US Cellular 2010 Annual Report Download - page 67

UNITED STATES CELLULAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 11 ASSET RETIREMENT OBLIGATIONS (Continued)
During 2010 and 2009, U.S. Cellular performed a review of the assumptions and estimated costs related
to its asset retirement obligations. The results of the reviews (identified as ‘‘Revisions in estimated cash
outflows’’) and other changes in asset retirement obligations during 2010 and 2009 were as follows:
2010 2009
(Dollars in thousands)
Balance, beginning of period .......................... $162,665 $148,982
Additional liabilities accrued ......................... 4,757 3,935
Revisions in estimated cash outflows .................. 1,317 (47)
Disposition of assets .............................. (2,086) (1,128)
Accretion expense ................................ 12,150 10,923
Balance, end of period .............................. $178,803 $162,665
NOTE 12 DEBT
Revolving Credit Facility
Prior to December 17, 2010, U.S. Cellular had a $300 million revolving credit facility available for general
corporate purposes. On December 17, 2010, U.S. Cellular entered into a new $300 million revolving
credit agreement with certain lenders and other parties. As a result, U.S. Cellular’s $300 million revolving
credit agreement due to expire in June 2012, was terminated on December 17, 2010. The new revolving
credit agreement is due to expire in December 2015. Amounts under the new revolving credit facility may
be borrowed, repaid and reborrowed from time to time from and after December 17, 2010 until maturity
in December 2015.
At December 31, 2010, U.S. Cellular had no outstanding borrowings and $0.2 million of outstanding
letters of credit under the new revolving credit facility, leaving $299.8 million available for use. Borrowings
under the new revolving credit facility bear interest at the LIBOR (or, at U.S. Cellular’s option, an alternate
‘‘Base Rate’’ as defined in the revolving credit agreement) plus a contractual spread based on U.S.
Cellular’s credit rating. U.S. Cellular may select borrowing periods of either one, two, three or six months
(or other period of twelve months or less requested by U.S. Cellular if approved by the lenders). At
December 31, 2010, the one-month LIBOR was 0.26% and the contractual spread was 200 basis points.
If U.S. Cellular provides less than three business days notice of intent to borrow, interest on borrowings
is at the Base Rate plus the contractual spread. The new revolving credit facility required U.S. Cellular to
pay fees at an aggregate rate of 0.9% of the total $300 million facility in 2010. Total fees recognized
under the new and previous U.S. Cellular revolving credit facilities were $3.8 million, $5.9 million and
$1.7 million in 2010, 2009 and 2008, respectively.
U.S. Cellular did not borrow against the revolving credit facilities in 2010 or 2009.
U.S. Cellular’s interest cost on its new revolving credit facility is subject to increase if its current credit
rating from Standard & Poor’s Rating Service, Moody’s Investors Service and/or Fitch Ratings is lowered,
and is subject to decrease if the rating is raised. The new credit facility would not cease to be available
nor would the maturity date accelerate solely as a result of a downgrade in U.S. Cellular’s credit rating.
However, a downgrade in U.S. Cellular’s credit rating could adversely affect its ability to renew the credit
facility or obtain access to other credit facilities in the future.
The new revolving credit facility has a commitment fee based on the senior unsecured debt rating
assigned to U.S. Cellular by certain ratings agencies. The range of the commitment fee is 0.20% to
0.45% of the unused portion of the revolving credit facility.
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