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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 : 8227O
AT & T Inc.
23 August 2017
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) July 25, 2017
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 (IRS Employer Identification
of Incorporation) Number) 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 July 25, 2017, its results of operations for the second quarter of 2017. 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 July 25, 2017 reporting financial
results for the second quarter ended June 30, 2017.
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: July 25, 2017 By: /s/ Debra L. Dial
Debra L. Dial
Senior Vice President and Controller
AT&T Reports Second-Quarter Results
-- Consolidated revenues of $39.8 billion
-- Operating income of $7.3 billion
-- Net income attributable to AT&T of $3.9
billion
-- Diluted EPS of $0.63 as reported and $0.79
as adjusted, compared to $0.55 and $0.72
in the year-ago quarter
-- Cash from operations of $8.9 billion
-- Free cash flow of $3.7 billion
Company Maintains Full-Year Guidance
-- U.S. wireless results:
o Best-ever postpaid phone churn of 0.79%
o Total postpaid churn, including tablets, of 1.01%
o Growing operating income margin of 30.4% with
record-high EBITDA margins including best-ever
wireless service margin of 50.4%
-- 2.8 million wireless net adds
o 2.3 million U.S., driven by connected devices,
prepaid and postpaid
o 476,000 Mexico net adds
-- Entertainment Group results:
o 112,000 IP broadband net adds; 8,000 total broadband
net adds
o More than 5.5 million AT&T Fiber customer locations
passed
o Total video losses of 199,000 with DIRECTV NOW
gains helping offset traditional TV subscriber
decline; Total video subscribers essentially
flat year over year
-- International results:
o Revenues up 10.8% with favorable operating trends
o Continued revenue growth and margin improvement
in Mexico
Note: AT&T's second-quarter earnings conference call will be webcast at 4:30 p.m. ET on Tuesday, July 25, 2017. The webcast and related materials will be available on AT&T's Investor Relations website at https://investors.att.com .
DALLAS, July 25, 2017 - AT&T Inc. * ( NYSE:T ) reported strong adjusted earnings growth and margin expansion with lower expenses in the second quarter.
"Once again our team delivered expanded consolidated margins and, as a result, grew adjusted earnings per share by nearly 10% as we executed well against our business priorities," said Randall Stephenson, AT&T chairman and CEO. "And in a quarter where our competitors used promotions aggressively, we added more than 500,000 branded smartphones to our base and more than 100,000 IP broadband subscribers, achieved record EBITDA wireless margins and had the lowest postpaid phone churn in our history. We continue to expect the Time Warner deal to close by year - end and further transform the company . "
Consolidated Financial Results
AT&T's consolidated revenues for the second quarter totaled $39.8 billion versus $40.5 billion in the year-ago quarter, primarily due to declines in legacy wireline services and consumer mobility. Compared with results for the second quarter of 2016, operating expenses were $32.5 billion versus $34.0 billion; operating income was $7.3 billion versus $6.6 billion; and operating income margin was 18.4% versus 16.2%. When adjusting for amortization, merger- and integration-related expenses and other items, operating income was $8.6 billion versus $8.1 billion and operating income margin was 21.6%, up 150 basis points versus the year-ago quarter.
Second-quarter net income attributable to AT&T totaled $3.9 billion, or $0.63 per diluted share, compared with $3.4 billion, or $0.55 per diluted share, in the year-ago quarter. Adjusting for $0.16 of costs for amortization, merger- and integration-related expenses and other items, earnings per diluted share was $0.79 compared with an adjusted $0.72 in the year-ago quarter, up 9.7%.
Cash from operating activities was $8.9 billion in the second quarter and $18.2 billion year to date. Capital expenditures were $5.2 billion in the quarter and $11.2 billion year to date. Free cash flow - cash from operating activities minus capital expenditures - was $3.7 billion for the quarter and $6.9 billion year to date.
*About AT&T
AT&T Inc. ( NYSE:T ) helps millions around the globe connect with leading entertainment, business, mobile and high speed internet services. We offer the nation's best data network** and the best global coverage of any U.S. wireless provider. We're one of the world's largest providers of pay TV. We have TV customers in the U.S. and 11 Latin American countries. Nearly 3.5 million companies, from small to large businesses around the globe, turn to AT&T for our highly secure smart solutions.
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 about AT&T products and services is available at about.att.com . Follow our news on Twitter at @ATT, on Facebook at facebook.com/att and on YouTube at youtube.com/att .
(c) 2017 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.
**Claim based on the Nielsen Certified Data Network Score. Score includes data reported by wireless consumers in the Nielsen Mobile Insights survey, network measurements from Nielsen Mobile Performance and Nielsen Drive Test Benchmarks for Q4 2016 + Q1 2017 across 121 markets.
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 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 https://investors.att.com .
For more information, contact:
Fletcher Cook - AT&T Global Media Relations
Email: fletcher.cook@att.com
Phone: (214) 757-7629
Eric Ryan - AT&T Global Media Relations
Email: eric.ryan.1@att.com
Phone: (929) 273-8434
AT&T Inc.
Financial Data
Consolidated Statements of Income
------------------------------------------------------------------------------------
Dollars in millions
except Three Months Six Months
per share amounts Ended Ended
------------------
Unaudited June 30, Percent June 30, Percent
------------------ ------------------
2017 2016 Change 2017 2016 Change
--------------------- ------- ------- --------- ------- ------- ---------
Operating Revenues
Service $36,538 $37,142 -1.6% $72,994 $74,243 -1.7%
Equipment 3,299 3,378 -2.3% 6,208 6,812 -8.9%
---------------------- ------ ------ ------ ------
Total Operating
Revenues 39,837 40,520 -1.7% 79,202 81,055 -2.3%
---------------------- ------ ------ ------ ------
Operating Expenses
Cost of services
and sales
Equipment 4,138 4,260 -2.9% 7,986 8,635 -7.5%
Broadcast,
programming
and operations 4,898 4,701 4.2% 9,872 9,330 5.8%
Other cost of
services
(exclusive of
depreciation
and amortization
shown
separately below) 9,218 9,514 -3.1% 18,283 18,910 -3.3%
Selling, general
and administrative 8,113 8,909 -8.9% 16,600 17,350 -4.3%
Depreciation and
amortization 6,147 6,576 -6.5% 12,274 13,139 -6.6%
---------------------- ------ ------ ------ ------
Total Operating
Expenses 32,514 33,960 -4.3% 65,015 67,364 -3.5%
---------------------- ------ ------ ------ ------
Operating Income 7,323 6,560 11.6% 14,187 13,691 3.6%
---------------------- ------ ------ ------ ------
Interest Expense (1,395) (1,258) 10.9% (2,688) (2,465) 9.0%
Equity in Net Income
(Loss)
of Affiliates 14 28 -50.0% (159) 41 -%
Other Income (Expense)
- Net 128 91 40.7% 108 161 -32.9%
---------------------- ------ ------ ------ ------
Income Before Income
Taxes 6,070 5,421 12.0% 11,448 11,428 0.2%
Income Tax Expense 2,056 1,906 7.9% 3,860 4,028 -4.2%
---------------------- ------ ------ ------ ------
Net Income 4,014 3,515 14.2% 7,588 7,400 2.5%
---------------------- ------ ------ ------ ------
Less: Net Income
Attributable
to
Noncontrolling
Interest (99) (107) -7.5% (204) (189) 7.9%
---------------------- ------ ------ ------ ------
Net Income
Attributable
to AT&T $ 3,915 $ 3,408 14.9% $ 7,384 $ 7,211 2.4%
====================== ====== ====== ====== ======
Basic Earnings Per
Share
Attributable to AT&T $ 0.63 $ 0.55 14.5% $ 1.19 $ 1.17 1.7%
Weighted Average
Common
Shares Outstanding
(000,000) 6,165 6,174 -0.1% 6,166 6,173 -0.1%
Diluted Earnings Per
Share
Attributable to AT&T $ 0.63 $ 0.55 14.5% $ 1.19 $ 1.17 1.7%
Weighted Average
Common
Shares Outstanding
with
Dilution (000,000) 6,184 6,195 -0.2% 6,185 6,193 -0.1%
---------------------- ------ ------ ----- ------ ------ -----
AT&T Inc.
