

25,952

 

20,829

 

 

 

654,260

 

549,332

 

 

 

 

 

 

 

Long-term Debt

 

1,161,241

 

1,160,786

 

 

 

 

 

 

 

Deferred Liabilities and Credits

 

821,345

 

840,268

 

 

 

 

 

 

 

Minority Interest

 

46,442

 

40,052

 

 

 

 

 

 

 

Common Shareholders’ Equity

 

 

 

 

 

Common Shares, par value $1 per share

 

55,046

 

55,046

 

Series A Common Shares, par value $1 per share

 

33,006

 

33,006

 

Additional paid-in capital

 

1,286,964

 

1,305,249

 

Treasury Shares

 

(47,088

)

(99,627

)

Accumulated other comprehensive income

 

24,944

 

32,803

 

Retained earnings

 

1,397,868

 

1,263,120

 

 

 

2,750,740

 

2,589,597

 

 

 

 

 

 

 

Total Liabilities and Shareholders’ Equity

 

$

5,434,028

 

$

5,180,035

 

 

NOTE:  Certain December 31, 2004 amounts have been changed to conform to current period presentation.

6