AT&T INC. - FORM 8-K - EX-99.2 - AT&T INC. SELECTED FINANCIAL STATEMENTS AND OPERATING DATA

AT&T INC. - FORM 8-K - EX-99.2 - AT&T INC. SELECTED FINANCIAL STATEMENTS AND OPERATING DATA - October 22, 2015

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AT&T INC. Reports

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AT&T INC. Reports

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file	filename
8-K - AT&T INC. 3RD QUARTER 2015 EARNINGS RELEASE - AT&T INC.	q3earning8k.htm
EX-99.1 - AT&T INC. 3Q-2015 NEWS RELEASE - AT&T INC.	ex99_1.htm
EX-99.3 - DISCUSSION OF EBITDA, FREE CASH FLOW, FREE CASH FLOW YIELD, FREE CASH FLOW AFTER DIVIDENDS AND ADJUSTING ITEMS. - AT&T INC.	ex99_3.htm

Financial Data

AT&T Inc.
Consolidated Statements of Income
Dollars in millions except per share amounts
Unaudited	Three Months Ended									Nine Months Ended
	9/30/2015			9/30/2014			% Chg			9/30/2015			9/30/2014			% Chg
Operating Revenues
Service	$	35,625		$	29,790			19.6	%	$	94,128		$	89,122			5.6	%
Equipment		3,466			3,167			9.4	%		10,554			8,886			18.8	%
Total Operating Revenues		39,091			32,957			18.6	%		104,682			98,008			6.8	%

Operating Expenses
Cost of services and sales
Equipment		4,313			4,432			-2.7	%		13,035			12,503			4.3	%
Broadcast, programming and operations		4,081			1,038			-			6,351			3,019			-
Other cost of services and sales (exclusive of depreciation and amortization shown separately below)		9,402			8,866			-6.0	%		27,969			26,167			-6.9	%
Selling, general and administrative		9,107			8,475			7.5	%		24,535			24,932			-1.6	%
Depreciation and amortization		6,265			4,539			38.0	%		15,539			13,706			13.4	%
Total Operating Expenses		33,168			27,350			21.3	%		87,429			80,327			8.8	%
Operating Income		5,923			5,607			5.6	%		17,253			17,681			-2.4	%
Interest Expense		1,146			1,016			12.8	%		2,977			2,757			8.0	%
Equity in Net Income (Loss) of Affiliates		15			(2	)		-			48			188			-74.5	%
Other (Expense) Income - Net		(57	)		42			-			61			1,456			-95.8	%
Income Before Income Taxes		4,735			4,631			2.2	%		14,385			16,568			-13.2	%
Income Tax Expense		1,657			1,444			14.8	%		4,784			5,914			-19.1	%
Net Income		3,078			3,187			-3.4	%		9,601			10,654			-9.9	%
Less: Net Income Attributable to Noncontrolling Interest		(84	)		(57	)		-47.4	%		(262	)		(213	)		-23.0	%
Net Income Attributable to AT&T	$	2,994		$	3,130			-4.3	%	$	9,339		$	10,441			-10.6	%


Basic Earnings Per Share Attributable to AT&T	$	0.50		$	0.60			-16.7	%	$	1.71		$	2.00			-14.5	%
Weighted Average Common Shares Outstanding (000,000)		5,924			5,198			14.0	%		5,447			5,208			4.6	%

Diluted Earnings Per Share Attributable to AT&T	$	0.50		$	0.60			-16.7	%	$	1.71		$	2.00			-14.5	%
Weighted Average Common Shares Outstanding with Dilution (000,000)		5,943			5,214			14.0	%		5,463			5,224			4.6	%

Financial Data

AT&T Inc.
Statements of Segment Income
Dollars in millions
Unaudited
	Three Months Ended										Nine Months Ended
		9/30/2015			9/30/2014			% Chg				9/30/2015			9/30/2014			% Chg
Business Solutions
Segment Operating Revenues
Wireless service		$	7,732		$	7,542			2.5	%		$	23,003		$	22,593			1.8	%
Fixed strategic services			2,763			2,454			12.6	%			8,083			7,103			13.8	%
Legacy voice and data services			4,499			4,928			-8.7	%			13,743			15,055			-8.7	%
Other services			885			977			-9.4	%			2,585			2,834			-8.8	%
Wireless equipment			1,813			1,586			14.3	%			5,499			4,292			28.1	%
Total Segment Operating Revenues			17,692			17,487			1.2	%			52,913			51,877			2.0	%

