UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549
     

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934


Date of report (Date of earliest event reported) January 30, 2019

AT&T INC.
(Exact Name of Registrant as Specified in Charter)


Delaware
1-8610
43-1301883
(State or Other Jurisdiction of Incorporation)
(Commission File Number)
(IRS Employer Identification No.)

                       208 S. Akard St., Dallas, Texas
75202
                        (Address of Principal Executive Offices)
(Zip Code)

Registrant’s telephone number, including area code (210) 821-4105


__________________________________
(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240-14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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

Emerging growth company 

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

Item 8.01  Other Events.

Throughout this document, AT&T Inc. is referred to as “we” or “AT&T.” AT&T is a holding company whose subsidiaries and affiliates operate worldwide in the telecommunications, media and technology industries.

Overview
We announced on January 30, 2019 that fourth-quarter 2018 net income attributable to AT&T totaled $4.9 billion, or $0.66 per diluted share . Fourth-quarter 2018 income per diluted share included amounts netting to $1.4 billion, or $(0.20) per share, resulting from the following significant items: $(0.25) per diluted share for the amortization of merger-related intangible assets, and a combined $(0.02) per diluted share for tax-related items, merger and integration costs and other items and $0.07 per diluted share for noncash gains for the annual adjustment related to pension and postemployment benefit accounting. The results compare with a reported net income attributable to AT&T of $19.0 billion, or $3.08 per diluted share, in the fourth quarter of 2017, which included the impact of the Tax Cuts and Jobs Act. For the full year 2018, net income attributable to AT&T was $19.4 billion versus $29.5 billion in 2017; earnings per diluted share were $2.85 compared with $4.76 for 2017. Results in 2018 reflect our acquisition of Time Warner Inc. (Time Warner), favorable impacts from U.S. corporate tax reform and new revenue accounting rules.

Fourth-quarter 2018 revenues were $48.0 billion, up 15.2 percent from the fourth quarter of 2017, and full-year 2018 revenues were $170.8 billion, up 6.4 percent from the previous full year . Fourth-quarter and full-year 2018 revenues reflect increased revenues primarily from our acquisition of Time Warner. These increases were partially offset by our adoption of a new revenue accounting standard, including the netting of approximately $980 million Universal Service Fund (USF) fees in the fourth quarter and declines in legacy wireline revenues, wireless equipment sales and video services. Compared with results for the fourth quarter of 2017, current year operating expenses were $41.8 billion, up 3.6 percent and full-year 2018 operating expenses were $144.7 billion, up 2.9 percent from the previous full year ; fourth-quarter operating income was $6.2 billion compared to $1.3 billion in the comparable 2017 period, and full-year 2018 operating income was $26.1 billion, up 30.7 percent from the full-year 2017; and AT&T’s fourth-quarter operating income margin was 12.8 percent, compared to 3.1 percent, and full-year 2018 operating income margin was 15.3 percent compared to 12.4 percent . For the full year, cash from operating activities was $43.6 billion, up $5.6 billion when compared to 2017, driven by contributions from acquired businesses; lower cash tax payments in 2018 of $2.4 billion and lower voluntary employee-related payments of $0.6 billion; and continued working capital focus, including extension of vendor payment terms with major suppliers per our previously disclosed strategy, resulting in $1.6 billion of accounts payable increase offset by $1.2 billion of receivable timing pressure.

We reported a net gain of 3.8 million North American wireless subscribers in the fourth quarter of 2018, of which 2.8 million were domestic. At December 31, 2018, our North American wireless customer base was approximately 171.3 million compared to 156.3 million in the prior year, and our domestic wireless subscribers totaled 153.0 million compared to 141.2 million. During the fourth quarter, net adds in North America were as follows:
Branded net adds (combined postpaid and prepaid) were 1.0 million, of which 39,000 were domestic.
o
Prepaid subscriber net adds were 1.0 million, of which 26,000 were domestic.
o
Postpaid subscriber net adds were a loss of 4,000, including a domestic increase of 13,000.
Total domestic postpaid tablet and computing device net adds were a loss of 410,000.
Reseller net adds were a loss of 399,000, with a loss of 438,000 net adds in the U.S.
Connected device net adds were 3.2 million, 2.1 million of which were primarily attributable to wholesale connected cars.

We offer subscribers the choice to purchase devices on installment (AT&T Next) or to bring their own device (BYOD). During the fourth quarter of 2018, we sold 4.7 million smartphones under our AT&T Next program and had BYOD gross adds of 531,000. Sales under our equipment installment programs represented nearly 83 percent of all postpaid smartphone gross adds and upgrades, essentially consistent with the prior year. At December 31, 2018, about 52 percent of the postpaid smartphone base is on AT&T Next, slightly lower than the prior year.


