Exhibit 99.1
As previously announced, U.S. Cellular will hold a teleconference Aug. 7, 2007, at 10:00 a.m. Chicago time. Interested parties may listen to the call live over the Internet by accessing the conference call page of the Investor Relations section of www.teldta.com or www.uscc.com.
Contact: |
| Mark A. Steinkrauss, Vice President, Corporate Relations |
|
| (312) 592-5384 mark.steinkrauss@teldta.com |
|
|
|
|
| Julie D. Mathews, Manager, Investor Relations |
|
| (312) 592-5341 julie.mathews@teldta.com |
U.S. CELLULAR REPORTS STRONG SECOND QUARTER 2007 RESULTS;
ADJUSTS GUIDANCE UPWARD
CHICAGO – Aug. 7, 2007 - United States Cellular Corporation [AMEX:USM] reported service revenues of $906.2 million for the second quarter of 2007, up 14.5 percent from $791.7 million for the comparable period one year ago. The company recorded operating income of $123.5 million, up 56.5 percent from $78.9 million for the second quarter of 2006. Net income and diluted earnings per share were $147.6 million and $1.67, respectively, compared to net income and diluted earnings per share of $50.1 million and $0.57, respectively, for the comparable period one year ago.
· The total number of customers increased 5.4 percent year over year to 6,010,000. The number of retail customers increased 6.8 percent to 5,448,000.
· Average monthly revenue per unit (ARPU) increased 8.3 percent to $50.42.
· Data revenues grew 77.2 percent to $85.4 million, 9.4 percent of service revenues.
· Operating income grew 56.5 percent to $123.5 million.
· Cash flows from operating activities were $181.1 million for the quarter and $436.1 million for the first six months.
“U.S. Cellular is driven to provide the very best in customer satisfaction,” said John E. Rooney, president and chief executive officer. “We continue to differentiate ourselves from the competition by providing an exceptional quality customer experience each and every time with an emphasis on the postpay customer. In the quarter, total customers surpassed 6 million and 95 percent were postpay.
“U.S. Cellular had a very strong second quarter financially,” said Rooney. “Service revenues grew an impressive 14.5 percent driven by growth in the subscriber base and higher average revenue per customer. Our ARPU grew again for the sixth consecutive quarter to $50.42, and an increase of 8 percent over the second quarter a year ago. Data revenues were up 77 percent in the quarter to over $85 million, representing 9 percent of service revenues. Coupled with the strong revenue growth was a sharp improvement in operating margin which expanded significantly from the second quarter a year ago.
“Going forward, we are continuing to concentrate our efforts on growing our existing markets, improving profitability and increasing cash flow. At this time we have no plans to open any significant new markets this year or next,” concluded Rooney.
Reseller customers historically have been classified as postpay and represented approximately 10% of total postpay customers as of June 30, 2007. In 2007, U.S. Cellular and its third party reseller changed the method of reporting reseller customer disconnects. The change affects the calculation of total postpay churn per month. Under the new method of reporting, the total postpay churn rate including reseller customers was 1.9 percent. The retail postpay churn rate, which excludes reseller customers and thus was not impacted by the change, was 1.4 percent.
The forward contracts related to U.S. Cellular’s investment in Vodafone American Depository Receipts (ADRs) matured on May 7, 2007. U.S. Cellular delivered the Vodafone ADRs in settlement of the forward contracts and sold the remaining shares. U.S. Cellular recorded a $131.7 million pre-tax gain on the settlement of the forward contracts and sale of the remaining shares.
On April 4, 2007, U.S. Cellular entered into an agreement with an investment bank to purchase 670,000 of its common shares through an accelerated share repurchase (“ASR”) for approximately $49 million. Also, on July 10, 2007, U.S. Cellular entered into an additional agreement with the same investment bank to purchase 168,000 of its common shares through an ASR for approximately $16 million.
Guidance for the year ending Dec. 31, 2007 is as follows. There can be no assurance that final results will not differ materially from this guidance.
U.S. Cellular 2007 guidance as of Aug. 7, 2007 is as follows: |
|
|
| |
Net Retail Customer Additions |
| 375,000 – 425,000 |
| |
Service Revenues |
| Approx. $3.6 billion |
| |
Operating Income |
| $ | 395 - $445 million |
|
Depreciation, Amortization & Accretion |
| Approx. $615 million |
| |
Capital Expenditures |
| $ | 600 - $615 million |
|
As previously announced, U.S. Cellular will hold a teleconference Aug. 7, 2007, at 10:00 a.m. Chicago time. Interested parties may listen to the call live over the Internet by accessing http://www.videonewswire.com/event.asp?id=41601 or the conference call page of the Investor Relations section of www.uscc.com. You can also connect to the teleconference by telephone (US/Canada) at (800)706-9695 with a conference ID # 11759028. The conference call will be archived on the conference call section of the U.S. Cellular web site at www.uscc.com.
