EX-99 3 usmq105exhibit991.htm

Exhibit 99.1

As previously announced, TDS and USM will hold a joint teleconference April 27, 2005 at 10:00 a.m. Chicago time. Interested parties may listen to the call live on the U.S. Cellular web site at www.uscellular.com in the Conference Call page of the Investor Relations section.


Contact: Kenneth R. Meyers, Executive Vice President - Finance - U.S. Cellular
(773) 399-8900 kmeyers@uscellular.com

Mark A. Steinkrauss, Vice President, Corporate Relations - TDS
(312) 592-5384 mark.steinkrauss@teldta.com


FOR RELEASE: IMMEDIATE

U.S. CELLULAR REPORTS FIRST QUARTER RESULTS
Surpasses 5 Million Customer Milestone

CHICAGO — April 27, 2005 — United States Cellular Corporation [AMEX:USM] reported service revenues of $668.8 million for the first quarter of 2005, up 8% from $619.4 million in the comparable period a year ago. During the quarter, U.S. Cellular crossed the five million customer mark, totaling 5,127,000 customers at quarter end. The company recorded operating income of $36.2 million during the quarter compared to $28.3 million in the first quarter of 2004. Net income and basic earnings per share were $16.9 million and $0.20, respectively, compared to net income and basic earnings per share of $9.2 million and $0.11, respectively, in the comparable period one year ago.

First quarter 2005 operating results do not include any results from operations of the south Texas markets that were sold to AT&T Wireless Services, Inc., now a subsidiary of Cingular Wireless LLC, in February 2004, or results of operations from the markets sold to ALLTEL Communications, Inc. in November 2004. The markets sold in 2004 contributed $11.5 million of service revenues in the first quarter of 2004.

First Quarter Highlights

  • Customers totaled 5,127,000, a 13% increase from 4,547,000 customers one year earlier.

  • Net customer activations from distribution channels totaled 182,000 during the quarter, compared to 196,000 activations for the same quarter of 2004. The 182,000 net customer activations includes 123,000 retail and 59,000 reseller customer activations.

  • For the quarter, the company recorded post-pay churn of 1.5%, which is favorable to industry averages.


President’s Comments
“We are starting this year on a very strong note, recording 182,000 new customer additions from distribution channels in our first quarter. This exceptional performance caused us to surpass the five million customer mark during the quarter with customer unit activations at quarter-end totaling 5,127,000. Service revenues grew 8% from a year ago, primarily reflecting customer growth and increased data revenues, despite the sale of several properties,” said John E. Rooney, president and chief executive officer.

“During the last 15 months we have continued to grow and enhance our easyedgeSM wireless data applications and we have more enhancements to come later this year. Customer demand for data services has been strong. We recorded $29 million of data revenues in the quarter, up from $11 million in the first quarter a year ago. We expect this growth to continue as more customers become familiar with our service offerings and as we increase the number of new applications. Last month, for example, we added AOL® Instant MessagingTM, a feature we expect to be very popular. We are also planning to introduce intercarrier picture messaging before year end.

“Our success is due to our dedicated associates, who are focused on providing the very best in customer satisfaction. Their passion and commitment resulted in U.S. Cellular having once again one of the lowest customer churn rates in the industry. During the quarter, post-pay churn was 1.5%, and all-in churn was 1.6%. Another testimony that our customer satisfaction strategy is a successful one was noted by Consumers Union, publisher of CONSUMER REPORTS magazine. Consumers Union, in its analysis of FCC data, found that U.S. Cellular had the lowest number of complaints per million customers of the eight largest wireless carriers in the U.S.”

“The three new markets we launched in the third quarter of 2004, Portland, Maine; Oklahoma City; and Lincoln, Nebraska, continue to perform well. This year we are focused on launching commercial service in one major new market, St. Louis, Missouri, in the third quarter. The St. Louis launch will be larger in scale than the Oklahoma City, Portland and Lincoln launches combined. Much of the network to support the St. Louis market is up and running, and we have been hiring and training associates for several months. We are excited about offering service in St. Louis, as we feel it will greatly enhance the value of our existing franchise, particularly for customers in the Midwest.”

