Exhibit 99.1
Contact: | Kenneth R. Meyers, Executive Vice President, Finance, U.S. Cellular |
| (773) 399-8900 kmeyers@uscellular.com |
| |
| Mark A. Steinkrauss, Vice President, Corporate Relations, TDS |
| (312) 592-5384 mark.steinkrauss@teldta.com |
FOR RELEASE: IMMEDIATE
U.S. CELLULAR REPORTS THIRD QUARTER 2005 RESULTS
AND RESTATED RESULTS FOR CERTAIN PRIOR PERIODS
CHICAGO – April 26, 2006 - United States Cellular Corporation [AMEX:USM] reported service revenues of $729.5 million for the third quarter of 2005, up 7 percent from $683.3 million, as restated, for the comparable period one year ago. The company recorded operating income of $66.2 million during the quarter, up 24 percent compared to $53.4 million for the third quarter of 2004, as restated. Net income and basic earnings per share were $34.6 million and $0.40, respectively, compared to net income and basic earnings per share of $27.6 million and $0.32, respectively, as restated, for the comparable period one year ago.
On Nov. 10, 2005, U.S. Cellular announced that it would restate financial results for several prior periods, resulting in a delay in issuing its third quarter 2005 results. Today, the company completed the restatements for the first and second quarters of 2005, the years ended Dec. 31, 2002 – 2004, each of the quarters of 2004 and 2003, and certain selected financial data for the years 2001 and 2000. It was necessary to complete the restatements on amended Forms 10-Q and 10-K before the company could release third quarter operating results. All of the amended financial statements are expected to be filed with the Securities and Exchange Commission (SEC) later today.
Restated consolidated statements of operations and consolidated balance sheets are attached to this press release as appendices 1 through 5.
Third Quarter Highlights
• Customers totaled 5,303,000, a 10 percent increase from 4,828,000 customers one year ago.
• Net customer activations from distribution channels totaled 76,000, compared to 144,000 net activations for the same quarter in 2004. Excluding reseller customer activations, net retail customer activations totaled 77,000 and 111,000 in each respective quarter.
• The company recorded postpay churn of 1.5 percent, which compares favorably to industry averages.
Comments on Third Quarter 2005 Results
The company’s strategy continues to focus on maximizing the customer experience, as is demonstrated by its low 1.5 percent postpay churn rate, which is down slightly year over year. Also in the quarter, 95 percent of customers’ minutes of use were on U.S. Cellular’s network, demonstrating that a regional approach to wireless service meets the needs of our customers in the company’s markets.
U.S. Cellular again received third-party endorsement of its strong customer service. During the quarter, the company received a ranking of “Highest Overall Satisfaction Among Wireless Telephone Users in North Central Region in a Tie” in the J.D. Power and Associates 2005 U.S. Wireless Regional Customer Satisfaction Index (CSI) StudySM. The North Central Region covers Wisconsin, Illinois, Indiana, Ohio, and Michigan.
The company’s operations are off to a good start in St. Louis, the only market launched in 2005. This is an important market, as it is large and provides Midwest customers with an even broader calling area. It’s encouraging to note that gross customer additions for the St. Louis market thus far have been primarily postpay accounts. The company will not launch any significant new markets in 2006. Rather, U.S. Cellular will concentrate on building on successes in St. Louis and other recently launched markets.
In the quarter, the U.S. Cellular also introduced SpeedTalkSM, a ‘walkie-talkie’ service that allows customers to use U.S. Cellular’s superior calling network combined with the ability to contact up to 25 people with the touch of a button. Customer response to this offering has been better than expected to date, with a great deal of interest coming from current small-and medium-size businesses.
Restatement
U.S. Cellular has amended its Form 10-K for the year ended Dec. 31, 2004 to restate financial statements and financial information for each of the years ended Dec. 31, 2002-2004, including quarterly information for 2004 and 2003, and certain selected financial data for the years 2001 and 2000. U.S. Cellular also amended its Forms 10-Q for the first two quarters of 2005 to restate quarterly financial statements and financial information included in those filings. Restated consolidated statements of operations and consolidated balance sheets are attached to this press release as appendices 1 through 5. U.S. Cellular will also file its Form 10-Q for the third quarter of 2005. U.S. Cellular’s complete filings can be accessed on its website at www.uscellular.com or on the website of the SEC at www.sec.gov.
U.S. Cellular’s filings include disclosure of certain material weaknesses in internal control over financial reporting and U.S. Cellular’s plans to remediate those weaknesses.
Due to the lengthy restatement process, U.S. Cellular does not expect to file its Form 10-K for the year ended Dec. 31, 2005, or its Form 10-Q for the quarter ended March 31, 2006, on a timely basis. As a result of the late filings, U.S. Cellular will not be in compliance with American Stock Exchange (AMEX) listing standards. U.S. Cellular has obtained an extension until June 30, 2006 to regain compliance with AMEX listing standards.
US Cellular has received waivers under its multi-bank revolving credit facility and certain forward contracts, which permit U.S. Cellular to remain in compliance with its covenants, provided that it files its Form 10-K for the year ended Dec. 31, 2005 by May 31, 2006, and its Form 10-Q for the quarter ended March 31, 2006, by June 30, 2006.
2
Certain financial and statistical information will be posted to the website, together with reconciliations to generally accepted accounting principles (GAAP). Investors may access this additional information on the Investor Relations page of the U.S. Cellular web site.