Financial Data
Consolidated Balance Sheets
---------------------------------------------------------------------------------
Dollars in millions
Jun. Dec.
Unaudited 30, 31,
2017 2016
-------------------------------------------------------- -------- --------
Assets
Current Assets
Cash and cash equivalents $ 25,617 $ 5,788
Accounts receivable - net of allowances for doubtful
accounts of $732 and $661 14,997 16,794
Prepaid expenses 1,371 1,555
Other current assets 11,562 14,232
--------------------------------------------------------- ------- -------
Total current assets 53,547 38,369
--------------------------------------------------------- ------- -------
Property, Plant and Equipment - Net 126,184 124,899
Goodwill 105,546 105,207
Licenses 95,864 94,176
Customer Lists and Relationships - Net 12,414 14,243
Other Intangible Assets - Net 7,980 8,441
Investments in Equity Affiliates 1,615 1,674
Other Assets 17,645 16,812
--------------------------------------------------------- ------- -------
Total Assets $420,795 $403,821
========================================================= ======= =======
Liabilities and Stockholders' Equity
Current Liabilities
Debt maturing within one year $ 10,831 $ 9,832
Accounts payable and accrued liabilities 26,471 31,138
Advanced billing and customer deposits 4,371 4,519
Accrued taxes 3,331 2,079
Dividends payable 3,008 3,008
--------------------------------------------------------- ------- -------
Total current liabilities 48,012 50,576
--------------------------------------------------------- ------- -------
Long-Term Debt 132,824 113,681
--------------------------------------------------------- ------- -------
Deferred Credits and Other Noncurrent Liabilities
Deferred income taxes 61,926 60,128
Postemployment benefit obligation 31,422 33,578
Other noncurrent liabilities 20,753 21,748
--------------------------------------------------------- ------- -------
Total deferred credits and other noncurrent liabilities 114,101 115,454
--------------------------------------------------------- ------- -------
Stockholders' Equity
Common stock 6,495 6,495
Additional paid-in capital 89,471 89,604
Retained earnings 36,067 34,734
Treasury stock (12,697) (12,659)
Accumulated other comprehensive income 5,389 4,961
Noncontrolling interest 1,133 975
--------------------------------------------------------- ------- -------
Total stockholders' equity 125,858 124,110
--------------------------------------------------------- ------- -------
Total Liabilities and Stockholders' Equity $420,795 $403,821
========================================================= ======= =======
AT&T Inc.
Financial Data
Consolidated Statements of Cash Flows
--------------------------------------------------------------------
Dollars in millions Six Months Ended
Unaudited June 30,
----------------------
2017 2016
------------------------------------------ --------- -----------
Operating Activities
Net income $ 7,588 $ 7,400
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and amortization 12,274 13,139
Undistributed loss (earnings)
from investments in equity affiliates 167 (22)
Provision for uncollectible
accounts 795 705
Deferred income tax expense 964 1,767
Net loss (gain) from sale of
investments, net of impairments 12 (85)
Actuarial loss (gain) on pension
and postretirement benefits (259) -
Changes in operating assets
and liabilities:
Accounts receivable 119 (364)
Other current assets 471 2,229
Accounts payable and other accrued
liabilities (2,761) (3,032)
Equipment installment receivables
and related sales 907 464
Deferred fulfillment costs (796) (1,190)
Retirement benefit funding (280) (280)
Other - net (1,041) (2,524)
-------------------------------------------- ------- -------
Total adjustments 10,572 10,807
-------------------------------------------- ------- -------
Net Cash Provided by Operating
Activities 18,160 18,207
-------------------------------------------- ------- -------
Investing Activities
Capital expenditures:
Purchase of property and equipment (10,750) (9,702)
Interest during construction (473) (437)
Acquisitions, net of cash acquired 1,224 (485)
Dispositions 51 107
Sales of securities, net - 500
-------------------------------------------- ------- -------
Net Cash Used in Investing Activities (9,948) (10,017)
-------------------------------------------- ------- -------
Financing Activities
Net change in short-term borrowings
with original maturities of
three months or less (2) -
Issuance of long-term debt 24,115 10,140
Repayment of long-term debt (6,118) (9,129)
Purchase of treasury stock (458) (197)
Issuance of treasury stock 24 119
Dividends paid (6,021) (5,899)
Other 77 (1,137)
-------------------------------------------- ------- -------
Net Cash Provided by (Used in)
Financing Activities 11,617 (6,103)
-------------------------------------------- ------- -------
Net increase in cash and cash
equivalents 19,829 2,087
Cash and cash equivalents beginning
of year 5,788 5,121
-------------------------------------------- ------- -------
Cash and Cash Equivalents End
of Period $ 25,617 $ 7,208
============================================ ======= =======
AT&T Inc.
Consolidated Supplementary Data
Supplementary Financial Data
--------------------------------------------------------------------------------------------
Dollars in millions
except Three Months Six Months
per share amounts Ended Ended
Unaudited June 30, Percent June 30, Percent
---------------- --------------------------
2017 2016 Change 2017 2016 Change
------------------------ ------ ------ --------- -------- -------- ---------
Capital expenditures
Purchase of property
and equipment $4,966 $5,251 -5.4% $ 10,750 $ 9,702 10.8%
Interest during
construction $ 242 $ 219 10.5% $ 473 $ 437 8.2%
Dividends Declared per
Share $ 0.49 $ 0.48 2.1% $ 0.98 $ 0.96 2.1%
End of Period Common
Shares Outstanding
(000,000) 6,140 6,152 -0.2%
Debt Ratio 53.3% 50.5% 280 BP
Total Employees 260,480 277,200 -6.0%
------------------------ ----- ----- ----- ------- ------- -----
Supplementary Operating Data
--------------------------------------------------------------------------------------------
Subscribers and
connections
in thousands
Unaudited June 30, Percent
--------------------------
2017 2016 Change
------------------------ ----- ----- ----- ----------- ----------- ---------
Wireless Subscribers
Domestic 136,500 131,805 3.6%
Mexico 13,082 9,955 31.4%
------------------------ ----- ----- ----- ------- -------
Total Wireless
Subscribers 149,582 141,760 5.5%
------------------------ ----- ----- ----- ------- -------
Total Branded Wireless
Subscribers 104,421 99,557 4.9%
Video Connections
Domestic 25,200 25,323 -0.5%
PanAmericana 8,103 7,175 12.9%
Brazil 5,519 5,348 3.2%
------------------------ ----- ----- ----- ------- -------
Total Video Connections 38,822 37,846 2.6%
------------------------ ----- ----- ----- ------- -------
Broadband Connections
IP 14,234 13,544 5.1%
DSL 1,452 2,097 -30.8%
------------------------ ----- ----- ----- ------- -------
Total Broadband
Connections 15,686 15,641 0.3%
------------------------ ----- ----- ----- ------- -------
Voice Connections
Network Access Lines 12,791 15,284 -16.3%
U-verse VoIP
Connections 5,853 5,593 4.6%
------------------------ ----- ----- ----- ------- -------
Total Retail Consumer
Voice Connections 18,644 20,877 -10.7%
======================== ===== ===== ===== ======= ======= =====
Three Months Six Months
Ended Ended
June 30, Percent June 30, Percent
---------------- --------------------------
2017 2016 Change 2017 2016 Change
------------------------ ------ ------ --------- ----------- ----------- ---------
Wireless Net Additions
Domestic 2,282 1,361 67.7% 4,363 3,142 38.9%
Mexico 476 742 -35.8% 1,109 1,271 -12.7%
------------------------ ----- ----- ------- -------
Total Wireless Net
Additions 2,758 2,103 31.1% 5,472 4,413 24.0%
------------------------ ----- ----- ------- -------
Total Branded Wireless
Net Additions 888 1,401 -36.6% 1,626 2,596 -37.4%
Video Net Additions
Domestic (199) (49) -% (360) (101) -%
PanAmericana 13 81 -84.0% 65 109 -40.4%
Brazil (69) 6 -% (30) (95) 68.4%
------------------------ ----- ----- ------- -------
Total Video Net
Additions (255) 38 -% (325) (87) -%
------------------------ ----- ----- ------- -------
Broadband Net Additions
IP 124 74 67.6% 370 276 34.1%
DSL (133) (197) 32.5% (289) (413) 30.0%
------------------------ ----- ----- ------- -------
Total Broadband Net
Additions (9) (123) 92.7% 81 (137) -%
------------------------ ----- ----- ----- ------- ------- -----
BUSINESS SOLUTIONS
The Business Solutions segment provides services to business
customers, including multinational companies; governmental
and wholesale customers; and individual subscribers who purchase
wireless services through employer-sponsored plans. We provide
advanced IP-based services including Virtual Private Networks
(VPN); Ethernet-related products and broadband, collectively
referred to as strategic business services; as well as traditional
data and voice products. We utilize our wireless and wired
networks (referred to as "wired" or "wireline") to provide
a complete communications solution to our business customers.
