US Cellular 2008 Annual Report Download - page 180

UNITED STATES CELLULAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 6 ACQUISITIONS, DIVESTITURES AND EXCHANGES (Continued)
In aggregate, the 2006 acquisitions, divestitures and exchanges increased Licenses by $132.7 million,
Goodwill by $4.1 million and Customer lists by $2.0 million.
Unaudited pro forma financial information related to U.S. Cellular’s 2008 acquisitions has not been
presented because the financial statement impact of these acquisitions, individually and in the aggregate,
was not material to U.S. Cellular’s consolidated results of operations for 2008.
NOTE 7 LICENSES AND GOODWILL
Changes in U.S. Cellular’s licenses and goodwill are presented below. See Note 6—Acquisitions,
Divestitures and Exchanges for information regarding transactions which affected licenses and goodwill
during the periods.
Year Ended December 31, 2008 2007
(Dollars in thousands)
Licenses
Balance, beginning of year ......................... $1,482,446 $1,494,327
Acquisitions .................................. 337,622 11,096
Impairments .................................. (386,653) (22,977)
Balance, end of year ............................. $1,433,415 $1,482,446
Year Ended December 31, 2008 2007
(Dollars in thousands)
Goodwill
Balance, beginning of year ........................... $491,316 $485,452
Acquisitions ..................................... 2,963 5,864
Balance, end of year ................................ $494,279 $491,316
U.S. Cellular performs the required annual impairment assessment of its licenses and goodwill in the
second quarter of the year. U.S. Cellular did not recognize an impairment of licenses or goodwill as a
result of its annual impairment tests in the second quarter of 2008. As a result of the further deterioration
in the credit and financial markets and the accelerated decline in the overall economy in the fourth
quarter of 2008, U.S. Cellular performed another impairment assessment of licenses and goodwill as of
December 31, 2008. Such impairment assessment considered the recent economic events, and resulted
in the application of a higher discount rate when projecting future cash flows and lower than previously
projected earnings in the wireless industry.
The following were the results of such impairment tests at December 31, 2008:
• The estimated fair value of the U.S. Cellular reporting units exceeded their corresponding carrying
values and, accordingly, goodwill within these reporting units was not deemed to be impaired.
• The estimated fair value of certain licenses was less than their corresponding carrying values and, as a
result, an impairment loss of $386.7 million was recognized. Of this amount, $330.6 million relates to
licenses in developed operating markets, and $56.1 million relates to licenses that are not being
utilized.
See Note 1—Summary of Significant Accounting Policies for additional information on the methodology
used to evaluate licenses and goodwill.
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