TIDM58KN
RNS Number : 7837Y
AT & T Inc.
07 March 2017
FORM 10-K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2016
OR
.. TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 1-8610
AT&T INC.
Incorporated under the laws of the State of Delaware
I.R.S. Employer Identification Number 43-1301883
208 S. Akard St., Dallas, Texas, 75202
Telephone Number 210-821-4105
Securities registered pursuant to Section 12(b) of the Act: (See
attached Schedule A)
Securities registered pursuant to Section 12(g) of the Act:
None.
Indicate by check mark if the registrant is a well-known
seasoned issuer, as defined in Rule 405 of the
Securities Act. Yes [X] No [ ]
Indicate by check mark if the registrant is not required to file
reports pursuant to Section 13 or Section 15(d)
of the Act. Yes [ ] No [X]
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past
90 days. Yes [X] No [ ]
Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Web site, if any, every
Interactive Data File required to be submitted and posted pursuant
to Rule 405 of Regulation S-T during the preceding 12 months (or
for such shorter period that the registrant was required to submit
and post such files). Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein, and
will not be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form
10-K. [ ]
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer or
a smaller reporting company. See definition of "large accelerated
filer," "accelerated filer" and "smaller reporting company" in Rule
12b-2 of the Exchange Act.
Large accelerated filer Accelerated filer [
[X] ]
Non-accelerated filer Smaller reporting company
[ ] [ ]
(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act).
Yes [ ] No [X]
Based on the closing price of $43.21 per share on June 30, 2016,
the aggregate market value of our voting and non-voting common
stock held by non-affiliates was $266 billion.
At February 10, 2017, common shares outstanding were
6,141,570,142.
DOCUMENTS INCORPORATED BY REFERENCE
(1) Portions of AT&T Inc.'s Annual Report to Stockholders
for the fiscal year ended December 31, 2016 (Parts I and II).
(2) Portions of AT&T Inc.'s Notice of 2017 Annual Meeting
and Proxy Statement dated on or about March 10, 2017 to be filed
within the period permitted under General Instruction G(3) (Parts
III and IV).
SCHEDULE A
Securities Registered Pursuant To Section 12(b) Of The Act:
Name of each exchange
Title of each class on which registered
Common Shares (Par Value New York Stock
$1.00 Per Share) Exchange
5.875% AT&T Inc. New York Stock
Global Notes due April Exchange
28, 2017
Floating Rate AT&T Inc. New York Stock
Global Notes due June Exchange
4, 2019
1.875% AT&T Inc. New York Stock
Global Notes due December Exchange
4, 2020
2.65% AT&T Inc. New York Stock
Global Notes due December Exchange
17, 2021
1.45% AT&T Inc. New York Stock
Global Notes due June Exchange
1, 2022
2.50% AT&T Inc. New York Stock
Global Notes due March Exchange
15, 2023
1.30% AT&T Inc. New York Stock
Global Notes due September Exchange
5, 2023
2.75% AT&T Inc. New York Stock
Global Notes due May Exchange
19, 2023
2.40% AT&T Inc. New York Stock
Global Notes due March Exchange
15, 2024
3.50% AT&T Inc. New York Stock
Global Notes due December Exchange
17, 2025
4.375% AT&T Inc. New York Stock
Global Notes due September Exchange
14, 2029
2.60% AT&T Inc. New York Stock
Global Notes due December Exchange
17, 2029
3.55% AT&T Inc. New York Stock
Global Notes due December Exchange
17, 2032
5.20% AT&T Inc. New York Stock
Global Notes due November Exchange
18, 2033
3.375% AT&T Inc. New York Stock
Global Notes due March Exchange
15, 2034
SCHEDULE A - Continued
2.45% AT&T Inc. New York Stock
Global Notes due March Exchange
15, 2035
7.00% AT&T Inc. New York Stock
Global Notes due April Exchange
30, 2040
4.25% AT&T Inc. New York Stock
Global Notes due June Exchange
1, 2043
4.875% AT&T Inc. New York Stock
Global Notes due June Exchange
1, 2044
TABLE OF CONTENTS
Item Page
PART I
1. Business 1
1A. Risk Factors 11
2. Properties 12
3. Legal Proceedings 12
4. Mine Safety Disclosures 12
Executive Officers of the Registrant 13
PART II
5. Market for Registrant's Common Equity, 14
Related Stockholder Matters
and Issuer Purchases of Equity Securities
6. Selected Financial Data 15
Management's Discussion and Analysis
of Financial Condition
7. and Results of Operations 15
7A. Quantitative and Qualitative Disclosures 15
about Market Risk
Financial Statements and Supplementary
8. Data 15
Changes in and Disagreements with
Accountants on Accounting
9. and Financial Disclosure 15
9A. Controls and Procedures 15
9B. Other Information 16
PART III
Directors, Executive Officers and
10. Corporate Governance 16
11. Executive Compensation 16
12. Security Ownership of Certain Beneficial 16
Owners and
Management and Related Stockholder
Matters
13. Certain Relationships and Related 17
Transactions, and Director Independence
14. Principal Accountant Fees and Services 18
PART IV
Exhibits and Financial Statement
15. Schedules 18
PART I
ITEM 1. BUSINESS
GENERAL
AT&T Inc. ("AT&T," "we" or the "Company") is a holding
company incorporated under the laws of the State of Delaware in
1983 and has its principal executive offices at 208 S. Akard St.,
Dallas, Texas, 75202 (telephone number 210-821-4105). We maintain
an internet website at www.att.com. (This website address is for
information only and is not intended to be an active link or to
incorporate any website information into this document.) We make
available, free of charge, on our website our annual report on Form
10-K, our quarterly reports on Form 10-Q, current reports on Form
8-K and all amendments to those reports as soon as reasonably
practicable after such reports are electronically filed with, or
furnished to, the Securities and Exchange Commission (SEC). We also
make available on that website, and in print, if any stockholder or
other person so requests, our "Code of Ethics" applicable to all
employees and Directors, our "Corporate Governance Guidelines," and
the charters for all committees of our Board of Directors,
including Audit, Human Resources and Corporate Governance and
Nominating. Any changes to our Code of Ethics or waiver of our Code
of Ethics for senior financial officers, executive officers or
Directors will be posted on that website.
History
AT&T, formerly known as SBC Communications Inc. (SBC), was
formed as one of several regional holding companies created to hold
AT&T Corp.'s (ATTC) local telephone companies. On January 1,
1984, we were spun-off from ATTC pursuant to an anti-trust consent
decree, becoming an independent publicly-traded telecommunications
services provider. At formation, we primarily operated in five
southwestern states. Our subsidiaries merged with Pacific Telesis
Group in 1997, Southern New England Telecommunications Corporation
in 1998 and Ameritech Corporation in 1999, thereby expanding our
wireline operations as the incumbent local exchange carrier (ILEC)
into a total of 13 states. In November 2005, one of our
subsidiaries merged with ATTC, creating one of the world's leading
telecommunications providers. In connection with the merger, we
changed the name of our company from "SBC Communications Inc." to
"AT&T Inc." In December 2006, one of our subsidiaries merged
with BellSouth Corporation (BellSouth) making us the ILEC in an
additional nine states. With the BellSouth acquisition, we also
acquired BellSouth's 40 percent economic interest in AT&T
Mobility LLC (AT&T Mobility), formerly Cingular Wireless LLC,
resulting in 100 percent ownership of AT&T Mobility. In 2014,
we completed the acquisition of wireless provider Leap Wireless
International, Inc. (Leap) and sold our ILEC operations in
Connecticut, which we had previously acquired in 1998. In 2015, we
completed acquisitions of wireless properties in Mexico and
DIRECTV, a leading provider of digital television entertainment
services in both the United States and Latin America. Our services
and products are marketed under the AT&T, Cricket, DIRECTV,
SKY, and Unefon brand names.
Scope
We are a leading provider of communications and digital
entertainment services in the United States and the world. We offer
our services and products to consumers in the U.S., Mexico and
Latin America and to businesses and other providers of
telecommunications services worldwide. We also own and operate
three regional TV sports networks, and retain non-controlling
interests in another regional sports network and a network
dedicated to game-related programming as well as internet
interactive game playing.
The services and products that we offer vary by market, and
include: wireless communications, data/broadband and internet
services, digital video services, local and long-distance telephone
services, telecommunications equipment, managed networking, and
wholesale services. Our operating subsidiaries are organized as
follows, corresponding to our operating segments for financial
reporting purposes:
-- Business Solutions business units provide services to
business customers, including multinational companies; governmental
and wholesale customers; and individual subscribers who purchase
wireless services through employer-sponsored plans. We provide
advanced IP-based services including Virtual Private Networks
(VPN); Ethernet-related products and broadband, collectively
referred to as fixed strategic services; as well as traditional
data and voice products. We utilize our wireless and wired networks
(referred to as "wired" or "wireline") to provide a complete
integrated communications solution to our business customers.
-- Entertainment Group business units provide video, internet,
voice communication, and interactive and targeted advertising
services to customers located in the United States or in U.S.
territories. We utilize our copper and IP-based network and/or our
satellite technology.
-- Consumer Mobility business units provide nationwide wireless
service to consumers, and wholesale and resale subscribers located
in the United States or in U.S. territories. We utilize our network
to provide voice and data services, including high-speed internet,
video and home-monitoring services over wireless devices.
-- International business units provide entertainment services
in Latin America and wireless services in Mexico. Video
entertainment services are provided to primarily residential
customers using satellite technology. We utilize our regional and
national wireless networks in Mexico to provide consumer and
business customers with wireless data and voice communication
services.
Our Corporate and Other unit includes (1) operations that are
not considered reportable segments and that are no longer integral
to our operations or which we no longer actively market, and (2)
impacts of corporate-wide decisions for which the individual
operating segments are not being evaluated, including interest
costs and expected return on plan assets for our pension and
postretirement benefit plans.
With continuing advances in technology and in response to
changing demands from our customers, in recent years we have
focused on providing enhanced broadband, video and voice services.
In 2015, we purchased DIRECTV to expand our involvement in the
digital entertainment space. The nationwide reach of DIRECTV and
superior content-owner relationships significantly improve the
economics and expanded the geographic reach of our pre-existing
AT&T U-verse(R) video service. We also purchased wireless
operations in Mexico, moving quickly to build a world-class mobile
business in a country with a strong economic outlook, a growing
middle class, and cultural and geographic ties to the United
States. These acquisitions and our continued investment in a
premier network experience make our customers' lives more
convenient and productive and foster competition and further
innovation in the communications and entertainment industry. In
late 2016, we took another step in our strategy of providing an
unmatched communication and entertainment experience for our
customers when we agreed to purchase Time Warner Inc., a global
leader in creating premium media and entertainment content. In
2017, we plan to focus on the areas discussed below.
Wireless
AT&T Mobility began operations in October 2000 as a joint
venture between us and BellSouth and, in 2004, acquired AT&T
Wireless Services, Inc. Upon our acquisition of BellSouth in 2006,
AT&T Mobility became a wholly-owned subsidiary. We provide
wireless video, data and voice services. We are experiencing rapid
growth in video and data usage as consumers are demanding seamless
access across their wired and wireless devices, and as more and
more machines are being connected to the internet.
