Telus 2007 Annual Report Download - page 20

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the aggregate of U.S. $82 million for the years 2005 to 2008 were reduced to an
aggregate nominal amount of only four U.S. dollars for that time period.
Directory business
In 2001, TELUS sold its directory advertising services business to Verizon Information
Services – Canada Inc. (“VIS”), a subsidiary of Verizon. At the same time, various
TELUS subsidiaries and VIS entered into a series of commercial arrangements whereby
VIS acquired the exclusive right to publish TELUS directories and provide on-line
directories on TELUS portals, in Canada and within 40 miles of the Canada-U.S. border,
for an initial term of 30 years with certain renewal rights thereafter, and TELUS agreed
not to compete with this business for the term of the agreement.
On November 9, 2004, Verizon announced that it had completed a transaction to sell
VIS to Advertising Directory Solutions Holdings Inc. (“ADSHI”), an affiliate of Bain
Capital. On May 25, 2005, the Yellow Pages Group announced that it, through Yellow
Pages Income Fund, had completed the purchase of ADSHI from an affiliate of Bain
Capital.
LEGAL PROCEEDINGS AND REGULATORY ACTIONS
On May 8, 1998, an action was commenced against BC TEL (now TCI) by certain
holders of the $117.75 million principal amount of First Mortgage Bonds, 11.35 per cent
Series AL (the “Bonds”) which were redeemed by BC TEL on December 30, 1997. The
action alleged that the Bonds were improperly redeemed and claimed damages as a
result thereof. TCI successfully defended the action, which was dismissed by the
Ontario Superior Court of Justice in January 2003. On June 8, 2005, the Ontario Court
of Appeal overturned the lower court decision and ruled that the redemption of the
Bonds breached the terms of the First Mortgage Bonds. The Court of Appeal referred
the matter back to the lower court for an assessment of damages. On January 26, 2006,
the Supreme Court of Canada denied TCI’s leave to appeal the decision of the Court of
Appeal. On November 2, 2006, the Ontario Superior Court of Justice ruled that the
lawsuit should be treated as a representative action by all bondholders and not just the
named plaintiffs. On February 19, 2008, the trial court issued a decision setting out the
method of calculating damages. The Company is assessing that decision, but the
accruals made by the Company of estimated damages as part of financing costs since
the second quarter of 2005 continue to be adequate.
Two lawsuits were commenced against TELUS and other defendants in the Alberta
Court of Queen’s Bench on December 31, 2001 and January 2, 2002 respectively, by
plaintiffs alleging to be either members or business agents of the TWU. In one action,
the three plaintiffs alleged to be suing on behalf of all current or future beneficiaries of
the TELUS Corporation Pension Plan (“TCPP”), and in the other action, the two plaintiffs
allege to be suing on behalf of all current or future beneficiaries of the TELUS Edmonton
Pension Plan (“TEPP”). The statement of claim in the TCPP-related action named
TELUS, certain of its affiliates and certain present and former trustees of the TCPP as
defendants, and claims damages in the sum of $445 million. The statement of claim in
the TEPP-related action named TELUS, certain of its affiliates and certain individuals
who are alleged to be trustees of the TEPP and claims damages in the sum of
$15.5 million. In May 2002, the statements of claim were amended by the plaintiffs and
include allegations, inter alia, that benefits provided under the TCPP and TEPP are less