Document_And_Entity_Informatio
Document And Entity Information (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Jun. 30, 2014 | Jan. 31, 2015 | |
Entity Registrant Name | United States Cellular Corporation | ||
Entity Central Index Key | 821130 | ||
Document Type | 10-K | ||
Document Period End Date | 31-Dec-14 | ||
Amendment Flag | FALSE | ||
Current Fiscal Year End Date | -19 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Public Float | $547,778,270 | ||
Document Fiscal Year Focus | 2014 | ||
Document Fiscal Period Focus | FY | ||
Trading Symbol | USM | ||
Common Shares | |||
Entity Common Stock, Shares Outstanding | 51,010,000 | ||
Series A Common Shares | |||
Entity Common Stock, Shares Outstanding | 33,006,000 |
Consolidated_Statement_Of_Oper
Consolidated Statement Of Operations (USD $) | 12 Months Ended | ||
In Thousands, except Per Share data, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Operating revenues | |||
Service | $3,397,937 | $3,594,773 | $4,098,856 |
Equipment sales | 494,810 | 324,063 | 353,228 |
Total operating revenues | 3,892,747 | 3,918,836 | 4,452,084 |
Operating expenses | |||
System operations (excluding Depreciation, amortization and accretion reported below) | 769,911 | 763,435 | 946,805 |
Cost of equipment sold | 1,192,669 | 999,000 | 935,947 |
Selling, general and administrative (including charges from affiliates of $91.1 million, $99.2 million and $104.3 million in 2014, 2013 and 2012) | 1,591,914 | 1,677,395 | 1,764,933 |
Depreciation, amortization and accretion | 605,997 | 803,781 | 608,633 |
(Gain) loss on asset disposals, net | 21,469 | 30,606 | 18,088 |
(Gain) loss on sale of business and other exit costs, net | -32,830 | -246,767 | 21,022 |
(Gain) loss on license sales and exchanges | -112,993 | -255,479 | |
Total operating expenses | 4,036,137 | 3,771,971 | 4,295,428 |
Operating income (loss) | -143,390 | 146,865 | 156,656 |
Investment and other income (expense) | |||
Equity in earnings of unconsolidated entities | 129,764 | 131,949 | 90,364 |
Interest and dividend income | 12,148 | 3,961 | 3,644 |
Gain (loss) on investments | 18,556 | -3,718 | |
Interest expense | -57,386 | -43,963 | -42,393 |
Other, net | 160 | 288 | 500 |
Total investment and other income (expense) | 84,686 | 110,791 | 48,397 |
Income (loss) before income taxes | -58,704 | 257,656 | 205,053 |
Income tax expense (benefit) | -11,782 | 113,134 | 63,977 |
Net income (loss) | -46,922 | 144,522 | 141,076 |
Less: Net income (loss) attributable to noncontrolling interests, net of tax | -4,110 | 4,484 | 30,070 |
Net income (loss) attributable to U.S. Cellular shareholders | ($42,812) | $140,038 | $111,006 |
Basic weighted average shares outstanding | 84,213 | 83,968 | 84,645 |
Basic earnings (loss) per share attributable to U.S. Cellular shareholders | ($0.51) | $1.67 | $1.31 |
Diluted weighted average shares outstanding | 84,213 | 84,730 | 85,230 |
Diluted earnings (loss) per share attributable to U.S. Cellular shareholders | ($0.51) | $1.65 | $1.30 |
Special dividend per share to U.S. Cellular shareholders | $5.75 |
Consolidated_Statement_Of_Oper1
Consolidated Statement Of Operations Parenthetical (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Operating expenses | |||
Selling, general and administrative, charges from affiliates | $91.10 | $99.20 | $104.30 |
Consolidated_Statement_of_Cash
Consolidated Statement of Cash Flows (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Cash flows from operating activities | |||
Net income (loss) | ($46,922) | $144,522 | $141,076 |
Add (deduct) adjustments to reconcile net income to cash flows from operating activities | |||
Depreciation, amortization and accretion | 605,997 | 803,781 | 608,633 |
Bad debts expense | 101,282 | 98,864 | 67,372 |
Stock-based compensation expense | 22,383 | 15,844 | 21,466 |
Deferred income taxes, net | 57,604 | -75,348 | 49,244 |
Equity in earnings of unconsolidated entities | -129,764 | -131,949 | -90,364 |
Distributions from unconsolidated entities | 112,336 | 125,660 | 84,417 |
(Gain) loss on asset disposals, net | 21,469 | 30,606 | 18,088 |
(Gain) loss on sale of business and other exit costs, net | -32,830 | -246,767 | 21,022 |
(Gain) loss on license sales and exchanges | -112,993 | -255,479 | |
(Gain) loss on investments | -18,556 | 3,718 | |
Noncash interest expense | 1,155 | 1,059 | -1,822 |
Other operating activities | 26 | 646 | 546 |
Changes in assets and liabilities from operations | |||
Accounts receivable | 12,547 | -291,168 | -64,816 |
Equipment installment plans receivable | -188,829 | -591 | |
Inventory | -28,878 | -82,422 | -28,786 |
Accounts payable - trade | -95,587 | 85,199 | -4,977 |
Accounts payable - affiliate | -2,590 | 147 | -1,458 |
Customer deposits and deferred revenues | 33,524 | 66,344 | 30,353 |
Accrued taxes | -99,483 | 30,037 | 73,064 |
Accrued interest | 1,307 | 273 | 167 |
Other assets and liabilities | -59,412 | -9,805 | -27,652 |
Cash flows from operating activities | 172,342 | 290,897 | 899,291 |
Cash flows from investing activities | |||
Cash used for additions to property, plant and equipment | -605,083 | -717,862 | -826,400 |
Cash paid for aquisitions and licenses | -38,150 | -16,540 | -122,690 |
Cash received from divestitures | 179,842 | 811,120 | 49,932 |
Cash paid for investments | -120,000 | ||
Cash received for investments | 50,000 | 100,000 | 125,000 |
Federal Communications Commission deposit | -60,000 | ||
Other investing activities | 2,619 | -3,969 | -2,453 |
Cash flows from investing activities | -470,772 | 172,749 | -896,611 |
Cash flows from financing activities | |||
Issuance of long-term debt | 275,000 | ||
Repayment of borrowing under revolving credit facility | -150,000 | ||
Borrowing under revolving credit facility | 150,000 | ||
Common shares reissued for benefit plans, net of tax payments | 830 | 5,784 | -2,205 |
Common shares repurchased | -18,943 | -18,544 | -20,045 |
Payment of debt issuance costs | -9,644 | -23 | -514 |
Acquisition of licenses in common control transaction | -76,298 | ||
Dividends paid | -482,270 | ||
Distributions to noncontrolling interests | -3,056 | -3,766 | -22,970 |
Payments to acquire additional interest in subsidiaries | -1,005 | -3,167 | |
Other financing activities | -11 | -115 | 424 |
Cash flows from financing activities | 167,878 | -499,939 | -48,477 |
Net decrease in cash and cash equivalents | -130,552 | -36,293 | -45,797 |
Cash and cash equivalents | |||
Beginning of period | 342,065 | 378,358 | 424,155 |
End of period | $211,513 | $342,065 | $378,358 |
Consolidated_Balance_Sheet
Consolidated Balance Sheet (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Current assets | ||
Cash and cash equivalents | $211,513 | $342,065 |
Short-term investments | 50,104 | |
Accounts receivable | ||
Customers and agents, less allowances of $37,654 and $59,206, respectively | 466,048 | 467,255 |
Roaming | 23,865 | 30,136 |
Affiliated | 994 | 980 |
Other, less allowances of $859 and $1,032, respectively | 66,051 | 88,224 |
Inventory, net | 267,068 | 238,188 |
Prepaid expenses | 59,744 | 65,596 |
Net deferred income tax asset | 93,058 | 99,105 |
Other current assets | 90,834 | 19,538 |
Total current assets | 1,279,175 | 1,401,191 |
Assets held for sale | 107,055 | 16,027 |
Investments | ||
Licenses | 1,443,438 | 1,401,126 |
Goodwill | 370,151 | 387,524 |
Investments in unconsolidated entities | 283,014 | 265,585 |
Total investments | 2,096,603 | 2,054,235 |
Property, plant and equipment | ||
In service and under construction | 7,458,740 | 7,717,512 |
Less: Accumulated depreciation and amortization | 4,730,523 | 4,860,992 |
Property, plant and equipment, net | 2,728,217 | 2,856,520 |
Other assets and deferred charges | 276,218 | 117,735 |
Total assets | 6,487,268 | 6,445,708 |
Current liabilities | ||
Current portion of long-term debt | 46 | 166 |
Accounts payable | ||
Affiliated | 9,774 | 11,243 |
Trade | 306,845 | 405,583 |
Customer deposits and deferred revenues | 287,562 | 256,740 |
Accrued taxes | 36,652 | 73,820 |
Accrued compensation | 66,162 | 66,566 |
Other current liabilities | 149,853 | 192,055 |
Total current liabilities | 856,894 | 1,006,173 |
Liabilities held for sale | 20,934 | |
Deferred liabilities and credits | ||
Net deferred income tax liability | 859,867 | 836,297 |
Other deferred liabilities and credits | 284,002 | 315,073 |
Long-term debt | 1,151,819 | 878,032 |
Commitments and contingencies | ||
Noncontrolling interests with redemption features | 1,150 | 536 |
U.S. Cellular shareholders' equity | ||
Series A Common and Common Shares | 88,074 | 88,074 |
Additional paid-in capital | 1,472,558 | 1,424,729 |
Treasury Shares, at cost | -169,139 | -164,692 |
Retained earnings | 1,910,498 | 2,043,095 |
Total U.S. Cellular shareholders' equity | 3,301,991 | 3,391,206 |
Noncontrolling interests | 10,611 | 18,391 |
Total equity | 3,312,602 | 3,409,597 |
Total liabilities and equity | $6,487,268 | $6,445,708 |
Consolidated_Balance_Sheet_Par
Consolidated Balance Sheet Parenthetical (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, except Per Share data, unless otherwise specified | ||
Current assets | ||
Customers and agents, allowances | $37,654 | $59,206 |
Other, allowances | 859 | 1,032 |
U.S. Cellular shareholders' equity | ||
Authorized shares | 190,000 | 190,000 |
Issued shares | 88,074 | 88,074 |
Outstanding shares | 84,080 | 84,205 |
Par value | 88,074 | 88,074 |
Treasury shares | 3,994 | 3,869 |
Common Shares | ||
U.S. Cellular shareholders' equity | ||
Authorized shares | 140,000 | 140,000 |
Issued shares | 55,068 | 55,068 |
Outstanding shares | 51,074 | 51,199 |
Par value per share | $1 | $1 |
Par value | 55,068 | 55,068 |
Treasury shares | 3,994 | 3,869 |
Series A Common Shares | ||
U.S. Cellular shareholders' equity | ||
Authorized shares | 50,000 | 50,000 |
Issued shares | 33,006 | 33,006 |
Outstanding shares | 33,006 | 33,006 |
Par value per share | $1 | $1 |
Par value | $33,006 | $33,006 |
Consolidated_Statement_of_Chan
Consolidated Statement of Changes in Equity (USD $) | Total | Series A Common and Common Shares | Additional Paid-In Capital | Treasury Shares | Retained Earnings | Total U.S. Cellular Shareholders' Equity | Noncontrolling Interests |
In Thousands, unless otherwise specified | |||||||
Beginning balance at Dec. 31, 2011 | $3,675,917 | $88,074 | $1,387,341 | ($152,817) | $2,297,363 | $3,619,961 | $55,956 |
Add (Deduct) | |||||||
Net income (loss) attributable to U.S. Cellular shareholders | 111,006 | 111,006 | 111,006 | ||||
Net income (loss) attributable to noncontrolling interests classified as equity | 30,019 | 30,019 | |||||
Repurchase of Common Shares | -20,045 | -20,045 | -20,045 | ||||
Incentive and compensation plans | -2,042 | 137 | 7,138 | -9,317 | -2,042 | ||
Stock-based compensation awards | 21,249 | 21,249 | 21,249 | ||||
Tax windfall (shortfall) from stock awards | -1,518 | -1,518 | -1,518 | ||||
Distributions to noncontrolling interests | -22,970 | -22,970 | |||||
Adjust investment in subsidiaries for noncontrolling interest purchases | 3,658 | 5,244 | 5,244 | -1,586 | |||
Other | -27 | -27 | |||||
Ending balance at Dec. 31, 2012 | 3,795,247 | 88,074 | 1,412,453 | -165,724 | 2,399,052 | 3,733,855 | 61,392 |
Add (Deduct) | |||||||
Net income (loss) attributable to U.S. Cellular shareholders | 140,038 | 140,038 | 140,038 | ||||
Net income (loss) attributable to noncontrolling interests classified as equity | 4,251 | 4,251 | |||||
Common and Series A Common Shares dividends | -482,270 | -482,270 | -482,270 | ||||
Repurchase of Common Shares | -18,544 | -18,544 | -18,544 | ||||
Incentive and compensation plans | 6,073 | 222 | 19,576 | -13,725 | 6,073 | ||
Stock-based compensation awards | 15,467 | 15,467 | 15,467 | ||||
Tax windfall (shortfall) from stock awards | -3,267 | -3,267 | -3,267 | ||||
Distributions to noncontrolling interests | -3,576 | -3,576 | |||||
Adjust investment in subsidiaries for noncontrolling interest purchases | -52 | -146 | -146 | 94 | |||
Deconsolidation of partnerships | -43,770 | -43,770 | |||||
Ending balance at Dec. 31, 2013 | 3,409,597 | 88,074 | 1,424,729 | -164,692 | 2,043,095 | 3,391,206 | 18,391 |
Add (Deduct) | |||||||
Net income (loss) attributable to U.S. Cellular shareholders | -42,812 | -42,812 | -42,812 | ||||
Net income (loss) attributable to noncontrolling interests classified as equity | -4,787 | -4,787 | |||||
Repurchase of Common Shares | -18,943 | -18,943 | -18,943 | ||||
Incentive and compensation plans | 978 | 14,496 | -13,518 | 978 | |||
Stock-based compensation awards | 21,078 | 21,078 | 21,078 | ||||
Tax windfall (shortfall) from stock awards | -1,161 | -1,161 | -1,161 | ||||
Distributions to noncontrolling interests | -2,993 | -2,993 | |||||
Acquisition of licenses in common control transaction | -47,126 | 29,141 | -76,267 | -47,126 | |||
Adjust investment in subsidiaries for noncontrolling interest purchases | -1,229 | -1,229 | -1,229 | ||||
Ending balance at Dec. 31, 2014 | $3,312,602 | $88,074 | $1,472,558 | ($169,139) | $1,910,498 | $3,301,991 | $10,611 |
Summary_of_Significant_Account
Summary of Significant Accounting Policies and Recent Accounting Pronouncements | 12 Months Ended | |||||||||
Dec. 31, 2014 | ||||||||||
Disclosure Text Block | ||||||||||
Summary of Significant Accounting Policies and Recent Accounting Pronouncements | NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RECENT ACCOUNTING PRONOUNCEMENTS | |||||||||
United States Cellular Corporation (“U.S. Cellular”), a Delaware Corporation, is an 84%-owned subsidiary of Telephone and Data Systems, Inc. (“TDS”). | ||||||||||
Nature of Operations | ||||||||||
U.S. Cellular owns, operates and invests in wireless systems throughout the United States. As of December 31, 2014, U.S. Cellular served 4.8 million customers. U.S. Cellular has one reportable segment. | ||||||||||
Principles of Consolidation | ||||||||||
The accounting policies of U.S. Cellular conform to accounting principles generally accepted in the United States of America (“GAAP”) as set forth in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”). Unless otherwise specified, references to accounting provisions and GAAP in these notes refer to the requirements of the FASB ASC. The consolidated financial statements include the accounts of U.S. Cellular, its majority-owned subsidiaries, general partnerships in which U.S. Cellular has a majority partnership interest and variable interest entities (“VIEs”) in which U.S. Cellular is the primary beneficiary. Both VIE and primary beneficiary represent terms defined by GAAP. | ||||||||||
Intercompany accounts and transactions have been eliminated. | ||||||||||
Reclassifications | ||||||||||
Certain prior year amounts have been reclassified to conform to the 2014 financial statement presentation. These reclassifications did not affect consolidated net income attributable to U.S. Cellular shareholders, cash flows, assets, liabilities or equity for the years presented. | ||||||||||
Use of Estimates | ||||||||||
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect (a) the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and (b) the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates. Significant estimates are involved in accounting for goodwill and indefinite-lived intangible assets, income taxes, the loyalty reward program and equipment installment plans. | ||||||||||
Cash and Cash Equivalents | ||||||||||
Cash and cash equivalents include cash and short-term, highly liquid investments with original maturities of three months or less. | ||||||||||
Accounts Receivable and Allowance for Doubtful Accounts | ||||||||||
Accounts receivable consist primarily of amounts owed by customers for wireless services and equipment sales, including sales of certain devices under equipment installment plans, by agents for sales of equipment to them and by other wireless carriers whose customers have used U.S. Cellular's wireless systems. | ||||||||||
The allowance for doubtful accounts is the best estimate of the amount of probable credit losses related to existing billed and unbilled accounts receivable. The allowance is estimated based on historical experience, account aging and other factors that could affect collectability. Accounts receivable balances are reviewed on either an aggregate or individual basis for collectability depending on the type of receivable. When it is probable that an account balance will not be collected, the account balance is charged against the allowance for doubtful accounts. U.S. Cellular does not have any off-balance sheet credit exposure related to its customers. | ||||||||||
The changes in the allowance for doubtful accounts during the years ended December 31, 2014, 2013 and 2012 were as follows: | ||||||||||
2014 | 2013 | 2012 | ||||||||
(Dollars in thousands) | ||||||||||
Beginning balance | $ | 60,238 | $ | 26,902 | $ | 23,537 | ||||
Additions, net of recoveries | 101,282 | 98,864 | 67,372 | |||||||
Deductions | -116,942 | -65,528 | -64,007 | |||||||
Ending balance (1) | $ | 44,578 | $ | 60,238 | $ | 26,902 | ||||
-1 | In 2014, this balance includes a $6.1 million allowance related to the long-term portion of unbilled equipment installment receivables. | |||||||||
Inventory | ||||||||||
Inventory consists primarily of wireless devices stated at the lower of cost or market, with cost determined using the first-in, first-out method and market determined by replacement costs or estimated net realizable value. | ||||||||||
Goodwill | ||||||||||
U.S. Cellular has Goodwill as a result of its acquisitions of wireless businesses. Such Goodwill represents the excess of the total purchase price over the fair value of net assets acquired in these transactions. | ||||||||||
U.S. Cellular performs its annual impairment assessment of Goodwill as of November 1 of each year. For purposes of conducting its Goodwill impairment test in 2014 and 2013, U.S. Cellular identified four reporting units. The four reporting units represent four geographic groupings of operating markets, representing four geographic service areas. A discounted cash flow approach was used to value each reporting unit for purposes of the Goodwill impairment review. | ||||||||||
See Note 7 — Intangible Assets for additional details related to Goodwill. | ||||||||||
Licenses | ||||||||||
Licenses consist of direct and incremental costs incurred in acquiring Federal Communications Commission (“FCC”) licenses to provide wireless service. | ||||||||||
U.S. Cellular has determined that wireless licenses are indefinite-lived intangible assets and, therefore, not subject to amortization based on the following factors: | ||||||||||
Radio spectrum is not a depleting asset. | ||||||||||
The ability to use radio spectrum is not limited to any one technology. | ||||||||||
U.S. Cellular and its consolidated subsidiaries are licensed to use radio spectrum through the FCC licensing process, which enables licensees to utilize specified portions of the spectrum for the provision of wireless service. | ||||||||||
U.S. Cellular and its consolidated subsidiaries are required to renew their FCC licenses every ten years or, in some cases, every fifteen years. To date, all of U.S. Cellular's license renewal applications have been granted by the FCC. Generally, license renewal applications filed by licensees otherwise in compliance with FCC regulations are routinely granted. If, however, a license renewal application is challenged either by a competing applicant for the license or by a petition to deny the renewal application, the license will be renewed if the licensee can demonstrate its entitlement to a “renewal expectancy.” Licensees are entitled to such an expectancy if they can demonstrate to the FCC that they have provided “substantial service” during their license term and have “substantially complied” with FCC rules and policies. U.S. Cellular believes that it is probable that its future license renewal applications will be granted. | ||||||||||
U.S. Cellular performs its annual impairment assessment of its licenses as of November 1 of each year. For purposes of its 2014 and 2013 impairment testing of Licenses, U.S. Cellular separated its FCC licenses into eleven units of accounting based on geographic service areas. In both 2014 and 2013, seven of the units of accounting represented geographic groupings of licenses which, because they were not being utilized and, therefore, were not expected to generate cash flows from operating activities in the foreseeable future, were considered separate units of accounting for purposes of impairment testing. U.S. Cellular estimates the fair value of built licenses for purposes of impairment testing using the build-out method. The build-out method estimates the fair value of Licenses by discounting to present value the future cash flows calculated based on a hypothetical cost to build-out U.S. Cellular's network. | ||||||||||
For units of accounting which consist of unbuilt licenses, the fair value of the unbuilt licenses is assumed to change by the same percentage, and in the same direction, that the fair value of built licenses measured using the build-out method changed during the period. | ||||||||||
See Note 7 — Intangible Assets for additional details related to Licenses. | ||||||||||
Investments in Unconsolidated Entities | ||||||||||
For its equity method investments for which financial information is readily available, U.S. Cellular records its equity in the earnings of the entity in the current period. For its equity method investments for which financial information is not readily available, U.S. Cellular records its equity in the earnings of the entity on a one quarter lag basis. | ||||||||||
Property, Plant and Equipment | ||||||||||
U.S. Cellular's Property, plant and equipment is stated at the original cost of construction or purchase including capitalized costs of certain taxes, payroll-related expenses, interest and estimated costs to remove the assets. | ||||||||||
Expenditures that enhance the productive capacity of assets in service or extend their useful lives are capitalized and depreciated. Expenditures for maintenance and repairs of assets in service are charged to System operations expense or Selling, general and administrative expense, as applicable. Retirements and disposals of assets are recorded by removing the original cost of the asset (along with the related accumulated depreciation) from plant in service and charging it, together with net removal costs (removal costs less an applicable accrued asset retirement obligation and salvage value realized), to (Gain) loss on asset disposals, net. | ||||||||||
U.S. Cellular capitalizes certain costs of developing new information systems. | ||||||||||
Depreciation and amortization | ||||||||||
Depreciation is provided using the straight-line method over the estimated useful life of the related asset. | ||||||||||
U.S. Cellular depreciates leasehold improvement assets associated with leased properties over periods ranging from one to thirty years; such periods approximate the shorter of the assets' economic lives or the specific lease terms. | ||||||||||
Useful lives of specific assets are reviewed throughout the year to determine if changes in technology or other business changes would warrant accelerating the depreciation of those specific assets. Due to the Divestiture Transaction more fully described in Note 6 — Acquisitions, Divestitures and Exchanges, U.S. Cellular changed the useful lives of certain assets in 2013 and 2012. Other than the Divestiture Transaction, there were no other material changes to useful lives of property, plant and equipment in 2014, 2013 or 2012. See Note 9 — Property, Plant and Equipment for additional details related to useful lives. | ||||||||||
Impairment of Long-lived Assets | ||||||||||
U.S. Cellular reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the assets might be impaired. | ||||||||||
U.S. Cellular has one asset group for purposes of assessing property, plant and equipment for impairment based on the fact that the individual operating markets are reliant on centrally operated data centers, mobile telephone switching offices and network operations center. U.S. Cellular operates a single integrated national wireless network, and the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities represent cash flows generated by this single interdependent network. | ||||||||||
Agent Liabilities | ||||||||||
U.S. Cellular has relationships with agents, which are independent businesses that obtain customers for U.S. Cellular. At December 31, 2014 and 2013, U.S. Cellular had accrued $95.3 million and $121.3 million, respectively, for amounts due to agents. This amount is included in Other current liabilities in the Consolidated Balance Sheet. | ||||||||||
Other Assets and Deferred Charges | ||||||||||
Other assets and deferred charges include underwriters' and legal fees and other charges related to issuing U.S. Cellular's various borrowing instruments and other long-term agreements, and are amortized over the respective term of each instrument. The amounts of deferred charges included in the Consolidated Balance Sheet at December 31, 2014 and 2013, are shown net of accumulated amortization of $34.2 million and $26.0 million, respectively. At December 31, 2014, Other assets and deferred charges includes a $60.0 million deposit made by Advantage Spectrum L.P. to the FCC to participate in Auction 97. See Note 13 — Variable Interest Entities for additional information. | ||||||||||
Asset Retirement Obligations | ||||||||||
U.S. Cellular accounts for asset retirement obligations by recording the fair value of a liability for legal obligations associated with an asset retirement in the period in which the obligations are incurred. At the time the liability is incurred, U.S. Cellular records a liability equal to the net present value of the estimated cost of the asset retirement obligation and increases the carrying amount of the related long-lived asset by an equal amount. Until the obligation is fulfilled, U.S. Cellular updates its estimates relating to cash flows required and timing of settlement. U.S. Cellular records the present value of the changes in the future value as an increase or decrease to the liability and the related carrying amount of the long-lived asset. The liability is accreted to future value over a period ending with the estimated settlement date of the respective asset retirement obligation. The carrying amount of the long-lived asset is depreciated over the useful life of the related asset. Upon settlement of the obligation, any difference between the cost to retire the asset and the recorded liability is recognized in the Consolidated Statement of Operations. | ||||||||||
Treasury Shares | ||||||||||
Common Shares repurchased by U.S. Cellular are recorded at cost as treasury shares and result in a reduction of equity. Treasury shares are reissued as part of U.S. Cellular's stock-based compensation programs. When treasury shares are reissued, U.S. Cellular determines the cost using the first-in, first-out cost method. The difference between the cost of the treasury shares and reissuance price is included in Additional paid-in capital or Retained earnings. | ||||||||||
Revenue Recognition | ||||||||||
Revenues related to services are recognized as services are rendered. Revenues billed in advance or in arrears of the services being provided are estimated and deferred or accrued, as appropriate. | ||||||||||
Revenues from sales of equipment and accessories are recognized when title and risk of loss passes to the agent or end-user customer. | ||||||||||
Multiple Deliverable Arrangements | ||||||||||
U.S. Cellular sells multiple element service and equipment offerings. In these instances, revenues are allocated using the relative selling price method. Under this method, arrangement consideration, which consists of the amounts billed to the customer net of any cash-based discounts, is allocated to each element on the basis of its relative selling price. Revenue recognized for the delivered items is limited to the amount due from the customer that is not contingent upon the delivery of additional products or services. | ||||||||||
Loyalty Reward Program | ||||||||||
U.S. Cellular follows the deferred revenue method of accounting for its loyalty reward program. Under this method, revenue allocated to loyalty reward points is deferred. The amount allocated to the loyalty points is based on the estimated retail price of the products and services for which points may be redeemed divided by the number of loyalty points required to receive such products and services. This is calculated on a weighted average basis and requires U.S. Cellular to estimate the percentage of loyalty points that will be redeemed for each product or service. | ||||||||||
As of December 31, 2014 and 2013, U.S. Cellular had deferred revenue related to loyalty reward points outstanding of $94.6 million and $116.2 million, respectively. These amounts are recorded in Customer deposits and deferred revenues (a current liability account) in the Consolidated Balance Sheet, as customers may redeem their reward points within the current period. | ||||||||||
Revenue is recognized at the time of customer redemption or when such points have been depleted via an account maintenance charge. U.S. Cellular employs the proportional model to recognize revenues associated with breakage. Under the proportional model, U.S. Cellular allocates a portion of the estimated future breakage to each redemption and records revenue proportionally. U.S. Cellular periodically reviews and revises the redemption and depletion rates to estimate future breakage as appropriate based on history and related future expectations. | ||||||||||
In the fourth quarter of 2013, U.S. Cellular issued loyalty reward points with a value of $43.5 million as a loyalty bonus in recognition of the inconvenience experienced by customers during U.S. Cellular's billing system conversion in 2013. The value of the loyalty bonus reduced Service revenues in the Consolidated Statement of Operations and increased Customer deposits and deferred revenues in the Consolidated Balance Sheet. | ||||||||||
Equipment Installment Plans | ||||||||||
Equipment revenue under equipment installment plan contracts is recognized at the time the device is delivered to the end-user customer for the selling price of the device, net of any deferred imputed interest or trade-in right, if applicable. Imputed interest is reflected as a reduction to the receivable balance and recognized over the duration of the plan as a component of Interest and dividend income. See Note 3 — Equipment Installment Plans for additional information. | ||||||||||
Incentives | ||||||||||
Discounts and incentives are recognized as a reduction of Operating revenues concurrently with the associated revenue, and are allocated to the various products and services in the bundled offering based on their respective relative selling price. | ||||||||||
U.S. Cellular issues rebates to its agents and end customers. These incentives are recognized as a reduction to revenue at the time the wireless device sale to the agent or customer occurs, respectively. The total potential rebates and incentives are reduced by U.S. Cellular's estimate of rebates that will not be redeemed by customers based on historical experience of such redemptions. | ||||||||||
Activation Fees | ||||||||||
U.S. Cellular charges its end customers activation fees in connection with the sale of certain services and equipment. Device activation fees charged at U.S. Cellular agent locations, where U.S. Cellular does not also sell a wireless device to the customer, are deferred and recognized over the average device life. Device activation fees charged as a result of device sales at U.S. Cellular company-owned retail stores are recognized at the time the device is delivered to the customer. | ||||||||||
Amounts Collected from Customers and Remitted to Governmental Authorities – Gross vs. Net | ||||||||||
U.S. Cellular records amounts collected from customers and remitted to governmental authorities net within a tax liability account if the tax is assessed upon the customer and U.S. Cellular merely acts as an agent in collecting the tax on behalf of the imposing governmental authority. If the tax is assessed upon U.S. Cellular, then amounts collected from customers as recovery of the tax are recorded in Service revenues and amounts remitted to governmental authorities are recorded in Selling, general and administrative expenses in the Consolidated Statement of Operations. The amounts recorded gross in revenues that are billed to customers and remitted to governmental authorities totaled $97.0 million, $114.7 million and $135.7 million for 2014, 2013 and 2012, respectively. | ||||||||||
Eligible Telecommunications Carrier (“ETC”) Revenues | ||||||||||
Telecommunications companies may be designated by states, or in some cases by the FCC, as an ETC to receive support payments from the Universal Service Fund if they provide specified services in “high cost” areas. ETC revenues recognized in the reporting period represent the amounts which U.S. Cellular is entitled to receive for such period, as determined and approved in connection with U.S. Cellular's designation as an ETC in various states. | ||||||||||
Advertising Costs | ||||||||||
U.S. Cellular expenses advertising costs as incurred. Advertising costs totaled $204.9 million, $199.9 million and $227.0 million in 2014, 2013 and 2012, respectively. | ||||||||||
