US Cellular 2015 Annual Report Download - page 104

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 (‘‘net put value’’), was $1.1 million and $1.2 million at December 31, 2015
and 2014, 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.
During 2015, TDS recorded out-of-period adjustments attributable to 2013 and 2014, related to an agreement with King
Street Wireless. TDS has determined that these adjustments were not material to the prior quarterly or annual periods,
and also were not material to the full year 2015 results. As a result of these out-of-period adjustments, Net income
decreased by $2.8 million and Net income attributable to TDS shareholders decreased by $3.3 million in 2015.
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 2015, 2014 and 2013:
Year Ended December 31, 2015 2014 2013
(Dollars in thousands)
Net income (loss) attributable to TDS shareholders ............... $ 219,037 $ (136,355) $ 141,927
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 ...................... (14,785) (12,420) (14,135)
Change in TDS’ Capital in excess of par value from U.S. Cellular’s
repurchase of U.S. Cellular shares ..................... 1,325 1,296 3,370
Change in TDS’ Capital in excess of par value from common control
transaction ................................... –7,484 –
Purchase of ownership in subsidiaries from noncontrolling interests . . 240 (1,034) (123)
Net transfers (to) from noncontrolling interests ............... (13,220) (4,674) (10,888)
Change from net income (loss) attributable to TDS shareholders and
transfers (to) from noncontrolling interests ................. $ 205,817 $ (141,029) $ 131,039
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, 2015, net of estimated liquidation
costs, is $15.7 million. This amount excludes redemption amounts recorded in Noncontrolling interests with redemption
features in the Consolidated Balance Sheet. The estimate of settlement value was based on certain factors and
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, 2015 was $4.2 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.
96
TELEPHONE AND DATA SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS