(Mark One)
x
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2017
OR
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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Large accelerated filer [X]
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Accelerated filer [ ]
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Non-accelerated filer [ ] (Do not check if a smaller reporting company)
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Smaller reporting company [ ]
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Emerging growth company [ ]
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(1) |
Portions of AT&T Inc.'s Annual Report to Stockholders for the fiscal year ended December 31, 2017 (Parts I and II).
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(2) |
Portions of AT&T Inc.'s Notice of 2018 Annual Meeting and Proxy Statement dated on or about March 12, 2018 to be filed within the period permitted under General Instruction G(3) (Parts III and IV).
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Name of each exchange
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Title of each class
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on which registered
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Common Shares (Par Value $1.00 Per Share)
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New York Stock Exchange
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Floating Rate AT&T Inc.
Global Notes due June 4, 2019
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New York Stock Exchange
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1.875% AT&T Inc.
Global Notes due December 4, 2020
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New York Stock Exchange
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2.65% AT&T Inc.
Global Notes due December 17, 2021 |
New York Stock Exchange
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1.45% AT&T Inc.
Global Notes due June 1, 2022 |
New York Stock Exchange
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2.50% AT&T Inc.
Global Notes due March 15, 2023
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New York Stock Exchange
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Floating Rate AT&T Inc.
Global Notes due September 4, 2023
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New York Stock Exchange
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1.05% AT&T Inc.
Global Notes due September 4, 2023
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New York Stock Exchange
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1.30% AT&T Inc.
Global Notes due September 5, 2023
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New York Stock Exchange
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2.75% AT&T Inc.
Global Notes due May 19, 2023
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New York Stock Exchange
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2.40% AT&T Inc.
Global Notes due March 15, 2024 |
New York Stock Exchange
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3.50% AT&T Inc.
Global Notes due December 17, 2025 |
New York Stock Exchange
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1.80% AT&T Inc.
Global Notes due September 4, 2026
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New York Stock Exchange
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2.35% AT&T Inc.
Global Notes due September 4, 2029
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New York Stock Exchange
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4.375% AT&T Inc.
Global Notes due September 14, 2029
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New York Stock Exchange
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SCHEDULE A - Continued
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2.60% AT&T Inc.
Global Notes due December 17, 2029 |
New York Stock Exchange
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3.55% AT&T Inc.
Global Notes due December 17, 2032
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New York Stock Exchange
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5.20% AT&T Inc.
Global Notes due November 18, 2033
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New York Stock Exchange
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3.375% AT&T Inc.
Global Notes due March 15, 2034 |
New York Stock Exchange
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2.45% AT&T Inc.
Global Notes due March 15, 2035 |
New York Stock Exchange
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3.15% AT&T Inc.
Global Notes due September 4, 2036
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New York Stock Exchange
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3.55% AT&T Inc.
Global Notes due September 14, 2037
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New York Stock Exchange
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7.00% AT&T Inc.
Global Notes due April 30, 2040 |
New York Stock Exchange
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4.25% AT&T Inc.
Global Notes due June 1, 2043
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New York Stock Exchange
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4.875% AT&T Inc.
Global Notes due June 1, 2044 |
New York Stock Exchange
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5.35% AT&T Inc.
Global Notes due November 1, 2066
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New York Stock Exchange
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Item
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Page
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PART I
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1.
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Business
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1
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1A.
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Risk Factors
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11
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2.
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Properties
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12
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3.
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Legal Proceedings
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12
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4.
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Mine Safety Disclosures
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12
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Executive Officers of the Registrant
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13
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PART II
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5.
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Market for Registrant's Common Equity, Related Stockholder Matters
and Issuer Purchases of Equity Securities
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14
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6.
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Selected Financial Data
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16
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7.
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Management's Discussion and Analysis of Financial Condition
and Results of Operations
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16
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7A.
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Quantitative and Qualitative Disclosures about Market Risk
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16
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8.
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Financial Statements and Supplementary Data
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16
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9.
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Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure
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16
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9A.
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Controls and Procedures
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16
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9B.
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Other Information
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17
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PART III
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10.
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Directors, Executive Officers and Corporate Governance
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17
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11.
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Executive Compensation
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17
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12.
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Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters
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17
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13.
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Certain Relationships and Related Transactions, and Director Independence
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18
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14.
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Principal Accountant Fees and Services
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18
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PART IV
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15.
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Exhibits and Financial Statement Schedules
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18
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·
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Business Solutions business units provide services to business customers, including multinational companies, governmental and wholesale customers, and individual subscribers who purchase wireless services through employer-sponsored plans. We provide advanced IP-based services including Virtual Private Networks (VPN); Ethernet-related products; FlexWare, a service that relies on Software Defined Networking (SDN) and Network Functions Virtualization (NFV) to provide application-based routing, and broadband, collectively referred to as strategic services, as well as traditional data and voice products. We utilize our wireless and wired networks to provide a complete communications solution to our business customers.
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·
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Entertainment Group business units provide video, internet, voice communication, and interactive and targeted advertising services to customers located in the United States or in U.S. territories. We utilize our IP-based and copper network and our satellite technology.
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·
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Consumer Mobility business units provide nationwide wireless service to consumers, and wholesale and resale subscribers located in the United States and in U.S. territories. We utilize our network to provide voice and data services, including high-speed internet services over wireless devices.
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AT&T Inc.
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·
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International business units provide entertainment services in Latin America and wireless services in Mexico. Video entertainment services are provided to primarily residential customers using satellite technology. We utilize our regional and national networks in Mexico to provide consumer and business customers with wireless data and voice communication services.
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AT&T Inc.
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AT&T Inc.
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AT&T Inc.
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AT&T Inc.
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AT&T Inc.
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AT&T Inc.
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Percentage of Total
Consolidated Operating Revenues
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2017
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2016
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2015
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Business Solutions Segment
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Wireless service
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20
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%
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19
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%
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21
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%
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Legacy voice and data services
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9
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10
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12
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Equipment
1
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5
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5
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6
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Entertainment Group Segment
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Video entertainment
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23
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22
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14
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Legacy voice and data services
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2
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3
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4
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Consumer Mobility Segment
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Wireless service
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16
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17
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20
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Equipment
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3
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3
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4
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International Segment
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Video entertainment
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3
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3
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1
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AT&T Inc.
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AT&T Inc.
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AT&T Inc.
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·
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Adverse economic and/or capital access changes in the markets served by us or in countries in which we have significant investments, including the impact on customer demand and our ability and our suppliers' ability to access financial markets at favorable rates and terms.
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Changes in available technology and the effects of such changes, including product substitutions and deployment costs.
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Increases in our benefit plans' costs, including increases due to adverse changes in the United States and foreign securities markets, resulting in worse-than-assumed investment returns and discount rates; adverse changes in mortality assumptions; adverse medical cost trends; and unfavorable or delayed implementation or repeal of healthcare legislation, regulations or related court decisions.
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The final outcome of FCC and other federal, state or foreign government agency proceedings (including judicial review, if any, of such proceedings) involving issues that are important to our business, including, without limitation, special access and business data services; intercarrier compensation; interconnection obligations; pending Notices of Apparent Liability; the transition from legacy technologies to IP-based infrastructure, including the withdrawal of legacy TDM-based services; universal service; broadband deployment; wireless equipment siting regulations; E911 services; competition policy; privacy; net neutrality; unbundled network elements and other wholesale obligations; multi-channel video programming distributor services and equipment; availability of new spectrum, on fair and balanced terms; and wireless and satellite license awards and renewals.
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The final outcome of state and federal legislative efforts involving issues that are important to our business, including privacy, net neutrality, deregulation of IP-based services, relief from Carrier of Last Resort obligations and elimination of state commission review of the withdrawal of services.
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Enactment of additional state, local, federal and/or foreign regulatory and tax laws and regulations, or changes to existing standards and actions by tax agencies and judicial authorities including the resolution of disputes with any taxing jurisdictions, pertaining to our subsidiaries and foreign investments, including laws and regulations that reduce our incentive to invest in our networks, resulting in lower revenue growth and/or higher operating costs.
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Our ability to absorb revenue losses caused by increasing competition, including offerings that use alternative technologies or delivery methods (e.g., cable, wireless, VoIP and over-the-top video service), subscriber reluctance to purchase new wireless handsets, and our ability to maintain capital expenditures.
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The extent of competition including from governmental networks and other providers and the resulting pressure on customer totals and segment operating margins.
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Our ability to develop attractive and profitable product/service offerings to offset increasing competition.
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The ability of our competitors to offer product/service offerings at lower prices due to lower cost structures and regulatory and legislative actions adverse to us, including state regulatory proceedings relating to unbundled network elements and non-regulation of comparable alternative technologies (e.g., VoIP).
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The continued development and delivery of attractive and profitable video and broadband offerings; the extent to which regulatory and build-out requirements apply to our offerings; our ability to match speeds offered by our competitors and the availability, cost and/or reliability of the various technologies and/or content required to provide such offerings.
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·
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Our continued ability to maintain margins, attract and offer a diverse portfolio of video, wireless service and devices and device financing plans.
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The availability and cost of additional wireless spectrum and regulations and conditions relating to spectrum use, licensing, obtaining additional spectrum, technical standards and deployment and usage, including network management rules.
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Our ability to manage growth in wireless video and data services, including network quality and acquisition of adequate spectrum at reasonable costs and terms.
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The outcome of pending, threatened or potential litigation (which includes arbitrations), including, without limitation, patent and product safety claims by or against third parties.
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·
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The impact from major equipment failures on our networks, including satellites operated by DIRECTV; the effect of security breaches related to the network or customer information; our inability to obtain handsets, equipment/software or have handsets, equipment/software serviced in a timely and cost-effective manner from suppliers; and in the case of satellites launched, timely provisioning of services from vendors; or severe weather conditions, natural disasters, pandemics, energy shortages, wars or terrorist attacks.
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·
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The issuance by the Financial Accounting Standards Board or other accounting oversight bodies of new accounting standards or changes to existing standards.
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Our ability to close our pending acquisition of Time Warner Inc. and successfully reorganize our operations, including the ability to manage various businesses in widely dispersed business locations and with decentralized management.
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·
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Our ability to adequately fund our wireless operations, including payment for additional spectrum, network upgrades and technological advancements.
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·
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Our increased exposure to video competition and foreign economies, including foreign exchange fluctuations as well as regulatory and political uncertainty.
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·
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Changes in our corporate strategies, such as changing network-related requirements or acquisitions and dispositions, which may require significant amounts of cash or stock, to respond to competition and regulatory, legislative and technological developments.
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·
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The uncertainty surrounding further congressional action to address spending reductions, which may result in a significant decrease in government spending and reluctance of businesses and consumers to spend in general.
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(a)
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Waste Disposal Inquiry Involving DIRECTV
In August 2012, a unit organized by the California Attorney General and the District Attorney for Alameda County, California notified DIRECTV that the unit was examining allegations that DIRECTV had failed to properly manage, store, transport and dispose of Hazardous and Universal Waste in accordance with the California Health & Safety Code. No litigation was filed. In November 2017, DIRECTV settled this matter for an immaterial amount and agreed to continue to abide by processes to comply with California waste regulations already implemented by AT&T affiliates in California for a period of 5 years.
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AT&T Inc.
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EXECUTIVE OFFICERS OF THE REGISTRANT
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(As of February 1, 2018)
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Name
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Age
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Position
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Held Since
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Randall L. Stephenson
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57
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Chairman of the Board, Chief Executive Officer
and President
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6/2007
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William A. Blase Jr.
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62
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Senior Executive Vice President – Human Resources
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6/2007
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John M. Donovan
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57
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Chief Executive Officer, AT&T Communications, LLC
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8/2017
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David S. Huntley
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59
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Senior Executive Vice President and Chief Compliance Officer
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12/2014
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Lori M. Lee
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52
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Chief Executive Officer-AT&T International and Global Marketing Officer
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8/2017
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Brian D. Lesser
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43
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Chief Executive Officer-AT&T Advertising and Analytics, AT&T Services, Inc.
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9/2017
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David R. McAtee II
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49
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Senior Executive Vice President and General Counsel
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10/2015
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Robert W. Quinn Jr.
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57
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Senior Executive Vice President – External and Legislative
Affairs, AT&T Services, Inc.
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10/2016
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John T. Stankey
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55
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Senior Executive Vice President-AT&T/Time Warner Merger Integration Planning, AT&T Services, Inc.
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8/2017
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John J. Stephens
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58
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Senior Executive Vice President and Chief Financial Officer
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6/2011
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AT&T Inc.
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AT&T Inc.
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AT&T Inc.
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AT&T Inc.
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(1) Report of Independent Registered Public Accounting Firm
Financial Statements covered by Report of Independent Registered Public Accounting Firm:
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income
Consolidated Balance Sheets
Consolidated Statements of Cash Flows
Consolidated Statements of Changes in Stockholders’ Equity
Notes to Consolidated Financial Statements
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Page
*
*
*
*
*
*
*
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* |
Incorporated herein by reference to the appropriate portions of the registrant's Annual Report to Stockholders for the fiscal year ended December 31, 2017. (See Part II.)
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(2) Financial Statement Schedules:
II - Valuation and Qualifying Accounts
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Page
23
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Exhibit Number
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2
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Agreement and Plan of Merger, dated as of October 22, 2016, among AT&T Inc., Time Warner Inc. and West Merger Sub, Inc. (
Exhibit 10.1 to Form 8-K dated October 24, 2016
.
)
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3-a
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Restated Certificate of Incorporation, filed with the Secretary of State of Delaware on December 13, 2013. (
Exhibit 3.1 to Form 8-K dated December 13, 2013
.)
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3-b
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Bylaws amended December 18, 2015. (
Exhibit 3 to Form 8-K dated December 18, 2015
.)
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4-a
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No instrument which defines the rights of holders of long-term debt of the registrant and all of its consolidated subsidiaries is filed herewith pursuant to Regulation S-K, Item 601(b)(4)(iii)(A), except for the instruments referred to in 4-b, 4-c, 4-d, 4-e, 4-f, 4-g, 4-h, 4-i, and 4-j below. Pursuant to this regulation, the registrant hereby agrees to furnish a copy of any such instrument not filed herewith to the SEC upon request.
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AT&T Inc.
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4-b
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Guaranty of certain obligations of Pacific Bell Telephone Co. and Southwestern Bell Telephone Co. (
Exhibit 4-c to Form 10-K for 2011
.)
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4-c
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Guaranty of certain obligations of Ameritech Capital Funding Corp., Indiana Bell Telephone Co. Inc., Michigan Bell Telephone Co., Pacific Bell Telephone Co., Southwestern Bell Telephone Company, Illinois Bell Telephone Company, The Ohio Bell Telephone Company, The Southern New England Telephone Company, Southern New England Telecommunications Corporation, and Wisconsin Bell, Inc. (
Exhibit 4-d to Form 10-K for 2011
.)
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4-d
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Guarantee of certain obligations of AT&T Corp. (
Exhibit 4-e to Form 10-K for 2011
.)
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4-e
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Indenture, dated as of May 15, 2013, between AT&T Inc. and The Bank of New York Mellon Trust Company, N.A. as Trustee.
(
Exhibit 4.1 to Form 8-K dated May 15, 2013
.
)
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4-f
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Indenture dated as of November 1, 1994 between SBC Communications Inc. and The Bank of New York, as Trustee. (
Exhibit 4-h to Form 10-K for 2013
.)
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10-a
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2018 Incentive Plan.
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10-b
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2016 Incentive Plan (
Exhibit 10-a to Form 10-Q filed for March 31, 2016
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10-b(i)
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10-b(ii)
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10-b(iii)
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10-c
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2011 Incentive Plan, amended September 24, 2015. (
Exhibit 10-a to Form 10-Q filed for September 30, 2015
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10-d
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10-e
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Supplemental Life Insurance Plan, amended September 24, 2015. (
Exhibit 10-e to Form 10-Q filed for September 30, 2015
.)
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10-f
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Supplemental Retirement Income Plan, amended December 31, 2008. (
Exhibit 10-e to Form 10-K for 2013
.)
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10-g
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2005 Supplemental Employee Retirement Plan, amended September 28, 2017. (
Exhibit 10.1 to Form 8-K dated October 3, 2017
.)
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10-h
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Salary and Incentive Award Deferral Plan, amended December 31, 2004. (
Exhibit 10-k to Form 10-K for 2011
.)
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10-i
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Stock Savings Plan, amended December 31, 2004. (
Exhibit 10-l to Form 10-K for 2011
.)
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10-j
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10-k
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Cash Deferral Plan, amended March 30, 2017. (
Exhibit 10-b to Form 10-Q filed for March 31, 2017
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10-l
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Master Trust Agreement for AT&T Inc. Deferred Compensation Plans and Other Executive Benefit Plans and subsequent amendments dated August 1, 1995 and November 1, 1999. (
Exhibit 10-dd to Form 10-K for 2009
.)
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AT&T Inc.
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10-m
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Officer Disability Plan, amended January 1, 2010. (
Exhibit 10-i to Form 10-Q filed for June 30, 2009
.)
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10-n
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10-o
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Pension Benefit Makeup Plan No.1, amended December 31, 2016. (
Exhibit 10-n to Form 10-K filed for 2017
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)
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10-p
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AT&T Inc. Equity Retention and Hedging Policy. (
Exhibit 10.2 to Form 8-K dated December 15, 2011
.)
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10-q
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Administrative Plan, amended September 24, 2015. (
Exhibit 10-p to Form 10-K for 2016
.)
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10-r
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AT&T Inc. Non-Employee Director Stock and Deferral Plan, amended September 25, 2015. (
Exhibit 99.1 to Form 8-K dated September 25, 2015
.)
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10-s
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AT&T Inc. Non-Employee Director Stock Purchase Plan, dated June 27, 2008. (
Exhibit 10-t to Form 10-K for 2013
.)
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10-t
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Communications Concession Program for Directors, amended and restated February 1, 2013. (
Exhibit 10-aa to Form 10-K for 2012
.)
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10-u
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Form of Indemnity Agreement, effective July 1, 1986, between SBC (now AT&T Inc.) and its directors and officers. (
Exhibit 10-bb to Form 10-K for 2011
.)
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10-v
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Transition Agreement by and between BellSouth Corporation and Rafael de la Vega, dated December 29, 2003. (
Exhibit 10-cc to Form 10-K for 2011
.)
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10-w
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AT&T Corp. Executive Deferred Compensation Plan (formerly known as AT&T Corp. Senior Management Incentive Award Deferral Plan), amended and restated January 1, 2008. (
Exhibit 10-aa to Form 10-K for 2013
.)
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10-x
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Master Trust Agreement for AT&T Corp. Deferred Compensation Plans and Other Executive Benefit Plans, effective January 13, 1994. (
Exhibit 10-nn to Form 10-K for 2011
.)
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10-x(i)
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First Amendment to Master Trust Agreement, effective December 23, 1997. (
Exhibit 10-nn(i) to Form 10-K for 2011
.)
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10-y
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AT&T Corp. Non-Qualified Pension Plan, amended December 31, 2008. (
Exhibit 10-cc to Form 10-K for 2013
.)
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10-z
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AT&T Corp. Excess Benefit and Compensation Plan, amended December 31, 2008. (
Exhibit 10-dd to Form 10-K for 2013
.)
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10-aa
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BellSouth Corporation Nonqualified Deferred Compensation Plan, dated January 1, 2005. (
Exhibit 10-ss to Form 10-K for 2011
.)
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10-bb
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BellSouth Corporation Stock and Incentive Compensation Plan, amended June 28, 2004. (
Exhibit 10-qq for Form 10-K for 2009
.)
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10-bb(i)
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First Amendment to the BellSouth Corporation Stock and Incentive Compensation Plan, dated September 26, 2005. (
Exhibit 10-xx(i) to Form 10-K for 2011
.)
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AT&T Inc.
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10-bb(ii)
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Second Amendment to BellSouth Corporation Stock and Incentive Compensation Plan, effective June 26, 2008. (
Exhibit 10-hh(ii) to Form 10-K for 2013
.)
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10-cc
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BellSouth Corporation Supplemental Executive Retirement Plan, amended December 18, 2014. (
Exhibit 10.2 to Form 8-K dated December 18, 2014
.)
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10-dd
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BellSouth Nonqualified Deferred Income Plan, amended May 1, 2012. (
Exhibit 10-fff to Form 10-K for 2012
.)
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10-ee
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Cingular Wireless Cash Deferral Plan, dated November 1, 2001. (
Exhibit 10-hhh to Form 10-K for 2011
.)
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10-ff
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AT&T Mobility 2005 Cash Deferral Plan, dated January 1, 2005. (
Exhibit 10-lll to Form 10-K for 2011
.)
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10-gg
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AT&T Executive Physical Program, dated January 1, 2011.
(
Exhibit 10-ff to Form 10-K for 2016
.)
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10-hh
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Equalization Agreement for John Stankey (
Exhibit 10.1 to Form 8-K dated August 20, 2015
.)
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10-ii
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Agreement between James Cicconi and AT&T Inc. (
Exhibit 10-b to Form 10-Q filed for September 30, 2016
.)
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10-jj
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Agreement between Ralph de la Vega and AT&T Inc. (
Exhibit 10.1 to Form 8-K dated December 16, 2016
.)
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10-kk
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$12,000,000,000 Amended and Restated Credit Agreement, dated December 11, 2015,
among AT&T, certain lenders named therein and Citibank, N.A., as administrative agent. (
Exhibit 10 to Form 8-K dated December 15, 2015
.)
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10-ll
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$10,000,000,000 Term Loan Credit Agreement, dated as of November 15, 2016, among AT&T Inc., the lenders named therein and JPMorgan Chase Bank, N.A., as Agent (
Exhibit 10.1 to Form 8-K dated November 15, 2016
.)
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10-ll(i)
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First Amendment to the $10,000,000,000 Term Loan Credit Agreement (increased to $16,175,000,000), dated February 2, 2018. (
Exhibit 10.1 to Form 8-K dated February 5, 2018
.)
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10-mm
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$2,250,000,000 Term Loan Credit Agreement, dated as of September 29, 2017, among AT&T Inc., certain lenders named therein and The Bank of Nova Scotia, as Administrative Agent (
Exhibit 10-f to Form 10-Q filed for September 30, 2017
.)
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12
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13
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21
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23
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24
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31
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Rule 13a-14(a)/15d-14(a) Certifications
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AT&T Inc.
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31.1
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31.2
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32
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99
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Supplemental Interim Financial Information
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101
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XBRL Instance Document
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COL. A
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COL. B
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COL. C
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COL. D
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COL. E
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||||||||||||||||||||
Additions
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||||||||||||||||||||||||
(1)
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(2)
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(3)
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|||||||||||||||||||
Balance at
Beginning of
Period
|
Charged to
Costs and
Expenses (a)
|
Charged to
Other
Accounts (b)
|
Acquisitions
(c)
|
Deductions (d)
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Balance at End
of Period
|
|||||||||||||||||||
Year 2017
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$
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661
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1,642
|
-
|
-
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1,640
|
$
|
663
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||||||||||||||||
Year 2016
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$
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704
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1,474
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-
|
-
|
1,517
|
$
|
661
|
||||||||||||||||
Year 2015
|
$
|
454
|
1,416
|
-
|
214
|
1,380
|
$
|
704
|
||||||||||||||||
(a) |
Includes amounts previously written off which were credited directly to this account when recovered. Excludes direct charges and credits to expense for nontrade receivables in the consolidated statements of income.
|
(b) |
Includes amounts related to long-distance carrier receivables which were billed by AT&T.
|
(c)
|
Acquisitions of DIRECTV and wireless properties in Mexico in 2015.
|
(d)
|
Amounts written off as uncollectible, or related to divested entities.
|
COL. A
|
COL. B
|
COL. C
|
COL. D
|
COL. E
|
||||||||||||||||||||
Additions
|
||||||||||||||||||||||||
(1)
|
|
(2)
|
|
(3)
|
|
|||||||||||||||||||
Balance at
Beginning of
Period
|
Charged to
Costs and
Expenses
|
Charged to
Other
Accounts (a)
|
Acquisitions
(b)
|
Deductions (c)
|
Balance at End
of Period
|
|||||||||||||||||||
Year 2017
|
$
|
2,283
|
2,376
|
(19)
|
|
-
|
-
|
$
|
4,640
|
|||||||||||||||
Year 2016
|
$
|
2,141
|
81
|
61
|
-
|
-
|
$
|
2,283
|
||||||||||||||||
Year 2015
|
$
|
1,182
|
283
|
373
|
420
|
117
|
$
|
2,141
|
||||||||||||||||
(a) |
Includes current year reclassifications from other balance sheet accounts.
|
(b) |
Acquisitions of DIRECTV and wireless properties in Mexico in 2015.
|
AT&T INC.
/s/ John J. Stephens
John J. Stephens
Senior Executive Vice President
and Chief Financial Officer
|
/s/ John J. Stephens
John J. Stephens, as attorney-in-fact
and on his own behalf as Principal
Financial Officer and Principal
Accounting Officer
February 20, 2018
|
Directors:
|
|
Randall L. Stephenson*
|
Michael B. McCallister*
|
Samuel A. Di Piazza, Jr.*
|
Beth E. Mooney*
|
Richard W. Fisher*
|
Joyce M. Roché*
|
Scott T. Ford*
|
Matthew K. Rose*
|
Glenn H. Hutchins*
|
Cynthia B. Taylor*
|
William E. Kennard*
|
Laura D'Andrea Tyson*
|
Geoffrey Y. Yang*
|
1.01
|
Establishment of the Plan.
AT&T Inc., a Delaware corporation (the "Company" or "AT&T"), hereby establishes an incentive compensation plan (the "Plan"), as set forth in this document.
|
1.02
|
Purpose of the Plan.
The purpose of the Plan is to promote the success and enhance the value of the Company by linking the personal interests of Participants to those of the Company's stockholders, and by providing Participants with an incentive for outstanding performance.
|
1.03
|
Effective Date of the Plan.
