US Cellular 2015 Annual Report Download - page 88

assets in certain markets in Wisconsin, Iowa, Minnesota and Michigan, to U.S. Cellular for $91.5 million in cash (the
‘‘Airadigm Transaction’’). 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 of $15.2 million.
ᔢIn 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.
ᔢIn 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.
ᔢIn 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.
ᔢIn 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.
ᔢIn August 2013, TDS Telecom acquired substantially all of the assets of Baja Broadband, LLC (‘‘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.
TDS’ acquisitions in 2015 and 2014 and the allocation of the purchase price for these acquisitions were as follows:
Allocation of Purchase Price
Intangible
Purchase Franchise Assets Subject Net Tangible
Price1Goodwill2Licenses Rights to Amortization3Assets/(Liabilities)
(Dollars in thousands)
2015
U.S. Cellular licenses4...... $ 345,807 $ – $ 345,807 $ – $ – $ –
Total ............... $ 345,807 $ – $ 345,807 $ – $ – $ –
2014
U.S. Cellular licenses ....... $ 41,707 $ – $ 41,707 $ – $ – $ –
TDS Telecom cable business . . 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
1Cash 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.
2The entire amount of Goodwill acquired in 2014 was amortizable for income tax purposes.
3In 2014, at the date of acquisition, the weighted average amortization period for Intangible Assets Subject to Amortization acquired was 4.6 years for
TDS Telecom’s cable business.
4Includes purchases totaling $338.3 million made by Advantage Spectrum from the FCC for licenses in Auction 97. These licenses have not yet been
granted by the FCC.
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TELEPHONE AND DATA SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS