TIDM58KN
RNS Number : 3838Y
AT & T Inc.
16 May 2016
UNITED 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) April 26,
2016
AT&T INC.
(Exact Name of Registrant as Specified in Charter)
Delaware 1-8610 43-1301883
----------------------------- ---------------- ----------------------------
(State or Other Jurisdiction (Commission File (IRS Employer Identification
of Incorporation) Number) 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 April 26, 2016, its results of
operations for the first quarter of 2016. 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 April 26, 2016 reporting
financial results for the first quarter ended
March 31, 2016.
99.2 AT&T Inc. selected financial statements and operating
data.
99.3 Discussion of EBITDA, Free Cash Flow, Free Cash
Flow Yield, Free Cash Flow after Dividends and
Adjusting Items.
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: April 26, 2016 By: /s/ Debra L. Dial______________
Debra L. Dial
Senior Vice President and
Controller
AT&T Reports Strong Revenue and Adjusted Earnings Growth
with Solid Margin Expansion in First-Quarter Results
Fourth Straight Quarter of Double-Digit Adjusted EPS Growth;
Best-Ever U.S. Wireless EBITDA Service Margins;
Full-Year Guidance on Track
Highlights
-- Consolidated revenues of $40.5
billion, up 24% versus the
year-earlier period primarily
due to DIRECTV acquisition
-- Diluted EPS of $0.61 as reported;
$0.72 diluted adjusted EPS,
a 10.8% increase
-- Cash from operations of $7.9
billion; free cash flow of
$3.2 billion, up 17% year over
year
-- Adjusted margins expand in
every domestic segment
-- 2.3 million North American wireless
net adds driven by connected
devices, Mexico and Cricket;
712,000 branded (postpaid and
prepaid) phone net adds
-- Total churn of 1.42% in U.S.,
stable year over year; postpaid
churn of 1.10%
-- Business Solutions revenues
up 0.3% year over year; wireless
revenues up 2.3%
o Strategic business services
revenues of $2.8 billion,
up nearly $250 million
-- 328,000 U.S. DIRECTV net adds;
total video subscribers decline
slightly
-- Entertainment Group broadband
grew with 186,000 IP broadband
net adds
Note: AT&T's first-quarter earnings conference call will be
webcast at 4:30 p.m. ET on Tuesday, April 26, 2016. The webcast and
related materials will be available on AT&T's Investor
Relations website at www.att.com/investor.relations.
DALLAS, April 26, 2016 - AT&T Inc. (NYSE:T) today reported
strong revenue, adjusted operating margin, adjusted EPS and free
cash flow growth for the first quarter.
"It was a good start to the year. We had solid financial results
and executed well on our strategy to be the premier integrated
communications provider for businesses and consumers," said Randall
Stephenson, AT&T chairman and CEO. "We're seeing good momentum
with our initial integrated wireless, video and broadband offers.
And we'll expand the integrated choices for customers in the fourth
quarter when we launch our new video streaming services.
April 26, 2016
(c) 2016 AT&T Intellectual Property. All rights reserved.
AT&T and the Globe logo are registered trademarks of AT&T
Intellectual Property.
"Our consolidated revenues, adjusted earnings and free cash flow
continue to grow as margins continue to expand. And we're putting
up these numbers even as we invest in building our Mexico wireless
business. In addition, DIRECTV merger synergies are on track to
reach $1.5 billion or better by the end of the year."
Consolidated Financial Results
AT&T's consolidated revenues for the first quarter totaled
$40.5 billion, up more than 24% versus the year-earlier period
largely due to the July 24, 2015 acquisition of DIRECTV. Compared
with results for the first quarter of 2015, operating expenses were
$33.4 billion versus $27.0 billion; operating income was $7.1
billion versus $5.6 billion; and operating income margin was 17.6%
versus 17.1%. When adjusting for amortization, merger- and
integration-related costs and other expenses and a gain on spectrum
transfers, operating income was $8.1 billion versus $6.1 billion;
and operating income margin was 19.9%, up 110 basis points from a
year ago.
First-quarter net income attributable to AT&T totaled $3.8
billion, or $0.61 per diluted share, compared to $3.3 billion, or
$0.63 per diluted share, in the year-ago quarter. Adjusting for the
$0.17 of costs for merger- and integration-related expenses and
amortization, $0.02 of other costs and the $0.08 gain on spectrum
transfers, earnings per diluted share was $0.72 compared to an
adjusted $0.65 in the year-ago quarter, an increase of 10.8%.
Cash from operating activities was $7.9 billion in the first
quarter, and capital investment(1) totaled $4.7 billion. Free cash
flow - cash from operating activities minus capital expenditures -
was $3.2 billion, up 17% year over year.
For detailed segment results, please go to the Investor Briefing
and Financial and Operational Results on the AT&T Investor
Relations website.
(1) 1Q16 includes $43 million in capital purchases in Mexico
with favorable vendor payment terms.
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.
April 26, 2016
(c) 2016 AT&T Intellectual Property. All rights reserved.
AT&T and the Globe logo are registered trademarks of AT&T
Intellectual Property.
Page 2
About AT&T
AT&T Inc. (NYSE:T) helps millions around the globe connect
with leading entertainment, mobile, high-speed Internet and voice
services. We're the world's largest provider of pay TV. We have TV
customers in the U.S. and 11 Latin American countries. We offer the
best global coverage of any U.S. wireless provider*. And we help
businesses worldwide serve their customers better with our mobility
and highly secure cloud solutions.
Additional information about AT&T products and services is
available at http://about.att.com. Follow our news on Twitter at
@ATT, on Facebook at http://www.facebook.com/att and YouTube at
http://www.youtube.com/att.
(c) 2016 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.
*Global coverage claim based on offering discounted voice and
data roaming; LTE roaming; voice roaming; and world-capable
smartphone and tablets in more countries than any other U.S. based
carrier. International service required. Coverage not available in
all areas. Coverage may vary per country and be limited/restricted
in some countries.
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 www.att.com/investor.relations.
The "quiet period" for FCC Spectrum Auction 1000 (also known as
the 600 MHz incentive auction) is now in effect. During the quiet
period, auction applicants are required to avoid discussions of
bids, bidding strategy and post-auction market structure with other
auction applicants.
EBITDA Discussion
For AT&T, EBITDA is defined as operating income before
depreciation and amortization. EBITDA service margin is calculated
as EBITDA divided by service revenues. EBITDA differs from Segment
Operating Income (Loss), as calculated in accordance with U.S.
generally accepted accounting principles (GAAP), in that it
excludes depreciation and amortization. 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 GAAP. Our calculation of EBITDA, as
presented, may differ from similarly titled measures reported by
other companies.
We believe these measures are relevant and useful information to
our 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 its
segments. 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.
April 26, 2016
(c) 2016 AT&T Intellectual Property. All rights reserved.
AT&T and the Globe logo are registered trademarks of AT&T
Intellectual Property.
Page 3
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
excludes other income (expense) - net, net income attributable to
noncontrolling interest and equity in net income (loss) of
affiliates, as these do not reflect the operating results of our
subscriber base and national footprint that we utilize to obtain
and service our customers. 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, our
management excludes these results when evaluating the performance
of our primary operations. EBITDA excludes interest expense and the
provision for income taxes. Excluding these items eliminates the
expenses associated with its capitalization and tax structures.
Finally, EBITDA excludes depreciation and amortization, in order to
eliminate the impact of capital investments.
We believe EBITDA as a percentage of service revenues to be a
more relevant measure than EBITDA as a percentage of total revenue
for our Consumer Mobility segment operating margin and our
supplemental AT&T Mobility operating margin. For the periods
covered by this report, we subsidized a portion of some of our
wireless handset sales, all of which are recognized in the period
in which we sell the handset. Management views this equipment
subsidy as a cost to acquire or retain a subscriber, which is
recovered through the ongoing service revenue that is generated by
the subscriber. 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 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, which directly affect our segment
income. 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 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.
Free Cash Flow Discussion
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. Free cash flow yield is defined
as cash from continuing operations less construction and capital
expenditures as a percentage of market capitalization computed on
the last trading day of the quarter. Market capitalization is
computed by multiplying the end of period stock price by the end of
period shares outstanding. We believe these metrics provide useful
information to our investors because management 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 it as a measure
of cash available to pay debt and return cash to shareowners.
April 26, 2016
(c) 2016 AT&T Intellectual Property. All rights reserved.
AT&T and the Globe logo are registered trademarks of AT&T
Intellectual Property.
Page 4
Net Debt to EBITDA Discussion
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 EBITDA ratio is calculated by dividing the Net Debt by
annualized 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 EBITDA is calculated by
annualizing the year-to-date EBITDA.
Adjusted EBITDA excludes costs which are non-recurring in
nature. Adjusted EBITDA also excludes net actuarial gains or losses
associated with our pension and postemployment benefit plans, which
we immediately recognize in the income statement, pursuant to our
accounting policy for the recognition of actuarial gains/losses. As
a result, the Adjusted EBITDA reflects an expected return on plan
assets rather than the actual return on plan assets, as included in
the GAAP measure of income. This measure is consistent with metrics
under our existing credit agreements.
Adjusting Items Discussion
Adjusted Operating Revenues, 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.
Capital Investment is a non-GAAP financial measure calculated by
including vendor financing arrangements for capital improvements of
the wireless network in Mexico. These favorable payment terms are
considered vendor financing arrangements and are reported as
repayments of debt instead of capital expenditures. Management
believes that Capital Investment provides relevant and useful
information to investors and other users of our financial data in
evaluating the investment in our business.
Adjusted Operating Revenues, Adjusted Operating Income, Adjusted
Operating Income Margin, Adjusted EBITDA, Adjusted EBITDA margin,
Adjusted EBITDA service margin, Adjusted diluted EPS and Capital
Investment 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 diluted EPS, as
presented, may differ from similarly titled measures reported by
other companies.
Entertainment Group Segment Adjusted Operating Revenues includes
the external operating revenues from DIRECTV U.S. as reported in
the DIRECTV Form 10-Q dated March 31, 2015 adjusted to (1) include
operations reported in other DIRECTV operating segments that
AT&T has chosen to manage in our Entertainment Group segment,
(2) conform DIRECTV's practice of recognizing revenue to be
received under contractual commitments on a straight line basis
over the minimum contract period to AT&T's method of limiting
the revenue recognized to the monthly amounts billed and (3) to
eliminate intercompany transactions from DIRECTV U.S. and the
Entertainment Group segment. Adjusting Entertainment Group segment
operating revenues provides for comparability between periods.
April 26, 2016
(c) 2016 AT&T Intellectual Property. All rights reserved.
AT&T and the Globe logo are registered trademarks of AT&T
Intellectual Property.
Page 5
For more information, contact:
Name: Fletcher Cook
AT&T Corporate Communications
Phone: (214) 757-7629
Email: fletcher.cook@att.com
Name: Jaquelyn Scharnick
For AT&T Corporate Communications
Phone: (214) 254-3790
Email: jscharnick@brunswickgroup.com
April 26, 2016
(c) 2016 AT&T Intellectual Property. All rights reserved.
AT&T and the Globe logo are registered trademarks of AT&T
Intellectual Property.
Page 6
Financial Data
AT&T Inc.
--------------------------------------------------------------------------------------
Consolidated Statements of Income
Dollars in millions except per share amounts
--------------------------------------------------------------------------------------
Unaudited Three Months Ended
3/31/2016 3/31/2015 % Chg
--------------------------------------------- ----------- ----------- --------
Operating Revenues
Service $ 37,101 $ 28,962 28.1%
Equipment 3,434 3,614 -5.0%
---------------------------------------------- ------- ------- ----
Total Operating Revenues 40,535 32,576 24.4%
---------------------------------------------- ------- ------- ----
Operating Expenses
Cost of services and sales
Equipment 4,375 4,546 -3.8%
Broadcast, programming and operations 4,629 1,122 -
Other cost of services (exclusive
of depreciation
and amortization shown separately
below) 9,396 8,812 6.6%
Selling, general and administrative 8,441 7,961 6.0%
Depreciation and amortization 6,563 4,578 43.4%
---------------------------------------------- ------- ------- ----
Total Operating Expenses 33,404 27,019 23.6%
---------------------------------------------- ------- ------- ----
Operating Income 7,131 5,557 28.3%
---------------------------------------------- ------- ------- ----
Interest Expense 1,207 899 34.3%
Equity in Net Income of Affiliates 13 - -
Other Income (Expense) - Net 70 70 -
---------------------------------------------- ------- ------- ----
Income Before Income Taxes 6,007 4,728 27.1%
Income Tax Expense 2,122 1,389 52.8%
---------------------------------------------- ------- ------- ----
Net Income 3,885 3,339 16.4%
---------------------------------------------- ------- ------- ----
Less: Net Income Attributable to
Noncontrolling Interest (82) (76) -7.9%
---------------------------------------------- ------- ------- ----
Net Income Attributable to AT&T $ 3,803 $ 3,263 16.5%
============================================== ======= ======= ====
Basic Earnings Per Share Attributable
to AT&T $ 0.62 $ 0.63 -1.6%
Weighted Average Common
Shares Outstanding (000,000) 6,172 5,203 18.6%
Diluted Earnings Per Share Attributable
to AT&T $ 0.61 $ 0.63 -3.2%
Weighted Average Common
Shares Outstanding with Dilution
(000,000) 6,190 5,219 18.6%
Financial Data
AT&T Inc.
