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| Name | Symbol | Market | Type |
|---|---|---|---|
| At&t Inc 5.500% | LSE:58KN | London | Bond |
| Price Change | % Change | Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 121.921 | 0 | 00:00:00 |
From Nov 2019 to Nov 2024
TIDM58KN
RNS Number : 5161A
AT & T Inc.
29 May 2019
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 24, 2019
AT&T INC.
(Exact Name of Registrant as Specified in Charter)
Hot Features
Premium
Delaware 1-8610 43-1301883
(State or Other Jurisdiction (Commission File Number) (IRS Employer Identification
of Incorporation) 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))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (--230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (--240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Item 2.02 Results of Operations and Financial Condition.
The registrant announced on April 24, 2019, its results of operations for the first quarter of 2019. 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 24, 2019 reporting financial results for the
first quarter ended March 31, 2019 .
99.2 AT&T Inc. selected financial statements and operating data .
99.3 Discussion and reconciliation of non-GAAP measures .
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 24, 2019 By: / s/ Debra L. Dial
Debra L. Dial
Senior Vice President and Controller
AT&T Reports First-Quarter Results
First-Quarter Consolidated Results
-- Diluted EPS of $0.56 as reported compared to $0.75 in the
year-ago quarter
-- Adjusted EPS of $0.86 compared to $0.85 in the year-ago
quarter
-- Consolidated revenues of $44.8 billion
-- Cash from operations of $11.1 billion, up 24%
-- Capital expenditures of $5.2 billion
-- Free cash flow of $5.9 billion
Note: AT&T's first-quarter earnings conference call will be webcast at 8:30 a.m. ET on Wednesday, April 24, 2019. The webcast and related materials will be available on AT&T's Investor Relations website at https://investors.att.com .
DALLAS, April 24, 2019 - AT&T Inc . ( NYSE:T ) reported solid Mobility and WarnerMedia results in the first quarter, including wireless service revenue growth and postpaid phone net adds, and grew operating income and EBITDA in the Entertainment Group.
"Our first-quarter results show that we're delivering on what we promised," said Randall Stephenson, AT&T chairman and CEO. "We're on plan to meet our de-leveraging goals with strong free cash flow and asset sales. We grew Entertainment Group EBITDA in the quarter and are confident we'll meet or exceed our full-year target. FirstNet deployment continues ahead of schedule. And we are recognized for having the nation's best wireless network 1 , as well as the fastest network 2 .
"All this speaks volumes about our focus on our strategic priorities and our ability to grow our Mobility, WarnerMedia and emerging Xandr businesses. Our teams are executing well and have turned in a good performance to start the year."
First-Quarter Results
Communications Highlights
-- Mobility:
o Service revenues up 2.9%; operating income and EBITDA growth
with postpaid phone and prepaid net adds
o 179,000 postpaid smartphone net adds in the U.S.
-- 80,000 postpaid phone net adds
o 96,000 prepaid net adds of which 85,000 are phones
-- Entertainment Group:
o 13% operating income growth with solid ARPU gains
o 6.9% EBITDA growth as company targets stability
o Focus on long-term value customer base
-- 22.4 million premium TV subscribers - 544,000 net loss
-- 1.5 million DIRECTV NOW subscribers - 83,000 net loss
o Nearly 300,000 AT&T Fiber gains; 45,000 broadband net adds
with broadband revenue growth of more than 8%
o 12.4 million customer locations passed with fiber
WarnerMedia Highlights
-- Solid revenue growth with strong operating income growth with gains
in all business units
o Turner subscription revenue growth
o HBO digital subscriber growth continued as last season of Game
of Thrones begins
o Strong Warner Bros. revenue and operating income growth
Latin America Highlights
-- 93,000 Mexico wireless net adds
Xandr Highlights
-- Advertising revenues grew by 26.4% largely due to the AppNexus acquisition
Consolidated Financial Results
AT&T's consolidated revenues for the first quarter totaled $44.8 billion versus $38.0 billion in the year-ago quarter, up 17.8%, primarily due to the Time Warner acquisition. Declines in legacy wireline services, Vrio, wireless equipment and domestic video were more than offset by the addition of WarnerMedia, domestic wireless services and Xandr. Operating expenses were $37.6 billion versus $31.8 billion in the year-ago quarter, an increase of about $5.8 billion due to the Time Warner acquisition and higher commission amortization from adopting new accounting standards last year, partially offset by lower wireless equipment costs and cost efficiencies.
Operating income was $7.2 billion versus $6.2 billion in the year-ago quarter, primarily due to the Time Warner acquisition, with operating income margin of 16.1% versus 16.3%. When adjusting for amortization, merger- and integration-related expenses and other items, operating income was $9.6 billion versus $7.5 billion in the year-ago quarter, and operating income margin was 21.4% versus 19.7% in the year-ago quarter due to the acquisition of Time Warner.
First-quarter net income attributable to AT&T was $4.1 billion, or $0.56 per diluted share, versus $4.7 billion, or $0.75 per diluted share, in the year-ago quarter. Adjusting for $0.30, which includes merger-amortization costs, merger- and integration-related expenses, a non-cash actuarial loss on benefit plans and other items, earnings per diluted share was $0.86 compared to an adjusted $0.85 in the year-ago quarter.
Cash from operating activities was $11.1 billion, and capital expenditures were $5.2 billion. Capital investment - which consists of capital expenditures plus cash payments for vendor financing - totaled $6.0 billion, which includes about $800 million of cash payments for vendor financing. Free cash flow - cash from operating activities minus capital expenditures - was $5.9 billion for the quarter.
1 Based on GWS OneScore Sept. 2018
2 Based on analysis by Ookla (R) of Speedtest Intelligence (R) data average download speeds for Q1 2019
*About AT&T
AT&T Inc. ( NYSE:T ) is a diversified, global leader in telecommunications, media and entertainment, and technology. It executes in the market under four operating units. WarnerMedia's HBO, Turner and Warner Bros. divisions are world leaders in creating premium content, operate one of the world's largest TV and film studios, and own a world-class library of entertainment. AT&T Communications provides more than 100 million U.S. consumers with entertainment and communications experiences across TV, mobile and broadband services. Plus, it serves nearly 3 million business customers with high-speed, highly secure connectivity and smart solutions. AT&T Latin America provides pay-TV services across 11 countries and territories in Latin America and the Caribbean, and is the fastest growing wireless provider in Mexico, serving consumers and businesses. Xandr provides marketers with innovative and relevant advertising solutions for consumers around premium video content and digital advertising through its AppNexus platform.
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. Additional information is available at about.att.com. (c) 2019 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.
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.
This news re lease 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 https://investors.att.com .
For more information, contact:
Erin McGrath
AT&T Inc.
Phone: 214-862-0651
Email: erin.mcGrath@att.com
AT&T Inc.
Financial Data
Dollars in millions except per share amounts
Unaudited First Quarter Percent
----------------
2019 2018 Change
----------------------------------------------------- ------ ------ ----------
Operating Revenues
Service $40,684 $33,646 20.9%
Equipment 4,143 4,392 (5.7)%
Total Operating Revenues 44,827 38,038 17.8%
------ ------
Operating Expenses
Cost of revenues
Equipment 4,502 4,848 (7.1)%
Broadcast, programming and operations 7,652 5,166 48.1%
Other cost of revenues (exclusive of depreciation
and amortization shown separately below) 8,585 7,932 8.2%
Selling, general and administrative 9,649 7,897 22.2%
Depreciation and amortization 7,206 5,994 20.2%
------------------------------------------------------ ------ ------
Total Operating Expenses 37,594 31,837 18.1%
------------------------------------------------------ ------ ------
Operating Income 7,233 6,201 16.6%
------------------------------------------------------ ------ ------
Interest Expense 2,141 1,771 20.9%
Equity in Net Income (Loss) of Affiliates (7) 9 -%
Other Income (Expense) - Net 286 1,702 (83.2)%
------------------------------------------------------ ------ ------
Income Before Income Taxes 5,371 6,141 (12.5)%
Income Tax Expense 1,023 1,382 (26.0)%
------------------------------------------------------ ------ ------
Net Income 4,348 4,759 (8.6)%
------------------------------------------------------ ------ ------
Less: Net Income Attributable to
Noncontrolling Interest (252) (97) -%
------------------------------------------------------ ------ ------
Net Income Attributable to AT&T $ 4,096 $ 4,662 (12.1)%
====================================================== ====== ======
Basic Earnings Per Share Attributable to AT&T $ 0.56 $ 0.75 (25.3)%
Weighted Average Common
Shares Outstanding (000,000) 7,313 6,161 18.7%
Diluted Earnings Per Share Attributable to AT&T $ 0.56 $ 0.75 (25.3)%
Weighted Average Common
Shares Outstanding with Dilution (000,000) 7,342 6,180 18.8%
------------------------------------------------------ ------ ------ ------
AT&T Inc.
Financial Data
Dollars in millions
Unaudited Mar. 31, Dec. 31,
2019 2018
--------------------------------------------------------------------- -------- --------
Assets
Current Assets
Cash and cash equivalents $ 6,516 $ 5,204
Accounts receivable - net of allowances for doubtful accounts
of $905 and $907 23,863 26,472
Prepaid expenses 1,518 2,047
Other current assets 14,575 17,704
---------------------------------------------------------------------- -------- --------
Total current assets 46,472 51,427
---------------------------------------------------------------------- -------- --------
Noncurrent Inventories and Theatrical Film and Television Production
Costs 10,270 7,713
Property, Plant and Equipment - Net 132,051 131,473
Goodwill 146,434 146,370
Licenses - Net 97,001 96,144
Trademarks and Trade Names - Net 24,218 24,345
Distribution Networks - Net 16,623 17,069
Other Intangible Assets - Net 24,732 26,269
Investments in and Advances to Equity Affiliates 6,230 6,245
Operating Lease Right-of-Use Assets 20,235 -
Other Assets 24,118 24,809
---------------------------------------------------------------------- -------- --------
Total Assets $ 548,384 $ 531,864
====================================================================== ======== ========
Liabilities and Stockholders' Equity
Current Liabilities
Debt maturing within one year $ 11,538 $ 10,255
Accounts payable and accrued liabilities 42,306 43,184
Advanced billings and customer deposits 5,956 5,948
Accrued taxes 1,130 1,179
Dividends payable 3,722 3,854
---------------------------------------------------------------------- -------- --------
Total current liabilities 64,652 64,420
---------------------------------------------------------------------- -------- --------
Long-Term Debt 163,942 166,250
---------------------------------------------------------------------- -------- --------
Deferred Credits and Other Noncurrent Liabilities
Deferred income taxes 59,207 57,859
Postemployment benefit obligation 19,664 19,218
Operating lease liabilities 18,253 -
Other noncurrent liabilities 27,715 30,233
---------------------------------------------------------------------- -------- --------
Total deferred credits and other noncurrent liabilities 124,839 107,310
---------------------------------------------------------------------- -------- --------
Stockholders' Equity
Common stock 7,621 7,621
Additional paid-in capital 125,174 125,525
Retained earnings 59,424 58,753
Treasury stock (11,452) (12,059)
Accumulated other comprehensive income 4,345 4,249
Noncontrolling interest 9,839 9,795
---------------------------------------------------------------------- -------- --------
Total stockholders' equity 194,951 193,884
---------------------------------------------------------------------- -------- --------
Total Liabilities and Stockholders' Equity $ 548,384 $ 531,864
====================================================================== ======== ========
AT&T Inc.
Financial Data
Dollars in millions
Unaudited First Quarter
------------------
2019 2018
---------------------------------------------------------------------- -------
Operating Activities
Net income $ 4,348 $ 4,759
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization 7,206 5,994
Amortization of film and television costs 2,497 -
Undistributed earnings from investments in equity affiliates 112 (2)
Provision for uncollectible accounts 592 438
Deferred income tax expense (benefit) 1,069 1,222
Net (gain) loss from investments, net of impairments (175) 2
Actuarial (gain) loss on pension and postretirement benefits 432 (930)
Changes in operating assets and liabilities:
Accounts receivable 1,894 (439)
Other current assets, inventories and theatrical film and television
production costs (2,510) 614
Accounts payable and other accrued liabilities (3,686) (1,962)
Equipment installment receivables and related sales 652 505
Deferred customer contract acquisition and fulfillment costs (375) (826)
Retirement benefit funding - (140)
Other - net (1,004) (288)
----------------------------------------------------------------------- ------- -------
Total adjustments 6,704 4,188
----------------------------------------------------------------------- ------- -------
Net Cash Provided by Operating Activities 11,052 8,947
----------------------------------------------------------------------- ------- -------
Investing Activities
Capital expenditures:
Purchase of property and equipment (5,121) (5,957)
Interest during construction (61) (161)
Acquisitions, net of cash acquired (213) (234)
Dispositions 10 56
(Purchases) sales of securities, net (1) (116)
Advances to and investments in equity affiliates, net (15) (1,007)
Cash collections of deferred purchase price - 267
----------------------------------------------------------------------- ------- -------
Net Cash Used in Investing Activities (5,401) (7,152)
----------------------------------------------------------------------- ------- -------
Financing Activities
Net change in short-term borrowings with original maturities
of three months or less (256) -
Issuance of other short-term borrowings 296 -
Repayment of other short-term borrowings (176) -
Issuance of long-term debt 9,182 2,565
Repayment of long-term debt (9,840) (4,911)
Purchase of treasury stock (189) (145)
Issuance of treasury stock 167 11
Dividends paid (3,714) (3,070)
Other 109 2,048
----------------------------------------------------------------------- ------- -------
Net Cash Used in Financing Activities (4,421) (3,502)
----------------------------------------------------------------------- ------- -------
Net increase (decrease) in cash and cash equivalents and restricted
cash 1,230 (1,707)
Cash and cash equivalents and restricted cash beginning of year 5,400 50,932
----------------------------------------------------------------------- ------- -------
Cash and Cash Equivalents and Restricted Cash End of Period $ 6,630 $ 49,225
======================================================================= ======= =======
AT&T Inc.
