US Cellular 2015 Annual Report Download - page 48

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any cash distributions in 2015 from the LA Partnership as U.S. Cellular was informed by the general partner that, in
connection with the acquisition of a spectrum license covering the LA Partnership’s market in FCC Auction 97, the LA
Partnership would not make a cash distribution in 2015. This spectrum license will enhance the value of U.S. Cellular’s
interest in the LA Partnership. Notwithstanding the lack of a cash distribution in 2015, U.S. Cellular will be obligated to
make tax payments on its share of any taxable income reported by the LA Partnership in 2015 and beyond. The amount
of future cash distributions from the LA Partnership are uncertain, and could be impacted by future spectrum purchases
by the LA Partnership.
Cash Flows from Investing Activities
Cash flows used for investing activities were $737.7 million in 2015. 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 $800.6 million in 2015.
During 2015, a $278.3 million payment was made by Advantage Spectrum L.P. to the FCC for licenses for which it was
the provisional winning bidder. See Note 6 — Acquisitions, Divestitures and Exchanges and 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 were $460.7 million in 2015. In July 2015, U.S. Cellular borrowed $225 million on its
Term Loan. In November 2015, U.S. Cellular issued $300 million of 7.25% Senior Notes due 2064.
2014 Commentary
Cash Flows from Operating Activities
Cash flows from operating activities were $394.8 million in 2014. Working capital factors which significantly decreased
cash flows from operating activities included changes in accounts payable levels as a result of timing differences related
to operating expenses and device purchases. In 2014, increased receivables related to equipment installment plans
decreased cash flows from operating activities.
In December 2014, as part of the Tax Increase Prevention Act of 2014, bonus depreciation was enacted which allowed
TDS to accelerate deductions for depreciation resulting in a federal taxable loss in 2014. Primarily as a result of this
federal income tax carryback, TDS recorded $113.7 million of Income taxes receivable at December 31, 2014. TDS paid
income taxes, net of refunds, of $48.9 million in 2014.
Cash Flows from Investing Activities
Cash flows used for investing activities were $909.7 million in 2014. Cash used for additions to property, plant and
equipment totaled $799.5 million in 2014. Cash paid for acquisitions and licenses in 2014 was $295.3 million which
includes $272.8 million related to Cable acquisitions and $22.9 million related to Licenses. Cash received from
divestitures in 2014 was $187.6 million which includes $91.8 million related to Licenses and $71.1 million related to the
Divestiture Transaction. See Note 6 — Acquisitions, Divestitures and Exchanges in the Notes to Consolidated Financial
Statements for additional information related to these acquisitions and divestitures. TDS realized cash proceeds of
$50.0 million in 2014 related to the maturities of its investments in U.S. Treasury Notes and corporate notes. In 2014,
cash used for investing activities includes 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 were $156.8 million in 2014. In December 2014, U.S. Cellular issued $275 million of
7.25% Senior Notes due 2063.
40
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS