Data revenues increase 34 percent
CHICAGO, Nov. 5 /PRNewswire-FirstCall/ --
Note: Comparisons are year over year unless otherwise noted.
3Q 2009 Highlights
- Postpay net additions were 8,000; prepaid net losses were 14,000.
- Service revenues of $984.9 million, down 3 percent due primarily to a $24.7 million decrease in inbound roaming revenues.
- Retail service ARPU (average revenue per unit) increased from $46.97 to $47.02.
- 34 percent increase in data revenues, to $174.3 million, representing 18 percent of service revenues. Data revenue per customer increased from $7.01 to $9.46.
- Postpay churn was 1.7 percent; postpay customers comprised 96 percent of retail customers.
- 7 percent increase in cell sites in service, to 7,161.
As previously announced, U.S. Cellular® will hold a teleconference on Nov. 5, 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.
United States Cellular Corporation (NYSE: USM) reported service revenues of $984.9 million for the third quarter of 2009, a 3 percent decrease from $1,013.9 million in the comparable period one year ago, due primarily to a $24.7 million reduction in inbound roaming revenues related to the acquisition of Alltel Corporation by Verizon Wireless. Net income attributable to U.S. Cellular and related diluted earnings per share were $35.6 million and $0.41, respectively, for the third quarter of 2009, compared to $89.9 million and $1.02, respectively, in the comparable period one year ago. In the third quarter of 2008, U.S. Cellular recorded a $16.4 million pre-tax gain on disposition of investments related to Rural Cellular Corporation.
"During the third quarter, both gross and net retail additions improved significantly over the second quarter," said John E. Rooney, U.S. Cellular president and CEO. "We reached out with targeted postpay promotions and more value-driven prepaid plans and customers responded well, particularly in our larger markets. In fact, retail net additions improved sequentially each month in the quarter.
"Data revenues grew 34 percent, helping to offset the expected decline in inbound roaming revenue," continued Rooney. "To promote continued growth in data revenues, we have accelerated the expansion of our 3G network, reaching approximately 75 percent of our customers at the end of the third quarter. This will help us further drive the already strong sales of smartphones, messaging products and data applications. We're also seeing excellent demand for our premium phones, like the recently launched LG Bliss(TM) and LG Tritan(TM). And, we're optimizing our handset mix, including the recent launch of the Blackberry Tour(TM) to promote sales in all of our customer segments during the holiday season.
"As expected, operating income declined this quarter, reflecting lower revenues, as well as increased spending in support of multi-year initiatives," added Rooney. "These initiatives will be a strong focus for U.S. Cellular in 2010 and beyond, enabling us to increase efficiency, while strengthening our relationships with customers and developing targeted marketing and sales programs for all channels."
Guidance
Guidance for the year ending Dec. 31, 2009 is as follows. Guidance is unchanged from Aug. 6, 2009. There can be no assurance that final results will not differ materially from this guidance.
U.S. Cellular 2009 guidance as of Nov. 5, 2009 is as follows: Service revenues $3,900-$3,950 million Operating income(1) $300-$375 million Depreciation, amortization and accretion(1) Approx. $600 million Capital expenditures Approx. $575 million (1) Includes losses on disposals of assets.
The foregoing guidance represents the views of management as of Nov. 5, 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 Nov. 5, 2009 at 10:00 a.m. Chicago time.
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 6.1 million customers in 26 states. The Chicago-based company employed approximately 8,700 full-time equivalent associates as of Sept. 30, 2009. At the end of the quarter, Telephone and Data Systems, Inc. owned 82 percent of U.S. Cellular.
Visit uscellular.com for comprehensive financial information, including earnings releases, quarterly and annual filings, shareholder information, and more.
