Segment Information

6 Months Ended

Jun. 30, 2020

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 three reportable segments: (1) Communications, (2) WarnerMedia and (3) Latin America.

We have recast our segment results for all prior periods to include our prior Xandr segment within our WarnerMedia segment.

We also evaluate segment and business unit performance based on EBITDA and/or EBITDA margin, which 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.

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 over-the-top (OTT) services, broadband and voice communications services primarily to residential customers. This segment also sells advertising on 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. Historical financial results from Xandr, previously a separate reportable segment, have been combined with the WarnerMedia segment within Eliminations and other. 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 services internationally, as well as content licensing and home entertainment.

 Warner Bros. primarily 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:

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

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

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, and (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.”

 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 of network assets and impairments 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 three months ended June 30, 2020
		Revenues			Operations and Support Expenses			EBITDA			Depreciation and Amortization			Operating Income (Loss)			Equity in Net Income (Loss) of Affiliates			Segment Contribution
Communications
Mobility	$	17,149		$	9,332		$	7,817		$	2,012		$	5,805		$	-		$	5,805
Entertainment Group		10,069			7,730			2,339			1,309			1,030			-			1,030
Business Wireline		6,374			3,779			2,595			1,318			1,277			-			1,277
Total Communications		33,592			20,841			12,751			4,639			8,112			-			8,112
WarnerMedia
Turner		2,988			1,347			1,641			69			1,572			-			1,572
Home Box Office		1,627			1,489			138			25			113			(5)			108
Warner Bros.		3,256			2,583			673			40			633			(19)			614
Eliminations and other		(1,057)			(685)			(372)			33			(405)			28			(377)
Total WarnerMedia		6,814			4,734			2,080			167			1,913			4			1,917
Latin America
Vrio		752			661			91			127			(36)			8			(28)
Mexico		480			538			(58)			115			(173)			-			(173)
Total Latin America		1,232			1,199			33			242			(209)			8			(201)
Segment Total		41,638			26,774			14,864			5,048			9,816		$	12		$	9,828
Corporate and Other
Corporate		437			933			(496)			93			(589)
Acquisition-related items		-			211			(211)			2,145			(2,356)
Certain significant items		-			3,084			(3,084)			-			(3,084)
Eliminations and consolidations		(1,125)			(869)			(256)			(1)			(255)
AT&T Inc.	$	40,950		$	30,133		$	10,817		$	7,285		$	3,532

For the three months ended June 30, 2019
		Revenues			Operations and Support Expenses			EBITDA			Depreciation and Amortization			Operating Income (Loss)			Equity in Net Income (Loss) of Affiliates			Segment Contribution
Communications
Mobility	$	17,292		$	9,522		$	7,770		$	2,003		$	5,767		$	-		$	5,767
Entertainment Group		11,368			8,515			2,853			1,339			1,514			-			1,514
Business Wireline		6,607			3,975			2,632			1,242			1,390			-			1,390
Total Communications		35,267			22,012			13,255			4,584			8,671			-			8,671
WarnerMedia
Turner		3,410			2,217			1,193			39			1,154			11			1,165
Home Box Office		1,716			1,131			585			12			573			15			588
Warner Bros.		3,389			2,918			471			31			440			-			440
Eliminations and other		320			170			150			22			128			29			157
Total WarnerMedia		8,835			6,436			2,399			104			2,295			55			2,350
Latin America
Vrio		1,032			881			151			165			(14)			12			(2)
Mexico		725			813			(88)			119			(207)			-			(207)
Total Latin America		1,757			1,694			63			284			(221)			12			(209)
Segment Total		45,859			30,142			15,717			4,972			10,745		$	67		$	10,812
Corporate and Other
Corporate		450			765			(315)			170			(485)
Acquisition-related items		(30)			316			(346)			1,960			(2,306)
Certain significant items		-			94			(94)			-			(94)
Eliminations and consolidations		(1,322)			(961)			(361)			(1)			(360)
AT&T Inc.	$	44,957		$	30,356		$	14,601		$	7,101		$	7,500

