EX-99.1 2 a08-13324_1ex99d1.htm EX-99.1

Exhibit 99.1

 

 

As previously announced, U.S. Cellular® will hold a teleconference May 7, 2008, 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 INCREASES IN SERVICE, DATA REVENUES

Service and data revenues up 12 percent and 49 percent in the quarter

 

Note: Comparisons are year over year unless otherwise noted.

 

1Q 2008 Highlights

 

·      11.8 percent increase in service revenues, to $962.1 million.

 

·      49.2 percent increase in data revenues, to $115.7 million, representing 12 percent of service revenues.

 

·      6.9 percent increase in ARPU (average monthly service revenue per unit), to $52.06.

 

·      9.6 percent increase in operating income, to $119 million.

 

·      Retail postpay churn was 1.4 percent; postpay customers comprised 95 percent of retail customers.

 

·      7.5 percent increase in cell sites in service, to 6,452.

 

·      Repurchased 150,000 common shares for $10.8 million, to offset dilution from employee benefit plans and seek to increase value to shareholders.

 

CHICAGO – May 7, 2008 – United States Cellular Corporation [AMEX:USM] reported service revenues of $962.1 million for the first quarter of 2008, an 11.8 percent increase from $860.6 million in the comparable period one year ago. The company recorded operating income of $119 million, an increase of 9.6 percent from $108.5 million in the first quarter of 2007. Net income and diluted earnings per share were $70.6 million and $0.80, respectively, compared to $74.4 million and $0.84, respectively, in the comparable period one year ago.*

 



 


*In the first quarter of 2007, the company recorded a $12.5 million pre-tax gain on fair value adjustment of derivative instruments related to the derivative component of the Vodafone Group Plc variable prepaid forward contracts.

 

Continued growth in data revenues drives service revenues and ARPU

 

“U.S. Cellular experienced strong growth in data revenues this quarter,” said John E. Rooney, U.S. Cellular president and CEO, “driven in part by new smartphones like the BlackBerry® Pearl™ and their related data plans, and by customers’ increased use of messaging services. The 49 percent increase in data revenues helped to drive up both service revenues and ARPU. The growth in service revenues was partly offset by growth in operating expenses, however, resulting in lower margins. We also had solid net retail customer additions in the quarter, and maintained a low, 1.4-percent retail postpay churn rate.

 

“We continue to focus on providing a consistently high-quality wireless experience,” added Rooney, “in terms of network strength and reliability and exceptional customer service. We received our fifth consecutive J.D. Power and Associates award for call quality this quarter, and our associates are committed to exceeding our customers’ expectations for service and satisfaction.”

 

Strengthened footprint with new spectrum

 

U.S. Cellular participated in Auction 73, the Federal Communications Commission (FCC) auction of spectrum in the 700 MHz band, through its interest in King Street Wireless L.P. King Street Wireless was the provisional winning bidder for 152 licenses for an aggregate bid of $300.5 million, net of its designated entity discount, which was recorded in licenses on U.S. Cellular’s balance sheet as of March 31, 2008. The FCC has not yet awarded any of the licenses to winning bidders. The licenses expected to be awarded to King Street Wireless cover areas that overlap or are proximate or contiguous to areas covered by licenses that U.S. Cellular currently owns, operates, and/or consolidates in its financial statements.

 

Guidance

 

Guidance for the year ending Dec. 31, 2008 is as follows. There can be no assurance that final results will not differ materially from this guidance.

 

U.S. Cellular 2008 guidance as of May 7, 2008 is as follows:

 

Net Retail Customer Additions

 

200,000 - 275,000

Service Revenues

 

$3.9 - 4.0 billion**

Operating Income

 

$435 - 510 million

Depreciation, Amortization & Accretion

 

Approx. $615 million**

Capital Expenditures

 

$565 - 615 million

 


**Unchanged from guidance issued on Feb. 29, 2008

 

The foregoing guidance represents the views of management as of May 7, 2008 and should not be assumed to be accurate as of any other date. U.S. Cellular undertakes no legal duty to update such information, whether as a result of new information, future events, or otherwise.

