Form 8-K AT&T INC. For: Mar 31
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of report (Date of earliest event reported) April 26, 2016
AT&T INC.
(Exact Name of Registrant as Specified in Charter)
Delaware
|
1-8610
|
43-1301883
|
(State or Other Jurisdiction of Incorporation)
|
(Commission File Number)
|
(IRS Employer Identification No.)
|
208 S. Akard St., Dallas, Texas
|
75202
|
(Address of Principal Executive Offices)
|
(Zip Code)
|
Registrant's telephone number, including area code (210) 821-4105
__________________________________
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240-14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition.
The registrant announced on April 26, 2016, its results of operations for the first quarter of 2016. The text of the press release and accompanying financial information are attached as exhibits and incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
The following exhibits are furnished as part of this report:
(d) Exhibits
99.1
|
|
Press release dated April 26, 2016 reporting financial results for the first quarter ended March 31, 2016.
|
99.2
|
|
AT&T Inc. selected financial statements and operating data.
|
99.3
|
Discussion of EBITDA, Free Cash Flow, Free Cash Flow Yield, Free Cash Flow after Dividends and Adjusting Items.
|
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
AT&T INC.
|
|
Date: April 26, 2016
|
By: /s/ Debra L. Dial______________
Debra L. Dial
Senior Vice President and Controller
|
AT&T Reports Strong Revenue and Adjusted Earnings Growth
with Solid Margin Expansion in First-Quarter Results
Fourth Straight Quarter of Double-Digit Adjusted EPS Growth;
Best-Ever U.S. Wireless EBITDA Service Margins;
Full-Year Guidance on Track
Highlights
·
|
Consolidated revenues of $40.5 billion, up 24% versus the year-earlier period primarily due to DIRECTV acquisition
|
·
|
Diluted EPS of $0.61 as reported; $0.72 diluted adjusted EPS, a 10.8% increase
|
·
|
Cash from operations of $7.9 billion; free cash flow of $3.2 billion, up 17% year over year
|
·
|
Adjusted margins expand in every domestic segment
|
·
|
2.3 million North American wireless net adds driven by connected devices, Mexico and Cricket; 712,000 branded (postpaid and prepaid) phone net adds
|
·
|
Total churn of 1.42% in U.S., stable year over year; postpaid churn of 1.10%
|
·
|
Business Solutions revenues up 0.3% year over year; wireless revenues up 2.3%
|
o
|
Strategic business services revenues of $2.8 billion, up nearly $250 million
|
·
|
328,000 U.S. DIRECTV net adds; total video subscribers decline slightly
|
·
|
Entertainment Group broadband grew with 186,000 IP broadband net adds
|
Note: AT&T's first-quarter earnings conference call will be webcast at 4:30 p.m. ET on Tuesday, April 26, 2016. The webcast and related materials will be available on AT&T's Investor Relations website at www.att.com/investor.relations.
DALLAS, April 26, 2016 — AT&T Inc. (NYSE:T) today reported strong revenue, adjusted operating margin, adjusted EPS and free cash flow growth for the first quarter.
"It was a good start to the year. We had solid financial results and executed well on our strategy to be the premier integrated communications provider for businesses and consumers," said Randall Stephenson, AT&T chairman and CEO. "We're seeing good momentum with our initial integrated wireless, video and broadband offers. And we'll expand the integrated choices for customers in the fourth quarter when we launch our new video streaming services.
April 26, 2016
© 2016 AT&T Intellectual Property. All rights reserved. AT&T and the Globe logo are registered trademarks of AT&T Intellectual Property.
"Our consolidated revenues, adjusted earnings and free cash flow continue to grow as margins continue to expand. And we're putting up these numbers even as we invest in building our Mexico wireless business. In addition, DIRECTV merger synergies are on track to reach $1.5 billion or better by the end of the year."
Consolidated Financial Results
AT&T's consolidated revenues for the first quarter totaled $40.5 billion, up more than 24% versus the year-earlier period largely due to the July 24, 2015 acquisition of DIRECTV. Compared with results for the first quarter of 2015, operating expenses were $33.4 billion versus $27.0 billion; operating income was $7.1 billion versus $5.6 billion; and operating income margin was 17.6% versus 17.1%. When adjusting for amortization, merger- and integration-related costs and other expenses and a gain on spectrum transfers, operating income was $8.1 billion versus $6.1 billion; and operating income margin was 19.9%, up 110 basis points from a year ago.
First-quarter net income attributable to AT&T totaled $3.8 billion, or $0.61 per diluted share, compared to $3.3 billion, or $0.63 per diluted share, in the year-ago quarter. Adjusting for the $0.17 of costs for merger- and integration-related expenses and amortization, $0.02 of other costs and the $0.08 gain on spectrum transfers, earnings per diluted share was $0.72 compared to an adjusted $0.65 in the year-ago quarter, an increase of 10.8%.
Cash from operating activities was $7.9 billion in the first quarter, and capital investment1 totaled $4.7 billion. Free cash flow — cash from operating activities minus capital expenditures — was $3.2 billion, up 17% year over year.
For detailed segment results, please go to the Investor Briefing and Financial and Operational Results on the AT&T Investor Relations website.
11Q16 includes $43 million in capital purchases in Mexico with favorable vendor payment terms.
AT&T products and services are provided or offered by subsidiaries and affiliates of AT&T Inc. under the AT&T brand and not by AT&T Inc.
April 26, 2016
© 2016 AT&T Intellectual Property. All rights reserved. AT&T and the Globe logo are registered trademarks of AT&T Intellectual Property. Page 2
About AT&T
AT&T Inc. (NYSE:T) helps millions around the globe connect with leading entertainment, mobile, high-speed Internet and voice services. We're the world's largest provider of pay TV. We have TV customers in the U.S. and 11 Latin American countries. We offer the best global coverage of any U.S. wireless provider*. And we help businesses worldwide serve their customers better with our mobility and highly secure cloud solutions.
Additional information about AT&T products and services is available at http://about.att.com. Follow our news on Twitter at @ATT, on Facebook at http://www.facebook.com/att and YouTube at http://www.youtube.com/att.
© 2016 AT&T Intellectual Property. All rights reserved. AT&T, the Globe logo and other marks are trademarks and service marks of AT&T Intellectual Property and/or AT&T affiliated companies. All other marks contained herein are the property of their respective owners.
*Global coverage claim based on offering discounted voice and data roaming; LTE roaming; voice roaming; and world-capable smartphone and tablets in more countries than any other U.S. based carrier. International service required. Coverage not available in all areas. Coverage may vary per country and be limited/restricted in some countries.
Cautionary Language Concerning Forward-Looking Statements
Information set forth in this news release contains financial estimates and other forward-looking statements that are subject to risks and uncertainties, and actual results might differ materially. A discussion of factors that may affect future results is contained in AT&T's filings with the Securities and Exchange Commission. AT&T disclaims any obligation to update and revise statements contained in this news release based on new information or otherwise.
Information set forth in this news release contains financial estimates and other forward-looking statements that are subject to risks and uncertainties, and actual results might differ materially. A discussion of factors that may affect future results is contained in AT&T's filings with the Securities and Exchange Commission. AT&T disclaims any obligation to update and revise statements contained in this news release based on new information or otherwise.
This news release may contain certain non-GAAP financial measures. Reconciliations between the non-GAAP financial measures and the GAAP financial measures are available on the company's website at www.att.com/investor.relations.
The "quiet period" for FCC Spectrum Auction 1000 (also known as the 600 MHz incentive auction) is now in effect. During the quiet period, auction applicants are required to avoid discussions of bids, bidding strategy and post-auction market structure with other auction applicants.
EBITDA Discussion
For AT&T, EBITDA is defined as operating income before depreciation and amortization. EBITDA service margin is calculated as EBITDA divided by service revenues. EBITDA differs from Segment Operating Income (Loss), as calculated in accordance with U.S. generally accepted accounting principles (GAAP), in that it excludes depreciation and amortization. EBITDA does not give effect to cash used for debt service requirements and thus does not reflect available funds for distributions, reinvestment or other discretionary uses. EBITDA is not presented as an alternative measure of operating results or cash flows from operations, as determined in accordance with GAAP. Our calculation of EBITDA, as presented, may differ from similarly titled measures reported by other companies.
We believe these measures are relevant and useful information to our investors as they are part of AT&T's internal management reporting and planning processes and are important metrics that management uses to evaluate the operating performance of its segments. These measures are used by management as a gauge of our success in acquiring, retaining and servicing subscribers because we believe these measures reflect AT&T's ability to generate and grow subscriber revenues while providing a high level of customer service in a cost-effective manner. Management also uses these measures as a method of comparing segment performance with that of many of its competitors. The financial and operating metrics which affect EBITDA include the key revenue and expense drivers for which segment managers are responsible and upon which we evaluate their performance.
