UNITED STATES
SECURITIES AND EXCHANGE
COMMISSION
Washington, D.C. 20549
FORM
8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of The Securities Exchange Act of 1934
Date of Report (Date of earliest
event reported): May 16, 2013
TELEPHONE AND
DATA SYSTEMS, INC.
(Exact name of registrant as
specified in its charter)
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Delaware
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001-14157
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36-2669023
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(State
or other jurisdiction
of
incorporation)
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(Commission
File
Number)
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(I.R.S.
Employer
Identification
No.)
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30
North LaSalle Street, Suite 4000, Chicago, Illinois
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60602
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(Address
of principal executive offices)
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(Zip
Code)
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Registrant's telephone number, including
area code: (312) 630-1900
Not Applicable
(Former name or
former address, if changed since last report)
Check the appropriate box below if the
Form 8-K filing is intended to simultaneously satisfy the filing obligation of
the registrant under any of the following provisions (see General Instruction
A.2. below):
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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Item 2.01 Completion of Acquisition
or Disposition of Assets.
On
May 17, 2013, United States Cellular Corporation (“U.S. Cellular”), a
subsidiary of Telephone and Data Systems, Inc. (“TDS”), issued a press release
announcing the closing of the transactions contemplated by the Purchase and
Sale Agreement described below (the “Divestiture Transaction”). A copy of the
press release is incorporated by reference herein on Exhibit 99.1.
As
previously disclosed, on November 6, 2012, U.S. Cellular entered into a
Purchase and Sale Agreement and certain related agreements with subsidiaries of
Sprint Nextel Corp. (“Sprint”). TDS’ Current Report on Form 8-K dated November
6, 2012 describing the foregoing is incorporated herein by reference.
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 at closing,
subject to pro-rations of certain assets and liabilities.
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 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 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 for certain network decommissioning costs, network
site lease rent and termination costs, network access termination costs, and
employee termination benefits for specified engineering employees.
In
addition to the foregoing described arrangements, TDS and U.S. Cellular and
their affiliates have certain arms’ length, ordinary business relationships
with Sprint and its affiliates, including roaming agreements.
Because
the Divestiture Transaction meets at least one of the significance tests
specified in Item 2.01 of Form 8-K, TDS is incorporating, as Exhibit 99.2 to
this Form 8-K, unaudited pro forma condensed consolidated financial statements
for TDS as of and for the three months ended March 31, 2013 and for the year
ended December 31, 2012, that give effect to the Divestiture Transaction. Such
pro forma financial information was combined with pro forma information
relating to the deconsolidation of certain partnership interests, as previously
disclosed, and as described in the incorporated pro forma financial statements.
Item
8.01. Other Events
The
press release issued on May 17, 2013 also announced the declaration by U.S.
Cellular of a special cash dividend of $5.75 per share, payable on June 25,
2013 to all holders of U.S. Cellular Common Shares and Series A Common Shares
of record at the close of business on June 11, 2013. A copy of the press
release is incorporated by reference herein as Exhibit 99.1.
The
aggregate amount of the dividend is approximately $481 million. Because TDS
owns all of the Series A Common Shares and approximately 74.3% of the Common
Shares, representing approximately 84.4% of the shares of common stock of U.S.
Cellular, TDS will receive approximately $406 million of the total dividend and
U.S. Cellular’s public shareholders will receive approximately $75 million of
the total dividend. As a result, because TDS consolidates U.S. Cellular, the
amount of the outflow of cash from the TDS consolidated group as a result of
the U.S. Cellular dividend will be approximately $75 million.
Item
9.01. Financial Statements and Exhibits
(b) Pro Forma Financial Information
The unaudited pro forma condensed
consolidated financial statements of TDS as of and for the three months ended
March 31, 2013 and for the year ended December 31, 2012, that give effect to
the Divestiture Transaction, as discussed above in item 2.01, are incorporated
herein as Exhibit 99.2.
(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.