REG - AT & T Inc. - 2Q17 Earnings Release <Origin Href="QuoteRef">T.N</Origin> - Part 1
RNS Number : 8227OAT & T Inc.23 August 2017UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of report (Date of earliest event reported) July 25, 2017
AT&T INC.
(Exact Name of Registrant as Specified in Charter)
Delaware
1-8610
43-1301883
(State or Other Jurisdiction of Incorporation)
(Commission File Number)
(IRS Employer Identification No.)
208 S. Akard St., Dallas, Texas
75202
(Address of Principal Executive Offices)
(Zip Code)
Registrant's telephone number, including area code (210) 821-4105
__________________________________
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240-14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition.
The registrant announced on July 25, 2017, its results of operations for the second quarter of 2017. The text of the press release and accompanying financial information are attached as exhibits and incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
The following exhibits are furnished as part of this report:
(d)Exhibits
99.1
Press release dated July 25, 2017 reporting financial results for the second quarter ended June 30, 2017.
99.2
AT&T Inc. selected financial statements and operating data.
99.3
Discussion and reconciliation of non-GAAP measures.
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 hereunto duly authorized.
AT&T INC.
Date: July 25, 2017
By: /s/ Debra L. Dial
Debra L. Dial
Senior Vice President and Controller
AT&T Reports Second-Quarter Results
Consolidated revenues of $39.8 billion
Operating income of $7.3 billion
Net income attributable to AT&T of $3.9 billion
Diluted EPS of $0.63 as reported and $0.79 as adjusted, compared to $0.55 and $0.72 in the year-ago quarter
Cash from operations of $8.9 billion
Free cash flow of $3.7 billion
Company Maintains Full-Year Guidance
U.S. wireless results:
o
Best-ever postpaid phone churn of 0.79%
o
Total postpaid churn, including tablets, of 1.01%
o
Growing operating income margin of 30.4% with record-high EBITDA margins including best-ever wireless service margin of 50.4%
2.8 million wireless net adds
o
2.3 million U.S., driven by connected devices, prepaid and postpaid
o
476,000 Mexico net adds
Entertainment Group results:
o
112,000 IP broadband net adds; 8,000 total broadband net adds
o
More than 5.5 million AT&T Fiber customer locations passed
o
Total video losses of 199,000 with DIRECTV NOW gains helping offset traditional TV subscriber decline; Total video subscribers essentially flat year over year
International results:
o
Revenues up 10.8% with favorable operating trends
o
Continued revenue growth and margin improvement in Mexico
Note: AT&T's second-quarter earnings conference call will be webcast at 4:30 p.m. ET on Tuesday, July 25, 2017. The webcast and related materials will be available on AT&T's Investor Relations website at https://investors.att.com .
DALLAS, July 25, 2017 - AT&T Inc.* ( NYSE:T ) reported strong adjusted earnings growth and margin expansion with lower expenses in the second quarter.
"Once again our team delivered expanded consolidated margins and, as a result, grew adjusted earnings per share by nearly 10% as we executed well against our business priorities," said Randall Stephenson, AT&T chairman and CEO. "And in a quarter where our competitors used promotions aggressively, we added more than 500,000 branded smartphones to our base and more than 100,000 IP broadband subscribers, achieved record EBITDA wireless margins and had the lowest postpaid phone churn in our history. We continue to expect the Time Warner deal to close by year - end and further transform the company . "
Consolidated Financial Results
AT&T's consolidated revenues for the second quarter totaled $39.8 billion versus $40.5 billion in the year-ago quarter, primarily due to declines in legacy wireline services and consumer mobility. Compared with results for the second quarter of 2016, operating expenses were $32.5 billion versus $34.0 billion; operating income was $7.3 billion versus $6.6 billion; and operating income margin was 18.4% versus 16.2%. When adjusting for amortization, merger- and integration-related expenses and other items, operating income was $8.6 billion versus $8.1 billion and operating income margin was 21.6%, up 150 basis points versus the year-ago quarter.
Second-quarter net income attributable to AT&T totaled $3.9 billion, or $0.63 per diluted share, compared with $3.4 billion, or $0.55 per diluted share, in the year-ago quarter. Adjusting for $0.16 of costs for amortization, merger- and integration-related expenses and other items, earnings per diluted share was $0.79 compared with an adjusted $0.72 in the year-ago quarter, up 9.7%.
Cash from operating activities was $8.9 billion in the second quarter and $18.2 billion year to date. Capital expenditures were $5.2 billion in the quarter and $11.2 billion year to date. Free cash flow - cash from operating activities minus capital expenditures - was $3.7 billion for the quarter and $6.9 billion year to date.
*About AT&T
AT&T Inc. ( NYSE:T) helps millions around the globe connect with leading entertainment, business, mobile and high speed internet services. We offer the nation's best data network** and the best global coverage of any U.S. wireless provider. We're one of the world's largest providers of pay TV. We have TV customers in the U.S. and 11 Latin American countries. Nearly 3.5 million companies, from small to large businesses around the globe, turn to AT&T for our highly secure smart solutions.
AT&T products and services are provided or offered by subsidiaries and affiliates of AT&T Inc. under the AT&T brand and not by AT&T Inc. Additional information about AT&T products and services is available atabout.att.com . Follow our news on Twitter at @ATT, on Facebook at facebook.com/att and on YouTube at youtube.com/att.
2017 AT&T Intellectual Property. All rights reserved. AT&T, the Globe logo and other marks are trademarks and service marks of AT&T Intellectual Property and/or AT&T affiliated companies. All other marks contained herein are the property of their respective owners.
**Claim based on the Nielsen Certified Data Network Score. Score includes data reported by wireless consumers in the Nielsen Mobile Insights survey, network measurements from Nielsen Mobile Performance and Nielsen Drive Test Benchmarks for Q4 2016 + Q1 2017 across 121 markets.
Cautionary Language Concerning Forward-Looking Statements
Information set forth in this news release contains financial estimates and other forward-looking statements that are subject to risks and uncertainties, and actual results might differ materially. A discussion of factors that may affect future results is contained in AT&T's filings with the Securities and Exchange Commission. AT&T disclaims any obligation to update and revise statements contained in this news release based on new information or otherwise.
This news release may contain certain non-GAAP financial measures. Reconciliations between the non- GAAP financial measures and the GAAP financial measures are available on the company's website at https://investors.att.com .
For more information, contact:
Fletcher Cook - AT&T Global Media Relations
Email: fletcher.cook@att.com
Phone: (214) 757-7629
Eric Ryan - AT&T Global Media Relations
Email: eric.ryan.1@att.com
Phone: (929) 273-8434
AT&T Inc.
