2014

U.S. Cellular Reports Fourth Quarter 2010 Results Provides financial guidance for 2011

CHICAGO, Feb. 24, 2011 /PRNewswire/ --

Note: Comparisons are year over year unless otherwise noted.

Fourth Quarter Highlights

  • Service revenues were $992 million.
  • Retail service ARPU (average revenue per unit) increased to $47.41 from $47.07.
  • Net retail customer losses of 10,000 postpaid and 11,000 prepaid.
  • Retail postpaid churn improved to 1.5 percent from 1.6 percent; postpaid customers comprised 95 percent of retail customers.
  • 5 percent increase in cell sites in service to 7,645.
  • Nearly 1.2 million customers adopted Belief Plans.

As previously announced, U.S. Cellular will hold a teleconference Feb. 24, 2011 at 9:30 a.m. CST.  Listen to the live call via the Conference Calls page of www.teldta.com or uscellular.com.

United States Cellular Corporation (NYSE: USM) reported service revenues of $991.9 million for the fourth quarter of 2010, versus $985.4 million for the comparable period one year ago. Net income attributable to U.S. Cellular shareholders and related diluted earnings per share were $6.8 million and $0.08, respectively, for the fourth quarter of 2010; compared to $6.6 million and $0.08, respectively, for the comparable period in 2009.

For the twelve months ended Dec. 31, 2010, U.S. Cellular reported service revenues of $3,913.0 million, compared to $3,927.1 million in 2009.  Net income attributable to U.S. Cellular shareholders for 2010 and related diluted earnings per share, were $132.3 million and $1.53, respectively.  In 2009, net income attributable to U.S. Cellular shareholders and related diluted earnings per share were $206.7 million and $2.37 respectively. Fourth quarter and full year 2009 results were impacted by a $14.0 million (pre-tax), or $0.10 diluted loss per share, charge for impairment of licenses.

"U.S. Cellular had many significant accomplishments during the fourth quarter, but our financial performance was impacted by strong competitive pressures and the actions we took to protect our customer base, as well as spending on our enablement initiatives," said Mary Dillon, U.S. Cellular president and CEO.

"We ended 2010 with nearly 1.2 million new and existing customers on our Belief Plans, demonstrating the value our customers place on this innovative program to enhance overall customer satisfaction. During the fourth quarter, we increased average revenue per customer and customer loyalty.  In addition, demand for smartphones was quite strong.  Smartphone sales represented 40 percent of all devices sold during the quarter and will be a big factor in helping to drive revenue growth in the future, although there was a negative impact on near-term profitability. Smartphone owners currently make up just 17 percent of our postpaid base, so we have significant room for growth in this area. We have a very competitive selection of phones and devices, like the Samsung Galaxy series, and we're evolving our network to provide a fast, high-quality 4G experience.

"Our customers know that we offer the best experience in wireless, as validated by numerous third-party awards, including being named a J.D. Power and Associates 2011 Customer Service Champion, and we're working hard to spread the word. We are confident that we have the right strategies in place to help us compete effectively."

Fourth Quarter Treasury Activity

U.S. Cellular entered into a new $300 million revolving credit facility that is due to expire in Dec. 2015.  

Guidance for year ending Dec. 31, 2011

This guidance represents the views of management as of Feb. 24, 2011, and should not be assumed to be accurate as of any other date.  There can be no assurance that final results will not differ materially from this guidance.  U.S. Cellular undertakes no legal duty to update such information, whether as a result of new information, future events, or otherwise.



2011 


2010 


Estimated Results


Actual Results

Service revenues

$4,000 - $4,100 million


$3,913.0 million

Adjusted OIBDA (1) (3)

$775 - $875 million


$783.1 million

Operating income (3)

$185 - $285 million


$195.4 million

Depreciation, amortization and accretion expenses, and




  losses on asset disposals and impairment of assets (2)

Approx. $590 million


$587.8 million

Capital expenditures (3)

Approx. $650 million


$583.1 million




(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)

2010 Actual Results include losses on asset disposals and no losses on impairment of assets. The 2011 Estimated Results include only the estimate for Depreciation, amortization and accretion expenses and losses on disposals of assets, and do not include any estimate for losses on impairment of assets (since these cannot be predicted).



