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