U.S. Cellular assesses its existing wireless interests on an ongoing basis with a goal of improving the competitiveness of its operations and maximizing its long-term return on investment. As part of this strategy, U.S. Cellular reviews attractive opportunities to acquire additional operating markets and wireless spectrum. In addition, U.S. Cellular may seek to divest outright or include in exchanges for other wireless interests those interests that are not strategic to its long-term success.

Acquisitions did not have a material impact on U.S. Cellular's consolidated financial statements for the periods presented and pro forma results, assuming acquisitions had occurred at the beginning of each period presented, would not be materially different from the results reported.

On November 6, 2012, U.S. Cellular entered into a Purchase and Sale Agreement with subsidiaries of Sprint Nextel Corporation (“Sprint”). Pursuant to the Purchase and Sale Agreement, on May 16, 2013, U.S. Cellular transferred customers and certain PCS license spectrum to Sprint in U.S. Cellular's Chicago, central Illinois, St. Louis and certain Indiana/Michigan/Ohio markets (“Divestiture Markets”) in consideration for $480 million in cash. The Purchase and Sale Agreement also contemplated certain other agreements, together with the Purchase and Sale Agreement collectively referred to as the “Divestiture Transaction.”

U.S. Cellular has retained other assets and liabilities related to the Divestiture Markets, including network assets, retail stores and related equipment, and other buildings and facilities. The transaction does not affect spectrum licenses held by U.S. Cellular or variable interest entities (“VIEs”) that are not currently used in the operations of the Divestiture Markets. Pursuant to the Purchase and Sale Agreement, U.S. Cellular and Sprint also entered into certain other agreements, including customer and network transition services agreements, which require U.S. Cellular to provide customer, billing and network services to Sprint for a period of up to 24 months after the May 16, 2013 closing date. Sprint will reimburse U.S. Cellular for providing such services at an amount equal to U.S. Cellular's cost, including applicable overhead allocations. In addition, these agreements require Sprint to reimburse U.S. Cellular up to $200 million (the “Sprint Cost Reimbursement”) for certain network decommissioning costs, network site lease rent and termination costs, network access termination costs, and employee termination benefits for specified engineering employees. It is estimated that up to $160 million of the Sprint Cost Reimbursement will be recorded in (Gain) loss on sale of business and other exit costs, net and up to $40 million of the Sprint Cost Reimbursement will be recorded in System operations in the Consolidated Statement of Operations. For the nine months ended September 30, 2013, $1.1 million of the Sprint Cost Reimbursement had been received and recorded in Cash received from divestitures in the Consolidated Statement of Cash Flows.

Financial impacts of the Divestiture Transaction are classified in the Consolidated Statement of Operations within Operating income (loss). The table below describes the amounts U.S. Cellular has recognized and expects to recognize in the Consolidated Statement of Operations between the date the Purchase and Sale Agreement was signed and the end of the transition services period.


(Dollars in thousands)			Expected Period of Recognition		Projected Range				Cumulative Amount Recognized as of September 30, 2013		Actual Amount Recognized Nine Months Ended September 30, 2013		Actual Amount Recognized Three Months Ended September 30, 2013
(Gain) loss on sale of business and other exit costs, net
	Proceeds from Sprint
		Purchase price		2013	$	(480,000)	$	(480,000)	$	(480,000)	$	(480,000)	$	-
		Sprint Cost Reimbursement		2013-2014		(120,000)		(160,000)		(4,221)		(4,221)		(4,213)
	Net assets transferred			2013		213,593		213,593		213,593		213,593		-
	Non-cash charges for the write-off and write-down of property under construction and related assets			2012-2013		10,000		14,000		10,726		54		(27)
	Employee related costs including severance, retention and outplacement			2012-2014		15,000		20,000		15,071		2,462		(641)
	Contract termination costs			2012-2014		125,000		175,000		18,840		18,781		2,176
	Transaction costs			2012-2013		4,000		6,000		5,218		4,081		362
		Total (Gain) loss on sale of business and other exit costs, net			$	(232,407)	$	(211,407)	$	(220,773)	$	(245,250)	$	(2,343)

Depreciation, amortization and accretion expense
	Incremental depreciation, amortization and accretion, net of salvage values			2012-2014		175,000		210,000		154,058		134,000		45,676
(Increase) decrease in Operating income					$	(57,407)	$	(1,407)	$	(66,715)	$	(111,250)	$	43,333

Incremental depreciation, amortization and accretion, net of salvage values represents anticipated amounts to be recorded in the specified time periods as a result of a change in estimate for the remaining useful life and salvage value of certain assets and a change in estimate which accelerated the settlement dates of certain asset retirement obligations in conjunction with the Divestiture Transaction. Specifically, for the years indicated, this is estimated depreciation, amortization and accretion recorded on assets and liabilities of the Divestiture Markets after the November 6, 2012 transaction date less depreciation, amortization and accretion that would have been recorded on such assets and liabilities in the normal course, absent the Divestiture Transaction. As a result of the accelerated settlement dates of certain asset retirement obligations, U.S. Cellular reclassified $34.0 million of its asset retirement obligations from long to short-term liabilities at September 30, 2013.


		As a result of the transaction, U.S. Cellular recognized the following amounts in the Consolidated Balance Sheet:

					Nine Months Ended September 30, 2013
(Dollars in thousands)			Balance December 31, 2012		Costs Incurred		Cash Settlements (1)		Adjustments (2)		Balance September 30, 2013
Accrued compensation
	Employee related costs including severance, retention, outplacement		$	12,305	$	6,750	$	(11,460)	$	(4,288)	$	3,307
Other current liabilities
	Contract termination costs		$	30	$	12,201	$	(6,561)	$	-	$	5,670
Other deferred liabilities and credits
	Contract termination costs		$	-	$	7,246	$	(1,488)	$	-	$	5,758

(1)		Cash settlement amounts are included in either the Net income or changes in Other assets and liabilities line items as part of Cash flows from operating activities on the Consolidated Statement of Cash Flows.
(2)		Adjustment to liability represents changes to previously accrued amounts.

On October 4, 2013, U.S. Cellular sold the majority of its Mississippi Valley non-operating market license (“unbuilt license”) for $308.0 million. The sale will result in a $252.2 million gain and a $96.0 million current tax expense, which will be recorded in the fourth quarter of 2013. In addition, on August 14, 2013 U.S. Cellular entered into a definitive agreement to sell the majority of its St. Louis area unbuilt license for $92.3 million. This transaction is subject to regulatory approval and is expected to close by the end of 2013. In accordance with GAAP, the book value of both licenses has been accounted for and disclosed as “held for sale” in the Consolidated Balance Sheet at September 30, 2013.

	U.S. Cellular acquisitions during the nine months ended September 30, 2013 and 2012 and the allocation of the purchase price for these acquisitions were as follows:

				Allocation of Purchase Price
		Purchase Price		Goodwill		Licenses		Intangible Assets Subject to Amortization		Net Tangible Assets/(Liabilities)
(Dollars in thousands)
2013
Licenses		$	16,540	$	-	$	16,540	$	-	$	-

2012
Licenses		$	57,957	$	-	$	57,957	$	-	$	-

		At September 30, 2013 and December 31, 2012, the following assets and liabilities were classified in the Consolidated Balance Sheet as "Assets held for sale" and "Liabilities held for sale":

			Current Assets		Licenses		Goodwill		Property, Plant and Equipment		Loss on Assets Held for Sale (1)		Total Assets Held for Sale		Liabilities Held for Sale (2)
(Dollars in thousands)
September 30, 2013
Divestiture of Missouri Market (3)			$	726	$	2,909	$	669	$	3,179	$	(1,607)	$	5,876	$	471
Divestiture of Spectrum Licenses (4)				-		72,537		-		-		-		72,537		-
	Total		$	726	$	75,446	$	669	$	3,179	$	(1,607)	$	78,413	$	471

December 31, 2012
Divestiture Transaction			$	-	$	140,599	$	72,994	$	-	$	-	$	213,593	$	19,594
Bolingbrook Customer Care Center (5)				-		-		-		4,275		(1,105)		3,170		-
	Total		$	-	$	140,599	$	72,994	$	4,275	$	(1,105)	$	216,763	$	19,594

(1)		Loss on assets held for sale was recorded in (Gain) loss on sale of business and other exit costs, net in the Consolidated Statement of Operations.
(2)		Liabilities held for sale primarily consisted of Customer deposits and deferred revenues.
(3)		On May 15, 2013, U.S. Cellular entered into an agreement with a third party to sell the subscribers, spectrum and the network assets for a Missouri market.
(4)		U.S. Cellular and/or its consolidated VIEs entered into agreements with third parties to sell unbuilt licenses in Mississippi Valley; St. Louis, MO; South Bend-Mishawaka, IN and Jackson, MI.
(5)		Effective January 1, 2013, U.S. Cellular transferred its Bolingbrook Customer Care Center operations to an existing third party vendor.