Note 14

Segment Information

Reportable Segments

We have two reportable segments, which we operate and manage as strategic business units and organize by products and services. We measure and evaluate our reportable segments based on segment operating income, consistent with the chief operating decision maker’s assessment of segment performance.

Corporate, eliminations and other includes unallocated corporate expenses, intersegment eliminations recorded in consolidation, the results of other businesses, such as our investments in unconsolidated businesses, pension and other employee benefit related costs, lease financing, as well as the historical results of divested operations, other adjustments and gains and losses that are not allocated in assessing segment performance due to their non-operational nature. Although such transactions are excluded from the business segment results, they are included in reported consolidated earnings. Gains and losses that are not individually significant are included in all segment results as these items are included in the chief operating decision maker’s assessment of segment performance. Effective January 1, 2014, we have also reclassified the results of certain businesses, such as development stage businesses that support our strategic initiatives, from our Wireline segment to Corporate, eliminations and other. The impact of this reclassification was not material to our consolidated financial statements or our segment results of operations.

On July 1, 2014, our Wireline segment sold a non-strategic business (see Note 2). Accordingly, the historical Wireline results for these operations have been reclassified to Corporate, eliminations and other to reflect comparable segment operating results.

The reconciliation of segment operating revenues and expenses to consolidated operating revenues and expenses below also includes those items of a non-operational nature. We exclude from segment results the effects of certain items that management does not consider in assessing segment performance, primarily because of their non-operational nature.

We have adjusted prior period consolidated and segment information, where applicable, to conform to current year presentation.

Our segments and their principal activities consist of the following:


Segment		Description
Wireless		Wireless’ communications products and services include wireless voice and data services and equipment sales, which are provided to consumer, business and government customers across the United States.

Wireline		Wireline’s voice, data and video communications products and enhanced services include broadband video and data, corporate networking solutions, data center and cloud services, security and managed network services and local and long distance voice services. We provide these products and services to consumers in the United States, as well as to carriers, businesses and government customers both in the United States and around the world.

The following table provides operating financial information for our two reportable segments:

(dollars in millions)

2014

Wireless

Wireline

Total Segments

External Operating Revenues

Retail service

69,451

–

69,451

Other service

3,104

–

3,104

Service revenue

72,555

–

72,555

Equipment

10,957

–

10,957

Other

4,021

–

4,021

Consumer retail

–

15,583

Small business

–

2,464

Mass Markets

–

18,047

Strategic services

–

8,318

Core

–

5,355

Global Enterprise

–

13,673

Global Wholesale

–

5,240

Other

–

462

Intersegment revenues

113

1,007

1,120

Total operating revenues

87,646

38,429

126,075

Cost of services and sales

28,825

21,332

50,157

Selling, general and administrative expense

23,602

8,180

31,782

Depreciation and amortization expense

8,459

7,882

16,341

Total operating expenses

60,886

37,394

98,280

Operating income

26,760

1,035

27,795

Assets

160,385

76,673

237,058

Plant, property and equipment, net

38,276

50,318

88,594

Capital expenditures

10,515

5,750

16,265


	(dollars in millions)
2013	Wireless		Wireline		Total Segments
External Operating Revenues
Retail service	$	66,282	$	–	$	66,282
Other service		2,691		–		2,691

Service revenue		68,973		–		68,973

Equipment		8,096		–		8,096
Other		3,851		–		3,851

Consumer retail		–		14,842		14,842
Small business		–		2,537		2,537

Mass Markets		–		17,379		17,379

Strategic services		–		8,129		8,129
Core		–		6,028		6,028

Global Enterprise		–		14,157		14,157

Global Wholesale		–		5,583		5,583
Other		–		442		442
Intersegment revenues		103		1,063		1,166

Total operating revenues		81,023		38,624		119,647

Cost of services and sales		23,648		21,396		45,044
Selling, general and administrative expense		23,176		8,571		31,747
Depreciation and amortization expense		8,202		8,327		16,529

Total operating expenses		55,026		38,294		93,320

Operating income	$	25,997	$	330	$	26,327


Assets	$	146,429	$	84,573	$	231,002
Plant, property and equipment, net		35,932		51,885		87,817
Capital expenditures		9,425		6,229		15,654


	(dollars in millions)
2012	Wireless		Wireline		Total Segments
External Operating Revenues
Retail service	$	61,383	$	–	$	61,383
Other service		2,290		–		2,290

Service revenue		63,673		–		63,673

Equipment		8,010		–		8,010
Other		4,096		–		4,096

Consumer retail		–		14,145		14,145
Small business		–		2,589		2,589

Mass Markets		–		16,734		16,734

Strategic services		–		7,737		7,737
Core		–		6,833		6,833

Global Enterprise		–		14,570		14,570

Global Wholesale		–		6,031		6,031
Other		–		498		498
Intersegment revenues		89		1,112		1,201

Total operating revenues		75,868		38,945		114,813

Cost of services and sales		24,490		21,657		46,147
Selling, general and administrative expense		21,650		8,860		30,510
Depreciation and amortization expense		7,960		8,424		16,384

Total operating expenses		54,100		38,941		93,041

Operating income	$	21,768	$	4	$	21,772


Assets	$	142,485	$	84,815	$	227,300
Plant, property and equipment, net		34,545		52,911		87,456
Capital expenditures		8,857		6,342		15,199

Reconciliation to Consolidated Financial Information

A reconciliation of the segment operating revenues to consolidated operating revenues is as follows:


	(dollars in millions)
Years Ended December 31,	2014		2013		2012
Operating Revenues
Total reportable segments	$	126,075	$	119,647	$	114,813
Reconciling items:
Impact of divested operations (Note 2)		256		599		835
Corporate, eliminations and other		748		304		198

Consolidated operating revenues	$	127,079	$	120,550	$	115,846

A reconciliation of the total of the reportable segments’ operating income to consolidated Income before (provision) benefit for income taxes is as follows:


	(dollars in millions)
Years Ended December 31,	2014			2013			2012
Operating Income
Total segment operating income	$	27,795		$	26,327		$	21,772
Severance, pension and benefit credits (charges) (Note 12)		(7,507	)		6,232			(7,186	)
Gain on spectrum license transactions (Note 2)		707			278			–
Litigation settlements (Note 17)		–			–			(384	)
Impact of divested operations (Note 2)		12			43			56
Other costs		(334	)		–			(276	)
Corporate, eliminations and other		(1,074	)		(912	)		(822	)

Consolidated operating income		19,599			31,968			13,160
Equity in earnings of unconsolidated businesses		1,780			142			324
Other income and (expense), net		(1,194	)		(166	)		(1,016	)
Interest expense		(4,915	)		(2,667	)		(2,571	)

Income Before (Provision) Benefit for Income Taxes	$	15,270		$	29,277		$	9,897

A reconciliation of the total of the reportable segments’ assets to consolidated assets is as follows:


	(dollars in millions)
At December 31,	2014			2013
Assets
Total reportable segments	$	237,058		$	231,002
Corporate, eliminations and other		(4,350	)		43,096

Total consolidated	$	232,708		$	274,098

Corporate, eliminations and other at December 31, 2013 is primarily comprised of cash and cash equivalents which were used to complete the Wireless Transaction on February 21, 2014.

We generally account for intersegment sales of products and services and asset transfers at current market prices. No single customer accounted for more than 10% of our total operating revenues during the years ended December 31, 2014, 2013 and 2012. International operating revenues and long-lived assets are not significant.