About U.S. Cellular
As of Dec. 31, 2005, U.S. Cellular Corporation, the nation’s sixth-largest wireless service carrier, provided wireless service to 5.5 million customers in 26 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: Possible future restatements; the ability of the company to successfully manage and grow the operations of the Chicago MTA and newly launched markets; changes in competition in the markets in which the company operates; changes in the overall economy; changes due to industry consolidation; advances in telecommunications technology; changes in the telecommunications regulatory environment; changes in the value of investments, including variable prepaid forward contracts; an adverse change in the ratings afforded our debt securities by accredited ratings organizations; pending and future litigation; acquisitions/divestitures of properties and/or licenses; and changes in customer growth rates, average monthly 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 the Form 8-K used by U.S. Cellular to furnish this press release to the SEC, which are incorporated by reference herein.
For more information about U.S. Cellular, visit: www.uscellular.com.
###
3
UNITED STATES CELLULAR CORPORATION
SUMMARY OPERATING DATA
Quarter Ended | | 9/30/2005 | | 6/30/2005 | | 3/31/2005 | | 12/31/2004 | | 9/30/2004 | |
| | | | | | | | | | | |
Consolidated Markets: | | | | | | | | | | | |
Total population (000s) (1) | | 44,690 | | 44,690 | | 44,576 | | 44,391 | | 45,581 | |
All customers - | | | | | | | | | | | |
Customer units | | 5,303,000 | | 5,227,000 | | 5,127,000 | | 4,945,000 | | 4,828,000 | |
Gross customer unit activations | | 355,000 | | 340,000 | | 426,000 | | 408,000 | | 387,000 | |
Net customer unit activations | | 76,000 | | 94,000 | | 182,000 | | 150,000 | | 144,000 | |
Market penetration (1) | | 11.87 | % | 11.70 | % | 11.50 | % | 11.14 | % | 10.59 | % |
Retail customers - | | | | | | | | | | | |
Customer units | | 4,765,000 | | 4,688,000 | | 4,601,000 | | 4,478,000 | | 4,395,000 | |
Gross customer unit activations | | 346,000 | | 317,000 | | 365,000 | | 358,000 | | 354,000 | |
Net customer unit activations | | 77,000 | | 81,000 | | 123,000 | | 105,000 | | 111,000 | |
| | | | | | | | | | | |
Cell sites in service | | 5,149 | | 5,034 | | 4,899 | | 4,856 | | 4,713 | |
Average monthly revenue per unit (2) | | $ | 46.19 | | $ | 44.52 | | $ | 44.46 | | $ | 45.41 | | $ | 47.88 | |
Retail service revenue per unit (2) | | $ | 40.25 | | $ | 39.40 | | $ | 39.20 | | $ | 39.93 | | $ | 40.91 | |
Inbound roaming revenue per unit (2) | | $ | 2.70 | | $ | 2.27 | | $ | 1.98 | | $ | 2.38 | | $ | 3.47 | |
Long-distance/other revenue per unit (2) | | $ | 3.24 | | $ | 2.85 | | $ | 3.28 | | $ | 3.10 | | $ | 3.50 | |
Minutes of use (MOU) (3) | | 639 | | 627 | | 584 | | 568 | | 553 | |
Postpay churn rate per month (4) | | 1.5 | % | 1.4 | % | 1.5 | % | 1.6 | % | 1.6 | % |
Marketing cost per gross customer unit addition (5) | | $ | 491 | | $ | 461 | | $ | 396 | | $ | 440 | | $ | 407 | |
Construction Expenditures (000s) | | $ | 128,300 | | $ | 143,800 | | $ | 112,800 | | $ | 261,500 | | $ | 130,800 | |
(1) Market penetration is calculated using 2004 Claritas population estimates for all periods of 2005 and 2003 Claritas estimates for all periods of 2004. “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 9/30/05 total population counts include the population of the market acquired from Cingular Wireless in April 2005. The total population counts on and after 12/31/04 exclude the population of the two markets sold to ALLTEL in November 2004. The 9/30/04 total population counts include the population of the market added to consolidated operations as of 1/1/04. The population of markets in which U.S. Cellular has deferred the transfer of licenses from AT&T Wireless (now Cingular Wireless) are not included in the total population counts for any period, nor are the population counts of markets for which Carroll Wireless, L.P., a consolidated U.S. Cellular subsidiary, was the winning bidder in the Federal Communications Commission’s Auction 58 that concluded in February 2005. The total population counts for all periods include the population of the two markets agreed to be divested to ALLTEL pursuant to the September 2005 exchange agreement, and exclude the population of the 15 markets agreed to be acquired pursuant to such agreement.