Consolidated Supplementary Data
Dollars in millions except per share amounts
Unaudited First Quarter Percent
-------------------------
2019 2018 Change
-------------------------------------------------- ------- ------- ----------
Capital expenditures
Purchase of property and equipment $ 5,121$ 5,957 (14.0)%
Interest during construction 61 161 (62.1)%
-------------------------------------------------- ------- -------
Total Capital Expenditures $ 5,182$ 6,118 (15.3)%
--------------------------------------------------- ------- -------
Dividends Declared per Share $ 0.51$ 0.50 2.0%
End of Period Common Shares Outstanding (000,000) 7,297 6,148 18.7%
Debt Ratio 47.4% 52.6% (520) BP
Total Employees 262,290 249,240 5.2%
--------------------------------------------------- ------- ------- ------
Subscribers and connections in thousands
Unaudited First Quarter Percent
-------------------------
2019 2018 Change
-------------------------------------------------- ------- ------- ----------
Wireless Subscribers
Domestic 155,732 143,832 8.3%
Mexico 17,722 15,642 13.3%
-------------------------------------------------- ------- -------
Total Wireless Subscribers 173,454 159,474 8.8%
--------------------------------------------------- ------- -------
Video Connections
Domestic 23,891 25,394 (5.9)%
Latin America 13,584 13,573 0.1%
-------------------------------------------------- ------- -------
Total Video Connections 37,475 38,967 (3.8)%
--------------------------------------------------- ------- -------
Broadband Connections
IP 14,852 14,637 1.5%
DSL 885 1,138 (22.2)%
-------------------------------------------------- ------- -------
Total Broadband Connections 15,737 15,775 (0.2)%
--------------------------------------------------- ------- -------
Voice Connections
Network Access Lines 9,576 11,288 (15.2)%
U-verse VoIP Connections 4,935 5,585 (11.6)%
-------------------------------------------------- ------- -------
Total Retail Voice Connections 14,511 16,873 (14.0)%
=================================================== ======= ======= ======
First Quarter Percent
-------------------------
2019 2018 Change
-------------------------------------------------- ------- ------- ----------
Wireless Net Additions
Domestic 2,727 2,630 3.7%
Mexico 93 543 (82.9)%
-------------------------------------------------- ------- -------
Total Wireless Net Additions 2,820 3,173 (11.1)%
--------------------------------------------------- ------- -------
Video Net Additions
Domestic (626) 124 -%
Latin America (32) (15) -%
-------------------------------------------------- ------- -------
Total Video Net Additions (658) 109 -%
--------------------------------------------------- ------- -------
Broadband Net Additions
IP 100 150 (33.3)%
DSL (64) (94) 31.9%
-------------------------------------------------- ------- -------
Total Broadband Net Additions 36 56 (35.7)%
--------------------------------------------------- ------- ------- ------
COMMUNICATIONS SEGMENT
The Communications segment provides wireless and wireline telecom, video and
broadband services to consumers located in the U.S. or in U.S. territories and
businesses globally. The Communications segment contains three reporting units:
Mobility, Entertainment Group, and Business Wireline.
Dollars in millions
Unaudited First Quarter Percent
----------------------------
2019 2018 Change
------------------------------------------------- ---- -------- --- ------- ------------
Segment Operating Revenues
Mobility $ 17,567 $ 17,355 1.2 %
Entertainment Group 11,328 11,431 (0.9)%
Business Wireline 6,498 6,747 (3.7) %
------------------------------------------------- ---- -------- --- -------
Total Segment Operating Revenues 35,393 35,533 (0.4)%
================================================== ==== ======== === =======
Segment Operating Contribution
Mobility 5,351 5,158 3.7 %
Entertainment Group 1,478 1,309 12.9%
Business Wireline 1,223 1,560 (21.6) %
------------------------------------------------- ---- -------- --- -------
Total Segment Operating Contribution $ 8,052 $ 8,027 0.3%
================================================== ==== ======== === =======
Mobility
Mobility provides nationwide wireless service and equipment.
Dollars in millions
Unaudited First Quarter Percent
------------------------------
2019 2018 Change
------------------------------------------ --- ------- --- ------- -----------
Operating Revenues
Service $ 13,792 $ 13,403 2.9%
Equipment 3,775 3,952 (4.5)%
------------------------------------------- --- ------- --- -------
Total Operating Revenues 17,567 17,355 1.2%
------------------------------------------- --- ------- --- -------
Operating Expenses
Operations and support 10,181 10,102 0.8%
Depreciation and amortization 2,035 2,095 (2.9) %
------------------------------------------- --- ------- --- -------
Total Operating Expenses 12,216 12,197 0.2%
------------------------------------------- --- ------- --- -------
Operating Income 5,351 5,158 3.7 %
Equity in Net Income (Loss) of Affiliates - - -%
------------------------------------------- --- ------- --- -------
Operating Contribution $ 5,351$ 5,158 3.7 %
=========================================== === ======= =======
Operating Income Margin 30.5% 29.7% 80 BP
------------------------------------------- --- ------- ------- ------ ---
Subscribers and connections in thousands
Unaudited First Quarter Percent
------------------------------
2019 2018 Change
------------------------------------------ --- ------- --- ------- -----------
Mobility Subscribers
Postpaid 76,550 77,431 (1.1)%
Prepaid 17,180 15,671 9.6%
Reseller 7,574 9,002 (15.9)%
Connected Devices 54,428 41,728 30.4%
------------------------------------------- --- ------- --- -------
Total Mobility Subscribers 155,732 143,832 8.3%
=========================================== === ======= === =======
First Quarter Percent
------------------------------
2019 2018 Change
------------------------------------------ --- ------- --- ------- -----------
Mobility Net Additions
Postpaid (204) 49 -%
Prepaid 96 241 (60.2)%
Reseller (253) (388) 34.8%
Connected Devices 3,088 2,728 13.2%
------------------------------------------- --- ------- --- -------
Total Mobility Net Additions 2,727 2,630 3.7%
=========================================== === ======= === =======
Postpaid Churn 1.17% 1.06% 11 BP
Postpaid Phone-Only Churn 0.93% 0.84% 9 BP
------------------------------------------- --- ------- ------- ------ ---
Entertainment Group
Entertainment Group provides video, including over-the-top (OTT) services,
broadband and voice communication services primarily to residential customers.
This business unit also sells advertising on video distribution platforms.
