Edgar Filing: UNITED STATES CELLULAR CORP

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2013

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 1-9712

UNITED STATES CELLULAR CORPORATION

(Exact name of Registrant as specified in its charter)

Delaware

62-1147325

(State or other jurisdiction of incorporation or organization)

(IRS Employer Identification No.)

8410 West Bryn Mawr, Chicago, Illinois 60631

(Address of principal executive offices) (Zip code)

Registrant's telephone number, including area code: (773) 399-8900

Indicate by check mark

Yes

• whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

• whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

• whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

• whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

Class

Outstanding at March 31, 2013

Common Shares, $1 par value

50,685,294 Shares

Series A Common Shares, $1 par value

33,005,877 Shares

United States Cellular Corporation

Quarterly Report on Form 10-Q
For the Quarterly Period Ended March 31, 2013

Index

				Page No.
Part I.	Financial Information

	Item 1.	Financial Statements (Unaudited)		1

		Consolidated Statement of Operations		1
			Three Months Ended March 31, 2013 and 2012

		Consolidated Statement of Cash Flows		2
			Three Months Ended March 31, 2013 and 2012

		Consolidated Balance Sheet		3
			March 31, 2013 and December 31, 2012

		Consolidated Statement of Changes in Equity		5
			Three Months Ended March 31, 2013 and 2012

		Notes to Consolidated Financial Statements		7

	Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations		16

		Overview		16
		Divestiture Transaction		18
		2013 Estimates		18
		Results of Operations		20
		Recent Accounting Pronouncements		25
		Financial Resources		25
		Liquidity and Capital Resources		27
		Application of Critical Accounting Policies and Estimates		30
		Safe Harbor Cautionary Statement		31

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk		34

	Item 4.	Controls and Procedures		35

Part II.	Other Information			36

	Item 1.	Legal Proceedings		36

	Item 1A.	Risk Factors		36

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		36

	Item 5.	Other Information		37

	Item 6.	Exhibits		38

Signatures

Part I. Financial Information
Item 1. Financial Statements

United States Cellular Corporation

Consolidated Statement of Operations (Unaudited)

			Three Months Ended
			March 31,
(Dollars and shares in thousands, except per share amounts)			2013		2012
Operating revenues
	Service		$	996,349	$	1,023,820
	Equipment sales			85,397		68,301
		Total operating revenues		1,081,746		1,092,121

Operating expenses
	System operations (excluding Depreciation, amortization and accretion reported below)			216,299		233,164
	Cost of equipment sold			241,691		187,036
	Selling, general and administrative (including charges from affiliates of $23.5 million and $26.0 million, respectively)			420,080		442,244
	Depreciation, amortization and accretion			189,845		146,685
	Loss on asset disposals, net			5,434		2,003
	(Gain) loss on sale of business and other exit costs, net			6,931		(4,213)
		Total operating expenses		1,080,280		1,006,919

Operating income				1,466		85,202

Investment and other income (expense)
	Equity in earnings of unconsolidated entities			26,835		21,614
	Interest and dividend income			903		1,043
	Interest expense			(10,910)		(13,411)
	Other, net			(215)		202
		Total investment and other income (expense)		16,613		9,448

Income before income taxes				18,079		94,650
	Income tax expense			7,369		25,638

Net income				10,710		69,012
	Less: Net income attributable to noncontrolling interests, net of tax			(5,796)		(6,520)
Net income attributable to U.S. Cellular shareholders			$	4,914	$	62,492

Basic weighted average shares outstanding				83,838		84,570
Basic earnings per share attributable to U.S. Cellular shareholders			$	0.06	$	0.74

Diluted weighted average shares outstanding				84,403		85,133
Diluted earnings per share attributable to U.S. Cellular shareholders			$	0.06	$	0.73

The accompanying notes are an integral part of these consolidated financial statements.

United States Cellular Corporation

Consolidated Statement of Cash Flows (Unaudited)
			Three Months Ended
			March 31,
(Dollars in thousands)			2013		2012
Cash flows from operating activities
	Net income		$	10,710	$	69,012
	Add (deduct) adjustments to reconcile net income to net cash flows from operating activities
		Depreciation, amortization and accretion		189,845		146,685
		Bad debts expense		16,910		13,850
		Stock-based compensation expense		5,036		5,391
		Deferred income taxes, net		7,048		6,283
		Equity in earnings of unconsolidated entities		(26,835)		(21,614)
		Distributions from unconsolidated entities		5,836		2,822
		Loss on asset disposals, net		5,434		2,003
		(Gain) loss on sale of business and other exit costs, net		6,931		(4,213)
		Noncash interest expense		262		451
		Other operating activities		250		449
	Changes in assets and liabilities from operations
		Accounts receivable		33,611		36,621
		Inventory		16,750		(4,410)
		Accounts payable - trade		4,644		(17,689)
		Accounts payable - affiliate		(1,933)		2,989
		Customer deposits and deferred revenues		8,862		9,512
		Accrued taxes		6,175		79,765
		Accrued interest		9,201		9,167
		Other assets and liabilities		(75,122)		(80,107)
				223,615		256,967