 

Conference call information

 

U.S. Cellular will hold a conference call on May 7, 2008 at 10:00 a.m. Chicago time.

 

·      Access the live call online at http://www.videonewswire.com/event.asp?id=48272 or on the Conference Calls page of www.uscellular.com.

 

2



 

·      Access the call by phone at (800) 706-9695 (US/Canada) and use conference ID 45884257.

 

Before the call, certain financial and statistical information to be discussed during the call will be posted to the Conference Call page of www.uscellular.com, together with reconciliations to generally accepted accounting principles (GAAP) of any non-GAAP information to be disclosed. The call will be archived on the Conference Calls page of www.uscellular.com.

 

About U.S. Cellular

 

United States Cellular Corporation, the nation’s sixth-largest, full-service wireless carrier, provides a comprehensive range of wireless products and services, excellent customer support, and a high-quality network to more than 6.2 million customers in 26 states. The Chicago-based company employed 8,700 associates as of March 31, 2008. For more information about U.S. Cellular, visit www.uscellular.com.

 

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, projections, and assumptions, 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 more recently launched markets; changes in the overall economy, competition, the state and federal telecommunications regulatory environment, and the value of assets and investments; adverse changes in the ratings afforded our debt securities by accredited ratings organizations; industry consolidation; advances in telecommunications technology; uncertainty of access to the capital markets; risks and uncertainties relating to restatements and possible future restatements; ability to remediate the material weakness; pending and future litigation; changes in income tax rates, laws, regulations or rulings; acquisitions/divestitures of properties and/or licenses; and changes in customer growth rates, average monthly revenue per unit, churn rates, roaming terms, the availability of devices and the mix of products and services offered by the company. 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.

 

###

 

3



 

UNITED STATES CELLULAR CORPORATION

SUMMARY OPERATING DATA

 

Quarter Ended

 

3/31/2008

 

12/31/2007

 

9/30/2007

 

6/30/2007

 

3/31/2007

 

Total Population:

 

 

 

 

 

 

 

 

 

 

 

Consolidated markets (1)

 

82,846,000

 

82,371,000

 

81,841,000

 

81,581,000

 

56,048,000

 

Consolidated operating markets (1)

 

45,262,000

 

44,955,000

 

44,955,000

 

44,955,000

 

44,416,000

 

All customers:

 

 

 

 

 

 

 

 

 

 

 

Customer units (2)

 

6,201,000

 

6,122,000

 

6,067,000

 

6,010,000

 

5,973,000

 

Gross customer unit additions

 

409,000

 

437,000

 

447,000

 

418,000

 

459,000

 

Net customer unit additions

 

80,000

 

55,000

 

57,000

 

37,000

 

152,000

 

Market penetration at end of period:

 

 

 

 

 

 

 

 

 

 

 

Consolidated markets (3)

 

7.5

%

7.4

%

7.4

%

7.4

%

10.7

%

Consolidated operating markets (3)

 

13.7

%

13.6

%

13.5

%

13.4

%

13.4

%

Retail customers:

 

 

 

 

 

 

 

 

 

 

 

Customer units (2)

 

5,640,000

 

5,564,000

 

5,500,000

 

5,448,000

 

5,377,000

 

Gross customer unit additions

 

360,000

 

367,000

 

374,000

 

347,000

 

397,000

 

Net customer unit additions

 

85,000

 

64,000

 

52,000

 

71,000

 

146,000

 

 

 

 

 

 

 

 

 

 

 

 

 

Cell sites in service

 

6,452

 

6,383

 

6,255

 

6,140

 

6,004

 

Average monthly revenue per unit (4)

 

$

 52.06

 

$

 52.46

 

$

 52.71

 

$

 50.42

 

$

 48.69

 

Retail service revenue per unit (4)

 

