US Cellular 2014 Annual Report Download - page 82

United States Cellular Corporation
Notes to Consolidated Financial Statements (Continued)
NOTE 17 SUPPLEMENTAL CASH FLOW DISCLOSURES (Continued)
charges in the Consolidated Balance Sheet and $11.5 million reduced the carrying amount of the assets
to which they relate, which are included in Property, plant and equipment in the Consolidated Balance
Sheet.
NOTE 18 RELATED PARTIES
U.S. Cellular is billed for all services it receives from TDS, pursuant to the terms of various agreements
between it and TDS. These billings are included in U.S. Cellular’s Selling, general and administrative
expenses. Some of these agreements were established at a time prior to U.S. Cellular’s initial public
offering when TDS owned more than 90% of U.S. Cellular’s outstanding capital stock and may not reflect
terms that would be obtainable from an unrelated third party through arms-length negotiations. Billings
from TDS to U.S. Cellular are based on expenses specifically identified to U.S. Cellular and on
allocations of common expenses. Such allocations are based on the relationship of U.S. Cellular’s
assets, employees, investment in property, plant and equipment and expenses relative to all subsidiaries
in the TDS consolidated group. Management believes the method TDS uses to allocate common
expenses is reasonable and that all expenses and costs applicable to U.S. Cellular are reflected in its
financial statements. Billings to U.S. Cellular from TDS totaled $91.1 million, $99.2 million and
$104.3 million in 2014, 2013 and 2012, respectively.
The Audit committee of the Board of Directors of U.S. Cellular is responsible for the review and
evaluation of all related party transactions as such term is defined by the rules of the New York Stock
Exchange (‘‘NYSE’’).
NOTE 19 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The following persons are partners of Sidley Austin LLP, the principal law firm of U.S. Cellular and its
subsidiaries: Walter C.D. Carlson, a director of U.S. Cellular, a director and non-executive Chairman of
the Board of Directors of TDS and a trustee and beneficiary of a voting trust that controls TDS; William S.
DeCarlo, the General Counsel of TDS and an Assistant Secretary of TDS and certain subsidiaries of TDS;
and Stephen P. Fitzell, the General Counsel of U.S. Cellular and TDS Telecommunications Corporation
and an Assistant Secretary of U.S. Cellular and certain other subsidiaries of TDS. Walter C.D. Carlson
does not provide legal services to TDS, U.S. Cellular or their subsidiaries. U.S. Cellular and its
subsidiaries incurred legal costs from Sidley Austin LLP of $10.7 million in 2014, $13.2 million in 2013
and $10.7 million in 2012.
In December 2014, U.S. Cellular entered into an agreement to sell 595 towers outside of its core markets
to a third party for $159 million. The sale of certain of the towers was completed in December 2014, and
the sale of the remaining towers was completed in January 2015. See Note 6—Acquisitions, Divestitures
and Exchanges in the Notes to the Consolidated Financial Statements. Of the 595 towers, six towers
were acquired by U.S. Cellular from Airadigm for a total of $2.6 million. These six towers were included
as part of the sale of towers by U.S. Cellular in order to avoid the need for two sets of transaction
documents. The value of $2.6 million paid by U.S. Cellular to Airadigm for such six towers was
determined using the same method of valuation that was used to value the towers owned by U.S.
Cellular that were sold to the third party. The Audit Committee of the board of directors reviewed and
evaluated this transaction between U.S. Cellular and Airadigm.
In December 2013, TDS initially proposed to have Airadigm Communications, Inc. (‘‘Airadigm’’) sell to
U.S. Cellular the FCC spectrum licenses, towers and customers in certain Airadigm markets for
$110 million in cash. Because TDS owns 100% of the common stock of Airadigm and approximately 84%
of the common stock of U.S. Cellular, this proposal was a related party transaction. Accordingly, the U.S.
Cellular Board of Directors formed a Special Committee comprised entirely of independent and
disinterested directors with exclusive authority to consider, negotiate and, if appropriate, approve any
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