uscellular8-kex991.htm - Generated by SEC Publisher for SEC Filing

EX-99.1 2 uscellular8-kex991.htm EX-99.1 uscellular8-kex991.htm - Generated by SEC Publisher for SEC Filing

Exhibit 99.1

As previously announced, U.S. Cellular® will hold a teleconference on Aug. 6, 2009, at 10:00 a.m. Chicago time. Interested parties may listen to the call live by accessing the Conference Calls page of www.teldta.com or uscellular.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 SECOND QUARTER RESULTS
Data revenues increase 31 percent

Note: Comparisons are year over year unless otherwise noted.

2Q 2009 Highlights


§	Service revenues were $974.8 million.
§	31 percent increase in data revenues, to $162.0 million, representing 17 percent of service revenues.
§	ARPU (average monthly service revenue per unit) was $52.41.
§	20 percent increase in operating income, to $140.9 million.
§	Postpay churn was 1.7 percent; postpay customers comprised 95 percent of retail customers.
§	7 percent increase in cell sites in service, to 7,043.
§	Repurchased 140,000 common shares for $6.0 million to offset dilution from employee benefit plans.

CHICAGO – Aug. 6, 2009 – United States Cellular Corporation [NYSE:USM] reported service revenues of $974.8 million for the second quarter of 2009, a 1 percent decrease from $987.4 million in the comparable period one year ago, due to a $22.0 million reduction in inbound roaming revenues related primarily to the acquisition of Alltel Corporation by Verizon Wireless. U.S. Cellular recorded operating income of $140.9 million, a 20 percent increase from $117.9 million in the second quarter of 2008. Net income attributable to U.S. Cellular and related diluted earnings per share were $83.4 million and $0.96, respectively, for the second quarter of 2009, compared to $72.6 million and $0.83, respectively, in the comparable period one year ago.

“U.S. Cellular had a net loss in retail customers for the second quarter,” said John E. Rooney, U.S. Cellular president and CEO, “due to the combined effect of the weak economy and very competitive market conditions. The launch of the latest iPhone and other exclusive handsets was a factor, as was the increased presence and competitiveness of low-priced, prepaid service providers in some of our markets. Customers have responded well, however, to the new national plans we introduced late in the quarter, and to our industry-first Battery Swap program, which meets a widespread customer need.

“Despite the challenges we faced in the quarter,” continued Rooney, “we achieved solid financial results, with increased operating income and operating cash flow. After adjusting for a decline in roaming revenues that resulted from Verizon’s acquisition of Alltel, service revenues increased slightly, due to continued growth in demand for data services. In fact, data revenues grew 31 percent and now represent 17 percent of service revenues. We expect this growth to continue, as we bring our 3G network—which now covers 40 percent of our customer base—to 70 percent of our customers by year end. We have also implemented additional cost controls to ensure ongoing funding for important multi-year initiatives designed to promote online sales and enhance our billing and customer relationship management capabilities.”

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 Aug. 6, 2009 is as follows:
Net retail customer additions (1)	—
Service revenues	$3,900 - $3,950 million
Operating income (2)	$300 - $375 million
Depreciation, amortization and accretion (2)	Approx. $600 million
Capital expenditures	Approx. $575 million

(1)	U.S. Cellular has withdrawn its net retail customer additions guidance for the remainder of 2009 due to uncertainty related to the weak economy and consumer purchasing intentions.
(2)	Includes losses on disposals of assets.

The foregoing guidance represents the views of management as of Aug. 6, 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 Aug. 6, 2009 at 10:00 a.m. Chicago time.
· Access the live call on the Conference Calls page of uscellular.com at http://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=67422&eventID=2355543
· Access the call by phone at 800/706-9695 (US/Canada) and use conference ID #22679990.

Before the call, certain financial and statistical information to be discussed during the call will be posted to the Conference Calls page of 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 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 approximately 6.2 million customers in 26 states. The Chicago-based company employed approximately 8,700 full-time equivalent associates as of June 30, 2009. For more information about U.S. Cellular, visit 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 its markets; the current credit crisis affecting financial markets, and its effects on the overall economy; competition; the state and federal telecommunications regulatory environment; 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; pending and future litigation; changes in income tax rates, laws, regulations or rulings; acquisitions/divestitures of properties and/or licenses; changes in customer growth rates, average monthly revenue per unit, churn rates, roaming revenue and terms, the availability of handset devices, or the mix of products and services offered by the company; and the ability to obtain or maintain roaming arrangements with other carriers. 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.


