Notes to Consolidated Financial Statements

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. Significant changes in the components of other comprehensive income (loss), net of income tax expense (benefit), are described below.

Foreign Currency Translation

(dollars in millions)

Years Ended December 31,

2007

 

2006

 

2005

 

 

Foreign Currency Translation Adjustments:

 

Vodafone Omnitel

$

397

 

$

330

 

$

(590

)

CANTV

 

412

 

 

 

 

(47

)

Verizon Dominicana

 

 

 

786

 

 

(114

)

Other international operations

 

29

 

 

80

 

 

(4

)

 

$

838

 

$

1,196

 

$

(755

)

We sold our interest in CANTV during the second quarter of 2007. We sold our interest in Verizon Dominicana during the fourth quarter of 2006. See Note 2 for information on CANTV and Verizon Dominicana. 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.

Unrealized Gains (Losses) on Marketable Securities

The changes in Unrealized Gains (Losses) on Marketable Securities were as follows:

(dollars in millions)

Years Ended December 31,

2007

 

2006

 

2005

 

 

Unrealized Gains (Losses) on Marketable Securities

Unrealized gains, net of taxes of $13, $30 and $10

$

13

 

$

79

 

$

4

 

Less reclassification adjustments for gains realized

in net income, net of taxes of $11, $13 and $14

 

(17

)

 

(25

)

 

(25

)

Net unrealized gains (losses) on marketable securities

$

(4

)

 

54

 

 

(21

)

Defined Benefit Pension and Postretirement Plans

During 2007, the change in defined benefit pension and postretirement plans of $1,948 million, net of taxes of $661 million, represents the change in the funded status of the plans in connection with the annual pension and postretirement valuation in accordance with SFAS No. 158. The funded status was impacted by changes in actuarial assumptions, asset performance and plan experience.

Accumulated Other Comprehensive Loss

The components of Accumulated Other Comprehensive Loss are as follows:

(dollars in millions)

At December 31,

2007

 

2006

 

 

Foreign currency translation adjustments

$

1,167

 

$

329

 

Net unrealized losses on hedging

 

(10

)

 

(11

)

Unrealized gains on marketable securities

 

60

 

 

64

 

Defined benefit pension and postretirement plans

 

(5,723

)

 

(7,671

)

Other

 

 

 

(241

)

Accumulated Other Comprehensive Loss

$

(4,506

)

$

(7,530

)

The foreign currency translation adjustments at December 31, 2007 were primarily comprised of unrealized gains in the value of our investment in Vodafone Omnitel as a result of the appreciation of the Euro.