10-K

 

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K
(Mark One)
x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2014
					OR
	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 001-14157
TELEPHONE AND DATA SYSTEMS, INC.
(Exact name of Registrant as specified in its charter)
Delaware							36-2669023
(State or other jurisdiction of incorporation or organization)							(IRS Employer Identification No.)
30 North LaSalle Street, Suite 4000, Chicago, Illinois 60602 (Address of principal executive offices) (Zip code)
Registrant’s telephone number, including area code: (312) 630-1900
Securities registered pursuant to Section 12(b) of the Act:
		Title of each class					Name of each exchange on which registered
		Common Shares, $.01 par value					New York Stock Exchange
		6.625% Senior Notes due 2045					New York Stock Exchange
		6.875% Senior Notes due 2059					New York Stock Exchange
		7.0% Senior Notes due 2060					New York Stock Exchange
		5.875% Senior Notes due 2061					New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.										Yes x	No 
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.										Yes 	No x
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.										Yes x	No 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).										Yes x	No 
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.										x
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer			x	Accelerated filer		Non-accelerated filer			Smaller reporting company		
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).										Yes 	No x
As of June 30, 2014, the aggregate market values of the registrant’s Common Shares, Series A Common Shares and Preferred Shares held by non-affiliates were approximately $2.5 billion, $2.4 million and $0.8 million, respectively.  For purposes hereof, it was assumed that each director, executive officer and holder of 10% or more of any class of voting equity security of Telephone and Data Systems, Inc. (“TDS”) is an affiliate.  The June 30, 2014 closing price of the Common Shares was $26.11 as reported by the New York Stock Exchange.  Because trading in the Series A Common Shares and Preferred Shares is infrequent, the registrant has assumed for purposes hereof that (i) each Series A Common Share has a market value equal to one Common Share because the Series A Common Shares are convertible on a share-for-share basis into Common Shares, (ii) each nonredeemable Preferred Share has a market value of $100 because each of such shares had a stated value of $100 when issued, and (iii) each Preferred Share that is redeemable by the delivery of TDS Common Shares has a value equal to the value of the number of Common Shares (at $26.11 per share) on June 30, 2014 that would be required to be delivered upon redemption.
The number of shares outstanding of each of the registrant’s classes of common stock, as of January 31, 2015, is 100,728,000 Common Shares, $.01 par value, and 7,179,000 Series A Common Shares, $.01 par value.
DOCUMENTS INCORPORATED BY REFERENCE
Those sections or portions of the registrant's 2014 Annual Report to Shareholders (“Annual Report”), filed as Exhibit 13 hereto, and of the registrant’s Notice of Annual Meeting of Shareholders and Proxy Statement for its 2015 Annual Meeting of Shareholders (“Proxy Statement”) to be filed on or prior to April 30, 2015, described in the table of contents included herein are incorporated by reference into Parts II and III of this report.

Telephone and Data Systems, Inc.

Annual Report on Form 10-K

For the Period Ended December 31, 2014

TABLE OF CONTENTS

		Page Number
Part I
	Item 1.  Business	1
	Item 1A.  Risk Factors	17
	Item 1B.  Unresolved Staff Comments	31
	Item 2.  Properties	31
	Item 3.  Legal Proceedings	31
	Item 4.  Mine Safety Disclosures	31
Part II
	Item 5.  Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	32
	Item 6.  Selected Financial Data	32
	Item 7.  Management’s Discussion and Analysis of Financial Condition and Results of Operations	32
	Item 7A.  Quantitative and Qualitative Disclosures About Market Risk	32
	Item 8.  Financial Statements and Supplementary Data	33
	Item 9.  Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	33
	Item 9A.  Controls and Procedures	33
	Item 9B.  Other Information	34
Part III
	Item 10.  Directors, Executive Officers and Corporate Governance	35
	Item 11.  Executive Compensation	35
	Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	35
	Item 13.  Certain Relationships and Related Transactions, and Director Independence	35
	Item 14.  Principal Accountant Fees and Services	35
Part IV
	Item 15.  Exhibits and Financial Statement Schedules	36

Telephone and Data Systems, Inc. 30 NORTH LASALLE STREET, SUITE 4000, CHICAGO, ILLINOIS 60602 TELEPHONE (312) 630-1900  

PART I

Item 1.  Business

Telephone and Data Systems, Inc.(“TDS”) is a diversified telecommunications company providing high-quality telecommunications services to approximately 4.8 million wireless customers and 1.2 million wireline and cable connections at December 31, 2014. TDS conducts its wireless operations through its majority-owned subsidiary, United States Cellular Corporation  (“U.S. Cellular”).  As of December 31, 2014, TDS owned 84% of the combined total of the outstanding Common Shares and Series A Common Shares of U.S. Cellular and controlled 96% of the combined voting power of both classes of common stock.  TDS provides wireline services, cable services and hosted and managed services, through its wholly-owned subsidiary, TDS Telecommunications Corporation (“TDS Telecom”).

TDS’ business segments reflected in this Annual Report on Form 10-K for the year ended December 31, 2014 are U.S. Cellular and TDS Telecom’s Wireline, Cable and Hosted and Managed Services (“HMS”) operations. TDS operations also include the majority-owned printing and distribution company, Suttle-Straus, Inc. (“Suttle-Straus”) and TDS’ wholly-owned subsidiary, Airadigm Communications, Inc. (“Airadigm”).  Suttle-Straus and Airadigm’s financial results were not significant to TDS’ operations.  All of TDS’ segments operate only in the United States, except for HMS, which includes an insignificant foreign operation.  Additional information about TDS’ segments is incorporated herein by reference from Note 18 — Business Segment Information, in TDS’ Annual Report to Shareholders, filed as Exhibit 13 hereto.

TDS was incorporated in 1968 and changed its state of incorporation from Iowa to Delaware in 1998.  TDS executive offices are located at 30 North LaSalle Street, Suite 4000, Chicago, Illinois 60602.  TDS’ telephone number is 312-630-1900. 

TDS Common Shares trade under the ticker symbol “TDS” on the New York Stock Exchange (“NYSE”).  U.S. Cellular Common Shares trade on the NYSE under the ticker symbol “USM.”

Under listing standards of the NYSE, TDS is a “controlled company” as such term is defined by the NYSE.  TDS is a controlled company because over 50% of the voting power for the election of directors of TDS is held by the trustees of the TDS Voting Trust.

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The following map represents TDS’ consolidated areas of operations:

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U.S. Cellular Operations

Customers, Services and Products

Customers.  U.S. Cellular provides service to postpaid and prepaid customers from a variety of demographic segments.  U.S. Cellular uses a segmentation model to classify businesses and consumers into logical groupings for developing new products and services, direct marketing campaigns, and retention efforts.  U.S. Cellular focuses on retail consumers, government, and small-to-mid-size business customers in vertical industries such as construction, retail, professional services and real estate.  These customers are served primarily through U.S. Cellular’s retail and direct sales channels.

Services.  U.S. Cellular’s postpaid customers are able to choose from a variety of national plans with voice, messaging and data usage options and pricing that are designed to fit different customer needs, usage patterns and budgets.  Helping a customer find the right pricing plan is an important element of U.S. Cellular’s brand positioning.  U.S. Cellular offers Shared Data plans that include unlimited voice minutes and text messaging combined with a variety of data usage options.  Under these plans, customers can share data usage among all users and devices connected to the plan.  Business rate plans are designed to meet the unique needs of the business customer.  U.S. Cellular’s national plans price all domestic calls as local calls, regardless of where they are made or received in the United States, with no long distance or roaming charges.  U.S. Cellular also offers prepaid service plans, which include voice, messaging and data options in a variety of ways, for a monthly fee.  In 2014, unlimited prepaid plans were launched which provide customers unlimited voice, messaging and data, including specified amounts of high speed fourth generation Long Term Evolution (“4G LTE”) data; data usage over the specified limit is provided at lower speeds to ensure customers are never without data access.   U.S. Cellular also expanded its device installment contract offerings in 2014 as discussed in “Devices and Products” below.

U.S. Cellular builds customer loyalty by offering high-quality network services, customer focused support services, effective pricing and other benefits including rewards points, which can be used to obtain a free wireless device or to accelerate the timing of a wireless device upgrade, as well as for other rewards such as additional lines and accessories. Certain available postpaid plans include Overage Cap, a free service that prevents voice overage charges from exceeding $50 for a National Single Line Plan or $150 for a Family Plan.

U.S. Cellular’s portfolio of smartphones, tablets and other connected devices (see “Devices and Products” below) is a key part of its strategy to deliver wireless devices which allow customers to stay productive, entertained and connected on the go, and are backed by U.S. Cellular’s high-speed networks, including a 4G LTE network, which, as of December 31, 2014, covered 94% of its postpaid customers.  U.S. Cellular’s 4G LTE network supports smartphone messaging, data and internet services that allow customers to access the web and social network sites, e-mail, text, picture and video message, utilize turn-by-turn GPS navigation, and browse and download thousands of applications to customize their wireless devices to fit their lifestyles.  U.S. Cellular also operates a third generation (“3G”) network, which supports nationwide roaming.

In 2014, U.S. Cellular launched several new services such as connected home and new international dialing.  Connected home is a professionally configured, self-installed home security and automation system whereby customers receive professional home monitoring services.  Additional services such as protection against fire and other emergencies, as well as energy and video monitoring, are also available to customers with the connected home solution.

In 2014, U.S. Cellular greatly expanded its solutions to business and government customers, specifically in the areas of asset/fleet management, monitor and control, mobile automation and business communication, through offerings in machine to machine, wireless priority services, and mobile device management.  U.S. Cellular will continue to further enhance its advanced wireless services and connected solutions for consumer and business customers in 2015 and beyond.

Devices and Products.  U.S. Cellular offers a comprehensive range of wireless devices such as handsets, modems, mobile hotspots, home phone and tablets for use by its customers.  U.S. Cellular offers wireless devices that are compatible with some or all of its 4G LTE and 3G networks and all are compliant with the Federal Communications Commission’s (“FCC”) enhanced wireless 911 (“E-911”) requirements.  In addition, U.S. Cellular offers a wide range of accessories, significantly expanding the breadth of products offered, from wireless basics such as carrying cases, hands-free devices, batteries, battery chargers, and memory cards to related consumer electronics such as headphones, speakers, and Bluetooth keyboards to customers. U.S. Cellular also sells wireless devices to agents and other third-party distributors for resale. U.S. Cellular frequently discounts wireless devices sold to new and current customers and provides discounts on upgraded wireless devices to current customers, in order to attract new customers or to retain existing customers by reducing the cost of becoming or remaining a wireless customer.  In 2013, U.S. Cellular began offering customers the option to purchase certain devices under installment contracts over a period of up to 24 months and, in 2014, began offering financing under installment contracts for all wireless devices.  For certain installment plans, after a specified period of time, the customer may have the right to upgrade to a new device, thus enabling customers to more easily access the latest smartphones and provide a better overall customer experience. 

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U.S. Cellular continues to offer several programs which allow the customer to receive a replacement device through a retail store or through direct mail.  U.S. Cellular also has enhanced its Device Protection+ program in 2014 to include overnight delivery while continuing to provide customers peace of mind by covering lost and stolen devices.

During 2014, U.S. Cellular continued to bolster its expanding smartphone and tablet portfolio with Android wireless devices and tablets such as the Samsung Galaxy S5, Samsung Galaxy Note 4, LG G3, Motorola Moto X (2^nd Generation), Motorola G, Samsung Galaxy Tab 4, and LG Gpad, and Apple products such as the iPhone 6, iPhone 6Plus, iPad Air 2, and iPad Mini.  U.S. Cellular’s smartphone offerings play a significant role in driving data service usage and revenues.  The devices offered include a full array of smartphones and feature phones. In 2014, U.S. Cellular also offered additional products and services including phone in a box and connected home. 

U.S. Cellular purchases wireless devices and accessory products from a number of manufacturers, including Samsung, Apple, Motorola, LG, Superior Communications, Kyocera, ZTE, Tessco, and Sierra Wireless. U.S. Cellular negotiates volume discounts with its suppliers and works with them in promoting specific equipment in its local advertising.  U.S. Cellular does not own significant product warehousing and distribution infrastructure.  Instead, it contracts with third party providers for substantially all of its product warehousing, distribution and direct customer fulfillment activities. U.S. Cellular also contracts with third party providers for services related to its device replacement programs.

U.S. Cellular continuously monitors the financial condition of its wireless device and accessory suppliers.  Because U.S. Cellular purchases wireless devices and accessories from numerous suppliers, U.S. Cellular does not expect the financial condition of any single supplier to affect its ability to offer a competitive variety of wireless devices and accessories for sale to customers.

Marketing, Customer Service, and Sales and Distribution Channels

Marketing and Advertising.  U.S. Cellular’s marketing plan is focused on acquiring, retaining and growing customer relationships by maintaining an exceptional wireless network, providing outstanding customer service, and offering high-quality products and services built around customer needs at fair prices.

U.S. Cellular believes that creating positive relationships with its customers enhances their wireless experience and builds customer loyalty.  U.S. Cellular currently offers several innovative, customer-centric programs and services to customers.  The Overage Protection service provides customers peace-of-mind by sending them text message alerts when they come close to reaching their allowable monthly plan minutes, text messages or data usage in order to avoid overage charges.  With the launch of Shared Data plans in late 2013, whereby a customer selects the size of the data bucket to share among all of their lines/devices, U.S. Cellular followed up in 2014 with a service to allow customers to limit data usage on specific lines – or for the entire account – thereby providing controls to manage account overages.  This service, Data Usage Controls, allows customers an easy way to split up their data bucket by line.

U.S. Cellular increases consumer awareness using media such as television, radio, newspaper, direct mail advertising, the Internet, social media and sponsorships.  U.S. Cellular has achieved its current level of penetration of its markets through a combination of a strong brand position, promotional advertising, broad distribution, maintaining a high-quality wireless network and providing outstanding customer service.  U.S. Cellular’s advertising is directed at increasing the public awareness and understanding of the wireless services it offers, improving potential customers’ awareness of the U.S. Cellular brand, attracting and retaining customers, and increasing existing customers’ usage of U.S. Cellular’s services. U.S. Cellular attempts to select the advertising and promotional media that are most appealing to the targeted groups of potential customers in each local market.  U.S. Cellular supplements its advertising with a focused public relations program that drives store traffic, supports sales of products and services, and builds brand awareness and preference.  The approach combines national and local media relations in mainstream and social media channels with market-wide activities, events, and sponsorships. U.S. Cellular focuses its charitable giving strategy on supporting initiatives relevant to consumers in its service areas.  These initiatives include support of programs that focus on education, such as Calling All Teachers, which supports schools and teachers in the communities U.S. Cellular serves.

Customer Service.  U.S. Cellular manages customer retention by focusing on outstanding customer service through the development of processes that are customer-friendly, extensive training of frontline sales and support associates and the implementation of retention programs.

U.S. Cellular currently operates four regional customer care centers with personnel who are responsible for customer service activities, and a national financial services center with personnel who perform credit and other customer payment activities.  U.S. Cellular also contracts with third parties that provide additional customer care and financial services support.

Sales and Distribution Channels.  U.S. Cellular supports a multi-faceted distribution program, including retail sales, direct sales, third-party national retailers, and independent agents, plus a website and telesales.

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Company retail store locations are designed to market wireless products and services to the consumer and small business segments in a setting familiar to these types of customers.  As of December 31, 2014, retail sales associates work in approximately 275 U.S. Cellular-operated retail stores and kiosks. Direct sales consultants market wireless services to mid-size business customers. Additionally, the U.S. Cellular website enables customers to activate service and purchase wireless devices online.

U.S. Cellular maintains an ongoing training program to improve the effectiveness of retail sales associates and direct sales consultants by focusing their efforts on obtaining customers by facilitating the sale of appropriate packages for the customer’s expected usage and value-added services that meet the individual needs of the customer.

U.S. Cellular has relationships with exclusive and non-exclusive agents, which are independent businesses that obtain customers for U.S. Cellular on a commission basis.  At December 31, 2014, U.S. Cellular had contracts with these businesses aggregating over 650 locations.  U.S. Cellular provides additional support and training to its exclusive agents to increase customer satisfaction and to ensure a consistent customer experience.  U.S. Cellular’s agents are generally in the business of selling wireless devices, wireless service packages and other related products.  No single agent accounted for 10% or more of U.S. Cellular’s operating revenues during the past three years.

In 2013 and 2014, U.S. Cellular expanded its distribution through third-party national and on-line retailers. As of December 2014, Wal-Mart, Sam’s Club, RadioShack and Dollar General now offer U.S. Cellular products and services at select retail locations in U.S. Cellular’s service areas. Further, Amazon offers U.S. Cellular’s postpaid and prepaid services on-line.  U.S. Cellular continues to explore new relationships with additional third-party retailers as part of its strategy to expand distribution.

U.S. Cellular also markets wireless service through resellers.  The resale business involves the sale of wholesale access and minutes to independent companies that package and resell wireless services to end-users.  These resellers generally provide prepaid and postpaid services to subscribers under their own brand names and also provide their own billing and customer service.  U.S. Cellular incurs no direct subscriber acquisition costs related to reseller customers.  At December 31, 2014, U.S. Cellular had approximately 114,000 customers of resellers.  For the year ended December 31, 2014, revenues from resale business were less than 1% of total service revenues.

Seasonality.  There is seasonality in operating expenses, which tend to be higher in the fourth quarter than in the other quarters due to increased marketing and promotional activities during the holiday season, which may cause operating income to vary from quarter to quarter.

Competition

The wireless telecommunication industry is highly competitive.  U.S. Cellular competes directly with several wireless service providers in each of its markets. In general, there are between two and four competitors in each wireless market in which U.S. Cellular provides service, excluding resellers and mobile virtual network operators. In its footprint, U.S. Cellular competes to varying degrees against each of the national wireless companies: Verizon Wireless, AT&T Mobility, Sprint, and to a much lesser extent, T-Mobile USA, in addition to a few smaller regional carriers in specific pockets of its footprint.  Verizon is U.S. Cellular’s largest competitor, in terms of both customer acquisition opportunities and customer defection risk in the majority of its markets. However, all of the national competitors have substantially greater financial, technical, marketing, sales, purchasing and distribution resources than U.S. Cellular. Additionally, U.S. Cellular competes with other companies that use alternative communication technology and services to provide similar products and services.   

Since each of these wireless competitors operates on systems using spectrum licensed by the FCC and has comparable technology and facilities, competition among wireless service providers for customers is principally on the basis of types of products and services, price, size of area covered, call quality, network speed and responsiveness of customer service.  U.S. Cellular employs a customer satisfaction strategy that includes maintaining an outstanding wireless network throughout its markets.  U.S. Cellular owns and operates low-band spectrum (less than 1 GHz) that covers the majority of its footprint and enables more efficient, superior coverage in rural areas (compared to spectrum above 1 GHz), which strengthens its network quality positioning.

The use of national advertising and promotional programs by the top four wireless service providers may be a source of additional competitive and pricing pressures in all U.S. Cellular markets, even if those operators do not provide direct service in a particular market.  Over the past year in particular, competition among top carriers has become even more aggressive, with the top four carriers engaging in rich promotional initiatives including contract buyouts and limited-time and permanent price reductions fueled by the rise of equipment installment plans.  In addition, in the current wireless environment, U.S. Cellular’s ability to compete depends on its ability to continue to offer national voice and data plans. U.S. Cellular provides wireless services comparable to the national competitors, but the national wireless companies operate in a wider geographic area and are able to offer no- or low-cost roaming over a wider area on their own networks than U.S. Cellular can offer on its network.  Although U.S. Cellular offers the same coverage area as these competitors, U.S. Cellular incurs roaming charges for data sessions and calls made in portions of the coverage area which are not part of its network, thereby increasing its cost of operations. U.S. Cellular depends on roaming agreements with other wireless

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carriers to provide voice and data roaming capabilities in areas not covered by U.S. Cellular’s network. Similarly, U.S. Cellular provides roaming services on its network to other wireless carriers’ customers who travel within U.S. Cellular’s coverage areas.

Convergence of connectivity is taking place on many levels, including dual-mode wireless devices that act as wireline or wireless devices depending on location and the incorporation of wireless “hot spot” technology in wireless devices making internet access seamless regardless of location.  Although less directly a substitute for other wireless services, wireless data services such as Wi-Fi may be adequate for those who do not need mobile wide-area roaming or full two-way voice services.  Technological advances or regulatory changes in the future, such as the rollout and consumer adoption of Wi-Fi calling and Voice over Long Term Evolution (“VoLTE”) capabilities, may make available other alternatives to wireless service, thereby creating additional sources of competition that shift consumers’ perceptions and preferences of network strength, speed and reliability.

U.S. Cellular’s approach in 2015 and in future years will be to focus on the unique needs and attitudes towards wireless service of its selected target segments.  U.S. Cellular will deliver selected, targeted high quality products and services at competitive prices and will continue to differentiate itself by seeking to provide an overall outstanding customer experience, including a high quality network. U.S. Cellular’s customer-centric approach, highly reliable network and outstanding customer service, as evidenced by numerous consumer satisfaction awards based on survey results, illustrate how U.S. Cellular seeks to differentiate itself from competitors. U.S. Cellular’s ability to compete successfully in the future, and to meet growth and return on capital objectives, will depend upon its ability to anticipate and respond to changes related to new service offerings, consumer preferences, competitors’ pricing strategies, technology, demographic trends, economic conditions and its access to adequate spectrum resources.

System Usage

U.S. Cellular’s main sources of revenues are from its own customers and from customers of competitors who roam on its network. The interoperability of wireless service enables a customer who is in a wireless service area other than the customer’s home service area to place or receive a call or use data in that service area.  U.S. Cellular has entered into reciprocal roaming agreements with operators of other wireless systems covering virtually all systems with Code Division Multiple Access (“CDMA”) technology in the United States, Canada and Mexico.  Roaming agreements offer customers the opportunity to roam on these systems.  These reciprocal agreements automatically pre-register the customers of U.S. Cellular’s systems in the other carriers’ systems.  In addition, a customer of a participating system roaming in a U.S. Cellular market where this arrangement is in effect is able to make and receive calls or data on U.S. Cellular’s system.  The charge for this service is negotiated as part of the roaming agreement between U.S. Cellular and the roaming customer’s carrier. U.S. Cellular bills this charge to the customer’s home carrier, which then may bill the customer.  In many instances, based on competitive factors, carriers, including U.S. Cellular, may not charge their customers, or charge lower amounts to their customers than the amounts actually charged by other wireless carriers for roaming. Since 2010, U.S. Cellular has offered nationwide 3G data roaming services, allowing its customers to access high-speed data across the country.

U.S. Cellular currently is exploring 4G LTE roaming agreements with operators of other wireless systems. The FCC’s adoption of mandatory 4G LTE roaming rules, which were upheld by the United States Court of Appeals for the District of Columbia, may be of assistance in the negotiation of 4G LTE roaming agreements with other wireless operators in the future. However, technological challenges currently exist which can limit the interoperability of 4G LTE wireless devices on other carriers’ networks. Specifically, wireless devices support certain configurations of spectrum frequencies and as a result 4G LTE wireless devices offered by carriers are not necessarily compatible with the networks of other carriers. U.S. Cellular is working with other carriers, original equipment manufacturers and potential LTE roaming vendors to mitigate interoperability issues.  U.S. Cellular has been ready to support inbound and outbound LTE roaming with certain carriers who have compatible networks and devices since the second half of 2014. 

In 2015, U.S. Cellular expects to begin user trials of its Voice over LTE (“VoLTE”) service in selected operating markets.  VoLTE will allow customers to utilize U.S. Cellular’s LTE network for voice and data services.  See also Exhibit 13 to this Form 10-K, Annual Report section “Regulatory Matters”.

Technology and System Design and Construction

Technology.  Wireless telecommunication systems transmit voice, data, graphics and video through the transmission of signals over networks of radio towers using radio spectrum licensed by the FCC.  Access to local, regional, national and worldwide telecommunications networks is provided through system interconnections.  A high-quality network, supported by continued investments in that network, will remain an important factor for wireless companies to remain competitive.

U.S. Cellular has deployed 4G LTE technology in conjunction with King Street Wireless L.P. that covered approximately 94% of its postpaid customers as of December 31, 2014, and anticipates further expansion of 4G LTE coverage, as well as VoLTE user trials, in 2015.  U.S. Cellular continues to offer services based on 3G technology and CDMA digital technology across its networks.

Through roaming agreements with other CDMA-based wireless carriers, U.S. Cellular’s customers may access CDMA service in virtually all areas of the United States, as well as parts of Canada and Mexico.  Another digital technology, Global System for Mobile

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Communication (“GSM”), has a larger installed base of customers worldwide. Since CDMA technology currently is not compatible with GSM technology, U.S. Cellular customers with CDMA-only based wireless devices currently are not able to use their wireless devices when traveling through areas serviced only by GSM-based networks. However, both CDMA and GSM technologies are being succeeded by 4G LTE technology.

System Design and Construction.  U.S. Cellular designs and constructs its systems in a manner it believes will permit it to provide high-quality service to substantially all types of compatible wireless devices.  Designs are based on engineering studies which relate to specific markets, in support of the larger network.  Such engineering studies are performed by U.S. Cellular personnel or third-party engineering firms.  Network reliability is given careful consideration and extensive backup redundancy is employed in many aspects of U.S. Cellular’s network design.  Route diversity, redundant equipment, ring topology and extensive use of emergency standby power also are used to enhance network reliability and minimize service disruption from any particular network element failure.

In accordance with its strategy of building and strengthening its operating market areas, U.S. Cellular has selected high-capacity, carrier-class digital wireless switching systems that are capable of serving multiple markets through a single mobile telephone switching office.  Centralized equipment, used for network and data management, is located in high-availability facilities supported by multiple levels of power and network redundancy. U.S. Cellular’s systems are designed to incorporate Internet Protocol (“IP”) packet-based Ethernet technology, which allows for increased data capacity and a more efficient network. Interconnection between the mobile telephone switching office and the cell sites utilizes Ethernet technology for nearly all 4G LTE sites, over fiber or microwave links.

U.S. Cellular believes that currently available technologies and appropriate capital additions will allow sufficient capacity on its networks to meet anticipated demand for voice and data services over the next few years. U.S. Cellular’s continued investment in new licenses will support future demand for fourth generation broadband services using 4G LTE. Increasing demand for high-speed data and video services may require the acquisition of additional spectrum licenses to provide sufficient capacity and throughput.

Construction of wireless systems is capital-intensive, requiring substantial investment for land and improvements, buildings, towers, mobile telephone switching offices, cell site equipment, transport equipment, engineering and installation.  U.S. Cellular primarily uses its own personnel to engineer each wireless system it owns and operates, and engages contractors to construct the facilities.

The costs (inclusive of the costs to acquire licenses) to develop the systems which U.S. Cellular operates have historically been financed primarily through proceeds from debt and equity offerings, with cash generated by operations, and proceeds from the sales of wireless interests and other non-strategic assets.

Business Development Strategy

U.S. Cellular groups its individual markets (geographic service areas as defined by the FCC in which wireless carriers are licensed, for fixed terms, to provide service) into broader geographic market areas to offer customers large service areas that primarily utilize U.S. Cellular’s network.  U.S. Cellular’s ownership interests in wireless licenses include both consolidated and investment interests in licenses covering portions of 30 states and a total population of 50.9 million at December 31, 2014.

U.S. Cellular’s business development strategy is to obtain interests in and access to wireless licenses in its current operating markets and in areas that are adjacent to or in close proximity to its other wireless licenses, thereby building contiguous operating market areas with strong spectrum positions.  U.S. Cellular believes that the acquisition of additional licenses within its current operating markets will enhance its network capacity to meet its customers’ increased demand for data services.  U.S. Cellular anticipates that grouping its operations into market areas will continue to provide it with certain economies in its capital and operating costs.  U.S. Cellular may continue to make opportunistic acquisitions or exchanges that further strengthen its current operating markets or in other attractive markets.  U.S. Cellular seeks to acquire noncontrolling interests in licenses in which it already owns the majority interest and/or operates the license.  From time to time, U.S. Cellular has divested outright or included in exchanges for other wireless interests certain consolidated and investment interests that were considered less essential to its current and expected future operations.  As part of its business development strategy, U.S. Cellular from time to time may be engaged in negotiations relating to the acquisition, exchange or disposition of companies, strategic properties or wireless spectrum.  See Note 6 — Acquisitions, Divestitures and Exchanges and Note 8 — Investments in Unconsolidated Entities in the Notes to Consolidated Financial Statements for a description of significant acquisitions, divestitures and exchanges in the years 2012 through 2014. 

From time to time, the FCC conducts auctions through which additional spectrum is made available for the provision of wireless services.  U.S. Cellular may participate as a bidder, or member of a bidding group, in future auctions, such as the FCC’s upcoming auction of 600MHz broadcast television spectrum expected to occur in 2016. In general, U.S. Cellular may not disclose any such participation unless it or such bidding group is announced as a winning bidder by the FCC. 

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U.S. Cellular has participated in certain prior FCC auctions indirectly through its limited partnership interests.  Each entity qualified as a “designated entity” and thereby was eligible for bidding credits with respect to most licenses purchased in accordance with the rules defined by the FCC for each auction.  In most cases, the bidding credits resulted in a 25% discount from the gross winning bid.

In January 2015, the FCC released the results of Auction 97.  U.S. Cellular participated in Auction 97 indirectly through its limited partnership interest in Advantage Spectrum L.P. (“Advantage Spectrum”).  See Note 14 — Variable Interest Entities in the Notes to Consolidated Financial Statements for additional information.

In 2012, the FCC conducted a single round, sealed bid, reverse auction to award Mobility Fund Phase I support to bidders that commit to provide wireless service in areas designated as unserved by the FCC.  U.S. Cellular and several of its subsidiaries were winning bidders in eligible areas within 10 states. See Note 19 —  Supplemental Cash Flow Disclosures in the Notes to Consolidated Financial Statements for additional information.

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TDS Telecom Operations

General

TDS Telecom provides wireline and cable broadband, video and voice services to approximately 1.2 million connections in 36 states. The overall strategy for the wireline and cable businesses is to own the best pipe in the market in order to capitalize on data growth and the need for higher broadband speeds.  In addition, TDS Telecom provides a wide range of Information Technology (“IT”) services including colocation, dedicated hosting, hosted application management, cloud computing services and planning, engineering, procurement, installation, sales and management of  IT infrastructure hardware solutions.  TDS Telecom operates in three reportable segments: Wireline, Cable and Hosted and Managed Services. 

·TDS Telecom’s wireline strategy is to focus on broadband offerings and be the preferred communications solutions provider in its markets for both residential and commercial customers by developing and delivering high-quality broadband, video and voice products and services that meet or exceed customers’ needs, and to outperform the competition by delivering superior customer service.

·TDS Telecom’s cable strategy is to expand broadband offerings while leveraging the company’s existing processes, procedures, shared support teams, commercial expertise, and customer service focus.

·Through its hosted and managed services business, OneNeck IT Solutions, TDS Telecom aims to grow recurring revenues from mid-market businesses by leveraging core competencies in network management, IT, customer service and reliability to take advantage of the growing IT outsourcing marketplace.

Business Development Strategy

TDS Telecom seeks to grow its operations through the acquisition of businesses that support and complement its product and services growth strategy. As part of this strategy, TDS Telecom may also seek to divest or exchange interests that are not strategic to its long-term success.  See Note 6 — Acquisitions, Divestitures and Exchanges in the Notes to Consolidated Financial Statements for a description of significant acquisitions, divestitures and exchanges in the years 2012 through 2014.

While management believes that it will be successful in making additional acquisitions, there can be no assurance that TDS or TDS Telecom will be able to negotiate additional acquisitions on terms acceptable to them or that regulatory approvals, where required, will be received.

WIRELINE

Wireline Operations

Wireline operations are located in a mix of rural, small town and suburban markets, with the largest concentrations of its customers in the Upper Midwest and the Southeast. As of December 31, 2014, TDS Telecom operates 111 incumbent local exchange carriers (“ILEC”) in 27 states and provides telecommunications services as a competitive local exchange carrier (“CLEC”) in Illinois, Michigan, Minnesota, and Wisconsin. Wireline operations provide retail telecommunications services to both residential and commercial customers that reside within its respective service territories.  Wireline also provides services to wholesale customers, who are primarily interexchange carriers (companies that provide long-distance telephone and data services between local exchange areas) that compensate TDS Telecom for the use of its facilities to originate and terminate their voice and data transmissions.

Wireline Strategy

The Wireline residential customer strategy is to provide broadband, video and voice services through value-added bundling of these services.  The commercial focus is to provide advanced IP-based voice and data services.  Wireline is selectively investing in the continuing transformation of its legacy circuit-switched network to a highly reliable IP-based broadband network to economically deploy advanced technologies and new services. Wireline continues to actively advocate for state and federal regulatory frameworks that enable its operations to grow and invest profitably and continue to meet customer expectations for new and improved services.

Wireline believes that its residential and business customers have a strong preference to purchase complementary telecommunications services from a single provider.  Wireline has found that by offering and bundling services in customer-friendly packages, it can build customer loyalty and reduce customer churn.  Wireline offers bundles which include a full array of high-speed data, video and voice services.

Wireline’s objective is to be the preferred broadband provider in its ILEC residential markets.  It continues to invest in high-speed data service and as of December 31, 2014, was able to provide this service to 94% of its ILEC physical access lines.  At that date, 63% of the service addresses in its ILEC markets had 10 megabits per second (“Mbps”) or faster service available and 29% of the service addresses in its ILEC markets had 25 Mbps or faster service available.  Where economically feasible, fiber technology is being

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deployed to provide internet speeds of up to 1 gigabit per second.  In selected residential markets, Wireline leads its marketing and promotional strategies with its Internet Protocol Television Service (“IPTV”) under the brand TDSTV.  This interactive video offering is intended to counter intensifying competition for video and broadband services and retain the triple play customer bundles.  In markets where IPTV is not offered, TDS Telecom has partnered with a satellite TV provider to allow for double and triple play bundling.

Wireline’s residential customer strategy within its CLEC markets is to provide continuing service to its current residential customer base with high quality customer service and competitive pricing, but not to seek any new residential customers due to their high acquisition costs and due to regulatory changes which have increased network cost and limited network availability.  Therefore, it is expected that the number of residential customers within the CLEC markets will continue to decline.  There are 15,200 CLEC residential connections remaining at December 31, 2014.

Wireline has continued to expand its presence in the business broadband market with hosted-managedIP telephony, high-speed symmetrical dedicated broadband and point-to-point Ethernet services.  ManagedIP delivers business customers a converged voice and data communications solution to the desktop.  Point-to-point Ethernet provides customers secure and reliable high-speed data links for two or more locations over TDS Telecom’s internal network, not the public Internet.  The strategy includes leveraging products such as managedIP and hosted and managed services to all of Wireline’s commercial customers, differentiating both on service excellence and a superior product portfolio.

Wireline focuses its commercial marketing on information-intensive industries such as financial services, health services, real estate, hotels and motels, retail, education and government.  Wireline uses its direct sales force, agents, digital marketing, targeted mailings, and telemarketing to sell products and services to commercial markets, which are segmented into tiers based on size (in terms of connections and revenues) and strategic importance.  Different sales and distribution channels are used to target each segment.

Wireline Products, Services and Revenue Sources

Wireline operations generate revenues by providing the following products and services to commercial and residential customers and carriers:

·Broadband services, including fiber-based and digital and other premium and enhanced data services;

·IPTV and satellite video;

·Voice services, including local and long-distance telephone service, Voice over Internet Protocol (“VoIP”) and enhanced local services like voice mail, caller ID and call forwarding; and

·Network access services to interexchange carriers for the origination and termination of interstate and intrastate long distance phone calls on TDS Telecom’s network and special access services to carriers and others.

Additional operating data for Wireline operations is incorporated by reference from Results of Operations — TDS Telecom, in TDS’ Annual Report to Shareholders, filed as Exhibit 13 hereto.

Residential.  Wireline residential customer operations provide high-speed data products and video services and local and long-distance telephone service.  Video services are offered through either its own IPTV offering or through a resale agreement with a satellite provider.   TDS Telecom extends the range of its services to customers through bundling of broadband, video and voice.

Commercial.  Wireline commercial customer operations provide  local and long-distance telephone service, broadband, IP based services, and other services to businesses within its markets that are typically small to medium sized businesses, but may include large corporations.  Wireline operations provide these commercial customers with secure and reliable internet access, data connections and advanced voice service with innovative VoIP features.  Wireline operations address customer needs for increased communications capabilities at reduced costs by matching these needs to new and existing technologies to create greater efficiencies and by providing support for these technologies after the sale.  The Wireline flagship product is managedIP, a fully-hosted software and hardware solution that provides customers with a secure internet connection and the latest VoIP features and capabilities.  ManagedIP is available in markets covering 87% of all commercial customers at December 31, 2014.

Wholesale.  Wireline operations continue to provide a high level of service to traditional interexchange carriers.  Wireline’s wholesale market focus is on access revenues, which is the compensation received from the interexchange carriers for carrying long distance and data traffic on TDS Telecom’s networks.  Universal Service Fund (“USF”) revenues, which support the cost of providing telecommunication services in high cost areas, are also included in wholesale service revenues.  In 2014, TDS Telecom received $192 million in wholesale revenues which included approximately $82 million received under all the USF programs.  Recent and proposed regulatory changes may affect the amounts of Wireline future wholesale revenues.  See additional information incorporated by

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reference from Exhibit 13 to this Form 10-K, Annual Report section “Regulatory Matters” and in Risk Factors.

Wireline Technology and System Design

Wireline operates an integrated, highly-reliable network that consists of central office host and remote sites, primarily equipped with digital and IP switches.  Fiber optic and copper cable connect the host central offices with remote switches and ultimately with end customers.  Wireline continues to upgrade and expand its telecommunications network to respond to the needs of its customers for greater bandwidth and advanced technologies. The network is transitioning from its legacy circuit-switched network to a highly reliable IP-based broadband network to facilitate the integration of broadband, video and voice services.  Wireline has pursued a plan to deploy fiber technology, which enables significantly greater broadband speeds to selected residential subdivisions and to commercial customers, when the investment is economically justified. 

Wireline has developed and deployed an inter-regional data routing infrastructure using leased fiber capacity which allows it to reach over 85% of its physical access lines with its multi-gigabyte core network.  This configuration along with the continued development of an IP network that interconnects substantially all the existing service territories allows for next generation IP service offerings; namely, IPTV, managedIP, residential VoIP and least-cost routing as well as comprehensive IP policy management.

Wireline is also standardizing equipment and processes to increase efficiency in maintaining its network.  Wireline utilizes centralized monitoring and management of its network to reduce costs and improve service reliability.  Network standardization has supported TDS Telecom in operating its 24-hours-a-day / 7-days-per-week Network Management Center, which continuously monitors the network in an effort to proactively identify and correct network faults prior to any customer impact.  In addition, TDS Telecom anticipates reducing costs through the sharing of best practices across operations, centralization or standardization of functions and processes, and deployment of technologies and systems that provide for greater efficiencies and profitability.

Wireline Competition

The competitive environment in the telecommunications industry has changed significantly as a result of technological advances, customer expectations and changes to regulation.  Wireline continues to seek to develop and maintain an efficient cost structure to ensure that it can compete with price-based initiatives from competitors.  Wireline is faced with significant challenges, including competition from cable, VoIP, wireless and other wireline providers as well as decreases in intercarrier compensation received for the use of TDS Telecom’s networks.  These challenges could have a material adverse effect on the financial condition, results of operations and cash flows of TDS Telecom.

Wireline has experienced physical access line losses and access minute declines due to competition from wireless carriers offering local and nationwide voice and data plans, from cable providers offering voice and data services via cable modems, and from other VoIP providers.

Cable companies have developed technological improvements that have allowed them to extend their competitive operations beyond major markets and have enabled them to provide a broader range of voice and data services over their cable networks.  Cable companies have aggressively pursued the bundling of voice communications, data and video at discounted prices to attract customers from traditional telephone companies.  In addition, cable companies continue to add value to their internet offerings by increasing speeds at no cost to the customer.  Wireline estimates that 71% of its ILEC access lines face active competition from cable providers at December 31, 2014.   Cable companies are increasingly targeting both residential and commercial customers.

Wireless telephone service providers offering feature-rich wireless devices and improved network quality constitute a significant source of competition.  A growing segment of customers have chosen to completely forego the use of traditional wireline telephone service and instead rely solely on wireless service for voice communications services.  This trend is more pronounced among residential customers, which comprise approximately 62% of Wireline connections as of December 31, 2014. Some small businesses have followed the residential path by choosing wireless service and disconnecting wireline service. 

VoIP technology also has improved and has led cable, internet and other communications companies to substantially increase their offerings of VoIP service to commercial and residential customers.  VoIP providers route calls partially or wholly over the Internet, without the use of ILEC circuit switches and, in the case of cable operators and CLECs, without the use of ILEC networks to carry their communications traffic.  VoIP providers frequently use existing internet networks to deliver flat-rate, unlimited nationwide calling plans.  These plans are generally priced below the prices currently charged for traditional ILEC local and long-distance telephone services.

While TDS Telecom positions itself as a high-quality telecommunications provider, it is experiencing competition from Regional Bell Operating Companies (“RBOCs”) in areas where TDS Telecom competes as a CLEC, other CLECs, cable providers, wireless carriers, VoIP providers and fiber overbuilders as it seeks to gain and retain customers.  In addition, the RBOCs are continuing to implement technological changes that could impede TDS Telecom’s access to facilities used to provide CLEC telecommunications services.  To

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mitigate this risk TDS Telecom has implemented and is working on other forms of last mile access alternatives to deliver services.

CABLE

Cable Operations

TDS Telecom entered the cable business (“Cable”) with the acquisition of Baja Broadband (“Baja”) on August 1, 2013.  Baja operates cable systems in markets primarily in Colorado, New Mexico, Texas, and Utah.  Subsequently, on September 1, 2014, TDS acquired substantially all of the assets of a group of companies operating as BendBroadband, (“Bend”), headquartered in Bend, Oregon.  As part of the agreement, TDS also acquired a Tier III data center providing colocation and managed services and a cable advertising and broadcast business.  The operations of the data center are included in the HMS segment.  The operations of the cable and the advertising and broadcast businesses are included in the Cable segment.  At December 31, 2014, Cable provides service to 267,300 total broadband, video and voice connections.

Cable Strategy

Through its Cable operations, TDS Telecom is expanding broadband services while leveraging its core competencies in network management and customer focus. The Cable business operates high-quality hybrid fiber and coaxial cable networks capable of delivering advanced high-speed data, video, fiber connectivity and voice services to residential and business customers.  The Cable strategy is to operate in markets with the favorable demographics of a rapidly growing population and diverse business community.  Through investment in plant upgrades, and improvements in programing and customer service levels, the Company intends to grow its revenue base.

Cable Products and Services

Residential.  Cable offers advanced broadband, video and voice services.  These services are actively bundled at competitive prices to encourage cross-selling within our customer base and to attract new customers.  Approximately 56% of residential customers subscribe to a bundle of services.

·Broadband:  DOCSIS 3.0 technology is deployed to 95% of homes passed which allows Cable to offer up to 100Mbps connection speed.  Access to 24/7 technical support and security features are also provided to broadband customers.

·Video: Provided over a digital, fiber-optic platform customers have access to basic service, premium programming and high-definition television combined with DVR service.

·Voice:  Telephony service uses IP to transport digitized voice signals over the same private network that brings cable television and high-speed data services to customers.  All residential voice service customers have access to direct international calling and can subscribe to various long distance plans.

Commercial.  Business services are delivered over an advanced digital, fiber-optic platform providing high-speed broadband products, multi-line phone solutions and video.  Cable provides advanced business services, including data networking, Ethernet, hosting, high speed broadband access and VoIP services, to small and medium sized businesses.  Cable’s commercial service team works closely with its customers’ IT managers to develop customized telecommunications solutions and provides rapid implementation capabilities essential to the needs of the individual business.

Cable Technology and System Design

Cable’s telecommunication systems are designed to transmit data, video and voice services using a broadband hybrid fiber-coaxial network that consists of optical fiber transport from a headend facility to nodes where coaxial cable is then used to reach the customer.  These fiber rich networks offer substantial bandwidth capacity and, through the use of DOCSIS 3.0 technology, enable Cable to offer robust broadband and voice services as well as traditional and two-way video services.  Cable is continuing to connect its markets to the TDS Telecom network backbone to leverage existing internet connectivity, voice services, and support systems enhancing reliability and redundancy aimed at building greater dependability as a service provider.

Cable Competition

Cable seeks to be the leading provider of broadband and video services in its targeted markets.  From a broadband perspective, Cable will compete against the incumbent local telephone providers, which primarily offer DSL-based services. Cable offers a superior, higher bandwidth data product using its DOCSIS technology.  Video competition is primarily satellite providers, and telephone companies that offer video services and compete for broadband and voice customers.  Other telecommunications providers, including

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Internet-based VoIP providers and wireless providers may compete directly for both residential and commercial voice and data service customers.  Changes in consumer behavior and /or new technologies could cause consumers to reduce or cancel their cable video services and instead seek to obtain video on demand over the internet or through new technologies.  Since cable systems are operated under non-exclusive franchises, competing cable systems may be built in the same area.  Cable intends to avoid markets served by such over-builders or municipalities which have constructed their own cable systems or where other ILEC’s provide fiber to the premise broadband and video service offerings.

HOSTED AND MANAGED SERVICES

Hosted and Managed Services Operations

TDS Telecom’s hosted and managed services (“HMS”) business offers a full suite of IT solutions including cloud and hosting solutions, managed services, enterprise resource planning (“ERP”) application management, professional services, and IT hardware. HMS owns and operates two data centers in Iowa, one each in Minnesota, Wisconsin and Oregon, and operates two data centers in Arizona.  TDS Telecom’s HMS business was developed through multiple strategic acquisitions.  All of the HMS acquisitions and their operations are consolidated under a single, unified brand, OneNeck IT Solutions.  HMS has been organized to leverage the trusted advisor relationships of its solutions provider acquisitions to offer the entire HMS product portfolio to its customers.

HMS Strategy

The goal of TDS Telecom’s HMS operations is to create, deliver and support a platform of IT products and services tailored for mid-sized business customers.  These businesses typically have not outsourced their IT management and represent a relatively untapped market seeking a highly trusted provider relationship.  By combining a solutions provider’s status as trusted IT advisor with data center assets and an expansive product set, HMS intends to build a growing relationship between the provider and customer. Furthermore, cloud computing presents an opportunity for growth as it is a transformational tool that is changing the way businesses buy computing power and IT services. HMS is positioning itself to grow by building sophisticated sales teams, strong customer service delivery, extensive engineering talent, and deep ties to vendors to partner with customers to reduce their risk profiles and create cost savings.

A highly sophisticated sales force is critical to success in the hosted and managed services marketplace.  With the complexity of the sales process and the high level interactions necessary to win customer orders, highly experienced account executives, sales engineers and support staff are needed to gain the trust of customers looking to outsource IT functions. HMS continues to enhance its sales capabilities to be able to deliver products and services in all HMS product categories in all of its markets. 

HMS has established a support organization capable of meeting mid-market customer demands for enhanced product offerings.  HMS has put in place an integrated, scalable, service delivery platform intended to exceed the quality commitments made to customers.  HMS is continually improving the efficiency and cost effectiveness of its service delivery model through standardization and automation of functions in an effort to improve profitability while maintaining high customer satisfaction.

HMS Products and Services

HMS provides IT equipment and solutions to meet its business customers’ needs including cloud computing, colocation, hosted application management, hosted and managed services and planning, engineering, procurement, sales, installation, and management of IT infrastructure hardware solutions. HMS operates fault tolerant, continuously maintainable data center facilities.  Value is provided to its customers through experienced teams that manage mission critical data centers, cloud, and customer infrastructure 24 hours per day 365 days per year. Statement on Standards for Attestation Engagements 16 (“SSAE 16”) reports, which describe the controls in place at HMS’s facilities, provide assurances to customers that their data is secure, available, and meet processing integrity, confidentiality and privacy requirements. Data centers are the foundation for outsourced IT services, which include hosted and managed-services, application management and cloud services.

HMS’s portfolio of hosted and managed services covers servers, voice and data networks, Microsoft Exchange environments, storage, and service desk capabilities on equipment located both within HMS data centers and at customer locations.  HMS also has significant expertise in hosted application management, particularly ERP systems from vendors such as Oracle, Microsoft, Infor and SAP.  These systems can be hosted in HMS data centers, on customer premise or on the HMS cloud computing infrastructure.

HMS’s cloud offering, branded ReliaCloud, is an Infrastructure as a Service solution designed to run traditional business applications in a secure and compliant operational framework within a cloud environment.  ReliaCloud is a complete, enterprise-class cloud solution that handles scalability and high performance data management for use in public, private, and hybrid cloud configurations. The compliant-capable cloud solution is designed for resource intense applications and databases that require a secure operational framework.

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HMS’s solutions provider services include planning, engineering, procurement, sales, installation, and management of IT infrastructure solutions from world-class Original Equipment Manufacturers (“OEMs”). The breadth and depth of technical certifications held by team members have allowed HMS to achieve the highest levels of partner status with Cisco Systems, Hewlett-Packard Company, EMC, VMware and Microsoft.

HMS Customers

HMS’s customers span multiple industries including healthcare, financial, manufacturing, retail, and government and are located across the United States.  Regional presences encompass states in the Upper Midwest, Great Plains, Rocky Mountains, Northwest, and Southwest, and are key to establishing the locally-known trusted advisor relationships that middle market companies desire.  HMS primarily targets middle market companies that are between 200 and 2,000 employees in size, but also serves smaller customers with sophisticated IT needs as well as enterprise clients which value the trusted relationships they have built with HMS over time.

HMS Competition

The IT services market is large and complex, with a diverse array of segments in which performance and market dynamics vary considerably.  As a result of these dynamics, the IT services market is a highly competitive environment.   Market competitors include large diversified telecommunications and technology companies that primarily target Fortune 500 sized companies as well as smaller independent companies that provide services for mid-sized business customers.  HMS has positioned itself to not compete head-to-head with these providers, but rather seeks to fill the gap between large business process outsourcers and fragmented IT service providers.  However, new entrants may emerge and grow rapidly creating additional sources of competition.

TDS — Regulation

TDS’ operations are subject to federal, state and local regulation.

Wireless

TDS provides various wireless services, including voice and data services, pursuant to licenses granted by the FCC.  The construction, operation and transfer of wireless systems in the United States are regulated to varying degrees by the FCC pursuant to the Communications Act of 1934, as amended (“Communications Act”).  The FCC currently does not require wireless carriers to comply with a number of statutory provisions otherwise applicable to common carriers that provide, originate or terminate interstate or international telecommunications.  However, the FCC has promulgated regulations governing construction and operation of wireless systems, licensing (including renewal of licenses) and technical standards for the provision of wireless services under the Communications Act.

Wireless licenses are granted by the FCC based on various geographic areas.  The completion of acquisitions, involving the transfer of control of all or a portion of a wireless system requires prior FCC approval.  The FCC determines on a case-by-case basis whether an acquisition of wireless licenses is in the public interest.  Wireless licenses are generally granted for a ten year term or, in some cases, for a fifteen year term.  The FCC has established standards for conducting comparative renewal proceedings between a wireless license holder seeking renewal of its license and challengers filing competing applications.  All of U.S. Cellular’s licenses for which it applied for renewal between 1995 and 2014 have been renewed.  The FCC is pursuing proceedings to modify the license renewal process.  U.S. Cellular expects to meet the criteria of any license renewal process.

As part of its data services, U.S. Cellular provides internet access.  As described more fully in Exhibit 13 to this Form 10-K under “Regulatory Matters – FCC Net Neutrality Proposal,” there are developments and proposals that may result in greater regulation of wireless data services relating to internet access.

Although the Communications Act generally pre-empts state and local governments from regulating the entry of, or the rates charged by, wireless carriers, certain state and local governments regulate other terms and conditions of wireless services, including billing, termination of service arrangements, imposition of early termination fees, advertising, network outages, the use of handsets while driving, zoning and land use.  Further, the Federal Aviation Administration also regulates the siting, lighting and construction of transmitter towers and antennae.

Wireline

The FCC generally exercises jurisdiction over all facilities of, and services offered by, TDS Telecom’s ILECs as telecommunications common carriers, to the extent they provide, originate or terminate interstate or international telecommunications.  State public utility commissions generally exercise jurisdiction over intrastate telecommunications facilities and services.

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The Communications Act requires, among other things, that communications common carriers offer interstate services when requested at just and reasonable rates at terms and conditions that are non-discriminatory.  Maximum rates for regulated interstate services are prescribed by the FCC, and local rates paid by end user customers and intrastate access charges paid by carriers continue to be subject to state commission approval in many states.

TDS Telecom’s CLEC operations are subject to similar but reduced regulation compared to ILECs.

In addition to traditional circuit-switched voice service that is fully regulated as a telecommunications common carrier service, TDS Telecom also provides VoIP, which is currently subject to less regulation.

In addition to traditional voice communications and VoIP, TDS Telecom also offers broadband services, including internet access.  As described more fully in Exhibit 13 to this form 10-K under “Regulatory Matters – FCC Net Neutrality Proposal,” there are developments and proposals that may result in greater regulation of such services.

Cable

As a cable multiple systems operator (“MSO”), Cable is subject to regulation by the FCC, covering matters such as technical operations, administrative requirements, consumer protection, access by people with disabilities and content.  The operation of cable systems requires the MSO to obtain franchises from state or local governmental authorities to occupy public rights of way with network facilities.  These franchises typically are nonexclusive and limited in time, contain various conditions and limitations, and provide for the payment of fees to the local authority, determined generally as a standard percentage of gross revenues.

TDS’ Cable operations also provide VoIP and other broadband services, including internet access.  The VoIP and internet regulatory matters and issues described above under “Wireline” are substantially similar for cable providers, including proposals that may result in greater regulation of broadband internet services.

HMS

HMS is subject to varying degrees of regulation in each of the jurisdictions in which it operates. Federal, state and local laws and regulations, and their interpretation and enforcement may be applicable and may differ significantly among those jurisdictions. These regulations and laws may cover taxation, privacy, data protection, copyrights and other intellectual property, electronic communications and regulations applicable to electronic products and services.

Additional information relating to TDS’ regulatory environment is incorporated by reference from Exhibit 13 to this Form 10-K, Annual Report section “Regulatory Matters” and in Risk Factors.

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TDS—Other Items

Debt Securities

The following securities trade on the NYSE: TDS’ 6.625% Senior Notes due 2045 trade under the symbol “TDI,” TDS’ 6.875% Senior Notes due 2059 trade under the symbol “TDE,” TDS’ 7.0% Senior Notes due 2060 trade under the symbol “TDJ” and TDS’ 5.875% Senior Notes due 2061 trade under the symbol “TDA.”  U.S. Cellular’s 6.95% Senior Notes due 2060 trade under the symbol “UZA.” U.S. Cellular’s 7.25% Senior Notes due 2063 trade under the symbol “UZB.” U.S. Cellular’s 6.7% Senior Notes due 2033 are traded over the counter and are not listed on any stock exchange.

Employees

TDS had approximately 10,600 full-time and part-time employees as of December 31, 2014, less than 1% of whom were represented by labor organizations.  TDS considers its relationship with its employees to be good.

Location and Company Information

TDS’ website is http://www.tdsinc.com.  TDS files with, or furnishes to, the Securities and Exchange Commission (“SEC”) annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, as well as various other information.  Anyone may access, free of charge, through the Investor Relations portion of the website, the TDS annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to such reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, as soon as reasonably practical after such material is electronically filed with the SEC.  The public may read and copy any materials TDS files with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington D.C. 20549.  The public may obtain information on the operation of the Reference Room by calling the SEC at 1-800-732-0330.  The public may also view electronic filings of TDS by accessing SEC filings at http://www.sec.gov.

U.S. Cellular’s website address is http://www.uscellular.com.  U.S. Cellular files with, or furnishes to, the SEC annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, as well as various other information.  Investors may access, free of charge, through the Investor Relations portion of the website, U.S. Cellular’s annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to such reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practical after such material is filed electronically with the SEC.  The public may read and copy any materials U.S. Cellular files with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington D.C. 20549.  The public may obtain information on the operation of the Reference Room by calling the SEC at 1-800-732-0330.  The public may also view electronic filings of U.S. Cellular by accessing SEC filings at http://www.sec.gov.

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Item 1A.  Risk Factors

PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

SAFE HARBOR CAUTIONARY STATEMENT

This Annual Report on Form 10-K, including exhibits, contains statements that are not based on historical facts and represent forward-looking statements, as this term is defined in the Private Securities Litigation Reform Act of 1995.  All statements, other than statements of historical facts, that address activities, events or developments that TDS intends, expects, projects, believes, estimates, plans or anticipates will or may occur in the future are forward-looking statements.  The words “believes,” “anticipates,” “estimates,” “expects,” “plans,” “intends,” “projects” and similar expressions are intended to identify these forward-looking statements, but are not the exclusive means of identifying them.  Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, events or developments to be significantly different from any future results, events or developments expressed or implied by such forward-looking statements.  Such risks, uncertainties and other factors include those set forth below under “Risk Factors” in this Form 10-K.  Each of the following risks could have a material adverse effect on TDS; however, such factors are not necessarily all of the important factors that could cause actual results, performance or achievements to differ materially from those expressed in, or implied by, the forward-looking statements contained in this document.  Other unknown or unpredictable factors also could have material adverse effects on future results, performance or achievements.  TDS undertakes no obligation to update publicly any forward-looking statements whether as a result of new information, future events or otherwise.  You should carefully consider the following risk factors and other information contained in, or incorporated by reference into, this Form 10-K to understand the material risks relating to TDS’ business.

RISK FACTORS

1)Intense competition in the markets in which TDS operates could adversely affect TDS’ revenues or increase its costs to compete.

Competition in the telecommunications industry is currently intense and could intensify further in the future due to the general effects of the economy, as well as due to multiple wireless industry factors such as increasing market penetration, decreasing customer churn rates, introduction of new products, new competitors and changing prices.  There is competition in handsets and other devices; network quality, coverage, speed and technologies; distribution; pricing; and other categories.  TDS’ ability to compete effectively will depend, in part, on its ability to anticipate and respond to various competitive factors affecting the telecommunications industry.  TDS anticipates that, in the future, competition may cause the prices for products and services to continue to decline and the costs to compete to increase.  Most of TDS’ competitors are national or global telecommunications companies that are larger than TDS, possess greater resources, possess more extensive coverage areas and more spectrum within their coverage areas, and market other services with their communications services that TDS does not offer.  In addition, TDS may face competition from technologies that may be introduced in the future or from new entrants into the industry.  New technologies, services and products that are more commercially effective than the technologies, services and products offered by TDS may be developed.  Further, new technologies may be proprietary such that TDS is not able to adopt such technologies.  There can be no assurance that TDS will be able to compete successfully in this environment. 

Sources of competition to TDS’ wireless business typically include two to four competing wireless telecommunications service providers in each market, wireline telecommunications service providers, cable companies, resellers (including mobile virtual network operators), and providers of other alternate telecommunications services.  Many of TDS’ wireless competitors and other competitors have substantially greater financial, technical, marketing, sales, purchasing and distribution resources than TDS.

TDS’ competitors offer a wide array of wireless service offerings and wireless devices.  There is increasing complexity associated with these wireless product and service offerings and the related pricing.  Further, new wireless services and products and pricing structures are frequently introduced.  Multiple events related to new services, products and pricing offered by TDS’ competitors occurring simultaneously or in close proximity may impact TDS’ ability to respond to such events and compete effectively.

Sources of competition to TDS’ Wireline business include, but are not limited to, resellers of local exchange services, interexchange carriers, Regional Bell Operating Companies (“RBOCs”), satellite transmission service providers, wireless communications providers, cable companies, competitive access service providers, competitive local exchange carriers, Voice over Internet Protocol (“VoIP”) providers and providers using other emerging technologies.  The Wireline CLEC business sources of competition include the sources identified above as well as the ILEC in each market, which enjoys competitive advantages, including its wireline connection to virtually all of the customers and potential customers of Wireline’s CLEC business, its established brand name and its substantial financial resources.  Wireline’s CLEC business is typically required to discount services to win potential customers.  In the future, TDS expects the number of its physical access lines served to continue to be adversely affected by wireless and broadband substitution and by cable company competition.

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Some of the specific risks presented by certain Wireline competitors include:

·Cable companies – continued deployment of technologies such as DOCSIS 3.0 and their further evolution that substantially increase data transfer speeds, and offering these speeds to customers at relatively low prices, including speed upgrades for no additional charge.

·Wireless – the trend of customers “substituting” their wireline connection with a wireless device.

·RBOCs – continue to be formidable competitors given their full suite of services, experience and strong financial resources.

·VoIP providers – are able to offer voice service at a very low price point.

·Fiber overbuilders – municipalities or other providers offering the same or higher data speeds at similar or lower price points.

TDS’ Cable business also provides high-speed internet and digital voice services, as well as cable television service. With respect to internet and voice services, Cable’s business faces sources of competition similar to the Wireline business.  With respect to cable television service, cable operators compete against broadcast television, direct broadcast satellite providers, on-line video services and may compete against wireline providers which have begun to upgrade their networks to provide video services in addition to voice and high-speed internet access services.  As a result, the cable business is highly competitive.

Sources of competition for HMS’s business primarily include large diversified telecommunications and technology companies, as well as smaller independent companies that focus on mid-market companies.  In addition, new entrants may emerge and grow rapidly creating additional sources of competition or companies may begin insourcing IT services.  The IT services market is large and complex, with a diverse array of segments in which performance and market dynamics vary considerably.  As a result of these dynamics the IT services market is a highly competitive environment.  Therefore, the HMS business is increasingly required to assume greater potential contractual risk obligations, such as risks relating to the consequences of data breaches or unauthorized disclosure of confidential customer information, in order to win new customer engagements.  In the event of such incidents, the HMS business could be materially adversely effected.

If TDS does not adapt to compete effectively in such a highly competitive environment, such competitive factors could result in product, service, pricing or cost disadvantages and could have an adverse effect on TDS’ business, financial condition or results of operations.

2)A failure by TDS to successfully execute its business strategy (including planned acquisitions, divestitures and exchanges) or allocate resources or capital could have an adverse effect on TDS’ business, financial condition or results of operations.

U.S. Cellular is a regional wireless carrier that operates on a customer satisfaction strategy, seeking to meet customer needs by providing a comprehensive range of wireless products and services, excellent customer support, and a high-quality network.  U.S. Cellular seeks to operate controlling interests in wireless licenses in areas adjacent to or in proximity to its other wireless licenses, thereby building contiguous operating market areas.  U.S. Cellular relies on roaming agreements with other carriers to provide roaming capability to its customers in areas of the U.S. outside its service areas and to improve coverage within selected areas of U.S. Cellular’s network footprint.  U.S. Cellular pursues a product and technology strategy which requires it to recognize product and technology advances and quickly adopt and execute rollouts of such advances.  This strategy requires U.S. Cellular to make timely and effective strategic decisions related to technological advances and related products and services, and which of these technological advances to adopt and roll out to its customers.

Further, U.S. Cellular’s strategic decisions related to the adoption of new technologies are ultimately impacted by such factors as consumer preferences for technologies and the related services and products, and original equipment manufacturer (“OEM”) and standard bodies support of such technologies, including Long-Term Evolution (“LTE”) and VoLTE, among other factors.  If U.S. Cellular’s competitors adopt new technologies faster than U.S. Cellular, then consumers who are eager to adopt new technologies more quickly may select U.S. Cellular’s competitors rather than U.S. Cellular as their service provider.  These customers who are early adopters of new technologies are often customers who generate higher average revenue per unit (“ARPU”), and to the extent that U.S. Cellular does not attract these types of customers, U.S. Cellular could be at a competitive disadvantage and have a customer base that generates lower overall ARPU relative to its competition.

Wireline’s business seeks to be the preferred telecommunications solutions provider in its chosen markets for both residential and commercial customers by developing and delivering high-quality products that meet or exceed customers’ needs and to outperform the competition by maintaining superior customer service.  Wireline’s residential customer strategy is to provide broadband, video and voice services through value-added bundling of products and services.  The commercial focus is to provide advanced IP-based voice and data services.  Wireline is selectively investing in the continuing transformation of its legacy circuit-switched network to a highly reliable IP-based broadband network to economically deploy advanced technologies and new services.  Wireline continues to actively advocate for state and federal regulatory frameworks that enable its operations to grow and invest profitably and continue to meet customer expectations for new and improved services.

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Cable’s business provides broadband, video and voice services.  Although similar to Wireline, the strategies for Cable involve different technical, regulatory, business and other factors and TDS has limited experience in operating cable companies.  In particular, Cable’s business has significant costs and risks relating to programming and retransmission.  Such costs have been increasing and Cable’s business may not be able to fully pass these costs on to customers.  In addition, Cable’s business is limited in its ability to obtain programming at favorable costs and terms due to its small scale.  Also, Cable’s business may be affected by a wide range of regulatory or other issues, including matters pertaining to set-top boxes, equipment connectivity, content regulation, closed captioning, pole attachments, privacy, copyright, technical standards, and municipal entry into video and broadband.  Further, changes in consumer behavior and/or new technologies could cause consumers to reduce or cancel their cable video services and instead seek to obtain video on demand over the internet or through new technologies.  Cable’s business development strategy also includes evaluating opportunities for possible further acquisitions of desirable cable companies on attractive terms to increase the scale of Cable’s business.  There can be no assurance that TDS will be successful in its Cable business strategy.

HMS’s business development strategy is to increase its presence in the IT infrastructure and application outsourcing and solution provider market through organic growth, expansion or acquisition.  HMS’s service platform with coverage across all of its product categories provides the potential for expansion of current products and services to additional markets in or near HMS’s current footprint. HMS may continue to make opportunistic acquisitions of companies that further strengthen its operating market areas and enter additional attractive markets.

The successful execution of strategies, the optimal allocation within TDS’ portfolio of assets and optimal capital allocation decisions depend on various internal and external factors, many of which are not in TDS’ control.  TDS’ ability to implement and execute its business strategies and optimally allocate its assets and capital and, as a result, achieve desired financial results, could be affected by such factors.  Such factors include pricing practices by competitors, relative scale, purchasing power, roaming and other strategic agreements, wireless device availability, timing of introduction of wireless devices and other factors.  In addition, there is no assurance that U.S. Cellular’s or TDS Telecom’s strategies will be successful.  Even if TDS executes its business strategies as intended, such strategies may not be successful in the long term to profitably sustain growth in revenues or otherwise. 

A failure by TDS to execute its business strategies successfully or to allocate resources or capital optimally could have an adverse effect on TDS’ businesses, financial condition or results of operations.

3)TDS offers customers the option to purchase certain devices under installment contracts, which creates certain risks and uncertainties which could have an adverse impact on TDS' financial condition or results of operations.

Beginning in the second quarter of 2014, U.S. Cellular expanded its offerings of equipment installment plans.  Such plans offer customers the option to purchase certain devices under installment contracts over a period of up to 24 months.  TDS expects that sales of devices under these plans, when compared to sales of devices made under the traditional subsidy model, will reduce retail service revenue and ARPU but increase equipment revenue.  Such plans also are expected to result in lower cash flows from operating activities in the near term.  However, at this time, TDS does not have significant experience in these new plans or a sufficient history to determine how these plans will affect TDS’ business, financial position or results of operations. 

Compared to equipment sales made under the traditional subsidy model, these equipment installment plans involve different business risks and accounting considerations.  These plans could adversely impact bad debts expense, marketing expense, customer churn, cash flows, inventory valuation, and other financial results and metrics.

4)Changes in roaming practices or other factors could cause TDS’ roaming revenues to decline from current levels and/or impact TDS’ ability to service its customers in geographic areas where TDS does not have its own network, which could have an adverse effect on TDS’ business, financial condition or results of operations.

TDS’ revenues include roaming revenues related to the use of TDS’ network by other wireless carriers’ customers who travel within TDS’ coverage areas.  Changes in the network footprints of carriers due to mergers, acquisitions or network expansions could have an adverse effect on TDS’ roaming revenues.  For example, consolidation among other carriers which have network footprints that currently overlap TDS’ network could decrease the amount of roaming revenues for TDS. 

Similarly, TDS’ wireless customers can access another carrier’s digital system automatically only if the other carrier allows TDS’ customers to roam on its network.  TDS relies on roaming agreements with other carriers to provide roaming capability to its customers in areas of the U.S., Mexico and Canada outside of its service areas and to improve coverage within selected areas of TDS’ network footprint.  Such agreements cover traditional voice services as well as data services.  Although TDS currently has long-term roaming agreements with certain other carriers, these agreements generally are subject to renewal and termination if certain events occur.  FCC rules and orders impose certain requirements on wireless carriers to offer certain roaming arrangements to other carriers. However, carriers frequently disagree on what is required.  Also, at this time, there is no assurance that TDS will be able to enter into agreements to provide roaming services using 4G LTE or other technologies or that it will be able to do so on reasonable or cost

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effective terms.  In addition, see Exhibit 13 to this Form 10-K, Annual Report section “Regulatory Matters – FCC Interoperability Order” for further information and developments.

Some competitors may be able to obtain lower roaming rates than TDS is able to obtain because they have larger call volumes or may be able to reduce roaming charges by providing service principally over their own networks.  In addition, the quality of service that a wireless carrier delivers during a roaming call may be inferior to the quality of service TDS provides, the price of a roaming call may not be competitive with prices of other wireless carriers for such call, and TDS’ customers may not be able to use some of the advanced features, such as voicemail notification or data applications, that TDS customers enjoy when making calls on TDS’ network.  TDS’ rate of adoption of new technologies, such as those enabling high-speed data services, could affect its ability to enter into or maintain roaming agreements with other carriers.  In addition, TDS’ wireless technology may not be compatible with technologies used by other carriers, which may limit the ability of TDS to enter into voice or data roaming agreements with such other carriers.  TDS’ roaming partners could switch their business to new operators or, over time, to their own networks.  Changes in roaming usage patterns, rates for roaming minutes or data usage or relationships with carriers whose customers generate roaming minutes or data use on TDS’ network could have an adverse effect on TDS’ revenues and revenue growth.

To the extent that TDS’ key roaming partners expand their networks in TDS’ service areas, the roaming arrangements between TDS and these key roaming partners could become less strategic for the roaming partners.  That is, these key roaming partners will have fewer or less extensive geographic areas where roaming services are required by their customers and, as a result, the roaming arrangements could become less critical to serving their customer base.  This presents a risk to TDS in that, to the extent TDS is not able to enter into economically viable roaming arrangements with key roaming partners, this could impact TDS’ ability to service its customers in geographic areas where TDS does not have its own network.

If TDS’ roaming revenues decline, or if TDS is unable to obtain or maintain roaming agreements with other wireless carriers that contain pricing and other terms that are competitive and acceptable to TDS, and that satisfy TDS’ quality and interoperability requirements, its business, financial condition or results of operations could be adversely affected.

5)A failure by TDS to obtain access to adequate radio spectrum to meet current or anticipated future needs and/or to accurately predict future needs for radio spectrum could have an adverse effect on TDS’ business, financial condition or results of operations.

TDS’ wireless business depends on the ability to use portions of the radio spectrum licensed by the FCC.  TDS could fail to obtain access to sufficient spectrum capacity in new or existing critical markets, whether through FCC auctions or other transactions, in order to meet the anticipated spectrum requirements associated with increased demand for existing services, especially increases in customer demand for data services, and to enable deployment of next-generation services.  TDS believes that this increased demand for data services reflects a trend that will continue for the foreseeable future; as such, TDS could fail to accurately forecast its future spectrum requirements considering changes in customer usage patterns, technology requirements and the expanded demands of new services.  Such a failure could have an adverse impact on the quality of TDS’ services or TDS’ ability to roll out such future services in some markets, or could require that TDS curtail existing services in order to make spectrum available for next-generation services.  Spectrum constrained providers could be effectively capped in increasing market share.  As spectrum constrained providers gain customers, they use up their network capacity.  Since they lack spectrum, they can respond to demand only by adding cell sites, which is capital intensive, limited by zoning considerations, and ultimately may not be cost effective.  TDS may acquire access to spectrum through a number of alternatives, including participation in spectrum auctions, partnering on a non-controlling basis with other auction applicants (“Other Applicants”) and other acquisitions and exchanges.  As required by law, the FCC has conducted auctions for licenses to use some parts of the radio spectrum.  The decision to conduct auctions, and the determination of what spectrum frequencies will be made available for auction and the determination of geographic size of licenses, are made by the FCC pursuant to laws that it administers.  The FCC may not be able to allocate spectrum sufficient to meet the demands of all those wishing to obtain licenses for new market entry or to expand their spectrum holdings to meet the expanding demand for data services or to address other spectrum constraints.  Due to factors such as geographic size of licenses and auction bidders that may raise prices beyond acceptable levels, TDS or Other Applicants may not be successful in FCC auctions in obtaining the spectrum that either believes is necessary to implement its business and technology strategies.  In addition, newly auctioned spectrum may not be compatible with existing spectrum, and vendors may not create suitable products to use such spectrum.  Further, access to use spectrum won in FCC auctions may not be available on a timely basis.  Such access is dependent upon the FCC actually granting licenses won in the various auctions, which can be delayed for various reasons.  Furthermore, newly licensed spectrum may not be available for immediate use since the radio operations of incumbent users, including in some cases government agencies, may need to be relocated to other portions of the radio spectrum, and/or the newly licensed spectrum may be subject to sharing and coordination obligations for a period of time.  TDS also may seek to acquire radio spectrum through purchases and exchanges with other spectrum licensees.  However, TDS may not be able to acquire sufficient spectrum through these types of transactions, and TDS may not be able to complete any of these transactions on favorable terms.

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6)To the extent conducted by the Federal Communications Commission (“FCC”), TDS is likely to participate in FCC auctions of additional spectrum in the future as an applicant or as a noncontrolling partner in another auction applicant and, during certain periods, will be subject to the FCC’s anti-collusion rules, which could have an adverse effect on TDS.

From time to time, the FCC conducts auctions through which additional spectrum is made available for the provision of wireless services.  TDS has participated in such auctions in the past and is likely to participate in other auctions conducted by the FCC in the future as an applicant or as a non-controlling partner in another auction applicant.  FCC anti-collusion rules place certain restrictions on business communications and disclosures by participants in an FCC auction.  These anti-collusion rules may restrict the normal conduct of TDS’ business and/or disclosures by TDS relating to an FCC auction, which could last three to six months or more.  The restrictions could have an adverse effect on TDS’ business, financial condition or results of operations.

7)Changes in the regulatory environment or a failure by TDS to timely or fully comply with any applicable regulatory requirements could adversely affect TDS’ business, financial condition or results of operations.

TDS’ operations are subject to varying degrees of regulation by the FCC, state public utility commissions and other federal, state and local regulatory agencies and legislative bodies.  TDS is unable to predict the future actions of the various regulatory bodies that govern TDS, but such actions could have adverse effects on TDS’ business.  New or amended regulatory requirements could increase TDS’ costs and divert resources from other initiatives.

Adverse decisions, increased regulation, or changes to existing regulation by regulatory bodies could negatively impact TDS’ operations by, among other things, changing the amount that can be charged for local, intrastate or interstate access rates, increasing TDS’ costs of doing business, permitting greater competition or limiting TDS’ ability to engage in certain sales or marketing activities.  New regulatory mandates or enforcement may require unexpected or changed capital investment, lost revenues, changes in operations or other changes. 

Court decisions and rulemakings could have a substantial impact on TDS’ operations, including rulemakings on intercarrier access compensation, state and federal universal service, and treatment of VoIP traffic or unbundled network elements (“UNEs”).  Litigation and different objectives among federal and state regulators could create uncertainty and delay TDS’ ability to respond to new regulations. 

TDS attempts to timely and fully comply with all regulatory requirements.  However, this may not be possible due to various factors.  Any failure by TDS to timely or fully comply with any regulatory requirements could adversely affect TDS’ financial condition, results of operations or ability to do business.

For additional information about TDS’ regulatory environment, including the potential risk to a reduction in the current level of TDS’ revenues as an Eligible Telecommunications Carrier, see “TDS — Regulation” in this Form 10-K and Exhibit 13 to this Form 10-K, Annual Report section “Regulatory Matters”.

8)An inability to attract people of outstanding potential, to develop their potential through education and assignments, and to retain them by keeping them engaged, challenged and properly rewarded could have an adverse effect on TDS' business, financial condition or results of operations.

TDS’ businesses are highly technical and competition for skilled talent in the telecommunications and IT services industries is aggressive.  Due to competition for qualified management, technical, sales and other personnel, there can be no assurance that TDS will be able to continue to attract and/or retain people of outstanding potential for the development of its business.  The loss of the services of existing key personnel as well as the failure to recruit additional qualified personnel in a timely manner could have an adverse effect on TDS’ business, financial condition or results of operations.

9)TDS’ assets are concentrated primarily in the U.S. telecommunications industry. As a result, its results of operations may fluctuate based on factors related primarily to conditions in this industry.

TDS’ assets are concentrated primarily in the U.S. telecommunications industry and the United States.  The U.S. telecommunications industry is facing significant change and an uncertain operating environment.  Although TDS has diversified into HMS and the cable businesses, TDS’ revenue streams continue to be substantially derived from telecommunications services, including wireless, wireline, broadband and internet services.  TDS’ focus on the U.S. telecommunications industry, together with its positioning relative to larger competitors with greater resources within the industry, may represent increased risk for investors due to the lack of diversification.  This could have an adverse effect on TDS’ ability to profitably sustain long-term revenue growth and could have an adverse effect on its business, financial condition or results of operations.

10)TDS’ lower scale relative to larger competitors could adversely affect its business, financial condition or results of operations.

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There has been a trend in the telecommunications, IT services and related industries in recent years towards consolidation of service providers through acquisitions, reorganizations and joint ventures.  This trend could continue, leading to larger competitors over time. TDS has lower scale efficiencies compared to larger competitors.  TDS may be unable to compete successfully with larger companies that have substantially greater financial, technical, marketing, sales, purchasing and distribution resources or that offer more services than TDS, which could adversely affect TDS’ revenues and costs of doing business.  Specifically, TDS’ smaller scale relative to most of its competitors could have the following impacts, among others:

·Increased operating costs due to lack of leverage with vendors;

·Limited opportunities for strategic partnerships as potential partners are focused on wireless, wireline and cable companies with greater scale;

·Limited access to content and programming;

·Limited ability to influence industry standards;

·Reduced ability to invest in research and development of new products and services;

·Vendors may deem TDS non-strategic and not develop or sell products and services to TDS, particularly where technical requirements differ from those of larger companies;

·Limited access to intellectual property; and

·Other limited opportunities such as for software development or third party distribution.

TDS’ telecommunications businesses increasingly depend on access to content for data, music or video services and access to new wireless devices being developed by vendors.  TDS’ ability to obtain such access depends in part on other parties.  If TDS is unable to obtain timely access to new content or wireless devices being developed by vendors, its business, financial condition or results of operations could be adversely affected.

As a result of the foregoing, TDS’ lower scale relative to larger competitors could adversely affect TDS’ business, financial condition or results of operations.

11)Changes in various business factors could have an adverse effect on TDS’ business, financial condition or results of operations.

Changes in any of several factors could have an adverse effect on TDS’ business, financial condition or results of operations.  These factors include, but are not limited to:

·Demand for or usage of services, particularly data services;

·Customer preferences, including internet speed and type of wireless devices;

·Customer perceptions of network quality and performance;

·The pricing of services;

·Access to and cost of programming;

·The overall size and growth rate of TDS’ customer base;

·Average revenue per customer;

·Penetration rates;

·Churn rates;

·Selling expenses;

·Net customer acquisition and retention costs;

·Customers’ ability to pay for services and the potential impact on bad debts expense;

·Roaming agreements and rates;

·Third-party vendor support;

·The mix of products and services offered by TDS and purchased by customers; and

·The costs of providing products and services.

12)Advances or changes in technology could render certain technologies used by TDS obsolete, could put TDS at a competitive disadvantage, could reduce TDS’ revenues or could increase its costs of doing business.

The telecommunications and IT services industries are experiencing significant changes in technologies and services expected by customers.  In the telecommunications industry, this is evidenced by evolving industry standards, ongoing improvements in the capacity and quality of digital technology, shorter development cycles for new services and products, and enhancements and changes in end-user requirements and preferences.  Widespread deployment of new technologies could cause the technology used on TDS’ wireless networks and traditional circuit-switched telephone services to become less competitive or obsolete.  Also, high speed wireless networks (“wireless broadband”) represent a product offering and opportunity for TDS’ wireless business, but also represent a risk for TDS’ Wireline and Cable businesses as customers may elect to substitute their wireline broadband connection for wireless

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broadband.  Further, fixed-mobile convergence services that combine wireline broadband services with mobile services represent a competitive threat.  In addition, the IT services market is characterized by rapidly changing technology and services.  Future technological changes or advancements may enable other technologies to equal or exceed TDS’ current levels of service and render its system infrastructure obsolete.  TDS may not be able to respond to such changes and implement new technology on a timely or cost-effective basis, which could reduce its revenues or increase its costs of doing business.  If TDS cannot keep pace with these technological changes or other changes in the telecommunications or IT services industries over time, its financial condition, results of operations or ability to do business could be adversely affected.

13)Complexities associated with deploying new technologies present substantial risk.

TDS’ wireless business has selected 4G LTE technology as its approach to address demand for services enabled by fourth generation wireless technology.  The deployment of 4G LTE technology is impacted by a number of technical challenges. 

Manufacturers of wireless devices (“Original Equipment Manufacturers” or “OEMs”) must design and manufacture equipment that operates on the frequency bands available to TDS.  This may involve software and hardware support for such bands in wireless device chipsets as well as band-specific designs for components such as filters.  OEMs, chipset manufacturers, and component manufacturers will likely prioritize the support of frequency bands that are specified by the largest wireless carriers.  Given TDS’ smaller scale relative to its competitors, certain bands of spectrum licensed to TDS and its affiliates in certain cases represent a lower priority for chipset and wireless device manufacturers.  As a result, the timing and the availability of wireless devices to support TDS’ continued 4G LTE roll out could be negatively impacted.  In addition, due to TDS’ relatively smaller scale, the cost of such equipment could be higher for TDS than for TDS’ competitors.

Additionally, the efficiency of LTE networks and the peak speeds they can provide are optimized when the technology is deployed in larger channel bandwidths that, in early releases of LTE, require larger amounts of contiguous spectrum.  To the extent that TDS’ competitors have access to larger contiguous spectrum positions, they may be able to offer faster speeds or provision their networks more efficiently.  In order for TDS to realize the same LTE data transfer speeds as competitors, it is important that both network infrastructure and device manufacturers support non-contiguous spectrum aggregation features for TDS.

Lack of wireless devices available to TDS to support its 4G LTE network, comparatively smaller spectrum positions for 4G LTE deployments, or carrier aggregation standards that result in TDS delivering slower 4G LTE data transfer speeds relative to its competitors, could have an adverse impact on TDS’ business, financial condition and results of operations.

TDS’ Wireline business is deploying technologically advanced wireline services including advanced DSL, fiber optic and Very-high-speed digital subscriber line 2 (“VDSL2”) technologies. A significant amount of the product development and integration risks are borne by TDS.  Further, the simultaneous rollout of these advanced services and technologies increases the execution risk.  If TDS fails to effectively deploy new technologies and products on a timely basis, this could have an adverse impact on TDS’ business, financial condition and results of operations.

Cable’s business is also subject to complexities associated with deploying new technologies and involves substantial risk, including rapid technology changes.  If Cable’s business does not respond appropriately to technology changes, its competitive position may be adversely affected.

The HMS business is also continuously evaluating and deploying advances in technology relating to IT services.  If HMS fails to effectively deploy new technologies and products on a timely basis, this could have an adverse impact on its business, financial condition and results of operations.

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14)TDS is subject to numerous surcharges and fees from federal, state and local governments, and the applicability and the amount of these fees are subject to great uncertainty.

Telecommunications providers pay a variety of surcharges and fees on their gross revenues from interstate and intrastate services, including USF fees and common carrier regulatory fees. The division of services between interstate services and intrastate services, including the divisions associated with the federal USF fees, is a matter of interpretation and may in the future be contested by the FCC or state authorities. The FCC also may change in the future the basis on which federal USF fees are charged. The Federal government and many states also apply transaction-based taxes to sales of TDS products and services and to purchases of telecommunications services from various carriers. In addition, state regulators and local governments have imposed and may continue to impose various surcharges, taxes and fees on TDS services. The applicability of these surcharges and fees to its services is uncertain in many cases and jurisdictions may contest whether TDS has assessed and remitted those monies correctly.  Periodically state and federal regulators may increase or change the surcharges and fees TDS currently pays.  In some instances TDS passes through these charges to its customers.  However, Congress, the FCC, state regulatory agencies or state legislatures may limit the ability to pass through transaction-based tax liabilities, regulatory surcharges and regulatory fees imposed on TDS to customers.  TDS may or may not be able to recover some or all of those taxes from its customers and the amount of taxes may deter demand for its services or increase its cost to provide service which could have an adverse effect on its business, financial condition or operating results.

15)Performance under device purchase agreements could have a material adverse impact on TDS' business, financial condition or results of operations.

TDS has entered into purchase commitments with certain vendors and may enter into similar purchase commitments with other vendors in the future.  If TDS is unable to sell all of the devices that it is required to purchase under such agreements, or if it is unable to sell them at the prices it projects, its business, financial condition or results of operations could be adversely affected.

16)Changes in TDS’ enterprise value, changes in the market supply or demand for wireless licenses, wireline or cable markets or IT service providers, adverse developments in the businesses or the industries in which TDS is involved and/or other factors could require TDS to recognize impairments in the carrying value of its licenses, goodwill, franchise rights and/or physical assets.

A large portion of TDS’ assets consists of indefinite-lived intangible assets in the form of licenses, goodwill and franchise rights.  TDS also has substantial investments in long-lived assets such as property, plant and equipment.  TDS reviews its licenses, goodwill, franchise rights and other long-lived assets for impairment annually or whenever events or circumstances indicate that the carrying amount of such assets may not be fully recoverable.  An impairment loss may need to be recognized to the extent the carrying value of the assets exceeds the fair value of such assets.  The amount of any such impairment loss could be significant and could have an adverse effect on TDS’ reported financial results for the period in which the loss is recognized.  The estimation of fair values requires assumptions by management about factors that are uncertain including such things as future cash flows and the appropriate discount rate.  Different assumptions for these factors could create materially different results. 

17)Costs, integration problems or other factors associated with acquisitions, divestitures or exchanges of properties or licenses and/or expansion of TDS’ businesses could have an adverse effect on TDS’ business, financial condition or results of operations.

As part of TDS’ operating strategy, TDS from time to time may be engaged in the acquisition, divestiture or exchange of companies, businesses, strategic properties, wireless spectrum or other assets.  TDS may change the markets in which it operates and the services that it provides through such acquisitions, divestitures and/or exchanges.  In general, TDS may not disclose the negotiation of such transactions until a definitive agreement has been reached.   These transactions commonly involve a number of risks, including:

·Identification of attractive companies, businesses, properties, spectrum or other assets for acquisition or exchange, and/or the selection of TDS’ businesses or assets for divestiture or exchange;

·Competition for acquisition targets and the ability to acquire or exchange businesses at reasonable prices;

·Possible lack of buyers for businesses or assets that TDS desires to divest and the ability to divest or exchange such businesses or assets at reasonable prices;

·Ability to negotiate favorable terms and conditions for acquisitions, divestitures and exchanges;

·Significant expenditures associated with acquisitions, divestitures and exchanges;

·Legal and regulatory risks associated with new businesses or markets;

·Ability to enter markets in which TDS has limited or no direct prior experience and competitors have stronger positions;

·Ability to manage businesses that are engaged in activities other than traditional wireline and wireless service, including cable businesses and hosted and managed services businesses;

·Uncertain revenues and expenses associated with acquisitions, with the result that TDS may not realize the growth in revenues, anticipated cost structure, profitability, or return on investment that it expects;

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·Difficulty of integrating the technologies, services, products, operations and personnel of the acquired businesses, or of separating such matters for divested businesses or assets;

·Diversion of management’s attention;

·Disruption of ongoing business;

·Impact on TDS’ cash and available credit lines for use in financing future growth and working capital needs;

·Inability to retain key personnel;

·Inability to successfully incorporate acquired assets and rights into TDS’ service offerings;

·Inability to maintain uniform standards, controls, procedures and policies;

·Possible conditions to approval by the FCC, the Federal Trade Commission and/or the Department of Justice; and

·Impairment of relationships with employees, customers or vendors.

No assurance can be given that TDS will be successful with respect to its acquisition, divestiture or exchange strategies or initiatives.  If TDS is not successful with respect to its acquisitions, divestitures or exchanges, its business, financial condition or results of operations could be adversely affected.

18)TDS’ investments in unproven technologies may not produce the benefits that TDS expects.

TDS is making investments in various new technologies and service and product offerings.  These investments include technologies for enhanced data service offerings, IPTV, cable and IT services.  TDS expects new services, products and solutions based on these new technologies to contribute to future growth in its revenues.  However, the markets for some of these services, products and solutions are still emerging and the overall potential for these markets remains uncertain.  If customer demand for these new services, products and solutions does not develop as expected, TDS’ business, financial condition or results of operations could be adversely affected.

19)A failure by TDS to complete significant network construction and systems implementation activities as part of its plans to improve the quality, coverage, capabilities and capacity of its networks and support systems could have an adverse effect on its operations.

TDS’ business plan includes significant construction activities and enhancements to its network, support and other systems and infrastructure.  In connection therewith, TDS must, among other things, continue to:

·Lease, acquire or otherwise obtain rights to cell and switch sites, data centers relating to IT services or other facilities;

·Obtain zoning variances or other local governmental or third-party approvals or permits for network construction;

·Complete and update the radio frequency design, including cell site design, frequency planning and network optimization, for each of TDS’ wireless markets; and

·Improve, expand and maintain customer care, network management, billing and other financial and management systems.

Any difficulties encountered in completing these activities, as well as problems in vendor equipment availability, technical resources, system performance or system adequacy, could delay expansion of operations and product capabilities in new or existing markets or result in increased costs.  Failure to successfully build-out and enhance TDS’ network, support facilities and other systems and infrastructure in a cost-effective manner, and in a manner that satisfies customer expectations, could have an adverse effect on TDS’ business, business prospects, financial condition or results of operations.

20)Difficulties involving third parties with which TDS does business, including changes in TDS’ relationships with or financial or operational difficulties of key suppliers or independent agents and third party national retailers who market TDS’ services, could adversely affect TDS’ business, financial condition or results of operations.

TDS has relationships with independent agents and third party national retailers who market TDS’ services.  If such relationships are seriously harmed or if such parties experience financial difficulties, including bankruptcy, TDS’ business, financial condition or results of operations could be adversely affected. 

TDS depends upon certain vendors to provide it with equipment, services or content to continue its network construction and upgrades and to operate its business.  TDS does not have operational or financial control over such key suppliers and has limited influence with respect to the manner in which these key suppliers conduct their businesses.  If these key suppliers experience financial difficulties or file for bankruptcy or experience other operational difficulties, they may be unable to provide equipment, services or content to TDS on a timely basis or cease to provide such equipment, services or content or otherwise fail to honor their obligations to TDS. 

Regulations regarding the use of “conflict minerals” mined from the Democratic Republic of Congo and adjoining countries may affect some of TDS’ suppliers.  These regulations may limit the availability of conflict free minerals and, as a result, TDS may not be able to obtain products in sufficient quantities or at competitive prices from its vendors who utilize such minerals in the manufacture

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of products.  In such cases, TDS may be unable to maintain and upgrade its network or provide products and services to its customers in a competitive manner, or could suffer other disruptions to its business.  In that event, TDS’ business, financial condition or results of operations could be adversely affected. 

In addition, operation of TDS’ supply chain and management of its inventory require accurate forecasting of customer growth and demand, which has become increasingly challenging.  If overall demand for wireless devices or the mix of demand for wireless devices is significantly different than TDS’ expectations, TDS could face inadequate or excess supplies of particular models of wireless devices.  This could result in lost sales opportunities or an excess supply of inventory.  Either of these situations could adversely affect TDS’ revenues, costs of doing business, results of operations or financial condition.

In 2010, U.S. Cellular entered into agreements with a third party vendor to develop a Billing and Operational Support System (B/OSS).  In 2014, U.S. Cellular entered into certain other agreements with such vendor that rearrange the structure under the original agreements, including arrangements pursuant to which U.S. Cellular now outsources certain support functions for its B/OSS to such vendor.  Operational problems associated with the B/OSS, including any failure by the vendor to provide the required level of service under the outsourcing arrangements, could have adverse effects on TDS’ business, financial condition or results of operations.

21)TDS has significant investments in entities that it does not control. Losses in the value of such investments could have an adverse effect on TDS’ financial condition or results of operations.

TDS has significant investments in entities that it does not control, including equity investments and interests in certain variable interest entities.  TDS’ interests in such entities do not provide TDS with control over the business strategy, financial goals, network build-out plans or other operational aspects of these entities.  TDS cannot provide assurance that these entities will operate in a manner that will increase or maintain the value of TDS’ investments, that TDS’ proportionate share of income from these investments will continue at the current level in the future or that TDS will not incur losses from the holding of such investments.  Losses in the values of such investments or a reduction in income from these investments could adversely affect TDS’ financial condition or results of operations.

22)A failure by TDS to maintain flexible and capable telecommunication networks or information technology, or a material disruption thereof, could have an adverse effect on TDS’ business, financial condition or results of operations.

TDS relies extensively on its telecommunication networks and information technology to operate and manage its businesses, process transactions and summarize and report results.  These networks and technology become obsolete over time and must be upgraded, replaced and/or otherwise enhanced over time.  Enhancements must be more flexible and dependable than ever before.  All of this is capital intensive and challenging.  A failure by TDS to maintain flexible and capable telecommunication networks or information technology could have an adverse effect on TDS’ business, financial condition or results of operations.

The increased provision of data services including IPTV has introduced significant new demands on TDS’ network and has also increased complexities related to network management.  As it relates to Wireline’s networks, the transition to new IP-based networks from well-established time-division multiplexing networks requires new support tools and technician skills.  Further, this transition requires the use of more leased facilities and partnerships which require enhanced network monitoring and controls.  The IP-based networks also generally require more electronics on customers’ premises which introduces more technical risks and makes diagnostics and repairs more difficult. 

Further, the increased provision of data services on TDS’ networks has created an increased level of risk related to quality of service.  This is due to the fact that many customers increasingly rely on data communications to execute and validate transactions.  As a result, redundancy and geographical diversity of TDS’ network facilities are critical to providing uninterrupted service.  Also, the speed of repair and maintenance procedures in the event of network interruptions is critical to maintaining customer satisfaction.  TDS’ ability to maintain high quality, uninterrupted service to its customers is critical, particularly given the increasingly competitive environment and customers’ ability to choose other service providers. 

In addition, TDS’ networks and information technology and the networks and information technology of vendors on which TDS relies are subject to damage or interruption due to various events, including power outages, computer, network and telecommunications failures, computer viruses, security breaches, hackers and other cyber security risks, catastrophic events, natural disasters, errors or unauthorized actions by employees and vendors, flawed conversion of systems, disruptive technologies and technology changes.

23)Cyber-attacks or other breaches of network or information technology security could have an adverse effect on TDS' business, financial condition or results of operations.

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TDS experiences cyber-attacks of varying degrees on a regular basis. TDS maintains administrative, technical and physical controls, as well as other preventative actions, to reduce the risk of security breaches.  Although to date TDS has not experienced a material security breach, these efforts may be insufficient to prevent a security breach stemming from future cyber-attacks.  If TDS’ or its vendors’ networks and information technology are not adequately adapted to changes in technology or are damaged or fail to function properly, and/or if TDS’ or its vendors’ security is breached or otherwise compromised, TDS could suffer adverse consequences, including theft, destruction or other loss of critical and private data, including customer and/or employee data, interruptions or delays in its operations, inaccurate billings, inaccurate financial reporting, and significant costs to remedy the problems.  If TDS’ or its vendors’ systems become unavailable or suffer a security breach of customer or other data, TDS may be required to expend significant resources and take various actions to address the problems, including notification under data privacy laws and regulations, may be subject to fines, sanctions and litigation, and its reputation and operating results could be adversely affected.  Such events may also cause TDS to fail to satisfy service level commitments or trigger contractual obligations to customers of its IT services.  Any material disruption in TDS’ networks or information technology, including security breaches, could have an adverse effect on TDS’ business, financial condition or results of operations.

24)The market price of TDS’ Common Shares is subject to fluctuations due to a variety of factors.

Factors that may affect the future market price of TDS’ Common Shares include:

·General economic conditions, including conditions in the credit and financial markets;

·Industry conditions;

·Fluctuations in TDS’ quarterly customer additions, churn rate, revenues, results of operations or cash flows;

·Variations between TDS’ actual financial and operating results and those expected by analysts and investors; and

·Announcements by TDS’ competitors.

Any of these or other factors could adversely affect the future market price of TDS’ Common Shares, or could cause the future market price of TDS’ Common Shares to fluctuate from time to time.

25)Changes in facts or circumstances, including new or additional information, could require TDS to record charges in excess of amounts accrued in the financial statements, which could have an adverse effect on TDS’ business, financial condition or results of operations.

The preparation of financial statements requires TDS to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  TDS bases its estimates on historical experience and on various other assumptions and information that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities.  Actual results may differ from estimates under different assumptions or conditions. Changes in facts or circumstances, including new or additional information, could require TDS to record charges in excess of amounts accrued in the financial statements, if any, which could have an adverse effect on TDS’ business, financial condition or results of operations.

26)Disruption in credit or other financial markets, a deterioration of U.S. or global economic conditions or other events could, among other things, impede TDS’ access to or increase the cost of financing its operating and investment activities and/or result in reduced revenues and lower operating income and cash flows, which would have an adverse effect on TDS’ business, financial condition or results of operations.

Disruptions in the credit and financial markets, declines in consumer confidence, increases in unemployment, declines in economic growth and uncertainty about corporate earnings could have a significant negative impact on the U.S. and global financial and credit markets and the overall economy.  Such events could have an adverse impact on financial institutions resulting in limited access to capital and credit for many companies. Furthermore, economic uncertainties make it very difficult to accurately forecast and plan future business activities.  Changes in economic conditions, changes in financial markets, deterioration in the capital markets or other factors could have an adverse effect on TDS’ business, financial condition, revenues, results of operations and cash flows. 

27)Uncertainty of TDS’ ability to access capital, deterioration in the capital markets, other changes in market conditions, changes in TDS’ credit ratings or other factors could limit or restrict the availability of financing on terms and prices acceptable to TDS, which could require TDS to reduce its construction, development or acquisition programs.

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TDS and its subsidiaries operate capital-intensive businesses.  TDS has used internally-generated funds and has also obtained substantial funds from external sources to finance the build-out and enhancement of markets, to fund acquisitions and for general corporate purposes.  TDS also may require substantial additional capital for, among other uses, acquisitions of providers of wireless or wireline telecommunications services, cable markets, IT services or other businesses, spectrum license or system acquisitions, system development and network capacity expansion.  There can be no assurance that sufficient funds will continue to be available to TDS or its subsidiaries on terms or at prices acceptable to TDS.  Changes in TDS’ credit ratings, uncertainty of access to capital for telecommunications companies, deterioration in the capital markets, reduced regulatory capital at banks which in turn limits their ability to borrow and lend, other changes in market conditions or other factors could limit or restrict the availability of financing on terms and prices acceptable to TDS, which could require TDS to reduce its construction, development and acquisition programs.  Reduction of TDS’ construction, development and acquisition programs likely would have a negative impact on TDS’ consolidated revenues, income and cash flows.

28)Settlements, judgments, restraints on its current or future manner of doing business and/or legal costs resulting from pending and future litigation could have an adverse effect on TDS’ business, financial condition or results of operations.

TDS is regularly involved in a number of legal and policy proceedings before the FCC and various state and federal courts.  Such legal and policy proceedings can be complex, costly, protracted and highly disruptive to business operations by diverting the attention and energies of management and other key personnel.

The assessment of legal and policy proceedings is a highly subjective process that requires judgments about future events.  Additionally, amounts ultimately received or paid upon settlement or resolution of litigation and other contingencies may differ materially from amounts accrued in the financial statements.  Depending on a range of factors, these or similar proceedings could impose restraints on TDS’ current or future manner of doing business.  Such potential outcomes could have an adverse effect on TDS’ financial condition, results of operations or ability to do business.

29)The possible development of adverse precedent in litigation or conclusions in professional studies to the effect that radio frequency emissions from wireless devices and/or cell sites cause harmful health consequences, including cancer or tumors, or may interfere with various electronic medical devices such as pacemakers, could have an adverse effect on TDS’ wireless business, financial condition or results of operations.

Media reports and certain professional studies have suggested that certain radio frequency emissions from wireless devices may be linked to various health problems, including cancer or tumors, and may interfere with various electronic medical devices, including hearing aids and pacemakers.  U.S. Cellular is a party to and may in the future be a party to lawsuits against wireless carriers and other parties claiming damages for alleged health effects, including cancer or tumors, arising from wireless phones or radio frequency transmitters.  Concerns over radio frequency emissions may discourage use of wireless devices or expose TDS to potential litigation.  In addition, the FCC or other regulatory authorities may adopt regulations in response to concerns about radio frequency emissions.  Any resulting decrease in demand for wireless services, costs of litigation and damage awards or regulation could have an adverse effect on TDS’ business, financial condition or results of operations.

In addition, some studies have indicated that some aspects of using wireless devices while driving may impair drivers’ attention in certain circumstances, making accidents more likely.  These concerns could lead to potential litigation relating to accidents, deaths or serious bodily injuries, any of which could have an adverse effect on TDS’ business, financial condition or results of operations.

Numerous state and local legislative bodies have enacted or proposed legislation restricting or prohibiting the use of wireless devices while driving motor vehicles.  These enacted or proposed laws or other similar laws, if passed, could have the effect of reducing customer usage and/or increasing costs, which could have an adverse effect on TDS’ business, financial condition, or results of operations.

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30)Claims of infringement of intellectual property and proprietary rights of others, primarily involving patent infringement claims, could prevent TDS from using necessary technology to provide products or services or subject TDS to expensive intellectual property litigation or monetary penalties, which could have an adverse effect on TDS’ business, financial condition or results of operations.

