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U.S. Cellular Reports Second Quarter 2010 Results
Revises 2010 financial guidance

CHICAGO, Aug 05, 2010 /PRNewswire via COMTEX/ --

Note: Comparisons are year over year unless otherwise noted.

2Q 2010 Highlights

  • 7,000 retail net additions, reflecting a gain of 29,000 prepaid customers and a loss of 22,000 postpaid customers.
  • Service revenues were $972.6 million.
  • 33 percent increase in data revenues to $215.3 million, representing 22 percent of total service revenues.
  • Retail service ARPU (average revenue per unit) was $46.81 compared to $46.82.
  • Retail postpaid churn remained low at 1.4 percent; postpaid customers comprised 94 percent of retail customers.
  • Expanded 3G network to cover approximately 98 percent of customers.
  • 5 percent increase in cell sites in service to 7,416.
  • Repurchased 395,344 common shares for $16.2 million.

As previously announced, U.S. Cellular will hold a teleconference Aug. 5 at 9:30 a.m. CDT. Interested parties may listen to the call live by accessing the Conference Calls page of www.teldta.com or uscellular.com.

United States Cellular Corporation (NYSE: USM) reported service revenues of $972.6 million for the second quarter of 2010, versus $974.3 million in the comparable period one year ago. Net income attributable to U.S. Cellular shareholders and related diluted earnings per share were $40.8 million and $0.47, respectively, for the second quarter of 2010, compared to $81.8 million and $0.94, respectively, in the comparable period one year ago.

"We faced significant challenges from competition and the economy in the second quarter of 2010," said U.S. Cellular president and CEO Mary N. Dillon, who joined the company June 1. "Consequently, our performance results were mixed. We achieved improvements in retail net additions and customer churn, and data revenues grew by 33 percent. However, total service revenues and operating income were below our expectations. We continue to feel the impact of lower voice revenues, reflecting industry competition as more customers choose value-priced plans, and investments in the major initiatives currently underway that will enable us to build a strong foundation for future growth. As part of these initiatives, we recently implemented new programs that enable associates in our retail stores and customer care centers to better meet our customers' needs by offering more targeted service and product recommendations.

"Going forward, we plan to continue to drive data revenue growth with a strong smartphone portfolio that includes the Android(TM)-powered phones our customers are asking for. We launched the Samsung Acclaim(TM) in early July, and we plan to offer the much-anticipated HTC Desire(TM) in August and the Samsung Galaxy S(TM) later this year. Now that we offer data services to the vast majority of customers across our fast and reliable 3G network, we expect sales of data-optimized devices--which were 24 percent of all devices sold in the quarter--to continue to grow rapidly. And we're excited about giving our customers even more innovative programs like Battery Swap and Overage Protection that show we have our customers' backs.

"I'm honored to be leading a company that is so thoroughly unified around its commitment to ensuring positive experiences for its customers. Although we face a number of challenges, we have a culture of success--the Dynamic Organization--that will enable us to overcome these challenges by leveraging our strengths. U.S. Cellular's customers believe that we offer something better than our competitors, and we intend to prove that they can rely on us for service and communications experiences that are above and beyond what customers have come to expect from a wireless provider."

Guidance

Guidance for the year ending Dec. 31, 2010 as of Aug. 5, 2010 is provided below, compared to previous guidance provided on May 10, 2010. There can be no assurance that final results will not differ materially from this guidance.



                             Current guidance     Previous guidance
                             ----------------     -----------------
     Service revenues     $3,925-$4,000 million $3,975-$4,075 million
     Adjusted OIBDA(1)        $800-$850 million     $850-$950 million
     Operating income         $200-$250 million    $250- $350 million
     Depreciation,
      amortization and
      accretion(2)         Approx. $600 million             Unchanged
     Capital expenditures  Approx. $600 million             Unchanged


    (1) Adjusted OIBDA is defined as operating income excluding the
    effects of: depreciation, amortization and accretion (OIBDA); the
    net gain or loss on asset disposals (if any); and the loss on
    impairment of assets (if any).  This measure also may be commonly
    referred to by management as operating cash flow. This measure
    should not be confused with cash flows from operating activities,
    which is a component of the consolidated statement of cash flows.
    (2) The 2010 estimated results include estimated losses on disposals
    of assets, but does not include an estimate for losses on impairment
    of assets, since these cannot be predicted.

The foregoing guidance represents the views of management as of Aug. 5, 2010 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. 5, 2010 at 9:30 a.m. CDT.

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. The call will be archived on the Conference Calls page of uscellular.com.

About U.S. Cellular

United States Cellular Corporation, the nation's sixth-largest wireless carrier, provides a comprehensive range of wireless products and services, excellent customer support, and a high-quality network to approximately 6.1 million customers in 26 states. The Chicago-based company employed approximately 8,900 full-time equivalent associates as of June 30, 2010. At the end of the quarter, Telephone and Data Systems, Inc. owned 82 percent of U.S. Cellular.

Visit uscellular.com for comprehensive financial information, including earnings releases, quarterly and annual filings, shareholder information and more.

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 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                         6/30/2010    3/31/2010    12/31/2009
                                          ---------    ---------    ----------
    Total population
      Consolidated markets (1)          90,468,000  90,468,000   89,712,000
      Consolidated operating markets
       (1)                              46,546,000  46,546,000   46,306,000
    Market penetration at end of
     period
      Consolidated markets (2)                 6.8%        6.8%         6.8%
      Consolidated operating markets
       (2)                                    13.2%       13.2%        13.3%
    All customers
      Total at end of period             6,144,000   6,147,000    6,141,000
      Gross additions                      349,000     358,000      399,000
      Net additions (losses)                (3,000)      6,000       10,000
    Retail customers
      Total at end of period             5,775,000   5,768,000    5,744,000
      Gross additions                      307,000     305,000      354,000
      Net retail additions (losses)
       (3)                                   7,000      24,000       39,000
        Net postpaid additions (losses)    (22,000)     (9,000)      26,000
        Net prepaid additions (losses)      29,000      33,000       13,000
    Service revenues components
     (000s)
      Voice and other retail service      $648,565    $663,759     $677,107
      Data service                         215,271     201,280      189,759
                                           -------     -------      -------
      Total retail service                $863,836    $865,039     $866,866
      Inbound roaming                       60,902      51,942       61,728
      Other                                 47,838      48,027       56,814
                                            ------      ------       ------
    Total service revenues (000s)
     (4)                                  $972,576    $965,008     $985,408

      Divided by average customers
       (000s)                                6,151       6,137        6,139
      Divided by three months in each
       quarter                                   3           3            3
                                               ---         ---          ---

    Average monthly revenue per
     unit (5)                               $52.71      $52.41       $53.51
      Voice and other retail service
       (5)                                  $35.14      $36.05       $36.77
      Data service (5)                      $11.67      $10.93       $10.30
                                            ------      ------       ------
      Total retail service (5)              $46.81      $46.98       $47.07

      Inbound roaming (5)                    $3.30       $2.82        $3.35
      Other (5)                              $2.60       $2.61        $3.09
    Postpaid churn rate (6)                    1.4%        1.4%         1.6%
    Capital expenditures (000s)           $133,500    $121,500     $189,000
    Cell sites in service                    7,416       7,310        7,279




    Quarter Ended                                9/30/2009          6/30/2009
                                                 ---------          ---------
    Total population
      Consolidated markets (1)                 85,118,000        83,726,000
      Consolidated operating markets
       (1)                                     46,306,000        46,306,000
    Market penetration at end of
     period
      Consolidated markets (2)                        7.2%              7.4%
      Consolidated operating markets
       (2)                                           13.2%             13.3%
    All customers
      Total at end of period                    6,131,000         6,155,000
      Gross additions                             386,000           317,000
      Net additions (losses)                      (24,000)          (88,000)
    Retail customers
      Total at end of period                    5,705,000         5,711,000
      Gross additions                             351,000           286,000
      Net retail additions (losses)
       (3)                                         (6,000)          (59,000)
        Net postpaid additions (losses)             8,000           (32,000)
        Net prepaid additions (losses)            (14,000)          (27,000)
    Service revenues components
     (000s)
      Voice and other retail service             $690,576          $708,847
      Data service                                174,286           161,955
                                                  -------           -------
      Total retail service                       $864,862          $870,802
      Inbound roaming                              68,767            62,223
      Other                                        50,289            41,323
                                                   ------            ------
    Total service revenues (000s)
     (4)                                         $983,918          $974,348

