Exhibit 99.1 |
As previously announced, TDS and USM will hold a joint teleconference on April 28, 2004 at 9:00 a.m. Chicago time. Interested parties may listen to the call live on the TDS web site atwww.teldta.com in the Conference Call section of Investor Relations. |
Contact: | Kenneth R. Meyers, Executive Vice President - Finance - U.S. Cellular (773) 399-8900kmeyers@uscellular.com |
Mark A. Steinkrauss, Vice President, Corporate Relations - TDS (312) 592-5384mark.steinkrauss@teldta.com |
FOR RELEASE: IMMEDIATE U.S. CELLULAR REPORTS STRONG FIRST QUARTER RESULTS April 28, 2004, Chicago, Illinois — United States Cellular Corporation [AMEX:USM] reported service revenues of $619.4 million for the first quarter of 2004, up 10% from $564.6 million in the comparable period a year ago. The company recorded operating income of $28.3 million during the quarter, an increase of $32.6 million from the first quarter of 2003, as restated. Operating expenses in 2003 included a $21.6 million loss, as restated, related to the then-pending exchange of U.S. Cellular’s Florida and Georgia properties to AT&T Wireless Services, Inc. [NYSE:AWE] (“AT&T Wireless”). Net income and basic earnings per share were $9.2 million and $.11, respectively compared to a net loss and basic loss per share of $27.8 million and $.32, respectively, in the comparable period one year ago, as restated. In the first quarter of 2003, the company recorded the cumulative effect of an accounting change, net of tax, related to the implementation of Statement of Financial Accounting Standards (SFAS) 143, “Accounting for Asset Retirement Obligations,” which reduced net income by $14.3 million. The company’s operating results include, through February 17, 2004, the operations of the southern Texas markets that were sold to AT&T Wireless on February 18, 2004. The company’s operating results include the previously mentioned Florida and Georgia properties’ results for the entire first quarter of 2003, but exclude those properties’ results for 2004. First Quarter Highlights |
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“We had an exceptional quarter at U.S. Cellular, thanks in large part to our terrific sales and customer service organization. Our net customer additions from distribution channels were 196,000 for the quarter, more than double investment community expectations. Customer demand was strong across all of our markets and was steady for each month of the quarter,” said John E. Rooney, president and chief executive officer. “Furthermore, we not only added substantially to our customer base, but also retained our existing customers in one of the country’s most competitive industries. Our postpay churn rate was 1.3% for the quarter, one of the lowest in the industry, and especially meaningful to us since 97% of our customers are postpay,” continued Rooney. “Both the net addition and churn results certainly attest to the effectiveness of our strategy of focusing on our customers, providing them good value and outstanding service. That doesn’t happen without great people who are empowered to put the customer first.” “In addition to our strong customer addition and retention performance, we increased our year-over-year monthly retail service revenue per customer for the ninth consecutive quarter. A number of factors were responsible for this, including growing customer adoption of our data products; the availability of camera phones and picture-messaging service; and our focus on selling higher-value plans, vertical services and accessory equipment. “All in all, a very good quarter. Service revenues increased 10%, despite the disposition of several markets, and profitability improved year over year as well. We look forward to continued growth in the business as the overall economy seems poised for continued improvement,” Rooney concluded. U.S. Cellular Corporation, the nation’s eighth largest wireless service carrier, provides wireless service to more than 4.5 million customers in 28 