The Plan is effective on May 1, 2018.
|
2.01
|
Whenever used in the Plan, the following terms shall have the meanings set forth below and, when the meaning is intended, the initial letter of the word is capitalized:
|
(a)
|
"Applicable Law" means the legal requirements relating to the administration of options and share-based or performance-based awards under any applicable laws of the United States, any other country, and any provincial, state, or local subdivision, any applicable stock exchange or automated quotation system rules or regulations, as such laws, rules, regulations and requirements shall be in place from time to time.
|
(b)
|
"Award" means, individually or collectively, a grant or award under this Plan of Stock Options, Restricted Stock (including unrestricted Stock), Restricted Stock Units, Performance Units, or Performance Shares.
|
(c)
|
"Award Agreement" means an agreement which may be entered into by each Participant and the Company, setting forth the terms and provisions applicable to Awards granted to Participants under this Plan.
|
(d)
|
"Board" or "Board of Directors" means the AT&T Board of Directors.
|
(e)
|
"Cause" means willful and gross misconduct on the part of an Employee that is materially and demonstrably detrimental to the Company or any Subsidiary as determined by the Committee in its sole discretion.
|
(f)
|
"Change in Control" shall be deemed to have occurred if (1) any "person" (as such term is used in Sections 13(d) and 14(d) of the Exchange Act), other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company or a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company, becomes the "beneficial owner" (as defined in Rule 13d-3 under said Act), directly or indirectly, of securities of the Company representing twenty percent (20%) or more of the total voting power represented by the Company's then outstanding voting securities; or (2) during any period of two (2) consecutive years, individuals who at the beginning of such period constitute the Board of Directors of the Company and any new Director whose election by the Board of Directors or nomination for election by the Company's stockholders was approved by a vote of at least two-thirds (2/3) of the Directors then still in office who either were Directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof; or (3) the consummation of a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation, or (4) the stockholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all the Company's assets.
|
(g)
|
"Code" means the Internal Revenue Code of 1986, as amended from time to time.
|
(h)
|
"Committee" means the committee or committees of the Board of Directors given authority to administer the Plan as provided in Article 3.
|
(i)
|
"Director" means any individual who is a member of the AT&T Board of Directors.
|
(j)
|
"Disability" means, absence of an Employee from work under the relevant Company or Subsidiary long term disability plan.
|
(k)
|
"Employee" means any employee of the Company or of one of the Company's Subsidiaries. "Employment" means the employment of an Employee by the Company or one of its Subsidiaries. Directors who are not otherwise employed by the Company shall not be considered Employees under this Plan.
|
(l)
|
"Exchange Act" means the Securities Exchange Act of 1934, as amended from time to time, or any successor Act thereto.
|
(m)
|
"Exercise Price" means the price at which a Share may be purchased by a Participant pursuant to an Option, as determined by the Committee.
|
(n)
|
"Fair Market Value" means the closing price on the NYSE for a Share on the relevant date, or if such date was not a trading day, the next preceding trading date, all as determined by the Company. A trading day is any day that the Shares are traded on the NYSE. In lieu of the foregoing, the Committee may, from time to time, select any other index or measurement to determine the Fair Market Value of Shares under the Plan, including but not limited to an average determined over a period of trading days.
|
(o)
|
"Insider" means an Employee who is, on the relevant date, an officer, director, or ten percent (10%) beneficial owner of the Company, as those terms are defined under Section 16 of the Exchange Act.
|
(p)
|
"NYSE" or "New York Stock Exchange." If the New York Stock Exchange is no longer the principal exchange on which the stock is listed, then NYSE shall refer to such principal exchange unless otherwise provided by the Disinterested Committee.
|
(q)
|
"Officer Level Employee" means a Participant who is an officer level Employee for compensation purposes as indicated on the records of AT&T. References to records of AT&T shall include the records of its Subsidiaries.
|
(r)
|
"Option" means an option to purchase Shares from AT&T.
|
(s)
|
"Participant" means an Employee or former Employee who holds an outstanding Award granted under the Plan.
|
(t)
|
"Performance Unit" and "Performance Share" each mean an Award granted to an Employee pursuant to Article 8 herein.
|
(u)
|
"Retirement" or to "Retire" means the Participant's Termination of Employment for any reason other than death, Disability, or for Cause, on or after the earlier of the following dates, or as otherwise provided by the Committee: (1) for Officer Level Employees, the date the Participant is at least age fifty-five (55) and has completed a 5 year Term of Employment; provided, however, that individuals who are designated as an Officer on or after October 1, 2015, must have completed a 10-year Term of Employment; or (2) the date the Participant has attained one of the following combinations of age and service, except as otherwise indicated below:
|
Term of Employment
|
Age |
|
10 years or more
|
65 or older
|
|
20 years or more
|
55 or older
|
|
25 years or more
|
50 or older
|
|
30 years or more
|
Any age
|
|
(v)
|
"Senior Manager" means a Participant who is a senior manager for compensation purposes as indicated on the records of AT&T.
|
(w) |
"Severance Termination of Employment" means a Termination of Employment where the Participant receives a cash severance payment under a severance plan of the Participant's employer or pursuant to an individually negotiated severance agreement.
|
(x) |
"Shares" or "Stock" means the shares of common stock of the Company.
|
(y) |
"Subsidiary" means any corporation, partnership, venture or other entity in which AT&T holds, directly or indirectly, a fifty percent (50%) or greater ownership interest.
|
(z) |
"Surplus Termination of Employment" means a Termination of Employment as a result of force surplus, technological, operational, organizational and/or structural changes affecting the relevant employer without an offer for comparable employment, or an Employment Termination that occurs as a result of declining a Company initiated or offered job relocation to a work location that is more than fifty (50) miles from the employee's work location and that increases the employee's work commute.
|
(aa) |
"Termination of Employment" or a similar reference means the event where the Employee is no longer an Employee of the Company or of any Subsidiary, including but not limited to where the employing company ceases to be a Subsidiary. With respect to any Award that provides "nonqualified deferred compensation" within the meaning of Section 409A of the Code, "Termination of Employment" shall mean a "separation from service" as defined under Section 409A of the Code.
|
3.01
|
The Committee
. Administration of the Plan shall be as follows:
|
(a)
|
With respect to Insiders, the Plan and Awards hereunder shall be administered by the Human Resources Committee of the Board or such other committee as may be appointed by the Board for this purpose (each of the Human Resources Committee and such other committee is the "Disinterested Committee"), where each Director on such Disinterested Committee is a "Non-Employee Director," as that term is used in Rule 16b-3 under the Exchange Act (or any successor designation for determining the committee that may administer plans, transactions or awards exempt under Section 16(b) of the Exchange Act), as that rule may be modified from time to time.
|
(b)
|
With respect to persons who are not Insiders, the Plan and Awards hereunder shall be administered by each of the Disinterested Committee and such other committee, if any, to which the Board may delegate such authority (such other Committee shall be the "Non-Insider Committee"), and each such Committee shall have full authority to administer the Plan and all Awards hereunder, except as otherwise provided herein or by the Board. The Disinterested Committee may, from time to time, limit the authority of the Non-Insider Committee in any way. Any Committee may be replaced by the Board at any time.
|
(c)
|
Except as otherwise indicated from the context, references to the "Committee" in this Plan shall be to either of the Disinterested Committee or the Non-Insider Committee.
|
3.02
|
Authority of the Committee
. The Committee shall have complete control over the administration of the Plan and shall have the authority in its sole discretion to exercise all of the powers granted to it under the Plan, which shall include but not be limited to the authority to:
|
(a)
|
construe, interpret and implement the Plan, grant terms and grant notices, and all Award Agreements;
|
(b)
|
prescribe, amend and rescind rules and regulations relating to the Plan, including rules governing its own operations;
|
(c)
|
make all determinations necessary or advisable in administering the Plan or any Award thereunder;
|
(d)
|
correct any defect, supply any omission and reconcile any inconsistency in the Plan; and
|
(e)
|
with respect to Awards:
|
(i)
|
grant Awards,
|
(ii)
|
determine who shall receive Awards,
|
(iii)
|
determine when Awards shall be granted
|
(iv)
|
determine the terms and conditions of Awards, including, but not limited to, conditioning the exercise, vesting, payout or other terms or conditions of an
Award on the achievement of Performance Goals (defined in Article 8), and |
(v)
|
determine whether and to the extent the terms and conditions of Awards have been achieved or satisfied.
|
3.03
|
No Award may be made under the Plan after April 30, 2028.
|
3.04
|
References to determinations or other actions by AT&T or the Company, herein, shall mean actions authorized by the Committee, the Chairman of the Board of AT&T, the Senior Executive Vice President of AT&T in charge of Human Resources or their respective successors or duly authorized delegates, in each case in the discretion of such person, provided, however, only the Disinterested Committee may take action with respect to Insiders with regard to granting or determining the terms of Awards or other matters that would require the Disinterested Committee to act in order to comply with Rule 16b-3 promulgated under the Exchange Act.
|
3.05
|
All determinations and decisions made by AT&T pursuant to the provisions of the Plan and all related orders or resolutions of the Board shall be final, conclusive, and binding on all persons, including but not limited to the Company, its stockholders, Employees, Participants, and their estates and beneficiaries.
|
3.06
|
This Plan is not intended to and does not limit the discretion of the Committee or the Company in any way to pay any form of compensation in lieu of or in addition to the Awards or other compensation provided by this Plan.
|
4.01
|
Number of Shares
. Subject to adjustment as provided in Section 4.03 herein, the number of Shares available for issuance under the Plan shall not exceed one hundred fifty (150) million Shares. The Shares granted under this Plan may be either authorized but unissued or reacquired Shares. The Disinterested Committee shall have full discretion to determine the manner in which Shares available for grant are counted in this Plan. In any calendar year, no individual may be granted one or more awards of Restricted Stock, Restricted Stock Units, Performance Shares, or any combination thereof, which, in aggregate, would have a potential payout equivalent to more than five percent (5%) of the Shares approved for issuance under this Plan.
|
4.02
|
Share Accounting
. Without limiting the discretion of the Committee under this section, unless otherwise provided by the Disinterested Committee, the following rules will apply for purposes of the determination of the number of Shares available for grant under the Plan or compliance with the foregoing limits:
|
(a)
|
If an outstanding Award for any reason expires or is terminated or canceled without having been exercised or settled in full, or if Shares acquired pursuant to an Award subject to forfeiture are forfeited under the terms of the Plan or the relevant Award, the Shares allocable to the terminated portion of such Award or such forfeited Shares shall again be available for issuance under the Plan.
|
(b)
|
Shares shall not be deemed to have been issued pursuant to the Plan with respect to any portion of an Award that is settled in cash, other than an Option.
|
(c)
|
When an Option is exercised (including but not limited to a Stock-Settled exercise), the number of shares available for issuance under the Plan shall be reduced by the gross number of shares for which the Option is exercised.
|
4.03
|
Adjustments in Authorized Plan Shares and Outstanding Awards
. In the event of any merger, reorganization, consolidation, recapitalization, separation, split-up, liquidation, Share combination, Stock split, Stock dividend, or other change in the corporate structure of the Company affecting the Shares, an adjustment shall be made in the number and class of Shares which may be delivered under the Plan (including but not limited to individual limits), and in the number and class of and/or price of Shares subject to outstanding Awards granted under the Plan, and/or the number of outstanding Options, Shares of Restricted Stock, and Performance Shares (and Performance Units and other Awards whose value is based on a number of Shares) constituting outstanding Awards, as may be determined to be appropriate and equitable by the Disinterested Committee, in its sole discretion, to prevent dilution or enlargement of rights.
|
5.01
|
Eligibility
. All management Employees are eligible to receive Awards under this Plan.
|
5.02
|
Actual Participation
. Subject to the provisions of the Plan, the Committee may, from time to time, select from all eligible Employees, those to whom Awards shall be granted and shall determine the nature and amount of each Award. No Employee is entitled to receive an Award unless selected by the Committee.
|
6.01
|
Grant of Options
. Subject to the terms and provisions of the Plan, Options may be granted to eligible Employees at any time and from time to time, and under such terms and conditions, as shall be determined by the Committee. The Committee shall have discretion in determining the number of Shares subject to Options granted to each Employee; provided, however, that no single Employee may receive Options under this Plan for more than two percent (2%) of the Shares approved for issuance under this Plan during any calendar year. The Committee may not grant Incentive Stock Options, as described in Section 422 of the Code, under this Plan.
|
6.02
|
Form of Issuance
. The Committee may require, as a condition to receiving an Option Award, that the Participant enter into an Option Award Agreement, setting forth the terms and conditions of the Award. In lieu of an Option Award Agreement, the Committee may provide the terms and conditions of an Option Award in a notice to the Participant, in the resolution approving the Award, or in such other manner as it deems appropriate. Such terms and conditions shall include the Exercise Price, the duration of the Option, the number of Shares to which an Option pertains (unless otherwise provided by the Committee, each Option may be exercised to purchase one Share), and such other provisions as the Committee shall determine.
|
6.03
|
Exercise Price
. Unless a greater Exercise Price is determined by the Committee, the Exercise Price for each Option Awarded under this Plan shall be equal to one hundred percent (100%) of the Fair Market Value of a Share on the date the Option is granted. Subject to adjustment as provided in Section 4.03 herein or as otherwise provided herein, the terms of an Option may not be amended to reduce the exercise price nor may Options be cancelled or exchanged for cash, other awards or Options with an exercise price that is less than the exercise price of the original Options.
|
6.04
|
Duration of Options
. Each Option shall expire at such time as the Committee shall determine at the time of grant (which duration may be extended by the Committee); provided, however, that no Option shall be exercisable later than the tenth (10th) anniversary date of its grant. In the event the Committee does not specify the expiration date of an Option, then such Option will expire on the tenth (10th) anniversary date of its grant, except as otherwise provided herein.
|
6.05
|
Vesting of Options
. A grant of Options shall vest at such times and under such terms and conditions as determined by the Committee; provided, however, unless another vesting period is provided by the Committee at or before the grant of an Option, one-third of the Options will vest on each of the first three anniversaries of the grant; if one Option remains after equally dividing the grant by three, it will vest on the first anniversary of the grant, if two Options remain, then one will vest on each of the first two anniversaries. The Committee shall have the right to accelerate the vesting of any Option; however, the Chairman of the Board or the Senior Executive Vice President-Human Resources, or their respective successors, or such other persons designated by the Committee, shall have the authority to accelerate the vesting of Options for any Participant who is not an Insider.
|
6.06
|
Exercise of Options.
|
(a)
|
An Option shall be exercised by providing notice to the designated agent selected by the Company (if no such agent has been designated, then to the Company), in the manner and form determined by the Company, which notice shall be irrevocable, setting forth the exact number of Shares with respect to which the Option is being exercised and including with such notice payment of the Exercise Price, as applicable. When an Option has been transferred, the Company or its designated agent may require appropriate documentation that the person or persons exercising the Option, if other than the Participant, has the right to exercise the Option. No Option may be exercised with respect to a fraction of a Share.
|
(b)
|
Options granted under the Plan shall be exercisable at such times and be subject to such restrictions and conditions as the Committee shall in each instance approve, which need not be the same for each grant or for each Participant. Unless otherwise provided by the Committee, exercises of Options may be effected only on days and during the hours that the NYSE is open for regular trading. The Company may change or limit the times or days Options may be exercised. If an Option expires on a day or at a time when exercises are not permitted, then the Options may be exercised no later than the immediately preceding date and time that the Options were exercisable.
|
6.07
|
Payment of the Exercise Price
.
|
(a)
|
Unless otherwise determined by the Committee, the Exercise Price shall be paid in full at the time of exercise. No Shares shall be issued or transferred until full payment has been received or the next business day thereafter, as determined by AT&T.
|
(b)
|
The Committee may, from time to time, determine, modify, or limit the method or methods of exercising Options or the manner in which the Exercise Price is to be paid. Unless otherwise provided by the Committee in full or in part:
|
(i)
|
Payment may be made in cash.
|
(ii)
|
An Option may be "stock settled," which shall mean upon exercise of an Option, the Company shall deliver that number of shares of Stock found by taking the difference between (A) the Fair Market Value of the Stock as of the first day that the Stock was traded on the NYSE immediately preceding the exercise date, multiplied by the number of Options being exercised and (B) the total Exercise Price of the Options being exercised, and dividing such difference by the Fair Market Value of the Stock as of the first day that the Stock was traded on the NYSE immediately preceding the exercise date.
|
(iii)
|
If the Company has designated an agent to process Option exercises, an Option may be exercised by issuing an exercise notice together with instructions to such agent irrevocably instructing the agent (which shall include any broker-dealer engaged by the agent): (A) to immediately sell (which shall include an exercise notice that becomes effective upon execution of a sale order) a sufficient portion of the Shares to be received from the Option exercise to pay the Exercise Price of the Options being exercised and the required tax withholding, and (B) to deliver on the settlement date the portion of the proceeds of the sale equal to the Exercise Price and tax withholding to the Company. In the event the agent sells any Shares on behalf of a Participant, the agent shall be acting solely as the agent of the Participant, and the Company disclaims any responsibility for the actions of the agent in making any such sales. No Shares shall be issued until the settlement date and until the proceeds (equal to the Exercise Price and tax withholding) are paid to the Company.
|
6.08
|
Termination of Employment
. Unless otherwise provided by the Committee, the following limitations on exercise of Options shall apply upon Termination of Employment:
|
(a)
|
Termination by Death or Disability
. In the event of the Participant's Termination of Employment by reason of death or Disability, all outstanding Options granted to that Participant shall immediately vest as of the date of Termination of Employment and may be exercised, if at all, no more than five (5) years from the date of the Termination of Employment, unless the Options, by their terms, expire earlier.
|
(b)
|
Termination for Cause
. In the event of the Participant's Termination of Employment for Cause, then the Committee may, in its sole discretion, forfeit all outstanding Options held by the Participant to the Company and no additional exercise period shall be allowed, regardless of the vested status of the Options.
|
(c)
|
Retirement or Other Termination of Employment
. In the event of the Participant's Termination of Employment for any reason other than the reasons set forth in (a) or (b), above:
|
(i)
|
If upon the Participant's Termination of Employment, the Participant is eligible to Retire, then all outstanding unvested Options granted to that Participant shall immediately vest as of the date of the Participant's Termination of Employment;
|
(ii)
|
All outstanding Options which are vested as of the effective date of Termination of Employment may be exercised, if at all, no more than five (5) years from the date of Termination of Employment if the Participant is eligible to Retire, or three (3) months from the date of the Termination of Employment if the Participant is not eligible to Retire, as the case may be, unless in either case the Options, by their terms, expire earlier; and
|
(iii)
|
In the event of the death of the Participant after Termination of Employment, this paragraph (c) shall still apply and not paragraph (a), above.
|
(d)
|
Options not Vested at Termination
. Except as provided in paragraphs (a) and (c)(i), above, all Options held by the Participant which are not vested on or before the effective date of Termination of Employment shall immediately be forfeited to the Company (and the Shares subject to such forfeited Options shall once again become available for issuance under the Plan).
|
(e)
|
Other Terms and Conditions.
Notwithstanding the foregoing, the Committee may, in its sole discretion, establish different, or waive, terms and conditions pertaining to the effect of Termination of Employment on Options, whether or not the Options are outstanding, but no such modification shall shorten the terms of Options issued prior to such modification or otherwise be materially adverse to the Participant.
|
6.09
|
Restrictions on Exercise and Transfer of Options.
Unless otherwise provided by the Committee:
|
(a)
|
During the Participant's lifetime, the Participant's Options shall be exercisable only by the Participant or by the Participant's guardian or legal representative. After the death of the Participant, except as otherwise provided by AT&T's Rules for Employee Beneficiary Designations, an Option shall only be exercised by the holder thereof (including, but not limited to, an executor or administrator of a decedent's estate) or his or her guardian or legal representative.
|
(b)
|
No Option shall be transferable except: (i) in the case of the Participant, only upon the Participant's death and in accordance with the AT&T Rules for Employee Beneficiary Designations; and (ii) in the case of any holder after the Participant's death, only by will or by the laws of descent and distribution.
|
7.01
|
Grant of Restricted Stock
. Subject to the terms and provisions of the Plan, the Committee, at any time and from time to time, may grant Shares of Restricted Stock to eligible Employees in such amounts and upon such terms and conditions as the Committee shall determine. In addition to any other terms and conditions imposed by the Committee, vesting of Restricted Stock may be conditioned upon the achievement of Performance Goals in the same manner as provided in Section 8.04, herein, with respect to Performance Shares.
|
7.02
|
Restricted Stock Agreement
. The Committee may require, as a condition to receiving a Restricted Stock Award, that the Participant enter into a Restricted Stock Award Agreement, setting forth the terms and conditions of the Award. In lieu of a Restricted Stock Award Agreement, the Committee may provide the terms and conditions of an Award in a notice to the Participant of the Award, on the Stock certificate representing the Restricted Stock, in the resolution approving the Award, or in such other manner as it deems appropriate.
|
7.03
|
Transferability
. Except as otherwise provided in this Article 7, and subject to any additional terms in the grant thereof, Shares of Restricted Stock granted herein may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated until fully vested.
|
7.04
|
Restrictions
.
|
(a)
|
The Restricted Stock shall be subject to such vesting terms, including the achievement of Performance Goals (as described in Section 8.04), as may be determined by the Committee. Unless otherwise provided by the Committee, to the extent Restricted Stock is subject to any condition to vesting, if such condition or conditions are not satisfied by the time the period for achieving such condition has expired, such Restricted Stock shall be forfeited. The Committee may impose such other conditions and/or restrictions on any Shares of Restricted Stock granted pursuant to the Plan as it may deem advisable including but not limited to a requirement that Participants pay a stipulated purchase price for each Share of Restricted Stock and/or restrictions under applicable Federal or state securities laws; and may legend the certificates representing Restricted Stock to give appropriate notice of such restrictions. The Committee may also grant Restricted Stock without any terms or conditions in the form of vested Stock Awards.
|
(b)
|
The Company shall have the right to retain the certificates, if any, representing Shares of Restricted Stock in the Company's possession until such time as the Shares are fully vested and all conditions and/or restrictions applicable to such Shares have been satisfied.
|
7.05
|
Removal of Restrictions
. Except as otherwise provided in this Article 7 or otherwise provided in the grant terms, Shares of Restricted Stock covered by each Restricted Stock grant made under the Plan shall become freely transferable by the Participant after completion of all conditions to vesting, if any. However, the Committee, in its sole discretion, shall have the right to immediately vest the shares and waive all or part of the restrictions and conditions with regard to all or part of the Shares held by any Participant at any time.
|
7.06
|
Voting Rights, Dividends and Other Distributions
. Participants holding Shares of Restricted Stock granted hereunder may exercise full voting rights and, unless otherwise provided in the grant terms, shall receive all dividends and distributions paid with respect to such Shares. The Committee may require that dividends and other distributions, other than regular cash dividends, paid to Participants with respect to Shares of Restricted Stock be subject to the same restrictions and conditions as the Shares of Restricted Stock with respect to which they were paid. If any such dividends or distributions are paid in Shares, the Shares shall automatically be subject to the same restrictions and conditions as the Shares of Restricted Stock with respect to which they were paid.
|
7.07
|
Termination of Employment Due to Death or Disability
. In the event of the Participant's Termination of Employment by reason of death or Disability, all restrictions imposed on outstanding Shares of Restricted Stock held by the Participant shall immediately lapse and the Restricted Stock shall immediately become fully vested as of the date of Termination of Employment.
|
7.08
|
Termination of Employment for Other Reasons
. Unless otherwise provided by the Committee, in the event of the Participant's Termination of Employment for any reason other than due to death, Disability, or Surplus Termination of Employment, all Shares of Restricted Stock held by the Participant which are not vested as of the effective date of Termination of Employment immediately shall be forfeited and returned to the Company.
|
7.09
|
Restricted Stock Units
.
|
(a)
|
In lieu of or in addition to Restricted Stock, the Committee may grant Restricted Stock Units under such terms and conditions as shall be determined by the Committee. Restricted Stock Units shall be subject to the same terms and conditions under this Plan as Restricted Stock except as otherwise provided in this Section 7.09 or as otherwise provided by the Committee. Except as otherwise provided by the Committee, the award shall be settled and pay out promptly upon vesting (to the extent permitted by Section 409A of the Code), and the Participant holding such Restricted Stock Units shall receive, as determined by the Committee, Shares (or cash equal to the Fair Market Value of the number of Shares as of the date the award becomes payable) equal to the number of such Restricted Stock Units. Restricted Stock Units shall not be transferable, shall have no voting rights, and shall not receive dividends, but shall, unless otherwise provided by the Committee, receive dividend equivalents at the time and at the same rate as dividends are paid on Shares with the same record and pay dates.
|
(b)
|
Except as otherwise provided by the Committee, upon a Participant's Termination of Employment due to death or Disability or upon becoming or being Retirement eligible, his or her Restricted Stock Units will vest, and in the case of death, will pay out promptly, and in other cases, will pay out at the scheduled distribution date. If the Participant dies after Termination of Employment, vested Restricted Stock Units will be promptly paid out.
|
7.10 |
Surplus Termination of Employment. Except as otherwise provided by the Committee, in the event of a Surplus Termination of Employment of a Participant that occurs prior to the vesting date of a grant of Restricted Stock or Restricted Stock Units made to such Participant, such grant shall be pro-rated and vested as follows: the number of the Participant's unvested Restricted Stock or Restricted Stock Units shall be prorated by multiplying the number of unvested Restricted Stock or Restricted Stock Units by the number of months in the restriction period during which the Participant worked at least one day divided by the total number of months in the restriction period, and such prorated amount shall be immediately vested; provided, however, a grant of Restricted Stock Units shall not be payable until the scheduled distribution date, or as otherwise provided in the Plan.
|
8.01
|
Grants of Performance Units and Performance Shares
. Subject to the terms of the Plan, Performance Shares and Performance Units may be granted to eligible Employees at any time and from time to time, as determined by the Committee. The Committee shall have complete discretion in determining the number of Performance Units and/or Performance Shares Awarded to each Participant and the terms and conditions of each such Award.
|
8.02
|
Value of Performance Shares and Units.
|
8.03
|
Performance Period
. The Performance Period for Performance Shares and Performance Units is the period over which the Performance Goals are measured. The Performance Period is set by the Committee for each Award.
|
8.04
|
Performance Goals
.
|
8.05
|
Dividend Equivalents on Performance Shares.
