Enhanced Investments - Financial Portal

Published: 2021-09-09 16:31:20 ET

EX-99.1 2 exhibit991.htm EX-99.1 SUPPLEMENTAL QUARTERLY PRO FORMA FINANCIAL INFORMATION Document


Quarterly Pro Forma Financial Information
Supplemental Unaudited Quarterly Pro Forma Financial Information1
Dollars in millions
Unaudited


Operating Revenues	3/31/20		6/30/20		9/30/20		12/31/20		2020		3/31/21			6/30/21
Reported AT&T Operating Revenues	$	42,779	$	40,950	$	42,340	$	45,691	$	171,760	$	43,939		$	44,045

Less: Video (A1)	(7,407)		(7,021)		(7,014)		(7,168)		(28,610)		(6,725)			(6,639)
Add: WarnerMedia sales to Video (A2)	755		666		551		487		2,459		524			508
Add: WarnerMedia sales of DIRECTV advertising inventory (A3)	413		294		408		603		1,718		388			410
Add: Other eliminations	64		55		65		84		268		61			58
Pro Forma Operating Revenues	$	36,604	$	34,944	$	36,350	$	39,697	$	147,595	$	38,187		$	38,382

Reported Revenue Growth Rate Y/Y											2.7		%	7.6		%
Pro Forma Revenue Growth Rate Y/Y											4.3		%	9.8		%


Operations and Support Expenses	3/31/20	6/30/20	9/30/20	12/31/20	2020	3/31/21		6/30/21
Reported AT&T Operations and Support Expenses	$28,071	$30,133	$29,178	$49,457	$136,839	$30,469		$35,015
Adjustments (B1)	476	(3,295)	(151)	(16,655)	(19,625)	(94)		(4,555)
Adjusted Operations and Support Expenses	28,547	26,838	29,027	32,802	117,214	30,375		30,460
Less: Video (A1)	(6,020)	(5,809)	(5,887)	(6,458)	(24,174)	(5,660)		(5,275)
Add: WarnerMedia sales to Video (A2)	755	666	551	487	2,459	524		508
Add: WarnerMedia sales of DIRECTV advertising inventory (A3)	39	38	38	38	153	39		38
Add: WarnerMedia/DIRECTV 70% revenue share (A3)	289	206	286	422	1,203	271		287
Add: Other eliminations	64	55	65	84	268	61		58
Pro Forma Adjusted Operations and Support Expenses	$23,674	$21,994	$24,080	$27,375	$97,123	$25,610		$26,076
Reported Operations and Support Expense Growth Rate Y/Y						8.5	%	16.2	%
Adjusted Operations and Support Expense Growth Rate Y/Y						6.4	%	13.5	%
Pro Forma Adjusted Operations and Support Expense Growth Rate Y/Y						8.2	%	18.6	%


Depreciation and Amortization Expense	3/31/20	6/30/20	9/30/20	12/31/20	2020	3/31/21		6/30/21
Reported AT&T Depreciation and Amortization Expense	$7,222	$7,285	$7,030	$6,979	$28,516	$5,809		$5,761
Adjustments (B1)	(2,056)	(2,145)	(1,921)	(1,904)	(8,026)	(1,131)		(1,069)
Adjusted Depreciation and Amortization Expense	5,166	5,140	5,109	5,075	20,490	4,678		4,692
Less: Video Depreciation (A1)	(591)	(593)	(557)	(521)	(2,262)	(164)		(148)
Add: Other consolidation	—	1	—	1	2	—		—
Pro Forma Adjusted Depreciation and Amortization Expense	$4,575	$4,548	$4,552	$4,555	$18,230	$4,514		$4,544
Reported Depreciation and Amortization Expense Growth Rate Y/Y						-19.6	%	-20.9	%
Adjusted Depreciation and Amortization Expense Growth Rate Y/Y						-9.4	%	-8.7	%
Pro Forma Adjusted Depreciation and Amortization Expense Growth Rate Y/Y						-1.3	%	-0.1	%


Operating Income	3/31/20			6/30/20			9/30/20			12/31/20			2020			3/31/21			6/30/21
Reported AT&T Operating Income (Loss)	$	7,486		$	3,532		$	6,132		$	(10,745)		$	6,405		$	7,661		$	3,269
Adjustments (B1)	1,580			5,440			2,072			18,559			27,651			1,225			5,624
Adjusted Operating Income	9,066			8,972			8,204			7,814			34,056			8,886			8,893
Less: Video (A1)	(796)			(619)			(570)			(189)			(2,174)			(901)			(1,216)
Add: WarnerMedia sales to Video (A2)	—			—			—			—			—			—			—
Add: WarnerMedia sales of DIRECTV advertising inventory (A3)	374			255			370			564			1,563			349			372
Add: WarnerMedia/DIRECTV 70% revenue share (A3)	(289)			(206)			(286)			(422)			(1,203)			(271)			(287)
Add: Other eliminations	—			—			—			—			—			—			—
Pro Forma Adjusted Operating Income	$	8,355		$	8,402		$	7,718		$	7,767		$	32,242		$	8,063		$	7,762







Reported Operating Income Growth Rate Y/Y																2.3		%	-7.4		%
Adjusted Operating Income Growth Rate Y/Y																-2.0		%	-0.9		%
Pro Forma Adjusted Operating Income Growth Rate Y/Y																-3.5		%	-7.6		%
Reported Operating Income Margin	17.5		%	8.6		%	14.5		%	-23.5		%	3.7		%	17.4		%	7.4		%
Adjusted Operating Income Margin	21.2		%	21.9		%	19.4		%	17.1		%	19.8		%	20.2		%	20.2		%
Pro Forma Adjusted Operating Income Margin	22.8		%	24.0		%	21.2		%	19.6		%	21.8		%	21.1		%	20.2		%




EBITDA	3/31/20			6/30/20			9/30/20			12/31/20			2020			3/31/21			6/30/21
Reported AT&T Net Income (Loss)	$	4,963		$	1,563		$	3,168		$	(13,515)		$	(3,821)		$	7,942		$	1,874
Additions:
Income Tax Expense (Benefit)	1,302			935			766			(2,038)			965			2,122			751
Interest Expense	2,018			2,041			1,972			1,894			7,925			1,870			1,684
Equity in Net Income (Loss) of Affiliates	6			10			(5)			(106)			(95)			(52)			(41)
Other (Income) Expense - net	(803)			(1,017)			231			3,020			1,431			(4,221)			(999)
Depreciation and amortization	7,222			7,285			7,030			6,979			28,516			5,809			5,761
EBITDA	14,708			10,817			13,162			(3,766)			34,921			13,470			9,030
Adjustments (B1)	(476)			3,295			151			16,655			19,625			94			4,555
Adjusted EBITDA	14,232			14,112			13,313			12,889			54,546			13,564			13,585
Less: Video (A1)	(1,387)			(1,212)			(1,127)			(710)			(4,436)			(1,065)			(1,364)
Add: WarnerMedia sales to Video (A2)	—			—			—			—			—			—			—
Add: WarnerMedia sales of DIRECTV advertising inventory (A3)	374			256			370			565			1,565			349			372
Add: WarnerMedia/DIRECTV 70% revenue share (A3)	(289)			(206)			(286)			(422)			(1,203)			(271)			(287)
Add: Other eliminations	—			—			—			—			—			—			—
Pro Forma Adjusted EBITDA	$	12,930		$	12,950		$	12,270		$	12,322		$	50,472		$	12,577		$	12,306

Adjusted EBITDA Growth Rate Y/Y																-4.7		%	-3.7		%
Pro Forma Adjusted EBITDA Growth Rate Y/Y																-2.7		%	-5.0		%
Adjusted EBITDA Margin	33.3		%	34.5		%	31.4		%	28.2		%	31.8		%	30.9		%	30.8		%
Pro Forma Adjusted EBITDA Margin	35.3		%	37.1		%	33.8		%	31.0		%	34.2		%	32.9		%	32.1		%

1 After the transaction,AT&T expects to retain incurred operations and support costs in the range of ~$500M per quarter and depreciation costs for network infrastructure that provides both U-verse video and broadband services of ~$150M per quarter, of which approximately 50% will be received from DIRECTV through transition service agreements and commercial arrangements. These pro formas do not include the impacts of accounting for the NFL SUNDAY TICKET, per the Contribution Agreement.





NOTES

(A) Notes to Pro Forma Adjustments
(A1) Video business results as reported in AT&T's consolidated financial results; quarter ended 2021 exclude retained depreciation on assets supporting U-verse products
(A2) Intercompany transactions between WarnerMedia and Video that are external following the close of the transaction
(A3) DIRECTV's advertising inventory sold by WarnerMedia (Xandr business) pursuant to commercial agreement, with WarnerMedia recording all the advertising revenues and an expense for DIRECTV's 70% revenue share






(B1) Non-GAAP Adjustments2:	3/31/20		6/30/20		9/30/20		12/31/20		2020		3/31/21		6/30/21

Merger Costs	$	182	$	211	$	38	$	37	$	468	$	37	$	—
Employee separation costs and benefit-related (gain) loss	119		765		40		253		1,177		57		—
Impairments	123		2,319		73		16,365		18,880		—		4,555
Gain on spectrum transaction	(900)		—		—		—		(900)		—		—
Adjustments to Operations and Support Expenses/ EBITDA	(476)		3,295		151		16,655		19,625		94		4,555
Amortization of intangibles	2,056		2,145		1,921		1,890		8,012		1,131		1,069
Impairments	—		—		—		14		14		—		—
Adjustments to Operating Income	$	1,580	$	5,440	$	2,072	$	18,559	$	27,651	$	1,225	$	5,624

2 As reported in AT&T's Forms 8-K filed April 22, 2020, July 23, 2020, October 22, 2020, January 27, 2021, April 22, 2021 and July 22, 2021.

Enhanced Investments, Inc.
329 South Oyster Bay Road #2085
Plainview, NY 11803
team@eninvs.com

Important disclosures

Performance results were prepared by Enhanced Investments, and have not been compiled, reviewed or audited by an independent accountant. Performance estimates are subject to future adjustment and revision. Investors should be aware that a loss of investment is possible. Account holdings are for illustrative purposes only and are not investment recommendations. Additional information, including (i) the calculation methodology; and (ii) a list showing the contribution of each holding to the portfolio’s performance during the time period will be provided upon request.
All statements made via social media sites sponsored or maintained by Enhanced Investments and its affiliates are for informational purposes only and do not constitute a comprehensive description of Enhanced Investments' investment advisory services.
Certain investments are not suitable for all investors. Before investing, consider your investment objectives and applicable fees. The rate of return on investments can vary widely over time, especially for long term investments. Investment losses are possible, including the potential loss of all amounts invested. Information provided by Enhanced Investments is for informational and general educational purposes only and is not investment or financial advice.

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All the strategies assume investments in equity invstrumenta only and are more relevant for "agressive investment profile". Eastern European flagship strategy assumes using up to 20% leverage of total portfolio. GlobalCommodities and US Growth strategy currently assume no leverage.
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Performance results were prepared by Enhanced Investments, and have not been compiled, reviewed or audited by an independent accountant. Performance estimates are subject to future adjustment and revision. Investors should be aware that a loss of investment is possible. Account holdings are for illustrative purposes only and are not investment recommendations. Additional information, including (i) the calculation methodology; and (ii) a list showing the contribution of each holding to the portfolio’s performance during the time period will be provided upon request.
All statements made via social media sites sponsored or maintained by Enhanced Investments and its affiliates are for informational purposes only and do not constitute a comprehensive description of Enhanced Investments' investment advisory services.
Certain investments are not suitable for all investors. Before investing, consider your investment objectives and applicable fees. The rate of return on investments can vary widely over time, especially for long term investments. Investment losses are possible, including the potential loss of all amounts invested. Information provided by Enhanced Investments is for informational and general educational purposes only and is not investment or financial advice.