US Cellular 2011 Annual Report Download - page 20

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Income tax expense
The effective tax rates on Income before income taxes (‘‘pre-tax income’’) for 2011, 2010 and 2009 were
36.5%, 34.0% and 33.8%, respectively. The following significant discrete and other items impacted
income tax expense for these years:
2011—Includes a tax benefit of $9.9 million resulting from statute of limitations expirations and tax
expense of $6.1 million resulting from corrections of partnership basis.
2010—Includes a tax benefit of $7.9 million resulting from favorable settlements of state income tax
audits.
2009—Includes tax benefits of $7.7 million and $7.2 million resulting from a state tax law change and the
release of state valuation allowances, respectively.
See Note 5—Income Taxes in the Notes to Consolidated Financial Statements for a discussion of income
tax expense and the overall effective tax rate on Income before income taxes.
INFLATION
Management believes that inflation affects U.S. Cellular’s business to no greater or lesser extent than the
general economy.
RECENT ACCOUNTING PRONOUNCEMENTS
In general, recent accounting pronouncements did not have and are not expected to have a significant
effect on U.S. Cellular’s financial condition and results of operations.
See Note 1—Summary of Significant Accounting Policies and Recent Accounting Pronouncements in the
Notes to Consolidated Financial Statements for information on recent accounting pronouncements.
FINANCIAL RESOURCES
U.S. Cellular operates a capital- and marketing-intensive business. U.S. Cellular utilizes cash from its
operating activities, cash proceeds from divestitures, short-term credit facilities and long-term debt
financing to fund its acquisitions (including licenses), construction costs, operating expenses and
Common Share repurchases. Cash flows may fluctuate from quarter to quarter and year to year due to
seasonality, the timing of acquisitions, capital expenditures and other factors. The table below and the
following discussion in this Financial Resources section summarize U.S. Cellular’s cash flow activities in
2011, 2010 and 2009.
2011 2010 2009
(Dollars in thousands)
Cash flows from (used in)
Operating activities(1) ................... $987,862 $ 834,387 $ 871,809
Investing activities(1) .................... (759,603) (777,297) (545,462)
Financing activities ..................... (81,019) (83,166) (196,942)
Net increase in cash and cash equivalents ...... $147,240 $ (26,076) $ 129,405
(1) In preparing its Consolidated Statement of Cash Flows for the year ended December 31,
2011, U.S. Cellular discovered certain errors related to the classification of outstanding
checks with the right of offset and related to the classification of Accounts payable for
Additions to property, plant and equipment as non-cash investing activities for purposes of
preparing the Consolidated Statement of Cash Flows. These errors resulted in the
misstatement of Cash flows from operating activities and Cash flows used in investing
activities for the years ended December 31, 2010 and 2009. The amounts herein have been
revised to reflect the proper amounts. See Note 2—Revision of Prior Period Amounts in the
Notes to Consolidated Financial Statements for additional information.
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