AT&T Wireless 2015 Annual Report Download - page 58

Notes to Consolidated Financial Statements (continued)
Dollars in millions except per share amounts
56 | AT&T INC.
resulted in revenues in Venezuela of approximately $500
and operating profit before depreciation and amortization of
approximately $180. Pro forma data may not be indicative of
the results that would have been obtained had these events
occurred at the beginning of the perids presented, nor is it
intended to be a projection of future results.
Nextel Mexico On April 30, 2015, we completed our
acquisition of the subsidiaries of NII Holdings Inc.,
operating its wireless business in Mexico, for $1,875,
including approximately $427 of net debt and other
adjustments. The subsidiaries offered service under the
name Nextel Mexico.
The preliminary values of assets acquired were: $383 in
licenses, $1,293 in property, plant and equipment, $111
in customer lists and $112 of goodwill. The goodwill was
allocated to our International segment.
GSF Telecom On January 16, 2015, we acquired Mexican
wireless company GSF Telecom Holdings, S.A.P.I. de C.V.
(GSF Telecom) for $2,500, including net debt of
approximately $700. GSF Telecom offered service under
both the Iusacell and Unefon brand names in Mexico.
The preliminary values of assets acquired were: $673 in
licenses, $715 in property, plant and equipment, $374 in
customer lists, $26 in trade names and $972 of goodwill.
The goodwill was allocated to our International segment.
AWS-3 Auction In January 2015, we submitted winning
bids for 251 Advanced Wireless Service (AWS) spectrum
licenses in the AWS-3 Auction (FCC Auction 97) for $18,189.
We provided the Federal Communications Commission (FCC)
an initial down payment of $921 in October 2014 and
paid the remaining $17,268 in the first quarter of 2015.
Spectrum Acquisitions During 2015, we acquired $489
of wireless spectrum, not including the AWS auction.
During 2014, we acquired $1,263 of wireless spectrum,
not including Leap Wireless International, Inc. (Leap)
discussed below.
Leap In March 2014, we acquired Leap, a provider of
prepaid wireless service, for $15.00 per outstanding share of
Leap’s common stock, or $1,248 (excluding Leap’s cash on
hand), plus one nontransferable contingent value right (CVR)
per share. The CVR will entitle each Leap stockholder to a
pro rata share of the net proceeds of the future sale of the
Chicago 700 MHz A-band FCC license held by Leap.
The values of assets acquired under the terms of the
agreement were: $3,000 in licenses, $510 in property,
plant and equipment, $520 of customer lists, $340 for trade
names and $248 of goodwill. The goodwill was allocated to
our Consumer Mobility segment. The estimated fair value of
debt associated with the acquisition of Leap was $3,889,
all of which was redeemed or matured by July 31, 2014.
These estimates are preliminary in nature and subject to
adjustments, which could be material. Any necessary
adjustments will be finalized within one year from the date
of acquisition. Substantially all the receivables acquired are
expected to be collectable. We have not identified any
material unrecorded pre-acquisition contingencies where the
related asset, liability or impairment is probable and the
amount can be reasonably estimated. Goodwill is calculated
as the difference between the acquisition date fair value of
the consideration transferred and the fair value of the net
assets acquired, and represents the future economic benefits
that we expect to achieve as a result of acquisition. Prior to
the finalization of the purchase price allocation, if information
becomes available that would indicate it is probable that
such events had occurred and the amounts can be reasonably
estimated, such items will be included in the final purchase
price allocation and may change goodwill. Purchased
goodwill is not expected to be deductible for tax purposes.
The goodwill was allocated to our Entertainment Group and
International segments.
For the 160-day period ended December 31, 2015, our
consolidated statement of income included $14,561 of
revenues and $(46) of operating income, which included
$2,254 of intangible amortization from DIRECTV, and its
affiliates. The following unaudited pro forma consolidated
results of operations assume that the acquisition of DIRECTV
was completed as of January 1, 2014.
(Unaudited)
Year Ended December 31,
2015 2014
Total operating revenues1 $165,694 $165,595
Net Income Attributable to AT&T 12,683 6,412
Basic Earnings Per Share
Attributable to AT&T $ 2.06 $ 1.04
Diluted Earnings Per Share
Attributable to AT&T $ 2.06 $ 1.04
1 Reflects revenue declines resulting from our fourth-quarter 2014 sale of our
Connecticut wireline operations.
Nonrecurring adjustments included in the pro forma results
above consist of the following: At June 30, 2015, due to
the continued economic uncertainty and lack of liquidity in
all three of the official currency exchange mechanisms in
Venezuela, DIRECTV changed the exchange rate used to
measure its Venezuelan subsidiary’s monetary assets and
liabilities into U.S. dollars from Sistema Complementario
de Administración de Divisas (SICAD) to Sistema Marginal
de Divisas (SIMADI). The significant change in exchange
rates also required the reevaluation of the recoverability
of fixed and intangible assets and inventory, which
resulted in an impairment charge of $1,060 recorded in
DIRECTV’s consolidated statement of operations for the
six-month period ended June 30, 2015. Prior to DIRECTV’s
June 30, 2015 change to the SIMADI exchange rate,
operating results for the six months ended June 30, 2015
were measured using the SICAD exchange rate which