[July 23, 2015] |
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AT&T Reports Double-Digit Adjusted EPS and Free Cash Flow Growth, and 2.1 Million Wireless Net Adds in Second-Quarter Results
AT&T
Inc. (NYSE:T)
today reported solid second-quarter results with strong adjusted EPS
growth, expanding margins and growing free cash flow.
"These results reaffirm our transformation strategy," said Randall
Stephenson, AT&T chairman and CEO. "We grew revenues, expanded
margins and delivered double-digit adjusted EPS and cash flow growth. We
added more than 2 million new wireless subscribers as the repositioning
of our smartphone base nears completion. We also began expanding
high-quality, high-speed wireless service to Mexican consumers and
businesses.
"This is a pivotal time for us. We look forward to closing DIRECTV and
building on this momentum by delivering a new TV everywhere experience
integrated with mobile and high-speed Internet service."
Consolidated Financial Results
AT&T's consolidated revenues for the second quarter totaled $33.0
billion, up 1.4 percent versus the year-earlier period. When excluding
the divested Connecticut wireline property, revenues were up 2.2
percent. Compared with results for the second quarter of 2014, operating
expenses were $27.3 billion versus $27.0 billion; operating income was
$5.7 billion versus $5.6 billion in the second quarter a year ago, and
operating income margin was 17.3 percent, up slightly from 17.2 percent
in the year-ago quarter. When adjusting for merger and
integration-related expenses, operating income was $6.5 billion versus
$5.8 billion a year ago; and operating income margin was 19.6 percent,
up 190 basis points from a year ago.
Second-quarter 2015 net income attributable to AT&T totaled $3.0
billion, or $0.58 per diluted share, compared to net income of $3.5
billion, or $0.68 per diluted share in the year-ago quarter. Adjusting
for $0.05 of Leap network decommissioning, $0.03 of wireless integration
expenses and $0.03 of DIRECTV and Mexico merger and integration-related
expenses, earnings per share was $0.69 compared to an adjusted $0.62 in
the year-ago quarter, an increase of more than 11 percent.
Cash from operating activities totaled $9.2 billion in the second
quarter and $15.9 billion year to date; and capital expenditures totaled
$4.7 billion and $8.7 billion year to date. Free cash flow - cash from
operating activities minus capital expenditures - totaled $4.5 billion
for the quarter and $7.2 billion year to date, an increase over the
year-ago quarter even as the company continues to invest in its
high-quality network and customers. The free cash flow dividend payout
ratio was 55 percent in the second quarter and 67 percent year to date.
For detailed segment results, please go to the Investor Briefing and
Financial and Operational Results on the AT&T
Investor Relations website.
*Free cash flow dividend payout ratio is dividends divided by free
cash flow
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.
About AT&T
AT&T Inc. (NYSE:T) helps millions of people and businesses around the
globe stay connected through leading wireless, high-speed Internet,
voice and cloud-based services. We're helping people mobilize their
worlds with state-of-the-art communications, entertainment services and
amazing innovations like connected cars and devices for homes, offices
and points in between. Our U.S. wireless network offers customers the
nation's strongest LTE signal and the nation's most reliable 4G LTE
network. We offer the best global wireless coverage*. We're improving
how our customers stay entertained and informed with AT&T U-verse® TV
and High Speed Internet services. And businesses worldwide are serving
their customers better with AT&T's mobility and highly secure cloud
solutions.
Additional information about AT&T products and services is available at http://about.att.com.
Follow our news on Twitter at @ATT, on Facebook at http://www.facebook.com/att
and YouTube at http://www.youtube.com/att.
© 2015 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.
Reliability and signal strength claims based on nationwide carriers'
LTE. Signal strength claim based ONLY on avg. LTE signal strength. LTE
not available everywhere.
*Global coverage claim based on offering discounted voice and data
roaming; LTE roaming; voice roaming; and world-capable smartphone and
tablets in more countries than any other U.S. carrier. International
services required. Coverage not available in all areas. Coverage may
vary per country and be limited/restricted in some countries.
Cautionary Language Concerning Forward-Looking Statements
Information set forth in this news release contains financial estimates
and other forward-looking statements that are subject to risks and
uncertainties, and actual results may 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 or revise statements contained in this news release
based on new information or otherwise. This news release may contain
certain non-GAAP financial measures. Reconciliations between the
non-GAAP financial measures and the GAAP financial measures are
available on the company's website at www.att.com/investor.relations.
Accompanying financial statements follow.
NOTE: EBITDA is defined as operating income before
depreciation and amortization. EBITDA differs from Segment Operating
Income (loss), as calculated in accordance with U.S. generally accepted
accounting principles (GAAP), in that it excludes depreciation and
amortization. EBITDA does not give effect to cash used for debt service
requirements and thus does not reflect available funds for
distributions, reinvestment or other discretionary uses. EBITDA is not
presented as an alternative measure of operating results or cash flows
from operations, as determined in accordance with GAAP. Our calculation
of EBITDA, as presented, may differ from similarly titled measures
reported by other companies.
NOTE: Free cash flow is defined as cash from operations minus
construction and capital expenditures. Free cash flow after
dividends is defined as cash from operations minus construction, capital
expenditures and dividends. Free cash flow 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 regularly reviews free cash flow as an important
indicator of the cash generated by normal business operations, including
capital expenditures, and makes decisions based on it. Management also
views free cash flow as a measure of cash available to pay debt and
return cash to shareowners.
Free cash flow includes reimbursements of certain postretirement
benefits paid.
NOTE: Adjusted Operating Income and Margin are non-GAAP
financial measures calculated by excluding from operating revenues and
operating expenses significant items that are non-operational or
non-recurring in nature. Management believes that these measures provide
relevant and useful information to investors and other users of our
financial data in evaluating the effectiveness of our operations and
underlying business trends.
Adjusted Operating Income and Margin should be considered in addition
to, but not as a substitute for, other measures of financial performance
reported in accordance with GAAP. Our calculation of Adjusted Operating
Income and Margin, as presented, may differ from similarly titled
measures reported by other companies.
Adjusted Operating Income Margin is calculated by dividing Adjusted
Operating Income by Operating Revenues.
NOTE: Net-Debt-to-EBITDA ratios are non-GAAP financial
measures frequently used by investors and credit rating agencies.
Management believes these measures provide relevant and useful
information to investors and other users of our financial data. Net
debt is calculated by subtracting cash and cash equivalents from the sum
of debt maturing within one year and long-term debt. The
Net-Debt-to-EBITDA ratio is calculated by dividing the Net Debt by
annualized EBITDA. Annualized EBITDA is calculated by annualizing
the year-to-date EBITDA.
Our calculation of EBITDA, as presented, may differ from similarly
titled measures reported by other companies.
NOTE: Adjusted Diluted EPS is a non-GAAP financial measure
calculated by excluding from operating revenues, operating expenses and
equity in net income of affiliates certain significant items that are
non-operational or non-recurring in nature, including dispositions.
Management believes that this measure provides relevant and useful
information to investors and other users of our financial data in
evaluating the effectiveness of our operations and underlying business
trends.
Adjusted Diluted EPS should be considered in addition to, but not as
a substitute for, other measures of financial performance reported in
accordance with GAAP. Our calculation of Adjusted Diluted EPS, as
presented, may differ from similarly titled measures reported by other
companies.
NOTE: Adjusted EBITDA is a non-GAAP financial measure
calculated by excluding costs which are non-recurring in nature,
including dispositions and merger integration and transaction costs.
Adjusted EBITDA also excludes net actuarial gains or losses associated
with our pension and postemployment benefit plans. Management believes
that these measures provide relevant and useful information to investors
and other users of our financial data in evaluating the effectiveness of
our operations and underlying business trends.
Adjusted EBITDA should be considered in addition to, but not as a
substitute for, other measures of financial performance reported in
accordance with GAAP. Our calculation of Adjusted EBITDA, as presented,
may differ from similarly titled measures reported by other companies.
Adjusted EBITDA Margin is calculated by dividing Adjusted EBITDA by
Operating Revenues.
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Financial Data
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AT&T Inc.