Segment Operating Expenses
Operations and Support Expenses			10,921			11,295			-3.3	%			32,966			32,836			0.4	%
Depreciation and amortization			2,474			2,331			6.1	%			7,276			7,009			3.8	%
Total Segment Operating Expenses			13,395			13,626			-1.7	%			40,242			39,845			1.0	%
Segment Operating Income			4,297			3,861			11.3	%			12,671			12,032			5.3	%
Equity in Net Income of Affiliates			-			-			-				-			-			-
Segment Contribution		$	4,297		$	3,861			11.3	%		$	12,671		$	12,032			5.3	%

Segment Operating Income Margin			24.3	%		22.1	%						23.9	%		23.2	%


Entertainment and Internet Services
Segment Operating Revenues
Video entertainment		$	7,162		$	1,719			-			$	11,024		$	5,016			-
High-speed internet			1,685			1,414			19.2	%			4,861			4,040			20.3	%
Legacy voice and data services			1,419			1,834			-22.6	%			4,547			5,897			-22.9	%
Equipment and other			592			586			1.0	%			1,868			1,687			10.7	%
Total Segment Operating Revenues			10,858			5,553			95.5	%			22,300			16,640			34.0	%

Segment Operating Expenses
Operations and Support Expenses			8,450			4,781			76.7	%			18,222			14,182			28.5	%
Depreciation and amortization			1,389			1,109			25.2	%			3,519			3,396			3.6	%
Total Segment Operating Expenses			9,839			5,890			67.0	%			21,741			17,578			23.7	%
Segment Operating Income			1,019			(337	)		-				559			(938	)		-
Equity in Net Income (Loss) of Affiliates			2			-			-				(16	)		-			-
Segment Contribution		$	1,021		$	(337	)		-			$	543		$	(938	)		-

Segment Operating Income Margin			9.4	%		-6.1	%						2.5	%		-5.6	%


Financial Data

AT&T Inc.
Statements of Segment Income
Dollars in millions
Unaudited
	Three Months Ended										Nine Months Ended
		9/30/2015			9/30/2014			% Chg				9/30/2015			9/30/2014			% Chg
Consumer Mobility
Segment Operating Revenues
Postpaid wireless service		$	5,527		$	6,071			-9.0	%		$	16,783		$	18,490			-9.2	%
Prepaid wireless service			1,198			1,163			3.0	%			3,411			3,106			9.8	%
Other service revenue			638			646			-1.2	%			1,825			1,768			3.2	%
Equipment			1,421			1,328			7.0	%			4,298			3,883			10.7	%
Total Segment Operating Revenues			8,784			9,208			-4.6	%			26,317			27,247			-3.4	%

Segment Operating Expenses
Operations and Support Expenses			5,065			5,731			-11.6	%			15,808			17,173			-7.9	%
Depreciation and amortization			976			950			2.7	%			2,912			2,846			2.3	%
Total Segment Operating Expenses			6,041			6,681			-9.6	%			18,720			20,019			-6.5	%
Segment Operating Income			2,743			2,527			8.5	%			7,597			7,228			5.1	%
Equity in Net Income (Loss) of Affiliates			-			(1	)		-				-			(1	)		-
Segment Contribution		$	2,743		$	2,526			8.6	%		$	7,597		$	7,227			5.1	%

Segment Operating Income Margin			31.2	%		27.4	%						28.9	%		26.5	%


International
Segment Operating Revenues
Video entertainment		$	945		$	-			-			$	945		$	-			-
Wireless service			494			-			-				1,153			-			-
Wireless equipment			87			-			-				155			-			-
Total Segment Operating Revenues			1,526			-			-				2,253			-			-

Segment Operating Expenses
Operations and Support Expenses			1,384			-			-				2,131			-			-
Depreciation and amortization			225			-			-				346			-			-
Total Segment Operating Expenses			1,609			-			-				2,477			-			-
Segment Operating Income (Loss)			(83	)		-			-				(224	)		-			-
Equity in Net Income (Loss) of Affiliates			(4	)		-			-				(4	)		153			-
Segment Contribution		$	(87	)	$	-			-			$	(228	)	$	153			-

Segment Operating Income Margin			-5.4	%									-9.9	%

Financial Data

AT&T Inc.
Consolidated Balance Sheets
Dollars in millions
Unaudited	9/30/15			12/31/14
				As Adjusted

