EXHIBIT 99b**CONSOLIDATED FINANCIAL STATEMENTS****CINGULAR WIRELESS LLC***Years Ended December 31, 2003, 2004 and 2005**with Report of Independent Registered Public AccountingFirm*
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**CONSOLIDATED FINANCIAL STATEMENTS****Years Ended December 31, 2003, 2004 and 2005**     **Contents**        Report of Independent Registered Public Accounting    Firm — Ernst & Young LLP  76     Report of Independent Registered Public Accounting    Firm — PricewaterhouseCoopers LLP  77     Audited Consolidated Financial Statements        Consolidated Balance Sheets  78     Consolidated Statements of Income  79     Consolidated Statements of Changes in Members’ Capital  80     Consolidated Statements of Comprehensive Income  81     Consolidated Statements of Cash Flows  82     Notes to Consolidated Financial Statements  83 
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**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**Board of Directors and ShareownersCingular Wireless Corporation, Manager of     Cingular Wireless LLCWe have audited the accompanying consolidated balance sheets ofCingular Wireless LLC as of December 31, 2004 and 2005 andthe related consolidated statements of income, changes inmembers’ capital, comprehensive income and cash flows foreach of the three years in the period ended December 31,2005. These financialstatements are the responsibility of theCompany’s management. Our responsibility is to express anopinion on these financial statements based on ouraudits. The financial statements of Omnipoint FacilitiesNetwork II, LLC (Omnipoint), a wholly-owned subsidiary ofGSM Facilities, LLC (an equity investee in which the Company hadan approximate 60% interest at December 31, 2004), havebeen audited by other auditors whose report has been furnishedto us; insofar as our opinion on the consolidated financialstatements relates to the 2003 and 2004 amounts included forOmnipoint, it is based solely on their report. In theconsolidated financial statements, the Company’s indirectinvestment in Omnipoint is stated at $880 million atDecember 31, 2004, and the Company’s equity in netlosses of Omnipoint is stated at $100 million for the yearended December 31, 2003 and $135 million for the yearended December 31, 2004.We conducted our audits in accordance with standards of thePublic Company Accounting Oversight Board (United States). Thosestandards require that we plan and perform the audit to obtainreasonable assurance about whether the financial statements arefree of material misstatement. An audit includes examining, on atest basis, evidence supporting the amounts and disclosures inthe financial statements. An audit also includes assessing theaccounting principles used and significant estimates made bymanagement, as well as evaluating the overall financialstatement presentation. We believe that our audits and thereport of other auditors for 2003 and 2004 provide a reasonablebasis for our opinion.In our opinion, based on our audits and the report of otherauditors for 2003 and 2004, the consolidated financialstatements referred to above present fairly, in all materialrespects, the consolidated financial position of CingularWireless LLC at December 31, 2004 and 2005, and theconsolidated results of its operations and its cash flows foreach of the three years in the period ended December 31,2005, in conformity with U.S. generally accepted accountingprinciples.     /s/ Ernst & Young    LLP    Atlanta, GeorgiaFebruary 24, 2006
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**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**To the Members and Board of Directors of GSM Facilities, LLC:In our opinion, the accompanying balance sheet and the relatedstatements of operations, of member’s equity and of cashflows (not presented separately herein) present fairly, in allmaterial respects, the financial position of OmnipointFacilities Network II, LLC (the “Company”) atDecember 31, 2004, and the results of its operations andits cash flows for the years ended December 31, 2004 and2003 in conformity with accounting principles generally acceptedin the United States of America. These financial statements arethe responsibility of the Company’s management. Ourresponsibility is to express an opinion on these financialstatements based on our audits. We conducted our audits of thesestatements in accordance with the standards of the PublicCompany Accounting Oversight Board (United States). Thosestandards require that we plan and perform the audit to obtainreasonable assurance about whether the financial statements arefree of material misstatement. An audit includes examining, on atest basis, evidence supporting the amounts and disclosures inthe financial statements, assessing the accounting principlesused and significant estimates made by management, andevaluating the overall financial statement presentation. Webelieve that our audits provide a reasonable basis for ouropinion.As described in Notes 1 and 5, the Company’stransactions are substantially with related parties, who are theCompany’s member owners. Additionally, as described inNote 1, the Company relies on its member owners for fundingrequirements.As described in Notes 1 and 6, the Company’sassets were contributed toT-Mobile USA, Inc.(“T-Mobile”)on January 5, 2005, as part of an agreement betweenT-Mobile and CingularWireless LLC to unwind the operations of their joint venture,GSM Facilities, LLC.     /s/ PricewaterhouseCoopers    LLP    Seattle, WashingtonMarch 3, 2005
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**CINGULAR WIRELESS LLC****CONSOLIDATED BALANCE SHEETS**            **December 31,**     **2004** **2005**       **(Dollars in millions)****ASSETS**    Current assets:             Cash and cash equivalents $352  $472      Accounts receivable, net of allowance for doubtful accounts of    $348 and $286  3,448   3,622      Due from affiliates, net  138   —      Inventories  690   536      Prepaid assets  346   320      Current deferred tax assets  2   767      Other current assets  594   332            Total current assets  5,570   6,049     Property, plant and equipment, net  21,958   21,745     Licenses, net  24,762   25,242     Goodwill  21,637   22,359     Customer relationship intangibles, net  4,698   2,998     Other intangible assets, net  241   174     Investments in and advances to equity affiliates  2,676   7     Other assets  696   745            Total assets $82,238  $79,319         **LIABILITIES AND MEMBERS’ CAPITAL**    Current liabilities:             Debt maturing within one year $2,158  $2,036      Accounts payable  1,383   1,920      Due to affiliates, net  —   54      Advanced billing and customer deposits  728   946      Accrued liabilities  3,714   5,052            Total current liabilities  7,983   10,008     Long-term debt:             Debt due to members  9,628   6,717      Other long-term debt, net of premium  14,229   12,623            Total long-term debt  23,857   19,340     Deferred tax liabilities, net  3,997   3,086     Other noncurrent liabilities  1,256   1,364            Total liabilities  37,093   33,798     Commitments and contingencies            Minority interests in consolidated entities  609   543     Members’ capital:             Members’ capital  44,714   44,988      Receivable for properties to be contributed  (178)  —      Accumulated other comprehensive loss, net of taxes  —   (10)           Total members’ capital  44,536   44,978            Total liabilities and members’ capital $82,238  $79,319        See accompanying notes.
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**CINGULAR WIRELESS LLC****CONSOLIDATED STATEMENTS OF INCOME**                **Year Ended December 31,**     **2003** **2004** **2005**         **(Dollars in millions)**    Operating revenues:                 Service revenues $14,317  $17,602  $30,638      Equipment sales  1,260   1,963   3,795               Total operating revenues  15,577   19,565   34,433     Operating expenses:                 Cost of services (excluding depreciation of $1,670, $2,259 and    $4,112, which is included below)  3,775   4,737   9,318      Cost of equipment sales  2,031   2,874   5,069      Selling, general and administrative  5,428   7,349   11,647      Depreciation and amortization  2,089   3,077   6,575               Total operating expenses  13,323   18,037   32,609               Operating income  2,254   1,528   1,824     Other income (expenses):                 Interest expense  (856)  (900)  (1,260)     Minority interest in earnings of consolidated entities  (101)  (86)  (102)     Equity in net (loss) earnings of affiliates  (333)  (415)  5      Other, net  41   16   64               Total other income (expenses)  (1,249)  (1,385)  (1,293)              Income before provision (benefit) for income taxes  1,005   143   531     Provision (benefit) for income taxes  28   (58)  198               Net income $977  $201  $333           See accompanying notes.
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**CINGULAR WIRELESS LLC****CONSOLIDATED STATEMENTS OF CHANGES IN MEMBERS’CAPITAL**        **(Dollars in millions)**    Balance at December 31, 2002, $7,435      Net income  977      Distributions to members, net  (79)        Balance at December 31, 2003  8,333      Net income  201      Contributions from members, net  36,000      Other, net  2         Balance at December 31, 2004,  44,536      Net income  333      Contributions from members, net  117      Other, net  (8)        Balance at December 31, 2005 $44,978     See accompanying notes.
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**CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME**                 **Year Ended December 31,**     **2003** **2004** **2005**         **(Dollars in millions)****Comprehensive Income**                Net income $977  $201  $333      Other comprehensive income (loss):                  Minimum pension liability adjustment, net of taxes of $1 in 2004    and 2005  —   (4)  (4)      Net foreign currency translation adjustment, net of taxes of    ($4) and $4 in 2004 and 2005  —   6   (6)              Total comprehensive income $977  $203  $323           See accompanying notes.
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**CINGULAR WIRELESS LLC****CONSOLIDATED STATEMENTS OF CASH FLOWS**                 **Year Ended December 31,**     **2003** **2004** **2005**         **(Dollars in millions)****Operating activities**                Net income $977  $201  $333     Adjustments to reconcile net income to net cash provided by    operating activities:                 Depreciation and amortization  2,089   3,077   6,575      Provision for doubtful accounts  259   423   570      Minority interest in earnings of consolidated entities  101   86   102      Equity in net loss (earnings) of affiliates  333   415   (5)     Amortization of debt discount (premium), net  1   (43)  (231)     Deferred income taxes  (1)  (74)  90      Changes in operating assets and liabilities:                  Accounts receivable  (331)  (336)  (732)      Inventories  (147)  (189)  163       Other current assets  (83)  (18)  181       Accounts payable and other current liabilities  278   (512)  999       Pensions and post-employment benefits  55   88   103      Other, net  155   202   253               Net cash provided by operating activities  3,686   3,320   8,401 **Investing activities**                Construction and capital expenditures  (2,734)  (3,449)  (7,475)    Investments in and advances to equity affiliates  (616)  (422)  (199)    Proceeds from dispositions of assets  7   188   3,874     Acquisition of AT&T Wireless, net of cash received  —   (35,543)  —     Acquisitions of other businesses and licenses, net of cash    received  (25)  (1,632)  (155)    (Purchase) Redemption of held-to-maturity investments  —   (219)  219     Other  —   —   50               Net cash used in investing activities  (3,368)  (41,077)  (3,686)**Financing activities**                Net borrowings (repayments) under revolving credit agreement  —   1,667   (1,156)    Repayment of long-term debt  (64)  (530)  (482)    Repayment of long-term debt due to members  —   (50)  (2,911)    Net distributions to minority interests  (33)  (141)  (46)    Contributions from members  10   36,024   —               Net cash (used in) provided by financing activities  (87)  36,970   (4,595)              Net increase (decrease) in cash and cash equivalents  231   (787)  120     Cash and cash equivalents at beginning of period  908   1,139   352               Cash and cash equivalents at end of period $1,139  $352  $472           See accompanying notes.
