2014

U.S. Cellular Reports Third Quarter 2011 Results Data drives ARPU growth; inbound roaming revenues increase; profitability improves

CHICAGO, Nov. 4, 2011 /PRNewswire/ --

Note: Comparisons are year over year unless otherwise noted.

3Q 2011 Highlights

  • Smartphones sold, as a percent of total devices sold, increased to 39.9 percent from 23.6 percent; smartphone customers increased to 26.2 percent of postpaid customers from 12.1 percent.
  • Postpaid ARPU (average revenue per unit) increased to $52.41 from $50.82.
  • Service revenues increased 5 percent to $1,036.6 million.
  • Operating income increased 66 percent to $101.6 million.
  • Net loss of 23,000 retail customers, reflecting loss of 34,000 postpaid customers and gain of 11,000 prepaid customers; postpaid customers comprised 95 percent of retail customers.
  • Cell sites in service increased 4 percent to 7,828.

As previously announced, U.S. Cellular will hold a teleconference Nov. 4, 2011 at 9:00 a.m. CDT. Interested parties may listen to the call live by accessing the Investor Relations page of uscellular.com or www.teldta.com.

United States Cellular Corporation (NYSE: USM) reported service revenues of $1,036.6 million for the third quarter of 2011 versus $983.5 million in the comparable period one year ago. Net income attributable to U.S. Cellular shareholders and related diluted earnings per share were $62.1 million and $0.73, respectively, for the third quarter of 2011, compared to $38.3 million and $0.44, respectively, in the comparable period one year ago.

"We continued to increase postpaid ARPU and maintain a low churn rate," said Mary N. Dillon, U.S. Cellular president and CEO, "and though our retail subscriber results remain disappointing, they did improve slightly compared to recent quarters. We are seeing increased awareness from our advertising, device launches and focused promotions, and we're building on that with targeted campaigns to add more new customers during the holiday period and beyond.

"Smartphones sales and adoption of data plans remain very strong, and we're continuing to control loss on equipment by balancing device costs and promotions. We again improved operating margins by increasing ARPU and roaming revenue, and controlling expenses.  Also during the quarter, we completed an exchange of licenses that will provide additional spectrum to meet anticipated future capacity and coverage requirements in several of our markets.    

"Along with our Belief Plans, which 2.8 million of our customers have now selected, we're offering a competitive device lineup for the holiday period, including the highly rated Motorola Electrify™, and several new smartphones at attractive price points from HTC. We'll complete our first 4G LTE markets in November, and offer 4G-enabled devices early in 2012."

Guidance for year ending Dec. 31, 2011

Guidance for the year ending Dec. 31, 2011, as of Nov. 4, 2011, is provided below, compared to the previous guidance provided on Aug. 8, 2011. U.S. Cellular undertakes no duty to update such information, whether as a result of new information, future events, or otherwise.  There can be no assurance that final results will not differ materially from this guidance.  




Current Estimates


Previous Estimates (1)


Service revenues

$4,000-$4,100 million


Unchanged


Operating income (3) (4)

$230-$305 million


$210-$285 million


Depreciation, amortization and accretion expenses,





  and losses on asset disposals and exchanges  





  and impairment of assets (3)

Approx. $590 million


Unchanged


Adjusted OIBDA (2) (4)

$820-$895 million


$800-$875 million


Capital expenditures (4)

$750-$800 million


Unchanged



(1) The 2011 Estimated Results as disclosed in U.S. Cellular's Quarterly Report on Form 10-Q for the period ended June 30, 2011.

(2) Adjusted OIBDA is defined as Operating income excluding the effects of: Depreciation, amortization and accretion (OIBDA); the net gain or loss on asset disposals and exchanges (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.

(3) The 2011 Estimated Results do not include any estimate for losses on impairment of assets since these cannot be predicted.