Assets
Current Assets
Cash and cash equivalents	$	6,202		$	8,603
Accounts receivable - net of allowances for doubtful accounts of $656 and $454		16,329			14,527
Prepaid expenses		1,166			831
Other current assets		11,254			9,802
Total current assets		34,951			33,763
Property, Plant and Equipment - Net		122,836			112,898
Goodwill		105,966			69,692
Licenses		93,063			60,824
Customer Lists and Relationships - Net		19,608			812
Other Intangible Assets - Net		8,236			5,327
Investments in Equity Affiliates		1,744			250
Other Assets		13,585			13,659
Total Assets	$	399,989		$	297,225

Liabilities and Stockholders' Equity
Current Liabilities
Debt maturing within one year	$	7,535		$	6,056
Accounts payable and accrued liabilities		28,280			23,592
Advanced billing and customer deposits		4,640			4,105
Accrued taxes		4,591			1,136
Dividends payable		2,892			2,438
Total current liabilities		47,938			37,327
Long-Term Debt		119,395			76,011
Deferred Credits and Other Noncurrent Liabilities
Deferred income taxes		53,044			38,549
Postemployment benefit obligation		36,396			37,079
Other noncurrent liabilities		20,427			17,989
Total deferred credits and other noncurrent liabilities		109,867			93,617
Stockholders' Equity
Common stock		6,495			6,495
Additional paid-in capital		89,717			91,108
Retained earnings		32,627			31,081
Treasury stock		(12,309	)		(47,029	)
Accumulated other comprehensive income		5,294			8,061
Noncontrolling interest		965			554
Total stockholders' equity		122,789			90,270
Total Liabilities and Stockholders' Equity	$	399,989		$	297,225

Financial Data

AT&T Inc.
Consolidated Statements of Cash Flows
Dollars in millions
Unaudited
	Nine months ended September 30,
	2015			2014
				As Adjusted
Operating Activities
Net income	$	9,601		$	10,654
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization		15,539			13,706
Undistributed earnings from investments in equity affiliates		(36	)		(45	)
Provision for uncollectible accounts		895			692
Deferred income tax expense		1,539			1,450
Net gain from sale of investments, net of impairments		(46	)		(1,374	)
Changes in operating assets and liabilities:
Accounts receivable		453			(1,269	)
Other current assets		350			(840	)
Accounts payable and accrued liabilities		1,279			4,790
Retirement benefit funding		(595	)		(420	)
Other - net		(2,284	)		(1,751	)
Total adjustments		17,094			14,939
Net Cash Provided by Operating Activities		26,695			25,593

Investing Activities
Construction and capital expenditures:
Capital expenditures		(13,356	)		(16,829	)
Interest during construction		(566	)		(178	)
Acquisitions, net of cash acquired		(30,694	)		(2,053	)
Dispositions		79			6,074
Sales (purchases) of securities, net		1,490			(1,996	)
Return of advances to and investments in equity affiliates		-			3
Other		-			(1	)
Net Cash Used in Investing Activities		(43,047	)		(14,980	)

Financing Activities
Net change in short-term borrowings with
original maturities of three months or less		(1	)		(16	)
Issuance of long-term debt		33,967			8,564
Repayment of long-term debt		(9,962	)		(10,376	)
Purchase of treasury stock		-			(1,617	)
Issuance of treasury stock		133			34
Dividends paid		(7,311	)		(7,170	)
Other		(2,875	)		(913	)
Net Cash Provided by (Used in) Financing Activities		13,951			(11,494	)
Net decrease in cash and cash equivalents		(2,401	)		(881	)
Cash and cash equivalents beginning of year		8,603			3,339
Cash and Cash Equivalents End of Period	$	6,202		$	2,458

Financial Data

AT&T Inc.
Supplementary Operating and Financial Data
Dollars in millions except per share amounts, subscribers and connections in (000s)
Unaudited	Three Months Ended									Nine Months Ended
	9/30/2015			9/30/2014			% Chg			9/30/2015			9/30/2014			% Chg
Business Solutions Wireless Subscribers											71,561			62,551			14.4	%
Postpaid											47,414			44,063			7.6	%
Reseller											83			6			-
Connected Devices¹											24,064			18,482			30.2	%

Business Solutions Wireless Net Adds		1,875			1,816			3.2	%		4,968			3,646			36.3	%
Postpaid		265			545			-51.4	%		850			1,498			-43.3	%
Reseller		8			(4	)		-			14			4			-
Connected Devices¹		1,602			1,275			25.6	%		4,104			2,144			91.4	%

Business Wireless Postpaid Churn		1.05	%		0.84	%	21 BP				0.95	%		0.84	%	11 BP

Consumer Mobility Subscribers											54,845			56,099			-2.2	%
Postpaid											29,257			31,043			-5.8	%
Prepaid¹											10,988			10,026			9.6	%
Reseller											13,647			13,877			-1.7	%
Connected Devices¹											953			1,153			-17.3	%

Consumer Mobility Net Adds		638			191			-			857			57			-
Postpaid		23			240			-90.4	%		289			938			-69.2	%
Prepaid¹		466			(46	)		-			895			(244	)		-
Reseller		149			91			63.7	%		(218	)		(286	)		23.8	%
Connected Devices¹		-			(94	)		-			(109	)		(351	)		68.9	%

Consumer Mobility Postpaid Churn		1.33	%		1.20	%	13 BP				1.23	%		1.15	%	8 BP
Total Consumer Mobility Churn		1.90	%		2.03	%	-13 BP				1.93	%		1.99	%	-6 BP

Entertainment and Internet Services Connections											52,637			34,694			51.7	%
Video Connections											25,424			5,848			-
Satellite											19,570			-			-
U-verse											5,854			5,848			0.1	%

Video Net Adds		(66	)		212			-			(40	)		591			-
Satellite		26			-			-			26			-			-
U-verse		(92	)		212			-			(66	)		591			-

Broadband Connections											14,322			14,465			-1.0	%
IP											12,185			11,010			10.7	%
DSL											2,137			3,455			-38.1	%

Broadband Net Adds		(106	)		68			-			(120	)		152			-
IP		172			547			-68.6	%		802			1,527			-47.5	%
DSL		(278	)		(479	)		42.0	%		(922	)		(1,375	)		32.9	%

Total Wireline Voice Connections											12,891			14,381			-10.4	%

AT&T International
Wireless Subscribers and Connections
Subscribers											8,091			-			-
Net Adds		(231	)		-			-			(689	)		-			-
Total Churn		5.61	%		-			-			6.87	%		-			-

Video Subscribers and Connections
Latin America Video Subscribers		(113	)		-			-			12,544			-			-
Pan Americana		16			-			-			7,006			-			-
Brazil		(129	)		-			-			5,538			-			-

AT&T Total Subscribers and Connections
AT&T Mobility Subscribers											126,406			118,650			6.5	%
Postpaid											76,671			75,105			2.1	%
Prepaid¹											10,988			10,026			9.6	%
Reseller											13,729			13,884			-1.1	%
Connected Devices¹											25,018			19,635			27.4	%

AT&T Mobility Net Adds		2,513			2,007			25.2	%		5,825			3,703			57.3	%
Postpaid		289			785			-63.2	%		1,140			2,436			-53.2	%
Prepaid¹		466			(46	)		-			895			(244	)		-
Reseller		156			87			79.3	%		(205	)		(281	)		27.0	%
Connected Devices¹		1,602			1,181			35.6	%		3,995			1,792			-
M&A Activity, Partitioned Customers and Other Adjs.		(9	)		9			-			27			4,571			-99.4	%

AT&T Mobility Churn
Postpaid Churn		1.16	%		0.99	%	17 BP				1.06	%		0.97	%	9 BP
Total Churn		1.33	%		1.36	%	-3 BP				1.35	%		1.41	%	-6 BP

Other
Domestic Licensed POPs (000,000)											321			321			-

Total Video Subscribers											37,994			6,067			-
Domestic											25,450			6,067			-
Pan Americana											7,006			-			-
Brazil											5,538			-			-

Total Video Net Adds		(178	)		216			-			(150	)		607			-
Domestic		(65	)		216			-			(37	)		607			-
Pan Americana		16			-			-			16			-			-
Brazil		(129	)		-			-			(129	)		-			-

Total Broadband Connections											15,832			16,486			-4.0	%
IP											13,076			12,098			8.1	%
DSL											2,756			4,388			-37.2	%

Broadband Net Adds		(129	)		38			-			(196	)		61			-
IP		192			601			-68.1	%		871			1,723			-49.4	%
DSL		(321	)		(563	)		43.0	%		(1,067	)		(1,662	)		35.8	%

Total Wireline Voice Connections											22,795			26,220			-13.1	%

AT&T Inc.
Construction and capital expenditures:
Capital expenditures	$	5,028		$	5,180			-2.9	%	$	13,356		$	16,829			-20.6	%
Interest during construction	$	227		$	60			-		$	566		$	178			-
Dividends Declared per Share	$	0.47		$	0.46			2.2	%	$	1.41		$	1.38			2.2	%
End of Period Common Shares Outstanding (000,000)											6,152			5,185			18.6	%
Debt Ratio²											50.8	%		43.9	%	690 BP
Total Employees											281,240			247,700			13.5	%

¹	Prior year amounts restated to conform to current period reporting methodology.
²	Total long-term debt plus debt maturing within one year divided by total debt plus total stockholders' equity.
	Notes: For the end of 3Q15, total switched access lines were 17,352.
	Business Solutions and Consumer Mobility may not total to AT&T Mobility due to rounding.

Financial Data

AT&T Inc.
Supplemental AT&T Mobility Results
Dollars in millions
Unaudited
	Three Months Ended									Nine Months Ended
	9/30/2015			9/30/2014			% Chg			9/30/2015			9/30/2014			% Chg
AT&T Mobility
Operating Revenues
Service	$	15,095		$	15,423			-2.1	%	$	45,022		$	45,958			-2.0	%
Equipment		3,234			2,914			11.0	%		9,797			8,175			19.8	%
Total Segment Operating Revenues		18,329			18,337			-			54,819			54,133			1.3	%

Operating Expenses
Operations and Support Expenses		10,865			11,683			-7.0	%		33,310			34,021			-2.1	%
Depreciation and amortization		2,046			1,909			7.2	%		6,082			5,785			5.1	%
Total Operating Expenses		12,911			13,592			-5.0	%		39,392			39,806			-1.0	%
Operating Income		5,418			4,745			14.2	%		15,427			14,327			7.7	%
Equity in Net Income (Loss) of Affiliates		-			(1	)		-			-			(1	)		-
Income	$	5,418		$	4,744			14.2	%	$	15,427		$	14,326			7.7	%

Operating Income Margin		29.6	%		25.9	%					28.1	%		26.5	%

Financial Data

AT&T Inc.
Non-GAAP Consolidated Reconciliation
Adjusted Operating Revenues and Adjusted Consolidated EBITDA
Dollars in millions
Unaudited
	Three Months Ended
	September 30,
	2013			2014			2015
Reported Operating Revenues	$	32,158		$	32,957		$	39,091
Adjustments:
DIRECTV deferred revenue⁴	$	-		$	-		$	85
Adjusted Operating Revenues	$	32,158		$	32,957		$	39,176

Reported Operating Income	$	6,277		$	5,607		$	5,923
Plus: Depreciation and Amortization		4,615			4,539			6,265
EBITDA¹	$	10,892		$	10,146		$	12,188
Adjustments:
Wireless merger integration costs²		-			171			142
Leap network decommissioning		-			-			250
DIRECTV/Mexico merger integration items³		-			42			303
Employee separation costs		-			-			122
Spectrum transfer		(229	)		-			-
Other		-			-			35
Adjusted EBITDA	$	10,663		$	10,359		$	13,040
Year-over-year growth - Adjusted					-2.9	%		25.9	%
Adjusted EBITDA Margin*		33.2	%		31.4	%		33.3	%

Financial Data

AT&T Inc.
Non-GAAP Consolidated Reconciliation
Adjusted Operating Revenues, Adjusted Operating Income and Margin
Dollars in millions
Unaudited
	Three Months Ended
	September 30,
	2013			2014			2015
Reported Operating Revenues	$	32,158		$	32,957		$	39,091
Adjustments:
DIRECTV deferred revenue³	$	-		$	-		$	85
Adjusted Operating Revenues	$	32,158		$	32,957		$	39,176

Reported Operating Income	$	6,277		$	5,607		$	5,923
Adjustments:
Amortization of intangible assets		-			42			1,171
Wireless merger integration costs¹		-			171			142
Leap network decommissioning		-			-			250
DIRECTV/Mexico integration items²		-			42			303
Employee separation costs		-			-			122
Spectrum transfer		(229	)		-			-
Other		-			-			35
Adjusted Operating Income	$	6,048		$	5,862		$	7,946
Year-over-year growth - Adjusted					-3.1	%		35.6	%
Adjusted Operating Income Margin*		18.8	%		17.8	%		20.3	%

¹ Adjustments include Operations and Support expenses for domestic wireless integration costs. ² Adjustments include DIRECTV merger integration items and Operations and Support expenses for international wireless integration costs. ³Adjustments include DIRECTV deferred revenue not recognized due to purchase accounting fair value adjustment.

Adjusted Operating Revenue and Adjusted Operating Income and Margin are non-GAAP financial measures calculated by excluding from operating revenues and operating expenses significant items that are non-operational or non-recurring in nature. Management believes that these measures provide relevant and useful information to investors and other users of our financial data in evaluating the effectiveness of our operations and underlying business trends. Adjusted Operating Revenue and Adjusted Operating Income and Margin should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance with GAAP. Our calculation of Adjusted Operating Income and Margin, as presented, may differ from similarly titled measures reported by other companies. *Adjusted Operating Income Margin is calculated by dividing Adjusted Operating Income by Adjusted Operating Revenues.