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Consolidated Statements of Income
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Dollars in millions except per share amounts
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Unaudited
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Three Months Ended
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Six Months Ended
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6/30/2015
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6/30/2014
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% Chg
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6/30/2015
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6/30/2014
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% Chg
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Operating Revenues
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Service
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$
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29,541
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$
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29,556
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-0.1
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%
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$
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58,503
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$
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59,332
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-1.4
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%
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Equipment
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3,474
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3,019
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15.1
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%
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7,088
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5,719
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23.9
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%
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Total Operating Revenues
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33,015
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32,575
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1.4
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%
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65,591
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65,051
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0.8
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%
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Operating Expenses
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Cost of services and sales (exclusive of depreciation and
amortization shown separately below)
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15,140
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14,212
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6.5
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%
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29,721
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27,533
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7.9
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%
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Selling, general and administrative
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7,467
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8,197
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-8.9
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%
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15,428
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16,457
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-6.3
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%
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Depreciation and amortization
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4,696
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4,550
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3.2
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%
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9,274
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9,167
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1.2
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%
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Total Operating Expenses
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27,303
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26,959
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1.3
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%
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54,423
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53,157
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2.4
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%
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Operating Income
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5,712
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5,616
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1.7
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%
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11,168
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11,894
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-6.1
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%
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Interest Expense
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932
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881
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5.8
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%
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1,831
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|
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1,741
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5.2
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%
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Equity in Net Income of Affiliates
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33
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|
102
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-67.6
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%
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33
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|
190
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-82.6
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%
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Other Income (Expense) - Net
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48
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1,269
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-96.2
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%
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|
118
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1,414
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-91.7
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%
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Income Before Income Taxes
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4,861
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6,106
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-20.4
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%
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9,488
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11,757
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-19.3
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%
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Income Tax Expense
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1,715
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2,485
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-31.0
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%
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3,066
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4,402
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-30.3
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%
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Net Income
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3,146
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3,621
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-13.1
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%
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6,422
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7,355
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-12.7
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%
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Less: Net Income Attributable to Noncontrolling Interest
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(102
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)
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(74
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)
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-37.8
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%
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(178
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(156
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-14.1
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%
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Net Income Attributable to AT&T
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$
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3,044
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$
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3,547
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-14.2
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%
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$
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6,244
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$
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7,199
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-13.3
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%
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Basic Earnings Per Share Attributable to AT&T
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$
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0.58
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$
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0.68
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-14.7
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%
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$
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1.20
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$
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1.38
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-13.0
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%
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Weighted Average Common Shares Outstanding (000,000)
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5,204
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5,204
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-
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5,204
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5,213
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-0.2
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%
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Diluted Earnings Per Share Attributable to AT&T
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$
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0.58
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$
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0.68
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-14.7
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%
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$
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1.20
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$
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1.38
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-13.0
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%
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Weighted Average Common Shares Outstanding with Dilution (000,000)
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5,220
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5,220
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-
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5,220
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5,229
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-0.2
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%
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Financial Data
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AT&T Inc.
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Consolidated Balance Sheets
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Dollars in millions
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6/30/15
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12/31/14
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Unaudited
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Assets
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Current Assets
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Cash and cash equivalents
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$
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20,956
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$
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8,603
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Accounts receivable - net of allowances for doubtful accounts of
$492 and $454
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13,821
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14,527
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Prepaid expenses
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|
834
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|
831
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Deferred income taxes
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|
1,131
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|
1,142
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Other current assets
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6,421
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6,925
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Total current assets
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43,163
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32,028
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Property, Plant and Equipment - Net
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114,348
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112,898
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Goodwill
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70,920
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|
69,692
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Licenses
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|
|
80,922
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|
|
60,824
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Other Intangible Assets - Net
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|
|
6,385
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|
|
|
6,139
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Investments in Equity Affiliates
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|
|
288
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|
|
250
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Other Assets
|
|
|
10,463
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|
|
|
10,998
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Total Assets
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|
$
|
326,489
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|
|
$
|
292,829
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Liabilities and Stockholders' Equity
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Current Liabilities
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Debt maturing within one year
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|
$
|
8,603
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|
|
$
|
6,056
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Accounts payable and accrued liabilities
|
|
|
21,560
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|
|
|
23,592
|
|
Advanced billing and customer deposits
|
|
|
4,075
|
|
|
|
4,105
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Accrued taxes
|
|
|
3,848
|
|
|
|
1,091
|
|
Dividends payable
|
|
|
2,441
|
|
|
|
2,438
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Total current liabilities
|
|
|
40,527
|
|
|
|
37,282
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Long-Term Debt
|
|
|
105,067
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|
|
|
76,011
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Deferred Credits and Other Noncurrent Liabilities
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|
|
|
|
|
|
Deferred income taxes
|
|
|
38,516
|
|
|
|
37,544
|
|
Postemployment benefit obligation
|
|
|
36,638
|
|
|
|
37,079
|
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Other noncurrent liabilities
|
|
|
18,240
|
|
|
|
17,989
|
|
Total deferred credits and other noncurrent liabilities
|
|
|
93,394
|
|
|
|
92,612
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Stockholders' Equity
|
|
|
|
|
|
|
Common stock
|
|
|
6,495
|
|
|
|
6,495
|
|
Additional paid-in capital
|
|
|
91,032
|
|
|
|
91,108
|
|
Retained earnings
|
|
|
29,086
|
|
|
|
27,736
|
|
Treasury stock
|
|
|
(46,793
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)
|
|
|
(47,029
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)
|
Accumulated other comprehensive income
|
|
|
7,039
|
|
|
|
8,060
|
|
Noncontrolling interest
|
|
|
642
|
|
|
|
554
|
|
Total stockholders' equity
|
|
|
87,501
|
|
|
|
86,924
|
|
Total Liabilities and Stockholders' Equity
|
|
$
|
326,489
|
|
|
$
|
292,829
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Data
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AT&T Inc.
