CHICAGO, July 17 /PRNewswire/ -- United States Cellular Corporation
(Amex: USM) reported second quarter results today, reflecting continued growth
in revenues and exceptionally low customer churn. A weaker retail environment
produced lower than expected new customer activations. For the quarter, USM
reported $461.2 million in service revenues, which produced $166.6 million in
operating cash flow and $.68 of basic earnings per share from operations.
Year-to-date service revenues totaled $885.1 million, producing
$296.5 million of operating cash flow and $1.08 of basic earnings per share
from operations.
Second Quarter Highlights
-- Customer units increased to 3,294,000, a 17% increase over last year.
-- Net customer unit activations from marketing channels totaled 73,000,
compared to 100,000 activations generated during the same quarter of
2000.
-- USM entered into agreements related to the acquisition of personal
communication service ("PCS") licenses in 23 markets, serving a total
population of 7.7 million, for $122.4 million.
John E. Rooney, President and Chief Executive Officer, commented: "Our
second quarter results reflect our continued investment in adding and
retaining customers, as evidenced by our impressive 1.6% postpay churn rate
and continued strong revenue growth. We are continually striving to improve
our service quality and are developing new products and services to make U.S.
Cellular the customer's first choice for wireless service in our markets. The
lower amount of net customer additions indicates that the overall economic
downturn has affected traffic into our retail and agent locations."
Acquisition of PCS Licenses
During the quarter USM entered into agreements, on its own behalf and
through joint ventures with certain designated entities ("DEs"), related to
the acquisition of interests in PCS licenses in 23 markets. These licenses
cover a total population of 7.7 million. The aggregate consideration to be
paid for these licenses is $122.4 million in cash. The licenses are
predominantly 10 megahertz licenses in the Midwest. Approximately 56% of the
total consideration to be paid represents licenses for new market
opportunities, including Omaha, Nebraska and markets in central Illinois such
as Bloomington, Champaign-Urbana and Springfield. The remaining licenses will
add capacity to areas U.S. Cellular already serves. As of June 30, 2001, USM,
on its own behalf, had completed the acquisition of interests in six of the
markets, representing 2.3 million pops, for $42.3 million. The remaining
transactions were pending as of June 30, 2001.
Repurchase of LYONs
During the quarter, Liquid Yield Option Notes ("LYONs") holders converted
a total of $33.6 million face value of LYONs ($14.6 million book value), which
USM satisfied by paying $5.3 million in cash and reissuing 235,794 Common
Shares. The LYONs conversions satisfied with cash would have been convertible
into approximately 83,000 Common Shares. LYONs conversions satisfied with cash
produced an after-tax extraordinary loss of $1.5 million.
USM Stock Repurchases
During the quarter, USM did not repurchase any of its Common Shares, and
reissued 271,677 Common Shares from its treasury shares to satisfy LYONs
conversions and for certain employee benefit plans. Over 1.3 million shares
may be repurchased under an existing authorization.
Based in Chicago, USM manages and invests in wireless systems throughout
the United States. As of June 30, 2001, USM managed operational systems
serving 146 markets.
All information set forth in this news release, except historical and
factual information, represents forward-looking statements. This includes all
statements about USM'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 forward-looking statements include, but are not limited to:
general economic and business conditions, both nationally and in the regions
in which USM operates; technology changes; competition; changes in business
strategy or development plans; acquisitions/divestitures of properties and/or
licenses; changes in governmental regulations; changes in the value of
investments; availability of future financing; and changes in growth in
cellular customers, penetration rates, churn rates and roaming rates.
Investors are encouraged to consider these and other risks and uncertainties
that are discussed in documents filed by USM with the SEC.
As previously announced, TDS and USM will hold a joint teleconference on
July 17, 2001 at 10:00 central daylight savings time. Interested parties may
listen to the call live over the Internet by accessing the conference call
section of www.teldta.com or connect by telephone at 888/245-6674 passcode:
1279724. The conference call will also be archived on the conference call
section of the TDS website at www.teldta.com .
USM's Internet Home Page: www.uscellular.com
UNITED STATES CELLULAR CORPORATION
SUMMARY OPERATING DATA
Quarter Ended 6/30/01 3/31/01 12/31/00
Total cellular population
equivalents
(owned and acquirable, 000s) 26,676 26,676 26,646
Total PCS population equivalents
(owned and acquirable, 000s)
Wholly-owned 4,929 0 0
Owned through joint ventures with
designated entities 2,376 0 0
Consolidated Markets:
Population equivalents owned (000s) 24,607 24,607 24,208
Total population (000s) 25,670 25,670 25,075
Customer units 3,294,000 3,221,000 3,061,000
Net customer unit activations 73,000 114,000 171,000
Market penetration 12.83% 12.55% 12.21%
Markets in operation 142 142 139
Cell sites in service 2,688 2,597 2,501
Average monthly revenue per unit * $47.26 $44.65 $47.49
Retail service revenue per unit * $36.65 $34.39 $36.00
Inbound roaming revenue per unit $6.90 $6.74 $7.42
Long-distance/other revenue per
unit $3.71 $3.52 $4.07
Postpay churn rate per month 1.6% 1.7% 1.8%
Marketing cost per gross
customer unit addition $346 $308 $327
Capital Expenditures ($000s) $131,722 $120,410 $98,784
* Amounts for the quarters ended 6/30/00 and 9/30/00 reflect changes due
to the implementation of SAB 101.
