AT&T INC. - FORM 8-K - EX-99.3 - AT&T INC. DISCUSSION AND RECONCILIATION OF NON-GAAP MEASURES.

Attached files

file	filename
8-K - AT&T 4TH QUARTER 2018 EARNINGS RELEASE - AT&T INC.	q4earning8k.htm
EX-99.2 - AT&T INC. 4TH QUARTER 2018 SELECTED FINANCIAL STATEMENTS AND OPERATING DATA - AT&T INC.	ex99_2.htm
EX-99.1 - AT&T INC. PRESS RELEASE DATED JANUARY 30, 2019 REPORTING FINANCIAL RESULTS FOR T - AT&T INC.	ex99_1.htm

EXHIBIT 99.3

Discussion and Reconciliation of Non-GAAP Measures

We believe the following measures are relevant and useful information to investors as they are part of AT&T's internal management reporting and planning processes and are important metrics that management uses to evaluate the operating performance of AT&T and its segments. Management also uses these measures as a method of comparing performance with that of many of our competitors.

Certain amounts have been conformed to the current period's presentation, including our adoption of new accounting standards; ASU No. 2017-07, "Compensation – Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost," ASU No. 2016-15, "Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments," and ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash; and our revised operating segments.

Free Cash Flow

Free cash flow is defined as cash from operations minus Capital expenditures. Free cash flow after dividends is defined as cash from operations minus 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 views free cash flow as an important indicator of how much cash is generated by routine 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.

Free Cash Flow and Free Cash Flow Dividend Payout Ratio
Dollars in millions
		Fourth Quarter				Year Ended
		2018		2017		2018		2017
Net cash provided by operating activities	$	12,080	$	9,537	$	43,602	$	38,010
Less: Capital expenditures		(4,152)		(5,076)		(21,251)		(21,550)
Free Cash Flow		7,928		4,461		22,351		16,460

Less: Dividends paid		(3,635)		(3,008)		(13,410)		(12,038)
Free Cash Flow after Dividends	$	4,293	$	1,453	$	8,941	$	4,422
Free Cash Flow Dividend Payout Ratio		45.9%		67.4%		60.0%		73.1%

EBITDA

Our calculation of EBITDA, as presented, may differ from similarly titled measures reported by other companies. For AT&T, EBITDA excludes other income (expense) – net, and equity in net income (loss) of affiliates, as these do not reflect the operating results of our subscriber base or operations that are not under our control. Equity in net income (loss) of affiliates represents the proportionate share of the net income (loss) of affiliates in which we exercise significant influence, but do not control. Because we do not control these entities, management excludes these results when evaluating the performance of our primary operations. EBITDA also excludes interest expense and the provision for income taxes. Excluding these items eliminates the expenses associated with our capital and tax structures. Finally, EBITDA excludes depreciation and amortization in order to eliminate the impact of capital investments. 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 U.S. generally accepted accounting principles (GAAP).

EBITDA service margin is calculated as EBITDA divided by service revenues.

When discussing our segment, business unit and supplemental results, EBITDA excludes equity in net income (loss) of affiliates, and depreciation and amortization from operating contribution.

These measures are used by management as a gauge of our success in acquiring, retaining and servicing subscribers because we believe these measures reflect AT&T's ability to generate and grow subscriber revenues while providing a high level of customer service in a cost-effective manner. Management also uses these measures as a method of comparing operating performance with that of many of its competitors. The financial and operating metrics which affect EBITDA include the key revenue and expense drivers for which management is responsible and upon which we evaluate performance.

We believe EBITDA Service Margin (EBITDA as a percentage of service revenues) to be a more relevant measure than EBITDA Margin (EBITDA as a percentage of total revenue) for our Mobility business unit operating margin. We also use wireless service revenues to calculate margin to facilitate comparison, both internally and externally with our wireless competitors, as they calculate their margins using wireless service revenues as well.

There are material limitations to using these non-GAAP financial measures. EBITDA, EBITDA margin and EBITDA service margin, as we have defined them, may not be comparable to similarly titled measures reported by other companies. Furthermore, these performance measures do not take into account certain significant items, including depreciation and amortization, interest expense, tax expense and equity in net income (loss) of affiliates. Management compensates for these limitations by carefully analyzing how its competitors present performance measures that are similar in nature to EBITDA as we present it, and considering the economic effect of the excluded expense items independently as well as in connection with its analysis of net income as calculated in accordance with GAAP. EBITDA, EBITDA margin and EBITDA service margin should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance with GAAP.

