U.S. Cellular Reports Third Quarter 2012 Results
CHICAGO, Nov. 7, 2012 /PRNewswire/ --
Note: Comparisons are year over year unless otherwise
noted.
3Q 2012 Highlights
- Retail gross additions increased 23 percent resulting in a net
gain of 19,000 retail customers, compared to a net loss of 23,000
retail customers.
- Postpaid gross additions increased 7 percent and postpaid churn
increased to 1.7 percent, resulting in a net loss of 38,000
postpaid customers in the quarter. Postpaid customers
comprised 93 percent of retail customers.
- Prepaid gross additions increased 71 percent, driven by the
introduction of U Prepaid in select Walmart stores, and prepaid
churn decreased to 5.9 percent, resulting in a net increase of
57,000 prepaid customers in the quarter.
- Total revenues increased 3 percent; service revenues remained
steady at $1,036.4 million.
- Postpaid ARPU (average revenue per user) increased 4 percent to
$54.34 from $52.41; total ARPU increased 3 percent to
$59.57 from $58.09.
- Postpaid smartphone customers increased to 38.6 percent of
customers from 26.2 percent. Smartphones as a percent of total
devices sold increased to 53.0 percent from 39.9 percent; 50
percent of smartphones sold were 4G.
- Cell sites in service increased 2 percent to 7,984, of which
4,545 are owned towers.
- 4G LTE network now covers 30 percent of customers; expect to
reach 58 percent of customers by year end.
As previously announced, U.S. Cellular will hold a
teleconference Nov. 7, 2012 at
7:30 a.m. CST. Interested parties may
listen to the call live by accessing the Investor Relations page of
www.uscellular.com or www.teldta.com.
United States Cellular Corporation (NYSE:USM) reported service
revenues of $1,036.4 million for the
third quarter of 2012 and $1,036.6
million in the comparable period one year ago. Net income
attributable to U.S. Cellular shareholders and related diluted
earnings per share were $35.5 million
and $0.42, respectively, for the
third quarter of 2012, compared to $62.1
million and $0.73,
respectively, in the comparable period one year ago.
"We achieved some positive milestones in the quarter, including
retail customer growth driven by strong results in the prepaid
segment of our business, and migration of customers to our 4G LTE
network," said Mary N. Dillon, U.S.
Cellular president and CEO, "though postpaid churn remained
elevated and profitability was impacted by device subsidies and the
expected decline in regulatory support.
"Sales of our U Prepaid service at Walmart drove prepaid net
additions. We're now leveraging this important distribution channel
to offer postpaid service in more than 400 Walmart stores, and
we'll continue to explore new opportunities to bring our services
and products to more customers.
"We increased gross postpaid customers seven percent through
effective marketing and sales programs such as our new Hello Better
advertising campaign and by offering high-demand devices like the
Samsung Galaxy S® III, though our postpaid churn rate remained
high. Profitability declined, however, as we incurred higher
subsidies to encourage adoption of 4G LTE devices, which
represented 50 percent of smartphone sales. While the cost to
subsidize these devices has a short-term impact on profitability,
we expect longer-term benefits as customers migrate to the more
efficient 4G LTE network, including growth in ARPU and lower
capital expenditures for our legacy networks."
U.S. Cellular Strategic Actions
In a separate release, U.S. Cellular also announced today two
strategic actions designed to increase focus on markets where it
has strong positions and streamline operations to increase overall
efficiency and effectiveness. The company has entered into a
definitive agreement with Sprint, who will purchase its customers
and PCS spectrum in certain Midwest markets. U.S. Cellular will
also transition the operations of its Bolingbrook, Ill., customer care center to an
existing vendor partner. Further information can be found on the
U.S. Cellular Investor Relations website.
Guidance for year ending Dec.
31,
2012
Guidance for the year ending Dec. 31,
2012, as of Nov. 7, 2012,
before the effects of the Sprint Transaction is provided below,
compared to the previous guidance provided on Aug. 3, 2012. 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.
|
2012
Estimated Results (1)
|
|
Previous Estimates (2)
|
|
Service
revenues
|
$4,075-$4,125 million
|
|
$4,050-$4,150 million
|
|
Operating
income (3)
|
$200-$250
million
|
|
$200-$300
million
|
|
Depreciation, amortization and accretion
expenses,
|
|
|
|
|
and impairment of assets and net
gain
|
|
|
|
|
or loss on asset disposals and exchanges
(3)
|
Approx.
$600 million
|
|
Unchanged
|
|
Adjusted
OIBDA (3) (4)
|
$800-$850
million
|
|
$800-$900
million
|
|
Capital
expenditures
|
Approx.
$850 million
|
|
Unchanged
|
|
|
|
|
|
(1)
|
These
estimates are based on U.S. Cellular's current plans, which include
a multi-year deployment of 4G LTE technology which commenced in
2011. New developments or changing conditions (such as
customer net growth, customer demand for data services or possible
acquisitions, dispositions or exchanges) could affect U.S.
Cellular's plans and, therefore, its 2012 estimated results. These
estimates are before the effects of the definitive agreement signed
with Sprint, who will purchase U.S. Cellular customers and PCS
Spectrum in certain Midwest markets. The Company expects to incur
incremental operating expenses in the fourth quarter of 2012 in the
range of $30 to $60 million for severance, incremental accelerated
depreciation, asset write-downs and other costs related to this
transaction, which will decrease Operating income, increase
Depreciation, amortization and accretion expenses, and impairment
of assets and net gain or loss on asset disposals and exchanges,
and decrease OIBDA.
|
|
(2)
|
The 2012
Estimated Results as disclosed in U.S. Cellular's Quarterly Report
on Form 10-Q for the period ended June 30, 2012.
|
|
(3)
|
The 2012
Estimated Results do not include any estimate for unrecognized net
gains or losses related to disposals and exchanges of assets or
losses on impairment of assets (since such transactions and their
effects are uncertain).
|
|
(4)
|
Adjusted
OIBDA is defined as operating income excluding the effects of:
depreciation, amortization and accretion (OIBDA); the loss on
impairment of assets (if any); and the net gain or loss on asset
disposals and exchanges (if any). Adjusted OIBDA excludes the
loss on impairment of assets (if any) and net gain or loss on asset
disposals and exchanges (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; such gains or
losses may occur in the future.
|
|
Adjusted
OIBDA may also be commonly referred to by management as operating
cash flow. 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. This amount should not be confused with Cash
flows from operating activities, which is a component of the
Consolidated Statement of Cash Flows.
|
|
Conference call information
U.S. Cellular will hold a conference call on Nov. 7, 2012 at 7:30 a.m.
CST.
- Access the live call on the Investor Relations page of
uscellular.com or at
http://www.videonewswire.com/event.asp?id=90531.
- Access the call by phone at 877/407-8029 (US/Canada), no pass code required.
Before the call, certain financial and statistical information
to be discussed during the call will be posted to the Investor
Relations 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 seventh-largest
wireless carrier, provides a comprehensive range of wireless
products and services, excellent customer support, and a
high-quality network to approximately 5.8 million customers in 26
states. The Chicago-based company
employed approximately 8,400 people as of Sept. 30, 2012. At the end of the third quarter
of 2012, Telephone and Data Systems, Inc. owned 84 percent of U.S.
Cellular.
