(Mark One) |
x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||
o | For the quarterly period ended | ||
or | |||
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||
Large accelerated filer | [X] | Accelerated filer | [ ] | |
Non-accelerated filer | [ ] | (Do not check if a smaller reporting company) | Smaller reporting company | [ ] |
AT&T INC. | ||||||||||||||||
CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||||
Dollars in millions except per share amounts | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Three months ended | Six months ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Operating Revenues | $ | 32,575 | $ | 32,075 | $ | 65,051 | $ | 63,431 | ||||||||
Operating Expenses | ||||||||||||||||
Cost of services and sales (exclusive of depreciation | ||||||||||||||||
and amortization shown separately below) | 14,212 | 13,270 | 27,533 | 25,824 | ||||||||||||
Selling, general and administrative | 8,197 | 8,121 | 16,457 | 16,454 | ||||||||||||
Depreciation and amortization | 4,550 | 4,571 | 9,167 | 9,100 | ||||||||||||
Total operating expenses | 26,959 | 25,962 | 53,157 | 51,378 | ||||||||||||
Operating Income | 5,616 | 6,113 | 11,894 | 12,053 | ||||||||||||
Other Income (Expense) | ||||||||||||||||
Interest expense | (881 | ) | (825 | ) | (1,741 | ) | (1,652 | ) | ||||||||
Equity in net income of affiliates | 102 | 218 | 190 | 403 | ||||||||||||
Other income (expense) – net | 1,269 | 288 | 1,414 | 320 | ||||||||||||
Total other income (expense) | 490 | (319 | ) | (137 | ) | (929 | ) | |||||||||
Income Before Income Taxes | 6,106 | 5,794 | 11,757 | 11,124 | ||||||||||||
Income tax expense | 2,485 | 1,914 | 4,402 | 3,471 | ||||||||||||
Net Income | 3,621 | 3,880 | 7,355 | 7,653 | ||||||||||||
Less: Net Income Attributable to Noncontrolling Interest | (74 | ) | (58 | ) | (156 | ) | (131 | ) | ||||||||
Net Income Attributable to AT&T | $ | 3,547 | $ | 3,822 | $ | 7,199 | $ | 7,522 | ||||||||
Basic Earnings Per Share Attributable to AT&T | $ | 0.68 | $ | 0.71 | $ | 1.38 | $ | 1.38 | ||||||||
Diluted Earnings Per Share Attributable to AT&T | $ | 0.68 | $ | 0.71 | $ | 1.38 | $ | 1.38 | ||||||||
Weighted Average Number of Common Shares | ||||||||||||||||
Outstanding – Basic (in millions) | 5,204 | 5,381 | 5,213 | 5,446 | ||||||||||||
Weighted Average Number of Common Shares | ||||||||||||||||
Outstanding – with Dilution (in millions) | 5,220 | 5,397 | 5,229 | 5,463 | ||||||||||||
Dividends Declared Per Common Share | $ | 0.46 | $ | 0.45 | $ | 0.92 | $ | 0.90 | ||||||||
See Notes to Consolidated Financial Statements. |
AT&T INC. | ||||||||||||||||
CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||||
Dollars in millions except per share amounts | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Three months ended | Nine months ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Operating Revenues | $ | 32,957 | $ | 32,158 | $ | 98,008 | $ | 95,589 | ||||||||
Operating Expenses | ||||||||||||||||
Cost of services and sales (exclusive of depreciation | ||||||||||||||||
and amortization shown separately below) | 14,541 | 13,403 | 42,074 | 39,227 | ||||||||||||
Selling, general and administrative | 8,475 | 7,952 | 24,932 | 24,406 | ||||||||||||
Depreciation and amortization | 4,539 | 4,615 | 13,706 | 13,715 | ||||||||||||
Total operating expenses | 27,555 | 25,970 | 80,712 | 77,348 | ||||||||||||
Operating Income | 5,402 | 6,188 | 17,296 | 18,241 | ||||||||||||
Other Income (Expense) | ||||||||||||||||
Interest expense | (1,016 | ) | (829 | ) | (2,757 | ) | (2,481 | ) | ||||||||
Equity in net income (loss) of affiliates | (2 | ) | 91 | 188 | 494 | |||||||||||
Other income (expense) – net | 42 | 50 | 1,456 | 370 | ||||||||||||
Total other income (expense) | (976 | ) | (688 | ) | (1,113 | ) | (1,617 | ) | ||||||||
Income Before Income Taxes | 4,426 | 5,500 | 16,183 | 16,624 | ||||||||||||
Income tax expense | 1,367 | 1,595 | 5,769 | 5,066 | ||||||||||||
Net Income | 3,059 | 3,905 | 10,414 | 11,558 | ||||||||||||
Less: Net Income Attributable to Noncontrolling Interest | (57 | ) | (91 | ) | (213 | ) | (222 | ) | ||||||||
Net Income Attributable to AT&T | $ | 3,002 | $ | 3,814 | $ | 10,201 | $ | 11,336 | ||||||||
Basic Earnings Per Share Attributable to AT&T | $ | 0.58 | $ | 0.72 | $ | 1.96 | $ | 2.10 | ||||||||
Diluted Earnings Per Share Attributable to AT&T | $ | 0.58 | $ | 0.72 | $ | 1.95 | $ | 2.09 | ||||||||
Weighted Average Number of Common Shares | ||||||||||||||||
Outstanding – Basic (in millions) | 5,198 | 5,315 | 5,208 | 5,402 | ||||||||||||
Weighted Average Number of Common Shares | ||||||||||||||||
Outstanding – with Dilution (in millions) | 5,214 | 5,331 | 5,224 | 5,419 | ||||||||||||
Dividends Declared Per Common Share | $ | 0.46 | $ | 0.45 | $ | 1.38 | $ | 1.35 | ||||||||
See Notes to Consolidated Financial Statements. |
AT&T INC. | ||||||||||||||||
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||||||||||||||
Dollars in millions | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Three months ended | Nine months ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Net income | $ | 3,059 | $ | 3,905 | $ | 10,414 | $ | 11,558 | ||||||||
Other comprehensive income, net of tax: | ||||||||||||||||
Foreign Currency: | ||||||||||||||||
Translation adjustments (includes $(1), $(1), $0 and $(2) attributable to noncontrolling interest), net of taxes of $(22), $(21), $(17) and $(86) | (35 | ) | (37 | ) | (29 | ) | (155 | ) | ||||||||
Reclassification adjustment included in net income, net of taxes of $0, $0, $224 and $19 | - | - | 416 | 34 | ||||||||||||
Available-for-sale securities: | ||||||||||||||||
Net unrealized gains (losses), net of taxes of $(15), $38, $19 and $84 | (29 | ) | 69 | 30 | 155 | |||||||||||
Reclassification adjustment realized in net income, net of taxes of $(1), $(2), $(9) and $(7) | (1 | ) | (3 | ) | (15 | ) | (13 | ) | ||||||||
Cash flow hedges: | ||||||||||||||||
Net unrealized gains, net of taxes of $201, $171, $148 and $286 | 370 | 316 | 272 | 526 | ||||||||||||
Reclassification adjustment included in net income, net of taxes of $3, $4, $14 and $12 | 8 | 7 | 29 | 22 | ||||||||||||
Defined benefit postretirement plans: | ||||||||||||||||
Reclassification adjustment included in net income, net of taxes $0, $0, $33 and $5 | - | - | 61 | 8 | ||||||||||||
Amortization of net prior service credit included in net income, net of taxes of $(146), $(109), $(435) and $(327) | (239 | ) | (178 | ) | (718 | ) | (533 | ) | ||||||||
Other comprehensive income | 74 | 174 | 46 | 44 | ||||||||||||
Total comprehensive income | 3,133 | 4,079 | 10,460 | 11,602 | ||||||||||||
Less: Total comprehensive income attributable to noncontrolling interest | (56 | ) | (90 | ) | (213 | ) | (220 | ) | ||||||||
Total Comprehensive Income Attributable to AT&T | $ | 3,077 | $ | 3,989 | $ | 10,247 | $ | 11,382 | ||||||||
See Notes to Consolidated Financial Statements. |
AT&T INC. | ||||||||||||||||
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||||||||||||||
Dollars in millions | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Three months ended | Six months ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Net income | $ | 3,621 | $ | 3,880 | $ | 7,355 | $ | 7,653 | ||||||||
Other comprehensive income, net of tax: | ||||||||||||||||
Foreign Currency: | ||||||||||||||||
Translation adjustments (includes $1, $(1), $1 and $(1) attributable to noncontrolling interest), net of taxes of $15, $(127), $5 and $(65) | 26 | (239 | ) | 6 | (118 | ) | ||||||||||
Reclassification adjustment included in net income, net of taxes of $210, $19, $224 and $19 | 391 | 34 | 416 | 34 | ||||||||||||
Available-for-sale securities: | ||||||||||||||||
Net unrealized gains, net of taxes of $24, $6, $34 and $46 | 43 | 11 | 59 | 86 | ||||||||||||
Reclassification adjustment realized in net income, net of taxes of $(1), $(1), $(8) and $(5) | (3 | ) | (3 | ) | (14 | ) | (10 | ) | ||||||||
Cash flow hedges: | ||||||||||||||||
Net unrealized gains (losses), net of taxes of $(56), $66, $(53) and $115 | (104 | ) | 120 | (98 | ) | 210 | ||||||||||
Reclassification adjustment included in net income, net of taxes of $7, $4, $11 and $8 | 14 | 8 | 21 | 15 | ||||||||||||
Defined benefit postretirement plans: | ||||||||||||||||
Reclassification adjustment included in net income, net of taxes $31, $5, $33 and $5 | 58 | 8 | 61 | 8 | ||||||||||||
Amortization of net prior service credit included in net income, net of taxes of $(142), $(109), $(289) and $(218) | (239 | ) | (177 | ) | (479 | ) | (355 | ) | ||||||||
Other comprehensive income (loss) | 186 | (238 | ) | (28 | ) | (130 | ) | |||||||||
Total comprehensive income | 3,807 | 3,642 | 7,327 | 7,523 | ||||||||||||
Less: Total comprehensive income attributable to noncontrolling interest | (75 | ) | (57 | ) | (157 | ) | (130 | ) | ||||||||
Total Comprehensive Income Attributable to AT&T | $ | 3,732 | $ | 3,585 | $ | 7,170 | $ | 7,393 | ||||||||
See Notes to Consolidated Financial Statements. |
AT&T INC. | ||||||||
CONSOLIDATED BALANCE SHEETS | ||||||||
Dollars in millions except per share amounts | ||||||||