At December 31, 2018, we had 38.4 million video subscribers (including 1.6 million DIRECTV NOW) compared with 38.9 million at December 31, 2017 . Including losses from our over-the-top (OTT) video service, DIRECTV NOW, total net video subscribers decreased by 462,000 in the fourth quarter of 2018, of which 660,000 were in the U.S. (including Entertainment Group and Business Wireline subscribers).

Our total broadband connections were 15.7 million at both December 31, 2018 and 2017. During the fourth quarter, we added 7,000 IP broadband subscribers, for a total of 14.8 million at December 31, 2018. Total broadband net adds were a loss of 46,000 in the quarter.

At December 31, 2018, our total switched access lines were 10.0 million compared with 11.8 million at December 31, 2017. The number of U-verse voice connections (which use VoIP technology and therefore are not included in the access line total) decreased by 557,000 in the quarter, totaling 5.1 million at December 31, 2018, compared to 5.7 million at December 31, 2017.

Segment Summary
During the third-quarter of 2018, we announced that, following our June 14, 2018 acquisition of Time Warner, and effective beginning with the quarter ended September 30, 2018, we revised our operating segments to align with the new management structure and organizational responsibilities. Our reportable segments are: Communications, WarnerMedia, Latin America and Xandr.

We analyze our segments based on, among other things, segment contribution, which consists of operating income, excluding acquisition-related costs and other significant items, and equity in net income (loss) of affiliates for investments managed within each segment.

Communications
Our Communications segment consists of our Mobility, Entertainment Group and Business Wireline business units. Fourth-quarter 2018 operating revenues were $37.5 billion, down 4.2 percent versus fourth-quarter 2017, with segment operating contribution of $7.6 billion, up 11.3 percent versus the year-ago quarter. Our adoption of new revenue accounting rules reduced fourth-quarter 2018 revenues by $848 million and increased operating contribution by $561 million. The Communications operating income margin was 20.4 percent, compared to 17.6 percent in the year-earlier quarter.

Mobility
Mobility revenues for the fourth quarter of 2018 were $18.8 billion, down 2.1 percent versus the fourth quarter of 2017, with revenue declines resulting from our election to net USF fees that were partially offset by increased service revenues. Mobility operating expenses totaled $13.3 billion, down 10.6 percent versus the fourth quarter of 2017. The decrease was driven by lower postpaid smartphone volumes and our adoption of new accounting rules that resulted in the netting of USF fees and commission deferrals. Mobility’s operating income margin was 29.1 percent compared to 22.3 percent in the year-ago quarter.

For the quarter ended December 31, 2018, postpaid phone-only ARPU decreased 4.1 percent versus the year-earlier quarter, primarily due to new revenue accounting rules.

Postpaid phone only churn was 1.00 percent, compared to 0.89 percent in the fourth quarter of 2017. Total postpaid churn was 1.24 percent, compared to 1.11 percent in the year-ago quarter.

Entertainment Group
Entertainment Group (Entertainment) revenues for the fourth quarter of 2018 were $12.0 billion, down 4.8 percent versus the year-ago quarter reflecting continued pressure in video revenues from declines in video subscribers, partially offset by higher advertising sales. Our adoption of the new revenue accounting standard, including changes in our USF policy, also pressured revenues in the fourth quarter of 2018. Entertainment operating expenses totaled $11.1 billion, down 3.7 percent versus the fourth quarter of 2017. The decrease was largely driven by commission deferrals resulting from new accounting rules, cost initiatives and lower volumes that were partially offset by content-cost increases and impacts of one less week of NFL SUNDAY TICKET. The Entertainment operating income margin was 6.9 percent compared to 8.0 percent in the year-earlier quarter.


At December 31, 2018, Entertainment revenue connections included:
Approximately 24.5 million video connections (including 1.6 million DIRECTV NOW subscribers) at December 31, 2018 compared to 25.2 million at December 31, 2017. During the fourth quarter of 2018, including the impact of losses of 267,000 from DIRECTV NOW, total video subscribers decreased 658,000. DIRECTV NOW net adds included approximately 65,000 on free or substantially free trials.
Approximately 14.4 million broadband connections at December 31, 2018 compared to 14.4 million at December 31, 2017. During the fourth quarter, we added 6,000 IP broadband subscribers, for a total of 13.7 million at December 31, 2018. Total broadband subscribers decreased 32,000 in the quarter.
Approximately 8.5 million wired voice connections at December 31, 2018 compared to 10.0 million at December 31, 2017. Voice connections include switched access lines and VoIP connections.