Visit www.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: impacts of the Sprint Transaction including, but
not limited to, the ability to obtain regulatory approval,
successfully complete the transaction and the financial impacts of
such transaction; the ability of the company to successfully manage
and grow its markets; the overall economy; competition; the ability
to obtain or maintain roaming arrangements with other carriers on
acceptable terms; 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 user, churn rates, roaming revenue and
terms, the availability of handset devices, or 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 Current Report 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
|
|
9/30/2012
|
|
|
6/30/2012
|
|
|
3/31/2012
|
|
|
12/31/2011
|
|
|
9/30/2011
|
|
Total
population
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated markets (1)
|
|
92,996,000
|
|
|
92,684,000
|
|
|
92,684,000
|
|
|
91,965,000
|
|
|
91,965,000
|
|
Consolidated operating markets (1)
|
|
46,966,000
|
|
|
46,966,000
|
|
|
46,966,000
|
|
|
46,888,000
|
|
|
46,888,000
|
|
Market
penetration at end of period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated markets (2)
|
|
6.2%
|
|
|
6.3%
|
|
|
6.3%
|
|
|
6.4%
|
|
|
6.5%
|
|
Consolidated operating markets (2)
|
|
12.4%
|
|
|
12.3%
|
|
|
12.4%
|
|
|
12.6%
|
|
|
12.7%
|
|
All
customers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total at
end of period
|
|
5,808,000
|
|
|
5,799,000
|
|
|
5,837,000
|
|
|
5,891,000
|
|
|
5,932,000
|
|
Gross
additions
|
|
364,000
|
|
|
290,000
|
|
|
285,000
|
|
|
306,000
|
|
|
299,000
|
|
Net
additions (losses)
|
|
9,000
|
|
|
(38,000)
|
|
|
(49,000)
|
|
|
(41,000)
|
|
|
(36,000)
|
|
Smartphones sold as a percent of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
total devices sold (3)
|
|
53.0%
|
|
|
51.9%
|
|
|
54.1%
|
|
|
52.5%
|
|
|
39.9%
|
|
Retail
customers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total at
end of period
|
|
5,561,000
|
|
|
5,542,000
|
|
|
5,570,000
|
|
|
5,608,000
|
|
|
5,621,000
|
|
Smartphone
penetration (3) (4)
|
|
38.6%
|
|
|
36.8%
|
|
|
34.4%
|
|
|
30.5%
|
|
|
26.2%
|
|
Gross
additions
|
|
350,000
|
|
|
277,000
|
|
|
273,000
|
|
|
298,000
|
|
|
284,000
|
|
Net retail
additions (losses) (5)
|
|
19,000
|
|
|
(28,000)
|
|
|
(34,000)
|
|
|
(13,000)
|
|
|
(23,000)
|
|
Net postpaid additions
(losses)
|
|
(38,000)
|
|
|
(48,000)
|
|
|
(38,000)
|
|
|
(20,000)
|
|
|
(34,000)
|
|
Net prepaid additions
(losses)
|
|
57,000
|
|
|
20,000
|
|
|
4,000
|
|
|
7,000
|
|
|
11,000
|
|
Service
revenue components (000s)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail
service
|
$
|
884,219
|
|
$
|
889,219
|
|
$
|
888,527
|
|
$
|
882,091
|
|
$
|
871,199
|
|
Inbound
roaming
|
|
106,132
|
|
|
86,363
|
|
|
80,132
|
|
|
93,353
|
|
|
107,810
|
|
Other
|
|
46,019
|
|
|
54,160
|
|
|
55,161
|
|
|
54,601
|
|
|
57,600
|
|
Total
service revenues (000s)
|
$
|
1,036,370
|
|
$
|
1,029,742
|
|
$
|
1,023,820
|
|
$
|
1,030,045
|
|
$
|
1,036,609
|
|
Total
ARPU (6)
|
$
|
59.57
|
|
$
|
59.05
|
|
$
|
58.21
|
|
$
|
58.13
|
|
$
|
58.09
|
|
Billed
ARPU (7)
|
$
|
50.83
|
|
$
|
50.99
|
|
$
|
50.52
|
|
$
|
49.78
|
|
$
|
48.82
|
|
Postpaid ARPU (8)
|
$
|
54.34
|
|
$
|
54.42
|
|
$
|
54.00
|
|
$
|
53.35
|
|
$
|
52.41
|
|
Postpaid churn rate (9)
|
|
1.7%
|
|
|
1.6%
|
|
|
1.6%
|
|
|
1.6%
|
|
|
1.5%
|
|
Capital
expenditures (000s)
|
$
|
199,100
|
|
$
|
183,200
|
|
$
|
201,300
|
|
$
|
276,400
|
|
$
|
248,000
|
|
Cell
sites in service
|
|
7,984
|
|
|
7,932
|
|
|
7,875
|
|
|
7,882
|
|
|
7,828
|
|
|
|
(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
an Android™, BlackBerry®, or Windows Mobile® operating system,
excluding tablets.
|
|
(4)
|
Smartphone
penetration is calculated by dividing postpaid smartphone customers
by total postpaid customers.