Financial Data

AT&T Inc.
Non-GAAP Consolidated Reconciliation
Free Cash Flow
Dollars in millions
Unaudited and Adjusted
	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2014			2015			2014			2015

Net cash provided by operating activities	$	8,724		$	10,797		$	25,593		$	26,695

Less: Construction and capital expenditures		(5,240	)		(5,255	)		(17,007	)		(13,922	)

Free Cash Flow	$	3,484		$	5,542		$	8,586		$	12,773




Free Cash Flow after Dividends
Dollars in millions
Unaudited
	Three Months Ended						Nine Months Ended
	September 30,						September 30,
		2014			2015			2014			2015

Net cash provided by operating activities	$	8,724		$	10,797		$	25,593		$	26,695

Less: Construction and capital expenditures		(5,240	)		(5,255	)		(17,007	)		(13,922	)

Free Cash Flow		3,484			5,542			8,586			12,773

Less: Dividends paid		(2,386	)		(2,438	)		(7,170	)		(7,311	)

Free Cash Flow after Dividends	$	1,098		$	3,104		$	1,416		$	5,462

Free Cash Flow Dividend Payout Ratio					44	%					57	%

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

Financial Data

AT&T Inc.
Non-GAAP Consolidated Reconciliation
Pro Forma Annualized Net-Debt-to-Adjusted-EBITDA Ratio¹
Dollars in millions
Unaudited
	Three Months Ended
	3/31/15			6/30/15			9/30/15			YTD 2015

Pro Forma Net Income		3,580			2,653			2,936			9,169
Add Back:
Taxes		1,577			2,198			1,622			5,397
Interest Expense, Equity In Net Income of Affiliates and Other Income (Expense) - net, and Noncontrolling Interest		1,231			1,252			1,272			3,755
Depreciation and amortization		6,245			5,762			6,497			18,504
Pro Forma Consolidated EBITDA		12,633			11,865			12,327			36,825
Add Back:
Wireless merger integration costs²		209			215			142			566
Leap network decommissioning		-			364			250			614
DIRECTV/Mexico merger integration items³		89			116			303			508
Pension termination charges		150			-			-			150
Other		-			-			35			35
Impairment of Venezuela subsidiary (Pro Forma)⁴		-			1,060			-			1,060
Integration expenses (Pro Forma)⁵		(72	)		(90	)		(20	)		(182	)
Pro Forma Adjusted Consolidated EBITDA		13,009			13,530			13,037			39,576
Pro Forma Annualized Adjusted Consolidated EBITDA											52,768
End-of-period current debt											7,535
End-of-period long-term debt											119,395
Total End-of-Period Debt											126,930
Less Cash and Cash Equivalents											6,202
Less Bank Securities – Certificates of Deposit & Time Deposits											400
Net Debt Balance										$	120,328
Pro Forma Annualized Net-Debt-to-Adjusted-EBITDA Ratio											2.28

¹ The pro forma financials reflect the combined results of operations of the combined company based on the historical financial statements of AT&T and DIRECTV, after giving effect to the merger and certain adjustments, and are intended to reflect the impact of the DIRECTV acquisition on AT&T. Adjustments to derive Pro Forma Net Income are consistent with the adjustments described in the "Notes to Unaudited Pro Forma Condensed Combined Financial Statements" included in the Form 8-K/A dated July 24, 2015. Calculations include the historical results for AT&T for the nine months ended September 30, 2015 and the results from DIRECTV for the period from January 1, 2015 through July 24, 2015, the date of its acquisition by AT&T. ² Adjustments include Operations and Support expenses for domestic wireless integration costs. ³ Adjustments include DIRECTV merger and integration items and Operations and Support expenses for international wireless integration costs. Approximately $182 of DIRECTV merger costs were included in Pro Forma Net Income. ⁴ Adjustment includes pre-tax charge related to the remeasurement of the net monetary assets at the SIMADI rate and the associated impairment of the fixed assets of DIRECTV's Venezuelan subsidiary. ⁵ Adjustment to eliminate AT&T's merger costs in the pro forma net income as those costs are included in the line "DIRECTV/Mexico merger integration items" above. Net-Debt-to-EBITDA ratios are non-GAAP financial measures frequently used by investors and credit rating agencies. Management believes these measures provide relevant and useful information to investors and other users of our financial data. Net debt is calculated by subtracting cash and cash equivalents from the sum of debt maturing within one year and long-term debt. The Net-Debt-to-EBITDA ratio is calculated by dividing the Net Debt by annualized EBITDA. Annualized EBITDA is calculated by annualizing the year-to-date EBITDA. Our calculation of EBITDA, as presented, may differ from similarly titled measures reported by other companies.

