Exhibit 99.1
As previously announced, U.S. Cellular® will hold a teleconference May 7, 2008, 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 INCREASES IN SERVICE, DATA REVENUES
Service and data revenues up 12 percent and 49 percent in the quarter
Note: Comparisons are year over year unless otherwise noted.
1Q 2008 Highlights
· 11.8 percent increase in service revenues, to $962.1 million.
· 49.2 percent increase in data revenues, to $115.7 million, representing 12 percent of service revenues.
· 6.9 percent increase in ARPU (average monthly service revenue per unit), to $52.06.
· 9.6 percent increase in operating income, to $119 million.
· Retail postpay churn was 1.4 percent; postpay customers comprised 95 percent of retail customers.
· 7.5 percent increase in cell sites in service, to 6,452.
· Repurchased 150,000 common shares for $10.8 million, to offset dilution from employee benefit plans and seek to increase value to shareholders.
CHICAGO – May 7, 2008 – United States Cellular Corporation [AMEX:USM] reported service revenues of $962.1 million for the first quarter of 2008, an 11.8 percent increase from $860.6 million in the comparable period one year ago. The company recorded operating income of $119 million, an increase of 9.6 percent from $108.5 million in the first quarter of 2007. Net income and diluted earnings per share were $70.6 million and $0.80, respectively, compared to $74.4 million and $0.84, respectively, in the comparable period one year ago.*
*In the first quarter of 2007, the company recorded a $12.5 million pre-tax gain on fair value adjustment of derivative instruments related to the derivative component of the Vodafone Group Plc variable prepaid forward contracts.
Continued growth in data revenues drives service revenues and ARPU
“U.S. Cellular experienced strong growth in data revenues this quarter,” said John E. Rooney, U.S. Cellular president and CEO, “driven in part by new smartphones like the BlackBerry® Pearl™ and their related data plans, and by customers’ increased use of messaging services. The 49 percent increase in data revenues helped to drive up both service revenues and ARPU. The growth in service revenues was partly offset by growth in operating expenses, however, resulting in lower margins. We also had solid net retail customer additions in the quarter, and maintained a low, 1.4-percent retail postpay churn rate.
“We continue to focus on providing a consistently high-quality wireless experience,” added Rooney, “in terms of network strength and reliability and exceptional customer service. We received our fifth consecutive J.D. Power and Associates award for call quality this quarter, and our associates are committed to exceeding our customers’ expectations for service and satisfaction.”
Strengthened footprint with new spectrum
U.S. Cellular participated in Auction 73, the Federal Communications Commission (FCC) auction of spectrum in the 700 MHz band, through its interest in King Street Wireless L.P. King Street Wireless was the provisional winning bidder for 152 licenses for an aggregate bid of $300.5 million, net of its designated entity discount, which was recorded in licenses on U.S. Cellular’s balance sheet as of March 31, 2008. The FCC has not yet awarded any of the licenses to winning bidders. The licenses expected to be awarded to King Street Wireless cover areas that overlap or are proximate or contiguous to areas covered by licenses that U.S. Cellular currently owns, operates, and/or consolidates in its financial statements.
Guidance
Guidance for the year ending Dec. 31, 2008 is as follows. There can be no assurance that final results will not differ materially from this guidance.
U.S. Cellular 2008 guidance as of May 7, 2008 is as follows:
Net Retail Customer Additions |
| 200,000 - 275,000 |
Service Revenues |
| $3.9 - 4.0 billion** |
Operating Income |
| $435 - 510 million |
Depreciation, Amortization & Accretion |
| Approx. $615 million** |
Capital Expenditures |
| $565 - 615 million |
**Unchanged from guidance issued on Feb. 29, 2008
The foregoing guidance represents the views of management as of May 7, 2008 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 May 7, 2008 at 10:00 a.m. Chicago time.
· Access the live call online at http://www.videonewswire.com/event.asp?id=48272 or on the Conference Calls page of www.uscellular.com.
2
· Access the call by phone at (800) 706-9695 (US/Canada) and use conference ID 45884257.
Before the call, certain financial and statistical information to be discussed during the call will be posted to the Conference Call page of www.uscellular.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 of www.uscellular.com.