Cash flows from investing activities
	Cash used for additions to property, plant and equipment			(151,024)		(209,160)
	Cash paid for acquisitions and licenses			(14,150)		(11,096)
	Cash received from divestitures			-		49,786
	Cash paid for investments			-		(10,000)
	Cash received for investments			-		10,000
	Other investing activities			3,654		296
				(161,520)		(170,174)

Cash flows from financing activities
	Repayment of long-term debt			(61)		(12)
	Common shares reissued for benefit plans, net of tax payments			123		357
	Common shares repurchased			(18,425)		-
	Distributions to noncontrolling interests			(2,396)		(218)
	Other financing activities			2		3
				(20,757)		130

Net increase in cash and cash equivalents				41,338		86,923

Cash and cash equivalents
	Beginning of period			378,358		424,155
	End of period		$	419,696	$	511,078

The accompanying notes are an integral part of these consolidated financial statements.

United States Cellular Corporation

Consolidated Balance Sheet — Assets (Unaudited)
(Dollars in thousands)			March 31, 2013		December 31, 2012
Current assets
	Cash and cash equivalents		$	419,696	$	378,358
	Short-term investments			110,585		100,676
	Accounts receivable
		Customers and agents, less allowances of $24,106 and $24,290, respectively		314,463		349,424
		Roaming		29,132		31,782
		Affiliated		44		375
		Other, less allowances of $1,692 and $2,612, respectively		51,062		63,639
	Inventory			139,136		155,886
	Income taxes receivable			2,776		1,612
	Prepaid expenses			64,365		62,560
	Net deferred income tax asset			36,302		35,419
	Other current assets			17,111		16,745
				1,184,672		1,196,476

Assets held for sale				213,593		216,763

Investments
	Licenses			1,470,944		1,456,794
	Goodwill			421,743		421,743
	Customer lists, net of accumulated amortization of $96,843 and $96,809, respectively			68		102
	Investments in unconsolidated entities			165,529		144,531
	Long-term investments			40,142		50,305
				2,098,426		2,073,475
Property, plant and equipment
	In service and under construction			7,562,931		7,478,428
	Less: Accumulated depreciation			4,614,423		4,455,840
				2,948,508		3,022,588

Other assets and deferred charges				78,436		78,148

Total assets			$	6,523,635	$	6,587,450

The accompanying notes are an integral part of these consolidated financial statements.

United States Cellular Corporation

Consolidated Balance Sheet — Liabilities and Equity (Unaudited)
(Dollars and shares in thousands)					March 31, 2013		December 31, 2012
Current liabilities
	Current portion of long-term debt				$	93	$	92
	Accounts payable
		Affiliated				8,792		10,725
		Trade				281,762		310,936
	Customer deposits and deferred revenues					202,209		192,113
	Accrued taxes					43,357		35,834
	Accrued compensation					50,698		90,418
	Other current liabilities					98,657		114,881
						685,568		754,999

Liabilities held for sale						18,360		19,594

Deferred liabilities and credits
	Net deferred income tax liability					857,439		849,818
	Other deferred liabilities and credits					292,687		288,441

Long-term debt						878,975		878,858

Commitments and contingencies						-		-

Noncontrolling interests with redemption features						466		493

Equity
	U.S. Cellular shareholders' equity
		Series A Common and Common Shares
			Authorized 190,000 shares (50,000 Series A Common and 140,000 Common Shares)
			Issued 88,074 shares (33,006 Series A Common and 55,068 Common Shares)
			Outstanding 83,691 shares (33,006 Series A Common and 50,685 Common Shares) and 84,168 shares (33,006 Series A Common and 51,162 Common Shares), respectively
			Par Value ($1 per share) ($33,006 Series A Common and $55,068 Common Shares)			88,074		88,074
		Additional paid-in capital				1,417,308		1,412,453
		Treasury shares, at cost, 4,383 and 3,906 Common Shares, respectively				(183,385)		(165,724)
		Retained earnings				2,403,325		2,399,052
			Total U.S. Cellular shareholders' equity			3,725,322		3,733,855

	Noncontrolling interests					64,818		61,392

				Total equity		3,790,140		3,795,247

Total liabilities and equity					$	6,523,635	$	6,587,450

The accompanying notes are an integral part of these consolidated financial statements.