(4) This guidance is based on U.S. Cellular's current operations, which include a multi-year deployment of Long-term Evolution ("LTE") technology commencing in 2011.  As customer demand for data services increases, and competitive conditions in the wireless industry evolve, such as the rate of deployment of LTE technology by other carriers, the timing of U.S. Cellular's deployment of LTE and the timing of other capital expenditures could change.  These factors could affect U.S. Cellular's estimated capital expenditures and operating expenses in 2011.



Conference call information

U.S. Cellular will hold a conference call on Nov. 4, 2011 at 9:00 a.m. CDT.


Before the call, certain financial and statistical information to be discussed during the call will be posted to the Investor Relations 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 5.9 million customers in 26 states. The Chicago-based company employed approximately 8,900 people as of September 30, 2011. At the end of the third quarter, Telephone and Data Systems, Inc. owned 84 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 ability to obtain or maintain roaming arrangements with other carriers; 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 Securities and Exchange Commission ("SEC"), which are incorporated by reference herein.

United States Cellular Corporation

Summary Operating Data (Unaudited)

















Quarter Ended


9/30/2011



6/30/2011



3/31/2011



12/31/2010



9/30/2010

Total population
















Consolidated markets (1)


91,965,000 



91,204,000 



91,090,000 



90,468,000 



90,468,000 


Consolidated operating markets (1)


46,888,000 



46,888,000 



46,774,000 



46,546,000 



46,546,000 

 Market penetration at end of period
















Consolidated markets (2)


6.5%



6.5%



6.6%



6.7%



6.7%


Consolidated operating markets (2)


12.7%



12.7%



12.9%



13.0%



13.1%

All customers
















Total at end of period


5,932,000 



5,968,000 



6,033,000 



6,072,000 



6,103,000 


Gross additions


299,000 



257,000 



293,000 



327,000 



338,000 


Net additions (losses)


(36,000)



(70,000)



(39,000)



(31,000)



(41,000)


Smartphones sold as a percent of total devices sold (3)


39.9%



39.6%



42.5%



39.6%



23.6%

Retail customers
















Total at end of period


5,621,000 



5,644,000 



5,698,000 



5,729,000 



5,750,000 


Smartphone penetration (3) (4)


26.2%



23.0%



20.2%



16.6%



12.1%


Gross additions


284,000 



226,000 



256,000 



292,000 



301,000 


Net retail additions (losses) (5)


(23,000)



(58,000)



(31,000)



(21,000)



(25,000)


     Net postpaid additions (losses)


(34,000)



(41,000)



(22,000)



(10,000)



(25,000)


     Net prepaid additions (losses)


11,000 



(17,000)



(9,000)



(11,000)



Service revenue components (000s)
















Retail service

$

871,199 


$

868,630 


$

864,602 


$

864,905 


$

865,766 


Inbound roaming


107,810 



82,760 



64,386 



67,545 



72,901 


Other


57,600 



50,640 



56,125 



59,464 



44,836 

Total service revenues (000s)

$

1,036,609 


$

1,002,030 


$

985,113 


$

991,914 


$

983,503 

Total ARPU (6)

$

58.09 


$

55.69 


$

54.29 


$

54.37 


$

53.53 

Billed ARPU (7)

$

48.82 


$

48.27 


$

47.65 


$

47.41 


$

47.12 

Postpaid ARPU (8)

$

52.41 


$

51.84 


$

51.21 


$

50.99 


$

50.82 

Postpaid churn rate (9)


1.5%



1.4%



1.4%



1.5%



1.6%

Capital expenditures (000s)

$

248,000 


$

162,100 


$

95,900 


$

203,400 


$

124,700 

Cell sites in service


7,828 



7,770 



7,663 



7,645 



7,524 



(1) Used only to calculate market penetration of consolidated markets and consolidated operating markets, respectively. See footnote (2) below.

(2) Market Penetration is 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) Includes net postpaid additions (losses) and net prepaid additions (losses).

(6) Total ARPU - Average monthly service revenue per customer includes retail service, inbound roaming and other service revenues and is calculated by dividing total service revenues by the number of months in the period and by the average total customers during the period.

