AT&T Wireless 2006 Annual Report Download - page 26

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24 : :
2006 AT&T Annual Report
Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)
Dollars in millions except per share amounts
• Our provision for uncollectible accounts decreased $87,
as we experienced fewer losses from our retail customers
and a decrease in bankruptcy filings by our wholesale
customers.
In addition to the impact of ATTC, selling, general and
administrative expenses in 2005 increased due to:
• ATTC merger-related asset impairment charges of $349
and merger-related severance expense of $107 increased
expenses.
• Expenses increased due to a charge of $236 to terminate
an existing agreement with WilTel.
• Salary and wage merit increases and other bonus accrual
adjustments increased expenses $108.
Partially offsetting these increases, expenses in 2005
decreased due to the following:
• Lower employee levels decreased expenses, primarily
salary and wages, by $264.
• In-region benefit expenses (consisting primarily of
our combined net pension and postretirement cost)
decreased $79 due to the one-time accrual in 2004 for
a retiree bonus as a result of the settlement of our labor
contract negotiations, $66 as a result of changes made
to management medical coverage in 2005 and $73
related to changes in phone concessions for out-of-
region retirees.
• Lower nonemployee-related expenses, such as contract
services, agent commissions and materials and supplies
costs of $59.
• Our provision for uncollectible accounts decreased $55,
as we experienced fewer losses from our retail customers
and a decrease in bankruptcy filings by our wholesale
customers.
Depreciation and amortization expenses increased
$2,188, or 29.5%, in 2006 and $104, or 1.4%, in 2005
primarily due to higher depreciable and amortizable asset
bases as a result of the ATTC acquisition.
Supplemental Information
Access Line Summary Our in-region switched access lines
at December 31, 2006 and 2005 are shown below and access
line trends are addressed throughout this segment discussion.
Wireline In-Region1
Switched Access Lines
Percent Change
2006 vs. 2005 vs.
(In 000s) 2006 2005 2004 2005 2004
Retail Consumer
Primary 21,841 22,793 23,206 (4.2)% (1.8)%
Additional 3,466 3,890 4,322 (10.9) (10.0)
Retail Consumer Subtotal 25,307 26,683 27,528 (5.2) (3.1)
Retail Business 17,136 17,457 17,552 (1.8) (0.5)
Retail Subtotal 42,443 44,140 45,080 (3.8) (2.1)
Percent of total switched access lines 91.7% 89.3% 86.1%
Wholesale
Sold through ATTC 1,044 1,638 2,337 (36.3) (29.9)
Sold to other CLECs2 2,571 3,300 4,509 (22.1) (26.8)
Wholesale Subtotal 3,615 4,938 6,846 (26.8) (27.9)
Percent of total switched access lines 7.8% 10.0% 13.1%
Payphone (Retail and Wholesale) 249 335 430 (25.7) (22.1)
Percent of total switched access lines 0.5% 0.7% 0.8%
Total Switched Access Lines 46,307 49,413 52,356 (6.3)% (5.6)%
Broadband Connections3 8,538 6,921 5,104 23.4% 35.6%
1Wireline In-region represents access lines served by AT&T’s ILECs (excludes subsidiaries of BellSouth).
2Competitive local exchange carriers (CLECs).
3Broadband connections include DSL lines of 8,529 in 2006 and 6,921 in 2005, U-verse high-speed Internet access and satellite broadband.