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U.S. Cellular Reports Increases in Service, Data Revenues
Copyright 2009 PR Newswire. All Rights Reserved
2009-05-06
Service and data revenues increase 2 and 36 percent in the quarter
Note: Comparisons are year over year unless otherwise noted.
1Q 2009 Highlights
- 2 percent increase in service revenues, to $981.9 million.
- 36 percent increase in data revenues, to $157.0 million, representing
16 percent of service revenues.
- 1 percent increase in ARPU (average monthly service revenue per
unit), to $52.54.
- Postpay churn remained low at 1.5 percent; postpay customers
comprised 95 percent of retail customers.
- 8 percent increase in cell sites in service, to 6,942, of which
approximately 4,000 are company-owned.
-Repurchased 367,000 common shares for $13.3 million to offset dilution
from employee benefit plans.
CHICAGO, May 6 /PRNewswire-FirstCall/ -- United States Cellular
Corporation (NYSE: USM) reported service revenues of $981.9 million for
the first quarter of 2009, a 2 percent increase from $962.1 million in
the comparable period one year ago. The company recorded operating
income of $114.8 million, down from $119.0 million in the first quarter
of 2008. Net income attributable to U.S. Cellular and related Diluted
earnings per share were $84.6 million and $0.97, respectively, for the
first quarter of 2009, compared to $70.6 million and $0.80,
respectively, in the comparable period one year ago.
"We had solid gains in postpay customers, who are the cornerstone of
our strategy," said John E. Rooney, U.S. Cellular president and CEO.
"These postpay customers make up 95 percent of U.S. Cellular's retail
base, and they are buying more of our smart phones and touchscreen
phones, and using more of our data services.
"As a result," added Rooney, "we had strong gains in data revenues and
increased service revenues despite a loss in roaming revenues resulting
from the acquisition of Alltel Corporation by Verizon Wireless. Also,
U.S. Cellular has had 14 consecutive quarters of year-over-year ARPU
growth. And, we kept churn low--a sign that our customer satisfaction
strategy continues to be effective.
"To keep our product mix optimized, we rolled out new handsets in the
quarter, and brought the HTC Touch Pro(TM) to our lineup in April,"
continued Rooney. "Sales of all smartphones and premium devices,
including our BlackBerry(R) and Windows Mobile(R) solutions, have
nearly tripled year over year. As we expand our 3G network to more of
our cell sites, we expect continued revenue growth in this area.
"We are committed to growing U.S. Cellular for the long term," said
Rooney, "and we have the sound strategy and dedicated associates to
provide quality services and products and unmatched customer support.
We recently received a seventh-consecutive award for call quality from
J.D. Power and Associates. We're proud of our network, and we're proud
to be a company our customers can believe in."
Guidance
Guidance for the year ending Dec. 31, 2009 is as follows. Guidance is
unchanged from Feb. 26, 2009. There can be no assurance that final
results will not differ materially from this guidance.
U.S. Cellular 2009 guidance as of May 6, 2009 is as follows:
Net Retail Customer Additions 75,000 - 150,000
Service Revenues $3,900 - $4,000 million
Operating Income(1) $275 - $350 million
Depreciation, Amortization & 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 May 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 May 6, 2009 at 10:00 a.m.
Chicago time.
-- Access the live call online on the Conference Calls page of
www.uscellular.com or at
http://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=67422&eventID=2189425
-- Access the call by phone at 800/706-9695 (US/Canada) and use
conference ID #96977513.
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(R)
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 approximately 8,800 full-time equivalent
associates as of March 31, 2009. For more information about U.S.
Cellular, visit www.uscellular.com.
Safe Harbor Statement Under the Private Securities Litigation Reform
Act of 1995: All information set forth in this news release, except
historical and factual information, represents forward-looking
statements. This includes all statements about the company's plans,
beliefs, estimates, and expectations. These statements are based on
current estimates, projections, and assumptions, which involve certain
risks and uncertainties that could cause actual results to differ
materially from those in the forward-looking statements. Important
factors that may affect these forward-looking statements include, but
are not limited to: The ability of the company to successfully manage
and grow 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.
As previously announced, U.S. Cellular(R)will hold a teleconference on
May 6, 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 ofwww.teldta.comorwww.uscc.com.
