AT&T INC. filed this 8-K on Sep 21, 2018
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AT&T INC. (Form: 8-K, Received: 09/21/2018 06:58:47)


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549
__________________________________

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934


Date of report (Date of earliest event reported) September 21, 2018

AT&T INC.
(Exact Name of Registrant as Specified in Charter)


Delaware
1-8610
43-1301883
(State or Other Jurisdiction of Incorporation)
(Commission File Number)
(IRS Employer Identification No.)

                       208 S. Akard St., Dallas, Texas
75202
                        (Address of Principal Executive Offices)
(Zip Code)

Registrant's telephone number, including area code (210) 821-4105


__________________________________
(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 ☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 ☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 ☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240-14d-2(b))
 ☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐
Item 8.01  Other Events.

Throughout this document, AT&T Inc. is referred to as "we" or "AT&T." AT&T is a holding company whose subsidiaries and affiliates operate worldwide in the telecommunications, media and technology industries. Due to organizational changes and our June 14, 2018 acquisition of Time Warner Inc. (Time Warner), effective for the quarter ended September 30, 2018, we are revising our operating segments to align with the new management structure and organizational responsibilities.

Our new reportable segments are:

The Communications segment provides wireless and wireline telecom, video and broadband services to consumers located in the U.S. or in U.S. territories and businesses globally. This segment contains the following reporting 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 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. Historical results from AT&T's Regional Sports Network (RSN) and equity investments (predominately Game Show Network and Otter Media Holdings), previously included in Entertainment Group, have been recast into the WarnerMedia segment and are combined with the Time Warner operations for the period subsequent to our acquisition on June 14, 2018. This segment contains the following reporting units:
·
Turner is comprised of the WarnerMedia businesses managed by Turner as well as our RSN. This reporting unit creates and programs branded news, entertainment, sports and kids multi-platform content that is sold to various distribution affiliates. Turner also sells advertising on its networks and digital properties.
·
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.
·
Home Box Office consists of premium pay television and OTT services domestically and premium pay, basic tier television and OTT services internationally, as well as content licensing and home entertainment.

The Latin America segment provides entertainment and wireless services outside of the U.S. This segment contains the following reporting units:
·
Vrio provides video services to customers using satellite technology in Latin America and the Caribbean.
·
Mexico provides wireless service and equipment to customers in Mexico.

The Advertising & Analytics   segment  provides advertising services. These services utilize data insights to develop higher value targeted advertising. Certain revenues in this segment are also reported by the Communications segment and are eliminated upon consolidation.

In addition to these reportable segments, we will be providing supplemental financial information to aid in comparability to other companies that presents (1) our AT&T Business Solutions results which include both wireless and wireline operations and (2) a combined view of advertising revenues reported by AT&T.

AT&T today is making available the recasting of the historical reported segment and supplemental results, which will be included in our third-quarter 2018 earnings materials, for the quarters and year ended 2017 and for the quarters ended March 31, and June 30, 2018, which are provided as hereto. We have included Time Warner results for the 16-day period from June 15, 2018 to June 30, 2018. In accordance with U.S. generally accepted accounting principles, operating results from Time Warner prior to the acquisition are excluded.
 
CAUTIONARY LANGUAGE CONCERNING FORWARD-LOOKING STATEMENTS

Information set forth in this filing contains financial estimates and other forward-looking statements that are subject to risks and uncertainties. A discussion of factors that may affect future results is contained in AT&T's filings with the Securities and Exchange Commission. AT&T disclaims any obligation to update or revise statements contained in this filing based on new information or otherwise.
 

Item 9.01 Financial Statements and Exhibits.
 
The following exhibits are filed as part of this report:
 
(d)          Exhibits

99.1       
 
Reconciliation of Segment Contribution to consolidated Operating Income and consolidated
Income Before Income Taxes
99.2       
 
Recast quarterly segment results
99.3       
 
Supplemental AT&T Business Solutions results
99.4       
 
Supplemental AT&T Advertising revenues


 



Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
AT&T INC.
   
