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

Attached files

file	filename
EX-99.3 - DISCUSSION OF EBITDA, FREE CASH FLOW, NET DEBT TO EBITDA AND ADJUSTING ITEMS - AT&T INC.	ex99_3.htm
EX-99.1 - AT&T INC. 4Q-2015 NEWS RELEASE - AT&T INC.	ex99_1.htm
8-K - AT&T INC. 4TH QUARTER 2015 EARNINGS RELEASE - AT&T INC.	q4earning8k.htm

Financial Data

AT&T Inc.
Consolidated Statements of Income
Dollars in millions except per share amounts
Unaudited	Three Months Ended									Twelve Months Ended
	12/31/2015			12/31/2014			% Chg			12/31/2015			12/31/2014			% Chg

Operating Revenues
Service	$	37,635		$	29,315			28.4	%	$	131,677		$	118,437			11.2	%
Equipment		4,484			5,124			-12.5	%		15,124			14,010			8.0	%
Total Operating Revenues		42,119			34,439			22.3	%		146,801			132,447			10.8	%

Operating Expenses
Cost of services and sales
Equipment		5,868			6,443			-8.9	%		19,268			18,946			1.7	%
Broadcast, programming and operations		5,645			1,056			-			11,996			4,075			-
Other cost of services (exclusive of depreciation and amortization shown separately below)		8,178			10,957			-25.4	%		35,782			37,124			-3.6	%
Selling, general and administrative		8,419			14,765			-43.0	%		32,954			39,697			-17.0	%
Abandonment of network assets		-			2,120			-			-			2,120			-
Depreciation and amortization		6,477			4,567			41.8	%		22,016			18,273			20.5	%
Total Operating Expenses		34,587			39,908			-13.3	%		122,016			120,235			1.5	%
Operating Income (Loss)		7,532			(5,469	)		-			24,785			12,212			-
Interest Expense		1,143			856			33.5	%		4,120			3,613			14.0	%
Equity in Net Income (Loss) of Affiliates		31			(13	)		-			79			175			-54.9	%
Other Income (Expense) - Net		(113	)		125			-			(52	)		1,581			-
Income (Loss) Before Income Taxes		6,307			(6,213	)		-			20,692			10,355			99.8	%
Income Tax Expense (Benefit)		2,221			(2,295	)		-			7,005			3,619			93.6	%
Net Income (Loss)		4,086			(3,918	)		-			13,687			6,736			-
Less: Net Income Attributable to Noncontrolling Interest		(80	)		(81	)		1.2	%		(342	)		(294	)		-16.3	%
Net Income (Loss) Attributable to AT&T	$	4,006		$	(3,999	)		-		$	13,345		$	6,442			-


Basic Earnings Per Share Attributable to AT&T	$	0.65		$	(0.77	)		-		$	2.37		$	1.24			91.1	%
Weighted Average Common Shares Outstanding (000,000)		6,165			5,198			18.6	%		5,628			5,205			8.1	%

Diluted Earnings Per Share Attributable to AT&T	$	0.65		$	(0.77	)		-		$	2.37		$	1.24			91.1	%
Weighted Average Common Shares Outstanding with Dilution (000,000)		6,187			5,214			18.7	%		5,646			5,221			8.1	%

Financial Data

AT&T Inc.
Statements of Segment Income
Dollars in millions
Unaudited
	Three Months Ended									Twelve Months Ended
	12/31/2015			12/31/2014			% Chg			12/31/2015			12/31/2014			% Chg
Business Solutions
Segment Operating Revenues
Wireless service	$	7,684		$	7,589			1.3	%	$	30,687		$	30,182			1.7	%
Fixed strategic services		2,827			2,563			10.3	%		10,910			9,666			12.9	%
Legacy voice and data services		4,276			4,802			-11.0	%		18,019			19,857			-9.3	%
Other service and equipment		973			1,026			-5.2	%		3,558			3,860			-7.8	%
Wireless equipment		2,454			2,749			-10.7	%		7,953			7,041			13.0	%
Total Segment Operating Revenues		18,214			18,729			-2.7	%		71,127			70,606			0.7	%

Segment Operating Expenses
Operations and support expenses		11,980			12,990			-7.8	%		44,946			45,826			-1.9	%
Depreciation and amortization		2,513			2,346			7.1	%		9,789			9,355			4.6	%
Total Segment Operating Expenses		14,493			15,336			-5.5	%		54,735			55,181			-0.8	%
Segment Operating Income		3,721			3,393			9.7	%		16,392			15,425			6.3	%
Equity in Net Income of Affiliates		-			-			-			-			-			-
Segment Contribution	$	3,721		$	3,393			9.7	%	$	16,392		$	15,425			6.3	%

