Exhibit 99.1
| NEWS RELEASE |
As previously announced, U.S. Cellular® will hold a teleconference on Feb. 26, 2009, 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 FOURTH QUARTER AND FULL-YEAR 2008 RESULTS
NON-CASH IMPAIRMENT CHARGE RELATED TO SFAS 142
Note: Comparisons are year over year unless otherwise noted.
4Q 2008 Highlights
· 2.0 percent increase in service revenues, to $977.0 million.
· 31.8 percent increase in data revenues, to $142.1 million, representing 14.5 percent of service revenues.
· Postpay churn of 1.6 percent; postpay customers comprised 95 percent of retail customers.
· 7.7 percent increase in cell sites in service, to 6,877.
· Repurchased 150,000 common shares for $5.2 million, to offset dilution from employee benefit plans.
Full-Year 2008 Highlights
· 7.1 percent increase in service revenues, to $3,940.3 million.
· 39.1 percent increase in data revenues, to $511.7 million.
· 4.0 percent increase in ARPU to $53.23.
· 6.9 percent increase in cash flows from operating activities, to $922.8 million.
· Postpay churn low at 1.5 percent.
· Repurchased 600,000 shares in 2008 at a total cost of $32.9 million, to offset dilution from employee benefit plans.
CHICAGO — Feb. 26, 2009 — United States Cellular Corporation [NYSE:USM] reported service revenues of $977.0 million for the fourth quarter of 2008, a 2.0 percent increase from $957.9 million in the comparable period one year ago. In the fourth quarter, U.S. Cellular recorded a $386.7 million impairment discussed later in this release. Although this resulted in a loss for the quarter, the impairment was a non-cash charge and did not affect cash or cash flow.
“We finished the year with some solid operating results, despite difficult economic conditions,” said John E. Rooney, U.S. Cellular president and chief executive officer. “We added 41,000 net retail postpay customers in the quarter, postpay being the market segment we focus on given our high customer satisfaction model. In fact, 95 percent of our retail customers are postpay. Spending on advertising and promotions remained high given the aggressive competition and waning consumer confidence.
“Data revenues continued to grow nicely in the quarter, increasing 32 percent and representing 14.5 percent of service revenues,” Rooney continued. “Smart phone sales are up sharply and carry higher ARPU due to data packages. ARPU has increased year over year for 13 consecutive quarters.”
“In 2008, U.S. Cellular continued to improve its handset selection and rolled out five new smart phone models and one premium touchscreen phone,” said Jay M. Ellison, U.S. Cellular executive vice president and chief operating officer. “Additionally, to support the growing demand for data, we have in place a Mobile Broadband (EVDO Rev. A) network that was available to approximately 23 percent of our cell sites at year end, and will cover more than 60 percent of our cell sites by the end of 2009. Our broad suite of handsets, coupled with the 3G speeds of Mobile Broadband, provide customers an ideal data experience. We also expanded our network during the year, adding nearly 500 cell sites and ending the year with approximately 6,900 cell sites in service.”
OUTLOOK
“For 2009,” continued Jack Rooney, “we intend to not only retain and grow our customer base, but also invest in the company on a number of fronts, so that we emerge from the economic downturn stronger than ever. In addition to the continued overlay of EVDO, we are pursuing a number of multi-year initiatives to make this happen.”
The initiatives include:
· A new point-of-sale system to consolidate billing on one platform. This will enable reduced time to market and improved testing capabilities, and give U.S. Cellular the ability to develop more flexible pricing and services.
· Development of an Electronic Data Warehouse/Customer Relationship Management (EDW/CRM) System. This system will allow U.S. Cellular to collect and analyze information more efficiently to build and improve customer relationships.
· An Internet/Web initiative that will enable customers to make a wide range of transactions and, eventually, to manage their accounts online.
SFAS 142 Impairment Charge
U.S. Cellular recorded an impairment of licenses of $386.7 million (pre-tax) in the fourth quarter of 2008 in accordance with Statement of Financial Accounting Standards, “Goodwill and Other Intangible Assets” (“SFAS No. 142”).
The impairment charge had no impact on cash or cash flow.
In accordance with SFAS No. 142, U.S. Cellular performed its annual impairment test of licenses and goodwill in the second quarter of 2008 and concluded at the time that there was no impairment. As a result of the further deterioration in the credit and financial markets and the accelerated decline in the overall economy in the fourth quarter of 2008, U.S. Cellular updated its impairment assessment of licenses and goodwill as of Dec. 31, 2008. The impairment assessment resulted in a $386.7 million impairment to licenses and no impairment to goodwill.