As previously announced, TDS and U.S. Cellular will hold a joint teleconference April 27, 2005, at 10:00 a.m. Chicago time. Interested parties may listen to the call live over the Internet by accessing http://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=67422&eventID=1054136, or the conference call page of the Investor Relations section of www.uscellular.com, or connect by telephone at 888/245-6674 with a pass code of 5585317. The conference call will be archived on the conference call section of our web site at www.uscellular.com. Prior to the start of the call, certain financial and statistical information discussed during the conference call comments will be posted to the web site, together with reconciliations to generally accepted accounting principles (GAAP) of any non-GAAP information to be disclosed. Investors may access this additional information on the conference call page of the Investor Relations section of the U.S. Cellular web site.

As of March 31, U.S. Cellular Corporation, the nation’s seventh largest wireless service carrier, provided wireless service to 5.1 million customers in 25 states. The Chicago-based company operates on a customer satisfaction strategy, meeting customer needs by providing a comprehensive range of wireless products and services, superior customer support and a high-quality network.

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

2


statements. This includes all statements about the company’s plans, beliefs, estimates and expectations. These statements are based on current estimates and projections, 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: changes in circumstances or events that may affect the ability of the company to launch up the operations of the licensed areas involved in the AT&T Wireless transaction completed in August 2003; the ability of the company to successfully manage and grow the operations of the Chicago MTA and newly launched markets; changes in the overall economy; changes in competition in the markets in which the company operates; changes due to industry consolidation; advances in telecommunications technology; the impact of wireless local number portability; changes in the telecommunications regulatory environment; changes in the value of investments, including variable prepaid forward contracts; an adverse change in the ratings afforded our debt securities by nationally accredited ratings organizations; pending and future litigation; acquisitions/divestitures of properties and/or licenses; and changes in customer growth rates, average monthly revenue per unit, churn rates, roaming rates and the mix of products and services offered in the company’s markets. 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, which are incorporated by reference herein.

U.S. Cellular’s web site is www.uscellular.com

3


UNITED STATES CELLULAR CORPORATION
SUMMARY OPERATING DATA


Quarter Ended      3/31/05    12/31/04    9/30/04    6/30/04    3/31/04  
   
Consolidated Markets:  
    Total population (000s) (1)    44,576    44,391    45,581    45,581    45,581  
    All customers -  
      Customer units    5,127,000    4,945,000    4,828,000    4,684,000    4,547,000  
      Gross customer unit activations    426,000    408,000    387,000    365,000    397,000  
      Net customer unit activations    182,000    150,000    144,000    137,000    196,000  
      Market penetration (1)    11.50 %  11.14 %  10.59 %  10.28 %  9.98 %
    Retail customers -  
      Customer units    4,601,000    4,478,000    4,395,000    4,284,000    4,180,000  
      Gross customer unit activations    365,000    358,000    354,000    328,000    345,000  
      Net customer unit activations    123,000    105,000    111,000    104,000    144,000  

    Cell sites in service
    4,899    4,856    4,713    4,420    4,122  
    Average monthly revenue per unit (2)   $ 44.28   $ 46.12   $ 48.49   $ 47.79   $ 46.16  
      Retail service revenue per unit (2)   $ 39.04   $ 40.55   $ 41.51   $ 41.58   $ 40.26  
      Inbound roaming revenue per unit (2)   $ 1.98   $ 2.47   $ 3.39   $ 3.21   $ 3.17  
      Long-distance/other revenue per unit (2)   $ 3.26   $ 3.10   $ 3.59   $ 3.00   $ 2.73  
    Minutes of use (MOU) (3)    584    568    553    542    491  
    Postpay churn rate per month (4)    1.5 %  1.6 %  1.6 %  1.5 %  1.3 %
    Marketing cost per gross  
      customer unit addition (5)   $ 394   $ 442   $ 410   $ 392   $ 371  
    Capital Expenditures ($000s)   $ 112,243   $ 260,358   $ 131,648   $ 162,579   $ 100,535  

