Verizon Wireless 2007 Annual Report Download - page 53

Notes to Consolidated Financial Statements continued
51
NOTE 5
PLANT, PROPERTY AND EQUIPMENT
The following table displays the details of plant, property and equipment,
which is stated at cost:
(dollars in millions)
At December 31, 2007 2006
Land $ 839 $ 959
Buildings and equipment 19,734 19,207
Network equipment 173,654 163,580
Furniture, oce and data processing equipment 11,912 12,789
Work in progress 1,988 2,315
Leasehold improvements 3,612 3,061
Other 2,255 2,198
213,994 204,109
Less accumulated depreciation 128,700 121,753
Total $ 85,294 $ 82,356
NOTE 6
INVESTMENTS IN UNCONSOLIDATED BUSINESSES
Our investments in unconsolidated businesses are comprised of the
following:
(dollars in millions)
At December 31, Ownership
2007
Investment Ownership
2006
Investment
Equity Investees
Vodafone Omnitel 23.1% $ 2,313 23.1% $ 3,624
CANTV – – 28.5 230
Other Various 744 Various 744
Total equity investees 3,057 4,598
Cost Investees Various 315 Various 270
Total investments
in unconsolidated
businesses $ 3,372 $ 4,868
Dividends and repatriations of foreign earnings received from these
investees amounted to $2,571 million in 2007, $42 million in 2006 and
$2,335 million in 2005.
Equity Investees
Vodafone Omnitel
Vodafone Omnitel is the second largest wireless communications
company in Italy. At December 31, 2007 and 2006, our investment in
Vodafone Omnitel included goodwill of $1,154 million and $1,044 million,
respectively.
In December 2007, Verizon received a net distribution from Vodafone
Omnitel of approximately $2.1 billion and we anticipate that we may
receive an additional distribution from Vodafone Omnitel within the
next twelve months. As a result, we recorded $610 million of foreign
and domestic taxes and expenses specifically relating to our share of
Vodafone Omnitel’s distributable earnings. During 2005, we repatriated
approximately $2.2 billion of Vodafone Omnitel’s earnings through the
repurchase of issued and outstanding shares of its equity. Vodafone
Omnitel’s owners, Verizon and Vodafone Group Plc (Vodafone),
participated on a pro rata basis; consequently, Verizon’s ownership
interest after the share repurchase remained at 23.1%.
CANTV
Verizon sold its interest in CANTV in 2007 (see Note 2).
Other Equity Investees
Verizon has limited partnership investments in entities that invest in
affordable housing projects, for which Verizon provides funding as a
limited partner and receives tax deductions and tax credits based on its
partnership interests. At December 31, 2007 and 2006, Verizon had equity
investments in these partnerships of $637 million and $659 million, respec-
tively. Verizon currently adjusts the carrying value of these investments for
any losses incurred by the limited partnerships through earnings.
The remaining investments include wireless partnerships in the U.S. and
other smaller domestic and international investments.
Cost Investees
Some of our cost investments are carried at their current market value.
Other cost investments are carried at their original cost, except in cases
where we have determined that a decline in the estimated market value
of an investment is other than temporary as described in Note 4. Our cost
investments include a variety of domestic and international investments
primarily involved in providing communication services.
NOTE 7
MINORITY INTEREST
Minority interests in equity of subsidiaries were as follows:
(dollars in millions)
At December 31, 2007 2006
Minority interests in consolidated subsidiaries:
Wireless joint venture $ 31,782 $ 27,854
Cellular partnerships and other 506 483
$ 32,288 $ 28,337
Wireless Joint Venture
The wireless joint venture was formed in April 2000 in connection with
the combination of the U.S. wireless operations and interests of Verizon
and Vodafone. The wireless joint venture operates as Verizon Wireless.
Verizon owns a controlling 55% interest in Verizon Wireless and Vodafone
owns the remaining 45%.
Under the terms of an investment agreement, Vodafone had the right
to require Verizon Wireless to purchase up to an aggregate of $20 billion
worth of Vodafone’s interest in Verizon Wireless at designated times (put
windows) at its then fair market value, not to exceed $10 billion in any
one put window. The last of these put windows opened on June 10 and
closed on August 9 in 2007. Vodafone did not exercise its right during this
period and no longer has any right to require the purchase of any of its
interest in Verizon Wireless.
Cellular Partnerships and Other
In August 2002, Verizon Wireless and Price Communications Corp. (Price)
combined Price’s wireless business with a portion of Verizon Wireless. The
resulting limited partnership, Verizon Wireless of the East LP (VZ East),
is controlled and managed by Verizon Wireless. In exchange for its con-
tributed assets, Price received a limited partnership interest in VZ East
which was exchangeable into the common stock of Verizon Wireless if
an initial public offering of that stock occurred, or into the common stock
of Verizon on the fourth anniversary of the asset contribution date. On
August 15, 2006, Verizon delivered 29.5 million shares of newly-issued
Verizon common stock to Price valued at $1,007 million in exchange for
Price’s limited partnership interest in VZ East. As a result of acquiring Price’s
limited partnership interest, Verizon recorded goodwill of $345 million in
the third quarter of 2006 attributable to its Domestic Wireless segment.