Document And Entity Information
Document And Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Jan. 31, 2016 | Jun. 30, 2015 | |
Entity Registrant Name | United States Cellular Corporation | ||
Entity Central Index Key | 821,130 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2015 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Public Float | $ 506,100,707 | ||
Document Fiscal Year Focus | 2,015 | ||
Document Fiscal Period Focus | FY | ||
Trading Symbol | USM | ||
Common Shares | |||
Entity Common Stock, Shares Outstanding | 51,316,000 | ||
Series A Common Shares | |||
Entity Common Stock, Shares Outstanding | 33,006,000 |
Consolidated Statement Of Opera
Consolidated Statement Of Operations - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Operating revenues | |||
Service | $ 3,350,431 | $ 3,397,937 | $ 3,594,773 |
Equipment sales | 646,422 | 494,810 | 324,063 |
Total operating revenues | 3,996,853 | 3,892,747 | 3,918,836 |
Operating expenses | |||
System operations (excluding Depreciation, amortization and accretion reported below) | 775,042 | 769,911 | 763,435 |
Cost of equipment sold | 1,052,810 | 1,192,669 | 999,000 |
Selling, general and administrative (including charges from affiliates of $96.2 million, $91.1 million and $99.2 million in 2015, 2014 and 2013) | 1,493,730 | 1,591,914 | 1,677,395 |
Depreciation, amortization and accretion | 606,455 | 605,997 | 803,781 |
(Gain) loss on asset disposals, net | 16,313 | 21,469 | 30,606 |
(Gain) loss on sale of business and other exit costs, net | (113,555) | (32,830) | (246,767) |
(Gain) loss on license sales and exchanges | (146,884) | (112,993) | (255,479) |
Total operating expenses | 3,683,911 | 4,036,137 | 3,771,971 |
Operating income (loss) | 312,942 | (143,390) | 146,865 |
Investment and other income (expense) | |||
Equity in earnings of unconsolidated entities | 140,083 | 129,764 | 131,949 |
Interest and dividend income | 36,332 | 12,148 | 3,961 |
Gain (loss) on investments | 18,556 | ||
Interest expense | (86,194) | (57,386) | (43,963) |
Other, net | 466 | 160 | 288 |
Total investment and other income | 90,687 | 84,686 | 110,791 |
Income (loss) before income taxes | 403,629 | (58,704) | 257,656 |
Income tax expense (benefit) | 156,334 | (11,782) | 113,134 |
Net income (loss) | 247,295 | (46,922) | 144,522 |
Less: Net income (loss) attributable to noncontrolling interests, net of tax | 5,948 | (4,110) | 4,484 |
Net income (loss) attributable to U.S. Cellular shareholders | $ 241,347 | $ (42,812) | $ 140,038 |
Basic weighted average shares outstanding | 84,248 | 84,213 | 83,968 |
Basic earnings (loss) per share attributable to U.S. Cellular shareholders | $ 2.86 | $ (0.51) | $ 1.67 |
Diluted weighted average shares outstanding | 84,891 | 84,213 | 84,730 |
Diluted earnings (loss) per share attributable to U.S. Cellular shareholders | $ 2.84 | $ (0.51) | $ 1.65 |
Special dividend per share to U.S. Cellular shareholders | $ 5.75 |
Consolidated Statement Of Oper3
Consolidated Statement Of Operations Parenthetical - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Operating expenses | |||
Selling, general and administrative, charges from affiliates | $ 96.2 | $ 91.1 | $ 99.2 |
Consolidated Statement of Cash
Consolidated Statement of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Cash flows from operating activities | |||
Net income (loss) | $ 247,295 | $ (46,922) | $ 144,522 |
Add (deduct) adjustments to reconcile net income (loss) to cash flows from operating activities | |||
Depreciation, amortization and accretion | 606,455 | 605,997 | 803,781 |
Bad debts expense | 105,745 | 101,282 | 98,864 |
Stock-based compensation expense | 24,748 | 22,383 | 15,844 |
Deferred income taxes, net | 55,306 | 57,604 | (75,348) |
Equity in earnings of unconsolidated entities | (140,083) | (129,764) | (131,949) |
Distributions from unconsolidated entities | 60,041 | 112,336 | 125,660 |
(Gain) loss on asset disposals, net | 16,313 | 21,469 | 30,606 |
(Gain) loss on sale of business and other exit costs, net | (113,555) | (32,830) | (246,767) |
(Gain) loss on license sales and exchanges | (146,884) | (112,993) | (255,479) |
(Gain) loss on investments | (18,556) | ||
Noncash interest expense | 1,621 | 1,155 | 1,059 |
Other operating activities | (400) | 26 | 646 |
Changes in assets and liabilities from operations | |||
Accounts receivable | (95,730) | 12,547 | (291,168) |
Equipment installment plans receivable | (133,734) | (188,829) | (591) |
Inventory | 117,764 | (28,878) | (82,422) |
Accounts payable | 4,931 | (98,177) | 85,346 |
Customer deposits and deferred revenues | (36,612) | 33,524 | 66,344 |
Accrued taxes | 33,569 | (99,483) | 30,037 |
Accrued interest | 4,047 | 1,307 | 273 |
Other assets and liabilities | (55,723) | (59,412) | (9,805) |
Net cash provided by operating activities | 555,114 | 172,342 | 290,897 |
Cash flows from investing activities | |||
Cash used for additions to property, plant and equipment | (580,593) | (605,083) | (717,862) |
Cash paid for aquisitions and licenses | (285,807) | (38,150) | (16,540) |
Cash received from divestitures and exchanges | 316,729 | 179,842 | 811,120 |
Cash received for investments | 50,000 | 100,000 | |
Federal Communications Commission deposit | (60,000) | ||
Other investing activities | 1,003 | 2,619 | (3,969) |
Net cash provided by (used in) investing activities | (548,668) | (470,772) | 172,749 |
Cash flows from financing activities | |||
Issuance of long-term debt | 525,000 | 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 | 2,167 | 830 | 5,784 |
Common shares repurchased | (6,188) | (18,943) | (18,544) |
Payment of debt issuance costs | (13,005) | (9,644) | (23) |
Acquisition of assets in common control transaction | (2,437) | (76,298) | |
Dividends paid | (482,270) | ||
Distributions to noncontrolling interests | (6,369) | (3,056) | (3,766) |
Payments to acquire additional interest in subsidiaries | (2,108) | (1,005) | |
Other financing activities | 357 | (11) | (115) |
Net cash provided by (used in) financing activities | 497,417 | 167,878 | (499,939) |
Net increase (decrease) in cash and cash equivalents | 503,863 | (130,552) | (36,293) |
Cash and cash equivalents | |||
Beginning of period | 211,513 | 342,065 | 378,358 |
End of period | $ 715,376 | $ 211,513 | $ 342,065 |
Consolidated Balance Sheet
Consolidated Balance Sheet - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Current assets | ||
Cash and cash equivalents | $ 715,376 | $ 211,513 |
Accounts receivable | ||
Customers and agents, less allowances of $44,876 and $37,654, respectively | 608,202 | 466,048 |
Roaming | 20,130 | 23,865 |
Affiliated | 253 | 994 |
Other, less allowances of $830 and $859, respectively | 43,634 | 66,051 |
Inventory, net | 149,307 | 267,068 |
Prepaid expenses | 80,794 | 59,744 |
Net deferred income tax asset | 93,058 | |
Other current assets | 53,946 | 90,834 |
Total current assets | 1,671,642 | 1,279,175 |
Assets held for sale | 107,055 | |
Licenses | 1,834,212 | 1,443,438 |
Goodwill | 369,596 | 370,151 |
Investments in unconsolidated entities | 363,383 | 283,014 |
Property, plant and equipment | ||
In service and under construction | 7,668,736 | 7,458,740 |
Less: Accumulated depreciation | 5,019,803 | 4,730,523 |
Property, plant and equipment, net | 2,648,933 | 2,728,217 |
Other assets and deferred charges | 172,212 | 251,259 |
Total assets | 7,059,978 | 6,462,309 |
Current liabilities | ||
Current portion of long-term debt | 11,313 | 46 |
Accounts payable | ||
Affiliated | 10,170 | 9,774 |
Trade | 274,807 | 306,845 |
Customer deposits and deferred revenues | 250,983 | 287,562 |
Accrued taxes | 28,448 | 36,652 |
Accrued compensation | 67,770 | 66,162 |
Other current liabilities | 104,447 | 149,853 |
Total current liabilities | 747,938 | 856,894 |
Liabilities held for sale | 20,934 | |
Deferred liabilities and credits | ||
Net deferred income tax liability | 820,731 | 859,867 |
Other deferred liabilities and credits | 290,949 | 284,002 |
Long-term debt, net | $ 1,628,507 | 1,126,860 |
Commitments and contingencies | ||
Noncontrolling interests with redemption features | $ 1,097 | 1,150 |
U.S. Cellular shareholders' equity | ||
Series A Common and Common Shares | 88,074 | 88,074 |
Additional paid-in capital | 1,496,453 | 1,472,558 |
Treasury Shares, at cost | (156,535) | (169,139) |
Retained earnings | 2,132,521 | 1,910,498 |
Total U.S. Cellular shareholders' equity | 3,560,513 | 3,301,991 |
Noncontrolling interests | 10,243 | 10,611 |
Total equity | 3,570,756 | 3,312,602 |
Total liabilities and equity | $ 7,059,978 | $ 6,462,309 |
Consolidated Balance Sheet Pare
Consolidated Balance Sheet Parenthetical - USD ($) shares in Thousands, $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Current assets | ||
Customers and agents, allowances | $ 44,876 | $ 37,654 |
Other, allowances | $ 830 | $ 859 |
U.S. Cellular shareholders' equity | ||
Authorized shares | 190,000 | 190,000 |
Issued shares | 88,074 | 88,074 |
Outstanding shares | 84,359 | 84,080 |
Par value | $ 88,074 | $ 88,074 |
Treasury shares | 3,715 | 3,994 |
Common Shares | ||
U.S. Cellular shareholders' equity | ||
Authorized shares | 140,000 | 140,000 |
Issued shares | 55,068 | 55,068 |
Outstanding shares | 51,353 | 51,074 |
Par value per share | $ 1 | $ 1 |
Par value | $ 51,353 | $ 51,074 |
Treasury shares | 3,715 | 3,994 |
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 Chang
Consolidated Statement of Changes in Equity - USD ($) $ in Thousands | Total | Series A Common and Common Shares | Additional Paid-In Capital | Treasury Shares | Retained Earnings | Total U.S. Cellular Shareholders' Equity | Noncontrolling Interests |
Beginning 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 assets 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 |
Add (Deduct) | |||||||
Net income (loss) attributable to U.S. Cellular shareholders | 241,347 | 241,347 | 241,347 | ||||
Net income (loss) attributable to noncontrolling interests classified as equity | 340 | 340 | |||||
Repurchase of Common Shares | (6,188) | (6,188) | (6,188) | ||||
Incentive and compensation plans | 2,091 | 186 | 18,792 | (16,887) | 2,091 | ||
Stock-based compensation awards | 23,843 | 23,843 | 23,843 | ||||
Tax windfall (shortfall) from stock awards | (1,014) | (1,014) | (1,014) | ||||
Distributions to noncontrolling interests | (708) | (708) | |||||
Acquisition of assets in common control transaction | (1,552) | 885 | (2,437) | (1,552) | |||
Adjust investment in subsidiaries for noncontrolling interest purchases | (5) | (5) | (5) | ||||
Ending balance at Dec. 31, 2015 | $ 3,570,756 | $ 88,074 | $ 1,496,453 | $ (156,535) | $ 2,132,521 | $ 3,560,513 | $ 10,243 |
Summary of Significant Accounti
Summary of Significant Accounting Policies and Recent Accounting Pronouncements | 12 Months Ended |
Dec. 31, 2015 | |
Disclosure Text Block | |
Summary of Significant Accounting Policies and Recent Accounting Pronouncements | United States Cellular Corporation Notes to Consolidated Financial Statements N ote 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, 2015 , U.S. Cellular served 4.9 million customers. U.S. Cellular has one reportable segment. Principles of Consolidation The accounting policies of U.S. Cellular conform to acc ounting 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 an d 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 a mounts have been reclassified to conform to the 2015 financial statement presentation. In the fourth quarter of 2015, U.S. Cellular adopted, on a retrospective basis, Accounting Standards Update 2015-03, Simplifyi ng the Presentation of Debt Issuance Costs (“ASU 2015-03”). See discussion of ASU 2015-03 below under Debt Issuance Costs. 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. Ac tual results could differ from those estimates. Significant estimates are involved in accounting for goodwill and indefinite-lived intangible assets, income taxes and equipment installment plans. Cash and Cash Equivalents Cash and cash equivalents include cash and 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, incl uding sales of certain devices under equipment installment plans through its owned and agent distribution channels, by agents for sales of equipment to them and by other wireless carriers whose customers have used U.S. Cellular’s wireless systems. The allo wance 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 aff ect 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 cha rged 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 2015 , 2014 and 2013 were as follows: 2015 2014 2013 (Dollars in thousands) Balance at beginning of year $ 44,578 $ 60,238 $ 26,902 Additions, net of recoveries 105,745 101,282 98,864 Deductions (99,080) (116,942) (65,528) Balance at end of year 1 $ 51,243 $ 44,578 $ 60,238 1 In 2015 and 2014, balance includes an allowance of $5.5 million and $6.1 million, respectively, related to the long-term portion of unbilled equipment installment plan 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 cost or estimated net realizable value. Licenses Licenses consist of dire ct 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 amortiz ation 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 licens ing 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 fift een 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 rene wal 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 Licenses as of November 1 of each year or more frequently if there are events or circumstances that cause U.S. Cellular to believe the carrying value of Lic enses exceeds their fair value on a more likely than not basis. Prior to the fourth quarter of 2015, U.S. Cellular separated its FCC licenses into eleven units of accounting based on geographic service areas. The eleven units of accounting consisted of f our geographic units of accounting for developed operating market licenses (“built licenses”) and seven geographic non-operating market licenses (“unbuilt licenses”). As part of the current year annual impairment evaluation, U.S. Cellular evaluated the ag gregation criteria based on how such licenses are deployed and provide value in U.S. Cellular’s operations, and current industry and market factors. It was determined the built licenses should be aggregated into one unit of accounting. The unbuilt licenses continued to be separated into seven geographic units of accounting. As of November 1, 2015, U.S. Cellular performed a qualitative impairment assessment to determine whether it is more likely than not that the fair value of the built and unbuilt licens es exceed their carrying value. In 2014, U.S. Cellular estimated 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. Based on the impairment assessments performed, U.S. Cellular did not have an impairment of its Licenses in 2015 or 2014 . See Note 7 — Intangible Assets for additional details related to Licenses. 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. For purposes of conducting its annual Goodw ill impairment test as of November 1, 2015, U.S. Cellular identified one reporting unit. In 2014, U.S. Cellular identified four reporting units based on four geographic groupings of operating markets, representing four geographic service areas. Due to th e evolution of the business and the extent to which U.S. Cellular has similar customers, products and services, and operations across all geographic regions, and also operates one interdependent network, U.S. Cellular determined it had one reporting unit a s of November 1, 2015. The change in reporting units required U.S. Cellular to perform an impairment test for both the previous four reporting units and one new reporting unit as of November 1, 2015. A discounted cash flow approach was used to value ea ch reporting unit for purposes of the Goodwill impairment review. Based upon the impairment assessments performed, U.S. Cellular did not have an impairment of its Goodwill in 2015 or 2014 . See Note 7 — Intangible Assets for additional details related to Goodwill. 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 plan t 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 ove r 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 busi ness changes would warrant accelerating the depreciation of those specific assets. Due to the Divestiture Transaction more fully described in Note 6 — Acquisitions, Divestitures and Exchange s , U.S. Cellular changed the useful lives of certain assets in 2013. Other than the Divestiture Transaction, there were no material changes to useful lives of property, plant and equipment in 2015 , 2014 or 2013 . 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 prop erty, 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 a 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, 2015 and 2014 , U.S. Cellular had accr ued $ 75.7 million and $ 95.3 million, respectively, for amounts due to agents. These amounts are included in Other current liabilities in the Consolidated Balance Sheet. Debt Issuance Costs Debt is suance costs include underwriters’ and legal fees and other charges related to issuing various borrowing instruments and other long-term agreements, and are amortized over the respective term of each instrument. U.S. Cellular early adopted ASU 2015-03 usi ng the retrospective method as of December 31, 2015. ASU 2015-03 requires certain debt issuance costs to be presented in the balance sheet as an offset to the related debt obligation. Debt issuance costs related to U.S. Cellular’s revolving credit facili ty are excluded from the scope of ASU 2015-03 and are recorded in Other assets and deferred charges in the Consolidated Balance Sheet. As a result of the retrospective adoption, U.S. Cellular reclassified unamortized debt issuance costs of $ 25.0 million as of December 31, 2014 from Other assets and deferred charges to Long-term debt, net in the Consolidated Balance Sheet. Other than this reclassification, the adoption of ASU 2015-03 did not have an impact on U.S. Cellular’s consolidated financial statements. 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 obligati ons 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 equa l 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 liabil ity 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 de preciated 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. 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 t he 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 U.S. Cellular no longer has any requirements to perform, when title has passed and when the products are accepted by the 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 is a llocated 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 Prog ram In March 2015, U.S. Cellular announced that it would discontinue its loyalty reward program effective September 1, 2015. All unredeemed reward points expired at that time and the deferred revenue balance of $ 58.2 million r elated to such expired points was recognized as service revenues. At December 31, 2014, U.S. Cellular had deferred revenue related to loyalty reward points outstanding of $ 94.6 million. U.S. Cellular followed the deferred reve nue method of accounting for its loyalty reward program. Under this method, revenue allocated to loyalty reward points was deferred. The amount allocated to the loyalty points was based on the estimated retail price of the products and services for whic h points may be redeemed divided by the number of loyalty points required to receive such products and services. This was calculated on a weighted average basis and required U.S. Cellular to estimate the percentage of loyalty points that would be redeemed for each product or service. Revenue was recognized at the time of customer redemption or when such points were depleted via an account maintenance charge. U.S. Cellular employed the proportional model to recognize revenues associated with breakage. U nder the proportional model, U.S. Cellular allocated a portion of the estimated future breakage to each redemption and recorded revenue proportionally. 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 in 2013. 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 inte rest 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 that are deemed cash are recognized as a reduction of Operating revenues concurrently with the associated revenue. U.S. Cellular is sues 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 customer occurs. The total potential rebates and incentives are reduced by U.S. Cellular’s estimate of reb ates 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 c harged at agent locations in connection with subsidized device sales are deferred and recognized over a period that corresponds with the length of the customer’s service contract. Device activation fees charged at U.S. Cellular company-owned retail stores in connection with subsidized device sales are recognized at the time the device is delivered to the customer. Device activation fees charged at both agent locations and U.S. Cellular company-owned retail stores in connection with equipment installment p lan device transactions are deferred and recognized over a period that corresponds with the equipment upgrade eligibility date based on the contract terms. Amounts Collected from Customers and Remitted to Governmental Authorities – Gross vs. Net U.S. Cel lular 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 go vernmental 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 administra tive expenses in the Consolidated Statement of Operations. The amounts recorded gross in revenues that are billed to customers and remitted to governmental authorities totaled $ 77.2 million, $ 97.0 million and $ 114.7 million for 2015 , 2014 and 2013 , 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 $ 231.5 million, $ 204.9 million and $ 199.9 million in 2015 , 2014 and 2013 , respectively. Income Taxes U.S. Cellular is included in a consolidated federal income tax return with other members of the TDS consolidated grou p. 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 a tax allocation agreement between TDS and U.S. Cellular, U.S. Cellular remit s its applicable income tax payments to TDS. U.S. Cellular had a tax receivable balance with TDS of $ 33.1 million and $ 74.3 million as of December 31, 2015 and 2014 , 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 ba ses. 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 defe rred 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. In November 2015, the FASB is sued Accounting Standards Update 2015-17, Income Taxes: Balance Sheet Classification of Deferred Taxes (“ASU 2015-17”), requiring all deferred tax assets and liabilities, and any related valuation allowance, to be classified as non-current on the balance s heet. The classification change for all deferred taxes as non-current simplifies entities’ processes as it eliminates the need to separately identify the net current and net non-current deferred tax asset or liability in each jurisdiction and allocate valu ation allowances . U.S. Cellular is required to adopt ASU 2015-17 on January 1, 2017. Early adoption is permitted. U.S. Cellular early adopted this standard using the prospective method as of December 31, 2015. No prior period amounts were adjusted. Sto ck-Based Compensation and Other Plans 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-Schole s 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 estim ated 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 re lated 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 p re-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. Stock option awards vest on an annual basis in three separate tranches. Compensation cost is recognized using a graded attribution method over the requisite service period, whic h is generally the vesting period. Restricted stock units cliff vest in three years. Therefore, compensation cost for restricted stock units is recognized on a straight-line basis over the requisite service period, which is generally the vesting period. 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 $ 10.9 million, $ 10.6 million and $ 10.4 million in 2015 , 2014 and 2013 , respectively. U.S. Cellular also participates in a defined contribution retirement savi ngs plan (“401(k) plan”) sponsored by TDS. Total costs incurred for U.S. Cellular’s contributions to the 401(k) plan were $ 15.3 million, $ 14.9 million and $ 15.4 million in 2015 , 2014 and 2013 , respectively. Recently Issued Accounting Pronouncements In May 2014, the FASB issued Accountin g 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. In August 2015, the FASB issued Accounting Standa rds Update 2015-14, Revenue from Contracts with Customers: Deferral of the Effective Date, requiring the adoption of ASU 2014-09 on January 1, 2018. Early adoption as of January 1, 2017 is permitted; however, U.S. Cellular does not intend to adopt early. U.S. Cellular is evaluating the effects that adoption of ASU 2014-09 will have on its financial position, results of operations and disclosures. In August 2014, the FASB issued Accounting Standards Update 2014-15, Disclosure of Uncertainties about an Ent ity’s Ability to Continue as a Going Concern (“ASU 2014-15”). ASU 2014-15 requires U.S. Cellular to assess its ability to continue as a going concern each interim and annual reporting period and provide certain disclosures if there is substantial doubt ab out the entity’s ability to continue as a going concern, including management’s plan to alleviate the substantial doubt. U.S. Cellular is required to adopt the provisions of ASU 2014-15 for the annual period ending December 31, 2016, but early adoption is permitted. The adoption of ASU 2014-15 will not impact U.S. Cellular’s financial position or results of operations but may impact future disclosures. In February 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. Additionally, ASU 2015-02 changes certain criteria for identifying variable interest entities. U.S. Cellular adopted t he provisions of this standard as of January 1, 2016. U.S. Cellular expects that certain consolidated subsidiaries that are not defined as variable interest entities under current accounting guidance will be defined as variable interest entities under the provisions of ASU 2015-02. However, U.S. Cellular’s adoption of ASU 2015-02 will not change the group of entities which U.S. Cellular is required to consolidate in its financial statements. Accordingly, the adoption of ASU 2015-02 will not impact its fi nancial position or results of operations. In July 2015, the FASB issued Accounting Standards Update 2015-11, Inventory: Simplifying the Measurement of Inventory (“ASU 2015-11”), which requires inventory to be measured at the lower of cost or net realizab le value. U.S. Cellular is required to adopt ASU 2015-11 on January 1, 2017. Early adoption is permitted. U.S. Cellular is evaluating the effects that adoption of ASU 2015-11 will have on its financial position and results of operations. In September 20 15, the FASB issued Accounting Standards Update 2015-16, Business Combinations: Simplifying the Accounting for Measurement-Period Adjustments (“ASU 2015-16”). ASU 2015-16 simplifies how adjustments are made to provisional amounts recognized in a business combination during the measurement period. U.S. Cellular adopted ASU 2015-16 on January 1, 2016. There will be no immediate impacts to U.S. Cellular’s financial position, results of operations, and disclosures. In January 2016, the FASB issued Accounting Standards Update 2016-01, Financial Instruments – Overall: Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”). This ASU introduces changes to current accounting for equity investments and financial liabilities under the fair value option and the presentation and disclosure requirements for financial instruments. U.S. Cellular is required to adopt ASU 2016-01 on January 1, 2018. Certain provisions are eligible for early adoption. U.S. Cellular is evaluating the effects that adoption of ASU 2016-01 will have on its financial position and results of operations. |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2015 | |
Disclosure Text Block | |
Fair Value Measurements | Note 2 Fair Value Measurements As of December 31, 2015 and 2014 , 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 pri ces 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 a re 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 representat ive 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 th e fair value of financial instruments for disclosure purposes as displayed below. Level within the Fair Value Hierarchy December 31, 2015 December 31, 2014 Book Value Fair Value Book Value Fair Value (Dollars in thousands) Cash and cash equivalents 1 $ 715,376 $ 715,376 $ 211,513 $ 211,513 Long-term debt Retail 2 917,000 928,643 617,000 608,462 Insti tutional 2 533,015 501,461 532,722 513,647 Other 2 213,750 213,750 – – The fair value of Cash and cash equivalents approximates the book value 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, 7.25% 2063 Senior Notes and 7.25% 2064 Senior Notes. U.S. Cellular’s “Institution al” debt consists of the 6.7% Senior Notes which are traded over the counter. U.S. Cellular’s “Other” debt consists of a senior term loan credit facility. U.S. Cellular estimated the fair value of its Institutional and Other debt through a discounted cash flow analysis using the interest rates or estimated yield to maturity for each borrowing, which ranged from 3.19% to 7.51% at December 31, 2015 . An estimated yield to maturity of 7.25% was used to estimate fair value of Institutional debt at December 31, 2014 . |
Equipment Installment Plans
Equipment Installment Plans | 12 Months Ended |
Dec. 31, 2015 | |
Disclosure Text Block | |
Equipment Installment Plans | Note 3 Equipment Installment Plans U.S. Cellular offers customers, through its owned and agent distribution channels, the option to purchase certain devices under equipment installment contracts over a specified time period. For certain equipment installm ent plans (“EIP”), after a specified period of time or amount of payments, 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 trad ing 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, 2015 and 2014 , the guarantee liability related to these plans was $ 92.7 million and $ 57.5 million, respectively, and is reflected in Customer deposits an d 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. Eq uipment installment plan receivables had a weighted average effective imputed interest rate of 9.7% and 10.2% as of December 31, 2015 and 2014, respectively. The following table summarizes the unbilled equipment installment plan receivables as of December 31, 2015 and 2014 . Such amounts are presented in the Consolidated Balance Sheet as Accounts receivable – customers and agents and Other assets and deferred charges, where applicable. December 31, 2015 2014 (Dollars in thousands) Short-term portion of unbilled equipment installment plan receivables, gross $ 278,709 $ 127,400 Short-term portion of unbilled deferred interest (20,810) (16,365) Short-term portion of unbilled allowance for credit losses (13,827) (3,686) Short-term portion of unbilled equipment installment plan receivables, net $ 244,072 $ 107,349 Long-term portion of unbilled equipment installment plan receivables, gross $ 75,738 $ 89,435 Long-term portion of unbilled deferred interest (2,283) (2,791) Long-term portion of unbilled allowance for credit losses (5,537) (6,065) Long-term portion of unbilled equipment installment plan receivables, net $ 67,918 $ 80,579 U.S. Cellular assesses the collectability of the equipment installment plan receivables based on historical payment experience, account aging and other qualitative factors and provides an allowance for estimated losses. 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. U.S. Cellular recorded out-of-period adjustments in 2015 due to errors related to equipment installment plan transactions that were attributable to 2014. U.S. Cellular has determined that these adjustments were not material to prior annual periods, and also were not material to the current y ear results. These equipment installment plan adjustments had the impact of reducing Equipment sales revenues by $ 6.2 million and Income before income taxes by $ 5.8 million in 2015 . |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2015 | |
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, 2015 and 2014 were as follows: December 31, 2015 2014 (Dollars in thousands) Federal income taxes receivable $ 33,233 $ 73,510 Net state income taxes receivable 1,072 1,199 Income tax expense (benefit) is summarized as follows: Year Ended December 31, 2015 2014 2013 (Dollars in thousands) Current Federal $ 95,867 $ (77,931) $ 180,056 State 5,161 8,545 8,426 Deferred Federal 48,164 44,881 (69,917) State 7,142 6,276 (5,431) State - valuation allowance adjustment – 6,447 – $ 156,334 $ (11,782) $ 113,134 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 effec tive income tax expense rate is as follows: Year Ended December 31, 2015 2014 2013 Amount Rate Amount Rate Amount Rate (Dollars in thousands) Statutory federal income tax expense and rate $ 141,270 35.0 % $ (20,547) 35.0 % $ 90,180 35.0 % State income taxes, net of federal benefit 1 8,328 2.1 12,217 (20.8) 5,246 2.0 Effect of noncontrolling interests 2,578 0.6 (5,777) 9.8 (2,230) (0.9) Gains (losses) on investments and sale of assets 2 – – – – 20,509 8.0 Other differences, net 4,158 1.0 2,325 (3.9) (571) (0.2) Total income tax expense (benefit) and rate $ 156,334 38.7 % $ (11,782) 20.1 % $ 113,134 43.9 % 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 mil lion increase to income tax expense related to a valuation allowance recorded against certain state deferred tax assets. 2 Gains (losses) on investments and sale of assets represents 2013 tax expense related to the NY1 & NY2 Deconsolidation and the Divestiture Transaction. See Note 6 — Acquisitions, Divestitures and Exchanges and N ote 8 — Investments in Unconsolidated Entities for additional information. Significant components of U.S. Cellular’s deferred income tax assets and liabilities at December 31, 2015 and 2014 were as follows: December 31, 2015 2014 (Dollars in thousands) Deferred tax assets Current deferred tax assets $ – $ 96,886 Net operating loss (“NOL”) carryforwards 78,835 72,878 Stock-based compensation 23,726 21,072 Compensation and benefits - other 19,936 2,586 Deferred rent 18,593 18,513 Other 80,007 26,116 Total deferred tax assets 221,097 238,051 Less valuation allowance (54,915) (53,119) Net deferred tax assets 166,182 184,932 Deferred tax liabilities Property, plant and equipment 516,760 520,723 Licenses/intangibles 306,295 275,456 Partnership investments 162,296 149,371 Other – 4,135 Total deferred tax liabilities 985,351 949,685 Net deferred income tax liability $ 819,169 $ 764,753 U.S. Cellular early adopted ASU 2015-17 as of December 31, 2015 using the prospective method . The change required by the guidance, whereby all deferred taxes are classified as non-current, simplifies processes by eliminating the need to separately identif y the net current and net non-current deferred tax asset or liability in each jurisdiction and allocate valuation allowances. The prior year Consolidated Balance Sheet and the deferred tax disclosure above were not revised. At December 31, 2015, $820.7 m illion of net deferred income tax liability is included in Net deferred income tax liability and $1.5 million is included in Other assets and deferred charges in the Consolidated Balance Sheet. At December 31, 2014, $93.1 million of net current deferred i ncome tax asset is included in Net deferred income tax asset and $859.9 million of net noncurrent deferred income tax liability is included in Net deferred income tax liability and $2.0 million is included in Other assets and deferred charges in the Consol idated Balance Sheet. At December 31, 2015 , U.S. Cellular and certain subsidiaries had $ 1.6 billion of state NOL carryforwards (generating a $ 63.9 million deferred tax asset) available to offset future taxable income. The state NOL carryforwards expire between 2016 and 2035 . Certain subsidiaries had federal NOL carryforwards (generating a $ 15.0 million deferred tax asset) available to offset their future taxable income. The federal NOL carryforwards expire between 2018 and 2035 . A valuation allowance was established for certain state NOL carryforwa rds 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: 2015 2014 2013 (Dollars in thousands) Balance at beginning of year $ 53,119 $ 43,375 $ 41,295 Charged (credited) to income tax expense 1,796 9,744 (1,527) Charged to other accounts – – 3,607 Balance at end of year $ 54,915 $ 53,119 $ 43,375 A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows: 2015 2014 2013 (Dollars in thousands) Unrecognized tax benefits balance at beginning of year $ 36,075 $ 28,813 $ 26,460 Additions for tax positions of current year 7,099 7,766 5,925 Additions for tax positions of prior years 1,193 154 1,501 Reductions for tax positions of prior years (99) (554) (45) Reductions for settlements of tax positions (273) – (576) Reductions for lapses in statutes of limitations (5,488) (104) (4,452) Unrecognized tax benefits balance at end of year $ 38,507 $ 36,075 $ 28,813 Unrecognized tax benefits are included in Accrued taxes and Other deferred liabilit ies and credits in the Consolidated Balance Sheet. If these benefits were recognized, they would have reduced income tax expense in 2015 , 2014 and 2013 by $ 25.4 million , $ 23.4 million and $ 18.7 million , respectively, net of the federal benefit from state income taxes. As of December 31, 2015 , it is reasonably possible that unrecogniz ed tax benefits could decrease by approximately $ 10.6 million in the next twelve months. The nature of the uncertainty relates primarily to state income tax positions and their resolut ion or the expiration of statutes of limitation. U.S. Cellular recognizes accrued interest and penalties related to unrecognized tax benefits in Income tax expense (benefit) . The amounts charged to income tax expe nse related to interest and penalties resulted in an expense of $ 0.7 million, $ 3.5 million and $ 0.6 million in 2015 , 2014 and 2013 , respectively. Net accrued interest and penalties were $ 16.8 million and $ 16.2 million at December 31, 2015 and 2014 , respectively. U.S. Cellular is included in TDS’ consolidated federal and certain state income tax returns. U.S. Cellular also files certain state and local income tax returns separately from TDS. With only limited exceptions, TDS is no longer subject to federal income tax audits for the years prior to 2012 . With only a few exceptions, TDS is no longer subject to state income tax audits for years prior to 2011 . |
Earnings Per Share
Earnings Per Share | 12 Months Ended |
Dec. 31, 2015 | |
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 wei ghted 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 i ncome (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 i ncremental 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 numbe r of common shares were as follows: Year ended December 31, 2015 2014 2013 (Dollars and shares in thousands, except per share amounts) Net income (loss) attributable to U.S. Cellular shareholders $ 241,347 $ (42,812) $ 140,038 Weighted average number of shares used in basic earnings (loss) per share 84,248 84,213 83,968 Effect of dilutive securities: Stock options 1 153 – 211 Restricted stock units 1 490 – 551 Weighted average number of shares used in diluted earnings (loss) per share 84,891 84,213 84,730 Basic earnings (loss) per share attributable to U.S. Cellular shareholders $ 2.86 $ (0.51) $ 1.67 Diluted earnings (loss) per share attributable to U.S. Cellular shareholders $ 2.84 $ (0.51) $ 1.65 1 There were no effects of dilutive securities in 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 antidilu tive. The number of such Common Shares excluded, if any, is shown in the table below. Year Ended December 31, 2015 2014 2013 (Shares in thousands) Stock options 3,192 3,279 2,010 Restricted stock units 330 1,186 190 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. |
Acquisitions, Divestitures and
Acquisitions, Divestitures and Exchanges | 12 Months Ended |
Dec. 31, 2015 | |
Disclosure Text Block | |
Acquisitions, Divestitures and Exchanges | Note 6 Acquisitions, Divestitures and Exchanges Divestiture Transaction On May 16, 2013, pursuant to a Purchase and Sale Agreement, U.S. Cellular sold customers and certain PCS spectrum licenses to subsidiaries of Sprint Corp. fka Sprint Nextel Corporation (“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 agreements require Sprint to reimburse U.S. Cellul ar 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 e ngineering employees. As of December 31, 2015 , U.S. Cellular had received a cumulative total of $ 111.6 million pursuant to the Sprint Cost Reimbursement. Sprint Cost Reimbursement totaling $ 30.0 m illion, $ 71.1 million and $ 10.6 million had been received and recorded in Cash received from divestitures and exchanges in the Consolidated Statement of Cash Flows in 2015, 2014, and 2013, respectiv ely. As a result of the Divestiture Transaction, U.S. Cellular recognized gains of $ 6.0 million, $ 29.3 million and $ 248.4 million in (Gain) loss on sale of business and other exit costs, net, in 2015, 2014 and 2013, respectively. Other Acquisitions, Divestitures and Exchanges In March 2015, U.S. Cellular exchanged certain of its unbuilt PCS licenses for certain other PCS licenses located in U.S. Cellular’s existing operat ing markets and $ 117.0 million of cash. As of the transaction date, the licenses received in the transaction had an estimated fair value, per a market approach, of $ 43.5 million. A gain of $ 125.2 million was recorded in (Gain) loss on license sales and exchanges, net in the Consolidated Statement of Operations in the first quarter of 2015. U.S. Cellular participated in Auction 97 indirectly through i ts limited partnership interest in Advantage Spectrum. Advantage Spectrum was the provisional winning bidder for 124 licenses for an aggregate winning bid of $ 338.3 million, after its expected design ated entity discount of 25 %. Advantage Spectrum’s bid amount, less the upfront payment of $ 60.0 million paid in 2014, was paid to the FCC in March 2015. These licenses have not yet been granted by t he FCC. See Note 13 — Variable Interest Entities for additional information. 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 $ 159.0 million. This agreement and related transactions are referred to as the “Tower Sale” and were 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 mil lion in earnest money. At the time of the first closing, a $ 3.8 million gain was recorded. The second closing for the remaining 359 towers, primarily with tenants, took place in January 2015, at whi ch time U.S. Cellular received $ 141.8 million in additional cash proceeds and recorded a gain of $ 108.2 million in (Gain) loss on sale of business and other exit costs, net. In Septem ber 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 was accomplished in two clos ings. The first closing occurred in December 2014 at which time U.S. Cellular transferred licenses to the counterparty with a net book value of $ 11.5 million, received licenses with an estimated fair value, per a market approa ch, of $ 51.5 million, recorded a $ 21.7 million gain and recorded an $ 18.3 million deferred credit in Other current liabilities. The license that was transferred to the counterparty in the second closing had a net book value of $ 22.2 million. The second closing occurred in July 2015. At the time of the second closing, U.S. Cellular received $ 28.0 million in cash and recognized the deferred credit from the first closing resulting in a total gain of $ 24.0 million recorded on this part of the license exchange. In May 2014, U.S. Cellular entered into a License Purchase and Customer Recomme ndation Agreement with Airadigm Communications, Inc. (“Airadigm”), a wholly-owned subsidiary of TDS. In September 2014, pursuant to the License Purchase and Customer Recommendation Agreement, Airadigm transferred FCC spectrum licenses and certain tower as sets in certain markets in Wisconsin, Iowa, Minnesota and Michigan, for $ 91.5 million in cash to U.S. Cellular. 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 Consolid ated 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 coverin g 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 t his 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 ex changes 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. U.S. Cellular did not have any assets or liabilities classified as held for sale at December 31, 2015. At December 31, 2014 , the following assets and liabilities 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 Customer Deposits and Deferred Revenues 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, 2015 | |
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 Exc hanges for information regarding transactions which affected Licenses during the periods. Licenses Year Ended December 31, 2015 2014 (Dollars in thousands) Balance at beginning of year $ 1,443,438 $ 1,401,126 Acquisitions 1 345,807 41,707 Transferred to Assets Held for Sale – (56,809) Exchanges 2 43,485 55,780 Other 1,482 1,634 Balance at end of year $ 1,834,212 $ 1,443,438 1 Amount in 2015 includes purchases totaling $338.3 million made by Advantage Spectrum from the FCC for licenses in which it was the provisional winning bidder in Auction 97. See Note 6 — Acquisitions, Divestitures and Exchanges, and Note 13 — Variable Interest Entities for further information. 2 Amount in 2015 represents licenses received in the March 2015 PCS license exchange. See Note 6 — Acquisitions, Divestitures and Exchanges for further information. Licenses disposed of in the exchange were previously removed from the Licenses balance and reflected in Assets held for sale in the Consolidated Balance Sheet as of December 31, 2014. Goodwill Year Ended December 31, 2015 2014 (Dollars in thousands) Balance at beginning of year $ 370,151 $ 387,524 Divestitures – (1,092) Transferred to Assets held for sale – (16,281) Other (555) – Balance at end of year $ 369,596 $ 370,151 |
Investments in Unconsolidated E
Investments in Unconsolidated Entities | 12 Months Ended |
Dec. 31, 2015 | |
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. Th ese investments are accounted for using either the equity or cost method as shown in the following table: December 31, 2015 2014 (Dollars in thousands) Equity method investments: Capital contributions, loans, advances and adjustments $ 112,192 $ 116,881 Cumulative share of income 1,432,145 1,287,371 Cumulative share of distributions (1,182,890) (1,122,849) 361,447 281,403 Cost method investments 1,936 1,611 Total investments in unconsolidated entities $ 363,383 $ 283,014 The following tables, which are based on information provided in part by third parties, summarize the combined assets, liabilities and equity, and results of operations of U.S. Cellular’s equity method investments: December 31, 2015 2014 (Dollars in thousands) Assets Current $ 631,764 $ 691,519 Due from affiliates 88,685 303,322 Property and other 4,555,136 2,295,936 $ 5,275,585 $ 3,290,777 Liabilities and Equity Current liabilities $ 808,126 $ 403,005 Deferred credits 237,191 170,887 Long-term liabilities 147,222 18,101 Long-term capital lease obligations 1,539 1,722 Partners' capital and shareholders' equity 4,081,507 2,697,062 $ 5,275,585 $ 3,290,777 Year Ended December 31, 2015 2014 2013 (Dollars in thousands) Results of Operations Revenues $ 6,958,422 $ 6,668,615 $ 6,218,067 Operating expenses 5,226,550 5,035,544 4,473,722 Operating income 1,731,872 1,633,071 1,744,345 Other income (expense), net (6,901) 1,160 4,842 Net income $ 1,724,971 $ 1,634,231 $ 1,749,187 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 hel d 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. C ellular 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 unconsol idated 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. |
Property, Plant and Equipment
Property, Plant and Equipment | 12 Months Ended |
Dec. 31, 2015 | |
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, 2015 and 2014 were as follows: December 31, Useful Lives (Years) 2015 2014 (Dollars in thousands) Land N/A $ 35,535 $ 35,031 Buildings 20 295,282 296,502 Leasehold and land improvements 1-30 1,102,991 1,086,718 Cell site equipment 7-25 3,382,743 3,269,609 Switching equipment 5-8 960,091 960,377 Office furniture and equipment 3-5 502,362 553,630 Other operating assets and equipment 3-5 78,714 89,663 System development 1-7 1,169,170 1,042,195 Work in process N/A 141,848 125,015 7,668,736 7,458,740 Accumulated depreciation and amortization (5,019,803) (4,730,523) $ 2,648,933 $ 2,728,217 Depreciation and amortization expense totaled $ 595.5 million, $ 593.2 million and $ 791.1 million in 2015 , 2014 and 2013 , respectively. In 2015 , 2014 and 2013 , (Gain) loss on asset disposals, net included charges of $ 16.3 million, $ 21.5 million and $ 30.6 million, respe ctively, 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, 2015 | |
Disclosure Text Block | |
Asset Retirement Obligation | Note 10 Asset Retirem ent 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 obl igations 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 2015 and 2014 , 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 2015 and 2014 were as follows: December 31, 2015 2014 (Dollars in thousands) Balance at beginning of year $ 152,512 $ 195,568 Additional liabilities accrued 1,661 2,507 Revisions in estimated cash outflows (759) (2,792) Disposition of assets (5,949) (44,403) Accretion expense 10,958 12,534 Transferred to Liabilities held for sale – (10,902) Balance at end of year 1 $ 158,423 $ 152,512 1 The total amount of asset retirement obligations related to the Divestiture Transaction included in Other current liabilities was $5.9 million as of December 31, 2014. |
Debt
Debt | 12 Months Ended |
Dec. 31, 2015 | |
Disclosure Text Block | |
Debt | Note 11 Debt Revolving Credit Facility At December 31, 2015 , U.S. Cellular had a revolving credit facility available for general corporate purposes. Amounts under the revolving credit facility may be borr owed, repaid and reborrowed from time to time until maturity. U.S. Cellular borrowed and repaid cash amounts under its revolving credit facility in 2014 . U.S. Cellular did not borrow under its revolving credit facility in 2015 or 2013 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 s enior 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 intere st rate on any borrowings under the revolving credit facility by 0.25% per annum. As of December 31, 2015, U.S. Cellular’s credit ratings from the nationally recognized credit rating agencies remained at sub-investment grade. 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 continued availability of the revolving c redit 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, 2015 with all covenants and other requirements set forth in the revolving credit facility. The following table summarizes the terms of the revolving credit facility as of December 31, 2015 : (Dollars in millions) Maximum borrowing capacity $ 300.0 Letters of credit outstanding $ 17.5 Amount borrowed $ – Amount available for use $ 282.5 Illustrative borrowing rate: One-month London Interbank Offered Rate ("LIBOR") plus contractual spread 1 2.18% Illustrative LIBOR Rate 0.43% Contractual spread 1.75% Commitment fees on amount available for use 2 0.30% Agreement date Dec 2010 Maturity date Dec 2017 Fees incurred attributable to the Revolving Credit Facility are as follows: Fees incurred as a percent of Maximum borrowing capacity for 2015 0.29% Fees incurred, amount 2015 $ 0.9 2014 $ 3.0 2013 $ 0.8 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). 2 The revolving credit facility has commitment fees based on the unsecured senior debt ratings assigned to U.S. Cellular by certain ratings agencies. 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 agreem ent, (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 million and (ii) refinancing indebtedness in excess of $250 million 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, 2015 , U.S. Cellular had no outstanding consolidated funded indebtedness or refinancing indebtedness that was subordinated to the revolving credit agreement pursuant to the su bordination 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 quarte rs 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 from 3.75 to 3.50, with further decreases effective July 1, 2016 and Janu ary 1, 2017 (and will return to 3.00 to 1.00 at that time). For the twelve months ended December 31, 2015 , the actual Consolidated Leverage Ratio was 2.08 to 1.00. Future changes in U.S. Cellular’s financial cond ition could negatively impact its ability to meet the financial covenants and requirements in its revolving credit facility agreement. Term Loan In January 2015, U.S. Cellular entered into a senior term loan credit facility. In July 2015, U.S. Cellular bo rrowed the full amount of $225 million available under this facility in two separate draws. The interest rate on outstanding borrowings will be reset at three and six month intervals at a rate of LIBOR plus 250 basis points. This credit facility provides for the draws to be continued on a long-term basis under terms that are readily determinable. U.S. Cellular has the ability and intent to carry the debt for the duration of the agreement. Principal reductions will be due and payable in quarterly installm ents of $2.8 million beginning in March 2016 through December 2021, and the remaining unpaid balance will be due and payable in January 2022. This facility was entered into for general corporate purposes, including working capital, spectrum purchases and capital expenditures. 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 loan credit facility, TDS and U.S. Cellular entered into a subordination agreement dated Jan uary 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 December 31, 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. Other Long-Term Debt In November 2015, U.S. Cellular issued $300 million of 7.25% Senior Notes due 2064, and received cash proceeds of $ 289.7 million after payment of debt issuance costs of $ 10.3 million. These funds will be used for general corporate purposes, including working capital, spectrum purchases and capital expenditures. Long-term debt as of December 31, 2015 and 20 14 was as follows: December 31, 2015 2014 Issuance date Maturity date Call date Principal Amount Less Unamortized discount and debt issuance costs Total Principal Amount Less Unamortized discount and debt issuance costs Total (Dollars in thousands) Unsecured Senior Notes 6.700% Dec 2003 and June 2004 Dec 2033 Dec 2003 $ 544,000 $ 15,247 $ 528,753 $ 544,000 $ 15,656 $ 528,344 6.950% May 2011 May 2060 May 2016 342,000 10,905 331,095 342,000 10,937 331,063 7.250% Dec 2014 Dec 2063 Dec 2019 275,000 9,629 265,371 275,000 9,644 265,356 7.250% Nov 2015 Nov 2064 Nov 2020 300,000 10,316 289,684 – – – Term Loan Jan 2015 Jan 2022 225,000 2,283 222,717 – – – Obligation on capital leases 2,200 – 2,200 2,143 – 2,143 Total long-term debt $ 1,688,200 $ 48,380 $ 1,639,820 $ 1,163,143 $ 36,237 $ 1,126,906 Long-term debt, current $ 11,313 $ 46 Long-term debt, noncurrent $ 1,628,507 $ 1,126,860 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, 7.25% 2063 Senior Notes and 7.25% 2064 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 an d 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. The annual requirements for principal payments on long-term debt are approximately $ 11.3 m illion, $ 11.3 million, $ 11.3 million, $ 11.4 million and $ 11.4 million for the years 2016 through 2020, respe ctively. 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, consol idate or merge assets. U.S. Cellular’s long-term debt notes 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. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2015 | |
Disclosure Text Block | |
Commitments and Contingencies | Note 12 Commitments and Contingencies Agreements In November 2014, U.S. Cellular executed a Master Statement of Work and certain other documents with Amdocs Software Systems Limited (“Amdocs”). The agreement provides that U.S. Cellular will 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 estimated amount to be paid to Amdocs with respect to the agreement during the remaining term is approximately $ 83 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 prod ucts 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, 2015 under these agreements is approxima tely $ 196 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, 2015 , 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 Lease s Future Minimum Rental Payments Operating Leases Future Minimum Rental Receipts (Dollars in thousands) 2016 $ 141,959 $ 48,573 2017 123,846 40,433 2018 105,024 32,112 2019 86,935 21,746 2020 73,981 10,284 Thereafter 671,738 1,260 Total $ 1,203,483 $ 154,408 Rent expense totaled $ 153.0 million, $ 152.4 million and $ 162.1 million in 2015 , 2014 and 2013 , respectively. Indemnifications U.S. Cellular enters into agreements in the normal course of business that provide for indemnification of coun terparties. 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 th e 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 out come 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 inv olved 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 a mount 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 fina ncial statement disclosures. The ultimate outcomes of legal proceedings could differ materially from amounts accrued in the financial statements. U.S. Cellular has accrued $ 0.5 million and $ 0.4 million with respect to legal proceedings and unasserted claims as of December 31, 2015 and 2014 , 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 is unable to estimate any contingent loss in excess of the amoun ts accrued. |
Variable Interest Entities
Variable Interest Entities | 12 Months Ended |
Dec. 31, 2015 | |
Disclosure Text Block | |
Variable Interest Entities | Note 13 Variable Interest Entities U.S. Cellular consolidates variable interest entities (“VIEs”) in which it has a controlling financial interest and is the primary beneficia ry. 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 benefi ts 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, 2015 , U.S. Cellular holds a variable interest in and consolidates the following VIEs under GAAP: 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 Wi reless (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 partnership s; however, the general partner of each partnership needs the 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. Al though 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. 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, 2015 2014 (Dollars in thousands) Assets Cash and cash equivalents $ 1,435 $ 2,588 Other current assets 265 278 Licenses 1 648,661 312,977 Property, plant and equipment, net 7,722 10,671 Other assets and deferred charges 147 60,059 Total assets $ 658,230 $ 386,573 Liabilities Current liabilities $ 143 $ 110 Deferred liabilities and credits 489 622 Total liabilities $ 632 $ 732 1 At December 31, 2015, includes purchases totaling $338.3 million made by Advantage Spectrum from the FCC as described below. Other Related Matters In March 2015, King Street Wireless made a $ 60.0 million distribution to its investors. Of this distribution, $ 6.0 million was provided to King Street Wireless, Inc . and $ 54.0 million was provided to U.S. Cellular. FCC Auction 97 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 p artner in Advantage Spectrum. Advantage Spectrum applied as a “designated entity,” and expects to receive bid credits with respect to spectrum purchased in Auction 97. Advantage Spectrum was the winning bidder for 124 licenses for an aggregate bid of $ 338.3 million, after its expected designated entity discount of 25% . This amount is classified as Licenses in U.S. Cellular’s Consolidated Balance Sheet. Advantage Spectrum’s bid a mount, less the initial deposit of $ 60.0 million paid in 2014, plus certain other charges totaling $ 2.3 million, were paid to the FCC in March 2015. These licenses have not yet been granted by and are still pending before the FCC. To help fund this payment, U.S. Cellular made loans and capital contributions to Advantage Spectrum and Frequency Advantage totaling $ 280.6 million during 2015 . U.S. Cellular’s ca pital contributions and advances made to its VIEs totaled $ 60.9 million in 2014. There were no capital contributions or advances made to VIEs in 2013. Advantage Spectrum, Aquinas Wireless and King Street Wireless were formed to pa rticipate 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 Form 10-K for the year ended December 31, 2015 . 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 gene ral 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. Ther e 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 Wirele ss 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 interes ts 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 iss uance 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 r epay 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 oblig ation, 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 payabl e to U.S. Cellular for loans and accrued interest thereon made by U.S. Cellular to the general partners (“net put value”), was $ 1.1 million and $ 1.2 million at Decembe r 31, 2015 and 2014 , 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 valu e 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. During 2015 , U.S. Cellular recorded out-of-period adjustments attributable to 2013 and 2014, related to an agreement with King Street Wireless. U.S. Cellular has determined that these adjustments were not material to the prior quarterly or annual periods, and also were no t material to the full year 2015 results. As a result of these out-of-period adjustments, Net income decreased by $ 2.8 million and Net income attributable to U.S. Cellular shareholders decreased by $ 4.0 mi llion in 2015. |