Unless otherwise provided by the Committee, a cash payment ("Dividend Equivalent") in an amount equal to the dividend payable on one Share shall be made to a Participant for each Performance Share held by such Participant on the record date for the dividend. Such Dividend Equivalent, if any, will be payable at the time the relevant AT&T common stock dividend is payable or at such other time as determined by the Committee, and may be modified or terminated by the Committee at any time. Notwithstanding the foregoing, unless otherwise provided by the Committee, Dividend Equivalents paid with respect to Performance Shares granted to an Officer Level Employee shall only be paid on the number of Performance Shares actually distributed and such payment shall be made when the related Performance Shares are distributed.
|
8.06
|
Form and Timing of Payment of Performance Units and Performance Shares
.
|
(a)
|
As soon as practicable after the applicable Performance Period has ended and all other conditions (other than Committee actions) to conversion and distribution of a Performance Share and/or Performance Unit Award have been satisfied (or, if applicable, at such other time determined by the Committee at or before the establishment of the Performance Goal), the Committee shall determine whether and the extent to which the Performance Goals were met for the applicable Performance Units and Performance Shares. If the Committee determines that the Performance Goals have been met, then the number of Performance Units and Performance Shares to be converted into Stock and/or cash and distributed to the Participants shall be determined in accordance with the Performance Goals for such Awards, subject to any limits imposed by the Committee.
|
(b)
|
Payment of Performance Units and Performance Shares shall be made in a single lump sum, as soon as reasonably administratively possible following the determination of the number of Shares or amount of cash to which the Participant is entitled but not later than the 15
th
day of the third month following the end of the applicable Performance Period.
|
(c)
|
Performance Units will be distributed to Participants in the form of cash. Unless otherwise provided by the Committee, Performance Shares will be distributed to Participants in the form of fifty percent (50%) Stock and fifty percent (50%) Cash.
|
(d)
|
At any time prior to the distribution of the Performance Shares and/or Performance Units, unless otherwise provided by the Committee or prohibited by this Plan (such as in the case of a Change in Control), the Committee shall have the authority to modify the Performance Goals or the terms and conditions of Performance Units or Performance Shares, reduce or eliminate the number of Performance Units or Performance Shares to be converted and distributed, cancel any part or all of a grant or award of Performance Units or Performance Shares, or to mandate the form in which the Award shall be paid (i.e., in cash, in Stock or both, in any proportions determined by the Committee).
|
(e)
|
Notwithstanding anything to the contrary in this Plan, after a Change in Control, the payout of Performance Units and Performance Shares shall be determined exclusively by the attainment of the Performance Goals in effect prior to the Change in Control, and such Performance Goals may not be modified after such Change in Control. In addition, after a Change in Control, other than an adjustment to the awards based on the extent to which the Performance Goals were achieved, AT&T shall not reduce or eliminate the number of Performance Units or Performance Shares or cancel any part or all of a grant or award of Performance Units or Performance Shares.
|
(f)
|
For the purpose of converting Performance Shares into cash and distributing the same to the holders thereof (or for determining the amount of cash to be deferred), the value of a Performance Share shall be the Fair Market Value of a Share on the date the Committee authorizes the payout of Awards. Performance Shares to be distributed in the form of Stock will be converted at the rate of one (1) Share per Performance Share.
|
8.07
|
Death or Disability
. In the event of the Participant's death during a Performance Period, the Participant shall receive a lump sum payout of the related outstanding Performance Units and Performance Shares calculated as if all unfinished Performance Periods had ended with one hundred percent (100%) of the Performance Goals achieved, valued as of the date of death and payable as soon thereafter as reasonably possible but not later than the 15th day of the third month after the end of the calendar year in which such death occurred. Where the amount or part of Dividend Equivalents is determined by the number of Performance Shares that are paid out or is otherwise determined by a performance measure, and the related Performance Period for the Dividend Equivalents was not completed at death, then the Dividend Equivalents will be calculated as though one hundred percent (100%) of the goals were achieved and paid as soon as reasonably possible. A Termination of Employment due to Disability will not affect a Participant's Award.
|
8.08
|
Retirement, Surplus Termination, Severance Termination, or Other Termination
. Unless the Committee determines otherwise at any time, in the event of the Participant's Termination of Employment during the Performance Period while Retirement eligible, in the event of a Surplus Termination of Employment, Severance Termination of Employment, and in each case, not due to death or Disability, then upon such Termination, the amount of the Participant's Performance Units and number of Performance Shares shall be adjusted; the revised Awards shall be determined by multiplying the amount of the Performance Units and the number of Performance Shares, as applicable, by the number of months the Participant worked at least one day during the respective Performance Period divided by the number of months in the Performance Period, to be paid, if at all, at the same time and under the same terms that such outstanding Performance Units or Performance Shares would otherwise be paid; provided, however, if the Termination of Employment occurs during the Performance Period and is for a reason other than Death, Disability, Surplus Termination of Employment, or Severance Termination of Employment and while not Retirement eligible, then the related Award shall be cancelled upon such Termination.
|
8.09
|
Nontransferability
. Performance Units and Performance Shares are not transferable.
|
9.01
|
In the event of the death of a Participant, distributions or Awards under this Plan, except for Restricted Stock, shall pass in accordance with the AT&T Rules for Employee Beneficiary Designations, as the same may be amended from time to time. A Participant's most recent Beneficiary Designation that is applicable to awards under the 1996 Stock and Incentive Plan, the 2001 Incentive Plan, the 2006 Incentive Plan, the 2011 Incentive Plan or the 2016 Incentive Plan will also apply to distributions or awards under this Plan, except for Restricted Stock, unless and until the Participant provides to the contrary in accordance with the procedures set forth in such Rules.
|
10.01
|
Employment Not Guaranteed
. Nothing in the Plan shall interfere with or limit in any way the right of the Company or any Subsidiary to terminate any Participant's Employment at any time, nor confer upon any Participant any right to continue in the employ of the Company or one of its Subsidiaries.
|
10.02
|
Participation
. No Employee shall have the right to be selected to receive an Award under this Plan, or, having been so selected, to be selected to receive a future Award.
|
10.03
|
Loyalty Conditions and Enforcement
. This section relates solely to Awards granted to a Participant who is an Officer Level Employee or a Senior Manager as of the date the Award is made.
|
(a)
|
Each Award under the Plan is intended to closely align the Participant's long-term interests with those of the Company and its shareholders, and the conditions set forth in subsections (b) or (c) hereof (collectively, the "Loyalty Conditions") are intended to protect the Company's critical need for each Participant's loyalty to the Company and its shareholders. If any Participant does not comply with a Loyalty Condition, either during employment or within the periods described below following Termination of Employment for any reason, then the Participant is acting contrary to the long-term interests of the Company, and there will be a failure of the consideration on which the Participant received any Award or Awards pursuant to the Plan. Accordingly, unless otherwise provided in the Award, as a condition of such Award, the Participant is deemed to agree that he shall not, without obtaining the written consent of AT&T in advance, violate the Loyalty Conditions of this Section. Unless otherwise expressly provided in an Award Agreement, if the Participant violates a Loyalty Condition, then the Company may terminate any outstanding, unexercised, unexpired, unpaid, or deferred Awards ("Award Termination"), rescind any exercise, payment or delivery pursuant to any Award or Awards ("Rescission"), or recapture any cash or Shares (whether restricted or unrestricted) issued pursuant to any Award or Awards, or proceeds from the Participant's sale of such Shares
|
|
("Recapture"). Notwithstanding any provision to the contrary, nothing in this Plan shall be interpreted to prohibit, limit or interfere with a Participant's right to report possible violations of federal, state or local law or regulation to any governmental or law enforcement agency or entity, including, but not limited to, the Department of Justice, the Securities and Exchange Commission, the Federal Communications Commission or Congress, to make other disclosures that are protected under the whistleblower or other provision of federal, state or local law or regulation, or to receive an award, reward, or other compensation therefore. Similarly, a Participant may report such possible violations to anyone in his or her chain of command, the AT&T Legal Department, AT&T Asset Protection, or any other AT&T group responsible for compliance with laws or AT&T policy.
|
(b)
|
A Participant shall not, without the Company's prior written authorization, (i) disclose to anyone outside the Company or use, other than in the Company's business, any Confidential Information, or (ii) disclose any trade secrets of the Company, as that term is defined under Applicable Law, for as long as such information is not generally known to the Company's competitors through no fault or negligence of the Participant.
|
(c)
|
A Participant shall not, without the Company's prior written authorization, during his or her employment by the Company or any of its Subsidiaries, or within two years after the Termination of Employment for any reason, engage in any of the following conduct:
|
(i)
|
own, operate or control, or participate in the ownership, operation or control of, any business enterprise (including, without limitation, any corporation, partnership, proprietorship or other venture) that competes with the Company in the Restricted Business anywhere in the Restricted Territory;
|
(ii)
|
become employed as an officer or executive by any business enterprise (including, without limitation, any corporation, partnership, proprietorship or other venture) that competes with the Company in the Restricted Business anywhere in the Restricted Territory, if such employment or engagement requires Participant to compete against the Company in the Restricted Business;
|
(iii)
|
solicit any nonclerical employee of the Company with whom the Participant had Contact during his or her employment to terminate employment with the Company; or
|
(iv)
|
commit any breach of Participant's fiduciary duty or the duty of loyalty, as determined by Applicable Law,
|
(d)
|
Coincidentally with the exercise, receipt of payment, or delivery of cash or Shares pursuant to an Award, the Company may require that the Participant shall give a certification to the Company in writing if the Participant is not for any reason in full compliance with the terms and conditions of the Plan, including its Loyalty Conditions. If a Termination of Employment has occurred for any reason, the Participant's certification shall state the name and address of the Participant's then-current employer
|
(e)
|
or any entity for which the Participant performs business services and the Participant's title, and shall identify any organization or business in which the Participant owns an equity interest of greater than five percent.
|
(f)
|
If the Company determines, in its sole and absolute discretion, that a Participant has violated any of the Loyalty Conditions, then the Committee may, in its sole and absolute discretion, impose an Award Termination, Rescission, and/or Recapture with respect to any or all of the Participant's Awards, including any Shares or cash associated therewith, or any proceeds thereof.
|
(g)
|
Within ten days after receiving notice from the Company of any such activity described in subsections (b) or (c) above, the Participant shall deliver to the Company the cash or Shares acquired pursuant to any and all Awards, or, if Participant has sold the Shares, the gain realized, or payment received as a result of the rescinded exercise, payment, or delivery; provided, that if the Participant returns Shares that the Participant purchased pursuant to the exercise of an Option (or the gains realized from the sale of such Shares), the Company shall promptly refund the exercise price, without earnings or interest, that the Participant paid for the Shares. Any payment by the Participant to the Company pursuant to this Section shall be made either in cash or by returning to the Company the number of Shares that the Participant received in connection with the rescinded exercise, payment, or delivery. It shall not be a basis for Award Termination, Rescission or Recapture if, after a Termination of Employment, the Participant purchases, as an investment or otherwise, stock or other securities of an organization engaged in the Restricted Business, so long as (i) such stock or other securities are listed upon a recognized securities exchange or traded over the counter, and (ii) such investment does not represent more than a ten percent (10%) equity interest in the organization or business.
|
(h)
|
Notwithstanding the foregoing provisions of this Section, the Company has sole and absolute discretion not to require Award Termination, Rescission and/or Recapture, and its determination not to require Award Termination, Rescission and/or Recapture with respect to any particular act by a particular Participant or Award shall not in any way reduce or eliminate the Company's authority to require Award Termination, Rescission and/or Recapture with respect to any other act or Participant or Award. Nothing in this Section shall be construed to impose obligations on the Participant to refrain from engaging in lawful competition with the Company after the Participant's Termination of Employment that does not violate subsections (b) or (c) of this Section, other than any obligations that are part of any separate agreement between the Company and the Participant or that arise under Applicable Law.
|
(i)
|
All administrative and discretionary authority given to the Company under this Section shall be exercised by the most senior human resources executive of the Company or such other person or committee (including without limitation the Committee) as the Committee may designate from time to time.
|
(j)
|
If any provision within this Section is determined to be unenforceable or invalid under any applicable law, such provision will be applied to the maximum extent permitted by Applicable Law, and shall automatically be deemed amended in a manner consistent with its objectives and any limitations required under Applicable Law.
|
10.04
|
Reimbursement of Company for Unearned or Ill-gotten Gains.
The Participant shall repay to the Company any amount received under any Award, and the Company may cancel or forfeit any unpaid or unvested Award, in each case to the extent required under any policy adopted at any time by the Company pursuant to any applicable listing standards established under Section 10D of the Securities Exchange Act of 1934. This section shall not limit the Company's right to revoke or cancel an award or take other action against a recipient of an award for any other reason, including but not limited to misconduct.
|
11.01
|
Amendment and Termination.
At any time and from time to time, the Board or the Disinterested Committee may amend or terminate the Plan. The Board, the Disinterested Committee, or the Non-Insider Committee (subject to Section 3.01) may amend an Award in whole or in part. Notwithstanding the foregoing, no termination, amendment, or modification of the Plan or any Award (other than Performance Shares or Performance Units) that adversely affects in any material way any Award previously granted under the Plan shall be made without the written consent of the Participant holding such Award; provided, however, that any such modification made for the purpose of complying with Section 409A of the Code or due to changes in applicable law may be made by the Company without the consent of any Participant.
|
11.02
|
Delay in Payment
. To the extent required in order to avoid the imposition of any interest and/or additional tax under Section 409A(a)(1)(B) of the Code, any amount that is considered deferred compensation under the Plan or Agreement and that is required to be postponed pursuant to Section 409A of the Code, following the a Participant's Termination of Employment shall be delayed for six months if a Participant is deemed to be a "specified employee" as defined in Section 409A(a)(2)(i)(B) of the Code; provided that, if the Participant dies during the postponement period prior to the payment of the postponed amount, the amounts withheld on account of Section 409A shall be paid to the executor or administrator of the decedent's estate within 60 days following the date of his death. A "Specified Employee" means any Participant who is a "key employee" (as defined in Code Section 416(i) without regard to paragraph (5) thereof), as
|
|
|
11.03
|
determined by AT&T in accordance with its uniform policy with respect to all arrangements subject to Code Section 409A, based upon the twelve (12) month period ending on each December 31st (such twelve (12) month period is referred to below as the "identification period"). All Participants who are determined to be key employees under Code Section 416(i) (without regard to paragraph (5) thereof) during the identification period shall be treated as Specified Employees for purposes of the Plan during the twelve (12) month period that begins on the first day of the 4th month following the close of such identification period.
|
12.01
|
Tax Withholding
. Unless otherwise provided by the Committee, the Company shall deduct or withhold an amount sufficient to satisfy Federal, state, and local taxes (including but not limited to the Participant's employment tax obligations) required by law to be withheld with respect to any taxable event arising or as a result of this Plan ("Withholding Taxes").
|
12.02
|
Share Withholding
.
|
(a)
|
Unless otherwise provided by the Committee, upon the exercise of Options, the lapse of restrictions on Restricted Stock, the distribution of Performance Shares in the form of Stock, or any other taxable event hereunder involving the transfer of Stock to a Participant, the Company shall withhold Stock equal in value to the Withholding Taxes applicable to such transaction using the method used to value the Stock for tax purposes.
|
(b)
|
Any fractional Share of Stock payable to a Participant shall be withheld as additional Federal withholding, or, at the option of the Company, paid in cash to the Participant.
|
(c)
|
Unless otherwise determined by the Committee, when the method of payment for the Exercise Price is from the sale through an agent appointed by the Company of the Stock acquired through the Option exercise, then the tax withholding shall be satisfied out of the proceeds. For administrative purposes in determining the amount of taxes due, the sale price of such Stock shall be deemed to be the Fair Market Value of the Stock.
|
(d)
|
If permitted by the Committee, prior to the end of any Performance Period a Participant may elect to have a greater amount of Stock withheld from the distribution of Performance Shares to pay withholding taxes; provided, however, the Committee may prohibit or limit any individual election or all such elections at any time.
|
(e)
|
Alternatively, or in combination with the foregoing, the Committee may require Withholding Taxes to be paid in cash by the Participant or by the sale of a portion of the Stock being distributed in connection with an Award, or by a combination thereof.
|
13.01
|
All obligations of the Company under the Plan, with respect to Awards granted hereunder, shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company.
|
14.01
|
Gender and Number
. Except where otherwise indicated by the context, any masculine term used herein also shall include the feminine; the plural shall include the singular and the singular shall include the plural.
|
14.02
|
Severability
. In the event any provision of the Plan shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the Plan, and the Plan shall be construed and enforced as if the illegal or invalid provision had not been included.
|
14.03
|
Requirements of Law
. The granting of Awards and the issuance of Shares under the Plan shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required.
|
14.04
|
Errors
. At any time AT&T may correct any error made under the Plan without prejudice to AT&T. Such corrections may include, among other things, changing or revoking an issuance of an Award.
|
14.05
|
Elections and Notices
.
|
(a)
|
Notwithstanding anything to the contrary contained in this Plan, all elections and notices of every kind shall be made on forms prepared by AT&T or the General Counsel, Secretary or Assistant Secretary, or their respective delegates or shall be made in such other manner as permitted or required by AT&T or the General Counsel, Secretary or Assistant Secretary, or their respective delegates, including but not limited to elections or notices through electronic means, over the Internet or otherwise. An election shall be deemed made when received by AT&T (or its designated agent, but only in cases where the designated agent has been appointed for the purpose of receiving such election), which may waive any defects in form. AT&T may limit the time an election may be made in advance of any deadline.
|
(b)
|
Where any notice or filing required or permitted to be given to AT&T under the Plan, it shall be delivered to the principal office of AT&T, directed to the attention of the Senior Executive Vice President-Human Resources of AT&T or his or her successor. Such notice shall be deemed given on the date of delivery.
|
(c)
|
Notice to the Participant shall be deemed given when mailed (or sent by telecopy) to the Participant's work or home address as shown on the records of AT&T or, at the option of AT&T, to the Participant's e-mail address as shown on the records of AT&T.
|
(d)
|
It is the Participant's responsibility to ensure that the Participant's addresses are kept up to date on the records of AT&T. In the case of notices affecting multiple Participants, the notices may be given by general distribution at the Participants' work locations.
|
14.06
|
Governing Law
. To the extent not preempted by Federal law, the Plan, and all awards and agreements hereunder, and any and all disputes in connection therewith, shall be governed by and construed in accordance with the substantive laws of the State of Texas, without regard to conflict or choice of law principles which might otherwise refer the construction, interpretation or enforceability of this Plan to the substantive law of another jurisdiction.
|
14.07
|
Venue
. Because awards under the Plan are granted in Texas, records relating to the Plan and awards thereunder are located in Texas, and the Plan and awards thereunder are administered in Texas, except as otherwise agreed by the Participant and the Company in a Mandatory Arbitration Agreement, the Company and the Participant to whom an award under this Plan is granted, for themselves and their successors and assigns, irrevocably submit to the exclusive and sole jurisdiction and venue of the state or federal courts of Texas with respect to any and all disputes arising out of or relating to this Plan, the subject matter of this Plan or any awards under this Plan, including but not limited to any disputes arising out of or relating to the interpretation and enforceability of any awards or the terms and conditions of this Plan. To achieve certainty regarding the appropriate forum in which to prosecute and defend actions arising out of or relating to this Plan, and to ensure consistency in application and interpretation of the Governing Law to the Plan, except as otherwise agreed by the Participant and the Company in a Mandatory Arbitration Agreement, the parties agree that:
|
(a)
|
sole and exclusive appropriate venue for any such action shall be an appropriate federal or state court in Dallas County, Texas, and no other,
|
(b)
|
all claims with respect to any such action shall be heard and determined exclusively in such Texas court, and no other,
|
(c)
|
such Texas court shall have sole and exclusive jurisdiction over the person of such parties and over the subject matter of any dispute relating hereto, and
|
|
|
(d)
|
that the parties waive any and all objections and defenses to bringing any such action before such Texas court, including but not limited to those relating to lack of personal jurisdiction, improper venue or
forum non conveniens
.
|
14.08
|
409A Compliance
. Awards under the Plan may be structured to be exempt from or be subject to Section 409A of the Code. To the extent that Awards granted under the Plan are subject to Section 409A of the Code, the Plan will be construed and administered in a manner that enables the Plan and such Awards to comply with the provisions of Section 409A of the Code.
|
(a) |
if Mr. Donovan reports to an officer or employee of the Company or any of its affiliates other than the Chief Executive Officer of AT&T Inc.; or
|
(b) |
if the Company creates a higher-level position (e.g., Vice Chairman or Chief Operating Officer of AT&T Inc.) and Mr. Donovan is not placed in that role or an equivalent role; and
|
(a) |
if Mr. Stankey reports to an officer or employee of the Company or any of its affiliates other than the Chief Executive Officer of AT&T Inc.; or
|
(b) |
if the Company creates a higher-level position (e.g., Vice Chairman or Chief Operating Officer of AT&T Inc.) and Mr. Stankey is not placed in that role or an equivalent role; and
|
(a) |
if Mr. Stephens reports to an officer or employee of the Company or any of its affiliates other than the Chief Executive Officer of AT&T Inc.; or
|
(b) |
if the Company creates a higher-level position (e.g., Vice Chairman or Chief Operating Officer of AT&T Inc.) and Mr. Stephens is not placed in that role or an equivalent role; and
|
1.
|
Definitions
.
|
3.
|
Establishing, Modifying, or Terminating Awards.
|
A.
|
The Committee may establish, modify or terminate an Award for any Employee.
|
B.
|
Except as prohibited by the Committee, the CEO may interpret, establish, modify or terminate an Award for any Officer (other than an Executive Officer) or lower level employee, even if the Award was originally granted by the Committee.
|
C.
|
Except as prohibited by the Committee or the CEO, the SEVP-HR may interpret, establish, modify or terminate an Award for any Employee that is not an Officer, even if the Award was originally granted by the Committee or the CEO.
|
D.
|
Except as prohibited by the Committee or the Plan, in the event of a promotion, change in responsibility, or new hire during the Performance Period, the CEO or SEVP-HR may establish or modify an Award for an Employee.
|
A.
|
No person shall have any claim to be granted an Award under the Plan and there is no obligation for uniformity of treatment of Employees under the Plan. Awards under the Plan may not be assigned or alienated.
|
B.
|
Neither the Plan nor any action taken hereunder shall be construed as giving to any Employee the right to be retained in the employ of AT&T or any subsidiary thereof.
|
C.
|
Awards shall be subject to applicable withholding taxes as required by law.
|
D.
|
The Plan shall be governed by the laws of the State of Texas and applicable Federal law.
|
E.
|
The AT&T Rules for Employee Beneficiary Designations shall apply to Awards under this Plan.
|
(1)
|
From 6% to 30% (in whole percentage increments) of the Participant's monthly Base Compensation, other than Annual Bonus, during the calendar year (the Plan Year for such contributions) following the calendar year of such election. The Employee Contributions shall be used to acquire Share Units to be credited to the Share Deferral Account for that Plan Year.
|
(2)
|
Up to 95% (in whole percentage increments or limited to the target amount) of a Short Term Incentive Award, or from 6% to 30% (in whole percentage increments) of Annual Bonus, in each case such contributions shall be made during the second calendar year (which is the Plan Year for such contributions) following the year of such election, except that in 2008 a separate election may be made with respect to contributions to be made in 2009. An Employee may make such an election with respect to the type of Award (Short Term Incentive Award or Annual Bonus) that the Employee is under as of the time
|
(1)
|
the monthly Employee Contributions from Base Compensation to this Plan and the Cash Deferral Plan (in the aggregate, "Deferred BC"), plus
|
(2)
|
the amount of the Participant's monthly Base Compensation in excess of the Deferred BC ("Non-Deferred BC") but only to the extent such monthly Non-Deferred BC, when aggregated with the Participant's total Non-Deferred BC for prior months in such Plan Year, as determined by the relevant Employer, exceeds the limit in effect under Section 401(a)(17) of the Code applicable with respect to such Plan Year.
|
6.1 |
Distributions of Share Units.
|
6.6 |
Distribution Process.
|
7.1 |
Stockholder Approval
|
(1)
|
on June 15 of the Plan Year for the Share Deferral Account, the Participant shall receive two (2) Options for each Share Unit acquired by the Participant as part of such Share Deferral Account during the immediately preceding January through May period with Employee Contributions of Base Compensation and/or Short Term Incentive Award. A fractional number of Options shall be rounded up to the next whole number.
|
(2)
|
on the February 15 immediately following the Plan Year for the Share Deferral Account, a Participant shall receive:
|
(i)
|
two (2) Options for each Share Unit acquired by the Participant as part of such Share Deferral Account during the immediately preceding June through the remainder of the relevant Plan Year with Employee Contributions of Base Compensation and/or Short Term Incentive Award; and
|
(a)
|
in cash, or
|
(i)
|
electing a Stock-Settled Exercise on or after February 1, 2013. Upon exercise of Options through a Stock-Settled Exercise, the Participant shall receive that number of shares of Stock found by (1) subtracting the Exercise Price of an Option being exercised (on a per share basis) from the FMV of the Stock as of the immediately preceding day that the Stock was traded on the NYSE, (2) multiplying the difference by the number of Options being exercised, and (3) dividing the result by the same FMV. For example, a Participant exercises 1,000 Options with an Exercise Price of $30 (exercises may only occur on a day when the NYSE is open for regular trading) and the FMV for the immediately preceding trading day was $40. In that case, the Participant would receive his $10,000 profit in the form of 250 shares of Stock, subject to tax withholding and any other costs provided under this Plan.
|
(ii)
|
if AT&T has designated a stockbroker to act as AT&T's agent to process Option exercises, issuance of an exercise notice to such stockbroker together with instructions irrevocably instructing the stockbroker: (A) to immediately sell (which shall include an exercise notice that becomes effective upon execution of a sell order) a sufficient portion of the Stock to pay the Exercise Price of the Options being exercised and the required tax withholding, and (B) to deliver on the settlement date the portion of the proceeds of the sale equal to the Exercise Price and tax withholding to AT&T. In the event the stockbroker sells any Stock on behalf of a Participant, the stockbroker shall be acting solely as the agent of the Participant, and AT&T disclaims any responsibility for the actions of the stockbroker in making any such sales. No Stock shall be issued until the settlement date and until the proceeds (equal to the Exercise Price and tax withholding) are paid to AT&T.
|
(i)
|
if such Termination of Employment is by reason of death or Disability, then for a period of three (3) years from the date of such Termination of Employment or until the expiration of the stated term of such Option, whichever period is shorter; or
|
(ii)
|
if such Termination of Employment is for any other reason, then for a period of one (1) year from the date of such Termination of Employment or until the expiration of the stated term of such Option, whichever period is shorter.
|
9.3 |
Amendment
.
|
10.7 |
Captions
.