April 26, 2016
© 2016 AT&T Intellectual Property. All rights reserved. AT&T and the Globe logo are registered trademarks of AT&T Intellectual Property. Page 3
EBITDA does not give effect to cash used for debt service requirements and thus does not reflect available funds for distributions, reinvestment or other discretionary uses. EBITDA excludes other income (expense) – net, net income attributable to noncontrolling interest and equity in net income (loss) of affiliates, as these do not reflect the operating results of our subscriber base and national footprint that we utilize to obtain and service our customers. Equity in net income (loss) of affiliates represents the proportionate share of the net income (loss) of affiliates in which we exercise significant influence, but do not control. Because we do not control these entities, our management excludes these results when evaluating the performance of our primary operations. EBITDA excludes interest expense and the provision for income taxes. Excluding these items eliminates the expenses associated with its capitalization and tax structures. Finally, EBITDA excludes depreciation and amortization, in order to eliminate the impact of capital investments.
We believe EBITDA as a percentage of service revenues to be a more relevant measure than EBITDA as a percentage of total revenue for our Consumer Mobility segment operating margin and our supplemental AT&T Mobility operating margin. For the periods covered by this report, we subsidized a portion of some of our wireless handset sales, all of which are recognized in the period in which we sell the handset. Management views this equipment subsidy as a cost to acquire or retain a subscriber, which is recovered through the ongoing service revenue that is generated by the subscriber. We also use wireless service revenues to calculate margin to facilitate comparison, both internally and externally with our wireless competitors, as they calculate their margins using wireless service revenues as well.
There are material limitations to using these non-GAAP financial measures. EBITDA and EBITDA service margin, as we have defined them, may not be comparable to similarly titled measures reported by other companies. Furthermore, these performance measures do not take into account certain significant items, including depreciation and amortization, interest expense, tax expense and equity in net income (loss) of affiliates, which directly affect our segment income. Management compensates for these limitations by carefully analyzing how its competitors present performance measures that are similar in nature to EBITDA as we present it, and considering the economic effect of the excluded expense items independently as well as in connection with its analysis of net income as calculated in accordance with GAAP. EBITDA and EBITDA service margin should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance with GAAP.
Free Cash Flow Discussion
Free cash flow is defined as cash from operations minus construction and capital expenditures. Free cash flow after dividends is defined as cash from operations minus construction, capital expenditures and dividends. Free cash flow yield is defined as cash from continuing operations less construction and capital expenditures as a percentage of market capitalization computed on the last trading day of the quarter. Market capitalization is computed by multiplying the end of period stock price by the end of period shares outstanding. We believe these metrics provide useful information to our investors because management reviews free cash flow as an important indicator of how much cash is generated by normal business operations, including capital expenditures, and makes decisions based on it. Management also views it as a measure of cash available to pay debt and return cash to shareowners.
April 26, 2016
© 2016 AT&T Intellectual Property. All rights reserved. AT&T and the Globe logo are registered trademarks of AT&T Intellectual Property. Page 4
Net Debt to EBITDA Discussion
Net Debt to EBITDA ratios are non-GAAP financial measures frequently used by investors and credit rating agencies and management believes these measures provide relevant and useful information to investors and other users of our financial data. The Net Debt to EBITDA ratio is calculated by dividing the Net Debt by annualized EBITDA. Net Debt is calculated by subtracting cash and cash equivalents and certificates of deposit and time deposits that are greater than 90 days, from the sum of debt maturing within one year and long-term debt. Annualized EBITDA is calculated by annualizing the year-to-date EBITDA.
Adjusted EBITDA excludes costs which are non-recurring in nature. Adjusted EBITDA also excludes net actuarial gains or losses associated with our pension and postemployment benefit plans, which we immediately recognize in the income statement, pursuant to our accounting policy for the recognition of actuarial gains/losses. As a result, the Adjusted EBITDA reflects an expected return on plan assets rather than the actual return on plan assets, as included in the GAAP measure of income. This measure is consistent with metrics under our existing credit agreements.
Adjusting Items Discussion
Adjusted Operating Revenues, Adjusted Operating Income, Adjusted Operating Income Margin, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBITDA service margin and Adjusted diluted EPS are non-GAAP financial measures calculated by excluding from operating revenues, operating expenses and income tax expense certain significant items that are non-operational or non-recurring in nature, including dispositions and merger integration and transaction costs. Management believes that these measures provide relevant and useful information to investors and other users of our financial data in evaluating the effectiveness of our operations and underlying business trends.
Capital Investment is a non-GAAP financial measure calculated by including vendor financing arrangements for capital improvements of the wireless network in Mexico. These favorable payment terms are considered vendor financing arrangements and are reported as repayments of debt instead of capital expenditures. Management believes that Capital Investment provides relevant and useful information to investors and other users of our financial data in evaluating the investment in our business.
Adjusted Operating Revenues, Adjusted Operating Income, Adjusted Operating Income Margin, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBITDA service margin, Adjusted diluted EPS and Capital Investment should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance with GAAP. Our calculations of Adjusted diluted EPS, as presented, may differ from similarly titled measures reported by other companies.
Entertainment Group Segment Adjusted Operating Revenues includes the external operating revenues from DIRECTV U.S. as reported in the DIRECTV Form 10-Q dated March 31, 2015 adjusted to (1) include operations reported in other DIRECTV operating segments that AT&T has chosen to manage in our Entertainment Group segment, (2) conform DIRECTV's practice of recognizing revenue to be received under contractual commitments on a straight line basis over the minimum contract period to AT&T's method of limiting the revenue recognized to the monthly amounts billed and (3) to eliminate intercompany transactions from DIRECTV U.S. and the Entertainment Group segment. Adjusting Entertainment Group segment operating revenues provides for comparability between periods.
April 26, 2016
© 2016 AT&T Intellectual Property. All rights reserved. AT&T and the Globe logo are registered trademarks of AT&T Intellectual Property. Page 5
For more information, contact:
Name: Fletcher Cook
AT&T Corporate Communications
Phone: (214) 757-7629
Email: [email protected]
Name: Jaquelyn Scharnick
For AT&T Corporate Communications
Phone: (214) 254-3790
Email: [email protected]
April 26, 2016
© 2016 AT&T Intellectual Property. All rights reserved. AT&T and the Globe logo are registered trademarks of AT&T Intellectual Property. Page 6
Financial Data
|
||||||||||||
AT&T Inc.
|
||||||||||||
Consolidated Statements of Income
|
||||||||||||
Dollars in millions except per share amounts
|
||||||||||||
Unaudited
|
Three Months Ended
|
|||||||||||
3/31/2016
|
3/31/2015
|
% Chg
|
||||||||||
Operating Revenues
|
||||||||||||
Service
|
$
|
37,101
|
$
|
28,962
|
28.1
|
%
|
||||||
Equipment
|
3,434
|
3,614
|
-5.0
|
%
|
||||||||
Total Operating Revenues
|
40,535
|
32,576
|
24.4
|
%
|
||||||||
Operating Expenses
|
||||||||||||
Cost of services and sales
|
||||||||||||
Equipment
|
4,375
|
4,546
|
-3.8
|
%
|
||||||||
Broadcast, programming and operations
|
4,629
|
1,122
|
-
|
|||||||||
Other cost of services (exclusive of depreciation
and amortization shown separately below)
|
9,396
|
8,812
|
6.6
|
%
|
||||||||
Selling, general and administrative
|
8,441
|
7,961
|
6.0
|
%
|
||||||||
Depreciation and amortization
|
6,563
|
4,578
|
43.4
|
%
|
||||||||
Total Operating Expenses
|
33,404
|
27,019
|
23.6
|
%
|
||||||||
Operating Income
|
7,131
|
5,557
|
28.3
|
%
|
||||||||
Interest Expense
|
1,207
|
899
|
34.3
|
%
|
||||||||
Equity in Net Income of Affiliates
|
13
|
-
|
-
|
|||||||||
Other Income (Expense) - Net
|
70
|
70
|
-
|
|||||||||
Income Before Income Taxes
|
6,007
|
4,728
|
27.1
|
%
|
||||||||
Income Tax Expense
|
2,122
|
1,389
|
52.8
|
%
|
||||||||
Net Income
|
3,885
|
3,339
|
16.4
|
%
|
||||||||
Less: Net Income Attributable to Noncontrolling Interest
|
(82
|
)
|
(76
|
)
|
-7.9
|
%
|
||||||
Net Income Attributable to AT&T
|
$
|
3,803
|
$
|
3,263
|
16.5
|
%
|
||||||
Basic Earnings Per Share Attributable to AT&T
|
$
|
0.62
|
$
|
0.63
|
-1.6
|
%
|
||||||
Weighted Average Common
Shares Outstanding (000,000)
|
6,172
|
5,203
|
18.6
|
%
|
||||||||
Diluted Earnings Per Share Attributable to AT&T
|
$
|
0.61
|
$
|
0.63
|
-3.2
|
%
|
||||||
Weighted Average Common
Shares Outstanding with Dilution (000,000)
|
6,190
|
5,219
|
18.6
|
%
|
Financial Data
|
|||||||||||||
AT&T Inc.
