Verizon Wireless 2006 Annual Report Download - page 71

Notes to Consolidated Financial Statements continued
69
earnings are indefinitely invested outside of the U.S. It is not prac-
tical to estimate the amount of taxes that might be payable upon
the remittance of such earnings.
The valuation allowance primarily represents the tax benefits of cer-
tain foreign and state net operating loss carry forwards, capital loss
carry forwards and other deferred tax assets which may expire
without being utilized. During 2006, the valuation allowance
increased $1,785 million. This increase was primarily due to the
addition of former MCI valuation allowances. This increase was
offset by valuation allowance reversals relating to utilizing prior year
investment losses to offset the capital gains realized on the sale of
various businesses including Verizon Dominicana.
Former MCI tax loss carry forwards include federal, state and for-
eign net operating loss tax carry forwards as well as capital loss tax
carry forwards. As a result of the MCI Bankruptcy and the applica-
tion of the related tax attribute reduction rules, MCI reduced the tax
basis in intercompany accounts receivables. This reduction in tax
basis results in a deferred tax liability as reflected above.
NOTE 17
SEGMENT INFORMATION
Reportable Segments
On November 17, 2006, we completed the spin-off of our U.S. print
and Internet yellow pages directories to our shareowners, which
was included in the Information Services segment. The spin-off
resulted in a new company, named Idearc Inc. In addition, we
reached definitive agreements to sell our interests in TELPRI and
Verizon Dominicana, each of which were included in the
International segment. The operations of our U.S. print and Internet
yellow pages directories business, Verizon Dominicana and TELPRI
are reported as discontinued operations and assets held for sale.
Accordingly we have two reportable segments, which we operate
and manage as strategic business units and organize by products
and services. We measure and evaluate our reportable segments
based on segment income. Corporate, eliminations and other
includes unallocated corporate expenses, intersegment elimina-
tions recorded in consolidation, the results of other businesses
such as our investments in unconsolidated businesses, primarily
Omnitel and CANTV, lease financing, and asset impairments and
expenses that are not allocated in assessing segment performance
due to their non-recurring nature. These adjustments include trans-
actions that the chief operating decision makers exclude in
assessing business unit performance due primarily to their non-
recurring and/or non-operational nature. Although such
transactions are excluded from the business segment results, they
are included in reported consolidated earnings. Gains and losses
that are not individually significant are included in all segment
results, since these items are included in the chief operating deci-
sion makers’ assessment of unit performance.
Our segments and their principal activities consist of the following:
Wireline
Wireline provides communications services including voice, broadband
video and data, next generation IP network services, network access, long
distance and other services to consumers, carriers, business and govern-
ment customers both domestically and globally in 150 countries.
Domestic Wireless
Domestic wireless products and services include wireless voice and data
products and other value added services and equipment sales across the
United States.