Income Taxes | ||||||||||
U.S. Cellular is included in a consolidated federal income tax return with other members of the TDS consolidated group. TDS and U.S. Cellular are parties to a Tax Allocation Agreement which provides that U.S. Cellular and its subsidiaries be included with the TDS affiliated group in a consolidated federal income tax return and in state income or franchise tax returns in certain situations. For financial statement purposes, U.S. Cellular and its subsidiaries calculate their income, income taxes and credits as if they comprised a separate affiliated group. Under the Tax Allocation Agreement, U.S. Cellular remits its applicable income tax payments to TDS. U.S. Cellular had a tax receivable balance with TDS of $74.3 million and a tax payable balance of $34.8 million as of December 31, 2014 and 2013, respectively. | ||||||||||
Deferred taxes are computed using the liability method, whereby deferred tax assets are recognized for future deductible temporary differences and operating loss carryforwards, and deferred tax liabilities are recognized for future taxable temporary differences. Both deferred tax assets and liabilities are measured using the tax rates anticipated to be in effect when the temporary differences reverse. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. Deferred tax assets are reduced by a valuation allowance when it is more likely than not that some portion or all of the deferred tax assets will not be realized. U.S. Cellular evaluates income tax uncertainties, assesses the probability of the ultimate settlement with the applicable taxing authority and records an amount based on that assessment. | ||||||||||
Stock-Based Compensation | ||||||||||
U.S. Cellular has established a long-term incentive plan and a Non-Employee Director compensation plan. These plans are described more fully in Note 16 — Stock-based Compensation. These plans are considered compensatory plans and, therefore, recognition of compensation cost for grants made under these plans is required. | ||||||||||
U.S. Cellular values its share-based payment transactions using a Black-Scholes valuation model. Stock-based compensation cost recognized during the period is based on the portion of the share-based payment awards that are ultimately expected to vest. Accordingly, stock-based compensation cost recognized has been reduced for estimated forfeitures. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Pre-vesting forfeitures and expected life are estimated based on historical experience related to similar awards, giving consideration to the contractual terms of the stock-based awards, vesting schedules and expectations of future employee behavior. U.S. Cellular believes that its historical experience provides the best estimates of future pre-vesting forfeitures and future expected life. The expected volatility assumption is based on the historical volatility of U.S. Cellular's common stock over a period commensurate with the expected life. The dividend yield assumption is zero because U.S. Cellular has never paid a dividend, except a special cash dividend in June 2013, and has expressed its intention to retain all future earnings in the business. The risk-free interest rate assumption is determined using the U.S. Treasury Yield Curve Rate with a term length that approximates the expected life of the stock options. | ||||||||||
The fair value of options is recognized as compensation cost over the respective requisite service period of the awards, which is generally the vesting period, on a straight-line basis for each separate vesting portion of the awards as if the awards were, in-substance, multiple awards (graded vesting attribution method). | ||||||||||
Defined Contribution Plans | ||||||||||
U.S. Cellular participates in a qualified noncontributory defined contribution pension plan sponsored by TDS; such plan provides pension benefits for the employees of U.S. Cellular and its subsidiaries. Under this plan, pension benefits and costs are calculated separately for each participant and are funded currently. Pension costs were $10.6 million, $10.4 million and $12.4 million in 2014, 2013 and 2012, respectively. | ||||||||||
U.S. Cellular also participates in a defined contribution retirement savings plan (“401(k) plan”) sponsored by TDS. Total costs incurred for U.S. Cellular's contributions to the 401(k) plan were $14.9 million, $15.4 million and $17.1 million in 2014, 2013 and 2012, respectively. | ||||||||||
Recently Issued Accounting Pronouncements | ||||||||||
On April 10, 2014, the FASB issued Accounting Standards Update 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity (“ASU 2014-08”). ASU 2014-08 changes the requirements and disclosures for reporting discontinued operations. U.S. Cellular was required to adopt the provisions of ASU 2014-08 effective January 1, 2015, but early adoption was permitted. U.S. Cellular adopted the provisions of ASU 2014-08 upon its issuance. The adoption of ASU 2014-08 did not have a significant impact on U.S. Cellular's financial position or results of operations. | ||||||||||
On May 28, 2014, the FASB issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”). ASU 2014-09 outlines a single comprehensive model to use in accounting for revenue arising from contracts with customers. U.S. Cellular is required to adopt the provisions of ASU 2014-09 effective January 1, 2017. Early adoption is prohibited. U.S. Cellular is evaluating what effects the adoption of ASU 2014-09 will have on U.S. Cellular's financial position and results of operations. | ||||||||||
On August 27, 2014, the FASB issued Accounting Standards Update 2014-15, Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern (“ASU 2014-15”). ASU 2014-15 requires management to perform interim and annual assessments of an entity's ability to continue as a going concern within one year of the date financial statements are issued and provides guidance on determining when and how to disclose going concern uncertainties in financial statements. U.S. Cellular is required to adopt the provisions of ASU 2014-15 effective January 1, 2016, but early adoption is permitted. The adoption of ASU 2014-15 is not expected to impact U.S. Cellular's financial position or results of operations. | ||||||||||
On January 9, 2015, the FASB issued Accounting Standards Update 2015-01, Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items (“ASU 2015-01”). ASU 2015-01 eliminates from GAAP the requirement to separately classify, present and disclose extraordinary events and transactions. U.S. Cellular is required to adopt the provisions of ASU 2015-01 effective January 1, 2016, but early adoption is permitted. The adoption of ASU 2015-01 is not expected to impact U.S. Cellular's financial position or results of operations. | ||||||||||
On February 18, 2015, the FASB issued Accounting Standards Update 2015-02, Consolidation: Amendments to the Consolidation Analysis (“ASU 2015-02”). ASU 2015-02 simplifies consolidation accounting by reducing the number of consolidation models and changing various aspects of current GAAP, including certain consolidation criteria for variable interest entities. U.S. Cellular is required to adopt the provisions of ASU 2015-02 effective January 1, 2016. Early adoption is permitted. U.S. Cellular is still assessing the impact, if any, the adoption of ASU 2015-02 will have on U.S. Cellular's financial position or results of operations. |
Fair_Value_Measurements
Fair Value Measurements | 12 Months Ended | ||||||||||||||
Dec. 31, 2014 | |||||||||||||||
Disclosure Text Block | |||||||||||||||
Fair Value Measurements | NOTE 2 FAIR VALUE MEASUREMENTS | ||||||||||||||
As of December 31, 2014 and 2013, U.S. Cellular did not have any financial or nonfinancial assets or liabilities that were required to be recorded at fair value in its Consolidated Balance Sheet in accordance with GAAP. | |||||||||||||||
The provisions of GAAP establish a fair value hierarchy that contains three levels for inputs used in fair value measurements. Level 1 inputs include quoted market prices for identical assets or liabilities in active markets. Level 2 inputs include quoted market prices for similar assets and liabilities in active markets or quoted market prices for identical assets and liabilities in inactive markets. Level 3 inputs are unobservable. A financial instrument's level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. A financial instrument's level within the fair value hierarchy is not representative of its expected performance or its overall risk profile and, therefore, Level 3 assets are not necessarily higher risk than Level 2 assets or Level 1 assets. | |||||||||||||||
U.S. Cellular has applied the provisions of fair value accounting for purposes of computing the fair value of financial instruments for disclosure purposes as displayed below. | |||||||||||||||
31-Dec-14 | 31-Dec-13 | ||||||||||||||
Level within the Fair Value Hierarchy | Book Value | Fair Value | Book Value | Fair Value | |||||||||||
(Dollars in thousands) | |||||||||||||||
Cash and cash equivalents | 1 | $ | 211,513 | $ | 211,513 | $ | 342,065 | $ | 342,065 | ||||||
Short-term investments | |||||||||||||||
U.S. Treasury Notes | 1 | - | - | 50,104 | 50,104 | ||||||||||
Long-term debt | |||||||||||||||
Retail | 2 | 617,000 | 608,462 | 342,000 | 309,852 | ||||||||||
Institutional | 2 | 532,722 | 513,647 | 532,449 | 507,697 | ||||||||||
Short-term investments are designated as held-to-maturity investments and recorded at amortized cost in the Consolidated Balance Sheet. For these investments, U.S. Cellular's objective is to earn a higher rate of return on funds that are not anticipated to be required to meet liquidity needs in the near term, while maintaining a low level of investment risk. | |||||||||||||||
The fair values of Cash and cash equivalents and Short-term investments approximate their book values due to the short-term nature of these financial instruments. Long-term debt excludes capital lease obligations and the current portion of Long-term debt. The fair value of “Retail” Long-term debt was estimated using market prices for the 6.95% Senior Notes and 7.25% Senior Notes. U.S. Cellular's “Institutional” debt consists of the 6.7% Senior Notes which are traded over the counter. U.S. Cellular estimated the fair value of its Institutional debt through a discounted cash flow analysis using an estimated yield to maturity of 7.25% and 7.35% at December 31, 2014 and 2013, respectively. | |||||||||||||||
Equipment_Installment_Plans
Equipment Installment Plans | 12 Months Ended | ||||||
Dec. 31, 2014 | |||||||
Disclosure Text Block | |||||||
Equipment Installment Plans | NOTE 3 EQUIPMENT INSTALLMENT PLANS | ||||||
U.S. Cellular offers customers the option to purchase certain devices under equipment installment contracts over a period of up to 24 months. For certain equipment installment plans, after a specified period of time, the customer may have the right to upgrade to a new device and have the remaining unpaid equipment installment contract balance waived, subject to certain conditions, including trading in the original device in good working condition and signing a new equipment installment contract. U.S. Cellular values this trade-in right as a guarantee liability. The guarantee liability is initially measured at fair value and is determined based on assumptions including the probability and timing of the customer upgrading to a new device and the fair value of the device being traded-in at the time of trade-in. As of December 31, 2014, the guarantee liability related to these plans was $57.5 million and is reflected in Customer deposits and deferred revenues in the Consolidated Balance Sheet. | |||||||
U.S. Cellular equipment installment plans do not provide for explicit interest charges. For equipment installment plans with duration of greater than twelve months, U.S. Cellular imputes interest. | |||||||
The following table summarizes the unbilled equipment installment plan receivables as of December 31, 2014 and 2013. Such amounts are presented on the Consolidated Balance Sheet as Accounts receivable – customers and agents and Other assets and deferred charges, where applicable. | |||||||
(Dollars in thousands) | 31-Dec-14 | 31-Dec-13 | |||||
Short-term portion of unbilled equipment installment plan receivables, gross | $ | 127,400 | $ | 611 | |||
Short-term portion of unbilled deferred interest | -16,365 | - | |||||
Short-term portion of unbilled allowance for credit losses | -3,686 | -20 | |||||
Short-term portion of unbilled equipment installment plan receivables, net | $ | 107,349 | $ | 591 | |||
Long-term portion of unbilled equipment installment plan receivables, gross | $ | 89,435 | $ | - | |||
Long-term portion of unbilled deferred interest | -2,791 | - | |||||
Long-term portion of unbilled allowance for credit losses | -6,065 | - | |||||
Long-term portion of unbilled equipment installment plan receivables, net | $ | 80,579 | $ | - | |||
U.S. Cellular considers the collectability of the equipment installment plan receivables based on historical payment experience, account aging and other qualitative factors. The credit profiles of U.S. Cellular's customers on equipment installment plans are similar to those of U.S. Cellular customers with traditional subsidized plans. Customers with a higher risk credit profile are required to make a deposit for equipment purchased through an installment contract. | |||||||
Income_Taxes
Income Taxes | 12 Months Ended | ||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||
Disclosure Text Block | |||||||||||||||||||
Income Taxes | NOTE 4 INCOME TAXES | ||||||||||||||||||
U.S. Cellular is included in a consolidated federal income tax return and in certain state income tax returns with other members of the TDS consolidated group. For financial statement purposes, U.S. Cellular and its subsidiaries compute their income tax expense as if they comprised a separate affiliated group and were not included in the TDS consolidated group. | |||||||||||||||||||
U.S. Cellular's current income taxes balances at December 31, 2014 and 2013 were as follows: | |||||||||||||||||||
December 31, | 2014 | 2013 | |||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||
Federal income taxes receivable (payable) | $ | 73,510 | $ | -32,351 | |||||||||||||||
Net state income taxes receivable (payable) | 1,199 | -1,545 | |||||||||||||||||
Income tax expense (benefit) is summarized as follows: | |||||||||||||||||||
Year Ended December 31, | 2014 | 2013 | 2012 | ||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||
Current | |||||||||||||||||||
Federal | $ | -77,931 | $ | 180,056 | $ | 10,547 | |||||||||||||
State | 8,545 | 8,426 | 4,186 | ||||||||||||||||
Deferred | |||||||||||||||||||
Federal | 44,881 | -69,917 | 54,490 | ||||||||||||||||
State | 6,276 | -5,431 | -5,246 | ||||||||||||||||
State - valuation allowance adjustment | 6,447 | - | - | ||||||||||||||||
$ | -11,782 | $ | 113,134 | $ | 63,977 | ||||||||||||||
A reconciliation of U.S. Cellular's income tax expense computed at the statutory rate to the reported income tax expense, and the statutory federal income tax expense rate to U.S. Cellular's effective income tax expense rate is as follows: | |||||||||||||||||||
Year Ended December 31, | 2014 | 2013 | 2012 | ||||||||||||||||
Amount | Rate | Amount | Rate | Amount | Rate | ||||||||||||||
(Dollars in millions) | |||||||||||||||||||
Statutory federal income tax expense and rate | $ | -20.5 | 35 | % | $ | 90.2 | 35 | % | $ | 71.8 | 35 | % | |||||||
State income taxes, net of federal benefit (1) | 12.2 | -20.8 | 5.2 | 2 | 3.7 | 1.8 | |||||||||||||
Effect of noncontrolling interests | -5.8 | 9.8 | -2.2 | -0.9 | -6.3 | -3.1 | |||||||||||||
Gains (losses) on investments and sale of assets (2) | - | - | 20.5 | 8 | - | - | |||||||||||||
Correction of deferred taxes (3) | - | - | - | - | -5.3 | -2.6 | |||||||||||||
Other differences, net | 2.3 | -3.9 | -0.6 | -0.2 | 0.1 | 0.1 | |||||||||||||
Total income tax expense and rate | $ | -11.8 | 20.1 | % | $ | 113.1 | 43.9 | % | $ | 64 | 31.2 | % | |||||||
-1 | State income taxes, net of federal benefit, include changes in unrecognized tax benefits as well as adjustments to the valuation allowance. During the third quarter of 2014 U.S. Cellular recorded a $6.4 million increase to income tax expense related to a valuation allowance recorded against certain state deferred tax assets. In each interim period, U.S. Cellular evaluates the available positive and negative evidence to assess whether deferred tax assets are realizable, on a more likely than not basis. During the year ended December 31, 2014, based on revised forecasts of future state income, U.S. Cellular concluded that the negative evidence related to the realization of certain state deferred tax assets outweighed the positive evidence. Accordingly, U.S. Cellular determined that such deferred tax assets related to certain states were not realizable, on a more likely than not basis. | ||||||||||||||||||
-2 | Gains (losses) on investments and sale of assets represents 2013 tax expense related to the NY1 & NY2 Deconsolidation and the Divestiture Transaction. | ||||||||||||||||||
-3 | Correction of deferred taxes reflects immaterial adjustments to correct deferred tax balances in 2012 related to tax basis and law changes that related to periods prior to 2012. | ||||||||||||||||||
Significant components of U.S. Cellular’s deferred income tax assets and liabilities at December 31, 2014 and 2013 were as follows: | |||||||||||||||||||
December 31, | 2014 | 2013 | |||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||
Deferred tax assets | |||||||||||||||||||
Current deferred tax assets | $ | 96,886 | $ | 102,088 | |||||||||||||||
Net operating loss (“NOL”) carryforwards | 72,878 | 61,294 | |||||||||||||||||
Stock-based compensation | 21,072 | 19,028 | |||||||||||||||||
Compensation and benefits - other | 2,586 | 3,746 | |||||||||||||||||
Deferred rent | 18,513 | 19,462 | |||||||||||||||||
Other | 26,116 | 24,604 | |||||||||||||||||
Total deferred tax assets | 238,051 | 230,222 | |||||||||||||||||
Less valuation allowance | -53,119 | -43,375 | |||||||||||||||||
Net deferred tax assets | 184,932 | 186,847 | |||||||||||||||||
Deferred tax liabilities | |||||||||||||||||||
Property, plant and equipment | 520,723 | 503,491 | |||||||||||||||||
Licenses/intangibles | 275,456 | 282,764 | |||||||||||||||||
Partnership investments | 149,371 | 133,931 | |||||||||||||||||
Other | 4,135 | 3,853 | |||||||||||||||||
Total deferred tax liabilities | 949,685 | 924,039 | |||||||||||||||||
Net deferred income tax liability | $ | 764,753 | $ | 737,192 | |||||||||||||||
At December 31, 2014, U.S. Cellular and certain subsidiaries had $1,439.4 million of state NOL carryforwards (generating a $59.4 million deferred tax asset) available to offset future taxable income. The state NOL carryforwards expire between 2015 and 2034. Certain subsidiaries had federal NOL carryforwards (generating a $13.5 million deferred tax asset) available to offset their future taxable income. The federal NOL carryforwards expire between 2018 and 2034. A valuation allowance was established for certain state NOL carryforwards and federal NOL carryforwards since it is more likely than not that a portion of such carryforwards will expire before they can be utilized. | |||||||||||||||||||
A summary of U.S. Cellular’s deferred tax asset valuation allowance is as follows: | |||||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||
Balance at January 1, | $ | 43,375 | $ | 41,295 | $ | 30,261 | |||||||||||||
Charged to income tax expense | 9,744 | -1,527 | 3,033 | ||||||||||||||||
Charged to other accounts | - | 3,607 | 8,001 | ||||||||||||||||
Balance at December 31, | $ | 53,119 | $ | 43,375 | $ | 41,295 | |||||||||||||
As of December 31, 2014, the valuation allowance reduced current deferred tax assets by $3.8 million and noncurrent deferred tax assets by $49.2 million. | |||||||||||||||||||
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows: | |||||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||
Unrecognized tax benefits balance at January 1, | $ | 28,813 | $ | 26,460 | $ | 28,745 | |||||||||||||
Additions for tax positions of current year | 7,766 | 5,925 | 6,656 | ||||||||||||||||
Additions for tax positions of prior years | 154 | 1,501 | 854 | ||||||||||||||||
Reductions for tax positions of prior years | -554 | -45 | -115 | ||||||||||||||||
Reductions for settlements of tax positions | - | -576 | - | ||||||||||||||||
Reductions for lapses in statutes of limitations | -104 | -4,452 | -9,680 | ||||||||||||||||
Unrecognized tax benefits balance at December 31, | $ | 36,075 | $ | 28,813 | $ | 26,460 | |||||||||||||
Unrecognized tax benefits are included in Accrued taxes and Other deferred liabilities and credits in the Consolidated Balance Sheet. If these benefits were recognized, they would have reduced income tax expense in 2014, 2013 and 2012 by $23.4 million, $18.7 million and $17.2 million, respectively, net of the federal benefit from state income taxes. As of December 31, 2014, it is reasonably possible that unrecognized tax benefits could decrease by approximately $10 million in the next twelve months. The nature of the uncertainty relates primarily to state income tax positions and their resolution or the expiration of statutes of limitation. | |||||||||||||||||||
U.S. Cellular recognizes accrued interest and penalties related to unrecognized tax benefits in Income tax expense. The amounts charged to income tax expense related to interest and penalties resulted in an expense of $3.5 million and $0.6 million in 2014 and 2013, respectively, and a benefit of $2.2 million in 2012. Net accrued interest and penalties were $16.2 million and $12.3 million at December 31, 2014 and 2013, respectively. | |||||||||||||||||||
U.S. Cellular is included in TDS' consolidated federal income tax return. U.S. Cellular also files various state and local income tax returns. The TDS consolidated group remains subject to federal income tax audits for the tax years after 2011. With only a few exceptions, TDS is no longer subject to state income tax audits for years prior to 2010. | |||||||||||||||||||
Earnings_Per_Share
Earnings Per Share | 12 Months Ended | |||||||||
Dec. 31, 2014 | ||||||||||
Disclosure Text Block | ||||||||||
Earnings per Share | NOTE 5 EARNINGS PER SHARE | |||||||||
Basic earnings (loss) per share attributable to U.S. Cellular shareholders is computed by dividing Net income (loss) attributable to U.S. Cellular shareholders by the weighted average number of common shares outstanding during the period. Diluted earnings (loss) per share attributable to U.S. Cellular shareholders is computed by dividing Net income (loss) attributable to U.S. Cellular shareholders by the weighted average number of common shares outstanding during the period adjusted to include the effects of potentially dilutive securities. Potentially dilutive securities primarily include incremental shares issuable upon exercise of outstanding stock options and the vesting of restricted stock units. | ||||||||||
The amounts used in computing earnings (loss) per common share and the effects of potentially dilutive securities on the weighted average number of common shares were as follows: | ||||||||||
Year ended December 31, | 2014 | 2013 | 2012 | |||||||
(Dollars and shares in thousands, except earnings per share) | ||||||||||
Net income (loss) attributable to U.S. Cellular shareholders | $ | -42,812 | $ | 140,038 | $ | 111,006 | ||||
Weighted average number of shares used in basic earnings (loss) per share | 84,213 | 83,968 | 84,645 | |||||||
Effect of dilutive securities: | ||||||||||
Stock options (1) | - | 211 | 184 | |||||||
Restricted stock units (1) | - | 551 | 401 | |||||||
Weighted average number of shares used in diluted earnings (loss) per share | 84,213 | 84,730 | 85,230 | |||||||
Basic earnings (loss) per share attributable to U.S. Cellular shareholders | $ | -0.51 | $ | 1.67 | $ | 1.31 | ||||
Diluted earnings (loss) per share attributable to U.S. Cellular shareholders | $ | -0.51 | $ | 1.65 | $ | 1.3 | ||||
(1) There were no effects of dilutive securities for the year ended December 31, 2014 due to the net loss for the year. | ||||||||||
Certain Common Shares issuable upon the exercise of stock options or vesting of restricted stock units were not included in average diluted shares outstanding for the calculation of Diluted earnings (loss) per share attributable to U.S. Cellular shareholders because their effects were antidilutive. The number of such Common Shares excluded, if any, is shown in the table below. | ||||||||||
Year Ended December 31, | 2014 | 2013 | 2012 | |||||||
(Shares in thousands) | ||||||||||
Stock options | 3,279 | 2,010 | 2,123 | |||||||
Restricted stock units | 1,186 | 190 | 369 | |||||||
On June 25, 2013, U.S. Cellular paid a special cash dividend of $5.75 per share, for an aggregate amount of $482.3 million, to all holders of U.S. Cellular Common Shares and Series A Common Shares as of June 11, 2013. Outstanding U.S. Cellular stock options and restricted stock unit awards were equitably adjusted for the special cash dividend. The impact of such adjustments on the earnings (loss) per share calculation was fully reflected for all years presented. | ||||||||||
Acquisitions_Divestitures_and_
Acquisitions, Divestitures and Exchanges | 12 Months Ended | ||||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||||
Disclosure Text Block | |||||||||||||||||||||||
Acquisitions, Divestitures and Exchanges | NOTE 6 ACQUISITIONS, DIVESTITURES AND EXCHANGES | ||||||||||||||||||||||
Divestiture Transaction | |||||||||||||||||||||||
On November 6, 2012, U.S. Cellular entered into a Purchase and Sale Agreement with subsidiaries of Sprint Corp., fka 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.” | |||||||||||||||||||||||
These other agreements included customer and network transition services agreements, which required 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 reimbursed U.S. Cellular for providing such services at an amount equal to U.S. Cellular's estimated costs, including applicable overhead allocations. These services were substantially complete as of March 31, 2014. 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 $175 million of the Sprint Cost Reimbursement will be recorded in (Gain) loss on sale of business and other exit costs, net and up to $25 million of the Sprint Cost Reimbursement will be recorded in System operations in the Consolidated Statement of Operations. In 2014 and 2013, $71.1 million and $10.6 million, respectively, 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. 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 December 31, 2014 | Actual Amount Recognized Year Ended December 31, 2014 | Actual Amount Recognized Year Ended December 31, 2013 | Actual Amount Recognized Year Ended December 31, 2012 | |||||||||||||||||
(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 | 2013-2015 | -120,000 | -175,000 | -111,970 | -64,329 | -47,641 | - | ||||||||||||||||
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 | 2012-2015 | 20,000 | 22,000 | 20,410 | 9,735 | 3 | 10,672 | ||||||||||||||||
Employee related costs including severance, retention and outplacement | 2012-2015 | 13,000 | 16,000 | 14,147 | -115 | 1,653 | 12,609 | ||||||||||||||||
Contract termination costs | 2012-2015 | 70,000 | 100,000 | 84,320 | 24,736 | 59,525 | 59 | ||||||||||||||||
Transaction costs | 2012-2015 | 5,000 | 7,000 | 6,284 | 719 | 4,428 | 1,137 | ||||||||||||||||
Total (Gain) loss on sale of business and other exit costs, net | $ | -278,407 | $ | -296,407 | $ | -253,216 | $ | -29,254 | $ | -248,439 | $ | 24,477 | |||||||||||
Depreciation, amortization and accretion expense | |||||||||||||||||||||||
Incremental depreciation, amortization and accretion, net of salvage values | 2012-2014 | 215,049 | 215,049 | 215,049 | 16,478 | 178,513 | 20,058 | ||||||||||||||||
(Increase) decrease in Operating income | $ | -63,358 | $ | -81,358 | $ | -38,167 | $ | -12,776 | $ | -69,926 | $ | 44,535 | |||||||||||
Incremental depreciation, amortization and accretion, net of salvage values represents amounts 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 periods indicated, this is estimated depreciation, amortization and accretion recorded on assets and liabilities of the Divestiture Markets after the execution of the Purchase and Sale Agreement on November 6, 2012 less depreciation, amortization and accretion that would have been recorded on such assets and liabilities in the normal course, absent the Divestiture Transaction. | |||||||||||||||||||||||
In 2014, U.S. Cellular recorded $3.4 million of additional Depreciation, amortization and accretion expense for the Divestiture Markets due to higher asset retirement obligation remediation estimates. | |||||||||||||||||||||||
As a result of the transaction, U.S. Cellular recognized the following amounts in the Consolidated Balance Sheet: | |||||||||||||||||||||||
Year Ended December 31, 2014 | |||||||||||||||||||||||
(Dollars in thousands) | Balance December 31, 2013 | Costs Incurred | Cash Settlements (1) | Adjustments (2) | Balance December 31, 2014 | ||||||||||||||||||
Accrued compensation | |||||||||||||||||||||||
Employee related costs including severance, retention, outplacement | $ | 2,053 | $ | 127 | $ | -1,223 | $ | -242 | $ | 715 | |||||||||||||
Accounts payable - trade | |||||||||||||||||||||||
Contract termination costs | $ | - | $ | 4,018 | $ | - | $ | -1,190 | $ | 2,828 | |||||||||||||
Other current liabilities | |||||||||||||||||||||||
Contract termination costs | $ | 13,992 | $ | 12,703 | $ | -22,210 | $ | 3,747 | $ | 8,232 | |||||||||||||
Other deferred liabilities and credits | |||||||||||||||||||||||
Contract termination costs | $ | 30,849 | $ | 24,171 | $ | -3,569 | $ | -30,411 | $ | 21,040 | |||||||||||||
Year Ended December 31, 2013 | |||||||||||||||||||||||
(Dollars in thousands) | Balance December 31, 2012 | Costs Incurred | Cash Settlements (1) | Adjustments (2) | Balance December 31, 2013 | ||||||||||||||||||
Accrued compensation | |||||||||||||||||||||||
Employee related costs including severance, retention, outplacement | $ | 12,305 | $ | 6,853 | $ | -11,905 | $ | -5,200 | $ | 2,053 | |||||||||||||
Other current liabilities | |||||||||||||||||||||||
Contract termination costs | $ | 30 | $ | 22,675 | $ | -8,713 | $ | - | $ | 13,992 | |||||||||||||
Other deferred liabilities and credits | |||||||||||||||||||||||
Contract termination costs | $ | - | $ | 34,283 | $ | -3,434 | $ | - | $ | 30,849 | |||||||||||||
-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 in the Consolidated Statement of Cash Flows. | ||||||||||||||||||||||
-2 | Adjustment to liability represents changes to previously accrued amounts. | ||||||||||||||||||||||
Other Acquisitions, Divestitures and Exchanges | |||||||||||||||||||||||
In December 2014, U.S. Cellular entered into an agreement with a third party to sell 595 towers and certain related contracts, assets, and liabilities for approximately $159 million. This transaction was accomplished in two closings. The first closing occurred in December 2014 and included the sale of 236 towers, without tenants, for $10.0 million. On this same date, U.S. Cellular received $7.5 million in earnest money. At the time of the first closing, a $3.8 million gain was recorded in (Gain) loss on sale of business and other exit costs, net. The second closing for the remaining 359 towers, primarily with tenants, took place in January 2015, at which time U.S. Cellular received $141.5 million in additional cash proceeds and recorded a gain of approximately $107 million. The assets and liabilities subject to the second closing have been classified as “held for sale” in the Consolidated Balance Sheet as of December 31, 2014. | |||||||||||||||||||||||
In September 2014, U.S. Cellular entered into an agreement with a third party to exchange certain PCS and AWS licenses for certain other PCS and AWS licenses and $28.0 million of cash. This license exchange will be accomplished in two closing transactions. The first closing occurred in December 2014 at which time U.S. Cellular received licenses with an estimated fair value, per a market approach, of $51.5 million, recorded a $21.7 million gain in (Gain) loss on license sales and exchanges in the Consolidated Statement of Operations and recorded an $18.3 million deferred credit in Other current liabilities. The second closing is expected to occur in 2015. The license that will be transferred has been classified as “Assets held for sale” in the Consolidated Balance Sheet as of December 31, 2014. At the time of the second closing, U.S. Cellular will recognize the deferred credit from the first closing and expects to record a gain on the license exchange. | |||||||||||||||||||||||
In September 2014, U.S. Cellular entered into an agreement with a third party to exchange certain of its PCS unbuilt licenses for PCS licenses located in U.S. Cellular's operating markets plus $117.0 million of cash. This transaction is subject to regulatory approvals and is expected to close in 2015. The book value of the licenses to be exchanged have been classified as “Assets held for sale” in the Consolidated Balance Sheet at December 31, 2014. U.S. Cellular expects to record a gain when this transaction closes. | |||||||||||||||||||||||