UNITED STATES CELLULAR CORPORATION
SUMMARY OPERATING DATA
Quarter Ended 3/31/2009 12/31/2008 9/30/2008 6/30/2008 3/31/2008
Total Population:
Consolidated
markets(1) 83,726,000 83,014,000 82,875,000 82,875,000 82,846,000
Consolidated
operating
markets(1) 46,306,000 46,009,000 45,493,000 45,493,000 45,262,000
All customers:
Total at end
of period 6,243,000 6,196,000 6,176,000 6,194,000 6,175,000
Gross
additions 404,000 395,000 367,000 365,000 408,000
Net additions
(losses) 47,000 20,000 (18,000) 16,000 73,000
Market penetration
at end of period:
Consolidated
markets(2) 7.5% 7.5% 7.5% 7.5% 7.5%
Consolidated
operating
markets(2) 13.5% 13.5% 13.6% 13.6% 13.6%
Retail customers:
Total at end
of period 5,770,000 5,707,000 5,674,000 5,677,000 5,640,000
Gross
additions 366,000 352,000 325,000 318,000 360,000
Net postpay
additions 60,000 41,000 12,000 33,000 72,000
Net prepay
additions
(losses) 3,000 (8,000) (15,000) 1,000 13,000
Cell sites in
service 6,942 6,877 6,716 6,596 6,452
Average monthly
revenue per
unit(3) $52.54 $52.71 $54.59 $53.27 $52.24
Retail service
revenue per
unit(3) (5) $46.78 $46.43 $46.97 $46.53 $46.18
Inbound roaming
revenue per
unit(3) (5) $3.21 $4.25 $5.03 $4.54 $3.95
Other revenue per
unit(3) (5) $2.55 $2.03 $2.59 $2.20 $2.11
Postpay churn
rate(4) 1.5% 1.6% 1.6% 1.4% 1.4%
Construction
expenditures
(000s) $137,700 $190,000 $146,100 $137,800 $111,700
(1) "Total population of consolidated markets" and "Total population of
consolidated operating markets" are used only for the purposes of
calculating market penetration of consolidated markets and consolidated
operating markets, respectively, which is calculated by dividing
customers by the total market population (without duplication of
population in overlapping markets).
(2) 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 Revenues
(000s) $981,874 $976,952 $1,013,928 $987,352 $962,094
Components:
Retail service
revenue (000s) 874,098 860,503 872,397 862,392 850,470
Inbound roaming
revenue (000s) 60,057 78,768 93,472 84,201 72,755
Other revenue
(000s) 47,719 37,681 48,059 40,759 38,869
Divided by average
customers (000s) 6,229 6,178 6,191 6,178 6,139
Divided by three
months in each
quarter 3 3 3 3 3
Average monthly
revenue per unit $52.54 $52.71 $54.59 $53.27 $52.24
Retail service
Revenue per unit $46.78 $46.43 $46.97 $46.53 $46.18
Inbound roaming
revenue per unit $3.21 $4.25 $5.03 $4.54 $3.95
Other revenue per
unit $2.55 $2.03 $2.59 $2.20 $2.11
(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 Long-distance/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 March 31,
(Unaudited, dollars and shares in thousands, except per share amounts)
Increase (Decrease)
2009 2008 Amount Percent
Operating revenues
Service $981,874 $962,094 $19,780 2%
Equipment sales 70,890 75,762 (4,872) (6%)
Total operating
revenues 1,052,764 1,037,856 14,908 1%
Operating expenses
System operations
(excluding Depreciation,
amortization and
accretion reported
below) 200,003 191,016 8,987 5%
Cost of equipment sold 185,701 178,045 7,656 4%
Selling, general and
administrative 412,448 403,626 8,822 2%
Depreciation, amortization
and accretion 137,651 142,530 (4,879) (3%)
Loss on asset disposals,
net 2,191 3,673 (1,482) (40%)
Total operating
expenses 937,994 918,890 19,104 2%
Operating income 114,770 118,966 (4,196) (4%)
Investment and other income
(expense)
Equity in earnings of
unconsolidated entities 25,327 21,235 4,092 19%
Interest and dividend
income 477 1,905 (1,428) (75%)
Interest expense (19,022) (20,115) 1,093 5%
Other, net 280 118 162 N/M
Total investment and
other income (expense) 7,062 3,143 3,919 N/M
Income before income taxes 121,832 122,109 (277) ---
Income tax expense 31,232 47,540 (16,308) (34%)
Net income 90,600 74,569 16,031 21%
Less: Net income
attributable to
noncontrolling
interests, net of tax (6,008) (4,012) (1,996) (50%)
Net income attributable to
U.S. Cellular $84,592 $70,557 $14,035 20%
Basic weighted average shares
outstanding 87,196 87,571 (375) ---
Basic earnings per share
attributable to
U.S. Cellular shareholders $0.97 $0.81 $0.16 20%
Diluted weighted averages
