(Mark One) x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, or | |||
o | 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 | [ ] |
Emerging growth company | [ ] |
AT&T INC. | ||||||||
CONSOLIDATED STATEMENTS OF INCOME | ||||||||
Dollars in millions except per share amounts | ||||||||
(Unaudited) | ||||||||
Three Months Ended | ||||||||
March 31, | ||||||||
2016 | 2015 | |||||||
Operating Revenues | ||||||||
Service | $ | 37,101 | $ | 28,962 | ||||
Equipment | 3,434 | 3,614 | ||||||
Total operating revenues | 40,535 | 32,576 | ||||||
Operating Expenses | ||||||||
Cost of services and sales | ||||||||
Equipment | 4,375 | 4,546 | ||||||
Broadcast, programming and operations | 4,629 | 1,122 | ||||||
Other cost of services (exclusive of depreciation | ||||||||
and amortization shown separately below) | 9,396 | 8,812 | ||||||
Selling, general and administrative | 8,441 | 7,961 | ||||||
Depreciation and amortization | 6,563 | 4,578 | ||||||
Total operating expenses | 33,404 | 27,019 | ||||||
Operating Income | 7,131 | 5,557 | ||||||
Other Income (Expense) | ||||||||
Interest expense | (1,207 | ) | (899 | ) | ||||
Equity in net income of affiliates | 13 | - | ||||||
Other income (expense) – net | 70 | 70 | ||||||
Total other income (expense) | (1,124 | ) | (829 | ) | ||||
Income Before Income Taxes | 6,007 | 4,728 | ||||||
Income tax expense | 2,122 | 1,389 | ||||||
Net Income | 3,885 | 3,339 | ||||||
Less: Net Income Attributable to Noncontrolling Interest | (82 | ) | (76 | ) | ||||
Net Income Attributable to AT&T | $ | 3,803 | $ | 3,263 | ||||
Basic Earnings Per Share Attributable to AT&T | $ | 0.62 | $ | 0.63 | ||||
Diluted Earnings Per Share Attributable to AT&T | $ | 0.61 | $ | 0.63 | ||||
Weighted Average Number of Common Shares Outstanding – Basic (in millions) | 6,172 | 5,203 | ||||||
Weighted Average Number of Common Shares Outstanding – with Dilution (in millions) | 6,190 | 5,219 | ||||||
Dividends Declared Per Common Share | $ | 0.48 | $ | 0.47 | ||||
See Notes to Consolidated Financial Statements. |
AT&T INC. | ||||||||
CONSOLIDATED STATEMENTS OF INCOME | ||||||||
Dollars in millions except per share amounts | ||||||||
(Unaudited) | ||||||||
Three months ended | ||||||||
March 31, | ||||||||
2017 | 2016 | |||||||
Operating Revenues | ||||||||
Service | $ | 36,456 | $ | 37,101 | ||||
Equipment | 2,909 | 3,434 | ||||||
Total operating revenues | 39,365 | 40,535 | ||||||
Operating Expenses | ||||||||
Cost of services and sales | ||||||||
Equipment | 3,848 | 4,375 | ||||||
Broadcast, programming and operations | 4,974 | 4,629 | ||||||
Other cost of services (exclusive of depreciation and amortization shown separately below) | 9,065 | 9,396 | ||||||
Selling, general and administrative | 8,487 | 8,441 | ||||||
Depreciation and amortization | 6,127 | 6,563 | ||||||
Total operating expenses | 32,501 | 33,404 | ||||||
Operating Income | 6,864 | 7,131 | ||||||
Other Income (Expense) | ||||||||
Interest expense | (1,293 | ) | (1,207 | ) | ||||
Equity in net income (loss) of affiliates | (173 | ) | 13 | |||||
Other income (expense) – net | (20 | ) | 70 | |||||
Total other income (expense) | (1,486 | ) | (1,124 | ) | ||||
Income Before Income Taxes | 5,378 | 6,007 | ||||||
Income tax expense | 1,804 | 2,122 | ||||||
Net Income | 3,574 | 3,885 | ||||||
Less: Net Income Attributable to Noncontrolling Interest | (105 | ) | (82 | ) | ||||
Net Income Attributable to AT&T | $ | 3,469 | $ | 3,803 | ||||
Basic Earnings Per Share Attributable to AT&T | $ | 0.56 | $ | 0.62 | ||||
Diluted Earnings Per Share Attributable to AT&T | $ | 0.56 | $ | 0.61 | ||||
Weighted Average Number of Common Shares Outstanding – Basic (in millions) | 6,166 | 6,172 | ||||||
Weighted Average Number of Common Shares Outstanding – with Dilution (in millions) | 6,186 | 6,190 | ||||||
Dividends Declared Per Common Share | $ | 0.49 | $ | 0.48 | ||||
See Notes to Consolidated Financial Statements. |
AT&T INC. | ||||||||||||||||
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||||||||||||||
Dollars in millions | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Three months ended | Three months ended | |||||||||||||||
March 31, | March 31, | |||||||||||||||
2016 | 2015 | 2017 | 2016 | |||||||||||||
Net income | $ | 3,885 | $ | 3,339 | $ | 3,574 | $ | 3,885 | ||||||||
Other comprehensive income, net of tax: | ||||||||||||||||
Other comprehensive income (loss), net of tax: | ||||||||||||||||
Foreign currency: | ||||||||||||||||
Foreign currency translation adjustment, net of taxes of $(10) and $(104) | (44 | ) | (186 | ) | ||||||||||||
Foreign currency translation adjustment (includes $6 and $0 attributable to noncontrolling interest), net of taxes of $391 and $(10) | 372 | (44 | ) | |||||||||||||
Available-for-sale securities: | ||||||||||||||||
Net unrealized gains (losses), net of taxes of $(15) and $19 | (26 | ) | 33 | |||||||||||||
Reclassification adjustment included in net income, net of taxes of $(2) and $(3) | (3 | ) | (5 | ) | ||||||||||||
Net unrealized gains (losses), net of taxes of $15 and $(15) | 33 | (26 | ) | |||||||||||||
Reclassification adjustment included in net income, net of taxes of $3, and $(2) | 5 | (3 | ) | |||||||||||||
Cash flow hedges: | ||||||||||||||||
Net unrealized gains (losses), net of taxes of $67 and $(190) | 124 | (354 | ) | |||||||||||||
Reclassification adjustment included in net income, net of taxes of $5 and $4 | 10 | 7 | ||||||||||||||
Net unrealized gains, net of taxes of $7 and $67 | 13 | 124 | ||||||||||||||
Reclassification adjustment included in net income, net of taxes of $5 and $5 | 10 | 10 | ||||||||||||||
Defined benefit postretirement plans: | ||||||||||||||||
Amortization of net prior service credit included in net income, net of taxes of $(131) and $(131) | (215 | ) | (215 | ) | ||||||||||||
Amortization of net prior service credit included in net income, net of taxes of $(139) and $(131) | (228 | ) | (215 | ) | ||||||||||||
Other comprehensive income (loss) | (154 | ) | (720 | ) | 205 | (154 | ) | |||||||||
Total comprehensive income | 3,731 | 2,619 | 3,779 | 3,731 | ||||||||||||
Less: Total comprehensive income attributable to noncontrolling interest | (82 | ) | (76 | ) | (111 | ) | (82 | ) | ||||||||
Total Comprehensive Income Attributable to AT&T | $ | 3,649 | $ | 2,543 | $ | 3,668 | $ | 3,649 | ||||||||
See Notes to Consolidated Financial Statements. |
AT&T INC. | ||||||||
CONSOLIDATED BALANCE SHEETS | ||||||||
Dollars in millions except per share amounts | ||||||||
March 31, | December 31, | |||||||
2017 | 2016 | |||||||
Assets | (Unaudited) | |||||||
Current Assets | ||||||||
Cash and cash equivalents | $ | 14,884 | $ | 5,788 | ||||
Accounts receivable - net of allowances for doubtful accounts of $699 and $661 | 15,078 | 16,794 | ||||||
Prepaid expenses | 1,418 | 1,555 | ||||||
Other current assets | 14,347 | 14,232 | ||||||
Total current assets | 45,727 | 38,369 | ||||||
Property, plant and equipment | 319,108 | 319,648 | ||||||
Less: accumulated depreciation and amortization | (193,816 | ) | (194,749 | ) | ||||
Property, Plant and Equipment – Net | 125,292 | 124,899 | ||||||
Goodwill | 105,593 | 105,207 | ||||||
Licenses | 94,617 | 94,176 | ||||||
Customer Lists and Relationships – Net | 13,366 | 14,243 | ||||||
Other Intangible Assets – Net | 8,295 | 8,441 | ||||||
Investments in Equity Affiliates | 1,551 | 1,674 | ||||||
Other Assets | 17,462 | 16,812 | ||||||
Total Assets | $ | 411,903 | $ | 403,821 | ||||
Liabilities and Stockholders' Equity | ||||||||
Current Liabilities | ||||||||
Debt maturing within one year | $ | 12,681 | $ | 9,832 | ||||
Accounts payable and accrued liabilities | 27,120 | 31,138 | ||||||
Advanced billing and customer deposits | 4,493 | 4,519 | ||||||
Accrued taxes | 3,384 | 2,079 | ||||||
Dividends payable | 3,012 | 3,008 | ||||||
Total current liabilities | 50,690 | 50,576 | ||||||
Long-Term Debt | 120,568 | 113,681 | ||||||
Deferred Credits and Other Noncurrent Liabilities | ||||||||
Deferred income taxes | 61,100 | 60,128 | ||||||
Postemployment benefit obligation | 33,404 | 33,578 | ||||||
Other noncurrent liabilities | 21,160 | 21,748 | ||||||
Total deferred credits and other noncurrent liabilities | 115,664 | 115,454 | ||||||
Stockholders' Equity | ||||||||
Common stock ($1 par value, 14,000,000,000 authorized at March 31, 2017 and | ||||||||
December 31, 2016: issued 6,495,231,088 at March 31, 2017 and December 31, 2016) | 6,495 | 6,495 | ||||||
Additional paid-in capital | 89,411 | 89,604 | ||||||
Retained earnings | 35,175 | 34,734 | ||||||
Treasury stock (347,741,277 at March 31, 2017 and 356,237,141 | ||||||||
at December 31, 2016, at cost) | (12,400 | ) | (12,659 | ) | ||||
Accumulated other comprehensive income | 5,160 | 4,961 | ||||||
Noncontrolling interest | 1,140 | 975 | ||||||
Total stockholders' equity | 124,981 | 124,110 | ||||||
Total Liabilities and Stockholders' Equity | $ | 411,903 | $ | 403,821 | ||||
See Notes to Consolidated Financial Statements. |
AT&T INC. | ||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
Dollars in millions | ||||||||
(Unaudited) | ||||||||
Three months ended | ||||||||
March 31, | ||||||||
2017 | 2016 | |||||||
Operating Activities | ||||||||
Net income | $ | 3,574 | $ | 3,885 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 6,127 | 6,563 | ||||||