EBITDA, EBITDA Margin and EBITDA Service Margin
Dollars in millions
		Fourth Quarter				Year Ended
		2018		2017		2018		2017
Net Income	$	5,130	$	19,136	$	19,953	$	29,847
Additions:
Income Tax (Benefit) Expense		615		(20,419)		4,920		(14,708)
Interest Expense		2,112		1,926		7,957		6,300
Equity in Net (Income) Loss of Affiliates		(23)		(20)		48		128
Other (Income) Expense - Net		(1,674)		658		(6,782)		(1,597)
Depreciation and amortization		7,892		6,071		28,430		24,387
EBITDA		14,052		7,352		54,526		44,357

Total Operating Revenues		47,993		41,676		170,756		160,546
Service Revenues		42,496		36,225		152,345		145,597

EBITDA Margin		29.3%		17.6%		31.9%		27.6%
EBITDA Service Margin		33.1%		20.3%		35.8%		30.5%

Supplemental Historical EBITDA, EBITDA Margin and EBITDA Service Margin
Dollars in millions
		Fourth Quarter		Year Ended
		2018		2018
Net Income	$	4,690	$	18,157
Additions:
Income Tax (Benefit) Expense		472		4,337
Interest Expense		2,112		7,957
Equity in Net (Income) Loss of Affiliates		(23)		48
Other (Income) Expense - Net		(1,674)		(6,782)
Depreciation and amortization		7,892		28,430
EBITDA		13,469		52,147

Total Operating Revenues		48,857		174,303
Service Revenues		43,931		157,979

EBITDA Margin		27.6%		29.9%
EBITDA Service Margin		30.7%		33.0%

Segment and Business Unit EBITDA, EBITDA Margin and EBITDA Service Margin
Dollars in millions
		Fourth Quarter				Year Ended
		2018		2017		2018		2017
Communications Segment
Operating Contribution	$	7,639	$	6,864	$	32,262	$	31,685
Additions:
Equity in Net (Income) Loss of Affiliates		1		2		4		2
Depreciation and amortization		4,604		4,600		18,424		18,425
EBITDA		12,244		11,466		50,690		50,112

Total Operating Revenues		37,458		39,110		144,631		150,378

Operating Income Margin		20.4%		17.6%		22.3%		21.1%
EBITDA Margin		32.7%		29.3%		35.0%		33.3%
Mobility
Operating Contribution	$	5,455	$	4,275	$	21,722	$	20,204
Additions:
Equity in Net (Income) of Affiliates		-		-		1		-
Depreciation and amortization		2,068		2,027		8,355		8,015
EBITDA		7,523		6,302		30,078		28,219

Total Operating Revenues		18,769		19,168		71,344		71,090
Service Revenues		13,859		14,282		54,933		57,696

Operating Income Margin		29.1%		22.3%		30.4%		28.4%
EBITDA Margin		40.1%		32.9%		42.2%		39.7%
EBITDA Service Margin		54.3%		44.1%		54.8%		48.9%

Entertainment Group
Operating Contribution	$	825	$	1,001	$	4,713	$	5,471
Additions:
Equity in Net (Income) Loss of Affiliates		1		-		2		-
Depreciation and amortization		1,329		1,367		5,315		5,621
EBITDA		2,155		2,368		10,030		11,092

Total Operating Revenues		11,962		12,560		46,460		49,995

Operating Income Margin		6.9%		8.0%		10.1%		10.9%
EBITDA Margin		18.0%		18.9%		21.6%		22.2%
Business Wireline
Operating Contribution	$	1,359	$	1,588	$	5,827	$	6,010
Additions:
Equity in Net (Income) Loss of Affiliates		-		2		1		2
Depreciation and amortization		1,207		1,206		4,754		4,789
EBITDA		2,566		2,796		10,582		10,801

Total Operating Revenues		6,727		7,382		26,827		29,293

Operating Income Margin		20.2%		21.5%		21.7%		20.5%
EBITDA Margin		38.1%		37.9%		39.4%		36.9%

Segment and Business Unit EBITDA, EBITDA Margin and EBITDA Service Margin
Dollars in millions
		Fourth Quarter				Year Ended
		2018		2017		2018		2017
WarnerMedia Segment
Operating Contribution	$	2,703	$	41	$	5,695	$	62
Additions:
Equity in Net (Income) of Affiliates		(80)		6		(25)		29
Depreciation and amortization		139		1		305		4
EBITDA		2,762		48		5,975		95