|
(i)
|
an "Employer Business" shall mean AT&T Inc. and any of its Subsidiaries, or any business in which they or any affiliate of theirs has a substantial ownership or joint venture interest;
|
(ii)
|
"engaging in competition with AT&T" shall mean, while employed by AT&T or any of its Subsidiaries, or within two (2) years after Participant's Termination of Employment, engaging by the Participant in any business or activity in all or any portion of the same geographical market where the same or substantially similar business or activity is being carried on by an Employer Business. "Engaging in competition with AT&T" shall not include owning a non-substantial publicly traded interest as a shareholder in a business that competes with an Employer Business. "Engaging in competition with AT&T" shall include representing or providing consulting services to, or being an employee of, any person or entity that is engaged in competition with any Employer Business or that takes a position adverse to any Employer Business.
|
(iii)
|
"engaging in conduct disloyal to AT&T" means, while employed by AT&T or any of its Subsidiaries, or within two (2) years after Participant's Termination of Employment, (i) soliciting for employment or hire, whether as an employee or as an independent contractor, for any business in competition with an Employer Business, any person employed by AT&T or any of its Subsidiaries during the one (1) year prior to the Participant's Termination of Employment, whether or not acceptance of such position would constitute a breach of such person's contractual obligations to AT&T or any of its Subsidiaries; (ii) soliciting, encouraging, or inducing any vendor or supplier with which Participant had business contact on behalf of any Employer Business during the two (2) years prior to the Participant's Termination of Employment (regardless of the reason for that termination) to terminate, discontinue, renegotiate, reduce, or otherwise cease or modify its relationship with AT&T or any of its Subsidiaries; or (iii) soliciting, encouraging, or inducing any customer or active prospective customer with whom Participant had business contact, whether in person or by other media ("Customer"), on behalf of any Employer Business during the two (2) years prior to the Participant's Termination of Employment (regardless of the reason for that termination), to terminate, discontinue, renegotiate, reduce, or otherwise cease or modify its relationship with any Employer Business, or to purchase competing goods or services from a business competing with any Employer Business, or accepting or servicing business from such Customer on behalf of himself or any other business. "Engaging in conduct disloyal to AT&T" shall also mean, disclosing Confidential Information to any third party or using Confidential Information, other than for an Employer Business, or failing to return any Confidential Information to the Employer Business following termination of employment.
|
(iv)
|
"Confidential Information" shall mean all information belonging to, or otherwise relating to, an Employer Business, which is not generally known, regardless of the manner in which it is stored or conveyed to Participant, and which the Employer Business has taken reasonable measures under the circumstances to protect from unauthorized use or disclosure. Confidential Information includes trade secrets as well as other proprietary knowledge, information, know-how, and non-public intellectual property rights, including unpublished or pending patent applications and all related patent rights, formulae, processes, discoveries, improvements, ideas, conceptions, compilations of data, and data, whether or not patentable or copyrightable and whether or not it has been conceived, originated, discovered, or developed in whole or in part by Participant. For example, Confidential Information includes, but is not limited to, information concerning the Employer Business' business plans, budgets, operations, products, strategies, marketing, sales, inventions, designs, costs, legal strategies, finances, employees, customers, prospective customers, licensees, or licensors; information received from third parties under confidential conditions; or other valuable financial, commercial, business, technical or marketing information concerning the Employer Business, or any of the products or services made, developed or sold by the Employer Business. Confidential Information does not include information that (i) was generally known to the public at the time of disclosure; (ii) was lawfully received by Participant from a third party; (iii) was
|
(i)
|
ERISA shall control all issues and controversies hereunder, and the Committee shall serve for purposes hereof as a "fiduciary" of the Plan and its "named fiduciary" within the meaning of ERISA.
|
(ii)
|
All litigation between the parties relating to this section shall occur in federal court, which shall have exclusive jurisdiction; any such litigation shall be held in the United States District Court for the Northern District of Texas, and the only remedies available with respect to the Plan shall be those provided under ERISA.
|
2.1
|
Active Participant
. "Active Participant" shall mean an Active Employee Participant and his Dependents.
|
2.2
|
Active Employee Participant
. "Active Employee Participant" shall mean an Eligible Employee electing to participate in the Plan while in active service, on a Leave of Absence or while receiving short term disability benefits under the Officer Disability Plan.
|
2.3
|
Annual Deductible
. "Annual Deductible" shall mean the amount the Active Participant must pay for Covered Health Services in a Plan Year before the Plan will begin paying for Covered Benefits in that calendar year. The Annual Deductible applies to all Covered Health Services. The Annual Deductible does not apply to Preventive Care, Dental Services and Vision Services. Once the Participant meets his applicable Annual Deductible, the Plan will begin to pay Covered Benefits, subject to any required Coinsurance, in accordance with and as governed by Section 4.1. The applicable Annual Deductible is set forth in
Appendix A
to this Plan.
|
2.4
|
Annual Out-of-Pocket Maximum
.
"Annual Out-of-Pocket Maximum" shall mean the maximum amount of Covered Health Services an Active Participant must pay out-of-pocket every calendar year, including the Participant's Annual Deductible. Once the Participant reaches the applicable Annual Out-of-Pocket Maximum, Covered Benefits for those Covered Health Services that apply to the Annual Out-of-Pocket Maximum are payable in accordance with and as governed by Section 4.1 during the rest of that Plan Year. The following costs shall never apply toward the Annual Out-of-Pocket Maximum: (a) any applicable Monthly Contributions and (b) any charges for Non-Covered Health Services. Even when the Annual Out-of-Pocket Maximum has been reached, Covered Benefits will not be provided for the following: (a) any applicable Monthly Contributions and (b) any charges for Non-Covered Health Services. The applicable Annual Out-of-Pocket Maximum is set forth in
Appendix A
to this Plan.
|
2.5
|
AT&T
. "AT&T" shall mean AT&T Inc. References to "Company" shall mean AT&T.
|
2.6
|
Basic Plan(s)
. "Basic Plan(s)" shall mean AT&T's group dental (non-DHMO option), and vision care plans (including the AT&T Retiree Vision Care Program) or the "AT&T International Health Plan" for Officers serving in expatriate positions with the Company.
|
2.7
|
CEO
. "CEO" shall mean the Chief Executive Officer of AT&T Inc.
|
2.8
|
COBRA
.
"
COBRA" shall mean the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended.
|
2.9
|
Coinsurance
.
"Coinsurance" shall mean the amount an Active Participant must pay each time he/she receives Covered Health Services, after he/she meets the applicable Annual Deductible. Coinsurance payments are calculated as a percentage of Covered Health Services, rather than a set dollar amount. Coinsurance does not apply to Preventive Care, Dental Services and Vision Services (or Medical Services for Retired Participants as provided in Section 4.1(c)). The applicable Coinsurance percentage is set forth in
Appendix A
to this Plan.
|
2.10
|
Committee
. "Committee" shall mean the Human Resources Committee of the Board of Directors of AT&T Inc.
|
2.11
|
Covered Benefits
. "Covered Benefits" shall mean the benefits provided by the Plan, as provided for and governed by Section 4.1 of the Plan.
|
2.12
|
Covered Health Services
. "Covered Health Services" means all Medical Services or Preventive Care that would qualify as deductible medical expenses for federal income tax purposes, whether deducted or not. Dental Services and Vision Services are not included in the definition of Covered Health Services.
|
2.13
|
Dental Services
. "Dental Services" shall mean services for dental and orthodontic care. The Plan Administrator, in its sole discretion, shall determine whether a particular service is classified as Preventive Care or a Dental, Medical or Vision Service.
|
2.14
|
Dependent(s)
. "Dependent(s)" shall mean those individuals who would qualify as a Participant's dependent(s) under the terms of the Basic Plan in which the Participant participates (or last previously participated with respect to Medicare Eligible Retired Participants (the "Prior Basic Plan"), or, if applicable, Substitute Basic Coverage.
|
2.15
|
Disability
.
"Disability" shall mean qualification for long term disability benefits under Section 3.1 of the Officer Disability Plan.
|
2.16
|
Eligible Employee
. "Eligible Employee" shall mean an Officer. Notwithstanding the foregoing, the CEO may, from time to time, exclude any Officer or group of Officers from being an "Eligible Employee" under this Plan. Employees of a company acquired by AT&T shall not be considered an Eligible Employee unless designated as such by the CEO. Notwithstanding the foregoing, only the Committee shall have the authority to exclude from participation or take any action with respect to Executive Officers.
|
2.17
|
Employer
. "Employer" shall mean AT&T Inc. or any of its Subsidiaries.
|
2.18
|
Executive Officer
. "Executive Officer" shall mean any executive officer of AT&T, as that term is used under the Securities Exchange Act of 1934.
|
2.19
|
Leave of Absence
. "Leave of Absence" shall mean a Company-approved leave of absence.
|
2.20
|
Medical Services
.
"Medical Services" shall mean medical/surgical, mental health/substance abuse and prescription pharmacy services. The Plan Administrator, in its sole discretion, shall determine whether a particular service is classified as Preventive Care or a Medical, Dental or Vision Service. Medical Services do not include Dental Services and Vision Services.
|
2.21
|
Monthly Contributions
.
"Monthly Contributions" shall mean the monthly premiums or contributions required for participation in this Plan as further governed by Article 7 of the Plan. The applicable Monthly Contributions are set forth in Exhibit A to this Plan.
|
2.22
|
Non-Covered Health Services
.
"Non-Covered Health Services" shall mean any Medical Services or Preventive Care which do not meet the definition of Covered Health Services.
|
2.23
|
Officer
. "Officer" shall mean an individual who is designated as an officer level employee for compensation purposes on the records of AT&T.
|
2.24
|
Participant
. "Participant" shall mean an Active Participant or Retired Participant or both, as the context indicates.
|
2.25
|
Plan Administrator
. "Plan Administrator" shall mean the SEVP-HR, or any other person or persons whom the Committee may appoint to administer the Plan; provided that the Committee may act as the Plan Administrator at any time.
|
2.26
|
Plan Year
.
"Plan Year" shall mean the calendar year.
|
2.27
|
Preventive Care
. "Preventive Care" generally focuses on evaluating a Participant's current health status when the Participant is symptom-free and taking the necessary steps to maintain the Participant's health. The Plan Administrator, in its sole discretion, shall determine whether a particular service constitutes Preventive Care.
|
2.28
|
Qualified Dependent
. "Qualified Dependent" shall mean
a Dependent who loses coverage under a COBRA eligible program due to a Qualifying Event.
|
2.29
|
Qualifying Event
.
"Qualifying Event" shall mean
any of the following events if, but for COBRA continuation coverage, they would result in a Participant's loss of coverage under this Plan:
|
(1) |
death of a covered Eligible Employee;
|
(2) |
termination (other than by reason of such Eligible Employee's gross misconduct) of an Employee's employment;
|
(3) |
reduction in hours of an Eligible Employee;
|
(4) |
divorce or legal separation of an Eligible Employee or dissolution of an Eligible Employee's registered domestic partnership;
|
(5) |
an Eligible Employee's entitlement to Medicare benefits; or
|
(6) |
a Dependent child ceasing to qualify as a Dependent under the Basic Plan,(or, if applicable, Substitute Basic Coverage)
or with respect to a Dependent child who is a Medicare Eligible Retired Participant, the child's ceasing to otherwise qualify under the Prior Basic Plan
.
|
3.1
|
Active Participants
.
Each Eligible Employee shall be eligible to participate in this Plan along with his/her Dependent(s) beginning on the effective date of the employee becoming an Eligible Employee.
|
3.2
|
Retired Participants
.
Provisions of this Plan will continue in effect during Retirement for each Retired Employee Participant and his/her Dependent(s) with respect to any Eligible Employee who became a Participant before January 1, 1999. Neither an Eligible Employee who became a Participant after December 31, 1998 nor his/her Dependent(s) shall be eligible for participation hereunder on or after such Participant's Retirement. Coverage for Retired Participants shall be subject to the payment of all applicable Monthly Contributions, as governed by Article 7. The provisions of this Plan related to Retired Participants, including the level of Covered Benefits and the applicable Monthly Premiums, shall begin to apply on the first day of the month following the month in which the Active Employee Participant Retires. If a Retired Employee Participant terminates participation at any time for any reason, participation of that Retired Employee participant and his/her Dependent(s) may not be reinstated for any reason.
|
3.3
|
Requirement to Enroll and Participate in Basic Plans and Medicare
.
Notwithstanding any provision in this plan to the contrary, as a condition to participation in the Plan, each Participant must be enrolled in, paying for, and participating in (i) the Basic Plans if such Participant is eligible for coverage under the terms of the Basic Plans, or, if applicable, Substitute Basic Coverage, and (ii) all parts of Medicare for which such Participant is eligible and for which Medicare would be primary if enrolled therein, except for Medicare Part D relating to prescription drug coverage.
|
4.1
|
Covered Benefits
. Subject to the limitations in this
Plan (including but not limited to the loyalty conditions set forth in Article 8 below)
, this Plan provides the benefits described below. Monthly Contributions for participation in this Plan, the Basic Plans, Medicare, or any other health plan are not considered "services", and are therefore are not Covered Benefits under this Plan.
|
(a)
|
Active Participants (Medical Services and Preventive Care) -
|
(b)
|
Active Participants (Dental Services and Vision Services)
-
|
(c)
|
Retired Participants
–
|
4.2
|
Covered Benefit Limits
.
RESERVED
|
4.3
|
Priority of Paying Covered Claims
. Claims for benefits will be applied against the various health plans, as applicable, and coordinated with Medicare in the following order:
|
(1) |
Medicare, to the extent the Participant is eligible therefore and such claim is actually paid by Medicare,
|
(2) |
Basic Plans, if applicable,
|
(3) |
CarePlus, if elected,
|
(4) |
Long Term Care Plan, if elected,
|
(5) |
this Plan.
|
4.4
|
Substitute Basic Coverage
. Notwithstanding any other provision of this Plan to the contrary, if a Retired Employee Participant, other than a Medicare Eligible Retired Participant, is eligible for participation under this Plan during Retirement, but not eligible to participate under the Basic Plans, the Plan shall provide medical, dental, and vision benefits for the Retired Employee Participant and his/her Dependent(s) substantially equivalent to the benefits under the Basic Plans through an insured product (hereinafter, "Substitute Basic Coverage"). Eligibility for Substitute Basic Coverage is conditioned upon the Retired Participant's payment of contributions in the same amount that a similarly situated retired Basic Plan participant is required to pay under the Basic Plans. Such Substitute Basic Coverage shall constitute such Retired Participant's Basic Plans for all purposes under this Plan. The costs of Substitute Basic Coverage (except for the required monthly contributions referenced in this paragraph) shall be borne by AT&T, and the costs of Substitute Basic Coverage shall not be included in the determination of any Retired Participant's annual Plan contribution amount as provided in Article 7. In addition, certain other Retired Employee Participants participate in the "Separation Medical Plan" rather than the Basic Plans. References to Substitute Basic Coverage throughout this Plan shall be deemed to include the Separation Medical Plan. The Plan Administrator maintains records governing the names of those Retired Employee Participants who have Substitute Basic Coverage or Separation Medical Plan coverage.
|
5.1
|
Termination of Participation
.
Participation will cease on the last day of the month in which one of the following conditions occurs:
|
5.2
|
Dependents Failure to Participate in Basic Plans
. If a Dependent, other than a Medicare Eligible Retired Participant, ceases participation under a Basic Plan or, if applicable, Substitute Basic Coverage, such Dependent's participation under this Plan will cease with the same effective date.
|
5.3
|
Death
. In the event of the Active Employee Participant's (or Retired Employee's Participant's) death, his Dependents may continue participation in this Plan as follows:
|
(3) |
In the event of (i) an in-service death of an Active Employee Participant not eligible to participate in the Plan in Retirement as provided in Article 3.2 or (ii) an in-service death of an Active Employee Participant eligible to participate in the Plan in Retirement as provided in Article 3.2 but the individual was not Retirement eligible, within the meaning of Section 2.30, at the time of death, such Active Employee Participant's Dependent(s) may continue participation in this Plan, eligible for the Covered Benefits described in Sections 4.1(a) and (b), for a 36-month period commencing the month following the month in which such Active Employee Participant dies as long as such Dependent(s) are participating in the Basic Plans (or with respect to a Dependent who is a Medicare Eligible Retired Participant, for so long as such Dependent would have otherwise been eligible for participation under the terms of the Prior Basic Plan) and subject to the payment of Active Participant Contributions for the first 12 months and payment of Active COBRA Contributions for the remaining 24 months, as provided by Articles 7 and 10.1. If the Active Employee Participant's Dependent(s) are eligible for COBRA, they will automatically be enrolled in COBRA so that there is no lapse in coverage, and this 36-month coverage will be integrated and run concurrently with COBRA coverage.
|
6.1
|
Disability
. With respect to any Active Employee Participant who commences receipt of short term or long term disability benefits under the Officer Disability Plan, participation under this Plan will be as follows:
|
(2) |
An Active Employee Participant not eligible to participate in the Plan in Retirement as provided in Article 3.2 who commences long term disability benefits under the Officer Disability Plan or an Active Employee Participant eligible to participate in the Plan in Retirement as provided in Article 3.2 but who is not Retirement eligible, within the meaning of Section 2.30, at the time long term disability benefits under the Officer Disability Plan commence, will cease participation in this Plan (along with his/her Dependents) effective as of the last day of the calendar month in which such long term disability benefits commence, unless such benefits commence on the first day of a calendar month, in which case participation in this Plan shall cease effective as of the last day of the prior month.
|
(3) |
An Active Employee Participant eligible to participate in the Plan in Retirement as provided in Article 3.2 ,who is Retirement eligible, within the meaning of Section 2.30, at the time long term disability benefits under the Officer Disability Plan commence, will be eligible to continue participation in this Plan on the same terms and conditions that participation would be available to such Participant in Retirement, subject to the payment of applicable contributions for this Plan as provided by Article 7, regardless of his/her continued receipt of long term disability benefits under the Officer Disability Plan.
|
7.1
|
Provision of Benefits under the Plan
. Except as provided below in this Article 7 with respect to required Monthly Contributions or with respect to any required Coinsurance, the benefits available to Participants under this Plan shall be provided through an insurance policy maintained by AT&T.
|
7.2
|
Active Participant Contributions
. An Active Participant electing to participate in the Plan will pay Monthly Contributions to participate in the Plan while in active service, while on Leave of Absence or while receiving short term disability benefits under the Officer Disability Plan. The Monthly Contribution for participation may change annually, effective at the beginning of each Plan Year. Contributions to be made by Active Participants electing to participate in the Plan shall be set annually by the SEVP-HR, determined in the SEVP-HR's sole and absolute discretion. The SEVP-HR may adopt tiered rates for similarly situated groups of Participants based on factors such as the number of Dependents covered or Medicare eligibility. Notwithstanding the foregoing, required Monthly Contributions for Executive Officers shall be approved by the Committee.
|
7.3
|
Retired Participant Contributions
. Retired Participants who elect to participate will pay Monthly Contributions to participate in the Plan. The Monthly Contribution for participation may change annually, effective at the beginning of each Plan Year.
Contributions to be made by Retired Participants who elect to participate shall be set annually by the SEVP-HR (in his/her sole and absolute discretion), to the extent their contributions have not previously been provided for in a separate agreement.
|
7.4
|
Survivor Contributions.
Upon the death of a Participant, the Participant's Dependents shall be required to pay Monthly Contributions to participate in the Plan. The Monthly Contributions shall
be set annually by the SEVP-HR, in the SEVP-HR's sole and absolute discretion.
Any changes to the Monthly Contributions shall be effective at the beginning of each Plan Year.
|
7.5
|
Contributions for Participants on Disability
. Participants continuing benefits while on Disability shall be required to pay Monthly Contributions to participate in the Plan. The Monthly Contributions shall
be set annually by the SEVP-HR, determined in the SEVP-HR's sole and absolute discretion.
Any changes to the Monthly Contributions shall be effective at the beginning of each Plan Year.
|
8.1
|
Participants acknowledge that no coverage and benefits would be provided under this Plan on and after January 1, 2010 but for the loyalty conditions and covenants set forth in this Article, and that the conditions and covenants herein are a material inducement to AT&T's willingness to sponsor the Plan and to offer Plan coverage and benefits for the Participants on or after January 1, 2010. Accordingly, as a condition of receiving coverage and any Plan benefits on or after January 1, 2010, each Participant is deemed to agree that he/she shall not, without obtaining the written consent of the Plan Administrator in advance, participate in activities that constitute engaging in competition with AT&T or engaging in conduct disloyal to AT&T, as those terms are defined in this Section. Further and notwithstanding any other provision of this Plan, all coverage and benefits under this Plan on and after January 1, 2010 with respect to a Participant and his or her Dependents shall be subject in their entirety to the enforcement provisions of this Section if the Participant, without the Plan Administrator's consent, participates in an activity that constitutes engaging in competition with AT&T or engaging in conduct disloyal to AT&T, as defined below. The provisions of this Article 8 as in effect immediately before such date shall be applicable to Participants who retire before January 1, 2010.
|
8.2
|
Definitions
. For purposes of this Article and of the Plan generally
|
(1)
|
an "Employer Business" shall mean AT&T, any Subsidiary, or any business in which AT&T or a Subsidiary or an affiliated company of AT&T has a substantial ownership or joint venture interest;
|
(2)
|
"engaging in competition with AT&T" shall mean, while employed by an Employer Business or within two (2) years after the Participant's termination of employment, engaging by the Participant in any business or activity in all or any portion of the same geographical market where the same or substantially similar business or activity is being carried on by an Employer Business. "Engaging in competition with AT&T" shall not include owning a nonsubstantial publicly traded interest as a shareholder in a business that competes with an Employer Business. "Engaging in competition with AT&T" shall include representing or providing consulting services to, or being an employee or director of, any person or entity that is engaged in competition with any Employer Business or that takes a position adverse to any Employer Business.
|
(3)
|
"engaging in conduct disloyal to AT&T" means, while employed by an Employer Business or within two (2) years after the Participant's termination of employment, (i) soliciting for employment or hire, whether as an employee or as an independent contractor, for any business in competition with an Employer Business, any person employed by AT&T or its affiliates during the one (1) year prior to the termination of the Participant's employment, whether or not acceptance of such position would constitute a breach of such person's contractual obligations to AT&T and its affiliates; (ii) soliciting, encouraging, or inducing any vendor or supplier with which Participant had business contact on behalf of any Employer Business during the two (2) years prior to the termination of the Participant's employment, for any reason to terminate, discontinue, renegotiate, reduce, or otherwise cease or modify its relationship with AT&T or its affiliate; or (iii) soliciting, encouraging, or inducing any customer or active prospective customer with whom Participant had business contact, whether in person or by other media, on behalf of any Employer Business during the two (2) years prior to the termination of Participant's employment for any reason ("Customer"), to terminate, discontinue, renegotiate, reduce, or otherwise cease or modify its relationship with any Employer Business, or to purchase competing goods or services from a business competing with any Employer Business, or accepting or servicing business from such Customer on behalf of himself or any other business. "Engaging in conduct disloyal to
|
|
|
(4)
|
"Confidential Information" shall mean all information belonging to, or otherwise relating to, an Employer Business, which is not generally known, regardless of the manner in which it is stored or conveyed to the Participant, and which the Employer Business has taken reasonable measures under the circumstances to protect from unauthorized use or disclosure. Confidential Information includes trade secrets as well as other proprietary knowledge, information, know-how, and non-public intellectual property rights, including unpublished or pending patent applications and all related patent rights, formulae, processes, discoveries, improvements, ideas, conceptions, compilations of data, and data, whether or not patentable or copyrightable and whether or not it has been conceived, originated, discovered, or developed in whole or in part by the Participant. For example, Confidential Information includes, but is not limited to, information concerning the Employer Business' business plans, budgets, operations, products, strategies, marketing, sales, inventions, designs, costs, legal strategies, finances, employees, customers, prospective customers, licensees, or licensors; information received from third parties under confidential conditions; or other valuable financial, commercial, business, technical or marketing information concerning the Employer Business, or any of the products or services made, developed or sold by the Employer Business. Confidential Information does not include information that (i) was generally known to the public at the time of disclosure; (ii) was lawfully received by the Participant from a third party; (iii) was known to the Participant prior to receipt from the Employer Business; or (iv) was independently developed by the Participant or independent third parties; in each of the foregoing circumstances, this exception applies only if such public knowledge or possession by an independent third party was without breach by the Participant or any third party of any obligation of confidentiality or non-use, including but not limited to the obligations and restrictions set forth in this Plan.
|
8.3
|
Forfeiture of Benefits
. Subject to the provisions of Section 1001(5) of the Affordable Care Act, coverage and benefits shall be forfeited and shall not be provided under this Plan for any period as to which the Plan Administrator determines that, within the time period and without the written consent specified, Participant has been either engaging in competition with AT&T or engaging in conduct disloyal to AT&T.
|
|
|
8.4
|
Equitable Relief
.
The parties recognize that any Participant's breach of any of the covenants in this Article 8 will cause irreparable injury to AT&T, will represent a failure of the consideration under which AT&T (in its capacity as creator and sponsor of the Plan) agreed to provide the Participant with the opportunity to receive Plan coverage and benefits, and that monetary damages would not provide AT&T with an adequate or complete remedy that would warrant AT&T's continued sponsorship of the Plan and payment of Plan benefits for all Participants. Accordingly, in the event of a Participant's actual or threatened breach of the covenants in this Article, the Plan Administrator, in addition to all other rights and acting as a fiduciary under ERISA on behalf of all Participants, shall have a fiduciary duty (in order to assure that AT&T receives fair and promised consideration for its continued Plan sponsorship and funding) to seek an injunction restraining the Participant from breaching the covenants in this Article 8. In addition, AT&T shall pay for any Plan expenses that the Plan Administrator incurs hereunder, and shall be entitled to recover from the Participant its reasonable attorneys' fees and costs incurred in obtaining such injunctive remedies. To enforce its repayment rights with respect to a Participant, the Plan shall have a first priority, equitable lien on all Plan benefits provided to or for the Participant and his or her Dependents. In the event the Plan Administrator succeeds in enforcing the terms of this Article through a written settlement with the Participant or a court order granting an injunction hereunder, the Participant shall be entitled to collect Plan benefits collect Plan benefits prospectively, if the Participant is otherwise entitled to such benefits, net of any fees and costs assessed pursuant hereto (which fees and costs shall be paid to AT&T as a repayment on behalf of the Participant), provided that the Participant complies with said settlement or injunction.
|
8.5
|
Uniform Enforcement
. In recognition of AT&T's need for nationally uniform standards for the Plan administration, it is an absolute condition in consideration of any Participant's accrual or receipt of benefits under the Plan after January 1, 2010 that each and all of the following conditions apply to all Participants and to any benefits that are paid or are payable under the Plan:
|
(1)
|
ERISA shall control all issues and controversies hereunder, and the Committee shall serve for purposes hereof as a "fiduciary" of the Plan, and as its "named fiduciary" within the meaning of ERISA.
|
(2)
|
All litigation between the parties relating to this Article shall occur in federal court, which shall have exclusive jurisdiction, any such litigation shall be held in the United States District Court for the Northern District of Texas, and the only remedies available with respect to the Plan shall be those provided under ERISA.
|
(3)
|
If the Plan Administrator determines in its sole discretion either (I) that AT&T or its affiliate that employed the Participant terminated the Participant's employment for cause, or (II) that
|
9.1
|
Administration
. The Plan Administrator is the named fiduciary of the Plan and has the power and duty to do all things necessary to carry out the terms of the Plan. The Plan Administrator has the sole and absolute discretion to interpret the provisions of the Plan, to make findings of fact, to determine the rights and status of Participants and other under the Plan, to determine which expenses and benefits qualify as Covered Health Services or Covered Benefits, to make all benefit determinations under the Plan, to decide disputes under the Plan and to delegate all or a part of this discretion to third parties and insurers. To the fullest extent permitted by law, such interpretations, findings, determinations and decisions shall be final, binding and conclusive on all persons for all purposes of the Plan. The Plan Administrator may delegate any or all of its authority and responsibility under the Plan to other individuals, committees, third party administrators, claims administrators or insurers for any purpose, including, but not limited to the processing of benefits and claims related thereto. In carrying out these functions, these individuals or entities have been delegated responsibility and discretion for interpreting the provisions of the Plan, making findings of fact, determining the rights and status of Participants and others under the Plan, and deciding disputes under the Plan and such interpretations, findings, determinations and decisions shall be final, binding and conclusive on all persons for all purposes of the Plan.
|
9.2
|
Amendments and Termination
. This Plan may be modified or terminated at any time in accordance with the provisions of AT&T's Schedule of Authorizations.
|
9.3
|
Newborns' and Mothers' Health Protection Act of 1996
. To the extent this Plan provides benefits for hospital lengths of stay in connection with childbirth, the Plan will cover the minimum length of stay required for deliveries (i.e., a 48-hour hospital stay after a vaginal delivery or a 96-hour stay following a delivery by Cesarean section.) The mother's or newborn's attending physician, after consulting with the mother, may discharge the mother or her newborn earlier than the minimum length of stay otherwise required by law. Such coverage shall be subject to all other provisions of this Plan.
|
9.4
|
Women's Health and Cancer Rights Act of 1998
. To the extent this Plan provides benefits for mastectomies, it will provide, for an individual who is receiving benefits in connection with a mastectomy and who elects breast reconstruction in connection with such mastectomy, coverage for reconstruction on the breast on which the mastectomy was performed, surgery and reconstruction on the other breast to give a symmetrical appearance, and prosthesis and coverage for physical complications of all stages of the mastectomy, including lymphedemas. Such coverage shall be subject to all other provisions of this Plan.
|
9.5
|
Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008
. To the extent this Plan provides mental health benefits or substance use disorder benefits it will not place annual or lifetime maximums for such benefits that are lower than the annual and lifetime maximums for physical health benefits. In addition, the financial requirements (e.g., deductibles and co-payments) and treatment limitations (e.g., number of visits or days of coverage) that apply to mental health benefits or substance use disorder benefits will not be more restrictive than the predominant financial requirements or treatment limitations that apply to substantially all medical/surgical benefits; mental health benefits and substance use disorder benefits will not be subject to any separate cost sharing requirements or treatment limitations that only apply to such benefits; if the Plan provides for out of network medical/surgical or substance use disorder benefits, it will provide for out of network mental health and substance use disorder benefits and standards for medical necessity determinations and reasons for any denial of benefits relating to mental health benefits and substance use disorder benefits will be made available upon request to plan participants. Such coverage shall be subject to all other provisions of this Plan.
|
9.6
|
Continuation of Coverage During Family or Medical Leave
. During any period which an Active Employee Participant is on a family or medical leave as defined in the Family or Medical Leave Act, any benefit elections in force for such Participant shall remain in effect. While the Participant is on paid leave, contributions shall continue. If the Participant is on an unpaid leave, the Participant may elect to prepay required contributions on a pre-tax basis before the commencement of such unpaid leave. Alternatively, the Participant may elect to make such payments on an after-tax basis monthly in accordance with an arrangement that the Plan Administrator shall provide. If coverage is not continued during the entire period of the family or medical leave because the Participant declines to pay the premium, the coverage must be reinstated upon reemployment with no exclusions or waiting periods, notwithstanding any other provision of this Plan to the contrary. If the Participant does not return to work upon completion of the leave, the Participant must pay the full cost of any health care coverage that was continued on his/her behalf during the leave. These rules apply to the COBRA eligible programs.
|
9.7
|
Rights While on Military Leave
. Pursuant to the provisions of the Uniformed Services Employment and Reemployment Rights Act of 1994, an Active Employee Participant on military leave will be considered to be on a Leave of Absence and will be entitled during the leave to the health and welfare benefits that would be made available to other similarly situated employees if they were on a Leave of Absence. This entitlement will end if the individual provides written notice of intent not to return to work following the completion of the military leave. The individual shall have the right to continue his/her coverage, including any Dependent coverage, for the lesser of the length of the leave or 18 months. If the military leave is for a period of 31 days or more, the individual may be required to pay 102 percent of the total premium (determined in the same manner as a COBRA continuation coverage premium). If coverage is not continued during the entire period of the military leave because the individual declines to pay the premium or the leave extends beyond 18 months, the coverage must be reinstated upon reemployment with no pre-existing condition exclusions (other than for service-related illnesses or injuries) or waiting periods (other than those applicable to all Eligible Employees).
|
9.8
|
Qualified Medical Child Support Orders
. The Plan will comply with any Qualified Medical Child Support Order issued by a court of competent jurisdiction or administrative body that requires the Plan to provide medical coverage to a Dependent child of an Active Employee or Retired Employee Participant. The Plan Administrator will establish reasonable procedures for determining whether a court order or administrative decree requiring medical coverage for a Dependent child meets the requirements for a Qualified Medical Child Support Order. The cost of coverage or any additional cost of such coverage, if any, shall be borne by the Participant.
|
9.9
|
Right of Recovery
.
If the Plan has made an erroneous or excess payment to any Participant, the Plan Administrator shall be entitled to recover such excess from the individual or entity to whom such payments were made. The recovery of such overpayment may be made by offsetting the amount of any other benefit or amount payable by the amount of the overpayment under the Plan.
|
10.1
|
Continuation of Coverage Under COBRA
. Participants shall have all COBRA continuation rights required by federal law and all conversion rights. COBRA continuation coverage shall be continued as provided in this Article 10.
|
10.2
|
COBRA Continuation Coverage for Terminated Participants
. A covered Active Employee Participant may elect COBRA continuation coverage, at his/her own expense, if his participation under this Plan would terminate as a result of one of the following Qualifying Events: an Employee's termination of employment or reduction of hours with an Employer.
|
10.3
|
COBRA Continuation Coverage for Dependents
. A Qualified Dependent may elect COBRA continuation coverage, at his/her own expense, if his/her participation under this Plan would terminate as a result of a Qualifying Event.
|
10.4
|
Period of Continuation Coverage for Covered Participants
.
A covered Active Employee Participant who qualifies for COBRA continuation coverage as a result of a Participant's termination of employment or reduction in hours of employment described in Subsection 10.2 may elect COBRA continuation coverage for up to 18 months measured from the date of the Qualifying Event.
|
10.5
|
Period of COBRA Continuation Coverage for Dependents
. If a Qualified Dependent elects COBRA continuation coverage under a COBRA eligible program as a result of the an Active Employee Participant's termination of employment as described in Subsection 10.2, continuation coverage may be continued for up to 18 months measured from the date of the Qualifying Event. COBRA continuation coverage for all other Qualifying Events may continue for up to 36 months.
|
10.6
|
Contribution Requirements for COBRA Continuation Coverage
. Covered Participants and Qualified Dependents who elect COBRA continuation coverage as a result of a Qualifying Event will be required to pay continuation coverage payments. Continuation coverage payments are the payments required for COBRA continuation coverage that is an amount equal to a reasonable estimate of the cost to this Plan of providing coverage for all covered Participants at the time of the Qualifying Event plus a 2% administrative expense. In the case of a disabled individual who receives an additional 11-month extended coverage under COBRA, the Employer may assess up to 150% of the cost for this extended coverage period. Such cost shall be determined on an actuarial basis and take into account such factors as the Secretary of the Treasury may prescribe in regulations.
|
10.7
|
Limitation on Participant's Rights to COBRA Continuation Coverage
.
|
10.8
|
Subsequent Qualifying Event
. If a second Qualifying Event occurs during an 18-month extension explained above, coverage may be continued for a maximum of 36 months from the date of the first Qualifying Event. In the event the Dependent loses coverage due to a Qualifying Event and after such date the Participant becomes entitled to Medicare, the Dependent shall have available up to 36 months of coverage measured from the date of the Qualifying Event that causes the loss of coverage. If the Participant was entitled to Medicare prior to the Qualifying Event, the Dependent shall have up to 36 months of coverage measured from the date of entitlement to Medicare.
|
10.9
|
Extension of COBRA Continuation Period for Disabled Individuals
. The period of continuation shall be extended to 29 months in total (measured from the date of the Qualifying Event) in the event the individual is disabled as determined by the Social Security laws within 60 days of the Qualifying Event. The individual must provide evidence to the Plan Administrator of such Social Security determination prior to the earlier of 60 days after the date of the Social Security determination, or the expiration of the initial 18 months of COBRA continuation coverage. In such event, the Employer may charge the individual up to 150% of the COBRA cost of the coverage.
|
11.1
|
Definitions
. For purposes of this Article 11, the following defined terms shall have the meaning assigned to such terms in this subsection:
|
11.2
|
Privacy Provisions Relating to Protected Health Information ("PHI")
. The Plan and its Business Associates shall use and disclose PHI to the extent permitted by, and in accordance with, HIPAA, for purposes of providing benefits under the Plan and for purposes of administering the plan, including, by way of illustration and not by way of limitation, for purposes of Treatment, Payment, and Health Care Operations.
|
11.3
|
Disclosure of De-Identified or Summary Health Information
. The HIPAA Plan, or, with respect to the HIPAA Plan, a health insurance issuer, may disclose summary health information (as that phrase is defined at 45 C.F.R. § 160.5049a)) to the Plan Sponsor of the HIPAA Plan (and its affiliates) if such entity requests such information for the purpose of:
|
11.4
|
The HIPAA Plan Will Use and Disclose PHI as Required by Law
or as Permitted by the Authorization of the Participant or Beneficiary
.
|
11.5
|
Disclosure of PHI to the Plan Sponsor
.
The HIPAA Plan will disclose information to the Plan Sponsor only upon certification from the Plan Sponsor that the HIPAA Plan documents have been amended to incorporate the assurances provided below.
|
(2) |
ensure that any affiliates or agents, including a subcontractor, to whom the Plan Sponsor provides PHI received from the HIPAA Plan, agrees to the same restrictions and conditions that apply to the Plan Sponsor with respect to such PHI;
|
(3) |
not use or disclose PHI for employment-related actions and decisions unless authorized by the individual to whom the PHI relates;
|
(4) |
not use or disclose PHI in connection with any other benefits or employee benefit plan of the Plan Sponsor or its affiliates unless permitted by the Plan or authorized by an individual to whom the PHI relates;
|
(5) |
report to the Plan any PHI use or disclosure that is inconsistent with the uses or disclosures provided for of which it becomes aware;
|
(6) |
make PHI available to an individual in accordance with HIPAA's access rules;
|
(7) |
make PHI available for amendment and incorporate any amendments to PHI in accordance with HIPAA;
|
(9) |
make internal practices, books and records relating to the use and disclosure of PHI received from the HIPAA Plan available to the Secretary of the United States Department of Health and Human Resources for purposes of determining the Plan's compliance with HIPAA; and
|
(10) |
if feasible, return or destroy all PHI received from the HIPAA Plan that the Plan Sponsor still maintains in any form, and retain no copies of such PHI when no longer needed for the purpose for which disclosure was made (or if return or destruction is not feasible, limit further uses and disclosures to those purposes that make the return or destruction infeasible).
|
11.6
|
Separation Between the Plan Sponsor and the HIPAA Plan
.
In accordance with HIPAA, only the following employees and Business Associate personnel shall be given access to PHI:
|
(1) |
employees of the AT&T Benefits and/or AT&T Executive Compensation organizations responsible for administering group health plan benefits under the HIPAA Plan, including those employees whose functions in the regular course of business include Payment, Health Care Operations or other matters pertaining to the health care programs under a HIPAA Plan;
|
(2) |
employees who supervise the work of the employees described in (1), above;
|
(3) |
support personnel, including other employees outside of the AT&T Benefits or AT&T Executive Compensation organizations whose duties require them to rule on health plan-related appeals or perform functions concerning the HIPAA Plan;
|
(4) |
investigatory personnel to the limited extent that such PHI is necessary to conduct investigations of possible fraud;
|
(5) |
outside and in-house legal counsel providing counsel to the HIPAA Plan;
|
(6) |
consultants providing advice concerning the administration of the HIPAA Plan; and
|
(7) |
the employees of Business Associates charged with providing services to the HIPAA Plan.
|
11.7
|
Enforcement
.
|
Monthly Contributions
|
Individual - $152
Individual + Spouse - $187
Individual + 1 or More Children - $152
Individual + Spouse + 1 or More Children - $361
|
Annual Deductible
|
Individual - $1,600
Individual + 1 or More - $3,200
|
Coinsurance Percentage
|
10% after the Annual Deductible is met. Coinsurance applies until the Annual Out-of-Pocket Maximum is reached.
|
Annual Out-of-Pocket Maximum
|
Individual - $5,500
Individual + 1 or More - $11,000 (individual amount of $5,500)
|
Retired Prior to August 31, 1992 and Surviving Spouses
|
Individual - $203
Individual + Spouse - $203
Individual + 2 or More - $203
|
|
Retired on or after September 1, 1992 and Surviving Spouses
Note: The Plan Administrator shall maintain records governing whether a Retired Participant is in Class A, B, C or D.
|
Class A
|
Individual - $556
Individual + Spouse - $908
Individual + 1 or More Children - $556
Individual + Spouse + 1 or More Children - $782
|
Class B
|
Individual - $680
Individual + Spouse - $1,110
Individual + 1 or More Children - $680
Individual + Spouse + 1 or More Children - $958
|
|
Class C
|
Individual - $859
Individual + Spouse - $1,387
Individual + 1 or More Children - $859
Individual + Spouse + 1 or More Children - $1,209
|
|
Class D
|
Individual - $1,046
Individual + Spouse - $2,076
Individual + 1 or More Children - $1,046
Individual + Spouse + 1 or More Children - $1,770
|
Active COBRA
|
Individual - $1,793
Individual + Spouse - $3,674
Individual + 1 or More Children - $2,959
Individual + Spouse + 1 or More Children - $5,089
|
Retired Prior to August 31, 1992 and Surviving Spouses COBRA
|
Individual - $1,550
Individual + 1 - $3,176
Individual + 2 or More - $3,333
|
Retired on or after September 1, 1992 and Surviving Spouses COBRA
|
Individual - $1,501
Individual + Spouse - $3,186
Individual + 1 or More Children - $2,446
Individual + Spouse + 1 or More Children - $4,400
|
·
|
A claim related to basic eligibility for coverage under the Plan (See Section 12.2 of the Plan).
|
·
|
A claim related to the Loyalty Conditions contained in Article 8 of the Plan (See Section 12.2 of the Plan).
|
·
|
You will receive notice of the benefit determination in writing or electronically within 72 hours after the Claims Administrator receives all necessary information, taking into account the seriousness of your condition.
|
·
|
Notice of denial may be oral with a written or electronic confirmation to follow within three days.
|
·
|
The Claims Administrator's receipt of the requested information.
|
·
|
The end of the 48-hour period within which you were to provide the additional information, if the information is not received within that time.
|
·
|
For appeals of pre-service claims, the first-level appeal will be conducted and you will be notified by the Claims Administrator of the decision within 15 days from receipt of a request for appeal of a denied Claim. The second-level appeal will be conducted and you will be notified by the Claims Administrator of the decision within 15 days from receipt of a request for review of the first-level appeal decision.
|
·
|
For appeals of post-service claims, the first-level appeal will be conducted and you will be notified by the Claims Administrator of the decision within 30 days from receipt of a request for appeal of a denied claim. The second-level appeal will be conducted and you will be notified by the Claims Administrator of the decision within 30 days from receipt of a request for review of the first-level appeal decision.
|
·
|
For procedures associated with urgent Claims, refer to the following "Urgent Claim Appeals That Require Immediate Action" section.
|
·
|
If you are not satisfied with the first-level appeal decision of the Claims Administrator, you have the right to request a second-level appeal from the Claims Administrator. Your second level appeal request must be submitted to the Claims Administrator in writing within 60 days from receipt of the first-level appeal decision.
|
·
|
For pre-service and post-service claim appeals, the Plan Administrator has delegated to the Claims Administrator the exclusive right to interpret and administer the provisions of the Plan. The Claims Administrator's decisions are conclusive and binding.
|
Name
|
Title
|
Effective Date of Participation
|
David McAtee
|
Senior Executive Vice President & General Counsel
|
February 1, 2018
|
EXHIBIT 12
|
|||||||||||||||||
AT&T INC.
|
|||||||||||||||||
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
|
|||||||||||||||||
Dollars in Millions
|
|||||||||||||||||
Year Ended December 31,
|
|||||||||||||||||
2017
|
2016
|
2015
|
2014
|
2013
|
|||||||||||||
Earnings:
|
|||||||||||||||||
Income from continuing operations before income taxes
|
$
|
15,139
|
$
|
19,812
|
$
|
20,692
|
$
|
10,355
|
$
|
28,050
|
|||||||
Equity in net (income) loss of affiliates included above
|
128
|
(98)
|
(79)
|
(175)
|
(642)
|
||||||||||||
Fixed charges
|
8,854
|
7,296
|
6,592
|
5,295
|
5,452
|
||||||||||||
Distributed income of equity affiliates
|
46
|
61
|
30
|
148
|
318
|
||||||||||||
Interest capitalized
|
(903)
|
(892)
|
(797)
|
(234)
|
(284)
|
||||||||||||
Earnings, as adjusted
|
$
|
23,264
|
$
|
26,179
|
$
|
26,438
|
$
|
15,389
|
$
|
32,894
|
|||||||
Fixed Charges:
|
|||||||||||||||||
Interest expense
|
$
|
6,300
|
$
|
4,910
|
$
|
4,120
|
$
|
3,613
|
$
|
3,940
|
|||||||
Interest capitalized
|
903
|
892
|
797
|
234
|
284
|
||||||||||||
Portion of rental expense representative of interest factor
|
1,651
|
1,494
|
1,675
|
1,448
|
1,228
|
||||||||||||
Fixed Charges
|
$
|
8,854
|
$
|
7,296
|
$
|
6,592
|
$
|
5,295
|
$
|
5,452
|
|||||||
Ratio of Earnings to Fixed Charges
|
2.63
|
3.59
|
4.01
|
2.91
|
6.03
|
Percent Change
|
||||||||||||||||||||
2017 vs.
|
2016 vs.
|
|||||||||||||||||||
2017
|
2016
|
2015
|
2016
|
2015
|
||||||||||||||||
Operating revenues
|
||||||||||||||||||||
Service
|
$
|
145,597
|
$
|
148,884
|
$
|
131,677
|
(2.2
|
)%
|
13.1
|
%
|
||||||||||
Equipment
|
14,949
|
14,902
|
15,124
|
0.3
|
(1.5
|
)
|
||||||||||||||
Total Operating Revenues
|
160,546
|
163,786
|
146,801
|
(2.0
|
)
|
11.6
|
||||||||||||||
Operating expenses
|
||||||||||||||||||||
Cost of services and sales
|
||||||||||||||||||||
Equipment
|
18,709
|
18,757
|
19,268
|
(0.3
|
)
|
(2.7
|
)
|
|||||||||||||
Broadcast, programming and operations
|
21,159
|
19,851
|
11,996
|
6.6
|
65.5
|
|||||||||||||||
Other cost of services
|
37,511
|
38,276
|
35,782
|
(2.0
|
)
|
7.0
|
||||||||||||||
Selling, general and administrative
|
34,917
|
36,347
|
32,919
|
(3.9
|
)
|
10.4
|
||||||||||||||
Asset abandonments and impairments
|
2,914
|
361
|
35
|
-
|
-
|
|||||||||||||||
Depreciation and amortization
|
24,387
|
25,847
|
22,016
|
(5.6
|
)
|
17.4
|
||||||||||||||
Total Operating Expenses
|
139,597
|
139,439
|
122,016
|
0.1
|
14.3
|
|||||||||||||||
Operating Income
|
20,949
|
24,347
|
24,785
|
(14.0
|
)
|
(1.8
|
)
|
|||||||||||||
Interest expense
|
6,300
|
4,910
|
4,120
|
28.3
|
19.2
|
|||||||||||||||
Equity in net income (loss) of affiliates
|
(128
|
)
|
98
|
79
|
-
|
24.1
|
||||||||||||||
Other income (expense) – net
|
618
|
277
|
(52
|
)
|
-
|
-
|
||||||||||||||
Income Before Income Taxes
|
15,139
|
19,812
|
20,692
|
(23.6
|
)
|
(4.3
|
)
|
|||||||||||||
Net Income
|
29,847
|
13,333
|
13,687
|
-
|
(2.6
|
)
|
||||||||||||||
Net Income Attributable to AT&T
|
$
|
29,450
|
$
|
12,976
|
$
|
13,345
|
-
|
%
|
(2.8
|
)%
|
Dollars
|
in millions except per share and per subscriber amounts
|
Business Solutions
|
||||||||||||||||||||
Segment Results
|
||||||||||||||||||||
Percent Change
|
||||||||||||||||||||
2017 vs.
|
2016 vs.
|
|||||||||||||||||||
2017
|
2016
|
2015
|
2016
|
2015
|
||||||||||||||||
Segment operating revenues
|
||||||||||||||||||||
Wireless service
|
$
|
31,902
|
$
|
31,850
|
$
|
30,687
|
0.2
|
%
|
3.8
|
%
|
||||||||||
Fixed strategic services
|
12,227
|
11,431
|
10,383
|
7.0
|
10.1
|
|||||||||||||||
Legacy voice and data services
|
13,931
|
16,370
|
18,546
|
(14.9
|
)
|
(11.7
|
)
|
|||||||||||||
Other service and equipment
|
3,451
|
3,566
|
3,559
|
(3.2
|
)
|
0.2
|
||||||||||||||
Wireless equipment
|
7,895
|
7,771
|
7,952
|
1.6
|
(2.3
|
)
|
||||||||||||||
Total Segment Operating Revenues
|
69,406
|
70,988
|
71,127
|
(2.2
|
)
|
(0.2
|
)
|
|||||||||||||
Segment operating expenses
|
||||||||||||||||||||
Operations and support
|
42,929
|
44,330
|
44,946
|
(3.2
|
)
|
(1.4
|
)
|
|||||||||||||
Depreciation and amortization
|
9,326
|
9,832
|
9,789
|
(5.1
|
)
|
0.4
|
||||||||||||||
Total Segment Operating Expenses
|
52,255
|
54,162
|
54,735
|
(3.5
|
)
|
(1.0
|
)
|
|||||||||||||
Segment Operating Income
|
17,151
|
16,826
|
16,392
|
1.9
|
2.6
|
|||||||||||||||
Equity in Net Income (Loss) of Affiliates
|
(1
|
)
|
-
|
-
|
-
|
-
|
||||||||||||||
Segment Contribution
|
$
|
17,150
|
$
|
16,826
|
$
|
16,392
|
1.9
|
%
|
2.6
|
%
|
Percent Change
|
||||||||||||||||||||
2017 vs.
|
2016 vs.
|
|||||||||||||||||||
(in 000s)
|
2017
|
2016
|
2015
|
2016
|
2015
|
|||||||||||||||
Business Wireless Net Additions
2, 4
|
||||||||||||||||||||
Postpaid
|
147
|
759
|
1,203
|
(80.6
|
)%
|
(36.9
|
)%
|
|||||||||||||
Reseller
|
7
|
(33
|
)
|
13
|
-
|
-
|
||||||||||||||
Connected devices
1
|
9,639
|
5,330
|
5,315
|
80.8
|
0.3
|
|||||||||||||||
Business Wireless Net Subscriber Additions
|
9,793
|
6,056
|
6,531
|
61.7
|
(7.3
|
)
|
||||||||||||||
Business Wireless Postpaid Churn
2, 3, 4
|
1.04
|
%
|
1.00
|
%
|
0.99
|
%
|
4 BP
|
1 BP
|
||||||||||||
Business IP Broadband Net Additions
|
48
|
66
|
89
|
(27.3
|
)%
|
(25.8
|
)%
|
|||||||||||||
1
Includes data-centric devices such as session-based tablets, monitoring devices and automobile systems. Excludes postpaid tablets.
|
||||||||||||||||||||
2
Excludes migrations between AT&T segments and/or subscriber categories and acquisition-related additions during the period.
|
||||||||||||||||||||
3
Calculated by dividing the aggregate number of wireless subscribers who canceled service during a period divided by the total number
|
||||||||||||||||||||
of wireless subscribers at the beginning of that period. The churn rate for the period is equal to the average of the churn rate for
|
||||||||||||||||||||
each month of that period.
|
||||||||||||||||||||
4
2017 excludes the impact of the 2G shutdown, which is reflected in beginning of period subscribers.
|
Entertainment Group
|
||||||||||||||||||||
Segment Results
|
||||||||||||||||||||
Percent Change
|
||||||||||||||||||||
2017 vs.
|
2016 vs.
