Enhanced Investments - Financial Portal

Published: 2020-10-22 06:16:54 ET

EX-99.1 2 t-3q2020801exhibit991.htm EX-99.1 AT&T SELECTED FINANCIAL AND OPERATING DATA Document


AT&T Inc.
Financial Data

Consolidated Statements of Income
Dollars in millions except per share amounts
Unaudited	Third Quarter						Percent		Nine-Month Period				Percent
	2020		2019		Change		2020		2019		Change
Operating Revenues
Service	$	37,782	$	40,317	(6.3)	%	$	113,716	$	122,024	(6.8)	%
Equipment	4,558		4,271		6.7	%	12,353		12,348		—	%
Total Operating Revenues	42,340		44,588		(5.0)	%	126,069		134,372		(6.2)	%

Operating Expenses
Cost of revenues
Equipment	4,552		4,484		1.5	%	12,622		13,047		(3.3)	%
Broadcast, programming and operations	6,912		7,066		(2.2)	%	19,555		22,448		(12.9)	%
Other cost of revenues (exclusive of depreciation and amortization shown separately below)	8,375		8,604		(2.7)	%	24,833		25,910		(4.2)	%
Selling, general and administrative	9,266		9,584		(3.3)	%	27,857		29,077		(4.2)	%
Asset impairments and abandonments	73		—		—	%	2,515		—		—	%
Depreciation and amortization	7,030		6,949		1.2	%	21,537		21,256		1.3	%
Total Operating Expenses	36,208		36,687		(1.3)	%	108,919		111,738		(2.5)	%
Operating Income	6,132		7,901		(22.4)	%	17,150		22,634		(24.2)	%
Interest Expense	1,972		2,083		(5.3)	%	6,031		6,373		(5.4)	%
Equity in Net Income (Loss) of Affiliates	5		3		66.7	%	(11)		36		—	%
Other Income (Expense) — Net	(231)		(935)		(75.3)	%	1,589		(967)		—	%
Income Before Income Taxes	3,934		4,886		(19.5)	%	12,697		15,330		(17.2)	%
Income Tax Expense	766		937		(18.2)	%	3,003		3,059		(1.8)	%
Net Income	3,168		3,949		(19.8)	%	9,694		12,271		(21.0)	%
Less: Net Income Attributable to Noncontrolling Interest	(352)		(249)		(41.4)	%	(987)		(762)		(29.5)	%
Net Income Attributable to AT&T	$	2,816	$	3,700	(23.9)	%	$	8,707	$	11,509	(24.3)	%
Less: Preferred Stock Dividends	(54)		—		—	%	(138)		—		—	%
Net Income Attributable to Common Stock	$	2,762	$	3,700	(25.4)	%	$	8,569	$	11,509	(25.5)	%

Basic Earnings Per Share Attributable to Common Stock	$	0.39	$	0.50	(22.0)	%	$	1.19	$	1.57	(24.2)	%
Weighted Average Common Shares Outstanding (000,000)	7,147		7,327		(2.5)	%	7,160		7,321		(2.2)	%
Diluted Earnings Per Share Attributable to Common Stock	$	0.39	$	0.50	(22.0)	%	$	1.19	$	1.57	(24.2)	%
Weighted Average Common Shares Outstanding with Dilution (000,000)	7,173		7,356		(2.5)	%	7,186		7,350		(2.2)	%


AT&T Inc.
Financial Data

Consolidated Balance Sheets
Dollars in millions
Unaudited	Sep. 30,		Dec. 31,
	2020		2019
Assets
Current Assets
Cash and cash equivalents	$	9,758	$	12,130
Accounts receivable — net of related allowances for credit loss of $1,386 and $1,235	19,379		22,636
Prepaid expenses	1,420		1,631
Other current assets	19,414		18,364
Total current assets	49,971		54,761
Noncurrent Inventories and Theatrical Film and Television Production Costs	13,948		12,434
Property, Plant and Equipment — Net	128,722		130,128
Goodwill	143,688		146,241
Licenses — Net	98,397		97,907
Trademarks and Trade Names — Net	23,575		23,567
Distribution Networks — Net	14,249		15,345
Other Intangible Assets — Net	17,523		20,798
Investments in and Advances to Equity Affiliates	2,325		3,695
Operating Lease Right-Of-Use Assets	24,546		24,039
Other Assets	21,609		22,754
Total Assets	$	538,553	$	551,669
Liabilities and Stockholders’ Equity
Current Liabilities
Debt maturing within one year	$	5,898	$	11,838
Accounts payable and accrued liabilities	42,728		45,956
Advanced billings and customer deposits	5,862		6,124
Accrued taxes	1,336		1,212
Dividends payable	3,741		3,781
Total current liabilities	59,565		68,911
Long-Term Debt	152,980		151,309
Deferred Credits and Other Noncurrent Liabilities
Deferred income taxes	60,448		59,502
Postemployment benefit obligation	17,928		18,788
Operating lease liabilities	22,056		21,804
Other noncurrent liabilities	30,520		29,421
Total deferred credits and other noncurrent liabilities	130,952		129,515
Stockholders’ Equity
Preferred stock	—		—
Common stock	7,621		7,621
Additional paid-in capital	130,139		126,279
Retained earnings	55,094		57,936
Treasury stock	(17,950)		(13,085)
Accumulated other comprehensive income	649		5,470
Noncontrolling interest	19,503		17,713
Total stockholders’ equity	195,056		201,934
Total Liabilities and Stockholders’ Equity	$	538,553	$	551,669


AT&T Inc.
Financial Data

Consolidated Statements of Cash Flows
Dollars in millions
Unaudited	Nine-Month Period
	2020		2019
Operating Activities
Net income	$	9,694	$	12,271
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	21,537		21,256
Amortization of television and film costs	6,448		7,059
Undistributed earnings from investments in equity affiliates	108		81
Provision for uncollectible accounts	1,611		1,855
Deferred income tax expense	2,248		1,039
Net (gain) loss on investments, net of impairments	(689)		(1,014)
Pension and postretirement benefit expense (credit)	(2,245)		(1,297)
Actuarial (gain) loss on pension and postretirement benefits	63		4,048
Asset impairments and abandonments	2,515		—
Changes in operating assets and liabilities:
Receivables	2,321		2,503
Other current assets, inventories and theatrical film and television production costs	(7,836)		(9,337)
Accounts payable and other accrued liabilities	(4,905)		(936)
Equipment installment receivables and related sales	(148)		848
Deferred customer contract acquisition and fulfillment costs	453		(796)
Postretirement claims and contributions	(409)		(635)
Other - net	2,282		(220)
Total adjustments	23,354		24,454
Net Cash Provided by Operating Activities	33,048		36,725

Investing Activities
Capital expenditures, including $(92) and $(160) of interest during construction	(13,283)		(15,843)
Acquisitions, net of cash acquired	(1,215)		(1,124)
Dispositions	428		3,775
(Purchases), sales and settlements of securities and investments, net	444		523
Advances to and investments in equity affiliates, net	(100)		(333)
Net Cash Used in Investing Activities	(13,726)		(13,002)

Financing Activities
Net change in short-term borrowings with original maturities of three months or less	(17)		(22)
Issuance of other short-term borrowings	9,440		4,012
Repayment of other short-term borrowings	(7,710)		(4,702)
Issuance of long-term debt	31,987		15,034
Repayment of long-term debt	(37,583)		(24,368)
Payment of vendor financing	(1,965)		(2,601)
Issuance of preferred stock	3,869		—
Purchase of treasury stock	(5,483)		(409)
Issuance of treasury stock	88		576
Issuance of preferred interests in subsidiary	1,979		1,488
Dividends paid	(11,215)		(11,162)
Other	(5,158)		(187)
Net Cash Used in Financing Activities	(21,768)		(22,341)
Net (decrease) increase in cash and cash equivalents and restricted cash	(2,446)		1,382
Cash and cash equivalents and restricted cash beginning of year	12,295		5,400
Cash and Cash Equivalents and Restricted Cash End of Period	$	9,849	$	6,782


AT&T Inc.
Consolidated Supplementary Data

Supplementary Financial Data
Dollars in millions except per share amounts
Unaudited	Third Quarter						Percent			Nine-Month Period						Percent
	2020		2019		Change		2020			2019			Change
Capital expenditures
Purchase of property and equipment	$	3,819	$	5,141	(25.7)	%	$	13,191		$	15,683		(15.9)	%
Interest during construction	32		48		(33.3)	%	92			160			(42.5)	%
Total Capital Expenditures	$	3,851	$	5,189	(25.8)	%	$	13,283		$	15,843		(16.2)	%

Dividends Declared per Common Share	$	0.52	$	0.51	2.0	%	$	1.56		$	1.53		2.0	%

End of Period Common Shares Outstanding (000,000)							7,125			7,303			(2.4)	%
Debt Ratio							44.9		%	45.9		%	(100)	BP
Total Employees							234,630			251,840			(6.8)	%

Supplementary Operating Data
Subscribers and connections in thousands
Unaudited							September 30,								Percent
							2020			2019			Change
Broadband Connections
IP							14,761			14,786			(0.2)	%
DSL							614			789			(22.2)	%
Total Broadband Connections							15,375			15,575			(1.3)	%

Voice Connections
Network Access Lines							7,562			8,831			(14.4)	%
U-verse VoIP Connections							3,942			4,539			(13.2)	%
Total Retail Voice Connections							11,504			13,370			(14.0)	%

	Third Quarter						Percent			Nine-Month Period						Percent
	2020		2019		Change		2020			2019			Change
Broadband Net Additions
IP	213		(74)		—	%	102			33			—	%
DSL	(39)		(49)		20.4	%	(116)			(160)			27.5	%
Total Broadband Net Additions	174		(123)		—	%	(14)			(127)			89.0	%

COMMUNICATIONS SEGMENT

The Communications segment provides wireless and wireline telecom, video and broadband services to consumers located in the U.S. and businesses globally. The Communications segment contains three reporting units: Mobility, Entertainment Group, and Business Wireline.