About U.S. Cellular
United States Cellular Corporation, the nation’s sixth-largest, full-service wireless carrier, provides a comprehensive range of wireless products and services, excellent customer support, and a high-quality network to more than 6.2 million customers in 26 states. The Chicago-based company employed 8,700 associates as of March 31, 2008. For more information about U.S. Cellular, visit www.uscellular.com.
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 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 operations of more recently launched markets; changes in the overall economy, competition, the state and federal telecommunications regulatory environment, and 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; risks and uncertainties relating to restatements and possible future restatements; ability to remediate the material weakness; pending and future litigation; changes in income tax rates, laws, regulations or rulings; acquisitions/divestitures of properties and/or licenses; and changes in customer growth rates, average monthly revenue per unit, churn rates, roaming terms, the availability of devices and the mix of products and services offered by the company. 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 |
| 3/31/2008 |
| 12/31/2007 |
| 9/30/2007 |
| 6/30/2007 |
| 3/31/2007 |
| |||||
Total Population: |
|
|
|
|
|
|
|
|
|
|
| |||||
Consolidated markets (1) |
| 82,846,000 |
| 82,371,000 |
| 81,841,000 |
| 81,581,000 |
| 56,048,000 |
| |||||
Consolidated operating markets (1) |
| 45,262,000 |
| 44,955,000 |
| 44,955,000 |
| 44,955,000 |
| 44,416,000 |
| |||||
All customers: |
|
|
|
|
|
|
|
|
|
|
| |||||
Customer units (2) |
| 6,201,000 |
| 6,122,000 |
| 6,067,000 |
| 6,010,000 |
| 5,973,000 |
| |||||
Gross customer unit additions |
| 409,000 |
| 437,000 |
| 447,000 |
| 418,000 |
| 459,000 |
| |||||
Net customer unit additions |
| 80,000 |
| 55,000 |
| 57,000 |
| 37,000 |
| 152,000 |
| |||||
Market penetration at end of period: |
|
|
|
|
|
|
|
|
|
|
| |||||
Consolidated markets (3) |
| 7.5 | % | 7.4 | % | 7.4 | % | 7.4 | % | 10.7 | % | |||||
Consolidated operating markets (3) |
| 13.7 | % | 13.6 | % | 13.5 | % | 13.4 | % | 13.4 | % | |||||
Retail customers: |
|
|
|
|
|
|
|
|
|
|
| |||||
Customer units (2) |
| 5,640,000 |
| 5,564,000 |
| 5,500,000 |
| 5,448,000 |
| 5,377,000 |
| |||||
Gross customer unit additions |
| 360,000 |
| 367,000 |
| 374,000 |
| 347,000 |
| 397,000 |
| |||||
Net customer unit additions |
| 85,000 |
| 64,000 |
| 52,000 |
| 71,000 |
| 146,000 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Cell sites in service |
| 6,452 |
| 6,383 |
| 6,255 |
| 6,140 |
| 6,004 |
| |||||
Average monthly revenue per unit (4) |
| $ | 52.06 |
| $ | 52.46 |
| $ | 52.71 |
| $ | 50.42 |
| $ | 48.69 |
|
Retail service revenue per unit (4) |
| $ | 45.14 |
| $ | 45.36 |
| $ | 45.00 |
| $ | 43.87 |
| $ | 42.69 |
|
Inbound roaming revenue per unit (4) |
| $ | 2.93 |
| $ | 3.09 |
| $ | 3.36 |
| $ | 2.68 |
| $ | 2.33 |
|
Long-distance/other revenue per unit (4) |
| $ | 3.99 |
| $ | 4.01 |
| $ | 4.35 |
| $ | 3.87 |
| $ | 3.67 |
|
Minutes of use (MOU) (5) |
| 948 |
| 906 |
| 887 |
| 858 |
| 783 |
| |||||
Retail postpay churn rate per month (6) |
| 1.4 | % | 1.5 | % | 1.6 | % | 1.4 | % | 1.3 | % | |||||
Construction Expenditures (000s) |
| $ | 111,700 |
| $ | 188,100 |
| $ | 130,600 |