UNITED STATES CELLULAR CORPORATION
SUMMARY OPERATING DATA
Quarter Ended 9/30/00 6/30/00
Total cellular population equivalents
(owned and acquirable, 000s) 26,592 26,407
Total PCS population equivalents
(owned and acquirable, 000s)
Wholly-owned 0 0
Owned through joint ventures with
designated entities 0 0
Consolidated Markets:
Population equivalents owned (000s) 24,191 24,247
Total population (000s) 24,900 25,044
Customer units 2,890,000 2,807,000
Net customer unit activations 107,000 100,000
Market penetration 11.61% 11.21%
Markets in operation 138 139
Cell sites in service 2,430 2,392
Average monthly revenue per unit * $50.91 $50.64
Retail service revenue per unit * $37.25 $37.38
Inbound roaming revenue per
unit $9.17 $9.10
Long-distance/other revenue per
unit $4.49 $4.16
Postpay churn rate per month 1.8% 1.7%
Marketing cost per gross
customer unit addition $321 $335
Capital Expenditures ($000s) $76,834 $69,968
* Amounts for the quarters ended 6/30/00 and 9/30/00 reflect changes due
to the implementation of SAB 101.
UNITED STATES CELLULAR CORPORATION
FINANCIAL HIGHLIGHTS
Three Months Ended June 30
(Unaudited, dollars in thousands, except per share amounts)
Increase
(Decrease)
2001 2000 Amount Percent
Operating Revenues
Service Revenues $461,162 $418,726 $42,436 10.1%
Equipment Sales 14,127 14,269 (142) (1.0%)
475,289 432,995 42,294 9.8%
Operating Expenses (excluding
depreciation and amortization)
System Operations 105,852 86,790 19,062 22.0%
Marketing and Selling 67,999 70,728 (2,729) (3.9%)
Cost of Equipment Sold 28,204 30,054 (1,850) (6.2%)
General and Administrative 106,600 86,353 20,247 23.4%
308,655 273,925 34,730 12.7%
Operating Cash Flow 166,634 159,070 7,564 4.8%
Depreciation 57,673 50,218 7,455 14.8%
Amortization of Intangibles 15,335 14,907 428 2.9%
73,008 65,125 7,883 12.1%
Operating Income 93,626 93,945 (319) (0.3%)
Investment Income, Net of License
Cost Amortization 9,650 10,626 (976) (9.2%)
Other Income (Expense) 4,439 6,717 (2,278) (33.9%)
Income Before Interest, Income Taxes
and Minority Interest 107,715 111,288 (3,573) (3.2%)
Interest Expense 8,702 9,378 (676) (7.2%)
Income Tax Expense 37,238 42,430 (5,192) (12.2%)
Income Before Minority Interest 61,775 59,480 2,295 3.9%
Minority Share of Income (2,870) (3,295) 425 12.9%
Income Before Extraordinary Item 58,905 56,185 2,720 4.8%
Extraordinary item - (loss) on
extinguishment of debt, net of tax (1,536) (6,106) 4,570 74.8%
Net Income $57,369 $50,079 $7,290 14.6%
Weighted Average Common and Series A
Common Shares (000s) (Basic) 86,311 86,277 34
Earnings Per Common and Series A
Common Share ("EPS") (Basic) $0.66 $0.58 $0.08 13.8%
Basic EPS - Operations Before
Extraordinary Item $0.68 $0.65 $0.03 4.6%
Basic EPS from Extraordinary Item $(0.02) $(0.07) $0.05 71.4%
Earnings Per Common and Series A
Common Share ("EPS") (Diluted) $0.65 $0.56 $0.09 16.1%
Diluted EPS Before Extraordinary
Item $0.67 $0.63 $0.04 6.3%
Diluted EPS from Extraordinary Item $(0.02) $(0.07) $0.05 71.4%
UNITED STATES CELLULAR CORPORATION
FINANCIAL HIGHLIGHTS
Six Months Ended June 30
(Unaudited, dollars in thousands, except per share amounts)
Increase
(Decrease)
2001 2000 Amount Percent
Operating Revenues
Service Revenues $885,121 $798,756 $86,365 10.8%
Equipment Sales 29,937 28,396 1,541 5.4%
915,058 827,152 87,906 10.6%
Operating Expenses (excluding
depreciation and amortization)
System Operations 201,436 168,548 32,888 19.5%
Marketing and Selling 139,304 140,186 (882) (0.6%)
Cost of Equipment Sold 62,016 64,651 (2,635) (4.1%)
General and Administrative 215,846 168,040 47,806 28.4%
618,602 541,425 77,177 14.3%
Operating Cash Flow 296,456 285,727 10,729 3.8%
Depreciation 112,917 101,387 11,530 11.4%
Amortization of Intangibles 31,430 29,746 1,684 5.7%
144,347 131,133 13,214 10.1%
Operating Income 152,109 154,594 (2,485) (1.6%)
Investment Income, Net of License