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***CINGULAR WIRELESS LLC****NOTES TO CONSOLIDATED FINANCIAL STATEMENTS****Years Ended December 31, 2003, 2004 and 2005****(Dollars in Millions)****1.****Summary of Significant Accounting Policies*****Background and Basis of Presentation***Cingular Wireless LLC (the Company) is a Delaware limitedliability company formed in 2000 by SBC Communications Inc.(SBC) and BellSouth Corporation (BellSouth) as the operatingcompany for their U.S. wireless joint venture. (OnNovember 18, 2005, SBC acquired through merger AT&TCorp. and changed the name of the surviving entity to AT&TInc. When used herein, “AT&T” will refer to thesurviving entity and, prior to November 18, 2005, to SBC.AT&T Corp. will be referred to as “Old AT&T”prior to November 18, 2005.) AT&T and BellSouth,through their wholly-owned subsidiaries, respectively, ownapproximate 60% and 40% economic interests in the Company.Cingular Wireless Corporation (the Manager), which is directedequally by AT&T and BellSouth, acts as the Company’smanager and controls the Company’s management andoperations. The Company provides wireless voice and datacommunications services, including local, long-distance androaming services using both cellular and personal communicationsservices (PCS) frequencies licensed by the FederalCommunications Commission (FCC), and equipment to customers in46 states, including service to all 100 of the largestU.S. metropolitan areas. All of the Company’soperations, which primarily serve customers in the U.S., areconducted through subsidiaries or joint ventures. Throughroaming arrangements with other carriers, the Company providesits customers service in regions where it does not have networkcoverage and is thus able to serve customers in virtually theentire U.S. and over 180 foreign countries.In October 2004, the Company acquired AT&T WirelessServices, Inc. (AT&T Wireless) for an aggregateconsideration of approximately $41,000 in cash. AT&TWireless, which has been renamed New Cingular Wireless Services,Inc. but will continue to be referred to herein as AT&TWireless, is now a direct wholly-owned subsidiary of theCompany. The operations of AT&T Wireless are integrated withthose of the Company, and the business is conducted under the“Cingular” brand name.As provided for in the original Contribution and FormationAgreement among the Company, AT&T and BellSouth, themajority of contributions of wireless operations and assets incertain markets were made during 2000 and 2001. The contributionby AT&T of wireless operations and assets in certainArkansas markets occurred on May 1, 2005, and was recordedas “Receivable for properties to be contributed” inthe consolidated balance sheets through the contribution date.Prior to the contribution, the Company managed the propertiesfor a fee. Fees received for managing the Arkansas markets forthe years ended December 31, 2003, 2004 and 2005 were $30,$40 and $30, respectively.These consolidated financial statements include charges fromAT&T and BellSouth for certain expenses pursuant to variousagreements (see Note 11). These expenses are considered tobe a reasonable reflection of the value of services provided orthe benefits received by the Company.***Use of Estimates***The preparation of financial statements in conformity withU.S. generally accepted accounting principles (GAAP)requires management to make estimates and assumptions thataffect the amounts reflected in the consolidated financialstatements and accompanying notes. The Company bases itsestimates on experience, where applicable and other assumptionsthat management believes are reasonable under the circumstances.Actual results could differ from those estimates under differentassumptions or conditions. Estimates are used when accountingfor certain items such as accrued and deferred revenues,allowance for
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***CINGULAR WIRELESS LLC****NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(Continued)**doubtful accounts, useful lives of property, plant andequipment, amortization periods for intangible assets, legal andtax contingencies, employee benefit programs, evaluation ofminimum lease terms for operating leases, fair values ofinvestments and intangible assets, asset impairment charges anddeferred income taxes, including income tax valuationallowances. Additionally, estimates are used when recording thefair values of assets acquired and liabilities assumed in apurchase business combination.***Principles of Consolidation***The consolidated financial statements include the accounts ofthe Company, variable interest entities in which the Company isthe primary beneficiary as defined by Financial AccountingStandards Board (FASB) Interpretation No. 46R,*Consolidation of Variable Interest Entities, aninterpretation of ARB No. 51* (FIN 46R), and votinginterest entities in which the Company exercises control. Otherparties’ interests in consolidated entities are reported asminority interests. All significant intercompany transactionsare eliminated in the consolidation process.The equity method is used to account for investments that arenot consolidated but in which the Company exercises significantinfluence. Investments in which the Company does not have theability to exercise significant influence are accounted forunder the cost method.***Segments***The Company manages the business as one reportable businesssegment, wireless communications services, which also is asingle operating segment. The Company operates primarily in theU.S.***Revenue Recognition***The Company earns service revenues by providing access to itswireless network (access revenue) and for usage of its wirelesssystem (airtime revenue). Access revenue from postpaidsubscribers is billed either in advance or arrears andrecognized ratably over the service period. Airtime revenue,including roaming revenue and long-distance revenue, is billedin arrears based on minutes of use and is recognized when theservice is rendered. Data airtime revenue, also billed inarrears, is based upon either number of messages or kilobytesused and is recognized when the service is rendered. Prepaidairtime sold to subscribers and revenue collected frompay-in-advancesubscribers is recorded as deferred revenue prior to thecommencement of services, and revenue is recognized when airtimeis used or expires. Access and airtime services provided arebilled throughout the month according to the bill cycle in whicha particular subscriber is placed. As a result of bill cyclecut-off times, the Company is required to make estimates forservice revenues earned but not yet billed at the end of eachmonth, and for advanced billings. Estimates for access revenuesare based upon the most current bill cycle revenues. Estimatesfor airtime revenues are based upon historicalminutes/messages/kilobytes of use.The Company’sROLLOVER®rate plans include a feature whereby unused anytime minutes donot expire each month but rather are available, under certainconditions, for future use for a period not to exceed one yearfrom the date of purchase. The Company defers revenue based onan estimate of the portion of unused minutes expected to beutilized prior to expiration. Historical subscriber usagepatterns, which have been consistent and which the Company viewsto be reliable for purposes of gauging predictive behavior,allow the Company to estimate the number of unused minutes to beutilized, as well as those which are likely to expire or beforfeited. No deferral of revenue is recorded for the minutesexpected to expire or be forfeited, as no future performance isexpected to be required by the Company, nor is there anyobligation
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***CINGULAR WIRELESS LLC****NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(Continued)**to refund or redeem for value the expired minutes. The balanceof the deferral as of December 31, 2004 and 2005 was $146and $234, respectively, and has been included in “Advancedbilling and customer deposits” in the consolidated balancesheets.Service revenues include revenues from Company subscribers whoroam outside their selected home coverage area, referred to as“incollect” roaming revenues, and revenues from otherwireless carriers for roaming by their subscribers on theCompany’s network, referred to as “outcollect”roaming revenues.The Company offers enhanced services including caller ID, callwaiting, call forwarding, three-way calling, no answer/busytransfer, text messaging and voice mail. Generally, theseenhanced features generate additional service revenues throughmonthly subscription fees or increased wireless usage throughutilization of the features. Other optional services, such asmobile-to-mobilecalling, roadside assistance and handset insurance, may also beprovided for a monthly fee. These enhanced features and optionalservices may be bundled with package rate plans or soldseparately. Revenues for enhanced services and optional featuresare recognized as earned. Service revenues also include billingsto our subscribers for Universal Service Fund (USF) andother regulatory fees.Equipment sales consist principally of revenues from the sale ofwireless handsets and accessories to new and existingsubscribers and to agents and other third-party distributors.The revenue and related expenses associated with the sale ofwireless handsets and accessories through our indirect saleschannels are recognized when the products are delivered andaccepted by the agent or third-party distributor, as this isconsidered to be a separate earnings process from the sale ofwireless services and probability of collection is likely.Shipping and handling costs for wireless handsets sold to agentsand other third-party distributors are classified as costs ofequipment sales.The Company has determined that the sale of wireless servicesthrough its direct sales channels with an accompanying handsetconstitutes a revenue arrangement with multiple deliverables inaccordance with Emerging Issues Task Force(EITF) No. 00-21, *Accounting for RevenueArrangements with Multiple Deliverables.* The Companyaccounts for these arrangements as separate units of accounting,including the wireless service and handset. Arrangementconsideration received for the handset is recognized asequipment sales when the handset is delivered and accepted bythe subscriber. Arrangement consideration received for thewireless service is recognized as service revenues when earned.As the non-refundable, up-front activation fee charged to thesubscriber does not meet the criteria as a separate unit ofaccounting, the Company allocates the additional arrangementconsideration received from the activation fee to the handset(the delivered item) to the extent that the aggregate handsetand activation fee proceeds do not exceed the fair value of thehandset. Any activation fees not allocated to the handset wouldbe deferred upon activation and recognized as service revenue ona straight-line basis over the expected customer relationshipperiod. The Company determined that the sale of wirelessservices through its indirect sales channels (agents) doesnot constitute a revenue arrangement with multiple deliverables.For indirect channel sales, the Company continues to defernon-refundable, up-front activation fees and associated costs tothe extent of the related revenues in accordance with StaffAccounting Bulletin No. 104 (SAB 104). Thesedeferred fees and costs are amortized on a straight-line basisover the estimated customer relationship period. The Company hasrecorded deferred revenues and deferred expenses of equalamounts in the consolidated balance sheets. As ofDecember 31, 2004 and 2005, deferred revenues and expenseswere $124 and $187, respectively.
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***CINGULAR WIRELESS LLC****NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(Continued)*****Income Taxes***The Company is not a taxable entity for federal income taxpurposes. Rather, federal taxable income or loss is included inthe Company’s respective members’ federal income taxreturns. However, the Company’s provision (benefit) forincome taxes includes federal and state income taxes for certainof its corporate subsidiaries, as well as for certain stateswhich impose income taxes upon non-corporate legal entities. Theacquisition of AT&T Wireless resulted in a significantincrease in its pre-tax income (loss) from its corporatesubsidiaries since AT&T Wireless retained its corporationstatus. However, after the acquisition, AT&T Wirelesscontributed the majority of its assets and liabilities toCingular Wireless II, LLC (CW II), which it ownsjointly with Cingular Wireless LLC. In exchange for the assetsand liabilities contributed to CW II, AT&T Wirelessreceived a 43% ownership interest in CW II, from which anyincome (loss) is allocated and is subject to federal and stateincome taxes. The remaining income (loss) from CW II isallocated to the Company and flows through to the members whoare taxed at their level pursuant to federal and state incometax laws.The Company recognizes deferred tax assets and liabilities basedon differences between the financial reporting and tax bases ofassets and liabilities, applying enacted statutory rates.Pursuant to the provisions of Statement of Financial AccountingStandards No. 109, *Accounting For Income Taxes*(SFAS 109), the Company provides valuation allowancesfor deferred tax assets for which it does not considerrealization of such assets to be more likely than not. SeeNote 13 for further information.***Required Distributions***The Company is required to make periodic distributions to itsmembers on a pro rata basis in accordance with eachmember’s ownership interest in amounts sufficient to permitmembers to pay the tax liabilities resulting from allocations ofincome tax items from the Company. Since the Company did notgenerate taxable income in 2003, 2004 or 2005, the Company madeno distributions for tax liabilities in 2003, 2004 or 2005.***Cash and Cash Equivalents***Cash and cash equivalents include all highly liquid investmentswith original maturities of three months or less. Outstandingchecks and drafts of $169 and $336 have been included in“Accounts payable” in the consolidated balance sheetsas of December 31, 2004 and 2005, respectively.***Accounts Receivable***Accounts receivable consist principally of trade accountsreceivable from subscribers and are generally unsecured and duewithin 30 days. Credit losses relating to these receivablesconsistently have been within management’s expectations.Expected credit losses are recorded as an allowance for doubtfulaccounts in the consolidated balance sheets. Estimates ofexpected credit losses are based primarily on write-offexperience, net of recoveries, and on the aging of the accountsreceivable balances. The collection policies and procedures ofthe Company vary by credit class and payment history ofcustomers. Provisions for uncollectible receivables are includedin selling, general and administrative expenses.***Inventories***Inventories consist principally of wireless handsets andaccessories and are valued at the lower of cost or market value.Market value is determined using current replacement cost.
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***CINGULAR WIRELESS LLC****NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(Continued)*****Property, Plant and Equipment***Property, plant and equipment are stated at cost, lessaccumulated depreciation and amortization. The cost of additionsand substantial improvements is capitalized. Interest expenseand network engineering costs incurred during the constructionphase of the Company’s wireless network are capitalized aspart of property, plant and equipment until the projects arecompleted and the assets are placed into service. The cost ofmaintenance and repairs is charged to operating expenses.Property, plant and equipment are depreciated using thestraight-line method over their estimated useful lives.Leasehold improvements, including cell site acquisition andother site construction improvements, are depreciated over theshorter of their estimated useful lives or lease terms that arereasonably assured. Depreciation lives may be accelerated due tochanges in technology, the rate of migration of theCompany’s subscriber base from its Time Division MultipleAccess (TDMA) network to its Global System for MobileCommunication (GSM) network or other industry conditions.Upon sale or retirement of an asset, the related costs andaccumulated depreciation are removed from the accounts and anygain or loss is recognized and principally included in“Cost of services” in the consolidated statements ofincome.***Software Capitalization***The Company capitalizes certain costs incurred in connectionwith developing or obtaining internal use software in accordancewith American Institute of Certified Public AccountantsStatement of Position98-1,*Accounting forthe Costs of Computer Software Developed or Obtained forInternal Use.* Capitalized costs include direct developmentcosts associated with internal use software, including internaldirect labor costs and external costs of materials and services.These capitalized software costs are included in “Property,plant and equipment, net” in the consolidated balancesheets and are being amortized on a straight-line basis over aperiod not to exceed five years. Costs incurred during thepreliminary project stage, as well as maintenance and trainingcosts, are expensed as incurred.***Intangible Assets***Intangible assets consist primarily of customer relationships,FCC spectrum licenses and the excess of consideration paid overthe fair value of net assets acquired in purchase businesscombinations (goodwill). In conjunction with the Company’sacquisition of AT&T Wireless, the Company also recordedintangible assets associated with trade names, trade marks andlease contracts.Customer relationships represent values placed on subscribers ofacquired businesses and have a finite life. The majority of theCompany’s customer relationship intangible assets areamortized over a five-year period using thesum-of-the-monthsdigits method.In accordance with Statement of Financial Accounting StandardsNo. 142, *Goodwill and Other Intangible Assets*(SFAS 142), goodwill and other indefinite-livedintangible assets are not amortized. The Company has determinedthat its FCC spectrum licenses should be treated asindefinite-lived intangible assets (see Note 4). The FCCissues spectrum licenses for up to ten years that authorizewireless carriers to provide service in specific geographicservice areas. In 1993, the FCC adopted specific standards toapply to wireless renewals, concluding it will award a licenserenewal to a licensee that meets certain standards of pastperformance. Historically, the FCC has granted license renewalsroutinely. The licenses held by the Company expire at variousdates and the Company believes it will be able to meet allrequirements necessary to secure renewal of its wirelesslicenses.
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***CINGULAR WIRELESS LLC****NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(Continued)**The Company tests goodwill and other indefinite-lived intangibleassets for impairment on an annual basis. Additionally, goodwillwill be tested for impairment between annual tests if an eventoccurs or circumstances change that would more likely than notreduce the Company’s fair value below its carrying value.Indefinite-lived intangible assets will be tested between annualtests if events or changes in circumstances indicate that theasset might be impaired. These events or circumstances wouldinclude a significant change in the business climate, legalfactors, operating performance indicators, competition, sale ordisposition of a significant portion of the business or otherfactors. See Note 4 for description of the goodwill andindefinite-lived intangible asset impairment tests.***Valuation of Long-lived Assets***Long-lived assets, including property, plant and equipment andintangible assets with finite lives, are reviewed for impairmentin accordance with Statement of Financial Accounting StandardsNo. 144, *Accounting for the Impairment or Disposal ofLong-Lived Assets,* whenever events or changes incircumstances indicate that the carrying amount may not berecoverable. It is reasonably possible that these assets couldbecome impaired as a result of technological or other industrychanges. In analyzing potential impairment, the Company usesprojections of future cash flows from the asset group. Theseprojections are based on the Company’s views of forecastedgrowth rates, anticipated future economic conditions,appropriate discount rates relative to risk and estimates ofresidual values. If the total of the expected futureundiscounted cash flows from the asset group the Company intendsto hold and use is less than the carrying amount of the assetgroup, a loss is recognized for the difference between the fairvalue and carrying amount of the asset group. The asset group tobe held and used represents the lowest level for whichidentifiable cash flows are largely independent of the cashflows of other groups of assets and liabilities. The Company hasdetermined the lowest level for which cash flows are largelyindependent of the cash flows of other groups is theconsolidated company level. For assets the Company intends todispose of, a loss is recognized if the carrying amount of theassets in the disposal group is more than fair value, net of thecosts of disposal. The Company principally uses the discountedcash flow method to estimate the fair value of its long-livedassets. The discount rate applied to the undiscounted cash flowsis consistent with the Company’s weighted-average cost ofcapital.***Asset Retirement Obligations***In accordance with Statement of Financial Accounting StandardsNo. 143, *Accounting for Asset Retirement Obligations*(SFAS 143), the Company records the fair value of aliability for an asset retirement obligation in the period inwhich it is incurred and capitalizes that amount as part of thebook value of the long-lived asset. Over time, the liability isaccreted to its present value each period, and the capitalizedcost is depreciated over the estimated useful life of therelated asset. Upon settlement of the liability, the Companyeither settles the obligation for its recorded amount or incursa gain or loss.The Company has certain legal obligations related to networkinfrastructure, principally tower and related assets, certainadministrative facilities and battery disposal, which fallwithin the scope of SFAS 143. These legal obligationsinclude obligations to remediate leased land on which theCompany’s network infrastructure and administrative assetsare located. The significant assumptions used in estimating theCompany’s asset retirement obligations include thefollowing: a probability, depending upon the type of operatinglease, that the Company’s assets with asset retirementobligations will be remediated at the lessor’s directive;expected settlement dates that coincide with lease expirationdates plus estimates of lease extensions; remediation costs thatare indicative of what third party vendors would charge theCompany to
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***CINGULAR WIRELESS LLC****NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(Continued)**remediate the sites; expected inflation rates that areconsistent with historical inflation rates; and credit-adjustedrisk-free rates that approximate the Company’s incrementalborrowing rates.***Advertising Costs***Costs for advertising are expensed as incurred. Totaladvertising expenses were $643, $973 and $1,249 for the yearsended December 31, 2003, 2004 and 2005, respectively.***Operating Leases***Rent expense is recorded on a straight-line basis over theinitial lease term and those renewal periods that are reasonablyassured. The difference between rent expense and rent paid isrecorded as deferred rent and is included in “Accruedliabilities” and “Other noncurrent liabilities”in the consolidated balance sheets.***Derivative Financial Instruments***In accordance with Statement of Financial Accounting StandardsNo. 133, *Accounting for Derivative Instruments andHedging Activities*(SFAS 133), the Company recognizesall derivatives as either assets or liabilities in theconsolidated balance sheets and measures those instruments atfair value. Gains and losses resulting from changes in the fairvalues of those derivative instruments will be recorded toearnings or other comprehensive income (loss) depending on theuse of the derivative instrument and whether it qualifies forhedge accounting. The Company also assesses, both at theinception of the hedge and on an on-going basis, whether thederivatives used in hedging transactions are effective. Shouldit be determined that a derivative is not effective as a hedge,the Company would discontinue the hedge accounting prospectively.The Company formally documents all relationships between hedginginstruments and hedged items, as well as its risk managementobjectives and strategies for undertaking various hedgetransactions.***New Accounting Standards***In March 2005, the FASB issued Interpretation No. 47,*Accounting for Conditional Asset Retirement Obligations (aninterpretation of FASB Statement No. 143)*(FIN 47). This Interpretation clarifies that the termconditional asset retirement obligation, as used in FASBStatement No. 143, *Accounting for Asset RetirementObligations,* refers to a legal obligation to perform anasset retirement activity in which the timing and(or) method of settlement are conditional on a future eventthat may or may not be within the control of the entity. Theobligation to perform the asset retirement activity isunconditional even though uncertainty may exist about the timingand (or) method of settlement. Accordingly, an entity isrequired to recognize the fair value of a liability for theconditional asset retirement obligation when incurred and theuncertainty about the timing and (or) method of settlementshould be factored into the measurement of the liability whensufficient information exists. This Interpretation is effectiveno later than December 31, 2005. Retrospective applicationof interim financial information is permitted but is notrequired. Additionally, companies shall recognize the cumulativeeffect of initially applying this Interpretation as a change inaccounting principle. The Company adopted this new pronouncementeffective December 31, 2005. The impact to theCompany’s consolidated financial statements as a result ofadopting this new statement is not material.
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***CINGULAR WIRELESS LLC****NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(Continued)*****Reclassifications***Certain amounts have been reclassified in the consolidatedfinancial statements to conform to the current yearpresentation. The consolidated statements of income for 2003 and2004 have been reclassified to reflect certain billings to theCompany’s subscribers related to gross receipts taxes as“Service revenues” and the related payments to theassociated taxing authorities and regulatory agencies as“Cost of services” expense. Operating income and netincome for both years were unaffected by the reclassification.The amounts reclassified for 2003 and 2004 were $94 and $129,respectively.**2.****Acquisitions and Dispositions**During 2003, 2004 and 2005, the Company completed certaintransactions as part of its overall strategy to expand itswireless footprint and divest itself of nonstrategic assets, aswell as divestitures required by regulatory agencies.**Acquisitions*****AT&T Wireless***In October 2004, the Company acquired AT&T Wireless in atransaction accounted for under the purchase method prescribedin SFAS No. 141, *Business Combinations*(SFAS 141). AT&T Wireless was a provider of wirelessvoice and data services and products primarily in the U.S. andserved nearly 22 million subscribers as of the acquisitiondate. AT&T Wireless also held equity interests in Triton PCSHoldings, Inc. (Triton), Cincinnati Bell, Inc. (CincinnatiBell), TeleCorp PCS, Inc. (TeleCorp) and other U.S. andinternational communications ventures, corporations andpartnerships. The acquisition formed the largest wirelesscommunications company in the U.S., based upon the number ofsubscribers.The aggregate consideration paid to AT&T Wirelessshareholders to complete the AT&T Wireless acquisition wasapproximately $41,000 in cash. The Company received $36,024 inequity funding from AT&T and BellSouth to finance theacquisition in proportion to their respective economicinterests. The remaining portion of the purchase price wasfunded with AT&T Wireless cash on hand. The results ofAT&T Wireless’ operations have been included in theCompany’s consolidated financial statements since theacquisition date.The acquisition was structured as a merger of a wholly-ownedsubsidiary of the Manager with and into AT&T Wireless,following which AT&T Wireless became a direct wholly-ownedsubsidiary of the Manager, and as the surviving entity, AT&TWireless retained all of its assets and liabilities. Followingthe merger, the Manager sold all its interests in AT&TWireless to the Company for $36,024, and AT&T Wireless thenbecame its direct wholly-owned subsidiary. Subsequently, asignificant portion of the operations, including assets,liabilities and subsidiary entities, were transferred from theCompany and AT&T Wireless to CW II. The Company andCW II executed supplemental indentures to AT&TWireless’s two indentures under which its Senior Notes areoutstanding to become co-obligated for all obligationsthereunder. Further, AT&T Wireless and CW II executedsupplemental indentures to the Company’s indenturegoverning the Company’s Senior Notes to become co-obligatedfor all obligations thereunder. As a result, CW II,AT&T Wireless and the Company are co-obligated on all of theCompany’s and AT&T Wireless’ Senior Notes.
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***CINGULAR WIRELESS LLC****NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(Continued)**The Company paid a premium (*i.e.*, goodwill) over the fairvalue of the net tangible and identified intangible assetsacquired for a number of reasons, including but not limited tothe following:•     AT&T Wireless fills in the Company’s licensed spectrum    and network footprints by covering areas where it did not have    licenses or network infrastructure; •     AT&T Wireless adds depth to the Company’s licensed    spectrum position in existing markets, enhancing the    Company’s ability to offer high-speed data services and    reduce capital expenditures; •     AT&T Wireless’ subscriber base, which has a stronger    business subscriber component than that of the Company, adds a    complementary subscriber mix to the Company’s subscriber    base; •     AT&T Wireless’ average revenue per user, or    “ARPU”, had historically been higher than that of the    Company’s subscribers; •     AT&T Wireless gives the Company added size and scale to    compete more effectively in the industry and to procure more    significant cost economies from vendors; and •     the acquisition will reduce the Company’s incollect roaming    costs because of the broader post-acquisition footprint.*Allocation of Purchase Price*The application of purchase accounting under SFAS 141required that the total purchase price be allocated to the fairvalue of assets acquired and liabilities assumed based on theirfair values at the acquisition date. The allocation processrequired an analysis of all such assets and liabilitiesincluding acquired contracts, customer relationships, FCClicenses, contractual commitments and legal contingencies toidentify and record the fair value of all assets acquired andliabilities assumed. In valuing acquired assets and assumedliabilities, fair values were based on, but were not limited to:future expected cash flows; current replacement cost for similarcapacity for certain property, plant and equipment; market rateassumptions for contractual obligations; estimates of settlementcosts for litigation and contingencies; and appropriate discountrates and growth rates.The approach to the estimation of the fair values of theAT&T Wireless intangible assets involved the following steps:•     Preparation of discounted cash flow analyses; •     Deduction of the fair values of tangible assets; •     Determination of the fair value of identified significant    intangible assets; •     Reconciliation of the individual assets’ returns with the    weighted average cost of capital; and •     Allocation of the excess purchase price over the fair value of    the identifiable assets and liabilities acquired to goodwill.The amounts reported as of December 31, 2004 in the tablebelow reflect the estimated fair values as of the acquisitiondate of October 26, 2004 plus adjustments made during thefourth quarter of 2004. The
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***CINGULAR WIRELESS LLC****NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(Continued)**adjustments summarized in the table below include purchase priceallocation adjustments made during 2005 prior to the end of theallocation period.                 **Purchase Price Allocation**     **As of**   **As of**  **December 31, 2004** **Adjustments(2)** **October 26, 2005**           Assets acquired:                 Current assets $8,457(1) $2  $8,459      Property, plant and equipment  10,314   (2,310)  8,004      Intangible assets not subject to amortization                 Licenses  15,540   649   16,189      Intangible assets subject to amortization                 Customer relationships  5,010   (23)  4,987      Other intangible assets  312   —   312      Investments in unconsolidated subsidiaries  898   103   1,001      Other assets  447   (12)  435      Goodwill  20,468   774   21,242                 Total assets acquired  61,446   (817)  60,629     Liabilities assumed:                 Current liabilities, excluding current portion of long-term debt  3,261   934   4,195      Long-term debt  12,172   4   12,176      Deferred income taxes  3,938   (1,763)  2,175      Other non-current liabilities  811   8   819                 Total liabilities assumed  20,182   (817)  19,365                Net assets acquired $41,264  $—  $41,264            (1)     Includes $5,240 of cash used to finance the acquisition. (2)     Adjustments include the impact of integration plans approved by    management in June and October 2005, wherein the utility and    expected lives of certain network and non-network property,    plant and equipment and internal-use software acquired were    reduced as a result of management decisions and refinements to    assumptions and/or data used to assign asset values in the    purchase price allocation. The impact of these plans and    refinements resulted in a reduction to the valuation of these    former AT&T Wireless assets as of the acquisition date.    Included in our 2005 operating results is a $35 reduction of    depreciation expense attributable to the fourth quarter of 2004    related to a $1,645 reduction in the valuation of property,    plant and equipment resulting from the integration plans    approved and management decisions made in 2005. Changes to the    valuation of property, plant and equipment resulted in    adjustments to the fair value of certain identifiable intangible    assets acquired and goodwill and associated deferred taxes. The    integration plans also resulted in the recognition of    liabilities under EITF Issue No. 95-3, *Recognition of    Liabilities in Connection with a Purchase Business Combination*(EITF 95-3), that adjusted the purchase price    allocation (see also Note 12 for further detail);    adjustments to these liabilities have been recorded as of    December 31, 2005, and may
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***CINGULAR WIRELESS LLC****NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(Continued)**    continue as the integration plans are executed and completed in    2006. The purchase price allocation has also been adjusted to    record preacquisition contingencies. In addition to the deferred    tax impacts associated with valuation adjustments, a net    reduction in deferred taxes was recorded to reflect revisions to    the tax bases of the assets acquired and liabilities assumed in    the purchase, and correspondingly reduced goodwill.In accordance with SFAS 141, goodwill includes a portion ofvalue for assembled workforce which is not separately classifiedfrom goodwill. Deferred tax liabilities have been recorded onall intangible assets except non-deductible goodwill. Taxbenefits will be reflected in the consolidated statements ofincome in future periods as the book basis of finite-livedintangible assets is amortized over their associated usefullives or if any intangible assets except non-deductible goodwillare impaired.Substantially all of the licenses acquired have an indefinitelife, and accordingly, are not subject to amortization. Themajority of customer relationship intangible assets are beingamortized over a weighted-average period of five years using thesum-of-the-monthsdigits method. This method best reflects the estimated patternin which the economic benefits will be consumed. Otherintangible assets and other noncurrent liabilities include leaseand sublease contracts, which are amortized over the remainingterms of the underlying leases and have a weighted-averageamortization period of seven years. Other intangibles alsoincludes the right to use the AT&T Wireless brand tradename, which was amortized over a six month period following theacquisition, and represented the use period under the BrandLicense Agreement with Old AT&T, as amended. Trademarks areamortized over their expected remaining economic lives, rangingfrom five to six years, and have a weighted-average amortizationperiod of 5.6 years.The Company completed an assessment of any preacquisitioncontingencies where the related liability was probable and theamount of the liability could be reasonably estimated. Inconnection with this assessment, the Company recordedpreacquisition liabilities of $172 related to pending legalproceedings in the final purchase price allocation.***Triton Wireless Properties***In September 2004, the Company and AT&T Wireless and Tritonsigned an agreement providing for the acquisition by the Companyof Triton’s wireless properties in Virginia (the“Virginia properties”) in exchange for certain ofAT&T Wireless’ properties in North Carolina, PuertoRico and the U.S. Virgin Islands (the “NC/ PRproperties”). In addition, the Company agreed to pay Triton$176 in cash. The exchange of network properties closed onDecember 1, 2004, and was accounted for as a purchase inaccordance with SFAS 141. The FCC licenses were retained bythe respective parties pending FCC approval for the transfer,which occurred in November 2005. The results of the Virginiaproperties have been included in, and the results of theexchanged properties have been excluded from, the Company’sconsolidated financial statements since the respective closingdates.
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***CINGULAR WIRELESS LLC****NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(Continued)**Under the purchase method of accounting, the assets andliabilities of the Virginia properties were recorded at theirrespective fair values as of the date of acquisition. Thefollowing table summarizes the estimated fair values of theassets and liabilities exchanged as of the acquisition date.                 **Virginia** **NC/PR** **Combined**  **Properties** **Properties** **Totals**           Assets acquired (disposed):                 Current assets $32  $(62) $(30)     Property, plant and equipment  147   (285)  (138)     Customer relationships  48   (68)  (20)     FCC Licenses  301   (227)  74      Goodwill  364   (117)  247                 Total assets acquired (disposed)  892   (759)  133     Liabilities assumed (disposed):                 Current liabilities  13   4   17      Noncurrent liabilities  —   (60)  (60)                Total liabilities assumed (disposed)  13   (56)  (43)              Net assets acquired (disposed) $879  $(703) $176           In addition to the wireless property exchange, AT&T Wirelessand Triton, through wholly-owned subsidiaries, signed anagreement in July 2004 to terminate their stockholders’agreement which would terminate a market exclusivity arrangementbetween the parties. As of the close of the AT&T Wirelessacquisition, the Company had wireless operations in marketswhere AT&T Wireless was prohibited from operating under theexclusivity arrangement. In exchange for the termination of thestockholders’ agreement, AT&T Wireless agreed tosurrender to Triton its equity interest in Triton valued at$194. This transaction closed on October 26, 2004,immediately following the acquisition of AT&T Wireless. Withthe consummation of this agreement, the Company is able toprovide on its network continuing service in areas where Tritoncurrently has operations. The Company recognized no gain or losson the transaction.*Pro Forma Financial Information*The following unaudited pro forma consolidated results ofoperations of the Company for the years ended December 31,2003 and 2004 assume that the acquisitions of AT&T Wirelessand the Virginia properties were completed as of January 1 ineach fiscal year shown below:           **Year Ended**  **December 31,**     **2003** **2004**       **(Unaudited)**    Revenues $31,238  $32,179     Income before provision for income taxes  1,626   232     Net income  1,353   193 The pro forma amounts represent the historical operating resultsof AT&T Wireless and the Virginia properties withappropriate adjustments that give effect to depreciation andamortization, interest expense, income taxes, and theelimination of intercompany roaming activity among the Company,AT&T Wireless
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***CINGULAR WIRELESS LLC****NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(Continued)**and the Virginia properties. The effects of othernon-acquisition related items are included in the pro formaamounts presented above. The pro forma amounts are notnecessarily indicative of the operating results that would haveoccurred if the acquisitions and related transactions had beencompleted at the beginning of the applicable periods presented.In addition, the pro forma amounts are not necessarilyindicative of operating results in future periods, in which theCompany might realize revenue enhancements and cost savings.***Acquisition of NextWave Licenses***In August 2003, the Company executed an agreement with NextWaveTelecom, Inc. and certain of its affiliates for the purchase ofFCC licenses for wireless spectrum in 34 markets for $1,400 incash. The transaction closed in April 2004, and the Companyrecorded this cost as additional licenses in the consolidatedbalance sheet.**Dispositions*****Termination of GSMF Network Infrastructure Joint    Venture***In May 2004, the Company andT-Mobile entered intoan agreement, subject to the closing of the acquisition ofAT&T Wireless, to dissolve GSM Facilities, LLC (GSMF), sellto T-Mobile certainspectrum licenses and other assets and exchange certain otherspectrum licenses. The first stage of these transactions closedin January 2005.Pursuant to the agreement, the joint venture was dissolved andthe Company sold its ownership of the California/ Nevada MajorTrading Area (MTA) network assets toT-Mobile forapproximately $2,500 in cash. Also, as part of the dissolution,the Company was required to contribute an additional $200 to theventure to restore a capital account deficit. The Companyretained the right to utilize the California/ Nevada and NewYork T-Mobile networksduring a four-year transition period and has committed topurchase a minimum number of minutes over this term with apurchase commitment value of $1,200 (see Note 15). TheCompany and T-Mobileretained all of their respective customers in each market.Additionally, in January 2005, the Company sold 10 megahertz(MHz) of spectrum toT-Mobile in each of theSan Francisco, Sacramento and Las Vegas Basic Trading Areas(BTAs) for $180 as part of the dissolution of GSMF.As part of the original joint venture agreement, the Company andT-Mobile were each toreceive 50% of the spectrum used in the operation of the jointventure following its dissolution. Spectrum licenses were notcontributed to the joint venture upon its formation in 2001, butrather were subject to a separate agreement governing their use.In connection with the dissolution, the Company andT-Mobile arecontractually required to exchange certain spectrum licenses.The Company expects the spectrum licenses to be exchanged onJanuary 1, 2007. The Company will receive 10 MHz ofspectrum in the New York BTA and 2.5 MHz of spectrum in theLas Vegas, Nevada BTA, andT-Mobile will receive5 MHz of spectrum in each of nine BTAs in California, thelargest of which is San Diego.T-Mobile also has theoption to purchase an additional 10 MHz of spectrum in theLos Angeles and San Diego BTAs from the Company commencingJanuary 2007. The Company expects to recognize a net gain on thedissolution of the joint venture upon the completion of thespectrum exchange in 2007, principally due to the value of theNew York spectrum to be received in connection with theconsummation of these transactions.
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***CINGULAR WIRELESS LLC****NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(Continued)*****Investment in Cincinnati Bell Wireless***In connection with the acquisition of AT&T Wireless, theCompany and Cincinnati Bell signed an agreement in August 2004that allowed the Company the right to put to Cincinnati Bell,AT&T Wireless’ 19.9% equity interest in CincinnatiBell’s wireless subsidiary, Cincinnati Bell Wireless LLC(CBW), for $83. In February 2006, the Company exercised this putright and closed on the transfer of its investment to CincinnatiBell. The Company accounted for its investment in CBW under thecost method. This investment, which had carrying amounts of $81and $83 as of December 31, 2004 and 2005, respectively, isincluded in “Other assets” in the consolidated balancesheets. The gain on the sale was not material.***Mobitex Data Business***In September 2004, the Company sold Cingular Interactive, L.P.(Cingular Interactive), a data messaging business utilizing theproprietary “Mobitex” packet switched network. Inconnection with its agreement to sell Cingular Interactive, theCompany evaluated the Cingular Interactive long-lived assetcarrying values, including property, plant and equipment and FCClicenses, for recoverability. Based on the results of therecoverability test, the Company adjusted the carrying values ofthe Cingular Interactive long-lived assets to their fair valuein September 2004, resulting in a loss of $31. Fair value wasdetermined using the agreed upon sale price for the CingularInteractive assets, less costs to sell. The write-down of thelong-lived assets is included in “Cost of services” inthe consolidated statements of income and “Other, net”in the consolidated statements of cash flows for 2004. The lossrecognized on sale of Cingular Interactive in October 2004 wasnot material.***Sale of Bermuda and Caribbean Operations and    Licenses***In June 2005, the Company signed a stock purchase agreement withDigicel Limited (Digicel) to sell former AT&T Wirelessoperations and licenses in Bermuda and certain Caribbean marketsto Digicel for $61 in cash (subject to certain potentialadjustments under the agreement). The majority of thetransaction closed in the third and fourth quarters of 2005 forwhich the Company received approximately $57 in cash. No gain orloss was recognized on the sales that closed. The two remainingmarkets are expected to close upon governmental and regulatoryapprovals in the respective markets. The Company does not expectto recognize a material gain or loss on these assets which areincluded in other current assets in the accompanyingconsolidated balance sheets as of December 31, 2005. Theoperating results of the Caribbean markets are not material forany period presented.***Other Divestitures***The Company has completed a series of transactions to dispose ofcertain domestic wireless assets, including those required to bedivested by the FCC and the U.S. Department of Justice(DOJ) in connection with its acquisition of AT&TWireless. These dispositions did not have a material impact onthe Company’s ability to provide services in any market oron its results of operations. The most significant of therequired dispositions was the transaction completed in April2005 with Alltel Corporation, in which the Company sold toAlltel, licenses, network assets and subscribers in severalmarkets that the Company acquired as part of the AT&TWireless acquisition. In exchange for the assets sold, theCompany received cash and additional minority interests inpartnerships that it already controlled. The Company also soldto Alltel 20 MHz of spectrum and network assets formerlyheld by AT&T Wireless in Wichita, Kansas, which it was notrequired to divest. The fair value of the assets exchanged inthe transactions was approximately $400. The gain recognized onthe exchange was not material.
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***CINGULAR WIRELESS LLC****NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(Continued)****3.****Property, Plant and Equipment**Property, plant and equipment is summarized as follows:                 **December 31,**  **Estimated**    **Useful Lives** **2004** **2005**         **(In years)**        Land  —  $95  $109     Buildings and building improvements  10-25   6,182   5,792     Operating and other equipment  2-15   25,388   29,217     Furniture and fixtures  3-10   450   427     Construction in progress  —   810   1,599                  32,925   37,144     Less accumulated depreciation and amortization      10,967   15,399               Property, plant and equipment, net     $21,958  $21,745           Depreciation expense and capitalized interest and networkengineering costs incurred during the construction phase of theCompany’s wireless network are summarized as follows:               **Year Ended December 31,**     **2003** **2004** **2005**           Depreciation expense $1,927  $2,562  $4,812     Capitalized interest costs  15   16   44     Capitalized network engineering costs  103   134   255 The net book value of assets recorded under capital leases was$916 and $897 at December 31, 2004 and 2005, respectively.These capital leases principally relate to communications towersand other operating equipment. Amortization of assets recordedunder capital leases is included in depreciation expense.Capital lease additions for the years ended December 31,2003, 2004 and 2005 were $143, $94 and $79, respectively.Previously, the Company’s cellular/ PCS networks wereequipped with GSM or TDMA digital transmission technologies. Inthe second quarter of 2004, the Company completed a two-yearoverlay of GSM equipment throughout its TDMA markets to providea common voice standard. As a part of this project, the Companyadded high-speed technologies for data services known as GeneralPacket Radio Service (GPRS) and Enhanced Data Rates for GSMEvolution (EDGE). Due to the accelerated migration of traffic toits GSM network experienced in 2004, the Company evaluated theestimated useful lives of its TDMA equipment. This review wascompleted in the fourth quarter of 2004 and, effectiveOctober 1, 2004, useful lives were further shortened tofully depreciate all TDMA equipment by December 31, 2007.This change in estimate increased depreciation expense in thefourth quarter of 2004 by $61 and 2005 depreciation expense byapproximately $235.**4.****Intangible Assets**A significant portion of the Company’s intangible assetsare FCC licenses that provide the Company with the exclusiveright to utilize certain radio frequency spectrum to providewireless communications services. While FCC licenses are issuedfor only a fixed time, renewals of FCC licenses have occurredroutinely and
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***CINGULAR WIRELESS LLC****NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(Continued)**at nominal cost. Moreover, the Company has determined that thereare currently no legal, regulatory, contractual, competitive,economic or other factors that limit the useful lives of its FCClicenses and therefore treats the FCC licenses as anindefinite-lived intangible asset under the provisions ofSFAS 142.In accordance with EITF No. 02-7, *Unit of Accounting forTesting Impairment of Indefinite-Lived Intangible Assets,*the Company tests its licenses for impairment on anaggregate basis, consistent with the Company’s managementof the business on a national scope. The Company utilizes a fairvalue approach, incorporating discounted cash flows, to completethe test. This approach determines the fair value of the FCClicenses and, accordingly, incorporates cash flow assumptionsregarding the investment in a network, the development ofdistribution channels and other inputs for making the businessoperational. As these inputs are included in determining freecash flows of the business, the present value of the free cashflows is attributable to the licenses. The discount rate appliedto the cash flows is consistent with the Company’sweighted-average cost of capital.During the fourth quarters of 2003, 2004 and 2005, the Companycompleted its annual impairment tests for goodwill andindefinite-lived FCC licenses. These annual impairment tests,prepared as of October 1, resulted in no impairment of theCompany’s goodwill or indefinite-lived FCC licenses.Summarized below are the carrying values for the major classesof intangible assets that will continue to be amortized underSFAS 142, as well as the carrying values of thoseintangible assets deemed to have indefinite lives:                          **December 31, 2004** **December 31, 2005**         **Estimated** **Gross**   **Gross**    **Useful** **Carrying** **Accumulated** **Carrying** **Accumulated**  **Lives** **Amount** **Amortization** **Amount** **Amortization**             **(In years)**            Intangible assets subject to amortization:                         Customer relationships  5  $5,273  $(575) $5,316  $(2,318)     Other  1-18   326   (73)  306   (134)                    Total     $5,599  $(648) $5,622  $(2,452)                    Intangible assets not subject to amortization:                         FCC licenses     $24,748  $—  $25,242  $—                      Goodwill     $21,637  $—  $22,359  $—                 The weighted average estimated useful lives of intangible assetssubject to amortization was 5.0 years as ofDecember 31, 2005, with remaining useful lives ofapproximately 3.8 years.The changes in the carrying value of goodwill for the year endedDecember 31, 2005, which are largely attributable toadjustments to the purchase price allocation of AT&TWireless assets and liabilities, are as follows:.
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***CINGULAR WIRELESS LLC****NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(Continued)**          Balance, December 31, 2004 $21,637      Goodwill acquired  65      Goodwill disposed of  (150)     Other adjustments  807         Balance, December 31, 2005 $22,359     The following table presents current and estimated amortizationexpense for each of the following periods:          Aggregate amortization expense for the year ended:         2003 $162      2004  515      2005  1,763     Estimated amortization expense for the year ending:         2006  1,315      2007  955      2008  603      2009  237      2010 and thereafter  60 In addition to the SFAS 142 intangible assets noted above,the Company had $2 of intangible assets in each of 2004 and 2005in connection with the recognition of an additional minimumliability for its bargained pension plan and/or otherunqualified benefit plans as required by SFAS No. 87,*Employers’ Accounting for Pensions,*(SFAS 87)(see Note 14).**5.****Investments in and Advances to Equity Affiliates**The Company had investments in affiliates and had made advancesto entities that provided the Company access to additional U.S.and international wireless markets. The Company did not have acontrolling interest in these investments, and all of theseinvestments were accounted for under the equity method ofaccounting. The most significant of these investments was GSMF,a jointly controlled network infrastructure venture withT-Mobile for networksin the New York City metropolitan area, California and Nevada.GSMF was dissolved in January 2005, and the others were soldduring 2005.Investments in and advances to equity affiliates consisted ofthe following at December 31, 2004:         Investment in GSMF $2,108     Investment in Atlantic West B.V. (Netherlands)  349     Investment in IDEA Cellular Ltd. (India)  210     Other  9       $2,676     **GSMF**In November 2001, the Company andT-Mobile formed GSMFand contributed to it portions of their existing networkinfrastructures in the California, Nevada and New York Citymetropolitan area markets.
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***CINGULAR WIRELESS LLC****NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(Continued)**Management control of GSMF was vested in a four-membermanagement committee. Both companies bought network servicesfrom GSMF but retained ownership and control of their ownlicenses in those markets. The Company andT-Mobile independentlymarketed their services to subscribers and utilized their ownsales, marketing, billing and customer care operations. In July2002, the Company began marketing its commercial service in theNew York City market andT-Mobile began servicein California and Nevada.The Company andT-Mobile jointly fundedcapital expenditures of GSMF and procured services and networkequipment on behalf of GSMF in the respective markets. Networkequipment was contributed to GSMF at prices which approximatedfair value. The Company deferred any resulting profits andrecorded them as part of “Investments in and advances toequity affiliates” in the consolidated balance sheets. TheCompany recognized the intercompany profit over the estimateduseful lives of the related assets as a reduction of equity innet loss of affiliates.In January 2005, the Company andT-Mobile terminatedtheir network infrastructure joint venture through a series oftransactions. See Note 2 for additional information.The Company incurred and charged to GSMF certain networkoperating costs. The monthly operating expenses of GSMF,including monthly cash payments made on tower capital leaseobligations, were then charged back to the Company andT-Mobile based uponeach party’s proportionate share of licensed spectrum ineach market. Through a separate reciprocal home roamingagreement, the Company andT-Mobile charged eachother for usage that was not in the same proportion as thespectrum-based allocations. This usage charge was primarilybased upon the Company’s andT-Mobile’s shareof the total minutes of use on the respective networks. Thesecharges for network services are included in “Cost ofservices” in the consolidated statements of income. Thesetransactions are summarized as follows:           **Year Ended**  **December 31,**     **2003** **2004**         Network operating costs charged to GSMF $320  $385     Network services received based on usage  254   253 At December 31, 2004, the “Due from affiliates,net” caption in the consolidated balance sheets included$125 and $13 related to transactions between the Company andGSMF for the settlement of capital obligations and settlement ofoperating expenses, respectively.GSMF incurred net losses due to depreciation, deferred rent andinterest expense, which were not reimbursed by the Company orT-Mobile. For the yearsended December 31, 2003 and 2004, the Company recordedequity in the net loss of GSMF of $335 and $416, respectively.***Atlantic West B.V.***Atlantic West B.V. (AWBV), which was acquired through AT&TWireless, was a joint venture between the Company and VerizonCommunications, Inc. (Verizon). AWBV owned a 49% interest inEurotel Bratislava a.s. (Bratislava), a wireless operatingentity in Slovakia prior to its sale in December 2004. InDecember 2004, AWBV sold its interest in Bratislava to SlovakTelecom a.s. for cash proceeds of $315. The Company’sshare of proceeds from the sale totaled $158. AWBV distributed$280 of the proceeds upon completion of the sale, of which $140was distributed to the Company. The remaining cash proceeds,along with $662 in cash from a prior sale, were distributedequally to the Company and Verizon in June
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***CINGULAR WIRELESS LLC****NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(Continued)**2005 upon completion of a repatriation plan which qualifiedunder the American Jobs Creation Act of 2004 (see Note 13).The Company recognized no gain or loss on the sale transactionas the assumed fair value of the investment, in conjunction withits purchase of AT&T Wireless, equaled the transaction saleproceeds. AWBV is no longer operational as of December 31,2005.***IDEA Cellular Ltd.***In September 2005, the Company sold its 32.9% interest in IDEACellular Ltd. (IDEA), a cellular telecommunications company inIndia, to the other principal shareholders in IDEA for $300 incash. The Company recognized no gain or loss on the transaction.**6.****Variable Interest Entities**The Company has variable interests in several entities for whichit is deemed to be the primary beneficiary and accordinglyconsolidates the statements of financial position, results ofoperations and cash flows for these entities pursuant to FASBInterpretation No. 46 (Revised December 2003),*Consolidation of Variable Interest Entities — aninterpretation of ARB No. 51*(FIN 46R). Thesevariable interests typically consist of a combination of some orall of voting equity interests, nonvoting equity interests,loans and put options that provide the other owners the right torequire the Company, subject to prior governmental approvals topurchase their ownership interest if and when certain eventsoccur. These entities were formed to enable individuals andbusinesses with limited assets and revenues to partner with, andreceive financing from, large businesses, such as the Company orAT&T Wireless, to bid on licenses that were otherwiseunavailable to large entities. To date, the activities of theseentities have consisted primarily of acquiring licenses throughacquisitions and FCC auctions and network construction. TheCompany has no significant variable interests for which it isnot deemed to be the primary beneficiary.***Salmon PCS LLC***In November 2000, the Company and Crowley Digital Wireless, LLC(Crowley Digital) entered into an agreement, pursuant to whichSalmon PCS LLC (Salmon) was formed to bid as a “very smallbusiness” for certain 1900 MHz band PCS licensesauctioned by the FCC.Crowley Digital has the right to put its approximate 20%economic interest in Salmon to the Company at a cash price equalto Crowley Digital’s initial investment plus a specifiedrate of return. The put right can be exercised at certain timesending in April 2008. The Company’s maximum liability forthe purchase of Crowley Digital’s interest in Salmon underthis put right is $225. The fair values of this put obligation,estimated at $155 and $172 as of December 31, 2004 and2005, are included in “Other noncurrent liabilities”and “Accrued liabilities” in the consolidated balancesheets for the respective periods.***Edge Mobile Wireless, LLC***In November 2004, the Company and Edge Mobile Wireless, LLC(Edge Mobile Wireless) formed Edge Mobile, LLC (Edge) to bid asan “entrepreneur” for certain 1900 MHz band PCSlicenses auctioned by the FCC. In February 2005, Edge’stotal high bids for the 21 licenses it won at auction inNovember 2005 amounted to $181, of which the Company wasobligated to fund $174. In December 2004, the Companycontributed $31 in equity to Edge, which was used to pay for aportion of the licenses. The Company contributed equity and madeadvances to Edge in March 2005 of $7 and $136, respectively, tocover its remaining obligation.
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***CINGULAR WIRELESS LLC****NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(Continued)**Edge Mobile Wireless will have the right to put its economicinterest in Edge to the Company at a cash price equal to EdgeMobile Wireless’ investment plus a specified rate ofreturn. The put right can be exercised at certain times, but, inno event, prior to the grant of the licenses. Upon grant of thelicenses to Edge in November 2005, the Company recorded theestimated fair value of the put obligation, which is immaterialto the Company’s financial condition.***AT&T Wireless Variable Interest Entities***As a result of the AT&T Wireless acquisition, theCompany’s consolidated financial statements include othervariable interest entities, similar to Salmon and Edge MobileWireless. The Company’s maximum liability related to theseentities as of December 31, 2005 was approximately $147,which represents the gross payment under the put options thatprovide the other owners the right to require the Company topurchase their ownership interests under certain circumstances.Also, through its acquisition of AT&T Wireless, the Companyacquired a variable interest and was deemed to be the primarybeneficiary in an entity engaged in leasing activities.**7.****Accrued Liabilities**Accrued liabilities are summarized as follows:           **December 31,**     **2004** **2005**         Accrued fixed asset purchases $822  $1,369     Taxes, other than income  387   499     Payroll and other related liabilities  697   622     Agent commissions  329   289     Advertising  231   125     Accrued interest  232   219     Lease termination costs  —   291     Equipment removal costs  —   190     Other  1,016   1,448            Total accrued liabilities $3,714  $5,052        **8.****Debt*****Debt Maturing Within One Year****Revolving Credit Agreement*Effective August 1, 2004, the Company entered into arevolving credit agreement with AT&T and BellSouth for themto provide unsubordinated short-term financing on a pro ratabasis at an interest rate of LIBOR plus 0.05% for theCompany’s ordinary course operations based upon theCompany’s budget and forecasted cash needs. The revolvingcredit agreement provides that in the event that the Company hasavailable cash (as defined) on any business day, such amountshall first be applied to the repayment of the revolving loans,and any remaining excess shall then be applied to the repaymentof the Subordinated Notes (member loans) from AT&T andBellSouth at month end if the Company does not
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***CINGULAR WIRELESS LLC****NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(Continued)**then require a cash advance under the agreement. As ofDecember 31, 2005, the Company had an outstanding balanceof $511 under the revolving credit agreement. The agreement wasamended in June 2005 to extend expiration until July 31,2007. The weighted average annual interest rate under thisagreement for the period August 1, 2004 throughDecember 31, 2004 and for the year ended December 31,2005 was 2.3% and 2.9% respectively. Interest expense on therevolving credit agreement for the years ended December 31,2004 and 2005 was $4 and $11, respectively.***Long-term Debt***Long-term debt is summarized as follows:            **December 31,**     **2004** **2005**         Due to members — Subordinated Notes due June 2008 $9,628  $6,717     Due to external parties — Cingular Wireless LLC, maker:             5.625% Senior Notes, due December 2006  500   500      6.5% Senior Notes, due December 2011  750   750      7.125% Senior Notes, due December 2031  750   750     Due to external parties — AT&T Wireless Services,    Inc., maker:             6.875% Senior Notes, due April 2005  250   —      7.35% Senior Notes, due March 2006  1,000   1,000      7.5% Senior Notes, due May 2007  750   750      7.875% Senior Notes, due March 2011  3,000   3,000      8.125% Senior Notes, due May 2012  2,000   2,000      8.75% Senior Notes, due March 2031  2,500   2,500     Due to external parties — TeleCorp Wireless, Inc.,    maker:             10.625% Senior Subordinated Notes  200   —      Capital leases, 5.72% to 9.6%  1,011   1,142      Other  52   38            Total long-term debt, including current maturities  22,391   19,147     Unamortized premium (discount) on noncurrent Senior Notes    and Senior Subordinated Notes and other Notes, net  1,960   1,716     Current maturities of long-term debt  (491)  (1,523)    Interest rate swap fair value adjustment (see Note 9)  (3)  —            Total long-term debt $23,857  $19,340        *Debt Due to Members*The long-term debt due to members (member loans) representsborrowings from AT&T and BellSouth. Interest accrues at 6%and is payable monthly. Interest expense on the member loans forthe years ended December 31, 2003, 2004 and 2005 was $653,$582 and $510, respectively. The Company’s member loanshave a maturity date of June 30, 2008. The Company mayprepay the member loans at any time, subject to the provisionsdescribed below, and is obligated to prepay the member loans tothe extent of excess cash
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***CINGULAR WIRELESS LLC****NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(Continued)**from operations (as defined). See “Revolving CreditAgreement” above. For the years ended December 31,2004 and December 31, 2005, the Company repaid $50 and$2,911, respectively, of its member loans. Funds generated fromoperations and proceeds from asset sales were used to makerepayments on the member loans.AT&T and BellSouth have agreed to subordinate theirrepayment rights applicable to the member loans to the repaymentrights of the Company’s senior debt. Senior debt includesthe Company’s Senior Notes, including Senior Notes ofAT&T Wireless and other borrowings from external partiesdesignated as senior debt to which AT&T and BellSouth havespecifically agreed to be subordinate. The payment of principaland interest on the subordinated member loans by the Company isprohibited in the event of bankruptcy or an event of default inthe payment or prepayment of any principal of or interest on anysenior debt, or in the event of an acceleration of thesubordinated debt upon its default, until the senior debt hasbeen repaid in full.*Senior Notes — Cingular Wireless LLC*The Senior Notes are unsecured obligations and rank equally withall other unsecured and unsubordinated indebtedness. The SeniorNotes are governed by an indenture with J.P. Morgan TrustCompany, N.A., which acts as trustee. The indenture contains a“negative pledge” provision that the Company will notsubject its property or assets to any mortgage or otherencumbrance unless the Senior Notes are secured equally andratably with other indebtedness that is secured by that propertyor assets, unless “secured debt” would not exceed 15%of “consolidated net tangible assets” (as such termsare defined in the indenture). There is no sinking fund ormandatory redemption applicable to the Senior Notes. The SeniorNotes are redeemable, in whole or in part, at the Company’soption, at any time at a price equal to their principal amountplus any accrued interest and premium. CW II and AT&TWireless became co-obligated on the Company’s Senior Notesfollowing the Company’s acquisition of AT&T Wireless.*Senior Notes — AT&T Wireless*Following the Company’s acquisition of AT&T Wireless inOctober 2004, the Company, along with CW II, becameco-obligated on $9,500 of Senior Notes of AT&T Wireless.Included in the Senior Notes of AT&T Wireless are $6,500 ofunsecured and unsubordinated Senior Notes issued under a March2001 private placement, with $1,000 maturing on March 1,2006; $3,000 maturing on March 1, 2011; and $2,500 maturingon March 1, 2031. Fixed interest rates range from 7.35% to8.75% per annum, payable semi-annually. Also included inthe Senior Notes are $2,750 of unsecured and unsubordinatedSenior Notes issued through an April 2002 registered publicoffering by AT&T Wireless, with $750 maturing on May 1,2007, and $2,000 maturing on May 1, 2012. Fixed interestrates range from 7.5% to 8.125% per annum, payablesemi-annually.The $9,250 outstanding Senior Notes of AT&T Wireless aregoverned under two separate indentures, with U.S. BankN.A., successor to the Bank of New York, as trustee. The SeniorNotes are unsecured unsubordinated obligations, ranking equallyin right with all other unsecured and unsubordinated obligationsof the Company. The Senior Notes are redeemable, as a whole orin part, at the Company’s option, at any time or from timeto time, at a price equal to their principal amount plus anyaccrued interest and premium similar to that applicable to theCompany’s Senior Notes. The Senior Notes are not subject toany sinking fund requirements. With respect to both indentures,covenants limit activity related to “sale and leasebacktransactions” (as defined) under certain circumstances andcontain a “negative pledge” provision similar to thatapplicable to the Company’s Senior Notes.
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***CINGULAR WIRELESS LLC****NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(Continued)***Fair Values of Long-term Debt*At December 31, 2004 and 2005, the fair values of theSenior Notes and Senior Subordinated Notes were $13,879 and$13,153, respectively, based on their quoted market prices. Thecarrying value of the long-term debt due to members approximatesfair value since the Company may prepay the debt at any time, asdescribed above, without penalty. The above Senior Notes andSenior Subordinated Notes assumed in the Company’sacquisition of AT&T Wireless were recorded at fair value onthe acquisition date in accordance with the purchase accountingrequirements of SFAS 141. The premium recorded at theacquisition date totaled $2,045, of which $1,731 remainsoutstanding as of December 31, 2005. The premium is beingamortized under the effective interest method which reflectsmarket interest rates on the date of the acquisition.Amortization of the premium is recorded in the Company’sfinancial statements as a reduction to interest expense. For theyear ended December 31, 2005, this amortization totaled$231, which resulted in an effective annual interest rate of4.7% for the acquired Senior Notes and Senior Subordinated Notes.*Capital Leases*The Company has entered into capital leases primarily for theuse of communications towers.*Maturities of Long-Term Debt*Maturities of long-term debt outstanding, including capitallease obligations, at December 31, 2005 are summarizedbelow:                **Debt** **Capital Leases** **Total**           Maturities:                 2006 $1,520  $89  $1,609      2007  755   94   849      2008  6,722   98   6,820      2009  3   103   106      2010  2   108   110      Thereafter  9,003   2,607   11,610               Total minimum payments $18,005  $3,099  $21,104      Less capital lease imputed interest  —   1,518   1,518      Less capital lease executory costs  —   439   439               Total obligations $18,005  $1,142  $19,147           *Cash Paid for Interest*Cash paid for interest on debt for the years endedDecember 31, 2003, 2004 and 2005 was $862, $892 and $1,503,respectively. These amounts include cash paid for interest onmember loans and the revolving credit agreement with the membersof $665, $582 and $525 for the years ended December 31,2003, 2004 and 2005, respectively.
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***CINGULAR WIRELESS LLC****NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(Continued)****9.****Financial Instruments**The carrying amounts of cash and cash equivalents, accountsreceivable, accounts payable, advanced billing and customerdeposits and other current assets and liabilities are reasonableestimates of their fair value due to the short-term nature ofthese instruments.The Company uses interest rate swaps to manage its interest rateexposure on certain of its debt obligations. The Company doesnot invest in derivative instruments for trading purposes. InMarch 2003, the Company entered into two interest rate swapcontracts with banks to convert a portion of the fixed rateexposure on its five-year Senior Notes due December 15,2006 to variable rates without an exchange of the underlyingprincipal amount. Under the terms of the interest rate swapcontracts, the Company receives interest at a fixed rate of5.625% and pays interest at a variable rate equal to thesix-month LIBOR plus a specified margin, based on an aggregatenotional amount of $250. The six-month LIBOR rate on eachsemi-annual reset date determines the variable portion of theinterest rate swaps. For the years ended December 31, 2004and 2005, the effective interest rate associated with thisnotional amount was 4.58% and 6.05%, respectively.In accordance with SFAS 133, the Company recorded a fairvalue adjustment to the portion of its fixed rate long-term debtthat is hedged. This fair value adjustment is recorded as anincrease or decrease to long-term debt, with the related valuefor the interest rate swaps’ recorded in “Otherassets” or “Other noncurrent liabilities” ifnoncurrent, and/or “Other current assets” or“Accrued liabilities” if current, in the consolidatedbalance sheets. At December 31, 2005, the portion of debtrelated to the interest rate swap is classified as current andis recorded net of $5 related to the fair value of the interestrate swap. Interest rate differentials associated with theseinterest rate swaps are recorded as an adjustment to a currentasset or liability, with the offset to interest expense over thelife of the interest rate swaps.The Company has designated the swaps as fair value hedges of itsfixed rate debt. The terms of the interest rate swap contractsand hedged items are such that effectiveness can be measuredusing the short-cut method as defined in SFAS 133.**10.****Concentrations of Risk**The Company relies on local and long-distance telephonecompanies and other companies to provide certain communicationsservices. Additionally, the Company relies on one vendor toprovide billing services for the postpaid subscribers acquiredin conjunction with the Company’s acquisition of AT&TWireless (see Note 2). Although management believesalternative vendors could be found in a timely manner, anydisruption of these services could potentially have an adverseimpact on operating results.The Company relies on roaming agreements with other wirelesscarriers to permit the Company’s customers to use theirGSM/ GPRS/ EDGE and TDMA networks in areas not covered by theCompany’s networks. If these providers decide not tocontinue those agreements due to a change in ownership or othercircumstance, this could cause a loss of service in certainareas and possible loss of subscribers.Although the Company attempts to maintain multiple vendors tothe extent practicable, its handset inventory and networkinfrastructure equipment, which are important components of itsoperations, are currently acquired from only a few sources. Ifthe suppliers are unable to meet the Company’s needs as itcontinues to build out and upgrade its network infrastructureand sell service and handsets, delays and increased costs in theexpansion of the Company’s network infrastructure or lossesof potential customers could result, which would adverselyaffect operating results.