United States Cellular Corporation

Consolidated Statement of Changes in Equity (Unaudited)

	U.S. Cellular Shareholders
(Dollars in thousands)	Series A Common and Common Shares		Additional Paid-In Capital		Treasury Shares		Retained Earnings		Total U.S. Cellular Shareholders' Equity		Noncontrolling Interests		Total Equity
Balance, December 31, 2012	$	88,074	$	1,412,453	$	(165,724)	$	2,399,052	$	3,733,855	$	61,392	$	3,795,247
Add (Deduct)
Net income attributable to U.S. Cellular shareholders		-		-		-		4,914		4,914		-		4,914
Net income attributable to noncontrolling interests classified as equity		-		-		-		-		-		5,822		5,822
Repurchase of Common Shares		-		-		(18,425)		-		(18,425)		-		(18,425)
Incentive and compensation plans		-		-		764		(641)		123		-		123
Stock-based compensation awards		-		5,036		-		-		5,036		-		5,036
Tax windfall (shortfall) from stock awards		-		(181)		-		-		(181)		-		(181)
Distributions to noncontrolling interests		-		-		-		-		-		(2,396)		(2,396)
Balance, March 31, 2013	$	88,074	$	1,417,308	$	(183,385)	$	2,403,325	$	3,725,322	$	64,818	$	3,790,140

The accompanying notes are an integral part of these consolidated financial statements.

United States Cellular Corporation

Consolidated Statement of Changes in Equity (Unaudited)

	U.S. Cellular Shareholders
(Dollars in thousands)	Series A Common and Common Shares		Additional Paid-In Capital		Treasury Shares		Retained Earnings		Total U.S. Cellular Shareholders' Equity		Noncontrolling Interests		Total Equity
Balance, December 31, 2011	$	88,074	$	1,387,341	$	(152,817)	$	2,297,363	$	3,619,961	$	55,956	$	3,675,917
Add (Deduct)
Net income attributable to U.S. Cellular shareholders		-		-		-		62,492		62,492		-		62,492
Net income attributable to noncontrolling interests classified as equity		-		-		-		-		-		6,460		6,460
Incentive and compensation plans		-		189		597		(266)		520		-		520
Stock-based compensation awards		-		5,344		-		-		5,344		-		5,344
Tax windfall (shortfall) from stock awards		-		(29)		-		-		(29)		-		(29)
Distributions to noncontrolling interests		-		-		-		-		-		(218)		(218)
Balance, March 31, 2012	$	88,074	$	1,392,845	$	(152,220)	$	2,359,589	$	3,688,288	$	62,198	$	3,750,486

The accompanying notes are an integral part of these consolidated financial statements.

United States Cellular Corporation

Notes to Consolidated Financial Statements

1. Basis of Presentation

United States Cellular Corporation (“U.S. Cellular”), a Delaware Corporation, is an 85%-owned subsidiary of Telephone and Data Systems, Inc. (“TDS”).

The accounting policies of U.S. Cellular conform to accounting principles generally accepted in the United States of America (“GAAP”) as set forth in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”). The consolidated financial statements include the accounts of U.S. Cellular, its majority-owned subsidiaries, general partnerships in which U.S. Cellular has a majority partnership interest and certain entities in which U.S. Cellular has a variable interest that require consolidation under GAAP. All material intercompany accounts and transactions have been eliminated.

The consolidated financial statements included herein have been prepared by U.S. Cellular, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. However, U.S. Cellular believes that the disclosures included herein are adequate to make the information presented not misleading. These consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in U.S. Cellular’s Annual Report on Form 10-K (“Form 10-K”) for the year ended December 31, 2012.

The accompanying unaudited consolidated financial statements contain all adjustments (consisting of only normal recurring items, unless otherwise disclosed) necessary for a fair statement of the financial position as of March 31, 2013 and December 31, 2012, and the results of operations, cash flows and changes in equity for the three months ended March 31, 2013 and 2012. The Consolidated Statement of Comprehensive Income was not included because comprehensive income for the three months ended March 31, 2013 and 2012 equaled net income. These results are not necessarily indicative of the results to be expected for the full year.

Recent Accounting Pronouncements

As of March 31, 2013, there are no recent accounting pronouncements that are expected to have a material impact on U.S. Cellular’s financial position or results of operations.