(3)

This guidance is based on U.S. Cellular's current plans.  New developments or changing competitive conditions in the wireless industry, such as the rate of deployment of 4G Long-term Evolution ("LTE") technology by other carriers, could affect U.S. Cellular's LTE deployment plans and, as a result, its capital expenditures and operating expenses.



Conference call information

U.S. Cellular will hold a conference call on Feb. 24, 2011 at 9:30 a.m. CST.


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. The call will be archived on the Conference Calls page of www.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 6.1 million customers in 26 states. The Chicago-based company had 9,000 full-time equivalent associates as of Dec. 31, 2010. 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 grow its markets; changes in the overall economy, competition, the state and federal telecommunications regulatory environment, and the value of assets and investments; adverse changes in the ratings afforded the company's debt securities by accredited ratings organizations; industry consolidation; advances in telecommunications technology; uncertainty of access to the capital markets; risks and uncertainties relating to possible future restatements; pending and future litigation; changes in income tax rates, laws, regulations or rulings; acquisitions/divestitures of properties and/or licenses; and changes in customer growth rates, average monthly revenue per unit, churn rates, roaming revenue and terms, the availability of handset devices and the mix of products and services offered by the company. Investors are encouraged to consider these and other risks and uncertainties that are discussed in the Form 8-K used by U.S. Cellular to furnish this press release to the SEC, which are incorporated by reference herein.

For more information about U.S. Cellular, visit www.uscellular.com.


UNITED STATES CELLULAR CORPORATION

SUMMARY OPERATING DATA (UNAUDITED)

















Quarter Ended


12/31/2010



9/30/2010



6/30/2010



3/31/2010



12/31/2009

Total population
















Consolidated markets(1)


90,468,000



90,468,000



90,468,000



90,468,000



89,712,000


Consolidated operating markets(1)


46,546,000



46,546,000



46,546,000



46,546,000



46,306,000

Market penetration at end of period
















Consolidated markets(2)


6.7%



6.7%



6.8%



6.8%



6.8%


Consolidated operating markets(2)


13.0%



13.1%



13.2%



13.2%



13.3%

All customers
















Total at end of period


6,072,000



6,103,000



6,144,000



6,147,000



6,141,000


Gross additions


327,000



338,000



349,000



358,000



399,000


Net additions (losses)


(31,000)



(41,000)



(3,000)



6,000



10,000


Smartphones sold as a percent of
















     total devices sold(3)


39.6%



23.6%



15.8%



16.6%



14.7%

Retail customers
















Total at end of period


5,729,000



5,750,000



5,775,000



5,768,000



5,744,000


Smartphone penetration (3) (4)


16.6%



12.0%



10.1%



8.9%



7.5%


Gross additions


292,000



301,000



307,000



305,000



354,000


Net retail additions (losses)(5)


(21,000)



(25,000)



7,000



24,000



39,000


     Net postpaid additions (losses)


(10,000)



(25,000)



(22,000)



(9,000)



26,000


     Net prepaid additions (losses)


(11,000)



---



29,000



33,000



13,000

Service revenue components (000s)
















Retail service

$

864,905


$

865,766


$

863,836


$

865,039


$

866,866


Inbound roaming


67,545



72,901



60,902



51,942



61,728


Other


59,464



44,836



47,838



48,027



56,814

Total service revenues (000s)

$

991,914


$

983,503


$

972,576


$

965,008


$

985,408


Divided by average customers (000s)


6,081



6,124



6,151



6,137



6,139


Divided by three months in each quarter


3



3



3



3



3


Total average monthly revenue per unit(6)

$

54.37


$

53.53


$

52.71


$

52.41


$

53.51

Components of average monthly revenue per customer by revenue type


Retail service(6)

$

47.41


$

47.12


$

46.81


$

46.98


$

47.07


Inbound roaming(6)

$

3.70


$

3.97


$

3.30


$

2.82


$

3.35


Other(6)

$

3.26


$

2.44


$

2.60


$

2.61


$

3.09

















Retail postpaid churn rate(7)


1.5%



1.6%



1.4%



1.4%



1.6%

Capital expenditures (000s)

$

203,400


$

124,700


$

133,500


$

121,500


$

189,000

Cell sites in service


7,645



7,524



7,416



7,310



7,279




(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)

Smartphones represent wireless devices which run on a Blackberry, Windows Mobile, or Android operating system.

(4)

Smartphone penetration is calculated by dividing postpaid customers on smartphone service plans by total postpaid customers.

(5)

Calculated by adding net postpaid additions (losses) and net prepaid additions (losses).

(6)

Calculated by dividing the components of service revenues by the average customers and number of months in the quarter.

(7)

Represents the percentage of the retail postpaid customer base that disconnects service each month. This amount represents the average retail postpaid churn rate for each respective quarterly period.






UNITED STATES CELLULAR CORPORATION



CONSOLIDATED STATEMENT OF OPERATIONS HIGHLIGHTS



Three Months Ended December 31,



(Unaudited, dollars and shares in thousands, except per share amounts)



























Increase (Decrease)




2010



2009



Amount


Percent

Operating revenues














Service

$

991,914



$

985,408



$

6,506


1%


Equipment sales


71,236




74,690




(3,454)


(5%)



Total operating revenues


1,063,150




1,060,098




3,052

















Operating expenses














System operations (excluding Depreciation, amortization















and accretion reported below)


216,254




202,546




13,708


7%


Cost of equipment sold


230,620




211,883




18,737


9%


Selling, general and administrative


474,904




473,143




1,761



Depreciation, amortization and accretion


144,649




146,807




(2,158)


(1%)


Loss on impairment of intangible assets


---




14,000




(14,000)


N/M


Loss on asset disposals, net


2,310




7,528




(5,218)


(69%)



Total operating expenses


1,068,737




1,055,907




12,830


1%
















Operating income (loss)


(5,587)




4,191




(9,778)


>100%
















Investment and other income (expense)














Equity in earnings of unconsolidated entities


22,900




23,553




(653)


(3%)


Interest and dividend income


824




949




(125)


(13%)


Interest expense


(12,637)




(19,134)




6,497


34%


Other, net


285




259




26


10%



Total investment and other income (expense)


11,372




5,627




5,745


>100%
















Income before income taxes


5,785




9,818




(4,033)


(41%)


Income tax (benefit)


(7,285)




(940)




(6,345)


>100%
















Net income


13,070




10,758




2,312


21%


Less:  Net (income) attributable to noncontrolling interests,















net of tax


(6,226)




(4,185)




(2,041)


(49%)

Net income attributable to U.S. Cellular shareholders

$

6,844



$

6,573



$

271


4%















Basic weighted average shares outstanding


85,668




86,719




(1,051)


(1%)

Basic earnings per share attributable to  














U.S. Cellular shareholders

$

0.08



$

0.08



$

---

















Diluted weighted average shares outstanding


86,190




87,087




(897)


(1%)

Diluted earnings per share attributable to














U.S. Cellular shareholders

$

0.08



$

0.08



$

---



N/M – Percentage change not meaningful




UNITED STATES CELLULAR CORPORATION

CONSOLIDATED STATEMENT OF OPERATIONS HIGHLIGHTS

Twelve Months Ended December 31,

(Unaudited, dollars and shares in thousands, except per share amounts)



























     Increase (Decrease)




2010 



2009 



Amount


Percent

Operating revenues














Service

$

3,913,001



$

3,927,128



$

(14,127)



Equipment sales


264,680




286,752




(22,072)


(8%)



Total operating revenues


4,177,681




4,213,880




(36,199)


(1%)
















Operating expenses














System operations (excluding Depreciation, amortization















and accretion reported below)


854,931




802,854




52,077


6%


Cost of equipment sold


742,981




742,993




(12)



Selling, general and administrative


1,796,624




1,747,404




49,220


3%


Depreciation, amortization and accretion


577,054




569,514




7,540


1%


Loss on impairment of intangible assets


---




14,000




(14,000)


N/M


Loss on asset disposals, net


10,717




16,169




(5,452)


(34%)



Total operating expenses


3,982,307




3,892,934




89,373


2%
















Operating income


195,374




320,946




(125,572)


(39%)
















Investment and other income (expense)














Equity in earnings of unconsolidated entities


97,318




96,800




518


1%


Interest and dividend income


3,808




3,597




211


6%


Interest expense


(61,555)




(78,199)




16,644


21%


Other, net


72




1,442




(1,370)


(95%)



Total investment and other income (expense)