states. The 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: changes in circumstances or events that may affect the ability of the company to start up the operations of the licensed areas involved in the AWE transaction completed in August 2003; the ability of the company to successfully manage and grow the operations of the Chicago MTA; changes in the overall economy; changes in competition in the markets in which the company operates; advances in telecommunications technology; changes brought about by the implementation of wireless local number portability; changes in the telecommunications regulatory environment; changes in the value of investments, including variable prepaid forward contracts; changes in the capital markets that could adversely impact the availability, cost and terms of financing; an adverse change in the ratings afforded our debt securities by nationally accredited ratings organizations; pending and future litigation; acquisitions/divestitures of properties and/or licenses; changes in customer growth rates, retail service 2 |
revenue per unit, churn rates, roaming rates 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 documents filed by the Company with the Securities and Exchange Commission. As previously announced, TDS and U.S. Cellular will hold a joint teleconference on April 28, 2004 at 9:00 a.m. Chicago time. Interested parties may listen to the call live over the Internet by accessing the conference call section ofwww.uscellular.com, by accessinghttp://www.firstcallevents.com/service/ajwz405201898gf12.html or by calling 888/245-6674 Conference ID#6960621. The conference call will also be archived on the conference call section of the U.S. Cellular web site atwww.uscellular.com. Certain financial and statistical information contained in the conference call presentation will be posted to the conference call page of the Investor Relations section of the U.S. Cellular web site, together with reconciliations to generally accepted accounting principles (GAAP) of any non-GAAP information to be disclosed, prior to the commencement of the call. USM’s Internet Home Page:www.uscellular.com 3 |
UNITED STATES CELLULAR CORPORATION |
Quarter Ended | 3/31/04 | 12/31/03 | 9/30/03 | 6/30/03 | 3/31/03 | ||||||||||||
Consolidated Markets: | |||||||||||||||||
Total population (000s) (1) | 45,581 | 46,267 | 45,817 | 41,288 | 41,288 | ||||||||||||
Customer units | 4,547,000 | 4,409,000 | 4,268,000 | 4,343,000 | 4,240,000 | ||||||||||||
Net customer unit activations | 196,000 | 141,000 | 66,000 | 103,000 | 137,000 | ||||||||||||
Market penetration (1) | 9.98 | % | 9.53 | % | 9.32 | % | 10.52 | % | 10.27 | % | |||||||
Cell sites in service | 4,122 | 4,184 | 4,082 | 4,106 | 3,987 | ||||||||||||
Average monthly revenue per unit (2) | $ | 46.16 | $ | 47.80 | $ | 49.05 | $ | 47.38 | $ | 45.05 | |||||||
Retail service revenue per unit (2) | $ | 40.26 | $ | 40.64 | $ | 40.68 | $ | 39.69 | $ | 37.68 | |||||||
Inbound roaming revenue per unit (2) | $ | 3.17 | $ | 3.90 | $ | 4.65 | $ | 4.41 | $ | 4.36 | |||||||
Long-distance/other revenue per unit (2) | $ | 2.73 | $ | 3.26 | $ | 3.72 | $ | 3.28 | $ | 3.01 | |||||||
Minutes of use (MOU) (3) | 491 | 462 | 435 | 424 | 377 | ||||||||||||
Postpay churn rate per month (4) | 1.3 | % | 1.4 | % | 1.6 | % | 1.5 | % | 1.6 | % | |||||||
Marketing cost per gross | |||||||||||||||||
customer unit addition (5) | $ | 371 | $ | 384 | $ | 405 | $ | 378 | $ | 358 | |||||||
Capital Expenditures ($000s) | $ | 100,535 | $ | 193,413 | $ | 135,111 | $ | 163,076 | $ | 140,926 |
