Orange County - Poughkeepsie Limited Partnership

Balance Sheets - As of December 31, 2012 and 2011

(Dollars in Thousands)

	2012		2011
ASSETS

CURRENT ASSETS:
Accounts receivable, net of allowance of $693 and $945	$	19,694	$	17,597
Unbilled revenue	2,563		2,765
Prepaid expenses and other current assets	113		163

Total current assets	22,370		20,525

PROPERTY, PLANT AND EQUIPMENT—Net	41,072		39,596

TOTAL ASSETS	$	63,442	$	60,121

LIABILITIES AND PARTNERS’ CAPITAL

CURRENT LIABILITIES:
Accounts payable and accrued liabilities	$	7,930	$	8,277
Distribution payable to partner	13,000		13,000
Advance billings and customer deposits	8,185		7,421

Total current liabilities	29,115		28,698

LONG TERM LIABILITIES:
Long term distribution payable to partner	—		13,000
Other long term liabilities	1,047		802

Total long term liabilities	1,047		13,802

Total liabilities	30,162		42,500

PARTNERS’ CAPITAL	33,280		17,621

TOTAL LIABILITIES AND PARTNERS’ CAPITAL	$	63,442	$	60,121

See notes to financial statements.

Orange County - Poughkeepsie Limited Partnership

Statements of Operations - Years Ended December 31, 2012, 2011 and 2010

(Dollars in Thousands)

	2012		2011		2010

OPERATING REVENUE:
Service revenue	$	266,307	$	245,161	$	187,985
Equipment and other	44,109		28,179		—

Total operating revenue	310,416		273,340		187,985

OPERATING COSTS AND EXPENSES:
Cost of service (exclusive of depreciation and amortization)	87,678		75,073		23,859
Depreciation and amortization	8,131		7,593		7,048
Cost of equipment	55,903		39,476		—
Selling, general and administrative	81,152		53,832		2,987

Total operating costs and expenses	232,864		175,974		33,894

OPERATING INCOME	77,552		97,366		154,091

INTEREST INCOME, Net	14		40		1,034

NET INCOME	$	77,566	$	97,406	$	155,125

Allocation of Net Income:
Limited Partners	$	23,269	$	29,222	$	46,538
General Partner	$	54,297	$	68,184	$	108,587

See notes to financial statements.

Orange County - Poughkeepsie Limited Partnership

Statements of Changes in Partners’ Capital - Years Ended December 31, 2012, 2011 and 2010

(Dollars in Thousands)

	General Partner			Limited Partners
	Verizon Wireless of the East LP			Verizon Wireless of the East LP			Cellco Partnership			Warwick Valley Telephone Company			Total Partners’ Capital

BALANCE—January 1, 2010	$	30,987		$	6,640		$	3,052		$	3,588		$	44,267

Distributions	(108,500		)	(23,250		)	(10,682		)	(12,568		)	(155,000		)

Net Income	108,587			23,269			10,691			12,578			155,125

BALANCE—December 31, 2010	31,074			6,659			3,061			3,598			44,392

Distributions	(68,093		)	(14,591		)	(6,704		)	(13,600		)	(102,988		)

Contributions	—			—			4,811			—			4,811

Guaranteed Distributions	—			—			—			(26,000		)	(26,000		)

Net Income	68,184			14,611			6,713			7,898			97,406

BALANCE—December 31, 2011	31,165			6,679			7,881			(28,104		)	17,621

Distributions	(47,159		)	(10,105		)	(4,643		)	—			(61,907		)

Net Income	54,297			11,634			5,345			6,290			77,566

BALANCE—December 31, 2012	$	38,303		$	8,208		$	8,583		$	(21,814	)	$	33,280

See notes to financial statements.

Orange County - Poughkeepsie Limited Partnership

Statements of Cash Flows - Years Ended December 31, 2012, 2011 and 2010

(Dollars in Thousands)

	2012			2011			2010
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	77,566		$	97,406		$	155,125
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	8,131			7,593			7,048
Provision for losses on accounts receivable	1,416			1,403			—
Changes in certain assets and liabilities:
Accounts receivable	(3,513		)	(18,814		)	23
Unbilled revenue	202			(1,477		)	(82		)
Prepaid expenses and other current assets	50			(80		)	(6		)
Accounts payable and accrued liabilities	(315		)	21,093			91
Advance billings and customer deposits	764			7,421			—
Long term liabilities	245			13,175			173

Net cash provided by operating activities	84,546			127,720			162,372

CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures, net	(9,639		)	(12,902		)	(5,569		)
Change in due from affiliate, net	—			9,359			(1,803		)

Net cash used in investing activities	(9,639		)	(3,543		)	(7,372		)

CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to partners	(74,907		)	(128,988		)	(155,000		)
Contributions from partners	—			4,811			—

Net cash used in financing activities	(74,907		)	(124,177		)	(155,000		)

CHANGE IN CASH	—			—			—

CASH—Beginning of year	—			—			—

CASH—End of year	$	—		$	—		$	—

NONCASH TRANSACTIONS FROM INVESTING ACTIVITIES:

Accruals for Capital Expenditures	$	62		$	94		$	100

See notes to financial statements.

Orange County - Poughkeepsie Limited Partnership

Notes to Financial Statements

(Dollars in Thousands)

1. ORGANIZATION AND MANAGEMENT

Orange County - Poughkeepsie Limited Partnership — Orange County - Poughkeepsie Limited Partnership (the “Partnership”) was formed in 1987. The principal activity of the Partnership is providing cellular service in the Orange County and Poughkeepsie, New York metropolitan service areas.

The partners and their respective ownership percentages as of December 31, 2012, 2011 and 2010 are as follows:

General Partner:
Verizon Wireless of the East LP*	70.0	%

Limited Partners:
Verizon Wireless of the East LP*	15.0	%
Warwick Valley Telephone Company (“Warwick”)	8.1081	%
Cellco Partnership	6.8919	%

* Verizon Wireless of the East LP is a partnership between Verizon Wireless of Georgia LLC and Verizon Wireless Acquisition South LLC, which hold a controlling interest, and Verizon ELPI Holding Corp. (a subsidiary of Verizon Communications Inc.) which holds a preferred interest. Verizon Wireless of the East LP is consolidated by Cellco Partnership (d/b/a Verizon Wireless) (“Cellco”).

In accordance with the partnership agreement, Cellco is responsible for managing the operations of the partnership (See Note 5).

On May 26, 2011, the General Partner and Warwick executed an agreement (the “Agreement”) that converted the Partnership from a wholesale business to a retail business effective May 1, 2011. As part of the Agreement, Cellco contributed to the Partnership the assets and liabilities directly used in and arising out of the existing retail operations in the Orange County and Poughkeepsie metropolitan service areas. Per the terms of the Agreement, no adjustments were made to the Partnership interests as a result of this contribution. Pursuant to the Agreement, Warwick received guaranteed cash distributions from the Partnership of $13,000 and $13,600 in 2012 and 2011, respectively, and is entitled to receive a guaranteed cash distribution of $13,000 in 2013. Warwick is only entitled to receive guaranteed distributions in periods during which Warwick holds its current partnership interest for the entire calendar periods. Annual cash distributions shall be paid in equal quarterly amounts.

The Agreement gave Warwick the right to require Cellco to purchase all of Warwick’s Partnership interest (the “Put Option”) at any time during April 2013 or April 2014. The purchase price under the Put Option shall be the greater of $50,000 or the product of five times the EBITDA of the Partnership for the calendar year preceding the exercise of the Put Option, times Warwick’s 8.1081% ownership.

In connection with the Agreement, Cellco leased to the Partnership certain 700 MHz spectrum to facilitate the build out of the wireless network (See Note 6).