      Divided by average customers
       (000s)                                       6,138             6,199
      Divided by three months in each
       quarter                                          3                 3
                                                      ---               ---

    Average monthly revenue per
     unit (5)                                      $53.43            $52.39
      Voice and other retail service
       (5)                                         $37.51            $38.11
      Data service (5)                              $9.46             $8.71
                                                    -----             -----
      Total retail service (5)                     $46.97            $46.82

      Inbound roaming (5)                           $3.73             $3.35
      Other (5)                                     $2.73             $2.22
    Postpaid churn rate (6)                           1.7%              1.7%
    Capital expenditures (000s)                  $128,900           $91,200
    Cell sites in service                           7,161             7,043



    (1) Used only to calculate 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) Calculated by adding net postpaid additions (losses) and net
    prepaid additions (losses).
    (4) U.S. Cellular adjusted previously reported service revenues for
    the three months ended March 31, 2010 and all quarterly periods in
    2009.  Previously reported service revenues for the quarterly period
    ended March 31, 2010 and for the quarterly periods ended December
    31, September 30, and June 30, 2009 (as reported in U.S. Cellular's
    Form 8-K filed on May 10, 2010 for all such periods), were $965.2
    million, $984.9 million, $983.4 million and $974.1 million,
    respectively.
    (5) Calculated by dividing the components of service revenues by the
    average customers and number of months in the quarter.
    (6) Calculated by dividing the total postpaid customer disconnects
    during the quarter by the average postpaid customer base for the
    quarter.



                       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)
                                                  -------------------
                                  2010  2009 (1)   Amount      Percent
                                  ----   -------   ------      -------
    Operating revenues
      Service                 $972,576   $974,348     $(1,772)         -
      Equipment sales           57,317     67,795     (10,478)      (15%)
                                ------     ------     -------
        Total operating
         revenues            1,029,893  1,042,143     (12,250)       (1%)
                             ---------  ---------     -------
    Operating expenses
      System operations
       (excluding
       Depreciation,
        amortization and
         accretion reported
         below)                213,542    194,709      18,833         10%
      Cost of equipment
       sold                    161,965    156,055       5,910          4%
      Selling, general and
       administrative          445,177    411,153      34,024          8%
      Depreciation,
       amortization and
       accretion               144,455    138,777       5,678          4%
      Loss on asset
       disposals, net            1,250      2,611      (1,361)      (52%)
                                 -----      -----      ------
        Total operating
         expenses              966,389    903,305      63,084          7%
                               -------    -------      ------

    Operating income            63,504    138,838     (75,334)      (54%)

    Investment and other
     income (expense)
      Equity in earnings
       of unconsolidated
       entities                 25,753     24,794         959          4%
      Interest and
       dividend income             862        751         111         15%
      Interest expense         (16,438)   (19,856)      3,418         17%
      Other, net                   472         (2)        474      >100%
                                   ---        ---         ---
        Total investment and
         other income
           (expense)            10,649      5,687       4,962         87%
                                ------      -----       -----

    Income before income
     taxes                      74,153    144,525     (70,372)      (49%)
      Income tax expense        28,181     56,788     (28,607)      (50%)
                                ------     ------     -------

    Net income                  45,972     87,737     (41,765)      (48%)
      Less: Net income
       attributable to
       noncontrolling
        interests, net of
         tax                    (5,219)    (5,969)        750         13%
                                ------     ------         ---
    Net income
     attributable to
     U.S. Cellular
     shareholders              $40,753    $81,768    $(41,015)      (50%)
                               =======    =======    ========

    Basic weighted
     average shares
     outstanding                86,425     86,992        (567)       (1%)
    Basic earnings per
     share attributable
     to
      U.S. Cellular
       shareholders              $0.47      $0.94      $(0.47)      (50%)
                                 =====      =====      ======

    Diluted weighted
     average shares
     outstanding                86,787     87,177        (390)         -
    Diluted earnings per
     share attributable
     to
      U.S. Cellular
       shareholders              $0.47      $0.94      $(0.47)      (50%)
                                 =====      =====      ======


    (1) Amounts have been adjusted. See "Revision of Prior Period
    Amounts" section for additional details.