(1) | Market penetration is calculated using 2003 Claritas population estimates for 3/31/04 and 2002 Claritas estimates for 2003. "Total population" represents the total population of each of U.S. Cellular's consolidated markets, regardless of whether the market has begun marketing operations. The 3/31/04 total population counts include the population of the market added to consolidated operations as of 1/1/04, but exclude the population of the six markets sold to AT&T Wireless in February 2004. The 12/31/03 and 9/30/03 total population counts exclude the population of the 10 markets transferred to AT&T Wireless in August 2003 and include the population of markets acquired from AT&T Wireless in that transaction. The population of markets in which U.S. Cellular has deferred the transfer of licenses from AT&T Wireless 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 | $ | 619,382 | $ | 620,639 | $ | 628,440 | $ | 610,109 | $ | 564,601 | |||||||
Components: | |||||||||||||||||
Retail service revenue during quarter | $ | 540,228 | $ | 527,626 | $ | 521,247 | $ | 511,106 | $ | 472,308 | |||||||
Inbound roaming revenue during quarter | $ | 42,499 | $ | 50,653 | $ | 59,638 | $ | 56,840 | $ | 54,606 | |||||||
Long-distance/other revenue during quarter | $ | 36,655 | $ | 42,360 | $ | 47,555 | $ | 42,163 | $ | 37,687 | |||||||
Divided by average customers during quarter (000s) | 4,473 | 4,328 | 4,271 | 4,292 | 4,178 | ||||||||||||
Divided by three months in each quarter | 3 | 3 | 3 | 3 | 3 | ||||||||||||
Average monthly revenue per unit | $ | 46.16 | $ | 47.80 | $ | 49.05 | $ | 47.38 | $ | 45.05 | |||||||
Retail service revenue per unit | $ | 40.26 | $ | 40.64 | $ | 40.68 | $ | 39.69 | $ | 37.68 | |||||||
Inbound roaming revenue per unit | $ | 3.17 | $ | 3.90 | $ | 4.65 | $ | 4.41 | $ | 4.36 | |||||||
Long-distance/other revenue per unit | $ | 2.73 | $ | 3.26 | $ | 3.72 | $ | 3.28 | $ | 3.01 |
(3) | Average monthly local minutes of use per customer (without roaming). |
(4) | Postpay churn rate per month is calculated by dividing the average monthly postpay customer disconnects during the quarter by the average postpay customer base for the quarter. |
(5) | Due to changes in accounting for agent rebates and net customer retention expenses, for all periods shown this measurement is no longer calculable using information from the financial statements as reported. The details of this calculation and a reconciliation to line items reported in Financial Highlights for each respective quarter are shown on U.S. Cellular's web site, along with additional information related to U.S. Cellular's first quarter results, at www.uscellular.com. |
4 |
UNITED STATES CELLULAR CORPORATION |
Increase (Decrease) | ||||||||||||||
2003 | ||||||||||||||
2004 | Restated | Amount | Percent | |||||||||||
Operating Revenues | ||||||||||||||
Service Revenues | $ | 619,382 | $ | 564,601 | $ | 54,781 | 9.7% | |||||||
Equipment Sales | 38,268 | 39,173 | (905 | ) | (2.3% | ) | ||||||||
657,650 | 603,774 | 53,876 | 8.9% | |||||||||||
Operating Expenses | ||||||||||||||
System Operations | 137,523 | 137,965 | (442 | ) | (0.3% | ) | ||||||||
Cost of Equipment Sold | 119,888 | 88,643 | 31,245 | 35.2% | ||||||||||
Selling, General and Administrative | 258,206 | 250,352 | 7,854 | 3.1% | ||||||||||
Depreciation | 101,440 | 94,900 | 6,540 | 6.9% | ||||||||||
Amortization and Accretion | 12,454 | 14,677 | (2,223 | ) | (15.1% | ) | ||||||||
(Gain) Loss on Assets Held for Sale | (143 | ) | 21,561 | (21,704 | ) | N/M | ||||||||
629,368 | 608,098 | 21,270 | 3.5% | |||||||||||
Operating Income | 28,282 | (4,324 | ) | 32,606 | N/M | |||||||||
Investment Income | 14,287 | 12,378 | 1,909 | 15.4% | ||||||||||
Interest (Expense) | (20,315 | ) | (15,454 | ) | (4,861 | ) | (31.5% | ) | ||||||
(Loss) on Investments | — | (3,500 | ) | 3,500 | N/M | |||||||||
Other Income | 751 | 261 | 490 | 187.7% | ||||||||||
Income Before Income Taxes and Minority Interest | 23,005 | (10,639 | ) | 33,644 | N/M | |||||||||
Income Tax Expense (Benefit) | 11,661 | (388 | ) | 12,049 | N/M | |||||||||
Income Before Minority Interest | 11,344 | (10,251 | ) | 21,595 | N/M | |||||||||
Minority Share of Income | (2,112 | ) | (3,229 | ) | 1,117 | 34.6% | ||||||||
Income (Loss) Before Cumulative Effect of Accounting Change | 9,232 | (13,480 | ) | 22,712 | N/M | |||||||||
Cumulative effect of accounting change, net of tax | — | (14,346 | ) | 14,346 | N/M | |||||||||