Undistributed loss (earnings) from investments in equity affiliates | 182 | (13 | ) | |||||
Provision for uncollectible accounts | 393 | 374 | ||||||
Deferred income tax expense | 480 | 1,346 | ||||||
Net loss (gain) from sale of investments, net of impairments | 61 | (44 | ) | |||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | 445 | 43 | ||||||
Other current assets | 228 | 1,319 | ||||||
Accounts payable and other accrued liabilities | (1,778 | ) | (3,990 | ) | ||||
Equipment installment receivables and related sales | 579 | 454 | ||||||
Deferred fulfillment costs | (436 | ) | (542 | ) | ||||
Retirement benefit funding | (140 | ) | (140 | ) | ||||
Other - net | (497 | ) | (1,355 | ) | ||||
Total adjustments | 5,644 | 4,015 | ||||||
Net Cash Provided by Operating Activities | 9,218 | 7,900 | ||||||
Investing Activities | ||||||||
Capital expenditures: | ||||||||
Purchase of property and equipment | (5,784 | ) | (4,451 | ) | ||||
Interest during construction | (231 | ) | (218 | ) | ||||
Acquisitions, net of cash acquired | (162 | ) | (165 | ) | ||||
Dispositions | 6 | 81 | ||||||
Sale of securities, net | - | 445 | ||||||
Net Cash Used in Investing Activities | (6,171 | ) | (4,308 | ) | ||||
Financing Activities | ||||||||
Net change in short-term borrowings with original maturities of three months or less | (1 | ) | - | |||||
Issuance of long-term debt | 12,440 | 5,978 | ||||||
Repayment of long-term debt | (3,053 | ) | (2,296 | ) | ||||
Purchase of treasury stock | (177 | ) | - | |||||
Issuance of treasury stock | 21 | 89 | ||||||
Dividends paid | (3,009 | ) | (2,947 | ) | ||||
Other | (172 | ) | 471 | |||||
Net Cash Provided by Financing Activities | 6,049 | 1,295 | ||||||
Net increase in cash and cash equivalents | 9,096 | 4,887 | ||||||
Cash and cash equivalents beginning of year | 5,788 | 5,121 | ||||||
Cash and Cash Equivalents End of Period | $ | 14,884 | $ | 10,008 | ||||
Cash paid (received) during the three months ended March 31 for: | ||||||||
Interest | $ | 1,643 | $ | 1,459 | ||||
Income taxes, net of refunds | $ | (160 | ) | $ | 477 | |||
See Notes to Consolidated Financial Statements. |
AT&T INC. | ||||||||
CONSOLIDATED BALANCE SHEETS | ||||||||
Dollars in millions except per share amounts | ||||||||
March 31, | December 31, | |||||||
2016 | 2015 | |||||||
Assets | (Unaudited) | |||||||
Current Assets | ||||||||
Cash and cash equivalents | $ | 10,008 | $ | 5,121 | ||||
Accounts receivable - net of allowances for doubtful accounts of $697 and $704 | 16,070 | 16,532 | ||||||
Prepaid expenses | 1,378 | 1,072 | ||||||
Other current assets | 10,545 | 13,267 | ||||||
Total current assets | 38,001 | 35,992 | ||||||
Property, plant and equipment | 309,380 | 306,227 | ||||||
Less: accumulated depreciation and amortization | (185,926 | ) | (181,777 | ) | ||||
Property, Plant and Equipment – Net | 123,454 | 124,450 | ||||||
Goodwill | 104,651 | 104,568 | ||||||
Licenses | 94,130 | 93,093 | ||||||
Customer Lists and Relationships - Net | 17,197 | 18,208 | ||||||
Other Intangible Assets – Net | 9,108 | 9,409 | ||||||
Investments in Equity Affiliates | 1,594 | 1,606 | ||||||
Other Assets | 15,503 | 15,346 | ||||||
Total Assets | $ | 403,638 | $ | 402,672 | ||||
Liabilities and Stockholders' Equity | ||||||||
Current Liabilities | ||||||||
Debt maturing within one year | $ | 8,399 | $ | 7,636 | ||||
Accounts payable and accrued liabilities | 26,169 | 30,372 | ||||||
Advanced billing and customer deposits | 4,550 | 4,682 | ||||||
Accrued taxes | 2,455 | 2,176 | ||||||
Dividends payable | 2,955 | 2,950 | ||||||
Total current liabilities | 44,528 | 47,816 | ||||||
Long-Term Debt | 122,104 | 118,515 | ||||||
Deferred Credits and Other Noncurrent Liabilities | ||||||||
Deferred income taxes | 57,489 | 56,181 | ||||||
Postemployment benefit obligation | 34,114 | 34,262 | ||||||
Other noncurrent liabilities | 20,998 | 22,258 | ||||||
Total deferred credits and other noncurrent liabilities | 112,601 | 112,701 | ||||||
Stockholders' Equity | ||||||||
Common stock ($1 par value, 14,000,000,000 authorized at March 31, 2016 and | ||||||||
December 31, 2015: issued 6,495,231,088 at March 31, 2016 and December 31, 2015) | 6,495 | 6,495 | ||||||
Additional paid-in capital | 89,414 | 89,763 | ||||||
Retained earnings | 34,506 | 33,671 | ||||||
Treasury stock (339,006,986 at March 31, 2016 and 350,291,239 | ||||||||
at December 31, 2015, at cost) | (12,163 | ) | (12,592 | ) | ||||
Accumulated other comprehensive income | 5,180 | 5,334 | ||||||
Noncontrolling interest | 973 | 969 | ||||||
Total stockholders' equity | 124,405 | 123,640 | ||||||
Total Liabilities and Stockholders' Equity | $ | 403,638 | $ | 402,672 | ||||
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) | ||||||||
March 31, 2017 | ||||||||
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 | $ | 89,604 | ||||||
Issuance of treasury stock | 4 | |||||||
Share-based payments | (197 | ) | ||||||
Balance at end of period | $ | 89,411 | ||||||
Retained Earnings | ||||||||
Balance at beginning of year | $ | 34,734 | ||||||
Net income attributable to AT&T ($0.56 per diluted share) | 3,469 | |||||||
Dividends to stockholders ($0.49 per share) | (3,030 | ) | ||||||
Other | 2 | |||||||
Balance at end of period | $ | 35,175 | ||||||
Treasury Stock | ||||||||
Balance at beginning of year | (356 | ) | $ | (12,659 | ) | |||
Repurchase and acquisition of common stock | (5 | ) | (200 | ) | ||||
Issuance of treasury stock | 13 | 459 | ||||||
Balance at end of period | (348 | ) | $ | (12,400 | ) | |||
Accumulated Other Comprehensive Income Attributable to AT&T, net of tax | ||||||||
Balance at beginning of year | $ | 4,961 | ||||||
Other comprehensive income attributable to AT&T | 199 | |||||||
Balance at end of period | $ | 5,160 | ||||||
Noncontrolling Interest | ||||||||
Balance at beginning of year | $ | 975 | ||||||
Net income attributable to noncontrolling interest | 105 | |||||||
Distributions | (77 | ) | ||||||
Acquisition of noncontrolling interest | 131 | |||||||
Translation adjustments attributable to noncontrolling interest, net of taxes | 6 | |||||||
Balance at end of period | $ | 1,140 | ||||||
Total Stockholders' Equity at beginning of year | $ | 124,110 | ||||||
Total Stockholders' Equity at end of period | $ | 124,981 | ||||||
See Notes to Consolidated Financial Statements. |
AT&T INC. | ||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
Dollars in millions | ||||||||
(Unaudited) | ||||||||
Three months ended | ||||||||
March 31, | ||||||||
2016 | 2015 | |||||||
Operating Activities | ||||||||
Net income | $ | 3,885 | $ | 3,339 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 6,563 | 4,578 | ||||||
Undistributed earnings from investments in equity affiliates | (13 | ) | - | |||||
Provision for uncollectible accounts | 374 | 285 | ||||||
Deferred income tax expense | 1,346 | 252 | ||||||
Net gain from sale of investments, net of impairments | (44 | ) | (33 | ) | ||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | 627 | 739 | ||||||
Other current assets | 612 | 408 | ||||||
Accounts payable and accrued liabilities | (4,006 | ) | (1,817 | ) | ||||
Retirement benefit funding | (140 | ) | (140 | ) | ||||
Other - net | (1,304 | ) | (873 | ) | ||||
Total adjustments | 4,015 | 3,399 | ||||||
Net Cash Provided by Operating Activities | 7,900 | 6,738 | ||||||
Investing Activities | ||||||||
Construction and capital expenditures: | ||||||||
Capital expenditures | (4,451 | ) | (3,848 | ) | ||||
Interest during construction | (218 | ) | (123 | ) | ||||
Acquisitions, net of cash acquired | (165 | ) | (19,514 | ) | ||||
Dispositions | 81 | 8 | ||||||
Sale of securities, net | 445 | 1,890 | ||||||
Net Cash Used in Investing Activities | (4,308 | ) | (21,587 | ) | ||||
Financing Activities | ||||||||
Issuance of long-term debt | 5,978 | 16,572 | ||||||
Repayment of long-term debt | (2,296 | ) | (596 | ) | ||||
Issuance of treasury stock | 89 | 8 | ||||||
Dividends paid | (2,947 | ) | (2,434 | ) | ||||
Other | 471 | (2,860 | ) | |||||
Net Cash Provided by Financing Activities | 1,295 | 10,690 | ||||||
Net increase (decrease) in cash and cash equivalents | 4,887 | (4,159 | ) | |||||
Cash and cash equivalents beginning of year | 5,121 | 8,603 | ||||||
Cash and Cash Equivalents End of Period | $ | 10,008 | $ | 4,444 | ||||
Cash paid (received) during the three months ended March 31 for: | ||||||||
Interest | $ | 1,459 | $ | 1,021 | ||||
Income taxes, net of refunds | $ | 477 | $ | (247 | ) | |||
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) | ||||||||
March 31, 2016 | ||||||||
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 | $ | 89,763 | ||||||
Issuance of treasury stock | (41 | ) | ||||||
Share-based payments | (308 | ) | ||||||
Balance at end of period | $ | 89,414 | ||||||
Retained Earnings | ||||||||
Balance at beginning of year | $ | 33,671 | ||||||
Net income attributable to AT&T ($0.61 per diluted share) | 3,803 | |||||||
Dividends to stockholders ($0.48 per share) | (2,968 | ) | ||||||
Balance at end of period | $ | 34,506 | ||||||
Treasury Stock | ||||||||
Balance at beginning of year | (350 | ) | $ | (12,592 | ) | |||
Issuance of treasury stock | 11 | 429 | ||||||
Balance at end of period | (339 | ) | $ | (12,163 | ) | |||
Accumulated Other Comprehensive Income Attributable to AT&T, net of tax | ||||||||
Balance at beginning of year | $ | 5,334 | ||||||
