Management’s Discussion and Analysis of Results of Operations and Financial Condition to each individual geographic region. The cash flow estimates incorpo- rate assumptions that market participants would use in their estimates of fair value. Key assumptions made in this process were the selection of a discount rate, estimated future cash flow levels, projected capital expenditures, and selection of terminal values. U.S. Cellular also retained a third party valuation firm to prepare  valuations of the seven groupings of FCC licenses (units of accounting pursuant to EITF 02-7). The valuations were prepared using an excess earnings methodology, through the use of a discounted cash flow approach. This excess earnings methodology estimates the fair value  of the intangible assets (FCC license units of accounting) by measuring the future cash flows of the license groups, reduced by charges for contributory assets such as working capital, trademarks, existing  subscribers, fixed assets, assembled workforce and goodwill. U.S. Cellular recorded an impairment loss on its investment in licenses totaling $49.6 million in 2003 related to the impairment of two report- ing units. Upon adoption of SFAS No. 142 in 2002, U.S. Cellular recorded an initial impairment loss on investment in licenses of $12.7 million ($20.9 million net of income taxes of $8.2 million) as a cumulative effect of an accounting change. In 2003, a license impairment loss of $3.5 million was recorded related to U.S. Cellular’s investment in a non-operational market in Florida that remains after the exchange with AT&T Wireless is completed. Also in 2003, U.S. Cellular reduced the carrying value of one of its cost method investments by $1.7 million based on a cash flow analysis of the invest- ment. Both charges were included in Loss on marketable equity securities and other investments in the statements of operations. SFAS No. 143, “Accounting for Asset Retirement Obligations,” was issued in June 2001, and became effective for U.S. Cellular beginning January 1, 2003. SFAS No. 143 requires entities to record the fair value of a liability for legal obligations associated with an asset retirement in the period in which the obligations are incurred. When the liability is initially recorded, the entity capitalizes the cost of the asset retirement obligation by increasing the carrying amount of the related long-lived asset. Over time, the liability is accreted to its present value each period, and the capitalized cost is depreciated over the useful life of the related asset. Upon settlement of the obligation, any difference between the cost to retire the asset and the liability recorded is recognized in the statements of operations as a gain or loss. The calculation of the asset retirement obligation for U.S. Cellular  is a critical accounting estimate because changing the factors used in calculating the obligation could result in a larger or smaller estimated obligation that could have a significant impact on U.S. Cellular’s results of operations and financial condition. Such factors may include proba- bilities or likelihood of remediation, cost estimates, lease renewals and salvage values. Actual results may differ materially from estimates  under different assumptions or conditions. U.S. Cellular is subject to asset retirement obligations associated  primarily with its cell sites, retail sites and office locations. Asset retire- ment obligations generally include costs to remediate leased land  on which U.S. Cellular’s cell sites and switching offices are located. The temporary differences that gave rise to the noncurrent deferred tax assets and liabilities as of December 31, 2003 are as follows: The accounting for income taxes, the amounts of income tax assets and liabilities and the related income tax provision are critical accounting estimates because such amounts are significant to U.S. Cellular’s finan- cial condition, changes in financial condition and results of operations. The preparation of the consolidated financial statements requires  U.S. Cellular to calculate its provision for income taxes. This process involves estimating the actual current income tax liability together with assessing temporary differences resulting from the different treatment of items, such as depreciation expense, for tax and accounting purposes as well as estimating the impact of potential adjustments to filed tax returns. These temporary differences result in deferred tax assets and liabilities, which are included in U.S. Cellular’s consolidated balance sheet. U.S. Cellular must then assess the likelihood that deferred tax assets will be recovered from future taxable income, and, to the extent management believes that recovery is not likely, establish a valuation allowance. Management’s judgment is required in determining the provision for income taxes, deferred tax assets and liabilities and any valuation allowance recorded against deferred tax assets. U.S. Cellular’s current net deferred tax asset was $16.8 million as of December 31, 2003, representing primarily the deferred tax effects of the allowance for doubtful accounts on accounts receivable. U.S. Cellular is also generally required to return leased retail store premises and office space to their pre-existing conditions. U.S. Cellular determined that it had an obligation to remove long-lived assets in its cell sites, retail sites and office locations as described by SFAS No. 143, and has recorded an initial $54.4 million liability upon the adoption of SFAS No. 143 on January 1, 2003. Current year addi- tions and accretion have increased the December 31, 2003 asset retirement obligation to $64.5 million. See Asset Retirement Obligation in Note 1 – Summary of Significant Accounting Policies for a schedule of the changes in asset retirement obligations in 2003. Income T axes Asset Retirement Obligations 36 December 31, 2003 (as restated) (Dollars in thousands) Deferred T ax Asset Net operating loss carryforwards $ 30,671 Unearned revenue 1,772 Derivative accounting 22,015 Other 5,222 59,680 Less v aluation allowance (10,480) T otal Deferred Tax Asset 49,200 Deferred T ax Liability Property, plant and equipment 222,213 Licenses 206,129 Marketable equity securities 86,251 Partnership investments 30,511 T otal Deferred Tax Liability 545,104 Net Deferred Income Tax Liability $495,904