Noncontrolling Interests
Noncontrolling Interests | 12 Months Ended |
Dec. 31, 2015 | |
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 rede emable 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 w hich 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, 2015 , net of estimated liquidation costs, is $ 25.7 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 assumpti ons 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 partnershi ps prior to their scheduled termination dates. The corresponding carrying value of the mandatorily redeemable noncontrolling interests in finite-lived consolidated partnerships at December 31, 2015 was $ 9.5 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 i s 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 appreciatio n 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, 2015 | |
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 h ave 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 ma tters 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 t he directors (rounded down), and the Common Shares elect 25% of the directors (rounded up). As of December 31, 2015 , a majority of U.S. Cellular’s outstanding Common Share s 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 S hares 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 c onditions. This authorization does not have an expiration date. Share repurchases made under this authorization were as follows: Year Ended December 31, Number of Shares Average Cost Per Share Total Cost (Shares and dollar amounts in thousands, except per share amounts) 2015 U.S. Cellular Common Shares 178 $ 34.86 $ 6,188 2014 U.S. Cellular Common Shares 496 $ 38.19 $ 18,943 2013 U.S. Cellular Common Shares 499 $ 37.19 $ 18,544 Pursuant to certain employee and non-employee benefit plans, U.S. Cellular reissued the following Treasury Shares: Year Ended December 31, 2015 2014 2013 (Shares in thousands) Treasury Shares Reissued 457 371 536 |
Stock-Based Compensation
Stock-Based Compensation | 12 Months Ended |
Dec. 31, 2015 | |
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 un its, and deferred compensation stock unit awards to key employees. At December 31, 2015 , the only types of awards outstanding are fixed non-qualified stock option awards, restr icted stock unit awards, and deferred compensation stock unit awards. Under the Non-Employee Director compensation plan, U.S. Cellular may grant Common Shares to members of the Board of Directors who are not employees of U.S. Cellular or TDS. On June 25, 2 013, 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, 2015 , U.S. Cellular had reserved 9,340,000 Common Shares for equity awards granted and to be granted under the Long-Term Incentive Plans and 183,000 Common Shares f or issuance under the Non-Employee Director compensation plan. 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 opti ons 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 Decembe r 31, 2015 expire between 2016 and 2025. 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 2015 , 2014 and 2013 using the Black-Scholes valuation model and the assumptions shown in the table below. 2015 2014 2013 Expected life 4.6 years 4.5 years 4.6-9.0 years Expected annual volatility rate 30.1% 28.0%-28.1% 29.2%-39.6% Dividend yield 0% 0% 0% Risk-free interest rate 1.2% 1.4%-1.5% 0.7%-2.4% Estimated annual forfeiture rate 9.7% 9.4% 0.0%-8.1% A summary of U.S. Cellular stock options outstanding (total and portion exercisable) and changes during 2015, is presented in the table below: Common Share Options Number of Options Weighted Average Exercise Price Aggregate Intrinsic Value Weighted Average Remaining Contractual Life (in years) Outstanding at December 31, 2014 3,388,000 $ 41.51 (1,586,000 exercisable) $ 45.28 Granted 1,279,000 36.42 Exercised (321,000) 32.94 Forfeited (110,000) 37.57 Expired (134,000) 43.77 Outstanding at December 31, 2015 4,102,000 $ 40.62 $ 11,292,000 6.80 (1,849,000 exercisable) $ 44.33 $ 3,733,000 4.60 The weighted average grant date fair value per share of the U.S. Cellular stock options granted in 2015 , 2014 and 2013 was $ 9.94 , $ 10.68 and $ 11.53 , respectively. The aggregate intrinsic value of U.S. Cellular stock options exercised in 2015 , 2014 and 2013 was $ 2.1 million, $ 2.0 million and $ 6.8 milli on, respectively. The aggregate intrinsic value 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 opti on holders upon exercise or that would have been received by option holders had all options been exercised on December 31, 2015 . 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 recogniz ed 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, 201 5 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, 2014 1,142,000 $ 35.60 Granted 478,000 37.24 Vested (349,000) 34.05 Forfeited (77,000) 35.76 Nonvested at December 31, 2015 1,194,000 $ 36.70 The total fair value of restricted stock units that vested during 2015 , 2014 and 2013 was $ 12.9 million, $ 11.1 million and $ 8.8 million, respectively. The weighted average grant date fair value per share of the restricted stock units granted in 2015 , 2014 and 2013 was $ 37.24 , $ 41.24 and $ 32.06 , respectively. Long-Term Incentive Plans – Deferred Compensation Stock Units – Certain U.S. Cellular employees may elect to def er 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 i n 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 3 3% 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. The total fair value of deferred compensation stock units that vested during 2015 and 2013 was $ 0.2 million and less than $ 0.1 million, respectively. The weighted average grant date fair value per share of the deferred compensation stock units granted in 2015 and 2013 was $ 35.96 and $ 31.50 , respectively. There were no deferred compensation stock units granted or that vested during 2014. As of December 31, 2015 , there were 6,000 vested but unissued deferred compensation stock units valued at $ 0.2 million. Compensation of Non-Employee Directors – U.S. Cellular issued 15,000 , 14,200 and 13,000 Common Shares in 2015 , 2014 and 2013 , respectively, under its Non-Empl oyee Director compensation plan. Stock ‑ Based Compensation Expense The following table summarizes stock ‑ based compensation expense recognized during 2015 , 2014 and 2013 : Year Ended December 31, 2015 2014 2013 (Dollars in thousands) Stock option awards $ 11,231 $ 9,513 $ 5,810 Restricted stock unit awards 12,716 12,125 9,485 Deferred compensation bonus and matching stock unit awards 241 185 2 Awards under Non-Employee Director compensation plan 560 560 547 Total stock-based compensation, before income taxes 24,748 22,383 15,844 Income tax benefit (9,352) (8,454) (5,984) Total stock-based compensation expense, net of income taxes $ 15,396 $ 13,929 $ 9,860 The following table provides a summary of the stock-based c ompensation expense included in the Consolidated Statement of Operations for the years ended: December 31, 2015 2014 2013 (Dollars in thousands) Selling, general and administrative expense $ 22,233 $ 19,429 $ 12,933 System operations 2,515 2,954 2,911 Total stock-based compensation expense $ 24,748 $ 22,383 $ 15,844 At December 31, 2015 , unrecognized compensation cost for all U.S. Cellular stock ‑ based compensation awards was $ 26.1 million and is expected to be recognized over a weighted average period of 1.9 years. U.S. Cellular’s tax benefits realized from the exercise of stock options and other awards totaled $ 5.9 million in 2015 . |
Supplemental Cash Flow Disclosu
Supplemental Cash Flow Disclosures | 12 Months Ended |
Dec. 31, 2015 | |
Disclosure Text Block | |
Supplemental Cash Flow Disclosures | Note 17 Supplemental Cash Flow Disclosures Following are supplemental cash flow disclosures regarding interest paid and incom e taxes paid. Year Ended December 31, 2015 2014 2013 (Dollars in thousands) Interest paid $ 80,530 $ 54,955 $ 42,904 Income taxes paid, net of refunds received 59,159 33,276 157,778 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 sha res 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, 2015 2014 2013 (Dollars in thousands) Common Shares withheld 228,011 163,355 606,582 Aggregate value of Common Shares withheld $ 8,448 $ 6,868 $ 25,179 Cash receipts upon exercise of stock options 6,881 5,166 10,468 Cash disbursements for payment of taxes (4,714) (4,336) (4,684) Net cash receipts from exercise of stock options and vesting of other stock awards $ 2,167 $ 830 $ 5,784 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 $ 1 7.4 million letters of credit to the FCC, of which the entire amount remained outstanding as of December 31, 2015 . U.S. Cellular has received $ 13.4 million in support funds, of which the entire balance has been spent as of December 31, 2015 . In 2014 , $ 1.9 million was included as a componen t 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. U.S. Cellular has set up a receivable in the amount of $ 18.4 million as of December 31, 2015 as part of Phase II of the Mobility Fund. |
Certain Relationships and Relat
Certain Relationships and Related Transactions | 12 Months Ended |
Dec. 31, 2015 | |
Disclosure Text Block | |
Certain Relationships and Related Transactions | Note 18 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 TD S 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 l egal services to TDS, U.S. Cellular or their subsidiaries. U.S. Cellular and its subsidiaries incurred legal costs from Sidley Austin LLP of $ 8.7 million in 2015 , $ 10.7 million in 2014 and $ 13.2 million in 2013 . 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 mor e 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 and certain of its subsidiaries to U.S. Cellular are based on expe nses 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 to taled $ 96.2 million, $ 91.1 million and $ 99.2 million in 2015 , 2014 and 2013 , respectively. 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, a nd the sale of the remaining towers was completed in January 2015. See Note 6 – Acquisitions, Divestitures and Exchanges in the Notes to 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 d irectors reviewed and evaluated this transaction between U.S. Cellular and Airadigm. In December 2013, TDS initially proposed to have Airadigm sell to U.S. Cellular the FCC spectrum licenses, towers and customers in certain Airadigm markets for $110 millio n 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 compr ised 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 Commit tee 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 Purch ase 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 c onsideration 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. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2015 | |
Disclosure Text Block | |
Subsequent events | Note 19 Subsequent Events In January 2016, U.S. Cellular entered into an agreement to purchase a 700 MHz A Block license for $ 36.0 million. The transaction is expected to close in the third quarter of 2016 pending regulatory approval. In February 2016, U.S. Cellular entered into m ultiple agreements with third parties that provide for the transfer of certain AWS and PCS spectrum licenses and approximately $ 30 million in cash to U.S. Cellular, in exchange for U.S. Cellular transferring certain AWS, PCS and 700 MHz licenses to the third parties. The transactions are subject to regulatory approval and other customary closing conditions, and are expected to close in 2016. Upon closing of the transactions, U.S. Cellular expects to recognize a gain. |
Summary of Significant Accoun27
Summary of Significant Accounting Policies and Recent Accounting Pronouncements (Significant Accounting Policies) | 12 Months Ended |
Dec. 31, 2015 | |
Accounting Policies | |
Nature of Operations | U.S. Cellular owns, operates and invests in wireless systems throughout the United States. As of December 31, 2015 , U.S. Cellular served 4.9 million customers. U.S. Cellular has one reportable segment. |
Principles of Consolidation | The accounting policies of U.S. Cellular conform to acc ounting 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 an d 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 a mounts have been reclassified to conform to the 2015 financial statement presentation. In the fourth quarter of 2015, U.S. Cellular adopted, on a retrospective basis, Accounting Standards Update 2015-03, Simplifyi ng the Presentation of Debt Issuance Costs (“ASU 2015-03”). See discussion of ASU 2015-03 below under Debt Issuance Costs. |
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. Ac tual results could differ from those estimates. Significant estimates are involved in accounting for goodwill and indefinite-lived intangible assets, income taxes and equipment installment plans. |
Cash and Cash Equivalents | Cash and cash equivalents include cash and 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, incl uding sales of certain devices under equipment installment plans through its owned and agent distribution channels, 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 allo wance 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 aff ect 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 cha rged 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 cost or estimated net realizable value. |
Intangible Assets | Licenses Licenses consist of dire ct 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 amortiz ation 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 licens ing 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 fift een 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 rene wal 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 Licenses as of November 1 of each year or more frequently if there are events or circumstances that cause U.S. Cellular to believe the carrying value of Lic enses exceeds their fair value on a more likely than not basis. Prior to the fourth quarter of 2015, U.S. Cellular separated its FCC licenses into eleven units of accounting based on geographic service areas. The eleven units of accounting consisted of f our geographic units of accounting for developed operating market licenses (“built licenses”) and seven geographic non-operating market licenses (“unbuilt licenses”). As part of the current year annual impairment evaluation, U.S. Cellular evaluated the ag gregation criteria based on how such licenses are deployed and provide value in U.S. Cellular’s operations, and current industry and market factors. It was determined the built licenses should be aggregated into one unit of accounting. The unbuilt licenses continued to be separated into seven geographic units of accounting. As of November 1, 2015, U.S. Cellular performed a qualitative impairment assessment to determine whether it is more likely than not that the fair value of the built and unbuilt licens es exceed their carrying value. In 2014, U.S. Cellular estimated 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. Based on the impairment assessments performed, U.S. Cellular did not have an impairment of its Licenses in 2015 or 2014 . See Note 7 — Intangible Assets for additional details related to Licenses. 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. For purposes of conducting its annual Goodw ill impairment test as of November 1, 2015, U.S. Cellular identified one reporting unit. In 2014, U.S. Cellular identified four reporting units based on four geographic groupings of operating markets, representing four geographic service areas. Due to th e evolution of the business and the extent to which U.S. Cellular has similar customers, products and services, and operations across all geographic regions, and also operates one interdependent network, U.S. Cellular determined it had one reporting unit a s of November 1, 2015. The change in reporting units required U.S. Cellular to perform an impairment test for both the previous four reporting units and one new reporting unit as of November 1, 2015. A discounted cash flow approach was used to value ea ch reporting unit for purposes of the Goodwill impairment review. Based upon the impairment assessments performed, U.S. Cellular did not have an impairment of its Goodwill in 2015 or 2014 . See Note 7 — Intangible Assets for additional details related to Goodwill. |
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 plan t 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 ove r 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 busi ness changes would warrant accelerating the depreciation of those specific assets. Due to the Divestiture Transaction more fully described in Note 6 — Acquisitions, Divestitures and Exchange s , U.S. Cellular changed the useful lives of certain assets in 2013. Other than the Divestiture Transaction, there were no material changes to useful lives of property, plant and equipment in 2015 , 2014 or 2013 . 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 prop erty, 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 a 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, 2015 and 2014 , U.S. Cellular had accr ued $ 75.7 million and $ 95.3 million, respectively, for amounts due to agents. These amounts are included in Other current liabilities in the Consolidated Balance Sheet. |
Debt Issuance Costs | Debt is suance costs include underwriters’ and legal fees and other charges related to issuing various borrowing instruments and other long-term agreements, and are amortized over the respective term of each instrument. U.S. Cellular early adopted ASU 2015-03 usi ng the retrospective method as of December 31, 2015. ASU 2015-03 requires certain debt issuance costs to be presented in the balance sheet as an offset to the related debt obligation. Debt issuance costs related to U.S. Cellular’s revolving credit facili ty are excluded from the scope of ASU 2015-03 and are recorded in Other assets and deferred charges in the Consolidated Balance Sheet. As a result of the retrospective adoption, U.S. Cellular reclassified unamortized debt issuance costs of $ 25.0 million as of December 31, 2014 from Other assets and deferred charges to Long-term debt, net in the Consolidated Balance Sheet. Other than this reclassification, the adoption of ASU 2015-03 did not have an impact on U.S. Cellular’s consolidated financial statements. |