Segment Results
-------------------------------------------------------------------------------------------------
Three Months Six Months
Dollars in millions Ended Ended
Unaudited June 30, Percent June 30, Percent
------------------------ ------------------------
2017 2016 Change 2017 2016 Change
----------------------- ------- ------- --------- ------- ------- ---------
Segment Operating Revenues
Wireless service $ 8,006 $ 7,963 0.5% $15,935 $15,818 0.7%
Fixed strategic
services 3,028 2,805 8.0% 6,002 5,556 8.0%
Legacy voice and
data
services 3,508 4,162 -15.7% 7,138 8,535 -16.4%
Other service and
equipment 844 874 -3.4% 1,661 1,733 -4.2%
Wireless
equipment 1,721 1,775 -3.0% 3,219 3,546 -9.2%
----------------------- ------ ------ ------ ------
Total Segment
Operating
Revenues 17,107 17,579 -2.7% 33,955 35,188 -3.5%
----------------------- ------ ------ ------ ------
Segment Operating Expenses
Operations and support
expenses 10,313 10,857 -5.0% 20,489 21,659 -5.4%
Depreciation and
amortization 2,335 2,521 -7.4% 4,647 5,029 -7.6%
----------------------- ------ ------ ------ ------
Total Segment
Operating
Expenses 12,648 13,378 -5.5% 25,136 26,688 -5.8%
----------------------- ------ ------ ------ ------
Segment Operating
Income 4,459 4,201 6.1% 8,819 8,500 3.8%
Equity in Net Income
of Affiliates - - -% - - -%
----------------------- ------ ------ ------ ------
Segment Contribution $ 4,459 $ 4,201 6.1% $ 8,819 $ 8,500 3.8%
======================= ====== ====== ====== ======
Segment Operating
Income
Margin 26.1% 23.9% 26.0% 24.2%
----------------------- ------ ------ ----- ------ ------ -----
Supplementary Operating Data
-------------------------------------------------------------------------------------------------
Subscribers and connections in thousands
Unaudited June 30, Percent
------------------------
2017 2016 Change
----------------------- ------ ------ ----- ---------- ---------- ---------
Business Solutions
Wireless
Subscribers
Postpaid/Branded 51,111 49,433 3.4%
Reseller 72 51 41.2%
Connected Devices 33,611 28,061 19.8%
----------------------- ------ ------ ----- ------ ------
Total Business
Solutions
Wireless Subscribers 84,794 77,545 9.3%
----------------------- ------ ------ ----- ------ ------
Business Solutions IP
Broadband Connections 992 948 4.6%
======================= ====== ====== ===== ====== ====== =====
Three Months Six Months
Ended Ended
June 30, Percent June 30, Percent
------------------------ ------------------------
2017 2016 Change 2017 2016 Change
----------------------- ---------- ---------- --------- ------ ------ ---------
Business Solutions
Wireless
Net Additions
Postpaid/Branded 36 185 -80.5% (89) 318 -%
Reseller (5) (13) 61.5% 1 (35) -%
Connected Devices 2,170 1,199 81.0% 4,723 2,777 70.1%
----------------------- ------ ------ ------ ------
Total Business
Solutions
Wireless Net Additions 2,201 1,371 60.5% 4,635 3,060 51.5%
----------------------- ------ ------ ------ ------
Business Solutions
Wireless
Postpaid Churn 0.97% 0.91% 6 BP 1.02% 0.97% 5 BP
----------------------- ------ ------ ------ ------
Business Solutions IP
Broadband
Net Additions 12 20 -40.0% 16 37 -56.8%
======================= ====== ====== ===== ====== ====== =====
ENTERTAINMENT GROUP
The Entertainment Group segment provides video, internet,
voice communication, and interactive and targeted advertising
services to customers located in the U.S. or in U.S. territories.
We utilize our copper and IP-based wired network and/or
our satellite technology.
Segment Results
------------------------------------------------------------------------------------------------
Three Months Six Months
Dollars in millions Ended Ended
Unaudited June 30, Percent June 30, Percent
------------------------ ------------------------
2017 2016 Change 2017 2016 Change
---------------------- ----------- ----------- --------- ----------- ----------- ---------
Segment Operating
Revenues
Video entertainment $ 9,153 $ 8,963 2.1% $18,173 $17,867 1.7%
High-speed internet 1,927 1,867 3.2% 3,868 3,670 5.4%
Legacy voice and
data services 1,005 1,244 -19.2% 2,061 2,557 -19.4%
Other service and
equipment 597 637 -6.3% 1,203 1,275 -5.6%
---------------------- ------ ------ ------ ------
Total Segment
Operating
Revenues 12,682 12,711 -0.2% 25,305 25,369 -0.3%
---------------------- ------ ------ ------ ------
Segment Operating
Expenses
Operations and support
expenses 9,558 9,569 -0.1% 19,159 19,147 0.1%
Depreciation and
amortization 1,458 1,489 -2.1% 2,877 2,977 -3.4%
---------------------- ------ ------ ------ ------
Total Segment
Operating
Expenses 11,016 11,058 -0.4% 22,036 22,124 -0.4%
---------------------- ------ ------ ------ ------
Segment Operating
Income 1,666 1,653 0.8% 3,269 3,245 0.7%
Equity in Net Income
(Loss)
of Affiliates (11) (2) -% (17) 1 -%
---------------------- ------ ------ ------ ------
Segment Contribution $ 1,655 $ 1,651 0.2% $ 3,252 $ 3,246 0.2%
====================== ====== ====== ====== ======
Segment Operating
Income
Margin 13.1% 13.0% 12.9% 12.8%
---------------------- ------ ------ ----- ------ ------ -----
Supplementary Operating Data
------------------------------------------------------------------------------------------------
Subscribers and Six Months
connections Ended
in thousands
Unaudited June 30, Percent
------------------------
2017 2016 Change
---------------------- ------ ------ ----- ---------- ---------- ---------
Video Connections
Satellite 20,856 20,454 2.0%
U-verse 3,825 4,841 -21.0%
DIRECTV NOW 491 - -%
---------------------- ------ ------ ----- ------ ------
Total Video
Connections 25,172 25,295 -0.5%
---------------------- ------ ------ ----- ------ ------
Broadband Connections
IP 13,242 12,596 5.1%
DSL 1,060 1,585 -33.1%
---------------------- ------ ------ ----- ------ ------
Total Broadband
Connections 14,302 14,181 0.9%
---------------------- ------ ------ ----- ------ ------
Voice Connections
Retail Consumer
Switched
Access Lines 5,257 6,515 -19.3%
U-verse Consumer
VoIP Connections 5,439 5,300 2.6%
---------------------- ------ ------ ----- ------ ------
Total Retail Consumer
Voice
Connections 10,696 11,815 -9.5%
====================== ====== ====== ===== ====== ====== =====
Three Months Six Months
Ended Ended
June 30, Percent June 30, Percent
------------------------ ------------------------
2017 2016 Change 2017 2016 Change
---------------------- ------ ------ --------- ------ ------ ---------
Video Net Additions
Satellite (156) 342 -% (156) 670 -%
U-verse (195) (391) 50.1% (428) (773) 44.6%
DIRECTV NOW 152 - -% 224 - -%
---------------------- ------ ------ ------ ------ -----
Total Video Net
Additions (199) (49) -% (360) (103) -%
---------------------- ------ ------ ------ ------ -----
Broadband Net
Additions
IP 112 54 -% 354 240 47.5%
DSL (104) (164) 36.6% (231) (345) 33.0%
---------------------- ------ ------ ------ ------ -----
Total Broadband Net
Additions 8 (110) -% 123 (105) -%
---------------------- ------ ------ ----- ------ ------ -----
CONSUMER MOBILITY
The Consumer Mobility segment provides nationwide wireless
service to consumers and wholesale and resale wireless subscribers
located in the U.S. or in U.S. territories. We utilize our
U.S. wireless network to provide voice and data services,
including high-speed internet, video, and home monitoring
services.