In 2012, management determined that Verizon Wireless of the East LP’s ownership percentage should have separately reflected the General and Limited Partnership interests, in accordance with the partnership agreement. Net income, distributions and capital should have reflected the same separation. The financial statements should have disclosed that Verizon Wireless of the East LP had a 70% General Partnership interest and a 15% Limited Partnership interest. Accordingly, the Statements of Changes in Partners’ Capital for 2011 and 2010 have been revised to allocate Verizon Wireless of the East LP’s capital, net income and distributions between General Partner and Limited Partner interest. The net income for 2011 and 2010 presented below the Statements of Operations previously allocated $82,795 and $131,856, respectively, to the General Partner. The allocation should have been $68,184 and $108,587, respectively. Additionally, the net income for 2011 and 2010 previously allocated to the Limiter Partner was $14,611 and $23,269, respectively. The allocation should have been $29,222 and $46,538, respectively.

2. SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates — The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect reported amounts and disclosures. Actual results could differ from those estimates. Estimates are used for, but are not limited to, the accounting for: allocations, allowance for uncollectible accounts receivable, unbilled revenue, depreciation and amortization, useful lives and impairment of assets, accrued expenses, and contingencies.

Revenue Recognition — The Partnership offers products and services to our customers through bundled arrangements. These arrangements involve multiple deliverables which may include products, services, or a combination of products and services.

On May 1, 2011, the Partnership prospectively adopted the accounting standard updates regarding revenue recognition for multiple deliverable arrangements, and arrangements that include software elements. These updates require a vendor to allocate revenue in an arrangement using its best estimate of selling price if neither vendor specific objective evidence nor third party evidence of selling price exists. The residual method of revenue allocation is no longer permissible. These accounting standard updates do not change our units of accounting for bundled arrangements, nor do they materially change how we allocate arrangement consideration to our various products and services. Accordingly, the adoption of these standard updates did not have a significant impact on the financial

statements. Additionally, we do not currently foresee any changes to our products, services or pricing practices that will have a significant effect on the financial statements in periods after the initial adoption, although this could change.

The Partnership earns revenue by providing access to its network (access revenue) and usage of its network (usage revenue), which includes voice and data revenue. Customers are associated with the Partnership based upon mobile identification number. For agreements involving the resale of third-party services in which the Partnership is considered the primary obligor in the arrangements, the Partnership records revenue gross at the time of sale. The roaming rates charged by the Partnership to Cellco do not necessarily reflect current market rates. The Partnership will continue to re-evaluate the rates on a periodic basis (See Note 5). Effective May 1, 2011 (See Note 1), access revenue is generally billed one month in advance and is recognized when earned; the unearned portion is classified in Advance billings on the balance sheet. Usage revenue is recognized when service is rendered and included in Unbilled revenue until billed. Equipment sales revenue associated with the sale of wireless devices and related equipment costs are recognized when the products are delivered to and accepted by the customer, as this is considered to be a separate earnings process from the sale of wireless services. Customer activation fees charged to customers are considered additional consideration and are recorded in Equipment and other revenue, generally, at the time of customer acceptance.

Wireless bundled service plans primarily consist of wireless voice and data services. The bundling of a voice plan with a text messaging plan (“Talk & Text”), for example, creates a multiple deliverable arrangement consisting of a voice component and a data component in the form of text messaging. For these arrangements, revenue is allocated to each deliverable using a relative selling price method. Under this method, arrangement consideration is allocated to each separate deliverable based on our standalone selling price for each product or service, up to the amount that is not contingent upon providing additional services. For equipment sales, the Partnership currently subsidizes the cost of wireless devices. The amount of this subsidy is generally contingent on the arrangement and terms selected by the customer. The equipment revenue is recognized up to the amount collected when the wireless device is sold.

Approximately 97% of the Partnership’s 2010 revenue was affiliate revenue due to the fact that Cellco was the Partnership’s primary reseller. The wholesale rates charged to Cellco did not necessarily reflect current market rates.

The Partnership reports taxes imposed by governmental authorities on revenue-producing transactions between us and our customers on a net basis.

Operating Costs and Expenses — Operating expenses include expenses incurred directly by the Partnership, as well as an allocation of selling, general and administrative, and operating costs incurred by Cellco or its affiliates on behalf of the Partnership. Employees of Cellco provide services performed on behalf of the Partnership. These employees are not employees of the Partnership, therefore operating expenses include direct and

allocated charges of salary and employee benefit costs for the services provided to the Partnership. Cellco believes such allocations, principally based on the Partnership’s percentage of total customers, customer gross additions or minutes-of-use, are in accordance with the Partnership Agreement. Effective May 1, 2011, the roaming rates charged to the Partnership by Cellco do not necessarily reflect current market rates. The Partnership will continue to re-evaluate the rates on a periodic basis (see Note 5).

Retail Stores— Effective May 1, 2011 (See Note 1), the daily operations of all retail stores owned by the Partnership are managed by Cellco. All fixed assets, liabilities, income and expenses related to these retail stores are recorded in the financial statements of the Partnership.

Income Taxes — The Partnership is not a taxable entity for federal and state income tax purposes. Any taxable income or loss is apportioned to the partners based on their respective partnership interests and is reported by them individually.

Inventory — Inventory is owned by Cellco and is not recorded on the Partnership’s financial statements. Effective May 1, 2011 (See Note 1), upon sale, the related cost of the inventory is transferred to the Partnership at Cellco’s cost basis and included in the accompanying statements of operations.

Allowance for Doubtful Accounts — The Partnership maintains allowances for uncollectible accounts receivable for estimated losses resulting from the inability of customers to make required payments. Estimates are based on the aging of the accounts receivable balances and the historical write-off experience, net of recoveries.

Property, Plant and Equipment — Property, plant and equipment primarily represents costs incurred to construct and expand capacity and network coverage on mobile telephone switching offices and cell sites. The cost of property, plant and equipment is depreciated over its estimated useful life using the straight-line method of accounting. Leasehold improvements are amortized over the shorter of their estimated useful lives or the term of the related lease. Major improvements to existing plant and equipment are capitalized. Routine maintenance and repairs that do not extend the life of the plant and equipment are charged to expense as incurred.

Upon the sale or retirement of property, plant and equipment, the cost and related accumulated depreciation or amortization are eliminated and any related gain or loss is reflected in the statements of operations. All property, plant and equipment purchases are made through an affiliate of Cellco. Transfers of property, plant and equipment between Cellco and affiliates are recorded at net book value.

Interest expense and network engineering costs incurred during the construction phase of the Partnership’s network and real estate properties under development are capitalized as part of property, plant and equipment and recorded as construction in progress until the projects are completed and placed into service.

FCC Licenses — The Federal Communications Commission (“FCC”) issues licenses that authorize cellular carriers to provide service in specific cellular geographic service areas. The FCC grants licenses for terms of up to ten years. In 1993 the FCC adopted specific standards to apply to cellular renewals, concluding it will award a license renewal to a cellular licensee that meets certain standards of past performance. Historically, the FCC has granted license renewals routinely and at nominal costs, which are expensed as incurred. All wireless licenses issued by the FCC that authorize the Partnership to provide cellular services are recorded on the books of Cellco. The current terms of the Partnership’s FCC licenses expire in January 2018. Cellco believes it will be able to meet all requirements necessary to secure renewal of the Partnership’s cellular licenses.

Valuation of Assets — Long-lived assets, including property, plant and equipment and intangible assets with finite lives, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. The impairment loss would be measured as the amount by which the carrying amount of the asset exceeds the fair value of the asset.

Cellco re-evaluates the useful life determination for wireless licenses at least annually to determine whether events and circumstances continue to support an indefinite useful life. Moreover, Cellco has determined that there are currently no legal, regulatory, contractual, competitive, economic or other factors that limit the useful life of the Partnership’s wireless licenses.

