: 37.86  +0.25
news

Press Release Details

U.S. Cellular Reports Second Quarter Results

08/06/2009

Data revenues increase 31 percent

As previously announced, U.S. Cellular(R) will hold a teleconference on Aug. 6, 2009, at 10:00 a.m. Chicago time. Interested parties may listen to the call live by accessing the Conference Calls page of www.teldta.com or uscellular.com.

CHICAGO, Aug. 6, /PRNewswire-FirstCall/ --

Note: Comparisons are year over year unless otherwise noted.

2Q 2009 Highlights
  • Service revenues were $974.8 million.
  • 31 percent increase in data revenues, to $162.0 million, representing 17 percent of service revenues.
  • ARPU (average monthly service revenue per unit) was $52.41.
  • 20 percent increase in operating income, to $140.9 million.
  • Postpay churn was 1.7 percent; postpay customers comprised 95 percent of retail customers.
  • 7 percent increase in cell sites in service, to 7,043.
  • Repurchased 140,000 common shares for $6.0 million to offset dilution from employee benefit plans.

United States Cellular Corporation (NYSE: USM) reported service revenues of $974.8 million for the second quarter of 2009, a 1 percent decrease from $987.4 million in the comparable period one year ago, due to a $22.0 million reduction in inbound roaming revenues related primarily to the acquisition of Alltel Corporation by Verizon Wireless. U.S. Cellular recorded operating income of $140.9 million, a 20 percent increase from $117.9 million in the second quarter of 2008. Net income attributable to U.S. Cellular and related diluted earnings per share were $83.4 million and $0.96, respectively, for the second quarter of 2009, compared to $72.6 million and $0.83, respectively, in the comparable period one year ago.

"U.S. Cellular had a net loss in retail customers for the second quarter," said John E. Rooney, U.S. Cellular president and CEO, "due to the combined effect of the weak economy and very competitive market conditions. The launch of the latest iPhone and other exclusive handsets was a factor, as was the increased presence and competitiveness of low-priced, prepaid service providers in some of our markets. Customers have responded well, however, to the new national plans we introduced late in the quarter, and to our industry-first Battery Swap program, which meets a widespread customer need.

"Despite the challenges we faced in the quarter," continued Rooney, "we achieved solid financial results, with increased operating income and operating cash flow. After adjusting for a decline in roaming revenues that resulted from Verizon's acquisition of Alltel, service revenues increased slightly, due to continued growth in demand for data services. In fact, data revenues grew 31 percent and now represent 17 percent of service revenues. We expect this growth to continue, as we bring our 3G network -- which now covers 40 percent of our customer base -- to 70 percent of our customers by year end. We have also implemented additional cost controls to ensure ongoing funding for important multi-year initiatives designed to promote online sales and enhance our billing and customer relationship management capabilities."

Guidance

Guidance for the year ending Dec. 31, 2009 is as follows. There can be no assurance that final results will not differ materially from this guidance.

    U.S. Cellular 2009 guidance as of Aug. 6, 2009 is as follows:
        Net retail customer additions(1)
        Service revenues                           $3,900 - $3,950 million
        Operating income(2)                        $300 - $375 million
        Depreciation, amortization and             Approx. $600 million
         accretion(2)
        Capital expenditures                       Approx. $575 million

    (1) U.S. Cellular has withdrawn its net retail customer additions
        guidance for the remainder of 2009 due to uncertainty related to
        the weak economy and consumer purchasing intentions.
    (2) Includes losses on disposals of assets.

The foregoing guidance represents the views of management as of Aug. 6, 2009 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 Aug. 6, 2009 at 10:00 a.m. Chicago time.

    --  Access the live call on the Conference Calls page of uscellular.com at
        http://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=67422&
        eventID=2355543

    --  Access the call by phone at 800/706-9695 (US/Canada) and use
        conference ID #22679990.

