US Cellular 2008 Annual Report Download - page 183

UNITED STATES CELLULAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 10 INVESTMENT IN UNCONSOLIDATED ENTITIES (Continued)
Year Ended December 31, 2008 2007 2006
(Dollars in thousands)
Results of Operations
Revenues ................................ $4,764,000 $4,498,000 $4,193,000
Operating expenses ......................... 3,358,000 3,076,000 2,903,000
Operating income .......................... 1,406,000 1,422,000 1,290,000
Other income, net .......................... 27,000 32,000 54,000
Net income ............................... $1,433,000 $1,454,000 $1,344,000
NOTE 11 PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment in service and under construction, and related accumulated depreciation,
as of December 31, 2008 and 2007 were as follows:
Useful Lives
December 31, (Years) 2008 2007
(Dollars in thousands)
Land .................................... N/A $ 26,045 $ 25,359
Buildings ................................. 20 275,307 254,650
Leasehold improvements ...................... 1-30 905,936 824,206
Cell site equipment .......................... 6-25 2,567,271 2,374,769
Switching equipment ......................... 1-8 877,664 803,908
Office furniture and equipment .................. 3-5 527,592 441,762
Other operating equipment .................... 5-25 302,640 271,941
System development ......................... 3-7 259,860 250,350
Work in process ............................ N/A 142,068 162,170
5,884,383 5,409,115
Accumulated depreciation ..................... (3,264,007) (2,814,019)
$ 2,620,376 $ 2,595,096
Depreciation expense totaled $550.1 million, $543.1 million and $497.1 million in 2008, 2007 and 2006,
respectively. Amortization expense on system development costs totaled $11.2 million, $15.9 million and
$27.9 million in 2008, 2007 and 2006, respectively.
In 2008, 2007 and 2006, Loss on asset disposals, net included charges of $23.4 million, $19.4 million
and $19.6 million, respectively, related to disposals of assets, trade-ins of older assets for replacement
assets and other retirements of assets from service. In 2007, U.S. Cellular conducted a physical inventory
of its significant cell site and switching assets. As a result, Loss on asset disposals, net also included a
charge of $14.6 million in 2007 reflecting the results of the physical inventory and related valuation and
reconciliation.
NOTE 12 ASSET RETIREMENT OBLIGATIONS
U.S. Cellular is subject to asset retirement obligations associated with its leased cell sites, switching
office sites, retail store sites and office locations. Asset retirement obligations generally include
obligations to restore leased land and retail store and office premises to their pre-lease conditions. These
obligations are included in Other deferred liabilities and credits in the Consolidated Balance Sheet.
During the third quarters of 2008 and 2007, U.S. Cellular performed its annual review of the assumptions
and estimated costs related to its asset retirement obligations. The results of the reviews (identified as
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