AT&T Wireless 2013 Annual Report Download - page 72

Notes to Consolidated Financial Statements (continued)
Dollars in millions except per share amounts
70 | AT&T Inc.
NOTE 15. ADDITIONAL FINANCIAL INFORMATION
December 31,
Consolidated Balance Sheets 2013 2012
Accounts payable and accrued liabilities:
Accounts payable $11,561 $12,076
Accrued payroll and commissions 1,985 2,332
Current portion of employee
benefit obligation 1,949 2,116
Accrued interest 1,559 1,588
Other 4,053 2,382
Total accounts payable and
accrued liabilities $21,107 $20,494
Consolidated Statements of Income 2013 2012 2011
Advertising expense $3,268 $2,910 $3,135
Interest expense incurred $4,224 $3,707 $3,697
Capitalized interest (284) (263) (162)
Total interest expense $3,940 $3,444 $3,535
Consolidated Statements of Cash Flows 2013 2012 2011
Cash paid during the year for:
Interest $4,302 $3,714 $3,691
Income taxes, net of refunds 1,985 458 32
No customer accounted for more than 10% of consolidated
revenues in 2013, 2012 or 2011.
A majority of our employees are represented by labor
unions as of year-end 2013.
NOTE 16. TOWER TRANSACTION
On December 16, 2013, we closed our transaction with
Crown Castle International Corp. (Crown Castle) in which
Crown Castle gained the exclusive rights to lease and
operate 9,048 wireless towers and purchased 627 of
our wireless towers for $4,827 in cash. Under the terms
of the leases, Crown Castle has exclusive rights to lease
and operate the towers over various terms with an average
length of approximately 28 years. As the leases expire,
Crown Castle will have fixed price purchase options for
these towers totaling approximately $4,200, based on their
estimated fair market values at the end of the lease terms.
We sublease space on the towers from Crown Castle for
an initial term of 10 years at current market rates, subject
to optional renewals in the future.
We determined our continuing involvement with the
tower assets prevented us from achieving sale-leaseback
accounting for the transaction, and we accounted for
the cash proceeds from Crown Castle as a financing
obligation on our consolidated balance sheet. We record
interest on the financing obligation using the effective
interest method at a rate of approximately 3.90%.
The financing obligation is increased by interest expense
and estimated future net cash flows generated and
retained by Crown Castle from operation of the tower
sites, and reduced by our contractual payments.
We continue to include the tower assets in Property,
plant and equipment in our consolidated balance sheets
and depreciate them accordingly. At December 31, 2013,
the tower assets had a balance of $1,039. The impact
of the transaction on our operating results for the
year ended December 31, 2013, was not material.
The future minimum payments under the sublease
arrangement are $221 for 2014, $225 for 2015, $229
for 2016, $234 for 2017, $239 for 2018, and $2,797
thereafter.
NOTE 17. CONTINGENT LIABILITIES
We are party to numerous lawsuits, regulatory
proceedings and other matters arising in the ordinary
course of business. In evaluating these matters on an
ongoing basis, we take into account amounts already
accrued on the balance sheet. In our opinion, although
the outcomes of these proceedings are uncertain,
they should not have a material adverse effect on our
financial position, results of operations or cash flows.
We have contractual obligations to purchase certain goods
or services from various other parties. Our purchase
obligations are expected to be approximately $5,749 in
2014, $5,182 in total for 2015 and 2016, $2,570 in total
for 2017 and 2018 and $819 in total for years thereafter.
See Note 10 for a discussion of collateral and credit-
risk contingencies.