Segment Information

3 Months Ended

Mar. 31, 2020

Segment Information

Segment Information [Text Block]

NOTE 4. SEGMENT INFORMATION

Our segments are strategic business units that offer products and services to different customer segments over various technology platforms and/or in different geographies that are managed accordingly. We analyze our segments based on segment operating contribution, which consists of operating income, excluding acquisition-related costs and other significant items (as discussed below), and equity in net income (loss) of affiliates for investments managed within each segment. We have four reportable segments: (1) Communications, (2) WarnerMedia, (3) Latin America, and (4) Xandr.

We also evaluate segment and business unit performance based on EBITDA and/or EBITDA margin, which is defined as operating contribution excluding equity in net income (loss) of affiliates and depreciation and amortization. We believe EBITDA to be a relevant and useful measurement to our investors as it is part of our internal management reporting and planning processes and it is an important metric that management uses to evaluate operating 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 margin is EBITDA divided by total revenues.

The Communications segment provides wireless and wireline telecom, video and broadband services to consumers located in the U.S. and businesses globally. This segment contains the following business units:

Mobility provides nationwide wireless service and equipment.

Entertainment Group provides video, including over-the-top (OTT) services, broadband and voice communications services primarily to residential customers. This segment also sells advertising on distribution platforms.

Business Wireline provides advanced IP-based services, as well as traditional voice and data services to business customers.

The WarnerMedia segment develops, produces and distributes feature films, television, gaming and other content in various physical and digital formats globally. This segment contains the following business units:

Turner primarily operates multichannel basic television networks and digital properties. Turner also sells advertising on its networks and digital properties.

Home Box Office consists of premium pay television and OTT and streaming services domestically and premium pay, basic tier television and OTT services internationally, as well as content licensing and home entertainment.

Warner Bros. primarily consists of the production, distribution and licensing of television programming and feature films, the distribution of home entertainment products and the production and distribution of games.

The Latin America segment provides entertainment and wireless services outside of the U.S. This segment contains the following business units:

Vrio provides video services primarily to residential customers using satellite technology in Latin America and the Caribbean.

Mexico provides wireless service and equipment to customers in Mexico.

The Xandr segment provides advertising services. These services utilize data insights to develop and deliver targeted advertising across video and digital platforms. Certain revenues in this segment are also reported by the Communications segment and are eliminated upon consolidation.

Corporate and Other reconciles our segment results to consolidated operating income and income before income taxes, and includes:

Corporate, which consists of: (1) businesses no longer integral to our operations or which we no longer actively market, (2) corporate support functions, (3) impacts of corporate-wide decisions for which the individual operating segments are not being evaluated and (4) the reclassification of the amortization of prior service credits, which we continue to report with segment operating expenses, to consolidated “Other income (expense) – net.”

Acquisition-related items which consists of items associated with the merger and integration of acquired businesses, including amortization of intangible assets.

Certain significant items includes (1) employee separation charges associated with voluntary and/or strategic offers, (2) losses resulting from abandonment or impairment of assets and (3) other items for which the segments are not being evaluated.

Eliminations and consolidations, which (1) removes transactions involving dealings between our segments, including content licensing between WarnerMedia and Communications, and (2) includes adjustments for our reporting of the advertising business.

“Interest expense” and “Other income (expense) – net,” are managed only on a total company basis and are, accordingly, reflected only in consolidated results.