(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 | | $ | 729,504 | | $ | 691,746 | | $ | 671,639 | | $ | 662,955 | | $ | 683,258 | |
Components: | | | | | | | | | | | |
Retail service revenue during quarter | | $ | 635,610 | | $ | 612,159 | | $ | 592,167 | | $ | 582,950 | | $ | 583,852 | |
Inbound roaming revenue during quarter | | $ | 42,654 | | $ | 35,313 | | $ | 29,875 | | $ | 34,812 | | $ | 49,572 | |
Long-distance/other revenue during quarter | | $ | 51,240 | | $ | 44,274 | | $ | 49,597 | | $ | 45,193 | | $ | 49,834 | |
| | | | | | | | | | | |
Divided by average customers during quarter (000s) | | 5,264 | | 5,179 | | 5,035 | | 4,866 | | 4,757 | |
Divided by three months in each quarter | | 3 | | 3 | | 3 | | 3 | | 3 | |
| | | | | | | | | | | |
Average monthly revenue per unit | | $ | 46.19 | | $ | 44.52 | | $ | 44.46 | | $ | 45.41 | | $ | 47.88 | |
Retail service revenue per unit | | $ | 40.25 | | $ | 39.40 | | $ | 39.20 | | $ | 39.93 | | $ | 40.91 | |
Inbound roaming revenue per unit | | $ | 2.70 | | $ | 2.27 | | $ | 1.98 | | $ | 2.38 | | $ | 3.47 | |
Long-distance/other revenue per unit | | $ | 3.24 | | $ | 2.85 | | $ | 3.28 | | $ | 3.10 | | $ | 3.50 | |
(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) This measurement is not 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 third quarter results, at www.uscellular.com.
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UNITED STATES CELLULAR CORPORATION
FINANCIAL HIGHLIGHTS
Three Months Ended September 30,
(Unaudited, dollars in thousands, except per share amounts)
| | | | | | Increase (Decrease) | |
| | 2005 | | 2004 | | Amount | | Percent | |
| | | | (As Restated) | | | | | |
Operating Revenues | | | | | | | | | |
Service | | $ | 729,504 | | $ | 683,258 | | $ | 46,246 | | 6.8 | % |
Equipment sales | | 66,002 | | 57,035 | | 8,967 | | 15.7 | % |
Total Operating Revenues | | 795,506 | | 740,293 | | 55,213 | | 7.5 | % |
Operating Expenses | | | | | | | | | |
System operations (excluding depreciation shown below) | | 159,102 | | 151,102 | | 8,000 | | 5.3 | % |
Cost of equipment sold | | 130,823 | | 126,731 | | 4,092 | | 3.2 | % |
Selling, general and administrative | | 312,777 | | 281,522 | | 31,255 | | 11.1 | % |
Depreciation, amortization and accretion | | 126,583 | | 127,503 | | (920 | ) | (0.7 | )% |
Total Operating Expenses | | 729,285 | | 686,858 | | 42,427 | | 6.2 | % |
| | | | | | | | | |
Operating Income | | 66,221 | | 53,435 | | 12,786 | | 23.9 | % |
| | | | | | | | | |
Investment and Other Income (Expense) | | | | | | | | | |
Investment income | | 17,744 | | 18,002 | | (258 | ) | (1.4 | )% |
Interest and dividend income | | 384 | | 678 | | (294 | ) | (43.4 | )% |
Interest (expense) | | (21,122 | ) | (23,671 | ) | 2,549 | | 10.8 | % |
Other (expense), net | | (691 | ) | (3,330 | ) | 2,639 | | 79.2 | % |
| | (3,685 | ) | (8,321 | ) | 4,636 | | 55.7 | % |
Income Before Income Taxes and Minority Interest | | 62,536 | | 45,114 | | 17,422 | | 38.6 | % |
Income tax expense | | 24,471 | | 14,319 | | 10,152 | | 70.9 | % |
Income Before Minority Interest | | 38,065 | | 30,795 | | 7,270 | | 23.6 | % |
Minority share of income | | (3,445 | ) | (3,202 | ) | (243 | ) | (7.6 | )% |
Net Income | | $ | 34,620 | | $ | 27,593 | | $ | 7,027 | | 25.5 | % |
| | | | | | | | | |
Basic Weighted Average Common Shares Outstanding (000s) | | 86,904 | | 86,278 | | 626 | | 0.7 | % |
Basic Earnings Per Share | | $ | 0.40 | | $ | 0.32 | | 0.08 | | 25.0 | % |
| | | | | | | | | |
Diluted Weighted Average Common Shares Outstanding (000s) | | 87,661 | | 86,797 | | 864 | | 1.0 | % |
Diluted Earnings Per Share | | $ | 0.39 | | $ | 0.32 | | $ | 0.07 | | 21.9 | % |
5
UNITED STATES CELLULAR CORPORATION
FINANCIAL HIGHLIGHTS
Nine Months Ended September 30,
(Unaudited, dollars in thousands, except per share amounts)
| | | | | | Increase (Decrease) | |
| | 2005 | | 2004 | | Amount | | Percent | |
| | | | (As Restated) | | | | | |
Operating Revenues | | | | | | | | | |
Service | | $ | 2,092,889 | | $ | 1,953,991 | | $ | 138,898 | | 7.1 | % |
Equipment sales | | 155,653 | | 145,067 | | 10,586 | | 7.3 | % |
Total Operating Revenues | | 2,248,542 | | 2,099,058 | | 149,484 | | 7.1 | % |
Operating Expenses | | | | | | | | | |
System operations (excluding depreciation shown below) | | 444,811 | | 436,047 | | 8,764 | | 2.0 | % |
Cost of equipment sold | | 374,882 | | 357,154 | | 17,728 | | 5.0 | % |
Selling, general and administrative | | 875,316 | | 797,938 | | 77,378 | | 9.7 | % |
Depreciation, amortization and accretion | | 380,860 | | 363,749 | | 17,111 | | 4.7 | % |
(Gain) on assets held for sale | | — | | (725 | ) | 725 | | N/M | |
Total Operating Expenses | | 2,075,869 | | 1,954,163 | | 121,706 | | 6.2 | % |
| | | | | | | | | |
Operating Income | | 172,673 | | 144,895 | | 27,778 | | 19.2 | % |
| | | | | | | | | |
Investment and Other Income (Expense) | | | | | | | | | |
Investment income | | 50,009 | | 48,083 | | 1,926 | | 4.0 | % |
Interest and dividend income | | 6,756 | | 3,156 | | 3,600 | | 114.1 | % |
Interest (expense) | | (63,304 | ) | (64,937 | ) | 1,633 | | 2.5 | % |
Gain (loss) on investments | | 551 | | (1,830 | ) | 2,381 | | 130.1 | % |
Other (expense), net | | (536 | ) | (2,779 | ) | 2,243 | | 80.7 | % |
| | (6,524 | ) | (18,307 | ) | 11,783 | | 64.4 | % |
Income Before Income Taxes and Minority Interest | | 166,149 | | 126,588 | | 39,561 | | 31.3 | % |
Income tax expense | | 65,445 | | 47,337 | | 18,108 | | 38.3 | % |
Income Before Minority Interest | | 100,704 | | 79,251 | | 21,453 | | 27.1 | % |
Minority share of income | | (8,442 | ) | (7,824 | ) | (618 | ) | (7.9 | )% |
Net Income | | $ | 92,262 | | $ | 71,427 | | $ | 20,835 | | 29.2 | % |
| | | | | | | | | |
Basic Weighted Average Common Shares Outstanding (000s) | | 86,674 | | 86,211 | | 463 | | 0.5 | % |
Basic Earnings Per Share | | $ | 1.06 | | $ | 0.83 | | $ | 0.23 | | 27.7 | % |
| | | | | | | | | |
Diluted Weighted Average Common Shares Outstanding (000s) | | 87,390 | | 86,714 | | 676 | | 0.8 | % |
Diluted Earnings Per Share | | $ | 1.06 | | $ | 0.82 | | $ | 0.24 | | 29.3 | % |
N/M - Percentage change not meaningful
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UNITED STATES CELLULAR CORPORATION
CONSOLIDATED BALANCE SHEET HIGHLIGHTS
(Unaudited, dollars in thousands)
ASSETS
| | September 30,
2005 | | December 31,
2004 | |
| | | | (As Restated) | |
Current Assets | | | | | |
Cash and cash equivalents | | $ | 31,069 | | $ | 41,062 | |
Accounts receivable from customers and other | | 325,551 | | 316,436 | |
Inventory | | 54,899 | | 76,918 | |
Prepaid expenses | | 31,360 | | 31,764 | |
Deferred income tax asset | | 15,337 | | 73,216 | |
Other current assets | | 12,854 | | 24,951 | |
| | 471,070 | | 564,347 | |
| | | | | |
Investments | | | | | |
Licenses | | 1,340,489 | | 1,228,801 | |
Goodwill | | 442,698 | | 445,212 | |
Customer lists | | 18,876 | | 24,915 | |
Marketable equity securities | | 270,582 | | 282,829 | |
Investments in unconsolidated entities | | 178,874 | | 155,519 | |
Notes and interest receivable—long-term | | 4,727 | | 4,885 | |
| | 2,256,246 | | 2,142,161 | |
| | | | | |
Property, Plant and Equipment | | | | | |
In service and under construction | | 4,397,253 | | 4,133,471 | |
Less accumulated depreciation | | 1,975,846 | | 1,692,751 | |
| | 2,421,407 | | 2,440,720 | |
| | | | | |
Other Assets and Deferred Charges | | 28,260 | | 32,807 | |
| | | | | |
Assets of Operations Held for Sale | | 66,644 | | — | |
| | | | | |
Total Assets | | $ | 5,243,627 | | $ | 5,180,035 | |
LIABILITIES AND SHAREHOLDERS’ EQUITY
| | September 30,
2005 | | December 31,
2004 | |
| | | | (As Restated) | |
Current Liabilities | | | | | |
Notes payable | | $ | — | | $ | 30,000 | |
Accounts payable | | | | | |
Affiliates | | 6,453 | | 5,314 | |
Trade | | 212,432 | | 259,167 | |
Customer deposits and deferred revenues | | 103,146 | | 104,394 | |
Accrued taxes | | 95,997 | | 80,512 | |
Accrued compensation | | 33,063 | | 49,116 | |
Other current liabilities | | 38,116 | | 20,829 | |
| | 489,207 | | 549,332 | |
| | | | | |
Long-term Debt | | 1,161,127 | | 1,160,786 | |
| | | | | |
Deferred Liabilities and Credits | | 832,910 | | 840,268 | |
| | | | | |
Liabilities of Operations Held for Sale | | 5,585 | | — | |
| | | | | |
Minority Interest | | 46,407 | | 40,052 | |
| | | | | |
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 | | 1,283,614 | | 1,305,249 | |
Treasury Shares | | (50,000 | ) | (99,627 | ) |
Accumulated other comprehensive income | | 31,343 | | 32,803 | |
Retained earnings | | 1,355,382 | | 1,263,120 | |
| | 2,708,391 | | 2,589,597 | |
| | | | | |
Total Liabilities and Shareholders’ Equity | | $ | 5,243,627 | | $ | 5,180,035 | |
| | | | | | | | | |
NOTE: Certain December 31, 2004 amounts have been changed to conform to current period presentation.
