Investments In Unconsolidated Entities

12 Months Ended

Dec. 31, 2015

Disclosure Text Block

Investments in Unconsolidated Entities

Note 8Investments 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:

December31,		2015		2014
(Dollars in thousands)
Equity method investments:
	Capital contributions, loans, advances and adjustments	$	123,250	$	127,939
	Cumulative share of income		1,468,312		1,323,898
	Cumulative share of distributions		(1,205,497)		(1,145,438)
			386,065		306,399
Cost method investments			15,655		15,330
Total investments in unconsolidated entities		$	401,720	$	321,729

The following tables, which are based on information provided in part by third parties, summarize the combined assets, liabilities and equity, and results of operations of TDS’ equity method investments:

December31,		2015		2014
(Dollars in thousands)
Assets
	Current	$	670,723	$	733,133
	Due from affiliates		88,685		303,322
	Property and other		4,604,312		2,345,562
		$	5,363,720	$	3,382,017
Liabilities and Equity
	Current liabilities	$	810,121	$	407,073
	Deferred credits		242,301		175,516
	Long-term liabilities		157,785		29,342
	Long-term capital lease obligations		1,539		1,722
	Partners’ capital and shareholders’ equity		4,151,974		2,768,364
		$	5,363,720	$	3,382,017

Year Ended December31,		2015		2014		2013
(Dollars in thousands)
Results of Operations
	Revenues	$	6,979,184	$	6,700,266	$	6,239,200
	Operating expenses		5,245,216		5,063,925		4,492,372
	Operating income		1,733,968		1,636,341		1,746,828
	Other income (expense), net		(9,049)		6,741		4,019
	Net income	$	1,724,919	$	1,643,082	$	1,750,847

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 million in the second quarter of 2013.  The gain was recorded in Gain (loss) on investments in the Consolidated Statement of Operations.