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



                                              2010            2009 (1)
                                              ----             -------
    Operating revenues
      Service                           $1,937,584           $1,957,802
      Equipment sales                      116,166              138,685
                                           -------              -------
          Total operating revenues       2,053,750            2,096,487
                                         ---------            ---------
    Operating expenses
      System operations
       (excluding
       Depreciation,
            amortization and
             accretion reported
             below)                        420,656              394,697
      Cost of equipment sold               323,070              341,756
      Selling, general and
       administrative                      874,782              819,616
      Depreciation,
       amortization and
       accretion                           287,688              276,655
      Loss on asset disposals,
       net                                   6,426                6,556
                                             -----                -----
          Total operating expenses       1,912,622            1,839,280
                                         ---------            ---------

    Operating income                       141,128              257,207

    Investment and other
     income (expense)
      Equity in earnings of
       unconsolidated entities              50,447               50,121
      Interest and dividend
       income                                1,883                1,228
      Interest expense                     (32,962)             (39,283)
      Other, net                               407                  278
                                               ---                  ---
          Total investment and
           other income (expense)           19,775               12,344
                                            ------               ------

    Income before income
     taxes                                 160,903              269,551
      Income tax expense                    61,843               91,747
                                            ------               ------

    Net income                              99,060              177,804
      Less: Net income
       attributable to
       noncontrolling
          interests, net of tax            (10,938)             (11,977)
                                           -------              -------
    Net income attributable
     to U.S. Cellular
     shareholders                          $88,122             $165,827
                                           =======             ========

    Basic weighted average
     shares outstanding                     86,500               87,093
    Basic earnings per share
     attributable to
      U.S. Cellular
       shareholders                          $1.02                $1.90
                                             =====                =====

    Diluted weighted average
     shares outstanding                     86,873               87,308
    Diluted earnings per
     share attributable to
      U.S. Cellular
       shareholders                          $1.01                $1.90
                                             =====                =====



                                                Increase
                                               (Decrease)
                                                  ----------
                                           Amount         Percent
                                           ------         -------
    Operating revenues
      Service                               $(20,218)          (1%)
      Equipment sales                        (22,519)         (16%)
                                             -------
          Total operating revenues           (42,737)          (2%)
                                             -------
    Operating expenses
      System operations
       (excluding
       Depreciation,
            amortization and
             accretion reported
             below)                           25,959             7%
      Cost of equipment sold                 (18,686)          (5%)
      Selling, general and
       administrative                         55,166             7%
      Depreciation,
       amortization and
       accretion                              11,033             4%
      Loss on asset disposals,
       net                                      (130)          (2%)
                                                ----
          Total operating expenses            73,342             4%
                                              ------

    Operating income                        (116,079)         (45%)

    Investment and other
     income (expense)
      Equity in earnings of
       unconsolidated entities                   326             1%
      Interest and dividend
       income                                    655            53%
      Interest expense                         6,321            16%
      Other, net                                 129            46%
                                                 ---
          Total investment and
           other income (expense)              7,431            60%
                                               -----

    Income before income
     taxes                                  (108,648)         (40%)
      Income tax expense                     (29,904)         (33%)
                                             -------

    Net income                               (78,744)         (44%)
      Less: Net income
       attributable to
       noncontrolling
          interests, net of tax                1,039             9%
                                               -----
    Net income attributable
     to U.S. Cellular
     shareholders                           $(77,705)         (47%)
                                            ========

    Basic weighted average
     shares outstanding                         (593)          (1%)
    Basic earnings per share
     attributable to
      U.S. Cellular
       shareholders                           $(0.88)         (46%)
                                              ======

    Diluted weighted average
     shares outstanding                         (435)            -
    Diluted earnings per
     share attributable to
      U.S. Cellular
       shareholders                           $(0.89)         (47%)
                                              ======


    (1) Amounts have been adjusted. See "Revision of Prior Period
    Amounts" section for additional details.