September 30, | December 31, | |||||||
2014 | 2013 | |||||||
Assets | (Unaudited) | |||||||
Current Assets | ||||||||
Cash and cash equivalents | $ | 2,458 | $ | 3,339 | ||||
Accounts receivable - net of allowances for doubtful accounts of $482 and $483 | 13,445 | 12,918 | ||||||
Prepaid expenses | 869 | 960 | ||||||
Deferred income taxes | 1,030 | 1,199 | ||||||
Other current assets | 8,033 | 4,780 | ||||||
Total current assets | 25,835 | 23,196 | ||||||
Property, plant and equipment | 286,987 | 274,798 | ||||||
Less: accumulated depreciation and amortization | (171,853 | ) | (163,830 | ) | ||||
Property, Plant and Equipment – Net | 115,134 | 110,968 | ||||||
Goodwill | 70,131 | 69,273 | ||||||
Licenses | 60,784 | 56,433 | ||||||
Other Intangible Assets – Net | 6,252 | 5,779 | ||||||
Investments in Equity Affiliates | 166 | 3,860 | ||||||
Other Assets | 9,637 | 8,278 | ||||||
Total Assets | $ | 287,939 | $ | 277,787 | ||||
Liabilities and Stockholders' Equity | ||||||||
Current Liabilities | ||||||||
Debt maturing within one year | $ | 5,109 | $ | 5,498 | ||||
Accounts payable and accrued liabilities | 24,119 | 21,107 | ||||||
Advanced billing and customer deposits | 4,038 | 4,212 | ||||||
Accrued taxes | 4,328 | 1,774 | ||||||
Dividends payable | 2,385 | 2,404 | ||||||
Total current liabilities | 39,979 | 34,995 | ||||||
Long-Term Debt | 70,516 | 69,290 | ||||||
Deferred Credits and Other Noncurrent Liabilities | ||||||||
Deferred income taxes | 37,393 | 36,308 | ||||||
Postemployment benefit obligation | 29,918 | 29,946 | ||||||
Other noncurrent liabilities | 17,014 | 15,766 | ||||||
Total deferred credits and other noncurrent liabilities | 84,325 | 82,020 | ||||||
Stockholders' Equity | ||||||||
Common stock ($1 par value, 14,000,000,000 authorized at September 30, 2014 and | ||||||||
December 31, 2013: issued 6,495,231,088 at September 30, 2014 and December 31, 2013) | 6,495 | 6,495 | ||||||
Additional paid-in capital | 91,064 | 91,091 | ||||||
Retained earnings | 34,165 | 31,141 | ||||||
Treasury stock (1,310,226,392 at September 30, 2014 and 1,268,914,913 | ||||||||
at December 31, 2013, at cost) | (47,037 | ) | (45,619 | ) | ||||
Accumulated other comprehensive income | 7,926 | 7,880 | ||||||
Noncontrolling interest | 506 | 494 | ||||||
Total stockholders' equity | 93,119 | 91,482 | ||||||
Total Liabilities and Stockholders' Equity | $ | 287,939 | $ | 277,787 | ||||
See Notes to Consolidated Financial Statements. |
AT&T INC. | ||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
Dollars in millions | ||||||||
(Unaudited) | ||||||||
Nine months ended | ||||||||
September 30, | ||||||||
2014 | 2013 | |||||||
Operating Activities | ||||||||
Net income | $ | 10,414 | $ | 11,558 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 13,706 | 13,715 | ||||||
Undistributed earnings from investments in equity affiliates | (45 | ) | (232 | ) | ||||
Provision for uncollectible accounts | 692 | 653 | ||||||
Deferred income tax expense | 1,304 | 2,505 | ||||||
Net gain from sale of investments, net of impairments | (1,374 | ) | (272 | ) | ||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | (1,269 | ) | (440 | ) | ||||
Other current assets | (813 | ) | 520 | |||||
Accounts payable and accrued liabilities | 4,763 | (420 | ) | |||||
Retirement benefit funding | (420 | ) | (175 | ) | ||||
Other - net | (1,365 | ) | (533 | ) | ||||
Total adjustments | 15,179 | 15,321 | ||||||
Net Cash Provided by Operating Activities | 25,593 | 26,879 | ||||||
Investing Activities | ||||||||
Construction and capital expenditures: | ||||||||
Capital expenditures | (16,829 | ) | (15,565 | ) | ||||
Interest during construction | (178 | ) | (213 | ) | ||||
Acquisitions, net of cash acquired | (2,053 | ) | (4,025 | ) | ||||
Dispositions | 6,074 | 846 | ||||||
Purchases of securities | (1,996 | ) | - | |||||
Return of advances to and investments in equity affiliates | 3 | 301 | ||||||
Other | (1 | ) | (4 | ) | ||||
Net Cash Used in Investing Activities | (14,980 | ) | (18,660 | ) | ||||
Financing Activities | ||||||||
Net change in short-term borrowings with original maturities of three months or less | (16 | ) | 1,851 | |||||
Issuance of other short-term borrowings | - | 1,476 | ||||||
Repayment of other short-term borrowings | - | (1,476 | ) | |||||
Issuance of long-term debt | 8,564 | 6,416 | ||||||
Repayment of long-term debt | (10,376 | ) | (2,131 | ) | ||||
Purchase of treasury stock | (1,617 | ) | (11,134 | ) | ||||
Issuance of treasury stock | 34 | 108 | ||||||
Dividends paid | (7,170 | ) | (7,325 | ) | ||||
Other | (913 | ) | 499 | |||||
Net Cash Used in Financing Activities | (11,494 | ) | (11,716 | ) | ||||
Net decrease in cash and cash equivalents | (881 | ) | (3,497 | ) | ||||
Cash and cash equivalents beginning of year | 3,339 | 4,868 | ||||||
Cash and Cash Equivalents End of Period | $ | 2,458 | $ | 1,371 | ||||
Cash paid during the nine months ended September 30 for: | ||||||||
Interest | $ | 3,351 | $ | 2,980 | ||||
Income taxes, net of refunds | $ | 1,337 | $ | 1,573 | ||||
See Notes to Consolidated Financial Statements. |
AT&T INC. | ||||||||
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY | ||||||||
Dollars and shares in millions except per share amounts | ||||||||
(Unaudited) | ||||||||
September 30, 2014 | ||||||||
Shares | Amount | |||||||
Common Stock | ||||||||
Balance at beginning of year | 6,495 | $ | 6,495 | |||||
Issuance of stock | - | - | ||||||
Balance at end of period | 6,495 | $ | 6,495 | |||||
Additional Paid-In Capital | ||||||||
Balance at beginning of year | $ | 91,091 | ||||||
Issuance of treasury stock | 3 | |||||||
Share-based payments | 3 | |||||||
Change related to acquisition of interests held by noncontrolling owners | (33 | ) | ||||||
Balance at end of period | $ | 91,064 | ||||||
Retained Earnings | ||||||||
Balance at beginning of year | $ | 31,141 | ||||||
Net income attributable to AT&T ($1.95 per diluted share) | 10,201 | |||||||
Dividends to stockholders ($1.38 per share) | (7,177 | ) | ||||||
Balance at end of period | $ | 34,165 | ||||||
Treasury Stock | ||||||||
Balance at beginning of year | (1,269 | ) | $ | (45,619 | ) | |||
Repurchase of common stock | (48 | ) | (1,617 | ) | ||||
Issuance of treasury stock | 7 | 199 | ||||||
Balance at end of period | (1,310 | ) | $ | (47,037 | ) | |||
Accumulated Other Comprehensive Income Attributable to AT&T, net of tax | ||||||||
Balance at beginning of year | $ | 7,880 | ||||||
Other comprehensive income attributable to AT&T | 46 | |||||||
Balance at end of period | $ | 7,926 | ||||||
Noncontrolling Interest | ||||||||
Balance at beginning of year | $ | 494 | ||||||
Net income attributable to noncontrolling interest | 213 | |||||||
Distributions | (200 | ) | ||||||
Acquisitions of noncontrolling interests | 69 | |||||||
Acquisition of interests held by noncontrolling owners | (70 | ) | ||||||
Balance at end of period | $ | 506 | ||||||
Total Stockholders' Equity at beginning of year | $ | 91,482 | ||||||
Total Stockholders' Equity at end of period | $ | 93,119 | ||||||
See Notes to Consolidated Financial Statements. |
AT&T INC. | ||||||||
CONSOLIDATED BALANCE SHEETS | ||||||||
Dollars in millions except per share amounts | ||||||||
June 30, | December 31, | |||||||
2014 | 2013 | |||||||
Assets | (Unaudited) | |||||||
Current Assets | ||||||||
Cash and cash equivalents | $ | 11,305 | $ | 3,339 | ||||
Accounts receivable - net of allowances for doubtful accounts of $461 and $483 | 13,001 | 12,918 | ||||||
Prepaid expenses | 928 | 960 | ||||||
Deferred income taxes | 1,180 | 1,199 | ||||||
Other current assets | 6,698 | 4,780 | ||||||
Total current assets | 33,112 | 23,196 | ||||||
Property, plant and equipment | 283,252 | 274,798 | ||||||
Less: accumulated depreciation and amortization | (168,892 | ) | (163,830 | ) | ||||
Property, Plant and Equipment – Net | 114,360 | 110,968 | ||||||
Goodwill | 70,094 | 69,273 | ||||||
Licenses | 59,655 | 56,433 | ||||||
Other Intangible Assets – Net | 6,380 | 5,779 | ||||||
Investments in Equity Affiliates | 159 | 3,860 | ||||||
Other Assets | 9,706 | 8,278 | ||||||
Total Assets | $ | 293,466 | $ | 277,787 | ||||
Liabilities and Stockholders’ Equity | ||||||||
Current Liabilities | ||||||||
Debt maturing within one year | $ | 10,482 | $ | 5,498 | ||||
Accounts payable and accrued liabilities | 22,966 | 21,107 | ||||||
Advanced billing and customer deposits | 3,990 | 4,212 | ||||||
Accrued taxes | 3,962 | 1,774 | ||||||
Dividends payable | 2,388 | 2,404 | ||||||
Total current liabilities | 43,788 | 34,995 | ||||||
Long-Term Debt | 73,570 | 69,290 | ||||||
Deferred Credits and Other Noncurrent Liabilities | ||||||||
Deferred income taxes | 36,835 | 36,308 | ||||||
Postemployment benefit obligation | 30,070 | 29,946 | ||||||
Other noncurrent liabilities | 16,578 | 15,766 | ||||||
Total deferred credits and other noncurrent liabilities | 83,483 | 82,020 | ||||||
Stockholders’ Equity | ||||||||
Common stock ($1 par value, 14,000,000,000 authorized at June 30, 2014 and | ||||||||
December 31, 2013: issued 6,495,231,088 at June 30, 2014 and December 31, 2013) | 6,495 | 6,495 | ||||||
Additional paid-in capital | 91,057 | 91,091 | ||||||
Retained earnings | 33,554 | 31,141 | ||||||
Treasury stock (1,304,409,511 at June 30, 2014 and 1,268,914,913 | ||||||||
at December 31, 2013, at cost) | (46,825 | ) | (45,619 | ) | ||||
Accumulated other comprehensive income | 7,851 | 7,880 | ||||||
Noncontrolling interest | 493 | 494 | ||||||
Total stockholders’ equity | 92,625 | 91,482 | ||||||
Total Liabilities and Stockholders’ Equity | $ | 293,466 | $ | 277,787 | ||||
See Notes to Consolidated Financial Statements. |
AT&T INC. | ||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
Dollars in millions | ||||||||
(Unaudited) | ||||||||
Six months ended | ||||||||
June 30, | ||||||||
2014 | 2013 | |||||||
Operating Activities | ||||||||
Net income | $ | 7,355 | $ | 7,653 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 9,167 | 9,100 | ||||||
Undistributed earnings from investments in equity affiliates | (58 | ) | (198 | ) | ||||
Provision for uncollectible accounts | 444 | 439 | ||||||
Deferred income tax expense | 546 | 1,081 | ||||||
Net gain from sale of investments, net of impairments | (1,365 | ) | (260 | ) | ||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | (566 | ) | (290 | ) | ||||
Other current assets | (771 | ) | 784 | |||||
Accounts payable and accrued liabilities | 2,894 | (340 | ) | |||||
Retirement benefit funding | (280 | ) | - | |||||
Other - net | (497 | ) | (258 | ) | ||||
Total adjustments | 9,514 | 10,058 | ||||||
Net Cash Provided by Operating Activities | 16,869 | 17,711 | ||||||
Investing Activities | ||||||||
Construction and capital expenditures: | ||||||||
Capital expenditures | (11,649 | ) | (9,665 | ) | ||||
Interest during construction | (118 | ) | (140 | ) | ||||
Acquisitions, net of cash acquired | (857 | ) | (1,182 | ) | ||||
Dispositions | 4,921 | 825 | ||||||
Return of advances to and investments in equity affiliates | 2 | 301 | ||||||
Other | - | (4 | ) | |||||
Net Cash Used in Investing Activities | �� | (7,701 | ) | (9,865 | ) | |||
Financing Activities | ||||||||
Net change in short-term borrowings with original maturities of three months or less | 134 | - | ||||||
Issuance of other short-term borrowings | - | 1,476 | ||||||
Repayment of other short-term borrowings | - | (233 | ) | |||||
Issuance of long-term debt | 8,564 | 6,416 | ||||||
Repayment of long-term debt | (3,508 | ) | (1,823 | ) | ||||
Purchase of treasury stock | (1,396 | ) | (9,217 | ) | ||||
Issuance of treasury stock | 27 | 104 | ||||||
Dividends paid | (4,784 | ) | (4,930 | ) | ||||
Other | (239 | ) | 41 | |||||
Net Cash Used in Financing Activities | (1,202 | ) | (8,166 | ) | ||||
Net increase (decrease) in cash and cash equivalents | 7,966 | (320 | ) | |||||
Cash and cash equivalents beginning of year | 3,339 | 4,868 | ||||||
Cash and Cash Equivalents End of Period | $ | 11,305 | $ | 4,548 | ||||
Cash paid during the six months ended June 30 for: | ||||||||
Interest | $ | 2,292 | $ | 2,002 | ||||
Income taxes, net of refunds | $ | 987 | $ | 591 | ||||
See Notes to Consolidated Financial Statements. |
AT&T INC. | ||||
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY | ||||
Dollars and shares in millions except per share amounts | ||||
(Unaudited) | ||||
June 30, 2014 | ||||
Shares | Amount | |||
Common Stock | ||||
Balance at beginning of year | 6,495 | $ | 6,495 | |
Issuance of stock | - | - | ||
Balance at end of period | 6,495 | $ | 6,495 | |
Additional Paid-In Capital | ||||
Balance at beginning of year | $ | 91,091 | ||
Issuance of treasury stock | 4 | |||
Share-based payments | (34) | |||
Change related to acquisition of interests held by noncontrolling owners | (4) | |||
Balance at end of period | $ | 91,057 | ||
Retained Earnings | ||||
Balance at beginning of year | $ | 31,141 | ||
Net income attributable to AT&T ($1.38 per diluted share) | 7,199 | |||
Dividends to stockholders ($0.92 per share) | (4,786) | |||
Balance at end of period | $ | 33,554 | ||
Treasury Stock | ||||
Balance at beginning of year | (1,269) | $ | (45,619) | |
Repurchase of common stock | (42) | (1,396) | ||
Issuance of treasury stock | 7 | 190 | ||
Balance at end of period | (1,304) | $ | (46,825) | |
Accumulated Other Comprehensive Income Attributable to AT&T, net of tax | ||||
Balance at beginning of year | $ | 7,880 | ||
Other comprehensive loss attributable to AT&T | (29) | |||
Balance at end of period | $ | 7,851 | ||
Noncontrolling Interest | ||||
Balance at beginning of year | $ | 494 | ||
Net income attributable to noncontrolling interest | 156 | |||
Distributions | (158) | |||
Translation adjustments attributable to noncontrolling interest, net of taxes | 1 | |||
Balance at end of period | $ | 493 | ||
Total Stockholders’ Equity at beginning of year | $ | 91,482 | ||
Total Stockholders’ Equity at end of period | $ | 92,625 | ||
See Notes to Consolidated Financial Statements. |
Three months ended | Six months ended | Three months ended | Nine months ended | |||||||||||||||||||||||||||||
June 30, | June 30, | September 30, | September 30, | |||||||||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | |||||||||||||||||||||||||
Numerators | ||||||||||||||||||||||||||||||||
Numerator for basic earnings per share: | ||||||||||||||||||||||||||||||||
Net Income | $ | 3,621 | $ | 3,880 | $ | 7,355 | $ | 7,653 | $ | 3,059 | $ | 3,905 | $ | 10,414 | $ | 11,558 | ||||||||||||||||
Less: Net income attributable to noncontrolling interest | (74 | ) | (58 | ) | (156 | ) | (131 | ) | (57 | ) | (91 | ) | (213 | ) | (222 | ) | ||||||||||||||||
Net Income attributable to AT&T | 3,547 | 3,822 | 7,199 | 7,522 | 3,002 | 3,814 | 10,201 | 11,336 | ||||||||||||||||||||||||
Dilutive potential common shares: | ||||||||||||||||||||||||||||||||
Share-based payment | 3 | 2 | 7 | 6 | 3 | 3 | 10 | 9 | ||||||||||||||||||||||||
Numerator for diluted earnings per share | $ | 3,550 | $ | 3,824 | $ | 7,206 | $ | 7,528 | $ | 3,005 | $ | 3,817 | $ | 10,211 | $ | 11,345 | ||||||||||||||||
Denominators (000,000) | ||||||||||||||||||||||||||||||||
Denominator for basic earnings per share: | ||||||||||||||||||||||||||||||||
Weighted average number of common shares outstanding | 5,204 | 5,381 | 5,213 | 5,446 | 5,198 | 5,315 | 5,208 | 5,402 | ||||||||||||||||||||||||
Dilutive potential common shares: | ||||||||||||||||||||||||||||||||
Share-based payment (in shares) | 16 | 16 | 16 | 17 | 16 | 16 | 16 | 17 | ||||||||||||||||||||||||
Denominator for diluted earnings per share | 5,220 | 5,397 | 5,229 | 5,463 | 5,214 | 5,331 | 5,224 | 5,419 | ||||||||||||||||||||||||
Basic earnings per share attributable to AT&T | $ | 0.68 | $ | 0.71 | $ | 1.38 | $ | 1.38 | $ | 0.58 | $ | 0.72 | $ | 1.96 | $ | 2.10 | ||||||||||||||||
Diluted earnings per share attributable to AT&T | $ | 0.68 | $ | 0.71 | $ | 1.38 | $ | 1.38 | $ | 0.58 | $ | 0.72 | $ | 1.95 | $ | 2.09 |
At June 30, 2014 and for the period ended: | |||||||||||||||||||||||||||||||||||
At September 30, 2014 and for the period ended: | At September 30, 2014 and for the period ended: | ||||||||||||||||||||||||||||||||||
Foreign Currency Translation Adjustment | Net Unrealized Gains (Losses) on Available- for-Sale Securities | Net Unrealized Gains (Losses) on Cash Flow Hedges | Defined Benefit Postretirement Plans | Accumulated Other Comprehensive Income | Foreign Currency Translation Adjustment | Net Unrealized Gains (Losses) on Available- for-Sale Securities | Net Unrealized Gains (Losses) on Cash Flow Hedges | Defined Benefit Postretirement Plans | Accumulated Other Comprehensive Income | ||||||||||||||||||||||||||
Balance as of December 31, 2013 | Balance as of December 31, 2013 | $ | (367) | $ | 450 | $ | 445 | $ | 7,352 | $ | 7,880 | $ | (367 | ) | $ | 450 | $ | 445 | $ | 7,352 | $ | 7,880 | |||||||||||||
Other comprehensive income (loss) before reclassifications | Other comprehensive income (loss) before reclassifications | 5 | 59 | (98) | - | (34) | (29 | ) | 30 | 272 | - | 273 | |||||||||||||||||||||||
Amounts reclassified from accumulated OCI | Amounts reclassified from accumulated OCI | 416 | 1 | (14) | 2 | 21 | 3 | (418) | 4 | 5 | 416 | 1 | (15 | )2 | 29 | 3 | (657 | )4 | (227 | ) | |||||||||||||||
Net other comprehensive income (loss) | Net other comprehensive income (loss) | 421 | 45 | (77) | (418) | (29) | 387 | 15 | 301 | (657 | ) | 46 | |||||||||||||||||||||||
Balance as of June 30, 2014 | $ | 54 | $ | 495 | $ | 368 | $ | 6,934 | $ | 7,851 | |||||||||||||||||||||||||
Balance as of September 30, 2014 | $ | 20 | $ | 465 | $ | 746 | $ | 6,695 | $ | 7,926 | |||||||||||||||||||||||||
At June 30, 2013 and for the period ended: | |||||||||||||||||||||||||||||||||||
At September 30, 2013 and for the period ended: | At September 30, 2013 and for the period ended: | ||||||||||||||||||||||||||||||||||
Foreign Currency Translation Adjustment | Net Unrealized Gains (Losses) on Available- for-Sale Securities | Net Unrealized Gains (Losses) on Cash Flow Hedges | Defined Benefit Postretirement Plans | Accumulated Other Comprehensive Income | Foreign Currency Translation Adjustment | Net Unrealized Gains (Losses) on Available- for-Sale Securities | Net Unrealized Gains (Losses) on Cash Flow Hedges | Defined Benefit Postretirement Plans | Accumulated Other Comprehensive Income | ||||||||||||||||||||||||||