Other comprehensive loss attributable to AT&T | (154 | ) | ||||||
Balance at end of period | $ | 5,180 | ||||||
Noncontrolling Interest | ||||||||
Balance at beginning of year | $ | 969 | ||||||
Net income attributable to noncontrolling interest | 82 | |||||||
Distributions | (78 | ) | ||||||
Balance at end of period | $ | 973 | ||||||
Total Stockholders' Equity at beginning of year | $ | 123,640 | ||||||
Total Stockholders' Equity at end of period | $ | 124,405 | ||||||
See Notes to Consolidated Financial Statements. |
Three months ended | Three months ended | |||||||||||||||
March 31, | March 31, | |||||||||||||||
2016 | 2015 | 2017 | 2016 | |||||||||||||
Numerators | ||||||||||||||||
Numerator for basic earnings per share: | ||||||||||||||||
Net income | $ | 3,885 | $ | 3,339 | ||||||||||||
Net Income | $ | 3,574 | $ | 3,885 | ||||||||||||
Less: Net income attributable to noncontrolling interest | (82 | ) | (76 | ) | (105 | ) | (82 | ) | ||||||||
Net income attributable to AT&T | 3,803 | 3,263 | ||||||||||||||
Net Income attributable to AT&T | 3,469 | 3,803 | ||||||||||||||
Dilutive potential common shares: | ||||||||||||||||
Share-based payment | 4 | 4 | 4 | 4 | ||||||||||||
Numerator for diluted earnings per share | $ | 3,807 | $ | 3,267 | $ | 3,473 | $ | 3,807 | ||||||||
Denominators (000,000) | ||||||||||||||||
Denominator for basic earnings per share: | ||||||||||||||||
Weighted-average number of common shares outstanding | 6,172 | 5,203 | ||||||||||||||
Weighted average number of common shares outstanding | 6,166 | 6,172 | ||||||||||||||
Dilutive potential common shares: | ||||||||||||||||
Share-based payment (in shares) | 18 | 16 | 20 | 18 | ||||||||||||
Denominator for diluted earnings per share | 6,190 | 5,219 | 6,186 | 6,190 | ||||||||||||
Basic earnings per share attributable to AT&T | $ | 0.62 | $ | 0.63 | $ | 0.56 | $ | 0.62 | ||||||||
Diluted earnings per share attributable to AT&T | $ | 0.61 | $ | 0.63 | $ | 0.56 | $ | 0.61 |
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, 2016 | $ | (1,995) | $ | 541 | $ | 744 | $ | 5,671 | $ | 4,961 | |||||
Other comprehensive income (loss) before reclassifications | 366 | 33 | 13 | - | 412 | ||||||||||
Amounts reclassified from accumulated OCI | - | 1 | 5 | 1 | 10 | 2 | (228) | 3 | (213) | ||||||
Net other comprehensive income (loss) | 366 | 38 | 23 | (228) | 199 | ||||||||||
Balance as of March 31, 2017 | $ | (1,629) | $ | 579 | $ | 767 | $ | 5,443 | $ | 5,160 | |||||
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, 2015 | $ | (1,198) | $ | 484 | $ | 16 | $ | 6,032 | $ | 5,334 | |||||
Other comprehensive income (loss) before reclassifications | (44) | (26) | 124 | - | 54 | ||||||||||
Amounts reclassified from accumulated OCI | - | 1 | (3) | 1 | 10 | 2 | (215) | 3 | (208) | ||||||
Net other comprehensive income (loss) | (44) | (29) | 134 | (215) | (154) | ||||||||||
Balance as of March 31, 2016 | $ | (1,242) | $ | 455 | $ | 150 | $ | 5,817 | $ | 5,180 | |||||
1 | (Gains) losses are included in Other income (expense) - net in the consolidated statements of income. | ||||||||||||||
2 | (Gains) losses are included in Interest expense in the consolidated statements of income. See Note 6 for additional information. | ||||||||||||||
3 | 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). |
At March 31, 2016, 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 | |||||||||||
Balance as of December 31, 2015 | $ | (1,198) | $ | 484 | $ | 16 | $ | 6,032 | $ | 5,334 | |||||
Other comprehensive income (loss) before reclassifications | (44) | (26) | 124 | - | 54 | ||||||||||
Amounts reclassified from accumulated OCI | - | 1 | (3) | 2 | 10 | 3 | (215) | 4 | (208) | ||||||
Net other comprehensive income (loss) | (44) | (29) | 134 | (215) | (154) | ||||||||||
Balance as of March 31, 2016 | $ | (1,242) | $ | 455 | $ | 150 | $ | 5,817 | $ | 5,180 | |||||
At March 31, 2015, 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 | |||||||||||
Balance as of December 31, 2014 | $ | (26) | $ | 499 | $ | 741 | $ | 6,847 | $ | 8,061 | |||||
Other comprehensive income (loss) before reclassifications | (186) | 33 | (354) | - | (507) | ||||||||||
Amounts reclassified from accumulated OCI | - | 1 | (5) | 2 | 7 | 3 | (215) | 4 | (213) | ||||||
Net other comprehensive income (loss) | (186) | 28 | (347) | (215) | (720) | ||||||||||
Balance as of March 31, 2015 | $ | (212) | $ | 527 | $ | 394 | $ | 6,632 | $ | 7,341 | |||||
1 | Translation (gain) loss reclassifications are included in Other income (expense) - net in the consolidated statements of income. | ||||||||||||||
2 | (Gains) losses 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). |
· | Acquisition-related items |
· | Certain significant items |
For the three months ended March 31, 2017 | ||||||||||||||||||||||||||||
Revenues | Operations and Support Expenses | EBITDA | Depreciation and Amortization | Operating Income (Loss) | Equity in Net Income (Loss) of Affiliates | Segment Contribution | ||||||||||||||||||||||
Business Solutions | $ | 16,848 | $ | 10,176 | $ | 6,672 | $ | 2,312 | $ | 4,360 | $ | - | $ | 4,360 | ||||||||||||||
Entertainment Group | 12,623 | 9,601 | 3,022 | 1,419 | 1,603 | (6 | ) | 1,597 | ||||||||||||||||||||
Consumer Mobility | 7,740 | 4,528 | 3,212 | 873 | 2,339 | - | 2,339 | |||||||||||||||||||||
International | 1,929 | 1,759 | 170 | 290 | (120 | ) | 20 | (100 | ) | |||||||||||||||||||
Segment Total | 39,140 | 26,064 | 13,076 | 4,894 | 8,182 | $ | 14 | $ | 8,196 | |||||||||||||||||||
Corporate and Other | 225 | 221 | 4 | 31 | (27 | ) | ||||||||||||||||||||||
Acquisition-related items | - | 207 | (207 | ) | 1,202 | (1,409 | ) | |||||||||||||||||||||
Certain significant items | - | (118 | ) | 118 | - | 118 | ||||||||||||||||||||||
AT&T Inc. | $ | 39,365 | $ | 26,374 | $ | 12,991 | $ | 6,127 | $ | 6,864 |
For the three months ended March 31, 2016 | ||||||||||||||||||||||||||||
Revenues | Operations and Support Expenses | EBITDA | Depreciation and Amortization | Operating Income (Loss) | Equity in Net Income (Loss) of Affiliates | Segment Contribution | ||||||||||||||||||||||
Business Solutions | $ | 17,609 | $ | 10,802 | $ | 6,807 | $ | 2,508 | $ | 4,299 | $ | - | $ | 4,299 | ||||||||||||||
Entertainment Group | 12,658 | 9,578 | 3,080 | 1,488 | 1,592 | 3 | 1,595 | |||||||||||||||||||||
Consumer Mobility | 8,328 | 4,912 | 3,416 | 922 | 2,494 | - | 2,494 | |||||||||||||||||||||
International | 1,667 | 1,588 | 79 | 277 | (198 | ) | 14 | (184 | ) | |||||||||||||||||||
Segment Total | 40,262 | 26,880 | 13,382 | 5,195 | 8,187 | $ | 17 | $ | 8,204 | |||||||||||||||||||
Corporate and Other | 273 | 377 | (104 | ) | 17 | (121 | ) | |||||||||||||||||||||
Acquisition-related items | - | 295 | (295 | ) | 1,351 | (1,646 | ) | |||||||||||||||||||||
Certain significant items | - | (711 | ) | 711 | - | 711 | ||||||||||||||||||||||
AT&T Inc. | $ | 40,535 | $ | 26,841 | $ | 13,694 | $ | 6,563 | $ | 7,131 |
For the three months ended March 31, 2016 | ||||||||||||||||||||
Revenue | Operations and Support Expenses | EBITDA | Depreciation and Amortization | Operating Income (Loss) | Equity in Net Income (Loss) of Affiliates | Segment Contribution | ||||||||||||||
Business Solutions | $ | 17,609 | $ | 10,802 | $ | 6,807 | $ | 2,508 | $ | 4,299 | $ | - | $ | 4,299 | ||||||
Entertainment Group | 12,658 | 9,578 | 3,080 | 1,488 | 1,592 | 3 | 1,595 | |||||||||||||
Consumer Mobility | 8,328 | 4,912 | 3,416 | 922 | 2,494 | - | 2,494 | |||||||||||||
International | 1,667 | 1,588 | 79 | 277 | (198) | 14 | (184) | |||||||||||||
Segment Total | 40,262 | 26,880 | 13,382 | 5,195 | 8,187 | $ | 17 | $ | 8,204 | |||||||||||
Corporate and Other | 273 | 377 | (104) | 17 | (121) | |||||||||||||||
Acquisition-related items | - | 295 | (295) | 1,351 | (1,646) | |||||||||||||||
Certain significant items | - | (711) | 711 | - | 711 | |||||||||||||||
AT&T Inc. | $ | 40,535 | $ | 26,841 | $ | 13,694 | $ | 6,563 | $ | 7,131 | ||||||||||
For the three months ended March 31, 2015 | ||||||||||||||||||||
Revenue | Operations and Support Expenses | EBITDA | Depreciation and Amortization | Operating Income (Loss) | Equity in Net Income (Loss) of Affiliates | Segment Contribution | ||||||||||||||
Business Solutions | $ | 17,557 | $ | 11,073 | $ | 6,484 | $ | 2,342 | $ | 4,142 | $ | - | $ | 4,142 | ||||||
Entertainment Group | 5,660 | 4,859 | 801 | 1,065 | (264) | (6) | (270) | |||||||||||||
Consumer Mobility | 8,778 | 5,541 | 3,237 | 1,002 | 2,235 | - | 2,235 | |||||||||||||
International | 236 | 218 | 18 | 28 | (10) | - | (10) | |||||||||||||
Segment Total | 32,231 | 21,691 | 10,540 | 4,437 | 6,103 | $ | (6) | $ | 6,097 | |||||||||||
Corporate and Other | 345 | 234 | 111 | 20 | 91 | |||||||||||||||
Acquisition-related items | - | 299 | (299) | 121 | (420) | |||||||||||||||
Certain significant items | - | 217 | (217) | - | (217) | |||||||||||||||
AT&T Inc. | $ | 32,576 | $ | 22,441 | $ | 10,135 | $ | 4,578 | $ | 5,557 |
The following table is a reconciliation of Segment Contribution to "Income Before Income Taxes" reported on our consolidated statements of income. | ||||||||
First Quarter | ||||||||
2017 | 2016 | |||||||
Business Solutions | $ | 4,360 | $ | 4,299 | ||||
Entertainment Group | 1,597 | 1,595 | ||||||
Consumer Mobility | 2,339 | 2,494 | ||||||
International | (100 | ) | (184 | ) | ||||
