United States Cellular (USM) 8-K Results of Operations and Financial Condition

Exhibit 99.1

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 ofwww.teldta.comoruscellular.com.

Contact:                 Jane W. McCahon, Vice President, Corporate Relations

                                (312) 592-5379jane.mccahon@teldta.com

                                Julie D. Mathews, Manager, Investor Relations

                                (312) 592-5341julie.mathews@teldta.com

FOR RELEASE:  IMMEDIATE

U.S. cellular Reports THIRD QUARTER RESULTS

Data revenues increase 34 percent

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.

CHICAGO – Nov. 5, 2009 – 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™ and LG Tritan™.  And, we’re optimizing our handset mix,including the recent launch of the Blackberry Tour™ 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.

·Access the live call on the Conference Calls page ofuscellular.comathttp://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=67422&eventID=2517092

·Access the call by phone at 800/706-9695 (US/Canada) and use conference ID #38289990.

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

Visituscellular.comfor 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

2

 

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.

3

  

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.

4

 

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 toU.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

5

 

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 investments			—			16,628			(16,628	)	N/M
	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 noncontrollinginterests, 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 toU.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 toU.S. Cellular shareholders			$	2.33		$	2.65		$	(0.32	)	(12	)%
N/M - Percentage change not meaningful

6

United States Cellular Corporation Consolidated Balance Sheet Highlights (Unaudited, dollars in thousands)
ASSETS
		September 30, 2009		December 31, 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

7

 

United States Cellular Corporation Consolidated Balance Sheet Highlights (Unaudited, dollars in thousands)
LIABILITIES AND SHAREHOLDERS’ EQUITY
			September 30, 2009			December 31, 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

8

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

9