Business Wireline
Business Wireline (Business) revenues for the fourth quarter of 2018 were $6.7 billion, down 8.9 percent versus the year-ago quarter reflecting continued declines in legacy service revenues, partially offset by growth in strategic services. Business operating expenses totaled $5.4 billion, down 7.3 percent versus the fourth quarter of 2017. The decrease was largely driven by our adoption of new accounting rules, which included our policy election to record USF fees on a net basis, and cost efficiencies. Business operating income margin was 20.2 percent compared to 21.5 percent in the year-earlier quarter.

During the fourth quarter of 2018, we added 1,000 high-speed internet business subscribers, bringing total business IP broadband to 1.0 million subscribers. Total business broadband had a loss of 13,000 subscribers in the quarter.

WarnerMedia
Our WarnerMedia segment consists of our Turner, Home Box Office and Warner Bros. business units. Fourth-quarter 2018 operating revenues were $9.2 billion, with segment operating contribution of $2.7 billion and an operating income margin of 28.4 percent. Our WarnerMedia segment does not include results from Time Warner operations for the periods prior to our June 14, 2018 acquisition.

Turner
Turner i s comprised of the WarnerMedia businesses managed by Turner as well as results from our Regional Sports Networks (RSN).

Turner revenues for the fourth quarter of 2018 were $3.2 billion, compared to $107 million in the fourth quarter of 2017. Revenues during the quarter included $1.8 billion of subscription, $1.1 billion of advertising and $219 million of content and other revenues. Turner operating expenses totaled $1.9 billion, compared to $59 million in the fourth quarter of 2017. Turner’s operating income margin was 40.2 percent compared to 44.9 percent in the year-ago quarter. The increases were predominantly due to our June 2018 acquisition of Time Warner.

Home Box Office (HBO)
HBO revenues for the fourth quarter of 2018 were $1.7 billion and included $1.4 billion of subscription and $259 million of content and other revenues. HBO operating expenses totaled $1.1 billion and the operating income margin was 37.2 percent. All results were due to our June 2018 acquisition of Time Warner.

Warner Bros.
Warner Bros. revenues for the fourth quarter of 2018 were $4.5 billion and included revenues of $2.1 billion from theatrical product, $1.8 billion from television product and $564 million from video games and other. Warner Bros. operating expenses totaled $3.7 billion, and the operating income margin was 18.1 percent. All results were due to our June 2018 acquisition of Time Warner.


Latin America
Our Latin America segment consists of our Vrio and Mexico business units and is subject to foreign currency fluctuations. Fourth-quarter 2018 operating revenues were $1.8 billion, down 16.8 percent versus the prior year, with segment operating contribution of $(248) million, down $239 million versus fourth-quarter 2017. The Latin America operating income margin was (14.0) percent, compared to (1.5) percent in the year-earlier quarter.

Vrio
Video service revenues were $1.1 billion, down 22.8 percent versus the prior year, primarily resulting from foreign exchange pressure partially offset by pricing increases driven by macroeconomic conditions. Operating expenses were $1.0 billion, down 18.9 percent and Vrio’s operating income margin was 5.2 percent, compared to 9.7 percent in the year-earlier quarter.

We had approximately 13.8 million Latin America video connections at December 31, 2018 compared to 13.6 million at December 31, 2017. During the fourth quarter of 2018, video net adds were 198,000.

Mexico
Wireless revenues were $769 million, down 6.7 percent when compared to the fourth quarter of 2017. Decreased revenues were largely due to competitive pricing, the shutdown of a wholesale business in the fourth-quarter of 2017 and our adoption of the new revenue accounting standard, partially offset by gains in equipment revenues. Operating expenses were $1.1 billion, up 9.1 percent and Mexico’s operating income margin was (40.8) percent, compared to (20.5) percent in the year-earlier quarter.

We had approximately 18.3 million Mexican wireless subscribers at December 31, 2018 compared to 15.1 million at December 31, 2017. During the fourth quarter of 2018, we had branded net adds of 977,000 (prepaid net adds were 994,000 and postpaid net adds were a loss of 17,000).