Material Weakness Eliminated
In the fourth quarter of 2008, U.S. Cellular and Telephone and Data Systems, Inc. (NYSE: TDS, TDS.S) completed the implementation of previously reported enhanced internal controls related to income tax accounting. TDS provides shared services to U.S. Cellular, including assistance with accounting for income taxes. These controls are operating effectively and, as a result, the company no longer has a material weakness related to income taxes.
2
Guidance
Guidance for the year ending Dec. 31, 2009 is as follows. There can be no assurance that final results will not differ materially from this guidance.
U.S. Cellular 2009 guidance as of Feb. 26, 2009 is as follows:
Net Retail Customer Additions | | 75,000-150,000 | |
Service Revenues | | $3,900-$4,000 million | |
Operating Income | | $275-$350 million | |
Depreciation, Amortization and Accretion(1) | | Approx. $600 million | |
Capital Expenditures | | Approx. $575 million | |
(1) Includes losses on disposals of assets
The foregoing guidance represents the views of management as of Feb. 26, 2009 and should not be assumed to be accurate as of any other date. U.S. Cellular undertakes no legal duty to update such information, whether as a result of new information, future events, or otherwise.
Conference Call Information
U.S. Cellular will hold a conference call on Feb. 26, 2009 at 10:00 a.m. Chicago time.
· Access the live call online at http://www.videonewswire.com/event.asp?id=56184 or on the Conference Calls page of www.uscellular.com.
· Access the call by phone at 800/706-9695 (US/Canada) and use conference ID 86129191.
Before the call, certain financial and statistical information to be discussed during the call will be posted to the Conference Calls 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 fifth-largest, full-service wireless carrier, provides a comprehensive range of wireless products and services, excellent customer support, and a high-quality network to nearly 6.2 million customers in 26 states. The Chicago-based company employed 8,500 full-time equivalent associates as of Dec. 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 grow its markets; the current credit crisis affecting financial markets, and its effect on the overall economy; 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 the company’s debt securities by accredited ratings organizations; industry consolidation; advances in telecommunications technology; uncertainty of access to the capital markets; risks and uncertainties relating to possible future restatements; 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 revenue and terms, the availability of handset 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.
For more information about U.S. Cellular, visit: www.uscellular.com.
3
UNITED STATES CELLULAR CORPORATION
SUMMARY OPERATING DATA
Quarter Ended | | 12/31/2008 | | 9/30/2008 | | 6/30/2008 | | 3/31/2008 | | 12/31/2007 | |
Total Population: | | | | | | | | | | | |
Consolidated markets (1) | | 83,014,000 | | 82,875,000 | | 82,875,000 | | 82,846,000 | | 82,371,000 | |
Consolidated operating markets (1) | | 46,009,000 | | 45,493,000 | | 45,493,000 | | 45,262,000 | | 44,955,000 | |
All customers: | | | | | | | | | | | |
Customer units (2) | | 6,196,000 | | 6,176,000 | | 6,194,000 | | 6,175,000 | | 6,102,000 | |
Gross customer unit additions | | 395,000 | | 367,000 | | 365,000 | | 408,000 | | 436,000 | |
Net customer unit additions (losses) | | 20,000 | | (18,000 | ) | 16,000 | | 73,000 | | 44,000 | |
Market penetration at end of period: | | | | | | | | | | | |
Consolidated markets (3) | | 7.5 | % | 7.5 | % | 7.5 | % | 7.5 | % | 7.4 | % |