In May 2014, U.S. Cellular entered into a License Purchase and Customer Recommendation Agreement with Airadigm Communications, Inc. (“Airadigm”). TDS owns 100% of the common stock of Airadigm. Pursuant to the License Purchase and Customer Recommendation Agreement, on September 10, 2014, Airadigm transferred to U.S. Cellular Federal Communications Commission (“FCC”) spectrum licenses and certain tower assets in certain markets in Wisconsin, Iowa, Minnesota and Michigan, in consideration for $91.5 million in cash. Since both parties to this transaction are controlled by TDS, upon closing, U.S. Cellular recorded the transferred assets at Airadigm's net book value of $15.2 million. The difference between the consideration paid and the net book value of the transferred assets was recorded as a reduction of U.S. Cellular's Retained earnings. In addition, a deferred tax asset was recorded for the difference between the consideration paid and the net book value of the transferred assets, which increased U.S. Cellular's Additional paid-in capital. | |||||||||||||||||||||||
In March 2014, U.S. Cellular sold the majority of its St. Louis area non-operating market spectrum license for $92.3 million. A gain of $75.8 million was recorded in (Gain) loss on license sales and exchanges in the Consolidated Statement of Operations in the first quarter of 2014. | |||||||||||||||||||||||
In February 2014, U.S. Cellular completed an exchange whereby U.S. Cellular received one E block PCS spectrum license covering Milwaukee, WI in exchange for one D block PCS spectrum license covering Milwaukee, WI. The exchange of licenses provided U.S. Cellular with spectrum to meet anticipated future capacity and coverage requirements. No cash, customers, network assets, other assets or liabilities were included in the exchange. As a result of this transaction, U.S. Cellular recognized a gain of $15.7 million, representing the difference between the $15.9 million fair value of the license surrendered, calculated using a market approach valuation method, and the $0.2 million carrying value of the license surrendered. This gain was recorded in (Gain) loss on license sales and exchanges in the Consolidated Statement of Operations in the first quarter of 2014. | |||||||||||||||||||||||
In October 2013, U.S. Cellular sold the majority of its Mississippi Valley non-operating market license (“unbuilt license”) for $308.0 million. At the time of the sale, a $250.6 million gain was recorded in (Gain) loss on license sales and exchanges in the Consolidated Statement of Operations. | |||||||||||||||||||||||
In November 2012, U.S. Cellular acquired seven 700 MHz licenses covering portions of Illinois, Michigan, Minnesota, Missouri, Nebraska, Oregon, Washington and Wisconsin for $57.7 million. | |||||||||||||||||||||||
In August 2012, U.S. Cellular acquired four 700 MHz licenses covering portions of Iowa, Kansas, Missouri, Nebraska and Oklahoma for $34.0 million. | |||||||||||||||||||||||
In March 2012, U.S. Cellular sold the majority of the assets and liabilities of a wireless market for $49.8 million in cash. At the time of the sale, a $4.2 million gain was recorded in (Gain) loss on sale of business and other exit costs, net in the Consolidated Statement of Operations. | |||||||||||||||||||||||
At December 31, 2014 and 2013, the following assets were classified in the Consolidated Balance Sheet as "Assets held for sale" and "Liabilities held for sale": | |||||||||||||||||||||||
Current Assets | Other Assets and Deferred Charges | Licenses | Goodwill | Property, Plant and Equipment | Total Assets Held for Sale | ||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||
2014 | |||||||||||||||||||||||
Divestiture of Spectrum Licenses | $ | - | $ | - | $ | 56,809 | $ | - | $ | - | $ | 56,809 | |||||||||||
Sale of Business - Towers | 1,466 | 773 | - | 16,281 | 31,726 | 50,246 | |||||||||||||||||
Total | $ | 1,466 | $ | 773 | $ | 56,809 | $ | 16,281 | $ | 31,726 | $ | 107,055 | |||||||||||
2013 | |||||||||||||||||||||||
Divestiture of Spectrum Licenses | $ | - | $ | - | $ | 16,027 | $ | - | $ | - | $ | 16,027 | |||||||||||
Customer Deposits and Deferred Revenues | Other Current Liabilities | Other Deferred Liabilities and Credits | Total Liabilities Held for Sale | ||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||
2014 | |||||||||||||||||||||||
Sale of Business - Towers | $ | 2,704 | $ | 896 | $ | 17,334 | $ | 20,934 |
Intangible_Assets
Intangible Assets | 12 Months Ended | ||||||
Dec. 31, 2014 | |||||||
Disclosure Text Block | |||||||
Intangible Assets | NOTE 7 INTANGIBLE ASSETS | ||||||
Changes in U.S. Cellular's Licenses and Goodwill are presented below. See Note 6 — Acquisitions, Divestitures and Exchanges for information regarding transactions which affected Licenses during the periods. | |||||||
Licenses | |||||||
Year Ended December 31, | 2014 | 2013 | |||||
(Dollars in thousands) | |||||||
Balance, beginning of year | $ | 1,401,126 | $ | 1,456,794 | |||
Acquisitions | 41,707 | 16,540 | |||||
Divestitures | - | -59,419 | |||||
Transferred to Assets held for sale | -56,809 | -16,027 | |||||
Exchanges, net | 55,780 | - | |||||
Other | 1,634 | 3,238 | |||||
Balance, end of year | $ | 1,443,438 | $ | 1,401,126 | |||
Goodwill | |||||||
Year Ended December 31, | 2014 | 2013 | |||||
(Dollars in thousands) | |||||||
Balance, beginning of year | $ | 387,524 | $ | 421,743 | |||
Divestitures | -1,092 | -505 | |||||
Transferred to Assets held for sale | -16,281 | - | |||||
NY1 & NY2 Deconsolidation | - | -33,714 | |||||
Balance, end of year | $ | 370,151 | $ | 387,524 |
Investments_in_Unconsolidated_
Investments in Unconsolidated Entities | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
Disclosure Text Block | |||||||||||
Investments in Unconsolidated Entities | NOTE 8 INVESTMENTS IN UNCONSOLIDATED ENTITIES | ||||||||||
Investments in unconsolidated entities consist of amounts invested in wireless entities in which U.S. Cellular holds a noncontrolling interest. These investments are accounted for using either the equity or cost method as shown in the following table: | |||||||||||
December 31, | 2014 | 2013 | |||||||||
(Dollars in thousands) | |||||||||||
Equity method investments: | |||||||||||
Capital contributions, loans, advances and adjustments | $ | 116,881 | $ | 121,571 | |||||||
Cumulative share of income | 1,287,371 | 1,152,916 | |||||||||
Cumulative share of distributions | -1,122,849 | -1,010,513 | |||||||||
281,403 | 263,974 | ||||||||||
Cost method investments | 1,611 | 1,611 | |||||||||
Total investments in unconsolidated entities | $ | 283,014 | $ | 265,585 | |||||||
Equity in earnings of unconsolidated entities totaled $129.8 million, $131.9 million and $90.4 million in 2014, 2013 and 2012, respectively; of those amounts, U.S. Cellular's investment in the Los Angeles SMSA Limited Partnership (“LA Partnership”) contributed $71.8 million, $78.4 million and $67.2 million in 2014, 2013 and 2012, respectively. U.S. Cellular held a 5.5% ownership interest in the LA Partnership throughout and at the end of each of these years. | |||||||||||
The following tables, which are based on information provided in part by third parties, summarize the combined assets, liabilities and equity, and the combined results of operations of U.S. Cellular's equity method investments: | |||||||||||
December 31, | 2014 | 2013 | |||||||||
(Dollars in thousands) | |||||||||||
Assets | |||||||||||
Current | $ | 691,519 | $ | 489,659 | |||||||
Due from affiliates | 303,322 | 408,735 | |||||||||
Property and other | 2,295,936 | 2,026,104 | |||||||||
$ | 3,290,777 | $ | 2,924,498 | ||||||||
Liabilities and Equity | |||||||||||
Current liabilities | $ | 403,005 | $ | 351,624 | |||||||
Deferred credits | 170,887 | 84,834 | |||||||||
Long-term liabilities | 18,101 | 19,712 | |||||||||
Long-term capital lease obligations | 1,722 | 707 | |||||||||
Partners' capital and shareholders' equity | 2,697,062 | 2,467,621 | |||||||||
$ | 3,290,777 | $ | 2,924,498 | ||||||||
Year Ended December 31, | 2014 | 2013 | 2012 | ||||||||
(Dollars in thousands) | |||||||||||
Results of Operations | |||||||||||
Revenues | $ | 6,668,615 | $ | 6,218,067 | $ | 5,804,466 | |||||
Operating expenses | 5,035,544 | 4,473,722 | 4,363,399 | ||||||||
Operating income | 1,633,071 | 1,744,345 | 1,441,067 | ||||||||
Other income, net | 1,160 | 4,842 | 4,003 | ||||||||
Net income | $ | 1,634,231 | $ | 1,749,187 | $ | 1,445,070 | |||||
NY1 & NY2 Deconsolidation | |||||||||||
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”) (together with NY1, the “Partnerships”). The remaining interests in the Partnerships are held by Cellco Partnership d/b/a Verizon Wireless (“Verizon Wireless”). Prior to April 3, 2013, because U.S. Cellular owned a greater than 50% interest in each of these Partnerships and based on U.S. Cellular's rights under the Partnership Agreements, U.S. Cellular consolidated the financial results of these Partnerships in accordance with GAAP. | |||||||||||
On April 3, 2013, U.S. Cellular entered into an agreement with Verizon Wireless relating to the Partnerships. The agreement 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, U.S. Cellular deconsolidated the Partnerships effective as of April 3, 2013 and thereafter reported them as equity method investments in its consolidated financial statements (“NY1 & NY2 Deconsolidation”). After the NY1 & NY2 Deconsolidation, U.S. Cellular retained the same ownership percentages in the Partnerships and continues to report the same percentages of income from the Partnerships. Effective April 3, 2013, U.S. Cellular's income from the Partnerships is reported in Equity in earnings of unconsolidated entities in the Consolidated Statement of Operations. | |||||||||||
In accordance with GAAP, as a result of the NY1 & NY2 Deconsolidation, U.S. Cellular's interest in the Partnerships was reflected in Investments in unconsolidated entities at a fair value of $114.8 million as of April 3, 2013. Recording U.S. Cellular's interest in the Partnerships required allocation of the excess of fair value over book value to customer lists, licenses, a favorable contract and goodwill of the Partnerships. Amortization expense related to customer lists and the favorable contract will be recognized over their respective useful lives and is included in Equity in earnings of unconsolidated entities in the Consolidated Statement of Operations. In addition, U.S. Cellular recognized a non-cash pre-tax gain of $18.5 million in the second quarter of 2013. The gain was recorded in Gain (loss) on investments in the Consolidated Statement of Operations. | |||||||||||
The Partnerships were valued using a discounted cash flow approach and a guideline public company method. The discounted cash flow approach uses value drivers and risks specific to the industry and current economic factors and incorporates assumptions that market participants would use in their estimates of fair value and may not be indicative of U.S. Cellular specific assumptions. The most significant assumptions made in this process were the revenue growth rate (shown as a simple average in the table below), the terminal revenue growth rate, discount rate and capital expenditures. The assumptions were as follows: | |||||||||||
Key assumptions | |||||||||||
Average expected revenue growth rate (next ten years) | 2 | % | |||||||||
Terminal revenue growth rate (after year ten) | 2 | % | |||||||||
Discount rate | 10.5 | % | |||||||||
Capital expenditures as a percentage of revenue | 14.9-18.8 | % | |||||||||
The guideline public company method develops an indication of fair value by calculating average market pricing multiples for selected publicly-traded companies. The developed multiples were applied to applicable financial measures of the Partnerships to determine fair value. The discounted cash flow approach and guideline public company method were weighted to arrive at the total fair value of the Partnerships. | |||||||||||
Property_Plant_and_Equipment
Property, Plant and Equipment | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Disclosure Text Block | |||||||||
Property, Plant and Equipment | NOTE 9 PROPERTY, PLANT AND EQUIPMENT | ||||||||
Property, plant and equipment in service and under construction, and related accumulated depreciation and amortization, as of December 31, 2014 and 2013 were as follows: | |||||||||
December 31, | Useful Lives (Years) | 2014 | 2013 | ||||||
(Dollars in thousands) | |||||||||
Land | N/A | $ | 35,031 | $ | 36,266 | ||||
Buildings | 20 | 296,502 | 304,272 | ||||||
Leasehold and land improvements | 30-Jan | 1,086,718 | 1,197,520 | ||||||
Cell site equipment | 25-Jul | 3,269,609 | 3,306,575 | ||||||
Switching equipment | 8-May | 960,377 | 1,161,976 | ||||||
Office furniture and equipment | 5-Mar | 553,630 | 539,248 | ||||||
Other operating assets and equipment | 5-Mar | 89,663 | 92,456 | ||||||
System development | 7-Jan | 1,042,195 | 962,698 | ||||||
Work in process | N/A | 125,015 | 116,501 | ||||||
7,458,740 | 7,717,512 | ||||||||
Accumulated depreciation and amortization | -4,730,523 | -4,860,992 | |||||||
$ | 2,728,217 | $ | 2,856,520 | ||||||
Depreciation and amortization expense totaled $593.2 million, $791.1 million and $597.7 million in 2014, 2013 and 2012, respectively. As a result of the Divestiture Transaction, U.S. Cellular recognized incremental depreciation and amortization in 2014, 2013 and 2012. See Note 6 — Acquisitions, Divestitures and Exchanges for additional information. | |||||||||
In 2014, 2013 and 2012, (Gain) loss on asset disposals, net included charges of $21.5 million, $30.6 million and $18.1 million, respectively, related to disposals of assets, trade-ins of older assets for replacement assets and other retirements of assets from service in the normal course of business. | |||||||||
Asset_Retirement_Obligation
Asset Retirement Obligation | 12 Months Ended | ||||||
Dec. 31, 2014 | |||||||
Disclosure Text Block | |||||||
Asset Retirement Obligation | NOTE 10 ASSET RETIREMENT OBLIGATIONS | ||||||
U.S. Cellular is subject to asset retirement obligations associated with its leased cell sites, switching office sites, retail store sites and office locations in its operating markets. Asset retirement obligations generally include obligations to restore leased land and retail store and office premises to their pre-lease conditions. These obligations are included in Other deferred liabilities and credits and Other current liabilities in the Consolidated Balance Sheet. | |||||||
In 2014 and 2013, U.S. Cellular performed a review of the assumptions and estimated costs related to its asset retirement obligations. The results of the reviews (identified as “Revisions in estimated cash outflows”) and other changes in asset retirement obligations during 2014 and 2013 were as follows: | |||||||
(Dollars in thousands) | 2014 | 2013 | |||||
Balance, beginning of period | $ | 195,568 | $ | 179,607 | |||
Additional liabilities accrued | 2,507 | 635 | |||||
Revisions in estimated cash outflows | -2,792 | 6,268 | |||||
Disposition of assets | -44,403 | -3,534 | |||||
Accretion expense | 12,534 | 12,592 | |||||
Transferred to Liabilities held for sale | -10,902 | - | |||||
Balance, end of period (1) | $ | 152,512 | $ | 195,568 | |||
-1 | The total amount of asset retirement obligations related to the Divestiture Transaction included in Other current liabilities was $5.9 million and $37.7 million as of December 31, 2014 and 2013, respectively. |
Debt
Debt | 12 Months Ended | |||||||||||||||
Dec. 31, 2014 | ||||||||||||||||
Disclosure Text Block | ||||||||||||||||
Debt | NOTE 11 DEBT | |||||||||||||||
Revolving Credit Facility | ||||||||||||||||
At December 31, 2014, U.S. Cellular had a revolving credit facility available for general corporate purposes. Amounts under the revolving credit facility may be borrowed, repaid and reborrowed from time to time until maturity. U.S. Cellular borrowed and repaid amounts under its revolving credit facility in 2014. U.S. Cellular did not borrow under its revolving credit facility in 2013 or 2012 except for standby letters of credit. | ||||||||||||||||
In certain circumstances, U.S. Cellular's interest cost on its revolving credit facility may be subject to increase if its current credit rating from nationally recognized credit rating agencies is lowered, and may be subject to decrease if the rating is raised. | ||||||||||||||||
In 2014, certain nationally recognized credit rating agencies downgraded the U.S. Cellular corporate and senior debt credit ratings. After these downgrades, U.S. Cellular is rated at sub-investment grade. As a result of these downgrades, the commitment fee on the revolving credit facility increased to 0.30% per annum. The downgrades also increased the interest rate on any borrowings by 0.25% per annum. The revolving credit facility does not cease to be available nor does the maturity date accelerate solely as a result of a downgrade in U.S. Cellular's credit rating. However, downgrades in U.S. Cellular's credit rating could adversely affect its ability to renew the revolving credit facility or obtain access to other credit facilities in the future. | ||||||||||||||||
The maturity date of any borrowings under the U.S. Cellular revolving credit facility would accelerate in the event of a change in control. | ||||||||||||||||
The following table summarizes the terms of the revolving credit facility as of December 31, 2014: | ||||||||||||||||
(Dollars in millions) | ||||||||||||||||
Maximum borrowing capacity | $ | 300 | ||||||||||||||
Letters of credit outstanding | $ | 17.5 | ||||||||||||||
Amount borrowed | $ | - | ||||||||||||||
Amount available for use | $ | 282.5 | ||||||||||||||
Borrowing rate: One-month London Interbank Offered Rate ("LIBOR") plus contractual spread (1) | 1.92 | % | ||||||||||||||
Sample LIBOR Rate | 0.17 | % | ||||||||||||||
Contractual spread | 1.75 | % | ||||||||||||||
Range of commitment fees on amount available for use (2) | ||||||||||||||||
Low | 0.13 | % | ||||||||||||||
High | 0.3 | % | ||||||||||||||
Agreement date | Dec-10 | |||||||||||||||
Maturity date | Dec-17 | |||||||||||||||
Fees incurred attributable to the Revolving Credit Facility are as follows: | ||||||||||||||||
Fees incurred as a percent of Maximum borrowing capacity for 2014 | 0.42 | % | ||||||||||||||
Fees incurred, amount | ||||||||||||||||
2014 | $ | 1.3 | ||||||||||||||
2013 | $ | 0.8 | ||||||||||||||
2012 | $ | 1.1 | ||||||||||||||
-1 | Borrowings under the revolving credit facility bear interest at LIBOR plus a contractual spread based on U.S. Cellular’s credit rating or, at U.S. Cellular’s option, an alternate “Base Rate” as defined in the revolving credit agreement. U.S. Cellular may select a borrowing period of either one, two, three or six months (or other period of twelve months or less if requested by U.S. Cellular and approved by the lenders). If U.S. Cellular provides notice of intent to borrow the same business day, interest on borrowing is at the Base Rate plus the contractual spread. | |||||||||||||||
-2 | The revolving credit facility has commitment fees based on the unsecured senior debt ratings assigned to U.S. Cellular by certain ratings agencies. | |||||||||||||||
The continued availability of the revolving credit facility requires U.S. Cellular to comply with certain negative and affirmative covenants, maintain certain financial ratios and make representations regarding certain matters at the time of each borrowing. U.S. Cellular believes it was in compliance as of December 31, 2014 with all covenants and other requirements set forth in the revolving credit facility. | ||||||||||||||||
In connection with U.S. Cellular's revolving credit facility, TDS and U.S. Cellular entered into a subordination agreement dated December 17, 2010 together with the administrative agent for the lenders under U.S. Cellular's revolving credit agreement. Pursuant to this subordination agreement, (a) any consolidated funded indebtedness from U.S. Cellular to TDS will be unsecured and (b) any (i) consolidated funded indebtedness from U.S. Cellular to TDS (other than “refinancing indebtedness” as defined in the subordination agreement) in excess of $105,000,000, and (ii) refinancing indebtedness in excess of $250,000,000, will be subordinated and made junior in right of payment to the prior payment in full of obligations to the lenders under U.S. Cellular's revolving credit agreement. As of December 31, 2014, U.S. Cellular had no outstanding consolidated funded indebtedness or refinancing indebtedness that was subordinated to the revolving credit agreement pursuant to the subordination agreement. | ||||||||||||||||
In July 2014, U.S. Cellular entered into an amendment to the revolving credit facility agreement which increased the Consolidated Leverage Ratio (the ratio of Consolidated Funded Indebtedness to Consolidated Earnings before interest, taxes, depreciation and amortization) that U.S. Cellular is required to maintain. Beginning July 1, 2014, U.S. Cellular is required to maintain the Consolidated Leverage Ratio at a level not to exceed 3.75 to 1.00 for the period of the four fiscal quarters most recently ended (this was 3.00 to 1.00 prior to July 1, 2014). The terms of the amendment decrease the maximum permitted Consolidated Leverage Ratio beginning January 1, 2016, with further decreases effective July 1, 2016 and January 1, 2017 (and will return to 3.00 to 1.00 at that time). For the twelve months ended December 31, 2014, the actual Consolidated Leverage Ratio was 2.35 to 1.00. Future changes in U.S. Cellular's financial condition could negatively impact its ability to meet the financial covenants and requirements in its revolving credit facility agreement. | ||||||||||||||||
Long-Term Financing | ||||||||||||||||
Long-term debt as of December 31, 2014 and 2013 was as follows: | ||||||||||||||||
December 31, | ||||||||||||||||
(Dollars in thousands) | Issuance date | Maturity date | Call date | 2014 | 2013 | |||||||||||
Unsecured Senior Notes | ||||||||||||||||
6.70% | December 2003 and June 2004 | Dec-33 | Dec-03 | $ | 544,000 | $ | 544,000 | |||||||||
Less: 6.7% Unamortized discount | -11,278 | -11,551 | ||||||||||||||
532,722 | 532,449 | |||||||||||||||
6.95% | May-11 | May-60 | May-16 | 342,000 | 342,000 | |||||||||||
7.25% | Dec-14 | Dec-63 | Dec-19 | 275,000 | - | |||||||||||
Obligation on capital leases | 2,143 | 3,749 | ||||||||||||||
Total long-term debt | $ | 1,151,865 | $ | 878,198 | ||||||||||||
Long-term debt, current | $ | 46 | $ | 166 | ||||||||||||
Long-term debt, noncurrent | $ | 1,151,819 | $ | 878,032 | ||||||||||||
U.S. Cellular may redeem the 6.7% Senior Notes, in whole or in part, at any time prior to maturity at a redemption price equal to the greater of (a) 100% of the principal amount of such notes, plus accrued and unpaid interest, or (b) the sum of the present values of the remaining scheduled payments of principal and interest thereon discounted to the redemption date on a semi-annual basis at the Treasury Rate plus 30 basis points. U.S. Cellular may redeem the 6.95% Senior Notes and 7.25% Senior Notes, in whole or in part at any time after the call date, at a redemption price equal to 100% of the principal amount redeemed plus accrued and unpaid interest. | ||||||||||||||||
Interest on the 6.7% Senior Notes is payable semi-annually, and is payable quarterly on the 6.95% and 7.25% Senior Notes. | ||||||||||||||||
Capitalized debt issuance costs for Unsecured Senior Notes totaled $25.9 million and are included in Other assets and deferred charges (a long-term asset account). These costs are amortized over the life of the notes using the effective interest method. | ||||||||||||||||
U.S. Cellular does not have any annual requirements for principal payments on long-term debt over the next five years (excluding capital lease obligations). | ||||||||||||||||
The covenants associated with U.S. Cellular's long-term debt obligations, among other things, restrict U.S. Cellular's ability, subject to certain exclusions, to incur additional liens, enter into sale and leaseback transactions, and sell, consolidate or merge assets. | ||||||||||||||||
U.S. Cellular's long-term debt indentures do not contain any provisions resulting in acceleration of the maturities of outstanding debt in the event of a change in U.S. Cellular's credit rating. However, a downgrade in U.S. Cellular's credit rating could adversely affect its ability to obtain long-term debt financing in the future. | ||||||||||||||||
Term Loan Facility | ||||||||||||||||
On January 21, 2015, U.S. Cellular entered into a term loan credit facility relating to $225.0 million in debt. The term loan must be drawn in one or more advances by the six month anniversary of the date of the agreement; amounts not drawn by that time will cease to be available. Amounts repaid or prepaid under the term loan facility may not be reborrowed. The term loan is available for general corporate purposes, including working capital, spectrum purchases and capital expenditures. The term loan is unsecured except for a lien on all investments in equity which U.S. Cellular may have in the loan administrative agent, CoBank ACB, subject to certain limitations. | ||||||||||||||||
In certain circumstances, U.S. Cellular's interest cost on its term loan may be subject to increase if its current credit ratings from nationally recognized credit rating agencies are lowered, and may be subject to decrease if the ratings are raised. The term loan facility does not cease to be available nor does the maturity date accelerate solely as a result of a downgrade in U.S. Cellular's credit rating. However, downgrades in U.S. Cellular's credit rating could adversely affect its ability to renew or obtain access to credit facilities in the future. | ||||||||||||||||
The maturity date of term loan would accelerate in the event of a change in control. | ||||||||||||||||
The following table summarizes the terms of the term loan facility as of February 25, 2015: | ||||||||||||||||
(Dollars in millions) | ||||||||||||||||
Maximum borrowing capacity | $ | 225 | ||||||||||||||
Amount borrowed | $ | - | ||||||||||||||
Amount available for use | $ | 225 | ||||||||||||||
Hypothetical Borrowing rate: One-month London Interbank Offered Rate ("LIBOR") plus contractual spread (1) | 2.67 | % | ||||||||||||||
Sample LIBOR Rate | 0.17 | % | ||||||||||||||
Contractual spread | 2.5 | % | ||||||||||||||
Range of commitment fees on amount available for use (2) | ||||||||||||||||
Low | 0.13 | % | ||||||||||||||
High | 0.3 | % | ||||||||||||||
Agreement date | 21-Jan-15 | |||||||||||||||
Maturity date (3) | 21-Jan-22 | |||||||||||||||
-1 | Borrowings under the term loan credit facility bear interest at LIBOR plus a contractual spread based on U.S. Cellular’s credit rating or, at U.S. Cellular’s option, an alternate “Base Rate” as defined in the term loan facility. | |||||||||||||||
-2 | The term loan credit facility has commitment fees based on the unsecured senior debt ratings assigned to U.S. Cellular by certain ratings agencies. | |||||||||||||||
-3 | Principal amounts outstanding on the term loan facility will be due and payable quarterly in equal installments beginning on the last day of the fifth fiscal quarter ending after the agreement date, in an amount equal to 1.25% of the aggregate term loan facility commitment. Any amounts owing under the term loan facility not previously repaid will be due and payable on the maturity date. | |||||||||||||||
The continued availability of the term loan facility requires U.S. Cellular to comply with certain negative and affirmative covenants, maintain certain financial ratios and make representations regarding certain matters at the time of each borrowing, that are substantially the same as those in the U.S. Cellular revolving credit facility described above. | ||||||||||||||||
In connection with U.S. Cellular's term credit facility, TDS and U.S. Cellular entered into a subordination agreement dated January 21, 2015 together with the administrative agent for the lenders under U.S. Cellular's term loan credit agreement, which is substantially the same as the subordination agreement in the U.S. Cellular revolving credit facility described above. As of February 25, 2015, U.S. Cellular had no outstanding consolidated funded indebtedness or refinancing indebtedness that was subordinated to the term loan facility pursuant to this subordination agreement. |
Commitments_and_Contingencies
Commitments and Contingencies | 12 Months Ended | |||||
Dec. 31, 2014 | ||||||
Disclosure Text Block | ||||||
Commitments and Contingencies | NOTE 12 COMMITMENTS AND CONTINGENCIES | |||||
Agreements | ||||||
On November 25, 2014, U.S. Cellular executed a Master Statement of Work and certain other documents with Amdocs Software Systems Limited (“Amdocs”), effective October 1, 2014, that inter-relate with but rearrange the structure under previous Amdocs Agreements. The agreement provides that U.S. Cellular will now outsource to Amdocs certain support functions for its Billing and Operational Support System (“B/OSS”). Such functions include application support, billing operations and some infrastructure services. The agreement has a term through September 30, 2019, subject to five one-year renewal periods at U.S. Cellular's option. The total estimated amount to be paid to Amdocs with respect to the agreement during the initial five-year term is approximately $110 million (exclusive of travel and expenses and subject to certain potential adjustments). | ||||||
During 2013, U.S. Cellular entered into agreements with Apple to purchase certain minimum quantities of Apple iPhone products and fund marketing programs related to the Apple iPhone and iPad products over a three-year period beginning in November 2013. Based on current forecasts, U.S. Cellular estimates that the remaining contractual commitment as of December 31, 2014 under these agreements is approximately $818 million. At this time, U.S. Cellular expects to meet its contractual commitments with Apple. | ||||||
Lease Commitments | ||||||
U.S. Cellular is a party to various lease agreements, both as lessee and lessor, for office space, retail store sites, cell sites and equipment which are accounted for as operating leases. Certain leases have renewal options and/or fixed rental increases. Renewal options that are reasonably assured of exercise are included in determining the lease term. Any rent abatements or lease incentives, in addition to fixed rental increases, are included in the calculation of rent expense and calculated on a straight-line basis over the defined lease term. | ||||||
As of December 31, 2014, future minimum rental payments required under operating leases and rental receipts expected under operating leases that have noncancellable lease terms in excess of one year were as follows: | ||||||
Operating Leases Future Minimum Rental Payments* | Operating Leases Future Minimum Rental Receipts | |||||
(Dollars in thousands) | ||||||
2015 | $ | 139,286 | $ | 54,715 | ||
2016 | 125,458 | 44,110 | ||||
2017 | 107,987 | 34,780 | ||||
2018 | 90,687 | 24,174 | ||||
2019 | 74,640 | 12,082 | ||||
Thereafter | 740,501 | 8,567 | ||||
Total | $ | 1,278,559 | $ | 178,428 | ||
*Includes $88.4 million of future lease payments associated with leases transferred in January 2015 per the second closing of the tower sale. See Note 6 — Acquisitions, Divestitures and Exchanges for additional information. | ||||||
Rent expense totaled $152.4 million, $162.1 million and $183.9 million in 2014, 2013 and 2012, respectively. | ||||||
Indemnifications | ||||||
U.S. Cellular enters into agreements in the normal course of business that provide for indemnification of counterparties. The terms of the indemnifications vary by agreement. The events or circumstances that would require U.S. Cellular to perform under these indemnities are transaction specific; however, these agreements may require U.S. Cellular to indemnify the counterparty for costs and losses incurred from litigation or claims arising from the underlying transaction. U.S. Cellular is unable to estimate the maximum potential liability for these types of indemnifications as the amounts are dependent on the outcome of future events, the nature and likelihood of which cannot be determined at this time. Historically, U.S. Cellular has not made any significant indemnification payments under such agreements. | ||||||
Legal Proceedings | ||||||
U.S. Cellular is involved or may be involved from time to time in legal proceedings before the FCC, other regulatory authorities, and/or various state and federal courts. If U.S. Cellular believes that a loss arising from such legal proceedings is probable and can be reasonably estimated, an amount is accrued in the financial statements for the estimated loss. If only a range of loss can be determined, the best estimate within that range is accrued; if none of the estimates within that range is better than another, the low end of the range is accrued. The assessment of the expected outcomes of legal proceedings is a highly subjective process that requires judgments about future events. The legal proceedings are reviewed at least quarterly to determine the adequacy of accruals and related financial statement disclosures. The ultimate outcomes of legal proceedings could differ materially from amounts accrued in the financial statements. | ||||||