|
|||||||||||||
Statements of Segment Income
|
|||||||||||||
Dollars in millions
|
|||||||||||||
Unaudited
|
|||||||||||||
Three Months Ended
|
|||||||||||||
3/31/2016
|
3/31/2015
|
% Chg
|
|||||||||||
Business Solutions
|
|||||||||||||
Segment Operating Revenues
|
|||||||||||||
Wireless service
|
$
|
7,855
|
|
$
|
7,515
|
4.5
|
%
|
||||||
Fixed strategic services
|
2,786
|
2,549
|
9.3
|
%
|
|||||||||
Legacy voice and data services
|
4,338
|
4,754
|
-8.8
|
%
|
|||||||||
Other service and equipment
|
859
|
846
|
1.5
|
%
|
|||||||||
Wireless Equipment
|
1,771
|
1,893
|
-6.4
|
%
|
|||||||||
Total Segment Operating Revenues
|
17,609
|
17,557
|
0.3
|
%
|
|||||||||
Segment Operating Expenses
|
|||||||||||||
Operations and Support Expenses
|
10,802
|
11,073
|
-2.4
|
%
|
|||||||||
Depreciation and amortization
|
2,508
|
2,342
|
7.1
|
%
|
|||||||||
Total Segment Operating Expenses
|
13,310
|
13,415
|
-0.8
|
%
|
|||||||||
Segment Operating Income
|
4,299
|
4,142
|
3.8
|
%
|
|||||||||
Equity in Net Income of Affiliates
|
-
|
-
|
-
|
||||||||||
Segment Contribution
|
$
|
4,299
|
|
$
|
4,142
|
3.8
|
%
|
||||||
Segment Operating Income Margin
|
24.4
|
%
|
|
23.6
|
%
|
||||||||
Entertainment Group
|
|||||||||||||
Segment Operating Revenues
|
|||||||||||||
Video entertainment
|
$
|
8,904
|
|
$
|
1,871
|
-
|
|||||||
High-speed internet
|
1,803
|
1,553
|
16.1
|
%
|
|||||||||
Legacy voice and data services
|
1,313
|
1,612
|
-18.5
|
%
|
|||||||||
Other service and equipment
|
638
|
624
|
2.2
|
%
|
|||||||||
Total Segment Operating Revenues
|
12,658
|
5,660
|
-
|
||||||||||
Segment Operating Expenses
|
|||||||||||||
Operations and Support Expenses
|
9,578
|
4,859
|
97.1
|
%
|
|||||||||
Depreciation and amortization
|
1,488
|
1,065
|
39.7
|
%
|
|||||||||
Total Segment Operating Expenses
|
11,066
|
5,924
|
86.8
|
%
|
|||||||||
Segment Operating Income (Loss)
|
1,592
|
(264
|
)
|
-
|
|||||||||
Equity in Net Income (Loss) of Affiliates
|
3
|
(6
|
)
|
-
|
|||||||||
Segment Contribution
|
$
|
1,595
|
|
$
|
(270
|
)
|
-
|
||||||
Segment Operating Income Margin
|
12.6
|
%
|
|
-4.7
|
%
|
||||||||
Consumer Mobility
|
|||||||||||||
Segment Operating Revenues
|
|||||||||||||
Service
|
$
|
6,943
|
|
$
|
7,297
|
-4.9
|
%
|
||||||
Equipment
|
1,385
|
1,481
|
-6.5
|
%
|
|||||||||
Total Segment Operating Revenues
|
8,328
|
8,778
|
-5.1
|
%
|
|||||||||
Segment Operating Expenses
|
|||||||||||||
Operations and Support Expenses
|
4,912
|
5,541
|
-11.4
|
%
|
|||||||||
Depreciation and amortization
|
922
|
1,002
|
-8.0
|
%
|
|||||||||
Total Segment Operating Expenses
|
5,834
|
6,543
|
-10.8
|
%
|
|||||||||
Segment Operating Income
|
2,494
|
2,235
|
11.6
|
%
|
|||||||||
Equity in Net Income of Affiliates
|
-
|
-
|
-
|
||||||||||
Segment Contribution
|
$
|
2,494
|
|
$
|
2,235
|
11.6
|
%
|
||||||
Segment Operating Income Margin
|
29.9
|
%
|
|
25.5
|
%
|
||||||||
International
|
|||||||||||||
Segment Operating Revenues
|
|||||||||||||
Video entertainment
|
$
|
1,130
|
|
$
|
-
|
-
|
|||||||
Wireless service
|
455
|
215
|
-
|
||||||||||
Wireless Equipment
|
82
|
21
|
-
|
||||||||||
Total Segment Operating Revenues
|
1,667
|
236
|
-
|
||||||||||
Segment Operating Expenses
|
|||||||||||||
Operations and Support Expenses
|
1,588
|
218
|
-
|
||||||||||
Depreciation and amortization
|
277
|
28
|
-
|
||||||||||
Total Segment Operating Expenses
|
1,865
|
246
|
-
|
||||||||||
Segment Operating Income (Loss)
|
(198
|
)
|
(10
|
)
|
-
|
||||||||
Equity in Net Income of Affiliates
|
14
|
-
|
-
|
||||||||||
Segment Contribution
|
$
|
(184
|
)
|
|
$
|
(10
|
)
|
-
|
|||||
Segment Operating Income Margin
|
-11.9
|
%
|
|
-4.2
|
%
|
Financial Data
|
||||||||
AT&T Inc.
|
||||||||
Consolidated Balance Sheets
|
||||||||
Dollars in millions
|
||||||||
3/31/2016
|
12/31/2015
|
|||||||
Unaudited
|
||||||||
Assets
|
||||||||
Current Assets
|
||||||||
Cash and cash equivalents
|
$
|
10,008
|
$
|
5,121
|
||||
Accounts receivable - net of allowances for doubtful accounts of $697 and $704
|
16,070
|
16,532
|
||||||
Prepaid expenses
|
1,378
|
1,072
|
||||||
Other current assets
|
10,545
|
13,267
|
||||||
Total current assets
|
38,001
|
35,992
|
||||||
Property, Plant and Equipment - Net
|
123,454
|
124,450
|
||||||
Goodwill
|
104,651
|
104,568
|
||||||
Licenses
|
94,130
|
93,093
|
||||||
Customer Lists and Relationships - Net
|
17,197
|
18,208
|
||||||
Other Intangible Assets - Net
|
9,108
|
9,409
|
||||||
Investments in Equity Affiliates
|
1,594
|
1,606
|
||||||
Other Assets
|
15,503
|
15,346
|
||||||
Total Assets
|
$
|
403,638
|
$
|
402,672
|
||||
Liabilities and Stockholders' Equity
|
||||||||
Current Liabilities
|
||||||||
Debt maturing within one year
|
$
|
8,399
|
$
|
7,636
|
||||
Accounts payable and accrued liabilities
|
26,169
|
30,372
|
||||||
Advanced billing and customer deposits
|
4,550
|
4,682
|
||||||
Accrued taxes
|
2,455
|
2,176
|
||||||
Dividends payable
|
2,955
|
2,950
|
||||||
Total current liabilities
|
44,528
|
47,816
|
||||||
Long-Term Debt
|
122,104
|
118,515
|
||||||
Deferred Credits and Other Noncurrent Liabilities
|
||||||||
Deferred income taxes
|
57,489
|
56,181
|
||||||
Postemployment benefit obligation
|
34,114
|
34,262
|
||||||
Other noncurrent liabilities
|
20,998
|
22,258
|
||||||
Total deferred credits and other noncurrent liabilities
|
112,601
|
112,701
|
||||||
Stockholders' Equity
|
||||||||
Common stock
|
6,495
|
6,495
|
||||||
Additional paid-in capital
|
89,414
|
89,763
|
||||||
Retained earnings
|
34,506
|
33,671
|
||||||
Treasury stock
|
(12,163
|
)
|
(12,592
|
)
|
||||
Accumulated other comprehensive income
|
5,180
|
5,334
|
||||||
Noncontrolling interest
|
973
|
969
|
||||||
Total stockholders' equity
|
124,405
|
123,640
|
||||||
Total Liabilities and Stockholders' Equity
|
$
|
403,638
|
$
|
402,672
|
Financial Data
|
||||||||
AT&T Inc.