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Appendix 1
UNITED STATES CELLULAR CORPORATION
FINANCIAL HIGHLIGHTS
Year Ended December 31,
(Unaudited, dollars in thousands, except per share amounts)
| | 2004 | | 2003 | | 2002 | |
| | As Previously
Reported | | As
Restated | | As Previously
Reported | | As
Restated | | As Previously
Reported | | As
Restated | |
Operating Revenues | | | | | | | | | | | | | |
Service | | $ | 2,647,227 | | $ | 2,616,946 | | $ | 2,423,789 | | $ | 2,418,922 | | $ | 2,098,893 | | $ | 2,100,213 | |
Equipment sales | | 190,392 | | 191,255 | | 158,994 | | 158,832 | | 98,693 | | 98,662 | |
Total Operating Revenues | | 2,837,619 | | 2,808,201 | | 2,582,783 | | 2,577,754 | | 2,197,586 | | 2,198,875 | |
| | | | | | | | | | | | | |
Operating Expenses | | | | | | | | | | | | | |
System operations (excluding Depreciation shown separately below) | | 563,069 | | 562,690 | | 576,159 | | 578,289 | | 492,750 | | 493,624 | |
Cost of equipment sold | | 486,952 | | 486,605 | | 355,150 | | 355,139 | | 242,523 | | 242,465 | |
Selling, general and administrative | | 1,122,700 | | 1,088,181 | | 1,004,655 | | 1,007,599 | | 829,993 | | 831,421 | |
Depreciation | | 450,032 | | 450,292 | | 374,769 | | 374,935 | | 311,993 | | 312,434 | |
Amortization and accretion | | 47,910 | | 47,910 | | 57,564 | | 57,564 | | 39,161 | | 39,161 | |
Loss on impairment of intangible assets | | — | | — | | 49,595 | | 49,595 | | — | | — | |
(Gain) loss on assets held for sale | | (10,806 | ) | (10,806 | ) | 45,908 | | 45,908 | | — | | — | |
Total Operating Expenses | | 2,659,857 | | 2,624,872 | | 2,463,800 | | 2,469,029 | | 1,916,420 | | 1,919,105 | |
| | | | | | | | | | | | | |
Operating Income | | 177,762 | | 183,329 | | 118,983 | | 108,725 | | 281,166 | | 279,770 | |
| | | | | | | | | | | | | |
Investment and Other Income (Expense) | | | | | | | | | | | | | |
Investment income | | 68,481 | | 63,758 | | 52,063 | | 51,088 | | 42,068 | | 42,192 | |
Interest and dividend income | | 10,801 | | 10,764 | | 4,872 | | 4,820 | | 7,004 | | 6,987 | |
Gain (loss) on investments | | 24,436 | | 25,791 | | (5,200 | ) | (5,200 | ) | (295,454 | ) | (295,454 | ) |
Interest expense | | (86,241 | ) | (86,241 | ) | (64,607 | ) | (64,607 | ) | (47,878 | ) | (47,878 | ) |
Other income (expense), net | | (2,607 | ) | (2,576 | ) | 39 | | 10 | | 706 | | 717 | |
Total Investment and Other Income (Expense) | | 14,870 | | 11,496 | | (12,833 | ) | (13,889 | ) | (293,554 | ) | (293,436 | ) |
Income (Loss) before Income Taxes and Minority Interest | | 192,632 | | 194,825 | | 106,150 | | 94,836 | | (12,388 | ) | (13,666 | ) |
Income tax expense (benefit) | | 73,708 | | 74,678 | | 37,232 | | 35,869 | | (7,541 | ) | (1,287 | ) |
Income (Loss) Before Minority Interest | | 118,924 | | 120,147 | | 68,918 | | 58,967 | | (4,847 | ) | (12,379 | ) |
Minority share of income | | (9,903 | ) | (10,631 | ) | (11,912 | ) | (11,149 | ) | (13,538 | ) | (13,359 | ) |
Income (Loss) before cumulative effect of accounting change | | 109,021 | | 109,516 | | 57,006 | | 47,818 | | (18,385 | ) | (25,738 | ) |
Cumulative effect of accounting change, net of tax and minority interest | | — | | — | | (14,346 | ) | (14,346 | ) | (8,560 | ) | (8,560 | ) |
Net Income (Loss) | | $ | 109,021 | | $ | 109,516 | | $ | 42,660 | | $ | 33,472 | | $ | (26,945 | ) | $ | (34,298 | ) |
| | | | | | | | | | | | | |
Basic Earnings per Share: | | | | | | | | | | | | | |
Income (Loss) Before Cumulative Effect of Accounting Change | | $ | 1.26 | | $ | 1.27 | | $ | 0.67 | | $ | 0.56 | | $ | (0.22 | ) | $ | (0.31 | ) |
Cumulative effect of accounting change | | — | | — | | (0.17 | ) | (0.17 | ) | (0.09 | ) | (0.09 | ) |
Net Income (Loss) | | $ | 1.26 | | $ | 1.27 | | $ | 0.50 | | $ | 0.39 | | $ | (0.31 | ) | $ | (0.40 | ) |
| | | | | | | | | | | | | |
Diluted Earnings per Share: | | | | | | | | | | | | | |