U.S. Cellular has accrued $0.4 million and $0.3 million with respect to legal proceedings and unasserted claims as of December 31, 2014 and 2013, respectively. U.S. Cellular has not accrued any amount for legal proceedings if it cannot estimate the amount of the possible loss or range of loss. U.S. Cellular does not believe that the amount of any contingent loss in excess of the amounts accrued would be material. |
Variable_Interest_Entities
Variable Interest Entities | 12 Months Ended | ||||||
Dec. 31, 2014 | |||||||
Disclosure Text Block | |||||||
Variable Interest Entities | NOTE 13 VARIABLE INTEREST ENTITIES (VIEs) | ||||||
U.S. Cellular consolidates variable interest entities in which it has a controlling financial interest and is the primary beneficiary. A controlling financial interest will have both of the following characteristics: (a) the power to direct the VIE activities that most significantly impact economic performance and (b) the obligation to absorb the VIE losses and right to receive benefits that are significant to the VIE. U.S. Cellular reviews these criteria initially at the time it enters into agreements and subsequently when reconsideration events occur. | |||||||
Consolidated VIEs | |||||||
As of December 31, 2014, U.S. Cellular holds a variable interest in and consolidates the following VIEs under GAAP: | |||||||
Advantage Spectrum L.P. (“Advantage Spectrum”) and Frequency Advantage L.P., the general partner of Advantage Spectrum; | |||||||
Aquinas Wireless L.P. (“Aquinas Wireless”); and | |||||||
King Street Wireless L.P. (“King Street Wireless”) and King Street Wireless, Inc., the general partner of King Street Wireless. | |||||||
The power to direct the activities that most significantly impact the economic performance of Advantage Spectrum, Aquinas Wireless and King Street Wireless (collectively, the “limited partnerships”) is shared. Specifically, the general partner of these VIEs has the exclusive right to manage, operate and control the limited partnerships and make all decisions to carry on the business of the partnerships; however, the general partner of each partnership needs consent of the limited partner, a U.S. Cellular subsidiary, to sell or lease certain licenses, to make certain large expenditures, admit other partners or liquidate the limited partnerships. Although the power to direct the activities of the VIEs is shared, U.S. Cellular has a disproportionate level of exposure to the variability associated with the economic performance of the VIEs, indicating that U.S. Cellular is the primary beneficiary of the VIEs in accordance with GAAP. Accordingly, these VIEs are consolidated. | |||||||
The following table presents the classification of the consolidated VIEs' assets and liabilities in U.S. Cellular's Consolidated Balance Sheet. | |||||||
December 31, | 2014 | 2013 | |||||
(Dollars in thousands) | |||||||
Assets | |||||||
Cash and cash equivalents | $ | 2,588 | $ | 2,076 | |||
Other current assets | 278 | 1,184 | |||||
Licenses | 312,977 | 310,475 | |||||
Property, plant and equipment, net | 10,671 | 18,600 | |||||
Other assets and deferred charges | 60,059 | 511 | |||||
Total assets | $ | 386,573 | $ | 332,846 | |||
Liabilities | |||||||
Current liabilities | $ | 110 | $ | 46 | |||
Deferred liabilities and credits | 622 | 3,139 | |||||
Total liabilities | $ | 732 | $ | 3,185 | |||
Other Related Matters | |||||||
An FCC auction of AWS-3 spectrum licenses, referred to as Auction 97, began in November 2014 and ended in January 2015. U.S. Cellular participated in Auction 97 indirectly through its interest in Advantage Spectrum. A subsidiary of U.S. Cellular is a limited partner in Advantage Spectrum. Advantage Spectrum qualified as a “designated entity,” and thereby was eligible for bid credits with respect to spectrum purchased in Auction 97. To participate in this auction, a $60.0 million deposit was made to the FCC in 2014. Such amount is reflected in Other Assets and Deferred Charges in the Consolidated Balance Sheet. Advantage Spectrum was the provisional winning bidder for 124 licenses for an aggregate bid of $338.3 million, net of its anticipated designated entity discount of 25%. Advantage Spectrum's bid amount, less the initial deposit of $60.0 million, plus certain other charges totaling $2.3 million, are required to be paid to the FCC by March 2, 2015. | |||||||
Advantage Spectrum, Aquinas Wireless and King Street Wireless were formed to participate in FCC auctions of wireless spectrum and to fund, establish, and provide wireless service with respect to any FCC licenses won in the auctions. As such, these entities have risks similar to those described in the “Risk Factors” in U.S. Cellular's Annual Report on Form 10-K. | |||||||
U.S. Cellular's capital contributions and advances made to its VIEs totaled $60.9 million in the year ended December 31, 2014. In 2013, there were no capital contributions or advances made to VIEs or their general partners that were not VIEs. | |||||||
U.S. Cellular may agree to make additional capital contributions and/or advances to Advantage Spectrum, Aquinas Wireless or King Street Wireless and/or to their general partners to provide additional funding for the development of licenses granted in various auctions. U.S. Cellular may finance such amounts with a combination of cash on hand, borrowings under its revolving credit agreement and/or long-term debt. There is no assurance that U.S. Cellular will be able to obtain additional financing on commercially reasonable terms or at all to provide such financial support. | |||||||
The limited partnership agreements of Advantage Spectrum, Aquinas Wireless and King Street Wireless also provide the general partner with a put option whereby the general partner may require the limited partner, a subsidiary of U.S. Cellular, to purchase its interest in the limited partnership. The general partner's put options related to its interests in King Street Wireless and Aquinas Wireless will become exercisable in 2019 and 2020, respectively. The general partner's put options related to its interest in Advantage Spectrum will become exercisable on the fifth and sixth anniversaries of the issuance of any license. The put option price is determined pursuant to a formula that takes into consideration fixed interest rates and the market value of U.S. Cellular's Common Shares. Upon exercise of the put option, the general partner is required to repay borrowings due to U.S. Cellular. If the general partner does not elect to exercise its put option, the general partner may trigger an appraisal process in which the limited partner (a subsidiary of U.S. Cellular) may have the right, but not the obligation, to purchase the general partner's interest in the limited partnership at a price and on other terms and conditions specified in the limited partnership agreement. In accordance with requirements under GAAP, U.S. Cellular is required to calculate a theoretical redemption value for all of the put options assuming they are exercisable at the end of each reporting period, even though such exercise is not contractually permitted. Pursuant to GAAP, this theoretical redemption value, net of amounts payable to U.S. Cellular for loans and accrued interest thereon made by U.S. Cellular to the general partners the (“net put value”), was $1.2 million and $0.5 million at December 31, 2014 and 2013, respectively. The net put value is recorded as Noncontrolling interests with redemption features in U.S. Cellular's Consolidated Balance Sheet. Also in accordance with GAAP, changes in the redemption value of the put options, net of interest accrued on the loans, are recorded as a component of Net income attributable to noncontrolling interests, net of tax, in U.S. Cellular's Consolidated Statement of Operations. | |||||||
Noncontrolling_Interests
Noncontrolling Interests | 12 Months Ended |
Dec. 31, 2014 | |
Disclosure Text Block | |
Noncontrolling Interests | NOTE 14 NONCONTROLLING INTERESTS |
U.S. Cellular's consolidated financial statements include certain noncontrolling interests that meet the GAAP definition of mandatorily redeemable financial instruments. These mandatorily redeemable noncontrolling interests represent interests held by third parties in consolidated partnerships, where the terms of the underlying partnership agreement provide for a defined termination date at which time the assets of the subsidiary are to be sold, the liabilities are to be extinguished and the remaining net proceeds are to be distributed to the noncontrolling interest holders and U.S. Cellular in accordance with the respective partnership. The termination dates of these mandatorily redeemable noncontrolling interests range from 2085 to 2113. | |
The estimated aggregate amount that would be due and payable to settle all of these noncontrolling interests assuming an orderly liquidation of the finite-lived consolidated partnerships on December 31, 2014, net of estimated liquidation costs, is $9.9 million. This amount excludes redemption amounts recorded in Noncontrolling interests with redemption features in the Consolidated Balance Sheet. The estimate of settlement value was based on certain factors and assumptions which are subjective in nature. Changes in those factors and assumptions could result in a materially larger or smaller settlement amount. U.S. Cellular currently has no plans or intentions relating to the liquidation of any of the related partnerships prior to their scheduled termination dates. The corresponding carrying value of the mandatorily redeemable noncontrolling interests in finite-lived consolidated partnerships at December 31, 2014 was $7.8 million, and is included in Noncontrolling interests in the Consolidated Balance Sheet. The excess of the aggregate settlement value over the aggregate carrying value of these mandatorily redeemable noncontrolling interests is due primarily to the unrecognized appreciation of the noncontrolling interest holders' share of the underlying net assets in the consolidated partnerships. Neither the noncontrolling interest holders' share, nor U.S. Cellular's share, of the appreciation of the underlying net assets of these subsidiaries is reflected in the consolidated financial statements. |
Common_Shareholders_Equity
Common Shareholders' Equity | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Disclosure Text Block | |||||||||
Common Shareholder's Equity | NOTE 15 COMMON SHAREHOLDERS' EQUITY | ||||||||
Tax-Deferred Savings Plan | |||||||||
U.S. Cellular has reserved 67,215 Common Shares for issuance under the TDS Tax-Deferred Savings Plan, a qualified profit-sharing plan pursuant to Sections 401(a) and 401(k) of the Internal Revenue Code. Participating employees have the option of investing their contributions in a U.S. Cellular Common Share fund, a TDS Common Share fund or certain unaffiliated funds. | |||||||||
Series A Common Shares | |||||||||
Series A Common Shares are convertible on a share-for-share basis into Common Shares. In matters other than the election of directors, each Series A Common Share is entitled to ten votes per share, compared to one vote for each Common Share. The Series A Common Shares are entitled to elect 75% of the directors (rounded down), and the Common Shares elect 25% of the directors (rounded up). As of December 31, 2014, a majority of U.S. Cellular's outstanding Common Shares and all of U.S. Cellular's outstanding Series A Common Shares were held by TDS. | |||||||||
Common Share Repurchase Program | |||||||||
On November 17, 2009, the Board of Directors of U.S. Cellular authorized the repurchase of up to 1,300,000 Common Shares on an annual basis beginning in 2009 and continuing each year thereafter, on a cumulative basis. These purchases will be made pursuant to open market purchases, block purchases, private purchases, or otherwise, depending on market prices and other conditions. This authorization does not have an expiration date. | |||||||||
Share repurchases made under this authorization were as follows: | |||||||||
Year Ended December 31, | |||||||||
(Shares and dollar amounts in thousands, except per share amounts) | Number of Shares | Average Cost Per Share | Total Cost | ||||||
2014 | |||||||||
U.S. Cellular Common Shares | 496 | $ | 38.19 | $ | 18,943 | ||||
2013 | |||||||||
U.S. Cellular Common Shares | 499 | $ | 37.19 | $ | 18,544 | ||||
2012 | |||||||||
U.S. Cellular Common Shares | 571 | $ | 35.11 | $ | 20,045 | ||||
Pursuant to certain employee and non-employee benefit plans, U.S. Cellular reissued the following Treasury Shares: | |||||||||
Year Ended December 31, | 2014 | 2013 | 2012 | ||||||
(Shares in thousands) | |||||||||
Treasury Shares Reissued | 371 | 536 | 182 |
StockBased_Compensation
Stock-Based Compensation | 12 Months Ended | ||||||||||||||
Dec. 31, 2014 | |||||||||||||||
Disclosure Text Block | |||||||||||||||
Stock-Based Compensation | NOTE 16 STOCK-BASED COMPENSATION | ||||||||||||||
U.S. Cellular has established the following stock-based compensation plans: Long-Term Incentive Plans and a Non-Employee Director compensation plan. | |||||||||||||||
Under the U.S. Cellular Long-Term Incentive Plans, U.S. Cellular may grant fixed and performance based incentive and non-qualified stock options, restricted stock, restricted stock units, and deferred compensation stock unit awards to key employees. At December 31, 2014, the only types of awards outstanding are fixed non-qualified stock option awards, restricted stock unit awards, and deferred compensation stock unit awards. | |||||||||||||||
On June 25, 2013, U.S. Cellular paid a special cash dividend to all holders of U.S. Cellular Common Shares and Series A Common Shares as of June 11, 2013. Outstanding U.S. Cellular stock options, restricted stock unit awards and deferred compensation stock units were equitably adjusted for the special cash dividend. The impact of such adjustments are fully reflected for all years presented. See Note 5 – Earnings Per Share for additional information. | |||||||||||||||
At December 31, 2014, U.S. Cellular had reserved 9,782,000 Common Shares for equity awards granted and to be granted under the Long-Term Incentive Plans. | |||||||||||||||
U.S. Cellular also has established a Non-Employee Director compensation plan under which it has reserved 197,000 Common Shares at December 31, 2014 for issuance as compensation to members of the Board of Directors who are not employees of U.S. Cellular or TDS. | |||||||||||||||
U.S. Cellular uses treasury stock to satisfy requirements for Common Shares issued pursuant to its various stock-based compensation plans. | |||||||||||||||
Long-Term Incentive Plans—Stock Options—Stock options granted to key employees are exercisable over a specified period not in excess of ten years. Stock options generally vest over a period of three years from the date of grant. Stock options outstanding at December 31, 2014 expire between 2015 and 2024. However, vested stock options typically expire 30 days after the effective date of an employee's termination of employment for reasons other than retirement. Employees who leave at the age of retirement have 90 days (or one year if they satisfy certain requirements) within which to exercise their vested stock options. The exercise price of options equals the market value of U.S. Cellular Common Shares on the date of grant. | |||||||||||||||
U.S. Cellular estimated the fair value of stock options granted during 2014, 2013, and 2012 using the Black-Scholes valuation model and the assumptions shown in the table below. | |||||||||||||||
2014 | 2013 | 2012 | |||||||||||||
Expected life | 4.5 years | 4.6-9.0 years | 4.5 years | ||||||||||||
Expected annual volatility rate | 28.0%-28.1% | 29.2%-39.6% | 40.7%-42.6% | ||||||||||||
Dividend yield | 0% | 0% | 0% | ||||||||||||
Risk-free interest rate | 1.4%-1.5% | 0.7%-2.4% | 0.5%-0.9% | ||||||||||||
Estimated annual forfeiture rate | 9.40% | 0.0%-8.1% | 0.0%-9.1% | ||||||||||||
The fair value of options is recognized as compensation cost using an accelerated attribution method over the requisite service periods of the awards, which is generally the vesting period. | |||||||||||||||
A summary of U.S. Cellular stock options outstanding (total and portion exercisable) and changes during the three years ended December 31, 2014, is presented in the table below: | |||||||||||||||
Common Share Options | Number of Options | Weighted Average Exercise Price | Weighted Average Grant Date Fair Value | Aggregate Intrinsic Value | Weighted Average Remaining Contractual Life (in years) | ||||||||||
Outstanding at December 31, 2011 | 2,834,000 | $ | 43.07 | ||||||||||||
(1,533,000 exercisable) | 46.23 | ||||||||||||||
Granted | 677,000 | 34.91 | $ | 12.61 | |||||||||||
Exercised | -47,000 | 29.82 | $ | 205,000 | |||||||||||
Forfeited | -117,000 | 38.45 | |||||||||||||
Expired | -133,000 | 46.17 | |||||||||||||
Outstanding at December 31, 2012 | 3,214,000 | $ | 41.58 | ||||||||||||
(1,928,000 exercisable) | 43.99 | ||||||||||||||
Granted | 1,213,000 | 32.45 | $ | 11.53 | |||||||||||
Exercised | -892,000 | 34.78 | $ | 6,787,000 | |||||||||||
Forfeited | -574,000 | 34.17 | |||||||||||||
Expired | -247,000 | 48.35 | |||||||||||||
Outstanding at December 31, 2013 | 2,714,000 | $ | 42.22 | ||||||||||||
(1,359,000 exercisable) | $ | 46.91 | |||||||||||||
Granted | 1,116,000 | 41.21 | $ | 10.68 | |||||||||||
Exercised | -233,000 | 32.8 | $ | 1,966,000 | |||||||||||
Forfeited | -144,000 | 35.09 | |||||||||||||
Expired | -65,000 | 45.68 | |||||||||||||
Outstanding at December 31, 2014 | 3,388,000 | $ | 41.51 | $ | 7,495,000 | 6.7 | |||||||||
(1,586,000 exercisable) | $ | 45.28 | $ | 2,984,000 | 4.4 | ||||||||||
The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between U.S. Cellular's closing stock price and the exercise price multiplied by the number of in-the-money options) that was received by the option holders upon exercise or that would have been received by option holders had all options been exercised on December 31, 2014. | |||||||||||||||
Long-Term Incentive Plans—Restricted Stock Units—U.S. Cellular grants restricted stock unit awards, which generally vest after three years, to key employees. | |||||||||||||||
U.S. Cellular estimates the fair value of restricted stock units based on the closing market price of U.S. Cellular shares on the date of grant. The fair value is then recognized as compensation cost on a straight-line basis over the requisite service periods of the awards, which is generally the vesting period. | |||||||||||||||
A summary of U.S. Cellular nonvested restricted stock units at December 31, 2014 and changes during the year then ended is presented in the table below: | |||||||||||||||
Common Restricted Stock Units | Number | Weighted Average Grant Date Fair Value | |||||||||||||
Nonvested at December 31, 2013 | 1,170,000 | $ | 36.46 | ||||||||||||
Granted | 370,000 | 41.24 | |||||||||||||
Vested | -274,000 | 41.92 | |||||||||||||
Forfeited | -124,000 | 34.38 | |||||||||||||
Nonvested at December 31, 2014 | 1,142,000 | $ | 35.6 | ||||||||||||
The total fair value of restricted stock units that vested during 2014, 2013 and 2012 was $11.1 million, $8.8 million and $8.9 million, respectively, as of the respective vesting dates. The weighted average grant date fair value of restricted stock units granted in 2014, 2013 and 2012 was $41.24, $32.06 and $34.09, respectively. | |||||||||||||||
Long-Term Incentive Plans—Deferred Compensation Stock Units—Certain U.S. Cellular employees may elect to defer receipt of all or a portion of their annual bonuses and to receive a company matching contribution on the amount deferred. All bonus compensation that is deferred by employees electing to participate is immediately vested and is deemed to be invested in U.S. Cellular Common Share stock units. The amount of U.S. Cellular's matching contribution depends on the portion of the annual bonus that is deferred. Participants receive a 25% match for amounts deferred up to 50% of their total annual bonus and a 33% match for amounts that exceed 50% of their total annual bonus; such matching contributions also are deemed to be invested in U.S. Cellular Common Share stock units. | |||||||||||||||
There were no deferred compensation stock units granted or that vested during 2014. The total fair value of deferred compensation stock units that vested during 2013 and 2012 was less than $0.1 million in each year. The weighted average grant date fair value of deferred compensation stock units granted in 2013 and 2012 was $31.50 and $36.34, respectively. As of December 31, 2014, there were no vested or unissued deferred compensation stock units outstanding. | |||||||||||||||
Compensation of Non-Employee Directors—U.S. Cellular issued 14,200, 13,000 and 7,600 Common Shares in 2014, 2013 and 2012, respectively, under its Non-Employee Director compensation plan. | |||||||||||||||
Stock-Based Compensation Expense | |||||||||||||||
The following table summarizes stock-based compensation expense recognized during 2014, 2013 and 2012: | |||||||||||||||
Year Ended December 31, | 2014 | 2013 | 2012 | ||||||||||||
(Dollars in thousands) | |||||||||||||||
Stock option awards | $ | 9,513 | $ | 5,810 | $ | 8,471 | |||||||||
Restricted stock unit awards | 12,125 | 9,485 | 12,300 | ||||||||||||
Deferred compensation bonus and matching stock unit awards | 185 | 2 | 240 | ||||||||||||
Awards under Non-Employee Director compensation plan | 560 | 547 | 455 | ||||||||||||
Total stock-based compensation, before income taxes | 22,383 | 15,844 | 21,466 | ||||||||||||
Income tax benefit | -8,454 | -5,984 | -8,121 | ||||||||||||
Total stock-based compensation expense, net of income taxes | $ | 13,929 | $ | 9,860 | $ | 13,345 | |||||||||
The following table provides a summary of the stock-based compensation expense included in the Consolidated Statement of Operations for the years ended: | |||||||||||||||
December 31, | 2014 | 2013 | 2012 | ||||||||||||
(Dollars in thousands) | |||||||||||||||
Selling, general and administrative expense | $ | 19,429 | $ | 12,933 | $ | 18,437 | |||||||||
System operations | 2,954 | 2,911 | 3,029 | ||||||||||||
Total stock-based compensation expense | $ | 22,383 | $ | 15,844 | $ | 21,466 | |||||||||
At December 31, 2014, unrecognized compensation cost for all U.S. Cellular stock-based compensation awards was $24.1 million and is expected to be recognized over a weighted average period of 2.0 years. | |||||||||||||||
U.S. Cellular's tax benefits realized from the exercise of stock options and other awards totaled $5.3 million in 2014. | |||||||||||||||
Supplemental_Cash_Flow_Disclos
Supplemental Cash Flow Disclosures | 12 Months Ended | |||||||||
Dec. 31, 2014 | ||||||||||
Disclosure Text Block | ||||||||||
Supplemental Cash Flow Disclosures | NOTE 17 SUPPLEMENTAL CASH FLOW DISCLOSURES | |||||||||
Following are supplemental cash flow disclosures regarding interest paid and income taxes paid. | ||||||||||
Year Ended December 31, | 2014 | 2013 | 2012 | |||||||
(Dollars in thousands) | ||||||||||
Interest paid | $ | 54,955 | $ | 42,904 | $ | 44,048 | ||||
Income taxes paid (refunded) | 33,276 | 157,778 | -58,609 | |||||||
Following are supplemental cash flow disclosures regarding transactions related to stock-based compensation awards. In certain situations, U.S. Cellular withholds shares that are issuable upon the exercise of stock options or the vesting of restricted shares to cover, and with a value equivalent to, the exercise price and/or the amount of taxes required to be withheld from the stock award holder at the time of the exercise or vesting. U.S. Cellular then pays the amount of the required tax withholdings to the taxing authorities in cash. | ||||||||||
Year Ended December 31, | 2014 | 2013 | 2012 | |||||||
(Dollars in thousands) | ||||||||||
Common Shares withheld | 163,355 | 606,582 | 92,846 | |||||||
Aggregate value of Common Shares withheld | $ | 6,868 | $ | 25,179 | $ | 3,604 | ||||
Cash receipts upon exercise of stock options | 5,166 | 10,468 | 900 | |||||||
Cash disbursements for payment of taxes | -4,336 | -4,684 | -3,105 | |||||||
Net cash receipts (disbursements) from exercise of stock options and vesting of other stock awards | $ | 830 | $ | 5,784 | $ | -2,205 | ||||
On September 27, 2012, the FCC conducted a single round, sealed bid, reverse auction to award up to $300 million in one-time Mobility Fund Phase I support to successful bidders that commit to provide 3G, or better, wireless service in areas designated as unserved by the FCC. This auction was designated by the FCC as Auction 901. U.S. Cellular and several of its wholly-owned subsidiaries participated in Auction 901 and were winning bidders in eligible areas within 10 states and will receive up to $40.1 million in one-time support from the Mobility Fund. These funds when received reduce the carrying amount of the assets to which they relate or offset operating expenses. In connection with these winning bids, in June 2013, U.S. Cellular provided $17.4 million letters of credit to the FCC, of which the entire amount remained outstanding as of December 31, 2014. U.S. Cellular has received $13.4 million in support funds as of December 31, 2014, of which $1.9 million is included as a component of Other assets and deferred charges in the Consolidated Balance Sheet and $11.5 million reduced the carrying amount of the assets to which they relate, which are included in Property, plant and equipment in the Consolidated Balance Sheet. | ||||||||||
Related_Parties
Related Parties | 12 Months Ended |
Dec. 31, 2014 | |
Disclosure Text Block | |
Related Parties | NOTE 18 RELATED PARTIES |
U.S. Cellular is billed for all services it receives from TDS, pursuant to the terms of various agreements between it and TDS. These billings are included in U.S. Cellular's Selling, general and administrative expenses. Some of these agreements were established at a time prior to U.S. Cellular's initial public offering when TDS owned more than 90% of U.S. Cellular's outstanding capital stock and may not reflect terms that would be obtainable from an unrelated third party through arms-length negotiations. Billings from TDS to U.S. Cellular are based on expenses specifically identified to U.S. Cellular and on allocations of common expenses. Such allocations are based on the relationship of U.S. Cellular's assets, employees, investment in property, plant and equipment and expenses relative to all subsidiaries in the TDS consolidated group. Management believes the method TDS uses to allocate common expenses is reasonable and that all expenses and costs applicable to U.S. Cellular are reflected in its financial statements. Billings to U.S. Cellular from TDS totaled $91.1 million, $99.2 million and $104.3 million in 2014, 2013 and 2012, respectively. | |
The Audit committee of the Board of Directors of U.S. Cellular is responsible for the review and evaluation of all related party transactions as such term is defined by the rules of the New York Stock Exchange (“NYSE”). |
Certain_Relationships_and_Rela
Certain Relationships and Related Transactions | 12 Months Ended |
Dec. 31, 2014 | |
Disclosure Text Block | |
Certain Relationships and Related Transactions | NOTE 19 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS |
The following persons are partners of Sidley Austin LLP, the principal law firm of U.S. Cellular and its subsidiaries: Walter C.D. Carlson, a director of U.S. Cellular, a director and non-executive Chairman of the Board of Directors of TDS and a trustee and beneficiary of a voting trust that controls TDS; William S. DeCarlo, the General Counsel of TDS and an Assistant Secretary of TDS and certain subsidiaries of TDS; and Stephen P. Fitzell, the General Counsel of U.S. Cellular and TDS Telecommunications Corporation and an Assistant Secretary of U.S. Cellular and certain other subsidiaries of TDS. Walter C.D. Carlson does not provide legal services to TDS, U.S. Cellular or their subsidiaries. U.S. Cellular and its subsidiaries incurred legal costs from Sidley Austin LLP of $10.7 million in 2014, $13.2 million in 2013 and $10.7 million in 2012. | |
In December 2014, U.S. Cellular entered into an agreement to sell 595 towers outside of its core markets to a third party for $159 million. The sale of certain of the towers was completed in December 2014, and the sale of the remaining towers was completed in January 2015. See Note 6 – Acquisitions, Divestitures and Exchanges in the Notes to the Consolidated Financial Statements. Of the 595 towers, six towers were acquired by U.S. Cellular from Airadigm for a total of $2.6 million. These six towers were included as part of the sale of towers by U.S. Cellular in order to avoid the need for two sets of transaction documents. The value of $2.6 million paid by U.S. Cellular to Airadigm for such six towers was determined using the same method of valuation that was used to value the towers owned by U.S. Cellular that were sold to the third party. The Audit Committee of the board of directors reviewed and evaluated this transaction between U.S. Cellular and Airadigm. | |
In December 2013, TDS initially proposed to have Airadigm Communications, Inc. (“Airadigm”) sell to U.S. Cellular the FCC spectrum licenses, towers and customers in certain Airadigm markets for $110 million in cash. Because TDS owns 100% of the common stock of Airadigm and approximately 84% of the common stock of U.S. Cellular, this proposal was a related party transaction. Accordingly, the U.S. Cellular Board of Directors formed a Special Committee comprised entirely of independent and disinterested directors with exclusive authority to consider, negotiate and, if appropriate, approve any such transaction with Airadigm without any further involvement of the full board. The U.S. Cellular Special Committee engaged independent financial advisors and legal counsel. The transaction was negotiated between representatives of TDS and Airadigm, on the one hand, and the Special Committee and its representatives, on the other hand. The U.S. Cellular Special Committee also received a fairness opinion from its independent financial advisor. Following these events, the Special Committee approved a License Purchase and Customer Recommendation Agreement between U.S. Cellular and Airadigm. Pursuant to the License Purchase and Customer Recommendation Agreement, on September 10, 2014, Airadigm transferred to U.S. Cellular Federal Communications Commission (“FCC”) spectrum licenses and certain tower assets in certain markets in Wisconsin, Iowa, Minnesota and Michigan, in consideration for $91.5 million in cash. See Note 6 – Acquisitions, Divestitures and Exchanges in the Notes to Consolidated Financial Statements. | |
The Audit Committee of the Board of Directors of U.S. Cellular is responsible for the review and evaluation of all related-party transactions as such term is defined by the rules of the New York Stock Exchange. | |
Summary_of_Significant_Account1
Summary of Significant Accounting Policies and Recent Accounting Pronouncements (Significant Accounting Policies) | 12 Months Ended |
Dec. 31, 2014 | |
Accounting Policies | |
Nature of Operations | U.S. Cellular owns, operates and invests in wireless systems throughout the United States. As of December 31, 2014, U.S. Cellular served 4.8 million customers. U.S. Cellular has one reportable segment. |
Principles of Consolidation | The accounting policies of U.S. Cellular conform to accounting principles generally accepted in the United States of America (“GAAP”) as set forth in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”). Unless otherwise specified, references to accounting provisions and GAAP in these notes refer to the requirements of the FASB ASC. The consolidated financial statements include the accounts of U.S. Cellular, its majority-owned subsidiaries, general partnerships in which U.S. Cellular has a majority partnership interest and variable interest entities (“VIEs”) in which U.S. Cellular is the primary beneficiary. Both VIE and primary beneficiary represent terms defined by GAAP. |
Intercompany accounts and transactions have been eliminated. | |
Reclassifications | Certain prior year amounts have been reclassified to conform to the 2014 financial statement presentation. These reclassifications did not affect consolidated net income attributable to U.S. Cellular shareholders, cash flows, assets, liabilities or equity for the years presented. |
Use of Estimates | The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect (a) the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and (b) the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates. Significant estimates are involved in accounting for goodwill and indefinite-lived intangible assets, income taxes, the loyalty reward program and equipment installment plans. |
Cash and Cash Equivalents | Cash and cash equivalents include cash and short-term, highly liquid investments with original maturities of three months or less. |
Accounts Receivable | Accounts receivable consist primarily of amounts owed by customers for wireless services and equipment sales, including sales of certain devices under equipment installment plans, by agents for sales of equipment to them and by other wireless carriers whose customers have used U.S. Cellular's wireless systems. |
Allowance for Doubtful Accounts | The allowance for doubtful accounts is the best estimate of the amount of probable credit losses related to existing billed and unbilled accounts receivable. The allowance is estimated based on historical experience, account aging and other factors that could affect collectability. Accounts receivable balances are reviewed on either an aggregate or individual basis for collectability depending on the type of receivable. When it is probable that an account balance will not be collected, the account balance is charged against the allowance for doubtful accounts. U.S. Cellular does not have any off-balance sheet credit exposure related to its customers. |
Inventory | Inventory consists primarily of wireless devices stated at the lower of cost or market, with cost determined using the first-in, first-out method and market determined by replacement costs or estimated net realizable value. |
Intangible Assets | Goodwill |
U.S. Cellular has Goodwill as a result of its acquisitions of wireless businesses. Such Goodwill represents the excess of the total purchase price over the fair value of net assets acquired in these transactions. | |
U.S. Cellular performs its annual impairment assessment of Goodwill as of November 1 of each year. For purposes of conducting its Goodwill impairment test in 2014 and 2013, U.S. Cellular identified four reporting units. The four reporting units represent four geographic groupings of operating markets, representing four geographic service areas. A discounted cash flow approach was used to value each reporting unit for purposes of the Goodwill impairment review. | |
See Note 7 — Intangible Assets for additional details related to Goodwill. | |
Licenses | |
Licenses consist of direct and incremental costs incurred in acquiring Federal Communications Commission (“FCC”) licenses to provide wireless service. | |
U.S. Cellular has determined that wireless licenses are indefinite-lived intangible assets and, therefore, not subject to amortization based on the following factors: | |
Radio spectrum is not a depleting asset. | |
The ability to use radio spectrum is not limited to any one technology. | |
U.S. Cellular and its consolidated subsidiaries are licensed to use radio spectrum through the FCC licensing process, which enables licensees to utilize specified portions of the spectrum for the provision of wireless service. | |
U.S. Cellular and its consolidated subsidiaries are required to renew their FCC licenses every ten years or, in some cases, every fifteen years. To date, all of U.S. Cellular's license renewal applications have been granted by the FCC. Generally, license renewal applications filed by licensees otherwise in compliance with FCC regulations are routinely granted. If, however, a license renewal application is challenged either by a competing applicant for the license or by a petition to deny the renewal application, the license will be renewed if the licensee can demonstrate its entitlement to a “renewal expectancy.” Licensees are entitled to such an expectancy if they can demonstrate to the FCC that they have provided “substantial service” during their license term and have “substantially complied” with FCC rules and policies. U.S. Cellular believes that it is probable that its future license renewal applications will be granted. | |
U.S. Cellular performs its annual impairment assessment of its licenses as of November 1 of each year. For purposes of its 2014 and 2013 impairment testing of Licenses, U.S. Cellular separated its FCC licenses into eleven units of accounting based on geographic service areas. In both 2014 and 2013, seven of the units of accounting represented geographic groupings of licenses which, because they were not being utilized and, therefore, were not expected to generate cash flows from operating activities in the foreseeable future, were considered separate units of accounting for purposes of impairment testing. U.S. Cellular estimates the fair value of built licenses for purposes of impairment testing using the build-out method. The build-out method estimates the fair value of Licenses by discounting to present value the future cash flows calculated based on a hypothetical cost to build-out U.S. Cellular's network. | |
For units of accounting which consist of unbuilt licenses, the fair value of the unbuilt licenses is assumed to change by the same percentage, and in the same direction, that the fair value of built licenses measured using the build-out method changed during the period. | |
See Note 7 — Intangible Assets for additional details related to Licenses. | |
Investments in Unconsolidated Entities | For its equity method investments for which financial information is readily available, U.S. Cellular records its equity in the earnings of the entity in the current period. For its equity method investments for which financial information is not readily available, U.S. Cellular records its equity in the earnings of the entity on a one quarter lag basis. |
Property, Plant and Equipment | U.S. Cellular's Property, plant and equipment is stated at the original cost of construction or purchase including capitalized costs of certain taxes, payroll-related expenses, interest and estimated costs to remove the assets. |
Expenditures that enhance the productive capacity of assets in service or extend their useful lives are capitalized and depreciated. Expenditures for maintenance and repairs of assets in service are charged to System operations expense or Selling, general and administrative expense, as applicable. Retirements and disposals of assets are recorded by removing the original cost of the asset (along with the related accumulated depreciation) from plant in service and charging it, together with net removal costs (removal costs less an applicable accrued asset retirement obligation and salvage value realized), to (Gain) loss on asset disposals, net. | |
U.S. Cellular capitalizes certain costs of developing new information systems. | |
Depreciation and amortization | Depreciation is provided using the straight-line method over the estimated useful life of the related asset. |
U.S. Cellular depreciates leasehold improvement assets associated with leased properties over periods ranging from one to thirty years; such periods approximate the shorter of the assets' economic lives or the specific lease terms. | |
Useful lives of specific assets are reviewed throughout the year to determine if changes in technology or other business changes would warrant accelerating the depreciation of those specific assets. Due to the Divestiture Transaction more fully described in Note 6 — Acquisitions, Divestitures and Exchanges, U.S. Cellular changed the useful lives of certain assets in 2013 and 2012. Other than the Divestiture Transaction, there were no other material changes to useful lives of property, plant and equipment in 2014, 2013 or 2012. See Note 9 — Property, Plant and Equipment for additional details related to useful lives. | |
Impairment of Long-lived Assets | U.S. Cellular reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the assets might be impaired. |
U.S. Cellular has one asset group for purposes of assessing property, plant and equipment for impairment based on the fact that the individual operating markets are reliant on centrally operated data centers, mobile telephone switching offices and network operations center. U.S. Cellular operates a single integrated national wireless network, and the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities represent cash flows generated by this single interdependent network. | |
Agent Liabilities | U.S. Cellular has relationships with agents, which are independent businesses that obtain customers for U.S. Cellular. At December 31, 2014 and 2013, U.S. Cellular had accrued $95.3 million and $121.3 million, respectively, for amounts due to agents. This amount is included in Other current liabilities in the Consolidated Balance Sheet. |
Other Assets and Deferred Charges | Other assets and deferred charges include underwriters' and legal fees and other charges related to issuing U.S. Cellular's various borrowing instruments and other long-term agreements, and are amortized over the respective term of each instrument. The amounts of deferred charges included in the Consolidated Balance Sheet at December 31, 2014 and 2013, are shown net of accumulated amortization of $34.2 million and $26.0 million, respectively. At December 31, 2014, Other assets and deferred charges includes a $60.0 million deposit made by Advantage Spectrum L.P. to the FCC to participate in Auction 97. See Note 13 — Variable Interest Entities for additional information. |
Asset Retirement Obligations | U.S. Cellular accounts for asset retirement obligations by recording the fair value of a liability for legal obligations associated with an asset retirement in the period in which the obligations are incurred. At the time the liability is incurred, U.S. Cellular records a liability equal to the net present value of the estimated cost of the asset retirement obligation and increases the carrying amount of the related long-lived asset by an equal amount. Until the obligation is fulfilled, U.S. Cellular updates its estimates relating to cash flows required and timing of settlement. U.S. Cellular records the present value of the changes in the future value as an increase or decrease to the liability and the related carrying amount of the long-lived asset. The liability is accreted to future value over a period ending with the estimated settlement date of the respective asset retirement obligation. The carrying amount of the long-lived asset is depreciated over the useful life of the related asset. Upon settlement of the obligation, any difference between the cost to retire the asset and the recorded liability is recognized in the Consolidated Statement of Operations. |
Treasury Shares | Common Shares repurchased by U.S. Cellular are recorded at cost as treasury shares and result in a reduction of equity. Treasury shares are reissued as part of U.S. Cellular’s stock-based compensation programs. When treasury shares are reissued, U.S. Cellular determines the cost using the first-in, first-out cost method. The difference between the cost of the treasury shares and reissuance price is included in Additional paid-in capital or Retained earnings. |
Revenue Recognition | Revenues related to services are recognized as services are rendered. Revenues billed in advance or in arrears of the services being provided are estimated and deferred or accrued, as appropriate. |
Revenues from sales of equipment and accessories are recognized when title and risk of loss passes to the agent or end-user customer. | |
Multiple Deliverable Arrangements | |
U.S. Cellular sells multiple element service and equipment offerings. In these instances, revenues are allocated using the relative selling price method. Under this method, arrangement consideration, which consists of the amounts billed to the customer net of any cash-based discounts, is allocated to each element on the basis of its relative selling price. Revenue recognized for the delivered items is limited to the amount due from the customer that is not contingent upon the delivery of additional products or services. | |
Loyalty Reward Program | |
U.S. Cellular follows the deferred revenue method of accounting for its loyalty reward program. Under this method, revenue allocated to loyalty reward points is deferred. The amount allocated to the loyalty points is based on the estimated retail price of the products and services for which points may be redeemed divided by the number of loyalty points required to receive such products and services. This is calculated on a weighted average basis and requires U.S. Cellular to estimate the percentage of loyalty points that will be redeemed for each product or service. | |
As of December 31, 2014 and 2013, U.S. Cellular had deferred revenue related to loyalty reward points outstanding of $94.6 million and $116.2 million, respectively. These amounts are recorded in Customer deposits and deferred revenues (a current liability account) in the Consolidated Balance Sheet, as customers may redeem their reward points within the current period. | |
Revenue is recognized at the time of customer redemption or when such points have been depleted via an account maintenance charge. U.S. Cellular employs the proportional model to recognize revenues associated with breakage. Under the proportional model, U.S. Cellular allocates a portion of the estimated future breakage to each redemption and records revenue proportionally. U.S. Cellular periodically reviews and revises the redemption and depletion rates to estimate future breakage as appropriate based on history and related future expectations. | |
In the fourth quarter of 2013, U.S. Cellular issued loyalty reward points with a value of $43.5 million as a loyalty bonus in recognition of the inconvenience experienced by customers during U.S. Cellular's billing system conversion in 2013. The value of the loyalty bonus reduced Service revenues in the Consolidated Statement of Operations and increased Customer deposits and deferred revenues in the Consolidated Balance Sheet. | |
Equipment Installment Plans | |
Equipment revenue under equipment installment plan contracts is recognized at the time the device is delivered to the end-user customer for the selling price of the device, net of any deferred imputed interest or trade-in right, if applicable. Imputed interest is reflected as a reduction to the receivable balance and recognized over the duration of the plan as a component of Interest and dividend income. See Note 3 — Equipment Installment Plans for additional information. | |
Incentives | |
Discounts and incentives are recognized as a reduction of Operating revenues concurrently with the associated revenue, and are allocated to the various products and services in the bundled offering based on their respective relative selling price. | |
U.S. Cellular issues rebates to its agents and end customers. These incentives are recognized as a reduction to revenue at the time the wireless device sale to the agent or customer occurs, respectively. The total potential rebates and incentives are reduced by U.S. Cellular's estimate of rebates that will not be redeemed by customers based on historical experience of such redemptions. | |
Activation Fees | |
U.S. Cellular charges its end customers activation fees in connection with the sale of certain services and equipment. Device activation fees charged at U.S. Cellular agent locations, where U.S. Cellular does not also sell a wireless device to the customer, are deferred and recognized over the average device life. Device activation fees charged as a result of device sales at U.S. Cellular company-owned retail stores are recognized at the time the device is delivered to the customer. | |
Amounts Collected from Customers and Remitted to Governmental Authorities – Gross vs. Net | |
U.S. Cellular records amounts collected from customers and remitted to governmental authorities net within a tax liability account if the tax is assessed upon the customer and U.S. Cellular merely acts as an agent in collecting the tax on behalf of the imposing governmental authority. If the tax is assessed upon U.S. Cellular, then amounts collected from customers as recovery of the tax are recorded in Service revenues and amounts remitted to governmental authorities are recorded in Selling, general and administrative expenses in the Consolidated Statement of Operations. The amounts recorded gross in revenues that are billed to customers and remitted to governmental authorities totaled $97.0 million, $114.7 million and $135.7 million for 2014, 2013 and 2012, respectively. | |
Eligible Telecommunications Carrier (“ETC”) Revenues | |
Telecommunications companies may be designated by states, or in some cases by the FCC, as an ETC to receive support payments from the Universal Service Fund if they provide specified services in “high cost” areas. ETC revenues recognized in the reporting period represent the amounts which U.S. Cellular is entitled to receive for such period, as determined and approved in connection with U.S. Cellular's designation as an ETC in various states. | |
Advertising Costs | U.S. Cellular expenses advertising costs as incurred. Advertising costs totaled $204.9 million, $199.9 million and $227.0 million in 2014, 2013 and 2012, respectively. |
Income Taxes | U.S. Cellular is included in a consolidated federal income tax return with other members of the TDS consolidated group. TDS and U.S. Cellular are parties to a Tax Allocation Agreement which provides that U.S. Cellular and its subsidiaries be included with the TDS affiliated group in a consolidated federal income tax return and in state income or franchise tax returns in certain situations. For financial statement purposes, U.S. Cellular and its subsidiaries calculate their income, income taxes and credits as if they comprised a separate affiliated group. Under the Tax Allocation Agreement, U.S. Cellular remits its applicable income tax payments to TDS. U.S. Cellular had a tax receivable balance with TDS of $74.3 million and a tax payable balance of $34.8 million as of December 31, 2014 and 2013, respectively. |
Deferred taxes are computed using the liability method, whereby deferred tax assets are recognized for future deductible temporary differences and operating loss carryforwards, and deferred tax liabilities are recognized for future taxable temporary differences. Both deferred tax assets and liabilities are measured using the tax rates anticipated to be in effect when the temporary differences reverse. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. Deferred tax assets are reduced by a valuation allowance when it is more likely than not that some portion or all of the deferred tax assets will not be realized. U.S. Cellular evaluates income tax uncertainties, assesses the probability of the ultimate settlement with the applicable taxing authority and records an amount based on that assessment. | |
Stock-Based Compensation | U.S. Cellular has established a long-term incentive plan and a Non-Employee Director compensation plan. These plans are described more fully in Note 16 — Stock-based Compensation. These plans are considered compensatory plans and, therefore, recognition of compensation cost for grants made under these plans is required. |
U.S. Cellular values its share-based payment transactions using a Black-Scholes valuation model. Stock-based compensation cost recognized during the period is based on the portion of the share-based payment awards that are ultimately expected to vest. Accordingly, stock-based compensation cost recognized has been reduced for estimated forfeitures. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Pre-vesting forfeitures and expected life are estimated based on historical experience related to similar awards, giving consideration to the contractual terms of the stock-based awards, vesting schedules and expectations of future employee behavior. U.S. Cellular believes that its historical experience provides the best estimates of future pre-vesting forfeitures and future expected life. The expected volatility assumption is based on the historical volatility of U.S. Cellular's common stock over a period commensurate with the expected life. The dividend yield assumption is zero because U.S. Cellular has never paid a dividend, except a special cash dividend in June 2013, and has expressed its intention to retain all future earnings in the business. The risk-free interest rate assumption is determined using the U.S. Treasury Yield Curve Rate with a term length that approximates the expected life of the stock options. | |
The fair value of options is recognized as compensation cost over the respective requisite service period of the awards, which is generally the vesting period, on a straight-line basis for each separate vesting portion of the awards as if the awards were, in-substance, multiple awards (graded vesting attribution method). | |
Defined Contribution Plans | U.S. Cellular participates in a qualified noncontributory defined contribution pension plan sponsored by TDS; such plan provides pension benefits for the employees of U.S. Cellular and its subsidiaries. Under this plan, pension benefits and costs are calculated separately for each participant and are funded currently. Pension costs were $10.6 million, $10.4 million and $12.4 million in 2014, 2013 and 2012, respectively. |
U.S. Cellular also participates in a defined contribution retirement savings plan (“401(k) plan”) sponsored by TDS. Total costs incurred for U.S. Cellular's contributions to the 401(k) plan were $14.9 million, $15.4 million and $17.1 million in 2014, 2013 and 2012, respectively. | |
Recently Issued Accounting Pronouncements | On April 10, 2014, the FASB issued Accounting Standards Update 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity (“ASU 2014-08”). ASU 2014-08 changes the requirements and disclosures for reporting discontinued operations. U.S. Cellular was required to adopt the provisions of ASU 2014-08 effective January 1, 2015, but early adoption was permitted. U.S. Cellular adopted the provisions of ASU 2014-08 upon its issuance. The adoption of ASU 2014-08 did not have a significant impact on U.S. Cellular's financial position or results of operations. |
On May 28, 2014, the FASB issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”). ASU 2014-09 outlines a single comprehensive model to use in accounting for revenue arising from contracts with customers. U.S. Cellular is required to adopt the provisions of ASU 2014-09 effective January 1, 2017. Early adoption is prohibited. U.S. Cellular is evaluating what effects the adoption of ASU 2014-09 will have on U.S. Cellular's financial position and results of operations. | |
On August 27, 2014, the FASB issued Accounting Standards Update 2014-15, Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern (“ASU 2014-15”). ASU 2014-15 requires management to perform interim and annual assessments of an entity's ability to continue as a going concern within one year of the date financial statements are issued and provides guidance on determining when and how to disclose going concern uncertainties in financial statements. U.S. Cellular is required to adopt the provisions of ASU 2014-15 effective January 1, 2016, but early adoption is permitted. The adoption of ASU 2014-15 is not expected to impact U.S. Cellular's financial position or results of operations. | |
On January 9, 2015, the FASB issued Accounting Standards Update 2015-01, Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items (“ASU 2015-01”). ASU 2015-01 eliminates from GAAP the requirement to separately classify, present and disclose extraordinary events and transactions. U.S. Cellular is required to adopt the provisions of ASU 2015-01 effective January 1, 2016, but early adoption is permitted. The adoption of ASU 2015-01 is not expected to impact U.S. Cellular's financial position or results of operations. | |
On February 18, 2015, the FASB issued Accounting Standards Update 2015-02, Consolidation: Amendments to the Consolidation Analysis (“ASU 2015-02”). ASU 2015-02 simplifies consolidation accounting by reducing the number of consolidation models and changing various aspects of current GAAP, including certain consolidation criteria for variable interest entities. U.S. Cellular is required to adopt the provisions of ASU 2015-02 effective January 1, 2016. Early adoption is permitted. U.S. Cellular is still assessing the impact, if any, the adoption of ASU 2015-02 will have on U.S. Cellular's financial position or results of operations. | |
Variable Interest Entities | U.S. Cellular consolidates variable interest entities in which it has a controlling financial interest and is the primary beneficiary. A controlling financial interest will have both of the following characteristics: (a) the power to direct the VIE activities that most significantly impact economic performance and (b) the obligation to absorb the VIE losses and right to receive benefits that are significant to the VIE. U.S. Cellular reviews these criteria initially at the time it enters into agreements and subsequently when reconsideration events occur. |
Legal proceedings | U.S. Cellular is involved or may be involved from time to time in legal proceedings before the FCC, other regulatory authorities, and/or various state and federal courts. If U.S. Cellular believes that a loss arising from such legal proceedings is probable and can be reasonably estimated, an amount is accrued in the financial statements for the estimated loss. If only a range of loss can be determined, the best estimate within that range is accrued; if none of the estimates within that range is better than another, the low end of the range is accrued. The assessment of the expected outcomes of legal proceedings is a highly subjective process that requires judgments about future events. The legal proceedings are reviewed at least quarterly to determine the adequacy of accruals and related financial statement disclosures. The ultimate outcomes of legal proceedings could differ materially from amounts accrued in the financial statements. |
Summary_of_Significant_Account2
Summary of Significant Accounting Policies and Recent Accounting Pronouncements (Table) | 12 Months Ended | |||||||||
Dec. 31, 2014 | ||||||||||
Accounting Policies | ||||||||||
Accounts receivable, allowance for doubtful accounts | The changes in the allowance for doubtful accounts during the years ended December 31, 2014, 2013 and 2012 were as follows: | |||||||||
2014 | 2013 | 2012 | ||||||||
(Dollars in thousands) | ||||||||||
Beginning balance | $ | 60,238 | $ | 26,902 | $ | 23,537 | ||||
Additions, net of recoveries | 101,282 | 98,864 | 67,372 | |||||||
Deductions | -116,942 | -65,528 | -64,007 | |||||||
Ending balance (1) | $ | 44,578 | $ | 60,238 | $ | 26,902 | ||||
-1 | In 2014, this balance includes a $6.1 million allowance related to the long-term portion of unbilled equipment installment receivables. |
Fair_Value_Measurements_Table
Fair Value Measurements (Table) | 12 Months Ended | ||||||||||||||
Dec. 31, 2014 | |||||||||||||||
Fair Value Disclosures | |||||||||||||||
Fair value measurements | 31-Dec-14 | 31-Dec-13 | |||||||||||||
Level within the Fair Value Hierarchy | Book Value | Fair Value | Book Value | Fair Value | |||||||||||
(Dollars in thousands) | |||||||||||||||
Cash and cash equivalents | 1 | $ | 211,513 | $ | 211,513 | $ | 342,065 | $ | 342,065 | ||||||
Short-term investments | |||||||||||||||
U.S. Treasury Notes | 1 | - | - | 50,104 | 50,104 | ||||||||||
Long-term debt | |||||||||||||||
Retail | 2 | 617,000 | 608,462 | 342,000 | 309,852 | ||||||||||
Institutional | 2 | 532,722 | 513,647 | 532,449 | 507,697 |
Equipment_Installment_Plans_Ta
Equipment Installment Plans (Table) | 12 Months Ended | ||||||
Dec. 31, 2014 | |||||||
Equipment Installment Plans | |||||||
Equipment installment plans | The following table summarizes the unbilled equipment installment plan receivables as of December 31, 2014 and 2013. Such amounts are presented on the Consolidated Balance Sheet as Accounts receivable – customers and agents and Other assets and deferred charges, where applicable. | ||||||
(Dollars in thousands) | 31-Dec-14 | 31-Dec-13 | |||||
Short-term portion of unbilled equipment installment plan receivables, gross | $ | 127,400 | $ | 611 | |||
Short-term portion of unbilled deferred interest | -16,365 | - | |||||
Short-term portion of unbilled allowance for credit losses | -3,686 | -20 | |||||
Short-term portion of unbilled equipment installment plan receivables, net | $ | 107,349 | $ | 591 | |||
Long-term portion of unbilled equipment installment plan receivables, gross | $ | 89,435 | $ | - | |||
Long-term portion of unbilled deferred interest | -2,791 | - | |||||
Long-term portion of unbilled allowance for credit losses | -6,065 | - | |||||
Long-term portion of unbilled equipment installment plan receivables, net | $ | 80,579 | $ | - |
Income_Taxes_Tables
Income Taxes (Tables) | 12 Months Ended | ||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||
Income Tax Disclosure | |||||||||||||||||||
Income taxes receivable (payable) | December 31, | 2014 | 2013 | ||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||
Federal income taxes receivable (payable) | $ | 73,510 | $ | -32,351 | |||||||||||||||
Net state income taxes receivable (payable) | 1,199 | -1,545 | |||||||||||||||||
Income tax expense (benefit) | Income tax expense (benefit) is summarized as follows: | ||||||||||||||||||
Year Ended December 31, | 2014 | 2013 | 2012 | ||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||
Current | |||||||||||||||||||
Federal | $ | -77,931 | $ | 180,056 | $ | 10,547 | |||||||||||||
State | 8,545 | 8,426 | 4,186 | ||||||||||||||||
Deferred | |||||||||||||||||||
Federal | 44,881 | -69,917 | 54,490 | ||||||||||||||||
State | 6,276 | -5,431 | -5,246 | ||||||||||||||||
State - valuation allowance adjustment | 6,447 | - | - | ||||||||||||||||
$ | -11,782 | $ | 113,134 | $ | 63,977 | ||||||||||||||
Income tax reconciliation | Year Ended December 31, | 2014 | 2013 | 2012 | |||||||||||||||
Amount | Rate | Amount | Rate | Amount | Rate | ||||||||||||||
(Dollars in millions) | |||||||||||||||||||
Statutory federal income tax expense and rate | $ | -20.5 | 35 | % | $ | 90.2 | 35 | % | $ | 71.8 | 35 | % | |||||||
State income taxes, net of federal benefit (1) | 12.2 | -20.8 | 5.2 | 2 | 3.7 | 1.8 | |||||||||||||
Effect of noncontrolling interests | -5.8 | 9.8 | -2.2 | -0.9 | -6.3 | -3.1 | |||||||||||||
Gains (losses) on investments and sale of assets (2) | - | - | 20.5 | 8 | - | - | |||||||||||||
Correction of deferred taxes (3) | - | - | - | - | -5.3 | -2.6 | |||||||||||||
Other differences, net | 2.3 | -3.9 | -0.6 | -0.2 | 0.1 | 0.1 | |||||||||||||
Total income tax expense and rate | $ | -11.8 | 20.1 | % | $ | 113.1 | 43.9 | % | $ | 64 | 31.2 | % | |||||||
-1 | State income taxes, net of federal benefit, include changes in unrecognized tax benefits as well as adjustments to the valuation allowance. During the third quarter of 2014 U.S. Cellular recorded a $6.4 million increase to income tax expense related to a valuation allowance recorded against certain state deferred tax assets. In each interim period, U.S. Cellular evaluates the available positive and negative evidence to assess whether deferred tax assets are realizable, on a more likely than not basis. During the year ended December 31, 2014, based on revised forecasts of future state income, U.S. Cellular concluded that the negative evidence related to the realization of certain state deferred tax assets outweighed the positive evidence. Accordingly, U.S. Cellular determined that such deferred tax assets related to certain states were not realizable, on a more likely than not basis. | ||||||||||||||||||
-2 | Gains (losses) on investments and sale of assets represents 2013 tax expense related to the NY1 & NY2 Deconsolidation and the Divestiture Transaction. | ||||||||||||||||||
-3 | Correction of deferred taxes reflects immaterial adjustments to correct deferred tax balances in 2012 related to tax basis and law changes that related to periods prior to 2012. | ||||||||||||||||||
Temporary income tax differences | Significant components of U.S. Cellular’s deferred income tax assets and liabilities at December 31, 2014 and 2013 were as follows: | ||||||||||||||||||
December 31, | 2014 | 2013 | |||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||
Deferred tax assets | |||||||||||||||||||
Current deferred tax assets | $ | 96,886 | $ | 102,088 | |||||||||||||||
Net operating loss (“NOL”) carryforwards | 72,878 | 61,294 | |||||||||||||||||
Stock-based compensation | 21,072 | 19,028 | |||||||||||||||||
Compensation and benefits - other | 2,586 | 3,746 | |||||||||||||||||
Deferred rent | 18,513 | 19,462 | |||||||||||||||||
Other | 26,116 | 24,604 | |||||||||||||||||
Total deferred tax assets | 238,051 | 230,222 | |||||||||||||||||
Less valuation allowance | -53,119 | -43,375 | |||||||||||||||||
Net deferred tax assets | 184,932 | 186,847 | |||||||||||||||||
Deferred tax liabilities | |||||||||||||||||||
Property, plant and equipment | 520,723 | 503,491 | |||||||||||||||||
Licenses/intangibles | 275,456 | 282,764 | |||||||||||||||||
Partnership investments | 149,371 | 133,931 | |||||||||||||||||
Other | 4,135 | 3,853 | |||||||||||||||||
Total deferred tax liabilities | 949,685 | 924,039 | |||||||||||||||||
Net deferred income tax liability | $ | 764,753 | $ | 737,192 | |||||||||||||||
Deferred tax valuation allowance | A summary of U.S. Cellular’s deferred tax asset valuation allowance is as follows: | ||||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||
Balance at January 1, | $ | 43,375 | $ | 41,295 | $ | 30,261 | |||||||||||||
Charged to income tax expense | 9,744 | -1,527 | 3,033 | ||||||||||||||||
Charged to other accounts | - | 3,607 | 8,001 | ||||||||||||||||
Balance at December 31, | $ | 53,119 | $ | 43,375 | $ | 41,295 | |||||||||||||
As of December 31, 2014, the valuation allowance reduced current deferred tax assets by $3.8 million and noncurrent deferred tax assets by $49.2 million. | |||||||||||||||||||
Income tax unrecognized benefits summary | A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows: | ||||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||
Unrecognized tax benefits balance at January 1, | $ | 28,813 | $ | 26,460 | $ | 28,745 | |||||||||||||
Additions for tax positions of current year | 7,766 | 5,925 | 6,656 | ||||||||||||||||