Agent Liabilities

U.S. Cellular has relationships with agents, which are independent businesses that obtain customers for U.S. Cellular. At March 31, 2013 and December 31, 2012, U.S. Cellular had accrued $63.9 million and $88.2 million, respectively, for amounts due to agents, including rebates and commissions. These amounts are included in Other current liabilities in the Consolidated Balance Sheet.

Amounts Collected from Customers and Remitted to Governmental Authorities

If a tax is assessed upon the customer and U.S. Cellular merely acts as an agent in collecting the tax on behalf of the imposing governmental authority, then amounts collected from customers and remitted to governmental authorities are recorded on a net basis within a tax liability account in the Consolidated Balance Sheet. If the tax is assessed upon U.S. Cellular, then amounts collected from customers as recovery of the tax are recorded in Service revenues and amounts remitted to governmental authorities are recorded in Selling, general and administrative expenses in the Consolidated Statement of Operations. The amounts recorded gross in revenues that are billed to customers and remitted to governmental authorities totaled $32.1 million for the three months ended March 31, 2013, and $35.3 million for the three months ended March 31, 2012.

2. Fair Value Measurements

As of March 31, 2013 and December 31, 2012, U.S. Cellular did not have any financial assets or liabilities that were required to be recorded at fair value in its Consolidated Balance Sheet in accordance with GAAP. However, U.S. Cellular has applied the provisions of fair value accounting for purposes of computing the fair value of financial instruments for disclosure purposes as displayed below.

		Level within the Fair Value Hierarchy	March 31, 2013				December 31, 2012
		Level within the Fair Value Hierarchy	Book Value			Fair Value	Book Value		Fair Value
(Dollars in thousands)
Cash and cash equivalents		1	$	419,696	$	419,696	$	378,358	$	378,358
Short-term investments
	Government-backed securities	1		110,585		110,585		100,676		100,676
Long-term investments
	Government-backed securities	1		40,142		40,175		50,305		50,339
Long-term debt
	6.95% Senior Notes	1		342,000		363,067		342,000		376,610
	6.7% Senior Notes	2		532,256		585,423		532,194		582,744

Short-term investments and Long-term investments are both designated as held-to-maturity investments and recorded at amortized cost in the Consolidated Balance Sheet. Long-term investment maturities are 20 months at March 31, 2013. Government-backed securities include U.S. treasuries and corporate notes guaranteed under the Federal Deposit Insurance Corporation’s Temporary Liquidity Guarantee Program. Long-term debt excludes capital lease obligations and current portion of Long-term debt.

The fair values of Cash and cash equivalents and Short-term investments approximate their book values due to the short-term nature of these financial instruments. The fair value of Long-term debt, excluding capital lease obligations and the current portion of such Long-term debt, was estimated using market prices for the 6.95% Senior Notes, and discounted cash flow analysis using an estimated yield to maturity of 6.05% for the 6.7% Senior Notes at March 31, 2013.

As of March 31, 2013 and December 31, 2012, U.S. Cellular did not have nonfinancial assets or liabilities that required the application of fair value accounting for purposes of reporting such amounts in the Consolidated Balance Sheet.

3. Income Taxes

U.S. Cellular is included in a consolidated federal income tax return and in certain state income tax returns with other members of the TDS consolidated group. For financial statement purposes, U.S. Cellular and its subsidiaries compute their income tax expense as if they comprised a separate affiliated group and were not included in the TDS consolidated group.

U.S. Cellular’s overall effective tax rate on Income before income taxes for the three months ended March 31, 2013 and March 31, 2012 was 40.8% and 27.1%, respectively. The effective tax rate for the three months ended March 31, 2013 was higher than the rate for the three months ended March 31, 2012 primarily as a result of tax benefits related to the expiration of the statute of limitations for certain tax years and the adjustment of deferred tax balances related to certain partnership investments in 2012.

U.S. Cellular incurred a federal net operating loss in 2011 largely attributable to 100% bonus depreciation applicable to qualified capital expenditures. U.S. Cellular carried back this federal net operating loss to prior tax years and received a $66.8 million federal income tax refund in 2012 for carrybacks to 2009 and 2010 tax years. Of this amount, $58.1 million of the refund was received in the three months ended March 31, 2012.

4. Earnings Per Share

Basic earnings per share attributable to U.S. Cellular shareholders is computed by dividing Net income attributable to U.S. Cellular shareholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share attributable to U.S. Cellular shareholders is computed by dividing Net income attributable to U.S. Cellular shareholders by the weighted average number of common shares outstanding during the period adjusted to include the effects of potentially dilutive securities. Potentially dilutive securities primarily include incremental shares issuable upon exercise of outstanding stock options and the vesting of restricted stock units.

