REG - AT & T Inc. - 1st Quarter Results 2017 8-K <Origin Href="QuoteRef">T.N</Origin> - Part 3
23/05/2017 16:05
- Part 3: For the preceding part double click ID:nRSW0137Gb
measures of financial performance reported in accordance with GAAP.
EBITDA, EBITDA Margin and EBITDA Service Margin
Dollars in millions Three Months Ended
March 31,
2017 2016
Net Income $ 3,574 $ 3,885
Additions:
Income Tax Expense 1,804 2,122
Interest Expense 1,293 1,207
Equity in Net (Income) Loss of Affiliates 173 (13)
Other (Income) Expense - Net 20 (70)
Depreciation and amortization 6,127 6,563
EBITDA 12,991 13,694
Total Operating Revenues 39,365 40,535
Service Revenues 36,456 37,101
EBITDA Margin 33.0% 33.8%
EBITDA Service Margin 35.6% 36.9%
2
Segment EBITDA, EBITDA Margin and EBITDA Service Margin
Dollars in millions Three Months Ended
March 31,
2017 2016
Business Solutions Segment
Segment Contribution $ 4,360 $ 4,299
Additions:
Depreciation and amortization 2,312 2,508
EBITDA 6,672 6,807
Total Segment Operating Revenues 16,848 17,609
Segment Operating Income Margin 25.9% 24.4%
EBITDA Margin 39.6% 38.7%
Entertainment Group Segment
Segment Contribution $ 1,597 $ 1,595
Additions:
Equity in Net (Income) Loss of Affiliates 6 (3)
Depreciation and amortization 1,419 1,488
EBITDA 3,022 3,080
Total Segment Operating Revenues 12,623 12,658
Segment Operating Income Margin 12.7% 12.6%
EBITDA Margin 23.9% 24.3%
Consumer Mobility Segment
Segment Contribution $ 2,339 $ 2,494
Additions:
Depreciation and amortization 873 922
EBITDA 3,212 3,416
Total Segment Operating Revenues 7,740 8,328
Service Revenues 6,609 6,943
Segment Operating Income Margin 30.2% 29.9%
EBITDA Margin 41.5% 41.0%
EBITDA Service Margin 48.6% 49.2%
International Segment
Segment Contribution $ (100) $ (184)
Additions:
Equity in Net (Income) of Affiliates (20) (14)
Depreciation and amortization 290 277
EBITDA 170 79
Total Segment Operating Revenues 1,929 1,667
Segment Operating Income Margin -6.2% -11.9%
EBITDA Margin 8.8% 4.7%
3
Supplemental AT&T Mobility EBITDA, EBITDA Margin and EBITDA Service Margin
Dollars in millions Three Months Ended
March 31,
2017 2016
AT&T Mobility
Operating Income $ 5,172 $ 5,274
Add: Depreciation and amortization 1,997 2,056
EBITDA 7,169 7,330
Total Operating Revenues 17,167 17,954
Service Revenues 14,538 14,798
Operating Income Margin 30.1% 29.4%
EBITDA Margin 41.8% 40.8%
EBITDA Service Margin 49.3% 49.5%
Supplemental Latin America EBITDA and EBITDA Margin
Dollars in millions Three Months Ended
March 31,
2017 2016
International - Latin America
Operating Income $ 77 $ 53
Add: Depreciation and amortization 214 196
EBITDA 291 249
Total Operating Revenues 1,341 1,130
Operating Income Margin 5.7% 4.7%
EBITDA Margin 21.7% 22.0%
Supplemental Mexico EBITDA and EBITDA Margin
Dollars in millions Three Months Ended
March 31,
2017 2016
International - Mexico
Operating Income $ (197) $ (251)
Add: Depreciation and amortization 76 81
EBITDA (121) (170)
Total Operating Revenues 588 537
Operating Income Margin -33.5% -46.7%
EBITDA Margin -20.6% -31.7%
Adjusting Items
Adjusting items include revenues and costs we consider nonoperational in nature, such as items arising from asset
acquisitions or dispositions. We also adjust for net actuarial gains or losses associated with our pension and
postemployment benefit plans due to the often significant impact on our fourth-quarter results (we immediately recognize
this gain or loss in the income statement, pursuant to our accounting policy for the recognition of actuarial gains and
losses.) Consequently, our adjusted results reflect an expected return on plan assets rather than the actual return on plan
assets, as included in the GAAP measure of income.
4
The tax impact of adjusting items is calculated using the effective tax rate during the quarter except for adjustments
that, given their magnitude can drive a change in the effective tax rate, reflect the actual tax expense or combined
marginal rate of approximately 38%. For years prior to 2017, adjustments related to Mexico operations were taxed at the 30%
marginal rate for Mexico.
Adjusting Items
Dollars in millions Three Months Ended
March 31,
2017 2016
Operating Expenses
DIRECTV and other video merger integration costs $ 127 $ 173
Mexico merger integration costs 39 81
Time Warner merger costs 41 -
Wireless merger integration costs - 42
Employee separation costs - 25
(Gain) loss on transfer of wireless spectrum (118) (736)
Adjustments to Operations and Support Expenses 89 (415)
Amortization of intangible assets 1,202 1,351
Adjustments to Operating Expenses 1,291 936
Other
Merger related interest expense and exchange fees 1 109 16
(Gain) loss on sale of assets, impairments and other adjustments 257 4
Adjustments to Income Before Income Taxes 1,657 956
Tax impact of adjustments 556 331
Adjustments to Net Income $ 1,101 $ 625
1 Includes interest expense incurred on the debt issued prior to the close of merger transactions and fees associated with the exchange of DIRECTV notes for AT&T notes.
Adjusted Operating Income, Adjusted Operating Income Margin, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBITDA
service margin and Adjusted diluted EPS are non-GAAP financial measures calculated by excluding from operating revenues,
operating expenses and income tax expense certain significant items that are non-operational or non-recurring in nature,
including dispositions and merger integration and transaction costs. Management believes that these measures provide
relevant and useful information to investors and other users of our financial data in evaluating the effectiveness of our
operations and underlying business trends.
Adjusted Operating Revenues, Adjusted Operating Income, Adjusted Operating Income Margin, Adjusted EBITDA, Adjusted EBITDA
margin, Adjusted EBITDA service margin and Adjusted diluted EPS should be considered in addition to, but not as a
substitute for, other measures of financial performance reported in accordance with GAAP. AT&T's calculation of Adjusted
items, as presented, may differ from similarly titled measures reported by other companies.
Adjusted Operating Income, Adjusted Operating Income Margin,Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted EBITDA Service Margin
Dollars in millions Three Months Ended
March 31,
2017 2016
Operating Income $ 6,864 $ 7,131
Adjustments to Operating Expenses 1,291 936
Adjusted Operating Income 8,155 8,067
EBITDA 12,991 13,694
Adjustments to Operations and Support Expenses 89 (415)
Adjusted EBITDA 13,080 13,279
Total Operating Revenues 39,365 40,535
Service Revenues 36,456 37,101
Operating Income Margin 17.4% 17.6%
Adjusted Operating Income Margin 20.7% 19.9%
Adjusted EBITDA Margin 33.2% 32.8%
Adjusted EBITDA Service Margin 35.9% 35.8%
5
Adjusted Diluted EPS
Three Months Ended
March 31,
2017 2016
Diluted Earnings Per Share (EPS) $ 0.56 $ 0.61
Amortization of intangible assets 0.13 0.14
Merger integration and other items1 0.03 0.03
Asset abandonments, impairments and other adjustments 0.03 0.02
(Gain) loss on transfer of wireless spectrum (0.01) (0.08)
Adjusted EPS $ 0.74 $ 0.72
Year-over-year growth - Adjusted 2.8%
Weighted Average Common Shares Outstanding with Dilution (000,000) 6,186 6,190
1Includes combined merger integration items, merger-related interest expense and DIRECTV exchange fees.
Net Debt to Adjusted EBITDA
Net Debt to EBITDA ratios are non-GAAP financial measures frequently used by investors and credit rating agencies and
management believes these measures provide relevant and useful information to investors and other users of our financial
data. The Net Debt to Adjusted EBITDA ratio is calculated by dividing the Net Debt by annualized Adjusted EBITDA. Net Debt
is calculated by subtracting cash and cash equivalents and certificates of deposit and time deposits that are greater than
90 days, from the sum of debt maturing within one year and long-term debt. Annualized Adjusted EBITDA is calculated by
annualizing the year-to-date Adjusted EBITDA.
Net Debt to Adjusted EBITDA
Dollars in millions Three Months Ended
Mar. 31, YTD
2017 2017
Adjusted EBITDA $ 13,080 $ 13,080
Annualized Adjusted EBITDA 52,320
End-of-period current debt 12,681
End-of-period long-term debt 120,568
Total End-of-Period Debt 133,249
Less: Cash and Cash Equivalents 14,884
Net Debt Balance 118,365
Annualized Net Debt to Adjusted EBITDA Ratio 2.26
6
Supplemental Operational Measures
We provide a supplemental discussion of our domestic wireless operations that is calculated by combining our Consumer
Mobility and Business Solutions segments, and then adjusting to remove non-wireless operations. The following table
presents a reconciliation of our supplemental AT&T Mobility results.
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 Expense 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.
We provide a supplemental presentation of the Latin America and Mexico Wireless operations within our International
segment. The following table presents a reconciliation of our International segment.
Supplemental International
Three Months Ended
March 31, 2017 March 31, 2016
Latin America Mexico International Latin America Mexico International
Operating Revenues
Video Service $ 1,341 $ - $ 1,341 $ 1,130 $ - $ 1,130
Wireless Service - 475 475 - 455 455
Wireless Equipment - 113 113 - 82 82
Total Operating Revenues 1,341 588 1,929 1,130 537 1,667
Operating Expenses
Operations and support 1,050 709 1,759 881 707 1,588
Depreciation and amortization 214 76 290 196 81 277
Total Operating Expense 1,264 785 2,049 1,077 788 1,865
Operating Income 77 (197) (120) 53 (251) (198)
Equity in Net Income of Affiliates 20 - 20 14 - 14
Segment Contribution $ 97 $ (197) $ (100) $ 67 $ (251) $ (184)
7
This information is provided by RNS
The company news service from the London Stock ExchangeRecent news on AT&T
See all newsREG - AT & T Inc. - Annual Financial Report
AnnouncementREG - Societe Generale SA - Stabilisation Notice - AT+T
AnnouncementREG - Societe Generale SA - Stabilisation Notice - AT&T
AnnouncementREG - Societe Generale SA - Stabilisation Notice - AT&T
AnnouncementREG - Nestle SA Nestle Holdings Inc - Nestlé appoints Lisa Gibby as CCO
Announcement