(1) Market penetration is calculated using 2004 Claritas population estimates for 3/31/05 and 2003 Claritas estimates for all periods of 2004. "Total population" represents the total population of each of U.S. Cellular's consolidated markets, regardless of whether the market has begun marketing operations. The 12/31/04 total population counts exclude the population of the two markets sold to ALLTEL in November 2004. The 9/30/04, 6/30/04 and 3/31/04 total population counts include the population of the market added to consolidated operations as of 1/1/04, but exclude the population of the six markets sold to AT&T Wireless (now Cingular Wireless) in February 2004. The population of markets in which U.S. Cellular has deferred the transfer of licenses from AT&T Wireless (now Cingular Wireless) are not included in the total population counts for any period.
(2) Per unit revenue measurements are derived from Service Revenues as reported in Financial Highlights for each respective quarter as follows:
Service Revenues per Financial Highlights     $ 668,792   $ 673,223   $ 691,964   $ 662,658   $ 619,382  
Components:  
   Retail service revenue during quarter   $ 589,674   $ 591,972   $ 592,411   $ 576,541   $ 540,228  
   Inbound roaming revenue during quarter   $ 29,883   $ 36,027   $ 48,402   $ 44,516   $ 42,499  
   Long-distance/other revenue during quarter   $ 49,235   $ 45,224   $ 51,151   $ 41,601   $ 36,655  
Divided by average customers during quarter (000s)    5,035    4,866    4,757    4,622    4,473  
Divided by three months in each quarter    3    3    3    3    3  

Average monthly revenue per unit   $ 44.28   $ 46.12   $ 48.49   $ 47.79   $ 46.16  
Retail service revenue per unit   $ 39.04   $ 40.55   $ 41.51   $ 41.58   $ 40.26  
Inbound roaming revenue per unit   $ 1.98   $ 2.47   $ 3.39   $ 3.21   $ 3.17  
Long-distance/other revenue per unit   $ 3.26   $ 3.10   $ 3.59   $ 3.00   $ 2.73  

(3) Average monthly local minutes of use per customer (without roaming).
(4) Postpay churn rate per month is calculated by dividing the average monthly postpay customer disconnects during the quarter by the average postpay customer base for the quarter.
(5) Due to changes in accounting for agent rebates and net customer retention expenses, for all periods shown this measurement is no longer calculable using information from the financial statements as reported. The details of this calculation and a reconciliation to line items reported in Financial Highlights for each respective quarter are shown on U.S. Cellular's web site, along with additional information related to U.S. Cellular's first quarter results, at www.uscellular.com.

4


UNITED STATES CELLULAR CORPORATION
FINANCIAL HIGHLIGHTS
Three Months Ended March 31
(Unaudited, dollars in thousands, except per share amounts)


Increase (Decrease)

2005 2004 Amount Percent




Operating Revenues                    
     Service   $ 668,792   $ 619,382   $ 49,410    8.0%
     Equipment sales    39,643    38,268    1,375    3.6%



         Total Operating Revenues    708,435    657,650    50,785    7.7%



Operating Expenses   
     System operations (excluding depreciation shown below)    140,066    137,523    2,543    1.8%
     Cost of equipment sold    126,893    119,888    7,005    5.8%
     Selling, general and administrative    277,989    258,206    19,783    7.7%
     Depreciation, amortization and accretion    127,250    113,894    13,356    11.7%
     (Gain) on assets held for sale    --    (143 )  143    N/M



         Total Operating Expenses    672,198    629,368    42,830    6.8%



Operating Income     36,237    28,282    7,955    28.1%



     Investment income    13,919    14,287    (368 )  (2.6%)
     Interest and dividend income    2,036    378    1,658    N/M
     Interest (expense)    (20,738 )  (20,315 )  (423 )  (2.1%)
     Gain on investments    551    --    551    N/M
     Other income, net    200    373    (173 )  (46.4%)