   
   
Date: September 21, 2018
By: /s/ Debra L. Dial                              
  Debra L. Dial
Senior Vice President and Controller
 
   

Financial Data
                                     
EX 99.1
 
AT&T Inc.
                                         
Reconciliation of Segment Contribution to consolidated Operating Income and consolidated Income Before Income Taxes
 
Dollars in millions
                                         
Unaudited
                                         
                                           
                                           
For the three months ended June 30, 2018
                               
   
Revenues
 
Operations and Support Expenses
 
EBITDA
 
Depreciation and Amortization
 
Operating Income (Loss)
 
Equity in Net Income (Loss) of Affiliates
 
Segment Contribution
Communications
                                         
Mobility
 
$
17,282
   
$
9,663
   
$
7,619
   
$
2,113
   
$
5,506
   
$
-
   
$
5,506
 
Entertainment Group
   
11,478
     
8,657
     
2,821
     
1,345
     
1,476
     
(1
)
   
1,475
 
Business Wireline
   
6,650
     
4,038
     
2,612
     
1,180
     
1,432
     
1
     
1,433
 
Total Communications
   
35,410
     
22,358
     
13,052
     
4,638
     
8,414
     
-
     
8,414
 
WarnerMedia
                                                       
Turner
   
667
     
372
     
295
     
11
     
284
     
5
     
289
 
Warner Bros.
   
507
     
403
     
104
     
14
     
90
     
(1
)
   
89
 
Home Box Office
   
281
     
171
     
110
     
5
     
105
     
(1
)
   
104
 
Eliminations and other 1
   
(62
)
   
(35
)
   
(27
)
   
1
     
(28
)
   
(29
)
   
(57
)
Total WarnerMedia
   
1,393
     
911
     
482
     
31
     
451
     
(26
)
   
425
 
Latin America
                                                       
Vrio
   
1,254
     
1,016
     
238
     
186
     
52
     
15
     
67
 
Mexico
   
697
     
787
     
(90
)
   
127
     
(217
)
   
-
     
(217
)
Total Latin America
   
1,951
     
1,803
     
148
     
313
     
(165
)
   
15
     
(150
)
Advertising & Analytics
   
392
     
59
     
333
     
-
     
333
     
-
     
333
 
Segment Total
   
39,146
     
25,131
     
14,015
     
4,982
     
9,033
   
$
(11
)
 
$
9,022
 
Corporate and Other
                                                       
Corporate
   
320
     
661
     
(341
)
   
118
     
(459
)
               
Acquisition-related items
   
-
     
321
     
(321
)
   
1,278
     
(1,599
)
               
Certain significant items
   
-
     
152
     
(152
)
   
-
     
(152
)
               
Eliminations and consolidation 2
   
(480
)
   
(123
)
   
(357
)
   
-
     
(357
)
               
AT&T Inc.
 
$
38,986
   
$
26,142
   
$
12,844
   
$
6,378
   
$
6,466
                 
                                                         
                                                         
For the six months ended June 30, 2018
                                         
   
Revenues
 
Operations and Support Expenses
 
EBITDA
 
Depreciation and Amortization
 
Operating Income (Loss)
 
Equity in Net Income (Loss) of Affiliates
 
Segment Contribution
Communications
                                                       
Mobility
 
$
34,637
   
$
19,765
   
$
14,872
   
$
4,208
   
$
10,664
   
$
-
   
$
10,664
 
Entertainment Group
   
22,909
     
17,468
     
5,441
     
2,655
     
2,786
     
(2
)
   
2,784
 
Business Wireline
   
13,397
     
8,054
     
5,343
     
2,350
     
2,993
     
-
     
2,993
 
Total Communications
   
70,943
     
45,287
     
25,656
     
9,213
     
16,443
     
(2
)
   
16,441
 
WarnerMedia
                                                       
Turner
   
779
     
446
     
333
     
12
     
321
     
32
     
353
 
Warner Bros.
   
507
     
403
     
104
     
14
     
90
     
(1
)
   
89
 
Home Box Office
   
281
     
171
     
110
     
5
     
105
     
(1
)
   
104
 
Eliminations and other 1
   
(62
)
   
(27
)
   
(35
)
   
1
     
(36
)
   
(46
)
   
(82
)
Total WarnerMedia
   
1,505
     
993
     
512
     
32
     
480
     
(16
)
   
464
 
Latin America
                                                       
Vrio
   
2,608
     
2,017
     
591
     
391
     
200
     
15
     
215
 
Mexico
   
1,368
     
1,590
     
(222
)
   
254
     
(476
)
   
-
     
(476
)
Total Latin America
   
3,976
     
3,607
     
369
     
645
     
(276
)
   
15
     
(261
)
Advertising & Analytics
   
729
     
109
     
620
     
1
     
619
     
-
     
619
 
Segment Total
   
77,153
     
49,996
     
27,157
     
9,891
     
17,266
   
$
(3
)
 
$
17,263
 
Corporate and Other
                                                       
Corporate
   
653
     
1,396
     
(743
)
   
141
     
(884
)
               
Acquisition-related items
   
-
     
388
     
(388
)
   
2,340
     
(2,728
)
               
Certain significant items
   
-
     
332
     
(332
)
   
-
     
(332
)
               
Eliminations and consolidation 2
   
(782
)
   
(127
)
   
(655
)
   
-
     
(655
)
               
AT&T Inc.
 
