UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 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 22, 2020

 

AT&T INC.

(Exact Name of Registrant as Specified in Charter)

 



Delaware

  

001-08610

  

43-1301883

(State or Other Jurisdiction

of Incorporation)

  

(Commission

File Number)

  

(IRS Employer

Identification No.)
     

208 S. Akard St., Dallas, Texas

(Address of Principal Executive Offices)

  

75202

(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))

Securities Registered Pursuant to Section 12(b) of the Act

Title of each class

  

Trading

Symbol(s)

  

Name of each exchange

on which registered

Common Shares (Par Value $1.00 Per Share)

  

T

  

New York Stock Exchange

Depositary Shares, each representing a 1/1000th interest in a share of 5.000% Perpetual Preferred Stock, Series A

  

TPRA

  

New York Stock Exchange

Depositary Shares, each representing a 1/1000th interest in a share of 4.750% Perpetual Preferred Stock, Series C

  

TPRC

  

New York Stock Exchange

AT&T Inc. Floating Rate Global Notes due August 3, 2020

  

T 20C

  

New York Stock Exchange

AT&T Inc. 1.875% Global Notes due December 4, 2020

  

T 20

  

New York Stock Exchange

AT&T Inc. 2.650% Global Notes due December 17, 2021

  

T 21B

  

New York Stock Exchange

AT&T Inc. 1.450% Global Notes due June 1, 2022

  

T 22B

  

New York Stock Exchange

AT&T Inc. 2.500% Global Notes due March 15, 2023

  

T 23

  

New York Stock Exchange

AT&T Inc. 2.750% Global Notes due May 19, 2023

  

T 23C

  

New York Stock Exchange

Title of each class    

Trading

Symbol(s)

    

Name of each exchange

on which registered

AT&T Inc. Floating Rate Global Notes due September 5, 2023

  

T 23D

  

New York Stock Exchange

AT&T Inc. 1.050% Global Notes due September 5, 2023

  

T 23E

  

New York Stock Exchange

AT&T Inc. 1.300% Global Notes due September 5, 2023

  

T 23A

  

New York Stock Exchange

AT&T Inc. 1.950% Global Notes due September 15, 2023

  

T 23F

  

New York Stock Exchange

AT&T Inc. 2.400% Global Notes due March 15, 2024

  

T 24A

  

New York Stock Exchange

AT&T Inc. 3.500% Global Notes due December 17, 2025

  

T 25

  

New York Stock Exchange

AT&T Inc. 0.250% Global Notes due March 4, 2026

  

T 26E

  

New York Stock Exchange

AT&T Inc. 1.800% Global Notes due September 5, 2026

  

T 26D

  

New York Stock Exchange

AT&T Inc. 2.900% Global Notes due December 4, 2026

  

T 26A

  

New York Stock Exchange

AT&T Inc. 2.350% Global Notes due September 5, 2029

  

T 29D

  

New York Stock Exchange

AT&T Inc. 4.375% Global Notes due September 14, 2029

  

T 29B

  

New York Stock Exchange

AT&T Inc. 2.600% Global Notes due December 17, 2029

  

T 29A

  

New York Stock Exchange

AT&T Inc. 0.800% Global Notes due March 4, 2030

  

T 30B

  

New York Stock Exchange

AT&T Inc. 3.550% Global Notes due December 17, 2032

  

T 32

  

New York Stock Exchange

AT&T Inc. 5.200% Global Notes due November 18, 2033

  

T 33

  

New York Stock Exchange

AT&T Inc. 3.375% Global Notes due March 15, 2034

  

T 34

  

New York Stock Exchange

AT&T Inc. 2.450% Global Notes due March 15, 2035

  

T 35

  

New York Stock Exchange

AT&T Inc. 3.150% Global Notes due September 4, 2036

  

T 36A

  

New York Stock Exchange

AT&T Inc. 1.800% Global Notes due September 14, 2039

  

T 39B

  

New York Stock Exchange

AT&T Inc. 7.000% Global Notes due April 30, 2040

  

T 40

  

New York Stock Exchange

AT&T Inc. 4.250% Global Notes due June 1, 2043

  

T 43

  

New York Stock Exchange

AT&T Inc. 4.875% Global Notes due June 1, 2044

  

T 44

  

New York Stock Exchange
AT&T Inc. 4.000% Global Notes due June 1, 2049
   T 49A
   New York Stock Exchange

AT&T Inc. 4.250% Global Notes due March 1, 2050

  

T 50

  

New York Stock Exchange

AT&T Inc. 5.350% Global Notes due November 1, 2066

  

TBB

  

New York Stock Exchange

AT&T Inc. 5.625% Global Notes due August 1, 2067

  

TBC

  

New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Item 2.02 Results of Operations and Financial Condition.

The registrant announced on April 22, 2020, its results of operations for the first quarter of 2020. 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 22, 2020 reporting financial results for the first quarter ended March 31, 2020.
     

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

 99.3
Discussion and reconciliation of non-GAAP measures.
     

 104
Cover Page Interactive Data File (embedded within the Inline XBRL document)


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 22, 2020
By: /s/ Debra L. Dial                                  .
       Debra L. Dial
 Senior Vice President and Controller








 
AT&T Reports First-Quarter Results

First-Quarter Consolidated Results

●
Diluted EPS of $0.63 as reported compared to $0.56 in the year-ago quarter
●
Adjusted EPS of $0.84 ($0.89 without COVID-19 impact) compared to $0.86 in the year-ago quarter
●
Cash from operations of $8.9 billion
●
Capital expenditures of $5.0 billion 
●
Free cash flow of $3.9 billion
●
Consolidated revenues of $42.8 billion

Note: AT&T's first-quarter earnings conference call will be webcast at 8:30 a.m. ET on Wednesday, April 22, 2020. The webcast and related materials will be available on AT&T’s Investor Relations website at https://investors.att.com.

DALLAS, April 22, 2020 — AT&T Inc. (NYSE:T) reported first-quarter results that underscored the financial strength and ample liquidity of the business even with current economic conditions.

The strength and relevance of our core subscription businesses, our continued execution on our business transformation initiatives, and sizing of our operations to economic activity is expected to provide cash from operations to support investments in growth areas, dividend payments and debt retirement.

First-Quarter Results
Communications
●
Mobility:
o
Service revenues up 2.5%
o
Operating income up 9.0% with EBITDA of $7.8 billion, up 7.0%
o
Postpaid phone churn of 0.86%, a 6 basis point improvement
o
163,000 postpaid phone net adds1
o
Named nation’s best network and, for the 5th quarter in a row, the fastest network2

 
●
Entertainment Group:
o
Solid video and broadband ARPU gains
o
AT&T TV national launch; video subs impacted by focus on long-term value customer base:
■
18.6 million premium TV subscribers – 897,000 net loss
o
209,000 AT&T Fiber net adds; IP broadband revenue growth of nearly 2%

WarnerMedia Highlights
●
HBO Max launch set for May 27
●
Cancellation of the 2020 NCAA Division I Men's Basketball Tournament
●
Warner Bros. television and film production on hiatus during pandemic

“The COVID pandemic had a 5 cents per share impact on our first quarter. Without it, the quarter was about what we expected — strong wireless numbers that covered the HBO Max investment, and produced stable EBITDA and EBITDA margins,” said Randall Stephenson, AT&T Chairman and CEO.

“We have a strong cash position, a strong balance sheet, and our core businesses are solid and continue to generate good free cash flow — even in today’s environment. In light of the pandemic’s economic impact, we’ve already adjusted our capital allocation plans and suspended all share retirements,” Stephenson said.  “As a result, we’re able to continue investing in critical growth areas like 5G, broadband and HBO Max, while maintaining our dividend commitment and paying down debt.”

Consolidated Financial Results
AT&T's consolidated revenues for the first quarter totaled $42.8 billion versus $44.8 billion in the year-ago quarter. Growth in domestic wireless service revenues and strategic and managed business services revenues partially offset declines in revenues from WarnerMedia, domestic video, legacy wireline services, domestic wireless equipment and Vrio.

Operating expenses were $35.3 billion versus $37.6 billion in the year-ago quarter, down 6.1% due to a one-time spectrum gain, lower Entertainment Group costs, lower WarnerMedia costs primarily associated with lower revenues, lower domestic wireless equipment costs and cost efficiencies. Merger-amortization was stable year-over-year and includes amortization of orbital slots licenses which commenced in the current quarter.
Operating income was $7.5 billion versus $7.2 billion in the year-ago quarter, with operating expense reductions outpacing revenue declines. Operating income margin was 17.5% versus 16.1% in the year-ago quarter.  When adjusting for amortization, a one-time spectrum gain, merger- and integration-related expenses and other items, operating income was $9.1 billion versus $9.6 billion in the year-ago quarter, and operating income margin was 21.2% versus 21.4% in the year-ago quarter.

First-quarter net income attributable to common stock was $4.6 billion, or $0.63 per diluted common share, versus $4.1 billion, or $0.56 per diluted common share, in the year-ago quarter. Adjusting for $0.21, which includes merger-amortization costs, a one-time spectrum gain, merger- and integration-related expenses and other items, earnings per diluted common share was $0.84 compared to an adjusted $0.86 in the year-ago quarter. The company did not adjust for COVID-19 costs of about $0.05 in the quarter, with more than half of those costs expected to have only short-term impacts.

Cash from operating activities was $8.9 billion, and capital expenditures were $5.0 billion. Capital investment – which consists of capital expenditures plus cash payments for vendor financing – totaled $5.8 billion, which includes about $800 million of cash payments for vendor financing. Free cash flow – cash from operating activities minus capital expenditures – was
$3.9 billion for the quarter. Net-debt-to-adjusted EBITDA at the end of the first quarter was about 2.6x3.

In addition to its investments to further improve and expand operations, AT&T used its cash to return substantial value to shareholders through dividends and share repurchases. In the first quarter, dividends paid for common shares totaled $3.7 billion and the company repurchased 142 million of its common shares.

Guidance
Due to the lack of visibility related to COVID-19 pandemic and recovery, the Company has withdrawn financial guidance at this time.

1All subscriber counts exclude customers who we have agreed not to terminate service under the FCC’s “Keep Americans Connected Pledge”. For reporting purposes, the company counts these subscribers as if they had disconnected service.
2 America’s Best Network based on GWS OneScore Sept. 2019; Nation’s fastest network based on analysis by Ookla® of Speedtest Intelligence® data median download speeds for Q1 2020. Ookla trademarks used under license and reprinted with permission.
3Net Debt to adjusted EBITDA ratios are non-GAAP financial measures that are frequently used by investors and credit rating agencies to provide relevant and useful information. Our Net Debt to Adjusted EBITDA ratio is calculated by dividing the Net Debt by the sum of the most recent four quarters Adjusted EBITDA.

*About AT&T
AT&T Inc. (NYSE:T) is a diversified, global leader in telecommunications, media and entertainment, and technology. It executes in the market under four operating units. WarnerMedia is a leading media and entertainment company that creates and distributes premium and popular content to global audiences through its consumer brands, including: HBO, HBO Max, Warner Bros., TNT, TBS, truTV, CNN, DC Entertainment, New Line, Cartoon Network, Adult Swim and Turner Classic Movies. AT&T Communications provides more than 100 million U.S. consumers with entertainment and communications experiences across TV, mobile and broadband. Plus, it serves high-speed, highly secure connectivity and smart solutions to nearly 3 million business customers. AT&T Latin America provides pay-TV services across 11 countries and territories in Latin America and the Caribbean and wireless services to consumers and businesses in Mexico, where it is the fastest-growing wireless provider. Xandr provides marketers with innovative and relevant advertising solutions for consumers around premium video content and digital advertising through its platform.

AT&T products and services are provided or offered by subsidiaries and affiliates of AT&T Inc. under the AT&T brand and not by AT&T Inc. Additional information is available at about.att.com. © 2020 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.

Cautionary Language Concerning Forward-Looking Statements
Information set forth in this news release contains financial estimates and other forward-looking statements that are subject to risks and uncertainties, and actual results might differ materially. A discussion of factors that may affect future results is contained in AT&T’s filings with the Securities and Exchange Commission. AT&T disclaims any obligation to update and revise statements contained in this news release based on new information or otherwise.
This news release may contain certain non-GAAP financial measures. Reconciliations between the non-GAAP financial measures and the GAAP financial measures are available on the company’s website at https://investors.att.com.

For more information, contact:
Fletcher Cook
AT&T Inc.
Phone: 214-912-8541




AT&T Inc.

 

 

 

 

 

 

 

Financial Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated Statements of Income

Dollars in millions except per share amounts

 

 

 

Unaudited

First Quarter

Percent

 

 

 

2020

 

2019

 

Change

Operating Revenues

 

 

 

 

 

 

 

  Service

$

38,883

$

40,684

 

(4.4)

%

  Equipment

 

3,896

 

4,143

 

(6.0)

%

    Total Operating Revenues

 

42,779

 

44,827

 

(4.6)

%

 

 

 

 

 

 

 

 

 

Operating Expenses

 

 

 

 

 

 

 

   Cost of revenues

 

 

 

 

 

 

 

    Equipment

 

4,092

 

4,502

 

(9.1)

%

    Broadcast, programming and operations

 

6,847

 

7,652

 

(10.5)

%

    Other cost of revenues (exclusive of depreciation

          and amortization shown separately below)

 

8,342

 

8,585

 

(2.8)

%

   Selling, general and administrative

 

8,790

 

9,649

 

(8.9)

%

   Depreciation and amortization

 

7,222

 

7,206

 

0.2

%

    Total Operating Expenses

 

35,293

 

37,594

 

(6.1)

%

Operating Income

 

7,486

 

7,233

 

3.5

%

Interest Expense

 

2,018

 

2,141

 

(5.7)

%

Equity in Net Income (Loss) of Affiliates

 

(6)

 

(7)

 

14.3

%

Other Income (Expense) - Net

 

803

 

286

 

-

%

Income Before Income Taxes

 

6,265

 

5,371

 

16.6

%

Income Tax Expense

 

1,302

 

1,023

 

27.3

%

Net Income

 

4,963

 

4,348

 

14.1

%

 Less: Net Income Attributable to

    Noncontrolling Interest

 

(353)

 

(252)

 

(40.1)

%

Net Income Attributable to AT&T

$

4,610

$

4,096

 

12.5

%

 Less: Preferred Stock Dividends

 

(32)

 

-

 

-

%

Net Income Attributable to Common Stock

$

4,578

$

4,096

 

11.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic Earnings Per Share Attributable to

    Common Stock

$

0.63

$

0.56

 

12.5

%

Weighted Average Common

    Shares Outstanding (000,000)

 

7,187

 

7,313

 

(1.7)

%

Diluted Earnings Per Share Attributable to

    Common Stock

$

0.63

$

0.56

 

12.5

%

Weighted Average Common 

    Shares Outstanding with Dilution (000,000)

 

7,214

 

7,342

 

(1.7)

%

1

AT&T Inc.

 

 

 

 

 

Financial Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated Balance Sheets

Dollars in millions

 

Unaudited

 

Mar. 31,

 

 

Dec. 31,

 

 

 

2020

 

 

2019

Assets

 

 

 

 

 

Current Assets

 

 

 

 

 

Cash and cash equivalents

$

9,955

 

$

12,130

Accounts receivable - net of allowances for doubtful accounts of $1,651 and $1,235

 

19,908

 

 

22,636

Prepaid expenses

 

1,600

 

 

1,631

Other current assets

 

21,241

 

 

18,364

Total current assets

 

52,704

 

 

54,761

Noncurrent Inventories and Theatrical Film and Television Production Costs

 

13,276

 

 

12,434

Property, Plant and Equipment – Net

 

128,921

 

 

130,128

Goodwill

 

145,546

 

 

146,241

Licenses – Net

 

96,662

 

 

97,907

Trademarks and Trade Names – Net

 

23,293

 

 

23,567

Distribution Networks – Net

 

14,886

 

 

15,345

Other Intangible Assets – Net

 

19,623

 

 

20,798

Investments in and Advances to Equity Affiliates

 

3,606

 

 

3,695

Operating Lease Right-of-Use Assets

 

24,008

 

 

24,039

Other Assets

 

22,829

 

 

22,754

Total Assets

$

545,354

 

$

551,669

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

Current Liabilities

 

 

 

 

 

Debt maturing within one year

$

17,067

 

$

11,838

Accounts payable and accrued liabilities

 

40,771

 

 

45,956

Advanced billings and customer deposits

 

5,960

 

 

6,124

Accrued taxes

 

2,169

 

 

1,212

Dividends payable

 

3,737

 

 

3,781

Total current liabilities

 

69,704

 

 

68,911

Long-Term Debt

 

147,202

 

 

151,309

Deferred Credits and Other Noncurrent Liabilities

 

 

 

 

 

Deferred income taxes

 

58,491

 

 

59,502

Postemployment benefit obligation

 

18,324

 

 

18,788

Operating lease liabilities

 

21,584

 

 

21,804

Other noncurrent liabilities

 

34,600

 

 

29,421

Total deferred credits and other noncurrent liabilities

 

132,999

 

 

129,515

Stockholders’ Equity

 

 

 

 

 

Preferred stock

-

 

 

-

Common stock

 

7,621

 

 

7,621

Additional paid-in capital

 

129,966

 

 

126,279

Retained earnings

 

58,534

 

 

57,936

Treasury stock

 

(17,957)

 

 

(13,085)

Accumulated other comprehensive income

 

(385)

 

 

5,470

Noncontrolling interest

 

17,670

 

 

17,713

Total stockholders’ equity

 

195,449

 

 

201,934

Total Liabilities and Stockholders' Equity

$

545,354

 

$

551,669

 

 

 

 

 

 

 
2

AT&T Inc.

 

 

 

 

 

Financial Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated Statements of Cash Flows

Dollars in millions

 

Unaudited

First Quarter

 

 

2020

 

 

2019

Operating Activities

 

 

 

 

 

Net income

$

4,963

 

$

4,348

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

7,222

 

 

7,206

 

Amortization of film and television costs

 

2,269

 

 

2,497

 

Undistributed earnings from investments in equity affiliates

 

39

 

 

112

 

Provision for uncollectible accounts

 

780

 

 

592

 

Deferred income tax expense (benefit)

 

259

 

 

753

 

Net (gain) loss on investments, net of impairments

 

(646)

 

 

(175)

 

Pension and postiretirement benefit expense (credit)

 

(748)

 

 

(369)

 

Actuarial (gain) loss on pension and postretirement benefits

 

-

 

 

432

Changes in operating assets and liabilities:

 

 

 

 

 

 

Receivables

 

1,695

 

 

2,125

 

Other current assets, inventories and theatrical film and television production costs

 

(3,267)

 

 

(2,510)

 

Accounts payable and other accrued liabilities

 

(3,884)

 

 

(3,686)

 

Equipment installment receivables and related sales

 

535

 

 

652

 

Deferred customer contract acquisition and fulfillment costs

 

105

 

 

(375)

Postretirement claims and contributions

 

(111)

 

 

(193)

Other - net

 

(345)

 

 

(357)

Total adjustments

 

3,903

 

 

6,704

Net Cash Provided by Operating Activities

 

8,866

 

 

11,052

 

 

 

 

 

Investing Activities

 

 

 

 

 

Capital expenditures:

 

 

 

 

 

 

Purchase of property and equipment

 

(4,938)

 

 

(5,121)

 

Interest during construction

 

(28)

 

 

(61)

Acquisitions, net of cash acquired

 

(100)

 

 

(117)

Dispositions

 

118

 

 

10

(Purchases), sales and settlement of securities and investments, net

 

(6)

 

 

(1)

Advances to and investments in equity affiliates, net

 

(68)

 

 

(111)

Net Cash Used in Investing Activities

 

(5,022)

 

 

(5,401)

 

 

 

 

 

 

Financing Activities

 

 

 

 

 

Net change in short-term borrowings with original maturities of three months or less

 

1,742

 

 

(256)

Issuance of other short-term borrowings

 

1,390

 

 

296

Repayment of other short-term borrowings

 

-

 

 

(176)

Issuance of long-term debt

 

4,357

 

 

9,182

Repayment of long-term debt

 

(4,422)

 

 

(9,840)

Payment of vendor financing

 

(791)

 

 

(819)

Issuance of preferred stock

 

3,869

 

 

-

Purchase of treasury stock

 

(5,463)

 

 

(189)

Issuance of treasury stock

 

58

 

 

167

Dividends paid

 

(3,737)

 

 

(3,714)

Other

 

(3,102)

 

 

928

Net Cash Used in Financing Activities

 

(6,099)

 

 

(4,421)

Net (decrease) increase in cash and cash equivalents and restricted cash

 

(2,255)

 

 

1,230

Cash and cash equivalents and restricted cash beginning of year

 

12,295

 

 

5,400

Cash and Cash Equivalents and Restricted Cash End of Period

$

10,040

 

$

6,630

 

 

 

 

 

 
3

AT&T Inc.

Consolidated Supplementary Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Supplementary Financial Data

Dollars in millions except per share amounts

 

 

 

 

 

 

 

Unaudited

 

 

 

First Quarter

Percent

 

 

 

 

 

 

 

 

 

 

2020

 

2019

 

Change

Capital expenditures

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchase of property and equipment

 

 

 

 

 

 

 

 

$

4,938

$

5,121

 

(3.6)

%

 

Interest during construction

 

 

 

 

 

 

 

 

 

28

 

61

 

(54.1)

%

Total Capital Expenditures

 

 

 

 

 

 

 

 

$

4,966

$

5,182

 

(4.2)

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends Declared per Common Share

 

 

 

 

 

 

 

 

$

0.52

$

0.51

 

2.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

End of Period Common Shares Outstanding (000,000)

 

 

 

 

 

 

 

 

 

7,125

 

7,297

 

(2.4)

%

Debt Ratio

 

 

 

 

 

 

 

 

 

45.7

%

47.4

%

(170)

BP

Total Employees

 

 

 

 

 

 

 

 

 

244,490

 

262,290

 

(6.8)

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Supplementary Operating Data

Subscribers and connections in thousands

 

 

 

 

 

 

 

 

Unaudited

 

 

 

 

 

March 31,

Percent

 

 

 

 

 

 

 

 

 

 

 

2020

 

2019

 

Change

Broadband Connections

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

IP

 

 

 

 

 

 

 

 

 

14,627

 

14,852

 

(1.5)

%

 

DSL

 

 

 

 

 

 

 

 

 

688

 

885

 

(22.3)

%

Total Broadband Connections

 

 

 

 

 

 

 

 

 

15,315

 

15,737

 

(2.7)

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Voice Connections

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Network Access Lines

 

 

 

 

 

 

 

 

 

8,160

 

9,587

 

(14.9)

%

 

U-verse VoIP Connections

 

 

 

 

 

 

 

 

 

4,213

 

4,935

 

(14.6)

%

Total Retail Voice Connections

 

 

 

 

 

 

 

 

 

12,373

 

14,522

 

(14.8)

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

First Quarter

Percent

 

 

 

 

 

 

 

 

 

 

2020

 

2019

 

Change

Broadband Net Additions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

IP

 

 

 

 

 

 

 

 

 

(32)

 

100

 

-

%

 

DSL

 

 

 

 

 

 

 

 

 

(42)

 

(64)

 

34.4

%

Total Broadband Net Additions

 

 

 

 

 

 

 

 

 

(74)

 

36

 

-

%
4

COMMUNICATIONS SEGMENT

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Communications segment provides wireless and wireline telecom, video and broadband services to consumers located in the U.S. and businesses globally. The Communications segment contains three reporting units: Mobility, Entertainment Group, and Business Wireline.

 

 

 

 

 

 

 

 

Segment Results

Dollars in millions

 

 

 

Unaudited

First Quarter

Percent

 

 

 

2020

 

2019

 

Change

Segment Operating Revenues

 

 

 

 

 

 

 

 

Mobility

 $  

17,402

 $  

17,363

 

0.2

 %  

 

Entertainment Group

 

10,515

 

11,328

 

(7.2)

%

 

Business Wireline

 

6,332

 

6,478

 

(2.3)

 %  

    Total Segment Operating Revenues

 

34,249

 

35,169

 

(2.6)

%

 

 

 

 

 

 

 

 

 

Segment Operating Contribution

 

 

 

 

 

 

 

 

Mobility

 

5,788

 

5,309

 

9.0

 %  

 

Entertainment Group

 

1,335

 

1,478

 

(9.7)

%

 

Business Wireline

 

1,080

 

1,224

 

(11.8)

 %  

    Total Segment Operating Contribution

$

8,203

$

8,011

 

2.4

%

 

 

 

 

 

 

 

 

 

 

5

Mobility

 

 

 

 

 

 

 

 

 

Mobility provides nationwide wireless service and equipment.

 

 

 

 

 

 

 

 

 

Mobility Results

Dollars in millions

 

 

 

Unaudited

First Quarter

Percent

 

 

 

2020

 

2019

 

Change

Operating Revenues

 

 

 

 

 

 

 

Service

 $  

13,968

 $  

13,629

 

2.5

 %  

Equipment

 

3,434

 

3,734

 

(8.0)

%

    Total Operating Revenues

 

17,402

 

17,363

 

0.2

 %  

 

 

 

 

 

 

 

 

 

Operating Expenses

 

 

 

 

 

 

 

Operations and support

 

9,569

 

10,041

 

(4.7)

%

Depreciation and amortization

 

2,045

 

2,013

 

1.6

 %  

    Total Operating Expenses

 

11,614

 

12,054

 

(3.7)

%

Operating Income

 

5,788

 

5,309

 

9.0

 %  

Equity in Net Income (Loss) of Affiliates

 

-

 

-

 

-

%

Operating Contribution

$

5,788

$

5,309

 

9.0

 %  

 

 

 

 

 

 

 

 

 

Operating Income Margin

 

33.3

%

30.6

%

270

BP

 

 

 

 

 

 

 

 

 

Supplementary Operating Data

Subscribers and connections in thousands

 

 

 

 

Unaudited

March 31,

Percent

 

 

 

2020

 

2019

 

Change

Mobility Subscribers

 

 

 

 

 

 

 

Postpaid

 

75,148

 

75,737

 

(0.8)

%

Prepaid

 

17,808

 

17,012

 

4.7

%

Reseller

 

6,736

 

7,495

 

(10.1)

%

Connected Devices

 

69,506

 

54,426

 

27.7

%

Total Mobility Subscribers

 

169,198

 

154,670

 

9.4

%

 

 

 

 

 

 

 

 

 

Postpaid Phone Subscribers

 

63,105

 

62,830

 

0.4

%

Total Phone Subscribers

 

79,792

 

78,887

 

1.1

%

 

 

 

 

 

 

 

 

 

 

 

First Quarter

Percent

 

 

 

2020

 

2019

 

Change

Mobility Net Additions

 

 

 

 

 

 

 

Postpaid

 

27

 

(207)

 

-

%

Prepaid

 

(45)

 

101

 

-

%

Reseller

 

(190)

 

(242)

 

21.5

%

Connected Devices

 

3,518

 

3,088

 

13.9

%

Total Mobility Net Additions

 

3,310

 

2,740

 

20.8

%

 

 

 

 

 

 

 

 

Postpaid Phone Net Additions

 

163

 

79

 

-

%

Total Phone Net Additions

 

120

 

168

 

(28.6)

%

 

 

 

 

 

 

 

 

Postpaid Churn

 

1.08

%

1.16

%

(8)

BP

Postpaid Phone-Only Churn

 

0.86

%

0.92

%

(6)

BP
6

Entertainment Group

  

 

  

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

  
 

 

  

Entertainment Group Results

  

Dollars in millions

 

 

 

  

Unaudited

First Quarter

Percent

  

 

 

2020

 

2019

 

Change

  

 Operating Revenues

 

 

 

 

 

 

 

  

Video entertainment

$

7,395

$

8,074

 

(8.4)

%

  

High-speed internet

 

2,109

 

2,070

 

1.9

%

  

Legacy voice and data services

 

581

 

683

 

(14.9)

%

  

Other service and equipment

 

430

 

501

 

(14.2)

%

  

Total Operating Revenues

 

10,515

 

11,328

 

(7.2)

%

  

 

 

 

 

 

 

 

 

  

Operating Expenses

 

 

 

 

 

 

 

  

Operations and support

 

7,891

 

8,527

 

(7.5)

%

  

Depreciation and amortization

 

1,289

 

1,323

 

(2.6)

%

  

Total Operating Expenses

 

9,180

 

9,850

 

(6.8)

%

  

Operating Income

 

1,335

 

1,478

 

(9.7)

%

  

Equity in Net Income (Loss) of Affiliates

 

-

 

-

 

-

%

  

Operating Contribution

$

1,335

$

1,478

 

(9.7)

%

  

 

 

 

 

 

 

 

 

  

Operating Income Margin

 

12.7

%

13.0

%

(30)

BP

  

 

 

 

 

 

 

 

 

  

Supplementary Operating Data

  

Subscribers and connections in thousands

 

 

 

  

Unaudited

March 31,

Percent

  

 

 

2020

 

2019

 

Change

  

Video Connections

 

 

 

 

 

 

 

  

Premium TV

 

18,576

 

22,359

 

(16.9)

%

  

AT&T TV Now

 

788

 

1,508

 

(47.7)

%

  

Total Video Connections

 

19,364

 

23,867

 

(18.9)

%

  

 

 

 

 

 

 

 

 

  

Broadband Connections

 

 

 

 

 

 

 

  

IP

 

13,554

 

13,822

 

(1.9)

%

  

DSL

 

492

 

632

 

(22.2)

%

  

Total Broadband Connections

 

14,046

 

14,454

 

(2.8)

%

  

Fiber Broadband Connections (included in IP)

 

4,096

 

3,060

 

33.9

%

  

 

 

 

 

 

 

 

 

  

Voice Connections

 

 

 

 

 

 

 

  

Retail Consumer Switched Access Lines

 

3,196

 

3,787

 

(15.6)

%

  

U-verse Consumer VoIP Connections

 

3,630

 

4,393

 

(17.4)

%

  

Total Retail Consumer Voice Connections

 

6,826

 

8,180

 

(16.6)

%

  

 

 

 

 

 

 

 

 

  

 

First Quarter

Percent

  

 

 

2020

 

2019

 

Change

  

Video Net Additions

 

 

 

 

 

 

 

  

Premium TV

 

(897)

 

(544)

 

(64.9)

%

  

AT&T TV Now

 

(138)

 

(83)

 

(66.3)

%

  

Total Video Net Additions

 

(1,035)

 

(627)

 

(65.1)

%

  

 

 

 

 

 

 

 

 

  

Broadband Net Additions

 

 

 

 

 

 

 

  

IP

 

(44)

 

93

 

-

%

  

DSL

 

(29)

 

(48)

 

39.6

%

  

Total Broadband Net Additions

 

(73)

 

45

 

-

%

  

Fiber Broadband Net Additions (included in IP)

 

209

 

297

 

(29.6)

%

  
7

Business Wireline

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

Business Wireline Results

Dollars in millions

 

 

 

Unaudited

First Quarter

Percent

 

 

2020

 

2019

 

Change

Operating Revenues

 

 

 

 

 

 

 

 

Strategic and managed services

 $  

3,879

 $  

3,779

 

2.6

 %  

 

Legacy voice and data services

 

2,129

 

2,397

 

(11.2)

%

 

Other service and equipment

 

324

 

302

 

7.3

 %  

    Total Operating Revenues

 

6,332

 

6,478

 

(2.3)

%

 

 

 

 

 

 

 

 

Operating Expenses

 

 

 

 

 

 

 

Operations and support

 

3,951

 

4,032

 

(2.0)

 %  

Depreciation and amortization

 

1,301

 

1,222

 

6.5

%

    Total Operating Expenses

 

5,252

 

5,254

 

-

 %  

Operating Income

 

1,080

 

1,224

 

(11.8)

%

Equity in Net Income (Loss) of Affiliates

 

-

 

-

 

-

 %  

Operating Contribution

$

1,080

$

1,224

 

(11.8)

%

 

 

 

 

 

 

 

 

Operating Income Margin

 

17.1

%

18.9

%

(180)

BP

 

 

 

 

 

 

 

 

 

 

Business Solutions

 

 

 

 

 

 

 

  

As a supplemental presentation to our Communications segment operating results, we are providing a view of our AT&T Business Solutions results which includes both wireless and fixed operations. This combined view presents a complete profile of the entire business customer relationship and underscores the importance of mobile solutions to serving our business customers. Results have been recast to conform to the current period's classification of consumer and business wireless subscribers.

  
 
 

 

 

 

 

 

 

 

 

 

  

Business Solutions Results

  

Dollars in millions

 

 

 

  

Unaudited

First Quarter

Percent

  

 

 

2020

 

2019

 

Change

  

Operating Revenues

 

 

 

 

 

 

 

  

 

Wireless service

 $  

1,949

 $  

1,777

 

9.7

 %  

  

 

Strategic and managed services

 

3,879

 

3,779

 

2.6

%

  

 

Legacy voice and data services

 

2,129

 

2,397

 

(11.2)

 %  

  

 

Other service and equipment

 

324

 

302

 

7.3

%

  

 

Wireless equipment

 

710

 

590

 

20.3

 %  

  

    Total Operating Revenues

 

8,991

 

8,845

 

1.7

%

  

 

 

 

 

 

 

 

 

  

Operating Expenses

 

 

 

 

 

 

 

  

Operations and support

 

5,710

 

5,614

 

1.7

 %  

  

Depreciation and amortization

 

1,625

 

1,525

 

6.6

%

  

    Total Operating Expenses

 

7,335

 

7,139

 

2.7

 %  

  

Operating Income

 

1,656

 

1,706

 

(2.9)

%

  

Equity in Net Income (Loss) of Affiliates

 

-

 

-

 

-

 %  

  

Operating Contribution

$

1,656

$

1,706

 

(2.9)

%

  

 

 

 

 

 

 

 

 

  

Operating Income Margin

 

18.4

%

19.3

%

(90)

BP

  

8

WARNERMEDIA  SEGMENT

 

 

 

 

 

 

 

 

 

The WarnerMedia segment develops, produces and distributes feature films, television, gaming and other content in various physical and digital formats globally. Results from Turner, Home Box Office and Warner Bros. businesses are combined with AT&T's Regional Sports Network (RSN) and Otter Media Holdings in the WarnerMedia segment.

 

Segment Results

Dollars in millions

 

 

 

Unaudited

First Quarter

Percent

 

 

 

2020

 

2019

 

Change

Segment Operating Revenues

 

 

 

 

 

 

 

 

Turner

$

3,162

 $  

3,443

 

(8.2)

 %  

 

HBO

 

1,497

 

1,510

 

(0.9)

%

 

Warner Bros.

 

3,240

 

3,518

 

(7.9)

 %  

 

Eliminations and other

 

(540)

 

(92)

 

-

%

    Total Segment Operating Revenues

 

7,359

 

8,379

 

(12.2)

 %  

 

 

 

 

 

 

 

 

 

Cost of revenues

 

 

 

 

 

 

 

 

Turner

 

1,320

 

1,680

 

(21.4)

 %  

 

HBO

 

816

 

670

 

21.8

%

 

Warner Bros.