Segment Results
Dollars in millions
Unaudited	Third Quarter						Percent		Nine-Month Period				Percent
	2020		2019		Change		2020		2019		Change
Segment Operating Revenues
Mobility	$	17,894	$	17,701	1.1	%	$	52,445	$	52,356	0.2	%
Entertainment Group	10,053		11,197		(10.2)	%	30,637		33,893		(9.6)	%
Business Wireline	6,340		6,503		(2.5)	%	19,046		19,588		(2.8)	%
Total Segment Operating Revenues	34,287		35,401		(3.1)	%	102,128		105,837		(3.5)	%

Segment Operating Contribution
Mobility	5,691		5,742		(0.9)	%	17,284		16,818		2.8	%
Entertainment Group	779		1,084		(28.1)	%	3,144		4,076		(22.9)	%
Business Wireline	1,178		1,210		(2.6)	%	3,535		3,824		(7.6)	%
Total Segment Operating Contribution	$	7,648	$	8,036	(4.8)	%	$	23,963	$	24,718	(3.1)	%

Mobility

Mobility provides nationwide wireless service and equipment.


Mobility Results
Dollars in millions
Unaudited	Third Quarter								Percent			Nine-Month Period					Percent
	2020			2019			Change		2020			2019			Change
Operating Revenues
Service	$	13,883		$	13,930		(0.3)	%	$	41,520		$	41,383		0.3	%
Equipment	4,011			3,771			6.4	%	10,925			10,973			(0.4)	%
Total Operating Revenues	17,894			17,701			1.1	%	52,445			52,356			0.2	%

Operating Expenses
Operations and support	10,182			9,948			2.4	%	29,083			29,511			(1.5)	%
Depreciation and amortization	2,021			2,011			0.5	%	6,078			6,027			0.8	%
Total Operating Expenses	12,203			11,959			2.0	%	35,161			35,538			(1.1)	%
Operating Income	5,691			5,742			(0.9)	%	17,284			16,818			2.8	%
Equity in Net Income (Loss) of Affiliates	—			—			—	%	—			—			—	%
Operating Contribution	$	5,691		$	5,742		(0.9)	%	$	17,284		$	16,818		2.8	%

Operating Income Margin	31.8		%	32.4		%	(60)	BP	33.0		%	32.1		%	90	BP

Supplementary Operating Data
Subscribers and connections in thousands
Unaudited												September 30,					Percent
									2020			2019			Change
Mobility Subscribers
Postpaid									75,969			75,152			1.1	%
Prepaid									18,100			17,740			2.0	%
Reseller									6,708			7,120			(5.8)	%
Connected Devices									75,967			62,288			22.0	%
Total Mobility Subscribers									176,744			162,300			8.9	%

	Third Quarter								Percent			Nine-Month Period					Percent
	2020			2019			Change		2020			2019			Change
Mobility Net Additions
Postpaid Phone Net Additions¹	645			101			—	%	657			254			—	%
Total Phone Net Additions¹	776			255			—	%	880			780			12.8	%

Postpaid^1,2	1,081			(217)			—	%	954			(570)			—	%
Prepaid^{2, 3}	245			227			7.9	%	365			669			(45.4)	%
Reseller²	(4)			(231)			98.3	%	(252)			(677)			62.8	%
Connected Devices	4,203			3,900			7.8	%	9,976			10,947			(8.9)	%
Total Mobility Net Additions	5,525			3,679			50.2	%	11,043			10,369			6.5	%

Postpaid Churn¹	0.85		%	1.19		%	(34) BP		0.99		%	1.14		%	(15) BP
Postpaid Phone-Only Churn¹	0.69		%	0.95		%	(26) BP		0.80		%	0.91		%	(11) BP
¹The third quarter ended September 30, 2020 includes 233 (151 phone) "Keep Americans Connected Pledge" paying accounts. The third quarter and nine-month period ended September 30, 2020 exclude 121 (97 phone) customers who we have agreed not to terminate service under the "Keep Americans Connected Pledge." The third quarter and nine-month period ended September 30, 2020 postpaid churn excluding "Keep Americans Connected Pledge" paying accounts was 0.95% (0.77% phone) and 1.02% (0.82% phone), respectively.
²The third quarter and nine-month period ended September 30, 2020, exclude subscribers transferred in connection with business dispositions.
³The third quarter and nine-month period ended September 30, 2020, exclude 188 subscriber disconnections resulting from updating our prepaid activation policy.

Entertainment Group

Entertainment Group provides video, including over-the-top (OTT) services, broadband and voice communication services primarily to residential customers. This business unit also sells advertising on video distribution platforms.


Entertainment Group Results
Dollars in millions
Unaudited	Third Quarter								Percent			Nine-Month Period						Percent
	2020			2019			Change		2020			2019			Change
Operating Revenues
Video entertainment	$	6,964		$	7,933		(12.2)	%	$	21,335		$	24,042		(11.3)	%
High-speed internet	2,128			2,117			0.5	%	6,329			6,296			0.5	%
Legacy voice and data services	538			628			(14.3)	%	1,679			1,969			(14.7)	%
Other service and equipment	423			519			(18.5)	%	1,294			1,586			(18.4)	%
Total Operating Revenues	10,053			11,197			(10.2)	%	30,637			33,893			(9.6)	%

Operating Expenses
Operations and support	7,997			8,797			(9.1)	%	23,618			25,839			(8.6)	%
Depreciation and amortization	1,277			1,316			(3.0)	%	3,875			3,978			(2.6)	%
Total Operating Expenses	9,274			10,113			(8.3)	%	27,493			29,817			(7.8)	%
Operating Income	779			1,084			(28.1)	%	3,144			4,076			(22.9)	%
Equity in Net Income (Loss) of Affiliates	—			—			—	%	—			—			—	%
Operating Contribution	$	779		$	1,084		(28.1)	%	$	3,144		$	4,076		(22.9)	%

Operating Income Margin	7.7		%	9.7		%	(200)	BP	10.3		%	12.0		%	(170)	BP

Supplementary Operating Data
Subscribers and connections in thousands
Unaudited									September 30,								Percent
									2020			2019			Change
Video Connections
Premium TV									17,100			20,418			(16.3)	%
AT&T TV Now									683			1,145			(40.3)	%
Total Video Connections									17,783			21,563			(17.5)	%

Broadband Connections
Total Broadband Connections									14,102			14,301			(1.4)	%
Fiber Broadband Connections									4,678			3,696			26.6	%

Voice Connections
Retail Consumer Switched Access Lines									2,977			3,467			(14.1)	%
U-verse Consumer VoIP Connections									3,361			3,973			(15.4)	%
Total Retail Consumer Voice Connections									6,338			7,440			(14.8)	%

	Third Quarter								Percent			Nine-Month Period						Percent
	2020			2019			Change		2020			2019			Change
Video Net Additions
Premium TV ¹	(590)			(1,163)			49.3	%	(2,373)			(2,485)			4.5	%
AT&T TV Now	(37)			(195)			81.0	%	(243)			(446)			45.5	%
Total Video Net Additions	(627)			(1,358)			53.8	%	(2,616)			(2,931)			10.7	%

Broadband Net Additions
Total Broadband Net Additions¹	158			(119)			—	%	(17)			(108)			84.3	%
Fiber Broadband Net Additions¹	357			318			12.3	%	791			933			(15.2)	%
¹The third quarter ended September 30, 2020 includes 116 premium TV and 104 broadband (28 fiber) "Keep Americans Connected Pledge" paying accounts. The third quarter and nine-month period ended September 30, 2020 excludes 7 premium TV and 13 broadband (4 fiber) connections who we have agreed not to terminate service under the "Keep Americans Connected Pledge."

Business Wireline

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


Business Wireline Results
Dollars in millions
Unaudited	Third Quarter								Percent			Nine-Month Period					Percent
	2020			2019			Change		2020			2019			Change
Operating Revenues
Strategic and managed services	$	3,967		$	3,900		1.7	%	$	11,789		$	11,513		2.4	%
Legacy voice and data services	2,031			2,252			(9.8)	%	6,227			6,973			(10.7)	%
Other service and equipment	342			351			(2.6)	%	1,030			1,102			(6.5)	%
Total Operating Revenues	6,340			6,503			(2.5)	%	19,046			19,588			(2.8)	%

Operating Expenses
Operations and support	3,833			4,022			(4.7)	%	11,563			12,029			(3.9)	%
Depreciation and amortization	1,329			1,271			4.6	%	3,948			3,735			5.7	%
Total Operating Expenses	5,162			5,293			(2.5)	%	15,511			15,764			(1.6)	%
Operating Income	1,178			1,210			(2.6)	%	3,535			3,824			(7.6)	%
Equity in Net Income (Loss) of Affiliates	—			—			—	%	—			—			—	%
Operating Contribution	$	1,178		$	1,210		(2.6)	%	$	3,535		$	3,824		(7.6)	%

Operating Income Margin	18.6		%	18.6		%	—	BP	18.6		%	19.5		%	(90)	BP

Business Solutions

As a supplemental presentation to our Communications segment operating results, we are providing a view of our AT&T Business Solutions results which includes both wireless and fixed operations. This combined view presents a complete profile of the entire business customer relationship and underscores the importance of mobile solutions to serving our business customers. Results have been recast to conform to the current period's classification of consumer and business wireless subscribers.


Business Solutions Results
Dollars in millions
Unaudited	Third Quarter								Percent			Nine-Month Period					Percent
	2020			2019			Change		2020			2019			Change
Operating Revenues
Wireless service	$	1,951		$	1,888		3.3	%	$	5,784		$	5,546		4.3	%
Strategic and managed services	3,967			3,900			1.7	%	11,789			11,513			2.4	%
Legacy voice and data services	2,031			2,252			(9.8)	%	6,227			6,973			(10.7)	%
Other service and equipment	342			351			(2.6)	%	1,030			1,102			(6.5)	%
Wireless equipment	662			692			(4.3)	%	1,957			1,899			3.1	%
Total Operating Revenues	8,953			9,083			(1.4)	%	26,787			27,033			(0.9)	%

Operating Expenses
Operations and support	5,508			5,645			(2.4)	%	16,642			16,771			(0.8)	%
Depreciation and amortization	1,650			1,573			4.9	%	4,912			4,643			5.8	%
Total Operating Expenses	7,158			7,218			(0.8)	%	21,554			21,414			0.7	%
Operating Income	1,795			1,865			(3.8)	%	5,233			5,619			(6.9)	%
Equity in Net Income (Loss) of Affiliates	—			—			—	%	—			—			—	%
Operating Contribution	$	1,795		$	1,865		(3.8)	%	$	5,233		$	5,619		(6.9)	%

Operating Income Margin	20.0		%	20.5		%	(50)	BP	19.5		%	20.8		%	(130)	BP

WARNERMEDIA SEGMENT

The WarnerMedia segment develops, produces and distributes feature films, television, gaming and other content in various physical and digital formats globally, and also includes our Xandr business, which utilizes data analytics to provide targeted advertising services. Results from Turner, Home Box Office (HBO) and Warner Bros. businesses are combined with AT&T's Regional Sports Network (RSN), Otter Media Holdings and Xandr in the WarnerMedia segment. All previously reported periods have been recast to include Xandr, which was a separate reportable segment prior to the second quarter of 2020.


Segment Results
Dollars in millions
Unaudited	Third Quarter						Percent		Nine-Month Period				Percent
	2020		2019		Change		2020		2019		Change
Segment Operating Revenues
Turner	$	3,176	$	3,007	5.6	%	$	9,326	$	9,860	(5.4)	%
HBO	1,781		1,819		(2.1)	%	4,905		5,045		(2.8)	%
Warner Bros.	2,411		3,333		(27.7)	%	8,907		10,240		(13.0)	%
Eliminations and other	146		191		(23.6)	%	(962)		845		—	%
Total Segment Operating Revenues	7,514		8,350		(10.0)	%	22,176		25,990		(14.7)	%

Cost of revenues
Turner	1,689		1,036		63.0	%	3,974		4,512		(11.9)	%
HBO	1,244		847		46.9	%	3,155		2,356		33.9	%
Warner Bros.	1,600		2,261		(29.2)	%	6,179		7,183		(14.0)	%
Selling, general and administrative	1,364		1,278		6.7	%	4,152		3,994		4.0	%
Eliminations and other	(313)		(93)		—	%	(1,455)		(127)		—	%
Depreciation and amortization	171		165		3.6	%	501		425		17.9	%
Total Operating Expenses	5,755		5,494		4.8	%	16,506		18,343		(10.0)	%
Operating Income	1,759		2,856		(38.4)	%	5,670		7,647		(25.9)	%
Equity in Net Income of Affiliates	11		15		(26.7)	%	30		137		(78.1)	%
Total Segment Operating Contribution	$	1,770	$	2,871	(38.3)	%	$	5,700	$	7,784	(26.8)	%

Turner

Turner 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.


Turner Results
Dollars in millions
Unaudited	Third Quarter								Percent			Nine-Month Period					Percent
	2020			2019			Change		2020			2019			Change
Operating Revenues
Subscription	$	1,840		$	1,927		(4.5)	%	$	5,693		$	5,835		(2.4)	%
Advertising	1,077			913			18.0	%	2,830			3,440			(17.7)	%
Content and other	259			167			55.1	%	803			585			37.3	%
Total Operating Revenues	3,176			3,007			5.6	%	9,326			9,860			(5.4)	%

Operating Expenses
Cost of revenues	1,689			1,036			63.0	%	3,974			4,512			(11.9)	%
Selling, general and administrative	399			424			(5.9)	%	1,171			1,301			(10.0)	%
Depreciation and amortization	69			68			1.5	%	207			167			24.0	%
Total Operating Expenses	2,157			1,528			41.2	%	5,352			5,980			(10.5)	%
Operating Income	1,019			1,479			(31.1)	%	3,974			3,880			2.4	%
Equity in Net Income (Loss) of Affiliates	(6)			10			—	%	—			46			—	%
Operating Contribution	$	1,013		$	1,489		(32.0)	%	$	3,974		$	3,926		1.2	%

Operating Income Margin	32.1		%	49.2		%	(1,710)	BP	42.6		%	39.4		%	320	BP

Home Box Office

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.