Additions for tax positions of prior years | 154 | 1,501 | 854 | ||||||||||||||||
Reductions for tax positions of prior years | -554 | -45 | -115 | ||||||||||||||||
Reductions for settlements of tax positions | - | -576 | - | ||||||||||||||||
Reductions for lapses in statutes of limitations | -104 | -4,452 | -9,680 | ||||||||||||||||
Unrecognized tax benefits balance at December 31, | $ | 36,075 | $ | 28,813 | $ | 26,460 |
Earnings_Per_Share_Tables
Earnings Per Share (Tables) | 12 Months Ended | |||||||||
Dec. 31, 2014 | ||||||||||
Earnings Per Share | ||||||||||
Earnings per share | Year ended December 31, | 2014 | 2013 | 2012 | ||||||
(Dollars and shares in thousands, except earnings per share) | ||||||||||
Net income (loss) attributable to U.S. Cellular shareholders | $ | -42,812 | $ | 140,038 | $ | 111,006 | ||||
Weighted average number of shares used in basic earnings (loss) per share | 84,213 | 83,968 | 84,645 | |||||||
Effect of dilutive securities: | ||||||||||
Stock options (1) | - | 211 | 184 | |||||||
Restricted stock units (1) | - | 551 | 401 | |||||||
Weighted average number of shares used in diluted earnings (loss) per share | 84,213 | 84,730 | 85,230 | |||||||
Basic earnings (loss) per share attributable to U.S. Cellular shareholders | $ | -0.51 | $ | 1.67 | $ | 1.31 | ||||
Diluted earnings (loss) per share attributable to U.S. Cellular shareholders | $ | -0.51 | $ | 1.65 | $ | 1.3 | ||||
(1) There were no effects of dilutive securities for the year ended December 31, 2014 due to the net loss for the year. | ||||||||||
Summary of antidilutive shares | Year Ended December 31, | 2014 | 2013 | 2012 | ||||||
(Shares in thousands) | ||||||||||
Stock options | 3,279 | 2,010 | 2,123 | |||||||
Restricted stock units | 1,186 | 190 | 369 |
Acquisitions_Divestitures_and_1
Acquisitions, Divestitures and Exchanges (Tables) | 12 Months Ended | ||||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||||
Divestiture Financial Impacts | |||||||||||||||||||||||
Business divestiture financial impacts | |||||||||||||||||||||||
(Dollars in thousands) | Expected Period of Recognition | Projected Range | Cumulative Amount Recognized as of December 31, 2014 | Actual Amount Recognized Year Ended December 31, 2014 | Actual Amount Recognized Year Ended December 31, 2013 | Actual Amount Recognized Year Ended December 31, 2012 | |||||||||||||||||
(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 | 2013-2015 | -120,000 | -175,000 | -111,970 | -64,329 | -47,641 | - | ||||||||||||||||
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 | 2012-2015 | 20,000 | 22,000 | 20,410 | 9,735 | 3 | 10,672 | ||||||||||||||||
Employee related costs including severance, retention and outplacement | 2012-2015 | 13,000 | 16,000 | 14,147 | -115 | 1,653 | 12,609 | ||||||||||||||||
Contract termination costs | 2012-2015 | 70,000 | 100,000 | 84,320 | 24,736 | 59,525 | 59 | ||||||||||||||||
Transaction costs | 2012-2015 | 5,000 | 7,000 | 6,284 | 719 | 4,428 | 1,137 | ||||||||||||||||
Total (Gain) loss on sale of business and other exit costs, net | $ | -278,407 | $ | -296,407 | $ | -253,216 | $ | -29,254 | $ | -248,439 | $ | 24,477 | |||||||||||
Depreciation, amortization and accretion expense | |||||||||||||||||||||||
Incremental depreciation, amortization and accretion, net of salvage values | 2012-2014 | 215,049 | 215,049 | 215,049 | 16,478 | 178,513 | 20,058 | ||||||||||||||||
(Increase) decrease in Operating income | $ | -63,358 | $ | -81,358 | $ | -38,167 | $ | -12,776 | $ | -69,926 | $ | 44,535 | |||||||||||
As a result of the transaction, U.S. Cellular recognized the following amounts in the Consolidated Balance Sheet: | |||||||||||||||||||||||
Year Ended December 31, 2014 | |||||||||||||||||||||||
(Dollars in thousands) | Balance December 31, 2013 | Costs Incurred | Cash Settlements (1) | Adjustments (2) | Balance December 31, 2014 | ||||||||||||||||||
Accrued compensation | |||||||||||||||||||||||
Employee related costs including severance, retention, outplacement | $ | 2,053 | $ | 127 | $ | -1,223 | $ | -242 | $ | 715 | |||||||||||||
Accounts payable - trade | |||||||||||||||||||||||
Contract termination costs | $ | - | $ | 4,018 | $ | - | $ | -1,190 | $ | 2,828 | |||||||||||||
Other current liabilities | |||||||||||||||||||||||
Contract termination costs | $ | 13,992 | $ | 12,703 | $ | -22,210 | $ | 3,747 | $ | 8,232 | |||||||||||||
Other deferred liabilities and credits | |||||||||||||||||||||||
Contract termination costs | $ | 30,849 | $ | 24,171 | $ | -3,569 | $ | -30,411 | $ | 21,040 | |||||||||||||
Year Ended December 31, 2013 | |||||||||||||||||||||||
(Dollars in thousands) | Balance December 31, 2012 | Costs Incurred | Cash Settlements (1) | Adjustments (2) | Balance December 31, 2013 | ||||||||||||||||||
Accrued compensation | |||||||||||||||||||||||
Employee related costs including severance, retention, outplacement | $ | 12,305 | $ | 6,853 | $ | -11,905 | $ | -5,200 | $ | 2,053 | |||||||||||||
Other current liabilities | |||||||||||||||||||||||
Contract termination costs | $ | 30 | $ | 22,675 | $ | -8,713 | $ | - | $ | 13,992 | |||||||||||||
Other deferred liabilities and credits | |||||||||||||||||||||||
Contract termination costs | $ | - | $ | 34,283 | $ | -3,434 | $ | - | $ | 30,849 | |||||||||||||
-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 in the Consolidated Statement of Cash Flows. | ||||||||||||||||||||||
-2 | Adjustment to liability represents changes to previously accrued amounts. | ||||||||||||||||||||||
Assets and liabilities held for sale | At December 31, 2014 and 2013, the following assets were classified in the Consolidated Balance Sheet as "Assets held for sale" and "Liabilities held for sale": | ||||||||||||||||||||||
Current Assets | Other Assets and Deferred Charges | Licenses | Goodwill | Property, Plant and Equipment | Total Assets Held for Sale | ||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||
2014 | |||||||||||||||||||||||
Divestiture of Spectrum Licenses | $ | - | $ | - | $ | 56,809 | $ | - | $ | - | $ | 56,809 | |||||||||||
Sale of Business - Towers | 1,466 | 773 | - | 16,281 | 31,726 | 50,246 | |||||||||||||||||
Total | $ | 1,466 | $ | 773 | $ | 56,809 | $ | 16,281 | $ | 31,726 | $ | 107,055 | |||||||||||
2013 | |||||||||||||||||||||||
Divestiture of Spectrum Licenses | $ | - | $ | - | $ | 16,027 | $ | - | $ | - | $ | 16,027 | |||||||||||
Customer Deposits and Deferred Revenues | Other Current Liabilities | Other Deferred Liabilities and Credits | Total Liabilities Held for Sale | ||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||
2014 | |||||||||||||||||||||||
Sale of Business - Towers | $ | 2,704 | $ | 896 | $ | 17,334 | $ | 20,934 |
Intangible_Assets_Tables
Intangible Assets (Tables) | 12 Months Ended | ||||||
Dec. 31, 2014 | |||||||
Licenses | |||||||
Licenses | Licenses | ||||||
Year Ended December 31, | 2014 | 2013 | |||||
(Dollars in thousands) | |||||||
Balance, beginning of year | $ | 1,401,126 | $ | 1,456,794 | |||
Acquisitions | 41,707 | 16,540 | |||||
Divestitures | - | -59,419 | |||||
Transferred to Assets held for sale | -56,809 | -16,027 | |||||
Exchanges, net | 55,780 | - | |||||
Other | 1,634 | 3,238 | |||||
Balance, end of year | $ | 1,443,438 | $ | 1,401,126 | |||
Goodwill | |||||||
Goodwill | Goodwill | ||||||
Year Ended December 31, | 2014 | 2013 | |||||
(Dollars in thousands) | |||||||
Balance, beginning of year | $ | 387,524 | $ | 421,743 | |||
Divestitures | -1,092 | -505 | |||||
Transferred to Assets held for sale | -16,281 | - | |||||
NY1 & NY2 Deconsolidation | - | -33,714 | |||||
Balance, end of year | $ | 370,151 | $ | 387,524 |
Investment_in_Unconsolidated_E
Investment in Unconsolidated Entities (Tables) | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
Equity Method Investment, Summarized Financial Information | |||||||||||
Equity and cost method investments | December 31, | 2014 | 2013 | ||||||||
(Dollars in thousands) | |||||||||||
Equity method investments: | |||||||||||
Capital contributions, loans, advances and adjustments | $ | 116,881 | $ | 121,571 | |||||||
Cumulative share of income | 1,287,371 | 1,152,916 | |||||||||
Cumulative share of distributions | -1,122,849 | -1,010,513 | |||||||||
281,403 | 263,974 | ||||||||||
Cost method investments | 1,611 | 1,611 | |||||||||
Total investments in unconsolidated entities | $ | 283,014 | $ | 265,585 | |||||||
Equity method investments, summarized financial position | December 31, | 2014 | 2013 | ||||||||
(Dollars in thousands) | |||||||||||
Assets | |||||||||||
Current | $ | 691,519 | $ | 489,659 | |||||||
Due from affiliates | 303,322 | 408,735 | |||||||||
Property and other | 2,295,936 | 2,026,104 | |||||||||
$ | 3,290,777 | $ | 2,924,498 | ||||||||
Liabilities and Equity | |||||||||||
Current liabilities | $ | 403,005 | $ | 351,624 | |||||||
Deferred credits | 170,887 | 84,834 | |||||||||
Long-term liabilities | 18,101 | 19,712 | |||||||||
Long-term capital lease obligations | 1,722 | 707 | |||||||||
Partners' capital and shareholders' equity | 2,697,062 | 2,467,621 | |||||||||
$ | 3,290,777 | $ | 2,924,498 | ||||||||
Equity method investments, summarized results of operations | Year Ended December 31, | 2014 | 2013 | 2012 | |||||||
(Dollars in thousands) | |||||||||||
Results of Operations | |||||||||||
Revenues | $ | 6,668,615 | $ | 6,218,067 | $ | 5,804,466 | |||||
Operating expenses | 5,035,544 | 4,473,722 | 4,363,399 | ||||||||
Operating income | 1,633,071 | 1,744,345 | 1,441,067 | ||||||||
Other income, net | 1,160 | 4,842 | 4,003 | ||||||||
Net income | $ | 1,634,231 | $ | 1,749,187 | $ | 1,445,070 | |||||
Fair Value Key Assumptions | Key assumptions | ||||||||||
Average expected revenue growth rate (next ten years) | 2 | % | |||||||||
Terminal revenue growth rate (after year ten) | 2 | % | |||||||||
Discount rate | 10.5 | % | |||||||||
Capital expenditures as a percentage of revenue | 14.9-18.8 | % |
Property_Plant_and_Equipment_T
Property, Plant and Equipment (Table) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Disclosure Text Block | |||||||||
Property, plant and equipment | December 31, | Useful Lives (Years) | 2014 | 2013 | |||||
(Dollars in thousands) | |||||||||
Land | N/A | $ | 35,031 | $ | 36,266 | ||||
Buildings | 20 | 296,502 | 304,272 | ||||||
Leasehold and land improvements | 30-Jan | 1,086,718 | 1,197,520 | ||||||
Cell site equipment | 25-Jul | 3,269,609 | 3,306,575 | ||||||
Switching equipment | 8-May | 960,377 | 1,161,976 | ||||||
Office furniture and equipment | 5-Mar | 553,630 | 539,248 | ||||||
Other operating assets and equipment | 5-Mar | 89,663 | 92,456 | ||||||
System development | 7-Jan | 1,042,195 | 962,698 | ||||||
Work in process | N/A | 125,015 | 116,501 | ||||||
7,458,740 | 7,717,512 | ||||||||
Accumulated depreciation and amortization | -4,730,523 | -4,860,992 | |||||||
$ | 2,728,217 | $ | 2,856,520 |
Asset_Retirement_Obligations_T
Asset Retirement Obligations (Table) | 12 Months Ended | ||||||
Dec. 31, 2014 | |||||||
Asset Retirement Obligations | |||||||
Asset retirement obligations | (Dollars in thousands) | 2014 | 2013 | ||||
Balance, beginning of period | $ | 195,568 | $ | 179,607 | |||
Additional liabilities accrued | 2,507 | 635 | |||||
Revisions in estimated cash outflows | -2,792 | 6,268 | |||||
Disposition of assets | -44,403 | -3,534 | |||||
Accretion expense | 12,534 | 12,592 | |||||
Transferred to Liabilities held for sale | -10,902 | - | |||||
Balance, end of period (1) | $ | 152,512 | $ | 195,568 | |||
-1 | The total amount of asset retirement obligations related to the Divestiture Transaction included in Other current liabilities was $5.9 million and $37.7 million as of December 31, 2014 and 2013, respectively. |
Debt_Table
Debt (Table) | 12 Months Ended | |||||||||||||||
Dec. 31, 2014 | ||||||||||||||||
Debt Disclosure | ||||||||||||||||
Debt instrument facilities | The following table summarizes the terms of the revolving credit facility as of December 31, 2014: | |||||||||||||||
(Dollars in millions) | ||||||||||||||||
Maximum borrowing capacity | $ | 300 | ||||||||||||||
Letters of credit outstanding | $ | 17.5 | ||||||||||||||
Amount borrowed | $ | - | ||||||||||||||
Amount available for use | $ | 282.5 | ||||||||||||||
Borrowing rate: One-month London Interbank Offered Rate ("LIBOR") plus contractual spread (1) | 1.92 | % | ||||||||||||||
Sample LIBOR Rate | 0.17 | % | ||||||||||||||
Contractual spread | 1.75 | % | ||||||||||||||
Range of commitment fees on amount available for use (2) | ||||||||||||||||
Low | 0.13 | % | ||||||||||||||
High | 0.3 | % | ||||||||||||||
Agreement date | Dec-10 | |||||||||||||||
Maturity date | Dec-17 | |||||||||||||||
Fees incurred attributable to the Revolving Credit Facility are as follows: | ||||||||||||||||
Fees incurred as a percent of Maximum borrowing capacity for 2014 | 0.42 | % | ||||||||||||||
Fees incurred, amount | ||||||||||||||||
2014 | $ | 1.3 | ||||||||||||||
2013 | $ | 0.8 | ||||||||||||||
2012 | $ | 1.1 | ||||||||||||||
-1 | Borrowings under the revolving credit facility bear interest at LIBOR plus a contractual spread based on U.S. Cellular’s credit rating or, at U.S. Cellular’s option, an alternate “Base Rate” as defined in the revolving credit agreement. U.S. Cellular may select a borrowing period of either one, two, three or six months (or other period of twelve months or less if requested by U.S. Cellular and approved by the lenders). If U.S. Cellular provides notice of intent to borrow the same business day, interest on borrowing is at the Base Rate plus the contractual spread. | |||||||||||||||
-2 | The revolving credit facility has commitment fees based on the unsecured senior debt ratings assigned to U.S. Cellular by certain ratings agencies. | |||||||||||||||
The following table summarizes the terms of the term loan facility as of February 25, 2015: | ||||||||||||||||
(Dollars in millions) | ||||||||||||||||
Maximum borrowing capacity | $ | 225 | ||||||||||||||
Amount borrowed | $ | - | ||||||||||||||
Amount available for use | $ | 225 | ||||||||||||||
Hypothetical Borrowing rate: One-month London Interbank Offered Rate ("LIBOR") plus contractual spread (1) | 2.67 | % | ||||||||||||||
Sample LIBOR Rate | 0.17 | % | ||||||||||||||
Contractual spread | 2.5 | % | ||||||||||||||
Range of commitment fees on amount available for use (2) | ||||||||||||||||
Low | 0.13 | % | ||||||||||||||
High | 0.3 | % | ||||||||||||||
Agreement date | 21-Jan-15 | |||||||||||||||
Maturity date (3) | 21-Jan-22 | |||||||||||||||
-1 | Borrowings under the term loan credit facility bear interest at LIBOR plus a contractual spread based on U.S. Cellular’s credit rating or, at U.S. Cellular’s option, an alternate “Base Rate” as defined in the term loan facility. | |||||||||||||||
-2 | The term loan credit facility has commitment fees based on the unsecured senior debt ratings assigned to U.S. Cellular by certain ratings agencies. | |||||||||||||||
-3 | Principal amounts outstanding on the term loan facility will be due and payable quarterly in equal installments beginning on the last day of the fifth fiscal quarter ending after the agreement date, in an amount equal to 1.25% of the aggregate term loan facility commitment. Any amounts owing under the term loan facility not previously repaid will be due and payable on the maturity date. | |||||||||||||||
Long term debt | Long-Term Financing | |||||||||||||||
Long-term debt as of December 31, 2014 and 2013 was as follows: | ||||||||||||||||
December 31, | ||||||||||||||||
(Dollars in thousands) | Issuance date | Maturity date | Call date | 2014 | 2013 | |||||||||||
Unsecured Senior Notes | ||||||||||||||||
6.70% | December 2003 and June 2004 | Dec-33 | Dec-03 | $ | 544,000 | $ | 544,000 | |||||||||
Less: 6.7% Unamortized discount | -11,278 | -11,551 | ||||||||||||||
532,722 | 532,449 | |||||||||||||||
6.95% | May-11 | May-60 | May-16 | 342,000 | 342,000 | |||||||||||
7.25% | Dec-14 | Dec-63 | Dec-19 | 275,000 | - | |||||||||||
Obligation on capital leases | 2,143 | 3,749 | ||||||||||||||
Total long-term debt | $ | 1,151,865 | $ | 878,198 | ||||||||||||
Long-term debt, current | $ | 46 | $ | 166 | ||||||||||||
Long-term debt, noncurrent | $ | 1,151,819 | $ | 878,032 |
Commitments_and_Contingencies_
Commitments and Contingencies (Tables) | 12 Months Ended | |||||
Dec. 31, 2014 | ||||||
Commitments and Contingencies Disclosure | ||||||
Lease Commitments | Operating Leases Future Minimum Rental Payments* | Operating Leases Future Minimum Rental Receipts | ||||
(Dollars in thousands) | ||||||
2015 | $ | 139,286 | $ | 54,715 | ||
2016 | 125,458 | 44,110 | ||||
2017 | 107,987 | 34,780 | ||||
2018 | 90,687 | 24,174 | ||||
2019 | 74,640 | 12,082 | ||||
Thereafter | 740,501 | 8,567 | ||||
Total | $ | 1,278,559 | $ | 178,428 | ||
*Includes $88.4 million of future lease payments associated with leases transferred in January 2015 per the second closing of the tower sale. See Note 6 — Acquisitions, Divestitures and Exchanges for additional information. |
Variable_Interest_Entities_VIE
Variable Interest Entities VIEs (Tables) | 12 Months Ended | ||||||
Dec. 31, 2014 | |||||||
Variable Interest Entities VIEs | |||||||
Consolidated VIE assets and liabilities | December 31, | 2014 | 2013 | ||||
(Dollars in thousands) | |||||||
Assets | |||||||
Cash and cash equivalents | $ | 2,588 | $ | 2,076 | |||
Other current assets | 278 | 1,184 | |||||
Licenses | 312,977 | 310,475 | |||||
Property, plant and equipment, net | 10,671 | 18,600 | |||||
Other assets and deferred charges | 60,059 | 511 | |||||
Total assets | $ | 386,573 | $ | 332,846 | |||
Liabilities | |||||||
Current liabilities | $ | 110 | $ | 46 | |||
Deferred liabilities and credits | 622 | 3,139 | |||||
Total liabilities | $ | 732 | $ | 3,185 |
Common_Shareholders_Equity_Tab
Common Shareholders' Equity (Table) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Common Shareholders' Equity | |||||||||
Common shareholders' equity | Year Ended December 31, | ||||||||
(Shares and dollar amounts in thousands, except per share amounts) | Number of Shares | Average Cost Per Share | Total Cost | ||||||
2014 | |||||||||
U.S. Cellular Common Shares | 496 | $ | 38.19 | $ | 18,943 | ||||
2013 | |||||||||
U.S. Cellular Common Shares | 499 | $ | 37.19 | $ | 18,544 | ||||
2012 | |||||||||
U.S. Cellular Common Shares | 571 | $ | 35.11 | $ | 20,045 | ||||
Year Ended December 31, | 2014 | 2013 | 2012 | ||||||
(Shares in thousands) | |||||||||
Treasury Shares Reissued | 371 | 536 | 182 |
StockBased_Compensation_Table
Stock-Based Compensation (Table) | 12 Months Ended | ||||||||||||||
Dec. 31, 2014 | |||||||||||||||
Stock-based compensation | |||||||||||||||
Stock-based compensation, fair value assumptions | 2014 | 2013 | 2012 | ||||||||||||
Expected life | 4.5 years | 4.6-9.0 years | 4.5 years | ||||||||||||
Expected annual volatility rate | 28.0%-28.1% | 29.2%-39.6% | 40.7%-42.6% | ||||||||||||
Dividend yield | 0% | 0% | 0% | ||||||||||||
Risk-free interest rate | 1.4%-1.5% | 0.7%-2.4% | 0.5%-0.9% | ||||||||||||
Estimated annual forfeiture rate | 9.40% | 0.0%-8.1% | 0.0%-9.1% | ||||||||||||
Summary of stock options | Common Share Options | Number of Options | Weighted Average Exercise Price | Weighted Average Grant Date Fair Value | Aggregate Intrinsic Value | Weighted Average Remaining Contractual Life (in years) | |||||||||
Outstanding at December 31, 2011 | 2,834,000 | $ | 43.07 | ||||||||||||
(1,533,000 exercisable) | 46.23 | ||||||||||||||
Granted | 677,000 | 34.91 | $ | 12.61 | |||||||||||
Exercised | -47,000 | 29.82 | $ | 205,000 | |||||||||||
Forfeited | -117,000 | 38.45 | |||||||||||||
Expired | -133,000 | 46.17 | |||||||||||||
Outstanding at December 31, 2012 | 3,214,000 | $ | 41.58 | ||||||||||||
(1,928,000 exercisable) | 43.99 | ||||||||||||||
Granted | 1,213,000 | 32.45 | $ | 11.53 | |||||||||||
Exercised | -892,000 | 34.78 | $ | 6,787,000 | |||||||||||
Forfeited | -574,000 | 34.17 | |||||||||||||
Expired | -247,000 | 48.35 | |||||||||||||
Outstanding at December 31, 2013 | 2,714,000 | $ | 42.22 | ||||||||||||
(1,359,000 exercisable) | $ | 46.91 | |||||||||||||
Granted | 1,116,000 | 41.21 | $ | 10.68 | |||||||||||
Exercised | -233,000 | 32.8 | $ | 1,966,000 | |||||||||||
Forfeited | -144,000 | 35.09 | |||||||||||||
Expired | -65,000 | 45.68 | |||||||||||||
Outstanding at December 31, 2014 | 3,388,000 | $ | 41.51 | $ | 7,495,000 | 6.7 | |||||||||
(1,586,000 exercisable) | $ | 45.28 | $ | 2,984,000 | 4.4 | ||||||||||
Summary of nonvested restricted stock units | Common Restricted Stock Units | Number | Weighted Average Grant Date Fair Value | ||||||||||||
Nonvested at December 31, 2013 | 1,170,000 | $ | 36.46 | ||||||||||||
Granted | 370,000 | 41.24 | |||||||||||||
Vested | -274,000 | 41.92 | |||||||||||||
Forfeited | -124,000 | 34.38 | |||||||||||||
Nonvested at December 31, 2014 | 1,142,000 | $ | 35.6 | ||||||||||||
Stock-based compensation | Year Ended December 31, | 2014 | 2013 | 2012 | |||||||||||
(Dollars in thousands) | |||||||||||||||
Stock option awards | $ | 9,513 | $ | 5,810 | $ | 8,471 | |||||||||
Restricted stock unit awards | 12,125 | 9,485 | 12,300 | ||||||||||||
Deferred compensation bonus and matching stock unit awards | 185 | 2 | 240 | ||||||||||||
Awards under Non-Employee Director compensation plan | 560 | 547 | 455 | ||||||||||||
Total stock-based compensation, before income taxes | 22,383 | 15,844 | 21,466 | ||||||||||||
Income tax benefit | -8,454 | -5,984 | -8,121 | ||||||||||||
Total stock-based compensation expense, net of income taxes | $ | 13,929 | $ | 9,860 | $ | 13,345 | |||||||||
Stock-based compensation, allocation by financial statement line item | December 31, | 2014 | 2013 | 2012 | |||||||||||
(Dollars in thousands) | |||||||||||||||
Selling, general and administrative expense | $ | 19,429 | $ | 12,933 | $ | 18,437 | |||||||||
System operations | 2,954 | 2,911 | 3,029 | ||||||||||||
Total stock-based compensation expense | $ | 22,383 | $ | 15,844 | $ | 21,466 |
Supplemental_Cash_Flow_Disclos1
Supplemental Cash Flow Disclosures (Table) | 12 Months Ended | |||||||||
Dec. 31, 2014 | ||||||||||
Supplemental Cash Flow Disclosures | ||||||||||
Supplemental cash flow disclosures | Year Ended December 31, | 2014 | 2013 | 2012 | ||||||
(Dollars in thousands) | ||||||||||
Interest paid | $ | 54,955 | $ | 42,904 | $ | 44,048 | ||||
Income taxes paid (refunded) | 33,276 | 157,778 | -58,609 | |||||||
Year Ended December 31, | 2014 | 2013 | 2012 | |||||||
(Dollars in thousands) | ||||||||||
Common Shares withheld | 163,355 | 606,582 | 92,846 | |||||||
Aggregate value of Common Shares withheld | $ | 6,868 | $ | 25,179 | $ | 3,604 | ||||
Cash receipts upon exercise of stock options | 5,166 | 10,468 | 900 | |||||||
Cash disbursements for payment of taxes | -4,336 | -4,684 | -3,105 | |||||||
Net cash receipts (disbursements) from exercise of stock options and vesting of other stock awards | $ | 830 | $ | 5,784 | $ | -2,205 |
Summary_of_Significant_Account3
Summary of Significant Accounting Policies and Recent Accounting Pronouncements (Details) (USD $) | 12 Months Ended | |||||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | ||||
number | ||||||
Summary of Significant Accounting Policies and Recent Accounting Pronouncements | ||||||
Number of customers | 4,800,000 | |||||
Agent liability | $95,300,000 | $121,300,000 | ||||
Amounts recorded gross in revenues that are billed to customers and remitted to governmental authorities | 97,000,000 | 114,700,000 | 135,700,000 | |||
Advertising costs | 204,900,000 | 199,900,000 | 227,000,000 | |||
Accumulated amortization of deferred charges | 34,200,000 | 26,000,000 | ||||
Federal Communications Commission deposit | 60,000,000 | |||||
Long-term | ||||||
Accounts receivable | ||||||
Unbilled allowance for credit losses | 6,065,000 | |||||
TDS | ||||||
Summary of Significant Accounting Policies and Recent Accounting Pronouncements | ||||||
TDS ownership of U.S. Cellular | 84.00% | |||||
Income taxes receivable | 74,300,000 | |||||
Income taxes (payable) | -34,800,000 | |||||
401(k) | ||||||
Summary of Significant Accounting Policies and Recent Accounting Pronouncements | ||||||
Defined contribution cost | 14,900,000 | 15,400,000 | 17,100,000 | |||
Pension | ||||||
Summary of Significant Accounting Policies and Recent Accounting Pronouncements | ||||||
Defined contribution cost | 10,600,000 | 10,400,000 | 12,400,000 | |||
Allowance for doubtful accounts | ||||||
Accounts receivable | ||||||
Allowance for doubtful accounts, beginning balance | 60,238,000 | [1] | 26,902,000 | [1] | 23,537,000 | |
Additions, net of recoveries | 101,282,000 | 98,864,000 | 67,372,000 | |||
Deductions | -116,942,000 | -65,528,000 | -64,007,000 | |||
Allowance for doubtful accounts, ending balance | 44,578,000 | [1] | 60,238,000 | [1] | 26,902,000 | [1] |
Loyalty Rewards Program | ||||||
Summary of Significant Accounting Policies and Recent Accounting Pronouncements | ||||||
Deferred revenue | 94,600,000 | 116,200,000 | ||||
Loyalty Rewards Program | Special issuance | ||||||
Summary of Significant Accounting Policies and Recent Accounting Pronouncements | ||||||
Deferred revenue | $43,500,000 | |||||
[1] | In 2014, this balance includes a $6.1 million allowance related to the long-term portion of unbilled equipment installment receivables. |
Fair_Value_Measurements_Detail
Fair Value Measurements (Details) (USD $) | 12 Months Ended | |||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||||
Cash and cash equivalents | 211,513 | 342,065 | $378,358 | $424,155 |
Short-term investments | 50,104 | |||
Fair Value | Level 1 | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||||
Cash and cash equivalents | 211,513 | 342,065 | ||
Fair Value | Level 2 | Retail | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||||
Long-term debt | 608,462 | 309,852 | ||
Fair Value | Level 2 | Institutional | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||||
Long-term debt | 513,647 | 507,697 | ||
Fair Value | U.S. Treasury Notes | Level 1 | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||||
Short-term investments | 50,104 | |||
Book Value | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||||
Cash and cash equivalents | 211,513 | 342,065 | ||
Book Value | Retail | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||||
Long-term debt | 617,000 | 342,000 | ||
Book Value | Institutional | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||||
Long-term debt | 532,722 | 532,449 | ||
Book Value | U.S. Treasury Notes | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||||
Short-term investments | 50,104 | |||
Institutional | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||||
Fair value assumption, interest rate | 7.25% | 7.35% |
Equipment_Installment_Plans_De
Equipment Installment Plans (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Equipment installment plan receivables | ||
Equipment installment plan payment period | 24 months | |
Guarantee liability | $57,500,000 | |
Short-term | ||
Equipment installment plan receivables | ||
Unbilled equipment installment plan receivables, gross | 127,400,000 | 611,000 |
Unbilled deferred interest | -16,365,000 | |
Unbilled allowance for credit losses | -3,686,000 | -20,000 |
Unbilled equipment installment plan receivables, net | 107,349,000 | 591,000 |
Long-term | ||
Equipment installment plan receivables | ||
Unbilled equipment installment plan receivables, gross | 89,435,000 | |
Unbilled deferred interest | -2,791,000 | |
Unbilled allowance for credit losses | -6,065,000 | |
Unbilled equipment installment plan receivables, net | $80,579,000 |
Income_Taxes_Balances_Details
Income Taxes, Balances (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
State | ||
Income Tax Disclosure | ||
Income taxes receivable | $1,199 | |
Income taxes (payable) | -1,545 | |
Federal | ||
Income Tax Disclosure | ||
Income taxes receivable | 73,510 | |
Income taxes (payable) | ($32,351) |
Income_Taxes_Expense_Benefit_D
Income Taxes, Expense (Benefit) (Details) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Income tax expense (benefit) | |||
Current federal income tax expense (benefit) | ($77,931) | $180,056 | $10,547 |
Current state income tax expense | 8,545 | 8,426 | 4,186 |
Deferred federal income tax expense (benefit) | 44,881 | -69,917 | 54,490 |
Deferred state income tax expense (benefit) | 6,276 | -5,431 | -5,246 |
State - valuation allowance adjustment | 6,447 | ||
Total income tax expense (benefit) | ($11,782) | $113,134 | $63,977 |
Income_Taxes_Expense_Reconcili
Income Taxes, Expense Reconciliation (Details) (USD $) | 12 Months Ended | |||||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | ||||
Income tax expense reconciliation | ||||||
Statutory federal income tax expense | ($20,500,000) | $90,200,000 | $71,800,000 | |||
State income taxes, net of federal benefit | 12,200,000 | [1] | 5,200,000 | [1] | 3,700,000 | [1] |
Effect of noncontrolling interests | -5,800,000 | -2,200,000 | -6,300,000 | |||
Gains (losses) on investments and sale of assets | 20,500,000 | [2] | ||||
Correction of deferred taxes | -5,300,000 | [3] | ||||
Other differences, net | 2,300,000 | -600,000 | 100,000 | |||
Total income tax expense (benefit) | ($11,782,000) | $113,134,000 | $63,977,000 | |||
[1] | State income taxes, net of federal benefit, include changes in unrecognized tax benefits as well as adjustments to the valuation allowance. During the third quarter of 2014 U.S. Cellular recorded a $6.4 million increase to income tax expense related to a valuation allowance recorded against certain state deferred tax assets. In each interim period, U.S. Cellular evaluates the available positive and negative evidence to assess whether deferred tax assets are realizable, on a more likely than not basis. During the year ended December 31, 2014, based on revised forecasts of future state income, U.S. Cellular concluded that the negative evidence related to the realization of certain state deferred tax assets outweighed the positive evidence. Accordingly, U.S. Cellular determined that such deferred tax assets related to certain states were not realizable, on a more likely than not basis. | |||||
[2] | Gains (losses) on investments and sale of assets represents 2013 tax expense related to the NY1 & NY2 Deconsolidation and the Divestiture Transaction. | |||||
[3] | Correction of deferred taxes reflects immaterial adjustments to correct deferred tax balances in 2012 related to tax basis and law changes that related to periods prior to 2012. |
Income_Taxes_Rate_Reconciliati
Income Taxes, Rate Reconciliation (Details) | 12 Months Ended | |||||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | ||||
Income tax rate reconciliation | ||||||
Statutory federal income tax rate | 35.00% | 35.00% | 35.00% | |||
State income taxes, net of federal benefit | -20.80% | [1] | 2.00% | [1] | 1.80% | [1] |
Effect of noncontrolling interests | 9.80% | -0.90% | -3.10% | |||
Gains (losses) on investments and sale of assets | 8.00% | [2] | ||||
Correction of deferred taxes | -2.60% | [3] | ||||
Other differences, net | -3.90% | -0.20% | 0.10% | |||
Total income tax rate | 20.10% | 43.90% | 31.20% | |||
[1] | State income taxes, net of federal benefit, include changes in unrecognized tax benefits as well as adjustments to the valuation allowance. During the third quarter of 2014 U.S. Cellular recorded a $6.4 million increase to income tax expense related to a valuation allowance recorded against certain state deferred tax assets. In each interim period, U.S. Cellular evaluates the available positive and negative evidence to assess whether deferred tax assets are realizable, on a more likely than not basis. During the year ended December 31, 2014, based on revised forecasts of future state income, U.S. Cellular concluded that the negative evidence related to the realization of certain state deferred tax assets outweighed the positive evidence. Accordingly, U.S. Cellular determined that such deferred tax assets related to certain states were not realizable, on a more likely than not basis. | |||||
[2] | Gains (losses) on investments and sale of assets represents 2013 tax expense related to the NY1 & NY2 Deconsolidation and the Divestiture Transaction. | |||||
[3] | Correction of deferred taxes reflects immaterial adjustments to correct deferred tax balances in 2012 related to tax basis and law changes that related to periods prior to 2012. |
Income_Taxes_Components_of_Def
Income Taxes, Components of Deferred Income Tax (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Deferred tax assets | ||
Current deferred tax assets | $96,886 | $102,088 |
Net operating loss ("NOL") carryforwards | 72,878 | 61,294 |
Stock-based compensation | 21,072 | 19,028 |
Compensation and benefits - other | 2,586 | 3,746 |
Deferred rent | 18,513 | 19,462 |
Other | 26,116 | 24,604 |
Total deferred tax assets | 238,051 | 230,222 |
Less valuation allowance | -53,119 | -43,375 |
Net deferred tax assets | 184,932 | 186,847 |
Deferred tax liabilities | ||
Property, plant and equipment | 520,723 | 503,491 |
Licenses/intangibles | 275,456 | 282,764 |
Partnership investments | 149,371 | 133,931 |
Other | 4,135 | 3,853 |
Total deferred tax liabilities | 949,685 | 924,039 |
Net deferred income tax liability | $764,753 | $737,192 |
Income_Taxes_Net_Operating_Los
Income Taxes, Net Operating Losses (Details) (USD $) | 12 Months Ended |
In Millions, unless otherwise specified | Dec. 31, 2014 |
State | |
Operating Loss Carryforwards | |
State NOL carryforwards | 1,439.40 |
Deferred tax asset for State NOL carryforwards | 59.4 |
State | Minimum | |
Operating Loss Carryforwards | |