|
|||||||||||||||||||
2017
|
2016
|
2015
|
2016
|
2015
|
||||||||||||||||
Segment operating revenues
|
||||||||||||||||||||
Video entertainment
|
$
|
36,728
|
$
|
36,460
|
$
|
20,271
|
0.7
|
%
|
79.9
|
%
|
||||||||||
High-speed internet
|
7,674
|
7,472
|
6,601
|
2.7
|
13.2
|
|||||||||||||||
Legacy voice and data services
|
3,920
|
4,829
|
5,914
|
(18.8
|
)
|
(18.3
|
)
|
|||||||||||||
Other service and equipment
|
2,376
|
2,534
|
2,508
|
(6.2
|
)
|
1.0
|
||||||||||||||
Total Segment Operating Revenues
|
50,698
|
51,295
|
35,294
|
(1.2
|
)
|
45.3
|
||||||||||||||
Segment operating expenses
|
||||||||||||||||||||
Operations and support
|
39,420
|
39,338
|
28,345
|
0.2
|
38.8
|
|||||||||||||||
Depreciation and amortization
|
5,623
|
5,862
|
4,945
|
(4.1
|
)
|
18.5
|
||||||||||||||
Total Segment Operating Expenses
|
45,043
|
45,200
|
33,290
|
(0.3
|
)
|
35.8
|
||||||||||||||
Segment Operating Income (Loss)
|
5,655
|
6,095
|
2,004
|
(7.2
|
)
|
-
|
||||||||||||||
Equity in Net Income (Loss) of Affiliates
|
(30
|
)
|
9
|
(4
|
)
|
-
|
-
|
|||||||||||||
Segment Contribution
|
$
|
5,625
|
$
|
6,104
|
$
|
2,000
|
(7.8
|
)%
|
-
|
%
|
Percent Change
|
||||||||||||||||||||
2017 vs.
|
2016 vs.
|
|||||||||||||||||||
At December 31 (in 000s)
|
2017
|
2016
|
2015
|
2016
|
2015
|
|||||||||||||||
Video Connections
|
||||||||||||||||||||
Satellite
|
20,458
|
21,012
|
19,784
|
(2.6
|
)%
|
6.2
|
%
|
|||||||||||||
U-verse
|
3,631
|
4,253
|
5,614
|
(14.6
|
)
|
(24.2
|
)
|
|||||||||||||
DIRECTV NOW
1
|
1,155
|
267
|
-
|
-
|
-
|
|||||||||||||||
Total Video Connections
|
25,244
|
25,532
|
25,398
|
(1.1
|
)
|
0.5
|
||||||||||||||
Broadband Connections
|
||||||||||||||||||||
IP
|
13,462
|
12,888
|
12,356
|
4.5
|
4.3
|
|||||||||||||||
DSL
|
888
|
1,291
|
1,930
|
(31.2
|
)
|
(33.1
|
)
|
|||||||||||||
Total Broadband Connections
|
14,350
|
14,179
|
14,286
|
1.2
|
(0.7
|
)
|
||||||||||||||
Retail Consumer Switched Access Lines
|
4,774
|
5,853
|
7,286
|
(18.4
|
)
|
(19.7
|
)
|
|||||||||||||
U-verse Consumer VoIP Connections
|
5,222
|
5,425
|
5,212
|
(3.7
|
)
|
4.1
|
||||||||||||||
Total Retail Consumer Voice Connections
|
9,996
|
11,278
|
12,498
|
(11.4
|
)%
|
(9.8
|
)%
|
|||||||||||||
1
Consistent with industry practice, DIRECTV NOW includes over-the-top connections that are on free-trial.
|
Consumer Mobility
|
||||||||||||||||||||
Segment Results
|
||||||||||||||||||||
Percent Change
|
||||||||||||||||||||
2017 vs.
|
2016 vs.
|
|||||||||||||||||||
2017
|
2016
|
2015
|
2016
|
2015
|
||||||||||||||||
Segment operating revenues
|
||||||||||||||||||||
Service
|
$
|
26,053
|
$
|
27,536
|
$
|
29,150
|
(5.4
|
)%
|
(5.5
|
)%
|
||||||||||
Equipment
|
5,499
|
5,664
|
5,916
|
(2.9
|
)
|
(4.3
|
)
|
|||||||||||||
Total Segment Operating Revenues
|
31,552
|
33,200
|
35,066
|
(5.0
|
)
|
(5.3
|
)
|
|||||||||||||
Segment operating expenses
|
||||||||||||||||||||
Operations and support
|
18,966
|
19,659
|
21,477
|
(3.5
|
)
|
(8.5
|
)
|
|||||||||||||
Depreciation and amortization
|
3,507
|
3,716
|
3,851
|
(5.6
|
)
|
(3.5
|
)
|
|||||||||||||
Total Segment Operating Expenses
|
22,473
|
23,375
|
25,328
|
(3.9
|
)
|
(7.7
|
)
|
|||||||||||||
Segment Operating Income
|
9,079
|
9,825
|
9,738
|
(7.6
|
)
|
0.9
|
||||||||||||||
Equity in Net Income of Affiliates
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Segment Contribution
|
$
|
9,079
|
$
|
9,825
|
$
|
9,738
|
(7.6
|
)%
|
0.9
|
%
|
Percent Change
|
||||||||||||||||||||
2017 vs.
|
2016 vs.
|
|||||||||||||||||||
(in 000s)
|
2017
|
2016
|
2015
|
2016
|
2015
|
|||||||||||||||
Consumer Mobility Net Additions
1, 4
|
||||||||||||||||||||
Postpaid
|
447
|
359
|
463
|
24.5
|
%
|
(22.5
|
)%
|
|||||||||||||
Prepaid
5
|
1,013
|
1,575
|
1,364
|
(35.7
|
)
|
15.5
|
||||||||||||||
Branded Net Additions
|
1,460
|
1,934
|
1,827
|
(24.5
|
)
|
5.9
|
||||||||||||||
Reseller
|
(1,878
|
)
|
(1,813
|
)
|
(168
|
)
|
(3.6
|
)
|
-
|
|||||||||||
Connected devices
2,5
|
52
|
19
|
(131
|
)
|
-
|
-
|
||||||||||||||
Consumer Mobility Net Subscriber Additions
|
(366
|
)
|
140
|
1,528
|
-
|
%
|
(90.8
|
)%
|
||||||||||||
Total Churn
1, 3, 4
|
2.36
|
%
|
2.15
|
%
|
1.94
|
%
|
21 BP
|
21 BP
|
||||||||||||
Postpaid Churn
1, 3, 4
|
1.17
|
%
|
1.19
|
%
|
1.25
|
%
|
(2) BP
|
(6) BP
|
||||||||||||
1
Excludes migrations between AT&T segments and/or subscriber categories and acquisition-related additions during the period.
|
||||||||||||||||||||
2
Includes data-centric devices such as session-based tablets, monitoring devices and postpaid automobile systems. Excludes postpaid
|
||||||||||||||||||||
tablets. See (5) below.
|
||||||||||||||||||||
3
Calculated by dividing the aggregate number of wireless subscribers who canceled service during a month divided by the total
|
||||||||||||||||||||
number of wireless subscribers at the beginning of that month. The churn rate for the period is equal to the average of the
|
||||||||||||||||||||
churn rate for each month of that period.
|
||||||||||||||||||||
4
2017 excludes the impact of the 2G shutdown and a true-up to the reseller subscriber base, which is reflected in beginning
|
||||||||||||||||||||
of period subscribers.
|
||||||||||||||||||||
5
Beginning in 2017, we are reporting prepaid IoT connections, which primarily consist of connected cars, as a component of
|
||||||||||||||||||||
prepaid subscribers, resulting in 153 additional prepaid net adds in the year.
|
International
|
||||||||||||||||||||
Segment Results
|
||||||||||||||||||||
Percent Change
|
||||||||||||||||||||
2017
|
2016
|
2015
|
2017 vs.
2016
|
2016 vs.
2015
|
||||||||||||||||
Segment operating revenues
|
||||||||||||||||||||
Video entertainment
|
$
|
5,456
|
$
|
4,910
|
$
|
2,151
|
11.1
|
%
|
-
|
%
|
||||||||||
Wireless service
|
2,047
|
1,905
|
1,647
|
7.5
|
15.7
|
|||||||||||||||
Wireless equipment
|
766
|
468
|
304
|
63.7
|
53.9
|
|||||||||||||||
Total Segment Operating Revenues
|
8,269
|
7,283
|
4,102
|
13.5
|
77.5
|
|||||||||||||||
Segment operating expenses
|
||||||||||||||||||||
Operations and support
|
7,404
|
6,830
|
3,930
|
8.4
|
73.8
|
|||||||||||||||
Depreciation and amortization
|
1,218
|
1,166
|
655
|
4.5
|
78.0
|
|||||||||||||||
Total Segment Operating Expenses
|
8,622
|
7,996
|
4,585
|
7.8
|
74.4
|
|||||||||||||||
Segment Operating Income (Loss)
|
(353
|
)
|
(713
|
)
|
(483
|
)
|
50.5
|
(47.6
|
)
|
|||||||||||
Equity in Net Income (Loss) of Affiliates
|
87
|
52
|
(5
|
)
|
67.3
|
-
|
||||||||||||||
Segment Contribution
|
$
|
(266
|
)
|
$
|
(661
|
)
|
$
|
(488
|
)
|
59.8
|
%
|
(35.5
|
)%
|
Percent Change
|
||||||||||||||||||||
(in 000s)
|
2017
|
2016
|
2015
|
2017 vs.
2016
|
2016 vs.
2015
|
|||||||||||||||
Mexico Wireless Net Additions
|
||||||||||||||||||||
Postpaid
|
533
|
677
|
177
|
(21.3
|
)%
|
-
|
%
|
|||||||||||||
Prepaid
|
2,670
|
2,732
|
(169
|
)
|
(2.3
|
)
|
-
|
|||||||||||||
Branded Net Additions
|
3,203
|
3,409
|
8
|
(6.0
|
)
|
-
|
||||||||||||||
Reseller
|
(77
|
)
|
(120
|
)
|
(104
|
)
|
35.8
|
(15.4
|
)
|
|||||||||||
Mexico Wireless
Net Subscriber Additions
|
3,126
|
3,289
|
(96
|
)
|
(5.0
|
)
|
-
|
|||||||||||||
Latin America Satellite Net Additions
1
|
||||||||||||||||||||
PanAmericana
|
232
|
140
|
76
|
65.7
|
84.2
|
|||||||||||||||
SKY Brazil
|
(190
|
)
|
(195
|
)
|
(223
|
)
|
2.6
|
12.6
|
||||||||||||
Latin America Satellite
Net Subscriber Additions
2
|
42
|
(55
|
)
|
(147
|
)
|
-
|
%
|
62.6
|
%
|
|||||||||||
1
In 2017, we updated the methodology used to account for prepaid video connections, which were reflected in beginning of period
|
||||||||||||||||||||
subscribers.
|
||||||||||||||||||||
2
SKY Mexico had net subscriber losses of 11 in the nine months ended September 30, 2017 and additions of 742 and 646 for the year
|
||||||||||||||||||||
ended December 31, 2016 and 2015, respectively.
|
AT&T Mobility Results
|
||||||||||||||||||||
Percent Change
|
||||||||||||||||||||
2017 vs.
|
2016 vs.
|
|||||||||||||||||||
2017
|
2016
|
2015
|
2016
|
2015
|
||||||||||||||||
Operating revenues
|
||||||||||||||||||||
Service
|
$
|
57,955
|
$
|
59,386
|
$
|
59,837
|
(2.4
|
)%
|
(0.8
|
)%
|
||||||||||
Equipment
|
13,394
|
13,435
|
13,868
|
(0.3
|
)
|
(3.1
|
)
|
|||||||||||||
Total Operating Revenues
|
71,349
|
72,821
|
73,705
|
(2.0
|
)
|
(1.2
|
)
|
|||||||||||||
Operating expenses
|
||||||||||||||||||||
Operations and support
|
43,255
|
43,886
|
45,789
|
(1.4
|
)
|
(4.2
|
)
|
|||||||||||||
EBITDA
|
28,094
|
28,935
|
27,916
|
(2.9
|
)
|
3.7
|
||||||||||||||
Depreciation and amortization
|
8,027
|
8,292
|
8,113
|
(3.2
|
)
|
2.2
|
||||||||||||||
Total Operating Expenses
|
51,282
|
52,178
|
53,902
|
(1.7
|
)
|
(3.2
|
)
|
|||||||||||||
Operating Income
|
$
|
20,067
|
$
|
20,643
|
$
|
19,803
|
(2.8
|
)%
|
4.2
|
%
|
Percent Change
|
||||||||||||||||||||
2017 vs.
|
2016 vs.
|
|||||||||||||||||||
(in 000s)
|
2017
|
2016
|
2015
|
2016
|
2015
|
|||||||||||||||
Wireless Net Additions
1, 4
|
||||||||||||||||||||
Postpaid
|
594
|
1,118
|
1,666
|
(46.9
|
)%
|
(32.9
|
)%
|
|||||||||||||
Prepaid
5
|
1,013
|
1,575
|
1,364
|
(35.7
|
)
|
15.5
|
||||||||||||||
Branded Net Additions
|
1,607
|
2,693
|
3,030
|
(40.3
|
)
|
(11.1
|
)
|
|||||||||||||
Reseller
|
(1,871
|
)
|
(1,846
|
)
|
(155
|
)
|
(1.4
|
)
|
-
|
|||||||||||
Connected devices
2, 5
|
9,691
|
5,349
|
5,184
|
81.2
|
3.2
|
|||||||||||||||
Wireless Net Subscriber Additions
|
9,427
|
6,196
|
8,059
|
52.1
|
(23.1
|
)
|
||||||||||||||
Smartphones sold under our installment
programs during period
|
16,667
|
17,871
|
17,320
|
(6.7
|
)%
|
3.2
|
%
|
|||||||||||||
Total Churn
3, 4
|
1.36
|
%
|
1.48
|
%
|
1.39
|
%
|
(12) BP
|
9 BP
|
||||||||||||
Branded Churn
3, 4
|
1.68
|
%
|
1.62
|
%
|
1.63
|
%
|
6 BP
|
(1) BP
|
||||||||||||
Postpaid Churn
3, 4
|
1.08
|
%
|
1.07
|
%
|
1.09
|
%
|
1 BP
|
(2) BP
|
||||||||||||
Postpaid Phone-Only Churn
3, 4
|
0.85
|
%
|
0.92
|
%
|
0.99
|
%
|
(7) BP
|
(7) BP
|
||||||||||||
1
Excludes acquisition-related additions during the period.
|
||||||||||||||||||||
2
Includes data-centric devices such as session-based tablets, monitoring devices and primarily wholesale automobile systems. Excludes
|
||||||||||||||||||||
postpaid tablets. See (5) below.
|
||||||||||||||||||||
3
Calculated by dividing the aggregate number of wireless subscribers who canceled service during a month divided by the total number
|
||||||||||||||||||||
of wireless subscribers at the beginning of that month. The churn rate for the period is equal to the average of the churn rate for
|
||||||||||||||||||||
each month of that period.
|
||||||||||||||||||||
4
2017 excludes the impact of the 2G shutdown and a true-up to the reseller subscriber base, which is reflected in beginning
|
||||||||||||||||||||
of period subscribers.
|
||||||||||||||||||||
5
Beginning in 2017, we are reporting prepaid IoT connections, which primarily consist of connected cars, as a component of
|
||||||||||||||||||||
prepaid subscribers, resulting in 153 additional prepaid net adds in the year.
|
·
|
Submitted winning bids for 251 Advanced Wireless Services (AWS) spectrum licenses for a near-nationwide contiguous block of high-quality spectrum in the AWS-3 Auction.
|
·
|
Redeployed spectrum previously used for basic 2G services to support more advanced mobile internet services on our 3G and 4G networks.
|
·
|
Secured the First Responder Network Authority (FirstNet) contract, which provides us with access to a nationwide low band 20 MHz of spectrum.
|
·
|
Invested in 5G and millimeter-wave technologies with our 2018 acquisition of Fiber-Tower Corporation, which holds significant amounts of spectrum in the millimeter wave bands (28 GHz and 39 GHz) that the FCC recently reallocated for mobile broadband services. These bands will help to accelerate our entry into 5G services.
|
·
|
Building a premier gigabit network. FirstNet, combined with our fiber and 5G deployment, provide a powerful platform to accelerate our move to a ubiquitous gigabit world.
|
·
|
Growing profitability in Mexico.
|
·
|
Creating a new platform for targeted advertising, using data, content and talent to build an automated advertising platform that can transform premium video and TV advertising.
|
·
|
Launching a next generation video streaming platform, adding additional enhancements and user interfaces to our video services.
|
·
|
Continuing to develop a competitive advantage through our industry-leading cost-structure.
|
·
|
The West and East Regions' Core contracts which expired in April 2016 were settled and ratified by the CWA in August 2017. The West contract now includes approximately 2,300 former DIRECTV non-management employees. These new contracts expire in April 2020 and together cover more than 17,000 employees.
|
·
|
The Southwest Region's Core contract which would have expired in April 2017 was settled and ratified by the CWA in April 2017. This new contract expires in April 2021 and covers 20,000 employees.
|
·
|
The IBEW's primary labor contract which would have expired in June 2017 was settled and ratified by the CWA in May 2017. This contract expires in June 2022 and covers 5,000 employees.
|
·
|
A Mobility contract covering approximately 20,000 employees which would have expired in February 2017 was settled and ratified by the CWA in January 2018. The new contract will expire in February 2021.
|
·
|
February issuance of $1,250 of 3.200% global notes due 2022; $750 of 3.800% global notes due 2024; $2,000 of 4.250% global notes due 2027; $3,000 of 5.250% global notes due 2037; $2,000 of 5.450% global notes due 2047; and $1,000 of 5.700% global notes due 2057.
|
·
|
March issuance of $1,430 of 5.500% global notes due 2047.
|
·
|
March issuance of $800 floating rate global notes due 2020. The floating rate for the notes is based upon the three-month London Interbank Offered Rate (LIBOR), reset quarterly, plus 65 basis points.
|
·
|
March draw of $300 on a private financing agreement with Banco Nacional de Mexico, S.A. due March 2019. The agreement contains terms similar to that provided under our syndicated credit arrangements; the interest rate is a market rate. As of December 31, 2017, a total of $690 had been drawn against this arrangement.
|
·
|
May issuance of $1,500 floating rate global notes due 2021. The floating rate for the notes is based upon the three-month LIBOR, reset quarterly, plus 95 basis points.
|
·
|
May issuance of CAD$600 of 2.850% global notes due 2024 and CAD$750 of 4.850% global notes due 2047 (together, equivalent to $994, when issued).
|
·
|
June issuance of £1,000 of 3.550% global notes due 2037, subject to mandatory redemption described further below (equivalent to $1,282 when issued).
|
·
|
June issuance of €750 of 1.050% global notes due 2023; €1,750 of 1.800% global notes due 2026; €1,500 of 2.350% global notes due 2029; €1,750 of 3.150% global notes due 2036 and €1,250 of floating rate global notes due 2023. All except the 2036 global notes are subject to mandatory redemption (together, equivalent to $7,883, when issued).
|
·
|
August issuance of $750 of floating rate notes due 2023;
$1,750 of 2.850% global notes due 2023; $3,000 of 3.400% global notes due 2024; $5,000 of 3.900% global notes due 2027; $4,500 of 4.900% global notes due 2037; $5,000 of 5.150% global notes due 2050 and $2,500 of 5.300% global notes due 2058. All are subject to mandatory redemption.
|
·
|
October draw of $750 on a private financing agreement with Canadian Imperial Bank of Commerce due 2022.
|
·
|
October issuance of $1,323
of 5.350% global notes due 2066.
|
·
|
$1,142 of 2.400% global notes due 2017.
|
·
|
$1,000 of 1.600% global notes due 2017.
|
·
|
$500 of floating rate notes due 2017.
|
·
|
£750 of 5.875% global notes due 2017.
|
·
|
$750 repayment of a private financing agreement with Export Development Canada due 2017.
|
·
|
$1,150 of 1.700% global notes due 2017.
|
·
|
$4,155 repayment of amounts outstanding under our syndicated credit agreement.
|
·
|
$2,000 of 1.400% global notes due 2017.
|
·
|
$1,000 of annual put reset securities issued by BellSouth that may be put back to us each April until maturity in 2021.
|
·
|
An accreting zero-coupon note that may be redeemed each May until maturity in 2022. In May 2017, $1 was redeemed by the holder for $1. If the remainder of the zero-coupon note (issued for principal of $500 in 2007 and partially exchanged in the 2017 debt exchange offers) is held to maturity, the redemption amount will be $592.
|
Payments Due By Period
|
|||||||||||||||||||||
Total
|
Less than
1 Year
|
1-3
Years
|
3-5
Years
|
More than
5 Years
|
|||||||||||||||||
Contractual Obligations
|
|||||||||||||||||||||
Long-term debt obligations
1
|
$
|
167,879
|
$
|
37,836
|
$
|
16,257
|
$
|
18,155
|
$
|
95,631
|
|||||||||||
Interest payments on long-term debt
|
121,906
|
7,253
|
13,668
|
12,559
|
88,426
|
||||||||||||||||
Finance obligations
2
|
3,102
|
244
|
502
|
522
|
1,834
|
||||||||||||||||
Operating lease obligations
3
|
25,928
|
3,945
|
7,100
|
5,627
|
9,256
|
||||||||||||||||
Capital lease obligations
4
|
1,818
|
142
|
190
|
218
|
1,268
|
||||||||||||||||
Unrecognized tax benefits
5
|
5,052
|
985
|
-
|
-
|
4,067
|
||||||||||||||||
FirstNet sustainability payments
6
|
18,000
|
240
|
240
|
315
|
17,205
|
||||||||||||||||
Purchase obligations
7
|
35,239
|
10,074
|
12,331
|
7,003
|
5,831
|
||||||||||||||||
Total Contractual Obligations
|
$
|
378,924
|
$
|
60,719
|
$
|
50,288
|
$
|
44,399
|
$
|
223,518
|
|||||||||||
1
Represents principal or payoff amounts of notes and debentures at maturity or, for putable debt, the next put opportunity (see Note 9).
|
|||||||||||||||||||||
2
Represents future minimum payments under the Crown Castle and other arrangements (see Note 16).
|
|||||||||||||||||||||
3
Represents operating lease payments (see Note 6).
|
|||||||||||||||||||||
4
Represents capital lease payments (see Note 6).
|
|||||||||||||||||||||
5
The noncurrent portion of the UTBs is included in the "More than 5 Years" column, as we cannot reasonably
|
|||||||||||||||||||||
estimate the timing or amounts of additional cash payments, if any, at this time (see Note 11).
|
|||||||||||||||||||||
6
Represents contractual commitment to make sustainability payments over the 25-year contract. These sustainability payments represent
|
|||||||||||||||||||||
our commitment to fund FirstNet's operating expenses and future reinvestment in the network, which we will own and operate.
|
|||||||||||||||||||||
FirstNet has a statutory requirement to reinvest funds that exceed the agency's operating expenses. We anticipate that the remaining
|
|||||||||||||||||||||
amount, expected to be in the $15,000 range, will be reinvested into our network. (See Note 17)
|
|||||||||||||||||||||
7
The purchase obligations will be funded with cash provided by operations or through incremental borrowings. The minimum
|
|||||||||||||||||||||
commitment for certain obligations is based on termination penalties that could be paid to exit the contracts. If we elect to exit these
|
|||||||||||||||||||||
contracts, termination fees for all such contracts in the year of termination could be approximately $694 in 2018, $737 in the
|
|||||||||||||||||||||
aggregate for 2019 and 2020, $255 in the aggregate for 2021 and 2022, and $131 in the aggregate thereafter. Certain termination fees are
|
|||||||||||||||||||||
excluded from the above table, as the fees would not be paid every year and the timing of such payments, if any, is uncertain.
|
Year Ended
|
||||||||||||||||
December 31, 2017
|
||||||||||||||||
Consumer Mobility
|
Business Solutions
|
Adjustments
1
|
AT&T Mobility
|
|||||||||||||
Operating revenues
|
||||||||||||||||
Wireless service
|
$
|
26,053
|
$
|
31,902
|
$
|
-
|
$
|
57,955
|
||||||||
Fixed strategic services
|
-
|
12,227
|
(12,227
|
)
|
-
|
|||||||||||
Legacy voice and data services
|
-
|
13,931
|
(13,931
|
)
|
-
|
|||||||||||
Other service and equipment
|
-
|
3,451
|
(3,451
|
)
|
-
|
|||||||||||
Wireless equipment
|
5,499
|
7,895
|
-
|
13,394
|
||||||||||||
Total Operating Revenues
|
31,552
|
69,406
|
(29,609
|
)
|
71,349
|
|||||||||||
Operating expenses
|
||||||||||||||||
Operations and support
|
18,966
|
42,929
|
(18,640
|
)
|
43,255
|
|||||||||||
EBITDA
|
12,586
|
26,477
|
(10,969
|
)
|
28,094
|
|||||||||||
Depreciation and amortization
|
3,507
|
9,326
|
(4,806
|
)
|
8,027
|
|||||||||||
Total Operating Expense
|
22,473
|
52,255
|
(23,446
|
)
|
51,282
|
|||||||||||
Operating Income
|
$
|
9,079
|
$
|
17,151
|
$
|
(6,163
|
)
|
$
|
20,067
|
|||||||
1
Business wireline operations reported in Business Solutions segment.
|
Year Ended
|
||||||||||||||||
December 31, 2016
|
||||||||||||||||
Consumer Mobility
|
Business Solutions
|
Adjustments
1
|
AT&T Mobility
|
|||||||||||||
Operating revenues
|
||||||||||||||||
Wireless service
|
$
|
27,536
|
$
|
31,850
|
$
|
-
|
$
|
59,386
|
||||||||
Fixed strategic services
|
-
|
11,431
|
(11,431
|
)
|
-
|
|||||||||||
Legacy voice and data services
|
-
|
16,370
|
(16,370
|
)
|
-
|
|||||||||||
Other service and equipment
|
-
|
3,566
|
(3,566
|
)
|
-
|
|||||||||||
Wireless equipment
|
5,664
|
7,771
|
-
|
13,435
|
||||||||||||
Total Operating Revenues
|
33,200
|
70,988
|
(31,367
|
)
|
72,821
|
|||||||||||
Operating expenses
|
||||||||||||||||
Operations and support
|
19,659
|
44,330
|
(20,103
|
)
|
43,886
|
|||||||||||
EBITDA
|
13,541
|
26,658
|
(11,264
|
)
|
28,935
|
|||||||||||
Depreciation and amortization
|
3,716
|
9,832
|
(5,256
|
)
|
8,292
|
|||||||||||
Total Operating Expense
|
23,375
|
54,162
|
(25,359
|
)
|
52,178
|
|||||||||||
Operating Income
|
$
|
9,825
|
$
|
16,826
|
$
|
(6,008
|
)
|
$
|
20,643
|
|||||||
1
Business wireline operations reported in Business Solutions segment.