Total Operating Revenues		9,232		107		18,941		430
Operating Income Margin		28.4%		43.9%		29.9%		21.2%
EBITDA Margin		29.9%		44.9%		31.5%		22.1%

Turner
Operating Contribution	$	1,306	$	61	$	3,108	$	140
Additions:
Equity in Net (Income) of Affiliates		(15)		(13)		(54)		(45)
Depreciation and amortization		60		1		131		4
EBITDA		1,351		49		3,185		99

Total Operating Revenues		3,212		107		6,979		430
Operating Income Margin		40.2%		44.9%		43.8%		22.1%
EBITDA Margin		42.1%		45.8%		45.6%		23.0%

Home Box Office
Operating Contribution	$	650	$	-	$	1,384	$	-
Additions:
Equity in Net (Income) Loss of Affiliates		(28)		-		(29)		-
Depreciation and amortization		26		-		56		-
EBITDA		648		-		1,411		-

Total Operating Revenues		1,673		-		3,598		-

Operating Income Margin		37.2%		-		37.7%		-
EBITDA Margin		38.7%		-		39.2%		-
Warner Bros.
Operating Contribution	$	807	$	-	$	1,449	$	-
Additions:
Equity in Net (Income) Loss of Affiliates		4		-		28		-
Depreciation and amortization		42		-		96		-
EBITDA		853		-		1,573		-

Total Operating Revenues		4,476		-		8,703		-

Operating Income Margin		18.1%		-		17.0%		-
EBITDA Margin		19.1%		-		18.1%		-

Segment and Business Unit EBITDA, EBITDA Margin and EBITDA Service Margin
Dollars in millions
		Fourth Quarter				Year Ended
		2018		2017		2018		2017
Latin America Segment
Operating Contribution	$	(248)	$	(9)	$	(710)	$	(266)
Additions:
Equity in Net (Income) of Affiliates		(10)		(25)		(34)		(87)
Depreciation and amortization		296		313		1,238		1,218
EBITDA		38		279		494		865

Total Operating Revenues		1,843		2,215		7,652		8,269

Operating Income Margin		-14.0%		-1.5%		-9.7%		-4.3%
EBITDA Margin		2.1%		12.6%		6.5%		10.5%

Vrio
Operating Contribution	$	66	$	160	$	347	$	522
Additions:
Equity in Net (Income) of Affiliates		(10)		(25)		(34)		(87)
Depreciation and amortization		169		207		728		849
EBITDA		225		342		1,041		1,284

Total Operating Revenues		1,074		1,391		4,784		5,456

Operating Income Margin		5.2%		9.7%		6.5%		8.0%
EBITDA Margin		20.9%		24.6%		21.8%		23.5%

Mexico
Operating Contribution	$	(314)	$	(169)	$	(1,057)	$	(788)
Additions:
Depreciation and amortization		127		106		510		369
EBITDA		(187)		(63)		(547)		(419)

Total Operating Revenues		769		824		2,868		2,813

Operating Income Margin		-40.8%		-20.5%		-36.9%		-28.0%
EBITDA Margin		-24.3%		-7.6%		-19.1%		-14.9%


Segment EBITDA, EBITDA Margin and EBITDA Service Margin
Dollars in millions
		Fourth Quarter				Year Ended
		2018		2017		2018		2017
Xandr
Operating Contribution	$	381	$	329	$	1,333	$	1,202
Additions:
Depreciation and amortization		5		1		9		2
EBITDA		386		330		1,342		1,204

Total Operating Revenues		566		381		1,740		1,373

Operating Income Margin		67.3%		86.4%		76.6%		87.5%
EBITDA Margin		68.2%		86.6%		77.1%		87.7%

Adjusting Items

Adjusting items include revenues and costs we consider nonoperational in nature, such as items arising from asset acquisitions or dispositions. We also adjust for net actuarial gains or losses associated with our pension and postemployment benefit plans due to the often significant impact on our fourth-quarter results, unless earlier remeasurement is required (we immediately recognize this gain or loss in the income statement, pursuant to our accounting policy for the recognition of actuarial gains and losses.) Consequently, our adjusted results reflect an expected return on plan assets rather than the actual return on plan assets, as included in the GAAP measure of income.

The tax impact of adjusting items is calculated using the effective tax rate during the quarter except for adjustments that, given their magnitude, can drive a change in the effective tax rate, reflect the actual tax expense or combined marginal rate of approximately 38% for transactions prior to tax reform and 25% for transactions after tax reform.