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 obligati ons 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 equa l 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 liabil ity 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 de preciated 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. 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 U.S. Cellular no longer has any requirements to perform, when title has passed and when the products are accepted by the 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 is a llocated 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 Prog ram In March 2015, U.S. Cellular announced that it would discontinue its loyalty reward program effective September 1, 2015. All unredeemed reward points expired at that time and the deferred revenue balance of $ 58.2 million r elated to such expired points was recognized as service revenues. At December 31, 2014, U.S. Cellular had deferred revenue related to loyalty reward points outstanding of $ 94.6 million. U.S. Cellular followed the deferred reve nue method of accounting for its loyalty reward program. Under this method, revenue allocated to loyalty reward points was deferred. The amount allocated to the loyalty points was based on the estimated retail price of the products and services for whic h points may be redeemed divided by the number of loyalty points required to receive such products and services. This was calculated on a weighted average basis and required U.S. Cellular to estimate the percentage of loyalty points that would be redeemed for each product or service. Revenue was recognized at the time of customer redemption or when such points were depleted via an account maintenance charge. U.S. Cellular employed the proportional model to recognize revenues associated with breakage. U nder the proportional model, U.S. Cellular allocated a portion of the estimated future breakage to each redemption and recorded revenue proportionally. 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 in 2013. 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 inte rest 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 that are deemed cash are recognized as a reduction of Operating revenues concurrently with the associated revenue. U.S. Cellular is sues 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 customer occurs. The total potential rebates and incentives are reduced by U.S. Cellular’s estimate of reb ates 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 c harged at agent locations in connection with subsidized device sales are deferred and recognized over a period that corresponds with the length of the customer’s service contract. Device activation fees charged at U.S. Cellular company-owned retail stores in connection with subsidized device sales are recognized at the time the device is delivered to the customer. Device activation fees charged at both agent locations and U.S. Cellular company-owned retail stores in connection with equipment installment p lan device transactions are deferred and recognized over a period that corresponds with the equipment upgrade eligibility date based on the contract terms. Amounts Collected from Customers and Remitted to Governmental Authorities – Gross vs. Net U.S. Cel lular 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 go vernmental 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 administra tive expenses in the Consolidated Statement of Operations. The amounts recorded gross in revenues that are billed to customers and remitted to governmental authorities totaled $ 77.2 million, $ 97.0 million and $ 114.7 million for 2015 , 2014 and 2013 , 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 $ 231.5 million, $ 204.9 million and $ 199.9 million in 2015 , 2014 and 2013 , respectively. |
Income Taxes | U.S. Cellular is included in a consolidated federal income tax return with other members of the TDS consolidated grou p. 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 a tax allocation agreement between TDS and U.S. Cellular, U.S. Cellular remit s its applicable income tax payments to TDS. U.S. Cellular had a tax receivable balance with TDS of $ 33.1 million and $ 74.3 million as of December 31, 2015 and 2014 , 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 ba ses. 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 defe rred 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. In November 2015, the FASB is sued Accounting Standards Update 2015-17, Income Taxes: Balance Sheet Classification of Deferred Taxes (“ASU 2015-17”), requiring all deferred tax assets and liabilities, and any related valuation allowance, to be classified as non-current on the balance s heet. The classification change for all deferred taxes as non-current simplifies entities’ processes as it eliminates the need to separately identify the net current and net non-current deferred tax asset or liability in each jurisdiction and allocate valu ation allowances . U.S. Cellular is required to adopt ASU 2015-17 on January 1, 2017. Early adoption is permitted. U.S. Cellular early adopted this standard using the prospective method as of December 31, 2015. No prior period amounts were adjusted. |
Stock-Based Compensation and Other Plans | 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-Schole s 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 estim ated 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 re lated 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 p re-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. Stock option awards vest on an annual basis in three separate tranches. Compensation cost is recognized using a graded attribution method over the requisite service period, whic h is generally the vesting period. Restricted stock units cliff vest in three years. Therefore, compensation cost for restricted stock units is recognized on a straight-line basis over the requisite service period, which is generally the vesting period. |
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 $ 10.9 million, $ 10.6 million and $ 10.4 million in 2015 , 2014 and 2013 , respectively. U.S. Cellular also participates in a defined contribution retirement savi ngs plan (“401(k) plan”) sponsored by TDS. Total costs incurred for U.S. Cellular’s contributions to the 401(k) plan were $ 15.3 million, $ 14.9 million and $ 15.4 million in 2015 , 2014 and 2013 , respectively. |
Recently Issued Accounting Pronouncements | In May 2014, the FASB issued Accountin g 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. In August 2015, the FASB issued Accounting Standa rds Update 2015-14, Revenue from Contracts with Customers: Deferral of the Effective Date, requiring the adoption of ASU 2014-09 on January 1, 2018. Early adoption as of January 1, 2017 is permitted; however, U.S. Cellular does not intend to adopt early. U.S. Cellular is evaluating the effects that adoption of ASU 2014-09 will have on its financial position, results of operations and disclosures. In August 2014, the FASB issued Accounting Standards Update 2014-15, Disclosure of Uncertainties about an Ent ity’s Ability to Continue as a Going Concern (“ASU 2014-15”). ASU 2014-15 requires U.S. Cellular to assess its ability to continue as a going concern each interim and annual reporting period and provide certain disclosures if there is substantial doubt ab out the entity’s ability to continue as a going concern, including management’s plan to alleviate the substantial doubt. U.S. Cellular is required to adopt the provisions of ASU 2014-15 for the annual period ending December 31, 2016, but early adoption is permitted. The adoption of ASU 2014-15 will not impact U.S. Cellular’s financial position or results of operations but may impact future disclosures. In February 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. Additionally, ASU 2015-02 changes certain criteria for identifying variable interest entities. U.S. Cellular adopted t he provisions of this standard as of January 1, 2016. U.S. Cellular expects that certain consolidated subsidiaries that are not defined as variable interest entities under current accounting guidance will be defined as variable interest entities under the provisions of ASU 2015-02. However, U.S. Cellular’s adoption of ASU 2015-02 will not change the group of entities which U.S. Cellular is required to consolidate in its financial statements. Accordingly, the adoption of ASU 2015-02 will not impact its fi nancial position or results of operations. In July 2015, the FASB issued Accounting Standards Update 2015-11, Inventory: Simplifying the Measurement of Inventory (“ASU 2015-11”), which requires inventory to be measured at the lower of cost or net realizab le value. U.S. Cellular is required to adopt ASU 2015-11 on January 1, 2017. Early adoption is permitted. U.S. Cellular is evaluating the effects that adoption of ASU 2015-11 will have on its financial position and results of operations. In September 20 15, the FASB issued Accounting Standards Update 2015-16, Business Combinations: Simplifying the Accounting for Measurement-Period Adjustments (“ASU 2015-16”). ASU 2015-16 simplifies how adjustments are made to provisional amounts recognized in a business combination during the measurement period. U.S. Cellular adopted ASU 2015-16 on January 1, 2016. There will be no immediate impacts to U.S. Cellular’s financial position, results of operations, and disclosures. In January 2016, the FASB issued Accounting Standards Update 2016-01, Financial Instruments – Overall: Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”). This ASU introduces changes to current accounting for equity investments and financial liabilities under the fair value option and the presentation and disclosure requirements for financial instruments. U.S. Cellular is required to adopt ASU 2016-01 on January 1, 2018. Certain provisions are eligible for early adoption. U.S. Cellular is evaluating the effects that adoption of ASU 2016-01 will have on its financial position and results of operations. |
Variable Interest Entities | U.S. Cellular consolidates variable interest entities (“VIEs”) in which it has a controlling financial interest and is the primary beneficia ry. 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 benefi ts 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 inv olved 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 a mount 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 fina ncial statement disclosures. The ultimate outcomes of legal proceedings could differ materially from amounts accrued in the financial statements. |
Summary of Significant Accoun28
Summary of Significant Accounting Policies and Recent Accounting Pronouncements (Table) | 12 Months Ended |
Dec. 31, 2015 | |
Accounting Policies | |
Accounts receivable, allowance for doubtful accounts | The changes in the allowance for doubtful accounts during 2015 , 2014 and 2013 were as follows: 2015 2014 2013 (Dollars in thousands) Balance at beginning of year $ 44,578 $ 60,238 $ 26,902 Additions, net of recoveries 105,745 101,282 98,864 Deductions (99,080) (116,942) (65,528) Balance at end of year 1 $ 51,243 $ 44,578 $ 60,238 1 In 2015 and 2014, balance includes an allowance of $5.5 million and $6.1 million, respectively, related to the long-term portion of unbilled equipment installment plan receivables. |
Fair Value Measurements (Table)
Fair Value Measurements (Table) | 12 Months Ended |
Dec. 31, 2015 | |
Fair Value Disclosures | |
Fair value measurements | U.S. Cellular has applied the provisions of fair value accounting for purposes of computing th e fair value of financial instruments for disclosure purposes as displayed below. Level within the Fair Value Hierarchy December 31, 2015 December 31, 2014 Book Value Fair Value Book Value Fair Value (Dollars in thousands) Cash and cash equivalents 1 $ 715,376 $ 715,376 $ 211,513 $ 211,513 Long-term debt Retail 2 917,000 928,643 617,000 608,462 Insti tutional 2 533,015 501,461 532,722 513,647 Other 2 213,750 213,750 – – |
Equipment Installment Plans (Ta
Equipment Installment Plans (Table) | 12 Months Ended |
Dec. 31, 2015 | |
Equipment Installment Plans | |
Equipment installment plans | The following table summarizes the unbilled equipment installment plan receivables as of December 31, 2015 and 2014 . Such amounts are presented in the Consolidated Balance Sheet as Accounts receivable – customers and agents and Other assets and deferred charges, where applicable. December 31, 2015 2014 (Dollars in thousands) Short-term portion of unbilled equipment installment plan receivables, gross $ 278,709 $ 127,400 Short-term portion of unbilled deferred interest (20,810) (16,365) Short-term portion of unbilled allowance for credit losses (13,827) (3,686) Short-term portion of unbilled equipment installment plan receivables, net $ 244,072 $ 107,349 Long-term portion of unbilled equipment installment plan receivables, gross $ 75,738 $ 89,435 Long-term portion of unbilled deferred interest (2,283) (2,791) Long-term portion of unbilled allowance for credit losses (5,537) (6,065) Long-term portion of unbilled equipment installment plan receivables, net $ 67,918 $ 80,579 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Income Tax Disclosure | |
Income taxes receivable (payable) | U.S. Cellular’s current income taxes balances at December 31, 2015 and 2014 were as follows: December 31, 2015 2014 (Dollars in thousands) Federal income taxes receivable $ 33,233 $ 73,510 Net state income taxes receivable 1,072 1,199 |
Income tax expense (benefit) | Income tax expense (benefit) is summarized as follows: Year Ended December 31, 2015 2014 2013 (Dollars in thousands) Current Federal $ 95,867 $ (77,931) $ 180,056 State 5,161 8,545 8,426 Deferred Federal 48,164 44,881 (69,917) State 7,142 6,276 (5,431) State - valuation allowance adjustment – 6,447 – $ 156,334 $ (11,782) $ 113,134 |
Income tax reconciliation | 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 effec tive income tax expense rate is as follows: Year Ended December 31, 2015 2014 2013 Amount Rate Amount Rate Amount Rate (Dollars in thousands) Statutory federal income tax expense and rate $ 141,270 35.0 % $ (20,547) 35.0 % $ 90,180 35.0 % State income taxes, net of federal benefit 1 8,328 2.1 12,217 (20.8) 5,246 2.0 Effect of noncontrolling interests 2,578 0.6 (5,777) 9.8 (2,230) (0.9) Gains (losses) on investments and sale of assets 2 – – – – 20,509 8.0 Other differences, net 4,158 1.0 2,325 (3.9) (571) (0.2) Total income tax expense (benefit) and rate $ 156,334 38.7 % $ (11,782) 20.1 % $ 113,134 43.9 % 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 mil lion increase to income tax expense related to a valuation allowance recorded against certain state deferred tax assets. 2 Gains (losses) on investments and sale of assets represents 2013 tax expense related to the NY1 & NY2 Deconsolidation and the Divestiture Transaction. See Note 6 — Acquisitions, Divestitures and Exchanges and N ote 8 — Investments in Unconsolidated Entities for additional information. |
Temporary income tax differences | Significant components of U.S. Cellular’s deferred income tax assets and liabilities at December 31, 2015 and 2014 were as follows: December 31, 2015 2014 (Dollars in thousands) Deferred tax assets Current deferred tax assets $ – $ 96,886 Net operating loss (“NOL”) carryforwards 78,835 72,878 Stock-based compensation 23,726 21,072 Compensation and benefits - other 19,936 2,586 Deferred rent 18,593 18,513 Other 80,007 26,116 Total deferred tax assets 221,097 238,051 Less valuation allowance (54,915) (53,119) Net deferred tax assets 166,182 184,932 Deferred tax liabilities Property, plant and equipment 516,760 520,723 Licenses/intangibles 306,295 275,456 Partnership investments 162,296 149,371 Other – 4,135 Total deferred tax liabilities 985,351 949,685 Net deferred income tax liability $ 819,169 $ 764,753 |
Deferred tax valuation allowance | A summary of U.S. Cellular’s deferred tax asset valuation allowance is as follows: 2015 2014 2013 (Dollars in thousands) Balance at beginning of year $ 53,119 $ 43,375 $ 41,295 Charged (credited) to income tax expense 1,796 9,744 (1,527) Charged to other accounts – – 3,607 Balance at end of year $ 54,915 $ 53,119 $ 43,375 |
Income tax unrecognized benefits summary | A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows: 2015 2014 2013 (Dollars in thousands) Unrecognized tax benefits balance at beginning of year $ 36,075 $ 28,813 $ 26,460 Additions for tax positions of current year 7,099 7,766 5,925 Additions for tax positions of prior years 1,193 154 1,501 Reductions for tax positions of prior years (99) (554) (45) Reductions for settlements of tax positions (273) – (576) Reductions for lapses in statutes of limitations (5,488) (104) (4,452) Unrecognized tax benefits balance at end of year $ 38,507 $ 36,075 $ 28,813 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Earnings Per Share | |
Earnings per share | The amounts used in computing earnings (loss) per common share and the effects of potentially dilutive securities on the weighted average numbe r of common shares were as follows: Year ended December 31, 2015 2014 2013 (Dollars and shares in thousands, except per share amounts) Net income (loss) attributable to U.S. Cellular shareholders $ 241,347 $ (42,812) $ 140,038 Weighted average number of shares used in basic earnings (loss) per share 84,248 84,213 83,968 Effect of dilutive securities: Stock options 1 153 – 211 Restricted stock units 1 490 – 551 Weighted average number of shares used in diluted earnings (loss) per share 84,891 84,213 84,730 Basic earnings (loss) per share attributable to U.S. Cellular shareholders $ 2.86 $ (0.51) $ 1.67 Diluted earnings (loss) per share attributable to U.S. Cellular shareholders $ 2.84 $ (0.51) $ 1.65 1 There were no effects of dilutive securities in 2014 due to the net loss for the year. |
Summary of antidilutive shares | 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 antidilu tive. The number of such Common Shares excluded, if any, is shown in the table below. Year Ended December 31, 2015 2014 2013 (Shares in thousands) Stock options 3,192 3,279 2,010 Restricted stock units 330 1,186 190 |
Acquisitions, Divestitures an33
Acquisitions, Divestitures and Exchanges (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Divestiture Financial Impacts | |
Assets and liabilities held for sale | U.S. Cellular did not have any assets or liabilities classified as held for sale at December 31, 2015. At December 31, 2014 , the following assets and liabilities 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 Customer Deposits and Deferred Revenues 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, 2015 | |
Licenses | |
Licenses | Licenses Year Ended December 31, 2015 2014 (Dollars in thousands) Balance at beginning of year $ 1,443,438 $ 1,401,126 Acquisitions 1 345,807 41,707 Transferred to Assets Held for Sale – (56,809) Exchanges 2 43,485 55,780 Other 1,482 1,634 Balance at end of year $ 1,834,212 $ 1,443,438 1 Amount in 2015 includes purchases totaling $338.3 million made by Advantage Spectrum from the FCC for licenses in which it was the provisional winning bidder in Auction 97. See Note 6 — Acquisitions, Divestitures and Exchanges, and Note 13 — Variable Interest Entities for further information. 2 Amount in 2015 represents licenses received in the March 2015 PCS license exchange. See Note 6 — Acquisitions, Divestitures and Exchanges for further information. Licenses disposed of in the exchange were previously removed from the Licenses balance and reflected in Assets held for sale in the Consolidated Balance Sheet as of December 31, 2014. |
Goodwill | |
Goodwill | Goodwill Year Ended December 31, 2015 2014 (Dollars in thousands) Balance at beginning of year $ 370,151 $ 387,524 Divestitures – (1,092) Transferred to Assets held for sale – (16,281) Other (555) – Balance at end of year $ 369,596 $ 370,151 |
Investment in Unconsolidated En
Investment in Unconsolidated Entities (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Equity Method Investment, Summarized Financial Information | |
Equity and cost method investments | Investments in unconsolidated entities consist of amounts invested in wireless entities in which U.S. Cellular holds a noncontrolling interest. Th ese investments are accounted for using either the equity or cost method as shown in the following table: December 31, 2015 2014 (Dollars in thousands) Equity method investments: Capital contributions, loans, advances and adjustments $ 112,192 $ 116,881 Cumulative share of income 1,432,145 1,287,371 Cumulative share of distributions (1,182,890) (1,122,849) 361,447 281,403 Cost method investments 1,936 1,611 Total investments in unconsolidated entities $ 363,383 $ 283,014 |
Equity method investments, summarized financial position | December 31, 2015 2014 (Dollars in thousands) Assets Current $ 631,764 $ 691,519 Due from affiliates 88,685 303,322 Property and other 4,555,136 2,295,936 $ 5,275,585 $ 3,290,777 Liabilities and Equity Current liabilities $ 808,126 $ 403,005 Deferred credits 237,191 170,887 Long-term liabilities 147,222 18,101 Long-term capital lease obligations 1,539 1,722 Partners' capital and shareholders' equity 4,081,507 2,697,062 $ 5,275,585 $ 3,290,777 |
Equity method investments, summarized results of operations | Year Ended December 31, 2015 2014 2013 (Dollars in thousands) Results of Operations Revenues $ 6,958,422 $ 6,668,615 $ 6,218,067 Operating expenses 5,226,550 5,035,544 4,473,722 Operating income 1,731,872 1,633,071 1,744,345 Other income (expense), net (6,901) 1,160 4,842 Net income $ 1,724,971 $ 1,634,231 $ 1,749,187 |
Property, Plant and Equipment (
Property, Plant and Equipment (Table) | 12 Months Ended |
Dec. 31, 2015 | |
Disclosure Text Block | |
Property, plant and equipment | Property, plant and equipment in service and under construction, and related accumulated depreciation and amortization, as of December 31, 2015 and 2014 were as follows: December 31, Useful Lives (Years) 2015 2014 (Dollars in thousands) Land N/A $ 35,535 $ 35,031 Buildings 20 295,282 296,502 Leasehold and land improvements 1-30 1,102,991 1,086,718 Cell site equipment 7-25 3,382,743 3,269,609 Switching equipment 5-8 960,091 960,377 Office furniture and equipment 3-5 502,362 553,630 Other operating assets and equipment 3-5 78,714 89,663 System development 1-7 1,169,170 1,042,195 Work in process N/A 141,848 125,015 7,668,736 7,458,740 Accumulated depreciation and amortization (5,019,803) (4,730,523) $ 2,648,933 $ 2,728,217 |
Asset Retirement Obligations (T
Asset Retirement Obligations (Table) | 12 Months Ended |
Dec. 31, 2015 | |
Asset Retirement Obligations | |
Asset retirement obligations | In 2015 and 2014 , 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 2015 and 2014 were as follows: December 31, 2015 2014 (Dollars in thousands) Balance at beginning of year $ 152,512 $ 195,568 Additional liabilities accrued 1,661 2,507 Revisions in estimated cash outflows (759) (2,792) Disposition of assets (5,949) (44,403) Accretion expense 10,958 12,534 Transferred to Liabilities held for sale – (10,902) Balance at end of year 1 $ 158,423 $ 152,512 1 The total amount of asset retirement obligations related to the Divestiture Transaction included in Other current liabilities was $5.9 million as of December 31, 2014. |
Debt (Table)
Debt (Table) | 12 Months Ended |
Dec. 31, 2015 | |
Debt Disclosure | |
Debt instrument facilities | The following table summarizes the terms of the revolving credit facility as of December 31, 2015 : (Dollars in millions) Maximum borrowing capacity $ 300.0 Letters of credit outstanding $ 17.5 Amount borrowed $ – Amount available for use $ 282.5 Illustrative borrowing rate: One-month London Interbank Offered Rate ("LIBOR") plus contractual spread 1 2.18% Illustrative LIBOR Rate 0.43% Contractual spread 1.75% Commitment fees on amount available for use 2 0.30% Agreement date Dec 2010 Maturity date Dec 2017 Fees incurred attributable to the Revolving Credit Facility are as follows: Fees incurred as a percent of Maximum borrowing capacity for 2015 0.29% Fees incurred, amount 2015 $ 0.9 2014 $ 3.0 2013 $ 0.8 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). 2 The revolving credit facility has commitment fees based on the unsecured senior debt ratings assigned to U.S. Cellular by certain ratings agencies. |
Long term debt | Long-term debt as of December 31, 2015 and 20 14 was as follows: December 31, 2015 2014 Issuance date Maturity date Call date Principal Amount Less Unamortized discount and debt issuance costs Total Principal Amount Less Unamortized discount and debt issuance costs Total (Dollars in thousands) Unsecured Senior Notes 6.700% Dec 2003 and June 2004 Dec 2033 Dec 2003 $ 544,000 $ 15,247 $ 528,753 $ 544,000 $ 15,656 $ 528,344 6.950% May 2011 May 2060 May 2016 342,000 10,905 331,095 342,000 10,937 331,063 7.250% Dec 2014 Dec 2063 Dec 2019 275,000 9,629 265,371 275,000 9,644 265,356 7.250% Nov 2015 Nov 2064 Nov 2020 300,000 10,316 289,684 – – – Term Loan Jan 2015 Jan 2022 225,000 2,283 222,717 – – – Obligation on capital leases 2,200 – 2,200 2,143 – 2,143 Total long-term debt $ 1,688,200 $ 48,380 $ 1,639,820 $ 1,163,143 $ 36,237 $ 1,126,906 Long-term debt, current $ 11,313 $ 46 Long-term debt, noncurrent $ 1,628,507 $ 1,126,860 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Commitments and Contingencies Disclosure | |
Lease Commitments | As of December 31, 2015 , 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 Lease s Future Minimum Rental Payments Operating Leases Future Minimum Rental Receipts (Dollars in thousands) 2016 $ 141,959 $ 48,573 2017 123,846 40,433 2018 105,024 32,112 2019 86,935 21,746 2020 73,981 10,284 Thereafter 671,738 1,260 Total $ 1,203,483 $ 154,408 |
Variable Interest Entities (Tab
Variable Interest Entities (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Variable Interest Entities VIEs | |
Consolidated VIE assets and liabilities | The following table presents the classification of the consolidated VIEs’ assets and liabilities in U.S. Cellular’s Consolidated Balance Sheet. December 31, 2015 2014 (Dollars in thousands) Assets Cash and cash equivalents $ 1,435 $ 2,588 Other current assets 265 278 Licenses 1 648,661 312,977 Property, plant and equipment, net 7,722 10,671 Other assets and deferred charges 147 60,059 Total assets $ 658,230 $ 386,573 Liabilities Current liabilities $ 143 $ 110 Deferred liabilities and credits 489 622 Total liabilities $ 632 $ 732 1 At December 31, 2015, includes purchases totaling $338.3 million made by Advantage Spectrum from the FCC as described below. |
Common Shareholders' Equity (Ta
Common Shareholders' Equity (Table) | 12 Months Ended |
Dec. 31, 2015 | |
Common Shareholders' Equity | |
Schedule of common shares, rollforward | Year Ended December 31, Number of Shares Average Cost Per Share Total Cost (Shares and dollar amounts in thousands, except per share amounts) 2015 U.S. Cellular Common Shares 178 $ 34.86 $ 6,188 2014 U.S. Cellular Common Shares 496 $ 38.19 $ 18,943 2013 U.S. Cellular Common Shares 499 $ 37.19 $ 18,544 Year Ended December 31, 2015 2014 2013 (Shares in thousands) Treasury Shares Reissued 457 371 536 |
Stock-Based Compensation (Table
Stock-Based Compensation (Table) | 12 Months Ended |
Dec. 31, 2015 | |
Stock-based compensation | |
Stock-based compensation, fair value assumptions | U.S. Cellular estimated the fair value of stock options granted during 2015 , 2014 and 2013 using the Black-Scholes valuation model and the assumptions shown in the table below. 2015 2014 2013 Expected life 4.6 years 4.5 years 4.6-9.0 years Expected annual volatility rate 30.1% 28.0%-28.1% 29.2%-39.6% Dividend yield 0% 0% 0% Risk-free interest rate 1.2% 1.4%-1.5% 0.7%-2.4% Estimated annual forfeiture rate 9.7% 9.4% 0.0%-8.1% |
Summary of stock options | A summary of U.S. Cellular stock options outstanding (total and portion exercisable) and changes during 2015, is presented in the table below: Common Share Options Number of Options Weighted Average Exercise Price Aggregate Intrinsic Value Weighted Average Remaining Contractual Life (in years) Outstanding at December 31, 2014 3,388,000 $ 41.51 (1,586,000 exercisable) $ 45.28 Granted 1,279,000 36.42 Exercised (321,000) 32.94 Forfeited (110,000) 37.57 Expired (134,000) 43.77 Outstanding at December 31, 2015 4,102,000 $ 40.62 $ 11,292,000 6.80 (1,849,000 exercisable) $ 44.33 $ 3,733,000 4.60 |
Summary of nonvested restricted stock units | A summary of U.S. Cellular nonvested restricted stock units at December 31, 201 5 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, 2014 1,142,000 $ 35.60 Granted 478,000 37.24 Vested (349,000) 34.05 Forfeited (77,000) 35.76 Nonvested at December 31, 2015 1,194,000 $ 36.70 |
Stock-based compensation | The following table summarizes stock ‑ based compensation expense recognized during 2015 , 2014 and 2013 : Year Ended December 31, 2015 2014 2013 (Dollars in thousands) Stock option awards $ 11,231 $ 9,513 $ 5,810 Restricted stock unit awards 12,716 12,125 9,485 Deferred compensation bonus and matching stock unit awards 241 185 2 Awards under Non-Employee Director compensation plan 560 560 547 Total stock-based compensation, before income taxes 24,748 22,383 15,844 Income tax benefit (9,352) (8,454) (5,984) Total stock-based compensation expense, net of income taxes $ 15,396 $ 13,929 $ 9,860 |
Stock-based compensation, allocation by financial statement line item | The following table provides a summary of the stock-based c ompensation expense included in the Consolidated Statement of Operations for the years ended: December 31, 2015 2014 2013 (Dollars in thousands) Selling, general and administrative expense $ 22,233 $ 19,429 $ 12,933 System operations 2,515 2,954 2,911 Total stock-based compensation expense $ 24,748 $ 22,383 $ 15,844 |
Supplemental Cash Flow Disclo43
Supplemental Cash Flow Disclosures (Table) | 12 Months Ended |
Dec. 31, 2015 | |
Supplemental Cash Flow Disclosures | |
Supplemental cash flow disclosures | Year Ended December 31, 2015 2014 2013 (Dollars in thousands) Interest paid $ 80,530 $ 54,955 $ 42,904 Income taxes paid, net of refunds received 59,159 33,276 157,778 Year Ended December 31, 2015 2014 2013 (Dollars in thousands) Common Shares withheld 228,011 163,355 606,582 Aggregate value of Common Shares withheld $ 8,448 $ 6,868 $ 25,179 Cash receipts upon exercise of stock options 6,881 5,166 10,468 Cash disbursements for payment of taxes (4,714) (4,336) (4,684) Net cash receipts from exercise of stock options and vesting of other stock awards $ 2,167 $ 830 $ 5,784 |
Summary of Significant Accoun44
Summary of Significant Accounting Policies and Recent Accounting Pronouncements (Details) $ in Thousands | 12 Months Ended | |||||
Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | Dec. 31, 2013USD ($) | ||||
Summary of Significant Accounting Policies and Recent Accounting Pronouncements | ||||||
Number of customers | 4,900,000 | |||||
Number of reportable segments | 1 | |||||
Agent liability | $ 75,700 | $ 95,300 | ||||
Amounts recorded gross in revenues that are billed to customers and remitted to governmental authorities | 77,200 | 97,000 | $ 114,700 | |||
Advertising costs | 231,500 | 204,900 | 199,900 | |||
Service revenues | 3,350,431 | 3,397,937 | 3,594,773 | |||
Other assets and deferred charges | 172,212 | 251,259 | ||||
Long-term debt, net | 1,628,507 | 1,126,860 | ||||
Effect of adoption of new ASUs | ||||||
Summary of Significant Accounting Policies and Recent Accounting Pronouncements | ||||||
Other assets and deferred charges | (25,000) | |||||
Long-term debt, net | (25,000) | |||||
Long-term | ||||||
Accounts receivable | ||||||
Unbilled allowance for credit losses | $ 5,537 | 6,065 | ||||
TDS | ||||||
Summary of Significant Accounting Policies and Recent Accounting Pronouncements | ||||||
TDS ownership of U.S. Cellular | 84.00% | |||||
Income taxes receivable | $ 33,100 | 74,300 | ||||
401(k) | ||||||
Summary of Significant Accounting Policies and Recent Accounting Pronouncements | ||||||
Defined contribution cost | 15,300 | 14,900 | 15,400 | |||
Pension | ||||||
Summary of Significant Accounting Policies and Recent Accounting Pronouncements | ||||||
Defined contribution cost | 10,900 | 10,600 | 10,400 | |||
Allowance for doubtful accounts | ||||||
Accounts receivable | ||||||
Allowance for doubtful accounts, beginning balance | 44,578 | [1] | 60,238 | [1] | 26,902 | |
Additions, net of recoveries | 105,745 | 101,282 | 98,864 | |||
Deductions | (99,080) | (116,942) | (65,528) | |||
Allowance for doubtful accounts, ending balance | [1] | 51,243 | 44,578 | 60,238 | ||
Loyalty Rewards Program | ||||||
Summary of Significant Accounting Policies and Recent Accounting Pronouncements | ||||||
Deferred revenue | $ 94,600 | |||||
Service revenues | $ 58,200 | |||||
Loyalty Rewards Program | Special issuance | ||||||
Summary of Significant Accounting Policies and Recent Accounting Pronouncements | ||||||
Deferred revenue | $ 43,500 | |||||
[1] | In 2015 and 2014, balance includes an allowance of $5.5 million and $6.1 million, respectively, related to the long-term portion of unbilled equipment installment plan receivables. |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Financial Instruments | ||||
Cash and cash equivalents | $ 715,376 | $ 211,513 | $ 342,065 | $ 378,358 |
Retail | Minimum | ||||
Financial Instruments | ||||
Fair value assumption, interest rate | 3.19% | 7.25% | ||
Retail | Maximum | ||||
Financial Instruments | ||||
Fair value assumption, interest rate | 7.51% | 7.25% | ||
Fair Value | Level 1 | ||||
Financial Instruments | ||||
Cash and cash equivalents | $ 715,376 | $ 211,513 | ||
Fair Value | Level 2 | Retail | ||||
Financial Instruments | ||||
Long-term debt | 928,643 | 608,462 | ||
Fair Value | Level 2 | Institutional | ||||
Financial Instruments | ||||
Long-term debt | 501,461 | 513,647 | ||
Fair Value | Level 2 | Other | ||||
Financial Instruments | ||||
Long-term debt | 213,750 | |||
Book Value | ||||
Financial Instruments | ||||
Cash and cash equivalents | 715,376 | 211,513 | ||
Book Value | Retail | ||||
Financial Instruments | ||||
Long-term debt | 917,000 | 617,000 | ||
Book Value | Institutional | ||||
Financial Instruments | ||||
Long-term debt | 533,015 | $ 532,722 | ||
Book Value | Other | ||||
Financial Instruments | ||||
Long-term debt | $ 213,750 |
Equipment Installment Plans (De
Equipment Installment Plans (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Equipment installment plan receivables | |||
Guarantee liability | $ 92,700 | $ 57,500 | |
Imputed interest rate | 9.70% | 10.20% | |
Accounting Changes And Error Corrections [Abstract] | |||
Immaterial Error Correction | U.S. Cellular recorded out-of-period adjustments in 2015 due to errors related to equipment installment plan transactions that were attributable to 2014. U.S. Cellular has determined that these adjustments were not material to prior annual periods, and also were not material to the current year results. These equipment installment plan adjustments had the impact of reducing Equipment sales revenues by $6.2 million and Income before income taxes by $5.8 million in 2015. | ||
Equipment sales | $ 646,422 | $ 494,810 | $ 324,063 |
Income before income taxes | $ 403,629 | (58,704) | $ 257,656 |
Equipment installment plans | |||
Accounting Changes And Error Corrections [Abstract] | |||
Immaterial Error Correction | U.S. Cellular recorded out-of-period adjustments in 2015 due to errors related to equipment installment plan transactions that were attributable to 2014. U.S. Cellular has determined that these adjustments were not material to prior annual periods, and also were not material to the current year results. These equipment installment plan adjustments had the impact of reducing Equipment sales revenues by $6.2 million and Income before income taxes by $5.8 million in 2015. | ||
Adjustment | |||
Accounting Changes And Error Corrections [Abstract] | |||
Equipment sales | $ 6,200 | ||
Income before income taxes | 5,800 | ||
Short-term | |||
Equipment installment plan receivables | |||
Unbilled equipment installment plan receivables, gross | 278,709 | 127,400 | |
Unbilled deferred interest | (20,810) | (16,365) | |
Unbilled allowance for credit losses | (13,827) | (3,686) | |
Unbilled equipment installment plan receivables, net | 244,072 | 107,349 | |
Long-term | |||
Equipment installment plan receivables | |||
Unbilled equipment installment plan receivables, gross | 75,738 | 89,435 | |
Unbilled deferred interest | (2,283) | (2,791) | |
Unbilled allowance for credit losses | (5,537) | (6,065) | |
Unbilled equipment installment plan receivables, net | $ 67,918 | $ 80,579 |
Income Taxes, Balances (Details
Income Taxes, Balances (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
State | ||
Income Tax Disclosure | ||
Income taxes receivable | $ 1,072 | $ 1,199 |
Federal | ||
Income Tax Disclosure | ||
Income taxes receivable | $ 33,233 | $ 73,510 |
Income Taxes, Expense (Benefit)
Income Taxes, Expense (Benefit) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Income tax expense (benefit) | |||
Current federal income tax expense (benefit) | $ 95,867 | $ (77,931) | $ 180,056 |
Current state income tax expense | 5,161 | 8,545 | 8,426 |
Deferred federal income tax expense (benefit) | 48,164 | 44,881 | (69,917) |
Deferred state income tax expense (benefit) | 7,142 | 6,276 | (5,431) |
State - valuation allowance adjustment | 6,447 | ||
Total income tax expense (benefit) | $ 156,334 | $ (11,782) | $ 113,134 |
Income Taxes, Expense Reconcili
Income Taxes, Expense Reconciliation (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | ||
Income tax expense reconciliation | ||||
Statutory federal income tax expense | $ 141,270 | $ (20,547) | $ 90,180 | |
State income taxes, net of federal benefit | [1] | 8,328 | 12,217 | 5,246 |
Effect of noncontrolling interests | 2,578 | (5,777) | (2,230) | |
Gains (losses) on investments and sale of assets | [2] | 20,509 | ||
Other differences, net | 4,158 | 2,325 | (571) | |
Total income tax expense (benefit) | $ 156,334 | $ (11,782) | $ 113,134 | |
[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. | |||
[2] | Gains (losses) on investments and sale of assets represents 2013 tax expense related to the NY1 & NY2 Deconsolidation and the Divestiture Transaction. See Note 6 — Acquisitions, Divestitures and Exchanges and Note 8 — Investments in Unconsolidated Entities for additional information. |
Income Taxes, Rate Reconciliati
Income Taxes, Rate Reconciliation (Details) | 12 Months Ended | |||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | ||
Income tax rate reconciliation | ||||
Statutory federal income tax rate | 35.00% | 35.00% | 35.00% | |
State income taxes, net of federal benefit | [1] | 2.10% | (20.80%) | 2.00% |
Effect of noncontrolling interests | 0.60% | 9.80% | (0.90%) | |
Gains (losses) on investments and sale of assets | [2] | 8.00% | ||
Other differences, net | 1.00% | (3.90%) | (0.20%) | |
Total income tax rate | 38.70% | 20.10% | 43.90% | |
[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 $6.4 million increase to income tax expense related to a valuation allowance recorded against certain state deferred tax assets. | |||
[2] | Gains (losses) on investments and sale of assets represents 2013 tax expense related to the NY1 & NY2 Deconsolidation and the Divestiture Transaction. See Note 6 — Acquisitions, Divestitures and Exchanges and Note 8 — Investments in Unconsolidated Entities for additional information. |
Income Taxes, Components of Def
Income Taxes, Components of Deferred Income Tax (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Deferred tax assets | ||
Current deferred tax assets | $ 96,886 | |
Net operating loss ("NOL") carryforwards | $ 78,835 | 72,878 |
Stock-based compensation | 23,726 | 21,072 |
Compensation and benefits - other | 19,936 | 2,586 |
Deferred rent | 18,593 | 18,513 |
Other | 80,007 | 26,116 |
Total deferred tax assets | 221,097 | 238,051 |
Less valuation allowance | (54,915) | (53,119) |
Net deferred tax assets | 166,182 | 184,932 |
Deferred tax liabilities | ||
Property, plant and equipment | 516,760 | 520,723 |
Licenses/intangibles | 306,295 | 275,456 |
Partnership investments | 162,296 | 149,371 |
Other | 4,135 | |
Total deferred tax liabilities | 985,351 | 949,685 |
Net deferred income tax liability | 819,169 | 764,753 |
Net deferred income tax asset | ||
Deferred tax liabilities | ||
Net deferred income tax liability | 93,100 | |
Net deferred income tax liability | ||
Deferred tax liabilities | ||
Net deferred income tax liability | 820,700 | 859,900 |
Other assets and deferred charges | ||
Deferred tax liabilities | ||
Net deferred income tax liability | $ 1,500 | $ 2,000 |
Income Taxes, Net Operating Los
Income Taxes, Net Operating Losses (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2015USD ($) | |
State | |
Operating Loss Carryforwards | |
State NOL carryforwards | $ 1,600 |
Deferred tax asset for State NOL carryforwards | $ 63.9 |
State | Minimum | |
Operating Loss Carryforwards | |
Expiration of NOL carryforwards | Dec. 31, 2016 |
State | Maximum | |
Operating Loss Carryforwards | |
Expiration of NOL carryforwards | Dec. 31, 2035 |
Federal | |
Operating Loss Carryforwards | |
Deferred tax asset for Federal NOL carryforward | $ 15 |
Federal | Minimum | |
Operating Loss Carryforwards | |
Expiration of NOL carryforwards | Dec. 31, 2018 |
Federal | Maximum | |
Operating Loss Carryforwards | |
Expiration of NOL carryforwards | Dec. 31, 2035 |
Income Taxes, Deferred Tax Valu
Income Taxes, Deferred Tax Valuation Allowance (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Deferred tax valuation allowance, rollfoward | |||
Balance at beginning of period | $ 53,119 | ||
Balance at end of period | 54,915 | $ 53,119 | |
Deferred tax asset valuation allowance | |||
Deferred tax valuation allowance, rollfoward | |||
Balance at beginning of period | 53,119 | 43,375 | $ 41,295 |
Charged to income tax expense | 1,796 | 9,744 | (1,527) |
Charged to other accounts | 3,607 | ||
Balance at end of period | $ 54,915 | $ 53,119 | $ 43,375 |
Income Taxes, Unrecognized Tax
Income Taxes, Unrecognized Tax Benefits (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Summary of unrecognized income tax benefits | |||
Unrecognized tax benefit, beginning balance | $ 36,075 | $ 28,813 | $ 26,460 |
Additions for tax positions of current year | 7,099 | 7,766 | 5,925 |
Additions for tax positions of prior years | 1,193 | 154 | 1,501 |
Reductions for tax positions of prior years | (99) | (554) | (45) |
Reductions for settlements of tax positions | (273) | (576) | |
Reductions for lapses in statutes of limitations | (5,488) | (104) | (4,452) |
Unrecognized tax benefit, ending balance | 38,507 | 36,075 | 28,813 |
Effect of unrecognized tax benefit on income tax expense | $ 25,400 | $ 23,400 | $ 18,700 |
Income Taxes, Additional Disclo
Income Taxes, Additional Disclosures (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Income Tax Disclosure | |||
Net accrued interest and penalties | $ 16.8 | $ 16.2 | |
Interest and penalties expense related to unrecognized income tax benefits | 0.7 | $ 3.5 | $ 0.6 |
Decrease in unrecognized tax benefits reasonably possible in the next twelve months | $ 10.6 | ||
State | |||
Income Tax Disclosure | |||
All audit periods prior to this year are closed | 2,011 | ||
Federal | |||
Income Tax Disclosure | |||
All audit periods prior to this year are closed | 2,012 |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | ||
Earnings per share | ||||
Net income (loss) attributable to U.S. Cellular shareholders | $ 241,347 | $ (42,812) | $ 140,038 | |
Weighted average number of shares used in basic earnings (loss) per share | ||||
Weighted average number of shares used in basic earnings (loss) per share | 84,248 | 84,213 | 83,968 | |
Effects of dilutive securities: | ||||
Stock options | [1] | 153 | 211 | |
Restricted stock units | [1] | 490 | 551 | |
Weighted average number of shares used in diluted earnings (loss) per share | 84,891 | 84,213 | 84,730 | |
Earnings per share, Other disclosures | ||||
Basic earnings (loss) per share attributable to U.S. Cellular shareholders | $ 2.86 | $ (0.51) | $ 1.67 | |
Diluted earnings (loss) per share attributable to U.S. Cellular shareholders | $ 2.84 | $ (0.51) | $ 1.65 | |
Dividend payable date | Jun. 25, 2013 | |||
Dividend date of record | Jun. 11, 2013 | |||
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 | 3,192 | 3,279 | 2,010 | |
Restricted Stock Units | ||||
Earnings per share, Other disclosures | ||||
Antidilutive securities | 330 | 1,186 | 190 | |
[1] | There were no effects of dilutive securities in 2014 due to the net loss for the year. |
Acquisitions, Divestitures an57
Acquisitions, Divestitures and Exchanges, acquisitions (Details) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | |
Sep. 30, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | |
Acquisitions, divestitures and exchanges | |||
Federal Communications Commission deposit | $ 60,000 | ||
Total winning bid | $ 338,300 | ||
Airadigm Communications, Inc. | |||
Acquisitions, divestitures and exchanges | |||
Purchase price | $ 91,500 | ||
Description of acquired entity | In May 2014, U.S. Cellular entered into a License Purchase and Customer Recommendation Agreement with Airadigm Communications, Inc. (“Airadigm”), a wholly-owned subsidiary of TDS. In September 2014, pursuant to the License Purchase and Customer Recommendation Agreement, Airadigm transferred FCC spectrum licenses and certain tower assets in certain markets in Wisconsin, Iowa, Minnesota and Michigan, for $91.5 million in cash to U.S. Cellular. 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 | ||
TDS ownership percentage | 100.00% | ||
Auction 97 | |||
Acquisitions, divestitures and exchanges | |||
Description of acquired entity | U.S. Cellular participated in Auction 97 indirectly through its limited partnership interest in Advantage Spectrum. Advantage Spectrum was the provisional winning bidder for 124 licenses for an aggregate winning bid of $338.3 million, after its expected designated entity discount of 25%. Advantage Spectrum’s bid amount, less the upfront payment of $60.0 million paid in 2014, was paid to the FCC in March 2015. These licenses have not yet been granted by the FCC. See Note 13 — Variable Interest Entities for additional information. | ||
Federal Communications Commission deposit | $ 60,000 | ||
Licenses won | 124 | ||
Total winning bid | $ 338,300 | ||
Designated entity auction discount | 25.00% |
Acquisitions, Divestitures an58
Acquisitions, Divestitures and Exchanges, divestitures (Details) $ in Thousands | May. 16, 2013USD ($) | Jan. 31, 2015USD ($) | Dec. 31, 2014USD ($) | Mar. 31, 2014USD ($) | Oct. 31, 2013USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | Dec. 31, 2013USD ($) | Dec. 31, 2015USD ($) |
Divestiture Financial Impacts | |||||||||
Cash received from divestitures and exchanges | $ 316,729 | $ 179,842 | $ 811,120 | ||||||
(Gain) loss on sale of business and other exit costs, net | $ (113,555) | (32,830) | (246,767) | ||||||
Assets held for sale | |||||||||
Current assets | $ 1,466 | 1,466 | |||||||
Other assets and deferred charges | 773 | 773 | |||||||
Licenses | 56,809 | 56,809 | |||||||
Goodwill | 16,281 | 16,281 | |||||||
Property, plant and equipment | 31,726 | 31,726 | |||||||
Total assets held for sale | 107,055 | 107,055 | |||||||
Liabilities held for sale | |||||||||
Total liabilities held for sale | 20,934 | 20,934 | |||||||
Divestiture transaction | |||||||||
Divestitures | |||||||||
Business divestiture description | On May 16, 2013, pursuant to a Purchase and Sale Agreement, U.S. Cellular sold customers and certain PCS spectrum licenses to subsidiaries of Sprint Corp. fka Sprint Nextel Corporation (“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 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. | ||||||||
Divestiture Financial Impacts | |||||||||
Cash received from divestitures and exchanges | $ 480,000 | ||||||||
(Gain) loss on sale of business and other exit costs, net | $ (6,000) | (29,300) | (248,400) | ||||||
Non-operating market licenses | |||||||||
Assets held for sale | |||||||||
Licenses | 56,809 | 56,809 | |||||||
Total assets held for sale | $ 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. | ||||||||
Divestiture Financial Impacts | |||||||||
Cash received from divestitures and exchanges | $ 308,000 | ||||||||
(Gain) loss on sale of business and other exit costs, net | $ (250,600) | ||||||||
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. | ||||||||
Divestiture Financial Impacts | |||||||||
Cash received from divestitures and exchanges | $ 92,300 | ||||||||
(Gain) loss on sale of business and other exit costs, net | $ (75,800) | ||||||||
Tower sale | |||||||||
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 $159.0 million. This agreement and related transactions are referred to as the “Tower Sale” and were 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. The second closing for the remaining 359 towers, primarily with tenants, took place in January 2015, at which time U.S. Cellular received $141.8 million in additional cash proceeds and recorded a gain of $108.2 million in (Gain) loss on sale of business and other exit costs, net. | ||||||||
Number of towers | 595 | 595 | |||||||
Divestiture Financial Impacts | |||||||||
Cash received from divestitures and exchanges | $ 159,000 | ||||||||
Tower sale - first closing | |||||||||
Divestitures | |||||||||
Number of towers | 236 | 236 | |||||||
Divestiture Financial Impacts | |||||||||
Cash received from divestitures and exchanges | $ 10,000 | ||||||||
(Gain) loss on sale of business and other exit costs, net | (3,800) | ||||||||
Tower sale - second closing | |||||||||
Divestitures | |||||||||
Number of towers | 359 | ||||||||
Divestiture Financial Impacts | |||||||||
Cash received from divestitures and exchanges | $ 141,800 | ||||||||
(Gain) loss on sale of business and other exit costs, net | $ (108,200) | ||||||||
Assets held for sale | |||||||||
Current assets | 1,466 | $ 1,466 | |||||||
Other assets and deferred charges | 773 | 773 | |||||||
Goodwill | 16,281 | 16,281 | |||||||
Property, plant and equipment | 31,726 | 31,726 | |||||||
Total assets held for sale | 50,246 | 50,246 | |||||||
Liabilities held for sale | |||||||||
Customer deposits and deferred revenues | 2,704 | 2,704 | |||||||
Other current liabilities | 896 | 896 | |||||||
Other deferred liabilities and credits | 17,334 | 17,334 | |||||||
Sprint Cost Reimbursement | Divestiture transaction | |||||||||
Divestiture Financial Impacts | |||||||||
Cash received from divestitures and exchanges | $ 30,000 | $ 71,100 | $ 10,600 | $ 111,600 | |||||
Sprint Cost Reimbursement | Maximum | Divestiture transaction | |||||||||
Divestiture Financial Impacts | |||||||||
Cash received from divestitures and exchanges | $ 200,000 | ||||||||
Earnest money received | Tower sale - first closing | |||||||||
Divestiture Financial Impacts | |||||||||
Cash received from divestitures and exchanges | $ 7,500 |
Acquisitions, Divestitures an59
Acquisitions, Divestitures and Exchanges, exchanges (Details) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | |||||
Jul. 31, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Feb. 28, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Exchanges | |||||||
(Gain) loss on license sales and exchanges | $ (146,884) | $ (112,993) | $ (255,479) | ||||
Cash received from divestitures and exchanges | 316,729 | 179,842 | $ 811,120 | ||||
Other current liabilities | $ 149,853 | 104,447 | 149,853 | ||||
Carrying value | 1,443,438 | $ 1,834,212 | 1,443,438 | ||||
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 was accomplished in two closings. The first closing occurred in December 2014 at which time U.S. Cellular transferred licenses to the counterparty with a net book value of $11.5 million, received licenses with an estimated fair value, per a market approach, of $51.5 million, recorded a $21.7 million gain and recorded an $18.3 million deferred credit in Other current liabilities. The license that was transferred to the counterparty in the second closing had a net book value of $22.2 million. The second closing occurred in July 2015. At the time of the second closing, U.S. Cellular received $28.0 million in cash and recognized the deferred credit from the first closing resulting in a total gain of $24.0 million recorded on this part of the license exchange. | ||||||
PCS and AWS license exchange - first closing | |||||||
Exchanges | |||||||
(Gain) loss on license sales and exchanges | (21,700) | ||||||
Fair value | 51,500 | 51,500 | |||||
Other current liabilities | 18,300 | 18,300 | |||||
Carrying value | $ 11,500 | $ 11,500 | |||||
PCS and AWS license exchange - second closing | |||||||
Exchanges | |||||||
(Gain) loss on license sales and exchanges | $ (24,000) | ||||||
Cash received from divestitures and exchanges | 28,000 | ||||||
Carrying value | $ 22,200 | ||||||
PCS license exchange | |||||||
Exchanges | |||||||
Asset exchange description | In March 2015, U.S. Cellular exchanged certain of its unbuilt PCS licenses for certain other PCS licenses located in U.S. Cellular’s existing operating markets and $117.0 million of cash. As of the transaction date, the licenses received in the transaction had an estimated fair value, per a market approach, of $43.5 million. A gain of $125.2 million was recorded in (Gain) loss on license sales and exchanges, net in the Consolidated Statement of Operations in the first quarter of 2015. | ||||||
(Gain) loss on license sales and exchanges | $ (125,200) | ||||||
Fair value | 43,500 | ||||||
Cash received from divestitures and exchanges | $ 117,000 | ||||||
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) | ||||||
Fair value | 15,900 | ||||||
Carrying value | $ 200 |
Intangible Assets (Details)
Intangible Assets (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | ||
Licenses | |||
Balance, beginning of period | $ 1,443,438 | $ 1,401,126 | |
Acquisitions | [1] | 345,807 | 41,707 |
Transferred to Assets held for sale | (56,809) | ||
Exchanges | [2] | 43,485 | 55,780 |
Other | 1,482 | 1,634 | |
Balance, end of period | 1,834,212 | 1,443,438 | |
Total winning bid | 338,300 | ||
Goodwill | |||
Balance, beginning of year | 370,151 | 387,524 | |
Divestitures | (1,092) | ||
Transferred to Assets held for sale | (16,281) | ||
Other | (555) | ||
Balance, end of year | $ 369,596 | $ 370,151 | |
[1] | Amount in 2015 includes purchases totaling $338.3 million made by Advantage Spectrum from the FCC for licenses in which it was the provisional winning bidder in Auction 97. See Note 6 — Acquisitions, Divestitures and Exchanges, and Note 10 — Variable Interest Entities for further information. | ||
[2] | Amount in 2015 represents licenses received in the March 2015 PCS license exchange. See Note 6 — Acquisitions, Divestitures and Exchanges for further information. Licenses disposed of in this exchange and the exchange that closed in July 2015 were previously removed from the Licenses balance and reflected in Assets held for sale in the Consolidated Balance Sheet as of December 31, 2014. |
Investments in Unconsolidated61
Investments in Unconsolidated Entities (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Equity and cost method investments | |||
Capital contributions, loans, advances and adjustments | $ 112,192 | $ 116,881 | |
Cumulative share of income | 1,432,145 | 1,287,371 | |
Cumulative share of distributions | (1,182,890) | (1,122,849) | |
Equity method investments | 361,447 | 281,403 | |
Cost method investments | 1,936 | 1,611 | |
Total investments in unconsolidated entities | 363,383 | 283,014 | |
Aggregate equity method investments | |||
Equity method investments, combined assets | |||
Current | 631,764 | 691,519 | |
Due from affiliates | 88,685 | 303,322 | |
Property and other | 4,555,136 | 2,295,936 | |
Total assets | 5,275,585 | 3,290,777 | |
Equity method investments, combined liabilities and equity | |||
Current liabilities | 808,126 | 403,005 | |
Deferred credits | 237,191 | 170,887 | |
Long-term liabilities | 147,222 | 18,101 | |
Long-term capital lease obligations | 1,539 | 1,722 | |
Partners' capital and shareholders' equity | 4,081,507 | 2,697,062 | |
Total liabilities and equity | 5,275,585 | 3,290,777 | |
Equity method investments, combined income statements | |||
Revenues | 6,958,422 | 6,668,615 | $ 6,218,067 |
Operating expenses | 5,226,550 | 5,035,544 | 4,473,722 |
Operating income | 1,731,872 | 1,633,071 | 1,744,345 |
Other income (expense), net | (6,901) | 1,160 | 4,842 |
Net income | $ 1,724,971 | $ 1,634,231 | $ 1,749,187 |
Investment in Unconsolidated 62
Investment in Unconsolidated Entities, Deconsolidation (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2015 | Dec. 31, 2013 | Dec. 31, 2014 | Apr. 03, 2013 | |
Deconsolidation of New York Partnerships | ||||
Investments in unconsolidated entities | $ 363,383 | $ 283,014 | ||
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 | Apr. 3, 2013 | |||
Deconsolidation gain | $ 18,500 | |||
Investments in unconsolidated entities | $ 114,800 |
Property, Plant and Equipment63
Property, Plant and Equipment (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Property, Plant and Equipment | |||
Land | $ 35,535 | $ 35,031 | |
Buildings | 295,282 | 296,502 | |
Leasehold and land improvements | 1,102,991 | 1,086,718 | |
Cell site equipment | 3,382,743 | 3,269,609 | |
Switching equipment | 960,091 | 960,377 | |
Office furniture and equipment | 502,362 | 553,630 | |
Other operating assets and equipment | 78,714 | 89,663 | |
System development | 1,169,170 | 1,042,195 | |
Work in process | 141,848 | 125,015 | |
Property, plant and equipment, gross | 7,668,736 | 7,458,740 | |
Accumulated depreciation and amortization | (5,019,803) | (4,730,523) | |
Property, plant and equipment, net | 2,648,933 | 2,728,217 | |
Depreciation and amortization expense | 595,500 | 593,200 | $ 791,100 |
(Gain) loss on asset disposals, net | $ 16,313 | $ 21,469 | $ 30,606 |
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 ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2015 | Dec. 31, 2014 | |||
Asset retirement obligation | ||||
Asset retirement obligation - Balance at beginning of year | $ 152,512 | [1] | $ 195,568 | |
Additional liabilities accrued | 1,661 | 2,507 | ||
Revisions in estimated cash outflows | (759) | (2,792) | ||
Disposition of assets | (5,949) | (44,403) | ||
Accretion expense | 10,958 | 12,534 | ||
Transferred to Liabilities held for sale | (10,902) | |||
Asset retirement obligation - Balance at end of year | 158,423 | 152,512 | [1] | |
Other current liabilities | ||||
Asset retirement obligation | ||||
Asset retirement obligation - Balance at beginning of year | $ 5,900 | |||
Asset retirement obligation - Balance at end of year | $ 5,900 | |||
[1] | The total amount of asset retirement obligations related to the Divestiture Transaction included in Other current liabilities was $5.9 million as of December 31, 2014. |
Debt, revolving credit faciliti
Debt, revolving credit facilities (Details) - U.S. Cellular revolving credit facility - USD ($) $ in Millions | 12 Months Ended | |||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | ||
Revolving credit | ||||
Maximum borrowing capacity | $ 300 | |||
Letters of credit outstanding | 17.5 | |||
Amount available for use | $ 282.5 | |||
Illustrative borrowing rate: One-month London InterBank Offered Rate ("LIBOR") plus contractual spread | [1] | 2.18% | ||
Illustrative LIBOR Rate | 0.43% | |||
Contractual spread | 1.75% | |||
Commitment fees on amount available for use | [2] | 0.30% | ||
Fees incurred as a percent of Maximum borrowing capacity for 2015 | 0.29% | |||
Fees incurred, amount | $ 0.9 | $ 3 | $ 0.8 | |
Agreement date | Dec. 17, 2010 | |||
Maturity date | Dec. 17, 2017 | |||
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 million and (ii) refinancing indebtedness in excess of $250 million 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, 2015, 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 from 3.75 to 3.50, 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, 2015, the actual Consolidated Leverage Ratio was 2.08 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. | |||
[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). | |||
[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, long-term debt (Details)
Debt, long-term debt (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Long-term debt | ||
Principal Amount | $ 1,688,200 | $ 1,163,143 |
Unamortized discount and debt issuance costs | 48,380 | 36,237 |
Total long-term debt | 1,639,820 | 1,126,906 |
Cash proceeds | 525,000 | 275,000 |
Current portion of long-term debt | 11,313 | 46 |
Long-term debt, net | 1,628,507 | 1,126,860 |
Long-term debt maturities | ||
Scheduled principal payments 2016 | 11,300 | |
Scheduled principal payments 2017 | 11,300 | |
Scheduled principal payments 2018 | 11,300 | |
Scheduled principal payments 2019 | 11,400 | |
Scheduled principal payments 2020 | $ 11,400 | |
6.7% Senior Notes | ||
Long-term debt | ||
Interest rate on debt | 6.70% | |
Maturity date of debt issued | Dec. 15, 2033 | |
Call date of debt issued | Dec. 31, 2003 | |
Principal Amount | $ 544,000 | 544,000 |
Unamortized discount and debt issuance costs | 15,247 | 15,656 |
Long term debt | $ 528,753 | 528,344 |
6.7% Senior Notes | Minimum | ||
Long-term debt | ||
Date of debt issuance | Dec. 8, 2003 | |
6.7% Senior Notes | Maximum | ||
Long-term debt | ||
Date of debt issuance | Jun. 28, 2004 | |
6.95% Senior Notes | ||
Long-term debt | ||
Interest rate on debt | 6.95% | |
Date of debt issuance | May 9, 2011 | |
Maturity date of debt issued | May 15, 2060 | |
Call date of debt issued | May 15, 2016 | |
Principal Amount | $ 342,000 | 342,000 |
Unamortized discount and debt issuance costs | 10,905 | 10,937 |
Long term debt | $ 331,095 | 331,063 |
7.25% Senior Notes due 2063 | ||
Long-term debt | ||
Interest rate on debt | 7.25% | |
Date of debt issuance | Dec. 1, 2014 | |
Maturity date of debt issued | Dec. 1, 2063 | |
Call date of debt issued | Dec. 8, 2019 | |
Principal Amount | $ 275,000 | 275,000 |
Unamortized discount and debt issuance costs | 9,629 | 9,644 |
Long term debt | $ 265,371 | 265,356 |
7.25% Senior Notes due 2064 | ||
Long-term debt | ||
Interest rate on debt | 7.25% | |
Date of debt issuance | Nov. 23, 2015 | |
