This excerpt taken from the VOD 20-F filed Jun 14, 2007.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Representatives and
We have audited the accompanying consolidated balance sheets of Cellco Partnership d/b/a Verizon Wireless (the “Partnership”) as of December 31, 2006 and 2005, and the related consolidated statements of operations and comprehensive income, changes in partners’ capital, and cash flows for each of the three years in the period ended December 31, 2006. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on the financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of the Partnership as of December 31, 2006 and 2005, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2006, in conformity with accounting principles generally accepted in the United States of America.
As discussed in Notes 1 and 11 to the consolidated financial statements, the Partnership adopted the provisions of Statement of Financial Accounting Standards No. 123(R), “Share-Based Payment,” on January 1, 2006.
Deloitte & Touche LLP
New York, New York
Return of Capital and Share Consolidation
The Company implemented a transaction to return capital to shareholders (the “Return of Capital”) during the year by way of an issue (the “Bonus Issue”) of redeemable, non-cumulative preference shares (the “B Shares”) to shareholders in proportion to their holding of ordinary shares or ADRs immediately prior to the Bonus Issue (the “Pre-existing Shares” and the “Pre-existing ADRs” respectively). Under the Return of Capital, holders of the Pre-existing Shares could elect to have one of the following alternatives apply (with certain classes of persons located in the US along with holders of Pre-existing ADRs only permitted to participate in the second alternative below):
(i) the shareholder could elect to redeem the B Shares at their nominal value on 4 August 2006 (the “Initial Redemption”);
(ii) the shareholder could elect to receive a single dividend of an amount equal to the nominal value of the B Shares on a specified date in August 2006 (the “Initial B Share Dividend”) following which the shares automatically converted into unlisted deferred shares (the “Deferred Shares”); or
(iii) the shareholder could elect to redeem the B Shares at their nominal value at a later date being 5 February or 5 August in the calendar year 2007 or 2008 (the “Future Redemption”) with the shareholder receiving a continuing, non-cumulative preferential dividend on the B Shares in the meantime.
At the same time, the Pre-existing Shares and the Pre-existing ADRs were sub-divided and consolidated (the "Share Capital Consolidation"). The Share Capital Consolidation and the Bonus Issue are together referred to as the "Capital Reorganisation". The shares and ADRs following sub-division and consolidation are referred to below as "New Shares" or "New ADRs" in order to distinguish them from the Pre-existing Shares and Pre-existing ADRs.
The comments below are intended only as a general guide to the current tax position under the laws of the United Kingdom and practice of Her Majesty’s Revenue and Customs primarily in respect of US holders who are (except where specifically addressed) solely resident in the United Kingdom for tax purposes and who hold their shares beneficially as investments and not on trading account. This is a complex area and shareholders should consult their tax advisers in order to be certain of their individual position.