Notes to Consolidated Financial Statements

Note 15

Comprehensive Income

Comprehensive income consists of net income and other gains and losses affecting equity that, under generally accepted accounting principles, are excluded from net income. Significant changes in the components of Other comprehensive income (loss), net of (provision) benefit for income taxes are described below.

Foreign Currency Translation

The changes in Foreign currency translation adjustments were as follows:

(dollars in millions)

Years Ended December 31,

2010

 

2009

 

2008

 

Vodafone Omnitel

$

(119

)

$

49

 

$

(119

)

Other international operations

 

(52

)

 

29

 

 

(112

)

Foreign currency translation adjustments

$

(171

)

$

78

 

$

(231

)

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,

2010

 

2009

 

2008

 

Unrealized gains (losses)

$

38

 

$

112

 

$

(43

)

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

 

(51

)

 

25

 

 

(3

)

Net unrealized gains (losses) on cash flow hedges

$

89

 

$

87

 

$

(40

)

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,

2010

 

2009

 

2008

 

Unrealized gains (losses)

$

37

 

$

95

 

$

(142

)

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

 

8

 

 

8

 

 

(45

)

Net unrealized gains (losses) on marketable securities

$

29

 

$

87

 

$

(97

)

Foreign Currency Translation Adjustments

The change in Foreign currency translation adjustments during 2010 was primarily driven by the devaluation of the Euro versus the U.S. dollar. The change in Foreign currency translation adjustments during 2009 was primarily driven by the devaluation of the U.S. dollar versus 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 versus the U.S. dollar.

Net Unrealized Gains (Losses) on Cash Flow Hedges

During 2010, 2009 and 2008, Unrealized gains (losses) on cash flow hedges included in Other comprehensive income attributable to noncontrolling interest, primarily reflects activity related to a cross currency swap (see Note 10).

Defined Benefit Pension and Postretirement Plans

The change in Defined benefit pension and postretirement plans of $2.5 billion, net of taxes of $1.2 billion at December 31, 2010 was attributable to the change in prior service cost. The change was impacted by a change to our Medicare Part D strategy, resulting in the adoption of plan amendments during the fourth quarter of 2010, which will allow the company to be eligible for greater Medicare Part D plan subsidies over time and was also impacted by the curtailment losses associated with the voluntary incentive program for union-represented employees recorded in the second quarter of 2010 (see Note 12). The change in Defined benefit pension and postretirement plans of $0.3 billion, net of taxes of $0.4 billion at December 31, 2009 was attributable to a change in prior service cost.

Accumulated Other Comprehensive Income (Loss)

The components of Accumulated other comprehensive income (loss) were as follows:

(dollars in millions)

At December 31,

2010

 

2009

 

Foreign currency translation adjustments

$

843

 

$

1,014

 

Net unrealized gain on cash flow hedges

 

126

 

 

37

 

Unrealized gain on marketable securities

 

79

 

 

50

 

Defined benefit pension and postretirement plans

 

1

 

 

(2,473

)

Accumulated Other Comprehensive Income (Loss)

$

1,049

 

$

(1,372

)