U.S. Cellular had current deferred tax assets totaling $16.8 million and $10.8 million at December 31, 2003 and 2002, respectively, resulting primarily from the allowance for customer receivables. The temporary differences that gave rise to the noncurrent deferred tax assets and liabilities are as follows: Income tax provisions charged to Income (loss) before cumulative  effect of accounting change are summarized as follows: Included in cumulative effect of accounting changes were deferred tax benefits of $9.7 million in 2003 and $5.3 million in 2002. A reconciliation of U.S. Cellular’s expected income tax expense (benefit) computed at the statutory rate to the reported income tax expense (benefit), and the statutory federal income tax expense (benefit) rate to U.S. Cellular’s effective income tax expense (benefit) rate is as follows: U.S. Cellular and certain subsidiaries had $62.0 million of federal  net operating loss carryforwards (generating a $15.2 million deferred tax asset) at December 31, 2003 expiring between 2004 and 2023. In addition, U.S. Cellular and certain subsidiaries had $264.2 million  of state net operating loss (“NOL”) carryforward (generating a  $15.5 million deferred tax asset) at December 31, 2003. The state NOL carryforward, available to offset future taxable income, is primarily  from the individual subsidiaries which generated the loss, and expires between 2004 and 2023. A valuation allowance has been provided when it is more likely than not that some portion of the deferred tax asset will not be realized. Basic earnings per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed using net income (loss) and weighted average common shares adjusted to include the effect of potentially dilutive securities. Potentially dilutive securities include incremental shares issuable upon exercise of outstanding stock options and conversion of debentures. The amounts used in computing Earnings per Common and Series A Common Shares and the effect on income and the weighted average number of Common and Series A Common Shares of dilutive potential common stock are as follows: (1) Represents a reassessment of the rate at which U.S. Cellular provides for deferred taxes. 51 Year Ended December 31, 2003 2002 2001 (as restated) Amount Rate Amount Rate Amount Rate (Dollars in millions) Statutory federal  income tax expense  (benefit) $37.1 35.0% $(4.3) (35.0)% $116.0 35.0% State income taxes, net of federal benefit 1.2 1.2 (2.4) (19.1) 14.3 4.3 Amortization of license  acquisition costs — — — — 3.6 1.1 Effects of minority  share of income  excluded from  consolidated federal  income tax return (5.0) (4.5) (4.5) (36.3) (2.9) (0.9) Effects of gains (losses)  on marketable  equity securities, other investments and assets held for sale 2.2 2.0 2.9 23.6 — — Resolution of prior  period tax issues 1.8 1.6 9.7 78.0 13.0 3.9 Loss on  extinguishment of debt — — — — 2.4 0.7 Deferred tax  rate change (1) — — (8.4) (68.2) — — Other (0.1) (0.1) (0.5) (3.9) 0.9 0.4 Effective income  tax expense (benefit) $37.2 35.2% $(7.5) (60.9)% $147.3 44.5% NOTE 3 EARNINGS PER SHARE NOTE 2 INCOME TAXES Notes to Consolidated Financial Statements Year Ended December 31, 2003 2002 2001 (as restated) (Dollars in thousands) Federal income taxes Current $ 1,097 $ 444 $ 88,345 Deferred 28,560 (4,674) 36,974 State income taxes Current 15,066 3,758 17,009 Deferred (7,491) (7,069) 4,987 Total income tax expense (benefit) $37,232 $(7,541) $147,315 December 31, 2003 2002 (as restated) (as restated) (Dollars in thousands) Deferred Tax Asset Net operating loss carryforward $ 30,671 $ 43,291 Unearned revenue 1,772 7,099 Derivative accounting 22,015 3,527 Other 5,222 2,040 59,680 55,957 Less valuation allowance (10,480) (13,224) Total Deferred Tax Asset 49,200 42,733 Deferred Tax Liability Property, plant and equipment 222,213 202,314 Licenses 206,129 223,654 Marketable equity securities 86,251 56,925 Partnership investments 30,511 1,654 Total Deferred Tax Liability 545,104 484,547 Net Deferred Income Tax Liability $495,904 $441,814