AT&T (T) 8-K Expected Cost Synergies from DIRECTV Transaction Increased Significantly to $2.5 billion

Financial Data
AT&T Inc.
Consolidated Statements of Income
Dollars in millions except per share amounts
Unaudited	Three Months Ended
	3/31/2015			3/31/2014			% Chg
Operating Revenues
Service	$	28,962		$	29,776			-2.7	%
Equipment		3,614			2,700			33.9	%
Total Operating Revenues		32,576			32,476			0.3	%
Operating Expenses
Cost of services and sales (exclusive of depreciation and      amortization shown separately below)		14,581			13,321			9.5	%
Selling, general and administrative		7,961			8,260			-3.6	%
Depreciation and amortization		4,578			4,617			-0.8	%
Total Operating Expenses		27,120			26,198			3.5	%
Operating Income		5,456			6,278			-13.1	%
Interest Expense		899			860			4.5	%
Equity in Net Income of Affiliates		-			88			-
Other Income (Expense) - Net		70			145			-51.7	%
Income Before Income Taxes		4,627			5,651			-18.1	%
Income Tax Expense		1,351			1,917			-29.5	%
Net Income		3,276			3,734			-12.3	%
Less: Net Income Attributable to Noncontrolling Interest		(76	)		(82	)		7.3	%
Net Income Attributable to AT&T	$	3,200		$	3,652			-12.4	%
Basic Earnings Per Share Attributable to AT&T	$	0.61		$	0.70			-12.9	%
Weighted Average Common      Shares Outstanding (000,000)		5,203			5,222			-0.4	%
Diluted Earnings Per Share Attributable to AT&T	$	0.61		$	0.70			-12.9	%
Weighted Average Common      Shares Outstanding with Dilution (000,000)		5,219			5,238			-0.4	%

Financial Data
AT&T Inc.
Statements of Segment Income
Dollars in millions
Unaudited
	Three Months Ended
Wireless	3/31/2015				3/31/2014				% Chg
Segment Operating Revenues
Service	$	14,812			$	15,387				-3.7	%
Equipment		3,374				2,479				36.1	%
Total Segment Operating Revenues		18,186				17,866				1.8	%
Segment Operating Expenses
Operations and support		11,681				10,882				7.3	%
Depreciation and amortization		2,058				1,931				6.6	%
Total Segment Operating Expenses		13,739				12,813				7.2	%
Segment Operating Income		4,447				5,053				-12.0	%
Equity in Net Income (Loss) of Affiliates		(4	)			(20	)			80.0	%
Segment Income	$	4,443			$	5,033				-11.7	%
Segment Operating Income Margin		24.5		%		28.3		%
Wireline
Segment Operating Revenues
Service	$	13,935			$	14,389				-3.2	%
Equipment		213				212				0.5	%
Total Segment Operating Revenues		14,148				14,601				-3.1	%
Segment Operating Expenses
Operations and support		10,263				10,457				-1.9	%
Depreciation and amortization		2,476				2,684				-7.7	%
Total Segment Operating Expenses		12,739				13,141				-3.1	%
Segment Operating Income		1,409				1,460				-3.5	%
Equity in Net Income (Loss) of Affiliates		(7	)			1				-
Segment Income	$	1,402			$	1,461				-4.0	%
Segment Operating Income Margin		10.0		%		10.0		%
International
Segment Operating Revenues
Service	$	215				-
Equipment		21				-
Total Segment Operating Revenues		236				-
						-
Segment Operating Expenses
Operations and support		219				-
Depreciation and amortization		44				-
Total Segment Operating Expenses		263				-
Segment Operating Income (Loss)		(27	)			-
Equity in Net Income of Affiliates		-				-
Segment Income (Loss)	$	(27	)			-
Segment Operating Income Margin		(11.4	)	%

Financial Data
AT&T Inc.
Consolidated Balance Sheets
Dollars in millions
	3/31/15			12/31/14
	Unaudited
Assets
Current Assets
Cash and cash equivalents	$	4,444		$	8,603
Accounts receivable - net of allowances for doubtful accounts of $488 and $454		13,592			14,527
Prepaid expenses		930			831
Deferred income taxes		1,538			1,142
Other current assets		6,906			6,925
Total current assets		27,410			32,028
Property, Plant and Equipment - Net		113,198			112,898
Goodwill		70,341			69,692
Licenses		80,560			60,824
Other Intangible Assets - Net		6,423			6,139
Investments in Equity Affiliates		266			250
Other Assets		9,830			10,998
Total Assets	$	308,028		$	292,829
Liabilities and Stockholders' Equity
Current Liabilities
Debt maturing within one year	$	8,181		$	6,056
Accounts payable and accrued liabilities		20,418		��	23,592
Advanced billing and customer deposits		4,221			4,105
Accrued taxes		2,390			1,091
Dividends payable		2,441			2,438
Total current liabilities		37,651			37,282
Long-Term Debt		88,272			76,011
Deferred Credits and Other Noncurrent Liabilities
Deferred income taxes		38,019			37,544
Postemployment benefit obligation		37,074			37,079
Other noncurrent liabilities		19,908			17,989
Total deferred credits and other noncurrent liabilities		95,001			92,612
Stockholders' Equity
Common stock		6,495			6,495
Additional paid-in capital		90,977			91,108
Retained earnings		28,490			27,736
Treasury stock		(46,804	)		(47,029	)
Accumulated other comprehensive income		7,341			8,060
Noncontrolling interest		605			554
Total stockholders' equity		87,104			86,924
Total Liabilities and Stockholders' Equity	$	308,028		$	292,829

Financial Data
AT&T Inc.
Consolidated Statements of Cash Flows
Dollars in millions
	Three months ended March 31,
	2015			2014
Operating Activities
Net income	$	3,276		$	3,734
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization		4,578			4,617
Undistributed earnings from investments in equity affiliates		-			17
Provision for uncollectible accounts		285			241
Deferred income tax expense		214			578
Net gain from sale of investments, net of impairments		(33	)		(122	)
Changes in operating assets and liabilities:
Accounts receivable		739			(498	)
Other current assets		13			(340	)
Accounts payable and accrued liabilities		(1,817	)		1,025
Retirement benefit funding		(140	)		(140	)
Other - net		(377	)		(313	)
Total adjustments		3,462			5,065
Net Cash Provided by Operating Activities		6,738			8,799
Investing Activities
Construction and capital expenditures:
Capital expenditures		(3,848	)		(5,716	)
Interest during construction		(123	)		(55	)
Acquisitions, net of cash acquired		(19,514	)		(662	)
Dispositions		8			351
Sale of securities		1,890			-
Net Cash Used in Investing Activities		(21,587	)		(6,082	)
Financing Activities
Net change in short-term borrowings with
original maturities of three months or less		-			(17	)
Issuance of long-term debt		16,572			2,987
Repayment of long-term debt		(596	)		(1,867	)
Purchase of treasury stock		-			(1,237	)
Issuance of treasury stock		8			13
Dividends paid		(2,434	)		(2,398	)
Other		(2,860	)		74
Net Cash Provided by (Used in) Financing Activities		10,690			(2,445	)
Net (decrease) increase in cash and cash equivalents		(4,159	)		272
Cash and cash equivalents beginning of year		8,603			3,339
Cash and Cash Equivalents End of Period	$	4,444		$	3,611

Financial Data
AT&T Inc.
Supplementary Operating and Financial Data
Dollars in millions except per share amounts, subscribers and connections in (000s)
Unaudited	Three Months Ended
	3/31/2015			3/31/2014			% Chg
Wireless
Subscribers and Connections
Total		121,772			116,014			5.0	%
Postpaid		76,175			73,291			3.9	%
Prepaid1		10,037			10,411			-3.6	%
Reseller		13,595			13,886			-2.1	%
Connected Devices1		21,965			18,426			19.2	%
Wireless Net Adds
Total		1,218			1,062			14.7	%
Postpaid		441			625			-29.4	%
Prepaid1		98			88			11.4	%
Reseller		(266	)		(206	)		-29.1	%
Connected Devices1		945			555			70.3	%
M&A Activity, Partitioned Customers and Other Adjs.		-			4,576			-
Wireless Churn
Postpaid Churn		1.02	%		1.07	%	-5 BP
Total Churn		1.40	%		1.39	%	1 BP
Other
Licensed POPs (000,000)		321			321			-
Wireline
Voice
Total Wireline Voice Connections		24,149			27,716			-12.9	%
Net Change		(629	)		(773	)		18.6	%
Broadband
Total Wireline Broadband Connections		16,097			16,503			-2.5	%
Net Change		69			78			-11.5	%
Video
Total U-verse Video Connections		5,993			5,661			5.9	%
Net Change		50			201			-75.1	%
Consumer Revenue Connections
Broadband2		14,537			14,807			-1.8	%
U-verse Video Connections		5,969			5,642			5.8	%
Voice3		13,669			15,775			-13.4	%
Total Consumer Revenue Connections2		34,175			36,224			-5.7	%
Net Change		(191	)		(166	)		-15.1	%
AT&T Inc.
Construction and capital expenditures:
Capital expenditures	$	3,848		$	5,716			-32.7	%
Interest during construction	$	123		$	55			-
Dividends Declared per Share	$	0.47		$	0.46			2.2	%
End of Period Common Shares Outstanding (000,000)		5,193			5,195			-
Debt Ratio4		52.5	%		46.6	%	590 BP
Total Employees		250,790			246,730			1.6	%

1	Prior year amounts restated to conform to current period reporting methodology.
2	Consumer wireline broadband connections include DSL lines, U-verse high speed Internet access and satellite broadband.
3	Includes consumer U-verse Voice over Internet Protocol connections of 5,009 as of March 31, 2015.
4	Total long-term debt plus debt maturing within one year divided by total debt plus total stockholders' equity. Note: For the end of 1Q15, total switched access lines were 18,949; retail business switched access lines totaled 8,784; and wholesale,  national mass markets and coin switched access lines totaled 1,505.

Financial Data
AT&T Inc.
Non-GAAP Consolidated Reconciliation
Free Cash Flow
Dollars in millions
Unaudited
	Three Months Ended
	March 31,
	2014			2015
Net cash provided by operating activities	$	8,799		$	6,738
Less: Construction and capital expenditures		(5,771	)		(3,971	)
Free Cash Flow	$	3,028		$	2,767
Free Cash Flow after Dividends
Dollars in millions
Unaudited
	Three Months Ended
	March 31,
		2014			2015
Net cash provided by operating activities	$	8,799		$	6,738
Less: Construction and capital expenditures		(5,771	)		(3,971	)
Free Cash Flow		3,028			2,767
Less: Dividends paid		(2,398	)		(2,434	)
Free Cash Flow after Dividends	$	630		$	333
Free cash flow includes reimbursements of certain postretirement benefits paid. Free cash flow is defined as cash from operations minus construction and capital expenditures. Free cash flow after dividends is defined as cash from operations minus construction, capital expenditures and dividends. We believe these metrics provide useful information to our investors because management regularly reviews free cash flow as an important indicator of how much cash is generated by normal business operations, including capital expenditures, and makes decisions based on it. Management also views free cash flow as a measure of cash available to pay debt and return cash to shareowners.