Xandr
Our Xandr segment provides advertising services utilizing data insights to develop higher-value targeted advertising. Certain revenues in this segment are also reported by the Communications segment and are eliminated upon consolidation. Fourth-quarter 2018 operating revenues were $566 million, up 48.6 percent versus the prior year, reflecting the acquisition of AppNexus. Xandr segment operating contribution was $381 million, up 15.8% versus fourth-quarter 2017. The Xandr segment operating income margin was 67.3 percent, compared to 86.4 percent in the year-earlier quarter.

Supplemental Discussions
As a supplemental discussion of our operating results, for comparison purposes, we are providing (1) our AT&T Business Solutions results which include both wireless and wireline operations and (2) a combined view of reported advertising revenues across all segments of AT&T. A reconciliation of the non-GAAP numbers in this supplemental discussion is attached as exhibit 99.2 hereto.

AT&T Business Solutions
Revenues from AT&T Business Solutions for the fourth quarter of 2018 were $9.4 billion, down 5.2 percent versus the year-ago quarter driven by our adoption of the new revenue accounting standard, which included changes in our USF policy, and declines in our legacy services. Partially offsetting the decreases were higher wireless revenues and growth in strategic services. Operating expenses totaled $7.4 billion, down 5.4 percent versus the fourth quarter of 2017, largely due to commission deferrals resulting from new accounting rules and increased cost efficiencies, partially offset by wireless sales costs. AT&T Business Solutions operating income margin was 21.1 percent, compared to 21.0 percent in the year-earlier quarter.

AT&T Advertising Revenues
Total AT&T Advertising revenues for the fourth quarter of 2018 were $1.9 billion compared to $437 million in the year-ago quarter, with the increase primarily driven by our acquisition of Time Warner, primarily from Turner.


Supplemental Segment Results
As a supplemental presentation of our operating results, we are providing certain segment and business unit results under the comparative historical accounting method prior to our adoption of Financial Accounting Standards Board Accounting Standards Update No. 2014-09, “Revenue from Contracts with Customers (Topic 606),” as modified (ASC 606), which is included in Exhibit 99.1 hereto.

2019 Guidance
We expect that our total capital investment, which consists of capital expenditures plus potential vendor financing payments, will be in the $23.0 billion range, excluding expected FirstNet reimbursement in the $1.0 billion range and potential vendor financing. We expect low-single digit adjusted earnings per share growth. Our guidance excludes adjusting items. Adjustments include merger-related adjusted amortization in the range of $7.5 billion, a non-cash mark-to-market benefit plan gain/loss, merger integration and other adjustments. We expect the mark-to-market adjustment, which is driven by interest rates and investment returns that are not reasonably estimable at this time, to be a significant item. Our adjusted EPS estimate depend on future levels of revenues and expenses which are not reasonably estimable at this time. Accordingly, we cannot provide a reconciliation between forecasted adjusted diluted EPS and reported diluted EPS without unreasonable effort.



CAUTIONARY LANGUAGE CONCERNING FORWARD-LOOKING STATEMENTS

Information set forth in this filing contains financial estimates and other forward-looking statements that are subject to risks and uncertainties. A discussion of factors that may affect future results is contained in AT&T’s filings with the Securities and Exchange Commission. AT&T disclaims any obligation to update or revise statements contained in this filing based on new information or otherwise.


Item 9.01 Financial Statements and Exhibits.

The following exhibits are filed as part of this report:

(d)   Exhibits

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

99.2  Discussion and reconciliation of non-GAAP measures.






Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
AT&T INC.
   
   
   
Date: January 30, 2019
By: /s/ Debra L. Dial                                    
  Debra L. Dial
Senior Vice President and Controller
 
   

 EXHIBIT 99.1


AT&T Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated Statements of Income

Dollars in millions except per share amounts

 

 

 

 

 

 

 

Unaudited

Fourth Quarter

Percent

 

Year Ended

Percent

 

 

 

2018

 

2017

 

Change

 

 

2018

 

2017

 

Change

Operating Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Service

 

$

42,496

$

36,225

 

17.3

%

 

$

152,345

$

145,597

 

4.6

%

  Equipment

 

 

5,497

 

5,451

 

0.8

%

 

 

18,411

 

14,949

 

23.2

%

    Total Operating Revenues

 

47,993

 

41,676

 

15.2

%

 

 

170,756

 

160,546

 

6.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Cost of revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Equipment

 

5,733

 

6,532

 

(12.2)

%

 

 

19,786

 

18,709

 

5.8

%

    Broadcast, programming and operations

 

8,885

 

6,003

 

48.0

%

 

 

26,727

 

21,159

 

26.3

%

    Other cost of revenues (exclusive of depreciation

          and amortization shown separately below)

 

8,691

 

9,391

 

(7.5)

%

 

 

