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United States Cellular Corporation
Notes to Consolidated Financial Statements (Continued)
NOTE 11 COMMITMENTS AND CONTINGENCIES (Continued)
Indemnifications
U.S. Cellular enters into agreements in the normal course of business that provide for indemnification of
counterparties. The terms of the indemnifications vary by agreement. The events or circumstances that
would require U.S. Cellular to perform under these indemnities are transaction specific; however, these
agreements may require U.S. Cellular to indemnify the counterparty for costs and losses incurred from
litigation or claims arising from the underlying transaction. U.S. Cellular is unable to estimate the
maximum potential liability for these types of indemnifications as the amounts are dependent on the
outcome of future events, the nature and likelihood of which cannot be determined at this time.
Historically, U.S. Cellular has not made any significant indemnification payments under such agreements.
Legal Proceedings
U.S. Cellular is involved or may be involved from time to time in legal proceedings before the FCC, other
regulatory authorities, and/or various state and federal courts. If U.S. Cellular believes that a loss arising
from such legal proceedings is probable and can be reasonably estimated, an amount is accrued in the
financial statements for the estimated loss. If only a range of loss can be determined, the best estimate
within that range is accrued; if none of the estimates within that range is better than another, the low end
of the range is accrued. The assessment of the expected outcomes of legal proceedings is a highly
subjective process that requires judgments about future events. The legal proceedings are reviewed at
least quarterly to determine the adequacy of accruals and related financial statement disclosures. The
ultimate outcomes of legal proceedings could differ materially from amounts accrued in the financial
statements.
U.S. Cellular has accrued $0.3 million and $1.7 million with respect to legal proceedings and unasserted
claims as of December 31, 2013 and 2012, respectively. U.S. Cellular has not accrued any amount for
legal proceedings if it cannot estimate the amount of the possible loss or range of loss. U.S. Cellular
does not believe that the amount of any contingent loss in excess of the amounts accrued would be
material.
Apple iPhone Products Purchase Commitment
In March 2013, U.S. Cellular entered into an agreement with Apple to purchase certain minimum
quantities of Apple iPhone products over a three-year period beginning in November 2013. Based on
current forecasts, U.S. Cellular estimates that the remaining contractual purchase commitment as of
December 31, 2013 is approximately $950 million. At this time, U.S. Cellular expects to meet its
contractual commitment with Apple.
NOTE 12 VARIABLE INTEREST ENTITIES (VIEs)
U.S. Cellular consolidates variable interest entities in which it has a controlling financial interest and is the
primary beneficiary. A controlling financial interest will have both of the following characteristics: (a) the
power to direct the VIE activities that most significantly impact economic performance and (b) the
obligation to absorb the VIE losses and right to receive benefits that are significant to the VIE. U.S.
Cellular reviews these criteria initially at the time it enters into agreements and subsequently when
reconsideration events occur.
Consolidated VIEs
As of December 31, 2013, U.S. Cellular holds a variable interest in and consolidates the following VIEs
under GAAP:
• Aquinas Wireless L.P. (‘‘Aquinas Wireless’’); and
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