Net Income | $ | 9,232 | $ | (27,826 | ) | $ | 37,058 | N/M | ||||||
Weighted Average Common and Series A Common Shares (000s) (Basic) | 86,153 | 86,121 | 32 | |||||||||||
Earnings Per Common and Series A Common Share ("EPS") (Basic) | $ | 0.11 | $ | (0.32 | ) | $ | 0.43 | N/M | ||||||
Basic EPS Before Cumulative Effect of Accounting Change | $ | 0.11 | $ | (0.15 | ) | $ | 0.26 | N/M | ||||||
Basic EPS from Cumulative Effect of Accounting Change | $ | — | $ | (0.17 | ) | $ | 0.17 | N/M | ||||||
Earnings Per Common and Series A Common Share ("EPS") (Diluted) | $ | 0.11 | $ | (0.32 | ) | $ | 0.43 | N/M | ||||||
Diluted EPS Before Cumulative Effect of Accounting Change | $ | 0.11 | $ | (0.15 | ) | $ | 0.26 | N/M | ||||||
Diluted EPS from Cumulative Effect of Accounting Change | $ | — | $ | (0.17 | ) | $ | 0.17 | N/M |
N/M - Percent change not meaningful 5 |
UNITED STATES CELLULAR CORPORATION ASSETS |
March 31, 2004 | December 31, 2003 Restated | |||||||
Current Assets | ||||||||
Cash and cash equivalents | ||||||||
General funds | $ | 35,005 | $ | 9,822 | ||||
Affiliated cash equivalents | 30 | 26 | ||||||
35,035 | 9,848 | |||||||
Accounts receivable | 279,309 | 286,980 | ||||||
Inventory | 55,978 | 70,963 | ||||||
Prepaid expenses and other current assets | 58,256 | 56,314 | ||||||
428,578 | 424,105 | |||||||
Investments | ||||||||
Licenses | 1,196,774 | 1,193,798 | ||||||
Goodwill | 433,250 | 430,256 | ||||||
Customer list, net | 34,287 | 24,448 | ||||||
License rights | 42,037 | 42,037 | ||||||
Marketable equity securities | 248,403 | 260,188 | ||||||
Investments in unconsolidated entities, net | 174,297 | 170,569 | ||||||
Notes and interest receivable--long-term | 5,400 | 6,476 | ||||||
2,134,448 | 2,127,772 | |||||||
Property, Plant and Equipment | ||||||||
In service and under construction | 3,549,751 | 3,441,177 | ||||||
Less accumulated depreciation | 1,370,131 | 1,267,293 | ||||||
2,179,620 | 2,173,884 | |||||||
Deferred Charges | ||||||||
System development costs, net | 84,291 | 97,370 | ||||||
Other, net | 26,492 | 26,565 | ||||||
110,783 | 123,935 | |||||||
Assets of Operations Held for Sale | — | 100,523 | ||||||
Total Assets | $ | 4,853,429 | $ | 4,950,219 | ||||
NOTE: Certain December 31, 2003 amounts have been changed to conform to current period presentation. 6a |
UNITED STATES CELLULAR CORPORATION LIABILITIES AND SHAREHOLDERS' EQUITY |
March 31, 2004 | December 31, 2003 Restated | |||||||
Current Liabilities | ||||||||
Current portion of long-term debt | $ | 3,000 | $ | 3,000 | ||||
Current portion of long-term debt - affiliates | — | 105,000 | ||||||
Notes payable | 85,000 | — | ||||||
Accounts payable | ||||||||
Affiliates | 3,938 | 4,252 | ||||||
Trade | 214,363 | 281,306 | ||||||
Customer deposits and deferred revenues | 100,850 | 93,789 | ||||||
Accrued interest | 14,335 | 11,416 | ||||||
Accrued taxes | 30,251 | 24,228 | ||||||
Accrued compensation | 26,062 | 39,257 | ||||||
Other current liabilities | 21,966 | 19,648 | ||||||
499,765 | 581,896 | |||||||
Long-term Debt | ||||||||
6% zero coupon convertible debentures | 160,019 | 157,659 | ||||||
7.25% unsecured notes | 250,000 | 250,000 | ||||||
Variable prepaid forward contract | 159,856 | 159,856 | ||||||
8.75% notes | 130,000 | 130,000 | ||||||
6.7% notes | 436,889 | 436,829 | ||||||
Other | 10,000 | 10,000 | ||||||
1,146,764 | 1,144,344 | |||||||
Deferred Liabilities and Credits | 693,081 | 693,346 | ||||||
Minority Interest | 34,397 | 60,097 | ||||||
Liabilities of Operations Held for Sale | — | 2,427 | ||||||
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 | 1,308,947 | 1,308,963 | ||||||
Treasury Shares | (113,377 | ) | (115,156 | ) | ||||
Accumulated other comprehensive income | 27,105 | 26,789 | ||||||
Retained earnings | 1,168,695 | 1,159,461 | ||||||
2,479,422 | 2,468,109 | |||||||
Total Liabilities and Shareholders' Equity | $ | 4,853,429 | $ | 4,950,219 | ||||
NOTE: Certain December 31, 2003 amounts have been changed to conform to current period presentation. 6b |