Consolidated operating markets (3) | | 13.5 | % | 13.6 | % | 13.6 | % | 13.6 | % | 13.6 | % |
Retail customers: | | | | | | | | | | | |
Customer units (2) | | 5,707,000 | | 5,674,000 | | 5,677,000 | | 5,640,000 | | 5,564,000 | |
Gross customer unit additions | | 352,000 | | 325,000 | | 318,000 | | 360,000 | | 367,000 | |
Net postpay customer unit additions | | 41,000 | | 12,000 | | 33,000 | | 72,000 | | 70,000 | |
Net prepay customer unit additions (losses) | | (8,000 | ) | (15,000 | ) | 1,000 | | 13,000 | | (6,000 | ) |
Cell sites in service | | 6,877 | | 6,716 | | 6,596 | | 6,452 | | 6,383 | |
Average monthly revenue per unit (4) | | $ | 52.71 | | $ | 54.59 | | $ | 53.27 | | $ | 52.24 | | $ | 52.60 | |
Retail service revenue per unit (4) (7) | | $ | 46.43 | | $ | 46.97 | | $ | 46.53 | | $ | 46.18 | | $ | 46.39 | |
Inbound roaming revenue per unit (4) (7) | | $ | 4.25 | | $ | 5.03 | | $ | 4.54 | | $ | 3.95 | | $ | 4.22 | |
Other revenue per unit (4) (7) | | $ | 2.03 | | $ | 2.59 | | $ | 2.20 | | $ | 2.11 | | $ | 1.99 | |
Minutes of use (MOU) - Voice (5) | | 678 | | 695 | | 704 | | 701 | | 689 | |
Postpay churn rate (6) | | 1.6 | % | 1.6 | % | 1.4 | % | 1.4 | % | 1.5 | % |
Construction Expenditures (000s) | | $ | 190,000 | | $ | 146,100 | | $ | 137,800 | | $ | 111,700 | | $ | 188,100 | |
(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 as of December 31, 2007 and March 31, 2008, and retail customer units as of March 31, 2008 have been adjusted from amounts previously reported, as a result of 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 (000s) | | $ | 976,952 | | $ | 1,013,928 | | $ | 987,352 | | $ | 962,094 | | $ | 957,896 | |
Components: | | | | | | | | | | | |
Retail service revenue (000s) | | 860,503 | | 872,397 | | 862,392 | | 850,470 | | 844,848 | |
Inbound roaming revenue (000s) | | 78,768 | | 93,472 | | 84,201 | | 72,755 | | 76,850 | |
Other revenue (000s) | | 37,681 | | 48,059 | | 40,759 | | 38,869 | | 36,198 | |
| | | | | | | | | | | |
Divided by average customers (000s) | | 6,178 | | 6,191 | | 6,178 | | 6,139 | | 6,070 | |
Divided by three months in each quarter | | 3 | | 3 | | 3 | | 3 | | 3 | |
| | | | | | | | | | | |
Average monthly revenue per unit | | $ | 52.71 | | $ | 54.59 | | $ | 53.27 | | $ | 52.24 | | $ | 52.60 | |
Retail service revenue per unit | | $ | 46.43 | | $ | 46.97 | | $ | 46.53 | | $ | 46.18 | | $ | 46.39 | |
Inbound roaming revenue per unit | | $ | 4.25 | | $ | 5.03 | | $ | 4.54 | | $ | 3.95 | | $ | 4.22 | |
Other revenue per unit | | $ | 2.03 | | $ | 2.59 | | $ | 2.20 | | $ | 2.11 | | $ | 1.99 | |
(5) | Average monthly voice minutes of use per customer (without roaming). |
(6) | Postpay churn rate is calculated by dividing the total postpay customer disconnects during the quarter by the average postpay customer base for the quarter. |
(7) | Long-distance revenue was reclassified in the fourth quarter of 2008 from Long-distance/Other revenue to Retail service revenue and Inbound roaming revenue. Previous quarters have been adjusted to reflect this change. |
4
UNITED STATES CELLULAR CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS HIGHLIGHTS
Three Months Ended December 31,
(Unaudited, dollars and shares in thousands, except per share amounts)
| | | | | | Increase (Decrease) | |
| | 2008 | | 2007 | | Amount | | Percent | |
Operating Revenues | | | | | | | | | |
Service | | $ | 976,952 | | $ | 957,896 | | $ | 19,056 | | 2.0 | % |
Equipment sales | | 75,910 | | 66,214 | | 9,696 | | 14.6 | % |
Total operating revenues | | 1,052,862 | | 1,024,110 | | 28,752 | | 2.8 | % |
| | | | | | | | | |
Operating Expenses | | | | | | | | | |