Dollars in millions
Unaudited First Quarter Percent
-----------------------------------------------------------------
2019 2018 Change
---------------------- --------- ------------------ --------- ---------------- ----- --------------------
Operating Revenues
Video
entertainment $ 8,074 $ 8,225 (1.8) %
High-speed
internet 2,070 1,878 10.2 %
Legacy voice and
data services 683 806 (15.3) %
Other service
and equipment 501 522 (4.0) %
----------------------- --------- ------------------ --------- ---------------- -----
Total Operating
Revenues 11,328 11,431 (0.9) %
----------------------- --------- ------------------ --------- ---------------- -----
Operating Expenses
Operations and support 8,527 8,811 (3.2) %
Depreciation and
amortization 1,323 1,310 1.0 %
----------------------- --------- ------------------ --------- ---------------- -----
Total Operating
Expenses 9,850 10,121 (2.7) %
----------------------- --------- ------------------ --------- ---------------- -----
Operating Income 1,478 1,310 12.8 %
Equity in Net Income
(Loss) of Affiliates - (1) - %
----------------------- --------- ------------------ --------- ---------------- -----
Operating Contribution $ 1,478 $ 1,309 12.9 %
======================= ========= ================== ========= ================ =====
Operating Income Margin 13.0% 11.5% 150 BP
----------------------- --------- ------------------ -------- ---------------- ---- ----------------
Subscribers and
connections in
thousands
Unaudited First Quarter Percent
-----------------------------------------------------------------
2019 2018 Change
---------------------- --------- ------------------ --------- ---------------- ----- --------------------
Video Connections 1
Premium TV 22,359 23,902 (6.5) %
DIRECTV NOW 1,508 1,467 2.8 %
----------------------- --------- ------------------ --------- ---------------- -----
Total Video Connections 23,867 25,369 (5.9) %
----------------------- --------- ------------------ --------- ---------------- -----
Broadband Connections 1
IP 13,822 13,616 1.5 %
DSL 632 816 (22.5) %
----------------------- --------- ------------------ --------- ---------------- -----
Total Broadband
Connections 14,454 14,432 0.2 %
----------------------- --------- ------------------ --------- ---------------- -----
Voice Connections
Retail Consumer
Switched Access
Lines 3,787 4,535 (16.5) %
U-verse Consumer
VoIP
Connections 4,393 5,105 (13.9) %
----------------------- --------- ------------------ --------- ---------------- -----
Total Retail Consumer
Voice Connections 8,180 9,640 (15.1) %
======================= ========= ================== ========= ================ ===== ================
First Quarter Percent
-----------------------------------------------------------------
2019 2018 Change
---------------------- --------- ------------------ --------- ---------------- ----- --------------------
Video Net Additions 1,2
Premium TV (544) (187) - %
DIRECTV NOW (83) 312 - %
----------------------- --------- ------------------ --------- ---------------- -----
Total Video Net
Additions (627) 125 - %
----------------------- --------- ------------------ --------- ---------------- -----
Broadband Net Additions
1
IP 93 154 (39.6) %
DSL (48) (72) 33.3 %
----------------------- --------- ------------------ --------- ---------------- -----
Total Broadband Net
Additions 45 82 (45.1) %
----------------------- --------- ------------------ --------- ---------------- -----
1 2019 includes the impact of conforming our subscriber disconnection policy
with that of our wireless business and industry
practice (to billing cycle basis), resulting in 117 additional video and 38
additional broadband subscribers at March 31, 2019.
2 Includes the impact of customers that migrated to DIRECTV NOW.
Business Wireline
Business Wireline unit provides advanced IP-based services, as well as traditional
data services to business customers. Revenues have been recast to conform to
the current period's presentation.
Dollars in millions
Unaudited First Quarter Percent
------------------------------
2019 2018 Change
---------------------------------------------------- ---- ------- --- ------ ------------
Operating Revenues
Strategic and managed services $ 3,792 $ 3,595 5.5 %
Legacy voice and data services 2,404 2,865 (16.1)%
Other service and equipment 302 287 5.2 %
--------------------------------------------------- ---- ------- --- ------
Total Operating Revenues 6,498 6,747 (3.7)%
---------------------------------------------------- ---- ------- --- ------
Operating Expenses
Operations and support 4,040 4,016 0.6 %
Depreciation and amortization 1,235 1,170 5.6%
---------------------------------------------------- ---- ------- --- ------
Total Operating Expenses 5,275 5,186 1.7 %
---------------------------------------------------- ---- ------- --- ------
Operating Income 1,223 1,561 (21.7)%
Equity in Net Income (Loss) of Affiliates - (1) - %
---------------------------------------------------- ---- ------- --- ------
Operating Contribution $ 1,223$ 1,560 (21.6)%
==================================================== ==== ======= ======
Operating Income Margin 18.8% 23.1% (430) BP
---------------------------------------------------- ---- ------- ------ ------- ---
Business Solutions
As a supplemental presentation to our Communications segment operating results,
we are providing a view of our AT&T Business Solutions results which includes
both wireless and fixed operations. This combined view presents a complete
profile of the entire business customer relationship and underscores the importance
of mobile solutions to serving our business customers. Revenues have been recast
to conform to the current period's presentation.
Dollars in millions
Unaudited First Quarter Percent
------------------------------
2019 2018 Change
------------------------------------------------------- --- ------- --- ------- -----------
Operating Revenues
Wireless service $ 1,913 $ 1,791 6.8 %
Strategic and managed services 3,792 3,595 5.5%
Legacy voice and data services 2,404 2,865 (16.1) %
Other service and equipment 302 287 5.2%
Wireless equipment 596 578 3.1 %
------------------------------------------------------ --- ------- --- -------
Total Operating Revenues 9,007 9,116 (1.2)%
------------------------------------------------------- --- ------- --- -------
Operating Expenses
Operations and support 5,640 5,594 0.8 %
Depreciation and amortization 1,541 1,458 5.7%
------------------------------------------------------- --- ------- --- -------
Total Operating Expenses 7,181 7,052 1.8 %
------------------------------------------------------- --- ------- --- -------
Operating Income 1,826 2,064 (11.5)%
Equity in Net Income (Loss) of Affiliates - (1) - %
------------------------------------------------------- --- ------- --- -------
Operating Contribution $ 1,826$ 2,063 (11.5)%
======================================================= === ======= =======
Operating Income Margin 20.3% 22.6% (230) BP
------------------------------------------------------- --- ------- ------- -------
W ARNER M EDIA SEGMENT
The WarnerMedia segment develops, produces and distributes feature films, television,
gaming and other content in various physical and digital formats globally. Results
from Turner, Home Box Office and Warner Bros. businesses are combined with AT&T's
Regional Sports Network (RSN) and Otter Media Holdings in the WarnerMedia segment.
Dollars in millions
Unaudited First Quarter Percent
--------------------------------
2019 2018 Change
----------------------------------------------------------- ----- ------- ----- ----- ---------
Operating Revenues
Subscription $ 3,369 $ 98 - %
Advertising 1,279 14 -%
Content and other 3,731 - - %
---------------------------------------------------------- ----- ------- ----- -----
Total Operating Revenues 8,379 112 -%
----------------------------------------------------------- ----- ------- ----- -----
Operating Expenses
Operations and support 5,993 82 - %
Depreciation and amortization 143 1 -%
----------------------------------------------------------- ----- ------- ----- -----
Total Operating Expenses 6,136 83 - %
----------------------------------------------------------- ----- ------- ----- -----
Operating Income 2,243 29 -%
Equity in Net Income (Loss) of Affiliates 67 10 - %
----------------------------------------------------------- ----- ------- ----- -----
Operating Contribution $ 2,310$ 39 -%
=========================================================== ===== ======= ==== =====
Operating Income Margin 26.8% 25.9% 90 BP
----------------------------------------------------------- ----- ------- ---- ----- ---- ---
LATIN AMERICA SEGMENT
The Latin America segment provides entertainment and wireless service outside
of the U.S. Our international subsidiaries conduct business in their local currency
and operating results are converted to U.S. dollars using official exchange
rates. The Latin America segment contains two business units: Vrio and Mexico.
Dollars in millions
Unaudited First Quarter Percent
-------------------------
2019 2018 Change
------------------------------------------------------ ------- ---- ------ --------------
Segment Operating Revenues
Vrio $ 1,067 $ 1,354 (21.2) %
Mexico 651 671 (3.0)%
------------------------------------------------------ ------- ---- ------
Total Segment Operating Revenues 1,718 2,025 (15.2) %
======================================================= ======= ==== ======
Segment Operating Contribution
Vrio 32 148 (78.4)%
Mexico (205) (259) 20.8 %
------------------------------------------------------ ------- ---- ------
Total Segment Operating Contribution $ (173) $ (111) (55.9)%
======================================================= ======= ==== ======
Vrio
Vrio provides entertainment services to customers utilizing satellite technology
in Latin America and the Caribbean.
Dollars in millions
Unaudited First Quarter Percent
-------------------------------------------------------------
2019 2018 Change
-------------------- ------ ------------------ ------ ------------------ ----- ----------------------------
Operating
Revenues $ 1,067$ 1,354 (21.2) %
--------------------- ------ ------------------ ----- ------------------ -----
Operating Expenses
Operations and
support 866 1,001 (13.5)%
Depreciation and
amortization 169 205 (17.6) %
--------------------- ------ ------------------ ------ ------------------ -----
Total Operating
Expenses 1,035 1,206 (14.2)%
--------------------- ------ ------------------ ------ ------------------ -----
Operating Income 32 148 (78.4) %
Equity in Net Income - - -%
of Affiliates
--------------------- ------ ------------------ ------ ------------------ -----
Operating
Contribution $ 32$ 148 (78.4) %
===================== ====== ================== ===== ================== =====
Operating Income
Margin 3.0% 10.9% (790) BP
--------------------- ------ ------------------ ----- ------------------ ---- ------------------ --------
Subscribers and
connections in
thousands
Unaudited First Quarter Percent
-------------------------------------------------------------
2019 2018 Change
-------------------- ------ ------------------ ------ ------------------ ----- ----------------------------
Vrio Video
Subscribers 1 13,584 13,573 0.1 %
===================== ====== ================== ====== ================== =====
First Quarter Percent
-------------------------------------------------------------
2019 2018 Change
-------------------- ------ ------------------ ------ ------------------ ----- ----------------------------
Vrio Video Net
Subscriber Additions (32) (15) - %
===================== ====== ================== ====== ================== ===== ================== ========
1 2019 excludes the impact of 222 subscriber disconnections resulting from conforming
our video credit policy across the region, which is
reflected in beginning of period subscribers.
Mexico
Mexico provides wireless services and equipment to customers in Mexico.
Dollars in millions
Unaudited First Quarter Percent
-----------------------------------------------------------
2019 2018 Change
------------------------ --- ------------------ ------ ------------------ ------ ---------------------------
Operating Revenues
Wireless service $ 442$ 404 9.4 %
Wireless
equipment 209 267 (21.7)%
------------------------ --- ------------------ ------ ------------------ ------
Total Operating
Revenues 651 671 (3.0) %
------------------------ --- ------------------ ------ ------------------ ------
Operating Expenses
Operations and support 725 803 (9.7)%
Depreciation and
amortization 131 127 3.1 %
------------------------ --- ------------------ ------ ------------------ ------
Total Operating
Expenses 856 930 (8.0)%
------------------------ --- ------------------ ------ ------------------ ------
Operating Income (Loss) (205) (259) 20.8 %
Equity in Net Income of - - -%
Affiliates
------------------------ --- ------------------ ------ ------------------ ------
Operating Contribution $ (205)$ (259) 20.8 %
======================== === ================== ===== ================== ======
Operating Income Margin (31.5)% (38.6)% 710 BP
------------------------ --- ------------------ ----- ------------------ ----- ----------------- --------
Subscribers and
connections in thousands
Unaudited First Quarter Percent
-----------------------------------------------------------
2019 2018 Change
------------------------ --- ------------------ ------ ------------------ ------ ---------------------------
Mexico Wireless
Subscribers 1
Postpaid 5,642 5,607 0.6 %
Prepaid 11,779 9,857 19.5%
Reseller 301 178 69.1 %
------------------------ --- ------------------ ------ ------------------ ------
Total Mexico Wireless
Subscribers 17,722 15,642 13.3%
======================== === ================== ====== ================== ======
First Quarter Percent
-----------------------------------------------------------
2019 2018 Change
------------------------ --- ------------------ ------ ------------------ ------ ---------------------------
Mexico Wireless Net
Additions
Postpaid (69) 109 - %
Prepaid 114 459 (75.2)%
Reseller 48 (25) - %
------------------------ --- ------------------ ------ ------------------ ------
Total Mexico Wireless
Net Subscriber
Additions 93 543 (82.9)%
======================== === ================== ====== ================== ====== ================= =======
1 2019 excludes the impact of 692 subscriber disconnections resulting from the
churn of customers related to sales by certain third-party
distributors and the sunset of 2G services in Mexico, which are reflected in
beginning of period subscribers.
XANDR SEGMENT
The Xandr segment provides advertising services. These services utilize data
insights to develop higher value targeted advertising. Certain revenues in
this segment are also reported by the Communications segment and are eliminated
upon consolidation.
Dollars in millions
Unaudited First Quarter Percent
----------------------------
2019 2018 Change
------------------------------------------------ ----- ---- ----- ---- ---------------
Segment Operating Revenues $ 426 $ 337 26.4 %
Segment Operating Expenses
Operations and support 160 50 -%
Depreciation and amortization 13 1 - %
------------------------------------------------ ----- ---- ----- ----
Total Segment Operating Expenses 173 51 -%
------------------------------------------------ ----- ---- ----- ----
Operating Income 253 286 (11.5) %
Equity in Net Income of Affiliates - - -%
------------------------------------------------ ----- ---- ----- ----
Segment Operating Contribution $ 253 $ 286 (11.5) %
================================================ ===== ==== ===== ====
Segment Operating Income Margin 59.4 % 84.9 % (2,550) BP
------------------------------------------------ ----- ---- ----- ---- --------- ----
Supplemental AT&T Advertising Revenues
As a supplemental presentation to our Xandr segment operating results, we are
providing a view of total advertising revenues generated by AT&T, which combines
the advertising revenues recorded across all operating segments. This combined
view presents the entire portfolio of revenues generated from AT&T assets and
represents a significant strategic initiative and growth opportunity for AT&T.
