AT&T Wireless 2006 Annual Report Download - page 59

2006 AT&T Annual Report : : 57
The following unaudited pro forma consolidated results of
operations assume that the acquisition of BellSouth was
completed as of January 1 for each of the fiscal years shown
below.
Year Ended December 31, 2006 2005
Revenues $116,300 $116,144
Net Income (Loss) 9,226 7,687
Earnings Per Common Share $ 1.46 $ 1.22
Earnings Per Common Share –
Assuming Dilution $ 1.46 $ 1.22
Pro forma data may not be indicative of the results that would
have been obtained had these events actually occurred at the
beginning of the periods presented, nor does it intend to be a
projection of future results.
AT&T Corp. In November 2005, we acquired ATTC in a
transaction accounted for under FAS 141, issuing 632 million
shares. ATTC was one of the nation’s largest business service
communications providers, offering a variety of global com-
munications services, including large domestic and multina-
tional businesses, small and medium-sized businesses and
government agencies, and operated one of the largest
telecommunications networks in the U.S. ATTC also provided
domestic and international long-distance and usage-based-
communications services to consumer customers. ATTC is now
a wholly-owned subsidiary of AT&T and the results of ATTC’s
operations have been included in our consolidated financial
statements after the November 18, 2005 acquisition date.
Under the purchase method of accounting, the transaction
was valued, for accounting purposes, at $15,517 and the
assets and liabilities of ATTC were recorded at their respective
fair values as of the date of the acquisition. At the time of the
acquisition, we obtained preliminary third-party valuations of
property, plant and equipment, intangible assets (including the
AT&T trade name), debt and certain other assets and liabilities.
Because of the proximity of this transaction to year-end, the
values of certain assets and liabilities at December 31, 2005
were based on preliminary valuations and were subject to
adjustment as additional information was obtained. Such
additional information included, but was not limited to:
valuations and physical counts of property, plant and equip-
ment, valuation of investments and the involuntary termina-
tion of employees.
The following table summarizes the preliminary estimated
fair values of the ATTC assets acquired and liabilities assumed
and related deferred income taxes as of the acquisition date
and adjustments made thereto.
Purchase Price Allocation
As of As of
12/31/05 Adjs. 11/18/06
Assets acquired
Current assets $ 6,295 $ 358 $ 6,653
Property, plant and equipment 10,921 (489) 10,432
Intangible assets not subject
to amortization:
Trade name 4,900 — 4,900
Licenses 40 — 40
Intangible assets subject
to amortization:
Customer lists and
relationships 3,050 — 3,050
Patents 150 — 150
Brand licensing agreements 70 — 70
Investments in
unconsolidated subsidiaries 160 (90) 70
Other assets 4,247 167 4,414
Goodwill 12,343 (976) 11,367
Total assets acquired 42,176 (1,030) 41,146
Liabilities assumed
Current liabilities, excluding
current portion of
long-term debt 6,740 (176) 6,564
Long-term debt 8,293 — 8,293
Deferred income taxes 531 (173) 358
Postemployment
benefit obligation 8,807 (520) 8,287
Other noncurrent liabilities 2,288 (161) 2,127
Total liabilities assumed 26,659 (1,030) 25,629
Net assets acquired $15,517 $ — $15,517
Adjustments were primarily related to property, plant and
equipment, head-count assumptions associated with payments
for involuntary employee separations, pension asset valuations
and the adjustment for certain tax items. Reductions in the
value of property, plant and equipment primarily reflect the
reduction of estimated real estate values of property in use
as well as a more comprehensive look at our fixed asset
portfolio. In addition to the deferred tax impacts associated
with valuation adjustments, a net reduction in deferred
taxes was recorded as a result of modifications to various
pre-merger tax estimates and the resolution of an ATTC IRS
audit (an adjustment of $385 for the years 1997-2001).
As ATTC stock options that were converted at the time of
the merger are exercised, the tax effect on those options may
further reduce goodwill. As of December 31, 2006, we had
recorded $13 in related reductions.