XML 39 R11.htm IDEA: XBRL DOCUMENT
v2.4.0.8

Acquisitions, Divestitures and Exchanges | 6 Months Ended
--- | ---
Jun. 30, 2013
Disclosure Text Block |
Acquisitions, Divestitures and Exchanges | 5. Acquisitions, Divestitures and Exchanges U.S. Cellular assesses its existing wireless interests on an ongoing basis with a goal of improving the competitiveness of its operations and maximizing its long-term return on investment. As part of this strategy, U.S. Cellular reviews attractive opportunities to acquire additional operating markets and wireless spectrum. In addition, U.S. Cellular may seek to divest outright or include in exchanges for other wireless interests those interests that are not strategic to its long-term success. Acquisitions did not have a material impact o n U.S. Cellular's consolidated financial statements for the periods presented and pro forma results, assuming acquisitions had occurred at the beginning of each period presented, would not be materially different from the results reported. Divestiture Transaction On November 6, 2012, U.S. Cellular entered into a Purchase and Sale Agreement with subsidiaries of Sprint Nextel Corporation (“Sprint”). Pursuant to t he Purchase and Sale Agreement, on May 16, 2013, U.S. Cellular transfer red customers and certain PCS license spectrum to Sprint in U.S. Cellular's Chicago, central Illinois, St. Louis and certain Indiana/Michigan/Ohio markets (“Divestiture Markets”) in consideration for $480 million in cash. The Purchase and Sale Agreement also contemplate d certain other agreements, together with the Purchase and Sale Agreement collectively referred to as the “Divestiture Transaction.” U.S. Cellular has retain ed other assets and liabilities related to the Divestiture Markets, including network assets, retail stores and related equipment, and other buildings and facilities. The transaction does not affect spectrum licenses held by U.S. Cellular or variable interest entities (“VIEs”) that are not currently used in the operations of the D ivestiture Markets. Pursuant to t he Purchase and Sale Agreement, U.S. Cellular and Sprint also entered into certain other agreements, including customer and network transition services agreements, which require U.S. Cellular to provide customer, billing and network services to Sprint for a period of up to 24 months after the May 16, 2013 closing date. Sprint will reimburse U.S. Cellular for providing such services at an amount equal to U.S. Cellular's cost, including applicable overhead allocations. In addition, these agreements require Sprint to reimburse U.S. Cellular up to $200 million (the “Sprint Cost Reimbursement”) for certain network decommissioning costs, network site lease rent and termination costs, network access termination costs, and employee termination benefits for specified engineering employees. It is estimated that u p to $160 million of the Sprint Cost Reimbursement will be recorded in (Gain) loss on sale of business and other exit costs, net and up to $40 million of the Sprint Cost Reimbursement will be recorded in System operations in the Consolidated Statement of Operations. Financial impacts of the Divestiture Transaction are classified in the Consolidated Statement of Operations within Operating income. The table below describes the amounts U.S. Cellular has recognize d and expects to recognize in the Consolidated Statement of Operations between the date the Purchase and Sale Agreement was signed and the end of the transition services period.