Financial Data

AT&T Inc.
Non-GAAP Consolidated Reconciliation
Adjusted Diluted EPS
Unaudited

	Three Months Ended
	September 30,
	2014		2015

Reported Diluted EPS	$	0.60	$	0.50
Adjustments:
Amortization of intangible assets		-		0.13
Merger and integration items¹		0.03		0.05
Leap network decommissioning		-		0.03
Early debt redemption costs		0.02		-
Employee separation costs		-		0.01
Other		-		0.02
Adjusted Diluted EPS	$	0.65	$	0.74

Year-over-year growth - Adjusted				13.8	%


Weighted Average Common Shares Outstanding
with Dilution (000,000)		5,214		5,943

¹ Adjustments include DIRECTV merger and integration items, domestic and international wireless merger and integration costs, and interest expense incurred on debt issued in May 2015 to fund the cash consideration of the DIRECTV merger.

Adjusted Diluted EPS is a non-GAAP financial measure calculated by excluding from operating revenues, operating expenses, interest expense and income taxes certain significant items that are non-operational or non-recurring in nature, including dispositions. Management believes that this measure provides relevant and useful information to investors and other users of our financial data in evaluating the effectiveness of our operations and underlying business trends. Adjusted Diluted EPS should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance with GAAP. Our calculation of Adjusted Diluted EPS, as presented, may differ from similarly titled measures reported by other companies.
Sum of components may not tie due to rounding.

Financial Data

AT&T Inc.
Non-GAAP Segment Reconciliation
Business Solutions Segment EBITDA
Dollars in millions
Unaudited
	Three Months Ended
	9/30/14			12/31/14			3/31/15			6/30/15			9/30/15

Segment Operating Revenues
Total Segment Operating Revenues	$	17,487		$	18,729		$	17,557		$	17,664		$	17,692

Segment Operating Income		3,861			3,393			4,142			4,232			4,297
Segment Operating Income Margin		22.1	%		18.1	%		23.6	%		24.0	%		24.3	%

Plus: Depreciation and amortization		2,331			2,346			2,342			2,460			2,474
EBITDA¹	$	6,192		$	5,739		$	6,484		$	6,692		$	6,771
EBITDA as a % of Revenues		35.4	%		30.6	%		36.9	%		37.9	%		38.3	%

Entertainment and Internet Services Segment EBITDA
Dollars in millions
Unaudited

Segment Operating Revenues
Total Segment Operating Revenues	$	5,553		$	5,593		$	5,660		$	5,782		$	10,858

Segment Operating Income		(337	)		(294	)		(264	)		(196	)		1,019
Segment Operating Income Margin		-6.1	%		-5.3	%		-4.7	%		-3.4	%		9.4	%

Plus: Depreciation and amortization		1,109			1,077			1,065			1,065			1,389
EBITDA¹	$	772		$	783		$	801		$	869		$	2,408
EBITDA as a % of Revenues		13.9	%		14.0	%		14.2	%		15.0	%		22.2	%

¹For AT&T, EBITDA is defined as operating income before depreciation and amortization. We believe EBITDA to be a relevant and useful measurement to our investors as it is part of our internal management reporting and planning processes and it is an important metric that management uses to evaluate operating performance. EBITDA does not give effect to cash used for debt service requirements and thus does not reflect available funds for distributions, reinvestment or other discretionary uses.

Financial Data

AT&T Inc.
Non-GAAP Segment Reconciliation
Consumer Mobility Segment EBITDA
Dollars in millions
Unaudited
	Three Months Ended
	9/30/14			12/31/14			3/31/15			6/30/15			9/30/15

Segment Operating Revenues
Total Segment Operating Revenues	$	9,208		$	9,522		$	8,778		$	8,755		$	8,784

Segment Operating Income		2,527			1,823			2,235			2,618			2,743
Segment Operating Income Margin		27.4	%		19.1	%		25.5	%		29.9	%		31.2	%

Plus: Depreciation and amortization		950			981			1,002			934			976
EBITDA¹	$	3,477		$	2,804		$	3,237		$	3,552		$	3,719
EBITDA as a % of Revenues		37.8	%		29.4	%		36.9	%		40.6	%		42.3	%

