AT&T Uverse 2007 Annual Report Download - page 67

2007 AT&T Annual Report
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NOTE 5. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is summarized as follows at
December 31:
Lives
(years) 2007 2006
Land — $ 1,860 $ 1,925
Buildings 35-45 23,670 23,481
Central office equipment 3-10 70,632 63,997
Cable, wiring and conduit 10-50 68,676 64,483
Other equipment 5-15 32,606 33,448
Software 3-5 9,298 11,678
Under construction — 3,776 3,137
210,518 202,149
Accumulated depreciation
and amortization 114,628 107,553
Property, plant and
equipment – net $ 95,890 $ 94,596
Our depreciation expense was $15,625 in 2007, $8,874 in
2006 and $7,372 in 2005.
Certain facilities and equipment used in operations are
leased under operating or capital leases. Rental expenses
under operating leases were $2,566 for 2007, $869 for 2006,
and $473 for 2005. The future minimum rental payments
under noncancelable operating leases for the years 2008
through 2012 are $2,088, $1,850, $1,629, $1,399 and
$1,223, with $6,958 due thereafter. Capital leases are
not significant.
American Tower Corp. Agreement
In August 2000, we reached an agreement with American
Tower Corp. (American Tower) under which we granted
American Tower the exclusive rights to lease space on a
number of our communications towers. In exchange, we
received a combination of cash and equity instruments as
complete prepayment of rent with the closing of each leasing
agreement. The value of the prepayments was recorded as
deferred revenue and recognized in income as revenue over
the life of the leases. The balance of deferred revenue was
$539 in 2007, $568 in 2006, and $598 in 2005.
NOTE 6. GOODWILL AND OTHER INTANGIBLE ASSETS
Changes in the carrying amounts of goodwill, by segment, for the years ended December 31, 2007 and 2006, are as follows:
Advertising
Wireless Wireline & Publishing Other Total
Balance as of January 1, 2006 $ — $ 12,795 $ 8 $1,252 $ 14,055
Goodwill acquired:
BellSouth acquisition 27,429 20,939 5,528 — 53,896
Other — 197 128 139 464
Goodwill adjustment related to ATTC acquisition — (989) — — (989)
Other 681 — — (450) 231
Balance as of December 31, 2006 28,110 32,942 5,664 941 67,657
Goodwill acquired 2,623 133 171 — 2,927
Goodwill adjustment related to BellSouth acquisition 1,989 (1,554) — — 435
Settlement of IRS audit — (123) — — (123)
Goodwill adjustments for prior-year acquisitions and FIN 48 — (44) (51) (32) (127)
Other (9) (53) 4 2 (56)
Balance as of December 31, 2007 $32,713 $31,301 $5,788 $ 911 $70,713
Goodwill is tested annually for impairment, with any impairments being expensed in that period’s income statement. Due to the
proximity of our acquisition of BellSouth to year-end 2006, we originally recorded all BellSouth assets, including goodwill, in our
other segment. In 2007, in conjunction with our segment realignment (see Note 4) we moved the initial BellSouth goodwill to our
wireline and advertising & publishing segments. During our allocation period, we completed purchase accounting adjustments to
the AT&T Mobility and BellSouth goodwill (see Note 2). Other changes to goodwill include adjustments totaling $42 for the tax
effect of stock options exercised.