-----------------------------------------------------------------------------------
Statements of Segment Income
Dollars in millions
-----------------------------------------------------------------------------------
Unaudited
Three Months Ended
-------------------------------------------
3/31/2016 3/31/2015 % Chg
------------------------------------- ----------- ----------- -----
Business Solutions
------------------------------------- ----------- ----------- -----
Segment Operating Revenues
Wireless service $ 7,855 $ 7,515 4.5%
Fixed strategic services 2,786 2,549 9.3%
Legacy voice and data services 4,338 4,754 -8.8%
Other service and equipment 859 846 1.5%
Wireless Equipment 1,771 1,893 -6.4%
-------------------------------------- ------- ------- -----
Total Segment Operating Revenues 17,609 17,557 0.3%
-------------------------------------- ------- ------- -----
Segment Operating Expenses
Operations and Support Expenses 10,802 11,073 -2.4%
Depreciation and amortization 2,508 2,342 7.1%
-------------------------------------- ------- ------- -----
Total Segment Operating Expenses 13,310 13,415 -0.8%
-------------------------------------- ------- ------- -----
Segment Operating Income 4,299 4,142 3.8%
Equity in Net Income of Affiliates - - -
------------------------------------- ------- ------- -----
Segment Contribution $ 4,299 $ 4,142 3.8%
====================================== ======= ======= =====
Segment Operating Income Margin 24.4% 23.6%
Entertainment Group
------------------------------------- ------- ------- -----
Segment Operating Revenues
Video entertainment $ 8,904 $ 1,871 -
High-speed internet 1,803 1,553 16.1%
Legacy voice and data services 1,313 1,612 -18.5%
Other service and equipment 638 624 2.2%
-------------------------------------- ------- ------- -----
Total Segment Operating Revenues 12,658 5,660 -
-------------------------------------- ------- ------- -----
Segment Operating Expenses
Operations and Support Expenses 9,578 4,859 97.1%
Depreciation and amortization 1,488 1,065 39.7%
-------------------------------------- ------- ------- -----
Total Segment Operating Expenses 11,066 5,924 86.8%
-------------------------------------- ------- ------- -----
Segment Operating Income (Loss) 1,592 (264) -
Equity in Net Income (Loss) of
Affiliates 3 (6) -
-------------------------------------- ------- ------- -----
Segment Contribution $ 1,595 $ (270) -
====================================== ======= ======= =====
Segment Operating Income Margin 12.6% -4.7%
Consumer Mobility
------------------------------------- ------- ------- -----
Segment Operating Revenues
Service $ 6,943 $ 7,297 -4.9%
Equipment 1,385 1,481 -6.5%
-------------------------------------- ------- ------- -----
Total Segment Operating Revenues 8,328 8,778 -5.1%
-------------------------------------- ------- ------- -----
Segment Operating Expenses
Operations and Support Expenses 4,912 5,541 -11.4%
Depreciation and amortization 922 1,002 -8.0%
-------------------------------------- ------- ------- -----
Total Segment Operating Expenses 5,834 6,543 -10.8%
-------------------------------------- ------- ------- -----
Segment Operating Income 2,494 2,235 11.6%
Equity in Net Income of Affiliates - - -
------------------------------------- ------- ------- -----
Segment Contribution $ 2,494 $ 2,235 11.6%
====================================== ======= ======= =====
Segment Operating Income Margin 29.9% 25.5%
International
------------------------------------- ------- ------- -----
Segment Operating Revenues
Video entertainment $ 1,130 $ - -
Wireless service 455 215 -
Wireless Equipment 82 21 -
-------------------------------------- ------- ------- -----
Total Segment Operating Revenues 1,667 236 -
-------------------------------------- ------- ------- -----
Segment Operating Expenses
Operations and Support Expenses 1,588 218 -
Depreciation and amortization 277 28 -
-------------------------------------- ------- ------- -----
Total Segment Operating Expenses 1,865 246 -
-------------------------------------- ------- ------- -----
Segment Operating Income (Loss) (198) (10) -
Equity in Net Income of Affiliates 14 - -
-------------------------------------- ------- ------- -----
Segment Contribution $ (184) $ (10) -
====================================== ======= ======= =====
Segment Operating Income Margin -11.9% -4.2%
Financial Data
AT&T Inc.
----------------------------------------------------------------------------
Consolidated Balance Sheets
Dollars in millions
----------------------------------------------------------------------------
3/31/2016 12/31/2015
Unaudited
-------------------------------------------- ----------- ------------
Assets
Current Assets
Cash and cash equivalents $ 10,008 $ 5,121
Accounts receivable - net of allowances
for doubtful accounts of $697 and $704 16,070 16,532
Prepaid expenses 1,378 1,072
Other current assets 10,545 13,267
--------------------------------------------- ------- --------
Total current assets 38,001 35,992
--------------------------------------------- ------- --------
Property, Plant and Equipment - Net 123,454 124,450
Goodwill 104,651 104,568
Licenses 94,130 93,093
Customer Lists and Relationships - Net 17,197 18,208
Other Intangible Assets - Net 9,108 9,409
Investments in Equity Affiliates 1,594 1,606
Other Assets 15,503 15,346
--------------------------------------------- ------- --------
Total Assets $ 403,638 $ 402,672
============================================= ======= ========
Liabilities and Stockholders' Equity
Current Liabilities
Debt maturing within one year $ 8,399 $ 7,636
Accounts payable and accrued liabilities 26,169 30,372
Advanced billing and customer deposits 4,550 4,682
Accrued taxes 2,455 2,176
Dividends payable 2,955 2,950
--------------------------------------------- ------- --------
Total current liabilities 44,528 47,816
--------------------------------------------- ------- --------
Long-Term Debt 122,104 118,515
--------------------------------------------- ------- --------
Deferred Credits and Other Noncurrent
Liabilities
Deferred income taxes 57,489 56,181
Postemployment benefit obligation 34,114 34,262
Other noncurrent liabilities 20,998 22,258
--------------------------------------------- ------- --------
Total deferred credits and other noncurrent
liabilities 112,601 112,701
--------------------------------------------- ------- --------
Stockholders' Equity
Common stock 6,495 6,495
Additional paid-in capital 89,414 89,763
Retained earnings 34,506 33,671
Treasury stock (12,163) (12,592)
Accumulated other comprehensive income 5,180 5,334
Noncontrolling interest 973 969
--------------------------------------------- ------- --------
Total stockholders' equity 124,405 123,640
--------------------------------------------- ------- --------
Total Liabilities and Stockholders' Equity $ 403,638 $ 402,672
============================================= ======= ========
Financial Data
AT&T Inc.
----------------------------------------------------------------------------
Consolidated Statements of Cash Flows
Dollars in millions
(Unaudited)
----------------------------------------------------------------------------
Three Months
Ended
3/31/2016 3/31/2015
--------------------------------------------- ----------- -----------
Operating Activities
Net income $ 3,885 $ 3,339
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 6,563 4,578
Undistributed earnings from investments
in equity affiliates (13) -
Provision for uncollectible accounts 374 285
Deferred income tax expense 1,346 252
Net gain from sale of investments, net
of impairments (44) (33)
Changes in operating assets and liabilities:
Accounts receivable 627 739
Other current assets 612 408
Accounts payable and accrued liabilities (4,006) (1,817)
Retirement benefit funding (140) (140)
Other - net (1,304) (873)
---------------------------------------------- ------- -------
Total adjustments 4,015 3,399
---------------------------------------------- ------- -------
Net Cash Provided by Operating Activities 7,900 6,738
---------------------------------------------- ------- -------
Investing Activities
Construction and capital expenditures:
Capital expenditures (4,451) (3,848)
Interest during construction (218) (123)
Acquisitions, net of cash acquired (165) (19,514)
Dispositions 81 8
Sales of securities, net 445 1,890
---------------------------------------------- ------- -------
Net Cash Used in Investing Activities (4,308) (21,587)
---------------------------------------------- ------- -------
Financing Activities
Issuance of long-term debt 5,978 16,572
Repayment of long-term debt (2,296) (596)
Issuance of treasury stock 89 8
Dividends paid (2,947) (2,434)
Other 471 (2,860)
---------------------------------------------- ------- -------
Net Cash Provided by Financing Activities 1,295 10,690
---------------------------------------------- ------- -------
Net increase (decrease) in cash and cash
equivalents 4,887 (4,159)
Cash and cash equivalents beginning of
year 5,121 8,603
---------------------------------------------- ------- -------
Cash and Cash Equivalents End of Period $ 10,008 $ 4,444
============================================== ======= =======
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
------------------------------------
3/31/2016 3/31/2015 % Chg
---------------------------------------- ------------ ----------- ---------
Business Solutions Wireless Subscribers 75,771 66,945 13.2%
------------------------------------------ ------- ------- -----
Postpaid 48,844 45,959 6.3%
Reseller 64 14 -
Connected Devices 26,863 20,972 28.1%
Business Solutions Wireless Net Adds 1,689 1,324 27.6%
------------------------------------------ ------- ------- -----
Postpaid 133 297 -55.2%
Reseller (22) 3 -
Connected Devices 1,578 1,024 54.1%
Business Wireless Postpaid Churn 1.02% 0.90% 12 BP
Consumer Mobility Subscribers 54,674 54,827 -0.3%
------------------------------------------ ------- ------- -----
Postpaid 28,294 30,216 -6.4%
Prepaid 12,171 10,037 21.3%
Reseller 13,313 13,581 -2.0%
Connected Devices 896 993 -9.8%
Consumer Mobility Net Adds 92 (106) -
------------------------------------------ ------- ------- -----
Postpaid (4) 144 -
Prepaid 500 98 -
Reseller (378) (269) -40.5%
Connected Devices (26) (79) 67.1%
Consumer Mobility Postpaid Churn 1.24% 1.20% 4 BP
Total Consumer Mobility Churn 2.11% 2.04% 7 BP
Entertainment Group 51,748 34,175 51.4%
------------------------------------------ ------- ------- -----
Video Connections 25,344 5,969 -
------------------------------------------ ------- ------- -----
Satellite 20,112 - -
U-verse 5,232 5,969 -12.3%
Video Net Adds (54) 49 -
------------------------------------------ ------- ------- -----
Satellite 328 - -
U-verse (382) 49 -
Broadband Connections 14,291 14,537 -1.7%
------------------------------------------ ------- ------- -----
IP 12,542 11,796 6.3%
DSL 1,749 2,741 -36.2%
Broadband Net Adds 5 93 -94.6%
------------------------------------------ ------- ------- -----
IP 186 413 -55.0%
DSL (181) (320) 43.4%
Total Wireline Voice Connections 12,113 13,669 -11.4%
------------------------------------------ ------- ------- -----
AT&T International
---------------------------------------- ------- ------- -----
Mexican Wireless Subscribers and
Connections
---------------------------------------- ------- ------- -----
Subscribers 9,213 5,728 60.8%
------------------------------------------ ------- ------- -----
Net Adds 529 - -
Total Churn 5.45% - -
Video Subscribers and Connections
---------------------------------------- ------- ------- -----
Latin America Video Subscribers 12,436 - -
------------------------------------------ ------- ------- -----
Pan Americana 7,094 - -
Brazil 5,342 - -
Video Subscribers and Connections
Net Adds
---------------------------------------- ------- ------- -----
Latin America Video Subscribers (73) - -
------------------------------------------ ------- ------- -----
Pan Americana 28 - -
Brazil (101) - -
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
-------------------------------------
3/31/2016 3/31/2015 % Chg
----------------------------------------- ------------ ------------ ---------
AT&T Total Subscribers and Connections
----------------------------------------- -------- -------- -----
AT&T Mobility Subscribers 130,445 121,772 7.1%
------------------------------------------ ------- ------- -----
Postpaid 77,138 76,175 1.3%
Prepaid 12,171 10,037 21.3%
------------------------------------------ ------- ------- -----
Branded 89,309 86,212 3.6%
------------------------------------------ ------- ------- -----
Reseller 13,378 13,595 -1.6%
Connected Devices 27,758 21,965 26.4%
AT&T Mobility Net Adds 1,781 1,218 46.2%
------------------------------------------ ------- ------- -----
Postpaid 129 441 -70.7%
Prepaid 500 98 -
------------------------------------------ ------- ------- -----
Branded 629 539 16.7%
------------------------------------------ ------- ------- -----
Reseller (400) (266) -50.4%
Connected Devices 1,552 945 64.2%
M&A Activity, Partitioned Customers
and Other Adjs. 24 - -
AT&T Mobility Churn
Postpaid Churn 1.10% 1.02% 8 BP
Total Churn 1.42% 1.40% 2 BP
Other
Domestic Licensed POPs (000,000) 322 321 0.3%
Total Video Subscribers 37,808 5,993 -
------------------------------------------ ------- ------- -----
Domestic 25,372 5,993 -
Pan Americana 7,094 - -
Brazil 5,342 - -
Total Video Net Adds (125) 50 -
------------------------------------------ ------- ------- -----
Domestic (52) 50 -
Pan Americana 28 - -
Brazil (101) - -
Total Broadband Connections 15,764 16,097 -2.1%
------------------------------------------ ------- ------- -----
IP 13,470 12,644 6.5%
DSL 2,294 3,453 -33.6%
Broadband Net Adds (14) 69 -
------------------------------------------ ------- ------- -----
IP 202 439 -54.0%
DSL (216) (370) 41.6%
Total Wireline Voice Connections 21,459 24,149 -11.1%
------------------------------------------ ------- ------- -----
Total Wireless Subscribers 139,658 127,500 9.5%
------------------------------------------ ------- ------- -----
Domestic Wireless Subscribers 130,445 121,772 7.1%
Mexican Wireless Subscribers 9,213 5,728 60.8%
Branded Subscribers 98,158 91,448 7.3%
Branded Net Adds 1,195 539 -
AT&T Inc.
----------------------------------------- ------- ------- -----
Construction and capital expenditures:
Capital expenditures $ 4,451 $ 3,848 15.7%
Interest during construction $ 218 $ 123 77.2%
Dividends Declared per Share $ 0.48 $ 0.47 2.1%
End of Period Common Shares Outstanding
(000,000) 6,156 5,193 18.5%
Debt Ratio(1,2) 51.2% 51.5% -30 BP
Total Employees 280,870 250,790 12.0%
(1) Prior year amounts restated to conform to current period
reporting methodology.
(2) Total long-term debt plus debt maturing within one year
divided by total debt plus total stockholders' equity.
Note: For the end of 1Q16, total switched access lines
were 15,975.
Business Solutions and Consumer Mobility may not
total to AT&T Mobility due to rounding.
Financial Data
AT&T Inc.
--------------------------------------------------------------------------
Supplemental AT&T Mobility Results
Dollars in millions
--------------------------------------------------------------------------
Unaudited
Three Months Ended
------------------------------------
3/31/2016 3/31/2015 % Chg
----------------------------------- ----------- ----------- --------
AT&T Mobility
----------------------------------- ------- ------- ----
Operating Revenues
Service $14,798 $14,812 -0.1%
Equipment 3,156 3,374 -6.5%
------------------------------------ ------ ------ ----
Total Operating Revenues 17,954 18,186 -1.3%
------------------------------------ ------ ------ ----
Operating Expenses
Operations and support expenses 10,624 11,472 -7.4%
Depreciation and amortization 2,056 2,005 2.5%
------------------------------------ ------ ------ ----
Total Operating Expenses 12,680 13,477 -5.9%
------------------------------------ ------ ------ ----
Operating Income $ 5,274 $ 4,709 12.0%
==================================== ====== ====== ====
Operating Income Margin 29.4% 25.9%
Financial Data
AT&T Inc.
----------------------------------------------------------------------------------------------------------------------
Segment Supplemental
Dollars in millions except per share amounts
----------------------------------------------------------------------------------------------------------------------
For the three months ended March 31, 2016
----------------------------------------------------------------------------------------------------------------------
Equity
in Net
Operations Depreciation Operating Income
and Support and Income of Segment
Revenues Expenses EBITDA Amortization (Loss) Affiliates Contribution
-------------------- ---------- ----------- ------- ------------- ----------- ---------- --------------
Business
Solutions $ 17,609 $ 10,802 $ 6,807 $ 2,508 $ 4,299 $ - $ 4,299
Entertainment
Group 12,658 9,578 3,080 1,488 1,592 3 1,595
Consumer
Mobility 8,328 4,912 3,416 922 2,494 - 2,494
International 1,667 1,588 79 277 (198) 14 (184)
--------------------- ------ ---------- ------ ------------ ------- --------- ----------
Segment Total $ 40,262 $ 26,880 $13,382 $ 5,195 $ 8,187 $ 17 $ 8,204
===================== ====== ========== ====== ============ ======= ========= ==========
Corporate
and Other 273 377 (104) 17 (121)
Acquisition-related
items - 295 (295) 1,351 (1,646)
Certain Significant
items - (711) 711 - 711
--------------------- ------ ---------- ------ ------------ ------- --------- ----------
AT&T Inc. $ 40,535 $ 26,841 $13,694 $ 6,563 $ 7,131
===================== ====== ========== ====== ============ ======= ========= ==========
For the three months ended March 31, 2015
----------------------------------------------------------------------------------------------------------------------
Equity
in Net
Operations Depreciation Operating Income
and Support and Income of Segment
Revenues Expenses EBITDA Amortization (Loss) Affiliates Contribution
-------------------- ---------- ----------- ------- ------------- ----------- ---------- --------------
Business
Solutions $ 17,557 $ 11,073 $ 6,484 $ 2,342 $ 4,142 $ - $ 4,142
Entertainment
Group 5,660 4,859 801 1,065 (264) (6) (270)
Consumer
Mobility 8,778 5,541 3,237 1,002 2,235 - 2,235
International 236 218 18 28 (10) - (10)
--------------------- ------ ---------- ------ ------------ ------- --------- ----------
Segment Total $ 32,231 $ 21,691 $10,540 $ 4,437 $ 6,103 $ (6) $ 6,097
===================== ====== ========== ====== ============ ======= ========= ==========
Corporate
and Other 345 234 111 20 91
Acquisition-related
items - 299 (299) 121 (420)
Certain Significant
items - 217 (217) - (217)
--------------------- ------ ---------- ------ ------------ ------- --------- ----------
AT&T Inc. $ 32,576 $ 22,441 $10,135 $ 4,578 $ 5,557
===================== ====== ========== ====== ============ ======= ========= ==========
Financial Data
AT&T Inc.
Non-GAAP Consolidated Reconciliation
--------------------------------------------------------------------------
Adjusted EBITDA and Margin(1)
Dollars in millions
Unaudited
Three Months Ended
March 31,
2015 2016
---------------------------------------------- ----------- ------------
Reported Operating Revenues $32,576 $ 40,535
----------------------------------------------- ------ -------
Reported Operating Income $ 5,557 $ 7,131
Plus: Depreciation and Amortization 4,578 6,563
----------------------------------------------- ------ -------
EBITDA(2) $10,135 $ 13,694
----------------------------------------------- ------ -------
Adjustments:
Wireless merger integration costs(3) 209 42
DIRECTV/Mexico merger integration costs(4) 89 254
Employee separation costs 217 25
Gain on transfer of wireless spectrum - (736)
Adjusted EBITDA $10,650 $ 13,279
=============================================== ====== =======
Adjusted EBITDA Margin* 32.7% 32.8%
----------------------------------------------- ------ -------
(1) 2015 Adjusted EBITDA has been restated to reflect
the change in accounting for customer set-up and installation
costs.
(2) EBITDA is defined as operating income before depreciation
and amortization.
(3) Adjustments include Operations and Support expenses
for domestic wireless integration costs.
(4) Adjustments include DIRECTV merger integration costs
and Operations and Support expenses for international
wireless integration costs.
Adjusted EBITDA and Margin are non-GAAP financial measures
calculated by excluding from operating revenues and operating
expenses 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 EBITDA 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 EBITDA, as presented, may differ from similarly
titled measures reported by other companies.
*Adjusted EBITDA Margin is calculated by dividing Adjusted
EBITDA by Operating Revenues.
Financial Data
AT&T Inc.
Non-GAAP Segment Reconciliation
-------------------------------------------------------------------------------------------
Business
Solutions
Segment EBITDA
Dollars in
millions
Unaudited
Three Months Ended
3/31/15 6/30/15 9/30/15 12/31/15 3/31/16
----------- ------------- ------------- -------------- -----------
Segment Operating Revenues
-------------------------------------------------------------------------------------------
Total Segment
Operating
Revenues $17,557 $17,664 $17,692 $18,214 $17,609
----------------- ------ ------ ---- ------ ---- ------ ----- ------
Segment Operating
Income 4,142 4,232 4,297 3,721 4,299
----------------- ------ ------ ---- ------ ---- ------ ----- ------
Segment Operating
Income Margin 23.6 % 24.0% 24.3% 20.4% 24.4%
Plus:
Depreciation
and amortization 2,342 2,460 2,474 2,513 2,508
----------------- ------ ------ ---- ------ ---- ------ ----- ------
EBITDA(1) $ 6,484 $ 6,692 $ 6,771 $ 6,234 $ 6,807
----------------- ------ ------ ---- ------ ---- ------ ----- ------
EBITDA as a % of
Revenues 36.9 % 37.9% 38.3% 34.2% 38.7%
Entertainment Group Segment EBITDA
Three Months Ended
3/31/15 6/30/15 9/30/15 12/31/15 3/31/16
----------- ------------- ------------- -------------- -----------
Segment
Operating
Revenues
---------------- ------ ------ ---- ------ ---- ------ ----- ------
Total Segment
Operating
Revenues $ 5,660 $ 5,782 $10,858 $12,994 $12,658
----------------- ------ ------ ---- ------ ---- ------ ----- ------
Segment Operating
Income (264 ) (196) 1,019 1,445 1,592
----------------- ------ ------ --- ------ ---- ------ ----- ------
Segment Operating
Income Margin -4.7 % -3.4% 9.4% 11.1% 12.6%
Plus:
Depreciation
and amortization 1,065 1,065 1,389 1,426 1,488
----------------- ------ ------ ---- ------ ---- ------ ----- ------
EBITDA(1) $ 801 $ 869 $ 2,408 $ 2,871 $ 3,080
----------------- ------ ------ ---- ------ ---- ------ ----- ------
EBITDA as a % of
Revenues 14.2 % 15.0% 22.2% 22.1% 24.3%
Entertainment Group Segment Adjusted Operating Revenues
Three Months Ended
3/31/15 3/31/16
-------------- -----------
Segment Operating
Revenues $ 5,660 $12,658
DIRECTV Operating
Revenues(2) 6,456
----------------- ------ ------ ---- ------ ---- ------ ----- ------
Adjustments:
Other DIRECTV
operations 88
Revenue
recognition 95
Intercompany
eliminations (16)
----------------- ------ ------ ---- ------ ---- ------ ---- ------
Adjusted Total
Segment
Operating
Revenues $12,283 $12,658
----------------- ------ ------ ---- ------ ---- ------ ----- ------
YoY Growth 3.1%
(1) For AT&T, EBITDA is defined as operating income before
depreciation and amortization. EBITDA differs from Segment
Operating Income (Loss), as calculated in accordance with
U.S. generally accepted accounting principles (GAAP),
in that it excludes depreciation and amortization. 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 GAAP. Our calculation of EBITDA, as presented, may
differ from similarly titled measures reported by other
companies.
(2) Includes operating revenues for DIRECTV, as reported
in DIRECTV's Form 10-Q for the period ended 3/31/15.
(3) Includes certain adjustments to conform to AT&T methodology
and presentation and eliminate intercompany transactions.
Revenue recognition adjustment conforms DIRECTV's practice
of recognizing revenue to be received under contractual
commitments on a straight line basis over the minimum
contract period to AT&T's method of limiting the revenue
recognized to the monthly amounts billed.
Financial Data
AT&T Inc.
Non-GAAP Segment Reconciliation
-------------------------------------------------------------------------------------------
Consumer Mobility Segment
EBITDA
Dollars in millions
Unaudited
Three Months Ended
3/31/15 6/30/15 9/30/15 12/31/15 3/31/16
---------- ---------- ---------- ---------- ------------
Segment Operating Revenues
---------------------------- ------ ------ ------ ------ ------
Total Segment Operating
Revenues $8,778 $8,755 $8,784 $8,749 $8,328
----------------------------- ----- ----- ----- ----- -----
Segment Operating Income 2,235 2,619 2,743 2,141 2,494
----------------------------- ----- ----- ----- ----- -----
Segment Operating Income
Margin 25.5% 29.9% 31.2% 24.5% 29.9%
Plus: Depreciation and
amortization 1,002 934 976 939 922
----------------------------- ----- ----- ----- ----- -----
EBITDA(1) $3,237 $3,553 $3,719 $3,080 $3,416
----------------------------- ----- ----- ----- ----- -----
EBITDA as a % of Revenues 36.9% 40.6% 42.3% 35.2% 41.0%
International Segment
EBITDA
Three Months Ended
3/31/15 6/30/15 9/30/15 12/31/15 3/31/16
---------- ---------- ---------- ---------- ------------
Segment Operating Revenues
---------------------------- ----- ----- ----- ----- -----
Total Segment Operating
Revenues $ 236 $ 491 $1,526 $1,849 $1,667
----------------------------- ----- ----- ----- ----- -----
Segment Operating Income (10) (131) (83) (259) (198)
----------------------------- ----- ----- ----- ----- -----
Segment Operating Income
Margin -4.2% -26.7% -5.4% -14.0% -11.9%
Plus: Depreciation and
amortization 28 93 225 309 277
----------------------------- ----- ----- ----- ----- -----
EBITDA(1) $ 18 $ (38) $ 142 $ 50 $ 79
----------------------------- ----- ----- ----- ----- -----
EBITDA as a % of Revenues 7.6% -7.7% 9.3% 2.7% 4.7%
(1) For AT&T, EBITDA is defined as operating income before
depreciation and amortization. EBITDA differs from Segment
Operating Income (Loss), as calculated in accordance with
U.S. generally accepted accounting principles (GAAP),
in that it excludes depreciation and amortization. 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 GAAP. Our calculation of EBITDA, as presented, may
differ from similarly titled measures reported by other
companies.