Balance as of December 31, 2012 | Balance as of December 31, 2012 | $ | (284) | $ | 272 | $ | (110) | $ | 5,358 | $ | 5,236 | $ | (284 | ) | $ | 272 | $ | (110 | ) | $ | 5,358 | $ | 5,236 | ||||||||||||
Other comprehensive income (loss) before reclassifications | Other comprehensive income (loss) before reclassifications | (117) | 86 | 210 | - | 179 | (153 | ) | 155 | 526 | - | 528 | |||||||||||||||||||||||
Amounts reclassified from accumulated OCI | Amounts reclassified from accumulated OCI | 34 | 1 | (10) | 2 | 15 | 3 | (347) | 4 | (308) | 34 | 1 | (13 | )2 | 22 | 3 | (525 | )4 | (482 | ) | |||||||||||||||
Net other comprehensive income (loss) | Net other comprehensive income (loss) | (83) | 76 | 225 | (347) | (129) | (119 | ) | 142 | 548 | (525 | ) | 46 | ||||||||||||||||||||||
Balance as of June 30, 2013 | $ | (367) | $ | 348 | $ | 115 | $ | 5,011 | $ | 5,107 | |||||||||||||||||||||||||
1 | Pre-tax translation loss reclassifications are included in Other income (expense) - net in the consolidated statements of income. | ||||||||||||||||||||||||||||||||||
2 | Pre-tax gains are included in Other income (expense) - net in the consolidated statements of income. | ||||||||||||||||||||||||||||||||||
3 | (Gains) losses are included in interest expense in the consolidated statements of income. See Note 6 for additional information. | ||||||||||||||||||||||||||||||||||
4 | The amortization of prior service credits associated with postretirement benefits, net of amounts capitalized as part of construction labor, are included in Cost of services and sales and Selling, general and administrative in the consolidated statements of income (see Note 5). | ||||||||||||||||||||||||||||||||||
Actuarial loss reclassifications related to our equity method investees are included in Other income (expense) - net in the consolidated statements of income. | |||||||||||||||||||||||||||||||||||
Balance as of September 30, 2013 | $ | (403 | ) | $ | 414 | $ | 438 | $ | 4,833 | $ | 5,282 |
1 Pre-tax translation loss reclassifications are included in Other income (expense) - net in the consolidated statements of income. | |||||||||||||||
2 Pre-tax gains are included in Other income (expense) - net in the consolidated statements of income. | |||||||||||||||
3 (Gains) losses are included in interest expense in the consolidated statements of income. See Note 6 for additional information. | |||||||||||||||
4 The amortization of prior service credits associated with postretirement benefits, net of amounts capitalized as part of construction labor, are included in Cost of services and sales and Selling, general and administrative in the consolidated statements of income (see Note 5). | |||||||||||||||
Actuarial loss reclassifications related to our equity method investees are included in Other income (expense) - net in the consolidated statements of income. |
For the three months ended June 30, 2014 | ||||||||||||||||
Wireless | Wireline | Corporate and Other | Consolidated Results | |||||||||||||
Service | $ | 15,148 | $ | 14,408 | $ | - | $ | 29,556 | ||||||||
Equipment | 2,782 | 229 | 8 | 3,019 | ||||||||||||
Total segment operating revenues | 17,930 | 14,637 | 8 | 32,575 | ||||||||||||
Operations and support expenses | 11,568 | 10,700 | 141 | 22,409 | ||||||||||||
Depreciation and amortization expenses | 2,035 | 2,514 | 1 | 4,550 | ||||||||||||
Total segment operating expenses | 13,603 | 13,214 | 142 | 26,959 | ||||||||||||
Segment operating income (loss) | 4,327 | 1,423 | (134 | ) | 5,616 | |||||||||||
Interest expense | - | - | 881 | 881 | ||||||||||||
Equity in net income (loss) of affiliates | (29 | ) | - | 131 | 102 | |||||||||||
Other income (expense) – net | - | - | 1,269 | 1,269 | ||||||||||||
Segment income before income taxes | $ | 4,298 | $ | 1,423 | $ | 385 | $ | 6,106 | ||||||||
For the six months ended June 30, 2014 | Consolidated Results | |||||||||||||||
Wireless | Wireline | Corporate and Other | ||||||||||||||
Service | $ | 30,535 | $ | 28,797 | $ | - | $ | 59,332 | ||||||||
Equipment | 5,261 | 441 | 17 | 5,719 | ||||||||||||
Total segment operating revenues | 35,796 | 29,238 | 17 | 65,051 | ||||||||||||
Operations and support expenses | 22,450 | 21,157 | 383 | 43,990 | ||||||||||||
Depreciation and amortization expenses | 3,966 | 5,198 | 3 | 9,167 | ||||||||||||
Total segment operating expenses | 26,416 | 26,355 | 386 | 53,157 | ||||||||||||
Segment operating income (loss) | 9,380 | 2,883 | (369 | ) | 11,894 | |||||||||||
Interest expense | - | - | 1,741 | 1,741 | ||||||||||||
Equity in net income (loss) of affiliates | (49 | ) | 1 | 238 | 190 | |||||||||||
Other income (expense) – net | - | - | 1,414 | 1,414 | ||||||||||||
Segment income (loss) before income taxes | $ | 9,331 | $ | 2,884 | $ | (458 | ) | $ | 11,757 |
For the three months ended September 30, 2014 | ||||||||||||||||
Wireless | Wireline | Corporate and Other | Consolidated Results | |||||||||||||
Service | $ | 15,423 | $ | 14,368 | $ | - | $ | 29,791 | ||||||||
Equipment | 2,914 | 247 | 5 | 3,166 | ||||||||||||
Total segment operating revenues | 18,337 | 14,615 | 5 | 32,957 | ||||||||||||
Operations and support expenses | 11,855 | 10,761 | 400 | 23,016 | ||||||||||||
Depreciation and amortization expenses | 1,965 | 2,571 | 3 | 4,539 | ||||||||||||
Total segment operating expenses | 13,820 | 13,332 | 403 | 27,555 | ||||||||||||
Segment operating income (loss) | 4,517 | 1,283 | (398 | ) | 5,402 | |||||||||||
Interest expense | - | - | 1,016 | 1,016 | ||||||||||||
Equity in net income (loss) of affiliates | (26 | ) | 1 | 23 | (2 | ) | ||||||||||
Other income (expense) – net | - | - | 42 | 42 | ||||||||||||
Segment income (loss) before income taxes | $ | 4,491 | $ | 1,284 | $ | (1,349 | ) | $ | 4,426 | |||||||
For the nine months ended September 30, 2014 | Consolidated Results | |||||||||||||||
Wireless | Wireline | Corporate and Other | ||||||||||||||
Service | $ | 45,958 | $ | 43,165 | $ | - | $ | 89,123 | ||||||||
Equipment | 8,175 | 688 | 22 | 8,885 | ||||||||||||
Total segment operating revenues | 54,133 | 43,853 | 22 | 98,008 | ||||||||||||
Operations and support expenses | 34,305 | 31,918 | 783 | 67,006 | ||||||||||||
Depreciation and amortization expenses | 5,931 | 7,769 | 6 | 13,706 | ||||||||||||
Total segment operating expenses | 40,236 | 39,687 | 789 | 80,712 | ||||||||||||
Segment operating income (loss) | 13,897 | 4,166 | (767 | ) | 17,296 | |||||||||||
Interest expense | - | - | 2,757 | 2,757 | ||||||||||||
Equity in net income (loss) of affiliates | (75 | ) | 2 | 261 | 188 | |||||||||||
Other income (expense) – net | - | - | 1,456 | 1,456 | ||||||||||||
Segment income (loss) before income taxes | $ | 13,822 | $ | 4,168 | $ | (1,807 | ) | $ | 16,183 |
For the three months ended June 30, 2013 | ||||||||||||||||||||||||||||||||
For the three months ended September 30, 2013 | For the three months ended September 30, 2013 | |||||||||||||||||||||||||||||||
Wireless | Wireline | Corporate and Other | Consolidated Results | |||||||||||||||||||||||||||||
Service | $ | 15,460 | $ | 14,403 | $ | - | $ | 29,863 | ||||||||||||||||||||||||
Equipment | 2,020 | 267 | 8 | 2,295 | ||||||||||||||||||||||||||||
Total segment operating revenues | 17,480 | 14,670 | 8 | 32,158 | ||||||||||||||||||||||||||||
Operations and support expenses | 10,982 | 10,385 | (12 | ) | 21,355 | |||||||||||||||||||||||||||
Depreciation and amortization expenses | 1,875 | 2,736 | 4 | 4,615 | ||||||||||||||||||||||||||||
Total segment operating expenses | 12,857 | 13,121 | (8 | ) | 25,970 | |||||||||||||||||||||||||||
Segment operating income | 4,623 | 1,549 | 16 | 6,188 | ||||||||||||||||||||||||||||
Interest expense | - | - | 829 | 829 | ||||||||||||||||||||||||||||
Equity in net income (loss) of affiliates | (18 | ) | - | 109 | 91 | |||||||||||||||||||||||||||
Other income (expense) – net | - | - | 50 | 50 | ||||||||||||||||||||||||||||
Segment income (loss) before income taxes | $ | 4,605 | $ | 1,549 | $ | (654 | ) | $ | 5,500 | |||||||||||||||||||||||
For the nine months ended September 30, 2013 | For the nine months ended September 30, 2013 | Consolidated Results | ||||||||||||||||||||||||||||||
Wireless | Wireline | Corporate and Other | Consolidated Results | Wireless | Wireline | Corporate and Other | ||||||||||||||||||||||||||
Service | $ | 15,370 | $ | 14,482 | $ | - | $ | 29,852 | $ | 45,892 | $ | 43,266 | $ | - | $ | 89,158 | ||||||||||||||||
Equipment | 1,921 | 291 | 11 | 2,223 | 5,570 | 832 | 29 | 6,431 | ||||||||||||||||||||||||
Total segment operating revenues | 17,291 | 14,773 | 11 | 32,075 | 51,462 | 44,098 | 29 | 95,589 | ||||||||||||||||||||||||
Operations and support expenses | 10,770 | 10,417 | 204 | 21,391 | 31,932 | 31,137 | 564 | 63,633 | ||||||||||||||||||||||||
Depreciation and amortization expenses | 1,843 | 2,722 | 6 | 4,571 | 5,553 | 8,146 | 16 | 13,715 | ||||||||||||||||||||||||
