Segment Information

12 Months Ended

Dec. 31, 2019

Segment Information

Segment Information [Text Block]

NOTE 4. SEGMENT INFORMATION

Our segments are strategic business units that offer products and services to different customer segments over various technology platforms and/or in different geographies that are managed accordingly. We analyze our segments based on segment operating contribution, which consists of operating income, excluding acquisition-related costs and other significant items (as discussed below), and equity in net income (loss) of affiliates for investments managed within each segment. We have four reportable segments: (1) Communications, (2) WarnerMedia, (3) Latin America, and (4) Xandr.

We also evaluate segment and business unit performance based on EBITDA and/or EBITDA margin. EBITDA is defined as operating contribution excluding equity in net income (loss) of affiliates and depreciation and amortization. We believe EBITDA to be a relevant and useful measurement to our investors as it is part of our internal management reporting and planning processes and it is an important metric that management uses to evaluate operating performance. EBITDA does not give effect to cash used for debt service requirements and thus does not reflect available funds for distributions, reinvestment or other discretionary uses. EBITDA margin is EBITDA divided by total revenues.

We have recast our segment results for all prior periods to exclude wireless and wireline operations in Puerto Rico and the U.S. Virgin Islands from our Mobility and Business Wireline business units of the Communications segment, instead reporting them with Corporate and Other (see Note 6).

The Communications segment provides wireless and wireline telecom, video and broadband services to consumers located in the U.S. and businesses globally. This segment contains the following business units:

Mobility provides nationwide wireless service and equipment.

Entertainment Group provides video, including OTT services, broadband and voice communications services primarily to residential customers. This segment also sells advertising on DIRECTV and U-verse distribution platforms.

Business Wireline provides advanced IP-based services, as well as traditional voice and data services to business customers.

The WarnerMedia segment develops, produces and distributes feature films, television, gaming and other content in various physical and digital formats globally. This segment contains the following business units:

Turner primarily operates multichannel basic television networks and digital properties. Turner also sells advertising on its networks and digital properties.

Home Box Office consists of premium pay television and OTT and streaming services domestically and premium pay, basic tier television and OTT and streaming services internationally, as well as content licensing and home entertainment.

Warner Bros. consists of the production, distribution and licensing of television programming and feature films, the distribution of home entertainment products and the production and distribution of games.

The Latin America segment provides entertainment and wireless services outside of the U.S. This segment contains the following business units:

Mexico provides wireless service and equipment to customers in Mexico.

Vrio provides video services primarily to residential customers using satellite technology in Latin America and the Caribbean.

The Xandr segment provides advertising services. These services utilize data insights to develop higher-value targeted advertising across video and digital platforms. Certain revenues in this segment are also reported by the Communications segment and are eliminated upon consolidation.

Corporate and Other reconciles our segment results to consolidated operating income and income before income taxes, and includes:

Corporate, which consists of: (1) businesses no longer integral to our operations or which we no longer actively market, (2) corporate support functions, (3) impacts of corporate-wide decisions for which the individual operating segments are not being evaluated, (4) the reclassification of the amortization of prior service credits, which we continue to report with segment operating expenses, to consolidated other income (expense) – net and (5) the recharacterization of programming intangible asset amortization, for released programming acquired in the Time Warner acquisition, which we continue to report within WarnerMedia segment operating expense, to consolidated amortization expense. The programming and intangible asset amortization reclass was $472 and $1,416 for the year ended December 31, 2019 and 2018, respectively.

Acquisition-related items which consists of items associated with the merger and integration of acquired businesses, including amortization of intangible assets.

Certain significant items includes (1) employee separation charges associated with voluntary and/or strategic offers, (2) losses resulting from abandonment or impairment of assets and (3) other items for which the segments are not being evaluated.

Eliminations and consolidations, which (1) removes transactions involving dealings between our segments, including content licensing between WarnerMedia and Communications, and (2) includes adjustments for our reporting of the advertising business.

Interest expense and other income (expense) – net, are managed only on a total company basis and are, accordingly, reflected only in consolidated results.