Segment Contribution | 8,196 | 8,204 | ||||||
Reconciling Items: | ||||||||
Corporate and Other | (27 | ) | (121 | ) | ||||
Merger and integration charges | (207 | ) | (295 | ) | ||||
Amortization of intangibles acquired | (1,202 | ) | (1,351 | ) | ||||
Employee separation costs | - | (25 | ) | |||||
Gain on wireless spectrum transactions | 118 | 736 | ||||||
Segment equity in net (income) loss of affiliates | (14 | ) | (17 | ) | ||||
AT&T Operating Income | 6,864 | 7,131 | ||||||
Interest expense | 1,293 | 1,207 | ||||||
Equity in net income (loss) of affiliates | (173 | ) | 13 | |||||
Other income (expense) - net | (20 | ) | 70 | |||||
Income Before Income Taxes | $ | 5,378 | $ | 6,007 |
The following table is a reconciliation of operating contribution to "Income Before Income Taxes" reported on our consolidated statements of income. | ||||||||
First Quarter | ||||||||
2016 | 2015 | |||||||
Business Solutions | $ | 4,299 | $ | 4,142 | ||||
Entertainment Group | 1,595 | (270 | ) | |||||
Consumer Mobility | 2,494 | 2,235 | ||||||
International | (184 | ) | (10 | ) | ||||
Segment Operating Contribution | 8,204 | 6,097 | ||||||
Reconciling Items: | ||||||||
Corporate and Other | (121 | ) | 91 | |||||
Merger and integration charges | (295 | ) | (299 | ) | ||||
Amortization of intangibles acquired | (1,351 | ) | (121 | ) | ||||
Employee separation charges | (25 | ) | (217 | ) | ||||
Gain on wireless spectrum transactions | 736 | - | ||||||
Segment equity in net (income) loss of affiliates | (17 | ) | 6 | |||||
AT&T Operating Income | 7,131 | 5,557 | ||||||
Interest Expense | 1,207 | 899 | ||||||
Equity in net income (loss) of affiliates | 13 | - | ||||||
Other income (expense) - Net | 70 | 70 | ||||||
Income Before Income Taxes | $ | 6,007 | $ | 4,728 |
Three months ended | ||||||||
March 31, | ||||||||
2017 | 2016 | |||||||
Pension cost: | ||||||||
Service cost – benefits earned during the period | $ | 282 | $ | 278 | ||||
Interest cost on projected benefit obligation | 484 | 495 | ||||||
Expected return on assets | (783 | ) | (778 | ) | ||||
Amortization of prior service credit | (31 | ) | (26 | ) | ||||
Net pension (credit) cost | $ | (48 | ) | $ | (31 | ) | ||
Postretirement cost: | ||||||||
Service cost – benefits earned during the period | $ | 41 | $ | 48 | ||||
Interest cost on accumulated postretirement benefit obligation | 222 | 243 | ||||||
Expected return on assets | (80 | ) | (89 | ) | ||||
Amortization of prior service credit | (336 | ) | (319 | ) | ||||
Net postretirement (credit) cost | $ | (153 | ) | $ | (117 | ) | ||
Combined net pension and postretirement (credit) cost | $ | (201 | ) | $ | (148 | ) |
Three months ended | ||||||||
March 31, | ||||||||
2016 | 2015 | |||||||
Pension cost: | ||||||||
Service cost – benefits earned during the period | $ | 278 | $ | 299 | ||||
Interest cost on projected benefit obligation | 495 | 474 | ||||||
Expected return on assets | (778 | ) | (826 | ) | ||||
Amortization of prior service credit | (26 | ) | (26 | ) | ||||
Net pension (credit) cost | $ | (31 | ) | $ | (79 | ) | ||
Postretirement cost: | ||||||||
Service cost – benefits earned during the period | $ | 48 | $ | 55 | ||||
Interest cost on accumulated postretirement benefit obligation | 243 | 242 | ||||||
Expected return on assets | (89 | ) | (105 | ) | ||||
Amortization of prior service credit | (319 | ) | (320 | ) | ||||
Net postretirement (credit) cost | $ | (117 | ) | $ | (128 | ) | ||
Combined net pension and postretirement (credit) cost | $ | (148 | ) | $ | (207 | ) |
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. |
March 31, 2016 | December 31, 2015 | March 31, 2017 | December 31, 2016 | ||||||||||||||||||||||||||||
Carrying | Fair | Carrying | Fair | Carrying | Fair | Carrying | Fair | ||||||||||||||||||||||||
Amount | Value | Amount | Value | Amount | Value | Amount | Value | ||||||||||||||||||||||||
Notes and debentures1 | $ | 129,229 | $ | 137,865 | $ | 124,847 | $ | 128,993 | $ | 132,379 | $ | 138,944 | $ | 122,381 | $ | 128,726 | |||||||||||||||
Bank borrowings | 4 | 4 | 4 | 4 | 3 | 3 | 4 | 4 | |||||||||||||||||||||||
Investment securities | 2,592 | 2,592 | 2,704 | 2,704 | 2,640 | 2,640 | 2,587 | 2,587 | |||||||||||||||||||||||
1 Includes credit agreement borrowings. |
March 31, 2017 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Available-for-Sale Securities | ||||||||||||||||
Domestic equities | $ | 1,253 | $ | - | $ | - | $ | 1,253 | ||||||||
International equities | 639 | - | - | 639 | ||||||||||||
Fixed income bonds | - | 501 | - | 501 | ||||||||||||
Asset Derivatives1 | ||||||||||||||||
Interest rate swaps | - | 62 | - | 62 | ||||||||||||
Cross-currency swaps | - | 235 | - | 235 | ||||||||||||
Liability Derivatives1 | ||||||||||||||||
Interest rate swaps | - | (20 | ) | - | (20 | ) | ||||||||||
Cross-currency swaps | - | (3,635 | ) | - | (3,635 | ) | ||||||||||
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" in our consolidated balance sheets. |
March 31, 2016 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Available-for-Sale Securities | ||||||||||||||||
Domestic equities | $ | 1,111 | $ | - | $ | - | $ | 1,111 | ||||||||
International equities | 541 | - | - | 541 | ||||||||||||
Fixed income bonds | - | 676 | - | 676 | ||||||||||||
Asset Derivatives1 | ||||||||||||||||
Interest rate swaps | - | 197 | - | 197 | ||||||||||||
Cross-currency swaps | - | 519 | - | 519 | ||||||||||||
Liability Derivatives1 | ||||||||||||||||
Cross-currency swaps | - | (2,582 | ) | - | (2,582 | ) | ||||||||||
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" in our consolidated balance sheets. | ||||||||||||||||
December 31, 2016 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Available-for-Sale Securities | ||||||||||||||||
Domestic equities | $ | 1,215 | $ | - | $ | - | $ | 1,215 | ||||||||
International equities | 594 | - | - | 594 | ||||||||||||
Fixed income bonds | - | 508 | - | 508 | ||||||||||||
Asset Derivatives1 | ||||||||||||||||
Interest rate swaps | - | 79 | - | 79 | ||||||||||||
Cross-currency swaps | - | 89 | - | 89 | ||||||||||||
Liability Derivatives1 | ||||||||||||||||
Interest rate swaps | - | (14 | ) | - | (14 | ) | ||||||||||
Cross-currency swaps | - | (3,867 | ) | - | (3,867 | ) | ||||||||||
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" in our consolidated balance sheets. |
December 31, 2015 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Available-for-Sale Securities | ||||||||||||||||
Domestic equities | $ | 1,132 | $ | - | $ | - | $ | 1,132 | ||||||||
International equities | 569 | - | - | 569 | ||||||||||||
Fixed income bonds | - | 680 | - | 680 | ||||||||||||
Asset Derivatives1 | ||||||||||||||||
Interest rate swaps | - | 136 | - | 136 | ||||||||||||
Cross-currency swaps | - | 556 | - | 556 | ||||||||||||
Foreign exchange contracts | - | 3 | - | 3 | ||||||||||||
Liability Derivatives1 | ||||||||||||||||
Cross-currency swaps | - | (3,466 | ) | - | (3,466 | ) | ||||||||||
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" in our consolidated balance sheets. | ||||||||||||||||
March 31, | December 31, | March 31, | December 31, | |||||||||||||
2016 | 2015 | 2017 | 2016 | |||||||||||||
Interest rate swaps | $ | 7,050 | $ | 7,050 | $ | 10,450 | $ | 9,650 | ||||||||
Cross-currency swaps | 29,642 | 29,642 | 29,642 | 29,642 | ||||||||||||
Foreign exchange contracts | 3 | 100 | ||||||||||||||
Total | $ | 36,695 | $ | 36,792 | $ | 40,092 | $ | 39,292 |
Following are the related hedged items affecting our financial position and performance: | ||||||||
Effect of Derivatives on the Consolidated Statements of Income | ||||||||
Fair Value Hedging Relationships | Three months ended | |||||||
March 31, | ||||||||
2017 | 2016 | |||||||
Interest rate swaps (Interest expense): | ||||||||
Gain (Loss) on interest rate swaps | $ | (25 | ) | $ | 66 | |||
Gain (Loss) on long-term debt | 25 | (66 | ) |
Following are the related hedged items affecting our financial position and performance: | |||||||
Effect of Derivatives on the Consolidated Statements of Income | |||||||
Fair Value Hedging Relationships | Three months ended | ||||||
March 31, | March 31, | ||||||
2016 | 2015 | ||||||
Interest rate swaps (Interest expense): | |||||||
Gain (Loss) on interest rate swaps | $ | 66 | $ | 41 | |||
Gain (Loss) on long-term debt | (66 | ) | (41 | ) |
Three months ended | Three months ended | |||||||||||||||
March 31, | March 31, | March 31, | ||||||||||||||
Cash Flow Hedging Relationships | 2016 | 2015 | 2017 | 2016 | ||||||||||||
Cross-currency swaps: | ||||||||||||||||
Gain (Loss) recognized in accumulated OCI | $ | 191 | $ | (228 | ) | $ | 20 | $ | 191 | |||||||
Interest rate locks: | ||||||||||||||||
Gain (Loss) recognized in accumulated OCI | - | (316 | ) | |||||||||||||
Interest income (expense) reclassified from accumulated OCI into income | (15 | ) | (11 | ) | (15 | ) | (15 | ) |
Assets acquired | ||||
Cash | $ | 4,797 | ||
Accounts receivable | 2,026 | |||
All other current assets | 1,535 | |||
Property, plant and equipment | 9,331 | |||
Intangible assets not subject to amortization | ||||
Orbital slots | 11,946 | |||
Trade name | 1,371 | |||
Intangible assets subject to amortization | ||||
Customer lists and relationships | 19,508 | |||
Trade name | 2,915 | |||
Other | 457 | |||
Investments and other assets | 2,388 | |||
Goodwill | 34,449 | |||
Total assets acquired | 90,723 | |||
Liabilities assumed | ||||
Current liabilities, excluding current portion of long-term debt | 5,733 | |||
Long-term debt | 20,585 | |||
Other noncurrent liabilities | 16,642 | |||
Total liabilities assumed | 42,960 | |||
Net assets acquired | 47,763 | |||
Noncontrolling interest | (354 | ) | ||
Aggregate value of consideration paid | $ | 47,409 |
Three months ended | ||||||||
March 31, | ||||||||
2017 | 2016 | |||||||
Gross receivables sold | $ | 2,846 | $ | 2,482 | ||||
Net receivables sold 1 | 2,621 | 2,256 | ||||||
Cash proceeds received | 1,432 | 1,521 | ||||||
Deferred purchase price recorded | 1,189 | 719 | ||||||
1 Receivables net of allowance, imputed interest and trade-in right guarantees. |
Three months ended | ||||||||
March 31, | ||||||||
2016 | 2015 | |||||||
Gross receivables sold | $ | 2,482 | $ | 2,635 | ||||
Net receivables sold1 | 2,256 | 2,381 | ||||||
Cash proceeds received | 1,521 | 1,524 | ||||||
Deferred purchase price recorded | 719 | 858 | ||||||
1 Receivables net of allowance, imputed interest and trade-in right guarantees. |
Three months ended | ||||||||
March 31, | ||||||||
2017 | 2016 | |||||||
Fair value of repurchased receivables | $ | 377 | $ | 532 | ||||
Carrying value of deferred purchase price | 339 | 539 | ||||||
Gain (loss) on repurchases 1 | $ | 38 | $ | (7 | ) | |||
1 These gains (losses) are included in "Selling, general and administrative" in the consolidated statements of income. |
2017 | ||||
Outstanding derecognized receivables at January 1, | $ | 7,232 | ||
Gross receivables sold | 2,846 | |||
Collections on cash purchase price | (1,128 | ) | ||
Collections on deferred purchase price | (185 | ) | ||
Fees | (23 | ) | ||
Trade ins and other | (73 | ) | ||
Fair value of repurchased receivables | (377 | ) | ||
Outstanding derecognized receivables at March 31, | $ | 8,292 |
First Quarter | ||||||||||||
2017 | 2016 | Percent Change | ||||||||||
Operating Revenues | ||||||||||||
Service | $ | 36,456 | $ | 37,101 | (1.7 | )% | ||||||
Equipment | 2,909 | 3,434 | (15.3 | ) | ||||||||
Total Operating Revenues | 39,365 | 40,535 | (2.9 | ) | ||||||||
Operating expenses | ||||||||||||
Cost of services and sales | ||||||||||||
Equipment | 3,848 | 4,375 | (12.0 | ) | ||||||||
Broadcast, programming and operations | 4,974 | 4,629 | 7.5 | |||||||||
Other cost of services | 9,065 | 9,396 | (3.5 | ) | ||||||||
Selling, general and administrative | 8,487 | 8,441 | 0.5 | |||||||||
Depreciation and amortization | 6,127 | 6,563 | (6.6 | ) | ||||||||
Total Operating Expenses | 32,501 | 33,404 | (2.7 | ) | ||||||||
Operating Income | 6,864 | 7,131 | (3.7 | ) | ||||||||
Income Before Income Taxes | 5,378 | 6,007 | (10.5 | ) | ||||||||
Net Income | 3,574 | 3,885 | (8.0 | ) | ||||||||
Net Income Attributable to AT&T | $ | 3,469 | $ | 3,803 | (8.8 | )% |
First Quarter | ||||||||||||
2016 | 2015 | Percent Change | ||||||||||
Operating Revenues | ||||||||||||
Service | $ | 37,101 | $ | 28,962 | 28.1 | % | ||||||
Equipment | 3,434 | 3,614 | (5.0 | ) | ||||||||
Total Operating Revenues | 40,535 | 32,576 | 24.4 | |||||||||
Operating expenses | ||||||||||||
Cost of services and sales | ||||||||||||
Equipment | 4,375 | 4,546 | (3.8 | ) | ||||||||
Broadcast, programming and operations | 4,629 | 1,122 | - | |||||||||
Other cost of services | 9,396 | 8,812 | 6.6 | |||||||||
Selling, general and administrative | 8,441 | 7,961 | 6.0 | |||||||||
Depreciation and amortization | 6,563 | 4,578 | 43.4 | |||||||||
Total Operating Expenses | 33,404 | 27,019 | 23.6 | |||||||||
Operating Income | 7,131 | 5,557 | 28.3 | |||||||||
Income Before Income Taxes | 6,007 | 4,728 | 27.1 | |||||||||
Net Income | 3,885 | 3,339 | 16.4 | |||||||||
Net Income Attributable to AT&T | $ | 3,803 | $ | 3,263 | 16.5 | % |
Selected Financial and Operating Data | ||||||||
March 31, | ||||||||
Subscribers and connections in (000s) | 2017 | 2016 | ||||||
Domestic wireless subscribers | 134,218 | 130,445 | ||||||
Mexican wireless subscribers | 12,606 | 9,213 | ||||||
North American wireless subscribers | 146,824 | 139,658 | ||||||
North American branded subscribers | 103,532 | 98,158 | ||||||
North American branded net additions | 738 | 1,195 | ||||||
Domestic satellite video subscribers | 21,012 | 20,112 | ||||||
AT&T U-verse® (U-verse) video subscribers | 4,048 | 5,260 | ||||||
Latin America satellite video subscribers 1 | 13,678 | 12,436 | ||||||
Total video subscribers | 38,738 | 37,808 | ||||||
Total domestic broadband connections | 15,695 | 15,764 | ||||||
Network access lines in service | 13,363 | 15,975 | ||||||
U-verse VoIP connections | 5,858 | 5,484 | ||||||
Debt ratio 2 | 51.6 | % | 51.2 | % | ||||
Net debt ratio 3 | 45.8 | % | 47.3 | % | ||||
Ratio of earnings to fixed charges 4 | 3.80 | 4.22 | ||||||
Number of AT&T employees | 264,530 | 280,870 |
Selected Financial and Operating Data | ||||||||
March 31, | ||||||||
Subscribers and connections in (000s) | 2016 | 2015 | ||||||
Domestic wireless subscribers | 130,445 | 121,772 | ||||||
Mexican wireless subscribers | 9,213 | 5,728 | ||||||
North American wireless subscribers | 139,658 | 127,500 | ||||||
North American branded subscribers | 98,158 | 91,448 | ||||||
North American branded net additions | 1,195 | 539 | ||||||
Domestic satellite video subscribers | 20,112 | - | ||||||
U-verse video subscribers | 5,260 | 5,993 | ||||||
Latin America satellite video subscribers1 | 12,436 | - | ||||||
Total video subscribers | 37,808 | 5,993 | ||||||
Total domestic broadband connections | 15,764 | 16,097 | ||||||
Network access lines in service | 15,975 | 18,949 | ||||||
U-Verse VoIP connections | 5,484 | 5,200 | ||||||
Debt ratio2 | 51.2 | % | 51.5 | % | ||||
Net Debt Ratio3 | 47.3 | % | 49.1 | % | ||||
Ratio of earnings to fixed charges4 | 4.22 | 4.30 | ||||||
Number of AT&T employees | 280,870 | 250,790 |
Business Solutions | ||||||||||||||||||||||||
Segment Results | ||||||||||||||||||||||||
First Quarter | First Quarter | |||||||||||||||||||||||
2016 | 2015 | Percent Change | 2017 | 2016 | Percent Change | |||||||||||||||||||
Segment operating revenues | ||||||||||||||||||||||||
Wireless service | $ | 7,855 | $ | 7,515 | 4.5 | % | $ | 7,929 | $ | 7,855 | 0.9 | % | ||||||||||||
Fixed strategic services | 2,786 | 2,549 | 9.3 | 2,974 | 2,751 | 8.1 | ||||||||||||||||||
Legacy voice and data services | 4,338 | 4,754 | (8.8 | ) | 3,630 | 4,373 | (17.0 | ) | ||||||||||||||||
Other service and equipment | 859 | 846 | 1.5 | 817 | 859 | (4.9 | ) | |||||||||||||||||
Wireless equipment | 1,771 | 1,893 | (6.4 | ) | 1,498 | 1,771 | (15.4 | ) | ||||||||||||||||
Total Segment Operating Revenues | 17,609 | 17,557 | 0.3 | 16,848 | 17,609 | (4.3 | ) | |||||||||||||||||
Segment operating expenses | ||||||||||||||||||||||||
Operations and support | 10,802 | 11,073 | (2.4 | ) | 10,176 | 10,802 | (5.8 | ) | ||||||||||||||||
Depreciation and amortization | 2,508 | 2,342 | 7.1 | 2,312 | 2,508 | (7.8 | ) | |||||||||||||||||
Total Segment Operating Expenses | 13,310 | 13,415 | (0.8 | ) | 12,488 | 13,310 | (6.2 | ) | ||||||||||||||||
Segment Operating Income | 4,299 | 4,142 | 3.8 | 4,360 | 4,299 | 1.4 | ||||||||||||||||||
Equity in Net Income (Loss) of Affiliates | - | - | - | |||||||||||||||||||||
Equity in Net Income of Affiliates | - | - | - | |||||||||||||||||||||
Segment Contribution | $ | 4,299 | $ | 4,142 | 3.8 | % | $ | 4,360 | $ | 4,299 | 1.4 | % |
The following table highlights other key measures of performance for the Business Solutions segment: | ||||||||||||
First Quarter | ||||||||||||
2016 | 2015 | Percent Change | ||||||||||
(in 000s) | ||||||||||||
Business Wireless Subscribers | ||||||||||||
Postpaid | 48,844 | 45,959 | 6.3 | % | ||||||||
Reseller | 64 | 14 | - | |||||||||
Connected devices 1 | 26,863 | 20,972 | 28.1 | |||||||||
Total Business Wireless Subscribers | 75,771 | 66,945 | 13.2 | |||||||||
Business Wireless Net Additions 2 | ||||||||||||
Postpaid | 133 | 297 | (55.2 | ) | ||||||||
Reseller | (22 | ) | 3 | - | ||||||||
Connected devices 1 | 1,578 | 1,024 | 54.1 | |||||||||
Business Wireless Net Subscriber Additions | 1,689 | 1,324 | 27.6 | |||||||||
Business Wireless Postpaid Churn 2, 3 | 1.02% | 0.90% | 12 BP | |||||||||
Business IP Broadband Connections | 928 | 849 | 9.3 | |||||||||
Business IP Broadband Net Additions | 17 | 27 | (37.0 | ) % | ||||||||
1 Includes data-centric devices such as session-based tablets, monitoring devices and automobile systems. Excludes postpaid tablets. | ||||||||||||
2 Excludes migrations between AT&T segments and/or subscriber categories and acquisition-related additions during the period. | ||||||||||||
3 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. |
March 31, | ||||||||||||
(in 000s) | 2017 | 2016 | Percent Change | |||||||||
Business Wireless Subscribers | ||||||||||||
Postpaid/Branded | 50,839 | 48,844 | 4.1 | % | ||||||||
Reseller | 76 | 64 | 18.8 | |||||||||
Connected devices 1 | 31,439 | 26,863 | 17.0 | |||||||||
Total Business Wireless Subscribers | 82,354 | 75,771 | 8.7 | |||||||||
Business IP Broadband Connections | 980 | 928 | 5.6 | % | ||||||||
1 Includes data-centric devices such as session-based tablets, monitoring devices and automobile systems. Excludes postpaid tablets. |
First Quarter | ||||||||||||
2017 | 2016 | |||||||||||
(in 000s) | Percent Change | |||||||||||