$
77,024
   
$
51,985
   
$
25,039
   
$
12,372
   
$
12,667
                 
                                                         
 
                                                         
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
 
$
71,090
   
$
42,871
   
$
28,219
   
$
8,015
   
$
20,204
   
$
-
   
$
20,204
 
Entertainment Group
   
49,995
     
38,903
     
11,092
     
5,621
     
5,471
     
-
     
5,471
 
Business Wireline
   
29,293
     
18,492
     
10,801
     
4,789
     
6,012
     
(2
)
   
6,010
 
Total Communications
   
150,378
     
100,266
     
50,112
     
18,425
     
31,687
     
(2
)
   
31,685
 
WarnerMedia
                                                       
Turner
   
430
     
331
     
99
     
4
     
95
     
45
     
140
 
Warner Bros.
   
-
     
-
     
-
     
-
     
-
     
-
     
-
 
Home Box Office
   
-
     
-
     
-
     
-
     
-
     
-
     
-
 
Eliminations and other 1
   
-
     
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
)
Advertising & Analytics
   
1,373
     
169
     
1,204
     
2
     
1,202
     
-
     
1,202
 
Segment Total
   
160,450
     
108,174
     
52,276
     
19,649
     
32,627
   
$
56
   
$
32,683
 
Corporate and Other
                                                       
Corporate
   
1,522
     
3,306
     
(1,784
)
   
97
     
(1,881
)
               
Acquisition-related items
   
-
     
798
     
(798
)
   
4,608
     
(5,406
)
               
Certain significant items
   
(243
)
   
3,880
     
(4,123
)
   
33
     
(4,156
)
               
Eliminations and consolidation 2
   
(1,183
)
   
31
     
(1,214
)
   
-
     
(1,214
)
               
AT&T Inc.
 
$
160,546
   
$
116,189
   
$
44,357
   
$
24,387
   
$
19,970
                 
 
 
 
Reconciliation to consolidated Income Before Income Taxes
   
Three Months Ended
 
Six Months Ended
 
Year Ended
   
June 30, 2018
 
June 30, 2018
 
December 31, 2017
Communications
 
$
8,414
   
$
16,441
   
$
31,685
 
WarnerMedia
   
425
     
464
     
62
 
Latin America
   
(150
)
   
(261
)
   
(266
)
Advertising & Analytics
   
333
     
619
     
1,202
 
Segment Contribution
   
9,022
     
17,263
     
32,683
 
Reconciling Items:
                       
Corporate
   
(459
)
   
(884
)
   
(1,881
)
Merger and integration charges
   
(321
)
   
(388
)
   
(798
)
Amortization of intangibles acquired
   
(1,278
)
   
(2,340
)
   
(4,608
)
Employee separation costs
   
(133
)
   
(184
)
   
(445
)
Tax reform special bonus
   
-
     
-
     
(220
)
Gain on wireless spectrum transactions
   
-
     
-
     
181
 
Foreign currency devaluation
   
(19
)
   
(44
)
   
-
 
Natural disaster costs and revenue credits
   
-
     
(104
)
   
(626
)
Asset abandonments and impairments
   
-
     
-
     
(3,046
)
Segment equity in net income of affiliates
   
11
     
3
     
(56
)
Eliminations and consolidation 2
   
(357
)
   
(655
)
   
(1,214
)
AT&T Operating Income
   
6,466
     
12,667
     
19,970
 
Interest expense
   
2,023
     
3,794
     
6,300
 
Equity in net income (loss) of affiliates
   
(16
)
   
(7
)
   
(128
)
Other income (expense) - net
   
2,353
     
4,055
     
1,597
 
Income Before Income Taxes
 
$
6,780
   
$
12,921
   
$
15,139
 
1 Eliminations within the WarnerMedia segment and other operations.
             
2 Eliminations and consolidation removes transactions that either involve dealings between AT&T companies, including content licensing with
  WarnerMedia, or relate to advertising arrangements recorded in both the Communications and Advertising & Analytics segments. This
  reconciling item also includes conforming adjustment to the historical presentation of our advertising business.
Financial Data
                               
EX 99.2
 
AT&T Inc.
                                   
