EX-99.1 2 a07-20977_1ex99d1.htm EX-99.1

Exhibit 99.1

As previously announced, U.S. Cellular will hold a teleconference Aug. 7, 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 SECOND QUARTER 2007 RESULTS;
ADJUSTS GUIDANCE UPWARD

CHICAGO – Aug. 7, 2007 - United States Cellular Corporation [AMEX:USM] reported service revenues of $906.2 million for the second quarter of 2007, up 14.5 percent from $791.7 million for the comparable period one year ago.  The company recorded operating income of $123.5 million, up 56.5 percent from $78.9 million for the second quarter of 2006.  Net income and diluted earnings per share were $147.6 million and $1.67, respectively, compared to net income and diluted earnings per share of $50.1 million and $0.57, respectively, for the comparable period one year ago.

Second Quarter Highlights

·       The total number of customers increased 5.4 percent year over year to 6,010,000.  The number of retail customers increased 6.8 percent to 5,448,000.

·       Average monthly revenue per unit (ARPU) increased 8.3 percent to $50.42.

·       Data revenues grew 77.2 percent to $85.4 million, 9.4 percent of service revenues.

·       Operating income grew 56.5 percent to $123.5 million. 

·       Cash flows from operating activities were $181.1 million for the quarter and $436.1 million for the first six months.

“U.S. Cellular is driven to provide the very best in customer satisfaction,” said John E. Rooney, president and chief executive officer.  “We continue to differentiate ourselves from the competition by providing an exceptional quality customer experience each and every time with an emphasis on the postpay customer.  In the quarter, total customers surpassed 6 million and 95 percent were postpay. 

 




 

“U.S. Cellular had a very strong second quarter financially,” said Rooney.  “Service revenues grew an impressive 14.5 percent driven by growth in the subscriber base and higher average revenue per customer.  Our ARPU grew again for the sixth consecutive quarter to $50.42, and an increase of 8 percent over the second quarter a year ago.  Data revenues were up 77 percent in the quarter to over $85 million, representing 9 percent of service revenues.  Coupled with the strong revenue growth was a sharp improvement in operating margin which expanded significantly from the second quarter a year ago. 

“Going forward, we are continuing to concentrate our efforts on growing our existing markets, improving profitability and increasing cash flow.  At this time we have no plans to open any significant new markets this year or next,” concluded Rooney.

Reseller Customers

Reseller customers historically have been classified as postpay and represented approximately 10% of total postpay customers as of June 30, 2007.  In 2007, U.S. Cellular and its third party reseller changed the method of reporting reseller customer disconnects.  The change affects the calculation of total postpay churn per month.  Under the new method of reporting, the total postpay churn rate including reseller customers was 1.9 percent.  The retail postpay churn rate, which excludes reseller customers and thus was not impacted by the change, was 1.4 percent. 

Gain on Investments

The forward contracts related to U.S. Cellular’s investment in Vodafone American Depository Receipts (ADRs) matured on May 7, 2007.  U.S. Cellular delivered the Vodafone ADRs in settlement of the forward contracts and sold the remaining shares.  U.S. Cellular recorded a $131.7 million pre-tax gain on the settlement of the forward contracts and sale of the remaining shares.

Share Repurchases

On April 4, 2007, U.S. Cellular entered into an agreement with an investment bank to purchase 670,000 of its common shares through an accelerated share repurchase (“ASR”) for approximately $49 million.  Also, on July 10, 2007, U.S. Cellular entered into an additional agreement with the same investment bank to purchase 168,000 of its common shares through an ASR for approximately $16 million.

Guidance

Guidance for the year ending Dec. 31, 2007 is as follows.  There can be no assurance that final results will not differ materially from this guidance.

U.S. Cellular 2007 guidance as of Aug. 7, 2007 is as follows:

 

 

 

Net Retail Customer Additions

 

375,000 – 425,000

 

Service Revenues

 

Approx. $3.6 billion

 

Operating Income

 

$

395 - $445 million

 

Depreciation, Amortization & Accretion

 

Approx. $615 million

 

Capital Expenditures

 

$

600 - $615 million

 

 

As previously announced, U.S. Cellular will hold a teleconference Aug. 7, 2007, at 10:00 a.m. Chicago time.  Interested parties may listen to the call live over the Internet by accessing http://www.videonewswire.com/event.asp?id=41601 or the conference call page of the Investor Relations section of www.uscc.com.  You can also connect to the teleconference by telephone (US/Canada) at (800)706-9695 with a conference ID # 11759028.  The conference call will be archived on the conference call section of the U.S. Cellular web site at www.uscc.com. 

 

2




 

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 U.S. Cellular web site.

About U.S. Cellular

As of June 30, 2007, U.S. Cellular Corporation, the nation's sixth-largest network wireless service carrier, employed 8,100 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 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; 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 terms 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.

###

 

3




UNITED STATES CELLULAR CORPORATION
SUMMARY OPERATING DATA

Quarter Ended

 

6/30/2007

 

3/31/2007

 

12/31/2006

 

9/30/2006

 

6/30/2006

 

Consolidated Markets:

 

 

 

 

 

 

 

 

 

 

 

Total population (000s) (1)

 

81,581

 

56,048

 

55,543

 

55,543

 

55,543

 

All customers -

 

 

 

 

 

 

 

 

 

 

 

Customer units

 

6,010,000

 

5,973,000

 

5,815,000

 

5,729,000

 

5,704,000

 

Gross customer unit activations

 

418,000

 

459,000

 

389,000

 

365,000

 

347,000

 

Net customer unit activations

 

37,000

 

152,000

 

86,000

 

25,000

 

48,000

 

Market penetration (1)

 

7.4

%

10.7

%

10.5

%

10.3

%

10.3

%

Retail customers -

 

 

 

 

 

 

 

 

 

 

 

Customer units

 

5,448,000

 

5,377,000

 

5,225,000

 

5,127,000

 

5,099,000

 

Gross customer unit activations

 

347,000

 

397,000

 

375,000

 

353,000

 

331,000

 

Net customer unit activations

 

71,000

 

146,000

 

98,000

 

28,000

 

49,000

 

 

 

 

 

 

 

 

 

 

 

 

 

Cell sites in service

 

6,140

 

6,004

 

5,925

 

5,726

 

5,583

 

Average monthly revenue per unit (2)

 

$

50.42

 

$

48.69

 

$

48.15

 

$

47.93

 

$

46.54

 

Retail service revenue per unit (2)

 

$

43.87

 

$

42.69

 

$

42.21

 

$

41.75

 

$

40.92

 

Inbound roaming revenue per unit (2)

 

$

2.68

 

$

2.33

 

$

2.34

 

$

2.55

 

$

2.28

 

Long-distance/other revenue per unit (2)

 

$

3.87

 

$

3.67

 

$

3.60

 

$

3.63

 

$

3.34

 

Minutes of use (MOU) (3)

 

858

 

783

 

749

 

725

 

719

 

Retail postpay churn rate per month (4)

 

1.4

%

1.3

%

1.5

%

1.7

%

1.6

%

Capital Expenditures (000s)

 

$

137,100

 

$

109,700

 

$

158,400

 

$

152,800

 

$

151,400

 


(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. In the quarter ended 6/30/07, the FCC granted Barat Wireless’ applications with respect to 17 licenses for which it was the winning bidder in Auction 66.

(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

 

906,218

 

860,583

 

831,663

 

821,820

 

791,705

 

Components:

 

 

 

 

 

 

 

 

 

 

 

Retail service revenue during quarter

 

$

788,535

 

$

754,515

 

$

729,072

 

$

715,896

 

$

696,079

 

Inbound roaming revenue during quarter

 

$

48,084

 

$

41,268

 

$

40,354

 

$

43,806

 

$

38,745

 

Long-distance/other revenue during quarter

 

$

69,599

 

$

64,800

 

$

62,237

 

$

62,118

 

$

56,881

 

 

 

 

 

 

 

 

 

 

 

 

 

Divided by average customers during quarter (000s)

 

5,991

 

5,892

 

5,757

 

5,716

 

5,670

 

Divided by three months in each quarter

 

3

 

3

 

3

 

3

 

3

 

 

 

 

 

 

 

 

 

 

 

 

 

Average monthly revenue per unit

 

$

50.42

 

$

48.69

 

$

48.15

 

$

47.93

 

$

46.54

 

Retail service revenue per unit

 

$

43.87

 

$

42.69

 

$

42.21

 

$

41.75

 

$

40.92

 

Inbound roaming revenue per unit

 

$

2.68

 

$

2.33

 

$

2.34

 

$

2.55

 

$

2.28

 

Long-distance/other revenue per unit

 

$

3.87

 

$

3.67

 

$

3.60

 

$

3.63

 

$

3.34

 


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

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

4




UNITED STATES CELLULAR CORPORATION

FINANCIAL HIGHLIGHTS

Three Months Ended June 30,

(Unaudited, dollars in thousands, except per share amounts)

 

 

 

 

 

 

Increase (Decrease)

 

 

 

2007

 

2006

 

Amount

 

Percent

 

Operating Revenues

 

 