Cellco tests its wireless licenses for potential impairment annually, and more frequently if indications of impairment exist. Cellco evaluates its licenses on an aggregate basis, using a direct income-based value approach. This approach estimates fair value using a discounted cash flow analysis to estimate what a marketplace participant would be willing to pay to purchase the aggregated wireless licenses as of the valuation date. If the fair value of the aggregated wireless licenses is less than the aggregated carrying amount of the wireless licenses, an impairment is recognized. In addition, Cellco believes that under the Partnership agreement it has the right to allocate, based on a reasonable methodology, any impairment loss recognized by Cellco for all licenses included in Cellco’s national footprint. Cellco does not charge the Partnership for the use of any FCC license recorded on its books (except for the annual cost of $2,018 related to the spectrum leases). Cellco evaluated its wireless licenses for potential impairment as of December 15, 2012 and December 15, 2011. These evaluations resulted in no impairment of wireless licenses.

Concentrations — The Partnership maintains allowances for uncollectible accounts receivable for estimated losses resulting from the inability of customers to make required payments. Estimates are based on historical net write-off experience. No single customer receivable is large enough to present a significant financial risk to the partnership.

Cellco and the Partnership rely on local and long-distance telephone companies, some of which are related parties (See Note 5), and other companies to provide certain communication services. Although management believes alternative telecommunications facilities could be found in a timely manner, any disruption of these services could potentially have a material adverse impact on the Partnership’s operating results.

Although Cellco attempts to maintain multiple vendors for its network assets and inventory, which are important components of its operations, they are currently acquired from only a few sources. Certain of these products are in turn utilized by the Partnership and are important components of the Partnership’s operations. If the suppliers are unable to meet Cellco’s needs as it builds out its network infrastructure and sells service and equipment, delays and increased costs in the expansion of the Partnership’s network infrastructure or losses of potential customers could result, which would adversely affect operating results.

Financial Instruments — The Partnership’s trade receivables and payables are short-term in nature, and accordingly, their carrying value approximates fair value.

Due from affiliate — Due from affiliate principally represents the Partnership’s cash position with Cellco. Cellco manages, on behalf of the Partnership, all cash, inventory, investing and financing activities of the Partnership. As such, the change in due from affiliate is reflected as an investing activity or a financing activity in the statements of cash flows depending on whether it represents a net asset or net liability for the Partnership.

Additionally, administrative and operating costs incurred by Cellco on behalf of the Partnership, as well as property, plant and equipment transactions with affiliates, are charged to the Partnership through this account. Starting in 2011, interest income is based on the Applicable Federal Rate which was approximately .2% and .4% for the years ended December 31, 2012 and 2011, respectively. Interest expense is calculated by applying Cellco’s average cost of borrowing from Verizon Communications, Inc, which was approximately 7.3% and 6.8% for the years ended December 31, 2012 and 2011, respectively. For 2010, interest income or interest expense was based on the average monthly outstanding balance in this account and was calculated by applying Cellco’s average cost of borrowing from Verizon Communications, Inc., which was approximately 5.8% for the year ended December 31, 2010. Included in net interest income is interest income of $17, $45 and $1,034 for the years ended December 31, 2012, 2011 and 2010, respectively, related to due from affiliate.

Distributions - The Partnership is required to make distributions to its partners based upon the Partnership’s operating results, cash availability and financing needs as determined by the General Partner at the date of the distribution. See Note 1 regarding guaranteed distributions to Warwick related to the retail combination of the Partnership.

Recently Adopted Accounting Standards - During the first quarter of 2012, we adopted the accounting standard update regarding fair value measurement. This update was issued

3. PROPERTY, PLANT AND EQUIPMENT, NET

Property, plant and equipment consist of the following as of December 31, 2012 and 2011:

	2012			2011

Buildings and improvements (20-40 years)	$	20,412		$	18,895
Wireless plant and equipment (3-15 years)	61,533			56,346
Furniture, fixtures and equipment (3-10 years)	1,742			1,583
Leasehold improvements (5 years)	8,977			7,985

	92,664			84,809

Less: accumulated depreciation	(51,592		)	(45,213		)

Property, plant and equipment, net	$	41,072		$	39,596

Depreciation expense	$	8,131		$	7,593

Capitalized network engineering costs of $610 and $714 were recorded during the years ended December 31, 2012 and 2011, respectively. Construction in progress included in certain classifications shown above, principally wireless plant and equipment, amounted to $2,745 and $1,819 as of December 31, 2012 and 2011, respectively.