Segment Results for the Three Months Ended
                         
Dollars in millions
                                   
Unaudited
                                   
                                     
Operating Revenues
 
3/31/2017
   
6/30/2017
   
9/30/2017
   
12/31/2017
   
3/31/2018
   
6/30/2018
 
Communications segment
                                   
Mobility
 
$
17,097
   
$
17,455
   
$
17,370
   
$
19,168
   
$
17,355
   
$
17,282
 
Entertainment Group
   
12,467
     
12,501
     
12,467
     
12,560
     
11,431
     
11,478
 
Business Wireline
   
7,330
     
7,303
     
7,278
     
7,382
     
6,747
     
6,650
 
Total Communications Segment
   
36,894
     
37,259
     
37,115
     
39,110
     
35,533
     
35,410
 
                                                 
WarnerMedia segment
                                               
Turner
   
105
     
111
     
107
     
107
     
112
     
667
 
Warner Bros.
   
-
     
-
     
-
     
-
     
-
     
507
 
Home Box Office
   
-
     
-
     
-
     
-
     
-
     
281
 
Eliminations and other 1
   
-
     
-
     
-
     
-
     
-
     
(62
)
Total WarnerMedia Segment
   
105
     
111
     
107
     
107
     
112
     
1,393
 
                                                 
Latin America segment
                                               
Vrio
   
1,341
     
1,361
     
1,363
     
1,391
     
1,354
     
1,254
 
Mexico
   
588
     
665
     
736
     
824
     
671
     
697
 
Total Latin America Segment
   
1,929
     
2,026
     
2,099
     
2,215
     
2,025
     
1,951
 
                                                 
Advertising & Analytics segment
   
321
     
338
     
333
     
381
     
337
     
392
 
                                                 
Corporate and other
                                               
Corporate
   
409
     
391
     
382
     
340
     
333
     
320
 
Certain significant items
   
-
     
-
     
(89
)
   
(154
)
   
-
     
-
 
Eliminations and consolidation 2
   
(293
)
   
(288
)
   
(279
)
   
(323
)
   
(302
)
   
(480
)
AT&T Operating Revenues
 
$
39,365
   
$
39,837
   
$
39,668
   
$
41,676
   
$
38,038
   
$
38,986
 
                                                 
                                                 
Operations and Support Expenses
 
3/31/2017
   
6/30/2017
   
9/30/2017
   
12/31/2017
   
3/31/2018
   
6/30/2018
 
Communications segment
                                               
Mobility
 
$
9,885
   
$
10,091
   
$
10,029
   
$
12,866
   
$
10,102
   
$
9,663
 
Entertainment Group
   
9,512
     
9,395
     
9,804
     
10,192
     
8,811
     
8,657
 
Business Wireline
   
4,673
     
4,598
     
4,635
     
4,586
     
4,016
     
4,038
 
Total Communications Segment
   
24,070
     
24,084
     
24,468
     
27,644
     
22,929
     
22,358
 
                                                 
WarnerMedia segment
                                               
Turner
   
63
     
113
     
97
     
58
     
74
     
372
 
Warner Bros.
   
-
     
-
     
-
     
-
     
-
     
403
 
Home Box Office
   
-
     
-
     
-
     
-
     
-
     
171
 
Eliminations and other 1
   
-
     
2
     
1
     
1
     
8
     
(35
)
Total WarnerMedia Segment
   
63
     
115
     
98
     
59
     
82
     
911
 
                                                 
Latin America segment
                                               
Vrio
   
1,050
     
998
     
1,075
     
1,049
     
1,001
     
1,016
 
Mexico
   
709
     
774
     
862
     
887
     
803
     
787
 
Total Latin America Segment
   
1,759
     
1,772
     
1,937
     
1,936
     
1,804
     
1,803
 
                                                 
Advertising & Analytics segment
   
43
     
36
     
39
     
51
     
50
     
59
 
                                                 
Corporate and other
                                               
Corporate
   
872
     
767
     
801
     
866
     
735
     
661
 
Acquisition-related items
   
207
     
281
     
134
     
176
     
67
     
321
 
Certain significant items
   
(118
)
   
95
     
325
     
3,578
     
180
     
152
 
Eliminations and consolidation 2
   
(14
)
   
14
     
17
     
14
     
(4
)
   
(123
)
AT&T Operations and
   Support Expenses
 
$
26,882
   
$
27,164
   
$
27,819
   
$
34,324
   
$
25,843
   
$
26,142
 
                                                 
 
