US Cellular 2015 Annual Report Download - page 50

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Net deferred income tax asset
Net deferred income tax asset decreased $107.7 million as a result of the early adoption of ASU 2015-17 as of
December 31, 2015. The previously identified Net current deferred tax asset is now grouped with non-current deferred
income tax liability in accordance with ASU 2015-17. See Note 4 — Income Taxes in the Notes to Consolidated Financial
Statements for more information on ASU 2015-17.
Assets held for sale
Assets held for sale decreased $103.3 million due the closing of the Tower Sale ($38.4 million), two license exchanges
($56.8 million), and the sale of certain ILEC markets ($8.2 million). No assets were held for sale as of December 31,
2015. For information on the Tower Sale, see Note 6 — Acquisitions, Divestitures and Exchanges in the Notes to
Consolidated Financial Statements.
Licenses
Licenses increased $390.8 million due primarily to an aggregate winning bid of $338.3 million in FCC Auction 97 by
Advantage Spectrum and other license purchases and exchanges resulting in a net increase of $51.0 million. Auction 97
licenses won by Advantage Spectrum have not yet been granted. See Note 6 — Acquisitions, Divestitures and
Exchanges in the Notes to Consolidated Financial Statements for more information about these transactions.
Long-term debt, net
Long-term debt, net increased $498.8 million due primarily to U.S. Cellular’s $300 million 7.25% Senior Notes issued in
November 2015 and $225 million Term Loan draw in July 2015. See Note 11 — Debt for additional information.
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
Licenses, Goodwill 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 Licenses, Goodwill and Franchise rights as of November 1 of each year or more
frequently if triggering events are present. 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 Licenses,
Goodwill and Franchise rights activity in 2015 and 2014.
Wireless Licenses – U.S. Cellular
Prior to the fourth quarter of 2015, U.S. Cellular separated its FCC licenses into eleven units of accounting based on
geographic service areas. The eleven units of accounting consisted of four geographic units of accounting for developed
operating market licenses (‘‘built licenses’’) and seven geographic non-operating market licenses (‘‘unbuilt licenses’’). As
part of the current year annual impairment evaluation, U.S. Cellular evaluated the aggregation criteria based on how
such licenses are deployed and provide value in U.S. Cellular’s operations, and current industry and market factors. It
was determined that the built licenses should be aggregated into one unit of accounting. The unbuilt licenses continued
to be separated into seven geographic units of accounting.
As of November 1, 2015, U.S. Cellular performed a qualitative impairment assessment to determine whether it was more
likely than not that the fair value of the licenses exceeded their carrying value. Given the change in the reporting units for
built licenses, the qualitative assessment was performed for the following units of accounting: historical four units of
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS