EX-99.1 2 a07-28190_1ex99d1.htm EX-99.1

Exhibit 99.1

 

As previously announced, U.S. Cellular will hold a teleconference Nov. 6, 2007, at 10:00 a.m. Chicago time.  Interested parties may listen to the call live via the Internet by accessing the Conference Calls page 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 THIRD QUARTER 2007 RESULTS;

ADJUSTS GUIDANCE UPWARD

 

 

CHICAGO — Nov. 6, 2007 - United States Cellular Corporation [AMEX:USM] reported service revenues of $954.5 million for the third quarter of 2007, up 16.1 percent from $821.8 million for the comparable period one year ago.  The company recorded operating income of $100.9 million, up 30.5 percent from $77.3 million for the third quarter of 2006.  Net income and diluted earnings per share were $63.6 million and $0.72, respectively, compared to net income and diluted earnings per share of $35.9 million and $0.41, respectively, for the comparable period one year ago.

 

Third Quarter Highlights

      The total number of customers increased 5.9 percent year over year to 6,067,000.  The number of retail customers increased 7.3 percent to 5,500,000.

      Average monthly revenue per unit (ARPU) increased 10.0 percent to $52.71.

      Data revenues grew 66.0 percent to $96.8 million, 10.1 percent of service revenues.

      Operating income grew 30.5 percent to $100.9 million. 

      Cash flows from operating activities were $181.3 million for the quarter and $617.4 million for the first nine months.

 

“This quarter we had strong service revenues growth of 16 percent, as well as a 31 percent increase in operating income,” said John E. Rooney, president and chief executive officer.  “In addition, cash flows from operating activities were $181.3 million.  There were a number of factors contributing to our success this quarter.  For one, data revenues continue to be a strong revenue growth driver for U.S. Cellular, growing 66 percent this quarter to $97 million.  Data revenues now account for more than 10 percent of service revenues and helped average revenue per unit, or ARPU, increase by 10 percent, to $52.71.  In addition, the popularity of our national and wide area calling plans helped to



increase ARPU as more than half of our customer base has shifted to these high-value plans.  We expect these trends to continue.

 

“We also continue to see results from our customer satisfaction strategy and high-quality network,” continued Rooney. “We recently received our fourth consecutive award from J.D. Power and Associates for call quality in the North Central region. The award highlights both our associates’ efforts to provide the best customer service and our commitment to ensuring a high-quality call experience. Our retail postpay churn rate of 1.6 percent, down from 1.7 percent in the third quarter of 2006, reflects this commitment.”

 

Net Customer Additions

The company acquired 73,000 net retail postpay customers in the quarter.   Postpay customers are the cornerstone of U.S. Cellular’s customer acquisition and satisfaction strategy and comprise 95 percent of the retail customer base.   The number of prepay customers declined 21,000.  The company also acquired 5,000 net reseller customers.

 

Share Repurchases

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

 

In addition, on Oct. 25, 2007, U.S. Cellular entered into a third agreement with the same firm 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 Nov. 6, 2007 is as follows:

 

 

Net Retail Customer Additions

 

375,000 - 425,000

Service Revenues

 

$3.6 - $3.7 billion

Operating Income

 

$410 - $460 million

Depreciation, Amortization & Accretion

 

Approx. $600 million

Capital Expenditures

 

Approx. $600 million

 

Conference Call Information

As previously announced, U.S. Cellular will hold a teleconference Nov. 6, 2007, at 10:00 a.m. Chicago time.   Interested parties may listen to the call live via the Internet by accessing http://www.videonewswire.com/event.asp?id=43702 or visiting the Conference Calls page of www.uscc.com.  To connect by phone, call 800/706-9695 (US/Canada) and use conference ID #22669548.  The call will be archived on the Conference Calls page of www.uscc.com.

 

Prior to the start of the call, certain financial and statistical information to be discussed during the call will be posted to the Conference Call page of www.uscc.com, together with reconciliations to generally accepted accounting principles (GAAP) of any non-GAAP information to be disclosed.

