US Cellular 2013 Annual Report Download - page 54

United States Cellular Corporation
Notes to Consolidated Financial Statements (Continued)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RECENT ACCOUNTING
PRONOUNCEMENTS (Continued)
forfeitures and expected life are estimated based on historical experience related to similar awards,
giving consideration to the contractual terms of the stock-based awards, vesting schedules and
expectations of future employee behavior. U.S. Cellular believes that its historical experience provides the
best estimates of future pre-vesting forfeitures and future expected life. The expected volatility
assumption is based on the historical volatility of U.S. Cellular’s common stock over a period
commensurate with the expected life. The dividend yield assumption is zero because U.S. Cellular has
never paid a dividend, except a special cash dividend in June 2013, and has expressed its intention to
retain all future earnings in the business. The risk-free interest rate assumption is determined using the
U.S. Treasury Yield Curve Rate with a term length that approximates the expected life of the stock
options.
The fair value of options is recognized as compensation cost over the respective requisite service period
of the awards, which is generally the vesting period, on a straight-line basis for each separate vesting
portion of the awards as if the awards were, in-substance, multiple awards (graded vesting attribution
method).
Defined Contribution Plans
U.S. Cellular participates in a qualified noncontributory defined contribution pension plan sponsored by
TDS; such plan provides pension benefits for the employees of U.S. Cellular and its subsidiaries. Under
this plan, pension benefits and costs are calculated separately for each participant and are funded
currently. Pension costs were $10.4 million, $12.4 million and $11.6 million in 2013, 2012 and 2011,
respectively.
U.S. Cellular also participates in a defined contribution retirement savings plan (‘‘401(k) plan’’) sponsored
by TDS. Total costs incurred from U.S. Cellular’s contributions to the 401(k) plan were $15.4 million,
$17.1 million and $15.5 million in 2013, 2012 and 2011, respectively.
Operating Leases
U.S. Cellular is a party to various lease agreements for office space, retail stores, cell sites and
equipment that are accounted for as operating leases. Certain leases have renewal options and/or fixed
rental increases. Renewal options that are reasonably assured of exercise are included in determining
the lease term. U.S. Cellular accounts for certain operating leases that contain rent abatements, lease
incentives and/or fixed rental increases by recognizing lease revenue and expense on a straight-line
basis over the lease term.
Recently Issued Accounting Pronouncements
On July 18, 2013, the FASB issued Accounting Standards Update 2013-11, Income Taxes (Topic 740):
Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryfoward, a Similar Tax Loss,
or a Tax Credit Carryforward Exists (‘‘ASU 2013-11’’). ASU 2013-11 addresses the presentation of an
unrecognized tax benefit when a net operating loss carryforward or tax credit carryforward exists. In such
event, an unrecognized tax benefit, or portion of an unrecognized tax benefit, would be presented in the
Consolidated Balance Sheet as a reduction to deferred tax assets unless the net operating loss
carryforward or tax credit carryforward at the reporting date is not available under the tax law of the
applicable jurisdiction. U.S. Cellular is required to adopt the provisions of ASU 2013-11 effective
January 1, 2014. The adoption of ASU 2013-11 is not expected to have a significant impact on U.S.
Cellular’s financial position or results of operations.
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