TDS faces possible effects of industry litigation relating to patents, other intellectual property or otherwise, that may restrict TDS’ access to devices for sale to customers.  If technology that TDS uses in products or services were determined by a court to infringe a patent or other intellectual property right held by another person, TDS could be precluded from using that technology and could be required to pay significant monetary damages.  TDS also may be required to pay significant royalties to such person to continue to use such technology in the future.  The successful enforcement of any intellectual property rights, or TDS’ inability to negotiate a license for such rights on acceptable terms, could force TDS to cease using the relevant technology and offering services incorporating the technology.  Any litigation to determine the validity of claims that TDS’ products or services infringe or may infringe intellectual property rights of another, regardless of their merit or resolution, could be costly and divert the effort and attention of TDS’ management and technical personnel.  Regardless of the merits of any specific claim, TDS cannot give assurance that it would prevail in litigation because of the complex technical issues and inherent uncertainties in intellectual property litigation.  Although TDS generally seeks to obtain indemnification agreements from vendors that provide it with technology, there can be no assurance that any claim of infringement will be covered by an indemnity or that TDS will be able to recover all or any of its losses and costs under any available indemnity agreements.  Any claims of infringement of intellectual property and proprietary rights of others could prevent TDS from using necessary technology to provide its services or subject TDS to expensive intellectual property litigation or monetary penalties, which could have an adverse effect on TDS’ business, financial condition or results of operations.

31)Certain matters, such as control by the TDS Voting Trust and provisions in the TDS Restated Certificate of Incorporation, may serve to discourage or make more difficult a change in control of TDS.

The TDS Restated Certificate of Incorporation, as amended, and the TDS bylaws contain provisions which may serve to discourage or make more difficult a change in control of TDS without the support of the TDS Voting Trust and the TDS Board of Directors or without meeting various other conditions.

The TDS Restated Certificate of Incorporation, as amended, authorizes the issuance of different series of common stock, which have different voting rights.  The TDS Series A Common Shares have the power to elect approximately 75% (less one) of the directors and have ten votes per share in matters other than the election of directors.  The TDS Common Shares (with one vote per share) vote as a separate group only with respect to the election of 25% (plus one) of the directors.  In addition, the total percentage voting power in matters other than the election of directors of the Series A Common Shares and Common Shares are fixed, at 56.7% and 43.3%, respectively, subject to adjustment due to changes in the number of outstanding Series A Common Shares.

A substantial majority of the outstanding TDS Series A Common Shares are held in the TDS Voting Trust which expires on June 30, 2035.  The TDS Voting Trust was created to facilitate the long-standing relationships among the trustees’ certificate holders.  By virtue of the number of shares held by them, the voting trustees have the power to elect eight directors based on the current TDS Board of Directors’ size of twelve directors, and control a majority of the voting power of TDS with respect to matters other than the election of directors.

The existence of the TDS Voting Trust is likely to deter any potential unsolicited or hostile takeover attempts or other efforts to obtain control of TDS and may make it more difficult for shareholders to sell shares of TDS at higher than market prices.  The trustees of the TDS Voting Trust have advised TDS that they intend to maintain the ability to keep or dispose of voting control of TDS.

The TDS Restated Certificate of Incorporation, as amended, also authorizes the TDS Board of Directors to designate and issue TDS Undesignated Shares in one or more classes or series of preferred or common stock from time to time.  Generally, no further action or authorization by the shareholders is necessary prior to the designation or issuance of the additional TDS Undesignated Shares authorized pursuant to the TDS Restated Certificate of Incorporation, as amended, unless applicable laws or regulations would require such approval in a given instance.  Such TDS Undesignated Shares could be issued in circumstances that would serve to preserve control of TDS’ then existing management.

In addition, the TDS Restated Certificate of Incorporation, as amended, includes a provision which authorizes the TDS Board of Directors to consider various factors, including effects on customers, taxes, and the long-term and short-term interests of TDS, in the context of a proposal or offer to acquire or merge the corporation, or to sell its assets, and to reject such offer if the TDS Board of Directors determines that the proposal is not in the best interests of the corporation based on such factors.

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The provisions of the TDS Restated Certificate of Incorporation, as amended, and the TDS bylaws and the existence of various classes of capital stock could prevent shareholders from profiting from an increase in the market value of their shares as a result of a change in control of TDS by delaying or preventing such change in control.

32)Any of the foregoing events or other events could cause revenues, earnings, capital expenditures and/or any other financial or statistical information to vary from TDS’ forward-looking estimates by a material amount.

From time to time, TDS may disclose forward-looking information, including estimates of future service revenues; various measures of income before income taxes; and/or capital expenditures.  Any such forward-looking information includes consideration of known or anticipated changes to the extent disclosed, but dynamic market conditions and/or other unknown or unanticipated events, including but not limited to the risks discussed above, could cause such estimates to differ materially from the actual amounts.

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Item 1B. Unresolved Staff Comments

None.

Item 2.  Properties

U.S. Cellular

U.S. Cellular’s mobile telephone switching offices, cell sites, call centers and retail stores are located primarily in U.S. Cellular’s operating markets and are either owned or leased under long-term leases by U.S. Cellular, one of its subsidiaries, or the partnership, limited liability company or corporation which holds the license issued by the FCC. 

U.S. Cellular leases space for its corporate offices in Chicago, Bensenville and Wood Dale, Illinois; it also leases space for its network operations center in Schaumburg, Illinois and its regional and local market business offices.  U.S. Cellular operates four customer care centers; two of the facilities used in these operations are owned and two are leased. 

TDS Telecom

Wireline owns substantially all of its physical assets consisting of telephone distribution networks, network electronic equipment and land and buildings located in its ILEC operating markets.   TDS Telecom leases most of its office space, retail sites, equipment, switching facility buildings, storage facilities and sales offices used in its CLEC operations. 

Cable’s principal physical assets consist of cable distribution networks, headends, towers and business offices.  Cable generally leases business offices and space on the towers on which equipment is located while headends are located on owned or leased parcels of land.

HMS’ principal physical assets consist of data centers and business offices which are either owned or leased.

TDS Telecom leases space for its corporate headquarters office in Madison, Wisconsin.

Corporate

TDS leases space for its corporate offices in Chicago, Illinois and Middleton, Wisconsin. 

General

U.S. Cellular’s cell and transmitter sites and TDS Telecom’s telephone and cable lines are located on private and public property.  Locations on private land are by virtue of ownership, easements or other arrangements.  U.S. Cellular and TDS Telecom have not experienced major problems with obtaining zoning approval for cell and transmitter sites, telephone lines or other operating facilities and do not anticipate significant problems in this area in future periods. 

U.S. Cellular’s and TDS Telecom’s properties, plant and equipment are maintained in good operating condition and are suitable and adequate for TDS’ business operations. 

As of December 31, 2014, Property, plant and equipment, net of accumulated depreciation, totaled $2,728.2 million at U.S. Cellular, $787.2 million at Wireline, $187.9 million at Cable, $118.6 million at HMS; and $24.2 million at Corporate, Airadigm and Suttle-Straus.

Item 3.  Legal Proceedings

TDS is involved or may be involved from time to time in legal proceedings before the FCC, other regulatory authorities, and/or various state and federal courts.  If TDS believes that a loss arising from such legal proceedings is probable and can be reasonably estimated, an amount is accrued in the financial statements for the estimated loss.  If only a range of loss can be determined, the best estimate within that range is accrued; if none of the estimates within that range is better than another, the low end of the range is accrued.  The assessment of the expected outcomes of legal proceedings is a highly subjective process that requires judgments about future events.  The legal proceedings are reviewed at least quarterly to determine the adequacy of accruals and related financial statement disclosures.  The ultimate outcomes of legal proceedings could differ materially from amounts accrued in the financial statements.  See Note 13 — Commitments and Contingencies in the Notes to Consolidated Financial Statements for further information.

Item 4.  Mine Safety Disclosures.

Not applicable

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PART II

Item 5.  Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Market, holder, dividend and performance graph information is incorporated by reference from Exhibit 13 to this Form 10-K, Annual Report sections entitled “Shareholder Information” and “Consolidated Quarterly Information (Unaudited).”

Information relating to Issuer Purchases of Equity Securities is set forth below.

On August 2, 2013, the Board of Directors of TDS authorized a $250 million stock repurchase program for TDS Common Shares.  Depending on market conditions, such shares may be repurchased in compliance with Rule 10b-18 of the Securities Exchange Act of 1934, as amended ("Exchange Act"), pursuant to Rule 10b5-1 under the Exchange Act, or pursuant to accelerated share repurchase arrangements, prepaid share repurchases, private transactions or as otherwise authorized.  This authorization does not have an expiration date.

TDS determines whether to repurchase shares from time to time based on many considerations, including cash needed for other known or possible requirements, the stock price, market conditions, debt rating considerations, business forecasts, business plans, macroeconomic conditions, share issuances under compensation plans, provisions in governing and legal documents and other legal requirements, and other facts and circumstances.  Subject to these considerations, TDS may approve the repurchase of its shares from time to time when circumstances warrant. 

Period	Total Number of Shares Purchased		Average Price Paid per Share	Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Dollar Value of Shares that may yet be Purchased Under the Plans or Programs
October 1 - 31, 2014	244,269	$	23.51	244,269	$	202,770,127
November 1 - 30, 2014	-		-	-		202,770,127
December 1 - 31, 2014	67,740		23.01	67,740		201,211,668
Total for or as of the end of the   quarter ended December 31, 2014	312,009	$	23.40	312,009	$	201,211,668

The following is additional information with respect to the Common Shares authorization:

i.The date the program was announced was August 2, 2013 by Form 8-K.

ii.The amount approved was up to $250 million in aggregate purchase price of TDS Common Shares.

iii.There is no expiration date for the program.

iv.The authorization did not expire during the fourth quarter of 2014.

v.TDS did not determine to terminate the foregoing Common Share repurchase program, or cease making further purchases thereunder, during the fourth quarter of 2014.

Item 6.  Selected Financial Data

Incorporated by reference from Exhibit 13 to this Form 10-K, Annual Report section entitled “Selected Consolidated Financial and Operating Data,” except for Ratio of earnings to fixed charges, which is incorporated herein by reference from Exhibit 12 to this Form 10-K.

Item 7.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

Incorporated by reference from Exhibit 13 to this Form 10-K, Annual Report section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Item 7A.  Quantitative and Qualitative Disclosures About Market Risk

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Incorporated by reference from Exhibit 13 to this Form 10-K, Annual Report section entitled “Market Risk.”

Item 8.  Financial Statements and Supplementary Data

Incorporated by reference from Exhibit 13 to this Form 10-K, Annual Report sections entitled “Consolidated Statement of Operations,” “Consolidated Statement of Comprehensive Income,” “Consolidated Statement of Cash Flows,” “Consolidated Balance Sheet,” “Consolidated Statement of Changes in Equity,” “Notes to Consolidated Financial Statements,” “Management’s Report on Internal Control Over Financial Reporting,” “Report of Independent Registered Public Accounting Firm,” and “Consolidated Quarterly Information (Unaudited).”

Item 9.  Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A.  Controls and Procedures

Evaluation of Disclosure Controls and Procedures

TDS maintains disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) that are designed to ensure that information required to be disclosed in its reports filed or submitted under the Exchange Act is processed, recorded, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to TDS’ management, including its principal executive officer and principal financial officer, as appropriate, to allow for timely decisions regarding required disclosure.  In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

As required by SEC Rule 13a-15(b), TDS carried out an evaluation, under the supervision and with the participation of management, including its principal executive officer and principal financial officer, of the effectiveness of the design and operation of TDS’ disclosure controls and procedures as of the end of the period covered by this Annual Report.  Based on this evaluation, the principal executive officer and principal financial officer have concluded that TDS’ disclosure controls and procedures were effective as of December 31, 2014, at the reasonable assurance level. 

Management’s Report on Internal Control Over Financial Reporting 

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act.  TDS’ internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America (“GAAP”).  TDS’ internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the issuer; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the issuer are being made only in accordance with authorizations of management and, where required, the board of directors of the issuer; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the issuer’s assets that could have a material effect on the interim or annual consolidated financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.  Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Under the supervision and with the participation of TDS’ management, including its principal executive officer and principal financial officer, TDS conducted an evaluation of the effectiveness of its internal control over financial reporting as of December 31, 2014, based on the criteria established in the 2013 version of Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).  Management has concluded that TDS maintained effective internal control over financial reporting as of December 31, 2014 based on criteria established in the 2013 version of Internal Control — Integrated Framework issued by the COSO.

The effectiveness of TDS’ internal control over financial reporting as of December 31, 2014 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in the firm’s report which is incorporated by reference into Item 8 of this Annual Report on Form 10-K from Exhibit 13 filed herewith.

33

Changes in Internal Control Over Financial Reporting

There were no changes in TDS’ internal control over financial reporting during the fourth quarter of 2014 that have materially affected, or are reasonably likely to materially affect, TDS’ internal control over financial reporting.

Item 9B.  Other Information

None.

34

PART III

Item 10.  Directors, Executive Officers and Corporate Governance

Incorporated by reference from Proxy Statement sections entitled “Election of Directors,” “Corporate Governance,” “Executive Officers” and “Section 16(a) Beneficial Ownership Reporting Compliance.”

Item 11.  Executive Compensation

Incorporated by reference from Proxy Statement section entitled “Executive and Director Compensation.”

Item 12.  Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Incorporated by reference from Proxy Statement sections entitled “Security Ownership of Certain Beneficial Owners and Management” and “Securities Authorized for Issuance under Equity Compensation Plans.”

Item 13.  Certain Relationships and Related Transactions, and Director Independence

Incorporated by reference from Proxy Statement sections entitled “Corporate Governance” and “Certain Relationships and Related Transactions.”

Item 14.  Principal Accountant Fees and Services

Incorporated by reference from Proxy Statement section entitled “Fees Paid to Principal Accountants.”

35

PART IV

Item 15.  Exhibits and Financial Statement Schedules

(a)	The following documents are filed as a part of this report:
	(1)	Financial Statements
		Consolidated Statement of Operations	Annual Report*
		Consolidated Statement of Comprehensive Income	Annual Report*
		Consolidated Statement of Cash Flows	Annual Report*
		Consolidated Balance Sheet	Annual Report*
		Consolidated Statement of Changes in Equity	Annual Report*
		Notes to Consolidated Financial Statements	Annual Report*
		Management’s Report on Internal Control Over Financial Reporting	Annual Report*
		Report of Independent Registered Public Accounting Firm   —PricewaterhouseCoopers LLP	Annual Report*
		Consolidated Quarterly Information (Unaudited)	Annual Report*
		* Incorporated by reference from Exhibit 13.

(2)	Financial Statement Schedules
			Location
	Los Angeles SMSA Limited Partnership Financial Statements		S-1
		Report of Independent Registered Public Accounting Firm — Ernst & Young	S-2
		Report of Independent Registered Public Accounting Firm — Deloitte & Touche LLP	S-3
		Balance Sheets	S-4
		Statements of Operations	S-5
		Statements of Changes in Partners’ Capital	S-6
		Statements of Cash Flows	S-7
		Notes to Financial Statements	S-8

All other schedules have been omitted because they are not applicable or not required or because the required information is shown in the financial statements or notes thereto.

(3)       Exhibits

The exhibits set forth in the accompanying Index to Exhibits are filed as a part of this Report.  Compensatory plans or arrangements are identified in the Index to Exhibits with an asterisk.

36

LOS ANGELES SMSA LIMITED PARTNERSHIP

FINANCIAL STATEMENTS

TDS’ subsidiary, U.S. Cellular, owns a 5.5% limited partnership interest in the Los Angeles SMSA Limited Partnership and accounts for such interest by the equity method.  The partnership’s financial statements were obtained by U.S. Cellular as a limited partner.

S-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Partners of Los Angeles SMSA

Limited Partnership

We have audited the accompanying balance sheet of Los Angeles SMSA Limited Partnership (the Partnership) as of December 31, 2014, and the related statements of income and comprehensive income, change in partners’ capital and cash flows for the year ended December 31, 2014. These financial statements are the responsibility of the Partnership’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Partnership’s internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Partnership’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Partnership at December 31, 2014, and the results of its operations and its cash flows for the year ended December 31, 2014, in conformity with U.S. generally accepted accounting principles. 

/s/ Ernst & Young LLP
Certified Public Accountants

Orlando, Florida
February 25, 2015

S-2

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Partners of

Los Angeles SMSA Limited Partnership:

Basking Ridge, New Jersey

We have audited the accompanying balance sheets of Los Angeles SMSA Limited Partnership (the "Partnership") as of December 31, 2013 and 2012, and the related statements of operations, changes in partners’ capital, and cash flows for each of the three years in the period ended December 31, 2013. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  The Partnership is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.  Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Partnership's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such financial statements present fairly, in all material respects, the financial position of the Partnership as of December 31, 2013 and 2012, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2013 in conformity with accounting principles generally accepted in the United States of America.

/s/ Deloitte & Touche LLP

Atlanta, Georgia

February 28, 2014

S-3

Los Angeles SMSA Limited Partnership
Balance Sheets - As of December 31, 2014 and 2013
(Dollars in Thousands)
			2014		2013
ASSETS
CURRENT ASSETS:
	Due from affiliate		$	205,273	$	316,794
	Accounts receivable, net of allowance of $24,136 and $21,600			529,649		363,069
	Unbilled revenue			24,511		20,070
	Prepaid expenses			13,188		4,357
		Total current assets		772,621		704,290
PROPERTY, PLANT AND EQUIPMENT—Net				1,715,460		1,581,317
WIRELESS LICENSES				79,543		79,543
OTHER ASSETS				99,652		8,848
TOTAL ASSETS			$	2,667,276	$	2,373,998
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
	Accounts payable and accrued liabilities		$	168,893	$	117,972
	Advance billings and customer deposits			197,715		152,698
	Deferred gain			4,923		4,923
		Total current liabilities		371,531		275,593
LONG TERM LIABILITIES:
	Deferred gain			23,950		28,892
	Other liabilities			38,021		34,411
		Total long term liabilities		61,971		63,303
		Total liabilities		433,502		338,896
PARTNERS' CAPITAL				2,233,774		2,035,102
TOTAL LIABILITIES AND PARTNERS' CAPITAL			$	2,667,276	$	2,373,998
See notes to financial statements.

S-4

Los Angeles SMSA Limited Partnership
Statements of Income and Comprehensive Income - Years Ended December 31, 2014, 2013 and 2012
(Dollars in Thousands)
			2014		2013		2012
OPERATING REVENUE:
	Service revenue		$	4,317,377	$	4,166,296	$	3,920,064
	Equipment and other			851,557		667,963		677,836
		Total operating revenue		5,168,934		4,834,259		4,597,900
OPERATING EXPENSES:
	Cost of service (exclusive of depreciation and amortization)			863,031		753,438		705,065
	Depreciation and amortization			344,887		337,313		343,565
	Cost of equipment			1,195,874		885,502		948,130
	Selling, general and administrative			1,470,669		1,445,229		1,375,852
		Total operating expenses		3,874,461		3,421,482		3,372,612
OPERATING INCOME				1,294,473		1,412,777		1,225,288
OTHER INCOME:
	Interest income, net			4,199		1,520		1,051
	Other			-		4,941		4,941
		Total other income		4,199		6,461		5,992
NET INCOME AND COMPREHENSIVE INCOME			$	1,298,672	$	1,419,238	$	1,231,280
Allocation of Net Income:
	Limited Partners		$	779,203	$	851,543	$	738,768
	General Partner		$	519,469	$	567,695	$	492,512
See notes to financial statements.

S-5

Los Angeles SMSA Limited Partnership
Statements of Changes in Partners' Capital - Years Ended December 31, 2014, 2013 and 2012
(Dollars in Thousands)
		General Partner		Limited Partners
		AirTouch Cellular		AirTouch Cellular		Cellco Partnership		United States Cellular Corporation		Total Partners' Capital
BALANCE—January 1, 2012		$	753,834	$	797,179	$	229,920	$	103,651	$	1,884,584
	Distributions		(480,000)		(507,600)		(146,400)		(66,000)		(1,200,000)
	Net Income		492,512		520,832		150,216		67,720		1,231,280
BALANCE—December 31, 2012			766,346		810,411		233,736		105,371		1,915,864
	Distributions		(520,000)		(549,900)		(158,600)		(71,500)		(1,300,000)
	Net Income		567,695		600,337		173,146		78,060		1,419,238
BALANCE—December 31, 2013			814,041		860,848		248,282		111,931		2,035,102
	Distributions		(440,000)		(465,300)		(134,200)		(60,500)		(1,100,000)
	Net Income		519,468		549,338		158,438		71,428		1,298,672
BALANCE—December 31, 2014		$	893,509	$	944,886	$	272,520	$	122,859	$	2,233,774
See notes to financial statements.

S-6

Los Angeles SMSA Limited Partnership
Statements of Cash Flows - Years Ended December 31, 2014, 2013 and 2012
(Dollars in Thousands)
					2014		2013		2012
CASH FLOWS FROM OPERATING ACTIVITIES:
	Net income				$	1,298,672	$	1,419,238	$	1,231,280
	Adjustments to reconcile net income to net cash provided by operating activities:
		Depreciation and amortization				344,887		337,313		343,565
		Amortization of deferred gain				(4,942)		(4,941)		(4,957)
		Provision for losses on accounts receivable				34,370		44,339		37,057
		Changes in certain assets and liabilities:
			Accounts receivable			(200,950)		(68,809)		(69,272)
			Unbilled revenue			(4,441)		(579)		2,761
			Prepaid expenses			(8,831)		180		(760)
			Other assets			(91,809)		(8,193)		19
			Accounts payable and accrued liabilities			32,591		(15,872)		18,548
			Advance billings and customer deposits			45,017		7,849		9,826
			Other liabilities			3,610		10,447		4,208
				Net cash provided by operating activities		1,448,174		1,720,972		1,572,275
CASH FLOWS FROM INVESTING ACTIVITIES:
	Capital expenditures					(487,511)		(371,385)		(322,328)
	Fixed asset transfers out					27,816		23,459		50,152
	Change in due from affiliate					111,521		(73,046)		(100,099)
				Net cash used in investing activities		(348,174)		(420,972)		(372,275)
CASH FLOWS FROM FINANCING ACTIVITIES:
	Distributions to partners					(1,100,000)		(1,300,000)		(1,200,000)
				Net cash used in financing activities		(1,100,000)		(1,300,000)		(1,200,000)
CHANGE IN CASH						—		—		—
CASH—Beginning of year						—		—		—
CASH—End of year					$	—	$	—	$	—
NONCASH TRANSACTIONS FROM INVESTING ACTIVITIES:
	Accruals for Capital Expenditures				$	31,019	$	12,689	$	11,403
See notes to financial statements.

S-7

Los Angeles SMSA Limited Partnership

Notes to Financial Statements – Years Ended December 31, 2014, 2013 and 2012.

(Dollars in Thousands)

1.ORGANIZATION AND MANAGEMENT

Los Angeles SMSA Limited Partnership – Los Angeles SMSA Limited Partnership (the “Partnership” or “we”) was formed in 1984. The principal activity of the Partnership is providing cellular service in the Los Angeles metropolitan service area.

The partners and their respective ownership percentages as of December 31, 2014, 2013 and 2012 are as follows:

General Partner
	AirTouch Cellular* (“General Partner”)	40.0%
Limited Partners:
	AirTouch Cellular*	42.3%
	Cellco Partnership	12.2%
	United States Cellular Corporation	5.5%

______________________________

* AirTouch Cellular is a wholly-owned subsidiary of Verizon Wireless (VAW) LLC (a wholly-owned subsidiary of Cellco Partnership (“Cellco”) doing business as Verizon Wireless.

In accordance with the partnership agreement, Cellco is responsible for managing the operations of the partnership (See Note 6).

2.SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates — We prepare our financial statements using U.S. generally accepted accounting principles (GAAP), which require management to make estimates and assumptions that affect reported amounts and disclosures.  Actual results could differ from those estimates.

Examples of significant estimates include: the allowance for doubtful accounts, the recoverability of property, plant, and equipment, the recoverability of intangible assets and other long-lived assets, unbilled revenues, fair values of financial instruments, accrued expenses and contingencies.

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

The Partnership earns revenue primarily by providing access to and usage of its network.  In general, access revenue is billed one month in advance and recognized when earned.  Usage revenue is generally billed in arrears and recognized when service is rendered.  Equipment sales revenue associated with the sale of wireless handsets and accessories is generally recognized when the products are delivered to and accepted by the customer, as this is considered to be a separate earnings process from providing wireless services.  For agreements involving the resale of third-party services in which we are considered the primary obligor in the arrangements, we record the revenue gross at the time of the sale.  For equipment sales, we generally subsidize the cost of wireless devices for plans under our traditional subsidy model.  The amount of this subsidy is generally contingent on the arrangement and terms selected by the customer.   In multiple deliverable arrangements which involve the sale of equipment and a service contract, the equipment revenue is recognized up to the amount collected when the wireless device is sold. 

In addition to the traditional subsidy model for equipment sales, we offer new and existing customers the option to participate in Verizon Edge, a program that provides eligible wireless customers with the ability to pay for handsets under an equipment installment plan. Under the Verizon Edge program, customers have the right to upgrade their handset after a minimum of 30 days, subject to certain conditions, including making a stated portion of the required device payments, trading in their handset in good working condition and signing a new contract with Verizon. Upon upgrade, the outstanding balance of the equipment installment plan is exchanged for the used handset. This trade-in right is accounted for as a guarantee obligation.

Verizon Edge is a multiple-element arrangement typically consisting of the trade-in right, handset and monthly wireless service. At the inception of the arrangement, the amount allocable to the delivered units of accounting is limited to the amount that is not contingent upon the delivery of the monthly wireless service (the noncontingent amount). The full amount of the trade-in right’s fair value (not an allocated value) will be recognized as the guarantee liability and the remaining allocable consideration will be allocated to the handset. The value of the guarantee liability effectively results in a reduction to revenue recognized for

S-8

the sale of the handset. The guarantee liability is measured at fair value upon initial recognition based on assumptions lacking observable pricing inputs including the probability and timing of the customer upgrading to a new phone, the customer’s estimated remaining installment balance at the time of trade-in and the estimated fair value of the phone at the time of trade-in and therefore is classified within Level 3 of the fair value hierarchy. When the customer trades-in their used phone, the handset received is recorded to inventory and measured as the difference between the remaining equipment installment plan balance at the time of trade-in and the guarantee liability. As a result of changes in the Verizon Edge program during 2014, and corresponding changes in related assumptions, the guarantee liability associated with Verizon Edge agreements under the current program is not material.  The guarantee liability may increase after initial recognition as a result of changes in facts or assumptions and we will account for any increase in the guarantee liability with a corresponding decrease to revenue. The subsequent derecognition of the guarantee liability occurs when the guarantor is released from risk, which will occur at the earlier of the time the trade-in right is exercised or expires.

Roaming revenue reflects service revenue earned by the Partnership when customers not associated with the Partnership operate in the service area of the Partnership and use the Partnership’s network.  The roaming rates with third party carriers associated with those customers are based on agreements with such carriers.  The roaming rates charged by the Partnership to Cellco are established by Cellco on a periodic basis and may not reflect current market rates (see Note 6).

Maintenance and Repairs – We charge the cost of maintenance and repairs, including the cost of replacing minor items not constituting substantial betterments, principally to Cost of services as these costs are incurred.

Advertising Costs– Costs for advertising products and services as well as other promotional and sponsorship costs are charged to Selling, general and administrative expense in the periods in which they are incurred.

Operating Expenses – Operating expenses include expenses incurred directly by the Partnership, as well as an allocation of selling, general and administrative, and operating costs incurred by Cellco or its affiliates on behalf of the Partnership. Employees of Cellco provide services performed on behalf of the Partnership. These employees are not employees of the Partnership, therefore operating expenses include direct and allocated charges of salary and employee benefit costs for the services provided to the Partnership. Cellco believes such allocations, principally based on the Partnership’s percentage of certain revenue streams, total customers, customer gross additions or minutes-of-use, are in accordance with the Partnership Agreement and are a reasonable method of allocating such costs.

Cost of roaming reflects costs incurred by the Partnership when customers associated with the Partnership operate in a service area not associated with the Partnership and use a network not associated with the Partnership.  The roaming rates with third party carriers are based on agreements with such carriers.  The roaming rates charged to the Partnership by Cellco are established by Cellco on a periodic basis and may not reflect current market rates (see Note 6).

Cost of equipment is recorded upon sale of the related equipment at Cellco’s cost basis.  No inventory of equipment is maintained at the Partnership.

Retail Stores–The daily operations of all retail stores owned by the Partnership are managed by Cellco. All fixed assets, liabilities, income and expenses related to these retail stores are recorded in the financial statements of the Partnership.

Comprehensive Income–Comprehensive income is the same as net income as presented in the accompanying statements of income and comprehensive income.

Income Taxes–  The Partnership is treated as a pass through for income tax purposes and, therefore, is not subject to federal, state or local income taxes.  Accordingly, no provision has been recorded for income taxes in the Partnership’s financial statements.  The results of operations, including taxable income, gains, losses, deductions and credits, are allocated to and reflected on the income tax Schedules provided to the respective partners.

The Partnership files federal and state tax returns.  The 2011 through 2014 federal tax years for the Partnership remain subject to examination by the Internal Revenue Service.  The 2011 through 2014 tax years for the Partnership remain subject to examination by the state tax jurisdiction.  Because the application of tax laws and regulations to many types of transactions is susceptible to varying interpretations, positions taken could be changed at a later date upon final determination by taxing authorities.

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

S-9

Additionally, administrative and operating costs incurred by Cellco on behalf of the Partnership, as well as property, plant and equipment transactions with affiliates, are charged to the Partnership  through this account. Interest income is based on the Applicable Federal Rate which was approximately 0.3%, 0.2% and 0.2% for the years ended December 31, 2014, 2013 and 2012, respectively.  Interest expense is calculated by applying Cellco’s average cost of borrowing from Verizon Communications, Inc, which was approximately 5.0%, 7.4% and 7.3% for the years ended December 31, 2014, 2013 and 2012 respectively.  Included in interest income, net is interest income of $1,706, $1,352 and $1,123 for the years ended December 31, 2014, 2013 and 2012, respectively, related to due from affiliate.

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

Impairment – All of our long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable.  If any indications are present, we test for recoverability by comparing the carrying amount of the asset group to the net undiscounted cash flows expected to be generated from the asset group.  If those net undiscounted cash flows do not exceed the carrying amount, we perform the next step, which is to determine the fair value of the asset and record an impairment, if any.  We reevaluate the useful life determinations for these long-lived assets each year to determine whether events and circumstances warrant a revision in their remaining useful lives.

Property, Plant and Equipment – We record plant, property and equipment at cost.  Plant, property and equipment are generally depreciated on a straight-line basis. 

Leasehold improvements are amortized over the shorter of the estimated life of the improvement or the remaining term of the related lease, calculated from the time the asset was placed in service.

When the depreciable assets are retired or otherwise disposed of, the related cost and accumulated depreciation are deducted from the property, plant and equipment accounts, and any gains or losses on disposition are recognized in income.  Transfers of property, plant and equipment between Cellco and affiliates are recorded at net book value on the date of the transfer and included in due from affiliate.

We capitalize interest associated with the acquisition or construction of network-related assets.  Capitalized interest is reported as a reduction in interest expense and depreciated as part of the cost of the network-related assets.

Wireless Licenses – A significant portion of our intangible assets are wireless licenses that provide our wireless operations with the exclusive right to utilize designated radio frequency spectrum to provide wireless communication services.  While licenses are issued for only a fixed time, generally ten years, such licenses are subject to renewal by the Federal Communications Commission (FCC).  License renewals have occurred routinely and at nominal cost.  Moreover, we have determined that there are currently no legal, regulatory, contractual, competitive, economic or other factors that limit the useful life of our wireless licenses.  As a result, we treat the wireless licenses as an indefinite-lived intangible asset.  We reevaluate the useful life determination for wireless licenses each year to determine whether events and circumstances continue to support an indefinite useful life.

Cellco and the Partnership test their wireless licenses for potential impairment annually.  In 2014 and 2013, Cellco and the Partnership performed a qualitative assessment to determine whether it is more likely than not that the fair value of their wireless licenses was less than the carrying amount.  As part of the assessment, we considered several qualitative factors including the business enterprise value of Cellco, macroeconomic conditions (including changes in interest rates and discount rates), industry and market considerations (including industry revenue and EBITDA (Earnings before interest, taxes, depreciation and amortization) margin projections), the projected financial performance of Cellco and the Partnership, as well as other factors.  The most recent quantitative assessment of the wireless licenses occurred in 2012 and yielded no impairment. The quantitative assessment consisted of comparing the estimated fair value of their wireless licenses to the aggregated carrying amount as of the test date. Using the quantitative assessment, they evaluated their licenses on an aggregate basis using a direct value approach.  The direct value approach estimates fair value using a discounted cash flow analysis to estimate what a marketplace participant would be willing to pay to purchase the aggregated wireless licenses as of the valuation date. 

Interest expense incurred while qualifying activities are performed to ready wireless licenses for their intended use is capitalized as part of wireless licenses.  The capitalization period ends when the development is discontinued or substantially complete and the license is ready for its intended use. 

S-10

In addition, Cellco believes that under the Partnership agreement it has the right to allocate, based on a reasonable methodology, any impairment loss recognized by Cellco for all licenses included in Cellco’s national footprint.  Cellco and the Partnership evaluated their wireless licenses for potential impairment as of December 15, 2014 and December 15, 2013.  These evaluations resulted in no impairment of wireless licenses.

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

Fair Value Measurements– Fair value of financial and non-financial assets and liabilities is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.  The three-tier hierarchy for inputs used in measuring fair value, which prioritizes the inputs used in the methodologies of measuring fair value for assets and liabilities, is as follows:

Level 1 - Quoted prices in active markets for identical assets or liabilities

Level 2 - Observable inputs other than quoted prices in active markets for identical assets and liabilities

Level 3 - No observable pricing inputs in the market

Financial assets and financial liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurements.  Our assessment of the significance of a particular input to the fair value measurements requires judgment, and may affect the valuation of the assets and liabilities being measured and their placement within the fair value hierarchy.

Distributions – The Partnership is required to make distributions to its partners based upon the Partnership’s operating results, due to/from affiliate status, and financing needs as determined by the General Partner at the date of the distribution.

Recent Accounting Standards - In May 2014, the accounting standard update related to the recognition of revenue from contracts with customers was issued. This standard update clarifies the principles for recognizing revenue and develops a common revenue standard for U.S. GAAP and International Financial Reporting Standards. The standard update intends to provide a more robust framework for addressing revenue issues; improve comparability of revenue recognition practices across entities, industries, jurisdictions, and capital markets; and provide more useful information to users of financial statements through improved disclosure requirements. Upon adoption of this standard update, we expect that the allocation and timing of revenue recognition will be impacted. We expect to adopt this standard update during the first quarter of 2017.

There are two adoption methods available for implementation of the standard update related to the recognition of revenue from contracts with customers. Under one method, the guidance is applied retrospectively to contracts for each reporting period presented, subject to allowable practical expedients. Under the other method, the guidance is applied to contracts not completed as of the date of initial application, recognizing the cumulative effect of the change as an adjustment to the beginning balance of retained earnings, and also requires additional disclosures comparing the results to the previous guidance. We are currently evaluating these adoption methods and the impact that this standard update will have on our financial statements.

In January 2015, the accounting standard update related to the reporting of extraordinary and unusual items was issued. This standard update eliminates the concept of extraordinary items from U.S. GAAP as part of an initiative to reduce complexity in accounting standards while maintaining or improving the usefulness of the information provided to the users of the financial statements. The presentation and disclosure guidance for items that are unusual in nature or occur infrequently will be retained and expanded to include items that are both unusual in nature and infrequent in occurrence. This standard update is effective as of the first quarter of 2016; however, earlier adoption is permitted. 

Reclassifications – Certain amounts in the 2012 and 2013 financial statements have been reclassified to conform to the 2014 presentation.

Subsequent Events – Events subsequent to December 31, 2014 have been evaluated through February 25, 2015, the date the financial statements were issued.

3.WIRELESS EQUIPMENT INSTALLMENT PLANS

We offer new and existing customers the option to participate in Verizon Edge, a program that provides eligible wireless customers with the ability to pay for their handset over a period of time (an equipment installment plan) and the right to

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upgrade their handset after a minimum of 30 days, subject to certain conditions, including making a stated portion of the required device payments, trading in their handset in good working condition and signing a new contract with Verizon.  The current portion of gross guarantee liability related to this program, which was approximately $37,602 at December 31, 2014 and was not material at December 31, 2013, was primarily included in Advance billings and customer deposits on our balance sheets. The long term portion of gross guarantee liability related to this program, which was approximately $3,960 at December 31, 2014 and was not material at December 31, 2013, was primarily included in Other liabilities on our balance sheets.

At the time of sale, we impute risk adjusted interest on the receivables associated with Verizon Edge.  We record the imputed interest as a reduction to the related accounts receivable.  Interest income, which is included within Interest income, net on our statements of income and comprehensive income, is recognized over the financed installment term.

We assess the collectability of our Verizon Edge receivables based upon a variety of factors, including the credit quality of the customer base, payment trends and other qualitative factors.  The current portion of our receivables related to Verizon Edge included in Accounts receivable was $153,460 at December 31, 2014 and was not material at December 31, 2013. The long-term portion of the equipment installment plan receivables included in Other assets was $79,515 December 31, 2014 and was not material at December 31, 2013.

The credit profiles of our customers with a Verizon Edge plan are similar to those of our customers with a traditional subsidized plan.  Customers with a credit profile which carries a higher risk are required to make a down payment for equipment financed through Verizon Edge.

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4.PROPERTY, PLANT AND EQUIPMENT, NET

Property, plant and equipment consist of the following as of December 31, 2014 and 2013:

	2014		2013
Land	$	7,730	$	7,730
Buildings and improvements (15-40 years)		725,592		633,840
Wireless plant and equipment (3-15 years)		3,753,115		3,483,289
Furniture, fixtures and equipment (2-10 years)		65,425		67,981
Leasehold improvements (5 years)		366,349		327,277
		4,918,211		4,520,117
Less: accumulated depreciation		(3,202,751)		(2,938,800)
Property, plant and equipment, net	$	1,715,460	$	1,581,317
Depreciation expense	$	343,883	$	337,302

Capitalized network engineering costs of $26,564 and $22,242 were recorded during the years ended December 31, 2014 and 2013, respectively. Construction in progress included in certain classifications shown above, principally wireless plant and equipment, amounted to $116,258 and $88,836, as of December 31, 2014 and 2013, respectively.

Lease Transactions – Prior to the acquisition of the Partnership interest by Cellco in 2000, Vodafone Group Plc (“Vodafone”), then parent company of AirTouch Cellular, entered into agreements to sublease all of its unused space on up to 430 of its communications towers (“Sublease Agreement”) to SpectraSite Holdings, Inc. (“SpectraSite”) in exchange for $155,000. At various closings in 2001 and 2000, SpectraSite leased 274 communications towers owned and operated by the Partnership for $98,465.  The gain realized on the transaction is being recognized over the term of the Sublease Agreement.  At December 31, 2014 and 2013, the Partnership has $28,873 and $33,815, respectively, recorded as deferred gain.  The Sublease Agreement requires monthly maintenance fees for the existing physical space used by the Partnership’s cellular equipment. The Partnership paid $3,944, $8,872 and $11,421 to SpectraSite pursuant to the Sublease Agreement for the years ended December 31, 2014, 2013 and 2012, respectively, which is included in cost of service in the accompanying statements of income and comprehensive Income.

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5.CURRENT LIABILITIES

Accounts payable and accrued liabilities consist of the following as of December 31, 2014 and 2013:

	2014		2013
Accounts payable	$	153,147	$	104,654
Accrued liabilities		15,746		13,318
Accounts payable and accrued liabilities	$	168,893	$	117,972

Advance billings and customer deposits consist of the following as of December 31, 2014 and 2013:

	2014		2013
Advance billings	$	154,098	$	148,328
Customer deposits		6,015		4,370
Edge guarantee liability		37,602		-
Advance billings and customer deposits	$	197,715	$	152,698

6.TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES

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

Service revenues - Service revenues include monthly customer billings processed by Cellco on behalf of the Partnership and roaming revenues relating to customers of other affiliated markets that are specifically identified to the Partnership.  Service revenue also includes long distance, data, and certain revenue reductions including revenue concessions that are processed by Cellco and allocated to the Partnership based on certain factors deemed appropriate by Cellco.

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

Cost of Service - Cost of service includes roaming costs relating to the Partnership’s customers roaming in other affiliated markets.  Cost of service also includes cost of telecom, long distance and application content that are incurred by Cellco and allocated to the Partnership based on certain factors deemed appropriate by Cellco.  The Partnership has also entered into a lease agreement for the right to use additional spectrum owned by Cellco.  See Note 6 for further information regarding this arrangement.

Cost of equipment - Cost of equipment is recorded at Cellco’s cost basis (see Note 2). Cost of equipment also includes certain costs related to handsets, accessories and other costs incurred by Cellco and allocated to the Partnership based on certain factors deemed appropriate by Cellco.

Selling, general and administrative - Selling, general and administrative expenses include commissions, customer billing, office telecom, customer care, salaries, sales and marketing and advertising expenses that are specifically identified to the Partnership as well as incurred by Cellco and allocated to the Partnership based on certain factors deemed appropriate by Cellco.

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Property, plant and equipment - Property, plant and equipment includes assets purchased by Cellco and directly charged to the Partnership as well as assets transferred between Cellco and the Partnership (see Note 2).

7.COMMITMENTS 

Cellco, on behalf of the Partnership, and the Partnership itself have entered into operating leases for facilities, and equipment used in the Partnership’s operations. Lease contracts include renewal options that include rent expense adjustments based on the Consumer Price Index as well as annual and end-of-lease term adjustments. Rent expense is recorded on a straight-line basis. The noncancellable lease term used to calculate the amount of the straight-line rent expense is generally determined to be the initial lease term, including any optional renewal terms that are reasonably assured. Leasehold improvements related to these operating leases are amortized over the shorter of their estimated useful lives or the noncancellable lease term. For the years ended December 31, 2014, 2013 and 2012, the Partnership incurred a total of $97,285, $87,643 and $80,178 respectively, as rent expense related to these operating leases, which was included in cost of service and general and administrative expenses in the accompanying statements of income and comprehensive income. Aggregate future minimum rental commitments under noncancellable operating leases, excluding renewal options that are not reasonably assured and remaining tower maintenance fees of $26,274  (See Note 4), for the years shown are as follows:

Years	Amount
2015	$	83,936
2016		68,834
2017		55,917
2018		43,629
2019		31,104
2020 and thereafter		75,546
Total minimum payments	$	358,966

The Partnership has also entered into certain agreements with Cellco, whereas the Partnership leases certain spectrum from Cellco that overlaps the Los Angeles metropolitan service area. Total rent expense under these leases amounted to $110,044 in 2014, $51,699 in 2013 and $51,185 in 2012, respectively.

Based on the terms of these leases as of December 31, 2014, future spectrum lease obligations, excluding renewal options that are not reasonably assured, are expected to be as follows:

Years	Amount
2015	$	125,097
2016		125,734
2017		104,294
2018		93,249
2019		82,781
2020 and thereafter		1,026,801
Total minimum payments	$	1,557,956

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

8.CONTINGENCIES 

Cellco and the Partnership are subject to lawsuits and other claims including class actions, product liability, patent infringement, intellectual property, antitrust, partnership disputes, and claims involving relations with resellers and agents. Cellco is also currently defending lawsuits filed against it and other participants in the wireless industry alleging various adverse effects as a result of wireless phone usage. Various consumer class action lawsuits allege that Cellco violated certain state consumer protection laws and other statutes and defrauded customers through misleading billing practices or statements. These matters may involve indemnification obligations by third parties and/or affiliated parties covering all or part of any

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potential damage awards against Cellco and the Partnership and/or insurance coverage. All of the above matters are subject to many uncertainties, and the outcomes are not currently predictable.

The Partnership may be allocated a portion of the damages that may result upon adjudication of these matters if the claimants prevail in their actions. In none of the currently pending matters is the amount of accrual material. An estimate of the reasonably possible loss or range of loss in excess of the amounts already accrued to either Cellco or the Partnership with respect to these matters as of December 31, 2014 cannot be made at this time due to various factors typical in contested proceedings, including (1) uncertain damage theories and demands; (2) a less than complete factual record; (3) uncertainty concerning legal theories and their resolution by courts or regulators; and (4) the unpredictable nature of the opposing party and its demands. We continuously monitor these proceedings as they develop and adjust any accrual or disclosure as needed. We do not expect that the ultimate resolution of any pending regulatory or legal matter in future periods will have a material effect on the financial condition of the Partnership, but it could have a material effect on our results of operations for a given reporting period.

9.RECONCILIATION OF ALLOWANCE FOR DOUBTFUL ACCOUNTS

		Balance at Beginning of the Year		Additions Charged to Operations		Write-offs Net of Recoveries		Balance at End of the Year
Accounts Receivable Allowances:
	2014	$	21,600	$	34,370	$	(31,834)	$	24,136
	2013		14,205		44,339		(36,944)		21,600
	2012		14,076		37,057		(36,928)		14,205
******

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

TELEPHONE AND DATA SYSTEMS, INC.
By:	/s/ LeRoy T. Carlson, Jr.
	LeRoy T. Carlson, Jr.
	President and Chief Executive Officer
	(principal executive officer)
By:	/s/ Douglas D. Shuma
	Douglas D. Shuma
	Senior Vice President and Controller
	(principal financial officer and principal accounting officer)

Dated:  February 25, 2015

Power of Attorney

Each person whose signature appears below constitutes and appoints LeRoy T. Carlson, Jr. as his or her true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution for him or her and in his or her name, place, and stead, in any and all capacities to sign any and all amendments to this Annual Report on Form 10-K under the Securities Exchange Act of 1934, as amended, and to file the same, with all exhibits thereto, and other documents in connection therewith with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do so and perform each and every act and thing requisite or necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all the said attorney-in fact and agent or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ LeRoy T. Carlson, Jr.	Director	February 25, 2015
LeRoy T. Carlson, Jr.
/s/ Letitia G. Carlson, M.D.	Director	February 25, 2015
Letitia G. Carlson, M.D.
/s/ Prudence E. Carlson	Director	February 25, 2015
Prudence E. Carlson
/s/ Walter C.D. Carlson	Director	February 25, 2015
Walter C.D. Carlson
/s/ Clarence A. Davis	Director	February 25, 2015
Clarence A. Davis
/s/ Kenneth R. Meyers	Director	February 25, 2015
Kenneth R. Meyers
/s/ George W. Off	Director	February 25, 2015
George W. Off
/s/ Christopher D. O’Leary	Director	February 25, 2015
Christopher D. O’Leary
/s/ Mitchell H. Saranow	Director	February 25, 2015
Mitchell H. Saranow
/s/ Gary L. Sugarman	Director	February 25, 2015
Gary L. Sugarman
/s/ Herbert S. Wander	Director	February 25, 2015
Herbert S. Wander
/s/ David A Wittwer	Director	February 25, 2015
David A. Wittwer

INDEX TO EXHIBITS

Exhibit Number	Description of Documents
3.1	TDS’ Restated Certificate of Incorporation, dated January 24, 2012, is hereby incorporated by reference to Exhibit 3.1 to TDS’ Registration Statement on Form 8-A/A dated January 24, 2012.
3.2(a)	TDS Restated Bylaws, as amended, are hereby incorporated by reference to Exhibit 3.1 to TDS’ Current Report on Form 8‑K dated July 19, 2013.
3.2(b)	Amendment to Section 2.23 of TDS Restated Bylaws, is hereby incorporated by reference to Exhibit 3.1 to TDS’ Current Report on form 8-K dated August 20, 2014
4.1	TDS’ Restated Certificate of Incorporation is hereby incorporated as Exhibit 3.1.
4.2(a)	TDS Restated Bylaws, as amended, are hereby incorporated as Exhibit 3.2(a) and 3.2(b).
4.2(b)	TDS Restated Bylaws, as amended, are hereby incorporated as Exhibit 4.2.
4.3(a)	Indenture for Senior Debt Securities between TDS and The Bank of New York Mellon Trust Company, N.A., formerly known as The Bank of New York Trust Company, N.A., as successor to BNY Midwest Trust Company (“BNY”) dated November 1, 2001 is hereby incorporated by reference to Exhibit 4 to TDS’ Quarterly Report on Form 10-Q for the quarter ended September 30, 2001.
4.3(b)	Second Supplemental Indenture dated May 31, 2002 by and between TDS and BNY making changes to the First Supplemental Indenture is hereby incorporated by reference to Exhibit 4.8 to TDS’ Quarterly Report on Form 10-Q for the quarter ended June 30, 2002.
4.3(c)	Third Supplemental Indenture dated March 31, 2005 by and between TDS and BNY, establishing TDS’ 6.625% Senior Notes due 2045, is hereby incorporated by reference to Exhibit 4.1 to TDS’ Current Report on Form 8‑K dated March 23, 2005.
4.3(d)	Fourth Supplemental Indenture dated November 16, 2010 by and between TDS and BNY, establishing TDS’ 6.875% Senior Notes due 2059, is hereby incorporated by reference to Exhibit 4.1 to TDS’ Current Report on Form 8‑K dated November 16, 2010.
4.3(e)	Fifth Supplemental Indenture dated March 21, 2011 by and between TDS and BNY, establishing TDS’ 7% Senior Notes due 2060, is hereby incorporated by reference to Exhibit 4.1 to TDS’ Current Report on Form 8-K dated March 21, 2011.
4.3(f)	Sixth Supplemental Indenture dated November 26, 2012 by and between TDS and BNY, establishing TDS’ 5.875% Senior Notes due 2061, is hereby incorporated by reference to Exhibit 4.1 to TDS’ Current Report on Form 8-K dated November 26, 2012.
4.4(a)	Revolving Credit Agreement dated December 17, 2010 among TDS and the lenders named therein, and Bank of America, N.A. as Administrative Agent, is hereby incorporated by reference to Exhibit 4.1 to TDS’ Current Report on Form 8-K dated December 17, 2010.
4.4(b)	Third Amendment dated July 24, 2014 to TDS Revolving Credit Agreement dated December 17, 2010, is hereby incorporated by reference to Exhibit 4.1 to TDS’ Current Report on Form 8-K dated July 24, 2014.
4.5(a)	Revolving Credit Agreement dated December 17, 2010 among U.S. Cellular and the lenders named therein, and Toronto Dominion (Texas) LLC as Administrative Agent, is hereby incorporated by reference to Exhibit 4.1 to U.S. Cellular’s Current Report on Form 8-K dated December 17, 2010.
4.5(b)	Third Amendment dated July 24, 2014 to U.S. Cellular Revolving Credit Agreement dated December 17, 2010, is hereby incorporated by reference to Exhibit 4.1 to U.S. Cellular’s Current Report on Form 8-K dated July 24, 2014.
4.6(a)	Indenture for Senior Debt Securities dated June 1, 2002 between U.S. Cellular and BNY is hereby incorporated by reference to Exhibit 4.1 to Form S-3 dated May 31, 2013 (File No. 333-188971).
4.6(b)	Form of Third Supplemental Indenture dated as of December 3, 2003 between U.S. Cellular and BNY, relating to $444,000,000 of U.S. Cellular’s 6.7% Senior Notes due 2033, is hereby incorporated by reference to Exhibit 4.1 to U.S. Cellular’s Current Report on Form 8-K dated December 3, 2003.
4.6(c)	Form of Fifth Supplemental Indenture dated as of June 21, 2004 between U.S. Cellular and BNY, relating to $100,000,000 of U.S. Cellular’s 6.7% Senior Notes due 2033, is hereby incorporated by reference to Exhibit 4.1 to U.S. Cellular’s Current Report on Form 8-K dated June 21, 2004.
4.6(d)	Form of Sixth Supplemental Indenture dated as of May 9, 2011 between U.S. Cellular and BNY, relating to $342,000,000 of U.S. Cellular’s 6.95% Senior Notes due 2060, is hereby incorporated by reference to Exhibit 4.1 to U.S. Cellular’s Current Report on Form 8-K dated May 9, 2011.
4.6(e)	Form of Seventh Supplemental Indenture dated as of December 8, 2014 between U.S. Cellular and BNY, relating to $275,000,000 of U.S. Cellular’s 7.25% Senior Notes due 2063, is hereby incorporated by reference to Exhibit 2 to U.S. Cellular’s Registration Statement on Form 8-A dated December 2, 2014.
4.7	Indenture for Subordinated Debt Securities between TDS and BNY is hereby incorporated by reference to Exhibit 4.1 to TDS’ Current Report on Form 8-K dated September 16, 2013.
4.8	Indenture for Subordinated Debt Securities between U.S. Cellular and BNY is hereby incorporated by reference to Exhibit 4.1 to U.S. Cellular’s Current Report on Form 8-K dated September 16, 2013.
4.9	Term Loan Credit Agreement dated as of January 21, 2015, is hereby incorporated by reference to Exhibit 4.1 to U.S. Cellular’s Current Report on Form 8-K dated January 21, 2015.
9.1	Amendment and Restatement (dated April 22, 2005) of Voting Trust Agreement dated June 30, 1989 is hereby incorporated by reference to the Exhibit filed on Amendment No. 3 to Schedule 13D dated May 2, 2005 filed by the trustees of such voting trust with respect to TDS Common Shares.
10.1(a)*	Salary Continuation Agreement for LeRoy T. Carlson dated May 20, 1977, as amended May 22, 1981 and May 25, 1984, is hereby incorporated by reference to TDS’ Registration Statement on Form S-2, No. 2-92307.
10.1(b)*	Amendment to Salary Continuation Agreement for LeRoy T. Carlson is hereby incorporated by reference to Exhibit 10.4 to TDS’ Current Report on Form 8-K dated November 25, 2008.
10.2(a)*	TDS Amended and Restated 2004 Long-Term Incentive Plan is hereby incorporated by reference to Exhibit 10.1 to TDS’ Current Report on Form 8-K dated April 11, 2005.
10.2(b)*	First Amendment to TDS Amended and Restated 2004 Long-Term Incentive Plan is hereby incorporated by reference to Exhibit 10.3 to TDS’ Current Report on Form 8-K dated December 10, 2007.
10.2(c)*	Second Amendment to TDS Amended and Restated 2004 Long-Term Incentive Plan is hereby incorporated by reference to Exhibit 10.4 to TDS’ Current Report on Form 8-K dated December 10, 2007.
10.2(d)*	Third Amendment to TDS Amended and Restated 2004 Long-Term Incentive Plan is hereby incorporated by reference to Exhibit 10.1 to TDS’ Current Report on Form 8-K dated December 22, 2008.
10.3(a)*	Telephone and Data Systems, Inc. 2011 Long-Term Incentive Plan is hereby incorporated by reference to Exhibit B to TDS’ Notice of Annual Meeting of Shareholders and Proxy Statement dated April 18, 2014.
10.3(b)*	Amendment No. 1 to Telephone and Data Systems, Inc.  2011 Long-Term Incentive Plan is hereby incorporated by reference to Exhibit A to TDS’ Notice of Annual Meeting of Shareholders and Proxy statement dated April 18, 2014.
10.4(a)*	TDS Supplemental Executive Retirement Plan, as amended and restated, effective January 1, 2009 is hereby incorporated by reference to Exhibit 10.1 to TDS’ Current Report on Form 8-K dated August 27, 2008.
10.4(b)*	Amendment Number One to the Telephone and Data Systems, Inc. Supplemental Executive Retirement Plan, is hereby incorporated by reference to Exhibit 10.2 to Telephone and Data Systems, Inc.’s Current Report on Form 8-K dated March 15, 2012.
10.4(c)*	Amendment Number Two to the Telephone and Data Systems, Inc. Supplemental Executive Retirement Plan, is hereby incorporated by reference to Exhibit 10.3 to Telephone and Data Systems, Inc.’s Current Report on Form 8-K dated November 3, 2014.
10.5*	TDS’ Restated Compensation Plan for Non-Employee Directors, is hereby incorporated by reference to Exhibit A to the TDS Notice of Annual Meeting of Shareholders and Proxy Statement dated April 19, 2013.
10.6*	TDS Bonus Deferral and Stock Unit Match Program and Election Form is hereby incorporated by reference to Exhibit 10.6 to TDS’ Annual Report on Form 10-K for the year ended December 31, 2012.
10.7*	U.S. Cellular 2005 Long-Term Incentive Plan, as amended, is hereby incorporated by reference to Exhibit C to U.S. Cellular’s Notice of Annual Meeting of Shareholders and Proxy Statement dated April 15, 2009.
10.8*	U.S. Cellular 2013 Long-Term Incentive Plan, as amended, is hereby incorporated by reference to Exhibit A to U.S. Cellular’s Notice of Annual Meeting of Shareholders and Proxy Statement dated April 15, 2013.
10.9(a)*	U.S. Cellular Executive Deferred Compensation Interest Account Plan is hereby incorporated by reference to Exhibit 10.1 to U.S. Cellular’s Current Report on Form 8-K dated December 10, 2007.
10.9(b)*	First Amendment to U.S. Cellular Executive Deferred Compensation Interest Account Plan is hereby incorporated by reference to Exhibit 10.6 to U.S. Cellular’s Current Report on Form 8-K dated December 9, 2008.
10.9(c)*	Second Amendment to U.S. Cellular Executive Deferred Compensation Interest Account Plan is hereby incorporated by reference to Exhibit 10.12(c) to U.S. Cellular’s Annual Report on Form 10-K for the year ended December 31, 2012.
10.9(d)*	Election Form for U.S. Cellular Executive Deferred Compensation Interest Account Plan is hereby incorporated by reference to Exhibit 10.12(d) to U.S. Cellular’s Annual Report on Form 10-K for the year ended December 31, 2012.
10.10*	U.S. Cellular Form of Long-Term Incentive Plan Executive Deferred Compensation Agreement —Phantom Stock Account for officers is hereby incorporated by reference to Exhibit 10.5 to U.S. Cellular’s Current Report on Form 8-K dated May 14, 2013.
10.11(a)*	TDS 2007 Deferred Compensation Agreement between TDS and Kenneth R. Meyers dated December 26, 2006 is hereby incorporated by reference to Exhibit 99.1 to TDS’ Current Report on Form 8-K dated January 1, 2007.
10.11(b)*	Amendment to TDS 2007 Deferred Compensation Agreement between TDS and Kenneth R. Meyers is hereby incorporated by reference to Exhibit 10.4 to TDS Current Report on Form 8-K dated December 22, 2008.
10.12*	Form of TDS Corporate Officer Long-Term Incentive Plan Stock Option Award Agreement is hereby incorporated by reference to Exhibit 10.1 to TDS’ Current Report on Form 8-K dated May 10, 2013.
10.13*	Form of TDS Corporate Officer Long-Term Incentive Plan Restricted Stock Unit Award Agreement is hereby incorporated by reference to Exhibit 10.2 to TDS’ Current Report on Form 8-K dated May 10, 2013.
10.14*	TDS 2014 Officer Bonus Program.
10.15*	U.S. Cellular 2014 Officer Annual Incentive Plan effective January 1, 2014 is hereby incorporated by reference to Exhibit 10.1 to U.S. Cellular’s Current Report on Form 8-K dated August 19, 2014.
10.16	Guidelines for the determination of Annual Bonus for President and Chief Executive Officer of U.S. Cellular are hereby incorporated by reference to Exhibit 10.2 to U.S. Cellular’s Current Report on Form 8-K dated August 19, 2014.
10.17*	Amended and Restated Guidelines for the Determination of Annual Bonus for Chairman Emeritus of TDS is hereby incorporated by reference to Exhibit 10.2 to TDS’ Current Report on Form 8-K dated November 18, 2009.
10.18*	Form of TDS Deferred Compensation Agreement is hereby incorporated by reference to Exhibit 10.1 to TDS’ Current Report on Form 8-K dated December 21, 2009.
10.19*	Change of Election Form for TDS Deferred Compensation Agreement is hereby incorporated by reference to Exhibit 10.2 to TDS’ Current Report on Form 8-K dated December 21, 2009.
10.20*	Pre 2005 Form of Deferred Compensation Agreement used by TDS Telecommunications Corporation is hereby incorporated by reference to Exhibit 10.28 to TDS’ Annual Report on Form 10-K for the annual period ended December 31, 2009.
10.21(a)*	Post 2004 TDS Telecommunications Corporation Executive Deferred Compensation Program, as amended and restated effective January 1, 2008 is hereby incorporated by reference to Exhibit 10.29 to TDS’ Annual Report on Form 10-K for the annual period ended December 31, 2009.
10.21(b)*	First Amendment to TDS Telecommunications Corporation Executive Deferred Compensation Program dated October 8, 2008 is hereby incorporated by reference to Exhibit 10.30 to TDS’ Annual Report on Form 10-K for the annual period ended December 31, 2009.
10.22*	Current Initial Election Form and Post 2004 Payment Election Form for TDS Telecommunications Corporation Executive Deferred Compensation Program is hereby incorporated by reference to Exhibit 10.31 to TDS’ Annual Report on Form 10-K for the annual period ended December 31, 2009.
10.23*	Current Annual Election Form for TDS Telecommunications Corporation Executive Deferred Compensation Program is hereby incorporated by reference to Exhibit 10.32 to TDS’ Annual Report on Form 10-K for the annual period ended December 31, 2009.
10.24*	Form of U.S. Cellular’s Long-Term Incentive Plan Stock Option Award Agreement for Kenneth R. Meyers, is hereby incorporated by reference to Exhibit 10.2 to U.S. Cellular’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2014.
10.25*	Form of U.S. Cellular Long-Term Incentive Plan Restricted Stock Unit Award Agreement for Kenneth R. Meyers, is hereby incorporated by reference to Exhibit 10.1 to U.S. Cellular’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2014.
10.26*	Letter Agreement dated July 25, 2013 between U.S. Cellular and Kenneth R. Meyers is hereby incorporated by reference to Exhibit 10.1 to U.S. Cellular’s Current Report on Form 8-K dated July 25, 2013.
10.27**	Master Service Agreement entered into by United States Cellular Corporation and Amdocs Software Systems Limited on August 17, 2010 to develop a Billing and Operational Support System (“B/OSS”) with a new point-of-sale system to consolidate billing on one platform, is hereby incorporated by reference to Exhibit 10.8 to U.S. Cellular’s Quarterly Report on Form 10-Q dated September 30, 2010.
10.28**	Software License and Maintenance Agreement entered into by United States Cellular Corporation and Amdocs Software Systems Limited on August 17, 2010 to develop a Billing and Operational Support System (“B/OSS”) with a new point-of-sale system to consolidate billing on one platform, is hereby incorporated by reference to Exhibit 10.9 to U.S. Cellular’s Quarterly Report on Form 10-Q dated September 30, 2010.
10.29***	Master Statement of Work, dated as of November 25, 2014, between U.S. Cellular and Amdocs Software Systems, Ltd., is hereby incorporated by reference from Exhibit 10.26to U.S. Cellular’s Annual Report on Form 10-K for the year ended December 31, 2014.
11	Statement regarding computation of earnings per share (included in Note 5 — Earnings Per Share in the Notes to Consolidated Financial Statements in Exhibit 13).
12	Statement regarding computation of ratio of earnings to fixed charges for the years ended December 31, 2014, 2013, 2012, 2011, and 2010.
13	Incorporated portions of 2014 Annual Report to Shareholders.
21	Subsidiaries of TDS.
23.1	Consent of Independent Registered Public Accounting Firm—PricewaterhouseCoopers LLP.
23.2	Consent of Independent Registered Public Accounting Firm—Ernst & Young LLP.
23.3	Consent of Independent Registered Public Accounting Firm—Deloitte & Touche LLP.
31.1	Principal executive officer certification pursuant to Rule 13a-14 of the Securities Exchange Act of 1934.
31.2	Principal financial officer certification pursuant to Rule 13a-14 of the Securities Exchange Act of 1934.
32.1	Principal executive officer certification pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code.
32.2	Principal financial officer certification pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code.
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
*      Indicates a management contract or compensatory plan or arrangement.
**   Portions of this Exhibit have been omitted and filed separately with the Securities and Exchange Commission as part of an application for confidential treatment pursuant to the Securities Exchange Act of 1934, as amended.  The application for confidential treatment has been granted.
*** Portions of the Exhibit have been omitted and filed separately with the Securities and Exchange Commission as part of an application for confidential treatment pursuant to the Securities Exchange Act of 1934, as amended.

EX-10.14

 

Exhibit 10.14

TELEPHONE AND DATA SYSTEMS, INC. (TDS)

2014 OFFICER BONUS PROGRAM

This bonus program covers all TDS officers other than the President and CEO of TDS and the Chairman Emeritus of TDS.  Payments under this program to the TDS Telecom President and CEO and the below listed executive officers require specific approval of the TDS Compensation Committee.  Bonuses for other officers covered by this program require the approval of the President and CEO of TDS.  This program does not apply to any officer of a TDS subsidiary other than the President and CEO of TDS Telecom. 

ØTDS EXECUTIVE OFFICER PARTICIPANTS:

ŸSVP Technology, Services and Strategy

ŸSVP Finance and Treasurer

ŸSVP and Controller

ŸSVP and CIO

ŸSVP, Acquisitions and Corporate Development

ŸVP Human Resources

The TDS Telecom President and CEO (Dave Wittwer) will have the same company and individual performance weightings as the TDS executive officers.  However, this officer’s company performance bonus opportunity will be based on TDS Telecom’s approved 2014 Bonus Plan, which will be aligned with the metrics in this program, but may contain additional performance measures.

ØCOMPANY PERFORMANCE COMPONENT:

ŸWeighting:   60%

ŸPerformance Measures:  The following performance measures are primary indicators of progress against the TDS Portfolio goal to create increasing results to shareholders and other stakeholders.

ûConsolidated Operating Revenue Growth:  Revenue growth is the primary driver to long-term growth in profitability and returns.  It is also an indicator of the success of past investments. 

üConsolidated Operating Revenue Growth will be calculated as year-over-year growth in TDS Consolidated revenue excluding U.S. Cellular Equipment Revenue.  For 2014, year-over-year growth will be calculated using U.S. Cellular Core market results pro forma for 2013.

ûConsolidated Adjusted Income Before Income Taxes (AIBIT): AIBIT is a direct measure of the cash generated from the operations of the TDS businesses in a given year and the overall profitability of the company. 

üThe calculation of AIBIT will align with the methodology used for external reporting purposes, which is currently defined as income before income taxes, depreciation, amortization and accretion, net gain or loss on sale of business and other exit costs, net gain or loss on sale of licenses and exchanges, gain or loss on investment and interest expense. 

ûConsolidated Simple Free Cash Flow (Simple FCF):Simple FCF, defined as AIBIT less capital expenditures, is an indicator of TDS’s success in delivering shareholder value.  As TDS’s major business units are capital intensive businesses, the simple FCF measure is an indicator of how efficiently the business is managing its capital expenditures and the level of cash the company has available to invest in future growth opportunities or create returns for shareholders. 

üThe calculation of AIBIT will follow the methodology described above.  The calculation of capital expenditures will focus on cash outflows and therefore exclude capitalized interest, which is a non-cash accounting adjustment.

Adjustments to Company Performance component calculations:

ŸAcquisitions: 

ûAcquisitions that occur in the second half of the fiscal year will be excluded from bonus calculations (target and actual).

ûAdjustment will be made for acquisitions that occur in the first half of the fiscal year, with performance judged against the valuation model and adjusted for any timing differences between expected and actual closing.  To the extent that the acquisition is not included in the targets, the targets will be adjusted at the time of the acquisition closing date to reflect the valuation model (as approved by the Board) and any known timing differences.

ûTransaction costs related to the acquisition will be excluded from both the target and actual results.

ŸDivestitures: 

ûDivestitures or discontinued operations that occur in the first half of the fiscal year will be excluded from the bonus calculations (target and actual).

ûDivestitures or discontinued operations that occur in the second half of the fiscal year will be included in the bonus calculation.  If a divestiture or discontinued operation was not included in the targets, the targets will be adjusted at the time of the closing date to reflect the impact of the period of time that the divesture is not owned.  In addition, significant shifts in strategy will be taken into consideration when determining the appropriate treatment of divestitures in the bonus calculation.

ûTransaction costs related to the divestiture will be excluded from both the target and actual results.

ŸOther Adjustments:  Any adjustments to the target or actual bonus calculations will be presented to the Compensation Committee for review and approval.  Adjustment recommendations should be limited to material accounting adjust-ments or major business decisions that, without their adjustment, would cause the calculated bonus results to differ materially from unadjusted calculation and therefore not reflect the true performance delivered in the year.  Bonus expense will be included in the AIBIT and Simple FCF metrics.   

ŸBonus Ranges:

The bonus ranges were set to reinforce the Company’s pay for performance culture.  The minimum performance level for a performance measure needs to be achieved before any bonus for that performance measure is earned.  The narrow ranges result in substantial reductions in bonuses when targets are not achieved, and greater rewards for above target performance.  See Appendix A for payout grids.

PERFORMANCE MEASURE	MINIMUM	TARGET	MAXIMUM
Consolidated Operating Revenues Growth	1.0%	6.5%	11.9%
Consolidated AIBIT	$677M	$797M	$917M
Consolidated Simple FCF	-$156M	-$55M	$46M

ŸBonus Payouts As A Percent Of Target At Minimum And Maximum Performance Levels:

PERFORMANCE MEASURE	MINIMUM	TARGET	MAXIMUM
Consolidated Operating Revenues Growth	50%	100%	200%
Consolidated AIBIT	50%	100%	200%
Consolidated Simple FCF	50%	100%	200%

Bonus payouts between the minimum and target and between target and maximum performance level for each performance measure will be computed by interpolation.

Any bonus for performance below the minimum percentage for a performance measure will be at the discretion of the Compensation Committee.

ŸWeighting Of Performance Measures:

PERFORMANCE MEASURE	WEIGHTING
Consolidated Operating Revenues Growth	40%
Consolidated AIBIT	30%
Consolidated Simple FCF	30%
	100%

ØTHE PERFORMANCE TARGETS:

They will be set by the Compensation Committee each year based on the plans and objectives of the business. 

ØINDIVIDUAL PERFORMANCE COMPONENT:

ŸWeighting:   40%

ŸSegment Weighting:

ûKey Objectives:                             50% 

ûOverall Performance:  50%

100%

ŸLevel of Performance and Percent Payout of Target:

PERFORMANCE	% PAYOUT OF TARGET
Far exceeds target performance:  Performance greatly exceeded that which was planned and expected.	150% - 200%
Significantly exceeds target performance: Performance substantially exceeded that which was planned and expected.	120% - 150%
Somewhat exceeds/fully meets/almost fully meets target performance:  Performance was close to that which was planned and expected.	80% - 120%
Partially meets target performance: Given the conditions that prevailed, performance was sufficient to merit a partial bonus.	Up to 80%
Well below target performance:  Given the conditions that prevailed, performance was not sufficient to merit any bonus.	0%

ŸKey Objectives:

With regard to this bonus opportunity, the TDS President and CEO will, with input from the executive officer, assign the executive officer 2 to 5 or so major initia-tives to be carried out during the year, and decide how each will be weighted.  As appropriate, these objectives will include that executive officer’s expected individual contribution(s) toward executing the Company’s Portfolio Management Strategy. 

With the approval of the TDS President and CEO, an executive officer’s objec-tives and weightings may be revised during the performance year if important new initiatives arise or circumstances with respect to an objective have materially changed.  Performance on each selected objective will be based on the TDS President and CEO’s assessment of the results the executive/the executive’s team achieved in meeting the assigned objectives.

ŸOverall Performance:

Each officer’s overall performance for the year will be assessed by the TDS President and CEO based on his effectiveness/success with regard to:

ûCarrying out his/her ongoing responsibilities and significant initiatives during the performance year (other than his/her above discussed key objectives).

ûRecommending/making decisions; taking actions; and providing support, assistance and counsel to the business units, and to help achieve TDS Corporate Portfolio Strategy agreed upon metrics and milestones.

ûProviding support, assistance and counsel to corporate senior leaders and management.

In making these assessments, the TDS President and CEO will take into consideration:

ûHis/her evaluation of the officer’s performance in the above areas.

ûThe annual written performance feedback he/she receives on the executive officer from his/her peers.

ûThe every-other-year written performance input he receives from the executive officer’s direct reports and other key associates.

ûThe executive officer’s report on his/her activities/accomplishments for the performance year.

ûSuch other creditable input as he/she may receive during the year about an officer’s performance.

ØDETERMINATION OF BONUS AWARDS:

Once the Company performance bonus percentage is known, the TDS President and CEO will recommend to the Compensation Committee for each participating executive officer:

ŸHis/her company performance bonus.  This will be the amount calculated in accordance with the terms of this program (unless the TDS President and CEO feels that there is a compelling rationale to recommend an adjustment to this amount, which he would provide to the Committee).

ŸHis/her recommended individual performance bonus, and his/her total recommended bonus.

The Compensation Committee will review these proposed bonus awards and either approve them as submitted or revise some or all of them, as they deem appropriate.  Once the Committee and TDS President and CEO finalize the officers’ bonus awards, they may be paid. 

Approved bonus awards shall be paid during the period commencing on the January 1^st immediately following the performance year and ending on March 15^th immediately following the performance year.  Notwithstanding the foregoing, in the event that payment by such March 15^th is administratively impracticable and such impracticability was unforeseeable, payment will be made as soon as administra-tively practicable after such March 15^th, but in no event later than December 31^st following the performance year.  Payment will be made in the form of a lump sum.

Notwithstanding any provision of this bonus program to the contrary, a participating officer does not have a legally binding right to a bonus unless and until the bonus amount, if any, is paid and no bonus shall be paid unless the officer remains employed through the actual bonus payout date unless otherwise approved at the discretion of the Compensation Committee or President and CEO of TDS, as applicable.

ØREVISIONS TO THE OFFICER BONUS PROGRAM:

The TDS Officer Bonus Program may be revised or discontinued at any time and for any reason.  If and when either the Compensation Committee and/or management determines that the TDS Officer Bonus Program should be revised, the parties will discuss the proposed change(s) and the rationale for them, following which the Committee will determine what, if any, changes will be made.

ØBONUS CLAWBACK:

Any bonus paid pursuant to this program is subject to recovery by TDS or any other action pursuant to any clawback or recoupment policy which TDS may adopt from time to time, including without limitation any such policy which TDS may be required to adopt under the Dodd-Frank Wall Street Reform and Consumer Protection Act and implementing rules and regulations thereunder, or as otherwise required by law.

Appendix A: 2014 Payout Grids - Company Performance Component
Target Total Revenue	YoY Growth  ($)	YoY Growth (%)	Results ($) as a % of Target	Total Bonus Points Earned	% of Bonus Points Earned
$4,438	$44	1.00%	95%	200	50%
$4,486	$92	2.10%	96%	240	60%
$4,534	$140	3.20%	97%	280	70%
$4,582	$188	4.30%	98%	320	80%
$4,630	$236	5.40%	99%	360	90%
$4,678	$284	6.50%	100%	400	100%
$4,726	$332	7.60%	101%	480	120%
$4,774	$380	8.60%	102%	560	140%
$4,822	$428	9.70%	103%	640	160%
$4,870	$476	10.80%	104%	720	180%
$4,918	$524	11.90%	105%	800	200%
>$4918	N/A	N/A	N/A	>800	200%
CONSOLIDATED AIBIT ($ in millions)
Target Total AIBIT	YoY Growth  ($)	YoY Growth (%)	Bonus Results as a % of Target	Total Bonus Points Earned	% of Bonus Points Earned
$677	($162)	-19.3%	85%	150	50%
$701	($138)	-16.4%	88%	180	60%
$725	($114)	-13.6%	91%	210	70%
$749	($90)	-10.7%	94%	240	80%
$773	($66)	-7.9%	97%	270	90%
$797	($42)	-5.0%	100%	300	100%
$821	($18)	-2.1%	103%	360	120%
$845	$6	0.7%	106%	420	140%
$869	$30	3.6%	109%	480	160%
$893	$54	6.4%	112%	540	180%
$917	$78	9.3%	115%	600	200%
>$917	N/A	N/A	N/A	>600	200%
CONSOLIDATED FCF ($ in millions)
Target Total FCF	YoY Growth  ($)	YoY Growth (%)	Bonus Results as a % of Target	Total Bonus Points Earned	% of Bonus Points Earned
($156)	($85)	-120%	284%	150	50%
$135	($64)	-92%	245%	180	60%
($115)	($44)	-63%	209%	210	70%
($95)	($24)	-35%	173%	240	80%
($75)	($4)	-6%	136%	270	90%
($55)	$16	22%	100%	300	100%
($35)	$36	51%	64%	360	120%
($15)	$56	79%	27%	420	140%
$6	$76	108%	-9%	480	160%
$26	$97	137%	-47%	540	180%
$46	$117	165%	-84%	600	200%
>$46	N/A	N/A	N/A	>600	200%

Appendix B: Financial Metrics Detail
2014 Bonus - Financial Metrics		2013 Actual	2014 Budget	2014 Bonus Targets	Variance - Bonus Targets vs. Budget
$ in Millions
TDS Consolidated Operating Revenue
	U.S. Cellular CORE Service Revenue	$3,411	$3,641	$3,562	($79)
	Wireline Segment	$720	$701	$701	$0
	HMS Segment	$187	$303	$303	$0
	Cable Segment	$36	$92	$92	$0
	TDS Telecom Eliminations	$4	($1)	($1)	$0
	TDS Parent and Eliminations	$35	$22	$22	$0
Total TDS Cons. Operating Revenue		$4,394	$4,756	$4,678	($78)
	Growth		8%	6%	-2%
AIBT
	U.S. Cellular	$585	$594	$529	($66)
	TDS Telecom	$249	$272	$272	$0
	Parent and Other	$5	($3)	($3)	$0
	TDS Consolidated	$839	$863	$797	($66)
Capex
	U.S. Cellular	($738)	($642)	($642)	$0
	TDS Telecom	($165)	($202)	($202)	$0
	Parent and Other	($7)	($8)	($8)	$0
	TDS Consolidated	($910)	($851)	($851)	$0
Free Cash Flow
	U.S. Cellular	($153)	($47)	($113)	($66)
	TDS Telecom	$84	$70	$70	$0
	Parent and Other	($2)	($11)	($11)	$0
	TDS Consolidated	($71)	$11	($55)	($66)

EX-12

 

										Exhibit 12
TELEPHONE AND DATA SYSTEMS, INC. RATIO OF EARNINGS TO FIXED CHARGES (1)
For the Year Ended December 31,
(Dollars in thousands)			2014		2013		2012		2011		2010
EARNINGS:
Income (loss) before income taxes (2)			$	(152,224)	$	292,864	$	196,235	$	363,745	$	285,774
Add (deduct):
	Equity in earnings of unconsolidated entities			(131,965)		(132,714)		(92,867)		(82,538)		(98,074)
	Distributions from unconsolidated entities			112,349		127,929		84,884		92,231		100,845
	Amortization of capitalized interest			7,142		4,638		1,676		1,109		867
	Income attributable to noncontrolling interests   in subsidiaries that do not have fixed charges			(1,361)		(5,651)		(25,709)		(22,004)		(21,938)
				(166,059)		287,066		164,219		352,543		267,474
Add fixed charges:
	Consolidated interest expense (3)			111,397		98,811		86,745		118,201		116,810
	Interest portion (1/3) of consolidated   rent expense			61,909		66,698		71,505		65,470		62,983
			$	7,247	$	452,575	$	322,469	$	536,214	$	447,267
FIXED CHARGES:
	Consolidated interest expense (3)		$	111,397	$	98,811	$	86,745	$	118,201	$	116,810
	Capitalized interest			10,295		22,206		21,369		14,321		4,825
	Interest portion (1/3) of consolidated   rent expense			61,909		66,698		71,505		65,470		62,983
			$	183,601	$	187,715	$	179,619	$	197,992	$	184,618
RATIO OF EARNINGS TO FIXED CHARGES				*		2.41		1.80		2.71		2.42
	Tax-effected preferred dividends		$	62	$	78	$	78	$	71	$	75
	Fixed charges			183,601		187,715		179,619		197,992		184,618
		Fixed charges and preferred dividends	$	183,663	$	187,793	$	179,697	$	198,063	$	184,693
RATIO OF EARNINGS TO FIXED CHARGES   AND PREFERRED DIVIDENDS				*		2.41		1.79		2.71		2.42
(1)	Considering, among other things, recent significant divestitures and an increasing amount of rental income in proportion to gross rent expense, TDS revised its approach in 2014 in calculating the above ratios to use gross rent expense, rather than net rent expense, for estimating the interest portion of rent expense.  Prior years have been revised to conform to the 2014 presentation.
(2)	Includes non-cash charges related to losses on impairment of $87.8 million in 2014 and $0.5 million in 2012.
	Includes gain on sale of business and other exit costs, net of $15.8 million and $300.7 million in 2014 and 2013, respectively, and loss on sale of business and other exit costs, net of $21.1 million in 2012.
	Includes gain on license sales and exchanges of $113.0 million in 2014, $255.5 million in 2013 and $11.8 million in 2011.
	Includes gain on investments of $14.5 million in 2013 and $24.1 million in 2011 and loss on investments of $3.7 million in 2012.
(3)	Interest expense on income tax contingencies is not included in fixed charges.
*	Earnings for the year ended December 31, 2014 were inadequate to cover fixed charges by $176.4 million, and fixed charges and preferred dividends by $176.4 million.

EX-13

 

	Exhibit 13
Telephone and Data Systems, Inc.
Financial Reports Contents
Management’s Discussion and Analysis of Results of Operations and Financial Condition	1
Overview	1
Regulatory Matters	5
Results of Operations—Consolidated	8
Results of Operations—U.S. Cellular	11
Results of Operations—TDS Telecom	17
Inflation	24
Recently Issued Accounting Pronouncements	24
Liquidity and Capital Resources	24
Application of Critical Accounting Policies and Estimates	31
Certain Relationships and Related Transactions	37
Private Securities Litigation Reform Act of 1995 Safe Harbor Cautionary Statement	38
Market Risk	41
Consolidated Statement of Operations	42
Consolidated Statement of Comprehensive Income (Loss)	43
Consolidated Statement of Cash Flows	44
Consolidated Balance Sheet—Assets	45
Consolidated Balance Sheet—Liabilities and Equity	46
Consolidated Statement of Changes in Equity	47
Notes to Consolidated Financial Statements	50
Reports of Management	97
Report of Independent Registered Public Accounting Firm	99
Selected Consolidated Financial Data	100
Consolidated Quarterly Information (Unaudited)	101
Shareholder Information	103

Telephone and Data Systems, Inc.

Management’s Discussion and Analysis of Financial Condition

and Results of Operations

Telephone and Data Systems, Inc. (“TDS”) is a diversified telecommunications company providing high-quality telecommunications services to approximately 4.8 million wireless customers and 1.2 million wireline and cable connections at December 31, 2014. TDS conducts all of its wireless operations through its 84%-owned subsidiary, United States Cellular Corporation (“U.S. Cellular”).  TDS provides wireline services, cable services and hosted and managed services (“HMS”), through its wholly-owned subsidiary, TDS Telecommunications Corporation (“TDS Telecom”).

The following discussion and analysis should be read in conjunction with TDS’ audited consolidated financial statements and the description of TDS’ business included in Item 1 of the TDS Annual Report on Form 10-K (“Form 10-K”) for the year ended December 31, 2014. The discussion and analysis contained herein refers to consolidated data and results of operations, unless otherwise noted.

OVERVIEW

The following is a summary of certain selected information contained in the comprehensive Management’s Discussion and Analysis of Financial Condition and Results of Operations that follows. The overview does not contain all of the information that may be important. You should carefully read the entire Management’s Discussion and Analysis of Financial Condition and Results of Operations and not rely solely on the overview.

TDS’ business segments reflected in this Annual Report on Form 10-K for the year ended December 31, 2014 are U.S. Cellular, TDS Telecom’s Wireline, Cable and HMS operations.  TDS operations also include the majority-owned printing and distribution company, Suttle-Straus, Inc. (“Suttle-Straus”) and TDS’ wholly-owned subsidiary, Airadigm Communications, Inc. (“Airadigm”).  Suttle-Straus and Airadigm’s financial results were not significant to TDS’ operations.  All of TDS’ segments operate only in the United States, except for HMS, which includes an insignificant foreign operation.  See Note 18 — Business Segment Information for summary financial information on each business segment.

U.S. Cellular

In its consolidated operating markets, U.S. Cellular serves approximately 4.8 million customers in 23 states. As of December 31, 2014, U.S. Cellular’s average penetration rate in its consolidated operating markets was 15.0%. U.S. Cellular operates on a customer satisfaction strategy, striving to meet or exceed customer needs by providing a comprehensive range of wireless products and services, excellent customer support, and a high-quality network. U.S. Cellular’s business development strategy is to obtain interests in and access to wireless licenses in its current operating markets and in areas that are adjacent to or in close proximity to its other wireless licenses, thereby building contiguous operating market areas with strong spectrum positions.  U.S. Cellular believes that the acquisition of additional licenses within its current operating markets will enhance its network capacity to meet its customers’ increased demand for data services.  In addition, U.S. Cellular anticipates that grouping its operations into market areas will continue to provide it with certain economies in its capital and operating costs.

Financial and operating highlights in 2014 included the following:

·Total customers were 4,760,000 at December 31, 2014, including 4,646,000 retail customers (98% of total).

·Beginning in the second quarter of 2014, U.S. Cellular expanded its offerings for equipment installment plans.  In 2014, 24% of total device sales to postpaid customers were made under equipment installment plans.

·In December 2014, U.S. Cellular sold $275 million of 7.25% Unsecured Senior Notes due 2063 and will use the proceeds for general corporate purposes, including spectrum purchases and capital expenditures.  See Note 11 — Debt for additional details.

·In December 2014, U.S. Cellular entered into an agreement to sell 595 towers outside of its Core Markets for approximately $159 million.  Concurrently, U.S. Cellular closed on the sale of 236 towers, without tenants, for $10.0 million, recorded a gain of $4.7 million to (Gain) loss on sale of business and other exit costs, net and received $7.5 million in earnest money.  The closing for the remaining 359 towers, primarily with tenants, occurred in January 2015, at which time U.S. Cellular received $141.5 million in additional cash proceeds.  TDS recorded a gain of approximately $119 million related to this transaction.

1

·In December 2014, U.S. Cellular completed a license exchange primarily in Oklahoma, North Carolina and Tennessee.  As a result of this transaction, a gain of $21.7 million was recorded in (Gain) loss on license sales and exchanges in the Consolidated Statement of Operations.

·In March 2014, U.S. Cellular sold the majority of its St. Louis area non-operating market license for $92.3 million.  As a result of this sale, a gain of $75.8 million was recorded in (Gain) loss on license sales and exchanges in the Consolidated Statement of Operations.

·In February 2014, U.S. Cellular completed a license exchange in Wisconsin.  As a result of this transaction, a gain of $15.7 million was recorded in (Gain) loss on license sales and exchanges in the Consolidated Statement of Operations.

In 2014, Core Markets information is the same as Consolidated Markets information.  However, because the Divestiture Transaction and the NY1 & NY2 Deconsolidation were consummated in the second quarter of 2013, the Consolidated Markets in the first six months of 2013 include information with respect to the Divestiture Markets and the NY1 & NY2 Partnerships.  Accordingly, the following operating information is presented for Core Markets to permit a comparison of 2014 to 2013 excluding the Divestiture Markets and the NY1 & NY2 Partnerships.  As used here, Core Markets is defined as all consolidated markets in which U.S. Cellular currently conducts business and, therefore, excludes the Divestiture Markets and the NY1 & NY2 Partnerships.  Core Markets as defined also includes any other income or expenses due to U.S. Cellular’s direct or indirect ownership interests in other spectrum in the Divestiture Markets which was not included in the Divestiture Transaction and other retained assets from the Divestiture Markets.  See Note 6 — Acquisitions, Divestitures and Exchanges and Note 8 — Investments in Unconsolidated Entities in the Notes to Consolidated Financial Statements for additional information.

Highlights in the twelve months ended December 31, 2014 for Core Markets included the following:

·Retail customer net additions were 36,000 in 2014 compared to net losses of 215,000 in 2013. In the postpaid category, there were net additions of 31,000 in 2014, compared to net losses of 217,000 in 2013.  Prepaid net additions were 5,000 in 2014 compared to net additions of 2,000 in 2013.

·Postpaid customers comprised approximately 93% of U.S. Cellular’s retail customers as of both December 31, 2014 and December 31, 2013, respectively. The postpaid churn rate was 1.8% in 2014 and 1.7% in 2013.  Postpaid churn in the first half of 2014 was adversely affected by the billing system conversion in 2013; however, it steadily improved over the course of the year and was 1.6% for the three months ended December 31, 2014.  The prepaid churn rate was 6.4% in 2014 and 6.7% in 2013.

·Billed average revenue per user (“ARPU”) increased to $53.49 in 2014 from $50.82 in 2013 reflecting an increase in postpaid ARPU due to increases in smartphone adoption and corresponding revenues from data products and services. Service revenue ARPU increased to $60.32 in 2014 from $57.66 in 2013 due primarily to an increase in postpaid and prepaid ARPU.

·Postpaid customers on smartphone service plans increased to 60% as of December 31, 2014 compared to 51% as of December 31, 2013. In addition, smartphones represented 81% of all handsets sold in 2014 compared to 73% in 2013. 

The following financial information is presented for U.S. Cellular consolidated results:

·Retail service revenues of $3,013.0 million decreased $152.5 million year-over-year, due to a decrease of 456,000 in the average number of retail customers (including approximately 250,000 due to the reductions caused by the Divestiture Transaction and NY1 & NY2 Deconsolidation) partially offset by an increase in billed ARPU.

·Total additions to Property, plant and equipment were $557.6 million, including expenditures to deploy fourth generation Long-term Evolution (“4G LTE”) equipment, construct cell sites, increase capacity in existing cell sites and switches, outfit new and remodel existing retail stores, and enhance billing and other customer management related systems and platforms. Total cell sites in service decreased 11% year-over-year to 6,220 primarily as a result of the deactivation of certain cell sites in the Divestiture Markets.

·Operating income (loss) decreased $290.3 million to a loss of $143.4 million in 2014 from income of $146.9 million in 2013. The gain on license sales and exchanges and the gain on sale of business and other exit costs contributed $145.8 million and $502.2 million to operating income in 2014 and 2013, respectively.  Without these items, operating income (loss) improved by $66.2 million due to higher equipment revenue and lower selling, general and administrative, and depreciation, amortization and accretion expenses, which were partially offset by lower service revenues and higher cost of equipment sold.

U.S. Cellular anticipates that its future results may be affected by the following factors:

2

·Effects of industry competition on service and equipment pricing;

·U.S. Cellular completed the migration of its customers to a new Billing and Operational Support System (“B/OSS”) in the third quarter of 2013.  Intermittent system outages and delayed system response times negatively impacted customer service and sales operations at certain times.  System enhancements and other measures were implemented to address these issues, and customer service and sales operations response times have improved to expected levels.  In addition, in the fourth quarter of 2014, U.S. Cellular entered into certain arrangements pursuant to which U.S. Cellular now outsources certain support functions for its B/OSS to a third-party vendor.  B/OSS is a complex system and any future operational problems with the system, including any failure by the vendor to provide the required level of service under the outsourcing arrangements, could have adverse effects on U.S. Cellular’s results of operations or cash flows;

·Impacts of selling Apple products;

·Impacts of selling devices under equipment installment plans;

·Relative ability to attract and retain customers in a competitive marketplace in a cost effective manner;

·Expanded distribution of products and services in third-party national retailers;

·The nature and rate of growth in the wireless industry, requiring U.S. Cellular to grow revenues primarily from selling additional products and services to its existing customers, increasing the number of multi-device users among its existing customers, increasing data products and services and attracting wireless customers switching from other wireless carriers;

·Continued growth in revenues and costs related to data products and services and declines in revenues from voice services;

·Rapid growth in the demand for new data devices and services which may result in increased cost of equipment sold and other operating expenses and the need for additional investment in spectrum, network capacity and enhancements;

·Further consolidation among carriers in the wireless industry, which could result in increased competition for customers and/or cause roaming revenues to decline;

·Uncertainty related to various rulemaking proceedings underway at the Federal Communications Commission (“FCC”);

·The ability to negotiate satisfactory 4G LTE data roaming agreements with other wireless operators;

·In September 2014, U.S. Cellular entered into agreements to sell certain non-operating licenses (“unbuilt licenses”) in exchange for receiving licenses in its operating markets and cash.  These transactions are subject to regulatory approval and are expected to close in 2015.  See Note 6 — Acquisitions, Divestitures and Exchanges in the Notes to the Consolidated Financial Statements for additional information related to these transactions;

·In January 2015, U.S. Cellular entered into a term loan credit agreement providing a $225.0 million senior term loan credit facility which will be used for general corporate purposes, including spectrum purchases and capital expenditures; and

·In January 2015, the FCC released the results of Auction 97. U.S. Cellular participated in Auction 97 indirectly through its limited partnership in Advantage Spectrum, L.P.  See Note 14 — Variable Interest Entities in the Notes to Consolidated Financial Statements for additional information.

See “Results of Operations — U.S. Cellular.”

3

TDS Telecom

The Wireline and Cable segments seek to be the preferred telecommunications solutions providers in their chosen markets serving both residential and commercial customers by developing and delivering high-quality products that meet or exceed customers’ needs and to outperform the competition by maintaining superior customer service. TDS Telecom provides broadband, video and voice services to residential customers through value-added bundling of products.  The commercial focus is to provide advanced IP-based voice and data services to small to medium sized businesses.  The HMS segment offers a full suite of Information Technology (“IT”) solutions including cloud and hosting solutions, managed services, enterprise resource planning (“ERP”) application management, professional services, and IT hardware. 

On September 1, 2014, TDS acquired substantially all of the assets of a group of companies operating as BendBroadband (“Bend”), headquartered in Bend, Oregon for $260.7 million in cash.  Bend is a full-service communications company, offering an extensive range of broadband, fiber connectivity, cable television and telephone services for commercial and residential customers in Central Oregon.  As part of the agreement, TDS also acquired a Tier III data center providing colocation and managed services and a cable advertising and broadcast business.  The operations of the cable and advertising and broadcast businesses are included in the Cable segment.  The data center services are included in the HMS segment.

On October 4, 2013, TDS acquired 100% of the outstanding shares of MSN Communications, Inc. (“MSN”) for $43.6 million in cash.  The operations of MSN are included in the HMS segment since the date of acquisition.

On August 1, 2013, TDS Telecom acquired substantially all of the assets of Baja Broadband, LLC (“Baja”) for $264.1 million in cash.  The operations of Baja are included in the Cable segment since the date of acquisition.

TDS Telecom acquired Vital Support Systems, LLC (“Vital”) in June 2012 for $46.1 million in cash.  The operations of Vital are included in the HMS segment since the date of acquisition. 

All of these acquisitions impact the comparability of TDS Telecom operating results.

Financial and operating highlights in 2014 included the following:

·Operating revenues increased $141.3 million or 15% to $1,088.3 million in 2014.  The increase was due primarily to $164.5 million from acquisitions.

·Operating expenses increased $196.5 million or 22% to $1,098.7 million in 2014 due primarily to $160.6 million from acquisitions and an $84.0 million non-cash goodwill impairment loss, partially offset by a $43.6 million decrease in Wireline expenses.

·Additions to Property, plant and equipment totaled $208.1 million in 2014 including strategic investment in increased network capabilities for broadband services, HMS expansion, IPTV expansion, and software tools that improve management of the network and support sales and customer service processes.

·An $84.0 million loss on impairment of goodwill was recognized in the HMS segment during the quarter ended September 30, 2014.  See Note 7 — Intangible Assets in the Notes to Consolidated Financial Statements for more information related to this impairment.

·Operating income declined $55.2 million to a $10.4 million loss in 2014.  Without the impairment loss of $84.0 million, operating income was higher by $28.8 million or 64%.

TDS anticipates that TDS Telecom’s future results will be affected by the following factors:

·Continued increases in competition from wireless and other wireline providers, cable providers, satellite video providers, and technologies such as Voice over Internet Protocol (“VoIP”), DOCSIS 3.0 and further upgrades, and fourth generation (“4G”) mobile technology;

·Continued increases in consumer data usage and demand for high-speed data services;

·Continued declines in Wireline voice connections;

·Continued focus on customer retention programs, including discounting for “triple-play” bundles including broadband, video or satellite video and voice;

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·The expansion of Internet Protocol television (“IPTV”) into additional market areas;

·Continued growth in hosted and managed services which may result in the need for additional investment in data centers;

·Continued focus on cost-reduction initiatives through product and service cost improvements and process efficiencies;

·The Federal government’s disbursement of Broadband Stimulus Funds to bring broadband to rural customers;

·The National Broadband Plan and other rulemaking by the FCC, including uncertainty related to future funding from the Universal Service Fund (“USF”), broadband requirements, intercarrier compensation  and changes in access reform;

·Impacts of the Bend, Baja and MSN transactions, including, but not limited to, the ability to successfully integrate and operate these businesses and the financial impacts of such transactions; and

·Potential acquisitions or divestitures by TDS and/or TDS Telecom of wireline, cable, HMS, or other businesses.

See “Results of Operations—TDS Telecom.”

Pro Forma Financial Information

Refer to TDS’ Form 8-K filed on February 26, 2014 for pro forma financial information related to the Divestiture Transaction and the NY1 & NY2 Deconsolidation for the three and twelve months ended December 31, 2013, as if the transactions had occurred at the beginning of the respective periods. 

REGULATORY MATTERS

FCC Interoperability Order

On October 25, 2013, the FCC adopted a Report and Order and Order of Proposed Modification confirming a voluntary industry agreement on interoperability in the Lower 700 MHz spectrum band.   The FCC's Report and Order laid out a roadmap for the voluntary commitments of AT&T and DISH Network Corporation ("DISH") to become fully binding. The FCC implemented the AT&T commitments in an Order adopted in the first quarter of 2014 that modified AT&T’s Lower 700 MHz licenses.  Pursuant to these commitments, AT&T will begin incorporating changes in its network and devices that will foster interoperability across all paired spectrum blocks in the Lower 700 MHz Band and support LTE roaming on AT&T networks for carriers with compatible Band 12 devices, consistent with the FCC’s rules on roaming.  AT&T will be implementing the foregoing changes in phases starting with network software enhancement taking place possibly through the third quarter of 2015 with the AT&T Band 12 device roll-out to follow.  In late 2014, AT&T made filings with and reaffirmed to the FCC its commitment under this Order.  In addition, the FCC has adopted changes in its technical rules for certain unpaired spectrum licensed to AT&T and DISH in the Lower 700 MHz band to enhance prospects for Lower 700 MHz interoperability.  AT&T’s network and devices currently interoperate across only two of the three paired blocks in the Lower 700 MHz band.   U.S. Cellular’s LTE deployment, carried out in conjunction with its partner, King Street Wireless, utilizes spectrum in all three of these blocks and, consequently, was not interoperable with the AT&T configuration.  U.S. Cellular believes that the FCC action will broaden the ecosystem of devices available to U.S. Cellular’s customers over time.

FCC Net Neutrality Proposal

Currently, internet services are subject to substantially less regulation than traditional common carrier telecommunications services under federal law and generally are not subject to state or local government regulation because they are currently classified as an “information service” by the FCC under the Communications Act.  Internet services provided by wireless carriers may also be subject to less regulation than by other telecommunications companies.  However, in 2009, the FCC initiated a rulemaking proceeding designed to codify its existing “Net Neutrality” principles to regulate how internet service providers manage applications and content that traverse their networks.  In December 2010, the FCC adopted a net neutrality rule based on its Title I “ancillary” authority under the Communications Act.  Among other things, these rules prohibited all internet providers from blocking consumers’ access to lawful websites or applications that compete with the provider’s voice or video telephony services, subject to reasonable network management.  The rules subjected the providers of fixed but not wireless broadband internet access to a prohibition on “unreasonable discrimination” in transmitting internet traffic over their networks, subject to reasonable network management.  On January 14, 2014, the U.S. Court of Appeals for the District of Columbia Circuit vacated the foregoing “anti-blocking” and “anti-discrimination” portions of the FCC’s net neutrality rules.  In May 2014, the FCC proposed revised rules, substantially similar to the vacated rules, except that the revised proposed rules would replace the prohibition of “unreasonable discrimination” with a prohibition on

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“commercially unreasonable practices.”  Following public comments on such rules and the urging of President Obama, in February 2015 the FCC chairman instead proposed applying “Title II” or telecommunications common carrier regulation to both fixed and wireless internet service providers to prevent “paid prioritization” of internet traffic to end users and to restrict wireless carriers from limiting the capacity of certain high volume data users to use the data network.  If the FCC adopts such proposed rules, it is expected that they will be challenged in litigation.  TDS cannot predict the outcome of these proceedings.

FCC Spectrum Auction 97

In January 2015, the FCC released the results of Auction 97.  U.S. Cellular participated in Auction 97 indirectly through its limited partnership interest in Advantage Spectrum L.P.  See Note 14 — Variable Interest Entities in the Notes to Consolidated Financial Statements for additional information. 

FCC Reform Order

The Telecommunications Act authorizes and directs the FCC to establish a Universal Service Fund (“USF”), to preserve and advance universal access to telecommunications services in rural and high-cost areas of the country.  All carriers with interstate and international revenues must contribute to the USF.  Carriers are free to pass on the cost of such contributions to their customers.  In 2014, U.S. Cellular contributed $78.9 million into the federal USF and passed on the cost of such contributions to its customers.  In 2014, TDS Telecom contributed $12.4 million into the federal USF and passed on the cost of such contributions to its customers.    

Telecommunications companies may be designated by states, or in some cases by the FCC, as an Eligible Telecommunications Carrier (“ETC”) to receive universal service support payments if they provide specified services in “high cost” areas.   U.S. Cellular has been designated as an ETC in certain states and received approximately $92.1 million in high cost support for service to high cost areas in 2014.  TDS Telecom also received support under USF support programs.  In 2014, TDS Telecom received $82.2 million under all the federal USF support programs. 

In 2011, the FCC released an order (“Reform Order”) to: reform its universal service and intercarrier compensation mechanisms; establish a new, broadband-focused support mechanism; and propose further rules to advance reform.  Pursuant to the FCC's Reform Order, U.S. Cellular’s ETC support has been phased down by 40% since July 1, 2012.  As provided by the Reform Order, the phase down is currently suspended and U.S. Cellular will continue to receive 60% of its baseline support until a new fund provided in the Reform Order is operational.  With respect to TDS Telecom, it remains unclear whether the new mechanism will provide TDS Telecom with the same level of support over time that TDS Telecom receives today.  Further proceedings including litigation may also be possible.  At this time, TDS cannot predict the net effect of further changes to the USF high cost support program under the Reform Order.

Multiple appeals of the Reform Order were consolidated and argued in the U.S. Court of Appeals for the 10^th Circuit on November 19, 2013.  The court ruled in favor of the FCC and U.S. Cellular filed a Petition of Certiorari on November 25, 2014 with the United States Supreme Court. At this time, U.S. Cellular cannot predict whether the Supreme Court will accept the case or the timing or outcome of any such decision should the Court permit the appeal.

With respect to intercarrier compensation, the Reform Order provides for a reduction in the charges that U.S. Cellular pays to wireline phone companies to transport and terminate calls that originate on their networks, which will reduce U.S. Cellular's operating expenses. The reductions in intercarrier charges are to increase over the next five to ten years, further reducing U.S. Cellular's operating expenses.  With respect to TDS Telecom, the Reform Order provides for a reduction in the charges that TDS Telecom pays to wireline phone companies to transport and terminate calls that originate on TDS Telecom’s network, which will reduce TDS Telecom’s operating expenses.  However, TDS Telecom also receives revenue from other carriers to transport and terminate calls that originate on those carriers’ networks.  As reductions in intercarrier charges are to increase over the next five to ten years, TDS Telecom’s related revenues and operating expenses are expected to decline. The net effect of these changes is not known. Further proceedings including litigation may also be possible. TDS cannot predict whether such changes will have a material adverse effect on TDS’ business, financial condition or results of operations.

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FCC Definition of Broadband Benchmark

In January 2015, the FCC redefined its "broadband" benchmark speeds as delivering at least 25 Mbps (previously 4 Mbps) for downloads and 3 Mbps (previously 1 Mbps) for uploads.  These benchmarks may be used by the FCC in connection with certain FCC rules, determining eligibility for support payments, the consideration and approval by the FCC of certain transactions and other regulatory and related purposes.  TDS does not use the new FCC benchmark to define broadband for purposes of disclosure of operating metrics or financial results.  With respect to the Wireline segment, broadband connections represent the number of customers that are provided with high-capacity data circuits via various technologies, including fiber, DSL and dedicated internet circuit technologies.  With respect to the Cable segment, broadband connections represent the billable number of lines into a building for high speed data services.  See “Results of Operations – TDS Telecom” below.

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RESULTS OF OPERATIONS—CONSOLIDATED
Year Ended December 31,			2014		Increase/ (Decrease)		Percentage Change	2013		Increase/ (Decrease)		Percentage Change	2012
(Dollars in thousands, except per share amounts)
Operating revenues
	U.S. Cellular		$	3,892,747	$	(26,089)	(1)%	$	3,918,836	$	(533,248)	(12)%	$	4,452,084
	TDS Telecom			1,088,312		141,309	15%		947,003		92,497	11%		854,506
	All other			28,379		(7,018)	(20)%		35,397		(3,290)	(9)%		38,687
		Total operating revenues		5,009,438		108,202	2%		4,901,236		(444,041)	(8)%		5,345,277
Operating expenses
	U.S. Cellular			4,036,137		264,166	7%		3,771,971		(523,457)	(12)%		4,295,428
	TDS Telecom			1,098,683		196,512	22%		902,171		88,407	11%		813,764
	All other (1)			64,482		72,747	>100%		(8,265)		(60,487)	>(100)		52,222
		Total operating expenses		5,199,302		533,425	11%		4,665,877		(495,537)	(10)%		5,161,414
Operating income (loss)
	U.S. Cellular			(143,390)		(290,255)	>(100)%		146,865		(9,791)	(6)%		156,656
	TDS Telecom			(10,371)		(55,203)	>(100)%		44,832		4,090	10%		40,742
	All other (1)			(36,103)		(79,765)	>(100)%		43,662		57,197	>100		(13,535)
		Total operating income (loss)		(189,864)		(425,223)	>(100)%		235,359		51,496	28%		183,863
Other income (expenses)
	Equity in earnings of   unconsolidated entities			131,965		(749)	(1)%		132,714		39,847	43%		92,867
	Interest and dividend income			16,957		7,865	87%		9,092		(156)	(2)%		9,248
	Gain (loss) on investments			-		(14,547)	N/M		14,547		18,265	>100		(3,718)
	Interest expense			(111,397)		12,586	13%		(98,811)		12,066	(14)%		(86,745)
	Other, net			115		152	>100%		(37)		(757)	>(100)		720
		Total other income   (expenses)		37,640		(19,865)	(35)%		57,505		45,133	>100%		12,372
Income (loss) before income taxes				(152,224)		(445,088)	>(100)%		292,864		96,629	49%		196,235
	Income tax expense (benefit)			(4,932)		(130,975)	>(100)%		126,043		52,461	71%		73,582
Net income (loss)				(147,292)		(314,113)	>(100)%		166,821		44,168	36%		122,653
	Less: Net income (loss) attributable to noncontrolling interests, net of tax			(10,937)		(35,831)	>(100)%		24,894		(15,898)	(39)%		40,792
Net income (loss) attributable to   TDS shareholders				(136,355)		(278,282)	>(100)%		141,927		60,066	73%		81,861
	Preferred dividend requirement			(49)		-	-		(49)		1	2%		(50)
Net income (loss) available to   common shareholders			$	(136,404)	$	(278,282)	>(100)%	$	141,878	$	60,067	73%	$	81,811
Basic earnings (loss) per share   attributable to   TDS shareholders			$	(1.26)	$	(2.57)	>(100)%	$	1.31	$	0.56	75%	$	0.75
Diluted earnings (loss) per share   attributable to   TDS shareholders			$	(1.26)	$	(2.55)	>(100)%	$	1.29	$	0.54	72%	$	0.75
N/M - Percentage change not meaningful

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(1)Consists of corporate and other operations and intercompany eliminations. In 2013, TDS recognized an incremental gain of $53.5 million compared to U.S. Cellular upon closing of the Divestiture Transaction as a result of lower asset basis in the assets disposed.

Operating Revenues and Expenses

See “Results of Operations — U.S. Cellular” and “Results of Operations — TDS Telecom” below for factors that affected Operating revenues and expenses.

Equity in earnings of unconsolidated entities

Equity in earnings of unconsolidated entities represents TDS’ share of net income from entities in which it has a noncontrolling interest and that are accounted for by the equity method.

TDS’ investment in the Los Angeles SMSA Limited Partnership (“LA Partnership”) contributed $71.8 million, $78.4 million and $67.2 million to Equity in earnings of unconsolidated entities in 2014, 2013 and 2012, respectively. TDS received cash distributions from the LA Partnership of $60.5 million $71.5 million and $66.0 million in 2014, 2013 and 2012, respectively.

On April 3, 2013, TDS deconsolidated the NY1 & NY2 Partnerships and began reporting them as equity method investments in its consolidated financial statements as of that date.  In 2014, TDS’ investment in the NY1 & NY2 Partnerships contributed $29.0 million and in 2013, subsequent to their deconsolidation, NY1 & NY2 Partnerships contributed $24.7 million to Equity in earnings of unconsolidated entities.  No amounts were included in 2012 because the NY1 & NY2 Partnerships were consolidated in that year. Distributions from the NY1 & NY2 Partnerships of $26.8 million in 2014, and $29.4 in 2013, are included in Distributions from unconsolidated entities on the Consolidated Statement of Cash Flows.

Interest and dividend income

In 2014, Interest and dividend income increased by $7.9 million due primarily to imputed interest income recognized on Equipment Installment Plans. See Note 3 — Equipment Installment Plans in the Notes to Consolidated Financial Statements for additional information.

Gain (loss) on investments

In connection with the deconsolidation of the NY1 & NY2 Partnerships, TDS recognized a non-cash pre-tax gain of $14.5 million which was recorded in Gain (loss) on investments in 2013. See Note 8 — Investments in Unconsolidated Entities in the Notes to Consolidated Financial Statements for additional information.

Loss on investment in 2012 includes a provision for loss of $3.7 million related to a note receivable and preferred stock acquired by U.S. Cellular in connection with an acquisition in 1998.

Interest expense

In 2014, Interest expense increased $12.6 million from 2013 due primarily to a decrease in capitalized interest related to network and systems projects. In 2013, interest expense increased $12.1 million due primarily to the issuance of TDS’ 5.875% Senior Notes in November 2012 for $195.0 million. This amount was partially offset by an increase in capitalized interest during 2013.

Income tax expense

The effective tax rates on Income before income taxesand extraordinary items (“pre-tax income”) for 2014, 2013 and 2012 were 3.2%, 43.0% and 37.5%, respectively.  The following significant discrete and other items impacted income tax expense for these years:

2014 — Includes tax expense of $38.5 million related to valuation allowances recorded against certain state deferred tax assets, an increase to tax expense of $18.3 million due to a nondeductible impairment of Goodwill, and a tax benefit of $10.8 million related to a release of valuation allowance on federal net operating losses previously limited under loss utilization rules.  The effective tax rate in 2014 is lower due to the effect of these items combined with the loss in 2014 in Income (loss) before income taxes.

2013 — Includes tax expense of $14.9 million related to the NY1 & NY2 Deconsolidation and the Divestiture Transaction, and a tax benefit of $5.5 million resulting from statute of limitation expirations.

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2012 — Includes tax benefits of $11.3 million resulting from statute of limitation expirations and $6.1 million resulting from corrections relating to prior periods, offset by tax expense of $1.3 million related to state income tax audits and tax expense associated with increases to state deferred tax asset valuation allowances of $5.2 million.

See Note 4 — Income Taxes in the Notes to Consolidated Financial Statements for further information on the effective tax rate.

Net income (loss) attributable to noncontrolling interests, net of tax

Net income (loss) attributable to noncontrolling interests, net of tax includes the noncontrolling public shareholders’ share of U.S. Cellular’s net income (loss), the noncontrolling shareholders’ or partners’ share of certain U.S. Cellular subsidiaries’ net income (loss) and other TDS noncontrolling interests.

Year Ended December 31,		2014		2013		2012
(Dollars in thousands)
Net income (loss) attributable to noncontrolling interests, net of tax   U.S. Cellular
	Noncontrolling public shareholders’ (1)	$	(6,826)	$	21,775	$	18,431
	Noncontrolling shareholders’ or partners’ (1) (2)		(4,111)		3,119		22,361
		$	(10,937)	$	24,894	$	40,792
(1)	The decrease in 2014 is due primarily to decreased income from certain partnerships and U.S. Cellular.
(2)	The decrease in 2013 is due primarily to the elimination of the noncontrolling interest as a result of the NY1 & NY2 Deconsolidation on April 3, 2013.

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RESULTS OF OPERATIONS—U.S. CELLULAR

TDS provides wireless telephone service through U.S. Cellular, an 84%-owned subsidiary.  U.S. Cellular owns, manages and invests in wireless markets throughout the United States.

Summary Operating Data for U.S. Cellular Consolidated Markets

Following is a table of summarized operating data for U.S. Cellular’s Consolidated Markets. Consolidated Markets herein refers to markets which U.S. Cellular currently consolidates, or previously consolidated in the periods presented, and is not adjusted in prior periods presented for subsequent divestitures or deconsolidations. Unless otherwise noted, figures reported in Results of Operations are representative of consolidated results.
As of or for the Year Ended December 31,			2014			2013			2012
Retail Customers
	Postpaid
		Total at end of period		4,298,000			4,267,000			5,134,000
		Gross additions		940,000			697,000			880,000
		Net additions (losses)		31,000			(325,000)			(165,000)
		ARPU(1)	$	56.75		$	54.31		$	54.32
		ARPA(2)	$	133.19		$	120.92		$	123.27
		Churn rate(3)		1.8	%		1.8	%		1.7	%
		Smartphone penetration(4)		59.8	%		50.8	%		41.8	%
	Prepaid
		Total at end of period		348,000			343,000			423,000
		Gross additions		274,000			309,000			368,000
		Net additions (losses)		5,000			(21,000)			118,000
		ARPU(1)	$	34.07		$	31.44		$	33.26
		Churn rate(3)		6.4	%		7.0	%		6.0	%
Total customers at end of period				4,760,000			4,774,000			5,798,000
Billed ARPU(1)			$	53.49		$	50.73		$	50.81
Service revenue ARPU(1)			$	60.32		$	57.61		$	58.70
Smartphones sold as a percent of total handsets sold				81.3	%		72.8	%		58.7	%
Total Population
	Consolidated markets(5)			50,906,000			58,013,000			93,244,000
	Consolidated operating markets(5)			31,729,000			31,759,000			46,966,000
Market penetration at end of period
	Consolidated markets(6)			9.4	%		8.2	%		6.2	%
	Consolidated operating markets(6)			15.0	%		15.0	%		12.3	%
Capital expenditures (000s)			$	557,615		$	737,501		$	836,748
Total cell sites in service				6,220			6,975			8,028
Owned towers in service				4,281			4,448			4,408

Summary Operating Data for U.S. Cellular Core Markets

Following is a table of summarized operating data for U.S. Cellular's Core Markets.  For comparability, Core Markets as presented here excludes the results of the Divestiture Markets and NY1 and NY2 Partnerships as of or for the twelve months ended December 31, 2013 and December 31, 2012.
As of or for the Year Ended December 31,			2014			2013			2012
Retail Customers
	Postpaid
		Total at end of period		4,298,000			4,267,000			4,496,000
		Gross additions		940,000			682,000			746,000
		Net additions (losses)		31,000			(217,000)			(92,000)
		ARPU(1)	$	56.75		$	54.23		$	53.65
		ARPA(2)	$	133.19		$	115.00		$	120.78
		Churn rate(3)		1.8	%		1.7	%		1.5	%
		Smartphone penetration(4)		59.8	%		50.8	%		41.1	%
	Prepaid
		Total at end of period		348,000			343,000			342,000
		Gross additions		274,000			295,000			288,000
		Net additions (losses)		5,000			2,000			124,000
		ARPU(1)	$	34.07		$	31.45		$	32.98
		Churn rate(3)		6.4	%		6.7	%		5.2	%
Total customers at end of period				4,760,000			4,774,000			5,022,000
Billed ARPU (1)			$	53.49		$	50.82		$	50.54
Service revenue ARPU(1)			$	60.32		$	57.66		$	58.49
Smartphones sold as a percent of total handsets sold				81.3	%		73.0	%		58.9	%
Total Population
	Consolidated markets(5)			50,906,000			58,013,000			83,384,000
	Consolidated operating markets(5)			31,729,000			31,759,000			31,445,000
Market penetration at end of period
	Consolidated markets(6)			9.4	%		8.2	%		6.0	%
	Consolidated operating markets(6)			15.0	%		15.0	%		16.0	%
Capital expenditures (000s)			$	557,615		$	735,082		$	768,884
Total cell sites in service				6,220			6,161			6,130
Owned towers in service				3,951			3,883			3,847

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(1)Average Revenue per User (“ARPU”) metrics are calculated by dividing a revenue base by an average number of customers by the number of months in the period.  These revenue bases and customer populations are shown below:

a.Postpaid ARPU consists of total postpaid service revenues and postpaid customers.

b.Prepaid ARPU consists of total prepaid service revenues and prepaid customers.

c.Billed ARPU consists of total postpaid, prepaid and reseller service revenues and postpaid, prepaid and reseller customers.

d.Service revenue ARPU consists of total postpaid, prepaid and reseller service revenues, inbound roaming and other service revenues and postpaid, prepaid and reseller customers.

(2)Average Revenue per Account (“ARPA”) metric is calculated by dividing total postpaid service revenues by the average number of postpaid accounts by the number of months in the period.

(3)Churn metrics represent the percentage of the postpaid or prepaid customers that disconnects service each month. These metrics represent the average monthly postpaid or prepaid churn rate for each respective period.

(4)Smartphones represent wireless devices which run on an Android, Apple, BlackBerry or Windows Mobile operating system, excluding connected devices.  Smartphone penetration is calculated by dividing postpaid smartphone customers by total postpaid customers.

(5)The decrease in the population of consolidated markets is due primarily to the divestiture of the Mississippi Valley non-operating license in October 2013, the majority of the St. Louis area non-operating market license in March 2014, and certain non-operating licenses in North Carolina in December 2014.  Total Population is used only to calculate market penetration of consolidated markets and consolidated operating markets, respectively. See footnote (6) below.

(6)Market penetration is calculated by dividing the number of wireless customers at the end of the period by the total population of consolidated markets and consolidated operating markets, respectively, as estimated by Claritas.  The increase in consolidated markets penetration is due primarily to a lower denominator as a result of the license divestitures described in footnote (5) above.

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Components of Operating Income (Loss)
Year Ended December 31,		2014		Increase/ (Decrease)		Percentage Change	2013		Increase/ (Decrease)		Percentage Change	2012
(Dollars in thousands)
Retail service		$	3,012,984	$	(152,512)	(5)%	$	3,165,496	$	(382,483)	(11)%	$	3,547,979
Inbound roaming			224,090		(39,096)	(15)%		263,186		(85,531)	(25)%		348,717
Other			160,863		(5,228)	(3)%		166,091		(36,069)	(18)%		202,160
	Service revenues		3,397,937		(196,836)	(5)%		3,594,773		(504,083)	(12)%		4,098,856
Equipment sales			494,810		170,747	53%		324,063		(29,165)	(8)%		353,228
	Total operating revenues		3,892,747		(26,089)	(1)%		3,918,836		(533,248)	(12)%		4,452,084
System operations (excluding   Depreciation, amortization   and accretion reported below)			769,911		6,476	1%		763,435		(183,370)	(19)%		946,805
Cost of equipment sold			1,192,669		193,669	19%		999,000		63,053	7%		935,947
Selling, general and   administrative			1,591,914		(85,481)	(5)%		1,677,395		(87,538)	(5)%		1,764,933
Depreciation, amortization   and accretion			605,997		(197,784)	(25)%		803,781		195,148	32%		608,633
(Gain) loss on asset disposals, net			21,469		9,137	30%		30,606		(12,518)	(69)%		18,088
(Gain) loss on sale of business   and other exit costs, net			(32,830)		(213,937)	(87)%		(246,767)		267,789	>100%		21,022
(Gain) loss on license sales and   exchanges			(112,993)		(142,486)	(56)%		(255,479)		255,479	N/M		-
	Total operating expenses		4,036,137		264,166	7%		3,771,971		(523,457)	(12)%		4,295,428
Operating income (loss)		$	(143,390)	$	(290,255)	>(100)%	$	146,865	$	(9,791)	(6)%	$	156,656
N/M - Percentage change not meaningful

Operating Revenues

Service revenues

Service revenues consist primarily of: (i) charges for access, airtime, roaming, recovery of regulatory costs and value added services, including data products and services, provided to U.S. Cellular’s retail customers and to end users through third party resellers (“retail service”); (ii) charges to other wireless carriers whose customers use U.S. Cellular’s wireless systems when roaming; and (iii) amounts received from the Federal USF.

Retail service revenues

Retail service revenues decreased by $152.5 million, or 5%, to $3,013.0 million due primarily to a decrease in U.S. Cellular’s average customer base (including the reductions caused by the Divestiture Transaction and NY1 & NY2 Deconsolidation), partially offset by an increase in billed ARPU. 

In 2013, Retail service revenues decreased by $382.5 million, or 11%, to $3,165.5 million due primarily to a decrease in U.S. Cellular’s average customer base (including the reductions caused by the Divestiture Transaction and NY1 & NY2 Deconsolidation) and a slight decrease in billed ARPU.  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 Operating revenues in the Consolidated Statement of Operations and increased Customer deposits and deferred revenues in the Consolidated Balance Sheet.  

Billed ARPU increased to $53.49 in 2014 from $50.73 in 2013.  This overall increase is due primarily to an increase in postpaid ARPU to $56.75 in 2014 from $54.31 in 2013 and an increase in prepaid ARPU to $34.07 in 2014 from $31.44 in 2013, reflecting an increase in smartphone penetration and corresponding revenues from data products and services, partially offset by lower monthly service billings for customers on equipment installment plans. Billed ARPU in 2013 was relatively flat compared to $50.81 in 2012.  An increase in smartphone adoption and corresponding revenues from data products and services drove higher ARPU; however, this growth was offset by the special issuance of loyalty rewards points in the fourth quarter of 2013, which negatively impacted billed ARPU for the year by $0.70.

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U.S. Cellular expects continued pressure on retail service revenues in the foreseeable future due to industry competition for customers and related effects on pricing of service plan offerings offset to some degree by continued adoption of smartphones and data usage.  In addition, beginning in the second quarter of 2014, U.S. Cellular expanded its offerings of equipment installment plans.  To the extent that customers adopt these plans, U.S. Cellular expects an increase in equipment sales revenues.  However, certain of the equipment installment plans provide the customer with a reduction in the monthly access charge for the device; thus, to the extent that existing customers adopt such plans, U.S. Cellular expects a reduction in retail service revenues and ARPU.

Inbound roaming revenues

Inbound roaming revenues decreased by $39.1 million, or 15% in 2014 to $224.1 million.  The decrease was due in part to a $17.6 million impact related to the Divestiture Transaction and NY1 & NY2 Deconsolidation recorded in 2013.  The remaining decrease in the Core Markets was due to a decrease in rates and a decline in voice volume, partially offset by higher data usage.  U.S. Cellular expects modest growth in data volume, declining voice volumes and declining rates which likely will result in declining inbound roaming revenues in the near term.  Both inbound and outbound roaming rates are subject to periodic revision; further, U.S. Cellular is negotiating 4G LTE roaming rates with several carriers which could materially affect roamer revenues and expenses going forward.

Inbound roaming revenues decreased by $85.5 million, or 25% in 2013 to $263.2 million.  The decrease was due primarily to lower rates ($47.9 million) and the impacts of the Divestiture Transaction and NY1 & NY2 Deconsolidation ($37.6 million).  Data volume increased year-over year but the impact of this increase was offset by the combined impacts of lower volume for voice and lower rates for both data and voice.  The decline in roaming revenues was offset by a decline in roaming expense also due to lower rates. 

Other revenues

Other revenues of $160.9 million in 2014 decreased by $5.2 million, or 3%, compared to 2013 due to a $14.8 million decrease in ETC support, partially offset by an increase in tower rental revenue.  Tower rental revenue was $55.5 million and $45.7 million in 2014 and 2013, respectively.  In 2013, Other revenues decreased by $36.1 million, or 18%, due primarily to a decrease in ETC support. 

Equipment sales revenues

Equipment sales revenues include revenues from sales of wireless devices and related accessories to both new and existing customers, as well as revenues from sales of wireless devices and accessories to agents. All Equipment sales revenues are recorded net of rebates.

U.S. Cellular offers a competitive line of quality wireless devices to both new and existing customers. U.S. Cellular's customer acquisition and retention efforts include offering new wireless devices to customers at discounted prices; in addition, customers on currently offered rate plans receive loyalty reward points that may be used to purchase a new wireless device or accelerate the timing of a customer's eligibility for a wireless device upgrade at promotional pricing. U.S. Cellular also continues to sell wireless devices to agents including national retailers; this practice enables U.S. Cellular to provide better control over the quality of wireless devices sold to its customers, establish roaming preferences and earn quantity discounts from wireless device manufacturers which are passed along to agents and other retailers.

Beginning in the second quarter of 2014, U.S. Cellular expanded its offerings of equipment installment plans.  To the extent that customers adopt these plans, U.S. Cellular expects an increase in equipment sales revenues.  However, certain of the equipment installment plans provide the customer with a reduction in the monthly access charge for the device; thus, to the extent that existing customers adopt such plans, U.S. Cellular expects a reduction in retail service revenues and ARPU.

Equipment sales revenues increased $170.7 million, or 53%,  to $494.8  million in 2014.  Equipment sales revenues in 2014 include $190.4 million related to equipment installment plan sales.  The increase is due primarily to an increase in average revenue per device sold (including the impact of sales under equipment installment plans) and sales of connected devices and accessories.  This increase is partially offset by a decrease in the sales of other device categories, primarily the feature phone category, and the effects of the Divestiture Transaction and the NY1 & NY2 Deconsolidation.

The decrease in 2013 equipment sales revenues of $29.2 million, or 8%, to $324.1 million was driven primarily by selling fewer devices, partially due to the Divestiture Transaction.  Declines in volume were offset by an increase of 12% in average revenue per device.  Average revenue per wireless device sold increased due to a continued shift in customer preference to higher priced smartphones.

Operating Expenses

System operations expenses (excluding Depreciation, amortization and accretion)

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System operations expenses (excluding Depreciation, amortization and accretion) include charges from telecommunications service providers for U.S. Cellular’s customers’ use of their facilities, costs related to local interconnection to the wireline network, charges for cell site rent and maintenance of U.S. Cellular’s network, long-distance charges, outbound roaming expenses and payments to third‑party data product and platform developers.  

System operations expenses increased $6.5 million, or 1%, to $769.9 million in 2014 and decreased $183.4 million, or 19%, to $763.4 million in 2013.  Key components of the net changes in System operations expenses were as follows:

·Maintenance, utility and cell site expenses increased $26.6 million, or 8%, in 2014 and decreased $61.6 million, or 15%, in 2013.  The increase in 2014 reflects higher support costs for the expanded 4G LTE network and completion of certain maintenance projects deferred from 2013, partially offset by the impacts of the Divestiture Transaction and NY1 & NY2 Deconsolidation.  The decrease in 2013 is driven primarily by impacts of the Divestiture Transaction and reductions in expenses related to 3G equipment support and network costs, offset by increases in charges related to 4G LTE equipment and network costs.

·Expenses incurred when U.S. Cellular’s customers used other carriers’ networks while roaming increased $5.8 million, or 3%, in 2014 and decreased $64.1 million, or 27%, in 2013.  The increase in 2014 is driven primarily by an increase in data roaming usage, partially offset by lower rates, lower voice usage, and the impacts of the Divestiture Transaction and NY1 & NY2 Deconsolidation.  The decrease in 2013 is due primarily to lower rates for both voice and data and lower voice volume, which more than offset increased data roaming usage, as well as the impacts of the Divestiture Transaction and NY1 & NY2 Deconsolidation.

·Customer usage expenses decreased by $25.9 million, or 11%, in 2014, and $57.7 million, or 19%, in 2013.  The decrease in 2014 is driven by impacts of the Divestiture Transaction and NY1 & NY2 Deconsolidation, lower volume and rates for long distance usage and lower fees for platform and content providers, partially offset by LTE migration costs.  The decrease in 2013 is driven by impacts of the Divestiture Transaction and decreases in intercarrier charges as a result of the FCC’s Reform Order and certain data costs, partially offset by increases due to network costs for 4G LTE.

U.S. Cellular expects system operations expenses to increase in the future to support the continued growth in cell sites and other network facilities as it continues to add capacity, enhance quality and deploy new technologies as well as to support increases in total customer usage, particularly data usage.  However, these increases are expected to be offset to some extent by cost savings generated by shifting data traffic to the 4G LTE network from the 3G network.

Cost of equipment sold

Cost of equipment sold increased $193.7 million, or 19%, in 2014 and $63.1 million, or 7% in 2013.  In both years, the increase was driven primarily by an increase in the average cost per wireless device sold (22% in 2014 and 33% in 2013), which more than offset the impact of selling fewer devices.  Average cost per device sold increased due to general customer preference for higher priced 4G LTE smartphones and tablets.  Smartphones sold as a percentage of total devices sold were 73%, 68% and 56% in 2014, 2013 and 2012, respectively.  The total number of devices sold decreased by 3% and 18% in 2014 and 2013, respectively, partially due to the Divestiture Transaction.

U.S. Cellular’s loss on equipment, defined as equipment sales revenues less cost of equipment sold, was $697.9 million, $674.9 million and $582.7 million for 2014, 2013 and 2012, respectively. U.S. Cellular expects loss on equipment to continue to be a significant cost in the foreseeable future as iconic data-centric wireless devices continue to increase in cost and wireless carriers continue to use device availability and pricing as a means of competitive differentiation.  However, U.S. Cellular expects that sales of wireless devices under equipment installment plans and, for certain devices such as tablets, under non-subsidized plans, will offset loss on equipment to some degree.     

Selling, general and administrative expenses

Selling, general and administrative expenses include salaries, commissions and expenses of field sales and retail personnel and facilities; telesales department salaries and expenses; agent commissions and related expenses; corporate marketing and merchandise management; and advertising expenses.  Selling, general and administrative expenses also include bad debts expense, costs of operating customer care centers and corporate expenses.

Selling, general and administrative expenses decreased by $85.5 million to $1,591.9 million in 2014 and by $87.5 million to $1,677.4 million in 2013.  Key components of the net changes in Selling, general and administrative expenses were as follows:

2014 —

·General and administrative expenses decreased by $79.7 million, or 8%, due primarily to the Divestiture Transaction and NY1 & NY2 Deconsolidation and lower consulting expenses related to the billing system conversion in the prior year.

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·Selling and marketing expenses decreased by $5.7 million, or 1%, due primarily to lower agent, employee and facilities costs as a result of the Divestiture Transaction, partially offset by increases in advertising expense and commissions; higher commissions reflected increases in gross additions, renewals and accessory sales volumes.

2013 —

·Selling and marketing expenses decreased by $75.7 million, or 9%, primarily from lower commission expenses, more cost-effective advertising spending and reduced employee and facilities costs as a result of the Divestiture Transaction.

·General and administrative expenses decreased by $11.8 million, or 1%, driven by corporate cost containment and reduction initiatives and reduced spending as a result of the Divestiture Transaction, offset by costs associated with launching the new billing system of $55.8 million and higher bad debts expense of $31.5 million due to higher customer accounts receivable balances resulting from billing issues experienced after the system conversion.

Depreciation, amortization and accretion

Depreciation, amortization and accretion expense decreased $197.8 million, or 25%, in 2014, due primarily to the higher amount of accelerated depreciation, amortization and accretion in the Divestiture Markets that occurred in 2013.  Depreciation, amortization and accretion expense increased $195.1 million, or 32%, in 2013 due primarily to the acceleration of depreciation, amortization and accretion in the Divestiture Markets.  The impact of the acceleration was $13.1 million and $158.5 million in 2014 and 2013, respectively.  The accelerated depreciation, amortization and accretion in the Divestiture Markets was completed in the first quarter of 2014.

(Gain) loss on asset disposals, net

(Gain) loss on asset disposals, net was a loss of $21.5 million in 2014 and $30.6 million in 2013 due primarily to losses resulting from the write-off and disposals of certain network assets.

(Gain) loss on sale of business and other exit costs, net

(Gain) loss on sale of business and other exit costs, net was a gain of $32.8 million in 2014 and $246.8 million in 2013, both primarily related to the Divestiture Transaction.  See Note 6 — Acquisitions, Divestitures and Exchanges in the Notes to Consolidated Financial Statements for additional information.

(Gain) loss on license sales and exchanges

(Gain) loss on license sales and exchanges was a net gain in 2014  resulting from the sale of the St. Louis area non-operating market license and the license exchanges primarily in Wisconsin, Oklahoma, North Carolina and Tennessee.  The gain in 2013 resulted from the sale of the Mississippi Valley non-operating market license for $308.0 million, which resulted in a pre-tax gain of $250.6 million. See Note 6 — Acquisitions, Divestitures and Exchanges in the Notes to Consolidated Financial Statements for additional information.

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RESULTS OF OPERATIONS—TDS TELECOM

TDS conducts its Wireline, Cable and HMS operations through TDS Telecom, a wholly-owned subsidiary.  The following table summarizes operating data for Wireline and Cable operations:

As of or for the year ended December 31,				2014		2013		2012
Wireline
	Residential connections
		Voice (1)			335,900		352,100		374,700
		Broadband (2)			229,200		227,000		229,900
		IPTV (3)			23,400		13,800		7,900
			Wireline residential connections		588,500		592,900		612,500
	Total residential revenue per connection (4)			$	41.22	$	40.53	$	39.65
	Commercial connections
		Voice (1)			193,200		218,400		243,100
		Broadband (2)			24,700		27,100		29,700
		managedIP (5)			140,200		127,600		94,600
			Wireline commercial connections		358,100		373,100		367,400
	Total Wireline connections				946,600		966,000		979,900
Cable
	Cable connections
		Video (6)			110,400		69,100
		Broadband (7)			110,900		61,000
		Voice (7)			46,000		17,200
			Cable connections		267,300		147,300
(1)	The individual circuit connecting a customer to TDS Telecom’s central office facilities.
(2)	The number of customers provided high-capacity data circuits via various technologies, including DSL and dedicated internet circuit technologies.
(3)	The number of customers provided video services using IP networking technology.
(4)	Total residential revenue divided by the average number of total residential connections.
(5)	The number of telephone handsets, data lines and IP trunks providing communications using IP networking technology.
(6)	Generally, a home or business receiving video programming counts as one video connection.  In counting bulk residential or commercial connections, such as an apartment building or a hotel, connections are counted based on the number of units/rooms within the building receiving service.
(7)	Broadband and voice connections reflect billable number of lines into a building for high speed data and voice services, respectively.

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TDS Telecom Total (Wireline, Cable and HMS Operations)
Components of Operating Income
					Increase/		Percentage			Increase/		Percentage
Year Ended December 31,			2014		(Decrease)		Change	2013		(Decrease)		Change	2012
(Dollars in thousands)
Operating revenues
	Wireline		$	716,422	$	(10,145)	(1)%	$	726,567	$	(15,181)	(2)%	$	741,748
	Cable			116,855		80,972	>100%		35,883		35,883	N/M		-
	HMS			258,732		73,116	39%		185,616		72,606	64%		113,010
	Intra-company elimination			(3,697)		(2,634)	>(100)%		(1,063)		(811)	>(100)%		(252)
		TDS Telecom operating   revenues		1,088,312		141,309	15%		947,003		92,497	11%		854,506
Operating expenses
	Wireline			617,948		(43,613)	(7)%		661,561		(21,805)	(3)%		683,366
	Cable			116,565		80,638	>100%		35,927		35,927	N/M		-
	HMS			367,867		162,121	79%		205,746		75,096	57%		130,650
	Intra-company elimination			(3,697)		(2,634)	>(100)%		(1,063)		(811)	>(100)%		(252)
		TDS Telecom operating   expenses		1,098,683		196,512	22%		902,171		88,407	11%		813,764
TDS Telecom operating income   (loss)			$	(10,371)	$	(55,203)	>(100)%	$	44,832	$	4,090	10%	$	40,742
N/M - Not meaningful

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Wireline Operations
Components of Operating Income
						Increase/		Percentage			Increase/		Percentage
Year Ended December 31,				2014		(Decrease)		Change	2013		(Decrease)		Change	2012
(Dollars in thousands)
Service revenues
	Residential			$	293,302	$	85	-	$	293,217	$	(3,375)	(1)%	$	296,592
	Commercial				229,308		(407)	-		229,715		2,774	1%		226,941
	Wholesale				191,976		(8,464)	(4)%		200,440		(14,243)	(7)%		214,683
		Total service revenues			714,586		(8,786)	(1)%		723,372		(14,844)	(2)%		738,216
Equipment and product sales					1,836		(1,359)	(43)%		3,195		(337)	(10)%		3,532
			Total operating revenues		716,422		(10,145)	(1)%		726,567		(15,181)	(2)%		741,748
Cost of services (excluding   depreciation, amortization and   accretion reported below)					256,878		(9,757)	(4)%		266,635		(3,698)	(1)%		270,333
Cost of equipment and products					2,336		(1,495)	(39)%		3,831		99	3%		3,732
Selling, general and   administrative					189,956		(30,141)	(14)%		220,097		(15,619)	(7)%		235,716
Depreciation, amortization   and accretion					169,044		(1,824)	(1)%		170,868		(1,658)	(1)%		172,526
(Gain) loss on asset disposals,   net					2,091		1,961	>100%		130		(890)	(87)%		1,020
(Gain) loss on sale of business   and other exit costs, net					(2,357)		(2,357)	N/M		-		(39)	N/M		39
			Total operating expenses		617,948		(43,613)	(7)%		661,561		(21,805)	(3)%		683,366
Total operating income				$	98,474	$	33,468	51%	$	65,006	$	6,624	11%	$	58,382
N/M – Not meaningful

Operating Revenues

Residential revenues consist of broadband, video and voice services to Wireline’s residential customer base. 

Residential revenues were relatively unchanged from the prior year at $293.3 million in 2014.  Legacy voice connections declined by 5%, decreasing revenues by $7.1 million, while IPTV connections grew 73% increasing revenues $6.6 million.  A 1% increase in average revenue per residential connection driven by price increases for broadband services, growth in customers opting for faster broadband speeds and growth in customers selecting higher tier IPTV packages increased revenues $1.8 million.

Residential revenues decreased $3.4 million or 1% to $293.2 million in 2013.  A 3% reduction in the number of average residential connections reduced revenues by $7.9 million partially offset by a $5.2 million increase due to growth in average revenue per residential connection of 2%.  The growth in average revenue per residential connection was mainly driven by broadband price increases, growth in customers opting for faster broadband speeds and the growth of customers selecting higher tier IPTV packages.

Commercial revenuesconsist of broadband and voice services and sales and installation of IP-based telecommunications systems to Wireline’s commercial customer base.

Commercial revenues were relatively unchanged from the prior year at $229.3 million in 2014.  Decreases in revenue from declining legacy voice and data connections exceeded increases in revenues from a 19% growth in average managedIP connections by $3.1 million. A 1% increase in average revenue per connection driven by price increases on legacy voice and data services and managedIP customers moving to higher speed data services increased commercial revenues $2.8 million.

Commercial revenues increased $2.8 million or 1% to $229.7 million in 2013. A 2% increase in average commercial connections, which was driven by the 49% growth in managedIP as customers converted from traditional voice and data connections, increased

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revenues by $4.4 million. This increase was partially offset by a 1% decline in average revenue per commercial connection, primarily driven by lower managed IP rates, which decreased revenues $2.7 million.

Wholesale revenuesconsist of compensation from other carriers for utilizing TDS Telecom’s network infrastructure and regulatory recoveries.

Wholesale revenues decreased $8.5 million or 4% to $192.0 million in 2014.  Revenues received through inter-state and intra-state regulatory recovery mechanisms decreased $6.9 million.  Wholesale revenues declined $2.7 million due to a 10% reduction in intra-state minutes-of-use.

Wholesale revenues decreased $14.2 million or 7% to $200.4 million in 2013.  Network access revenues decreased $6.8 million in 2013 as a result of changes in support mechanisms and in intercarrier compensation resulting from the Reform Order released by the FCC in November 2011.  Wholesale revenues also declined $5.3 million due to a 15% reduction in intra-state minutes-of-use.

Operating Expenses

Cost of services (excluding Depreciation, amortization and accretion)

Cost of services decreased $9.8 million or 4% to $256.9 million in 2014.  Costs of providing long-distance services, provisioning circuits and purchasing unbundled network elements decreased by $9.6 million and employee expenses decreased by $5.0 million primarily due to reductions in employees.  Charges related to the growth in IPTV increased cost of services $4.5 million.

Cost of services decreased $3.7 million or 1% to $266.6 million in 2013due primarily to a $5.5 million decrease in costs of providing long distance services and promotional giveaways.  In addition, carrier interconnection charges decreased $2.3 million as a result of lower access charges that became effective related to the Reform Order.  Employee expense decreased $1.1 million due to a reduction in employees. Offsetting the decreases were increases in charges related to IPTV expansion.

Selling, general and administrative expenses

Selling, general and administrative expenses decreased $30.1 million or 14% to $190.0 million in 2014 due to cost control efforts.  Employee expenses decreased $18.1 million primarily due to reductions in employees and consulting andIT maintenance charges decreased $2.5 million and $2.1 million, respectively.  Federal USF charges decreased $3.0 million.

Selling, general and administrative expenses decreased $15.6 million or 7% to $220.1 million in 2013 due primarily to decreases in employee expenses, Federal USF contributions due to lower revenues, bad debts, and property taxes.

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Cable Operations
Components of Operating Income
					Increase/		Percentage
Year Ended December 31,			2014  (2)		(Decrease)		Change	2013  (1)
(Dollars in thousands)
Service revenues
	Residential		$	93,985	$	64,969	>100%	$	29,016
	Commercial			22,870		16,003	>100%		6,867
		Total operating revenues		116,855		80,972	>100%		35,883
Cost of services (excluding Depreciation, amortization and   accretion reported below)				54,265		36,991	>100%		17,274
Selling, general and administrative expenses				36,175		25,121	>100%		11,054
Depreciation, amortization and accretion				23,643		16,072	>100%		7,571
(Gain) loss on asset disposals, net				2,482		2,454	>100%		28
		Total operating expenses		116,565		80,638	>100%		35,927
Total operating income (loss)			$	290	$	334	N/M	$	(44)
(1)		Represents the operations of Baja from August 1, 2013 (date of acquisition) to December 31, 2013.
(2)		Represents the operations of Baja for twelve months and Bend from September 1, 2014 (date of acquisition) to December 31, 2014.

Operating Revenues

Residential revenues consist of broadband, video and voice services to Cable’s residential customer base.

Residential revenues increased $65.0 million to $94.0 million in 2014 due primarily to $63.8 million of revenues from acquisitions.

In 2013, Cable generated revenues of $29.0 million since the acquisition.

Commercial revenues consist of broadband, video and voice services to Cable’s commercial customer base.

Commercial revenues increased $16.0 million to $22.9 million in 2014 due primarily to $15.6 million of revenues from acquisitions.

In 2013, Cable generated revenues of $6.9 million since the acquisition.

Operating Expenses

Cost of services(excluding Depreciation, amortization and accretion)

Cost of services (excluding Depreciation, amortization and accretion) increased $37.0 million to $54.3 million in 2014 due primarily to $35.2 million of costs from acquisitions.

In 2013, cost of services (excluding Depreciation, amortization and accretion) of $17.3 million were incurred for programming costs and expenses related to the delivery and support of services since the acquisition.

Selling, general and administrative expenses

Selling, general and administrative expenses increased $25.1 million to $36.2 million in 2014 due primarily to $24.8 million of costs from acquisitions.

In 2013, selling, general and administrative expenses of $11.1 million included legal and consulting costs of $2.0 million related to the acquisition.

Depreciation, amortization and accretion expense

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Depreciation, amortization and accretion expense increased $16.1 million to $23.6 million in 2014 due primarily to $15.1 million of costs from acquisitions, including $5.1 million of amortization of customer lists and trade names.

In 2013, depreciation, amortization and accretion expense of $7.6 million was incurred since the acquisition.  Amortization of the acquired customer list and trade name contributed $3.0 million of expense.

HMS Operations
Components of Operating Income
					Increase/		Percentage			Increase/		Percentage
Year Ended December 31,			2014		(Decrease)		Change	2013		(Decrease)		Change	2012
(Dollars in thousands)
Service revenues			$	109,766	$	14,891	16%	$	94,875	$	17,779	23%	$	77,096
Equipment and product sales				148,966		58,225	64%		90,741		54,827	>100%		35,914
	Total operating revenues			258,732		73,116	39%		185,616		72,606	64%		113,010
Cost of services (excluding   depreciation, amortization and    accretion reported below)				77,392		16,969	28%		60,423		13,587	29%		46,836
Cost of equipment and products				126,362		50,371	66%		75,991		47,046	>100%		28,945
Selling, general and   administrative				53,020		8,075	18%		44,945		10,752	31%		34,193
Depreciation, amortization   and accretion				26,912		2,650	11%		24,262		3,694	18%		20,568
Loss on impairment of assets				84,000		84,000	N/M		-		-	N/M		-
(Gain) loss on asset disposals,   net				181		56	45%		125		17	16%		108
		Total operating expenses		367,867		162,121	79%		205,746		75,096	57%		130,650
Total operating income (loss)			$	(109,135)	$	(89,005)	>(100)%	$	(20,130)	$	(2,490)	(14)%	$	(17,640)
N/M - Not meaningful

Operating Revenues

Service revenues consist primarily of colocation, cloud computing and hosted managed services, application management, and installation and management of IT infrastructure hardware solutions.

Service revenues increased $14.9 million or 16% to $109.8 million in 2014. Acquisitions contributed $11.5 million of this increase.  The remaining increase was due primarily to 6% growth in recurring services consisting of colocation, dedicated hosting, hosted application management and cloud computing services.

Service revenues increased $17.8 million to $94.9 million in 2013.  Acquisitions contributed $9.2 million of incremental service revenues with the remaining increase due to 10% growth in recurring services.

Equipment and product sales include revenues from sales of IT infrastructure hardware solutions.

Equipment and product sales increased $58.2 million to $149.0 million in 2014.  Acquisitions contributed $73.6 million of incremental equipment and product sales.  Lower cyclical spending by existing customers resulted in a decrease in equipment sales of $15.4 million.

Equipment and product sales increased $54.8 million to $90.7 million in 2013 due to acquisitions.

Operating Expenses

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Cost of services (excluding Depreciation, amortization and accretion)

Cost of services increased $17.0 million to $77.4 million in 2014.  Cost of services increased $8.4 million as a result of acquisitions.  Employee related expenses, data center maintenance and software costs also increased to support growth in services provided to customers.

Cost of services increased $13.6 million to $60.4 million in 2013.  Acquisitions increased Cost of services $1.9 million.  Employee related expense also increased in 2013 by $5.7 million in addition to increased data center costs to support revenue growth.

Cost of equipment and products

Cost of equipment and products increased $50.4 million to $126.4 million in 2014 due to $62.6 million in costs from acquisitions.  Cyclical spend by existing customers resulted in a decrease in Cost of equipment and products sold of $12.2 million.

Cost of equipment and products increased $47.0 million to $76.0 million in 2013 due to acquisitions.

Selling, general and administrative expense

Selling, general and administrative expense increased $8.1 million to $53.0 million in 2014 due primarily to $11.6 million from acquisitions.

Selling, general and administrative expense increased $10.8 million to $44.9 million in 2013.  Costs from acquisitions increased Selling, general and administrative expense $10.6 million.

Depreciation, amortization and accretion expense

Depreciation, amortization and accretion expense increased $2.7 million to $26.9 million due primarily to customer list amortization costs from acquisitions.

Depreciation, amortization and accretion expense increased $3.7 million to $24.3 million in 2013 due primarily to acquisitions. Customer list and trade name amortization contributed $2.2 million of the increase in 2013.

Loss on Impairment of Assets

As a result of interim testing performed during the third quarter of 2014, TDS determined the carrying value of the HMS goodwill exceeded the implied fair value of goodwill.  As a result, an $84.0 million impairment loss was recognized.

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INFLATION

Management believes that inflation affects TDS’ business to no greater or lesser extent than the general economy.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

See Note 1 — Summary of Significant Accounting Policies and Recent Accounting Pronouncements in the Notes to Consolidated Financial Statements for information on recently issued accounting pronouncements.

In general, recently issued accounting pronouncements did not have and are not expected to have a significant effect on TDS’ financial condition and results of operations, except for Accounting Standards Update 2014-09, Revenue from Contracts with Customers.  TDS is evaluating the effects of adoption of this standard on its financial condition and results of operations.

LIQUIDITY AND CAPITAL RESOURCES

CASH FLOWS

TDS operates a capital- and marketing-intensive business.  TDS utilizes cash on hand, cash from operating activities, cash proceeds from divestitures and disposition of investments, short-term credit facilities and long-term debt financing to fund its acquisitions (including licenses), construction costs, operating expenses and share repurchases.  Cash flows may fluctuate from quarter to quarter and year to year due to seasonality, the timing of acquisitions and divestitures, capital expenditures and other factors.  The table below and the following discussion summarize TDS’ cash flow activities in 2014, 2013 and 2012.

		2014		2013		2012
(Dollars in thousands)
Cash flows from (used in)
	Operating activities	$	394,812	$	494,610	$	1,105,172
	Investing activities		(909,744)		(260,653)		(998,069)
	Financing activities		156,819		(144,424)		70,103
Net increase (decrease) in cash and cash equivalents		$	(358,113)	$	89,533	$	177,206

Cash Flows from Operating Activities

Cash flows from operating activities were $394.8 million in 2014 and $494.6 million in 2013. The net decrease reflected higher earnings excluding the gains recognized on the sale of businesses and the gains recognized on license sales and exchanges, which had the impact of improving cash flows from operating activities, more than offset by changes in working capital, which had the impact of decreasing cash flows from operating activities.  Working capital factors which significantly decreased cash flows from operating activities included changes in accounts payable levels year-over-year as a result of timing differences related to operating expenses and device purchases.  In December 2014, as part of the Tax Increase Prevention Act of 2014, bonus depreciation was enacted which allowed TDS to take certain additional deductions for depreciation resulting in a federal taxable loss in 2014.  Such taxable loss will be carried back to prior tax years to refund tax amounts previously paid.  Primarily as a result of this federal income tax carryback, TDS has recorded $113.7 million of Income taxes receivable at December 31, 2014.  TDS paid income taxes of $48.9 million and $175.6 in 2014 and 2013, respectively.  In 2013, accounts receivable grew substantially due to issues resulting from the conversion to a new billing system at U.S. Cellular.  In 2014, the higher accounts receivable balances resulting from the billing system conversion decreased to more normal levels; however, this decrease was partially offset by increased receivables related to equipment installment plan sales which are expected to increase in the near term.

Cash flows from operating activities were $494.6 million in 2013 and $1,105.2 million in 2012.  This decrease was due primarily to changes in accounts receivable, income tax payments (net of refunds), and inventory.  The changes in accounts receivable balances were due primarily to billing delays encountered during the conversion to a new U.S. Cellular billing system in the third quarter of 2013.  Net income tax payments of $175.6 million were recorded in 2013 compared to net income tax refunds of $62.0 million in 2012.  The net refunds in 2012 were primarily related to a federal net operating loss in 2011 largely attributable to 100% bonus depreciation applicable to qualified capital expenditures.  The change in inventory was due primarily to higher costs per unit related to 4G LTE smartphones.

Cash Flows from Investing Activities

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TDS makes substantial investments to acquire wireless licenses and properties and to construct and upgrade telecommunications networks and facilities as a basis for creating long-term value for shareholders.  In recent years, rapid changes in technology and new opportunities have required substantial investments in potentially revenue-enhancing and cost-reducing upgrades to TDS’ networks.

Cash used for additions to property, plant and equipment totaled $799.5 million, $883.8 million and $995.5 million in 2014, 2013 and 2012, respectively, and is reported in the Consolidated Statement of Cash Flows.

Capital expenditures (i.e., additions to property, plant and equipment and system development expenditures), which include the effects of accruals and capitalized interest, in 2014, 2013 and 2012 were as follows:
Capital expenditures	2014		2013		2012
(Dollars in thousands)
U.S. Cellular	$	557,615	$	737,501	$	836,748
TDS Telecom Wireline		135,805		140,009		158,580
TDS Telecom Cable		35,640		8,375		-
TDS Telecom HMS		36,618		16,474		15,344
Corporate and Other		4,899		7,301		(6,051)
Total	$	770,577	$	909,660	$	1,004,621
See "Capital Expenditures" below for additional information on Capital expenditures.

Cash payments for acquisitions in 2014, 2013 and 2012 were as follows:
Cash Payments for Acquisitions	2014		2013		2012
(Dollars in thousands)
U.S. Cellular licenses	$	22,916	$	16,540	$	122,690
TDS Telecom HMS businesses		(442)		33,961		40,692
TDS Telecom Cable businesses		272,779		264,069		-
Total	$	295,253	$	314,570	$	163,382

Cash amounts paid for the acquisitions may differ from the purchase price due to cash acquired in the transactions and the timing of cash payments related to the respective transactions.

Cash Received from Divestitures	2014		2013		2012
(Dollars in thousands)
U.S. Cellular licenses	$	91,789	$	311,989	$	-
U.S. Cellular businesses		88,132		499,131		49,932
TDS Telecom Wireline businesses		7,724		-		250
Total	$	187,645	$	811,120	$	50,182

See Note 6 — Acquisitions, Divestitures and Exchanges in the Notes to Consolidated Financial Statements for additional information related to these acquisitions and divestitures.

In 2012, TDS invested $120.0 million in U.S. Treasury Notes. TDS realized cash proceeds of $50.0 million, $115.0 million and $243.4 million in 2014, 2013 and 2012, respectively, related to the maturities of its investments in U.S. Treasury Notes, corporate notes and certificates of deposit.

In 2014, cash used for investing activities included a $60.0 million deposit made by Advantage Spectrum, L.P., a variable interest entity consolidated by U.S. Cellular, to the FCC for its participation in Auction 97.  See Note 14 — Variable Interest Entities in the Notes to Consolidated Financial Statements for additional information.

Cash Flows from Financing Activities 

Cash flows from financing activities include proceeds from and repayments of short-term and long-term debt, dividends to shareholders, distributions to noncontrolling interests, cash used to repurchase Common Shares and cash proceeds from reissuance of Common Shares pursuant to stock-based compensation plans.

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In December 2014, U.S. Cellular issued $275.0 million of 7.25% Senior Notes due 2063, and paid related debt issuance costs of $9.2 million.

In November 2012, TDS issued $195.0 million of 5.875% Senior Notes due 2061, and paid related debt issuance costs of $7.1 million.

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.  Of the $482.3 million paid, TDS received $407.1 million while noncontrolling public shareholders received $75.2 million.  The cash paid to noncontrolling public shareholders is presented as U.S. Cellular dividends paid to noncontrolling public shareholders on the Consolidated Statement of Cash Flows.

Adjusted Free Cash Flow

The following table presents Adjusted free cash flow. Adjusted free cash flow is defined as Cash flows from operating activities (which includes cash outflows related to the Sprint decommissioning), as adjusted for cash proceeds from the Sprint Cost Reimbursement (which are included in Cash flows from investing activities in the Consolidated Statement of Cash Flows), less Cash used for additions to property, plant and equipment. Adjusted free cash flow is a non-GAAP financial measure which TDS believes may be useful to investors and other users of its financial information in evaluating the amount of cash generated by business operations (including cash proceeds from the Sprint Cost Reimbursement), after Cash used for additions to property, plant and equipment.

(Dollars in thousands)		2014		2013		2012
Cash flows from operating activities		$	394,812	$	494,610	$	1,105,172
Add: Sprint Cost Reimbursement (1)			71,097		10,560		-
Less: Cash used for additions to property, plant and equipment			799,496		883,797		995,517
	Adjusted free cash flow	$	(333,587)	$	(378,627)	$	109,655
(1)	See Note 6 — Acquisitions, Divestitures and Exchanges in the Notes to Consolidated Financial Statements for additional information related to the Sprint Cost Reimbursement.

See Cash flows from Operating Activities and Cash flows from Investing Activities for additional information related to the components of Adjusted free cash flow.

LIQUIDITY

TDS believes that existing cash and investment balances, funds available under its revolving credit facilities and term loan facility and expected cash flows from operating and investing activities provide substantial liquidity and financial flexibility for TDS to meet its normal day-to-day operating needs.  However, these resources may not be adequate to fund all future expenditures that the companies could potentially elect to make such as acquisitions of spectrum licenses in FCC auctions and other acquisition, construction and development programs.  It may be necessary from time to time to increase the size of the existing revolving credit facilities, to put in place new facilities, or to obtain other forms of financing in order to fund these potential expenditures.  To the extent that sufficient funds are not available to TDS or its subsidiaries on terms or at prices acceptable to TDS, it could require TDS to reduce its acquisition, construction and development programs.

U.S. Cellular’s profitability historically has been lower in the fourth quarter as a result of significant marketing and promotional activity during the holiday season.  Additionally, TDS expects lower cash flows from operating activities in the near term as the popularity of U.S. Cellular’s equipment installment plans increases.  TDS cannot provide assurances that circumstances that could have a material adverse effect on its liquidity or capital resources will not occur. Economic conditions, changes in financial markets, TDS financial performance and/or prospects or other factors could restrict TDS’ liquidity and availability of financing on terms and prices acceptable to TDS, which could require TDS to reduce its capital expenditure, acquisition or share repurchase programs. Such reductions could have a material adverse effect on TDS’ business, financial condition or results of operations.

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Cash and Cash Equivalents

At December 31, 2014, TDS’ cash and cash equivalents totaled $471.9 million.  Cash and cash equivalents include cash and short-term, highly liquid investments with original maturities of three months or less.  The primary objective of TDS’ Cash and cash equivalents investment activities is to preserve principal.  At December 31, 2014, the majority of TDS’ Cash and cash equivalents was held in bank deposit accounts and in money market funds that invest exclusively in U.S. Treasury Notes or in repurchase agreements fully collateralized by such obligations. TDS monitors the financial viability of the money market funds and direct investments in which it invests and believes that the credit risk associated with these investments is low.

Financing

Revolving Credit Facilities

TDS (exclusive of facilities held by U.S. Cellular) and U.S. Cellular have revolving credit facilities available for general corporate purposes including spectrum purchases and capital expenditures, with a maximum borrowing capacity of $400.0 million and $300.0 million, respectively.  As of December 31, 2014, the unused capacity under these agreements was $399.4 million and $282.5 million, respectively.  The continued availability of the revolving credit facilities requires TDS and 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.  TDS and U.S. Cellular believe that they were in compliance as of December 31, 2014 with all of the financial covenants and requirements set forth in their revolving credit facilities.

See Note 11 — Debt in the Notes to Consolidated Financial Statements for additional information regarding the revolving credit facilities.

Term Loan Facility

On January 21, 2015, U.S. Cellular entered into a term loan credit facility relating to $225.0 million in debt.  The term loan must be drawn in one or more advances by the six month anniversary of the date of the agreement; amounts not drawn by that time will cease to be available.  Amounts repaid or prepaid under the term loan facility may not be reborrowed.  The maturity date of the term loan would accelerate in the event of a change in control.

The term loan is available for general corporate purposes including spectrum purchases and capital expenditures.  The term loan is unsecured except for a lien on all equity which U.S. Cellular may have in the loan administrative agent, CoBank ACB, subject to certain limitations. 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.

See Note 11 — Debt in the Notes to Consolidated Financial Statements for additional information regarding the term loan facility.

Long-Term Financing

TDS and U.S. Cellular each have an effective shelf registration statement on Form S-3 to issue senior or subordinated debt securities. The proceeds from any such issuances may be used for general corporate purposes including: the possible reduction of other long-term debt, spectrum purchases, and capital expenditures; in connection with acquisition, construction and development programs; the reduction of short-term debt; for working capital; to provide additional investments in subsidiaries; or the repurchase of shares.  The TDS shelf registration permits TDS to issue at any time and from time to time senior or subordinated debt securities in one or more offerings in an indeterminate amount.  The U.S. Cellular shelf registration statement permits U.S. Cellular to issue at any time and from time to time senior or subordinated debt securities in one or more offerings.  The ability of TDS or U.S. Cellular to complete an offering pursuant to such shelf registration statements is subject to market conditions and other factors at the time.

In December 2014, U.S. Cellular sold and issued $275 million of 7.25% Senior Notes due in 2063 for general corporate purposes including spectrum purchases and capital expenditures, reducing the available amount on U.S. Cellular’s shelf registration statement from $500 million to $225 million.  U.S. Cellular has the authority to replenish this shelf registration statement back to $500 million.

TDS believes that it and its subsidiaries were in compliance as of December 31, 2014 with all financial covenants and other requirements set forth in its long-term debt indentures. TDS and U.S. Cellular have not failed to make nor do they expect to fail to make any scheduled payment of principal or interest under such indentures.

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The long-term debt principal payments due for the next five years represent less than 1% of the total long-term debt obligation at December 31, 2014.  Refer to Market Risk — Long-Term Debt for additional information regarding required principal payments and the weighted average interest rates related to TDS’ Long-term debt.

TDS and U.S. Cellular, at their discretion, may from time to time seek to retire or purchase their outstanding debt through cash purchases and/or exchanges for other securities, in open market purchases, privately negotiated transactions, tender offers, exchange offers or otherwise. Such repurchases or exchanges, if any, will depend on prevailing market conditions, liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.

See Note 11 — Debt in the Notes to Consolidated Financial Statements for additional information on Long-term financing.

Credit Rating

In certain circumstances, TDS’ and U.S. Cellular’s interest cost on their various facilities may be subject to increase if their current credit ratings from nationally recognized credit rating agencies are lowered, and may be subject to decrease if the ratings are raised.  The facilities do not cease to be available nor do the maturity dates accelerate solely as a result of a downgrade in TDS’ or U.S. Cellular’s credit rating.  However, downgrades in TDS’ or U.S. Cellular’s credit rating could adversely affect their ability to renew the facilities or obtain access to other credit facilities in the future.

In 2014, nationally recognized credit rating agencies downgraded TDS and U.S. Cellular’s corporate and senior debt credit ratings. After these downgrades, TDS and U.S. Cellular are rated at sub-investment grade.  TDS and U.S. Cellular’s credit ratings as of December 31, 2014, and the dates such ratings were issued/re-affirmed were as follows:

Moody's (TDS) (issued November 26, 2014)	Ba2	—negative outlook
Moody's (U.S. Cellular) (issued November 26, 2014)	Ba1	—negative outlook
Standard & Poor's (issued November 24, 2014)	BB	—stable outlook
Fitch Ratings (re-affirmed November 24, 2014)	BB+	—stable outlook

Capital Expenditures

U.S. Cellular’s capital expenditures for 2015 are expected to be approximately $600million.  These expenditures are expected to be for the following general purposes:

·Expand and enhance network coverage, including providing additional capacity to accommodate increased network usage, principally data usage, by current customers;

·Continue to deploy 4G LTE technology in certain markets;

·Expand and enhance the retail store network; and

·Develop and enhance office systems.

TDS Telecom’s capital expenditures for 2015 are expected to be approximately $220 million.  These expenditures are expected to be for the following general purposes:

·Maintain and enhance existing infrastructure at Wireline, HMS, and Cable;

·Fiber expansion in Wireline and Cable markets to support IPTV and super high speed data;

·Success-based spending to sustain managedIP, IPTV, HMS and Cable growth; and

·Expansion of HMS data center facilities.

TDS plans to finance its capital expenditures program for 2015 using primarily Cash flows from operating activities, and as necessary, existing cash balances, short-term investments, borrowings under its revolving credit agreements, term loan and/or other long-term debt.

Acquisitions, Divestitures and Exchanges

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

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TDS may be engaged from time to time in negotiations relating to the acquisition, divestiture or exchange of companies, properties, wireless spectrum and other possible businesses.  In general, TDS may not disclose such transactions until there is a definitive agreement. See Note 6 — Acquisitions, Divestitures and Exchanges in the Notes to Consolidated Financial Statements for additional information related to significant transactions, including expected pre-tax cash proceeds from such transactions in 2015.

Variable Interest Entities

TDS consolidates certain entities because they are “variable interest entities” under accounting principles generally accepted in the United States of America (“GAAP”). See Note 14 — Variable Interest Entities in the Notes to Consolidated Financial Statements for additional information related to these variable interest entities. TDS may elect to make additional capital contributions and/or advances to these variable interest entities in future periods in order to fund their operations.

FCC Spectrum Auction 97

In January 2015, the FCC released the results of Auction 97.  U.S. Cellular participated in Auction 97 indirectly through its limited partnership interest in Advantage Spectrum.  Advantage Spectrum was the provisional winning bidder of 124 licenses for an aggregate bid of $338.3 million, net of its anticipated designated entity discount of 25%.  On or prior to March 2, 2015, Advantage Spectrum is required to pay the FCC for its bid amount, less the initial deposit of $60.0 million, plus certain other charges totaling $2.3 million.  Advantage Spectrum expects to fund this capital requirement with loans and capital contributions from its partners.  U.S. Cellular plans to use a portion of the proceeds received from the issuance of its 7.25% Senior Notes and term loan facility to provide loans to Advantage Spectrum and its general partner and capital contributions to Advantage Spectrum.

Common Share Repurchase Programs

In the past year, TDS and U.S. Cellular have repurchased and expect to continue to repurchase their Common Shares, in each case subject to any available repurchase program.  For additional information related to the current TDS and U.S. Cellular repurchase authorizations and repurchases made during 2014, 2013 and 2012, see Note 16 — Common Shareholders’ Equity in the Notes to Consolidated Financial Statements and Part II, Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. 

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Contractual and Other Obligations
At December 31, 2014, the resources required for contractual obligations were as follows:
		Payments Due by Period
(Dollars in millions)		Total		Less Than 1 Year		1 - 3 Years		3 - 5 Years		More Than 5 Years
Long-term debt obligations (1)		$	2,002.7	$	0.7	$	3.7	$	-	$	1,998.3
Interest payments on long-term   debt obligations			5,197.1		136.0		271.9		271.6		4,517.6
Operating leases (2)			1,401.3		155.5		258.7		188.6		798.5
Capital leases			5.3		0.3		0.6		0.7		3.7
Purchase obligations (3)(4)			1,867.2		919.8		720.2		147.9		79.3
		$	10,473.6	$	1,212.3	$	1,255.1	$	608.8	$	7,397.4
(1)	Includes current and long-term portions of debt obligations.  The total long-term debt obligation differs from Long-term debt in the Consolidated Balance Sheet due to capital leases and the $11.3 million unamortized discount related to U.S. Cellular’s 6.7% Senior Notes. See Note 11 — Debt in the Notes to Consolidated Financial Statements for additional information.
(2)	Includes future lease costs related to telecommunications plant facilities, office space, retail sites, cell sites, data centers and equipment.  See Note 13 — Commitments and Contingencies in the Notes to Consolidated Financial Statements for additional information.
(3)	Includes obligations payable under non-cancellable contracts, commitments for network facilities and transport services, agreements for software licensing, long-term marketing programs, and agreements with Apple to purchase certain minimum quantities of Apple iPhone products and fund marketing programs related to the Apple iPhone and iPad products.  As described more fully in Note 6 — Acquisitions, Divestitures and Exchanges in the Notes to Consolidated Financial Statements, U.S. Cellular expects to incur network-related exit costs in the Divestiture Markets as a result of the transaction, including: (i) costs to decommission cell sites and mobile telephone switching office (“MTSO”) sites, (ii) costs to terminate real property leases and (iii) costs to terminate certain network access arrangements in the subject markets.  The impacts of these exit activities on TDS' purchase obligations are reflected in the table above only to the extent that agreements were consummated at December 31, 2014.
(4)	Does not include reimbursable amounts TDS Telecom will provide to complete projects under the American Recovery and Reinvestment Act of 2009.  TDS Telecom will receive $105.1 million in federal grants and will provide $30.9 million of its own funds to complete 44 projects.  As of December 31, 2014, TDS Telecom has expended $125.2 million of the $126.3 million on these projects.  Under the terms of the grants, the projects must be completed by June of 2015.

The table above excludes liabilities related to “unrecognized tax benefits” as defined by GAAP because TDS is unable to predict the period of settlement of such liabilities.  Such unrecognized tax benefits were $37.8 million at December 31, 2014.  See Note 4 — Income Taxes in the Notes to Consolidated Financial Statements for additional information on unrecognized tax benefits.

Agreements

·On November 25, 2014, U.S. Cellular executed a Master Statement of Work and certain other documents with Amdocs Software Systems Limited (“Amdocs”), effective October 1, 2014, that inter-relate with but rearrange the structure under previous Amdocs Agreements.  The agreement provides that U.S. Cellular will now outsource to Amdocs certain support functions for its Billing and Operational Support System (“B/OSS”).  Such functions include application support, billing operations and some infrastructure services.  The agreement has a term through September 30, 2019, subject to five one-year renewal periods at U.S. Cellular’s option.  The total estimated amount to be paid to Amdocs with respect to the agreement during the initial five-year term is approximately $110 million (exclusive of travel and expenses and subject to certain potential adjustments).

·During 2013, U.S. Cellular entered into agreements with Apple to purchase certain minimum quantities of Apple iPhone products and fund marketing programs related to the Apple iPhone and iPad products over a three-year period beginning in November 2013.  Based on current forecasts, TDS estimates that the remaining contractual commitment as of December 31, 2014 under these agreements is approximately $818 million.  At this time, TDS expects to meet its contractual commitments with Apple. 

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Off-Balance Sheet Arrangements

TDS had no transactions, agreements or other contractual arrangements with unconsolidated entities involving “off-balance sheet arrangements,” as defined by SEC rules, that had or are reasonably likely to have a material current or future effect on its financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Dividends

TDS paid quarterly dividends per outstanding share of $0.1340 in 2014, $0.1275 in 2013 and $0.1225 in 2012. TDS increased the dividend per share to $0.1410 in the first quarter of 2015.  See Note 16 — Common Shareholders’ Equity in the Notes to Consolidated Financial Statements for additional information.  TDS has no current plans to change its policy of paying dividends.

APPLICATION OF CRITICAL ACCOUNTING POLICIES AND ESTIMATES

TDS prepares its consolidated financial statements in accordance with GAAP.  TDS’ significant accounting policies are discussed in detail in Note 1 — Summary of Significant Accounting Policies and Recent Accounting Pronouncements in the Notes to Consolidated Financial Statements.

Management believes the application of the following critical accounting policies and the estimates required by such application reflect its most significant judgments and estimates used in the preparation of TDS’ consolidated financial statements.  Management has discussed the development and selection of each of the following accounting policies and related estimates and disclosures with the Audit Committee of TDS’ Board of Directors.

Intangible Asset Impairment

Goodwill, licenses, and Franchise rights represent a significant component of TDS’ consolidated assets.  These assets are considered to be indefinite lived assets and are therefore not amortized but tested annually for impairment.  TDS performs annual impairment testing of Goodwill, Licenses and Franchise rights, as required by GAAP, as of November 1 of each year.  Significant negative events, such as changes in any of the assumptions described below as well as decreases in forecasted cash flows, could result in an impairment in future periods.

See Note 7 — Intangible Assets in the Notes to Consolidated Financial Statements for information related to Goodwill, Licenses and Franchise rights activity in 2014 and 2013.

Goodwill – U.S. Cellular

Based on the results of the U.S. Cellular annual Goodwill impairment assessment performed as of November 1, 2014, the fair value of each of the U.S. Cellular reporting units exceeded their respective carrying values.  Therefore, no impairment of Goodwill existed. 

For purposes of impairment testing of U.S. Cellular Goodwill in 2014 and 2013, U.S. Cellular identified four reporting units based on geographic service areas (all of which are included in TDS’ wireless reportable segment). 

A discounted cash flow approach was used to value each reporting unit, using value drivers and risks specific to the industry and current economic factors.  The cash flow estimates incorporated assumptions that market participants would use in their estimates of fair value and may not be indicative of U.S. Cellular specific assumptions.  However, the discount rate used in the analysis accounts for any additional risk a market participant might place on integrating U.S. Cellular into its operations at the level of cash flows assumed under this approach.  The most significant assumptions made in this process were the revenue growth rate (shown as a compound annual growth rate in the table below), the terminal revenue growth rate, the discount rate and capital expenditures as a percentage of revenue (shown as a simple average in the table below).  There are uncertainties associated with these key assumptions and potential events and/or circumstances that could have a negative effect on these key assumptions, which are described below.  These assumptions were as follows:

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Key Assumptions		November 1, 2014
Revenue growth rate (1)		1.6	%
Terminal revenue growth rate (1)		2.0	%
Discount rate (2)		10.5	%
Capital expenditures as a percentage of revenue (3)		16.5	%
(1)	There are risks that could negatively impact the projected revenue growth rates, including, but not limited to: the success of new and existing products/services, competition, operational difficulties and churn.
(2)	The discount rate of each reporting unit was computed by calculating the weighted average cost of capital of market participants with businesses reasonably comparable to U.S. Cellular.  The discount rate is dependent upon the cost of capital of other industry market participants and the company specific risk.  To the extent that the weighted average cost of capital of industry participants increases or U.S. Cellular's risk in relation to its peers increases, this would decrease the estimated fair value of the reporting units.  The weighted average cost of capital may increase if borrowing costs rise, market participants weight more of their capital structure towards equity (vs. debt), or other elements affecting the estimated cost of equity increase.
(3)	Capital expenditures generally include costs to develop the network.  To the extent costs associated with these capital expenditures increase at a rate higher than expected and disproportionate to forecasted future revenues, this could negatively impact future cash flows.

Provided all other assumptions remained the same, the discount rate would have to increase to a range of 11.2% to 12.1% to yield estimated fair values of reporting units that equal their respective carrying values at November 1, 2014.  Further, assuming all other assumptions remained the same, the terminal growth rate assumptions would need to decrease to amounts ranging from negative 1.9% to positive 0.6% to yield estimates of fair value equal to the carrying values of the respective reporting unit at November 1, 2014.

The carrying value of each U.S. Cellular reporting unit at TDS as of November 1, 2014 and the percentage by which its estimated fair value exceeded carrying value was as follows:
Reporting Unit		Carrying Value at TDS (1)		Excess of estimated Fair Value over Carrying Value
(Dollars in millions)
Central Region		$	1,598	23.7	%
Mid-Atlantic Region			516	12.5	%
New England Region			217	20.9	%
Northwest Region			170	28.1	%
Total		$	2,501
(1)	Under previous business combination guidance in effect prior to January 1, 2009, TDS had recorded Goodwill as a result of accounting for U.S. Cellular’s purchases of U.S. Cellular Common Shares as step acquisitions using purchase accounting. As a result, the carrying values of the reporting units differ between U.S. Cellular and TDS.  The carrying value of the reporting units at U.S. Cellular was $2,646 million at November 1, 2014.

Goodwill – TDS Telecom

TDS Telecom has recorded Goodwill as a result of the acquisition of wireline, HMS and cable companies.  For purposes of the 2014 Goodwill impairment testing, TDS Telecom has three reporting units: Wireline, HMS and Cable.  For purposes of the 2013 Goodwill impairment testing, TDS Telecom had three reporting units: ILEC, HMS and Cable.  During 2014, the ILEC and CLEC operations were combined into one reporting unit referred to as Wireline.  There is no Goodwill at the CLEC operations. 

Qualitative Assessment – HMS

During the third quarter of 2014, due to a decline in projected revenue and earnings of TDS Telecom’s HMS reporting unit compared with previously projected results, TDS determined that an interim impairment test of HMS Goodwill was required.  See discussion below under “Quantitative Assessment – Wireline, Cable, and Interim HMS.”

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Considering that the interim test was recently performed as of August 1, 2014, a qualitative assessment of the HMS reporting unit was determined to be sufficient for the annual impairment test that was completed as of November 1, 2014.  The qualitative assessment, which analyzed company, industry and economic trends, concluded that it was more likely than not that the fair value of the HMS reporting unit was at least equal to its carrying value, and accordingly, no Goodwill impairment resulted. 

Quantitative Assessment – Wireline, Cable, and Interim HMS

The discounted cash flow approach and guideline public company method were used to value the Wireline and Cable reporting units at November 1, 2014.  Additionally, these approaches were used to value the HMS reporting unit as of the interim impairment testing date of August 1, 2014.  As of November 1, 2014, the fair values of the Wireline and Cable reporting units exceeded their carrying values; therefore, no impairment of Goodwill existed for either reporting unit.  As of August 1, 2014, TDS Telecom determined that the carrying value of the HMS reporting unit exceeded its fair value.  Therefore, a Step 2 Goodwill impairment test was performed and TDS recognized a loss on impairment of assets of $84.0 million during the three months ended September 30, 2014 for its HMS reporting unit.

The discounted cash flow approach uses value drivers and risks specific to the industry and current economic factors.  The most significant assumptions made in this process were the revenue growth rate (shown as a compound annual growth rate in the table below), the terminal revenue growth rate, the discount rate and capital expenditures as a percentage of revenue (shown as a simple average in the table below). 

The guideline public company method develops an indication of fair value by calculating average market pricing multiples for selected publicly-traded companies.  The developed multiples were applied to applicable financial measures of the respective reporting unit to determine fair value.  The discounted cash flow approach and guideline public company method were weighted to arrive at the total fair value used for impairment testing.

For purposes of the discounted cash flow approach, the following table represents key assumptions used in estimating the fair value of the Wireline and Cable reporting units as of the respective testing dates. 

There are uncertainties associated with these key assumptions and potential events and/or circumstances that could have a negative effect on the key assumptions, which are described below. 

		November 1, 2014				August 1, 2014
Key Assumptions		Wireline		Cable		HMS
Revenue growth rate (1)		(2.8)	%	6.9	%	6.1	%
Terminal revenue growth rate (1)		0.0	%	3.0	%	2.5	%
Discount rate (2)		7.0	%	10.5	%	11.5	%
Capital expenditures as a percentage of revenue (3)		17.0	%	15.8	%	8.6	%
(1)	There are risks that could negatively impact the projected revenue growth rates, including, but not limited to: the success of new and existing products/services, competition, and operational difficulties.  TDS Telecom uses internally generated forecasts to develop such rates.  TDS Telecom's internally generated forecasts consider such things as observed demand and market and competitive knowledge.
(2)	The discount rate is dependent upon the cost of capital of other industry market participants and company specific risk.  To the extent that the weighted average cost of capital of industry participants increases, this would decrease the estimated fair value of the reporting units.  The weighted average cost of capital may increase if borrowing costs rise, market participants weight more of their capital structure towards equity (vs. debt), Wireline, Cable or HMS' risk in relation to its peers increases or other elements affecting the estimated cost of equity increase.  This rate varies by reporting unit as a result of such things as the maturity and capital intensity of the related market participants.
(3)	To the extent costs associated with these capital expenditures increase at a rate higher than expected and disproportionate to forecasted future revenues, this could negatively impact future cash flows.

The following represents the carrying values of the reporting units tested for impairment as of November 1, 2014, and the results of the Step 1 Goodwill impairment tests.  The following does not show the carrying value of the HMS reporting unit or the percentage by which the estimated reporting unit fair value exceeded its carrying value as of November 1, 2014 because the carrying value had been adjusted to fair value during the three months ended September 30, 2014 and a qualitative assessment was performed as of the annual impairment testing date, November 1, 2014.
Reporting unit	Carrying value		Percentage by which the estimated reporting unit FV exceeded its CV
(Dollars in millions)
Wireline	$	1,455	4.9	%
Cable	$	524	11.2	%

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Provided all other assumptions remained the same, the Wireline and Cable discount rates would have to increase to 7.8% and 11.5%, respectively, to yield estimated fair values equal to their respective carrying values at November 1, 2014.  Further, provided all other assumptions remained the same, the Wireline and Cable terminal revenue growth rate assumptions would need to decrease to negative 1.1% and positive 1.0%, respectively, to yield an estimate of fair value equal to the carrying value of the respective reporting units at November 1, 2014.

Wireless Licenses

As of November 1, 2014, the estimated fair value of the U.S. Cellular licenses in each unit of accounting exceeded their carrying value.  Therefore, no impairment of licenses existed.  U.S. Cellular tests licenses for impairment at the level of reporting referred to as a unit of accounting.  For purposes of its impairment testing of licenses as of November 1, 2014 and November 1, 2013, U.S. Cellular separated its FCC licenses into eleven units of accounting based on geographic service areas.  In both 2014 and 2013, seven of the units of accounting represented geographic groupings of licenses which, because they were not being utilized and, therefore, were not expected to generate cash flows from operating activities in the foreseeable future, were considered separate units of accounting for purposes of impairment testing.

Developed operating market licenses (“built licenses”)

U.S. Cellular applies the build-out method to estimate the fair values of built licenses.  The most significant assumptions applied for purposes of the licenses impairment assessment were as follows:

Key Assumptions		November 1, 2014
Build-out period (1)		5 years
Discount rate (2)		8.75	%
Terminal revenue growth rate		2.0	%
Terminal capital expenditures as a percentage of revenue		14.5	%
Customer penetration rates		12.0-16.3	%
(1)	The build-out period represents the estimated time to perform a hypothetical build of the network.  Changes in the estimated build-out period can occur as a result of changes in resources and technology.  Such changes could negatively or positively impact the results.
(2)	The discount rate used in the valuation of licenses is less than the discount rate used in the valuation of reporting units for purposes of goodwill impairment testing.  The discount rate used for licenses includes a reduced company-specific risk premium as it is assumed a market participant starting a greenfield build would construct and operate its network in an optimal manner and would not be constrained by the current network and operations associated with a mature wireless company.  The discount rate is estimated based on the overall risk-free interest rate adjusted for industry participant information, such as a typical capital structure (i.e., debt-equity ratio), the after-tax cost of debt and the cost of equity.  The cost of equity takes into consideration the average risk specific to individual market participants.  The weighted average cost of capital may increase if borrowing costs rise, market participants weight more of their capital structure towards equity (vs. debt), or other elements affecting the estimated cost of equity increase.

As of November 1, 2014, the fair values of the built licenses units of accounting exceeded their respective carrying values by amounts ranging from 7.9% to 42.9%.  The discount rate would have to increase to a range of 8.9% to 9.3% to yield estimated fair values of licenses in the respective units of accounting that equal their respective carrying values at November 1, 2014. 

Non-operating market licenses (“unbuilt licenses”)

For purposes of performing impairment testing of unbuilt licenses, the fair value of the unbuilt licenses is assumed to have changed 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.  There was no impairment loss recognized related to unbuilt licenses as a result of the November 1, 2014 licenses impairment test. 

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Carrying Value of Licenses
The carrying value of licenses at November 1, 2014 was as follows:
Unit of Accounting (1)		Carrying Value
(Dollars in millions)
U.S. Cellular - Built licenses
Central Region		$	804
Mid-Atlantic Region			234
New England Region			107
Northwest Region			68
U.S. Cellular - Unbuilt licenses
New England			1
North Northwest			3
South Northwest			2
North Central			51
South Central			22
East Central			87
Mid-Atlantic			17
	Total (2)	$	1,396
Other			6
Total (3)		$	1,402
(1)	U.S. Cellular participated in spectrum auctions indirectly through its interests in Aquinas Wireless L.P. (“Aquinas Wireless”) and King Street Wireless L.P. (“King Street Wireless”), collectively, the “limited partnerships.”  Interests in other limited partnerships that participated in spectrum auctions have since been acquired.  Each limited partnership participated in and was awarded spectrum licenses in one of two separate spectrum auctions (FCC Auctions 78 and 73). All of the units of accounting above, except New England, include licenses awarded to the limited partnerships.
(2)	Under previous business combination guidance in effect prior to January 1, 2009, TDS had recorded licenses as a result of accounting for U.S. Cellular’s purchases of U.S. Cellular Common Shares as step acquisitions using purchase accounting. As a result, the carrying values of the units of accounting for the developed operating markets differ between U.S. Cellular and TDS. The total carrying value of all units of accounting at U.S. Cellular was $1,391 million at November 1, 2014.
(3)	Between the November 1, 2014 impairment test date and the December 31, 2014 Consolidated Balance Sheet date, TDS obtained licenses through a license exchange in the amount of $51 million and capitalized interest on certain licenses pursuant to current network build-outs in the amount of $1 million.

Franchise rights

TDS Telecom has recorded Franchise rights as a result of acquisitions of cable businesses.  TDS Telecom tests Franchise rights for impairment at a level of reporting referred to as a unit of accounting.  For purposes of its impairment testing of Franchise rights, TDS Telecom has one unit of accounting: Cable.  A qualitative assessment of the Cable unit of accounting was completed as of November 1, 2013.

TDS Telecom applied the build-out method to estimate the fair value of Franchise rights as of November 1, 2014.  Based on the results of this assessment, the estimated fair value of the Franchise rights exceeded their carrying value. 

The following table represents key assumptions used in estimating the fair value of the Franchise rights as of November 1, 2014 using the build-out method.  There are uncertainties associated with these key assumptions and potential events and/or circumstances that could have a negative effect on the key assumptions, which are described below.

Key Assumptions		November 1, 2014
Build-out period (1)		2 years
Discount rate (2)		8.0	%
Terminal revenue growth rate		3.0	%
Terminal capital expenditures as a percentage of revenue		15.8	%
(1)	The build-out period represents the estimated time to perform a hypothetical build of the network.  Changes in the estimated build-out period can occur as a result of changes in resources and technology.  Such changes could negatively or positively impact the results.
(2)	The discount rate used in the valuation of Franchise rights is less than the discount rate used in the valuation of reporting units for purposes of Goodwill impairment testing. The discount rate used for Franchise rights includes a reduced company-specific risk premium as it is assumed a market participant starting a greenfield build would construct and operate its network in an optimal manner and would not be constrained by the current network and operations associated with a mature cable company.  The discount rate is estimated based on the overall risk-free interest rate adjusted for industry participant information, such as a typical capital structure (i.e., debt-equity ratio), the after-tax cost of debt and the cost of equity.  The cost of equity takes into consideration the average risk specific to individual market participants.  The weighted average cost of capital may increase if borrowing costs rise, market participants weight more of their capital structure towards equity (vs. debt), or other elements affecting the estimated cost of equity increase.

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As of November 1, 2014, the fair value of the franchise rights exceeded its carrying value by 25.7%.  Provided all other assumptions remained the same, the discount rate would have to increase to 8.4% to yield an estimated fair value of the Franchise rights that equals its carrying value at November 1, 2014. Further, provided all other assumptions remained the same, the terminal revenue growth rate assumption would need to decrease to 2.3% to yield an estimate of fair value equal to the carrying value of the Franchise rights at November 1, 2014.

Income Taxes

The amounts of income tax assets and liabilities, the related income tax provision and the amount of unrecognized tax benefits are critical accounting estimates because such amounts are significant to TDS’ financial condition and results of operations.

The preparation of the consolidated financial statements requires TDS to calculate a provision for income taxes.  This process involves estimating the actual current income tax liability together with assessing temporary differences resulting from the different treatment of items for tax purposes.  These temporary differences result in deferred income tax assets and liabilities, which are included in TDS’ Consolidated Balance Sheet.  TDS must then assess the likelihood that deferred income tax assets will be realized based on future taxable income and, to the extent management believes that realization is not likely, establish a valuation allowance.  Management’s judgment is required in determining the provision for income taxes, deferred income tax assets and liabilities and any valuation allowance that is established for deferred income tax assets.

TDS recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position.  The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate resolution.

See Note 4 — Income Taxes in the Notes to Consolidated Financial Statements for details regarding TDS’ income tax provision, deferred income taxes and liabilities, valuation allowances and unrecognized tax benefits, including information regarding estimates that impact income taxes.

Loyalty Reward Program

See the Revenue Recognition — U.S. Cellular section of Note 1 — Summary of Significant Accounting Policies and Recent Accounting Pronouncements in the Notes to Consolidated Financial Statements for additional description of this program and the related accounting. 

TDS follows the deferred revenue method of accounting for its loyalty reward program.  Under this method, revenue allocated to loyalty reward points is deferred.  The amount allocated to the loyalty points is based on the estimated retail price of the products and services for which points may be redeemed, as well as TDS’ estimate of the percentage of loyalty points that will be redeemed for each product or service.  A significant change in any of the aforementioned assumptions used would impact the amount of revenue deferred and recognized under the loyalty reward program.   

Revenue is recognized at the time of customer redemption or when such points have been depleted via an account maintenance charge.  As a result of the accumulation of historical experience, beginning in the fourth quarter of 2013, TDS began recognizing

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breakage under the proportional model.  Prior to the fourth quarter of 2013, breakage was not recognized until incurred.  Under the proportional model, TDS allocates a portion of the estimated future breakage to each redemption and records revenue proportionally.

TDS periodically reviews and if necessary, revises the redemption and depletion rates under this model as appropriate based on history and related future expectations.  In 2014 and 2013, TDS recognized $20.6 million and $16.8 million, respectively, in revenues related to estimated and actual breakage.

Equipment Installment Plans

TDS offers customers the option to purchase certain devices under installment contracts over a period of up to 24 months and, under certain of these plans, offers the customer a trade-in right.  Customers on an installment contract that elect to trade-in their device, will receive a credit in the amount of the outstanding balance of the installment contract,  provided the subscriber trades-in an eligible used device in good working condition and purchases a new device from TDS. Equipment revenue under these contracts is recognized at the time the device is delivered to the end-user customer for the selling price of the device, net of any deferred imputed interest or trade-in right, if applicable. 

Trade-In Right

TDS values the trade-in right as a guarantee liability.  This 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 estimated fair value of the used device eligible for trade-in.  TDS reevaluates its estimate of the guarantee liability at each reporting date.  A significant change in any of the aforementioned assumptions used to compute the guarantee liability would impact the amount of revenue recognized under these plans and the timing thereof.  For the year ended December 31, 2014, TDS assumed the earliest contractual time of trade-in, or 12 months, for all customers on installment contracts with trade-in rights.

When a customer exercises the trade-in option, the difference between the outstanding receivable balance forgiven and the fair value of the used device is recorded as a reduction to the guarantee liability.  If the customer does not exercise the trade-in option at the time he or she is eligible, TDS begins amortizing the liability and records this amortization as additional operating revenue.

Interest

TDS equipment installment plans do not provide for explicit interest charges.  For equipment installment plans with a duration of greater than twelve months, TDS imputes interest using a market rate and recognizes such interest income over the duration of the plan as a component of Interest and dividend income.  Changes in the imputed interest rate would impact the amount of revenue recognized under these plans. 

Allowance

TDS maintains an allowance for doubtful accounts for estimated losses that result from the failure of our customers to make payments due under the equipment installment plans.  The allowance is estimated based on historical experience, account aging and other factors that could affect collectability.  When it is probable that an account balance will not be collected, the account balance is charged against the allowance for doubtful accounts.  To the extent that actual loss experience differs significantly from historical trends, the required allowance amounts could differ from the original estimates. 

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

See Note 20 – Certain Relationships and Related Transactions in the Notes to Consolidated Financial Statements.

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 PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

SAFE HARBOR CAUTIONARY STATEMENT

This Management’s Discussion and Analysis of Financial Condition and Results of Operations and other sections of this Annual Report contain statements that are not based on historical facts, including the words “believes,” “anticipates,” “intends,” “expects” and similar words.  These statements constitute and represent “forward‑looking statements” as this term is defined in the Private Securities Litigation Reform Act of 1995.  Such forward‑looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, events or developments to be significantly different from any future results, events or developments expressed or implied by such forward‑looking statements.  Such risks, uncertainties and other factors include, but are not limited to, the following risks:

·Intense competition in the markets in which TDS operates could adversely affect TDS’ revenues or increase its costs to compete.

·A failure by TDS to successfully execute its business strategy (including planned acquisitions, divestitures and exchanges) or allocate resources or capital could have an adverse effect on TDS’ business, financial condition or results of operations.

·TDS offers customers the option to purchase certain devices under installment contracts, which creates certain risks and uncertainties which could have an adverse impact on TDS' financial condition or results of operations.

·Changes in roaming practices or other factors could cause TDS’ roaming revenues to decline from current levels and/or impact TDS’ ability to service its customers in geographic areas where TDS does not have its own network, which could have an adverse effect on TDS’ business, financial condition or results of operations.

·A failure by TDS to obtain access to adequate radio spectrum to meet current or anticipated future needs and/or to accurately predict future needs for radio spectrum could have an adverse effect on TDS’ business, financial condition or results of operations.

·To the extent conducted by the Federal Communications Commission (“FCC”), TDS is likely to participate in FCC auctions of additional spectrum in the future as an applicant or as a noncontrolling partner in another auction applicant and, during certain periods, will be subject to the FCC’s anti-collusion rules, which could have an adverse effect on TDS.

·Changes in the regulatory environment or a failure by TDS to timely or fully comply with any applicable regulatory requirements could adversely affect TDS’ business, financial condition or results of operations.

·An inability to attract people of outstanding potential, to develop their potential through education and assignments, and to retain them by keeping them engaged, challenged and properly rewarded could have an adverse effect on TDS' business, financial condition or results of operations.

·TDS’ assets are concentrated primarily in the U.S. telecommunications industry. As a result, its results of operations may fluctuate based on factors related primarily to conditions in this industry.

·TDS’ lower scale relative to larger competitors could adversely affect its business, financial condition or results of operations.

·Changes in various business factors could have an adverse effect on TDS’ business, financial condition or results of operations.

·Advances or changes in technology could render certain technologies used by TDS obsolete, could put TDS at a competitive disadvantage, could reduce TDS’ revenues or could increase its costs of doing business.

·Complexities associated with deploying new technologies present substantial risk.

·TDS is subject to numerous surcharges and fees from federal, state and local governments, and the applicability and the amount of these fees are subject to great uncertainty.

·Performance under device purchase agreements could have a material adverse impact on TDS' business, financial condition or results of operations.

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·Changes in TDS’ enterprise value, changes in the market supply or demand for wireless licenses, wireline or cable markets or IT service providers, adverse developments in the businesses or the industries in which TDS is involved and/or other factors could require TDS to recognize impairments in the carrying value of its licenses, goodwill, franchise rights and/or physical assets.

·Costs, integration problems or other factors associated with acquisitions, divestitures or exchanges of properties or licenses and/or expansion of TDS’ businesses could have an adverse effect on TDS’ business, financial condition or results of operations.

·TDS’ investments in unproven technologies may not produce the benefits that TDS expects.

·A failure by TDS to complete significant network construction and systems implementation activities as part of its plans to improve the quality, coverage, capabilities and capacity of its networks and support systems could have an adverse effect on its operations.

·Difficulties involving third parties with which TDS does business, including changes in TDS’ relationships with or financial or operational difficulties of key suppliers or independent agents and third party national retailers who market TDS’ services, could adversely affect TDS’ business, financial condition or results of operations.

·TDS has significant investments in entities that it does not control. Losses in the value of such investments could have an adverse effect on TDS’ financial condition or results of operations.

·A failure by TDS to maintain flexible and capable telecommunication networks or information technology, or a material disruption thereof, could have an adverse effect on TDS’ business, financial condition or results of operations.

·Cyber-attacks or other breaches of network or information technology security could have an adverse effect on TDS' business, financial condition or results of operations.

·The market price of TDS’ Common Shares is subject to fluctuations due to a variety of factors.

·Changes in facts or circumstances, including new or additional information, could require TDS to record charges in excess of amounts accrued in the financial statements, which could have an adverse effect on TDS’ business, financial condition or results of operations.

·Disruption in credit or other financial markets, a deterioration of U.S. or global economic conditions or other events could, among other things, impede TDS’ access to or increase the cost of financing its operating and investment activities and/or result in reduced revenues and lower operating income and cash flows, which would have an adverse effect on TDS’ business, financial condition or results of operations.

·Uncertainty of TDS’ ability to access capital, deterioration in the capital markets, other changes in market conditions, changes in TDS’ credit ratings or other factors could limit or restrict the availability of financing on terms and prices acceptable to TDS, which could require TDS to reduce its construction, development or acquisition programs.

·Settlements, judgments, restraints on its current or future manner of doing business and/or legal costs resulting from pending and future litigation could have an adverse effect on TDS’ business, financial condition or results of operations.

·The possible development of adverse precedent in litigation or conclusions in professional studies to the effect that radio frequency emissions from wireless devices and/or cell sites cause harmful health consequences, including cancer or tumors, or may interfere with various electronic medical devices such as pacemakers, could have an adverse effect on TDS’ wireless business, financial condition or results of operations.

·Claims of infringement of intellectual property and proprietary rights of others, primarily involving patent infringement claims, could prevent TDS from using necessary technology to provide products or services or subject TDS to expensive intellectual property litigation or monetary penalties, which could have an adverse effect on TDS’ business, financial condition or results of operations.

·Certain matters, such as control by the TDS Voting Trust and provisions in the TDS Restated Certificate of Incorporation, may serve to discourage or make more difficult a change in control of TDS.

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·Any of the foregoing events or other events could cause revenues, earnings, capital expenditures and/or any other financial or statistical information to vary from TDS’ forward-looking estimates by a material amount.

See “Risk Factors” in TDS’ Annual Report on Form 10-K for the year ended December 31, 2014 for a further discussion of these risks.  TDS undertakes no obligation to update publicly any forward‑looking statements whether as a result of new information, future events or otherwise.  Readers should evaluate any statements in light of these important factors.

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MARKET RISK

Long-Term Debt

As of December 31, 2014, the majority of TDS’ long-term debt was in the form of fixed-rate notes with maturities ranging up to 49 years.  Fluctuations in market interest rates can lead to significant fluctuations in the fair value of these fixed-rate notes.

The following table presents the scheduled principal payments on long-term debt and capital lease obligations, and the related weighted average interest rates by maturity dates at December 31, 2014:

		Principal Payments Due by Period
(Dollars in millions)			Long-Term Debt Obligations (1)	Weighted-Avg. Interest Rates on Long-Term Debt Obligations (2)
2015		$	0.8	2.5	%
2016			3.8	4.4	%
2017			0.1	8.7	%
2018			0.1	8.8	%
2019			0.1	9.1	%
After 5 years			2,000.8	6.8	%
Total		$	2,005.7	6.8	%
(1)	The total long-term debt obligation differs from Long-term debt in the Consolidated Balance Sheet due to the $11.3 million unamortized discount related to U.S. Cellular's 6.7% Senior Notes.  See Note 11 — Debt in the Notes to Consolidated Financial Statements for additional information.
(2)	Represents the weighted average interest rates at December 31, 2014 for debt maturing in the respective periods.

Fair Value of Long-Term Debt

At December 31, 2014 and 2013, the estimated fair value of long-term debt obligations, excluding capital lease obligations and the current portion of such long-term debt, was $1,932.4 million and $1,560.6 million, respectively.  The fair value of long-term debt, excluding capital lease obligations and the current portion of such long-term debt, was estimated using market prices for TDS’ 7.0% Senior Notes, 6.875% Senior Notes, 6.625% Senior Notes, and 5.875% Senior Notes, and U.S. Cellular’s 6.95% Senior Notes at December 31, 2014 and 2013, and for U.S. Cellular’s 7.25% Senior Notes at December 31, 2014, and a discounted cash flow analysis for U.S. Cellular’s 6.7% Senior Notes and the remaining debt at December 31, 2014 and 2013.

Other Market Risk Sensitive Instruments

The substantial majority of TDS’ other market risk sensitive instruments (as defined in item 305 of SEC Regulation S-K) are short-term, including Cash and cash equivalents.  Accordingly, TDS believes that a significant change in interest rates would not have a material effect on such other market risk sensitive instruments.

41

Telephone and Data Systems, Inc. Consolidated Statement of Operations
Year Ended December 31,				2014		2013		2012
(Dollars and shares in thousands, except per share amounts)
Operating revenues
	Service			$	4,328,654	$	4,443,491	$	4,952,603
	Equipment and product sales				680,784		457,745		392,674
		Total operating revenues			5,009,438		4,901,236		5,345,277
Operating expenses
	Cost of services (excluding Depreciation, amortization   and accretion reported below)				1,164,658		1,118,183		1,274,625
	Cost of equipment and products				1,346,811		1,107,133		997,945
	Selling, general and administrative				1,865,807		1,947,778		2,033,901
	Depreciation, amortization and accretion				836,532		1,018,077		813,626
	Loss on impairment of assets				87,802		-		515
	(Gain) loss on asset disposals, net				26,531		30,841		19,741
	(Gain) loss on sale of business and other exit costs, net				(15,846)		(300,656)		21,061
	(Gain) loss on license sales and exchanges				(112,993)		(255,479)		-
			Total operating expenses		5,199,302		4,665,877		5,161,414
Operating income (loss)					(189,864)		235,359		183,863
Investment and other income (expense)
	Equity in earnings of unconsolidated entities				131,965		132,714		92,867
	Interest and dividend income				16,957		9,092		9,248
	Gain (loss) on investments				-		14,547		(3,718)
	Interest expense				(111,397)		(98,811)		(86,745)
	Other, net				115		(37)		720
		Total investment and other income (expense)			37,640		57,505		12,372
Income (loss) before income taxes					(152,224)		292,864		196,235
	Income tax expense (benefit)				(4,932)		126,043		73,582
Net income (loss)					(147,292)		166,821		122,653
	Less: Net income (loss) attributable to noncontrolling interests, net of tax				(10,937)		24,894		40,792
Net income (loss) attributable to TDS shareholders					(136,355)		141,927		81,861
	TDS Preferred dividend requirement				(49)		(49)		(50)
Net income (loss) available to common shareholders				$	(136,404)	$	141,878	$	81,811
Basic weighted average shares outstanding					108,485		108,490		108,671
Basic earnings (loss) per share attributable to TDS shareholders				$	(1.26)	$	1.31	$	0.75
Diluted weighted average shares outstanding					108,485		109,132		108,937
Diluted earnings (loss) per share attributable to TDS shareholders				$	(1.26)	$	1.29	$	0.75
Dividends per share to TDS shareholders				$	0.54	$	0.51	$	0.49
The accompanying notes are an integral part of these consolidated financial statements.

42

Telephone and Data Systems, Inc.
Consolidated Statement of Comprehensive Income (Loss)
Year Ended December 31,				2014		2013		2012
(Dollars in thousands)
Net income (loss)				$	(147,292)	$	166,821	$	122,653
Net change in accumulated other comprehensive income
	Change in net unrealized gain on equity investments				341		51		49
	Change in foreign currency translation adjustment				48		(34)		4
	Change related to retirement plan
		Amounts included in net periodic benefit cost for the period
			Net actuarial gains (losses)		10,990		13,345		90
			Prior service cost		2,057		-		-
			Amortization of prior service cost		(3,644)		(3,605)		(3,735)
			Amortization of unrecognized net loss		1,287		2,452		2,517
					10,690		12,192		(1,128)
			Change in deferred income taxes		(4,058)		(4,646)		1,797
		Change related to retirement plan, net of tax			6,632		7,546		669
	Net change in accumulated other comprehensive income				7,021		7,563		722
Comprehensive income (loss)					(140,271)		174,384		123,375
	Less: Comprehensive income attributable to noncontrolling interest				10,937		24,894		40,792
Comprehensive income (loss) attributable to TDS shareholders				$	(151,208)	$	149,490	$	82,583
The accompanying notes are an integral part of these consolidated financial statements.

43

Telephone and Data Systems, Inc. Consolidated Statement of Cash Flows
Year Ended December 31,			2014		2013		2012
(Dollars in thousands)
Cash flows from operating activities
	Net income (loss)		$	(147,292)	$	166,821	$	122,653
	Add (deduct) adjustments to reconcile net income to net   cash flows from operating activities
		Depreciation, amortization and accretion		836,532		1,018,077		813,626
		Bad debts expense		107,861		105,629		74,695
		Stock-based compensation expense		35,793		30,338		41,871
		Deferred income taxes, net		71,713		(67,150)		58,785
		Equity in earnings of unconsolidated entities		(131,965)		(132,714)		(92,867)
		Distributions from unconsolidated entities		112,349		127,929		84,884
		Loss on impairment of assets		87,802		-		515
		(Gain) loss on asset disposals, net		26,531		30,841		19,741
		(Gain) loss on sale of business and other exit costs, net		(15,846)		(300,656)		21,061
		(Gain) loss on license sales and exchanges		(112,993)		(255,479)		-
		(Gain) loss on investments		-		(14,547)		3,718
		Noncash interest expense		1,642		2,463		(572)
		Other operating activities		(641)		612		1,393
	Changes in assets and liabilities from operations
		Accounts receivable		17,629		(293,729)		(81,107)
		Equipment installment plans receivable		(188,829)		(591)		-
		Inventory		(29,149)		(83,536)		(29,917)
		Accounts payable		(117,264)		86,028		(12,332)
		Customer deposits and deferred revenues		33,952		66,460		32,981
		Accrued taxes		(122,921)		17,388		77,458
		Accrued interest		1,277		380		(891)
		Other assets and liabilities		(71,369)		(9,954)		(30,523)
				394,812		494,610		1,105,172
Cash flows from investing activities
	Cash used for additions to property, plant and equipment			(799,496)		(883,797)		(995,517)
	Cash paid for acquisitions and licenses			(295,253)		(314,570)		(163,382)
	Cash received from divestitures			187,645		811,120		50,182
	Cash paid for investments			-		-		(120,000)
	Cash received for investments			50,000		115,000		243,444
	Federal Communications Commission deposit			(60,000)		-		-
	Other investing activities			7,360		11,594		(12,796)
				(909,744)		(260,653)		(998,069)
Cash flows from financing activities
	Issuance of long-term debt			275,000		37		195,358
	Repayment of borrowing under revolving credit facility			(150,000)		-		-
	Borrowing under revolving credit facility			150,000		-		-
	TDS Common Shares reissued for benefit plans,     net of tax payments			(2,019)		9,654		(1,119)
	U.S. Cellular Common Shares reissued for benefit     plans, net of tax payments			830		5,784		(2,205)
	Repurchase of TDS Common Shares			(39,096)		(9,692)		(20,026)
	Repurchase of U.S. Cellular Common Shares			(18,943)		(18,544)		(20,045)
	Dividends paid to TDS shareholders			(58,040)		(55,293)		(53,165)
	U.S. Cellular dividends paid to noncontrolling public shareholders			-		(75,235)		-
	Payment of debt issuance costs			(10,215)		(23)		(8,242)
	Distributions to noncontrolling interests			(627)		(3,766)		(20,856)
	Payments to acquire additional interest in subsidiaries			-		(4,505)		(3,167)
	Other financing activities			9,929		7,159		3,570
				156,819		(144,424)		70,103
Net increase (decrease) in cash and cash equivalents				(358,113)		89,533		177,206
Cash and cash equivalents
	Beginning of period			830,014		740,481		563,275
	End of period		$	471,901	$	830,014	$	740,481
The accompanying notes are an integral part of these consolidated financial statements.

