| | U.S. Cellular Reports Full Third-Quarter Results |
CHICAGO, Oct. 31 /PRNewswire-FirstCall/ -- United States Cellular
Corporation (Amex: USM) reported full operating results for the third quarter
and nine months ended Sept. 30, 2003. Service revenues were $628.4 million
for the third quarter of 2003, up 12% from $561.2 million in the comparable
period a year ago. The company recorded operating income of $97 million during
the quarter, an increase of 55% from the third quarter of 2002. Net income and
basic earnings per share were $41.7 million and $.48 respectively, compared to
$11 million and $.13 respectively, in the comparable period one year ago. In
the third quarter of 2002, the company recorded $34.2 million of pre-tax
losses ($21.8 million net of tax of $12.4 million) related to the writedown of
certain notes receivable.
The company's results include operations through July 31, 2003 of markets
included in the August 1, 2003 exchange of assets with AT&T Wireless.
Year-over-year comparisons are also affected by the acquisition of the
company's Chicago operations on August 7, 2002. Third quarter 2002 results
only include the operating results of the Chicago operations subsequent to
that date.
Prior Third Quarter Announcement
U.S. Cellular issued a press release on Oct. 22 reporting third-quarter
and nine-month operating data. The U.S. Cellular press release can be found
in the Conference Call section of the Investor Relations section of
http://www.uscellular.com . In addition, the company hosted a joint conference call
on Oct. 22 and discussed third-quarter operating data. U.S. Cellular will not
be hosting another conference call to discuss third-quarter results.
The operating data released on Oct. 22 are not changed by the information
reported in this press release, which includes the full operating results for
the third quarter and nine months ending Sept. 30, 2003. U.S. Cellular had
released only certain operating data on Oct. 22 due to uncertainty about the
applicability and effect of recent guidance regarding the implementation of
SFAS 150, _Accounting for Certain Instruments with Characteristics of both
Liabilities and Equity" that relate to mandatorily redeemable noncontrolling
interests. On Oct. 29, 2003, U.S. Cellular was advised that the Financial
Accounting Standards Board (_FASB_) deferred those provisions of SFAS 150 and
prohibited early adoption while the FASB reconsiders these provisions.
Consequently, as required by this decision, the results of operations do not
include any effects related to SFAS 150.
Income Tax Rate
The company recorded an additional $10.2 million income tax expense
related to the exchange of properties with AT&T Wireless on Aug. 1, 2003 that
resulted in an overall effective tax rate of 50.5% in the quarter. Excluding
the additional income tax expense related to the exchange, the effective
income tax rate would have been 40.3%.
U.S. Cellular Reported Certain Operating Data for Third Quarter _ Oct. 22,
2003
U.S. Cellular issued a press release on Oct. 22 reporting certain third-
quarter and nine-month operating data. The U.S. Cellular press release can be
found in the Conference Call section of the Investor Relations section of
http://www.uscellular.com. In addition, the company hosted a joint conference call
on Oct. 22 and discussed certain third-quarter operating data. U.S. Cellular
will not be hosting another conference call to discuss third-quarter results.
Interested parties may listen to the Oct. 22 replay by accessing the
Conference Call section of the Investor Relations section of
http://www.uscellular.com or at
http://www.firstcallevents.com/service/ajwz390314455gf12.html . In addition,
certain financial and statistical information contained in the conference call
presentation was posted to the U.S. Cellular web site together with
reconciliations to Generally Accepted Accounting Principles (_GAAP_) of any
non-GAAP information.
As of Sept. 30, U.S. Cellular Corporation, the nation's eighth largest
wireless service carrier, provided wireless service to more than 4.2 million
customers in 141 markets throughout 25 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.
USM's Internet Home Page: http://www.uscellular.com
UNITED STATES CELLULAR CORPORATION
SUMMARY OPERATING DATA
Quarter Ended 9/30/03 6/30/03 3/31/03 12/31/02 9/30/02
Consolidated Markets:
Total population
(000s) (a) 45,817 41,288 41,288 41,048 41,048
Customer units 4,268,000 4,343,000 4,240,000 4,103,000 3,943,000
Net customer unit
activations 66,000 103,000 137,000 160,000 76,000
Market penetration
(a) 9.32% 10.52% 10.27% 10.00% 9.61%
Markets in operation
(b) 141 150 149 149 149
Cell sites in service 4,082 4,106 3,987 3,914 3,750
Average monthly
revenue per unit (c) $49.05 $47.38 $45.05 $47.91 $49.31
Retail service
revenue per unit
(c) $39.57 $38.69 $37.05 $38.69 $38.95
Inbound roaming
revenue per unit
(c) $4.65 $4.41 $4.36 $5.37 $6.52
Long-distance/other
revenue per unit
(c) $4.83 $4.28 $3.64 $3.85 $3.84
Minutes of use (MOU)
(d) 435 424 377 359 327
Postpay churn rate per
month (e) 1.6% 1.5% 1.6% 1.8% 2.0%
Marketing cost per
gross customer unit
addition (f) $405 $378 $358 $369 $348
Capital Expenditures
($000s) $135,111 $163,076 $140,926 $281,615 $192,256
(a) Market penetration is calculated using 2002 Claritas population
estimates for 9/30/03, 6/30/03 and 3/31/03 and 2001 Claritas
estimates for all other periods. "Total population" represents the
total incremental population of each of U.S. Cellular's consolidated
markets, regardless of whether the market has begun marketing
operations. The 9/30/03 total population amounts exclude the
population of the 10 markets transferred to AWE in August 2003 and
include the population of the 14 markets acquired from AWE in August
2003.