Maturity date of debt issued | Nov. 23, 2064 | |
Call date of debt issued | Nov. 30, 2020 | |
Principal Amount | $ 300,000 | |
Unamortized discount and debt issuance costs | 10,316 | |
Long term debt | 289,684 | |
Debt issuance cost | 10,300 | |
Cash proceeds | $ 289,700 | |
U.S. Cellular Term loan facility | ||
Long-term debt | ||
Date of debt issuance | Jan. 21, 2015 | |
Maturity date of debt issued | Jan. 21, 2022 | |
Principal Amount | $ 225,000 | |
Unamortized discount and debt issuance costs | 2,283 | |
Long term debt | 222,717 | |
Obligation on capital leases | ||
Long-term debt | ||
Principal Amount | 2,200 | 2,143 |
Obligation on capital leases | $ 2,200 | $ 2,143 |
Debt, term loan facility (Detai
Debt, term loan facility (Details) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | |
Mar. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Term loan | |||
Principal Amount | $ 1,688,200 | $ 1,163,143 | |
U.S. Cellular Term loan facility | |||
Term loan | |||
Principal Amount | 225,000 | ||
Maximum borrowing capacity | $ 225,000 | ||
Agreement date | Jan. 21, 2015 | ||
Maturity date | Jan. 21, 2022 | ||
Payment terms | In January 2015, U.S. Cellular entered into a senior term loan credit facility. In July 2015, U.S. Cellular borrowed the full amount of $225 million available under this facility in two separate draws. The interest rate on outstanding borrowings will be reset at three and six month intervals at a rate of LIBOR plus 250 basis points. This credit facility provides for the draws to be continued on a long-term basis under terms that are readily determinable. U.S. Cellular has the ability and intent to carry the debt for the duration of the agreement. Principal reductions will be due and payable in quarterly installments of $2.8 million beginning in March 2016 through December 2021, and the remaining unpaid balance will be due and payable in January 2022. This facility was entered into for general corporate purposes, including working capital, spectrum purchases and capital expenditures. | ||
Subordination agreement description | In connection with U.S. Cellular’s term loan 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 December 31, 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. | ||
Frequency of periodic Term Loan payment | quarterly | ||
Contractual spread | 2.50% | ||
U.S. Cellular Term loan facility | Expected event | |||
Term loan | |||
Term Loan periodic payment amount | $ 2,800 |
Commitments and Contingencies,
Commitments and Contingencies, minimum lease obligations (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2015USD ($) | |
Commitments and Contingencies | |
Operating leases description | 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 | |
2,016 | $ 141,959 |
2,017 | 123,846 |
2,018 | 105,024 |
2,019 | 86,935 |
2,020 | 73,981 |
After 2,020 | 671,738 |
Total | 1,203,483 |
Operating Leases Future Minimum Payments Receivable Abstract | |
2,016 | 48,573 |
2,017 | 40,433 |
2,018 | 32,112 |
2,019 | 21,746 |
2,020 | 10,284 |
After 2,020 | 1,260 |
Total | $ 154,408 |
Commitments and Contingencies69
Commitments and Contingencies, additional lease informaton (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Commitments and Contingencies Disclosure | |||
Rent expense | $ 153 | $ 152.4 | $ 162.1 |
Commitments and Contingencies70
Commitments and Contingencies, purchase commitments (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2015USD ($) | |
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, 2015 under these agreements is approximately $196 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 | $ 196 |
Amdocs Software Systems Limited | |
Long Term Purchase Commitment | |
Purchase commitment agreement description | In November 2014, U.S. Cellular executed a Master Statement of Work and certain other documents with Amdocs Software Systems Limited (“Amdocs”). The agreement provides that U.S. Cellular will 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 estimated amount to be paid to Amdocs with respect to the agreement during the remaining term is approximately $83 million (exclusive of travel and expenses and subject to certain potential adjustments). |
Purchase commitment period | 5 years |
Purchase commitment remaining estimated payments | $ 83 |
Commitments and Contingencies71
Commitments and Contingencies, legal accruals and unasserted claims (Details) - USD ($) $ in Millions | Dec. 31, 2015 | Dec. 31, 2014 |
Loss Contingency Estimate | ||
Accrual for legal proceedings and unasserted claims | $ 0.5 | $ 0.4 |
Variable Interest Entities (Det
Variable Interest Entities (Details) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | ||||
Mar. 31, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | ||
Assets | ||||||
Cash and cash equivalents | $ 715,376 | $ 211,513 | $ 342,065 | $ 378,358 | ||
Other current assets | 53,946 | 90,834 | ||||
Licenses | 1,834,212 | 1,443,438 | ||||
Property, plant and equipment, net | 2,648,933 | 2,728,217 | ||||
Other assets and deferred charges | 172,212 | 251,259 | ||||
Liabilities | ||||||
Current liabilities | 747,938 | 856,894 | ||||
Variable Interest Entities, Other Disclosures | ||||||
Federal Communications Commission deposit | 60,000 | |||||
Total winning bid | 338,300 | |||||
Noncontrolling interests with redemption features | $ 1,097 | 1,150 | ||||
Accounting Changes And Error Corrections [Abstract] | ||||||
Immaterial Error Correction | U.S. Cellular recorded out-of-period adjustments in 2015 due to errors related to equipment installment plan transactions that were attributable to 2014. U.S. Cellular has determined that these adjustments were not material to prior annual periods, and also were not material to the current year results. These equipment installment plan adjustments had the impact of reducing Equipment sales revenues by $6.2 million and Income before income taxes by $5.8 million in 2015. | |||||
Net income (loss) | $ 247,295 | (46,922) | 144,522 | |||
Net income (loss) attributable to U.S. Cellular shareholders | 241,347 | (42,812) | $ 140,038 | |||
Variable Interest Entities | ||||||
Assets | ||||||
Cash and cash equivalents | 1,435 | 2,588 | ||||
Other current assets | 265 | 278 | ||||
Licenses | [1] | 648,661 | 312,977 | |||
Property, plant and equipment, net | 7,722 | 10,671 | ||||
Other assets and deferred charges | 147 | 60,059 | ||||
Total assets | 658,230 | 386,573 | ||||
Liabilities | ||||||
Current liabilities | 143 | 110 | ||||
Deferred liabilities and credits | 489 | 622 | ||||
Total liabilities | 632 | 732 | ||||
Variable Interest Entities, Other Disclosures | ||||||
Capital contributions, loans or advances | 280,600 | 60,900 | ||||
Advantage Spectrum L.P. | ||||||
Variable Interest Entities, Other Disclosures | ||||||
Federal Communications Commission deposit | $ 60,000 | |||||
Total winning bid | 338,300 | |||||
Other auction charges | $ 2,300 | |||||
Designated entity auction discount | 25.00% | |||||
Licenses won | 124 | |||||
King Street Wireless L.P. | ||||||
Variable Interest Entities, Other Disclosures | ||||||
Cash distributions paid | $ 60,000 | |||||
King Street Wireless, L.P. distribution paid to U.S. Cellular | 54,000 | |||||
King Street Wireless, L.P. distribution paid to King Street Wireless, Inc. | $ 6,000 | |||||
Accounting Changes And Error Corrections [Abstract] | ||||||
Immaterial Error Correction | During 2015, U.S. Cellular recorded out-of-period adjustments attributable to 2013 and 2014, related to an agreement with King Street Wireless. U.S. Cellular has determined that these adjustments were not material to the prior quarterly or annual periods, and also were not material to the full year 2015 results. As a result of these out-of-period adjustments, Net income decreased by $2.8 million and Net income attributable to U.S. Cellular shareholders decreased by $4.0 million in 2015. | |||||
King Street Wireless L.P. | Adjustment | ||||||
Accounting Changes And Error Corrections [Abstract] | ||||||
Net income (loss) | $ 2,800 | |||||
Net income (loss) attributable to U.S. Cellular shareholders | $ 4,000 | |||||
[1] | At December 31, 2015, includes purchases totaling $338.3 million made by Advantage Spectrum from the FCC as described below. |
Noncontrolling Interests (Detai
Noncontrolling Interests (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2015USD ($) | |
Redeemable noncontrolling interest | |
Termination date range of mandatorily redeemable noncontrolling interests - begin | 2,085 |
Termination date range of mandatorily redeemable noncontrolling interests - end | 2,113 |
Settlement value of mandatorily redeemable noncontrolling interests | $ 25.7 |
Carrying value of mandatorily redeemable noncontrolling interests | $ 9.5 |
Common Shareholders' Equity (De
Common Shareholders' Equity (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Share repurchases | |||
Amount | $ 6,188 | $ 18,943 | $ 18,544 |
Treasury Shares | |||
Share repurchases | |||
Amount | $ 6,188 | $ 18,943 | $ 18,544 |
Common Shares | |||
Common shareholders' equity, other disclosures | |||
Voting rights for number of 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 | 457,000 | 371,000 | 536,000 |
Share repurchases | |||
Number of shares acquired | 178,000 | 496,000 | 499,000 |
Average cost per share | $ 34.86 | $ 38.19 | $ 37.19 |
Amount | $ 6,188 | $ 18,943 | $ 18,544 |
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. This authorization does not have an expiration date. | ||
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 for number of board of directors | 75% |
Stock-Based Compensation Overvi
Stock-Based Compensation Overview, Expense and Valuation Model (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Stock-based compensation | |||
Stock-based compensation expense | $ 24,748 | $ 22,383 | $ 15,844 |
Income tax benefit | (9,352) | (8,454) | (5,984) |
Total stock-based compensation expense, net of income taxes | 15,396 | 13,929 | 9,860 |
Unrecognized compensation cost for all stock-based compensation awards | $ 26,100 | ||
Weighted average period for recognition of unrecognized compensation cost for all stock-based compensation awards | 1 year 11 months | ||
Tax benefit from exercise of stock options and other awards | $ 5,900 | ||
System operations | |||
Stock-based compensation | |||
Stock-based compensation expense | 2,515 | 2,954 | 2,911 |
Selling, general and administrative expense | |||
Stock-based compensation | |||
Stock-based compensation expense | $ 22,233 | 19,429 | 12,933 |
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, 2015, 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, 2015 expire between 2016 and 2025. 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 | $ 11,231 | 9,513 | 5,810 |
2005 and 2013 Long-Term Incentive Plans | Stock Options | Minimum | |||
Stock-based compensation, overview | |||
Stock options expiration date | Apr. 3, 2016 | ||
2005 and 2013 Long-Term Incentive Plans | Stock Options | Maximum | |||
Stock-based compensation, overview | |||
Stock options expiration date | Apr. 1, 2025 | ||
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 | $ 12,716 | 12,125 | 9,485 |
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 | $ 241 | 185 | 2 |
Non-Employee Directors' Plan | |||
Stock-based compensation | |||
Stock-based compensation expense | $ 560 | $ 560 | $ 547 |
Common Shares | 2005 and 2013 Long-Term Incentive Plans | |||
Stock-based compensation | |||
Shares reserved | 9,340,000 | ||
Common Shares | 2005 and 2013 Long-Term Incentive Plans | Stock Options | |||
Black Scholes valuation model assumptions | |||
Expected annual volatility rate, minimum | 30.10% | 28.00% | 29.20% |
Expected annual volatility rate, maximum | 30.10% | 28.10% | 39.60% |
Dividend yield | 0.00% | 0.00% | 0.00% |
Risk-free interest rate, minimum | 1.20% | 1.40% | 0.70% |
Risk-free interest rate, maximum | 1.20% | 1.50% | 2.40% |
Estimated annual forfeiture rate, minimum | 9.70% | 9.40% | 0.00% |
Estimated annual forfeiture rate, maximum | 9.70% | 9.40% | 8.10% |
Common Shares | 2005 and 2013 Long-Term Incentive Plans | Stock Options | Minimum | |||
Black Scholes valuation model assumptions | |||
Expected life | 4 years 7 months | 4 years 6 months | 4 years 7 months |
Common Shares | 2005 and 2013 Long-Term Incentive Plans | Stock Options | Maximum | |||
Black Scholes valuation model assumptions | |||
Expected life | 4 years 7 months | 4 years 6 months | 9 years |
Common Shares | Non-Employee Directors' Plan | |||
Stock-based compensation | |||
Shares reserved | 183,000 |
Stock-Based 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, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Stock compensation, stock option rollforward schedule, number of options | |||
Outstanding, begin of period | 3,388,000 | ||
Exercisable options, begin of period | 1,586,000 | ||
Granted options | 1,279,000 | ||
Exercised options | (321,000) | ||
Forfeited options | (110,000) | ||
Expired options | (134,000) | ||
Outstanding, end of period | 4,102,000 | 3,388,000 | |
Exercisable options, end of period | 1,849,000 | 1,586,000 | |
Stock compensation, stock option rollforward schedule, other information | |||
Options outstanding, begin of period - weighted average exercise price | $ 41.51 | ||
Options exercisable, begin of period - weighted average exercise price | 45.28 | ||
Options granted, weighted average exercise price | 36.42 | ||
Options exercised, weighted average exercise price | 32.94 | ||
Options forfeited, weighted average exercise price | 37.57 | ||
Options expired, weighted average exercise price | 43.77 | ||
Options outstanding, end of period - weighted average exercise price | 40.62 | $ 41.51 | |
Options exercisable, end of period - weighted average exercise price | 44.33 | 45.28 | |
Options granted, weighted average grant date fair value | $ 9.94 | $ 10.68 | $ 11.53 |
Aggregate intrinsic value, options exercised | $ 2,100,000 | $ 2,000,000 | $ 6,800,000 |
Aggregate intrinsic value, options outstanding | 11,292,000 | ||
Aggregate intrinsic value, options exercisable | $ 3,733,000 | ||
Weighted average remaining contractual life, outstanding | 6 years 10 months | ||
Weighted average remaining contractual life, exercisable | 4 years 7 months |
Stock-Based Compensation Nonves
Stock-Based Compensation Nonvested Shares and Other (Details) - Common Shares - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
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 | 1,142,000 | ||
Granted number of shares | 478,000 | ||
Vested number of shares | (349,000) | ||
Forfeited number of shares | (77,000) | ||
Nonvested stock units, end of period - Number of shares | 1,194,000 | 1,142,000 | |
Stock based compensation, Nonvested shares weighted average grant date fair value | |||
Nonvested stock units - begin of period weighted average grant date fair value | $ 35.60 | ||
Granted weighted average grant date fair value | 37.24 | $ 41.24 | $ 32.06 |
Vested weighted average grant date fair value | 34.05 | ||
Forfeited weighted average grant date fair value | 35.76 | ||
Nonvested stock units - end of period weighted average grant date fair value | $ 36.70 | $ 35.60 | |
Fair value of vested stock units | $ 12.9 | $ 11.1 | $ 8.8 |
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 | $ 35.96 | $ 31.50 | |
Fair value of vested stock units | $ 0.2 | ||
Shares issued and granted under stock compensation plans | |||
Vested number of shares, unissued | 6,000 | ||
Vested number of shares, unissued, fair value | $ 0.2 | ||
2005 and 2013 Long-Term Incentive Plans | Deferred Compensation Stock Units | Maximum | |||
Stock based compensation, Nonvested shares weighted average grant date fair value | |||
Fair value of vested stock units | $ 0.1 | ||
Non-Employee Directors' Plan | |||
Shares issued and granted under stock compensation plans | |||
Shares issued | 15,000 | 14,200 | 13,000 |
Supplemental Cash Flow Disclo78
Supplemental Cash Flow Disclosures (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015USD ($)shares | Dec. 31, 2014USD ($)shares | Dec. 31, 2013USD ($)shares | |
Supplemental cash flow disclosures | |||
Interest paid | $ 80,530 | $ 54,955 | $ 42,904 |
Income taxes paid, net of refunds received | 59,159 | 33,276 | 157,778 |
Other assets and deferred charges | 172,212 | 251,259 | |
Supplemental cash flows, stock based compensation | |||
Cash receipts upon exercise of stock options | 6,881 | 5,166 | 10,468 |
Cash disbursements for payments of taxes | (4,714) | (4,336) | (4,684) |
Net cash receipts from exercise of stock options and vesting of other stock awards | $ 2,167 | 830 | $ 5,784 |
Auction 901 Mobility Funds | |||
Supplemental cash flow disclosures | |||
FCC auction date | Sep. 27, 2012 | ||
Letters of credit outstanding | $ 17,400 | ||
FCC auction amount received | $ 13,400 | ||
FCC auction number of states won | 10 | ||
Other assets and deferred charges | $ 18,400 | ||
Other assets and deferred charges | Auction 901 Mobility Funds | |||
Supplemental cash flow disclosures | |||
FCC auction amount received | 1,900 | ||
Property, plant and equipment, net | Auction 901 Mobility Funds | |||
Supplemental cash flow disclosures | |||
FCC auction amount received | $ 11,500 | ||
Maximum | Auction 901 Mobility Funds | |||
Supplemental cash flow disclosures | |||
FCC auction amount | 300,000 | ||
FCC auction amount awarded | $ 40,100 | ||
Common Shares | |||
Supplemental cash flows, stock based compensation | |||
Shares withheld | shares | 228,011 | 163,355 | 606,582 |
Aggregate value of shares withheld | $ 8,448 | $ 6,868 | $ 25,179 |
Certain Relationships and Rel79
Certain Relationships and Related Transactions (Details) $ in Thousands | Sep. 10, 2014USD ($) | Dec. 31, 2014USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | Dec. 31, 2013USD ($) |
Certain relationships and related transactions | |||||
Billings to U.S. Cellular from TDS | $ 96,200 | $ 91,100 | $ 99,200 | ||
Cash received from divestitures and exchanges | $ 316,729 | 179,842 | 811,120 | ||
Tower sale | |||||
Certain relationships and related transactions | |||||
Number of towers | 595 | ||||
Cash received from divestitures and exchanges | $ 159,000 | ||||
Sidley Austin LLP | |||||
Certain relationships and related transactions | |||||
Legal expense | $ 8,700 | $ 10,700 | 13,200 | ||
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 $8.7 million in 2015, $10.7 million in 2014 and $13.2 million in 2013. | ||||
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 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 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. | ||||
Number of towers purchased | 6 | 6 | |||
Purchase price | $ 91,500 | $ 2,600 | |||
TDS ownership percentage | 100.00% | ||||
Airadigm Communications, Inc. | Proposed purchase price | |||||
Certain relationships and related transactions | |||||
Purchase price | 110,000 | ||||
TDS | |||||
Certain relationships and related 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 and certain of its subsidiaries 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 $96.2 million, $91.1 million and $99.2 million in 2015, 2014 and 2013, respectively. | ||||
Billings to U.S. Cellular from TDS | $ 96,200 | $ 91,100 | $ 99,200 | ||
TDS ownership percentage | 84.00% |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) $ in Thousands | 12 Months Ended | ||||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Jan. 31, 2016 | |
Subsequent Events | |||||
Subsequent Event Description | In January 2016, U.S. Cellular entered into an agreement to purchase a 700 MHz A Block license for $36.0 million. The transaction is expected to close in the third quarter of 2016 pending regulatory approval. In February 2016, U.S. Cellular entered into multiple agreements with third parties that provide for the transfer of certain AWS and PCS spectrum licenses and approximately $30 million in cash to U.S. Cellular, in exchange for U.S. Cellular transferring certain AWS, PCS and 700 MHz licenses to the third parties. The transactions are subject to regulatory approval and other customary closing conditions, and are expected to close in 2016. Upon closing of the transactions, U.S. Cellular expects to recognize a gain. | ||||
Cash received from divestitures and exchanges | $ 316,729 | $ 179,842 | $ 811,120 | ||
Expected event | |||||
Subsequent Events | |||||
Cash received from divestitures and exchanges | $ 30,000 | ||||
Subsequent event | |||||
Subsequent Events | |||||
License acquisition agreement amount | $ 36,000 |