For the year ended December 31, 2019
		Revenues			Operations and Support Expenses			EBITDA			Depreciation and Amortization			Operating Income (Loss)			Equity in Net Income (Loss) of Affiliates			Segment Contribution
Communications
Mobility	$	71,056		$	40,681		$	30,375		$	8,054		$	22,321		$	-		$	22,321
Entertainment Group		45,126			35,028			10,098			5,276			4,822			-			4,822
Business Wireline		26,177			16,091			10,086			4,999			5,087			-			5,087
Total Communications		142,359			91,800			50,559			18,329			32,230			-			32,230
WarnerMedia
Turner		13,122			7,740			5,382			235			5,147			52			5,199
Home Box Office		6,749			4,312			2,437			102			2,335			30			2,365
Warner Bros.		14,358			11,816			2,542			162			2,380			(30)			2,350
Other		(730)			(71)			(659)			39			(698)			110			(588)
Total WarnerMedia		33,499			23,797			9,702			538			9,164			162			9,326
Latin America
Vrio		4,094			3,378			716			660			56			27			83
Mexico		2,869			3,085			(216)			502			(718)			-			(718)
Total Latin America		6,963			6,463			500			1,162			(662)			27			(635)
Xandr		2,022			646			1,376			58			1,318			-			1,318
Segment Total		184,843			122,706			62,137			20,087			42,050		$	189		$	42,239
Corporate and Other
Corporate		1,675			3,008			(1,333)			629			(1,962)
Acquisition-related items		(72)			960			(1,032)			7,460			(8,492)
Certain significant items		-			2,082			(2,082)			43			(2,125)
Eliminations and consolidations		(5,253)			(3,735)			(1,518)			(2)			(1,516)
AT&T Inc.	$	181,193		$	125,021		$	56,172		$	28,217		$	27,955

For the year ended December 31, 2018
		Revenues			Operations and Support Expenses			EBITDA			Depreciation and Amortization			Operating Income (Loss)			Equity in Net Income (Loss) of Affiliates			Segment Contribution
Communications
Mobility	$	70,521		$	40,690		$	29,831		$	8,263		$	21,568		$	-		$	21,568
Entertainment Group		46,460			36,430			10,030			5,315			4,715			-			4,715
Business Wireline		26,740			16,201			10,539			4,714			5,825			-			5,825
Total Communications		143,721			93,321			50,400			18,292			32,108			-			32,108
WarnerMedia
Turner		6,979			3,794			3,185			131			3,054			54			3,108
Home Box Office		3,598			2,187			1,411			56			1,355			29			1,384
Warner Bros.		8,703			7,130			1,573			96			1,477			(28)			1,449
Other		(339)			(145)			(194)			22			(216)			(30)			(246)
Total WarnerMedia		18,941			12,966			5,975			305			5,670			25			5,695
Latin America
Vrio		4,784			3,743			1,041			728			313			34			347
Mexico		2,868			3,415			(547)			510			(1,057)			-			(1,057)
Total Latin America		7,652			7,158			494			1,238			(744)			34			(710)
Xandr		1,740			398			1,342			9			1,333			-			1,333
Segment Total		172,054			113,843			58,211			19,844			38,367		$	59		$	38,426
Corporate and Other
Corporate		2,150			2,250			(100)			1,630			(1,730)
Acquisition-related items		(49)			1,185			(1,234)			6,931			(8,165)
Certain significant items		-			899			(899)			26			(925)
Eliminations and consolidations		(3,399)			(1,947)			(1,452)			(1)			(1,451)
AT&T Inc.	$	170,756		$	116,230		$	54,526		$	28,430		$	26,096