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|
|
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Consolidated Statements of Cash Flows
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|
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Dollars in millions
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|
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(Unaudited)
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|
|
|
|
|
|
|
|
|
Six months ended June 30,
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|
|
|
2015
|
|
|
2014
|
|
|
|
|
|
|
|
Operating Activities
|
|
|
|
|
|
|
Net income
|
|
$
|
6,422
|
|
|
$
|
7,355
|
|
Adjustments to reconcile net income to net cash provided by
operating activities:
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
9,274
|
|
|
|
9,167
|
|
Undistributed earnings from investments in equity affiliates
|
|
|
(23
|
)
|
|
|
(58
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)
|
Provision for uncollectible accounts
|
|
|
535
|
|
|
|
444
|
|
Deferred income tax expense
|
|
|
1,183
|
|
|
|
546
|
|
Net gain from sale of investments, net of impairments
|
|
|
(50
|
)
|
|
|
(1,365
|
)
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
Accounts receivable
|
|
|
434
|
|
|
|
(566
|
)
|
Other current assets
|
|
|
743
|
|
|
|
(771
|
)
|
Accounts payable and accrued liabilities
|
|
|
(1,125
|
)
|
|
|
2,894
|
|
Retirement benefit funding
|
|
|
(455
|
)
|
|
|
(280
|
)
|
Other - net
|
|
|
(1,040
|
)
|
|
|
(497
|
)
|
Total adjustments
|
|
|
9,476
|
|
|
|
9,514
|
|
Net Cash Provided by Operating Activities
|
|
|
15,898
|
|
|
|
16,869
|
|
|
|
|
|
|
|
|
Investing Activities
|
|
|
|
|
|
|
Construction and capital expenditures:
|
|
|
|
|
|
|
Capital expenditures
|
|
|
(8,328
|
)
|
|
|
(11,649
|
)
|
Interest during construction
|
|
|
(339
|
)
|
|
|
(118
|
)
|
Acquisitions, net of cash acquired
|
|
|
(20,954
|
)
|
|
|
(857
|
)
|
Dispositions
|
|
|
72
|
|
|
|
4,921
|
|
Sale of securities
|
|
|
1,890
|
|
|
|
-
|
|
Return of advances to and investments in equity affiliates
|
|
|
-
|
|
|
|
2
|
|
Other
|
|
|
(1
|
)
|
|
|
-
|
|
Net Cash Used in Investing Activities
|
|
|
(27,660
|
)
|
|
|
(7,701
|
)
|
|
|
|
|
|
|
|
Financing Activities
|
|
|
|
|
|
|
Net change in short-term borrowings with original maturities of
three months or less
|
|
|
-
|
|
|
|
134
|
|
Issuance of long-term debt
|
|
|
33,958
|
|
|
|
8,564
|
|
Repayment of long-term debt
|
|
|
(2,919
|
)
|
|
|
(3,508
|
)
|
Purchase of treasury stock
|
|
|
-
|
|
|
|
(1,396
|
)
|
Issuance of treasury stock
|
|
|
20
|
|
|
|
27
|
|
Dividends paid
|
|
|
(4,873
|
)
|
|
|
(4,784
|
)
|
Other
|
|
|
(2,071
|
)
|
|
|
(239
|
)
|
Net Cash Provided by (Used in) Financing Activities
|
|
|
24,115
|
|
|
|
(1,202
|
)
|
Net increase in cash and cash equivalents
|
|
|
12,353
|
|
|
|
7,966
|
|
Cash and cash equivalents beginning of year
|
|
|
8,603
|
|
|
|
3,339
|
|
Cash and Cash Equivalents End of Period
|
|
$
|
20,956
|
|
|
$
|
11,305
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AT&T Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statements of Segment Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollars in millions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unaudited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wireless
|
|
|
6/30/2015
|
|
|
6/30/2014
|
|
% Chg
|
|
|
6/30/2015
|
|
|
6/30/2014
|
|
% Chg
|
Segment Operating Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service
|
|
$
|
15,115
|
|
|
|
$
|
15,148
|
|
|
|
-0.2
|
%
|
|
$
|
29,927
|
|
|
|
$
|
30,535
|
|
|
|
-2.0
|
%
|
Equipment
|
|
|
3,189
|
|
|
|
|
2,782
|
|
|
|
14.6
|
%
|
|
|
6,563
|
|
|
|
|
5,261
|
|
|
|
24.7
|
%
|
Total Segment Operating Revenues
|
|
|
18,304
|
|
|
|
|
17,930
|
|
|
|
2.1
|
%
|
|
|
36,490
|
|
|
|
|
35,796
|
|
|
|
1.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Operating Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operations and support
|
|
|
11,551
|
|
|
|
|
11,568
|
|
|
|
-0.1
|
%
|
|
|
23,232
|
|
|
|
|
22,450
|
|
|
|
3.5
|
%
|
Depreciation and amortization
|
|
|
2,073
|
|
|
|
|
2,035
|
|
|
|
1.9
|
%
|
|
|
4,131
|
|
|
|
|
3,966
|
|
|
|
4.2
|
%
|
Total Segment Operating Expenses
|
|
|
13,624
|
|
|
|
|
13,603
|
|
|
|
0.2
|
%
|
|
|
27,363
|
|
|
|
|
26,416
|
|
|
|
3.6
|
%
|
Segment Operating Income
|
|
|
4,680
|
|
|
|
|
4,327
|
|
|
|
8.2
|
%
|
|
|
9,127
|
|
|
|
|
9,380
|
|
|
|
-2.7
|
%
|
Equity in Net Income (Loss) of Affiliates
|
|
|
-
|
|
|
|
|
(29
|
)
|
|
|
-
|
|
|
|
(4
|
)
|
|
|
|
(49
|
)
|
|
|
91.8
|
%
|
Segment Income
|
|
$
|
4,680
|
|
|
|
$
|
4,298
|
|
|
|
8.9
|
%
|
|
$
|
9,123
|
|
|
|
$
|
9,331
|
|
|
|
-2.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Operating Income Margin
|
|
|
25.6
|
|
%
|
|
|
24.1
|
|
%
|
|
|
|
|
|
25.0
|
|
%
|
|
|
26.2
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wireline
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Operating Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service
|
|
$
|
13,981
|
|
|
|
$
|
14,408
|
|
|
|
-3.0
|
%
|
|
$
|
27,916
|
|
|
|
$
|
28,797
|
|
|
|
-3.1
|
%
|
Equipment
|
|
|
233
|
|
|
|
|
229
|
|
|
|
1.7
|
%
|
|
|
446
|
|
|
|
|
441
|
|
|
|
1.1
|
%
|
Total Segment Operating Revenues
|
|
|
14,214
|
|
|
|
|
14,637
|
|
|
|
-2.9
|
%
|
|
|
28,362
|
|
|
|
|
29,238
|
|
|
|
-3.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Operating Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operations and support
|
|
|
10,362
|
|
|
|
|
10,700
|
|
|
|
-3.2
|
%
|
|
|
20,625
|
|
|
|
|
21,157
|
|
|
|
-2.5
|
%
|
Depreciation and amortization
|
|
|
2,488
|
|
|
|
|
2,514
|
|
|
|
-1.0
|
%
|
|
|
4,964
|
|
|
|
|
5,198
|
|
|
|
-4.5
|
%
|
Total Segment Operating Expenses
|
|
|
12,850
|
|
|
|
|
13,214
|
|
|
|
-2.8
|
%
|
|
|
25,589
|
|
|
|
|
26,355
|
|
|
|
-2.9
|
%
|
Segment Operating Income
|
|
|
1,364
|
|
|
|
|
1,423
|
|
|
|
-4.1
|
%
|
|
|
2,773
|
|
|
|
|
2,883
|
|
|
|
-3.8
|
%
|
Equity in Net Income (Loss) of Affiliates
|
|
|
1
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(6
|
)
|
|
|
|
1
|
|
|
|
-
|
|
Segment Income
|
|
$
|
1,365
|
|
|
|
$
|
1,423
|
|
|
|
-4.1
|
%
|
|
$
|
2,767
|
|
|
|
$
|
2,884
|
|
|
|
-4.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Operating Income Margin
|
|
|
9.6
|
|
%
|
|
|
9.7
|
|
%
|
|
|
|
|
|
9.8
|
|
%
|
|
|
9.9
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Operating Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service
|
|
$
|
445
|
|
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
660
|
|
|
|
$
|
-
|
|
|
|
-
|
|
Equipment
|
|
|
46
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
67
|
|
|
|
|
-
|
|
|
|
-
|
|
Total Segment Operating Revenues
|
|
|
491
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
727
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Operating Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operations and support
|
|
|
529
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
748
|
|
|
|
|
-
|
|
|
|
-
|
|
Depreciation and amortization
|
|
|
125
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
169
|
|
|
|
|
-
|
|
|
|
-
|
|
Total Segment Operating Expenses
|
|
|
654
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
917
|
|
|
|
|
-
|
|
|
|
-
|
|
Segment Operating Income (Loss)
|
|
|
(163
|
)
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(190
|
)
|
|
|
|
-
|
|
|
|
-
|
|
Equity in Net Income of Affiliates
|
|
|
-
|
|
|
|
|
99
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
153
|
|
|
|
-
|
|
Segment Income (Loss)
|
|
$
|
(163
|
)
|
|
|
$
|
99
|
|
|
|
-
|
|
|
$
|
(190
|
)
|
|
|
$
|
153
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Operating Income Margin
|
|
|
(33.2
|
)
|
%
|
|
|
-
|
|
|
|
|
|
|
|
(26.1
|
)
|
%
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AT&T Inc.