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 9/30/2009 6/30/2009 3/31/2009 12/31/2008 9/30/2008
--------- --------- --------- ---------- ---------
Total
population
Consolidated
markets(1) 85,118,000 83,726,000 83,726,000 83,014,000 82,875,000
Consolidated
operating
markets(1) 46,306,000 46,306,000 46,306,000 46,009,000 45,493,000
All customers
Total at end
of period 6,131,000 6,155,000 6,243,000 6,196,000 6,176,000
Gross
additions 386,000 317,000 404,000 395,000 367,000
Net
additions
(losses) (24,000) (88,000) 47,000 20,000 (18,000)
Market
penetration
at end of
period
Consolidated
markets(2) 7.2% 7.4% 7.5% 7.5% 7.5%
Consolidated
operating
markets(2) 13.2% 13.3% 13.5% 13.5% 13.6%
Retail
customers
Total at end
of period 5,705,000 5,711,000 5,770,000 5,707,000 5,674,000
Gross
additions 351,000 286,000 366,000 352,000 325,000
Net postpay
additions
(losses) 8,000 (32,000) 60,000 41,000 12,000
Net prepay
additions
(losses) (14,000) (27,000) 3,000 (8,000) (15,000)
Cell sites in
service 7,161 7,043 6,942 6,877 6,716
Average
monthly
revenue per
unit(3) $53.49 $52.41 $52.54 $52.71 $54.59
Retail
service
revenue per
unit(3) (5) $47.02 $46.85 $46.78 $46.43 $46.97
Inbound
roaming
revenue per
unit(3) (5) $3.73 $3.35 $3.21 $4.25 $5.03
Other
revenue per
unit(3) (5) $2.74 $2.21 $2.55 $2.03 $2.59
Postpay churn
rate(4) 1.7% 1.7% 1.5% 1.6% 1.6%
Construction
expenditures
(000s) $128,900 $91,200 $137,700 $190,000 $146,100
(1) Used only to calculate 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) Derived from Service revenues as reported in Financial Highlights
for each respective quarter as follows:
Service revenue
(000s) $984,923 $974,755 $981,874 $976,952 $1,013,928
Components
Retail service
revenue (000s) 865,867 871,209 874,098 860,503 872,397
Inbound roaming
revenue (000s) 68,767 62,223 60,057 78,768 93,472
Other revenue
(000s) 50,289 41,323 47,719 37,681 48,059
Divided by average
customers (000s) 6,138 6,199 6,229 6,178 6,191
Divided by three
months in each quarter 3 3 3 3 3
Average monthly
revenue per unit $53.49 $52.41 $52.54 $52.71 $54.59
Retail service
revenue per unit $47.02 $46.85 $46.78 $46.43 $46.97
Inbound roaming
revenue per unit $3.73 $3.35 $3.21 $4.25 $5.03
Other revenue
per unit $2.74 $2.21 $2.55 $2.03 $2.59
(4) 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 September 30,
(Unaudited, dollars and shares in thousands, except per share amounts)
Increase (Decrease)
-------------------
2009 2008 Amount Percent
---- ---- ------ -------
Operating revenues
Service $984,923 $1,013,928 $(29,005) (3%)
Equipment sales 73,377 77,947 (4,570) (6%)
------ ------ ------
Total operating
revenues 1,058,300 1,091,875 (33,575) (3%)
--------- --------- -------
Operating expenses
System operations
(excluding
Depreciation,
amortization and
accretion reported
below) 205,458 197,473 7,985 4%
Cost of equipment sold 189,354 185,992 3,362 2%
Selling, general and
administrative 454,839 436,135 18,704 4%
Depreciation,
amortization and
accretion 147,586 145,434 2,152 1%
Loss on asset
disposals, net 3,371 6,884 (3,513) (51%)
----- ----- ------
Total operating
expenses 1,000,608 971,918 28,690 3%
--------- ------- ------
Operating income 57,692 119,957 (62,265) (52%)
Investment and other
income (expense)
Equity in earnings of
unconsolidated
entities 23,126 22,319 807 4%
Interest and dividend
income 1,420 1,137 283 25%
Gain on disposition of
investments - 16,628 (16,628) N/M
Interest expense (19,358) (19,722) 364 2%
Other, net 905 391 514 N/M
--- --- ---
Total investment
and other income
(expense) 6,093 20,753 (14,660) (71%)
----- ------ -------
Income before income
taxes 63,785 140,710 (76,925) (55%)
Income tax expense 22,541 45,506 (22,965) (50%)
------ ------ -------
Net income 41,244 95,204 (53,960) (57%)
Less: Net income
attributable to
noncontrolling
interests, net of tax (5,606) (5,255) (351) (7%)
------ ------ ----
Net income attributable
to U.S. Cellular $35,638 $89,949 $(54,311) (60%)
======= ======= =========
Basic weighted average
shares outstanding 86,848 87,460 (612) (1%)
Basic earnings per share
attributable to
U.S. Cellular
shareholders $0.41 $1.03 $(0.62) (60%)
===== ===== ======
Diluted weighted average
shares outstanding 87,128 87,833 (705) (1%)
Diluted earnings per
share attributable to
U.S. Cellular
shareholders $0.41 $1.02 $(0.61) (60%)
===== ===== ======
N/M - Percentage change not meaningful
United States Cellular Corporation
Consolidated Statement of Operations Highlights
Nine Months Ended September 30,
(Unaudited, dollars and shares in thousands, except per share amounts)
Increase (Decrease)
------------------
2009 2008 Amount Percent
---- ---- ------ -------
Operating revenues
Service $2,941,552 $2,963,374 $(21,822) (1%)
Equipment sales 212,062 226,949 (14,887) (7%)
------- ------- -------
Total operating
revenues 3,153,614 3,190,323 (36,709) (1%)
--------- --------- -------
Operating expenses
System operations
(excluding Depreciation,
amortization and accretion
reported below) 600,267 585,141 15,126 3%
Cost of equipment sold 531,110 540,182 (9,072) (2%)
Selling, general and
administrative 1,277,357 1,258,177 19,180 2%
Depreciation,
amortization and
accretion 423,851 433,222 (9,371) (2%)
Loss on asset
disposals, net 7,648 16,776 (9,128) (54%)
----- ------ ------
Total operating
expenses 2,840,233 2,833,498 6,735 -
--------- --------- -----
Operating income 313,381 356,825 (43,444) (12%)
Investment and other
income (expense)
Equity in earnings of
unconsolidated
entities 73,247 66,361 6,886 10%
Interest and dividend
income 2,648 4,471 (1,823) (41%)
Gain on disposition of N/M
investments - 16,628 (16,628)
Interest expense (57,767) (60,611) 2,844 5%
Other, net 1,183 1,109 74 7%
----- ----- --
Total investment
and other income
(expense) 19,311 27,958 (8,647) (31%)
------ ------ ------
Income before income
taxes 332,692 384,783 (52,091) (14%)
Income tax expense 111,521 137,062 (25,541) (19%)
------- ------- -------
Net income 221,171 247,721 (26,550) (11%)
Less: Net income
attributable to
noncontrolling
interests, net of
tax (17,583) (14,613) (2,970) (20%)
------- ------- ------
Net income attributable
to U.S. Cellular $203,588 $233,108 $(29,520) (13%)
======== ======== =========
Basic weighted average
shares outstanding 87,011 87,534 (523) (1%)
Basic earnings per share
attributable to
U.S. Cellular
shareholders $2.34 $2.66 $(0.32) (12%)
===== ===== ======
Diluted weighted average
shares outstanding 87,216 87,908 (692) (1%)
Diluted earnings per
share attributable to
U.S. Cellular
shareholders $2.33 $2.65 $(0.32) (12%)
===== ===== ======
N/M - Percentage change not meaningful
United States Cellular Corporation
Consolidated Balance Sheet Highlights
(Unaudited, dollars in thousands)
ASSETS
September 30, December 31,
2009 2008
---- ----
Current assets
Cash and cash equivalents $404,894 $170,996
Accounts receivable from
customers and other 447,958 419,619
Inventory 121,073 116,564
Prepaid income taxes 4,793 22,515
Prepaid expenses 63,020 51,645
Net deferred income tax asset 19,481 19,481
Other current assets 53,101 14,227
------ ------
1,114,320 815,047
Investments
Licenses 1,445,501 1,433,415
Goodwill 494,737 494,279
Customer lists 5,273 8,936
Investments in unconsolidated entities 177,497 156,637
Notes and interest receivable - long-term 4,247 4,297
----- -----
2,127,255 2,097,564
Property, plant and equipment
In service and under construction 5,718,767 5,884,383
Less: accumulated depreciation 3,157,001 3,264,007
--------- ---------
2,561,766 2,620,376
