AT&T Wireless 2014 Annual Report Download - page 75

AT&T INC. | 73
As of December 31, 2014, there was $425 of total
unrecognized compensation cost related to nonvested
share-based payment arrangements granted. That cost is
expected to be recognized over a weighted-average period
of 2.27 years. The total fair value of shares vested during
the year was $327 for 2014, compared to $336 for 2013
and $333 for 2012.
It is our policy to satisfy share option exercises using our
treasury stock. Cash received from stock option exercises
was $43 for 2014, $135 for 2013 and $517 for 2012.
NOTE 14. STOCKHOLDERS’ EQUITY
Stock Repurchase Program From time to time, we
repurchase shares of common stock for distribution through
our employee benefit plans or in connection with certain
acquisitions. In December 2010, our Board of Directors
authorized the repurchase of 300 million shares of our
common stock. We began buying back stock under this
program in 2012 and completed the purchase of authorized
shares that year. In July 2012, our Board of Directors
approved a second authorization to repurchase 300 million
shares and we completed that program in May 2013.
In March 2013, our Board of Directors approved a third
authorization to repurchase 300 million shares, under
which we repurchased shares during 2014. In March 2014,
our Board of Directors approved a fourth authorization
to repurchase up to 300 million shares of our common
stock. For the year ended December 31, 2014, we had
repurchased approximately 48 million shares totaling
$1,617 under these authorizations. For the year ended
December 31, 2013, we had repurchased approximately
366 million shares totaling $13,028 under these
authorizations. Upon completing our acquisition of
DIRECTV, our priority will be to use free cash flow
(operating cash flows less construction and capital
expenditures) after dividends to pay down debt.
To implement these authorizations, we use open market
repurchase programs, relying on Rule 10b5-1 of the
Securities Exchange Act of 1934 where feasible. We also
use accelerated share repurchase programs with large
financial institutions to repurchase our stock.
Authorized Shares There are 14 billion authorized
common shares of AT&T stock and 10 million authorized
preferred shares of AT&T stock. As of December 31, 2014
and 2013, no preferred shares were outstanding.
Dividend Declarations In December 2014, the Company
declared an increase in its quarterly dividend to $0.47 per
share of common stock. In December 2013, the Company
declared a quarterly dividend of $0.46 per share of common
stock, which reflected an increase from the $0.45 quarterly
dividend declared in November 2012.
Preferred Equity Interest The preferred equity interest
discussed in Note 12 is not transferable by the trust except
through its put and call features, and therefore has been
eliminated in consolidation. 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 GAAP, AT&T has
a right to purchase from the pension plan trust some or all
of 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 that of AT&T, (2) the date
on which AT&T Inc. is rated below investment grade for two
consecutive calendar quarters, (3) upon a change of control if
AT&T does not exercise its purchase option, or (4) at any time
after a seven-year period from the contribution date. In the
event AT&T elects or is required to purchase the preferred
equity interest, AT&T may elect to settle the purchase price
in cash or shares of AT&T common stock or a combination
thereof. Because the preferred equity interest was not
considered outstanding for accounting purposes at year-end,
it did not affect the calculation of earnings per share.
NOTE 15. ADDITIONAL FINANCIAL INFORMATION
December 31,
Consolidated Balance Sheets 2014 2013
Accounts payable and accrued liabilities:
Accounts payable $14,984 $11,561
Accrued payroll and commissions 1,967 1,985
Current portion of employee
benefit obligation 1,842 1,949
Accrued interest 1,597 1,559
Other 3,202 4,053
Total accounts payable and
accrued liabilities $23,592 $21,107
Consolidated Statements of Income 2014 2013 2012
Advertising expense $3,272 $3,268 $2,910
Interest expense incurred $3,847 $4,224 $3,707
Capitalized interest (234) (284) (263)
Total interest expense $3,613 $3,940 $3,444
Consolidated Statements of Cash Flows 2014 2013 2012
Cash paid during the year for:
Interest $4,099 $4,302 $3,714
Income taxes, net of refunds 1,532 1,985 458