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


                                   ASSETS

                                                       December
                                          June 30,                  31,
                                                  2010    2009 (1)
                                                  ----     -------
    Current assets
      Cash and cash equivalents               $232,853     $294,411
      Short-term investments                   135,798          330
      Accounts receivable from
       customers and other                     411,450      425,057
      Inventory                                120,304      152,556
      Prepaid income taxes                           -          717
      Prepaid expenses                          65,219       63,463
      Net deferred income tax asset             21,570       21,570
      Other current assets                      48,662       51,013
                                                ------       ------
                                             1,035,856    1,009,117

    Investments
      Licenses                               1,445,501    1,435,000
      Goodwill                                 494,737      494,737
      Customer lists                             1,701        4,083
      Investments in unconsolidated
       entities                                163,518      161,481
      Notes and interest receivable -
       long-term                                 4,143        4,214
      Long-term investments                     40,987            -
                                                ------          ---
                                             2,150,587    2,099,515

    Property, plant and equipment
      In service and under
       construction                          6,096,533    5,884,307
      Less: accumulated depreciation         3,525,193    3,282,969
                                             ---------    ---------
                                             2,571,340    2,601,338

    Other assets and deferred
     charges                                    37,865       38,776


    Total assets                            $5,795,648   $5,748,746
                                            ==========   ==========


    (1) Amounts have been adjusted. See "Revision of Prior Period
    Amounts" section for additional details.


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

                            LIABILITIES AND SHAREHOLDERS' EQUITY


                                                 June 30,    December 31,
                                                       2010   2009 (1)
                                                       ----    -------
    Current liabilities
      Current portion of long-term debt                 $86         $76
      Accounts payable
        Affiliated                                   11,714      14,732
        Trade                                       262,279     296,288
      Customer deposits and deferred revenues       144,101     140,248
      Accrued taxes                                  90,802      57,507
      Accrued compensation                           45,086      62,242
      Other current liabilities                      80,322      92,884
                                                     ------      ------
                                                    634,390     663,977

    Deferred liabilities and credits
      Net deferred income tax liability             497,797     513,994
      Other deferred liabilities and credits        273,467     262,412

    Long-term debt                                  867,880     867,522

    Commitments and contingencies

    Noncontrolling interests with mandatory
     redemption features                                746         727

    Equity
    U.S. Cellular shareholders' equity
      Series A Common and Common Shares, par
       value $1 per share                            88,074      88,074
      Additional paid-in capital                  1,364,129   1,356,322
      Treasury shares                               (80,107)    (69,616)
      Retained earnings                           2,090,966   2,013,633
                                                  ---------   ---------
        Total U.S. Cellular shareholders' equity  3,463,062   3,388,413

    Noncontrolling interests                         58,306      51,701
                                                     ------      ------

      Total equity                                3,521,368   3,440,114


    Total liabilities and equity                 $5,795,648  $5,748,746
                                                 ==========  ==========


    (1) Amounts have been adjusted. See "Revision of Prior Period
    Amounts" section for additional details.

                         United States Cellular Corporation
                Schedule of Cash and Cash Equivalents and Investments
                          (Unaudited, dollars in thousands)

    In an effort to improve investment returns, during the second quarter
    of 2010, U.S. Cellular elected to use a portion of its cash balance
    to directly purchase U.S. treasury securities and securities insured
    by the Federal Deposit Insurance Corporation ("FDIC"), as opposed to
    investing in money market funds.  The maturity dates of such direct
    investments were staggered in order to maintain cash balances and
    liquidity at targeted levels.  U.S. Cellular also continues to
    invest in certificates of deposit that are insured by the FDIC.  The
    following table presents U.S. Cellular's cash and cash equivalents;
    and investments in U.S. treasury securities, commercial paper and
    certificates of deposit at June 30, 2010 and December 31, 2009.

