US Cellular 2008 Annual Report Download - page 140

depend on prevailing market conditions, liquidity requirements, contractual restrictions and other factors.
The amounts involved may be material.
Marketable Equity Securities
U.S. Cellular had no investments in marketable equity securities at December 31, 2008. See Note 9—
Marketable Equity Securities in the Notes to Consolidated Financial Statements for a description of
marketable equity securities transactions during 2008 and 2007.
Capital Expenditures
U.S. Cellular’s capital expenditures for 2009 are expected to be approximately $575 million. These
expenditures are expected to be for the following general purposes:
• Expand and enhance U.S. Cellular’s coverage in its service areas;
• Provide additional capacity to accommodate increased network usage by current customers;
• Overlay EVDO technology in certain markets;
• Enhance U.S. Cellular’s retail store network; and
• Develop office systems.
U.S. Cellular plans to finance its capital expenditures program for 2009 using cash on hand, cash flows
from operating activities and short-term debt.
Suppliers
U.S. Cellular depends upon certain key suppliers to provide it with handsets, equipment, services or
content to continue its network build and upgrade and to operate its business. U.S. Cellular does not
have operational or financial control over any of such key suppliers and has limited influence with
respect to the manner in which these key suppliers conduct their businesses. If these key suppliers
experience financial difficulties and are unable to provide equipment, services or content to U.S. Cellular
on a timely basis or cease to provide such equipment, services or content or if such key suppliers
otherwise fail to honor their obligations to U.S. Cellular, U.S. Cellular may be unable to maintain and
upgrade its network or provide services to its customers in a competitive manner, or could suffer other
disruptions to its business. In that event, U.S. Cellular’s business, financial condition or results of
operations could be adversely affected. U.S. Cellular monitors the financial condition of its key suppliers
through its risk management process.
On January 14, 2009, Nortel Networks Corporation (‘‘Nortel’’), a key supplier of network equipment,
business communications systems, and technical support for U.S. Cellular, announced that it, Nortel
Networks Limited and certain of its other Canadian subsidiaries, will seek creditor protection under the
Companies’ Creditors Arrangement Act in Canada. Additionally, certain of Nortel’s U.S. subsidiaries,
including Nortel Networks Inc. and Nortel Networks Capital Corporation, have filed voluntary petitions in
the United States under Chapter 11 (‘‘reorganization’’) of the U.S. Bankruptcy Code, and certain of
Nortel’s other subsidiaries made similar filings in other jurisdictions. In the event Nortel does not succeed
in reorganization, U.S. Cellular believes that it will be able to procure similar network equipment,
business communications systems, and technical support from other suppliers and, therefore, U.S.
Cellular does not believe that Nortel’s reorganization will have a significant impact on its day-to-day
operations. However, if Nortel does not succeed in its reorganization, the following could adversely
impact U.S. Cellular’s future results of operations and cash flows:
• Reduced competition among telecommunications equipment suppliers could increase the future costs
to acquire such equipment;
• Replacement and upgrades of Nortel equipment with equipment from other vendors could be more
costly; and
• Maintenance of Nortel equipment could be more costly.
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