|
Supplementary Operating and Financial Data
|
Dollars in millions except per share amounts, subscribers and
connections in (000s)
|
Unaudited
|
|
Three Months Ended
|
|
|
Six Months Ended
|
|
|
|
|
6/30/2015
|
|
6/30/2014
|
|
% Chg
|
|
|
6/30/2015
|
|
6/30/2014
|
|
% Chg
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wireless
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subscribers and Connections
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
123,902
|
|
|
|
116,634
|
|
|
6.2
|
%
|
|
|
Postpaid
|
|
|
|
|
|
|
|
|
|
76,541
|
|
|
|
74,332
|
|
|
3.0
|
%
|
|
|
Prepaid1
|
|
|
|
|
|
|
|
|
|
10,438
|
|
|
|
10,082
|
|
|
3.5
|
%
|
|
|
Reseller
|
|
|
|
|
|
|
|
|
|
13,506
|
|
|
|
13,756
|
|
|
-1.8
|
%
|
|
|
Connected Devices1
|
|
|
|
|
|
|
|
|
|
23,417
|
|
|
|
18,464
|
|
|
26.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wireless Net Adds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
2,094
|
|
|
|
634
|
|
|
-
|
|
|
|
|
3,312
|
|
|
|
1,696
|
|
|
95.3
|
%
|
|
|
Postpaid
|
|
|
410
|
|
|
|
1,026
|
|
|
-60.0
|
%
|
|
|
|
851
|
|
|
|
1,651
|
|
|
-48.5
|
%
|
|
|
Prepaid
|
|
|
331
|
|
|
|
(286
|
)
|
|
-
|
|
|
|
|
429
|
|
|
|
(198
|
)
|
|
-
|
|
|
|
Reseller
|
|
|
(95
|
)
|
|
|
(162
|
)
|
|
41.4
|
%
|
|
|
|
(361
|
)
|
|
|
(368
|
)
|
|
1.9
|
%
|
|
|
Connected Devices
|
|
|
1,448
|
|
|
|
56
|
|
|
-
|
|
|
|
|
2,393
|
|
|
|
611
|
|
|
-
|
|
|
M&A Activity, Partitioned Customers and Other Adjs.
|
|
|
36
|
|
|
|
(14
|
)
|
|
-
|
|
|
|
|
36
|
|
|
|
4,562
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wireless Churn
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Postpaid Churn
|
|
|
1.01
|
%
|
|
|
0.86
|
%
|
|
15 BP
|
|
|
|
1.01
|
%
|
|
|
0.96
|
%
|
|
5 BP
|
|
Total Churn
|
|
|
1.31
|
%
|
|
|
1.47
|
%
|
|
-16 BP
|
|
|
|
1.36
|
%
|
|
|
1.43
|
%
|
|
-7 BP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Licensed POPs (000,000)
|
|
|
|
|
|
|
|
|
|
321
|
|
|
|
321
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wireline
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Voice
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Wireline Voice Connections
|
|
|
|
|
|
|
|
|
|
23,497
|
|
|
|
26,958
|
|
|
-12.8
|
%
|
|
|
Net Change
|
|
|
(652
|
)
|
|
|
(758
|
)
|
|
14.0
|
%
|
|
|
|
(1,281
|
)
|
|
|
(1,531
|
)
|
|
16.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Broadband
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Wireline Broadband Connections
|
|
|
|
|
|
|
|
|
|
15,961
|
|
|
|
16,448
|
|
|
-3.0
|
%
|
|
|
Net Change
|
|
|
(136
|
)
|
|
|
(55
|
)
|
|
-
|
|
|
|
|
(67
|
)
|
|
|
23
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Video
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total U-verse Video Connections
|
|
|
|
|
|
|
|
|
|
5,971
|
|
|
|
5,851
|
|
|
2.1
|
%
|
|
|
Net Change
|
|
|
(22
|
)
|
|
|
190
|
|
|
-
|
|
|
|
|
28
|
|
|
|
391
|
|
|
-92.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Revenue Connections
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Broadband2
|
|
|
|
|
|
|
|
|
|
14,428
|
|
|
|
14,780
|
|
|
-2.4
|
%
|
|
U-verse Video Connections
|
|
|
|
|
|
|
|
|
|
5,946
|
|
|
|
5,831
|
|
|
2.0
|
%
|
|
Voice3
|
|
|
|
|
|
|
|
|
|
13,312
|
|
|
|
15,314
|
|
|
-13.1
|
%
|
Total Consumer Revenue Connections1
|
|
|
|
|
|
|
|
|
|
33,686
|
|
|
|
35,925
|
|
|
-6.2
|
%
|
|
Net Change
|
|
|
(489
|
)
|
|
|
(299
|
)
|
|
-63.5
|
%
|
|
|
|
(680
|
)
|
|
|
(465
|
)
|
|
-46.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AT&T Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction and capital expenditures:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
$
|
4,480
|
|
|
$
|
5,933
|
|
|
-24.5
|
%
|
|
|
$
|
8,328
|
|
|
$
|
11,649
|
|
|
-28.5
|
%
|
|
|
Interest during construction
|
|
$
|
216
|
|
|
$
|
63
|
|
|
-
|
|
|
|
$
|
339
|
|
|
$
|
118
|
|
|
-
|
|
|
Dividends Declared per Share
|
|
$
|
0.47
|
|
|
$
|
0.46
|
|
|
2.2
|
%
|
|
|
$
|
0.94
|
|
|
$
|
0.92
|
|
|
2.2
|
%
|
|
End of Period Common Shares Outstanding (000,000)
|
|
|
|
|
|
|
|
|
|
5,193
|
|
|
|
5,191
|
|
|
-
|
|
|
Debt Ratio4
|
|
|
|
|
|
|
|
|
|
56.5
|
%
|
|
|
47.6
|
%
|
|
890 BP
|
|
Total Employees
|
|
|
|
|
|
|
|
|
|
250,730
|
|
|
|
248,170
|
|
|
1.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
Prior year amounts restated to conform to current period reporting
methodology.
|
2
|
Consumer wireline broadband connections include DSL lines, U-verse
high speed Internet access and satellite broadband.
|
3
|
Includes consumer U-verse Voice over Internet Protocol connections
of 5,170 as of June 30, 2015.
|
4
|
Total long-term debt plus debt maturing within one year divided by
total debt plus total stockholders' equity.
|
|
Note: For the end of 2Q15, total switched access lines were
18,116; retail business switched access lines totaled 8,331; and
wholesale, national mass markets and coin switched access lines
totaled 1,643. Restated switched access lines do not include ISDN
lines.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AT&T Inc.
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Wireless Reconciliation
|
|
|
|
|
|
|
|
|
|
|
Wireless Segment EBITDA
|
|
|
|
|
|
|
|
|
|
|
Dollars in millions
|
|
|
|
|
|
|
|
|
|
|
Unaudited
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
6/30/14
|
|
9/30/14
|
|
12/31/14
|
|
3/31/15
|
|
6/30/15
|
|
|
|
|
|
|
|
|
|
|
|
Segment Operating Revenues
|
|
|
|
|
|
|
|
|
|
|
Service
|
|
$
|
15,148
|
|
|
$
|
15,423
|
|
|
$
|
15,074
|
|
|
$
|
14,812
|
|
|
$
|
15,115
|
|
Equipment
|
|
|
2,782
|
|
|
|
2,914
|
|
|
|
4,785
|
|
|
|
3,374
|
|
|
|
3,189
|
|
Total Segment Operating Revenues
|
|
$
|
17,930
|
|
|
$
|
18,337
|
|
|
$
|
19,859
|
|
|
$
|
18,186
|
|
|
$
|
18,304
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Operating Expenses
|
|
|
|
|
|
|
|
|
|
|
Operations and support
|
|
|
11,568
|
|
|
|
11,855
|
|
|
|
14,619
|
|
|
|
11,681
|
|
|
|
11,551
|
|
Depreciation and amortization
|
|
|
2,035
|
|
|
|
1,965
|
|
|
|
2,010
|
|
|
|
2,058
|
|
|
|
2,073
|
|
Total Segment Operating Expenses
|
|
|
13,603
|
|
|
|
13,820
|
|
|
|
16,629
|
|
|
|
13,739
|
|
|
|
13,624
|
|
Segment Operating Income
|
|
|
4,327
|
|
|
|
4,517
|
|
|
|
3,230
|
|
|
|
4,447
|
|
|
|
4,680
|
|
Segment Operating Income Margin
|
|
|
24.1
|
%
|
|
|
24.6
|
%
|
|
|
16.3
|
%
|
|
|
24.5
|
%
|
|
|
25.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Plus: Depreciation and amortization
|
|
|
2,035
|
|
|
|
1,965
|
|
|
|
2,010
|
|
|
|
2,058
|
|
|
|
2,073
|
|
EBITDA1
|
|
$
|
6,362
|
|
|
$
|
6,482
|
|
|
$
|
5,240
|
|
|
$
|
6,505
|
|
|
$
|
6,753
|
|
EBITDA as a % of Service Revenues2
|
|
|
42.0
|
%
|
|
|
42.0
|
%
|
|
|
34.8
|
%
|
|
|
43.9
|
%
|
|
|
44.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
1 EBITDA is defined as Operating Income before
Depreciation and amortization.
