Notes to Consolidated Financial Statements
NOTE 18
COMPREHENSIVE INCOME
Comprehensive income consists of net income and other gains and losses affecting shareowners’ investment that, under GAAP, are excluded from net income. Significant changes in the components of other comprehensive income (loss), net of income tax expense (benefit), are described below.
Foreign Currency Translation
(dollars in millions) |
|||||||||
Years Ended December 31, |
2007 |
2006 |
2005 |
||||||
|---|---|---|---|---|---|---|---|---|---|
|
|||||||||
Foreign Currency Translation Adjustments: |
|||||||||
|
|||||||||
Vodafone Omnitel |
$ |
397 |
|
$ |
330 |
|
$ |
(590 |
) |
CANTV |
|
412 |
|
|
— |
|
|
(47 |
) |
Verizon Dominicana |
|
— |
|
|
786 |
|
|
(114 |
) |
Other international operations |
|
29 |
|
|
80 |
|
|
(4 |
) |
|
$ |
838 |
|
$ |
1,196 |
|
$ |
(755 |
) |
We sold our interest in CANTV during the second quarter of 2007. We sold our interest in Verizon Dominicana during the fourth quarter of 2006. See Note 2 for information on CANTV and Verizon Dominicana. The foreign currency translation adjustment in 2005 represents unrealized losses from the decline in the functional currencies of our investments in Vodafone Omnitel, Verizon Dominicana and CANTV.
Unrealized Gains (Losses) on Marketable Securities
The changes in Unrealized Gains (Losses) on Marketable Securities were as follows:
(dollars in millions) |
|||||||||
Years Ended December 31, |
2007 |
2006 |
2005 |
||||||
|---|---|---|---|---|---|---|---|---|---|
|
|||||||||
Unrealized Gains (Losses) on Marketable Securities |
|||||||||
Unrealized gains, net of taxes of $13, $30 and $10 |
$ |
13 |
|
$ |
79 |
|
$ |
4 |
|
Less reclassification adjustments for gains realized |
|||||||||
in net income, net of taxes of $11, $13 and $14 |
|
(17 |
) |
|
(25 |
) |
|
(25 |
) |
Net unrealized gains (losses) on marketable securities |
$ |
(4 |
) |
|
54 |
|
|
(21 |
) |
Defined Benefit Pension and Postretirement Plans
During 2007, the change in defined benefit pension and postretirement plans of $1,948 million, net of taxes of $661 million, represents the change in the funded status of the plans in connection with the annual pension and postretirement valuation in accordance with SFAS No. 158. The funded status was impacted by changes in actuarial assumptions, asset performance and plan experience.
Accumulated Other Comprehensive Loss
The components of Accumulated Other Comprehensive Loss are as follows:
(dollars in millions) |
||||||
At December 31, |
2007 |
2006 |
||||
|---|---|---|---|---|---|---|
|
||||||
Foreign currency translation adjustments |
$ |
1,167 |
|
$ |
329 |
|
Net unrealized losses on hedging |
|
(10 |
) |
|
(11 |
) |
Unrealized gains on marketable securities |
|
60 |
|
|
64 |
|
Defined benefit pension and postretirement plans |
|
(5,723 |
) |
|
(7,671 |
) |
Other |
|
— |
|
|
(241 |
) |
Accumulated Other Comprehensive Loss |
$ |
(4,506 |
) |
$ |
(7,530 |
) |
The foreign currency translation adjustments at December 31, 2007 were primarily comprised of unrealized gains in the value of our investment in Vodafone Omnitel as a result of the appreciation of the Euro.