Business Wireless Net Additions 1, 4 | ||||||||||||
Postpaid/Branded | (125 | ) | 133 | - | % | |||||||
Reseller | 6 | (22 | ) | - | ||||||||
Connected devices 2 | 2,553 | 1,578 | 61.8 | |||||||||
Business Wireless Net Subscriber Additions | 2,434 | 1,689 | 44.1 | |||||||||
Business Wireless Postpaid Churn 1, 3, 4 | 1.07 | % | 1.02 | % | 5 BP | |||||||
Business IP Broadband Net Additions | 4 | 17 | (76.5 | )% | ||||||||
1 Excludes migrations between AT&T segments and/or subscriber categories and acquisition-related additions during the period. | ||||||||||||
2 Includes data-centric devices such as session-based tablets, monitoring devices and automobile systems. Excludes postpaid tablets. | ||||||||||||
3 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. | ||||||||||||
4 2017 excludes the impact of the 2G shutdown, which was reflected in beginning of period subscribers. |
Entertainment Group | ||||||||||||
Segment Results | ||||||||||||
First Quarter | ||||||||||||
2016 | 2015 | Percent Change | ||||||||||
Segment operating revenues | ||||||||||||
Video entertainment | $ | 8,904 | $ | 1,871 | - | |||||||
High-speed Internet | 1,803 | 1,553 | 16.1 | |||||||||
Legacy voice and data services | 1,313 | 1,612 | (18.5 | ) | ||||||||
Other service and equipment | 638 | 624 | 2.2 | |||||||||
Total Segment Operating Revenues | 12,658 | 5,660 | - | |||||||||
Segment operating expenses | ||||||||||||
Operations and support | 9,578 | 4,859 | 97.1 | |||||||||
Depreciation and amortization | 1,488 | 1,065 | 39.7 | |||||||||
Total Segment Operating Expenses | 11,066 | 5,924 | 86.8 | |||||||||
Segment Operating Income (Loss) | 1,592 | (264) | - | |||||||||
Equity in Net Income (Loss) of Affiliates | 3 | (6) | - | |||||||||
Segment Contribution | $ | 1,595 | $ | (270) | - |
Entertainment Group | ||||||||||||
Segment Results | ||||||||||||
First Quarter | ||||||||||||
2017 | 2016 | Percent Change | ||||||||||
Segment operating revenues | ||||||||||||
Video entertainment | $ | 9,020 | $ | 8,904 | 1.3 | % | ||||||
High-speed internet | 1,941 | 1,803 | 7.7 | |||||||||
Legacy voice and data services | 1,056 | 1,313 | (19.6 | ) | ||||||||
Other service and equipment | 606 | 638 | (5.0 | ) | ||||||||
Total Segment Operating Revenues | 12,623 | 12,658 | (0.3 | ) | ||||||||
Segment operating expenses | ||||||||||||
Operations and support | 9,601 | 9,578 | 0.2 | |||||||||
Depreciation and amortization | 1,419 | 1,488 | (4.6 | ) | ||||||||
Total Segment Operating Expenses | 11,020 | 11,066 | (0.4 | ) | ||||||||
Segment Operating Income | 1,603 | 1,592 | 0.7 | |||||||||
Equity in Net Income (Loss) of Affiliates | (6 | ) | 3 | - | ||||||||
Segment Contribution | $ | 1,597 | $ | 1,595 | 0.1 | % |
First Quarter | ||||||||||||
2016 | 2015 | Percent Change | ||||||||||
(in 000s) | ||||||||||||
Video Connections | ||||||||||||
Satellite | 20,112 | - | - | |||||||||
U-verse | 5,232 | 5,969 | (12.3 | ) | ||||||||
Total Video Connections | 25,344 | 5,969 | - | |||||||||
Video Net Additions | ||||||||||||
Satellite | 328 | - | - | |||||||||
U-verse | (382 | ) | 49 | - | ||||||||
Net Video Additions | (54 | ) | 49 | - | ||||||||
Broadband Connections | ||||||||||||
IP | 12,542 | 11,796 | 6.3 | |||||||||
DSL | 1,749 | 2,741 | (36.2 | ) | ||||||||
Total Broadband Connections | 14,291 | 14,537 | (1.7 | ) | ||||||||
Broadband Net Additions | ||||||||||||
IP | 186 | 413 | (55.0 | ) | ||||||||
DSL | (181 | ) | (320 | ) | 43.4 | |||||||
Net Broadband Additions | 5 | 93 | (94.6 | ) | ||||||||
Retail Consumer Switched Access Lines | 6,888 | 8,660 | (20.5 | ) | ||||||||
U-verse Consumer VoIP Connections | 5,225 | 5,009 | 4.3 | |||||||||
Total Retail Consumer Voice Connections | 12,113 | 13,669 | (11.4 | ) % | ||||||||
March 31, | ||||||||||||
(in 000s) | 2017 | 2016 | Percent Change | |||||||||
Linear Video Connections | ||||||||||||
Satellite | 21,012 | 20,112 | 4.5 | % | ||||||||
U-verse | 4,020 | 5,232 | (23.2 | ) | ||||||||
Total Linear Video Connections | 25,032 | 25,344 | (1.2 | ) | ||||||||
Broadband Connections | ||||||||||||
IP | 13,130 | 12,542 | 4.7 | |||||||||
DSL | 1,164 | 1,749 | (33.4 | ) | ||||||||
Total Broadband Connections | 14,294 | 14,291 | - | |||||||||
Retail Consumer Switched Access Lines | 5,533 | 6,888 | (19.7 | ) | ||||||||
U-verse Consumer VoIP Connections | 5,470 | 5,225 | 4.7 | |||||||||
Total Retail Consumer Voice Connections | 11,003 | 12,113 | (9.2 | )% |
First Quarter | ||||||||||||
2017 | 2016 | Percent Change | ||||||||||
(in 000s) | ||||||||||||
Linear Video Net Additions 1 | ||||||||||||
Satellite | - | 328 | - | % | ||||||||
U-verse | (233 | ) | (382 | ) | 39.0 | |||||||
Linear Net Video Additions | (233 | ) | (54 | ) | - | |||||||
Broadband Net Additions | ||||||||||||
IP | 242 | 186 | 30.1 | |||||||||
DSL | (127 | ) | (181 | ) | 29.8 | |||||||
Net Broadband Additions | 115 | 5 | - | % | ||||||||
1 Includes disconnections for customers that migrated to DIRECTV NOW. |
Consumer Mobility | ||||||||||||
Segment Results | ||||||||||||
First Quarter | ||||||||||||
2016 | 2015 | Percent Change | ||||||||||
Segment operating revenues | ||||||||||||
Service | $ | 6,943 | $ | 7,297 | (4.9 | ) % | ||||||
Equipment | 1,385 | 1,481 | (6.5 | ) | ||||||||
Total Segment Operating Revenues | 8,328 | 8,778 | (5.1 | ) | ||||||||
Segment operating expenses | ||||||||||||
Operations and support | 4,912 | 5,541 | (11.4 | ) | ||||||||
Depreciation and amortization | 922 | 1,002 | (8.0 | ) | ||||||||
Total Segment Operating Expenses | 5,834 | 6,543 | (10.8 | ) | ||||||||
Segment Operating Income | 2,494 | 2,235 | 11.6 | |||||||||
Equity in Net Income (Loss) of Affiliates | - | - | - | |||||||||
Segment Contribution | $ | 2,494 | $ | 2,235 | 11.6 | % |
Consumer Mobility | ||||||||||||
Segment Results | ||||||||||||
First Quarter | ||||||||||||
2017 | 2016 | Percent Change | ||||||||||
Segment operating revenues | ||||||||||||
Service | $ | 6,609 | $ | 6,943 | (4.8 | )% | ||||||
Equipment | 1,131 | 1,385 | (18.3 | ) | ||||||||
Total Segment Operating Revenues | 7,740 | 8,328 | (7.1 | ) | ||||||||
Segment operating expenses | ||||||||||||
Operations and support | 4,528 | 4,912 | (7.8 | ) | ||||||||
Depreciation and amortization | 873 | 922 | (5.3 | ) | ||||||||
Total Segment Operating Expenses | 5,401 | 5,834 | (7.4 | ) | ||||||||
Segment Operating Income | 2,339 | 2,494 | (6.2 | ) | ||||||||
Equity in Net Income of Affiliates | - | - | - | |||||||||
Segment Contribution | $ | 2,339 | $ | 2,494 | (6.2 | )% |
The following tables highlight other key measures of performance for the Consumer Mobility segment: | ||||||||||||
March 31, | ||||||||||||
(in 000s) | 2017 | 2016 | Percent Change | |||||||||
Consumer Mobility Subscribers | ||||||||||||
Postpaid | 26,510 | 28,294 | (6.3 | )% | ||||||||
Prepaid | 13,844 | 12,171 | 13.7 | |||||||||
Branded | 40,354 | 40,465 | (0.3 | ) | ||||||||
Reseller | 10,549 | 13,313 | (20.8 | ) | ||||||||
Connected devices 1 | 961 | 896 | 7.3 | |||||||||
Total Consumer Mobility Subscribers | 51,864 | 54,674 | (5.1 | )% | ||||||||
1 Includes data-centric devices such as session-based tablets, monitoring devices and automobile systems. Excludes postpaid tablets. |
The following table highlights other key measures of performance for the Consumer Mobility segment: | ||||||||||||
First Quarter | ||||||||||||
2016 | 2015 | Percent Change | ||||||||||
(in 000s) | ||||||||||||
Consumer Mobility Subscribers | ||||||||||||
Postpaid | 28,294 | 30,216 | (6.4 | ) % | ||||||||
Prepaid | 12,171 | 10,037 | 21.3 | |||||||||
Branded | 40,465 | 40,253 | 0.5 | |||||||||
Reseller | 13,313 | 13,581 | (2.0 | ) | ||||||||
Connected devices 1 | 896 | 993 | (9.8 | ) | ||||||||
Total Consumer Mobility Subscribers | 54,674 | 54,827 | (0.3 | ) | ||||||||
Consumer Mobility Net Additions 2 | ||||||||||||
Postpaid | (4) | 144 | - | |||||||||
Prepaid | 500 | 98 | - | |||||||||
Branded Net Additions | 496 | 242 | - | |||||||||
Reseller | (378) | (269) | (40.5 | ) | ||||||||
Connected devices 1 | (26) | (79) | 67.1 | |||||||||
Consumer Mobility Net Subscriber Additions | 92 | (106) | - | |||||||||
Total Churn 2, 3 | 2.11% | 2.04% | 7 BP | |||||||||
Postpaid Churn 2, 3 | 1.24% | 1.20% | 4 BP | |||||||||
1 Includes data-centric devices such as session-based tablets, monitoring devices and automobile systems. Excludes postpaid tablets. | ||||||||||||
2 Excludes migrations between AT&T segments and/or subscriber categories and acquisition-related additions during the period. | ||||||||||||
3 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. |
First Quarter | ||||||||||||
2017 | 2016 | Percent Change | ||||||||||
(in 000s) | ||||||||||||
Consumer Mobility Net Additions 1, 4 | ||||||||||||
Postpaid | (66 | ) | (4 | ) | - | % | ||||||
Prepaid | 282 | 500 | (43.6 | ) | ||||||||
Branded Net Additions | 216 | 496 | (56.5 | ) | ||||||||
Reseller | (588 | ) | (378 | ) | (55.6 | ) | ||||||
Connected devices 2 | 19 | (26 | ) | - | ||||||||
Consumer Mobility Net Subscriber Additions | (353 | ) | 92 | - | % | |||||||
Total Churn 1, 3, 4 | 2.42 | % | 2.11 | % | 31 BP | |||||||
Postpaid Churn 1, 3, 4 | 1.22 | % | 1.24 | % | (2) BP | |||||||
1 Excludes migrations between AT&T segments and/or subscriber categories and acquisition-related additions during the period. | ||||||||||||
