0000732717-16-000189.txt : 20160721 0000732717-16-000189.hdr.sgml : 20160721 20160721160149 ACCESSION NUMBER: 0000732717-16-000189 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20160630 ITEM INFORMATION: Other Events ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20160721 DATE AS OF CHANGE: 20160721 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AT&T INC. CENTRAL INDEX KEY: 0000732717 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813] IRS NUMBER: 431301883 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-08610 FILM NUMBER: 161777451 BUSINESS ADDRESS: STREET 1: 208 S. AKARD ST STREET 2: ATTN : JAMES LACY CITY: DALLAS STATE: TX ZIP: 75202 BUSINESS PHONE: 2108214105 MAIL ADDRESS: STREET 1: 208 S. AKARD ST STREET 2: ATTN : JAMES LACY CITY: DALLAS STATE: TX ZIP: 75202 FORMER COMPANY: FORMER CONFORMED NAME: SBC COMMUNICATIONS INC DATE OF NAME CHANGE: 19950501 FORMER COMPANY: FORMER CONFORMED NAME: SOUTHWESTERN BELL CORP DATE OF NAME CHANGE: 19920703 8-K 1 q2earnings801_8k.htm AT&T INC. 2ND QUARTER 2016 EARNINGS RELEASE



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) July 21, 2016

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 8.01  Other Events.

Throughout this document, AT&T Inc. is referred to as "we" or "AT&T." We are a holding company whose subsidiaries and affiliates operate in the communications and digital entertainment services industry. Our subsidiaries and affiliates provide services and equipment that deliver wireless, video and broadband services both domestically and internationally, as well as traditional telephony services.

Overview
We announced on July 21, 2016, that second-quarter 2016 net income attributable to AT&T totaled $3.4 billion, or $0.55 per diluted share, compared to $3.1 billion, or $0.59 per diluted share in the second quarter of 2015.

Second-quarter 2016 revenues were $40.5 billion, up 22.7 percent from the second-quarter 2015. Second quarter revenues reflect increased revenues primarily from our acquisition of DIRECTV.  Compared with results for the second quarter of 2015, operating expenses were $34.0 billion versus $27.2 billion; operating income was $6.6 billion, up from $5.8 billion; and AT&T's operating income margin was 16.2 percent, compared to 17.5 percent. Second-quarter 2016 cash from operating activities was $10.3 billion, up from $9.2 billion in the year-ago quarter primarily due to the acquisition of DIRECTV and the timing of working capital payments.

Many of our products, including AT&T Mobility and AT&T U-verse® (U-verse), are offered to subscribers in multiple segments. Accordingly, to aid in understanding subscriber trends, we are presenting an overall discussion of these customer metrics. We reported a net gain of 2.1 million North American wireless subscribers in the second quarter of 2016, of which 1.4 million were in the U.S. At June 30, 2016, our North American wireless customer base was approximately 141.8 million compared to 132.5 million in the prior year, and our domestic wireless subscribers totaled 131.8 million compared to 123.9 million. During the second quarter, net adds were as follows:
·
North American branded net adds (combined postpaid and prepaid) were 1.4 million, of which 622,000 were domestic. North American prepaid subscriber net adds were 979,000, of which 365,000 were domestic. North American postpaid subscriber net adds were 422,000, of which 257,000 were domestic. Total domestic postpaid tablet and computing device net adds were 319,000.
·
Connected devices were 1.2 million; 1.3 million attributable to connected cars.
·
North American reseller had a net loss of 496,000, with 459,000 in the U.S. primarily attributable to the year-end 2016 shutdown of our 2G U.S. network.

We no longer offer subsidized device purchases for the majority of our U.S. customers, instead allowing subscribers to purchase devices on installment (AT&T Next) or to bring their own device (BYOD). During the first quarter of 2016, we also introduced an integrated offer that allows for unlimited wireless data when combined with our video services, ending the second quarter with more than 5.0 million subscribers to this offer. At June 30, 2016, Mobile Share plans represented nearly 58.2 million domestic wireless connections and about 75 percent of our domestic wireless postpaid smartphone base was on no-device-subsidy Mobile Share plans.

Sales under our equipment installment programs, including AT&T Next continued to increase during the second quarter, with 83 percent of all postpaid smartphone gross adds and upgrades selecting these programs, compared to nearly 80 percent in the first quarter of 2016 and 68 percent in the second quarter of 2015. During the second quarter of 2016, we sold 4.0 million smartphones under our AT&T Next program and had BYOD gross adds of 477,000. About 93 percent of smartphone transactions in the quarter were no-subsidy compared to 74 percent in the year-ago quarter. At June 30, 2016, about 50 percent of the postpaid smartphone base is on AT&T Next compared to nearly 37 percent at June 30, 2015.
 

With our July 24, 2015, acquisition of DIRECTV, we added 32.2 million subscribers of DIRECTV's video services, which includes domestic and international subscribers and reflects our methodology used to count commercial subscribers. At June 30, 2016, we had 37.8 million video subscribers compared with 6.0 million at June 30, 2015. Total video subscribers increased by 38,000 in the second quarter of 2016.

Our total broadband connections were 15.6 million at June 30, 2016, and 16.0 million at June 30, 2015. During the second quarter, we added 74,000 IP broadband subscribers, for a total of 13.5 million at June 30, 2016. Total broadband subscribers declined by 123,000 in the quarter.

At June 30, 2016, our total switched access lines were 15.3 million compared with 18.1 million at June 30, 2015. The number of U-verse voice connections (which use VoIP technology and therefore are not included in the access line total) increased by 109,000 in the quarter to reach 5.6 million at June 30, 2016, compared to 5.4 million at June 30, 2015.

Segment Summary
Business Solutions
Revenues from our Business Solutions (ABS) segment for the second quarter of 2016 were $17.6 billion, down 0.5 percent versus the year-ago quarter primarily due to continued declines in our legacy voice and data products, lower equipment revenues and foreign exchange pressures. These revenue declines were mostly offset by growth in strategic business services and higher wireless service revenues, largely due to migrations from our Consumer Mobility segment. Second-quarter 2016 ABS operating expenses totaled $13.4 billion, down 0.4 percent versus the second quarter of 2015. The ABS operating margin was 23.9 percent, compared to 24.0 percent in the year-earlier quarter with wireless and IP revenue growth and cost efficiencies mostly offsetting declines in legacy services.

We had approximately 77.5 million business wireless subscribers at June 30, 2016, compared to 69.2 million at June 30, 2015. During the second quarter of 2016, business wireless net adds for connected devices were 1.2 million and postpaid net adds were 185,000. Postpaid business wireless subscriber churn was 0.91 percent, compared to 0.91 percent in the year-ago quarter.

During the second quarter of 2016, we added 20,000 high-speed Internet business subscribers, bringing total business IP broadband to 948,000 subscribers. Total business broadband connections had a loss of 14,000 subscribers in the quarter.

Entertainment Group
Our Entertainment Group (Entertainment) segment includes the results of the U.S. satellite-based operations acquired in our July 2015 acquisition of DIRECTV as well as broadband and wired voice services to domestic residential customers. Entertainment revenues for the second quarter of 2016 were $12.7 billion, more than double the year-ago quarter due to the acquisition of DIRECTV as well as strong growth in consumer IP broadband. Revenues from legacy voice and data products continue to decline. Second-quarter 2016 Entertainment operating expenses totaled $11.1 billion compared to $6.0 billion in the second quarter of 2015, largely due to the acquisition of DIRECTV. The Entertainment operating margin was 13.0 percent, compared to (3.4) percent in the year-earlier quarter with satellite video and IP revenue growth and cost efficiencies offsetting programming content cost pressure and declines in legacy services.

At June 30, 2016, Entertainment had approximately 51.3 million revenue connections, compared to 33.7 million at June 30, 2015, which included:
·
Approximately 25.3 million video connections at June 30, 2016, compared to 6.0 million at June 30, 2015. DIRECTV's satellite subscribers as of the July 24, 2015, acquisition date were 19.5 million. During the second quarter of 2016, we added 342,000 satellite subscribers despite some seasonality pressures; however, U-verse subscribers declined 391,000 as we focused on profitability and increasingly emphasized satellite sales, including U-verse subscribers choosing to switch to satellite. At June 30, 2016, more than 80 percent of our domestic video subscribers are on the DIRECTV platform.
·
Approximately 14.2 million broadband connections at June 30, 2016, compared to 14.4 million at June 30, 2015. During the second quarter, we added 54,000 IP broadband subscribers, for a total of 12.6 million at June 30, 2016. Total broadband subscribers declined 110,000 in the quarter.
·
Approximately 11.8 million wired voice connections at June 30, 2016, compared to 13.3 million at June 30, 2015. Voice connections include switched access lines and VoIP connections.

Consumer Mobility
Revenues from our Consumer Mobility segment, which consist of consumer, wholesale and resale subscribers located in the U.S., for the second quarter of 2016 were $8.2 billion, down 6.5 percent versus the year-ago quarter, reflecting a $627 million decline in postpaid service revenues due to the popularity of Mobile Share plans, migrations of customers to our ABS segment and lower equipment revenues, reflecting lower smartphone upgrade volumes and an increase in BYOD. This decline was partially offset by an increase of $249 million in prepaid service revenues. Second-quarter 2016 Consumer Mobility operating expenses totaled $5.6 billion, down 8.5 percent versus the second quarter of 2015 reflecting lower equipment and commission costs as well as increased efficiencies. The Consumer Mobility operating margin was 31.4 percent, compared to 29.9 percent in the year-earlier quarter with lower volumes, fewer subsidized sales and cost efficiencies more than offsetting the pressure from customers choosing our lower service rate Mobile Share plans.

We had approximately 54.3 million Consumer Mobility subscribers at June 30, 2016, compared to 54.7 million at June 30, 2015. During the second quarter of 2016, we had branded net adds of 437,000, (prepaid net adds were 365,000 reflecting gains in both Cricket and GoPhone subscribers, and consumer postpaid net adds were 72,000). Consumer reseller had a net loss of 446,000. Our business wireless offerings allow for individual subscribers to purchase wireless services through employer-sponsored plans for a reduced price. The migration of these subscribers to the ABS segment negatively impacted Consumer postpaid subscriber and service revenues growth.
 

Total customer churn of Consumer Mobility subscribers was 1.96 percent versus 1.86 percent in the second quarter of 2015, including postpaid churn of 1.09 percent, compared to 1.16 percent in the year-ago quarter.

International
Our International segment consists of the Latin American operations acquired in our July 2015 acquisition of DIRECTV as well as the Mexican wireless operations acquired earlier in 2015. Second quarter 2016 operating revenues were $1.8 billion, with $1.2 billion attributable to video services in Latin America and $606 million of wireless revenues in Mexico. Second quarter 2015 operating revenues included the results of our Mexican wireless companies and were $491 million. Our international segment revenues reflect foreign exchange pressures in our DIRECTV Latin America and Mexican wireless results. Operating expenses were $2.0 billion compared to $622 million in the second quarter of 2015, largely due to our acquisition of DIRECTV. The International operating margin was (10.6) percent, compared to (26.7) percent in the year-earlier quarter.

At June 30, 2016, we had approximately 10.0 million wireless subscribers in Mexico and 12.5 million video connections in Latin America, including 5.3 million in Brazil. During the second quarter of 2016, our Mexico wireless business had net adds of 742,000 subscribers and our Latin America operations had net adds of 87,000 video connections.

Supplemental Discussion
As a supplemental discussion of our operating results, for comparison purposes, we are providing a view of our combined AT&T Mobility operations (domestic only). AT&T Mobility revenues for the second quarter of 2016 were $17.9 billion, down 2.1 percent versus the second quarter of 2015, and AT&T Mobility's operating income margin was 29.8 percent compared to 29.0 percent in the year-ago quarter reflecting continuing adoption of AT&T Next, an increase in BYOD customers, lower smartphone upgrade volumes and continued efforts to drive operating costs out of the business.

For the quarter ended June 30, 2016, postpaid phone-only ARPU decreased 2.4 percent versus the year-earlier quarter and increased 0.5 percent sequentially. Postpaid phone-only ARPU plus AT&T Next increased 2.5 percent versus the year earlier quarter and 0.6 percent sequentially.

Postpaid churn was 0.97 percent, compared to 1.01 percent in the year-ago. Total customer churn was 1.35 percent versus 1.31 percent in the second quarter of 2015.

Repurchases of our common stock under our previously announced share repurchase authorization by our Board of Directors totaled 5 million shares, or $197 million during the second quarter of 2016. At June 30, 2016, about 402 million shares remain available under approved share repurchase authorizations.

CAUTIONARY LANGUAGE CONCERNING FORWARD-LOOKING STATEMENTS

Information set forth in this filing contains financial estimates and other forward-looking statements that are subject to risks and uncertainties. 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 or revise statements contained in this filing based on new information or otherwise.

Item 9.01 Financial Statements and Exhibits.

The following exhibits are filed as part of this report:

(d)   Exhibits

99.1  AT&T Inc. selected financial statements and operating data.



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 21, 2016
By: /s/ Debra L. Dial     
      Debra L. Dial
    Senior Vice President and Controller

  
   

EX-99.1 2 ex99_1.htm AT&T INC. SELECTED FINANCIAL STATEMENTS AND OPERATING DATA
Financial Data
                                    
                                     
AT&T Inc.
                                    
Consolidated Statements of Income
                                    
Dollars in millions except per share amounts
                                    
Unaudited
  
Three Months Ended
  
Six Months Ended
   
6/30/2016
  
6/30/2015
  
% Chg
  
6/30/2016
  
6/30/2015
  
% Chg
                                     
Operating Revenues
                                    
  Service
  
$
37,142
    
$
29,541
      
25.7
%
  
$
74,243
    
$
58,503
      
26.9
%
  Equipment
    
3,378
      
3,474
      
-2.8
%
    
6,812
      
7,088
      
-3.9
%
    Total Operating Revenues
    
40,520
      
33,015
      
22.7
%
    
81,055
      
65,591
      
23.6
%
                                                 
Operating Expenses
                                                
  Cost of services and sales
                                                
       Equipment
    
4,260
      
4,353
      
-2.1
%
    
8,635
      
8,899
      
-3.0
%
       Broadcast, programming and operations
    
4,701
      
1,148
      
-
      
9,330
      
2,270
      
-
  
       Other cost of services (exclusive of depreciation
           and amortization shown separately below)
    
9,514
      
9,578
      
-0.7
%
    
18,910
      
18,390
      
2.8
%
  Selling, general and administrative
    
8,909
      
7,467
      
19.3
%
    
17,350
      
15,428
      
12.5
%
  Depreciation and amortization
    
6,576
      
4,696
      
40.0
%
    
13,139
      
9,274
      
41.7
%
    Total Operating Expenses
    
33,960
      
27,242
      
24.7
%
    
67,364
      
54,261
      
24.1
%
Operating Income
    
6,560
      
5,773
      
13.6
%
    
13,691
      
11,330
      
20.8
%
Interest Expense
    
1,258
      
932
      
35.0
%
    
2,465
      
1,831
      
34.6
%
Equity in Net Income of Affiliates
    
28
      
33
      
-15.2
%
    
41
      
33
      
24.2
%
Other Income (Expense) - Net
    
91
      
48
      
89.6
%
    
161
      
118
      
36.4
%
Income Before Income Taxes
    
5,421
      
4,922
      
10.1
%
    
11,428
      
9,650
      
18.4
%
Income Tax Expense
    
1,906
      
1,738
      
9.7
%
    
4,028
      
3,127
      
28.8
%
Net Income
    
3,515
      
3,184
      
10.4
%
    
7,400
      
6,523
      
13.4
%
  Less: Net Income Attributable to Noncontrolling Interest
    
(107
)
    
(102
)
    
-4.9
%
    
(189
)
    
(178
)
    
-6.2
%
Net Income Attributable to AT&T
  
$
3,408
    
$
3,082
      
10.6
%
  
$
7,211
    
$
6,345
      
13.6
%
                                                 
                                                 
Basic Earnings Per Share Attributable to AT&T
  
$
0.55
    
$
0.59
      
-6.8
%
  
$
1.17
    
$
1.22
      
-4.1
%
Weighted Average Common
     Shares Outstanding (000,000)
    
6,174
      
5,204
      
18.6
%
    
6,173
      
5,204
      
18.6
%
                                                 
Diluted Earnings Per Share Attributable to AT&T
  
$
0.55
    
$
0.59
      
-6.8
%
  
$
1.17
    
$
1.22
      
-4.1
%
Weighted Average Common
     Shares Outstanding with Dilution (000,000)
    
6,195
      
5,220
      
18.7
%
    
6,193
      
5,220
      
18.6
%
                                                 
 
Financial Data
                                       
AT&T Inc.
Statements of Segment Income
Dollars in millions
                                      
Unaudited
                                      
   
Three Months Ended
  
Six Months Ended
   
6/30/2016
    
6/30/2015
  
% Chg
  
6/30/2016
  
6/30/2015
  
% Chg
Business Solutions
                                      
Segment Operating Revenues
                                      
Wireless service
  
$
7,963
      
$
7,756
      
2.7
%
  
$
15,818
    
$
15,271
      
3.6
%
Fixed strategic services
    
2,797
        
2,580
      
8.4
%
    
5,559
      
5,099
      
9.0
%
Legacy voice and data services
    
4,158
        
4,681
      
-11.2
%
    
8,521
      
9,465
      
-10.0
%
Other service and equipment
    
886
        
854
      
3.7
%
    
1,744
      
1,700
      
2.6
%
Wireless equipment
    
1,775
        
1,793
      
-1.0
%
    
3,546
      
3,686
      
-3.8
%
    Total Segment Operating Revenues
    
17,579
        
17,664
      
-0.5
%
    
35,188
      
35,221
      
-0.1
%
                                                   
Segment Operating Expenses
                                                  
Operations and support expenses
    
10,857
        
10,972
      
-1.0
%
    
21,659
      
22,045
      
-1.8
%
Depreciation and amortization
    
2,521
        
2,460
      
2.5
%
    
5,029
      
4,802
      
4.7
%
    Total Segment Operating Expenses
    
13,378
        
13,432
      
-0.4
%
    
26,688
      
26,847
      
-0.6
%
Segment Operating Income
    
4,201
        
4,232
      
-0.7
%
    
8,500
      
8,374
      
1.5
%
Equity in Net Income of Affiliates
    
-
        
-
      
-
      
-
      
-
      
-
  
Segment Contribution
  
$
4,201
      
$
4,232
      
-0.7
%
  
$
8,500
    
$
8,374
      
1.5
%
                                                   
Segment Operating Income Margin
    
23.9
%
 
    
24.0
%
            
24.2
%
    
23.8
%
        
                                                   
Entertainment Group
                                                  
Segment Operating Revenues
                                                  
Video entertainment
  
$
8,963
      
$
1,991
      
-
    
$
17,867
    
$
3,862
      
-
  
High-speed internet
    
1,867
        
1,623
      
15.0
%
    
3,670
      
3,176
      
15.6
%
Legacy voice and data services
    
1,244
        
1,516
      
-17.9
%
    
2,557
      
3,128
      
-18.3
%
Other service and equipment
    
637
        
652
      
-2.3
%
    
1,275
      
1,276
      
-0.1
%
    Total Segment Operating Revenues
    
12,711
        
5,782
      
-
      
25,369
      
11,442
      
-
  
                                                   
Segment Operating Expenses
                                                  
Operations and support expenses
    
9,569
        
4,913
      
94.8
%
    
19,147
      
9,772
      
95.9
%
Depreciation and amortization
    
1,489
        
1,065
      
39.8
%
    
2,977
      
2,130
      
39.8
%
    Total Segment Operating Expenses
    
11,058
        
5,978
      
85.0
%
    
22,124
      
11,902
      
85.9
%
Segment Operating Income (Loss)
    
1,653
        
(196
)
    
-
      
3,245
      
(460
)
    
-
  
Equity in Net Income (Loss) of Affiliates
    
(2
)
      
(12
)
    
83.3
%
    
1
      
(18
)
    
-
  
Segment Contribution
  
$
1,651
      
$
(208
)
    
-
    
$
3,246
    
$
(478
)
    
-
  
                                                   
Segment Operating Income Margin
    
13.0
%
    
-3.4
%
            
12.8
%
    
-4.0
%
        
                                                   
 
 
Financial Data
  
                                         
AT&T Inc.
  
Statements of Segment Income
  
Dollars in millions
  
Unaudited
                                        
   
Three Months Ended
  
Six Months Ended
   
6/30/2016
      
6/30/2015
    
% Chg
    
6/30/2016
      
6/30/2015
    
% Chg
  
Consumer Mobility
                                        
Segment Operating Revenues
                                        
Service
  
$
6,948
      
$
7,359
      
-5.6
%
  
$
13,891
      
$
14,656
      
-5.2
%
Equipment
    
1,238
        
1,396
      
-11.3
%
    
2,623
        
2,877
      
-8.8
%
    Total Segment Operating Revenues
    
8,186
        
8,755
      
-6.5
%
    
16,514
        
17,533
      
-5.8
%
                                                     
Segment Operating Expenses
                                                    
Operations and support expenses
    
4,680
        
5,202
      
-10.0
%
    
9,592
        
10,743
      
-10.7
%
Depreciation and amortization
    
932
        
934
      
-0.2
%
    
1,854
        
1,936
      
-4.2
%
    Total Segment Operating Expenses
    
5,612
        
6,136
      
-8.5
%
    
11,446
        
12,679
      
-9.7
%
Segment Operating Income
    
2,574
        
2,619
      
-1.7
%
    
5,068
        
4,854
      
4.4
%
Equity in Net Income of Affiliates
    
-
        
-
      
-
      
-
        
-
      
-
  
Segment Contribution
  
$
2,574
      
$
2,619
      
-1.7
%
  
$
5,068
      
$
4,854
      
4.4
%
                                                     
Segment Operating Income Margin
    
31.4
%
29.9
%
30.7
%
  
27.7
%
    
                                                     
International
                                                    
Segment Operating Revenues
                                                    
Video entertainment
  
$
1,222
      
$
-
      
-
    
$
2,352
      
$
-
      
-
  
Wireless service
    
489
        
444
      
10.1
%
    
944
        
659
      
43.2
%
Wireless equipment
    
117
        
47
      
-
      
199
        
68
      
-
  
    Total Segment Operating Revenues
    
1,828
        
491
      
-
      
3,495
        
727
      
-
  
                                                     
Segment Operating Expenses
                                                    
Operations and support expenses
    
1,723
        
529
      
-
      
3,311
        
747
      
-
  
Depreciation and amortization
    
298
        
93
      
-
      
575
        
121
      
-
  
    Total Segment Operating Expenses
    
2,021
        
622
      
-
      
3,886
        
868
      
-
  
Segment Operating Income (Loss)
    
(193
)
      
(131
)
    
-47.3
%
    
(391
)
      
(141
)
    
-
  
Equity in Net Income of Affiliates
    
9
        
-
      
-
      
23
        
-
      
-
  
Segment Contribution
  
$
(184
)
    
$
(131
)
    
-40.5
%
  
$
(368
)
    
$
(141
)
    
-
  
                                                     
Segment Operating Income Margin
  
-10.6
%
    
-26.7
%
            
-11.2
%
    
-19.4
%
        
                                                     
 
 
Financial Data
             
AT&T Inc.
Consolidated Balance Sheets
            
Dollars in millions
   
6/30/16
  
12/31/15
   
Unaudited
      
             
Assets
            
Current Assets
            
Cash and cash equivalents
  
$
7,208
    
$
5,121
  
Accounts receivable - net of allowances for doubtful accounts of $642 and $704
    
15,830
      
16,532
  
Prepaid expenses
    
1,197
      
1,072
  
Other current assets
    
11,770
      
13,267
  
Total current assets
    
36,005
      
35,992
  
Property, Plant and Equipment - Net
    
123,537
      
124,450
  
Goodwill
    
105,252
      
104,568
  
Licenses
    
94,098
      
93,093
  
Customer Lists and Relationships - Net
    
16,259
      
18,208
  
Other Intangible Assets - Net
    
9,107
      
9,409
  
Investments in Equity Affiliates
    
1,677
      
1,606
  
Other Assets
    
15,873
      
15,346
  
Total Assets
  
$
401,808
    
$
402,672
  
                 
Liabilities and Stockholders' Equity
                
Current Liabilities
                
Debt maturing within one year
  
$
9,528
    
$
7,636
  
Accounts payable and accrued liabilities
    
26,746
      
30,372
  
Advanced billing and customer deposits
    
4,465
      
4,682
  
Accrued taxes
    
2,773
      
2,176
  
Dividends payable
    
2,953
      
2,950
  
Total current liabilities
    
46,465
      
47,816
  
Long-Term Debt
    
117,308
      
118,515
  
Deferred Credits and Other Noncurrent Liabilities
                
Deferred income taxes
    
57,983
      
56,181
  
Postemployment benefit obligation
    
34,023
      
34,262
  
Other noncurrent liabilities
    
21,425
      
22,258
  
Total deferred credits and other noncurrent liabilities
    
113,431
      
112,701
  
Stockholders' Equity
                
Common stock
    
6,495
      
6,495
  
Additional paid-in capital
    
89,486
      
89,763
  
Retained earnings
    
34,950
      
33,671
  
Treasury stock
    
(12,343
)
    
(12,592
)
Accumulated other comprehensive income
    
5,047
      
5,334
  
Noncontrolling interest
    
969
      
969
  
Total stockholders' equity
    
124,604
      
123,640
  
Total Liabilities and Stockholders' Equity
  
$
401,808
    
$
402,672
  
 
 
Financial Data
             
AT&T Inc.
Consolidated Statements of Cash Flows
Dollars in millions
(Unaudited)
   
Six months ended June 30,
   
2016
  
2015
             
Operating Activities
            
Net income
  
$
7,400
    
$
6,523
  
Adjustments to reconcile net income to net cash provided by operating activities:
                
    Depreciation and amortization
    
13,139
      
9,274
  
    Undistributed earnings from investments in equity affiliates
    
(22
)
    
(23
)
    Provision for uncollectible accounts
    
705
      
535
  
    Deferred income tax expense
    
1,767
      
1,244
  
    Net gain from sale of investments, net of impairments
    
(85
)
    
(50
)
Changes in operating assets and liabilities:
                
    Accounts receivable
    
543
      
434
  
    Other current assets
    
1,069
      
732
  
    Accounts payable and accrued liabilities
    
(3,059
)
    
(1,125
)
Retirement benefit funding
    
(280
)
    
(455
)
Other - net
    
(2,970
)
    
(1,191
)
Total adjustments
    
10,807
      
9,375
  
Net Cash Provided by Operating Activities
    
18,207
      
15,898
  
                 
Investing Activities
                
Capital expenditures:
                
    Purchase of property and equipment
    
(9,702
)
    
(8,328
)
    Interest during construction
    
(437
)
    
(339
)
Acquisitions, net of cash acquired
    
(485
)
    
(20,954
)
Dispositions
    
107
      
72
  
Sales of securities, net
    
500
      
1,890
  
Other
    
-
      
(1
)
Net Cash Used in Investing Activities
    
(10,017
)
    
(27,660
)
                 
Financing Activities
                
Issuance of long-term debt
    
10,140
      
33,958
  
Repayment of long-term debt
    
(9,129
)
    
(2,919
)
Purchase of treasury stock
    
(197
)
    
-
  
Issuance of treasury stock
    
119
      
20
  
Dividends paid
    
(5,899
)
    
(4,873
)
Other
    
(1,137
)
    
(2,071
)
Net Cash (Used in) Provided by Financing Activities
    
(6,103
)
    
24,115
  
Net increase in cash and cash equivalents
    
2,087
      
12,353
  
Cash and cash equivalents beginning of year
    
5,121
      
8,603
  
Cash and Cash Equivalents End of Period
  
$
7,208
    
$
20,956
  
 
 
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
  
Six Months Ended
     
6/30/2016
  
6/30/2015
% Chg
  
6/30/2016
  
6/30/2015
% Chg
Business Solutions Wireless Subscribers
                    
77,545
      
69,178
      
12.1
%
   Postpaid                    
49,432
      
46,697
      
5.9
%
 
Branded Subscribers
                    
49,432
      
46,697
      
5.9
%
   Reseller                    
52
      
19
      
-
  
   Connected Devices                    
28,061
      
22,462
      
24.9
%
                                           
Business Solutions Wireless Net Adds    
1,371
      
1,769
      
-22.5
%
    
3,060
      
3,093
      
-1.1
%
   Postpaid    
185
      
288
      
-35.8
%
    
318
      
585
      
-45.6
%
 
Branded Net Adds
    
185
      
288
      
-35.8
%
    
318
      
585
      
-45.6
%
   Reseller    
(13
)
    
3
      
-
      
(35
)
    
6
      
-
  
   Connected Devices    
1,199
      
1,478
      
-18.9
%
    
2,777
      
2,502
      
11.0
%
                                                   
Business Wireless Postpaid Churn
    
0.91
%
    
0.91
%
    
-
      
0.97
%
    
0.90
%
7
BP 
                                                   
Consumer Mobility Subscribers                            
54,260
      
54,724
      
-0.8
%
 
Postpaid
                            
27,862
      
29,844
      
-6.6
%
 
Prepaid
                            
12,633
      
10,438
      
21.0
%
 
   Branded Subscribers
                            
40,495
      
40,282
      
0.5
%
 
Reseller
                            
12,869
      
13,487
      
-4.6
%
 
Connected Devices
                            
896
      
955
      
-6.2
%
                                                   
Consumer Mobility Net Adds    
(10
)
    
325
      
-
      
82
      
219
      
-62.6
%
 
Postpaid
    
72
      
122
      
-41.0
%
    
68
      
266
      
-74.4
%
 
Prepaid
    
365
      
331
      
10.3
%
    
865
      
429
      
-
  
 
   Branded Net Adds
    
437
      
453
      
-3.5
%
    
933
      
695
      
34.2
%
 
Reseller
    
(446
)
    
(98
)
    
-
      
(824
)
    
(367
)
    
-
  
 
Connected Devices
    
(1
)
    
(30
)
    
96.7
%
    
(27
)
    
(109
)
    
75.2
%
                                                   
Consumer Mobility Postpaid Churn    
1.09
%
    
1.16
%
-7
BP    
1.16
%
    
1.18
%
-2
BP
Total Consumer Mobility Churn
    
1.96
%
    
1.86
%
10
BP    
2.04
%
    
1.95
%
9
BP
                                                   
Entertainment Group
                            
51,291
      
33,686
      
52.3
%
Video Connections
                            
25,295
      
5,946
      
-
  
 
Satellite
                            
20,454
      
-
      
-
  
 
U-verse
                            
4,841
      
5,946
      
-18.6
%
                                                   
Video Net Adds
    
(49
)
    
(23
)
    
-
      
(103
)
    
26
      
-
  
 
Satellite
    
342
      
-
      
-
      
670
      
-
      
-
  
 
U-verse
    
(391
)
    
(23
)
    
-
      
(773
)
    
26
      
-
  
                                                   
Broadband Connections
                            
14,181
      
14,428
      
-1.7
%
 
IP
                            
12,596
      
12,013
      
4.9
%
 
DSL
                            
1,585
      
2,415
      
-34.4
%
                                                   
Broadband Net Adds
    
(110
)
    