 

About U.S. Cellular

As of Sept. 30, 2007, U.S. Cellular Corporation, the nation’s sixth-largest wireless service carrier, employed 8,200 associates and provided wireless service to 6.1 million customers in 26 states.  The

 

 

2



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; 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

 

9/30/2007

 

6/30/2007

 

3/31/2007

 

12/31/2006

 

9/30/2006

 

Consolidated Markets:

 

 

 

 

 

 

 

 

 

 

 

Total population (000s) (1)

 

81,841

 

81,581

 

56,048

 

55,543

 

55,543

 

All customers -

 

 

 

 

 

 

 

 

 

 

 

Customer units

 

6,067,000

 

6,010,000

 

5,973,000

 

5,815,000

 

5,729,000

 

Gross customer unit activations

 

447,000

 

418,000

 

459,000

 

389,000

 

365,000

 

Net customer unit activations

 

57,000

 

37,000

 

152,000

 

86,000

 

25,000

 

Market penetration (1)

 

7.4

%

7.4

%

10.7

%

10.5

%

10.3

%

Retail customers -

 

 

 

 

 

 

 

 

 

 

 

Customer units

 

5,500,000

 

5,448,000

 

5,377,000

 

5,225,000

 

5,127,000

 

Gross customer unit activations

 

374,000

 

347,000

 

397,000

 

375,000

 

353,000

 

Net customer unit activations

 

52,000

 

71,000

 

146,000

 

98,000

 

28,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cell sites in service

 

6,255

 

6,140

 

6,004

 

5,925

 

5,726

 

Average monthly revenue per unit (2)

 

$

52.71

 

$

50.42

 

$

48.69

 

$

48.15

 

$

47.93

 

Retail service revenue per unit (2)

 

$

45.00

 

$

43.87

 

$

42.69

 

$

42.21

 

$

41.75

 

Inbound roaming revenue per unit (2)

 

$

3.36

 

$

2.68

 

$

2.33

 

$

2.34

 

$

2.55

 

Long-distance/other revenue per unit (2)

 

$

4.35

 

$

3.87

 

$

3.67

 

$

3.60

 

$

3.63

 

Minutes of use (MOU) (3)

 

887

 

858

 

783

 

749

 

725

 

Retail postpay churn rate per month (4)

 

1.6

%

1.4

%

1.3

%

1.5

%

1.7

%

Construction Expenditures (000s)

 

$

130,600

 

$

137,100

 

$

109,700

 

$

158,400

 

$

152,800

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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

 

$

954,540

 

$

906,218

 

$

860,583

 

$

831,663

 

$

821,820

 

Components:

 

 

 

 

 

 

 

 

 

 

 

Retail service revenue during quarter

 

$

814,948

 

$

788,535

 

$

754,515

 

$

729,072

 

$

715,896

 

Inbound roaming revenue during quarter

 

$

60,843

 

$

48,084

 

$

41,268

 

$

40,354

 

$

43,806

 

Long-distance/other revenue during quarter

 

$

78,749

 

$

69,599

 

$

64,800

 

$

62,237

 

$

62,118

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Divided by average customers during quarter (000s)

 

6,036

 

5,991

 

5,892

 

5,757

 

5,716

 

Divided by three months in each quarter

 

3

 

3

 

3

 

3

 

3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average monthly revenue per unit

 

$

52.71

 

$

50.42

 

$

48.69

 

$

48.15

 

$

47.93

 

Retail service revenue per unit

 

$

45.00

 

$

43.87

 

$

42.69

 

$

42.21

 

$

41.75

 

Inbound roaming revenue per unit

 

$

3.36

 

$

2.68

 

$

2.33

 

$

2.34

 

$

2.55

 

Long-distance/other revenue per unit

 

$

4.35

 

$

3.87

 

$

3.67

 

$

3.60

 

$

3.63

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

4



 

 

UNITED STATES CELLULAR CORPORATION

FINANCIAL HIGHLIGHTS

Three Months Ended September 30,

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

 

 

 

 

 

 

 

Increase (Decrease)

 

 

 

2007

 

2006

 

Amount

 

Percent

 

Operating Revenues

 

 

 

 

 

 

 

 

 

Service

 

$

954,540

 

$

821,820

 

$

132,720

 

16.1

%

Equipment sales

 

61,294

 

66,703

 

(5,409

)

(8.1

%)

Total Operating Revenues

 

1,015,834

 

888,523

 

127,311

 

14.3

%

Operating Expenses

 

 

 

 

 

 

 

 

 

System operations (excluding depreciation shown below)

 

185,479

 

165,107

 

20,372

 

12.3

%

Cost of equipment sold

 

164,662

 

140,757

 

23,905

 

17.0

%

Selling, general and administrative

 

414,978

 

358,392

 

56,586

 

15.8

%

Depreciation, amortization and accretion

 

149,776

 

146,940

 

2,836

 

1.9

%

Total Operating Expenses

 

914,895

 

811,196

 

103,699

 

12.8

%

 

 

 

 

 

 

 

 

 

 

Operating Income

 

100,939

 

77,327

 

23,612

 

30.5

%

 

 

 

 

 

 

 

 

 

 

Investment and Other Income (Expense)

 

 

 

 

 

 

 

 

 

Equity in earnings of unconsolidated entities

 

23,782

 

23,483

 

299

 

1.3

%

Interest and dividend income

 

3,395

 

601

 

2,794

 

N/M

 

Interest expense

 

(19,625

)

(23,974

)

4,349

 

18.1

%

Fair value adjustment of derivative instruments

 

 

(21,285

)

21,285

 

N/M

 

Other, net

 

179

 

(225

)

404

 

N/M

 

 

 

7,731

 

(21,400

)

29,131

 

N/M

 

Income Before Income Taxes and Minority Interest

 

108,670

 

55,927

 

52,743

 

94.3

%

Income tax expense

 

41,154

 

15,510

 

25,644

 

N/M

 

Income Before Minority Interest

 

67,516

 

40,417

 

27,099

 

67.0

%

Minority share of income

 

(3,961

)

(4,542

)

581

 

12.8

%

Net Income

 

$

63,555

 

$

35,875

 

$

27,680

 

77.2

%

 

 

 

 

 

 

 

 

 

 

Basic Weighted Average Common Shares Outstanding (000s)

 

87,757

 

87,281

 

476

 

0.5

%

Basic Earnings Per Share

 

$

0.72

 

$

0.41

 

$

0.31

 

75.6

%

 

 

 

 

 

 

 

 

 

 

Diluted Weighted Average Common Shares Outstanding (000s)

 

88,589

 

88,092

 

497

 

0.6

%

Diluted Earnings Per Share

 

$

0.72

 

$

0.41

 

$

0.31

 

75.6

%

 

 

N/M - Percentage change not meaningful

 

 

5



 

UNITED STATES CELLULAR CORPORATION

FINANCIAL HIGHLIGHTS

Nine Months Ended September 30,

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

 

 

 

 

 

 

 

Increase (Decrease)

 

 

 

2007

 

2006

 

Amount

 

Percent

 

Operating Revenues

 

 

 

 

 

 

 

 

 

Service

 

$

2,721,341

 

$

2,382,747

 

$

338,594

 

14.2

%

Equipment sales

 

200,813

 

188,289

 

12,524

 

6.7

%

Total Operating Revenues

 

2,922,154

 

2,571,036

 

351,118

 

13.7

%

Operating Expenses

 

 

 

 

 

 

 

 

 

System operations (excluding depreciation shown below)

 

529,172

 

468,980

 

60,192

 

12.8

%

Cost of equipment sold

 

470,356

 

417,489

 

52,867

 

12.7

%

Selling, general and administrative

 

1,141,803

 

1,028,865

 

112,938

 

11.0

%

Depreciation, amortization and accretion

 

447,889

 

429,451

 

18,438

 

4.3

%

Total Operating Expenses

 

2,589,220

 

2,344,785

 

244,435

 

10.4

%

 

 

 

 

 

 

 

 

 

 

Operating Income

 

332,934

 

226,251

 

106,683

 

47.2

%

 

 

 

 

 

 

 

 

 

 

Investment and Other Income (Expense)

 

 

 

 

 

 

 

 

 

Equity in earnings of unconsolidated entities

 

69,860

 

64,923

 

4,937

 

7.6

%

Interest and dividend income

 

8,598

 

10,996

 

(2,398

)

(21.8

%)

Interest expense

 

(64,634

)

(70,189

)

5,555

 

7.9

%

Fair value adjustment of derivative instruments

 

(5,388

)

(17,392

)

12,004

 

69.0

%

Gain on sale of investments

 

131,686

 

 

131,686

 

N/M

 

Other, net

 

(315

)

(163

)