Home Box Office Results
Dollars in millions
Unaudited	Third Quarter								Percent			Nine-Month Period					Percent
	2020			2019			Change		2020			2019			Change
Operating Revenues
Subscription	$	1,624		$	1,533		5.9	%	$	4,403		$	4,383		0.5	%
Content and other	157			286			(45.1)	%	502			662			(24.2)	%
Total Operating Revenues	1,781			1,819			(2.1)	%	4,905			5,045			(2.8)	%

Operating Expenses
Cost of revenues	1,244			847			46.9	%	3,155			2,356			33.9	%
Selling, general and administrative	450			225			—	%	1,081			768			40.8	%
Depreciation and amortization	27			33			(18.2)	%	73			67			9.0	%
Total Operating Expenses	1,721			1,105			55.7	%	4,309			3,191			35.0	%
Operating Income	60			714			(91.6)	%	596			1,854			(67.9)	%
Equity in Net Income of Affiliates	—			10			—	%	15			40			(62.5)	%
Operating Contribution	$	60		$	724		(91.7)	%	$	611		$	1,894		(67.7)	%

Operating Income Margin	3.4		%	39.3		%	(3,590)	BP	12.2		%	36.7		%	(2,450)	BP

Warner Bros.

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.


Warner Bros. Results
Dollars in millions
Unaudited	Third Quarter								Percent			Nine-Month Period					Percent
	2020			2019			Change		2020			2019			Change
Operating Revenues
Theatrical product	$	1,068		$	1,375		(22.3)	%	$	3,203		$	4,408		(27.3)	%
Television product	960			1,461			(34.3)	%	4,605			4,384			5.0	%
Video games and other	383			497			(22.9)	%	1,099			1,448			(24.1)	%
Total Operating Revenues	2,411			3,333			(27.7)	%	8,907			10,240			(13.0)	%

Operating Expenses
Cost of revenues	1,600			2,261			(29.2)	%	6,179			7,183			(14.0)	%
Selling, general and administrative	373			445			(16.2)	%	1,327			1,360			(2.4)	%
Depreciation and amortization	43			39			10.3	%	124			122			1.6	%
Total Operating Expenses	2,016			2,745			(26.6)	%	7,630			8,665			(11.9)	%
Operating Income	395			588			(32.8)	%	1,277			1,575			(18.9)	%
Equity in Net Income (Loss) of Affiliates	(23)			(25)			8.0	%	(50)			(19)			—	%
Operating Contribution	$	372		$	563		(33.9)	%	$	1,227		$	1,556		(21.1)	%

Operating Income Margin	16.4		%	17.6		%	(120)	BP	14.3		%	15.4		%	(110)	BP

LATIN AMERICA SEGMENT

The Latin America segment provides entertainment and wireless service outside of the U.S. Our international subsidiaries conduct business in their local currency and operating results are converted to U.S. dollars using official exchange rates. The Latin America segment contains two business units: Vrio and Mexico.


Segment Results
Dollars in millions
Unaudited	Third Quarter						Percent		Nine-Month Period				Percent
	2020		2019		Change		2020		2019		Change
Segment Operating Revenues
Vrio	$	753	$	1,013	(25.7)	%	$	2,392	$	3,112	(23.1)	%
Mexico	643		717		(10.3)	%	1,826		2,093		(12.8)	%
Total Segment Operating Revenues	1,396		1,730		(19.3)	%	4,218		5,205		(19.0)	%

Segment Operating Contribution
Vrio	(34)		13		—	%	(101)		43		—	%
Mexico	(143)		(179)		20.1	%	(461)		(591)		22.0	%
Total Segment Operating Contribution	$	(177)	$	(166)	(6.6)	%	$	(562)	$	(548)	(2.6)	%

Vrio

Vrio provides entertainment services to customers utilizing satellite technology in Latin America and the Caribbean.


Vrio Results
Dollars in millions
Unaudited	Third Quarter								Percent			Nine-Month Period						Percent
	2020			2019			Change		2020			2019			Change
Operating Revenues	$	753		$	1,013		(25.7)	%	$	2,392		$	3,112		(23.1)	%

Operating Expenses
Operations and support	675			851			(20.7)	%	2,119			2,598			(18.4)	%
Depreciation and amortization	126			162			(22.2)	%	400			496			(19.4)	%
Total Operating Expenses	801			1,013			(20.9)	%	2,519			3,094			(18.6)	%
Operating Income	(48)			—			—	%	(127)			18			—	%
Equity in Net Income of Affiliates	14			13			7.7	%	26			25			4.0	%
Operating Contribution	$	(34)		$	13		—	%	$	(101)		$	43		—	%

Operating Income Margin	(6.4)		%	—		%	(640)	BP	(5.3)		%	0.6		%	(590)	BP

Supplementary Operating Data
Subscribers and connections in thousands
Unaudited									September 30,								Percent
									2020			2019			Change
Vrio Video Subscribers									10,893			13,306			(18.1)	%

	Third Quarter								Percent			Nine-Month Period						Percent
	2020			2019			Change		2020			2019			Change
Vrio Video Net Additions¹	229			(167)			—	%	(197)			(310)			36.5	%

¹The nine-month period ended September 30, 2020 excludes the impact of 2.2 million subscriber disconnections resulting from the closure of our DIRECTV operations in Venezuela.

Mexico

Mexico provides wireless services and equipment to customers in Mexico.


Mexico Results
Dollars in millions
Unaudited	Third Quarter								Percent			Nine-Month Period						Percent
	2020			2019			Change		2020			2019			Change
Operating Revenues
Wireless service	$	385		$	455		(15.4)	%	$	1,197		$	1,376		(13.0)	%
Wireless equipment	258			262			(1.5)	%	629			717			(12.3)	%
Total Operating Revenues	643			717			(10.3)	%	1,826			2,093			(12.8)	%

Operating Expenses
Operations and support	662			774			(14.5)	%	1,914			2,312			(17.2)	%
Depreciation and amortization	124			122			1.6	%	373			372			0.3	%
Total Operating Expenses	786			896			(12.3)	%	2,287			2,684			(14.8)	%
Operating Income (Loss)	(143)			(179)			20.1	%	(461)			(591)			22.0	%
Equity in Net Income of Affiliates	—			—			—	%	—			—			—	%
Operating Contribution	$	(143)		$	(179)		20.1	%	$	(461)		$	(591)		22.0	%

Operating Income Margin	(22.2)		%	(25.0)		%	280	BP	(25.2)		%	(28.2)		%	300	BP

Supplementary Operating Data
Subscribers and connections in thousands
Unaudited									September 30,								Percent
									2020			2019			Change
Mexico Wireless Subscribers
Postpaid									4,710			5,352			(12.0)	%
Prepaid									13,249			12,848			3.1	%
Reseller									455			419			8.6	%
Total Mexico Wireless Subscribers									18,414			18,619			(1.1)	%

	Third Quarter								Percent			Nine-Month Period						Percent
	2020			2019			Change		2020			2019			Change
Mexico Wireless Net Additions¹
Postpaid	(61)			(137)			55.5	%	(393)			(359)			(9.5)	%
Prepaid	472			668			(29.3)	%	(335)			1,183			—	%
Reseller	30			67			(55.2)	%	83			166			(50.0)	%
Total Mexico Wireless Net Additions	441			598			(26.3)	%	(645)			990			—	%

¹The nine-month period ended September 30, 2020 excludes the impact of 101 subscriber disconnections resulting from conforming our policy on reporting of fixed wireless resellers.

Supplemental AT&T Advertising Revenues

As a supplemental presentation, we are providing a view of total advertising revenues generated by AT&T, which combines the advertising revenues recorded across all operating segments. This combined view presents the entire portfolio of revenues generated from AT&T assets.


Advertising Revenues
Dollars in millions
Unaudited	Third Quarter						Percent		Nine-Month Period				Percent
	2020		2019		Change		2020		2019		Change
Operating Revenues
Turner	$	1,077	$	913	18.0	%	$	2,830	$	3,440	(17.7)	%
Entertainment Group	408		421		(3.1)	%	1,115		1,170		(4.7)	%
Xandr	497		504		(1.4)	%	1,348		1,415		(4.7)	%
Other	105		106		(0.9)	%	278		281		(1.1)	%
Eliminations	(408)		(421)		3.1	%	(1,115)		(1,170)		4.7	%
Total Advertising Revenues	$	1,679	$	1,523	10.2	%	$	4,456	$	5,136	(13.2)	%

SUPPLEMENTAL SEGMENT RECONCILIATION


Three Months Ended
Dollars in millions
Unaudited
September 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	$	17,894	$	10,182	$	7,712	$	2,021	$	5,691	$	—	$	5,691
Entertainment Group	10,053		7,997		2,056		1,277		779		—		779
Business Wireline	6,340		3,833		2,507		1,329		1,178		—		1,178
Total Communications	34,287		22,012		12,275		4,627		7,648		—		7,648
WarnerMedia
Turner	3,176		2,088		1,088		69		1,019		(6)		1,013
Home Box Office	1,781		1,694		87		27		60		—		60
Warner Bros.	2,411		1,973		438		43		395		(23)		372
Eliminations and other	146		(171)		317		32		285		40		325
Total WarnerMedia	7,514		5,584		1,930		171		1,759		11		1,770
Latin America
Vrio	753		675		78		126		(48)		14		(34)
Mexico	643		662		(19)		124		(143)		—		(143)
Total Latin America	1,396		1,337		59		250		(191)		14		(177)
Segment Total	43,197		28,933		14,264		5,048		9,216		$	25	$	9,241
Corporate and Other
Corporate	431		1,012		(581)		61		(642)
Acquisition-related items	—		38		(38)		1,921		(1,959)
Certain significant items	—		113		(113)		—		(113)
Eliminations and consolidations	(1,288)		(918)		(370)		—		(370)
AT&T Inc.	$	42,340	$	29,178	$	13,162	$	7,030	$	6,132


Three Months Ended
Dollars in millions
Unaudited
September 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	$	17,701	$	9,948	$	7,753	$	2,011	$	5,742	$	—	$	5,742
Entertainment Group	11,197		8,797		2,400		1,316		1,084		—		1,084
Business Wireline	6,503		4,022		2,481		1,271		1,210		—		1,210
Total Communications	35,401		22,767		12,634		4,598		8,036		—		8,036
WarnerMedia
Turner	3,007		1,460		1,547		68		1,479		10		1,489
Home Box Office	1,819		1,072		747		33		714		10		724
Warner Bros.	3,333		2,706		627		39		588		(25)		563
Eliminations and other	191		91		100		25		75		20		95
Total WarnerMedia	8,350		5,329		3,021		165		2,856		15		2,871
Latin America
Vrio	1,013		851		162		162		—		13		13
Mexico	717		774		(57)		122		(179)		—		(179)
Total Latin America	1,730		1,625		105		284		(179)		13		(166)
Segment Total	45,481		29,721		15,760		5,047		10,713		$	28	$	10,741
Corporate and Other
Corporate	407		703		(296)		131		(427)
Acquisition-related items	—		190		(190)		1,771		(1,961)
Certain significant items	—		39		(39)		—		(39)
Eliminations and consolidations	(1,300)		(915)		(385)		—		(385)
AT&T Inc.	$	44,588	$	29,738	$	14,850	$	6,949	$	7,901

SUPPLEMENTAL SEGMENT RECONCILIATION


Nine Months Ended
Dollars in millions
Unaudited
September 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	$	52,445	$	29,083	$	23,362	$	6,078	$	17,284	$	—	$	17,284
Entertainment Group	30,637		23,618		7,019		3,875		3,144		—		3,144
Business Wireline	19,046		11,563		7,483		3,948		3,535		—		3,535
Total Communications	102,128		64,264		37,864		13,901		23,963		—		23,963
WarnerMedia
Turner	9,326		5,145		4,181		207		3,974		—		3,974
Home Box Office	4,905		4,236		669		73		596		15		611
Warner Bros.	8,907		7,506		1,401		124		1,277		(50)		1,227
Eliminations and other	(962)		(882)		(80)		97		(177)		65		(112)
Total WarnerMedia	22,176		16,005		6,171		501		5,670		30		5,700
Latin America
Vrio	2,392		2,119		273		400		(127)		26		(101)
Mexico	1,826		1,914		(88)		373		(461)		—		(461)
Total Latin America	4,218		4,033		185		773		(588)		26		(562)
Segment Total	128,522		84,302		44,220		15,175		29,045		$	56	$	29,101
Corporate and Other
Corporate	1,256		2,819		(1,563)		241		(1,804)
Acquisition-related items	—		431		(431)		6,122		(6,553)
Certain significant items	—		2,539		(2,539)		—		(2,539)
Eliminations and consolidations	(3,709)		(2,709)		(1,000)		(1)		(999)
AT&T Inc.	$	126,069	$	87,382	$	38,687	$	21,537	$	17,150


Nine Months Ended
Dollars in millions
Unaudited
September 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	$	52,356	$	29,511	$	22,845	$	6,027	$	16,818	$	—	$	16,818
Entertainment Group	33,893		25,839		8,054		3,978		4,076		—		4,076
Business Wireline	19,588		12,029		7,559		3,735		3,824		—		3,824
Total Communications	105,837		67,379		38,458		13,740		24,718		—		24,718
WarnerMedia
Turner	9,860		5,813		4,047		167		3,880		46		3,926
Home Box Office	5,045		3,124		1,921		67		1,854		40		1,894
Warner Bros.	10,240		8,543		1,697		122		1,575		(19)		1,556
Eliminations and other	845		438		407		69		338		70		408
Total WarnerMedia	25,990		17,918		8,072		425		7,647		137		7,784
Latin America
Vrio	3,112		2,598		514		496		18		25		43
Mexico	2,093		2,312		(219)		372		(591)		—		(591)
Total Latin America	5,205		4,910		295		868		(573)		25		(548)
Segment Total	137,032		90,207		46,825		15,033		31,792		$	162	$	31,954
Corporate and Other
Corporate	1,290		2,129		(839)		505		(1,344)
Acquisition-related items	(72)		579		(651)		5,719		(6,370)
Certain significant items	—		381		(381)		—		(381)
Eliminations and consolidations	(3,878)		(2,814)		(1,064)		(1)		(1,063)
AT&T Inc.	$	134,372	$	90,482	$	43,890	$	21,256	$	22,634