US Cellular 2009 Annual Report Download - page 64

UNITED STATES CELLULAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 6 VARIABLE INTEREST ENTITIES (VIEs) (Continued)
The following table presents the classification of the consolidated VIEs’ assets and liabilities in
U.S. Cellular’s Consolidated Balance Sheet.
December 31, 2009 2008
(Dollars in thousands)
Assets
Cash .......................................... $ 679 $ 684
Other current assets .............................. 393 63
Licenses ....................................... 487,962 487,962
Property, plant and equipment ....................... 440 —
Total assets ..................................... $489,474 $488,709
Liabilities
Customer deposits and deferred revenues ............... $ 70 $ 63
Total liabilities ................................... $ 70 $ 63
Other Related Matters
U.S. Cellular may agree to make additional capital contributions and/or advances to the VIEs discussed
above and/or to their general partners to provide additional funding for the development of licenses
granted in the various auctions. U.S. Cellular may finance such amounts with a combination of cash on
hand, borrowings under its revolving credit agreement and/or long-term debt. There is no assurance that
U.S. Cellular will be able to obtain additional financing on commercially reasonable terms or at all to
provide such financial support.
The general partner of each of these VIEs has the exclusive right to manage, operate, and control the
limited partnerships and make all decisions to carry on the business of the partnerships; however, the
general partner needs consent of the partners to sell or lease certain licenses, to make certain large
expenditures, admit other partners, or liquidate the limited partnerships. Based on the current ownership
interests, the general partner would need the consent of the U.S. Cellular subsidiary that is a limited
partner in each of the respective partnerships.
The limited partnership agreements also provide the general partner with a put option whereby the
general partner may require the limited partner, a subsidiary of U.S. Cellular, to purchase its interest in
the limited partnership. The general partner’s put options related to its interests in Carroll Wireless, Barat
Wireless, King Street Wireless and Aquinas Wireless will become exercisable in 2011, 2017, 2019 and
2020, respectively. The put option price is determined pursuant to a formula that takes into consideration
fixed interest rates and the market value of U.S. Cellular’s Common Shares. Upon exercise of the put
option, the general partner is required to repay borrowings due to U.S. Cellular. If the general partner
does not elect to exercise its put option, the general partner may trigger an appraisal process in which
the limited partner (a subsidiary of U.S. Cellular) may have the right, but not the obligation, to purchase
the general partner’s interest in the limited partnership at a price and on other terms and conditions
specified in the limited partnership agreement. In accordance with requirements under GAAP,
U.S. Cellular is required to calculate a theoretical redemption value for all of the puts assuming they are
exercisable at the end of each reporting period, even though such exercise is not contractually
permitted. Pursuant to GAAP, this theoretical redemption value, net of amounts payable to U.S. Cellular
for loans (and accrued interest thereon) made by U.S. Cellular to the general partners, is recorded as a
component of Noncontrolling interests with redemption features in U.S. Cellular’s Consolidated Balance
Sheet. Also per GAAP, changes in the redemption value of the put options, net of interest accrued on the
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