US Cellular 2013 Annual Report Download - page 71

United States Cellular Corporation
Notes to Consolidated Financial Statements (Continued)
NOTE 12 VARIABLE INTEREST ENTITIES (VIEs) (Continued)
consideration fixed interest rates and the market value of U.S. Cellular’s Common Shares. Upon exercise
of the put option, the general partner is required to repay borrowings due to U.S. Cellular. If the general
partner does not elect to exercise its put option, the general partner may trigger an appraisal process in
which the limited partner (a subsidiary of U.S. Cellular) may have the right, but not the obligation, to
purchase the general partner’s interest in the limited partnership at a price and on other terms and
conditions specified in the limited partnership agreement. In accordance with requirements under GAAP,
U.S. Cellular is required to calculate a theoretical redemption value for all of the put options assuming
they are exercisable at the end of each reporting period, even though such exercise is not contractually
permitted. Pursuant to GAAP, this theoretical redemption value, net of amounts payable to U.S. Cellular
for loans and accrued interest thereon made by U.S. Cellular to the general partners the (‘‘net put
value’’), was $0.5 million at December 31, 2013 and 2012, respectively. The net put value is recorded as
Noncontrolling interests with redemption features in U.S. Cellular’s Consolidated Balance Sheet. Also in
accordance with GAAP, changes in the redemption value of the put options, net of interest accrued on
the loans, are recorded as a component of Net income attributable to noncontrolling interests, net of tax,
in U.S. Cellular’s Consolidated Statements of Operations.
U.S. Cellular’s capital contributions and advances made to Aquinas Wireless and King Street Wireless
and/or their general partners totaled $10.0 million in the year ended December 31, 2012. There were no
capital contributions or advances made to Aquinas Wireless or King Street Wireless or their general
partners in 2013.
U.S. Cellular currently provides 4G LTE service in conjunction with King Street Wireless. Aquinas Wireless
is still in the process of developing long-term business plans.
NOTE 13 NONCONTROLLING INTERESTS
U.S. Cellular’s consolidated financial statements include certain noncontrolling interests that meet the
GAAP definition of mandatorily redeemable financial instruments. These mandatorily redeemable
noncontrolling interests represent interests held by third parties in consolidated partnerships and limited
liability companies (‘‘LLCs’’), where the terms of the underlying partnership or LLC agreement provide for
a defined termination date at which time the assets of the subsidiary are to be sold, the liabilities are to
be extinguished and the remaining net proceeds are to be distributed to the noncontrolling interest
holders and U.S. Cellular in accordance with the respective partnership and LLC agreements. The
termination dates of these mandatorily redeemable noncontrolling interests range from 2085 to 2107.
The estimated aggregate amount that would be due and payable to settle all of these noncontrolling
interests assuming an orderly liquidation of the finite-lived consolidated partnerships and LLCs on
December 31, 2013, net of estimated liquidation costs, is $24.8 million. This amount excludes
redemption amounts recorded in Noncontrolling interests with redemption features in the Consolidated
Balance Sheet. The estimate of settlement value was based on certain factors and assumptions which
are subjective in nature. Changes in those factors and assumptions could result in a materially larger or
smaller settlement amount. U.S. Cellular currently has no plans or intentions relating to the liquidation of
any of the related partnerships or LLCs prior to their scheduled termination dates. The corresponding
carrying value of the mandatorily redeemable noncontrolling interests in finite-lived consolidated
partnerships and LLCs at December 31, 2013 was $15.4 million, and is included in Noncontrolling
interests in the Consolidated Balance Sheet. The excess of the aggregate settlement value over the
aggregate carrying value of these mandatorily redeemable noncontrolling interests is due primarily to the
unrecognized appreciation of the noncontrolling interest holders’ share of the underlying net assets in
the consolidated partnerships and LLCs. Neither the noncontrolling interest holders’ share, nor U.S.
Cellular’s share, of the appreciation of the underlying net assets of these subsidiaries is reflected in the
consolidated financial statements.
63