Segment Information

6 Months Ended

Jun. 30, 2014

Segment Information

Segment Information

NOTE 4. SEGMENT INFORMATION

Our segments are strategic business units that offer different products and services over various technology platforms and are managed accordingly. We analyze our operating segments based on segment income before income taxes. We make our capital allocation decisions based on our strategic direction of the business, needs of the network (wireless or wireline) providing services and demands to provide emerging services to our customers. Actuarial gains and losses from pension and other postretirement benefits, interest expense and other income (expense) – net, are managed only on a total company basis and are, accordingly, reflected only in consolidated results. Therefore, these items are not included in each segment's reportable results. The customers and long-lived assets of our reportable segments are predominantly in the United States. We have two reportable segments: (1) Wireless and (2) Wireline.

The Wireless segment uses our nationwide network to provide consumer and business customers with wireless data and voice communications services. This segment includes our portion of the results from our mobile wallet joint venture which is accounted for as an equity investment.

The Wireline segment uses our regional, national and global network to provide consumer and business customers with data and voice communications services, AT&T U-verse® high speed Internet, video and VoIP services and managed networking to business customers.

The Corporate and Other column includes unallocated corporate expenses, which includes costs to support corporate-driven activities and operations, impacts of corporate-wide decisions for which the individual operating segments are not being evaluated, including interest costs and expected return on plan assets for our pension and postretirement benefit plans as well as our actuarial gains and losses on our pension and postretirement plan valuations. Results from equity method investments in América Móvil (prior to our May 2014 announcement of our intention to dispose of our investment), YP Holdings LLC, and Otter Media (our joint venture with The Chernin Group), are also excluded from our segment results as those results are nonoperational and not considered in our assessment of segment performance. We have revised our prior-period presentation to conform to our current reporting.

In the following tables, we show how our segment results are reconciled to our consolidated results reported.

For the three months ended June 30, 2014								Consolidated Results
		Wireless		Wireline		Corporate and Other
Service	$	15,148	$	14,408	$	-	$	29,556
Equipment		2,782		229		8		3,019
Total segment operating revenues		17,930		14,637		8		32,575
Operations and support expenses		11,568		10,700		141		22,409
Depreciation and amortization expenses		2,035		2,514		1		4,550
Total segment operating expenses		13,603		13,214		142		26,959
Segment operating income (loss)		4,327		1,423		(134)		5,616
Interest expense		-		-		881		881
Equity in net income (loss) of affiliates		(29)		-		131		102
Other income (expense) – net		-		-		1,269		1,269
Segment income before income taxes	$	4,298	$	1,423	$	385	$	6,106
For the six months ended June 30, 2014								Consolidated Results
		Wireless		Wireline		Corporate and Other
Service	$	30,535	$	28,797	$	-	$	59,332
Equipment		5,261		441		17		5,719
Total segment operating revenues		35,796		29,238		17		65,051
Operations and support expenses		22,450		21,157		383		43,990
Depreciation and amortization expenses		3,966		5,198		3		9,167
Total segment operating expenses		26,416		26,355		386		53,157
Segment operating income (loss)		9,380		2,883		(369)		11,894
Interest expense		-		-		1,741		1,741
Equity in net income (loss) of affiliates		(49)		1		238		190
Other income (expense) – net		-		-		1,414		1,414
Segment income (loss) before income taxes	$	9,331	$	2,884	$	(458)	$	11,757
For the three months ended June 30, 2013								Consolidated Results
		Wireless		Wireline		Corporate and Other
Service	$	15,370	$	14,482	$	-	$	29,852
Equipment		1,921		291		11		2,223
Total segment operating revenues		17,291		14,773		11		32,075
Operations and support expenses		10,770		10,417		204		21,391
Depreciation and amortization expenses		1,843		2,722		6		4,571
Total segment operating expenses		12,613		13,139		210		25,962
Segment operating income (loss)		4,678		1,634		(199)		6,113
Interest expense		-		-		825		825
Equity in net income (loss) of affiliates		(19)		-		237		218
Other income (expense) – net		-		-		288		288
Segment income (loss) before income taxes	$	4,659	$	1,634	$	(499)	$	5,794
For the six months ended June 30, 2013								Consolidated Results
		Wireless		Wireline		Corporate and Other
Service	$	30,432	$	28,863	$	-	$	59,295
Equipment		3,550		565		21		4,136
Total segment operating revenues		33,982		29,428		21		63,431
Operations and support expenses		20,950		20,752		576		42,278
Depreciation and amortization expenses		3,678		5,410		12		9,100
Total segment operating expenses		24,628		26,162		588		51,378
Segment operating income (loss)		9,354		3,266		(567)		12,053
Interest expense		-		-		1,652		1,652
Equity in net income (loss) of affiliates		(37)		1		439		403
Other income (expense) – net		-		-		320		320
Segment income (loss) before income taxes	$	9,317	$	3,267	$	(1,460)	$	11,124