2
Prior to the start of the call, certain financial and statistical information discussed during the conference call comments will be posted to the web site, together with reconciliations to generally accepted accounting principles (GAAP) of any non-GAAP information to be disclosed. Investors may access this additional information on the conference call page of the Investor Relations section of the U.S. Cellular web site.
As of June 30, 2007, U.S. Cellular Corporation, the nation's sixth-largest network wireless service carrier, employed 8,100 associates and provided wireless service to 6 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: The ability of the company to successfully manage and grow the 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 assets; changes in the value of investments; an adverse change in the ratings afforded our debt securities by accredited ratings organizations; risks and uncertainties relating to restatements and possible future restatements; 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 terms 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 |
| 6/30/2007 |
| 3/31/2007 |
| 12/31/2006 |
| 9/30/2006 |
| 6/30/2006 |
| |||||
Consolidated Markets: |
|
|
|
|
|
|
|
|
|
|
| |||||
Total population (000s) (1) |
| 81,581 |
| 56,048 |
| 55,543 |
| 55,543 |
| 55,543 |
| |||||
All customers - |
|
|
|
|
|
|
|
|
|
|
| |||||
Customer units |
| 6,010,000 |
| 5,973,000 |
| 5,815,000 |
| 5,729,000 |
| 5,704,000 |
| |||||
Gross customer unit activations |
| 418,000 |
| 459,000 |
| 389,000 |
| 365,000 |
| 347,000 |
| |||||
Net customer unit activations |
| 37,000 |
| 152,000 |
| 86,000 |
| 25,000 |
| 48,000 |
| |||||
Market penetration (1) |
| 7.4 | % | 10.7 | % | 10.5 | % | 10.3 | % | 10.3 | % | |||||
Retail customers - |
|
|
|
|
|
|
|
|
|
|
| |||||
Customer units |
| 5,448,000 |
| 5,377,000 |
| 5,225,000 |
| 5,127,000 |
| 5,099,000 |
| |||||
Gross customer unit activations |
| 347,000 |
| 397,000 |
| 375,000 |
| 353,000 |
| 331,000 |
| |||||
Net customer unit activations |
| 71,000 |
| 146,000 |
| 98,000 |
| 28,000 |
| 49,000 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Cell sites in service |
| 6,140 |
| 6,004 |
| 5,925 |
| 5,726 |
| 5,583 |
| |||||
Average monthly revenue per unit (2) |
| $ | 50.42 |
| $ | 48.69 |
| $ | 48.15 |
| $ | 47.93 |
| $ | 46.54 |
|
Retail service revenue per unit (2) |
| $ | 43.87 |
| $ | 42.69 |
| $ | 42.21 |
| $ | 41.75 |
| $ | 40.92 |
|
Inbound roaming revenue per unit (2) |
| $ | 2.68 |
| $ | 2.33 |
| $ | 2.34 |
| $ | 2.55 |
| $ | 2.28 |
|
Long-distance/other revenue per unit (2) |
| $ | 3.87 |
| $ | 3.67 |
| $ | 3.60 |
| $ | 3.63 |
| $ | 3.34 |
|
Minutes of use (MOU) (3) |
| 858 |
| 783 |
| 749 |
| 725 |
| 719 |
| |||||
Retail postpay churn rate per month (4) |
| 1.4 | % | 1.3 | % | 1.5 | % | 1.7 | % | 1.6 | % | |||||
Capital Expenditures (000s) |
| $ | 137,100 |
| $ | 109,700 |
| $ | 158,400 |
| $ | 152,800 |
| $ | 151,400 |
|
(1) Market penetration is calculated using 2006 Claritas population estimates for all periods of 2007 and 2005 Claritas estimates for all periods of 2006. “Total population” represents the total population of each of U.S. Cellular’s consolidated markets, regardless of whether the market has begun marketing operations (without duplication of population in overlapping markets). The population of markets in which U.S. Cellular has deferred the transfer of licenses from AT&T Wireless Services, Inc. are not included in the total population counts for any period. In the quarter ended 6/30/07, the FCC granted Barat Wireless’ applications with respect to 17 licenses for which it was the winning bidder in Auction 66.
