United States Cellular Corporat (UZD) 8-K Completion of Acquisition or Disposition of Assets

Exhibit 99.1

UNAUDITED PRO FORMA FINANCIAL INFORMATION

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”).

The unaudited pro forma financial information is based on financial statements prepared in accordance with GAAP.  In addition, the unaudited pro forma financial information is based upon available information and assumptions that U.S. Cellular considers to be reasonable, and have been made solely for purposes of developing such unaudited pro forma financial information for illustrative purposes in compliance with the disclosure requirements of the Securities and Exchange Commission (“SEC”).

The unaudited pro forma financial information is based on various assumptions. The actual results reported by U.S. Cellular in periods following the Deconsolidation may differ significantly from that reflected in this unaudited pro forma financial information.  As a result, the unaudited pro forma financial information does not purport to project the future financial condition and results of operations of the consolidated company. The pro forma assumptions and adjustments are described in the accompanying schedules.  Pro forma adjustments are shown in the “NY1 & NY2” column and are those that are directly attributable to the transaction, are factually supportable and, with respect to the unaudited pro forma Statement of Operations, are expected to have a continuing impact on the consolidated results.

The unaudited pro forma financial information should be read together with U.S. Cellular’s audited consolidated financial statements and accompanying notes, as of and for the fiscal year ended December 31, 2012, and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in U.S. Cellular’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012, which was filed with the SEC on February 26, 2013.

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The unaudited Pro Forma Statement of Operations for the year ended December 31, 2012 gives effect to the Deconsolidation as if it had occurred effective January 1, 2012, the beginning of U.S Cellular's 2012 fiscal year.
United States Cellular Corporation Pro Forma Statement of Operations (Unaudited)
Year Ended December 31, 2012			As Reported		NY1 & NY2		Pro Forma
(Dollars and shares in thousands, except per share amounts)
Operating revenues
	Service		$	4,098,856	$	157,807	$	3,941,049
	Equipment sales			353,228		11,164		342,064
		Total operating revenues		4,452,084		168,971		4,283,113
Operating expenses
	System operations (excluding Depreciation, amortization and   accretion reported below)			946,805		40,432		906,373
	Cost of equipment sold			935,947		23,683		912,264
	Selling, general and administrative (including charges from   affiliates of $104.3 million)			1,764,933		46,317		1,718,616
	Depreciation, amortization and accretion			608,633		10,262		598,371
	(Gain) loss on asset disposals and exchanges, net			18,088		-		18,088
	(Gain) loss on sale of business and other exit costs, net			21,022		-		21,022
		Total operating expenses		4,295,428		120,694		4,174,734
Operating income				156,656		48,277		108,379
Investment and other income (expense)
	Equity in earnings of unconsolidated entities (1)			90,364		(28,407)		118,771
	Interest and dividend income			3,644		-		3,644
	Gain (loss) on investment			(3,718)		-		(3,718)
	Interest expense			(42,393)		-		(42,393)
	Other, net			500		90		410
		Total investment and other income (expense)		48,397		(28,317)		76,714
Income before income taxes				205,053		19,960		185,093
	Income tax expense			63,977		-		63,977
Net income				141,076		19,960		121,116
	Less: Net income attributable to noncontrolling interests, net of tax			(30,070)		(19,960)		(10,110)
Net income attributable to U.S. Cellular shareholders			$	111,006	$	-	$	111,006
Basic weighted average shares outstanding (2)				84,645		-		84,645
Basic earnings per share attributable to U.S. Cellular shareholders			$	1.31	$	-	$	1.31
Diluted weighted average shares outstanding (2)				85,067		-		85,067
Diluted earnings per share attributable to U.S. Cellular shareholders			$	1.30	$	-	$	1.30