Before the call, certain financial and statistical information to be discussed during the call will be posted to the Conference Calls page of 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 uscellular.com

About U.S. Cellular

United States Cellular Corporation, the nation's fifth-largest, full-service wireless carrier, provides a comprehensive range of wireless products and services, excellent customer support, and a high-quality network to approximately 6.2 million customers in 26 states. The Chicago-based company employed approximately 8,700 full-time equivalent associates as of June 30, 2009. For more information about U.S. Cellular, visit 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 its markets; the current credit crisis affecting financial markets, and its effects on the overall economy; competition; the state and federal telecommunications regulatory environment; 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; pending and future litigation; changes in income tax rates, laws, regulations or rulings; acquisitions/divestitures of properties and/or licenses; changes in customer growth rates, average monthly revenue per unit, churn rates, roaming revenue and terms, the availability of handset devices, or the mix of products and services offered by the company; and the ability to obtain or maintain roaming arrangements with other carriers. 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.

                          UNITED STATES CELLULAR CORPORATION
                                SUMMARY OPERATING DATA

    Quarter
     Ended           6/30/2009  3/31/2009  12/31/2008   9/30/2008   6/30/2008

     Total Population:
        Consolidated
         markets(1) 83,726,000 83,726,000  83,014,000  82,875,000  82,875,000
        Consolidated
         operating
         markets(1) 46,306,000 46,306,000  46,009,000  45,493,000  45,493,000
     All customers:
        Total at end
         of period   6,155,000  6,243,000   6,196,000   6,176,000   6,194,000
        Gross
         additions     317,000    404,000     395,000     367,000     365,000
        Net additions
         (losses)      (88,000)    47,000      20,000     (18,000)     16,000
     Market
      penetration
      at end of
      period:
        Consolidated
         markets(2)        7.4%       7.5%        7.5%        7.5%        7.5%
        Consolidated
         operating
         markets(2)       13.3%      13.5%       13.5%       13.6%       13.6%
     Retail customers:
        Total at end
         of period   5,711,000  5,770,000   5,707,000   5,674,000   5,677,000
        Gross
         additions     286,000    366,000     352,000     325,000     318,000
        Net postpay
         additions
         (losses)      (32,000)    60,000      41,000      12,000      33,000
        Net prepay
         additions
         (losses)      (27,000)     3,000      (8,000)    (15,000)      1,000

     Cell sites in
      service            7,043      6,942       6,877       6,716       6,596
     Average
      monthly
      revenue per
      unit(3)           $52.41     $52.54      $52.71      $54.59      $53.27
        Retail
         service
         revenue per
         unit(3) (5)    $46.85     $46.78      $46.43      $46.97      $46.53
        Inbound
         roaming
         revenue per
         unit(3) (5)     $3.35      $3.21       $4.25       $5.03       $4.54
        Other
         revenue per
         unit(3) (5)     $2.21      $2.55       $2.03       $2.59       $2.20
     Postpay churn
      rate(4)              1.7%       1.5%        1.6%        1.6%        1.4%
     Construction
      expenditures
      (000s)           $91,200   $137,700    $190,000    $146,100    $137,800

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


     Service
      revenue
      (000s)          $974,755   $981,874    $976,952  $1,013,928    $987,352
     Components:
     Retail
      service
      revenue
      (000s)           871,209    874,098     860,503     872,397     862,392
     Inbound
      roaming
      revenue
      (000s)            62,223     60,057      78,768      93,472      84,201
     Other
      revenue
      (000s)            41,323     47,719      37,681      48,059      40,759

     Divided by
      average
      customers
      (000s)             6,199      6,229       6,178       6,191       6,178
     Divided by
      three
      months in
      each
      quarter                3          3           3           3           3
                           ---        ---         ---         ---         ---

     Average
      monthly
      revenue per
      unit              $52.41     $52.54      $52.71      $54.59      $53.27
     Retail
      service
      revenue per
      unit              $46.85     $46.78      $46.43      $46.97      $46.53
     Inbound
      roaming
      revenue per
      unit               $3.35      $3.21       $4.25       $5.03       $4.54
     Other revenue per
      unit               $2.21      $2.55       $2.03       $2.59       $2.20


    (4) Postpay churn rate is calculated by dividing the total postpay
        customer disconnects during the quarter by the average postpay
        customer base for the quarter.
    (5) Long-distance revenue was reclassified in the fourth quarter of 2008
        from Other revenue to Retail service revenue and Inbound roaming
        revenue.  Previous quarters have been adjusted to reflect this change.