For the six months ended June 30, 2020
		Revenues			Operations and Support Expenses			EBITDA			Depreciation and Amortization			Operating Income (Loss)			Equity in Net Income (Loss) of Affiliates			Segment Contribution
Communications
Mobility	$	34,551		$	18,901		$	15,650		$	4,057		$	11,593		$	-		$	11,593
Entertainment Group		20,584			15,621			4,963			2,598			2,365			-			2,365
Business Wireline		12,706			7,730			4,976			2,619			2,357			-			2,357
Total Communications		67,841			42,252			25,589			9,274			16,315			-			16,315
WarnerMedia
Turner		6,150			3,057			3,093			138			2,955			6			2,961
Home Box Office		3,124			2,542			582			46			536			15			551
Warner Bros.		6,496			5,533			963			81			882			(27)			855
Eliminations and other		(1,108)			(711)			(397)			65			(462)			25			(437)
Total WarnerMedia		14,662			10,421			4,241			330			3,911			19			3,930
Latin America
Vrio		1,639			1,444			195			274			(79)			12			(67)
Mexico		1,183			1,252			(69)			249			(318)			-			(318)
Total Latin America		2,822			2,696			126			523			(397)			12			(385)
Segment Total		85,325			55,369			29,956			10,127			19,829		$	31		$	19,860
Corporate and Other
Corporate		825			1,807			(982)			180			(1,162)
Acquisition-related items		-			393			(393)			4,201			(4,594)
Certain significant items		-			2,426			(2,426)			-			(2,426)
Eliminations and consolidations		(2,421)			(1,791)			(630)			(1)			(629)
AT&T Inc.	$	83,729		$	58,204		$	25,525		$	14,507		$	11,018

For the six months ended June 30, 2019
		Revenues			Operations and Support Expenses			EBITDA			Depreciation and Amortization			Operating Income (Loss)			Equity in Net Income (Loss) of Affiliates			Segment Contribution
Communications
Mobility	$	34,655		$	19,563		$	15,092		$	4,016		$	11,076		$	-		$	11,076
Entertainment Group		22,696			17,042			5,654			2,662			2,992			-			2,992
Business Wireline		13,085			8,007			5,078			2,464			2,614			-			2,614
Total Communications		70,436			44,612			25,824			9,142			16,682			-			16,682
WarnerMedia
Turner		6,853			4,353			2,500			99			2,401			36			2,437
Home Box Office		3,226			2,052			1,174			34			1,140			30			1,170
Warner Bros.		6,907			5,837			1,070			83			987			6			993
Eliminations and other		654			347			307			44			263			50			313
Total WarnerMedia		17,640			12,589			5,051			260			4,791			122			4,913
Latin America
Vrio		2,099			1,747			352			334			18			12			30
Mexico		1,376			1,538			(162)			250			(412)			-			(412)
Total Latin America		3,475			3,285			190			584			(394)			12			(382)
Segment Total		91,551			60,486			31,065			9,986			21,079		$	134		$	21,213
Corporate and Other
Corporate		883			1,426			(543)			374			(917)
Acquisition-related items		(72)			389			(461)			3,948			(4,409)
Certain significant items		-			342			(342)			-			(342)
Eliminations and consolidations		(2,578)			(1,899)			(679)			(1)			(678)
AT&T Inc.	$	89,784		$	60,744		$	29,040		$	14,307		$	14,733

The following table is a reconciliation of Segment Contributions to “Income Before Income Taxes” reported on our consolidated statements of income:

			Three months ended June 30,						Six months ended June 30,
			2020			2019			2020			2019
Communications		$	8,112		$	8,671		$	16,315		$	16,682
WarnerMedia			1,917			2,350			3,930			4,913
Latin America			(201)			(209)			(385)			(382)
Segment Contribution			9,828			10,812			19,860			21,213
Reconciling Items:
Corporate and Other			(589)			(485)			(1,162)			(917)
Merger and integration items			(211)			(346)			(393)			(461)
Amortization of intangibles acquired			(2,145)			(1,960)			(4,201)			(3,948)
Impairments			(2,319)			-			(2,442)			-
Gain on spectrum transaction¹			-			-			900			-
Employee separation costs and benefit-related losses			(765)			(94)			(884)			(342)
Segment equity in net income of affiliates			(12)			(67)			(31)			(134)
Eliminations and consolidations			(255)			(360)			(629)			(678)
AT&T Operating Income			3,532			7,500			11,018			14,733
Interest Expense			2,041			2,149			4,059			4,290
Equity in net income (loss) of affiliates			(10)			40			(16)			33
Other income (expense) - net			1,017			(318)			1,820			(32)
Income Before Income Taxes		$	2,498		$	5,073		$	8,763		$	10,444
¹	Included as a reduction of "Selling, general and administrative expenses" in the consolidated statement of income.

The following table presents intersegment revenues by segment:

Intersegment Reconciliation
	Three months ended June 30,					Six months ended June 30,
	2020			2019		2020				2019
Intersegment Revenues
Communications	$	2		$	8	$	4		$	8
WarnerMedia		774			861		1,591			1,719
Latin America		-			-		-			-
Total Intersegment Revenues		776			869		1,595			1,727
Consolidations		349			453		826			851
Eliminations and consolidations	$	1,125		$	1,322	$	2,421		$	2,578