     (4,032 )  (5,277 )  1,245    23.6%



Income Before Income Taxes and Minority Interest     32,205    23,005    9,200    40.0%
Income tax expense    12,803    11,661    1,142    9.8%



Income Before Minority Interest     19,402    11,344    8,058    71.0%
Minority share of income    (2,504 )  (2,112 )  (392 )  (18.6%)



Net Income    $ 16,898   $ 9,232   $ 7,666    83.0%



Basic Weighted Average Common Shares Outstanding (000s)     86,405    86,153    252    0.3%



Basic Earnings (Loss) Per Share    $ 0.20   $ 0.11   $ 0.09    81.8%



Diluted Weighted Average Common Shares Outstanding (000s)     87,125    86,704    421    0.5%



Diluted Earnings (Loss) Per Share    $ 0.19   $ 0.11   $ 0.08    72.7%




N/M - Percentage change not meaningful


5


UNITED STATES CELLULAR CORPORATION
CONSOLIDATED BALANCE SHEET HIGHLIGHTS

(Unaudited, dollars in thousands)

ASSETS


March 31,
2005
December 31,
2004


Current Assets            
    Cash and cash equivalents   $ 30,866   $ 40,922  
    Accounts receivable    309,148    317,649  
    Inventory    69,751    76,918  
    Prepaid expenses    32,938    31,507  
    Deferred income tax asset    72,667    83,741  
    Other current assets    14,998    28,214  


     530,368    578,951  


Investments   
    Licenses    1,358,725    1,228,801  
    Goodwill    425,908    425,918  
    Customer list, net    22,615    24,915  
    Marketable equity securities    274,079    282,829  
    Investments in unconsolidated entities, net    176,367    162,764  
    Notes and interest receivable--long-term    4,778    4,885  


     2,262,472    2,130,112  


Property, Plant and Equipment   
    In service and under construction    4,216,083    4,130,551  
    Less accumulated depreciation    1,787,613    1,690,832  


     2,428,470    2,439,719  


Other Assets and Deferred Charges     31,954    33,145  


Total Assets    $ 5,253,264   $ 5,181,927  



NOTE: Certain December 31, 2004 amounts have been changed to conform to current period presentation.


6a


UNITED STATES CELLULAR CORPORATION
CONSOLIDATED BALANCE SHEET HIGHLIGHTS

(Unaudited, dollars in thousands)

LIABILITIES AND SHAREHOLDERS' EQUITY


March 31,
2005
December 31,
2004


Current Liabilities            
    Notes payable   $ 135,000   $ 30,000  
    Accounts payable  
       Affiliates    5,412    5,314  
       Trade    197,766    254,926  
    Customer deposits and deferred revenues    107,909    104,578  
    Accrued taxes    86,833    78,624  
    Accrued compensation    25,921    49,116  
    Other current liabilities    35,045    24,308  


     593,886    546,866  


Long-term Debt   
    Long-term debt    1,001,044    1,000,930  
    Forward contracts    159,856    159,856  


     1,160,900    1,160,786  


Deferred Liabilities and Credits     845,564    845,812  


Minority Interest     42,796    40,373  


Common Shareholders' Equity   
    Common Shares, par value $1 per share    55,046    55,046  
    Series A Common Shares, par value $1 per share    33,006    33,006  
    Additional paid-in capital    1,290,104    1,302,496  
    Treasury Shares    (79,229 )  (99,627 )
    Accumulated other comprehensive income    28,516    31,393  
    Retained earnings    1,282,675    1,265,776  


     2,610,118    2,588,090  


Total Liabilities and Shareholders' Equity    $ 5,253,264   $ 5,181,927  



NOTE: Certain December 31, 2004 amounts have been changed to conform to current period presentation.


6b