Adjusting Items
Dollars in millions
		Fourth Quarter				Year Ended
		2018		2017		2018		2017
Operating Revenues
Time Warner deferred revenue	$	49	$	-	$	49	$	-
Natural disaster revenue credits		-		154		-		243
Adjustments to Operating Revenues		49		154		49		243
Operating Expenses
Time Warner and other merger costs		436		63		1,185		214
Employee separation costs		327		177		587		445
Natural disaster costs		77		265		181		384
Asset abandonments and impairments		46		2,914		46		2,914
Holding losses on benefit-related investments		42		-		42		-
DIRECTV merger integration costs		-		95		-		412
Mexico merger integration costs		-		19		-		172
Tax reform special bonus		-		220		-		220
(Gain) loss on transfer of wireless spectrum		-		-		-		(181)
Foreign currency exchange		-		-		43		98
Adjustments to Operations and Support Expenses		928		3,753		2,084		4,678
Amortization of intangible assets		2,261		1,100		6,930		4,608
Impairments		26		33		26		33
Adjustments to Operating Expenses		3,215		4,886		9,040		9,319
Other
Merger-related interest and fees¹		-		432		1,029		1,104
Actuarial (gain) loss		(686)		1,517		(3,412)		1,258
Holding losses on benefit-related investments		208		-		208		-
(Gain) loss on sale of assets, impairments and other adjustments		(352)		161		(631)		382
Adjustments to Income Before Income Taxes		2,434		7,150		6,283		12,306
Tax impact of adjustments		412		1,908		1,177		3,625
Tax-related items		601		19,455		505		19,309
Adjustments to Net Income	$	1,421	$	(14,213)	$	4,601	$	(10,628)
¹Includes interest expense incurred on debt issued, redemption premiums and interest income earned on cash held prior to the close of merger transactions.

Adjusted Operating Income, Adjusted Operating Income Margin, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBITDA service margin and Adjusted diluted EPS are non-GAAP financial measures calculated by excluding from operating revenues, operating expenses and income tax expense certain 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 Revenues, Adjusted Operating Income, Adjusted Operating Income Margin, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBITDA service margin and 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. AT&T's calculation of Adjusted items, as presented, may differ from similarly titled measures reported by other companies.

Adjusted Operating Income, Adjusted Operating Income Margin, Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted EBITDA Service Margin
Dollars in millions
		Fourth Quarter				Year Ended
		2018		2017		2018		2017
Operating Income	$	6,160	$	1,281	$	26,096	$	19,970
Adjustments to Operating Revenues		49		154		49		243
Adjustments to Operating Expenses		3,215		4,886		9,040		9,319
Adjusted Operating Income		9,424		6,321		35,185		29,532

EBITDA		14,052		7,352		54,526		44,357
Adjustments to Operating Revenues		49		154		49		243
Adjustments to Operations and Support Expenses		928		3,753		2,084		4,678
Adjusted EBITDA		15,029		11,259		56,659		49,278

Pro forma as of June 30, 2018
WarnerMedia Operating Income		-				3,047
Additions:
Depreciation and amortization		-				339
Merger costs		-				694
WarnerMedia Adjusted EBITDA		-				4,080
WarnerMedia segment income (post acquisition)		-				(451)
WarnerMedia segment depreciation and amortization (post acquisition)		-				(30)
WarnerMedia merger costs (post acquisition)		-				(159)
Film and television cost amortization (release prior to June 14)		-				1,103
Pro Forma Adjusted EBITDA ¹		15,029				61,202

Total Operating Revenues		47,993		41,676		170,756		160,546
Adjustments to Operating Revenues		49		154		49		243
Total Adjusted Operating Revenue		48,042		41,830		170,805		160,789
Service Revenues		42,496		36,225		152,345		145,597
Adjustments to Service Revenues		49		154		49		243
Adjusted Service Revenue		42,545		36,379		152,394		145,840


Operating Income Margin		12.8%		3.1%		15.3%		12.4%
Adjusted Operating Income Margin		19.6%		15.1%		20.6%		18.4%
Adjusted EBITDA Margin		31.3%		26.9%		33.2%		30.6%
Adjusted EBITDA Service Margin		35.3%		30.9%		37.2%		33.8%

Supplemental Results under Historical Accounting Method
Operating Income		5,577				23,717
Adjustments to Operating Revenues		49				49
Adjustments to Operating Expenses		3,215				9,040
Adjusted Supplemental Operating Income		8,841				32,806