Financial Data
Consolidated Statements of Income
Dollars in millions except per share amounts
Three Months Ended
Six Months Ended
Unaudited
June 30,
Percent
June 30,
Percent
2017
2016
Change
2017
2016
Change
Operating Revenues
Service
$
36,538
$
37,142
-1.6
%
$
72,994
$
74,243
-1.7
%
Equipment
3,299
3,378
-2.3
%
6,208
6,812
-8.9
%
Total Operating Revenues
39,837
40,520
-1.7
%
79,202
81,055
-2.3
%
Operating Expenses
Cost of services and sales
Equipment
4,138
4,260
-2.9
%
7,986
8,635
-7.5
%
Broadcast, programming and operations
4,898
4,701
4.2
%
9,872
9,330
5.8
%
Other cost of services (exclusive of depreciation
and amortization shown separately below)
9,218
9,514
-3.1
%
18,283
18,910
-3.3
%
Selling, general and administrative
8,113
8,909
-8.9
%
16,600
17,350
-4.3
%
Depreciation and amortization
6,147
6,576
-6.5
%
12,274
13,139
-6.6
%
Total Operating Expenses
32,514
33,960
-4.3
%
65,015
67,364
-3.5
%
Operating Income
7,323
6,560
11.6
%
14,187
13,691
3.6
%
Interest Expense
(1,395
)
(1,258
)
10.9
%
(2,688
)
(2,465
)
9.0
%
Equity in Net Income (Loss) of Affiliates
14
28
-50.0
%
(159
)
41
-
%
Other Income (Expense) - Net
128
91
40.7
%
108
161
-32.9
%
Income Before Income Taxes
6,070
5,421
12.0
%
11,448
11,428
0.2
%
Income Tax Expense
2,056
1,906
7.9
%
3,860
4,028
-4.2
%
Net Income
4,014
3,515
14.2
%
7,588
7,400
2.5
%
Less: Net Income Attributable to
Noncontrolling Interest
(99
)
(107
)
-7.5
%
(204
)
(189
)
7.9
%
Net Income Attributable to AT&T
$
3,915
$
3,408
14.9
%
$
7,384
$
7,211
2.4
%
Basic Earnings Per Share Attributable to AT&T
$
0.63
$
0.55
14.5
%
$
1.19
$
1.17
1.7
%
Weighted Average Common
Shares Outstanding (000,000)
6,165
6,174
-0.1
%
6,166
6,173
-0.1
%
Diluted Earnings Per Share Attributable to AT&T
$
0.63
$
0.55
14.5
%
$
1.19
$
1.17
1.7
%
Weighted Average Common
Shares Outstanding with Dilution (000,000)
6,184
6,195
-0.2
%
6,185
6,193
-0.1
%
AT&T Inc.
Financial Data
Consolidated Balance Sheets
Dollars in millions
Unaudited
Jun. 30,
Dec. 31,
2017
2016
Assets
Current Assets
Cash and cash equivalents
$
25,617
$
5,788
Accounts receivable - net of allowances for doubtful accounts of $732 and $661
14,997
16,794
Prepaid expenses
1,371
1,555
Other current assets
11,562
14,232
Total current assets
53,547
38,369
Property, Plant and Equipment - Net
126,184
124,899
Goodwill
105,546
105,207
Licenses
95,864
94,176
Customer Lists and Relationships - Net
12,414
14,243
Other Intangible Assets - Net
7,980
8,441
Investments in Equity Affiliates
1,615
1,674
Other Assets
17,645
16,812
Total Assets
$
420,795
$
403,821
Liabilities and Stockholders' Equity
Current Liabilities
Debt maturing within one year
$
10,831
$
9,832
Accounts payable and accrued liabilities
26,471
31,138
Advanced billing and customer deposits
4,371
4,519
Accrued taxes
3,331
2,079
Dividends payable
3,008
3,008
Total current liabilities
48,012
50,576
Long-Term Debt
132,824
113,681
Deferred Credits and Other Noncurrent Liabilities
Deferred income taxes
61,926
60,128
Postemployment benefit obligation
31,422
33,578
Other noncurrent liabilities
20,753
21,748
Total deferred credits and other noncurrent liabilities
114,101
115,454
Stockholders' Equity
Common stock
6,495
6,495
Additional paid-in capital
89,471
89,604
Retained earnings
36,067
34,734
Treasury stock
(12,697
)
(12,659
)
Accumulated other comprehensive income
5,389
4,961
Noncontrolling interest
1,133
975
Total stockholders' equity
125,858
124,110
Total Liabilities and Stockholders' Equity
$
420,795
$
403,821
AT&T Inc.
Financial Data
Consolidated Statements of Cash Flows
Dollars in millions
Six Months Ended
Unaudited
June 30,
2017
2016
Operating Activities
Net income
$
7,588
$
7,400
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
12,274
13,139
Undistributed loss (earnings) from investments in equity affiliates
167
(22
)
Provision for uncollectible accounts
795
705
Deferred income tax expense
964
1,767
Net loss (gain) from sale of investments, net of impairments
12
(85
)
Actuarial loss (gain) on pension and postretirement benefits
(259
)
-
Changes in operating assets and liabilities:
Accounts receivable
119
(364
)
Other current assets
471
2,229
Accounts payable and other accrued liabilities
(2,761
)
(3,032
)
Equipment installment receivables and related sales
907
464
Deferred fulfillment costs
(796
)
(1,190
)
Retirement benefit funding
(280
)
(280
)
Other - net
(1,041
)
(2,524
)
Total adjustments
10,572
10,807
Net Cash Provided by Operating Activities
18,160
18,207
Investing Activities
Capital expenditures:
Purchase of property and equipment
(10,750
)
(9,702
)
Interest during construction
(473
)
(437
)
Acquisitions, net of cash acquired
1,224
(485
)
Dispositions
51
107
Sales of securities, net
-
500
Net Cash Used in Investing Activities
(9,948
)
(10,017
)
Financing Activities
Net change in short-term borrowings with original maturities of three months or less
(2
)
-
Issuance of long-term debt
24,115
10,140
Repayment of long-term debt
(6,118
)
(9,129
)
Purchase of treasury stock
(458
)
(197
)
Issuance of treasury stock
24
119
Dividends paid
(6,021
)
(5,899
)
Other
77
(1,137
)
Net Cash Provided by (Used in) Financing Activities
11,617
(6,103
)
Net increase in cash and cash equivalents
19,829
2,087
Cash and cash equivalents beginning of year
5,788
5,121
Cash and Cash Equivalents End of Period
$
25,617
$
7,208
AT&T Inc.
