Exhibit 99.1
As previously announced, U.S. Cellular will hold a teleconference Nov. 6, 2007, at 10:00 a.m. Chicago time. Interested parties may listen to the call live via the Internet by accessing the Conference Calls page 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 |
FOR RELEASE: IMMEDIATE
U.S. CELLULAR REPORTS STRONG THIRD QUARTER 2007 RESULTS;
ADJUSTS GUIDANCE UPWARD
CHICAGO — Nov. 6, 2007 - United States Cellular Corporation [AMEX:USM] reported service revenues of $954.5 million for the third quarter of 2007, up 16.1 percent from $821.8 million for the comparable period one year ago. The company recorded operating income of $100.9 million, up 30.5 percent from $77.3 million for the third quarter of 2006. Net income and diluted earnings per share were $63.6 million and $0.72, respectively, compared to net income and diluted earnings per share of $35.9 million and $0.41, respectively, for the comparable period one year ago.
Third Quarter Highlights
• The total number of customers increased 5.9 percent year over year to 6,067,000. The number of retail customers increased 7.3 percent to 5,500,000.
• Average monthly revenue per unit (ARPU) increased 10.0 percent to $52.71.
• Data revenues grew 66.0 percent to $96.8 million, 10.1 percent of service revenues.
• Operating income grew 30.5 percent to $100.9 million.
• Cash flows from operating activities were $181.3 million for the quarter and $617.4 million for the first nine months.
“This quarter we had strong service revenues growth of 16 percent, as well as a 31 percent increase in operating income,” said John E. Rooney, president and chief executive officer. “In addition, cash flows from operating activities were $181.3 million. There were a number of factors contributing to our success this quarter. For one, data revenues continue to be a strong revenue growth driver for U.S. Cellular, growing 66 percent this quarter to $97 million. Data revenues now account for more than 10 percent of service revenues and helped average revenue per unit, or ARPU, increase by 10 percent, to $52.71. In addition, the popularity of our national and wide area calling plans helped to
increase ARPU as more than half of our customer base has shifted to these high-value plans. We expect these trends to continue.
“We also continue to see results from our customer satisfaction strategy and high-quality network,” continued Rooney. “We recently received our fourth consecutive award from J.D. Power and Associates for call quality in the North Central region. The award highlights both our associates’ efforts to provide the best customer service and our commitment to ensuring a high-quality call experience. Our retail postpay churn rate of 1.6 percent, down from 1.7 percent in the third quarter of 2006, reflects this commitment.”
Net Customer Additions
The company acquired 73,000 net retail postpay customers in the quarter. Postpay customers are the cornerstone of U.S. Cellular’s customer acquisition and satisfaction strategy and comprise 95 percent of the retail customer base. The number of prepay customers declined 21,000. The company also acquired 5,000 net reseller customers.
Share Repurchases
On April 4, 2007, U.S. Cellular entered into an agreement with an investment banking firm to purchase 670,000 of its common shares through an accelerated share repurchase (“ASR”) for approximately $49 million. On July 10, 2007, U.S. Cellular entered into an additional agreement with the same firm to purchase 168,000 of its common shares through an ASR for approximately $16 million.
In addition, on Oct. 25, 2007, U.S. Cellular entered into a third agreement with the same firm to purchase 168,000 of its common shares through an ASR for approximately $16 million.
Guidance
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 Nov. 6, 2007 is as follows: |
|
|
Net Retail Customer Additions |
| 375,000 - 425,000 |
Service Revenues |
| $3.6 - $3.7 billion |
Operating Income |
| $410 - $460 million |
Depreciation, Amortization & Accretion |
| Approx. $600 million |
Capital Expenditures |
| Approx. $600 million |
Conference Call Information
As previously announced, U.S. Cellular will hold a teleconference Nov. 6, 2007, at 10:00 a.m. Chicago time. Interested parties may listen to the call live via the Internet by accessing http://www.videonewswire.com/event.asp?id=43702 or visiting the Conference Calls page of www.uscc.com. To connect by phone, call 800/706-9695 (US/Canada) and use conference ID #22669548. The call will be archived on the Conference Calls page of www.uscc.com.