Dollars in millions
Unaudited First Quarter Percent
---------------------------
2019 2018 Change
-------------------------------------------------- --------- -------- -------------
Operating Revenues
WarnerMedia $ 1,279 $ 14 - %
Communications 417 375 11.2%
Xandr 426 337 26.4 %
Eliminations (350) (334) (4.8)%
-------------------------------------------------- --------- --------
Total Advertising Revenues $ 1,772 $ 392 - %
=================================================== ========= ========
SUPPLEMENTAL SEGMENT RECONCILIATION
Dollars in millions
Unaudited
March 31, 2019
--------------------- -------- ---------- ------ ------------ --------- ---------- -------------
Equity
in Net
Operations Income
and Depreciation Operating (Loss)
Support and Income of Segment
Revenues Expenses EBITDA Amortization (Loss) Affiliates Contribution
--------------------- -------- ---------- ------ ------------ --------- ---------- -------------
Communications
Mobility $ 17,567 $ 10,181 $ 7,386 $ 2,035 $ 5,351 $ - $ 5,351
Entertainment
Group 11,328 8,527 2,801 1,323 1,478 - 1,478
Business Wireline 6,498 4,040 2,458 1,235 1,223 - 1,223
--------------------- -------- ---------- ------ ------------ --------- ---------- -------------
Total Communications 35,393 22,748 12,645 4,593 8,052 - 8,052
--------------------- -------- ---------- ------ ------------ --------- ---------- -------------
WarnerMedia 8,379 5,993 2,386 143 2,243 67 2,310
--------------------- -------- ---------- ------ ------------ --------- ---------- -------------
Latin America
Vrio 1,067 866 201 169 32 - 32
Mexico 651 725 (74) 131 (205) - (205)
--------------------- -------- ---------- ------ ------------ --------- ---------- -------------
Total Latin America 1,718 1,591 127 300 (173) - (173)
--------------------- -------- ---------- ------ ------------ --------- ---------- -------------
Xandr 426 160 266 13 253 - 253
--------------------- -------- ---------- ------ ------------ --------- ---------- -------------
Segment Total 45,916 30,492 15,424 5,049 10,375 $ 67 $ 10,442
===================== ======== ========== ====== ============ ========= ========== =============
Corporate and
Other
Corporate 209 513 (304) 169 (473)
Acquisition-related
items (42) 73 (115) 1,988 (2,103)
Certain significant
items - 248 (248) - (248)
Eliminations
and consolidations (1,256) (938) (318) - (318)
--------------------- -------- ---------- ------ ------------ ---------
AT&T Inc. $ 44,827 $ 30,388 $14,439 $ 7,206 $ 7,233
===================== ======== ========== ====== ============ =========
March 31, 2018
--------------------- -------- ---------- ------ ------------ --------- ---------- -------------
Equity
in Net
Operations Income
and Depreciation Operating (Loss)
Support and Income of Segment
Revenues Expenses EBITDA Amortization (Loss) Affiliates Contribution
--------------------- -------- ---------- ------ ------------ --------- ---------- -------------
Communications
Mobility $ 17,355 $ 10,102 $ 7,253 $ 2,095 $ 5,158 $ - $ 5,158
Entertainment
Group 11,431 8,811 2,620 1,310 1,310 (1) 1,309
Business Wireline 6,747 4,016 2,731 1,170 1,561 (1) 1,560
--------------------- -------- ---------- ------ ------------ --------- ---------- -------------
Total Communications 35,533 22,929 12,604 4,575 8,029 (2) 8,027
--------------------- -------- ---------- ------ ------------ --------- ---------- -------------
WarnerMedia 112 82 30 1 29 10 39
--------------------- -------- ---------- ------ ------------ --------- ---------- -------------
Latin America
Vrio 1,354 1,001 353 205 148 - 148
Mexico 671 803 (132) 127 (259) - (259)
--------------------- -------- ---------- ------ ------------ --------- ---------- -------------
Total Latin America 2,025 1,804 221 332 (111) - (111)
--------------------- -------- ---------- ------ ------------ --------- ---------- ------------- Xandr 337 50 287 1 286 - 286 --------------------- -------- ---------- ------ ------------ --------- ---------- ------------- Segment Total 38,007 24,865 13,142 4,909 8,233 $ 8 $ 8,241 ===================== ======== ========== ====== ============ ========= ========== ============= Corporate and Other Corporate 333 735 (402) 23 (425) Acquisition-related items - 67 (67) 1,062 (1,129) Certain significant items - 180 (180) - (180) Eliminations and consolidations (302) (4) (298) - (298) --------------------- -------- ---------- ------ ------------ --------- AT&T Inc. $ 38,038 $ 25,843 $12,195 $ 5,994 $ 6,201 ===================== ======== ========== ====== ============ =========
Discussion and Reconciliation of Non-GAAP Measures
We believe the following measures are relevant and useful information to 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 AT&T and its segments. Management also uses these measures as a method of comparing performance with that of many of our competitors. These measures should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance with US generally accepted accounting principles (GAAP).
Free Cash Flow
Free cash flow is defined as cash from operations minus capital expenditures. Free cash flow after dividends is defined as cash from operations minus capital expenditures and dividends. Free cash flow dividend payout ratio is defined as the percentage of dividends paid to free cash flow. We believe these metrics provide useful information to our investors because management views free cash flow as an important indicator of how much cash is generated by routine 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.
Free Cash Flow and Free Cash Flow Dividend Payout Ratio
Dollars in millions
First Quarter
---------------------
2019 2018
------------------------------------------ --- ------- --- -------
Net cash provided by operating activities $ 11,052 $ 8,947
Less: Capital expenditures (5,182) (6,118)
------------------------------------------ --- ------- --- -------
Free Cash Flow 5,870 2,829
------------------------------------------ --- ------- --- -------
Less: Dividends paid (3,714) (3,070)
------------------------------------------ --- ------- --- -------
Free Cash Flow after Dividends $ 2,156 $ (241)
------------------------------------------ --- ------- --- -------
Free Cash Flow Dividend Payout Ratio 63.3% 108.5%
------------------------------------------ --- ------- --- -------
Cash Paid for Capital Investment
In connection with capital improvements, we negotiate with some of our vendors to obtain favorable payment terms of 120 days or more, referred to as vendor financing, which are excluded from capital expenditures and reported in accordance with GAAP as financing activities. We present an additional view of cash paid for capital investment to provide investors with a comprehensive view of cash used to invest in our networks, product developments and support systems.
Cash Paid for Capital Investment
Dollars in millions
First Quarter
---------------------
2019 2018
--------------------------------- ------- ---
Capital Expenditures $(5,182) $ (6,118)
Cash paid for vendor financing (820) (172)
--------------------------------- ------- --- -------
Cash paid for Capital Investment $(6,002) $ (6,290)
--------------------------------- ------- --- -------
1
EBITDA
Our calculation of EBITDA, as presented, may differ from similarly titled measures reported by other companies. For AT&T, EBITDA excludes other income (expense) - net, and equity in net income (loss) of affiliates, as these do not reflect the operating results of our subscriber base or operations that are not under our control. 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, management excludes these results when evaluating the performance of our primary operations. EBITDA also excludes interest expense and the provision for income taxes. Excluding these items eliminates the expenses associated with our capital and tax structures. Finally, EBITDA excludes depreciation and amortization in order to eliminate the impact of capital investments. 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 U.S. generally accepted accounting principles (GAAP).
EBITDA service margin is calculated as EBITDA divided by service revenues.
When discussing our segment, business unit and supplemental results, EBITDA excludes equity in net income (loss) of affiliates, and depreciation and amortization from operating contribution.
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 operating 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 management is responsible and upon which we evaluate performance.
We believe EBITDA Service Margin (EBITDA as a percentage of service revenues) to be a more relevant measure than EBITDA Margin (EBITDA as a percentage of total revenue) for our Mobility business unit operating margin. 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, EBITDA margin 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. 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, EBITDA margin 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.