Income (Loss) Before Cumulative Effect of Accounting Change | | $ | 1.26 | | $ | 1.26 | | $ | 0.66 | | $ | 0.56 | | $ | (0.22 | ) | $ | (0.31 | ) |
Cumulative effect of accounting change | | — | | — | | (0.17 | ) | (0.17 | ) | (0.09 | ) | (0.09 | ) |
Net Income (Loss) | | $ | 1.26 | | $ | 1.26 | | $ | 0.49 | | $ | 0.39 | | $ | (0.31 | ) | $ | (0.40 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Appendix 2
UNITED STATES CELLULAR COPORATION
CONSOLIDATED BALANCE SHEET HIGHTLIGHTS
(Unaudited, dollars in thousands)
| | December 31, 2004 | | December 31, 2003 | |
| | As Previously
Reported | | As
Restated | | As Previously
Reported | | As
Restated | |
Current Assets | | | | | | | | | |
Cash and cash equivalents | | | | | | | | | |
General funds | | $ | 40,863 | | $ | 41,003 | | $ | 9,822 | | $ | 10,003 | |
Affiliated cash equivalents | | 59 | | 59 | | 26 | | 26 | |
| | 40,922 | | 41,062 | | 9,848 | | 10,029 | |
Accounts receivable | | | �� | | | | | | |
Due from customers | | 251,943 | | 248,383 | | 227,651 | | 225,017 | |
Roaming | | 26,421 | | 26,421 | | 35,362 | | 35,362 | |
Other | | 39,285 | | 41,632 | | 23,967 | | 26,079 | |
Inventory | | 76,918 | | 76,918 | | 70,963 | | 70,963 | |
Prepaid expenses | | 31,507 | | 31,764 | | 22,396 | | 22,389 | |
Deferred income tax asset | | 83,741 | | 73,216 | | 16,786 | | 14,904 | |
Other current assets | | 28,214 | | 24,951 | | 17,132 | | 12,161 | |
| | 578,951 | | 564,347 | | 424,105 | | 416,904 | |
Investments | | | | | | | | | |
Licenses | | 1,186,764 | | 1,186,764 | | 1,189,326 | | 1,189,326 | |
License rights | | 42,037 | | 42,037 | | 42,037 | | 42,037 | |
Goodwill | | 425,918 | | 445,212 | | 430,256 | | 449,550 | |
Customer lists | | 24,915 | | 24,915 | | 24,448 | | 24,448 | |
Marketable equity securities | | 282,829 | | 282,829 | | 260,188 | | 260,188 | |
Investments in unconsolidated entities | | 162,764 | | 155,519 | | 170,569 | | 166,862 | |
Notes and interest receivable – long-term | | 4,885 | | 4,885 | | 6,476 | | 6,476 | |
| | 2,130,112 | | 2,142,161 | | 2,123,300 | | 2,138,887 | |
Property, Plant and Equipment, net | | | | | | | | | |
In service and under construction | | 3,910,080 | | 3,913,000 | | 3,441,177 | | 3,443,345 | |
Less accumulated depreciation | | 1,544,644 | | 1,546,563 | | 1,267,293 | | 1,269,326 | |
| | 2,365,436 | | 2,366,437 | | 2,173,884 | | 2,174,019 | |
Deferred Charges | | | | | | | | | |
System development costs | | 74,283 | | 74,283 | | 97,370 | | 97,370 | |
Other, net of accumulated amortization | | 33,145 | | 32,807 | | 26,565 | | 27,041 | |
| | 107,428 | | 107,090 | | 123,935 | | 124,411 | |
Assets of Operations Held for Sale | | — | | — | | 100,523 | | 100,523 | |
Total Assets | | $ | 5,181,927 | | $ | 5,180,035 | | $ | 4,945,747 | | $ | 4,954,744 | |
| | | | | | | | | |
Current Liabilities | | | | | | | | | |
Current portion of long-term debt | | $ | — | | $ | — | | $ | 3,000 | | $ | 3,000 | |
Current portion of long-term debt – affiliated | | — | | — | | 105,000 | | 105,000 | |
Notes payable | | 30,000 | | 30,000 | | — | | — | |
Accounts payable | | | | | | | | | |
Affiliated | | 5,314 | | 5,314 | | 4,252 | | 4,252 | |
Trade | | 254,926 | | 259,167 | | 281,306 | | 284,577 | |
Customer deposits and deferred revenues | | 104,578 | | 104,394 | | 93,789 | | 94,081 | |
Accrued interest | | 6,120 | | 6,120 | | 11,416 | | 11,416 | |
Accrued taxes | | 78,624 | | 80,512 | | 25,477 | | 26,228 | |
Accrued compensation | | 49,116 | | 49,116 | | 39,257 | | 39,257 | |
Other current liabilities | | 18,188 | | 14,709 | | 18,399 | | 18,399 | |
| | 546,866 | | 549,332 | | 581,896 | | 586,210 | |
Deferred Liabilities and Credits | | | | | | | | | |
Net deferred income tax liability | | 680,278 | | 670,250 | | 495,904 | | 498,587 | |
Derivative liability | | 70,796 | | 70,796 | | 55,735 | | 55,735 | |
Asset retirement obligation | | 72,534 | | 72,575 | | 64,501 | | 64,540 | |
