USM » Topics » Property, Plant and Equipment

This excerpt taken from the USM DEF 14A filed Apr 15, 2009.

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:

December 31,
  Useful Lives
(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.

This excerpt taken from the USM ARS filed Apr 15, 2009.

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:

December 31,
  Useful Lives
(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.

These excerpts taken from the USM 10-K filed Feb 26, 2009.

Property, Plant and Equipment

U.S. Cellular provides for depreciation on its property, plant and equipment using the straight-line method over the estimated useful lives of the assets. U.S. Cellular depreciates its leasehold improvement assets associated with leased properties over periods ranging from one to thirty years, which approximates the shorter of the assets' economic lives or the specific lease terms. Annually, U.S. Cellular reviews its property, plant and equipment to assess whether the estimated useful lives are appropriate. The estimated useful lives of property, plant and equipment is a critical accounting estimate because changing the lives of assets can result in larger or smaller charges for depreciation expense. Factors used in determining useful lives include technology changes, regulatory requirements, obsolescence and type of use. U.S. Cellular did not materially change the useful lives of its property, plant and equipment in 2008, 2007 or 2006.

Expenditures that enhance the productive capacity of assets in service or extend their useful lives are capitalized and depreciated. Expenditures for maintenance and repairs of assets in service are charged to System operations expense or Selling, general and administrative expense, as applicable.

U.S. Cellular reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the assets might be impaired. The tangible asset impairment test is a two-step process. The first step compares the carrying value of the assets with the estimated undiscounted cash flows over the remaining asset life. If the carrying value of the assets is greater than the undiscounted cash flows, the second step of the test is performed to measure the amount of impairment loss. The second step compares the carrying value of the asset to its estimated fair value. If the carrying value exceeds the estimated fair value (less cost to sell), an impairment loss is recognized for the difference.

Quoted market prices in active markets are the best evidence of fair value of tangible long-lived assets and are used when available. If quoted market prices are not available, the estimate of fair value is based on the best information available, including prices for similar assets and the use of other valuation techniques. A present value analysis of cash flow scenarios is often the best available valuation technique. The use of this technique involves assumptions by management about factors that are highly uncertain including future cash flows, the appropriate discount rate, and other inputs. Different assumptions for these inputs or the use of different valuation methodologies could create materially different results.

There was no impairment of long-lived assets in 2008, 2007 or 2006.

23


Property, Plant and Equipment

U.S. Cellular's Property, plant and equipment is stated at the original cost of construction or purchase including capitalized costs of certain taxes, payroll-related expenses, interest and estimated costs to remove the assets.

Expenditures that enhance the productive capacity of assets in service or extend their useful lives are capitalized and depreciated. Expenditures for maintenance and repairs of assets in service are charged to System operations expense or Selling, general and administrative expense, as applicable. Retirements and disposals of assets are recorded by removing the original cost of the asset (along with the related accumulated depreciation) from plant in service and charging it, together with removal cost less any salvage realized, to Loss on asset disposals, net.

42



UNITED STATES CELLULAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Costs of developing new information systems are capitalized in accordance with Statement of Position 98-1, Accounting for the Cost of Computer Software Developed or Obtained for Internal Use ("SOP 98-1"), and amortized over their expected economic useful lives.

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:

December 31,
  Useful Lives
(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.

Property, Plant and Equipment—Property, plant and equipment primarily represents costs incurred to construct and expand capacity and network coverage on Mobile Telephone Switching Offices and cell sites. The cost of property, plant and equipment is depreciated over its estimated useful life using the straight-line method of accounting. Leasehold improvements are amortized over the shorter of their estimated useful lives or the term of the related lease. Major improvements to existing plant and equipment are capitalized. Routine maintenance and repairs that do not extend the life of the plant and equipment are charged to expense as incurred.

 

Upon the sale or retirement of property, plant and equipment, the cost and related accumulated depreciation or amortization is eliminated from the accounts and any related gain or loss is reflected in the Statements of Operations.

 

Network engineering costs incurred during the construction phase of the Partnership’s network and real estate properties under development are capitalized as part of property, plant and equipment and recorded as construction-in-progress until the projects are completed and placed into service.

 

Property, Plant and Equipment—Property,
plant and equipment primarily represents costs incurred to construct and expand
capacity and network coverage on Mobile Telephone Switching Offices and cell
sites. The cost of property, plant and equipment is depreciated over its
estimated useful life using the straight-line method of accounting. Leasehold
improvements are amortized over the shorter of their estimated useful lives or
the term of the related lease. Major improvements to existing plant and
equipment are capitalized. Routine maintenance and repairs that do not extend
the life of the plant and equipment are charged to expense as incurred.



 



Upon the
sale or retirement of property, plant and equipment, the cost and related
accumulated depreciation or amortization is eliminated from the accounts and
any related gain or loss is reflected in the Statements of Operations.



 



Network
engineering costs incurred during the construction phase of the Partnership’s
network and real estate properties under development are capitalized as part of
property, plant and equipment and recorded as
construction-in-progress until the projects are completed
and placed into service.



 



Property, Plant and Equipment



U.S. Cellular provides for depreciation on its property, plant and equipment using the straight-line method over the estimated
useful lives of the assets. U.S. Cellular depreciates its leasehold improvement assets associated with leased properties over periods ranging from one to thirty years, which approximates the
shorter of the assets' economic lives or the specific lease terms. Annually, U.S. Cellular reviews its property, plant and equipment to assess whether the estimated useful lives are
appropriate. The estimated useful lives of property, plant and equipment is a critical accounting estimate because changing the lives of assets can result in larger or smaller charges for depreciation
expense. Factors used in determining useful lives include technology changes, regulatory requirements, obsolescence and type of use. U.S. Cellular did not materially change the useful lives of
its property, plant and equipment in 2008, 2007 or 2006.



