Verizon Wireless 2009 Annual Report Download - page 55

Notes to Consolidated Financial Statements continued
53
During 2008, we recorded pretax charges of $103 million ($81 million
after-tax), for costs incurred related to the separation of the wireline facili-
ties and operations in Maine, New Hampshire and Vermont from Verizon
at the closing of the transaction, as well as for professional advisory and
legal fees in connection with this transaction.
Discontinued Operations
On March 30, 2007, we completed the sale of our 52% interest in
Telecomunicaciones de Puerto Rico, Inc. (TELPRI) and received gross pro-
ceeds of approximately $980 million. The sale resulted in a pretax gain of
$120 million ($70 million after-tax). Verizon contributed $100 million ($65
million after-tax) of the proceeds to the Verizon Foundation.
We have classified the financial information of TELPRI as discontinued
operations in the consolidated financial statements for all periods pre-
sented through the date of the divestiture.
Income from discontinued operations, net of tax, presented in the consol-
idated statements of income during the year ended December 31, 2007
included operating revenues of $306 million, income before provision for
income taxes of $185 million, provision for income taxes of $43 million
and income from discontinued operations, net of tax of $142 million.
Extraordinary Item
In January 2007, the Bolivarian Republic of Venezuela (the Republic)
declared its intent to nationalize certain companies, including Compañía
Anónima Nacional Teléfonos de Venezuela (CANTV). On February 12,
2007, we entered into a Memorandum of Understanding (MOU) with the
Republic, which provided that the Republic offer to purchase all of the
equity securities of CANTV, including our 28.5% interest, through public
tender offers in Venezuela and the United States. Under the terms of the
MOU, the prices in the tender offers would be adjusted downward to
reflect any dividends declared and paid subsequent to February 12, 2007.
During 2007, the tender offers were completed and Verizon received
an aggregate amount of approximately $572 million, which included
$476 million from the tender offers as well as $96 million of dividends
declared and paid subsequent to the MOU. During 2007, based upon our
investment balance in CANTV, we recorded an extraordinary loss of $131
million, including taxes of $38 million.
NOTE 4
WIRELESS LICENSES, GOODWILL AND OTHER
INTANGIBLE ASSETS
Wireless Licenses
Changes in the carrying amount of wireless licenses are as follows:
(dollars in millions)
Balance at December 31, 2007 $ 50,796
Wireless licenses acquired 10,626
Capitalized interest on wireless licenses 557
Reclassifications, adjustments and other (5)
Balance at December 31, 2008 $ 61,974
Wireless licenses acquired (Note 2) 9,444
Capitalized interest on wireless licenses 730
Reclassifications, adjustments and other (81)
Balance at December 31, 2009 $ 72,067
Reclassifications, adjustments and other during 2009 primarily include
wireless licenses that are included in the Alltel Divestiture Markets (see
Note 2) as held for sale and included in Prepaid expenses and other in the
accompanying consolidated balance sheets. As of December 31, 2009
and 2008, $12.2 billion and $12.4 billion, respectively, of wireless licenses
were under development for commercial service for which we are capi-
talizing interest costs.
The average remaining renewal period of our wireless license portfolio
was 8.0 years as of December 31, 2009 (see Note 1, Goodwill and Other
Intangible Assets – Intangible Assets Not Subject to Amortization).
On March 20, 2008, the FCC announced the results of Auction 73 of
wireless spectrum licenses in the 700 MHz band. We were the suc-
cessful bidder for twenty-five 12 MHz licenses in the A-Block frequency,
seventy-seven 12 MHz licenses in the B-Block frequency and seven 22
MHz licenses (nationwide with the exception of Alaska) in the C-Block
frequency, with an aggregate bid price of $9,363 million. We have made
all required payments to the FCC for these licenses by April 2008. The FCC
granted us these licenses on November 26, 2008.
Goodwill
Changes in the carrying amount of goodwill are as follows:
(dollars in millions)
Domestic
Wireless Wireline Total
Balance at December 31, 2007 $ 345 $ 4,900 $ 5,245
Acquisitions (Note 2) 954 – 954
Reclassifications, adjustments and other (2) (162) (164)
Balance at December 31, 2008 $ 1,297 $ 4,738 $ 6,035
Acquisitions (Note 2) 16,353 – 16,353
Reclassifications, adjustments and other 88 (4) 84
Balance at December 31, 2009 $ 17,738 $ 4,734 $ 22,472
Reclassifications, adjustments and other in Domestic Wireless during 2009
relate to the finalization of the Rural Cellular purchase accounting, par-
tially offset by goodwill that is included in the Alltel Divestiture Markets
(see Note 2) as held for sale and included in Prepaid expenses and other
in the accompanying consolidated financial statements. Reclassifications,
adjustments and other during 2008 reflect the revised estimated tax
losses of acquired assets and liabilities.