32,906

 

37,942

 

(13.3)

%

   Selling, general and administrative

 

10,586

 

9,484

 

11.6

%

 

 

36,765

 

35,465

 

3.7

%

   Asset abandonment and impairments

 

46

 

2,914

 

(98.4)

%

 

 

46

 

2,914

 

(98.4)

%

   Depreciation and amortization

 

7,892

 

6,071

 

30.0

%

 

 

28,430

 

24,387

 

16.6

%

    Total Operating Expenses

 

41,833

 

40,395

 

3.6

%

 

 

144,660

 

140,576

 

2.9

%

Operating Income

 

6,160

 

1,281

 

-

%

 

 

26,096

 

19,970

 

30.7

%

Interest Expense

 

(2,112)

 

(1,926)

 

9.7

%

 

 

(7,957)

 

(6,300)

 

26.3

%

Equity in Net Income (Loss) of Affiliates

 

23

 

20

 

15.0

%

 

 

(48)

 

(128)

 

62.5

%

Other Income (Expense) - Net

 

1,674

 

(658)

 

-

%

 

 

6,782

 

1,597

 

-

%

Income (Loss) Before Income Taxes

 

5,745

 

(1,283)

 

-

%

 

 

24,873

 

15,139

 

64.3

%

Income Tax (Benefit) Expense

 

615

 

(20,419)

 

-

%

 

 

4,920

 

(14,708)

 

-

%

Net Income

 

5,130

 

19,136

 

(73.2)

%

 

 

19,953

 

29,847

 

(33.1)

%

 Less: Net Income Attributable to

    Noncontrolling Interest

 

(272)

 

(99)

 

-

%

 

 

(583)

 

(397)

 

(46.9)

%

Net Income Attributable to AT&T

$

4,858

$

19,037

 

(74.5)

%

 

$

19,370

$

29,450

 

(34.2)

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic Earnings Per Share Attributable to AT&T

$

0.66

$

3.08

 

(78.6)

%

 

$

2.85

$

4.77

 

(40.3)

%

   Weighted Average Common

       Shares Outstanding (000,000)

 

7,296

 

6,163

 

18.4

%

 

 

6,778

 

6,164

 

10.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted Earnings Per Share Attributable to AT&T

$

0.66

$

3.08

 

(78.6)

%

 

$

2.85

$

4.76

 

(40.1)

%

   Weighted Average Common 

       Shares Outstanding with Dilution (000,000)

 

7,328

 

6,182

 

18.5

%

 

 

6,806

 

6,183

 

10.1

%

 


 

AT&T Inc.

 

 

 

 

 

Financial Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated Balance Sheets

Dollars in millions

 

Unaudited

 

Dec. 31,

 

 

Dec. 31,

 

 

 

2018

 

 

2017

Assets

 

 

 

 

 

Current Assets

 

 

 

 

 

Cash and cash equivalents

$

5,204

 

$

50,498

Accounts receivable - net of allowances for doubtful accounts of $907 and $663

 

26,472

 

 

16,522

Prepaid expenses

 

2,047

 

 

1,369

Other current assets

 

17,704

 

 

10,757

Total current assets

 

51,427

 

 

79,146

Noncurrent Inventories and Theatrical Film and Television Production Costs

 

7,713

 

 

-

Property, Plant and Equipment – Net

 

131,473

 

 

125,222

Goodwill

 

146,370

 

 

105,449

Licenses

 

96,144

 

 

96,136

Trademarks and Trade Names - Net

 

24,345

 

 

7,021

Distribution Networks - Net

 

17,069

 

 

-

Other Intangible Assets – Net

 

26,269

 

 

11,119

Investments in and Advances to Equity Affiliates

 

6,245

 

 

1,560

Other Assets

 

24,809

 

 

18,444

Total Assets

$

531,864

 

$

444,097

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

Current Liabilities

 

 

 

 

 

Debt maturing within one year

$

10,255

 

$

38,374

Accounts payable and accrued liabilities

 

43,184

 

 

34,470

Advanced billings and customer deposits

 

5,948

 

 

4,213

Accrued taxes

 

1,179

 

 

1,262

Dividends payable

 

3,854

 

 

3,070

Total current liabilities

 

64,420

 

 

81,389

Long-Term Debt

 

166,250

 

 

125,972

Deferred Credits and Other Noncurrent Liabilities

 

 

 

 

 

Deferred income taxes

 

57,859

 

 

43,207

Postemployment benefit obligation

 

19,218

 

 

31,775

Other noncurrent liabilities

 

30,233

 