(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 |
| $ | 906,218 |
| $ | 860,583 |
| $ | 831,663 |
| $ | 821,820 |
| $ | 791,705 |
|
Components: |
|
|
|
|
|
|
|
|
|
|
| |||||
Retail service revenue during quarter |
| $ | 788,535 |
| $ | 754,515 |
| $ | 729,072 |
| $ | 715,896 |
| $ | 696,079 |
|
Inbound roaming revenue during quarter |
| $ | 48,084 |
| $ | 41,268 |
| $ | 40,354 |
| $ | 43,806 |
| $ | 38,745 |
|
Long-distance/other revenue during quarter |
| $ | 69,599 |
| $ | 64,800 |
| $ | 62,237 |
| $ | 62,118 |
| $ | 56,881 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Divided by average customers during quarter (000s) |
| 5,991 |
| 5,892 |
| 5,757 |
| 5,716 |
| 5,670 |
| |||||
Divided by three months in each quarter |
| 3 |
| 3 |
| 3 |
| 3 |
| 3 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Average monthly revenue per unit |
| $ | 50.42 |
| $ | 48.69 |
| $ | 48.15 |
| $ | 47.93 |
| $ | 46.54 |
|
Retail service revenue per unit |
| $ | 43.87 |
| $ | 42.69 |
| $ | 42.21 |
| $ | 41.75 |
| $ | 40.92 |
|
Inbound roaming revenue per unit |
| $ | 2.68 |
| $ | 2.33 |
| $ | 2.34 |
| $ | 2.55 |
| $ | 2.28 |
|
Long-distance/other revenue per unit |
| $ | 3.87 |
| $ | 3.67 |
| $ | 3.60 |
| $ | 3.63 |
| $ | 3.34 |
|
(3) Average monthly local minutes of use per customer (without roaming).
(4) Retail postpay churn rate per month is calculated by dividing the average monthly customer disconnects during the quarter by the average customer base for the quarter.
4
UNITED STATES CELLULAR CORPORATION
FINANCIAL HIGHLIGHTS
Three Months Ended June 30,
(Unaudited, dollars in thousands, except per share amounts)
|
|
|
|
|
| Increase (Decrease) |
| |||||
|
| 2007 |
| 2006 |
| Amount |
| Percent |
| |||
Operating Revenues |
|
|
|
|
|
|
|
| ||||
Service |
| $ | 906,218 |
| $ | 791,705 |
| $ | 114,513 |
| 14.5 | % |
Equipment sales |
| 65,428 |
| 54,432 |
| 10,996 |
| 20.2 | % | |||
Total Operating Revenues |
| 971,646 |
| 846,137 |
| 125,509 |
| 14.8 | % | |||
Operating Expenses |
|
|
|
|
|
|
|
|
| |||
System operations (excluding depreciation shown below) |
| 176,409 |
| 150,555 |
| 25,854 |
| 17.2 | % | |||
Cost of equipment sold |
| 151,015 |
| 133,416 |
| 17,599 |
| 13.2 | % | |||
Selling, general and administrative |
| 371,894 |
| 342,769 |
| 29,125 |
| 8.5 | % | |||
Depreciation, amortization and accretion |
| 148,856 |
| 140,486 |
| 8,370 |
| 6.0 | % | |||
Total Operating Expenses |
| 848,174 |
| 767,226 |
| 80,948 |
| 10.6 | % | |||
|
|
|
|
|
|
|
|
|
| |||
Operating Income |
| 123,472 |
| 78,911 |
| 44,561 |
| 56.5 | % | |||
|
|
|
|
|
|
|
|
|
| |||
Investment and Other Income (Expense) |
|
|
|
|
|
|
|
|
| |||
Equity in earnings of unconsolidated entities |
| 22,980 |
| 21,957 |
| 1,023 |
| 4.7 | % | |||
Interest and dividend income |
| 2,653 |
| 9,807 |
| (7,154 | ) | (72.9 | %) | |||
Interest expense |
| (21,325 | ) | (23,007 | ) | 1,682 |
| (7.3 | %) | |||
Fair value adjustment of derivative instruments |
| (17,849 | ) | (922 | ) | (16,927 | ) | N/M |
| |||
Gain (loss) on investments |
| 131,686 |
| — |
| 131,686 |
| N/M |
| |||
Other income |
| 91 |
| (140 | ) | 231 |
| N/M |
| |||
|
| 118,236 |
| 7,695 |
| 110,541 |
| N/M |
| |||
Income Before Income Taxes and Minority Interest |
| 241,708 |
| 86,606 |
| 155,102 |
| N/M |
| |||
Income tax expense |
| 91,500 |
| 33,683 |
| 57,817 |
| N/M |
| |||
Income Before Minority Interest |
| 150,208 |
| 52,923 |
| 97,285 |
| N/M |
| |||
Minority share of income |
| (2,637 | ) | (2,859 | ) | 222 |
| (7.8 | %) | |||
Net Income |
| $ | 147,571 |
| $ | 50,064 |
| $ | 97,507 |
| N/M |
|
|
|
|
|
|
|
|
|
|
| |||
Basic Weighted Average Common Shares Outstanding (000s) |
| 87,590 |
| 87,281 |
| 309 |
| 0.4 | % | |||
Basic Earnings Per Share |
| $ | 1.68 |
| $ | 0.57 |
| $ | 1.11 |
| N/M |
|
|
|
|
|
|
|
|
|
|
| |||
Diluted Weighted Average Common Shares Outstanding (000s) |
| 88,410 |
| 88,083 |
| 327 |
| 0.4 | % | |||
Diluted Earnings Per Share |
| $ | 1.67 |
| $ | 0.57 |
| $ | 1.10 |
| N/M |
|
N/M - Percentage change not meaningful
5
UNITED STATES CELLULAR CORPORATION
FINANCIAL HIGHLIGHTS
Three Months Ended June 30,
(Unaudited, dollars in thousands, except per share amounts)
|
|
|
|
|
| Increase (Decrease) |
| |||||
|
| 2007 |
| 2006 |
| Amount |
| Percent |
| |||
Operating Revenues |
|
|
|
|
|
|
|
|
| |||
Service |
| $ | 1,766,801 |
| $ | 1,560,927 |
| $ | 205,874 |
| 13.2 | % |
Equipment sales |
| 139,519 |
| 121,586 |
| 17,933 |
| 14.7 | % | |||
Total Operating Revenues |
| 1,906,320 |
| 1,682,513 |
| 223,807 |
| 13.3 | % | |||
Operating Expenses |
|
|
|
|
|
|
|
|
| |||
System operations (excluding depreciation shown below) |
| 343,693 |
| 303,873 |
| 39,820 |
| 13.1 | % | |||
Cost of equipment sold |
| 305,694 |
| 276,732 |
| 28,962 |
| 10.5 | % | |||
Selling, general and administrative |
| 726,825 |
| 670,473 |
| 56,352 |
| 8.4 | % | |||
Depreciation, amortization and accretion |
| 298,113 |
| 282,511 |
| 15,602 |
| 5.5 | % | |||
Total Operating Expenses |
| 1,674,325 |
| 1,533,589 |
| 140,736 |
| 9.2 | % | |||
|
|
|
|
|
|
|
|
|
| |||
Operating Income |
| 231,995 |
| 148,924 |
| 83,071 |
| 55.8 | % | |||
|
|
|
|
|
|
|
|
|
| |||
Investment and Other Income (Expense) |
|
|
|
|
|
|
|
|
| |||
Equity in earnings of unconsolidated entities |
| 46,078 |
| 41,440 |
| 4,638 |
| 11.2 | % | |||
Interest and dividend income |
| 5,203 |
| 10,395 |
| (5,192 | ) | (49.9 | %) | |||
Interest expense |
| (45,009 | ) | (46,215 | ) | 1,206 |
| (2.6 | %) | |||
Fair value adjustment of derivative instruments |
| (5,388 | ) | 3,893 |
| (9,281 | ) | N/M |
| |||
Gain (loss) on investments |
| 131,686 |
| — |
| 131,686 |
| N/M |
| |||
Other income |
| (494 | ) | 62 |
| (556 | ) | N/M |
| |||
|
| 132,076 |
| 9,575 |
| 122,501 |
| N/M |
| |||
Income Before Income Taxes and Minority Interest |
| 364,071 |
| 158,499 |
| 205,572 |
| N/M |
| |||
Income tax expense |
| 135,388 |
| 62,393 |
| 72,995 |
| N/M |
| |||
Income Before Minority Interest |
| 228,683 |
| 96,106 |
| 132,577 |
| N/M |
| |||
Minority share of income |
| (6,711 | ) | (6,596 | ) | (115 | ) | 1.7 | % | |||
Net Income |
| $ | 221,972 |
| $ | 89,510 |
| $ | 132,462 |
| N/M |
|
|
|
|
|
|
|
|
|
|
| |||
Basic Weighted Average Common Shares Outstanding (000s) |