44

Telephone and Data Systems, Inc. Consolidated Balance Sheet — Assets
December 31,			2014		2013
(Dollars in thousands)
Current assets
	Cash and cash equivalents		$	471,901	$	830,014
	Short-term investments			-		50,104
	Accounts receivable
		Due from customers and agents, less allowances of $41,431 and $63,690, respectively		548,537		551,611
		Other, less allowances of $1,141 and $1,914, respectively		135,144		179,503
	Inventory, net			273,707		244,560
	Net deferred income tax asset			107,686		106,077
	Prepaid expenses			86,506		87,920
	Income taxes receivable			113,708		2,397
	Other current assets			29,766		35,151
				1,766,955		2,087,337
Assets held for sale				103,343		16,027
Investments
	Licenses			1,453,574		1,423,779
	Goodwill			771,352		836,843
	Franchise rights			244,300		123,668
	Other intangible assets, net of accumulated amortization of $133,823 and $112,752, respectively			64,499		71,454
	Investments in unconsolidated entities			321,729		301,772
	Other investments			508		641
				2,855,962		2,758,157
Property, plant and equipment
	In service and under construction			11,194,044		11,239,804
	Less: Accumulated depreciation and amortization			7,347,919		7,361,660
				3,846,125		3,878,144
Other assets and deferred charges				334,554		164,482
Total assets			$	8,906,939	$	8,904,147
The accompanying notes are an integral part of these consolidated financial statements.

45

Telephone and Data Systems, Inc. Consolidated Balance Sheet — Liabilities and Equity
December 31,					2014		2013
(Dollars and shares in thousands)
Current liabilities
	Current portion of long-term debt				$	808	$	1,646
	Accounts payable					387,125		496,069
	Customer deposits and deferred revenues					324,318		289,445
	Accrued interest					7,919		6,673
	Accrued taxes					46,734		70,518
	Accrued compensation					114,549		115,031
	Other current liabilities					181,803		212,374
						1,063,256		1,191,756
Liabilities held for sale						21,643		-
Deferred liabilities and credits
	Net deferred income tax liability					941,519		862,975
	Other deferred liabilities and credits					430,774		458,709
Long-term debt						1,993,586		1,720,074
Commitments and contingencies
Noncontrolling interests with redemption features						1,150		536
Equity
	TDS shareholders’ equity
		Series A Common and Common Shares
			Authorized 290,000 shares (25,000 Series A Common and 265,000 Common Shares)
			Issued 132,749 shares (7,179 Series A Common and 125,570 Common Shares)    and 132,711 shares (7,166 Series A Common, and 125,545 Common Shares),    respectively
			Outstanding 107,899 shares (7,179 Series A Common and 100,720 Common Shares)    and 108,757 shares (7,166 Series A Common, and 101,591 Common Shares),    respectively
			Par Value ($.01 per share) ($72 Series A Common and $1,255 Common Shares)			1,327		1,327
		Capital in excess of par value				2,336,511		2,308,807
		Treasury shares at cost:
			24,850 and 23,954 Common Shares, respectively			(748,199)		(721,354)
		Accumulated other comprehensive income (loss)				6,452		(569)
		Retained earnings				2,330,187		2,529,626
				Total TDS shareholders’ equity		3,926,278		4,117,837
	Preferred shares					824		824
	Noncontrolling interests					527,909		551,436
		Total equity				4,455,011		4,670,097
Total liabilities and equity					$	8,906,939	$	8,904,147
The accompanying notes are an integral part of these consolidated financial statements

46

	Telephone and Data Systems, Inc. Consolidated Statement of Changes in Equity
		TDS Shareholders
(Dollars in thousands)		Series A Common and Common Shares		Capital in Excess of Par Value		Treasury Common Shares		Accumulated Other Comprehensive Income (Loss)		Retained Earnings		Total TDS Shareholders' Equity		Preferred Shares		Non controlling Interests		Total Equity
December 31, 2013		$	1,327	$	2,308,807	$	(721,354)	$	(569)	$	2,529,626	$	4,117,837	$	824	$	551,436	$	4,670,097
Add (Deduct)
Net income (loss) attributable   to TDS shareholders			-		-		-		-		(136,355)		(136,355)		-		-		(136,355)
Net income (loss) attributable   to noncontrolling interests   classified as equity			-		-		-		-		-		-		-		(11,614)		(11,614)
Net unrealized gain (loss)   on equity investments			-		-		-		341		-		341		-		-		341
Change in foreign currency   translation adjustment			-		-		-		48		-		48		-		-		48
Changes related to retirement   plan			-		-		-		6,632		-		6,632		-		-		6,632
TDS Common and Series A   Common Share dividends			-		-		-		-		(57,991)		(57,991)		-		-		(57,991)
TDS Preferred dividend   requirement			-		-		-		-		(49)		(49)		-		-		(49)
Repurchase of Common Shares			-		-		(39,096)		-		-		(39,096)		-		-		(39,096)
Dividend reinvestment plan			-		2,702		7,093		-		-		9,795		-		-		9,795
Incentive and compensation   plans			-		(1,580)		5,158		-		(5,044)		(1,466)		-		-		(1,466)
Adjust investment in   subsidiaries for repurchases,   issuances and other   compensation plans			-		12,072		-		-		-		12,072		-		(11,349)		723
Stock-based compensation   awards			-		14,182		-		-		-		14,182		-		-		14,182
Tax windfall (shortfall)   from stock awards			-		328		-		-		-		328		-		-		328
Distributions to   noncontrolling interests			-		-		-		-		-		-		-		(564)		(564)
December 31, 2014		$	1,327	$	2,336,511	$	(748,199)	$	6,452	$	2,330,187	$	3,926,278	$	824	$	527,909	$	4,455,011
	The accompanying notes are an integral part of these consolidated financial statements.

47

	Telephone and Data Systems, Inc. Consolidated Statement of Changes in Equity
		TDS Shareholders
(Dollars in thousands)		Series A Common and Common Shares		Capital in Excess of Par Value		Treasury Common Shares		Accumulated Other Comprehensive Income (Loss)		Retained Earnings		Total TDS Shareholders' Equity		Preferred Shares		Non controlling Interests		Total Equity
December 31, 2012		$	1,327	$	2,304,122	$	(750,099)	$	(8,132)	$	2,464,318	$	4,011,536	$	825	$	643,966	$	4,656,327
Add (Deduct)
Net income (loss) attributable   to TDS shareholders			-		-		-		-		141,927		141,927		-		-		141,927
Net income (loss) attributable   to noncontrolling interests   classified as equity			-		-		-		-		-		-		-		24,661		24,661
Net unrealized gain (loss)   on equity investments			-		-		-		51		-		51		-		-		51
Change in foreign currency   translation adjustment			-		-		-		(34)		-		(34)		-		-		(34)
Changes related to retirement   plan			-		-		-		7,546		-		7,546		-		-		7,546
TDS Common and Series A   Common Share dividends			-		-		-		-		(55,244)		(55,244)		-		-		(55,244)
TDS Preferred dividend   requirement			-		-		-		-		(49)		(49)		-		-		(49)
U.S. Cellular dividends paid   to noncontrolling public   shareholders			-		-		-		-		-		-		-		(75,235)		(75,235)
Repurchase of Preferred Shares			-		-		-		-		(5)		(5)		(1)		-		(6)
Repurchase of Common Shares			-		-		(9,692)		-		-		(9,692)		-		-		(9,692)
Dividend reinvestment plan			-		1,619		13,647		-		(5,966)		9,300		-		-		9,300
Incentive and compensation   plans			-		655		24,790		-		(15,355)		10,090		-		-		10,090
Adjust investment in   subsidiaries for repurchases,   issuances and other   compensation plans			-		(290)		-		-		-		(290)		-		20		(270)
Stock-based compensation   awards			-		14,430		-		-		-		14,430		-		-		14,430
Tax windfall (shortfall)   from stock awards			-		(1,311)		-		-		-		(1,311)		-		-		(1,311)
Distributions to   noncontrolling interests			-		-		-		-		-		-		-		(3,576)		(3,576)
Adjust investment in   subsidiaries for   noncontrolling interest   purchases			-		(10,418)		-		-		-		(10,418)		-		5,370		(5,048)
Deconsolidation of partnerships			-		-		-		-		-		-		-		(43,770)		(43,770)
December 31, 2013		$	1,327	$	2,308,807	$	(721,354)	$	(569)	$	2,529,626	$	4,117,837	$	824	$	551,436	$	4,670,097
	The accompanying notes are an integral part of these consolidated financial statements.

48

	Telephone and Data Systems, Inc. Consolidated Statement of Changes in Equity
		TDS Shareholders
(Dollars in thousands)		Series A Common and Common Shares		Capital in Excess of Par Value		Treasury Common Shares		Accumulated Other Comprehensive  Income (Loss)		Retained Earnings		Total TDS Shareholders' Equity		Preferred Shares		Non controlling Interests		Total Equity
December 31, 2011		$	1,326	$	2,268,711	$	(750,921)	$	(8,854)	$	2,451,899	$	3,962,161	$	830	$	639,688	$	4,602,679
Add (Deduct)
Net income (loss) attributable   to TDS shareholders			-		-		-		-		81,861		81,861		-		-		81,861
Net income (loss) attributable   to noncontrolling interests   classified as equity			-		-		-		-		-		-		-		40,739		40,739
Net unrealized gain (loss)   on equity investments			-		-		-		49		-		49		-		-		49
Change in foreign currency   translation adjustment			-		-		-		4		-		4		-		-		4
Changes related to retirement   plan			-		-		-		669		-		669		-		-		669
TDS Common and Series A   Common Share dividends			-		-		-		-		(53,115)		(53,115)		-		-		(53,115)
TDS Preferred dividend   requirement			-		-		-		-		(50)		(50)		-		-		(50)
Repurchase of Preferred   Shares			-		-		-		-		(17)		(17)		(5)		-		(22)
Repurchase of Common Shares			-		-		(20,026)		-		-		(20,026)		-		-		(20,026)
Dividend reinvestment plan			1		1,148		14,123		-		(8,349)		6,923		-		-		6,923
Incentive and compensation   plans			-		444		6,725		-		(7,911)		(742)		-		-		(742)
Adjust investment in   subsidiaries for repurchases,   issuances and other   compensation plans			-		12,572		-		-		-		12,572		-		(14,924)		(2,352)
Stock-based compensation   awards			-		20,030		-		-		-		20,030		-		-		20,030
Tax windfall (shortfall)   from stock awards			-		(3,179)		-		-		-		(3,179)		-		-		(3,179)
Distributions to noncontrolling   interests			-		-		-		-		-		-		-		(20,856)		(20,856)
Adjust investment in   subsidiaries for   noncontrolling interest   purchases			-		4,396		-		-		-		4,396		-		(738)		3,658
Other			-		-		-		-		-		-		-		57		57
December 31, 2012		$	1,327	$	2,304,122	$	(750,099)	$	(8,132)	$	2,464,318	$	4,011,536	$	825	$	643,966	$	4,656,327
The accompanying notes are an integral part of these consolidated financial statements.

49

Telephone and Data Systems, Inc.

Notes to Consolidated Financial Statements

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RECENT ACCOUNTING PRONOUNCEMENTS

Nature of Operations

Telephone and Data Systems, Inc. (“TDS”) is a diversified telecommunications company providing high-quality telecommunications services to approximately 4.8 million wireless customers and 1.2 million wireline and cable connections at December 31, 2014.  TDS conducts all of its wireless operations through its 84%-owned subsidiary, United States Cellular Corporation (“U.S. Cellular”). TDS provides wireline services, cable services and hosted and managed services through its wholly-owned subsidiary, TDS Telecommunications Corporation (“TDS Telecom”).  

TDS has the following reportable segments: U.S. Cellular and TDS Telecom’s Wireline, Cable and Hosted and Managed Services (“HMS”) operations.  TDS’ non-reportable other business activities are presented as “Corporate, Eliminations and Other”.  This includes the operations of TDS’ majority owned printing and distribution company, Suttle-Straus, Inc. (“Suttle-Straus”) and TDS’ wholly owned subsidiary, Airadigm Communications, Inc. (“Airadigm”).  Suttle-Straus and Airadigm’s financial results were not significant to TDS’ operations.  All of TDS’ segments operate only in the United States, except for HMS, which includes an insignificant foreign operation.  See Note 18 — Business Segment Information for summary financial information on each business segment.

Principles of Consolidation

The accounting policies of TDS conform to accounting principles generally accepted in the United States of America (“GAAP”) as set forth in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”). Unless otherwise specified, references to accounting provisions and GAAP in these notes refer to the requirements of the FASB ASC.  The consolidated financial statements include the accounts of TDS, its majority-owned subsidiaries, general partnerships in which it has a majority partnership interest and variable interest entities (“VIEs”) in which TDS is the primary beneficiary.  Both VIE and primary beneficiary represent terms defined by GAAP. 

Intercompany accounts and transactions have been eliminated. 

Reclassifications

Certain prior year amounts have been reclassified to conform to the 2014 financial statement presentation.  These reclassifications did not affect consolidated net income attributable to TDS shareholders, cash flows, assets, liabilities or equity for the years presented.

In 2014, TDS began presenting separately Equipment and product sales and Cost of equipment and products.  As a result of recent HMS acquisitions, these amounts are now more significant to TDS and, accordingly, are shown as separate captions under Operating revenues and Operating expenses, respectively, on the Consolidated Statement of Operations.  Amounts in 2013 and 2012 have been reclassified to conform to the 2014 presentation.  The separate presentation of Equipment and product sales and Cost of equipment and products had no other impact on the TDS financial statements.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect (a) the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and (b) the reported amounts of revenues and expenses during the reported period.  Actual results could differ from those estimates.  Significant estimates are involved in accounting for goodwill and indefinite-lived intangible assets, income taxes, the loyalty reward program and equipment installment plans.

Cash and Cash Equivalents

Cash and cash equivalents include cash and short-term, highly liquid investments with original maturities of three months or less.

Accounts Receivable and Allowance for Doubtful Accounts

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U.S. Cellular’s accounts receivable consist primarily of amounts owed by customers for wireless services and equipment sales, including sales of certain devices under equipment installment plans, by agents for sales of equipment to them and by other wireless carriers whose customers have used U.S. Cellular’s wireless systems.

TDS Telecom’s accounts receivable primarily consist of amounts owed by customers for services and products provided, by interexchange carriers for long-distance traffic which TDS Telecom carries on its network, and by interstate and intrastate revenue pools that distribute access charges.

The allowance for doubtful accounts is the best estimate of the amount of probable credit losses related to existing billed and unbilled accounts receivable.  The allowance is estimated based on historical experience, account aging and other factors that could affect collectability.  Accounts receivable balances are reviewed on either an aggregate or individual basis for collectability depending on the type of receivable.  When it is probable that an account balance will not be collected, the account balance is charged against the allowance for doubtful accounts.  TDS does not have any off-balance sheet credit exposure related to its customers.

The changes in the allowance for doubtful accounts during the years ended December 31, 2014, 2013 and 2012 were as follows:
		2014		2013		2012
(Dollars in thousands)
Beginning balance		$	65,604	$	33,415	$	31,071
	Additions, net of recoveries		107,861		105,629		74,695
	Deductions		(124,828)		(73,440)		(72,351)
Ending balance (1)		$	48,637	$	65,604	$	33,415
(1)	In 2014, this balance includes a $6.1 million allowance related to the long-term portion of unbilled equipment installment receivables.

Inventory

Inventory consists primarily of wireless devices stated at the lower of cost or market, with cost determined using the first-in, first-out method and market determined by replacement costs or estimated net realizable value.  TDS Telecom’s materials and supplies are stated at average cost.

Goodwill

TDS has Goodwill as a result of its acquisition of wireless, wireline, HMS, and cable companies and, under previous business combination guidance in effect prior to 2009, step acquisitions related to U.S. Cellular’s repurchase of its common shares. Such Goodwill represents the excess of the total purchase price over the fair value of net assets acquired in these transactions.  TDS performs its annual impairment assessment of Goodwill as of November 1 of each year. 

See Note 7 — Intangible Assets for additional details related to Goodwill.

U.S. Cellular

For purposes of conducting its Goodwill impairment test in 2014 and 2013, U.S. Cellular identified four reporting units.  The four reporting units represent four geographic groupings of operating markets, representing four geographic service areas.  A discounted cash flow approach was used to value each reporting unit for purposes of the Goodwill impairment review.

TDS Telecom

For purposes of the 2014 annual impairment testing, TDS Telecom has identified three reporting units: Wireline, HMS and Cable.  For purposes of the 2013 annual impairment testing, TDS Telecom had three reporting units: incumbent local exchange carrier (“ILEC”), HMS and Cable.  During 2014, the ILEC operations were combined with the competitive local exchange carrier (“CLEC”) operations to create the Wireline reporting unit.  There is no Goodwill at the CLEC operations.  The discounted cash flow approach and guideline public company method were used to value the Wireline and Cable reporting units for the 2014 annual impairment test.  For the 2014 annual impairment test, TDS Telecom performed a qualitative assessment of the HMS reporting unit.

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Licenses

Licenses consist of direct and incremental costs incurred in acquiring Federal Communications Commission (“FCC”) licenses to provide wireless service.

TDS has determined that wireless licenses are indefinite-lived intangible assets and, therefore, not subject to amortization based on the following factors:

·Radio spectrum is not a depleting asset.

·The ability to use radio spectrum is not limited to any one technology.

·TDS and its consolidated subsidiaries are licensed to use radio spectrum through the FCC licensing process, which enables licensees to utilize specified portions of the spectrum for the provision of wireless service.

·TDS and its consolidated subsidiaries are required to renew their FCC licenses every ten years or, in some cases, every fifteen years. To date, all of TDS’ license renewal applications have been granted by the FCC. Generally, license renewal applications filed by licensees otherwise in compliance with FCC regulations are routinely granted. If, however, a license renewal application is challenged either by a competing applicant for the license or by a petition to deny the renewal application, the license will be renewed if the licensee can demonstrate its entitlement to a “renewal expectancy.” Licensees are entitled to such an expectancy if they can demonstrate to the FCC that they have provided “substantial service” during their license term and have “substantially complied” with FCC rules and policies. TDS believes that it is probable that its future license renewal applications will be granted.

U.S. Cellular performs its annual impairment assessment of its licenses as of November 1 of each year.  For purposes of its 2014 and 2013 impairment testing of Licenses, U.S. Cellular separated its FCC licenses into eleven units of accounting based on geographic service areas.  In both 2014 and 2013, seven of the units of accounting represented geographic groupings of licenses which, because they were not being utilized and, therefore, were not expected to generate cash flows from operating activities in the foreseeable future, were considered separate units of accounting for purposes of impairment testing. U.S. Cellular estimates the fair value of built licenses for purposes of impairment testing using the build-out method.  The build-out method estimates the fair value of Licenses by discounting to present value the future cash flows calculated based on a hypothetical cost to build-out U.S. Cellular’s network.

For units of accounting which consist of unbuilt licenses, the fair value of the unbuilt licenses is assumed to change by the same percentage, and in the same direction, that the fair value of built licenses measured using the build-out method changed during the period.

See Note 7 — Intangible Assets for additional details related to Licenses.

Franchise rights

TDS has Franchise rights as a result of acquisitions of cable businesses.  Franchise rights are intangible assets that provide their holder with the right to operate a business in a certain geographical location as sanctioned by the franchiser, usually a government agency.  TDS has determined that Franchise rights are indefinite-lived intangible assets and, therefore, not subject to amortization because TDS expects both the renewal by the granting authorities and the cash flows generated from the Franchise rights to continue indefinitely.  Cable Franchise rights are generally granted for ten year periods and may be renewed for additional terms upon approval by the granting authority.  TDS anticipates that future renewals of its Franchise rights will be granted. 

TDS Telecom performs its annual impairment assessment of Franchise rights as of November 1 of each year.  TDS Telecom tests Franchise rights for impairment at a unit of accounting level.  For purposes of its impairment testing of Franchise rights, TDS Telecom identified one unit of accounting.  TDS Telecom estimates the fair value of franchise rights for purposes of impairment testing using the build-out method.  For the 2013 annual impairment test, TDS Telecom performed a qualitative assessment of the Franchise rights.

See Note 7 — Intangible Assets for additional details related to Franchise rights.

Investments in Unconsolidated Entities

For its equity method investments for which financial information is readily available, TDS 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, TDS records its equity in the earnings of the entity on a one quarter lag basis.

Property, Plant and Equipment

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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 Cost of services and products or Selling, general and administrative expense, as applicable.  Retirements and disposals of assets are recorded by removing the original cost of the asset (along with the related accumulated depreciation) from plant in service and charging it, together with net removal costs (removal costs less an applicable accrued asset retirement obligation and salvage value realized), to (Gain) loss on asset disposals, net.

TDS 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, except for certain Wireline segment assets, which use the group depreciation method.  The group depreciation method develops a depreciation rate based on the average useful life of a specific group of assets, rather than each asset individually.  TDS depreciates leasehold improvement assets associated with leased properties over periods ranging from one to thirty years; such periods approximate the shorter of the assets’ economic lives or the specific lease terms.

Useful lives of specific assets are reviewed throughout the year to determine if changes in technology or other business changes would warrant accelerating the depreciation of those specific assets. Due to the Divestiture Transaction more fully described in Note 6 — Acquisitions, Divestitures and Exchanges, U.S. Cellular changed the useful lives of certain assets in 2013 and 2012. Other than the Divestiture Transaction, there were no other material changes to useful lives of property, plant and equipment in 2014, 2013 or 2012.  TDS Telecom did not materially change the useful lives of its property, plant and equipment in 2014, 2013 or 2012.  See Note 9 — Property, Plant and Equipment for additional details related to useful lives.

Impairment of Long-lived Assets

TDS reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the assets might be impaired.

U.S. Cellular has one asset group for purposes of assessing property, plant and equipment for impairment based on the fact that the individual operating markets are reliant on centrally operated data centers, mobile telephone switching offices and network operations center.  U.S. Cellular operates a single integrated national wireless network, and the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities represent cash flows generated by this single interdependent network.

TDS Telecom has three asset groups of Wireline, Cable and HMS for purposes of assessing property, plant and equipment for impairment based on their integrated network, assets and operations.  The cash flows generated by each of these groups is the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities.

Agent Liabilities

U.S. Cellular has relationships with agents, which are independent businesses that obtain customers for U.S. Cellular.  At December 31, 2014 and 2013, U.S. Cellular had accrued $95.3 million and $121.3 million, respectively, for amounts due to agents.  This amount is included in Other current liabilities in the Consolidated Balance Sheet.

Other Assets and Deferred Charges

Other assets and deferred charges include underwriters’ and legal fees and other charges related to issuing various borrowing instruments and other long-term agreements, and are amortized over the respective term of each instrument.  The amounts of deferred charges included in the Consolidated Balance Sheet at December 31, 2014 and 2013, are shown net of accumulated amortization of $58.1 million and $41.4 million, respectively.  At December 31, 2014, Other assets and deferred charges includes a $60.0 million deposit made by Advantage Spectrum L.P. to the FCC to participate in Auction 97.  See Note 14 — Variable Interest Entities for additional information.

Asset Retirement Obligations

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TDS accounts for asset retirement obligations by recording the fair value of a liability for legal obligations associated with an asset retirement in the period in which the obligations are incurred. At the time the liability is incurred, TDS records a liability equal to the net present value of the estimated cost of the asset retirement obligation and increases the carrying amount of the related long-lived asset by an equal amount. Until the obligation is fulfilled, TDS updates its estimates relating to cash flows required and timing of settlement.  TDS records the present value of the changes in the future value as an increase or decrease to the liability and the related carrying amount of the long-lived asset.  The liability is accreted to future value over a period ending with the estimated settlement date of the respective asset retirement obligation.  The carrying amount of the long-lived asset is depreciated over the useful life of the related asset. Upon settlement of the obligation, any difference between the cost to retire the asset and the recorded liability is recognized in the Consolidated Statement of Operations.

Treasury Shares

Common Shares repurchased by TDS are recorded at cost as treasury shares and result in a reduction of equity.  Treasury shares are reissued as part of TDS’ stock-based compensation programs.  When treasury shares are reissued, TDS 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 Capital in excess of par value 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, products and accessories are recognized when title and risk of loss passes to the agent or end-user customer.  

Multiple Deliverable Arrangements 

U.S. Cellular and TDS Telecom sell multiple element service and equipment offerings.  In these instances, revenues are allocated using the relative selling price method.  Under this method, arrangement consideration, which consists of the amounts billed to the customer net of any cash-based discounts, is allocated to each element on the basis of its relative selling price.  Revenue recognized for the delivered items is limited to the amount due from the customer that is not contingent upon the delivery of additional products or services.

Loyalty Reward Program

U.S. Cellular follows the deferred revenue method of accounting for its loyalty reward program.  Under this method, revenue allocated to loyalty reward points is deferred.   The amount allocated to the loyalty points is based on the estimated retail price of the products and services for which points may be redeemed divided by the number of loyalty points required to receive such products and services.  This is calculated on a weighted average basis and requires U.S. Cellular to estimate the percentage of loyalty points that will be redeemed for each product or service. 

As of December 31, 2014 and 2013, U.S. Cellular had deferred revenue related to loyalty reward points outstanding of $94.6 million and $116.2 million, respectively.  These amounts are recorded in Customer deposits and deferred revenues (a current liability account) in the Consolidated Balance Sheet, as customers may redeem their reward points within the current period. 

Revenue is recognized at the time of customer redemption or when such points have been depleted via an account maintenance charge.  U.S. Cellular employs the proportional model to recognize revenues associated with breakage.  Under the proportional model, U.S. Cellular allocates a portion of the estimated future breakage to each redemption and records revenue proportionally.  U.S. Cellular periodically reviews and revises the redemption and depletion rates to estimate future breakage as appropriate based on history and related future expectations. 

In the fourth quarter of 2013, U.S. Cellular issued loyalty reward points with a value of $43.5 million as a loyalty bonus in recognition of the inconvenience experienced by customers during U.S. Cellular’s billing system conversion in 2013.  The value of the loyalty bonus reduced Service revenues in the Consolidated Statement of Operations and increased Customer deposits and deferred revenues in the Consolidated Balance Sheet.

Equipment Installment Plans

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U.S. Cellular equipment revenue under equipment installment plan contracts is recognized at the time the device is delivered to the end-user customer for the selling price of the device, net of any deferred imputed interest or trade-in right, if applicable.   Imputed interest is reflected as a reduction to the receivable balance and recognized over the duration of the plan as a component of Interest and dividend income.  See Note 3 — Equipment Installment Plans for additional information.

Incentives

Discounts and incentives are recognized as a reduction of Operating revenues concurrently with the associated revenue, and are allocated to the various products and services in the bundled offering based on their respective relative selling price. 

U.S. Cellular issues rebates to its agents and end customers.  These incentives are recognized as a reduction to revenue at the time the wireless device sale to the agent or customer occurs, respectively.  The total potential rebates and incentives are reduced by U.S. Cellular’s estimate of rebates that will not be redeemed by customers based on historical experience of such redemptions.

Activation Fees

TDS charges its end customers activation fees in connection with the sale of certain services and equipment.  Activation fees charged by TDS Telecom in conjunction with a service offering are deferred and recognized over the average customer’s service period.   Device activation fees charged at U.S. Cellular agent locations, where U.S. Cellular does not also sell a wireless device to the customer, are deferred and recognized over the average device life.  Device activation fees charged as a result of device sales at U.S. Cellular company-owned retail stores are recognized at the time the device is delivered to the customer. 

Amounts Collected from Customers and Remitted to Governmental Authorities – Gross vs. Net

TDS 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 TDS merely acts as an agent in collecting the tax on behalf of the imposing governmental authority.  If the tax is assessed upon TDS, then amounts collected from customers as recovery of the tax are recorded in Service revenues and amounts remitted to governmental authorities are recorded in Selling, general and administrative expenses in the Consolidated Statement of Operations.  The amounts recorded gross in revenues that are billed to customers and remitted to governmental authorities totaled $113.5 million, $131.0 million and $152.4 million for 2014, 2013 and 2012, respectively. 

Wholesale Revenues

TDS Telecom earns Wholesale revenues in its Wireline segment as a result of its participation in revenue pools with other telephone companies for interstate revenue and for certain intrastate revenue.  Such pools are funded by long distance revenue and/or access charges within state jurisdictions and by access charges in the interstate jurisdiction.  Wholesale revenues earned through the various pooling processes are recorded based on estimates following the National Exchange Carrier Association’s rules as approved by the FCC.

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

TDS expenses advertising costs as incurred.  Advertising costs totaled $228.5 million, $212.8 million and $240.9 million in 2014, 2013 and 2012, respectively.

Income Taxes

TDS files a consolidated federal income tax return.  Deferred taxes are computed using the liability method, whereby deferred tax assets are recognized for future deductible temporary differences and operating loss carryforwards, and deferred tax liabilities are recognized for future taxable temporary differences.  Both deferred tax assets and liabilities are measured using the tax rates anticipated to be in effect when the temporary differences reverse.  Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases.  Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.  Deferred tax assets are reduced by a valuation allowance when it is more likely than not that

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some portion or all of the deferred tax assets will not be realized.  TDS evaluates income tax uncertainties, assesses the probability of the ultimate settlement with the applicable taxing authority and records an amount based on that assessment. 

Stock-Based Compensation

TDS has established long-term incentive plans, dividend reinvestment plans, and a Non-Employee Director compensation plan.  See Note 17 — Stock-based Compensation for additional information.  The dividend reinvestment plan of TDS is not considered a compensatory plan and, therefore, recognition of compensation costs for grants made under this plan is not required.  All other plans are considered compensatory plans; therefore, recognition of compensation costs for grants made under these plans is required.

TDS values its share-based payment transactions using a Black-Scholes valuation model.  Stock-based compensation cost recognized during the period is based on the portion of the share-based payment awards that are ultimately expected to vest.  Accordingly, stock-based compensation cost recognized has been reduced for estimated forfeitures.  Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.  Pre-vesting forfeitures and expected life are estimated based on historical experience related to similar awards, giving consideration to the contractual terms of the stock-based awards, vesting schedules and expectations of future employee behavior.  TDS believes that its historical experience provides the best estimates of future pre-vesting forfeitures and future expected life.  The expected volatility assumption is based on the historical volatility of TDS’ common stock over a period commensurate with the expected life.  The dividend yield assumption is equal to the dividends declared in the most recent year as a percentage of the share price on the date of grant.  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.

Beginning with grants in 2013, newly granted TDS stock option awards cliff vest in three years.  TDS stock option awards granted prior to 2013 and U.S. Cellular stock option awards vest on an annual basis in three separate tranches.  Compensation cost is recognized on a straight-line basis over the requisite service period, which was generally the vesting period, for each separate vesting portion of the awards as if the awards were, in-substance, multiple awards (graded vesting attribution method). 

Recently Issued Accounting Pronouncements

On April 10, 2014, the FASB issued Accounting Standards Update 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity (“ASU 2014-08”). ASU 2014-08 changes the requirements and disclosures for reporting discontinued operations. TDS was required to adopt the provisions of ASU 2014-08 effective January 1, 2015, but early adoption was permitted. TDS adopted the provisions of ASU 2014-08 upon its issuance.  The adoption of ASU 2014-08 did not have a significant impact on TDS’ financial position or results of operations.

On May 28, 2014, the FASB issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”).  ASU 2014-09 outlines a single comprehensive model to use in accounting for revenue arising from contracts with customers.  TDS is required to adopt the provisions of ASU 2014-09 effective January 1, 2017.  Early adoption is prohibited. TDS is evaluating what effects the adoption of ASU 2014-09 will have on TDS’ financial position and results of operations. 

On August 27, 2014, the FASB issued Accounting Standards Update 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ASU 2014-15”).  ASU 2014-15 requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date financial statements are issued and provides guidance on determining when and how to disclose going concern uncertainties in financial statements.  TDS is required to adopt the provisions of ASU 2014-15 effective January 1, 2016, but early adoption is permitted.  The adoption of ASU 2014-15 is not expected to impact TDS’ financial position or results of operations.

On January 9, 2015, the FASB issued Accounting Standards Update 2015-01, Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items (“ASU 2015-01”).  ASU 2015-01 eliminates from GAAP the requirement to separately classify, present and disclose extraordinary events and transactions.  TDS is required to adopt the provisions of ASU 2015-01 effective January 1, 2016, but early adoption is permitted.  The adoption of ASU 2015-01 is not expected to impact TDS’ financial position or results of operations.

On February 18, 2015, the FASB issued Accounting Standards Update 2015-02, Consolidation: Amendments to the Consolidation Analysis (“ASU 2015-02”).  ASU 2015-02 simplifies consolidation accounting by reducing the number of consolidation models and changing various aspects of current GAAP, including certain consolidation criteria for variable interest entities.  TDS is required to adopt the provisions of ASU 2015-02 effective January 1, 2016.  Early adoption is permitted.  TDS is still assessing the impact, if any, the adoption of ASU 2015-02 will have on TDS’ financial position or results of operations.

NOTE 2 FAIR VALUE MEASUREMENTS

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As of December 31, 2014 and 2013, TDS did not have any financial or nonfinancial assets or liabilities that were required to be recorded at fair value in its Consolidated Balance Sheet in accordance with GAAP. 

The provisions of GAAP establish a fair value hierarchy that contains three levels for inputs used in fair value measurements.  Level 1 inputs include quoted market prices for identical assets or liabilities in active markets.  Level 2 inputs include quoted market prices for similar assets and liabilities in active markets or quoted market prices for identical assets and liabilities in inactive markets.  Level 3 inputs are unobservable.  A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.  A financial instrument’s level within the fair value hierarchy is not representative of its expected performance or its overall risk profile and, therefore, Level 3 assets are not necessarily higher risk than Level 2 assets or Level 1 assets.

TDS has applied the provisions of fair value accounting for purposes of computing the fair value of financial instruments for disclosure purposes as displayed below.

		Level within the Fair Value Hierarchy	December 31, 2014				December 31, 2013
			Book Value		Fair Value		Book Value		Fair Value
(Dollars in thousands)
Cash and cash equivalents		1	$	471,901	$	471,901	$	830,014	$	830,014
Short-term investments
	U.S. Treasury Notes	1		-		-		50,104		50,104
Long-term debt
	Retail	2		1,453,250		1,414,105		1,178,250		1,048,010
	Institutional and other	2		537,471		518,322		537,454		512,635

Short-term investments are designated as held-to-maturity investments and recorded at amortized cost in the Consolidated Balance Sheet.  For these investments, TDS’ objective is to earn a higher rate of return on funds that are not anticipated to be required to meet liquidity needs in the near term, while maintaining a low level of investment risk.

The fair values of Cash and cash equivalents and Short-term investments approximate their book values due to the short-term nature of these financial instruments. Long-term debt excludes capital lease obligations and the current portion of Long-term debt.  The fair value of “Retail” Long-term debt was estimated using market prices for TDS’ 7.0% Senior Notes, 6.875% Senior Notes, 6.625% Senior Notes and 5.875% Senior Notes, and U.S. Cellular’s 6.95% Senior Notes and 7.25% Senior Notes.  TDS’ “Institutional” debt consists of U.S. Cellular’s 6.7% Senior Notes which are traded over the counter.  TDS 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 0.00% to 7.25% at December 31, 2014 and 0.00% to 7.35% at December 31, 2013.

NOTE 3 EQUIPMENT INSTALLMENT PLANS

TDS offers customers the option to purchase certain devices under equipment installment contracts over a period of up to 24 months.  For certain equipment installment plans, after a specified period of time, the customer may have the right to upgrade to a new device and have the remaining unpaid equipment installment contract balance waived, subject to certain conditions, including trading in the original device in good working condition and signing a new equipment installment contract.  TDS values this trade-in right as a guarantee liability.  The guarantee liability is initially measured at fair value and is determined based on assumptions including the probability and timing of the customer upgrading to a new device and the fair value of the device being traded-in at the time of trade-in.  As of December 31, 2014, the guarantee liability related to these plans was $57.5 million and is reflected in Customer deposits and deferred revenues in the Consolidated Balance Sheet.

TDS equipment installment plans do not provide for explicit interest charges.  For equipment installment plans with duration of greater than twelve months, TDS imputes interest.

The following table summarizes the unbilled equipment installment plan receivables as of December 31, 2014 and 2013.  Such amounts are presented on the Consolidated Balance Sheet as Accounts receivable – customers and agents and Other assets and deferred charges, where applicable.
(Dollars in thousands)	December 31, 2014		December 31, 2013
Short-term portion of unbilled equipment installment plan receivables, gross	$	127,400	$	611
Short-term portion of unbilled deferred interest		(16,365)		-
Short-term portion of unbilled allowance for credit losses		(3,686)		(20)
Short-term portion of unbilled equipment installment plan receivables, net	$	107,349	$	591
Long-term portion of unbilled equipment installment plan receivables, gross	$	89,435	$	-
Long-term portion of unbilled deferred interest		(2,791)		-
Long-term portion of unbilled allowance for credit losses		(6,065)		-
Long-term portion of unbilled equipment installment plan receivables, net	$	80,579	$	-

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TDS considers the collectability of the equipment installment plan receivables based on historical payment experience, account aging and other qualitative factors.  The credit profiles of TDS customers on equipment installment plans are similar to those of TDS 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.

NOTE 4 INCOME TAXES

TDS’ current income taxes balances at December 31, 2014 and 2013 were as follows:

December 31,	2014		2013
(Dollars in thousands)
Federal income taxes receivable (payable)	$	108,820	$	(20,288)
Net state income taxes receivable (payable)		4,391		2,397

Income tax expense (benefit) is summarized as follows:
Year Ended December 31,		2014		2013		2012
(Dollars in thousands)
Current
	Federal	$	(87,736)	$	181,579	$	9,705
	State		11,091		11,614		5,092
Deferred
	Federal		41,851		(65,970)		61,113
	Federal - valuation allowance adjustment		(10,816)		-		-
	State		2,208		(1,180)		(2,328)
	State - valuation allowance adjustment		38,470		-		-
		$	(4,932)	$	126,043	$	73,582

A reconciliation of TDS’ income tax expense computed at the statutory rate to the reported income tax expense, and the statutory federal income tax expense rate to TDS’ effective income tax expense rate is as follows:

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Year Ended December 31,		2014				2013				2012
		Amount		Rate		Amount		Rate		Amount		Rate
(Dollars in millions)
Statutory federal income tax expense and rate		$	(53.3)	35.0	%	$	102.5	35.0	%	$	68.7	35.0	%
State income taxes, net of federal benefit (1)			42.8	(28.1)			10.5	3.6			8.4	4.2
Effect of noncontrolling interests			(5.8)	3.8			(1.0)	(0.4)			-	-
Gains (losses) on investments and sale of assets (2)			-	-			14.9	5.1			-	-
Correction of deferred taxes (3)			-	-			-	-			(6.1)	(3.1)
Change in federal valuation allowance (4)			(8.7)	5.7			-	-			-	-
Goodwill impairment (5)			18.3	(12.0)			-	-			-	-
Other differences, net			1.8	(1.2)			(0.9)	(0.3)			2.6	1.4
Total income tax expense and rate		$	(4.9)	3.2	%	$	126.0	43.0	%	$	73.6	37.5	%
(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 TDS recorded a $38.5 million increase to income tax expense related to a valuation allowance recorded against certain state deferred tax assets.  In each interim period, TDS evaluates the available positive and negative evidence to assess whether deferred tax assets are realizable, on a more likely than not basis.  During the year ended December 31, 2014, based on revised forecasts of future state income, TDS concluded that the negative evidence related to the realization of certain state deferred tax assets outweighed the positive evidence.  Accordingly, TDS determined that such deferred tax assets related to certain states were not realizable, on a more likely than not basis.
(2)	Gains (losses) on investments and sale of assets represents 2013 tax expense related to the NY1 & NY2 Deconsolidation and the Divestiture Transaction.
(3)	Correction of deferred taxes reflects immaterial adjustments to correct deferred tax balances in 2012 related to tax basis and law changes that related to periods prior to 2012.
(4)	Change in federal valuation allowance relates primarily to a decrease to income tax expense in the third quarter of 2014 due to a valuation allowance reduction for federal net operating losses previously limited under loss utilization rules.  Due to the shutdown of Airadigm’s consumer wireless business and resulting intercompany sale of certain assets by Airadigm to U.S. Cellular during the year (as described in Note 6 — Acquisitions, Divestitures and Exchanges), Airadigm is expected to recognize sufficient taxable income for TDS to utilize the previously limited net operating losses.
(5)	Goodwill impairment reflects an adjustment to increase income tax expense by $18.3 million related to a portion of the goodwill impairment of Suttle-Straus and the HMS reporting unit recorded in 2014 which is nondeductible for income tax purposes.  See Note 7 — Intangible Assets for additional information related to the goodwill impairment.

Significant components of TDS’ deferred income tax assets and liabilities at December 31, 2014 and 2013 were as follows:

December 31,		2014		2013
(Dollars in thousands)
Deferred tax assets
	Current deferred tax assets	$	113,402	$	114,532
	Net operating loss (“NOL”) carryforwards		135,676		121,651
	Stock-based compensation		54,789		50,563
	Compensation and benefits - other		11,014		12,681
	Deferred rent		19,604		20,500
	Other		35,523		32,444
Total deferred tax assets			370,008		352,371
	Less valuation allowance		(113,553)		(79,064)
Net deferred tax assets			256,455		273,307
Deferred tax liabilities
	Property, plant and equipment		667,540		637,090
	Licenses/intangibles		259,865		251,578
	Partnership investments		151,123		136,581
	Other		9,724		4,956
	Total deferred tax liabilities		1,088,252		1,030,205
Net deferred income tax liability		$	831,797	$	756,898

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At December 31, 2014, TDS and certain subsidiaries had $2,315.3 million of state NOL carryforwards (generating a $111.3 million deferred tax asset) available to offset future taxable income.  The state NOL carryforwards expire between 2015 and 2034.  Certain subsidiaries had federal NOL carryforwards (generating a $24.3 million deferred tax asset) available to offset their future taxable income.  The federal NOL carryforwards expire between 2018 and 2034.  A valuation allowance was established for certain state NOL carryforwards and federal NOL carryforwards since it is more likely than not that a portion of such carryforwards will expire before they can be utilized.

A summary of TDS' deferred tax asset valuation allowance is as follows:
		2014		2013		2012
(Dollars in thousands)
Balance at January 1,		$	79,064	$	70,502	$	49,686
	Charged to income tax expense		34,489		1,954		5,268
	Charged to other accounts		-		6,608		15,548
Balance at December 31,		$	113,553	$	79,064	$	70,502
As of December 31, 2014, the valuation allowance reduced current deferred tax assets by $5.7 million and noncurrent deferred tax assets by $107.8 million.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
		2014		2013		2012
(Dollars in thousands)
Unrecognized tax benefits balance at January 1,		$	30,390	$	28,420	$	28,841
	Additions for tax positions of current year		7,610		6,388		7,027
	Additions for tax positions of prior years		883		1,858		1,673
	Reductions for tax positions of prior years		(399)		(467)		(7)
	Reductions for settlements of tax positions		(312)		(1,337)		(21)
	Reductions for lapses in statutes of limitations		(356)		(4,472)		(9,093)
Unrecognized tax benefits balance at December 31,		$	37,816	$	30,390	$	28,420

Unrecognized tax benefits are included in Accrued taxes and Other deferred liabilities and credits in the Consolidated Balance Sheet.  If these benefits were recognized, they would have reduced income tax expense in 2014, 2013 and 2012 by $24.6 million, $19.8 million and $18.6 million, respectively, net of the federal benefit from state income taxes. 

As of December 31, 2014, it is reasonably possible that unrecognized tax benefits could decrease by approximately $10 million in the next twelve months.  The nature of the uncertainty relates primarily to state income tax positions and their resolution or the expiration of statutes of limitation.

TDS recognizes accrued interest and penalties related to unrecognized tax benefits in Income tax expense.  The amounts charged to income tax expense related to interest and penalties resulted in an expense of $3.4 million and $0.7 million in 2014 and 2013, respectively, and a benefit of $1.5 million in 2012.  Net accrued interest and penalties were $16.2 million and $12.4 million at December 31, 2014 and 2013, respectively.

TDS and its subsidiaries file federal and state income tax returns.  TDS remains subject to federal income tax audits for the tax years after 2011.  With only a few exceptions, TDS is no longer subject to state income tax audits for years prior to 2010.

NOTE 5 EARNINGS PER SHARE

Basic earnings (loss) per share attributable to TDS shareholders is computed by dividing Net income (loss) available to common shareholders of TDS by the weighted average number of common shares outstanding during the period. Diluted earnings (loss) per share attributable to TDS shareholders is computed by dividing Net income (loss) available to common shareholders of TDS by the weighted average number of common shares outstanding during the period adjusted to include the effects of potentially dilutive securities. Potentially dilutive securities primarily include incremental shares issuable upon exercise of outstanding stock options and the vesting of restricted stock units.

The amounts used in computing earnings (loss) per common share and the effects of potentially dilutive securities on the weighted average number of common shares were as follows:

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Year Ended December 31,				2014		2013		2012
(Dollars and shares in thousands, except earnings per share)
Basic earnings (loss) per share attributable to TDS shareholders:
Net income (loss) available to common shareholders of TDS used in basic    earnings (loss) per share				$	(136,404)	$	141,878	$	81,811
Adjustments to compute diluted earnings:
	Noncontrolling interest adjustment				-		(1,058)		(640)
	Preferred dividend adjustment				-		49		-
Net income (loss) attributable to common shareholders of TDS used in    diluted earnings (loss) per share				$	(136,404)	$	140,869	$	81,171
Weighted average number of shares used in basic earnings (loss) per share
		Common Shares			101,304		101,339		101,532
		Series A Common Shares			7,181		7,151		7,139
			Total		108,485		108,490		108,671
Effects of dilutive securities:
	Stock options (1)				-		209		11
	Restricted stock units (1)				-		375		255
	Preferred shares (1)				-		58		-
Weighted average number of shares used in diluted earnings (loss) per share					108,485		109,132		108,937
Basic earnings (loss) per share attributable to TDS shareholders				$	(1.26)	$	1.31	$	0.75
Diluted earnings (loss) per share attributable to TDS shareholders				$	(1.26)	$	1.29	$	0.75
(1)		There were no effects of dilutive securities for the year ended December 31, 2014 due to the net loss for the year.

On June 25, 2013, U.S. Cellular paid a special cash dividend of $5.75 per share, for an aggregate amount of $482.3 million, to all holders of U.S. Cellular Common Shares and Series A Common Shares as of June 11, 2013.  Outstanding U.S. Cellular stock options and restricted stock unit awards were equitably adjusted for the special cash dividend.  The impact of such adjustments on the earnings (loss) per share calculation was fully reflected for all years presented.

Certain Common Shares issuable upon the exercise of stock options, vesting of restricted stock units or conversion of convertible preferred shares were not included in average diluted shares outstanding for the calculation of Diluted earnings (loss) per share because their effects were antidilutive. The number of such Common Shares excluded is shown in the table below.

Year Ended December 31,	2014	2013	2012
(Shares in thousands)
Stock options	8,984	7,120	8,130
Restricted stock units	839	171	154
Preferred shares	56	-	57

NOTE 6 ACQUISITIONS, DIVESTITURES AND EXCHANGES

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

Divestiture Transaction

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

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These other agreements included customer and network transition services agreements, which required U.S. Cellular to provide customer, billing and network services to Sprint for a period of up to 24 months after the May 16, 2013 closing date. Sprint reimbursed U.S. Cellular for providing such services at an amount equal to U.S. Cellular’s estimated costs, including applicable overhead allocations.  These services were substantially complete as of March 31, 2014.  In addition, these agreements require Sprint to reimburse U.S. Cellular up to $200 million (the “Sprint Cost Reimbursement”) for certain network decommissioning costs, network site lease rent and termination costs, network access termination costs, and employee termination benefits for specified engineering employees.  It is estimated that up to $175 million of the Sprint Cost Reimbursement will be recorded in (Gain) loss on sale of business and other exit costs, net and up to $25 million of the Sprint Cost Reimbursement will be recorded in Cost of services the Consolidated Statement of Operations.  In 2014 and 2013, $71.1 million and $10.6 million, respectively, of the Sprint Cost Reimbursement had been received and recorded in Cash received from divestitures in the Consolidated Statement of Cash Flows.

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

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(Dollars in thousands)			Expected Period of Recognition	Projected Range				Cumulative Amount Recognized as of December 31, 2014		Actual Amount Recognized Year Ended December 31, 2014		Actual Amount Recognized Year Ended December 31, 2013		Actual Amount Recognized Year Ended December 31, 2012
(Gain) loss on sale of business and other exit   costs, net
	Proceeds from Sprint
		Purchase price	2013	$	(480,000)	$	(480,000)	$	(480,000)	$	-	$	(480,000)	$	-
		Sprint Cost Reimbursement	2013-2015		(120,000)		(175,000)		(111,970)		(64,329)		(47,641)		-
	Net assets transferred		2013		160,073		160,073		160,073		-		160,073		-
	Non-cash charges for the write-off   and write-down of property under   construction and related assets		2012-2015		20,000		22,000		20,410		9,735		3		10,672
	Employee related costs including   severance, retention and outplacement		2012-2015		13,000		16,000		14,147		(115)		1,653		12,609
	Contract termination costs		2012-2015		70,000		100,000		84,320		24,736		59,525		59
	Transaction costs		2012-2015		5,000		7,000		6,284		719		4,428		1,137
		Total (Gain) loss on sale of business   and other exit costs, net		$	(331,927)	$	(349,927)	$	(306,736)	$	(29,254)	$	(301,959)	$	24,477
Depreciation, amortization and   accretion expense
	Incremental depreciation, amortization   and accretion, net of salvage values		2012-2014		215,049		215,049		215,049		16,478		178,513		20,058
(Increase) decrease in Operating income				$	(116,878)	$	(134,878)	$	(91,687)	$	(12,776)	$	(123,446)	$	44,535

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Incremental depreciation, amortization and accretion, net of salvage values represents amounts recorded in the specified time periods as a result of a change in estimate for the remaining useful life and salvage value of certain assets and a change in estimate which accelerated the settlement dates of certain asset retirement obligations in conjunction with the Divestiture Transaction.  Specifically, for the periods indicated, this is estimated depreciation, amortization and accretion recorded on assets and liabilities of the Divestiture Markets after the execution of the Purchase and Sale Agreement on November 6, 2012 less depreciation, amortization and accretion that would have been recorded on such assets and liabilities in the normal course, absent the Divestiture Transaction.

In 2014, TDS recorded $3.4 million of additional Depreciation, amortization and accretion expense for the Divestiture Markets due to higher asset retirement obligation remediation estimates.

As a result of the transaction, TDS recognized the following amounts in the Consolidated Balance Sheet:
				Year Ended December 31, 2014
(Dollars in thousands)		Balance December 31, 2013		Costs Incurred		Cash Settlements (1)		Adjustments (2)		Balance December 31, 2014
Accrued compensation
	Employee related costs including   severance, retention, outplacement	$	2,053	$	127	$	(1,223)	$	(242)	$	715
Accounts payable
	Contract termination costs	$	-	$	4,018	$	-	$	(1,190)	$	2,828
Other current liabilities
	Contract termination costs	$	13,992	$	12,703	$	(22,210)	$	3,747	$	8,232
Other deferred liabilities and credits
	Contract termination costs	$	30,849	$	24,171	$	(3,569)	$	(30,411)	$	21,040
				Year Ended December 31, 2013
(Dollars in thousands)		Balance December 31, 2012		Costs Incurred		Cash Settlements (1)		Adjustments (2)		Balance December 31, 2013
Accrued compensation
	Employee related costs including   severance, retention, outplacement	$	12,305	$	6,853	$	(11,905)	$	(5,200)	$	2,053
Other current liabilities
	Contract termination costs	$	30	$	22,675	$	(8,713)	$	-	$	13,992
Other deferred liabilities and credits
	Contract termination costs	$	-	$	34,283	$	(3,434)	$	-	$	30,849
(1)	Cash settlement amounts are included in either the Net income or changes in Other assets and liabilities line items as part of Cash flows from operating activities in the Consolidated Statement of Cash Flows.
(2)	Adjustment to liability represents changes to previously accrued amounts.

Airadigm Transaction

On May 23, 2014 (the “Signing Date”), U.S. Cellular entered into a License Purchase and Customer Recommendation Agreement with Airadigm.  Pursuant to the License Purchase and Customer Recommendation Agreement, on September 10, 2014, Airadigm transferred to U.S. Cellular Federal Communications Commission (“FCC”) spectrum licenses and certain tower assets in certain markets in Wisconsin, Iowa, Minnesota and Michigan, in consideration for $91.5 million in cash.  Since both parties to this transaction are controlled by TDS, upon closing, U.S. Cellular recorded the transferred assets at Airadigm’s net book value.  The transaction also impacts the expected realization of Airadigm’s federal net operating loss carryforwards and therefore TDS reduced its valuation allowance by $10.8 million upon the transaction closing and recognized an income tax benefit for this same amount.  See Note 4 — Income Taxes.

Airadigm has shut down operation of its consumer wireless business and most of the associated network.  Except for certain machine to machine operations that will be continued, Airadigm’s assets not acquired by U.S. Cellular will be sold or otherwise disposed of, its tower leases, interconnection and other agreements will be terminated and most of its employees have been

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terminated.  The shut-down of Airadigm’s consumer wireless business was substantially complete in the third quarter of 2014 while network decommissioning is ongoing.  As a result of the Agreement and the related impacts from the shut-down of Airadigm’s consumer wireless business discussed herein, TDS recognized expenses related to exit and disposal activities within Operating income in its Statement of Operations between the Signing Date and December 31, 2014:

(Dollars in thousands)			Projected Range				Actual Amount Recognized Year Ended December 31, 2014
(Gain) loss on sale of business and other exit costs, net
	Charges for the impairment and decommissioning of various   operating assets		$	8,000	$	12,000	$	8,467
	Employee related costs including severance, retention and outplacement			500		1,500		676
	Contract termination costs			10,000		15,000		11,099
		Total (Gain) loss on sale of business and other exit costs, net	$	18,500	$	28,500	$	20,242

		As a result of the transaction, TDS recognized the following amounts in the Consolidated Balance Sheet:
					Year Ended December 31, 2014
(Dollars in thousands)			Balance May 23, 2014		Costs Incurred		Cash Settlements (1)		Adjustments (2)		Balance December 31, 2014
Accrued compensation
	Employee related costs including   severance, retention and outplacement		$	-	$	676	$	(523)	$	-	$	153
Other current liabilities
	Contract termination costs		$	-	$	7,475	$	(4,291)	$	1,043	$	4,227
Other deferred liabilities and credits
	Contract termination costs		$	-	$	3,975	$	-	$	(1,396)	$	2,579
(1)		Cash settlement amounts are included in either the Net income or changes in Other assets and liabilities line items as part of Cash flows from operating activities on the Consolidated Statement of Cash Flows.
(2)		Adjustment to liability represents changes to previously accrued amounts.

Other Acquisitions, Divestitures and Exchanges

·In December 2014, U.S. Cellular entered into an agreement with a third party to sell 595 towers and certain related contracts, assets, and liabilities for approximately $159 million.  This transaction was accomplished in two closings.  The first closing occurred in December 2014 and included the sale of 236 towers, without tenants, for $10.0 million.  On this same date, U.S. Cellular received $7.5 million in earnest money.  At the time of the first closing, a $4.7 million gain was recorded in (Gain) loss on sale of business and other exit costs, net.  The second closing for the remaining 359 towers, primarily with tenants, took place in January 2015, at which time U.S. Cellular received $141.5 million in additional cash proceeds and recorded a gain of approximately $119 million.  The assets and liabilities subject to the second closing have been classified as “held for sale” in the Consolidated Balance Sheet as of December 31, 2014. 

·In September 2014, U.S. Cellular entered into an agreement with a third party to exchange certain PCS and AWS licenses for certain other PCS and AWS licenses and $28.0 million of cash.  This license exchange will be accomplished in two closing transactions.  The first closing occurred in December 2014 at which time U.S. Cellular received licenses with an estimated fair value, per a market approach, of $51.5 million, recorded a $21.7 million gain in (Gain) loss on license sales and exchanges in the Consolidated Statement of Operations and recorded an $18.3 million deferred credit in Other current liabilities.  The second closing is expected to occur in 2015.  The license that will be transferred has been classified as “Assets held for sale” in the Consolidated Balance Sheet as of December 31, 2014.  At the time of the second closing, TDS will recognize the deferred credit from the first closing and expects to record a gain on the license exchange.

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·In September 2014, U.S. Cellular entered into an agreement with a third party to exchange certain of its PCS unbuilt licenses for PCS licenses located in U.S. Cellular’s operating markets plus $117.0 million of cash.  This transaction is subject to regulatory approvals and is expected to close in 2015.  The book value of the licenses to be exchanged have been classified as “Assets held for sale” in the Consolidated Balance Sheet at December 31, 2014.  TDS expects to record a gain when this transaction closes.

·In September 2014, TDS acquired substantially all of the assets of a group of companies operating as BendBroadband (“Bend”), headquartered in Bend, Oregon for $260.7 million in cash.  Bend is a full-service communications company, offering an extensive range of broadband, fiber connectivity, cable television and telephone services for commercial and residential customers in Central Oregon.  As part of the agreement, TDS also acquired a Tier III data center providing colocation and managed services and a cable advertising and broadcast business.  Bend service offerings complement the current portfolio of products offered through TDS Telecom businesses.  Goodwill was recorded due primarily to the expectation of future growth and synergies in Cable segment operations.  The operations of the data center are included in the HMS segment.  The operations of the cable and the advertising and broadcast businesses are included in the Cable segment. 

·In March 2014, U.S. Cellular sold the majority of its St. Louis area non-operating market spectrum license for $92.3 million.  A gain of $75.8 million was recorded in (Gain) loss on license sales and exchanges in the Consolidated Statement of Operations in the first quarter of 2014.   

·In February 2014, U.S. Cellular completed an exchange whereby U.S. Cellular received one E block PCS spectrum license covering Milwaukee, WI in exchange for one D block PCS spectrum license covering Milwaukee, WI.  The exchange of licenses provided U.S. Cellular with spectrum to meet anticipated future capacity and coverage requirements.  No cash, customers, network assets, other assets or liabilities were included in the exchange.  As a result of this transaction, TDS recognized a gain of $15.7 million, representing the difference between the $15.9 million fair value of the license surrendered, calculated using a market approach valuation method, and the $0.2 million carrying value of the license surrendered.  This gain was recorded in (Gain) loss on license sales and exchanges in the Consolidated Statement of Operations in the first quarter of 2014.

·In October 2013, TDS acquired 100% of the outstanding shares of MSN Communications, Inc. (“MSN”) for $43.6 million in cash.  MSN is an information technology solutions provider whose service offerings complement the HMS portfolio of products.  MSN is included in the HMS segment for reporting purposes.

·In October 2013, U.S. Cellular sold the majority of its Mississippi Valley non-operating market license (“unbuilt license”) for $308.0 million.  At the time of the sale, a $250.6 million gain was recorded in (Gain) loss on license sales and exchanges in the Consolidated Statement of Operations. 

·In August 2013, TDS Telecom acquired substantially all of the assets of Baja for $264.1 million in cash. Baja is a cable company that operates in markets primarily in Colorado, New Mexico, Texas, and Utah and offers broadband, video and voice services, which complement the TDS Telecom portfolio of products.  Baja is included in the Cable segment for reporting purposes.

·In November 2012, U.S. Cellular acquired seven 700 MHz licenses covering portions of Illinois, Michigan, Minnesota, Missouri, Nebraska, Oregon, Washington and Wisconsin for $57.7 million.

·In August 2012, U.S. Cellular acquired four 700 MHz licenses covering portions of Iowa, Kansas, Missouri, Nebraska and Oklahoma for $34.0 million. 

·In June 2012, TDS paid $46.1 million in cash to purchase 100% of the outstanding shares of Vital Support Systems, LLC (“Vital”). Vital is an information technology solutions provider whose service offerings complement the HMS portfolio of products. Vital is included in the HMS segment for reporting purposes.

·In March 2012, U.S. Cellular sold the majority of the assets and liabilities of a wireless market for $49.8 million in cash.  At the time of the sale, a $4.2 million gain was recorded in (Gain) loss on sale of business and other exit costs, net in the Consolidated Statement of Operations. 

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TDS' acquisitions in 2014 and 2013 and the allocation of the purchase price for these acquisitions were as follows:
					Allocation of Purchase Price
			Purchase Price (1)		Goodwill (2)		Licenses		Franchise Rights		Intangible Assets Subject to Amortization (3)		Net Tangible Assets/(Liabilities)
(Dollars in thousands)
2014
U.S. Cellular licenses			$	41,707	$	-	$	41,707	$	-	$	-	$	-
TDS Telecom cable   businesses				273,789		33,610		2,703		120,979		14,056		102,441
	Total		$	315,496	$	33,610	$	44,410	$	120,979	$	14,056	$	102,441
2013
U.S. Cellular licenses			$	16,540	$	-	$	16,540	$	-	$	-	$	-
TDS Telecom cable   business				264,069		61,712		-		123,668		11,542		67,147
TDS Telecom HMS   business				43,557		15,203		-		-		17,183		11,171
	Total		$	324,166	$	76,915	$	16,540	$	123,668	$	28,725	$	78,318
(1)		Cash amounts paid for acquisitions may differ from the purchase price due to cash acquired in the transactions and the timing of cash payments related to the respective transactions.
(2)		The entire amount of Goodwill acquired in 2014 and 2013 was amortizable for income tax purposes.
(3)		At the date of acquisition, the weighted average amortization period for Intangible Assets Subject to Amortization acquired was as follows:    2014: 4.6 years for TDS Telecom cable business;    2013: 2.9 years for TDS Telecom cable business and 10 years for TDS HMS business

At December 31, 2014 and 2013, the following assets were classified in the Consolidated Balance Sheet as "Assets held for sale" and "Liabilities held for sale":
			Current Assets		Other Assets and Deferred Charges		Licenses		Goodwill		Property, Plant and Equipment		Total Assets Held for Sale
(Dollars in thousands)
2014
Divestiture of Spectrum Licenses			$	-	$	-	$	56,809	$	-	$	-	$	56,809
Sale of Business - Towers				1,472		773		-		4,344		31,770		38,359
Divestiture of Wireline markets (1)				215		2		-		4,100		3,858		8,175
	Total		$	1,687	$	775	$	56,809	$	8,444	$	35,628	$	103,343
2013
Divestiture of Spectrum Licenses			$	-	$	-	$	16,027	$	-	$	-	$	16,027
(1)		On December 30, 2014, TDS Telecom entered into an agreement with a third party to sell certain Wireline markets.

		Current Liabilities		Other Deferred Liabilities and Credits		Total Liabilities Held for Sale
(Dollars in thousands)
2014
Sale of Business - Towers		$	3,607	$	17,641	$	21,248
Divestiture of Wireline markets			218		177		395
	Total	$	3,825	$	17,818	$	21,643

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NOTE 7 INTANGIBLE ASSETS

Changes in TDS’ Licenses, Franchise rights and Goodwill are presented below.  See Note 6 — Acquisitions, Divestitures and Exchanges for information regarding transactions which affected Licenses, Franchise rights and Goodwill during the periods.  Previously under GAAP, TDS accounted for U.S. Cellular’s share repurchases as step acquisitions, allocating a portion of the share repurchase value to TDS’ Licenses and Goodwill.  Consequently, U.S. Cellular’s Licenses and Goodwill on a stand-alone basis do not equal the TDS consolidated Licenses and Goodwill related to U.S. Cellular.

Licenses
(Dollars in thousands)			U.S. Cellular		Wireline		Cable		Other (1)		Total
Balance December 31, 2012			$	1,462,019	$	2,800	$	-	$	15,220	$	1,480,039
	Acquisitions			16,540		-		-		-		16,540
	Transferred to Assets held for sale			(16,027)		-		-		-		(16,027)
	Divestitures			(59,419)		-		-		-		(59,419)
	Other			2,646		-		-		-		2,646
Balance December 31, 2013				1,405,759		2,800		-		15,220		1,423,779
	Acquisitions			41,707		-		2,703		-		44,410
	Transferred to Assets held for sale			(56,809)		-		-		-		(56,809)
	Exchanges, net			55,780		-		-		-		55,780
	Divestitures			-		-		-		(15,220)		(15,220)
	Other			1,634		-		-		-		1,634
Balance December 31, 2014			$	1,448,071	$	2,800	$	2,703	$	-	$	1,453,574
(1)		Represents the transfer of licenses from Airadigm to U.S. Cellular in 2014.  See Note 6 — Acquisitions, Divestitures and Exchanges for additional information.

Franchise rights
(Dollars in thousands)		Cable
Balance December 31, 2012		$	-
	Acquisitions		123,668
Balance December 31, 2013			123,668
	Acquisitions		120,979
	Divestitures		(347)
Balance December 31, 2014		$	244,300

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Goodwill
(Dollars in thousands)			U.S. Cellular		Wireline (1)		Cable		HMS		Other (2)		Total
Balance December 31, 2012 (3)			$	269,307	$	420,458	$	-	$	103,627	$	3,802	$	797,194
	Acquisitions			-		-		61,712		15,203		-		76,915
	Divestitures			(135)		-		-		-		-		(135)
	NY1 & NY2 Deconsolidation			(37,131)		-		-		-		-		(37,131)
Balance December 31, 2013				232,041		420,458		61,712		118,830		3,802		836,843
	Acquisitions			-		-		33,610		-		-		33,610
	Loss on impairment			-		-		-		(84,000)		(3,802)		(87,802)
	Divestitures			(291)		(2,564)		-		-		-		(2,855)
	Transferred to Assets held for sale			(4,344)		(4,100)		-		-		-		(8,444)
Balance December 31, 2014			$	227,406	$	413,794	$	95,322	$	34,830	$	-	$	771,352
(1)		In July 2014, TDS Telecom sold certain Wireline markets.
(2)		TDS performed its annual impairment review of Goodwill in the fourth quarter of 2014.  Based on the results of this review, TDS concluded that the entire amount of Goodwill related to Suttle-Straus was impaired, which resulted in a $3.8 million loss on impairment.
(3)		Includes accumulated impairment losses in prior periods as follows: $333.9 million for U.S. Cellular, $29.4 million for Wireline and $0.5 million for Other.

Interim Goodwill Impairment Assessment

During the third quarter of 2014, due to a decline in projected revenue and earnings of TDS Telecom’s HMS reporting unit compared with previously projected results, TDS determined that an interim impairment test of HMS Goodwill was required.  TDS performed the Step 1 Goodwill impairment test, as defined by GAAP, as of August 1, 2014.

The discounted cash flow approach and guideline public company method were used to value the HMS reporting unit.  The discounted cash flow approach uses value drivers and risks specific to the industry and current economic factors.  The cash flow estimates incorporated assumptions that market participants would use in their estimates of fair value and may not be indicative of TDS Telecom specific assumptions.  The most significant assumptions made in this process were the revenue growth rate (shown as a ten year compound annual growth rate in the table below), the terminal revenue growth rate, the discount rate and capital expenditures as a percentage of revenue (shown as a ten year simple average in the table below). 

The guideline public company method develops an indication of fair value by calculating average market pricing multiples for selected publicly-traded companies. The developed multiples were applied to applicable financial measures of the HMS reporting unit to determine fair value. The discounted cash flow approach and guideline public company method were weighted to arrive at the total fair value used for impairment testing.

The following table represents key assumptions used in estimating the fair value of the HMS reporting unit as of August 1, 2014 using the discounted cash flow approach.

Key assumptions	HMS
Revenue growth rate	6.1	%
Terminal revenue growth rate	2.5	%
Discount rate	11.5	%
Capital expenditures as a percentage of revenue	8.6	%

As of August 1, 2014, the carrying value of the HMS reporting unit exceeded its fair value; therefore, a Step 2 Goodwill impairment test was performed.  The second step compared the implied fair value of the reporting unit Goodwill to the carrying amount of that Goodwill.  To calculate the implied fair value of Goodwill in this second step, TDS allocated the fair value of the reporting unit to all of the assets and liabilities of that reporting unit (including any unrecognized intangible assets) as if the reporting unit had been acquired in a business combination and the fair value was the price paid to acquire the reporting unit.  The excess of the fair value of the reporting unit over the amount assigned to the assets and liabilities of the reporting unit was the implied fair value of Goodwill.  Since the carrying amount of Goodwill exceeded the implied fair value of Goodwill, an impairment loss was recognized for that

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difference.  As a result of the Step 2 Goodwill impairment test, TDS recognized a loss on impairment of $84.0 million during the third quarter of 2014.

NOTE 8 INVESTMENTS IN UNCONSOLIDATED ENTITIES

Investments in unconsolidated entities consist of amounts invested in wireless and wireline entities in which TDS holds a noncontrolling interest.  These investments are accounted for using either the equity or cost method as shown in the following table:

December 31,		2014		2013
(Dollars in thousands)
Equity method investments:
	Capital contributions, loans, advances and adjustments	$	127,939	$	132,629
	Cumulative share of income		1,323,898		1,186,900
	Cumulative share of distributions		(1,145,438)		(1,033,087)
			306,399		286,442
Cost method investments			15,330		15,330
Total investments in unconsolidated entities		$	321,729	$	301,772

Equity in earnings of unconsolidated entities totaled $132.0 million, $132.7 million and $92.9 million in 2014, 2013 and 2012, respectively; of those amounts, TDS’ investment in the Los Angeles SMSA Limited Partnership (“LA Partnership”) contributed $71.8 million, $78.4 million and $67.2 million in 2014, 2013 and 2012, respectively.  TDS held a 5.5% ownership interest in the LA Partnership throughout and at the end of each of these years.

The following tables, which are based on information provided in part by third parties, summarize the combined assets, liabilities and equity, and the combined results of operations of TDS’ equity method investments:

December 31,		2014		2013
(Dollars in thousands)
Assets
	Current	$	733,133	$	520,804
	Due from affiliates		303,322		408,735
	Property and other		2,345,562		2,080,436
		$	3,382,017	$	3,009,975
Liabilities and Equity
	Current liabilities	$	407,073	$	355,167
	Deferred credits		175,516		89,198
	Long-term liabilities		29,342		31,605
	Long-term capital lease obligations		1,722		707
	Partners’ capital and shareholders’ equity		2,768,364		2,533,298
		$	3,382,017	$	3,009,975

Year Ended December 31,		2014		2013		2012
(Dollars in thousands)
Results of Operations
	Revenues	$	6,700,266	$	6,239,200	$	5,825,150
	Operating expenses		5,063,925		4,492,372		4,381,731
	Operating income		1,636,341		1,746,828		1,443,419
	Other income, net		6,741		4,019		7,190
	Net income	$	1,643,082	$	1,750,847	$	1,450,609

NY1 & NY2 Deconsolidation

U.S. Cellular holds a 60.00% interest in St. Lawrence Seaway RSA Cellular Partnership (“NY1”) and a 57.14% interest in New York RSA 2 Cellular Partnership (“NY2”)  (together with NY1, the “Partnerships”). The remaining interests in the Partnerships are held by Cellco Partnership d/b/a Verizon Wireless (“Verizon Wireless”).  Prior to April 3, 2013, because U.S. Cellular owned

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a greater than 50% interest in each of these Partnerships and based on U.S. Cellular’s rights under the Partnership Agreements, U.S. Cellular consolidated the financial results of these Partnerships in accordance with GAAP. 

On April 3, 2013, U.S. Cellular entered into an agreement with Verizon Wireless relating to the Partnerships. The agreement amends the Partnership Agreements in several ways which provide Verizon Wireless with substantive participating rights that allow Verizon Wireless to make decisions that are in the ordinary course of business of the Partnerships and which are significant to directing and executing the activities of the business.  Accordingly, as required by GAAP, TDS 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, TDS’ income from the Partnerships is reported in Equity in earnings of unconsolidated entities in the Consolidated Statement of Operations.

In accordance with GAAP, as a result of the NY1 & NY2 Deconsolidation, U.S. Cellular’s interest in the Partnerships was reflected in Investments in unconsolidated entities at a fair value of $114.8 million as of April 3, 2013. Recording U.S. Cellular’s interest in the Partnerships required allocation of the excess of fair value over book value to customer lists, licenses, a favorable contract and goodwill of the Partnerships. Amortization expense related to customer lists and the favorable contract will be recognized over their respective useful lives and is included in Equity in earnings of unconsolidated entities in the Consolidated Statement of Operations.  In addition, TDS recognized a non-cash pre-tax gain of $14.5 millionin the second quarter of 2013.  The gain was recorded in Gain (loss) on investments in the Consolidated Statement of Operations.

The Partnerships were valued using a discounted cash flow approach and a guideline public company method. The discounted cash flow approach uses value drivers and risks specific to the industry and current economic factors and incorporates assumptions that market participants would use in their estimates of fair value and may not be indicative of TDS specific assumptions.  The most significant assumptions made in this process were the revenue growth rate (shown as a simple average in the table below), the terminal revenue growth rate, discount rate and capital expenditures.  The assumptions were as follows:

Key assumptions
Average expected revenue growth rate (next ten years)	2.0	%
Terminal revenue growth rate (after year ten)	2.0	%
Discount rate	10.5	%
Capital expenditures as a percentage of revenue	14.9-18.8	%

The guideline public company method develops an indication of fair value by calculating average market pricing multiples for selected publicly-traded companies. The developed multiples were applied to applicable financial measures of the Partnerships to determine fair value. The discounted cash flow approach and guideline public company method were weighted to arrive at the total fair value of the Partnerships.

NOTE 9 PROPERTY, PLANT AND EQUIPMENT

U.S. Cellular’s Property, plant and equipment in service and under construction, and related accumulated depreciation and amortization, as of December 31, 2014 and 2013 were as follows:

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	Useful Lives
December 31,	(Years)	2014		2013
(Dollars in thousands)
Land	N/A	$	35,031	$	36,266
Buildings	20		296,502		304,272
Leasehold and land improvements	1-30		1,086,718		1,197,520
Cell site equipment	7-25		3,269,609		3,306,575
Switching equipment	5-8		960,377		1,161,976
Office furniture and equipment	3-5		553,630		539,248
Other operating assets and equipment	3-5		89,663		92,456
System development	1-7		1,042,195		962,698
Work in process	N/A		125,015		116,501
			7,458,740		7,717,512
Accumulated depreciation and amortization			(4,730,523)		(4,860,992)
		$	2,728,217	$	2,856,520

U.S. Cellular’s depreciation and amortization expense totaled $593.2 million, $791.1 million and $597.7 million in 2014, 2013 and 2012, respectively.  As a result of the Divestiture Transaction, U.S. Cellular recognized incremental depreciation and amortization in 2014, 2013 and 2012.  See Note 6 –  Acquisitions, Divestitures and Exchanges for additional information.

TDS Telecom’s (including Wireline, Cable, and HMS) Property, plant and equipment in service and under construction, and related accumulated depreciation, as of December 31, 2014 and 2013 were as follows:

	Useful Lives
December 31,	(Years)		2014		2013
(Dollars in thousands)
Land	N/A	$	16,974	$	12,794
Buildings	5-40		172,963		148,800
Cable and wire	15-35		1,628,782		1,523,123
Network electronic equipment	5-13		1,278,799		1,229,941
Office furniture and equipment	7-10		79,666		74,507
Other equipment	5-12		102,540		94,438
System development	3-7		241,153		230,416
Work in process	N/A		91,419		88,614
			3,612,296		3,402,633
Accumulated depreciation and amortization			(2,518,625)		(2,417,999)
		$	1,093,671	$	984,634

The provision for certain Wireline companies’ depreciation as a percentage of depreciable property was 5.2% in 2014, 5.3% in 2013 and 5.6% in 2012.  TDS Telecom’s depreciation and amortization expense related to Property, plant and equipment totaled $195.1 million, $182.6 million and $177.3 million in 2014, 2013 and 2012, respectively.  

Corporate and other Property, plant and equipment in service and under construction, and related accumulated depreciation, as of December 31, 2014 and 2013 were as follows:

December 31,	2014		2013
(Dollars in thousands)
Property, plant and equipment	$	123,008	$	119,659
Accumulated depreciation and amortization		(98,771)		(82,669)
Total	$	24,237	$	36,990

Corporate and other fixed assets consist of assets at the TDS corporate offices, Suttle-Straus and Airadigm.  Corporate and other depreciation and amortization expense related to Property, plant and equipment totaled $9.3 million, $10.7 million and $10.3 million in 2014, 2013 and 2012, respectively.

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In 2014, 2013 and 2012, (Gain) loss on asset disposals, net included charges of $26.5 million, $30.8 million and $19.7 million, respectively, related to disposals of assets, trade-ins of older assets for replacement assets and other retirements of assets from service in the normal course of business.

NOTE 10 ASSET RETIREMENT OBLIGATIONS

U.S. Cellular is subject to asset retirement obligations associated with its leased cell sites, switching office sites, retail store sites and office locations in its operating markets.  Asset retirement obligations generally include obligations to restore leased land and retail store and office premises to their pre-lease conditions.

TDS Telecom owns poles, cable and wire and certain buildings and leases data center and office space and property used for housing central office switching equipment and fiber cable. These assets and leases often have removal or remediation requirements associated with them. For example, TDS Telecom’s poles, cable and wire are often located on property that is not owned by TDS Telecom and are often subject to the provisions of easements, permits, or leasing arrangements. Pursuant to the terms of the permits, easements, or leasing arrangements, TDS Telecom is often required to remove these assets and return the property to its original condition at some defined date in the future.

Asset retirement obligations are included in Other deferred liabilities and credits and Other current liabilities in the Consolidated Balance Sheet. 

In 2014 and 2013, U.S. Cellular and TDS Telecom performed a review of the assumptions and estimated costs related to asset retirement obligations.  The results of the reviews (identified as “Revisions in estimated cash outflows”) and other changes in asset retirement obligations during 2014 and 2013 were as follows:

			U.S.		TDS				TDS
(Dollars in thousands)			Cellular		Telecom		Other		Consolidated
Balance December 31, 2013			$	195,568	$	75,395	$	4,275	$	275,238
	Additional liabilities accrued			2,507		2,400		-		4,907
	Revisions in estimated cash outflows			(2,792)		1,777		23		(992)
	Disposition of assets			(44,403)		(882)		(957)		(46,242)
	Accretion expense			12,534		4,723		249		17,506
	Transferred to Liabilities held for sale			(10,902)		(177)		(306)		(11,385)
Balance December 31, 2014 (1)			$	152,512	$	83,236	$	3,284	$	239,032
Balance December 31, 2012			$	179,607	$	69,969	$	4,034	$	253,610
	Additional liabilities accrued			635		3,667		-		4,302
	Revisions in estimated cash outflows			6,268		(2,562)		-		3,706
	Disposition of assets			(3,534)		(577)		-		(4,111)
	Accretion expense			12,592		4,898		241		17,731
Balance December 31, 2013 (1)			$	195,568	$	75,395	$	4,275	$	275,238
(1)		The total amount of asset retirement obligations related to the Divestiture Transaction and Airadigm Transaction included in Other current liabilities was $9.1 million and $37.7 million as of December 31, 2014 and 2013, respectively.

NOTE 11 DEBT

Revolving Credit Facilities

At December 31, 2014, TDS and U.S. Cellular had revolving credit facilities available for general corporate purposes. Amounts under the revolving credit facilities may be borrowed, repaid and reborrowed from time to time until maturity.  U.S. Cellular borrowed and repaid amounts under its revolving credit facility in 2014.  Neither TDS nor U.S. Cellular borrowed under their revolving credit facilities in 2013 or 2012 except for standby letters of credit. 

In certain circumstances, TDS’ and U.S. Cellular’s interest cost on their revolving credit facilities may be subject to increase if their current credit ratings from nationally recognized credit rating agencies are lowered, and may be subject to decrease if the ratings are raised. 

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In 2014, certain nationally recognized credit rating agencies downgraded TDS and U.S. Cellular corporate and senior debt credit ratings. After these downgrades, TDS and U.S. Cellular are rated at sub-investment grade.  As a result of these downgrades, the commitment fee on the revolving credit facilities increased to 0.30% per annum.  The downgrades also increased the interest rate on any borrowings by 0.25% per annum.  The revolving credit facilities do not cease to be available nor do the maturity dates accelerate solely as a result of a downgrade in TDS’ or U.S. Cellular’s credit rating.  However, downgrades in TDS’ or U.S. Cellular’s credit rating could adversely affect their ability to renew the revolving credit facilities or obtain access to other credit facilities in the future.

The maturity date of any borrowings under the TDS and U.S. Cellular revolving credit facilities would accelerate in the event of a change in control. 

The following table summarizes the terms of such revolving credit facilities as of December 31, 2014:
(Dollars in millions)			TDS			U.S. Cellular
Maximum borrowing capacity			$	400.0		$	300.0
Letters of credit outstanding			$	0.6		$	17.5
Amount borrowed			$	-		$	-
Amount available for use			$	399.4		$	282.5
Borrowing rate: One-month London Interbank Offered   Rate (“LIBOR”) plus contractual spread (1)				1.92	%		1.92	%
	Sample LIBOR Rate			0.17	%		0.17	%
	Contractual spread			1.75	%		1.75	%
Range of commitment fees on amount available for use (2)
	Low			0.13	%		0.13	%
	High			0.30	%		0.30	%
Agreement date				December 2010			December 2010
Maturity date				December 2017			December 2017
Fees incurred attributable to the Revolving Credit Facility are as follows:
	Fees incurred as a percent of Maximum borrowing capacity for 2014			0.42	%		0.42	%
	Fees incurred, amount
		2014	$	1.7		$	1.3
		2013	$	0.9		$	0.8
		2012	$	1.3		$	1.1
(1)		Borrowings under the revolving credit facility bear interest at LIBOR plus a contractual spread based on TDS' or U.S. Cellular’s credit rating or, at TDS' or U.S. Cellular’s option, an alternate “Base Rate” as defined in the revolving credit agreement.  TDS and 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 TDS or U.S. Cellular and approved by the lenders).  If TDS or U.S. Cellular provides notice of intent to borrow the same business day, interest on borrowing is at the Base Rate plus the contractual spread.
(2)		The revolving credit facility has commitment fees based on the unsecured senior debt ratings assigned to TDS and U.S. Cellular by certain ratings agencies.

The continued availability of the revolving credit facilities requires TDS and 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. TDS and U.S. Cellular believe they were in compliance as of December 31, 2014 with all covenants and other requirements set forth in the revolving credit facilities.

In connection with U.S. Cellular’s revolving credit facility, TDS and U.S. Cellular entered into a subordination agreement dated December 17, 2010 together with the administrative agent for the lenders under U.S. Cellular’s revolving credit agreement.  Pursuant to this subordination agreement, (a) any consolidated funded indebtedness from U.S. Cellular to TDS will be unsecured and (b) any (i) consolidated funded indebtedness from U.S. Cellular to TDS (other than “refinancing indebtedness” as defined in the subordination agreement) in excess of $105,000,000, and (ii) refinancing indebtedness in excess of $250,000,000, will be subordinated and made junior in right of payment to the prior payment in full of obligations to the lenders under U.S. Cellular’s revolving credit agreement.  As of December 31, 2014, U.S. Cellular had no outstanding consolidated funded indebtedness or refinancing indebtedness that was subordinated to the revolving credit agreement pursuant to the subordination agreement.

In July 2014, TDS and U.S. Cellular entered into amendments to the revolving credit facilities agreements which increased the Consolidated Leverage Ratio (the ratio of Consolidated Funded Indebtedness to Consolidated Earnings before interest, taxes, depreciation and amortization) that the companies are required to maintain.  Beginning July 1, 2014, TDS and U.S. Cellular are

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required to maintain the Consolidated Leverage Ratio at a level not to exceed 3.75 to 1.00 for the period of the four fiscal quarters most recently ended (this was 3.00 to 1.00 prior to July 1, 2014).  The terms of the amendment decrease the maximum permitted Consolidated Leverage Ratio beginning January 1, 2016, with further decreases effective July 1, 2016 and January 1, 2017 (and will return to 3.00 to 1.00 at that time).  For the twelve months ended December 31, 2014, the actual Consolidated Leverage Ratio was 2.50 to 1.00.  Future changes in TDS’ and U.S. Cellular’s financial condition could negatively impact their ability to meet the financial covenants and requirements in their revolving credit facilities agreements.  TDS also has certain other non-material credit facilities from time to time.

At December 31, 2014, TDS had recorded $5.4 million of issuance costs related to the revolving credit facilities which is included in Other assets and deferred charges in the Consolidated Balance Sheet.

Long Term Financing
Long-term debt as of December 31, 2014 and 2013 was as follows:
									December 31,
(Dollars in thousands)					Issuance date	Maturity date	Call date	2014		2013
TDS:
		Unsecured Senior Notes
			6.625%		March 2005	March 2045	March 2010	$	116,250	$	116,250
			6.875%		November 2010	November 2059	November 2015		225,000		225,000
			7.0%		March 2011	March 2060	March 2016		300,000		300,000
			5.875%		November 2012	December 2061	December 2017		195,000		195,000
		Purchase contract at 6.0%			October 2001	October 2021			1,097		1,097
				Total Parent					837,347		837,347
Subsidiaries:
	U.S. Cellular -
		Unsecured Senior Notes
			6.7%		December 2003 and June 2004	December 2033	December 2003		544,000		544,000
			Less: 6.7% Unamortized discount						(11,278)		(11,551)
									532,722		532,449
			6.95%		May 2011	May 2060	May 2016		342,000		342,000
			7.25%		December 2014	December 2063	December 2019		275,000		-
		Obligation on capital leases							2,143		3,749
	TDS Telecom -
		Rural Utilities Service (“RUS”) and other notes							699		749
		Obligation on capital leases							768		779
	Other -
		Long-term notes, 3.7% to 4.8%				Through 2016			3,686		4,612
		Obligation on capital leases							29		35
				Total Subsidiaries					1,157,047		884,373
Total long-term debt								$	1,994,394	$	1,721,720
		Long-term debt, current						$	808	$	1,646
		Long-term debt, noncurrent						$	1,993,586	$	1,720,074

TDS may redeem its callable notes and U.S. Cellular may redeem its 6.95% Senior Notes and 7.25% Senior Notes, in whole or in part at any time after the respective call date, at a redemption price equal to 100% of the principal amount redeemed plus accrued and unpaid interest.  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.

Interest on the notes is payable quarterly on Senior Notes outstanding at December 31, 2014, with the exception of U.S. Cellular's 6.7% note in which interest is payable semi-annually.

Capitalized debt issuance costs for Unsecured Senior Notes totaled $53.9 million and are included in Other assets and deferred charges (a long-term asset account).  These costs are amortized over the life of the notes using the effective interest method.

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The annual requirements for principal payments on long-term debt are approximately $0.8million, $3.8 million, $0.1 million, $0.1 million and $0.1 million for the years 2015 through 2019, respectively.

The covenants associated with TDS and its subsidiaries’ long-term debt obligations, among other things, restrict TDS’ ability, subject to certain exclusions, to incur additional liens, enter into sale and leaseback transactions, and sell, consolidate or merge assets.

TDS’ long-term debt indentures do not contain any provisions resulting in acceleration of the maturities of outstanding debt in the event of a change in TDS’ credit rating. However, a downgrade in TDS’ credit rating could adversely affect its ability to obtain long-term debt financing in the future.

Term Loan Facility

On January 21, 2015, U.S. Cellular entered into a term loan credit facility relating to $225.0 million in debt.  The term loan must be drawn in one or more advances by the six month anniversary of the date of the agreement; amounts not drawn by that time will cease to be available.  Amounts repaid or prepaid under the term loan facility may not be reborrowed.  The term loan is available for general corporate purposes, including working capital, spectrum purchases and capital expenditures.  The term loan is unsecured except for a lien on all investments in equity which U.S. Cellular may have in the loan administrative agent, CoBank ACB, subject to certain limitations.

In certain circumstances, U.S. Cellular’s interest cost on its term loan may be subject to increase if its current credit ratings from nationally recognized credit rating agencies are lowered, and may be subject to decrease if the ratings are raised.  The term loan facility does not cease to be available nor does the maturity date accelerate solely as a result of a downgrade in U.S. Cellular’s credit rating.  However, downgrades in U.S. Cellular’s credit rating could adversely affect its ability to renew or obtain access to credit facilities in the future.

The maturity date of term loan would accelerate in the event of a change in control.

The following table summarizes the terms of the term loan facility as of February 25, 2015:
(Dollars in millions)
Maximum borrowing capacity		$	225.0
Amount borrowed		$	-
Amount available for use		$	225.0
Hypothetical Borrowing rate: One-month London Interbank Offered Rate ("LIBOR") plus contractual spread (1)			2.67	%
	Sample LIBOR Rate		0.17	%
	Contractual spread		2.5	%
Range of commitment fees on amount available for use (2)
	Low		0.13	%
	High		0.30	%
Agreement date			January 21, 2015
Maturity date (3)			January 21, 2022
(1)	Borrowings under the term loan credit facility bear interest at LIBOR plus a contractual spread based on U.S. Cellular’s credit rating or, at U.S. Cellular’s option, an alternate “Base Rate” as defined in the term loan facility.
(2)	The term loan credit facility has commitment fees based on the unsecured senior debt ratings assigned to U.S. Cellular by certain ratings agencies.
(3)	Principal amounts outstanding on the term loan facility will be due and payable quarterly in equal installments beginning on the last day of the fifth fiscal quarter ending after the agreement date, in an amount equal to 1.25% of the aggregate term loan facility commitment.  Any amounts owing under the term loan facility not previously repaid will be due and payable on the maturity date.

The continued availability of the term loan facility requires U.S. Cellular to comply with certain negative and affirmative covenants, maintain certain financial ratios and make representations regarding certain matters at the time of each borrowing, that are substantially the same as those in the U.S. Cellular revolving credit facility described above.

In connection with U.S. Cellular’s term credit facility, TDS and U.S. Cellular entered into a subordination agreement dated January 21, 2015 together with the administrative agent for the lenders under U.S. Cellular’s term loan credit agreement, which is substantially

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the same as the subordination agreement in the U.S. Cellular revolving credit facility described above.  As of February 25, 2015, U.S. Cellular had no outstanding consolidated funded indebtedness or refinancing indebtedness that was subordinated to the term loan facility pursuant to this subordination agreement.

NOTE 12 EMPLOYEE BENEFIT PLANS

Defined Contribution Plans

TDS sponsors a qualified noncontributory defined contribution pension plan.  The plan provides benefits for the employees of TDS Corporate, TDS Telecom and U.S. Cellular.  Under this plan, pension costs are calculated separately for each participant and are funded annually.  Total pension costs were $16.4 million, $16.2 million and $18.4 million in 2014, 2013 and 2012, respectively.  In addition, TDS sponsors a defined contribution retirement savings plan (“401(k)”) plan.  Total costs incurred from TDS’ contributions to the 401(k) plan were $25.3 million, $24.8 million and $25.0 million in 2014, 2013 and 2012, respectively.

TDS also sponsors an unfunded nonqualified deferred supplemental executive retirement plan for certain employees to offset the reduction of benefits caused by the limitation on annual employee compensation under the tax laws.

Other Post-Retirement Benefits

TDS sponsors a defined benefit post-retirement plan that provides medical benefits and that covers most of the employees of TDS Corporate, TDS Telecom and the Wireline subsidiaries of TDS Telecom.  The plan is contributory, with retiree contributions adjusted annually.

The following amounts are included in Accumulated other comprehensive loss in the Consolidated Balance Sheet before affecting such amounts for income taxes:

December 31,	2014		2013
(Dollars in thousands)
Net prior service costs	$	17,246	$	18,833
Net actuarial loss		(8,436)		(20,713)
	$	8,810	$	(1,880)

The estimated net actuarial loss and prior service cost gain for the postretirement benefit plans that will be amortized from Accumulated other comprehensive loss into net periodic benefit cost during 2015 are $0.3 million and $3.4 million, respectively.

The following table reconciles the beginning and ending balances of the benefit obligation and the fair value of plan assets for the other post-retirement benefit plans.

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December 31,		2014		2013
(Dollars in thousands)
Change in benefit obligation
	Benefit obligation at beginning of year	$	46,142	$	54,568
	Service cost		1,018		1,348
	Interest cost		2,255		2,137
	Plan amendments		(2,057)		-
	Actuarial (gain) loss		(10,897)		(9,437)
	Prescription drug subsidy		264		-
	Employee contribution		2,216		2,230
	Benefits paid		(4,296)		(4,704)
	Benefit obligation at end of year		34,645		46,142
Change in plan assets
	Fair value of plan assets at beginning of year		49,743		45,047
	Actual return (loss) on plan assets		3,495		6,973
	Employee contribution		2,216		2,230
	Employer contribution		166		197
	Benefits paid		(4,296)		(4,704)
	Fair value of plan assets at end of year		51,324		49,743
Funded status		$	16,679	$	3,601

The funded status identified above is recorded as a component of Other assets and deferred charges in TDS’ Consolidated Balance Sheet as of December 31, 2014 and 2013.

The following table sets forth by level within the fair value hierarchy the plans’ assets at fair value, as of December 31, 2014 and 2013.  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 measurement.  A financial instrument’s level within the fair value hierarchy is not representative of its expected performance or its overall risk profile, and therefore Level 3 assets are not necessarily higher risk than Level 2 assets or Level 1 assets.  There were no Level 3 assets for any years presented.

Mutual funds are valued based on the closing price reported on the active market on which the individual securities are traded.  The investment strategy for each type of mutual fund is identified below the table and referenced by number.

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December 31, 2014
(Dollars in thousands)		Level 1		Level 2		Total
Mutual funds
	Bond (1)	$	12,842	$	-	$	12,842
	International equity (2)		12,003		-		12,003
	Money market (3)		2,053		-		2,053
	US large cap (4)		20,191		-		20,191
	US small cap (5)		4,234		-		4,234
Other			-		1		1
Total plan assets at fair value		$	51,323	$	1	$	51,324
December 31, 2013
(Dollars in thousands)			Level 1		Level 2		Total
Mutual funds
	Bond (1)	$	12,697	$	-	$	12,697
	International equity (2)		9,876		-		9,876
	Money market (3)		1,798		-		1,798
	US large cap (4)		20,861		-		20,861
	US small cap (5)		4,500		-		4,500
Other			-		11		11
Total plan assets at fair value		$	49,732	$	11	$	49,743

(1)Bond - The funds seek to achieve a maximum total return, consistent with preservation of capital and prudent investment management by investing in a wide spectrum of fixed income instruments including bonds, debt securities and other similar instruments issued by government and private-sector entities.

(2)International equity - The funds seek to provide long-term capital appreciation by investing in the stocks of companies located outside the United States that are considered to have the potential for above-average capital appreciation.

(3)Money market - The fund seeks as high a level of current income as is consistent with the preservation of capital and the maintenance of liquidity by investing in a diversified portfolio of high-quality, dollar-denominated short-term debt securities.

(4)US large cap - The funds seek to track the performance of several benchmark indices that measure the investment return of large-capitalization stocks.  The funds attempt to replicate the indices by investing substantially all of their assets in the stocks that make up the various indices in approximately the same proportion as the weighting in the indices.

(5)US small cap - The fund seeks to track the performance of a benchmark index that measures the investment return of small-capitalization stocks.  The fund attempts to replicate the index by investing substantially all of its assets in the stocks that make up the index in approximately the same proportion as the weighting in the index.

The following table summarizes how plan assets are invested.

			Allocation of Plan Assets
			at December 31,
Investment	Target Asset
Category	Allocation		2014		2013
U.S. equities	46	%	47.6	%	51.0	%
International equities	24	%	23.4	%	19.9	%
Debt securities	30	%	29.0	%	29.1	%

The post-retirement benefit fund engages multiple asset managers to ensure proper diversification of the investment portfolio within each asset category.  The investment objective is to meet or exceed the rate of return of a performance index comprised of 46% Dow Jones U.S. Total Stock Market Index, 24% FTSE All World (excluding U.S.) Stock Index, and 30% Barclays Capital Aggregate Bond

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Index.  The three-year and five-year average rates of return for TDS’ post-retirement benefit fund are 13.26% and 10.30%, respectively.

The post-retirement benefit fund does not hold any debt or equity securities issued by TDS, U.S. Cellular or any related parties.

TDS is not required to set aside current funds for its future retiree health and life insurance benefits.  The decision to contribute to the plan assets is based upon several factors, including the funded status of the plan, market conditions, alternative investment opportunities, tax benefits and other circumstances.  In accordance with applicable income tax regulations, total accumulated contributions to fund the costs of future retiree medical benefits are restricted to an amount not to exceed 25% of the total accumulated contributions to the trust.  An additional contribution equal to a reasonable amortization of the past service cost may be made without regard to the 25% limitation.  TDS has not determined whether it will make a contribution to the plan in 2015.

Net periodic benefit cost recorded in the Consolidated Statement of Operations includes the following components:
Year Ended December 31,		2014		2013		2012
(Dollars in thousands)
Service cost		$	1,018	$	1,348	$	1,197
Interest cost			2,255		2,137		2,297
Expected return on plan assets			(3,402)		(3,065)		(2,995)
Amortization of prior service costs (1)			(3,644)		(3,605)		(3,735)
Amortization of actuarial losses (2)			1,287		2,452		2,517
Net post-retirement cost (benefit)		$	(2,486)	$	(733)	$	(719)
(1)	Based on straight-line amortization over the average time remaining before active employees become fully eligible for plan benefits.
(2)	Based on straight-line amortization over the average time remaining before active employees retire.

The following assumptions were used to determine benefit obligations and net periodic benefit cost:
December 31,	2014		2013
Benefit obligations
Discount rate	4.20	%	5.00	%
Net periodic benefit cost
Discount rate	5.00	%	4.00	%
Expected return on plan assets	7.00	%	7.00	%

The discount rate for 2014 and 2013 was determined using a hypothetical Aa spot yield curve represented by a series of annualized individual spot discount rates from six months to 99 years.  The spot rate curve was derived from a direct calculation of the implied forward rate curve based on the included bond cash flows.  This yield curve, when populated with projected cash flows that represent the expected timing and amount of TDS plan benefit payments, produces a single effective interest discount rate that is used to measure the plan’s liabilities.

The expected rate of return was determined using the target asset allocation for the TDS plan and rate of return expectations for each asset class.

The measurement date for actuarial determination was December 31, 2014.  For measurement purposes, the annual rate of increase in the per capita cost of covered health care benefits was assumed for 2014 to be 7.8% for plan participants aged 65 and above, and 7.5% for participants under age 65.  For all participants the 2014 annual rate of increase is expected to decrease to 5.0% by 2022. The 2013 expected rate of increase was 7.5% for plan participants aged 65 and above, and 7.9% for participants under age 65, decreasing to 5.0% for all participants by 2021.

A 1% increase or decrease in assumed health care cost trend rates would have the following effects as of and for the year ended December 31, 2014:

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	One Percent
	Increase		Decrease
(Dollars in thousands)
Effect on total service and interest cost components	$	25	$	(23)
Effect on post-retirement benefit obligation	$	423	$	(393)

The following estimated future benefit payments, which reflect expected future service, are expected to be paid:

Year
(Dollars in thousands)
2015	$	1,687
2016		1,719
2017		1,662
2018		1,652
2019		1,667
2020-2024		9,442

NOTE 13 COMMITMENTS AND CONTINGENCIES

Agreements

·On November 25, 2014, U.S. Cellular executed a Master Statement of Work and certain other documents with Amdocs Software Systems Limited (“Amdocs”), effective October 1, 2014, that inter-relate with but rearrange the structure under previous Amdocs Agreements.  The agreement provides that U.S. Cellular will now outsource to Amdocs certain support functions for its Billing and Operational Support System (“B/OSS”).  Such functions include application support, billing operations and some infrastructure services.  The agreement has a term through September 30, 2019, subject to five one-year renewal periods at U.S. Cellular’s option.  The total estimated amount to be paid to Amdocs with respect to the agreement during the initial five-year term is approximately $110 million (exclusive of travel and expenses and subject to certain potential adjustments).

·During 2013, U.S. Cellular entered into agreements with Apple to purchase certain minimum quantities of Apple iPhone products and fund marketing programs related to the Apple iPhone and iPad products over a three-year period beginning in November 2013.  Based on current forecasts, TDS estimates that the remaining contractual commitment as of December 31, 2014 under these agreements is approximately $818 million.  At this time, TDS expects to meet its contractual commitments with Apple.

Lease Commitments

TDS and its subsidiaries have leases for certain plant facilities, office space, retail store sites, cell sites, data centers and data-processing equipment which are accounted for as operating leases.  Certain leases have renewal options and/or fixed rental increases.  Renewal options that are reasonably assured of exercise are included in determining the lease term.  Any rent abatements or lease incentives, in addition to fixed rental increases, are included in the calculation of rent expense and calculated on a straight-line basis over the defined lease term.

As of December 31, 2014, future minimum rental payments required under operating leases and rental receipts expected under operating leases that have noncancellable lease terms in excess of one year were as follows:

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	Operating Leases Future Minimum Rental Payments*		Operating Leases Future Minimum Rental Receipts
(Dollars in thousands)
2015	$	155,476	$	54,463
2016		139,346		43,918
2017		119,384		34,619
2018		102,014		24,095
2019		86,580		12,038
Thereafter		798,530		8,558
Total	$	1,401,330	$	177,691
*Includes $88.4 million of future lease payments associated with leases transferred in January 2015 per the second closing of the tower sale.  See Note 6 — Acquisitions, Divestitures and Exchanges for additional information.

For 2014, 2013 and 2012, rent expense for noncancellable long-term leases was $177.0 million, $187.4 million and $204.1 million, respectively; and rent expense under cancellable short-term leases was $8.8 million, $12.5 million and $10.4 million, respectively.

Indemnifications

TDS enters into agreements in the normal course of business that provide for indemnification of counterparties. The terms of the indemnifications vary by agreement. The events or circumstances that would require TDS to perform under these indemnities are transaction specific; however, these agreements may require TDS to indemnify the counterparty for costs and losses incurred from litigation or claims arising from the underlying transaction. TDS is unable to estimate the maximum potential liability for these types of indemnifications as the amounts are dependent on the outcome of future events, the nature and likelihood of which cannot be determined at this time. Historically, TDS has not made any significant indemnification payments under such agreements.