Total segment operating expenses | 12,613 | 13,139 | 210 | 25,962 | 37,485 | 39,283 | 580 | 77,348 | ||||||||||||||||||||||||
Segment operating income (loss) | 4,678 | 1,634 | (199 | ) | 6,113 | 13,977 | 4,815 | (551 | ) | 18,241 | ||||||||||||||||||||||
Interest expense | - | - | 825 | 825 | - | - | 2,481 | 2,481 | ||||||||||||||||||||||||
Equity in net income (loss) of affiliates | (19 | ) | - | 237 | 218 | (55 | ) | 1 | 548 | 494 | ||||||||||||||||||||||
Other income (expense) – net | - | - | 288 | 288 | - | - | 370 | 370 | ||||||||||||||||||||||||
Segment income (loss) before income taxes | $ | 4,659 | $ | 1,634 | $ | (499 | ) | $ | 5,794 | $ | 13,922 | $ | 4,816 | $ | (2,114 | ) | $ | 16,624 | ||||||||||||||
For the six months ended June 30, 2013 | Consolidated Results | |||||||||||||||||||||||||||||||
Wireless | Wireline | Corporate and Other | ||||||||||||||||||||||||||||||
Service | $ | 30,432 | $ | 28,863 | $ | - | $ | 59,295 | ||||||||||||||||||||||||
Equipment | 3,550 | 565 | 21 | 4,136 | ||||||||||||||||||||||||||||
Total segment operating revenues | 33,982 | 29,428 | 21 | 63,431 | ||||||||||||||||||||||||||||
Operations and support expenses | 20,950 | 20,752 | 576 | 42,278 | ||||||||||||||||||||||||||||
Depreciation and amortization expenses | 3,678 | 5,410 | 12 | 9,100 | ||||||||||||||||||||||||||||
Total segment operating expenses | 24,628 | 26,162 | 588 | 51,378 | ||||||||||||||||||||||||||||
Segment operating income (loss) | 9,354 | 3,266 | (567 | ) | 12,053 | |||||||||||||||||||||||||||
Interest expense | - | - | 1,652 | 1,652 | ||||||||||||||||||||||||||||
Equity in net income (loss) of affiliates | (37 | ) | 1 | 439 | 403 | |||||||||||||||||||||||||||
Other income (expense) – net | - | - | 320 | 320 | ||||||||||||||||||||||||||||
Segment income (loss) before income taxes | $ | 9,317 | $ | 3,267 | $ | (1,460 | ) | $ | 11,124 |
Three months ended | Six months ended | Three months ended | Nine months ended | |||||||||||||||||||||||||||||
June 30, | June 30, | September 30, | September 30, | |||||||||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | |||||||||||||||||||||||||
Pension cost: | ||||||||||||||||||||||||||||||||
Service cost – benefits earned during the period | $ | 282 | $ | 330 | $ | 564 | $ | 660 | $ | 282 | $ | 331 | $ | 846 | $ | 991 | ||||||||||||||||
Interest cost on projected benefit obligation | 662 | 607 | 1,323 | 1,214 | 661 | 608 | 1,984 | 1,822 | ||||||||||||||||||||||||
Expected return on assets | (851 | ) | (828 | ) | (1,700 | ) | (1,656 | ) | (849 | ) | (828 | ) | (2,549 | ) | (2,484 | ) | ||||||||||||||||
Amortization of prior service credit | (23 | ) | (23 | ) | (47 | ) | (46 | ) | (24 | ) | (25 | ) | (71 | ) | (71 | ) | ||||||||||||||||
Net pension cost | $ | 70 | $ | 86 | $ | 140 | $ | 172 | $ | 70 | $ | 86 | $ | 210 | $ | 258 | ||||||||||||||||
Postretirement cost: | ||||||||||||||||||||||||||||||||
Service cost – benefits earned during the period | $ | 58 | $ | 96 | $ | 116 | $ | 191 | $ | 59 | $ | 95 | $ | 175 | $ | 286 | ||||||||||||||||
Interest cost on accumulated postretirement benefit obligation | 364 | 389 | 729 | 779 | 365 | 389 | 1,094 | 1,168 | ||||||||||||||||||||||||
Expected return on assets | (162 | ) | (178 | ) | (326 | ) | (356 | ) | (165 | ) | (177 | ) | (491 | ) | (533 | ) | ||||||||||||||||
Amortization of prior service credit | (362 | ) | (262 | ) | (724 | ) | (525 | ) | (362 | ) | (263 | ) | (1,086 | ) | (788 | ) | ||||||||||||||||
Net postretirement (credit) cost | $ | (102 | ) | $ | 45 | $ | (205 | ) | $ | 89 | $ | (103 | ) | $ | 44 | $ | (308 | ) | $ | 133 | ||||||||||||
Combined net pension and postretirement (credit) cost | $ | (32 | ) | $ | 131 | $ | (65 | ) | $ | 261 | $ | (33 | ) | $ | 130 | $ | (98 | ) | $ | 391 |
Level 1 | Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that we have the ability to access. |
Level 2 | Inputs to the valuation methodology include: |
· | Quoted prices for similar assets and liabilities in active markets. |
· | Quoted prices for identical or similar assets or liabilities in inactive markets. |
· | Inputs other than quoted market prices that are observable for the asset or liability. |
· | Inputs that are derived principally from or corroborated by observable market data by correlation or other means. |
Level 3 | Inputs to the valuation methodology are unobservable and significant to the fair value measurement. |
· | Fair value is often based on developed models in which there are few, if any, external observations. |
June 30, 2014 | December 31, 2013 | September 30, 2014 | December 31, 2013 | ||||||||||||||||||||||||||||
Carrying | Fair | Carrying | Fair | Carrying | Fair | Carrying | Fair | ||||||||||||||||||||||||
Amount | Value | Amount | Value | Amount | Value | Amount | Value | ||||||||||||||||||||||||
Notes and debentures | $ | 83,548 | $ | 91,833 | $ | 74,484 | $ | 79,309 | $ | 75,226 | $ | 82,938 | $ | 74,484 | $ | 79,309 | |||||||||||||||
Commercial paper | 150 | 150 | 20 | 20 | - | - | 20 | 20 | |||||||||||||||||||||||
Bank borrowings | 5 | 5 | 1 | 1 | 5 | 5 | 1 | 1 | |||||||||||||||||||||||
Investment securities | 2,708 | 2,708 | 2,450 | 2,450 | 2,643 | 2,643 | 2,450 | 2,450 |
September 30, 2014 | |||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Available-for-Sale Securities | |||||||||||||||
Domestic equities | $ | 1,108 | $ | - | $ | - | $ | 1,108 | |||||||
International equities | 541 | - | - | 541 | |||||||||||
Fixed income bonds | - | 913 | - | 913 | |||||||||||
Asset Derivatives1 | |||||||||||||||
Interest rate swaps | - | 131 | - | 131 | |||||||||||
Cross-currency swaps | - | 1,536 | - | 1,536 | |||||||||||
Liability Derivatives1 | |||||||||||||||
Interest rate swaps | - | (10 | ) | - | (10 | ) | |||||||||
Cross-currency swaps | - | (901 | ) | - | (901 | ) | |||||||||
December 31, 2013 | |||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Available-for-Sale Securities | |||||||||||||||
Domestic equities | $ | 1,049 | $ | - | $ | - | $ | 1,049 | |||||||
International equities | 563 | - | - | 563 | |||||||||||
Fixed income bonds | - | 759 | - | 759 | |||||||||||
Asset Derivatives1 | |||||||||||||||
Interest rate swaps | - | 191 | - | 191 | |||||||||||
Cross-currency swaps | - | 1,951 | - | 1,951 | |||||||||||
Liability Derivatives1 | |||||||||||||||
Interest rate swaps | - | (7 | ) | - | (7 | ) | |||||||||
Cross-currency swaps | - | (519 | ) | - | (519 | ) | |||||||||
1 Derivatives designated as hedging instruments are reflected as Other assets, Other noncurrent liabilities and, for a portion of interest rate swaps, Other current assets. |
June 30, 2014 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Available-for-Sale Securities | ||||||||||||||||
Domestic equities | $ | 1,113 | $ | - | $ | - | $ | 1,113 | ||||||||
International equities | 566 | - | - | 566 | ||||||||||||
Fixed income bonds | - | 949 | - | 949 | ||||||||||||
Asset Derivatives1 | ||||||||||||||||
Interest rate swaps | - | 203 | - | 203 | ||||||||||||
Cross-currency swaps | - | 2,011 | - | 2,011 | ||||||||||||
Liability Derivatives1 | ||||||||||||||||
Cross-currency swaps | - | (503 | ) | - | (503 | ) | ||||||||||
December 31, 2013 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Available-for-Sale Securities | ||||||||||||||||
Domestic equities | $ | 1,049 | $ | - | $ | - | $ | 1,049 | ||||||||
International equities | 563 | - | - | 563 | ||||||||||||
Fixed income bonds | - | 759 | - | 759 | ||||||||||||
Asset Derivatives1 | ||||||||||||||||
Interest rate swaps | - | 191 | - | 191 | ||||||||||||
Cross-currency swaps | - | 1,951 | - | 1,951 | ||||||||||||
Liability Derivatives1 | ||||||||||||||||
Interest rate swaps | - | (7 | ) | - | (7 | ) | ||||||||||
Cross-currency swaps | - | (519 | ) | - | (519 | ) | ||||||||||
1 Derivatives designated as hedging instruments are reflected as Other assets, Other noncurrent liabilities and, for a portion of interest rate swaps, Other current assets. |
June 30, | December 31, | September 30, | December 31, | |||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Interest rate swaps | $ | 6,350 | $ | 4,750 | $ | 6,550 | $ | 4,750 | ||||||||
Cross-currency swaps | 20,650 | 17,787 | 20,650 | 17,787 | ||||||||||||
Total | $ | 27,000 | $ | 22,537 | $ | 27,200 | $ | 22,537 |
Following is the related hedged items affecting our financial position and performance: | Following is the related hedged items affecting our financial position and performance: | Following is the related hedged items affecting our financial position and performance: | |||||||||||||||||||||||||||||
Effect of Derivatives on the Consolidated Statements of Income | Effect of Derivatives on the Consolidated Statements of Income | Effect of Derivatives on the Consolidated Statements of Income | |||||||||||||||||||||||||||||
Three months ended | Six months ended | ||||||||||||||||||||||||||||||
Fair Value Hedging Relationships | Three months ended | Nine months ended | |||||||||||||||||||||||||||||
June 30, 2014 | June 30, 2013 | June 30, 2014 | June 30, 2013 | September 30, 2014 | September 30, 2013 | September 30, 2014 | September 30, 2013 | ||||||||||||||||||||||||
Interest rate swaps (Interest expense): | |||||||||||||||||||||||||||||||
Gain (Loss) on interest rate swaps | $ | 22 | $ | (63 | ) | $ | 11 | $ | (87 | ) | $ | (70 | ) | $ | 9 | $ | (59 | ) | $ | (78 | ) | ||||||||||
Gain (Loss) on long-term debt | (22 | ) | 63 | (11 | ) | 87 | 70 | (9 | ) | 59 | 78 |
Three months ended | Nine months ended | |||||||||||||||
Cash Flow Hedging Relationships | September 30, 2014 | September 30, 2013 | September 30, 2014 | September 30, 2013 | ||||||||||||
Cross-currency swaps: | ||||||||||||||||
Gain (Loss) recognized in accumulated OCI | $ | 567 | $ | 482 | $ | 418 | $ | 807 | ||||||||
Interest rate locks: | ||||||||||||||||
Interest income (expense) reclassified from accumulated OCI into income | (11 | ) | (11 | ) | (33 | ) | (34 | ) | ||||||||
Foreign exchange contracts: | ||||||||||||||||
Gain (Loss) recognized in accumulated OCI | - | 5 | (2 | ) | 5 |
Three months ended | Six months ended | |||||||||||||||
Cash Flow Hedging Relationships | June 30, 2014 | June 30, 2013 | June 30, 2014 | June 30, 2013 | ||||||||||||
Cross-currency swaps: | ||||||||||||||||
Gain (Loss) recognized in accumulated OCI | $ | (160 | ) | $ | 184 | $ | (149 | ) | $ | 325 | ||||||
Interest rate locks: | ||||||||||||||||
Interest income (expense) reclassified from accumulated OCI into income | (11 | ) | (12 | ) | (22 | ) | (23 | ) | ||||||||
Foreign exchange contracts: | ||||||||||||||||
Gain (Loss) recognized in accumulated OCI | - | 2 | (2 | ) | - |
September 30, | December 31, | |||||||
2014 | 2013 | |||||||
Assets held for sale: | ||||||||
Current assets | $ | 138 | $ | 155 | ||||
Property, plant and equipment - net | 1,436 | 1,289 | ||||||
Goodwill | 799 | 799 | ||||||
Other assets | 18 | 17 | ||||||
Total assets | $ | 2,391 | $ | 2,260 | ||||
Liabilities related to assets held for sale: | ||||||||
Current liabilities | $ | 122 | $ | 128 | ||||
Noncurrent liabilities | 537 | 480 | ||||||
Total liabilities | $ | 659 | $ | 608 |
June 30, | December 31, | |||||||
2014 | 2013 | |||||||
Assets held for sale: | ||||||||
Current assets | $ | 122 | $ | 155 | ||||
Property, plant and equipment - net | 1,388 | 1,289 | ||||||
Goodwill | 799 | 799 | ||||||
Other assets | 18 | 17 | ||||||
Total assets | $ | 2,327 | $ | 2,260 | ||||
Liabilities related to assets held for sale: | ||||||||
Current liabilities | $ | 125 | $ | 128 | ||||
Noncurrent liabilities | 478 | 480 | ||||||
Total liabilities | $ | 603 | $ | 608 |
Three months | Nine months | |||||||
Net receivables sold1 | $ | 885 | $ | 2,276 | ||||
Cash proceeds received | 556 | 1,375 | ||||||
Deferred purchase price recorded | 324 | 889 | ||||||
1 Gross receivables sold were $1,028 and $2,665 for the third quarter and the first nine months of 2014, respectively, before deducting the allowance, imputed interest and trade-in right guarantees. |
Second Quarter | Six-Month Period | Third Quarter | Nine-Month Period | |||||||||||||||||||||||||||||||||||||||||||||
2014 | 2013 | Percent Change | 2014 | 2013 | Percent Change | 2014 | 2013 | Percent Change | 2014 | 2013 | Percent Change | |||||||||||||||||||||||||||||||||||||
Operating Revenues | $ | 32,575 | $ | 32,075 | 1.6 | % | $ | 65,051 | $ | 63,431 | 2.6 | % | $ | 32,957 | $ | 32,158 | 2.5 | % | $ | 98,008 | $ | 95,589 | 2.5 | % | ||||||||||||||||||||||||
Operating expenses | ||||||||||||||||||||||||||||||||||||||||||||||||
Cost of services and sales | 14,212 | 13,270 | 7.1 | 27,533 | 25,824 | 6.6 | 14,541 | 13,403 | 8.5 | 42,074 | 39,227 | 7.3 | ||||||||||||||||||||||||||||||||||||
Selling, general and administrative | 8,197 | 8,121 | 0.9 | 16,457 | 16,454 | - | 8,475 | 7,952 | 6.6 | 24,932 | 24,406 | 2.2 | ||||||||||||||||||||||||||||||||||||
Depreciation and amortization | 4,550 | 4,571 | (0.5 | ) | 9,167 | 9,100 | 0.7 | 4,539 | 4,615 | (1.6 | ) | 13,706 | 13,715 | (0.1 | ) | |||||||||||||||||||||||||||||||||
Total Operating Expenses | 26,959 | 25,962 | 3.8 | 53,157 | 51,378 | 3.5 | 27,555 | 25,970 | 6.1 | 80,712 | 77,348 | 4.3 | ||||||||||||||||||||||||||||||||||||
Operating Income | 5,616 | 6,113 | (8.1 | ) | 11,894 | 12,053 | (1.3 | ) | 5,402 | 6,188 | (12.7 | ) | 17,296 | 18,241 | (5.2 | ) | ||||||||||||||||||||||||||||||||
Income Before Income Taxes | 6,106 | 5,794 | 5.4 | 11,757 | 11,124 | 5.7 | 4,426 | 5,500 | (19.5 | ) | 16,183 | 16,624 | (2.7 | ) | ||||||||||||||||||||||||||||||||||
Net Income | 3,621 | 3,880 | (6.7 | ) | 7,355 | 7,653 | (3.9 | ) | 3,059 | 3,905 | (21.7 | ) | 10,414 | 11,558 | (9.9 | ) | ||||||||||||||||||||||||||||||||
Net Income Attributable to AT&T | $ | 3,547 | $ | 3,822 | (7.2 | ) % | $ | 7,199 | $ | 7,522 | (4.3 | ) % | $ | 3,002 | $ | 3,814 | (21.3 | )% | $ | 10,201 | $ | 11,336 | (10.0 | )% |
Second Quarter | Six-Month Period | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
América Móvil | $ | 99 | $ | 174 | $ | 153 | $ | 325 | ||||||||
YP Holdings | 31 | 63 | 85 | 115 | ||||||||||||
Mobile Wallet Joint Venture | (29 | ) | (19 | ) | (49 | ) | (37 | ) | ||||||||
Other | 1 | - | 1 | - | ||||||||||||
Equity in Net Income of Affiliates | $ | 102 | $ | 218 | $ | 190 | $ | 403 |
Third Quarter | Nine-Month Period | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
América Móvil | $ | - | $ | 85 | $ | 153 | $ | 410 | ||||||||
YP Holdings LLC (YP Holdings) | 23 | 23 | 108 | 138 | ||||||||||||
SoftcardTM Mobile Wallet Joint Venture | (25 | ) | (18 | ) | (74 | ) | (55 | ) | ||||||||
Other | - | 1 | 1 | 1 | ||||||||||||
Equity in Net Income (Loss) of Affiliates | $ | (2 | ) | $ | 91 | $ | 188 | $ | 494 |
Selected Financial and Operating Data | ||||||||||||||||
June 30, | September 30, | |||||||||||||||
Subscribers and connections in (000s) | 2014 | 2013 | 2014 | 2013 | ||||||||||||
Wireless subscribers | 116,634 | 107,884 | 118,650 | 109,460 | ||||||||||||
Network access lines in service | 22,547 | 26,849 | 21,464 | 25,680 | ||||||||||||
U-Verse VoIP connections | 4,411 | 3,379 | 4,756 | 3,616 | ||||||||||||
Total wireline broadband connections | 16,448 | 16,453 | 16,486 | 16,427 | ||||||||||||
Debt ratio1 | 47.6 | % | 46.6 | % | 44.8 | % | 46.9 | % | ||||||||
Ratio of earnings to fixed charges2 | 5.53 | 5.51 | 4.99 | 5.50 | ||||||||||||
Number of AT&T employees | 248,170 | 245,350 | 247,700 | 246,740 |
Wireless | ||||||||||||||||||||||||
Segment Results | ||||||||||||||||||||||||
Third Quarter | Nine-Month Period | |||||||||||||||||||||||
2014 | 2013 | Percent Change | 2014 | 2013 | Percent Change | |||||||||||||||||||
Segment operating revenues | ||||||||||||||||||||||||
Service | $ | 15,423 | $ | 15,460 | (0.2 | )% | $ | 45,958 | $ | 45,892 | 0.1 | % | ||||||||||||
Equipment | 2,914 | 2,020 | 44.3 | 8,175 | 5,570 | 46.8 | ||||||||||||||||||
Total Segment Operating Revenues | 18,337 | 17,480 | 4.9 | 54,133 | 51,462 | 5.2 | ||||||||||||||||||
Segment operating expenses | ||||||||||||||||||||||||
Operations and support | 11,855 | 10,982 | 7.9 | 34,305 | 31,932 | 7.4 | ||||||||||||||||||
Depreciation and amortization | 1,965 | 1,875 | 4.8 | 5,931 | 5,553 | 6.8 | ||||||||||||||||||
Total Segment Operating Expenses | 13,820 | 12,857 | 7.5 | 40,236 | 37,485 | 7.3 | ||||||||||||||||||
Segment Operating Income | 4,517 | 4,623 | (2.3 | ) | 13,897 | 13,977 | (0.6 | ) | ||||||||||||||||
Equity in Net Income (Loss) of | ||||||||||||||||||||||||
Affiliates | (26) | (18) | (44.4 | ) | (75) | (55) | (36.4 | ) | ||||||||||||||||
Segment Income | $ | 4,491 | $ | 4,605 | (2.5 | )% | $ | 13,822 | $ | 13,922 | (0.7 | )% |
Wireless | ||||||||||||||||||||||||
Segment Results | ||||||||||||||||||||||||
Second Quarter | Six-Month Period | |||||||||||||||||||||||
2014 | 2013 | Percent Change | 2014 | 2013 | Percent Change | |||||||||||||||||||
Segment operating revenues | ||||||||||||||||||||||||
Service | $ | 15,148 | $ | 15,370 | (1.4 | ) % | $ | 30,535 | $ | 30,432 | 0.3 | % | ||||||||||||
Equipment | 2,782 | 1,921 | 44.8 | 5,261 | 3,550 | 48.2 | ||||||||||||||||||
Total Segment Operating Revenues | 17,930 | 17,291 | 3.7 | 35,796 | 33,982 | 5.3 | ||||||||||||||||||
Segment operating expenses | ||||||||||||||||||||||||
Operations and support | 11,568 | 10,770 | 7.4 | 22,450 | 20,950 | 7.2 | ||||||||||||||||||
Depreciation and amortization | 2,035 | 1,843 | 10.4 | 3,966 | 3,678 | 7.8 | ||||||||||||||||||
Total Segment Operating Expenses | 13,603 | 12,613 | 7.8 | 26,416 | 24,628 | 7.3 | ||||||||||||||||||
Segment Operating Income | 4,327 | 4,678 | (7.5 | ) | 9,380 | 9,354 | 0.3 | |||||||||||||||||
Equity in Net Income (Loss) of | ||||||||||||||||||||||||
Affiliates | (29 | ) | (19) | (52.6 | ) | (49 | ) | (37) | (32.4 | ) | ||||||||||||||
Segment Income | $ | 4,298 | $ | 4,659 | (7.7 | ) % | $ | 9,331 | $ | 9,317 | 0.2 | % |
The following table highlights other key measures of performance for the Wireless segment: | ||||||||||||||||||||||||
Third Quarter | Nine-Month Period | |||||||||||||||||||||||
2014 | 2013 | Percent Change | 2014 | 2013 | Percent Change | |||||||||||||||||||
(in 000s) | ||||||||||||||||||||||||
Wireless Subscribers 1 | 118,650 | 109,460 | 8.4 | % | ||||||||||||||||||||
