US Cellular 2009 Annual Report Download - page 33

Allowance for Doubtful Accounts
U.S. Cellular’s accounts receivable primarily consist of amounts owed by customers pursuant to service
contracts and for equipment sales, by agents for sales of equipment to them and by other wireless
carriers whose customers have used U.S. Cellular’s wireless systems.
The allowance for doubtful accounts is the best estimate of the amount of probable credit losses related
to existing accounts receivable. The allowance is estimated based on historical experience and other
factors that could affect collectability. Accounts receivable balances are reviewed on either an aggregate
or individual basis for collectability depending on the type of receivable. When it is probable that an
account balance will not be collected, the account balance is charged against the allowance for doubtful
accounts. U.S. Cellular does not have any off-balance sheet credit exposure related to its customers.
U.S. Cellular will continue to monitor its accounts receivable balances and related allowance for doubtful
accounts on an ongoing basis to assess whether it has adequately provided for potentially uncollectible
amounts.
See Note 1—Summary of Significant Accounting Policies and Recent Accounting Pronouncements in the
Notes to Consolidated Financial Statements for additional information regarding U.S. Cellular’s allowance
for doubtful accounts.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
U.S. Cellular is billed for all services it receives from TDS pursuant to the terms of various agreements
between U.S. Cellular and TDS. The majority of these billings are included in U.S. Cellular’s Selling,
general and administrative expenses. Some of these agreements were established prior to U.S. Cellular’s
initial public offering, when TDS owned more than 90% of U.S. Cellular’s outstanding capital stock, and
may not reflect terms that would be obtainable from an unrelated third party through arms-length
negotiations. Billings from TDS to U.S. Cellular are based on expenses specifically identified to
U.S. Cellular and on allocations of common expenses. Such allocations are based on the relationship of
U.S. Cellular’s assets, employees, investment in property, plant and equipment and expenses to the total
assets, employees, investment in property, plant and equipment and expenses of TDS. Management
believes that the method TDS uses to allocate common expenses is reasonable and that all expenses
and costs applicable to U.S. Cellular are reflected in U.S. Cellular’s consolidated financial statements.
Billings from TDS to U.S. Cellular totaled $114.8 million, $113.3 million and $121.8 million for 2009, 2008
and 2007, respectively.
The following persons are partners of Sidley Austin LLP, the principal law firm of U.S. Cellular and its
subsidiaries: Walter C.D. Carlson, a director of U.S. Cellular, a director and non-executive Chairman of
the Board of Directors of TDS and a trustee and beneficiary of a voting trust that controls TDS; William S.
DeCarlo, the General Counsel of TDS and an Assistant Secretary of TDS and certain subsidiaries of TDS;
and Stephen P. Fitzell, the General Counsel of U.S. Cellular and TDS Telecommunications Corporation
and an Assistant Secretary of U.S. Cellular and certain other subsidiaries of TDS. Walter C.D. Carlson
does not provide legal services to TDS, U.S. Cellular or their subsidiaries. U.S. Cellular and its
subsidiaries incurred legal costs from Sidley Austin LLP of $8.6 million in 2009, $6.9 million in 2008 and
$6.6 million in 2007.
The Audit Committee of the Board of Directors is responsible for the review and evaluation of all related
party transactions, as such term is defined by the rules of the New York Stock Exchange.
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