Cost Amortization 16,641 19,004 (2,363) (12.4%)
Gain on Cellular and Other
Investments - 17,851 (17,851) N/M
Other Income (Expense) 11,270 10,468 802 7.7%
Income Before Interest, Income Taxes
and Minority Interest 180,020 201,917 (21,897) (10.8%)
Interest Expense 17,523 18,738 (1,215) (6.5%)
Income Tax Expense 64,426 75,844 (11,418) (15.1%)
Income Before Minority Interest 98,071 107,335 (9,264) (8.6%)
Minority Share of Income (5,149) (4,310) (839) (19.5%)
Income Before Extraordinary Item and
Cumulative Effect of a Change
in Accounting Principle 92,922 103,025 (10,103) (9.8%)
Extraordinary item - (loss) on
extinguishment of debt, net of tax (5,165) (6,106) 941 15.4%
Income Before Cumulative Effect of a
Change in Accounting Principle 87,757 96,919 (9,162) (9.5%)
Cumulative effect of a change in
accounting principle, net of tax - (4,661) 4,661 N/M
Net Income $87,757 $92,258 $(4,501) (4.9%)
Weighted Average Common and Series A
Common Shares (000s) (Basic) 86,150 86,938 (788) (0.9%)
Earnings Per Common and Series A
Common Share ("EPS") (Basic) $1.02 $1.06 $(0.04) (3.8%)
Basic EPS - Operations Before
Extraordinary Item $1.08 $1.06 $0.02 1.9%
Basic EPS from Cumulative Effect of
a Change in Accounting Principle $- $(0.05) $0.05 N/M
Basic EPS from Extraordinary Item $(0.06) $(0.07) $0.01 14.3%
Basic EPS - Gains $- $0.12 $(0.12) N/M
Earnings Per Common and Series A
Common Share ("EPS") (Diluted) $1.01 $1.03 $(0.02) (1.9%)
Diluted EPS Before Extraordinary
Item $1.06 $1.03 $0.03 2.9%
Diluted EPS from Cumulative Effect
of a Change in Accounting Principle $- $(0.05) $0.05 N/M
Diluted EPS from Extraordinary Item $(0.05) $(0.06) $0.01 16.7%
Diluted EPS - Gains $- $0.11 $(0.11) N/M
UNITED STATES CELLULAR CORPORATION
CONSOLIDATED BALANCE SHEET HIGHLIGHTS
(Unaudited, dollars in thousands)
ASSETS LIABILITIES AND SHAREHOLDERS' EQUITY
June 30, December 31, June 30, December 31,
2001 2000 2001 2000
Current Assets Current Liabilities
Cash and cash equivalents Accounts payable
General funds $6,689 $69,956 Affiliates $2,488 $9,124
Affiliated cash
equivalents 87 54,325 Other 168,917 203,223
6,776 124,281
Customer
Temporary deposits and
investments 7 7 deferred
Accounts revenues 59,592 53,855
receivable 230,558 219,083 Accrued
Inventory 34,670 48,798 interest 8,140 7,449
Note Accrued
receivable 45,502 - taxes 35,993 32,529
Prepaid Accrued
expenses compensation 17,290 19,550
and other Revolving Credit
current Facility 96,000 55,000
assets 21,785 17,194 Other current
liabilities 21,050 17,597
339,298 409,363 409,470 398,327
Investments Long-term Debt
Licenses, 6% zero coupon
net 1,243,413 1,130,802 convertible
Marketable debentures 160,529 185,817
equity 7.25% unsecured
securities 246,609 377,900 notes 250,000 250,000
Investments in
unconsolidated
entities, net 152,879 188,859 Other 13,000 13,000
Notes and 423,529 448,817
interest
receivable
--long-term 45,222 84,566
1,688,123 1,782,127
Deferred Liabilities
and Credits 323,454 370,386
Property, Plant and Minority interest 40,965 34,933
Equipment
In service and
under con-
struction 2,071,372 1,801,377
Less accumulated
depreciation 776,186 655,754 Common Shareholders' Equity
1,295,186 1,145,623 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 1,312,316 1,321,193
Deferred Charges Treasury
System development Shares (112,024) (145,542)
costs, net 110,692 119,724 Accumulated
other comprehensive
(loss) income (94,412) (16,296)
Other, net 12,973 10,197 Retained
123,665 129,921 earnings 1,054,922 967,164
2,248,854 2,214,571
Total Assets $3,446,272 $3,467,034 Total Liabilities
and Shareholders'
Equity $3,446,272 $3,467,034
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SOURCE United States Cellular Corporation
Web site: http: //www.uscellular.com
CONTACT: Kenneth R. Meyers, Executive Vice President - Finance of U.S. Cellular, 773-399-8900, or kmeyers@uscellular.com