Expenditures
that enhance the productive capacity of assets in service or extend their useful lives are capitalized and depreciated. Expenditures for maintenance and repairs of assets in service are
charged to System operations expense or Selling, general and administrative expense, as applicable.



U.S. Cellular
reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the assets might be impaired. The tangible asset impairment test is
a two-step process. The first step compares the carrying value of the assets with the estimated undiscounted cash flows over the remaining asset life. If the carrying value of the assets
is greater than the undiscounted cash flows, the second step of the test is performed to measure the amount of impairment loss. The second step compares the carrying value of the asset to its
estimated fair value. If the carrying value exceeds the estimated fair value (less cost to sell), an impairment loss is recognized for the difference.



Quoted
market prices in active markets are the best evidence of fair value of tangible long-lived assets and are used when available. If quoted market prices are not available, the
estimate of fair value is based on the best information available, including prices for similar assets and the use of other valuation techniques. A present value analysis of cash flow scenarios is
often the best available valuation technique. The use of this technique involves assumptions by management
about factors that are highly uncertain including future cash flows, the appropriate discount rate, and other inputs. Different assumptions for these inputs or the use of different valuation
methodologies could create materially different results.



There
was no impairment of long-lived assets in 2008, 2007 or 2006.



23









Property, Plant and Equipment



U.S. Cellular's Property, plant and equipment is stated at the original cost of construction or purchase including capitalized costs of certain
taxes, payroll-related expenses, interest and estimated costs to remove the assets.



Expenditures
that enhance the productive capacity of assets in service or extend their useful lives are capitalized and depreciated. Expenditures for maintenance and repairs of assets in service are
charged to System operations expense or Selling, general and administrative expense, as applicable. Retirements and disposals of assets are recorded by removing the original cost of the asset (along
with the related accumulated depreciation) from plant in service and charging it, together with removal cost less any salvage realized, to Loss on asset disposals, net.



42










UNITED STATES CELLULAR CORPORATION



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)




NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)



Costs
of developing new information systems are capitalized in accordance with Statement of Position 98-1,
Accounting for the Cost of Computer Software Developed or
Obtained for Internal Use
("SOP 98-1"), and amortized over their expected economic useful lives.



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:







































































































































































































































December 31,



 Useful Lives

(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.



This excerpt taken from the USM DEF 14A filed Apr 15, 2008.

NOTE 11    PROPERTY, PLANT AND EQUIPMENT

        Property, plant and equipment in service and under construction, net of accumulated depreciation, consists of:

December 31,
  Useful Lives
  2007
  2006
 
(Dollars in thousands)
  (Years)
   
   
 
Land   N/A   $ 25,359   $ 25,297  
Buildings   20     254,650     237,479  
Leasehold Improvements   1-30     824,206     740,218  
Cell site equipment   6-25     2,374,769     2,329,898  
Switching equipment   1-8     803,908     757,183  
Office furniture and equipment   3-5     441,762     412,914  
Other operating equipment   5-25     271,941     285,009  
System development   3-7     250,350     238,347  
Work in process   N/A     162,170     94,649  
       
 
 
          5,409,115     5,120,994  
Accumulated depreciation         (2,814,019 )   (2,492,146 )
       
 
 
        $ 2,595,096   $ 2,628,848  
       
 
 

        Depreciation expense totaled $543.1 million, $497.1 million and $444.7 million in 2007, 2006 and 2005, respectively. Amortization expense on system development costs totaled $15.9 million, $27.9 million and $29.4 million in 2007, 2006 and 2005, respectively. Amortization of system development costs decreased in 2007 primarily due to a billing system becoming fully amortized in 2006.

        In 2007, 2006 and 2005, (gain)/loss on asset disposals/exchanges included charges of $34.1 million, $19.6 million and $20.4 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, (gain)/loss on asset disposals/exchanges included a charge of $14.6 million in 2007 reflecting the results of the physical inventory and related valuation and reconciliation.

This excerpt taken from the USM ARS filed Apr 15, 2008.

NOTE 11    PROPERTY, PLANT AND EQUIPMENT

        Property, plant and equipment in service and under construction, net of accumulated depreciation, consists of:

December 31,
  Useful Lives
  2007
  2006
 
(Dollars in thousands)
  (Years)
   
   
 
Land   N/A   $ 25,359   $ 25,297  
Buildings   20     254,650     237,479  
Leasehold Improvements   1-30     824,206     740,218  
Cell site equipment   6-25     2,374,769     2,329,898  
Switching equipment   1-8     803,908     757,183  
Office furniture and equipment   3-5     441,762     412,914  
Other operating equipment   5-25     271,941     285,009  
System development   3-7     250,350     238,347  
Work in process   N/A     162,170     94,649  
       
 
 
          5,409,115     5,120,994  
Accumulated depreciation         (2,814,019 )   (2,492,146 )
       
 
 
        $ 2,595,096   $ 2,628,848  
       
 
 

        Depreciation expense totaled $543.1 million, $497.1 million and $444.7 million in 2007, 2006 and 2005, respectively. Amortization expense on system development costs totaled $15.9 million, $27.9 million and $29.4 million in 2007, 2006 and 2005, respectively. Amortization of system development costs decreased in 2007 primarily due to a billing system becoming fully amortized in 2006.

        In 2007, 2006 and 2005, (gain)/loss on asset disposals/exchanges included charges of $34.1 million, $19.6 million and $20.4 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, (gain)/loss on asset disposals/exchanges included a charge of $14.6 million in 2007 reflecting the results of the physical inventory and related valuation and reconciliation.

Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki