EX-99.1 2 a07-13970_1ex99d1.htm EX-99.1

Exhibit 99.1

As previously announced, U.S. Cellular will hold a teleconference May 15, 2007, at 10:00 a.m. Chicago time.  Interested parties may listen to the call live over the Internet by accessing the conference call page of the Investor Relations section of www.teldta.com or www.uscc.com.

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

Julie D. Mathews, Manager, Investor Relations
(312) 592-5341 julie.mathews@teldta.com

FOR RELEASE:  IMMEDIATE

U.S. CELLULAR REPORTS STRONG FIRST QUARTER 2007 RESULTS;
OPERATING INCOME UP 55%

CHICAGO — May 15, 2007 - United States Cellular Corporation [AMEX:USM] reported service revenues of $860.6 million for the first quarter of 2007, up 12 percent from $769.2 million for the comparable period one year ago.  The company recorded operating income of $108.5 million during the quarter compared to $70.0 million for the first quarter of 2006.  Net income and diluted earnings per share were $74.4 million and $0.84, respectively, compared to net income and diluted earnings per share of $39.4 million and $0.45, respectively for the comparable period one year ago.

First Quarter Highlights

·                  The total number of customers increased 6 percent year over year to 5,973,000.  The number of retail customers increased 7 percent to 5,377,000.

·                  The company recorded a postpay churn rate of 1.5 percent.

·                  Average monthly revenue per unit (ARPU) increased 5 percent to $48.69.

·                  Service revenues grew 12 percent to $860.6 million.

·                  Data revenues grew 71 percent to $77.6 million, 9 percent of service revenues.

·                  Operating income grew 55 percent to $108.5 million.

·                  Cash flows from operating activities were $255.1 million.

“Our intense focus on the customer helped to drive strong retail net customer additions in the quarter of 146,000 and service revenue growth of 12 percent.  The growth in revenues coupled with effective management of costs in turn drove operating income growth of 55 percent and contributed to an impressive 89 percent increase in net income.  We are concentrating our efforts on growing our existing markets and improving profitability as well as integrating several properties acquired last year and early this year.  We have no plans to open any significant new markets this year or next,” said John E. Rooney, president and chief executive officer.

“To ensure that we have competitive product offerings, the company rolled out 27 new handsets in 2006 and simplified its calling plans into national, family and wide area calling plans.  Customer acceptance of




the new handsets and calling plans has been strong and contributed to the strong first quarter retail net additions.   The new plans, together with growth in vertical services and data revenues, led to higher ARPU.  This is the fifth consecutive quarter of improving ARPU.”

“U.S. Cellular continually assesses its wireless markets with the goal of strengthening its footprint.  During the quarter, U.S. Cellular purchased Iowa Rural Service Area 15, an existing market in northwest Iowa.  This market filled in a portion of Iowa that we did not serve thereby improving coverage in the Midwest.  In terms of strengthening the network, the company added 79 cell sites bringing the total number of cell sites to over 6,000.  We are confident that our broad coverage and quality network coupled with competitive product offerings and dedicated associates providing excellent customer service will lead to continued success during the year.”

As previously announced, U.S. Cellular will hold a teleconference May 15, 2007, at 10:00 a.m. Chicago time.   Interested parties may listen to the call live over the Internet by accessing http://audioevent.mshow.com/332130/ or the conference call page of the Investor Relations section of www.teldta.com or www.uscc.com.  You can also connect to the teleconference by telephone (US/Canada) at 800/706-9695 with a conference ID #5793984.  The conference call will be archived on the conference call section of the TDS web site at www.teldta.com or www.uscc.com.

Prior to the start of the call, certain financial and statistical information discussed during the conference call comments will be posted to the web site, together with reconciliations to generally accepted accounting principles (GAAP) of any non-GAAP information to be disclosed.  Investors may access this additional information on the conference call page of the Investor Relations section of the TDS web site.

About U.S. Cellular

As of March 31, 2007, U.S. Cellular Corporation, the nation’s sixth-largest wireless service carrier, employed 8,000 associates and provided wireless service to 6 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 assets; 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; risks and uncertainties relating to restatements and 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.

2




 

UNITED STATES CELLULAR CORPORATION
SUMMARY OPERATING DATA

Quarter Ended

 

3/31/2007

 

12/31/2006

 

9/30/2006

 

6/30/2006

 

3/31/2006

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated Markets:

 

 

 

 

 

 

 

 

 

 

 

Total population (000s) (1)

 

56,048

 

55,543

 

55,543

 

55,543

 

55,164

 

All customers -

 

 

 

 

 

 

 

 

 

 

 

Customer units

 

5,973,000

 

5,815,000

 

5,729,000

 

5,704,000

 

5,633,000

 

Gross customer unit activations

 

459,000

 

389,000

 

365,000

 

347,000

 

434,000

 

Net customer unit activations

 

152,000

 

86,000

 

25,000

 

48,000

 

151,000

 

Market penetration (1)

 

10.7

%

10.5

%

10.3

%

10.3

%

10.2

%

Retail customers -

 

 

 

 

 

 

 

 

 

 

 

Customer units

 

5,377,000

 

5,225,000

 

5,127,000

 

5,099,000

 

5,029,000

 

Gross customer unit activations

 

397,000

 

375,000

 

353,000

 

331,000

 

380,000

 

Net customer unit activations

 

146,000

 

98,000

 

28,000

 

49,000

 

122,000

 

 

 

 

 

 

 

 

 

 

 

 

 

Cell sites in service

 

6,004

 

5,925

 

5,726

 

5,583

 

5,438

 

Average monthly revenue per unit (2)

 

$

48.69

 

$

48.15

 

$

47.93

 

$

46.54

 

$

46.17

 

Retail service revenue per unit (2)

 

$

42.69

 

$

42.21

 

$

41.75

 

$

40.92

 

$

40.77

 

Inbound roaming revenue per unit (2)

 

$

2.33

 

$

2.34

 

$

2.55

 

$

2.28

 

$

2.12

 

Long-distance/other revenue per unit(2)

 

$

3.67

 

$

3.60

 

$

3.63

 

$

3.34

 

$

3.28

 

Minutes of use (MOU) (3)

 

783

 

749

 

725

 

719

 

658

 

Postpay churn rate per month (4)

 

1.5

%

1.5

%

1.6

%

1.5

%

1.5

%

Marketing cost per gross
customer unit addition (5)

 

$

426

 

$

511

 

$

496

 

$

503

 

$

412

 

Construction Expenditures (000s)

 

$

109,700

 

$

158,400

 

$

152,800

 

$

151,400

 

$

117,200

 


(1)             Market penetration is calculated using 2006 Claritas population estimates for all periods of 2007 and 2005 Claritas estimates for all periods of 2006.  Total population” represents the total population of each of U.S. Cellular’s consolidated markets, regardless of whether the market has begun marketing operations (without duplication of population in overlapping markets). The population of markets in which U.S. Cellular has deferred the transfer of licenses from AT&T Wireless Services, Inc. are not included in the total population counts for any period.

(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

 

$

860,583

 

$

831,663

 

$

821,820

 

$

791,705

 

$

769,222

 

Components:

 

 

 

 

 

 

 

 

 

 

 

Retail service revenue during quarter

 

$

754,515

 

$

729,072

 

$

715,896

 

$

696,079

 

$

679,256

 

Inbound roaming revenue during quarter

 

$

41,268

 

$

40,354

 

$

43,806

 

$

38,745

 

$

35,344

 

Long-distance/othe revenue during quarter

 

$

64,800

 

$

62,237

 

$

62,118

 

$

56,881

 

$

54,622

 

 

 

 

 

 

 

 

 

 

 

 

 

Divided by average customers during
quarter (000s)

 

5,892

 

5,757

 

5,716

 

5,670

 

5,554

 

Divided by three months in each quarter

 

3

 

3

 

3

 

3

 

3

 

 

 

 

 

 

 

 

 

 

 

 

 

Average monthly revenue per unit

 

$

48.69

 

$

48.15

 

$

47.93

 

$

46.54

 

$

46.17

 

Retail service revenue per unit

 

$

42.69

 

$

42.21

 

$

41.75

 

$

40.92

 

$

40.77

 

Inbound roaming revenue per unit

 

$

2.33

 

$

2.34

 

$

2.55

 

$

2.28

 

$

2.12

 

Long-disance/other revenue per unit

 

$

3.67

 

$

3.60

 

$

3.63

 

$

3.34

 

$

3.28

 


(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 first quarter results, at www.uscellular.com.

 

 

3




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

 

 

 

 

 

 

Increase (Decrease)

 

 

 

2007

 

2006

 

Amount

 

Percent

 

Operating Revenues

 

 

 

 

 

 

 

Service

 

$

860,583

 

$

769,222

 

$

91,361

 

11.9

%

Equipment sales

 

74,091

 

67,154

 

6,937

 

10.3

%

Total Operating Revenues

 

934,674

 

836,376

 

98,298

 

11.8

%

Operating Expenses

 

 

 

 

 

 

 

 

 

System operations (excluding depreciation shown below)

 

167,284

 

153,318

 

13,966

 

9.1

%

Cost of equipment sold

 

154,679

 

143,316

 

11,363

 

7.9

%

Selling, general and administrative

 

354,931

 

327,704

 

27,227

 

8.3

%

Depreciation, amortization and accretion

 

149,257

 

142,025

 

7,232

 

5.1

%

Total Operating Expenses

 

826,151

 

766,363

 

59,788

 

7.8

%

 

 

 

 

 

 

 

 

 

 

Operating Income

 

108,523

 

70,013

 

38,510

 