Prior to the start of the call, certain financial and statistical information to be discussed during the call will be posted to the Conference Call page of www.uscc.com, together with reconciliations to generally accepted accounting principles (GAAP) of any non-GAAP information to be disclosed.
About U.S. Cellular
As of Sept. 30, 2007, U.S. Cellular Corporation, the nation’s sixth-largest wireless service carrier, employed 8,200 associates and provided wireless service to 6.1 million customers in 26 states. The
2
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; 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 |
| 9/30/2007 |
| 6/30/2007 |
| 3/31/2007 |
| 12/31/2006 |
| 9/30/2006 |
| |||||||
Consolidated Markets: |
|
|
|
|
|
|
|
|
|
|
| |||||||
Total population (000s) (1) |
| 81,841 |
| 81,581 |
| 56,048 |
| 55,543 |
| 55,543 |
| |||||||
All customers - |
|
|
|
|
|
|
|
|
|
|
| |||||||
Customer units |
| 6,067,000 |
| 6,010,000 |
| 5,973,000 |
| 5,815,000 |
| 5,729,000 |
| |||||||
Gross customer unit activations |
| 447,000 |
| 418,000 |
| 459,000 |
| 389,000 |
| 365,000 |
| |||||||
Net customer unit activations |
| 57,000 |
| 37,000 |
| 152,000 |
| 86,000 |
| 25,000 |
| |||||||
Market penetration (1) |
| 7.4 | % | 7.4 | % | 10.7 | % | 10.5 | % | 10.3 | % | |||||||
Retail customers - |
|
|
|
|
|
|
|
|
|
|
| |||||||
Customer units |
| 5,500,000 |
| 5,448,000 |
| 5,377,000 |
| 5,225,000 |
| 5,127,000 |
| |||||||
Gross customer unit activations |
| 374,000 |
| 347,000 |
| 397,000 |
| 375,000 |
| 353,000 |
| |||||||
Net customer unit activations |
| 52,000 |
| 71,000 |
| 146,000 |
| 98,000 |
| 28,000 |
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Cell sites in service |
| 6,255 |
| 6,140 |
| 6,004 |
| 5,925 |
| 5,726 |
| |||||||
Average monthly revenue per unit (2) |
| $ | 52.71 |
| $ | 50.42 |
| $ | 48.69 |
| $ | 48.15 |
| $ | 47.93 |
| ||
Retail service revenue per unit (2) |
| $ | 45.00 |
| $ | 43.87 |
| $ | 42.69 |
| $ | 42.21 |
| $ | 41.75 |
| ||
Inbound roaming revenue per unit (2) |
| $ | 3.36 |
| $ | 2.68 |
| $ | 2.33 |
| $ | 2.34 |
| $ | 2.55 |
| ||
Long-distance/other revenue per unit (2) |
| $ | 4.35 |
| $ | 3.87 |
| $ | 3.67 |
| $ | 3.60 |
| $ | 3.63 |
| ||
Minutes of use (MOU) (3) |
| 887 |
| 858 |
| 783 |
| 749 |
| 725 |
| |||||||
Retail postpay churn rate per month (4) |
| 1.6 | % | 1.4 | % | 1.3 | % | 1.5 | % | 1.7 | % | |||||||
Construction Expenditures (000s) |
| $ | 130,600 |
| $ | 137,100 |
| $ | 109,700 |
| $ | 158,400 |
| $ | 152,800 |
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
(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. | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
(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 |
| $ | 954,540 |
| $ | 906,218 |
| $ | 860,583 |
| $ | 831,663 |
| $ | 821,820 |
| ||
Components: |
|
|
|
|
|
|
|
|
|
|
| |||||||
Retail service revenue during quarter |
| $ | 814,948 |
| $ | 788,535 |
| $ | 754,515 |
| $ | 729,072 |
| $ | 715,896 |
| ||
Inbound roaming revenue during quarter |
