AT&T INC. - FORM 8-K - EX-99.1 - AT&T INC. 2ND QUARTER 2018 SELECTED FINANCIAL STATEMENTS AND OPERATING DATA

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EX-99.2 - AT&T INC. 2ND QUARTER 2018 DISCUSSION AND RECONCILIATION OF NON-GAAP MEASURES - AT&T INC.	ex99_2.htm
8-K - AT&T INC. 2ND QUARTER 2018 EARNINGS RELEASE - AT&T INC.	q2earning8k_801.htm

AT&T Inc.
Financial Data


Consolidated Statements of Income
Dollars in millions except per share amounts	Three Months Ended									Six Months Ended
Unaudited	June 30,									June 30,
	2018			2017 As Adjusted			Percent Change			2018			2017 As Adjusted			Percent Change
Operating Revenues
Service	$	33,773		$	36,538			-7.6	%	$	67,419		$	72,994			-7.6	%
Equipment		4,080			3,299			23.7	%		8,472			6,208			36.5	%
Media		1,133			-			-	%		1,133			-			-	%
Total Operating Revenues		38,986			39,837			-2.1	%		77,024			79,202			-2.7	%

Operating Expenses
Cost of revenues
Equipment		4,377			4,138			5.8	%		9,225			7,986			15.5	%
Broadcast, programming and operations		5,449			4,898			11.2	%		10,615			9,872			7.5	%
Other cost of revenues (exclusive of depreciation and amortization shown separately below)		7,632			9,569			-20.2	%		15,564			18,857			-17.5	%
Selling, general and administrative		8,684			8,559			1.5	%		16,581			17,331			-4.3	%
Depreciation and amortization		6,378			6,147			3.8	%		12,372			12,274			0.8	%
Total Operating Expenses		32,520			33,311			-2.4	%		64,357			66,320			-3.0	%
Operating Income		6,466			6,526			-0.9	%		12,667			12,882			-1.7	%
Interest Expense		(2,023	)		(1,395	)		45.0	%		(3,794	)		(2,688	)		41.1	%
Equity in Net Income (Loss) of Affiliates		(16	)		14			-	%		(7	)		(159	)		95.6	%
Other Income (Expense) - Net		2,353			925			-	%		4,055			1,413			-	%
Income Before Income Taxes		6,780			6,070			11.7	%		12,921			11,448			12.9	%
Income Tax Expense		1,532			2,056			-25.5	%		2,914			3,860			-24.5	%
Net Income		5,248			4,014			30.7	%		10,007			7,588			31.9	%
Less: Net Income Attributable to Noncontrolling Interest		(116	)		(99	)		-17.2	%		(213	)		(204	)		-4.4	%
Net Income Attributable to AT&T	$	5,132			3,915			31.1	%		9,794			7,384			32.6	%

Basic Earnings Per Share Attributable to AT&T	$	0.81			0.63			28.6	%		1.56			1.19			31.1	%
Weighted Average Common Shares Outstanding (000,000)		6,351			6,165			3.0	%		6,257			6,166			1.5	%

Diluted Earnings Per Share Attributable to AT&T	$	0.81			0.63			28.6	%		1.56			1.19			31.1	%
Weighted Average Common Shares Outstanding with Dilution (000,000)		6,374			6,184			3.1	%		6,277			6,185			1.5	%

AT&T Inc.
Financial Data


Consolidated Balance Sheets
Dollars in millions
Unaudited	Jun. 30,			Dec. 31,
	2018			2017
Assets
Current Assets
Cash and cash equivalents	$	13,523		$	50,498
Accounts receivable - net of allowances for doubtful accounts of $804 and $663		25,492			16,522
Prepaid expenses		1,966			1,369
Other current assets		14,305			10,757
Total current assets		55,286			79,146
Noncurrent Inventories and Theatrical Film and Television Production Costs		5,849			-
Property, Plant and Equipment - Net		129,556			125,222
Goodwill		143,499			105,449
Licenses		96,802			96,136
Trademarks and Trade Names - Net		24,440			7,021
Distribution Networks		17,403			-
Other Intangible Assets - Net		30,800			11,119
Investments in and Advances to Equity Affiliates		8,007			1,560
Other Assets		23,734			18,444
Total Assets	$	535,376		$	444,097

Liabilities and Stockholders' Equity
Current Liabilities
Debt maturing within one year	$	21,672		$	38,374
Accounts payable and accrued liabilities		35,488			34,470
Advanced billing and customer deposits		5,914			4,213
Accrued taxes		1,889			1,262
Dividends payable		3,630			3,070
Total current liabilities		68,593			81,389
Long-Term Debt		168,495			125,972
Deferred Credits and Other Noncurrent Liabilities
Deferred income taxes		59,665			43,207
Postemployment benefit obligation		29,476			31,775
Other noncurrent liabilities		25,017			19,747
Total deferred credits and other noncurrent liabilities		114,158			94,729
Stockholders' Equity
Common stock		7,621			6,495
Additional paid-in capital		125,960			89,563
Retained earnings		56,555			50,500
Treasury stock		(12,872	)		(12,714	)
Accumulated other comprehensive income		5,716			7,017
Noncontrolling interest		1,150			1,146
Total stockholders' equity		184,130			142,007
Total Liabilities and Stockholders' Equity	$	535,376		$	444,097

