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USM > SEC Filings for USM > Form 8-K on 9-Apr-2013All Recent SEC Filings

Show all filings for UNITED STATES CELLULAR CORP | Request a Trial to NEW EDGAR Online Pro



Completion of Acquisition or Disposition of Assets, Financial Stateme

Item 2.01 Completion of Acquisition or Disposition of Assets.

On April 3, 2013, United States Cellular Corporation ("U.S. Cellular"), entered into a Term Sheet relating to the Partnerships (as defined below) with Cellco Partnership d/b/a Verizon Wireless ("Verizon Wireless"). Pursuant to its terms, the Term Sheet became effective on April 3, 2013.

U.S. Cellular holds a 60.00% interest in St. Lawrence Seaway RSA Cellular Partnership ("NY1") and a 57.14% interest in New York RSA 2 Cellular Partnership ("NY2" and, together with NY1, the "Partnerships"). The remaining interests are held by Verizon Wireless. The Term Sheet provides that the agreements governing the Partnerships (the "Partnership Agreements"), will be amended to reflect the changes effected by the Term Sheet.

The Partnerships are operated by Verizon Wireless under the Verizon Wireless brand. Because U.S. Cellular owns a greater than 50% interest in each of these markets, and based on U.S. Cellular's rights under the Partnership Agreements, prior to April 3, 2013, U.S. Cellular consolidated the financial results of these markets in accordance with accounting principles generally accepted in the United States of America ("GAAP").

The Term Sheet amends the Partnership Agreements in several ways, which provide Verizon Wireless with substantive participating rights that allow Verizon Wireless to make decisions that are in the ordinary course of business of the Partnerships and which are significant to directing and executing the activities of the business. Accordingly, as required by GAAP, effective April 3, 2013, U.S. Cellular has deconsolidated the Partnerships and thereafter will report them as equity method investments in its consolidated financial statements (the "Deconsolidation"). Under the instructions to Form 8-K, the Deconsolidation is treated as a disposition of the Partnership interests. This is only a deconsolidation for accounting purposes and does not represent a disposition or change in control for regulatory or other purposes.

The consideration for U.S. Cellular's agreements under the Term Sheet includes the agreements of Verizon Wireless under the Term Sheet as determined through arm's length negotiations, including a 700 MHz radio spectrum lease to the Partnerships for the geographical areas in which the Partnerships operate. In addition, the Partnerships' will have greater rights with respect roaming access by their customers on the Verizon 4G LTE network nationwide. The Term Sheet did not require the delivery of any funds in connection with the Deconsolidation on April 3, 2013.

Because the Deconsolidation meets one of the significance tests specified in Item 2.01 of Form 8-K, U.S. Cellular is filing, as Exhibit 99.1 to this Form 8-K, unaudited pro forma financial information for U.S. Cellular as of December 31, 2012 and for the year ended December 31, 2012 that give effect to the Deconsolidation.

In addition to the foregoing described arrangements, U.S. Cellular has certain arms' length, ordinary business relationships with Verizon Wireless and its affiliates, including the following: (i) U.S. Cellular and Verizon Wireless are parties to roaming agreements; and (ii) U.S. Cellular has a 5.5% ownership interest in the Los Angeles SMSA Limited Partnership, and partnership interests in other wireless partnerships, which are controlled by and managed by Verizon Wireless.

Item 9.01. Financial Statements and Exhibits

(b) Pro Forma Financial Information

The unaudited pro forma financial information of U.S. Cellular as of December 31, 2012 and for the year ended December 31, 2012 that give effect to the Deconsolidation, as discussed above in item 2.01, are attached as Exhibit 99.1.

(d) Exhibits:

In accordance with the provisions of Item 601 of Regulation S-K, any Exhibits filed or furnished herewith are set forth on the Exhibit Index attached hereto.

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