Consolidated Supplementary Data
Supplementary Financial Data
Dollars in millions except per share amounts
Three Months Ended
Six Months Ended
Unaudited
June 30,
Percent
June 30,
Percent
2017
2016
Change
2017
2016
Change
Capital expenditures
Purchase of property and equipment
$
4,966
$
5,251
-5.4
%
$
10,750
$
9,702
10.8
%
Interest during construction
$
242
$
219
10.5
%
$
473
$
437
8.2
%
Dividends Declared per Share
$
0.49
$
0.48
2.1
%
$
0.98
$
0.96
2.1
%
End of Period Common Shares Outstanding (000,000)
6,140
6,152
-0.2
%
Debt Ratio
53.3
%
50.5
%
280
BP
Total Employees
260,480
277,200
-6.0
%
Supplementary Operating Data
Subscribers and connections in thousands
Unaudited
June 30,
Percent
2017
2016
Change
Wireless Subscribers
Domestic
136,500
131,805
3.6
%
Mexico
13,082
9,955
31.4
%
Total Wireless Subscribers
149,582
141,760
5.5
%
Total Branded Wireless Subscribers
104,421
99,557
4.9
%
Video Connections
Domestic
25,200
25,323
-0.5
%
PanAmericana
8,103
7,175
12.9
%
Brazil
5,519
5,348
3.2
%
Total Video Connections
38,822
37,846
2.6
%
Broadband Connections
IP
14,234
13,544
5.1
%
DSL
1,452
2,097
-30.8
%
Total Broadband Connections
15,686
15,641
0.3
%
Voice Connections
Network Access Lines
12,791
15,284
-16.3
%
U-verse VoIP Connections
5,853
5,593
4.6
%
Total Retail Consumer Voice Connections
18,644
20,877
-10.7
%
Three Months Ended
Six Months Ended
June 30,
Percent
June 30,
Percent
2017
2016
Change
2017
2016
Change
Wireless Net Additions
Domestic
2,282
1,361
67.7
%
4,363
3,142
38.9
%
Mexico
476
742
-35.8
%
1,109
1,271
-12.7
%
Total Wireless Net Additions
2,758
2,103
31.1
%
5,472
4,413
24.0
%
Total Branded Wireless Net Additions
888
1,401
-36.6
%
1,626
2,596
-37.4
%
Video Net Additions
Domestic
(199
)
(49
)
-
%
(360
)
(101
)
-
%
PanAmericana
13
81
-84.0
%
65
109
-40.4
%
Brazil
(69
)
6
-
%
(30
)
(95
)
68.4
%
Total Video Net Additions
(255
)
38
-
%
(325
)
(87
)
-
%
Broadband Net Additions
IP
124
74
67.6
%
370
276
34.1
%
DSL
(133
)
(197
)
32.5
%
(289
)
(413
)
30.0
%
Total Broadband Net Additions
(9
)
(123
)
92.7
%
81
(137
)
-
%
BUSINESS SOLUTIONS
The Business Solutions segment provides services to business customers, including multinational companies; governmental and wholesale customers; and individual subscribers who purchase wireless services through employer-sponsored plans. We provide advanced IP-based services including Virtual Private Networks (VPN); Ethernet-related products and broadband, collectively referred to as strategic business services; as well as traditional data and voice products. We utilize our wireless and wired networks (referred to as "wired" or "wireline") to provide a complete communications solution to our business customers.
Segment Results
Dollars in millions
Three Months Ended
Six Months Ended
Unaudited
June 30,
Percent
June 30,
Percent
2017
2016
Change
2017
2016
Change
Segment Operating Revenues
Wireless service
$
8,006
$
7,963
0.5
%
$
15,935
$
15,818
0.7
%
Fixed strategic services
3,028
2,805
8.0
%
6,002
5,556
8.0
%
Legacy voice and data services
3,508
4,162
-15.7
%
7,138
8,535
-16.4
%
Other service and equipment
844
874
-3.4
%
1,661
1,733
-4.2
%
Wireless equipment
1,721
1,775
-3.0
%
3,219
3,546
-9.2
%
Total Segment Operating Revenues
17,107
17,579
-2.7
%
33,955
35,188
-3.5
%
Segment Operating Expenses
Operations and support expenses
10,313
10,857
-5.0
%
20,489
21,659
-5.4
%
Depreciation and amortization
2,335
2,521
-7.4
%
4,647
5,029
-7.6
%
Total Segment Operating Expenses
12,648
13,378
-5.5
%
25,136
26,688
-5.8
%
Segment Operating Income
4,459
4,201
6.1
%
8,819
8,500
3.8
%
Equity in Net Income of Affiliates
-
-
-
%
-
-
-
%
Segment Contribution
$
4,459
$
4,201
6.1
%
$
8,819
$
8,500
3.8
%
Segment Operating Income Margin
26.1
%
23.9
%
26.0
%
24.2
%
Supplementary Operating Data
Subscribers and connections in thousands
Unaudited
June 30,
Percent
2017
2016
Change
Business Solutions Wireless Subscribers
Postpaid/Branded
51,111
49,433
3.4
%
Reseller
72
51
41.2
%
Connected Devices
33,611
28,061
19.8
%
Total Business Solutions Wireless Subscribers
84,794
77,545
9.3
%
Business Solutions IP Broadband Connections
992
948
4.6
%
Three Months Ended
Six Months Ended
June 30,
Percent
June 30,
Percent
2017
2016
Change
2017
2016
Change
Business Solutions Wireless Net Additions
Postpaid/Branded
36
185
-80.5
%
(89
)
318
-
%
Reseller
(5
)
(13
)
61.5
%
1
(35
)
-
%
Connected Devices
2,170
1,199
81.0
%
4,723
2,777
70.1
%
Total Business Solutions Wireless Net Additions
2,201
1,371
60.5
%
4,635
3,060
51.5
%
Business Solutions Wireless Postpaid Churn
0.97
%
0.91
%
6
BP
1.02
%
0.97
%
5
BP
Business Solutions IP Broadband
Net Additions
12
20
-40.0
%
16
37
-56.8
%
ENTERTAINMENT GROUP
The Entertainment Group segment provides video, internet, voice communication, and interactive and targeted advertising services to customers located in the U.S. or in U.S. territories. We utilize our copper and IP-based wired network and/or our satellite technology.
