Annual report - About TELUS

notes to consolidated financial statements
(a) Merger of BC TELECOM and TELUS
The business combination between BC TELECOM and TELUS Corporation (now TELUS Holdings Inc.) described in note
1(b) was accounted for using the pooling of interests method under Canadian GAAP. Under Canadian GAAP, the application
of the pooling of interests method of accounting for the merger of BC TELECOM and TELUS (TELUS Holdings Inc.)
resulted in the restatement of prior periods as if the two companies had always been combined. Under U.S. GAAP, the
merger is accounted for using the purchase method. Use of the purchase method results in TELUS (TELUS Holdings Inc.)
being acquired by BC TELECOM for $4,662.4 million (including merger related costs of $51.9 million) effective January 31,
1999. The acquisition was effected by issuing 112.3 million shares in TELUS Corporation (formerly “BCT.TELUS
Corporation”) and 1.5 million options to replace TELUS (TELUS Holdings Inc.) options outstanding.
The acquisition is summarized as follows:
(millions)
Net assets acquired
Net working capital (including bank indebtedness acquired of $57.5 million) $ (644.6)
Property and equipment 2,531.4
Intangible assets 4,033.3
Goodwill 403.1
Deferred income tax asset 587.8
Other assets 284.8
Long-term debt (667.7)
Deferred income tax liability (1,855.3)
> 84
Other liabilities (10.4)
$ 4,662.4
Financed by
Issuance of shares and replacement options $ 4,609.2
Repurchase of partial shares 1.3
Transaction costs 51.9
$ 4,662.4
The results of TELUS prior to the merger date of January 31, 1999, would not be included in the results of the Company
under U.S. GAAP. Therefore, $15.3 million for the month ended January 31, 1999, has been deducted from the net income
under Canadian GAAP.
(b) Restructuring Charge
A charge of $466.3 million was recorded in 1999 for the expected costs to complete merger-related restructuring activities.
Under U.S. GAAP, costs incurred to:
° exit an activity of an acquired company,
° involuntarily terminate employees of an acquired company, or
° relocate employees of an acquired company
are recognized as liabilities assumed in a purchase business combination. Therefore, qualifying merger related restructuring
costs (after tax) of $144.6 million associated with TELUS have been recorded as liabilities assumed at the time of purchase.