55.0

%

 

 

 

 

 

 

 

 

 

 

Investment and Other Income (Expense)

 

 

 

 

 

 

 

 

 

Equity in earnings of unconsolidated entities

 

23,098

 

19,483

 

3,615

 

18.6

%

Interest and dividend income

 

2,550

 

588

 

1,962

 

N/M

 

Interest (expense)

 

(23,684

)

(23,208

)

(476

)

(2.1

%)

Fair value adjustment of derivative instruments

 

12,461

 

4,815

 

7,646

 

N/M

 

Other income

 

(585

)

202

 

(787

)

N/M

 

 

 

13,840

 

1,880

 

11,960

 

N/M

 

Income Before Income Taxes and Minority Interest

 

122,363

 

71,893

 

50,470

 

70.2

%

Income tax expense

 

43,888

 

28,710

 

15,178

 

52.9

%

Income Before Minority Interest

 

78,475

 

43,183

 

35,292

 

81.7

%

Minority share of income

 

(4,074

)

(3,737

)

(337

)

(9.0

%)

Net Income

 

$

74,401

 

$

39,446

 

$

34,955

 

88.6

%

 

 

 

 

 

 

 

 

 

 

Basic Weighted Average Common Shares Outstanding (000s)

 

87,882

 

87,213

 

669

 

0.8

%

Basic Earnings Per Share

 

$

0.85

 

$

0.45

 

$

0.40

 

88.9

%

 

 

 

 

 

 

 

 

 

 

Diluted Weighted Average Common Shares Outstanding (000s)

 

88,688

 

87,807

 

881

 

1.0

%

Diluted Earnings Per Share

 

$

0.84

 

$

0.45

 

$

0.39

 

86.7

%

 

 

 

 

 

 

 

 

 

 

N/M - Percentage change not meaningful

 

 

 

 

 

 

 

 

 

 

4




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

ASSETS

 

 

March 31,

 

December 31,

 

 

 

2007

 

2006

 

Current Assets

 

 

 

 

 

Cash and cash equivalents

 

$

189,856

 

$

32,912

 

Marketable equity securities

 

240,792

 

249,039

 

Accounts receivable from customers and other

 

382,431

 

407,438

 

Inventory

 

101,196

 

117,189

 

Prepaid expenses

 

45,520

 

34,955

 

Other current assets

 

10,642

 

13,385

 

 

 

970,437

 

854,918

 

 

 

 

 

 

 

Investments

 

 

 

 

 

Licenses

 

1,502,227

 

1,494,327

 

Goodwill

 

491,270

 

485,452

 

Customer lists

 

23,983

 

26,196

 

Marketable equity securities

 

4,436

 

4,873

 

Investments in unconsolidated entities

 

171,040

 

150,325

 

Notes and interest receivable—long-term

 

4,512

 

4,541

 

 

 

2,197,468

 

2,165,714

 

 

 

 

 

 

 

Property, Plant and Equipment

 

 

 

 

 

In service and under construction

 

5,195,511

 

5,120,994

 

Less accumulated depreciation

 

2,595,669

 

2,492,146

 

 

 

2,599,842

 

2,628,848

 

 

 

 

 

 

 

Other Assets and Deferred Charges

 

30,447

 

31,136

 

 

 

 

 

 

 

Total Assets

 

$

5,798,194

 

$

5,680,616

 

 

5




LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

March 31,

 

December 31,

 

 

 

2007

 

2006

 

Current Liabilities

 

 

 

 

 

Current portion of Long-term Debt

 

$

159,856

 

$

159,856

 

Derivative Liability

 

76,379

 

88,840

 

Notes payable

 

60,000

 

35,000

 

Accounts payable

 

 

 

 

 

Affiliates

 

10,892

 

13,568

 

Trade

 

222,921

 

241,303

 

Customer deposits and deferred revenues

 

135,149

 

123,344

 

Accrued taxes

 

69,480

 

26,913

 

Accrued compensation

 

32,613

 

47,842

 

Deferred Taxes

 

27,035

 

26,326

 

Other current liabilities

 

106,043

 

93,718

 

 

 

900,368

 

856,710

 

 

 

 

 

 

 

Long-term Debt

 

1,001,953

 

1,001,839

 

 

 

 

 

 

 

Deferred Liabilities and Credits

 

786,200

 

792,088

 

 

 

 

 

 

 

Minority Interest

 

38,005

 

36,700

 

 

 

 

 

 

 

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

 

1,294,969

 

1,290,829

 

Treasury Shares

 

(7,771

)

(14,462

)

Accumulated other comprehensive income

 

74,879

 

80,382

 

Retained earnings

 

1,621,539

 

1,548,478

 

 

 

3,071,668

 

2,993,279

 

 

 

 

 

 

 

Total Liabilities and Shareholders’ Equity

 

$

5,798,194

 

$

5,680,616

 

 

6