CHICAGO, Aug. 6, /PRNewswire-FirstCall/ --

Note: Comparisons are year over year unless otherwise noted.

2Q 2009 Highlights

    --  Service revenues were $974.8 million.
    --  31 percent increase in data revenues, to $162.0 million, representing 17
        percent of service revenues.
    --  ARPU (average monthly service revenue per unit) was $52.41.
    --  20 percent increase in operating income, to $140.9 million.
    --  Postpay churn was 1.7 percent; postpay customers comprised 95 percent of
        retail customers.
    --  7 percent increase in cell sites in service, to 7,043.
    --  Repurchased 140,000 common shares for $6.0 million to offset dilution
        from employee benefit plans.

United States Cellular Corporation reported service revenues of $974.8 million for the second quarter of 2009, a 1 percent decrease from $987.4 million in the comparable period one year ago, due to a $22.0 million reduction in inbound roaming revenues related primarily to the acquisition of Alltel Corporation by Verizon Wireless. U.S. Cellular recorded operating income of $140.9 million, a 20 percent increase from $117.9 million in the second quarter of 2008. Net income attributable to U.S. Cellular and related diluted earnings per share were $83.4 million and $0.96, respectively, for the second quarter of 2009, compared to $72.6 million and $0.83, respectively, in the comparable period one year ago.

"U.S. Cellular had a net loss in retail customers for the second quarter," said John E. Rooney, U.S. Cellular president and CEO, "due to the combined effect of the weak economy and very competitive market conditions. The launch of the latest iPhone and other exclusive handsets was a factor, as was the increased presence and competitiveness of low-priced, prepaid service providers in some of our markets. Customers have responded well, however, to the new national plans we introduced late in the quarter, and to our industry-first Battery Swap program, which meets a widespread customer need.

"Despite the challenges we faced in the quarter," continued Rooney, "we achieved solid financial results, with increased operating income and operating cash flow. After adjusting for a decline in roaming revenues that resulted from Verizon's acquisition of Alltel, service revenues increased slightly, due to continued growth in demand for data services. In fact, data revenues grew 31 percent and now represent 17 percent of service revenues. We expect this growth to continue, as we bring our 3G network -- which now covers 40 percent of our customer base -- to 70 percent of our customers by year end. We have also implemented additional cost controls to ensure ongoing funding for important multi-year initiatives designed to promote online sales and enhance our billing and customer relationship management capabilities."

Guidance

Guidance for the year ending Dec. 31, 2009 is as follows. There can be no assurance that final results will not differ materially from this guidance.

U.S. Cellular 2009 guidance as of Aug. 6, 2009 is as follows: Net retail customer additions(1) Service revenues $3,900 - $3,950 million Operating income(2) $300 - $375 million Depreciation, amortization and Approx. $600 million accretion(2) Capital expenditures Approx. $575 million (1) U.S. Cellular has withdrawn its net retail customer additions guidance for the remainder of 2009 due to uncertainty related to the weak economy and consumer purchasing intentions. (2) Includes losses on disposals of assets.

The foregoing guidance represents the views of management as of Aug. 6, 2009 and should not be assumed to be accurate as of any other date. U.S. Cellular undertakes no legal duty to update such information, whether as a result of new information, future events, or otherwise.

Conference call information

U.S. Cellular will hold a conference call on Aug. 6, 2009 at 10:00 a.m. Chicago time.

    --  Access the live call on the Conference Calls page of uscellular.com at
        http://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=6742
        2&eventID=2355543
    --  Access the call by phone at 800/706-9695 (US/Canada) and use conference
        ID #22679990.

Before the call, certain financial and statistical information to be discussed during the call will be posted to the Conference Calls page of uscellular.com, together with reconciliations to generally accepted accounting principles (GAAP) of any non-GAAP information to be disclosed. The call will be archived on the Conference Calls page of uscellular.com

About U.S. Cellular(R)

United States Cellular Corporation, the nation's fifth-largest, full-service wireless carrier, provides a comprehensive range of wireless products and services, excellent customer support, and a high-quality network to approximately 6.2 million customers in 26 states. The Chicago-based company employed approximately 8,700 full-time equivalent associates as of June 30, 2009. For more information about U.S. Cellular, visit 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 manage and grow its markets; the current credit crisis affecting financial markets, and its effects on the overall economy; competition; 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 SEC, which are incorporated by reference herein.