Financial Data
AT&T Inc.
Non-GAAP Reconciliation - Supplemental
---------------------------------------------------------------------------------------------
AT&T Mobility
EBITDA
Dollars in
millions
Unaudited
Three Months Ended
3/31/15 6/30/15 9/30/15 12/31/15 3/31/16
------------- ----------- ------------- --------------- --------------
Operating
Revenues
Service
Revenues $14,812 $15,115 $15,095 $14,815 $14,798
Equipment
Revenues 3,374 3,189 3,234 4,071 3,156
--------------- ------ ---- ------ ------ ---- ------ ------ ------ -----
Total
Operating
Revenues $18,186 $18,304 $18,329 $18,886 $17,954
--------------- ------ ---- ------ ------ ---- ------ ------ ------ -----
Operating
Income 4,709 5,300 5,418 4,376 5,274
--------------- ------ ---- ------ ------ ---- ------ ------ ------ -----
Operating
Income
Margin 25.9% 29.0 % 29.6% 23.2% 29.4%
Plus:
Depreciation
and
amortization 2,005 2,031 2,046 2,031 2,056
--------------- ------ ---- ------ ------ ---- ------ ------ ------ -----
EBITDA(1) $ 6,714 $ 7,331 $ 7,464 $ 6,407 $ 7,330
--------------- ------ ---- ------ ------ ---- ------ ------ ------ -----
YoY Growth 9.2%
EBITDA as a %
of
Revenues 36.9% 40.1 % 40.7% 33.9% 40.8%
EBITDA as a %
of
Service
Revenues 45.3% 48.5 % 49.4% 43.2% 49.5%
Mexico EBITDA
Dollars in
millions
Unaudited
Three Months Ended
3/31/15 6/30/15 9/30/15 12/31/15 3/31/16
------------- ----------- ------------- --------------- --------------
Operating
Revenues
-------------- ------ ---- ------ ------ ---- ------ ------ ------ -----
Total
Operating
Revenues $ 236 $ 491 $ 581 $ 643 $ 537
--------------- ------ ---- ------ ------ ---- ------ ------ ------ -----
Operating
Income (10) (131 ) (134) (258) (251)
--------------- ------ --- ------ ------ --- ------ ----- ------ ----
Operating
Income
Margin -4.2% -26.7 % -23.1% -40.1% -46.7%
Plus:
Depreciation
and
amortization 28 93 67 89 81
--------------- ------ ---- ------ ------ ---- ------ ------ ------ -----
EBITDA(1) $ 18 $ (38 ) $ (67) $ (169) $ (170)
--------------- ------ ---- ------ ------ --- ------ ----- ------ ----
EBITDA as a %
of
Revenues 7.6% -7.7 % -11.5% -26.3% -31.7%
(1) For AT&T, EBITDA is defined as operating income before
depreciation and amortization. EBITDA service margin is
calculated as EBITDA divided by service revenues. EBITDA
differs from Segment Operating Income (Loss), as calculated
in accordance with U.S. generally accepted accounting
principles (GAAP), in that it excludes depreciation and
amortization. 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 GAAP. 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(1)
Unaudited
Three Months Ended
March 31,
2015 2016
----------------------------------------- --------- ---------
Reported Diluted EPS $ 0.63 $ 0.61
Adjustments:
Amortization of intangible assets 0.01 0.14
Merger and integration costs(2) 0.04 0.03
Tax-related item (0.05) -
Gain on transfer of wireless spectrum - (0.08)
Other(3) 0.02 0.02
------------------------------------------ -------- --------
Adjusted Diluted EPS $ 0.65 $ 0.72
------------------------------------------ -------- --------
Year-over-year growth - Adjusted 10.8%
------------------------------------------ -------- --------
Weighted Average Common Shares Outstanding
with Dilution (000,000) 5,219 6,190
------------------------------------------ -------- --------
(1) 2015 Adjusted Diluted EPS has been restated to reflect
the change in accounting for customer set-up and installation
costs.
(2) Adjustments include DIRECTV merger and integration
costs, domestic and international wireless merger and
integration costs.
(3) Other adjustments include employee separation costs
and other costs.
Adjusted Diluted EPS is a non-GAAP financial measure 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 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 Consolidated Reconciliation
========================================================== ============== =============
Capital Investment
Dollars in millions
Unaudited
Three
Months
Ended
March
31,
2016
---------------------------------------------------------- -------------- -------------
Reported construction and capital expenditures $ 4,669
Add: Vendor financing for capital investments
in Mexico 43
---------------------------------------------------------- -------------- ---------
Capital Investment $ 4,712
---------------------------------------------------------- -------------- ---------
Free Cash Flow
Dollars in millions
Unaudited
Three Months Ended
March 31,
2015 2016
---------------------------------------------------------- --------------- ------------
Net cash provided by operating activities $ 6,738 $ 7,900
Less: Construction and capital expenditures (3,971 ) (4,669)
---------------------------------------------------------- ------ ------ ---------
Free Cash Flow $ 2,767 $ 3,231
---------------------------------------------------------- ------ ------ ---------
Free Cash Flow after Dividends
Dollars in millions
Unaudited
Three Months Ended
March 31,
2015 2016
---------------------------------------------------------- ------ ------- ------------
Net cash provided by operating activities $ 6,738 $ 7,900
Less: Construction and capital expenditures (3,971 ) (4,669)
---------------------------------------------------------- ------ ------ ---------
Free Cash Flow 2,767 3,231
---------------------------------------------------------- ------ ------ ---------
Less: Dividends paid (2,434 ) (2,947)
---------------------------------------------------------- ------ ------ ---------
Free Cash Flow after Dividends $ 333 $ 284
---------------------------------------------------------- ------ ------ ---------
Capital Investment is a non-GAAP financial measure calculated
by including financing arrangements for capital improvements
of the wireless network in Mexico. These favorable payment
terms are considered vendor financing arrangements and
are reported as repayments of debt instead of capital
expenditures. Management believes that Capital Investment
provides relevant and useful information to investors
and other users of our financial data in evaluating the
investment in our business.
