US Cellular 2008 Annual Report Download - page 142

Off-Balance Sheet Arrangements
U.S. Cellular has no transactions, agreements or other contractual arrangements with unconsolidated
entities involving ‘‘off-balance sheet arrangements,’’ as defined by SEC rules, that have or are reasonably
likely to have a material current or future effect on its financial condition, changes in financial condition,
revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
Accounts Receivable and Allowance for Doubtful Accounts
U.S. Cellular’s accounts receivable consist primarily of amounts owed by customers pursuant to service
contracts and for equipment sales, by agents for equipment sales, by other wireless carriers whose
customers have used U.S. Cellular’s wireless systems for roaming and by unaffiliated third-party
partnerships or corporations pursuant to equity distribution declarations.
The allowance for doubtful accounts is the best estimate of the amount of probable credit losses related
to existing accounts receivable. The allowance is estimated based on historical experience and other
factors that could affect collectability. Accounts receivable balances are reviewed on either an aggregate
or individual basis for collectability depending on the type of receivable. When it is probable that an
account balance will not be collected, the account balance is charged against the allowance for doubtful
accounts. U.S. Cellular’s experience related to credit losses did not appear to have been affected to any
significant degree by recent economic conditions and events as of December 31, 2008.
Insurance
U.S. Cellular has several commercial property and casualty insurance policies with a variety of subsidiary
companies of American International Group, Inc. (‘‘AIG’’). These companies operate under the insurance
regulations of various states, including New York, Pennsylvania and Delaware. U.S. Cellular has inquired
into the ability of these AIG companies to meet their obligations in the event of a claim against these
policies and has received assurance from AIG and U.S. Cellular’s insurance brokers that the companies
remain able to meet these obligations. State insurance regulators and the rating agencies have issued
press releases indicating the same. U.S. Cellular did not have any significant property and casualty
claims outstanding with these companies as of December 31, 2008. U.S. Cellular continues to monitor
the financial condition of other insurance providers.
APPLICATION OF CRITICAL ACCOUNTING POLICIES AND ESTIMATES
U.S. Cellular prepares its consolidated financial statements in accordance with accounting principles
generally accepted in the United States of America (‘‘GAAP’’). U.S. Cellular’s significant accounting
policies are discussed in detail in Note 1—Summary of Significant Accounting Policies in the Notes to
Consolidated Financial Statements.
The preparation of financial statements in accordance with GAAP requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of
contingent assets and liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Management bases its estimates on historical
experience and on various other assumptions and information that are believed to be reasonable under
the circumstances, the results of which form the basis for making judgments about the carrying values of
assets and liabilities. Actual results may differ from estimates under different assumptions or conditions.
Management believes the following critical accounting estimates reflect its most significant judgments
and estimates used in the preparation of U.S. Cellular’s consolidated financial statements. Management
has discussed the development and selection of each of the following accounting policies and estimates
and disclosures with the audit committee of U.S. Cellular’s Board of Directors.
There were no material changes to U.S. Cellular’s significant accounting policies or application of critical
accounting policies during 2008, except the adoption of Financial Accounting Standards Board (‘‘FASB’’)
Statement of Financial Accounting Standards (‘‘SFAS’’) No. 157, Fair Value Measurements (‘‘SFAS 157’’).
See Note 1—Summary of Significant Accounting Policies in the Notes to Consolidated Financial
Statements.
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