The amounts used in computing earnings per Common and Series A Common Share and the effects of potentially dilutive securities on the weighted average number of Common and Series A Common Shares were as follows:

		Three Months Ended March 31,
		2013		2012
(Dollars and shares in thousands, except per share amounts)
Net income attributable to U.S. Cellular shareholders		$	4,914	$	62,492

Weighted average number of shares used in basic earnings per share			83,838		84,570
Effects of dilutive securities:
	Stock options		44		135
	Restricted stock units		521		428
Weighted average number of shares used in diluted earnings per share			84,403		85,133

Basic earnings per share attributable to U.S. Cellular shareholders		$	0.06	$	0.74

Diluted earnings per share attributable to U.S. Cellular shareholders		$	0.06	$	0.73

Certain Common Shares issuable upon the exercise of stock options or vesting of restricted stock units were not included in average diluted shares outstanding for the calculation of Diluted earnings per share attributable to U.S. Cellular shareholders because their effects were antidilutive. The number of such Common Shares excluded, if any, is shown in the table below.

	Three Months Ended March 31,
	2013	2012
(Shares in thousands)
Stock options	2,468	1,444

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.

Divestiture Transaction

On November 6, 2012, U.S. Cellular entered into a Purchase and Sale Agreement with subsidiaries of Sprint Nextel Corporation (“Sprint”). The Purchase and Sale Agreement provides that U.S. Cellular will transfer customers and certain PCS licensed 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 at closing, subject to pro-rations of certain assets and liabilities. The Purchase and Sale Agreement also contemplates certain other agreements, together with the Purchase and Sale Agreement collectively referred to as the “Divestiture Transaction.” The transaction was approved by the FCC in March 2013 and the closing is expected to occur in the second quarter of 2013.

U.S. Cellular will retain 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 Divestiture Markets. The Purchase and Sale Agreement also contemplates certain other agreements, including customer and network transition services agreements, which will require that U.S. Cellular provide customer, billing and network services to Sprint for a period of up to 24 months after the 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 will 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.

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 recognized, 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, as a result of the transaction.


(Dollars in thousands)			Expected Period of Realization/ Incurrence		Projected Range				Cumulative Amount Incurred as of March 31, 2013		Actual Amount Incurred Three Months Ended March 31, 2013
(Gain) loss on sale of business and other exit costs, net
	Proceeds from Sprint
		Purchase price		2013	$	(480,000)	$	(480,000)	$	-	$	-
		Sprint Cost Reimbursement		2013-2014		(150,000)		(200,000)		-		-
	Net assets transferred			2013		210,000		230,000		-		-
	Non-cash charges for the write-off and write-down of property under construction and related assets			2012-2013		11,000		15,000		10,894		222
	Employee related costs including severance, retention and outplacement			2012-2014		16,000		25,000		15,659		3,050
	Contract termination costs			2012-2014		125,000		175,000		2,959		2,900
	Transaction costs			2012-2013		4,000		6,000		2,055		918
		Total (Gain) loss on sale of business and other exit costs, net			$	(264,000)	$	(229,000)	$	31,567	$	7,090

Depreciation, amortization and accretion expense
	Incremental depreciation, amortization and accretion, net of salvage values			2012-2013		175,000		210,000		58,104		38,046

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					$	(89,000)	$	(9,000)	$	89,671	$	45,136

Incremental depreciation, amortization and accretion, net of salvage values represents anticipated amounts to be recorded in the specified time periods as a result of revising the useful life of certain assets and revising 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:

					Three Months Ended March 31, 2013
(Dollars in thousands)			Balance December 31, 2012		Costs Incurred		Cash Settlements (1)		Non-cash Settlements		Adjustments		Balance March 31, 2013
Accrued compensation
	Employee related costs including severance, retention, outplacement		$	12,305	$	3,050	$	(1,607)	$	-	$	-	$	13,748
Other current liabilities
	Contract termination costs		$	30	$	2,900	$	(784)	$	-	$	-	$	2,146

(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.

		At March 31, 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":

			Licenses		Goodwill		Property, Plant and Equipment		Total Assets Held for Sale		Liabilities Held for Sale (1)
(Dollars in thousands)
March 31, 2013
Divestiture Transaction			$	140,599	$	72,994	$	-	$	213,593	$	18,360

December 31, 2012
Divestiture Transaction			$	140,599	$	72,994	$	-	$	213,593	$	19,594
Bolingbrook Customer Care Center (2)				-		-		3,170		3,170		-
	Total