AT&T Wireless 2011 Annual Report Download - page 49

AT&T Inc. 47
We plan to deploy this spectrum as supplemental downlink
capacity, using carrier aggregation technology once
compatible handsets and network equipment are developed.
T-Mobile In March 2011, we agreed to acquire from
Deutsche Telekom AG (Deutsche Telekom) all of the shares
of T-Mobile for approximately $39,000, subject to certain
adjustments. In December 2011, in light of opposition to the
merger from the DOJ and FCC, we and Deutsche Telekom
agreed to terminate the transaction. Pursuant to the purchase
agreement, we paid a breakup fee of $3,000, entered into
a broadband roaming agreement and, pursuant to required
regulatory approvals, are in the process of transferring to
Deutsche Telekom certain wireless spectrum. Termination of
the purchase agreement also terminated our associated credit
agreement with a group of banks, dated as of March 31, 2011,
to partially fund the purchase.
Tender of Telmex Shares In August 2011, the Board of
Directors of América Móvil approved a tender offer for the
remaining outstanding shares of Telmex that were not already
owned by América Móvil. The offer was for $10.50 Mexican
pesos per share (payable in cash). The tender offer was
launched in October 2011, and we tendered all of our shares
for $1,197 of cash.
Labor Contracts As of January 31, 2012, we employed
approximately 256,000 persons. Approximately 55% of our
employees are represented by the Communications Workers
of America, the International Brotherhood of Electrical
Workers or other unions. Contracts covering approximately
120,000 employees will expire during 2012. For contracts
covering approximately 80,000 (mainly wireline) employees,
the union is entitled to call a work stoppage in the absence
of a new contract being reached.
Environmental We are subject from time to time to
judicial and administrative proceedings brought by various
governmental authorities under federal, state or local
environmental laws. Although we are required to reference in
our Forms 10-Q and 10-K any of these proceedings that could
result in monetary sanctions (exclusive of interest and costs)
of one hundred thousand dollars or more, we do not believe
that any of them currently pending will have a material
adverse effect on our results of operations.
LIQUIDITY AND CAPITAL RESOURCES
We had $3,185 in cash and cash equivalents available at
December 31, 2011. Cash and cash equivalents included
cash of $1,182 and money market funds and other cash
equivalents of $2,003. Cash and cash equivalents increased
$1,748 since December 31, 2010. During 2011, cash inflows
were primarily provided by cash receipts from operations and
cash received from our tender of Telmex shares. These inflows
were largely offset by cash used to meet the needs of the
business, including but not limited to, payment of operating
expenses, funding capital expenditures, dividends to
stockholders and the acquisition of wireless spectrum; a net
reduction of debt, including our redemption of approximately
seeking to enjoin the immunity provision’s application on
grounds that it is unconstitutional was filed. In March 2009,
we and the Government filed motions to dismiss this lawsuit.
The court granted the motion to dismiss and entered final
judgment in July 2009. All cases brought against the AT&T
entities have been dismissed. In August 2009, plaintiffs in all
cases filed an appeal with the Ninth Circuit Court of Appeals.
On December 29, 2011, the Ninth Circuit Court of Appeals
affirmed the dismissals in all cases. Management believes
that any further appeal is without merit and intends to
continue to defend these matters vigorously.
Universal Service Fees Litigation In October 2010, our
wireless subsidiary was served with a purported class action
in Circuit Court, Cole County, Missouri (MBA Surety Agency,
Inc. v. AT&T Mobility, LLC), in which the plaintiffs contend that
we violated the FCC’s rules by collecting Universal Service
Fees on certain services not subject to such fees, including
Internet access service provided over wireless handsets
commonly called “smartphones” and wireless data cards, as
well as collecting certain other state and local fees. Plaintiffs
define the class as all persons who from April 1, 2003,
until the present had a contractual relationship with us for
Internet access through a smartphone or a wireless data card.
Plaintiffs seek an unspecified amount of damages as well
as injunctive relief. We believe that an adverse outcome
having a material effect on our financial statements in this
case is unlikely.
Wage and Hour Litigation Two wage and hour cases were
filed in federal court in December 2009 each asserting claims
under the Fair Labor Standards Act (Luque et al. v. AT&T Corp.
et al., U.S. District Court in the Northern District of California)
(Lawson et al. v. BellSouth Telecommunications, Inc., U.S.
District Court in the Northern District of Georgia). Luque also
alleges violations of a California wage and hour law, which
varies from the federal law. In each case, plaintiffs allege that
certain groups of wireline supervisory managers were entitled
to paid overtime and seek class action status as well as
damages, attorneys’ fees and/or penalties. Plaintiffs have been
granted conditional collective action status for their federal
claims and also are expected to seek class action status for
their state law claims. We are contesting the collective and
class action treatment of the claims, the merits of the claims
and the method of calculating damages for the claims. A jury
verdict recently was entered in favor of the Company in the
U.S. District Court in Connecticut on similar FLSA claims.
We believe that an adverse outcome in these cases having
a material effect on our financial statements is unlikely.
Qualcomm Spectrum Purchase In December 2011, we
completed our purchase of spectrum licenses in the Lower
700 MHz frequency band from Qualcomm Incorporated for
approximately $1,925 in cash. The spectrum covers more than
300 million people total nationwide, including 12 MHz of
Lower 700 MHz D and E block spectrum covering more than
70 million people in five of the top 15 metropolitan areas and
6 MHz of Lower 700 MHz D block spectrum covering more
than 230 million people across the rest of the United States.