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***CINGULAR WIRELESS LLC****NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(Continued)**Financial instruments that could potentially subject the Companyto credit risks consist principally of trade accountsreceivable. Concentrations of credit risk with respect to thesereceivables are limited due to the composition of the subscriberbase, which includes a large number of individuals andbusinesses. No subscriber accounted for more than 10% ofconsolidated revenues in any year presented.Approximately 35,000, or 55%, of the Company’s employeesare represented by the Communications Workers of America (CWA),with contracts expiring on various dates between March 2006 andFebruary 2009. Approximately 9,700 of the Company’semployees are covered by a contract that expires in March 2006.All of the contracts contain no-strike clauses. In most areas ofthe country and with most job titles, the Company iscontractually required to maintain a position of neutrality andto allow card-check balloting with respect to unionization andsupport the determination of its employees.The Company has approximately one million RIM BlackBerry users.In litigation against RIM by various patent holders, a court hasheld that BlackBerry services infringe several patents. If aninjunction is issued and RIM cannot modify the way the serviceis provided so that it does not infringe the patents at issue,the Company may have to either migrate its BlackBerry users toanother handheld device and service platform or separately seeklicenses from the patent holders. While there could be someexpense and disruption associated with implementing themodification, the expense and/or disruption to theCompany’s customers from having to migrate subscribers toanother device and service platform or to negotiate licensesfrom the patent holders could be very expensive and disruptiveto the Company’s wireless data business.**11.****Related Party Transactions**In addition to the affiliate transactions described elsewhere inthese financial statements, other significant transactions withrelated parties are summarized in the succeeding paragraphs.In connection with the formation of Cingular, the Companyentered into wireless agency agreements with subsidiaries ofAT&T and BellSouth. Such subsidiaries, and any of theiraffiliates that make an election to do so may act as authorizedagents exclusively on the Company’s behalf for the sale ofits wireless services to customers in AT&T’s andBellSouth’s respective incumbent service territories. TheCompany is free to contract with other agents, includingretailers and other distributors, for the sale of its wirelessservices in these territories and elsewhere throughout theU.S. In addition to the unilateral rights of AT&T andBellSouth and their affiliates to terminate the agreements andto the Company’s right to terminate in certain events, eachwireless agency agreement terminates upon breach, mutualagreement of the parties or on December 31, 2050. Agentcommissions and compensation charges are included in“Selling, general and administrative” in theconsolidated statements of income.The Company incurred local interconnect and long distancecharges from AT&T and BellSouth and their affiliates relatedto the provision of wireless services to its subscribers, whichare included in “Cost of services” in the consolidatedstatements of income, and telecommunication and other chargesfrom AT&T and BellSouth and their affiliates in connectionwith its internal business operations, which are primarilyincluded in “Selling, general and administrative” inthe consolidated statements of income.
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***CINGULAR WIRELESS LLC****NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(Continued)**Related party charges incurred by the Company are summarized asfollows:               **Year Ended December 31,**   **Type of Service:** **2003** **2004** **2005**           Agent commissions and compensation $103  $67  $74     Interconnect and long distance  815   927   1,297     Telecommunications and other charges  77   97   250 Additionally, the Company has purchase commitments to AT&T,BellSouth and their affiliates of approximately $161 fordedicated leased lines used to provide interconnection servicesand $109 for telecommunications and other services (seeNote 15).The Company had receivables from affiliates of $247 and $156 andpayables to affiliates of $109 and $210 at December 31,2004 and 2005, respectively, primarily with AT&T, BellSouthand GSMF.In August 2005, the Company sold to AT&T and BellSouthcertain ultra high frequency operating licenses that wereacquired as part of the AT&T Wireless transaction for $34 incash. Sale proceeds were received from each member in proportionto their respective economic ownership interests. No gain orloss was recognized on the transaction.In August 2000, Southwestern Bell Mobile Systems, Inc., whichAT&T transferred to the Company on October 2, 2000,agreed to transfer approximately 3,900 of its communicationstowers (later reduced to 3,306), including those owned byconsolidated partnerships, to another AT&T affiliate, inconnection with an agreement whereby the AT&T affiliatewould lease its rights to use and lease space on the towers toSpectraSite Inc. (SpectraSite). Under the arrangement,SpectraSite subleases back to the AT&T affiliate the spaceon the towers the Company uses. The AT&T affiliate furthersubleases that space to the Company or its affiliates. Theannual rent escalates by 5% as of December 14 of everyyear. The term of the sublease is unique to each tower andranges from 13 to 32 years. The Company (as lessee) has theright to withdraw from any lease on the tenth anniversary of thelease date and on each five-year anniversary thereafter. TheCompany accounts for its subleases of the tower space from theAT&T affiliate as capital leases.In 2003 and 2004, the Company transferred to the AT&Taffiliate 94 and 187 towers, respectively. No towers weretransferred in 2005. Through December 31, 2005, a total of3,265 towers were transferred having an aggregate net book valueat transfer date of $190.**12.****Acquisition-Related, Integration and Other Costs**The Company is executing plans to exit certain activities anddispose of certain assets of AT&T Wireless, includingredundant facilities and interests in certain foreignoperations, and to fully integrate the acquired operations withthose of the Company. These plans affect many areas of thecombined company, including sales and marketing, network,information technology, customer care, supply chain and generaland administrative functions. In connection therewith, theCompany expects to continue to incur significant costs over thenext several quarters associated with such integrationactivities. Plans affecting the Company’s integration ofretail stores, administrative space and the network have beencompleted and approved by management, resulting in adjustmentsto the purchase price allocation for the acquired assets andassumed liabilities of AT&T Wireless and the need to shortenthe useful lives of certain network and other property, plantand equipment.
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***CINGULAR WIRELESS LLC****NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(Continued)**For the years ended December 31, 2004 and 2005, the Companyexpensed integration costs of $288 and $876, respectively,related to these exit plans. Total costs to date include $601for network integration, $129 of costs to support the commoncustomer service experience, $116 to market the combinedcompany, $81 for billing and other IT systems conversions, $59to convert the branding of AT&T Wireless stores, agentlocations and other signage to the Cingular brand, $58 relatedto employee retention and involuntary terminations and $120 ofother integration planning and execution costs. These costs areprimarily included in “Depreciation and amortization”,“Cost of services” and “Selling, general andadministrative expenses” in the consolidated statements ofincome.**     ***Network IntegrationPlan — Phase I*In June 2005, the Company finalized a portion of its plan tointegrate certain acquired network assets of AT&T Wireless.The plan primarily addressed certain TDMA network equipment inlocations where the Company and AT&T Wireless hadoverlapping TDMA network assets and AT&T Wireless’ UMTS(Universal Mobile Telephone Service) assets. The plan includeddecommissioning TDMA assets (approximately 85% former AT&TWireless assets and 15% legacy Cingular assets) and replacingformer AT&T Wireless UMTS assets by the end of 2005. Thevaluation of these former AT&T Wireless assets was reducedby approximately $145 and was reflected as an adjustment to theoriginal purchase price allocated to these assets as of theacquisition date.The Company also determined to decommission and replace certainvendor-specific Cingular network assets in three markets as partof its overall network integration efforts, resulting in a netincrease of $257 in depreciation expense for 2005.**     ***Network IntegrationPlan — Phase II*In October 2005, the Company approved the second and final phaseof its network integration plan. This plan complemented theactivities undertaken in June 2005 to eliminate redundantnetwork facilities that arose upon the purchase of AT&TWireless. In connection with the second phase of the networkintegration plan, the Company is integrating its GSM (GlobalSystem for Mobile Communication) networks, decommissioningredundant cell sites and core network elements and swappingvendor equipment in various markets to have like equipment ineach operating market. The plan is anticipated to result indecommissioning approximately 7,600 cell sites, of whichapproximately 5,700 were acquired from AT&T Wireless. Thevaluation of the former AT&T Wireless assets affected by thesecond phase of the network integration plan was reduced byapproximately $1,319 and is reflected as an adjustment to theoriginal purchase price allocated to these assets. Certainlegacy Cingular assets that will be decommissioned as a resultof the second phase of the network rationalization plan weredepreciated on an accelerated basis beginning in the fourthquarter of 2005. The incremental depreciation associated withthose legacy assets amounted to $165 for the year endedDecember 31, 2005. The Company expects to completeactivities associated with its network integration plans byDecember 31, 2006.**     ***Retail Stores andAdministrative Space Integration Plans*The Company also finalized plans to integrate the retail storesand administrative space requirements for the sales/distributionand corporate real estate functions in June 2005. The valuationof former AT&T Wireless non-network assets affected by theseintegration plans was reduced by $74 and was reflected as anadjustment to the original purchase price allocated to theseassets as of the acquisition date. Legacy
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***CINGULAR WIRELESS LLC****NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(Continued)**Cingular assets affected by the integration plans will bedepreciated on an accelerated basis through their estimatedremaining lives. The impact on depreciation expense is notmaterial.**     ***Exit Costs Recordedunder Integration Plans*In addition to the revaluation of assets, the Company incurredand recorded certain costs and accruals associated with theintegration plans in accordance with the requirements ofEITF 95-3 andStatement of Financial Accounting Standards No. 146,*Accounting for Costs Associated with Exit or DisposalActivities*(SFAS 146). The costs presented in the tableimmediately following were recorded underEITF 95-3 during2005, to exit certain AT&T Wireless activities and resultedin adjustments to the purchase price allocation for assetsacquired and liabilities assumed in the acquisition of AT&TWireless. The majority of the costs recognized related totermination fees associated with leases and other contractualarrangements. Costs recorded under SFAS 146 as presented inthe second table below are recognized in the income statementwhen those costs have been incurred.The following table displays the activity and balances recordedunder EITF 95-3and are reflected in “Accrued liabilities” in theconsolidated balance sheets:**EITF 95-3Summary**                   **December 31, 2004** **Accruals** **Payments** **December 31, 2005**             Lease terminations $—  $293  $(31) $262     Severance  27   85   (97)  15     Equipment removal costs  —   194   (9)  185     Other  —   4   (1)  3                  Total $27  $576  $(138) $465              A summary of total expected costs to be incurred underSFAS 146 for the integration plans, and the amountsincurred for the year ended December 31, 2005, is presentedin the table below:**Summary of SFAS 146 Costs**                **Estimate of Costs**   **Cumulative Costs**  **Expected to be** **Costs incurred** **Incurred through**  **Incurred** **during 2005** **December 31, 2005**           Contract termination costs:                 Lease terminations $138  $36  $36      Agent terminations  10   —   —      Other contract terminations  6   —   —     Equipment removal costs  126   15   15     Other  4   3   3               Total $284  $54  $54           Costs recorded under SFAS 146 were classified in “Costof services” and “Selling, general andadministrative” in the consolidated statements of income.
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***CINGULAR WIRELESS LLC****NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(Continued)***Employee Termination Costs*In connection with the integration of AT&T Wireless, theCompany recognized $42 of termination costs in the year endedDecember 31, 2005, for approximately 2,400 Cingularemployees who were identified to be terminated during 2005 and2006. Approximately 1,900 of these employees left theirpositions by December 31, 2005. Employee terminationbenefits to be paid to former Cingular employees are recorded inaccordance with SFAS No. 112, *Employers’Accounting for Postemployment Benefits*(SFAS 112).Additional liabilities for termination benefits to be providedto former Cingular employees will be recognized when such costsare probable and estimable.Additionally, employee termination benefits of $35 and $85,including involuntary severance and related benefits, wererecorded in the years ended December 31, 2004 and 2005,respectively, for approximately 2,200 former AT&T Wirelessemployees. These costs were recognized underEITF 95-3 asliabilities assumed in the purchase business combination, whichincreased goodwill and did not affect net income, and arereflected in theEITF 95-3 Summarytable above. As of December 31, 2005, approximately 1,800of the identified employees had left their positions.The following table displays the SFAS 112 and SFAS 146activity and balances of the restructuring liabilitiesassociated with the integration plans which are reflected inaccrued liabilities on the consolidated balance sheet:           **SFAS 112** **SFAS 146**         Balance at December 31, 2004 $4  $—     Additions  42   54     Payments  (35)(1)  (17)           Balance at December 31, 2005 $11  $37         (1)     Includes cash payments and adjustments for changes in employment    status.*Hurricane Costs*In August and September 2005, hurricanes Katrina and Rita causedsignificant damage to coastal areas served by the Company inLouisiana, Mississippi, Alabama and Texas. The Companyconsequently experienced disruptions to its service andoperations, and incurred losses to its network equipment, retaillocations and other property. The extent of these asset lossescaused by the storms, and costs incurred for service restorationefforts, totaled $116. In addition, the Company recorded$32 in revenue losses related to subscribers residing ingeographic areas affected by hurricane Katrina.**13.****Income Taxes**The Company is not a taxable entity for federal income taxpurposes. Federal taxable income or loss is included in therespective member’s federal income tax return. The majorityof states follow this treatment. Certain states, however, imposetaxes at the Company level and such taxes are the responsibilityof the Company and are included in the Company’s income taxprovision (benefit). The consolidated financial statements alsoinclude income tax provisions (benefits) for federal andstate income taxes for all corporate subsidiaries of the Company.