|
||||||||
Consolidated Statements of Cash Flows
|
||||||||
Dollars in millions
|
||||||||
(Unaudited)
|
||||||||
Three Months Ended
|
||||||||
3/31/2016
|
3/31/2015
|
|||||||
Operating Activities
|
||||||||
Net income
|
$
|
3,885
|
$
|
3,339
|
||||
Adjustments to reconcile net income to
|
||||||||
net cash provided by operating activities:
|
||||||||
Depreciation and amortization
|
6,563
|
4,578
|
||||||
Undistributed earnings from investments in equity affiliates
|
(13
|
)
|
-
|
|||||
Provision for uncollectible accounts
|
374
|
285
|
||||||
Deferred income tax expense
|
1,346
|
252
|
||||||
Net gain from sale of investments, net of impairments
|
(44
|
)
|
(33
|
)
|
||||
Changes in operating assets and liabilities:
|
||||||||
Accounts receivable
|
627
|
739
|
||||||
Other current assets
|
612
|
408
|
||||||
Accounts payable and accrued liabilities
|
(4,006
|
)
|
(1,817
|
)
|
||||
Retirement benefit funding
|
(140
|
)
|
(140
|
)
|
||||
Other - net
|
(1,304
|
)
|
(873
|
)
|
||||
Total adjustments
|
4,015
|
3,399
|
||||||
Net Cash Provided by Operating Activities
|
7,900
|
6,738
|
||||||
Investing Activities
|
||||||||
Construction and capital expenditures:
|
||||||||
Capital expenditures
|
(4,451
|
)
|
(3,848
|
)
|
||||
Interest during construction
|
(218
|
)
|
(123
|
)
|
||||
Acquisitions, net of cash acquired
|
(165
|
)
|
(19,514
|
)
|
||||
Dispositions
|
81
|
8
|
||||||
Sales of securities, net
|
445
|
1,890
|
||||||
Net Cash Used in Investing Activities
|
(4,308
|
)
|
(21,587
|
)
|
||||
Financing Activities
|
||||||||
Issuance of long-term debt
|
5,978
|
16,572
|
||||||
Repayment of long-term debt
|
(2,296
|
)
|
(596
|
)
|
||||
Issuance of treasury stock
|
89
|
8
|
||||||
Dividends paid
|
(2,947
|
)
|
(2,434
|
)
|
||||
Other
|
471
|
(2,860
|
)
|
|||||
Net Cash Provided by Financing Activities
|
1,295
|
10,690
|
||||||
Net increase (decrease) in cash and cash equivalents
|
4,887
|
(4,159
|
)
|
|||||
Cash and cash equivalents beginning of year
|
5,121
|
8,603
|
||||||
Cash and Cash Equivalents End of Period
|
$
|
10,008
|
$
|
4,444
|
Financial Data
|
||||||||||||
AT&T Inc.
|
||||||||||||
Supplementary Operating and Financial Data
|
||||||||||||
Dollars in millions except per share amounts, subscribers and connections in (000s)
|
||||||||||||
Unaudited
|
Three Months Ended
|
|||||||||||
3/31/2016
|
3/31/2015
|
% Chg
|
||||||||||
Business Solutions Wireless Subscribers
|
75,771
|
66,945
|
13.2
|
%
|
||||||||
Postpaid
|
48,844
|
45,959
|
6.3
|
%
|
||||||||
Reseller
|
64
|
14
|
-
|
|||||||||
Connected Devices
|
26,863
|
20,972
|
28.1
|
%
|
||||||||
Business Solutions Wireless Net Adds
|
1,689
|
1,324
|
27.6
|
%
|
||||||||
Postpaid
|
133
|
297
|
-55.2
|
%
|
||||||||
Reseller
|
(22
|
)
|
3
|
-
|
||||||||
Connected Devices
|
1,578
|
1,024
|
54.1
|
%
|
||||||||
Business Wireless Postpaid Churn
|
1.02
|
%
|
0.90
|
%
|
12
|
BP | ||||||
Consumer Mobility Subscribers
|
54,674
|
54,827
|
-0.3
|
%
|
||||||||
Postpaid
|
28,294
|
30,216
|
-6.4
|
%
|
||||||||
Prepaid
|
12,171
|
10,037
|
21.3
|
%
|
||||||||
Reseller
|
13,313
|
13,581
|
-2.0
|
%
|
||||||||
Connected Devices
|
896
|
993
|
-9.8
|
%
|
||||||||
Consumer Mobility Net Adds
|
92
|
(106
|
)
|
-
|
||||||||
Postpaid
|
(4
|
)
|
144
|
-
|
||||||||
Prepaid
|
500
|
98
|
-
|
|||||||||
Reseller
|
(378
|
)
|
(269
|
)
|
-40.5
|
%
|
||||||
Connected Devices
|
(26
|
)
|
(79
|
)
|
67.1
|
%
|
||||||
Consumer Mobility Postpaid Churn
|
1.24
|
%
|
1.20
|
%
|
4
|
BP | ||||||
Total Consumer Mobility Churn
|
2.11
|
%
|
2.04
|
%
|
7
|
BP | ||||||
Entertainment Group
|
51,748
|
34,175
|
51.4
|
%
|
||||||||
Video Connections
|
25,344
|
5,969
|
-
|
|||||||||
Satellite
|
20,112
|
-
|
-
|
|||||||||
U-verse
|
5,232
|
5,969
|
-12.3
|
%
|
||||||||
Video Net Adds
|
(54
|
)
|
49
|
-
|
||||||||
Satellite
|
328
|
-
|
-
|
|||||||||
U-verse
|
(382
|
)
|
49
|
-
|
||||||||
Broadband Connections
|
14,291
|
14,537
|
-1.7
|
%
|
||||||||
IP
|
12,542
|
11,796
|
6.3
|
%
|
||||||||
DSL
|
1,749
|
2,741
|
-36.2
|
%
|
||||||||
Broadband Net Adds
|
5
|
93
|
-94.6
|
%
|
||||||||
IP
|
186
|
413
|
-55.0
|
%
|
||||||||
DSL
|
(181
|
)
|
(320
|
)
|
43.4
|
%
|
||||||
Total Wireline Voice Connections
|
12,113
|
13,669
|
-11.4
|
%
|
||||||||
AT&T International
|
||||||||||||
Mexican Wireless Subscribers and Connections
|
||||||||||||
Subscribers
|
9,213
|
5,728
|
60.8
|
%
|
||||||||
Net Adds
|
529
|
-
|
-
|
|||||||||
Total Churn
|
5.45
|
%
|
-
|
-
|
||||||||
Video Subscribers and Connections
|
||||||||||||
Latin America Video Subscribers
|
12,436
|
-
|
-
|
|||||||||
Pan Americana
|
7,094
|
-
|
-
|
|||||||||
Brazil
|
5,342
|
-
|
-
|
|||||||||
Video Subscribers and Connections Net Adds
|
||||||||||||
Latin America Video Subscribers
|
(73
|
)
|
-
|
-
|
||||||||
Pan Americana
|
28
|
-
|
-
|
|||||||||
Brazil
|
(101
|
)
|
-
|
-
|
Financial Data
|
||||||||||||
AT&T Inc.
|
||||||||||||
Supplementary Operating and Financial Data
|
||||||||||||
Dollars in millions except per share amounts, subscribers and connections in (000s)
|
||||||||||||
Unaudited
|
Three Months Ended
|
|||||||||||
3/31/2016
|
3/31/2015
|
% Chg
|
||||||||||
AT&T Total Subscribers and Connections
|
||||||||||||
AT&T Mobility Subscribers
|
130,445
|
121,772
|
7.1
|
%
|
||||||||
Postpaid
|
77,138
|
76,175
|
1.3
|
%
|
||||||||
Prepaid
|
12,171
|
10,037
|
21.3
|
%
|
||||||||
Branded
|
89,309
|
86,212
|
3.6
|
%
|
||||||||
Reseller
|
13,378
|
13,595
|
-1.6
|
%
|
||||||||
Connected Devices
|
27,758
|
21,965
|
26.4
|
%
|
||||||||
AT&T Mobility Net Adds
|
1,781
|
1,218
|
46.2
|
%
|
||||||||
Postpaid
|
129
|
441
|
-70.7
|
%
|
||||||||
Prepaid
|
500
|
98
|
-
|
|||||||||
Branded
|
629
|
539
|
16.7
|
%
|
||||||||
Reseller
|
(400
|
)
|
(266
|
)
|
-50.4
|
%
|
||||||
Connected Devices
|
1,552
|
945
|
64.2
|
%
|
||||||||
M&A Activity, Partitioned Customers and Other Adjs.
|
24
|
-
|
-
|
|||||||||
AT&T Mobility Churn
|
||||||||||||
Postpaid Churn
|
1.10
|
%
|
1.02
|
%
|
8
|
BP | ||||||
Total Churn
|
1.42
|
%
|
1.40
|
%
|
2
|
BP | ||||||
Other
|
||||||||||||
Domestic Licensed POPs (000,000)
|
322
|
321
|
0.3
|
%
|
||||||||
Total Video Subscribers
|
37,808
|
5,993
|
-
|
|||||||||
Domestic
|
25,372
|
5,993
|
-
|
|||||||||
Pan Americana
|
7,094
|
-
|
-
|
|||||||||
Brazil
|
5,342
|
-
|
-
|
|||||||||
Total Video Net Adds
|
(125
|
)
|
50
|
-
|
||||||||
Domestic
|
(52
|
)
|
50
|
-
|
||||||||
Pan Americana
|
28
|
-
|
-
|
|||||||||
Brazil
|
(101
|
)
|
-
|
-
|
||||||||
Total Broadband Connections
|
15,764
|
16,097
|
-2.1
|
%
|
||||||||
IP
|
13,470
|
12,644
|
6.5
|
%
|
||||||||
DSL
|
2,294
|
3,453
|
-33.6
|
%
|
||||||||
Broadband Net Adds
|
(14
|
)
|
69
|
-
|
||||||||
IP
|
202
|
439
|
-54.0
|
%
|
||||||||
DSL
|
(216
|
)
|
(370
|
)
|
41.6
|
%
|
||||||
Total Wireline Voice Connections
|
21,459
|
24,149
|
-11.1
|
%
|
||||||||
Total Wireless Subscribers
|
139,658
|
127,500
|
9.5
|
%
|
||||||||
Domestic Wireless Subscribers
|
130,445
|
121,772
|
7.1
|
%
|
||||||||
Mexican Wireless Subscribers
|
9,213
|
5,728
|
60.8
|
%
|
||||||||
Branded Subscribers
|
98,158
|
91,448
|
7.3
|
%
|
||||||||
Branded Net Adds
|
1,195
|
539
|
-
|
|||||||||
AT&T Inc.
|
||||||||||||
Construction and capital expenditures:
|
||||||||||||
Capital expenditures
|
$
|
4,451
|
$
|
3,848
|
15.7
|
%
|
||||||
Interest during construction
|
$
|
218
|
$
|
123
|
77.2
|
%
|
||||||
Dividends Declared per Share
|
$
|
0.48
|
$
|
0.47
|
2.1
|
%
|
||||||
End of Period Common Shares Outstanding (000,000)
|
6,156
|
5,193
|
18.5
|
%
|
||||||||
Debt Ratio1,2
|
51.2
|
%
|
51.5
|
%
|
-30
|
BP | ||||||
Total Employees
|
280,870
|
250,790
|
12.0
|
%
|
||||||||
1
|
Prior year amounts restated to conform to current period reporting methodology.
|
|
2
|
Total long-term debt plus debt maturing within one year divided by total debt plus total stockholders' equity.
|
|
Note: For the end of 1Q16, total switched access lines were 15,975.
|
||
Business Solutions and Consumer Mobility may not total to AT&T Mobility due to rounding.
|
Financial Data
|
|||||||||||||
AT&T Inc.
|
|||||||||||||
Supplemental AT&T Mobility Results
|
|||||||||||||
Dollars in millions
|
|||||||||||||
Unaudited
|
|||||||||||||
Three Months Ended
|
|||||||||||||
3/31/2016
|
3/31/2015
|
% Chg
|
|||||||||||
AT&T Mobility
|
|||||||||||||
Operating Revenues
|
|||||||||||||
Service
|
$
|
14,798
|
|
$
|
14,812
|
-0.1
|
%
|
||||||
Equipment
|
3,156
|
3,374
|
-6.5
|
%
|
|||||||||
Total Operating Revenues
|
17,954
|
18,186
|
-1.3
|
%
|
|||||||||
Operating Expenses
|
|||||||||||||
Operations and support expenses
|
10,624
|
11,472
|
-7.4
|
%
|
|||||||||
Depreciation and amortization
|
2,056
|
2,005
|
2.5
|
%
|
|||||||||
Total Operating Expenses
|
12,680
|
13,477
|
-5.9
|
%
|
|||||||||
Operating Income
|
$
|
5,274
|
|
$
|
4,709
|
12.0
|
%
|
||||||
Operating Income Margin
|
29.4
|
%
|
|
25.9
|
%
|
Financial Data
|
||||||||||||||||||||||||||||
AT&T Inc.
|
||||||||||||||||||||||||||||
Segment Supplemental
|
||||||||||||||||||||||||||||
Dollars in millions except per share amounts
|
||||||||||||||||||||||||||||
For the three months ended March 31, 2016
|
||||||||||||||||||||||||||||
Revenues
|
Operations and Support Expenses
|
EBITDA
|
Depreciation and Amortization
|
Operating Income (Loss)
|
Equity in Net Income of Affiliates
|
Segment Contribution
|
||||||||||||||||||||||
Business Solutions
|
$
|
17,609
|
$
|
10,802
|
$
|
6,807
|
$
|
2,508
|
$
|
4,299
|
$
|
-
|
$
|
4,299
|
||||||||||||||
Entertainment Group
|
12,658
|
9,578
|
3,080
|
1,488
|
1,592
|
3
|
1,595
|
|||||||||||||||||||||
Consumer Mobility
|
8,328
|
4,912
|
3,416
|
922
|
2,494
|
-
|
2,494
|
|||||||||||||||||||||
International
|
1,667
|
1,588
|
79
|
277
|
(198
|
)
|
14
|
(184
|
)
|
|||||||||||||||||||
Segment Total
|
$
|
40,262
|
$
|
26,880
|
$
|
13,382
|
$
|
5,195
|
$
|
8,187
|
$
|
17
|
$
|
8,204
|
||||||||||||||
Corporate and Other
|
273
|
377
|
(104
|
)
|
17
|
(121
|
)
|
|||||||||||||||||||||
Acquisition-related items
|
-
|
295
|
(295
|
)
|
1,351
|
(1,646
|
)
|
|||||||||||||||||||||
Certain Significant items
|
-
|
(711
|
)
|
711
|
-
|
711
|
||||||||||||||||||||||
AT&T Inc.
|
$
|
40,535
|
$
|
26,841
|
$
|
13,694
|
$
|
6,563
|
$
|
7,131
|
||||||||||||||||||
For the three months ended March 31, 2015
|
||||||||||||||||||||||||||||
Revenues
|
Operations and Support Expenses
|
EBITDA
|
Depreciation and Amortization
|
Operating Income (Loss)
|
Equity in Net Income of Affiliates
|
Segment Contribution
|
||||||||||||||||||||||
Business Solutions
|
$
|
17,557
|
$
|
11,073
|
$
|
6,484
|
$
|
2,342
|
$
|
4,142
|
$
|
-
|
$
|
4,142
|
||||||||||||||
Entertainment Group
|
5,660
|
4,859
|
801
|
1,065
|
(264
|
)
|
(6
|
)
|
(270
|
)
|
||||||||||||||||||
Consumer Mobility
|
8,778
|
5,541
|
3,237
|
1,002
|
2,235
|
-
|
2,235
|
|||||||||||||||||||||
International
|
236
|
218
|
18
|
28
|
(10
|
)
|
-
|
(10
|
)
|
|||||||||||||||||||
Segment Total
|
$
|
32,231
|
$
|
21,691
|
$
|
10,540
|
$
|
4,437
|
$
|
6,103
|
$
|
(6
|
)
|
$
|
6,097
|
|||||||||||||
Corporate and Other
|
345
|
234
|
111
|
20
|
91
|
|||||||||||||||||||||||
Acquisition-related items
|
-
|
299
|
(299
|
)
|
121
|
(420
|
)
|
|||||||||||||||||||||
Certain Significant items
|
-
|
217
|
(217
|
)
|
-
|
(217
|
)
|
|||||||||||||||||||||
AT&T Inc.
|
$
|
32,576
|
$
|
22,441
|
$
|
10,135
|
$
|
4,578
|
$
|
5,557
|
Financial Data
|
||||||||
AT&T Inc.
|
||||||||
Non-GAAP Consolidated Reconciliation
|
||||||||
Adjusted EBITDA and Margin1
|
||||||||
Dollars in millions
|
||||||||
Unaudited
|
||||||||
Three Months Ended
|
||||||||
March 31,
|
||||||||
2015
|
2016
|
|||||||
Reported Operating Revenues
|
$
|
32,576
|
$
|
40,535
|
||||
Reported Operating Income
|
$
|
5,557
|
$
|
7,131
|
||||
Plus: Depreciation and Amortization
|
4,578
|
6,563
|
||||||
EBITDA2
|
$
|
10,135
|
$
|
13,694
|
||||
Adjustments:
|
||||||||
Wireless merger integration costs3
|
209
|
42
|
||||||
DIRECTV/Mexico merger integration costs4
|
89
|
254
|
||||||
Employee separation costs
|
217
|
25
|
||||||
Gain on transfer of wireless spectrum
|
-
|
(736
|
)
|
|||||
Adjusted EBITDA
|
$
|
10,650
|
$
|
13,279
|
||||
Adjusted EBITDA Margin*
|
32.7
|
%
|
32.8
|
%
|
1 2015 Adjusted EBITDA has been restated to reflect the change in accounting for customer set-up and installation costs.
2 EBITDA is defined as operating income before depreciation and amortization.
3 Adjustments include Operations and Support expenses for domestic wireless integration costs.
4 Adjustments include DIRECTV merger integration costs and Operations and Support expenses for international wireless integration costs.
|
||||
Adjusted EBITDA and Margin are non-GAAP financial measures calculated by excluding from operating revenues and operating expenses certain significant items that are non-operational or non-recurring in nature, including dispositions and merger integration and transaction costs. Management believes that these measures provide relevant and useful information to investors and other users of our financial data in evaluating the effectiveness of our operations and underlying business trends.
Adjusted EBITDA should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance with GAAP. Our calculation of Adjusted EBITDA, as presented, may differ from similarly titled measures reported by other companies.
*Adjusted EBITDA Margin is calculated by dividing Adjusted EBITDA by Operating Revenues.
|
||||
Financial Data
|
||||||||||||||||||||
AT&T Inc.
|
||||||||||||||||||||
Non-GAAP Segment Reconciliation
|
||||||||||||||||||||
Business Solutions Segment EBITDA
|
||||||||||||||||||||
Dollars in millions
|
||||||||||||||||||||
Unaudited
|
||||||||||||||||||||
Three Months Ended
|
||||||||||||||||||||
3/31/15
|
6/30/15
|
9/30/15
|
12/31/15
|
3/31/16
|
||||||||||||||||
Segment Operating Revenues
|
||||||||||||||||||||
Total Segment Operating Revenues
|
$
|
17,557
|
$
|
17,664
|
$
|
17,692
|
$
|
18,214
|
$
|
17,609
|
||||||||||
Segment Operating Income
|
4,142
|
4,232
|
4,297
|
3,721
|
4,299
|
|||||||||||||||
Segment Operating Income Margin
|
23.6
|
%
|
24.0
|
%
|
24.3
|
%
|
20.4
|
%
|
24.4
|
%
|
||||||||||
Plus: Depreciation and amortization
|
2,342
|
2,460
|
2,474
|
2,513
|
2,508
|
|||||||||||||||
EBITDA1
|
$
|
6,484
|
$
|
6,692
|
$
|
6,771
|
$
|
6,234
|
$
|
6,807
|
||||||||||
EBITDA as a % of Revenues
|
36.9
|
%
|
37.9
|
%
|
38.3
|
%
|
34.2
|
%
|
38.7
|
%
|
||||||||||
Entertainment Group Segment EBITDA
|
||||||||||||||||||||
Three Months Ended
|
||||||||||||||||||||
3/31/15
|
6/30/15
|
9/30/15
|
12/31/15
|
3/31/16
|
||||||||||||||||
Segment Operating Revenues
|
||||||||||||||||||||
Total Segment Operating Revenues
|
$
|
5,660
|
$
|
5,782
|
$
|
10,858
|
$
|
12,994
|
$
|
12,658
|
||||||||||
Segment Operating Income
|
(264
|
)
|
(196
|
)
|
1,019
|
1,445
|
1,592
|
|||||||||||||
Segment Operating Income Margin
|
-4.7
|
%
|
-3.4
|
%
|
9.4
|
%
|
11.1
|
%
|
12.6
|
%
|
||||||||||
Plus: Depreciation and amortization
|
1,065
|
1,065
|
1,389
|
1,426
|
1,488
|
|||||||||||||||
EBITDA1
|
$
|
801
|
$
|
869
|
$
|
2,408
|
$
|
2,871
|
$
|
3,080
|
||||||||||
EBITDA as a % of Revenues
|
14.2
|
%
|
15.0
|
%
|
22.2
|
%
|
22.1
|
%
|
24.3
|
%
|
||||||||||
Entertainment Group Segment Adjusted Operating Revenues
|
||||||||||||||||||||
Three Months Ended
|
||||||||||||||||||||
3/31/15
|
3/31/16
|
|||||||||||||||||||
Segment Operating Revenues
|
$
|
5,660
|
$
|
12,658
|
||||||||||||||||
DIRECTV Operating Revenues2
|
6,456
|
|||||||||||||||||||
Adjustments:
|
||||||||||||||||||||
Other DIRECTV operations
|
88
|
|||||||||||||||||||
Revenue recognition
|
95
|
|||||||||||||||||||
Intercompany eliminations
|
(16
|
)
|
||||||||||||||||||
Adjusted Total Segment Operating Revenues
|
$
|
12,283
|
$
|
12,658
|
||||||||||||||||
YoY Growth
|
3.1
|
%
|
||||||||||||||||||
1 For AT&T, EBITDA is defined as operating income before depreciation and amortization. EBITDA differs from Segment Operating Income (Loss), as calculated in accordance with U.S. generally accepted accounting principles (GAAP), in that it excludes depreciation and amortization. EBITDA does not give effect to cash used for debt service requirements and thus does not reflect available funds for distributions, reinvestment or other discretionary uses. EBITDA is not presented as an alternative measure of operating results or cash flows from operations, as determined in accordance with GAAP. Our calculation of EBITDA, as presented, may differ from similarly titled measures reported by other companies.
2 Includes operating revenues for DIRECTV, as reported in DIRECTV's Form 10-Q for the period ended 3/31/15.
3 Includes certain adjustments to conform to AT&T methodology and presentation and eliminate intercompany transactions. Revenue recognition adjustment conforms DIRECTV's practice of recognizing revenue to be received under contractual commitments on a straight line basis over the minimum contract period to AT&T's method of limiting the revenue recognized to the monthly amounts billed.
|
||||||
Financial Data
|
||||||||||||||||||||
AT&T Inc.
|
||||||||||||||||||||
Non-GAAP Segment Reconciliation
|
||||||||||||||||||||
Consumer Mobility Segment EBITDA
|
||||||||||||||||||||
Dollars in millions
|
||||||||||||||||||||
Unaudited
|
||||||||||||||||||||
Three Months Ended
|
||||||||||||||||||||
3/31/15
|
6/30/15
|
9/30/15
|
12/31/15
|
3/31/16
|
||||||||||||||||
Segment Operating Revenues
|
||||||||||||||||||||
Total Segment Operating Revenues
|
$
|
8,778
|
$
|
8,755
|
$
|
8,784
|
$
|
8,749
|
$
|
8,328
|
||||||||||
Segment Operating Income
|
2,235
|
2,619
|
2,743
|
2,141
|
2,494
|
|||||||||||||||
Segment Operating Income Margin
|
25.5
|
%
|
29.9
|
%
|
31.2
|
%
|
24.5
|
%
|
29.9
|
%
|
||||||||||
Plus: Depreciation and amortization
|
1,002
|
934
|
976
|
939
|
922
|
|||||||||||||||
EBITDA1
|
$
|
3,237
|
$
|
3,553
|
$
|
3,719
|
$
|
3,080
|
$
|
3,416
|
||||||||||
EBITDA as a % of Revenues
|
36.9
|
%
|
40.6
|
%
|
42.3
|
%
|
35.2
|
%
|
41.0
|
%
|
||||||||||
International Segment EBITDA
|
||||||||||||||||||||
Three Months Ended
|
||||||||||||||||||||
3/31/15
|
6/30/15
|
9/30/15
|
12/31/15
|
3/31/16
|
||||||||||||||||
Segment Operating Revenues
|
||||||||||||||||||||
Total Segment Operating Revenues
|
$
|
236
|
$
|
491
|
$
|
1,526
|
$
|
1,849
|
$
|
1,667
|
||||||||||
Segment Operating Income
|
(10
|
)
|
(131
|
)
|
(83
|
)
|
(259
|
)
|
(198
|
)
|
||||||||||
Segment Operating Income Margin
|
-4.2
|
%
|
-26.7
|
%
|
-5.4
|
%
|
-14.0
|
%
|
-11.9
|
%
|
||||||||||
Plus: Depreciation and amortization
|
28
|
93
|
225
|
309
|
277
|
|||||||||||||||
EBITDA1
|
$
|
18
|
$
|
(38
|
)
|
$
|
142
|
$
|
50
|
$
|
79
|
|||||||||
EBITDA as a % of Revenues
|
7.6
|
%
|
-7.7
|
%
|
9.3
|
%
|
2.7
|
%
|
4.7
|
%
|
||||||||||
1 For AT&T, EBITDA is defined as operating income before depreciation and amortization. EBITDA differs from Segment Operating Income (Loss), as calculated in accordance with U.S. generally accepted accounting principles (GAAP), in that it excludes depreciation and amortization. EBITDA does not give effect to cash used for debt service requirements and thus does not reflect available funds for distributions, reinvestment or other discretionary uses. EBITDA is not presented as an alternative measure of operating results or cash flows from operations, as determined in accordance with GAAP. Our calculation of EBITDA, as presented, may differ from similarly titled measures reported by other companies.
|
Financial Data
|
||||||||||||||||||||
AT&T Inc.