4. CURRENT LIABILITIES

Accounts payable and accrued liabilities consist of the following as of December 31, 2012 and 2011:

	2012		2011

Accounts payable	$	7,521	$	7,058
Accrued liabilities	409		1,219
Accounts payable and accrued libilities	$	7,930	$	8,277

Advance billings and customer deposits consist of the following as of December 31, 2012 and 2011:

	2012		2011

Advance billings	$	7,954	$	7,257
Customer deposits	231		164
Advance billings and customer deposits	$	8,185	$	7,421

5. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES

In addition to fixed asset purchases (see Note 2), substantially all of service revenues, equipment and other revenues, cost of service, cost of equipment, and selling, general and administrative expenses represent transactions processed by affiliates (Cellco and its related parties) on behalf of the Partnership or represent transactions with affiliates. These transactions consist of revenues and expenses that pertain to the Partnership which are processed by Cellco and directly attributed to or directly charged to the Partnership. They also include certain revenues and expenses that are processed or incurred by Cellco which are allocated to the Partnership based on factors such as the Partnership’s percentage of customers, gross customer additions, or minutes of use. These transactions do not necessarily represent arm’s length transactions and may not represent all revenues and costs if the Partnership operated on a standalone basis.

Service revenues — Effective May 1, 2011 (See Note 1), service revenues include monthly customer billings processed by Cellco on behalf of the Partnership and roaming revenues relating to customers of other affiliated markets that are specifically identified to the Partnership. Service revenue also includes long distance, data, and certain revenue reductions including revenue concessions that are processed by Cellco and allocated to the Partnership based on certain factors deemed appropriate by Cellco.

Equipment and other revenues - Effective May 1, 2011 (See Note 1), equipment revenue includes equipment sales processed by Cellco and specifically identified to the Partnership, as well as certain handset and accessory revenues, contra-revenues including equipment concessions, and coupon rebates that are processed by Cellco and allocated to the Partnership based on certain factors deemed appropriate by Cellco. Other revenues include other fees and surcharges charged to the customer that are specifically identified to the Partnership.

Cost of Service - Cost of service includes switch costs that are specifically indentified to the Partnership. Cost of service also includes cost of telecom and long distance that are incurred by Cellco and allocated to the Partnership based on certain factors deemed appropriate by Cellco. Effective May 1, 2011 (See Note 1), roaming costs relating to customers roaming in other affiliated markets and application content that are incurred by Cellco and allocated to the Partnership were also included in cost of service. The Partnership has also entered into lease agreements for the right to use additional spectrum owned by Cellco. See Note 6 for further information regarding this arrangement.

Cost of equipment - Effective May 1, 2011 (See Note 1), cost of equipment includes the cost of inventory specifically identified and transferred to the Partnership (See Note 2). Cost of equipment also includes certain costs related to handsets, accessories and other costs incurred by Cellco and allocated to the Partnership.

Selling, general and administrative - Selling, general and administrative expenses include customer billing and salaries that are specifically identified to the Partnership as well as

incurred by Cellco and allocated to the Partnership. Effective May 1, 2011 (See Note 1), selling, general and administrative expenses include commissions, customer billing, office telecom, customer care, salaries, sales and marketing and advertising expenses.

