US Cellular 2013 Annual Report Download - page 21

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United States Cellular Corporation
Management’s Discussion and Analysis of Financial Condition and Results of Operations
capitalized interest for multi-year projects; in addition, in 2011, U.S. Cellular wrote off $8.2 million of
unamortized debt issuance costs related to its $330 million, 7.5% Senior Notes redeemed on June 20,
2011.
Income tax expense
The effective tax rates on Income before income taxes for 2013, 2012 and 2011 were 43.9%, 31.2% and
36.5%, respectively. The following significant discrete and other items impacted income tax expense for
these years:
2013—Includes a tax expense of $20.4 million related to the NY1 & NY2 Deconsolidation and the
Divestiture Transaction, and a tax benefit of $5.4 million resulting from statute of limitation expirations.
2012—Includes tax benefits of $12.1 million resulting from statute of limitation expirations and
$5.3 million resulting from corrections relating to a prior period.
2011—Includes a tax benefit of $9.9 million resulting from state statute of limitations expirations and tax
expense of $6.1 million resulting from corrections of partnership basis.
See Note 3—Income Taxes in the Notes to Consolidated Financial Statements for a discussion of income
tax expense and the overall effective tax rate on Income before income taxes.
Net income attributable to noncontrolling interests, net of tax
The large decrease in 2013 is primarily due to the elimination of the noncontrolling interests as a result
of the NY1 & NY2 Deconsolidation on April 3, 2013.
INFLATION
Management believes that inflation affects U.S. Cellular’s business to no greater or lesser extent than the
general economy.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In general, recently issued accounting pronouncements did not have and are not expected to have a
significant effect on U.S. Cellular’s financial condition and results of operations.
See Note 1—Summary of Significant Accounting Policies and Recent Accounting Pronouncements in the
Notes to Consolidated Financial Statements for information on recently issued accounting
pronouncements.
FINANCIAL RESOURCES
U.S. Cellular operates a capital- and marketing-intensive business. U.S. Cellular utilizes cash on hand,
cash from operating activities, cash proceeds from divestitures and disposition of investments, short-term
credit facilities and long-term debt financing to fund its acquisitions (including licenses), construction
costs, operating expenses and share repurchases. Cash flows may fluctuate from quarter to quarter and
year to year due to seasonality, the timing of acquisitions, capital expenditures and other factors. The
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