Notes to Consolidated Financial Statements

NOTE 15

COMPREHENSIVE INCOME

Comprehensive income (loss) consists of net income and other gains and losses affecting equity 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

The changes in Foreign currency translation adjustments were as follows:

(dollars in millions)

Years Ended December 31,

2009

 

2008

 

2007

 

Foreign Currency Translation Adjustments:

 

 

 

 

 

 

 

 

 

Vodafone Omnitel

$

49

 

$

(119

)

$

397

 

CANTV

 

 

 

 

 

412

 

Other international operations

 

29

 

 

(112

)

 

29

 

 

$

78

 

$

(231

)

$

838

 

Net Unrealized Gains (Losses) on Cash Flow Hedges

The changes in Unrealized gains (losses) on cash flow hedges were as follows:

(dollars in millions)

Years Ended December 31,

2009

 

2008

 

2007

 

Unrealized Gains (Losses) on Cash Flow Hedges

 

 

 

 

 

 

 

 

 

Unrealized gains (losses), net of taxes

$

112

 

$

(43

)

$

(2

)

Less reclassification adjustments for gains realized in net income, net of taxes

 

25

 

 

(3

)

 

(3

)

Net unrealized gains (losses) on cash flow hedges

$

87

 

$

(40

)

$

1

 

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,

2009

 

2008

 

2007

 

Unrealized Gains (Losses) on Marketable Securities

 

 

 

 

 

 

 

 

 

Unrealized gains (losses), net of taxes

$

95

 

$

(142

)

$

13

 

Less reclassification adjustments for gains (losses) realized in net income,

net of taxes

 

8

 

 

(45

)

 

17

 

Net unrealized gains (losses) on marketable securities

$

87

 

$

(97

)

$

(4

)

Accumulated Other Comprehensive Loss

The components of Accumulated other comprehensive loss were as follows:

(dollars in millions)

At December 31,

2009

 

2008

 

Foreign currency translation adjustments

$

1,014

 

$

936

 

Net unrealized gain (loss) on cash flow hedges

 

37

 

 

(50

)

Unrealized gain (loss) on marketable securities

 

50

 

 

(37

)

Defined benefit pension and postretirement plans

 

(12,580

)

 

(14,221

)

Accumulated Other Comprehensive Loss

$

(11,479

)

$

(13,372

)

Foreign Currency Translation Adjustments

The change in Foreign currency translation adjustments during 2009 was primarily driven by the devaluation of the U.S. dollar against the Euro. The change in Foreign currency translation adjustments during 2008 was primarily driven by the settlement of the foreign currency forward contracts, which hedged a portion of our net investment in Vodafone Omnitel and the devaluation of the Euro. During 2007, we sold our interest in CANTV (see Note 3).

Net Unrealized Gains (Losses) on Cash Flow Hedges

During 2009 and 2008, Unrealized gains on cash flow hedges, included in Other comprehensive income attributable to noncontrolling interest, primarily reflects activity related to the cross currency swap (see Note 10).

Defined Benefit Pension and Postretirement Plans

The change in Defined benefit pension and postretirement plans of $1.6 billion, net of taxes of $1.2 billion at December 31, 2009 was attributable to the change in the funded status of the plans in connection with the required annual pension and postretirement valuation. The funded status was impacted by changes in asset performance, actuarial assumptions, plan experience and settlement losses (see Note 12).

The change in Defined benefit pension and postretirement plans of $8.5 billion, net of taxes of $5.4 billion at December 31, 2008 was attributable to the change in the funded status of the plans in connection with the required annual pension and postretirement valuation. The funded status was impacted by changes in asset performance, actuarial assumptions, and plan experience. In addition to the pension and postretirement items, we recorded a reduction to the beginning balance of Accumulated other comprehensive loss of $79 million ($44 million after-tax) in connection with the spin-off of our local exchange and related business assets in Maine, New Hampshire and Vermont.

The change in Defined benefit pension and postretirement plans of $1.9 billion, net of taxes of $0.7 billion, at December 31, 2007 was attributable to the change in the funded status of the plans in connection with the required annual pension and postretirement valuation. The funded status was impacted by changes in actuarial assumptions, asset performance and plan experience.