For the year ended December 31, 2017
		Revenues			Operations and Support Expenses			EBITDA			Depreciation and Amortization			Operating Income (Loss)			Equity in Net Income (Loss) of Affiliates			Segment Contribution
Communications
Mobility	$	70,259		$	42,317		$	27,942		$	7,931		$	20,011		$	-		$	20,011
Entertainment Group		49,995			38,903			11,092			5,621			5,471			-			5,471
Business Wireline		29,203			18,441			10,762			4,756			6,006			-			6,006
Total Communications		149,457			99,661			49,796			18,308			31,488			-			31,488
WarnerMedia
Turner		430			331			99			4			95			45			140
Home Box Office		-			-			-			-			-			-			-
Warner Bros.		-			-			-			-			-			-			-
Other		-			4			(4)			-			(4)			(74)			(78)
Total WarnerMedia		430			335			95			4			91			(29)			62
Latin America
Vrio		5,456			4,172			1,284			849			435			87			522
Mexico		2,813			3,232			(419)			369			(788)			-			(788)
Total Latin America		8,269			7,404			865			1,218			(353)			87			(266)
Xandr		1,373			169			1,204			2			1,202			-			1,202
Segment Total		159,529			107,569			51,960			19,532			32,428		$	58		$	32,486
Corporate and Other
Corporate		2,443			3,911			(1,468)			214			(1,682)
Acquisition-related items		-			798			(798)			4,608			(5,406)
Certain significant items		(243)			3,880			(4,123)			33			(4,156)
Eliminations and consolidations		(1,183)			31			(1,214)			-			(1,214)
AT&T Inc.	$	160,546		$	116,189		$	44,357		$	24,387		$	19,970

The following table is a reconciliation of operating income (loss) to Income Before Income Taxes reported in our
consolidated statements of income:

		2019			2018			2017
Communications	$	32,230		$	32,108		$	31,488
WarnerMedia		9,326			5,695			62
Latin America		(635)			(710)			(266)
Xandr		1,318			1,333			1,202
Segment Contribution		42,239			38,426			32,486
Reconciling Items:
Corporate and Other		(1,962)			(1,730)			(1,682)
Merger and integration items		(1,032)			(1,234)			(798)
Amortization of intangibles acquired		(7,460)			(6,931)			(4,608)
Abandonments and impairments		(1,458)			(46)			(2,914)
Employee separation charges		(624)			(587)			(445)
Other noncash charges (credits), net		(43)			(111)			49
Natural disaster items		-			(181)			(626)
Tax reform special bonus		-			-			(220)
Segment equity in net income of affiliates		(189)			(59)			(58)
Eliminations and consolidations		(1,516)			(1,451)			(1,214)
AT&T Operating Income		27,955			26,096			19,970
Interest Expense		8,422			7,957			6,300
Equity in net income (loss) of affiliates		6			(48)			(128)
Other income (expense) - net		(1,071)			6,782			1,597
Income Before Income Taxes	$	18,468		$	24,873		$	15,139

The following table sets forth revenues earned from customers, and property, plant and equipment located in different geographic areas.

		2019						2018						2017
		Revenues			Net Property, Plant & Equipment			Revenues			Net Property, Plant & Equipment			Revenues			Net Property, Plant & Equipment
United States	$	162,344		$	122,567		$	154,795		$	123,457		$	149,841		$	118,200
Europe		6,137			1,854			4,073			1,634			1,064			392
Mexico		3,198			3,648			3,100			3,467			2,913			3,619
Brazil		2,761			1,057			2,724			1,213			2,948			1,447
All other Latin America		3,219			544			3,055			1,217			2,743			1,294
Asia/Pacific Rim		2,651			390			2,214			408			829			194
Other		883			68			795			77			208			76
Total	$	181,193		$	130,128		$	170,756		$	131,473		$	160,546		$	125,222

The following tables present intersegment revenues, assets, investments in equity affiliates and capital expenditures by
segment.

Intersegment Reconciliation
	2019			2018			2017
Intersegment revenues
Communications	$	26		$	13		$	-
WarnerMedia		3,308			1,875			134
Latin America		-			-			-
Xandr		10			-			-
Total Intersegment Revenues		3,344			1,888			134
Consolidations		1,909			1,511			1,049
Eliminations and consolidations	$	5,253		$	3,399		$	1,183

At or for the years ended December 31,					2019					2018
				Investments in Equity Method Investees			Capital Expenditures						Investments in Equity Method Investees			Capital Expenditures

	Assets									Assets

Communications	$	521,252		$	-		$	17,410		$	485,357		$	-		$	19,509
WarnerMedia		137,264			3,011			1,013			132,453			5,547			581
Latin America		20,606			650			757			18,148			677			745
Xandr		3,116			-			192			2,718			-			106
Corporate and eliminations		(130,569)			34			263			(106,812)			21			310
Total	$	551,669		$	3,695		$	19,635		$	531,864		$	6,245		$	21,251