For the three months ended March 31, 2020
												Equity in Net
				Operations				Depreciation		Operating		Income
				and Support				and		Income		(Loss)		Segment
		Revenues		Expenses		EBITDA		Amortization		(Loss)		Affiliates		Contribution
Communications
Mobility	$	17,402	$	9,569	$	7,833	$	2,045	$	5,788	$	-	$	5,788
Entertainment Group		10,515		7,891		2,624		1,289		1,335		-		1,335
Business Wireline		6,332		3,951		2,381		1,301		1,080		-		1,080
Total Communications		34,249		21,411		12,838		4,635		8,203		-		8,203
WarnerMedia
Turner		3,162		1,710		1,452		69		1,383		6		1,389
Home Box Office		1,497		1,053		444		21		423		20		443
Warner Bros.		3,240		2,950		290		41		249		(8)		241
Other		(540)		(196)		(344)		12		(356)		(3)		(359)
Total WarnerMedia		7,359		5,517		1,842		143		1,699		15		1,714
Latin America
Vrio		887		783		104		147		(43)		4		(39)
Mexico		703		714		(11)		134		(145)		-		(145)
Total Latin America		1,590		1,497		93		281		(188)		4		(184)
Xandr		489		170		319		20		299		-		299
Segment Total		43,687		28,595		15,092		5,079		10,013	$	19	$	10,032
Corporate and Other
Corporate		388		874		(486)		87		(573)
Acquisition-related items		-		182		(182)		2,056		(2,238)
Certain significant items		-		(658)		658		-		658
Eliminations and consolidations		(1,296)		(922)		(374)		-		(374)
AT&T Inc.	$	42,779	$	28,071	$	14,708	$	7,222	$	7,486

For the three months ended March 31, 2019
												Equity in Net
				Operations				Depreciation		Operating		Income
				and Support				and		Income		(Loss)		Segment
		Revenues		Expenses		EBITDA		Amortization		(Loss)		Affiliates		Contribution
Communications
Mobility	$	17,363	$	10,041	$	7,322	$	2,013	$	5,309	$	-	$	5,309
Entertainment Group		11,328		8,527		2,801		1,323		1,478		-		1,478
Business Wireline		6,478		4,032		2,446		1,222		1,224		-		1,224
Total Communications		35,169		22,600		12,569		4,558		8,011		-		8,011
WarnerMedia
Turner		3,443		2,136		1,307		60		1,247		25		1,272
Home Box Office		1,510		921		589		22		567		15		582
Warner Bros.		3,518		2,919		599		52		547		6		553
Other		(92)		17		(109)		9		(118)		21		(97)
Total WarnerMedia		8,379		5,993		2,386		143		2,243		67		2,310
Latin America
Vrio		1,067		866		201		169		32		-		32
Mexico		651		725		(74)		131		(205)		-		(205)
Total Latin America		1,718		1,591		127		300		(173)		-		(173)
Xandr		426		160		266		13		253		-		253
Segment Total		45,692		30,344		15,348		5,014		10,334	$	67	$	10,401
Corporate and Other
Corporate		433		661		(228)		204		(432)
Acquisition-related items		(42)		73		(115)		1,988		(2,103)
Certain significant items		-		248		(248)		-		(248)
Eliminations and consolidations		(1,256)		(938)		(318)		-		(318)
AT&T Inc.	$	44,827	$	30,388	$	14,439	$	7,206	$	7,233

The following table is a reconciliation of Segment Contributions to “Income Before Income Taxes” reported on our consolidated statements of income.

		Three months ended
		March 31,
		2020		2019
Communications		$	8,203	$	8,011
WarnerMedia			1,714		2,310
Latin America			(184)		(173)
Xandr			299		253
Segment Contribution			10,032		10,401
Reconciling Items:
Corporate and Other			(573)		(432)
Merger and integration items			(182)		(115)
Amortization of intangibles acquired			(2,056)		(1,988)
Impairments			(123)		-
Gain on spectrum transaction 1			900		-
Employee separation costs and benefit-related losses			(119)		(248)
Segment equity in net income (loss) of affiliates			(19)		(67)
Eliminations and consolidations			(374)		(318)
AT&T Operating Income			7,486		7,233
Interest Expense			2,018		2,141
Equity in net income (loss) of affiliates			(6)		(7)
Other income (expense) - net			803		286
Income Before Income Taxes		$	6,265	$	5,371
1	Included as a reduction of "Selling, general and administrative expenses" in the consolidated statement of income.

The following table presents intersegment revenues by segment.

Intersegment Reconciliation
	Three months ended
	March 31,
	2020		2019
Intersegment revenues
Communications	$	2	$	-
WarnerMedia		816		858
Latin America		-		-
Xandr		1		-
Total Intersegment Revenues		819		858
Consolidations		477		398
Eliminations and consolidations	$	1,296	$	1,256