 

2,346

 

2,430

 

(3.5)

 %  

Selling, general and administrative

 

1,354

 

1,284

 

5.5

%

Eliminations and other

 

(319)

 

(71)

 

-

 %  

Depreciation and amortization

 

143

 

143

 

-

%

Total Operating Expenses

 

5,660

 

6,136

 

(7.8)

 %  

Operating Income

 

1,699

 

2,243

 

(24.3)

%

Equity in Net Income of Affiliates

 

15

 

67

 

(77.6)

 %  

    Total Segment Operating Contribution

$

1,714

$

2,310

 

(25.8)

%

 

 

 

 

 

 

 

 

 

Turner

  

 

  

Turner creates and programs branded news, entertainment, sports and kids multi-platform content that is sold to various distribution affiliates. Turner also sells advertising on its networks and digital properties.

  
 

 

  

Turner Results

  

Dollars in millions

 

 

 

  

Unaudited

First Quarter

Percent

  

 

 

2020

 

2019

 

Change

  

Operating Revenues

 

 

 

 

 

  

 

  

 

Subscription

$

2,049

$

1,965

 

4.3

 %  

  

 

Advertising

 

957

 

1,261

 

(24.1)

%

  

 

Content and other

 

156

 

217

 

(28.1)

 %  

  

    Total Operating Revenues

 

3,162

 

3,443

 

(8.2)

%

  

 

 

 

 

 

 

 

 

 

  

Operating Expenses

 

 

 

 

 

 

 

  

 

Cost of revenues

 

1,320

 

1,680

 

(21.4)

 %  

  

 

Selling, general and administrative

 

390

 

456

 

(14.5)

%

  

 

Depreciation and amortization

 

69

 

60

 

15.0

 %  

  

    Total Operating Expenses

 

1,779

 

2,196

 

(19.0)

%

  

Operating Income

 

1,383

 

1,247

 

10.9

 %  

  

Equity in Net Income of Affiliates

 

6

 

25

 

(76.0)

%

  

Operating Contribution

$

1,389

$

1,272

 

9.2

 %  

  

 

 

 

 

 

 

 

 

  

Operating Income Margin

 

43.7

%

36.2

%

750

BP

  

9


Home Box Office

 

 

 

 

 

 

 

  

 

  

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

  
 

 

  

Home Box Office Results

  

Dollars in millions

 

 

 

  

Unaudited

First Quarter

Percent

  

 

 

2020

 

2019

 

Change

  

Operating Revenues

 

 

 

 

 

  

 

  

 

Subscription

$

1,338

$

1,334

 

0.3

 %  

  

 

Content and other

 

159

 

176

 

(9.7)

%

  

Total Operating Revenues

 

1,497

 

1,510

 

(0.9)

 %  

  

 

 

 

 

 

 

 

 

 

  

Operating Expenses

 

 

 

 

 

 

 

  

 

Cost of revenues

 

816

 

670

 

21.8

 %  

  

 

Selling, general and administrative

 

237

 

251

 

(5.6)

%

  

 

Depreciation and amortization

 

21

 

22

 

(4.5)

 %  

  

  Total Operating Expenses

 

1,074

 

943

 

13.9

%

  

Operating Income

 

423

 

567

 

(25.4)

 %  

  

Equity in Net Income of Affiliates

 

20

 

15

 

33.3

%

  

Operating Contribution

$

443

$

582

 

(23.9)

 %  

  

 

 

 

 

 

 

 

 

  

Operating Income Margin

 

28.3

%

37.5

%

(920)

BP

  


Warner Bros.

  

 

  

Warner Bros. 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.

  
 

 

  

Warner Bros. Results

  

Dollars in millions

 

 

 

  

Unaudited

First Quarter

Percent

  

 

 

 

2020

 

2019

 

Change

  

Operating Revenues

 

 

 

 

 

  

 

  

 

Theatrical product

$

1,106

$

1,506

 

(26.6)

 %  

  

 

Television product

 

1,769

 

1,613

 

9.7

%

  

 

Video games and other

 

365

 

399

 

(8.5)

 %  

  

    Total Operating Revenues

 

3,240

 

3,518

 

(7.9)

%

  

 

 

 

 

 

 

 

 

 

  

Operating Expenses

 

 

 

 

 

 

 

  

 

Cost of revenues

 

2,346

 

2,430

 

(3.5)

 %  

  

 

Selling, general and administrative

 

604

 

489

 

23.5

%

  

 

Depreciation and amortization

 

41

 

52

 

(21.2)

 %  

  

    Total Operating Expenses

 

2,991

 

2,971

 

0.7

%

  

Operating Income

 

249

 

547

 

(54.5)

 %  

  

Equity in Net Income (Loss) of Affiliates

 

(8)

 

6

 

-

%

  

Operating Contribution

$

241

$

553

 

(56.4)

 %  

  

 

 

 

 

 

 

 

 

  

Operating Income Margin

 

7.7

%

15.5

%

(780)

BP

  

 

10

LATIN AMERICA SEGMENT

 

The Latin America segment provides entertainment and wireless service outside of the U.S. Our international subsidiaries conduct business in their local currency and operating results are converted to U.S. dollars using official exchange rates. The Latin America segment contains two business units: Vrio and Mexico.

 

Segment Results

Dollars in millions

 

 

 

Unaudited

First Quarter

Percent

 

 

 

2020

 

2019

 

Change

Segment Operating Revenues

 

 

 

 

 

 

 

 

Vrio

$

887

 $  

1,067

 

(16.9)

 %  

 

Mexico

 

703

 

651

 

8.0

%

    Total Segment Operating Revenues

 

1,590

 

1,718

 

(7.5)

 %  

 

 

 

 

 

 

 

 

Segment Operating Contribution

 

 

 

 

 

 

 

 

Vrio

 

(39)

 

32

 

-

%

 

Mexico

 

(145)

 

(205)

 

29.3

 %  

    Total Segment Operating Contribution

$

(184)

$

(173)

 

(6.4)

%

 

 

 

 

 

 

 

 


Mexico

 

 Mexico provides wireless services and equipment to customers in Mexico.

 

Mexico Results

Dollars in millions

 

 

 

Unaudited

First Quarter

Percent

 

2020

2019

Change

Operating Revenues

 

 

 

 

 

  

 

Wireless service

$

467

$

442

 

5.7

%

Wireless equipment

 

236

 

209

 

12.9

%

    Total Operating Revenues

 

703

 

651

 

8.0

 %  

 

 

 

 

 

 

 

 

Operating Expenses

 

 

 

 

 

 

 

Operations and support

 

714

 

725

 

(1.5)

%

Depreciation and amortization

 

134

 

131

 

2.3

 %  

    Total Operating Expenses

 

848

 

856

 

(0.9)

%

Operating Income (Loss)

 

(145)

 

(205)

 

29.3

 %  

Equity in Net Income of Affiliates

 

-

 

-

 

-

%

Operating Contribution

$

(145)

$

(205)

 

29.3

 %  

 

 

 

 

 

 

 

 

Operating Income Margin

 

(20.6)

%

(31.5)

%

1,090

 BP  

 

 

 

 

 

 

 

 

Supplementary Operating Data

Subscribers and connections in thousands

 

 

 

 

Unaudited

March 31,

Percent

 

2020

2019

Change

Mexico Wireless Subscribers

 

 

 

 

 

 

 

Postpaid

 

4,962

 

5,642

 

(12.1)

 %  

Prepaid

 

13,692

 

11,779

 

16.2

%

Reseller

 

504

 

301

 

67.4

 %  

Total Mexico Wireless Subscribers

 

19,158

 

17,722

 

8.1

%

 

 

 

 

 

 

 

 

 

First Quarter

Percent

 

2020

2019

 

Change

Mexico Wireless Net Additions

 

 

 

 

 

 

 

Postpaid

 

(141)

 

(69)

 

-

 %  

Prepaid

 

108

 

114

 

(5.3)

%

Reseller

 

32

 

48

 

(33.3)

 %  

Total Mexico Wireless Net Subscriber Additions

 

(1)

 

93

 

-

%

 

 

 

 

 

 

 

 
11

Vrio

 

 

 

 

 

 

 

 

Vrio provides entertainment services to customers utilizing satellite technology in Latin America and the Caribbean.

 

Vrio Results

Dollars in millions

 

 

 

Unaudited

First Quarter

Percent

 

2020

2019

Change

Operating Revenues

$

887

$

1,067

 

(16.9)

 %  

 

 

 

 

 

 

 

 

Operating Expenses

 

 

 

 

 

 

 

Operations and support

 

783

 

866

 

(9.6)

%

Depreciation and amortization

 

147

 

169

 

(13.0)

 %  

Total Operating Expenses

 

930

 

1,035

 

(10.1)

%

Operating Income

 

(43)

 

32

 

-

 %  

Equity in Net Income of Affiliates

 

4

 

-

 

-

%

Operating Contribution

$

(39)

$

32

 

-

 %  

 

 

 

 

 

 

 

 

Operating Income Margin

 

(4.8)

%

3.0

%

(780)

 BP  

 

 

 

 

 

 

 

 

Supplementary Operating Data

Subscribers and connections in thousands

 

 

 

 

Unaudited

March 31,

Percent

 

2020

2019

Change

Vrio Video Subscribers

 

13,217

 

13,584

 

(2.7)

 %  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

First Quarter

Percent

 

2020

2019

Change

Vrio Video Net Subscriber Additions

 

(114)

 

(32)

 

-

 %  

 

 

 

 

 

 

 

 

 

XANDR SEGMENT

  

 

  

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

  
 

 

  

Segment Operating Results

  

Dollars in millions

 

 

 

 

 

 

 

  

Unaudited

 

 

 

First Quarter

Percent

  

 

 

 

 

 

 

 

 

 

2020

 

2019

 

Change

  

Segment Operating Revenues

 

 

 

 

 

 

 

 

$

489

$

426

 

14.8

%

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

Segment Operating Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

Operations and support

 

 

 

 

 

 

 

 

 

170

 

160

 

6.3

%

  

Depreciation and amortization

 

 

 

 

 

 

 

 

 

20

 

13

 

53.8

%

  

    Total Segment Operating Expenses

 

 

 

 

 

 

 

 

 

190

 

173

 

9.8

%

  

Operating Income

 

 

 

 

 

 

 

 

 

299

 

253

 

18.2

%

  

Equity in Net Income of Affiliates

 

 

 

 

 

 

 

 

 

-

 

-

 

-

%

  

Segment Operating Contribution

 

 

 

 

 

 

 

 

$

299

$

253

 

18.2

%

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

Segment Operating Income Margin

 

 

 

 

 

 

 

 

 

61.1

%

59.4

%

170

BP

  

12

Supplemental AT&T Advertising Revenues

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

As a supplemental presentation to our Xandr segment operating results, we are providing a view of total advertising revenues generated by AT&T, which combines the advertising revenues recorded across all operating segments. This combined view presents the entire portfolio of revenues generated from AT&T assets and represents a significant strategic initiative and growth opportunity for AT&T.

  
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

Advertising Revenues

  

Dollars in millions

 

 

 

 

 

 

 

  

Unaudited

 

 

 

First Quarter

Percent

  

 

 

 

 

 

 

 

 

 

 

2020

 

2019

 

Change

  

Operating Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

  

 

  

 

WarnerMedia

 

 

 

 

 

 

 

 

$

979

$

1,279

 

(23.5)

 %  

  

 

Communications

 

 

 

 

 

 

 

 

 

489

 

417

 

17.3

%

  

 

Xandr

 

 

 

 

 

 

 

 

 

489

 

426

 

14.8

 %  

  

 

Eliminations

 

 

 

 

 

 

 

 

 

(413)

 

(350)

 

(18.0)

%

  

    Total Advertising Revenues

 

 

 

 

 

 

 

 

$

1,544

$

1,772

 

(12.9)

 %  

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

 

13

SUPPLEMENTAL SEGMENT RECONCILIATION

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

Dollars in millions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unaudited

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

 

Operations and Support Expenses

 

 

EBITDA

 

 

Depreciation and Amortization

 

 

Operating Income (Loss)

 

 

Equity in Net Income (Loss) of Affiliates

 

 

Segment 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

  Eliminations and 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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

 

Operations and Support Expenses

 

 

EBITDA

 

 

Depreciation and Amortization

 

 

Operating Income (Loss)

 

 

Equity in Net Income (Loss) of Affiliates

 

 

Segment 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

  Eliminations and 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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
14

 

 

Discussion and Reconciliation of Non-GAAP Measures

 

We believe the following measures are relevant and useful information to investors as they are part of AT&T's internal management reporting and planning processes and are important metrics that management uses to evaluate the operating performance of AT&T and its segments. Management also uses these measures as a method of comparing performance with that of many of our competitors. These measures should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance with U.S. generally accepted accounting principles (GAAP).

 

Free Cash Flow

Free cash flow is defined as cash from operations minus capital expenditures. Free cash flow after dividends is defined as cash from operations minus capital expenditures and dividends on common shares. Free cash flow dividend payout ratio is defined as the percentage of dividends paid on common shares to free cash flow. We believe these metrics provide useful information to our investors because management views free cash flow as an important indicator of how much cash is generated by routine business operations, including capital expenditures, and makes decisions based on it. Management also views free cash flow as a measure of cash available to pay debt and return cash to shareowners.

 

Free Cash Flow and Free Cash Flow Dividend Payout Ratio

Dollars in millions

 

 

 

First Quarter

 

 

2020

 

2019

 

Net cash provided by operating activities

$

8,866

$

11,052

 

Less: Capital expenditures

 

(4,966)

 

(5,182)

 

Free Cash Flow

 

3,900

 

5,870

 

 

 

 

 

 

 

Less: Dividends paid

 

(3,737)

 

(3,714)

 

Free Cash Flow after Dividends

$

163

$

2,156

 

Free Cash Flow Dividend Payout Ratio

 

95.8%

 

63.3%

 

 

Cash Paid for Capital Investment

In connection with capital improvements, we negotiate with some of our vendors to obtain favorable payment terms of 120 days or more, referred to as vendor financing, which are excluded from capital expenditures and reported in accordance with GAAP as financing activities. We present an additional view of cash paid for capital investment to provide investors with a comprehensive view of cash used to invest in our networks, product developments and support systems.

 

Cash Paid for Capital Investment

Dollars in millions

 

 

 

First Quarter

 

 

2020

 

2019

 

Capital Expenditures

$

(4,966)

$

(5,182)

 

Cash paid for vendor financing

 

(791)

 

(819)

 

Cash paid for Capital Investment

$

(5,757)

$

(6,001)

 


EBITDA

Our calculation of EBITDA, as presented, may differ from similarly titled measures reported by other companies. For AT&T, EBITDA excludes other income (expense) – net, and equity in net income (loss) of affiliates, as these do not reflect the operating results of our subscriber base or operations that are not under our control. Equity in net income (loss) of affiliates represents the proportionate share of the net income (loss) of affiliates in which we exercise significant influence, but do not control. Because we do not control these entities, management excludes these results when evaluating the performance of our primary operations. EBITDA also excludes interest expense and the provision for income taxes. Excluding these items eliminates the expenses associated with our capital and tax structures. Finally, EBITDA excludes depreciation and amortization in order to eliminate the impact of capital investments. EBITDA does not give effect to cash used for debt service requirements and thus does not reflect available funds for distributions, reinvestment or other discretionary uses. EBITDA is not presented as an alternative measure of operating results or cash flows from operations, as determined in accordance with U.S. generally accepted accounting principles (GAAP).

 

1

EBITDA service margin is calculated as EBITDA divided by service revenues.

 

When discussing our segment, business unit and supplemental results, EBITDA excludes equity in net income (loss) of affiliates, and depreciation and amortization from operating contribution.

 

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 operating 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 management is responsible and upon which we evaluate performance.

 

We believe EBITDA Service Margin (EBITDA as a percentage of service revenues) to be a more relevant measure than EBITDA Margin (EBITDA as a percentage of total revenue) for our Mobility business unit operating margin. We also use wireless service revenues to calculate margin to facilitate comparison, both internally and externally with our wireless competitors, as they calculate their margins using wireless service revenues as well.

 

There are material limitations to using these non-GAAP financial measures. EBITDA, EBITDA margin and EBITDA service margin, as we have defined them, may not be comparable to similarly titled measures reported by other companies. Furthermore, these performance measures do not take into account certain significant items, including depreciation and amortization, interest expense, tax expense and equity in net income (loss) of affiliates. For market comparability, management analyzes performance measures that are similar in nature to EBITDA as we present it, and considering the economic effect of the excluded expense items independently as well as in connection with its analysis of net income as calculated in accordance with GAAP. EBITDA, EBITDA margin and EBITDA service margin should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance with GAAP.

 

EBITDA, EBITDA Margin and EBITDA Service Margin

Dollars in millions

 

 

 

First Quarter

 

 

2020

 

2019

 

Net Income

 $  

4,963

 $  

4,348

 

Additions:

 

 

 

 

 

   Income Tax Expense

 

1,302

 

1,023

 

   Interest Expense

 

2,018

 

2,141

 

   Equity in Net (Income) Loss of Affiliates

 

6

 

7

 

   Other (Income) Expense - Net

 

(803)

 

(286)

 

   Depreciation and amortization

 

7,222

 

7,206

 

EBITDA

 

14,708

 

14,439

 

 

 

 

 

 

 

Total Operating Revenues

 

42,779

 

44,827

 

Service Revenues

 

38,883

 

40,684

 

 

 

 

 

 

 

EBITDA Margin

 

34.4%

 

32.2%

 

EBITDA Service Margin

 

37.8%

 

35.5%

 

2

Segment and Business Unit EBITDA, EBITDA Margin and EBITDA Service Margin

Dollars in millions

 

 

 

 

First Quarter

 

 

 

2020

 

2019

 

Communications Segment

 

 

 

 

 

Operating Contribution

$

8,203

 $  

8,011

 

Additions:

 

 

 

 

 

Depreciation and amortization

 

4,635

 

4,558

 

EBITDA

 

12,838

 

12,569

 

 

 

 

 

 

 

Total Operating Revenues

 

34,249

 

35,169

 

 

 

 

 

 

 

Operating Income Margin

 

24.0%

 

22.8%

 

EBITDA Margin

 

37.5%

 

35.7%

 

 

 

 

 

 

 

Mobility

Operating Contribution

$

5,788

 $  

5,309

 

Additions:

 

 

 

 

 

Depreciation and amortization

 

2,045

 

2,013

 

EBITDA

 

7,833

 

7,322

 

 

 

 

 

 

 

Total Operating Revenues

 

17,402

 

17,363

 

Service Revenues

 

13,968

 

13,629

 

 

 

 

 

 

 

Operating Income Margin

 

33.3%

 

30.6%

 

EBITDA Margin

 

45.0%

 

42.2%

 

EBITDA Service Margin

 

56.1%

 

53.7%

 

 

 

 

 

 

 

Entertainment Group

Operating Contribution

$

1,335

 $  

1,478

 

Additions:

 

 

 

 

 

Depreciation and amortization

 

1,289

 

1,323

 

EBITDA

 

2,624

 

2,801

 

 

 

 

 

 

 

Total Operating Revenues

 

10,515

 

11,328

 

 

 

 

 

 

 

Operating Income Margin

 

12.7%

 

13.0%

 

EBITDA Margin

 

25.0%

 

24.7%

 

 

 

 

 

 

 

Business Wireline

Operating Contribution

$

1,080

 $  

1,224

 

Additions:

 

 

 

 

 

Depreciation and amortization

 

1,301

 

1,222

 

EBITDA

 

2,381

 

2,446

 

 

 

 

 

 

 

Total Operating Revenues

 

6,332

 

6,478

 

 

 

 

 

 

 

Operating Income Margin

 

17.1%

 

18.9%

 

EBITDA Margin

 

37.6%

 

37.8%

 
3


Segment and Business Unit EBITDA, EBITDA Margin and EBITDA Service Margin

Dollars in millions

 

 

 

 

First Quarter

 

 

 

2020

 

2019

 

WarnerMedia Segment

Operating Contribution

$

1,714

 $  

2,310

 

Additions:

 

 

 

 

 

Equity in Net (Income) of Affiliates

 

(15)

 

(67)

 

Depreciation and amortization

 

143

 

143

 

EBITDA

 

1,842

 

2,386

 

 

 

 

 

 

 

Total Operating Revenues

 

7,359

 

8,379

 

 

 

 

 

 

 

Operating Income Margin

 

23.1%

 

26.8%

 

EBITDA Margin

 

25.0%

 

28.5%

 

 

Segment and Business Unit EBITDA, EBITDA Margin and EBITDA Service Margin

Dollars in millions

 

 

 

 

First Quarter

 

 

 

2020

 

2019

 

Latin America Segment

 

 

 

 

 

Operating Contribution

$

(184)

 $  

(173)

 

Additions:

 

 

 

 

 

Equity in Net (Income) of Affiliates

 

(4)

 

-

 

Depreciation and amortization

 

281

 

300

 

EBITDA

 

93

 

127

 

 

 

 

 

 

 

Total Operating Revenues

 

1,590

 

1,718

 

 

 

 

 

 

 

Operating Income Margin

 

-11.8%

 

-10.1%

 

EBITDA Margin

 

5.8%

 

7.4%

 

 

 

 

 

 

 

Vrio

 

 

 

 

 

Operating Contribution

$

(39)

 $  

32

 

Additions:

 

 

 

 

 

Equity in Net (Income) of Affiliates

 

(4)

 

-

 

Depreciation and amortization

 

147

 

169

 

EBITDA

 

104

 

201

 

 

 

 

 

 

 

Total Operating Revenues

 

887

 

1,067

 

 

 

 

 

 

 

Operating Income Margin

 

-4.8%

 

3.0%

 

EBITDA Margin

 

11.7%

 

18.8%

 

 

 

 

 

 

 

Mexico

 

 

 

 

 

Operating Contribution

$

(145)

 $  

(205)

 

Additions:

 

 

 

 

 

Equity in Net (Income) Loss of Affiliates

 

-

 

-

 

Depreciation and amortization

 

134

 

131

 

EBITDA

 

(11)

 

(74)

 

 

 

 

 

 

 

Total Operating Revenues

 

703

 

651

 

 

 

 

 

 

 

Operating Income Margin

 

-20.6%

 

-31.5%

 

EBITDA Margin

 

-1.6%

 

-11.4%

 

 


Segment EBITDA, EBITDA Margin and EBITDA Service Margin

Dollars in millions

 

 

 

 

First Quarter

 

 

 

2020

 

2019

 

Xandr

 

 

 

 

 

Operating Contribution

$

299

 $  

253

 

Additions:

 

 

 

 

 

Equity in Net (Income) of Affiliates

 

-

 

-

 

Depreciation and amortization

 

20

 

13

 

EBITDA

 

319

 

266

 

 

 

 

 

 

 

Total Operating Revenues

 

489

 

426

 

 

 

 

 

 

 

Operating Income Margin

 

61.1%

 

59.4%

 

EBITDA Margin

 

65.2%

 

62.4%

 

 

 

 

 

 

 

Adjusting Items

Adjusting items include revenues and costs we consider non-operational in nature, such as items arising from asset acquisitions or dispositions. We also adjust for net actuarial gains or losses associated with our pension and postemployment benefit plans due to the often-significant impact on our results (we immediately recognize this gain or loss in the income statement, pursuant to our accounting policy for the recognition of actuarial gains and losses). Consequently, our adjusted results reflect an expected return on plan assets rather than the actual return on plan assets, as included in the GAAP measure of income.

 

The tax impact of adjusting items is calculated using the effective tax rate during the quarter except for adjustments that, given their magnitude, can drive a change in the effective tax rate, in these cases we use the actual tax expense or combined marginal rate of approximately 25%.  

4


Adjusting Items
  
Dollars in millions
    
   
First Quarter
  
   
2020
  
2019
  
Operating Revenues
          
   Time Warner merger adjustment
$
-
$
42
  
   Adjustments to Operating Revenues
  
-
  
42
  
Operating Expenses
          
   Time Warner and other merger costs
  
182
  
73
  
   Employee separation costs and benefit-related losses1
  
119
  
248
  
   Impairments
  
123
  
-
  
   Gain on spectrum transaction
  
(900)
  
-
  
Adjustments to Operations and Support Expenses
  
(476)
  
321
  
   Amortization of intangible assets3
  
2,056
  
1,989
  
Adjustments to Operating Expenses
  
1,580
  
2,310
  
Other
          
   Special termination charges, debt redemption
    costs and other adjustments
  
114
  
211
  
   Employee benefit related losses1,2
  
203
  
432
  
Adjustments to Income Before Income Taxes
  
1,897
  
2,995
  
   Tax impact of adjustments
  
394
  
649
  
   Tax-related items
  
-
  
141
  
Adjustments to Net Income
$
1,503
$
2,205
  
1 Total holding losses on benefit-related investments were approximately $300 million in the first quarter of 2020.
  
2 Includes holding losses on benefit-related investments in 2020 and an actuarial loss on our pension plan in 2019.
  
3 Includes $386 million amortization of orbital slot licenses which commenced in the first quarter of 2020.
  

 

 
Adjusted Operating Income, Adjusted Operating Income Margin, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBITDA service margin and Adjusted diluted EPS are non-GAAP financial measures calculated by excluding from operating revenues, operating expenses and income tax expense certain significant items that are non-operational or non-recurring in nature, including dispositions and merger integration and transaction costs. Management believes that these measures provide relevant and useful information to investors and other users of our financial data in evaluating the effectiveness of our operations and underlying business trends.

 

Adjusted Operating Revenues, Adjusted Operating Income, Adjusted Operating Income Margin, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBITDA service margin and Adjusted diluted EPS should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance with GAAP. AT&T's calculation of Adjusted items, as presented, may differ from similarly titled measures reported by other companies.