Other deferred liabilities and credits | | 22,204 | | 26,647 | | 75,440 | | 80,358 | |
| | 845,812 | | 840,268 | | 691,580 | | 699,220 | |
Long-Term Debt | | | | | | | | | |
Long-term debt, excluding current portion | | 1,000,930 | | 1,000,930 | | 984,488 | | 984,488 | |
Forward contracts | | 159,856 | | 159,856 | | 159,856 | | 159,856 | |
| | 1,160,786 | | 1,160,786 | | 1,144,344 | | 1,144,344 | |
Liabilities of Operations Held for Sale | | — | | — | | 2,427 | | 2,427 | |
Minority Interest in Subsidiaries | | 40,373 | | 40,052 | | 60,097 | | 59,048 | |
Common Stockholders’ Equity | | | | | | | | | |
Common shares | | 55,046 | | 55,046 | | 55,046 | | 55,046 | |
Series A common shares | | 33,006 | | 33,006 | | 33,006 | | 33,006 | |
Capital in excess of par value | | 1,302,496 | | 1,305,249 | | 1,308,963 | | 1,308,963 | |
Treasury shares | | (99,627 | ) | (99,627 | ) | (115,156 | ) | (115,156 | ) |
Accumulated other comprehensive income | | 31,393 | | 32,803 | | 26,789 | | 28,032 | |
Retained earnings | | 1,265,776 | | 1,263,120 | | 1,156,755 | | 1,153,604 | |
| | 2,588,090 | | 2,589,597 | | 2,465,403 | | 2,463,495 | |
Total Liabilities and Stockholders’ Equity | | $ | 5,181,927 | | $ | 5,180,035 | | $ | 4,945,747 | | $ | 4,954,744 | |
| | | | | | | | | | | | | | | | | |
Appendix 3
UNITED STATES CELLULAR CORPORATION
FINANCIAL HIGHLIGHTS
Three Months Ended,
(Unaudited, dollars in thousands, except per share amounts)
| | March 31, 2005 | | June 30, 2005 | |
| | As Previously
Reported | | As
Restated | | As Previously
Reported | | As
Restated | |
Operating Revenues | | | | | | | | | |
Service | | $ | 668,792 | | $ | 671,639 | | $ | 691,574 | | $ | 691,746 | |
Equipment Sales | | 39,643 | | 39,432 | | 50,348 | | 50,219 | |
Total Operating Revenues | | 708,435 | | 711,071 | | 741,922 | | 741,965 | |
Operating Expenses | | | | | | | | | |
System Operations (exclusive of depreciation, amortization and accretion shown separately below) | | 140,066 | | 138,471 | | 147,738 | | 147,238 | |
Cost of equipment sold | | 126,893 | | 127,248 | | 116,977 | | 116,811 | |
Selling, general and administrative expense | | 277,989 | | 278,330 | | 283,676 | | 284,209 | |
Depreciation, amortization and accretion expense | | 127,250 | | 127,493 | | 126,467 | | 126,784 | |
Total Operating Expenses | | 672,198 | | 671,542 | | 674,858 | | 675,042 | |
| | | | | | | | | |
Operating Income | | 36,237 | | 39,529 | | 67,064 | | 66,923 | |
| | | | | | | | | |
Investment and Other Income (Expense) | | | | | | | | | |
Investment income | | 13,919 | | 14,440 | | 16,157 | | 17,825 | |
Interest and dividend income | | 2,036 | | 2,025 | | 4,359 | | 4,347 | |
Interest expense | | (20,738 | ) | (20,738 | ) | (21,444 | ) | (21,444 | ) |
Gain on investments | | 551 | | 551 | | — | | — | |
Other income, net | | 200 | | 226 | | 84 | | (71 | ) |
Total Investment and Other Income (Expense) | | (4,032 | ) | (3,496 | ) | (844 | ) | 657 | |
Income (Loss) From Continuing Operations before Income Taxes and Minority Interest | | 32,205 | | 36,033 | | 66,220 | | 67,580 | |
Income tax expense (benefit) | | 12,803 | | 13,934 | | 26,021 | | 27,040 | |
Income (Loss) From Continuing Operations Before Minority Interest | | 19,402 | | 22,099 | | 40,199 | | 40,540 | |
Minority share of income | | (2,504 | ) | (2,534 | ) | (2,263 | ) | (2,463 | ) |
Net Income (Loss) | | $ | 16,898 | | $ | 19,565 | | $ | 37,936 | | $ | 38,077 | |
| | | | | | | | | |
Basic Earnings per Share: | | $ | 0.20 | | $ | 0.23 | | $ | 0.44 | | $ | 0.44 | |
| | | | | | | | | |
Diluted Earnings per Share: | | $ | 0.19 | | $ | 0.22 | | $ | 0.43 | | $ | 0.44 | |
| | | | | | | | | | | | | | | | | |
Appendix 4
UNITED STATES CELLULAR CORPORATION
CONSOLIDATED BALANCE SHEET HIGHLIGHTS
(Unaudited, dollars in thousands)
| | March 31, 2005 | | June 30, 2005 | |
| | As Previously
Reported | | As
Restated | | As Previously
Reported | | As
Restated | |
Current Assets | | | | | | | | | |
Cash and cash equivalents | | $ | 30,866 | | $ | 30,969 | | $ | 17,562 | | $ | 17,645 | |
Accounts Receivable | | | | | | | | | |
Customers | | 245,840 | | 245,838 | | 260,117 | | 260,708 | |
Roaming | | 23,039 | | 23,039 | | 27,701 | | 27,701 | |
Other | | 40,269 | | 40,600 | | 35,185 | | 35,730 | |
Inventory | | 69,751 | | 69,751 | | 55,127 | | 55,127 | |
Prepaid expenses | | 32,938 | | 33,273 | | 29,351 | | 29,721 | |
Deferred tax asset | | 72,667 | | 62,142 | | 46,461 | | 35,936 | |
Other current assets | | 14,998 | | 13,639 | | 18,056 | | 16,035 | |
| | 530,368 | | 519,251 | | 489,560 | | 478,603 | |
Investments | | | | | | | | | |
Licenses | | 1,358,725 | | 1,358,725 | | 1,362,434 | | 1,362,434 | |
Goodwill | | 425,908 | | 445,202 | | 426,058 | | 445,352 | |
Customer lists, net of accumulated amortization | | 22,615 | | 22,615 | | 20,952 | | 20,952 | |
Marketable equity securities | | 274,079 | | 274,079 | | 251,115 | | 251,115 | |
Investments in unconsolidated entities | | 176,367 | | 169,634 | | 166,310 | | 161,239 | |
Notes and interest receivable – long-term | | 4,778 | | 4,778 | | 4,753 | | 4,753 | |
| | 2,262,472 | | 2,275,033 | | 2,231,622 | | 2,245,845 | |
Property, Plant and Equipment | | | | | | | | | |
In service and under construction | | 4,216,083 | | 4,219,311 | | 4,352,889 | | 4,356,357 | |
Less accumulated depreciation | | 1,787,613 | | 1,789,552 | | 1,902,593 | | 1,905,050 | |
| | 2,428,470 | | 2,429,759 | | 2,450,296 | | 2,451,307 | |
| | | | | | | | | |
Other Deferred Charges | | 31,954 | | 31,627 | | 31,372 | | 31,164 | |
| | | | | | | | | |
Total Assets | | $ | 5,253,264 | | $ | 5,255,670 | | $ | 5,202,850 | | $ | 5,206,919 | |
Appendix 5
UNITED STATES CELLULAR CORPORATION
CONSOLIDATED BALANCE SHEET HIGHLIGHTS
(Unaudited, dollars in thousands)
| | March 31, 2005 | | June 30, 2005 | |
| | As Previously
Reported | | As
Restated | | As Previously
Reported | | As
Restated | |
Current Liabilities | | | | | | | | | |
Notes payable | | $ | 135,000 | | $ | 135,000 | | $ | 50,000 | | $ | 50,000 | |
Accounts payable | | | | | | | | | |
Affiliated | | 5,412 | | 5,412 | | 5,111 | | 5,111 | |
Trade | | 197,766 | | 203,682 | | 209,704 | | 214,726 | |
Customer deposits and deferred revenues | | 107,909 | | 107,997 | | 109,054 | | 109,131 | |
Accrued taxes | | 86,833 | | 88,972 | | 87,342 | | 88,623 | |
Accrued compensation | | 25,921 | | 25,921 | | 29,740 | | 29,740 | |
Other current liabilities | | 35,045 | | 32,011 | | 27,078 | | 24,045 | |
| | 593,886 | | 598,995 | | 518,029 | | 521,376 | |
| | | | | | | | | |
Deferred Liabilities and Credits | | | | | | | | | |
Net deferred income tax liability | | 676,773 | | 668,006 | | 671,148 | | 663,615 | |
Derivative liability | | 66,800 | | 66,800 | | 46,616 | | 46,616 | |
Other deferred liabilities and credits | | 101,991 | | 104,302 | | 106,271 | | 110,506 | |
| | 845,564 | | 839,108 | | 824,035 | | 820,737 | |
| | | | | | | | | |
Long-Term Debt | | 1,160,900 | | 1,160,900 | | 1,161,014 | | 1,161,014 | |
| | | | | | | | | |
Minority Interest | | 42,796 | | 42,504 | | 43,863 | | 43,773 | |
| | | | | | | | | |
Common Shareholders’ Equity | | | | | | | | | |
Common Shares, par value $1 per share | | 55,046 | | 55,046 | | 55,046 | | 55,046 | |
Series A Common Shares, par value $1 per share; | | 33,006 | | 33,006 | | 33,006 | | 33,006 | |
Additional paid-in capital | | 1,290,104 | | 1,292,859 | | 1,285,843 | | 1,288,595 | |
Treasury Shares | | (79,229 | ) | (79,229 | ) | (65,428 | ) | (65,428 | ) |
Accumulated other comprehensive income | | 28,516 | | 29,796 | | 26,832 | | 28,038 | |
Retained earnings | | 1,282,675 | | 1,282,685 | | 1,320,610 | | 1,320,762 | |
| | 2,610,118 | | 2,614,163 | | 2,655,909 | | 2,660,019 | |
Total Liabilities and Shareholders’ Equity | | $ | 5,253,264 | | $ | 5,255,670 | | $ | 5,202,850 | | $ | 5,206,919 | |
| | | | | | | | | | | | | | | | | |