$

 45.14

 

$

 45.36

 

$

 45.00

 

$

 43.87

 

$

 42.69

 

Inbound roaming revenue per unit (4)

 

$

 2.93

 

$

 3.09

 

$

 3.36

 

$

 2.68

 

$

 2.33

 

Long-distance/other revenue per unit (4)

 

$

 3.99

 

$

 4.01

 

$

 4.35

 

$

 3.87

 

$

 3.67

 

Minutes of use (MOU) (5)

 

948

 

906

 

887

 

858

 

783

 

Retail postpay churn rate per month (6)

 

1.4

%

1.5

%

1.6

%

1.4

%

1.3

%

Construction Expenditures (000s)

 

$

111,700

 

$

188,100

 

$

130,600

 

$

137,100

 

$

109,700

 

 


 

(1)

 

“Total population of consolidated markets” and “Total population of consolidated operating markets” are used only for the purposes of calculating market penetration of consolidated markets and consolidated operating markets, respectively, which is calculated by dividing customers by the total market population (without duplication of population in overlapping markets).

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2)

 

All customer units and Retail customer units as of March 31, 2008 include one time adjustments, resulting from a review of U.S. Cellular’s customer reporting procedures.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3)

 

Calculated by dividing the number of wireless customers at the end of the period by the total population of consolidated markets and consolidated operating markets, respectively, as estimated by Claritas.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4)

 

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

 

$

962,094

 

$

957,896

 

$

954,540

 

$

906,218

 

$

860,583

 

Components:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail service revenue during quarter

 

$

834,213

 

$

828,169

 

$

814,948

 

$

788,535

 

$

754,515

 

Inbound roaming revenue during quarter

 

$

54,089

 

$

56,358

 

$

60,843

 

$

48,084

 

$

41,268

 

Long-distance/other revenue during quarter

 

$

73,792

 

$

73,369

 

$

78,749

 

69,599

 

$

64,800

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Divided by average customers during quarter (000s)

 

6,160

 

 

6,086

 

 

6,036

 

 

5,991

 

 

5,892

 

Divided by three months in each quarter

 

3

 

 

3

 

 

3

 

 

3

 

 

3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average monthly revenue per unit

 

$

52.06

 

$

52.46

 

$

52.71

 

$

50.42

 

$

48.69

 

Retail service revenue per unit

 

$

45.14

 

$

45.36

 

$

45.00

 

$

43.87

 

$

42.69

 

Inbound roaming revenue per unit

 

$

2.93

 

$

3.09

 

$

3.36

 

$

2.68

 

$

2.33

 

Long-distance/other revenue per unit

 

$

3.99

 

$

4.01

 

$

4.35

 

$

3.87

 

$

3.67

 

 

(5)

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(6)

 

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

 

 

4



 

UNITED STATES CELLULAR CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS HIGHLIGHTS

Three Months Ended March 31,

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

 

 

 

 

 

 

 

Increase (Decrease)

 

 

 

2008

 

2007

 

Amount

 

Percent

 

Operating Revenues

 

 

 

 

 

 

 

 

 

Service

 

$

962,094

 

$

860,583

 

$

101,511

 

11.8

%

Equipment sales

 

75,762

 

74,091

 

1,671

 

2.3

%

Total Operating Revenues

 

1,037,856

 

934,674

 

103,182

 

11.0

%

Operating Expenses

 

 

 

 

 

 

 

 

 

System operations (excluding Depreciation, amortization and accretion shown separately below)

 

191,016

 

167,284

 

23,732

 

14.2

%

Cost of equipment sold

 

174,037

 

150,744

 

23,293

 

15.5

%

Selling, general and administrative

 

407,634

 

358,866

 

48,768

 

13.6

%

Depreciation, amortization and accretion

 

142,530

 

145,952

 

(3,422

)

(2.3)

%

Loss on asset disposals, net

 

3,673

 

3,305

 

368

 

11.1

%

Total Operating Expenses

 

