AT&T Wireless 2015 Annual Report Download - page 36

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)
Dollars in millions except per share amounts
34 | AT&T INC.
Our contractual obligations as of December31,2015,
are in the following table. The purchase obligations that
follow are those for which we have guaranteed funds and
will be funded with cash provided by operations or through
incremental borrowings. The minimum commitment for
certain obligations is based on termination penalties that
could be paid to exit the contract. Other long-term liabilities
are included in the table based on the year of required
payment or an estimate of the year of payment. Such
estimate of payment is based on a review of past trends
for these items, as well as a forecast of future activities.
Certain items were excluded from the following table,
as the year of payment is unknown and could not be
reliably estimated since past trends were not deemed
to be an indicator of future payment.
Substantially all of our purchase obligations are in
our Business Solutions, Entertainment Group, and the
Consumer Mobility segments. The table does not include
the fair value of our interest rate swaps. Our capital lease
obligations and vendor financing have been excluded
from the table due to the insignificant amounts of such
obligations at December31,2015. Many of our other
noncurrent liabilities have been excluded from the following
table due to the uncertainty of the timing of payments,
combined with the absence of historical trending to be used
as a predictor of such payments. Additionally, certain other
long-term liabilities have been excluded since settlement
of such liabilities will not require the use of cash. Our other
long-term liabilities are: deferred income taxes (see Note11)
of $56,181; postemployment benefit obligations of $34,262;
and other noncurrent liabilities of $22,258.
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.
CONTRACTUAL OBLIGATIONS,
COMMITMENTS AND CONTINGENCIES
Current accounting standards require us to disclose
our material obligations and commitments to making
future payments under contracts, such as debt and lease
agreements, and under contingent commitments, such
as debt guarantees. We occasionally enter into third-party
debt guarantees, but they are not, nor are they reasonably
likely to become, material. We disclose our contractual
long-term debt repayment obligations in Note 9 and
our operating lease payments in Note 6. Our contractual
obligations do not include contributions associated with
our voluntary contribution of the Mobility preferred equity
interest, or expected pension and postretirement payments
(we maintain pension funds and Voluntary Employee
Beneficiary Association trusts to fully or partially fund
these benefits) (see Note 12). In the ordinary course of
business, we routinely enter into commercial commitments
for various aspects of our operations, such as fixed assets,
inventory and office supplies. However, we do not believe
that the commitments will have a material effect on our
financial condition, results of operations or cash flows.
Contractual Obligations
Payments Due By Period
Less than 1-3 3-5 More than
Total 1 Year Years Years 5 Years
Long-term debt obligations1 $129,443 $ 7,383 $20,847 $17,322 $ 83,891
Interest payments on long-term debt 80,171 5,235 10,046 8,761 56,129
Finance obligations2 3,575 234 482 502 2,357
Operating lease obligations 28,845 3,775 6,808 5,774 12,488
Unrecognized tax benefits3 4,918 867 — — 4,051
Purchase obligations4 48,699 22,929 9,437 6,159 10,174
Total Contractual Obligations $295,651 $40,423 $47,620 $38,518 $169,090
1
Represents principal or payoff amounts of notes and debentures at maturity or, for putable debt, the next put opportunity.
2
Represents future minimum payments under the Crown Castle and other arrangements (see Note 16).
3
The noncurrent portion of the UTBs is included in the “More than 5 Years” column, as we cannot reasonably estimate the timing or amounts of additional cash payments,
if any, at this time. See Note 11 for additional information.
4
We calculated the minimum obligation for certain agreements to purchase goods or services based on termination fees that can be paid to exit the contract. If we elect
to exit these contracts, termination fees for all such contracts in the year of termination could be approximately $690 in 2016, $925 in the aggregate for 2017 and 2018,
$431 in the aggregate for 2019 and 2020, and $241 in the aggregate thereafter. Certain termination fees are excluded from the above table, as the fees would not be
paid every year and the timing of such payments, if any, is uncertain.