US Cellular 2012 Annual Report Download - page 79

United States Cellular Corporation
Notes to the Consolidated Financial Statements (Continued)
NOTE 16 SUPPLEMENTAL CASH FLOW DISCLOSURES (Continued)
Following are supplemental cash flow disclosures regarding transactions related to stock-based
compensation awards:
Year Ended December 31, 2012 2011 2010
(Dollars in thousands)
Common Shares withheld(1) ............................... 92,846 120,250 310,388
Aggregate value of Common Shares withheld ................... $ 3,604 $ 5,952 $ 13,527
Cash receipts upon exercise of stock options ................... 900 5,447 3,574
Cash disbursements for payment of taxes(2) .................... (3,105) (3,512) (3,065)
Net cash receipts (disbursements) from exercise of stock options and
vesting of other stock awards ............................. $(2,205) $ 1,935 $ 509
(1) Such shares were withheld to cover the exercise price of stock options, if applicable, and required
tax withholdings.
(2) In certain situations, U.S. Cellular withholds shares that are issuable upon the exercise of stock
options or the vesting of restricted shares to cover, and with a value equivalent to, the exercise price
and/or the amount of taxes required to be withheld from the stock award holder at the time of the
exercise or vesting. U.S. Cellular then pays the amount of the required tax withholdings to the taxing
authorities in cash.
NOTE 17 RELATED PARTIES
U.S. Cellular is billed for all services it receives from TDS, pursuant to the terms of various agreements
between it and TDS. These billings are included in U.S. Cellular’s Selling, general and administrative
expenses. Some of these agreements were established at a time prior to U.S. Cellular’s initial public
offering when TDS owned more than 90% of U.S. Cellular’s outstanding capital stock and may not reflect
terms that would be obtainable from an unrelated third party through arms-length negotiations. Billings
from TDS to U.S. Cellular are based on expenses specifically identified to U.S. Cellular and on
allocations of common expenses. Such allocations are based on the relationship of U.S. Cellular’s
assets, employees, investment in property, plant and equipment and expenses relative to all subsidiaries
in the TDS consolidated group. Management believes the method TDS uses to allocate common
expenses is reasonable and that all expenses and costs applicable to U.S. Cellular are reflected in its
financial statements. Billings to U.S. Cellular from TDS totaled $104.3 million, $104.1 million and
$107.5 million in 2012, 2011 and 2010, respectively.
In the second quarter of 2012, certain subsidiaries of U.S. Cellular agreed to lease wireless spectrum
from Airadigm Communications, Inc. (‘‘Airadigm’’) to enhance wireless services in existing markets. Both
U.S. Cellular and Airadigm are consolidated subsidiaries of TDS. The lease agreements require U.S.
Cellular to make payments of approximately $0.5 million to Airadigm annually for a period of five years
after which U.S. Cellular will have an option to renew the lease for a fixed period of time. U.S. Cellular
accounts for these leases as operating leases and includes the lease payments as System operations
expense in the Consolidated Statement of Operations.
The Audit committee of the Board of Directors of U.S. Cellular is responsible for the review and
evaluation of all related party transactions as such term is defined by the rules of the New York Stock
Exchange (‘‘NYSE’’).
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