System operations (excluding Depreciation, amortization and accretion reported below) | | 198,916 | | 187,903 | | 11,013 | | 5.9 | % |
Cost of equipment sold | | 203,224 | | 168,987 | | 34,237 | | 20.3 | % |
Selling, general and administrative | | 442,873 | | 414,719 | | 28,154 | | 6.8 | % |
Depreciation, amortization and accretion | | 143,709 | | 142,279 | | 1,430 | | 1.0 | % |
Loss on impairment of intangible assets | | 386,653 | | 20,840 | | 365,813 | | N/M | |
Loss on asset disposals, net | | 6,602 | | 26,117 | | (19,515 | ) | (74.7 | )% |
Total operating expenses | | 1,381,977 | | 960,845 | | 421,132 | | 43.8 | % |
| | | | | | | | | |
Operating Income (Loss) | | (329,115 | ) | 63,265 | | (392,380 | ) | N/M | |
| | | | | | | | | |
Investment and Other Income (Expense) | | | | | | | | | |
Equity in earnings of unconsolidated entities | | 25,620 | | 20,173 | | 5,447 | | 27.0 | % |
Interest and dividend income | | 1,259 | | 4,461 | | (3,202 | ) | (71.8 | )% |
Gain on disposition of investments | | — | | 6,301 | | (6,301 | ) | N/M | |
Interest expense | | (16,579 | ) | (20,045 | ) | 3,466 | | 17.3 | % |
Other, net | | 160 | | (395 | ) | 555 | | N/M | |
Total Investment and Other Income (Expense) | | 10,460 | | 10,495 | | (35 | ) | (0.3 | )% |
| | | | | | | | | |
Income (Loss) Before Income Taxes and Minority Interest | | (318,655 | ) | 73,760 | | (392,415 | ) | N/M | |
Income tax expense (benefit) | | (129,007 | ) | 40,169 | | (169,176 | ) | N/M | |
| | | | | | | | | |
Income (Loss) Before Minority Interest | | (189,648 | ) | 33,591 | | (223,239 | ) | N/M | |
Minority share of income, net of tax | | (10,470 | ) | (4,384 | ) | (6,086 | ) | N/M | |
| | | | | | | | | |
Net Income (Loss) | | $ | (200,118 | ) | $ | 29,207 | | $ | (229,325 | ) | N/M | |
| | | | | | | | | |
Basic Weighted Average Common Shares Outstanding | | 87,340 | | 87,691 | | (351 | ) | (0.4 | )% |
Basic Earnings (Loss) Per Share | | $ | (2.29 | ) | $ | 0.33 | | $ | (2.62 | ) | N/M | |
| | | | | | | | | |
Diluted Weighted Average Common Shares Outstanding | | 87,340 | | 88,309 | | (969 | ) | (1.1 | )% |
Diluted Earnings (Loss) Per Share | | $ | (2.29 | ) | $ | 0.33 | | $ | (2.62 | ) | N/M | |
N/M - Percentage change not meaningful
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UNITED STATES CELLULAR CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS HIGHLIGHTS
Twelve Months Ended December 31,
(Unaudited, dollars and shares in thousands, except per share amounts)
| | | | | | Increase (Decrease) | |
| | 2008 | | 2007 | | Amount | | Percent | |
Operating Revenues | | | | | | | | | |
Service | | $ | 3,940,326 | | $ | 3,679,237 | | $ | 261,089 | | 7.1 | % |
Equipment sales | | 302,859 | | 267,027 | | 35,832 | | 13.4 | % |
Total operating revenues | | 4,243,185 | | 3,946,264 | | 296,921 | | 7.5 | % |
| | | | | | | | | |
Operating Expenses | | | | | | | | | |
System operations (excluding Depreciation, amortization and accretion reported below) | | 784,057 | | 717,075 | | 66,982 | | 9.3 | % |
Cost of equipment sold | | 743,406 | | 637,297 | | 106,109 | | 16.6 | % |
Selling, general and administrative | | 1,701,050 | | 1,558,568 | | 142,482 | | 9.1 | % |
Depreciation, amortization and accretion | | 576,931 | | 578,186 | | (1,255 | ) | (0.2 | )% |
Loss on impairment of intangible assets | | 386,653 | | 24,923 | | 361,730 | | N/M | |
Loss on asset disposals, net | | 23,378 | | 34,016 | | (10,638 | ) | (31.3 | )% |
Total operating expenses | | 4,215,475 | | 3,550,065 | | 665,410 | | 18.7 | % |
| | | | | | | | | |
Operating Income | | 27,710 | | 396,199 | | (368,489 | ) | (93.0 | )% |
| | | | | | | | | |
Investment and Other Income (Expense) | | | | | | | | | |