shares outstanding 87,446 88,064 (618) (1%)
Diluted earnings per share
attributable to
U.S. Cellular shareholders $0.97 $0.80 $0.17 21%
N/M - Percentage change not meaningful
United States Cellular Corporation
Consolidated Balance Sheet Highlights
(Unaudited, dollars in thousands)
ASSETS
March 31, December 31,
2009 2008
Current assets
Cash and cash equivalents $191,797 $170,996
Accounts receivable from customers and
other 414,383 419,619
Inventory 108,051 116,564
Prepaid income taxes --- 22,515
Prepaid expenses 57,766 51,645
Net deferred income tax asset 19,481 19,481
Other current assets 8,283 14,227
799,761 815,047
Investments
Licenses 1,445,665 1,433,415
Goodwill 494,737 494,279
Customer lists 7,656 8,936
Investments in unconsolidated entities 175,571 156,637
Notes and interest receivable - long-term 4,265 4,297
2,127,894 2,097,564
Property, plant and equipment
In service and under construction 5,527,778 5,884,383
Less: accumulated depreciation 2,904,973 3,264,007
2,622,805 2,620,376
Other assets and deferred charges 69,495 33,055
Total assets $5,619,955 $5,566,042
United States Cellular Corporation
Consolidated Balance Sheet Highlights
(Unaudited, dollars in thousands)
LIABILITIES AND SHAREHOLDERS' EQUITY
March 31, December 31,
2009 2008
Current liabilities
Current portion of long-term debt 10,086 $10,258
Accounts payable
Affiliated 7,255 9,613
Trade 218,031 248,785
Customer deposits and deferred revenues 149,690 151,082
Accrued taxes 34,729 17,643
Accrued compensation 43,202 55,969
Other current liabilities 106,858 108,533
569,851 601,883
Deferred liabilities and credits
Net deferred income tax liability 481,196 478,106
Other deferred liabilities and credits 236,478 233,619
717,674 711,725
Long-term debt 997,534 996,636
Commitments and contingencies
Noncontrolling interests with redemption
features 612 589
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 1,343,599 1,340,146
Treasury shares (61,835) (50,258)
Retained earnings 1,911,995 1,828,680
Total U.S. Cellular shareholders'
equity 3,281,833 3,206,642
Noncontrolling interests 52,451 48,567
Total equity 3,334,284 3,255,209
Total liabilities and equity $5,619,955 $5,566,042
United States Cellular Corporation
Consolidated Statement of Cash Flows
Three Months Ended March 31,
(Unaudited, dollars in thousands)
2009 2008
Cash flows from operating activities
Net income $90,600 $74,569
Add (deduct) adjustments to reconcile net income
to net cash flows from operating activities
Depreciation, amortization and accretion 137,651 142,530
Bad debts expense 18,704 17,962
Stock-based compensation expense 2,964 1,773
Deferred income taxes, net 1,673 15,926
Equity in earnings of unconsolidated
entities (25,327) (21,235)
Distributions from unconsolidated entities 5,908 6,933
Loss on asset disposals, net 2,191 3,673
Excess tax benefit from stock awards (3) (764)
Other noncash expense 443 443
Changes in assets and liabilities from
operations
Accounts receivable (13,468) (8,615)
Inventory 7,204 (13,697)
Accounts payable - trade (30,754) (2,418)
Accounts payable - affiliate (2,358) (117)
Customer deposits and deferred revenues (1,392) 6,515
Accrued taxes 39,591 32,949
Accrued interest 9,337 9,337
Other assets and liabilities (57,402) (35,967)
185,562 229,797
Cash flows from investing activities
Additions to property, plant and equipment (137,741) (111,690)
Cash received from divestitures --- 6,838
Cash paid for acquisitions and licenses (12,127) (102,000)
Other investing activities 240 239
(149,628) (206,613)
Cash flows from financing activities
Common shares reissued for benefit plans, net
of tax payments 356 (2,526)
Common shares repurchased (13,291) (6,201)
Excess tax benefit from stock awards 3 764
Distributions to noncontrolling interests (2,101) (3,231)
Other financing activities (100) (48)
(15,133) (11,242)
Net increase (decrease) in cash and cash
equivalents 20,801 11,942
Cash and cash equivalents
Beginning of period 170,996 204,533
End of period $191,797 $216,475
SOURCE United States Cellular Corporation
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