AT&T Inc.
Financial Data


Consolidated Statements of Cash Flows
Dollars in millions	Six Months Ended
Unaudited	June 30,
	2018			2017 As Adjusted
Operating Activities
Net income	$	10,007		$	7,588
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		12,372			12,274
Amortization of film and television costs		168			-
Undistributed earnings from investments in equity affiliates		235			167
Provision for uncollectible accounts		808			795
Deferred income tax expense		2,032			964
Net (gain) loss from sale of investments, net of impairments		(29	)		12
Actuarial (gain) loss on pension and postretirement benefits		(2,726	)		(259	)
Changes in operating assets and liabilities:
Accounts receivable		233			119
Other current assets, inventories and theatrical file and television production costs		1,039			470
Accounts payable and other accrued liabilities		(3,890	)		(2,761	)
Equipment installment receivables and related sales		490			525
Deferred customer contract acquisition and fulfillment costs		(1,725	)		(796	)
Retirement benefit funding		(280	)		(280	)
Other - net		442			(1,148	)
Total adjustments		9,169			10,082
Net Cash Provided by Operating Activities		19,176			17,670

Investing Activities
Capital expenditures:
Purchase of property and equipment		(10,959	)		(10,750	)
Interest during construction		(267	)		(473	)
Acquisitions, net of cash acquired		(40,715	)		1,224
Dispositions		59			51
(Purchases) sales of securities, net		(218	)		169
Advances to and investments in equity affiliates, net		(1,035	)		-
Cash collections of deferred purchase price		500			382
Net Cash Used in Investing Activities		(52,635	)		(9,397	)

Financing Activities
Net change in short-term borrowings with original maturities of three months or less		2,992			(2	)
Issuance of other short-term borrowings		4,839			-
Issuance of long-term debt		26,478			24,115
Repayment of long-term debt		(30,212	)		(6,118	)
Purchase of treasury stock		(564	)		(458	)
Issuance of treasury stock		12			24
Dividends paid		(6,144	)		(6,021	)
Other		(1,121	)		77
Net Cash (Used in) Provided by Financing Activities		(3,720	)		11,617
Net (decrease) increase in cash and cash equivalents and restricted cash		(37,179	)		19,890
Cash and cash equivalents and restricted cash beginning of year		50,932			5,935
Cash and Cash Equivalents and Restricted Cash End of Period	$	13,753		$	25,825

AT&T Inc.
Consolidated Supplementary Data


Supplementary Financial Data
Dollars in millions except per share amounts	Three Months Ended									Six Months Ended
Unaudited	June 30,						Percent			June 30,							Percent
	2018			2017			Change			2018				2017			Change
Capital expenditures
Purchase of property and equipment	$	5,002		$	4,966			0.7	%	$	10,959			$	10,750			1.9	%
Interest during construction		106			242			-56.2	%		267				473			-43.6	%
Total Capital Expenditures	$	5,108		$	5,208			-1.9	%	$	11,226			$	11,223			-	%

Dividends Declared per Share	$	0.50		$	0.49			2.0	%	$	1.00			$	0.98			2.0	%

End of Period Common Shares Outstanding (000,000)											7,261				6,140			18.3	%
Debt Ratio											50.8		%		53.3	%		-250	BP
Total Employees											273,210				260,480			4.9	%


Supplementary Operating Data
Subscribers and connections in thousands
Unaudited										June 30,							Percent
											2018				2017		Change
Wireless Subscribers
Domestic											146,889				136,102			7.9	%
Mexico											16,398				13,082			25.3	%
Total Wireless Subscribers											163,287				149,184			9.5	%

Total Branded Wireless Subscribers											109,806				104,022			5.6	%

Video Connections
Domestic											25,473				25,200			1.1	%
Latin America											13,713				13,622			0.7	%
Total Video Connections											39,186				38,822			0.9	%

Broadband Connections
IP											14,709				14,234			3.3	%
DSL											1,063				1,452			-26.8	%
Total Broadband Connections											15,772				15,686			0.5	%

Voice Connections
Network Access Lines											10,832				12,791			-15.3	%
U-verse VoIP Connections											5,449				5,853			-6.9	%
Total Retail Voice Connections											16,281				18,644			-12.7	%


	Three Months Ended									Six Months Ended
	June 30,						Percent			June 30,							Percent
		2018			2017		Change				2018				2017		Change
Wireless Net Additions
Domestic		3,064			2,298			33.3	%		5,694				4,376			30.1	%
Mexico		756			476			58.8	%		1,299				1,109			17.1	%
Total Wireless Net Additions		3,820			2,774			37.7	%		6,993				5,485			27.5	%

Total Branded Wireless Net Additions		1,280			904			41.6	%		2,138				1,639			30.4	%

Video Net Additions
Domestic		79			(199	)		-	%		203				(360	)		-	%
Latin America		140			(56	)		-	%		125				35			-	%
Total Video Net Additions		219			(255	)		-	%		328				(325	)		-	%

Broadband Net Additions
IP		72			124			-41.9	%		222				370			-40.0	%
DSL		(75	)		(133	)		43.6	%		(169	)			(289	)		41.5	%
Total Broadband Net Additions		(3	)		(9	)		66.7	%		53				81			-34.6	%

CONSUMER MOBILITY

The Consumer Mobility segment provides nationwide wireless service to consumers and wholesale and resale wireless subscribers located in the U.S. or in U.S. territories. We provide voice and data services, including high-speed internet, and video services.