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 the cash 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
----------------------------------------------------------------------------
Annualized Net-Debt-to-Adjusted-EBITDA
Ratio
Dollars in millions
Unaudited
Three Months Ended
3/31/16 YTD 2016
------------------------------------------------ ------------ -----------
Operating Revenues 40,535 40,535
Operating Expenses 33,404 33,404
Total Operating Income 7,131 7,131
Add Back Depreciation and Amortization 6,563 6,563
Consolidated EBITDA 13,694 13,694
Add Back:
Wireless merger integration costs(1) 42 42
DIRECTV/Mexico merger integration costs(2) 254 254
Gain on transfer of wireless spectrum (736) (736)
Total Adjusted Consolidated EBITDA 13,254 13,254
Annualized Adjusted Consolidated EBITDA $ 53,016
End-of-period current debt 8,399
End-of-period long-term debt 122,104
Total End-of-Period Debt 130,503
Less Cash and Cash Equivalents 10,008
Net Debt Balance $120,495
------------------------------------------------ ------- -------
Annualized Net-Debt-to-Adjusted-EBITDA
Ratio 2.27
------------------------------------------------ ------- -------
(1) Adjustments include Operations and Support expenses
for domestic wireless integration costs.
(2) Adjustments include DIRECTV merger and integration
costs and Operations and Support expenses for international
wireless integration 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 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.
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 Operating Income and Margin(1)
Dollars in millions
Unaudited
Three Months Ended
March 31,
2015 2016
------------------------------------------------------------ --------------------- -------------------
Operating Revenues $ 32,576 $ 40,535
-------------------------------------------------------------- ------ ------ ----- -------- -----
Reported Operating Income $ 5,557 $ 7,131
Adjustments:
Amortization of intangible assets 50 1,351
Wireless merger integration costs(2) 209 42
DIRECTV/Mexico merger integration costs(3) 89 254
Employee separation costs 217 25
Gain on transfer of wireless spectrum - (736)
-------------------------------------------------------------- ------ ------ ----- -------- ----
Adjusted Operating Income $ 6,122 $ 8,067
============================================================== ====== ====== ===== ======== =====
Adjusted Operating Income Margin* 18.8% 19.9%
-------------------------------------------------------------- ------ ------ ---- -------- ----
(1) 2015 Adjusted Operating Income and Margin have been
restated to reflect the change in accounting for customer
set-up and installation costs.
(2) Adjustments include Operations and Support expenses
for domestic wireless integration costs.
(3) Adjustments include DIRECTV merger integration costs
and Operations and Support expenses for international
wireless integration costs.
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, 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 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.
Exhibit 99.3
EBITDA DISCUSSION
For AT&T, EBITDA is defined as operating income before
depreciation and amortization. EBITDA service margin is calculated
as EBITDA divided by service revenues. EBITDA differs from Segment
Operating Income (Loss), as calculated in accordance with U.S.
generally accepted accounting principles (GAAP), in that it
excludes depreciation and amortization. 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 GAAP. Our calculation of EBITDA, as
presented, may differ from similarly titled measures reported by
other companies.
We believe these measures are relevant and useful information to
our 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 its
segments. 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.
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
excludes other income (expense) - net, net income attributable to
noncontrolling interest and equity in net income (loss) of
affiliates, as these do not reflect the operating results of our
subscriber base and national footprint that we utilize to obtain
and service our customers. 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, our
management excludes these results when evaluating the performance
of our primary operations. EBITDA excludes interest expense and the
provision for income taxes. Excluding these items eliminates the
expenses associated with its capitalization and tax structures.
Finally, EBITDA excludes depreciation and amortization, in order to
eliminate the impact of capital investments.
We believe EBITDA as a percentage of service revenues to be a
more relevant measure than EBITDA as a percentage of total revenue
for our Consumer Mobility segment operating margin and our
supplemental AT&T Mobility operating margin. For the periods
covered by this report, we subsidized a portion of some of our
wireless handset sales, all of which are recognized in the period
in which we sell the handset. Management views this equipment
subsidy as a cost to acquire or retain a subscriber, which is
recovered through the ongoing service revenue that is generated by
the subscriber. 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 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, which directly affect our segment
income. 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 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.
FREE CASH FLOW DISCUSSION
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. Free cash flow yield is defined
as cash from continuing operations less construction and capital
expenditures as a percentage of market capitalization computed on
the last trading day of the quarter. Market capitalization is
computed by multiplying the end of period stock price by the end of
period shares outstanding. We believe these metrics provide useful
information to our investors because management 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 it as a measure
of cash available to pay debt and return cash to shareowners.
NET DEBT TO EBITDA DISCUSSION
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 EBITDA ratio is calculated by dividing the Net Debt by
annualized 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 EBITDA is calculated by
annualizing the year-to-date EBITDA.
Adjusted EBITDA excludes costs which are non-recurring in
nature. Adjusted EBITDA also excludes net actuarial gains or losses
associated with our pension and postemployment benefit plans, which
we immediately recognize in the income statement, pursuant to our
accounting policy for the recognition of actuarial gains/losses. As
a result, the Adjusted EBITDA reflects an expected return on plan
assets rather than the actual return on plan assets, as included in
the GAAP measure of income. This measure is consistent with metrics
under our existing credit agreements.
ADJUSTING ITEMS DISCUSSION
Adjusted Operating Revenues, 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.
Capital Investment is a non-GAAP financial measure calculated by
including vendor financing arrangements for capital improvements of
the wireless network in Mexico. These favorable payment terms are
considered vendor financing arrangements and are reported as
repayments of debt instead of capital expenditures. Management
believes that Capital Investment provides relevant and useful
information to investors and other users of our financial data in
evaluating the investment in our business.
Adjusted Operating Revenues, Adjusted Operating Income, Adjusted
Operating Income Margin, Adjusted EBITDA, Adjusted EBITDA margin,
Adjusted EBITDA service margin, Adjusted diluted EPS and Capital
Investment 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 diluted EPS, as
presented, may differ from similarly titled measures reported by
other companies.
Entertainment Group Segment Adjusted Operating Revenues includes
the external operating revenues from DIRECTV U.S. as reported in
the DIRECTV Form 10-Q dated March 31, 2015 adjusted to (1) include
operations reported in other DIRECTV operating segments that
AT&T has chosen to manage in our Entertainment Group segment,
(2) conform DIRECTV's practice of recognizing revenue to be
received under contractual commitments on a straight line basis
over the minimum contract period to AT&T's method of limiting
the revenue recognized to the monthly amounts billed and (3) to
eliminate intercompany transactions from DIRECTV U.S. and the
Entertainment Group segment. Adjusting Entertainment Group segment
operating revenues provides for comparability between periods.
This information is provided by RNS
The company news service from the London Stock Exchange
END
QRFZQLFFQEFXBBF
(END) Dow Jones Newswires
May 16, 2016 10:36 ET (14:36 GMT)
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