Equity in earnings of unconsolidated entities | | 91,981 | | 90,033 | | 1,948 | | 2.2 | % |
Interest and dividend income | | 5,730 | | 13,059 | | (7,329 | ) | (56.1 | )% |
Fair value adjustment of derivative instruments | | — | | (5,388 | ) | 5,388 | | N/M | |
Gain on disposition of investments | | 16,628 | | 137,987 | | (121,359 | ) | (87.9 | )% |
Interest expense | | (77,190 | ) | (84,679 | ) | 7,489 | | 8.8 | % |
Other, net | | 1,269 | | (710 | ) | 1,979 | | N/M | |
Total Investment and Other Income (Expense) | | 38,418 | | 150,302 | | (111,884 | ) | (74.4 | )% |
| | | | | | | | | |
Income Before Income Taxes and Minority Interest | | 66,128 | | 546,501 | | (480,373 | ) | (87.9 | )% |
Income tax expense | | 8,055 | | 216,711 | | (208,656 | ) | (96.3 | )% |
| | | | | | | | | |
Income Before Minority Interest | | 58,073 | | 329,790 | | (271,717 | ) | (82.4 | )% |
Minority share of income, net | | (25,083 | ) | (15,056 | ) | (10,027 | ) | (66.6 | )% |
| | | | | | | | | |
Net Income | | $ | 32,990 | | $ | 314,734 | | $ | (281,744 | ) | (89.5 | )% |
| | | | | | | | | |
Basic Weighted Average Common Shares Outstanding | | 87,457 | | 87,730 | | (273 | ) | (0.3 | )% |
Basic Earnings Per Share | | $ | 0.38 | | $ | 3.59 | | $ | (3.21 | ) | (89.4 | )% |
| | | | | | | | | |
Diluted Weighted Average Common Shares Outstanding | | 87,754 | | 88,481 | | (727 | ) | (0.8 | )% |
Diluted Earnings Per Share | | $ | 0.38 | | $ | 3.56 | | $ | (3.18 | ) | (89.3 | )% |
N/M - Percentage change not meaningful
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UNITED STATES CELLULAR CORPORATION
CONSOLIDATED BALANCE SHEET HIGHLIGHTS
(Unaudited, dollars in thousands)
ASSETS
| | December 31, | | December 31, | |
| | 2008 | | 2007 | |
Current Assets | | | | | |
Cash and cash equivalents | | $ | 170,996 | | $ | 204,533 | |
Accounts receivable from customers and other | | 419,619 | | 435,497 | |
Marketable equity securities | | — | | 16,352 | |
Inventory | | 116,564 | | 100,990 | |
Prepaid income taxes | | 22,515 | | — | |
Prepaid expenses | | 51,645 | | 41,588 | |
Net deferred income tax asset | | 19,481 | | 18,566 | |
Other current assets | | 14,227 | | 16,227 | |
| | 815,047 | | 833,753 | |
| | | | | |
Investments | | | | | |
Licenses | | 1,433,415 | | 1,482,446 | |
Goodwill | | 494,279 | | 491,316 | |
Customer lists, net | | 8,936 | | 15,375 | |
Investments in unconsolidated entities | | 156,637 | | 157,693 | |
Notes and interest receivable—long-term | | 4,297 | | 4,422 | |
| | 2,097,564 | | 2,151,252 | |
| | | | | |
Property, Plant and Equipment | | | | | |
In service and under construction | | 5,884,383 | | 5,409,115 | |
Less accumulated depreciation | | 3,264,007 | | 2,814,019 | |
| | 2,620,376 | | 2,595,096 | |
| | | | | |
Other Assets and Deferred Charges | | 33,055 | | 31,773 | |
| | | | | |
Total Assets | | $ | 5,566,042 | | $ | 5,611,874 | |
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UNITED STATES CELLULAR CORPORATION
CONSOLIDATED BALANCE SHEET HIGHLIGHTS
(Unaudited, dollars in thousands)
LIABILITIES AND SHAREHOLDERS’ EQUITY
| | December 31, | | December 31, | |
| | 2008 | | 2007 | |
Current Liabilities | | | | | |
Current portion of long-term debt | | $ | 10,258 | | $ | — | |
Accounts payable | | | | | |
Affiliated | | 9,613 | | 8,519 | |
Trade | | 248,785 | | 252,272 | |
Customer deposits and deferred revenues | | 151,082 | | 143,445 | |
Accrued taxes | | 17,643 | | 43,105 | |
Accrued compensation | | 55,969 | | 59,224 | |
Other current liabilities | | 108,533 | | 97,678 | |
| | 601,883 | | 604,243 | |
| | | | | |
Deferred Liabilities and Credits | | | | | |
Net deferred income tax liability | | 478,106 | | 554,412 | |