| $ | 60,843 |
| $ | 48,084 |
| $ | 41,268 |
| $ | 40,354 |
| $ | 43,806 |
| ||
Long-distance/other revenue during quarter |
| $ | 78,749 |
| $ | 69,599 |
| $ | 64,800 |
| $ | 62,237 |
| $ | 62,118 |
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Divided by average customers during quarter (000s) |
| 6,036 |
| 5,991 |
| 5,892 |
| 5,757 |
| 5,716 |
| |||||||
Divided by three months in each quarter |
| 3 |
| 3 |
| 3 |
| 3 |
| 3 |
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Average monthly revenue per unit |
| $ | 52.71 |
| $ | 50.42 |
| $ | 48.69 |
| $ | 48.15 |
| $ | 47.93 |
| ||
Retail service revenue per unit |
| $ | 45.00 |
| $ | 43.87 |
| $ | 42.69 |
| $ | 42.21 |
| $ | 41.75 |
| ||
Inbound roaming revenue per unit |
| $ | 3.36 |
| $ | 2.68 |
| $ | 2.33 |
| $ | 2.34 |
| $ | 2.55 |
| ||
Long-distance/other revenue per unit |
| $ | 4.35 |
| $ | 3.87 |
| $ | 3.67 |
| $ | 3.60 |
| $ | 3.63 |
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
(3) Average monthly local minutes of use per customer (without roaming). | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
(4) Retail postpay churn rate per month is calculated by dividing the total monthly customer disconnects during the quarter by the average customer base for the quarter. |
4
UNITED STATES CELLULAR CORPORATION
FINANCIAL HIGHLIGHTS
Three Months Ended September 30,
(Unaudited, dollars in thousands, except per share amounts)
|
|
|
|
|
| Increase (Decrease) |
| |||||
|
| 2007 |
| 2006 |
| Amount |
| Percent |
| |||
Operating Revenues |
|
|
|
|
|
|
|
|
| |||
Service |
| $ | 954,540 |
| $ | 821,820 |
| $ | 132,720 |
| 16.1 | % |
Equipment sales |
| 61,294 |
| 66,703 |
| (5,409 | ) | (8.1 | %) | |||
Total Operating Revenues |
| 1,015,834 |
| 888,523 |
| 127,311 |
| 14.3 | % | |||
Operating Expenses |
|
|
|
|
|
|
|
|
| |||
System operations (excluding depreciation shown below) |
| 185,479 |
| 165,107 |
| 20,372 |
| 12.3 | % | |||
Cost of equipment sold |
| 164,662 |
| 140,757 |
| 23,905 |
| 17.0 | % | |||
Selling, general and administrative |
| 414,978 |
| 358,392 |
| 56,586 |
| 15.8 | % | |||
Depreciation, amortization and accretion |
| 149,776 |
| 146,940 |
| 2,836 |
| 1.9 | % | |||
Total Operating Expenses |
| 914,895 |
| 811,196 |
| 103,699 |
| 12.8 | % | |||
|
|
|
|
|
|
|
|
|
| |||
Operating Income |
| 100,939 |
| 77,327 |
| 23,612 |
| 30.5 | % | |||
|
|
|
|
|
|
|
|
|
| |||
Investment and Other Income (Expense) |
|
|
|
|
|
|
|
|
| |||
Equity in earnings of unconsolidated entities |
| 23,782 |
| 23,483 |
| 299 |
| 1.3 | % | |||
Interest and dividend income |
| 3,395 |
| 601 |
| 2,794 |
| N/M |
| |||
Interest expense |
| (19,625 | ) | (23,974 | ) | 4,349 |
| 18.1 | % | |||
Fair value adjustment of derivative instruments |
| — |
| (21,285 | ) | 21,285 |
| N/M |
| |||
Other, net |
| 179 |
| (225 | ) | 404 |
| N/M |
| |||
|
| 7,731 |
| (21,400 | ) | 29,131 |
| N/M |
| |||
Income Before Income Taxes and Minority Interest |
| 108,670 |
| 55,927 |
| 52,743 |
| 94.3 | % | |||
Income tax expense |
