US Cellular 2013 Annual Report Download - page 28

United States Cellular Corporation
Management’s Discussion and Analysis of Financial Condition and Results of Operations
and repurchases made during 2013, 2012 and 2011, see Note 14—Common Shareholders’ Equity in the
Notes to Consolidated Financial Statements and Part II, Item 2. Unregistered Sales of Equity Securities and
Use of Proceeds.
Contractual and Other Obligations
At December 31, 2013, the resources required for contractual obligations were as follows:
Payments Due by Period
Less Than 1 - 3 3 - 5 More Than
Total 1 Year Years Years 5 Years
(Dollars in millions)
Long-term debt obligations(1) ................. $ 886.0 $ — $ — $ — $ 886.0
Interest payments on long-term debt obligations .... 1,846.2 60.3 120.4 120.4 1,545.1
Operating leases(2) ........................ 1,363.6 152.3 251.3 176.3 783.7
Capital leases ............................ 6.9 0.5 1.1 1.0 4.3
Purchase obligations(3) ...................... 1,797.3 589.9 1,006.9 121.0 79.5
$5,900.0 $803.0 $1,379.7 $418.7 $3,298.6
(1) Includes current and long-term portions of debt obligations. The total long-term debt obligation differs
from Long-term debt in the Consolidated Balance Sheet due to capital leases and the $11.6 million
unamortized discount related to U.S. Cellular’s 6.7% Senior Notes. See Note 10—Debt in the Notes to
Consolidated Financial Statements for additional information.
(2) Includes future lease costs related to office space, retail sites, cell sites and equipment. See Note 11—
Commitments and Contingencies in the Notes to Consolidated Financial Statements for additional
information.
(3) Includes obligations payable under non-cancellable contracts, commitments for network facilities and
transport services, agreements for software licensing, long-term marketing programs, and an agreement
with Apple to purchase Apple iPhone products. As described more fully in Note 5—Acquisitions,
Divestitures and Exchanges in the Notes to Consolidated Financial Statements, U.S. Cellular expects to
incur network-related exit costs in the Divestiture Markets as a result of the transaction, including:
(i) costs to decommission cell sites and mobile telephone switching office (‘‘MTSO’’) sites, (ii) costs to
terminate real property leases and (iii) costs to terminate certain network access arrangements in the
subject markets. The impacts of these exit activities on U.S. Cellular’s purchase obligations are reflected
in the table above only to the extent that agreements were consummated at December 31, 2013.
The table above excludes liabilities related to ‘‘unrecognized tax benefits’’ as defined by GAAP because U.S.
Cellular is unable to predict the period of settlement of such liabilities. Such unrecognized tax benefits were
$28.8 million at December 31, 2013. See Note 3—Income Taxes in the Notes to Consolidated Financial
Statements for additional information on unrecognized tax benefits.
Agreements
As previously disclosed, on August 17, 2010, U.S. Cellular and Amdocs Software Systems Limited
(‘‘Amdocs’’) entered into a Software License and Maintenance Agreement (‘‘SLMA’’) and a Master Service
Agreement (‘‘MSA’’) (collectively, the ‘‘Amdocs Agreements’’) to develop a Billing and Operational Support
System (B/OSS’’). In July 2013, U.S. Cellular implemented B/OSS, pursuant to an updated Statement of
Work dated June 29, 2012. Total payments to Amdocs related to this implementation are estimated to be
approximately $183.9 million (subject to certain potential adjustments) over the period from commencement
of the SLMA through the first half of 2014. As of December 31, 2013, $136.8 million had been paid to
Amdocs.
20