Notes to Consolidated Financial Statements Accumulated Other Comprehensive Income The cumulative balance of unrealized gains and (losses) on securities and derivative instruments and related income tax effects included in Accumulated other comprehensive income are as follows: In August 2002, U.S. Cellular entered into a loan agreement with TDS under which it borrowed $105 million, which was used to purchase USCOC of Chicago. The loan bears interest at an annual rate of 8.1%, payable quarterly, and becomes due in August 2008, with prepayments optional. The loan was subordinated to the 2002 Revolving Credit Facility until December 19, 2003. The terms of the loan do not contain restrictive covenants that are greater than those included in U.S. Cellular’s senior debt, except that the loan agreement provides that  U.S. Cellular may not incur senior debt in an aggregate principal amount in excess of $325 million unless it obtains the consent of TDS as a lender. U.S. Cellular’s Board of Directors, including independent directors, approved the terms of this loan and determined that such terms were fair to U.S. Cellular and all of its shareholders. On January 9, 2004, U.S. Cellular notified TDS of its intent to repay this note on February 9, 2004. U.S. Cellular has a Cash Management Agreement with TDS under which U.S. Cellular may from time to time deposit its excess cash with TDS for investment under TDS’s cash management program. Deposits made under the agreement are available to U.S. Cellular on demand and bear interest each month at the 30-day Commercial Paper Rate as reported in The Wall Street Journal, plus 1/4%, or such higher rate as TDS may at its discretion offer on such deposits. Interest income from such deposits was $94,000, $209,000 and $1.5 million in 2003, 2002 and 2001, respectively. U.S. Cellular’s anticipated capital expenditures requirements for 2004 primarily reflect plans for construction, system expansion, the buildout of certain of its personal communication service licensed areas and additional expenditures related to its plans to migrate to a single digital equipment platform. U.S. Cellular’s estimated capital spending for 2004 is $610 million to $630 million. These expenditures primarily address  the following needs: U.S. Cellular is billed for all services it receives from TDS, pursuant to the terms of various agreements between U.S. Cellular and TDS. The majority of these billings are included in U.S. Cellular’s selling, general and admin- istrative expenses. Some of these agreements were established at a time prior to U.S. Cellular’s initial public offering when TDS owned more than 90% of U.S. Cellular’s outstanding capital stock and may not reflect terms that would be obtainable from an unrelated third party through arms-length negotiations. Such billings are based on expenses specifi- cally identified to U.S. Cellular and on allocations of common expenses. Such allocations are based on the relationship of U.S. Cellular’s assets, employees, investment in plant and expenses to the total assets, employ- ees, investment in plant and expenses of TDS. Management believes the method used to allocate common expenses is reasonable and that all expenses and costs applicable to U.S. Cellular are reflected in the accom- panying financial statements on a basis which is representative of what they would have been if U.S. Cellular operated on a stand-alone basis. Billings to U.S. Cellular from TDS totaled $65.8 million, $56.8 million and $55.7 million in 2003, 2002 and 2001, respectively. U.S. Cellular’s overlay of existing technologies with CDMA is largely completed, and when the project is fully completed in 2004 it antici- pates total expenditures related to the project to be no more than  $300 million. U.S. Cellular will utilize CDMA technology in building  out the licenses it has acquired and expects to acquire in the future from AT&T Wireless. - Expand and enhance U.S. Cellular’s coverage in its service areas. - Provide additional capacity to accommodate increased network usage by current customers. - Build out certain licensed areas acquired in 2001, 2002 and 2003. - Addition of digital service capabilities to its systems, including com- pleting the migration toward a single digital equipment platform, Code Division Multiple Access (“CDMA”), from a mixture of CDMA and another digital technology, Time Division Multiple Access. - Enhance U.S. Cellular’s retail store network and office systems. 61 NOTE 19 COMMITMENTS AND CONTINGENCIES Construction and Expansion NOTE 18 RELATED PARTIES Year Ended December 31, 2003 2002 (Dollars in thousands) Balance, beginning of year $ 10,307 $ (78,997) Add (Deduct): Unrealized gains (losses) on  marketable equity securities 74,227 (86,428) Income (tax) benefit (29,327) 35,326 Net unrealized gains (losses) 44,900 (51,102) Deduct (Add): Recognized (losses) on marketable equity securities (200) (244,699) Income tax benefit 79 99,112 Net recognized gains (losses) from  Marketable Equity Securities included in Net Income (121) (145,587) 45,021 94,485 Unrealized loss on derivative instruments (28,539) (5,181) Net change in unrealized gains (losses)  included in Comprehensive Income 16,482 89,304 Balance, end of year $ 26,789 $ 10,307 Accumulated Unrealized Loss on Derivative Instruments Balance, beginning of year $ (5,181) $ — Add (Deduct): Unrealized (loss) on derivative instruments (28,539) (5,181) Balance, end of year $(33,720) $ (5,181)