 

 

 

 

 

 

Service

 

$

906,218

 

$

791,705

 

$

114,513

 

14.5

%

Equipment sales

 

65,428

 

54,432

 

10,996

 

20.2

%

Total Operating Revenues

 

971,646

 

846,137

 

125,509

 

14.8

%

Operating Expenses

 

 

 

 

 

 

 

 

 

System operations (excluding depreciation shown below)

 

176,409

 

150,555

 

25,854

 

17.2

%

Cost of equipment sold

 

151,015

 

133,416

 

17,599

 

13.2

%

Selling, general and administrative

 

371,894

 

342,769

 

29,125

 

8.5

%

Depreciation, amortization and accretion

 

148,856

 

140,486

 

8,370

 

6.0

%

Total Operating Expenses

 

848,174

 

767,226

 

80,948

 

10.6

%

 

 

 

 

 

 

 

 

 

 

Operating Income

 

123,472

 

78,911

 

44,561

 

56.5

%

 

 

 

 

 

 

 

 

 

 

Investment and Other Income (Expense)

 

 

 

 

 

 

 

 

 

Equity in earnings of unconsolidated entities

 

22,980

 

21,957

 

1,023

 

4.7

%

Interest and dividend income

 

2,653

 

9,807

 

(7,154

)

(72.9

%)

Interest expense

 

(21,325

)

(23,007

)

1,682

 

(7.3

%)

Fair value adjustment of derivative instruments

 

(17,849

)

(922

)

(16,927

)

N/M

 

Gain (loss) on investments

 

131,686

 

 

131,686

 

N/M

 

Other income

 

91

 

(140

)

231

 

N/M

 

 

 

118,236

 

7,695

 

110,541

 

N/M

 

Income Before Income Taxes and Minority Interest

 

241,708

 

86,606

 

155,102

 

N/M

 

Income tax expense

 

91,500

 

33,683

 

57,817

 

N/M

 

Income Before Minority Interest

 

150,208

 

52,923

 

97,285

 

N/M

 

Minority share of income

 

(2,637

)

(2,859

)

222

 

(7.8

%)

Net Income

 

$

147,571

 

$

50,064

 

$

97,507

 

N/M

 

 

 

 

 

 

 

 

 

 

 

Basic Weighted Average Common Shares Outstanding (000s)

 

87,590

 

87,281

 

309

 

0.4

%

Basic Earnings Per Share

 

$

1.68

 

$

0.57

 

$

1.11

 

N/M

 

 

 

 

 

 

 

 

 

 

 

Diluted Weighted Average Common Shares Outstanding (000s)

 

88,410

 

88,083

 

327

 

0.4

%

Diluted Earnings Per Share

 

$

1.67

 

$

0.57

 

$

1.10

 

N/M

 


N/M - Percentage change not meaningful

 

5




UNITED STATES CELLULAR CORPORATION

FINANCIAL HIGHLIGHTS

Three Months Ended June 30,

(Unaudited, dollars in thousands, except per share amounts)

 

 

 

 

 

 

 

Increase (Decrease)

 

 

 

2007

 

2006

 

Amount

 

Percent

 

Operating Revenues

 

 

 

 

 

 

 

 

 

Service

 

$

1,766,801

 

$

1,560,927

 

$

205,874

 

13.2

%

Equipment sales

 

139,519

 

121,586

 

17,933

 

14.7

%

Total Operating Revenues

 

1,906,320

 

1,682,513

 

223,807

 

13.3

%

Operating Expenses

 

 

 

 

 

 

 

 

 

System operations (excluding depreciation shown below)

 

343,693

 

303,873

 

39,820

 

13.1

%

Cost of equipment sold

 

305,694

 

276,732

 

28,962

 

10.5

%

Selling, general and administrative

 

726,825

 

670,473

 

56,352

 

8.4

%

Depreciation, amortization and accretion

 

298,113

 

282,511

 

15,602

 

5.5

%

Total Operating Expenses

 

1,674,325

 

1,533,589

 

140,736

 

9.2

%

 

 

 

 

 

 

 

 

 

 

Operating Income

 

231,995

 

148,924

 

83,071

 

55.8

%

 

 

 

 

 

 

 

 

 

 

Investment and Other Income (Expense)

 

 

 

 

 

 

 

 

 

Equity in earnings of unconsolidated entities

 

46,078

 

41,440

 

4,638

 

11.2

%

Interest and dividend income

 

5,203

 

10,395

 

(5,192

)

(49.9

%)

Interest expense

 

(45,009

)

(46,215

)

1,206

 

(2.6

%)

Fair value adjustment of derivative instruments

 

(5,388

)

3,893

 

(9,281

)

N/M

 

Gain (loss) on investments

 

131,686

 

 

131,686

 

N/M

 

Other income

 

(494

)

62

 

(556

)

N/M

 

 

 

132,076

 

9,575

 

122,501

 

N/M

 

Income Before Income Taxes and Minority Interest

 

364,071

 

158,499

 

205,572

 

N/M

 

Income tax expense

 

135,388

 

62,393

 

72,995

 

N/M

 

Income Before Minority Interest

 

228,683

 

96,106

 

132,577

 

N/M

 

Minority share of income

 

(6,711

)

(6,596

)

(115

)

1.7

%

Net Income

 

$

221,972

 

$

89,510

 

$

132,462

 

N/M

 

 

 

 

 

 

 

 

 

 

 

Basic Weighted Average Common Shares Outstanding (000s)

 

87,735

 

87,247

 

488

 

0.6

%

Basic Earnings Per Share

 

$

2.53

 

$

1.03

 

$

1.50

 

N/M

 

 

 

 

 

 

 

 

 

 

 

Diluted Weighted Average Common Shares Outstanding (000s)

 

88,615

 

87,994

 

621

 

0.7

%

Diluted Earnings Per Share

 

$

2.50

 

$

1.02

 

$

1.48

 

N/M

 


N/M - Percentage change not meaningful

6




UNITED STATES CELLULAR CORPORATION

CONSOLIDATED BALANCE SHEET HIGHLIGHTS

(Unaudited, dollars in thousands)

 

ASSETS

 

 

June 30,

 

December 31,

 

 

 

2007

 

2006

 

Current Assets

 

 

 

 

 

Cash and cash equivalents

 

$

146,082

 

$

32,912

 

Marketable equity securities

 

 

249,039

 

Accounts receivable from customers and other

 

409,771

 

407,438

 

Inventory

 

118,072

 

117,189

 

Prepaid expenses

 

46,277

 

34,955

 

Other current assets

 

19,816

 

13,385

 

 

 

740,018

 

854,918

 

 

 

 

 

 

 

Investments

 

 

 

 

 

Licenses

 

1,500,092

 

1,494,327

 

Goodwill

 

491,316

 

485,452

 

Customer lists

 

21,381

 

26,196

 

Marketable equity securities

 

16,248

 

4,873

 

Investments in unconsolidated entities

 

155,514

 

150,325

 

Notes and interest receivable—long-term

 

4,482

 

4,541

 

 

 

2,189,033

 

2,165,714

 

 

 

 

 

 

 

Property, Plant and Equipment

 

 

 

 

 

In service and under construction

 

5,313,726

 

5,120,994

 

Less accumulated depreciation

 

2,715,722

 

2,492,146

 

 

 

2,598,004

 

2,628,848

 

 

 

 

 

 

 

Other Assets and Deferred Charges

 

30,356

 

31,136

 

 

 

 

 

 

 

Total Assets

 

$

5,557,411

 

$

5,680,616

 

 

7




UNITED STATES CELLULAR CORPORATION

CONSOLIDATED BALANCE SHEET HIGHLIGHTS

(Unaudited, dollars in thousands)

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

June 30,

 

December 31,

 

 

 

2007

 

2006

 

Current Liabilities

 

 

 

 

 

Current portion of Long-term Debt

 

$

 

$

159,856

 

Derivative Liability

 

 

88,840

 

Notes payable

 

 

35,000

 

Accounts payable

 

 

 

 

 

Affiliates

 

10,038

 

13,568

 

Trade

 

237,522

 

241,303

 

Customer deposits and deferred revenues

 

141,116

 

123,344

 

Accrued taxes

 

70,492

 

26,913

 

Accrued compensation

 

38,635

 

47,842

 

Deferred Taxes

 

 

26,326

 

Other current liabilities

 

90,632

 

93,718

 

 

 

588,435

 

856,710

 

 

 

 

 

 

 

Long-term Debt

 

1,002,066

 

1,001,839

 

 

 

 

 

 

 

Deferred Liabilities and Credits

 

795,983

 

792,088

 

 

 

 

 

 

 

Minority Interest

 

39,518

 

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

 

1,313,041

 

1,290,829

 

Treasury Shares

 

(21,609

)

(14,462

)

Accumulated other comprehensive income

 

10,082

 

80,382

 

Retained earnings

 

1,741,843

 

1,548,478

 

 

 

3,131,409

 

2,993,279

 

 

 

 

 

 

 

Total Liabilities and Shareholders’ Equity

 

$

5,557,411

 

$

5,680,616

 

 

8