America Online 2015 Annual Report Download - page 19

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Other Consolidated Results
Equity in Earnings of Unconsolidated Businesses
Equity in earnings of unconsolidated businesses decreased $1.9billion during 2015 and increased $1.6billion during 2014 primarily due to the
gain of $1.9billion recorded on the sale of our interest in Vodafone Omnitel N.V. (the Omnitel Transaction, and such interest, the Omnitel Interest)
during the first quarter of 2014, which was part of the consideration for the Wireless Transaction completed on February21, 2014.
Other Income and (Expense), Net
Additional information relating to Other income and (expense), net is as follows:
(dollars in millions)
Increase/(Decrease)
Years Ended December31, 2015 2014 2013 2015 vs. 2014 2014 vs. 2013
Interest income $ 115 $ 108 $ 64 $ 7 6.5% $ 44 68.8%
Other, net 71 (1,302) (230) 1,373 nm (1,072) nm
Total $ 186 $ (1,194) $ (166) $ 1,380 nm $ (1,028) nm
nm - not meaningful
Other income and (expense), net changed favorably during 2015 and changed unfavorably during 2014 primarily driven by net early debt redemp-
tion costs of $1.4billion incurred in 2014 (see “Other Items”).
Interest Expense
(dollars in millions)
Increase/(Decrease)
Years Ended December31, 2015 2014 2013 2015 vs. 2014 2014 vs. 2013
Total interest costs on debt balances $ 5,504 $ 5,291 $ 3,421 $ 213 4.0% $ 1,870 54.7 %
Less capitalized interest costs 584 376 754 208 55.3 (378) (50.1)
Total $ 4,920 $ 4,915 $ 2,667 $ 5 0.1 $ 2,248 84.3
Average debt outstanding $ 113,325 $ 108,461 $ 65,959
Effective interest rate 4.9% 4.9% 5.2%
Total interest costs on debt balances increased during 2015 primarily due to a $4.9billion increase in average debt (see “Consolidated Financial
Condition”). Capitalized interest costs were higher in 2015 primarily due to an increase in wireless licenses that are currently under development,
which was a result of our winning bid in the FCC spectrum license auction during 2015. The FCC granted us those wireless licenses on April8,
2015 (see Note2 for additional information).
Total interest costs on debt balances increased during 2014 primarily due to the issuance of fixed and floating rate notes to finance the Wireless
Transaction (see “Acquisitions and Divestitures”) resulting in an increase in average debt and a corresponding increase in interest expense,
partially offset by a lower effective interest rate (see “Consolidated Financial Condition”). Capitalized interest costs were lower in 2014 primarily
due to a decrease in wireless licenses that are currently under development, which was due to the deployment of AWS licenses for commercial
service during 2014.
17Verizon Communications Inc. and Subsidiaries
Management’s Discussion and Analysis ofFinancialCondition and Results of Operations continued