Segment Operating Income Margin		20.4	%		18.1	%					23.0	%		21.8	%

Entertainment Group
Segment Operating Revenues
Video entertainment	$	9,247		$	1,810			-		$	20,271		$	6,826			-
High-speed Internet		1,740			1,482			17.4	%		6,601			5,522			19.5	%
Legacy voice and data services		1,367			1,695			-19.4	%		5,914			7,592			-22.1	%
Other service and equipment		640			606			5.6	%		2,508			2,293			9.4	%
Total Segment Operating Revenues		12,994			5,593			-			35,294			22,233			58.7	%

Segment Operating Expenses
Operations and support expenses		10,123			4,810			-			28,345			18,992			49.2	%
Depreciation and amortization		1,426			1,077			32.4	%		4,945			4,473			10.6	%
Total Segment Operating Expenses		11,549			5,887			96.2	%		33,290			23,465			41.9	%
Segment Operating Income (Loss)		1,445			(294	)		-			2,004			(1,232	)		-
Equity in Net Income (Loss) of Affiliates		12			(2	)		-			(4	)		(2	)		-
Segment Contribution	$	1,457		$	(296	)		-		$	2,000		$	(1,234	)		-

Segment Operating Income Margin		11.1	%		-5.3	%					5.7	%		-5.5	%

Financial Data

AT&T Inc.
Statements of Segment Income
Dollars in millions
Unaudited
	Three Months Ended									Twelve Months Ended
	12/31/2015			12/31/2014			% Chg			12/31/2015			12/31/2014			% Chg
Consumer Mobility
Segment Operating Revenues
Postpaid wireless service	$	5,247		$	5,792			-9.4	%	$	22,030		$	24,282			-9.3	%
Prepaid wireless service		1,251			1,099			13.8	%		4,662			4,205			10.9	%
Other service revenue		633			595			6.4	%		2,458			2,363			4.0	%
Equipment		1,618			2,036			-20.5	%		5,916			5,919			-0.1	%
Total Segment Operating Revenues		8,749			9,522			-8.1	%		35,066			36,769			-4.6	%

Segment Operating Expenses
Operations and support expenses		5,669			6,718			-15.6	%		21,477			23,891			-10.1	%
Depreciation and amortization		939			981			-4.3	%		3,851			3,827			0.6	%
Total Segment Operating Expenses		6,608			7,699			-14.2	%		25,328			27,718			-8.6	%
Segment Operating Income		2,141			1,823			17.4	%		9,738			9,051			7.6	%
Equity in Net Income (Loss) of Affiliates		-			-			-			-			(1	)		-
Segment Contribution	$	2,141		$	1,823			17.4	%	$	9,738		$	9,050			7.6	%

Segment Operating Income Margin		24.5	%		19.1	%					27.8	%		24.6	%

International
Segment Operating Revenues
Video entertainment	$	1,206		$	-			-		$	2,151		$	-			-
Wireless service		494			-			-			1,647			-			-
Wireless equipment		149			-			-			304			-			-
Total Segment Operating Revenues		1,849			-			-			4,102			-			-

Segment Operating Expenses
Operations and support expenses		1,799			-			-			3,930			-			-
Depreciation and amortization		309			-			-			655			-			-
Total Segment Operating Expenses		2,108			-			-			4,585			-			-
Segment Operating Income (Loss)		(259	)		-			-			(483	)		-			-
Equity in Net Income (Loss) of Affiliates		(1	)		-			-			(5	)		153			-
Segment Contribution	$	(260	)	$	-			-		$	(488	)	$	153			-

Segment Operating Income Margin		-14.0	%								-11.8	%

Financial Data

AT&T Inc.
Consolidated Balance Sheets
Dollars in millions
Unaudited	December 31,
		2015			2014

Assets
Current Assets
Cash and cash equivalents		$	5,121		$	8,603
Accounts receivable - net of allowances for doubtful accounts of $704 and $454			16,532			14,527
Prepaid expenses			1,072			831
Other current assets			13,267			9,645
Total current assets			35,992			33,606
Property, Plant and Equipment - Net			124,450			112,898
Goodwill			104,568			69,692
Licenses			93,093			60,824
Customer Lists and Relationships - Net			18,208			812
Other Intangible Assets - Net			9,409			5,327
Investments in Equity Affiliates			1,606			250
Other Assets			14,485			13,425
Total Assets		$	401,811		$	296,834