| 41,154 |
| 15,510 |
| 25,644 |
| N/M |
| |||
Income Before Minority Interest |
| 67,516 |
| 40,417 |
| 27,099 |
| 67.0 | % | |||
Minority share of income |
| (3,961 | ) | (4,542 | ) | 581 |
| 12.8 | % | |||
Net Income |
| $ | 63,555 |
| $ | 35,875 |
| $ | 27,680 |
| 77.2 | % |
|
|
|
|
|
|
|
|
|
| |||
Basic Weighted Average Common Shares Outstanding (000s) |
| 87,757 |
| 87,281 |
| 476 |
| 0.5 | % | |||
Basic Earnings Per Share |
| $ | 0.72 |
| $ | 0.41 |
| $ | 0.31 |
| 75.6 | % |
|
|
|
|
|
|
|
|
|
| |||
Diluted Weighted Average Common Shares Outstanding (000s) |
| 88,589 |
| 88,092 |
| 497 |
| 0.6 | % | |||
Diluted Earnings Per Share |
| $ | 0.72 |
| $ | 0.41 |
| $ | 0.31 |
| 75.6 | % |
N/M - Percentage change not meaningful
5
UNITED STATES CELLULAR CORPORATION
FINANCIAL HIGHLIGHTS
Nine Months Ended September 30,
(Unaudited, dollars in thousands, except per share amounts)
|
|
|
|
|
| Increase (Decrease) |
| ||||||
|
| 2007 |
| 2006 |
| Amount |
| Percent |
| ||||
Operating Revenues |
|
|
|
|
|
|
|
|
| ||||
Service |
| $ | 2,721,341 |
| $ | 2,382,747 |
| $ | 338,594 |
| 14.2 | % | |
Equipment sales |
| 200,813 |
| 188,289 |
| 12,524 |
| 6.7 | % | ||||
Total Operating Revenues |
| 2,922,154 |
| 2,571,036 |
| 351,118 |
| 13.7 | % | ||||
Operating Expenses |
|
|
|
|
|
|
|
|
| ||||
System operations (excluding depreciation shown below) |
| 529,172 |
| 468,980 |
| 60,192 |
| 12.8 | % | ||||
Cost of equipment sold |
| 470,356 |
| 417,489 |
| 52,867 |
| 12.7 | % | ||||
Selling, general and administrative |
| 1,141,803 |
| 1,028,865 |
| 112,938 |
| 11.0 | % | ||||
Depreciation, amortization and accretion |
| 447,889 |
| 429,451 |
| 18,438 |
| 4.3 | % | ||||
Total Operating Expenses |
| 2,589,220 |
| 2,344,785 |
| 244,435 |
| 10.4 | % | ||||
|
|
|
|
|
|
|
|
|
| ||||
Operating Income |
| 332,934 |
| 226,251 |
| 106,683 |
| 47.2 | % | ||||
|
|
|
|
|
|
|
|
|
| ||||
Investment and Other Income (Expense) |
|
|
|
|
|
|
|
|
| ||||
Equity in earnings of unconsolidated entities |
| 69,860 |
| 64,923 |
| 4,937 |
| 7.6 | % | ||||
Interest and dividend income |
| 8,598 |
| 10,996 |
| (2,398 | ) | (21.8 | %) | ||||
Interest expense |
| (64,634 | ) | (70,189 | ) | 5,555 |
| 7.9 | % | ||||
Fair value adjustment of derivative instruments |
| (5,388 | ) | (17,392 | ) | 12,004 |
| 69.0 | % | ||||
Gain on sale of investments |
| 131,686 |
| — |
| 131,686 |
| N/M |
| ||||
Other, net |
| (315 | ) | (163 | ) | (152 | ) | (93.3 | %) | ||||
|
| 139,807 |
| (11,825 | ) | 151,632 |
| N/M |
| ||||
Income Before Income Taxes and Minority Interest |
| 472,741 |
| 214,426 |
| 258,315 |
| N/M |
| ||||
Income tax expense |
| 176,542 |
| 77,903 |
| 98,639 |
| N/M |
| ||||
Income Before Minority Interest |
| 296,199 |
| 136,523 |
| 159,676 |
| N/M |
| ||||
Minority share of income |
| (10,672 | ) | (11,138 | ) | 466 |
| 4.2 | % | ||||
Net Income |
| $ | 285,527 |
| $ | 125,385 |
| $ | 160,142 |
| N/M |
| |
|
|
|
|
|
|
|
|
|
| ||||
Basic Weighted Average Common Shares Outstanding (000s) |
| 87,743 |
