AT&T Wireless 2006 Annual Report Download - page 60

58 : : 2006 AT&T Annual Report
Notes to Consolidated Financial Statements (continued)
Dollars in millions except per share amounts
ATTC maintained change-in-control provisions with its
employees that required enhanced severance and benefit
payments be paid to employees of ATTC if a change-in-control
occurred. Included in the liabilities assumed at acquisition,
was $1,543 accrued for such enhanced severance and
benefits. As part of the opening balance sheet adjustments,
a revised number of expected employee separations that will
result in payments resulted in a decline in the change-in-
control severance and benefits accrual of $616, included in
“Adjustments” below. Following is a summary of the accrual
recorded at December 31, 2005, cash payments made during
2006 and the purchase accounting adjustments thereto.
Cash Payments
Balance at for the Year Balance at
12/31/05 Ended 2006 Adjustments 12/31/06
Paid out of:
Company funds $ 870 $(279) $(184) $407
Pension and Postemployment benefit plans 673 (58) (432) 183
Total $1,543 $(337) $(616) $590
The following unaudited pro forma consolidated results of
operations assume that the acquisition of ATTC was com-
pleted as of January 1 for each of the fiscal years shown
below.
Year Ended December 31, 2005 20041
Revenues $65,789 $69,165
Net Income (Loss) 6,167 (74)
Earnings Per Common Share $ 1.59 $ (0.02)
Earnings Per Common Share –
Assuming Dilution $ 1.59 $ (0.02)
1
ATTC’s 2004 results include an impairment charge on property, plant and equipment of
$11,400. Since the triggering event for assessing impairment of long-lived assets occurred
in July 2004, it is not adjusted in the pro forma consolidated results.
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.
As part of the process of coordinating benefits, we changed
our management vacation-pay policy for legacy SBC Commu-
nications Inc. (SBC) employees so that vacation is earned
ratably throughout the year rather than at the end of the
preceding year. As a result, we recognized a decrease in
operating expenses of $330 in 2006.
Other Acquisitions During 2006, we acquired Comergent
Technologies, Nistevo Corporation and USinternetworking, Inc.,
for a combined $500, recording $333 in goodwill. The acquisi-
tions of these companies are designed to enhance our service
offerings for web hosting and application management. In
January 2005, we acquired Yantra Corporation (Yantra) for
$169 in cash and recorded goodwill of $98. Yantra is a
provider of distributed order management and supply-chain
fulfillment services.
Dispositions
Net proceeds from the 2004 dispositions of our international
investments were generally used to fund, in part, our share of
the purchase price paid by AT&T Mobility to acquire AT&T
Wireless (AWE).
Directory advertising In September 2004, we sold our
interest in the directory advertising business in Illinois and
northwest Indiana to R.H. Donnelley Corporation (Donnelley)
for net proceeds of $1,397. The sale included our interest in
the DonTech II Partnership, a partnership between us and
Donnelley that was the exclusive sales agent for Yellow Pages
advertising in those two areas. This transaction closed in the
third quarter of 2004 and we recorded a gain of $1,357 ($827
net of tax) in our third-quarter 2004 financial results. During
the third quarter of 2004, we changed our reporting for this
portion of the directory business to discontinued operations
(see Note 15).
TDC A/S During 2004, we sold our investment in Danish
telecommunications provider TDC A/S (TDC) for $2,864 in
cash. We reported a net loss of $138 ($66 net of tax).
Telkom S.A. Limited During 2004, we also sold our
investment in South African telecommunications provider
Telkom S.A. Limited for $1,186 in cash. We reported a loss
of $82 ($55 net of tax).
Belgacom S.A. In March 2004, in connection with
Belgacom S.A.’s (Belgacom) initial public offering (IPO), we
disposed of our entire investment in Belgacom. Both our
investment and TDC’s investment in Belgacom were held
through Belgacom’s minority stockholder, ADSB Telecommu-
nications B.V. In a series of transactions culminating with the
IPO, we reported a combined direct and indirect net gain of
$1,067 ($715 net of tax) in our 2004 financial results, with
$235 of this pretax gain reported as equity income, reflecting
our indirect ownership though TDC (which also disposed of
its interest). We received $2,063 in cash from the disposition
of our direct interest.