 

Adjusted Operating Income, Adjusted Operating Income Margin,

Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted EBITDA Service Margin

Dollars in millions

 

 

 

 

First Quarter

 

 

 

2020

 

2019

 

Operating Income

$

7,486

 $  

7,233

 

Adjustments to Operating Revenues

 

-

 

42

 

Adjustments to Operating Expenses

 

1,580

 

2,310

 

Adjusted Operating Income

 

9,066

 

9,585

 

 

 

 

 

 

 

EBITDA

 

14,708

 

14,439

 

Adjustments to Operating Revenues

 

-

 

42

 

Adjustments to Operations and Support Expenses

 

(476)

 

321

 

Adjusted EBITDA

 

14,232

 

14,802

 

 

 

 

 

 

 

Total Operating Revenues

 

42,779

 

44,827

 

Adjustments to Operating Revenues

 

-

 

42

 

Total Adjusted Operating Revenue

 

42,779

 

44,869

 

Service Revenues

 

38,883

 

40,684

 

Adjustments to Service Revenues

 

-

 

42

 

Adjusted Service Revenue

 

38,883

 

40,726

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income Margin

 

17.5%

 

16.1%

 

Adjusted Operating Income Margin

 

21.2%

 

21.4%

 

Adjusted EBITDA Margin

 

33.3%

 

33.0%

 

Adjusted EBITDA Service Margin

 

36.6%

 

36.3%

 
5


Adjusted Diluted EPS

 

 

 

 

 

First Quarter

 

 

 

2020

 

2019

 

Diluted Earnings Per Share (EPS)

 $  

0.63

 $  

0.56

 

   Amortization of intangible assets

 

0.23

 

0.21

 

   Merger integration items

 

0.02

 

0.01

 

   (Gain) loss on sale of assets, impairments

      and other adjustments

 

(0.04)

 

0.05

 

   Actuarial (gain) loss

 

-

 

0.05

 

   Tax-related items

 

-

 

(0.02)

 

Adjusted EPS

 $  

0.84

 $  

0.86

 

Year-over-year growth - Adjusted

 

-2.3%

 

 

 

Weighted Average Common Shares Outstanding with Dilution (000,000)

7,214

7,342

 

 

Constant Currency

Constant Currency is a non-GAAP financial measure that management uses to evaluate the operating performance of certain international subsidiaries by excluding or otherwise adjusting for the impact of changes in foreign currency exchange rates between comparative periods. We believe constant currency enhances comparison and is useful to investors to evaluate the performance of our business without taking into account the impact of changes to the foreign exchange rates to which our business is subject. To compute our constant currency results, we multiply or divide, as appropriate, our current year U.S. dollar results by the current year average foreign exchange rates and then multiply or divide, as appropriate, those amounts by the prior year average foreign exchange rates. In calculating amounts on a constant currency basis, for our Vrio business unit, we exclude our Venezuela subsidiary in light of the hyperinflationary conditions in Venezuela, which we do not believe are representative of the macroeconomics of the rest of the region in which we operate.


Constant Currency

Dollars in millions

 

 

 

 

 

First Quarter

 

 

 

2020

 

2019

 

AT&T Inc.

Total Operating Revenues

$

42,779

 $  

44,827

 

Exclude Venezuela

 

(6)

 

(3)

 

Impact of foreign exchange translation

 

299

 

-

 

Operating Revenues on Constant Currency Basis

 

43,072

 

44,824

 

Year-over-year growth

 

-3.9%

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

14,232

 

14,802

 

Exclude Venezuela

 

(2)

 

(2)

 

Impact of foreign exchange translation

 

119

 

-

 

Adjusted EBITDA on Constant Currency Basis

 

14,349

 

14,800

 

Year-over-year growth

 

-3.0%

 

 

 

 

 

 

 

 

 

WarnerMedia Segment

Total Operating Revenues

$

7,359

 $  

8,379

 

Impact of foreign exchange translation

 

66

 

-

 

Warner Media Operating Revenues on Constant Currency Basis

 

7,425

 

8,379

 

Year-over-year growth

 

-11.4%

 

 

 

 

 

 

 

 

 

EBITDA

 

1,842

 

2,386

 

Impact of foreign exchange translation

 

24

 

-

 

Warner Media EBITDA on Constant Currency Basis

 

1,866

 

2,386

 

Year-over-year growth

 

-21.8%

 

 

 

 

 

 

 

 

 

Latin America Segment

 

 

 

 

 

Total Operating Revenues

$

1,590

 $  

1,718

 

Exclude Venezuela

 

(6)

 

(3)

 

Impact of foreign exchange translation

 

233

 

-

 

Latin America Operating Revenues on Constant Currency Basis

 

1,817

 

1,715

 

Year-over-year growth

 

5.9%

 

 

 

 

 

 

 

 

 

EBITDA

 

93

 

127

 

Exclude Venezuela

 

(2)

 

(2)

 

Impact of foreign exchange translation

 

95

 

-

 

Latin America EBITDA on Constant Currency Basis

 

186

 

125

 

Year-over-year growth

 

48.8%

 

 

 
6

 

Net Debt to Adjusted EBITDA

Net Debt to EBITDA ratios are non-GAAP financial measures frequently used by investors and credit rating agencies and management believes these measures provide relevant and useful information to investors and other users of our financial data. Our Net Debt to Adjusted EBITDA ratio is calculated by dividing the Net Debt by the sum of the most recent four quarters Adjusted EBITDA. Net Debt is calculated by subtracting cash and cash equivalents and certificates of deposit and time deposits that are greater than 90 days, from the sum of debt maturing within one year and long-term debt.

 

 Net Debt to Adjusted EBITDA

Dollars in millions

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

 

 

June 30,

 

Sept. 30,

 

Dec. 31,

 

March 31,

 

Four Quarters

 

 

 

20191

 

20191

 

20191

 

2020

 

 

Adjusted EBITDA2

 $  

15,041

 $  

15,079

 $  

14,365

$

14,232

 $  

58,717

 

   End-of-period current debt

 

 

 

 

 

 

 

 

 

17,067

 

   End-of-period long-term debt

 

 

 

 

 

 

 

 

 

147,202

 

Total End-of-Period Debt

 

 

 

 

 

 

 

 

 

164,269

 

   Less: Cash and Cash Equivalents

 

 

 

 

 

 

 

 

 

9,955

 

Net Debt Balance

 

 

 

 

 

 

 

 

 

154,314

 

Annualized Net Debt to Adjusted EBITDA Ratio

 

 

 

 

 

2.628

 

1 As reported in AT&T's Form 8-K filed July 24, 2019, October 28, 2019, and January 29, 2020.

2 Includes the purchase accounting reclassification of released content amortization of $112 million, $108 million, $102 million and $69 million in the four quarters 

   presented, respectively.

7

Supplemental Operational Measures

We provide a supplemental discussion of our business solutions operations that is calculated by combining our Mobility and Business Wireline operating units, and then adjusting to remove non-business operations. The following table presents a reconciliation of our supplemental Business Solutions results.

Supplemental Operational Measure

 

 

First Quarter

 

 

March 31, 2020

 

 

March 31, 2019

 

 

Mobility

 

Business Wireline

 

Adjustments1

 

Business Solutions

 

 

Mobility

 

Business Wireline

 

Adjustments1

 

Business Solutions

Operating Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Wireless service

$

13,968

$

-

$

(12,019)

$

1,949

 

$

13,629

$

-

$

(11,852)

$

1,777

  Strategic and managed services

 

-

 

3,879

 

-

 

3,879

 

 

-

 

3,779

 

-

 

3,779

  Legacy voice and data services

 

-

 

2,129

 

-

 

2,129

 

 

-

 

2,397

 

-

 

2,397

  Other services and equipment

 

-

 

324

 

-

 

324

 

 

-

 

302

 

-

 

302

  Wireless equipment

 

3,434

 

-

 

(2,724)

 

710

 

 

3,734

 

-

 

(3,144)

 

590

Total Operating Revenues

 

17,402

 

6,332

 

(14,743)

 

8,991

 

 

17,363

 

6,478

 

(14,996)

 

8,845

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Operations and support

 

9,569

 

3,951

 

(7,810)

 

5,710

 

 

10,041

 

4,032

 

(8,459)

 

5,614

EBITDA

 

7,833

 

2,381

 

(6,933)

 

3,281

 

 

7,322

 

2,446

 

(6,537)

 

3,231

  Depreciation and amortization

 

2,045

 

1,301

 

(1,721)

 

1,625

 

 

2,013

 

1,222

 

(1,710)

 

1,525

Total Operating Expenses

 

11,614

 

5,252

 

(9,531)

 

7,335

 

 

12,054

 

5,254

 

(10,169)

 

7,139

Operating Income

 

5,788

 

1,080

 

(5,212)

 

1,656

 

 

5,309

 

1,224

 

(4,827)

 

1,706

Equity in Net Income (Loss) of Affiliates

 

-

 

-

 

-

 

-

 

 

-

 

-

 

-

 

-

Operating Contribution

$

5,788

$

1,080

$

(5,212)

$

1,656

 

$

5,309

$

1,224

$

(4,827)

$

1,706

1 Non-business wireless reported in the Communication segment under the Mobility business unit.

  Results have been recast to conform to the current period's classification.

 

 

 

 

 

 

 

 

 
8