Liabilities and Stockholders' Equity
Current Liabilities
Debt maturing within one year		$	7,636		$	6,056
Accounts payable and accrued liabilities			30,372			23,592
Advanced billing and customer deposits			4,682			4,105
Accrued taxes			2,176			1,091
Dividends payable			2,950			2,438
Total current liabilities			47,816			37,282
Long-Term Debt			118,515			75,778
Deferred Credits and Other Noncurrent Liabilities
Deferred income taxes			55,319			38,436
Postemployment benefit obligation			34,262			37,079
Other noncurrent liabilities			22,259			17,989
Total deferred credits and other noncurrent liabilities			111,840			93,504
Stockholders' Equity
Common stock			6,495			6,495
Additional paid-in capital			89,763			91,108
Retained earnings			33,671			31,081
Treasury stock			(12,592	)		(47,029	)
Accumulated other comprehensive income			5,334			8,061
Noncontrolling interest			969			554
Total stockholders' equity			123,640			90,270
Total Liabilities and Stockholders' Equity		$	401,811		$	296,834

Financial Data

AT&T Inc.
Consolidated Statements of Cash Flows
Dollars in millions
(Unaudited)
	Twelve months ended December 31,
	2015			2014

Operating Activities
Net income	$	13,687		$	6,736
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization		22,016			18,273
Undistributed earnings from investments in equity affiliates		(49	)		(27	)
Provision for uncollectible accounts		1,416			1,032
Deferred income tax expense		4,117			1,948
Net loss (gain) from sale of investments, net of impairments		91			(1,461	)
Actuarial (gain) loss on pension and postretirement benefits		(2,152	)		7,869
Abandonment of network assets		-			2,120
Changes in operating assets and liabilities:
Accounts receivable		(535	)		(2,651	)
Other current assets		(1,789	)		(974	)
Accounts payable and accrued liabilities		1,291			2,412
Retirement benefit funding		(735	)		(560	)
Other - net		(1,478	)		(3,379	)
Total adjustments		22,193			24,602
Net Cash Provided by Operating Activities		35,880			31,338

Investing Activities
Construction and capital expenditures:
Capital expenditures		(19,218	)		(21,199	)
Interest during construction		(797	)		(234	)
Acquisitions, net of cash acquired		(30,759	)		(3,141	)
Dispositions		83			8,123
Sales (purchases) of securities, net		1,545			(1,890	)
Return of advances to and investments in equity affiliates		1			4
Other		1			-
Net Cash Used in Investing Activities		(49,144	)		(18,337	)

Financing Activities
Net change in short-term borrowings with
original maturities of three months or less		(1	)		(16	)
Issuance of long-term debt		33,969			15,926
Repayment of long-term debt		(10,042	)		(10,400	)
Issuance of other long-term financing obligations		-			107
Purchase of treasury stock		(269	)		(1,617	)
Issuance of treasury stock		143			39
Dividends paid		(10,200	)		(9,552	)
Other		(3,818	)		(2,224	)
Net Cash Provided by (Used in) Financing Activities		9,782			(7,737	)
Net (decrease) increase in cash and cash equivalents		(3,482	)		5,264
Cash and cash equivalents beginning of year		8,603			3,339
Cash and Cash Equivalents End of Year	$	5,121		$	8,603

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									Twelve Months Ended
	12/31/2015			12/31/2014			% Chg			12/31/2015			12/31/2014			% Chg
Business Solutions Wireless Subscribers											73,659			65,114			13.1	%
Postpaid											48,290			45,160			6.9	%
Reseller											85			11			-
Connected Devices¹											25,284			19,943			26.8	%

Business Solutions Wireless Net Adds		1,563			1,863			-16.1	%		6,531			5,509			18.6	%
Postpaid		353			566			-37.6	%		1,203			2,064			-41.7	%
Reseller		(1	)		2			-			13			6			-
Connected Devices¹		1,211			1,295			-6.5	%		5,315			3,439			54.6	%

Business Wireless Postpaid Churn		1.10	%		1.08	%	2		BP		0.99	%		0.90	%	9		BP

Consumer Mobility Subscribers											54,981			55,440			-0.8	%
Postpaid											28,814			30,610			-5.9	%
Prepaid¹											11,548			9,965			15.9	%
Reseller											13,690			13,844			-1.1	%
Connected Devices¹											929			1,021			-9.0	%

Consumer Mobility Net Adds		671			42			-			1,528			99			-
Postpaid		174			288			-39.6	%		463			1,226			-62.2	%
Prepaid¹		469			(67	)		-			1,364			(311	)		-
Reseller		50			(65	)		-			(168	)		(351	)		52.1	%
Connected Devices¹		(22	)		(114	)		80.7	%		(131	)		(465	)		71.8	%