|
||||||||||||||||||||
Non-GAAP Reconciliation - Supplemental
|
||||||||||||||||||||
AT&T Mobility EBITDA
|
||||||||||||||||||||
Dollars in millions
|
||||||||||||||||||||
Unaudited
|
||||||||||||||||||||
Three Months Ended
|
||||||||||||||||||||
3/31/15
|
6/30/15
|
9/30/15
|
12/31/15
|
3/31/16
|
||||||||||||||||
Operating Revenues
|
||||||||||||||||||||
Service Revenues
|
$
|
14,812
|
$
|
15,115
|
$
|
15,095
|
$
|
14,815
|
$
|
14,798
|
||||||||||
Equipment Revenues
|
3,374
|
3,189
|
3,234
|
4,071
|
3,156
|
|||||||||||||||
Total Operating Revenues
|
$
|
18,186
|
$
|
18,304
|
$
|
18,329
|
$
|
18,886
|
$
|
17,954
|
||||||||||
Operating Income
|
4,709
|
5,300
|
5,418
|
4,376
|
5,274
|
|||||||||||||||
Operating Income Margin
|
25.9
|
%
|
29.0
|
%
|
29.6
|
%
|
23.2
|
%
|
29.4
|
%
|
||||||||||
Plus: Depreciation and amortization
|
2,005
|
2,031
|
2,046
|
2,031
|
2,056
|
|||||||||||||||
EBITDA1
|
$
|
6,714
|
$
|
7,331
|
$
|
7,464
|
$
|
6,407
|
$
|
7,330
|
||||||||||
YoY Growth
|
9.2
|
%
|
||||||||||||||||||
EBITDA as a % of Revenues
|
36.9
|
%
|
40.1
|
%
|
40.7
|
%
|
33.9
|
%
|
40.8
|
%
|
||||||||||
EBITDA as a % of Service Revenues
|
45.3
|
%
|
48.5
|
%
|
49.4
|
%
|
43.2
|
%
|
49.5
|
%
|
||||||||||
Mexico EBITDA
|
||||||||||||||||||||
Dollars in millions
|
||||||||||||||||||||
Unaudited
|
||||||||||||||||||||
Three Months Ended
|
||||||||||||||||||||
3/31/15
|
6/30/15
|
9/30/15
|
12/31/15
|
3/31/16
|
||||||||||||||||
Operating Revenues
|
||||||||||||||||||||
Total Operating Revenues
|
$
|
236
|
$
|
491
|
$
|
581
|
$
|
643
|
$
|
537
|
||||||||||
Operating Income
|
(10
|
)
|
(131
|
)
|
(134
|
)
|
(258
|
)
|
(251
|
)
|
||||||||||
Operating Income Margin
|
-4.2
|
%
|
-26.7
|
%
|
-23.1
|
%
|
-40.1
|
%
|
-46.7
|
%
|
||||||||||
Plus: Depreciation and amortization
|
28
|
93
|
67
|
89
|
81
|
|||||||||||||||
EBITDA1
|
$
|
18
|
$
|
(38
|
)
|
$
|
(67
|
)
|
$
|
(169
|
)
|
$
|
(170
|
)
|
||||||
EBITDA as a % of Revenues
|
7.6
|
%
|
-7.7
|
%
|
-11.5
|
%
|
-26.3
|
%
|
-31.7
|
%
|
||||||||||
1 For AT&T, EBITDA is defined as operating income before depreciation and amortization. EBITDA service margin is calculated as EBITDA divided by service revenues. EBITDA differs from Segment Operating Income (Loss), as calculated in accordance with U.S. generally accepted accounting principles (GAAP), in that it excludes depreciation and amortization. EBITDA does not give effect to cash used for debt service requirements and thus does not reflect available funds for distributions, reinvestment or other discretionary uses. EBITDA is not presented as an alternative measure of operating results or cash flows from operations, as determined in accordance with GAAP. Our calculation of EBITDA, as presented, may differ from similarly titled measures reported by other companies.
|
||||||
Financial Data
|
||||||||
AT&T Inc.
|
||||||||
Non-GAAP Consolidated Reconciliation
|
||||||||
Adjusted Diluted EPS1
|
||||||||
Unaudited
|
||||||||
Three Months Ended
|
||||||||
March 31,
|
||||||||
2015
|
2016
|
|||||||
Reported Diluted EPS
|
$
|
0.63
|
$
|
0.61
|
||||
Adjustments:
|
||||||||
Amortization of intangible assets
|
0.01
|
0.14
|
||||||
Merger and integration costs2
|
0.04
|
0.03
|
||||||
Tax-related item
|
(0.05
|
)
|
-
|
|||||
Gain on transfer of wireless spectrum
|
-
|
(0.08
|
)
|
|||||
Other3
|
0.02
|
0.02
|
||||||
Adjusted Diluted EPS
|
$
|
0.65
|
$
|
0.72
|
||||
Year-over-year growth - Adjusted
|
10.8
|
%
|
||||||
Weighted Average Common Shares Outstanding
|
||||||||
with Dilution (000,000)
|
5,219
|
6,190
|
||||||
1 2015 Adjusted Diluted EPS has been restated to reflect the change in accounting for customer set-up and installation costs.
2 Adjustments include DIRECTV merger and integration costs, domestic and international wireless merger and integration costs.
3 Other adjustments include employee separation costs and other costs.
|
Adjusted Diluted EPS is a non-GAAP financial measure calculated by excluding from operating revenues, operating expenses, and income tax expense certain significant items that are non-operational or non-recurring in nature, including dispositions and merger integration and transaction costs. Management believes that this measure provides relevant and useful information to investors and other users of our financial data in evaluating the effectiveness of our operations and underlying business trends.
Adjusted Diluted EPS should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance with GAAP. Our calculation of Adjusted Diluted EPS, as presented, may differ from similarly titled measures reported by other companies.
Sum of components may not tie due to rounding.
|
Financial Data
|
||||||||
AT&T Inc.
|
||||||||
Non-GAAP Consolidated Reconciliation
|
||||||||
Capital Investment
|
||||||||
Dollars in millions
|
||||||||
Unaudited
|
||||||||
Three Months
|
||||||||
Ended
|
||||||||
March 31,
|
||||||||
2016
|
||||||||
Reported construction and capital expenditures
|
$
|
4,669
|
||||||
Add: Vendor financing for capital investments in Mexico
|
43
|
|||||||
Capital Investment
|
$
|
4,712
|
||||||
Free Cash Flow
|
||||||||
Dollars in millions
|
||||||||
Unaudited
|
||||||||
Three Months Ended
|
||||||||
March 31,
|
||||||||
2015
|
2016
|
|||||||
Net cash provided by operating activities
|
$
|
6,738
|
$
|
7,900
|
||||
Less: Construction and capital expenditures
|
(3,971
|
)
|
(4,669
|
)
|
||||
Free Cash Flow
|
$
|
2,767
|
$
|
3,231
|
||||
Free Cash Flow after Dividends
|
||||||||
Dollars in millions
|
||||||||
Unaudited
|
||||||||
Three Months Ended
|
||||||||
March 31,
|
||||||||
2015
|
2016
|
|||||||
Net cash provided by operating activities
|
$
|
6,738
|
$
|
7,900
|
||||
Less: Construction and capital expenditures
|
(3,971
|
)
|
(4,669
|
)
|
||||
Free Cash Flow
|
2,767
|
3,231
|
||||||
Less: Dividends paid
|
(2,434
|
)
|
(2,947
|
)
|
||||
Free Cash Flow after Dividends
|
$
|
333
|
$
|
284
|
Capital Investment is a non-GAAP financial measure calculated by including financing arrangements for capital improvements of the wireless network in Mexico. These favorable payment terms are considered vendor financing arrangements and are reported as repayments of debt instead of capital expenditures. Management believes that Capital Investment provides relevant and useful information to investors and other users of our financial data in evaluating the investment in our business.
Free cash flow includes reimbursements of certain postretirement benefits paid.
Free cash flow is defined as cash from operations minus construction and capital expenditures. Free cash flow after dividends is defined as cash from operations minus construction, capital expenditures and dividends. We believe these metrics provide useful information to our investors because management regularly reviews free cash flow as an important indicator of the cash generated by normal business operations, including capital expenditures, and makes decisions based on it. Management also views free cash flow as a measure of cash available to pay debt and return cash to shareowners.
|
||||
Financial Data
|
||||||||
AT&T Inc.
|
||||||||
Non-GAAP Consolidated Reconciliation
|
||||||||
Annualized Net-Debt-to-Adjusted-EBITDA Ratio
|
||||||||
Dollars in millions
|
||||||||
Unaudited
|
||||||||
Three Months Ended
|
||||||||
3/31/16
|
YTD 2016
|
|||||||
Operating Revenues
|
40,535
|
40,535
|
||||||
Operating Expenses
|
33,404
|
33,404
|
||||||
Total Operating Income
|
7,131
|
7,131
|
||||||
Add Back Depreciation and Amortization
|
6,563
|
6,563
|
||||||
Consolidated EBITDA
|
13,694
|
13,694
|
||||||
Add Back:
|
||||||||
Wireless merger integration costs1
|
42
|
42
|
||||||
DIRECTV/Mexico merger integration costs2
|
254
|
254
|
||||||
Gain on transfer of wireless spectrum
|
(736
|
)
|
(736
|
)
|
||||
Total Adjusted Consolidated EBITDA
|
13,254
|
13,254
|
||||||
Annualized Adjusted Consolidated EBITDA
|
$
|
53,016
|
||||||
End-of-period current debt
|
8,399
|
|||||||
End-of-period long-term debt
|
122,104
|
|||||||
Total End-of-Period Debt
|
130,503
|
|||||||
Less Cash and Cash Equivalents
|
10,008
|
|||||||
Net Debt Balance
|
$
|
120,495
|
||||||
Annualized Net-Debt-to-Adjusted-EBITDA Ratio
|
2.27
|
1 Adjustments include Operations and Support expenses for domestic wireless integration costs.
2 Adjustments include DIRECTV merger and integration costs and Operations and Support expenses for international wireless integration costs.
Net-Debt-to-EBITDA ratios are non-GAAP financial measures frequently used by investors and credit rating agencies. Management believes these measures provide relevant and useful information to investors and other users of our financial data. Net debt is calculated by subtracting cash and cash equivalents and certificates of deposit and time deposits that are greater than 90 days from the sum of debt maturing within one year and long-term debt. The Net-Debt-to-EBITDA ratio is calculated by dividing the Net Debt by annualized EBITDA. Annualized EBITDA is calculated by annualizing the year-to-date EBITDA.
