Notes to Consolidated Financial Statements
NOTE 18
COMPREHENSIVE INCOME
Comprehensive income (loss) 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, |
2008 |
|
2007 |
|
2006 |
|
|||
|---|---|---|---|---|---|---|---|---|---|
Foreign Currency Translation Adjustments: |
|||||||||
Vodafone Omnitel |
$ |
(119 |
) |
$ |
397 |
|
$ |
330 |
|
CANTV |
|
— |
|
|
412 |
|
|
— |
|
Verizon Dominicana |
|
— |
|
|
— |
|
|
786 |
|
Other international operations |
|
(112 |
) |
|
29 |
|
|
80 |
|
|
$ |
(231 |
) |
$ |
838 |
|
$ |
1,196 |
|
Net Unrealized Gains (Losses) on Cash Flow Hedges
The changes in Unrealized Gains (Losses) on Cash Flow Hedges were as follows:
(dollars in millions) |
|||||||||
Years Ended December 31, |
2008 |
|
2007 |
|
2006 |
|
|||
|---|---|---|---|---|---|---|---|---|---|
Unrealized Gains (Losses) on Cash Flow Hedges |
|||||||||
Unrealized gains (losses), net of taxes |
$ |
(43 |
) |
$ |
(2 |
) |
$ |
11 |
|
Less reclassification adjustments for losses realized |
|||||||||
in net income, net of taxes |
|
(3 |
) |
|
(3 |
) |
|
(3 |
) |
Net unrealized gains (losses) on cash flow hedges |
$ |
(40 |
) |
$ |
1 |
|
$ |
14 |
|
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, |
2008 |
|
2007 |
|
2006 |
|
|||
|---|---|---|---|---|---|---|---|---|---|
Unrealized Gains (Losses) on Marketable Securities |
|||||||||
Unrealized gains (losses), net of taxes |
$ |
(142 |
) |
$ |
13 |
|
$ |
79 |
|
Less reclassification adjustments for gains (losses) realized |
|||||||||
in net income, net of taxes |
|
(45 |
) |
|
17 |
|
|
25 |
|
Net unrealized gains (losses) on marketable securities |
$ |
(97 |
) |
$ |
(4 |
) |
$ |
54 |
|
Accumulated Other Comprehensive Loss
The components of Accumulated Other Comprehensive Loss are as follows:
(dollars in millions) |
||||||
At December 31, |
2008 |
|
2007 |
|
||
|---|---|---|---|---|---|---|
Foreign currency translation adjustments |
$ |
936 |
|
$ |
1,167 |
|
Net unrealized losses on hedging |
|
(50 |
) |
|
(10 |
) |
Unrealized gains (losses) on marketable securities |
|
(37 |
) |
|
60 |
|
Defined benefit pension and postretirement plans |
|
(14,221 |
) |
|
(5,723 |
) |
Accumulated Other Comprehensive Loss |
$ |
(13,372 |
) |
$ |
(4,506 |
) |
Foreign Currency Translation Adjustments
The change in foreign currency translation adjustments at December 31, 2008 was primarily driven by the settlement of the foreign currency forward contracts which hedged a portion of our net investment in Vodafone Omnitel (see Note 11) and the devaluation of the Euro. During 2007 we sold our interest in CANTV. During 2006 we sold our interest in Verizon Dominicana. See Note 3 for information on CANTV and Verizon Dominicana.
Defined Benefit Pension and Postretirement Plans
The change in defined benefit pension and postretirement plans of $8.5 billion, net of taxes of $5.4 billion, at December 31, 2008 was attributable to 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 asset performance, actuarial assumptions, and plan experience. In addition to the pension and postretirement items, we recorded a reduction to the beginning balance of Accumulated other comprehensive loss of $79 million ($44 million after-tax) in connection with the spin-off of our local exchange and related business assets in Maine, New Hampshire and Vermont.