UNITED STATES CELLULAR CORPORATION SUMMARY OPERATING DATA Quarter Ended 6/30/2009 3/31/2009 12/31/2008 9/30/2008 6/30/2008 Total Population: Consolidated markets(1) 83,726,000 83,726,000 83,014,000 82,875,000 82,875,000 Consolidated operating markets(1) 46,306,000 46,306,000 46,009,000 45,493,000 45,493,000 All customers: Total at end of period 6,155,000 6,243,000 6,196,000 6,176,000 6,194,000 Gross additions 317,000 404,000 395,000 367,000 365,000 Net additions (losses) (88,000) 47,000 20,000 (18,000) 16,000 Market penetration at end of period: Consolidated markets(2) 7.4% 7.5% 7.5% 7.5% 7.5% Consolidated operating markets(2) 13.3% 13.5% 13.5% 13.6% 13.6% Retail customers: Total at end of period 5,711,000 5,770,000 5,707,000 5,674,000 5,677,000 Gross additions 286,000 366,000 352,000 325,000 318,000 Net postpay additions (losses) (32,000) 60,000 41,000 12,000 33,000 Net prepay additions (losses) (27,000) 3,000 (8,000) (15,000) 1,000 Cell sites in service 7,043 6,942 6,877 6,716 6,596 Average monthly revenue per unit(3) $52.41 $52.54 $52.71 $54.59 $53.27 Retail service revenue per unit(3) (5) $46.85 $46.78 $46.43 $46.97 $46.53 Inbound roaming revenue per unit(3) (5) $3.35 $3.21 $4.25 $5.03 $4.54 Other revenue per unit(3) (5) $2.21 $2.55 $2.03 $2.59 $2.20 Postpay churn rate(4) 1.7% 1.5% 1.6% 1.6% 1.4% Construction expenditures (000s) $91,200 $137,700 $190,000 $146,100 $137,800 (1) "Total population of consolidated markets" and "Total population of consolidated operating markets" are used only for the purposes of calculating 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) Per unit revenue measurements are derived from Service Revenues as reported in Financial Highlights for each respective quarter as follows: Service revenue (000s) $974,755 $981,874 $976,952 $1,013,928 $987,352 Components: Retail service revenue (000s) 871,209 874,098 860,503 872,397 862,392 Inbound roaming revenue (000s) 62,223 60,057 78,768 93,472 84,201 Other revenue (000s) 41,323 47,719 37,681 48,059 40,759 Divided by average customers (000s) 6,199 6,229 6,178 6,191 6,178 Divided by three months in each quarter 3 3 3 3 3 --- --- --- --- --- Average monthly revenue per unit $52.41 $52.54 $52.71 $54.59 $53.27 Retail service revenue per unit $46.85 $46.78 $46.43 $46.97 $46.53 Inbound roaming revenue per unit $3.35 $3.21 $4.25 $5.03 $4.54 Other revenue per unit $2.21 $2.55 $2.03 $2.59 $2.20 (4) Postpay churn rate is calculated by dividing the total postpay customer disconnects during the quarter by the average postpay customer base for the quarter. (5) Long-distance revenue was reclassified in the fourth quarter of 2008 from Other revenue to Retail service revenue and Inbound roaming revenue. Previous quarters have been adjusted to reflect this change. United States Cellular Corporation Consolidated Statement of Operations Highlights Three Months Ended June 30, (Unaudited, dollars and shares in thousands, except per share amounts) Increase (Decrease) 2009 2008 Amount Percent Operating revenues Service $974,755 $987,352 $(12,597) (1%) Equipment sales 67,795 73,240 (5,445) (7%) ------ ------ ------ Total operating revenues 1,042,550 1,060,592 (18,042) (2%) --------- --------- ------- Operating expenses System operations (excluding Depreciation, amortization and accretion reported below) 194,806 196,652 (1,846) (1%) Cost of equipment sold 156,055 176,145 (20,090) (11%) Selling, general and administrative 410,070 418,416 (8,346) (2%) Depreciation, amortization and accretion 138,614 145,258 (6,644) (5%) Loss on asset disposals, net 2,086 6,219 (4,133) (66%) ----- ----- ------ Total operating expenses 901,631 942,690 (41,059) (4%) ------- ------- ------- Operating income 140,919 117,902 23,017 20% Investment and other income (expense) Equity in earnings of unconsolidated entities 24,794 22,807 1,987 9% Interest and dividend income 751 1,429 (678) (47%) Interest expense (19,387) (20,774) 1,387 7% Other, net (2) 600 (602) N/M -- --- ---- Total investment and other income (expense) 6,156 4,062 2,094 52% ----- ----- ----- Income before income taxes 147,075 121,964 25,111 21% Income tax expense 57,748 44,016 13,732 31% ------ ------ ------ Net income 89,327 77,948 11,379 15% Less: Net income attributable to noncontrolling interests, net of tax (5,969) (5,346) (623) (12%) ------ ------ ---- Net income attributable to U.S. Cellular $83,358 $72,602 $10,756 15% ======= ======= ======= Basic weighted average shares outstanding 86,992 87,571 (579) (1%) Basic earnings per share attributable to U.S. Cellular shareholders $0.96 $0.83 $0.13 16% ===== ===== ===== Diluted weighted averages shares outstanding 87,177 87,872 (695) (1%) Diluted earnings per share attributable to U.S. Cellular shareholders $0.96 $0.83 $0.13 16% ===== ===== ===== N/M - Percentage change not meaningful United States Cellular Corporation Consolidated Statement of Operations Highlights Six Months Ended June 30, (Unaudited, dollars and shares in thousands, except per share amounts) Increase (Decrease) 2009 2008 Amount Percent Operating revenues Service $1,956,629 $1,949,446 $7,183 - Equipment sales 138,685 149,002 (10,317) (7%) ------- ------- ------- Total operating revenues 2,095,314 2,098,448 (3,134) - --------- --------- ------ Operating expenses System operations (excluding Depreciation, amortization and accretion reported below) 394,809 387,668 7,141 2% Cost of equipment sold 341,756 354,190 (12,434) (4%) Selling, general and administrative 822,518 822,042 476 - Depreciation, amortization and accretion 276,265 287,788 (11,523) (4%) Loss on asset disposals, net 4,277 9,892 (5,615) (57%) ----- ----- ------ Total operating expenses 1,839,625 1,861,580 (21,955) (1%) --------- --------- ------- Operating income 255,689 236,868 18,821 8% Investment and other income (expense) Equity in earnings of unconsolidated entities 50,121 44,042 6,079 14% Interest and dividend income 1,228 3,334 (2,106) (63%) Interest expense (38,409) (40,889) 2,480 6% Other, net 278 718 (440) (61%) --- --- ---- Total investment and other income (expense) 13,218 7,205 6,013 83% ------ ----- ----- Income before income taxes 268,907 244,073 24,834 10% Income tax expense 88,980 91,556 (2,576) (3%) ------ ------ ------ Net income 179,927 152,517 27,410 18% Less: Net income attributable to noncontrolling interests, net of tax (11,977) (9,358) (2,619) (28%) ------- ------ ------ Net income attributable to U.S. Cellular $167,950 $143,159 $24,791 17% ======== ======== ======= Basic weighted average shares outstanding 87,093 87,571 (478) (1%) Basic earnings per share attributable to U.S. Cellular shareholders $1.93 $1.63 $0.30 18% ===== ===== ===== Diluted weighted averages shares outstanding 87,308 87,963 (655) (1%) Diluted earnings per share attributable to U.S. Cellular shareholders $1.92 $1.63 $0.29 18% ===== ===== ===== N/M - Percentage change not meaningful United States Cellular Corporation Consolidated Balance Sheet Highlights (Unaudited, dollars in thousands) ASSETS June 30, December 31, 2009 2008 ---- ---- Current assets Cash and cash equivalents $275,920 $170,996 Accounts receivable from customers and other 447,521 419,619 Inventory 125,578 116,564 Prepaid income taxes - 22,515 Prepaid expenses 49,040 51,645 Net deferred income tax asset 19,481 19,481 Other current assets 54,705 14,227 ------ ------ 972,245 815,047 Investments Licenses 1,445,501 1,433,415 Goodwill 494,737 494,279 Customer lists 6,465 8,936 Investments in unconsolidated entities 192,445 156,637 Notes and interest receivable - long-term 4,231 4,297 ----- ----- 2,143,379 2,097,564 Property, plant and equipment In service and under construction 5,602,245 5,884,383 Less: accumulated depreciation 3,024,243 3,264,007 --------- --------- 2,578,002 2,620,376 Other assets and deferred charges 37,621 33,055 Total assets $5,731,247 $5,566,042 ========== ========== United States Cellular Corporation Consolidated Balance Sheet Highlights (Unaudited, dollars in thousands) LIABILITIES AND SHAREHOLDERS' EQUITY June 30, December 31, 2009 2008 ---- ---- Current liabilities Current portion of long-term debt $10,088 $10,258 Accounts payable Affiliated 13,750 9,613 Trade 210,826 248,785 Customer deposits and deferred revenues 145,710 151,082 Accrued taxes 58,433 17,643 Accrued compensation 41,976 55,969 Other current liabilities 91,149 108,533 ------ ------- 571,932 601,883 Deferred liabilities and credits Net deferred income tax liability 498,823 478,106 Other deferred liabilities and credits 243,258 233,619 ------- ------- 742,081 711,725 Long-term debt 997,651 996,636 Commitments and contingencies Noncontrolling interests with Mandatory redemption features 640 589 Equity U.S. Cellular shareholders' equity Common Shares, par value $1 per share 55,068 55,068 Series A Common Shares, par value $1 per share 33,006 33,006 Additional paid-in capital 1,348,664 1,340,146 Treasury shares (60,104) (50,258) Retained earnings 1,985,876 1,828,680 --------- --------- Total U.S. Cellular shareholders' equity 3,362,510 3,206,642 Noncontrolling interests 56,433 48,567 ------ ------ Total equity 3,418,943 3,255,209 Total liabilities and equity $5,731,247 $5,566,042 ========== ========== United States Cellular Corporation Consolidated Statement of Cash Flows Six Months Ended June 30, (Unaudited, dollars in thousands) 2009 2008 ---- ---- Cash flows from operating activities Net income $179,927 $152,517 Add (deduct) adjustments to reconcile net income to net cash flows from operating activities Depreciation, amortization and accretion 276,265 287,788 Bad debts expense 39,028 32,426 Stock-based compensation expense 7,974 6,481 Deferred income taxes, net 19,604 27,231 Equity in earnings of Unconsolidated entities (50,121) (44,042) Distributions from Unconsolidated entities 12,997 45,569 Loss on asset disposals, net 4,277 9,892 Excess tax benefit from stock awards (4) (896) Noncash interest expense 1,213 886 Changes in assets and liabilities from operations Accounts receivable (63,510) (50,059) Inventory (10,391) (19,816) Accounts payable - trade (41,378) 2,838 Accounts payable - affiliate 4,137 171 Customer deposits and deferred revenues (5,372) 10,406 Accrued taxes 64,851 1,471 Accrued interest 450 455 Other assets and liabilities (66,824) (36,486) ------- -------- 373,123 426,832 ------- ------- Cash flows from investing activities Additions to property, plant and equipment (228,902) (249,500) Cash received from divestitures 50 6,838 Cash paid for acquisitions and licenses (12,327) (312,615) Other investing activities 1,107 (1,215) ----- ------ (240,072) (556,492) -------- -------- Cash flows from financing activities Issuance of notes payable - 100,000 Repayment of notes payable - (50,000) Common shares reissued for benefit plans, net of tax payments (405) (1,878) Common shares repurchased (19,332) (14,516) Excess tax benefit from stock awards 4 896 Payment of debt issuance costs (4,309) - Distributions to noncontrolling interests (4,060) (6,022) Other financing activities (25) (2,198) --- ------ (28,127) 26,282 ------- ------ Net increase (decrease) in cash and cash equivalents 104,924 (103,378) Cash and cash equivalents Beginning of period 170,996 204,533 ------- ------- End of period $275,920 $101,155 ======== ========

SOURCE U.S. Cellular