Verizon Wireless 2006 Annual Report Download - page 74

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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.
Changes in the components of other comprehensive income (loss),
net of income tax expense (benefit), are as follows:
(dollars in millions)
Years Ended December 31, 2006 2005 2004
Foreign Currency Translation Adjustments $ 1,196 $(755) $ 548
Unrealized Gains (Losses) on Net Investment Hedges
Unrealized gains (losses), net of taxes of $–, $1 and $(48) –2(58)
Less reclassification adjustments for losses realized in net income,
net of taxes of $–, $– and $(48) ––(58)
Net unrealized gains on net investment hedges –2–
Unrealized Derivative Gains (Losses) on Cash Flow Hedges
Unrealized gains (losses), net of taxes of $–, $– and $(2) 11 4(9)
Less reclassification adjustments for (losses) realized in net income,
net of taxes of $(1), $(2) and $(2) (3)(6)(26)
Net unrealized derivative gains on cash flow hedges 14 10 17
Unrealized Gains (Losses) on Marketable Securities
Unrealized gains, net of taxes of $30, $10 and $4 79 48
Less reclassification adjustments for gains realized in net income,
net of taxes of $13, $14 and $1 25 25 1
Net unrealized gains (losses) on marketable securities 54 (21) 7
Minimum Pension Liability Adjustment, net of taxes of $417, $37 and $(185) 788 51 (332)
Defined benefit pension and postretirement plans –
SFAS No. 158 adoption, net of taxes of $(5,591) (7,671)– –
Other, net of taxes of $(159), $(20) and $(53) (128)(17) (43)
Other Comprehensive Income (Loss) $ (5,747) $(730) $ 197
The foreign currency translation adjustment in 2006 represents the
realization of the cumulative foreign currency translation loss of
approximately $800 million in connection with the sale of our con-
solidated interest in Verizon Dominicana (see Note 3), as well as
unrealized gains from the appreciation of the functional currency on
our investment in Vodafone Omnitel. The minimum pension liability
adjustment in 2006 represents the adoption of SFAS No. 158.
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.
The foreign currency translation adjustment in 2004 represents
unrealized gains from the appreciation of the functional currencies
at Verizon Dominicana and our investment in Vodafone Omnitel as
well as the realization of the cumulative foreign currency translation
loss in connection with the sale of our 20.5% interest in TELUS (see
Note 4), partially offset by unrealized losses from the decline in the
functional currency on our investment in CANTV.
During 2005, we entered into zero cost euro collars to hedge a por-
tion of our net investment in Vodafone Omnitel. As of December 31,
2005, our positions in the zero cost euro collars have been settled.
During 2004, we entered into foreign currency forward contracts to
hedge our net investment in Verizon Information Services Canada
and TELUS (see Note 3). In connection with the sales of these inter-
ests in the fourth quarter of 2004, the unrealized losses on these net
investment hedges were realized in net income along with the cor-
responding foreign currency translation balance.
As discussed in Note 15, we adopted SFAS No. 158 effective
December 31, 2006, which resulted in a net decrease to share-
owners’ investment of $6,883 million.
The changes in the minimum pension liability in 2005 and 2004
were required by accounting rules for certain pension plans based
on their funded status (see Note 15). In connection with our adop-
tion of SFAS No. 158 on December 31, 2006, we no longer record a
minimum pension liability adjustment as a discrete component of
Accumulated Other Comprehensive Loss.
Notes to Consolidated Financial Statements continued