Financial Data
AT&T Inc.
Non-GAAP Consolidated Reconciliation
Adjusted Operating Income and Margin
Dollars in millions
Unaudited
	Three Months Ended
	March 31,
	2013			2014			2015
Operating Revenues	$	31,356		$	32,476		$	32,576
Reported Operating Income	$	5,940		$	6,278		$	5,456
Adjustments:
Merger and integration costs1		-			92			348
Employee separation charges2		-			-			217
Adjusted Operating Income	$	5,940		$	6,370		$	6,021
Year-over-year growth - Adjusted					7.2	%		-5.5	%
Adjusted Operating Income Margin*		18.9	%		19.6	%		18.5	%
1 Includes domestic wireless and Iusacell integration costs and DIRECTV merger costs. 2 Includes $150M of pension termination charges and $67M severance and other charges.
Adjusted Operating Income and Margin are non-GAAP financial measures calculated by excluding from operating revenues and operating expenses significant items that are non-operational or non-recurring in nature. Management believes that these measures provide relevant and useful information to investors and other users of our financial data in evaluating the effectiveness of our operations and underlying business trends. Adjusted Operating Income and Margin should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance with GAAP. Our calculation of Adjusted Operating Income and Margin, as presented, may differ from similarly titled measures reported by other companies. *Adjusted Operating Income Margin is calculated by dividing Adjusted Operating Income by Operating Revenues.

Financial Data
AT&T Inc.
Non-GAAP Consolidated Reconciliation
Annualized Net-Debt-to-Adjusted-EBITDA Ratio
Dollars in millions
Unaudited
	Three Months Ended
	3/31/15		YTD 2015
Operating Revenues	$	32,576	$	32,576
Operating Expenses		27,120		27,120
Total Operating Income		5,456		5,456
Add Back Depreciation and Amortization		4,578		4,578
Consolidated Reported EBITDA		10,034		10,034
Add Back:
Merger and integration costs1		298		298
Pension termination charges		150		150
Total Consolidated Adjusted EBITDA				10,482
Annualized Consolidated Adjusted EBITDA			$	41,928
End-of-period current debt				8,181
End-of-period long-term debt				88,272
Total End-of-Period Debt				96,453
Less Cash and Cash Equivalents				4,444
Net Debt Balance			$	92,009
Annualized Net-Debt-to-Adjusted-EBITDA Ratio				2.19
1 Adjustments include Operations and Support expenses for domestic wireless and Iusacell integration costs and DIRECTV merger costs. Net-Debt-to-EBITDA ratios are non-GAAP financial measures frequently used by investors and credit rating agencies. Management believes these measures provide relevant and useful information to investors and other users of our financial data. Net debt is calculated by subtracting cash and cash equivalents from the sum of debt maturing within one year and long-term debt. The Net-Debt-to-EBITDA ratio is calculated by dividing the Net Debt by annualized EBITDA. Annualized EBITDA is calculated by annualizing the year-to-date EBITDA. Our calculation of EBITDA, as presented, may differ from similarly titled measures reported by other companies.

Financial Data
AT&T Inc.
Non-GAAP Consolidated Reconciliation
Adjusted Diluted EPS
Unaudited
	Three Months Ended
	March 31,
	2014		2015
Reported Diluted EPS	$	0.70	$	0.61
Adjustments:
Merger and integration costs1		0.01		0.04
Employee separation charges		-		0.03
Tax-related item		-		(0.05	)
Adjusted Diluted EPS	$	0.71	$	0.63
Year-over-year growth - Adjusted				-11.3	%
Weighted Average Common Shares Outstanding
with Dilution (000,000)		5,238		5,219
1Includes domestic wireless and Iusacell integration costs and DIRECTV merger costs.
Adjusted Diluted EPS is a non-GAAP financial measure calculated by excluding from operating revenues, operating expenses and equity in net income of affiliates certain significant items that are non-operational or non-recurring in nature, including dispositions. Management believes that this measure provides relevant and useful information to investors and other users of our financial data in evaluating the effectiveness of our operations and underlying business trends. Adjusted Diluted EPS should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance with GAAP. Our calculation of Adjusted Diluted EPS, as presented, may differ from similarly titled measures reported by other companies.
Sum of components may not tie due to rounding.

