AT&T Wireless 2013 Annual Report Download - page 33

AT&T Inc. | 31
and $19,224. These taxes include income, franchise,
property, sales, excise, payroll, gross receipts and various
other taxes and fees. Total health and welfare benefits
provided to certain active and retired employees and their
dependents totaled $5,167 in 2013, with $1,682 paid from
plan assets. Of those benefits, $4,254 related to medical
and prescription drug benefits. During 2013, we paid
$3,966 of pension benefits out of plan assets.
During 2013, we also received approximately $7,000
from monetization of various nonstrategic assets.
A majority of that cash was attributable to the towers
transaction (see Note 16) as well as sales of investments
and real estate holdings. We plan to continue to explore
similar opportunities in 2014.
In September 2013, we made a voluntary contribution of
a preferred equity interest in AT&T Mobility II LLC (Mobility),
the holding company for our wireless business, to the trust
used to pay pension benefits under our qualified pension
plans. The preferred equity interest had a value of $9,104
on the contribution date, does not have any voting rights
and has a liquidation value of $8,000. The trust is entitled
to receive cumulative cash distributions of $560 per
annum, which will be distributed quarterly in equal
amounts. So long as we make the distributions, we will
have no limitations on our ability to declare a dividend,
or repurchase shares. At the time of the contribution of
the preferred equity interest, we made an additional cash
contribution of $175 and have agreed to annual cash
contributions of $175 no later than the due date for our
federal income tax return for each of 2014, 2015 and 2016.
These contributions, combined with our existing pension
assets, are essentially equivalent to the pension obligation
at December 31, 2013.
The preferred equity interest is not transferable by the trust
except through its put and call features. After a period of
five years from the contribution or, if earlier, the date upon
which the pension plan trust is fully funded as determined
under U.S. generally accepted accounting principles (GAAP),
AT&T has a right to purchase from the pension plan trust
some or all the preferred equity interest at the greater of
their fair market value or minimum liquidation value plus
any unpaid cumulative dividends. In addition, AT&T will
have the right to purchase the preferred equity interest
in the event AT&T’s ownership of Mobility is less than
50% or there is a transaction that results in the transfer of
50% or more of the pension plan trust’s assets to an entity
not under common control with AT&T (collectively, a change
of control). The pension plan trust has the right to require
AT&T to purchase the preferred equity interest at the
greater of their fair market value or minimum liquidation
value plus any unpaid cumulative dividends, and in
installments, as specified in the contribution agreement
upon the occurrence of any of the following: (1) at any time
if the ratio of debt to total capitalization of Mobility exceeds
• We fail to pay when due other debt of $400 or more
that results in acceleration of that debt (commonly
referred to as cross-acceleration) or a creditor
commences enforcement proceedings within a
specified period after a money judgment of $400
or more has become final.
• A person acquires beneficial ownership of more than
50% of AT&T common shares or more than a majority
of AT&T’s directors change in any 24-month period
other than as elected by the remaining directors.
• We fail to make certain minimum funding payments
under the Employee Retirement Income Security Act
of 1974, as amended (ERISA).
• Our bankruptcy or insolvency.
Both agreements contain provisions permitting subsidiaries
to be added as additional borrowers, with or without a
guarantee by AT&T. The terms of the guarantee are set
forth in the agreements.
The obligations of the lenders under the December
2017 Facility to provide advances will terminate on
December11,2017, unless prior to that date either:
(i)AT&T, and if applicable, a Co-Borrower, reduce to $0 the
commitments of the lenders, or (ii) certain events of default
occur. We and lenders representing more than 50% of the
facility amount may agree to extend their commitments
for two one-year periods beyond the December11,2017,
termination date, under certain circumstances. We also can
request the lenders to further increase their commitments
(i.e., raise the available credit) up to an additional $2,000
provided no event of default has occurred. The same
provisions apply to the December 2018 Facility except
that the applicable date is December 11, 2018.
Other
Our total capital consists of debt (long-term debt and debt
maturing within one year) and stockholders’ equity. Our
capital structure does not include debt issued by América
Móvil or YP Holdings. At December 31, 2013, our debt ratio
was 45.0%, compared to 43.0% at December 31, 2012, and
38.0% at December 31, 2011. The debt ratio is affected by
the same factors that affect total capital, and reflects our
recent debt issuances and stock repurchases. Total capital
increased $3,731 in 2013 compared to a decrease of
$8,011 in 2012. The 2013 capital increase was primarily
due to increases in net income due to actuarial gains on
our pension and postretirement benefit plans, increases
in accumulated other comprehensive income related to
prior service credits resulting from amendments to our
postretirement benefit plans and increases in debt balances
partially offset by share repurchases.
A significant amount of our cash outflows are related
to tax items and benefits paid for current and former
employees. Total taxes incurred, collected and remitted by
AT&T during 2013, 2012, and 2011 were $21,004, $19,703