Search Help Sitemap Download
Verizon 2005 Interactive Annual Report
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 through the date of divestiture. Summarized results of operations for Verizon Information Services Canada are as follows:
(dollars in millions )
Years Ended December 31,   2004     2003  
Income from operations of Verizon Information Services Canada before income taxes $ 99   $ 88  
Gain on sale of investment   1,017     –  
Income tax provision   (546 )   (39 )
Income on discontinued operations, net of tax $ 570   $ 49  

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 and $284 million for the years ended December 31, 2004 and 2003, 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  
Loss from operations of Iusacell before income taxes $ –
Investment loss   (957 )
Income tax benefit   22
Loss on discontinued operations, net of tax   $ (935 )

Included in loss from operations of Iusacell before income taxes in the preceding table are operating revenues of $181 million for the year ended December 31, 2003.

Sales of Businesses, Net
Verizon Hawaii Inc.
During the second quarter of 2004, we entered into an agreement to sell our wireline and directory businesses in Hawaii, including Verizon Hawaii Inc. which operated approximately 700,000 switched access lines, as well as the services and assets of Verizon Long Distance, Verizon Online, Verizon Information Services and Verizon Select Services Inc. in Hawaii, to an affiliate of The Carlyle Group. This transaction closed during the second quarter of 2005. In connection with this sale, we received net proceeds of $1,326 million and recorded a net pretax gain of $530 million ($336 million after-tax). As a result of entering into the agreement to sell the Hawaii businesses, we separately classified the assets held for sale and related liabilities in the December 31, 2004 condensed consolidated balance sheet. Additional detail related to the assets held for sale, and related liabilities, follows:
(dollars in millions )
Year Ended December 31, 2004
Current assets   $ 109  
Plant, property and equipment, net   820  
Other non-current assets   21  
   Total assets   $ 950  
Debt maturing within one year   $ 125  
Other current liabilities     48  
Long-term debt     302  
Other non-current liabilities     50  
   Total liabilities   $ 525  

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.
Top
Features | Selected Financial Data and MD&A | Financials | Proxy | Investor Relations Website
* This is an interactive electronic version of Verizon’s 2005 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.