                      United States Cellular Corporation
                 Consolidated Statement of Operations Highlights
                            Three Months Ended June 30,
       (Unaudited, dollars and shares in thousands, except per share amounts)

                                                  Increase (Decrease)
                              2009        2008     Amount   Percent

     Operating
      revenues
        Service              $974,755   $987,352  $(12,597)   (1%)
        Equipment
         sales                 67,795     73,240    (5,445)   (7%)
                               ------     ------    ------
           Total
            operating
            revenues        1,042,550  1,060,592   (18,042)   (2%)
                            ---------  ---------   -------
     Operating
      expenses
        System
         operations
         (excluding
        Depreciation,
         amortization
         and accretion
         reported below)      194,806    196,652    (1,846)   (1%)
        Cost of
         equipment sold       156,055    176,145   (20,090)  (11%)
        Selling,
         general and
        administrative        410,070    418,416    (8,346)   (2%)
        Depreciation,
         amortization
         and accretion        138,614    145,258    (6,644)   (5%)
        Loss on asset
         disposals, net         2,086      6,219    (4,133)  (66%)
                                -----      -----    ------
           Total operating
            expenses          901,631    942,690   (41,059)   (4%)
                              -------    -------   -------

     Operating income         140,919    117,902    23,017    20%

     Investment and
      other income
      (expense)
        Equity in
         earnings of
         unconsolidated
         entities              24,794     22,807     1,987     9%
        Interest and
         dividend
         income                   751      1,429      (678)  (47%)
        Interest
         expense              (19,387)   (20,774)    1,387     7%
        Other, net                 (2)       600      (602)  N/M
                                   --        ---      ----
           Total
            investment
            and other
            income (expense)    6,156      4,062     2,094    52%
                                -----      -----     -----

     Income before
      income taxes            147,075    121,964    25,111    21%
        Income tax
         expense               57,748     44,016    13,732    31%
                               ------     ------    ------

     Net income                89,327     77,948    11,379    15%
        Less: Net
         income
         attributable
         to noncontrolling
         interests,
         net of tax            (5,969)    (5,346)     (623)  (12%)
                               ------     ------      ----
     Net income
      attributable to
      U.S. Cellular           $83,358    $72,602   $10,756    15%
                              =======    =======   =======

     Basic weighted
      average shares
      outstanding              86,992     87,571      (579)   (1%)
     Basic earnings
      per share
      attributable to
        U.S. Cellular
         shareholders           $0.96      $0.83     $0.13    16%
                                =====      =====     =====

     Diluted weighted
      averages shares
      outstanding              87,177     87,872      (695)   (1%)
     Diluted earnings
      per share
      attributable to
      U.S. Cellular
      shareholders              $0.96      $0.83     $0.13    16%
                                =====      =====     =====

     N/M - Percentage change not meaningful


                       United States Cellular Corporation
                 Consolidated Statement of Operations Highlights
                              Six Months Ended June 30,
        (Unaudited, dollars and shares in thousands, except per share amounts)

                                                           Increase (Decrease)
                                       2009        2008     Amount    Percent
     Operating revenues
        Service                    $1,956,629  $1,949,446   $7,183        -
        Equipment sales               138,685     149,002  (10,317)      (7%)
                                      -------     -------  -------
              Total operating
               revenues             2,095,314   2,098,448   (3,134)       -
                                    ---------   ---------   ------
     Operating expenses
        System operations
         (excluding
         Depreciation,
         amortization and
         accretion reported
         below)                       394,809     387,668    7,141        2%
        Cost of equipment
         sold                         341,756     354,190  (12,434)      (4%)
        Selling, general and
         administrative               822,518     822,042      476        -
        Depreciation,
         amortization and
         accretion                    276,265     287,788  (11,523)      (4%)
        Loss on asset disposals, net    4,277       9,892   (5,615)     (57%)
                                        -----       -----   ------
              Total operating
               expenses             1,839,625   1,861,580  (21,955)      (1%)
                                    ---------   ---------  -------