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The unaudited Pro Forma balance sheet gives effect to the Deconsolidation as if it had occurred on December 31, 2012.
United States Cellular Corporation Pro Forma Balance Sheet — Assets (Unaudited)
December 31, 2012			As Reported		NY1 & NY2 (3)		Pro Forma
(Dollars in thousands)
Current assets
	Cash and cash equivalents		$	378,358	$	-	$	378,358
	Short-term investments			100,676		-		100,676
	Accounts receivable
		Customers and agents		349,424		12,468		336,956
		Roaming		31,782		-		31,782
		Affiliated		375		-		375
		Other		63,639		13,681		49,958
	Inventory			155,886		-		155,886
	Income taxes receivable			1,612		-		1,612
	Prepaid expenses			62,560		40		62,520
	Net deferred income tax asset			35,419		-		35,419
	Other current assets			16,745		-		16,745
				1,196,476		26,189		1,170,287
Assets held for sale				216,763		-		216,763
Investments
	Licenses			1,456,794		-		1,456,794
	Goodwill			421,743		-		421,743
	Customer lists, net of accumulated amortization of $96,809			102		-		102
	Investments in unconsolidated entities (4)			144,531		(55,700)		200,231
	Long-term investments			50,305		-		50,305
				2,073,475		(55,700)		2,129,175
Property, plant and equipment
	In service and under construction			7,478,428		133,999		7,344,429
	Less: Accumulated depreciation			4,455,840		55,280		4,400,560
				3,022,588		78,719		2,943,869
Other assets and deferred charges				78,148		74		78,074
Total assets			$	6,587,450	$	49,282	$	6,538,168

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United States Cellular Corporation Pro Forma Balance Sheet — Liabilities and Equity (Unaudited)
December 31, 2012					As Reported		NY1 & NY2 (3)		Pro Forma
(Dollars and shares in thousands)
Current liabilities
	Current portion of long-term debt				$	92	$	-	$	92
	Accounts payable
		Affiliated				10,725		-		10,725
		Trade				310,936		4,653		306,283
	Customer deposits and deferred revenues					192,113		4,853		187,260
	Accrued taxes					35,834		-		35,834
	Accrued compensation					90,418		-		90,418
	Other current liabilities					114,881		-		114,881
						754,999		9,506		745,493
Liabilities held for sale						19,594		-		19,594
Deferred liabilities and credits
	Net deferred income tax liability					849,818		-		849,818
	Other deferred liabilities and credits					288,441		801		287,640
Long-term debt						878,858		-		878,858
Commitments and contingencies						-		-		-
Noncontrolling interests with redemption features						493		-		493
Equity
	U.S. Cellular shareholders' equity
		Series A Common and Common Shares
			Authorized 190,000 shares (50,000 Series A Common and 140,000 Common Shares)
			Issued 88,074 shares (33,006 Series A Common and 55,068 Common Shares)
			Outstanding 84,168 shares (33,006 Series A Common and 51,162 Common Shares)
			Par Value ($1 per share) ($33,006 Series A Common and $55,068 Common Shares)			88,074		-		88,074
		Additional paid-in capital				1,412,453		-		1,412,453
		Treasury shares, at cost, 3,906 Common Shares				(165,724)		-		(165,724)
		Retained earnings				2,399,052		-		2,399,052
			Total U.S. Cellular shareholders' equity			3,733,855		-		3,733,855
	Noncontrolling interests					61,392		38,975		22,417
				Total equity		3,795,247		38,975		3,756,272
Total liabilities and equity					$	6,587,450	$	49,282	$	6,538,168

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(1)NY1 & NY2 Equity in earnings of unconsolidated entities represents U.S. Cellular’s share of NY1 & NY2 net income for the year ended December 31, 2012 based on U.S. Cellular’s ownership interests in the Partnerships.

(2)The number of basic and diluted shares outstanding did not change as a result of the Deconsolidation.

(3)In accordance with GAAP, U.S. Cellular will recognize a non-cash gain in the second quarter of 2013 as a result of the Deconsolidation.  This has not been included as a pro forma adjustment to the unaudited Pro Forma Balance Sheet as of December 31, 2012 as the gain is not estimable at this time.  Note that the gain would not impact the unaudited Pro Forma Statement of Operations due to its non-recurring nature.

(4)As a result of the Deconsolidation, U.S. Cellular’s interest in the Partnerships is reflected in Investments in unconsolidated entities.

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