Portugal Telecom SGPS, S.A . (PT)

Comprehensive Income

        Accounting Practices Adopted in Brazil do not embody the concept of comprehensive income. U.S. GAAP requires the disclosure of comprehensive income which is comprised of net income and "other comprehensive income" that includes charges or credits directly to equity which are not the result of transactions with owners. Examples of other comprehensive income items are cumulative translation adjustments, unrealised gains and losses for available-for-sale securities, as well as the effects of the effective portion of cash flow hedge accounting and minimum pension liabilities.

k)    Comprehensive income

        Under U.S. GAAP, companies are required to adopt Statement of Financial Accounting Standards No. 130, "Reporting on Comprehensive Income" ("SFAS 130"). Comprehensive income is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources; it includes all changes in equity during a period except those resulting from investments by owners. Under Portuguese GAAP, companies are not required to report on comprehensive income.