EBITDA		13,469				52,147
Adjustments to Operating Revenues		49				49
Adjustments to Operations and Support Expenses		928				2,084
Adjusted Supplemental EBITDA		14,446				54,280

Supplemental Operating Revenues		48,857				174,303

Adjusted Supplemental Operating Income Margin		18.1%				18.8%
Adjusted Supplemental EBITDA margin		29.6%				31.1%
¹Pro Forma Adjusted EBITDA reflects the combined results operations of the combined company based on the historical financial statements of AT&T and Time Warner, after giving effect to the merger and certain adjustments, and is intended to reflect the impact of the Time Warner acquisition on AT&T. WarnerMedia operating income, depreciation and amortization expense and merger costs are provided on Item 7.01 Form 8-K filed by AT&T on July 24, 2018. Pro Forma adjustments are to (1) remove the duplication of operating results for the 16-period in which AT&T also reported Time Warner results and (2) to recognize the purchase accounting classification of released content as intangible assets and accordingly reclassify associated content amortization from operating expense to amortization expense. Intercompany revenue and expense eliminations net and do not impact EBITDA.

Adjusted Diluted EPS

		Fourth Quarter				Year Ended
		2018		2017		2018		2017
Diluted Earnings Per Share (EPS)	$	0.66	$	3.08	$	2.85	$	4.76
Amortization of intangible assets		0.25		0.12		0.81		0.50
Merger integration items¹		0.06		0.07		0.26		0.21
(Gain) loss on sale of assets, impairments and other adjustments²		0.04		0.48		0.05		0.58
Actuarial (gain) loss³		(0.07)		0.19		(0.38)		0.16
Tax-related items		(0.08)		(3.16)		(0.07)		(3.16)
Adjusted EPS	$	0.86	$	0.78	$	3.52	$	3.05
Year-over-year growth - Adjusted		10.3%				15.4%
Weighted Average Common Shares Outstanding with Dilution (000,000)		7,328		6,182		6,806		6,183
¹Includes combined merger integration items and merger-related interest income and expense, and redemption premiums.
²Includes gains on transactions, natural disaster adjustments and charges, and employee-related and other costs.
³Includes adjustments for actuarial gains or losses associated with our postemployment benefit plans, which we immediately recognize in the income statement, pursuant to our accounting policy for the recognition of actuarial gains/losses. We recorded total net actuarial gains of $3.4 billion in 2018. As a result, adjusted EPS reflects an expected return on plan assets of $3.5 billion (based on an average expected return on plan assets of 7.00% for our pension trust and 5.75% for our VEBA trusts), rather than the actual return on plan assets of $1.2 billion loss (actual pension return of -1.4% and VEBA return of -4.2%), included in the GAAP measure of income.

Pro Forma Net Debt to Adjusted EBITDA

Net Debt to EBITDA ratios are non-GAAP financial measures frequently used by investors and credit rating agencies and management believes these measures provide relevant and useful information to investors and other users of our financial data. Our Net Debt to Pro Forma Adjusted EBITDA ratio is calculated by dividing the Net Debt by Annualized Pro Forma Adjusted EBITDA. 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. Annualized Pro Forma Adjusted EBITDA is calculated by annualizing the year-to-date Pro Forma Adjusted EBITDA.

Our Annualized Net Debt to Pro Forma Adjusted EBITDA ratio for the year ended December 31, 2018 reflects the benefit of amortization of prior service credits of $1,754 in Other Income (Expense) - net rather than EBITDA, consistent with treatment for consolidated reported results. Segment results continue to show this benefit as a reduction in their operating expenses, consistent with treatment prior to adoption of accounting rules in first-quarter 2018. If we had used the historical method of accounting for prior service credits, our 2018 Annualized Net Debt to Pro Forma Adjusted EBITDA Ratio would be 2.75.