|
|
(5)
|
Includes
net postpaid additions (losses) and net prepaid additions
(losses).
|
|
(6)
|
Total ARPU
- Average monthly service revenue per user 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 user 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 user 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 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)
|
|
|
|
|
2012
|
|
2011
|
|
Amount
|
|
Percent
|
|
Operating revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service
|
$
|
1,036,370
|
|
|
$
|
1,036,609
|
|
|
$
|
(239)
|
|
|
|
—
|
|
Equipment
sales
|
|
103,987
|
|
|
|
73,830
|
|
|
|
30,157
|
|
|
|
41%
|
|
|
Total
operating revenues
|
|
1,140,357
|
|
|
|
1,110,439
|
|
|
|
29,918
|
|
|
|
3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
System
operations (excluding Depreciation,
amortization and accretion reported below)
|
|
249,245
|
|
|
|
241,852
|
|
|
|
7,393
|
|
|
|
3%
|
|
Cost of
equipment sold
|
|
248,029
|
|
|
|
196,229
|
|
|
|
51,800
|
|
|
|
26%
|
|
Selling,
general and administrative
|
|
438,526
|
|
|
|
438,774
|
|
|
|
(248)
|
|
|
|
—
|
|
Depreciation, amortization and accretion
|
|
145,151
|
|
|
|
141,664
|
|
|
|
3,487
|
|
|
|
2%
|
|
(Gain)
loss on asset disposals and exchanges, net
|
|
11,327
|
|
|
|
(9,700)
|
|
|
|
21,027
|
|
|
|
>100%
|
|
|
Total
operating expenses
|
|
1,092,278
|
|
|
|
1,008,819
|
|
|
|
83,459
|
|
|
|
8%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
48,079
|
|
|
|
101,620
|
|
|
|
(53,541)
|
|
|
|
(53%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment and other income
(expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in
earnings of unconsolidated entities
|
|
24,816
|
|
|
|
21,929
|
|
|
|
2,887
|
|
|
|
13%
|
|
Interest
and dividend income
|
|
935
|
|
|
|
869
|
|
|
|
66
|
|
|
|
8%
|
|
Interest
expense
|
|
(9,501)
|
|
|
|
(11,522)
|
|
|
|
2,021
|
|
|
|
18%
|
|
Other,
net
|
|
200
|
|
|
|
(97)
|
|
|
|
297
|
|
|
|
>100%
|
|
|
Total
investment and other income (expense)
|
|
16,450
|
|
|
|
11,179
|
|
|
|
5,271
|
|
|
|
47%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
before income taxes
|
|
64,529
|
|
|
|
112,799
|
|
|
|
(48,270)
|
|
|
|
(43%)
|
|
Income tax
expense
|
|
22,389
|
|
|
|
43,292
|
|
|
|
(20,903)
|
|
|
|
(48%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
42,140
|
|
|
|
69,507
|
|
|
|
(27,367)
|
|
|
|
(39%)
|
|
Less: Net
income attributable to noncontrolling
interests, net of tax
|
|
(6,689)
|
|
|
|
(7,367)
|
|
|
|
678
|
|
|
|
9%
|
|
Net
income attributable to U.S. Cellular
shareholders
|
$
|
35,451
|
|
|
$
|
62,140
|
|
|
$
|
(26,689)
|
|
|
|
(43%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
weighted average shares outstanding
|
|
84,737
|
|
|
|
84,547
|
|
|
|
190
|
|
|
|
—
|
|
Basic
earnings per share attributable to
U.S. Cellular shareholders
|
$
|
0.42
|
|
|
$
|
0.73
|
|
|
$
|
(0.31)
|
|
|
|
(42%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
weighted average shares outstanding
|
|
85,152
|
|
|
|
84,940
|
|
|
|
212
|
|
|
|
—
|
|
Diluted
earnings per share attributable to
U.S. Cellular shareholders