|
Year Ended
|
||||||||||||||||
December 31, 2015
|
||||||||||||||||
Consumer Mobility
|
Business Solutions
|
Adjustments
1
|
AT&T Mobility
|
|||||||||||||
Operating revenues
|
||||||||||||||||
Wireless service
|
$
|
29,150
|
$
|
30,687
|
$
|
-
|
$
|
59,837
|
||||||||
Fixed strategic services
|
-
|
10,383
|
(10,383
|
)
|
-
|
|||||||||||
Legacy voice and data services
|
-
|
18,546
|
(18,546
|
)
|
-
|
|||||||||||
Other service and equipment
|
-
|
3,559
|
(3,559
|
)
|
-
|
|||||||||||
Wireless equipment
|
5,916
|
7,952
|
-
|
13,868
|
||||||||||||
Total Operating Revenues
|
35,066
|
71,127
|
(32,488
|
)
|
73,705
|
|||||||||||
Operating expenses
|
||||||||||||||||
Operations and support
|
21,477
|
44,946
|
(20,634
|
)
|
45,789
|
|||||||||||
EBITDA
|
13,589
|
26,181
|
(11,854
|
)
|
27,916
|
|||||||||||
Depreciation and amortization
|
3,851
|
9,789
|
(5,527
|
)
|
8,113
|
|||||||||||
Total Operating Expense
|
25,328
|
54,735
|
(26,161
|
)
|
53,902
|
|||||||||||
Operating Income
|
$
|
9,738
|
$
|
16,392
|
$
|
(6,327
|
)
|
$
|
19,803
|
|||||||
1
Business wireline operations reported in Business Solutions segment.
|
·
|
Adverse economic and/or capital access changes in the markets served by us or in countries in which we have significant investments, including the impact on customer demand and our ability and our suppliers' ability to access financial markets at favorable rates and terms.
|
·
|
Changes in available technology and the effects of such changes, including product substitutions and deployment costs.
|
·
|
Increases in our benefit plans' costs, including increases due to adverse changes in the United States and foreign securities markets, resulting in worse-than-assumed investment returns and discount rates; adverse changes in mortality assumptions; adverse medical cost trends; and unfavorable or delayed implementation or repeal of healthcare legislation, regulations or related court decisions.
|
·
|
The final outcome of FCC and other federal, state or foreign government agency proceedings (including judicial review, if any, of such proceedings) involving issues that are important to our business, including, without limitation, special access and business data services; intercarrier compensation; interconnection obligations; pending Notices of Apparent Liability; the transition from legacy technologies to IP-based infrastructure, including the withdrawal of legacy TDM-based services; universal service; broadband deployment; wireless equipment siting regulations; E911 services; competition policy; privacy; net neutrality; unbundled network elements and other wholesale obligations; multi-channel video programming distributor services and equipment; availability of new spectrum, on fair and balanced terms; and wireless and satellite license awards and renewals.
|
·
|
The final outcome of state and federal legislative efforts involving issues that are important to our business, including privacy, net neutrality, deregulation of IP-based services, relief from Carrier of Last Resort obligations and elimination of state commission review of the withdrawal of services.
|
·
|
Enactment of additional state, local, federal and/or foreign regulatory and tax laws and regulations, or changes to existing standards and actions by tax agencies and judicial authorities including the resolution of disputes with any taxing jurisdictions, pertaining to our subsidiaries and foreign investments, including laws and regulations that reduce our incentive to invest in our networks, resulting in lower revenue growth and/or higher operating costs.
|
·
|
Our ability to absorb revenue losses caused by increasing competition, including offerings that use alternative technologies or delivery methods (e.g., cable, wireless, VoIP and over-the-top video service), subscriber reluctance to purchase new wireless handsets, and our ability to maintain capital expenditures.
|
·
|
The extent of competition including from governmental networks and other providers and the resulting pressure on customer totals and segment operating margins.
|
·
|
Our ability to develop attractive and profitable product/service offerings to offset increasing competition.
|
·
|
The ability of our competitors to offer product/service offerings at lower prices due to lower cost structures and regulatory and legislative actions adverse to us, including state regulatory proceedings relating to unbundled network elements and non-regulation of comparable alternative technologies (e.g., VoIP).
|
·
|
The continued development and delivery of attractive and profitable video and broadband offerings; the extent to which regulatory and build-out requirements apply to our offerings; our ability to match speeds offered by our competitors and the availability, cost and/or reliability of the various technologies and/or content required to provide such offerings.
|
·
|
Our continued ability to maintain margins, attract and offer a diverse portfolio of video, wireless service and devices and device financing plans.
|
·
|
The availability and cost of additional wireless spectrum and regulations and conditions relating to spectrum use, licensing, obtaining additional spectrum, technical standards and deployment and usage, including network management rules.
|
·
|
Our ability to manage growth in wireless video and data services, including network quality and acquisition of adequate spectrum at reasonable costs and terms.
|
·
|
The outcome of pending, threatened or potential litigation (which includes arbitrations), including, without limitation, patent and product safety claims by or against third parties.
|
·
|
The impact from major equipment failures on our networks, including satellites operated by DIRECTV; the effect of security breaches related to the network or customer information; our inability to obtain handsets, equipment/software or have handsets, equipment/software serviced in a timely and cost-effective manner from suppliers; and in the case of satellites launched, timely provisioning of services from vendors; or severe weather conditions, natural disasters, pandemics, energy shortages, wars or terrorist attacks.
|
·
|
The issuance by the Financial Accounting Standards Board or other accounting oversight bodies of new accounting standards or changes to existing standards.
|
·
|
Our ability to close our pending acquisition of Time Warner Inc. and successfully reorganize our operations, including the ability to manage various businesses in widely dispersed business locations and with decentralized management.
|
·
|
Our ability to adequately fund our wireless operations, including payment for additional spectrum, network upgrades and technological advancements.
|
·
|
Our increased exposure to video competition and foreign economies, including foreign exchange fluctuations as well as regulatory and political uncertainty.
|
·
|
Changes in our corporate strategies, such as changing network-related requirements or acquisitions and dispositions, which may require significant amounts of cash or stock, to respond to competition and regulatory, legislative and technological developments.
|
·
|
The uncertainty surrounding further congressional action to address spending reductions, which may result in a significant decrease in government spending and reluctance of businesses and consumers to spend in general.
|
Year Ended December 31,
|
2017
|
2016
|
2015
|
|||||||||
Numerators
|
||||||||||||
Numerator for basic earnings per share:
|
||||||||||||
Net income
|
$
|
29,847
|
$
|
13,333
|
$
|
13,687
|
||||||
Less: Net income attributable to noncontrolling interest
|
(397
|
)
|
(357
|
)
|
(342
|
)
|
||||||
Net income attributable to AT&T
|
29,450
|
12,976
|
13,345
|
|||||||||
Dilutive potential common shares:
|
||||||||||||
Share-based payment
|
13
|
13
|
13
|
|||||||||
Numerator for diluted earnings per share
|
$
|
29,463
|
$
|
12,989
|
$
|
13,358
|
||||||
Denominators (000,000)
|
||||||||||||
Denominator for basic earnings per share:
|
||||||||||||
Weighted-average number of common shares outstanding
|
6,164
|
6,168
|
5,628
|
|||||||||
Dilutive potential common shares:
|
||||||||||||
Share-based payment (in shares)
|
19
|
21
|
18
|
|||||||||
Denominator for diluted earnings per share
|
6,183
|
6,189
|
5,646
|
|||||||||
Basic earnings per share attributable to AT&T
|
$
|
4.77
|
$
|
2.10
|
$
|
2.37
|
||||||
Diluted earnings per share attributable to AT&T
|
$
|
4.76
|
$
|
2.10
|
$
|
2.37
|
Foreign
Currency
Translation
Adjustment
|
Net Unrealized
Gains (Losses) on Available-for-Sale Securities
|
Net Unrealized
Gains (Losses)
on Cash Flow
Hedges
|
Defined Benefit Postretirement
Plans
|
Accumulated
Other
Comprehensive
Income
|
||||||||||
Balance as of December 31, 2014
|
$
|
(26)
|
$
|
499
|
$
|
741
|
$
|
6,847
|
$
|
8,061
|
||||
Other comprehensive income
(loss) before reclassifications
|
(1,172)
|
-
|
(763)
|
45
|
(1,890)
|
|||||||||
Amounts reclassified
from accumulated OCI
|
-
|
1
|
(15)
|
1
|
38
|
2
|
(860)
|
3
|
(837)
|
|||||
Net other comprehensive
income (loss)
|
(1,172)
|
(15)
|
(725)
|
(815)
|
(2,727)
|
|||||||||
Balance as of December 31, 2015
|
(1,198)
|
484
|
16
|
6,032
|
5,334
|
|||||||||
Other comprehensive income
(loss) before reclassifications
|
(797)
|
58
|
690
|
497
|
448
|
|||||||||
Amounts reclassified
from accumulated OCI
|
-
|
1
|
(1)
|
1
|
38
|
2
|
(858)
|
3
|
(821)
|
|||||
Net other comprehensive
income (loss)
|
(797)
|
57
|
728
|
(361)
|
(373)
|
|||||||||
Balance as of December 31, 2016
|
(1,995)
|
541
|
744
|
5,671
|
4,961
|
|||||||||
Other comprehensive income
(loss) before reclassifications
|
20
|
187
|
371
|
1,083
|
1,661
|
|||||||||
Amounts reclassified
from accumulated OCI
|
-
|
1
|
(185)
|
1
|
39
|
2
|
(988)
|
3
|
(1,134)
|
|||||
Net other comprehensive
income (loss)
|
20
|
2
|
410
|
95
|
527
|
|||||||||
Amounts reclassified to retained earnings 4 | (79) | 117 | 248 | 1,243 | 1,529 | |||||||||
Balance as of December 31, 2017
|
$
|
(2,054)
|
$
|
660
|
$
|
1,402
|
$
|
7,009
|
$
|
7,017
|
||||
1
(Gains) losses are included in Other income (expense) - net in the consolidated statements of income.
|
||||||||||||||
2
(Gains) losses are included in Interest expense in the consolidated statements of income (see Note 10).
|
||||||||||||||
3
The amortization of prior service credits associated with postretirement benefits, net of amounts capitalized as part of construction labor,
|
||||||||||||||
are included in Cost of services and sales and Selling, general and administrative in the consolidated statements of income (see Note 12).
|
||||||||||||||
4 With the adoption of ASU 2018-02, the stranded tax effects resulting from the application of the Tax Cuts and Jobs Act are reclassified to retained earnings (see Note 1). |
·
|
Acquisition-related items
which consists of (1) items associated with the merger and integration of acquired businesses and (2) the noncash amortization of intangible assets acquired in acquisitions.
|
·
|
Certain significant items
which consists of (1) noncash actuarial gains and losses from pension and other postretirement benefits, (2) employee separation charges associated with voluntary and/or strategic offers, (3) losses resulting from abandonment or impairment of assets and (4) other items for which the segments are not being evaluated.
|
(Unaudited)
|
||||||||
Year Ended
|
||||||||
December 31,
|
||||||||
2015
|
2014
|
|||||||
Total operating revenues
|
$
|
165,694
|
$
|
165,595
|
||||
Net Income Attributable to AT&T
|
12,683
|
6,412
|
||||||
Basic Earnings Per Share Attributable to AT&T
|
$
|
2.06
|
$
|
1.04
|
||||
Diluted Earnings Per Share Attributable to AT&T
|
$
|
2.06
|
$
|
1.04
|
Lives (years)
|
2017
|
2016
|
||||||||||
Land
|
-
|
$
|
1,630
|
$
|
1,643
|
|||||||
Buildings and improvements
|
2-44
|
36,319
|
35,036
|
|||||||||
Central office equipment
1
|
3-10
|
94,076
|
92,954
|
|||||||||
Cable, wiring and conduit
|
15-50
|
67,695
|
79,279
|
|||||||||
Satellites
|
14-17
|
2,967
|
2,710
|
|||||||||
Other equipment
|
3-20
|
90,017
|
88,436
|
|||||||||
Software
|
3-5
|
16,750
|
14,472
|
|||||||||
Under construction
|
-
|
4,045
|
5,118
|
|||||||||
313,499
|
319,648
|
|||||||||||
Accumulated depreciation and amortization
|
188,277
|
194,749
|
||||||||||
Property, plant and equipment - net
|
$
|
125,222
|
$
|
124,899
|
||||||||
1
Includes certain network software.
|
Business Solutions
|
Entertainment Group
|
Consumer Mobility
|
International
|
Total
|
||||||||||||||||
Balance as of December 31, 2015
|
$
|
45,351
|
$
|
38,673
|
$
|
16,512
|
$
|
4,032
|
$
|
104,568
|
||||||||||
Goodwill acquired
|
22
|
380
|
14
|
65
|
481
|
|||||||||||||||
Foreign currency translation adjustments
|
-
|
-
|
-
|
167
|
167
|
|||||||||||||||
Other
|
(9
|
)
|
-
|
-
|
-
|
(9
|
)
|
|||||||||||||
Balance as of December 31, 2016
|
45,364
|
39,053
|
16,526
|
4,264
|
105,207
|
|||||||||||||||
Goodwill acquired
|
-
|
210
|
-
|
-
|
210
|
|||||||||||||||
Foreign currency translation adjustments
|
-
|
12
|
-
|
(30
|
)
|
(18
|
)
|
|||||||||||||
Other
|
31
|
5
|
14
|
-
|
50
|
|||||||||||||||
Balance as of December 31, 2017
|
$
|
45,395
|
$
|
39,280
|
$
|
16,540
|
$
|
4,234
|
$
|
105,449
|
December 31, 2017
|
December 31, 2016
|
|||||||||||||||||||||||
Other Intangible Assets
|
Gross Carrying Amount
|
Currency Translation Adjustment
|
Accumulated Amortization
|
Gross Carrying Amount
|
Currency Translation Adjustment
|
Accumulated Amortization
|
||||||||||||||||||
Amortized intangible assets:
|
||||||||||||||||||||||||
Customer lists and relationships:
|
||||||||||||||||||||||||
Wireless acquisitions
|
$
|
764
|
$
|
-
|
$
|
683
|
$
|
942
|
$
|
-
|
$
|
715
|
||||||||||||
BellSouth Corporation
|
2,370
|
-
|
2,370
|
4,450
|
-
|
4,429
|
||||||||||||||||||
DIRECTV
|
19,551
|
(141
|
)
|
8,950
|
19,547
|
(125
|
)
|
5,618
|
||||||||||||||||
AT&T Corp.
|
33
|
-
|
29
|
33
|
-
|
26
|
||||||||||||||||||
Mexican wireless
|
506
|
(97
|
)
|
278
|
506
|
(108
|
)
|
214
|
||||||||||||||||
Subtotal
|
23,224
|
(238
|
)
|
12,310
|
25,478
|
(233
|
)
|
11,002
|
||||||||||||||||
Trade names
|
2,942
|
(6
|
)
|
2,366
|
2,942
|
(7
|
)
|
1,394
|
||||||||||||||||
Other
|
781
|
(3
|
)
|
335
|
707
|
(3
|
)
|
283
|
||||||||||||||||
Total
|
$
|
26,947
|
$
|
(247
|
)
|
$
|
15,011
|
$
|
29,127
|
$
|
(243
|
)
|
$
|
12,679
|
||||||||||
Indefinite-lived intangible assets not subject to amortization:
|
||||||||||||||||||||||||
Licenses:
|
||||||||||||||||||||||||
Wireless licenses
|
$
|
84,434
|
$
|
82,474
|
||||||||||||||||||||
Orbital slots
|
11,702
|
11,702
|
||||||||||||||||||||||
Trade names
|
6,451
|
6,479
|
||||||||||||||||||||||
Total
|
$
|
102,587
|
$
|
100,655
|
2017
|
2016
|
|||||||
Beginning of year
|
$
|
1,674
|
$
|
1,606
|
||||
Additional investments
|
51
|
208
|
||||||
Equity in net income (loss) of affiliates
|
(128
|
)
|
98
|
|||||
Dividends and distributions received
|
(46
|
)
|
(61
|
)
|
||||
Currency translation adjustments
|
22
|
(156
|
)
|
|||||
Other adjustments
|
(13
|
)
|
(21
|
)
|
||||
End of year
|
$
|
1,560
|
$
|
1,674
|
2017
|
2016
|
|||||||||
Notes and debentures
1
|
||||||||||
Interest Rates
|
Maturities
2
|
|||||||||
0.49% – 2.99%
|
2017 – 2022
|
$
|
20,534
|
$
|
26,396
|
|||||
3.00% – 4.99%
|
2017 – 2049
|
93,915
|
66,520
|
|||||||
5.00% – 6.99%
|
2017 – 2095
|
46,343
|
26,883
|
|||||||
7.00% – 9.50%
|
2017 – 2097
|
4,579
|
5,050
|
|||||||
Other
|
680
|
4
|
||||||||
Fair value of interest rate swaps recorded in debt
|
(20)
|
48
|
||||||||
166,031
|
124,901
|
|||||||||
Unamortized (discount) premium - net
|
(2,968)
|
(2,201)
|
||||||||
Unamortized issuance costs
|
(537)
|
(319)
|
||||||||
Total notes and debentures
|
162,526
|
122,381
|
||||||||
Capitalized leases
|
1,818
|
869
|
||||||||
Other
|
-
|
259
|
||||||||
Total long-term debt, including current maturities
|
164,344
|
123,509
|
||||||||
Current maturities of long-term debt
|
(38,372)
|
(9,828)
|
||||||||
Total long-term debt
|
$
|
125,972
|
$
|
113,681
|
||||||
1
Includes credit agreement borrowings.
|
||||||||||
2
Maturities assume putable debt is redeemed by the holders at the next opportunity.
|
2017
|
2016
|
||||||||
Current maturities of long-term debt
|
$
|
38,372
|
$
|
9,828
|
|||||
Bank borrowings
1
|
2
|
4
|
|||||||
Total
|
$
|
38,374
|
$
|
9,832
|
|||||
1
Outstanding balance of short-term credit facility of a foreign subsidiary.
|
·
|
at a variable annual rate equal to (1) the highest of: (a) the base rate of Scotiabank, (b) 0.50% per annum above the Federal funds rate, and (c) the ICE Benchmark Administration Limited Settlement Rate applicable to U.S. dollars for a period of one month plus 1.00% per annum, plus (2) an applicable margin (as set forth in the Nova Scotia Credit Agreement); or
|
·
|
at a rate equal to: (i) LIBOR for a period of three or six months, as applicable, plus (ii) an applicable margin (as set forth in the Nova Scotia Credit Agreement).
|
·
|
at a variable annual rate equal to (1) the highest of: (a) the base rate of the bank affiliate of Citibank, N.A., (b) 0.50% per annum above the federal funds rate, and (c) the
London Interbank Offered Rate
(LIBOR) applicable to U.S. dollars for a period of one month plus 1.00% per annum, plus (2) an applicable margin (as set forth in this agreement); or
|
·
|
at a rate equal to: (i) LIBOR for a period of one, two, three or six months, as applicable, plus (ii) an applicable margin (as set forth in this agreement).
|
·
|
at a variable annual rate equal to: (1) the highest of (a) the prime rate of JPMorgan Chase Bank, N.A., (b) 0.5% per annum above the federal funds rate, and (c) the LIBOR rate applicable to dollars for a period of one month plus 1.00%, plus (2) an applicable margin, as set forth in the Term Loan (the "Applicable Margin for Base Advances (Term Loan)"); or
|
·
|
at a rate equal to: (i) LIBOR (adjusted upwards to reflect any bank reserve costs) for a period of one, two, three or six months, as applicable, plus (ii) an applicable margin, as set forth in the Term Loan (the "Applicable Margin for Eurodollar Rate Advances (Term Loan)").
|
Level 1 |
Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that we have the ability to access.
|
Level 2 |
Inputs to the valuation methodology include:
|
·
|
Quoted prices for similar assets and liabilities in active markets.
|
·
|
Quoted prices for identical or similar assets or liabilities in inactive markets.
|
·
|
Inputs other than quoted market prices that are observable for the asset or liability.
|
·
|
Inputs that are derived principally from or corroborated by observable market data by correlation or other means.
|
Level 3 |
Inputs to the valuation methodology are unobservable and significant to the fair value measurement.
|
·
|
Fair value is often based on developed models in which there are few, if any, external observations.