EBITDA, EBITDA Margin and EBITDA Service Margin
Dollars in millions
First Quarter
--------------------
2019 2018
-------------------------------------------- ------ --- -------
Net Income $ 4,348 $ 4,759
Additions:
Income Tax (Benefit) Expense 1,023 1,382
Interest Expense 2,141 1,771
Equity in Net (Income) Loss of Affiliates 7 (9)
Other (Income) Expense - Net (286) (1,702)
Depreciation and amortization 7,206 5,994
-------------------------------------------- ------ --- -------
EBITDA 14,439 12,195
-------------------------------------------- ------ --- -------
Total Operating Revenues 44,827 38,038
Service Revenues 40,684 33,646
EBITDA Margin 32.2% 32.1%
EBITDA Service Margin 35.5% 36.2%
-------------------------------------------- ------ --- -------
2
Segment and Business Unit EBITDA, EBITDA Margin and EBITDA Service Margin
Dollars in millions
First Quarter
----------------------
2019 2018
------------------------------------------------------ -------- --- -------
Communications Segment
------------------------------------------------------ -------- --- -------
Operating Contribution $ 8,052 $ 8,027
Additions:
Equity in Net (Income) Loss of Affiliates - 2
Depreciation and amortization 4,593 4,575
------------------------------------------------------ -------- --- -------
EBITDA 12,645 12,604
------------------------------------------------------ -------- --- -------
Total Operating Revenues 35,393 35,533
Operating Income Margin 22.8% 22.6%
EBITDA Margin 35.7% 35.5%
Mobility
Operating Contribution $ 5,351 $ 5,158
Additions:
Depreciation and amortization 2,035 2,095
------------------------------------------------------ -------- --- -------
EBITDA 7,386 7,253
------------------------------------------------------ -------- --- -------
Total Operating Revenues 17,567 17,355
Service Revenues 13,792 13,403
Operating Income Margin 30.5% 29.7%
EBITDA Margin 42.0% 41.8%
EBITDA Service Margin 53.6% 54.1%
Entertainment Group
Operating Contribution $ 1,478 $ 1,309
Additions:
Equity in Net (Income) Loss of Affiliates - 1
Depreciation and amortization 1,323 1,310
------------------------------------------------------ -------- --- -------
EBITDA 2,801 2,620
------------------------------------------------------ -------- --- -------
Total Operating Revenues 11,328 11,431
Operating Income Margin 13.0% 11.5%
EBITDA Margin 24.7% 22.9%
Business Wireline
Operating Contribution $ 1,223 $ 1,560
Additions:
Equity in Net (Income) Loss of Affiliates - 1
Depreciation and amortization 1,235 1,170
------------------------------------------------------ -------- --- -------
EBITDA 2,458 2,731
------------------------------------------------------ -------- --- -------
Total Operating Revenues 6,498 6,747
Operating Income Margin 18.8% 23.1%
EBITDA Margin 37.8% 40.5%
------------------------------------------------------ -------- --- -------
3
Segment and Business Unit EBITDA, EBITDA Margin and EBITDA Service Margin
Dollars in millions
First Quarter
----------------------
2019 2018
------------------------------------------------------ ------- ---- -------
WarnerMedia Segment
Operating Contribution $ 2,310 $ 39
Additions:
Equity in Net (Income) of Affiliates (67) (10)
Depreciation and amortization 143 1
------------------------------------------------------ ------- ---- -------
EBITDA 2,386 30
------------------------------------------------------ ------- ---- -------
Total Operating Revenues 8,379 112
Operating Income Margin 26.8% 25.9%
EBITDA Margin 28.5% 26.8%
Segment and Business Unit EBITDA, EBITDA Margin and EBITDA Service Margin
Dollars in millions
First Quarter
---------------------------
2019 2018
------------------------------------------------- ---------- ---- ---------
Latin America Segment
------------------------------------------------- ---------- ---- ---------
Operating Contribution $ (173) $ (111)
Additions:
Depreciation and amortization 300 332
------------------------------------------------- ---------- ---- ---------
EBITDA 127 221
------------------------------------------------- ---------- ---- ---------
Total Operating Revenues 1,718 2,025
Operating Income Margin -10.1% -5.5%
EBITDA Margin 7.4% 10.9%
Vrio
Operating Contribution $ 32 $ 148
Additions:
Depreciation and amortization 169 205
------------------------------------------------- ---------- ---- ---------
EBITDA 201 353
------------------------------------------------- ---------- ---- ---------
Total Operating Revenues 1,067 1,354
Operating Income Margin 3.0% 10.9%
EBITDA Margin 18.8% 26.1%
Mexico
Operating Contribution $ (205) $ (259)
Additions:
Depreciation and amortization 131 127
------------------------------------------------- ---------- ---- ---------
EBITDA (74) (132)
------------------------------------------------- ---------- ---- ---------
Total Operating Revenues 651 671
Operating Income Margin -31.5% -38.6%
EBITDA Margin -11.4% -19.7%
------------------------------------------------- ---------- ---- ---------
4
Segment EBITDA, EBITDA Margin and EBITDA Service Margin
Dollars in millions
First Quarter
-------------------
2019 2018
--------------------------------------- ------ --- ------
Xandr
--------------------------------------- ------ --- ------
Operating Contribution $ 253 $ 286
Additions:
Depreciation and amortization 13 1
--------------------------------------- ------ --- ------
EBITDA 266 287
--------------------------------------- ------ --- ------
Total Operating Revenues 426 337
Operating Income Margin 59.4% 84.9%
EBITDA Margin 62.4% 85.2%
--------------------------------------- ------ --- ------
Adjusting Items
Adjusting items include revenues and costs we consider non-operational in nature, such as items arising from asset acquisitions or dispositions. We also adjust for net actuarial gains or losses associated with our pension and postemployment benefit plans due to the often significant impact on our fourth-quarter results, unless earlier remeasurement is required (we immediately recognize this gain or loss in the income statement, pursuant to our accounting policy for the recognition of actuarial gains and losses). Consequently, our adjusted results reflect an expected return on plan assets rather than the actual return on plan assets, as included in the GAAP measure of income.
The tax impact of adjusting items is calculated using the effective tax rate during the quarter except for adjustments that, given their magnitude, can drive a change in the effective tax rate, reflect the actual tax expense or combined marginal rate of approximately 25% for transactions after tax reform.
Adjusting Items
Dollars in millions
First Quarter
-------------------
2019 2018
-------------------------------------------------------------------- ------ -----
Operating Revenues
Time Warner merger adjustment $ 42 $ -
Adjustments to Operating Revenues 42 -
------ -----
Operating Expenses
Time Warner and other merger costs 73 67
Employee separation costs 248 51
Natural disaster costs - 104
Foreign currency exchange - 25
-------------------------------------------------------------------- ------ -----
Adjustments to Operations and Support Expenses 321 247
-------------------------------------------------------------------- ------ -----
Amortization of intangible assets 1,989 1,062
Adjustments to Operating Expenses 2,310 1,309
------ -----
Other
Merger-related interest and fees 1 - 393
Special termination charges, debt redemption costs and other
adjustments 211 -
Actuarial (gain) loss 432 (930)
-------------------------------------------------------------------- ------ -----
Adjustments to Income Before Income Taxes 2,995 772
-------------------------------------------------------------------- ------ -----
Tax impact of adjustments 649 173
Tax-related items 141 -
-------------------------------------------------------------------- ------ -----
Adjustments to Net Income $ 2,205 $ 599
-------------------------------------------------------------------- ------ -----
1 Includes interest expense incurred on debt issued, redemption premiums and
interest income earned on cash held prior to the close of merger transactions.
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.
5
Adjusted Operating Revenues, Adjusted Operating Income, Adjusted Operating Income Margin, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBITDA service margin and 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. AT&T's calculation of Adjusted items, as presented, may differ from similarly titled measures reported by other companies.