Legal Proceedings

TDS is involved or may be involved from time to time in legal proceedings before the FCC, other regulatory authorities, and/or various state and federal courts. If TDS believes that a loss arising from such legal proceedings is probable and can be reasonably estimated, an amount is accrued in the financial statements for the estimated loss. If only a range of loss can be determined, the best estimate within that range is accrued; if none of the estimates within that range is better than another, the low end of the range is accrued. The assessment of the expected outcomes of legal proceedings is a highly subjective process that requires judgments about future events. The legal proceedings are reviewed at least quarterly to determine the adequacy of accruals and related financial statement disclosures. The ultimate outcomes of legal proceedings could differ materially from amounts accrued in the financial statements.

TDS has accrued $0.4 million and $0.3 million with respect to legal proceedings and unasserted claims as of December 31, 2014 and 2013, respectively.  TDS has not accrued any amount for legal proceedings if it cannot estimate the amount of the possible loss or range of loss. TDS does not believe that the amount of any contingent loss in excess of the amounts accrued would be material.

NOTE 14 VARIABLE INTEREST ENTITIES (VIEs)

TDS consolidates variable interest entities in which it hasa controlling financial interest and isthe primary beneficiary. A controlling financial interest will have both of the following characteristics: (a) the power to direct the VIE activities that most significantly impact economic performance and (b) the obligation to absorb the VIE losses and right to receive benefits that are significant to the VIE.  TDS reviews these criteria initially at the time it enters into agreements and subsequently when reconsideration events occur.

Consolidated VIEs

As of December 31, 2014, TDS holds a variable interest in and consolidates the following VIEs under GAAP:

·Advantage Spectrum L.P. (“Advantage Spectrum”) and Frequency Advantage L.P., the general partner of Advantage Spectrum;

·Aquinas Wireless L.P. (“Aquinas Wireless”); and

·King Street Wireless L.P. (“King Street Wireless”) and King Street Wireless, Inc., the general partner of King Street Wireless.

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The power to direct the activities that most significantly impact the economic performance of Advantage Spectrum, Aquinas Wireless and King Street Wireless (collectively, the “limited partnerships”) is shared. Specifically, the general partner of these VIEs has the exclusive right to manage, operate and control the limited partnerships and make all decisions to carry on the business of the partnerships; however, the general partner of each partnership needs consent of the limited partner, a TDS subsidiary, to sell or lease certain licenses, to make certain large expenditures, admit other partners or liquidate the limited partnerships. Although the power to direct the activities of the VIEs is shared, TDS has a disproportionate level of exposure to the variability associated with the economic performance of the VIEs, indicating that TDS is the primary beneficiary of the VIEs in accordance with GAAP.  Accordingly, these VIEs are consolidated.

The following table presents the classification of the consolidated VIEs’ assets and liabilities in TDS’ Consolidated Balance Sheet.

December 31,			2014		2013
(Dollars in thousands)
Assets
	Cash and cash equivalents		$	2,588	$	2,076
	Other current assets			278		1,184
	Licenses			312,977		310,475
	Property, plant and equipment, net			10,671		18,600
	Other assets and deferred charges			60,059		511
		Total assets	$	386,573	$	332,846
Liabilities
	Current liabilities		$	110	$	46
	Deferred liabilities and credits			622		3,139
		Total liabilities	$	732	$	3,185

Other Related Matters

An FCC auction of AWS-3 spectrum licenses, referred to as Auction 97, began in November 2014 and ended in January 2015.  TDS participated in Auction 97 indirectly through its interest in Advantage Spectrum.  A subsidiary of U.S. Cellular is a limited partner in Advantage Spectrum.  Advantage Spectrum qualified as a “designated entity,” and thereby was eligible for bid credits with respect to spectrum purchased in Auction 97.  To participate in this auction, a $60.0 million deposit was made to the FCC in 2014.  Such amount is reflected in Other Assets and Deferred Charges in the Consolidated Balance Sheet.  Advantage Spectrum was the provisional winning bidder for 124 licenses for an aggregate bid of $338.3 million, net of its anticipated designated entity discount of 25%. Advantage Spectrum’s bid amount, less the initial deposit of $60.0 million, plus certain other charges totaling $2.3 million, are required to be paid to the FCC by March 2, 2015.

Advantage Spectrum, Aquinas Wireless and King Street Wireless were formed to participate in FCC auctions of wireless spectrum and to fund, establish, and provide wireless service with respect to any FCC licenses won in the auctions.  As such, these entities have risks similar to those described in the “Risk Factors” in TDS’ Annual Report on Form 10-K.

TDS’ capital contributions and advances made to its VIEs totaled $60.9 million in the year ended December 31, 2014. In 2013, there were no capital contributions or advances made to VIEs or their general partners that were not VIEs.

TDS may agree to make additional capital contributions and/or advances to Advantage Spectrum, Aquinas Wireless or King Street Wireless and/or to their general partners to provide additional funding for the development of licenses granted in various auctions.  TDS may finance such amounts with a combination of cash on hand, borrowings under its revolving credit agreement and/or long-term debt.  There is no assurance that TDS will be able to obtain additional financing on commercially reasonable terms or at all to provide such financial support.

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The limited partnership agreements of Advantage Spectrum, Aquinas Wireless and King Street Wireless also provide the general partner with a put option whereby the general partner may require the limited partner, a subsidiary of U.S. Cellular, to purchase its interest in the limited partnership.  The general partner’s put options related to its interests in King Street Wireless and Aquinas Wireless will become exercisable in 2019 and 2020, respectively.  The general partner’s put options related to its interest in Advantage Spectrum will become exercisable on the fifth and sixth anniversaries of the issuance of any license. The put option price is determined pursuant to a formula that takes into consideration fixed interest rates and the market value of U.S. Cellular’s Common Shares.  Upon exercise of the put option, the general partner is required to repay borrowings due to U.S. Cellular.  If the general partner does not elect to exercise its put option, the general partner may trigger an appraisal process in which the limited partner (a subsidiary of U.S. Cellular) may have the right, but not the obligation, to purchase the general partner’s interest in the limited partnership at a price and on other terms and conditions specified in the limited partnership agreement.  In accordance with requirements under GAAP, TDS is required to calculate a theoretical redemption value for all of the put options assuming they are exercisable at the end of each reporting period, even though such exercise is not contractually permitted.  Pursuant to GAAP, this theoretical redemption value, net of amounts payable to U.S. Cellular for loans and accrued interest thereon made by U.S. Cellular to the general partners the (“net put value”), was $1.2 million and $0.5 million at December 31, 2014 and 2013, respectively.  The net put value is recorded as Noncontrolling interests with redemption features in TDS’ Consolidated Balance Sheet.  Also in accordance with GAAP, changes in the redemption value of the put options, net of interest accrued on the loans, are recorded as a component of Net income attributable to noncontrolling interests, net of tax, in TDS’ Consolidated Statement of Operations.

NOTE 15 NONCONTROLLING INTERESTS

The following schedule discloses the effects of Net income attributable to TDS shareholders and changes in TDS’ ownership interest in U.S. Cellular on TDS’ equity for 2014, 2013 and 2012:

Year Ended December 31,			2014		2013		2012
(Dollars in thousands)
Net income (loss) attributable to TDS shareholders			$	(136,355)	$	141,927	$	81,861
	Transfer (to) from the noncontrolling interests
		Change in TDS’  Capital in excess of par value from   U.S. Cellular's issuance of U.S. Cellular shares		(12,420)		(14,135)		(8,854)
		Change in TDS’  Capital in excess of par value from   U.S. Cellular’s repurchase of U.S. Cellular shares		1,296		3,370		4,789
		Change in TDS’  Capital in excess of par value from   common control transaction		7,484		-		-
		Purchase of ownership in subsidiaries from noncontrolling interests		(1,034)		(123)		4,397
		Net transfers (to) from noncontrolling interests		(4,674)		(10,888)		332
	Change from net income (loss) attributable to TDS shareholders and   transfers (to) from noncontrolling interests		$	(141,029)	$	131,039	$	82,193

Mandatorily Redeemable Noncontrolling Interests in Finite-Lived Subsidiaries

TDS’ consolidated financial statements include certain noncontrolling interests that meet the GAAP definition of mandatorily redeemable financial instruments. These mandatorily redeemable noncontrolling interests represent interests held by third parties in consolidated partnerships, where the terms of the underlying partnership agreement provide for a defined termination date at which time the assets of the subsidiary are to be sold, the liabilities are to be extinguished and the remaining net proceeds are to be distributed to the noncontrolling interest holders and TDS in accordance with the respective partnership agreements. The termination dates of these mandatorily redeemable noncontrolling interests range from 2085 to 2113.

The estimated aggregate amount that would be due and payable to settle all of these noncontrolling interests, assuming an orderly liquidation of the finite-lived consolidated partnerships on December 31, 2014, net of estimated liquidation costs, is $3.6 million.  This amount excludes redemption amounts recorded in Noncontrolling interests with redemption features in the Consolidated Balance Sheet.  The estimate of settlement value was based on certain factors and assumptions which are subjective in nature. Changes in those factors and assumptions could result in a materially larger or smaller settlement amount. TDS currently has no plans or intentions relating to the liquidation of any of the related partnerships prior to their scheduled termination dates. The corresponding carrying value of the mandatorily redeemable noncontrolling interests in finite-lived consolidated partnerships at December 31, 2014 was $3.0 million, and is included in Noncontrolling interests in the Consolidated Balance Sheet. The excess of the aggregate settlement value over the aggregate carrying value of these mandatorily redeemable noncontrolling interests is due primarily to the unrecognized

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appreciation of the noncontrolling interest holders’ share of the underlying net assets in the consolidated partnerships. Neither the noncontrolling interest holders’ share, nor TDS’ share, of the appreciation of the underlying net assets of these subsidiaries is reflected in the consolidated financial statements.

NOTE 16 COMMON SHAREHOLDERS' EQUITY

Common Stock

As of December 31, 2014, Series A Common Shares were convertible, on a share for share basis, into Common Shares and 7,178,943 Common Shares were reserved for possible issuance upon conversion of Series A Common Shares.

The following table summarizes the number of Common and Series A Common Shares issued and repurchased.
		Common Shares	Common Treasury Shares	Series A Common Shares
(Shares in thousands)
Balance December 31, 2011		125,502	24,165	7,119
	Repurchase of shares	-	868	-
	Conversion of Series A Common Shares	10	-	(10)
	Dividend reinvestment, incentive and compensation plans	-	(392)	51
Balance December 31, 2012		125,512	24,641	7,160
	Repurchase of shares	-	339	-
	Conversion of Series A Common Shares	33	-	(33)
	Dividend reinvestment, incentive and compensation plans	-	(1,026)	39
Balance December 31, 2013		125,545	23,954	7,166
	Repurchase of shares	-	1,542	-
	Conversion of Series A Common Shares	25	-	(25)
	Dividend reinvestment, incentive and compensation plans	-	(646)	38
Balance December 31, 2014		125,570	24,850	7,179

Tax-Deferred Savings Plan

TDS has reserved 90,341 Common Shares at December 31, 2014, for issuance under the TDS Tax-Deferred Savings Plan, a qualified profit‑sharing plan pursuant to Sections 401(a) and 401(k) of the Internal Revenue Code.  Participating employees have the option of investing their contributions and TDS’ contributions in a TDS Common Share fund, a U.S. Cellular Common Share fund or certain unaffiliated funds. 

Common Share Repurchases

TDS and U.S. Cellular Share Repurchases

On August 2, 2013, the Board of Directors of TDS authorized a $250 million stock repurchase program for the purchase of TDS Common Shares from time to time pursuant to open market purchases, block transactions, private purchases or otherwise, depending on market conditions.  This authorization does not have an expiration date.  TDS had a prior share repurchase authorization for $250 million that expired on November 19, 2012.

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.

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Share repurchases made under these authorizations and prior authorizations, were as follows:
Year Ended December 31,		Number of	Average Cost
(Shares and dollar amounts in thousands, except per share amounts)		Shares	Per Share		Amount
2014
	U.S. Cellular Common Shares	496	$	38.19	$	18,943
	TDS Common Shares	1,542		25.36		39,096
2013
	U.S. Cellular Common Shares	499	$	37.19	$	18,544
	TDS Common Shares	339		28.60		9,692
2012
	U.S. Cellular Common Shares	571	$	35.11	$	20,045
	TDS Common Shares	868		23.08		20,026

NOTE 17 STOCK-BASED COMPENSATION

TDS Consolidated

The following table summarizes stock-based compensation expense recognized during 2014, 2013 and 2012:

Year Ended December 31,	2014		2013		2012
(Dollars in thousands)
Stock option awards	$	15,802	$	12,973	$	20,884
Restricted stock unit awards		17,968		15,535		19,025
Deferred compensation bonus and matching stock unit awards		690		550		749
Awards under Non-Employee Director compensation plan		1,333		1,280		1,213
Total stock-based compensation, before income taxes		35,793		30,338		41,871
Income tax benefit		(13,519)		(11,459)		(15,848)
Total stock-based compensation expense, net of income taxes	$	22,274	$	18,879	$	26,023

At December 31, 2014, unrecognized compensation cost for all stock‑based compensation awards was $39.0 million and is expected to be recognized over a weighted average period of 2.0 years.

The following table provides a summary of the stock-based compensation expense included in the Consolidated Statement of Operations for the years ended:

December 31,		2014		2013		2012
(Dollars in thousands)
Selling, general and administrative expense	$	32,505	$	27,130	$	38,563
Cost of services and products		3,288		3,208		3,308
Total stock-based compensation	$	35,793	$	30,338	$	41,871

TDS’ tax benefits realized from the exercise of stock options and other awards totaled $8.6 million in 2014. 

TDS (excluding U.S. Cellular)

The information in this section relates to stock‑based compensation plans using the equity instruments of TDS.  Participants in these plans are employees of TDS Corporate and TDS Telecom and Non-employee Directors of TDS.  Information related to plans using the equity instruments of U.S. Cellular are shown in the U.S. Cellular section following the TDS section.

Under the TDS Long-Term Incentive Plans, TDS may grant fixed and performance based incentive and non-qualified stock options,

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restricted stock, restricted stock units, and deferred compensation stock unit awards to key employees. .

TDS had reserved 17,971,000 Common Shares at December 31, 2014 for equity awards granted and to be granted under the TDS Long-Term Incentive Plans in effect.  At December 31, 2014, the only types of awards outstanding are fixed non-qualified stock option awards, restricted stock unit awards, and deferred compensation stock unit awards.

TDS has also established a Non-Employee Directors’ compensation plan under which it has reserved 167,000 TDS Common Shares at December 31, 2014 for issuance as compensation to members of the Board of Directors who are not employees of TDS.

TDS uses treasury stock to satisfy requirements for shares issued pursuant to its various stock-based compensation plans.

Long-Term Incentive Plan—Stock Options—Stock options granted to key employees are exercisable over a specified period not in excess of ten years.  Stock options generally vest over periods up to three years from the date of grant.  Stock options outstanding at December 31, 2014 expire between 2015 and 2024.  However, vested stock options typically expire 30 days after the effective date of an employee’s termination of employment for reasons other than retirement.  Employees who leave at the age of retirement have 90 days (or one year if they satisfy certain requirements) within which to exercise their vested stock options.  The exercise price of options equals the market value of TDS common stock on the date of grant.

TDS estimated the fair value of stock options granted in 2014, 2013 and 2012 using the Black Scholes valuation model and the assumptions shown in the table below:
	2014		2013		2012
Expected life	5.8 Years		5.7 Years		5.5 Years
Expected annual volatility rate	39.6	%	41.0	%	41.1	%
Dividend yield	2.0	%	2.3	%	2.4	%
Risk-free interest rate	1.8	%	1.0	%	0.9	%
Estimated annual forfeiture rate	2.9	%	2.9	%	2.9	%

Prior to 2013, the fair value of options was recognized as compensation cost using an accelerated attribution method over the requisite service periods of the awards, which was generally the vesting period.  Beginning with grants in 2013, stock option awards cliff vest in three years.  Therefore, compensation cost is recognized on a straight-line basis over the requisite service period.

A summary of TDS stock options (total and portion exercisable) and changes during the three years ended December 31, 2014, is presented in the tables and narrative below.

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								Weighted
								Average
		Weighted		Weighted				Remaining
		Average		Average		Aggregate		Contractual
	Number of	Exercise		Grant Date		Intrinsic		Life
Common Share Options	Options	Prices		Fair Value		Value		(in years)
Outstanding at December 31, 2011	7,216,000	$	33.89
(4,865,000 exercisable)			36.67
Granted	1,702,000		20.79	$	6.28
Exercised	(1,000)		20.65			$	4,000
Forfeited	(106,000)		23.81
Expired	(298,000)		30.12
Outstanding at December 31, 2012	8,513,000	$	31.53
(5,782,000 exercisable)			35.12
Granted	1,259,000		22.60	$	7.01
Exercised	(683,000)		25.33			$	2,450,000
Forfeited	(81,000)		23.75
Expired	(228,000)		34.10
Outstanding at December 31, 2013	8,780,000	$	30.74
(6,160,000 exercisable)			34.13
Granted	930,000		26.83	$	8.66
Exercised	(40,000)		21.28			$	174,000
Forfeited	(73,000)		23.05
Expired	(457,000)		34.55
Outstanding at December 31, 2014	9,140,000	$	30.25			$	9,651,000	5.6
(6,487,000 exercisable)		$	32.93			$	4,143,000	4.5

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between TDS’ closing stock prices and the exercise price, multiplied by the number of in-the-money options) that was received by the option holders upon exercise or that would have been received by option holders had all options been exercised on December 31, 2014. 

Long-Term Incentive Plans—Restricted Stock Units—TDS also grants restricted stock unit awards to key employees. Each outstanding restricted stock unit is convertible into one Common Share Award. The restricted stock unit awards currently outstanding were granted in 2013 and 2014 and will vest in May 2016 and 2017, respectively.

TDS estimates the fair value of restricted stock units by reducing the grant-date price of TDS’ shares by the present value of the dividends expected to be paid on the underlying shares during the requisite service period, discounted at the appropriate risk-free interest rate, since employees are not entitled to dividends declared on the underlying shares while the restricted stock or RSU is unvested.  The fair value is then recognized as compensation cost on a straight-line basis over the requisite service periods of the awards, which is generally the vesting period.

A summary of TDS nonvested restricted stock units and changes during the year ended December 31, 2014 is presented in the table below:
Common Restricted Stock Units	Number	Weighted Average Grant Date Fair Value
Nonvested at December 31, 2013	663,000	$	20.43
Granted	355,000	$	25.26
Vested	(300,000)	$	19.68
Forfeited	(26,000)	$	21.31
Nonvested at December 31, 2014	692,000	$	23.20

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The total fair values as of the respective vesting dates of restricted stock units vested during 2014, 2013 and 2012 were $7.5 million, $5.8 million and $3.4 million, respectively. The weighted average grant date fair value of restricted stock units granted in 2014, 2013 and 2012 was $25.26, $21.09 and $19.62, respectively.

Long-Term Incentive Plans—Deferred Compensation Stock Units—Certain TDS 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 TDS Common Share units.  The amount of TDS’ matching contribution depends on the portion of the annual bonus that is deferred.  Participants receive a 25% stock unit 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 TDS Common Share units.

The total fair values of deferred compensation stock units that vested during 2014, 2013 and 2012 were $0.1 million, $0.1 million and $0.1 million, respectively.  The weighted average grant date fair value of deferred compensation stock units granted in 2014, 2013 and 2012 was $23.27, $21.99 and $24.18, respectively. As of December 31, 2014, there were 249,000 vested but unissued deferred compensation stock units valued at $6.3 million.

Compensation of Non-Employee Directors—TDS issued 33,000, 33,000 and 22,000 Common Shares under its Non-Employee Director plan in 2014, 2013 and 2012, respectively.

Dividend Reinvestment Plans (“DRIP”)—TDS had reserved 1,028,000 Common Shares at December 31, 2014, for issuance under Automatic Dividend Reinvestment and Stock Purchase Plans and 141,000 Series A Common Shares for issuance under the Series A Common Share Automatic Dividend Reinvestment Plan.  These plans enabled holders of TDS’ Common Shares and Preferred Shares to reinvest cash dividends in Common Shares and holders of Series A Common Shares to reinvest cash dividends in Series A Common Shares.  The purchase price of the shares is 95% of the market value, based on the average of the daily high and low sales prices for TDS’ Common Shares on the New York Stock Exchange for the ten trading days preceding the date on which the purchase is made.  These plans are considered non-compensatory plans, therefore no compensation expense is recognized for stock issued under these plans.

U.S. Cellular

The information in this section relates to stock‑based compensation plans using the equity instruments of U.S. Cellular.  Participants in these plans are employees of U.S. Cellular and Non-employee Directors of U.S. Cellular.  Information related to plans using the equity instruments of TDS are shown in the previous section.

U.S. Cellular has established the following stock‑based compensation plans: long-term incentive plans and a Non-Employee Director compensation plan.

Under the U.S. Cellular Long-Term Incentive Plans, U.S. Cellular may grant fixed and performance based incentive and non-qualified stock options, restricted stock, restricted stock units, and deferred compensation stock unit awards to key employees.  At December 31, 2014, the only types of awards outstanding are fixed non-qualified stock option awards, restricted stock unit awards, and deferred compensation stock unit awards.

On June 25, 2013, U.S. Cellular paid a special cash dividend to all holders of U.S. Cellular Common Shares and Series A Common Shares as of June 11, 2013.  Outstanding U.S. Cellular stock options, restricted stock unit awards and deferred compensation stock units were equitably adjusted for the special cash dividend.  The impact of such adjustments are fully reflected for all years presented.  See Note 5 – Earnings Per Share for additional information.

At December 31, 2014, U.S. Cellular had reserved 9,782,000 Common Shares for equity awards granted and to be granted under the Long-Term Incentive Plans. 

U.S. Cellular also has established a Non-Employee Director compensation plan under which it has reserved 197,000 Common Shares at December 31, 2014 for issuance as compensation to members of the Board of Directors who are not employees of U.S. Cellular or TDS.

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U.S. Cellular uses treasury stock to satisfy requirements for Common Shares issued pursuant to its various stock-based compensation plans.

Long-Term Incentive Plans—Stock Options—Stock options granted to key employees are exercisable over a specified period not in excess of ten years.  Stock options generally vest over a period of three years from the date of grant.  Stock options outstanding at December 31, 2014 expire between 2015 and 2024.  However, vested stock options typically expire 30 days after the effective date of an employee’s termination of employment for reasons other than retirement.  Employees who leave at the age of retirement have 90 days (or one year if they satisfy certain requirements) within which to exercise their vested stock options.  The exercise price of options equals the market value of U.S. Cellular Common Shares on the date of grant.

U.S. Cellular estimated the fair value of stock options granted during 2014, 2013, and 2012 using the Black-Scholes valuation model and the assumptions shown in the table below.
	2014	2013	2012
Expected life	4.5 years	4.6-9.0 years	4.5 years
Expected annual volatility rate	28.0%-28.1%	29.2%-39.6%	40.7%-42.6%
Dividend yield	0%	0%	0%
Risk-free interest rate	1.4%-1.5%	0.7%-2.4%	0.5%-0.9
Estimated annual forfeiture rate	9.4%	0.0%-8.1%	0.0%-9.1%

The fair value of options is recognized as compensation cost using an accelerated attribution method over the requisite service periods of the awards, which is generally the vesting period.

A summary of U.S. Cellular stock options outstanding (total and portion exercisable) and changes during the three years ended December 31, 2014, is presented in the table below:

								Weighted
								Average
		Weighted		Weighted				Remaining
		Average		Average		Aggregate		Contractual
	Number of	Exercise		Grant Date		Intrinsic		Life
Common Share Options	Options	Price		Fair Value		Value		(in years)
Outstanding at December 31, 2011	2,834,000	$	43.07
(1,533,000 exercisable)			46.23
Granted	677,000		34.91	$	12.61
Exercised	(47,000)		29.82			$	205,000
Forfeited	(117,000)		38.45
Expired	(133,000)		46.17
Outstanding at December 31, 2012	3,214,000	$	41.58
(1,928,000 exercisable)			43.99
Granted	1,213,000		32.45	$	11.53
Exercised	(892,000)		34.78			$	6,787,000
Forfeited	(574,000)		34.17
Expired	(247,000)		48.35
Outstanding at December 31, 2013	2,714,000	$	42.22
(1,359,000 exercisable)			46.91
Granted	1,116,000		41.21	$	10.68
Exercised	(233,000)		32.80			$	1,966,000
Forfeited	(144,000)		35.09
Expired	(65,000)		45.68
Outstanding at December 31, 2014	3,388,000	$	41.51			$	7,495,000	6.70
(1,586,000 exercisable)		$	45.28			$	2,984,000	4.40

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The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between U.S. Cellular’s closing stock price and the exercise price multiplied by the number of in-the-money options) that was received by the option holders upon exercise or that would have been received by option holders had all options been exercised on December 31, 2014.

Long-Term Incentive Plans—Restricted Stock Units—U.S. Cellular grants restricted stock unit awards, which generally vest after three years, to key employees. 

U.S. Cellular estimates the fair value of restricted stock units based on the closing market price of U.S. Cellular shares on the date of grant.  The fair value is then recognized as compensation cost on a straight-line basis over the requisite service periods of the awards, which is generally the vesting period.

A summary of U.S. Cellular nonvested restricted stock units at December 31, 2014 and changes during the year then ended is presented in the table below:
Common Restricted Stock Units	Number	Weighted Average Grant Date Fair Value
Nonvested at December 31, 2013	1,170,000	$	36.46
Granted	370,000		41.24
Vested	(274,000)		41.92
Forfeited	(124,000)		34.38
Nonvested at December 31, 2014	1,142,000	$	35.60

The total fair value of restricted stock units that vested during 2014, 2013 and 2012 was $11.1 million, $8.8 million and $8.9 million, respectively, as of the respective vesting dates.  The weighted average grant date fair value of restricted stock units granted in 2014, 2013 and 2012 was $41.24, $32.06 and $34.09, respectively.

Long-Term Incentive Plans—Deferred Compensation Stock Units—Certain U.S. Cellular employees may elect to defer receipt of all or a portion of their annual bonuses and to receive a company matching contribution on the amount deferred.  All bonus compensation that is deferred by employees electing to participate is immediately vested and is deemed to be invested in U.S. Cellular Common Share stock units.  The amount of U.S. Cellular’s matching contribution depends on the portion of the annual bonus that is deferred.  Participants receive a 25% match for amounts deferred up to 50% of their total annual bonus and a 33% match for amounts that exceed 50% of their total annual bonus; such matching contributions also are deemed to be invested in U.S. Cellular Common Share stock units.

There were no deferred compensation stock units granted or that vested during 2014.  The total fair value of deferred compensation stock units that vested during 2013 and 2012 was less than $0.1 million in each year.  The weighted average grant date fair value of deferred compensation stock units granted in 2013 and 2012 was $31.50 and $36.34, respectively.  As of December 31, 2014, there were no vested or unissued deferred compensation stock units outstanding.

Compensation of Non-Employee Directors—U.S. Cellular issued 14,200, 13,000 and 7,600 Common Shares in 2014, 2013 and 2012, respectively, under its Non-Employee Director compensation plan. 

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NOTE 18 BUSINESS SEGMENT INFORMATION

U.S. Cellular and TDS Telecom are billed for all services they receive from TDS, consisting primarily of information processing, accounting and finance, and general management services.  Such billings are based on expenses specifically identified to U.S. Cellular and TDS Telecom and on allocations of common expenses.  Management believes the method used to allocate common expenses is reasonable and that all expenses and costs applicable to U.S. Cellular and TDS Telecom are reflected in the accompanying business segment information on a basis that is representative of what they would have been if U.S. Cellular and TDS Telecom operated on a stand-alone basis.

Financial data for TDS’ reportable segments for 2014, 2013 and 2012, is as follows. 

					TDS Telecom
Year Ended or as of December 31, 2014			U.S. Cellular		Wireline		Cable		HMS		TDS Telecom Eliminations		TDS Telecom Total		Corporate, Eliminations and Other		Total
(Dollars in thousands)
Operating revenues
	Service		$	3,397,937	$	714,586	$	116,855	$	109,766	$	(3,697)	$	937,510	$	(6,793)	$	4,328,654
	Equipment and product sales			494,810		1,836		-		148,966		-		150,802		35,172		680,784
		Total operating revenues		3,892,747		716,422		116,855		258,732		(3,697)		1,088,312		28,379		5,009,438
Cost of services (excluding Depreciation, amortization   and accretion expense reported below)				769,911		256,878		54,265		77,392		(3,504)		385,031		9,716		1,164,658
Cost of equipment and products				1,192,669		2,336		-		126,362		-		128,698		25,444		1,346,811
Selling, general and administrative				1,591,914		189,956		36,175		53,020		(193)		278,958		(5,065)		1,865,807
Depreciation, amortization and accretion				605,997		169,044		23,643		26,912		-		219,599		10,936		836,532
Loss on impairment of assets				-		-		-		84,000		-		84,000		3,802		87,802
(Gain) loss on asset disposals, net				21,469		2,091		2,482		181		-		4,754		308		26,531
(Gain) loss on sale of business and other exit costs, net				(32,830)		(2,357)		-		-		-		(2,357)		19,341		(15,846)
(Gain) loss on license sales and exchanges				(112,993)		-		-		-		-		-		-		(112,993)
Operating income (loss)				(143,390)		98,474		290		(109,135)		-		(10,371)		(36,103)		(189,864)
Equity in earnings of unconsolidated entities				129,764		8		-		-		-		8		2,193		131,965
Interest and dividend income				12,148		2,396		8		26		-		2,430		2,379		16,957
Interest expense				(57,386)		2,695		95		(1,602)		-		1,188		(55,199)		(111,397)
Other, net				160		(32)		(1)		12		-		(21)		(24)		115
Income (loss) before income taxes				(58,704)		103,541		392		(110,699)		-		(6,766)		(86,754)		(152,224)
Add back:
Depreciation, amortization and accretion				605,997		169,044		23,643		26,912		-		219,599		10,936		836,532
Loss on impairment of assets				-		-		-		84,000		-		84,000		3,802		87,802
(Gain) loss on sale of business and other exit costs, net				(32,830)		(2,357)		-		-		-		(2,357)		19,341		(15,846)
(Gain) loss on license sales and exchanges				(112,993)		-		-		-		-		-		-		(112,993)
Interest expense				57,386		(2,695)		(95)		1,602		-		(1,188)		55,199		111,397
Adjusted income before income taxes			$	458,856	$	267,533	$	23,940	$	1,815	$	-	$	293,288	$	2,524	$	754,668
Investments in unconsolidated entities			$	283,014	$	3,803	$	-	$	-	$	-	$	3,803	$	34,912	$	321,729
Total assets			$	6,487,268	$	1,419,478	$	563,585	$	268,972	$	-	$	2,252,035	$	167,636	$	8,906,939
Capital expenditures			$	557,615	$	135,805	$	35,640	$	36,618	$	-	$	208,063	$	4,899	$	770,577

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					TDS Telecom
Year Ended or as of December 31, 2013			U.S. Cellular		Wireline		Cable		HMS		TDS Telecom Eliminations		TDS Telecom Total		Corporate, Eliminations and Other Reconciling Items		Total
(Dollars in thousands)
Operating revenues
	Service		$	3,594,773	$	723,372	$	35,883	$	94,875	$	(1,063)	$	853,067	$	(4,349)	$	4,443,491
	Equipment and product sales			324,063		3,195		-		90,741		-		93,936		39,746		457,745
		Total operating revenues		3,918,836		726,567		35,883		185,616		(1,063)		947,003		35,397		4,901,236
Cost of services (excluding Depreciation, amortization   and accretion reported below)				763,435		266,635		17,274		60,423		(1,000)		343,332		11,416		1,118,183
Cost of equipment and products				999,000		3,831		-		75,991		-		79,822		28,311		1,107,133
Selling, general and administrative				1,677,395		220,097		11,054		44,945		(63)		276,033		(5,650)		1,947,778
Depreciation, amortization and accretion				803,781		170,868		7,571		24,262		-		202,701		11,595		1,018,077
(Gain) loss on asset disposals, net				30,606		130		28		125		-		283		(48)		30,841
(Gain) loss on sale of business and other exit costs, net				(246,767)		-		-		-		-		-		(53,889)		(300,656)
(Gain) loss on license sales and exchanges				(255,479)		-		-		-		-		-		-		(255,479)
Operating income (loss)				146,865		65,006		(44)		(20,130)		-		44,832		43,662		235,359
Equity in earnings of unconsolidated entities				131,949		19		-		-		-		19		746		132,714
Interest and dividend income				3,961		1,759		2		63		-		1,824		3,307		9,092
Gain (loss) on investments				18,556		830		-		-		-		830		(4,839)		14,547
Interest expense				(43,963)		3,265		(74)		(1,626)		-		1,565		(56,413)		(98,811)
Other, net				288		(214)		-		29		-		(185)		(140)		(37)
Income (loss) before income taxes				257,656		70,665		(116)		(21,664)		-		48,885		(13,677)		292,864
Add back:
Depreciation, amortization and accretion				803,781		170,868		7,571		24,262		-		202,701		11,595		1,018,077
(Gain) loss on sale of business and other exit costs, net				(246,767)		-		-		-		-		-		(53,889)		(300,656)
(Gain) loss on license sales and exchanges				(255,479)		-		-		-		-		-		-		(255,479)
Gain (loss) on investments				(18,556)		(830)		-		-		-		(830)		4,839		(14,547)
Interest expense				43,963		(3,265)		74		1,626		-		(1,565)		56,413		98,811
Adjusted income before income taxes			$	584,598	$	237,438	$	7,529	$	4,224	$	-	$	249,191	$	5,281	$	839,070
Investments in unconsolidated entities			$	265,585	$	3,809	$	-	$	-	$	-	$	3,809	$	32,378	$	301,772
Total assets			$	6,445,708	$	1,452,502	$	278,969	$	328,397	$	-	$	2,059,868	$	398,571	$	8,904,147
Capital expenditures			$	737,501	$	140,009	$	8,375	$	16,474	$	-	$	164,858	$	7,301	$	909,660

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					TDS Telecom
Year Ended or as of December 31, 2012			U.S. Cellular		Wireline		HMS		TDS Telecom Eliminations		TDS Telecom Total		Corporate, Eliminations and Other Reconciling Items		Total
(Dollars in thousands)
Operating revenues
	Service		$	4,098,856	$	738,216	$	77,096	$	(252)	$	815,060	$	38,687	$	4,952,603
	Equipment and product sales			353,228		3,532		35,914		-		39,446		-		392,674
		Total operating revenues		4,452,084		741,748		113,010		(252)		854,506		38,687		5,345,277
Cost of services (excluding Depreciation, amortization   and accretion reported below)				946,805		270,333		46,836		(252)		316,917		10,903		1,274,625
Cost of equipment and products				935,947		3,732		28,945		-		32,677		29,321		997,945
Selling, general and administrative				1,764,933		235,716		34,193		-		269,909		(941)		2,033,901
Depreciation, amortization and accretion				608,633		172,526		20,568		-		193,094		11,899		813,626
Loss on impairment of assets				-		-		-		-		-		515		515
(Gain) loss on asset disposals, net				18,088		1,020		108		-		1,128		525		19,741
(Gain) loss on sale of business and other exit costs, net				21,022		39		-		-		39		-		21,061
Operating income (loss)				156,656		58,382		(17,640)		-		40,742		(13,535)		183,863
Equity in earnings of unconsolidated entities				90,364		10		-		-		10		2,493		92,867
Interest and dividend income				3,644		3,085		25		-		3,110		2,494		9,248
Gain (loss) on investments				(3,718)		-		-		-		-		-		(3,718)
Interest expense				(42,393)		2,674		(1,160)		-		1,514		(45,866)		(86,745)
Other, net				500		(353)		(1)		-		(354)		574		720
Income (loss) before income taxes				205,053		63,798		(18,776)		-		45,022		(53,840)		196,235
Add back:
Depreciation, amortization and accretion				608,633		172,526		20,568		-		193,094		11,899		813,626
Loss on impairment of assets				-		-		-		-		-		515		515
(Gain) loss on sale of business and other exit costs, net				21,022		39		-		-		39		-		21,061
Gain (loss) on investments				3,718		-		-		-		-		-		3,718
Interest expense				42,393		(2,674)		1,160		-		(1,514)		45,866		86,745
Adjusted income before income taxes			$	880,819	$	233,689	$	2,952	$	-	$	236,641	$	4,440	$	1,121,900
Investments in unconsolidated entities			$	144,531	$	3,809	$	-	$	-	$	3,809	$	31,581	$	179,921
Total assets			$	6,587,450	$	1,519,698	$	267,798	$	-	$	1,787,496	$	248,954	$	8,623,900
Capital expenditures			$	836,748	$	158,580	$	15,344	$	-	$	173,924	$	(6,051)	$	1,004,621

Adjusted income before income taxes is a segment measure reported to the chief operating decision maker for purposes of making decisions about allocating resources to the segments and assessing their performance.  Adjusted income before income taxes is defined as Income (loss) before income taxes, adjusted for the items set forth in the reconciliation above.  Adjusted income before income taxes excludes these items in order to show operating results on a more comparable basis from period to period. From time to time, TDS may also exclude other items from adjusted income before income taxes if such items help reflect operating results on a more comparable basis.  TDS does not intend to imply that any of such items that are excluded are non-recurring, infrequent or unusual; such items may occur in the future.  TDS believes Adjusted income before income taxes is a useful measure of TDS’ operating results before significant recurring non-cash charges, discrete gains and losses and financing charges (Interest expense).

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 NOTE 19 SUPPLEMENTAL CASH FLOW DISCLOSURES

Following are supplemental cash flow disclosures regarding interest paid and income taxes paid.

Year Ended December 31,	2014		2013		2012
(Dollars in thousands)
Interest paid	$	108,510	$	96,241	$	88,208
Income taxes paid (refunded)		48,876		175,629		(62,042)

Following are supplemental cash flow disclosures regarding transactions related to stock-based compensation awards.  In certain situations, TDS and U.S. Cellular withhold shares that are issuable upon the exercise of stock options or the vesting of restricted shares to cover, and with a value equivalent to, the exercise price and/or the amount of taxes required to be withheld from the stock award holder at the time of the exercise or vesting. TDS and U.S. Cellular then pay the amount of the required tax withholdings to the taxing authorities in cash.

TDS:
Year Ended December 31,	2014		2013		2012
(Dollars in thousands)
Common Shares withheld		109,061		265,748		49,840
Special Common Shares withheld		-		-		1,381
Aggregate value of Common Shares withheld	$	2,751	$	7,639	$	1,102
Aggregate value of Special Common Shares withheld	$	-	$	-	$	33
Cash receipts upon exercise of stock options		732		12,092		16
Cash disbursements for payment of taxes		(2,751)		(2,438)		(1,135)
Net cash receipts (disbursements) from exercise of     stock options and vesting of other stock awards	$	(2,019)	$	9,654	$	(1,119)

U.S. Cellular:
Year Ended December 31,	2014		2013		2012
(Dollars in thousands)
Common Shares withheld		163,355		606,582		92,846
Aggregate value of Common Shares withheld	$	6,868	$	25,179	$	3,604
Cash receipts upon exercise of stock options		5,166		10,468		900
Cash disbursements for payment of taxes		(4,336)		(4,684)		(3,105)
Net cash receipts (disbursements) from exercise of   stock options and vesting of other stock awards	$	830	$	5,784	$	(2,205)

Under the American Recovery and Reinvestment Act of 2009 (“the Recovery Act”), TDS Telecom was awarded $105.1 million in federal grants and will provide $30.9 million of its own funds to complete 44 projects to provide broadband access in unserved areas. TDS Telecom received $15.3 million, $41.9 million, and $16.7 million in grants in 2014, 2013 and 2012, respectively. TDS Telecom has received cumulative grants of $78.9 million as of December 31, 2014. These funds reduced the carrying amount of the assets to which they relate. TDS Telecom had recorded $14.2 million and $23.6 million in grants receivable at December 31, 2014 and 2013, respectively.  These amounts were included as a component of Accounts receivable, Other, in the Consolidated Balance Sheet.

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On September 27, 2012, the FCC conducted a single round, sealed bid, reverse auction to award up to $300 million in one-time Mobility Fund Phase I support to successful bidders that commit to provide 3G, or better, wireless service in areas designated as unserved by the FCC.  This auction was designated by the FCC as Auction 901. U.S. Cellular and several of its wholly-owned subsidiaries participated in Auction 901 and were winning bidders in eligible areas within 10 states and will receive up to $40.1 million in one-time support from the Mobility Fund. These funds when received reduce the carrying amount of the assets to which they relate or offset operating expenses.  In connection with these winning bids, in June 2013, U.S. Cellular provided $17.4 million letters of credit to the FCC, of which the entire amount remained outstanding as of December 31, 2014.  U.S. Cellular has received $13.4 million in support funds as of December 31, 2014, of which $1.9 million is included as a component of Other assets and deferred charges in the Consolidated Balance Sheet and $11.5 million reduced the carrying amount of the assets to which they relate, which are included in Property, plant and equipment in the Consolidated Balance Sheet.

NOTE 20 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The following persons are partners of Sidley Austin LLP, the principal law firm of TDS and its subsidiaries: Walter C.D. Carlson, a trustee and beneficiary of a voting trust that controls TDS, the non-executive Chairman of the Board and member of the Board of Directors of TDS and a director of U.S. Cellular, a subsidiary of 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 certain subsidiaries of TDS.  Walter C.D. Carlson does not provide legal services to TDS or its subsidiaries.   TDS, U.S. Cellular and their subsidiaries incurred legal costs from Sidley Austin LLP of $15.4 million in 2014, $17.6 million in 2013 and $13.6 million in 2012.

The Audit Committee of the Board of Directors of TDS 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.

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REPORTS OF MANAGEMENT

Management’s Responsibility for Financial Statements

Management of Telephone and Data Systems, Inc. has the responsibility for preparing the accompanying consolidated financial statements and for their integrity and objectivity.  The statements were prepared in accordance with accounting principles generally accepted in the United States of America and, in management’s opinion, were fairly presented.  The financial statements included amounts that were based on management’s best estimates and judgments.  Management also prepared the other information in the annual report and is responsible for its accuracy and consistency with the financial statements.

PricewaterhouseCoopers LLP, an independent registered public accounting firm, has audited these consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States) and has expressed herein its unqualified opinion on these financial statements.

/s/ LeRoy T. Carlson, Jr.	/s/ Douglas D. Shuma
LeRoy T. Carlson, Jr. President and Chief Executive Officer (principal executive officer)	Douglas D. Shuma Senior Vice President and Controller (principal financial officer and principal accounting officer)

97

Management’s Report on Internal Control Over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act.  TDS’ internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America (“GAAP”).  TDS’ internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the issuer; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the issuer are being made only in accordance with authorizations of management and, where required, the Board of Directors of the issuer; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the issuer’s assets that could have a material effect on the interim or annual consolidated financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.  Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Under the supervision and with the participation of TDS’ management, including its principal executive officer and principal financial officer, TDS conducted an evaluation of the effectiveness of its internal control over financial reporting as of December 31, 2014, based on the criteria established in the 2013 version of Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).  Management has concluded that TDS maintained effective internal control over financial reporting as of December 31, 2014 based on criteria established in the 2013 version of Internal Control — Integrated Framework issued by the COSO.

The effectiveness of TDS’ internal control over financial reporting as of December 31, 2014 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in the firm’s report included herein.

/s/ LeRoy T. Carlson, Jr.	/s/ Douglas D. Shuma
LeRoy T. Carlson, Jr. President and Chief Executive Officer (principal executive officer)	Douglas D. Shuma Senior Vice President and Controller (principal financial officer and principal accounting officer)

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Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of Telephone and Data Systems, Inc.:

In our opinion, based on our audits and the report of other auditors, the accompanying consolidated balance sheets and the related consolidated statements of operations, comprehensive income (loss), changes in equity, and cash flows present fairly, in all material respects, the financial position of Telephone and Data Systems, Inc. and its subsidiaries at December 31, 2014 and 2013, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2014 in conformity with accounting principles generally accepted in the United States of America.  Also in our opinion, based on our audit, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2014, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express opinions on these financial statements and on the Company’s internal control over financial reporting based on our integrated audits. We did not audit the financial statements of Los Angeles SMSA Limited Partnership, a 5.5% owned entity accounted for by the equity method of accounting. The consolidated financial statements of Telephone and Data Systems, Inc. reflect an investment in this partnership of $123,600,000 and $112,200,000 as of December 31, 2014 and 2013, respectively, and equity earnings of $71,800,000, $78,400,000 and $67,200,000 for each of the three years in the period ended December 31, 2014. The financial statements of Los Angeles SMSA Limited Partnership were audited by other auditors whose report thereon has been furnished to us, and our opinion on the financial statements expressed herein, insofar as it relates to the amounts included for Los Angeles SMSA Limited Partnership, is based solely on the report of the other auditors. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects.  Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.  Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits and the report of other auditors provide a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.  Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ PricewaterhouseCoopers LLP

Chicago, Illinois
February 25, 2015

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Telephone and Data Systems, Inc.
SELECTED CONSOLIDATED FINANCIAL DATA
Year Ended or at December 31,		2014		2013		2012		2011		2010
(Dollars and shares in thousands, except   per share amounts)
Statement of Operations data
Operating revenues		$	5,009,438	$	4,901,236	$	5,345,277	$	5,180,471	$	4,986,829
Loss on impairment of assets (1)			87,802		-		515		-		-
(Gain) loss on sale of business and other   exit costs, net			(15,846)		(300,656)		21,061		-		-
(Gain) loss on license sales   and exchanges			(112,993)		(255,479)		-		(11,762)		-
Operating income (loss)			(189,864)		235,359		183,863		362,502		296,091
Gain (loss) on investments			-		14,547		(3,718)		24,103		-
Net income (loss)			(147,292)		166,821		122,653		250,242		190,586
Net income (loss) attributable to noncontrolling   interests, net of tax			(10,937)		24,894		40,792		49,676		45,737
Net income (loss) attributable to TDS   shareholders			(136,355)		141,927		81,861		200,566		144,849
Net income (loss) available to common		$	(136,404)	$	141,878	$	81,811	$	200,516	$	144,799
Basic weighted average shares   outstanding			108,485		108,490		108,671		108,562		110,016
Basic earnings (loss) per share attributable   to TDS shareholders		$	(1.26)	$	1.31	$	0.75	$	1.85	$	1.32
Diluted weighted average shares   outstanding			108,485		109,132		108,937		109,098		110,488
Diluted earnings (loss) per share   attributable to TDS shareholders		$	(1.26)	$	1.29	$	0.75	$	1.83	$	1.31
Dividends per Common, Special Common   and Series A Common Share (2)		$	0.54	$	0.51	$	0.49	$	0.47	$	0.45
Balance Sheet data
Cash and cash equivalents		$	471,901	$	830,014	$	740,481	$	563,275	$	341,683
Property, plant and equipment, net			3,846,125		3,878,144		3,997,266		3,784,535		3,517,784
Total assets			8,906,939		8,904,147		8,623,900		8,201,005		7,696,117
Long-term debt, excluding current portion			1,993,586		1,720,074		1,721,571		1,529,857		1,499,862
Total TDS shareholders’ equity			3,926,278		4,117,837		4,011,536		3,962,161		3,817,895
Capital expenditures		$	770,577	$	909,660	$	1,004,621	$	987,218	$	755,032
(1)	Includes Loss on Impairment of intangible assets related to Goodwill in 2014 and 2012.
(2)	Dividends per share reflects the amount paid per share outstanding at the date the dividend was declared and has not been retroactively adjusted to reflect the impact of the Share Consolidation Amendment approved by TDS shareholders on January 13, 2012.

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Telephone and Data Systems, Inc.
CONSOLIDATED QUARTERLY INFORMATION (UNAUDITED)
	Quarter Ended
(Amounts in thousands, except per share amounts)	March 31		June 30		September 30		December 31
2014
Operating revenues	$	1,195,962	$	1,236,392	$	1,280,023	$	1,297,061
(Gain) loss on asset disposals, net (1)		2,430		7,903		9,293		6,905
(Gain) loss on sale of business and other exit costs, net (1)		(6,900)		2,611		(4,790)		(6,767)
(Gain) loss on license sales and exchanges (1)		(91,446)		―		―		(21,547)
Loss on impairment of assets (2)		―		―		84,000		3,802
Operating income (loss)		20,685		(49,090)		(125,415)		(36,044)
Net income (loss)		20,294		(25,726)		(121,199)		(20,661)
Net income (loss) attributable to TDS shareholders	$	18,254	$	(22,038)	$	(116,030)	$	(16,541)
Basic weighted average shares outstanding		108,988		108,719		108,252		107,995
Basic earnings (loss) per share attributable    to TDS shareholders	$	0.17	$	(0.20)	$	(1.07)	$	(0.15)
Diluted weighted average shares outstanding		109,672		108,719		108,252		107,995
Diluted earnings (loss) per share attributable    to TDS shareholders	$	0.16	$	(0.20)	$	(1.07)	$	(0.15)
Stock price
TDS Common Shares (3)
High	$	27.90	$	28.41	$	26.93	$	26.49
Low		21.30		24.67		23.08		22.19
Close		26.21		26.11		23.96		25.25
Dividends paid	$	0.1340	$	0.1340	$	0.1340	$	0.1340
	Quarter Ended
(Amounts in thousands, except per share amounts)	March 31		June 30		September 30		December 31
2013
Operating revenues	$	1,308,573	$	1,228,166	$	1,180,980	$	1,183,517
(Gain) loss on sale of business and other exit costs, net (1)		6,931		(303,034)		(1,534)		(3,019)
(Gain) loss on license sales and exchanges (1)		―		―		―		(255,479)
Operating income (loss)		7,154		282,227		(33,085)		(20,937)
Gain (loss) on investments (1)		―		14,518		―		29
Net income (loss)		6,989		178,397		(11,054)		(7,511)
Net income (loss) attributable to TDS shareholders	$	1,419	$	156,077	$	(9,512)	$	(6,057)
Basic weighted average shares outstanding		108,255		108,385		108,571		108,742
Basic earnings (loss) per share attributable    to TDS shareholders	$	0.01	$	1.44	$	(0.09)	$	(0.06)
Diluted weighted average shares outstanding		108,693		108,913		108,571		108,742
Diluted earnings (loss) per share attributable    to TDS shareholders	$	0.01	$	1.42	$	(0.09)	$	(0.06)
Stock price
TDS Common Shares (3)
High	$	26.17	$	24.87	$	29.83	$	31.52
Low		20.79		20.57		23.21		24.22
Close		21.07		24.65		29.55		25.78
Dividends paid	$	0.1275	$	0.1275	$	0.1275	$	0.1275

(1)See Note 9 —  Property, Plant and Equipment for additional information on (Gain) loss on asset disposals, net.  See Note 6 —  Acquisitions, Divestitures and Exchanges for additional information on (Gain) loss on sale of business and other exit costs, net and (Gain) loss on license sales and exchanges.  See Note 8 —  Investments in Unconsolidated Entities for additional information on Gain (loss) on investments in 2013.

(2)During the third quarter of 2014, TDS recognized a Loss on impairment of assets related to goodwill of $84.0 million.  See Note 7 — Intangible Assets for additional information.

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(3)The high, low and closing sales prices as reported by the New York Stock Exchange (“NYSE”).

102

Telephone and Data Systems, Inc.

SHAREHOLDER INFORMATION

Stock and dividend information

TDS' Common Shares are listed on the New York Stock Exchange (“NYSE”) under the symbol “TDS.”  As of January 31, 2015, the last trading day of the month, TDS Common Shares were held by approximately 1,460 record owners, and the Series A Common Shares were held by approximately 80 record owners.

TDS has paid cash dividends on its common stock since 1974, and paid dividends of $0.54 per Common and Series A Common Share during 2014.  During 2013, TDS paid dividends of $0.51 per Common and Series A Common Share.

The Common Shares of United States Cellular Corporation, an 84%-owned subsidiary of TDS, are listed on the NYSE under the symbol “USM.”

See “Consolidated Quarterly Information (Unaudited)” for information on the high and low trading prices of the TDS Common Shares for 2014 and 2013.

Stock performance graph

The following chart provides a comparison of TDS’ cumulative total return to shareholders (stock price appreciation plus dividends) during the previous five years to the returns of the Standard & Poor's 500 Composite Stock Price Index and the Dow Jones U.S. Telecommunications Index.  As of December 31, 2014, the Dow Jones U.S. Telecommunications Index was composed of the following companies: AT&T Inc., CenturyLink Inc., Frontier Communications Corp., Level 3 Communications Inc., SBA Communications Corp., Sprint Corp., T-Mobile US Inc., Telephone and Data Systems, Inc. (TDS), Verizon Communications Inc., and Windstream Holdings, Inc.

* Cumulative total return assumes reinvestment of dividends

	2009		2010		2011		2012		2013		2014
Telephone and Data Systems Common Shares (NYSE: TDS)	$	100	$	109.13	$	78.69	$	74.67	$	88.82	$	88.84
S&P 500 Index		100		115.06		117.49		136.30		180.44		205.14
Dow Jones U.S. Telecommunications Index		100		117.74		122.41		145.42		165.96		169.93

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Assumes $100.00 invested at the close of trading on the last trading day preceding the first day of 2009, in TDS Common Shares, S&P 500 Index and the Dow Jones U.S. Telecommunications Index.

Dividend reinvestment plan

TDS’ dividend reinvestment plans provide its common and preferred shareholders with a convenient and economical way to participate in the future growth of TDS.  Holders of record of ten (10) or more Common Shares or Preferred Shares may purchase Common Shares with their reinvested dividends at a five percent discount from market price.  Common Shares may also be purchased, at market price, on a monthly basis through optional cash payments by participants in this plan.  The initial ten (10) shares cannot be purchased directly from TDS.  An authorization card and prospectus will be mailed automatically by the transfer agent to all registered record holders with ten (10) or more shares.  Once enrolled in the plan, there are no brokerage commissions or service charges for purchases made under the plan.

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Investor relations

TDS’ annual report, SEC filings and news releases are available to investors, securities analysts and other members of the investment community.  These reports are provided, without charge, upon request to our Corporate Office.  Investors may also access these and other reports through the Investor Relations portion of the TDS website (www.tdsinc.com). 

Questions regarding lost, stolen or destroyed certificates, consolidation of accounts, transferring of shares and name or address changes should be directed to:

Julie Mathews, Manager—Investor Relations
Telephone and Data Systems, Inc.
30 North LaSalle Street, Suite 4000
Chicago, IL 60602
312.592.5341
312.630.9299 (fax)
julie.mathews@tdsinc.com 

General inquiries by investors, securities analysts and other members of the investment community should be directed to:

Jane W. McCahon, Vice President—Corporate Relations and Corporate Secretary
Telephone and Data Systems, Inc.
30 North LaSalle Street, Suite 4000
Chicago, IL 60602
312.592.5379
312.630.9299 (fax)
jane.mccahon@tdsinc.com 

Directors and executive officers

See “Election of Directors” and “Executive Officers” sections of the Proxy Statement issued in 2015 for the 2015 Annual Meeting.

Principal counsel
Sidley Austin LLP, Chicago, Illinois

Transfer agent
Computershare Trust Company, N.A.
211 Quality Circle, Suite 210
College Station, TX 77845
877.337.1575

Independent registered public accounting firm
PricewaterhouseCoopers LLP 

Visit TDS' web site at www.tdsinc.com 

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EX-21

 

		Exhibit 21
TELEPHONE AND DATA SYSTEMS, INC.
SUBSIDIARY COMPANIES
December 31, 2014
SUBSIDIARY COMPANIES		STATE OF ORGANIZATION
U.S. CELLULAR
	UNITED STATES CELLULAR CORPORATION	DELAWARE
	BANGOR CELLULAR TELEPHONE, L.P.	DELAWARE
	BARAT WIRELESS, INC.	DELAWARE
	BARAT WIRELESS, L.P.	DELAWARE
	CALIFORNIA RURAL SERVICE AREA #1, INC.	CALIFORNIA
	CARROLL PCS, INC.	DELAWARE
	CARROLL WIRELESS, L.P.	DELAWARE
	CEDAR RAPIDS CELLULAR TELEPHONE, L.P.	DELAWARE
	CELLVEST, INC.	DELAWARE
	CENTRAL CELLULAR TELEPHONES, LTD.	ILLINOIS
	CHAMPLAIN CELLULAR, INC.	NEW YORK
	COMMUNITY CELLULAR TELEPHONE COMPANY	TEXAS
	CROWN POINT CELLULAR, INC.	NEW YORK
	DUBUQUE CELLULAR TELEPHONE, L.P.	DELAWARE
	EASTERN NORTH CAROLINA CELLULAR JOINT VENTURE	DELAWARE
	HARDY CELLULAR TELEPHONE COMPANY	DELAWARE
	HUMPHREYS COUNTY CELLULAR, INC.	DELAWARE
	INDIANA RSA # 5, INC.	INDIANA
	INDIANA RSA NO. 4 LIMITED PARTNERSHIP	INDIANA
	INDIANA RSA NO. 5 LIMITED PARTNERSHIP	INDIANA
	IOWA RSA # 3, INC.	DELAWARE
	IOWA RSA # 9, INC.	DELAWARE
	IOWA RSA # 12, INC.	DELAWARE
	JACKSONVILLE CELLULAR PARTNERSHIP	NORTH CAROLINA
	JACKSONVILLE CELLULAR TELEPHONE COMPANY	NORTH CAROLINA
	KANSAS #15 LIMITED PARTNERSHIP	DELAWARE
	KENOSHA CELLULAR TELEPHONE, L.P.	DELAWARE
	MADISON CELLULAR TELEPHONE COMPANY	WISCONSIN
	MAINE RSA # 1, INC.	MAINE
	MAINE RSA # 4, INC.	MAINE
	MCDANIEL CELLULAR TELEPHONE COMPANY	DELAWARE
	MINNESOTA INVCO OF RSA # 7, INC.	DELAWARE
	NEWPORT CELLULAR, INC.	NEW YORK
	NH #1 RURAL CELLULAR, INC.	NEW HAMPSHIRE
	NORTH CAROLINA RSA 1 PARTNERSHIP	DELAWARE
	OREGON RSA #2, INC.	OREGON
	PCS WISCONSIN, LLC	WISCONSIN
	RACINE CELLULAR TELEPHONE COMPANY	WISCONSIN
	TENNESSEE NO. 3, LIMITED PARTNERSHIP	TENNESSEE
	TEXAHOMA CELLULAR LIMITED PARTNERSHIP	TEXAS
	TEXAS INVCO OF RSA # 6, INC.	DELAWARE
	TOWNSHIP CELLULAR TELEPHONE, INC.	DELAWARE
	UNITED STATES CELLULAR INVESTMENT CO. OF OKLAHOMA CITY, INC.	OKLAHOMA
	UNITED STATES CELLULAR INVESTMENT COMPANY, LLC	DELAWARE
	UNITED STATES CELLULAR INVESTMENT CORPORATION OF LOS ANGELES	INDIANA
	UNITED STATES CELLULAR OPERATING COMPANY LLC	DELAWARE
	UNITED STATES CELLULAR OPERATING COMPANY OF BANGOR	MAINE
	UNITED STATES CELLULAR OPERATING COMPANY OF CEDAR RAPIDS	DELAWARE
	UNITED STATES CELLULAR OPERATING COMPANY OF CHICAGO, LLC	DELAWARE
	UNITED STATES CELLULAR OPERATING COMPANY OF DUBUQUE	IOWA
	UNITED STATES CELLULAR OPERATING COMPANY OF KNOXVILLE	TENNESSEE
	UNITED STATES CELLULAR OPERATING COMPANY OF MEDFORD	OREGON
	UNITED STATES CELLULAR OPERATING COMPANY OF YAKIMA	WASHINGTON
	UNITED STATES CELLULAR TELEPHONE COMPANY (GREATER KNOXVILLE), L.P.	TENNESSEE
	USCC DISTRIBUTION CO., LLC	DELAWARE
	USCC FINANCIAL L.L.C.	ILLINOIS
	USCC PURCHASE, LLC	DELAWARE
	USCC REAL ESTATE CORPORATION	DELAWARE
	USCC SERVICES, LLC	DELAWARE
	USCC WIRELESS INVESTMENT, INC.	DELAWARE
	USCCI CORPORATION	DELAWARE
	USCIC OF FRESNO	CALIFORNIA
	USCIC OF NORTH CAROLINA RSA # 1, INC.	DELAWARE
	USCOC NEBRASKA/KANSAS, INC.	DELAWARE
	USCOC NEBRASKA/KANSAS, LLC	DELAWARE
	USCOC OF CENTRAL ILLINOIS, LLC	ILLINOIS
	USCOC OF CHICAGO REAL ESTATE HOLDINGS, LLC	DELAWARE
	USCOC OF CUMBERLAND, LLC	DELAWARE
	USCOC OF GREATER IOWA, LLC	DELAWARE
	USCOC OF GREATER MISSOURI, LLC	DELAWARE
	USCOC OF GREATER NORTH CAROLINA, LLC	DELAWARE
	USCOC OF GREATER OKLAHOMA, LLC	OKLAHOMA
	USCOC OF JACK/WIL, INC.	DELAWARE
	USCOC OF JACKSONVILLE, LLC	DELAWARE
	USCOC OF LACROSSE, LLC	WISCONSIN
	USCOC OF OREGON RSA # 5, INC.	DELAWARE
	USCOC OF PENNSYLVANIA RSA NO. 10-B2, INC.	DELAWARE
	USCOC OF RICHLAND, INC.	WASHINGTON
	USCOC OF ROCHESTER, INC.	DELAWARE
	USCOC OF SOUTH CAROLINA RSA # 4, INC.	SOUTH CAROLINA
	USCOC OF TEXAHOMA, INC.	TEXAS
	USCOC OF VIRGINIA RSA # 3, INC.	VIRGINIA
	USCOC OF WASHINGTON-4, INC.	DELAWARE
	USCOC OF WILMINGTON, LLC	DELAWARE
	VERMONT RSA NO. 2-B2, INC.	DELAWARE
	WASHINGTON RSA # 5, INC.	WASHINGTON
	WESTELCOM CELLULAR, INC.	NEW YORK
	WESTERN SUB-RSA LIMITED PARTNERSHIP	DELAWARE
	WILMINGTON CELLULAR PARTNERSHIP	NORTH CAROLINA
	WILMINGTON CELLULAR TELEPHONE COMPANY	NORTH CAROLINA
	YAKIMA MSA LIMITED PARTNERSHIP	DELAWARE
TDS TELECOMMUNICATIONS
	TDS TELECOMMUNICATIONS CORPORATION	DELAWARE
	INCUMBENT LOCAL EXCHANGE COMPANIES
	AMELIA TELEPHONE CORPORATION	VIRGINIA
	ARCADIA TELEPHONE COMPANY	OHIO
	ARIZONA TELEPHONE COMPANY	ARIZONA
	ARVIG TELEPHONE COMPANY	MINNESOTA
	ASOTIN TELEPHONE COMPANY	WASHINGTON
	BADGER TELECOM, LLC	DELAWARE
	BARNARDSVILLE TELEPHONE COMPANY	NORTH CAROLINA
	BLACK EARTH TELEPHONE COMPANY, LLC	DELAWARE
	BLUE RIDGE TELEPHONE COMPANY	GEORGIA
	BONDUEL TELEPHONE COMPANY, LLC	DELAWARE
	BRIDGE WATER TELEPHONE COMPANY	MINNESOTA
	BURLINGTON, BRIGHTON & WHEATLAND TELEPHONE COMPANY, LLC	DELAWARE
	BUTLER TELEPHONE COMPANY, INC.	ALABAMA
	CALHOUN CITY TELEPHONE COMPANY, INC.	MISSISSIPPI
	CAMDEN TELEPHONE AND TELEGRAPH COMPANY, INC.	GEORGIA
	CAMDEN TELEPHONE COMPANY, INC.	INDIANA
	CENTRAL STATE TELEPHONE COMPANY, LLC	DELAWARE
	CHATHAM TELEPHONE COMPANY	MICHIGAN
	CLEVELAND COUNTY TELEPHONE COMPANY, INC.	ARKANSAS
	COBBOSSEECONTEE TELEPHONE COMPANY	MAINE
	COMMUNICATION CORPORATION OF MICHIGAN	MICHIGAN
	COMMUNICATIONS CORPORATION OF INDIANA	INDIANA
	COMMUNICATIONS CORPORATION OF SOUTHERN INDIANA	INDIANA
	CONCORD TELEPHONE EXCHANGE, INC.	TENNESSEE
	CONTINENTAL TELEPHONE COMPANY	OHIO
	DECATUR TELEPHONE COMPANY, INC.	ARKANSAS
	DELTA COUNTY TELE-COMM, INC.	COLORADO
	DEPOSIT TELEPHONE COMPANY, INC.	NEW YORK
	DICKEYVILLE TELEPHONE, LLC	DELAWARE
	EASTCOAST TELECOM OF WISCONSIN, LLC	DELAWARE
	EDWARDS TELEPHONE COMPANY, INC.	NEW YORK
	GRANTLAND TELECOM, LLC	DELAWARE
	HAMPDEN TELEPHONE COMPANY	MAINE
	HAPPY VALLEY TELEPHONE COMPANY	CALIFORNIA
	HARTLAND & ST. ALBANS TELEPHONE COMPANY	MAINE
	HOLLIS TELEPHONE COMPANY, INC.	NEW HAMPSHIRE
	HOME TELEPHONE COMPANY, INC.	INDIANA
	HORNITOS TELEPHONE CO.	CALIFORNIA
	HUMPHREYS COUNTY TELEPHONE COMPANY	TENNESSEE
	ISLAND TELEPHONE COMPANY	MICHIGAN
	KEARSARGE TELEPHONE COMPANY	NEW HAMPSHIRE
	LESLIE COUNTY TELEPHONE COMPANY	KENTUCKY
	LEWIS RIVER TELEPHONE COMPANY, INC.	WASHINGTON
	LEWISPORT TELEPHONE COMPANY	KENTUCKY
	LITTLE MIAMI COMMUNICATIONS CORPORATION	OHIO
	LUDLOW TELEPHONE COMPANY	VERMONT
	MAHANOY & MAHANTANGO TELEPHONE COMPANY	PENNSYLVANIA
	MCCLELLANVILLE TELEPHONE COMPANY, INC.	SOUTH CAROLINA
	MCDANIEL TELEPHONE COMPANY	WASHINGTON
	MERRIMACK COUNTY TELEPHONE COMPANY	NEW HAMPSHIRE
	MID-AMERICA TELEPHONE, INC.	OKLAHOMA
	MID-PLAINS TELEPHONE, LLC	DELAWARE
	MID-STATE TELEPHONE COMPANY	MINNESOTA
	MIDWAY TELEPHONE COMPANY, LLC	DELAWARE
	MOSINEE TELEPHONE COMPANY, LLC	DELAWARE
	MT. VERNON TELEPHONE COMPANY, LLC	DELAWARE
	MYRTLE TELEPHONE COMPANY, INC.	MISSISSIPPI
	NELSON-BALL GROUND TELEPHONE COMPANY	GEORGIA
	NEW CASTLE TELEPHONE COMPANY	VIRGINIA
	NORTHFIELD TELEPHONE COMPANY	VERMONT
	NORWAY TELEPHONE COMPANY, INC.	SOUTH CAROLINA
	OAKMAN TELEPHONE COMPANY, INC.	ALABAMA
	OAKWOOD TELEPHONE COMPANY	OHIO
	OKLAHOMA COMMUNICATION SYSTEMS, INC.	OKLAHOMA
	ORISKANY FALLS TELEPHONE CORPORATION	NEW YORK
	PEOPLES TELEPHONE COMPANY, INC.	ALABAMA
	PERKINSVILLE TELEPHONE COMPANY, INC.	VERMONT
	PORT BYRON TELEPHONE COMPANY	NEW YORK
	POTLATCH TELEPHONE COMPANY	IDAHO
	QUINCY TELEPHONE COMPANY	FLORIDA
	RIVERSIDE TELECOM, LLC	DELAWARE
	S & W TELEPHONE COMPANY, INC.	INDIANA
	SALEM TELEPHONE COMPANY	KENTUCKY
	SALUDA MOUNTAIN TELEPHONE COMPANY	NORTH CAROLINA
	SCANDINAVIA TELEPHONE COMPANY, LLC	DELAWARE
	SERVICE TELEPHONE COMPANY	NORTH CAROLINA
	SHIAWASSEE TELEPHONE COMPANY	MICHIGAN
	SOMERSET TELEPHONE COMPANY	MAINE
	SOUTHEAST MISSISSIPPI TELEPHONE COMPANY, INC.	MISSISSIPPI
	SOUTHEAST TELEPHONE CO. OF WISCONSIN, LLC	DELAWARE
	SOUTHWESTERN TELEPHONE COMPANY	ARIZONA
	ST. STEPHEN TELEPHONE COMPANY	SOUTH CAROLINA
	STOCKBRIDGE & SHERWOOD TELEPHONE COMPANY, LLC.	DELAWARE
	STRASBURG TELEPHONE COMPANY	COLORADO
	SUGAR VALLEY TELEPHONE COMPANY	PENNSYLVANIA
	TELLICO TELEPHONE COMPANY, INC.	TENNESSEE
	TENNESSEE TELEPHONE COMPANY	TENNESSEE
	TENNEY TELEPHONE COMPANY, LLC	DELAWARE
	THE FARMERS TELEPHONE COMPANY, LLC	DELAWARE
	THE HOME TELEPHONE COMPANY OF PITTSBORO, INC.	INDIANA
	THE ISLAND TELEPHONE COMPANY	MAINE
	THE MERCHANTS AND FARMERS TELEPHONE COMPANY	INDIANA
	THE STATE LONG DISTANCE TELEPHONE COMPANY, LLC	DELAWARE
	THE VANLUE TELEPHONE COMPANY	OHIO
	THE WEST PENOBSCOT TELEPHONE & TELEGRAPH COMPANY	MAINE
	TIPTON TELEPHONE COMPANY, INC.	INDIANA
	TOWNSHIP TELEPHONE COMPANY, INC.	NEW YORK
	TRI-COUNTY TELEPHONE COMPANY, INC.	INDIANA
	UNION TELEPHONE COMPANY	NEW HAMPSHIRE
	UTELCO, LLC	DELAWARE
	VERNON TELEPHONE COMPANY, INC.	NEW YORK
	VIRGINIA TELEPHONE COMPANY	VIRGINIA
	WARREN TELEPHONE COMPANY	MAINE
	WAUNAKEE TELEPHONE COMPANY, LLC	DELAWARE
	WEST POINT TELEPHONE COMPANY, INCORPORATED	INDIANA
	WILLISTON TELEPHONE COMPANY	SOUTH CAROLINA
	WILTON TELEPHONE COMPANY, INC.	NEW HAMPSHIRE
	WINSTED TELEPHONE COMPANY	MINNESOTA
	WINTERHAVEN TELEPHONE COMPANY	CALIFORNIA
	WOLVERINE TELEPHONE COMPANY	MICHIGAN
	WYANDOTTE TELEPHONE COMPANY	OKLAHOMA
	OTHER COMPANIES
	TDS COMMUNICATION SOLUTIONS, INC.	DELAWARE
	TDS LONG DISTANCE CORPORATION	DELAWARE
	TDS METROCOM, LLC	DELAWARE
	TDS TELECOM SERVICE CORPORATION	IOWA
	TRI-COUNTY COMMUNICATIONS CORPORATION	INDIANA
TDS GROUP
	AFFILIATE FUND	DELAWARE
	AIRADIGM COMMUNICATIONS, INC.	WISCONSIN
	COMMVEST, INC.	DELAWARE
	M.C.T. COMMUNICATIONS, INC.	NEW HAMPSHIRE
	MSN COMMUNICATIONS, INC.	COLORADO
	NATIONAL TELEPHONE & TELEGRAPH COMPANY	DELAWARE
	ONENECK IT SERVICES CORPORATION	DELAWARE
	ONENECK IT SOLUTIONS LLC	DELAWARE
	ONENECK UK LIMITED	UNITED KINGDOM
	SUTTLE-STRAUS, INC.	WISCONSIN
	TDS BAJA BROADBAND LLC	DELAWARE
	TDS BROADBAND LLC	DELAWARE
	TDS BROADCASTING LLC	DELAWARE
	TEAM DES MOINES PARTNERS, LLC	DELAWARE
	TEAM MADISON PARTNERS, LLC	IOWA
	TEAM TECHNOLOGIES, LLC	DELAWARE
	TDSI CORPORATION	DELAWARE
	VISI INCORPORATED	DELAWARE
	VITAL SUPPORT SYSTEMS, LLC	IOWA
OTHER ENTITIES CONSOLIDATED IN ACCORDANCE WITH GAAP
	ADVANTAGE SPECTRUM, L.P.	DELAWARE
	AQUINAS WIRELESS, L.P.	DELAWARE
	FREQUENCY ADVANTAGE, L.P.	DELAWARE
	KING STREET WIRELESS, L.P.	DELAWARE
	KING STREET WIRELESS, INC.	DELAWARE

EX-23.1

 

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statements on Form S‑3 (Nos. 333-188965, 333-188969 and 333-190907), Form S-4 (No. 33-64293) and Form S-8 (Nos. 333-58127, 333-105676, 333-179702, 333-179703, 333-185143, 333-190330 and 333-197793) of Telephone and Data Systems, Inc. of our report dated February 25, 2015, relating to the financial statements and the effectiveness of internal control over financial reporting, which appears in the Annual Report to Shareholders, which is incorporated in this Annual Report on Form 10‑K.

/s/ PricewaterhouseCoopers LLP

Chicago, Illinois

February 25, 2015

EX-23.2

 

Exhibit 23.2

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in the following Registration Statements of Telephone and Data Systems, Inc.:

(1)Registration Statement (Form S-3 No. 333-188965),

(2)Registration Statement (Form S-3 No. 333-188969),

(3)Registration Statement (Form S-3 No.333-190907),

(4)Registration Statement (Form  S-4 No. 33-64293),

(5)Registration Statement (Form S-8 No. 333-58127),

(6)Registration Statement (Form S-8 No. 333-105676),

(7)Registration Statement (Form S-8 No. 333-179702),

(8)Registration Statement (Form S-8 No. 333-179703),

(9)Registration Statement (Form S-8 No. 333-185143),

(10)Registration Statement (Form S-8 No. 333-190330), and

(11)Registration Statement (Form S-8 No. 333-197793);

of our report dated February 25, 2015, with respect to the financial statements of Los Angeles SMSA Limited Partnership included in this Annual Report (Form 10-K) of Telephone and Data Systems, Inc. for the year ended December 31, 2014.

/s/ Ernst & Young LLP

Certified Public Accountants

Orlando, Florida

February 25, 2015

EX-23.3

 

Exhibit 23.3

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in Registration Statements on Form S-3 (Nos. 333-188965, 333-188969 and 333-190907), in the Registration Statement on Form S-4 (No. 33-64293), and in the Registration Statements on Form S-8 (Nos. 333-58127, 333-105676, 333-179702, 333-179703, 333-185143, 333-190330 and 333-197793) of Telephone and Data Systems, Inc. of our report dated February 28, 2014, relating to the financial statements of Los Angeles SMSA Limited Partnership as of December 31, 2013 and for each of the two years in the period ended December 31, 2013, appearing in the Annual Report on Form 10-K of Telephone and Data Systems, Inc. for the year ended December 31, 2014.

/s/ Deloitte & Touche LLP

Atlanta, Georgia

February 25, 2015

EX-31.1

 

Exhibit 31.1

Certification of Principal Executive Officer

I, LeRoy T. Carlson, Jr., certify that:

1.I have reviewed this annual report on Form 10-K of Telephone and Data Systems, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:  February 25, 2015

/s/ LeRoy T. Carlson, Jr.

LeRoy T. Carlson, Jr.

President and Chief Executive Officer

(principal executive officer)

EX-31.2

 

 Exhibit 31.2

Certification of Principal Financial Officer

I, Douglas D. Shuma, certify that:

1.I have reviewed this annual report on Form 10-K of Telephone and Data Systems, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:  February 25, 2015

/s/ Douglas D. Shuma

Douglas D. Shuma

Senior Vice President and Controller

(principal financial officer

and principal accounting officer)

EX-32.1

 

Exhibit 32.1

Certification Pursuant to Section 1350 of Chapter 63

of Title 18 of the United States Code

I, LeRoy T. Carlson, Jr., the principal executive officer of Telephone and Data Systems, Inc., certify that (i) the annual report on Form 10-K for the year ended December 31, 2014 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and (ii) the information contained in the Form 10-K fairly presents, in all material respects, the financial condition and results of operations of Telephone and Data Systems, Inc.

/s/ LeRoy T. Carlson, Jr

LeRoy T. Carlson, Jr.

February 25, 2015

A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to Telephone and Data Systems, Inc. and will be retained by Telephone and Data Systems, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

 

Exhibit 32.2

Certification Pursuant to Section 1350 of Chapter 63

of Title 18 of the United States Code

I, Douglas D. Shuma, the principal financial officer of Telephone and Data Systems, Inc., certify that (i) the annual report on Form 10-K for the year ended December 31, 2014 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and (ii) the information contained in the Form 10-K fairly presents, in all material respects, the financial condition and results of operations of Telephone and Data Systems, Inc.

/s/ Douglas D. Shuma

Douglas D. Shuma

February 25, 2015

A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to Telephone and Data Systems, Inc. and will be retained by Telephone and Data Systems, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

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Debt (Tables)

12 Months Ended

Dec. 31, 2014

Debt Disclosure [Abstract]

Debt instrument facilities

The following table summarizes the terms of such revolving credit facilities as of December 31, 2014:
(Dollars in millions)			TDS			U.S. Cellular
Maximum borrowing capacity			$	400.0		$	300.0
Letters of credit outstanding			$	0.6		$	17.5
Amount borrowed			$	-		$	-
Amount available for use			$	399.4		$	282.5
Borrowing rate: One-month London Interbank Offered Rate (“LIBOR”) plus contractual spread (1)				1.92	%		1.92	%
	Sample LIBOR Rate			0.17	%		0.17	%
	Contractual spread			1.75	%		1.75	%
Range of commitment fees on amount available for use (2)
	Low			0.13	%		0.13	%
	High			0.30	%		0.30	%
Agreement date				December 2010			December 2010
Maturity date				December 2017			December 2017
Fees incurred attributable to the Revolving Credit Facility are as follows:
	Fees incurred as a percent of Maximum borrowing capacity for 2014			0.42	%		0.42	%
	Fees incurred, amount
		2014	$	1.7		$	1.3
		2013	$	0.9		$	0.8
		2012	$	1.3		$	1.1
(1)		Borrowings under the revolving credit facility bear interest at LIBOR plus a contractual spread based on TDS' or U.S. Cellular’s credit rating or, at TDS' or U.S. Cellular’s option, an alternate “Base Rate” as defined in the revolving credit agreement. TDS and 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 TDS or U.S. Cellular and approved by the lenders). If TDS or U.S. Cellular provides notice of intent to borrow the same business day, interest on borrowing is at the Base Rate plus the contractual spread.
(2)		The revolving credit facility has commitment fees based on the unsecured senior debt ratings assigned to TDS and U.S. Cellular by certain ratings agencies.

The following table summarizes the terms of the term loan facility as of February 25, 2015:
(Dollars in millions)
Maximum borrowing capacity		$	225.0
Amount borrowed		$	-
Amount available for use		$	225.0
Hypothetical Borrowing rate: One-month London Interbank Offered Rate ("LIBOR") plus contractual spread (1)			2.67	%
	Sample LIBOR Rate		0.17	%
	Contractual spread		2.5	%
Range of commitment fees on amount available for use (2)
	Low		0.13	%
	High		0.30	%
Agreement date			January 21, 2015
Maturity date (3)			January 21, 2022
(1)	Borrowings under the term loan credit facility bear interest at LIBOR plus a contractual spread based on U.S. Cellular’s credit rating or, at U.S. Cellular’s option, an alternate “Base Rate” as defined in the term loan facility.
(2)	The term loan credit facility has commitment fees based on the unsecured senior debt ratings assigned to U.S. Cellular by certain ratings agencies.
(3)	Principal amounts outstanding on the term loan facility will be due and payable quarterly in equal installments beginning on the last day of the fifth fiscal quarter ending after the agreement date, in an amount equal to 1.25% of the aggregate term loan facility commitment. Any amounts owing under the term loan facility not previously repaid will be due and payable on the maturity date.

Long term debt

Long Term Financing
Long-term debt as of December 31, 2014 and 2013 was as follows:
									December 31,
(Dollars in thousands)					Issuance date	Maturity date	Call date	2014		2013
TDS:
		Unsecured Senior Notes
			6.625%		March 2005	March 2045	March 2010	$	116,250	$	116,250
			6.875%		November 2010	November 2059	November 2015		225,000		225,000
			7.0%		March 2011	March 2060	March 2016		300,000		300,000
			5.875%		November 2012	December 2061	December 2017		195,000		195,000
		Purchase contract at 6.0%			October 2001	October 2021			1,097		1,097
				Total Parent					837,347		837,347
Subsidiaries:
	U.S. Cellular -
		Unsecured Senior Notes
			6.7%		December 2003 and June 2004	December 2033	December 2003		544,000		544,000
			Less: 6.7% Unamortized discount						(11,278)		(11,551)
									532,722		532,449
			6.95%		May 2011	May 2060	May 2016		342,000		342,000
			7.25%		December 2014	December 2063	December 2019		275,000		-
		Obligation on capital leases							2,143		3,749
	TDS Telecom -
		Rural Utilities Service (“RUS”) and other notes							699		749
		Obligation on capital leases							768		779
	Other -
		Long-term notes, 3.7% to 4.8%				Through 2016			3,686		4,612
		Obligation on capital leases							29		35
				Total Subsidiaries					1,157,047		884,373
Total long-term debt								$	1,994,394	$	1,721,720
		Long-term debt, current						$	808	$	1,646
		Long-term debt, noncurrent						$	1,993,586	$	1,720,074

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Income Taxes, Rate Reconciliation (Details)	12 Months Ended
	Dec. 31, 2014		Dec. 31, 2013		Dec. 31, 2012
Income tax rate reconciliation
Statutory federal income tax rate	35.00%		35.00%		35.00%
State income taxes, net of federal benefit	(28.10%)	[1]	3.60%	[1]	4.20%	[1]
Effect of noncontrolling interests	3.80%		(0.40%)
Gains (losses) on investments and sale of assets			5.10%	[2]
Correction of deferred taxes					(3.10%)	[3]
Change in federal valuation allowance	5.70%	[4]
Goodwill impairment	(12.00%)	[5]
Other differences, net	(1.20%)		(0.30%)		1.40%
Total income tax rate	3.20%		43.00%		37.50%

[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 TDS recorded a $38.5 million increase to income tax expense related to a valuation allowance recorded against certain state deferred tax assets. In each interim period, TDS evaluates the available positive and negative evidence to assess whether deferred tax assets are realizable, on a more likely than not basis. During the year ended December 31, 2014, based on revised forecasts of future state income, TDS concluded that the negative evidence related to the realization of certain state deferred tax assets outweighed the positive evidence. Accordingly, TDS determined that such deferred tax assets related to certain states were not realizable, on a more likely than not basis.

[2] Gains (losses) on investments and sale of assets represents 2013 tax expense related to the NY1 & NY2 Deconsolidation and the Divestiture Transaction.

[3] Correction of deferred taxes reflects immaterial adjustments to correct deferred tax balances in 2012 related to tax basis and law changes that related to periods prior to 2012.

[4] Change in federal valuation allowance relates primarily to a decrease to income tax expense in the third quarter of 2014 due to a valuation allowance reduction for federal net operating losses previously limited under loss utilization rules. Due to the shutdown of Airadigm’s consumer wireless business and resulting intercompany sale of certain assets by Airadigm to U.S. Cellular during the year (as described in Note 6 — Acquisitions, Divestitures and Exchanges), Airadigm is expected to recognize sufficient taxable income for TDS to utilize the previously limited net operating losses.

[5] Goodwill impairment reflects an adjustment to increase income tax expense by $18.3 million related to a portion of the goodwill impairment of Suttle-Straus and the HMS reporting unit recorded in 2014 which is nondeductible for income tax purposes. See Note 7 — Intangible Assets for additional information related to the goodwill impairment.

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Summary of Significant Accounting Policies and Recent Accounting Pronouncements (Details) (USD $)	12 Months Ended
	Dec. 31, 2014 number		Dec. 31, 2013		Dec. 31, 2012
Basis of Presentation
Number of wireless customers	4,800,000
Wireline and Cable connections	1,200,000
Amounts recorded gross in revenues that are billed to customers and remitted to governmental authorities	$ 113,500,000		$ 131,000,000		$ 152,400,000
Advertising costs	228,500,000		212,800,000		240,900,000
Accumulated amortization of deferred charges	58,100,000		41,400,000
Federal Communications Commission deposit	60,000,000
Long-term
Accounts receivable
Unbilled allowance for credit losses	6,065,000
Allowance for doubtful accounts
Accounts receivable
Allowance for doubtful accounts, beginning balance	65,604,000	[1]	33,415,000	[1]	31,071,000
Additions, net of recoveries	107,861,000		105,629,000		74,695,000
Deductions	(124,828,000)		(73,440,000)		(72,351,000)
Allowance for doubtful accounts, ending balance	48,637,000	[1]	65,604,000	[1]	33,415,000	[1]
U.S. Cellular
Basis of Presentation
TDS ownership of U.S. Cellular	84.00%
Agent liability	95,300,000		121,300,000
U.S. Cellular | Loyalty Rewards Program
Basis of Presentation
Deferred revenue	94,600,000		116,200,000
U.S. Cellular | Loyalty Rewards Program | Special issuance
Basis of Presentation
Deferred revenue			$ 43,500,000

[1] In 2014, this balance includes a $6.1 million allowance related to the long-term portion of unbilled equipment installment receivables.

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Debt, long-term debt (Details) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Long term debt
Total long-term debt	$ 1,994,394,000	$ 1,721,720,000
Debt issuance cost	53,900,000
Long-term debt, current	808,000	1,646,000
Long-term debt, noncurrent	1,993,586,000	1,720,074,000
TDS Parent Company
Long term debt
Long term debt	837,347,000	837,347,000
Long term debt maturities
Scheduled principal payments 2015	800,000
Scheduled principal payments 2016	3,800,000
Scheduled principal payments 2017	100,000
Scheduled principal payments 2018	100,000
Scheduled principal payments 2019	100,000
TDS Parent Company | 7% Senior Notes
Long term debt
Interest rate on debt	7.00%
Date of debt issuance	Mar. 21, 2011
Maturity date of debt issued	Mar. 15, 2060
Call date of debt issued	Mar. 15, 2016
Long term debt	300,000,000	300,000,000
TDS Parent Company | 6.625% Senior Notes
Long term debt
Interest rate on debt	6.625%
Date of debt issuance	Mar. 31, 2005
Maturity date of debt issued	Mar. 31, 2045
Call date of debt issued	Mar. 31, 2010
Long term debt	116,250,000	116,250,000
TDS Parent Company | 6.875% Senior Notes
Long term debt
Interest rate on debt	6.875%
Date of debt issuance	Nov. 16, 2010
Maturity date of debt issued	Nov. 15, 2059
Call date of debt issued	Nov. 15, 2015
Long term debt	225,000,000	225,000,000
TDS Parent Company | 5.875% Senior Notes
Long term debt
Interest rate on debt	5.875%
Date of debt issuance	Nov. 26, 2012
Maturity date of debt issued	Dec. 01, 2061
Call date of debt issued	Dec. 01, 2017
Long term debt	195,000,000	195,000,000
TDS Parent Company | Long term notes
Long term debt
Interest rate on debt	6.00%
Date of debt issuance	Oct. 03, 2001
Maturity date of debt issued	Oct. 03, 2021
Purchase contracts	1,097,000	1,097,000
U.S. Cellular
Long term debt
Obligation on capital leases	2,143,000	3,749,000
U.S. Cellular | 6.95% Senior Notes
Long term debt
Interest rate on debt	6.95%
Date of debt issuance	May 09, 2011
Maturity date of debt issued	May 15, 2060
Call date of debt issued	May 15, 2016
Long term debt	342,000,000	342,000,000
U.S. Cellular | 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
Long term debt, face value	544,000,000	544,000,000
Unamortized discount	(11,278,000)	(11,551,000)
Long term debt	532,722,000	532,449,000
U.S. Cellular | 6.7% Senior Notes | Maximum
Long term debt
Date of debt issuance	Jun. 28, 2004
U.S. Cellular | 6.7% Senior Notes | Minimum
Long term debt
Date of debt issuance	Dec. 08, 2003
U.S. Cellular | 7.25% Senior Notes
Long term debt
Interest rate on debt	7.25%
Date of debt issuance	Dec. 01, 2014
Maturity date of debt issued	Dec. 01, 2063
Call date of debt issued	Dec. 08, 2019
Long term debt	275,000,000
TDS Telecom
Long term debt
Obligation on capital leases	768,000	779,000
TDS Telecom | Rural Utility Service and other notes
Long term debt
Long term debt	699,000	749,000
Other
Long term debt
Obligation on capital leases	29,000	35,000
Other | Long term notes
Long term debt
Long term debt	3,686,000	4,612,000
Other | Long term notes | Maximum
Long term debt
Interest rate on debt	4.80%
Maturity date of debt issued	Dec. 02, 2016
Other | Long term notes | Minimum
Long term debt
Interest rate on debt	3.70%
Total Subsidiaries
Long term debt
Total long-term debt	$ 1,157,047,000	$ 884,373,000

XML

Income Taxes, Components of Deferred Income Tax (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Deferred income tax assets
Current deferred tax assets	$ 113,402	$ 114,532
Net operating loss ("NOL") carryforwards	135,676	121,651
Stock-based compensation	54,789	50,563
Compensation and benefits - other	11,014	12,681
Deferred rent	19,604	20,500
Other	35,523	32,444
Total deferred tax assets	370,008	352,371
Less valuation allowance	(113,553)	(79,064)
Net deferred tax assets	256,455	273,307
Deferred income tax liabilities
Property, plant and equipment	667,540	637,090
Licenses/intangibles	259,865	251,578
Partnership investments	151,123	136,581
Other	9,724	4,956
Total deferred tax liabilities	1,088,252	1,030,205
Net deferred income tax liability	$ 831,797	$ 756,898

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Variable Interest Entities VIEs (Details) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011	Jan. 31, 2015 number
Assets
Cash and cash equivalents	$ 471,901,000	$ 830,014,000	$ 740,481,000	$ 563,275,000
Other current assets	29,766,000	35,151,000
Licenses	1,453,574,000	1,423,779,000
Property, plant and equipment, net	3,846,125,000	3,878,144,000
Other assets and deferred charges	334,554,000	164,482,000
Liabilities
Current liabilities	1,063,256,000	1,191,756,000
Variable Interest Entities, Other Disclosures
Federal Communications Commission deposit	60,000,000
Capital contributions, loans or advances	60,900,000
Noncontrolling interests with redemption features	1,150,000	536,000
U.S. Cellular
Assets
Property, plant and equipment, net	2,728,217,000	2,856,520,000
Variable Interest Entities
Assets
Cash and cash equivalents	2,588,000	2,076,000
Other current assets	278,000	1,184,000
Licenses	312,977,000	310,475,000
Property, plant and equipment, net	10,671,000	18,600,000
Other assets and deferred charges	60,059,000	511,000
Total assets	386,573,000	332,846,000
Liabilities
Current liabilities	110,000	46,000
Deferred liabilities and credits	622,000	3,139,000
Total liabilities	732,000	3,185,000
Variable Interest Entities, Other Disclosures
Put option, exercisable dates	The limited partnership agreements of Advantage Spectrum, Aquinas Wireless and King Street Wireless also provide the general partner with a put option whereby the general partner may require the limited partner, a subsidiary of U.S. Cellular, to purchase its interest in the limited partnership. The general partner’s put options related to its interests in King Street Wireless and Aquinas Wireless will become exercisable in 2019 and 2020, respectively. The general partner’s put options related to its interest in Advantage Spectrum will become exercisable on the fifth and sixth anniversaries of the issuance of any license.
Advantage Spectrum L.P.
Variable Interest Entities, Other Disclosures
Federal Communications Commission deposit	60,000,000
Subsequent Events
Subsequent event, description	An FCC auction of AWS-3 spectrum licenses, referred to as Auction 97, began in November 2014 and ended in January 2015. TDS participated in Auction 97 indirectly through its interest in Advantage Spectrum. A subsidiary of U.S. Cellular is a limited partner in Advantage Spectrum. Advantage Spectrum qualified as a “designated entity,” and thereby was eligible for bid credits with respect to spectrum purchased in Auction 97. To participate in this auction, a $60.0 million deposit was made to the FCC in 2014. Such amount is reflected in Other Assets and Deferred Charges in the Consolidated Balance Sheet. Advantage Spectrum was the provisional winning bidder for 124 licenses for an aggregate bid of $338.3 million, net of its anticipated designated entity discount of 25%. Advantage Spectrum’s bid amount, less the initial deposit of $60.0 million, plus certain other charges totaling $2.3 million, are required to be paid to the FCC by March 2, 2015.
Advantage Spectrum L.P. | U.S. Cellular | Subsequent event
Subsequent Events
Licenses won					124
Total winning bid					338,300,000
Designated entity auction discount					25.00%
Other auction charges					$ 2,300,000

XML

Business Segment (Tables)

12 Months Ended

Dec. 31, 2014

Business Segment Information

Business segment information

					TDS Telecom
Year Ended or as of December 31, 2014			U.S. Cellular		Wireline		Cable		HMS		TDS Telecom Eliminations		TDS Telecom Total		Corporate, Eliminations and Other		Total
(Dollars in thousands)
Operating revenues
	Service		$	3,397,937	$	714,586	$	116,855	$	109,766	$	(3,697)	$	937,510	$	(6,793)	$	4,328,654
	Equipment and product sales			494,810		1,836		-		148,966		-		150,802		35,172		680,784
		Total operating revenues		3,892,747		716,422		116,855		258,732		(3,697)		1,088,312		28,379		5,009,438
Cost of services (excluding Depreciation, amortization and accretion expense reported below)				769,911		256,878		54,265		77,392		(3,504)		385,031		9,716		1,164,658
Cost of equipment and products				1,192,669		2,336		-		126,362		-		128,698		25,444		1,346,811
Selling, general and administrative				1,591,914		189,956		36,175		53,020		(193)		278,958		(5,065)		1,865,807
Depreciation, amortization and accretion				605,997		169,044		23,643		26,912		-		219,599		10,936		836,532
Loss on impairment of assets				-		-		-		84,000		-		84,000		3,802		87,802
(Gain) loss on asset disposals, net				21,469		2,091		2,482		181		-		4,754		308		26,531
(Gain) loss on sale of business and other exit costs, net				(32,830)		(2,357)		-		-		-		(2,357)		19,341		(15,846)
(Gain) loss on license sales and exchanges				(112,993)		-		-		-		-		-		-		(112,993)
Operating income (loss)				(143,390)		98,474		290		(109,135)		-		(10,371)		(36,103)		(189,864)
Equity in earnings of unconsolidated entities				129,764		8		-		-		-		8		2,193		131,965
Interest and dividend income				12,148		2,396		8		26		-		2,430		2,379		16,957
Interest expense				(57,386)		2,695		95		(1,602)		-		1,188		(55,199)		(111,397)
Other, net				160		(32)		(1)		12		-		(21)		(24)		115
Income (loss) before income taxes				(58,704)		103,541		392		(110,699)		-		(6,766)		(86,754)		(152,224)
Add back:
Depreciation, amortization and accretion				605,997		169,044		23,643		26,912		-		219,599		10,936		836,532
Loss on impairment of assets				-		-		-		84,000		-		84,000		3,802		87,802
(Gain) loss on sale of business and other exit costs, net				(32,830)		(2,357)		-		-		-		(2,357)		19,341		(15,846)
(Gain) loss on license sales and exchanges				(112,993)		-		-		-		-		-		-		(112,993)
Interest expense				57,386		(2,695)		(95)		1,602		-		(1,188)		55,199		111,397
Adjusted income before income taxes			$	458,856	$	267,533	$	23,940	$	1,815	$	-	$	293,288	$	2,524	$	754,668
Investments in unconsolidated entities			$	283,014	$	3,803	$	-	$	-	$	-	$	3,803	$	34,912	$	321,729
Total assets			$	6,487,268	$	1,419,478	$	563,585	$	268,972	$	-	$	2,252,035	$	167,636	$	8,906,939
Capital expenditures			$	557,615	$	135,805	$	35,640	$	36,618	$	-	$	208,063	$	4,899	$	770,577

					TDS Telecom
Year Ended or as of December 31, 2013			U.S. Cellular		Wireline		Cable		HMS		TDS Telecom Eliminations		TDS Telecom Total		Corporate, Eliminations and Other Reconciling Items		Total
(Dollars in thousands)
Operating revenues
	Service		$	3,594,773	$	723,372	$	35,883	$	94,875	$	(1,063)	$	853,067	$	(4,349)	$	4,443,491
	Equipment and product sales			324,063		3,195		-		90,741		-		93,936		39,746		457,745
		Total operating revenues		3,918,836		726,567		35,883		185,616		(1,063)		947,003		35,397		4,901,236
Cost of services (excluding Depreciation, amortization and accretion reported below)				763,435		266,635		17,274		60,423		(1,000)		343,332		11,416		1,118,183
Cost of equipment and products				999,000		3,831		-		75,991		-		79,822		28,311		1,107,133
Selling, general and administrative				1,677,395		220,097		11,054		44,945		(63)		276,033		(5,650)		1,947,778
Depreciation, amortization and accretion				803,781		170,868		7,571		24,262		-		202,701		11,595		1,018,077
(Gain) loss on asset disposals, net				30,606		130		28		125		-		283		(48)		30,841
(Gain) loss on sale of business and other exit costs, net				(246,767)		-		-		-		-		-		(53,889)		(300,656)
(Gain) loss on license sales and exchanges				(255,479)		-		-		-		-		-		-		(255,479)
Operating income (loss)				146,865		65,006		(44)		(20,130)		-		44,832		43,662		235,359
Equity in earnings of unconsolidated entities				131,949		19		-		-		-		19		746		132,714
Interest and dividend income				3,961		1,759		2		63		-		1,824		3,307		9,092
Gain (loss) on investments				18,556		830		-		-		-		830		(4,839)		14,547
Interest expense				(43,963)		3,265		(74)		(1,626)		-		1,565		(56,413)		(98,811)
Other, net				288		(214)		-		29		-		(185)		(140)		(37)
Income (loss) before income taxes				257,656		70,665		(116)		(21,664)		-		48,885		(13,677)		292,864
Add back:
Depreciation, amortization and accretion				803,781		170,868		7,571		24,262		-		202,701		11,595		1,018,077
(Gain) loss on sale of business and other exit costs, net				(246,767)		-		-		-		-		-		(53,889)		(300,656)
(Gain) loss on license sales and exchanges				(255,479)		-		-		-		-		-		-		(255,479)
Gain (loss) on investments				(18,556)		(830)		-		-		-		(830)		4,839		(14,547)
Interest expense				43,963		(3,265)		74		1,626		-		(1,565)		56,413		98,811
Adjusted income before income taxes			$	584,598	$	237,438	$	7,529	$	4,224	$	-	$	249,191	$	5,281	$	839,070
Investments in unconsolidated entities			$	265,585	$	3,809	$	-	$	-	$	-	$	3,809	$	32,378	$	301,772
Total assets			$	6,445,708	$	1,452,502	$	278,969	$	328,397	$	-	$	2,059,868	$	398,571	$	8,904,147
Capital expenditures			$	737,501	$	140,009	$	8,375	$	16,474	$	-	$	164,858	$	7,301	$	909,660

					TDS Telecom
Year Ended or as of December 31, 2012			U.S. Cellular		Wireline		HMS		TDS Telecom Eliminations		TDS Telecom Total		Corporate, Eliminations and Other Reconciling Items		Total
(Dollars in thousands)
Operating revenues
	Service		$	4,098,856	$	738,216	$	77,096	$	(252)	$	815,060	$	38,687	$	4,952,603
	Equipment and product sales			353,228		3,532		35,914		-		39,446		-		392,674
		Total operating revenues		4,452,084		741,748		113,010		(252)		854,506		38,687		5,345,277
Cost of services (excluding Depreciation, amortization and accretion reported below)				946,805		270,333		46,836		(252)		316,917		10,903		1,274,625
Cost of equipment and products				935,947		3,732		28,945		-		32,677		29,321		997,945
Selling, general and administrative				1,764,933		235,716		34,193		-		269,909		(941)		2,033,901
Depreciation, amortization and accretion				608,633		172,526		20,568		-		193,094		11,899		813,626
Loss on impairment of assets				-		-		-		-		-		515		515
(Gain) loss on asset disposals, net				18,088		1,020		108		-		1,128		525		19,741
(Gain) loss on sale of business and other exit costs, net				21,022		39		-		-		39		-		21,061
Operating income (loss)				156,656		58,382		(17,640)		-		40,742		(13,535)		183,863
Equity in earnings of unconsolidated entities				90,364		10		-		-		10		2,493		92,867
Interest and dividend income				3,644		3,085		25		-		3,110		2,494		9,248
Gain (loss) on investments				(3,718)		-		-		-		-		-		(3,718)
Interest expense				(42,393)		2,674		(1,160)		-		1,514		(45,866)		(86,745)
Other, net				500		(353)		(1)		-		(354)		574		720
Income (loss) before income taxes				205,053		63,798		(18,776)		-		45,022		(53,840)		196,235
Add back:
Depreciation, amortization and accretion				608,633		172,526		20,568		-		193,094		11,899		813,626
Loss on impairment of assets				-		-		-		-		-		515		515
(Gain) loss on sale of business and other exit costs, net				21,022		39		-		-		39		-		21,061
Gain (loss) on investments				3,718		-		-		-		-		-		3,718
Interest expense				42,393		(2,674)		1,160		-		(1,514)		45,866		86,745
Adjusted income before income taxes			$	880,819	$	233,689	$	2,952	$	-	$	236,641	$	4,440	$	1,121,900
Investments in unconsolidated entities			$	144,531	$	3,809	$	-	$	-	$	3,809	$	31,581	$	179,921
Total assets			$	6,587,450	$	1,519,698	$	267,798	$	-	$	1,787,496	$	248,954	$	8,623,900
Capital expenditures			$	836,748	$	158,580	$	15,344	$	-	$	173,924	$	(6,051)	$	1,004,621

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Earnings Per Share (Tables)

12 Months Ended

Dec. 31, 2014

Earnings Per Share

Earnings per share

Year Ended December 31,				2014		2013		2012
(Dollars and shares in thousands, except earnings per share)
Basic earnings (loss) per share attributable to TDS shareholders:
Net income (loss) available to common shareholders of TDS used in basic earnings (loss) per share				$	(136,404)	$	141,878	$	81,811
Adjustments to compute diluted earnings:
	Noncontrolling interest adjustment				-		(1,058)		(640)
	Preferred dividend adjustment				-		49		-
Net income (loss) attributable to common shareholders of TDS used in diluted earnings (loss) per share				$	(136,404)	$	140,869	$	81,171
Weighted average number of shares used in basic earnings (loss) per share
		Common Shares			101,304		101,339		101,532
		Series A Common Shares			7,181		7,151		7,139
			Total		108,485		108,490		108,671
Effects of dilutive securities:
	Stock options (1)				-		209		11
	Restricted stock units (1)				-		375		255
	Preferred shares (1)				-		58		-
Weighted average number of shares used in diluted earnings (loss) per share					108,485		109,132		108,937
Basic earnings (loss) per share attributable to TDS shareholders				$	(1.26)	$	1.31	$	0.75
Diluted earnings (loss) per share attributable to TDS shareholders				$	(1.26)	$	1.29	$	0.75
(1)		There were no effects of dilutive securities for the year ended December 31, 2014 due to the net loss for the year.