Other assets and deferred charges 38,484 33,055
Total assets $5,841,825 $5,566,042
========== ==========
United States Cellular Corporation
Consolidated Balance Sheet Highlights
(Unaudited, dollars in thousands)
LIABILITIES AND SHAREHOLDERS' EQUITY
September 30, December 31,
2009 2008
---- ----
Current liabilities
Current portion of long-term debt $10,088 $10,258
Accounts payable
Affiliated 8,633 9,613
Trade 235,353 248,785
Customer deposits and deferred revenues 146,224 151,082
Accrued taxes 56,500 17,643
Accrued compensation 57,012 55,969
Other current liabilities 102,157 108,533
------- -------
615,967 601,883
Deferred liabilities and credits
Net deferred income tax liability 518,245 478,106
Other deferred liabilities and credits 250,762 233,619
------- -------
769,007 711,725
Long-term debt 997,552 996,636
Commitments and contingencies
Noncontrolling interests with
mandatory redemption features 708 589
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 1,353,544 1,340,146
Treasury shares (63,912) (50,258)
Retained earnings 2,020,710 1,828,680
--------- ---------
Total U.S. Cellular shareholders'
equity 3,398,416 3,206,642
Noncontrolling interests 60,175 48,567
------ ------
Total equity 3,458,591 3,255,209
Total liabilities and equity $5,841,825 $5,566,042
========== ==========
United States Cellular Corporation
Consolidated Statement of Cash Flows
Nine Months Ended September 30,
(Unaudited, dollars in thousands)
2009 2008
---- ----
Cash flows from operating activities
Net income $221,171 $247,721
Add (deduct) adjustments to reconcile
net income to net cash flows from operating
activities
Depreciation, amortization and accretion 423,851 433,222
Bad debts expense 73,100 52,753
Stock-based compensation expense 13,000 11,293
Deferred income taxes, net 44,429 44,486
Equity in earnings of
unconsolidated entities (73,247) (66,361)
Distributions from unconsolidated
entities 51,306 50,859
Gain on disposition of investments - (16,628)
Loss on asset disposals, net 7,648 16,776
Excess tax benefit from stock awards (4) (1,018)
Other noncash expense 1,828 1,539
Changes in assets and liabilities from
operations
Accounts receivable (101,263) (71,551)
Inventory (4,509) (11,552)
Accounts payable - trade (13,432) 11,383
Accounts payable - affiliate (980) 134
Customer deposits and deferred revenues (4,858) 9,534
Accrued taxes 58,139 (1,724)
Accrued interest 9,787 9,787
Other assets and liabilities (68,272) (24,073)
------- -------
637,694 696,580
------- -------
Cash flows from investing activities
Additions to property, plant and equipment (357,770) (395,637)
Proceeds from disposition of investments - 16,690
Cash received from divestitures 50 6,838
Cash paid for acquisitions and licenses (12,527) (314,730)
Other investing activities 1,357 (1,255)
----- ------
(368,890) (688,094)
-------- --------
Cash flows from financing activities
Issuance of notes payable - 100,000
Repayment of notes payable - (100,000)
Common shares reissued for benefit
plans, net of tax payments (119) (1,286)
Common shares repurchased (24,283) (23,146)
Excess tax benefit from stock awards 4 1,018
Payment of debt issuance costs (4,416) -
Distributions to noncontrolling interests (5,856) (9,146)
Other financing activities (236) (2,851)
---- ------
(34,906) (35,411)
------- -------
Net increase (decrease) in cash and cash
equivalents 233,898 (26,925)
Cash and cash equivalents
Beginning of period 170,996 204,533
------- -------
End of period $404,894 $177,608
======== ========
SOURCE
United States Cellular Corporation
Jane W. McCahon, Vice President, Corporate Relations, +1-312-592-5379, jane.mccahon@teldta.com, or Julie D. Mathews, Manager, Investor Relations, +1-312-592-5341, julie.mathews@teldta.com, both of United States Cellular Corporation