Consumer Mobility Postpaid Churn		1.31	%		1.43	%	-12		BP		1.25	%		1.22	%	3		BP
Total Consumer Mobility Churn		1.97	%		2.21	%	-24		BP		1.94	%		2.06	%	-12		BP

Entertainment Group											52,182			34,366			51.8	%
Video Connections											25,398			5,920			-
Satellite											19,784			-			-
U-verse											5,614			5,920			-5.2	%

Video Net Adds		(26	)		72			-			(66	)		663			-
Satellite		214			-			-			240			-			-
U-verse		(240	)		72			-			(306	)		663			-

Broadband Connections											14,286			14,444			-1.1	%
IP											12,356			11,383			8.5	%
DSL											1,930			3,061			-36.9	%

Broadband Net Adds		(37	)		(21	)		-76.2	%		(157	)		131			-
IP		171			372			-54.0	%		973			1,899			-48.8	%
DSL		(208	)		(393	)		47.1	%		(1,130	)		(1,768	)		36.1	%

Total Wireline Voice Connections											12,498			14,002			-10.7	%

AT&T International
Wireless Subscribers and Connections
Subscribers											8,684			-			-
Net Adds		593			-			-			(96	)		-			-
Total Churn		5.67	%		-			-			6.38	%		-			-

Video Subscribers and Connections
Latin America Video Subscribers		(34	)		-			-			12,510			-			-
Pan Americana		60			-			-			7,066			-			-
Brazil		(94	)		-			-			5,444			-			-

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									Twelve Months Ended
	12/31/2015			12/31/2014			% Chg			12/31/2015			12/31/2014			% Chg
AT&T Total Susbscribers and Connections
AT&T Mobility Subscribers											128,640			120,554			6.7	%
Postpaid¹											77,105			75,770			1.8	%
Prepaid¹											11,548			9,965			15.9	%
Reseller											13,774			13,855			-0.6	%
Connected Devices¹											26,213			20,964			25.0	%

AT&T Mobility Net Adds		2,234			1,905			17.3	%		8,059			5,608			43.7	%
Postpaid¹		526			854			-38.4	%		1,666			3,290			-49.4	%
Prepaid¹		469			(67	)		-			1,364			(311	)		-
Reseller		50			(65	)		-			(155	)		(346	)		55.2	%
Connected Devices¹		1,189			1,183			0.5	%		5,184			2,975			74.3	%
M&A Activity, Partitioned Customers and Other Adjs.		-			(1	)		-			27			4,570			-

AT&T Mobility Churn
Postpaid Churn		1.18	%		1.22	%	-4		BP		1.09	%		1.04	%	5		BP
Total Churn		1.50	%		1.59	%	-9		BP		1.39	%		1.45	%	-6		BP

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

Total Video Subscribers											37,934			5,943			-
Domestic											25,424			5,943			-
Pan Americana											7,066			-			-
Brazil											5,444			-			-

Total Video Net Adds		(60	)		(124	)		51.6	%		(210	)		483			-
Domestic		(26	)		(124	)		79.0	%		(63	)		483			-
Pan Americana		60			-			-			76			-			-
Brazil		(94	)		-			-			(223	)		-			-

Total Broadband Connections											15,778			16,028			-1.6	%
IP											13,268			12,205			8.7	%
DSL											2,510			3,823			-34.3	%

Broadband Net Adds		(54	)		(458	)		88.2	%		(250	)		(397	)		37.0	%
IP		192			107			79.4	%		1,063			1,830			-41.9	%
DSL		(246	)		(565	)		56.5	%		(1,313	)		(2,227	)		41.0	%

Total Wireline Voice Connections											22,123			24,778			-10.7	%

AT&T Inc.
Construction and capital expenditures:
Capital expenditures	$	5,862		$	4,370			34.1	%	$	19,218		$	21,199			-9.3	%
Interest during construction	$	231		$	56			-		$	797		$	234			-
Dividends Declared per Share	$	0.48		$	0.47			2.1	%	$	1.89		$	1.85			2.2	%
End of Period Common Shares Outstanding (000,000)											6,145			5,187			18.5	%
Debt Ratio^1,2											50.5	%		47.5	%	300		BP
Total Employees											281,450			243,620			15.5	%

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.
	Note: For the end of 4Q15, total switched access lines were 16,670.
		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									Twelve Months Ended
	12/31/2015			12/31/2014			% Chg			12/31/2015			12/31/2014			% Chg
AT&T Mobility
Operating Revenues
Service	$	14,815		$	15,074			-1.7	%	$	59,837		$	61,032			-2.0	%
Equipment		4,071			4,785			-14.9	%		13,868			12,960			7.0	%
Total Segment Operating Revenues		18,886			19,859			-4.9	%		73,705			73,992			-0.4	%

Operating Expenses
Operations and support expenses		12,479			14,327			-12.9	%		45,789			48,348			-5.3	%
Depreciation and amortization		2,031			1,959			3.7	%		8,113			7,744			4.8	%
Total Operating Expenses		14,510			16,286			-10.9	%		53,902			56,092			-3.9	%
Operating Income		4,376			3,573			22.5	%		19,803			17,900			10.6	%
Equity in Net Income (Loss) of Affiliates		-			-			-			-			(1	)		-
Income	$	4,376		$	3,573			22.5	%	$	19,803		$	17,899			10.6	%

Operating Income Margin		23.2	%		18.0	%					26.9	%		24.2	%

Financial Data

AT&T Inc.
Segment Supplemental - QTD
Dollars in millions
Unaudited

For the three months ended December 31, 2015
	Revenues		Operations and Support Expenses			EBITDA			Depreciation and Amortization		Operating Income (Loss)			Equity in Net Income of Affiliates			Segment Contribution
Business Solutions	$	18,214	$	11,980		$	6,234		$	2,513	$	3,721		$	-		$	3,721
Entertainment Group		12,994		10,123			2,871			1,426		1,445			12			1,457
Consumer Mobility		8,749		5,669			3,080			939		2,141			-			2,141
International		1,849		1,799			50			309		(259	)		(1	)		(260	)
Segment Total	$	41,806	$	29,571		$	12,235		$	5,187	$	7,048		$	11		$	7,059
Corporate and Other		313		272			41			17		24
Acquisition-related items		-		383			(383	)		1,273		(1,656	)
Certain Significant items		-		(2,116	)		2,116			-		2,116
AT&T Inc.	$	42,119	$	28,110		$	14,009		$	6,477	$	7,532

For the three months ended December 31, 2014
	Revenues		Operations and Support Expenses			EBITDA			Depreciation and Amortization		Operating Income (Loss)			Equity in Net Income of Affiliates			Segment Contribution
Business Solutions	$	18,729	$	12,990		$	5,739		$	2,346	$	3,393		$	-		$	3,393
Entertainment Group		5,593		4,810			783			1,077		(294	)		(2	)		(296	)
Consumer Mobility		9,522		6,718			2,804			981		1,823			-			1,823
International		-		-			-			-		-			-			-
Segment Total	$	33,844	$	24,518		$	9,326		$	4,404	$	4,922		$	(2	)	$	4,920
Corporate and Other		595		444			151			28		123
Acquisition-related items		-		382			(382	)		109		(491	)
Certain Significant items		-		9,997			(9,997	)		26		(10,023	)
AT&T Inc.	$	34,439	$	35,341		$	(902	)	$	4,567	$	(5,469	)

Financial Data

AT&T Inc.
Segment Supplemental - YTD
Dollars in millions
Unaudited

For the year ended December 31, 2015
	Revenues			Operations and Support Expenses			EBITDA			Depreciation and Amortization		Operating Income (Loss)			Equity in Net Income of Affiliates			Segment Contribution
Business Solutions	$	71,127		$	44,946		$	26,181		$	9,789	$	16,392		$	-		$	16,392
Entertainment Group		35,294			28,345			6,949			4,945		2,004			(4	)		2,000
Consumer Mobility		35,066			21,477			13,589			3,851		9,738			-			9,738
International		4,102			3,930			172			655		(483	)		(5	)		(488	)
Segment Total	$	145,589		$	98,698		$	46,891		$	19,240	$	27,651		$	(9	)	$	27,642
Corporate and Other		1,297			1,057			240			64		176
Acquisition-related items		(85	)		1,987			(2,072	)		2,712		(4,784	)
Certain Significant items		-			(1,742	)		1,742			-		1,742
AT&T Inc.	$	146,801		$	100,000		$	46,801		$	22,016	$	24,785

For the year ended December 31, 2014
	Revenues			Operations and Support Expenses			EBITDA			Depreciation and Amortization		Operating Income (Loss)			Equity in Net Income of Affiliates			Segment Contribution
Business Solutions	$	70,606		$	45,826		$	24,780		$	9,355	$	15,425		$	-		$	15,425
Entertainment Group		22,233			18,992			3,241			4,473		(1,232	)		(2	)		(1,234	)
Consumer Mobility		36,769			23,891			12,878			3,827		9,051			(1	)		9,050
International		-			-			-			-		-			153			153
Segment Total	$	129,608		$	88,709		$	40,899		$	17,655	$	23,244		$	150		$	23,394
Corporate and Other		2,839			2,471			368			105		263
Acquisition-related items		-			785			(785	)		487		(1,272	)
Certain Significant items		-			9,997			(9,997	)		26		(10,023	)
AT&T Inc.	$	132,447		$	101,962		$	30,485		$	18,273	$	12,212

Financial Data

AT&T Inc.
Non-GAAP Consolidated Reconciliation
Adjusted Operating Revenues and Adjusted Consolidated EBITDA¹
Dollars in millions
Unaudited
	Three Months Ended						Twelve Months Ended
	December 31,						December 31,
	2014			2015			2014			2015
Reported Operating Revenues	$	34,439		$	42,119		$	132,447		$	146,801
Adjustments:
DIRECTV deferred revenue⁵		-			-			-			85
Adjusted Operating Revenues	$	34,439		$	42,119		$	132,447		$	146,886

Reported Operating Income	$	(5,469	)	$	7,532		$	12,212		$	24,785
Plus: Depreciation and Amortization		4,567			6,477			18,273			22,016
EBITDA²	$	(902	)	$	14,009		$	30,485		$	46,801
Adjustments:
Actuarial (gain)/loss on benefit plans		7,869			(2,152	)		7,869			(2,152	)
Wireless merger integration costs³		299			79			648			645
Leap network decommissioning		-			55			-			669
DIRECTV/Mexico merger integration items⁴		89			249			131			757
Employee separation costs		-			36			-			375
Abandonment of network assets		2,120			-			2,120			-
Other		8			-			8			35
Adjusted EBITDA	$	9,483		$	12,276		$	41,261		$	47,130

Adjusted EBITDA Margin*		27.5	%		29.1	%		31.2	%		32.1	%

¹ 2014 Adjusted Consolidated EBITDA has been restated to reflect the change in accounting for customer set-up and installation costs. ² EBITDA is defined as operating income before depreciation and amortization. ³ Adjustments include Operations and Support expenses for domestic wireless integration costs. ⁴ Adjustments include DIRECTV merger integration items and Operations and Support expenses for international wireless integration costs. ⁵ Adjustment 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 from operating revenues and operating expenses certain significant items that are non-operational or 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.

Financial Data

AT&T Inc.
Non-GAAP Consolidated Reconciliation
Adjusted Operating Revenues, Adjusted Operating Income and Margin¹
Dollars in millions
Unaudited
	Three Months Ended						Twelve Months Ended
	December 31,						December 31,
	2014			2015			2014			2015
Reported Operating Revenues	$	34,439		$	42,119		$	132,447		$	146,801
Adjustments:
DIRECTV deferred revenue⁴		-			-			-			85
Adjusted Operating Revenues (Loss)	$	34,439		$	42,119		$	132,447		$	146,886

Reported Operating Income	$	(5,469	)	$	7,532		$	12,212		$	24,785
Adjustments:
Actuarial (gain)/loss on benefit plans		7,869			(2,152	)		7,869			(2,152	)
Amortization of intangible assets		38			1,273			135			2,557
Wireless merger integration costs²		299			79			648			645
Leap network decommissioning		-			55			-			669
DIRECTV/Mexico merger integration items³		89			249			131			757
Employee separation costs		-			36			-			375
Abandonment of network assets		2,120			-			2,120			-
Other		34			-			34			35
Adjusted Operating Income	$	4,980		$	7,072		$	23,149		$	27,671

Adjusted Operating Income Margin*		14.5	%		16.8	%		17.5	%		18.8	%

¹ 2014 Adjusted Operating Income and Margin have been restated to reflect the change in accounting for customer set-up and installation costs. ² Adjustments include Operations and Support expenses for domestic wireless integration costs. ³ Adjustments include DIRECTV merger integration items and Operations and Support expenses for international wireless integration costs. ⁴ Adjustments 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, including dispositions and merger integration and transaction costs. Management believes that these measures provide relevant and useful information to investors and other users of our financial data in evaluating the effectiveness of our operations and underlying business trends. Adjusted Operating Income and Margin exclude all actuarial gains or losses ($2.2 billion gain in 2015) associated with our pension and postemployment benefit plans, which we immediately recognize in the income statement, pursuant to our accounting policy for the recognition of actuarial gains/losses. As a result, Adjusted Operating Income and Margin reflect an expected return on plan assets of $3.7 billion (based on an average expected return on plan assets of 7.75% for our pension trust and 5.75% for our VEBA trusts), rather than the actual return on plan assets of $3.1 billion (actual pension return of 1.1% and VEBA return of 0.9%), as included in the GAAP measure of income. 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
Capital Investment
Dollars in millions
Unaudited
				Three Months						Twelve Months
				Ended						Ended
				December 31,						December 31,
				2015						2015

