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U.S. Cellular Reports Strong Third Quarter 2007 Results; Adjusts Guidance Upward

CHICAGO, Nov. 6 /PRNewswire-FirstCall/ -- 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 http://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 http://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 http://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 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: http://www.uscellular.com.



                        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.



                       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



                       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



                     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


            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

SOURCE United States Cellular Corporation

CONTACT: Mark A. Steinkrauss, Vice President, Corporate Relations,
+1-312-592-5384, mark.steinkrauss@teldta.com;
or Julie D. Mathews, Manager, Investor Relations,
+1-312-592-5341, julie.mathews@teldta.com,
both of United States Cellular Corporation
Web site: http://www.uscc.com
http://www.uscellular.com
(USM)