Revenue Recognition (Tables)

6 Months Ended

Jun. 30, 2018

Revenue from Contract with Customer [Abstract]

Adoption impact of ASU 2014-09 and ASU 2017-15 on financial statements

The line items impacted by the adoption of ASU 2014-09 and ASU 2017-05 on the Consolidated Statement of Operations, Consolidated Statement of Cash Flows and the Consolidated Balance Sheet are presented below.

Consolidated Statement of Operations

	Results under prior accounting standards

Three Months Ended June 30, 2018			Adjustment		As reported
(Dollars and shares in millions, except per share amounts)
Operating revenues
Service	$	1,022	$	(29)	$	993
Equipment and product sales		241		21		262
Total operating revenues		1,263		(8)		1,255
Cost of equipment and products		268		(2)		266
Selling, general and administrative		413		4		417
(Gain) loss on license sales and exchanges, net		(11)		–		(11)
Total operating expenses		1,192		2		1,194
Operating income (loss)		71		(10)		61
Income (loss) before income taxes		75		(10)		65
Income tax expense (benefit)		23		(2)		21
Net income (loss)		52		(8)		44
Less: Net income attributable to noncontrolling interests, net of tax		12		(1)		11
Net income (loss) attributable to TDS shareholders		39		(6)		33
Net income (loss) available to TDS common shareholders		39		(6)		33
Basic earnings (loss) per share available to TDS common shareholders		0.35		(0.05)		0.30
Diluted earnings (loss) per share available to TDS common shareholders		0.35		(0.06)		0.29

Numbers may not foot due to rounding.

	Results under prior accounting standards		Adjustment		As reported
Six Months Ended June 30, 2018	Results under prior accounting standards		Adjustment		As reported
(Dollars and shares in millions, except per share amounts)
Operating revenues
Service	$	2,029	$	(59)	$	1,970
Equipment and product sales		468		42		510
Total operating revenues		2,497		(17)		2,480
Cost of equipment and products		517		(5)		512
Selling, general and administrative		809		4		813
(Gain) loss on license sales and exchanges, net		(16)		(1)		(17)
Total operating expenses		2,341		(2)		2,339
Operating income (loss)		157		(16)		141
Income (loss) before income taxes		162		(16)		146
Income tax expense (benefit)		49		(4)		45
Net income (loss)		112		(11)		101
Less: Net income attributable to noncontrolling interests, net of tax		31		(2)		29
Net income (loss) attributable to TDS shareholders		81		(9)		72
Net income (loss) available to TDS common shareholders		81		(9)		72
Basic earnings (loss) per share available to TDS common shareholders		0.73		(0.08)		0.65
Diluted earnings (loss) per share available to TDS common shareholders	$	0.72	$	(0.09)	$	0.63

Numbers may not foot due to rounding.

Consolidated Balance Sheet

	Results under prior accounting standards
			Adjustment		As reported
As of June 30, 2018			Adjustment		As reported
(Dollars in millions)
Accounts receivable
Customers and agents, less allowances	$	830	$	56	$	886
Other, less allowances		113		(12)		101
Prepaid expenses		122		(19)		103
Other current assets		26		17		43
Total current assets		2,119		41		2,160
Licenses		2,239		1		2,240
Investments in unconsolidated entities		462		15		477
Other assets and deferred charges		414		172		586
Total assets		9,268		230		9,498
Customer deposits and deferred revenues		183		(18)		165
Accrued taxes		55		(1)		54
Other current liabilities		94		4		98
Total current liabilities		745		(16)		729
Deferred income tax liability, net		580		56		636
Other deferred liabilities and credits		515		8		523
Retained earnings		2,539		153		2,692
Total TDS shareholders' equity		4,331		153		4,484
Noncontrolling interests		659		29		688
Total equity		4,991		181		5,172
Total liabilities and equity		9,268		230		9,498

Numbers may not foot due to rounding.

Disaggregation of Revenues

Disaggregation of Revenue

In the following table, revenue is disaggregated by type of service and timing of revenue recognition. Service revenues are recognized over time and Equipment sales are point in time.