|
2 Service revenues include Wireless data, voice, text
and other service revenues.
|
|
|
|
|
|
|
|
|
|
|
Financial Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AT&T Inc.
|
|
|
|
|
|
|
|
|
Non-GAAP Wireless Reconciliation
|
|
|
|
|
|
|
|
|
Wireless Segment Adjusted EBITDA
|
|
|
|
|
|
|
|
|
Dollars in millions
|
|
|
|
|
|
|
|
|
Unaudited
|
|
|
|
Three Months Ended
|
|
|
|
|
June 30,
|
|
|
|
|
2013
|
|
2014
|
|
2015
|
Service Revenues2
|
|
|
|
$
|
15,370
|
|
|
$
|
15,148
|
|
|
$
|
15,115
|
|
|
|
|
|
|
|
|
|
|
EBITDA1
|
|
|
|
$
|
6,521
|
|
|
$
|
6,362
|
|
|
$
|
6,753
|
|
EBITDA as a % of Service Revenues2
|
|
|
|
|
42.4
|
%
|
|
|
42.0
|
%
|
|
|
44.7
|
%
|
Adjustments:
|
|
|
|
|
|
|
|
|
Wireless merger integration costs3
|
|
|
|
|
-
|
|
|
|
96
|
|
|
|
215
|
|
Leap network decommissioning
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
364
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA1
|
|
|
|
$
|
6,521
|
|
|
$
|
6,458
|
|
|
$
|
7,332
|
|
Adjusted EBITDA as a % of Adjusted Service Revenues2
|
|
|
|
|
42.4
|
%
|
|
|
42.6
|
%
|
|
|
48.5
|
%
|
|
|
|
|
|
|
|
|
|
1 EBITDA is defined as Operating Income before
Depreciation and amortization.
|
2 Service revenues include Wireless data, voice, text
and other service revenues.
|
3 Operations and Support expenses for domestic wireless
integration costs.
|
|
|
|
|
|
|
|
|
|
|
Financial Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AT&T Inc.
|
|
|
|
|
|
|
|
|
Non-GAAP Consolidated Reconciliation
|
|
|
|
|
|
|
|
|
Free Cash Flow
|
|
|
|
|
|
|
|
|
Dollars in millions
|
|
|
|
|
|
|
|
|
Unaudited
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
June 30,
|
|
June 30,
|
|
|
2014
|
|
2015
|
|
2014
|
|
2015
|
Net cash provided by operating activities
|
|
$
|
8,070
|
|
|
$
|
9,160
|
|
|
$
|
16,869
|
|
|
$
|
15,898
|
|
Less: Construction and capital expenditures
|
|
|
(5,996
|
)
|
|
|
(4,696
|
)
|
|
|
(11,767
|
)
|
|
|
(8,667
|
)
|
Free Cash Flow
|
|
$
|
2,074
|
|
|
$
|
4,464
|
|
|
$
|
5,102
|
|
|
$
|
7,231
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free Cash Flow after Dividends
|
|
|
|
|
|
|
|
|
Dollars in millions
|
|
|
|
|
|
|
|
|
Unaudited
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
June 30,
|
|
June 30,
|
|
|
2014
|
|
2015
|
|
2014
|
|
2015
|
Net cash provided by operating activities
|
|
$
|
8,070
|
|
|
$
|
9,160
|
|
|
$
|
16,869
|
|
|
$
|
15,898
|
|
Less: Construction and capital expenditures
|
|
|
(5,996
|
)
|
|
|
(4,696
|
)
|
|
|
(11,767
|
)
|
|
|
(8,667
|
)
|
Free Cash Flow
|
|
|
2,074
|
|
|
|
4,464
|
|
|
|
5,102
|
|
|
|
7,231
|
|
Less: Dividends paid
|
|
|
(2,386
|
)
|
|
|
(2,439
|
)
|
|
|
(4,784
|
)
|
|
|
(4,873
|
)
|
Free Cash Flow after Dividends
|
|
$
|
(312
|
)
|
|
$
|
2,025
|
|
|
$
|
318
|
|
|
$
|
2,358
|
|
|
|
|
|
|
|
|
|
|
Free Cash Flow Dividend Payout Ratio
|
|
|
|
|
55
|
%
|
|
|
|
|
67
|
%
|
|
|
|
|
|
|
|
|
|
Free cash flow includes reimbursements of certain postretirement
benefits paid.
|
|
Free cash flow is defined as cash from operations minus
construction and capital expenditures. Free cash flow after
dividends is defined as cash from operations minus construction,
capital expenditures and dividends. 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 regularly reviews free cash flow as
an important indicator of the cash generated by normal business
operations, including capital expenditures, and makes decisions
based on it. Management also views free cash flow as a measure of
cash available to pay debt and return cash to shareowners.
|
|
|
Financial Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AT&T Inc.
|
|
|
|
|
|
|
Non-GAAP Consolidated Reconciliation
|
|
|
|
|
|
|
Annualized Net-Debt-to-Adjusted-EBITDA Ratio
|
|
|
|
|
|
|
Dollars in millions
|
|
|
|
|
|
|
Unaudited
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
3/31/15
|
|
6/30/15
|
|
2015 YTD
|
|
|
|
|
|
|
|
Operating Revenues
|
|
$
|
32,576
|
|
$
|
33,015
|
|
$
|
65,591
|
Operating Expenses
|
|
|
27,120
|
|
|
27,303
|
|
|
54,423
|
Total Operating Income
|
|
|
5,456
|
|
|
5,712
|
|
|
11,168
|
Add Back Depreciation and Amortization
|
|
|
4,578
|
|
|
4,696
|
|
|
9,274
|
Consolidated Reported EBITDA
|
|
|
10,034
|
|
|
10,408
|
|
|
20,442
|
Add Back:
|
|
|
|
|
|
|
Wireless merger integration costs1
|
|
|
209
|
|
|
215
|
|
|
424
|
Leap network decommissioning
|
|
|
-
|
|
|
364
|
|
|
364
|
DIRECTV/Mexico merger costs2
|
|
|
89
|
|
|
116
|
|
|
205
|
Pension termination charges
|
|
|
150
|
|
|
-
|
|
|
150
|
Total Consolidated Adjusted EBITDA
|
|
|
10,482
|
|
|
11,103
|
|
|
21,585
|
Annualized Consolidated Adjusted EBITDA
|
|
|
|
|
|
$
|
43,170
|
End-of-period current debt
|
|
|
|
|
|
|
8,603
|
End-of-period long-term debt
|
|
|
|
|
|
|
105,067
|
Total End-of-Period Debt
|
|
|
|
|
|
|
113,670
|
Less Cash and Cash Equivalents
|
|
|
|
|
|
|
20,956
|
Net Debt Balance
|
|
|
|
|
|
$
|
92,714
|
|
|
|
|
|
|
|
Annualized Net-Debt-to-Adjusted-EBITDA Ratio
|
|
|
|
|
|
|
2.15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Adjustments include Operations and Support expenses
for domestic wireless integration costs.
|
|
2 Adjustments include Operations and Support expenses
for Iusacell and Nextel Mexico integration costs and DIRECTV
merger costs.
|
|
Net-Debt-to-EBITDA ratios are non-GAAP financial measures
frequently used by investors and credit rating agencies.
Management believes these measures provide relevant and useful
information to investors and other users of our financial data.
Net debt is calculated by subtracting cash and cash equivalents
from the sum of debt maturing within one year and long-term debt.
The Net-Debt-to-EBITDA ratio is calculated by dividing the Net
Debt by annualized EBITDA. Annualized EBITDA is calculated by
annualizing the year-to-date EBITDA.
|
|
Our calculation of EBITDA, as presented, may differ from similarly
titled measures reported by other companies.
|
|
|
|
|
|
Financial Data
|
|
|
|
|
|
|
|
|
|
AT&T Inc.
|
|
|
|
|
Non-GAAP Consolidated Reconciliation
|
|
|
|
|
Adjusted Diluted EPS
|
|
|
|
|
Unaudited
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
June 30,
|
|
|
2014
|
|
2015
|
Reported Diluted EPS
|
|
$
|
0.68
|
|
|
$
|
0.58
|
|
Adjustments:
|
|
|
|
|
Wireless merger integration costs1
|
|
|
0.02
|
|
|
|
0.03
|
|
Gain on sale of América Móvil shares
|
|
|
(0.08
|
)
|
|
|
-
|
|
Leap network decommissioning
|
|
|
-
|
|
|
|
0.05
|
|
DIRECTV/Mexico merger costs2
|
|
|
-
|
|
|
|
0.03
|
|
Adjusted Diluted EPS
|
|
$
|
0.62
|
|
|
$
|
0.69
|
|
Year-over-year growth - Adjusted
|
|
|
|
|
11.3
|
%
|
Weighted Average Common Shares Outstanding with Dilution (000,000)
|
|
|
5,220
|
|
|
|
5,220
|
|
|
|
|
|
|
1 Adjustments include domestic wireless integration
costs.
|
|
|
|
|
|
2 Adjustments include Iusacell and Nextel Mexico
integration costs, DIRECTV merger costs and interest expense
incurred on debt issued in May 2015 to fund the cash consideration
of the DIRECTV merger.
|
|
|
|
|
|
Adjusted Diluted EPS is a non-GAAP financial measure calculated by
excluding from operating revenues, operating expenses and equity
in net income of affiliates certain significant items that are
non-operational or non-recurring in nature, including
dispositions. Management believes that this measure provides
relevant and useful information to investors and other users of
our financial data in evaluating the effectiveness of our
operations and underlying business trends.
|
|
Adjusted Diluted EPS should be considered in addition to, but not
as a substitute for, other measures of financial performance
reported in accordance with GAAP. Our calculation of Adjusted
Diluted EPS, as presented, may differ from similarly titled
measures reported by other companies.
|
|
|
|
|
|
Sum of components may not tie due to rounding.
|
|
|
|
|
|
|
|
|
|
Financial Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AT&T Inc.
|
|
|
|
|
|
|
|
Non-GAAP Consolidated Reconciliation
|
|
|
|
|
|
|
|
Adjusted Operating Income and Margin
|
|
|
|
|
|
|
|
Dollars in millions
|
|
|
|
|
|
|
|
Unaudited
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
June 30,
|
|
|
|
2013
|
|
2014
|
|
2015
|
Operating Revenues
|
|
|
$
|
32,075
|
|
|
$
|
32,575
|
|
|
$
|
33,015
|
|
Reported Operating Income
|
|
|
$
|
6,113
|
|
|
$
|
5,616
|
|
|
$
|
5,712
|
|
Adjustments:
|
|
|
|
|
|
|
|
Wireless merger integration costs1
|
|
|
|
-
|
|
|
|
141
|
|
|
|
247
|
|
Leap network decommissioning
|
|
|
|
-
|
|
|
|
-
|
|
|
|
364
|
|
DIRECTV/Mexico merger costs2
|
|
|
|
-
|
|
|
|
-
|
|
|
|
147
|
|
Adjusted Operating Income
|
|
|
$
|
6,113
|
|
|
$
|
5,757
|
|
|
$
|
6,470
|
|
Year-over-year growth - Adjusted
|
|
|
|
|
|
-5.8
|
%
|
|
|
12.4
|
%
|
Adjusted Operating Income Margin*
|
|
|
|
19.1
|
%
|
|
|
17.7
|
%
|
|
|
19.6
|
%
|
|
|
|
|
|
|
|
|
1 Adjustments include domestic wireless integration
costs.
|
|
2 Adjustments include Iusacell and Nextel Mexico
integration costs and DIRECTV merger costs.
|
|
|
|
|
|
|
|
|
Adjusted Operating Income and Margin are non-GAAP financial
measures calculated by excluding from operating revenues and
operating expenses significant items that are non-operational or
non-recurring in nature. Management believes that these measures
provide relevant and useful information to investors and other
users of our financial data in evaluating the effectiveness of our
operations and underlying business trends.
|
|
Adjusted Operating Income and Margin should be considered in
addition to, but not as a substitute for, other measures of
financial performance reported in accordance with GAAP. Our
calculation of Adjusted Operating Income and Margin, as presented,
may differ from similarly titled measures reported by other
companies.
|
|
*Adjusted Operating Income Margin is calculated by dividing
Adjusted Operating Income by Operating Revenues.
|
|
|
|
|
|
|
|
|
|
Financial Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AT&T Inc.
|
|
|
|
|
|
|
|
Non-GAAP Consolidated Reconciliation
|
|
|
|
|
|
|
|
Adjusted Consolidated EBITDA
|
|
|
|
|
|
|
|
Dollars in millions
|
|
|
|
|
|
|
|
Unaudited
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
June 30,
|
|
|
|
2013
|
|
2014
|
|
2015
|
Operating Revenues
|
|
|
$
|
32,075
|
|
|
$
|
32,575
|
|
|
$
|
33,015
|
|
Reported Operating Income
|
|
|
$
|
6,113
|
|
|
$
|
5,616
|
|
|
$
|
5,712
|
|
Plus: Depreciation and Amortization
|
|
|
|
4,571
|
|
|
|
4,550
|
|
|
|
4,696
|
|
EBITDA1
|
|
|
$
|
10,684
|
|
|
$
|
10,166
|
|
|
$
|
10,408
|
|
Adjustments:
|
|
|
|
|
|
|
|
Wireless merger integration costs2
|
|
|
|
-
|
|
|
|
97
|
|
|
|
215
|
|
Leap network decommissioning
|
|
|
|
-
|
|
|
|
-
|
|
|
|
364
|
|
DIRECTV/Mexico merger costs3
|
|
|
|
-
|
|
|
|
-
|
|
|
|
116
|
|
Adjusted EBITDA
|
|
|
$
|
10,684
|
|
|
$
|
10,263
|
|
|
$
|
11,103
|
|
Year-over-year growth - Adjusted
|
|
|
|
|
|
-3.9
|
%
|
|
|
8.2
|
%
|
Adjusted EBITDA Margin*
|
|
|
|
33.3
|
%
|
|
|
31.5
|
%
|
|
|
33.6
|
%
|
|
|
|
|
|
|
|
|
1 EBITDA is defined as operating income before
depreciation and amortization.
|
2 Adjustments include Operations and Support expenses
for domestic wireless integration costs.
|
3 Adjustments include Operations and Support expenses
for Iusacell and Nextel Mexico integration costs and DIRECTV
merger costs.
|
|
|
|
|
|
|
|
|
Adjusted EBITDA is a non-GAAP financial measure calculated by
excluding costs which are non-recurring in nature, including
dispositions and merger integration and transaction costs.
Adjusted EBITDA also excludes net actuarial gains or losses
associated with our pension and postemployment benefit plans.
Management believes that these measures provide relevant and
useful information to investors and other users of our financial
data in evaluating the effectiveness of our operations and
underlying business trends.
|
|
Adjusted EBITDA should be considered in addition to, but not as a
substitute for, other measures of financial performance reported
in accordance with GAAP. Our calculation of Adjusted EBITDA, as
presented, may differ from similarly titled measures reported by
other companies.
|
|
*Adjusted EBITDA Margin is calculated by dividing Adjusted EBITDA
by Operating Revenues.
|
|
|
|
|
|
|
|
|
|
|
|
Financial Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AT&T Inc.
|
|
|
|
|
|
|
|
|
|
Non-GAAP Wireline Reconciliation
|
|
|
|
|
|
|
|
|
|
Wireline Segment EBITDA
|
|
|
|
|
|
|
|
|
|
Dollars in millions
|
|
|
|
|
|
|
|
|
|
Unaudited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|
6/30/14
|
|
3/31/15
|
|
6/30/15
|
Segment Operating Revenues
|
|
|
|
|
|
|
|
|
|
Service
|
|
|
|
|
$
|
14,408
|
|
|
$
|
13,935
|
|
|
$
|
13,981
|
|
Equipment
|
|
|
|
|
|
229
|
|
|
|
213
|
|
|
|
233
|
|
Total Segment Operating Revenues
|
|
|
|
|
$
|
14,637
|
|
|
$
|
14,148
|
|
|
$
|
14,214
|
|
Segment Operating Expenses
|
|
|
|
|
|
|
|
|
|
Operations and support
|
|
|
|
|
|
10,700
|
|
|
|
10,263
|
|
|
|
10,362
|
|
Depreciation and amortization
|
|
|
|
|
|
2,514
|
|
|
|
2,476
|
|
|
|
2,488
|
|
Total Segment Operating Expenses
|
|
|
|
|
|
13,214
|
|
|
|
12,739
|
|
|
|
12,850
|
|
Segment Operating Income
|
|
|
|
|
|
1,423
|
|
|
|
1,409
|
|
|
|
1,364
|
|
Segment Operating Income Margin
|
|
|
|
|
|
9.7
|
%
|
|
|
10.0
|
%
|
|
|
9.6
|
%
|
Plus: Depreciation and amortization
|
|
|
|
|
|
2,514
|
|
|
|
2,476
|
|
|
|
2,488
|
|
EBITDA1
|
|
|
|
|
$
|
3,937
|
|
|
$
|
3,885
|
|
|
$
|
3,852
|
|
EBITDA Margin
|
|
|
|
|
|
26.9
|
%
|
|
|
27.5
|
%
|
|
|
27.1
|
%
|
|
|
|
|
|
|
|
|
|
|
1 EBITDA is defined as Operating Income before
Depreciation and amortization.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AT&T Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Wireline Reconciliation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Operating Revenues to Exclude Connecticut Wireline
Properties1
|
|
|
|
|
Dollars in millions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unaudited
|
|
Three Months Ended
|
|
|
9/30/13
|
|
12/31/13
|
|
3/31/14
|
|
6/30/14
|
|
9/30/14
|
|
12/31/14
|
|
3/31/15
|
|
6/30/15
|
Connecticut Wireline Operating Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Markets
|
|
$
|
169
|
|
|
$
|
169
|
|
|
$
|
174
|
|
|
$
|
173
|
|
|
$
|
170
|
|
|
$
|
43
|
|
|
$
|
-
|
|
|
$
|
-
|
|
AT&T Business Solutions
|
|
|
109
|
|
|
|
107
|
|
|
|
101
|
|
|
|
99
|
|
|
|
101
|
|
|
|
24
|
|
|
|
-
|
|
|
|
-
|
|
Other
|
|
|
1
|
|
|
|
(1
|
)
|
|
|
-
|
|
|
|
2
|
|
|
|
1
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Connecticut Wireline Operating Revenues
|
|
$
|
279
|
|
|
$
|
275
|
|
|
$
|
275
|
|
|
$
|
274
|
|
|
$
|
272
|
|
|
$
|
67
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total AT&T Operating Revenues
|
|
$
|
32,158
|
|
|
$
|
33,163
|
|
|
$
|
32,476
|
|
|
$
|
32,575
|
|
|
$
|
32,957
|
|
|
$
|
34,439
|
|
|
$
|
32,576
|
|
|
$
|
33,015
|
|
Less Connecticut Wireline
|
|
|
(279
|
)
|
|
|
(275
|
)
|
|
|
(275
|
)
|
|
|
(274
|
)
|
|
|
(272
|
)
|
|
|
(67
|
)
|
|
|
-
|
|
|
|
-
|
|
Adjusted AT&T Operating Revenues
|
|
$
|
31,879
|
|
|
$
|
32,888
|
|
|
$
|
32,201
|
|
|
$
|
32,301
|
|
|
$
|
32,685
|
|
|
$
|
34,372
|
|
|
$
|
32,576
|
|
|
$
|
33,015
|
|
Year-over-Year growth - Adjusted
|
|
|
|
|
|
|
|
|
|
|
2.5
|
%
|
|
|
4.5
|
%
|
|
|
1.2
|
%
|
|
|
2.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wireline Operating Revenues
|
|
$
|
14,670
|
|
|
$
|
14,716
|
|
|
$
|
14,601
|
|
|
$
|
14,637
|
|
|
$
|
14,615
|
|
|
$
|
14,572
|
|
|
$
|
14,148
|
|
|
$
|
14,214
|
|
Less Connecticut Wireline
|
|
|
(279
|
)
|
|
|
(275
|
)
|
|
|
(275
|
)
|
|
|
(274
|
)
|
|
|
(272
|
)
|
|
|
(67
|
)
|
|
|
-
|
|
|
|
-
|
|
Adjusted Wireline Operating Revenues
|
|
$
|
14,391
|
|
|
$
|
14,441
|
|
|
$
|
14,326
|
|
|
$
|
14,363
|
|
|
$
|
14,343
|
|
|
$
|
14,505
|
|
|
$
|
14,148
|
|
|
$
|
14,214
|
|
Year-over-Year growth - Adjusted
|
|
|
|
|
|
|
|
|
|
|
-0.3
|
%
|
|
|
0.4
|
%
|
|
|
-1.2
|
%
|
|
|
-1.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wireline Consumer Operating Revenues
|
|
$
|
5,567
|
|
|
$
|
5,638
|
|
|
$
|
5,715
|
|
|
$
|
5,748
|
|
|
$
|
5,735
|
|
|
$
|
5,643
|
|
|
$
|
5,658
|
|
|
$
|
5,782
|
|
Less Connecticut Wireline
|
|
|
(169
|
)
|
|
|
(169
|
)
|
|
|
(174
|
)
|
|
|
(173
|
)
|
|
|
(170
|
)
|
|
|
(43
|
)
|
|
|
-
|
|
|
|
-
|
|
Adjusted Wireline Consumer Operating Revenues
|
|
$
|
5,398
|
|
|
$
|
5,469
|
|
|
$
|
5,541
|
|
|
$
|
5,575
|
|
|
$
|
5,565
|
|
|
$
|
5,600
|
|
|
$
|
5,658
|
|
|
$
|
5,782
|
|
Year-over-Year growth - Adjusted
|
|
|
|
|
|
|
|
|
|
|
3.1
|
%
|
|
|
2.4
|
%
|
|
|
2.1
|
%
|
|
|
3.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wireline Business Solutions Operating Revenues
|
|
$
|
8,849
|
|
|
$
|
8,839
|
|
|
$
|
8,670
|
|
|
$
|
8,672
|
|
|
$
|
8,669
|
|
|
$
|
8,596
|
|
|
$
|
8,288
|
|
|
$
|
8,239
|
|
Less Connecticut Wireline
|
|
|
(109
|
)
|
|
|
(107
|
)
|
|
|
(101
|
)
|
|
|
(99
|
)
|
|
|
(101
|
)
|
|
|
(24
|
)
|
|
|
-
|
|
|
|
-
|
|
Adjusted Wireline Business Solutions Operating Revenues
|
|
$
|
8,739
|
|
|
$
|
8,733
|
|
|
$
|
8,569
|
|
|
$
|
8,572
|
|
|
$
|
8,568
|
|
|
$
|
8,572
|
|
|
$
|
8,288
|
|
|
$
|
8,239
|
|
Year-over-Year growth - Adjusted
|
|
|
|
|
|
|
|
|
|
|
-2.0
|
%
|
|
|
-1.8
|
%
|
|
|
-3.3
|
%
|
|
|
-3.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wireline Strategic Business Services Revenues2
|
|
$
|
2,154
|
|
|
$
|
2,251
|
|
|
$
|
2,289
|
|
|
$
|
2,382
|
|
|
$
|
2,467
|
|
|
$
|
2,565
|
|
|
$
|
2,628
|
|
|
$
|
2,692
|
|
Less Connecticut Wireline
|
|
|
(9
|
)
|
|
|
(10
|
)
|
|
|
(11
|
)
|
|
|
(11
|
)
|
|
|
(13
|
)
|
|
|
(2
|
)
|
|
|
-
|
|
|
|
-
|
|
Adjusted Wireline Business Operating Revenues
|
|
$
|
2,145
|
|
|
$
|
2,240
|
|
|
$
|
2,278
|
|
|
$
|
2,370
|
|
|
$
|
2,454
|
|
|
$
|
2,563
|
|
|
$
|
2,628
|
|
|
$
|
2,692
|
|
Year-over-Year growth - Adjusted
|
|
|
|
|
|
|
|
|
|
|
14.4
|
%
|
|
|
14.4
|
%
|
|
|
15.4
|
%
|
|
|
13.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wireline U-verse Services Revenue
|
|
$
|
3,061
|
|
|
$
|
3,276
|
|
|
$
|
3,470
|
|
|
$
|
3,657
|
|
|
$
|
3,791
|
|
|
$
|
3,898
|
|
|
$
|
4,047
|
|
|
$
|
4,283
|
|
Less Connecticut Wireline
|
|
|
(95
|
)
|
|
|
(100
|
)
|
|
|
(105
|
)
|
|
|
(109
|
)
|
|
|
(111
|
)
|
|
|
(28
|
)
|
|
|
-
|
|
|
|
-
|
|
Adjusted U-verse Services Revenues
|
|
$
|
2,966
|
|
|
$
|
3,176
|
|
|
$
|
3,365
|
|
|
$
|
3,548
|
|
|
$
|
3,680
|
|
|
$
|
3,870
|
|
|
$
|
4,047
|
|
|
$
|
4,283
|
|
Year-over-Year growth - Adjusted
|
|
|
|
|
|
|
|
|
|
|
24.1
|
%
|
|
|
21.9
|
%
|
|
|
20.3
|
%
|
|
|
20.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Prior-period amounts restated to conform to
current-period reporting methodology and divestiture of
Connecticut Wireline Properties. Sum of segments' revenues within
a quarter might not tie to total revenues due to rounding. For
ease of presentation, Connecticut Wireline Properties revenues are
presented separately on the schedules above.