(7) Billed ARPU - Average monthly billed revenue per customer is calculated by dividing total retail service revenues by the number of months in the period and by the average total customers during the period. Retail service revenues include revenues attributable to postpaid, prepaid and reseller customers.

(8)Postpaid ARPU - Average monthly revenue per postpaid customer is calculated by dividing total retail service revenues from postpaid customers by the number of months in the period and by the average postpaid customers during the period.

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



United States Cellular Corporation

Consolidated Statement of Operations Highlights

Three Months Ended September 30,

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































     Increase (Decrease)






2011 



2010 (1)



Amount


Percent


Operating revenues
















Service

$

1,036,609 



$

983,503 



$

53,106 



5%



Equipment sales


73,830 




77,278 




(3,448)



(4%)




Total operating revenues


1,110,439 




1,060,781 




49,658 



5%


Operating expenses
















System operations (excluding Depreciation,

















amortization and accretion reported below)


241,852 




218,021 




23,831 



11%



Cost of equipment sold


193,491 




189,291 




4,200 



2%



Selling, general and administrative


441,512 




446,938 




(5,426)



(1%)



Depreciation, amortization and accretion


141,664 




143,191 




(1,527)



(1%)



(Gain) loss on asset disposals and exchanges, net


(9,700)




1,981 




(11,681)



>(100)%




Total operating expenses


1,008,819 




999,422 




9,397 



1%




















Operating income


101,620 




61,359 




40,261 



66%




















Investment and other income (expense)
















Equity in earnings of unconsolidated entities


21,929 




23,971 




(2,042)



(9%)



Interest and dividend income


869 




1,101 




(232)



(21%)



Interest expense


(11,522)




(15,956)




4,434 



28%



Other, net


(97)




(620)




523 



84%






















Total investment and other income (expense)


11,179 




8,496 




2,683 



32%




















Income before income taxes


112,799 




69,855 




42,944 



61%



Income tax expense


43,292 




25,639 




17,653 



69%




















Net income


69,507 




44,216 




25,291 



57%



Less: Net income attributable to noncontrolling

















interests, net of tax


(7,367)




(5,920)




(1,447)



(24%)


Net income attributable to U.S. Cellular shareholders

$

62,140 



$

38,296 



$

23,844 



62%


















Basic weighted average shares outstanding


84,547 




85,992 




(1,445)



(2%)


Basic earnings per share attributable to
















U.S. Cellular shareholders

$

0.73 



$

0.45 



$

0.28 



62%




















Diluted weighted average shares outstanding


84,940 




86,428 




(1,488)



(2%)


Diluted earnings per share attributable to
















U.S. Cellular shareholders

$

0.73 



$

0.44 



$

0.29 



66%





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



United States Cellular Corporation

Consolidated Statement of Operations Highlights

Nine Months Ended September 30,

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































     Increase (Decrease)






2011 



2010 (1)



Amount


Percent


Operating revenues
















Service

$

3,023,752 



$

2,921,087 



$

102,665 



4%



Equipment sales


219,961 




193,444 




26,517 



14%




Total operating revenues


3,243,713 




3,114,531 




129,182 



4%


Operating expenses
















System operations (excluding Depreciation,

















amortization and accretion reported below)


687,256 




638,677 




48,579 



8%



Cost of equipment sold


556,465 




512,361 




44,104 



9%



Selling, general and administrative


1,309,688 




1,321,720 




(12,032)



(1%)



Depreciation, amortization and accretion


431,581 




427,831 




3,750 



1%



(Gain) loss on asset disposals and exchanges, net


(5,741)




8,407 




(14,148)



>(100)%




Total operating expenses


2,979,249 




2,908,996 




70,253 



2%




















Operating income


264,464 




205,535 




58,929 



29%




















Investment and other income (expense)
















Equity in earnings of unconsolidated entities


65,289 




74,418 




(9,129)



(12%)



Interest and dividend income


2,466 




2,984 




(518)



(17%)



Gain on investment


13,373 




— 




13,373 



N/M



Interest expense


(51,905)




(48,918)




(2,987)



(6%)