Segment Results
Dollars in millions
Three Months Ended
Six Months Ended
Unaudited
June 30,
Percent
June 30,
Percent
2017
2016
Change
2017
2016
Change
Segment Operating Revenues
Video entertainment
$
9,153
$
8,963
2.1
%
$
18,173
$
17,867
1.7
%
High-speed internet
1,927
1,867
3.2
%
3,868
3,670
5.4
%
Legacy voice and data services
1,005
1,244
-19.2
%
2,061
2,557
-19.4
%
Other service and equipment
597
637
-6.3
%
1,203
1,275
-5.6
%
Total Segment Operating Revenues
12,682
12,711
-0.2
%
25,305
25,369
-0.3
%
Segment Operating Expenses
Operations and support expenses
9,558
9,569
-0.1
%
19,159
19,147
0.1
%
Depreciation and amortization
1,458
1,489
-2.1
%
2,877
2,977
-3.4
%
Total Segment Operating Expenses
11,016
11,058
-0.4
%
22,036
22,124
-0.4
%
Segment Operating Income
1,666
1,653
0.8
%
3,269
3,245
0.7
%
Equity in Net Income (Loss) of Affiliates
(11
)
(2
)
-
%
(17
)
1
-
%
Segment Contribution
$
1,655
$
1,651
0.2
%
$
3,252
$
3,246
0.2
%
Segment Operating Income Margin
13.1
%
13.0
%
12.9
%
12.8
%
Supplementary Operating Data
Subscribers and connections in thousands
Six Months Ended
Unaudited
June 30,
Percent
2017
2016
Change
Video Connections
Satellite
20,856
20,454
2.0
%
U-verse
3,825
4,841
-21.0
%
DIRECTV NOW
491
-
-
%
Total Video Connections
25,172
25,295
-0.5
%
Broadband Connections
IP
13,242
12,596
5.1
%
DSL
1,060
1,585
-33.1
%
Total Broadband Connections
14,302
14,181
0.9
%
Voice Connections
Retail Consumer Switched Access Lines
5,257
6,515
-19.3
%
U-verse Consumer VoIP Connections
5,439
5,300
2.6
%
Total Retail Consumer Voice Connections
10,696
11,815
-9.5
%
Three Months Ended
Six Months Ended
June 30,
Percent
June 30,
Percent
2017
2016
Change
2017
2016
Change
Video Net Additions
Satellite
(156
)
342
-
%
(156
)
670
-
%
U-verse
(195
)
(391
)
50.1
%
(428
)
(773
)
44.6
%
DIRECTV NOW
152
-
-
%
224
-
-
%
Total Video Net Additions
(199
)
(49
)
-
%
(360
)
(103
)
-
%
Broadband Net Additions
IP
112
54
-
%
354
240
47.5
%
DSL
(104
)
(164
)
36.6
%
(231
)
(345
)
33.0
%
Total Broadband Net Additions
8
(110
)
-
%
123
(105
)
-
%
CONSUMER MOBILITY
The Consumer Mobility segment provides nationwide wireless service to consumers and wholesale and resale wireless subscribers located in the U.S. or in U.S. territories. We utilize our U.S. wireless network to provide voice and data services, including high-speed internet, video, and home monitoring services.
Segment Results
Dollars in millions
Three Months Ended
Six Months Ended
Unaudited
June 30,
Percent
June 30,
Percent
2017
2016
Change
2017
2016
Change
Segment Operating Revenues
Service
$
6,528
$
6,948
-6.0
%
$
13,137
$
13,891
-5.4
%
Equipment
1,263
1,238
2.0
%
2,394
2,623
-8.7
%
Total Segment Operating Revenues
7,791
8,186
-4.8
%
15,531
16,514
-6.0
%
Segment Operating Expenses
Operations and support expenses
4,520
4,680
-3.4
%
9,048
9,592
-5.7
%
Depreciation and amortization
871
932
-6.5
%
1,744
1,854
-5.9
%
Total Segment Operating Expenses
5,391
5,612
-3.9
%
10,792
11,446
-5.7
%
Segment Operating Income
2,400
2,574
-6.8
%
4,739
5,068
-6.5
%
Equity in Net Income of Affiliates
-
-
-
%
-
-
-
%
Segment Contribution
$
2,400
$
2,574
-6.8
%
$
4,739
$
5,068
-6.5
%
Segment Operating Income Margin
30.8
%
31.4
%
30.5
%
30.7
%
Supplementary Operating Data
Subscribers and connections in thousands
Unaudited
June 30,
Percent
2017
2016
Change
Consumer Mobility Subscribers
Postpaid
26,290
27,862
-5.6
%
Prepaid
14,187
12,633
12.3
%
Branded
40,477
40,495
-
%
Reseller
10,182
12,869
-20.9
%
Connected Devices
1,047
896
16.9
%
Total Consumer Mobility Subscribers
51,706
54,260
-4.7
%
Three Months Ended
Six Months Ended
June 30,
Percent
June 30,
Percent
2017
2016
Change
2017
2016
Change
Consumer Mobility Net Additions
Postpaid
91
72
26.4
%
25
68
-63.2
%
Prepaid
267
365
-26.8
%
549
865
-36.5
%
Branded
358
437
-18.1
%
574
933
-38.5
%
Reseller
(363
)
(446
)
18.6
%
(951
)
(824
)
-15.4
%
Connected Devices
86
(1
)
-
%
105
(27
)
-
%
Total Consumer Mobility Net Additions
81
(10
)
-
%
(272
)
82
-
%
Total Churn
2.15
%
1.96
%
19
BP
2.29
%
2.04
%
25
BP
Postpaid Churn
1.09
%
1.09
%
-
BP
1.16
%
1.16
%
-
BP
INTERNATIONAL
The International segment provides entertainment services in Latin America and wireless services in Mexico. Video entertainment services are provided to primarily residential customers using satellite technology. We utilize our regional and national wireless networks in Mexico to provide consumer and business customers with wireless data and voice communication services. Our international subsidiaries conduct business in their local currency and operating results are converted to U.S. dollars using official exchange rates.
Segment Results
Dollars in millions
Three Months Ended
Six Months Ended
Unaudited
June 30,
Percent
June 30,
Percent
2017
2016
Change
2017
2016
Change
Segment Operating Revenues
Video entertainment
$
1,361
$
1,222
11.4
%
$
2,702
$
2,352
14.9
%
Wireless service
535
489
9.4
%
1,010
944
7.0
%
Wireless equipment
130
117
11.1
%
243
199
22.1
%
Total Segment Operating Revenues
2,026
1,828
10.8
%
3,955
3,495
13.2
%
Segment Operating Expenses
Operations and support expenses
1,772
1,723
2.8
%
3,531
3,311
6.6
%
Depreciation and amortization
311
298
4.4
%
601
575
4.5
%
Total Segment Operating Expenses
2,083
2,021
3.1
%
4,132
3,886
6.3
%
Segment Operating Income (Loss)
(57
)
(193
)
70.5
%
(177
)
(391
)
54.7
%
Equity in Net Income (Loss) of Affiliates
25
9
-
%
45
23
95.7
%
Segment Contribution
$
(32
)
$
(184
)
82.6
%
$
(132
)
$
(368
)
64.1
%
Segment Operating Income Margin
(2.8
)%
(10.6
)%
(4.5
)%
(11.2
)%
Supplementary Operating Data
Subscribers and connections in thousands
Unaudited
June 30,
Percent
2017
2016
Change
Mexican Wireless Subscribers
Postpaid
5,187
4,570
13.5
%
Prepaid
7,646
5,059
51.1
%
Branded
12,833
9,629
33.3
%
Reseller
249
326
-23.6
%
Total Mexican Wireless Subscribers
13,082
9,955
31.4
%
Latin America Satellite Subscribers
PanAmericana
8,103
7,175
12.9
%
SKY Brazil
5,519
5,348
3.2
%
Total Latin America Satellite Subscribers
13,622
12,523
8.8
%
Three Months Ended
Six Months Ended
June 30,
Percent
June 30,
Percent
2017
2016
Change
2017
2016
Change
Mexican Wireless Net Additions
Postpaid
92
165
-44.2
%
222
281
-21.0
%
Prepaid
402
614
-34.5
%
919
1,064
-13.6
%
Branded
494
779
-36.6
%
1,141
1,345
-15.2
%
Reseller
(18
)
(37
)
51.4
%
(32
)
(74
)
56.8
%
Total Mexican Wireless Net Additions
476
742
-35.8
%
1,109
1,271
-12.7
%
Latin America Satellite Net Additions
PanAmericana
13
81
-84.0
%
65
109
-40.4
%
SKY Brazil
(69
)
6
-
%
(30
)
(95
)
68.4
%
Total Latin America Satellite Net Additions
(56
)
87
-
%
35
14
-
%
SUPPLEMENTAL OPERATING INFORMATION - AT&T MOBILITY
As a supplemental discussion of our operating results, for comparison purposes, we are providing a view of our combined domestic wireless operations (AT&T Mobility).