|
$
|
0.42
|
|
|
$
|
0.73
|
|
|
$
|
(0.31)
|
|
|
|
(42%)
|
|
|
|
|
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)
|
|
2012
|
|
2011
|
|
Amount
|
|
Percent
|
|
Operating revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service
|
$
|
3,089,932
|
|
|
$
|
3,023,752
|
|
|
$
|
66,180
|
|
|
|
2%
|
|
Equipment
sales
|
|
246,946
|
|
|
|
219,961
|
|
|
|
26,985
|
|
|
|
12%
|
|
|
Total
operating revenues
|
|
3,336,878
|
|
|
|
3,243,713
|
|
|
|
93,165
|
|
|
|
3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
System
operations (excluding Depreciation,
amortization and accretion reported below)
|
|
725,636
|
|
|
|
687,256
|
|
|
|
38,380
|
|
|
|
6%
|
|
Cost of
equipment sold
|
|
626,765
|
|
|
|
563,717
|
|
|
|
63,048
|
|
|
|
11%
|
|
Selling,
general and administrative
|
|
1,315,823
|
|
|
|
1,302,436
|
|
|
|
13,387
|
|
|
|
1%
|
|
Depreciation, amortization and accretion
|
|
439,391
|
|
|
|
431,581
|
|
|
|
7,810
|
|
|
|
2%
|
|
(Gain)
loss on asset disposals and exchanges, net
|
|
11,819
|
|
|
|
(5,741)
|
|
|
|
17,560
|
|
|
|
>100%
|
|
|
Total
operating expenses
|
|
3,119,434
|
|
|
|
2,979,249
|
|
|
|
140,185
|
|
|
|
5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
217,444
|
|
|
|
264,464
|
|
|
|
(47,020)
|
|
|
|
(18%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment and other income
(expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in
earnings of unconsolidated entities
|
|
71,584
|
|
|
|
65,289
|
|
|
|
6,295
|
|
|
|
10%
|
|
Interest
and dividend income
|
|
2,823
|
|
|
|
2,466
|
|
|
|
357
|
|
|
|
14%
|
|
Gain
(loss) on investment
|
|
(3,728)
|
|
|
|
13,373
|
|
|
|
(17,101)
|
|
|
|
>(100)%
|
|
Interest
expense
|
|
(35,272)
|
|
|
|
(51,905)
|
|
|
|
16,633
|
|
|
|
32%
|
|
Other,
net
|
|
173
|
|
|
|
(47)
|
|
|
|
220
|
|
|
|
>100%
|
|
|
Total
investment and other income (expense)
|
|
35,580
|
|
|
|
29,176
|
|
|
|
6,404
|
|
|
|
22%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
before income taxes
|
|
253,024
|
|
|
|
293,640
|
|
|
|
(40,616)
|
|
|
|
(14%)
|
|
Income tax
expense
|
|
82,624
|
|
|
|
102,771
|
|
|
|
(20,147)
|
|
|
|
(20%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
170,400
|
|
|
|
190,869
|
|
|
|
(20,469)
|
|
|
|
(11%)
|
|
Less: Net
income attributable to noncontrolling
interests, net of tax
|
|
(19,772)
|
|
|
|
(18,629)
|
|
|
|
(1,143)
|
|
|
|
(6%)
|
|
Net
income attributable to U.S. Cellular
shareholders
|
$
|
150,628
|
|
|
$
|
172,240
|
|
|
$
|
(21,612)
|
|
|
|
(13%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
weighted average shares outstanding
|
|
84,671
|
|
|
|
84,984
|
|
|
|
(313)
|
|
|
|
—
|
|
Basic
earnings per share attributable to
U.S. Cellular shareholders
|
$
|
1.78
|
|
|
$
|
2.03
|
|
|
$
|
(0.25)
|
|
|
|
(12%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
weighted average shares outstanding
|
|
85,090
|
|
|
|
85,448
|
|
|
|
(358)
|
|
|
|
—
|
|
Diluted
earnings per share attributable to
U.S. Cellular shareholders
|
$
|
1.77
|
|
|
$
|
2.02
|
|
|
$
|
(0.25)
|
|
|
|
(12%)
|
|
|
|
|
|
|
|
United
States Cellular Corporation
Consolidated Balance Sheet