Segment Results
------------------------------------------------------------------------------------------------
Three Months Six Months
Dollars in millions Ended Ended
Unaudited June 30, Percent June 30, Percent
---------------------- ------------------------
2017 2016 Change 2017 2016 Change
------------------------ ---------- ---------- --------- ----------- ----------- ---------
Segment Operating
Revenues
Service $6,528 $6,948 -6.0% $13,137 $13,891 -5.4%
Equipment 1,263 1,238 2.0% 2,394 2,623 -8.7%
------------------------ ----- ----- ------ ------
Total Segment
Operating
Revenues 7,791 8,186 -4.8% 15,531 16,514 -6.0%
------------------------ ----- ----- ------ ------
Segment Operating
Expenses
Operations and support
expenses 4,520 4,680 -3.4% 9,048 9,592 -5.7%
Depreciation and
amortization 871 932 -6.5% 1,744 1,854 -5.9%
------------------------ ----- ----- ------ ------
Total Segment
Operating
Expenses 5,391 5,612 -3.9% 10,792 11,446 -5.7%
------------------------ ----- ----- ------ ------
Segment Operating Income 2,400 2,574 -6.8% 4,739 5,068 -6.5%
Equity in Net Income
of Affiliates - - -% - - -%
------------------------ ----- ----- ------ ------
Segment Contribution $2,400 $2,574 -6.8% $ 4,739 $ 5,068 -6.5%
======================== ===== ===== ====== ======
Segment Operating Income
Margin 30.8% 31.4% 30.5% 30.7%
------------------------ ----- ----- ----- ------ ------ -----
Supplementary Operating Data
------------------------------------------------------------------------------------------------
Subscribers and
connections
in thousands
Unaudited June 30, Percent
------------------------
2017 2016 Change
------------------------ ----- ----- ----- ---------- ---------- ---------
Consumer Mobility
Subscribers
Postpaid 26,290 27,862 -5.6%
Prepaid 14,187 12,633 12.3%
------------------------ ----- ----- ----- ------ ------
Branded 40,477 40,495 -%
Reseller 10,182 12,869 -20.9%
Connected Devices 1,047 896 16.9%
------------------------ ----- ----- ----- ------ ------
Total Consumer Mobility
Subscribers 51,706 54,260 -4.7%
======================== ===== ===== ===== ====== ====== =====
Three Months Six Months
Ended Ended
June 30, Percent June 30, Percent
---------------------- ------------------------
2017 2016 Change 2017 2016 Change
------------------------ --------- --------- --------- ---------- ---------- ---------
Consumer Mobility Net
Additions
Postpaid 91 72 26.4% 25 68 -63.2%
Prepaid 267 365 -26.8% 549 865 -36.5%
------------------------ ----- ----- ------ ------
Branded 358 437 -18.1% 574 933 -38.5%
Reseller (363) (446) 18.6% (951) (824) -15.4%
Connected Devices 86 (1) -% 105 (27) -%
------------------------ ----- ----- ------ ------
Total Consumer Mobility
Net Additions 81 (10) -% (272) 82 -%
------------------------ ----- ----- ------ ------
Total Churn 2.15% 1.96% 19 BP 2.29% 2.04% 25 BP
Postpaid Churn 1.09% 1.09% - BP 1.16% 1.16% - BP
------------------------ ----- ----- ----- ------ ------ -----
INTERNATIONAL
The International segment provides entertainment services
in Latin America and wireless services in Mexico. Video entertainment
services are provided to primarily residential customers
using satellite technology. We utilize our regional and national
wireless networks in Mexico to provide consumer and business
customers with wireless data and voice communication services.
Our international subsidiaries conduct business in their
local currency and operating results are converted to U.S.
dollars using official exchange rates.
Segment Results
------------------------------------------------------------------------------------------------
Three Months Six Months
Dollars in millions Ended Ended
Unaudited June 30, Percent June 30, Percent
----------------------
2017 2016 Change 2017 2016 Change
------------------------ ---------- ---------- --------- ----------- ----------- ---------
Segment Operating
Revenues
Video entertainment $1,361 $1,222 11.4% $ 2,702 $ 2,352 14.9%
Wireless service 535 489 9.4% 1,010 944 7.0%
Wireless equipment 130 117 11.1% 243 199 22.1%
------------------------ ----- ----- ------ ------
Total Segment
Operating
Revenues 2,026 1,828 10.8% 3,955 3,495 13.2%
------------------------ ----- ----- ------ ------
Segment Operating
Expenses
Operations and support
expenses 1,772 1,723 2.8% 3,531 3,311 6.6%
Depreciation and
amortization 311 298 4.4% 601 575 4.5%
------------------------ ----- ----- ------ ------
Total Segment
Operating
Expenses 2,083 2,021 3.1% 4,132 3,886 6.3%
------------------------ ----- ----- ------ ------
Segment Operating Income
(Loss) (57) (193) 70.5% (177) (391) 54.7%
Equity in Net Income
(Loss) of Affiliates 25 9 -% 45 23 95.7%
------------------------ ----- ----- ------ ------
Segment Contribution $ (32) $ (184) 82.6% $ (132) $ (368) 64.1%
======================== ===== ===== ====== ======
Segment Operating Income
Margin (2.8)% (10.6)% (4.5)% (11.2)%
------------------------ ----- ----- ----- ------ ------ -----
Supplementary Operating Data
------------------------------------------------------------------------------------------------
Subscribers and
connections
in thousands
Unaudited June 30, Percent
2017 2016 Change
------------------------ ----- ----- ----- ----------- ----------- ---------
Mexican Wireless
Subscribers
Postpaid 5,187 4,570 13.5%
Prepaid 7,646 5,059 51.1%
------------------------ ----- ----- ----- ------ ------
Branded 12,833 9,629 33.3%
Reseller 249 326 -23.6%
------------------------ ----- ----- ----- ------ ------
Total Mexican Wireless
Subscribers 13,082 9,955 31.4%
------------------------ ----- ----- ----- ------ ------
Latin America Satellite
Subscribers
PanAmericana 8,103 7,175 12.9%
SKY Brazil 5,519 5,348 3.2%
------------------------ ----- ----- ----- ------ ------
Total Latin America
Satellite
Subscribers 13,622 12,523 8.8%
======================== ===== ===== ===== ====== ====== =====
Three Months Six Months
Ended Ended
June 30, Percent June 30, Percent
----------------------
2017 2016 Change 2017 2016 Change
------------------------ ---------- ---------- --------- ----------- ----------- ---------
Mexican Wireless Net
Additions
Postpaid 92 165 -44.2% 222 281 -21.0%
Prepaid 402 614 -34.5% 919 1,064 -13.6%
------------------------ ----- ----- ------ ------
Branded 494 779 -36.6% 1,141 1,345 -15.2%
Reseller (18) (37) 51.4% (32) (74) 56.8%
------------------------ ----- ----- ------ ------
Total Mexican Wireless
Net Additions 476 742 -35.8% 1,109 1,271 -12.7%
------------------------ ----- ----- ------ ------
Latin America Satellite
Net Additions
PanAmericana 13 81 -84.0% 65 109 -40.4%
SKY Brazil (69) 6 -% (30) (95) 68.4%
------------------------ ----- ----- ------ ------
Total Latin America
Satellite
Net Additions (56) 87 -% 35 14 -%
------------------------ ----- ----- ----- ------ ------ -----
SUPPLEMENTAL OPERATING INFORMATION - AT&T MOBILITY
As a supplemental discussion of our operating results, for
comparison purposes, we are providing a view of our combined
domestic wireless operations (AT&T Mobility).