39,643




23,640




16,003


68%
















Income before income taxes


235,017




344,586




(109,569)


(32%)


Income tax expense


79,609




116,086




(36,477)


(31%)
















Net income


155,408




228,500




(73,092)


(32%)


Less: Net (income) attributable to noncontrolling interests,















net of tax


(23,084)




(21,768)




(1,316)


(6%)

Net income attributable to U.S. Cellular shareholders

$

132,324



$

206,732



$

(74,408)


(36%)















Basic weighted average shares outstanding


86,128




86,946




(818)


(1%)

Basic earnings per share attributable to














U.S. Cellular shareholders

$

1.54



$

2.38



$

(0.84)


(35%)
















Diluted weighted average shares outstanding


86,518




87,168




(650)


(1%)

Diluted earnings per share attributable to














U.S. Cellular shareholders

$

1.53



$

2.37



$

(0.84)


(35%)


N/M – Percentage change not meaningful




UNITED STATES CELLULAR CORPORATION

CONSOLIDATED BALANCE SHEET HIGHLIGHTS

(Unaudited, dollars in thousands)








ASSETS

















December 31,


December 31,



2010 


2009 

Current assets







Cash and cash equivalents

$

294,426


$

294,411


Short-term investments


146,586



330


Accounts receivable from customers and other


424,019



425,057


Inventory


112,279



152,556


Prepaid income taxes


41,397



717


Prepaid expenses


53,356



63,463


Net deferred income tax asset


26,757



21,570


Other current assets


10,804



51,013




1,109,624



1,009,117








Investments







Licenses


1,452,101



1,435,000


Goodwill


494,737



494,737


Customer lists, net


759



4,083


Investments in unconsolidated entities


160,847



161,481


Notes and interest receivable--long-term


4,070



4,214


Long-term investments


46,033



---




2,158,547



2,099,515








Property, plant and equipment







In service and under construction


6,382,581



5,884,307


Less: accumulated depreciation


3,767,509



3,282,969




2,615,072



2,601,338








Other assets and deferred charges


50,367



38,776















Total assets

$

5,933,610


$

5,748,746





UNITED STATES CELLULAR CORPORATION

CONSOLIDATED BALANCE SHEET HIGHLIGHTS

(Unaudited, dollars in thousands)









LIABILITIES AND EQUITY




















December 31,


December 31,




2010 


2009 

Current liabilities







Current portion of long-term debt

$

101


$

76


Accounts payable








Affiliated


10,791



14,732



Trade


281,601



296,288


Customer deposits and deferred revenues


146,428



140,248


Accrued taxes


39,299



57,507


Accrued compensation


65,952



62,242


Other current liabilities


121,823



92,884





665,995



663,977









Deferred liabilities and credits







Net deferred income tax liability


579,769



513,994


Other deferred liabilities and credits


284,949



262,412





864,718



776,406









Long-term debt


867,941



867,522









Commitments and contingencies














Noncontrolling interests with redemption features


855



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


1,368,487



1,356,322


Treasury Shares


(105,616)



(69,616)


Retained earnings


2,129,638



2,013,633



Total U.S. Cellular shareholders equity


3,480,583



3,388,413









Noncontrolling interests


53,518



51,701










Total equity


3,534,101



3,440,114









Total liabilities and equity

$

5,933,610


$

5,748,746




United States Cellular Corporation

Schedule of Cash and Cash Equivalents and Investments

(Unaudited, dollars in thousands)


In an effort to improve investment returns, during 2010, U.S. Cellular elected to use a portion of its cash balance to directly purchase government-backed securities, specifically U.S. treasury securities and securities insured by the Federal Deposit Insurance Corporation ("FDIC").  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 government-backed securities and certificates of deposit at December 31, 2010 and December 31, 2009.









December 31,


December 31,




2010 


2009 












Cash and cash equivalents


$

294,426


$

294,411


Amounts included in short-term investments (1)(2)









Government-backed securities (3)




146,336





Certificates of deposit




250



330






$

146,586


$

330


Amounts included in long-term investments (1)(4)









Government-backed securities (3)



$

46,033


$




(1)

Designated as held-to-maturity investments and are recorded at amortized cost on the Consolidated Balance Sheet.

(2)

Maturities are less than twelve months from the respective balance sheet dates.