Highlights
|
|
|
(Unaudited, dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
December 31,
|
|
|
|
|
2012
|
|
2011
|
|
|
Current
assets
|
|
|
|
|
|
|
|
|
|
Cash and
cash equivalents
|
$
|
409,579
|
|
|
$
|
424,155
|
|
|
|
Short-term
investments
|
|
140,494
|
|
|
|
127,039
|
|
|
|
Accounts
receivable from customers and others
|
|
463,785
|
|
|
|
441,821
|
|
|
|
Inventory
|
|
196,523
|
|
|
|
127,056
|
|
|
|
Income
taxes receivable
|
|
2,280
|
|
|
|
74,791
|
|
|
|
Prepaid
expenses
|
|
60,631
|
|
|
|
55,980
|
|
|
|
Net
deferred income tax asset
|
|
37,868
|
|
|
|
31,905
|
|
|
|
Other
current assets
|
|
15,993
|
|
|
|
10,096
|
|
|
|
|
1,327,153
|
|
|
|
1,292,843
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets
held for sale
|
|
—
|
|
|
|
49,647
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments
|
|
|
|
|
|
|
|
|
|
Licenses
|
|
1,531,873
|
|
|
|
1,470,769
|
|
|
|
Goodwill
|
|
494,737
|
|
|
|
494,737
|
|
|
|
Customer
lists, net
|
|
135
|
|
|
|
314
|
|
|
|
Investments in unconsolidated entities
|
|
162,012
|
|
|
|
138,096
|
|
|
|
Notes and
interest receivable – long-term
|
|
—
|
|
|
|
1,921
|
|
|
|
Long-term
investments
|
|
10,171
|
|
|
|
30,057
|
|
|
|
|
2,198,928
|
|
|
|
2,135,894
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net
|
|
|
|
|
|
|
|
|
|
In service
and under construction
|
|
7,341,632
|
|
|
|
7,008,449
|
|
|
|
Less:
accumulated depreciation
|
|
4,406,847
|
|
|
|
4,218,147
|
|
|
|
|
2,934,785
|
|
|
|
2,790,302
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
assets and deferred charges
|
|
75,482
|
|
|
|
59,290
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
$
|
6,536,348
|
|
|
$
|
6,327,976
|
|
|
|
|
|
|
United
States Cellular Corporation
Consolidated Balance Sheet
Highlights
|
|
(Unaudited, dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
December 31,
|
|
|
|
|
|
|
2012
|
|
2011
|
|
Current
liabilities
|
|
|
|
|
|
|
|
|
Current
portion of long-term debt
|
$
|
127
|
|
|
$
|
127
|
|
|
Accounts
payable
|
|
|
|
|
|
|
|
|
|
Affiliated
|
|
7,398
|
|
|
|
12,183
|
|
|
|
Trade
|
|
250,681
|
|
|
|
303,779
|
|
|
Customer
deposits and deferred revenues
|
|
208,042
|
|
|
|
181,355
|
|
|
Accrued
taxes
|
|
60,695
|
|
|
|
34,095
|
|
|
Accrued
compensation
|
|
52,200
|
|
|
|
69,551
|
|
|
Other
current liabilities
|
|
92,957
|
|
|
|
121,190
|
|
|
|
|
672,100
|
|
|
|
722,280
|
|
|
|
|
|
|
|
|
|
Liabilities held for sale
|
|
|
—
|
|
|
|
1,051
|
|
|
|
|
|
|
|
|
|
Deferred liabilities and credits
|
|
|
|
|
|
|
|
|
Net
deferred income tax liability
|
|
861,709
|
|
|
|
799,190
|
|
|
Other
deferred liabilities and credits
|
|
259,499
|
|
|
|
248,213
|
|
|
|
|
|
|
|
|
|
|
Long-term debt
|
|
|
880,486
|
|
|
|
880,320
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noncontrolling interests with mandatory redemption
features
|
|
759
|
|
|
|
1,005
|
|
|
|
|
|
|
|
|
|
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
|
|
1,406,617
|
|
|
|
1,387,341
|
|
|
Treasury
shares
|
|
(145,859)
|
|
|
|
(152,817)
|
|
|
Retained
earnings
|
|
2,438,760
|
|
|
|
2,297,363
|
|
|
|
Total U.S.