Operating Results
------------------------------------------------------------------------------------------------
Three Months Six Months
Dollars in millions Ended Ended
Unaudited June 30, Percent June 30, Percent
------------------------ --------------------------
2017 2016 Change 2017 2016 Change
-------------------- ----------- ----------- --------- ------------ ------------ ---------
Operating Revenues
Service $14,534 $14,911 -2.5% $ 29,072 $ 29,709 -2.1%
Equipment 2,984 3,013 -1.0% 5,613 6,169 -9.0%
-------------------- ------ ------ ------- -------
Total Operating
Revenues 17,518 17,924 -2.3% 34,685 35,878 -3.3%
-------------------- ------ ------ ------- -------
Operating Expenses
Operations and
support
expenses 10,197 10,501 -2.9% 20,195 21,125 -4.4%
Depreciation and
amortization 1,992 2,081 -4.3% 3,989 4,137 -3.6%
-------------------- ------ ------ ------- -------
Total Operating
Expenses 12,189 12,582 -3.1% 24,184 25,262 -4.3%
-------------------- ------ ------ ------- -------
Operating Income $ 5,329 $ 5,342 -0.2% $ 10,501 $ 10,616 -1.1%
==================== ====== ====== ======= =======
Operating Income
Margin 30.4% 29.8% 30.3% 29.6%
-------------------- ------ ------ ----- ------- ------- -----
Supplementary Operating Data
------------------------------------------------------------------------------------------------
Subscribers and
connections
in thousands
Unaudited June 30, Percent
--------------------------
2017 2016 Change
-------------------- ------ ------ ----- ----------- ----------- ---------
AT&T Mobility
Subscribers
Postpaid 77,401 77,295 0.1%
Prepaid 14,187 12,633 12.3%
-------------------- ------ ------ ----- ------- -------
Branded 91,588 89,928 1.8%
Reseller 10,254 12,920 -20.6%
Connected Devices 34,658 28,957 19.7%
-------------------- ------ ------ ----- ------- -------
Total AT&T Mobility
Subscribers 136,500 131,805 3.6%
-------------------- ------ ------ ----- ------- -------
Domestic Licensed
POPs (000,000) 326 322 1.2%
==================== ====== ====== ===== ======= ======= =====
Three Months Six Months
Ended Ended
June 30, Percent June 30, Percent
------------------------ --------------------------
2017 2016 Change 2017 2016 Change
-------------------- ---------- ---------- --------- ----------- ----------- ---------
AT&T Mobility Net
Additions
Postpaid 127 257 -50.6% (64) 386 -%
Prepaid 267 365 -26.8% 549 865 -36.5%
-------------------- ------ ------ ------- -------
Branded 394 622 -36.7% 485 1,251 -61.2%
Reseller (368) (459) 19.8% (950) (859) -10.6%
Connected Devices 2,256 1,198 88.3% 4,828 2,750 75.6%
-------------------- ------ ------ ------- -------
Total AT&T Mobility
Net Additions 2,282 1,361 67.7% 4,363 3,142 38.9%
-------------------- ------ ------ ------- -------
M&A Activity,
Partitioned
Customers and
Other Adjustments - (1) -% (2,723) 23 -%
Total Churn 1.28% 1.35% -7 BP 1.37% 1.38% -1 BP
Postpaid Churn 1.01% 0.97% 4 BP 1.07% 1.04% 3 BP
==================== ====== ====== ===== ======= ======= =====
SUPPLEMENTAL SEGMENT RECONCILIATION
Three Months Ended
---------------------------------------------------------------------------------------------------------------------
Dollars in
millions
Unaudited
June 30, 2017
-------------------- ---------- ----------- ------- ------------- ----------- ----------- ------------
Equity
in Net
Income
Operations Depreciation Operating (Loss)
and Support and Income of Segment
Revenues Expenses EBITDA Amortization (Loss) Affiliates Contribution
-------------------- ---------- ----------- ------- ------------- ----------- ----------- ------------
Business Solutions $ 17,107 $ 10,313 $ 6,794 $ 2,335 $ 4,459 $ - $ 4,459
Entertainment
Group 12,682 9,558 3,124 1,458 1,666 (11) 1,655
Consumer Mobility 7,791 4,520 3,271 871 2,400 - 2,400
International 2,026 1,772 254 311 (57) 25 (32)
--------------------- ------ ---------- ------ ------------ ------- ---------- -----------
Segment Total 39,606 26,163 13,443 4,975 8,468 $ 14 $ 8,482
===================== ====== ========== ====== ============ ======= ========== ===========
Corporate
and Other 231 87 144 2 142
Acquisition-related
items - 281 (281) 1,170 (1,451)
Certain Significant
items - (164) 164 - 164
--------------------- ------ ---------- ------ ------------ -------
AT&T Inc. $ 39,837 $ 26,367 $13,470 $ 6,147 $ 7,323
===================== ====== ========== ====== ============ =======
June 30, 2016
-------------------- ------ ---------- ------ ------------ ------- ---------- -----------
Equity
in Net
Income
Operations Depreciation Operating (Loss)
and Support and Income of Segment
Revenues Expenses EBITDA Amortization (Loss) Affiliates Contribution
-------------------- ---------- ----------- ------- ------------- ----------- ----------- ------------
Business Solutions $ 17,579 $ 10,857 $ 6,722 $ 2,521 $ 4,201 $ - $ 4,201
Entertainment
Group 12,711 9,569 3,142 1,489 1,653 (2) 1,651
Consumer Mobility 8,186 4,680 3,506 932 2,574 - 2,574
International 1,828 1,723 105 298 (193) 9 (184)
--------------------- ------ ---------- ------ ------------ ------- ---------- -----------
Segment Total 40,304 26,829 13,475 5,240 8,235 $ 7 $ 8,242
===================== ====== ========== ====== ============ ======= ========== ===========
Corporate
and Other 216 293 (77) 20 (97)
Acquisition-related
items - 233 (233) 1,316 (1,549)
Certain Significant
items - 29 (29) - (29)
--------------------- ------ ---------- ------ ------------ -------
AT&T Inc. $ 40,520 $ 27,384 $13,136 $ 6,576 $ 6,560
===================== ====== ========== ====== ============ =======
Six Months Ended
---------------------------------------------------------------------------------------------------------------------
Dollars in
millions
Unaudited
June 30, 2017
-------------------- ------ ---------- ------ ------------ ------- ---------- -----------
Equity
in Net
Income
Operations Depreciation Operating (Loss)
and Support and Income of Segment
Revenues Expenses EBITDA Amortization (Loss) Affiliates Contribution
-------------------- ---------- ----------- ------- ------------- ----------- ----------- ------------
Business Solutions $ 33,955 $ 20,489 $13,466 $ 4,647 $ 8,819 $ - $ 8,819
Entertainment
Group 25,305 19,159 6,146 2,877 3,269 (17) 3,252
Consumer Mobility 15,531 9,048 6,483 1,744 4,739 - 4,739
International 3,955 3,531 424 601 (177) 45 (132)
--------------------- ------ ---------- ------ ------------ ------- ---------- -----------
Segment Total 78,746 52,227 26,519 9,869 16,650 $ 28 $ 16,678
===================== ====== ========== ====== ============ ======= ========== ===========
Corporate
and Other 456 308 148 33 115
Acquisition-related
items - 488 (488) 2,372 (2,860)
Certain Significant
items - (282) 282 - 282
--------------------- ------ ---------- ------ ------------ -------
AT&T Inc. $ 79,202 $ 52,741 $26,461 $ 12,274 $ 14,187
===================== ====== ========== ====== ============ =======
June 30, 2016
-------------------- ------ ---------- ------ ------------ ------- ---------- -----------
Equity
in Net
Income
Operations Depreciation Operating (Loss)
and Support and Income of Segment
Revenues Expenses EBITDA Amortization (Loss) Affiliates Contribution
-------------------- ---------- ----------- ------- ------------- ----------- ----------- ------------
Business Solutions $ 35,188 $ 21,659 $13,529 $ 5,029 $ 8,500 $ - $ 8,500
Entertainment
Group 25,369 19,147 6,222 2,977 3,245 1 3,246
Consumer Mobility 16,514 9,592 6,922 1,854 5,068 - 5,068
International 3,495 3,311 184 575 (391) 23 (368)
--------------------- ------ ---------- ------ ------------ ------- ---------- -----------
Segment Total 80,566 53,709 26,857 10,435 16,422 $ 24 $ 16,446
===================== ====== ========== ====== ============ ======= ========== ===========
Corporate
and Other 489 670 (181) 37 (218)
Acquisition-related
items - 528 (528) 2,667 (3,195)
Certain Significant
items - (682) 682 - 682
--------------------- ------ ---------- ------ ------------ -------
AT&T Inc. $ 81,055 $ 54,225 $26,830 $ 13,139 $ 13,691
===================== ====== ========== ====== ============ =======
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.
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 Three Months Six Months Ended
Ended
June 30, June 30,
------------------------ --------------------------
2017 2016 2017 2016
------------------------------- ----------- ----------- ------------ ------------
Net cash provided by operating
activities $ 8,942 $10,307 $ 18,160 $ 18,207
Less: Capital expenditures (5,208) (5,470) (11,223) (10,139)
-------------------------------- ------ ------ ------- -------
Free Cash Flow 3,734 4,837 6,937 8,068
-------------------------------- ------ ------ ------- -------
Less: Dividends paid (3,012) (2,952) (6,021) (5,899)
-------------------------------- ------ ------ ------- -------
Free Cash Flow after Dividends $ 722 $ 1,885 $ 916 $ 2,169
-------------------------------- ------ ------ ------- -------
Free Cash Flow Dividend Payout
Ratio 80.7% 61.0% 86.8% 73.1%
-------------------------------- ------ ------ ------- -------
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 results, EBITDA excludes equity in net income (loss) of affiliates, and depreciation and amortization from segment contribution. For our supplemental presentation of our combined domestic wireless operations (AT&T Mobility) and our supplemental presentation of the Mexico Wireless and Latin America operations of our International segment, EBITDA excludes depreciation and amortization from operating income.
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. Management uses Mexico Wireless EBITDA in evaluating profitability trends after our two Mexico wireless acquisitions in 2015, and our investments in building a nationwide LTE network by end of 2018. Management uses Latin America EBITDA in evaluating the ability of our Latin America operations to generate cash to finance its own operations.
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 Consumer Mobility segment operating margin and our supplemental AT&T Mobility 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 Three Months Six Months Ended
Ended
June 30, June 30,
------------------------ ------------------------
2017 2016 2017 2016
--------------------------------- ----------- ----------- ----------- -----------
Net Income $ 4,014 $ 3,515 $ 7,588 $ 7,400
Additions:
Income Tax Expense 2,056 1,906 3,860 4,028
Interest Expense 1,395 1,258 2,688 2,465
Equity in Net (Income) Loss
of Affiliates (14) (28) 159 (41)
Other (Income) Expense - Net (128) (91) (108) (161)
Depreciation and amortization 6,147 6,576 12,274 13,139
---------------------------------- ------ ------ ------ ------
EBITDA 13,470 13,136 26,461 26,830
---------------------------------- ------ ------ ------ ------
Total Operating Revenues 39,837 40,520 79,202 81,055
Service Revenues 36,538 37,142 72,994 74,243
EBITDA Margin 33.8% 32.4% 33.4% 33.1%
EBITDA Service Margin 36.9% 35.4% 36.3% 36.1%
---------------------------------- ------ ------ ------ ------
Segment EBITDA, EBITDA Margin and EBITDA Service Margin
------------------------------------------------------------------------------------------
Dollars in millions Three Months Six Months Ended
Ended
June 30, June 30,
------------------------ ------------------------
2017 2016 2017 2016
------------------------------------- ----------- ----------- ----------- -----------
Business Solutions Segment
------------------------------------- ------- ------- ------- -------
Segment Contribution $ 4,459 $ 4,201 $ 8,819 $ 8,500
Additions:
Depreciation and amortization 2,335 2,521 4,647 5,029
-------------------------------------- ------ ------ ------ ------
EBITDA 6,794 6,722 13,466 13,529
-------------------------------------- ------ ------ ------ ------
Total Segment Operating Revenues 17,107 17,579 33,955 35,188
Segment Operating Income Margin 26.1% 23.9% 26.0% 24.2%
EBITDA Margin 39.7% 38.2% 39.7% 38.4%
Entertainment Group Segment
------------------------------------- ------ ------ ------ ------
Segment Contribution $ 1,655 $ 1,651 $ 3,252 $ 3,246
Additions:
Equity in Net (Income) Loss of
Affiliates 11 2 17 (1)
Depreciation and amortization 1,458 1,489 2,877 2,977
-------------------------------------- ------ ------ ------ ------
EBITDA 3,124 3,142 6,146 6,222
-------------------------------------- ------ ------ ------ ------
Total Segment Operating Revenues 12,682 12,711 25,305 25,369
Segment Operating Income Margin 13.1% 13.0% 12.9% 12.8%
EBITDA Margin 24.6% 24.7% 24.3% 24.5%
Consumer Mobility Segment
------------------------------------- ------ ------ ------ ------
Segment Contribution $ 2,400 $ 2,574 $ 4,739 $ 5,068
Additions:
Depreciation and amortization 871 932 1,744 1,854
-------------------------------------- ------ ------ ------ ------
EBITDA 3,271 3,506 6,483 6,922
-------------------------------------- ------ ------ ------ ------
Total Segment Operating Revenues 7,791 8,186 15,531 16,514
Service Revenues 6,528 6,948 13,137 13,891
Segment Operating Income Margin 30.8% 31.4% 30.5% 30.7%
EBITDA Margin 42.0% 42.8% 41.7% 41.9%
EBITDA Service Margin 50.1% 50.5% 49.3% 49.8%
International Segment
------------------------------------- ------ ------ ------ ------
Segment Contribution $ (32) $ (184) $ (132) $ (368)
Additions:
Equity in Net (Income) of Affiliates (25) (9) (45) (23)
Depreciation and amortization 311 298 601 575
-------------------------------------- ------ ------ ------ ------
EBITDA 254 105 424 184
-------------------------------------- ------ ------ ------ ------
Total Segment Operating Revenues 2,026 1,828 3,955 3,495
Segment Operating Income Margin -2.8% -10.6% -4.5% -11.2%
EBITDA Margin 12.5% 5.7% 10.7% 5.3%
-------------------------------------- ------ ------ ------ ------
Supplemental AT&T Mobility EBITDA, EBITDA Margin and EBITDA
Service Margin
-------------------------------------------------------------------------------------------
Dollars in millions Three Months Six Months Ended
Ended
June 30, June 30,
------------------------ ------------------------
2017 2016 2017 2016
-------------------------------------- ----------- ----------- ----------- -----------
AT&T Mobility
-------------------------------------- ------- ------- ------- -------
Operating Income $ 5,329 $ 5,342 $10,501 $10,616
Add: Depreciation and amortization 1,992 2,081 3,989 4,137
--------------------------------------- ------ ------ ------ ------
EBITDA 7,321 7,423 14,490 14,753
--------------------------------------- ------ ------ ------ ------
Total Operating Revenues 17,518 17,924 34,685 35,878
Service Revenues 14,534 14,911 29,072 29,709
Operating Income Margin 30.4% 29.8% 30.3% 29.6%
EBITDA Margin 41.8% 41.4% 41.8% 41.1%
EBITDA Service Margin 50.4% 49.8% 49.8% 49.7%
--------------------------------------- ------ ------ ------ ------
Supplemental Latin America EBITDA and EBITDA Margin
---------------------------------------------------------------------------------------
Dollars in millions Three Months Six Months Ended
Ended
June 30, June 30,
---------------------- ----------------------
2017 2016 2017 2016
-------------------------------------- ---------- ---------- ---------- ----------
International - Latin America
-------------------------------------- ------ ------ ------ ------
Operating Income $ 141 $ 32 $ 218 $ 85
Add: Depreciation and amortization 222 212 436 408
--------------------------------------- ----- ----- ----- -----
EBITDA 363 244 654 493
--------------------------------------- ----- ----- ----- -----
Total Operating Revenues 1,361 1,222 2,702 2,352
Operating Income Margin 10.4% 2.6% 8.1% 3.6%
EBITDA Margin 26.7% 20.0% 24.2% 21.0%
--------------------------------------- ----- ----- ----- -----