Operating Results
Dollars in millions
Three Months Ended
Six Months Ended
Unaudited
June 30,
Percent
June 30,
Percent
2017
2016
Change
2017
2016
Change
Operating Revenues
Service
$
14,534
$
14,911
-2.5
%
$
29,072
$
29,709
-2.1
%
Equipment
2,984
3,013
-1.0
%
5,613
6,169
-9.0
%
Total Operating Revenues
17,518
17,924
-2.3
%
34,685
35,878
-3.3
%
Operating Expenses
Operations and support expenses
10,197
10,501
-2.9
%
20,195
21,125
-4.4
%
Depreciation and amortization
1,992
2,081
-4.3
%
3,989
4,137
-3.6
%
Total Operating Expenses
12,189
12,582
-3.1
%
24,184
25,262
-4.3
%
Operating Income
$
5,329
$
5,342
-0.2
%
$
10,501
$
10,616
-1.1
%
Operating Income Margin
30.4
%
29.8
%
30.3
%
29.6
%
Supplementary Operating Data
Subscribers and connections in thousands
Unaudited
June 30,
Percent
2017
2016
Change
AT&T Mobility Subscribers
Postpaid
77,401
77,295
0.1
%
Prepaid
14,187
12,633
12.3
%
Branded
91,588
89,928
1.8
%
Reseller
10,254
12,920
-20.6
%
Connected Devices
34,658
28,957
19.7
%
Total AT&T Mobility Subscribers
136,500
131,805
3.6
%
Domestic Licensed POPs (000,000)
326
322
1.2
%
Three Months Ended
Six Months Ended
June 30,
Percent
June 30,
Percent
2017
2016
Change
2017
2016
Change
AT&T Mobility Net Additions
Postpaid
127
257
-50.6
%
(64
)
386
-
%
Prepaid
267
365
-26.8
%
549
865
-36.5
%
Branded
394
622
-36.7
%
485
1,251
-61.2
%
Reseller
(368
)
(459
)
19.8
%
(950
)
(859
)
-10.6
%
Connected Devices
2,256
1,198
88.3
%
4,828
2,750
75.6
%
Total AT&T Mobility Net Additions
2,282
1,361
67.7
%
4,363
3,142
38.9
%
M&A Activity, Partitioned Customers and
Other Adjustments
-
(1
)
-
%
(2,723
)
23
-
%
Total Churn
1.28
%
1.35
%
-7
BP
1.37
%
1.38
%
-1
BP
Postpaid Churn
1.01
%
0.97
%
4
BP
1.07
%
1.04
%
3
BP
SUPPLEMENTAL SEGMENT RECONCILIATION
Three Months Ended
Dollars in millions
Unaudited
June 30, 2017
Revenues
Operations and Support Expenses
EBITDA
Depreciation and Amortization
Operating Income (Loss)
Equity in Net Income (Loss) of Affiliates
Segment Contribution
Business Solutions
$
17,107
$
10,313
$
6,794
$
2,335
$
4,459
$
-
$
4,459
Entertainment Group
12,682
9,558
3,124
1,458
1,666
(11
)
1,655
Consumer Mobility
7,791
4,520
3,271
871
2,400
-
2,400
International
2,026
1,772
254
311
(57
)
25
(32
)
Segment Total
39,606
26,163
13,443
4,975
8,468
$
14
$
8,482
Corporate and Other
231
87
144
2
142
Acquisition-related items
-
281
(281
)
1,170
(1,451
)
Certain Significant items
-
(164
)
164
-
164
AT&T Inc.
$
39,837
$
26,367
$
13,470
$
6,147
$
7,323
June 30, 2016
Revenues
Operations and Support Expenses
EBITDA
Depreciation and Amortization
Operating Income (Loss)
Equity in Net Income (Loss) of Affiliates
Segment Contribution
Business Solutions
$
17,579
$
10,857
$
6,722
$
2,521
$
4,201
$
-
$
4,201
Entertainment Group
12,711
9,569
3,142
1,489
1,653
(2
)
1,651
Consumer Mobility
8,186
4,680
3,506
932
2,574
-
2,574
International
1,828
1,723
105
298
(193
)
9
(184
)
Segment Total
40,304
26,829
13,475
5,240
8,235
$
7
$
8,242
Corporate and Other
216
293
(77
)
20
(97
)
Acquisition-related items
-
233
(233
)
1,316
(1,549
)
Certain Significant items
-
29
(29
)
-
(29
)
AT&T Inc.
$
40,520
$
27,384
$
13,136
$
6,576
$
6,560
Six Months Ended
Dollars in millions
Unaudited
June 30, 2017
Revenues
Operations and Support Expenses
EBITDA
Depreciation and Amortization
Operating Income (Loss)
Equity in Net Income (Loss) of Affiliates
Segment Contribution
Business Solutions
$
33,955
$
20,489
$
13,466
$
4,647
$
8,819
$
-
$
8,819
Entertainment Group
25,305
19,159
6,146
2,877
3,269
(17
)
3,252
Consumer Mobility
15,531
9,048
6,483
1,744
4,739
-
4,739
International
3,955
3,531
424
601
(177
)
45
(132
)
Segment Total
78,746
52,227
26,519
9,869
16,650
$
28
$
16,678
Corporate and Other
456
308
148
33
115
Acquisition-related items
-
488
(488
)
2,372
(2,860
)
Certain Significant items
-
(282
)
282
-
282
AT&T Inc.
$
79,202
$
52,741
$
26,461
$
12,274
$
14,187
June 30, 2016
Revenues
Operations and Support Expenses
EBITDA
Depreciation and Amortization
Operating Income (Loss)
Equity in Net Income (Loss) of Affiliates
Segment Contribution
Business Solutions
$
35,188
$
21,659
$
13,529
$
5,029
$
8,500
$
-
$
8,500
Entertainment Group
25,369
19,147
6,222
2,977
3,245
1
3,246
Consumer Mobility
16,514
9,592
6,922
1,854
5,068
-
5,068
International
3,495
3,311
184
575
(391
)
23
(368
)
Segment Total
80,566
53,709
26,857
10,435
16,422
$
24
$
16,446
Corporate and Other
489
670
(181
)
37
(218
)
Acquisition-related items
-
528
(528
)
2,667
(3,195
)
Certain Significant items
-
(682
)
682
-
682
AT&T Inc.
$
81,055
$
54,225
$
26,830
$
13,139
$
13,691
Discussion and Reconciliation of Non-GAAP Measures
We believe the following measures are relevant and useful information to investors as they are part of AT&T's internal management reporting and planning processes and are important metrics that management uses to evaluate the operating performance of AT&T and its segments. Management also uses these measures as a method of comparing performance with that of many of our competitors.
Free Cash Flow
Free cash flow is defined as cash from operations minus Capital expenditures. Free cash flow after dividends is defined as cash from operations minus Capital expenditures and dividends. Free cash flow dividend payout ratio is defined as the percentage of dividends paid to free cash flow. We believe these metrics provide useful information to our investors because management views free cash flow as an important indicator of how much cash is generated by routine 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.
Free Cash Flow and Free Cash Flow Dividend Payout Ratio
Dollars in millions
Three Months Ended
Six Months Ended
June 30,
June 30,
2017
2016
2017
2016
Net cash provided by operating activities
$
8,942
$
10,307
$
18,160
$
18,207
Less: Capital expenditures
(5,208
)
(5,470
)
(11,223
)
(10,139
)
Free Cash Flow
3,734
4,837
6,937
8,068
Less: Dividends paid
(3,012
)
(2,952
)
(6,021
)
(5,899
)
Free Cash Flow after Dividends
$
722
$
1,885
$
916
$
2,169
Free Cash Flow Dividend Payout Ratio
80.7
%
61.0
%
86.8
%
73.1
%
EBITDA
Our calculation of EBITDA, as presented, may differ from similarly titled measures reported by other companies. For AT&T, EBITDA excludes other income (expense) - net, and equity in net income (loss) of affiliates, as these do not reflect the operating results of our subscriber base or operations that are not under our control. Equity in net income (loss) of affiliates represents the proportionate share of the net income (loss) of affiliates in which we exercise significant influence, but do not control. Because we do not control these entities, management excludes these results when evaluating the performance of our primary operations. EBITDA also excludes interest expense and the provision for income taxes. Excluding these items eliminates the expenses associated with our capital and tax structures. Finally, EBITDA excludes depreciation and amortization in order to eliminate the impact of capital investments. EBITDA does not give effect to cash used for debt service requirements and thus does not reflect available funds for distributions, reinvestment or other discretionary uses. EBITDA is not presented as an alternative measure of operating results or cash flows from operations, as determined in accordance with U.S. generally accepted accounting principles (GAAP).
EBITDA service margin is calculated as EBITDA divided by service revenues.
When discussing our segment results, EBITDA excludes equity in net income (loss) of affiliates, and depreciation and amortization from segment contribution. For our supplemental presentation of our combined domestic wireless operations (AT&T Mobility) and our supplemental presentation of the Mexico Wireless and Latin America operations of our International segment, EBITDA excludes depreciation and amortization from operating income.
These measures are used by management as a gauge of our success in acquiring, retaining and servicing subscribers because we believe these measures reflect AT&T's ability to generate and grow subscriber revenues while providing a high level of customer service in a cost-effective manner. Management also uses these measures as a method of comparing segment performance with that of many of its competitors. The financial and operating metrics which affect EBITDA include the key revenue and expense drivers for which segment managers are responsible and upon which we evaluate their performance. Management uses Mexico Wireless EBITDA in evaluating profitability trends after our two Mexico wireless acquisitions in 2015, and our investments in building a nationwide LTE network by end of 2018. Management uses Latin America EBITDA in evaluating the ability of our Latin America operations to generate cash to finance its own operations.
We believe EBITDA Service Margin (EBITDA as a percentage of service revenues) to be a more relevant measure than EBITDA Margin (EBITDA as a percentage of total revenue) for our Consumer Mobility segment operating margin and our supplemental AT&T Mobility operating margin. We also use wireless service revenues to calculate margin to facilitate comparison, both internally and externally with our wireless competitors, as they calculate their margins using wireless service revenues as well.
There are material limitations to using these non-GAAP financial measures. EBITDA, EBITDA margin and EBITDA service margin, as we have defined them, may not be comparable to similarly titled measures reported by other companies. Furthermore, these performance measures do not take into account certain significant items, including depreciation and amortization, interest expense, tax expense and equity in net income (loss) of affiliates. Management compensates for these limitations by carefully analyzing how its competitors present performance measures that are similar in nature to EBITDA as we present it, and considering the economic effect of the excluded expense items independently as well as in connection with its analysis of net income as calculated in accordance with GAAP. EBITDA, EBITDA margin and EBITDA service margin should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance with GAAP.