                                                      December
                                     June 30,                     31,
                                             2010            2009
                                             ----            ----

     Cash and cash equivalents           $232,853        $294,411
                                         ========        ========
      Amounts included in short-term
      investments
        U.S. treasuries                 110,451               -
         Certificates of deposit
          (1)                               104             330
        Commercial paper (2)             25,243               -
                                         ------             ---
                                      $135,798            $330
                                      ========            ====
      Amounts included in long-term
      investments (3)
        U.S. treasuries                  10,071               -
        Commercial paper (2)             30,916               -
                                         ------             ---
                                       $40,987      $        -
                                       =======    ===      ===



    (1) U.S. Cellular's investments in certificates of deposits are
    insured by the FDIC.
    (2) U.S. Cellular's investments in commercial paper are insured by
    the FDIC under its Temporary Liquidity Guarantee Program.
    (3) U.S. Cellular's long-term investments have maturity dates
    between July 2011 and December 2012.


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



                                                               2010 2009 (1)
                                                               ----  -------
    Cash flows from operating activities
      Net income                                            $99,060  $177,804
      Add (deduct) adjustments to reconcile net income to
       net
        cash flows from operating activities
          Depreciation, amortization and accretion          287,688   276,655
          Bad debts expense                                  36,605    39,028
          Stock-based compensation expense                    9,012     7,974
          Deferred income taxes, net                         (9,935)   19,084
          Equity in earnings of unconsolidated entities     (50,447)  (50,121)
          Distributions from unconsolidated entities         48,491    12,997
          Loss on asset disposals, net                        6,426     6,556
          Other operating activities                           (464)    1,209
      Changes in assets and liabilities from operations
          Accounts receivable                               (22,995)  (68,923)
          Inventory                                          32,252   (10,391)
          Accounts payable - trade                          (34,009)  (41,378)
          Accounts payable - affiliate                       (3,017)    4,137
          Customer deposits and deferred revenues             3,854    (5,699)
          Accrued taxes                                      27,744    71,041
          Accrued interest                                      121       450
          Other assets and liabilities                      (26,680)  (67,300)
                                                            -------   -------
                                                            403,706   373,123
                                                            -------   -------
    Cash flows from investing activities
      Additions to property, plant and equipment           (255,004) (228,902)
      Cash paid for acquisitions and licenses               (10,501)  (12,327)
      Cash paid for investments                            (175,000)     (275)
      Other investing activities                                889     1,432
                                                                ---     -----
                                                           (439,616) (240,072)
                                                           --------  --------
    Cash flows from financing activities
      Common shares reissued for benefit plans, net of tax
       payments                                                 144      (405)
      Common shares repurchased                             (21,423)  (19,332)
      Payment of debt issuance costs                              -    (4,309)
      Distributions to noncontrolling interests              (4,314)   (4,060)
      Other financing activities                                (55)      (21)
                                                                ---       ---
                                                            (25,648)  (28,127)
                                                            -------   -------

    Net increase (decrease) in cash and cash equivalents    (61,558)  104,924

    Cash and cash equivalents
      Beginning of period                                   294,411   170,996
                                                            -------   -------
      End of period                                        $232,853  $275,920
                                                           ========  ========



    (1) Amounts have been adjusted. See "Revision of Prior Period
    Amounts" section for additional details.


      United States Cellular Corporation
      Financial Measures and Reconciliations
      (Unaudited, dollars in thousands)


                         Three Months Ended June Six Months Ended June
                                     30                     30
                            2010           2009 (5)       2010     2009 (5)
                            ----           -------        ----      -------

     Service
      revenues          $972,576          $974,348  $1,937,584   $1,957,802

     Operating
      income              63,504           138,838     141,128      257,207
     Add:
       Depreciation,
        amortization
        and accretion    144,455           138,777     287,688      276,655
       Loss on asset
        disposals          1,250             2,611       6,426        6,556
                           -----             -----       -----        -----
         Adjusted OIBDA
          (1)(4)        $209,209          $280,226    $435,242     $540,418
                        ========          ========    ========     ========

         Adjusted OIBDA
          margin (2)        21.5%             28.8%       22.5%        27.6%


                            2010              2009        2010         2009
                            ----              ----        ----         ----

     Cash flows from
      operating
      activities        $251,454          $187,561    $403,706     $373,123
     Deduct:
       Capital
        expenditures     133,490            91,161     255,004      228,902
                         -------            ------     -------      -------
         Free cash flow
          (3)           $117,964           $96,400    $148,702     $144,221
                        ========           =======    ========     ========


    (1) Adjusted OIBDA is defined as operating income excluding the
    effects of: depreciation, amortization, and accretion (OIBDA); the
    net gain or loss on asset disposals (if any); and the loss on
    impairment of assets (if any).  This measure also may be commonly
    referred to by management as operating cash flow.  This measure
    should not be confused with cash flows from operating activities,
    which is a component of the consolidated statement of cash flows.
    (2) Adjusted OIBDA margin is defined as adjusted OIBDA divided by
    service revenues. Equipment revenues are excluded from the
    denominator of the calculation since equipment is generally sold at
    a net negative margin, and the equipment subsidy is effectively a
    cost for purposes of assessing business results.  U.S. Cellular
    believes that this calculation method is consistent with the method
    used by certain investors to assess U.S. Cellular's business
    results.  Adjusted OIBDA margin may also be commonly referred to by
    management as operating cash flow margin.
    (3) Free cash flow is defined as cash flows from operating activities
    minus capital expenditures. Free cash flow is a non-GAAP financial
    measure.  U.S. Cellular believes that free cash flow as reported by
    U.S. Cellular is useful to investors and other users of its
    financial information in evaluating the amount of cash generated by
    business operations, after consideration of capital expenditures.
    (4) Adjusted OIBDA excludes the net gain or loss on asset disposals
    and loss on impairment of assets, if any, in order to show operating
    results on a more comparable basis from period to period.  U.S.
    Cellular does not intend to imply that any of such amounts that are
    excluded are non-recurring, infrequent or unusual, and accordingly,
    they may be incurred in the future.
    (5) Amounts have been adjusted. See "Revision of Prior Period
    Amounts" section for additional details.

Revision of Prior Period Amounts

In preparing its financial statements for the three months ended March 31, 2010, U.S. Cellular discovered certain errors related to accounting for operating revenues and sales tax liabilities. The quantification of these errors was subsequently refined during the second quarter of 2010. These errors resulted in the overstatement of operating revenues and understatement of sales tax liabilities for the years ended December 31, 2009, 2008, 2007, and the three months ended March 31, 2010. In addition to recording these adjustments, U.S. Cellular recorded other adjustments to prior-period amounts to correct other immaterial items. In accordance with SEC Staff Accounting Bulletin Nos. 99 and 108 ("SAB 99 and SAB 108"), U.S. Cellular evaluated these errors and determined that they were immaterial to each of the reporting periods affected and, therefore, amendment of previously filed reports was not required. However, if the adjustments to correct the cumulative errors had been recorded in the first or second quarter of 2010, U.S. Cellular believes the impact would have been significant to those respective periods and would impact comparisons to prior periods. As permitted by SAB 108, U.S. Cellular revised in the current filing its comparative consolidated financial statements for these immaterial amounts. In addition, on August 5, 2010, U.S. Cellular filed a Current Report on Form 8-K (Items 8.01 and 9.01) with the SEC to revise financial statements and other financial information previously included in its Annual Report on Form 10-K for the year ended December 31, 2009 and Quarterly Report on Form 10-Q for the period ended March 31, 2010.

The Consolidated Balance Sheet at December 31, 2009 was revised to reflect the cumulative effect of these errors, which resulted in a decrease to retained earnings of $15.9 million. Also, in accordance with SAB 108, the Consolidated Statement of Operations and the Consolidated Statement of Cash Flows have been revised as follows:



    Consolidated Balance Sheet - December 31, 2009


                               As previously
     (Dollars in thousands)     reported (1) Adjustment      Revised
                                ------------ ----------      -------


     Accounts receivable from
      customers and other         $421,528     $3,529    $425,057
     Total current assets        1,005,588      3,529   1,009,117
     Total assets                5,745,217      3,529   5,748,746
     Customer deposits and
      deferred revenues            143,760     (3,512)    140,248
     Accrued taxes                  34,583     22,924      57,507
     Total current liabilities     644,565     19,412     663,977
     Retained earnings           2,029,516    (15,883)  2,013,633
     Total U.S. Cellular
      shareholders' equity       3,404,296    (15,883)  3,388,413
     Total equity                3,455,997    (15,883)  3,440,114
     Total liabilities and
      equity                     5,745,217      3,529   5,748,746