Adjusted Operating Income, Adjusted Operating Income Margin,
Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted EBITDA Service Margin
Dollars in millions
First Quarter
---------------------
2019 2018
--------------------------------------------------------- ------- --- -------
Operating Income $ 7,233 $ 6,201
Adjustments to Operating Revenues 42 -
Adjustments to Operating Expenses 2,310 1,309
--------------------------------------------------------- ------- --- -------
Adjusted Operating Income 9,585 7,510
--------------------------------------------------------- ------- --- -------
EBITDA 14,439 12,195
Adjustments to Operating Revenues 42 -
Adjustments to Operations and Support Expenses 321 247
--------------------------------------------------------- ------- --- -------
Adjusted EBITDA 14,802 12,442
--------------------------------------------------------- ------- --- -------
Total Operating Revenues 44,827 38,038
Adjustments to Operating Revenues 42 -
--------------------------------------------------------- ------- --- -------
Total Adusted Operating Revenue 44,869 38,038
--------------------------------------------------------- ------- --- -------
Service Revenues 40,684 33,646
Adjustments to Service Revenues 42 -
--------------------------------------------------------- ------- --- -------
Adusted Service Revenue 40,726 33,646
--------------------------------------------------------- ------- --- -------
Operating Income Margin 16.1% 16.3%
Adjusted Operating Income Margin 21.4% 19.7%
Adjusted EBITDA Margin 33.0% 32.7%
Adjusted EBITDA Service Margin 36.3% 37.0%
Adjusted Diluted EPS
First Quarter
---------------------
2019 2018
-------------------------------------------------------------------- ------- --- -------
Diluted Earnings Per Share (EPS) $ 0.56 $ 0.75
Amortization of intangible assets 0.21 0.13
Merger integration items 1 0.01 0.06
(Gain) loss on sale of assets, impairments
and other adjustments 2 0.05 0.03
Actuarial (gain) loss 3 0.05 (0.12)
Tax-related items (0.02) -
-------------------------------------------------------------------- ------- --- -------
Adjusted EPS $ 0.86 $ 0.85
-------------------------------------------------------------------- ------- --- -------
Year-over-year growth - Adjusted 1.2%
-------------------------------------------------------------------- ------- --- -------
Weighted Average Common Shares Outstanding with Dilution
(000,000) 7,342 6,180
-------------------------------------------------------------------- ------- --- -------
1 Includes combined merger integration items and merger-related interest income
and expense, and redemption premiums.
2 Includes gains on transactions, natural disaster adjustments and charges,
and employee-related and other costs.
3 Includes adjustments for actuarial gains or losses ($432 million loss in the
first quarter of 2019) associated with our pension benefit plan, which we immediately
recognize in the income statement, pursuant to our accounting policy for the
recognition of actuarial gains/losses. As a result, adjusted EPS reflects an
expected return on plan assets of $816 million (based on an average expected
return on plan assets of 7.00% for our pension trust), rather than the actual
return on plan assets of $2.8 billion (actual return of 5.8% for the quarter),
included in the GAAP measure of income.
6
Pro Forma Net Debt to Adjusted EBITDA
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. Our Net Debt to Pro Forma Adjusted EBITDA ratio is calculated by dividing the Net Debt by the sum of the most recent four quarters Pro Forma Adjusted 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.
Net Debt to Pro Forma Adjusted EBITDA
Dollars in millions
Three Months Ended
-----------------------------------------------------
Jun. 30, Sep. 30, Dec. 31, Mar. 31, Four Quarters
-------------
2018 1 2018 1 2018 1 2019
---------------------------------- -------- --- -------- --- -------- --- -------- ---
Pro Forma Adjusted EBITDA 1,2 $ 15,119 $ 15,872 $ 15,029 $ 14,802 $ 60,822
Add back severance (133) (76) (327) - (536)
Net Debt Pro Forma Adjusted
EBITDA 14,986 15,796 14,702 14,802 60,286
End-of-period current debt 11,538
End-of-period long-term debt 163,942
Total End-of-Period Debt 175,480
Less: Cash and Cash Equivalents 6,516
Net Debt Balance 168,964
---------------------------------- -------- --- -------- --- -------- --- -------- --- -------------
Annualized Net Debt to Pro Forma Adjusted EBITDA
Ratio 2.80
------------------------------------------------------------ --- -------- --- -------- --- -------------
1 As reported in AT&T's Form 8-K filed July 24, 2018, October 24, 2018 and January
30, 2019.
2 Includes the purchase accounting reclassification of released content amortization
of $491 million pro forma and $98 million reported by AT&T in the second quarter
of 2018, $772 million reported in the third quarter of 2018, $545 million reported
by AT&T in the fourth quarter of 2018 and $150 million reported by AT&T in the
first quarter of 2019.
7
Supplemental Operational Measures
We provide a supplemental discussion of our business solutions operations that is calculated by combining our Mobility and Business Wireline operating units, and then adjusting to remove non-business operations. The following table presents a reconciliation of our supplemental Business Solutions results.
Supplemental Operational Measure
First Quarter
----------------------------------------------------------------------------------------------
March 31, 2019 March 31, 2018
--------------------------------------------- ----------------------------------------------
Business Adjustments Business Business Adjustments Business
Mobility Wireline 1 Solutions Mobility Wireline 1 Solutions
-------------- -------- -------- ----------- --------- -------- -------- ----------- ----------
Operating
Revenues
Wireless
service $ 13,792 $ - $ (11,879) $ 1,913 $ 13,403 $ - $ (11,612) $ 1,791
Strategic and
managed
services - 3,792 - 3,792 - 3,595 - 3,595
Legacy voice
and
data
services - 2,404 - 2,404 - 2,865 - 2,865
Other
services
and
equipment - 302 - 302 - 287 - 287
Wireless
equipment 3,775 - (3,179) 596 3,952 - (3,374) 578
-------------- -------- -------- ----------- --------- -------- -------- ----------- ----------
Total
Operating
Revenues 17,567 6,498 (15,058) 9,007 17,355 6,747 (14,986) 9,116
-------------- -------- -------- ----------- --------- -------- -------- ----------- ----------
Operations
and
support 10,181 4,040 (8,581) 5,640 10,102 4,016 (8,524) 5,594
EBITDA 7,386 2,458 (6,477) 3,367 7,253 2,731 (6,462) 3,522
Depreciation
and
amortization 2,035 1,235 (1,729) 1,541 2,095 1,170 (1,807) 1,458
-------------- -------- -------- ----------- --------- -------- -------- ----------- ----------
Total
Operating
Expenses 12,216 5,275 (10,310) 7,181 12,197 5,186 (10,331) 7,052
-------------- -------- -------- ----------- --------- -------- -------- ----------- ----------
Operating
Income 5,351 1,223 (4,748) 1,826 5,158 1,561 (4,655) 2,064
Equity in net
Income
of Affiliates - - - - - (1) - (1)
-------------- -------- -------- ----------- --------- -------- -------- ----------- ----------
Contribution $ 5,351 $ 1,223 $ (4,748) $ 1,826 $ 5,158 $ 1,560 $ (4,655) $ 2,063
-------------- -------- -------- ----------- --------- -------- -------- ----------- ----------
1 Non-business wireless reported in the Communication segment under the Mobility
business unit.
8
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END
QRFEALSNASDNEFF
(END) Dow Jones Newswires
May 29, 2019 11:01 ET (15:01 GMT)
1 Year At&t Inc 5.500% Chart |
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