Postpaid smartphones | 55,791 | 50,637 | 10.2 | |||||||||||||||||||||
Postpaid feature phones and data-centric | ||||||||||||||||||||||||
devices | 19,314 | 21,395 | (9.7 | ) | ||||||||||||||||||||
Postpaid | 75,105 | 72,032 | 4.3 | |||||||||||||||||||||
Prepaid | 11,179 | 7,425 | 50.6 | |||||||||||||||||||||
Reseller | 13,884 | 14,089 | (1.5 | ) | ||||||||||||||||||||
Connected devices 2 | 18,482 | 15,914 | 16.1 | |||||||||||||||||||||
Total Wireless Subscribers | 118,650 | 109,460 | 8.4 | |||||||||||||||||||||
Net Additions 3 | ||||||||||||||||||||||||
Postpaid | 785 | 363 | - | 2,436 | 1,210 | - | ||||||||||||||||||
Prepaid | (140 | ) | 192 | - | (595 | ) | 19 | - | ||||||||||||||||
Reseller | 87 | (285 | ) | - | (281 | ) | (951 | ) | 70.5 | |||||||||||||||
Connected devices2 | 1,275 | 719 | 77.3 | 2,143 | 1,634 | 31.2 | ||||||||||||||||||
Net Subscriber Additions | 2,007 | 989 | - | 3,703 | 1,912 | 93.7 | ||||||||||||||||||
Mobile Share connections | 46,909 | 16,130 | - | |||||||||||||||||||||
Smartphones sold under our installment | ||||||||||||||||||||||||
program during period | 3,401 | 401 | - | 9,411 | 401 | - | ||||||||||||||||||
Total Churn4 | 1.36 | % | 1.31 | % | 5 BP | 1.41 | % | 1.35 | % | 6 BP | ||||||||||||||
Postpaid Churn4 | 0.99 | % | 1.07 | % | (8) BP | 0.97 | % | 1.04 | % | (7) BP |
The following table highlights other key measures of performance for the Wireless segment: | ||||||||||||||||||||||||
Second Quarter | Six-Month Period | |||||||||||||||||||||||
2014 | 2013 | Percent Change | 2014 | 2013 | Percent Change | |||||||||||||||||||
(in 000s) | ||||||||||||||||||||||||
Wireless Subscribers 1 | 116,634 | 107,884 | 8.1 | % | ||||||||||||||||||||
Postpaid smartphones | 54,629 | 49,462 | 10.4 | |||||||||||||||||||||
Postpaid feature phones and data-centric | ||||||||||||||||||||||||
devices | 19,703 | 21,816 | (9.7 | ) | ||||||||||||||||||||
Postpaid | 74,332 | 71,278 | 4.3 | |||||||||||||||||||||
Prepaid | 11,343 | 7,084 | 60.1 | |||||||||||||||||||||
Reseller | 13,756 | 14,330 | (4.0 | ) | ||||||||||||||||||||
Connected devices 2 | 17,203 | 15,192 | 13.2 | |||||||||||||||||||||
Total Wireless Subscribers | 116,634 | 107,884 | 8.1 | |||||||||||||||||||||
Net Additions 3 | ||||||||||||||||||||||||
Postpaid | 1,026 | 551 | 86.2 | % | 1,651 | 847 | 94.9 | |||||||||||||||||
Prepaid | (405 | ) | 11 | - | (455 | ) | (173) | - | ||||||||||||||||
Reseller | (162 | ) | (414) | 60.9 | (368 | ) | (666) | 44.7 | ||||||||||||||||
Connected devices2 | 175 | 484 | (63.8 | ) | 868 | 915 | (5.1 | ) | ||||||||||||||||
Net Subscriber Additions | 634 | 632 | 0.3 | 1,696 | 923 | 83.7 | ||||||||||||||||||
Mobile Share connections | 41,291 | 13,077 | - | |||||||||||||||||||||
Smartphones sold under our installment | ||||||||||||||||||||||||
program during period | 3,142 | - | - | 6,010 | - | - | ||||||||||||||||||
Total Churn4 | 1.47% | 1.36% | 11 BP | 1.43% | 1.37% | 6 BP | ||||||||||||||||||
Postpaid Churn4 | 0.86% | 1.02% | (16) BP | 0.96% | 1.03% | (7) BP |
4 Calculated by dividing the aggregate number of wireless subscribers who canceled service during a period divided by the total number of wireless subscribers at the beginning of that period. The churn rate for the period is equal to the average of the churn rate for each month of that period. |
· | Equipment costs increased $406 and $950, respectively, reflecting the sales of more expensive smartphones. Equipment costs also include Cricket and Alltel subscriber integration charges, which we expect will continue into 2015 as we complete the transition of those subscribers to our network. |
· | Selling (other than commissions) and administrative expenses increased |
· | Network system costs increased |
· |
Handset insurance cost increased |
Wireline | ||||||||||||||||||||||||
Segment Results | ||||||||||||||||||||||||
Second Quarter | Six-Month Period | |||||||||||||||||||||||
2014 | 2013 | Percent Change | 2014 | 2013 | Percent Change | |||||||||||||||||||
Segment operating revenues | ||||||||||||||||||||||||
Service | $ | 14,408 | $ | 14,482 | (0.5 | ) % | $ | 28,797 | $ | 28,863 | (0.2 | ) % | ||||||||||||
Equipment | 229 | 291 | (21.3 | ) | 441 | 565 | (21.9 | ) | ||||||||||||||||
Total Segment Operating Revenues | 14,637 | 14,773 | (0.9 | ) | 29,238 | 29,428 | (0.6 | ) | ||||||||||||||||
Segment operating expenses | ||||||||||||||||||||||||
Operations and support | 10,700 | 10,417 | 2.7 | 21,157 | 20,752 | 2.0 | ||||||||||||||||||
Depreciation and amortization | 2,514 | 2,722 | (7.6 | ) | 5,198 | 5,410 | (3.9 | ) | ||||||||||||||||
Total Segment Operating Expenses | 13,214 | 13,139 | 0.6 | 26,355 | 26,162 | 0.7 | ||||||||||||||||||
Segment Operating Income | 1,423 | 1,634 | (12.9 | ) | 2,883 | 3,266 | (11.7 | ) | ||||||||||||||||
Equity in Net Income of Affiliates | - | - | - | 1 | 1 | - | ||||||||||||||||||
Segment Income | $ | 1,423 | $ | 1,634 | (12.9 | ) % | $ | 2,884 | $ | 3,267 | (11.7 | ) % |
Wireline | ||||||||||||||||||||||||
Segment Results | ||||||||||||||||||||||||
Third Quarter | Nine-Month Period | |||||||||||||||||||||||
2014 | 2013 | Percent Change | 2014 | 2013 | Percent Change | |||||||||||||||||||
Segment operating revenues | ||||||||||||||||||||||||
Service | $ | 14,368 | $ | 14,403 | (0.2) | % | $ | 43,165 | $ | 43,266 | (0.2) | % | ||||||||||||
Equipment | 247 | 267 | (7.5) | 688 | 832 | (17.3) | ||||||||||||||||||
Total Segment Operating Revenues | 14,615 | 14,670 | (0.4) | 43,853 | 44,098 | (0.6) | ||||||||||||||||||
Segment operating expenses | ||||||||||||||||||||||||
Operations and support | 10,761 | 10,385 | 3.6 | 31,918 | 31,137 | 2.5 | ||||||||||||||||||
Depreciation and amortization | 2,571 | 2,736 | (6.0) | 7,769 | 8,146 | (4.6) | ||||||||||||||||||
Total Segment Operating Expenses | 13,332 | 13,121 | 1.6 | 39,687 | 39,283 | 1.0 | ||||||||||||||||||
Segment Operating Income | 1,283 | 1,549 | (17.2) | 4,166 | 4,815 | (13.5) | ||||||||||||||||||
Equity in Net Income of Affiliates | 1 | - | - | 2 | 1 | - | ||||||||||||||||||
Segment Income | $ | 1,284 | $ | 1,549 | (17.1) | % | $ | 4,168 | $ | 4,816 | (13.5) | % |
September 30, | September 30, | Percent | ||||||||||
(in 000s) | 2014 | 2013 | Change | |||||||||
U-verse high speed Internet | 12,098 | 9,745 | 24.1 | % | ||||||||
DSL and Other Broadband Connections | 4,388 | 6,682 | (34.3) | |||||||||
Total Wireline Broadband Connections1 | 16,486 | 16,427 | 0.4 | |||||||||
Total U-verse Video Connections | 6,067 | 5,266 | 15.2 | |||||||||
Retail Consumer Switched Access Lines | 10,182 | 13,133 | (22.5) | |||||||||
U-verse Consumer VoIP Connections | 4,698 | 3,616 | 29.9 | |||||||||
Total Retail Consumer Voice Connections | 14,880 | 16,749 | (11.2) | |||||||||
Switched Access Lines | ||||||||||||
Retail Consumer | 10,182 | 13,133 | (22.5) | |||||||||
Retail Business | 9,509 | 10,632 | (10.6) | |||||||||
Retail Subtotal | 19,691 | 23,765 | (17.1) | |||||||||
Wholesale Subtotal | 1,562 | 1,655 | (5.6) | |||||||||
Total Switched Access Lines2 | 21,464 | 25,680 | (16.4) | % |
June 30, | June 30, | Percent | ||||||||||
(in 000s) | 2014 | 2013 | Change | |||||||||
U-verse high speed Internet | 11,497 | 9,090 | 26.5 | % | ||||||||
DSL and Other Broadband Connections | 4,951 | 7,363 | (32.8 | ) | ||||||||
Total Wireline Broadband Connections1 | 16,448 | 16,453 | - | |||||||||
Total U-verse Video Connections | 5,851 | 5,001 | 17.0 | |||||||||
Retail Consumer Switched Access Lines | 10,935 | 13,983 | (21.8 | ) | ||||||||
U-verse Consumer VoIP Connections | 4,379 | 3,379 | 29.6 | |||||||||
Total Retail Consumer Voice Connections | 15,314 | 17,362 | (11.8 | ) | ||||||||
Switched Access Lines | ||||||||||||
Retail Consumer | 10,935 | 13,983 | (21.8 | ) | ||||||||
Retail Business | 9,808 | 10,904 | (10.1 | ) | ||||||||
Retail Subtotal | 20,743 | 24,887 | (16.7 | ) | ||||||||
Wholesale Subtotal | 1,581 | 1,687 | (6.3 | ) | ||||||||
Total Switched Access Lines2 | 22,547 | 26,849 | (16.0 | ) % |
· | March 2014 issuance of $1,100 of 2.300% global notes due 2019, $1,000 of 3.900% global notes due 2024 and $400 of floating rate global notes due 2019. The floating rate for the notes is based upon the three-month London Interbank Offered Rate (LIBOR), reset quarterly, plus 67 basis points. |
· | March 2014 issuance of $500 of floating rate global notes due 2017. The floating rate for the notes is based upon the three-month LIBOR, reset quarterly, plus 42 basis points. |
May 2014 draw of $750 on a private financing agreement with Export Development Canada due 2017. The agreement is designed to encourage the purchase of Canadian-sourced equipment. The agreement contains terms similar to that provided under our revolving credit arrangements, discussed |
· | June 2014 issuance of $2,000 of 4.800% global notes due 2044. |
· | June 2014 issuance of €1,600 (equivalent to $2,181 when issued) of 2.400% global notes due 2024 and €500 (equivalent to $681 when issued) of 3.375% global notes due 2034. |
· | March 2014 redemption of $1,814 of Cricket Communications, Inc. term loans and approximately $38 of 4.500% Leap convertible senior notes (Leap senior notes) in connection with the Leap acquisition. |
