US Cellular 2008 Annual Report Download - page 195

UNITED STATES CELLULAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 18 STOCK-BASED COMPENSATION (Continued)
reserved 125,000 shares for issuance under the 2009 ESPP. U.S. Cellular employees are also eligible to
participate in the TDS Employee Stock Purchase Plan.
Under these plans, the per share cost to participants is 85% of the market value of the U.S. Cellular
Common Shares, TDS Common Shares or TDS Special Common Shares as of the issuance date. Under
SFAS 123(R), the employee stock purchase plans are considered compensatory plans; therefore,
recognition of compensation cost for stock issued under these plans is required. Compensation cost is
measured as the difference between the cost of the shares to plan participants and the market value of
the shares on the date of issuance.
Compensation of Non-Employee Directors—U.S. Cellular issued 700 and 1,150 Common Shares in 2007
and 2006, respectively, under its Non-Employee Director Compensation Plan. No Common Shares were
issued under this plan in 2008.
Stock-Based Compensation Expense
The following table summarizes stock-based compensation expense recognized during 2008, 2007 and
2006:
Year Ended December 31, 2008 2007 2006
(Dollars in thousands)
Stock option awards ....................................... $ 7,331 $ 7,276 $12,821
Restricted stock unit awards ................................. 7,213 7,077 7,953
Deferred compensation matching stock unit awards ................ 350 155 (830)
Awards under employee stock purchase plan ..................... 228 124 39
Awards under non-employee director compensation plan ............ — 49 70
Total stock-based compensation, before income taxes ............... 15,122 14,681 20,053
Income tax benefit ........................................ (5,585) (5,345) (7,834)
Total stock-based compensation expense, net of income taxes ........ $ 9,537 $ 9,336 $12,219
In 2008, 2007 and 2006, stock-based compensation expense of $1.5 million, $1.2 million and
$1.0 million, respectively, were recorded in System operations expense and $13.6 million, $13.5 million
and $19.1 million, respectively, were recorded in Selling, general and administrative expense in the
Consolidated Statement of Operations.
At December 31, 2008, unrecognized compensation cost for all U.S. Cellular stock-based compensation
awards was $16.4 million. The unrecognized compensation cost for stock-based compensation awards at
December 31, 2008 is expected to be recognized over a weighted average period of 1.6 years.
U.S. Cellular’s tax benefits from the exercise of stock options and other awards totaled $6.7 million in
2008.
NOTE 19 SUPPLEMENTAL CASH FLOWS
Following are supplemental cash flow disclosures regarding interest paid and income taxes paid and
certain noncash transactions:
Year Ended December 31, 2008 2007 2006
(Dollars in thousands)
Interest paid .................................... $ 78,223 $ 84,095 $ 91,677
Income taxes paid ............................... $116,525 $212,578 $147,743
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