International Segment EBITDA
Dollars in millions
Unaudited

Segment Operating Revenues
Total Segment Operating Revenues	$	-		$	-		$	236		$	491		$	1,526

Segment Operating Income		-			-			(10	)		(131	)		(83	)
Segment Operating Income Margin								-4.2	%		-26.7	%		-5.4	%

Plus: Depreciation and amortization		-			-			28			93			225
EBITDA¹	$	-		$	-		$	18		$	(38	)	$	142
EBITDA as a % of Revenues								7.6	%		-7.7	%		9.3	%

¹For AT&T, EBITDA is defined as operating income before depreciation and amortization. EBITDA service margin is calculated as EBITDA divided by service revenues. EBITDA differs from Segment Operating Income (Loss), as calculated in accordance with U.S. generally accepted accounting principles (GAAP), in that it excludes depreciation and amortization. EBITDA does not give effect to cash used for debt service requirements and thus does not reflect available funds for distributions, reinvestment or other discretionary uses. EBITDA is not presented as an alternative measure of operating results or cash flows from operations, as determined in accordance with GAAP. Our calculation of EBITDA, as presented, may differ from similarly titled measures reported by other companies.

Financial Data

AT&T Inc.
Non-GAAP Reconciliation - Supplemental
AT&T Mobility EBITDA
Dollars in millions
Unaudited
				Three Months Ended
	9/30/13			9/30/14			12/31/14			3/31/15			6/30/15			9/30/15

Operating Revenues
Service Revenues	$	15,460		$	15,423		$	15,074		$	14,812		$	15,115		$	15,095
Equipment Revenues		2,020			2,914			4,785			3,374			3,189			3,234
Total Operating Revenues	$	17,480		$	18,337		$	19,859		$	18,186		$	18,304		$	18,329

Operating Income		4,671			4,745			3,573			4,710			5,298			5,418
Operating Income Margin		26.7	%		25.9	%		18.0	%		25.9	%		28.9	%		29.6	%

Plus: Depreciation and amortization		1,828			1,909			1,959			2,005			2,031			2,046
EBITDA¹	$	6,499		$	6,654		$	5,532		$	6,715		$	7,329		$	7,464
EBITDA as a % of Service Revenues		42.0	%		43.1	%		36.7	%		45.3	%		48.5	%		49.4	%

Mexico EBITDA
Dollars in millions
Unaudited
				Three Months Ended
				9/30/14			12/31/14			3/31/15			6/30/15			9/30/15

Operating Revenues
Total Operating Revenues				$	-		$	-		$	236		$	491		$	581

Operating Income					-			-			(10	)		(131	)		(134	)
Operating Income Margin											-4.2	%		-26.7	%		-23.1	%

Plus: Depreciation and amortization					-			-			28			93			67
EBITDA¹				$	-		$	-		$	18		$	(38	)	$	(67	)
EBITDA as a % of Revenues											7.6	%		-7.7	%		-11.5	%

¹For AT&T, EBITDA is defined as operating income before depreciation and amortization. EBITDA service margin is calculated as EBITDA divided by service revenues. EBITDA differs from Segment Operating Income (Loss), as calculated in accordance with U.S. generally accepted accounting principles (GAAP), in that it excludes depreciation and amortization. EBITDA does not give effect to cash used for debt service requirements and thus does not reflect available funds for distributions, reinvestment or other discretionary uses. EBITDA is not presented as an alternative measure of operating results or cash flows from operations, as determined in accordance with GAAP. Our calculation of EBITDA, as presented, may differ from similarly titled measures reported by other companies.

¹EBITDA is defined as operating income before depreciation and amortization.

²Adjustments include Operations and Support expenses for domestic wireless integration costs.

³Adjustments include Operations and Support expenses for DIRECTV merger and integration items and international wireless integration costs.

⁴Adjustment includes DIRECTV deferred revenue not recognized due to purchase accounting fair value adjustment.

Adjusted Operating Revenues and Adjusted EBITDA are non-GAAP financial measures calculated by excluding costs which are non-recurring in nature, including dispositions and merger integration and transaction costs. Adjusted EBITDA also excludes net actuarial gains or losses associated with our pension and postemployment benefit plans. Management believes that these measures provide relevant and useful information to investors and other users of our financial data in evaluating the effectiveness of our operations and underlying business trends.

Adjusted Operating Revenues and Adjusted EBITDA should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance with GAAP. Our calculation of Adjusted EBITDA, as presented, may differ from similarly titled measures reported by other companies.

*Adjusted EBITDA Margin is calculated by dividing Adjusted EBITDA by Adjusted Operating Revenues.