financials > notes to consolidated financial statements > note 3
note 3
DISCONTINUED OPERATIONS AND SALES OF BUSINESSES, NET

Discontinued Operations
Verizon Information Services Canada
During 2004, we announced our decision to sell Verizon Information Services Canada Inc. to an affiliate of Bain Capital, a global private investment firm, for $1,540 million (Cdn. $1,985 million). The sale closed during the fourth quarter of 2004 and resulted in a gain of $1,017 million ($516 million after-tax). In accordance with SFAS No. 144, we have classified the results of operations of Verizon Information Services Canada as discontinued operations in the consolidated statements of income in all years. In addition, the assets and liabilities of Verizon Information Services Canada are summarized and disclosed as current assets and current liabilities in the December 31, 2003 consolidated balance sheet.

Additional detail related to those assets and liabilities is as follows:

(dollars in millions )
At December 31,   2003  
Current assets $ 103  
Plant, property and equipment, net   14  
Other non-current assets   588  
Total assets $ 705  
Current liabilities $ 66  
Other non-current liabilities   10  
Total liabilities $ 76  
Summarized results of operations for Verizon Information Services Canada are as follows:
(dollars in millions )
Years Ended December 31,   2004     2003     2002  
Income from operations of Verizon Information Services Canada
   before income taxes
$ 99   $ 88   $ 127  
Gain on sale of investment   1,017          
Income tax provision   (546 )   (39 )   (57 )
Income on discontinued operations, net of tax $ 570   $ 49   $ 70  

Included in income from operations of Verizon Information Services Canada before income taxes in the preceding table are operating revenues of Verizon Information Services Canada prior to its sale in the fourth quarter of 2004 of $280 million, $284 million and $248 million for the years ended December 31, 2004, 2003 and 2002, respectively.

Iusacell
Discontinued operations also include the results of operations of Grupo Iusacell, S.A. de C.V. (Iusacell) prior to the sale of Iusacell in July 2003. In connection with the decision to sell our interest in Iusacell and a comparison of expected sale proceeds, less cost to sell, to the net book value of our investment in Iusacell (including the foreign currency translation balance), we recorded a pretax loss of $957 million ($931 million after-tax) in the second quarter of 2003. This loss included $317 million of goodwill.

Summarized results of operations for Iusacell, which was part of our International segment, follows:

(dollars in millions )
Years Ended December 31,   2003     2002  
Loss from operations of Iusacell before income taxes $   $ (74 )
Investment loss   (957 )    
Income tax benefit (provision)   22     (12 )
Loss on discontinued operations, net of tax $ (935 ) $ (86 )

Included in income (loss) from operations of Iusacell before income taxes in the preceding table are operating revenues of $181 million and $540 million for the years ended December 31, 2003 and 2002, respectively.

Sales of Businesses, Net
Wireline Property Sales
During 2002, we completed the sales of all 675,000 of our switched access lines in Alabama and Missouri to CenturyTel Inc. and 600,000 of our switched access lines in Kentucky to ALLTEL Corporation for $4,059 million in cash proceeds ($191 million of which was received in 2001). We recorded a pretax gain of $2,527 million ($1,550 million after-tax). The operating revenues and operating expenses of the access lines sold were $623 million and $241 million, respectively, in 2002.

Other Transactions
In 2003, we recorded a net pretax gain of $141 million ($88 million after-tax) primarily related to the sale of our European directory publication operations in Austria, the Czech Republic, Gibraltar, Hungary, Poland and Slovakia.

During 2002, we recorded a net pretax gain of $220 million ($116 million after-tax), primarily resulting from a pretax gain on the sale of TSI Telecommunication Services Inc. of $466 million ($275 million after-tax), partially offset by an impairment charge in connection with our exit from the video business and other charges of $246 million ($159 million after-tax).

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* This is an interactive electronic version of Verizon’s 2004 Annual Report to Shareholders, and it is intended to be complete and accurate. The contents of this version are qualified in their entirety by reference to the printed version. A reproduction of the printed version is available in PDF format on this website