EBITDA, EBITDA Margin and EBITDA Service Margin
Dollars in millions
Three Months Ended
Six Months Ended
June 30,
June 30,
2017
2016
2017
2016
Net Income
$
4,014
$
3,515
$
7,588
$
7,400
Additions:
Income Tax Expense
2,056
1,906
3,860
4,028
Interest Expense
1,395
1,258
2,688
2,465
Equity in Net (Income) Loss of Affiliates
(14
)
(28
)
159
(41
)
Other (Income) Expense - Net
(128
)
(91
)
(108
)
(161
)
Depreciation and amortization
6,147
6,576
12,274
13,139
EBITDA
13,470
13,136
26,461
26,830
Total Operating Revenues
39,837
40,520
79,202
81,055
Service Revenues
36,538
37,142
72,994
74,243
EBITDA Margin
33.8
%
32.4
%
33.4
%
33.1
%
EBITDA Service Margin
36.9
%
35.4
%
36.3
%
36.1
%
Segment EBITDA, EBITDA Margin and EBITDA Service Margin
Dollars in millions
Three Months Ended
Six Months Ended
June 30,
June 30,
2017
2016
2017
2016
Business Solutions Segment
Segment Contribution
$
4,459
$
4,201
$
8,819
$
8,500
Additions:
Depreciation and amortization
2,335
2,521
4,647
5,029
EBITDA
6,794
6,722
13,466
13,529
Total Segment Operating Revenues
17,107
17,579
33,955
35,188
Segment Operating Income Margin
26.1
%
23.9
%
26.0
%
24.2
%
EBITDA Margin
39.7
%
38.2
%
39.7
%
38.4
%
Entertainment Group Segment
Segment Contribution
$
1,655
$
1,651
$
3,252
$
3,246
Additions:
Equity in Net (Income) Loss of Affiliates
11
2
17
(1
)
Depreciation and amortization
1,458
1,489
2,877
2,977
EBITDA
3,124
3,142
6,146
6,222
Total Segment Operating Revenues
12,682
12,711
25,305
25,369
Segment Operating Income Margin
13.1
%
13.0
%
12.9
%
12.8
%
EBITDA Margin
24.6
%
24.7
%
24.3
%
24.5
%
Consumer Mobility Segment
Segment Contribution
$
2,400
$
2,574
$
4,739
$
5,068
Additions:
Depreciation and amortization
871
932
1,744
1,854
EBITDA
3,271
3,506
6,483
6,922
Total Segment Operating Revenues
7,791
8,186
15,531
16,514
Service Revenues
6,528
6,948
13,137
13,891
Segment Operating Income Margin
30.8
%
31.4
%
30.5
%
30.7
%
EBITDA Margin
42.0
%
42.8
%
41.7
%
41.9
%
EBITDA Service Margin
50.1
%
50.5
%
49.3
%
49.8
%
International Segment
Segment Contribution
$
(32
)
$
(184
)
$
(132
)
$
(368
)
Additions:
Equity in Net (Income) of Affiliates
(25
)
(9
)
(45
)
(23
)
Depreciation and amortization
311
298
601
575
EBITDA
254
105
424
184
Total Segment Operating Revenues
2,026
1,828
3,955
3,495
Segment Operating Income Margin
-2.8
%
-10.6
%
-4.5
%
-11.2
%
EBITDA Margin
12.5
%
5.7
%
10.7
%
5.3
%
Supplemental AT&T Mobility EBITDA, EBITDA Margin and EBITDA Service Margin
Dollars in millions
Three Months Ended
Six Months Ended
June 30,
June 30,
2017
2016
2017
2016
AT&T Mobility
Operating Income
$
5,329
$
5,342
$
10,501
$
10,616
Add: Depreciation and amortization
1,992
2,081
3,989
4,137
EBITDA
7,321
7,423
14,490
14,753
Total Operating Revenues
17,518
17,924
34,685
35,878
Service Revenues
14,534
14,911
29,072
29,709
Operating Income Margin
30.4
%
29.8
%
30.3
%
29.6
%
EBITDA Margin
41.8
%
41.4
%
41.8
%
41.1
%
EBITDA Service Margin
50.4
%
49.8
%
49.8
%
49.7
%
Supplemental Latin America EBITDA and EBITDA Margin
Dollars in millions
Three Months Ended
Six Months Ended
June 30,
June 30,
2017
2016
2017
2016
International - Latin America
Operating Income
$
141
$
32
$
218
$
85
Add: Depreciation and amortization
222
212
436
408
EBITDA
363
244
654
493
Total Operating Revenues
1,361
1,222
2,702
2,352
Operating Income Margin
10.4
%
2.6
%
8.1
%
3.6
%
EBITDA Margin
26.7
%
20.0
%
24.2
%
21.0
%
Supplemental Mexico EBITDA and EBITDA Margin
Dollars in millions
Three Months Ended
Six Months Ended
June 30,
June 30,
2017
2016
2017
2016
International - Mexico
Operating Income
$
(198
)
$
(225
)
$
(395
)
$
(476
)
Add: Depreciation and amortization
89
86
165
167
EBITDA
(109
)
(139
)
(230
)
(309
)
Total Operating Revenues
665
606
1,253
1,143
Operating Income Margin
-29.8
%
-37.1
%
-31.5
%
-41.6
%
EBITDA Margin
-16.4
%
-22.9
%
-18.4
%
-27.0
%
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.
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%. Certain foreign operations with losses, where such losses are not realizable for tax purposes, are not tax effected, resulting in no tax impact for Venezuela devaluation. 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
Six Months Ended
June 30,
June 30,
2017
2016
2017
2016
Operating Expenses
DIRECTV and other video merger integration costs
$
123
$
133
$
250
$
306
Mexico merger integration costs
80
66
119
147
Time Warner merger costs
78
-
119
-
Wireless merger integration costs
-
33
-
75
Actuarial (gain) loss
(259
)
-
(259
)
-
Employee separation costs
60
29
60
54
(Gain) loss on transfer of wireless spectrum
(63
)
-
(181
)
(736
)
Venezuela devaluation
98
-
98
-
Adjustments to Operations and Support Expenses
117
261
206
(154
)
Amortization of intangible assets
1,170
1,316
2,372
2,667
Adjustments to Operating Expenses
1,287
1,577
2,578
2,513
Other
Merger related interest expense and exchange fees 1
158
-
267
16
(Gain) loss on sale of assets, impairments and other adjustments
(36
)
-
221
4
Adjustments to Income Before Income Taxes
1,409
1,577
3,066
2,533
Tax impact of adjustments
445
550
1,001
881
Adjustments to Net Income
$
964
$
1,027
$
2,065
$
1,652
1 Includes interest expense incurred on the debt issued prior to the close of merger transactions.
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
Six Months Ended
June 30,
June 30,
2017
2016
2017
2016
Operating Income
$
7,323
$
6,560
$
14,187
$
13,691
Adjustments to Operating Expenses
1,287
1,577
2,578
2,513
Adjusted Operating Income 1
8,610
8,137
16,765
16,204
EBITDA
13,470
13,136
26,461
26,830
Adjustments to Operations and Support Expenses
117
261
206
(154
)
Adjusted EBITDA 1
13,587
13,397
26,667
26,676
Total Operating Revenues
39,837
40,520
79,202
81,055
Service Revenues
36,538
37,142
72,994
74,243
Operating Income Margin
18.4
%
16.2
%
17.9
%
16.9
%
Adjusted Operating Income Margin 1
21.6
%
20.1
%
21.2
%
20.0
%
Adjusted EBITDA Margin 1
34.1
%
33.1
%
33.7
%
32.9
%
Adjusted EBITDA Service Margin 1
37.2
%
36.1
%
36.5
%
35.9
%
1 Adjusted Operating Income, Adjusted EBITDA and associated margins exclude all actuarial gains or losses ($259 million gain in the second quarter of 2017) associated with our postemployment benefit plan, which we immediately recognize in the income statement, pursuant to our accounting policy for the recognition of actuarial gains/losses. As a result, Adjusted Operating Income and Margin reflect an expected return on plan assets of $106 million (based on an average expected return on plan assets of 5.75% for our VEBA trusts), rather than the actual return on plan assets of $234 million (actual annualized VEBA return of 12.2%), as included in the GAAP measure of income.