Expiration of NOL carryforwards | 31-Dec-15 |
State | Maximum | |
Operating Loss Carryforwards | |
Expiration of NOL carryforwards | 31-Dec-34 |
Federal | |
Operating Loss Carryforwards | |
Deferred tax asset for Federal NOL carryforward | 13.5 |
Federal | Minimum | |
Operating Loss Carryforwards | |
Expiration of NOL carryforwards | 31-Dec-18 |
Federal | Maximum | |
Operating Loss Carryforwards | |
Expiration of NOL carryforwards | 31-Dec-34 |
Income_Taxes_Deferred_Tax_Valu
Income Taxes, Deferred Tax Valuation Allowance (Details) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Deferred tax valuation allowance, rollfoward | |||
Balance at end of period | $53,119,000 | $43,375,000 | |
Deferred tax assets, valuation allowance, current | 3,800,000 | ||
Deferred tax assets valuation allowance noncurrent | 49,200,000 | ||
Deferred tax asset valuation allowance | |||
Deferred tax valuation allowance, rollfoward | |||
Balance at beginning of period | 43,375,000 | 41,295,000 | 30,261,000 |
Charged to income tax expense | 9,744,000 | -1,527,000 | 3,033,000 |
Charged to other accounts | 3,607,000 | 8,001,000 | |
Balance at end of period | $53,119,000 | $43,375,000 | $41,295,000 |
Income_Taxes_Unrecognized_Tax_
Income Taxes, Unrecognized Tax Benefits (Details) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Summary of unrecognized income tax benefits | |||
Unrecognized tax benefit, beginning balance | $28,813,000 | $26,460,000 | $28,745,000 |
Additions for tax positions of current year | 7,766,000 | 5,925,000 | 6,656,000 |
Additions for tax positions of prior years | 154,000 | 1,501,000 | 854,000 |
Reductions for tax positions of prior years | -554,000 | -45,000 | -115,000 |
Reductions for settlements of tax positions | -576,000 | ||
Reductions for lapses in statutes of limitations | -104,000 | -4,452,000 | -9,680,000 |
Unrecognized tax benefit, ending balance | 36,075,000 | 28,813,000 | 26,460,000 |
Effect of unrecognized tax benefit on income tax expense | $23,400,000 | $18,700,000 | $17,200,000 |
Income_Taxes_Additional_Disclo
Income Taxes, Additional Disclosures (Details) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Income Tax Disclosure | |||
Range of potential change in unrecognized tax benefits due to state income tax positions and their resolution and expiration of statutes of limitations within the next year | $10,000,000 | ||
Net accrued interest and penalties | 16,200,000 | 12,300,000 | |
Accrued interest and penalties related to unrecognized income tax benefits | $3,500,000 | $600,000 | ($2,200,000) |
State | |||
Income Tax Disclosure | |||
Open tax years by major tax jurisdiction | 2010 | ||
Federal | |||
Income Tax Disclosure | |||
Open tax years by major tax jurisdiction | 2012 |
Earnings_Per_Share_Details
Earnings Per Share (Details) (USD $) | 12 Months Ended | ||
In Thousands, except Per Share data, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Earnings per share | |||
Net income (loss) attributable to U.S. Cellular shareholders | ($42,812) | $140,038 | $111,006 |
Weighted average number of shares used in basic earnings (loss) per share | |||
Weighted average number of shares used in basic earnings (loss) per share | 84,213 | 83,968 | 84,645 |
Effects of dilutive securities: | |||
Stock options | 211 | 184 | |
Restricted stock units | 551 | 401 | |
Weighted average number of shares used in diluted earnings (loss) per share | 84,213 | 84,730 | 85,230 |
Earnings per share, Other disclosures | |||
Basic earnings (loss) per share attributable to U.S. Cellular shareholders | ($0.51) | $1.67 | $1.31 |
Diluted earnings (loss) per share attributable to U.S. Cellular shareholders | ($0.51) | $1.65 | $1.30 |
Dividend payable date | 25-Jun-13 | ||
Dividend date of record | 11-Jun-13 | ||
Series A Common and Common Shares, dividends per share paid | $5.75 | ||
Series A Common and Common Shares, dividends paid | $482,270 | ||
Stock Options | |||
Earnings per share, Other disclosures | |||
Antidilutive securities | 3,279 | 2,010 | 2,123 |
Restricted Stock Units | |||
Earnings per share, Other disclosures | |||
Antidilutive securities | 1,186 | 190 | 369 |
Acquisitions_Divestitures_and_2
Acquisitions, Divestitures and Exchanges, acquisitions (Details) (USD $) | 0 Months Ended | 12 Months Ended | |||
Sep. 10, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | Aug. 31, 2012 | Nov. 30, 2012 | |
Acquisitions, divestitures and exchanges | |||||
Licenses | 1,443,438,000 | $1,401,126,000 | |||
Airadigm Communications, Inc. | |||||
Acquisitions, divestitures and exchanges | |||||
Purchase price | 91,500,000 | ||||
Description of acquired entity | In May 2014, U.S. Cellular entered into a License Purchase and Customer Recommendation Agreement with Airadigm Communications, Inc. (“Airadigm”). TDS owns 100% of the common stock of Airadigm. Pursuant to the License Purchase and Customer Recommendation Agreement, on September 10, 2014, Airadigm transferred to U.S. Cellular Federal Communications Commission (“FCC”) spectrum licenses and certain tower assets in certain markets in Wisconsin, Iowa, Minnesota and Michigan, in consideration for $91.5 million in cash. Since both parties to this transaction are controlled by TDS, upon closing, U.S. Cellular recorded the transferred assets at Airadigm’s net book value of $15.2 million. The difference between the consideration paid and the net book value of the transferred assets was recorded as a reduction of U.S. Cellular’s Retained earnings. In addition, a deferred tax asset was recorded for the difference between the consideration paid and the net book value of the transferred assets, which increased U.S. Cellular’s Additional paid-in capital. | ||||
Book value transferred assets | 15,200,000 | ||||
TDS ownership percentage | 100.00% | ||||
License Acquisitions | 700 MHz Acquisition 1 | |||||
Acquisitions, divestitures and exchanges | |||||
Licenses | 34,000,000 | ||||
Description of acquired entity | In August 2012, U.S. Cellular acquired four 700 MHz licenses covering portions of Iowa, Kansas, Missouri, Nebraska and Oklahoma for $34.0 million. | ||||
License Acquisitions | 700 MHz Acquisition 2 | |||||
Acquisitions, divestitures and exchanges | |||||
Licenses | $57,700,000 | ||||
Description of acquired entity | In November 2012, U.S. Cellular acquired seven 700 MHz licenses covering portions of Illinois, Michigan, Minnesota, Missouri, Nebraska, Oregon, Washington and Wisconsin for $57.7 million. |
Acquisitions_Divestitures_and_3
Acquisitions, Divestitures and Exchanges, divestitures (Details) (USD $) | 12 Months Ended | 26 Months Ended | 1 Months Ended | 38 Months Ended | 36 Months Ended | ||||||||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2014 | Mar. 31, 2012 | Oct. 31, 2013 | Mar. 31, 2014 | Jan. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2015 | ||
number | |||||||||||||
Divestitures | |||||||||||||
(Increase) decrease in Operating Income | $143,390 | ($146,865) | ($156,656) | ||||||||||
(Gain) loss on license sales and exchanges | -112,993 | -255,479 | |||||||||||
Divestiture Financial Impacts | |||||||||||||
Cash received from divestitures | -179,842 | -811,120 | -49,932 | ||||||||||
Total (Gain) loss on sale of business and other exit costs, net | -32,830 | -246,767 | 21,022 | ||||||||||
Incremental depreciation, amortization and accretion, net of salvage values | 605,997 | 803,781 | 608,633 | ||||||||||
Assets held for sale | |||||||||||||
Current assets | 1,466 | 1,466 | 1,466 | ||||||||||
Other assets and deferred charges | 773 | 773 | 773 | ||||||||||
Licenses | 56,809 | 56,809 | 56,809 | ||||||||||
Goodwill | 16,281 | 16,281 | 16,281 | ||||||||||
Property, plant and equipment | 31,726 | 31,726 | 31,726 | ||||||||||
Total assets held for sale | 107,055 | 16,027 | 107,055 | 107,055 | |||||||||
Liabilities held for sale | |||||||||||||
Total liabilities held for sale | 20,934 | 20,934 | 20,934 | ||||||||||
Divestiture transaction | |||||||||||||
Divestitures | |||||||||||||
Business divestiture description | On November 6, 2012, U.S. Cellular entered into a Purchase and Sale Agreement with subsidiaries of Sprint Corp., fka 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.” These other agreements included customer and network transition services agreements, which required 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 reimbursed U.S. Cellular for providing such services at an amount equal to U.S. Cellular’s estimated costs, including applicable overhead allocations. These services were substantially complete as of March 31, 2014. 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. | ||||||||||||
(Increase) decrease in Operating Income | -12,776 | -69,926 | 44,535 | -38,167 | |||||||||
Divestiture Financial Impacts | |||||||||||||
Net assets transferred | 213,593 | 213,593 | |||||||||||
Non-cash charges for the write-off and write-down of property under construction and related assets | 9,735 | 3 | 10,672 | 20,410 | |||||||||
Employee related costs including severance, retention and outplacement | -115 | 1,653 | 12,609 | 14,147 | |||||||||
Contract termination costs | 24,736 | 59,525 | 59 | 84,320 | |||||||||
Transaction costs | 719 | 4,428 | 1,137 | 6,284 | |||||||||
Total (Gain) loss on sale of business and other exit costs, net | -29,254 | -248,439 | 24,477 | -253,216 | |||||||||
Incremental depreciation, amortization and accretion, net of salvage values | 16,478 | 178,513 | 20,058 | 215,049 | |||||||||
Wireless market | |||||||||||||
Divestitures | |||||||||||||
Business divestiture description | In March 2012, U.S. Cellular sold the majority of the assets and liabilities of a wireless market for $49.8 million in cash. At the time of the sale, a $4.2 million gain was recorded in (Gain) loss on sale of business and other exit costs, net in the Consolidated Statement of Operations. | ||||||||||||
Divestiture Financial Impacts | |||||||||||||
Cash received from divestitures | -49,800 | ||||||||||||
Total (Gain) loss on sale of business and other exit costs, net | -4,200 | ||||||||||||
Non-operating market licenses | |||||||||||||
Assets held for sale | |||||||||||||
Licenses | 56,809 | 56,809 | 56,809 | ||||||||||
Total assets held for sale | 56,809 | 56,809 | 56,809 | ||||||||||
Mississippi Valley | |||||||||||||
Divestitures | |||||||||||||
Business divestiture description | In October 2013, U.S. Cellular sold the majority of its Mississippi Valley non-operating market license (“unbuilt license”) for $308.0 million. At the time of the sale, a $250.6 million gain was recorded in (Gain) loss on license sales and exchanges in the Consolidated Statement of Operations. | ||||||||||||
(Gain) loss on license sales and exchanges | -250,600 | ||||||||||||
Divestiture Financial Impacts | |||||||||||||
Cash received from divestitures | -308,000 | ||||||||||||
St. Louis | |||||||||||||
Divestitures | |||||||||||||
Business divestiture description | In March 2014, U.S. Cellular sold the majority of its St. Louis area non-operating market spectrum license for $92.3 million. A gain of $75.8 million was recorded in (Gain) loss on license sales and exchanges in the Consolidated Statement of Operations in the first quarter of 2014. | ||||||||||||
(Gain) loss on license sales and exchanges | -75,800 | ||||||||||||
Divestiture Financial Impacts | |||||||||||||
Cash received from divestitures | -92,300 | ||||||||||||
Assets held for sale | |||||||||||||
Licenses | 16,027 | ||||||||||||
Tower sale | |||||||||||||
Divestitures | |||||||||||||
Number of towers | 595 | 595 | 595 | ||||||||||
Tower sale | Divestiture | |||||||||||||
Divestiture Financial Impacts | |||||||||||||
Cash received from divestitures | -159,000 | ||||||||||||
Tower sale - first closing | |||||||||||||
Divestitures | |||||||||||||
Business divestiture description | In December 2014, U.S. Cellular entered into an agreement with a third party to sell 595 towers and certain related contracts, assets, and liabilities for approximately $159 million. This transaction was accomplished in two closings. The first closing occurred in December 2014 and included the sale of 236 towers, without tenants, for $10.0 million. On this same date, U.S. Cellular received $7.5 million in earnest money. At the time of the first closing, a $3.8 million gain was recorded in (Gain) loss on sale of business and other exit costs, net. | ||||||||||||
Number of towers | 236 | 236 | 236 | ||||||||||
Divestiture Financial Impacts | |||||||||||||
Cash received from divestitures | -10,000 | ||||||||||||
Total (Gain) loss on sale of business and other exit costs, net | -3,800 | ||||||||||||
Tower sale - second closing | |||||||||||||
Assets held for sale | |||||||||||||
Current assets | 1,466 | 1,466 | 1,466 | ||||||||||
Other assets and deferred charges | 773 | 773 | 773 | ||||||||||
Goodwill | 16,281 | 16,281 | 16,281 | ||||||||||
Property, plant and equipment | 31,726 | 31,726 | 31,726 | ||||||||||
Total assets held for sale | 50,246 | 50,246 | 50,246 | ||||||||||
Liabilities held for sale | |||||||||||||
Customer deposits and deferred revenues | 2,704 | 2,704 | 2,704 | ||||||||||
Other current liabilities | 896 | 896 | 896 | ||||||||||
Other deferred liabilities and credits | 17,334 | 17,334 | 17,334 | ||||||||||
Total liabilities held for sale | 20,934 | 20,934 | 20,934 | ||||||||||
Tower sale - second closing | Divestiture | |||||||||||||
Divestitures | |||||||||||||
Business divestiture description | The second closing for the remaining 359 towers, primarily with tenants, took place in January 2015, at which time U.S. Cellular received $141.5 million in additional cash proceeds and recorded a gain of approximately $107 million. The assets and liabilities subject to the second closing have been classified as “held for sale” in the Consolidated Balance Sheet as of December 31, 2014. | ||||||||||||
Number of towers | 359 | ||||||||||||
Divestiture Financial Impacts | |||||||||||||
Cash received from divestitures | -141,500 | ||||||||||||
Total (Gain) loss on sale of business and other exit costs, net | -107,000 | ||||||||||||
Asset retirement obligation remediation | Divestiture transaction | |||||||||||||
Divestiture Financial Impacts | |||||||||||||
Incremental depreciation, amortization and accretion, net of salvage values | 3,400 | ||||||||||||
Minimum | Divestiture transaction | |||||||||||||
Divestiture Financial Impacts | |||||||||||||
Net assets transferred | 213,593 | ||||||||||||
Incremental depreciation, amortization and accretion, net of salvage values | 215,049 | ||||||||||||
Minimum | Expected event | Divestiture transaction | |||||||||||||
Divestitures | |||||||||||||
(Increase) decrease in Operating Income | -63,358 | ||||||||||||
Divestiture Financial Impacts | |||||||||||||
Non-cash charges for the write-off and write-down of property under construction and related assets | 20,000 | ||||||||||||
Employee related costs including severance, retention and outplacement | 13,000 | ||||||||||||
Contract termination costs | 70,000 | ||||||||||||
Transaction costs | 5,000 | ||||||||||||
Total (Gain) loss on sale of business and other exit costs, net | -278,407 | ||||||||||||
Maximum | Divestiture transaction | |||||||||||||
Divestitures | |||||||||||||
Transition services agreement duration | 24 months | ||||||||||||
Divestiture Financial Impacts | |||||||||||||
Net assets transferred | 213,593 | ||||||||||||
Incremental depreciation, amortization and accretion, net of salvage values | 215,049 | ||||||||||||
Maximum | Expected event | Divestiture transaction | |||||||||||||
Divestitures | |||||||||||||
(Increase) decrease in Operating Income | -81,358 | ||||||||||||
Divestiture Financial Impacts | |||||||||||||
Non-cash charges for the write-off and write-down of property under construction and related assets | 22,000 | ||||||||||||
Employee related costs including severance, retention and outplacement | 16,000 | ||||||||||||
Contract termination costs | 100,000 | ||||||||||||
Transaction costs | 7,000 | ||||||||||||
Total (Gain) loss on sale of business and other exit costs, net | -296,407 | ||||||||||||
Purchase price | Divestiture transaction | |||||||||||||
Divestiture Financial Impacts | |||||||||||||
Cash received from divestitures | -480,000 | -480,000 | |||||||||||
Purchase price | Minimum | Divestiture transaction | |||||||||||||
Divestiture Financial Impacts | |||||||||||||
Cash received from divestitures | -480,000 | ||||||||||||
Purchase price | Maximum | Divestiture transaction | |||||||||||||
Divestiture Financial Impacts | |||||||||||||
Cash received from divestitures | -480,000 | ||||||||||||
Sprint Cost Reimbursement | Divestiture transaction | Cash received from divestitures | |||||||||||||
Divestiture Financial Impacts | |||||||||||||
Cash received from divestitures | -71,100 | -10,600 | |||||||||||
Sprint Cost Reimbursement | Maximum | Expected event | Divestiture transaction | |||||||||||||
Divestiture Financial Impacts | |||||||||||||
Cash received from divestitures | -200,000 | ||||||||||||
Sprint Cost Reimbursement | (Gain) loss on sale of business and other exit costs, net | Divestiture transaction | |||||||||||||
Divestiture Financial Impacts | |||||||||||||
Cash received from divestitures | -64,329 | -47,641 | -111,970 | ||||||||||
Sprint Cost Reimbursement | (Gain) loss on sale of business and other exit costs, net | Minimum | Expected event | Divestiture transaction | |||||||||||||
Divestiture Financial Impacts | |||||||||||||
Cash received from divestitures | -120,000 | ||||||||||||
Sprint Cost Reimbursement | (Gain) loss on sale of business and other exit costs, net | Maximum | Expected event | Divestiture transaction | |||||||||||||
Divestiture Financial Impacts | |||||||||||||
Cash received from divestitures | -175,000 | ||||||||||||
Sprint Cost Reimbursement | System operations | Maximum | Expected event | Divestiture transaction | |||||||||||||
Divestiture Financial Impacts | |||||||||||||
Cash received from divestitures | -25,000 | ||||||||||||
Employee related costs including severance, retention and outplacement | Divestiture transaction | |||||||||||||
Balance Sheet rollforward | |||||||||||||
Balance, beginning of period | 2,053 | 12,305 | 12,305 | ||||||||||
Costs incurred | 127 | 6,853 | |||||||||||
Cash settlements | -1,223 | [1] | -11,905 | [1] | |||||||||
Adjustments | -242 | [2] | -5,200 | [2] | |||||||||
Balance, end of period | 715 | 2,053 | 715 | 715 | |||||||||
Contract termination costs | Other current liabilities | Divestiture transaction | |||||||||||||
Balance Sheet rollforward | |||||||||||||
Balance, beginning of period | 13,992 | 30 | 30 | ||||||||||
Costs incurred | 12,703 | 22,675 | |||||||||||
Cash settlements | -22,210 | [1] | -8,713 | [1] | |||||||||
Adjustments | 3,747 | [2] | |||||||||||
Balance, end of period | 8,232 | 13,992 | 8,232 | 8,232 | |||||||||
Contract termination costs | Other deferred liabilities and credits | Divestiture transaction | |||||||||||||
Balance Sheet rollforward | |||||||||||||
Balance, beginning of period | 30,849 | ||||||||||||
Costs incurred | 24,171 | 34,283 | |||||||||||
Cash settlements | -3,569 | [1] | -3,434 | [1] | |||||||||
Adjustments | -30,411 | [2] | |||||||||||
Balance, end of period | 21,040 | 30,849 | 21,040 | 21,040 | |||||||||
Contract termination costs | Accounts payable - trade | Divestiture transaction | |||||||||||||
Balance Sheet rollforward | |||||||||||||
Costs incurred | 4,018 | ||||||||||||
Adjustments | -1,190 | [2] | |||||||||||
Balance, end of period | 2,828 | 2,828 | 2,828 | ||||||||||
Earnest money received | Tower sale - first closing | |||||||||||||
Divestiture Financial Impacts | |||||||||||||
Cash received from divestitures | ($7,500) | ||||||||||||
[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 in the Consolidated Statement of Cash Flows. | ||||||||||||
[2] | Adjustment to liability represents changes to previously accrued amounts. |
Acquisitions_Divestitures_and_4
Acquisitions, Divestitures and Exchanges, exchanges (Details) (USD $) | 12 Months Ended | 1 Months Ended | 12 Months Ended | 1 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2014 | Dec. 31, 2015 | Feb. 28, 2014 | |
Exchanges | ||||||
(Gain) loss on license sales and exchanges | ($112,993,000) | ($255,479,000) | ||||
Carrying value | 1,443,438,000 | 1,401,126,000 | 1,443,438,000 | |||
Cash received from divestitures | 179,842,000 | 811,120,000 | 49,932,000 | |||
Other current liabilities | 149,853,000 | 192,055,000 | 149,853,000 | |||
PCS and AWS license exchange | ||||||
Exchanges | ||||||
Asset exchange description | In September 2014, U.S. Cellular entered into an agreement with a third party to exchange certain PCS and AWS licenses for certain other PCS and AWS licenses and $28.0 million of cash. This license exchange will be accomplished in two closing transactions. The first closing occurred in December 2014 at which time U.S. Cellular received licenses with an estimated fair value, per a market approach, of $51.5 million, recorded a $21.7 million gain in (Gain) loss on license sales and exchanges in the Consolidated Statement of Operations and recorded an $18.3 million deferred credit in Other current liabilities. The second closing is expected to occur in 2015. The license that will be transferred has been classified as “Assets held for sale” in the Consolidated Balance Sheet as of December 31, 2014. At the time of the second closing, U.S. Cellular will recognize the deferred credit from the first closing and expects to record a gain on the license exchange. | |||||
(Gain) loss on license sales and exchanges | -21,700,000 | |||||
Fair value | 51,500,000 | 51,500,000 | ||||
Asset exchange, valuation method | market approach valuation method | |||||
Other current liabilities | 18,300,000 | 18,300,000 | ||||
PCS license exchange | ||||||
Exchanges | ||||||
Asset exchange description | In September 2014, U.S. Cellular entered into an agreement with a third party to exchange certain of its PCS unbuilt licenses for PCS licenses located in U.S. Cellular’s operating markets plus $117.0 million of cash. This transaction is subject to regulatory approvals and is expected to close in 2015. The book value of the licenses to be exchanged have been classified as “Assets held for sale” in the Consolidated Balance Sheet at December 31, 2014. U.S. Cellular expects to record a gain when this transaction closes. | |||||
Expected event | PCS and AWS license exchange | ||||||
Exchanges | ||||||
Cash received from divestitures | 28,000,000 | |||||
Expected event | PCS license exchange | ||||||
Exchanges | ||||||
Cash received from divestitures | 117,000,000 | |||||
Spectrum exchange | ||||||
Exchanges | ||||||
Asset exchange description | In February 2014, U.S. Cellular completed an exchange whereby U.S. Cellular received one E block PCS spectrum license covering Milwaukee, WI in exchange for one D block PCS spectrum license covering Milwaukee, WI. The exchange of licenses provided U.S. Cellular with spectrum to meet anticipated future capacity and coverage requirements. No cash, customers, network assets, other assets or liabilities were included in the exchange. As a result of this transaction, U.S. Cellular recognized a gain of $15.7 million, representing the difference between the $15.9 million fair value of the license surrendered, calculated using a market approach valuation method, and the $0.2 million carrying value of the license surrendered. This gain was recorded in (Gain) loss on license sales and exchanges in the Consolidated Statement of Operations in the first quarter of 2014. | |||||
(Gain) loss on license sales and exchanges | -15,700,000 | |||||
Fair value | 15,900,000 | |||||
Carrying value | $200,000 | |||||
Asset exchange, valuation method | market approach valuation method |
Intangible_Assets_Details
Intangible Assets (Details) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Licenses | ||
Balance, beginning of period | $1,401,126 | $1,456,794 |
Acquisitions | 41,707 | 16,540 |
Divestitures | -59,419 | |
Transferred to Assets held for sale | -56,809 | -16,027 |
Exchanges, net | 55,780 | |
Other | 1,634 | 3,238 |
Balance, end of period | 1,443,438 | 1,401,126 |
Goodwill | ||
Balance, beginning of year | 387,524 | 421,743 |
Divestitures | -1,092 | -505 |
Transferred to Assets held for sale | -16,281 | |
NY1 & NY2 Deconsolidation | -33,714 | |
Balance, end of year | $370,151 | $387,524 |
Investments_in_Unconsolidated_1
Investments in Unconsolidated Entities (Details) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Equity and cost method investments | |||
Capital contributions, loans, advances and adjustments | $116,881 | $121,571 | |
Cumulative share of income | 1,287,371 | 1,152,916 | |
Cumulative share of distributions | -1,122,849 | -1,010,513 | |
Equity method investments | 281,403 | 263,974 | |
Cost method investments | 1,611 | 1,611 | |
Total investments in unconsolidated entities | 283,014 | 265,585 | |
Equity in earnings of unconsolidated entities | 129,764 | 131,949 | 90,364 |
Los Angeles SMSA Limited Partnership | |||
Equity and cost method investments | |||
Equity in earnings of unconsolidated entities | 71,800 | 78,400 | 67,200 |
Ownership interest in equity method investment | 5.50% | 5.50% | 5.50% |
Aggregate equity method investments | |||
Equity method investments, combined assets | |||
Current | 691,519 | 489,659 | |
Due from affiliates | 303,322 | 408,735 | |
Property and other | 2,295,936 | 2,026,104 | |
Total assets | 3,290,777 | 2,924,498 | |
Equity method investments, combined liabilities and equity | |||
Current liabilities | 403,005 | 351,624 | |
Deferred credits | 170,887 | 84,834 | |
Long-term liabilities | 18,101 | 19,712 | |
Long-term capital lease obligations | 1,722 | 707 | |
Partners' capital and shareholders' equity | 2,697,062 | 2,467,621 | |
Total liabilities and equity | 3,290,777 | 2,924,498 | |
Equity method investments, combined income statements | |||
Revenues | 6,668,615 | 6,218,067 | 5,804,466 |
Operating expenses | 5,035,544 | 4,473,722 | 4,363,399 |
Operating income | 1,633,071 | 1,744,345 | 1,441,067 |
Other income, net | 1,160 | 4,842 | 4,003 |
Net income | $1,634,231 | $1,749,187 | $1,445,070 |
Investment_in_Unconsolidated_E1
Investment in Unconsolidated Entities, Deconsolidation (Details) (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2014 | Apr. 03, 2013 | |
Deconsolidation of New York Partnerships | |||
Investments in unconsolidated entities | $265,585,000 | $283,014,000 | |
St. Lawrence Seaway RSA Cellular Partnership | |||
Deconsolidation of New York Partnerships | |||
Ownership interest in equity method investment | 60.00% | ||
New York RSA 2 Cellular Partnership | |||
Deconsolidation of New York Partnerships | |||
Ownership interest in equity method investment | 57.14% | ||
St. Lawrence Seaway RSA Cellular Partnership and New York RSA 2 Cellular Partnership | |||
Deconsolidation of New York Partnerships | |||
Date of deconsolidation | 3-Apr-13 | ||
Investments in unconsolidated entities | 114,800,000 | ||
Deconsolidation gain | $18,500,000 | ||
Discounted cash flow valuation approach | St. Lawrence Seaway RSA Cellular Partnership and New York RSA 2 Cellular Partnership | |||
Fair Value Inputs | |||
Average expected revenue growth rate (next ten years) | 2.00% | ||
Terminal revenue growth rate (after year ten) | 2.00% | ||
Discount rate | 10.50% | ||
Discounted cash flow valuation approach | Minimum | St. Lawrence Seaway RSA Cellular Partnership and New York RSA 2 Cellular Partnership | |||
Fair Value Inputs | |||
Capital expenditures as a percentage of revenue | 14.90% | ||
Discounted cash flow valuation approach | Maximum | St. Lawrence Seaway RSA Cellular Partnership and New York RSA 2 Cellular Partnership | |||
Fair Value Inputs | |||
Capital expenditures as a percentage of revenue | 18.80% |
Property_Plant_and_Equipment_D
Property, Plant and Equipment (Details) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Property, Plant and Equipment | |||
Land | $35,031,000 | $36,266,000 | |
Buildings | 296,502,000 | 304,272,000 | |
Leasehold and land improvements | 1,086,718,000 | 1,197,520,000 | |
Cell site equipment | 3,269,609,000 | 3,306,575,000 | |
Switching equipment | 960,377,000 | 1,161,976,000 | |
Office furniture and equipment | 553,630,000 | 539,248,000 | |
Other operating assets and equipment | 89,663,000 | 92,456,000 | |
System development | 1,042,195,000 | 962,698,000 | |
Work in process | 125,015,000 | 116,501,000 | |
Property, plant and equipment, gross | 7,458,740,000 | 7,717,512,000 | |
Accumulated depreciation and amortization | -4,730,523,000 | -4,860,992,000 | |
Property, plant and equipment, net | 2,728,217,000 | 2,856,520,000 | |
Depreciation and amortization expense | 593,200,000 | 791,100,000 | 597,700,000 |
(Gain) loss on asset disposals, net | $21,469,000 | $30,606,000 | $18,088,000 |
Buildings | |||
Property, Plant and Equipment | |||
Useful life | 20 years | ||
Leasehold and land improvements | Minimum | |||
Property, Plant and Equipment | |||
Useful life | 1 year | ||
Leasehold and land improvements | Maximum | |||
Property, Plant and Equipment | |||
Useful life | 30 years | ||
Cell site equipment | Minimum | |||
Property, Plant and Equipment | |||
Useful life | 7 years | ||
Cell site equipment | Maximum | |||
Property, Plant and Equipment | |||
Useful life | 25 years | ||
Switching equipment | Minimum | |||
Property, Plant and Equipment | |||
Useful life | 5 years | ||
Switching equipment | Maximum | |||
Property, Plant and Equipment | |||
Useful life | 8 years | ||
Office furniture and equipment | Minimum | |||
Property, Plant and Equipment | |||
Useful life | 3 years | ||
Office furniture and equipment | Maximum | |||
Property, Plant and Equipment | |||
Useful life | 5 years | ||
Other operating assets and equipment | Minimum | |||
Property, Plant and Equipment | |||
Useful life | 3 years | ||
Other operating assets and equipment | Maximum | |||
Property, Plant and Equipment | |||
Useful life | 5 years | ||
System development | Minimum | |||
Property, Plant and Equipment | |||
Useful life | 1 year | ||
System development | Maximum | |||
Property, Plant and Equipment | |||
Useful life | 7 years |
Asset_Retirement_Obligaion_Det
Asset Retirement Obligaion (Details) (USD $) | 12 Months Ended | |||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | ||
Asset retirement obligation | ||||
Asset retirement obligation - beginning balance | $195,568 | [1] | $179,607 | |
Additional liabilities accrued | 2,507 | 635 | ||
Revisions in estimated cash outflows | -2,792 | 6,268 | ||
Disposition of assets | -44,403 | -3,534 | ||
Accretion expense | 12,534 | 12,592 | ||
Transferred to Liabilities held for sale | -10,902 | |||
Asset retirement obligation - ending balance | 152,512 | [1] | 195,568 | [1] |
Other current liabilities | ||||
Asset retirement obligation | ||||
Asset retirement obligation - ending balance | $5,900 | $37,700 | ||
[1] | The total amount of asset retirement obligations related to the Divestiture Transaction included in Other current liabilities was $5.9 million and $37.7 million as of December 31, 2014 and 2013, respectively. |
Debt_revolving_credit_faciliti
Debt, revolving credit facilities (Details) (U.S. Cellular revolving credit facility, USD $) | 12 Months Ended | |||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Revolving credit | ||||
Maximum borrowing capacity | $300 | |||
Letters of credit outstanding | 17.5 | |||
Amount available for use | 282.5 | |||
Sample LIBOR Rate | 0.17% | [1] | ||
Contractual spread | 1.75% | [1] | ||
Borrowing rate: One-month London InterBank Offered Rate ("LIBOR") plus contractual spread | 1.92% | [1] | ||
Fees incurred as a percent of Maximum borrowing capacity for 2014 | 0.42% | |||
Fees incurred, amount | $1.30 | $0.80 | $1.10 | |
Agreement date | 17-Dec-10 | |||
Maturity date | 17-Dec-17 | |||
Subordination agreement description | In connection with U.S. Cellular’s revolving credit facility, TDS and U.S. Cellular entered into a subordination agreement dated December 17, 2010 together with the administrative agent for the lenders under U.S. Cellular’s revolving credit agreement. Pursuant to this subordination agreement, (a) any consolidated funded indebtedness from U.S. Cellular to TDS will be unsecured and (b) any (i) consolidated funded indebtedness from U.S. Cellular to TDS (other than “refinancing indebtedness” as defined in the subordination agreement) in excess of $105,000,000, and (ii) refinancing indebtedness in excess of $250,000,000, will be subordinated and made junior in right of payment to the prior payment in full of obligations to the lenders under U.S. Cellular’s revolving credit agreement. As of December 31, 2014, U.S. Cellular had no outstanding consolidated funded indebtedness or refinancing indebtedness that was subordinated to the revolving credit agreement pursuant to the subordination agreement. | |||
Revolving credit facility, terms of agreement | In July 2014, U.S. Cellular entered into an amendment to the revolving credit facility agreement which increased the Consolidated Leverage Ratio (the ratio of Consolidated Funded Indebtedness to Consolidated Earnings before interest, taxes, depreciation and amortization) that U.S. Cellular is required to maintain. Beginning July 1, 2014, U.S. Cellular is required to maintain the Consolidated Leverage Ratio at a level not to exceed 3.75 to 1.00 for the period of the four fiscal quarters most recently ended (this was 3.00 to 1.00 prior to July 1, 2014). The terms of the amendment decrease the maximum permitted Consolidated Leverage Ratio beginning January 1, 2016, with further decreases effective July 1, 2016 and January 1, 2017 (and will return to 3.00 to 1.00 at that time). For the twelve months ended December 31, 2014, the actual Consolidated Leverage Ratio was 2.35 to 1.00. Future changes in U.S. Cellular’s financial condition could negatively impact its ability to meet the financial covenants and requirements in its revolving credit facility agreement. | |||