(b) Represents only those markets which have begun marketing operations.
(c) Per unit revenue measurements are derived from Service Revenues as
reported in Financial Highlights for each respective quarter as
follows:
(Dollars in thousands)
Service Revenues per
Financial Highlights $628,440 $610,109 $564,601 $575,387 $561,240
Components:
Retail service
revenue during
quarter $506,983 $498,176 $464,341 $464,633 $443,290
Inbound roaming
revenue during
quarter $59,638 $56,840 $54,606 $64,533 $74,243
Long-distance/other
revenue during
quarter $61,819 $55,093 $45,654 $46,221 $43,707
Divided by average
customers during
quarter (000s) 4,271 4,292 4,178 4,003 3,794
Divided by three
months in each
quarter 3 3 3 3 3
Average monthly
revenue per unit $49.05 $47.38 $45.05 $47.91 $49.31
Retail service
revenue per unit $39.57 $38.69 $37.05 $38.69 $38.95
Inbound roaming
revenue per unit $4.65 $4.41 $4.36 $5.37 $6.52
Long-distance/other
revenue per unit $4.83 $4.28 $3.64 $3.85 $3.84
(d) Average monthly local minutes of use per customer (without roaming).
(e) Postpay churn rate per month is calculated by dividing the average
monthly postpay customer disconnects during the quarter by the average
postpay customer base for the quarter.
(f) The numerator of this calculation is the sum of Marketing and Selling
Expenses and Cost of Equipment Sold, less Equipment Sales Revenues
(excluding agent rebates related to customer retention), for each
respective quarter. The numerator is then divided by the number of
gross customers activated on the U.S. Cellular network for each
respective quarter to arrive at marketing cost per gross customer unit
addition.
UNITED STATES CELLULAR CORPORATION
FINANCIAL HIGHLIGHTS
Three Months Ended September 30
(Unaudited, dollars in thousands, except per share amounts)
Increase
(Decrease)
2003 2002 Amount Percent
Operating Revenues
Service Revenues $628,440 $561,240 $67,200 12.0%
Equipment Sales 28,903 18,546 10,357 55.8%
657,343 579,786 77,557 13.4%
Operating Expenses
System Operations (Excluding all
amounts included in Depreciation
below) 153,724 136,367 17,357 12.7%
Marketing and Selling 101,589 91,060 10,529 11.6%
Cost of Equipment Sold 53,383 51,595 1,788 3.5%
General and Administrative 150,894 135,191 15,703 11.6%
Depreciation 89,797 93,355 (3,558) (3.8%)
Amortization of Deferred Charges
and Customer Lists 12,367 9,521 2,846 29.9%
(Gain) on Assets Held for Sale (1,442) - (1,442) N/M
560,312 517,089 43,223 8.4%
Operating Income 97,031 62,697 34,334 54.8%
Investment Income 11,301 12,963 (1,662) (12.8%)
Interest (Expense) (15,615) (13,306) (2,309) (17.4%)
(Loss) on Investments - (34,210) 34,210 N/M
Other Income 1,019 885 134 15.1%
Income Before Income Taxes and
Minority Interest 93,736 29,029 64,707 222.9%
Income Tax Expense 47,364 15,460 31,904 206.4%
Income Before Minority Interest 46,372 13,569 32,803 241.7%
Minority Share of Income (4,633) (2,594) (2,039) (78.6%)
Net Income $41,739 $10,975 $30,764 280.3%
Weighted Average Common and Series A
Common Shares (000s) (Basic) 86,142 86,095 47
Earnings Per Common and Series A
Common Share ("EPS") (Basic) $0.48 $0.13 $0.35 269.2%
Earnings Per Common and Series A
Common Share ("EPS") (Diluted) $0.48 $0.13 $0.35 269.2%
N/M - Percent change not meaningful
UNITED STATES CELLULAR CORPORATION
FINANCIAL HIGHLIGHTS
Nine Months Ended September 30
(Unaudited, dollars in thousands, except per share amounts)
Increase
(Decrease)
2003 2002 Amount Percent
Operating Revenues
Service Revenues $1,803,150 $1,523,506 $279,644 18.4%
Equipment Sales 89,917 59,039 30,878 52.3%
1,893,067 1,582,545 310,522 19.6%
Operating Expenses
System Operations (Excluding
all amounts included in
Depreciation below) 438,721 362,426 76,295 21.1%
Marketing and Selling 309,058 249,185 59,873 24.0%
Cost of Equipment Sold 175,510 118,550 56,960 48.0%
General and Administrative 483,981 356,702 127,279 35.7%
Depreciation 272,773 228,289 44,484 19.5%
