US Cellular 2013 Annual Report Download - page 70

United States Cellular Corporation
Notes to Consolidated Financial Statements (Continued)
NOTE 12 VARIABLE INTEREST ENTITIES (VIEs) (Continued)
• King Street Wireless L.P. (‘‘King Street Wireless’’) and King Street Wireless, Inc., the general partner of
King Street Wireless.
The power to direct the activities that most significantly impact the economic performance of Aquinas
Wireless and King Street Wireless (collectively, the ‘‘limited partnerships’’) is shared. Specifically, the
general partner of these VIEs has the exclusive right to manage, operate and control the limited
partnerships and make all decisions to carry on the business of the partnerships; however, the general
partner of each partnership needs consent of the limited partner, a U.S. Cellular subsidiary, to sell or
lease certain licenses, to make certain large expenditures, admit other partners or liquidate the limited
partnerships. Although the power to direct the activities of the VIEs is shared, U.S. Cellular has a
disproportionate level of exposure to the variability associated with the economic performance of the
VIEs, indicating that U.S. Cellular is the primary beneficiary of the VIEs in accordance with GAAP.
Accordingly, these VIEs are consolidated.
The following table presents the classification of the consolidated VIEs’ assets and liabilities in U.S.
Cellular’s Consolidated Balance Sheet.
December 31, 2013 2012
(Dollars in thousands)
Assets
Cash and cash equivalents .......................... $ 2,076 $ 5,849
Other current assets .............................. 1,184 120
Licenses ....................................... 310,475 308,091
Property, plant and equipment, net .................... 18,600 16,443
Other assets and deferred charges .................... 511 887
Total assets ..................................... $332,846 $331,390
Liabilities
Current liabilities ................................. $ 46 $ 1,013
Deferred liabilities and credits ........................ 3,139 3,024
Total liabilities ................................... $ 3,185 $ 4,037
Other Related Matters
Aquinas Wireless and King Street Wireless were formed to participate in FCC auctions of wireless
spectrum and to fund, establish, and provide wireless service with respect to any FCC licenses won in
the auctions. As such, these entities have risks similar to those described in the ‘‘Risk Factors’’ in U.S.
Cellular’s Annual Report on Form 10-K.
U.S. Cellular may agree to make additional capital contributions and/or advances to Aquinas Wireless
and King Street Wireless and/or to their general partners to provide additional funding for the
development of licenses granted in various auctions. U.S. Cellular may finance such amounts with a
combination of cash on hand, borrowings under its revolving credit agreement and/or long-term debt.
There is no assurance that U.S. Cellular will be able to obtain additional financing on commercially
reasonable terms or at all to provide such financial support.
The limited partnership agreements of Aquinas Wireless and King Street Wireless also provide the
general partner with a put option whereby the general partner may require the limited partner, a
subsidiary of U.S. Cellular, to purchase its interest in the limited partnership. The general partner’s put
options related to its interests in King Street Wireless and Aquinas Wireless will become exercisable in
2019 and 2020, respectively. The put option price is determined pursuant to a formula that takes into
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