Net Debt to Pro Forma Adjusted EBITDA
Dollars in millions
		Three Months Ended
		Mar. 31,		Jun. 30,		Sep. 30,		Dec. 31,		YTD 2018
		2018		2018		2018		2018		YTD 2018
Pro Forma Adjusted EBITDA¹	$	15,182	$	15,119	$	15,872	$	15,029	$	61,202
Add back severance		(51)		(133)		(76)		(327)		(587)
Net Debt Pro Forma Adjusted EBITDA		15,131		14,986		15,796		14,702		60,615
Annualized Pro Forma Adjusted EBITDA										60,615
End-of-period current debt										10,255
End-of-period long-term debt										166,250
Total End-of-Period Debt										176,505
Less: Cash and Cash Equivalents										5,204
Net Debt Balance										171,301
Annualized Net Debt to Pro Forma Adjusted EBITDA Ratio										2.83
¹Includes the purchase accounting reclassification of released content amortization of $612 million pro forma in the first quarter, $491 million pro forma and $98 million reported by AT&T in the second quarter and $772 million reported and $545 million reported by AT&T in the third and fourth quarters of 2018, respectively.

Supplemental Operational Measures

We provide a supplemental discussion of our business solutions operations that is calculated by combining our Mobility and Business Wireline operating units, and then adjusting to remove non-business operations. The following table presents a reconciliation of our supplemental Business Solutions results.

Supplemental Operational Measure
		Three Months Ended
		December 31, 2018								December 31, 2017
		Mobility		Business Wireline		Adjustments¹		Business Solutions		Mobility		Business Wireline		Adjustments¹		Business Solutions
Operating Revenues
Wireless service	$	13,859	$	-	$	(11,959)	$	1,900	$	14,282	$	-	$	(12,303)	$	1,979
Strategic services		-		3,142		-		3,142		-		3,070		-		3,070
Legacy voice and data services		-		2,521		-		2,521		-		3,251		-		3,251
Other services and equipment		-		1,064		-		1,064		-		1,061		-		1,061
Wireless equipment		4,910		-		(4,130)		780		4,886		-		(4,322)		564
Total Operating Revenues		18,769		6,727		(16,089)		9,407		19,168		7,382		(16,625)		9,925
Operations and support		11,246		4,161		(9,496)		5,911		12,866		4,586		(11,103)		6,349
EBITDA		7,523		2,566		(6,593)		3,496		6,302		2,796		(5,522)		3,576
Depreciation and amortization		2,068		1,207		(1,768)		1,507		2,027		1,206		(1,741)		1,492
Total Operating Expenses		13,314		5,368		(11,264)		7,418		14,893		5,792		(12,844)		7,841
Operating Income		5,455		1,359		(4,825)		1,989		4,275		1,590		(3,781)		2,084
Equity in net Income of Affiliates		-		-		-		-		-		(2)		1		(1)
Contribution	$	5,455	$	1,359	$	(4,825)	$	1,989	$	4,275	$	1,588	$	(3,780)	$	2,083
¹Non-business wireless reported in the Communication segment under the Mobility business unit.

Supplemental Operational Measure
		Year Ended
		December 31, 2018								December 31, 2017
		Mobility		Business Wireline		Adjustments¹		Business Solutions		Mobility		Business Wireline		Adjustments¹		Business Solutions
Operating Revenues
Wireless service	$	54,933	$	-	$	(47,536)	$	7,397	$	57,696	$	-	$	(49,687)	$	8,009
Strategic services		-		12,310		-		12,310		-		11,950		-		11,950
Legacy voice and data services		-		10,697		-		10,697		-		13,565		-		13,565
Other services and equipment		-		3,820		-		3,820		-		3,778		-		3,778
Wireless equipment		16,411		-		(13,879)		2,532		13,394		-		(11,842)		1,552
Total Operating Revenues		71,344		26,827		(61,415)		36,756		71,090		29,293		(61,529)		38,854

Operating Expenses
Operations and support		41,266		16,245		(34,792)		22,719		42,871		18,492		(36,867)		24,496
EBITDA		30,078		10,582		(26,623)		14,037		28,219		10,801		(24,662)		14,358
Depreciation and amortization		8,355		4,754		(7,158)		5,951		8,015		4,789		(6,903)		5,901
Total Operating Expenses		49,621		20,999		(41,950)		28,670		50,886		23,281		(43,770)		30,397
Operating Income		21,723		5,828		(19,465)		8,086		20,204		6,012		(17,759)		8,457
Equity in net Income of Affiliates		(1)		(1)		1		(1)		-		(2)		1		(1)
Contribution	$	21,722	$	5,827	$	(19,464)	$	8,085	$	20,204	$	6,010	$	(17,758)	$	8,456
¹Non-business wireless reported in the Communication segment under the Mobility business unit.

AT&T INC. - FORM 8-K - EX-99.3 - AT&T INC. DISCUSSION AND RECONCILIATION OF NON-GAAP MEASURES. - January 30, 2019

Attached files

AT&T INC. Reports