(107
)
    
-2.8
%
    
(105
)
    
(14
)
    
-
  
 
IP
    
54
      
217
      
-75.1
%
    
240
      
630
      
-61.9
%
 
DSL
    
(164
)
    
(324
)
    
49.4
%
    
(345
)
    
(644
)
    
46.4
%
                                                   
Total Wireline Voice Connections
                            
11,815
      
13,312
      
-11.2
%
                                                   
AT&T International
                                                
Mexican Wireless Subscribers and Connections
                                                
 
Subscribers
                            
9,955
      
8,550
      
16.4
%
 
Net Adds
    
742
      
(170
)
    
-
      
1,271
      
(458
)
    
-
  
 
Total Churn
    
5.83
%
    
6.81
%
-98
BP    
5.65
%
    
7.36
%
-171
BP 
                                                   
Video Subscribers and Connections
                                                
 
Latin America Video Subscribers
                            
12,523
      
-
      
-
  
 
Pan Americana
                            
7,175
      
-
      
-
  
 
Brazil
                            
5,348
      
-
      
-
  
                                                   
Video Subscribers and Connections Net Adds
                                                
 
Latin America Video Subscribers
    
87
      
-
      
-
      
14
      
-
      
-
  
 
Pan Americana
    
81
      
-
      
-
      
109
      
-
      
-
  
 
Brazil
    
6
      
-
      
-
      
(95
)
    
-
      
-
  
 
 
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
  
Six Months Ended
     
6/30/2016
  
6/30/2015
% Chg
  
6/30/2016
  
6/30/2015
% Chg
AT&T Total Subscribers and Connections
                                
AT&T Mobility Subscribers
                    
131,805
      
123,902
      
6.4
%
 
Postpaid
                    
77,295
      
76,541
      
1.0
%
 
Prepaid
                    
12,633
      
10,438
      
21.0
%
 
Branded Subscribers
                    
89,928
      
86,979
      
3.4
%
 
Reseller
                    
12,920
      
13,506
      
-4.3
%
 
Connected Devices
                    
28,957
      
23,417
      
23.7
%
                                          
AT&T Mobility Net Adds
    
1,361
      
2,094
      
-35.0
%
    
3,142
      
3,312
      
-5.1
%
 
Postpaid
    
257
      
410
      
-37.3
%
    
386
      
851
      
-54.6
%
 
Prepaid
    
365
      
331
      
10.3
%
    
865
      
429
      
-
  
 
   Branded Net Adds
    
622
      
741
      
-16.1
%
    
1,251
      
1,280
      
-2.3
%
 
Reseller
    
(459
)
    
(95
)
    
-
      
(859
)
    
(361
)
    
-
  
 
Connected Devices
    
1,198
      
1,448
      
-17.3
%
    
2,750
      
2,393
      
14.9
%
M&A Activity, Partitioned Customers and Other Adjs.
    
(1
)
    
36
      
-
      
23
      
36
      
-36.1
%
                                                   
AT&T Mobility Churn
                                                
Postpaid Churn
    
0.97
%
    
1.01
%
-4
BP    
1.04
%
    
1.01
%
3
BP 
Total Churn
    
1.35
%
    
1.31
%
4
BP    
1.38
%
    
1.36
%
2
BP 
                                                   
Other
                                                
Domestic Licensed POPs (000,000)
                            
322
      
321
      
0.3
%
                                                   
Total Video Subscribers
                            
37,846
      
5,971
      
-
  
 
Domestic
                            
25,323
      
5,971
      
-
  
 
Pan Americana
                            
7,175
      
-
      
-
  
 
Brazil
                            
5,348
      
-
      
-
  
                                                   
Total Video Net Adds
    
38
      
(22
)
    
-
      
(87
)
    
28
      
-
  
 
Domestic
    
(49
)
    
(22
)
    
-
      
(101
)
    
28
      
-
  
 
Pan Americana
    
81
      
-
      
-
      
109
      
-
      
-
  
 
Brazil
    
6
      
-
      
-
      
(95
)
    
-
      
-
  
                                                   
Total Broadband Connections
                            
15,641
      
15,961
      
-2.0
%
 
IP
                            
13,544
      
12,885
      
5.1
%
 
DSL
                            
2,097
      
3,076
      
-31.8
%
                                                   
Broadband Net Adds
    
(123
)
    
(136
)
    
9.6
%
    
(137
)
    
(67
)
    
-
  
 
IP
    
74
      
241
      
-69.3
%
    
276
      
680
      
-59.4
%
 
DSL
    
(197
)
    
(377
)
    
47.7
%
    
(413
)
    
(747
)
    
44.7
%
                                                   
Total Wireline Voice Connections
                            
20,877
      
23,497
      
-11.2
%
                                                   
Total Wireless Subscribers
                            
141,760
      
132,452
      
7.0
%
Domestic Wireless Subscribers                            
131,805
      
123,902
      
6.4
%
Mexican Wireless Subscribers
                            
9,955
      
8,550
      
16.4
%
                                                   
Branded Subscribers
                            
99,557
      
95,049
      
4.7
%
Branded Net Adds
    
1,401
      
741
      
89.1
%
    
2,596
      
1,280
      
-
  
                                                   
AT&T Inc.
                                                
Capital expenditures:
                                                
 
Purchase of property and equipment
  
$
5,251
    
$
4,480
      
17.2
%
  
$
9,702
    
$
8,328
      
16.5
%
 
Interest during construction
  
$
219
    
$
216
      
1.4
%
  
$
437
    
$
339
      
28.9
%
Dividends Declared per Share
  
$
0.48
    
$
0.47
      
2.1
%
  
$
0.96
    
$
0.94
      
2.1
%
End of Period Common Shares Outstanding (000,000)
                            
6,152
      
5,193
      
18.5
%
Debt Ratio1,2
                            
50.4
%
    
55.5
%
-510
BP
Total Employees
                            
277,200
      
250,730
      
10.6
%
                                                   
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 2Q16, total switched access lines were 15,285.
              
   
Business Solutions and Consumer Mobility may not total to AT&T Mobility due to rounding.
        
 
 
Financial Data
                                           
AT&T Inc.
Segment Supplemental - QTD
Dollars in millions
Unaudited
                                          
                                           
For the three months ended 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
                  
                                                         
For the three months ended June 30, 2015      
   
Revenues
    
Operations and Support Expenses
    
EBITDA
  
Depreciation and Amortization
    
Operating Income (Loss)
  
Equity in Net Income (Loss) of Affiliates
  
Segment
Contribution
Business Solutions
  
$
17,664
    
$
10,972
    
$
6,692
    
$
2,460
    
$
4,232
    
$
-
    
$
4,232
  
Entertainment Group
    
5,782
      
4,913
      
869
      
1,065
      
(196
)
    
(12
)
    
(208
)
Consumer Mobility
    
8,755
      
5,202
      
3,553
      
934
      
2,619
      
-
      
2,619
  
International
    
491
      
529
      
(38
)
    
93
      
(131
)
    
-
      
(131
)
Segment Total
    
32,692
      
21,616
      
11,076
      
4,552
      
6,524
    
$
(12
)
  
$
6,512
  
Corporate and Other
    
323
      
236
      
87
      
24
      
63
                  
Acquisition-related items
    
-
      
694
      
(694
)
    
120
      
(814
)
                
Certain Significant items
    
-
      
-
      
-
      
-
      
-
                  
AT&T Inc.
  
$
33,015
    
$
22,546
    
$
10,469
    
$
4,696
    
$
5,773
                  
                                                         
 
 
Financial Data
                                           
AT&T Inc.
Segment Supplemental - YTD
Dollars in millions 
Unaudited
                                          
                                           
For the six months ended June 30, 2016
   
Revenues
    
Operations and Support Expenses
    
EBITDA
  
Depreciation and Amortization
    
Operating Income (Loss)
  
Equity in Net Income 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
                  
                                                         
For the six months ended June 30, 2015
   
Revenues
    
Operations and Support Expenses
    
EBITDA
  
Depreciation and Amortization
    
Operating Income (Loss)
  
Equity in Net Income (Loss) of Affiliates
  
Segment
Contribution
Business Solutions
  
$
35,221
    
$
22,045
    
$
13,176
    
$
4,802
    
$
8,374
    
$
-
    
$
8,374
  
Entertainment Group
    
11,442
      
9,772
      
1,670
      
2,130
      
(460
)
    
(18
)
    
(478
)
Consumer Mobility
    
17,533
      
10,743
      
6,790
      
1,936
      
4,854
      
-
      
4,854
  
International
    
727
      
747
      
(20
)
    
121
      
(141
)
    
-
      
(141
)
Segment Total
    
64,923
      
43,307
      
21,616
      
8,989
      
12,627
    
$
(18
)
  
$
12,609
  
Corporate and Other
    
668
      
470
      
198
      
44
      
154
                  
Acquisition-related items
    
-
      
993
      
(993
)
    
241
      
(1,234
)
                
Certain Significant items
    
-
      
217
      
(217
)
    
-
      
(217
)
                
AT&T Inc.
  
$
65,591
    
$
44,987
    
$
20,604
    
$
9,274
    
$
11,330
                  
                                                         
 
 
Financial Data
                         
AT&T Inc.
Supplemental AT&T Mobility Results
Dollars in millions
Unaudited
                        
 
Three Months Ended
Six Months Ended
 
6/30/2016
6/30/2015
% Chg
6/30/2016
6/30/2015
% Chg
AT&T Mobility
Operating Revenues
                        
Service
  
$
14,912
    
$
15,115
      
-1.3
%
  
$
29,710
    
$
29,927
      
-0.7
%
Equipment
    
3,013
      
3,189
      
-5.5
%
    
6,169
      
6,563
      
-6.0
%
    Total Operating Revenues
    
17,925
      
18,304
      
-2.1
%
    
35,879
      
36,490
      
-1.7
%
                                                 
Operating Expenses
                                                
Operations and support expenses
    
10,502
      
10,973
      
-4.3
%
    
21,126
      
22,445
      
-5.9
%
Depreciation and amortization
    
2,081
      
2,031
      
2.5
%
    
4,137
      
4,036
      
2.5
%
    Total Operating Expenses
    
12,583
      
13,004
      
-3.2
%
    
25,263
      
26,481
      
-4.6
%
Operating Income
  
$
5,342
    
$
5,300
      
0.8
%
  
$
10,616
    
$
10,009
      
6.1
%
                                                 
 Operating Income Margin
    
29.8
%
    
29.0
%
            
29.6
%
    
27.4
%