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***CINGULAR WIRELESS LLC****NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(Continued)**Following the Company’s acquisition of AT&T Wirelessand related restructuring, AT&T Wireless became a directwholly-owned subsidiary of the Company. The Company and AT&TWireless transferred significant portions of their respectiveassets and liabilities to CW II. Earnings or losses fromCW II flow to its owners in accordance with theirrespective ownership interests. The structure retains AT&TWireless as a tax-paying corporation that is a 43% owner ofCW II. The Company owns the remaining 57% of CW II.The Company and CW II are generally both consideredpartnerships for federal and state income tax purposes. Forpartnerships, income tax items generally flow through to theirpartners and are taxed at the partner level pursuant to federaland state income tax laws.Deferred income taxes are recorded using enacted tax law andrates for the years in which the taxes are expected to be paidor refunds received. Deferred income taxes are provided foritems when there is a temporary difference in recording suchitems for financial reporting and income tax reporting. Amajority of these deferred taxes were recorded through therequired application of the purchase method of accounting forthe Company’s acquisition of AT&T Wireless. As part ofpurchase accounting, the assets and liabilities acquired wererecorded by the Company at fair value. The difference betweenthe fair values recorded for these acquired assets (other thangoodwill) and liabilities and the tax basis of those assets andliabilities generated the related deferred income taxes thathave been recorded in the Company’s financial statements.Additionally, the Company assumed significant tax net operatinglosses (NOLs) with its acquisition of AT&T Wireless.The provision (benefit) for income taxes consists of thefollowing:                 **Year Ended**  **December 31,**     **2003** **2004** **2005**           Current:                 Federal $26  $14  $73      State and local  3   2   35                Total current  29   16   108     Deferred:                 Federal  (3)  (67)  72      State and local  2   (7)  18                 Total deferred  (1)  (74)  90               Provision (benefit) for income taxes $28  $(58) $198           
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***CINGULAR WIRELESS LLC****NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(Continued)**A reconciliation of the income tax provision (benefit) computedat the statutory tax rate to the Company’s effective taxrate is as follows:               **Year Ended December 31,**     **2003** **2004** **2005**           Income tax provision at federal statutory rate of 35% $352  $50  $186     State income taxes, net of federal U.S. tax benefit  40   6   19     LLC income not subject to federal or state income taxes  (364)  (114)  (17)    State law changes, net  —   —   29     Reversal of valuation allowance  —   —   (13)    Other  —   —   (6)              Provision (benefit) for income taxes $28  $(58) $198           The significant components of the Company’s deferred taxassets and liabilities are as follows:             **December 31,**     **2004** **2005**         Current deferred tax assets:             Net operating loss carryforwards $—  $753      Other  2   14            Total current deferred tax assets  2   767            Noncurrent deferred tax assets:              Net operating loss/credit carryforwards  3,078   2,246       Valuation allowances  (147)  (131)           Total net noncurrent deferred tax assets  2,931   2,115     Noncurrent deferred tax liabilities:             Investment in Cingular Wireless II  6,655   4,962      FCC licenses and goodwill  216   201      Investments in and advances to unconsolidated subsidiaries  41   —     Other  16   38            Total noncurrent deferred tax liabilities  6,928   5,201            Total noncurrent net deferred tax liabilities $3,997  $3,086        The Company, through AT&T Wireless, has federal and stateNOL carryforwards of approximately $6,979 and$9,858, respectively, which expire at various datesprincipally from December 31, 2007 throughDecember 31, 2024. The Company also has federal tax creditcarryforwards of $42 which expire between 2007 and 2024.Internal Revenue Code Section 382 places certainlimitations on the annual amount of NOL carryforwards that canbe utilized if certain changes to a company’s ownershipoccur. The Company believes its purchase of AT&T Wirelesswas a change in ownership pursuant to Section 382 of theCode, and the NOL carryforwards of AT&T Wireless are limitedbut more likely than not will be used in future periods. As ofDecember 31, 2005, the Company has valuation allowances of$119 for NOLs and $12 for tax credits which were more likelythan not to expire unused. The majority of the Company’sdeferred tax
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***CINGULAR WIRELESS LLC****NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(Continued)**asset valuation allowance would be applied to reduce goodwill inthe event that the tax benefits for the items are recognized.On December 21, 2004, the FASB issued FSP FAS 109-2,*Accounting and Disclosure Guidance for the Foreign EarningsRepatriation Provision within the American Jobs Creation Act of2004*(the Act), to provide accounting and disclosureguidance for the repatriation provision of the Act. The Actcreated a temporary incentive for U.S. corporations torepatriate accumulated income earned abroad by providing an85 percent dividends received deduction for certaindividends from controlled foreign corporations. Suchrepatriations must occur in either an enterprise’s last taxyear that began before the enactment date, or the first tax yearthat begins during the one-year period beginning on the date ofenactment. The Company and the Board of Directors approved aplan to repatriate approximately $310 in previously unremittedforeign earnings under the Act, which were remitted in the thirdquarter of 2005. Amounts to be repatriated under the Act do nothave an effect on the Company’s income tax expense. Changesin deferred taxes related to the Act directly resulted inadjustments to the purchase price allocations that were recordedin connection with the Company’s acquisition of AT&TWireless.At December 31, 2004 and 2005, the Company’s recordednet assets at entities that are not taxpayers exceed their taxbases by approximately $14,000 and$14,900, respectively. The Company does not record deferredtaxes for their differences due to its structure. For the yearended December 31, 2004 and 2005, this basis differenceprincipally relates to the Company’s investment inCW II. Cash paid for income taxes for the years endedDecember 31, 2003, 2004 and 2005 was $23, $22 and $138,respectively.The Company’s income tax returns are regularly audited andreviewed by the Internal Revenue Service (IRS) and state taxingauthorities. During the fourth quarter of 2005, the IRScompleted field examinations for tax years 1997 through 2003 forthe legacy AT&T Wireless operations. During 1997 throughJuly 9, 2001 (the effective date of its split off from OldAT&T), AT&T Wireless was included in the consolidatedfederal income tax return of Old AT&T. After the spin-off,AT&T Wireless filed as a separate taxpayer. The IRS hasissued assessments challenging the timing and amounts of variousdeductions for both the January 1, 1997 throughJuly 9, 2001 and the July 10, 2001 throughDecember 31, 2003 periods. The proposed assessment forthese years is currently under review by the Congressional JointCommittee on Taxation (JCT). The Company expects completion ofthe JCT review and final resolution of these audits during 2006.Since the audit periods predate the Company’s acquisitionof AT&T Wireless, any adjustments that result from theassessment will increase or decrease goodwill pursuant to therules of purchase accounting.**14.****Employee Benefits*****Pensions and Post-Retirement Benefits***As of December 31, 2005, approximately 41,000 of theCompany’s employees are covered by one of twononcontributory qualified pension plans. Participation in theCompany’s plans commenced November 1, 2001, followingthe initial contribution of employees and related obligationsand liabilities by AT&T and BellSouth to the Company. Inconnection with this contribution, AT&T and BellSouthtransferred pension assets from their qualified trusts to thetrusts established for the Company’s pension plans.Approximately 24,000 current employees of the Company whowere formerly employed by AT&T Wireless became eligible toparticipate in the pension plans on January 1, 2006.Nonbargained employees commencing service on or beforeDecember 31, 2005, and some bargained employees,participate in a cash balance plan, under which they can electto receive their pensions in a
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***CINGULAR WIRELESS LLC****NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(Continued)**lump sum. The pension benefit formula for many bargainedemployees is based on a flat dollar amount per year of serviceaccording to job classification, and these benefits aretypically paid as an annuity. Nonbargained employees commencingservice on or after January 1, 2006 do not participate inany defined benefit pension plan.The projected benefit obligation of the Company’s pensionplans is the actuarial present value of all benefits attributedby the pension benefit formula to previously rendered employeeservice. It is measured based on assumptions concerning futureinterest rates, employee compensation levels, retirement dateand mortality. Actual experience may differ from the actuarialassumptions, and the benefit obligation will be affected. TheCompany uses a December 31 measurement date for its plans.For a closed group of nonbargained and bargained transitionalemployees, the Company provides certain retiree medical, dentaland life insurance benefits under various plans and accruesactuarially determined post-retirement benefit costs as activeemployees earn these benefits. These post-retirement plans arenot funded. Other nonbargained employees and their covereddependents who meet certain eligibility requirements areprovided access to post-retirement medical and dental benefitsat no cost to the Company. Current employees formerly employedby AT&T Wireless who meet certain eligibility requirementsare eligible only for access to post-retirement medical anddental benefits at no cost to the Company.In accordance with FASB Staff Position No. FAS 106-2,*Accounting and Disclosure Requirements Related to theMedicare Prescription Drug, Improvement and Modernization Act of2003*, the obligation under the Medicare Prescription Drug,Improvement and Modernization Act of 2003 (MedicareModernization Act) has been reflected effective January 1,2004. Due to expected future receipt of subsidies availableunder the Act for plans that are determined to be actuariallyequivalent, the plans’ combined accumulated postretirementbenefit obligation was reduced by approximately $8 and $10 as ofthe beginning of 2004 and 2005, respectively, and the 2004 and2005 net periodic benefit cost were each reduced byapproximately $2.*Obligations and Funded Status*The funded status of the pension plan and post-retirementbenefit plan and amounts recognized in the consolidated balancesheets at December 31, 2004 and 2005 are as follows:                      **Post-**  **Pension** **Retirement**  **December 31,** **December 31,**       **2004** **2005** **2004** **2005**             Change in Benefit Obligation:                     Benefit obligation at beginning of year $456  $536  $114  $117      Service cost  65   71   10   11      Interest cost  26   30   6   7      Amendments  2   —   (12)  —      Impact of Medicare Modernization Act  —   —   (8)  —      Actuarial loss (gain)  18   (12)  7   22      Benefits paid  (31)  (47)  —   —                  Benefit obligation at end of year $536  $578  $117  $157              
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***CINGULAR WIRELESS LLC****NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(Continued)**                      **Post-**  **Pension** **Retirement**  **December 31,** **December 31,**       **2004** **2005** **2004** **2005**             Change in Plan Assets:                     Fair value of plan assets at beginning of year $510  $526  $—  $—      Actual return on plan assets  47   37   —   —      Employer contribution  —   —   —   —      Benefits paid  (31)  (47)  —   —                  Fair value of plan assets at end of year $526  $516  $—  $—                                 **Pension** **Post- Retirement**  **December 31,** **December 31,**       **2004** **2005** **2004** **2005**             Funded status $(10) $(62) $(117) $(157)    Unrecognized prior service cost  14   11   (7)  (6)    Unrecognized net actuarial loss  12   3   29   50                  Prepaid (accrued) pension cost and post-retirement benefit    obligation $16  $(48) $(95) $(113)             The accumulated benefit obligation for the pension plans was$511 and $554 at December 31, 2004 and 2005, respectively.As of December 31, 2005, the bargained pension plan had anaccumulated benefit obligation that exceeded the fair value ofplan assets, and an additional minimum liability of $10 wasrecorded in accordance with the provisions ofSFAS No. 87, *“Employers’ Accounting forPensions”.* Additional information for this plan is asfollows:           **December 31,**     **2004** **2005**         Projected benefit obligation $26  $38     Accumulated benefit obligation  22   32     Fair value of plan assets  17   15     Increase in minimum liability included in other comprehensive    income  4   5 
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***CINGULAR WIRELESS LLC****NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(Continued)***Components of Net Periodic Pension Cost*Net pension expense and post-retirement benefit expenserecognized is comprised of the following:                           **Pension** **Post-Retirement**       **2003** **2004** **2005** **2003** **2004** **2005**                 Service cost $61  $65  $71  $9  $10  $11     Interest cost  24   26   30   6   6   7     Expected return on plan assets  (36)  (38)  (41)  —   —   —     Amortization of prior service cost  3   3   3   1   1   (1)    Recognized actuarial loss  —   —   1   1   1   1                        Net expense $52  $56  $64  $17  $18  $18                    *Assumptions*Significant weighted-average assumptions used in developingpension and post-retirement benefit obligations atDecember 31 include:                     **Post-**  **Pension** **Retirement**       **2004** **2005** **2004** **2005**             Discount rate  5.75%  5.50%  5.75%  5.50%    Composite rate of compensation increase  6.00%  5.00%  6.00%  5.00%Significant weighted-average assumptions used to determine netperiodic pension and post-retirement cost for the years endedDecember 31 include:                           **Pension 2003** **Post-Retirement**       **2003** **2004** **2005** **2003** **2004** **2005**                 Discount rate  6.75%  6.25%  5.75%  6.75%  6.25%  5.75%    Expected long-term return on plan assets  8.50%  8.50%  8.50%  —   —   —     Composite rate of compensation increase  6.00%  6.00%  6.00%  6.00%  6.00%  6.00%Discount rates are selected considering yields available onhigh-quality debt instruments at the measurement date. AtDecember 31, 2005, in addition to reviewing standard bondmarket indices, we specifically considered the timing andamounts of expected future benefit payments and compared thatwith a yield curve developed to reflect yields available onhigh-quality bonds. The discount rate selected as ofDecember 31, 2005 reflects the results of this yield curveanalysis, with appropriate consideration given to plandemographics and benefit design, as well as comparisons to otherpublished indices of long-maturity corporate bond rates.The expected long-term rate of return on assets was derivedusing data from investment managers and reflects the averagerate of earnings expected on the funds invested, or to beinvested, to provide for the benefits included in the projectedbenefit obligations. The Company considers many factors, whichinclude current market information on long-term returns(*e.g.*, long-term bond rates) and current and target assetallocations between asset categories. The target assetallocation is determined based on consultations with externalinvestment advisors.
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***CINGULAR WIRELESS LLC****NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(Continued)**Assumed health care cost trend rates at December 31 are asfollows:                   **2004** **2005**       **Pre-** **Post-** **Pre-** **Post-**  **Age 65** **Age 65** **Age 65** **Age 65**             Health care cost trend rate assumed for next year  9.25%  10.00%  9.25%  10.00%    Rate to which the cost trend rate is assumed to decline (the    ultimate trend rate)  5.00%  5.00%  5.00%  5.00%    Year the rate reaches the ultimate trend rate  2011   2011   2012   2012 The assumed dental cost trend rate is 5.0% in 2005 and futureyears. A one percentage-point change in the assumed health carecost trend rate would have the following effects:           **One Percentage-** **One Percentage-**  **Point Increase** **Point Decrease**         Effect on total of service and interest cost components $5  $(4)    Effect on post-retirement benefit obligation  23   (18)*Plan Assets*The Company’s pension plans asset allocations atDecember 31, by asset category are as follows:             **Plan Assets at**  **December 31,**     **2004** **2005**     **Asset Category**             Equity securities  62%  63%     Debt securities  28   27      Cash  —   —      Other  10   10              Total  100%  100%       The investment goal of the plans is to ensure the availabilityof funds for the liabilities as they become due and to meet theobjectives with a prudent risk profile, diversification anddiligent management in accordance with applicable statutory andregulatory constraints. Target allocations for the pension plansare 35% large cap equity (range of 30 — 40%), 10%small/mid cap equity (range of 5 — 15%), 15%international equity (range of 10 — 20%), 30% domesticfixed income (range of 25 — 30%), 10% alternativeinvestments (range 5 — 15%) and 0% cash(0 — 2%) range. The alternative investment allocationis comprised of absolute return strategies. Absolute returnstrategies are designed to return cash plus a premium regardlessof market direction and are included in the portfolio fordiversification purposes. Prohibited investments are outlined ineach individual manager’s agreement, and derivatives areallowed if in compliance with the Company’s internalderivative policy. Derivatives may be used as a substitute forphysical investing or to manage duration and currency risk.Performance is reviewed on a monthly basis.
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***CINGULAR WIRELESS LLC****NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(Continued)***Contributions*The Company estimates it will have a minimum funding requirementof $10 for its bargained pension plan in 2006. No contributionsare expected for the nonbargained pension plan orpost-retirement benefit plans in 2006.*Estimated Future Benefit Payments*The following benefit payments, which reflect expected futureservice, as appropriate, are expected to be paid.Post-retirement benefit payments shown reflect estimated paymentamounts, without the Medicare subsidy. The Medicare subsidy forall years shown below totals less than $2 in aggregate.             **Post-**  **Pension** **retirement**  **Benefits** **Benefits**         2006 $47  $1     2007  43   2     2008  46   2     2009  47   3     2010  52   4     2011-2015  294   30 *Defined Contribution Plans*The Company maintains several contributory savings plans thatcover substantially all employees. Contributions made by theCompany and the related costs are determined as a percentage ofcovered employees’ eligible contributions to the plans andtotaled $46 in 2003, $46 in 2004 and $48 in 2005.Current employees who were formerly employed by AT&TWireless participated in a legacy savings plan untilDecember 31, 2005, at which time that plan was merged intothe Company’s existing savings plan. The plan matched apercentage of employee contributions up to certain limits andprovided for a fixed percentage contribution and a discretionaryprofit sharing contribution. A final fixed percentagecontribution and discretionary profit sharing contribution willbe made in 2006 for the 2005 plan year for certain eligibleemployees formerly employed by AT&T Wireless. Contributionsunder the plan totaled $13 from the acquisition date ofOctober 26, 2004 through December 31, 2004, and $79for the year ended December 31, 2005.*Supplemental Retirement Plans*The Company also assumed the liabilities related tononqualified, unfunded supplemental retirement plans for seniormanagers previously employed by AT&T affiliates that werecontributed to the Company. Expenses related to these plans wereless than $2 in each year presented. Liabilities of $8 and $10related to these plans, which include an additional minimumpension liability of $3 and $4, have been included in“Other noncurrent liabilities” in the consolidatedbalance sheets at December 31, 2004 and 2005, respectively.The consolidated balance sheets also include $1 in “Otherintangible assets, net” at December 31, 2004 and 2005related to these plans.