Summary of antidilutive shares

Year Ended December 31,	2014	2013	2012
(Shares in thousands)
Stock options	8,984	7,120	8,130
Restricted stock units	839	171	154
Preferred shares	56	-	57

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Noncontrolling Interests (Details) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Noncontrolling interests
Net income (loss) attributable to TDS shareholders	$ (136,355,000)	$ 141,927,000	$ 81,861,000
Transfer (to) from the noncontrolling interests
Change in TDS' Capital in excess of par value from U.S. Cellular's issuance of U.S. Cellular shares	(12,420,000)	(14,135,000)	(8,854,000)
Change in TDS' Capital in excess of par value from U.S. Cellular's repurchase of U.S. Cellular shares	1,296,000	3,370,000	4,789,000
Change in TDS' Capital in excess of par value from common control transaction	7,484,000
Purchase of ownership in subsidiaries from noncontrolling interests	(1,034,000)	(123,000)	4,397,000
Net transfers (to) from noncontrolling interests	(4,674,000)	(10,888,000)	332,000
Change from net income (loss) attributable to TDS shareholders and transfers (to) from noncontrolling interests	(141,029,000)	131,039,000	82,193,000
Redeemable noncontrolling interest
Termination date range of mandatorily redeemable noncontrolling interests - begin	2085
Termination date range of mandatorily redeemable noncontrolling interests - end	2113
Settlement value of mandatorily redeemable noncontrolling interests	3,600,000
Carrying value of mandatorily redeemable noncontrolling interests	$ 3,000,000

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Employee Benefit Plans, other Post-Retirement Benefits (Details) (Post Retirement Medical Benefits, USD $)	12 Months Ended
	Dec. 31, 2014		Dec. 31, 2013		Dec. 31, 2012
Amounts included in the Consolidated Balance Sheet, before tax
Net prior service costs	$ 17,246,000		$ 18,833,000
Net actuarial loss	(8,436,000)		(20,713,000)
Sum net prior service cost and net actuarial loss	8,810,000		(1,880,000)
Amounts to be amortized to net benefit cost
Estimated net actuarial loss amortized from accumulated other comprehensive loss into net periodic benefit cost next year	300,000
Estimated prior service cost gain amortized from accumulated other comprehensive loss into net periodic benefit cost next year	3,400,000
Change in benefit obligation
Benefit obligation at beginning of year	46,142,000		54,568,000
Service cost	1,018,000		1,348,000		1,197,000
Interest cost	2,255,000		2,137,000		2,297,000
Plan amendments	(2,057,000)
Actuarial (gain) loss	(10,897,000)		(9,437,000)
Prescription drug subsidy	264,000
Employee contribution	2,216,000		2,230,000
Benefits paid	(4,296,000)		(4,704,000)
Benefit obligation at end of year	34,645,000		46,142,000		54,568,000
Change in plan assets
Fair value of plan assets at beginning of year	49,743,000		45,047,000
Actual return (loss) on plan assets	3,495,000		6,973,000
Employee contribution	2,216,000		2,230,000
Employer contribution	166,000		197,000
Benefits paid	4,296,000		4,704,000
Fair value of plan assets at end of year	51,324,000		49,743,000		45,047,000
Funded status	16,679,000		3,601,000
Benefit plan, investment and asset allocation
Three year return	13.26%
Five year return	10.30%
Net periodic benefit cost
Service cost	1,018,000		1,348,000		1,197,000
Interest cost	2,255,000		2,137,000		2,297,000
Expected return on plan assets	(3,402,000)		(3,065,000)		(2,995,000)
Amortization of prior service costs	(3,644,000)	[1]	(3,605,000)	[1]	(3,735,000)	[1]
Amortization of actuarial losses	1,287,000	[2]	2,452,000	[2]	2,517,000	[2]
Net post-retirement cost	(2,486,000)		(733,000)		(719,000)
Benefit obligations
Discount rate	4.20%		5.00%
Net periodic benefit cost assumptions
Discount rate	5.00%		4.00%
Expected return on plan assets	7.00%		7.00%
Discount rate assumptions	The discount rate for 2014 and 2013 was determined using a hypothetical Aa spot yield curve represented by a series of annualized individual spot discount rates from six months to 99 years. The spot rate curve was derived from a direct calculation of the implied forward rate curve based on the included bond cash flows. This yield curve, when populated with projected cash flows that represent the expected timing and amount of TDS plan benefit payments, produces a single effective interest discount rate that is used to measure the plan’s liabilities. The expected rate of return was determined using the target asset allocation for the TDS plan and rate of return expectations for each asset class. The measurement date for actuarial determination was December 31, 2014. For measurement purposes, the annual rate of increase in the per capita cost of covered health care benefits was assumed for 2014 to be 7.8% for plan participants aged 65 and above, and 7.5% for participants under age 65. For all participants the 2014 annual rate of increase is expected to decrease to 5.0% by 2022. The 2013 expected rate of increase was 7.5% for plan participants aged 65 and above, and 7.9% for participants under age 65, decreasing to 5.0% for all participants by 2021. A 1% increase or decrease in assumed health care cost trend rates would have the following effects as of and for the year ended December 31, 2014:
Health care trend rates
Ultimate health care cost trend rate	5.00%		5.00%
One percent increase effect on total service and interest cost components	25,000
One percent decrease effect on total service and interest cost components	(23,000)
One percent increase effect on post-retirement benefit obligation	423,000
One percent decrease effect on post-retirement benefit obligation	(393,000)
Estimated future post-retirement benefit payments
Estimated future post-retirement benefit payments - next twelve months	1,687,000
Estimated future post-retirement benefit payments - 2 years	1,719,000
Estimated future post-retirement benefit payments - 3 years	1,662,000
Estimated future post-retirement benefit payments - 4 years	1,652,000
Estimated future post-retirement benefit payments - 5 years	1,667,000
Estimated future post-retirement benefit payments - 6-10 years	9,442,000
65 and older
Health care trend rates
Health care cost trend rate	7.80%		7.50%
Under 65
Health care trend rates
Health care cost trend rate	7.50%		7.90%
Level 1
Change in plan assets
Fair value of plan assets at end of year	51,323,000		49,732,000
Level 2
Change in plan assets
Fair value of plan assets at end of year	1,000		11,000
Bond Mutual Funds
Change in plan assets
Fair value of plan assets at beginning of year	12,697,000	[3]
Fair value of plan assets at end of year	12,842,000	[3]
Benefit plan, investment and asset allocation
Investment strategy of mutual fund	The funds seek to achieve a maximum total return, consistent with preservation of capital and prudent investment management by investing in a wide spectrum of fixed income instruments including bonds, debt securities and other similar instruments issued by government and private-sector entities.
Target asset allocation	30.00%
Actual asset allocation	29.00%		29.10%
Bond Mutual Funds | Level 1
Change in plan assets
Fair value of plan assets at end of year	12,842,000	[3]	12,697,000	[3]
Equity Mutual Funds | U.S. Large Cap
Change in plan assets
Fair value of plan assets at beginning of year	20,861,000	[4]
Fair value of plan assets at end of year	20,191,000	[4]
Benefit plan, investment and asset allocation
Investment strategy of mutual fund	The funds seek to track the performance of several benchmark indices that measure the investment return of large-capitalization stocks. The funds attempt to replicate the indices by investing substantially all of their assets in the stocks that make up the various indices in approximately the same proportion as the weighting in the indices.
Equity Mutual Funds | U.S. Large Cap | Level 1
Change in plan assets
Fair value of plan assets at end of year	20,191,000	[4]	20,861,000	[4]
Equity Mutual Funds | U.S. Small Cap
Change in plan assets
Fair value of plan assets at beginning of year	4,500,000	[5]
Fair value of plan assets at end of year	4,234,000	[5]
Benefit plan, investment and asset allocation
Investment strategy of mutual fund	The fund seeks to track the performance of a benchmark index that measures the investment return of small-capitalization stocks. The fund attempts to replicate the index by investing substantially all of its assets in the stocks that make up the index in approximately the same proportion as the weighting in the index.
Equity Mutual Funds | U.S. Small Cap | Level 1
Change in plan assets
Fair value of plan assets at end of year	4,234,000	[5]	4,500,000	[5]
Equity Mutual Funds | International
Change in plan assets
Fair value of plan assets at beginning of year	9,876,000	[6]
Fair value of plan assets at end of year	12,003,000	[6]
Benefit plan, investment and asset allocation
Investment strategy of mutual fund	The funds seek to provide long-term capital appreciation by investing in the stocks of companies located outside the United States that are considered to have the potential for above-average capital appreciation.
Target asset allocation	24.00%
Actual asset allocation	23.40%		19.90%
Equity Mutual Funds | International | Level 1
Change in plan assets
Fair value of plan assets at end of year	12,003,000	[6]	9,876,000	[6]
Equity Mutual Funds | United States
Benefit plan, investment and asset allocation
Target asset allocation	46.00%
Actual asset allocation	47.60%		51.00%
Money Market Mutual Funds
Change in plan assets
Fair value of plan assets at beginning of year	1,798,000	[7]
Fair value of plan assets at end of year	2,053,000	[7]
Benefit plan, investment and asset allocation
Investment strategy of mutual fund	The fund seeks as high a level of current income as is consistent with the preservation of capital and the maintenance of liquidity by investing in a diversified portfolio of high-quality, dollar-denominated short-term debt securities.
Money Market Mutual Funds | Level 1
Change in plan assets
Fair value of plan assets at end of year	2,053,000	[7]	1,798,000	[7]
Other
Change in plan assets
Fair value of plan assets at end of year	1,000		11,000
Other | Level 2
Change in plan assets
Fair value of plan assets at end of year	$ 1,000		$ 11,000

[1] Based on straight-line amortization over the average time remaining before active employees become fully eligible for plan benefits.

[2] Based on straight-line amortization over the average time remaining before active employees retire.

[3] Bond - The funds seek to achieve a maximum total return, consistent with preservation of capital and prudent investment management by investing in a wide spectrum of fixed income instruments including bonds, debt securities and other similar instruments issued by government and private-sector entities.

[4] US large cap - The funds seek to track the performance of several benchmark indices that measure the investment return of large-capitalization stocks. The funds attempt to replicate the indices by investing substantially all of their assets in the stocks that make up the various indices in approximately the same proportion as the weighting in the indices.

[5] US small cap - The fund seeks to track the performance of a benchmark index that measures the investment return of small-capitalization stocks. The fund attempts to replicate the index by investing substantially all of its assets in the stocks that make up the index in approximately the same proportion as the weighting in the index.

[6] International equity - The appreciation by investing in the stocks of companies located outside the United States that are considered to have the potential for above-average capital appreciation. funds seek to provide long-term capital.

[7] Money market - The fund seeks as high a level of current income as is consistent with the preservation of capital and the maintenance of liquidity by investing in a diversified portfolio of high-quality, dollar-denominated short-term debt securities.

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Business Segment (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Business Segment Information
Service	$ 4,328,654	$ 4,443,491	$ 4,952,603
Equipment and product sales	680,784	457,745	392,674
Total operating revenues	5,009,438	4,901,236	5,345,277
Cost of services (excluding Depreciation, amortization and accretion reported below)	1,164,658	1,118,183	1,274,625
Cost of equipment and products	1,346,811	1,107,133	997,945
Selling, general and administrative	1,865,807	1,947,778	2,033,901
Depreciation, amortization and accretion	836,532	1,018,077	813,626
Loss on impairment of assets	87,802		515
(Gain) loss on asset disposals, net	26,531	30,841	19,741
(Gain) loss on sale of business and other exit costs, net	(15,846)	(300,656)	21,061
(Gain) loss on license sales and exchanges	(112,993)	(255,479)
Operating income (loss)	(189,864)	235,359	183,863
Equity in earnings of unconsolidated entities	131,965	132,714	92,867
Interest and dividend income	16,957	9,092	9,248
Gain (loss) on investments		14,547	(3,718)
Interest expense	(111,397)	(98,811)	(86,745)
Other, net	115	(37)	720
Income (loss) before income taxes	(152,224)	292,864	196,235
Depreciation, amortization and accretion	836,532	1,018,077	813,626
Loss on impairment of assets	87,802		515
(Gain) loss on sale of business and other exit costs, net	(15,846)	(300,656)	21,061
(Gain) loss on license sales and exchanges	(112,993)	(255,479)
Gain (loss) on investments		(14,547)	3,718
Interest expense	111,397	98,811	86,745
Adjusted income (loss) before income taxes	754,668	839,070	1,121,900
Investments in unconsolidated entities	321,729	301,772	179,921
Total assets	8,906,939	8,904,147	8,623,900
Capital expenditures	770,577	909,660	1,004,621
U.S. Cellular
Business Segment Information
Service	3,397,937	3,594,773	4,098,856
Equipment and product sales	494,810	324,063	353,228
Total operating revenues	3,892,747	3,918,836	4,452,084
Cost of services (excluding Depreciation, amortization and accretion reported below)	769,911	763,435	946,805
Cost of equipment and products	1,192,669	999,000	935,947
Selling, general and administrative	1,591,914	1,677,395	1,764,933
Depreciation, amortization and accretion	605,997	803,781	608,633
(Gain) loss on asset disposals, net	21,469	30,606	18,088
(Gain) loss on sale of business and other exit costs, net	(32,830)	(246,767)	21,022
(Gain) loss on license sales and exchanges	(112,993)	(255,479)
Operating income (loss)	(143,390)	146,865	156,656
Equity in earnings of unconsolidated entities	129,764	131,949	90,364
Interest and dividend income	12,148	3,961	3,644
Gain (loss) on investments		18,556	(3,718)
Interest expense	(57,386)	(43,963)	(42,393)
Other, net	160	288	500
Income (loss) before income taxes	(58,704)	257,656	205,053
Depreciation, amortization and accretion	605,997	803,781	608,633
(Gain) loss on sale of business and other exit costs, net	(32,830)	(246,767)	21,022
(Gain) loss on license sales and exchanges	(112,993)	(255,479)
Gain (loss) on investments		(18,556)	3,718
Interest expense	57,386	43,963	42,393
Adjusted income (loss) before income taxes	458,856	584,598	880,819
Investments in unconsolidated entities	283,014	265,585	144,531
Total assets	6,487,268	6,445,708	6,587,450
Capital expenditures	557,615	737,501	836,748
TDS Telecom Wireline
Business Segment Information
Service	714,586	723,372	738,216
Equipment and product sales	1,836	3,195	3,532
Total operating revenues	716,422	726,567	741,748
Cost of services (excluding Depreciation, amortization and accretion reported below)	256,878	266,635	270,333
Cost of equipment and products	2,336	3,831	3,732
Selling, general and administrative	189,956	220,097	235,716
Depreciation, amortization and accretion	169,044	170,868	172,526
(Gain) loss on asset disposals, net	2,091	130	1,020
(Gain) loss on sale of business and other exit costs, net	(2,357)		39
Operating income (loss)	98,474	65,006	58,382
Equity in earnings of unconsolidated entities	8	19	10
Interest and dividend income	2,396	1,759	3,085
Gain (loss) on investments		830
Interest expense	2,695	3,265	2,674
Other, net	(32)	(214)	(353)
Income (loss) before income taxes	103,541	70,665	63,798
Depreciation, amortization and accretion	169,044	170,868	172,526
(Gain) loss on sale of business and other exit costs, net	(2,357)		39
Gain (loss) on investments		(830)
Interest expense	(2,695)	(3,265)	(2,674)
Adjusted income (loss) before income taxes	267,533	237,438	233,689
Investments in unconsolidated entities	3,803	3,809	3,809
Total assets	1,419,478	1,452,502	1,519,698
Capital expenditures	135,805	140,009	158,580
TDS Telecom Cable
Business Segment Information
Service	116,855	35,883
Total operating revenues	116,855	35,883
Cost of services (excluding Depreciation, amortization and accretion reported below)	54,265	17,274
Selling, general and administrative	36,175	11,054
Depreciation, amortization and accretion	23,643	7,571
(Gain) loss on asset disposals, net	2,482	28
Operating income (loss)	290	(44)
Interest and dividend income	8	2
Interest expense	95	(74)
Other, net	(1)
Income (loss) before income taxes	392	(116)
Depreciation, amortization and accretion	23,643	7,571
Interest expense	(95)	74
Adjusted income (loss) before income taxes	23,940	7,529
Total assets	563,585	278,969
Capital expenditures	35,640	8,375
TDS Telecom HMS
Business Segment Information
Service	109,766	94,875	77,096
Equipment and product sales	148,966	90,741	35,914
Total operating revenues	258,732	185,616	113,010
Cost of services (excluding Depreciation, amortization and accretion reported below)	77,392	60,423	46,836
Cost of equipment and products	126,362	75,991	28,945
Selling, general and administrative	53,020	44,945	34,193
Depreciation, amortization and accretion	26,912	24,262	20,568
Loss on impairment of assets	84,000
(Gain) loss on asset disposals, net	181	125	108
Operating income (loss)	(109,135)	(20,130)	(17,640)
Interest and dividend income	26	63	25
Interest expense	(1,602)	(1,626)	(1,160)
Other, net	12	29	(1)
Income (loss) before income taxes	(110,699)	(21,664)	(18,776)
Depreciation, amortization and accretion	26,912	24,262	20,568
Loss on impairment of assets	84,000
Interest expense	1,602	1,626	1,160
Adjusted income (loss) before income taxes	1,815	4,224	2,952
Total assets	268,972	328,397	267,798
Capital expenditures	36,618	16,474	15,344
TDS Telecom Eliminations
Business Segment Information
Service	(3,697)	(1,063)	(252)
Total operating revenues	(3,697)	(1,063)	(252)
Cost of services (excluding Depreciation, amortization and accretion reported below)	(3,504)	(1,000)	(252)
Selling, general and administrative	(193)	(63)
TDS Telecom
Business Segment Information
Service	937,510	853,067	815,060
Equipment and product sales	150,802	93,936	39,446
Total operating revenues	1,088,312	947,003	854,506
Cost of services (excluding Depreciation, amortization and accretion reported below)	385,031	343,332	316,917
Cost of equipment and products	128,698	79,822	32,677
Selling, general and administrative	278,958	276,033	269,909
Depreciation, amortization and accretion	219,599	202,701	193,094
Loss on impairment of assets	84,000
(Gain) loss on asset disposals, net	4,754	283	1,128
(Gain) loss on sale of business and other exit costs, net	(2,357)		39
Operating income (loss)	(10,371)	44,832	40,742
Equity in earnings of unconsolidated entities	8	19	10
Interest and dividend income	2,430	1,824	3,110
Gain (loss) on investments		830
Interest expense	1,188	1,565	1,514
Other, net	(21)	(185)	(354)
Income (loss) before income taxes	(6,766)	48,885	45,022
Depreciation, amortization and accretion	219,599	202,701	193,094
Loss on impairment of assets	84,000
(Gain) loss on sale of business and other exit costs, net	(2,357)		39
Gain (loss) on investments		(830)
Interest expense	(1,188)	(1,565)	(1,514)
Adjusted income (loss) before income taxes	293,288	249,191	236,641
Investments in unconsolidated entities	3,803	3,809	3,809
Total assets	2,252,035	2,059,868	1,787,496
Capital expenditures	208,063	164,858	173,924
Corporate, Eliminations and Other
Business Segment Information
Service	(6,793)	(4,349)	38,687
Equipment and product sales	35,172	39,746
Total operating revenues	28,379	35,397	38,687
Cost of services (excluding Depreciation, amortization and accretion reported below)	9,716	11,416	10,903
Cost of equipment and products	25,444	28,311	29,321
Selling, general and administrative	(5,065)	(5,650)	(941)
Depreciation, amortization and accretion	10,936	11,595	11,899
Loss on impairment of assets	3,802		515
(Gain) loss on asset disposals, net	308	(48)	525
(Gain) loss on sale of business and other exit costs, net	19,341	(53,889)
Operating income (loss)	(36,103)	43,662	(13,535)
Equity in earnings of unconsolidated entities	2,193	746	2,493
Interest and dividend income	2,379	3,307	2,494
Gain (loss) on investments		(4,839)
Interest expense	(55,199)	(56,413)	(45,866)
Other, net	(24)	(140)	574
Income (loss) before income taxes	(86,754)	(13,677)	(53,840)
Depreciation, amortization and accretion	10,936	11,595	11,899
Loss on impairment of assets	3,802		515
(Gain) loss on sale of business and other exit costs, net	19,341	(53,889)
Gain (loss) on investments		4,839
Interest expense	55,199	56,413	45,866
Adjusted income (loss) before income taxes	2,524	5,281	4,440
Investments in unconsolidated entities	34,912	32,378	31,581
Total assets	167,636	398,571	248,954
Capital expenditures	$ 4,899	$ 7,301	$ (6,051)

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Income Taxes, Deferred Tax Valuation Allowance (Details) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Deferred tax valuation allowance, rollfoward
Balance at end of period	$ 113,553,000	$ 79,064,000
Deferred tax assets, valuation allowance, current	5,700,000
Deferred tax assets, valuation allowance, noncurrent	107,800,000
Deferred tax asset valuation allowance
Deferred tax valuation allowance, rollfoward
Balance at beginning of period	79,064,000	70,502,000	49,686,000
Charged to income tax expense	34,489,000	1,954,000	5,268,000
Charged to other accounts		6,608,000	15,548,000
Balance at end of period	$ 113,553,000	$ 79,064,000	$ 70,502,000

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Commitments and Contingencies, purchase commitments (Details) (USD $)	12 Months Ended
	Dec. 31, 2014
Apple
Long-term Purchase Commitment
Purchase commitment agreement description	During 2013, U.S. Cellular entered into agreements with Apple to purchase certain minimum quantities of Apple iPhone products and fund marketing programs related to the Apple iPhone and iPad products over a three-year period beginning in November 2013. Based on current forecasts, TDS estimates that the remaining contractual commitment as of December 31, 2014 under these agreements is approximately $818 million. At this time, TDS expects to meet its contractual commitments with Apple.
Purchase commitment period	3 years
Purchase commitment remaining estimated payments	$ 818,000,000
Amdocs Software Systems Limited
Long-term Purchase Commitment
Purchase commitment agreement description	On November 25, 2014, U.S. Cellular executed a Master Statement of Work and certain other documents with Amdocs Software Systems Limited (“Amdocs”), effective October 1, 2014, that inter-relate with but rearrange the structure under previous Amdocs Agreements. The agreement provides that U.S. Cellular will now outsource to Amdocs certain support functions for its Billing and Operational Support System (“B/OSS”). Such functions include application support, billing operations and some infrastructure services. The agreement has a term through September 30, 2019, subject to five one-year renewal periods at U.S. Cellular’s option. The total estimated amount to be paid to Amdocs with respect to the agreement during the initial five-year term is approximately $110 million (exclusive of travel and expenses and subject to certain potential adjustments).
Purchase commitment period	5 years
Purchase commitment estimated payments	$ 110,000,000

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Stock-Based Compensation, U.S. Cellular, Overview and Valuation model (Details) (U.S. Cellular)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
2005 and 2013 Long-Term Incentive Plans
Stock-based compensation, overview
Terms of award	Under the U.S. Cellular Long-Term Incentive Plans, U.S. Cellular may grant fixed and performance based incentive and non-qualified stock options, restricted stock, restricted stock units, and deferred compensation stock unit awards to key employees. At December 31, 2014, the only types of awards outstanding are fixed non-qualified stock option awards, restricted stock unit awards, and deferred compensation stock unit awards.
2005 and 2013 Long-Term Incentive Plans | Stock Options
Stock-based compensation, overview
Terms of award	Stock options granted to key employees are exercisable over a specified period not in excess of ten years. Stock options generally vest over a period of three years from the date of grant. Stock options outstanding at December 31, 2014 expire between 2015 and 2024. However, vested stock options typically expire 30 days after the effective date of an employee’s termination of employment for reasons other than retirement. Employees who leave at the age of retirement have 90 days (or one year if they satisfy certain requirements) within which to exercise their vested stock options. The exercise price of options equals the market value of U.S. Cellular Common Shares on the date of grant.
2005 and 2013 Long-Term Incentive Plans | Stock Options | Minimum
Stock-based compensation, overview
Stock options expiration date	Mar. 31, 2015
2005 and 2013 Long-Term Incentive Plans | Stock Options | Maximum
Stock-based compensation, overview
Stock options expiration date	Jul. 14, 2024
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.
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.
U.S. Cellular Common Shares | 2005 and 2013 Long-Term Incentive Plans
Stock-based compensation, overview
Shares reserved	9,782,000
U.S. Cellular Common Shares | 2005 and 2013 Long-Term Incentive Plans | Stock Options
Black Scholes valuation model assumptions
Expected life	4 years 6 months		4 years 6 months
Expected annual volatility rate, minimum	28.00%	29.20%	40.70%
Expected annual volatility rate, maximum	28.10%	39.60%	42.60%
Dividend yield	0.00%	0.00%	0.00%
Risk-free interest rate, minimum	1.40%	0.70%	0.50%
Risk-free interest rate, maximum	1.50%	2.40%	0.90%
Estimated annual forfeiture rate	9.40%
Estimated annual forfeiture rate, minimum		0.00%	0.00%
Estimated annual forfeiture rate, maximum		8.10%	9.10%
U.S. Cellular Common Shares | 2005 and 2013 Long-Term Incentive Plans | Stock Options | Minimum
Black Scholes valuation model assumptions
Expected life		4 years 7 months
U.S. Cellular Common Shares | 2005 and 2013 Long-Term Incentive Plans | Stock Options | Maximum
Black Scholes valuation model assumptions
Expected life		9 years
U.S. Cellular Common Shares | Non-Employee Directors' Plan
Stock-based compensation, overview
Shares reserved	197,000

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Common Shareholders' Equity, Equity Repurchase (Details) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Share repurchases
Amount	$ 39,096,000	$ 9,692,000	$ 20,026,000
Treasury Shares
Share repurchases
Amount	39,096,000	9,692,000	20,026,000
Common Shares | Treasury Shares
Share repurchases
Number of shares acquired	1,542,000	339,000	868,000
Common Shares | TDS Parent Company | Treasury Shares
Share repurchases
Number of shares acquired	1,542,000	339,000	868,000
Average cost per share	$ 25.36	$ 28.60	$ 23.08
Amount	39,096,000	9,692,000	20,026,000
Common share repurchase authorization	On August 2, 2013, the Board of Directors of TDS authorized a $250 million stock repurchase program for the purchase of TDS Common Shares from time to time pursuant to open market purchases, block transactions, private purchases or otherwise, depending on market conditions. This authorization does not have an expiration date. In 2012, TDS had a prior share repurchase authorization for $250 million that expired on November 19, 2012.
Repurchase authorization, dollar value	250,000,000
Repurchase expiration	This authorization does not have an expiration date.
U.S. Cellular Common Shares | U.S. Cellular | Treasury Shares
Share repurchases
Number of shares acquired	496,000	499,000	571,000
Average cost per share	$ 38.19	$ 37.19	$ 35.11
Amount	$ 18,943,000	$ 18,544,000	$ 20,045,000
Common share repurchase authorization	On November 17, 2009, the Board of Directors of U.S. Cellular authorized the repurchase of up to 1,300,000 Common Shares on an annual basis beginning in 2009 and continuing each year thereafter, on a cumulative basis. These purchases will be made pursuant to open market purchases, block purchases, private purchases, or otherwise, depending on market prices and other conditions.
Repurchase authorization, number of shares	1,300,000
Repurchase expiration	This authorization does not have an expiration date.

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Stock-Based Compensation, U.S. Cellular, Stock option rollforward schedules (Details) (U.S. Cellular, U.S. Cellular Common Shares, 2005 and 2013 Long-Term Incentive Plans, Stock Options, USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
U.S. Cellular | U.S. Cellular Common Shares | 2005 and 2013 Long-Term Incentive Plans | Stock Options
Stock compensation, stock option rollforward schedule, number of shares
Outstanding, begin of period	2,714,000	3,214,000	2,834,000
Exercisable options, begin of period	1,359,000	1,928,000	1,533,000
Granted options	1,116,000	1,213,000	677,000
Exercised options	(233,000)	(892,000)	(47,000)
Forfeited options	(144,000)	(574,000)	(117,000)
Expired options	(65,000)	(247,000)	(133,000)
Outstanding, end of period	3,388,000	2,714,000	3,214,000
Exercisable options, end of period	1,586,000	1,359,000	1,928,000
Stock compensation, stock option rollforward schedule, other information
Options outstanding, begin of period - weighted average exercise price	$ 42.22	$ 41.58	$ 43.07
Options exercisable, begin of period - weighted average exercise price	$ 46.91	$ 43.99	$ 46.23
Options granted, weighted average exercise price	$ 41.21	$ 32.45	$ 34.91
Options exercised, weighted average exercise price	$ 32.80	$ 34.78	$ 29.82
Options forfeited, weighted average exercise price	$ 35.09	$ 34.17	$ 38.45
Options expired, weighted average exercise price	$ 45.68	$ 48.35	$ 46.17
Options outstanding, end of period - weighted average exercise price	$ 41.51	$ 42.22	$ 41.58
Options exercisable, end of period - weighted average exercise price	$ 45.28	$ 46.91	$ 43.99
Options granted, weighted average grant date fair value	$ 10.68	$ 11.53	$ 12.61
Aggregate intrinsic value, options exercised	$ 1,966,000	$ 6,787,000	$ 205,000
Aggregate intrinsic value, options outstanding	7,495,000
Aggregate intrinsic value, options exercisable	$ 2,984,000
Weighted average remaining contractual life, outstanding	6 years 8 months
Weighted average remaining contractual life, exercisable	4 years 5 months

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Commitments and Contingencies, legal accruals and unasserted claims (Details) (USD $) In Millions, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Loss Contingency, Estimate
Accrual for legal proceedings and unasserted claims	$ 0.4	$ 0.3

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Debt, term loan facility (Details) (U.S. Cellular Term loan facility, U.S. Cellular, Subsequent event, USD $) In Millions, unless otherwise specified	0 Months Ended		12 Months Ended
	Feb. 25, 2015		Dec. 31, 2014
Subsequent events
Subsequent event, description			On January 21, 2015, U.S. Cellular entered into a term loan credit facility relating to $225.0 million in debt. The term loan must be drawn in one or more advances by the six month anniversary of the date of the agreement; amounts not drawn by that time will cease to be available. Amounts repaid or prepaid under the term loan facility may not be reborrowed. The term loan is available for general corporate purposes, including working capital, spectrum purchases and capital expenditures. The term loan is unsecured except for a lien on all investments in equity which U.S. Cellular may have in the loan administrative agent, CoBank ACB, subject to certain limitations.
Term loan
Maximum borrowing capacity	$ 225.0
Amount available for use	$ 225.0
Hypothetical Borrowing rate: One-month London Interbank Offered Rate ("LIBOR") plus contractual spread	2.67%	[1]
Sample LIBOR rate	0.17%	[1]
Contractual spread	2.50%	[1]
Agreement date	Jan. 21, 2015
Maturity date	Jan. 21, 2022	[2]
Payment terms			Principal amounts outstanding on the term loan facility will be due and payable quarterly in equal installments beginning on the last day of the fifth fiscal quarter ending after the agreement date, in an amount equal to 1.25% of the aggregate term loan facility commitment. Any amounts owing under the term loan facility not previously repaid will be due and payable on the maturity date.
Subordination agreement description			In connection with U.S. Cellular’s term credit facility, TDS and U.S. Cellular entered into a subordination agreement dated January 21, 2015 together with the administrative agent for the lenders under U.S. Cellular’s term loan credit agreement, which is substantially the same as the subordination agreement in the U.S. Cellular revolving credit facility described above. As of February 25, 2015, U.S. Cellular had no outstanding consolidated funded indebtedness or refinancing indebtedness that was subordinated to the term loan facility pursuant to this subordination agreement.
Minimum
Term loan
Range of commitment fees on amount available for use	0.13%	[3]
Maximum
Term loan
Range of commitment fees on amount available for use	0.30%	[3]

[1] Borrowings under the term loan credit facility bear interest at LIBOR plus a contractual spread based on U.S. Cellular’s credit rating or, at U.S. Cellular’s option, an alternate “Base Rate” as defined in the term loan facility.

[2] Principal amounts outstanding on the term loan facility will be due and payable quarterly in equal installments beginning on the last day of the fifth fiscal quarter ending after the agreement date, in an amount equal to 1.25% of the aggregate term loan facility commitment. Any amounts owing under the term loan facility not previously repaid will be due and payable on the maturity date.

[3] The term loan credit facility has commitment fees based on the unsecured senior debt ratings assigned to U.S. Cellular by certain ratings agencies.

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Business Segment Information

12 Months Ended

Dec. 31, 2014

Disclosure Text Block

Business Segment Information

NOTE 18 BUSINESS SEGMENT INFORMATION

U.S. Cellular and TDS Telecom are billed for all services they receive from TDS, consisting primarily of information processing, accounting and finance, and general management services. Such billings are based on expenses specifically identified to U.S. Cellular and TDS Telecom and on allocations of common expenses.Management believes the method used to allocate common expenses is reasonable and that all expenses and costs applicable to U.S. Cellular and TDS Telecom are reflected in the accompanying business segment information on a basis that is representative of what they would have been if U.S. Cellular and TDS Telecom operated on a stand-alone basis.

Financial data for TDS' reportable segments for 2014, 2013 and 2012, is as follows.

					TDS Telecom
Year Ended or as of December 31, 2014			U.S. Cellular		Wireline		Cable		HMS		TDS Telecom Eliminations		TDS Telecom Total		Corporate, Eliminations and Other		Total
(Dollars in thousands)
Operating revenues
	Service		$	3,397,937	$	714,586	$	116,855	$	109,766	$	(3,697)	$	937,510	$	(6,793)	$	4,328,654
	Equipment and product sales			494,810		1,836		-		148,966		-		150,802		35,172		680,784
		Total operating revenues		3,892,747		716,422		116,855		258,732		(3,697)		1,088,312		28,379		5,009,438
Cost of services (excluding Depreciation, amortization and accretion expense reported below)				769,911		256,878		54,265		77,392		(3,504)		385,031		9,716		1,164,658
Cost of equipment and products				1,192,669		2,336		-		126,362		-		128,698		25,444		1,346,811
Selling, general and administrative				1,591,914		189,956		36,175		53,020		(193)		278,958		(5,065)		1,865,807
Depreciation, amortization and accretion				605,997		169,044		23,643		26,912		-		219,599		10,936		836,532
Loss on impairment of assets				-		-		-		84,000		-		84,000		3,802		87,802
(Gain) loss on asset disposals, net				21,469		2,091		2,482		181		-		4,754		308		26,531
(Gain) loss on sale of business and other exit costs, net				(32,830)		(2,357)		-		-		-		(2,357)		19,341		(15,846)
(Gain) loss on license sales and exchanges				(112,993)		-		-		-		-		-		-		(112,993)
Operating income (loss)				(143,390)		98,474		290		(109,135)		-		(10,371)		(36,103)		(189,864)
Equity in earnings of unconsolidated entities				129,764		8		-		-		-		8		2,193		131,965
Interest and dividend income				12,148		2,396		8		26		-		2,430		2,379		16,957
Interest expense				(57,386)		2,695		95		(1,602)		-		1,188		(55,199)		(111,397)
Other, net				160		(32)		(1)		12		-		(21)		(24)		115
Income (loss) before income taxes				(58,704)		103,541		392		(110,699)		-		(6,766)		(86,754)		(152,224)
Add back:
Depreciation, amortization and accretion				605,997		169,044		23,643		26,912		-		219,599		10,936		836,532
Loss on impairment of assets				-		-		-		84,000		-		84,000		3,802		87,802
(Gain) loss on sale of business and other exit costs, net				(32,830)		(2,357)		-		-		-		(2,357)		19,341		(15,846)
(Gain) loss on license sales and exchanges				(112,993)		-		-		-		-		-		-		(112,993)
Interest expense				57,386		(2,695)		(95)		1,602		-		(1,188)		55,199		111,397
Adjusted income before income taxes			$	458,856	$	267,533	$	23,940	$	1,815	$	-	$	293,288	$	2,524	$	754,668
Investments in unconsolidated entities			$	283,014	$	3,803	$	-	$	-	$	-	$	3,803	$	34,912	$	321,729
Total assets			$	6,487,268	$	1,419,478	$	563,585	$	268,972	$	-	$	2,252,035	$	167,636	$	8,906,939
Capital expenditures			$	557,615	$	135,805	$	35,640	$	36,618	$	-	$	208,063	$	4,899	$	770,577

					TDS Telecom
Year Ended or as of December 31, 2013			U.S. Cellular		Wireline		Cable		HMS		TDS Telecom Eliminations		TDS Telecom Total		Corporate, Eliminations and Other Reconciling Items		Total
(Dollars in thousands)
Operating revenues
	Service		$	3,594,773	$	723,372	$	35,883	$	94,875	$	(1,063)	$	853,067	$	(4,349)	$	4,443,491
	Equipment and product sales			324,063		3,195		-		90,741		-		93,936		39,746		457,745
		Total operating revenues		3,918,836		726,567		35,883		185,616		(1,063)		947,003		35,397		4,901,236
Cost of services (excluding Depreciation, amortization and accretion reported below)				763,435		266,635		17,274		60,423		(1,000)		343,332		11,416		1,118,183
Cost of equipment and products				999,000		3,831		-		75,991		-		79,822		28,311		1,107,133
Selling, general and administrative				1,677,395		220,097		11,054		44,945		(63)		276,033		(5,650)		1,947,778
Depreciation, amortization and accretion				803,781		170,868		7,571		24,262		-		202,701		11,595		1,018,077
(Gain) loss on asset disposals, net				30,606		130		28		125		-		283		(48)		30,841
(Gain) loss on sale of business and other exit costs, net				(246,767)		-		-		-		-		-		(53,889)		(300,656)
(Gain) loss on license sales and exchanges				(255,479)		-		-		-		-		-		-		(255,479)
Operating income (loss)				146,865		65,006		(44)		(20,130)		-		44,832		43,662		235,359
Equity in earnings of unconsolidated entities				131,949		19		-		-		-		19		746		132,714
Interest and dividend income				3,961		1,759		2		63		-		1,824		3,307		9,092
Gain (loss) on investments				18,556		830		-		-		-		830		(4,839)		14,547
Interest expense				(43,963)		3,265		(74)		(1,626)		-		1,565		(56,413)		(98,811)
Other, net				288		(214)		-		29		-		(185)		(140)		(37)
Income (loss) before income taxes				257,656		70,665		(116)		(21,664)		-		48,885		(13,677)		292,864
Add back:
Depreciation, amortization and accretion				803,781		170,868		7,571		24,262		-		202,701		11,595		1,018,077
(Gain) loss on sale of business and other exit costs, net				(246,767)		-		-		-		-		-		(53,889)		(300,656)
(Gain) loss on license sales and exchanges				(255,479)		-		-		-		-		-		-		(255,479)
Gain (loss) on investments				(18,556)		(830)		-		-		-		(830)		4,839		(14,547)
Interest expense				43,963		(3,265)		74		1,626		-		(1,565)		56,413		98,811
Adjusted income before income taxes			$	584,598	$	237,438	$	7,529	$	4,224	$	-	$	249,191	$	5,281	$	839,070
Investments in unconsolidated entities			$	265,585	$	3,809	$	-	$	-	$	-	$	3,809	$	32,378	$	301,772
Total assets			$	6,445,708	$	1,452,502	$	278,969	$	328,397	$	-	$	2,059,868	$	398,571	$	8,904,147
Capital expenditures			$	737,501	$	140,009	$	8,375	$	16,474	$	-	$	164,858	$	7,301	$	909,660

					TDS Telecom
Year Ended or as of December 31, 2012			U.S. Cellular		Wireline		HMS		TDS Telecom Eliminations		TDS Telecom Total		Corporate, Eliminations and Other Reconciling Items		Total
(Dollars in thousands)
Operating revenues
	Service		$	4,098,856	$	738,216	$	77,096	$	(252)	$	815,060	$	38,687	$	4,952,603
	Equipment and product sales			353,228		3,532		35,914		-		39,446		-		392,674
		Total operating revenues		4,452,084		741,748		113,010		(252)		854,506		38,687		5,345,277
Cost of services (excluding Depreciation, amortization and accretion reported below)				946,805		270,333		46,836		(252)		316,917		10,903		1,274,625
Cost of equipment and products				935,947		3,732		28,945		-		32,677		29,321		997,945
Selling, general and administrative				1,764,933		235,716		34,193		-		269,909		(941)		2,033,901
Depreciation, amortization and accretion				608,633		172,526		20,568		-		193,094		11,899		813,626
Loss on impairment of assets				-		-		-		-		-		515		515
(Gain) loss on asset disposals, net				18,088		1,020		108		-		1,128		525		19,741
(Gain) loss on sale of business and other exit costs, net				21,022		39		-		-		39		-		21,061
Operating income (loss)				156,656		58,382		(17,640)		-		40,742		(13,535)		183,863
Equity in earnings of unconsolidated entities				90,364		10		-		-		10		2,493		92,867
Interest and dividend income				3,644		3,085		25		-		3,110		2,494		9,248
Gain (loss) on investments				(3,718)		-		-		-		-		-		(3,718)
Interest expense				(42,393)		2,674		(1,160)		-		1,514		(45,866)		(86,745)
Other, net				500		(353)		(1)		-		(354)		574		720
Income (loss) before income taxes				205,053		63,798		(18,776)		-		45,022		(53,840)		196,235
Add back:
Depreciation, amortization and accretion				608,633		172,526		20,568		-		193,094		11,899		813,626
Loss on impairment of assets				-		-		-		-		-		515		515
(Gain) loss on sale of business and other exit costs, net				21,022		39		-		-		39		-		21,061
Gain (loss) on investments				3,718		-		-		-		-		-		3,718
Interest expense				42,393		(2,674)		1,160		-		(1,514)		45,866		86,745
Adjusted income before income taxes			$	880,819	$	233,689	$	2,952	$	-	$	236,641	$	4,440	$	1,121,900
Investments in unconsolidated entities			$	144,531	$	3,809	$	-	$	-	$	3,809	$	31,581	$	179,921
Total assets			$	6,587,450	$	1,519,698	$	267,798	$	-	$	1,787,496	$	248,954	$	8,623,900
Capital expenditures			$	836,748	$	158,580	$	15,344	$	-	$	173,924	$	(6,051)	$	1,004,621

Adjusted income before income taxes is a segment measure reported to the chief operating decision maker for purposes of making decisions about allocating resources to the segments and assessing their performance. Adjusted income before income taxes is defined as Income (loss) before income taxes, adjusted for the items set forth in the reconciliation above. Adjusted income before income taxes excludes these items in order to show operating results on a more comparable basis from period to period. From time to time, TDS may also exclude other items from adjusted income before income taxes if such items help reflect operating results on a more comparable basis. TDS does not intend to imply that any of such items that are excluded are non-recurring, infrequent or unusual; such itemsmay occur in the future. TDS believes Adjusted income before income taxes is a useful measure of TDS' operating results before significant recurring non-cash charges, discrete gains and losses and financing charges (Interest expense).

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Equipment Installment Plans (Details) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Equipment installment plan receivables
Equipment installment plan payment period	24 months
Guarantee liability	$ 57,500,000
Short-term
Equipment installment plan receivables
Unbilled equipment installment plan receivables, gross	127,400,000	611,000
Unbilled deferred interest	(16,365,000)
Unbilled allowance for credit losses	(3,686,000)	(20,000)
Unbilled equipment installment plan receivables, net	107,349,000	591,000
Long-term
Equipment installment plan receivables
Unbilled equipment installment plan receivables, gross	89,435,000
Unbilled deferred interest	(2,791,000)
Unbilled allowance for credit losses	(6,065,000)
Unbilled equipment installment plan receivables, net	$ 80,579,000

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Variable Interest Entities VIEs (Tables)

12 Months Ended

Dec. 31, 2014

Variable Interest Entities VIEs

Consolidated VIE assets and liabilities

December 31,			2014		2013
(Dollars in thousands)
Assets
	Cash and cash equivalents		$	2,588	$	2,076
	Other current assets			278		1,184
	Licenses			312,977		310,475
	Property, plant and equipment, net			10,671		18,600
	Other assets and deferred charges			60,059		511
		Total assets	$	386,573	$	332,846
Liabilities
	Current liabilities		$	110	$	46
	Deferred liabilities and credits			622		3,139
		Total liabilities	$	732	$	3,185

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Commitments and Contingencies, additional lease information (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Commitments And Contingencies Disclosure
Rent expense, noncancellable long-term operating lease	$ 177.0	$ 187.4	$ 204.1
Rent expense, cancellable short-term operating lease	$ 8.8	$ 12.5	$ 10.4

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Property, Plant and Equpment (Tables)

12 Months Ended

Dec. 31, 2014

U.S. Cellular

Property, Plant and Equipment

Property, plant and equipment

	Useful Lives
December 31,	(Years)	2014		2013
(Dollars in thousands)
Land	N/A	$	35,031	$	36,266
Buildings	20		296,502		304,272
Leasehold and land improvements	1-30		1,086,718		1,197,520
Cell site equipment	7-25		3,269,609		3,306,575
Switching equipment	5-8		960,377		1,161,976
Office furniture and equipment	3-5		553,630		539,248
Other operating assets and equipment	3-5		89,663		92,456
System development	1-7		1,042,195		962,698
Work in process	N/A		125,015		116,501
			7,458,740		7,717,512
Accumulated depreciation and amortization			(4,730,523)		(4,860,992)
		$	2,728,217	$	2,856,520

TDS Telecom

Property, Plant and Equipment

Property, plant and equipment

	Useful Lives
December 31,	(Years)		2014		2013
(Dollars in thousands)
Land	N/A	$	16,974	$	12,794
Buildings	5-40		172,963		148,800
Cable and wire	15-35		1,628,782		1,523,123
Network electronic equipment	5-13		1,278,799		1,229,941
Office furniture and equipment	7-10		79,666		74,507
Other equipment	5-12		102,540		94,438
System development	3-7		241,153		230,416
Work in process	N/A		91,419		88,614
			3,612,296		3,402,633
Accumulated depreciation and amortization			(2,518,625)		(2,417,999)
		$	1,093,671	$	984,634

Other

Property, Plant and Equipment

Property, plant and equipment

December 31,	2014		2013
(Dollars in thousands)
Property, plant and equipment	$	123,008	$	119,659
Accumulated depreciation and amortization		(98,771)		(82,669)
Total	$	24,237	$	36,990

XML

Income Taxes, Expense (Benefit) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Income tax expense (benefit)
Current federal income tax expense (benefit)	$ (87,736)	$ 181,579	$ 9,705
Current state income tax expense	11,091	11,614	5,092
Deferred federal income tax expense (benefit)	41,851	(65,970)	61,113
Federal - valuation allowance adjustment	(10,816)
Deferred state income tax expense (benefit)	2,208	(1,180)	(2,328)
State - valuation allowance adjustment	38,470
Total income tax expense	$ (4,932)	$ 126,043	$ 73,582

XML

Property, Plant and Equipment (Details) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Property, Plant and Equipment
Property, plant and equipment, gross	$ 11,194,044,000	$ 11,239,804,000
Accumulated depreciation and amortization	(7,347,919,000)	(7,361,660,000)
Property, plant and equipment, net	3,846,125,000	3,878,144,000
(Gain) loss on asset disposals, net	26,531,000	30,841,000	19,741,000
U.S. Cellular
Property, Plant and Equipment
Land	35,031,000	36,266,000
Buildings	296,502,000	304,272,000
Leasehold and land improvements	1,086,718,000	1,197,520,000
Cell site equipment	3,269,609,000	3,306,575,000
Switching equipment	960,377,000	1,161,976,000
Office furniture and equipment	553,630,000	539,248,000
Other equipment	89,663,000	92,456,000
System development	1,042,195,000	962,698,000
Work in process	125,015,000	116,501,000
Property, plant and equipment, gross	7,458,740,000	7,717,512,000
Accumulated depreciation and amortization	(4,730,523,000)	(4,860,992,000)
Property, plant and equipment, net	2,728,217,000	2,856,520,000
Depreciation and amortization expense	593,200,000	791,100,000	597,700,000
(Gain) loss on asset disposals, net	21,469,000	30,606,000	18,088,000
U.S. Cellular | Buildings
Property, Plant and Equipment
Useful life	20 years
U.S. Cellular | Leasehold and land improvements | Minimum
Property, Plant and Equipment
Useful life	1 year
U.S. Cellular | Leasehold and land improvements | Maximum
Property, Plant and Equipment
Useful life	30 years
U.S. Cellular | Cell site equipment | Minimum
Property, Plant and Equipment
Useful life	7 years
U.S. Cellular | Cell site equipment | Maximum
Property, Plant and Equipment
Useful life	25 years
U.S. Cellular | Switching equipment | Minimum
Property, Plant and Equipment
Useful life	5 years
U.S. Cellular | Switching equipment | Maximum
Property, Plant and Equipment
Useful life	8 years
U.S. Cellular | Office furniture and equipment | Minimum
Property, Plant and Equipment
Useful life	3 years
U.S. Cellular | Office furniture and equipment | Maximum
Property, Plant and Equipment
Useful life	5 years
U.S. Cellular | Other operating assets and equipment | Minimum
Property, Plant and Equipment
Useful life	3 years
U.S. Cellular | Other operating assets and equipment | Maximum
Property, Plant and Equipment
Useful life	5 years
U.S. Cellular | System development | Minimum
Property, Plant and Equipment
Useful life	1 year
U.S. Cellular | System development | Maximum
Property, Plant and Equipment
Useful life	7 years
TDS Telecom
Property, Plant and Equipment
Land	16,974,000	12,794,000
Buildings	172,963,000	148,800,000
Cable and wire	1,628,782,000	1,523,123,000
Network electronic equipment	1,278,799,000	1,229,941,000
Office furniture and equipment	79,666,000	74,507,000
Other equipment	102,540,000	94,438,000
System development	241,153,000	230,416,000
Work in process	91,419,000	88,614,000
Property, plant and equipment, gross	3,612,296,000	3,402,633,000
Accumulated depreciation and amortization	(2,518,625,000)	(2,417,999,000)
Property, plant and equipment, net	1,093,671,000	984,634,000
Depreciation and amortization expense	195,100,000	182,600,000	177,300,000
(Gain) loss on asset disposals, net	4,754,000	283,000	1,128,000
TDS Telecom | Buildings | Minimum
Property, Plant and Equipment
Useful life	5 years
TDS Telecom | Buildings | Maximum
Property, Plant and Equipment
Useful life	40 years
TDS Telecom | Cable and wire | Minimum
Property, Plant and Equipment
Useful life	15 years
TDS Telecom | Cable and wire | Maximum
Property, Plant and Equipment
Useful life	35 years
TDS Telecom | Network electronic equipment | Minimum
Property, Plant and Equipment
Useful life	5 years
TDS Telecom | Network electronic equipment | Maximum
Property, Plant and Equipment
Useful life	13 years
TDS Telecom | Office furniture and equipment | Minimum
Property, Plant and Equipment
Useful life	7 years
TDS Telecom | Office furniture and equipment | Maximum
Property, Plant and Equipment
Useful life	10 years
TDS Telecom | Other equipment | Minimum
Property, Plant and Equipment
Useful life	5 years
TDS Telecom | Other equipment | Maximum
Property, Plant and Equipment
Useful life	12 years
TDS Telecom | System development | Minimum
Property, Plant and Equipment
Useful life	3 years
TDS Telecom | System development | Maximum
Property, Plant and Equipment
Useful life	7 years
TDS Telecom Wireline
Property, Plant and Equipment
Depreciation as a percent of depreciable property	5.20%	5.30%	5.60%
(Gain) loss on asset disposals, net	2,091,000	130,000	1,020,000
Other
Property, Plant and Equipment
Property, plant and equipment, gross	123,008,000	119,659,000
Accumulated depreciation and amortization	(98,771,000)	(82,669,000)
Property, plant and equipment, net	24,237,000	36,990,000
Depreciation and amortization expense	9,300,000	10,700,000	10,300,000
(Gain) loss on asset disposals, net	$ 308,000	$ (48,000)	$ 525,000

XML

Acquisitions, Divestitures and Exchanges, acquisitions (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended				1 Months Ended
	Dec. 31, 2014		Dec. 31, 2013		Aug. 31, 2013	Sep. 30, 2014	Oct. 31, 2013	Jun. 30, 2012	Dec. 31, 2012		Aug. 31, 2012	Nov. 30, 2012
Acquisitions, divestitures and exchanges
Goodwill	$ 771,352		$ 836,843						$ 797,194	[1]
Licenses	1,453,574		1,423,779
Franchise rights	244,300		123,668
Acquisitions
Acquisitions, divestitures and exchanges
Purchase price	315,496	[2]	324,166	[2]
Goodwill	33,610	[3]	76,915	[3]
Licenses	44,410		16,540
Franchise rights	120,979		123,668
Intangible assets subject to amortization	14,056	[4]	28,725	[4]
Net tangible assets (liabilities)	102,441		78,318
U.S. Cellular
Acquisitions, divestitures and exchanges
Goodwill	227,406		232,041						269,307	[1]
U.S. Cellular | License Acquisitions
Acquisitions, divestitures and exchanges
Purchase price	41,707	[2]	16,540	[2]
Licenses	41,707		16,540
U.S. Cellular | License Acquisitions | 700 Mhz Acquisition 1
Acquisitions, divestitures and exchanges
Description of acquired entity	In August 2012, U.S. Cellular acquired four 700 MHz licenses covering portions of Iowa, Kansas, Missouri, Nebraska and Oklahoma for $34.0 million.
Licenses											34,000
U.S. Cellular | License Acquisitions | 700 Mhz Acquisition 2
Acquisitions, divestitures and exchanges
Description of acquired entity	In November 2012, U.S. Cellular acquired seven 700 MHz licenses covering portions of Illinois, Michigan, Minnesota, Missouri, Nebraska, Oregon, Washington and Wisconsin for $57.7 million.
Licenses												57,700
TDS Telecom Wireline
Acquisitions, divestitures and exchanges
Goodwill	413,794	[5]	420,458	[5]					420,458	[1],[5]
TDS Telecom Cable
Acquisitions, divestitures and exchanges
Goodwill	95,322		61,712
TDS Telecom Cable | Business Acquisitions
Acquisitions, divestitures and exchanges
Weighted average useful life, acquired finite lived intangibles	4 years 7 months		2 years 11 months
Purchase price	273,789	[2]	264,069	[2]
Goodwill	33,610	[3]	61,712	[3]
Licenses	2,703
Franchise rights	120,979		123,668
Intangible assets subject to amortization	14,056	[4]	11,542	[4]
Net tangible assets (liabilities)	102,441		67,147
TDS Telecom Cable | Business Acquisitions | Baja Broadband, LLC
Acquisitions, divestitures and exchanges
Description of acquired entity	In August 2013, TDS Telecom acquired substantially all of the assets of Baja for $264.1 million in cash. Baja is a cable company that operates in markets primarily in Colorado, New Mexico, Texas, and Utah and offers broadband, video and voice services, which complement the TDS Telecom portfolio of products. Baja is included in the Cable segment for reporting purposes.
Purchase price					264,100
TDS Telecom Cable | Business Acquisitions | BendBroadband
Acquisitions, divestitures and exchanges
Description of acquired entity	In September 2014, TDS acquired substantially all of the assets of a group of companies operating as BendBroadband (“Bend”), headquartered in Bend, Oregon for $260.7 million in cash. Bend is a full-service communications company, offering an extensive range of broadband, fiber connectivity, cable television and telephone services for commercial and residential customers in Central Oregon. As part of the agreement, TDS also acquired a Tier III data center providing colocation and managed services and a cable advertising and broadcast business. Bend service offerings complement the current portfolio of products offered through TDS Telecom businesses. Goodwill was recorded due primarily to the expectation of future growth and synergies in Cable segment operations. The operations of the data center are included in the HMS segment. The operations of the cable and the advertising and broadcast businesses are included in the Cable segment.
Purchase price						260,700
TDS Telecom HMS
Acquisitions, divestitures and exchanges
Goodwill	34,830		118,830						103,627	[1]
TDS Telecom HMS | Business Acquisitions
Acquisitions, divestitures and exchanges
Weighted average useful life, acquired finite lived intangibles			10 years
Purchase price			43,557	[2]
Goodwill			15,203	[3]
Intangible assets subject to amortization			17,183	[4]
Net tangible assets (liabilities)			11,171
TDS Telecom HMS | Business Acquisitions | MSN Communications, Inc.
Acquisitions, divestitures and exchanges
Voting stock acquired							100.00%
Description of acquired entity	In October 2013, TDS acquired 100% of the outstanding shares of MSN Communications, Inc. (“MSN”) for $43.6 million in cash. MSN is an information technology solutions provider whose service offerings complement the HMS portfolio of products. MSN is included in the HMS segment for reporting purposes.
Purchase price							43,600
TDS Telecom HMS | Business Acquisitions | Vital Support Systems, LLC
Acquisitions, divestitures and exchanges
Voting stock acquired								100.00%
Description of acquired entity	In June 2012, TDS paid $46.1 million in cash to purchase 100% of the outstanding shares of Vital Support Systems, LLC (“Vital”). Vital is an information technology solutions provider whose service offerings complement the HMS portfolio of products. Vital is included in the HMS segment for reporting purposes.
Purchase price								46,100
Other
Acquisitions, divestitures and exchanges
Goodwill			$ 3,802	[6]					$ 3,802	[1],[6]

[1] Includes accumulated impairment losses in prior periods as follows: $333.9 million for U.S. Cellular, $29.4 million for Wireline and $0.5 million for Other.

[2] Cash amounts paid for acquisitions may differ from the purchase price due to cash acquired in the transactions and the timing of cash payments related to the respective transactions.

[3] The entire amount of Goodwill acquired in 2014 and 2013 was amortizable for income tax purposes.

[4] At the date of acquisition, the weighted average amortization period for Intangible Assets Subject to Amortization acquired was as follows: 2014: 4.6 years for TDS Telecom cable business; 2013: 2.9 years for TDS Telecom cable business and 10 years for TDS HMS business

[5] In July 2014, TDS Telecom sold certain Wireline markets.

[6] TDS performed its annual impairment review of Goodwill in the fourth quarter of 2014. Based on the results of this review, TDS concluded that the entire amount of Goodwill related to Suttle-Straus was impaired, which resulted in a $3.8 million loss on impairment.

XML

Supplemental Cash Flow Disclosures (Tables)

12 Months Ended

Dec. 31, 2014

Supplemental Cash Flow Disclosures

Supplemental cash flow disclosures

Year Ended December 31,	2014		2013		2012
(Dollars in thousands)
Interest paid	$	108,510	$	96,241	$	88,208
Income taxes paid (refunded)		48,876		175,629		(62,042)

TDS:
Year Ended December 31,	2014		2013		2012
(Dollars in thousands)
Common Shares withheld		109,061		265,748		49,840
Special Common Shares withheld		-		-		1,381
Aggregate value of Common Shares withheld	$	2,751	$	7,639	$	1,102
Aggregate value of Special Common Shares withheld	$	-	$	-	$	33
Cash receipts upon exercise of stock options		732		12,092		16
Cash disbursements for payment of taxes		(2,751)		(2,438)		(1,135)
Net cash receipts (disbursements) from exercise of stock options and vesting of other stock awards	$	(2,019)	$	9,654	$	(1,119)

U.S. Cellular:
Year Ended December 31,	2014		2013		2012
(Dollars in thousands)
Common Shares withheld		163,355		606,582		92,846
Aggregate value of Common Shares withheld	$	6,868	$	25,179	$	3,604
Cash receipts upon exercise of stock options		5,166		10,468		900
Cash disbursements for payment of taxes		(4,336)		(4,684)		(3,105)
Net cash receipts (disbursements) from exercise of stock options and vesting of other stock awards	$	830	$	5,784	$	(2,205)

XML

Fair Value Measurements

12 Months Ended

Dec. 31, 2014

Disclosure Text Block

Fair Value Measurements

NOTE 2 FAIR VALUE MEASUREMENTS

As of December 31, 2014 and 2013, TDS did not have any financial or nonfinancial assets or liabilities that were required to be recorded at fair value in its Consolidated Balance Sheet in accordance with GAAP.

The provisions of GAAP establish a fair value hierarchy that contains three levels for inputs used in fair value measurements. Level 1 inputs include quoted market prices for identical assets or liabilities in active markets. Level 2 inputs include quoted market prices for similar assets and liabilities in active markets or quoted market prices for identical assets and liabilities in inactive markets. Level 3 inputs are unobservable. A financial instrument's level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. A financial instrument's level within the fair value hierarchy is not representative of its expected performance or its overall risk profile and, therefore, Level 3 assets are not necessarily higher risk than Level 2 assets or Level 1 assets.

TDS has applied the provisions of fair value accounting for purposes of computing the fair value of financial instruments for disclosure purposes as displayed below.

		Level within the Fair Value Hierarchy	December 31, 2014				December 31, 2013
			Book Value		Fair Value		Book Value		Fair Value
(Dollars in thousands)
Cash and cash equivalents		1	$	471,901	$	471,901	$	830,014	$	830,014
Short-term investments
	U.S. Treasury Notes	1		-		-		50,104		50,104
Long-term debt
	Retail	2		1,453,250		1,414,105		1,178,250		1,048,010
	Institutional and other	2		537,471		518,322		537,454		512,635

Short-term investments are designated as held-to-maturity investments and recorded at amortized cost in the Consolidated Balance Sheet. For these investments, TDS' objective is to earn a higher rate of return on funds that are not anticipated to be required to meet liquidity needs in the near term, while maintaining a low level of investment risk.

The fair values of Cash and cash equivalents and Short-term investments approximate their book values due to the short-term nature of these financial instruments. Long-term debt excludes capital lease obligations and the current portion of Long-term debt.The fair value of “Retail” Long-term debtwas estimated using market prices for TDS' 7.0% Senior Notes, 6.875% Senior Notes, 6.625% Senior Notes and 5.875% Senior Notes, and U.S. Cellular's 6.95% Senior Notes and 7.25% Senior Notes. TDS' “Institutional” debt consists of U.S. Cellular's 6.7% Senior Notes which are traded over the counter. TDS 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 0.00% to 7.25% at December 31, 2014 and 0.00% to 7.35% at December 31,2013.

XML

Acquisitions, Divestitures and Exchanges, divestitures (Details) (USD $)	12 Months Ended					0 Months Ended	26 Months Ended		1 Months Ended						38 Months Ended	36 Months Ended
	Dec. 31, 2014		Dec. 31, 2013		Dec. 31, 2012	Sep. 10, 2014	Dec. 31, 2014		Mar. 31, 2012	Oct. 31, 2013	Mar. 31, 2014	Jan. 31, 2015	Dec. 31, 2014 number		Dec. 31, 2015	Dec. 31, 2015
Divestitures
(Increase) decrease in Operating Income	$ 189,864,000		$ (235,359,000)		$ (183,863,000)
(Gain) loss on license sales and exchanges	(112,993,000)		(255,479,000)
Divestiture Financial Impacts
Cash received from divestitures	(187,645,000)		(811,120,000)		(50,182,000)
Total (Gain) loss on sale of business and other exit costs, net	(15,846,000)		(300,656,000)		21,061,000
Incremental depreciation, amortization and accretion, net of salvage values	836,532,000		1,018,077,000		813,626,000
Assets held for sale
Current assets	1,687,000						1,687,000						1,687,000
Other assets and deferred charges	775,000						775,000						775,000
Licenses	56,809,000						56,809,000						56,809,000
Goodwill	8,444,000						8,444,000						8,444,000
Property, plant and equipment	35,628,000						35,628,000						35,628,000
Total assets held for sale	103,343,000		16,027,000				103,343,000						103,343,000
Liabilities held for sale
Current liabilities	3,825,000						3,825,000						3,825,000
Other deferred liabilities and credits	17,818,000						17,818,000						17,818,000
Total liabilities held for sale	21,643,000						21,643,000						21,643,000
Non-operating Market Licenses
Assets held for sale
Licenses	56,809,000		16,027,000				56,809,000						56,809,000
Total assets held for sale	56,809,000						56,809,000						56,809,000
Airadigm Communications, Inc.
Divestitures
Business divestiture description	On May 23, 2014 (the “Signing Date”), U.S. Cellular entered into a License Purchase and Customer Recommendation Agreement with Airadigm. Pursuant to the License Purchase and Customer Recommendation Agreement, on September 10, 2014, Airadigm transferred to U.S. Cellular Federal Communications Commission (“FCC”) spectrum licenses and certain tower assets in certain markets in Wisconsin, Iowa, Minnesota and Michigan, in consideration for $91.5 million in cash. Since both parties to this transaction are controlled by TDS, upon closing, U.S. Cellular recorded the transferred assets at Airadigm’s net book value. The transaction also impacts the expected realization of Airadigm’s federal net operating loss carryforwards and therefore TDS reduced its valuation allowance by $10.8 million upon the transaction closing and recognized an income tax benefit for this same amount. See Note 4 — Income Taxes.
Increase (decrease) in valuation allowance						(10,800,000)
Divestiture Financial Impacts
Cash received from divestitures						(91,500,000)
Charges for the impairment and decomissioning of various operating assets	8,467,000
Employee related costs including severance, retention and outplacement	676,000
Contract termination costs	11,099,000
Total (Gain) loss on sale of business and other exit costs, net	20,242,000
Wireline Markets
Assets held for sale
Current assets	215,000	[1]					215,000	[1]					215,000	[1]
Other assets and deferred charges	2,000	[1]					2,000	[1]					2,000	[1]
Goodwill	4,100,000	[1]					4,100,000	[1]					4,100,000	[1]
Property, plant and equipment	3,858,000	[1]					3,858,000	[1]					3,858,000	[1]
Total assets held for sale	8,175,000	[1]					8,175,000	[1]					8,175,000	[1]
Liabilities held for sale
Current liabilities	218,000						218,000						218,000
Other deferred liabilities and credits	177,000						177,000						177,000
Total liabilities held for sale	395,000						395,000						395,000
Tower sale - second closing
Assets held for sale
Current assets	1,472,000						1,472,000						1,472,000
Other assets and deferred charges	773,000						773,000						773,000
Goodwill	4,344,000						4,344,000						4,344,000
Property, plant and equipment	31,770,000						31,770,000						31,770,000
Total assets held for sale	38,359,000						38,359,000						38,359,000
Liabilities held for sale
Current liabilities	3,607,000						3,607,000						3,607,000
Other deferred liabilities and credits	17,641,000						17,641,000						17,641,000
Total liabilities held for sale	21,248,000						21,248,000						21,248,000
Minimum | Airadigm Communications, Inc.
Divestiture Financial Impacts
Charges for the impairment and decomissioning of various operating assets	8,000,000
Employee related costs including severance, retention and outplacement	500,000
Contract termination costs	10,000,000
Total (Gain) loss on sale of business and other exit costs, net	18,500,000
Maximum | Airadigm Communications, Inc.
Divestiture Financial Impacts
Charges for the impairment and decomissioning of various operating assets	12,000,000
Employee related costs including severance, retention and outplacement	1,500,000
Contract termination costs	15,000,000
Total (Gain) loss on sale of business and other exit costs, net	28,500,000
Employee related costs including severance, retention and outplacement | Airadigm Communications, Inc.
Balance Sheet rollforward
Costs incurred	676,000
Cash settlements	(523,000)	[2]
Balance, end of period	153,000						153,000						153,000
Contract termination costs | Other current liabilities | Airadigm Communications, Inc.
Balance Sheet rollforward
Costs incurred	7,475,000
Cash settlements	(4,291,000)	[2]
Adjustments	1,043,000	[3]
Balance, end of period	4,227,000						4,227,000						4,227,000
Contract termination costs | Other deferred liabilities and credits | Airadigm Communications, Inc.
Balance Sheet rollforward
Costs incurred	3,975,000
Adjustments	(1,396,000)	[3]
Balance, end of period	2,579,000						2,579,000						2,579,000
U.S. Cellular
Divestitures
(Increase) decrease in Operating Income	143,390,000		(146,865,000)		(156,656,000)
(Gain) loss on license sales and exchanges	(112,993,000)		(255,479,000)
Divestiture Financial Impacts
Total (Gain) loss on sale of business and other exit costs, net	(32,830,000)		(246,767,000)		21,022,000
Incremental depreciation, amortization and accretion, net of salvage values	605,997,000		803,781,000		608,633,000
U.S. Cellular | Divestiture Transaction
Divestitures
Business divestiture description	On November 6, 2012, U.S. Cellular entered into a Purchase and Sale Agreement with subsidiaries of Sprint Corp., fka Sprint Nextel Corporation (“Sprint”). Pursuant to the Purchase and Sale Agreement, on May 16, 2013, U.S. Cellular transferred customers and certain PCS license spectrum to Sprint in U.S. Cellular’s Chicago, central Illinois, St. Louis and certain Indiana/Michigan/Ohio markets (“Divestiture Markets”) in consideration for $480 million in cash. The Purchase and Sale Agreement also contemplated certain other agreements, together with the Purchase and Sale Agreement collectively referred to as the “Divestiture Transaction.” These other agreements included customer and network transition services agreements, which required U.S. Cellular to provide customer, billing and network services to Sprint for a period of up to 24 months after the May 16, 2013 closing date. Sprint reimbursed U.S. Cellular for providing such services at an amount equal to U.S. Cellular’s estimated costs, including applicable overhead allocations. These services were substantially complete as of March 31, 2014. In addition, these agreements require Sprint to reimburse U.S. Cellular up to $200 million (the “Sprint Cost Reimbursement”) for certain network decommissioning costs, network site lease rent and termination costs, network access termination costs, and employee termination benefits for specified engineering employees.
(Increase) decrease in Operating Income	(12,776,000)		(123,446,000)		44,535,000		(91,687,000)
Divestiture Financial Impacts
Net assets transferred			160,073,000				160,073,000
Non-cash charges for the write-off and write-down of property under construction and related assets	9,735,000		3,000		10,672,000		20,410,000
Employee related costs including severance, retention and outplacement	(115,000)		1,653,000		12,609,000		14,147,000
Contract termination costs	24,736,000		59,525,000		59,000		84,320,000
Transaction costs	719,000		4,428,000		1,137,000		6,284,000
Total (Gain) loss on sale of business and other exit costs, net	(29,254,000)		(301,959,000)		24,477,000		(306,736,000)
Incremental depreciation, amortization and accretion, net of salvage values	16,478,000		178,513,000		20,058,000		215,049,000
U.S. Cellular | Wireless Market
Divestitures
Business divestiture description	In March 2012, U.S. Cellular sold the majority of the assets and liabilities of a wireless market for $49.8 million in cash. At the time of the sale, a $4.2 million gain was recorded in (Gain) loss on sale of business and other exit costs, net in the Consolidated Statement of Operations.
Divestiture Financial Impacts
Cash received from divestitures									(49,800,000)
Total (Gain) loss on sale of business and other exit costs, net									(4,200,000)
U.S. Cellular | Mississippi Valley
Divestitures
Business divestiture description	In October 2013, U.S. Cellular sold the majority of its Mississippi Valley non-operating market license (“unbuilt license”) for $308.0 million. At the time of the sale, a $250.6 million gain was recorded in (Gain) loss on license sales and exchanges in the Consolidated Statement of Operations.
(Gain) loss on license sales and exchanges										(250,600,000)
Divestiture Financial Impacts
Cash received from divestitures										(308,000,000)
U.S. Cellular | St. Louis
Divestitures
Business divestiture description	In March 2014, U.S. Cellular sold the majority of its St. Louis area non-operating market spectrum license for $92.3 million. A gain of $75.8 million was recorded in (Gain) loss on license sales and exchanges in the Consolidated Statement of Operations in the first quarter of 2014.
(Gain) loss on license sales and exchanges											(75,800,000)
Divestiture Financial Impacts
Cash received from divestitures											(92,300,000)
U.S. Cellular | Tower sale
Divestitures
Number Of Towers	595						595						595
U.S. Cellular | Tower sale | Divestiture
Divestiture Financial Impacts
Cash received from divestitures												(159,000,000)
U.S. Cellular | Tower sale - first closing
Divestitures
Business divestiture description	In December 2014, U.S. Cellular entered into an agreement with a third party to sell 595 towers and certain related contracts, assets, and liabilities for approximately $159 million. This transaction was accomplished in two closings. The first closing occurred in December 2014 and included the sale of 236 towers, without tenants, for $10.0 million. On this same date, U.S. Cellular received $7.5 million in earnest money. At the time of the first closing, a $4.7 million gain was recorded in (Gain) loss on sale of business and other exit costs, net.
Number Of Towers	236						236						236
Divestiture Financial Impacts
Cash received from divestitures													(10,000,000)
Total (Gain) loss on sale of business and other exit costs, net													(4,700,000)
U.S. Cellular | Tower sale - second closing
Divestitures
Business divestiture description	The second closing for the remaining 359 towers, primarily with tenants, took place in January 2015, at which time U.S. Cellular received $141.5 million in additional cash proceeds and recorded a gain of approximately $119 million. The assets and liabilities subject to the second closing have been classified as “held for sale” in the Consolidated Balance Sheet as of December 31, 2014.
U.S. Cellular | Tower sale - second closing | Divestiture
Divestitures
Number Of Towers												359
Divestiture Financial Impacts
Cash received from divestitures												(141,500,000)
Total (Gain) loss on sale of business and other exit costs, net												(119,000,000)
U.S. Cellular | Asset retirement obligation remediation | Divestiture Transaction
Divestiture Financial Impacts
Incremental depreciation, amortization and accretion, net of salvage values	3,400,000
U.S. Cellular | Minimum | Divestiture Transaction
Divestiture Financial Impacts
Net assets transferred			160,073,000
Incremental depreciation, amortization and accretion, net of salvage values							215,049,000
U.S. Cellular | Minimum | Expected event | Divestiture Transaction
Divestitures
(Increase) decrease in Operating Income															(116,878,000)
Divestiture Financial Impacts
Non-cash charges for the write-off and write-down of property under construction and related assets															20,000,000
Employee related costs including severance, retention and outplacement															13,000,000
Contract termination costs															70,000,000
Transaction costs															5,000,000
Total (Gain) loss on sale of business and other exit costs, net															(331,927,000)
U.S. Cellular | Maximum | Divestiture Transaction
Divestitures
Transition services agreement duration	24 months
Divestiture Financial Impacts
Net assets transferred			160,073,000
Incremental depreciation, amortization and accretion, net of salvage values							215,049,000
U.S. Cellular | Maximum | Expected event | Divestiture Transaction
Divestitures
(Increase) decrease in Operating Income															(134,878,000)
Divestiture Financial Impacts
Non-cash charges for the write-off and write-down of property under construction and related assets															22,000,000
Employee related costs including severance, retention and outplacement															16,000,000
Contract termination costs															100,000,000
Transaction costs															7,000,000
Total (Gain) loss on sale of business and other exit costs, net															(349,927,000)
U.S. Cellular | Purchase price | Divestiture Transaction
Divestiture Financial Impacts
Cash received from divestitures			(480,000,000)				(480,000,000)
U.S. Cellular | Purchase price | Minimum | Divestiture Transaction
Divestiture Financial Impacts
Cash received from divestitures			(480,000,000)
U.S. Cellular | Purchase price | Maximum | Divestiture Transaction
Divestiture Financial Impacts
Cash received from divestitures			(480,000,000)
U.S. Cellular | Sprint Cost Reimbursement | Maximum | Expected event | Divestiture Transaction
Divestiture Financial Impacts
Cash received from divestitures																(200,000,000)
U.S. Cellular | Sprint Cost Reimbursement | Cash received from divestitures | Divestiture Transaction
Divestiture Financial Impacts
Cash received from divestitures	(71,100,000)		(10,600,000)
U.S. Cellular | Sprint Cost Reimbursement | (Gain) loss on sale of business and other exit costs, net | Divestiture Transaction
Divestiture Financial Impacts
Cash received from divestitures	(64,329,000)		(47,641,000)				(111,970,000)
U.S. Cellular | Sprint Cost Reimbursement | (Gain) loss on sale of business and other exit costs, net | Minimum | Expected event | Divestiture Transaction
Divestiture Financial Impacts
Cash received from divestitures																(120,000,000)
U.S. Cellular | Sprint Cost Reimbursement | (Gain) loss on sale of business and other exit costs, net | Maximum | Expected event | Divestiture Transaction
Divestiture Financial Impacts
Cash received from divestitures																(175,000,000)
U.S. Cellular | Sprint Cost Reimbursement | Cost of services | Maximum | Expected event | Divestiture Transaction
Divestiture Financial Impacts
Cash received from divestitures																(25,000,000)
U.S. Cellular | Employee related costs including severance, retention and outplacement | Divestiture Transaction
Balance Sheet rollforward
Balance, beginning of period	2,053,000		12,305,000													12,305,000
Costs incurred	127,000		6,853,000
Cash settlements	(1,223,000)	[2]	(11,905,000)	[2]
Adjustments	(242,000)	[3]	(5,200,000)	[3]
Balance, end of period	715,000		2,053,000				715,000						715,000
U.S. Cellular | Contract termination costs | Other current liabilities | Divestiture Transaction
Balance Sheet rollforward
Balance, beginning of period	13,992,000		30,000													30,000
Costs incurred	12,703,000		22,675,000
Cash settlements	(22,210,000)	[2]	(8,713,000)	[2]
Adjustments	3,747,000	[3]
Balance, end of period	8,232,000		13,992,000				8,232,000						8,232,000
U.S. Cellular | Contract termination costs | Other deferred liabilities and credits | Divestiture Transaction
Balance Sheet rollforward
Balance, beginning of period	30,849,000
Costs incurred	24,171,000		34,283,000
Cash settlements	(3,569,000)	[2]	(3,434,000)	[2]
Adjustments	(30,411,000)	[3]
Balance, end of period	21,040,000		30,849,000				21,040,000						21,040,000
U.S. Cellular | Contract termination costs | Accounts payable | Divestiture Transaction
Balance Sheet rollforward
Costs incurred	4,018,000
Adjustments	(1,190,000)	[3]
Balance, end of period	2,828,000						2,828,000						2,828,000
U.S. Cellular | Earnest money received | Tower sale - first closing
Divestiture Financial Impacts
Cash received from divestitures													$ (7,500,000)

[1] On December 30, 2014, TDS Telecom entered into an agreement with a third party to sell certain Wireline markets.

[2] Cash settlement amounts are included in either the Net income or changes in Other assets and liabilities line items as part of Cash flows from operating activities in the Consolidated Statement of Cash Flows.

[3] Adjustment to liability represents changes to previously accrued amounts.

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Noncontrolling Interests (Tables)

12 Months Ended

Dec. 31, 2014

Noncontrolling interests

Noncontrolling interests

Year Ended December 31,			2014		2013		2012
(Dollars in thousands)
Net income (loss) attributable to TDS shareholders			$	(136,355)	$	141,927	$	81,861
	Transfer (to) from the noncontrolling interests
		Change in TDS’ Capital in excess of par value from U.S. Cellular's issuance of U.S. Cellular shares		(12,420)		(14,135)		(8,854)
		Change in TDS’ Capital in excess of par value from U.S. Cellular’s repurchase of U.S. Cellular shares		1,296		3,370		4,789
		Change in TDS’ Capital in excess of par value from common control transaction		7,484		-		-
		Purchase of ownership in subsidiaries from noncontrolling interests		(1,034)		(123)		4,397
		Net transfers (to) from noncontrolling interests		(4,674)		(10,888)		332
	Change from net income (loss) attributable to TDS shareholders and transfers (to) from noncontrolling interests		$	(141,029)	$	131,039	$	82,193

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Summary of Significant Accounting Policies and Recent Accounting Pronouncements (Table)

12 Months Ended

Dec. 31, 2014

Accounting Policies

Accounts receivable, allowance for doubtful accounts

The changes in the allowance for doubtful accounts during the years ended December 31, 2014, 2013 and 2012 were as follows:
		2014		2013		2012
(Dollars in thousands)
Beginning balance		$	65,604	$	33,415	$	31,071
	Additions, net of recoveries		107,861		105,629		74,695
	Deductions		(124,828)		(73,440)		(72,351)
Ending balance (1)		$	48,637	$	65,604	$	33,415
(1)	In 2014, this balance includes a $6.1 million allowance related to the long-term portion of unbilled equipment installment receivables.

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Summary of Significant Accounting Policies and Recent Accounting Pronouncements (Significant Accounting Policies)

12 Months Ended

Dec. 31, 2014

Accounting Policies

Nature of Operations

Telephone and Data Systems, Inc. (“TDS”) is a diversified telecommunications company providing high-quality telecommunications services to approximately 4.8 million wireless customers and 1.2million wireline and cable connections at December 31, 2014. TDS conducts all of its wireless operations through its 84%-owned subsidiary, United States Cellular Corporation (“U.S. Cellular”).TDS provides wireline services, cableservices and hosted and managed services through its wholly-owned subsidiary, TDS Telecommunications Corporation (“TDS Telecom”).

TDS has the following reportable segments: U.S. Cellular and TDS Telecom's Wireline, Cable and Hosted and Managed Services (“HMS”) operations. TDS' non-reportable other business activities are presented as “Corporate, Eliminations and Other”. This includes the operations of TDS' majority owned printing and distribution company, Suttle-Straus, Inc. (“Suttle-Straus”) and TDS' wholly owned subsidiary, Airadigm Communications, Inc. (“Airadigm”). Suttle-Straus and Airadigm's financial results were not significant to TDS' operations. All of TDS' segments operate only in the United States, except for HMS, which includes an insignificant foreign operation. See Note 18—Business Segment Informationfor summary financial information on each business segment.

Principles of Consolidation

The accounting policies of TDS conform to accounting principles generally accepted in the United States of America (“GAAP”) as set forth in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”). Unless otherwise specified, references to accounting provisions and GAAP in these notes refer to the requirements of the FASB ASC. The consolidated financial statements include the accounts of TDS, its majority-owned subsidiaries, general partnerships in which it has a majority partnership interest and variable interest entities (“VIEs”) in which TDS is the primary beneficiary. Both VIE and primary beneficiary represent terms defined by GAAP.

Intercompany accounts and transactions have been eliminated.

Reclassifications

Certain prioryear amounts have been reclassified to conform to the 2014 financial statement presentation. These reclassifications did not affect consolidated net income attributable to TDS shareholders, cash flows, assets, liabilities or equity for the years presented.

In 2014, TDS began presenting separately Equipment and product sales and Cost of equipment and products. As a result of recent HMS acquisitions, these amounts are now more significant to TDS and, accordingly, are shown as separate captions under Operating revenues and Operating expenses, respectively, on the Consolidated Statement of Operations. Amounts in 2013 and 2012 have been reclassified to conform to the 2014 presentation. The separate presentation of Equipment and product sales and Cost of equipment and products had no other impact on the TDS financial statements.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect (a) the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and (b) the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates. Significant estimates are involved in accounting for goodwill and indefinite-lived intangible assets, income taxes, the loyalty reward program and equipment installment plans.

Cash and Cash Equivalents

Cash and cash equivalents include cash and short-term, highly liquid investments with original maturities of three months or less.

Accounts Receivable

U.S. Cellular's accounts receivable consist primarily of amounts owed by customers for wireless services and equipment sales, including sales of certain devices under equipment installment plans, by agents for sales of equipment to them and by other wireless carriers whose customers have used U.S. Cellular's wireless systems.

TDS Telecom's accounts receivable primarily consist of amounts owed by customers for services and products provided, by interexchange carriers for long-distance traffic which TDS Telecom carries on its network, and by interstate and intrastate revenue pools that distribute access charges.

Allowance for Doubtful Accounts

The allowance for doubtful accounts is the best estimate of the amount of probable credit losses related to existing billed and unbilled accounts receivable. The allowance is estimated based on historical experience, account aging and other factors that could affect collectability. Accounts receivable balances are reviewed on either an aggregate or individual basis for collectability depending on the type of receivable. When it is probable that an account balance will not be collected, the account balance is charged against the allowance for doubtful accounts. TDS 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 byreplacement costs or estimated net realizable value. TDS Telecom's materials and supplies are stated at average cost.

Intangible Assets

Goodwill

TDS has Goodwill as a result of its acquisition of wireless,wireline, HMS, and cablecompanies and, under previous business combination guidance in effect prior to 2009, step acquisitions related to U.S. Cellular's repurchase of its common shares. Such Goodwill represents the excess of the total purchase price over the fair value of net assets acquired in these transactions. TDS performs its annual impairment assessment of Goodwill as of November 1 of each year.

See Note 7 — Intangible Assets for additional details related to Goodwill.

U.S. Cellular

For purposes of conducting its Goodwill impairment test in 2014 and 2013, U.S. Cellular identified four reporting units. The four reporting units represent four geographic groupings of operating markets, representing four geographic service areas. A discounted cash flow approach was used to value each reporting unit for purposes of the Goodwill impairment review.

TDS Telecom

For purposes of the 2014 annual impairment testing, TDS Telecom has identified three reporting units: Wireline, HMS and Cable. For purposes of the 2013 annual impairment testing, TDS Telecom had three reporting units: incumbent local exchange carrier (“ILEC”), HMS and Cable. During 2014, the ILEC operations were combined with the competitive local exchange carrier (“CLEC”) operations to create the Wireline reporting unit. There is no Goodwill at the CLEC operations. The discounted cash flow approach and guideline public company method were used to value the Wireline and Cable reporting units for the 2014 annual impairment test. For the 2014 annual impairment test, TDS Telecom performed a qualitative assessment of the HMS reporting unit.

Licenses

Licenses consist of direct and incremental costs incurred in acquiring Federal Communications Commission (“FCC”) licenses to provide wireless service.

TDS has determined that wireless licenses are indefinite-lived intangible assets and, therefore, not subject to amortization based on the following factors:

• Radio spectrum is not a depleting asset.
• The ability to use radio spectrum is not limited to any one technology.
• TDS and its consolidated subsidiaries are licensed to use radio spectrum through the FCC licensing process, which enables licensees to utilize specified portions of the spectrum for the provision of wireless service.
• TDS and its consolidated subsidiaries are required to renew their FCC licenses every ten years or, in some cases, every fifteen years. To date, all of TDS'license renewal applications have been granted by the FCC. Generally, license renewal applications filed by licensees otherwise in compliance with FCC regulations are routinely granted. If, however, a license renewal application is challenged either by a competing applicant for the license or by a petition to deny the renewal application, the license will be renewed if the licensee can demonstrate its entitlement to a “renewal expectancy.” Licensees are entitled to such an expectancy if they can demonstrate to the FCC that they have provided “substantial service” during their license term and have “substantially complied” with FCC rules and policies. TDS believes that it is probable that its future license renewal applications will be granted.

U.S. Cellular performs its annual impairment assessment of its licenses as of November 1 of each year. For purposes of its 2014 and 2013 impairment testing of Licenses, U.S. Cellular separated its FCC licenses into eleven units of accounting based on geographic service areas. In both 2014 and 2013, seven of the units of accounting represented geographic groupings of licenses which, because they were not being utilized and, therefore, were not expected to generate cash flows from operating activities in the foreseeable future, were considered separate units of accounting for purposes of impairment testing. U.S. Cellular estimates the fair value of built licenses for purposes of impairment testing using the build-out method. The build-out method estimates the fair value of Licenses by discounting to present value the future cash flows calculated based on a hypothetical cost to build-out U.S. Cellular's network.

For units of accounting which consist of unbuilt licenses, the fair value of the unbuilt licenses is assumed to change by the same percentage, and in the same direction, that the fair value of built licenses measured using the build-out method changed during the period.

See Note 7 — Intangible Assets for additional details related to Licenses.

Franchise rights

TDS has Franchise rights as a result of acquisitions of cable businesses. Franchise rights are intangible assets that provide their holder with the right to operate a business in a certain geographical location as sanctioned by the franchiser, usually a government agency. TDS has determined that Franchise rights are indefinite-lived intangible assets and, therefore, not subject to amortization because TDS expects both the renewal by the granting authorities and the cash flows generated from the Franchise rights to continue indefinitely. Cable Franchise rights are generally granted for ten year periods and may be renewed for additional terms upon approval by the granting authority.TDS anticipates that future renewals of its Franchise rights will be granted.

TDS Telecom performs its annual impairment assessment of Franchise rights as of November 1 of each year. TDS Telecom tests Franchise rights for impairment at a unit of accounting level. For purposes of its impairment testing of Franchise rights, TDS Telecom identified one unit of accounting. TDS Telecom estimates the fair value of franchise rights for purposes of impairment testing using the build-out method. For the 2013 annual impairment test, TDS Telecom performed a qualitative assessment of the Franchise rights.

See Note 7 — Intangible Assets for additional details related to Franchise rights.

Investments in Unconsolidated Entities

For its equity method investments for which financial information is readily available, TDS 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, TDS records its equity in the earnings of the entity on a one quarter lag basis.

Property, Plant and Equipment

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 Cost of services and products or Selling, general and administrative expense, as applicable. Retirements and disposals of assets are recorded by removing the original cost of the asset (along with the related accumulated depreciation) from plant in service and charging it, together with net removal costs (removal costs less an applicable accrued asset retirement obligation and salvage value realized), to (Gain) loss on asset disposals, net.

TDS 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, except for certain Wireline segment assets, which use the group depreciation method. The group depreciation method develops a depreciation rate based on the average useful life of a specific group of assets, rather than each asset individually. TDS depreciates leasehold improvement assets associated with leased properties over periods ranging from one to thirty years; such periods approximate the shorter of the assets' economic lives or the specific lease terms.

Useful lives of specific assets are reviewed throughout the year to determine if changes in technology or other business changes would warrant accelerating the depreciation of those specific assets. Due to the Divestiture Transaction more fully described in Note 6 — Acquisitions, Divestitures and Exchanges, U.S. Cellular changed the useful lives of certain assets in 2013 and 2012.Other than the Divestiture Transaction, therewere no other material changes to useful lives of property, plant and equipment in 2014, 2013 or 2012. TDS Telecom did not materially change the useful lives of its property, plant and equipment in 2014, 2013 or 2012. See Note 9 — Property, Plant and Equipment for additional details related to useful lives.

Impairment of Long-lived Assets

TDS reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the assets might be impaired.

U.S. Cellular has one asset group for purposes of assessing property, plant and equipment for impairment based on the fact that the individual operating markets are reliant on centrally operated data centers, mobile telephone switching offices and network operations center. U.S. Cellular operates a single integrated national wireless network, and the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities represent cash flows generated by this single interdependent network.

TDS Telecom has three asset groups of Wireline, Cable and HMS for purposes of assessing property, plant and equipment for impairment based on their integrated network, assets and operations. The cash flows generated by each of these groups is the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities.

Agent Liabilities

U.S. Cellular has relationships with agents, which are independent businesses that obtain customers for U.S. Cellular. At December 31, 2014 and 2013, U.S. Cellular had accrued $95.3 million and $121.3 million, respectively, for amounts due to agents. This amount is included in Other current liabilities in the Consolidated Balance Sheet.

Other Assets and Deferred Charges

Other assets and deferred charges includeunderwriters' 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. The amounts of deferred charges included in the Consolidated Balance Sheet at December 31, 2014 and 2013, are shown net of accumulated amortization of $58.1 million and $41.4 million, respectively. At December 31, 2014, Other assets and deferred charges includes a $60.0 million deposit made by Advantage Spectrum L.P. to the FCC to participate in Auction 97. See Note 14 — Variable Interest Entities for additional information.

Asset Retirement Obligations

TDS accounts for asset retirement obligations by recording the fair value of a liability for legal obligations associated with an asset retirement in the period in which the obligations are incurred. At the time the liability is incurred, TDS records a liability equal to the net present value of the estimated cost of the asset retirement obligation and increases the carrying amount of the related long-lived asset by an equal amount. Until the obligation is fulfilled, TDS updates its estimates relating to cash flows required and timing of settlement. TDS records the present value of the changes in the future value as an increase or decrease to the liability and the related carrying amount of the long-lived asset. The liabilityis accreted to future value over a period ending with the estimated settlement date of the respective asset retirement obligation. The carrying amount of the long-lived asset is depreciated over the useful life of therelated 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 TDS are recorded at cost as treasury shares and result in a reduction of equity. Treasury shares are reissued as part of TDS’ stock-based compensation programs. When treasury shares are reissued, TDS 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 Capital in excess of par value 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, products and accessories are recognized when title and risk of loss passes to the agent or end-user customer.

Multiple Deliverable Arrangements

U.S. Cellular and TDS Telecom sell multiple element service and equipment offerings. In these instances, revenues are allocated using the relative selling price method. Under this method, arrangement consideration, which consists of the amounts billed to the customer net of any cash-based discounts, is allocated to each element on the basis of its relative selling price. Revenue recognized for the delivered items is limited to the amount due from the customer that is not contingent upon the delivery of additional products or services.

Loyalty Reward Program

U.S. Cellular follows the deferred revenue method of accounting for its loyalty reward program. Under this method, revenue allocated to loyalty reward points is deferred. The amount allocated to the loyalty points is based on the estimated retail price of the products and services for which points may be redeemed divided by the number of loyalty points required to receive such products and services. This is calculated on a weighted average basis and requires U.S. Cellular to estimate the percentage of loyalty points that will be redeemed for each product or service.

As of December 31, 2014 and 2013, U.S. Cellular had deferred revenue related to loyalty reward points outstanding of $94.6 million and $116.2 million, respectively. These amounts are recorded in Customer deposits and deferred revenues (a current liability account) in the Consolidated Balance Sheet, as customers may redeem their reward points within the current period.

Revenue is recognized at the time of customer redemption or when such points have been depleted via an account maintenance charge. U.S. Cellular employs the proportional model to recognize revenues associated with breakage. Under the proportional model, U.S. Cellular allocates a portion of the estimated future breakage to each redemption and records revenue proportionally. U.S. Cellular periodically reviews and revises the redemption and depletion rates to estimate future breakage as appropriate based on history and related future expectations.

In the fourth quarter of 2013, U.S. Cellular issued loyalty reward points with a value of $43.5 million as a loyalty bonus in recognition of the inconvenience experienced by customers during U.S. Cellular's billing system conversion in 2013. The value of the loyalty bonus reduced Service revenues in the Consolidated Statement of Operations and increased Customer deposits and deferred revenues in the Consolidated Balance Sheet.

Equipment Installment Plans

U.S. Cellular equipment revenue under equipment installment plan contracts is recognized at the time the device is delivered to the end-user customer for the selling price of the device, net of any deferred imputed interest or trade-in right, if applicable.   Imputed interest is reflected as a reduction to the receivable balance and recognized over the duration of the plan as a component of Interest and dividend income. See Note 3 — Equipment Installment Plans for additional information.

Incentives

Discounts and incentives are recognized as a reduction of Operating revenues concurrently with the associated revenue, and are allocated to the various products and services in the bundled offering based on their respective relative selling price.

U.S. Cellular issues rebates to its agents and end customers. These incentives are recognized as a reduction to revenue at the time the wireless device sale to the agent or customer occurs, respectively. The total potential rebates and incentives are reduced by U.S. Cellular's estimate of rebates that will not be redeemed by customers based on historical experience of such redemptions.

Activation Fees

TDS charges its end customers activation fees in connection with the sale of certain services and equipment. Activation fees charged by TDS Telecom in conjunction with a service offering are deferred and recognized over the average customer's service period. Device activation fees charged at U.S. Cellular agent locations, where U.S. Cellular does not also sell a wireless device to the customer, are deferred and recognized over the average device life. Device activation fees charged as a result of device sales at U.S. Cellular company-owned retail stores are recognized at the time the device is delivered to the customer.

Amounts Collected from Customers and Remitted to Governmental Authorities – Gross vs. Net

TDS 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 TDS merely acts as an agent in collecting the tax on behalf of the imposing governmental authority. If the tax is assessed upon TDS, then amounts collected from customers as recovery of the tax are recorded in Service revenues and amounts remitted to governmental authorities are recorded in Selling, general and administrative expenses in the Consolidated Statement of Operations. The amounts recorded gross in revenues that are billed to customers and remitted to governmental authorities totaled $113.5 million, $131.0 million and $152.4 million for 2014, 2013 and 2012, respectively.

Wholesale Revenues

TDS Telecom earns Wholesale revenues in its Wireline segment as a result of its participation in revenue pools with other telephone companies for interstate revenue and for certain intrastate revenue. Such pools are funded by long distance revenue and/or access charges within state jurisdictions and by access charges in the interstate jurisdiction. Wholesale revenues earned through the various pooling processes are recorded based on estimates following the National Exchange Carrier Association's rules as approved by the FCC.

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

TDS expenses advertising costs as incurred. Advertising costs totaled $228.5 million, $212.8 million and $240.9 million in 2014, 2013 and 2012, respectively.

Income Taxes

TDS files a consolidated federal income tax return. Deferred taxes are computed using the liability method, whereby deferred tax assets are recognized for future deductible temporary differences and operating loss carryforwards, and deferred tax liabilities are recognized for future taxable temporary differences. Both deferred tax assets and liabilities are measured using the tax rates anticipated to be in effect when the temporary differences reverse. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. Deferred tax assets are reduced by a valuation allowance when it is more likely than not that some portion or all of the deferred tax assets will not be realized. TDS evaluates income tax uncertainties, assesses the probability of the ultimate settlement with the applicable taxing authority and records an amount based on that assessment.

Stock-Based Compensation

TDS has established long-term incentive plans, dividend reinvestment plans,and a Non-Employee Director compensation plan. See Note 17—Stock-based Compensation for additional information. The dividend reinvestment plan of TDS is not considered a compensatory plan and, therefore, recognition of compensation costs for grants made under this plan is not required. All other plans are considered compensatory plans; therefore, recognition of compensation costs for grants made under these plans is required.

TDS values its share-based payment transactions using a Black-Scholes valuation model. Stock-based compensation cost recognized during the period is based on the portion of the share-based payment awards that are ultimately expected to vest. Accordingly, stock-based compensation cost recognized has been reduced for estimated forfeitures. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Pre-vesting forfeitures and expected life are estimated based on historical experience related to similar awards, giving consideration to the contractual terms of the stock-based awards, vesting schedules and expectations of future employee behavior. TDS believes that its historical experience provides the best estimates of future pre-vesting forfeitures and future expected life. The expected volatility assumption is based on the historical volatility of TDS' common stock over a period commensurate with the expected life. The dividend yield assumption is equal to the dividends declared in the most recent year as a percentage of the share price on the date of grant. 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.

Beginning with grants in 2013, newly granted TDS stock option awards cliff vest in three years. TDS stock option awards granted prior to 2013 and U.S. Cellular stock option awards vest on an annual basis in three separate tranches. Compensation cost is recognized on astraight-line basis over the requisite service period, which was generally the vesting period, for each separate vesting portion of the awards as if the awards were, in-substance, multiple awards (graded vesting attribution method).

Recently Issued Accounting Pronouncements

On April 10, 2014, the FASB issued Accounting Standards Update 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity (“ASU 2014-08”). ASU 2014-08 changes the requirements and disclosures for reporting discontinued operations. TDS was required to adopt the provisions of ASU 2014-08 effective January 1, 2015, but early adoption was permitted. TDS adopted the provisions of ASU 2014-08 upon its issuance. The adoption of ASU 2014-08 did not have a significant impact on TDS' financial position or results of operations.

On May 28, 2014, the FASB issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”). ASU 2014-09 outlines a single comprehensive model to use in accounting for revenue arising from contracts with customers. TDS is required to adopt the provisions of ASU 2014-09 effective January 1, 2017. Early adoption is prohibited. TDS is evaluating what effects the adoption of ASU 2014-09 will have on TDS' financial position and results of operations.

On August 27, 2014, the FASB issued Accounting Standards Update 2014-15, Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern (“ASU 2014-15”). ASU 2014-15 requires management to perform interim and annual assessments of an entity's ability to continue as a going concern within one year of the date financial statements are issued and provides guidance on determining when and how to disclose going concern uncertainties in financial statements. TDS is required to adopt the provisions of ASU 2014-15 effective January 1, 2016, but early adoption is permitted. The adoption of ASU 2014-15 is not expected to impact TDS' financial position or results of operations.

On January 9, 2015, the FASB issued Accounting Standards Update 2015-01, Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items (“ASU 2015-01”). ASU 2015-01 eliminates from GAAP the requirement to separately classify, present and disclose extraordinary events and transactions. TDS is required to adopt the provisions of ASU 2015-01 effective January 1, 2016, but early adoption is permitted. The adoption of ASU 2015-01 is not expected to impact TDS' financial position or results of operations.

On February 18, 2015, the FASB issued Accounting Standards Update 2015-02, Consolidation: Amendments to the Consolidation Analysis (“ASU 2015-02”). ASU 2015-02 simplifies consolidation accounting by reducing the number of consolidation models and changing various aspects of current GAAP, including certain consolidation criteria for variable interest entities. TDS is required to adopt the provisions of ASU 2015-02 effective January 1, 2016. Early adoption is permitted. TDS is still assessing the impact, if any,the adoption of ASU 2015-02will have on TDS' financial position or results of operations.

Variable Interest Entities

TDS consolidates variable interest entities in which it hasa controlling financial interest and isthe primary beneficiary. A controlling financial interest will have both of the following characteristics: (a) the power to direct the VIE activities that most significantly impact economic performance and (b) the obligation to absorb the VIE losses and right to receive benefits that are significant to the VIE.  TDS reviews these criteria initially at the time it enters into agreements and subsequently when reconsideration events occur.

Legal proceedings

TDS is involved or may be involved from time to time in legal proceedings before the FCC, other regulatory authorities, and/or various state and federal courts. If TDS believes that a loss arising from such legal proceedings is probable and can be reasonably estimated, an amount is accrued in the financial statements for the estimated loss. If only a range of loss can be determined, the best estimate within that range is accrued; if none of the estimates within that range is better than another, the low end of the range is accrued. The assessment of the expected outcomes of legal proceedings is a highly subjective process that requires judgments about future events. The legal proceedings are reviewed at least quarterly to determine the adequacy of accruals and related financial statement disclosures. The ultimate outcomes of legal proceedings could differ materially from amounts accrued in the financial statements.