918,890

 

826,151

 

92,739

 

11.2

%

 

 

 

 

 

 

 

 

 

 

Operating Income

 

118,966

 

108,523

 

10,443

 

9.6

%

 

 

 

 

 

 

 

 

 

 

Investment and Other Income (Expense)

 

 

 

 

 

 

 

 

 

Equity in earnings of unconsolidated entities

 

21,235

 

23,098

 

(1,863

)

(8.1)

%

Interest and dividend income

 

1,905

 

2,550

 

(645

)

(25.3)

%

Interest expense

 

(20,115

)

(23,684

)

3,569

 

15.1

%

Fair value adjustment of derivative instruments

 

 

12,461

 

(12,461

)

N/M

Other, net

 

118

 

(585

)

703

 

N/M

 

 

3,143

 

13,840

 

(10,697

)

(77.3)

%

Income Before Income Taxes and Minority Interest

 

122,109

 

122,363

 

(254

)

(0.2)

%

Income tax expense

 

47,540

 

43,888

 

3,652

 

8.3

%

Income Before Minority Interest

 

74,569

 

78,475

 

(3,906

)

(5.0)

%

Minority share of income, net of tax

 

(4,012

)

(4,074

)

62

 

1.5

%

Net Income

 

$

70,557

 

$

74,401

 

$

(3,844

)

(5.2)

%

 

 

 

 

 

 

 

 

 

 

Basic Weighted Average Common Shares Outstanding

 

87,571

 

87,882

 

(311

)

(0.4)

%

Basic Earnings Per Share

 

$

0.81

 

$

0.85

 

$

(0.04

)

(4.7)

%

 

 

 

 

 

 

 

 

 

 

Diluted Weighted Average Common Shares Outstanding

 

88,064

 

88,688

 

(624

)

(0.7)

%

Diluted Earnings Per Share

 

$

0.80

 

$

0.84

 

$

(0.04

)

(4.8)

%

 

N/M - Percentage change not meaningful

 

5



 

UNITED STATES CELLULAR CORPORATION

CONSOLIDATED BALANCE SHEET HIGHLIGHTS

(Unaudited, dollars in thousands)

 

ASSETS

 

 

 

March 31,

 

December 31,

 

 

 

2008

 

2007

 

Current Assets

 

 

 

 

 

Cash and cash equivalents

 

$

216,475

 

$

204,533

 

Marketable equity securities

 

16,404

 

16,352

 

Accounts receivable from customers and other

 

415,178

 

435,497

 

Inventory

 

114,687

 

100,990

 

Prepaid expenses

 

56,619

 

41,588

 

Other current assets

 

36,157

 

34,793

 

 

 

855,520

 

833,753

 

 

 

 

 

 

 

Investments

 

 

 

 

 

Licenses

 

1,788,548

 

1,482,446

 

Goodwill

 

492,286

 

491,316

 

Customer lists

 

14,333

 

15,375

 

Investments in unconsolidated entities

 

172,586

 

157,693

 

Notes and interest receivable — long-term

 

4,391

 

4,422

 

 

 

2,472,144

 

2,151,252

 

 

 

 

 

 

 

Property, Plant and Equipment

 

 

 

 

 

In service and under construction

 

5,493,389

 

5,409,115

 

Less accumulated depreciation

 

2,925,051

 

2,814,019

 

 

 

2,568,338

 

2,595,096

 

 

 

 

 

 

 

Other Assets and Deferred Charges

 

30,072

 

31,773

 

 

 

 

 

 

 

Total Assets

 

$

5,926,074

 

$

5,611,874

 

 

6



 

UNITED STATES CELLULAR CORPORATION

CONSOLIDATED BALANCE SHEET HIGHLIGHTS

(Unaudited, dollars in thousands)

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

March 31,

 

December 31,

 

 

 

2008

 

2007

 

Current Liabilities

 

 

 

 

 

Accounts payable

 

 

 

 

 