Other deferred liabilities and credits | | 233,619 | | 211,374 | |
| | 711,725 | | 765,786 | |
| | | | | |
Long-Term Debt | | 996,636 | | 1,002,293 | |
| | | | | |
Commitments and Contingencies | | | | | |
| | | | | |
Minority Interest | | 49,156 | | 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 | | 1,339,403 | | 1,316,042 | |
Treasury Shares | | (49,493 | ) | (41,094 | ) |
Accumulated other comprehensive income | | — | | 10,134 | |
Retained earnings | | 1,828,680 | | 1,823,022 | |
| | 3,206,642 | | 3,196,156 | |
| | | | | |
Total Liabilities and Shareholders’ Equity | | $ | 5,566,042 | | $ | 5,611,874 | |
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UNITED STATES CELLULAR CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
Twelve Months Ended December 31,
(Unaudited, dollars in thousands)
| | 2008 | | 2007 | |
Cash Flows from Operating Activities | | | | | |
Net income | | $ | 32,990 | | $ | 314,734 | |
Add (deduct) adjustments to reconcile net income to net cash flows from operating activities: | | | | | |
Depreciation, amortization and accretion | | 576,931 | | 578,186 | |
Bad debts expense | | 73,157 | | 66,923 | |
Stock-based compensation expense | | 15,122 | | 14,681 | |
Deferred income taxes, net | | (83,121 | ) | (26,503 | ) |
Equity in earnings of unconsolidated entities | | (91,981 | ) | (90,033 | ) |
Distributions from unconsolidated entities | | 91,845 | | 86,873 | |
Minority share of income | | 25,083 | | 15,056 | |
Unrealized fair value adjustment of derivative instruments | | — | | 5,388 | |
Loss on disposition of investments | | (16,628 | ) | (137,987 | ) |
Loss on impairment of intangibles | | 386,653 | | 24,923 | |
Loss on asset disposals, net | | 23,378 | | 34,016 | |
Noncash interest expense | | 1,772 | | 1,776 | |
Excess tax benefit from stock awards | | (1,151 | ) | (11,718 | ) |
Other operating activities | | 210 | | (5,538 | ) |
Changes in assets and liabilities from operations: | | | | | |
Change in accounts receivable | | (68,039 | ) | (98,634 | ) |
Change in inventory | | (15,563 | ) | 16,312 | |
Change in accounts payable - trade | | (4,572 | ) | 10,969 | |
Change in accounts payable - affiliate | | 1,093 | | (5,049 | ) |
Change in customer deposits and deferred revenues | | 7,628 | | 19,935 | |
Change in accrued taxes | | (34,699 | ) | 36,051 | |
Change in accrued interest | | — | | (1,192 | ) |
Change in other assets and liabilities | | 2,669 | | 13,909 | |
| | 922,777 | | 863,078 | |
Cash Flows from Investing Activities | | | | | |
Additions to property, plant and equipment | | (585,590 | ) | (565,495 | ) |
Proceeds from disposition of investments | | 16,690 | | 4,301 | |
Cash received from divestitures | | 6,838 | | 4,277 | |
Cash paid for acquisitions and licenses | | (341,694 | ) | (21,478 | ) |
Proceeds from return of investments | | 1,335 | | — | |
Other investing activities | | (1,606 | ) | (1,086 | ) |
| | (904,027 | ) | (579,481 | ) |
Cash Flows from Financing Activities | | | | | |
Issuance of notes payable | | 100,000 | | 25,000 | |
Repayment of notes payable | | (100,000 | ) | (60,000 | ) |
Common shares reissued, net of tax payments | | (2,288 | ) | 10,073 | |
Common shares repurchased | | (28,366 | ) | (87,902 | ) |
Excess tax benefit from exercise of stock awards | | 1,151 | | 11,718 | |
Capital distributions to minority partners | | (19,676 | ) | (10,866 | ) |
Other financing activities | | (3,108 | ) | 1 | |
| | (52,287 | ) | (111,976 | ) |
| | | | | |
Net Increase (Decrease) in Cash and Cash Equivalents | | (33,537 | ) | 171,621 | |
Cash and Cash Equivalents | | | | | |
Beginning of period | | 204,533 | | 32,912 | |
End of period | | $ | 170,996 | | $ | 204,533 | |
9