 

19,747

Total deferred credits and other noncurrent liabilities

 

107,310

 

 

94,729

Stockholders’ Equity

 

 

 

 

 

Common stock

 

7,621

 

 

6,495

Additional paid-in capital

 

125,525

 

 

89,563

Retained earnings

 

58,753

 

 

50,500

Treasury stock

 

(12,059)

 

 

(12,714)

Accumulated other comprehensive income

 

4,249

 

 

7,017

Noncontrolling interest

 

9,795

 

 

1,146

Total stockholders’ equity

 

193,884

 

 

142,007

Total Liabilities and Stockholders' Equity

$

531,864

 

$

444,097

 

 

 

 

 

 

 


 

AT&T Inc.

 

 

 

 

 

Financial Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated Statements of Cash Flows

Dollars in millions

 

Unaudited

Year Ended

 

 

 

2018

 

 

2017

Operating Activities

 

 

 

 

 

Net income

$

19,953

 

$

29,847

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

 

 

 

 

 

 

Depreciation and amortization

 

28,430

 

 

24,387

 

Amortization of film and television costs

 

3,772

 

 

-

 

Undistributed earnings from investments in equity affiliates

 

292

 

 

174

 

Provision for uncollectible accounts

 

1,791

 

 

1,642

 

Deferred income tax expense (benefit)

 

610

 

 

(15,940)

 

Net (gain) loss from sale of investments, net of impairments

 

(739)

 

 

(282)

 

Actuarial (gain) loss on pension and postretirement benefits

 

(3,412)

 

 

1,258

 

Asset abandonments and impairments

 

46

 

 

2,914

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

(1,244)

 

 

(986)

 

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

 

(6,442)

 

 

(778)

 

Accounts payable and other accrued liabilities

 

1,602

 

 

816

 

Equipment installment receivables and related sales

 

(490)

 

 

(1,239)

 

Deferred customer contract acquisition and fulfillment costs

 

(3,458)

 

 

(1,422)

Retirement benefit funding

 

(500)

 

 

(1,066)

Other - net

 

3,391

 

 

(1,315)

Total adjustments

 

23,649

 

 

8,163

Net Cash Provided by Operating Activities

 

43,602

 

 

38,010

 

 

 

 

 

Investing Activities

 

 

 

 

 

Capital expenditures:

 

 

 

 

 

 

Purchase of property and equipment

 

(20,758)

 

 

(20,647)

 

Interest during construction

 

(493)

 

 

(903)

Acquisitions, net of cash acquired

 

(43,309)

 

 

1,123

Dispositions

 

2,148

 

 

59

(Purchases) sales of securities, net

 

(185)

 

 

449

Advances to and investments in equity affiliates, net

 

(1,050)

 

 

-

Cash collections of deferred purchase price

 

500

 

 

976

Other

 

2

 

 

-

Net Cash Used in Investing Activities

 

(63,145)

 

 

(18,943)

 

 

 

 

 

 

Financing Activities

 

 

 

 

 

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

 

(821)

 

 

(2)

Issuance of other short-term borrowings

 

4,898

 

 

-

Repayment of other short-term borrowings

 

(2,098)

 

 

-

Issuance of long-term debt

 

41,875

 

 

48,793

Repayment of long-term debt

 

(52,643)

 

 

(12,339)

Purchase of treasury stock

 

(609)

 

 

(463)

Issuance of treasury stock

 

745

 

 

33

Dividends paid

 

(13,410)

 

 

(12,038)

Other

 

(3,926)

 

 

1,946

Net Cash (Used in) Provided by Financing Activities

 

(25,989)

 

 

25,930

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

 

(45,532)

 

 

44,997

Cash and cash equivalents and restricted cash beginning of year

 

50,932

 

 

5,935

Cash and Cash Equivalents and Restricted Cash End of Year

$

5,400

 

$

50,932

 

 

 

 

 

 

 


 

AT&T Inc.