|
|
2 Strategic business services are AT&T's most advanced
business solutions, including VPNs, Ethernet, cloud, hosting, IP
conferencing, VoIP, MIS over Ethernet, U-verse and security
services.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
These Adjusted Operating Revenues are non-GAAP financial measure
calculated by excluding the operating revenues of Connecticut
Wireline Properties sold in October 2014. Management believes that
these measures provides relevant and useful information to
investors and other users of our financial data in evaluating the
effectiveness of our operations and underlying business trends.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Operating Revenues should be considered in addition to,
but not as a substitute for, other measures of financial
performance reported in accordance with GAAP. Our calculations of
Adjusted Operating Revenues may differ from similarly titled
measures reported by other companies.
|
|
EBITDA DISCUSSION
For AT&T, EBITDA is defined as operating income before depreciation and
amortization. EBITDA service margin is calculated as EBITDA divided by
service revenues. EBITDA differs from Segment Operating Income (Loss),
as calculated in accordance with U.S. generally accepted accounting
principles (GAAP), in that it excludes depreciation and amortization.
EBITDA does not give effect to cash used for debt service requirements
and thus does not reflect available funds for distributions,
reinvestment or other discretionary uses. EBITDA is not presented as an
alternative measure of operating results or cash flows from operations,
as determined in accordance with GAAP. Our calculation of EBITDA, as
presented, may differ from similarly titled measures reported by other
companies.
We believe these measures are relevant and useful information to our
investors as they are part of AT&T's internal management reporting and
planning processes and are important metrics that management uses to
evaluate the operating performance of its wireless operations. These
measures are used by management as a gauge of our success in acquiring,
retaining and servicing wireless 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 our
Wireless segment's 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 AT&T Mobility's operating managers
are responsible and upon which we evaluate their performance.
EBITDA does not give effect to cash used for debt service requirements
and thus does not reflect available funds for distributions,
reinvestment or other discretionary uses. EBITDA excludes other income
(expense) - net, net income attributable to noncontrolling interest and
equity in net income (loss) of affiliates, as these do not reflect the
operating results of our wireless subscriber base and national footprint
that we utilize to obtain and service our customers. Equity in net
income (loss) of affiliates represents AT&T Mobility's proportionate
share of the net income (loss) of affiliates in which it exercises
significant influence, but does not control. As AT&T Mobility does not
control these entities, our management excludes these results when
evaluating the performance of our primary operations. EBITDA excludes
interest expense and the provision for income taxes. Excluding these
items eliminates the expenses associated with its capitalization and tax
structures. Finally, EBITDA excludes depreciation and amortization, in
order to eliminate the impact of capital investments.
We believe EBITDA as a percentage of service revenues to be a more
relevant measure of our Wireless segment operating margin than EBITDA as
a percentage of total revenue. We generally subsidize a portion of our
wireless handset sales, all of which are recognized in the period in
which we sell the handset. Management views this equipment subsidy as a
cost to acquire or retain a subscriber, which is recovered through the
ongoing service revenue that is generated by the subscriber. We also use
wireless service revenues to calculate margin to facilitate comparison,
both internally and externally with our wireless competitors, as they
calculate their margins using wireless service revenues as well.
There are material limitations to using these non-GAAP financial
measures. EBITDA and EBITDA service margin, as we have defined them, may
not be comparable to similarly titled measures reported by other
companies. Furthermore, these performance measures do not take into
account certain significant items, including depreciation and
amortization, interest expense, tax expense and equity in net income
(loss) of affiliates, which directly affect our Wireless segment income.
Management compensates for these limitations by carefully analyzing how
its competitors present performance measures that are similar in nature
to EBITDA as we present it, and considering the economic effect of the
excluded expense items independently as well as in connection with its
analysis of net income as calculated in accordance with GAAP. EBITDA and
EBITDA service margin should be considered in addition to, but not as a
substitute for, other measures of financial performance reported in
accordance with GAAP.
FREE CASH FLOW DISCUSSION
Free cash flow is defined as cash from operations minus construction and
capital expenditures. Free cash flow after dividends is defined as cash
from operations minus construction, capital expenditures and dividends.
Free cash flow yield is defined as cash from continuing operations less
construction and capital expenditures as a percentage of market
capitalization computed on the last trading day of the quarter. Market
capitalization is computed by multiplying the end of period stock price
by the end of period shares outstanding. We believe these metrics
provide useful information to our investors because management reviews
free cash flow as an important indicator of how much cash is generated
by normal business operations, including capital expenditures, and makes
decisions based on it. Management also views it as a measure of cash
available to pay debt and return cash to shareowners.
NET DEBT TO EBITDA DISCUSSION
Net Debt to EBITDA ratios are non-GAAP financial measures frequently
used by investors and credit rating agencies and management believes
these measures provide relevant and useful information to investors and
other users of our financial data. The Net Debt to EBITDA ratio is
calculated by dividing the Net Debt by annualized EBITDA. Net Debt is
calculated by subtracting cash and cash equivalents and certificates of
deposit and time deposits that are greater than 90 days, from the sum of
debt maturing within one year and long-term debt. Annualized EBITDA is
calculated by annualizing the year-to-date EBITDA.
Adjusted EBITDA excludes costs which are non-recurring in nature.
Adjusted EBITDA also excludes net actuarial gains or losses associated
with our pension and postemployment benefit plans, which we immediately
recognize in the income statement, pursuant to our accounting policy for
the recognition of actuarial gains/losses. As a result, the Adjusted
EBITDA reflects an expected return on plan assets rather than the actual
return on plan assets, as included in the GAAP measure of income. This
measure is consistent with metrics under our existing credit agreements.
ADJUSTING ITEMS DISCUSSION
Adjusted Operating Revenues, Adjusted Operating Income, Adjusted
Operating Income Margin, Adjusted EBITDA, Adjusted EBITDA 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 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. Our calculations of Adjusted diluted EPS, as
presented, may differ from similarly titled measures reported by other
companies.
View source version on businesswire.com: http://www.businesswire.com/news/home/20150723006434/en/
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