Segment Information | NOTE 4. SEGMENT INFORMATION Our segments are comprised of strategic business units that offer products and services to different customer segments over various technology platforms and/or in different geographies that are managed accordingly. We analyze our segments based on segment operating contribution, which consists of operating income, excluding acquisition-related costs and other significant items (as discussed below), and equity in net income (loss) of affiliates for investments managed within each segment. We have three reportable segments: (1) Communications, (2) WarnerMedia and (3) Latin America. We have recast our segment results for all prior periods to reflect the following: Communications segment results have been recast to remove the Video and Government Solutions businesses that were classified as held-for sale beginning in the first quarter of 2021, instead reporting those results in Corporate and Other, consistent with our historical practice. Additionally, we refined the allocation of shared infrastructure and deferred customer acquisition costs between Consumer Wireline and Video. WarnerMedia segment results were recast to include our prior Xandr segment within our WarnerMedia segment and to remove the Crunchyroll anime business that is classified as held-for-sale and removed from the WarnerMedia segment, instead including it in Corporate and Other. We also evaluate segment and business unit performance based on EBITDA and/or EBITDA margin. EBITDA is defined as operating contribution excluding equity in net income (loss) of affiliates and depreciation and amortization. We believe EBITDA to be a relevant and useful measurement to our investors as it is part of our internal management reporting and planning processes and it is an important metric that management uses to evaluate operating performance. EBITDA does not give effect to depreciation and amortization expenses incurred in operating contribution nor is it burdened by cash used for debt service requirements and thus does not reflect available funds for distributions, reinvestment or other discretionary uses. EBITDA margin is EBITDA divided by total revenues. The Communications segment provides wireless and wireline telecom and broadband services to consumers located in the U.S. and businesses globally. Our business strategies reflect bundled product offerings that cut across product lines and utilize shared assets. In December 2020, we changed our management strategy and reevaluated our domestic video business, allowing us to maximize value in our domestic video business and further accelerate our ability to innovate and execute in our fast-growing broadband and fiber business. In conjunction with the strategy change, we separated the former Entertainment Group into two business units, Video and Consumer Wireline, and recast our results for all prior periods. The Business Wireline business unit was also recast to remove video operations, instead including those in Video. Beginning in the first quarter of 2021, the Video business was classified as held-for-sale and recast to be reported in Corporate and Other. This segment contains the following business units: • Mobility provides nationwide wireless service and equipment. • Business Wireline provides advanced IP-based services, as well as traditional voice and data services to business customers. • Consumer Wireline provides internet, including broadband fiber, and legacy telephony voice communication services to residential customers. The WarnerMedia segment develops, produces and distributes feature films, television, gaming and other content in various physical and digital formats globally. Historical financial results of Eliminations & Other included in the WarnerMedia segment have been recast to include Xandr, previously a separate reportable segment, and to remove the Crunchyroll anime business that was classified as held-for-sale. This segment contains the following: • Turner primarily operates multichannel basic television networks and digital properties. Turner also sells advertising on its networks and digital properties. • Home Box Office consists of premium pay television and HBO Max domestically and premium pay, basic tier television internationally, and content licensing and home entertainment. • Warner Bros. primarily consists of the production, distribution and licensing of television programming and feature films, the distribution of home entertainment products and the production and distribution of games. • Eliminations & Other includes the Xandr advertising business, and also removes transactions between the Turner, Home Box Office and Warner Bros. business units, including internal sales of content to the HBO Max platform that began in the fourth quarter of 2019 (see Note 5). The Latin America segment provides entertainment and wireless services outside of the U.S. This segment contains the following business units: • Vrio provides video services primarily to residential customers using satellite technology in Latin America and the Caribbean. • Mexico provides wireless service and equipment to customers in Mexico. Corporate and Other reconciles our segment results to consolidated operating income and income before income taxes, and includes: • Corporate , which consists of: (1) businesses no longer integral to our operations or which we no longer actively market, (2) corporate support functions, (3) impacts of corporate-wide decisions for which the individual operating segments are not being evaluated, and (4) the reclassification of the amortization of prior service credits, which we continue to report with segment operating expenses, to consolidated “Other income (expense) – net.” • Video , which provides video, including over-the-top (OTT) services, and also sells multiplatform advertising services as video revenues. • Acquisition-related items, which consists of items associated with the merger and integration of acquired businesses, including amortization of intangible assets. • Certain significant items, which includes (1) employee separation charges associated with voluntary and/or strategic offers, (2) asset impairments and abandonments, and (3) other items for which the segments are not being evaluated. • Eliminations and consolidations , which (1) removes transactions involving dealings between our segments, including channel distribution between WarnerMedia and Communications, and (2) includes adjustments for our reporting of the advertising business. “Interest expense” and “Other income (expense) – net” are managed only on a total company basis and are, accordingly, reflected only in consolidated results. For the year ended December 31, 2020 Revenues Operations EBITDA Depreciation and Amortization Operating Equity in Net Segment Communications Mobility $ 72,564 $ 42,106 $ 30,458 $ 8,086 $ 22,372 $ — $ 22,372 Business Wireline 25,083 15,303 9,780 5,216 4,564 — 4,564 Consumer Wireline 12,318 8,027 4,291 2,914 1,377 — 1,377 Total Communications 109,965 65,436 44,529 16,216 28,313 — 28,313 WarnerMedia Turner 12,568 6,954 5,614 277 5,337 (2) 5,335 Home Box Office 6,808 6,028 780 98 682 16 698 Warner Bros. 12,154 9,917 2,237 169 2,068 (70) 1,998 Eliminations and other (1,088) (1,320) 232 127 105 74 179 Total WarnerMedia 30,442 21,579 8,863 671 8,192 18 8,210 Latin America Vrio 3,154 2,800 354 520 (166) 24 (142) Mexico 2,562 2,636 (74) 513 (587) — (587) Total Latin America 5,716 5,436 280 1,033 (753) 24 (729) Segment Total 146,123 92,451 53,672 17,920 35,752 $ 42 $ 35,794 Corporate and Other Corporate 1 2,207 4,205 (1,998) 310 (2,308) Video 28,610 24,174 4,436 2,262 2,174 Acquisition-related items — 468 (468) 8,012 (8,480) Certain significant items — 19,156 (19,156) 14 (19,170) Eliminations and consolidations (5,180) (3,615) (1,565) (2) (1,563) AT&T Inc. $ 171,760 $ 136,839 $ 34,921 $ 28,516 $ 6,405 1 Operations and Support Expenses include $2,442 for the reclassification of prior service credit amortization. For the year ended December 31, 2019 Revenues Operations EBITDA Depreciation Operating Equity in Net Segment Communications Mobility $ 71,056 $ 40,681 $ 30,375 $ 8,054 $ 22,321 $ — $ 22,321 Business Wireline 25,901 15,839 10,062 4,925 5,137 — 5,137 Consumer Wireline 13,012 7,775 5,237 2,880 2,357 — 2,357 Total Communications 109,969 64,295 45,674 15,859 29,815 — 29,815 WarnerMedia Turner 13,122 7,740 5,382 235 5,147 52 5,199 Home Box Office 6,749 4,312 2,437 102 2,335 30 2,365 Warner Bros. 14,358 11,816 2,542 162 2,380 (30) 2,350 Eliminations and other 1,030 304 726 90 636 109 745 Total WarnerMedia 35,259 24,172 11,087 589 10,498 161 10,659 Latin America Vrio 4,094 3,378 716 660 56 27 83 Mexico 2,869 3,085 (216) 502 (718) — (718) Total Latin America 6,963 6,463 500 1,162 (662) 27 (635) Segment Total 152,191 94,930 57,261 17,610 39,651 $ 188 $ 39,839 Corporate and Other Corporate 1 2,203 3,509 (1,306) 645 (1,951) Video 32,124 27,275 4,849 2,461 2,388 Acquisition-related items (72) 960 (1,032) 7,460 (8,492) Certain significant items — 2,082 (2,082) 43 (2,125) Eliminations and consolidations (5,253) (3,735) (1,518) (2) (1,516) AT&T Inc. $ 181,193 $ 125,021 $ 56,172 $ 28,217 $ 27,955 1 Operations and Support Expenses include $1,934 for the reclassification of prior service credit amortization. For the year ended December 31, 2018 Revenues Operations EBITDA Depreciation Operating Equity in Net Segment Communications Mobility $ 70,521 $ 40,690 $ 29,831 $ 8,263 $ 21,568 $ — $ 21,568 Business Wireline 26,494 16,012 10,482 4,704 5,778 — 5,778 Consumer Wireline 13,108 7,596 5,512 2,623 2,889 — 2,889 Total Communications 110,123 64,298 45,825 15,590 30,235 — 30,235 WarnerMedia Turner 6,979 3,794 3,185 131 3,054 54 3,108 Home Box Office 3,598 2,187 1,411 56 1,355 29 1,384 Warner Bros. 8,703 7,130 1,573 96 1,477 (28) 1,449 Eliminations and other 1,305 168 1,137 28 1,109 (30) 1,079 Total WarnerMedia 20,585 13,279 7,306 311 6,995 25 7,020 Latin America Vrio 4,784 3,743 1,041 728 313 34 347 Mexico 2,868 3,415 (547) 510 (1,057) — (1,057) Total Latin America 7,652 7,158 494 1,238 (744) 34 (710) Segment Total 138,360 84,735 53,625 17,139 36,486 $ 59 $ 36,545 Corporate and Other Corporate 1 2,481 2,502 (21) 1,637 (1,658) Video 33,363 28,856 4,507 2,698 1,809 Acquisition-related items (49) 1,185 (1,234) 6,931 (8,165) Certain significant items — 899 (899) 26 (925) Eliminations and consolidations (3,399) (1,947) (1,452) (1) (1,451) AT&T Inc. $ 170,756 $ 116,230 $ 54,526 $ 28,430 $ 26,096 1 Operations and Support Expenses include $1,753 for the reclassification of prior service credit amortization. The following table is a reconciliation of operating income (loss) to “Income Before Income Taxes” reported in our consolidated statements of income: 2020 2019 2018 Communications $ 28,313 $ 29,815 $ 30,235 WarnerMedia 8,210 10,659 7,020 Latin America (729) (635) (710) Segment Contribution 35,794 39,839 36,545 Reconciling Items: Corporate and Other (2,308) (1,951) (1,658) Video 2,174 2,388 1,809 Merger and integration items (468) (1,032) (1,234) Amortization of intangibles acquired (8,012) (7,460) (6,931) Impairments and abandonments (18,880) (1,458) (46) Gain on spectrum transaction 1 900 — — Employee separation charges and benefit-related (gain) loss (1,177) (624) (587) Other noncash charges (credits), net (13) (43) (111) Natural disaster items — — (181) Segment equity in net income of affiliates (42) (188) (59) Eliminations and consolidations (1,563) (1,516) (1,451) AT&T Operating Income 6,405 27,955 26,096 Interest Expense 7,925 8,422 7,957 Equity in net income (loss) of affiliates 95 6 (48) Other income (expense) - net (1,431) (1,071) 6,782 Income (Loss) Before Income Taxes $ (2,856) $ 18,468 $ 24,873 1 Included as a reduction of “Selling, general and administrative expenses” in the consolidated statements of income. The following table sets forth revenues earned from customers, and property, plant and equipment located in different geographic areas: 2020 2019 2018 Revenues Net Property, Plant & Equipment Revenues Net Property, Plant & Equipment Revenues Net Property, United States $ 155,899 $ 121,208 $ 161,689 $ 122,567 $ 154,795 $ 123,457 Europe 5,387 1,152 6,536 1,854 4,073 1,634 Mexico 2,862 3,530 3,198 3,648 3,100 3,467 Brazil 1,807 694 2,797 1,057 2,724 1,213 All other Latin America 2,679 485 3,219 544 3,055 1,217 Asia/Pacific Rim 2,322 203 2,793 390 2,214 408 Other 804 43 961 68 795 77 Total $ 171,760 $ 127,315 $ 181,193 $ 130,128 $ 170,756 $ 131,473 The following tables present intersegment revenues, assets, investments in equity affiliates and capital expenditures by segment: Intersegment Reconciliation 2020 2019 2018 Intersegment revenues Communications $ 11 $ 26 $ 13 WarnerMedia 3,183 3,318 1,875 Latin America — — — Total Intersegment Revenues 3,194 3,344 1,888 Consolidations 1,986 1,909 1,511 Eliminations and consolidations $ 5,180 $ 5,253 $ 3,399 At or for the years ended December 31, 2020 2019 Assets Investments in Capital Assets Investments in Capital Communications 1 $ 506,102 $ — $ 14,107 $ 492,649 $ — $ 17,410 WarnerMedia 148,037 1,123 699 140,376 3,011 1,205 Latin America 15,811 590 708 20,606 650 757 Corporate and eliminations 1 (144,189) 67 161 (101,962) 34 263 Total $ 525,761 $ 1,780 $ 15,675 $ 551,669 $ 3,695 $ 19,635 1 Amounts above have been updated to reflect the classification of our Video business as held-for-sale (beginning in the first quarter of 2021), which included the recast of historical results to remove Video from our Communications segment and instead report in Corporate and Other. |