Verizon Wireless 2007 Annual Report Download - page 52

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During 2005, we reported a net pretax charge of $98 million ($59 million
after-tax) related to the restructuring of the Verizon management retire-
ment benefit plans. This pretax charge was recorded in accordance with
SFAS No. 88, and SFAS No. 106, Employers’ Accounting for the Postretirement
Benefits Other Than Pensions (SFAS No. 106) and included the unamortized
cost of prior pension enhancements of $430 million, offset partially by a
pretax curtailment gain of $332 million related to retiree medical ben-
efits. In connection with this restructuring, management employees: no
longer earn pension benefits or earn service towards the company retiree
medical subsidy after June, 2006; received an 18-month enhancement
of the value of their pension and retiree medical subsidy; and receive a
higher savings plan matching contribution.
Other Items
In 2006, we recorded pretax charges of $26 million ($16 million after-tax)
resulting from the extinguishment of debt assumed in connection with
the completion of the MCI merger (see Note 8).
During 2005, we recorded pretax charges of $139 million ($133 million
after-tax) including a pretax impairment charge of $125 million per-
taining to aircraft leased to airlines involved in bankruptcy proceedings
and a pretax charge of $14 million ($8 million after-tax) in connection
with the early extinguishment of debt.
NOTE 4
MARKETABLE SECURITIES AND OTHER INVESTMENTS
We have investments in marketable securities which are considered
“available-for-sale” under SFAS No. 115. These investments have been
included in our consolidated balance sheets in Short-Term Investments,
Investments in Unconsolidated Businesses and Other Assets.
Under SFAS No. 115, available-for-sale securities are required to be carried
at their fair value, with unrealized gains and losses (net of income taxes)
that are considered temporary in nature recorded in Accumulated Other
Comprehensive Loss. The fair values of our investments in marketable
securities are determined based on market quotations. We continually
evaluate our investments in marketable securities for impairment due to
declines in market value considered to be other than temporary. That
evaluation includes, in addition to persistent, declining stock prices,
general economic and company-specific evaluations. In the event of a
determination that a decline in market value is other than temporary,
a charge to earnings is recorded in Other Income and (Expense), Net in
the consolidated statements of income for all or a portion of the unreal-
ized loss, and a new cost basis in the investment is established. As of
December 31, 2007, no impairments were determined to exist.
The following table shows certain summarized information related to our
investments in marketable securities:
(dollars in millions)
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair
Value
At December 31, 2007
Short-term investments $ 497 $ 21 $ – $ 518
Investments in unconsolidated
businesses (Note 6) 286 42 – 328
Other assets 661 31 – 692
$ 1,444 $ 94 $ – $ 1,538
At December 31, 2006
Short-term investments $ 616 $ 28 $ – $ 644
Investments in unconsolidated
businesses (Note 6) 259 38 (2) 295
Other assets 594 31 – 625
$ 1,469 $ 97 $ (2) $ 1,564
Our short-term investments are primarily bonds and mutual funds.
Certain other investments in securities that we hold are not adjusted to
market values because those values are not readily determinable and/
or the securities are not marketable. We do, however, adjust the carrying
values of these securities in situations where we believe declines in value
below cost were other than temporary. The carrying values for invest-
ments not adjusted to market value were $15 million at December 31,
2007 and $12 million at December 31, 2006.
Notes to Consolidated Financial Statements continued