Reported construction and capital expenditures				$	6,093					$	20,015
Add: Vendor financing for capital investments in Mexico					684						684
Capital Investment				$	6,777					$	20,699


Free Cash Flow
Dollars in millions
Unaudited
	Three Months Ended						Twelve Months Ended
	December 31,						December 31,
	2014				2015			2014			2015

Net cash provided by operating activities	$	5,745		$	9,185		$	31,338		$	35,880
Less: Construction and capital expenditures		(4,426	)		(6,093	)		(21,433	)		(20,015	)
Free Cash Flow	$	1,319		$	3,092		$	9,905		$	15,865


Free Cash Flow after Dividends
Dollars in millions
Unaudited
	Three Months Ended						Twelve Months Ended
	December 31,						December 31,
		2014			2015			2014			2015

Net cash provided by operating activities	$	5,745		$	9,185		$	31,338		$	35,880
Less: Construction and capital expenditures		(4,426	)		(6,093	)		(21,433	)		(20,015	)
Free Cash Flow		1,319			3,092			9,905			15,865

Less: Dividends paid		(2,382	)		(2,889	)		(9,552	)		(10,200	)

Free Cash Flow after Dividends	$	(1,063	)	$	203		$	353		$	5,665

Free Cash Flow Dividend Payout Ratio								96	%		64	%

Capital Investment is a non-GAAP financial measure calculated by including accrued long-term financing arrangements for capital improvements of the wireless network in Mexico. These favorable payment terms are considered vendor financing arrangements and are reported as repayments of debt instead of capital expenditures. Management believes that Capital Investment provides relevant and useful information to investors and other users of our financial data in evaluating the investment in our business. 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			12/31/15			YTD 2015

Pro Forma Net Income	$	3,580		$	2,645		$	2,985		$	4,006		$	13,216
Add Back:
Taxes		1,577			2,193			1,653			2,221			7,644
Interest Expense, Equity In Net Income of Affiliates and Other Income (Expense) - net, and Noncontrolling Interest		1,231			1,252			1,325			1,305			5,113
Depreciation and amortization		6,245			5,762			6,678			6,477			25,162
Pro Forma Consolidated EBITDA		12,633			11,852			12,641			14,009			51,135
Add Back:
Actuarial gain on benefit plans		-			-			-			(2,152	)		(2,152	)
Wireless merger integration costs²		209			215			142			79			645
Leap network decommissioning		-			364			250			55			669
DIRECTV/Mexico merger integration items³		89			116			303			249			757
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			13,517			13,351			12,240			52,117
Pro Forma Annualized Adjusted Consolidated EBITDA													$	52,117
End-of-period current debt														7,636
End-of-period long-term debt														118,515
Total End-of-Period Debt														126,151
Less Cash and Cash Equivalents														5,121
Less Bank Securities – Certificates of Deposit & Time Deposits														401
Net Debt Balance													$	120,629
Pro Forma Annualized Net-Debt-to-Adjusted-EBITDA Ratio														2.31

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 year ended December 31, 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 $166 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 and certificates of deposit and time deposits that are greater than 90 days from the sum of debt maturing within one year and long-term debt. 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 EPS¹
Unaudited

	Three Months Ended						Twelve Months Ended
	December 31,						December 31,
	2014			2015			2014			2015

Reported Diluted EPS	$	(0.77	)	$	0.65		$	1.24		$	2.37
Adjustments:
Actuarial (gain)/loss on benefit plans		0.94			(0.22	)		0.94			(0.24	)
Amortization of intangible assets		0.01			0.14			0.02			0.30
Merger and integration items²		0.05			0.04			0.10			0.18
Leap network decommissioning		-			0.01			-			0.08
Employee separation costs		-			-			-			0.04
Abandonment of network assets		0.25			-			0.25			-
Early debt redemption costs		-			-			0.02			-
America Movil - Gain on AMX shares sale		-			-			(0.08	)		-
Other³		0.08			0.01			0.07			(0.02	)
Adjusted Diluted EPS	$	0.56		$	0.63		$	2.56		$	2.71
Year-over-year growth - Adjusted					12.5	%					5.9	%
Weighted Average Common Shares Outstanding
with Dilution (000,000)		5,214			6,187			5,221			5,646

¹ 2014 Adjusted Diluted EPS has been restated to reflect the change in accounting for customer set-up and installation costs. ² 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. ³ Includes the loss on divestiture of Connecticut Wireline Properties and other asset write-off costs.