2 Includes data-centric devices such as session-based tablets, monitoring devices and automobile systems. Excludes postpaid tablets. | ||||||||||||
3 Calculated by dividing the aggregate number of wireless subscribers who canceled service during a month divided by the total number of wireless subscribers at the beginning of that month. The churn rate for the period is equal to the average of the churn rate for each month of that period. | ||||||||||||
4 2017 excludes the impact of the 2G shutdown and a true-up to the reseller subscriber base, which were reflected in beginning of period subscribers. |
International | ||||||||||||
Segment Results | ||||||||||||
First Quarter | ||||||||||||
2017 | 2016 | Percent Change | ||||||||||
Segment operating revenues | ||||||||||||
Video entertainment | $ | 1,341 | $ | 1,130 | 18.7 | % | ||||||
Wireless service | 475 | 455 | 4.4 | |||||||||
Wireless equipment | 113 | 82 | 37.8 | |||||||||
Total Segment Operating Revenues | 1,929 | 1,667 | 15.7 | |||||||||
Segment operating expenses | ||||||||||||
Operations and support | 1,759 | 1,588 | 10.8 | |||||||||
Depreciation and amortization | 290 | 277 | 4.7 | |||||||||
Total Segment Operating Expenses | 2,049 | 1,865 | 9.9 | |||||||||
Segment Operating Income (Loss) | (120 | ) | (198 | ) | 39.4 | |||||||
Equity in Net Income (Loss) of Affiliates | 20 | 14 | 42.9 | |||||||||
Segment Contribution | $ | (100 | ) | $ | (184 | ) | 45.7 | % |
International | ||||||||||||
Segment Results | ||||||||||||
First Quarter | ||||||||||||
2016 | 2015 | Percent Change | ||||||||||
Segment operating revenues | ||||||||||||
Video entertainment | $ | 1,130 | $ | - | - | |||||||
Wireless | 455 | 215 | - | |||||||||
Equipment | 82 | 21 | - | |||||||||
Total Segment Operating Revenues | 1,667 | 236 | - | |||||||||
Segment operating expenses | ||||||||||||
Operations and support | 1,588 | 218 | - | |||||||||
Depreciation and amortization | 277 | 28 | - | |||||||||
Total Segment Operating Expenses | 1,865 | 246 | - | |||||||||
Segment Operating Income (Loss) | (198) | (10) | - | |||||||||
Equity in Net Income of Affiliates | 14 | - | - | |||||||||
Segment Contribution | $ | (184) | $ | (10) | - |
(in 000s) | First Quarter | |||||||||||
2017 | 2016 | Percent Change | ||||||||||
Mexican Wireless Subscribers | ||||||||||||
Postpaid | 5,095 | 4,404 | 15.7 | % | ||||||||
Prepaid | 7,244 | 4,445 | 63.0 | |||||||||
Branded | 12,339 | 8,849 | 39.4 | |||||||||
Reseller | 267 | 364 | (26.6 | ) | ||||||||
Total Mexican Wireless Subscribers | 12,606 | 9,213 | 36.8 | |||||||||
Latin America Satellite Subscribers | ||||||||||||
PanAmericana | 8,090 | 7,094 | 14.0 | |||||||||
SKY Brazil 1 | 5,588 | 5,342 | 4.6 | |||||||||
Total Latin America Satellite Subscribers | 13,678 | 12,436 | 10.0 | % | ||||||||
1 Excludes subscribers of our International segment equity investments in SKY Mexico, in which we own a 41.3% stake. SKY Mexico had 8.0 million subscribers at December 31, 2016 and 7.7 million subscribers at March 31, 2016. |
First Quarter | ||||||||||||
(in 000s) | 2017 | 2016 | Percent Change | |||||||||
Mexican Wireless Net Additions | ||||||||||||
Postpaid | 130 | 116 | 12.1 | % | ||||||||
Prepaid | 517 | 450 | 14.9 | |||||||||
Branded Net Additions | 647 | 566 | 14.3 | |||||||||
Reseller | (14 | ) | (37 | ) | 62.2 | |||||||
Mexican Wireless Net Subscriber Additions | 633 | 529 | 19.7 | |||||||||
Latin America Satellite Net Additions 1 | ||||||||||||
PanAmericana | 52 | 28 | 85.7 | |||||||||
SKY Brazil | 39 | (101 | ) | - | ||||||||
Latin America Satellite Net Subscriber Additions 2 | 91 | (73 | ) | - | % | |||||||
1 In 2017, we updated the methodology used to account for prepaid video connections. The impact of this change is excluded. | ||||||||||||
2 SKY Mexico had net subscriber additions of 100,000 for the quarter ended December 31, 2016, and 398,000 for the quarter ended March 31, 2016. |
First Quarter | ||||||||||||
Percent | ||||||||||||
(in 000s) | 2016 | 2015 | Change | |||||||||
Mexican Wireless Subscribers | ||||||||||||
Postpaid | 4,405 | 1,646 | - | |||||||||
Prepaid | 4,445 | 3,590 | 23.8 | |||||||||
Branded | 8,850 | 5,236 | 69.0 | |||||||||
Reseller | 363 | 492 | (26.2 | ) | ||||||||
Total Mexican Wireless Subscribers | 9,213 | 5,728 | 60.8 | |||||||||
Mexican Wireless Net Additions | ||||||||||||
Postpaid | 116 | - | - | |||||||||
Prepaid | 450 | - | - | |||||||||
Branded Net Additions | 566 | - | - | |||||||||
Reseller | (37 | ) | - | - | ||||||||
Mexican Wireless Net Subscriber Additions | 529 | - | - | |||||||||
Latin America Satellite Subscribers | ||||||||||||
PanAmericana | 7,094 | - | - | |||||||||
SKY Brazil | 5,342 | - | - | |||||||||
Total Latin America Satellite Subscribers | 12,436 | - | - | |||||||||
Latin America Satellite Net Additions | ||||||||||||
PanAmericana | 28 | - | - | |||||||||
SKY Brazil | (101 | ) | - | - | ||||||||
Latin America Satellite Net Subscriber Additions | (73 | ) | - | - |
AT&T Mobility Results | ||||||||||||
First Quarter | ||||||||||||
2017 | 2016 | Percent Change | ||||||||||
Operating revenues | ||||||||||||
Service | $ | 14,538 | $ | 14,798 | (1.8 | )% | ||||||
Equipment | 2,629 | 3,156 | (16.7 | ) | ||||||||
Total Operating Revenues | 17,167 | 17,954 | (4.4 | ) | ||||||||
Operating expenses | ||||||||||||
Operations and support | 9,998 | 10,624 | (5.9 | ) | ||||||||
EBITDA | 7,169 | 7,330 | (2.2 | ) | ||||||||
Depreciation and amortization | 1,997 | 2,056 | (2.9 | ) | ||||||||
Total Operating Expenses | 11,995 | 12,680 | (5.4 | ) | ||||||||
Operating Income | $ | 5,172 | $ | 5,274 | (1.9 | )% |
AT&T Mobility Results | ||||||||||||
First Quarter | ||||||||||||
2016 | 2015 | Percent Change | ||||||||||
Operating revenues | ||||||||||||
Service | $ | 14,798 | $ | 14,812 | (0.1 | ) % | ||||||
Equipment | 3,156 | 3,374 | (6.5 | ) | ||||||||
Total Operating Revenues | 17,954 | 18,186 | (1.3 | ) | ||||||||
Operating expenses | ||||||||||||
Operations and support | 10,624 | 11,472 | (7.4 | ) | ||||||||
EBITDA | 7,330 | 6,714 | 9.2 | |||||||||
Depreciation and amortization | 2,056 | 2,005 | 2.5 | |||||||||
Total Operating Expenses | 12,680 | 13,477 | (5.9 | ) | ||||||||
Operating Income | $ | 5,274 | $ | 4,709 | 12.0 | % |
The following tables highlight other key measures of performance for AT&T Mobility: | ||||||||||||
First Quarter | Percent Change | |||||||||||
(in 000s) | 2017 | 2016 | ||||||||||
Wireless Subscribers 1 | ||||||||||||
Postpaid smartphones | 59,025 | 58,258 | 1.3 | % | ||||||||
Postpaid feature phones and data-centric devices | 18,324 | 18,880 | (2.9 | ) | ||||||||
Postpaid | 77,349 | 77,138 | 0.3 | |||||||||
Prepaid | 13,844 | 12,171 | 13.7 | |||||||||
Branded | 91,193 | 89,309 | 2.1 | |||||||||
Reseller | 10,625 | 13,378 | (20.6 | ) | ||||||||
Connected devices 2 | 32,400 | 27,758 | 16.7 | |||||||||
Total Wireless Subscribers | 134,218 | 130,445 | 2.9 | |||||||||
Branded Smartphones | 71,274 | 68,271 | 4.4 | |||||||||
Smartphones under our installment programs at end of period | 31,583 | 28,548 | 10.6 | % | ||||||||
1 Represents 100% of AT&T Mobility wireless subscribers. | ||||||||||||
2 Includes data-centric devices such as session-based tablets, monitoring devices and automobile systems. Excludes postpaid tablets. |
First Quarter | ||||||||||||
2017 | 2016 | Percent Change | ||||||||||
(in 000s) | ||||||||||||
Wireless Net Additions 1, 4 | ||||||||||||
Postpaid | (191 | ) | 129 | - | % | |||||||
Prepaid | 282 | 500 | (43.6 | ) | ||||||||
Branded Net Additions | 91 | 629 | (85.5 | ) | ||||||||
Reseller | (582 | ) | (400 | ) | (45.5 | ) | ||||||
Connected devices 2 | 2,572 | 1,552 | 65.7 | |||||||||
Wireless Net Subscriber Additions | 2,081 | 1,781 | 16.8 | |||||||||
Smartphones sold under our installment programs during period | 3,501 | 4,135 | (15.3 | )% | ||||||||
Total Churn 3, 4 | 1.46 | % | 1.42 | % | 4 BP | |||||||
Branded Churn 3, 4 | 1.71 | % | 1.63 | % | 8 BP | |||||||
Postpaid Churn 3, 4 | 1.12 | % | 1.10 | % | 2 BP | |||||||
Postpaid Phone Only Churn 3, 4 | 0.90 | % | 0.96 | % | (6) BP | |||||||
1 Excludes acquisition-related additions during the period. | ||||||||||||
2 Includes data-centric devices such as session-based tablets, monitoring devices and automobile systems. Excludes postpaid tablets. | ||||||||||||
3 Calculated by dividing the aggregate number of wireless subscribers who canceled service during a month divided by the total number of wireless subscribers at the beginning of that month. The churn rate for the period is equal to the average of the churn rate for each month of that period. | ||||||||||||
4 2017 excludes the impact of the 2G shutdown and a true-up to the reseller subscriber base, which were reflected in beginning of period subscribers. |
The following table highlights other key measures of performance for AT&T Mobility: | ||||||||||||
First Quarter | ||||||||||||
2016 | 2015 | Percent Change | ||||||||||
(in 000s) | ||||||||||||
Wireless Subscribers 1 | ||||||||||||
Postpaid smartphones | 58,258 | 57,157 | 1.9 | % | ||||||||
Postpaid feature phones and data-centric devices | 18,880 | 19,018 | (0.7 | ) | ||||||||
Postpaid | 77,138 | 76,175 | 1.3 | |||||||||
Prepaid | 12,171 | 10,037 | 21.3 | |||||||||
Branded | 89,309 | 86,212 | 3.6 | |||||||||
Reseller | 13,378 | 13,595 | (1.6 | ) | ||||||||
Connected devices 2 | 27,758 | 21,965 | 26.4 | |||||||||
Total Wireless Subscribers | 130,445 | 121,772 | 7.1 | |||||||||