Financial Data
AT&T Inc.
Non-GAAP Wireless Reconciliation
Wireless Segment EBITDA
Dollars in millions
Unaudited
	Three Months Ended
	3/31/14			6/30/14			9/30/14			12/31/14			3/31/15
Segment Operating Revenues
Service	$	15,387		$	15,148		$	15,423		$	15,074		$	14,812
Equipment		2,479			2,782			2,914			4,785			3,374
Total Segment Operating Revenues	$	17,866		$	17,930		$	18,337		$	19,859		$	18,186
Segment Operating Expenses
Operations and support		10,882			11,568			11,855			14,619			11,681
Depreciation and amortization		1,931			2,035			1,965			2,010			2,058
Total Segment Operating Expenses		12,813			13,603			13,820			16,629			13,739
Segment Operating Income		5,053			4,327			4,517			3,230			4,447
Segment Operating Income Margin		28.3	%		24.1	%		24.6	%		16.3	%		24.5	%
Plus: Depreciation and amortization		1,931			2,035			1,965			2,010			2,058
EBITDA1	$	6,984		$	6,362		$	6,482		$	5,240		$	6,505
EBITDA as a % of Service Revenues2		45.4	%		42.0	%		42.0	%		34.8	%		43.9	%
1EBITDA is defined as Operating Income Before Depreciation and Amortization. 2Service revenues include Wireless data, voice, text and other service revenues.

Financial Data
AT&T Inc.
Non-GAAP Wireless Reconciliation
Wireless Segment Adjusted EBITDA
Dollars in millions
Unaudited	Three Months Ended
	March 31,
	2013			2014			2015
Service Revenues	$	15,062		$	15,387		$	14,812
EBITDA1	$	6,511		$	6,984		$	6,505
EBITDA as a % of Service Revenues2		43.2	%		45.4	%		43.9	%
Adjustments:
Wireless integration expense3		-			17			209
Adjusted EBITDA1	$	6,511		$	7,001		$	6,714
Adjusted EBITDA as a % of Adjusted Service Revenues2		43.2	%		45.5	%		45.3	%
1 EBITDA is defined as operating income before depreciation and amortization. 2 Service revenues include Wireless data, voice, text and other service revenues. 3 Operations and Support expenses for domestic wireless integration costs.

Financial Data
AT&T Inc.
Non-GAAP Wireline Reconciliation
Wireline Segment EBITDA
Dollars in millions
Unaudited
	Three Months Ended
	3/31/14			12/31/14			3/31/15
Segment Operating Revenues
Service	$	14,389		$	14,240		$	13,935
Equipment		212			332			213
Total Segment Operating Revenues	$	14,601		$	14,572		$	14,148
Segment Operating Expenses
Operations and support		10,457			10,553			10,263
Depreciation and amortization		2,684			2,554			2,476
Total Segment Operating Expenses		13,141			13,107			12,739
Segment Operating Income		1,460			1,465			1,409
Segment Operating Income Margin		10.0	%		10.1	%		10.0	%
Plus: Depreciation and amortization		2,684			2,554			2,476
EBITDA1	$	4,144		$	4,019		$	3,885
EBITDA Margin		28.4	%		27.6	%		27.5	%
1EBITDA is defined as Operating Income Before Depreciation and Amortization.