Supplemental Mexico EBITDA and EBITDA Margin
---------------------------------------------------------------------------------------
Dollars in millions Three Months Six Months Ended
Ended
June 30, June 30,
---------------------- ----------------------
2017 2016 2017 2016
-------------------------------------- ---------- ---------- ---------- ----------
International - Mexico
-------------------------------------- ------ ------ ------ ------
Operating Income $ (198) $ (225) $ (395) $ (476)
Add: Depreciation and amortization 89 86 165 167
--------------------------------------- ----- ----- ----- -----
EBITDA (109) (139) (230) (309)
--------------------------------------- ----- ----- ----- -----
Total Operating Revenues 665 606 1,253 1,143
Operating Income Margin -29.8% -37.1% -31.5% -41.6%
EBITDA Margin -16.4% -22.9% -18.4% -27.0%
--------------------------------------- ----- ----- ----- -----
Adjusting Items
Adjusting items include revenues and costs we consider nonoperational 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 (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 38%. Certain foreign operations with losses, where such losses are not realizable for tax purposes, are not tax effected, resulting in no tax impact for Venezuela devaluation. For years prior to 2017, adjustments related to Mexico operations were taxed at the 30% marginal rate for Mexico.
Adjusting Items
---------------------------------------------------------------------------------
Dollars in millions Three Months Six Months Ended
Ended
June 30, June 30,
--------------- ----------------------
2017 2016 2017 2016
--------------------------------------- ------- ------ ----------- ---------
Operating Expenses
DIRECTV and other video merger
integration costs $ 123 $ 133 $ 250 $ 306
Mexico merger integration costs 80 66 119 147
Time Warner merger costs 78 - 119 -
Wireless merger integration
costs - 33 - 75
Actuarial (gain) loss (259) - (259) -
Employee separation costs 60 29 60 54
(Gain) loss on transfer of wireless
spectrum (63) - (181) (736)
Venezuela devaluation 98 - 98 -
---------------------------------------- ----- ----- ------ -----
Adjustments to Operations and
Support Expenses 117 261 206 (154)
---------------------------------------- ----- ----- ------ -----
Amortization of intangible assets 1,170 1,316 2,372 2,667
---------------------------------------- ----- ----- ------ -----
Adjustments to Operating Expenses 1,287 1,577 2,578 2,513
---------------------------------------- ----- ----- ------ -----
Other
Merger related interest expense
and exchange fees 1 158 - 267 16
(Gain) loss on sale of assets,
impairments and other adjustments (36) - 221 4
---------------------------------------- ----- ----- ------ -----
Adjustments to Income Before
Income Taxes 1,409 1,577 3,066 2,533
---------------------------------------- ----- ----- ------ -----
Tax impact of adjustments 445 550 1,001 881
---------------------------------------- ----- ----- ------ -----
Adjustments to Net Income $ 964 $1,027 $ 2,065 $1,652
---------------------------------------- ----- ----- ------ -----
1 Includes interest expense incurred on the debt issued
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.
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 Three Months Six Months Ended
Ended
June 30, June 30,
------------------------ ------------------------
2017 2016 2017 2016
---------------------------------- ----------- ----------- ----------- -----------
Operating Income $ 7,323 $ 6,560 $14,187 $13,691
Adjustments to Operating Expenses 1,287 1,577 2,578 2,513
----------------------------------- ------ ------ ------ ------
Adjusted Operating Income 1 8,610 8,137 16,765 16,204
----------------------------------- ------ ------ ------ ------
EBITDA 13,470 13,136 26,461 26,830
Adjustments to Operations and
Support Expenses 117 261 206 (154)
----------------------------------- ------ ------ ------ ------
Adjusted EBITDA 1 13,587 13,397 26,667 26,676
----------------------------------- ------ ------ ------ ------
Total Operating Revenues 39,837 40,520 79,202 81,055
Service Revenues 36,538 37,142 72,994 74,243
Operating Income Margin 18.4% 16.2% 17.9% 16.9%
Adjusted Operating Income Margin
1 21.6% 20.1% 21.2% 20.0%
Adjusted EBITDA Margin 1 34.1% 33.1% 33.7% 32.9%
Adjusted EBITDA Service Margin
1 37.2% 36.1% 36.5% 35.9%
----------------------------------- ------ ------ ------ ------
1 Adjusted Operating Income, Adjusted EBITDA and associated
margins exclude all actuarial gains or losses ($259 million
gain in the second quarter of 2017) associated with our
postemployment 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 Operating Income and Margin reflect an expected
return on plan assets of $106 million (based on an average
expected return on plan assets of 5.75% for our VEBA trusts),
rather than the actual return on plan assets of $234 million
(actual annualized VEBA return of 12.2%), as included in
the GAAP measure of income.
Adjusted Diluted EPS
--------------------------------------------------------------------------------------
Three Months Six Months Ended
Ended
June 30, June 30,
--------------------------------------- ------------------ ------------------------
2017 2016 2017 2016
--------------------------------------- ---------- ------ ------------- ---------
Diluted Earnings Per Share (EPS) $ 0.63 $ 0.55 $ 1.19 $ 1.17
Amortization of intangible assets 0.13 0.14 0.26 0.28
Merger integration and other
items 1 0.05 0.03 0.08 0.06
Asset abandonments, impairments
and other adjustments - - 0.03 -
Actuarial (gain) loss (0.03) - (0.03) -
(Gain) loss on transfer of wireless
spectrum (0.01) - (0.02) (0.08)
Venezuela devaluation 0.02 - 0.02 -
---------------------------------------- ----- ----- ----- -----
Adjusted EPS $ 0.79 $ 0.72 $ 1.53 $ 1.43
---------------------------------------- ----- ----- ----- -----
Year-over-year growth - Adjusted 9.7% 7.0%
---------------------------------------- ----- ----- ----- -----
Weighted Average Common Shares
Outstanding
with Dilution (000,000) 6,184 6,195 6,185 6,193
---------------------------------------- ----- ----- ----- -----
1 Includes combined merger integration items, merger-related
interest expense.
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. The Net Debt to Adjusted EBITDA ratio is calculated by dividing the Net Debt by Annualized 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. Annualized Adjusted EBITDA is calculated by annualizing the year-to-date Adjusted EBITDA.
Net Debt to Adjusted EBITDA
---------------------------------------------------------------------------
Dollars in millions
Three Months
Ended
--------------------
Mar. 31, Jun. 30 YTD 2017
-----------
2017 2017
--------------------------------------- ---------- --------
Adjusted EBITDA $ 13,080 $13,587 $ 26,667
Add back severance - (60) (60)
Net Debt Adjusted EBITDA 13,080 13,527 26,607
Annualized Adjusted EBITDA 53,214
End-of-period current debt 10,831
End-of-period long-term debt 132,824
Total End-of-Period Debt 143,655
Less: Cash and Cash Equivalents 25,617
Net Debt Balance 118,038
---------------------------------------- ------ ------ -------
Annualized Net Debt to Adjusted EBITDA
Ratio 2.22
---------------------------------------- ------ ------ -------
Supplemental Operational Measures
We provide a supplemental discussion of our domestic wireless operations that is calculated by combining our Consumer Mobility and Business Solutions segments, and then adjusting to remove non-wireless operations. The following table presents a reconciliation of our supplemental AT&T Mobility results.