· | April 2014 redemption of Cricket Communications, Inc. 7.750% senior notes with a face value of $1,600 in connection with the Leap acquisition. |
· | July 2014 redemption of $4,393 of debt consisting of all of the outstanding BellSouth 5.200% notes due 2014, AT&T 0.875% global notes due 2015, AT&T 5.625% global notes due 2016, and BellSouth 5.200% notes due 2016 as well as $750 in principal amount of the outstanding AT&T 2.500% global notes due 2015. |
· | July 2014 redemption of the remaining $211 of Leap senior notes in connection with the Leap acquisition. |
· | September 2014 redemption of $2,250 of SBC Communications Inc. 5.100% global notes due 2014. |
· | $1,000 of annual put reset securities issued by BellSouth that may be put back to us each April until maturity in 2021. |
· | An accreting zero-coupon note that may be redeemed each May until maturity in 2022. If the zero-coupon note (issued for principal of $500 in 2007) is held to maturity, the redemption amount will be $1,030. |
· | Adverse economic and/or capital access changes in the markets served by us or in countries in which we have significant investments, including the impact on customer demand and our ability and our |
· | Changes in available technology and the effects of such changes, including product substitutions and deployment costs. |
· | Increases in our benefit |
· | The final outcome of FCC and other federal or state agency proceedings (including judicial review, if any, of such proceedings) involving issues that are important to our business, including, without limit, intercarrier compensation, interconnection obligations, the transition from legacy technologies to IP-based infrastructure, universal service, broadband deployment, E911 services, competition policy, net neutrality, unbundled network elements and other wholesale obligations, availability of new spectrum from the FCC on fair and balanced terms, and wireless license awards and renewals. |
· | The final outcome of state and federal legislative efforts involving issues that are important to our business, including deregulation of IP-based services, relief from Carrier of Last Resort obligations, and elimination of state commission review of the withdrawal of services. |
· | Enactment of additional state, federal and/or foreign regulatory and tax laws and regulations pertaining to our subsidiaries and foreign investments, including laws and regulations that reduce our incentive to invest in our networks, resulting in lower revenue growth and/or higher operating costs. |
· | Our ability to absorb revenue losses caused by increasing competition, including offerings that use alternative technologies (e.g., cable, wireless and VoIP) and our ability to maintain capital expenditures. |
· | The extent of competition and the resulting pressure on customer and access line totals and wireline and wireless operating margins. |
· | Our ability to develop attractive and profitable product/service offerings to offset increasing competition in our wireless and wireline markets. |
· | The ability of our competitors to offer product/service offerings at lower prices due to lower cost structures and regulatory and legislative actions adverse to us, including state regulatory proceedings relating to unbundled network elements and nonregulation of comparable alternative technologies (e.g., VoIP). |
· | The continued development of attractive and profitable U-verse service offerings; the extent to which regulatory, franchise fees and build-out requirements apply to this initiative; and the availability, cost and/or reliability of the various technologies and/or content required to provide such offerings. |
· | Our continued ability to attract and offer a diverse portfolio of wireless service and device financing plans, devices |
· | The availability and cost of additional wireless spectrum and regulations and conditions relating to spectrum use, licensing, obtaining additional spectrum, technical standards and deployment and usage, including network management rules. |
· | Our ability to manage growth in wireless data services, including network quality and acquisition of adequate spectrum at reasonable costs and terms. |
· | The outcome of pending, threatened or potential litigation, including patent and product safety claims by or against third parties. |
· | The impact on our networks and business from major equipment failures; security breaches related to the network or customer information; our inability to obtain handsets, equipment/software or have handsets, equipment/software serviced in a timely and cost-effective manner from suppliers; or severe weather conditions, natural disasters, pandemics, energy shortages, wars or terrorist attacks. |
· | The issuance by the Financial Accounting Standards Board or other accounting oversight bodies of new accounting standards or changes to existing standards. |
· | The issuance by the Internal Revenue Service and/or state tax authorities of new tax regulations or changes to existing standards and actions by federal, state or local tax agencies and judicial authorities with respect to applying applicable tax laws and regulations and the resolution of disputes with any taxing jurisdictions. |
· | Our pending acquisition of DIRECTV. |
· | Our ability to adequately fund our wireless operations, including payment for additional spectrum, network upgrades and technological advancements. |
· | Changes in our corporate strategies, such as changing network requirements or acquisitions and dispositions, which may require significant amounts of cash or stock, to respond to competition and regulatory, legislative and technological developments. |
· | The uncertainty surrounding further congressional action to address spending reductions, which may result in a significant reduction in government spending and reluctance of businesses and consumers to spend in general and on our products and services specifically, due to this fiscal uncertainty. |
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds | ||||||||||||||||
(c) A summary of our repurchases of common stock during the third quarter of 2014 is as follows: | ||||||||||||||||
Period | (a) Total Number of Shares (or Units) Purchased1,2 | (b) Average Price Paid Per Share (or Unit) | (c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs1 | (d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) That May Yet Be Purchased Under The Plans or Programs | ||||||||||||
July 1, 2014 - July 31, 2014 | 5,205,380 | $ | 35.57 | 5,200,000 | 415,550,000 | |||||||||||
August 1, 2014 - August 31, 2014 | 1,004,945 | 35.67 | 1,000,000 | 414,550,000 | ||||||||||||
September 1, 2014 - September 30, 2014 | 3,379 | - | - | 414,550,000 | ||||||||||||
Total | 6,213,704 | $ | 35.58 | 6,200,000 | ||||||||||||
1 In March 2014, our Board of Directors approved a fourth authorization to repurchase up to 300 million shares of our common stock. In March 2013, our Board of Directors approved a third authorization to repurchase up to an additional 300 million shares of our common stock. | ||||||||||||||||
The authorizations have no expiration date. | ||||||||||||||||
2 Of the shares repurchased, 13,704 shares were acquired through the withholding of taxes on the vesting of restricted stock or through the payment in stock of taxes on the exercise price of options. | ||||||||||||||||
(c) A summary of our repurchases of common stock during the second quarter of 2014 is as follows: | ||||||||||
Period | (a) Total Number of Shares (or Units) Purchased 1,2 | (b) Average Price Paid Per Share (or Unit) | (c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs 1 | (d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) That May Yet Be Purchased Under The Plans or Programs | ||||||
April 1, 2014 - April 30, 2014 | 4,500,637 | $ | 35.43 | 4,500,000 | 420,750,000 | |||||
May 1, 2014 - May 31, 2014 | 7,793 | - | - | 420,750,000 | ||||||
June 1, 2014 - June 30, 2014 | 12,851 | - | - | 420,750,000 | ||||||
Total | 4,521,281 | $ | 35.43 | 4,500,000 | ||||||
1 | In March 2014, our Board of Directors approved a fourth authorization to repurchase up to 300 million shares of our common stock. | |||||||||
In March 2013, our Board of Directors approved a third authorization to repurchase of up to an additional 300 million shares of our common stock. The authorizations have no expiration date. | ||||||||||
2 | Of the shares repurchased, 21,281 shares were acquired through the withholding of taxes on the vesting of restricted stock or through the payment in stock of taxes on the exercise price of options. |
12 | Computation of Ratios of Earnings to Fixed Charges |
31 | Rule 13a-14(a)/15d-14(a) Certifications 31.1 Certification of Principal Executive Officer 31.2 Certification of Principal Financial Officer |
32 | Section 1350 Certifications |
101 | XBRL Instance Document |
November 10, 2014 | AT&T Inc. /s/ John J. Stephens John J. Stephens Senior Executive Vice President and Chief Financial Officer | |||