Financial Data
AT&T Inc.
Non-GAAP Reconciliation of Revenues
Adjusted Operating Revenues to Exclude Connecticut Wireline Properties1
Dollars in millions
Unaudited	Three Months Ended
	6/30/13			9/30/13			12/31/13			3/31/14			6/30/14			9/30/14			12/31/14			3/31/15
Connecticut Wireline Operating Revenues
Consumer Markets	$	169		$	169		$	169		$	174		$	173		$	170		$	43		$	-
AT&T Business Solutions		111			109			107			101			99			101			24			-
Other		1			1			(1	)		-			2			1			-			-
Connecticut Wireline Operating Revenues	$	281		$	279		$	275		$	275		$	274		$	272		$	67		$	-
Total AT&T Operating Revenues	$	32,075		$	32,158		$	33,163		$	32,476		$	32,575		$	32,957		$	34,439		$	32,576
Less Connecticut Wireline		(281	)		(279	)		(275	)		(275	)		(274	)		(272	)		(67	)		-
Adjusted AT&T Operating Revenues	$	31,794		$	31,879		$	32,888		$	32,201		$	32,301		$	32,685		$	34,372		$	32,576
Year-over-Year growth - Adjusted														1.6	%		2.5	%		4.5	%		1.2	%
Wireline Operating Revenues	$	14,773		$	14,670		$	14,716		$	14,601		$	14,637		$	14,615		$	14,572		$	14,148
Less Connecticut Wireline		(281	)		(279	)		(275	)		(275	)		(274	)		(272	)		(67	)		-
Adjusted Wireline Operating Revenues	$	14,492		$	14,391		$	14,441		$	14,326		$	14,363		$	14,343		$	14,505		$	14,148
Year-over-Year growth - Adjusted														-0.9	%		-0.3	%		0.4	%		-1.2	%
Wireline Consumer Operating Revenues	$	5,579		$	5,567		$	5,638		$	5,715		$	5,748		$	5,735		$	5,643		$	5,658
Less Connecticut Wireline		(169	)		(169	)		(169	)		(174	)		(173	)		(170	)		(43	)		-
Adjusted Wireline Consumer Operating Revenues	$	5,410		$	5,398		$	5,469		$	5,541		$	5,575		$	5,565		$	5,600		$	5,658
Year-over-Year growth - Adjusted														3.0	%		3.1	%		2.4	%		2.1	%
Wireline Business Solutions Operating Revenues	$	8,927		$	8,849		$	8,839		$	8,670		$	8,672		$	8,669		$	8,596		$	8,288
Less Connecticut Wireline		(111	)		(109	)		(107	)		(101	)		(99	)		(101	)		(24	)		-
Adjusted Wireline Business Solutions Operating Revenues	$	8,816		$	8,739		$	8,733		$	8,569		$	8,572		$	8,568		$	8,572		$	8,288
Year-over-Year growth - Adjusted														-2.8	%		-2.0	%		-1.8	%		-3.3	%
Wireline Strategic Business Services Revenues2	$	2,095		$	2,154		$	2,251		$	2,289		$	2,382		$	2,467		$	2,565		$	2,628
Less Connecticut Wireline		(9	)		(9	)		(10	)		(11	)		(11	)		(13	)		(2	)		-
Adjusted Wireline Business Operating Revenues	$	2,086		$	2,145		$	2,240		$	2,278		$	2,370		$	2,454		$	2,563		$	2,628
Year-over-Year growth - Adjusted														13.6	%		14.4	%		14.4	%		15.4	%
Wireline U-verse Services Revenue	$	2,931		$	3,061		$	3,276		$	3,470		$	3,657		$	3,791		$	3,898		$	4,047
Less Connecticut Wireline		(91	)		(95	)		(100	)		(105	)		(109	)		(111	)		(28	)		-
Adjusted U-verse Services Revenues	$	2,840		$	2,966		$	3,176		$	3,365		$	3,548		$	3,680		$	3,870		$	4,047
Year-over-Year growth - Adjusted														24.9	%		24.1	%		21.9	%		20.3	%
1Prior-period amounts restated to conform to current-period reporting methodology and divestiture of Connecticut Wireline Properties. Sum of segments' revenues within a quarter might not tie to total revenues due to rounding. 2Strategic business services are AT&T's most advanced business solutions, including VPNs, Ethernet, cloud, hosting, IP conferencing, VoIP, MIS over Ethernet, U-verse and security services.
Adjusted Operating Revenues is a non-GAAP financial measure calculated by excluding the operating revenues of Connecticut Wireline Properties sold in October 2014. Management believes that these measures provides relevant and useful information to investors and other users of our financial data in evaluating the effectiveness of our operations and underlying business trends. Adjusted Operating Revenues should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance with GAAP. Our calculations of Adjusted Operating Revenues may differ from similarly titled measures reported by other companies.