US Cellular 2012 Annual Report Download - page 15

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As a result of the transaction, U.S. Cellular expects net cash flows of the following:
Cash inflow (outflow)
(Dollars in thousands)
Proceeds:
Purchase price .................................. $ 480,000
Reimbursement of transition and exit costs .............. 150,000 - 200,000
Cash expenditures:
Employee related costs including severance, retention and
outplacement ................................. (15,000) - (25,000)
Contract termination costs .......................... (125,000) - (175,000)
Costs of decommissioning cell sites and MTSOs .......... (40,000) - (50,000)
Transaction costs ................................ (3,000) - (5,000)
Income taxes ................................... (130,000) - (150,000)
Net cash proceeds from the transaction are expected to be $275 million to $350 million. Such net cash
proceeds will be realized over the period from the date of the signing of the Purchase and Sale
Agreement on November 6, 2012, to the end of the transition services agreements. Net cash outflows
related to the Divestiture Transaction for the quarter ended December 31, 2012 totaled $0.3 million.
Following the closing, U.S. Cellular will no longer receive Operating revenues in the Divestiture Markets.
However, following the closing, U.S. Cellular will continue to incur System operations, Selling, general
and administrative expenses and Depreciation, amortization and accretion in the Divestiture Markets in
order for U.S. Cellular to provide transition services to Sprint. Certain of these costs will be reimbursed
by Sprint pursuant to the Customer Transition Service Agreement and the Network Transition Services
Agreement described above.
2013 ESTIMATES
U.S. Cellular’s estimates of full-year 2013 results are shown below. Such estimates represent U.S.
Cellular’s views as of the date of filing of U.S. Cellular’s Form 10-K for the year ended December 31,
2012. Such forward-looking statements should not be assumed to be current as of any future date. U.S.
Cellular undertakes no duty to update such information whether as a result of new information, future
events or otherwise. There can be no assurance that final results will not differ materially from such
estimated results.
U.S. Cellular has changed the measures which it uses to present estimates of operating results. U.S.
Cellular previously presented Adjusted OIBDA, defined as operating income excluding the effects of:
depreciation, amortization and accretion (OIBDA); the loss on impairment of assets; and the net gain or
loss on asset disposals and exchanges. U.S. Cellular believes Adjusted income before income taxes, as
defined below, is a measure which provides a more comprehensive and meaningful view of U.S.
Cellular’s recurring results of operations.
2013 Estimated Results(1)
Core Divestiture U.S. Cellular
Markets(2) Markets(2)(3) Consolidated(2)(3)
(Dollars in millions)
Service revenues ........................... $3,600 - $3,700 $165 - $185 $3,765 - $3,885
Adjusted income before income taxes(4) .......... $765 - $865 $15 - $35 $780 - $900
Capital expenditures ......................... Approx. $600 — Approx. $600
(1) These estimates are based on U.S. Cellular’s current plans, which include a multi-year deployment
of 4G LTE technology which commenced in 2011. New developments or changing conditions (such
as, but not limited to, regulatory developments, customer net growth, customer demand for data
services or possible acquisitions, dispositions or exchanges) could affect U.S. Cellular’s plans and,
therefore, its 2013 estimated results.
(2) The U.S. Cellular Consolidated amounts represent GAAP financial measures and include the results
of both the Core Markets and the Divestiture Markets. As used herein, ‘‘Core Markets’’ represents
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