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
	12/31/14			3/31/15			6/30/15			9/30/15			12/31/15

Segment Operating Revenues
Total Segment Operating Revenues	$	18,729		$	17,557		$	17,664		$	17,692		$	18,214

Segment Operating Income		3,393			4,142			4,232			4,297			3,721
Segment Operating Income Margin		18.1	%		23.6	%		24.0	%		24.3	%		20.4	%

Plus: Depreciation and amortization		2,346			2,342			2,460			2,474			2,513
EBITDA¹	$	5,739		$	6,484		$	6,692		$	6,771		$	6,234
EBITDA as a % of Revenues		30.6	%		36.9	%		37.9	%		38.3	%		34.2	%


Entertainment Group Segment EBITDA
	Three Months Ended
	12/31/14			3/31/15			6/30/15			9/30/15			12/31/15

Segment Operating Revenues
Total Segment Operating Revenues	$	5,593		$	5,660		$	5,782		$	10,858		$	12,994

Segment Operating Income (Loss)		(294	)		(264	)		(196	)		1,019			1,445
Segment Operating Income Margin		-5.3	%		-4.7	%		-3.4	%		9.4	%		11.1	%

Plus: Depreciation and amortization		1,077			1,065			1,065			1,389			1,426
EBITDA¹	$	783		$	801		$	869		$	2,408		$	2,871
EBITDA as a % of Revenues		14.0	%		14.2	%		15.0	%		22.2	%		22.1	%

¹ For AT&T, EBITDA is defined as operating income before depreciation and amortization. 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 Segment Reconciliation
Consumer Mobility Segment EBITDA
Dollars in millions
Unaudited
	Three Months Ended
	12/31/14			3/31/15			6/30/15			9/30/15			12/31/15

Segment Operating Revenues
Total Segment Operating Revenues	$	9,522		$	8,778		$	8,755		$	8,784		$	8,749

Segment Operating Income		1,823			2,235			2,618			2,743			2,141
Segment Operating Income Margin		19.1	%		25.5	%		29.9	%		31.2	%		24.5	%

Plus: Depreciation and amortization		981			1,002			934			976			939
EBITDA¹	$	2,804		$	3,237		$	3,552		$	3,719		$	3,080
EBITDA as a % of Revenues		29.4	%		36.9	%		40.6	%		42.3	%		35.2	%


International Segment EBITDA
	Three Months Ended
	12/31/14			3/31/15			6/30/15			9/30/15			12/31/15

Segment Operating Revenues
Total Segment Operating Revenues	$	-		$	236		$	491		$	1,526		$	1,849

Segment Operating Income (Loss)		-			(10	)		(131	)		(83	)		(259	)
Segment Operating Income Margin		-			-4.2	%		-26.7	%		-5.4	%		-14.0	%

Plus: Depreciation and amortization		-			28			93			225			309
EBITDA¹	$	-		$	18		$	(38	)	$	142		$	50
EBITDA as a % of Revenues		-			7.6	%		-7.7	%		9.3	%		2.7	%

¹ For AT&T, EBITDA is defined as operating income before depreciation and amortization. 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
	12/31/14			3/31/15			6/30/15			9/30/15			12/31/15

Operating Revenues
Service Revenues	$	15,074		$	14,812		$	15,115		$	15,095		$	14,815
Equipment Revenues		4,785			3,374			3,189			3,234			4,071
Total Operating Revenues	$	19,859		$	18,186		$	18,304		$	18,329		$	18,886

Operating Income		3,573			4,710			5,298			5,418			4,376
Operating Income Margin		18.0	%		25.9	%		28.9	%		29.6	%		23.2	%

Plus: Depreciation and amortization		1,959			2,005			2,031			2,046			2,031
EBITDA¹	$	5,532		$	6,715		$	7,329		$	7,464		$	6,407
YoY Growth														15.8	%
EBITDA as a % of Revenues		27.9	%		36.9	%		40.0	%		40.7	%		33.9	%
EBITDA as a % of Service Revenues		36.7	%		45.3	%		48.5	%		49.4	%		43.2	%


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

Operating Revenues
Total Operating Revenues	$	-		$	236		$	491		$	581		$	643

Operating Income (Loss)		-			(10	)		(131	)		(134	)		(258	)
Operating Income Margin		-			-4.2	%		-26.7	%		-23.1	%		-40.1	%

Plus: Depreciation and amortization		-			28			93			67			89
EBITDA¹	$	-		$	18		$	(38	)	$	(67	)	$	(169	)
EBITDA as a % of Revenues		-			7.6	%		-7.7	%		-11.5	%		-26.3	%

¹ For 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.

AT&T INC. - FORM 8-K - EX-99.2 - AT&T INC. SELECTED FINANCIAL STATEMENTS AND OPERATING DATA - January 26, 2016

Attached files

AT&T INC. Reports