| 87,735 |
| 87,247 |
| 488 |
| 0.6 | % | |||
Basic Earnings Per Share |
| $ | 2.53 |
| $ | 1.03 |
| $ | 1.50 |
| N/M |
|
|
|
|
|
|
|
|
|
|
| |||
Diluted Weighted Average Common Shares Outstanding (000s) |
| 88,615 |
| 87,994 |
| 621 |
| 0.7 | % | |||
Diluted Earnings Per Share |
| $ | 2.50 |
| $ | 1.02 |
| $ | 1.48 |
| N/M |
|
N/M - Percentage change not meaningful
6
UNITED STATES CELLULAR CORPORATION
CONSOLIDATED BALANCE SHEET HIGHLIGHTS
(Unaudited, dollars in thousands)
ASSETS
|
| June 30, |
| December 31, |
| ||
|
| 2007 |
| 2006 |
| ||
Current Assets |
|
|
|
|
| ||
Cash and cash equivalents |
| $ | 146,082 |
| $ | 32,912 |
|
Marketable equity securities |
| — |
| 249,039 |
| ||
Accounts receivable from customers and other |
| 409,771 |
| 407,438 |
| ||
Inventory |
| 118,072 |
| 117,189 |
| ||
Prepaid expenses |
| 46,277 |
| 34,955 |
| ||
Other current assets |
| 19,816 |
| 13,385 |
| ||
|
| 740,018 |
| 854,918 |
| ||
|
|
|
|
|
| ||
Investments |
|
|
|
|
| ||
Licenses |
| 1,500,092 |
| 1,494,327 |
| ||
Goodwill |
| 491,316 |
| 485,452 |
| ||
Customer lists |
| 21,381 |
| 26,196 |
| ||
Marketable equity securities |
| 16,248 |
| 4,873 |
| ||
Investments in unconsolidated entities |
| 155,514 |
| 150,325 |
| ||
Notes and interest receivable—long-term |
| 4,482 |
| 4,541 |
| ||
|
| 2,189,033 |
| 2,165,714 |
| ||
|
|
|
|
|
| ||
Property, Plant and Equipment |
|
|
|
|
| ||
In service and under construction |
| 5,313,726 |
| 5,120,994 |
| ||
Less accumulated depreciation |
| 2,715,722 |
| 2,492,146 |
| ||
|
| 2,598,004 |
| 2,628,848 |
| ||
|
|
|
|
|
| ||
Other Assets and Deferred Charges |
| 30,356 |
| 31,136 |
| ||
|
|
|
|
|
| ||
Total Assets |
| $ | 5,557,411 |
| $ | 5,680,616 |
|
7
UNITED STATES CELLULAR CORPORATION
CONSOLIDATED BALANCE SHEET HIGHLIGHTS
(Unaudited, dollars in thousands)
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
| June 30, |
| December 31, |
| ||
|
| 2007 |
| 2006 |
| ||
Current Liabilities |
|
|
|
|
| ||
Current portion of Long-term Debt |
| $ | — |
| $ | 159,856 |
|
Derivative Liability |
| — |
| 88,840 |
| ||
Notes payable |
| — |
| 35,000 |
| ||
Accounts payable |
|
|
|
|
| ||
Affiliates |
| 10,038 |
| 13,568 |
| ||
Trade |
| 237,522 |
| 241,303 |
| ||
Customer deposits and deferred revenues |
| 141,116 |
| 123,344 |
| ||
Accrued taxes |
| 70,492 |
| 26,913 |
| ||
Accrued compensation |
| 38,635 |
| 47,842 |
| ||
Deferred Taxes |
| — |
| 26,326 |
| ||
Other current liabilities |
| 90,632 |
| 93,718 |
| ||
|
| 588,435 |
| 856,710 |
| ||
|
|
|
|
|
| ||
Long-term Debt |
| 1,002,066 |
| 1,001,839 |
| ||
|
|
|
|
|
| ||
Deferred Liabilities and Credits |
| 795,983 |
| 792,088 |
| ||
|
|
|
|
|
| ||
Minority Interest |
| 39,518 |
| 36,700 |
| ||
|
|
|
|
|
| ||
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 |
| 1,313,041 |
| 1,290,829 |
| ||
Treasury Shares |
| (21,609 | ) | (14,462 | ) | ||
Accumulated other comprehensive income |
| 10,082 |
| 80,382 |
| ||
Retained earnings |
| 1,741,843 |
| 1,548,478 |
| ||
|
| 3,131,409 |
| 2,993,279 |
| ||
|
|
|
|
|
| ||
Total Liabilities and Shareholders’ Equity |
| $ | 5,557,411 |
| $ | 5,680,616 |
|
8