US Cellular 2008 Annual Report Download - page 181

UNITED STATES CELLULAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 7 LICENSES AND GOODWILL (Continued)
During 2007, U.S. Cellular recognized a $2.1 million impairment loss as a result of its annual impairment
assessment in the second quarter of 2007. In addition, U.S. Cellular recognized an impairment of
licenses of $20.8 million in the fourth quarter of 2007 in conjunction with an exchange of licenses with
Sprint Nextel. See Note 6—Acquisitions, Divestitures and Exchanges for more information related to the
Sprint Nextel exchange.
NOTE 8 CUSTOMER LISTS
Customer lists, which are intangible assets resulting from acquisitions of wireless markets, are amortized
based on estimated customer retention periods reflecting historical experience. Amortization expense is
determined using the double-declining balance method in the first year, switching to the straight-line
method over the remainder of the estimated retention period. U.S. Cellular reviews its customer lists
periodically to ensure that they are being amortized over periods which represent the actual retention
periods for the acquired customers.
The changes in the customer lists during 2008 and 2007 were as follows:
Year Ended December 31, 2008 2007
(Dollars in thousands)
Balance, beginning of period ........................... $15,375 $ 26,196
Acquisitions ...................................... 1,045 1,560
Impairment ...................................... — (1,947)
Amortization ...................................... (7,484) (10,434)
Balance, end of period ............................... $ 8,936 $ 15,375
In 2007, it was determined that the carrying value of certain customer list balances exceeded their
estimated fair values and an impairment loss of $1.9 million was recorded. The loss was included in Loss
on impairment of intangible assets in the Consolidated Statement of Operations. Fair values were
determined based upon a present value analysis of expected future cash flows and customer churn
rates.
Based on the Customer lists balance as of December 31, 2008, amortization expense for the years
2009-2013 is expected to be $4.9 million, $3.3 million, $0.4 million, $0.2 million and $0.1 million,
respectively.
NOTE 9 MARKETABLE EQUITY SECURITIES
Information regarding U.S. Cellular’s marketable equity securities and unrealized gains on marketable
equity securities is summarized below:
Year Ended December 31, 2008 2007
(Dollars in thousands)
Rural Cellular Corporation—0 and 370,882 Common Shares,
respectively ......................................... $— $16,352
Accounting cost basis ................................... — (334)
Gross unrealized holding gains ............................. — 16,018
Deferred income tax liability ............................... — (5,884)
Net unrealized holding gains ............................... $— $10,134
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