XML

Income Taxes, Net Operating Losses (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014
State
Income Tax Disclosure
NOL carryforwards	2,315.3
Deferred income tax asset for State NOL carryforwards	111.3
State | Minimum
Income Tax Disclosure
Expiration of NOL carryforwards	Dec. 31, 2015
State | Maximum
Income Tax Disclosure
Expiration of NOL carryforwards	Dec. 31, 2034
Federal
Income Tax Disclosure
Deferred income tax asset for Federal NOL carryforwards (entities not on Federal return)	24.3
Federal | Minimum
Income Tax Disclosure
Expiration of NOL carryforwards	Dec. 31, 2018
Federal | Maximum
Income Tax Disclosure
Expiration of NOL carryforwards	Dec. 31, 2034

XML

Common Shareholders' Equity (Tables)

12 Months Ended

Dec. 31, 2014

Common Share Repurchases

Schedule of common shares, rollforward

The following table summarizes the number of Common and Series A Common Shares issued and repurchased.
		Common Shares	Common Treasury Shares	Series A Common Shares
(Shares in thousands)
Balance December 31, 2011		125,502	24,165	7,119
	Repurchase of shares	-	868	-
	Conversion of Series A Common Shares	10	-	(10)
	Dividend reinvestment, incentive and compensation plans	-	(392)	51
Balance December 31, 2012		125,512	24,641	7,160
	Repurchase of shares	-	339	-
	Conversion of Series A Common Shares	33	-	(33)
	Dividend reinvestment, incentive and compensation plans	-	(1,026)	39
Balance December 31, 2013		125,545	23,954	7,166
	Repurchase of shares	-	1,542	-
	Conversion of Series A Common Shares	25	-	(25)
	Dividend reinvestment, incentive and compensation plans	-	(646)	38
Balance December 31, 2014		125,570	24,850	7,179

Share repurchases

Share repurchases made under these authorizations and prior authorizations, were as follows:
Year Ended December 31,		Number of	Average Cost
(Shares and dollar amounts in thousands, except per share amounts)		Shares	Per Share		Amount
2014
	U.S. Cellular Common Shares	496	$	38.19	$	18,943
	TDS Common Shares	1,542		25.36		39,096
2013
	U.S. Cellular Common Shares	499	$	37.19	$	18,544
	TDS Common Shares	339		28.60		9,692
2012
	U.S. Cellular Common Shares	571	$	35.11	$	20,045
	TDS Common Shares	868		23.08		20,026

XML

Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2014

Fair Value Disclosures

Fair value measurements

		Level within the Fair Value Hierarchy	December 31, 2014				December 31, 2013
			Book Value		Fair Value		Book Value		Fair Value
(Dollars in thousands)
Cash and cash equivalents		1	$	471,901	$	471,901	$	830,014	$	830,014
Short-term investments
	U.S. Treasury Notes	1		-		-		50,104		50,104
Long-term debt
	Retail	2		1,453,250		1,414,105		1,178,250		1,048,010
	Institutional and other	2		537,471		518,322		537,454		512,635

XML

Equipment Installment Plans (Table)

12 Months Ended

Dec. 31, 2014

Equipment Installment Plans

Equipment installment plans

The following table summarizes the unbilled equipment installment plan receivables as of December 31, 2014 and 2013. Such amounts are presented on the Consolidated Balance Sheet as Accounts receivable – customers and agents and Other assets and deferred charges, where applicable.
(Dollars in thousands)	December 31, 2014		December 31, 2013
Short-term portion of unbilled equipment installment plan receivables, gross	$	127,400	$	611
Short-term portion of unbilled deferred interest		(16,365)		-
Short-term portion of unbilled allowance for credit losses		(3,686)		(20)
Short-term portion of unbilled equipment installment plan receivables, net	$	107,349	$	591
Long-term portion of unbilled equipment installment plan receivables, gross	$	89,435	$	-
Long-term portion of unbilled deferred interest		(2,791)		-
Long-term portion of unbilled allowance for credit losses		(6,065)		-
Long-term portion of unbilled equipment installment plan receivables, net	$	80,579	$	-

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Summary of Significant Accounting Policies and Recent Accounting Pronouncements

12 Months Ended

Dec. 31, 2014

Disclosure Text Block

Summary of Significant Accounting Policies and Recent Accounting Pronouncements

NOTE 1SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RECENT ACCOUNTING PRONOUNCEMENTS

Nature of Operations

Telephone and Data Systems, Inc. (“TDS”) is a diversified telecommunications company providing high-quality telecommunications services to approximately 4.8 million wireless customers and 1.2million wireline and cable connections at December 31, 2014. TDS conducts all of its wireless operations through its 84%-owned subsidiary, United States Cellular Corporation (“U.S. Cellular”).TDS provides wireline services, cableservices and hosted and managed services through its wholly-owned subsidiary, TDS Telecommunications Corporation (“TDS Telecom”).

TDS has the following reportable segments: U.S. Cellular and TDS Telecom's Wireline, Cable and Hosted and Managed Services (“HMS”) operations. TDS' non-reportable other business activities are presented as “Corporate, Eliminations and Other”. This includes the operations of TDS' majority owned printing and distribution company, Suttle-Straus, Inc. (“Suttle-Straus”) and TDS' wholly owned subsidiary, Airadigm Communications, Inc. (“Airadigm”). Suttle-Straus and Airadigm's financial results were not significant to TDS' operations. All of TDS' segments operate only in the United States, except for HMS, which includes an insignificant foreign operation. See Note 18—Business Segment Informationfor summary financial information on each business segment.

Principles of Consolidation

The accounting policies of TDS conform to accounting principles generally accepted in the United States of America (“GAAP”) as set forth in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”). Unless otherwise specified, references to accounting provisions and GAAP in these notes refer to the requirements of the FASB ASC. The consolidated financial statements include the accounts of TDS, its majority-owned subsidiaries, general partnerships in which it has a majority partnership interest and variable interest entities (“VIEs”) in which TDS is the primary beneficiary. Both VIE and primary beneficiary represent terms defined by GAAP.

Intercompany accounts and transactions have been eliminated.

Reclassifications

Certain prioryear amounts have been reclassified to conform to the 2014 financial statement presentation. These reclassifications did not affect consolidated net income attributable to TDS shareholders, cash flows, assets, liabilities or equity for the years presented.

In 2014, TDS began presenting separately Equipment and product sales and Cost of equipment and products. As a result of recent HMS acquisitions, these amounts are now more significant to TDS and, accordingly, are shown as separate captions under Operating revenues and Operating expenses, respectively, on the Consolidated Statement of Operations. Amounts in 2013 and 2012 have been reclassified to conform to the 2014 presentation. The separate presentation of Equipment and product sales and Cost of equipment and products had no other impact on the TDS financial statements.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect (a) the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and (b) the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates. Significant estimates are involved in accounting for goodwill and indefinite-lived intangible assets, income taxes, the loyalty reward program and equipment installment plans.

Cash and Cash Equivalents

Cash and cash equivalents include cash and short-term, highly liquid investments with original maturities of three months or less.

Accounts Receivable and Allowance for Doubtful Accounts

U.S. Cellular's accounts receivable consist primarily of amounts owed by customers for wireless services and equipment sales, including sales of certain devices under equipment installment plans, by agents for sales of equipment to them and by other wireless carriers whose customers have used U.S. Cellular's wireless systems.

TDS Telecom's accounts receivable primarily consist of amounts owed by customers for services and products provided, by interexchange carriers for long-distance traffic which TDS Telecom carries on its network, and by interstate and intrastate revenue pools that distribute access charges.

The allowance for doubtful accounts is the best estimate of the amount of probable credit losses related to existing billed and unbilled accounts receivable. The allowance is estimated based on historical experience, account aging and other factors that could affect collectability. Accounts receivable balances are reviewed on either an aggregate or individual basis for collectability depending on the type of receivable. When it is probable that an account balance will not be collected, the account balance is charged against the allowance for doubtful accounts. TDS does not have any off-balance sheet credit exposure related to its customers.

The changes in the allowance for doubtful accounts during the years ended December 31, 2014, 2013 and 2012 were as follows:
		2014		2013		2012
(Dollars in thousands)
Beginning balance		$	65,604	$	33,415	$	31,071
	Additions, net of recoveries		107,861		105,629		74,695
	Deductions		(124,828)		(73,440)		(72,351)
Ending balance (1)		$	48,637	$	65,604	$	33,415
(1)	In 2014, this balance includes a $6.1 million allowance related to the long-term portion of unbilled equipment installment receivables.

Inventory

Inventory consists primarily of wireless devices stated at the lower of cost or market, with cost determined using the first-in, first-out method and market determined byreplacement costs or estimated net realizable value. TDS Telecom's materials and supplies are stated at average cost.

Goodwill

TDS has Goodwill as a result of its acquisition of wireless,wireline, HMS, and cablecompanies and, under previous business combination guidance in effect prior to 2009, step acquisitions related to U.S. Cellular's repurchase of its common shares. Such Goodwill represents the excess of the total purchase price over the fair value of net assets acquired in these transactions. TDS performs its annual impairment assessment of Goodwill as of November 1 of each year.

See Note 7 — Intangible Assets for additional details related to Goodwill.

U.S. Cellular

For purposes of conducting its Goodwill impairment test in 2014 and 2013, U.S. Cellular identified four reporting units. The four reporting units represent four geographic groupings of operating markets, representing four geographic service areas. A discounted cash flow approach was used to value each reporting unit for purposes of the Goodwill impairment review.

TDS Telecom

For purposes of the 2014 annual impairment testing, TDS Telecom has identified three reporting units: Wireline, HMS and Cable. For purposes of the 2013 annual impairment testing, TDS Telecom had three reporting units: incumbent local exchange carrier (“ILEC”), HMS and Cable. During 2014, the ILEC operations were combined with the competitive local exchange carrier (“CLEC”) operations to create the Wireline reporting unit. There is no Goodwill at the CLEC operations. The discounted cash flow approach and guideline public company method were used to value the Wireline and Cable reporting units for the 2014 annual impairment test. For the 2014 annual impairment test, TDS Telecom performed a qualitative assessment of the HMS reporting unit.

Licenses

Licenses consist of direct and incremental costs incurred in acquiring Federal Communications Commission (“FCC”) licenses to provide wireless service.

TDS has determined that wireless licenses are indefinite-lived intangible assets and, therefore, not subject to amortization based on the following factors:

• Radio spectrum is not a depleting asset.
• The ability to use radio spectrum is not limited to any one technology.
• TDS and its consolidated subsidiaries are licensed to use radio spectrum through the FCC licensing process, which enables licensees to utilize specified portions of the spectrum for the provision of wireless service.
• TDS and its consolidated subsidiaries are required to renew their FCC licenses every ten years or, in some cases, every fifteen years. To date, all of TDS'license renewal applications have been granted by the FCC. Generally, license renewal applications filed by licensees otherwise in compliance with FCC regulations are routinely granted. If, however, a license renewal application is challenged either by a competing applicant for the license or by a petition to deny the renewal application, the license will be renewed if the licensee can demonstrate its entitlement to a “renewal expectancy.” Licensees are entitled to such an expectancy if they can demonstrate to the FCC that they have provided “substantial service” during their license term and have “substantially complied” with FCC rules and policies. TDS believes that it is probable that its future license renewal applications will be granted.

U.S. Cellular performs its annual impairment assessment of its licenses as of November 1 of each year. For purposes of its 2014 and 2013 impairment testing of Licenses, U.S. Cellular separated its FCC licenses into eleven units of accounting based on geographic service areas. In both 2014 and 2013, seven of the units of accounting represented geographic groupings of licenses which, because they were not being utilized and, therefore, were not expected to generate cash flows from operating activities in the foreseeable future, were considered separate units of accounting for purposes of impairment testing. U.S. Cellular estimates the fair value of built licenses for purposes of impairment testing using the build-out method. The build-out method estimates the fair value of Licenses by discounting to present value the future cash flows calculated based on a hypothetical cost to build-out U.S. Cellular's network.

For units of accounting which consist of unbuilt licenses, the fair value of the unbuilt licenses is assumed to change by the same percentage, and in the same direction, that the fair value of built licenses measured using the build-out method changed during the period.

See Note 7 — Intangible Assets for additional details related to Licenses.

Franchise rights

TDS has Franchise rights as a result of acquisitions of cable businesses. Franchise rights are intangible assets that provide their holder with the right to operate a business in a certain geographical location as sanctioned by the franchiser, usually a government agency. TDS has determined that Franchise rights are indefinite-lived intangible assets and, therefore, not subject to amortization because TDS expects both the renewal by the granting authorities and the cash flows generated from the Franchise rights to continue indefinitely. Cable Franchise rights are generally granted for ten year periods and may be renewed for additional terms upon approval by the granting authority.TDS anticipates that future renewals of its Franchise rights will be granted.

TDS Telecom performs its annual impairment assessment of Franchise rights as of November 1 of each year. TDS Telecom tests Franchise rights for impairment at a unit of accounting level. For purposes of its impairment testing of Franchise rights, TDS Telecom identified one unit of accounting. TDS Telecom estimates the fair value of franchise rights for purposes of impairment testing using the build-out method. For the 2013 annual impairment test, TDS Telecom performed a qualitative assessment of the Franchise rights.

See Note 7 — Intangible Assets for additional details related to Franchise rights.

Investments in Unconsolidated Entities

For its equity method investments for which financial information is readily available, TDS 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, TDS records its equity in the earnings of the entity on a one quarter lag basis.

Property, Plant and Equipment

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 Cost of services and products or Selling, general and administrative expense, as applicable. Retirements and disposals of assets are recorded by removing the original cost of the asset (along with the related accumulated depreciation) from plant in service and charging it, together with net removal costs (removal costs less an applicable accrued asset retirement obligation and salvage value realized), to (Gain) loss on asset disposals, net.

TDS 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, except for certain Wireline segment assets, which use the group depreciation method. The group depreciation method develops a depreciation rate based on the average useful life of a specific group of assets, rather than each asset individually. TDS depreciates leasehold improvement assets associated with leased properties over periods ranging from one to thirty years; such periods approximate the shorter of the assets' economic lives or the specific lease terms.

Useful lives of specific assets are reviewed throughout the year to determine if changes in technology or other business changes would warrant accelerating the depreciation of those specific assets. Due to the Divestiture Transaction more fully described in Note 6 — Acquisitions, Divestitures and Exchanges, U.S. Cellular changed the useful lives of certain assets in 2013 and 2012.Other than the Divestiture Transaction, therewere no other material changes to useful lives of property, plant and equipment in 2014, 2013 or 2012. TDS Telecom did not materially change the useful lives of its property, plant and equipment in 2014, 2013 or 2012. See Note 9 — Property, Plant and Equipment for additional details related to useful lives.

Impairment of Long-lived Assets

TDS reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the assets might be impaired.

U.S. Cellular has one asset group for purposes of assessing property, plant and equipment for impairment based on the fact that the individual operating markets are reliant on centrally operated data centers, mobile telephone switching offices and network operations center. U.S. Cellular operates a single integrated national wireless network, and the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities represent cash flows generated by this single interdependent network.

TDS Telecom has three asset groups of Wireline, Cable and HMS for purposes of assessing property, plant and equipment for impairment based on their integrated network, assets and operations. The cash flows generated by each of these groups is the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities.

Agent Liabilities

U.S. Cellular has relationships with agents, which are independent businesses that obtain customers for U.S. Cellular. At December 31, 2014 and 2013, U.S. Cellular had accrued $95.3 million and $121.3 million, respectively, for amounts due to agents. This amount is included in Other current liabilities in the Consolidated Balance Sheet.

Other Assets and Deferred Charges

Other assets and deferred charges includeunderwriters' 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. The amounts of deferred charges included in the Consolidated Balance Sheet at December 31, 2014 and 2013, are shown net of accumulated amortization of $58.1 million and $41.4 million, respectively. At December 31, 2014, Other assets and deferred charges includes a $60.0 million deposit made by Advantage Spectrum L.P. to the FCC to participate in Auction 97. See Note 14 — Variable Interest Entities for additional information.

Asset Retirement Obligations

TDS accounts for asset retirement obligations by recording the fair value of a liability for legal obligations associated with an asset retirement in the period in which the obligations are incurred. At the time the liability is incurred, TDS records a liability equal to the net present value of the estimated cost of the asset retirement obligation and increases the carrying amount of the related long-lived asset by an equal amount. Until the obligation is fulfilled, TDS updates its estimates relating to cash flows required and timing of settlement. TDS records the present value of the changes in the future value as an increase or decrease to the liability and the related carrying amount of the long-lived asset. The liabilityis accreted to future value over a period ending with the estimated settlement date of the respective asset retirement obligation. The carrying amount of the long-lived asset is depreciated over the useful life of therelated 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 TDS are recorded at cost as treasury shares and result in a reduction of equity. Treasury shares are reissued as part of TDS' stock-based compensation programs. When treasury shares are reissued, TDS 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 Capital in excess of par value 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, products and accessories are recognized when title and risk of loss passes to the agent or end-user customer.

Multiple Deliverable Arrangements

U.S. Cellular and TDS Telecom sell multiple element service and equipment offerings. In these instances, revenues are allocated using the relative selling price method. Under this method, arrangement consideration, which consists of the amounts billed to the customer net of any cash-based discounts, is allocated to each element on the basis of its relative selling price. Revenue recognized for the delivered items is limited to the amount due from the customer that is not contingent upon the delivery of additional products or services.

Loyalty Reward Program

U.S. Cellular follows the deferred revenue method of accounting for its loyalty reward program. Under this method, revenue allocated to loyalty reward points is deferred. The amount allocated to the loyalty points is based on the estimated retail price of the products and services for which points may be redeemed divided by the number of loyalty points required to receive such products and services. This is calculated on a weighted average basis and requires U.S. Cellular to estimate the percentage of loyalty points that will be redeemed for each product or service.

As of December 31, 2014 and 2013, U.S. Cellular had deferred revenue related to loyalty reward points outstanding of $94.6 million and $116.2 million, respectively. These amounts are recorded in Customer deposits and deferred revenues (a current liability account) in the Consolidated Balance Sheet, as customers may redeem their reward points within the current period.

Revenue is recognized at the time of customer redemption or when such points have been depleted via an account maintenance charge. U.S. Cellular employs the proportional model to recognize revenues associated with breakage. Under the proportional model, U.S. Cellular allocates a portion of the estimated future breakage to each redemption and records revenue proportionally. U.S. Cellular periodically reviews and revises the redemption and depletion rates to estimate future breakage as appropriate based on history and related future expectations.

In the fourth quarter of 2013, U.S. Cellular issued loyalty reward points with a value of $43.5 million as a loyalty bonus in recognition of the inconvenience experienced by customers during U.S. Cellular's billing system conversion in 2013. The value of the loyalty bonus reduced Service revenues in the Consolidated Statement of Operations and increased Customer deposits and deferred revenues in the Consolidated Balance Sheet.

Equipment Installment Plans

U.S. Cellular equipment revenue under equipment installment plan contracts is recognized at the time the device is delivered to the end-user customer for the selling price of the device, net of any deferred imputed interest or trade-in right, if applicable.   Imputed interest is reflected as a reduction to the receivable balance and recognized over the duration of the plan as a component of Interest and dividend income. See Note 3 — Equipment Installment Plans for additional information.

Incentives

Discounts and incentives are recognized as a reduction of Operating revenues concurrently with the associated revenue, and are allocated to the various products and services in the bundled offering based on their respective relative selling price.

U.S. Cellular issues rebates to its agents and end customers. These incentives are recognized as a reduction to revenue at the time the wireless device sale to the agent or customer occurs, respectively. The total potential rebates and incentives are reduced by U.S. Cellular's estimate of rebates that will not be redeemed by customers based on historical experience of such redemptions.

Activation Fees

TDS charges its end customers activation fees in connection with the sale of certain services and equipment. Activation fees charged by TDS Telecom in conjunction with a service offering are deferred and recognized over the average customer's service period. Device activation fees charged at U.S. Cellular agent locations, where U.S. Cellular does not also sell a wireless device to the customer, are deferred and recognized over the average device life. Device activation fees charged as a result of device sales at U.S. Cellular company-owned retail stores are recognized at the time the device is delivered to the customer.

Amounts Collected from Customers and Remitted to Governmental Authorities – Gross vs. Net

TDS 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 TDS merely acts as an agent in collecting the tax on behalf of the imposing governmental authority. If the tax is assessed upon TDS, then amounts collected from customers as recovery of the tax are recorded in Service revenues and amounts remitted to governmental authorities are recorded in Selling, general and administrative expenses in the Consolidated Statement of Operations. The amounts recorded gross in revenues that are billed to customers and remitted to governmental authorities totaled $113.5 million, $131.0 million and $152.4 million for 2014, 2013 and 2012, respectively.

Wholesale Revenues

TDS Telecom earns Wholesale revenues in its Wireline segment as a result of its participation in revenue pools with other telephone companies for interstate revenue and for certain intrastate revenue. Such pools are funded by long distance revenue and/or access charges within state jurisdictions and by access charges in the interstate jurisdiction. Wholesale revenues earned through the various pooling processes are recorded based on estimates following the National Exchange Carrier Association's rules as approved by the FCC.

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

TDS expenses advertising costs as incurred. Advertising costs totaled $228.5 million, $212.8 million and $240.9 million in 2014, 2013 and 2012, respectively.

Income Taxes

TDS files a consolidated federal income tax return. Deferred taxes are computed using the liability method, whereby deferred tax assets are recognized for future deductible temporary differences and operating loss carryforwards, and deferred tax liabilities are recognized for future taxable temporary differences. Both deferred tax assets and liabilities are measured using the tax rates anticipated to be in effect when the temporary differences reverse. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. Deferred tax assets are reduced by a valuation allowance when it is more likely than not that some portion or all of the deferred tax assets will not be realized. TDS evaluates income tax uncertainties, assesses the probability of the ultimate settlement with the applicable taxing authority and records an amount based on that assessment.

Stock-Based Compensation

TDS has established long-term incentive plans, dividend reinvestment plans,and a Non-Employee Director compensation plan. See Note 17—Stock-based Compensation for additional information. The dividend reinvestment plan of TDS is not considered a compensatory plan and, therefore, recognition of compensation costs for grants made under this plan is not required. All other plans are considered compensatory plans; therefore, recognition of compensation costs for grants made under these plans is required.

TDS values its share-based payment transactions using a Black-Scholes valuation model. Stock-based compensation cost recognized during the period is based on the portion of the share-based payment awards that are ultimately expected to vest. Accordingly, stock-based compensation cost recognized has been reduced for estimated forfeitures. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Pre-vesting forfeitures and expected life are estimated based on historical experience related to similar awards, giving consideration to the contractual terms of the stock-based awards, vesting schedules and expectations of future employee behavior. TDS believes that its historical experience provides the best estimates of future pre-vesting forfeitures and future expected life. The expected volatility assumption is based on the historical volatility of TDS' common stock over a period commensurate with the expected life. The dividend yield assumption is equal to the dividends declared in the most recent year as a percentage of the share price on the date of grant. 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.

Beginning with grants in 2013, newly granted TDS stock option awards cliff vest in three years. TDS stock option awards granted prior to 2013 and U.S. Cellular stock option awards vest on an annual basis in three separate tranches. Compensation cost is recognized on astraight-line basis over the requisite service period, which was generally the vesting period, for each separate vesting portion of the awards as if the awards were, in-substance, multiple awards (graded vesting attribution method).

Recently Issued Accounting Pronouncements

On April 10, 2014, the FASB issued Accounting Standards Update 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity (“ASU 2014-08”). ASU 2014-08 changes the requirements and disclosures for reporting discontinued operations. TDS was required to adopt the provisions of ASU 2014-08 effective January 1, 2015, but early adoption was permitted. TDS adopted the provisions of ASU 2014-08 upon its issuance. The adoption of ASU 2014-08 did not have a significant impact on TDS' financial position or results of operations.

On May 28, 2014, the FASB issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”). ASU 2014-09 outlines a single comprehensive model to use in accounting for revenue arising from contracts with customers. TDS is required to adopt the provisions of ASU 2014-09 effective January 1, 2017. Early adoption is prohibited. TDS is evaluating what effects the adoption of ASU 2014-09 will have on TDS' financial position and results of operations.

On August 27, 2014, the FASB issued Accounting Standards Update 2014-15, Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern (“ASU 2014-15”). ASU 2014-15 requires management to perform interim and annual assessments of an entity's ability to continue as a going concern within one year of the date financial statements are issued and provides guidance on determining when and how to disclose going concern uncertainties in financial statements. TDS is required to adopt the provisions of ASU 2014-15 effective January 1, 2016, but early adoption is permitted. The adoption of ASU 2014-15 is not expected to impact TDS' financial position or results of operations.

On January 9, 2015, the FASB issued Accounting Standards Update 2015-01, Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items (“ASU 2015-01”). ASU 2015-01 eliminates from GAAP the requirement to separately classify, present and disclose extraordinary events and transactions. TDS is required to adopt the provisions of ASU 2015-01 effective January 1, 2016, but early adoption is permitted. The adoption of ASU 2015-01 is not expected to impact TDS' financial position or results of operations.

On February 18, 2015, the FASB issued Accounting Standards Update 2015-02, Consolidation: Amendments to the Consolidation Analysis (“ASU 2015-02”). ASU 2015-02 simplifies consolidation accounting by reducing the number of consolidation models and changing various aspects of current GAAP, including certain consolidation criteria for variable interest entities. TDS is required to adopt the provisions of ASU 2015-02 effective January 1, 2016. Early adoption is permitted. TDS is still assessing the impact, if any,the adoption of ASU 2015-02will have on TDS' financial position or results of operations.

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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2014

Income Tax Disclosure

Income taxes receivable (payable)

December 31,	2014		2013
(Dollars in thousands)
Federal income taxes receivable (payable)	$	108,820	$	(20,288)
Net state income taxes receivable (payable)		4,391		2,397

Income tax expense (benefit)

Income tax expense (benefit) is summarized as follows:
Year Ended December 31,		2014		2013		2012
(Dollars in thousands)
Current
	Federal	$	(87,736)	$	181,579	$	9,705
	State		11,091		11,614		5,092
Deferred
	Federal		41,851		(65,970)		61,113
	Federal - valuation allowance adjustment		(10,816)		-		-
	State		2,208		(1,180)		(2,328)
	State - valuation allowance adjustment		38,470		-		-
		$	(4,932)	$	126,043	$	73,582

Income tax reconciliation

Year Ended December 31,		2014				2013				2012
		Amount		Rate		Amount		Rate		Amount		Rate
(Dollars in millions)
Statutory federal income tax expense and rate		$	(53.3)	35.0	%	$	102.5	35.0	%	$	68.7	35.0	%
State income taxes, net of federal benefit (1)			42.8	(28.1)			10.5	3.6			8.4	4.2
Effect of noncontrolling interests			(5.8)	3.8			(1.0)	(0.4)			-	-
Gains (losses) on investments and sale of assets (2)			-	-			14.9	5.1			-	-
Correction of deferred taxes (3)			-	-			-	-			(6.1)	(3.1)
Change in federal valuation allowance (4)			(8.7)	5.7			-	-			-	-
Goodwill impairment (5)			18.3	(12.0)			-	-			-	-
Other differences, net			1.8	(1.2)			(0.9)	(0.3)			2.6	1.4
Total income tax expense and rate		$	(4.9)	3.2	%	$	126.0	43.0	%	$	73.6	37.5	%
(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 TDS recorded a $38.5 million increase to income tax expense related to a valuation allowance recorded against certain state deferred tax assets. In each interim period, TDS evaluates the available positive and negative evidence to assess whether deferred tax assets are realizable, on a more likely than not basis. During the year ended December 31, 2014, based on revised forecasts of future state income, TDS concluded that the negative evidence related to the realization of certain state deferred tax assets outweighed the positive evidence. Accordingly, TDS determined that such deferred tax assets related to certain states were not realizable, on a more likely than not basis.
(2)	Gains (losses) on investments and sale of assets represents 2013 tax expense related to the NY1 & NY2 Deconsolidation and the Divestiture Transaction.
(3)	Correction of deferred taxes reflects immaterial adjustments to correct deferred tax balances in 2012 related to tax basis and law changes that related to periods prior to 2012.
(4)	Change in federal valuation allowance relates primarily to a decrease to income tax expense in the third quarter of 2014 due to a valuation allowance reduction for federal net operating losses previously limited under loss utilization rules. Due to the shutdown of Airadigm’s consumer wireless business and resulting intercompany sale of certain assets by Airadigm to U.S. Cellular during the year (as described in Note 6 — Acquisitions, Divestitures and Exchanges), Airadigm is expected to recognize sufficient taxable income for TDS to utilize the previously limited net operating losses.
(5)	Goodwill impairment reflects an adjustment to increase income tax expense by $18.3 million related to a portion of the goodwill impairment of Suttle-Straus and the HMS reporting unit recorded in 2014 which is nondeductible for income tax purposes. See Note 7 — Intangible Assets for additional information related to the goodwill impairment.

Temporary income tax differences

December 31,		2014		2013
(Dollars in thousands)
Deferred tax assets
	Current deferred tax assets	$	113,402	$	114,532
	Net operating loss (“NOL”) carryforwards		135,676		121,651
	Stock-based compensation		54,789		50,563
	Compensation and benefits - other		11,014		12,681
	Deferred rent		19,604		20,500
	Other		35,523		32,444
Total deferred tax assets			370,008		352,371
	Less valuation allowance		(113,553)		(79,064)
Net deferred tax assets			256,455		273,307
Deferred tax liabilities
	Property, plant and equipment		667,540		637,090
	Licenses/intangibles		259,865		251,578
	Partnership investments		151,123		136,581
	Other		9,724		4,956
	Total deferred tax liabilities		1,088,252		1,030,205
Net deferred income tax liability		$	831,797	$	756,898

Deferred tax valuation allowance

A summary of TDS' deferred tax asset valuation allowance is as follows:
		2014		2013		2012
(Dollars in thousands)
Balance at January 1,		$	79,064	$	70,502	$	49,686
	Charged to income tax expense		34,489		1,954		5,268
	Charged to other accounts		-		6,608		15,548
Balance at December 31,		$	113,553	$	79,064	$	70,502
As of December 31, 2014, the valuation allowance reduced current deferred tax assets by $5.7 million and noncurrent deferred tax assets by $107.8 million.

Income tax unrecognized benefits summary

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
		2014		2013		2012
(Dollars in thousands)
Unrecognized tax benefits balance at January 1,		$	30,390	$	28,420	$	28,841
	Additions for tax positions of current year		7,610		6,388		7,027
	Additions for tax positions of prior years		883		1,858		1,673
	Reductions for tax positions of prior years		(399)		(467)		(7)
	Reductions for settlements of tax positions		(312)		(1,337)		(21)
	Reductions for lapses in statutes of limitations		(356)		(4,472)		(9,093)
Unrecognized tax benefits balance at December 31,		$	37,816	$	30,390	$	28,420

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Stock-Based Compensation, TDS excluding U.S. Cellular, Valuation model (Details) (TDS Parent Company, 2011 and 2004 Long-Term Incentive Plans, Stock Options)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
TDS Parent Company | 2011 and 2004 Long-Term Incentive Plans | Stock Options
Black Scholes valuation model assumptions
Expected life	5 years 10 months	5 years 8 months	5 years 6 months
Expected annual volatility rate	39.60%	41.00%	41.10%
Dividend yield	2.00%	2.30%	2.40%
Risk-free interest rate	1.80%	1.00%	0.90%
Estimated annual forfeiture rate	2.90%	2.90%	2.90%

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Employee Benefit Plans (Tables)

12 Months Ended

Dec. 31, 2014

Compensation and Retirement Disclosure [Abstract]

Amounts included in Accumulated other comprehensive income, before tax

December 31,	2014		2013
(Dollars in thousands)
Net prior service costs	$	17,246	$	18,833
Net actuarial loss		(8,436)		(20,713)
	$	8,810	$	(1,880)

Funded status of post-retirement benefit plans

December 31,		2014		2013
(Dollars in thousands)
Change in benefit obligation
	Benefit obligation at beginning of year	$	46,142	$	54,568
	Service cost		1,018		1,348
	Interest cost		2,255		2,137
	Plan amendments		(2,057)		-
	Actuarial (gain) loss		(10,897)		(9,437)
	Prescription drug subsidy		264		-
	Employee contribution		2,216		2,230
	Benefits paid		(4,296)		(4,704)
	Benefit obligation at end of year		34,645		46,142
Change in plan assets
	Fair value of plan assets at beginning of year		49,743		45,047
	Actual return (loss) on plan assets		3,495		6,973
	Employee contribution		2,216		2,230
	Employer contribution		166		197
	Benefits paid		(4,296)		(4,704)
	Fair value of plan assets at end of year		51,324		49,743
Funded status		$	16,679	$	3,601

Fair value of plan assets

December 31, 2014
(Dollars in thousands)		Level 1		Level 2		Total
Mutual funds
	Bond (1)	$	12,842	$	-	$	12,842
	International equity (2)		12,003		-		12,003
	Money market (3)		2,053		-		2,053
	US large cap (4)		20,191		-		20,191
	US small cap (5)		4,234		-		4,234
Other			-		1		1
Total plan assets at fair value		$	51,323	$	1	$	51,324
December 31, 2013
(Dollars in thousands)			Level 1		Level 2		Total
Mutual funds
	Bond (1)	$	12,697	$	-	$	12,697
	International equity (2)		9,876		-		9,876
	Money market (3)		1,798		-		1,798
	US large cap (4)		20,861		-		20,861
	US small cap (5)		4,500		-		4,500
Other			-		11		11
Total plan assets at fair value		$	49,732	$	11	$	49,743

• Bond - The funds seek to achieve a maximum total return, consistent with preservation of capital and prudent investment management by investing in a wide spectrum of fixed income instruments including bonds, debt securities and other similar instruments issued by government and private-sector entities.
• International equity - The funds seek to provide long-term capital appreciation by investing in the stocks of companies located outside the United States that are considered to have the potential for above-average capital appreciation.
• Money market - The fund seeks as high a level of current income as is consistent with the preservation of capital and the maintenance of liquidity by investing in a diversified portfolio of high-quality, dollar-denominated short-term debt securities.
• US large cap - The funds seek to track the performance of several benchmark indices that measure the investment return of large-capitalization stocks. The funds attempt to replicate the indices by investing substantially all of their assets in the stocks that make up the various indices in approximately the same proportion as the weighting in the indices.
• US small cap - The fund seeks to track the performance of a benchmark index that measures the investment return of small-capitalization stocks. The fund attempts to replicate the index by investing substantially all of its assets in the stocks that make up the index in approximately the same proportion as the weighting in the index.

Plan asset investment allocation

			Allocation of Plan Assets
			at December 31,
Investment	Target Asset
Category	Allocation		2014		2013
U.S. equities	46	%	47.6	%	51.0	%
International equities	24	%	23.4	%	19.9	%
Debt securities	30	%	29.0	%	29.1	%

Net periodic benefit cost

Net periodic benefit cost recorded in the Consolidated Statement of Operations includes the following components:
Year Ended December 31,		2014		2013		2012
(Dollars in thousands)
Service cost		$	1,018	$	1,348	$	1,197
Interest cost			2,255		2,137		2,297
Expected return on plan assets			(3,402)		(3,065)		(2,995)
Amortization of prior service costs (1)			(3,644)		(3,605)		(3,735)
Amortization of actuarial losses (2)			1,287		2,452		2,517
Net post-retirement cost (benefit)		$	(2,486)	$	(733)	$	(719)
(1)	Based on straight-line amortization over the average time remaining before active employees become fully eligible for plan benefits.
(2)	Based on straight-line amortization over the average time remaining before active employees retire.

Assumptions used to calculate net periodic benefit cost

The following assumptions were used to determine benefit obligations and net periodic benefit cost:
December 31,	2014		2013
Benefit obligations
Discount rate	4.20	%	5.00	%
Net periodic benefit cost
Discount rate	5.00	%	4.00	%
Expected return on plan assets	7.00	%	7.00	%

Change in health care cost trend rate

	One Percent
	Increase		Decrease
(Dollars in thousands)
Effect on total service and interest cost components	$	25	$	(23)
Effect on post-retirement benefit obligation	$	423	$	(393)

Estimated future post-retirement benefit payments

Year
(Dollars in thousands)
2015	$	1,687
2016		1,719
2017		1,662
2018		1,652
2019		1,667
2020-2024		9,442

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Income Taxes, Expense Reconciliation (Details) (USD $)	12 Months Ended
	Dec. 31, 2014		Dec. 31, 2013		Dec. 31, 2012
Income tax expense reconciliation
Statutory federal income tax expense	$ (53,300,000)	[1]	$ 102,500,000	[1]	$ 68,700,000	[1]
State income taxes, net of federal benefit	42,800,000		10,500,000		8,400,000
Effect of noncontrolling interests	(5,800,000)		(1,000,000)
Gains (losses) on investments and sale of assets			14,900,000	[2]
Correction of deferred taxes					(6,100,000)	[3]
Change in federal valuation allowance	(8,700,000)	[4]
Goodwill impairment	18,300,000	[5]
Other differences, net	1,800,000		(900,000)		2,600,000
Total income tax expense	$ (4,932,000)		$ 126,043,000		$ 73,582,000

[1] State income taxes, net of federal benefit, include changes in unrecognized tax benefits as well as adjustments to the valuation allowance. During the third quarter of 2014 TDS recorded a $38.5 million increase to income tax expense related to a valuation allowance recorded against certain state deferred tax assets. In each interim period, TDS evaluates the available positive and negative evidence to assess whether deferred tax assets are realizable, on a more likely than not basis. During the year ended December 31, 2014, based on revised forecasts of future state income, TDS concluded that the negative evidence related to the realization of certain state deferred tax assets outweighed the positive evidence. Accordingly, TDS determined that such deferred tax assets related to certain states were not realizable, on a more likely than not basis.

[2] Gains (losses) on investments and sale of assets represents 2013 tax expense related to the NY1 & NY2 Deconsolidation and the Divestiture Transaction.

[3] Correction of deferred taxes reflects immaterial adjustments to correct deferred tax balances in 2012 related to tax basis and law changes that related to periods prior to 2012.

[4] Change in federal valuation allowance relates primarily to a decrease to income tax expense in the third quarter of 2014 due to a valuation allowance reduction for federal net operating losses previously limited under loss utilization rules. Due to the shutdown of Airadigm’s consumer wireless business and resulting intercompany sale of certain assets by Airadigm to U.S. Cellular during the year (as described in Note 6 — Acquisitions, Divestitures and Exchanges), Airadigm is expected to recognize sufficient taxable income for TDS to utilize the previously limited net operating losses.

[5] Goodwill impairment reflects an adjustment to increase income tax expense by $18.3 million related to a portion of the goodwill impairment of Suttle-Straus and the HMS reporting unit recorded in 2014 which is nondeductible for income tax purposes. See Note 7 — Intangible Assets for additional information related to the goodwill impairment.

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Employee Benefit Plans, defined Contribution Plan (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Employee benefits
Description of defined contribution plan	Defined Contribution Plans TDS sponsors a qualified noncontributory defined contribution pension plan. The plan provides benefits for the employees of TDS Corporate, TDS Telecom and U.S. Cellular. Under this plan, pension costs are calculated separately for each participant and are funded annually. Total pension costs were $16.4 million, $16.2 million and $18.4 million in 2014, 2013 and 2012, respectively. In addition, TDS sponsors a defined contribution retirement savings plan (“401(k)”) plan. Total costs incurred from TDS’ contributions to the 401(k) plan were $25.3 million, $24.8 million and $25.0 million in 2014, 2013 and 2012, respectively. TDS also sponsors an unfunded nonqualified deferred supplemental executive retirement plan for certain employees to offset the reduction of benefits caused by the limitation on annual employee compensation under the tax laws.
Pension
Employee benefits
Defined contribution cost	$ 16.4	$ 16.2	$ 18.4
401(k)
Employee benefits
Defined contribution cost	$ 25.3	$ 24.8	$ 25.0

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Consolidated Statement Of Operations (USD $) In Thousands, except Per Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Operating revenues
Service	$ 4,328,654	$ 4,443,491	$ 4,952,603
Equipment and product sales	680,784	457,745	392,674
Total operating revenues	5,009,438	4,901,236	5,345,277
Operating expenses
Cost of services (excluding Depreciation, amortization and accretion reported below)	1,164,658	1,118,183	1,274,625
Cost of equipment and products	1,346,811	1,107,133	997,945
Selling, general and administrative	1,865,807	1,947,778	2,033,901
Depreciation, amortization and accretion	836,532	1,018,077	813,626
Loss on impairment of assets	87,802		515
(Gain) loss on asset disposals, net	26,531	30,841	19,741
(Gain) loss on sale of business and other exit costs, net	(15,846)	(300,656)	21,061
(Gain) loss on license sales and exchanges	(112,993)	(255,479)
Total operating expenses	5,199,302	4,665,877	5,161,414
Operating income (loss)	(189,864)	235,359	183,863
Investment and other income (expense)
Equity in earnings of unconsolidated entities	131,965	132,714	92,867
Interest and dividend income	16,957	9,092	9,248
Gain (loss) on investments		14,547	(3,718)
Interest expense	(111,397)	(98,811)	(86,745)
Other, net	115	(37)	720
Total investment and other income (expense)	37,640	57,505	12,372
Income (loss) before income taxes	(152,224)	292,864	196,235
Income tax expense (benefit)	(4,932)	126,043	73,582
Net income (loss)	(147,292)	166,821	122,653
Less: Net income (loss) attributable to noncontrolling interests, net of tax	(10,937)	24,894	40,792
Net income (loss) attributable to TDS shareholders	(136,355)	141,927	81,861
TDS Preferred dividend requirement	(49)	(49)	(50)
Net income (loss) available to common shareholders	$ (136,404)	$ 141,878	$ 81,811
Basic weighted average shares outstanding	108,485	108,490	108,671
Basic earnings (loss) per share attributable to TDS shareholders	$ (1.26)	$ 1.31	$ 0.75
Diluted weighted average shares outstanding	108,485	109,132	108,937
Diluted earnings (loss) per share attributable to TDS shareholders	$ (1.26)	$ 1.29	$ 0.75
Dividends per share to TDS shareholders	$ 0.54	$ 0.51	$ 0.49

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Stock-Based Compensation (Tables)

12 Months Ended

Dec. 31, 2014

Stock based compensation

Stock-based compensation

Year Ended December 31,	2014		2013		2012
(Dollars in thousands)
Stock option awards	$	15,802	$	12,973	$	20,884
Restricted stock unit awards		17,968		15,535		19,025
Deferred compensation bonus and matching stock unit awards		690		550		749
Awards under Non-Employee Director compensation plan		1,333		1,280		1,213
Total stock-based compensation, before income taxes		35,793		30,338		41,871
Income tax benefit		(13,519)		(11,459)		(15,848)
Total stock-based compensation expense, net of income taxes	$	22,274	$	18,879	$	26,023

Stock-based compensation, allocation by financial statement line item

December 31,		2014		2013		2012
(Dollars in thousands)
Selling, general and administrative expense	$	32,505	$	27,130	$	38,563
Cost of services and products		3,288		3,208		3,308
Total stock-based compensation	$	35,793	$	30,338	$	41,871

Stock-based compensation, fair value assumptions

TDS estimated the fair value of stock options granted in 2014, 2013 and 2012 using the Black Scholes valuation model and the assumptions shown in the table below:
	2014		2013		2012
Expected life	5.8 Years		5.7 Years		5.5 Years
Expected annual volatility rate	39.6	%	41.0	%	41.1	%
Dividend yield	2.0	%	2.3	%	2.4	%
Risk-free interest rate	1.8	%	1.0	%	0.9	%
Estimated annual forfeiture rate	2.9	%	2.9	%	2.9	%

U.S. Cellular estimated the fair value of stock options granted during 2014, 2013, and 2012 using the Black-Scholes valuation model and the assumptions shown in the table below.
	2014	2013	2012
Expected life	4.5 years	4.6-9.0 years	4.5 years
Expected annual volatility rate	28.0%-28.1%	29.2%-39.6%	40.7%-42.6%
Dividend yield	0%	0%	0%
Risk-free interest rate	1.4%-1.5%	0.7%-2.4%	0.5%-0.9
Estimated annual forfeiture rate	9.4%	0.0%-8.1%	0.0%-9.1%

Summary of stock options

								Weighted
								Average
		Weighted		Weighted				Remaining
		Average		Average		Aggregate		Contractual
	Number of	Exercise		Grant Date		Intrinsic		Life
Common Share Options	Options	Prices		Fair Value		Value		(in years)
Outstanding at December 31, 2011	7,216,000	$	33.89
(4,865,000 exercisable)			36.67
Granted	1,702,000		20.79	$	6.28
Exercised	(1,000)		20.65			$	4,000
Forfeited	(106,000)		23.81
Expired	(298,000)		30.12
Outstanding at December 31, 2012	8,513,000	$	31.53
(5,782,000 exercisable)			35.12
Granted	1,259,000		22.60	$	7.01
Exercised	(683,000)		25.33			$	2,450,000
Forfeited	(81,000)		23.75
Expired	(228,000)		34.10
Outstanding at December 31, 2013	8,780,000	$	30.74
(6,160,000 exercisable)			34.13
Granted	930,000		26.83	$	8.66
Exercised	(40,000)		21.28			$	174,000
Forfeited	(73,000)		23.05
Expired	(457,000)		34.55
Outstanding at December 31, 2014	9,140,000	$	30.25			$	9,651,000	5.6
(6,487,000 exercisable)		$	32.93			$	4,143,000	4.5

								Weighted
								Average
		Weighted		Weighted				Remaining
		Average		Average		Aggregate		Contractual
	Number of	Exercise		Grant Date		Intrinsic		Life
Common Share Options	Options	Price		Fair Value		Value		(in years)
Outstanding at December 31, 2011	2,834,000	$	43.07
(1,533,000 exercisable)			46.23
Granted	677,000		34.91	$	12.61
Exercised	(47,000)		29.82			$	205,000
Forfeited	(117,000)		38.45
Expired	(133,000)		46.17
Outstanding at December 31, 2012	3,214,000	$	41.58
(1,928,000 exercisable)			43.99
Granted	1,213,000		32.45	$	11.53
Exercised	(892,000)		34.78			$	6,787,000
Forfeited	(574,000)		34.17
Expired	(247,000)		48.35
Outstanding at December 31, 2013	2,714,000	$	42.22
(1,359,000 exercisable)			46.91
Granted	1,116,000		41.21	$	10.68
Exercised	(233,000)		32.80			$	1,966,000
Forfeited	(144,000)		35.09
Expired	(65,000)		45.68
Outstanding at December 31, 2014	3,388,000	$	41.51			$	7,495,000	6.70
(1,586,000 exercisable)		$	45.28			$	2,984,000	4.40

Summary of nonvested restricted stock units

A summary of TDS nonvested restricted stock units and changes during the year ended December 31, 2014 is presented in the table below:
Common Restricted Stock Units	Number	Weighted Average Grant Date Fair Value
Nonvested at December 31, 2013	663,000	$	20.43
Granted	355,000	$	25.26
Vested	(300,000)	$	19.68
Forfeited	(26,000)	$	21.31
Nonvested at December 31, 2014	692,000	$	23.20

A summary of U.S. Cellular nonvested restricted stock units at December 31, 2014 and changes during the year then ended is presented in the table below:
Common Restricted Stock Units	Number	Weighted Average Grant Date Fair Value
Nonvested at December 31, 2013	1,170,000	$	36.46
Granted	370,000		41.24
Vested	(274,000)		41.92
Forfeited	(124,000)		34.38
Nonvested at December 31, 2014	1,142,000	$	35.60

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Consolidated Balance Sheet Parenthetical (USD $) In Thousands, except Per Share data, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Current assets
Due from customers and agents, allowances	$ 41,431	$ 63,690
Other, allowances	1,141	1,914
Investments
Other intangible assets, accumulated amortization	133,823	112,752
TDS shareholders' equity
Authorized shares	290,000	290,000
Issued shares	132,749	132,711
Outstanding shares	107,899	108,757
Par value	1,327	1,327
Treasury Shares
TDS shareholders' equity
Treasury shares	24,850	23,954
Series A Common Shares
TDS shareholders' equity
Authorized shares	25,000	25,000
Issued shares	7,179	7,166
Outstanding shares	7,179	7,166
Par value per share	$ 0.01	$ 0.01
Par value	72	72
Common Shares
TDS shareholders' equity
Authorized shares	265,000	265,000
Issued shares	125,570	125,545
Outstanding shares	100,720	101,591
Par value per share	$ 0.01	$ 0.01
Par value	$ 1,255	$ 1,255
Common Shares | Treasury Shares
TDS shareholders' equity
Treasury shares	24,850	23,954

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Income Taxes, Additional Disclosures (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Income Tax Disclosure
Range of potential change in unrecognized tax benefits due to state income tax positions and their resolution and expiration of statutes of limitations within the next year	$ 10.0
Net accrued interest and penalties, total	16.2	12.4
Accrued interest and penalties related to unrecognized income tax benefits	$ 3.4	$ 0.7	$ (1.5)
Federal
Income Tax Disclosure
Open tax years	2012
State
Income Tax Disclosure
Open tax years	2010

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Intangible Assets (Tables)

12 Months Ended

Dec. 31, 2014

Licenses and Franchise Rights

Licenses and Franchise Rights

Licenses
(Dollars in thousands)			U.S. Cellular		Wireline		Cable		Other (1)		Total
Balance December 31, 2012			$	1,462,019	$	2,800	$	-	$	15,220	$	1,480,039
	Acquisitions			16,540		-		-		-		16,540
	Transferred to Assets held for sale			(16,027)		-		-		-		(16,027)
	Divestitures			(59,419)		-		-		-		(59,419)
	Other			2,646		-		-		-		2,646
Balance December 31, 2013				1,405,759		2,800		-		15,220		1,423,779
	Acquisitions			41,707		-		2,703		-		44,410
	Transferred to Assets held for sale			(56,809)		-		-		-		(56,809)
	Exchanges, net			55,780		-		-		-		55,780
	Divestitures			-		-		-		(15,220)		(15,220)
	Other			1,634		-		-		-		1,634
Balance December 31, 2014			$	1,448,071	$	2,800	$	2,703	$	-	$	1,453,574
(1)		Represents the transfer of licenses from Airadigm to U.S. Cellular in 2014. See Note 6 — Acquisitions, Divestitures and Exchanges for additional information.

Franchise rights
(Dollars in thousands)		Cable
Balance December 31, 2012		$	-
	Acquisitions		123,668
Balance December 31, 2013			123,668
	Acquisitions		120,979
	Divestitures		(347)
Balance December 31, 2014		$	244,300

Goodwill

Goodwill

Goodwill
(Dollars in thousands)			U.S. Cellular		Wireline (1)		Cable		HMS		Other (2)		Total
Balance December 31, 2012 (3)			$	269,307	$	420,458	$	-	$	103,627	$	3,802	$	797,194
	Acquisitions			-		-		61,712		15,203		-		76,915
	Divestitures			(135)		-		-		-		-		(135)
	NY1 & NY2 Deconsolidation			(37,131)		-		-		-		-		(37,131)
Balance December 31, 2013				232,041		420,458		61,712		118,830		3,802		836,843
	Acquisitions			-		-		33,610		-		-		33,610
	Loss on impairment			-		-		-		(84,000)		(3,802)		(87,802)
	Divestitures			(291)		(2,564)		-		-		-		(2,855)
	Transferred to Assets held for sale			(4,344)		(4,100)		-		-		-		(8,444)
Balance December 31, 2014			$	227,406	$	413,794	$	95,322	$	34,830	$	-	$	771,352
(1)		In July 2014, TDS Telecom sold certain Wireline markets.
(2)		TDS performed its annual impairment review of Goodwill in the fourth quarter of 2014. Based on the results of this review, TDS concluded that the entire amount of Goodwill related to Suttle-Straus was impaired, which resulted in a $3.8 million loss on impairment.
(3)		Includes accumulated impairment losses in prior periods as follows: $333.9 million for U.S. Cellular, $29.4 million for Wireline and $0.5 million for Other.

HMS

Fair Value Inputs

Fair Value Key Assumptions

Key assumptions	HMS
Revenue growth rate	6.1	%
Terminal revenue growth rate	2.5	%
Discount rate	11.5	%
Capital expenditures as a percentage of revenue	8.6	%

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Investment in Unconsolidated Entities (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Equity and cost method investments
Capital contributions, loans, advances and adjustments	$ 127,939	$ 132,629
Cumulative share of income	1,323,898	1,186,900
Cumulative share of distributions	(1,145,438)	(1,033,087)
Equity method investments	306,399	286,442
Cost method investments	15,330	15,330
Total investments in unconsolidated entities	321,729	301,772	179,921
Equity in earnings of unconsolidated entities	131,965	132,714	92,867
Los Angeles SMSA Limited Partnership
Equity and cost method investments
Equity in earnings of unconsolidated entities	71,800	78,400	67,200
Ownership interest in equity method investment	5.50%	5.50%	5.50%
Aggregate equity method investments
Equity method investments, combined assets
Current	733,133	520,804
Due from affiliates	303,322	408,735
Property and other	2,345,562	2,080,436
Total assets	3,382,017	3,009,975
Equity method investments, combined liabilities and equity
Current liabilities	407,073	355,167
Deferred credits	175,516	89,198
Long-term liabilities	29,342	31,605
Long-term capital lease obligations	1,722	707
Partners' capital and shareholders' equity	2,768,364	2,533,298
Total liabilities and equity	3,382,017	3,009,975
Equity method investments, combined income statements
Revenues	6,700,266	6,239,200	5,825,150
Operating expenses	5,063,925	4,492,372	4,381,731
Operating income	1,636,341	1,746,828	1,443,419
Other income, net	6,741	4,019	7,190
Net income	$ 1,643,082	$ 1,750,847	$ 1,450,609

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Noncontrolling Interests

12 Months Ended

Dec. 31, 2014

Disclosure Text Block

Noncontrolling Interests

NOTE 15 NONCONTROLLING INTERESTS

The following schedule discloses the effects of Net income attributable to TDS shareholders and changes in TDS' ownership interest in U.S. Cellular on TDS' equity for 2014, 2013 and 2012:

Year Ended December 31,			2014		2013		2012
(Dollars in thousands)
Net income (loss) attributable to TDS shareholders			$	(136,355)	$	141,927	$	81,861
	Transfer (to) from the noncontrolling interests
		Change in TDS’ Capital in excess of par value from U.S. Cellular's issuance of U.S. Cellular shares		(12,420)		(14,135)		(8,854)
		Change in TDS’ Capital in excess of par value from U.S. Cellular’s repurchase of U.S. Cellular shares		1,296		3,370		4,789
		Change in TDS’ Capital in excess of par value from common control transaction		7,484		-		-
		Purchase of ownership in subsidiaries from noncontrolling interests		(1,034)		(123)		4,397
		Net transfers (to) from noncontrolling interests		(4,674)		(10,888)		332
	Change from net income (loss) attributable to TDS shareholders and transfers (to) from noncontrolling interests		$	(141,029)	$	131,039	$	82,193

Mandatorily Redeemable Noncontrolling Interests in Finite-Lived Subsidiaries

TDS' consolidated financial statements include certain noncontrolling interests that meet the GAAP definition of mandatorily redeemable financial instruments. These mandatorily redeemable noncontrolling interests represent interests held by third parties in consolidated partnerships, where the terms of the underlying partnership agreement provide for a defined termination date at which time the assets of the subsidiary are to be sold, the liabilities are to be extinguished and the remaining net proceeds are to be distributed to the noncontrolling interest holders and TDS in accordance with the respective partnership agreements. The termination dates of these mandatorily redeemable noncontrolling interests range from 2085 to 2113.

The estimated aggregate amount that would be due and payable to settle all of these noncontrolling interests, assuming an orderly liquidation of the finite-lived consolidated partnerships on December 31, 2014, net of estimated liquidation costs, is $3.6 million.  This amount excludes redemption amounts recorded in Noncontrolling interests with redemption features in the Consolidated Balance Sheet.  The estimate of settlement value was based on certain factors and assumptions which are subjective in nature. Changes in those factors and assumptions could result in a materially larger or smaller settlement amount. TDS currently has no plans or intentions relating to the liquidation of any of the related partnerships prior to their scheduled termination dates. The corresponding carrying value of the mandatorily redeemable noncontrolling interests in finite-lived consolidated partnerships at December 31, 2014 was $3.0 million, and is included in Noncontrolling interests in the Consolidated Balance Sheet. The excess of the aggregate settlement value over the aggregate carrying value of these mandatorily redeemable noncontrolling interests is due primarily to the unrecognized appreciation of the noncontrolling interest holders' share of the underlying net assets in the consolidated partnerships. Neither the noncontrolling interest holders' share, nor TDS' share, of the appreciation of the underlying net assets of these subsidiaries is reflected in the consolidated financial statements.

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Investment in Unconsolidated Entities (Tables)

12 Months Ended

Dec. 31, 2014

Equity Method Investment, Summarized Financial Information

Equity and cost method investments

December 31,		2014		2013
(Dollars in thousands)
Equity method investments:
	Capital contributions, loans, advances and adjustments	$	127,939	$	132,629
	Cumulative share of income		1,323,898		1,186,900
	Cumulative share of distributions		(1,145,438)		(1,033,087)
			306,399		286,442
Cost method investments			15,330		15,330
Total investments in unconsolidated entities		$	321,729	$	301,772

Equity method investments, summarized financial position

December 31,		2014		2013
(Dollars in thousands)
Assets
	Current	$	733,133	$	520,804
	Due from affiliates		303,322		408,735
	Property and other		2,345,562		2,080,436
		$	3,382,017	$	3,009,975
Liabilities and Equity
	Current liabilities	$	407,073	$	355,167
	Deferred credits		175,516		89,198
	Long-term liabilities		29,342		31,605
	Long-term capital lease obligations		1,722		707
	Partners’ capital and shareholders’ equity		2,768,364		2,533,298
		$	3,382,017	$	3,009,975

Equity method investments, summarized results of operations

Year Ended December 31,		2014		2013		2012
(Dollars in thousands)
Results of Operations
	Revenues	$	6,700,266	$	6,239,200	$	5,825,150
	Operating expenses		5,063,925		4,492,372		4,381,731
	Operating income		1,636,341		1,746,828		1,443,419
	Other income, net		6,741		4,019		7,190
	Net income	$	1,643,082	$	1,750,847	$	1,450,609

St. Lawrence Seaway RSA Cellular Partnership and New York RSA 2 Cellular Partnership

Equity Method Investment, Summarized Financial Information

Fair Value Key Assumptions

Key assumptions
Average expected revenue growth rate (next ten years)	2.0	%
Terminal revenue growth rate (after year ten)	2.0	%
Discount rate	10.5	%
Capital expenditures as a percentage of revenue	14.9-18.8	%

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Stock Based Compensation

12 Months Ended

Dec. 31, 2014

Disclosure Text Block

Stock Based Compensation

NOTE 17 STOCK-BASED COMPENSATION

TDS Consolidated

The following table summarizes stock-based compensation expense recognized during 2014, 2013 and 2012:

Year Ended December 31,	2014		2013		2012
(Dollars in thousands)
Stock option awards	$	15,802	$	12,973	$	20,884
Restricted stock unit awards		17,968		15,535		19,025
Deferred compensation bonus and matching stock unit awards		690		550		749
Awards under Non-Employee Director compensation plan		1,333		1,280		1,213
Total stock-based compensation, before income taxes		35,793		30,338		41,871
Income tax benefit		(13,519)		(11,459)		(15,848)
Total stock-based compensation expense, net of income taxes	$	22,274	$	18,879	$	26,023

At December 31,2014, unrecognized compensation cost for all stock-based compensation awards was $39.0 millionandis expected to be recognized over a weighted average period of 2.0 years.

The following table provides a summary of the stock-based compensation expense included in the Consolidated Statement of Operations for the years ended:

December 31,		2014		2013		2012
(Dollars in thousands)
Selling, general and administrative expense	$	32,505	$	27,130	$	38,563
Cost of services and products		3,288		3,208		3,308
Total stock-based compensation	$	35,793	$	30,338	$	41,871

TDS' tax benefits realized from the exercise of stock options and other awards totaled $8.6 million in 2014.

TDS (excluding U.S. Cellular)

The information in this section relates to stock-based compensation plans using the equity instruments of TDS. Participants in these plans are employees of TDS Corporate and TDS Telecom and Non-employee Directors of TDS. Information related to plans using the equity instruments of U.S. Cellular are shown in the U.S. Cellular section following the TDS section.

Under the TDS Long-Term Incentive Plans, TDS 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. .

TDS had reserved 17,971,000 Common Shares at December 31, 2014for equity awards granted and to be granted under the TDS Long-Term Incentive Plans in effect. At December 31, 2014, the only types of awards outstanding are fixed non-qualified stock option awards, restricted stock unit awards, and deferred compensation stock unit awards.

TDS has also established a Non-Employee Directors' compensation plan under which it has reserved 167,000TDS Common Shares atDecember 31, 2014 for issuance as compensation to members of the Board of Directors who are not employees of TDS.

TDS uses treasury stock to satisfy requirements for shares issued pursuant to its various stock-based compensation plans.

Long-Term Incentive Plan—Stock Options—Stock options granted to key employees are exercisable over a specified period not in excess of ten years. Stock options generally vest over periods up to three years from the date of grant. Stock options outstanding at December 31, 2014 expire between 2015 and 2024. However, vested stock options typically expire 30 days after the effective date of an employee's termination of employment for reasons other than retirement. Employees who leave at the age of retirement have 90 days (or one year if they satisfy certain requirements) within which to exercise their vested stock options. The exercise price of options equals the market value of TDS common stock on the date of grant.

TDS estimated the fair value of stock options granted in 2014, 2013 and 2012 using the Black Scholes valuation model and the assumptions shown in the table below:
	2014		2013		2012
Expected life	5.8 Years		5.7 Years		5.5 Years
Expected annual volatility rate	39.6	%	41.0	%	41.1	%
Dividend yield	2.0	%	2.3	%	2.4	%
Risk-free interest rate	1.8	%	1.0	%	0.9	%
Estimated annual forfeiture rate	2.9	%	2.9	%	2.9	%

Prior to 2013, the fair value of options was recognized as compensation cost using an accelerated attribution method over the requisite service periods of the awards, which was generally the vesting period. Beginning with grants in 2013, stock option awards cliff vest in three years. Therefore, compensation cost is recognized on a straight-line basis over the requisite service period.

A summary of TDS stock options (total and portion exercisable) and changes during the three years ended December 31,2014, is presented in the tables and narrative below.

								Weighted
								Average
		Weighted		Weighted				Remaining
		Average		Average		Aggregate		Contractual
	Number of	Exercise		Grant Date		Intrinsic		Life
Common Share Options	Options	Prices		Fair Value		Value		(in years)
Outstanding at December 31, 2011	7,216,000	$	33.89
(4,865,000 exercisable)			36.67
Granted	1,702,000		20.79	$	6.28
Exercised	(1,000)		20.65			$	4,000
Forfeited	(106,000)		23.81
Expired	(298,000)		30.12
Outstanding at December 31, 2012	8,513,000	$	31.53
(5,782,000 exercisable)			35.12
Granted	1,259,000		22.60	$	7.01
Exercised	(683,000)		25.33			$	2,450,000
Forfeited	(81,000)		23.75
Expired	(228,000)		34.10
Outstanding at December 31, 2013	8,780,000	$	30.74
(6,160,000 exercisable)			34.13
Granted	930,000		26.83	$	8.66
Exercised	(40,000)		21.28			$	174,000
Forfeited	(73,000)		23.05
Expired	(457,000)		34.55
Outstanding at December 31, 2014	9,140,000	$	30.25			$	9,651,000	5.6
(6,487,000 exercisable)		$	32.93			$	4,143,000	4.5

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between TDS' closing stock prices and the exercise price, multiplied by the number of in-the-money options) that was received by the option holders upon exercise or that would have been received by option holders had all options been exercised on December 31,2014.

Long-Term Incentive Plans—Restricted Stock Units—TDS also grants restricted stock unit awards to key employees. Each outstanding restricted stock unit is convertible into one Common Share Award. The restricted stock unit awards currently outstanding were granted in 2013 and 2014 and will vest in May 2016 and 2017, respectively.

TDS estimates the fair value of restricted stock units by reducing the grant-date price of TDS' shares by the present value of the dividends expected to be paid on the underlying shares during the requisite service period, discounted at the appropriate risk-free interest rate, since employees are not entitled to dividends declared on the underlying shares while the restricted stock or RSU is unvested. The fair value is then recognized as compensation cost on a straight-line basis over the requisite service periods of the awards, which is generally the vesting period.

A summary of TDS nonvested restricted stock units and changes during the year ended December 31, 2014 is presented in the table below:
Common Restricted Stock Units	Number	Weighted Average Grant Date Fair Value
Nonvested at December 31, 2013	663,000	$	20.43
Granted	355,000	$	25.26
Vested	(300,000)	$	19.68
Forfeited	(26,000)	$	21.31
Nonvested at December 31, 2014	692,000	$	23.20

The total fair values as of the respective vesting dates of restricted stock units vested during 2014, 2013 and 2012 were $7.5million, $5.8million and $3.4million, respectively. The weighted average grant date fair value of restricted stock units granted in 2014, 2013 and 2012 was $25.26,$21.09 and $19.62, respectively.

Long-Term Incentive Plans—Deferred Compensation Stock Units—Certain TDS 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 TDS Common Share units. The amount of TDS' matching contribution depends on the portion of the annual bonus that is deferred. Participants receive a 25% stock unit 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 TDS Common Share units.

The total fair values of deferred compensation stock units that vested during 2014,2013and 2012 were$0.1million, $0.1million and $0.1million, respectively. The weighted average grant date fair value of deferred compensation stock units granted in 2014,2013and 2012 was $23.27,$21.99 and $24.18, respectively. As of December 31, 2014, there were 249,000 vested but unissued deferred compensation stock units valued at $6.3 million.

Compensation of Non-Employee Directors—TDS issued 33,000,33,000and 22,000 Common Shares under its Non-Employee Director plan in 2014,2013and 2012, respectively.

Dividend Reinvestment Plans (“DRIP”)—TDS had reserved 1,028,000 Common Shares at December 31,2014, for issuance under Automatic Dividend Reinvestment and Stock Purchase Plans and 141,000 Series A Common Shares for issuance under the Series A Common Share Automatic Dividend Reinvestment Plan. These plans enabled holders of TDS' Common Shares and Preferred Shares to reinvest cash dividends in Common Shares and holders of Series A Common Shares to reinvest cash dividends in Series A Common Shares. The purchase price of the shares is 95% of the market value, based on the average of the daily high and low sales prices for TDS' Common Shares on the New York Stock Exchange for the ten trading days preceding the date on which the purchase is made. These plans are considered non-compensatory plans, therefore no compensation expense is recognized for stock issued under these plans.

U.S. Cellular

The information in this section relates to stock-based compensation plans using the equity instruments of U.S. Cellular. Participants in these plans are employees of U.S. Cellular and Non-employee Directors of U.S. Cellular. Information related to plans using the equity instruments of TDS are shown in the previous section.

U.S. Cellular has established the following stock-based compensation plans: long-term incentive plans and a Non-Employee Director compensation plan.

Under the U.S. Cellular Long-Term Incentive Plans, U.S. Cellular may grant fixed and performance based incentive and non-qualified stock options, restricted stock, restricted stock units, and deferred compensation stock unit awards to key employees. At December 31, 2014, the only types of awards outstanding are fixed non-qualified stock option awards, restricted stock unit awards, and deferred compensation stock unit awards.

On June 25, 2013, U.S. Cellular paid a special cash dividend to all holders of U.S. Cellular Common Shares and Series A Common Shares as of June 11, 2013. Outstanding U.S. Cellular stock options, restricted stock unit awards and deferred compensation stock units were equitably adjusted for the special cash dividend. The impact of such adjustments are fully reflected for all years presented. See Note 5 – Earnings Per Share for additional information.

At December 31, 2014, U.S. Cellular had reserved 9,782,000 Common Shares for equity awards granted and to be granted under the Long-Term Incentive Plans.

U.S. Cellular also has established a Non-Employee Director compensation plan under which it has reserved 197,000 Common Shares at December 31, 2014for issuance as compensation to members of the Board of Directors who are not employees of U.S. Cellular or TDS.

U.S. Cellular uses treasury stock to satisfy requirements for Common Shares issued pursuant to its various stock-based compensation plans.

Long-Term Incentive Plans—Stock Options—Stock options granted to key employees are exercisable over a specified period not in excess of ten years. Stock options generally vest over a period of three years from the date of grant. Stock options outstanding at December 31, 2014 expire between 2015 and 2024. However, vested stock options typically expire 30 days after the effective date of an employee's termination of employment for reasons other than retirement. Employees who leave at the age of retirement have 90 days (or one year if they satisfy certain requirements) within which to exercise their vested stock options. The exercise price of options equals the market value of U.S. Cellular Common Shares on the date of grant.

U.S. Cellular estimated the fair value of stock options granted during 2014, 2013, and 2012 using the Black-Scholes valuation model and the assumptions shown in the table below.
	2014	2013	2012
Expected life	4.5 years	4.6-9.0 years	4.5 years
Expected annual volatility rate	28.0%-28.1%	29.2%-39.6%	40.7%-42.6%
Dividend yield	0%	0%	0%
Risk-free interest rate	1.4%-1.5%	0.7%-2.4%	0.5%-0.9
Estimated annual forfeiture rate	9.4%	0.0%-8.1%	0.0%-9.1%

The fair value of options is recognized as compensation cost using an accelerated attribution method over the requisite service periods of the awards, which is generally the vesting period.

A summary of U.S. Cellular stock options outstanding (total and portion exercisable) and changes during the three years ended December 31,2014, is presented in the table below:

								Weighted
								Average
		Weighted		Weighted				Remaining
		Average		Average		Aggregate		Contractual
	Number of	Exercise		Grant Date		Intrinsic		Life
Common Share Options	Options	Price		Fair Value		Value		(in years)
Outstanding at December 31, 2011	2,834,000	$	43.07
(1,533,000 exercisable)			46.23
Granted	677,000		34.91	$	12.61
Exercised	(47,000)		29.82			$	205,000
Forfeited	(117,000)		38.45
Expired	(133,000)		46.17
Outstanding at December 31, 2012	3,214,000	$	41.58
(1,928,000 exercisable)			43.99
Granted	1,213,000		32.45	$	11.53
Exercised	(892,000)		34.78			$	6,787,000
Forfeited	(574,000)		34.17
Expired	(247,000)		48.35
Outstanding at December 31, 2013	2,714,000	$	42.22
(1,359,000 exercisable)			46.91
Granted	1,116,000		41.21	$	10.68
Exercised	(233,000)		32.80			$	1,966,000
Forfeited	(144,000)		35.09
Expired	(65,000)		45.68
Outstanding at December 31, 2014	3,388,000	$	41.51			$	7,495,000	6.70
(1,586,000 exercisable)		$	45.28			$	2,984,000	4.40

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between U.S. Cellular's closing stock price and the exercise price multiplied by the number of in-the-money options) that was received by the option holders upon exercise or that would have been received by option holders had all options been exercised on December 31, 2014.

Long-Term Incentive Plans—Restricted Stock Units—U.S. Cellular grants restricted stock unit awards, which generally vest after three years, to key employees.

U.S. Cellular estimates the fair value of restricted stock units based on the closing market price of U.S. Cellular shares on the date of grant. The fair value is then recognized as compensation cost on a straight-line basis over the requisite service periods of the awards, which is generally the vesting period.

A summary of U.S. Cellular nonvested restricted stock units at December 31, 2014 and changes during the year then ended is presented in the table below:
Common Restricted Stock Units	Number	Weighted Average Grant Date Fair Value
Nonvested at December 31, 2013	1,170,000	$	36.46
Granted	370,000		41.24
Vested	(274,000)		41.92
Forfeited	(124,000)		34.38
Nonvested at December 31, 2014	1,142,000	$	35.60

The total fair value of restricted stock units that vested during 2014,2013 and 2012 was$11.1 million, $8.8 million and $8.9 million, respectively, as of the respective vesting dates. The weighted average grant date fair value of restricted stock units granted in 2014, 2013 and 2012 was $41.24, $32.06 and $34.09, respectively.

Long-Term Incentive Plans—Deferred Compensation Stock Units—Certain U.S. Cellular employees may elect to defer receipt of all or a portion of their annual bonuses and to receive a company matching contribution on the amount deferred. All bonus compensation that is deferred by employees electing to participate is immediately vested and is deemed to be invested in U.S. Cellular Common Share stock units. The amount of U.S. Cellular's matching contribution depends on the portion of the annual bonus that is deferred. Participants receive a 25% match for amounts deferred up to 50% of their total annual bonus and a 33% match for amounts that exceed 50% of their total annual bonus; such matching contributions also are deemed to be invested in U.S. Cellular Common Share stock units.

There were no deferred compensation stock units granted or that vested during 2014. The total fair value of deferred compensation stock units that vested during 2013 and 2012 was less than $0.1 millionin each year. The weighted average grant date fair value of deferred compensation stock units granted in 2013 and 2012 was $31.50 and $36.34, respectively.As of December 31,2014, there were no vested or unissued deferred compensation stock units outstanding.

Compensation of Non-Employee Directors—U.S. Cellular issued 14,200, 13,000 and 7,600 Common Shares in 2014, 2013 and 2012, respectively, under its Non-Employee Director compensation plan.

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Asset Retirement Obligation (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014		Dec. 31, 2013
Asset retirement obligation
Asset retirement obligation - beginning balance	$ 275,238	[1]	$ 253,610
Additional liabilities accrued	4,907		4,302
Revisions in estimated cash outflows	(992)		3,706
Disposition of assets	(46,242)		(4,111)
Accretion expense	17,506		17,731
Transferred to Liabilities held for sale	(11,385)
Asset retirement obligation - ending balance	239,032	[1]	275,238	[1]
Other current liabilities
Asset retirement obligation
Asset retirement obligation - ending balance	9,100		37,700
U.S. Cellular
Asset retirement obligation
Asset retirement obligation - beginning balance	195,568	[1]	179,607
Additional liabilities accrued	2,507		635
Revisions in estimated cash outflows	(2,792)		6,268
Disposition of assets	(44,403)		(3,534)
Accretion expense	12,534		12,592
Transferred to Liabilities held for sale	(10,902)
Asset retirement obligation - ending balance	152,512	[1]	195,568	[1]
TDS Telecom
Asset retirement obligation
Asset retirement obligation - beginning balance	75,395	[1]	69,969
Additional liabilities accrued	2,400		3,667
Revisions in estimated cash outflows	1,777		(2,562)
Disposition of assets	(882)		(577)
Accretion expense	4,723		4,898
Transferred to Liabilities held for sale	(177)
Asset retirement obligation - ending balance	83,236	[1]	75,395	[1]
Other
Asset retirement obligation
Asset retirement obligation - beginning balance	4,275	[1]	4,034
Revisions in estimated cash outflows	23
Disposition of assets	(957)
Accretion expense	249		241
Transferred to Liabilities held for sale	(306)
Asset retirement obligation - ending balance	$ 3,284	[1]	$ 4,275	[1]

[1] The total amount of asset retirement obligations related to the Divestiture Transaction and Airadigm Transaction included in Other current liabilities was $9.1 million and $37.7 million as of December 31, 2014 and 2013, respectively.

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Consolidated Statement of Changes in Equity (USD $) In Thousands, unless otherwise specified	Total	Series A Common and Common Shares	Capital in Excess of Par Value	Treasury Common Shares	Accumulated Other Comprehensive Income (Loss)	Retained Earnings	Total TDS Shareholders' Equity	Preferred Shares	Noncontrolling Interests
Beginning balance at Dec. 31, 2011	$ 4,602,679	$ 1,326	$ 2,268,711	$ (750,921)	$ (8,854)	$ 2,451,899	$ 3,962,161	$ 830	$ 639,688
Add (Deduct)
Net income (loss) attributable to TDS shareholders	81,861					81,861	81,861
Net income (loss) attributable to noncontrolling interests classified as equity	40,739								40,739
Net unrealized gain (loss) on equity investments	49				49		49
Change in foreign currency translation adjustment	4				4		4
Changes related to retirement plan	669				669		669
TDS Common and Series A Common Share dividends	(53,115)					(53,115)	(53,115)
TDS Preferred dividend requirement	(50)					(50)	(50)
Repurchase of Preferred Shares	(22)					(17)	(17)	(5)
Repurchase of Common Shares	(20,026)			(20,026)			(20,026)
Dividend reinvestment plan	6,923	1	1,148	14,123		(8,349)	6,923
Incentive and compensation plans	(742)		444	6,725		(7,911)	(742)
Adjust investment in subsidiaries for repurchases, issuances and other compensation plans	(2,352)		12,572				12,572		(14,924)
Stock-based compensation awards	20,030		20,030				20,030
Tax windfall (shortfall) from stock awards	(3,179)		(3,179)				(3,179)
Distributions to noncontrolling interests	(20,856)								(20,856)
Adjust investment in subsidiaries for noncontrolling interest purchases	3,658		4,396				4,396		(738)
Other	57								57
Ending balance at Dec. 31, 2012	4,656,327	1,327	2,304,122	(750,099)	(8,132)	2,464,318	4,011,536	825	643,966
Add (Deduct)
Net income (loss) attributable to TDS shareholders	141,927					141,927	141,927
Net income (loss) attributable to noncontrolling interests classified as equity	24,661								24,661
Net unrealized gain (loss) on equity investments	51				51		51
Change in foreign currency translation adjustment	(34)				(34)		(34)
Changes related to retirement plan	7,546				7,546		7,546
TDS Common and Series A Common Share dividends	(55,244)					(55,244)	(55,244)
TDS Preferred dividend requirement	(49)					(49)	(49)
U.S. Cellular dividends paid to noncontrolling public shareholders	(75,235)								(75,235)
Repurchase of Preferred Shares	(6)					(5)	(5)	(1)
Repurchase of Common Shares	(9,692)			(9,692)			(9,692)
Dividend reinvestment plan	9,300		1,619	13,647		(5,966)	9,300
Incentive and compensation plans	10,090		655	24,790		(15,355)	10,090
Adjust investment in subsidiaries for repurchases, issuances and other compensation plans	(270)		(290)				(290)		20
Stock-based compensation awards	14,430		14,430				14,430
Tax windfall (shortfall) from stock awards	(1,311)		(1,311)				(1,311)
Distributions to noncontrolling interests	(3,576)								(3,576)
Adjust investment in subsidiaries for noncontrolling interest purchases	(5,048)		(10,418)				(10,418)		5,370
Deconsolidation of partnerships	(43,770)								(43,770)
Ending balance at Dec. 31, 2013	4,670,097	1,327	2,308,807	(721,354)	(569)	2,529,626	4,117,837	824	551,436
Add (Deduct)
Net income (loss) attributable to TDS shareholders	(136,355)					(136,355)	(136,355)
Net income (loss) attributable to noncontrolling interests classified as equity	(11,614)								(11,614)
Net unrealized gain (loss) on equity investments	341				341		341
Change in foreign currency translation adjustment	48				48		48
Changes related to retirement plan	6,632				6,632		6,632
TDS Common and Series A Common Share dividends	(57,991)					(57,991)	(57,991)
TDS Preferred dividend requirement	(49)					(49)	(49)
Repurchase of Common Shares	(39,096)			(39,096)			(39,096)
Dividend reinvestment plan	9,795		2,702	7,093			9,795
Incentive and compensation plans	(1,466)		(1,580)	5,158		(5,044)	(1,466)
Adjust investment in subsidiaries for repurchases, issuances and other compensation plans	723		12,072				12,072		(11,349)
Stock-based compensation awards	14,182		14,182				14,182
Tax windfall (shortfall) from stock awards	328		328				328
Distributions to noncontrolling interests	(564)								(564)
Ending balance at Dec. 31, 2014	$ 4,455,011	$ 1,327	$ 2,336,511	$ (748,199)	$ 6,452	$ 2,330,187	$ 3,926,278	$ 824	$ 527,909

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Consolidated Statement Of Comprehensive Income (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Consolidated Statement of Comprehensive Income
Net income (loss)	$ (147,292)	$ 166,821	$ 122,653
Net change in accumulated other comprehensive income (loss)
Change in net unrealized gain (loss) on equity investments	341	51	49
Change in foreign currency translation adjustment	48	(34)	4
Change related to retirement plan
Net actuarial gains (losses)	10,990	13,345	90
Prior service cost	2,057
Amortization of prior service cost	(3,644)	(3,605)	(3,735)
Amortization of unrecognized net loss	1,287	2,452	2,517
Total gains (losses) recognized in Comprehensive Income before income tax benefit (expense)	10,690	12,192	(1,128)
Change in deferred income taxes	(4,058)	(4,646)	1,797
Change related to retirement plan, net of tax	6,632	7,546	669
Net change in accumulated other comprehensive income (loss)	7,021	7,563	722
Comprehensive income (loss)	(140,271)	174,384	123,375
Less: Comprehensive income (loss) attributable to noncontrolling interest	10,937	24,894	40,792
Comprehensive income (loss) attributable to TDS shareholders	$ (151,208)	$ 149,490	$ 82,583

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Asset Retirement Obligation

12 Months Ended

Dec. 31, 2014

Disclosure Text Block

Asset Retirement Obligation

NOTE 10 ASSET RETIREMENT OBLIGATIONS

U.S. Cellular is subject to asset retirement obligations associated with its leased cell sites, switching office sites, retail store sites and office locations in its operating markets. Asset retirement obligations generally include obligations to restore leased land and retail store and office premises to their pre-lease conditions.

TDS Telecom owns poles, cable and wire and certain buildings and leases data center and office space and property used for housing central office switching equipment and fiber cable. These assets and leases often have removal or remediation requirements associated with them. For example, TDS Telecom's poles, cable and wire are often located on property that is not owned by TDS Telecom and are often subject to the provisions of easements, permits, or leasing arrangements. Pursuant to the terms of the permits, easements, or leasing arrangements, TDS Telecom is often required to remove these assets and return the property to its original condition at some defined date in the future.

Asset retirement obligations are included in Other deferred liabilities and credits and Other current liabilities in the Consolidated Balance Sheet.

In 2014 and 2013, U.S. Cellular and TDS Telecom performed a review of the assumptions and estimated costs related to asset retirement obligations. The results of the reviews (identified as “Revisions in estimated cash outflows”) and other changes in asset retirement obligations during 2014 and 2013were as follows:

			U.S.		TDS				TDS
(Dollars in thousands)			Cellular		Telecom		Other		Consolidated
Balance December 31, 2013			$	195,568	$	75,395	$	4,275	$	275,238
	Additional liabilities accrued			2,507		2,400		-		4,907
	Revisions in estimated cash outflows			(2,792)		1,777		23		(992)
	Disposition of assets			(44,403)		(882)		(957)		(46,242)
	Accretion expense			12,534		4,723		249		17,506
	Transferred to Liabilities held for sale			(10,902)		(177)		(306)		(11,385)
Balance December 31, 2014 (1)			$	152,512	$	83,236	$	3,284	$	239,032
Balance December 31, 2012			$	179,607	$	69,969	$	4,034	$	253,610
	Additional liabilities accrued			635		3,667		-		4,302
	Revisions in estimated cash outflows			6,268		(2,562)		-		3,706
	Disposition of assets			(3,534)		(577)		-		(4,111)
	Accretion expense			12,592		4,898		241		17,731
Balance December 31, 2013 (1)			$	195,568	$	75,395	$	4,275	$	275,238
(1)		The total amount of asset retirement obligations related to the Divestiture Transaction and Airadigm Transaction included in Other current liabilities was $9.1 million and $37.7 million as of December 31, 2014 and 2013, respectively.

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Certain Relationships and Related Transactions (Details) (Sidley Austin LLP, USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Sidley Austin LLP
Certain relationships and related transactions
Legal expense	$ 15.4	$ 17.6	$ 13.6
Description of related transaction	The following persons are partners of Sidley Austin LLP, the principal law firm of TDS and its subsidiaries: Walter C.D. Carlson, a trustee and beneficiary of a voting trust that controls TDS, the non-executive Chairman of the Board and member of the Board of Directors of TDS and a director of U.S. Cellular, a subsidiary of 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 certain subsidiaries of TDS. Walter C.D. Carlson does not provide legal services to TDS or its subsidiaries. TDS, U.S. Cellular and their subsidiaries incurred legal costs from Sidley Austin LLP of $15.4 million in 2014, $17.6 million in 2013 and $13.6 million in 2012.

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Document And Entity Information (USD $)	12 Months Ended
	Dec. 31, 2014	Jun. 30, 2014	Jan. 31, 2015
Entity Registrant Name	TELEPHONE & DATA SYSTEMS INC /DE/
Entity Central Index Key	0001051512
Document Type	10-K
Document Period End Date	Dec. 31, 2014
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Public Float		$ 2,456,483,210
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	FY
Trading Symbol	TDS
Common Shares
Entity Public Float		2,453,235,208
Entity Common Stock, Shares Outstanding			100,728,000
Series A Common Shares
Entity Public Float		2,424,002
Entity Common Stock, Shares Outstanding			7,179,000
Preferred Shares
Entity Public Float		$ 824,000

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Debt

12 Months Ended

Dec. 31, 2014

Disclosure Text Block

Debt

NOTE 11 DEBT

Revolving Credit Facilities

At December 31, 2014, TDS and U.S. Cellular had revolving credit facilities available for general corporate purposes. Amounts under the revolving credit facilities may be borrowed, repaid and reborrowed from time to time until maturity. U.S. Cellular borrowed and repaid amounts under its revolving credit facility in 2014.Neither TDS nor U.S. Cellular borrowed under their revolving credit facilities in 2013 or 2012 except for standby letters of credit.

In certain circumstances, TDS' and U.S. Cellular's interest cost on their revolving credit facilities may be subject to increase if their current credit ratings from nationally recognized credit rating agencies are lowered, and may be subject to decrease if the ratings are raised.

In 2014, certain nationally recognized credit rating agencies downgraded TDS and U.S. Cellular corporate and senior debt credit ratings. After these downgrades, TDS and U.S. Cellular are rated at sub-investment grade. As a result of these downgrades, the commitment fee on the revolving credit facilitiesincreased to 0.30% per annum. The downgrades also increased the interest rate on any borrowings by 0.25% per annum. The revolving credit facilities do not cease to be available nor do the maturity dates accelerate solely as a result of a downgrade in TDS' or U.S. Cellular's credit rating. However, downgrades in TDS' or U.S. Cellular's credit rating could adversely affect their ability to renew the revolving credit facilities or obtain access to other credit facilities in the future.

The maturity date of any borrowings under the TDS and U.S. Cellular revolving credit facilities would accelerate in the event of a change in control.

The following table summarizes the terms of such revolving credit facilities as of December 31, 2014:
(Dollars in millions)			TDS			U.S. Cellular
Maximum borrowing capacity			$	400.0		$	300.0
Letters of credit outstanding			$	0.6		$	17.5
Amount borrowed			$	-		$	-
Amount available for use			$	399.4		$	282.5
Borrowing rate: One-month London Interbank Offered Rate (“LIBOR”) plus contractual spread (1)				1.92	%		1.92	%
	Sample LIBOR Rate			0.17	%		0.17	%
	Contractual spread			1.75	%		1.75	%
Range of commitment fees on amount available for use (2)
	Low			0.13	%		0.13	%
	High			0.30	%		0.30	%
Agreement date				December 2010			December 2010
Maturity date				December 2017			December 2017
Fees incurred attributable to the Revolving Credit Facility are as follows:
	Fees incurred as a percent of Maximum borrowing capacity for 2014			0.42	%		0.42	%
	Fees incurred, amount
		2014	$	1.7		$	1.3
		2013	$	0.9		$	0.8
		2012	$	1.3		$	1.1
(1)		Borrowings under the revolving credit facility bear interest at LIBOR plus a contractual spread based on TDS' or U.S. Cellular’s credit rating or, at TDS' or U.S. Cellular’s option, an alternate “Base Rate” as defined in the revolving credit agreement. TDS and 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 TDS or U.S. Cellular and approved by the lenders). If TDS or U.S. Cellular provides notice of intent to borrow the same business day, interest on borrowing is at the Base Rate plus the contractual spread.
(2)		The revolving credit facility has commitment fees based on the unsecured senior debt ratings assigned to TDS and U.S. Cellular by certain ratings agencies.

The continued availability of the revolving credit facilities requires TDS and 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. TDS and U.S. Cellular believe they were in compliance as of December 31, 2014 with all covenants and other requirements set forth in the revolving credit facilities.

In connection with U.S. Cellular's revolving credit facility, TDS and U.S. Cellular entered into a subordination agreement dated December 17, 2010 together with the administrative agent for the lenders under U.S. Cellular's revolving credit agreement. Pursuant to this subordination agreement, (a) any consolidated funded indebtedness from U.S. Cellular to TDS will be unsecured and (b) any (i) consolidated funded indebtedness from U.S. Cellular to TDS (other than “refinancing indebtedness” as defined in the subordination agreement) in excess of $105,000,000, and (ii) refinancing indebtedness in excess of $250,000,000, will be subordinated and made junior in right of payment to the prior payment in full of obligations to the lenders under U.S. Cellular'srevolving credit agreement. As of December 31, 2014, U.S. Cellular had no outstanding consolidated funded indebtedness or refinancing indebtedness that was subordinated to the revolving credit agreement pursuant to the subordination agreement.

In July 2014, TDS and U.S. Cellular entered into amendments to the revolving credit facilities agreements which increased the Consolidated Leverage Ratio (the ratio of Consolidated Funded Indebtedness to Consolidated Earnings before interest, taxes, depreciation and amortization) that the companies are required to maintain. Beginning July 1, 2014, TDS and U.S. Cellular are required to maintain the Consolidated Leverage Ratio at a level not to exceed 3.75 to 1.00 for the period of the four fiscal quarters most recently ended (this was 3.00 to 1.00 prior to July 1, 2014). The terms of the amendment decrease the maximum permitted Consolidated Leverage Ratio beginning January 1, 2016, with further decreases effective July 1, 2016 and January 1, 2017 (and will return to 3.00 to 1.00 at that time). For the twelve months ended December 31, 2014, the actual Consolidated Leverage Ratio was 2.50to 1.00. Future changes in TDS' and U.S. Cellular's financial condition could negatively impact their ability to meet the financial covenants and requirements in their revolving credit facilities agreements. TDS also has certain other non-material credit facilities from time to time.

AtDecember 31, 2014, TDS had recorded $5.4million of issuance costs related to the revolving credit facilities which is included in Other assets and deferred charges in the Consolidated Balance Sheet.

Long Term Financing
Long-term debt as of December 31, 2014 and 2013 was as follows:
									December 31,
(Dollars in thousands)					Issuance date	Maturity date	Call date	2014		2013
TDS:
		Unsecured Senior Notes
			6.625%		March 2005	March 2045	March 2010	$	116,250	$	116,250
			6.875%		November 2010	November 2059	November 2015		225,000		225,000
			7.0%		March 2011	March 2060	March 2016		300,000		300,000
			5.875%		November 2012	December 2061	December 2017		195,000		195,000
		Purchase contract at 6.0%			October 2001	October 2021			1,097		1,097
				Total Parent					837,347		837,347
Subsidiaries:
	U.S. Cellular -
		Unsecured Senior Notes
			6.7%		December 2003 and June 2004	December 2033	December 2003		544,000		544,000
			Less: 6.7% Unamortized discount						(11,278)		(11,551)
									532,722		532,449
			6.95%		May 2011	May 2060	May 2016		342,000		342,000
			7.25%		December 2014	December 2063	December 2019		275,000		-
		Obligation on capital leases							2,143		3,749
	TDS Telecom -
		Rural Utilities Service (“RUS”) and other notes							699		749
		Obligation on capital leases							768		779
	Other -
		Long-term notes, 3.7% to 4.8%				Through 2016			3,686		4,612
		Obligation on capital leases							29		35
				Total Subsidiaries					1,157,047		884,373
Total long-term debt								$	1,994,394	$	1,721,720
		Long-term debt, current						$	808	$	1,646
		Long-term debt, noncurrent						$	1,993,586	$	1,720,074

TDS may redeem its callable notes and U.S. Cellular may redeem its 6.95% Senior Notes and 7.25% Senior Notes, in whole or in part at any time after the respective call date, at a redemption price equal to 100% of the principal amount redeemed plus accrued and unpaid interest. 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.

Interest on the notes is payable quarterly on Senior Notes outstanding at December 31, 2014, with the exception of U.S. Cellular's 6.7% note in which interest is payable semi-annually.

Capitalized debt issuance costs for Unsecured Senior Notes totaled $53.9million and are included in Other assets and deferred charges (a long-term asset account). These costs are amortized over the life of the notes using the effective interest method.

The annual requirements for principal payments on long-term debt are approximately $0.8million, $3.8million, $0.1million, $0.1millionand $0.1million for the years 2015 through 2019, respectively.

The covenants associated with TDS and its subsidiaries' long-term debt obligations, among other things, restrict TDS' ability, subject to certain exclusions, to incur additional liens, enter into sale and leaseback transactions, and sell, consolidate or merge assets.

TDS' long-term debt indentures do not contain any provisions resulting in acceleration of the maturities of outstanding debt in the event of a change in TDS' credit rating. However, a downgrade in TDS' credit rating could adversely affect its ability to obtain long-term debt financing in the future.

Term Loan Facility

On January 21, 2015, U.S. Cellular entered into a term loan credit facility relating to $225.0 million in debt. The term loan must be drawn in one or more advances by the six month anniversary of the date of the agreement; amounts not drawn by that time will cease to be available. Amounts repaid or prepaid under the term loan facility may not be reborrowed. The term loan is available for general corporate purposes, including working capital, spectrum purchases and capital expenditures. The term loan is unsecured except for a lien on all investments in equity which U.S. Cellular may have in the loan administrative agent, CoBank ACB, subject to certain limitations.

In certain circumstances, U.S. Cellular's interest cost on its term loan may be subject to increase if its current credit ratings from nationally recognized credit rating agencies are lowered, and may be subject to decrease if the ratings are raised. The term loan facility does not cease to be available nor does the maturity date accelerate solely as a result of a downgrade in U.S. Cellular's credit rating. However, downgrades in U.S. Cellular's credit rating could adversely affect its ability to renew or obtain access to credit facilities in the future.

The maturity date of term loan would accelerate in the event of a change in control.

The following table summarizes the terms of the term loan facility as of February 25, 2015:
(Dollars in millions)
Maximum borrowing capacity		$	225.0
Amount borrowed		$	-
Amount available for use		$	225.0
Hypothetical Borrowing rate: One-month London Interbank Offered Rate ("LIBOR") plus contractual spread (1)			2.67	%
	Sample LIBOR Rate		0.17	%
	Contractual spread		2.5	%
Range of commitment fees on amount available for use (2)
	Low		0.13	%
	High		0.30	%
Agreement date			January 21, 2015
Maturity date (3)			January 21, 2022
(1)	Borrowings under the term loan credit facility bear interest at LIBOR plus a contractual spread based on U.S. Cellular’s credit rating or, at U.S. Cellular’s option, an alternate “Base Rate” as defined in the term loan facility.
(2)	The term loan credit facility has commitment fees based on the unsecured senior debt ratings assigned to U.S. Cellular by certain ratings agencies.
(3)	Principal amounts outstanding on the term loan facility will be due and payable quarterly in equal installments beginning on the last day of the fifth fiscal quarter ending after the agreement date, in an amount equal to 1.25% of the aggregate term loan facility commitment. Any amounts owing under the term loan facility not previously repaid will be due and payable on the maturity date.

The continued availability of the term loan facility requires U.S. Cellular to comply with certain negative and affirmative covenants, maintain certain financial ratios and make representations regarding certain matters at the time of each borrowing, that are substantially the same as those in the U.S. Cellular revolving credit facility described above.

In connection with U.S. Cellular's term credit facility, TDS and U.S. Cellular entered into a subordination agreement dated January 21, 2015 together with the administrative agent for the lenders under U.S. Cellular's term loan credit agreement, which is substantially the same as the subordination agreement in the U.S. Cellular revolving credit facility described above. As of February 25, 2015, U.S. Cellular had no outstanding consolidated funded indebtedness or refinancing indebtedness that was subordinated to the term loan facility pursuant to this subordination agreement.

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Common Shareholders' Equity, Equity Rollforward (Details)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Common shareholders' equity, share rollforward
Common stock, shares issued ending balance	132,749,000	132,711,000
Treasury Common Shares
Common shareholders' equity, share rollforward
Treasury shares, ending balance	24,850,000	23,954,000
Common Shares
Common shareholders' equity, share rollforward
Common stock, shares issued beginning balance	125,545,000	125,512,000	125,502,000
Conversion of Series A Common Shares	25,000	33,000	10,000
Common stock, shares issued ending balance	125,570,000	125,545,000	125,512,000
Common Shares | Treasury Common Shares
Common shareholders' equity, share rollforward
Treasury shares, beginning balance	23,954,000	24,641,000	24,165,000
Repurchase of shares	1,542,000	339,000	868,000
Dividend reinvestment, incentive and compensation plans - Treasury shares	(646,000)	(1,026,000)	(392,000)
Treasury shares, ending balance	24,850,000	23,954,000	24,641,000
Common Shares | Series A Share Conversion
Common shareholders' equity, other disclosures
Shares reserved	7,178,943
Common Shares | Tax-Deferred Savings Plan
Common shareholders' equity, other disclosures
Shares reserved	90,341
Series A Common Shares
Common shareholders' equity, share rollforward
Common stock, shares issued beginning balance	7,166,000	7,160,000	7,119,000
Conversion of Series A Common Shares	(25,000)	(33,000)	(10,000)
Dividend reinvestment, incentive and compensation plans	38,000	39,000	51,000
Common stock, shares issued ending balance	7,179,000	7,166,000	7,160,000

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Supplemental Cash Flow Disclosures (Details) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Supplemental Cash Flow Disclosures
Accounts receivable, Other	$ 135,144,000	$ 179,503,000
Interest paid	108,510,000	96,241,000	88,208,000
Income taxes paid (refunded)	48,876,000	175,629,000	(62,042,000)
Supplemental cash flows, stock based compensation
Net cash receipts (disbursements) from exercise of stock options and vesting of other stock awards	(2,019,000)	9,654,000	(1,119,000)
U.S. Cellular
Supplemental cash flows, stock based compensation
Cash receipts upon exercise of stock options	5,166,000	10,468,000	900,000
Cash disbursements for payments of taxes	(4,336,000)	(4,684,000)	(3,105,000)
Net cash receipts (disbursements) from exercise of stock options and vesting of other stock awards	830,000	5,784,000	(2,205,000)
U.S. Cellular | Auction 901 Mobility Funds
Supplemental Cash Flow Disclosures
FCC auction date	Sep. 27, 2012
FCC auction amount received	13,400,000
FCC auction number of states won	10
Letters of credit outstanding	17,400,000
U.S. Cellular | Other assets and deferred charges | Auction 901 Mobility Funds
Supplemental Cash Flow Disclosures
FCC auction amount received	1,900,000
U.S. Cellular | Property, plant and equipment, net | Auction 901 Mobility Funds
Supplemental Cash Flow Disclosures
FCC auction amount received	11,500,000
U.S. Cellular | Maximum | Auction 901 Mobility Funds
Supplemental Cash Flow Disclosures
FCC auction amount	300,000,000
FCC auction amount awarded	40,100,000
TDS Parent Company
Supplemental cash flows, stock based compensation
Cash receipts upon exercise of stock options	732,000	12,092,000	16,000
Cash disbursements for payments of taxes	(2,751,000)	(2,438,000)	(1,135,000)
Net cash receipts (disbursements) from exercise of stock options and vesting of other stock awards	(2,019,000)	9,654,000	(1,119,000)
TDS Telecom
Supplemental Cash Flow Disclosures
Recovery Act Grants Awarded	105,100,000
Recovery Act Projects Company Funds	30,900,000
Recovery Act Projects	44
Recovery Act Grants Received	15,300,000	41,900,000	16,700,000
Recovery Act Cumulative Grants Received	78,900,000
TDS Telecom | American Recovery and Reinvestment Act of 2009 Grants
Supplemental Cash Flow Disclosures
Accounts receivable, Other	14,200,000	23,600,000
Common Shares | U.S. Cellular
Supplemental cash flows, stock based compensation
Shares withheld	163,355	606,582	92,846
Aggregate value of shares withheld	6,868,000	25,179,000	3,604,000
Common Shares | TDS Parent Company
Supplemental cash flows, stock based compensation
Shares withheld	109,061	265,748	49,840
Aggregate value of shares withheld	2,751,000	7,639,000	1,102,000
Special Common Shares | TDS Parent Company
Supplemental cash flows, stock based compensation
Shares withheld			1,381
Aggregate value of shares withheld			$ 33,000

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Consolidated Statement Of Cash Flows (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Cash flows from operating activities
Net income (loss)	$ (147,292)	$ 166,821	$ 122,653
Add (deduct) adjustments to reconcile net income to cash flows from operating activities
Depreciation, amortization and accretion	836,532	1,018,077	813,626
Bad debts expense	107,861	105,629	74,695
Stock-based compensation expense	35,793	30,338	41,871
Deferred income taxes, net	71,713	(67,150)	58,785
Equity in earnings of unconsolidated entities	(131,965)	(132,714)	(92,867)
Distributions from unconsolidated entities	112,349	127,929	84,884
Loss on impairment of assets	87,802		515
(Gain) loss on asset disposals, net	26,531	30,841	19,741
(Gain) loss on sale of business and other exit costs, net	(15,846)	(300,656)	21,061
(Gain) loss on investments		(14,547)	3,718
(Gain) loss on license sales and exchanges	(112,993)	(255,479)
Noncash interest expense	1,642	2,463	(572)
Other operating activities	(641)	612	1,393
Changes in assets and liabilities from operations
Accounts receivable	17,629	(293,729)	(81,107)
Equipment installment plans receivable	(188,829)	(591)
Inventory	(29,149)	(83,536)	(29,917)
Accounts payable	(117,264)	86,028	(12,332)
Customer deposits and deferred revenues	33,952	66,460	32,981
Accrued taxes	(122,921)	17,388	77,458
Accrued interest	1,277	380	(891)
Other assets and liabilities	(71,369)	(9,954)	(30,523)
Cash flows from operating activities	394,812	494,610	1,105,172
Cash flows from investing activities
Cash used for additions to property, plant and equipment	(799,496)	(883,797)	(995,517)
Cash paid for acquisitions and licenses	(295,253)	(314,570)	(163,382)
Cash received from divestitures	187,645	811,120	50,182
Cash paid for investments			(120,000)
Cash received for investments	50,000	115,000	243,444
Federal Communications Commission deposit	(60,000)
Other investing activities	7,360	11,594	(12,796)
Cash flows from investing activities	(909,744)	(260,653)	(998,069)
Cash flows from financing activities
Issuance of long-term debt	275,000	37	195,358
Repayment of borrowing under revolving credit facility	(150,000)
Borrowing under revolving credit facility	150,000
TDS Common Shares reissued for benefit plans, net of tax payments	(2,019)	9,654	(1,119)
U.S. Cellular Common Shares reissued for benefit plans, net of tax payments	830	5,784	(2,205)
Repurchase of TDS Common Shares	(39,096)	(9,692)	(20,026)
Repurchase of U.S. Cellular Common Shares	(18,943)	(18,544)	(20,045)
Dividends paid to TDS shareholders	(58,040)	(55,293)	(53,165)
U.S. Cellular dividends paid to noncontrolling public shareholders		(75,235)
Payment of debt issuance costs	(10,215)	(23)	(8,242)
Distributions to noncontrolling interests	(627)	(3,766)	(20,856)
Payments to acquire additional interest in subsidiaries		(4,505)	(3,167)
Other financing activities	9,929	7,159	3,570
Cash flows from financing activities	156,819	(144,424)	70,103
Net increase (decrease) in cash and cash equivalents	(358,113)	89,533	177,206
Cash and cash equivalents
Beginning of period	830,014	740,481	563,275
End of period	$ 471,901	$ 830,014	$ 740,481

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Earnings Per Share

12 Months Ended

Dec. 31, 2014

Disclosure Text Block

Earnings per Share

NOTE 5 EARNINGS PER SHARE

Basic earnings (loss)per share attributable to TDS shareholders is computed by dividing Net income (loss) available to common shareholders of TDS by the weighted average number of common shares outstanding during the period. Diluted earnings (loss) per share attributable to TDS shareholders is computed by dividing Net income (loss)available to common shareholders of TDS by the weighted average number of common shares outstanding during the period adjusted to include the effects of potentially dilutive securities. Potentially dilutive securities primarily include incremental shares issuable upon exercise of outstanding stock options and the vesting of restricted stock units.