|
December 31, 2017
|
||||||||||||||||
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||||
Available-for-Sale Securities
|
||||||||||||||||
Domestic equities
|
$
|
1,142
|
$
|
-
|
$
|
-
|
$
|
1,142
|
||||||||
International equities
|
321
|
-
|
-
|
321
|
||||||||||||
Fixed income bonds
|
-
|
733
|
-
|
733
|
||||||||||||
Asset Derivatives
|
||||||||||||||||
Interest rate swaps
|
-
|
17
|
-
|
17
|
||||||||||||
Cross-currency swaps
|
-
|
1,753
|
-
|
1,753
|
||||||||||||
Liability Derivatives
|
||||||||||||||||
Interest rate swaps
|
-
|
(31
|
)
|
-
|
(31
|
)
|
||||||||||
Cross-currency swaps
|
-
|
(1,290
|
)
|
-
|
(1,290
|
)
|
December 31, 2016
|
||||||||||||||||
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||||
Available-for-Sale Securities
|
||||||||||||||||
Domestic equities
|
$
|
1,215
|
$
|
-
|
$
|
-
|
$
|
1,215
|
||||||||
International equities
|
594
|
-
|
-
|
594
|
||||||||||||
Fixed income bonds
|
-
|
508
|
-
|
508
|
||||||||||||
Asset Derivatives
|
||||||||||||||||
Interest rate swaps
|
-
|
79
|
-
|
79
|
||||||||||||
Cross-currency swaps
|
-
|
89
|
-
|
89
|
||||||||||||
Liability Derivatives
|
||||||||||||||||
Interest rate swaps
|
-
|
(14
|
)
|
-
|
(14
|
)
|
||||||||||
Cross-currency swaps
|
-
|
(3,867
|
)
|
-
|
(3,867
|
)
|
2017
|
2016
|
|||||||
Interest rate swaps
|
$
|
9,833
|
$
|
9,650
|
||||
Cross-currency swaps
|
38,694
|
29,642
|
||||||
Total
|
$
|
48,527
|
$
|
39,292
|
Cash Flow Hedging Relationships
|
||||||||||||
For the years ended December 31,
|
2017
|
2016
|
2015
|
|||||||||
Cross-currency swaps:
|
||||||||||||
Gain (Loss) recognized in accumulated OCI
|
$
|
571
|
$
|
1,061
|
$
|
(813
|
)
|
|||||
Interest rate locks:
|
||||||||||||
Gain (Loss) recognized in accumulated OCI
|
-
|
-
|
(361
|
)
|
||||||||
Interest income (expense) reclassified from
accumulated OCI into income
|
(60
|
)
|
(59
|
)
|
(58
|
)
|
2017
|
2016
|
|||||||
Depreciation and amortization
|
$
|
30,982
|
$
|
44,903
|
||||
Licenses and nonamortizable intangibles
|
16,129
|
22,892
|
||||||
Employee benefits
|
(6,202
|
)
|
(10,045
|
)
|
||||
Deferred fulfillment costs
|
2,472
|
3,204
|
||||||
Net operating loss and other carryforwards
|
(6,067
|
)
|
(4,304
|
)
|
||||
Other – net
|
1,222
|
(216
|
)
|
|||||
Subtotal
|
38,536
|
56,434
|
||||||
Deferred tax assets valuation allowance
|
4,640
|
2,283
|
||||||
Net deferred tax liabilities
|
$
|
43,176
|
$
|
58,717
|
||||
Noncurrent deferred tax liabilities
|
$
|
43,207
|
$
|
60,128
|
||||
Less: Noncurrent deferred tax assets
|
(31
|
)
|
(1,411
|
)
|
||||
Net deferred tax liabilities
|
$
|
43,176
|
$
|
58,717
|
Federal, State and Foreign Tax
|
2017
|
2016
|
||||||
Balance at beginning of year
|
$
|
6,516
|
$
|
6,898
|
||||
Increases for tax positions related to the current year
|
1,438
|
318
|
||||||
Increases for tax positions related to prior years
|
200
|
473
|
||||||
Decreases for tax positions related to prior years
|
(461
|
)
|
(1,168
|
)
|
||||
Lapse of statute of limitations
|
(28
|
)
|
(25
|
)
|
||||
Settlements
|
(23
|
)
|
50
|
|||||
Foreign currency effects
|
6
|
(30
|
)
|
|||||
Balance at end of year
|
7,648
|
6,516
|
||||||
Accrued interest and penalties
|
1,333
|
1,140
|
||||||
Gross unrecognized income tax benefits
|
8,981
|
7,656
|
||||||
Less: Deferred federal and state income tax benefits
|
(388
|
)
|
(557
|
)
|
||||
Less: Tax attributable to timing items included above
|
(2,368
|
)
|
(3,398
|
)
|
||||
Total UTB that, if recognized, would impact the
|
||||||||
effective income tax rate as of the end of the year
|
$
|
6,225
|
$
|
3,701
|
2017
|
2016
|
2015
|
||||||||||
Federal:
|
||||||||||||
Current
|
$
|
682
|
$
|
2,915
|
$
|
2,496
|
||||||
Deferred
|
(17,970
|
)
|
3,127
|
3,828
|
||||||||
(17,288
|
)
|
6,042
|
6,324
|
|||||||||
State and local:
|
||||||||||||
Current
|
79
|
282
|
72
|
|||||||||
Deferred
|
1,041
|
339
|
671
|
|||||||||
1,120
|
621
|
743
|
||||||||||
Foreign:
|
||||||||||||
Current
|
471
|
335
|
320
|
|||||||||
Deferred
|
989
|
(519
|
)
|
(382
|
)
|
|||||||
1,460
|
(184
|
)
|
(62
|
)
|
||||||||
Total
|
$
|
(14,708
|
)
|
$
|
6,479
|
$
|
7,005
|
2017
|
2016
|
2015
|
||||||||||
U.S. income before income taxes
|
$
|
16,438
|
$
|
20,911
|
$
|
21,519
|
||||||
Foreign income (loss) before income taxes
|
(1,299
|
)
|
(1,099
|
)
|
(827
|
)
|
||||||
Total
|
$
|
15,139
|
$
|
19,812
|
$
|
20,692
|
2017
|
2016
|
2015
|
||||||||||
Taxes computed at federal statutory rate
|
$
|
5,299
|
$
|
6,934
|
$
|
7,242
|
||||||
Increases (decreases) in income taxes resulting from:
|
||||||||||||
State and local income taxes – net of federal income tax benefit
|
509
|
416
|
483
|
|||||||||
Enactment of the Tax Cuts and Jobs Act
|
(20,271
|
)
|
-
|
-
|
||||||||
Mexico restructuring
|
-
|
(471
|
)
|
-
|
||||||||
Other – net
|
(245
|
)
|
(400
|
)
|
(720
|
)
|
||||||
Total
|
$
|
(14,708
|
)
|
$
|
6,479
|
$
|
7,005
|
|||||
Effective Tax Rate
|
(97.2
|
)%
|
32.7
|
%
|
33.9
|
%
|
Pension Benefits
|
Postretirement Benefits
|
|||||||||||||||
2017
|
2016
|
2017
|
2016
|
|||||||||||||
Benefit obligation at beginning of year
|
$
|
56,183
|
$
|
55,464
|
$
|
26,027
|
$
|
27,898
|
||||||||
Service cost - benefits earned during the period
|
1,128
|
1,112
|
138
|
192
|
||||||||||||
Interest cost on projected benefit obligation
|
1,936
|
1,980
|
809
|
972
|
||||||||||||
Amendments
|
48
|
(206
|
)
|
(1,807
|
)
|
(600
|
)
|
|||||||||
Actuarial (gain) loss
|
3,696
|
1,485
|
630
|
(529
|
)
|
|||||||||||
Special termination benefits
|
3
|
-
|
1
|
-
|
||||||||||||
Benefits paid
|
(3,705
|
)
|
(3,614
|
)
|
(1,739
|
)
|
(1,941
|
)
|
||||||||
Plan transfers
|
5
|
(38
|
)
|
-
|
35
|
|||||||||||
Benefit obligation at end of year
|
$
|
59,294
|
$
|
56,183
|
$
|
24,059
|
$
|
26,027
|
2017
|
2016
|
|||||||
Plan assets recognized in the consolidated financial statements
|
$
|
45,463
|
$
|
42,610
|
||||
Preferred equity interest in Mobility
|
9,155
|
8,477
|
||||||
Net assets available for benefits
|
$
|
54,618
|
$
|
51,087
|
Pension Benefits
|
Postretirement Benefits
|
|||||||||||||||||||||||
2017
|
2016
|
2015
|
2017
|
2016
|
2015
|
|||||||||||||||||||
Service cost – benefits earned during the period
|
$
|
1,128
|
$
|
1,112
|
$
|
1,212
|
$
|
138
|
$
|
192
|
$
|
222
|
||||||||||||
Interest cost on projected benefit obligation
|
1,936
|
1,980
|
1,902
|
809
|
972
|
967
|
||||||||||||||||||
Expected return on assets
|
(3,134
|
)
|
(3,115
|
)
|
(3,317
|
)
|
(319
|
)
|
(355
|
)
|
(421
|
)
|
||||||||||||
Amortization of prior service credit
|
(123
|
)
|
(103
|
)
|
(103
|
)
|
(1,466
|
)
|
(1,277
|
)
|
(1,278
|
)
|
||||||||||||
Actuarial (gain) loss
|
844
|
1,478
|
(373
|
)
|
342
|
(581
|
)
|
(1,632
|
)
|
|||||||||||||||
Net pension and postretirement cost (credit)
|
$
|
651
|
$
|
1,352
|
$
|
(679
|
)
|
$
|
(496
|
)
|
$
|
(1,049
|
)
|
$
|
(2,142
|
)
|
Pension Benefits
|
Postretirement Benefits
|
|||||||||||||||||||||||
2017
|
2016
|
2015
|
2017
|
2016
|
2015
|
|||||||||||||||||||
Balance at beginning of year
|
$
|
575
|
$
|
512
|
$
|
575
|
$
|
5,089
|
$
|
5,510
|
$
|
6,257
|
||||||||||||
Prior service (cost) credit
|
(30
|
)
|
128
|
1
|
1,120
|
372
|
45
|
|||||||||||||||||
Amortization of prior service credit
|
(76
|
)
|
(65
|
)
|
(64
|
)
|
(907
|
)
|
(793
|
)
|
(792
|
)
|
||||||||||||
Total recognized in other comprehensive (income) loss
|
(106
|
)
|
63
|
(63
|
)
|
213
|
(421
|
)
|
(747
|
)
|
||||||||||||||
Balance at end of year
|
$
|
469
|
$
|
575
|
$
|
512
|
$
|
5,302
|
$
|
5,089
|
$
|
5,510
|
Pension Benefits
|
Postretirement Benefits
|
|||||||||||||||||||||||
2017
|
2016
|
2015
|
2017
|
2016
|
2015
|
|||||||||||||||||||
Weighted-average discount rate for determining
benefit obligation at December 31
|
3.80
|
%
|
4.40
|
%
|
4.60
|
%
|
3.70
|
%
|
4.30
|
%
|
4.50
|
%
|
||||||||||||
Discount rate in effect for determining service cost
1
|
4.60
|
%
|
4.90
|
%
|
4.60
|
%
|
4.60
|
%
|
5.00
|
%
|
4.60
|
%
|
||||||||||||
Discount rate in effect for determining interest cost
1
|
3.60
|
%
|
3.70
|
%
|
3.30
|
%
|
3.40
|
%
|
3.60
|
%
|
3.30
|
%
|
||||||||||||
Long-term rate of return on plan assets
|
7.75
|
%
|
7.75
|
%
|
7.75
|
%
|
5.75
|
%
|
5.75
|
%
|
5.75
|
%
|
||||||||||||
Composite rate of compensation increase for determining benefit obligation
|
3.00
|
%
|
3.00
|
%
|
3.10
|
%
|
3.00
|
%
|
3.00
|
%
|
3.10
|
%
|
||||||||||||
Composite rate of compensation increase for
determining net cost (benefit)
|
3.00
|
%
|
3.10
|
%
|
3.00
|
%
|
3.00
|
%
|
3.10
|
%
|
3.00
|
%
|
||||||||||||
1
Weighted-average discount rate in effect from January 1, 2017 through April 30, 2017 was 4.70% for service costs and
|
||||||||||||||||||||||||
3.50% for interest costs, and, from May 1, 2017 through December 31, 2017 was 4.50% for service cost and 3.30% for interest cost.
|
One Percentage-
|
One Percentage-
|
|||||||
Point Increase
|
Point Decrease
|
|||||||
Increase (decrease) in total of service and interest cost components
|
$
|
34
|
$
|
(30
|
)
|
|||
Increase (decrease) in accumulated postretirement benefit obligation
|
401
|
(360
|
)
|
Pension Assets
|
Postretirement (VEBA) Assets
|
|||||||||||||||||||||||||||||||||||||||
Target
|
2017
|
2016
|
Target
|
2017
|
2016
|
|||||||||||||||||||||||||||||||||||
Equity securities:
|
||||||||||||||||||||||||||||||||||||||||
Domestic
|
20
|
%
|
-
|
30
|
%
|
23
|
%
|
24
|
%
|
13
|
%
|
-
|
23
|
%
|
18
|
%
|
22
|
%
|
||||||||||||||||||||||
International
|
10
|
%
|
-
|
20
|
%
|
16
|
15
|
10
|
%
|
-
|
20
|
%
|
15
|
19
|
||||||||||||||||||||||||||
Fixed income securities
|
35
|
%
|
-
|
45
|
%
|
41
|
39
|
35
|
%
|
-
|
45
|
%
|
40
|
38
|
||||||||||||||||||||||||||
Real assets
|
6
|
%
|
-
|
16
|
%
|
10
|
11
|
0
|
%
|
-
|
6
|
%
|
1
|
1
|
||||||||||||||||||||||||||
Private equity
|
4
|
%
|
-
|
14
|
%
|
10
|
11
|
0
|
%
|
-
|
7
|
%
|
2
|
2
|
||||||||||||||||||||||||||
Other
|
0
|
%
|
-
|
5
|
%
|
-
|
-
|
20
|
%
|
-
|
30
|
%
|
24
|
18
|
||||||||||||||||||||||||||
Total
|
100
|
%
|
100
|
%
|
100
|
%
|
100
|
%
|
Pension Assets
|
Equities
|
Fixed Income Funds
|
Real Estate and Real Assets
|
Total
|
||||||||||||
Balance at beginning of year
|
$
|
1
|
$
|
40
|
$
|
2,273
|
$
|
2,314
|
||||||||
Realized gains (losses)
|
1
|
-
|
(73
|
)
|
(72
|
)
|
||||||||||
Unrealized gains (losses)
|
(2
|
)
|
1
|
216
|
215
|
|||||||||||
Transfers in
|
-
|
-
|
25
|
25
|
||||||||||||
Transfers out
|
-
|
(32
|
)
|
-
|
(32
|
)
|
||||||||||
Purchases
|
5
|
-
|
157
|
162
|
||||||||||||
Sales
|
(1
|
)
|
(7
|
)
|
(311
|
)
|
(319
|
)
|
||||||||
Balance at end of year
|
$
|
4
|
$
|
2
|
$
|
2,287
|
$
|
2,293
|
Postretirement Assets
|
Fixed Income Funds
|
Total
|
||||||
Balance at beginning of year
|
$
|
26
|
$
|
26
|
||||
Transfers out
|
(15
|
)
|
(15
|
)
|
||||
Purchases
|
2
|
2
|
||||||
Sales
|
(8
|
)
|
(8
|
)
|
||||
Balance at end of year
|
$
|
5
|
$
|
5
|
Postretirement Assets and Liabilities at Fair Value as of December 31, 2016
|
||||||||||||||||
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||||
Interest bearing cash
|
$
|
175
|
$
|
593
|
$
|
-
|
$
|
768
|
||||||||
Foreign currencies
|
6
|
-
|
-
|
6
|
||||||||||||
Equity securities:
|
||||||||||||||||
Domestic equities
|
1,240
|
9
|
-
|
1,249
|
||||||||||||
International equities
|
834
|
-
|
-
|
834
|
||||||||||||
Fixed income securities:
|
||||||||||||||||
Asset-backed securities
|
-
|
33
|
4
|
37
|
||||||||||||
Commercial mortgage-backed securities
|
-
|
108
|
13
|
121
|
||||||||||||
Mortgage-backed securities
|
-
|
193
|
-
|
193
|
||||||||||||
Collateralized mortgage obligations
|
-
|
32
|
2
|
34
|
||||||||||||
Corporate and other fixed income instruments and funds
|
-
|
422
|
7
|
429
|
||||||||||||
Government and municipal bonds
|
20
|
466
|
-
|
486
|
||||||||||||
Securities lending collateral
|
-
|
128
|
-
|
128
|
||||||||||||
Total plan net assets at fair value
|
$
|
2,275
|
$
|
1,984
|
$
|
26
|
$
|
4,285
|
||||||||
Assets held at net asset value practical expedient
|
||||||||||||||||
Private equity funds
|
118
|
|||||||||||||||
Real estate funds
|
61
|
|||||||||||||||
Commingled funds
|
1,667
|
|||||||||||||||
Total assets held at net asset value practical expedient
|
1,846
|
|||||||||||||||
Other assets (liabilities)
1
|
(210
|
)
|
||||||||||||||
Total Plan Net Assets
|
$
|
5,921
|
||||||||||||||
1
Other assets (liabilities) include amounts receivable, accounts payable and net adjustment for securities lending payable.
|
Pension Assets
|
Equities
|
Fixed Income Funds
|
Real Estate and Real Assets
|
Total
|
||||||||||||
Balance at beginning of year
|
$
|
-
|
$
|
44
|
$
|
2,062
|
$
|
2,106
|
||||||||
Realized gains (losses)
|
-
|
(17
|
)
|
(103
|
)
|
(120
|
)
|
|||||||||
Unrealized gains (losses)
|
3
|
19
|
377
|
399
|
||||||||||||
Transfers in
|
(4
|
)
|
-
|
77
|
73
|
|||||||||||
Transfers out
|
-
|
(2
|
)
|
-
|
(2
|
)
|
||||||||||
Purchases
|
3
|
-
|
65
|
68
|
||||||||||||
Sales
|
(1
|
)
|
(4
|
)
|
(205
|
)
|
(210
|
)
|
||||||||
Balance at end of year
|
$
|
1
|
$
|
40
|
$
|
2,273
|
$
|
2,314
|
Postretirement Assets
|
Fixed Income Funds
|
Total
|
||||||
Balance at beginning of year
|
$
|
15
|
$
|
15
|
||||
Realized gains (losses)
|
(2
|
)
|
(2
|
)
|
||||
Unrealized gains (losses)
|
2
|
2
|
||||||
Transfers in
|
16
|
16
|
||||||
Sales
|
(5
|
)
|
(5
|
)
|
||||
Balance at end of year
|
$
|
26
|
$
|
26
|
Pension Benefits
|
Postretirement Benefits
|
|||||||
2018
|
$
|
4,633
|
$
|
1,751
|
||||
2019
|
4,191
|
1,719
|
||||||
2020
|
4,180
|
1,707
|
||||||
2021
|
4,149
|
1,692
|
||||||
2022
|
4,063
|
1,670
|
||||||
Years 2023 - 2027
|
19,653
|
7,267
|
2017
|
2016
|
|||||||
Projected benefit obligation
|
$
|
(2,344
|
)
|
$
|
(2,378
|
)
|
||
Accumulated benefit obligation
|
(2,285
|
)
|
(2,314
|
)
|
||||
Fair value of plan assets
|
-
|
-
|
Net Periodic Benefit Cost
|
2017
|
2016
|
2015
|
|||||||||
Service cost – benefits earned during the period
|
$
|
13
|
$
|
12
|
$
|
9
|
||||||
Interest cost on projected benefit obligation
|
77
|
83
|
77
|
|||||||||
Amortization of prior service cost (credit)
|
(1
|
)
|
(1
|
)
|
1
|
|||||||
Actuarial (gain) loss
|
126
|
72
|
(36
|
)
|
||||||||
Net supplemental retirement pension cost
|
$
|
215
|
$
|
166
|
$
|
51
|
Other Changes Recognized in
Other Comprehensive Income
|
2017
|
2016
|
2015
|
|||||||||
Prior service (cost) credit
|
$
|
1
|
$
|
1
|
$
|
(1
|
)
|
|||||
Amortization of prior service cost (credit)
|
(1
|
)
|
(1
|
)
|
1
|
|||||||
Total recognized in other comprehensive (income) loss (net of tax)
|
$
|
-
|
$
|
-
|
$
|
-
|
2017
|
2016
|
2015
|
||||||||||
Performance stock units
|
$
|
395
|
$
|
480
|
$
|
299
|
||||||
Restricted stock and stock units
|
90
|
152
|
147
|
|||||||||
Other nonvested stock units
|
(5
|
)
|
21
|
5
|
||||||||
Total
|
$
|
480
|
$
|
653
|
$
|
451
|
||||||
Income tax benefit
|
$
|
184
|
$
|
250
|
$
|
172
|
Nonvested Stock Units
|
Shares
|
Weighted-Average Grant-Date Fair Value
|
||||||
Nonvested at January 1, 2017
|
31
|
$
|
35.57
|
|||||
Granted
|
13
|
41.17
|
||||||
Vested
|
(14
|
)
|
34.70
|
|||||
Forfeited
|
(1
|
)
|
37.48
|
|||||
Nonvested at December 31, 2017
|
29
|
$
|
38.35
|
December 31,
|
||||||||
Consolidated Balance Sheets
|
2017
|
2016
|
||||||
Current customer fulfillment costs (included in Other current assets)
|
$
|
3,877
|
$
|
3,398
|
||||
Accounts payable and accrued liabilities:
|
||||||||
Accounts payable
|
$
|
24,439
|
$
|
22,027
|
||||
Accrued payroll and commissions
|
2,284
|
2,450
|
||||||
Current portion of employee benefit obligation
|
1,585
|
1,644
|
||||||
Accrued interest
|
2,661
|
2,023
|
||||||
Other
|
3,501
|
2,994
|
||||||
Total accounts payable and accrued liabilities
|
$
|
34,470
|
$
|
31,138
|
Consolidated Statements of Income
|
2017
|
2016
|
2015
|
|||||||||
Advertising expense
|
$
|
3,772
|
$
|
3,768
|
$
|
3,632
|
||||||
Interest expense incurred
|
$
|
7,203
|
$
|
5,802
|
$
|
4,917
|
||||||
Capitalized interest
|
(903
|
)
|
(892
|
)
|
(797
|
)
|
||||||
Total interest expense
|
$
|
6,300
|
$
|
4,910
|
$
|
4,120
|
Consolidated Statements of Cash Flows
|
2017
|
2016
|
2015
|
|||||||||
Cash paid during the year for:
|
||||||||||||
Interest
|
$
|
6,622
|
$
|
5,696
|
$
|
4,822
|
||||||
Income taxes, net of refunds
|
2,006
|
3,721
|
1,851
|
2017 Calendar Quarter
|
|||||||||||||||||||||
First
|
Second
1
|
Third
|
Fourth
1,2
|
Annual
|
|||||||||||||||||
Total Operating Revenues
|
$
|
39,365
|
$
|
39,837
|
$
|
39,668
|
$
|
41,676
|
$
|
160,546
|
|||||||||||
Operating Income
|
6,864
|
7,323
|
6,403
|
359
|
20,949
|
||||||||||||||||
Net Income
|
3,574
|
4,014
|
3,123
|
19,136
|
29,847
|
||||||||||||||||
Net Income Attributable to AT&T
|
3,469
|
3,915
|
3,029
|
19,037
|
29,450
|
||||||||||||||||
Basic Earnings Per Share
|
|||||||||||||||||||||
Attributable to AT&T
3
|
$
|
0.56
|
$
|
0.63
|
$
|
0.49
|
$
|
3.08
|
$
|
4.77
|
|||||||||||
Diluted Earnings Per Share
|
|||||||||||||||||||||
Attributable to AT&T
3
|
$
|
0.56
|
$
|
0.63
|
$
|
0.49
|
$
|
3.08
|
$
|
4.76
|
|||||||||||
Stock Price
|
|||||||||||||||||||||
High
|
$
|
43.02
|
$
|
41.69
|
$
|
39.41
|
$
|
39.51
|
|||||||||||||
Low
|
40.61
|
37.46
|
35.59
|
32.86
|
|||||||||||||||||
Close
|
41.55
|
37.73
|
39.17
|
38.88
|
|||||||||||||||||
1
Includes actuarial gains and losses on pension and postretirement benefit plans (Note 12).
|
|||||||||||||||||||||
2
Includes an asset abandonment charge (Note 6) and the impact of federal corporate income tax reform (Note 11).
|
|||||||||||||||||||||
3
Quarterly earnings per share impacts may not add to full-year earnings per share impacts due to the difference in weighted-average
|
|||||||||||||||||||||
common shares for the quarters versus the weighted-average common shares for the year.
|
/s/
Randall Stephenson
Randall Stephenson
Chairman of the Board,
Chief Executive Officer and President
|
|
|
/s/
John J. Stephens
John J. Stephens
Senior Executive Vice President and
Chief Financial Officer
|
|
|
|
|
|
Legal Name
|
State of Incorporation/Formation
|
Conducts Business Under
|
Illinois Bell Telephone
Company
|
Illinois
|
AT&T Illinois;
AT&T Wholesale
|
Indiana Bell Telephone
Company, Incorporated
|
Indiana
|
AT&T Indiana;
AT&T Wholesale
|
Michigan Bell
Telephone Company
|
Michigan
|
AT&T Michigan;
AT&T Wholesale
|
Nevada Bell
Telephone Company
|
Nevada
|
AT&T Nevada;
AT&T Wholesale
|
Pacific Bell
Telephone Company
|
California
|
AT&T California;
AT&T Wholesale;
AT&T DataComm
|
SBC Long Distance, LLC
|
Delaware
|
AT&T Long Distance
|
AT&T Teleholdings, Inc.
|
Delaware
|
AT&T Midwest;
AT&T West;
AT&T East
|
Southwestern Bell
Telephone Company
|
Delaware
|
AT&T Arkansas; AT&T Kansas;
AT&T Missouri; AT&T Oklahoma;
AT&T Texas; AT&T Southwest;
AT&T DataComm; AT&T Wholesale
|
The Ohio Bell
Telephone Company
|
Ohio
|
AT&T Ohio;
AT&T Wholesale
|
Wisconsin Bell, Inc.
|
Wisconsin
|
AT&T Wisconsin;
AT&T Wholesale
|
AT&T Corp.
|
New York
|
AT&T Corp.; ACC Business;
AT&T Wholesale;
AT&T Business Solutions;
AT&T Advanced Solutions;
AT&T Diversified Group;
AT&T Mobile and Business Solutions
|
Teleport Communications
America, LLC
|
Delaware
|
same
|
BellSouth, LLC
|
Georgia
|
AT&T South
|
BellSouth Telecommunications,
LLC
|
Georgia
|
AT&T Alabama
AT&T Florida
AT&T Georgia
AT&T Kentucky
AT&T Louisiana
AT&T Mississippi
AT&T North Carolina
AT&T South Carolina
AT&T Tennessee
AT&T Southeast
|
AT&T Mobility LLC
|
Delaware
|
same
|
AT&T Mobility II LLC
|
Delaware
|
same
|
New Cingular Wireless
PCS, LLC
|
Delaware
|
AT&T Mobility
|
Cricket Wireless LLC
|
Delaware
|
same
|
AT&T Communications, LLC
|
Delaware
|
same
|
AT&T International, LLC
|
Delaware
|
same
|
AT&T Comunicaciones Digitales, S. de R.L. de C.V.
|
Mexico City
|
same
|
DIRECTV, LLC
|
California
|
same
|
DIRECTV Enterprises, LLC
|
Delaware
|
same
|
DIRECTV Latin America, LLC
|
Delaware
|
same
|
Sky Serviços de Banda Larga Ltda.
|
Brazil
|
same
|
DIRECTV Colombia Ltda.
|
Colombia
|
same
|
DIRECTV Argentina S.A.
|
Argentina
|
same
|
(1)
|
Registration Statement (Form S-8 No. 333-34062) pertaining to the Stock Savings Plan,
|
(2)
|
Registration Statement (Form S-3 No. 333-209718) of AT&T and the related Prospectuses,
|
Registration Statement (Form S-8 No. 333-135517) pertaining to the AT&T 2006 Incentive Plan,
|
|
(3)
|
Registration Statement (Form S-8 No. 333-141864) pertaining to the AT&T Savings Plan and certain other plans,
|
(4)
|
Registration Statement (Form S-8 No. 333-139749) pertaining to the BellSouth Retirement Savings Plan and certain other BellSouth plans,
|
(5)
|
Registration Statement (Form S-8 No. 333-152822) pertaining to the AT&T Non-Employee Director Stock Purchase Plan,
|
(6)
|
Registration Statement (Form S-8 No. 333-173079) pertaining to the AT&T 2011 Incentive Plan,
|
(7)
|
Registration Statement (Form S-8 No. 333-188384) pertaining to the AT&T Stock Purchase and Deferral Plan and Cash Deferral Plan,
|
(8)
|
Registration Statement (Form S-8 No. 333-189789) pertaining to the AT&T Savings and Security Plan, the AT&T Puerto Rico Retirement Savings Plan, the AT&T Retirement Savings Plan, and the BellSouth Savings and Security Plan,
|
(9)
|
Registration Statement (Form S-8 No 333-205868) pertaining to the DIRECTV 2010 Stock Plan, the DIRECTV 401(k) Savings Plan, and the Liberty Entertainment, Inc. Transitional Stock Adjustment Plan, and
|
(10)
|
Registration Statement (Form S-8 No. 333-211303) pertaining to the 2016 Incentive Plan;
|
January 26, 2018
|
/s/ Randall L. Stephenson
|
|
Date
|
Randall L. Stephenson
Chairman of the Board, Chief Executive
Officer and President
|
February 2, 2018
|
/s/ Samuel A. Di Piazza, Jr.
|
|
Date
|
Samuel A. Di Piazza, Jr.
Director
|
February 2, 2018
|
/s/ Richard W. Fisher
|
|
Date
|
Richard W. Fisher
Director
|
February 2, 2018
|
/s/ Scott T. Ford
|
|
Date
|
Scott T. Ford
Director
|
February 2, 2018
|
/s/ Glenn H. Hutchins
|
|
Date
|
Glenn H. Hutchins
Director
|
February 2, 2018
|
/s/ William E. Kennard
|
|
Date
|
William E. Kennard
Director
|
February 2, 2018
|
/s/ Michael B. McCallister
|
|
Date
|
Michael B. McCallister
Director
|
February 2, 2018
|
/s/ Beth E. Mooney
|
|
Date
|
Beth E. Mooney
Director
|
February 2, 2018
|
/s/ Joyce M. Roché
|
|
Date
|
Joyce M. Roché
Director
|
February 2, 2018
|
/s/ Matthew K. Rose
|
|
Date
|
Matthew K. Rose
Director
|
February 2, 2018
|
/s/ Cynthia B. Taylor
|
|
Date
|
Cynthia B. Taylor
Director
|
February 2, 2018
|
/s/ Laura D'Andrea Tyson
|
|
Date
|
Laura D'Andrea Tyson
Director
|
February 2, 2018
|
/s/ Geoffrey Y. Yang
|
|
Date
|
Geoffrey Y. Yang
Director
|
1.
|
I have reviewed this report on Form 10-K of AT&T Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
1.
|
I have reviewed this report on Form 10-K of AT&T Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
February 20, 2018
|
February 20, 2018
|
By:
/s/ Randall Stephenson
Randall Stephenson
Chairman of the Board, Chief Executive Officer
and President
|
By:
/s/ John J. Stephens
John J. Stephens
Senior Executive Vice President
and Chief Financial Officer
|