UNITED STATES CELLULAR CORPORATION SUMMARY OPERATING DATA


Quarter Ended		6/30/2009			3/31/2009			12/31/2008			9/30/2008			6/30/2008
Total Population:
Consolidated markets (1)			83,726,000			83,726,000			83,014,000			82,875,000			82,875,000
Consolidated operating markets (1)			46,306,000			46,306,000			46,009,000			45,493,000			45,493,000
All customers:
Total at end of period			6,155,000			6,243,000			6,196,000			6,176,000			6,194,000
Gross additions			317,000			404,000			395,000			367,000			365,000
Net additions (losses)			(88,000	)		47,000			20,000			(18,000	)		16,000
Market penetration at end of period:
Consolidated markets (2)			7.4	%		7.5	%		7.5	%		7.5	%		7.5	%
Consolidated operating markets (2)			13.3	%		13.5	%		13.5	%		13.6	%		13.6	%
Retail customers:
Total at end of period			5,711,000			5,770,000			5,707,000			5,674,000			5,677,000
Gross additions			286,000			366,000			352,000			325,000			318,000
Net postpay additions (losses)			(32,000	)		60,000			41,000			12,000			33,000
Net prepay additions (losses)			(27,000	)		3,000			(8,000	)		(15,000	)		1,000

Cell sites in service			7,043			6,942			6,877			6,716			6,596
Average monthly revenue per unit (3)		$	52.41		$	52.54		$	52.71		$	54.59		$	53.27
Retail service revenue per unit (3) (5)		$	46.85		$	46.78		$	46.43		$	46.97		$	46.53
Inbound roaming revenue per unit (3) (5)		$	3.35		$	3.21		$	4.25		$	5.03		$	4.54
Other revenue per unit (3) (5)		$	2.21		$	2.55		$	2.03		$	2.59		$	2.20
Postpay churn rate (4)			1.7	%		1.5	%		1.6	%		1.6	%		1.4	%
Construction expenditures (000s)		$	91,200		$	137,700		$	190,000		$	146,100		$	137,800

(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)	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.
(3)	Per unit revenue measurements are derived from Service Revenues as reported in Financial Highlights for each respective quarter as follows:

Service revenue (000s)		$	974,755		$	981,874		$	976,952		$	1,013,928		$	987,352
Components:
Retail service revenue (000s)			871,209			874,098			860,503			872,397			862,392
Inbound roaming revenue (000s)			62,223			60,057			78,768			93,472			84,201
Other revenue (000s)			41,323			47,719			37,681			48,059			40,759

Divided by average customers (000s)			6,199			6,229			6,178			6,191			6,178
Divided by three months in each quarter			3			3			3			3			3

Average monthly revenue per unit		$	52.41		$	52.54		$	52.71		$	54.59		$	53.27
Retail service revenue per unit		$	46.85		$	46.78		$	46.43		$	46.97		$	46.53
Inbound roaming revenue per unit		$	3.35		$	3.21		$	4.25		$	5.03		$	4.54
Other revenue per unit		$	2.21		$	2.55		$	2.03		$	2.59		$	2.20

(4)	Postpay churn rate is calculated by dividing the total postpay customer disconnects during the quarter by the average postpay customer base for the quarter.
(5)	Long-distance revenue was reclassified in the fourth quarter of 2008 from Other revenue to Retail service revenue and Inbound roaming revenue. Previous quarters have been adjusted to reflect this change.

United States Cellular Corporation
Consolidated Statement of Operations Highlights
Three Months Ended June 30,
(Unaudited, dollars and shares in thousands, except per share amounts)


								Increase (Decrease)
		2009			2008			Amount		Percent
Operating revenues
Service	$	974,755		$	987,352		$	(12,597	)	(1	%)
Equipment sales		67,795			73,240			(5,445	)	(7	%)
Total operating revenues		1,042,550			1,060,592			(18,042	)	(2	%)
Operating expenses
System operations (excluding Depreciation, amortization and accretion reported below)		194,806			196,652			(1,846	)	(1	%)
Cost of equipment sold		156,055			176,145			(20,090	)	(11	%)
Selling, general and administrative		410,070			418,416			(8,346	)	(2	%)
Depreciation, amortization and accretion		138,614			145,258			(6,644	)	(5	%)
Loss on asset disposals, net		2,086			6,219			(4,133	)	(66	%)
Total operating expenses		901,631			942,690			(41,059	)	(4	%)

Operating income		140,919			117,902			23,017		20	%

Investment and other income (expense)
Equity in earnings of unconsolidated entities		24,794			22,807			1,987		9	%
Interest and dividend income		751			1,429			(678	)	(47	%)
Interest expense		(19,387	)		(20,774	)		1,387		7	%
Other, net		(2	)		600			(602	)	N/M
Total investment and other income (expense)		6,156			4,062			2,094		52	%
Income before income taxes		147,075			121,964			25,111		21	%
Income tax expense		57,748			44,016			13,732		31	%
Net income		89,327			77,948			11,379		15	%
Less: Net income attributable to noncontrolling interests, net of tax		(5,969	)		(5,346	)		(623	)	(12	%)
Net income attributable to U.S. Cellular	$	83,358		$	72,602		$	10,756		15	%

Basic weighted average shares outstanding		86,992			87,571			(579	)	(1	%)
Basic earnings per share attributable to U.S. Cellular shareholders	$	0.96		$	0.83		$	0.13		16	%

Diluted weighted averages shares outstanding		87,177			87,872			(695	)	(1	%)
Diluted earnings per share attributable to U.S. Cellular shareholders	$	0.96		$	0.83		$	0.13		16	%

N/M — Percentage change not meaningful

United States Cellular Corporation
Consolidated Statement of Operations Highlights
Six Months Ended June 30,
(Unaudited, dollars and shares in thousands, except per share amounts)


								Increase (Decrease)
		2009			2008			Amount		Percent
Operating revenues
Service	$	1,956,629		$	1,949,446		$	7,183		—
Equipment sales		138,685			149,002			(10,317	)	(7	%)
Total operating revenues		2,095,314			2,098,448			(3,134	)	—
Operating expenses
System operations (excluding Depreciation, amortization and accretion reported below)		394,809			387,668			7,141		2	%
Cost of equipment sold		341,756			354,190			(12,434	)	(4	%)
Selling, general and administrative		822,518			822,042			476		—
Depreciation, amortization and accretion		276,265			287,788			(11,523	)	(4	%)
Loss on asset disposals, net		4,277			9,892			(5,615	)	(57	%)
Total operating expenses		1,839,625			1,861,580			(21,955	)	(1	%)

Operating income		255,689			236,868			18,821		8	%

Investment and other income (expense)
Equity in earnings of unconsolidated entities		50,121			44,042			6,079		14	%
Interest and dividend income		1,228			3,334			(2,106	)	(63	%)
Interest expense		(38,409	)		(40,889	)		2,480		6	%
Other, net		278			718			(440	)	(61	%)
Total investment and other income (expense)		13,218			7,205			6,013		83	%
Income before income taxes		268,907			244,073			24,834		10	%
Income tax expense		88,980			91,556			(2,576	)	(3	%)
Net income		179,927			152,517			27,410		18	%
Less: Net income attributable to noncontrolling interests, net of tax		(11,977	)		(9,358	)		(2,619	)	(28	%)
Net income attributable to U.S. Cellular	$	167,950		$	143,159		$	24,791		17	%

Basic weighted average shares outstanding		87,093			87,571			(478	)	(1	%)
Basic earnings per share attributable to U.S. Cellular shareholders	$	1.93		$	1.63		$	0.30		18	%

Diluted weighted averages shares outstanding		87,308			87,963			(655	)	(1	%)
Diluted earnings per share attributable to U.S. Cellular shareholders	$	1.92		$	1.63		$	0.29		18	%

N/M — Percentage change not meaningful

United States Cellular Corporation
Consolidated Balance Sheet Highlights
(Unaudited, dollars in thousands)


ASSETS

		June 30,		December 31,
		2009		2008
Current assets
Cash and cash equivalents	$	275,920	$	170,996
Accounts receivable from customers and other		447,521		419,619
Inventory		125,578		116,564
Prepaid income taxes		—		22,515
Prepaid expenses		49,040		51,645
Net deferred income tax asset		19,481		19,481
Other current assets		54,705		14,227
		972,245		815,047