(152

)

(93.3

%)

 

 

139,807

 

(11,825

)

151,632

 

N/M

 

Income Before Income Taxes and Minority Interest

 

472,741

 

214,426

 

258,315

 

N/M

 

Income tax expense

 

176,542

 

77,903

 

98,639

 

N/M

 

Income Before Minority Interest

 

296,199

 

136,523

 

159,676

 

N/M

 

Minority share of income

 

(10,672

)

(11,138

)

466

 

4.2

%

Net Income

 

$

285,527

 

$

125,385

 

$

160,142

 

N/M

 

 

 

 

 

 

 

 

 

 

 

Basic Weighted Average Common Shares Outstanding (000s)

 

87,743

 

87,258

 

485

 

0.6

%

Basic Earnings Per Share

 

$

3.25

 

$

1.44

 

$

1.81

 

N/M

 

 

 

 

 

 

 

 

 

 

 

Diluted Weighted Average Common Shares Outstanding (000s)

 

88,680

 

88,071

 

609

 

0.7

%

Diluted Earnings Per Share

 

$

3.22

 

$

1.42

 

$

1.80

 

N/M

 

 

 

N/M - Percentage change not meaningful

 

 

6



 

 

UNITED STATES CELLULAR CORPORATION

CONSOLIDATED BALANCE SHEET HIGHLIGHTS

(Unaudited, dollars in thousands)

 

ASSETS

 

 

 

 

 

 

 

 

September 30,

 

December 31,

 

 

 

2007

 

2006

 

Current Assets

 

 

 

 

 

Cash and cash equivalents

 

$

182,020

 

$

32,912

 

Marketable equity securities

 

16,133

 

249,039

 

Accounts receivable from customers and other

 

429,684

 

407,438

 

Inventory

 

113,078

 

117,189

 

Prepaid expenses

 

46,634

 

34,955

 

Other current assets

 

13,557

 

13,385

 

 

 

801,106

 

854,918

 

Investments

 

 

 

 

 

Licenses

 

1,500,092

 

1,494,327

 

Goodwill

 

491,316

 

485,452

 

Customer lists

 

17,442

 

26,196

 

Marketable equity securities

 

 

4,873

 

Investments in unconsolidated entities

 

176,557

 

150,325

 

Notes and interest receivable—long-term

 

4,452

 

4,541

 

 

 

2,189,859

 

2,165,714

 

Property, Plant and Equipment

 

 

 

 

 

In service and under construction

 

5,414,358

 

5,120,994

 

Less accumulated depreciation

 

2,844,527

 

2,492,146

 

 

 

2,569,831

 

2,628,848

 

 

 

 

 

 

 

Other Assets and Deferred Charges

 

28,658

 

31,136

 

 

 

 

 

 

 

Total Assets

 

$

5,589,454

 

$

5,680,616

 

 

 

7



LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

September 30,

 

December 31,

 

 

 

2007

 

2006

 

Current Liabilities

 

 

 

 

 

Prepaid forward contracts

 

$

 

$

159,856

 

Derivative liability

 

 

88,840

 

Notes payable

 

 

35,000

 

Accounts payable

 

 

 

 

 

Affiliated

 

9,175

 

13,568

 

Trade

 

244,176

 

241,303

 

Customer deposits and deferred revenues

 

143,923

 

123,344

 

Accrued taxes

 

46,641

 

26,913

 

Accrued compensation

 

50,801

 

47,842

 

Net deferred income tax liability

 

 

26,326

 

Other current liabilities

 

103,338

 

93,718

 

 

 

598,054

 

856,710

 

 

 

 

 

 

 

Long-term Debt

 

1,002,180

 

1,001,839

 

 

 

 

 

 

 

Deferred Liabilities and Credits

 

759,600

 

792,088

 

 

 

 

 

 

 

Minority Interest

 

41,898

 

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

 

1,319,038

 

1,290,829

 

Treasury Shares

 

(28,601

)

(14,462

)

Accumulated other comprehensive income

 

10,009

 

80,382

 

Retained earnings

 

1,799,224

 

1,548,478

 

 

 

3,187,722

 

2,993,279

 

 

 

 

 

 

 

Total Liabilities and Shareholders’ Equity

 

$

5,589,454

 

$

5,680,616

 

 

 

8