AT&T Wireless 2015 Annual Report Download - page 57

AT&T INC. | 55
The income approach estimates fair value for an asset based
on the present value of cash flows projected to be generated
by the asset. Projected cash flows are discounted at a
required rate of return that reflects the relative risk of
achieving the cash flows and the time value of money.
The cost approach, which estimates value by determining the
current cost of replacing an asset with another of equivalent
economic utility, was used primarily for plant, property and
equipment. The cost to replace a given asset reflects the
estimated reproduction or replacement cost for the property,
less an allowance for loss in value due to depreciation.
Our December 31, 2015 consolidated balance sheet includes
the assets and liabilities of DIRECTV, which have been
measured at fair value.
The following table summarizes the preliminary estimated fair
values of the DIRECTV assets acquired and liabilities assumed
and related deferred income taxes as of the acquisition date.
Assets acquired
Cash $ 4,797
Accounts receivable 2,011
All other current assets 1,535
Property, plant and equipment (including satellites) 9,301
Intangible assets not subject to amortization
Orbital slots 11,946
Trade name 1,382
Intangible assets subject to amortization
Customer lists and relationships 19,505
Trade name 2,905
Other 457
Investments and other assets 2,360
Goodwill 34,427
Total assets acquired 90,626
Liabilities assumed
Current liabilities, excluding
current portion of long-term debt 5,693
Long-term debt 20,585
Other noncurrent liabilities 16,585
Total liabilities assumed 42,863
Net assets acquired 47,763
Noncontrolling interest (354)
Aggregate value of consideration paid $47,409
NOTE 5. ACQUISITIONS, DISPOSITIONS AND OTHER ADJUSTMENTS
Acquisitions
DIRECTV On July 24, 2015, we completed our
acquisition of DIRECTV, a leading provider of digital
television entertainment services in both the United States
and Latin America. The acquisition represents an opportunity
for us to integrate a unique and complementary set of
assets and achieve substantial cost synergies over time,
as well as generate revenue from pay television in
Latin America. Our distribution scale will enable us to
offer consumers bundles including video, high-speed
broadband and mobile services, using all the sales
channels of both companies. We believe the combined
company will be a content distribution leader across
mobile, video and broadband platforms.
Under the merger agreement, each share of DIRECTV stock
was exchanged for $28.50 cash plus 1.892 shares of our
common stock. After adjustment for shares issued to trusts
consolidated by AT&T, share-based payment arrangements
and fractional shares, which were settled in cash, AT&T
issued 954,407,524 shares to DIRECTV shareholders, giving
them an approximate 16% stake in the combined company,
based on common shares outstanding. Based on our
$34.29 per share closing stock price on July 24, 2015,
the aggregate value of consideration paid to DIRECTV
shareholders was $47,409, including $32,727 of AT&T
stock and $14,378 in cash, $299 for share-based
payment arrangements and $5 for DIRECTV shares
previously purchased on the open market by trusts
consolidated by AT&T.
Our 2015 operating results include the results from DIRECTV
following the acquisition date. The fair values of the assets
acquired and liabilities assumed were preliminarily determined
using the income, cost and market approaches. The fair value
measurements were primarily based on significant inputs that
are not observable in the market and are considered Level 3
under the Fair Value Measurement and Disclosure framework,
other than long-term debt assumed in the acquisition
(see Note 10). The income approach was primarily used to
value the intangible assets, consisting primarily of acquired
customer relationships, orbital slots and trade names.
The following table sets forth revenues earned from subscribers located in different geographic areas. Property is grouped by
its physical location.
2015 2014 2013
Net Property, Net Property, Net Property,
Revenues Plant & Equipment Revenues Plant & Equipment Revenues Plant & Equipment
United States $140,234 $118,515 $129,772 $112,092 $126,212 $110,090
Latin American
Brazil 1,224 1,384 142 33 136 41
Other 1,157 1,530 99 67 92 72
Mexico 2,046 2,369 94 20 90 24
Other 2,140 652 2,340 686 2,222 741
Total $146,801 $124,450 $132,447 $112,898 $128,752 $110,968