     Operating income                 255,689     236,868   18,821        8%

     Investment and other
      income (expense)
        Equity in earnings of
         unconsolidated
         entities                      50,121      44,042    6,079       14%
        Interest and dividend
         income                         1,228       3,334   (2,106)     (63%)
        Interest expense              (38,409)    (40,889)   2,480        6%
        Other, net                        278         718     (440)     (61%)
                                          ---         ---     ----
              Total investment
               and other income
               (expense)               13,218       7,205    6,013       83%
                                       ------       -----    -----

     Income before income taxes       268,907     244,073   24,834       10%
        Income tax expense             88,980      91,556   (2,576)      (3%)
                                       ------      ------   ------

     Net income                       179,927     152,517   27,410       18%
        Less: Net income
         attributable to
         noncontrolling interests,
         net of tax                   (11,977)     (9,358)  (2,619)     (28%)
                                      -------      ------   ------
     Net income attributable
      to U.S. Cellular               $167,950    $143,159  $24,791       17%
                                     ========    ========  =======

     Basic weighted average
      shares outstanding               87,093      87,571     (478)      (1%)
     Basic earnings per share
      attributable to
      U.S. Cellular
      shareholders                      $1.93       $1.63    $0.30       18%
                                        =====       =====    =====

     Diluted weighted
      averages shares
      outstanding                      87,308      87,963     (655)      (1%)
     Diluted earnings per
      share attributable to
      U.S. Cellular
      shareholders                      $1.92       $1.63    $0.29       18%
                                        =====       =====    =====

    N/M - Percentage change not meaningful


                         United States Cellular Corporation
                       Consolidated Balance Sheet Highlights
                         (Unaudited, dollars in thousands)

                 ASSETS

                                                   June 30,       December 31,
                                                     2009             2008
                                                     ----             ----
     Current assets
        Cash and cash equivalents                 $275,920         $170,996
        Accounts receivable from
         customers and other                       447,521          419,619
        Inventory                                  125,578          116,564
        Prepaid income taxes                             -           22,515
        Prepaid expenses                            49,040           51,645
        Net deferred income tax asset               19,481           19,481
        Other current assets                        54,705           14,227
                                                    ------           ------
                                                   972,245          815,047

     Investments
        Licenses                                 1,445,501        1,433,415
        Goodwill                                   494,737          494,279
        Customer lists                               6,465            8,936
        Investments in unconsolidated
         entities                                  192,445          156,637
        Notes and interest receivable -
         long-term                                   4,231            4,297
                                                     -----            -----
                                                 2,143,379        2,097,564

     Property, plant and equipment
        In service and under construction        5,602,245        5,884,383
        Less: accumulated depreciation           3,024,243        3,264,007
                                                 ---------        ---------
                                                 2,578,002        2,620,376

     Other assets and deferred charges              37,621           33,055

     Total assets                               $5,731,247       $5,566,042
                                                ==========       ==========


                       United States Cellular Corporation
                      Consolidated Balance Sheet Highlights
                        (Unaudited, dollars in thousands)

                  LIABILITIES AND SHAREHOLDERS' EQUITY

                                                       June 30,  December 31,
                                                        2009        2008
                                                        ----        ----
     Current liabilities
        Current portion of long-term debt             $10,088      $10,258
        Accounts payable
           Affiliated                                  13,750        9,613
           Trade                                      210,826      248,785
        Customer deposits and deferred revenues       145,710      151,082
        Accrued taxes                                  58,433       17,643
        Accrued compensation                           41,976       55,969
        Other current liabilities                      91,149      108,533
                                                       ------      -------
                                                      571,932      601,883