Adjusted Diluted EPS
Three Months Ended
Six Months Ended
June 30,
June 30,
2017
2016
2017
2016
Diluted Earnings Per Share (EPS)
$
0.63
$
0.55
$
1.19
$
1.17
Amortization of intangible assets
0.13
0.14
0.26
0.28
Merger integration and other items 1
0.05
0.03
0.08
0.06
Asset abandonments, impairments and other adjustments
-
-
0.03
-
Actuarial (gain) loss
(0.03
)
-
(0.03
)
-
(Gain) loss on transfer of wireless spectrum
(0.01
)
-
(0.02
)
(0.08
)
Venezuela devaluation
0.02
-
0.02
-
Adjusted EPS
$
0.79
$
0.72
$
1.53
$
1.43
Year-over-year growth - Adjusted
9.7
%
7.0
%
Weighted Average Common Shares Outstanding
with Dilution (000,000)
6,184
6,195
6,185
6,193
1 Includes combined merger integration items, merger-related interest expense.
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,
Jun. 30
YTD 2017
2017
2017
Adjusted EBITDA
$
13,080
$
13,587
$
26,667
Add back severance
-
(60
)
(60
)
Net Debt Adjusted EBITDA
13,080
13,527
26,607
Annualized Adjusted EBITDA
53,214
End-of-period current debt
10,831
End-of-period long-term debt
132,824
Total End-of-Period Debt
143,655
Less: Cash and Cash Equivalents
25,617
Net Debt Balance
118,038
Annualized Net Debt to Adjusted EBITDA Ratio
2.22
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
June 30, 2017
June 30, 2016
Consumer Mobility
Business Solutions
Adjustments 1
AT&T Mobility
Consumer Mobility
Business Solutions
Adjustments 1
AT&T Mobility
Operating Revenues
Wireless service
$
6,528
$
8,006
$
-
$
14,534
$
6,948
$
7,963
$
-
$
14,911
Fixed strategic services
-
3,028
(3,028
)
-
-
2,805
(2,805
)
-
Legacy voice and data services
-
3,508
(3,508
)
-
-
4,162
(4,162
)
-
Other services and equipment
-
844
(844
)
-
-
874
(874
)
-
Wireless equipment
1,263
1,721
-
2,984
1,238
1,775
-
3,013
Total Operating Revenues
7,791
17,107
(7,380
)
17,518
8,186
17,579
(7,841
)
17,924
Operating Expenses
Operations and support
4,520
10,313
(4,636
)
10,197
4,680
10,857
(5,036
)
10,501
EBITDA
3,271
6,794
(2,744
)
7,321
3,506
6,722
(2,805
)
7,423
Depreciation and amortization
871
2,335
(1,214
)
1,992
932
2,521
(1,372
)
2,081
Total Operating Expense
5,391
12,648
(5,850
)
12,189
5,612
13,378
(6,408
)
12,582
Operating Income
$
2,400
$
4,459
$
(1,530
)
$
5,329
$
2,574
$
4,201
$
(1,433
)
$
5,342
1 Non-wireless (fixed) operations reported in Business Solutions segment.
Supplemental Operational Measure
Six Months Ended
June 30, 2017
June 30, 2016
Consumer Mobility
Business Solutions
Adjustments 1
AT&T Mobility
Consumer Mobility
Business Solutions
Adjustments 1
AT&T Mobility
Operating Revenues
Wireless service
$
13,137
$
15,935
$
-
$
29,072
$
13,891
$
15,818
$
-
$
29,709
Fixed strategic services
-
6,002
(6,002
)
-
-
5,556
(5,556
)
-
Legacy voice and data services
-
7,138
(7,138
)
-
-
8,535
(8,535
)
-
Other services and equipment
-
1,661
(1,661
)
-
-
1,733
(1,733
)
-
Wireless equipment
2,394
3,219
-
5,613
2,623
3,546
-
6,169
Total Operating Revenues
15,531
33,955
(14,801
)
34,685
16,514
35,188
(15,824
)
35,878
Operating Expenses
Operations and support
9,048
20,489
(9,342
)
20,195
9,592
21,659
(10,126
)
21,125
EBITDA
6,483
13,466
(5,459
)
14,490
6,922
13,529
(5,698
)
14,753
Depreciation and amortization
1,744
4,647
(2,402
)
3,989
1,854
5,029
(2,746
)
4,137
Total Operating Expense
10,792
25,136
(11,744
)
24,184
11,446
26,688
(12,872
)
25,262
Operating Income
$
4,739
$
8,819
$
(3,057
)
$
10,501
$
5,068
$
8,500
$
(2,952
)
$
10,616
1 Non-wireless (fixed) operations reported in Business Solutions segment.
Supplemental International
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
June 30, 2017
June 30, 2016
Latin America
Mexico
International
Latin America
Mexico
International
Operating Revenues
Video service
$
1,361
$
-
$
1,361
$
1,222
$
-
$
1,222
Wireless service
-
535
535
-
489
489
Wireless equipment
-
130
130
-
117
117
Total Operating Revenues
1,361
665
2,026
1,222
606
1,828
Operating Expenses
Operations and support
998
774
1,772
978
745
1,723
Depreciation and amortization
222
89
311
212
86
298
Total Operating Expense
1,220
863
2,083
1,190
831
2,021
Operating Income
141
(198
)
(57
)
32
(225
)
(193
)
Equity in Net Income of Affiliates
25
-
25
9
-
9
Segment Contribution
$
166
$
(198
)
$
(32
)
$
41
$
(225
)
$
(184
)
Supplemental International
Six Months Ended
June 30, 2017
June 30, 2016
Latin America
Mexico
International
Latin America
Mexico
International
Operating Revenues
Video service
$
2,702
$
-
$
2,702
$
2,352
$
-
$
2,352
Wireless service
-
1,010
1,010
-
944
944
Wireless equipment
-
243
243
-
199
199
Total Operating Revenues
2,702
1,253
3,955
2,352
1,143
3,495
Operating Expenses
Operations and support
2,048
1,483
3,531
1,859
1,452
3,311
Depreciation and amortization
436
165
601
408
167
575
Total Operating Expense
2,484
1,648
4,132
2,267
1,619
3,886
Operating Income
218
(395
)
(177
)
85
(476
)
(391
)
Equity in Net Income of Affiliates
45
-
45
23
-
23
Segment Contribution
$
263
$
(395
)
$
(132
)
$
108
$
(476
)
$
(368
)
This information is provided by RNSThe company news service from the London Stock ExchangeENDIR OKNDNPBKDBFB
Recent 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