Net Additions 3 | ||||||||||||
Postpaid | 129 | 441 | (70.7 | ) | ||||||||
Prepaid | 500 | 98 | - | |||||||||
Branded Net Additions | 629 | 539 | 16.7 | |||||||||
Reseller | (400) | (266) | (50.4 | ) | ||||||||
Connected devices 2 | 1,552 | 945 | 64.2 | |||||||||
Net Subscriber Additions | 1,781 | 1,218 | 46.2 | |||||||||
Branded Smartphones | 68,271 | 64,047 | 6.6 | |||||||||
Mobile Share connections | 59,372 | 55,581 | 6.8 | |||||||||
Smartphones under our installment program at end of period | 28,548 | 18,540 | 54.0 | |||||||||
Smartphones sold under our installment program during period | 4,135 | 4,065 | 1.7 | % | ||||||||
Total Churn 4 | 1.42% | 1.40% | 2 BP | |||||||||
Branded Churn 4 | 1.63% | 1.59% | 4 BP | |||||||||
Postpaid Churn 4 | 1.10% | 1.02% | 8 BP | |||||||||
1 Represents 100% of AT&T Mobility wireless subscribers. | ||||||||||||
2 Includes data-centric devices such as session-based tablets, monitoring devices and automobile systems. Excludes postpaid tablets. | ||||||||||||
3 Excludes acquisition-related additions during the period. | ||||||||||||
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. |
· | Approximately 20,000 traditional wireline employees in the Southwest ratified a new contract in April 2017. The new contract will expire in April 2021. |
· | Approximately 5,000 traditional wireline employees primarily in the Midwest are covered by a contract that expires in June 2017. In April, we reached a tentative agreement on a new five-year contract that is subject to ratification. |
· | Approximately 20,000 mobility employees across the country are covered by contracts that expired in early 2017. We continue to negotiate with labor representatives. |
· | Approximately 15,000 traditional wireline employees in our West region are covered by contracts that expired in April 2016. We continue to negotiate with labor representatives. |
· | Approximately 11,000 former DIRECTV employees were eligible for and chose union representation. Bargaining has resulted in approximately 80% of these employees now being covered under ratified contracts that expire between 2017 and 2021. |
· | Submitted winning bids for 251 AWS spectrum licenses for a near-nationwide contiguous block of high-quality AWS spectrum in the AWS-3 Auction. |
· | Redeployed spectrum previously used for basic 2G services to support more advanced mobile internet services on our 3G and 4G networks. |
· | Secured the FirstNet contract, which provides us with access to a nationwide low band 20 MHz of spectrum, assuming all states opt in. |
· | Invested in 5G and millimeter-wave technologies with our in-process acquisition of Fiber Tower Corporation, which holds significant amounts of spectrum in the millimeter wave bands (28 GHz and 39 GHz) that the FCC recently reallocated for mobile broadband services. These bands will help to accelerate our entry into 5G services. |
Supplemental Operational Measure | ||||||||||||||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||||||||||||||
March 31, 2017 | March 31, 2016 | |||||||||||||||||||||||||||||||
Consumer Mobility | Business Solutions | Adjustments1 | AT&T Mobility | Consumer Mobility | Business Solutions | Adjustments1 | AT&T Mobility | |||||||||||||||||||||||||
Operating Revenues | ||||||||||||||||||||||||||||||||
Wireless service | $ | 6,609 | $ | 7,929 | $ | - | $ | 14,538 | $ | 6,943 | $ | 7,855 | $ | - | $ | 14,798 | ||||||||||||||||
Fixed strategic services | - | 2,974 | (2,974 | ) | - | - | 2,751 | (2,751 | ) | - | ||||||||||||||||||||||
Legacy voice and data services | - | 3,630 | (3,630 | ) | - | - | 4,373 | (4,373 | ) | - | ||||||||||||||||||||||
Other service and equipment | - | 817 | (817 | ) | - | - | 859 | (859 | ) | - | ||||||||||||||||||||||
Wireless equipment | 1,131 | 1,498 | - | 2,629 | 1,385 | 1,771 | - | 3,156 | ||||||||||||||||||||||||
Total Operating Revenues | 7,740 | 16,848 | (7,421 | ) | 17,167 | 8,328 | 17,609 | (7,983 | ) | 17,954 | ||||||||||||||||||||||
Operating Expenses | ||||||||||||||||||||||||||||||||
Operations and support | 4,528 | 10,176 | (4,706 | ) | 9,998 | 4,912 | 10,802 | (5,090 | ) | 10,624 | ||||||||||||||||||||||
EBITDA | 3,212 | 6,672 | (2,715 | ) | 7,169 | 3,416 | 6,807 | (2,893 | ) | 7,330 | ||||||||||||||||||||||
Depreciation and amortization | 873 | 2,312 | (1,188 | ) | 1,997 | 922 | 2,508 | (1,374 | ) | 2,056 | ||||||||||||||||||||||
Total Operating Expenses | 5,401 | 12,488 | (5,894 | ) | 11,995 | 5,834 | 13,310 | (6,464 | ) | 12,680 | ||||||||||||||||||||||
Operating Income | $ | 2,339 | $ | 4,360 | $ | (1,527 | ) | $ | 5,172 | $ | 2,494 | $ | 4,299 | $ | (1,519 | ) | $ | 5,274 | ||||||||||||||
1 Non-wireless (fixed) operations reported in Business Solutions segment. |
· | February issuance of $1,250 of |
· | February issuance of |
· | February issuance of |
· | February issuance of |
· | February issuance of $2,000 of 5.450% global notes due 2047. |
· | February issuance of $1,000 of 5.700% global notes due 2057. |
· | March issuance of $1,430 of 5.500% global notes due 2047. |
· | March issuance of $800 floating rate global notes due 2020. The floating rate for the notes is based upon the three-month London Interbank Offered Rate (LIBOR), reset quarterly, plus 65 basis points. |
· | March draw of $300 on a private financing agreement with Banco Nacional de Mexico, S.A. due March 2019. The agreement contains terms similar to that provided under our syndicated credit arrangements; the interest rate is a market rate. |
· |
· | $ |
· | $500 of |
· | $1,000 of annual put reset securities issued by BellSouth that may be put back to us each April until maturity in 2021. No such put was exercised during April |
· | 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 suppliers' ability to access financial markets at favorable rates and terms. |
· | Changes in available technology and the effects of such changes, including product substitutions and deployment costs. |
· | Increases in our benefit plans' costs, including increases due to adverse changes in the United States and foreign securities markets, resulting in worse-than-assumed investment returns and discount rates; adverse changes in mortality assumptions; adverse medical cost |
· | The final outcome of FCC and other federal, state or |
· | 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, local, federal and/or foreign regulatory and tax laws and regulations, or changes to existing standards and actions by tax agencies and judicial authorities including the resolution of disputes with any taxing jurisdictions, 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 or delivery methods (e.g., cable, wireless, VoIP and |
· | The extent of competition including from governmental networks and other providers and the resulting pressure on customer and access line totals and segment operating margins. |
· | Our ability to develop attractive and profitable product/service offerings to offset increasing competition. |
· | 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 |
· | The continued development and delivery of attractive and profitable video offerings through satellite and |
· | Our continued ability to maintain margins, attract and offer a diverse portfolio of wireless service and devices and device financing plans. |
· | 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 video and data services, including network quality and acquisition of adequate spectrum at reasonable costs and terms. |
· | The outcome of pending, threatened or potential litigation (which includes arbitrations), including, without limitation, patent and product safety claims by or against third parties. |
· | The impact from major equipment failures on our networks, including satellites operated by DIRECTV; the effect of 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; and in the case of satellites launched, timely provisioning of services from vendors; 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. |
· | Our ability to integrate our acquisition of DIRECTV. |
· | Our ability to close our pending acquisition of Time Warner Inc. and successfully integrate its operations. |
· | Our ability to adequately fund our wireless operations, including payment for additional spectrum, network upgrades and technological advancements. |
· | Our increased exposure to video competition and foreign economies due to our recent acquisitions of DIRECTV and Mexican wireless properties, including foreign exchange fluctuations as well as regulatory and political |
· | Changes in our corporate strategies, such as changing |
· | The uncertainty surrounding further congressional action to address spending reductions, which may result in a significant decrease in government spending and reluctance of businesses and consumers to spend in general. |
· | The uncertainty and impact of anticipated regulatory and corporate tax reform, which may impact the overall economy and incentives for business investments. |
45 AT&T INC. MARCH 31, Item 6. Exhibits Exhibits identified in parentheses below, on file with the Securities and Exchange Commission, are incorporated by reference as exhibits hereto. Unless otherwise indicated, all exhibits so incorporated are from File No. 1-8610.
46 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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