Supplemental Operational Measure
---------------------------------------------------------------------------------------------------------------------
Three Months Ended
June 30, 2017 June 30, 2016
----------------------------------------------- -----------------------------------------------
Consumer Business Adjustments AT&T Consumer Business Adjustments AT&T
Mobility Solutions 1 Mobility Mobility Solutions 1 Mobility
---------------- -------- --------- ------------- ---------- -------- --------- ------------- ----------
Operating
Revenues
Wireless
service $ 6,528 $ 8,006 $ - $ 14,534 $ 6,948 $ 7,963 $ - $ 14,911
Fixed strategic
services - 3,028 (3,028) - - 2,805 (2,805) -
Legacy
voice and
data services - 3,508 (3,508) - - 4,162 (4,162) -
Other services
and equipment - 844 (844) - - 874 (874) -
Wireless
equipment 1,263 1,721 - 2,984 1,238 1,775 - 3,013
----------------- ------- -------- --------- ------ ------- -------- --------- ------
Total Operating
Revenues 7,791 17,107 (7,380) 17,518 8,186 17,579 (7,841) 17,924
----------------- ------- -------- --------- ------ ------- -------- --------- ------
Operating
Expenses
Operations
and support 4,520 10,313 (4,636) 10,197 4,680 10,857 (5,036) 10,501
EBITDA 3,271 6,794 (2,744) 7,321 3,506 6,722 (2,805) 7,423
Depreciation
and
amortization 871 2,335 (1,214) 1,992 932 2,521 (1,372) 2,081
----------------- ------- -------- --------- ------ ------- -------- --------- ------
Total Operating
Expense 5,391 12,648 (5,850) 12,189 5,612 13,378 (6,408) 12,582
----------------- ------- -------- --------- ------ ------- -------- --------- ------
Operating
Income $ 2,400 $ 4,459 $ (1,530) $ 5,329 $ 2,574 $ 4,201 $ (1,433) $ 5,342
----------------- ------- -------- --------- ------ ------- -------- --------- ------
1 Non-wireless (fixed) operations reported in Business Solutions
segment.
Supplemental Operational Measure
---------------------------------------------------------------------------------------------------------------------
Six Months Ended
June 30, 2017 June 30, 2016
----------------------------------------------- -----------------------------------------------
Consumer Business Adjustments AT&T Consumer Business Adjustments AT&T
Mobility Solutions 1 Mobility Mobility Solutions 1 Mobility
---------------- -------- --------- ------------- ---------- -------- --------- ------------- ----------
Operating
Revenues
Wireless
service $ 13,137 $ 15,935 $ - $ 29,072 $ 13,891 $ 15,818 $ - $ 29,709
Fixed strategic
services - 6,002 (6,002) - - 5,556 (5,556) -
Legacy
voice and
data services - 7,138 (7,138) - - 8,535 (8,535) -
Other services
and equipment - 1,661 (1,661) - - 1,733 (1,733) -
Wireless
equipment 2,394 3,219 - 5,613 2,623 3,546 - 6,169
----------------- ------- -------- --------- ------ ------- -------- --------- ------
Total Operating
Revenues 15,531 33,955 (14,801) 34,685 16,514 35,188 (15,824) 35,878
----------------- ------- -------- --------- ------ ------- -------- --------- ------
Operating
Expenses
Operations
and support 9,048 20,489 (9,342) 20,195 9,592 21,659 (10,126) 21,125
EBITDA 6,483 13,466 (5,459) 14,490 6,922 13,529 (5,698) 14,753
Depreciation
and
amortization 1,744 4,647 (2,402) 3,989 1,854 5,029 (2,746) 4,137
----------------- ------- -------- --------- ------ ------- -------- --------- ------
Total Operating
Expense 10,792 25,136 (11,744) 24,184 11,446 26,688 (12,872) 25,262
----------------- ------- -------- --------- ------ ------- -------- --------- ------
Operating
Income $ 4,739 $ 8,819 $ (3,057) $ 10,501 $ 5,068 $ 8,500 $ (2,952) $ 10,616
----------------- ------- -------- --------- ------ ------- -------- --------- ------
1 Non-wireless (fixed) operations reported in Business Solutions
segment.
Supplemental International
We provide a supplemental presentation of the Latin America and Mexico Wireless operations within our International segment. The following table presents a reconciliation of our International segment.
Supplemental International
-------------------------------------------------------------------------------------------
Three Months Ended
June 30, 2017 June 30, 2016
---------------- --------------------------------- ---------------------------------
Latin Latin
America Mexico International America Mexico International
---------------- ------- ------ --------------- ------- ------ ---------------
Operating
Revenues
Video service $ 1,361 $ - $ 1,361 $ 1,222 $ - $ 1,222
Wireless
service - 535 535 - 489 489
Wireless
equipment - 130 130 - 117 117
----------------- ------ ----- ---- --------- ------ ----- ---- ---------
Total Operating
Revenues 1,361 665 2,026 1,222 606 1,828
----------------- ------ ----- ---- --------- ------ ----- ---- ---------
Operating
Expenses
Operations
and support 998 774 1,772 978 745 1,723
Depreciation
and
amortization 222 89 311 212 86 298
----------------- ------ ----- ---- --------- ------ ----- ---- ---------
Total Operating
Expense 1,220 863 2,083 1,190 831 2,021
----------------- ------ ----- ---- --------- ------ ----- ---- ---------
Operating Income 141 (198) (57) 32 (225) (193)
----------------- ------ ----- ---- --------- ------ ----- ---- ---------
Equity in Net
Income of
Affiliates 25 - 25 9 - 9
----------------- ------ ----- ---- --------- ------ ----- ---- ---------
Segment
Contribution $ 166 $ (198) $ (32) $ 41 $ (225) $ (184)
----------------- ------ ----- ---- --------- ------ ----- ---- ---------
Supplemental International
-------------------------------------------------------------------------------------------
Six Months Ended
June 30, 2017 June 30, 2016
--------------------------------- ---------------------------------
Latin Latin
America Mexico International America Mexico International
---------------- ------- ------ --------------- ------- ------ ---------------
Operating
Revenues
Video service $ 2,702 $ - $ 2,702 $ 2,352 $ - $ 2,352
Wireless
service - 1,010 1,010 - 944 944
Wireless
equipment - 243 243 - 199 199
----------------- ------ ----- ---- --------- ------ ----- ---- ---------
Total Operating
Revenues 2,702 1,253 3,955 2,352 1,143 3,495
----------------- ------ ----- ---- --------- ------ ----- ---- ---------
Operating
Expenses
Operations
and support 2,048 1,483 3,531 1,859 1,452 3,311
Depreciation
and
amortization 436 165 601 408 167 575
----------------- ------ ----- ---- --------- ------ ----- ---- ---------
Total Operating
Expense 2,484 1,648 4,132 2,267 1,619 3,886
----------------- ------ ----- ---- --------- ------ ----- ---- ---------
Operating Income 218 (395) (177) 85 (476) (391)
----------------- ------ ----- ---- --------- ------ ----- ---- ---------
Equity in Net
Income of
Affiliates 45 - 45 23 - 23
----------------- ------ ----- ---- --------- ------ ----- ---- ---------
Segment
Contribution $ 263 $ (395) $ (132) $ 108 $ (476) $ (368)
----------------- ------ ----- ---- --------- ------ ----- ---- ---------
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR OKNDNPBKDBFB
(END) Dow Jones Newswires
August 23, 2017 11:36 ET (15:36 GMT)
1 Year At&t Inc 5.500% Chart |
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