Other, net


(47)




(213)




166 



78%






















Total investment and other income (expense)


29,176 




28,271 




905 



3%




















Income before income taxes


293,640 




233,806 




59,834 



26%



Income tax expense


102,771 




88,656 




14,115 



16%




















Net income


190,869 




145,150 




45,719 



31%



Less: Net income attributable to noncontrolling

















interests, net of tax


(18,629)




(16,858)




(1,771)



(11%)


Net income attributable to U.S. Cellular shareholders

$

172,240 



$

128,292 



$

43,948 



34%


















Basic weighted average shares outstanding


84,984 




86,329 




(1,345)



(2%)


Basic earnings per share attributable to
















U.S. Cellular shareholders

$

2.03 



$

1.49 



$

0.54 



36%




















Diluted weighted average shares outstanding


85,448 




86,706 




(1,258)



(1%)


Diluted earnings per share attributable to
















U.S. Cellular shareholders

$

2.02 



$

1.48 



$

0.54 



36%





(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













September 30,



December 31,




2011 



2010 (1)


Current assets









Cash and cash equivalents

$

504,952 



$

294,426 



Short-term investments


110,761 




146,586 



Accounts receivable from customers and others


434,334 




424,019 



Inventory


148,770 




112,279 



Income taxes receivable


35,121 




41,397 



Prepaid expenses


56,607 




53,356 



Net deferred income tax asset


26,757 




26,757 



Other current assets


10,693 




10,804 





1,327,995 




1,109,624 











Assets held for sale


60,829 




— 











Investments









Licenses


1,470,550 




1,452,101 



Goodwill


494,737 




494,737 



Customer lists, net


425 




759 



Investments in unconsolidated entities


160,374 




160,847 



Notes and interest receivable – long-term


3,959 




4,070 



Long-term investments


45,297 




46,033 





2,175,342 




2,158,547 











Property, plant and equipment, net









In service and under construction


6,778,852 




6,340,537 



Less: accumulated depreciation


4,124,358 




3,766,015 





2,654,494 




2,574,522 











Other assets and deferred charges


61,941 




50,367 











Total assets

$

6,280,601 



$

5,893,060 





(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 EQUITY















September 30,



December 31,





2011 



2010 (1)


Current liabilities









Current portion of long-term debt

$

101 



$

101 



Accounts payable










Affiliated


11,976 




10,791 




Trade


360,788 




281,601 



Customer deposits and deferred revenues


177,123 




146,428 



Accrued taxes


43,910 




39,299 



Accrued compensation


48,117 




65,952 



Other current liabilities


95,665 




121,823 






737,680 




665,995 












Liabilities held for sale


858 




— 












Deferred liabilities and credits









Net deferred income tax liability


742,343 




583,444 



Other deferred liabilities and credits


235,032 




234,855 












Long-term debt


880,411 




867,941 












Commitments and contingencies


















Noncontrolling interests with mandatory redemption features


923 




855 












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


1,382,826 




1,368,487 



Treasury shares


(153,011)




(105,616)



Retained earnings


2,294,562 




2,135,507 




Total U.S. Cellular shareholders' equity


3,612,451 




3,486,452 












Noncontrolling interests


70,903 




53,518 













Total equity


3,683,354 




3,539,970 












Total liabilities and equity

$

6,280,601 



$

5,893,060 





(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)


The following table presents U.S. Cellular's cash and cash equivalents and investments at September 30, 2011 and December 31, 2010.







September 30,


December 31,




2011 


2010 












Cash and cash equivalents


$

504,952 


$

294,426 


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









Government-backed securities (3)




110,761 



146,336 



Certificates of deposit






250 






$

110,761 


$

146,586 


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









Government-backed securities (3)



$

45,297 


$

46,033 




(1) Designated as held-to-maturity investments and 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 Federal Deposit Insurance Corporation's Temporary Liquidity Guarantee Program.

(4) At September 30, 2011, maturities range between 13 and 23 months from the balance sheet date.



United States Cellular Corporation

Consolidated Statement of Cash Flows

Nine Months Ended September 30,

(Unaudited, dollars in thousands)

























2011 



2010 (1)

Cash flows from operating activities








Net income

$

190,869 



$

145,150 


Add (deduct) adjustments to reconcile net income to net









cash flows from operating activities










Depreciation, amortization and accretion


431,581 




427,831 




Bad debts expense


44,718 




56,244 




Stock-based compensation expense


15,475 




13,539 




Deferred income taxes, net


145,687 




51,942 




Equity in earnings of unconsolidated entities


(65,289)




(74,418)




Distributions from unconsolidated entities


52,037 




59,149 




(Gain) loss on asset disposals and exchanges, net


(5,741)




8,407 




Gain on investment


(13,373)




— 




Noncash interest expense


9,582 




1,846 




Other operating activities


1,143 




(1,740)


Changes in assets and liabilities from operations










Accounts receivable


(57,564)




(46,293)




Inventory


(36,326)




32,673 




Accounts payable - trade


79,031 




(50,720)




Accounts payable - affiliate


1,185 




(8,440)




Customer deposits and deferred revenues


30,695 




1,972 




Accrued taxes


9,679 




(19,491)




Accrued interest


9,283 




9,295 




Other assets and liabilities


(65,048)




(22,933)



777,624 




584,013 








Cash flows from investing activities








Additions to property, plant and equipment


(506,082)




(379,692)


Cash paid for acquisitions and licenses


(23,773)




(10,501)


Cash paid for investments


(50,000)




(190,250)


Cash received for investments


85,250 




25,330 


Other investing activities


(210)




656 



(494,815)




(554,457)








Cash flows from financing activities








Repayment of long-term debt


(330,106)




(307)


Issuance of long-term debt


342,000 




— 


Common shares reissued for benefit plans, net of tax payments


1,755 




738 


Common shares repurchased


(62,294)




(40,520)


Payment of debt issuance costs


(11,394)




— 


Distributions to noncontrolling interests


(1,176)




(5,828)


Other financing activities


169 




(8,758)



(61,046)




(54,675)








Cash classified as held for sale


(11,237)




— 








Net increase (decrease) in cash and cash equivalents


210,526 




(25,119)








Cash and cash equivalents








Beginning of period


294,426 




294,411 


End of period

$

504,952 



$

269,292 




(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 September 30,



Nine Months Ended September 30,





2011 



2010 (4)




2011 



2010 (4)





















Service revenues


$

1,036,609 


$

983,503 



$

3,023,752 


$

2,921,087 





















Operating income



101,620 



61,359 




264,464 



205,535 



Add:

















Depreciation, amortization and accretion



141,664 



143,191 




431,581 



427,831 




Loss on impairment of intangible assets



— 



— 




— 



— 




Gain (loss) on asset disposals and exchanges



(9,700)



1,981 




(5,741)



8,407 





Adjusted OIBDA (1)


$

233,584 


$

206,531 



$

690,304 


$

641,773 























Adjusted OIBDA margin (2)



22.5%



21.0%




22.8%



22.0%






































2011 



2010 (4)




2011 



2010 (4)





















Cash flows from operating activities


$

354,192 


$

180,307 



$

777,624 


$

584,013 



Deduct:

















Capital expenditures



248,042 



124,688 




506,082 



379,692 





Free cash flow (3)


$

106,150 


$

55,619 



$

271,542 


$

204,321 




(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 and exchanges (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 exchanges 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 loss, and such net loss is included in adjusted OIBDA as a cost of earning service revenues 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. U.S. Cellular believes this measure provides useful information to investors regarding U.S. Cellular's financial condition and results of operations because it highlights certain key cash and non-cash items and their impacts on cash flows from operating activities.

(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 may be 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) 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 nine months ended September 30, 2011, U.S. Cellular discovered certain errors related to accounting for asset retirement obligations and asset retirement costs. These errors resulted in the overstatement of Total operating expenses, Property, plant and equipment, net and Other deferred liabilities and credits in the first and second quarter 2011 interim financial statements and in the 2010, 2009 and 2008 annual periods reported in the Company's December 31, 2010 financial statements.   The beginning retained earnings balance presented in the December 31, 2010 annual financial statements was also understated as a result of these errors. 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, amendments of previously filed reports were not required. However, if the adjustments to correct the cumulative errors had been recorded in the third quarter 2011, U.S. Cellular believes the impact would have been significant to the third quarter results and would have impacted comparisons to prior periods. As permitted by SAB 108, revisions for these immaterial amounts to previously reported annual and quarterly results are reflected in the financial information herein and will be reflected in future filings containing such financial information.  

The Consolidated Balance Sheet at December 31, 2010 was revised to reflect the cumulative effect of these errors which resulted in an increase to Retained earnings of $5.9 million.  In accordance with SAB 108, the Consolidated Balance Sheet, the Consolidated Statement of Operations and the Consolidated Statement of Cash Flows have been revised as follows:


Consolidated Balance Sheet -- December 31, 2010





















As previously











(Dollars in thousands)

reported (1)




Adjustment




Revised


















Property, plant and equipment, net

$

2,615,072 



$

(40,550)



$

2,574,522 



Total assets


5,933,610 




(40,550)




5,893,060 



Net deferred income tax liability


579,769 




3,675 




583,444 



Other deferred liabilities and credits


284,949 




(50,094)




234,855 



Retained earnings


2,129,638 




5,869 




2,135,507 



Total U.S. Cellular shareholders' equity


3,480,583 




5,869 




3,486,452 



Total equity


3,534,101 




5,869 




3,539,970 



Total liabilities and equity


5,933,610 




(40,550)




5,893,060 
































Consolidated Statement of Operations -- Three Months Ended September 30, 2010






















As previously











(Dollars in thousands)

reported (2)




Adjustment




Revised
















Depreciation, amortization and accretion

$

144,717 



$

(1,526)



$

143,191 



Total operating expenses


1,000,948 




(1,526)




999,422 



Operating income


59,833 




1,526 




61,359 



Income before income taxes


68,329 




1,526 




69,855 



Income tax expense


25,051 




588 




25,639 



Net income


43,278 




938 




44,216 



Net income attributable to U.S. Cellular shareholders


37,358 




938 




38,296 



Basic earnings per share attributable to U.S. Cellular shareholders


0.43 




0.02 




0.45 



Diluted earnings per share attributable to U.S. Cellular shareholders


0.43 




0.01 




0.44 
































Consolidated Statement of Operations -- Nine Months Ended September 30, 2010






















As previously











(Dollars in thousands)

reported (2)




Adjustment




Revised
















Depreciation, amortization and accretion

$

432,405 



$

(4,574)



$

427,831 



Total operating expenses


2,913,570 




(4,574)




2,908,996 



Operating income


200,961 




4,574 




205,535 



Income before income taxes


229,232 




4,574 




233,806 



Income tax expense


86,894 




1,762 




88,656 



Net income


142,338 




2,812 




145,150 



Net income attributable to U.S. Cellular shareholders


125,480 




2,812 




128,292 



Basic earnings per share attributable to U.S. Cellular shareholders


1.45 




0.04 




1.49 



Diluted earnings per share attributable to U.S. Cellular shareholders


1.45 




0.03 




1.48 
































Consolidated Statement of Cash Flows -- Nine Months Ended September 30, 2010






















As previously











(Dollars in thousands)

reported (2)




Adjustment




Revised
















Net income

$

142,338 



$

2,812 



$

145,150 



Depreciation, amortization and accretion


432,405 




(4,574)




427,831 



Deferred income taxes, net


50,180 




1,762 




51,942 



Cash flows from operating activities


584,013 




— 




584,013 





(1) In Annual Report on Form 10-K for the year ended December 31, 2010, filed on February 25, 2011.

(2) In Quarterly Report on Form 10-Q for the period ended September 30, 2010, filed on November 4, 2010.



SOURCE United States Cellular Corporation



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