The amounts used in computing earnings (loss)per common share and the effects of potentially dilutive securities on the weighted average number of common shares were as follows:

Year Ended December 31,				2014		2013		2012
(Dollars and shares in thousands, except earnings per share)
Basic earnings (loss) per share attributable to TDS shareholders:
Net income (loss) available to common shareholders of TDS used in basic earnings (loss) per share				$	(136,404)	$	141,878	$	81,811
Adjustments to compute diluted earnings:
	Noncontrolling interest adjustment				-		(1,058)		(640)
	Preferred dividend adjustment				-		49		-
Net income (loss) attributable to common shareholders of TDS used in diluted earnings (loss) per share				$	(136,404)	$	140,869	$	81,171
Weighted average number of shares used in basic earnings (loss) per share
		Common Shares			101,304		101,339		101,532
		Series A Common Shares			7,181		7,151		7,139
			Total		108,485		108,490		108,671
Effects of dilutive securities:
	Stock options (1)				-		209		11
	Restricted stock units (1)				-		375		255
	Preferred shares (1)				-		58		-
Weighted average number of shares used in diluted earnings (loss) per share					108,485		109,132		108,937
Basic earnings (loss) per share attributable to TDS shareholders				$	(1.26)	$	1.31	$	0.75
Diluted earnings (loss) per share attributable to TDS shareholders				$	(1.26)	$	1.29	$	0.75
(1)		There were no effects of dilutive securities for the year ended December 31, 2014 due to the net loss for the year.

On June 25, 2013, U.S. Cellular paid a special cash dividend of $5.75 per share, for an aggregate amount of $482.3 million, to all holders of U.S. Cellular Common Shares and Series A Common Shares as of June 11, 2013. Outstanding U.S. Cellular stock options and restricted stock unit awards were equitably adjusted for the special cash dividend. The impact of such adjustments on the earnings (loss) per share calculation was fully reflected for all years presented.

Certain Common Shares issuable upon the exercise of stock options, vesting of restricted stock units or conversion of convertible preferred shares were not included in average diluted shares outstanding for the calculation of Diluted earnings (loss) per share because their effects were antidilutive. The number of such Common Shares excluded is shown in the table below.

Year Ended December 31,	2014	2013	2012
(Shares in thousands)
Stock options	8,984	7,120	8,130
Restricted stock units	839	171	154
Preferred shares	56	-	57

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Income Taxes

12 Months Ended

Dec. 31, 2014

Disclosure Text Block

Income Taxes

NOTE 4INCOME TAXES

TDS' current income taxesbalancesat December 31, 2014 and 2013 were as follows:

December 31,	2014		2013
(Dollars in thousands)
Federal income taxes receivable (payable)	$	108,820	$	(20,288)
Net state income taxes receivable (payable)		4,391		2,397

Income tax expense (benefit) is summarized as follows:
Year Ended December 31,		2014		2013		2012
(Dollars in thousands)
Current
	Federal	$	(87,736)	$	181,579	$	9,705
	State		11,091		11,614		5,092
Deferred
	Federal		41,851		(65,970)		61,113
	Federal - valuation allowance adjustment		(10,816)		-		-
	State		2,208		(1,180)		(2,328)
	State - valuation allowance adjustment		38,470		-		-
		$	(4,932)	$	126,043	$	73,582

A reconciliation of TDS' income tax expense computed at the statutory rate to the reported income tax expense, and the statutory federal income tax expense rate to TDS' effective income tax expense rate is as follows:

Year Ended December 31,		2014				2013				2012
		Amount		Rate		Amount		Rate		Amount		Rate
(Dollars in millions)
Statutory federal income tax expense and rate		$	(53.3)	35.0	%	$	102.5	35.0	%	$	68.7	35.0	%
State income taxes, net of federal benefit (1)			42.8	(28.1)			10.5	3.6			8.4	4.2
Effect of noncontrolling interests			(5.8)	3.8			(1.0)	(0.4)			-	-
Gains (losses) on investments and sale of assets (2)			-	-			14.9	5.1			-	-
Correction of deferred taxes (3)			-	-			-	-			(6.1)	(3.1)
Change in federal valuation allowance (4)			(8.7)	5.7			-	-			-	-
Goodwill impairment (5)			18.3	(12.0)			-	-			-	-
Other differences, net			1.8	(1.2)			(0.9)	(0.3)			2.6	1.4
Total income tax expense and rate		$	(4.9)	3.2	%	$	126.0	43.0	%	$	73.6	37.5	%
(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 TDS recorded a $38.5 million increase to income tax expense related to a valuation allowance recorded against certain state deferred tax assets. In each interim period, TDS evaluates the available positive and negative evidence to assess whether deferred tax assets are realizable, on a more likely than not basis. During the year ended December 31, 2014, based on revised forecasts of future state income, TDS concluded that the negative evidence related to the realization of certain state deferred tax assets outweighed the positive evidence. Accordingly, TDS determined that such deferred tax assets related to certain states were not realizable, on a more likely than not basis.
(2)	Gains (losses) on investments and sale of assets represents 2013 tax expense related to the NY1 & NY2 Deconsolidation and the Divestiture Transaction.
(3)	Correction of deferred taxes reflects immaterial adjustments to correct deferred tax balances in 2012 related to tax basis and law changes that related to periods prior to 2012.
(4)	Change in federal valuation allowance relates primarily to a decrease to income tax expense in the third quarter of 2014 due to a valuation allowance reduction for federal net operating losses previously limited under loss utilization rules. Due to the shutdown of Airadigm’s consumer wireless business and resulting intercompany sale of certain assets by Airadigm to U.S. Cellular during the year (as described in Note 6 — Acquisitions, Divestitures and Exchanges), Airadigm is expected to recognize sufficient taxable income for TDS to utilize the previously limited net operating losses.
(5)	Goodwill impairment reflects an adjustment to increase income tax expense by $18.3 million related to a portion of the goodwill impairment of Suttle-Straus and the HMS reporting unit recorded in 2014 which is nondeductible for income tax purposes. See Note 7 — Intangible Assets for additional information related to the goodwill impairment.

Significant components of TDS' deferred income tax assets and liabilities at December 31, 2014 and 2013were as follows:

December 31,		2014		2013
(Dollars in thousands)
Deferred tax assets
	Current deferred tax assets	$	113,402	$	114,532
	Net operating loss (“NOL”) carryforwards		135,676		121,651
	Stock-based compensation		54,789		50,563
	Compensation and benefits - other		11,014		12,681
	Deferred rent		19,604		20,500
	Other		35,523		32,444
Total deferred tax assets			370,008		352,371
	Less valuation allowance		(113,553)		(79,064)
Net deferred tax assets			256,455		273,307
Deferred tax liabilities
	Property, plant and equipment		667,540		637,090
	Licenses/intangibles		259,865		251,578
	Partnership investments		151,123		136,581
	Other		9,724		4,956
	Total deferred tax liabilities		1,088,252		1,030,205
Net deferred income tax liability		$	831,797	$	756,898

At December 31, 2014, TDS and certain subsidiaries had $2,315.3million of state NOL carryforwards (generating a $111.3 million deferred tax asset) available to offset future taxable income. The state NOL carryforwards expire between 2015and 2034.Certain subsidiaries had federal NOL carryforwards (generating a $24.3 million deferred tax asset) available to offset their future taxable income. The federal NOL carryforwards expire between 2018 and 2034. A valuation allowance was established for certain state NOL carryforwards and federal NOL carryforwards since it is more likely than not that a portion of such carryforwards will expire before they can be utilized.

A summary of TDS' deferred tax asset valuation allowance is as follows:
		2014		2013		2012
(Dollars in thousands)
Balance at January 1,		$	79,064	$	70,502	$	49,686
	Charged to income tax expense		34,489		1,954		5,268
	Charged to other accounts		-		6,608		15,548
Balance at December 31,		$	113,553	$	79,064	$	70,502
As of December 31, 2014, the valuation allowance reduced current deferred tax assets by $5.7 million and noncurrent deferred tax assets by $107.8 million.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
		2014		2013		2012
(Dollars in thousands)
Unrecognized tax benefits balance at January 1,		$	30,390	$	28,420	$	28,841
	Additions for tax positions of current year		7,610		6,388		7,027
	Additions for tax positions of prior years		883		1,858		1,673
	Reductions for tax positions of prior years		(399)		(467)		(7)
	Reductions for settlements of tax positions		(312)		(1,337)		(21)
	Reductions for lapses in statutes of limitations		(356)		(4,472)		(9,093)
Unrecognized tax benefits balance at December 31,		$	37,816	$	30,390	$	28,420

Unrecognized tax benefits are included in Accrued taxes and Other deferred liabilities and credits in the Consolidated Balance Sheet.If these benefits were recognized, they would have reduced income tax expense in 2014, 2013 and 2012 by $24.6 million, $19.8million and $18.6 million, respectively, net of the federal benefit from state income taxes.

As of December 31, 2014, it is reasonably possible that unrecognized tax benefits could decrease by approximately $10 million in the next twelve months. The nature of the uncertainty relates primarily to state income tax positions and their resolution or the expiration of statutes of limitation.

TDS recognizes accrued interest and penalties related to unrecognized tax benefits in Income tax expense. The amounts charged to income tax expense related to interest and penalties resulted in an expense of$3.4 million and $0.7 million in 2014 and 2013,respectively, and a benefit of$1.5 millionin 2012. Net accrued interest and penalties were $16.2 million and $12.4 million at December 31, 2014 and 2013, respectively.

TDS and its subsidiaries file federal and state income tax returns. TDS remains subject to federal income tax audits for the tax years after 2011. With only a few exceptions, TDS is no longer subject to state income tax audits for years prior to 2010.

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Common Shareholders' Equity

12 Months Ended

Dec. 31, 2014

Disclosure Text Block

Common Shareholders' Equity

NOTE 16 COMMON SHAREHOLDERS' EQUITY

Common Stock

As of December 31, 2014, Series A Common Shares were convertible, on a share for share basis, into Common Shares and 7,178,943Common Shares were reserved for possible issuance upon conversion of Series A Common Shares.

The following table summarizes the number of Common and Series A Common Shares issued and repurchased.
		Common Shares	Common Treasury Shares	Series A Common Shares
(Shares in thousands)
Balance December 31, 2011		125,502	24,165	7,119
	Repurchase of shares	-	868	-
	Conversion of Series A Common Shares	10	-	(10)
	Dividend reinvestment, incentive and compensation plans	-	(392)	51
Balance December 31, 2012		125,512	24,641	7,160
	Repurchase of shares	-	339	-
	Conversion of Series A Common Shares	33	-	(33)
	Dividend reinvestment, incentive and compensation plans	-	(1,026)	39
Balance December 31, 2013		125,545	23,954	7,166
	Repurchase of shares	-	1,542	-
	Conversion of Series A Common Shares	25	-	(25)
	Dividend reinvestment, incentive and compensation plans	-	(646)	38
Balance December 31, 2014		125,570	24,850	7,179

Tax-Deferred Savings Plan

TDS has reserved90,341Common Shares at December 31, 2014, for issuance under the TDS Tax-Deferred Savings Plan, a qualified profit-sharing plan pursuant to Sections 401(a) and 401(k) of the Internal Revenue Code. Participating employees have the option of investing their contributions and TDS' contributions in a TDS Common Share fund, a U.S. Cellular Common Share fund or certain unaffiliated funds.

Common Share Repurchases

TDS and U.S. Cellular Share Repurchases

On August 2, 2013, the Board of Directors of TDS authorized a $250 million stock repurchase program for the purchase of TDS Common Shares from time to time pursuant to open market purchases, block transactions, private purchases or otherwise, depending on market conditions. This authorization does not have an expiration date. TDS had a prior share repurchase authorization for $250 million that expired on November 19, 2012.

On November 17, 2009, the Board of Directors of U.S. Cellular authorized the repurchase of up to 1,300,000 Common Shares on an annual basis beginning in 2009 and continuing each year thereafter, on a cumulative basis. These purchases will be made pursuant to open market purchases, block purchases, private purchases, or otherwise, depending on market prices and other conditions. This authorization does not have an expiration date.

Share repurchases made under these authorizations and prior authorizations, were as follows:
Year Ended December 31,		Number of	Average Cost
(Shares and dollar amounts in thousands, except per share amounts)		Shares	Per Share		Amount
2014
	U.S. Cellular Common Shares	496	$	38.19	$	18,943
	TDS Common Shares	1,542		25.36		39,096
2013
	U.S. Cellular Common Shares	499	$	37.19	$	18,544
	TDS Common Shares	339		28.60		9,692
2012
	U.S. Cellular Common Shares	571	$	35.11	$	20,045
	TDS Common Shares	868		23.08		20,026

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Employee Benefits Plans

12 Months Ended

Dec. 31, 2014

Disclosure Text Block

Employee Benefit Plans

NOTE 12 EMPLOYEE BENEFIT PLANS

Defined Contribution Plans

TDS sponsors a qualified noncontributory defined contribution pension plan. The plan provides benefits for the employees of TDS Corporate, TDS Telecom and U.S. Cellular. Under this plan, pension costs are calculated separately for each participant and are funded annually. Total pension costs were$16.4million,$16.2million and $18.4 millionin 2014, 2013 and 2012, respectively. In addition, TDS sponsors a defined contribution retirement savings plan (“401(k)”) plan. Total costs incurred from TDS' contributions to the 401(k) plan were $25.3million, $24.8million and $25.0million in 2014, 2013 and 2012, respectively.

TDS also sponsors an unfunded nonqualified deferred supplemental executive retirement plan for certain employees to offset the reduction of benefits caused by the limitation on annual employee compensation under the tax laws.

Other Post-Retirement Benefits

TDS sponsorsa defined benefit post-retirement plan that provides medical benefits and that covers most of the employees of TDS Corporate, TDS Telecom and the Wireline subsidiaries of TDS Telecom. The plan is contributory, with retiree contributions adjusted annually.

The following amounts are included in Accumulated other comprehensive lossin the Consolidated Balance Sheet before affecting such amounts for income taxes:

December 31,	2014		2013
(Dollars in thousands)
Net prior service costs	$	17,246	$	18,833
Net actuarial loss		(8,436)		(20,713)
	$	8,810	$	(1,880)

The estimated net actuarial loss and prior service cost gain for the postretirement benefit plans that will be amortized from Accumulated other comprehensive loss into net periodic benefit cost during 2015 are $0.3 million and $3.4million, respectively.

The following table reconciles the beginning and ending balances of the benefit obligation and the fair value of plan assets for the other post-retirement benefit plans.

December 31,		2014		2013
(Dollars in thousands)
Change in benefit obligation
	Benefit obligation at beginning of year	$	46,142	$	54,568
	Service cost		1,018		1,348
	Interest cost		2,255		2,137
	Plan amendments		(2,057)		-
	Actuarial (gain) loss		(10,897)		(9,437)
	Prescription drug subsidy		264		-
	Employee contribution		2,216		2,230
	Benefits paid		(4,296)		(4,704)
	Benefit obligation at end of year		34,645		46,142
Change in plan assets
	Fair value of plan assets at beginning of year		49,743		45,047
	Actual return (loss) on plan assets		3,495		6,973
	Employee contribution		2,216		2,230
	Employer contribution		166		197
	Benefits paid		(4,296)		(4,704)
	Fair value of plan assets at end of year		51,324		49,743
Funded status		$	16,679	$	3,601

The funded status identified aboveis recorded as a component of Otherassets and deferred charges inTDS' Consolidated Balance Sheetas of December 31,2014 and 2013.

The following table sets forth by level within the fair value hierarchy the plans' assets at fair value, as of December 31, 2014 and 2013. 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 measurement. A financial instrument's level within the fair value hierarchy is not representative of its expected performance or its overall risk profile, and therefore Level 3 assets are not necessarily higher risk than Level 2 assets or Level 1 assets. There were no Level 3 assets for any years presented.

Mutual funds are valued based on the closing price reported on the active market on which the individual securities are traded. The investment strategy for each type of mutual fund is identified below the table and referenced by number.

December 31, 2014
(Dollars in thousands)		Level 1		Level 2		Total
Mutual funds
	Bond (1)	$	12,842	$	-	$	12,842
	International equity (2)		12,003		-		12,003
	Money market (3)		2,053		-		2,053
	US large cap (4)		20,191		-		20,191
	US small cap (5)		4,234		-		4,234
Other			-		1		1
Total plan assets at fair value		$	51,323	$	1	$	51,324
December 31, 2013
(Dollars in thousands)			Level 1		Level 2		Total
Mutual funds
	Bond (1)	$	12,697	$	-	$	12,697
	International equity (2)		9,876		-		9,876
	Money market (3)		1,798		-		1,798
	US large cap (4)		20,861		-		20,861
	US small cap (5)		4,500		-		4,500
Other			-		11		11
Total plan assets at fair value		$	49,732	$	11	$	49,743

• Bond - The funds seek to achieve a maximum total return, consistent with preservation of capital and prudent investment management by investing in a wide spectrum of fixed income instruments including bonds, debt securities and other similar instruments issued by government and private-sector entities.
• International equity - The funds seek to provide long-term capital appreciation by investing in the stocks of companies located outside the United States that are considered to have the potential for above-average capital appreciation.
• Money market - The fund seeks as high a level of current income as is consistent with the preservation of capital and the maintenance of liquidity by investing in a diversified portfolio of high-quality, dollar-denominated short-term debt securities.
• US large cap - The funds seek to track the performance of several benchmark indices that measure the investment return of large-capitalization stocks. The funds attempt to replicate the indices by investing substantially all of their assets in the stocks that make up the various indices in approximately the same proportion as the weighting in the indices.
• US small cap - The fund seeks to track the performance of a benchmark index that measures the investment return of small-capitalization stocks. The fund attempts to replicate the index by investing substantially all of its assets in the stocks that make up the index in approximately the same proportion as the weighting in the index.

The following table summarizes how plan assets are invested.

			Allocation of Plan Assets
			at December 31,
Investment	Target Asset
Category	Allocation		2014		2013
U.S. equities	46	%	47.6	%	51.0	%
International equities	24	%	23.4	%	19.9	%
Debt securities	30	%	29.0	%	29.1	%

The post-retirement benefit fund engages multiple asset managers to ensure proper diversification of the investment portfolio within each asset category. The investment objective is to meet or exceed the rate of return of a performance index comprised of46% Dow Jones U.S. Total Stock Market Index,24% FTSE All World (excluding U.S.) Stock Index, and30% Barclays Capital Aggregate Bond Index. The three-year and five-year average rates of return for TDS' post-retirement benefit fund are 13.26% and 10.30%, respectively.

The post-retirement benefit fund does not hold any debt or equity securities issued by TDS, U.S. Cellular or any related parties.

TDS is not required to set aside current funds for its future retiree health and life insurance benefits. The decision to contribute to the plan assets is based upon several factors, including the funded status of the plan, market conditions, alternative investment opportunities, tax benefits and other circumstances. In accordance with applicable income tax regulations, total accumulated contributions to fund the costs of future retiree medical benefits are restricted to an amount not to exceed 25% of the total accumulated contributions to the trust. An additional contribution equal to a reasonable amortization of the past service cost may be made without regard to the 25% limitation. TDS has not determined whether it will make a contribution to the plan in 2015.

Net periodic benefit cost recorded in the Consolidated Statement of Operations includes the following components:
Year Ended December 31,		2014		2013		2012
(Dollars in thousands)
Service cost		$	1,018	$	1,348	$	1,197
Interest cost			2,255		2,137		2,297
Expected return on plan assets			(3,402)		(3,065)		(2,995)
Amortization of prior service costs (1)			(3,644)		(3,605)		(3,735)
Amortization of actuarial losses (2)			1,287		2,452		2,517
Net post-retirement cost (benefit)		$	(2,486)	$	(733)	$	(719)
(1)	Based on straight-line amortization over the average time remaining before active employees become fully eligible for plan benefits.
(2)	Based on straight-line amortization over the average time remaining before active employees retire.

The following assumptions were used to determine benefit obligations and net periodic benefit cost:
December 31,	2014		2013
Benefit obligations
Discount rate	4.20	%	5.00	%
Net periodic benefit cost
Discount rate	5.00	%	4.00	%
Expected return on plan assets	7.00	%	7.00	%

The discount rate for 2014and 2013was determined using a hypothetical Aa spot yield curve represented by a series of annualized individual spot discount rates from six months to 99 years.The spot rate curve was derived from a direct calculation of the implied forward rate curve based on the included bond cash flows.This yield curve, when populated with projected cash flows that represent the expected timing and amount of TDS plan benefit payments, produces a single effective interest discount rate that is used to measure the plan's liabilities.

The expected rate of return was determined using the target asset allocation for the TDS plan and rate of return expectations for each asset class.

The measurement date for actuarial determination was December 31, 2014. For measurement purposes, the annual rate of increase in the per capita cost of covered health care benefits was assumed for 2014 to be 7.8% for plan participants aged 65 and above, and 7.5% for participants under age 65. For all participants the 2014 annual rate of increase is expected to decrease to 5.0% by 2022. The 2013 expected rate of increase was 7.5% for plan participants aged 65 and above, and 7.9% for participants under age 65, decreasing to 5.0% for all participants by 2021.

A 1% increase or decrease in assumed health care cost trend rates would have the following effectsas of and for the year ended December 31,2014:

	One Percent
	Increase		Decrease
(Dollars in thousands)
Effect on total service and interest cost components	$	25	$	(23)
Effect on post-retirement benefit obligation	$	423	$	(393)

The following estimated future benefit payments, which reflect expected future service, are expected to be paid:

Year
(Dollars in thousands)
2015	$	1,687
2016		1,719
2017		1,662
2018		1,652
2019		1,667
2020-2024		9,442

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Stock-Based Compensation, TDS excluding U.S. Cellular, Stock option rollforward schedules (Details) (TDS Parent Company, Common Shares, Stock Options, 2011 and 2004 Long-Term Incentive Plans, USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
TDS Parent Company | Common Shares | Stock Options | 2011 and 2004 Long-Term Incentive Plans
Stock compensation, stock option rollforward schedule, number of shares
Outstanding, begin of period	8,780,000	8,513,000	7,216,000
Exercisable options, begin of period	6,160,000	5,782,000	4,865,000
Granted options	930,000	1,259,000	1,702,000
Exercised options	(40,000)	(683,000)	(1,000)
Forfeited options	(73,000)	(81,000)	(106,000)
Expired options	(457,000)	(228,000)	(298,000)
Outstanding, end of period	9,140,000	8,780,000	8,513,000
Exercisable options, end of period	6,487,000	6,160,000	5,782,000
Stock compensation, stock option rollforward schedule, other information
Options outstanding, begin of period - weighted average exercise price	$ 30.74	$ 31.53	$ 33.89
Options exercisable, begin of period - weighted average exercise price	$ 34.13	$ 35.12	$ 36.67
Options granted, weighted average exercise price	$ 26.83	$ 22.60	$ 20.79
Options exercised, weighted average exercise price	$ 21.28	$ 25.33	$ 20.65
Options forfeited, weighted average exercise price	$ 23.05	$ 23.75	$ 23.81
Options expired, weighted average exercise price	$ 34.55	$ 34.10	$ 30.12
Options outstanding, end of period - weighted average exercise price	$ 30.25	$ 30.74	$ 31.53
Options exercisable, end of period - weighted average exercise price	$ 32.93	$ 34.13	$ 35.12
Options granted, weighted average grant date fair value	$ 8.66	$ 7.01	$ 6.28
Aggregate intrinsic value, options exercised	$ 174,000	$ 2,450,000	$ 4,000
Aggregate intrinsic value, options outstanding	9,651,000
Aggregate intrinsic value, options exercisable	$ 4,143,000
Weighted average remaining contractual life, outstanding	5 years 7 months
Weighted average remaining contractual life, exercisable	4 years 6 months

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Investments In Unconsolidated Entities

12 Months Ended

Dec. 31, 2014

Disclosure Text Block

Investments in Unconsolidated Entities

NOTE 8 INVESTMENTS IN UNCONSOLIDATED ENTITIES

Investments in unconsolidated entities consist of amounts invested in wireless and wireline entities in which TDS holds a noncontrolling interest. These investments are accounted for using either the equity or cost method as shown in the following table:

December 31,		2014		2013
(Dollars in thousands)
Equity method investments:
	Capital contributions, loans, advances and adjustments	$	127,939	$	132,629
	Cumulative share of income		1,323,898		1,186,900
	Cumulative share of distributions		(1,145,438)		(1,033,087)
			306,399		286,442
Cost method investments			15,330		15,330
Total investments in unconsolidated entities		$	321,729	$	301,772

Equity in earnings of unconsolidated entities totaled $132.0 million, $132.7 million and $92.9 million in 2014, 2013 and 2012, respectively; of those amounts, TDS' investment in the Los Angeles SMSA Limited Partnership (“LA Partnership”) contributed $71.8 million, $78.4 million and $67.2 million in 2014, 2013 and 2012, respectively. TDS held a 5.5% ownership interest in the LA Partnership throughout and at the end of each of these years.

The following tables, which are based on information provided in part by third parties, summarize the combined assets, liabilities and equity, and the combined results of operations of TDS' equity method investments:

December 31,		2014		2013
(Dollars in thousands)
Assets
	Current	$	733,133	$	520,804
	Due from affiliates		303,322		408,735
	Property and other		2,345,562		2,080,436
		$	3,382,017	$	3,009,975
Liabilities and Equity
	Current liabilities	$	407,073	$	355,167
	Deferred credits		175,516		89,198
	Long-term liabilities		29,342		31,605
	Long-term capital lease obligations		1,722		707
	Partners’ capital and shareholders’ equity		2,768,364		2,533,298
		$	3,382,017	$	3,009,975

Year Ended December 31,		2014		2013		2012
(Dollars in thousands)
Results of Operations
	Revenues	$	6,700,266	$	6,239,200	$	5,825,150
	Operating expenses		5,063,925		4,492,372		4,381,731
	Operating income		1,636,341		1,746,828		1,443,419
	Other income, net		6,741		4,019		7,190
	Net income	$	1,643,082	$	1,750,847	$	1,450,609

NY1 & NY2 Deconsolidation

U.S. Cellular holds a 60.00% interest in St. Lawrence Seaway RSA Cellular Partnership (“NY1”) and a 57.14% interest in New York RSA 2 Cellular Partnership (“NY2”)  (together with NY1, the “Partnerships”). The remaining interests in the Partnerships are held by Cellco Partnership d/b/a Verizon Wireless (“Verizon Wireless”). Prior to April 3, 2013, because U.S. Cellular owned a greater than 50% interest in each of these Partnerships and based on U.S. Cellular's rights under the Partnership Agreements, U.S. Cellular consolidated the financial results of these Partnerships in accordance with GAAP. 

On April 3, 2013, U.S. Cellular entered into an agreement with Verizon Wireless relating to the Partnerships. The agreement amends the Partnership Agreements in several ways which provide Verizon Wireless with substantive participating rights that allow Verizon Wireless to make decisions that are in the ordinary course of business of the Partnerships and which are significant to directing and executing the activities of the business. Accordingly, as required by GAAP, TDS 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, TDS' income from the Partnerships is reported in Equity in earnings of unconsolidated entities in the Consolidated Statement of Operations.

In accordance with GAAP, as a result of the NY1 & NY2 Deconsolidation, U.S. Cellular's interest in the Partnerships was reflected in Investments in unconsolidated entities at a fair value of $114.8 million as of April 3, 2013. Recording U.S. Cellular's interest in the Partnerships required allocation of the excess of fair value over book value to customer lists, licenses, a favorable contract and goodwill of the Partnerships. Amortization expense related to customer lists and the favorable contract will be recognized over their respective useful lives and is included in Equity in earnings of unconsolidated entities in the Consolidated Statement of Operations. In addition, TDS recognized a non-cash pre-tax gain of $14.5 millionin the second quarter of 2013. The gain was recorded in Gain (loss) on investments in the Consolidated Statement of Operations.

The Partnerships were valued using a discounted cash flow approach and a guideline public company method. The discounted cash flow approach uses value drivers and risks specific to the industry and current economic factors and incorporates assumptions that market participants would use in their estimates of fair value and may not be indicative of TDS specific assumptions.  The most significant assumptions made in this process were the revenue growth rate (shown as a simple average in the table below), the terminal revenue growth rate, discount rate and capital expenditures. The assumptions were as follows:

Key assumptions
Average expected revenue growth rate (next ten years)	2.0	%
Terminal revenue growth rate (after year ten)	2.0	%
Discount rate	10.5	%
Capital expenditures as a percentage of revenue	14.9-18.8	%

The guideline public company method develops an indication of fair value by calculating average market pricing multiples for selected publicly-traded companies. The developed multiples were applied to applicable financial measures of the Partnerships to determine fair value. The discounted cash flow approach and guideline public company method were weighted to arrive at the total fair value of the Partnerships.

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Earnings Per Share (Details) (USD $) Share data in Thousands, except Per Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013		Dec. 31, 2012
Basic earnings (loss) per share attributable to TDS shareholders
Net income (loss) available to common shareholders of TDS used in basic earnings (loss) per share	$ (136,404,000)	$ 141,878,000		$ 81,811,000
Adjustments to compute diluted earnings
Noncontrolling interest adjustment		(1,058,000)		(640,000)
Preferred dividend adjustment		49,000
Net income (loss) attributable to common shareholders of TDS used in diluted earnings (loss) per share	(136,404,000)	140,869,000		81,171,000
Weighted average number of shares used in basic earnings (loss) per share
Weighted average number of shares used in basic earnings (loss) per share	108,485	108,490		108,671
Effects of dilutive securities:
Stock options		209	[1]	11	[1]
Restricted stock units		375	[1]	255	[1]
Preferred shares		58	[1]
Weighted average number of shares used in diluted earnings (loss) per share	108,485	109,132		108,937
Earnings per share, Other disclosures
Basic earnings (loss) per share attributable to TDS shareholders	$ (1.26)	$ 1.31		$ 0.75
Diluted earnings (loss) per share attributable to TDS shareholders	$ (1.26)	$ 1.29		$ 0.75
U.S. Cellular
Earnings per share, Other disclosures
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		$ 482,300,000
Stock Options
Earnings per share, Other disclosures
Antidilutive shares	8,984	7,120		8,130
Restricted Stock Units
Earnings per share, Other disclosures
Antidilutive shares	839	171		154
Preferred Shares
Earnings per share, Other disclosures
Antidilutive shares	56			57
Common Shares
Weighted average number of shares used in basic earnings (loss) per share
Weighted average number of shares used in basic earnings (loss) per share	101,304	101,339		101,532
Series A Common Shares
Weighted average number of shares used in basic earnings (loss) per share
Weighted average number of shares used in basic earnings (loss) per share	7,181	7,151		7,139

[1] There were no effects of dilutive securities for the year ended December 31, 2014 due to the net loss for the year.

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Acquisitions Divestures And Exchanges

12 Months Ended

Dec. 31, 2014

Disclosure Text Block

Acquisitions, Divestures and Exchanges

NOTE 6 ACQUISITIONS, DIVESTITURES AND EXCHANGES

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

Divestiture Transaction

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

These other agreements included customer and network transition services agreements, which required U.S. Cellular to provide customer, billing and network services to Sprint for a period of up to 24 months after the May 16, 2013 closing date. Sprint reimbursed U.S. Cellular for providing such services at an amount equal to U.S. Cellular's estimated costs, including applicable overhead allocations. These services were substantially complete as of March 31, 2014.In addition, these agreementsrequire 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 employeetermination benefits for specified engineering employees. It is estimated that up to $175 million of the Sprint Cost Reimbursement will be recorded in (Gain) loss on sale of business and other exit costs, net and up to $25 million of the Sprint Cost Reimbursement will be recorded in Cost of services the Consolidated Statement of Operations. In 2014 and 2013, $71.1 million and $10.6 million, respectively, of the Sprint Cost Reimbursement had been received and recorded in Cash received from divestitures in the Consolidated Statement of Cash Flows.

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

(Dollars in thousands)			Expected Period of Recognition	Projected Range				Cumulative Amount Recognized as of December 31, 2014		Actual Amount Recognized Year Ended December 31, 2014		Actual Amount Recognized Year Ended December 31, 2013		Actual Amount Recognized Year Ended December 31, 2012
(Gain) loss on sale of business and other exit costs, net
	Proceeds from Sprint
		Purchase price	2013	$	(480,000)	$	(480,000)	$	(480,000)	$	-	$	(480,000)	$	-
		Sprint Cost Reimbursement	2013-2015		(120,000)		(175,000)		(111,970)		(64,329)		(47,641)		-
	Net assets transferred		2013		160,073		160,073		160,073		-		160,073		-
	Non-cash charges for the write-off and write-down of property under construction and related assets		2012-2015		20,000		22,000		20,410		9,735		3		10,672
	Employee related costs including severance, retention and outplacement		2012-2015		13,000		16,000		14,147		(115)		1,653		12,609
	Contract termination costs		2012-2015		70,000		100,000		84,320		24,736		59,525		59
	Transaction costs		2012-2015		5,000		7,000		6,284		719		4,428		1,137
		Total (Gain) loss on sale of business and other exit costs, net		$	(331,927)	$	(349,927)	$	(306,736)	$	(29,254)	$	(301,959)	$	24,477
Depreciation, amortization and accretion expense
	Incremental depreciation, amortization and accretion, net of salvage values		2012-2014		215,049		215,049		215,049		16,478		178,513		20,058
(Increase) decrease in Operating income				$	(116,878)	$	(134,878)	$	(91,687)	$	(12,776)	$	(123,446)	$	44,535

Incremental depreciation, amortization and accretion, net of salvage values represents amounts recorded in the specified time periods as a result of a change in estimate for the remaining useful life and salvage value of certain assets and a change in estimate which accelerated the settlement dates of certain asset retirement obligations in conjunction with the Divestiture Transaction. Specifically, for the periods indicated, this is estimated depreciation, amortization and accretion recorded on assets and liabilities of the Divestiture Markets after the execution of the Purchase and Sale Agreement on November 6, 2012 less depreciation, amortization and accretion that would have been recorded on such assets and liabilities in the normal course, absent the Divestiture Transaction.

In 2014, TDS recorded $3.4 million of additional Depreciation, amortization and accretion expense for the Divestiture Markets due to higher asset retirement obligation remediation estimates.

As a result of the transaction, TDS recognized the following amounts in the Consolidated Balance Sheet:
				Year Ended December 31, 2014
(Dollars in thousands)		Balance December 31, 2013		Costs Incurred		Cash Settlements (1)		Adjustments (2)		Balance December 31, 2014
Accrued compensation
	Employee related costs including severance, retention, outplacement	$	2,053	$	127	$	(1,223)	$	(242)	$	715
Accounts payable
	Contract termination costs	$	-	$	4,018	$	-	$	(1,190)	$	2,828
Other current liabilities
	Contract termination costs	$	13,992	$	12,703	$	(22,210)	$	3,747	$	8,232
Other deferred liabilities and credits
	Contract termination costs	$	30,849	$	24,171	$	(3,569)	$	(30,411)	$	21,040
				Year Ended December 31, 2013
(Dollars in thousands)		Balance December 31, 2012		Costs Incurred		Cash Settlements (1)		Adjustments (2)		Balance December 31, 2013
Accrued compensation
	Employee related costs including severance, retention, outplacement	$	12,305	$	6,853	$	(11,905)	$	(5,200)	$	2,053
Other current liabilities
	Contract termination costs	$	30	$	22,675	$	(8,713)	$	-	$	13,992
Other deferred liabilities and credits
	Contract termination costs	$	-	$	34,283	$	(3,434)	$	-	$	30,849
(1)	Cash settlement amounts are included in either the Net income or changes in Other assets and liabilities line items as part of Cash flows from operating activities in the Consolidated Statement of Cash Flows.
(2)	Adjustment to liability represents changes to previously accrued amounts.

Airadigm Transaction

On May 23, 2014 (the “Signing Date”), U.S. Cellular entered into a License Purchase and Customer Recommendation Agreement with Airadigm. Pursuant to the License Purchase and Customer Recommendation Agreement, on September 10, 2014, Airadigm transferred to U.S. Cellular Federal Communications Commission (“FCC”) spectrum licenses and certain tower assets in certain markets in Wisconsin, Iowa, Minnesota and Michigan, in consideration for $91.5 million in cash. Since both parties to this transaction are controlled by TDS, upon closing, U.S. Cellular recorded the transferred assets at Airadigm's net book value. The transaction also impacts the expected realization of Airadigm's federal net operating loss carryforwards and therefore TDS reduced its valuation allowance by $10.8 million upon the transaction closing and recognized an income tax benefit for this same amount. See Note 4 — Income Taxes.

Airadigm has shut down operation of its consumer wireless business and most of the associated network. Except for certain machine to machine operations that will be continued, Airadigm's assets not acquired by U.S. Cellular will be sold or otherwise disposed of, its tower leases, interconnection and other agreements will be terminated and most of its employees have been terminated. The shut-down of Airadigm's consumer wireless business was substantially complete in the third quarter of 2014 while network decommissioning is ongoing. As a result of the Agreement and the related impacts from the shut-down of Airadigm's consumer wireless business discussed herein, TDS recognized expenses related to exit and disposal activities within Operating income in its Statement of Operations between the Signing Date and December 31,2014:

(Dollars in thousands)			Projected Range				Actual Amount Recognized Year Ended December 31, 2014
(Gain) loss on sale of business and other exit costs, net
	Charges for the impairment and decommissioning of various operating assets		$	8,000	$	12,000	$	8,467
	Employee related costs including severance, retention and outplacement			500		1,500		676
	Contract termination costs			10,000		15,000		11,099
		Total (Gain) loss on sale of business and other exit costs, net	$	18,500	$	28,500	$	20,242

		As a result of the transaction, TDS recognized the following amounts in the Consolidated Balance Sheet:
					Year Ended December 31, 2014
(Dollars in thousands)			Balance May 23, 2014		Costs Incurred		Cash Settlements (1)		Adjustments (2)		Balance December 31, 2014
Accrued compensation
	Employee related costs including severance, retention and outplacement		$	-	$	676	$	(523)	$	-	$	153
Other current liabilities
	Contract termination costs		$	-	$	7,475	$	(4,291)	$	1,043	$	4,227
Other deferred liabilities and credits
	Contract termination costs		$	-	$	3,975	$	-	$	(1,396)	$	2,579
(1)		Cash settlement amounts are included in either the Net income or changes in Other assets and liabilities line items as part of Cash flows from operating activities on the Consolidated Statement of Cash Flows.
(2)		Adjustment to liability represents changes to previously accrued amounts.

• In August 2013, TDS Telecom acquired substantially all of the assets of Baja for $264.1 million in cash. Baja is a cable company that operates in markets primarily in Colorado, New Mexico, Texas, and Utah and offers broadband, video and voice services, which complement the TDS Telecom portfolio of products. Baja is included in the Cable segment for reporting purposes.
• In November 2012, U.S. Cellular acquired seven 700 MHz licenses covering portions of Illinois, Michigan, Minnesota, Missouri, Nebraska, Oregon, Washington and Wisconsin for $57.7 million.

TDS' acquisitions in 2014 and 2013 and the allocation of the purchase price for these acquisitions were as follows:
					Allocation of Purchase Price
			Purchase Price (1)		Goodwill (2)		Licenses		Franchise Rights		Intangible Assets Subject to Amortization (3)		Net Tangible Assets/(Liabilities)
(Dollars in thousands)
2014
U.S. Cellular licenses			$	41,707	$	-	$	41,707	$	-	$	-	$	-
TDS Telecom cable businesses				273,789		33,610		2,703		120,979		14,056		102,441
	Total		$	315,496	$	33,610	$	44,410	$	120,979	$	14,056	$	102,441
2013
U.S. Cellular licenses			$	16,540	$	-	$	16,540	$	-	$	-	$	-
TDS Telecom cable business				264,069		61,712		-		123,668		11,542		67,147
TDS Telecom HMS business				43,557		15,203		-		-		17,183		11,171
	Total		$	324,166	$	76,915	$	16,540	$	123,668	$	28,725	$	78,318
(1)		Cash amounts paid for acquisitions may differ from the purchase price due to cash acquired in the transactions and the timing of cash payments related to the respective transactions.
(2)		The entire amount of Goodwill acquired in 2014 and 2013 was amortizable for income tax purposes.
(3)		At the date of acquisition, the weighted average amortization period for Intangible Assets Subject to Amortization acquired was as follows: 2014: 4.6 years for TDS Telecom cable business; 2013: 2.9 years for TDS Telecom cable business and 10 years for TDS HMS business

At December 31, 2014 and 2013, the following assets were classified in the Consolidated Balance Sheet as "Assets held for sale" and "Liabilities held for sale":
			Current Assets		Other Assets and Deferred Charges		Licenses		Goodwill		Property, Plant and Equipment		Total Assets Held for Sale
(Dollars in thousands)
2014
Divestiture of Spectrum Licenses			$	-	$	-	$	56,809	$	-	$	-	$	56,809
Sale of Business - Towers				1,472		773		-		4,344		31,770		38,359
Divestiture of Wireline markets (1)				215		2		-		4,100		3,858		8,175
	Total		$	1,687	$	775	$	56,809	$	8,444	$	35,628	$	103,343
2013
Divestiture of Spectrum Licenses			$	-	$	-	$	16,027	$	-	$	-	$	16,027
(1)		On December 30, 2014, TDS Telecom entered into an agreement with a third party to sell certain Wireline markets.

		Current Liabilities		Other Deferred Liabilities and Credits		Total Liabilities Held for Sale
(Dollars in thousands)
2014
Sale of Business - Towers		$	3,607	$	17,641	$	21,248
Divestiture of Wireline markets			218		177		395
	Total	$	3,825	$	17,818	$	21,643

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Intangible Assets

12 Months Ended

Dec. 31, 2014

Disclosure Text Block

Intangible Assets

NOTE 7 INTANGIBLE ASSETS

Changes in TDS' Licenses, Franchise rights and Goodwill are presented below. See Note 6—Acquisitions, Divestitures and Exchanges for information regarding transactions which affected Licenses, Franchise rights and Goodwill during the periods. Previously under GAAP, TDS accounted for U.S. Cellular's share repurchases as step acquisitions, allocating a portion of the share repurchase value to TDS' Licenses and Goodwill. Consequently, U.S. Cellular's Licenses and Goodwill on a stand-alone basis do not equal the TDS consolidated Licenses and Goodwill related to U.S. Cellular.

Licenses
(Dollars in thousands)			U.S. Cellular		Wireline		Cable		Other (1)		Total
Balance December 31, 2012			$	1,462,019	$	2,800	$	-	$	15,220	$	1,480,039
	Acquisitions			16,540		-		-		-		16,540
	Transferred to Assets held for sale			(16,027)		-		-		-		(16,027)
	Divestitures			(59,419)		-		-		-		(59,419)
	Other			2,646		-		-		-		2,646
Balance December 31, 2013				1,405,759		2,800		-		15,220		1,423,779
	Acquisitions			41,707		-		2,703		-		44,410
	Transferred to Assets held for sale			(56,809)		-		-		-		(56,809)
	Exchanges, net			55,780		-		-		-		55,780
	Divestitures			-		-		-		(15,220)		(15,220)
	Other			1,634		-		-		-		1,634
Balance December 31, 2014			$	1,448,071	$	2,800	$	2,703	$	-	$	1,453,574
(1)		Represents the transfer of licenses from Airadigm to U.S. Cellular in 2014. See Note 6 — Acquisitions, Divestitures and Exchanges for additional information.

Franchise rights
(Dollars in thousands)		Cable
Balance December 31, 2012		$	-
	Acquisitions		123,668
Balance December 31, 2013			123,668
	Acquisitions		120,979
	Divestitures		(347)
Balance December 31, 2014		$	244,300

Goodwill
(Dollars in thousands)			U.S. Cellular		Wireline (1)		Cable		HMS		Other (2)		Total
Balance December 31, 2012 (3)			$	269,307	$	420,458	$	-	$	103,627	$	3,802	$	797,194
	Acquisitions			-		-		61,712		15,203		-		76,915
	Divestitures			(135)		-		-		-		-		(135)
	NY1 & NY2 Deconsolidation			(37,131)		-		-		-		-		(37,131)
Balance December 31, 2013				232,041		420,458		61,712		118,830		3,802		836,843
	Acquisitions			-		-		33,610		-		-		33,610
	Loss on impairment			-		-		-		(84,000)		(3,802)		(87,802)
	Divestitures			(291)		(2,564)		-		-		-		(2,855)
	Transferred to Assets held for sale			(4,344)		(4,100)		-		-		-		(8,444)
Balance December 31, 2014			$	227,406	$	413,794	$	95,322	$	34,830	$	-	$	771,352
(1)		In July 2014, TDS Telecom sold certain Wireline markets.
(2)		TDS performed its annual impairment review of Goodwill in the fourth quarter of 2014. Based on the results of this review, TDS concluded that the entire amount of Goodwill related to Suttle-Straus was impaired, which resulted in a $3.8 million loss on impairment.
(3)		Includes accumulated impairment losses in prior periods as follows: $333.9 million for U.S. Cellular, $29.4 million for Wireline and $0.5 million for Other.

Interim Goodwill Impairment Assessment

During the third quarter of 2014, due to a decline in projected revenue and earnings of TDS Telecom's HMS reporting unit compared with previously projected results, TDS determined that an interim impairment test of HMS Goodwill was required. TDS performed the Step 1 Goodwill impairment test, as defined by GAAP, as of August 1, 2014.

The discounted cash flow approach and guideline public company method were used to value the HMS reporting unit. The discounted cash flow approach uses value drivers and risks specific to the industry and current economic factors. The cash flow estimates incorporated assumptions that market participants would use in their estimates of fair value and may not be indicative of TDS Telecom specific assumptions. The most significant assumptions made in this process were the revenue growth rate (shown as a ten year compound annual growth rate in the table below), the terminal revenue growth rate, the discount rate and capital expenditures as a percentage of revenue (shown as a ten year simple average in the table below).

The guideline public company method develops an indication of fair value by calculating average market pricing multiples for selected publicly-traded companies. The developed multiples were applied to applicable financial measures of the HMS reporting unit to determine fair value. The discounted cash flow approach and guideline public company method were weighted to arrive at the total fair value used for impairment testing.

The following table represents key assumptions used in estimating the fair value of the HMS reporting unit as of August 1, 2014 using the discounted cash flow approach.

Key assumptions	HMS
Revenue growth rate	6.1	%
Terminal revenue growth rate	2.5	%
Discount rate	11.5	%
Capital expenditures as a percentage of revenue	8.6	%

As of August 1, 2014, the carrying value of the HMS reporting unit exceeded its fair value; therefore, a Step 2 Goodwill impairment test was performed. The second step compared the implied fair value of the reporting unit Goodwill to the carrying amount of that Goodwill. To calculate the implied fair value of Goodwill in this second step, TDS allocated the fair value of the reporting unit to all of the assets and liabilities of that reporting unit (including any unrecognized intangible assets) as if the reporting unit had been acquired in a business combination and the fair value was the price paid to acquire the reporting unit. The excess of the fair value of the reporting unit over the amount assigned to the assets and liabilities of the reporting unit was the implied fair value of Goodwill. Since the carrying amount of Goodwill exceeded the implied fair value of Goodwill, an impairment loss was recognized for that difference. As a result of the Step 2 Goodwill impairment test, TDS recognized a loss on impairment of $84.0 million during the third quarter of 2014.

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Property Plant And Equipment

12 Months Ended

Dec. 31, 2014

Disclosure Text Block

Property, Plant and Equipment

NOTE 9 PROPERTY, PLANT AND EQUIPMENT

U.S. Cellular's Property, plant and equipment in service and under construction, and related accumulated depreciation and amortization, as of December 31, 2014 and 2013 were as follows:

	Useful Lives
December 31,	(Years)	2014		2013
(Dollars in thousands)
Land	N/A	$	35,031	$	36,266
Buildings	20		296,502		304,272
Leasehold and land improvements	1-30		1,086,718		1,197,520
Cell site equipment	7-25		3,269,609		3,306,575
Switching equipment	5-8		960,377		1,161,976
Office furniture and equipment	3-5		553,630		539,248
Other operating assets and equipment	3-5		89,663		92,456
System development	1-7		1,042,195		962,698
Work in process	N/A		125,015		116,501
			7,458,740		7,717,512
Accumulated depreciation and amortization			(4,730,523)		(4,860,992)
		$	2,728,217	$	2,856,520

U.S. Cellular's depreciation and amortization expense totaled $593.2million, $791.1 million and $597.7 million in 2014, 2013 and 2012, respectively. As a result of the Divestiture Transaction, U.S. Cellular recognized incremental depreciation and amortization in 2014, 2013 and 2012. See Note 6– Acquisitions, Divestitures and Exchanges for additional information.

TDS Telecom's (including Wireline, Cable, and HMS) Property, plant and equipment in service and under construction, andrelated accumulated depreciation, as of December 31, 2014 and 2013were as follows:

	Useful Lives
December 31,	(Years)		2014		2013
(Dollars in thousands)
Land	N/A	$	16,974	$	12,794
Buildings	5-40		172,963		148,800
Cable and wire	15-35		1,628,782		1,523,123
Network electronic equipment	5-13		1,278,799		1,229,941
Office furniture and equipment	7-10		79,666		74,507
Other equipment	5-12		102,540		94,438
System development	3-7		241,153		230,416
Work in process	N/A		91,419		88,614
			3,612,296		3,402,633
Accumulated depreciation and amortization			(2,518,625)		(2,417,999)
		$	1,093,671	$	984,634

The provision for certain Wireline companies' depreciation as a percentage of depreciable property was5.2%in 2014, 5.3% in 2013 and 5.6% in 2012.TDS Telecom's depreciation and amortization expense related to Property, plant and equipment totaled $195.1million, $182.6million and $177.3million in 2014, 2013 and 2012, respectively.

Corporate and other Property, plant and equipment in service and under construction, and related accumulated depreciation, as of December 31, 2014 and 2013 were as follows:

December 31,	2014		2013
(Dollars in thousands)
Property, plant and equipment	$	123,008	$	119,659
Accumulated depreciation and amortization		(98,771)		(82,669)
Total	$	24,237	$	36,990

Corporate and other fixed assets consist of assets at the TDS corporate offices,Suttle-Straus and Airadigm. Corporate and other depreciation and amortization expense related to Property, plant and equipment totaled $9.3million,$10.7 million and $10.3 million in 2014, 2013 and 2012, respectively.

In 2014, 2013 and 2012, (Gain) loss on asset disposals, netincluded charges of $26.5 million, $30.8million and $19.7 million, respectively, related to disposals of assets, trade-ins of older assets for replacement assets and other retirements of assets from service in the normal course of business.

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Intangible Assets (Details) (USD $)	12 Months Ended
	Dec. 31, 2014		Dec. 31, 2013		Dec. 31, 2012
Goodwill
Balance, beginning of period	$ 836,843,000		$ 797,194,000	[1]
Acquisitions	33,610,000		76,915,000
Loss on impairment	(87,802,000)
Divestitures	(2,855,000)		(135,000)
NY1 & NY2 Deconsolidation			(37,131,000)
Transferred to Assets held for sale	(8,444,000)
Balance, end of period	771,352,000		836,843,000
Licenses
Licenses and Franchise Rights
Balance, beginning of period	1,423,779,000		1,480,039,000
Acquisitions	44,410,000		16,540,000
Transferred to Assets held for sale	(56,809,000)		(16,027,000)
Exchanges, net	55,780,000
Divestitures	(15,220,000)		(59,419,000)
Other	1,634,000		2,646,000
Balance, end of period	1,453,574,000		1,423,779,000
U.S. Cellular
Goodwill
Balance, beginning of period	232,041,000		269,307,000	[1]
Divestitures	(291,000)		(135,000)
NY1 & NY2 Deconsolidation			(37,131,000)
Transferred to Assets held for sale	(4,344,000)
Balance, end of period	227,406,000		232,041,000
Accumulated impairment losses in prior periods	333,900,000
U.S. Cellular | Licenses
Licenses and Franchise Rights
Balance, beginning of period	1,405,759,000		1,462,019,000
Acquisitions	41,707,000		16,540,000
Transferred to Assets held for sale	(56,809,000)		(16,027,000)
Exchanges, net	55,780,000
Divestitures			(59,419,000)
Other	1,634,000		2,646,000
Balance, end of period	1,448,071,000		1,405,759,000
Wireline
Goodwill
Balance, beginning of period	420,458,000	[2]			420,458,000	[1],[2]
Divestitures	(2,564,000)	[2]
Transferred to Assets held for sale	(4,100,000)	[2]
Balance, end of period	413,794,000	[2]			420,458,000	[1],[2]
Accumulated impairment losses in prior periods	29,400,000
Wireline | Licenses
Licenses and Franchise Rights
Balance, beginning of period					2,800,000
Balance, end of period	2,800,000		2,800,000		2,800,000
Cable
Goodwill
Balance, beginning of period	61,712,000
Acquisitions	33,610,000		61,712,000
Balance, end of period	95,322,000		61,712,000
Cable | Licenses
Licenses and Franchise Rights
Acquisitions	2,703,000
Balance, end of period	2,703,000
Cable | Franchise rights
Licenses and Franchise Rights
Balance, beginning of period	123,668,000
Acquisitions	120,979,000		123,668,000
Divestitures	(347,000)
Balance, end of period	244,300,000		123,668,000
HMS
Goodwill
Balance, beginning of period	118,830,000		103,627,000	[1]
Acquisitions			15,203,000
Loss on impairment	(84,000,000)
Balance, end of period	34,830,000		118,830,000
Other
Goodwill
Balance, beginning of period	3,802,000	[3]			3,802,000	[1],[3]
Loss on impairment	(3,802,000)	[3]
Balance, end of period					3,802,000	[1],[3]
Accumulated impairment losses in prior periods	500,000
Other | Licenses
Licenses and Franchise Rights
Balance, beginning of period	15,220,000	[4]			15,220,000	[4]
Divestitures	(15,220,000)	[4]
Balance, end of period					$ 15,220,000	[4]
Discounted cash flow valuation approach | HMS
Fair Value Inputs
Revenue growth rate	6.10%
Terminal revenue growth rate	2.50%
Discount Rate	11.50%
Capital expenditures as a percentage of revenue	8.60%

[1] Includes accumulated impairment losses in prior periods as follows: $333.9 million for U.S. Cellular, $29.4 million for Wireline and $0.5 million for Other.

[2] In July 2014, TDS Telecom sold certain Wireline markets.

[3] TDS performed its annual impairment review of Goodwill in the fourth quarter of 2014. Based on the results of this review, TDS concluded that the entire amount of Goodwill related to Suttle-Straus was impaired, which resulted in a $3.8 million loss on impairment.

[4] Represents the transfer of licenses from Airadigm to U.S. Cellular in 2014. See Note 6 — Acquisitions, Divestitures and Exchanges for additional information.

XML

Stock-Based Compensation, TDS excluding U.S. Cellular, Nonvested shares and other stock compensation disclosures (Details) (TDS Parent Company, Common Shares, USD $) In Millions, except Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Deferred Compensation Stock Units
Stock based compensation, Nonvested shares weighted average grant date fair value
Fair value of vested stock units	$ 0.1	$ 0.1	$ 0.1
Weighted average grant date fair value	$ 23.27	$ 21.99	$ 24.18
Shares issued and granted under stock compensation plans
Vested number of shares, unissued	249,000
Vested number of shares, unissued, fair value	6.3
Restricted Stock Units
Stock based compensation, Nonvested shares rollforward, number of shares
Nonvested stock units, begin of period - Number of shares	663,000
Granted number of shares	355,000
Vested number of shares	(300,000)
Forfeited number of shares	(26,000)
Nonvested stock units, end of period - Number of shares	692,000	663,000
Stock based compensation, Nonvested shares weighted average grant date fair value
Nonvested stock units - begin of period weighted average grant date fair value	$ 20.43
Granted weighted average grant date fair value	$ 25.26	$ 21.09	$ 19.62
Vested weighted average grant date fair value	$ 19.68
Forfeited weighted average grant date fair value	$ 21.31
Nonvested stock units - end of period weighted average grant date fair value	$ 23.20	$ 20.43
Fair value of vested stock units	$ 7.5	$ 5.8	$ 3.4
Shares issued and granted under stock compensation plans
Granted number of shares	355,000
Non-Employee Directors' Plan
Shares issued and granted under stock compensation plans
Shares issued	33,000	33,000	22,000

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Investment in Unconsolidated Entities, Deconsolidation (Details) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Apr. 03, 2013
Deconsolidation of New York Partnerships
Investments in unconsolidated entities	$ 321,729,000	301,772,000	$ 179,921,000
St. Lawrence Seaway RSA Cellular Partnership
Deconsolidation of New York Partnerships
Ownership interest in equity method investment	60.00%
New York RSA 2 Cellular Partnership
Deconsolidation of New York Partnerships
Ownership interest in equity method investment	57.14%
St. Lawrence Seaway RSA Cellular Partnership and New York RSA 2 Cellular Partnership
Deconsolidation of New York Partnerships
Date Of Deconsolidation	Apr. 03, 2013
Deconsolidation gain	14,500,000
Investments in unconsolidated entities				$ 114,800,000
Discounted cash flow valuation approach | St. Lawrence Seaway RSA Cellular Partnership and New York RSA 2 Cellular Partnership
Fair Value Inputs
Average expected revenue growth rate (next ten years)		2.00%
Terminal revenue growth rate (after year ten)		2.00%
Discount Rate		10.50%
Discounted cash flow valuation approach | Minimum | St. Lawrence Seaway RSA Cellular Partnership and New York RSA 2 Cellular Partnership
Fair Value Inputs
Capital expenditures as a percentage of revenue		14.90%
Discounted cash flow valuation approach | Maximum | St. Lawrence Seaway RSA Cellular Partnership and New York RSA 2 Cellular Partnership
Fair Value Inputs
Capital expenditures as a percentage of revenue		18.80%

XML

Acquisitions, Divestitures and Exchanges, exchanges (Details) (USD $)	12 Months Ended			1 Months Ended	12 Months Ended	1 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2014	Dec. 31, 2015	Feb. 28, 2014
Exchanges
(Gain) loss on license sales and exchanges	$ (112,993,000)	$ (255,479,000)
Carrying value	1,453,574,000	1,423,779,000		1,453,574,000
Cash received from divestitures	187,645,000	811,120,000	50,182,000
Other current liabilities	181,803,000	212,374,000		181,803,000
U.S. Cellular
Exchanges
(Gain) loss on license sales and exchanges	(112,993,000)	(255,479,000)
U.S. Cellular | PCS and AWS license exchange
Exchanges
Asset exchange description	In September 2014, U.S. Cellular entered into an agreement with a third party to exchange certain PCS and AWS licenses for certain other PCS and AWS licenses and $28.0 million of cash. This license exchange will be accomplished in two closing transactions. The first closing occurred in December 2014 at which time U.S. Cellular received licenses with an estimated fair value, per a market approach, of $51.5 million, recorded a $21.7 million gain in (Gain) loss on license sales and exchanges in the Consolidated Statement of Operations and recorded an $18.3 million deferred credit in Other current liabilities. The second closing is expected to occur in 2015. The license that will be transferred has been classified as “Assets held for sale” in the Consolidated Balance Sheet as of December 31, 2014. At the time of the second closing, TDS will recognize the deferred credit from the first closing and expects to record a gain on the license exchange.
(Gain) loss on license sales and exchanges				(21,700,000)
Fair value	51,500,000			51,500,000
Asset exchange, valuation method	market approach valuation method
Other current liabilities	18,300,000			18,300,000
U.S. Cellular | PCS license exchange
Exchanges
Asset exchange description	In September 2014, U.S. Cellular entered into an agreement with a third party to exchange certain of its PCS unbuilt licenses for PCS licenses located in U.S. Cellular’s operating markets plus $117.0 million of cash. This transaction is subject to regulatory approvals and is expected to close in 2015. The book value of the licenses to be exchanged have been classified as “Assets held for sale” in the Consolidated Balance Sheet at December 31, 2014. TDS expects to record a gain when this transaction closes. 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, TDS 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.
U.S. Cellular | Expected event | PCS and AWS license exchange
Exchanges
Cash received from divestitures					28,000,000
U.S. Cellular | Expected event | PCS license exchange
Exchanges
Cash received from divestitures					117,000,000
U.S. Cellular | Spectrum exchange
Exchanges
(Gain) loss on license sales and exchanges						(15,700,000)
Fair value						15,900,000
Carrying value						$ 200,000
Asset exchange, valuation method	market approach valuation method

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Acquisitions Divestitures and Exchanges (Tables)

12 Months Ended

Dec. 31, 2014

Business Combination

Acquisitions, Divestitures and Exchanges

TDS' acquisitions in 2014 and 2013 and the allocation of the purchase price for these acquisitions were as follows:
					Allocation of Purchase Price
			Purchase Price (1)		Goodwill (2)		Licenses		Franchise Rights		Intangible Assets Subject to Amortization (3)		Net Tangible Assets/(Liabilities)
(Dollars in thousands)
2014
U.S. Cellular licenses			$	41,707	$	-	$	41,707	$	-	$	-	$	-
TDS Telecom cable businesses				273,789		33,610		2,703		120,979		14,056		102,441
	Total		$	315,496	$	33,610	$	44,410	$	120,979	$	14,056	$	102,441
2013
U.S. Cellular licenses			$	16,540	$	-	$	16,540	$	-	$	-	$	-
TDS Telecom cable business				264,069		61,712		-		123,668		11,542		67,147
TDS Telecom HMS business				43,557		15,203		-		-		17,183		11,171
	Total		$	324,166	$	76,915	$	16,540	$	123,668	$	28,725	$	78,318
(1)		Cash amounts paid for acquisitions may differ from the purchase price due to cash acquired in the transactions and the timing of cash payments related to the respective transactions.
(2)		The entire amount of Goodwill acquired in 2014 and 2013 was amortizable for income tax purposes.
(3)		At the date of acquisition, the weighted average amortization period for Intangible Assets Subject to Amortization acquired was as follows: 2014: 4.6 years for TDS Telecom cable business; 2013: 2.9 years for TDS Telecom cable business and 10 years for TDS HMS business

Divestiture Financial Impacts

Business divestiture financial impacts

(Dollars in thousands)			Expected Period of Recognition	Projected Range				Cumulative Amount Recognized as of December 31, 2014		Actual Amount Recognized Year Ended December 31, 2014		Actual Amount Recognized Year Ended December 31, 2013		Actual Amount Recognized Year Ended December 31, 2012
(Gain) loss on sale of business and other exit costs, net
	Proceeds from Sprint
		Purchase price	2013	$	(480,000)	$	(480,000)	$	(480,000)	$	-	$	(480,000)	$	-
		Sprint Cost Reimbursement	2013-2015		(120,000)		(175,000)		(111,970)		(64,329)		(47,641)		-
	Net assets transferred		2013		160,073		160,073		160,073		-		160,073		-
	Non-cash charges for the write-off and write-down of property under construction and related assets		2012-2015		20,000		22,000		20,410		9,735		3		10,672
	Employee related costs including severance, retention and outplacement		2012-2015		13,000		16,000		14,147		(115)		1,653		12,609
	Contract termination costs		2012-2015		70,000		100,000		84,320		24,736		59,525		59
	Transaction costs		2012-2015		5,000		7,000		6,284		719		4,428		1,137
		Total (Gain) loss on sale of business and other exit costs, net		$	(331,927)	$	(349,927)	$	(306,736)	$	(29,254)	$	(301,959)	$	24,477
Depreciation, amortization and accretion expense
	Incremental depreciation, amortization and accretion, net of salvage values		2012-2014		215,049		215,049		215,049		16,478		178,513		20,058
(Increase) decrease in Operating income				$	(116,878)	$	(134,878)	$	(91,687)	$	(12,776)	$	(123,446)	$	44,535

As a result of the transaction, TDS recognized the following amounts in the Consolidated Balance Sheet:
				Year Ended December 31, 2014
(Dollars in thousands)		Balance December 31, 2013		Costs Incurred		Cash Settlements (1)		Adjustments (2)		Balance December 31, 2014
Accrued compensation
	Employee related costs including severance, retention, outplacement	$	2,053	$	127	$	(1,223)	$	(242)	$	715
Accounts payable
	Contract termination costs	$	-	$	4,018	$	-	$	(1,190)	$	2,828
Other current liabilities
	Contract termination costs	$	13,992	$	12,703	$	(22,210)	$	3,747	$	8,232
Other deferred liabilities and credits
	Contract termination costs	$	30,849	$	24,171	$	(3,569)	$	(30,411)	$	21,040
				Year Ended December 31, 2013
(Dollars in thousands)		Balance December 31, 2012		Costs Incurred		Cash Settlements (1)		Adjustments (2)		Balance December 31, 2013
Accrued compensation
	Employee related costs including severance, retention, outplacement	$	12,305	$	6,853	$	(11,905)	$	(5,200)	$	2,053
Other current liabilities
	Contract termination costs	$	30	$	22,675	$	(8,713)	$	-	$	13,992
Other deferred liabilities and credits
	Contract termination costs	$	-	$	34,283	$	(3,434)	$	-	$	30,849
(1)	Cash settlement amounts are included in either the Net income or changes in Other assets and liabilities line items as part of Cash flows from operating activities in the Consolidated Statement of Cash Flows.
(2)	Adjustment to liability represents changes to previously accrued amounts.

(Dollars in thousands)			Projected Range				Actual Amount Recognized Year Ended December 31, 2014
(Gain) loss on sale of business and other exit costs, net
	Charges for the impairment and decommissioning of various operating assets		$	8,000	$	12,000	$	8,467
	Employee related costs including severance, retention and outplacement			500		1,500		676
	Contract termination costs			10,000		15,000		11,099
		Total (Gain) loss on sale of business and other exit costs, net	$	18,500	$	28,500	$	20,242

		As a result of the transaction, TDS recognized the following amounts in the Consolidated Balance Sheet:
					Year Ended December 31, 2014
(Dollars in thousands)			Balance May 23, 2014		Costs Incurred		Cash Settlements (1)		Adjustments (2)		Balance December 31, 2014
Accrued compensation
	Employee related costs including severance, retention and outplacement		$	-	$	676	$	(523)	$	-	$	153
Other current liabilities
	Contract termination costs		$	-	$	7,475	$	(4,291)	$	1,043	$	4,227
Other deferred liabilities and credits
	Contract termination costs		$	-	$	3,975	$	-	$	(1,396)	$	2,579
(1)		Cash settlement amounts are included in either the Net income or changes in Other assets and liabilities line items as part of Cash flows from operating activities on the Consolidated Statement of Cash Flows.
(2)		Adjustment to liability represents changes to previously accrued amounts.

Assets and Liabilities held for sale

At December 31, 2014 and 2013, the following assets were classified in the Consolidated Balance Sheet as "Assets held for sale" and "Liabilities held for sale":
			Current Assets		Other Assets and Deferred Charges		Licenses		Goodwill		Property, Plant and Equipment		Total Assets Held for Sale
(Dollars in thousands)
2014
Divestiture of Spectrum Licenses			$	-	$	-	$	56,809	$	-	$	-	$	56,809
Sale of Business - Towers				1,472		773		-		4,344		31,770		38,359
Divestiture of Wireline markets (1)				215		2		-		4,100		3,858		8,175
	Total		$	1,687	$	775	$	56,809	$	8,444	$	35,628	$	103,343
2013
Divestiture of Spectrum Licenses			$	-	$	-	$	16,027	$	-	$	-	$	16,027
(1)		On December 30, 2014, TDS Telecom entered into an agreement with a third party to sell certain Wireline markets.

		Current Liabilities		Other Deferred Liabilities and Credits		Total Liabilities Held for Sale
(Dollars in thousands)
2014
Sale of Business - Towers		$	3,607	$	17,641	$	21,248
Divestiture of Wireline markets			218		177		395
	Total	$	3,825	$	17,818	$	21,643

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Income Taxes, Balances (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Income Tax Disclosure
Income taxes receivable	$ 113,708	$ 2,397
Federal
Income Tax Disclosure
Income taxes receivable	108,820
Income taxes (payable)		20,288
State
Income Tax Disclosure
Income taxes receivable	$ 4,391	$ 2,397

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Variable Interest Entities

12 Months Ended

Dec. 31, 2014

Disclosure Text Block

Variable Interest Entities

NOTE 14 VARIABLE INTEREST ENTITIES (VIEs)

TDS consolidates variable interest entities in which it hasa controlling financial interest and isthe primary beneficiary. A controlling financial interest will have both of the following characteristics: (a) the power to direct the VIE activities that most significantly impact economic performance and (b) the obligation to absorb the VIE losses and right to receive benefits that are significant to the VIE.  TDS reviews these criteria initially at the time it enters into agreements and subsequently when reconsideration events occur.

Consolidated VIEs

As of December 31, 2014, TDS holds a variable interest in and consolidates the following VIEs under GAAP:

• Advantage Spectrum L.P. (“Advantage Spectrum”) and Frequency Advantage L.P., the general partner of Advantage Spectrum;
• Aquinas Wireless L.P. (“Aquinas Wireless”); and
• King Street Wireless L.P. (“King Street Wireless”) and King Street Wireless, Inc., the general partner of King Street Wireless.

The power to direct the activities that most significantly impact the economic performance of Advantage Spectrum, Aquinas Wireless andKing Street Wireless (collectively, the “limited partnerships”) is shared. Specifically, the general partner of these VIEs has the exclusive right to manage, operate and control the limited partnerships and make all decisions to carry on the business of the partnerships; however, the general partner of each partnership needs consent of the limited partner, a TDS subsidiary, to sell or lease certain licenses, to make certain large expenditures, admit other partners or liquidate the limited partnerships. Although the power to direct the activities of the VIEs is shared, TDS has a disproportionate level of exposure to the variability associated with the economic performance of the VIEs, indicating that TDS is the primary beneficiary of the VIEs in accordance with GAAP. Accordingly, these VIEs are consolidated.

The following table presents the classification of the consolidated VIEs' assets and liabilities in TDS' Consolidated Balance Sheet.

December 31,			2014		2013
(Dollars in thousands)
Assets
	Cash and cash equivalents		$	2,588	$	2,076
	Other current assets			278		1,184
	Licenses			312,977		310,475
	Property, plant and equipment, net			10,671		18,600
	Other assets and deferred charges			60,059		511
		Total assets	$	386,573	$	332,846
Liabilities
	Current liabilities		$	110	$	46
	Deferred liabilities and credits			622		3,139
		Total liabilities	$	732	$	3,185

Other Related Matters

An FCC auction of AWS-3 spectrum licenses, referred to as Auction 97, began in November 2014 and ended in January 2015. TDS participated in Auction 97 indirectly through its interest in Advantage Spectrum. A subsidiary of U.S. Cellular is a limited partner in Advantage Spectrum. Advantage Spectrum qualified as a “designated entity,” and thereby was eligible for bid credits with respect to spectrum purchased in Auction 97. To participate in this auction, a $60.0 million deposit was made to the FCC in 2014. Such amount is reflected in Other Assets and Deferred Charges in the Consolidated Balance Sheet.Advantage Spectrum was the provisional winning bidder for 124 licenses for an aggregate bid of $338.3 million, net of its anticipated designated entity discount of 25%. Advantage Spectrum's bid amount, less the initial deposit of $60.0 million, plus certain other charges totaling $2.3 million, are required to be paid to the FCC by March 2, 2015.

Advantage Spectrum, Aquinas Wireless and King Street Wireless were formed to participate in FCC auctions of wireless spectrum and to fund, establish, and provide wireless service with respect to any FCC licenses won in the auctions. As such, these entities have risks similar to those described in the “Risk Factors” in TDS' Annual Report on Form 10-K.

TDS' capital contributions and advances made to its VIEs totaled $60.9 million in the year ended December 31, 2014. In 2013, there were no capital contributions or advances made to VIEs or their general partners that were not VIEs.

TDS may agree to make additional capital contributions and/or advances toAdvantage Spectrum, Aquinas Wireless or King Street Wirelessand/or to their general partners to provide additional funding for the development of licenses granted in various auctions.  TDS may finance such amounts with a combination of cash on hand, borrowings under its revolving credit agreement and/or long-term debt.  There is no assurance that TDS will be able to obtain additional financing on commercially reasonable terms or at all to provide such financial support.

The limited partnership agreements of Advantage Spectrum, Aquinas Wireless and King Street Wireless also provide the general partner with a put option whereby the general partner may require the limited partner, a subsidiary of U.S. Cellular, to purchase its interest in the limited partnership. The general partner's put options related to its interests in King Street Wireless and Aquinas Wireless will become exercisable in 2019 and 2020, respectively. The general partner's put options related to its interest in Advantage Spectrum will become exercisable on the fifth and sixth anniversaries of the issuance of any license. The put option price is determined pursuant to a formula that takes into consideration fixed interest rates and the market value of U.S. Cellular's Common Shares. Upon exercise of the put option, the general partner is required to repay borrowings due to U.S. Cellular. If the general partner does not elect to exercise its put option, the general partner may trigger an appraisal process in which the limited partner (a subsidiary of U.S. Cellular) may have the right, but not the obligation, to purchase the general partner's interest in the limited partnership at a price and on other terms and conditions specified in the limited partnership agreement. In accordance with requirements under GAAP, TDS is required to calculate a theoretical redemption value for all of the put options assuming they are exercisable at the end of each reporting period, even though such exercise is not contractually permitted. Pursuant to GAAP, this theoretical redemption value, net of amounts payable to U.S. Cellular for loans and accrued interest thereonmade by U.S. Cellular to the general partnersthe (“net put value”), was $1.2 million and $0.5million at December 31, 2014 and 2013, respectively. The net put value is recorded as Noncontrolling interests with redemption features in TDS' Consolidated Balance Sheet. Also in accordance with GAAP, changes in the redemption value of the put options, net of interest accrued on the loans, are recorded as a component of Net income attributable to noncontrolling interests, net of tax, in TDS' Consolidated Statement of Operations.

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Supplemental Cash Flow Disclosures

12 Months Ended

Dec. 31, 2014

Disclosure Text Block

Supplemental Cash Flow Disclosures

NOTE 19SUPPLEMENTAL CASH FLOW DISCLOSURES

Following are supplemental cash flow disclosures regarding interest paid and income taxes paid.

Year Ended December 31,	2014		2013		2012
(Dollars in thousands)
Interest paid	$	108,510	$	96,241	$	88,208
Income taxes paid (refunded)		48,876		175,629		(62,042)

Following are supplemental cash flow disclosures regarding transactions related to stock-based compensation awards. In certain situations, TDS and U.S. Cellular withhold shares that are issuable upon the exercise of stock options or the vesting of restricted shares to cover, and with a value equivalent to, the exercise price and/or the amount of taxes required to be withheld from the stock award holder at the time of the exercise or vesting. TDS and U.S. Cellular then pay the amount of the required tax withholdings to the taxing authorities in cash.

TDS:
Year Ended December 31,	2014		2013		2012
(Dollars in thousands)
Common Shares withheld		109,061		265,748		49,840
Special Common Shares withheld		-		-		1,381
Aggregate value of Common Shares withheld	$	2,751	$	7,639	$	1,102
Aggregate value of Special Common Shares withheld	$	-	$	-	$	33
Cash receipts upon exercise of stock options		732		12,092		16
Cash disbursements for payment of taxes		(2,751)		(2,438)		(1,135)
Net cash receipts (disbursements) from exercise of stock options and vesting of other stock awards	$	(2,019)	$	9,654	$	(1,119)

U.S. Cellular:
Year Ended December 31,	2014		2013		2012
(Dollars in thousands)
Common Shares withheld		163,355		606,582		92,846
Aggregate value of Common Shares withheld	$	6,868	$	25,179	$	3,604
Cash receipts upon exercise of stock options		5,166		10,468		900
Cash disbursements for payment of taxes		(4,336)		(4,684)		(3,105)
Net cash receipts (disbursements) from exercise of stock options and vesting of other stock awards	$	830	$	5,784	$	(2,205)

Under the American Recovery and Reinvestment Act of 2009 (“the Recovery Act”), TDS Telecom was awarded $105.1 million in federal grants and will provide $30.9 million of its own funds to complete 44 projects to provide broadband access in unserved areas. TDS Telecom received $15.3 million, $41.9 million, and $16.7 million in grants in 2014, 2013and 2012, respectively. TDS Telecom has received cumulative grants of $78.9 million as of December 31, 2014. These funds reduced the carrying amount of the assets to which they relate. TDS Telecom had recorded $14.2 million and $23.6 millionin grants receivable at December 31, 2014 and 2013, respectively. These amounts were included as a component of Accounts receivable, Other, in the Consolidated Balance Sheet.

On September 27, 2012, the FCC conducted a single round, sealed bid, reverse auction to award up to $300 million in one-time Mobility Fund Phase I support to successful bidders that commit to provide 3G, or better, wireless service in areas designated as unserved by the FCC.  This auction was designated by the FCC as Auction 901. U.S. Cellular and several of its wholly-owned subsidiaries participated in Auction 901 and were winning bidders in eligible areas within 10 states and will receive up to $40.1 million in one-time support from the Mobility Fund. These funds when received reduce the carrying amount of the assets to which they relate or offset operating expenses. In connection with these winning bids, in June 2013, U.S. Cellular provided $17.4 million letters of credit to the FCC, of which the entire amount remained outstanding as of December 31, 2014. U.S. Cellular has received $13.4 million in support funds as of December 31, 2014, of which $1.9 million is included as a component of Other assets and deferred charges in the Consolidated Balance Sheet and $11.5 million reduced the carrying amount of the assets to which they relate, which are included in Property, plant and equipment in the Consolidated Balance Sheet.

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Fair Value Measurements (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Cash and cash equivalents	471,901	830,014	$ 740,481	$ 563,275
Short-term investments		50,104
Fair Value | Level 1
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Cash and cash equivalents	471,901	830,014
Fair Value | Level 2 | Retail
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Long-term debt	1,414,105	1,048,010
Fair Value | Level 2 | Institutional and Other
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Long-term debt	518,322	512,635
Fair Value | U.S. Treasury Notes | Level 1
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Short-term investments		50,104
Book Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Cash and cash equivalents	471,901	830,014
Book Value | Retail
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Long-term debt	1,453,250	1,178,250
Book Value | Institutional and Other
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Long-term debt	537,471	537,454
Book Value | U.S. Treasury Notes
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Short-term investments		50,104
Institutional and Other | Minimum
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Fair value assumption, interest rate	0.00%	0.00%
Institutional and Other | Maximum
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Fair value assumption, interest rate	7.25%	7.35%

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Commitments and Contingencies (Tables)

12 Months Ended

Dec. 31, 2014

Commitments And Contingencies Disclosure

Lease commitments

	Operating Leases Future Minimum Rental Payments*		Operating Leases Future Minimum Rental Receipts
(Dollars in thousands)
2015	$	155,476	$	54,463
2016		139,346		43,918
2017		119,384		34,619
2018		102,014		24,095
2019		86,580		12,038
Thereafter		798,530		8,558
Total	$	1,401,330	$	177,691
*Includes $88.4 million of future lease payments associated with leases transferred in January 2015 per the second closing of the tower sale. See Note 6 — Acquisitions, Divestitures and Exchanges for additional information.

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Consolidated Balance Sheet (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Current assets
Cash and cash equivalents	$ 471,901	$ 830,014
Short-term investments		50,104
Accounts receivable
Due from customers and agents, less allowances of $41,431 and $63,690, respectively	548,537	551,611
Other, less allowances of $1,141 and $1,914, respectively	135,144	179,503
Inventory, net	273,707	244,560
Net deferred income tax asset	107,686	106,077
Prepaid expenses	86,506	87,920
Income taxes receivable	113,708	2,397
Other current assets	29,766	35,151
Total current assets	1,766,955	2,087,337
Assets held for sale	103,343	16,027
Investments
Licenses	1,453,574	1,423,779
Goodwill	771,352	836,843
Franchise rights	244,300	123,668
Other intangible assets, net of accumulated amortization of $133,823 and $112,752, respectively	64,499	71,454
Investments in unconsolidated entities	321,729	301,772
Other investments	508	641
Total investments	2,855,962	2,758,157
Property, plant and equipment
In service and under construction	11,194,044	11,239,804
Less: Accumulated depreciation and amortization	7,347,919	7,361,660
Property, plant and equipment, net	3,846,125	3,878,144
Other assets and deferred charges	334,554	164,482
Total assets	8,906,939	8,904,147
Current liabilities
Current portion of long-term debt	808	1,646
Accounts payable	387,125	496,069
Customer deposits and deferred revenues	324,318	289,445
Accrued interest	7,919	6,673
Accrued taxes	46,734	70,518
Accrued compensation	114,549	115,031
Other current liabilities	181,803	212,374
Total current liabilities	1,063,256	1,191,756
Liabilities held for sale	21,643
Deferred liabilities and credits
Net deferred income tax liability	941,519	862,975
Other deferred liabilities and credits	430,774	458,709
Long-term debt	1,993,586	1,720,074
Commitments and contingencies
Noncontrolling interests with redemption features	1,150	536
TDS shareholders' equity
Series A Common and Common Shares	1,327	1,327
Capital in excess of par value	2,336,511	2,308,807
Treasury shares at cost	(748,199)	(721,354)
Accumulated other comprehensive loss	6,452	(569)
Retained earnings	2,330,187	2,529,626
Total TDS shareholders' equity	3,926,278	4,117,837
Preferred shares	824	824
Noncontrolling interests	527,909	551,436
Total equity	4,455,011	4,670,097
Total liabilities and equity	$ 8,906,939	$ 8,904,147

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Stock-Based Compensation, U.S. Cellular, Nonvested shares and other stock compensation disclosures (Details) (U.S. Cellular, U.S. Cellular Common Shares, USD $) In Millions, except Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
2005 and 2013 Long-Term Incentive Plans | Restricted Stock Units
Stock based compensation, Nonvested shares rollforward, number of shares
Nonvested stock units, begin of period - Number of shares	1,170,000
Granted number of shares	370,000
Vested number of shares	(274,000)
Forfeited number of shares	(124,000)
Nonvested stock units, end of period - Number of shares	1,142,000	1,170,000
Stock based compensation, Nonvested shares weighted average grant date fair value
Nonvested stock units - begin of period weighted average grant date fair value	$ 36.46
Granted weighted average grant date fair value	$ 41.24	$ 32.06	$ 34.09
Vested weighted average grant date fair value	$ 41.92
Forfeited weighted average grant date fair value	$ 34.38
Nonvested stock units - end of period weighted average grant date fair value	$ 35.60	$ 36.46
Fair value of vested stock units	$ 11.1	$ 8.8	$ 8.9
2005 and 2013 Long-Term Incentive Plans | Deferred Compensation Stock Units
Stock based compensation, Nonvested shares weighted average grant date fair value
Granted weighted average grant date fair value		$ 31.5	$ 36.34
Fair value of vested stock units		$ 0.1	$ 0.1
Non-Employee Directors' Plan
Shares issued and granted under stock compensation plans
Shares issued	14,200	13,000	7,600

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Equipment Installment Plans

12 Months Ended

Dec. 31, 2014

Disclosure Text Block

Equipment Installment Plans

NOTE 3 EQUIPMENT INSTALLMENT PLANS

TDS offers customers the option to purchase certain devices under equipment installment contracts over a period of up to 24 months. For certain equipment installment plans, after a specified period of time, the customer may have the right to upgrade to a new device and have the remaining unpaid equipment installment contract balance waived, subject to certain conditions, including trading in the original device in good working condition and signing a new equipment installment contract.  TDS values this trade-in right as a guarantee liability.  The guarantee liability is initially measured at fair value and is determined based on assumptions including the probability and timing of the customer upgrading to a new device and the fair value of the device being traded-in at the time of trade-in. As of December 31, 2014, the guarantee liability related to these plans was $57.5 million and is reflected in Customer deposits and deferred revenuesin the Consolidated Balance Sheet.

TDS equipment installment plans do not provide for explicit interest charges. For equipment installment plans with duration of greater than twelve months, TDS imputes interest.

The following table summarizes the unbilled equipment installment plan receivables as of December 31, 2014 and 2013. Such amounts are presented on the Consolidated Balance Sheet as Accounts receivable – customers and agents and Other assets and deferred charges, where applicable.
(Dollars in thousands)	December 31, 2014		December 31, 2013
Short-term portion of unbilled equipment installment plan receivables, gross	$	127,400	$	611
Short-term portion of unbilled deferred interest		(16,365)		-
Short-term portion of unbilled allowance for credit losses		(3,686)		(20)
Short-term portion of unbilled equipment installment plan receivables, net	$	107,349	$	591
Long-term portion of unbilled equipment installment plan receivables, gross	$	89,435	$	-
Long-term portion of unbilled deferred interest		(2,791)		-
Long-term portion of unbilled allowance for credit losses		(6,065)		-
Long-term portion of unbilled equipment installment plan receivables, net	$	80,579	$	-

TDS considers the collectability of the equipment installment plan receivables based on historical payment experience, account aging and other qualitative factors. The credit profiles of TDS customers on equipment installment plans are similar to those of TDS 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.

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Income Taxes, Unrecognized Tax Benefits (Details) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Summary of unrecognized income tax benefits
Unrecognized tax benefits, beginning balance	$ 30,390,000	$ 28,420,000	$ 28,841,000
Additions for tax positions of current year	7,610,000	6,388,000	7,027,000
Additions for tax positions of prior years	883,000	1,858,000	1,673,000
Reduction for tax positions of prior years	(399,000)	(467,000)	(7,000)
Reductions for settlements of tax positions	(312,000)	(1,337,000)	(21,000)
Reductions for lapses in statutes of limitations	(356,000)	(4,472,000)	(9,093,000)
Unrecognized tax benefits, ending balance	37,816,000	30,390,000	28,420,000
Effect of unrecognized tax benefit on income tax expense	$ 24,600,000	$ 19,800,000	$ 18,600,000

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Stock-Based Compensation, TDS Consolidated (Details) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Stock based compensation
Stock-based compensation expense	$ 35,793,000	$ 30,338,000	$ 41,871,000
Income tax benefit	(13,519,000)	(11,459,000)	(15,848,000)
Total stock-based compensation expense, net of income taxes	22,274,000	18,879,000	26,023,000
Unrecognized compensation cost for all stock-based compensation awards	39,000,000
Weighted average period for recognition of unrecognized compensation cost for all stock-based compensation awards	2 years 2 months
Tax benefit from exercise of stock options and other awards	8,600,000
Cost of services and products
Stock based compensation
Stock-based compensation expense	3,288,000	3,208,000	3,308,000
Selling, general and administrative expense
Stock based compensation
Stock-based compensation expense	32,505,000	27,130,000	38,563,000
Long-Term Incentive Plans | Stock Options
Stock based compensation
Stock-based compensation expense	15,802,000	12,973,000	20,884,000
Long-Term Incentive Plans | Restricted Stock Units
Stock based compensation
Stock-based compensation expense	17,968,000	15,535,000	19,025,000
Long-Term Incentive Plans | Deferred Compensation Stock Units
Stock based compensation
Stock-based compensation expense	690,000	550,000	749,000
Non-Employee Directors' Plan
Stock based compensation
Stock-based compensation expense	$ 1,333,000	$ 1,280,000	$ 1,213,000
TDS Parent Company | 2011 and 2004 Long-Term Incentive Plans
Stock-based compensation, overview
Terms of award	Under the TDS Long-Term Incentive Plans, TDS 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.
TDS Parent Company | 2011 and 2004 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 periods up to three years from the date of grant. Stock options outstanding at December 31, 2014 expire between 2015 and 2024. However, vested stock options typically expire 30 days after the effective date of an employee’s termination of employment for reasons other than retirement. Employees who leave at the age of retirement have 90 days (or one year if they satisfy certain requirements) within which to exercise their vested stock options. The exercise price of options equals the market value of TDS common stock on the date of grant.
TDS Parent Company | 2011 and 2004 Long-Term Incentive Plans | Stock Options | Minimum
Stock-based compensation, overview
Stock options expiration date	Apr. 20, 2015
TDS Parent Company | 2011 and 2004 Long-Term Incentive Plans | Stock Options | Maximum
Stock-based compensation, overview
Stock options expiration date	May 16, 2024
TDS Parent Company | 2011 and 2004 Long-Term Incentive Plans | Restricted Stock Units
Stock-based compensation, overview
Terms of award	TDS also grants restricted stock unit awards to key employees. Each outstanding restricted stock unit is convertible into one Common Share Award. The restricted stock unit awards currently outstanding were granted in 2013 and 2014 and will vest in May 2016 and 2017, respectively.
TDS Parent Company | 2011 and 2004 Long-Term Incentive Plans | Deferred Compensation Stock Units
Stock-based compensation, overview
Terms of award	Certain TDS 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 TDS Common Share units. The amount of TDS’ matching contribution depends on the portion of the annual bonus that is deferred. Participants receive a 25% stock unit 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 TDS Common Share units.
TDS Parent Company | Common Shares | 2011 and 2004 Long-Term Incentive Plans
Stock-based compensation, overview
Shares reserved	17,971,000
TDS Parent Company | Common Shares | Non-Employee Directors' Plan
Stock-based compensation, overview
Shares reserved	167,000
TDS Parent Company | Common Shares | Automatic Dividend Reinvestment and Stock Purchase Plans
Stock-based compensation, overview
Shares reserved	1,028,000
TDS Parent Company | Series A Common Shares | Series A Common Share Automatic Dividend Reinvestment Plan
Stock-based compensation, overview
Shares reserved	141,000

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Debt, revolving credit facilities (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014		Dec. 31, 2013	Dec. 31, 2012
Revolving credit
Subordination agreement description	In connection with U.S. Cellular’s revolving credit facility, TDS and U.S. Cellular entered into a subordination agreement dated December 17, 2010 together with the administrative agent for the lenders under U.S. Cellular’s revolving credit agreement. Pursuant to this subordination agreement, (a) any consolidated funded indebtedness from U.S. Cellular to TDS will be unsecured and (b) any (i) consolidated funded indebtedness from U.S. Cellular to TDS (other than “refinancing indebtedness” as defined in the subordination agreement) in excess of $105,000,000, and (ii) refinancing indebtedness in excess of $250,000,000, will be subordinated and made junior in right of payment to the prior payment in full of obligations to the lenders under U.S. Cellular’s revolving credit agreement. As of December 31, 2014, U.S. Cellular had no outstanding consolidated funded indebtedness or refinancing indebtedness that was subordinated to the revolving credit agreement pursuant to the subordination agreement.
Revolving credit facility, terms of agreement	In July 2014, TDS and U.S. Cellular entered into amendments to the revolving credit facilities agreements which increased the Consolidated Leverage Ratio (the ratio of Consolidated Funded Indebtedness to Consolidated Earnings before interest, taxes, depreciation and amortization) that the companies are required to maintain. Beginning July 1, 2014, TDS and U.S. Cellular are required to maintain the Consolidated Leverage Ratio at a level not to exceed 3.75 to 1.00 for the period of the four fiscal quarters most recently ended (this was 3.00 to 1.00 prior to July 1, 2014). The terms of the amendment decrease the maximum permitted Consolidated Leverage Ratio beginning January 1, 2016, with further decreases effective July 1, 2016 and January 1, 2017 (and will return to 3.00 to 1.00 at that time). For the twelve months ended December 31, 2014, the actual Consolidated Leverage Ratio was 2.50 to 1.00. Future changes in TDS’ and U.S. Cellular’s financial condition could negatively impact their ability to meet the financial covenants and requirements in their revolving credit facilities agreements. TDS also has certain other non-material credit facilities from time to time.
TDS Revolving credit facility | TDS Parent Company
Revolving credit
Maximum borrowing capacity	$ 400.0
Letters of credit outstanding	0.6
Amount available for use	399.4
Sample LIBOR rate	0.17%	[1]
Contractual spread	1.75%	[1]
Borrowing rate: One-month London InterBank Offered Rate ("LIBOR") plus contractual spread	1.92%	[1]
Fees incurred as a percent of Maximum borrowing capacity for 2013	0.42%
Fees incurred, amount	1.7		0.9	1.3
Agreement date	Dec. 17, 2010
Maturity date	Dec. 17, 2017
Debt issuance cost, net of accumulated amortization	5.4
TDS Revolving credit facility | TDS Parent Company | Minimum
Revolving credit
Range of commitment fees on amount available for use	0.13%	[2]
TDS Revolving credit facility | TDS Parent Company | Maximum
Revolving credit
Range of commitment fees on amount available for use	0.30%	[2]
U.S. Cellular Revolving credit facility | U.S. Cellular
Revolving credit
Maximum borrowing capacity	300.0
Letters of credit outstanding	17.5
Amount available for use	282.5
Sample LIBOR rate	0.17%	[1]
Contractual spread	1.75%	[1]
Borrowing rate: One-month London InterBank Offered Rate ("LIBOR") plus contractual spread	1.92%	[1]
Fees incurred as a percent of Maximum borrowing capacity for 2013	0.42%
Fees incurred, amount	$ 1.3		$ 0.8	$ 1.1
Agreement date	Dec. 17, 2010
Maturity date	Dec. 17, 2017
U.S. Cellular Revolving credit facility | U.S. Cellular | Minimum
Revolving credit
Range of commitment fees on amount available for use	0.13%	[2]
U.S. Cellular Revolving credit facility | U.S. Cellular | Maximum
Revolving credit
Range of commitment fees on amount available for use	0.30%	[2]

[1] Borrowings under the revolving credit facility bear interest at LIBOR plus a contractual spread based on TDS' or U.S. Cellular’s credit rating or, at TDS' or U.S. Cellular’s option, an alternate “Base Rate” as defined in the revolving credit agreement. TDS and 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 TDS or U.S. Cellular and approved by the lenders). If TDS or U.S. Cellular provides notice of intent to borrow less than three business days in advance of a borrowing, interest on borrowing is at the Base Rate plus the contractual spread.

[2] The revolving credit facility has commitment fees based on the unsecured senior debt ratings assigned to TDS and U.S. Cellular by certain ratings agencies.

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Certain Relationships And Related Transactions

12 Months Ended

Dec. 31, 2014

Disclosure Text Block

Certain Relationships and Related Transactions

NOTE 20 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The following persons are partners of Sidley Austin LLP, the principal law firm of TDS and its subsidiaries: Walter C.D. Carlson, a trustee and beneficiary of a voting trust that controls TDS, the non-executive Chairman of the Board and member of the Board of Directors of TDS and a director of U.S. Cellular, a subsidiary of 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 certain subsidiaries of TDS. Walter C.D. Carlson does not provide legal services to TDS or its subsidiaries. TDS, U.S. Cellular and their subsidiaries incurred legal costs from Sidley Austin LLP of $15.4million in 2014, $17.6 million in 2013 and $13.6 million in 2012.

The Audit Committee of the Board of Directors of TDS 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.

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Commitments and Contingencies, minimum lease obligations (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014		Jan. 31, 2015
Commitments And Contingencies Disclosure
Operating leases	TDS and its subsidiaries have leases for certain plant facilities, office space, retail store sites, cell sites, data centers and data-processing 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
Operating Leases - Future Minimum Rental Payments 2015	$ 155,476	[1]
Operating Leases - Future Minimum Rental Payments 2016	139,346	[1]
Operating Leases - Future Minimum Rental Payments 2017	119,384	[1]
Operating Leases - Future Minimum Rental Payments 2018	102,014	[1]
Operating Leases - Future Minimum Rental Payments 2019	86,580	[1]
Operating Leases - Future Minimum Rental Payments After 2019	798,530	[1]
Operating Leases - Future Minimum Rental Payments Total	1,401,330	[1]
Operating Leases Future Minimum Payments Receivable
Operating Leases - Future Minimum Rental Receipts 2015	54,463
Operating Leases - Future Minimum Rental Receipts 2016	43,918
Operating Leases - Future Minimum Rental Receipts 2017	34,619
Operating Leases - Future Minimum Rental Receipts 2018	24,095
Operating Leases - Future Minimum Rental Receipts 2019	12,038
Operating Leases - Future Minimum Rental Receipts After 2019	8,558
Operating Leases - Future Minimum Rental Receipts Total	177,691
Subsequent event | Tower sale - second closing
Operating Leases Future Minimum Payments Due
Operating Leases - Future Minimum Rental Payments Total			$ 88,400

[1] *Includes $88.4 million of future lease payments associated with leases transferred in January 2015 per the second closing of the tower sale. See Note 6 — Acquisitions, Divestitures and Exchanges for additional information.

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Asset Retirement Obligation (Tables)

12 Months Ended

Dec. 31, 2014

Asset Retirement Obligation [Abstract]

Asset retirement obligations

			U.S.		TDS				TDS
(Dollars in thousands)			Cellular		Telecom		Other		Consolidated
Balance December 31, 2013			$	195,568	$	75,395	$	4,275	$	275,238
	Additional liabilities accrued			2,507		2,400		-		4,907
	Revisions in estimated cash outflows			(2,792)		1,777		23		(992)
	Disposition of assets			(44,403)		(882)		(957)		(46,242)
	Accretion expense			12,534		4,723		249		17,506
	Transferred to Liabilities held for sale			(10,902)		(177)		(306)		(11,385)
Balance December 31, 2014 (1)			$	152,512	$	83,236	$	3,284	$	239,032
Balance December 31, 2012			$	179,607	$	69,969	$	4,034	$	253,610
	Additional liabilities accrued			635		3,667		-		4,302
	Revisions in estimated cash outflows			6,268		(2,562)		-		3,706
	Disposition of assets			(3,534)		(577)		-		(4,111)
	Accretion expense			12,592		4,898		241		17,731
Balance December 31, 2013 (1)			$	195,568	$	75,395	$	4,275	$	275,238
(1)		The total amount of asset retirement obligations related to the Divestiture Transaction and Airadigm Transaction included in Other current liabilities was $9.1 million and $37.7 million as of December 31, 2014 and 2013, respectively.

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Commitments And Contingencies

12 Months Ended

Dec. 31, 2014

Disclosure Text Block

Commitments and Contingencies

NOTE 13 COMMITMENTS AND CONTINGENCIES

Agreements

• On November 25, 2014, U.S. Cellular executed a Master Statement of Work and certain other documents with Amdocs Software Systems Limited (“Amdocs”), effective October 1, 2014, that inter-relate with but rearrange the structure under previous Amdocs Agreements. The agreement provides that U.S. Cellular will now outsource to Amdocs certain support functions for its Billing and Operational Support System (“B/OSS”). Such functions include application support, billing operations and some infrastructure services. The agreement has a term through September 30, 2019, subject to five one-year renewal periods at U.S. Cellular's option. The total estimated amount to be paid to Amdocs with respect to the agreement during the initial five-year term is approximately $110 million (exclusive of travel and expenses and subject to certain potential adjustments).
• During 2013, U.S. Cellular entered into agreements with Apple to purchase certain minimum quantities of Apple iPhone products and fund marketing programs related to the Apple iPhone and iPad products over a three-year period beginning in November 2013. Based on current forecasts, TDS estimates that the remaining contractual commitment as of December 31, 2014under these agreements is approximately $818 million. At this time, TDS expects to meet its contractual commitments with Apple.

Lease Commitments

TDS and its subsidiaries have leases for certain plant facilities, office space, retail store sites, cellsites, data centers and data-processing 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 ofDecember 31,2014, future minimum rental payments required under operating leases and rental receipts expected under operating leases that have noncancellable lease terms in excess of one year were as follows:

	Operating Leases Future Minimum Rental Payments*		Operating Leases Future Minimum Rental Receipts
(Dollars in thousands)
2015	$	155,476	$	54,463
2016		139,346		43,918
2017		119,384		34,619
2018		102,014		24,095
2019		86,580		12,038
Thereafter		798,530		8,558
Total	$	1,401,330	$	177,691
*Includes $88.4 million of future lease payments associated with leases transferred in January 2015 per the second closing of the tower sale. See Note 6 — Acquisitions, Divestitures and Exchanges for additional information.

For 2014, 2013 and 2012, rent expense for noncancellable long-term leases was $177.0 million, $187.4 million and $204.1 million, respectively; and rent expense under cancellable short-term leases was $8.8 million, $12.5 million and $10.4million, respectively.

Indemnifications

TDS enters into agreements in the normal course of business that provide for indemnification of counterparties. The terms of the indemnifications vary by agreement. The events or circumstances that would require TDS to perform under these indemnities are transaction specific; however, these agreements may require TDS to indemnify the counterparty for costs and losses incurred from litigation or claims arising from the underlying transaction. TDS is unable to estimate the maximum potential liability for these types of indemnifications as the amounts are dependent on the outcome of future events, the nature and likelihood of which cannot be determined at this time. Historically, TDS has not made any significant indemnification payments under such agreements.

Legal Proceedings

TDS is involved or may be involved from time to time in legal proceedings before the FCC, other regulatory authorities, and/or various state and federal courts. If TDS believes that a loss arising from such legal proceedings is probable and can be reasonably estimated, an amount is accrued in the financial statements for the estimated loss. If only a range of loss can be determined, the best estimate within that range is accrued; if none of the estimates within that range is better than another, the low end of the range is accrued. The assessment of the expected outcomes of legal proceedings is a highly subjective process that requires judgments about future events. The legal proceedings are reviewed at least quarterly to determine the adequacy of accruals and related financial statement disclosures. The ultimate outcomes of legal proceedings could differ materially from amounts accrued in the financial statements.

TDS has accrued $0.4 million and $0.3 million with respect to legal proceedings and unasserted claims as of December 31, 2014 and 2013, respectively. TDS has not accrued any amount for legal proceedings if it cannot estimate the amount of the possible loss or range of loss. TDS does not believe that the amount of any contingent loss in excess of the amounts accrued would be material.