Consolidated Supplementary Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Supplementary Financial Data

Dollars in millions except per share amounts

 

 

 

 

 

 

 

Unaudited

Fourth Quarter

Percent

 

Year Ended

Percent

 

 

 

2018

 

2017

 

Change

 

 

2018

 

2017

 

Change

Capital expenditures

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchase of property and equipment

$

4,063

$

4,891

 

(16.9)

%

 

$

20,758

$

20,647

 

0.5

%

 

Interest during construction

 

89

 

185

 

(51.9)

%

 

 

493

 

903

 

(45.4)

%

Total Capital Expenditures

$

4,152

$

5,076

 

(18.2)

%

 

$

21,251

$

21,550

 

(1.4)

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends Declared per Share

$

0.51

$

0.50

 

2.0

%

 

$

2.01

$

1.97

 

2.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

End of Period Common Shares Outstanding (000,000)

 

 

 

 

 

 

 

 

 

7,282

 

6,139

 

18.6

%

Debt Ratio

 

 

 

 

 

 

 

 

 

47.7

%

53.6

%

(590)

BP

Total Employees

 

 

 

 

 

 

 

 

 

268,220

 

254,000

 

5.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Supplementary Operating Data

Subscribers and connections in thousands

 

 

 

 

 

 

 

 

 

Unaudited

 

 

 

 

 

Year Ended

Percent

 

 

 

 

 

 

 

 

 

 

 

2018

 

2017

 

Change

Wireless Subscribers

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Domestic

 

 

 

 

 

 

 

 

 

153,006

 

141,202

 

8.4

%

 

Mexico

 

 

 

 

 

 

 

 

 

18,321

 

15,099

 

21.3

%

Total Wireless Subscribers

 

 

 

 

 

 

 

 

 

171,327

 

156,301

 

9.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Branded Wireless Subscribers

 

 

 

 

 

 

 

 

 

111,958

 

107,740

 

3.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Video Connections

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Domestic

 

 

 

 

 

 

 

 

 

24,517

 

25,270

 

(3.0)

%

 

Latin America

 

 

 

 

 

 

 

 

 

13,838

 

13,629

 

1.5

%

Total Video Connections

 

 

 

 

 

 

 

 

 

38,355

 

38,899

 

(1.4)

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Broadband Connections

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

IP

 

 

 

 

 

 

 

 

 

14,751

 

14,487

 

1.8

%

 

DSL

 

 

 

 

 

 

 

 

 

950

 

1,232

 

(22.9)

%

Total Broadband Connections

 

 

 

 

 

 

 

 

 

15,701

 

15,719

 

(0.1)

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Voice Connections

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Network Access Lines

 

 

 

 

 

 

 

 

 

10,002

 

11,753

 

(14.9)

%

 

U-verse  VoIP Connections

 

 

 

 

 

 

 

 

 

5,114

 

5,682

 

(10.0)

%

Total Retail Voice Connections

 

 

 

 

 

 

 

 

 

15,116

 

17,435

 

(13.3)

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fourth Quarter

Percent

 

Year Ended

Percent

 

 

 

2018

 

2017

 

Change

 

 

2018

 

2017

 

Change

Wireless Net Additions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Domestic

 

2,753

 

2,757

 

(0.1)

%

 

 

11,810

 

9,474

 

24.7

%

 

Mexico

 

1,016

 

1,320

 

(23.0)

%

 

 

3,222

 

3,126

 

3.1

%

Total Wireless Net Additions

 

3,769

 

4,077

 

(7.6)

%

 

 

15,032

 

12,600

 

19.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Branded Wireless Net Additions

 

1,016

 

2,046

 

(50.3)

%

 

 

4,367

 

4,858

 

(10.1)

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Video Net Additions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Domestic

 

(660)

 

159

 

-

%

 

 

(753)

 

(291)

 

-

%

 

Latin America

 

198

 

139

 

42.4

%

 

 

250

 

42

 

-

%

Total Video Net Additions

 

(462)

 

298

 

-

%

 

 

(503)

 

(249)

 

-

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Broadband Net Additions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

IP

 

7

 

103

 

(93.2)

%

 

 

264

 

623

 

(57.6)

%

 

DSL

 

(53)

 

(99)

 

46.5

%

 

 

(282)

 

(509)

 

44.6

%

Total Broadband Net Additions

 

(46)

 

4

 

-

%

 

 

(18)

 

114

 

-

%


 

COMMUNICATIONS SEGMENT

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment Results

Dollars in millions

 

 

 

 

 

 

 

Unaudited

Fourth Quarter

Percent

 

Year Ended

Percent

 

 

 

2018

 

2017

 

Change

 

 

2018

 

2017

 

Change

Segment Operating Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mobility

$

18,769

$

19,168

 

(2.1)

%

 

$

71,344

$

71,090

 

0.4

%

 

Entertainment Group

 

11,962

 

12,560

 

(4.8)

%

 

 

46,460

 

49,995

 

(7.1)

%

 

Business Wireline

 

6,727

 

7,382

 

(8.9)

%

 

 

26,827

 

29,293

 

(8.4)

%

    Total Segment Operating Revenues

 

37,458

 