				TDS Telecom
Three Months Ended June 30, 2018		U.S. Cellular		Wireline		Cable		TDS Telecom Total		Corporate, Eliminations and Other		Total
(Dollars in millions)
Revenues from contracts with customers:
	Type of service:
	Retail service	$	652	$	–	$	–	$	–	$	–	$	652
	Inbound roaming		39		–		–		–		–		39
	Residential		–		80		47		127		–		127
	Commercial		–		46		10		57		–		57
	Wholesale		–		46		–		46		–		46
	Other service		33		–		–		–		18		51
	Service revenues from contracts with customers		724		173		57		229		18		971
	Equipment and product sales		233		–		–		1		28		262
	Total revenues from contracts with customers 1	$	957	$	173	$	57	$	230	$	46	$	1,233

Numbers may not foot due to rounding.

1	These amounts do not include revenues outside the scope of ASU 2014-09; therefore, revenue line items in this table will not agree to amounts presented in the Consolidated Statement of Operations.

				TDS Telecom
Six Months Ended June 30, 2018		U.S. Cellular		Wireline		Cable		TDS Telecom Total		Corporate, Eliminations and Other		Total
(Dollars in millions)
Revenue from contracts with customers:
	Type of service:
	Retail service	$	1,301	$	–	$	–	$	–	$	–	$	1,301
	Inbound roaming		66		–		–		–		–		66
	Residential		–		160		92		253		–		253
	Commercial		–		94		20		114		–		114
	Wholesale		–		93		–		93		–		93
	Other service		65		–		–		(1)		34		98
	Service revenues from contracts with customers		1,432		348		112		459		34		1,925
	Equipment and product sales		450		1		–		1		59		510
	Total revenues from contracts with customers 1	$	1,882	$	349	$	112	$	460	$	93	$	2,435

Numbers may not foot due to rounding.

1	These amounts do not include revenues outside the scope of ASU 2014-09; therefore, revenue line items in this table will not agree to amounts presented in the Consolidated Statement of Operations.

Contract with Customer, Assets and Liabilities

The accounts receivable balance related to amounts billed and not paid on contracts with customers, net of allowances, is shown in the table below. Bad debts expense recognized for the three and six months ended June 30, 2018, related to receivables was $23 million and $43 million, respectively.


		June 30, 2018
(Dollars in millions)
Accounts receivable
Customer and agents		$	882
Other			78
Total 1		$	960

1	These amounts do not include accounts receivable related to revenues outside the scope of ASU 2014-09; therefore, accounts receivable line items presented in this table will not agree to amounts presented in the Consolidated Balance Sheet.

The following table provides a rollforward of contract assets from contracts with customers, which are recorded in Other current assets and Other assets and deferred charges in the Consolidated Balance Sheet.

	Contract Assets
(Dollars in millions)
Balance at December 31, 2017	$	–
Change in accounting policy		28
Contract additions		14
Terminated contracts		(1)
Revenue recognized		(14)
Balance at June 30, 2018	$	27

The following table provides a rollforward of contract liabilities from contracts with customers, which are recorded in Customer deposits and deferred revenues and Other deferred liabilities and credits in the Consolidated Balance Sheet.

		Contract Liabilities
(Dollars in millions)
Balance at December 31, 2017		$	–
Change in accounting policy - Deferred revenues reclassification 1			209
Change in accounting policy - Retained earnings impact			(22)
Contract additions			85
Revenue recognized			(107)
Balance at June 30, 2018		$	165

1	This amount represents TDS' obligation to transfer goods or services to customers for which it had received payment and classified as deferred revenue at December 31, 2017.

Remaining Performance Obligations

Transaction price allocated to the remaining performance obligations

The following table includes estimated service revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period. The estimates represent service revenue to be recognized when services are delivered to customers pursuant to service plan contracts. These estimates are based on contracts in place as of June 30, 2018, and may vary from actual results due to future contract modifications. As a practical expedient, revenue related to contracts of less than one year, generally contracts with month-to-month customers, are excluded from these estimates.

		Service Revenue
(Dollars in millions)
Remainder of 2018		$	285
2019			200
Thereafter			93
	Total	$	578

Contract Cost Assets

Capitalized commission fees and fulfillment costs are amortized based on the transfer of the goods or services to which the assets relate, typically the contract term which ranges from thirteen months to five years. Contract cost asset balances, which are recorded in Other assets and deferred charges in the Consolidated Balance Sheet, were as follows:

	June 30, 2018
(Dollars in millions)
Costs to obtain contracts
Sales commissions	$	149
Fulfillment costs
Installation costs		10
Total contract cost assets	$	159