| $ | 137,100 |
| $ | 109,700 |
|
(1) |
| “Total population of consolidated markets” and “Total population of consolidated operating markets” are used only for the purposes of calculating 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) |
| All customer units and Retail customer units as of March 31, 2008 include one time adjustments, resulting from a review of U.S. Cellular’s customer reporting procedures. | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3) |
| 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. | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4) |
| 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 |
| $ | 962,094 |
| $ | 957,896 |
| $ | 954,540 |
| $ | 906,218 |
| $ | 860,583 |
|
Components: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail service revenue during quarter |
| $ | 834,213 |
| $ | 828,169 |
| $ | 814,948 |
| $ | 788,535 |
| $ | 754,515 |
|
Inbound roaming revenue during quarter |
| $ | 54,089 |
| $ | 56,358 |
| $ | 60,843 |
| $ | 48,084 |
| $ | 41,268 |
|
Long-distance/other revenue during quarter |
| $ | 73,792 |
| $ | 73,369 |
| $ | 78,749 |
| $ | 69,599 |
| $ | 64,800 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Divided by average customers during quarter (000s) |
| 6,160 |
|
| 6,086 |
|
| 6,036 |
|
| 5,991 |
|
| 5,892 |
| |
Divided by three months in each quarter |
| 3 |
|
| 3 |
|
| 3 |
|
| 3 |
|
| 3 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average monthly revenue per unit |
| $ | 52.06 |
| $ | 52.46 |
| $ | 52.71 |
| $ | 50.42 |
| $ | 48.69 |
|
Retail service revenue per unit |
| $ | 45.14 |
| $ | 45.36 |
| $ | 45.00 |
| $ | 43.87 |
| $ | 42.69 |
|
Inbound roaming revenue per unit |
| $ | 2.93 |
| $ | 3.09 |
| $ | 3.36 |
| $ | 2.68 |
| $ | 2.33 |
|
Long-distance/other revenue per unit |
| $ | 3.99 |
| $ | 4.01 |
| $ | 4.35 |
| $ | 3.87 |
| $ | 3.67 |
|
(5) |
| Average monthly local minutes of use per customer (without roaming). | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(6) |
| Retail postpay churn rate per month is calculated by dividing the total monthly retail postpay customer disconnects during the quarter by the average retail postpay customer base for the quarter. | |||||||||||
4
UNITED STATES CELLULAR CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS HIGHLIGHTS
Three Months Ended March 31,
(Unaudited, dollars and shares in thousands, except per share amounts)
|
|
|
|
|
| Increase (Decrease) |
| |||||
|
| 2008 |
| 2007 |
| Amount |
| Percent |
| |||
Operating Revenues |
|
|
|
|
|
|
|
|
| |||
Service |
| $ | 962,094 |
| $ | 860,583 |
| $ | 101,511 |
| 11.8 | % |
Equipment sales |
| 75,762 |
| 74,091 |
| 1,671 |
| 2.3 | % | |||
Total Operating Revenues |
| 1,037,856 |
| 934,674 |
| 103,182 |
| 11.0 | % | |||
Operating Expenses |
|
|
|
|
|
|
|
|
| |||
System operations (excluding Depreciation, amortization and accretion shown separately below) |
| 191,016 |
| 167,284 |
| 23,732 |
| 14.2 | % | |||
Cost of equipment sold |
| 174,037 |
| 150,744 |
| 23,293 |
| 15.5 | % | |||
Selling, general and administrative |
| 407,634 |
| 358,866 |
| 48,768 |
| 13.6 | % | |||
Depreciation, amortization and accretion |
| 142,530 |
| 145,952 |
| (3,422 | ) | (2.3) | % | |||
Loss on asset disposals, net |
| 3,673 |
| 3,305 |
| 368 |
| 11.1 | % | |||
Total Operating Expenses |
| 918,890 |
| 826,151 |
| 92,739 |
| 11.2 | % | |||
|
|
|
|
|
|
|
|
|
| |||
Operating Income |
| 118,966 |
| 108,523 |
| 10,443 |
| 9.6 | % | |||
|
|
|
|
|
|
|
|
|
| |||
Investment and Other Income (Expense) |
|
|
|
|
|
|
|
|
| |||
Equity in earnings of unconsolidated entities |
| 21,235 |
| 23,098 |
| (1,863 | ) | (8.1) | % | |||
Interest and dividend income |
| 1,905 |
| 2,550 |
| (645 | ) | (25.3) | % | |||
Interest expense |
| (20,115 | ) | (23,684 | ) | 3,569 |
| 15.1 | % | |||
Fair value adjustment of derivative instruments |
| — |
| 12,461 |
| (12,461 | ) | N/M | ||||
Other, net |
| 118 |
| (585 | ) | 703 |
| N/M | ||||
|
| 3,143 |
| 13,840 |
| (10,697 | ) | (77.3) | % | |||
Income Before Income Taxes and Minority Interest |
| 122,109 |
| 122,363 |
| (254 | ) | (0.2) | % | |||
Income tax expense |
| 47,540 |
| 43,888 |
| 3,652 |
| 8.3 | % | |||
Income Before Minority Interest |
| 74,569 |
| 78,475 |
| (3,906 | ) | (5.0) | % | |||
Minority share of income, net of tax |
| (4,012 | ) | (4,074 | ) | 62 |
| 1.5 | % | |||
Net Income |
| $ | 70,557 |
| $ | 74,401 |
| $ | (3,844 | ) | (5.2) | % |
|
|
|
|
|
|
|
|
|
| |||
Basic Weighted Average Common Shares Outstanding |
| 87,571 |
| 87,882 |
| (311 | ) | (0.4) | % | |||
Basic Earnings Per Share |
| $ | 0.81 |
| $ | 0.85 |
| $ | (0.04 | ) | (4.7) | % |
|
|
|
|
|
|
|
|
|
| |||
Diluted Weighted Average Common Shares Outstanding |
| 88,064 |
| 88,688 |
| (624 | ) | (0.7) | % | |||
Diluted Earnings Per Share |
| $ | 0.80 |
| $ | 0.84 |
| $ | (0.04 | ) | (4.8) | % |
N/M - Percentage change not meaningful
5
UNITED STATES CELLULAR CORPORATION
CONSOLIDATED BALANCE SHEET HIGHLIGHTS
(Unaudited, dollars in thousands)
ASSETS
|
| March 31, |
| December 31, |
| ||
|
| 2008 |
| 2007 |
| ||
Current Assets |
|
|
|
|
| ||
Cash and cash equivalents |
| $ | 216,475 |
| $ | 204,533 |
|
Marketable equity securities |
| 16,404 |
| 16,352 |
| ||
Accounts receivable from customers and other |
| 415,178 |
| 435,497 |
| ||
Inventory |
| 114,687 |
| 100,990 |
| ||
Prepaid expenses |
| 56,619 |
| 41,588 |
| ||
Other current assets |
| 36,157 |
| 34,793 |
| ||
|
| 855,520 |
| 833,753 |
| ||
|
|
|
|
|
| ||
Investments |
|
|
|
|
| ||
Licenses |
| 1,788,548 |
| 1,482,446 |
| ||
Goodwill |
| 492,286 |
| 491,316 |
| ||
Customer lists |
| 14,333 |
| 15,375 |
| ||
Investments in unconsolidated entities |
| 172,586 |
| 157,693 |
| ||
Notes and interest receivable — long-term |
| 4,391 |
| 4,422 |
| ||
|
| 2,472,144 |
| 2,151,252 |
| ||
|
|
|
|
|
| ||
Property, Plant and Equipment |
|
|
|
|
| ||
In service and under construction |
| 5,493,389 |
| 5,409,115 |
| ||
Less accumulated depreciation |
| 2,925,051 |
| 2,814,019 |
| ||
|
| 2,568,338 |
| 2,595,096 |
| ||
|
|
|
|
|
| ||
Other Assets and Deferred Charges |
| 30,072 |
| 31,773 |
| ||
|
|
|
|
|
| ||
Total Assets |
| $ | 5,926,074 |
| $ | 5,611,874 |
|
6
UNITED STATES CELLULAR CORPORATION
CONSOLIDATED BALANCE SHEET HIGHLIGHTS
(Unaudited, dollars in thousands)
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
| March 31, |
| December 31, |
| ||
|
| 2008 |
| 2007 |
| ||
Current Liabilities |
|
|
|
|
| ||
Accounts payable |
|
|
|
|
| ||
Affiliated |
| $ | 8,402 |
| $ | 8,519 |
|
Trade |
| 249,854 |
| 252,272 |
| ||
Customer deposits and deferred revenues |
| 149,960 |
| 143,445 |
| ||
Accrued taxes |
| 75,003 |
| 43,105 |
| ||
Accrued compensation |
| 37,489 |
| 59,224 |
| ||
Other current liabilities |
| 306,743 |
| 97,678 |
| ||
|
| 827,451 |
| 604,243 |
| ||
|
|
|
|
|
| ||
Long-Term Debt |
| 1,006,395 |
| 1,002,293 |
| ||
|
|
|
|
|
| ||
Deferred Liabilities and Credits |
| 785,830 |
| 765,786 |
| ||
|
|
|
|
|
| ||
Minority Interest |
| 44,772 |
| 43,396 |
| ||
|
|
|
|
|
| ||
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 |
| 1,317,488 |
| 1,316,042 |
| ||
Treasury Shares |
| (41,630 | ) | (41,094 | ) | ||
Accumulated other comprehensive income |
| 10,167 |
| 10,134 |
| ||
Retained earnings |
| 1,887,549 |
| 1,823,022 |
| ||
|
| 3,261,626 |
| 3,196,156 |
| ||
|
|
|
|
|
| ||
Total Liabilities and Shareholders’ Equity |
| $ | 5,926,074 |
| $ | 5,611,874 |
|
7
UNITED STATES CELLULAR CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended March 31,
(Unaudited, dollars in thousands)
|
| 2008 |
| 2007 |
| ||
Cash Flows from Operating Activities |
|
|
|
|
| ||
Net income |
| $ | 70,557 |
| $ | 74,401 |
|
Add (deduct) adjustments to reconcile net income to net cash flows from operating activities: |
|
|
|
|
| ||
Depreciation, amortization and accretion |
| 142,530 |
| 145,952 |
| ||
Bad debts expense |
| 17,962 |
| 11,087 |
| ||
Stock-based compensation expense |
| 1,773 |
| 3,022 |
| ||
Deferred income taxes, net |
| 15,926 |
| 369 |
| ||
Equity in earnings of unconsolidated entities |
| (21,235 | ) | (23,098 | ) | ||
Distributions from unconsolidated entities |
| 6,933 |
| 2,226 |
| ||
Minority share of income |
| 4,012 |
| 4,074 |
| ||
Unrealized fair value adjustment of derivative instruments |
| — |
| (12,461 | ) | ||
Loss on asset disposals, net |
| 3,673 |
| 3,305 |
| ||
Noncash interest expense |
| 443 |
| 445 |
| ||
Excess tax benefit from stock awards |
| (764 | ) | (1,114 | ) | ||
Changes in assets and liabilities from operations |
|
|
|
|
| ||
Change in accounts receivable |
| (8,615 | ) | 14,019 |
| ||
Change in inventory |
| (13,697 | ) | 16,106 |
| ||
Change in accounts payable - trade |
| (2,418 | ) | (18,382 | ) | ||
Change in accounts payable - affiliate |
| (117 | ) | (2,676 | ) | ||
Change in customer deposits and deferred revenues |
| 6,515 |
| 11,639 |
| ||
Change in accrued taxes |
| 32,949 |
| 47,155 |
| ||
Change in accrued interest |
| 9,337 |
| 9,382 |
| ||
Change in other assets and liabilities |
| (35,967 | ) | (30,385 | ) | ||
|
| 229,797 |
| 255,066 |
| ||
Cash Flows from Investing Activities |
|
|
|
|
| ||
Additions to property, plant and equipment |
| (111,690 | ) | (109,729 | ) | ||
Cash received from divestitures |
| 6,838 |
| 279 |
| ||
Cash paid for acquisitions |
| (102,000 | ) | (18,237 | ) | ||
Other investing activities |
| 239 |
| 662 |
| ||
|
| (206,613 | ) | (127,025 | ) | ||
Cash Flows from Financing Activities |
|
|
|
|
| ||
Issuance of notes payable |
| — |
| 25,000 |
| ||
Common shares repurchased |
| (6,201 | ) | — |
| ||
Common shares reissued, net of tax payments |
| (2,526 | ) | 5,558 |
| ||
Excess tax benefit from stock awards |
| 764 |
| 1,114 |
| ||
Capital distributions to minority partners |
| (3,231 | ) | (2,769 | ) | ||
Other financing activities |
| (48 | ) | — |
| ||
|
| (11,242 | ) | 28,903 |
| ||
|
|
|
|
|
| ||
Net Increase in Cash and Cash Equivalents |
| 11,942 |
| 156,944 |
| ||
Cash and Cash Equivalents |
|
|
|
|
| ||
Beginning of period |
| 204,533 |
| 32,912 |
| ||
End of period |
| $ | 216,475 |
| $ | 189,856 |
|
8