US Cellular 2014 Annual Report Download - page 73

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United States Cellular Corporation
Notes to Consolidated Financial Statements (Continued)
NOTE 12 COMMITMENTS AND CONTINGENCIES (Continued)
with respect to the agreement during the initial five-year term is approximately $110 million (exclusive
of travel and expenses and subject to certain potential adjustments).
• During 2013, U.S. Cellular entered into agreements with Apple to purchase certain minimum quantities
of Apple iPhone products and fund marketing programs related to the Apple iPhone and iPad products
over a three-year period beginning in November 2013. Based on current forecasts, U.S. Cellular
estimates that the remaining contractual commitment as of December 31, 2014 under these
agreements is approximately $818 million. At this time, U.S. Cellular expects to meet its contractual
commitments with Apple.
Lease Commitments
U.S. Cellular is a party to various lease agreements, both as lessee and lessor, for office space, retail
store sites, cell sites and equipment which 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. Any rent abatements or lease incentives, in addition to fixed
rental increases, are included in the calculation of rent expense and calculated on a straight-line basis
over the defined lease term.
As of December 31, 2014, future minimum rental payments required under operating leases and rental
receipts expected under operating leases that have noncancellable lease terms in excess of one year
were as follows:
Operating Leases Operating Leases
Future Minimum Future Minimum
Rental Payments* Rental Receipts
(Dollars in thousands)
2015 ................................................ $ 139,286 $ 54,715
2016 ................................................ 125,458 44,110
2017 ................................................ 107,987 34,780
2018 ................................................ 90,687 24,174
2019 ................................................ 74,640 12,082
Thereafter ............................................ 740,501 8,567
Total ................................................ $1,278,559 $178,428
* Includes $88.4 million of future lease payments associated with leases transferred in January 2015
per the second closing of the tower sale. See Note 6—Acquisitions, Divestitures and Exchanges for
additional information.
Rent expense totaled $152.4 million, $162.1 million and $183.9 million in 2014, 2013 and 2012,
respectively.
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.
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