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***CINGULAR WIRELESS LLC****NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(Continued)*****     Deferred CompensationPlan***The Company provides certain management employees with anonqualified, unfunded deferred compensation plan. The planallows eligible participants to defer some of their compensationon a pre-tax basis and receive pre-determined market-basedinterest rates of return. In addition, the plan provides for astated matching contribution by the Company based on apercentage of the compensation deferred. Deferred compensationexpenses for all years presented was not significant. Certainmanagement employees who previously were employees of AT&TWireless are participants in a nonqualified, unfunded deferredcompensation plan, which allows participants to defer a portionof their compensation on a pre-tax basis, with earningscalculated based on valuation funds selected by theparticipants. In addition, the plan provides for contributionsby the Company to participants whose matching and profit sharingcontributions to the qualified 401(k) plan were capped byoperation of the limitations imposed by tax laws. The liabilityof the deferred compensation plans totaled $81 as ofDecember 31, 2005, of which $14 and $67 have been recordedas “Accrued liabilities” and “Other noncurrentliabilities”, respectively, in the consolidated balancesheets.The liabilities associated with the AT&T Wireless deferredcompensation plan, along with other benefit obligations, havebeen funded and are held in a grantor trust, subject to theclaims of the Company’s creditors in the event of theCompany’s insolvency. Upon the acquisition of AT&TWireless by the Company, the trust became irrevocable, and theCompany was required to contribute an amount to the grantortrust equal to the present value of the total amount owed toparticipants in the deferred compensation plan and other benefitobligations. As of December 31, 2005, the grantor trustheld $46 in assets, of which $31 was invested in cashequivalents and short term investments. The remaining $15represented the cash surrender value of Company owned lifeinsurance policies. The assets held by the grantor trust wereincluded in “Other assets” in the consolidated balancesheets. Effective January 1, 2006, former employees ofAT&T Wireless commenced participation in the Company’sdeferred compensation plan. After December 31, 2005, nofuture deferrals will be made into the AT&T Wirelessdeferred compensation plan.***     Long-Term CompensationPlan***The Cingular Wireless Long-Term Compensation Plan, as amended(the Plan), provides for incentive compensation to eligibleparticipants over periods that are two years or longer in theform of performance units, stock appreciation units, restrictedstock units and performance stock units. Awards granted in anyparticular year may be comprised of any combination of awardtype provided for under the Plan, as approved by the planadministrator. All awards are ultimately settled in cash. Grantsare made in April of the award year.Performance units granted prior to 2005 are tied to theachievement of specified financial objectives over a three-yearperformance period. The units have a stated value of $50 (wholedollars). Performance units granted at inception of a three-yearperformance period are payable in the first quarter followingthe performance period, with payouts ranging from 0% to 200% ofthe stated value of the performance units for years prior to2004 and 0% to 150% for 2004 grants. The number of performanceunits granted under the Plan total approximately540,000 units in 2003 and 732,000 units in 2004. As ofDecember 31, 2005, the Company has approximately1.1 million outstanding performance units issued prior to2005. Expense is accrued ratably throughout the performanceperiod based upon management’s estimate of the compensationthat will ultimately be earned under the Plan. As performance ismonitored against the financial objectives that have beenestablished throughout the respective three-year performanceperiods,
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***CINGULAR WIRELESS LLC****NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(Continued)**management may revise its estimate of the compensation that willultimately be earned under the Plan and adjust its accrualaccordingly. For the year ended December 31, 2005, 822,000performance units that were granted in connection with the2002-2004 performance period were paid in the amount of $16.Stock appreciation units granted under the Plan, whichapproximate 3.3 million in total, are indexed to anunderlying share of BellSouth or AT&T common stock. Eachstock appreciation unit has a grant price equal to the closingprice of BellSouth or AT&T common stock, as the case may be,based on the closing New York Stock Exchange price on the grantdate. Stock appreciation units were granted to eligibleemployees on April 1, 2003, 50% of which vest two yearsafter the grant date and the remaining 50% of which vest threeyears following the grant date. Exercised units are paid outbased on the appreciation of the stock price underlying theunits to the exercise date. As of December 31, 2005, theCompany had approximately 2.5 million outstanding stockappreciation units. The units expire 10 years from thegrant date. Compensation cost is recognized over the period suchunits remain outstanding based upon the change in the fair valueof the stock appreciation units at the end of each reportingperiod.Restricted stock units granted under the Plan are indexed to anunderlying share of BellSouth or AT&T common stock. Thevalue of the restricted stock units granted in 2004 and 2005will be paid in cash to holders in March 2007 and March 2008,respectively, based on the average of the closing stock pricesof BellSouth and AT&T common stock for the last ten tradingdays of February 2007 and February 2008. Dividend equivalentswill be paid annually at the same rate as the dividend receivedby all BellSouth and AT&T shareholders, respectively. Thenumber of BellSouth restricted stock units and AT&Trestricted stock units granted in 2004 totaled 339,000 and378,000, respectively, with an aggregate value on the grant dateof approximately $19. During the year ended December 31,2005, the Company granted approximately 730,000 BellSouthrestricted stock units and 797,000 AT&T restricted stockunits with an aggregate value on the grant date of approximately$37. As of December 31, 2005, the Company had approximately2.1 outstanding restricted stock units. The value of therestricted stock units, adjusted for changes in the value of theunderlying BellSouth and AT&T common stock as the case maybe, is recognized as compensation expense over the respectivethree-year vesting periods.Performance stock units granted in 2005 under the Plan, whichapproximate 4.4 million in total, are indexed to anunderlying share of BellSouth or AT&T common stock, based onthe closing New York Stock Exchange price of each stock for the10 trading days preceding the grant date. The value of the unitsis also based upon the Company’s performance relative topre-established performance objectives over the performanceperiod. For the 2005 grant, the performance objectives are basedupon return on capital objectives. Performance stock units weregranted to eligible employees on April 1, 2005, and vestand become payable on March 1, 2008, with the final paymentbased upon the average closing stock prices for the last 10trading days in February 2008 applied to a payout percentageranging from between 0% to 150% as determined by theCompany’s performance against the objectives. Dividendequivalents will be paid annually on each performance stock unitat the same rate as the dividend received by all BellSouth andAT&T shareholders, respectively. A portion of the 2005grants of BellSouth and AT&T performance stock units is tiedto the Company’s achievement of a ranking of first orsecond in several critical industry measures by the end of 2007.The number of performance units paid at the end of theperformance period will range from 0% to 150% based uponattainment of those predetermined objectives, with the value ofeach unit based upon the average closing stock prices for thelast 10 trading days of February 2008. Dividend equivalents onthese units will be paid at the end of the performance periodbased on the same payout percentage that applies to theperformance stock units. As of December 31, 2005, theCompany had approximately 3.8 million outstanding 2005performance stock units. Compensation cost is recognized
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***CINGULAR WIRELESS LLC****NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(Continued)**over the period such units remain outstanding based upon thechange in the fair value of the stock appreciation units at theend of each reporting period.For the years ended December 31, 2004 and 2005, the Companyrecognized compensation expense of $26 and $68, respectively,associated with the Plan. Former AT&T Wireless employees whoremain in the employment of the Company and meet certaineligibility requirements were eligible to participate in thePlan beginning in 2005.**15.****Commitments and Contingencies*****     Leases***The Company enters into capital leases primarily for the use ofcommunications towers. Capital lease obligations are included inNote 8.The Company also enters into operating leases for facilities andequipment used in operations. These leases typically includerenewal options and escalation clauses. In general, ground andcollocation leases have five or ten year initial terms withthree to five renewal terms of five years each. Rental expenseunder operating leases for the years ended December 31,2003, 2004 and 2005 was $512, $699 and $1,646, respectively.The following table summarizes the approximate future minimumrentals under noncancelable operating leases, including renewalsthat are reasonably assured, in effect at December 31, 2005:         2006 $1,263     2007  1,121     2008  1,000     2009  912     2010  838     Thereafter  4,955         Total $10,089     ***     Commitments***The Company has unconditional purchase commitments foradvertising and marketing, computer equipment and services,roaming, long distance services, network equipment and relatedmaintenance and software development and related maintenance.These commitments totaled approximately $1,845 atDecember 31, 2005. Included in this amount are commitmentsof $109 to AT&T, BellSouth and their affiliates fortelecommunications and other services.The Company has commitments with local exchange carriers fordedicated leased lines. The original terms of these commitmentsvary frommonth-to-month to up tofive years. The Company’s related commitment to its primarycarriers as of December 31, 2005, was approximately $347,with remaining payments due in succeeding fiscal years asfollows: $171 in 2006, $108 in 2007, $60 in 2008, and $8 in2009. Included in these amounts are commitments of approximately$161 to AT&T, BellSouth and their affiliates.The Company has commitments to Crown Castle International formonitoring and maintenance services related to its communicationtowers. The Company’s commitment at December 31, 2005was
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***CINGULAR WIRELESS LLC****NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(Continued)**approximately $421, with payments due in succeeding fiscal yearsas follows: $59 in 2006, $61 in 2007, $65 in 2008, $68 in 2009and $23 in 2010.In connection with the termination of the Company’s GSMFnetwork infrastructure joint venture withT-Mobile (seeNote 2), the Company made a $1,200 commitment to purchase aminimum number of minutes fromT-Mobile. Thiscommitment became effective in January 2005, and approximately$520 of the purchase commitment remained outstanding as ofDecember 31, 2005.***     Contingencies***In a jury trial, Freedom Wireless, Inc. (Freedom) was awardeddamages jointly against the Company and Boston CommunicationsGroup, Inc. (BCGI) in the aggregate amount, includingprejudgment interest, of approximately $165 for alleged pastinfringement of two patents allegedly owned by Freedom and usedby BCGI to provide to the Company and other carriers a prepaidwireless telephone service technology platform. The court alsoenjoined the Company’s continued use of the BCGI platform,but the U.S. Court of Appeals for the Federal Circuitissued a stay of the injunction, and the Company and BCGI areappealing the entire case. BCGI has agreed to indemnify theCompany with respect to the claims asserted in this litigationand has escrowed $41 for that purpose. However, if BCGI were tocommence a bankruptcy proceeding, which is possible, the $41 maynot be available to cover any of the Company’s liability.As a result of this arrangement and based upon theCompany’s anticipated prospects on appeal, the Company doesnot believe the ultimate disposition of this case will have amaterial impact on its operations, cash flows or financialposition beyond the $20 accrued in its consolidated financialstatements.Several class-action lawsuits have been filed against OldAT&T asserting claims under the federal securities laws. Thecomplaints assert claims that Old AT&T made materialmisstatements concerning earnings and financial condition, whileomitting other material information, allegedly to maximizeproceeds from the offering of AT&T Wireless Group trackingstock in April 2000 and/or to avoid paying a cash guarantee inconnection with its MediaOne acquisition. The plaintiffs havedemanded damages in excess of $2,100 related to the offering ofAT&T Wireless Group tracking stock. In connection with thesplit-off of AT&T Wireless from Old AT&T, the SeparationAgreement between AT&T Wireless and Old AT&T providesfor the allocation to AT&T Wireless of 70% of anyliabilities arising out of these actions. Management’sestimation of the potential loss from this and otherpreacquisition liabilities from AT&T Wireless is reflectedin the purchase price allocation to AT&T Wireless’assets acquired and liabilities assumed.The Company is subject to claims arising in the ordinary courseof business involving allegations of personal injury, breach ofcontract, anti-competitive conduct, employment law issues,regulatory matters and other actions. To the extent thatmanagement believes that a loss arising from litigation orregulatory proceedings is probable and can reasonably beestimated, an amount is accrued on the financial statements forthe estimated loss. As additional information becomes available,the potential liability related to the matter is reassessed andthe accruals are revised, if necessary. While complete assurancecannot be given as to the outcome of any legal claims, theCompany believes that any financial impact would not be materialto its business, financial position or cash flows.
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***CINGULAR WIRELESS LLC****NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(Continued)****16.****Selected Quarterly Financial Data (Unaudited)**The table below sets forth summarized quarterly financial datafor the years ended December 31, 2004 and 2005.                   **First** **Second** **Third** **Fourth****2004** **Quarter** **Quarter** **Quarter** **Quarter(a)**             Total operating revenues $3,967(b) $4,187(b) $4,292(b) $7,119(b)    Operating income (loss)  550   671   460(c)  (153)(d)    Income (loss) before provision for income taxes  221   337   142(c)  (557)(d)    Net income (loss)  215   339   142(c)  (495)(d)                   **First** **Second** **Third** **Fourth****2005** **Quarter** **Quarter** **Quarter** **Quarter**             Total operating revenues $8,229  $8,609  $8,746  $8,849     Operating income  114(e)  504(f)  657(g)  549(h)    Income (loss) before provision for income taxes  (218)(e)  171(f)  326(g)  252(h)    Net income (loss)  (240)(e)  147(f)  222(g)  204(h)     (a)    On October 26, 2004, the Company completed its acquisition    of AT&T Wireless. Operating results for AT&T Wireless    have been included in the consolidated financial statements    subsequent to that date.     (b)    In order to conform with the current year presentation, amounts    reflect reclassifications related to the presentation of gross    receipts taxes in the amount of $25, $32, $35 and $37 for first,    second, third and fourth quarter, respectively. The amounts    presented are greater than those previously reported. The    reclassifications did not have an impact on previously reported    Operating income, Income (loss) before provision for income    taxes or net income (loss).     (c)    Includes a reduction of $43 for integration planning costs and    $31 loss on the writedown of the carrying value of the    Company’s Mobitex business.     (d)    Includes an increase in customer list intangible amortization    associated with purchase accounting adjustments (see    Notes 2 and 4) and $245 of acquisition-related and    integration costs (see Note 12).     (e)    Includes a reduction of $105 for integration planning costs.     (f)    Includes a reduction of $204 for integration planning costs.     (g)    Includes a reduction of $241 for integration planning costs, $96    in hurricane related costs.     (h)    Includes a reduction of $326 for integration planning costs, $20    in hurricane related costs.
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