Amortization of Deferred
Charges and Customer Lists 42,165 23,748 18,417 77.6%
Loss on Assets Held for Sale 25,558 - 25,558 N/M
1,747,766 1,338,900 408,866 30.5%
Operating Income 145,301 243,645 (98,344) (40.4%)
Investment Income 37,163 30,711 6,452 21.0%
Interest (Expense) (47,513) (30,993) (16,520) (53.3%)
(Loss) on Investments (3,500) (278,909) 275,409 98.7%
Other Income 2,801 4,924 (2,123) (43.1%)
Income (Loss) Before Income
Taxes and Minority Interest 134,252 (30,622) 164,874 N/M
Income Tax Expense (Benefit) 68,493 (3,856) 72,349 N/M
Income (Loss) Before Minority
Interest 65,759 (26,766) 92,525 N/M
Minority Share of Income (9,549) (6,248) (3,301) (52.8%)
Income (Loss) Before Cumulative
Effect of Accounting Change 56,210 (33,014) 89,224 N/M
Cumulative effect of accounting
change, net of tax - 4,097 (4,097) N/M
Net Income (Loss) $56,210 $(28,917) $85,127 N/M
Weighted Average Common and
Series A Common Shares (000s)
(Basic) 86,132 86,077 55
Earnings Per Common and Series A
Common Share ("EPS") (Basic) $0.65 $(0.34) $0.99 N/M
Basic EPS Before Cumulative
Effect of Accounting Change $0.65 $(0.39) $1.04 N/M
Basic EPS from Cumulative Effect
of Accounting Change $- $0.05 $(0.05) N/M
Earnings Per Common and Series A
Common Share ("EPS") (Diluted) $0.65 $(0.34) $0.99 N/M
Diluted EPS Before Cumulative
Effect of Accounting Change $0.65 $(0.39) $1.04 N/M
Diluted EPS from Cumulative
Effect of Accounting Change $- $0.05 $(0.05) N/M
N/M - Percent change not meaningful
UNITED STATES CELLULAR CORPORATION
CONSOLIDATED BALANCE SHEET HIGHLIGHTS
(Unaudited, dollars in thousands)
ASSETS LIABILITIES AND SHAREHOLDERS' EQUITY
Sept. 30, Dec. 31, Sept. 30, Dec. 31,
2003 2002 2003 2002
Current Assets Current Liabilities
Cash and cash 9% senior notes $- $45,200
equivalents Notes payable 470,000 460,000
General funds $21,945 $14,155
Affiliated cash Accounts payable
equivalents - 709 Affiliates 5,446 4,958
21,945 14,864 Trade 179,619 301,929
Accounts
receivable 273,901 315,251 Customer deposits
Inventory 39,674 55,490 and deferred
revenues 94,032 82,639
Prepaid expenses
and other current Accrued interest 5,203 9,295
assets 51,274 67,668 Accrued taxes 51,049 24,401
386,794 453,273 Accrued compensation 32,493 30,279
Other current
liabilities 24,311 20,323
Investments 862,153 979,024
Licenses 1,111,780 1,038,556
Goodwill 549,780 643,629 Long-term Debt
Long-term
Customer debt-affiliates 105,000 105,000
list, net 27,201 40,087 6% zero coupon
Deferred convertible
licenses 47,158 - debentures 155,356 148,604
Marketable 7.25% unsecured
equity notes 250,000 250,000
securities 211,178 185,961 Variable prepaid
Investments forward contract 159,856 159,856
in unconsoli- 8.75% notes 130,000 130,000
dated Other 13,000 13,000
entities, 813,212 806,460
net 178,417 161,451
Notes and
interest
receivable
--long-term 6,476 7,287
2,131,990 2,076,971
Property, Plant Deferred Liabilities
and Equipment and Credits 520,613 444,255
In service
and under Minority Interest 61,395 55,068
construct-
ion 3,339,146 3,085,583 Common Shareholders'
Less accu- Equity
mulated depre- Common Shares, par
ciation 1,248,339 1,051,792 value $1 per share 55,046 55,046
2,090,807 2,033,791 Series A Common
Shares, par value
$1 per share 33,006 33,006
Deferred Charges Additional
System devel- paid-in
opment costs, capital 1,307,646 1,307,185
net 107,754 114,642 Treasury Shares (115,473) (117,262)
Other, net 23,359 21,164 Accumulated other
131,113 135,806 comprehensive
income 20,142 10,307
Retained
earnings 1,182,964 1,126,752
2,483,331 2,415,034
Total
Assets $4,740,704 $4,699,841 Total Liabilities
and Shareholders'
Equity $4,740,704 $4,699,841
NOTE: Certain December 31, 2002 amounts have been changed to conform to
current period presentation.
SOURCE United States Cellular Corporation
Web Site: http://www.teldta.com http://www.uscellular.com
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