Telus 2010 Annual Report Download - page 166

162 . TELUS 2010 annual report
Similar proceedings have also been filed by, or on behalf of, plaintiffs’
counsel in other provincial jurisdictions.
Should the ultimate resolution of these actions differ from manage -
ment’s
assessments and assumptions, a material adjustment to the
Company’s financial position and the results of its operations could result;
management’s assessments and assumptions include that a reliable
estimate of the exposure cannot be made at this preliminary stage of
the lawsuit.
Uncertified class actions: Uncertified class actions against the
Company include a 2008 class action brought in Saskatchewan alleging
that, among other things, Canadian telecommunications carriers including
the Company have failed to provide proper notice of 9-1-1 charges to the
public and have been deceitfully passing them off as government charges,
as well as a 2008 class action brought in Ontario alleging that the Com-
pany has misrepresented its practice of “rounding up” wireless airtime to
the nearest minute and charging for the full minute. The plaintiffs in these
actions seek direct and punitive damages and other relief. The Company
is assessing the merits of these claims but the potential for liability and
magnitude of potential loss cannot be readily determined at this time.
protection legislation across Canada in connection with the collection of
system access fees, and seeks to recover direct and punitive damages
in an unspecified amount. In September 2007, the class was certified by
the Saskatchewan Court of Queen’s Bench as an opt-in national class.
In February 2008, the same court removed from the class all customers
of the Company who are bound by an arbitration clause, applying two
decisions of the Supreme Court of Canada. In March 2010, the Company
obtained leave to appeal the certification decision. That appeal was heard
in December 2010 and judgement was reserved. A parallel proceeding
(the Collins matter) was commenced in Saskatchewan in July 2009 after
the enactment of opt-out national class action legislation in Saskatchewan.
In Collins, plaintiff’s counsel applied to certify a new national class in
Saskatchewan making substantially the same allegations as in the Frey
matter. That application was stayed by the court in December 2009
upon an application by the defendants to dismiss it for abuse of process,
conditional on possible future changes in circumstance. In March 2010,
the plaintiffs applied for leave to appeal the stay decision. That applica-
tion is adjourned pending the outcome of the appeal in the Frey matter.
The Company believes that it has good defences to both actions.
21 ADDITIONAL FINANCIAL INFORMATION
Summary schedules of items comprising certain primary financial statement line items
Years ended December 31 (millions) 2010 2009
Employee benefits expense
Wages and salaries(3) $ß2,010 $ß2,093
Pensions – defined benefit (Note 13(b)) 28 18
Pensions – defined contribution (Note 13(l)) 61 61
Other defined benefits (Note 13(b)) 3 2
Restructuring costs (Note 7) 64 186
Other 131 128
2,297 2,488
Capitalized internal labour costs (363) (368)
$ß1,934 $ß2,120
(1) Operating revenues arising from services includes portable subsidy receipts for the
year ended December 31, 2010, of $37 (2009 – $51), as disclosed in Note 4(c).
(2) Cost of sales and service excludes depreciation and amortization of intangible assets
and includes cost of goods sold and costs to operate and maintain access to and
usage of the Company’s telecommunications infrastructure. Selling, general and
administrative costs include sales and marketing costs (including commissions),
customer care, bad debt expense, real estate costs and corporate overhead costs
such as information technology, finance (including billing services, credit and
collection), legal, human resources and external affairs.
Employee salaries, benefits and related costs are included in one of the two
components of operations expense to the extent that the costs are related to the
component functions.
(3) Wages and salaries include share-based compensation for the year ended
December 31, 2010, of $57 (2009 – $69), as disclosed in Note 12.
(a) Statement of income and
other comprehensive income
Years ended December 31 (millions) 2010 2009
Operating revenues
Service(1) $ß9,168 $ß9,077
Equipment 611 529
$ß9,779 $ß9,606
Operations expense(2)
Cost of sales and service
Cost of goods sold $ß1,189 $ß1,053
Other 2,191 2,225
3,380 3,278
Selling, general and administrative 2,682 2,647
$ß6,062 $ß5,925
Advertising expense $ 313 $ 282