America Online 2015 Annual Report Download - page 76

Foreign Currency Translation Adjustments
The change in Foreign currency translation adjustments during 2015
was related to our non-U.S. dollar net investments in foreign subsid-
iaries. The change in Foreign currency translation adjustments during
2014 was primarily a result of the completion of the Omnitel transac-
tion. The change in Foreign currency translation adjustments during
2013 was primarily related to our investment in Vodafone Omnitel N.V.
which was driven by the movements of the U.S. dollar against the Euro.
Net Unrealized Gains (Losses) on Cash Flow Hedges
During 2014 and 2013, Unrealized gains (losses) on cash flow hedges
included in Other comprehensive income (loss) attributable to non-
controlling interests primarily reflect activity related to cross currency
swaps. Reclassification adjustments on cash flow hedges primarily
reflect the reclassification to Other income and (expense), net of a
portion of the unrealized gains and losses on cross currency swaps to
offset related pre-tax foreign currency transaction gain or loss on the
underlying debt obligations (see Note9).
Net Unrealized Gains (Losses) on Marketable Securities
During 2015, 2014 and 2013, reclassification adjustments on mar-
ketable securities for gains (losses) realized in net income were not
significant.
Defined Benefit Pension and Postretirement Plans
The change in Defined benefit pension and postretirement plans at
December31, 2015 and 2014, respectively, was not significant.
Note15
Additional Financial Information
The tables that follow provide additional financial information related to
our consolidated financial statements:
Income Statement Information
(dollars in millions)
Years Ended December31, 2015 2014 2013
Depreciation expense $ 14,323 $ 14,966 $ 15,019
Interest costs on debt balances 5,504 5,291 3,421
Capitalized interest costs (584) (376) (754)
Advertising expense 2,749 2,526 2,438
Balance Sheet Information
(dollars in millions)
At December31, 2015 2014
Accounts Payable and Accrued Liabilities
Accounts payable $ 6,391 $ 5,598
Accrued expenses 5,281 4,016
Accrued vacation, salaries and wages 4,107 4,131
Interest payable 1,529 1,478
Taxes payable 2,054 1,457
$ 19,362 $ 16,680
Other Current Liabilities
Advance billings and customer deposits $ 2,969 $ 3,125
Dividends payable 2,323 2,307
Other 3,446 3,140
$ 8,738 $ 8,572
Cash Flow Information
(dollars in millions)
Years Ended December31, 2015 2014 2013
Cash Paid
Interest, net of amounts capitalized $ 4,491 $ 4,429 $ 2,122
During the year ended December31, 2015, Verizon repurchased
approximately 2.8million shares of the Company’s common stock
under our authorized share buyback program for approximately
$0.1billion. At December31, 2015, the maximum number of shares
that could be purchased by or on behalf of Verizon under our share
buyback program was 97.2million.
In addition to the previously authorized three-year share buyback
program, in February 2015, the Verizon Board of Directors autho-
rized Verizon to enter into an accelerated share repurchase (ASR)
agreement to repurchase $5.0billion of the Company’s common
stock. On February10, 2015, in exchange for an up-front payment
totaling $5.0billion, Verizon received an initial delivery of 86.2million
shares having a value of approximately $4.25billion. On June5, 2015,
Verizon received an additional 15.4million shares as final settlement
of the transaction under the ASR agreement. In total, 101.6million
shares were delivered under the ASR at an average repurchase price
of $49.21.
Common stock has been used from time to time to satisfy some of the
funding requirements of employee and shareowner plans, including
22.6million common shares issued from Treasury stock during the
year ended December31, 2015, which had an aggregate value of
$0.9billion.
Note16
Commitments and Contingencies
In the ordinary course of business Verizon is involved in various com-
mercial litigation and regulatory proceedings at the state and federal
level. Where it is determined, in consultation with counsel based on
litigation and settlement risks, that a loss is probable and estimable
in a given matter, the Company establishes an accrual. In none of
the currently pending matters is the amount of accrual material. An
estimate of the reasonably possible loss or range of loss in excess
of the amounts already accrued cannot be made at this time due to
various factors typical in contested proceedings, including (1) uncertain
damage theories and demands; (2) a less than complete factual
record; (3) uncertainty concerning legal theories and their resolution by
courts or regulators; and (4) the unpredictable nature of the opposing
party and its demands. We continuously monitor these proceedings
as they develop and adjust any accrual or disclosure as needed. We
do not expect that the ultimate resolution of any pending regulatory or
legal matter in future periods, including the Hicksville matter described
below, will have a material effect on our financial condition, but it
could have a material effect on our results of operations for a given
reporting period.
Reserves have been established to cover environmental matters
relating to discontinued businesses and past telecommunications
activities. These reserves include funds to address contamination
at the site of a former Sylvania facility in Hicksville NY, which had
processed nuclear fuel rods in the 1950s and 1960s. In September
2005, the Army Corps of Engineers (ACE) accepted the site into its
Formerly Utilized Sites Remedial Action Program. As a result, the ACE
has taken primary responsibility for addressing the contamination at
the site. An adjustment to the reserves may be made after a cost allo-
cation is conducted with respect to the past and future expenses of all
of the parties. Adjustments to the environmental reserve may also be
made based upon the actual conditions found at other sites requiring
remediation.
Verizon is currently involved in approximately 60 federal district court
actions alleging that Verizon is infringing various patents. Most of these
cases are brought by non- practicing entities and effectively seek only
monetary damages; a small number are brought by companies that
74 Verizon Communications Inc. and Subsidiaries
Notes to Consolidated Financial Statements continued