Minimum | ||||
Revolving credit | ||||
Range of commitment fees on amount available for use | 0.13% | [2] | ||
Maximum | ||||
Revolving credit | ||||
Range of commitment fees on amount available for use | 0.30% | [2] | ||
[1] | Borrowings under the revolving credit facility bear interest at LIBOR plus a contractual spread based on U.S. Cellularbs credit rating or, at U.S. Cellularbs option, an alternate bBase Rateb as defined in the revolving credit agreement. U.S. Cellular may select a borrowing period of either one, two, three or six months (or other period of twelve months or less if requested by U.S. Cellular and approved by the lenders). If U.S. Cellular provides notice of intent to borrow less than three business days in advance of a borrowing, interest on borrowing is at the Base Rate plus the contractual spread. | |||
[2] | The revolving credit facility has commitment fees based on the unsecured senior debt ratings assigned to U.S. Cellular by certain ratings agencies. |
Debt_longterm_debt_Details
Debt, long-term debt (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Long term debt | ||
Debt issuance cost | $25,900,000 | |
Obligation on capital leases | 2,143,000 | 3,749,000 |
Total long-term debt | 1,151,865,000 | 878,198,000 |
Long-term debt, current | 46,000 | 166,000 |
Long-term debt, noncurrent | 1,151,819,000 | 878,032,000 |
6.7% Senior Notes | ||
Long term debt | ||
Interest rate on debt | 6.70% | |
Maturity date of debt issued | 15-Dec-33 | |
Call date of debt issued | 31-Dec-03 | |
Long term debt, face value | 544,000,000 | 544,000,000 |
Unamortized discount | -11,278,000 | -11,551,000 |
Long term debt | 532,722,000 | 532,449,000 |
6.7% Senior Notes | Minimum | ||
Long term debt | ||
Date of debt issuance | 8-Dec-03 | |
6.7% Senior Notes | Maximum | ||
Long term debt | ||
Date of debt issuance | 28-Jun-04 | |
6.95% Senior Notes | ||
Long term debt | ||
Interest rate on debt | 6.95% | |
Date of debt issuance | 9-May-11 | |
Maturity date of debt issued | 15-May-60 | |
Call date of debt issued | 15-May-16 | |
Long term debt | 342,000,000 | 342,000,000 |
7.25% Senior Notes | ||
Long term debt | ||
Interest rate on debt | 7.25% | |
Date of debt issuance | 1-Dec-14 | |
Maturity date of debt issued | 1-Dec-63 | |
Call date of debt issued | 8-Dec-19 | |
Long term debt | $275,000,000 |
Debt_term_loan_facility_Detail
Debt, term loan facility (Details) (U.S. Cellular Term loan facility, Subsequent event, USD $) | 0 Months Ended | 12 Months Ended | |
In Millions, unless otherwise specified | Feb. 25, 2015 | Dec. 31, 2014 | |
Subsequent events | |||
Subsequent event, description | On January 21, 2015, U.S. Cellular entered into a term loan credit facility relating to $225.0 million in debt. The term loan must be drawn in one or more advances by the six month anniversary of the date of the agreement; amounts not drawn by that time will cease to be available. Amounts repaid or prepaid under the term loan facility may not be reborrowed. The term loan is available for general corporate purposes, including working capital, spectrum purchases and capital expenditures. The term loan is unsecured except for a lien on all investments in equity which U.S. Cellular may have in the loan administrative agent, CoBank ACB, subject to certain limitations. | ||
Term loan | |||
Maximum borrowing capacity | $225 | ||
Amount available for use | $225 | ||
Hypothetical Borrowing rate: One-month London Interbank Offered Rate ("LIBOR") plus contractual spread | 2.67% | [1] | |
Sample LIBOR Rate | 0.17% | [1] | |
Contractual spread | 2.50% | [1] | |
Agreement date | 21-Jan-15 | ||
Maturity date | 21-Jan-22 | [2] | |
Payment terms | Principal amounts outstanding on the term loan facility will be due and payable quarterly in equal installments beginning on the last day of the fifth fiscal quarter ending after the agreement date, in an amount equal to 1.25% of the aggregate term loan facility commitment. Any amounts owing under the term loan facility not previously repaid will be due and payable on the maturity date. | ||
Subordination agreement description | In connection with U.S. Cellular’s term credit facility, TDS and U.S. Cellular entered into a subordination agreement dated January 21, 2015 together with the administrative agent for the lenders under U.S. Cellular’s term loan credit agreement, which is substantially the same as the subordination agreement in the U.S. Cellular revolving credit facility described above. As of February 25, 2015, U.S. Cellular had no outstanding consolidated funded indebtedness or refinancing indebtedness that was subordinated to the term loan facility pursuant to this subordination agreement. | ||
Minimum | |||
Term loan | |||
Range of commitment fees on amount available for use | 0.13% | [3] | |
Maximum | |||
Term loan | |||
Range of commitment fees on amount available for use | 0.30% | [3] | |
[1] | Borrowings under the term loan credit facility bear interest at LIBOR plus a contractual spread based on U.S. Cellularbs credit rating or, at U.S. Cellularbs option, an alternate bBase Rateb as defined in the term loan facility. | ||
[2] | Principal amounts outstanding on the term loan facility will be due and payable quarterly in equal installments beginning on the last day of the fifth fiscal quarter ending after the agreement date, in an amount equal to 1.25% of the aggregate term loan facility commitment. Any amounts owing under the term loan facility not previously repaid will be due and payable on the maturity date. | ||
[3] | The term loan credit facility has commitment fees based on the unsecured senior debt ratings assigned to U.S. Cellular by certain ratings agencies. |
Commitments_and_Contingencies_1
Commitments and Contingencies, minimum lease obligations (Details) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Jan. 31, 2015 | |
Commitments and Contingencies | |||
Operating leases | U.S. Cellular is a party to various lease agreements, both as lessee and lessor, for office space, retail store sites, cell sites and equipment which are accounted for as operating leases. Certain leases have renewal options and/or fixed rental increases. Renewal options that are reasonably assured of exercise are included in determining the lease term. Any rent abatements or lease incentives, in addition to fixed rental increases, are included in the calculation of rent expense and calculated on a straight-line basis over the defined lease term. | ||
Operating Leases Future Minimum Payments Due Abstract | |||
Operating Leases - Future Minimum Rental Payments 2015 | $139,286 | [1] | |
Operating Leases - Future Minimum Rental Payments 2016 | 125,458 | [1] | |
Operating Leases - Future Minimum Rental Payments 2017 | 107,987 | [1] | |
Operating Leases - Future Minimum Rental Payments 2018 | 90,687 | [1] | |
Operating Leases - Future Minimum Rental Payments 2019 | 74,640 | [1] | |
Operating Leases - Future Minimum Rental Payments After 2019 | 740,501 | [1] | |
Operating Leases - Future Minimum Rental Payments Total | 1,278,559 | [1] | |
Operating Leases Future Minimum Payments Receivable Abstract | |||
Operating Leases - Future Minimum Rental Receipts 2015 | 54,715 | ||
Operating Leases - Future Minimum Rental Receipts 2016 | 44,110 | ||
Operating Leases - Future Minimum Rental Receipts 2017 | 34,780 | ||
Operating Leases - Future Minimum Rental Receipts 2018 | 24,174 | ||
Operating Leases - Future Minimum Rental Receipts 2019 | 12,082 | ||
Operating Leases - Future Minimum Rental Receipts After 2019 | 8,567 | ||
Operating Leases - Future Minimum Rental Receipts Total | 178,428 | ||
Subsequent event | Tower sale - second closing | |||
Operating Leases Future Minimum Payments Due Abstract | |||
Operating Leases - Future Minimum Rental Payments Total | $88,400 | ||
[1] | *Includes $88.4 million of future lease payments associated with leases transferred in January 2015 per the second closing of the tower sale. See Note 6 b Acquisitions, Divestitures and Exchanges for additional information. |
Commitments_and_Contingencies_2
Commitments and Contingencies, additional lease informaton (Details) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Commitments and Contingencies Disclosure | |||
Rent expense | $152.40 | $162.10 | $183.90 |
Commitments_and_Contingencies_3
Commitments and Contingencies, purchase commitments (Details) (USD $) | 12 Months Ended |
Dec. 31, 2014 | |
Apple | |
Long Term Purchase Commitment | |
Purchase commitment agreement description | During 2013, U.S. Cellular entered into agreements with Apple to purchase certain minimum quantities of Apple iPhone products and fund marketing programs related to the Apple iPhone and iPad products over a three-year period beginning in November 2013. Based on current forecasts, U.S. Cellular estimates that the remaining contractual commitment as of December 31, 2014 under these agreements is approximately $818 million. At this time, U.S. Cellular expects to meet its contractual commitments with Apple. |
Purchase commitment period | 3 years |
Purchase commitment remaining estimated payments | $818,000,000 |
Amdocs Software Systems Limited | |
Long Term Purchase Commitment | |
Purchase commitment agreement description | On November 25, 2014, U.S. Cellular executed a Master Statement of Work and certain other documents with Amdocs Software Systems Limited (“Amdocs”), effective October 1, 2014, that inter-relate with but rearrange the structure under previous Amdocs Agreements. The agreement provides that U.S. Cellular will now outsource to Amdocs certain support functions for its Billing and Operational Support System (“B/OSS”). Such functions include application support, billing operations and some infrastructure services. The agreement has a term through September 30, 2019, subject to five one-year renewal periods at U.S. Cellular’s option. The total estimated amount to be paid to Amdocs with respect to the agreement during the initial five-year term is approximately $110 million (exclusive of travel and expenses and subject to certain potential adjustments). |
Purchase commitment period | 5 years |
Purchase commitment estimated payments | $110,000,000 |
Commitments_and_Contingencies_4
Commitments and Contingencies, legal accruals and unasserted claims (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Loss Contingency Estimate | ||
Accrual for legal proceedings and unasserted claims | $0.40 | $0.30 |
Variable_Interest_Entities_VIE1
Variable Interest Entities VIEs (Details) (USD $) | 12 Months Ended | ||||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Jan. 31, 2015 | |
number | |||||
Assets | |||||
Cash and cash equivalents | $211,513,000 | $342,065,000 | $378,358,000 | $424,155,000 | |
Other current assets | 90,834,000 | 19,538,000 | |||
Licenses | 1,443,438,000 | 1,401,126,000 | |||
Property, plant and equipment, net | 2,728,217,000 | 2,856,520,000 | |||
Other assets and deferred charges | 276,218,000 | 117,735,000 | |||
Liabilities | |||||
Current liabilities | 856,894,000 | 1,006,173,000 | |||
Variable Interest Entities, Other Disclosures | |||||
Federal Communications Commission deposit | 60,000,000 | ||||
Capital contributions, loans or advances | 60,900,000 | ||||
Noncontrolling interests with redemption features | 1,150,000 | 536,000 | |||
Variable Interest Entities (VIE's) | |||||
Assets | |||||
Cash and cash equivalents | 2,588,000 | 2,076,000 | |||
Other current assets | 278,000 | 1,184,000 | |||
Licenses | 312,977,000 | 310,475,000 | |||
Property, plant and equipment, net | 10,671,000 | 18,600,000 | |||
Other assets and deferred charges | 60,059,000 | 511,000 | |||
Total assets | 386,573,000 | 332,846,000 | |||
Liabilities | |||||
Current liabilities | 110,000 | 46,000 | |||
Deferred liabilities and credits | 622,000 | 3,139,000 | |||
Total liabilities | 732,000 | 3,185,000 | |||
Variable Interest Entities, Other Disclosures | |||||
Put option, exercisable dates | The limited partnership agreements of Advantage Spectrum, Aquinas Wireless and King Street Wireless also provide the general partner with a put option whereby the general partner may require the limited partner, a subsidiary of U.S. Cellular, to purchase its interest in the limited partnership. The general partner’s put options related to its interests in King Street Wireless and Aquinas Wireless will become exercisable in 2019 and 2020, respectively. The general partner’s put options related to its interest in Advantage Spectrum will become exercisable on the fifth and sixth anniversaries of the issuance of any license. | ||||
Advantage Spectrum L.P. | |||||
Variable Interest Entities, Other Disclosures | |||||
Federal Communications Commission deposit | 60,000,000 | ||||
Advantage Spectrum L.P. | Subsequent event | |||||
Subsequent Events | |||||
Subsequent event, description | An FCC auction of AWS-3 spectrum licenses, referred to as Auction 97, began in November 2014 and ended in January 2015. U.S. Cellular participated in Auction 97 indirectly through its interest in Advantage Spectrum. A subsidiary of U.S. Cellular is a limited partner in Advantage Spectrum. Advantage Spectrum qualified as a “designated entity,” and thereby was eligible for bid credits with respect to spectrum purchased in Auction 97. To participate in this auction, a $60.0 million deposit was made to the FCC in 2014. Such amount is reflected in Other Assets and Deferred Charges in the Consolidated Balance Sheet. Advantage Spectrum was the provisional winning bidder for 124 licenses for an aggregate bid of $338.3 million, net of its anticipated designated entity discount of 25%. Advantage Spectrum’s bid amount, less the initial deposit of $60.0 million, plus certain other charges totaling $2.3 million, are required to be paid to the FCC by March 2, 2015. | ||||
Licenses won | 124 | ||||
Total winning bid | 338,300,000 | ||||
Designated entity auction discount | 25.00% | ||||
Other auction charges | $2,300,000 |
Noncontrolling_Interests_Detai
Noncontrolling Interests (Details) (USD $) | 12 Months Ended |
In Millions, unless otherwise specified | Dec. 31, 2014 |
Redeemable noncontrolling interest | |
Termination date range of mandatorily redeemable noncontrolling interests - begin | 2085 |
Termination date range of mandatorily redeemable noncontrolling interests - end | 2113 |
Settlement value of mandatorily redeemable noncontrolling interests | $9.90 |
Carrying value of mandatorily redeemable noncontrolling interests | $7.80 |
Common_Shareholders_Equity_Det
Common Shareholders' Equity (Details) (USD $) | 12 Months Ended | ||
In Thousands, except Share data, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Share repurchases | |||
Amount | $18,943 | $18,544 | $20,045 |
Treasury Shares | |||
Share repurchases | |||
Amount | 18,943 | 18,544 | 20,045 |
Common Shares | |||
Common shareholders' equity, other disclosures | |||
Voting rights, board of directors | 25% | ||
Common Shares | 401(k) | |||
Common shareholders' equity, other disclosures | |||
Shares reserved | 67,215 | ||
Common Shares | Treasury Shares | |||
Common shareholders' equity, other disclosures | |||
Shares reissued | 371,000 | 536,000 | 182,000 |
Share repurchases | |||
Number of shares acquired | 496,000 | 499,000 | 571,000 |
Average cost per share | $38.19 | $37.19 | $35.11 |
Amount | $18,943 | $18,544 | $20,045 |
Common share repurchase authorization | On November 17, 2009, the Board of Directors of U.S. Cellular authorized the repurchase of up to 1,300,000 Common Shares on an annual basis beginning in 2009 and continuing each year thereafter, on a cumulative basis. These purchases will be made pursuant to open market purchases, block purchases, private purchases, or otherwise, depending on market prices and other conditions. | ||
Repurchase authorization, additional number of shares | 1,300,000 | ||
Repurchase expiration | This authorization does not have an expiration date. | ||
Series A Common Shares | |||
Common shareholders' equity, other disclosures | |||
Voting rights, board of directors | 75% |
StockBased_Compensation_Overvi
Stock-Based Compensation Overview, Expense and Valuation Model (Details) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Stock-based compensation | |||
Stock-based compensation expense | $22,383,000 | $15,844,000 | $21,466,000 |
Income tax benefit | -8,454,000 | -5,984,000 | -8,121,000 |
Total stock-based compensation expense, net of income taxes | 13,929,000 | 9,860,000 | 13,345,000 |
Unrecognized compensation cost for all stock-based compensation awards | 24,100,000 | ||
Weighted average period for recognition of unrecognized compensation cost for all stock-based compensation awards | 2 years | ||
Tax benefit from exercise of stock options and other awards | 5,300,000 | ||
System operations | |||
Stock-based compensation | |||
Stock-based compensation expense | 2,954,000 | 2,911,000 | 3,029,000 |
Selling, general and administrative expense | |||
Stock-based compensation | |||
Stock-based compensation expense | 19,429,000 | 12,933,000 | 18,437,000 |
2005 and 2013 Long-Term Incentive Plans | |||
Stock-based compensation, overview | |||
Terms of Award | Under the U.S. Cellular Long-Term Incentive Plans, U.S. Cellular may grant fixed and performance based incentive and non-qualified stock options, restricted stock, restricted stock units, and deferred compensation stock unit awards to key employees. At December 31, 2014, the only types of awards outstanding are fixed non-qualified stock option awards, restricted stock unit awards, and deferred compensation stock unit awards. | ||
2005 and 2013 Long-Term Incentive Plans | Stock Options | |||
Stock-based compensation, overview | |||
Terms of Award | Stock options granted to key employees are exercisable over a specified period not in excess of ten years. Stock options generally vest over a period of three years from the date of grant. Stock options outstanding at December 31, 2014 expire between 2015 and 2024. However, vested stock options typically expire 30 days after the effective date of an employee’s termination of employment for reasons other than retirement. Employees who leave at the age of retirement have 90 days (or one year if they satisfy certain requirements) within which to exercise their vested stock options. The exercise price of options equals the market value of U.S. Cellular Common Shares on the date of grant. | ||
Stock-based compensation | |||
Stock-based compensation expense | 9,513,000 | 5,810,000 | 8,471,000 |
2005 and 2013 Long-Term Incentive Plans | Stock Options | Minimum | |||
Stock-based compensation, overview | |||
Stock options expiration date | 31-Mar-15 | ||
2005 and 2013 Long-Term Incentive Plans | Stock Options | Maximum | |||
Stock-based compensation, overview | |||
Stock options expiration date | 14-Jul-24 | ||
2005 and 2013 Long-Term Incentive Plans | Restricted Stock Units | |||
Stock-based compensation, overview | |||
Terms of Award | U.S. Cellular grants restricted stock unit awards, which generally vest after three years, to key employees. U.S. Cellular estimates the fair value of restricted stock units based on the closing market price of U.S. Cellular shares on the date of grant. The fair value is then recognized as compensation cost on a straight-line basis over the requisite service periods of the awards, which is generally the vesting period. | ||
Stock-based compensation | |||
Stock-based compensation expense | 12,125,000 | 9,485,000 | 12,300,000 |
2005 and 2013 Long-Term Incentive Plans | Deferred Compensation Stock Units | |||
Stock-based compensation, overview | |||
Terms of Award | Certain U.S. Cellular employees may elect to defer receipt of all or a portion of their annual bonuses and to receive a company matching contribution on the amount deferred. All bonus compensation that is deferred by employees electing to participate is immediately vested and is deemed to be invested in U.S. Cellular Common Share stock units. The amount of U.S. Cellular’s matching contribution depends on the portion of the annual bonus that is deferred. Participants receive a 25% match for amounts deferred up to 50% of their total annual bonus and a 33% match for amounts that exceed 50% of their total annual bonus; such matching contributions also are deemed to be invested in U.S. Cellular Common Share stock units. | ||
Stock-based compensation | |||
Stock-based compensation expense | 185,000 | 2,000 | 240,000 |
Non-Employee Directors' Plan | |||
Stock-based compensation | |||
Stock-based compensation expense | $560,000 | $547,000 | $455,000 |
Common Shares | 2005 and 2013 Long-Term Incentive Plans | |||
Stock-based compensation | |||
Shares reserved | 9,782,000 | ||
Common Shares | 2005 and 2013 Long-Term Incentive Plans | Stock Options | |||
Black Scholes valuation model assumptions | |||
Expected life | 4 years 6 months | 4 years 6 months | |
Expected annual volatility rate, minimum | 28.00% | 29.20% | 40.70% |
Expected annual volatility rate, maximum | 28.10% | 39.60% | 42.60% |
Dividend yield | 0.00% | 0.00% | 0.00% |
Risk-free interest rate, minimum | 1.40% | 0.70% | 0.50% |
Risk-free interest rate, maximum | 1.50% | 2.40% | 0.90% |
Estimated annual forfeiture rate | 9.40% | ||
Estimated annual forfeiture rate, minimum | 0.00% | 0.00% | |
Estimated annual forfeiture rate, maximum | 8.10% | 9.10% | |
Common Shares | 2005 and 2013 Long-Term Incentive Plans | Stock Options | Minimum | |||
Black Scholes valuation model assumptions | |||
Expected life | 4 years 7 months | ||
Common Shares | 2005 and 2013 Long-Term Incentive Plans | Stock Options | Maximum | |||
Black Scholes valuation model assumptions | |||
Expected life | 9 years | ||
Common Shares | Non-Employee Directors' Plan | |||
Stock-based compensation | |||
Shares reserved | 197,000 |
StockBased_Compensation_Option
Stock-Based Compensation Option Rollforward (Details) (Common Shares, 2005 and 2013 Long-Term Incentive Plans, Stock Options, USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Common Shares | 2005 and 2013 Long-Term Incentive Plans | Stock Options | |||
Stock compensation, stock option rollforward schedule, number of options | |||
Outstanding, begin of period | 2,714,000 | 3,214,000 | 2,834,000 |
Exercisable options, begin of period | 1,359,000 | 1,928,000 | 1,533,000 |
Granted options | 1,116,000 | 1,213,000 | 677,000 |
Exercised options | -233,000 | -892,000 | -47,000 |
Forfeited options | -144,000 | -574,000 | -117,000 |
Expired options | -65,000 | -247,000 | -133,000 |
Outstanding, end of period | 3,388,000 | 2,714,000 | 3,214,000 |
Exercisable options, end of period | 1,586,000 | 1,359,000 | 1,928,000 |
Stock compensation, stock option rollforward schedule, other information | |||
Options outstanding, begin of period - weighted average exercise price | $42.22 | $41.58 | $43.07 |
Options exercisable, begin of period - weighted average exercise price | $46.91 | $43.99 | $46.23 |
Options granted, weighted average exercise price | $41.21 | $32.45 | $34.91 |
Options exercised, weighted average exercise price | $32.80 | $34.78 | $29.82 |
Options forfeited, weighted average exercise price | $35.09 | $34.17 | $38.45 |
Options expired, weighted average exercise price | $45.68 | $48.35 | $46.17 |
Options outstanding, end of period - weighted average exercise price | $41.51 | $42.22 | $41.58 |
Options exercisable, end of period - weighted average exercise price | $45.28 | $46.91 | $43.99 |
Options granted, weighted average grant date fair value | $10.68 | $11.53 | $12.61 |
Aggregate intrinsic value, options exercised | $1,966,000 | $6,787,000 | $205,000 |
Aggregate intrinsic value, options outstanding | 7,495,000 | ||
Aggregate intrinsic value, options exercisable | $2,984,000 | ||
Weighted average remaining contractual life, outstanding | 6 years 8 months | ||
Weighted average remaining contractual life, exercisable | 4 years 5 months |
StockBased_Compensation_Nonves
Stock-Based Compensation Nonvested Shares and Other (Details) (Common Shares, USD $) | 12 Months Ended | ||
In Millions, except Share data, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
2005 and 2013 Long-Term Incentive Plans | Restricted Stock Units | |||
Stock based compensation, Nonvested shares rollforward, number of shares | |||
Nonvested stock units, begin of period - Number of shares | 1,170,000 | ||
Granted number of shares | 370,000 | ||
Vested number of shares | -274,000 | ||
Forfeited number of shares | -124,000 | ||
Nonvested stock units, end of period - Number of shares | 1,142,000 | 1,170,000 | |
Stock based compensation, Nonvested shares weighted average grant date fair value | |||
Nonvested stock units - begin of period weighted average grant date fair value | $36.46 | ||
Granted weighted average grant date fair value | $41.24 | $32.06 | $34.09 |
Vested weighted average grant date fair value | $41.92 | ||
Forfeited weighted average grant date fair value | $34.38 | ||
Nonvested stock units - end of period weighted average grant date fair value | $35.60 | $36.46 | |
Fair value of vested stock units | $11.10 | $8.80 | $8.90 |
2005 and 2013 Long-Term Incentive Plans | Deferred Compensation Stock Units | |||
Stock based compensation, Nonvested shares weighted average grant date fair value | |||
Granted weighted average grant date fair value | $31.50 | $36.34 | |
Fair value of vested stock units | $0.10 | $0.10 | |
Non-Employee Directors' Plan | |||
Shares issued and granted under stock compensation plans | |||
Shares issued | 14,200 | 13,000 | 7,600 |
Supplemental_Cash_Flow_Disclos2
Supplemental Cash Flow Disclosures (Details) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Supplemental cash flow disclosures | |||
Interest paid | $54,955,000 | $42,904,000 | $44,048,000 |
Income taxes paid (refunded) | 33,276,000 | 157,778,000 | -58,609,000 |
Supplemental cash flows, stock based compensation | |||
Cash receipts upon exercise of stock options | 5,166,000 | 10,468,000 | 900,000 |
Cash disbursements for payments of taxes | -4,336,000 | -4,684,000 | -3,105,000 |
Net cash receipts (disbursements) from exercise of stock options and vesting of other stock awards | 830,000 | 5,784,000 | -2,205,000 |
Auction 901 Mobility Funds | |||
Supplemental cash flow disclosures | |||
FCC auction date | 27-Sep-12 | ||
Letters of credit outstanding | 17,400,000 | ||
FCC auction amount received | 13,400,000 | ||
FCC auction number of states won | 10 | ||
Other assets and deferred charges | Auction 901 Mobility Funds | |||
Supplemental cash flow disclosures | |||
FCC auction amount received | 1,900,000 | ||
Property, plant and equipment, net | Auction 901 Mobility Funds | |||
Supplemental cash flow disclosures | |||
FCC auction amount received | 11,500,000 | ||
Maximum | Auction 901 Mobility Funds | |||
Supplemental cash flow disclosures | |||
FCC auction amount | 300,000,000 | ||
FCC auction amount awarded | 40,100,000 | ||
Common Shares | |||
Supplemental cash flows, stock based compensation | |||
Shares withheld | 163,355 | 606,582 | 92,846 |
Aggregate value of shares withheld | $6,868,000 | $25,179,000 | $3,604,000 |
Related_Parties_Details
Related Parties (Details) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Related Party Transactions | |||
Billings to U.S. Cellular from TDS | $91.10 | $99.20 | $104.30 |
TDS | |||
Related Party Transactions | |||
Description of related transaction | U.S. Cellular is billed for all services it receives from TDS, pursuant to the terms of various agreements between it and TDS. These billings are included in U.S. Cellular's Selling, general and administrative expenses. Some of these agreements were established at a time prior to U.S. Cellular's initial public offering when TDS owned more than 90% of U.S. Cellular's outstanding capital stock and may not reflect terms that would be obtainable from an unrelated third party through arms-length negotiations. Billings from TDS to U.S. Cellular are based on expenses specifically identified to U.S. Cellular and on allocations of common expenses. Such allocations are based on the relationship of U.S. Cellular's assets, employees, investment in property, plant and equipment and expenses relative to all subsidiaries in the TDS consolidated group. Management believes the method TDS uses to allocate common expenses is reasonable and that all expenses and costs applicable to U.S. Cellular are reflected in its financial statements. |
Certain_Relationships_and_Rela1
Certain Relationships and Related Transactions (Details) (USD $) | 12 Months Ended | 1 Months Ended | 0 Months Ended | 1 Months Ended | |||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Jan. 31, 2015 | Sep. 10, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | |
number | |||||||
Certain relationships and related transactions | |||||||
Cash received from divestitures | $179,842,000 | $811,120,000 | $49,932,000 | ||||
Tower sale | |||||||
Certain relationships and related transactions | |||||||
Number of towers | 595 | 595 | |||||
Tower sale | Divestiture | |||||||
Certain relationships and related transactions | |||||||
Cash received from divestitures | 159,000,000 | ||||||
Sidley Austin LLP | |||||||
Certain relationships and related transactions | |||||||
Legal expense | 10,700,000 | 13,200,000 | 10,700,000 | ||||
Description of related transaction | The following persons are partners of Sidley Austin LLP, the principal law firm of U.S. Cellular and its subsidiaries: Walter C.D. Carlson, a director of U.S. Cellular, a director and non-executive Chairman of the Board of Directors of TDS and a trustee and beneficiary of a voting trust that controls TDS; William S. DeCarlo, the General Counsel of TDS and an Assistant Secretary of TDS and certain subsidiaries of TDS; and Stephen P. Fitzell, the General Counsel of U.S. Cellular and TDS Telecommunications Corporation and an Assistant Secretary of U.S. Cellular and certain other subsidiaries of TDS. Walter C.D. Carlson does not provide legal services to TDS, U.S. Cellular or their subsidiaries. U.S. Cellular and its subsidiaries incurred legal costs from Sidley Austin LLP of $10.7 million in 2014, $13.2 million in 2013 and $10.7 million in 2012. | ||||||
Airadigm Communications, Inc. | |||||||
Certain relationships and related transactions | |||||||
Description of related transaction | In December 2014, U.S. Cellular entered into an agreement to sell 595 towers outside of its core markets to a third party for $159 million. The sale of certain of the towers was completed in December 2014, and the sale of the remaining towers was completed in January 2015. See Note 6 – Acquisitions, Divestitures and Exchanges in the Notes to the Consolidated Financial Statements. Of the 595 towers, six towers were acquired by U.S. Cellular from Airadigm for a total of $2.6 million. These six towers were included as part of the sale of towers by U.S. Cellular in order to avoid the need for two sets of transaction documents. The value of $2.6 million paid by U.S. Cellular to Airadigm for such six towers was determined using the same method of valuation that was used to value the towers owned by U.S. Cellular that were sold to the third party. The Audit Committee of the board of directors reviewed and evaluated this transaction between U.S. Cellular and Airadigm. In December 2013, TDS initially proposed to have Airadigm Communications, Inc. (“Airadigm”) sell to U.S. Cellular the FCC spectrum licenses, towers and customers in certain Airadigm markets for $110 million in cash. Because TDS owns 100% of the common stock of Airadigm and approximately 84% of the common stock of U.S. Cellular, this proposal was a related party transaction. Accordingly, the U.S. Cellular Board of Directors formed a Special Committee comprised entirely of independent and disinterested directors with exclusive authority to consider, negotiate and, if appropriate, approve any such transaction with Airadigm without any further involvement of the full board. The U.S. Cellular Special Committee engaged independent financial advisors and legal counsel. The transaction was negotiated between representatives of TDS and Airadigm, on the one hand, and the Special Committee and its representatives, on the other hand. The U.S. Cellular Special Committee also received a fairness opinion from its independent financial advisor. Following these events, the Special Committee approved a License Purchase and Customer Recommendation Agreement between U.S. Cellular and Airadigm. Pursuant to the License Purchase and Customer Recommendation Agreement, on September 10, 2014, Airadigm transferred to U.S. Cellular Federal Communications Commission (“FCC”) spectrum licenses and certain tower assets in certain markets in Wisconsin, Iowa, Minnesota and Michigan, in consideration for $91.5 million in cash. See Note 6 – Acquisitions, Divestitures and Exchanges in the Notes to Consolidated Financial Statements. | ||||||
Purchase price | 91,500,000 | 2,600,000 | |||||
TDS ownership percentage | 100.00% | 100.00% | |||||
Number of towers purchased | 6 | 6 | |||||
Airadigm Communications, Inc. | Proposed purchase price | |||||||
Certain relationships and related transactions | |||||||
Purchase price | $110,000,000 |