     Deferred liabilities and credits
        Net deferred income tax liability             498,823      478,106
        Other deferred liabilities and credits        243,258      233,619
                                                      -------      -------
                                                      742,081      711,725

     Long-term debt                                   997,651      996,636

     Commitments and contingencies

     Noncontrolling interests with Mandatory
      redemption features                                 640          589

     Equity
     U.S. Cellular shareholders' equity
        Common Shares, par value $1 per share          55,068       55,068
        Series A Common Shares, par value
         $1 per share                                  33,006       33,006
        Additional paid-in capital                  1,348,664    1,340,146
        Treasury shares                               (60,104)     (50,258)
        Retained earnings                           1,985,876    1,828,680
                                                    ---------    ---------
           Total U.S. Cellular shareholders'
            equity                                  3,362,510    3,206,642

     Noncontrolling interests                          56,433       48,567
                                                       ------       ------

        Total equity                                3,418,943    3,255,209

     Total liabilities and equity                  $5,731,247   $5,566,042
                                                   ==========   ==========


                        United States Cellular Corporation
                       Consolidated Statement of Cash Flows
                             Six Months Ended June 30,
                        (Unaudited, dollars in thousands)

                                                           2009      2008
                                                           ----      ----
     Cash flows from operating activities
         Net income                                     $179,927  $152,517
         Add (deduct) adjustments to reconcile net
          income to net cash flows from operating
          activities
               Depreciation, amortization and accretion  276,265   287,788
               Bad debts expense                          39,028    32,426
               Stock-based compensation expense            7,974     6,481
               Deferred income taxes, net                 19,604    27,231
               Equity in earnings of Unconsolidated
                entities                                 (50,121)  (44,042)
               Distributions from Unconsolidated
                entities                                  12,997    45,569
               Loss on asset disposals, net                4,277     9,892
               Excess tax benefit from stock
                awards                                        (4)     (896)
               Noncash interest expense                    1,213       886
         Changes in assets and liabilities
          from operations
               Accounts receivable                       (63,510)  (50,059)
               Inventory                                 (10,391)  (19,816)
               Accounts payable - trade                  (41,378)    2,838
               Accounts payable - affiliate                4,137       171
               Customer deposits and deferred revenues    (5,372)   10,406
               Accrued taxes                              64,851     1,471
               Accrued interest                              450       455
               Other assets and liabilities              (66,824)  (36,486)
                                                         -------  --------
                                                         373,123   426,832
                                                         -------   -------
     Cash flows from investing activities
         Additions to property, plant and
          equipment                                     (228,902) (249,500)
         Cash received from divestitures                      50     6,838
         Cash paid for acquisitions and
          licenses                                       (12,327) (312,615)
         Other investing activities                        1,107    (1,215)
                                                           -----    ------
                                                        (240,072) (556,492)
                                                        --------  --------
     Cash flows from financing activities
         Issuance of notes payable                             -   100,000
         Repayment of notes payable                            -   (50,000)
         Common shares reissued for benefit
          plans, net of tax payments                        (405)   (1,878)
         Common shares repurchased                       (19,332)  (14,516)
         Excess tax benefit from stock awards                  4       896
         Payment of debt issuance costs                   (4,309)        -
         Distributions to noncontrolling
          interests                                       (4,060)   (6,022)
         Other financing activities                          (25)   (2,198)
                                                             ---    ------
                                                         (28,127)   26,282
                                                         -------    ------

     Net increase (decrease) in cash and
      cash equivalents                                   104,924  (103,378)

     Cash and cash equivalents
         Beginning of period                             170,996   204,533
                                                         -------   -------
         End of period                                  $275,920  $101,155
                                                        ========  ========

SOURCE U.S. Cellular

CONTACT:
Mark A. Steinkrauss, Vice President, Corporate Relations, +1-312-592-5384, mark.steinkrauss@teldta.com,
or Julie D. Mathews, Manager, Investor Relations, +1-312-592-5341, julie.mathews@teldta.com