AT&T Wireless 2008 Annual Report Download - page 60

Notes to Consolidated Financial Statements (continued)
Dollars in millions except per share amounts
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| AT&T Annual Report 2008
respective consolidated statements of income and reporting
the ownership percentage of AT&T Mobility’s net assets as
“Investments in and Advances to AT&T Mobility” and the
ownership percentage of YPC’s net assets as “Investments
in Equity Affiliates” on the respective consolidated balance
sheets. After the BellSouth acquisition, BellSouth, AT&T
Mobility and YPC became wholly-owned subsidiaries of AT&T,
and the operational results of these companies have been
included in our consolidated financial statements since the
December 29, 2006 acquisition date.
Under the purchase method of accounting, the transaction
was valued, for accounting purposes, at approximately $66,800
and the assets and liabilities of BellSouth were recorded at
their respective fair value at the date of acquisition.
Other Acquisitions During 2008, we acquired
Easterbrooke Cellular Corporation, Windstream Wireless,
Wayport Inc. and the remaining 64% of Edge Wireless
for a combined $663, recording $449 in goodwill.
The acquisitions of these companies are designed to
expand our wireless and Wi-Fi coverage area.
During 2007, we acquired Interwise®, a global provider
of voice, Web and video conferencing services to businesses,
for $122 and Ingenio®, a provider of Pay Per Call® technology
for directory and local search business, for $195, net of cash.
We recorded $304 of goodwill related to these acquisitions.
During 2006, we acquired Comergent Technologies,
Nistevo Corporation and USinternetworking, Inc., for a
combined $500, recording $333 in goodwill. The acquisitions
of these companies are designed to enhance our service
offerings for Web hosting and application management.
Dispositions
In April 2008, we sold to Local Insight Regatta Holdings, Inc.,
the parent company of Local Insight Yellow Pages, the
Independent Line of Business segment of the L.M. Berry
Company for $230.
In May 2007, we sold to Clearwire Corporation (Clearwire),
a national provider of wireless broadband Internet access,
education broadband service spectrum and broadband
radio service spectrum valued at $300. Sale of this spectrum
was required as a condition to the approval of our acquisition
of BellSouth.
Other Adjustments
As ATTC and BellSouth stock options that were converted at
the time of the respective acquisitions are exercised, the tax
effect on those options may further reduce goodwill. During
2008, we recorded $1 in related goodwill reductions for ATTC
and $9 for BellSouth.
NOTE 3. EARNINGS PER SHARE
A reconciliation of the numerators and denominators of
basic earnings per share and diluted earnings per share for
the years ended December 31, 2008, 2007 and 2006 are
shown in the table below:
Year Ended December 31, 2008 2007 2006
Numerators
Numerator for basic earnings
per share:
Net Income $12,867 $11,951 $7,356
Dilutive potential common shares:
Other share-based payment 9 8 7
Numerator for diluted
earnings per share $12,876 $11,959 $7,363
Denominators (000,000)
Denominator for basic earnings
per share:
Weighted-average number
of common shares outstanding 5,927 6,127 3,882
Dilutive potential common shares:
Stock options 9 24 4
Other share-based payment 22 19 16
Denominator for diluted
earnings per share 5,958 6,170 3,902
Basic earnings per share $ 2.17 $ 1.95 $ 1.89
Diluted earnings per share $ 2.16 $ 1.94 $ 1.89
At December 31, 2008, 2007 and 2006, we had issued and
outstanding options to purchase approximately 204 million,
231 million and 309 million shares of AT&T common stock.
The exercise prices of options to purchase a weighted-average
of 144 million, 93 million and 201 million shares in 2008, 2007
and 2006 exceeded the average market price of AT&T stock.
Accordingly, we did not include these amounts in determining
the dilutive potential common shares for the respective periods.
At December 31, 2008, the exercise price of 20 million share
options was below market price.
NOTE 4. SEGMENT INFORMATION
Our segments are strategic business units that offer different
products and services and are managed accordingly.
We analyze our various operating segments based on
segment income before income taxes. Interest expense,
interest income and other income (expense) – net are
managed only on a total company basis and are, accordingly,
reflected only in consolidated results. The wireless segment