(Dollars in thousands) | Expected Period of Recognition |  | Projected Range |  | Cumulative Amount Recognized as of June 30, 2013 |  | Actual Amount Recognized Six Months Ended June 30, 2013 |  | Actual Amount Recognized Three Months Ended June 30, 2013
(Gain) loss on sale of business and other exit costs, net |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Proceeds from Sprint |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Purchase price |  | 2013 |  | $ | (480,000) |  | $ | (480,000) |  | $ | (480,000) |  | $ | (480,000) |  | $ | (480,000)
|  | Sprint Cost Reimbursement |  | 2013-2014 |  |  | (120,000) |  |  | (160,000) |  |  | (8) |  |  | (8) |  |  | (8)
| Net assets transferred |  | 2013 |  |  | 213,593 |  |  | 213,593 |  |  | 213,593 |  |  | 213,593 |  |  | 213,593
| Non-cash charges for the write-off and write-down of property under construction and related assets |  | 2012-2013 |  |  | 11,000 |  |  | 15,000 |  |  | 10,753 |  |  | 81 |  |  | (141)
| Employee related costs including severance, retention and outplacement |  | 2012-2014 |  |  | 16,000 |  |  | 25,000 |  |  | 15,712 |  |  | 3,103 |  |  | 53
| Contract termination costs |  | 2012-2014 |  |  | 125,000 |  |  | 175,000 |  |  | 16,664 |  |  | 16,605 |  |  | 13,705
| Transaction costs |  | 2012-2013 |  |  | 4,000 |  |  | 6,000 |  |  | 4,856 |  |  | 3,719 |  |  | 2,801
|  | Total (Gain) loss on sale of business and other exit costs, net |  |  |  | $ | (230,407) |  | $ | (205,407) |  | $ | (218,430) |  | $ | (242,907) |  | $ | (249,997)
Depreciation, amortization and accretion expense |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Incremental depreciation, amortization and accretion, net of salvage values |  | 2012-2014 |  |  | 175,000 |  |  | 210,000 |  |  | 108,382 |  |  | 88,324 |  |  | 50,278
Other Operating expenses |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Non-cash charges for the write-off and write-down of various operating assets and liabilities |  | 2013 |  |  | - |  |  | 10,000 |  |  | - |  |  | - |  |  | -
(Increase) decrease in Operating income |  |  |  | $ | (55,407) |  | $ | 14,593 |  | $ | (110,048) |  | $ | (154,583) |  | $ | (199,719)
Incremental depreciation, amortization and accretion, net of salvage values represents anticipated amounts to be recorded in the specified time periods as a result of a change in estimate for the remaining useful life and salvage value of certain assets and a change in estimate which accelerated the settlement dates of certain asset retirement obligations in conjunction with the Divestiture Transaction. Specifically, for the years indicated, this is estimated depreciation, amortization and accretion recorded on assets and liabilities of the Divestiture Markets after the November 6, 2012 transaction date less depreciation, amortization and accretion that would have been recorded on such assets and liabilities in the normal course, absent the Divestiture Transaction.
| As a result of the transaction, U.S. Cellular recognized the following amounts in the Consolidated Balance Sheet:
|  |  |  |  |  | Six Months Ended June 30, 2013 |  |  |
(Dollars in thousands) | Balance December 31, 2012 |  | Costs Incurred |  | Cash Settlements (1) |  | Non-cash Settlements |  | Adjustments |  | Other |  | Balance June 30, 2013
Accrued compensation |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Employee related costs including severance, retention, outplacement | $ | 12,305 |  | $ | 6,037 |  | $ | (10,282) |  | $ | - |  | $ | (2,934) |  | $ | 372 |  | $ | 5,498
Other current liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Contract termination costs | $ | 30 |  | $ | 10,183 |  | $ | (3,405) |  | $ | - |  | $ | - |  | $ | 942 |  | $ | 7,750
Other deferred liabilities and credits |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Contract termination costs | $ | - |  | $ | 6,421 |  | $ | - |  | $ | - |  | $ | - |  | $ | - |  | $ | 6,421
(1) | Cash settlement amounts are included in either the Net income or changes in Other assets and liabilities line items as part of Cash flows from operating activities on the Consolidated Statement of Cash Flows.
Other Acquisitions, Divestitures and Exchanges On June 28, 2013, U.S. Cellular entered into a definitive agreement to sell the majority of its Mississippi Valley non-operating market license (“unbuilt license”) for $308.0 million. The transaction is subject to regulatory approval and is expected to close by the end of 2013. In addition, the U.S. Cellular Board of Directors approved the sale of U.S. Cellular's St. Louis area unbuilt license. In accordance with GAAP, the book value of both licenses ha s been accounted for and disclosed as “held for sale” in the Consolidated Balance Sheet at June 30, 2013.
| U.S. Cellular acquisitions during the six months ended June 30, 2013 and 2012 and the allocation of the purchase price for these acquisitions were as follows:
|  |  |  |  |  | Allocation of Purchase Price
|  |  | Purchase Price (1) |  | Goodwill |  | Licenses |  | Intangible Assets Subject to Amortization |  | Net Tangible Assets/(Liabilities)
(Dollars in thousands) |  |  |  |  |  |  |  |  |  |  |  |  |  |
2013 |  |  |  |  |  |  |  |  |  |  |  |  |  |
Licenses | $ | 14,150 |  | $ | - |  | $ | 14,150 |  | $ | - |  | $ | -
| Total | $ | 14,150 |  | $ | - |  | $ | 14,150 |  | $ | - |  | $ | -
2012 |  |  |  |  |  |  |  |  |  |  |  |  |  |
Licenses | $ | 12,647 |  | $ | - |  | $ | 12,647 |  | $ | - |  | $ | -
| Total | $ | 12,647 |  | $ | - |  | $ | 12,647 |  | $ | - |  | $ | -
(1) | Cash amounts paid for acquisitions may differ from the purchase price due to cash acquired in the transactions and the timing of cash payments related to the respective transactions.
| At June 30, 2013 and December 31, 2012, the following assets and liabilities were classified in the Consolidated Balance Sheet as "Assets held for sale" and "Liabilities held for sale":
|  |  | Current Assets |  | Licenses |  | Goodwill |  | Property, Plant and Equipment |  | Loss on Assets Held for Sale (1) |  | Total Assets Held for Sale |  | Liabilities Held for Sale (2)
(Dollars in thousands) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
June 30, 2013 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Divestiture of Missouri Market (3) | $ | 633 |  | $ | 2,909 |  | $ | 669 |  | $ | 3,179 |  | $ | (857) |  | $ | 6,533 |  | $ | 559
Divestiture of Spectrum Licenses |  | - |  |  | 71,856 |  |  | - |  |  | - |  |  | - |  |  | 71,856 |  |  | -
| Total | $ | 633 |  | $ | 74,765 |  | $ | 669 |  | $ | 3,179 |  | $ | (857) |  | $ | 78,389 |  | $ | 559
December 31, 2012 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Divestiture Transaction | $ | - |  | $ | 140,599 |  | $ | 72,994 |  | $ | - |  | $ | - |  | $ | 213,593 |  | $ | 19,594
Bolingbrook Customer Care Center (4) |  | - |  |  | - |  |  | - |  |  | 4,275 |  |  | (1,105) |  |  | 3,170 |  |  | -
| Total | $ | - |  | $ | 140,599 |  | $ | 72,994 |  | $ | 4,275 |  | $ | (1,105) |  | $ | 216,763 |  | $ | 19,594
(1) | Loss on assets held for sale was recorded in (Gain) loss on sale of business and other exit costs, net in the Consolidated Statement of Operations.
(2) | Liabilities held for sale primarily consisted of Customer deposits and deferred revenues.
(3) | On May 15, 2013, U.S. Cellular entered into an agreement with a third party to sell the subscribers, spectrum and the network assets for a Missouri market.
(4) | Effective January 1, 2013, U.S. Cellular transferred its Bolingbrook Customer Care Center operations to an existing third party vendor.

X
- Details
Name: | us-gaap_DisclosureTextBlockAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for business combinations, including leverage buyout transactions (as applicable), and divestitures. This may include a description of a business combination or divestiture (or series of individually immaterial business combinations or divestitures) completed during the period, including background, timing, and assets and liabilities recognized and reclassified or sold. This element does not include fixed asset sales and plant closings. + References No definition available. + Details
Name: | us-gaap_MergersAcquisitionsAndDispositionsDisclosuresTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration