US Cellular 2012 Annual Report Download - page 64

United States Cellular Corporation
Notes to the Consolidated Financial Statements (Continued)
NOTE 7 ACQUISITIONS, DIVESTITURES AND EXCHANGES (Continued)
date. Sprint will reimburse U.S. Cellular for providing such services at an amount equal to U.S. Cellular’s
cost, including applicable overhead allocations. In addition, these agreements will require Sprint to
reimburse U.S. Cellular up to $200 million for certain network decommissioning costs, network site lease
rent and termination costs, network access termination costs, and employee termination benefits for
specified engineering employees.
Financial impacts of the Divestiture Transaction are classified in the Consolidated Statement of
Operations within Operating income. The table below describes the amounts U.S. Cellular expects to
recognize in the Consolidated Statement of Operations between the date the Purchase and Sale
Agreement was signed and the end of the transition services period, and the actual amounts incurred
during the year ended December 31, 2012, as a result of the transaction.
Actual
Amount
Expected Incurred
Period of Year Ended
Realization / December 31,
Incurrence(1) Projected Range 2012
(Dollars in thousands)
(Gain) loss on sale of business and other exit
costs, net
Proceeds from Sprint
Purchase price ........................ 2013 $(480,000) $(480,000) $ —
Reimbursement of transition and exit costs .... 2013-2014 (150,000) (200,000) —
Net assets transferred .................... 2013 210,000 230,000 —
Non-cash charges for the write-off and write-down
of property under construction and related
assets .............................. 2012-2013 5,000 15,000 10,672
Employee related costs including severance,
retention and outplacement ............... 2012-2014 15,000 25,000 12,609
Contract termination costs ................. 2012-2014 125,000 175,000 59
Transaction costs ........................ 2012-2013 3,000 5,000 1,137
Total (Gain) loss on sale of business and other
exit costs, net ....................... $(272,000) $(230,000) $24,477
Depreciation, amortization and accretion expense
Incremental depreciation, amortization and
accretion, net of salvage values(2) .......... 2012-2014 150,000 210,000 20,058
Other Operating expenses
Non-cash charges for the write-off and write-down
of various operating assets and liabilities ..... 2013 — 10,000 —
(Increase) decrease in Operating income ....... $(122,000) $ (10,000) $44,535
(1) Represents the estimated period in which a substantial majority of such amounts will be realized or
incurred.
(2) Represents incremental depreciation, amortization and accretion anticipated to be recorded in the
specified time periods as a result of revising the useful life of certain assets and revising the
settlement dates of certain asset retirement obligations in conjunction with the Divestiture
Transaction. Specifically, for the years indicated, this is estimated depreciation, amortization and
accretion recorded on assets and liabilities of the Divestiture Markets after the November 6, 2012
transaction date less depreciation, amortization and accretion that would have been recorded on
such assets and liabilities in the normal course, absent the Divestiture Transaction.
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