Our calculation of EBITDA, as presented, may differ from similarly titled measures reported by other companies.
|
|||
Financial Data
|
||||||||
AT&T Inc.
|
||||||||
Non-GAAP Consolidated Reconciliation
|
||||||||
Adjusted Operating Income and Margin1
|
||||||||
Dollars in millions
|
||||||||
Unaudited
|
||||||||
Three Months Ended
|
||||||||
March 31,
|
||||||||
2015
|
2016
|
|||||||
Operating Revenues
|
$
|
32,576
|
$
|
40,535
|
||||
Reported Operating Income
|
$
|
5,557
|
$
|
7,131
|
||||
Adjustments:
|
||||||||
Amortization of intangible assets
|
50
|
1,351
|
||||||
Wireless merger integration costs2
|
209
|
42
|
||||||
DIRECTV/Mexico merger integration costs3
|
89
|
254
|
||||||
Employee separation costs
|
217
|
25
|
||||||
Gain on transfer of wireless spectrum
|
-
|
(736
|
)
|
|||||
Adjusted Operating Income
|
$
|
6,122
|
$
|
8,067
|
||||
Adjusted Operating Income Margin*
|
18.8
|
%
|
19.9
|
%
|
1 2015 Adjusted Operating Income and Margin have been restated to reflect the change in accounting for customer set-up and installation costs.
2 Adjustments include Operations and Support expenses for domestic wireless integration costs.
3 Adjustments include DIRECTV merger integration costs and Operations and Support expenses for international wireless integration costs.
|
Adjusted Operating Income and Margin are non-GAAP financial measures calculated by excluding from operating revenues and operating expenses significant items that are non-operational or non-recurring in nature, including dispositions and merger integration and transaction costs. Management believes that these measures provide relevant and useful information to investors and other users of our financial data in evaluating the effectiveness of our operations and underlying business trends.
Adjusted Operating Income and Margin should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance with GAAP. Our calculation of Adjusted Operating Income and Margin, as presented, may differ from similarly titled measures reported by other companies.
*Adjusted Operating Income Margin is calculated by dividing Adjusted Operating Income by Operating Revenues.
|
||||
Exhibit 99.3
EBITDA DISCUSSION
For AT&T, EBITDA is defined as operating income before depreciation and amortization. EBITDA service margin is calculated as EBITDA divided by service revenues. EBITDA differs from Segment Operating Income (Loss), as calculated in accordance with U.S. generally accepted accounting principles (GAAP), in that it excludes depreciation and amortization. EBITDA does not give effect to cash used for debt service requirements and thus does not reflect available funds for distributions, reinvestment or other discretionary uses. EBITDA is not presented as an alternative measure of operating results or cash flows from operations, as determined in accordance with GAAP. Our calculation of EBITDA, as presented, may differ from similarly titled measures reported by other companies.
We believe these measures are relevant and useful information to our investors as they are part of AT&T's internal management reporting and planning processes and are important metrics that management uses to evaluate the operating performance of its segments. These measures are used by management as a gauge of our success in acquiring, retaining and servicing subscribers because we believe these measures reflect AT&T's ability to generate and grow subscriber revenues while providing a high level of customer service in a cost-effective manner. Management also uses these measures as a method of comparing segment performance with that of many of its competitors. The financial and operating metrics which affect EBITDA include the key revenue and expense drivers for which segment managers are responsible and upon which we evaluate their performance.
EBITDA does not give effect to cash used for debt service requirements and thus does not reflect available funds for distributions, reinvestment or other discretionary uses. EBITDA excludes other income (expense) – net, net income attributable to noncontrolling interest and equity in net income (loss) of affiliates, as these do not reflect the operating results of our subscriber base and national footprint that we utilize to obtain and service our customers. Equity in net income (loss) of affiliates represents the proportionate share of the net income (loss) of affiliates in which we exercise significant influence, but do not control. Because we do not control these entities, our management excludes these results when evaluating the performance of our primary operations. EBITDA excludes interest expense and the provision for income taxes. Excluding these items eliminates the expenses associated with its capitalization and tax structures. Finally, EBITDA excludes depreciation and amortization, in order to eliminate the impact of capital investments.
We believe EBITDA as a percentage of service revenues to be a more relevant measure than EBITDA as a percentage of total revenue for our Consumer Mobility segment operating margin and our supplemental AT&T Mobility operating margin. For the periods covered by this report, we subsidized a portion of some of our wireless handset sales, all of which are recognized in the period in which we sell the handset. Management views this equipment subsidy as a cost to acquire or retain a subscriber, which is recovered through the ongoing service revenue that is generated by the subscriber. We also use wireless service revenues to calculate margin to facilitate comparison, both internally and externally with our wireless competitors, as they calculate their margins using wireless service revenues as well.
There are material limitations to using these non-GAAP financial measures. EBITDA and EBITDA service margin, as we have defined them, may not be comparable to similarly titled measures reported by other companies. Furthermore, these performance measures do not take into account certain significant items, including depreciation and amortization, interest expense, tax expense and equity in net income (loss) of affiliates, which directly affect our segment income. Management compensates for these limitations by carefully analyzing how its competitors present performance measures that are similar in nature to EBITDA as we present it, and considering the economic effect of the excluded expense items independently as well as in connection with its analysis of net income as calculated in accordance with GAAP. EBITDA and EBITDA service margin should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance with GAAP.
FREE CASH FLOW DISCUSSION
Free cash flow is defined as cash from operations minus construction and capital expenditures. Free cash flow after dividends is defined as cash from operations minus construction, capital expenditures and dividends. Free cash flow yield is defined as cash from continuing operations less construction and capital expenditures as a percentage of market capitalization computed on the last trading day of the quarter. Market capitalization is computed by multiplying the end of period stock price by the end of period shares outstanding. We believe these metrics provide useful information to our investors because management reviews free cash flow as an important indicator of how much cash is generated by normal business operations, including capital expenditures, and makes decisions based on it. Management also views it as a measure of cash available to pay debt and return cash to shareowners.
NET DEBT TO EBITDA DISCUSSION
Net Debt to EBITDA ratios are non-GAAP financial measures frequently used by investors and credit rating agencies and management believes these measures provide relevant and useful information to investors and other users of our financial data. The Net Debt to EBITDA ratio is calculated by dividing the Net Debt by annualized EBITDA. Net Debt is calculated by subtracting cash and cash equivalents and certificates of deposit and time deposits that are greater than 90 days, from the sum of debt maturing within one year and long-term debt. Annualized EBITDA is calculated by annualizing the year-to-date EBITDA.
Adjusted EBITDA excludes costs which are non-recurring in nature. Adjusted EBITDA also excludes net actuarial gains or losses associated with our pension and postemployment benefit plans, which we immediately recognize in the income statement, pursuant to our accounting policy for the recognition of actuarial gains/losses. As a result, the Adjusted EBITDA reflects an expected return on plan assets rather than the actual return on plan assets, as included in the GAAP measure of income. This measure is consistent with metrics under our existing credit agreements.
ADJUSTING ITEMS DISCUSSION
Adjusted Operating Revenues, Adjusted Operating Income, Adjusted Operating Income Margin, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBITDA service margin and Adjusted diluted EPS are non-GAAP financial measures calculated by excluding from operating revenues, operating expenses and income tax expense certain significant items that are non-operational or non-recurring in nature, including dispositions and merger integration and transaction costs. Management believes that these measures provide relevant and useful information to investors and other users of our financial data in evaluating the effectiveness of our operations and underlying business trends.
Capital Investment is a non-GAAP financial measure calculated by including vendor financing arrangements for capital improvements of the wireless network in Mexico. These favorable payment terms are considered vendor financing arrangements and are reported as repayments of debt instead of capital expenditures. Management believes that Capital Investment provides relevant and useful information to investors and other users of our financial data in evaluating the investment in our business.
Adjusted Operating Revenues, Adjusted Operating Income, Adjusted Operating Income Margin, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBITDA service margin, Adjusted diluted EPS and Capital Investment should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance with GAAP. Our calculations of Adjusted diluted EPS, as presented, may differ from similarly titled measures reported by other companies.
Entertainment Group Segment Adjusted Operating Revenues includes the external operating revenues from DIRECTV U.S. as reported in the DIRECTV Form 10-Q dated March 31, 2015 adjusted to (1) include operations reported in other DIRECTV operating segments that AT&T has chosen to manage in our Entertainment Group segment, (2) conform DIRECTV's practice of recognizing revenue to be received under contractual commitments on a straight line basis over the minimum contract period to AT&T's method of limiting the revenue recognized to the monthly amounts billed and (3) to eliminate intercompany transactions from DIRECTV U.S. and the Entertainment Group segment. Adjusting Entertainment Group segment operating revenues provides for comparability between periods.
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- TELUS International and Appian Expand Strategic Partnership to Help Companies Simplify Complex Business Processes Through an Innovative, Low-Code Automation Platform
- Addex Therapeutics Reports Full Year 2023 Financial Results and Provides Corporate Update
- BioSenic S.A. : Transparency notifications received from François Rieger
Create E-mail Alert Related Categories
SEC FilingsSign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!