Investments
Licenses		1,445,501		1,433,415
Goodwill		494,737		494,279
Customer lists		6,465		8,936
Investments in unconsolidated entities		192,445		156,637
Notes and interest receivable — long-term		4,231		4,297
		2,143,379		2,097,564

Property, plant and equipment
In service and under construction		5,602,245		5,884,383
Less: accumulated depreciation		3,024,243		3,264,007
		2,578,002		2,620,376

Other assets and deferred charges		37,621		33,055

Total assets	$	5,731,247	$	5,566,042

United States Cellular Corporation
Consolidated Balance Sheet Highlights
(Unaudited, dollars in thousands)

LIABILITIES AND SHAREHOLDERS' EQUITY


		June 30,			December 31,
		2009			2008
Current liabilities
Current portion of long-term debt	$	10,088		$	10,258
Accounts payable
Affiliated		13,750			9,613
Trade		210,826			248,785
Customer deposits and deferred revenues		145,710			151,082
Accrued taxes		58,433			17,643
Accrued compensation		41,976			55,969
Other current liabilities		91,149			108,533
		571,932			601,883

Deferred liabilities and credits
Net deferred income tax liability		498,823			478,106
Other deferred liabilities and credits		243,258			233,619
		742,081			711,725

Long-term debt		997,651			996,636

Commitments and contingencies

Noncontrolling interests with mandatory redemption features		640			589

Equity
U.S. Cellular shareholders' equity
Common Shares, par value $1 per share		55,068			55,068
Series A Common Shares, par value $1 per share		33,006			33,006
Additional paid-in capital		1,348,664			1,340,146
Treasury shares		(60,104	)		(50,258	)
Retained earnings		1,985,876			1,828,680
Total U.S. Cellular shareholders' equity		3,362,510			3,206,642

Noncontrolling interests		56,433			48,567

Total equity		3,418,943			3,255,209

Total liabilities and equity	$	5,731,247		$	5,566,042

United States Cellular Corporation
Consolidated Statement of Cash Flows
Six Months Ended June 30,
(Unaudited, dollars in thousands)


		2009			2008
Cash flows from operating activities
Net income	$	179,927		$	152,517
Add (deduct) adjustments to reconcile net income to net cash flows from operating activities
Depreciation, amortization and accretion		276,265			287,788
Bad debts expense		39,028			32,426
Stock-based compensation expense		7,974			6,481
Deferred income taxes, net		19,604			27,231
Equity in earnings of unconsolidated entities		(50,121	)		(44,042	)
Distributions from unconsolidated entities		12,997			45,569
Loss on asset disposals, net		4,277			9,892
Excess tax benefit from stock awards		(4	)		(896	)
Noncash interest expense		1,213			886
Changes in assets and liabilities from operations
Accounts receivable		(63,510	)		(50,059	)
Inventory		(10,391	)		(19,816	)
Accounts payable - trade		(41,378	)		2,838
Accounts payable - affiliate		4,137			171
Customer deposits and deferred revenues		(5,372	)		10,406
Accrued taxes		64,851			1,471
Accrued interest		450			455
Other assets and liabilities		(66,824	)		(36,486	)
		373,123			426,832
Cash flows from investing activities
Additions to property, plant and equipment		(228,902	)		(249,500	)
Cash received from divestitures		50			6,838
Cash paid for acquisitions and licenses		(12,327	)		(312,615	)
Other investing activities		1,107			(1,215	)
		(240,072	)		(556,492	)
Cash flows from financing activities
Issuance of notes payable		—			100,000
Repayment of notes payable		—			(50,000	)
Common shares reissued for benefit plans, net of tax payments		(405	)		(1,878	)
Common shares repurchased		(19,332	)		(14,516	)
Excess tax benefit from stock awards		4			896
Payment of debt issuance costs		(4,309	)		—
Distributions to noncontrolling interests		(4,060	)		(6,022	)
Other financing activities		(25	)		(2,198	)
		(28,127	)		26,282

Net increase (decrease) in cash and cash equivalents		104,924			(103,378	)

Cash and cash equivalents
Beginning of period		170,996			204,533
End of period	$	275,920		$	101,155