Affiliated

 

$

8,402

 

$

8,519

 

Trade

 

249,854

 

252,272

 

Customer deposits and deferred revenues

 

149,960

 

143,445

 

Accrued taxes

 

75,003

 

43,105

 

Accrued compensation

 

37,489

 

59,224

 

Other current liabilities

 

306,743

 

97,678

 

 

 

827,451

 

604,243

 

 

 

 

 

 

 

Long-Term Debt

 

1,006,395

 

1,002,293

 

 

 

 

 

 

 

Deferred Liabilities and Credits

 

785,830

 

765,786

 

 

 

 

 

 

 

Minority Interest

 

44,772

 

43,396

 

 

 

 

 

 

 

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

 

1,317,488

 

1,316,042

 

Treasury Shares

 

(41,630

)

(41,094

)

Accumulated other comprehensive income

 

10,167

 

10,134

 

Retained earnings

 

1,887,549

 

1,823,022

 

 

 

3,261,626

 

3,196,156

 

 

 

 

 

 

 

Total Liabilities and Shareholders’ Equity

 

$

5,926,074

 

$

5,611,874

 

 

7



 

UNITED STATES CELLULAR CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended March 31,

(Unaudited, dollars in thousands)

 

 

 

2008

 

2007

 

Cash Flows from Operating Activities

 

 

 

 

 

Net income

 

$

70,557

 

$

74,401

 

Add (deduct) adjustments to reconcile net income to net cash flows from operating activities:

 

 

 

 

 

Depreciation, amortization and accretion

 

142,530

 

145,952

 

Bad debts expense

 

17,962

 

11,087

 

Stock-based compensation expense

 

1,773

 

3,022

 

Deferred income taxes, net

 

15,926

 

369

 

Equity in earnings of unconsolidated entities

 

(21,235

)

(23,098

)

Distributions from unconsolidated entities

 

6,933

 

2,226

 

Minority share of income

 

4,012

 

4,074

 

Unrealized fair value adjustment of derivative instruments

 

 

(12,461

)

Loss on asset disposals, net

 

3,673

 

3,305

 

Noncash interest expense

 

443

 

445

 

Excess tax benefit from stock awards

 

(764

)

(1,114

)

Changes in assets and liabilities from operations

 

 

 

 

 

Change in accounts receivable

 

(8,615

)

14,019

 

Change in inventory

 

(13,697

)

16,106

 

Change in accounts payable - trade

 

(2,418

)

(18,382

)

Change in accounts payable - affiliate

 

(117

)

(2,676

)

Change in customer deposits and deferred revenues

 

6,515

 

11,639

 

Change in accrued taxes

 

32,949

 

47,155

 

Change in accrued interest

 

9,337

 

9,382

 

Change in other assets and liabilities

 

(35,967

)

(30,385

)

 

 

229,797

 

255,066

 

Cash Flows from Investing Activities

 

 

 

 

 

Additions to property, plant and equipment

 

(111,690

)

(109,729

)

Cash received from divestitures

 

6,838

 

279

 

Cash paid for acquisitions

 

(102,000

)

(18,237

)

Other investing activities

 

239

 

662

 

 

 

(206,613

)

(127,025

)

Cash Flows from Financing Activities

 

 

 

 

 

Issuance of notes payable

 

 

25,000

 

Common shares repurchased

 

(6,201

)

 

Common shares reissued, net of tax payments

 

(2,526

)

5,558

 

Excess tax benefit from stock awards

 

764

 

1,114

 

Capital distributions to minority partners

 

(3,231

)

(2,769

)

Other financing activities

 

(48

)

 

 

 

(11,242

)

28,903

 

 

 

 

 

 

 

Net Increase in Cash and Cash Equivalents

 

11,942

 

156,944

 

Cash and Cash Equivalents

 

 

 

 

 

Beginning of period

 

204,533

 

32,912

 

End of period

 

$

216,475

 

$

189,856

 

 

 

8