Cellular shareholders' equity
|
|
|
3,787,592
|
|
|
|
3,619,961
|
|
|
|
|
|
|
|
|
|
Noncontrolling interests
|
|
|
74,203
|
|
|
|
55,956
|
|
|
|
|
|
|
|
|
|
|
Total
equity
|
|
3,861,795
|
|
|
|
3,675,917
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities and equity
|
$
|
6,536,348
|
|
|
$
|
6,327,976
|
|
|
|
|
|
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, 2012 and December 31,
2011.
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
December 31,
|
|
|
2012
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
$
|
409,579
|
|
|
$
|
424,155
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts
included in short-term investments (1)(2)
|
|
|
|
|
|
|
|
|
|
Government-backed securities (3)
|
|
140,494
|
|
|
|
127,039
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts
included in long-term investments (1)(4)
|
|
|
|
|
|
|
|
|
|
Government-backed securities (3)
|
|
10,171
|
|
|
|
30,057
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
cash and cash equivalents and investments
|
$
|
560,244
|
|
|
$
|
581,251
|
|
|
|
|
(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, 2012, maturities range between 17 and 18 months
from the balance sheet date.
|
|
|
|
|
|
|
|
United
States Cellular Corporation
Consolidated Statement of Cash
Flows
|
|
|
Nine
Months Ended September 30,
|
|
|
(Unaudited, dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2012
|
|
2011
|
|
|
Cash
flows from operating activities
|
|
|
|
|
|
|
|
|
|
Net
income
|
$
|
170,400
|
|
|
$
|
190,869
|
|
|
|
Add
(deduct) adjustments to reconcile net income to net
|
|
|
|
|
|
|
|
|
|
|
cash flows
from operating activities
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation, amortization and accretion
|
|
439,391
|
|
|
|
431,581
|
|
|
|
|
|
Bad debts
expense
|
|
51,293
|
|
|
|
44,718
|
|
|
|
|
|
Stock-based compensation expense
|
|
15,924
|
|
|
|
15,475
|
|
|
|
|
|
Deferred
income taxes, net
|
|
52,865
|
|
|
|
145,687
|
|
|
|
|
|
Equity in
earnings of unconsolidated entities
|
|
(71,584)
|
|
|
|
(65,289)
|
|
|
|
|
|
Distributions from unconsolidated entities
|
|
45,211
|
|
|
|
52,037
|
|
|
|
|
|
(Gain)
loss on asset disposals and exchanges, net
|
|
11,819
|
|
|
|
(5,741)
|
|
|
|
|
|
(Gain)
loss on investment
|
|
3,728
|
|
|
|
(13,373)
|
|
|
|
|
|
Noncash
interest expense
|
|
1,331
|
|
|
|
9,582
|
|
|
|
|
|
Other
operating activities
|
|
863
|
|
|
|
1,143
|
|
|
|
Changes in
assets and liabilities from operations
|
|
|
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
(67,302)
|
|
|
|
(57,564)
|
|
|
|
|
|
Inventory
|
|
(69,423)
|
|
|
|
(36,326)
|
|
|
|
|
|
Accounts
payable - trade
|
|
(28,902)
|
|
|
|
41,733
|
|
|
|
|
|
Accounts
payable - affiliate
|
|
(4,785)
|
|
|
|
1,185
|
|
|
|
|
|
Customer
deposits and deferred revenues
|
|
26,687
|
|
|
|
30,695
|
|
|
|
|
|
Accrued
taxes
|
|
99,556
|
|
|
|
9,679
|
|
|
|
|
|
Accrued
interest
|
|
9,508
|
|
|
|
9,283
|
|
|
|
|
|
Other
assets and liabilities
|
|
(77,821)
|
|
|
|
(66,553)
|
|
|
|
|
608,759
|
|
|
|
738,821
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from investing activities
|
|
|
|
|
|
|
|
|
|
Cash used
for additions to property, plant and equipment
|
|
(611,431)
|
|
|
|
(462,327)
|
|
|
|
Cash paid
for acquisitions and licenses
|
|
(57,957)
|
|
|
|
(23,773)
|
|
|
|
Cash
received for divestitures
|
|
49,932
|
|
|
|
—
|
|
|
|
Cash paid
for investments
|
|
(45,000)
|
|
|
|
(50,000)
|
|
|
|
Cash
received for investments
|
|
50,000
|
|
|
|
85,250
|
|
|
|
Other
investing activities
|
|
(5,030)
|
|
|
|
(210)
|
|
|
|
|
(619,486)
|
|
|
|
(451,060)
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from financing activities
|
|
|
|
|
|
|
|
|
|
Repayment
of long-term debt
|
|
(343)
|
|
|
|
(330,106)
|
|
|
|
Issuance
of long-term debt
|
|
—
|
|
|
|
342,000
|
|
|
|
Common
shares reissued for benefit plans, net of tax payments
|
|
(2,299)
|
|
|
|
1,755
|
|
|
|
Common
shares repurchased
|
|
—
|
|
|
|
(62,294)
|
|
|
|
Payment of
debt issuance costs
|
|
—
|
|
|
|
(11,394)
|
|
|
|
Distributions to noncontrolling interests
|
|
(1,491)
|
|
|
|
(1,176)
|
|
|
|
Other
financing activities
|
|
284
|
|
|
|
169
|
|
|
|
|
(3,849)
|
|
|
|
(61,046)
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
classified as held for sale
|
|
—
|
|
|
|
(11,237)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
increase (decrease) in cash and cash equivalents
|
|
(14,576)
|
|
|
|
215,478
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
|
|
|
|
|
|
|
|
Beginning
of period
|
|
424,155
|
|
|
|
276,915
|
|
|
|
End of
period
|
$
|
409,579
|
|
|
$
|
492,393
|
|
|
|
|
|
|
|
United
States Cellular Corporation
Financial Measures and Reconciliations
|
|
|
(Unaudited, dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
Months Ended September 30,
|
|
Nine
Months Ended September 30,
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service
revenues
|
$
|
1,036,370
|
|
|
$
|
1,036,609
|
|
|
$
|
3,089,932
|
|
|
$
|
3,023,752
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
48,079
|
|
|
|
101,620
|
|
|
|
217,444
|
|
|
|
264,464
|
|
|
Add:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation, amortization and accretion
|
|
145,151
|
|
|
|
141,664
|
|
|
|
439,391
|
|
|
|
431,581
|
|
|
Loss of
impairment of assets
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
(Gain)
loss on asset disposals and exchanges, net
|
|
11,327
|
|
|
|
(9,700)
|
|
|
|
11,819
|
|
|
|
(5,741)
|
|
|
|
Adjusted OIBDA (1)
|
$
|
204,557
|
|
|
$
|
233,584
|
|
|
$
|
668,654
|
|
|
$
|
690,304
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted OIBDA margin (2)
|
|
19.7%
|
|
|
|
22.5%
|
|
|
|
21.6%
|
|
|
|
22.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from operating activities
|
$
|
196,522
|
|
|
$
|
300,721
|
|
|
$
|
608,759
|
|
|
$
|
738,821
|
|
|
Deduct:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash used
for additions to property, plant and equipment
|
|
(181,206)
|
|
|
|
(196,933)
|
|
|
|
(611,431)
|
|
|
|
(462,327)
|
|
|
|
Free
cash flow (3)
|
$
|
15,316
|
|
|
$
|
103,788
|
|
|
$
|
(2,672)
|
|
|
$
|
276,494
|
|
|
|
|
(1)
|
Adjusted OIBDA is defined as operating income
excluding the effects of: depreciation, amortization and accretion
(OIBDA); the loss on impairment of assets (if any); and the net
gain or loss on asset disposals and exchanges (if any).
Adjusted OIBDA excludes the loss on impairment of assets (if any)
and net gain or loss on asset disposals and exchanges (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; such gains or losses may occur in the
future.
|
|
Adjusted
OIBDA may also be commonly referred to by management as operating
cash flow. 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. This amount should not be confused with
Cash flows from operating activities, which is a component of the
Consolidated Statement of Cash Flows
|
|
(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 less Cash
used for additions to property, plant and equipment. 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.
|
SOURCE United States Cellular Corporation
