Verizon Wireless 2009 Annual Report Download - page 29

27
OTHER ITEMS
Management’s Discussion and Analysis
of Financial Condition and Results of Operations continued
Access Lines Spin-off and Other Charges
During 2009, we recorded pretax charges of $453 million ($287 mil-
lion after-tax, or $.10 per diluted share) for costs incurred related to our
Wireline cost reduction initiatives, as well as network, non-network soft-
ware and other activities to enable the markets to be divested to operate
on a stand-alone basis subsequent to the closing of the transaction with
Frontier, and professional advisory and legal fees in connection with this
transaction.
In 2008 and 2007, we recorded pretax charges of $103 million ($81 million
after-tax, or $.03 per diluted share) and $84 million ($80 million after-
tax, or $.03 per diluted share), respectively, for costs incurred related to
network, non-network software, and other activities to enable the opera-
tions in Maine, New Hampshire and Vermont to operate on a stand-alone
basis subsequent to the spin-off of our telephone access line operations
in those states, and professional advisory and legal fees in connection
with this transaction.
Investment Impairment Charges
During 2008, we recorded a pretax charge of $48 million ($31 million after-
tax, or $.01 per diluted share) related to an other-than-temporary decline
in the fair value of our investments in certain marketable securities.
International Taxes
In December 2007, Verizon received a net distribution from Vodafone
Omnitel of approximately $2,100 million and received an additional
$670 million net distribution in April 2008. During 2007, we recorded
$610 million ($.21 per diluted share) of foreign and domestic taxes
and expenses specifically relating to our share of Vodafone Omnitel’s
distributable earnings.
Severance, Pension and Benefit Charges
During 2009, we recorded net pretax severance, pension and benefits
charges of $4,046 million ($2,487 million after-tax, or $.88 per diluted
share). Included in the charges were net pretax settlement losses of
$1,183 million ($719 million after-tax) related to employees that received
lump-sum distributions, primarily resulting from our previous separation
plans, as prescribed payment thresholds were reached. Additionally, we
recorded net pretax pension and postretirement curtailment losses of
$1,810 million ($1,100 million after-tax) as workforce reductions caused
the elimination of a significant amount of future service requiring us to
recognize a portion of the prior service costs and actuarial losses. These
charges also included $1,053 million ($668 million after-tax) for workforce
reductions of approximately 17,600 employees, 4,200 of which occurred
in late 2009, with the remainder expected to occur in 2010.
During 2008, we recorded net pretax severance, pension and benefits
charges of $950 million ($588 million after-tax, or $.21 per diluted share).
This charge primarily included $586 million ($363 million after-tax) for
workforce reductions in connection with the separation of approximately
8,600 employees and related charges; 3,500 of whom were separated in
the second half of 2008 and the remainder in 2009. Also included are
net pretax pension settlements losses of $364 million ($225 million after-
tax) related to employees that received lump-sum distributions, primarily
resulting from our separation plans in which prescribed payment thresh-
olds were reached.
During the fourth quarter of 2007, we recorded net pretax charges of
$772 million ($477 million after-tax, or $.16 per diluted share) primarily
in connection with workforce reductions of 9,000 employees and related
charges, 4,000 of whom were separated in the fourth quarter of 2007 with
the remaining reductions occurring in 2008. In addition, we adjusted our
actuarial assumptions for severance to align with future expectations.
Merger Integration and Acquisition Costs
During 2009, we recorded pretax charges of $1,211 million ($380 million
attributable to Verizon after-tax, or $.13 per diluted share), for merger
integration activities primarily related to the Alltel acquisition including
trade name amortization, re-branding initiatives and handset conversion
costs. Additionally, the 2009 charges also included transaction fees and
costs associated with the acquisition, including fees related to the credit
facility that was entered into and utilized to complete the acquisition.
In 2008 and 2007, we recorded pretax charges of $174 million ($107 mil-
lion attributable to Verizon after-tax, or $.03 per diluted share) and $178
million ($112 million after-tax, or $.04 per diluted share), respectively, pri-
marily comprised of systems integration activities and other costs related
to re-branding initiatives, facility exit costs and advertising associated
with the MCI acquisition.