| 87,258 |
| 485 |
| 0.6 | % | ||||
Basic Earnings Per Share |
| $ | 3.25 |
| $ | 1.44 |
| $ | 1.81 |
| N/M |
| |
|
|
|
|
|
|
|
|
|
| ||||
Diluted Weighted Average Common Shares Outstanding (000s) |
| 88,680 |
| 88,071 |
| 609 |
| 0.7 | % | ||||
Diluted Earnings Per Share |
| $ | 3.22 |
| $ | 1.42 |
| $ | 1.80 |
| N/M |
| |
N/M - Percentage change not meaningful
6
UNITED STATES CELLULAR CORPORATION
CONSOLIDATED BALANCE SHEET HIGHLIGHTS
(Unaudited, dollars in thousands)
ASSETS | |||||||
|
|
|
|
|
| ||
|
| September 30, |
| December 31, |
| ||
|
| 2007 |
| 2006 |
| ||
Current Assets |
|
|
|
|
| ||
Cash and cash equivalents |
| $ | 182,020 |
| $ | 32,912 |
|
Marketable equity securities |
| 16,133 |
| 249,039 |
| ||
Accounts receivable from customers and other |
| 429,684 |
| 407,438 |
| ||
Inventory |
| 113,078 |
| 117,189 |
| ||
Prepaid expenses |
| 46,634 |
| 34,955 |
| ||
Other current assets |
| 13,557 |
| 13,385 |
| ||
|
| 801,106 |
| 854,918 |
| ||
Investments |
|
|
|
|
| ||
Licenses |
| 1,500,092 |
| 1,494,327 |
| ||
Goodwill |
| 491,316 |
| 485,452 |
| ||
Customer lists |
| 17,442 |
| 26,196 |
| ||
Marketable equity securities |
| — |
| 4,873 |
| ||
Investments in unconsolidated entities |
| 176,557 |
| 150,325 |
| ||
Notes and interest receivable—long-term |
| 4,452 |
| 4,541 |
| ||
|
| 2,189,859 |
| 2,165,714 |
| ||
Property, Plant and Equipment |
|
|
|
|
| ||
In service and under construction |
| 5,414,358 |
| 5,120,994 |
| ||
Less accumulated depreciation |
| 2,844,527 |
| 2,492,146 |
| ||
|
| 2,569,831 |
| 2,628,848 |
| ||
|
|
|
|
|
| ||
Other Assets and Deferred Charges |
| 28,658 |
| 31,136 |
| ||
|
|
|
|
|
| ||
Total Assets |
| $ | 5,589,454 |
| $ | 5,680,616 |
|
7
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
|
|
|
|
|
| ||
|
| September 30, |
| December 31, |
| ||
|
| 2007 |
| 2006 |
| ||
Current Liabilities |
|
|
|
|
| ||
Prepaid forward contracts |
| $ | — |
| $ | 159,856 |
|
Derivative liability |
| — |
| 88,840 |
| ||
Notes payable |
| — |
| 35,000 |
| ||
Accounts payable |
|
|
|
|
| ||
Affiliated |
| 9,175 |
| 13,568 |
| ||
Trade |
| 244,176 |
| 241,303 |
| ||
Customer deposits and deferred revenues |
| 143,923 |
| 123,344 |
| ||
Accrued taxes |
| 46,641 |
| 26,913 |
| ||
Accrued compensation |
| 50,801 |
| 47,842 |
| ||
Net deferred income tax liability |
| — |
| 26,326 |
| ||
Other current liabilities |
| 103,338 |
| 93,718 |
| ||
|
| 598,054 |
| 856,710 |
| ||
|
|
|
|
|
| ||
Long-term Debt |
| 1,002,180 |
| 1,001,839 |
| ||
|
|
|
|
|
| ||
Deferred Liabilities and Credits |
| 759,600 |
| 792,088 |
| ||
|
|
|
|
|
| ||
Minority Interest |
| 41,898 |
| 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 |
| 1,319,038 |
| 1,290,829 |
| ||
Treasury Shares |
| (28,601 | ) | (14,462 | ) | ||
Accumulated other comprehensive income |
| 10,009 |
| 80,382 |
| ||
Retained earnings |
| 1,799,224 |
| 1,548,478 |
| ||
|
| 3,187,722 |
| 2,993,279 |
| ||
|
|
|
|
|
| ||
Total Liabilities and Shareholders’ Equity |
| $ | 5,589,454 |
| $ | 5,680,616 |
|
8