    Consolidated Statement of Operations - Three Months Ended June 30, 2009


                              As previously
     (Dollars in thousands,
      except per share
      amounts)                 reported (2)      Adjustment          Revised
                               ------------      ----------          -------

     Service revenues            $974,755           $(407)       $974,348
     Total operating revenues   1,042,550            (407)      1,042,143
     System operations
      expenses (excluding
      Depreciation
      amortization and
      accretion)                194,806     (97)        194,709
     Selling, general and
      administrative expenses     410,070           1,083         411,153
     Depreciation,
      amortization and
      accretion                   138,614             163         138,777
     Loss on asset disposals,
      net                           2,086             525           2,611
     Total operating expenses     901,631           1,674         903,305
     Operating income             140,919          (2,081)        138,838
     Interest expense             (19,387)           (469)        (19,856)
     Total investment and
      other income (expense)        6,156            (469)          5,687
     Income before income
      taxes                       147,075          (2,550)        144,525
     Income tax expense            57,748            (960)         56,788
     Net income                    89,327          (1,590)         87,737
     Net income attributable
      to U.S. Cellular
      shareholders                 83,358          (1,590)         81,768
     Basic earnings per share
      attributable to U.S.
      Cellular shareholders          0.96           (0.02)           0.94
     Diluted earnings per
      share attributable to
      U.S. Cellular
      shareholders                   0.96           (0.02)           0.94


    Consolidated Statement of Operations - Six Months Ended June 30, 2009


                              As previously
     (Dollars in thousands,
      except per share
      amounts)                 reported (2)       Adjustment           Revised
                               ------------       ----------           -------

     Service revenues          $1,956,629           $1,173       $1,957,802
     Total operating revenues   2,095,314            1,173        2,096,487
     System operations
      expenses (excluding
      Depreciation,
      amortization and
      accretion)                394,809     (112)        394,697
     Selling, general and
      administrative expenses     822,518           (2,902)         819,616
     Depreciation,
      amortization and
      accretion                   276,265              390          276,655
     Loss on asset disposals,
      net                           4,277            2,279            6,556
     Total operating expenses   1,839,625             (345)       1,839,280
     Operating income             255,689            1,518          257,207
     Interest expense             (38,409)            (874)         (39,283)
     Total investment and
      other income (expense)       13,218             (874)          12,344
     Income before income
      taxes                       268,907              644          269,551
     Income tax expense            88,980            2,767           91,747
     Net income                   179,927           (2,123)         177,804
     Net income attributable
      to U.S. Cellular
      shareholders                167,950           (2,123)         165,827
     Basic earnings per share
      attributable to U.S.
      Cellular shareholders          1.93            (0.03)            1.90

     Diluted earnings per
      share attributable to
      U.S. Cellular
      shareholders                   1.92            (0.02)            1.90





    Consolidated Statement of Cash Flows - Six Months Ended June 30, 2009


                               As previously
     (Dollars in thousands)     reported (2) Adjustment     Revised
                                ------------ ----------     -------

     Net income                   $179,927    $(2,123)  $177,804
     Depreciation,
      amortization and
      accretion                    276,265        390    276,655
     Deferred income taxes,
      net                           19,604       (520)    19,084
     Loss on asset disposals,
      net                            4,277      2,279      6,556
     Change in accounts
      receivable                   (63,510)    (5,413)   (68,923)
     Change in customer
      deposits and deferred
      revenues                      (5,372)      (327)    (5,699)
     Change in accrued taxes        64,851      6,190     71,041
     Change in other assets
      and liabilities              (66,824)      (476)   (67,300)
     Cash flows from operating
      activities                   373,123          -    373,123


    (1) In Annual Report on Form 10-K for the year ended December 31,
    2009 filed on February 25, 2010.
    (2) In Quarterly Report on Form 10-Q for the period ended June 30,
    2009 filed on August 6, 2009.

SOURCE United States Cellular Corporation