Segment Results
Dollars in millions	Three Months Ended									Six Months Ended
Unaudited	June 30,						Percent			June 30,						Percent
	2018			2017			Change			2018			2017			Change
Segment Operating Revenues
Service	$	11,853		$	12,467			-4.9	%	$	23,465		$	24,932			-5.9	%
Equipment		3,016			2,624			14.9	%		6,390			4,965			28.7	%
Total Segment Operating Revenues		14,869			15,091			-1.5	%		29,855			29,897			-0.1	%

Segment Operating Expenses
Operations and support		8,085			8,636			-6.4	%		16,609			17,196			-3.4	%
Depreciation and amortization		1,806			1,716			5.2	%		3,613			3,432			5.3	%
Total Segment Operating Expenses		9,891			10,352			-4.5	%		20,222			20,628			-2.0	%
Segment Operating Income		4,978			4,739			5.0	%		9,633			9,269			3.9	%
Equity in Net Income of Affiliates		-			-			-	%		-			-			-	%
Segment Contribution	$	4,978		$	4,739			5.0	%	$	9,633		$	9,269			3.9	%

Segment Operating Income Margin		33.5	%		31.4	%		210	BP		32.3	%		31.0	%		130	BP


Supplementary Operating Data
Subscribers and connections in thousands
Unaudited										June 30,						Percent
											2018			2017		Change
Consumer Mobility Subscribers
Postpaid											65,326			65,570			-0.4	%
Prepaid											15,376			14,187			8.4	%
Branded											80,702			79,757			1.2	%
Reseller											8,484			10,182			-16.7	%
Total Consumer Mobility Subscribers											89,186			89,939			-0.8	%


	Three Months Ended									Six Months Ended
	June 30,						Percent			June 30,						Percent
		2018			2017		Change				2018			2017		Change
Consumer Mobility Net Additions
Postpaid		(49	)		(28	)		-75.0	%		(113	)		(310	)		63.5	%
Prepaid		356			267			33.3	%		548			549			-0.2	%
Branded		307			239			28.5	%		435			239			82.0	%
Reseller		(451	)		(364	)		-23.9	%		(841	)		(951	)		11.6	%
Total Consumer Mobility Net Additions		(144	)		(125	)		-15.2	%		(406	)		(712	)		43.0	%

BUSINESS SOLUTIONS

The Business Solutions segment provides services to business customers, including multinational companies; governmental and wholesale customers. We provide advanced IP-based services including Virtual Private Networks (VPN); Ethernet-related products and broadband, collectively referred to as strategic business services; as well as traditional data and voice products. We provide a complete communications solution to our business customers.

Segment Results
Dollars in millions	Three Months Ended									Six Months Ended
Unaudited	June 30,						Percent			June 30,						Percent
	2018			2017			Change			2018			2017			Change
Segment Operating Revenues
Wireless service	$	1,829		$	2,004			-8.7	%	$	3,620		$	4,007			-9.7	%
Strategic services		3,039			2,958			2.7	%		6,109			5,862			4.2	%
Legacy voice and data services		2,723			3,423			-20.4	%		5,561			6,971			-20.2	%
Other service and equipment		888			922			-3.7	%		1,727			1,800			-4.1	%
Wireless equipment		584			360			62.2	%		1,162			648			79.3	%
Total Segment Operating Revenues		9,063			9,667			-6.2	%		18,179			19,288			-5.7	%

Segment Operating Expenses
Operations and support		5,616			6,053			-7.2	%		11,210			12,051			-7.0	%
Depreciation and amortization		1,487			1,483			0.3	%		2,945			2,943			0.1	%
Total Segment Operating Expenses		7,103			7,536			-5.7	%		14,155			14,994			-5.6	%
Segment Operating Income		1,960			2,131			-8.0	%		4,024			4,294			-6.3	%
Equity in Net Income (Loss) of Affiliates		1			-			-	%		-			-			-	%
Segment Contribution	$	1,961		$	2,131			-8.0	%	$	4,024		$	4,294			-6.3	%

Segment Operating Income Margin		21.6	%		22.0	%		-40	BP		22.1	%		22.3	%		-20	BP


Supplementary Operating Data
Subscribers and connections in thousands
Unaudited										June 30,						Percent
											2018			2017		Change
Business Solutions Wireless Subscribers
Postpaid											12,046			11,432			5.4	%
Prepaid											841			-			-	%
Branded											12,887			11,432			12.7	%
Reseller											98			73			34.2	%
Connected Devices											44,718			34,658			29.0	%
Total Business Mobility Subscribers											57,703			46,163			25.0	%

Business Solutions IP Broadband Connections											1,017			992			2.5	%


	Three Months Ended									Six Months Ended
	June 30,						Percent			June 30,						Percent
		2018			2017		Change				2018			2017		Change
Business Solutions Wireless Net Additions
Postpaid		122			171			-28.7	%		235			259			-9.3	%
Prepaid		97			-			-	%		146			-			-	%
Branded		219			171			28.1	%		381			259			47.1	%
Reseller		7			(4	)		-	%		9			1			-	%
Connected Devices		2,982			2,256			32.2	%		5,710			4,828			18.3	%
Total Business Solutions Wireless Net Additions		3,208			2,423			32.4	%		6,100			5,088			19.9	%

Business Solutions IP Broadband Net Additions		(4	)		12			-	%		(8	)		16			-	%

ENTERTAINMENT GROUP

The Entertainment Group segment provides video, internet, voice communication, and interactive and targeted advertising services to customers located in the U.S. or in U.S. territories.

Segment Results
Dollars in millions	Three Months Ended									Six Months Ended
Unaudited	June 30,						Percent			June 30,						Percent
	2018			2017			Change			2018			2017			Change
Segment Operating Revenues
Video entertainment	$	8,331		$	9,153			-9.0	%	$	16,690		$	18,173			-8.2	%
High-speed internet		1,981			1,927			2.8	%		3,859			3,868			-0.2	%
Legacy voice and data services		785			981			-20.0	%		1,604			2,012			-20.3	%
Other service and equipment		553			600			-7.8	%		1,074			1,209			-11.2	%
Total Segment Operating Revenues		11,650			12,661			-8.0	%		23,227			25,262			-8.1	%

Segment Operating Expenses
Operations and support		8,852			9,561			-7.4	%		17,791			19,166			-7.2	%
Depreciation and amortization		1,346			1,458			-7.7	%		2,658			2,878			-7.6	%
Total Segment Operating Expenses		10,198			11,019			-7.5	%		20,449			22,044			-7.2	%
Segment Operating Income		1,452			1,642			-11.6	%		2,778			3,218			-13.7	%
Equity in Net Income (Loss) of Affiliates		(20	)		(12	)		-66.7	%		(11	)		(18	)		38.9	%
Segment Contribution	$	1,432		$	1,630			-12.1	%	$	2,767		$	3,200			-13.5	%

Segment Operating Income Margin		12.5	%		13.0	%		-50	BP		12.0	%		12.7	%		-70	BP


Supplementary Operating Data
Subscribers and connections in thousands
Unaudited										June 30,						Percent
											2018			2017		Change
Video Connections
Satellite											19,984			20,856			-4.2	%
U-verse											3,656			3,825			-4.4	%
DIRECTV NOW											1,809			491			-	%
Total Video Connections											25,449			25,172			1.1	%

Broadband Connections
IP											13,692			13,242			3.4	%
DSL											763			1,060			-28.0	%
Total Broadband Connections											14,455			14,302			1.1	%

Voice Connections
Retail Consumer Switched Access Lines											4,333			5,257			-17.6	%
U-verse Consumer VoIP Connections											4,950			5,439			-9.0	%
Total Retail Consumer Voice Connections											9,283			10,696			-13.2	%


	Three Months Ended									Six Months Ended
	June 30,						Percent			June 30,						Percent
		2018			2017		Change				2018			2017		Change
Video Net Additions¹
Satellite		(286	)		(156	)		-83.3	%		(474	)		(156	)		-	%
U-verse		24			(195	)		-	%		25			(428	)		-	%
DIRECTV NOW		342			152			-	%		654			224			-	%
Total Video Net Additions		80			(199	)		-	%		205			(360	)		-	%

Broadband Net Additions
IP		76			112			-32.1	%		230			354			-35.0	%
DSL		(53	)		(104	)		49.0	%		(125	)		(231	)		45.9	%
Total Broadband Net Additions		23			8			-	%		105			123			-14.6	%
¹ Includes the impact of customers that migrated to DIRECTV NOW.

INTERNATIONAL

The International segment provides entertainment services in Latin America and wireless services in Mexico. Video entertainment services are provided to primarily residential customers using satellite technology. We utilize our regional and national wireless networks in Mexico to provide consumer and business customers with wireless data and voice communication services. Our international subsidiaries conduct business in their local currency and operating results are converted to U.S. dollars using official exchange rates.

Segment Results
Dollars in millions	Three Months Ended									Six Months Ended
Unaudited	June 30,						Percent			June 30,							Percent
	2018			2017			Change				2018			2017			Change
Segment Operating Revenues
Video entertainment	$	1,254		$	1,361			-7.9	%		$	2,608		$	2,702			-3.5	%
Wireless service		417			535			-22.1	%			821			1,010			-18.7	%
Wireless equipment		280			130			115.4	%			547			243			125.1	%
Total Segment Operating Revenues		1,951			2,026			-3.7	%			3,976			3,955			0.5	%

Segment Operating Expenses
Operations and support		1,803			1,772			1.7	%			3,607			3,531			2.2	%
Depreciation and amortization		313			311			0.6	%			645			601			7.3	%
Total Segment Operating Expenses		2,116			2,083			1.6	%			4,252			4,132			2.9	%
Segment Operating Income (Loss)		(165	)		(57	)		-	%			(276	)		(177	)		-55.9	%
Equity in Net Income of Affiliates		15			25			-40.0	%			15			45			-66.7	%
Segment Contribution	$	(150	)	$	(32	)		-	%		$	(261	)	$	(132	)		-97.7	%

Segment Operating Income Margin		(8.5	) %		(2.8	) %		-570	BP			(6.9	) %		(4.5	) %		-240	BP


Supplementary Operating Data
Subscribers and connections in thousands
Unaudited										June 30,							Percent
												2018			2017		Change
Mexican Wireless Subscribers
Postpaid												5,749			5,187			10.8	%
Prepaid												10,468			7,646			36.9	%
Branded												16,217			12,833			26.4	%
Reseller												181			249			-27.3	%
Total Mexican Wireless Subscribers												16,398			13,082			25.3	%

Latin America Satellite Subscribers
Total Latin America Satellite Subscribers												13,713			13,622			0.7	%


	Three Months Ended									Six Months Ended
	June 30,						Percent			June 30,							Percent
		2018			2017		Change					2018			2017		Change
Mexican Wireless Net Additions
Postpaid		142			92			54.3	%			251			222			13.1	%
Prepaid		611			402			52.0	%			1,070			919			16.4	%
Branded		753			494			52.4	%			1,321			1,141			15.8	%
Reseller		3			(18	)		-	%			(22	)		(32	)		31.3	%
Total Mexican Wireless Net Additions		756			476			58.8	%			1,299			1,109			17.1	%

Latin America Satellite Net Additions
Total Latin America Satellite Net Additions		140			(56	)		-	%			125			35			-	%

Warner Media

The Warner Media segment consists of the results of Time Warner Inc. after we completed our acquisition June 14, 2018. Our Warner Media segment operating income margin was 35.4% for the 16-day period ended June 30, 2018. Consistent with our past practice, many of the adjustment from the application of purchase accounting rules required under GAAP have not been allocated to the business unit, instead they are reported as acquisition-related items. The Warner Media segment consists of the following businesses: Turner, consisting principally of cable networks and digital media properties; Home Box Office (HBO), consisting principally of premium pay television and OTT services; and Warner Bros., consisting principally of television, feature film, home video and game production and distribution.

Segment Results
Dollars in millions	Three Months Ended									Six Months Ended
Unaudited	June 30,						Percent			June 30,						Percent
	2018			2017			Change			2018			2017			Change
Segment Operating Revenues
Content	$	487		$	-			-	%	$	487		$	-			-	%
Subscription		591			-			-	%		591			-			-	%
Advertising		208									208
Other		51			-			-	%		51			-			-	%
Intrasegment eliminations		(62	)								(62	)
Total Segment Operating Revenues		1,275			-			-	%		1,275			-			-	%

Segment Operating Expenses
Operations and support		794			-			-	%		794			-			-	%
Depreciation and amortization		30			-			-	%		30			-			-	%
Total Segment Operating Expenses		824			-			-	%		824			-			-	%
Segment Operating Income (Loss)		451			-			-	%		451			-			-	%
Equity in Net Income of Affiliates		(6	)		-			-	%		(6	)		-			-	%
Segment Contribution	$	445		$	-			-	%	$	445		$	-			-	%
Segment Operating Income Margin		35.4	%		-	%		-	BP		35.4	%		-	%		-	BP

SUPPLEMENTAL OPERATING INFORMATION - AT&T MOBILITY

As a supplemental discussion of our operating results, for comparison purposes, we are providing a view of our combined domestic wireless operations (AT&T Mobility).

Operating Results
Dollars in millions	Three Months Ended									Six Months Ended
Unaudited	June 30,						Percent			June 30,							Percent
	2018			2017			Change				2018			2017			Change
Operating Revenues
Service	$	13,682		$	14,471			-5.5	%		$	27,085		$	28,939			-6.4	%
Equipment		3,600			2,984			20.6	%			7,552			5,613			34.5	%
Total Operating Revenues		17,282			17,455			-1.0	%			34,637			34,552			0.2	%

Operating Expenses
Operations and support		9,663			10,091			-4.2	%			19,765			19,976			-1.1	%
Depreciation and amortization		2,113			1,988			6.3	%			4,208			3,980			5.7	%
Total Operating Expenses		11,776			12,079			-2.5	%			23,973			23,956			0.1	%
Operating Income	$	5,506		$	5,376			2.4	%		$	10,664		$	10,596			0.6	%

Operating Income Margin		31.9	%		30.8	%		110	BP			30.8	%		30.7	%		10	BP


Supplementary Operating Data
Subscribers and connections in thousands
Unaudited										June 30,							Percent
												2018			2017		Change
AT&T Mobility Subscribers
Postpaid												77,372			77,002			0.5	%
Prepaid												16,217			14,187			14.3	%
Branded												93,589			91,189			2.6	%
Reseller												8,582			10,255			-16.3	%
Connected Devices												44,718			34,658			29.0	%
Total AT&T Mobility Subscribers												146,889			136,102			7.9	%

Domestic Licensed POPs (000,000)												329			326			0.9	%


	Three Months Ended									Six Months Ended
	June 30,						Percent				June 30,						Percent
		2018			2017		Change					2018			2017		Change
AT&T Mobility Net Additions
Postpaid		73			143			-49.0	%			122			(51	)		-	%
Prepaid		453			267			69.7	%			694			549			26.4	%
Branded		526			410			28.3	%			816			498			63.9	%
Reseller		(444	)		(368	)		-20.7	%			(832	)		(950	)		12.4	%
Connected Devices		2,982			2,256			32.2	%			5,710			4,828			18.3	%
Total AT&T Mobility Net Additions		3,064			2,298			33.3	%			5,694			4,376			30.1	%
M&A Activity, Partitioned Customers and Other Adjustments		(7	)		-			-	%			(6	)		(2,723	)		99.8	%

Branded Churn		1.50	%		1.57	%		-7	BP			1.57	%		1.64	%		-7	BP
Postpaid Churn		1.02	%		1.01	%		1	BP			1.04	%		1.06	%		-2	BP
Postpaid Phone Only Churn		0.82	%		0.79	%		3	BP			0.83	%		0.84	%		-1	BP

SUPPLEMENTAL SEGMENT RECONCILIATION


Three Months Ended
Dollars in millions
Unaudited

June 30, 2018
	Revenues			Operations and Support Expenses			EBITDA			Depreciation and Amortization		Operating Income (Loss)			Equity in Net Income (Loss) of Affiliates			Segment Contribution
Consumer Mobility	$	14,869		$	8,085		$	6,784		$	1,806	$	4,978		$	-		$	4,978
Business Solutions		9,063			5,616			3,447			1,487		1,960			1			1,961
Entertainment Group		11,650			8,852			2,798			1,346		1,452			(20	)		1,432
International		1,951			1,803			148			313		(165	)		15			(150	)
WarnerMedia		1,275			794			481			30		451			(6	)		445
Segment Total		38,808			25,150			13,658			4,982		8,676		$	(10	)	$	8,666
Corporate and Other		319			660			(341	)		118		(459	)
Acquisition-related items		-			321			(321	)		1,278		(1,599	)
Certain Significant items		-			152			(152	)		-		(152	)
Eliminations		(141	)		(141	)		-			-		-
AT&T Inc.	$	38,986		$	26,142		$	12,844		$	6,378	$	6,466


June 30, 2017
	Revenues			Operations and Support Expenses			EBITDA			Depreciation and Amortization		Operating Income (Loss)			Equity in Net Income (Loss) of Affiliates			Segment Contribution
Consumer Mobility	$	15,091		$	8,636		$	6,455		$	1,716	$	4,739		$	-		$	4,739
Business Solutions		9,667			6,053			3,614			1,483		2,131			-			2,131
Entertainment Group		12,661			9,561			3,100			1,458		1,642			(12	)		1,630
International		2,026			1,772			254			311		(57	)		25			(32	)
Segment Total		39,445			26,022			13,423			4,968		8,455		$	13		$	8,468
Corporate and Other		392			766			(374	)		9		(383	)
Acquisition-related items		-			281			(281	)		1,170		(1,451	)
Certain Significant items		-			95			(95	)		-		(95	)
AT&T Inc.	$	39,837		$	27,164		$	12,673		$	6,147	$	6,526



Six Months Ended
Dollars in millions
Unaudited

June 30, 2018
	Revenues			Operations and Support Expenses			EBITDA			Depreciation and Amortization		Operating Income (Loss)			Equity in Net Income (Loss) of Affiliates			Segment Contribution
Consumer Mobility	$	29,855		$	16,609		$	13,246		$	3,613	$	9,633		$	-		$	9,633
Business Solutions		18,179			11,210			6,969			2,945		4,024			-			4,024
Entertainment Group		23,227			17,791			5,436			2,658		2,778			(11	)		2,767
International		3,976			3,607			369			645		(276	)		15			(261	)
WarnerMedia		1,275			794			481			30		451			(6	)		445
Segment Total		76,512			50,011			26,501			9,891		16,610		$	(2	)	$	16,608
Corporate and Other		653			1,395			(742	)		141		(883	)
Acquisition-related items		-			388			(388	)		2,340		(2,728	)
Certain Significant items		-			332			(332	)		-		(332	)
Eliminations		(141	)		(141	)		-			-		-
AT&T Inc.	$	77,024		$	51,985		$	25,039		$	12,372	$	12,667


June 30, 2017
	Revenues			Operations and Support Expenses			EBITDA			Depreciation and Amortization		Operating Income (Loss)			Equity in Net Income (Loss) of Affiliates			Segment Contribution
Consumer Mobility	$	29,897		$	17,196		$	12,701		$	3,432	$	9,269		$	-		$	9,269
Business Solutions		19,288			12,051			7,237			2,943		4,294			-			4,294
Entertainment Group		25,262			19,166			6,096			2,878		3,218			(18	)		3,200
International		3,955			3,531			424			601		(177	)		45			(132	)
Segment Total		78,402			51,944			26,458			9,854		16,604		$	27		$	16,631
Corporate and Other		800			1,637			(837	)		48		(885	)
Acquisition-related items		-			488			(488	)		2,372		(2,860	)
Certain Significant items		-			(23	)		23			-		23
AT&T Inc.	$	79,202		$	54,046		$	25,156		$	12,274	$	12,882

As a supplemental discussion of our operating results, we are providing results under the comparative historical accounting method prior to our adoption of ASC 606 and other accounting changes.

SUPPLEMENTAL INCOME STATEMENT

Supplemental Consolidated Statements of Income
Dollars in millions except per share amounts	Three Months Ended
Unaudited	June 30,
	2018			Accounting Impact			Historical 2018			2017			Percent Change
Operating Revenues
Service	$	33,773		$	(1,390	)	$	35,163		$	36,538			-3.8	%
Equipment		4,080			469			3,611			3,299			9.5	%
Media		1,133			(2	)		1,135			-			-	%
Total Operating Revenues		38,986			(923	)		39,909			39,837			0.2	%

Operating Expenses
Cost of revenues
Equipment		4,377			-			4,377			4,138			5.8	%
Broadcast, programming and operations		5,449			-			5,449			4,898			11.2	%
Other cost of revenues (exclusive of depreciation and amortization shown separately below)		7,632			(903	)		8,535			9,569			-10.8	%
Selling, general and administrative		8,684			(583	)		9,267			8,559			8.3	%
Depreciation and amortization		6,378			-			6,378			6,147			3.8	%
Total Operating Expenses		32,520			(1,486	)		34,006			33,311			2.1	%
Operating Income		6,466			563			5,903			6,526			-9.5	%
Interest Expense		(2,023	)		-			(2,023	)		(1,395	)		45.0	%
Equity in Net Income (Loss) of Affiliates		(16	)		-			(16	)		14			-	%
Other Income (Expense) - Net		2,353			-			2,353			925			-	%
Income Before Income Taxes		6,780			563			6,217			6,070			2.4	%
Income Tax Expense		1,532			138			1,394			2,056			-32.2	%
Net Income		5,248			425			4,823			4,014			20.2	%
Less: Net Income Attributable to Noncontrolling Interest		(116	)		(6	)		(110	)		(99	)		-11.1	%
Net Income Attributable to AT&T	$	5,132		$	419		$	4,713		$	3,915			20.4	%


Basic Earnings Per Share Attributable to AT&T	$	0.81		$	0.07		$	0.74		$	0.63			17.5	%
Weighted Average Common Shares Outstanding (000,000)		6,351			-			6,351			6,165			3.0	%

Diluted Earnings Per Share Attributable to AT&T	$	0.81		$	0.07		$	0.74		$	0.63			17.5	%
Weighted Average Common Shares Outstanding with Dilution (000,000)		6,374			-			6,374			6,184			3.1	%

SUPPLEMENTAL CONSUMER MOBILITY

Supplemental Segment Results
Dollars in millions	Three Months Ended
Unaudited	June 30,
	2018			Accounting Impact			Historical 2018			2017			Percent Change
Segment Operating Revenues
Service	$	11,853		$	(603	)	$	12,456		$	12,467			-0.1	%
Equipment		3,016			291			2,725			2,624			3.8	%
Total Segment Operating Revenues		14,869			(312	)		15,181			15,091			0.6	%

Segment Operating Expenses
Operations and support		8,085			(571	)		8,656			8,636			0.2	%
EBITDA		6,784			259			6,525			6,455			1.1	%
Depreciation and amortization		1,806			-			1,806			1,716			5.2	%
Total Segment Operating Expenses		9,891			(571	)		10,462			10,352			1.1	%
Segment Operating Income		4,978			259			4,719			4,739			-0.4	%
Equity in Net Income of Affiliates		-			-			-			-			-	%
Segment Contribution	$	4,978		$	259		$	4,719		$	4,739			-0.4	%

Operating Income Margin		33.5	%					31.1	%		31.4	%		-30	BP
EBITDA Margin		45.6	%					43.0	%		42.8	%		20	BP
EBITDA Service Margin		57.2	%					52.4	%		51.8	%		60	BP

SUPPLEMENTAL BUSINESS SOLUTIONS

Supplemental Segment Results
Dollars in millions	Three Months Ended
Unaudited	June 30,
	2018			Accounting Impact			Historical 2018			2017			Percent Change
Segment Operating Revenues
Wireless service	$	1,829		$	(209	)	$	2,038		$	2,004			1.7	%
Strategic services		3,039			(2	)		3,041			2,958			2.8	%
Legacy voice and data services		2,723			(251	)		2,974			3,423			-13.1	%
Other service and equipment		888			(70	)		958			922			3.9	%
Wireless equipment		584			160			424			360			17.8	%
Total Segment Operating Revenues		9,063			(372	)		9,435			9,667			-2.4	%

Segment Operating Expenses
Operations and support		5,616			(443	)		6,059			6,053			0.1	%
EBITDA		3,447			71			3,376			3,614			-6.6	%
Depreciation and amortization		1,487			-			1,487			1,483			0.3	%
Total Segment Operating Expenses		7,103			(443	)		7,546			7,536			0.1	%
Segment Operating Income		1,960			71			1,889			2,131			-11.4	%
Equity in Net Income of Affiliates		1			-			1			-			-	%
Segment Contribution	$	1,961		$	71		$	1,890		$	2,131			-11.3	%

Operating Income Margin		21.6	%					20.0	%		22.0	%		-200	BP
EBITDA Margin		38.0	%					35.8	%		37.4	%		-160	BP

SUPPLEMENTAL ENTERTAINMENT GROUP

Supplemental Segment Results
Dollars in millions	Three Months Ended
Unaudited	June 30,
	2018			Accounting Impact			Historical 2018			2017			Percent Change
Segment Operating Revenues
Video entertainment	$	8,331		$	(107	)	$	8,438		$	9,153			-7.8	%
High-speed internet		1,981			-			1,981			1,927			2.8	%
Legacy voice and data services		785			(33	)		818			981			-16.6	%
Other service and equipment		553			(66	)		619			600			3.2	%
Total Segment Operating Revenues		11,650			(206	)		11,856			12,661			-6.4	%

Segment Operating Expenses
Operations and support		8,852			(425	)		9,277			9,561			-3.0	%
EBITDA		2,798			219			2,579			3,100			-16.8	%
Depreciation and amortization		1,346			-			1,346			1,458			-7.7	%
Total Segment Operating Expenses		10,198			(425	)		10,623			11,019			-3.6	%
Segment Operating Income		1,452			219			1,233			1,642			-24.9	%
Equity in Net Income (Loss) of Affiliates		(20	)		-			(20	)		(12	)		-66.7	%
Segment Contribution	$	1,432		$	219		$	1,213		$	1,630			-25.6	%

Operating Income Margin		12.5	%					10.4	%		13.0	%		-260	BP
EBITDA Margin		24.0	%					21.8	%		24.5	%		-270	BP

SUPPLEMENTAL INTERNATIONAL

Supplemental Segment Results
Dollars in millions	Three Months Ended
Unaudited	June 30,
	2018			Accounting Impact			Historical 2018			2017			Percent Change
Segment Operating Revenues
Video entertainment	$	1,254		$	-		$	1,254		$	1,361			-7.9	%
Wireless service		417			(40	)		457			535			-14.6	%
Wireless equipment		280			18			262			130			-	%
Total Segment Operating Revenues		1,951			(22	)		1,973			2,026			-2.6	%

Segment Operating Expenses
Operations and support		1,803			(41	)		1,844			1,772			4.1	%
EBITDA		148			19			129			254			-49.2	%
Depreciation and amortization		313			-			313			311			0.6	%
Total Segment Operating Expenses		2,116			(41	)		2,157			2,083			3.6	%
Segment Operating Income (Loss)		(165	)		19			(184	)		(57	)		-	%
Equity in Net Income of Affiliates		15			-			15			25			-40.0	%
Segment Contribution	$	(150	)	$	19		$	(169	)	$	(32	)		-	%

Operating Income Margin		-8.5	%					-9.3	%		-2.8	%		-650	BP
EBITDA Margin		7.6	%					6.5	%		12.5	%		-600	BP

SUPPLEMENTAL AT&T MOBILITY

Supplemental Operating Results
Dollars in millions	Three Months Ended
Unaudited	June 30,
	2018			Accounting Impact			Historical 2018			2017			Percent Change
Operating Revenues
Service	$	13,682		$	(813	)	$	14,495		$	14,471			0.2	%
Equipment		3,600			451			3,149			2,984			5.5	%
Total Operating Revenues		17,282			(362	)		17,644			17,455			1.1	%

Operating Expenses
Operations and support		9,663			(670	)		10,333			10,091			2.4	%
EBITDA		7,619			308			7,311			7,364			-0.7	%
Depreciation and amortization		2,113			-			2,113			1,988			6.3	%
Total Operating Expenses		11,776			(670	)		12,446			12,079			3.0	%
Operating Income	$	5,506		$	308		$	5,198		$	5,376			-3.3	%

Operating Income Margin		31.9	%					29.5	%		30.8	%		-130	BP
EBITDA Margin		44.1	%					41.4	%		42.2	%		-80	BP
EBITDA Service Margin		55.7	%					50.4	%		50.9	%		-50	BP

SUPPLEMENTAL LATIN AMERICA

Supplemental Latin America Results
Dollars in millions	Three Months Ended
Unaudited	June 30,
	2018			Accounting Impact			Historical 2018			2017			Percent Change
Operating Revenues
Video entertainment	$	1,254		$	-		$	1,254		$	1,361			-7.9	%
Total Operating Revenues		1,254			-			1,254			1,361			-7.9	%

Operating Expenses
Operations and support		1,016			(40	)		1,056			998			5.8	%
EBITDA		238			40			198			363			-45.5	%
Depreciation and amortization		186			-			186			222			-16.2	%
Total Operating Expenses		1,202			(40	)		1,242			1,220			1.8	%
Operating Income (Loss)		52			40			12			141			-91.5	%
Equity in Net Income (Loss) of Affiliates		15			-			15			25			-40.0	%
Operating Contribution	$	67		$	40		$	27		$	166			-83.7	%

Operating Income Margin		4.1	%					1.0	%		10.4	%		-940	BP
EBITDA Margin		19.0	%					15.8	%		26.7	%		-1,090	BP

SUPPLEMENTAL MEXICO

Supplemental Mexico Results
Dollars in millions	Three Months Ended
Unaudited	June 30,
	2018			Accounting Impact			Historical 2018			2017			Percent Change
Operating Revenues
Wireless service	$	417		$	(40	)	$	457		$	535			-14.6	%
Wireless equipment		280			18			262			130			-	%
Total Operating Revenues		697			(22	)		719			665			8.1	%

Operating Expenses
Operations and support		787			(1	)		788			774			1.8	%
EBITDA		(90	)		(21	)		(69	)		(109	)		36.7	%
Depreciation and amortization		127			-			127			89			42.7	%
Total Operating Expenses		914			(1	)		915			863			6.0	%
Operating Income (Loss)		(217	)		(21	)		(196	)		(198	)		1.0	%
Operating Contribution	$	(217	)	$	(21	)	$	(196	)	$	(198	)		1.0	%

Operating Income Margin		-31.1	%					-27.3	%		-29.8	%		250	BP
EBITDA Margin		-12.9	%					-9.6	%		-16.4	%		680	BP

AT&T INC. - FORM 8-K - EX-99.1 - AT&T INC. 2ND QUARTER 2018 SELECTED FINANCIAL STATEMENTS AND OPERATING DATA - July 24, 2018

Attached files

AT&T INC. Reports