US Cellular 2012 Annual Report Download - page 61

United States Cellular Corporation
Notes to the Consolidated Financial Statements (Continued)
NOTE 5 VARIABLE INTEREST ENTITIES (VIEs) (Continued)
On September 7, 2012, U.S. Cellular acquired 100% of the ownership interest in Barat Wireless, Inc., the
general partner of Barat Wireless, for an immaterial amount. On December 5, 2012, U.S. Cellular
acquired 100% of the ownership interest in Carroll PCS, Inc., the general partner of Carroll Wireless, for
an immaterial amount. Prior to these acquisitions, U.S. Cellular consolidated Barat Wireless, Barat
Wireless, Inc., Carroll Wireless, and Carroll PCS, Inc. as VIEs. Subsequent to the acquisition dates these
entities ceased to be VIEs but continue to be consolidated based on U.S. Cellular’s controlling financial
interest in the entities.
The power to direct the activities that most significantly impact the economic performance of Aquinas
Wireless and King Street Wireless is shared. Specifically, the general partner 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 of each partnership needs consent of
the limited partner, a U.S. Cellular subsidiary, to sell or lease certain licenses, to make certain large
expenditures, admit other partners or liquidate the limited partnerships. Although the power to direct the
activities of the VIEs is shared, U.S. Cellular has a disproportionate level of exposure to the variability
associated with the economic performance of the VIEs, indicating that U.S. Cellular is the primary
beneficiary of the VIEs in accordance with GAAP. Accordingly, these VIEs are consolidated.
U.S. Cellular’s capital contributions and advances made to VIEs totaled $10.0 million and $15.8 million in
the years ended December 31, 2012 and 2011, respectively.
The following table presents the classification of the consolidated VIEs’ assets and liabilities in U.S.
Cellular’s Consolidated Balance Sheet.
December 31, 2012 2011
(Dollars in thousands)
Assets
Cash and cash equivalents .......................... $ 5,849 $ 12,086
Other current assets .............................. 120 47
Licenses ....................................... 308,091 483,059
Property, plant and equipment, net .................... 16,443 9,450
Other assets and deferred charges .................... 887 153
Total assets ..................................... $331,390 $504,795
Liabilities
Current liabilities ................................. $ 1,013 $ 957
Deferred liabilities and credits ........................ 3,024 —
Total liabilities ................................... $ 4,037 $ 957
Other Related Matters
U.S. Cellular may agree to make additional capital contributions and/or advances to Aquinas Wireless
and King Street Wireless 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 limited partnership agreements of Aquinas Wireless and King Street Wireless 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
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