Offer to purchase CLEARNET.pdf - About TELUS

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TELUS CORPORATION (FORMERLY BCT.TELUS COMMUNICATIONS INC.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) December 31, 1999 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) A summary of the book values of the assets and liabilities at the date of the merger is as follows: BC TELECOM (millions) TELUS Assets: Current assets ............................................... $ 476.3 $ 497.5 Property, plant and equipment, net ................................ 3,156.9 2,713.8 Other assets ................................................. 388.4 604.5 Less: 4,021.6 3,815.8 Current liabilities ............................................. 1,017.8 861.6 Long-term debt .............................................. 883.7 558.5 Other liabilities .............................................. 77.0 10.4 Non-controlling interest ........................................ 9.7 — Net assets .................................................. $2,033.4 $2,385.3 The operating results of BC TELECOM and TELUS for the month ended January 31, 1999 are as follows: BC TELECOM TELUS (millions) Revenue ..................................................... $261.8 $215.3 Income before interest and taxes ................................... 60.6 35.2 Net income .................................................. 29.5 15.3 A charge of $466.3 million was recorded in the first quarter of 1999 for the expected costs in 1999 and 2000 to complete merger-related restructuring activities. More than half of this charge is for management termination costs and the costs of voluntary early retirement programs. The business restructuring also included the rationalization of real estate, the impairment of assets in two start-up businesses that were reassessed in relation to national growth plans and consulting costs from merger integration activities. Third party costs to effect the merger arrangement were charged to retained earnings in the first quarter of 1999. These costs totaled $51.9 million and included financial advisor fees, regulatory filing fees, legal and accounting fees, and printing and mailing costs. The financial statements of BC TELECOM and TELUS have been adjusted to put the accounting methods used by the two companies on a common basis. As part of this process, TELUS Mobility Cellular Inc. has changed its accounting policies relating to the recognition of customer acquisition costs and access revenues. This change was applied retroactively and resulted in a prior period adjustment charging retained I-9
TELUS CORPORATION (FORMERLY BCT.TELUS COMMUNICATIONS INC.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) December 31, 1999 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) earnings with $25.3 million net of tax as at January 1, 1998. The 1998 results have been restated to reflect this change as follows: Increase (Decrease) (millions) Revenue .......................................... $ (.3) Operations expense .................................. 8.0 Financing costs ..................................... 1.7 Income tax ........................................ (4.5) Net income ........................................ $ (5.5) Prepaid expenses and other ............................ $(23.3) Deferred charges .................................... (27.4) Current liabilities .................................... (19.9) Closing retained earnings .............................. $(30.8) (b) Consolidation The consolidated financial statements include the accounts of the Company and all of the Company’s subsidiaries, of which the principal ones are TELUS Communications Inc., TELUS Communications (B.C.) Inc. (formerly BC TEL), TELUS Mobility Cellular Inc., TELUS Mobile Inc., TELUS Services Inc., TELUS Systems Support Inc., Telecom Leasing Canada (TLC) Limited, and ISM Information Systems Management (B.C.) Corporation (75%). (c) Inventories Inventories are valued at the lower of cost and net realizable value, with cost being determined on an average cost basis. (d) Property, Plant and Equipment (Property) Property is recorded at historical cost and, with respect to self-constructed property, includes materials, direct labour and applicable overhead costs. In addition, where construction projects exceed $20 million and are of a sufficiently long duration, an amount is capitalized for the cost of funds used to finance construction. This amount is included in the Consolidated Statement of Income as an offset against financing costs. The rate for calculating the capitalized financing costs is based on the Company’s one year cost of borrowing. In 1999, $1.6 million of financing costs was capitalized ($5.9 million — 1998). When property, plant and equipment is sold by the Company, the historical cost less accumulated depreciation is netted against the sale proceeds and the difference is included in the Consolidated Statement of Income. I-10
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No securities commission or similar
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QUESTIONS AND ANSWERS ABOUT THE OFF
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outstanding voting shares of Clearn
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WHERE YOU CAN OBTAIN MORE INFORMATI
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SUMMARY The following is a summary
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Commitment to Accept the Offers by
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Selected Historical and Pro Forma C
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DEFINITIONS In the accompanying Sum
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‘‘Governmental Entity’’ mea
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‘‘Shareholders Agreements’’
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Shares and the amount of cash recei
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shares into the Depositary’s acco
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the person or persons specified by
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(l) neither TELUS nor the Banks bec
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condition of the Offers specified u
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Page 35 and 36: The Offers are not being made to, n
Page 37 and 38: On July 14, 2000, Darren Entwistle,
Page 39 and 40: espect of such Acquisition Proposal
Page 41 and 42: etter positioned to take advantage
Page 43 and 44: The funds obtained pursuant to the
Page 45 and 46: part of its national strategy, TELU
Page 47 and 48: to require holders of TELUS Non-Vot
Page 49 and 50: ‘‘Dividends’’ in TELUS’ A
Page 51 and 52: systems. Change in the regulation o
Page 53 and 54: (b) the management proxy circular o
Page 55 and 56: COMMITMENTS TO ACQUIRE SECURITIES O
Page 57 and 58: the proposed transaction is likely
Page 59 and 60: ACQUISITION OF CLEARNET SHARES NOT
Page 61 and 62: least equal in value to the conside
Page 63 and 64: Beneficial owners of Clearnet Conve
Page 65 and 66: separately dispose of the balance o
Page 67 and 68: also be taxable Canadian property w
Page 69 and 70: No brokerage fees or commissions wi
Page 71 and 72: CONSENT OF AUDITORS To: British Col
Page 73 and 74: CERTIFICATE OF 612459 B.C. LTD. The
Page 75 and 76: MANAGEMENT’S REPORT Management is
Page 77 and 78: TELUS CORPORATION (FORMERLY BCT.TEL
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Page 87 and 88: 4. FINANCING COSTS TELUS CORPORATIO
Page 105 and 106: SCHEDULE II TELUS CORPORATION UNAUD
Page 107 and 108: COMPILATION REPORT To the Directors
Page 109 and 110: TELUS CORPORATION PRO FORMA CONSOLI
Page 111 and 112: TELUS CORPORATION NOTES TO THE PRO
Page 119 and 120: TELUS CORPORATION PRO FORMA CONSOLI
Page 127 and 128: SCHEDULE III TELUS CORPORATION U.S.
Page 129 and 130: The following table restates the ma
Page 131 and 132: ANNEX A ADDITIONAL INFORMATION ADDI
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Fares F. Salloum President — Inte
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Officers Name and Position held wit
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