(3)

Includes U.S. treasuries and corporate notes guaranteed under the FDIC's Temporary Liquidity Guarantee Program.

(4)

Maturities range between 14 and 24 months from the balance sheet date.




UNITED STATES CELLULAR CORPORATION

CONSOLIDATED STATEMENT OF CASH FLOWS

Twelve Months Ended December 31,

(Unaudited, dollars in thousands)







2010 


2009 

Cash flows from operating activities







Net income

$

155,408 


$

228,500 


Add (deduct) adjustments to reconcile net income








to net cash flows from operating activities









Depreciation, amortization and accretion


577,054 



569,514 




Bad debts expense


76,292 



107,991 




Stock-based compensation expense


18,044 



16,362 




Deferred income taxes, net


71,378 



45,496 




Equity in earnings of unconsolidated entities


(97,318)



(96,800)




Distributions from unconsolidated entities


100,359 



91,105 




Loss on impairment of intangible assets


— 



14,000 




Loss on asset disposals, net


10,717 



16,169 




Noncash interest expense


2,540 



2,442 




Excess tax benefit from stock awards


(114)



(24)




Other operating activities


(2,369)



— 


Changes in assets and liabilities from operations









Accounts receivable


(75,252)



(114,646)




Inventory


40,277 



(35,992)




Accounts payable - trade


(14,660)



47,503 




Accounts payable - affiliate


(3,940)



5,119 




Customer deposits and deferred revenues


6,180 



(9,921)




Accrued taxes


(70,057)



48,218 




Accrued interest


204 



(2,121)




Other assets and liabilities


79,546 



(51,107)






874,289 



881,808 










Cash flows from investing activities







Additions to property, plant and equipment


(583,134)



(546,758)


Cash received from divestitures




50 


Cash paid for acquisitions and licenses


(17,101)



(16,027)


Cash paid for investments


(250,250)



(450)


Cash received for investments


60,330 



120 


Other investing activities


(953)



1,614 






(791,108)



(561,451)










Cash flows from financing activities







Repayment of long-term debt


(316)



(140,236)


Common shares reissued for benefit plans, net of tax payments


509 



(82)


Common shares repurchased


(52,827)



(33,585)


Excess tax benefit from stock awards


114 



24 


Payment of debt issuance costs


(2,229)



(4,421)


Distributions to noncontrolling interests


(19,631)



(18,426)


Payments to acquire additional interest in subsidiaries


(8,786)



(285)


Other financing activities




69 






(83,166)



(196,942)










Net increase in cash and cash equivalents


15 



123,415 










Cash and cash equivalents







Beginning of period


294,411 



170,996 


End of period

$

294,426 


$

294,411 






United States Cellular Corporation

Financial Measures and Reconciliations


(Unaudited, dollars in thousands)






















Three Months Ended December 31,



Twelve Months Ended December 31,





2010 



2009 




2010 



2009 





















Service revenues


$

991,914 


$

985,408 



$

3,913,001 


$

3,927,128 





















Operating income (loss)



(5,587)



4,191 




195,374 



320,946 



Add:

















Depreciation, amortization and accretion



144,649 



146,807 




577,054 



569,514 




Loss on impairment of intangible asset



— 



14,000 




— 



14,000 




Loss on asset disposals



2,310 



7,528 




10,717 



16,169 





Adjusted OIBDA (1)


$

141,372 


$

172,526 



$

783,145 


$

920,629 























Adjusted OIBDA margin (2)



14.3%



17.5%




20.0%



23.4%









































2010 



2009 




2010 



2009 



Cash flows from operating activities


$

290,276 


$

244,114 



$

874,289 


$

881,808 



Deduct:

















Capital expenditures



203,442 



188,988 




583,134 



546,758 





Free cash flow (3)


$

86,834 


$

55,126 



$

291,155 


$

335,050 




(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. 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.

(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 net equipment subsidy is effectively a cost for purposes of assessing business results and is already reflected in adjusted OIBDA.  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.



SOURCE United States Cellular Corporation



RELATED LINKS
http://www.uscellular.com

More by this Source


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

 

PR Newswire Membership

Fill out a PR Newswire membership form or contact us at (888) 776-0942.

Learn about PR Newswire services

Request more information about PR Newswire products and services or call us at (888) 776-0942.