                                                 
Segment Operating Contribution
 
3/31/2017
   
6/30/2017
   
9/30/2017
   
12/31/2017
   
3/31/2018
   
6/30/2018
 
Communications segment
                                               
Mobility
 
$
5,220
   
$
5,376
   
$
5,333
   
$
4,275
   
$
5,158
   
$
5,506
 
Entertainment Group
   
1,536
     
1,651
     
1,283
     
1,001
     
1,309
     
1,475
 
Business Wireline
   
1,473
     
1,494
     
1,455
     
1,588
     
1,560
     
1,433
 
Total Communications Segment
   
8,229
     
8,521
     
8,071
     
6,864
     
8,027
     
8,414
 
                                                 
WarnerMedia segment
                                               
Turner
   
54
     
3
     
22
     
61
     
64
     
289
 
Warner Bros.
   
-
     
-
     
-
     
-
     
-
     
89
 
Home Box Office
   
-
     
-
     
-
     
-
     
-
     
104
 
Eliminations and other 1
   
(19
)
   
(19
)
   
(20
)
   
(20
)
   
(25
)
   
(57
)
Total WarnerMedia Segment
   
35
     
(16
)
   
2
     
41
     
39
     
425
 
                                                 
Latin America segment
                                               
Vrio
   
97
     
166
     
99
     
160
     
148
     
67
 
Mexico
   
(197
)
   
(198
)
   
(224
)
   
(169
)
   
(259
)
   
(217
)
Total Latin America Segment
   
(100
)
   
(32
)
   
(125
)
   
(9
)
   
(111
)
   
(150
)
                                                 
Advertising & Analytics segment
   
278
     
301
     
294
     
329
     
286
     
333
 
                                                 
AT&T Segment Operating Contribution
 
$
8,442
   
$
8,774
   
$
8,242
   
$
7,225
   
$
8,241
   
$
9,022
 
1 Eliminations within the WarnerMedia segment and other operations.
   
2 Eliminations and consolidation removes transactions that either involve dealings between AT&T companies, including content licensing with
  WarnerMedia, or relate to advertising arrangements recorded in both the Communications and Advertising & Analytics segments. This
  reconciling item also includes conforming adjustment to the historical presentation of our advertising business.
Financial Data
                               
EX 99.3
 
AT&T Inc.
                                   
Supplemental AT&T Business Solutions Results
                         
Dollars in millions
                                   
Unaudited
                                   
                                     
Business Solutions
 
3/31/2017
   
6/30/2017
   
9/30/2017
   
12/31/2017
   
3/31/2018
   
6/30/2018
 
Operating revenues
 
$
9,621
   
$
9,667
   
$
9,641
   
$
9,926
   
$
9,116
   
$
9,063
 
                                                 
Operating Expenses
                                               
Operations and Support Expenses
   
5,998
     
6,053
     
6,096
     
6,349
     
5,594
     
5,616
 
EBITDA
   
3,623
     
3,614
     
3,545
     
3,577
     
3,522
     
3,447
 
Depreciation and amortization
   
1,460
     
1,483
     
1,466
     
1,492
     
1,458
     
1,487
 
Total Operating Expenses
   
7,458
     
7,536
     
7,562
     
7,841
     
7,052
     
7,103
 
Operating Income
   
2,163
     
2,131
     
2,079
     
2,085
     
2,064
     
1,960
 
Equity in Net Income (Loss) of Affiliates
   
-
     
-
     
-
     
(1
)
   
(1
)
   
1
 
Operating Contribution
 
$
2,163
   
$
2,131
   
$
2,079
   
$
2,084
   
$
2,063
   
$
1,961
 
Financial Data
                               
EX 99.4
 
AT&T Inc.
                                   
Supplemental AT&T Advertising Revenues
                         
Dollars in millions
                                   
Unaudited
                                   
                                     
Total Advertising Revenues
 
3/31/2017
   
6/30/2017
   
9/30/2017
   
12/31/2017
   
3/31/2018
   
6/30/2018
 
Communications
 
$
353
   
$
372
   
$
369
   
$
419
   
$
375
   
$
431
 
WarnerMedia
   
-
     
-
     
-
     
-
     
-
     
202
 
Advertising & Analytics
   
321
     
338
     
333
     
381
     
337
     
392
 
Eliminations
   
(317
)
   
(334
)
   
(329
)
   
(377
)
   
(334
)
   
(387
)
Total Advertising Revenues
 
$
357
   
$
376
   
$
373
   
$
423
   
$
378
   
$
638
 

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