AT&T Wireless 2015 Annual Report Download - page 32

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)
Dollars in millions except per share amounts
30 | AT&T INC.
Virtually all of our capital expenditures are spent on our
communications networks and our video services and
support systems for our digital entertainment services.
Capital expenditures, excluding interest during construction,
decreased $1,981 from 2014, reflecting the completion
of our LTE build and other Project Velocity IP initiatives
in 2014. In connection with capital improvements to our
wireless network in Mexico, we also negotiated in 2015
favorable payment terms (referred to as vendor financing).
In 2015, we deferred $684 of vendor financing related
to capital additions to future periods. Capital expenditures
also include spending for DIRECTV, GSF Telecom and
Nextel Mexico after the acquisition dates. As part of
our organizational realignment, we no longer allocate
capital expenditures to our segments.
We expect our 2016 capital investment, which includes
our capital expenditures plus vendor financing payments
related to our Mexico network, for our existing businesses
to be in the $22,000 range, and we expect our capital
investment to be in the 15percent range of service revenues
or lower from 2016 through 2018. The amount of capital
investment is influenced by demand for services and products,
capacity needs and network enhancements. We are also
focused on ensuring merger commitments are met.
Cash Used in or Provided by Financing Activities
We paid dividends of $10,200 in 2015, $9,552 in 2014, and
$9,696 in 2013. The increase in 2015 is primarily due to the
increase in shares outstanding resulting from our acquisition
of DIRECTV and the increase in the quarterly dividend
approved by our Board of Directors in December 2014.
The decrease in 2014 reflects the decline in shares
outstanding resulting from repurchase activity, partially offset
by dividend rate increases. In December2015, our Board of
Directors approved a 2.1% increase in the quarterly dividend
from $0.47 to $0.48 per share. This follows a 2.2% dividend
increase approved by our Board in December2014. Dividends
declared by our Board of Directors totaled $1.89per share
in 2015, $1.85 per share in 2014, and $1.81per share in
2013. Our dividend policy considers the expectations and
requirements of stockholders, capital funding requirements of
AT&T and long-term growth opportunities. It is our intent to
provide the financial flexibility to allow our Board of Directors
to consider dividend growth and to recommend an increase in
dividends to be paid in future periods. All dividends remain
subject to declaration by our Board of Directors.
During 2015, we received net proceeds of $33,969 from
the issuance of $34,129 in long-term debt in various
markets, with an average weighted maturity of
approximately 12years and a weighted average coupon
of 2.7%. Debt issued included:
• February 2015 issuance of $2,619 of 4.600% global
notes due 2045.
• March 2015 borrowings under a variable rate term loan
facility due 2018, variable rate term loan facility due
LIQUIDITY AND CAPITAL RESOURCES
We had $5,121 in cash and cash equivalents available
at December 31, 2015. Approximately $807 of our cash
and cash equivalents resided in foreign jurisdictions, some
of which are subject to restrictions on repatriation.
Cash and cash equivalents decreased $3,482 since
December31,2014. We also had $401 in short-term
investments, which we included in “Other current assets”
on our consolidated balance sheets. In 2015, cash inflows
were primarily provided by cash receipts from operations,
including cash from our sale and transfer of certain
equipment installment receivables to third parties and
long-term debt issuances. These inflows were offset by
cash used to meet the needs of the business, including, but
not limited to, payment of operating expenses; acquisitions
of wireless spectrum, DIRECTV, GSF Telecom Holdings,
S.A.P.I.deC.V. (GSF Telecom) and Nextel Mexico; funding
capital expenditures; debt repayments; dividends to
stockholders; and collateral posting (see Note9).
We discuss many of these factors in detail below.
Cash Provided by or Used in Operating Activities
During 2015, cash provided by operating activities was
$35,880, compared to $31,338 in 2014. Higher operating
cash flows in 2015 were primarily due to improved
operating results, our acquisition of DIRECTV and working
capital improvements.
During 2014, cash provided by operating activities was
$31,338 compared to $34,796 in 2013. Lower operating
cash flows in 2014 were primarily due to wireless device
financing related to AT&T Next, which results in cash
collection over the installment period instead of at the time
of sale, increased inventory levels and retirement benefit
funding. Proceeds from the sale of equipment installment
receivables and the timing of working capital payments
partially offset the decline in operating cash flows.
Cash Used in or Provided by Investing Activities
During 2015, cash used in investing activities consisted
primarily of:
• $17,740 for acquisitions of spectrum licenses, largely
due to the remaining payment for AWS spectrum
licenses in the AWS-3 Auction.
• $19,218 in capital expenditures, excluding interest
during construction.
• $13,019 net of cash acquired for the acquisitions
of DIRECTV, GSF Telecom, Nextel Mexico and
other operations.
During 2015, we also received $1,945 upon the maturity
of certain short-term investments and paid $400 for
additional short-term investments.