39,110

 

(4.2)

%

 

 

144,631

 

150,378

 

(3.8)

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment Operating Contribution

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mobility

 

5,455

 

4,275

 

27.6

%

 

 

21,722

 

20,204

 

7.5

%

 

Entertainment Group

 

825

 

1,001

 

(17.6)

%

 

 

4,713

 

5,471

 

(13.9)

%

 

Business Wireline

 

1,359

 

1,588

 

(14.4)

%

 

 

5,827

 

6,010

 

(3.0)

%

    Total Segment Operating Contribution

$

7,639

$

6,864

 

11.3

%

 

$

32,262

$

31,685

 

1.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

Mobility

 

Mobility provides nationwide wireless service and equipment.

 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mobility Results

 

Dollars in millions

 

 

 

 

 

 

 

 

Unaudited

Fourth Quarter

Percent

 

Year Ended

Percent

 

 

 

 

2018

 

2017

 

Change

 

 

2018

 

2017

 

Change

 

Operating Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service

$

13,859

$

14,282

 

(3.0)

%

 

$

54,933

$

57,696

 

(4.8)

%

 

 

Equipment

 

4,910

 

4,886

 

0.5

%

 

 

16,411

 

13,394

 

22.5

%

 

    Total Operating Revenues

 

18,769

 

19,168

 

(2.1)

%

 

 

71,344

 

71,090

 

0.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operations and support

 

11,246

 

12,866

 

(12.6)

%

 

 

41,266

 

42,871

 

(3.7)

%

 

Depreciation and amortization

 

2,068

 

2,027

 

2.0

%

 

 

8,355

 

8,015

 

4.2

%

 

    Total Operating Expenses

 

13,314

 

14,893

 

(10.6)

%

 

 

49,621

 

50,886

 

(2.5)

%

 

Operating Income

 

5,455

 

4,275

 

27.6

%

 

 

21,723

 

20,204

 

7.5

%

 

Equity in Net Income (Loss) of Affiliates

 

-

 

-

 

-

%

 

 

(1)

 

-

 

-

%

 

Operating  Contribution

$

5,455

$

4,275

 

27.6

%

 

$

21,722

$

20,204

 

7.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income Margin

 

29.1

%

22.3

%

680

BP

 

 

30.4

%

28.4

%

200

BP

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Supplementary Operating Data

 

Subscribers and connections in thousands

 

 

 

 

 

 

 

 

Unaudited

 

 

 

Year Ended

Percent

 

 

 

 

 

 

 

 

 

 

 

 

2018

 

2017

 

Change

 

Mobility Subscribers

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Postpaid

 

 

 

 

 

 

 

 

 

76,889

 

77,510

 

(0.8)

%

 

 

Prepaid

 

 

 

 

 

 

 

 

 

17,000

 

15,335

 

10.9

%

 

Branded

 

 

 

 

 

 

 

 

 

93,889

 

92,845

 

1.1

%

 

Reseller

 

 

 

 

 

 

 

 

 

7,782

 

9,366

 

(16.9)

%

 

Connected Devices

 

 

 

 

 

 

 

 

 

51,335

 

38,991

 

31.7

%

 

Total Mobility Subscribers

 

 

 

 

 

 

 

 

 

153,006

 

141,202

 

8.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fourth Quarter

Percent

 

Year Ended

Percent

 

 

 

 

2018

 

2017

 

Change

 

 

2018

 

2017

 

Change

 

 Mobility Net Additions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Postpaid

 

13

 

558

 

(97.7)

%

 

 

(97)

 

641

 

-

%

 

 

Prepaid

 

26

 

140

 

(81.4)

%

 

 

1,290

 

1,013

 

27.3

%

 

Branded

 

39

 

698

 

(94.4)

%

 

 

1,193

 

1,654

 

(27.9)

%

 

Reseller

 

(438)

 

(530)

 

17.4

%

 

 

(1,704)

 

(1,871)

 

8.9

%

 

Connected Devices

 

3,152

 

2,589

 

21.7

%

 

 

12,321

 

9,691

 

27.1

%

 

Total Mobility Net Additions

 

2,753

 

2,757

 

(0.1)

%

 

 

11,810

 

9,474

 

24.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Branded Churn

 

1.82

%

1.75

%

7

BP

 

 

1.67

%

1.68

%

(1)

BP

 

Postpaid Churn

 

1.24

%

1.11

%

13

BP

 

 

1.12

%

1.07

%

5

BP

 

Postpaid Phone-Only Churn

 

1.00

%

0.89

%

11

BP