6. COMMITMENTS

Cellco, on behalf of the Partnership, and the Partnership itself have entered into operating leases for facilities, equipment, and spectrum used in its operations. Lease contracts include renewal options that include rent expense adjustments based on the Consumer Price Index as well as annual and end-of-lease term adjustments. Rent expense is recorded on a straight-line basis. The noncancellable lease term used to calculate the amount of the straight-line rent expense is generally determined to be the initial lease term, including any optional renewal terms that are reasonably assured. Leasehold improvements related to these operating leases are amortized over the shorter of their estimated useful lives or the noncancellable lease term. For the years ended December 31, 2012, 2011 and 2010, the Partnership incurred a total of $6,555, $5,566, and $3,553, respectively, as rent expense related to these operating leases, which was included in cost of service and general and administrative expenses in the accompanying statements of operations. Aggregate future minimum rental commitments under noncancellable operating leases, excluding renewal options that are not reasonably assured for the years shown are as follows:

Years	Amount

2013	$	5,054
2014	4,712
2015	4,266
2016	3,649
2017	2,075
2018 and thereafter	7,638

Total minimum payments	$	27,394

On January 1, 2011, the Partnership entered into a 700 MHz upper band spectrum lease with Cellco. The lease includes an initial term extending through June 1, 2019 and a renewal option through June 1, 2029. The license, held by Cellco, is considered an indefinite-lived intangible as Cellco believes it will be able to meet all requirements necessary to secure renewal of this license. The Partnership accounts for this spectrum lease as an executory contract which is similar to an operating lease.

Based on the terms of the spectrum license lease as of December 31, 2012, future spectrum lease obligations, including the renewal period, are expected to be as follows:

Years	Amount

2013	$	767
2014	767
2015	767
2016	767
2017	767
2018 and thereafter	8,752

Total minimum payments	$	12,587

The General Partner currently expects that the renewal option in the lease will be exercised.

From time to time Cellco enters into purchase commitments, primarily for network equipment, on behalf of the Partnership. These represent legal obligations of Cellco.

7. CONTINGENCIES

Cellco and the Partnership are subject to lawsuits and other claims including class actions, product liability, patent infringement, intellectual property, antitrust, partnership disputes, and claims involving relations with resellers and agents. Cellco is also currently defending lawsuits filed against it and other participants in the wireless industry alleging various adverse effects as a result of wireless phone usage. Various consumer class action lawsuits allege that Cellco violated certain state consumer protection laws and other statutes and defrauded customers through misleading billing practices or statements. These matters may involve indemnification obligations by third parties and/or affiliated parties covering all or part of any potential damage awards against Cellco and the Partnership and/or insurance coverage. All of the above matters are subject to many uncertainties, and the outcomes are not currently predictable.

The Partnership may be allocated a portion of the damages that may result upon adjudication of these matters if the claimants prevail in their actions. In none of the currently pending matters is the amount of accrual material. An estimate of the reasonably possible loss or range of loss in excess of the amounts already accrued to either Cellco or the Partnership with respect to these matters as of December 31, 2012 cannot be made at this time due to various factors typical in contested proceedings, including (1) uncertain damage theories and demands; (2) a less than complete factual record; (3) uncertainty concerning legal theories and their resolution by courts or regulators; and (4) the unpredictable nature of the opposing party and its demands. We continuously monitor these proceedings as they develop and adjust any accrual or disclosure as needed. We do not expect that the ultimate resolution of any pending regulatory or legal matter in future periods will have a material effect on the financial condition of the Partnership, but it could have a material effect on our results of operations for a given reporting period.

8. RECONCILIATION OF ALLOWANCE FOR DOUBTFUL ACCOUNTS

	Balance at			Balance at		Additions		Write-offs			Balance at
	Beginning			Retail Combination		Charged to		Net of			End
	of the Year			May 1, 2011		Operations		Recoveries			of the Year

Accounts Receivable Allowances:
2012	$	945		$	—	$	1,416	$	(1,668	)	$	693
2011	—		*	656		1,403		(1,114		)	945

* See Note 1.

******

TABLE OF CONTENTS

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM	1

Balance Sheets - As of December 31, 2012 and 2011	2

Statements of Operations - Years Ended December 31, 2012, 2011 and 2010	3

Statements of Changes in Partners’ Capital - Years Ended December 31, 2012, 2011 and 2010	4

Statements of Cash Flows - Years Ended December 31, 2012, 2011 and 2010	5

Notes to Financial Statements	6