As of December 31, 2016, we served 146.8 million wireless
subscribers in North America, with nearly 135 million in the United
States. Our LTE technology covers almost 400 million people in
North America, and, in the United States, we cover all major
metropolitan areas and almost 320 million people with our LTE
technology. We also provide 4G coverage using another technology
(HSPA+), and, when combined with our upgraded backhaul network, we
are able to enhance our network capabilities and provide superior
mobile broadband speeds for data and video services. Our wireless
network also relies on other GSM digital transmission technologies
for 3G data communications.
We have also started planning for deployment of the latest
wireless technology (5G) and are currently testing in our labs and
in the field various ways to deploy that technology. We expect
global 5G technology standards to be set over the next two years or
so, enabling companies to begin commercial deployment thereafter.
The increased speeds and network operating efficiency expected with
5G technology should enable massive deployment of devices connected
to the internet as well as faster delivery of video and data
services.
As the wireless industry continues to mature, future wireless
growth will become increasingly dependent on our ability to offer
innovative video and data services and a wireless network that has
sufficient spectrum and capacity to support these innovations. We
continue to invest significant capital in expanding our network
capacity, as well as to secure and utilize spectrum that meets our
long-term needs. To that end, we submitted winning bids for 251 AWS
spectrum licenses for a near-nationwide contiguous block of
high-quality AWS spectrum in the AWS-3 Auction (FCC Auction 97).
Our strategy also includes redeploying spectrum previously used for
basic 2G services to support more advanced mobile internet services
on our 3G and 4G networks. We have bid on FirstNet, the First
Responder Network Authority, which if awarded will provide access
to a nationwide low band 20 MHz of spectrum, assuming all states
"opt in," and are participating in the FCC 600 MHz Auction (Auction
1000). We will continue to invest in our wireless network as we
look to provide future service offerings and participate in
technologies such as 5G and millimeter-wave bands.
Business Solutions
We expect to continue to strengthen the reach and sophistication
of our network facilities and our ability to offer a variety of
communications services, both fixed and mobile, to businesses
customers, including multinational companies; governmental and
wholesale customers; and individual subscribers who purchase
wireless services through employer-sponsored plans.
Internet Protocol (IP) Technology
IP is generally used to describe the transmission of data, which
can include voice (called voice over IP or VoIP), using a
software-based technology rather than a traditional wire and
physical switch-based telephone network. A company using this
technology can provide voice and data services at a lower cost
because this technology uses bandwidth more efficiently than a
traditional network. Using this technology also presents growth
opportunities, especially in providing data and video services to
both fixed locations and mobile devices. To take advantage of both
these growth and cost-savings opportunities, we have encouraged the
migration of wireline customers in our current 21-state ILEC
service area to services using IP, and expect to continue this
transition through at least 2020.
Integration of Data/Broadband and Entertainment Services
As the communications industry continues to move toward
internet-based technologies that are capable of blending
traditional wireline and wireless services, we plan to offer
services that take advantage of these new and more sophisticated
technologies. In particular, we intend to continue to focus on
expanding our high-speed internet and video offerings and on
developing IP-based services that allow customers to unite their
home or business fixed services with their mobile service. During
2017, we will continue to develop and provide unique integrated
video, mobile and broadband solutions, including our recently
introduced over-the-top video service, DIRECTV NOW.
International
We believe that the wireless model in the U.S., with exploding
demand for mobile internet service and the associated economic
benefits, will be repeated around the world as companies invest in
high-speed mobile networks. Due in part to changes in the legal and
regulatory framework in Mexico in 2015, we acquired Mexican
wireless operations to establish a unique, seamless, cross-border
North American wireless network covering nearly 400 million people
and businesses in the United States and Mexico. During 2017, we
will continue to build a world-class mobile business and network in
Mexico.
BUSINESS OPERATIONS
OPERATING SEGMENTS
Our segments are strategic business units that offer different
products and services over various technology platforms and/or in
different geographies that are managed accordingly. We analyze our
operating segments based on Segment Contribution, which consists of
operating income, excluding acquisition-related costs and other
significant items, and equity in net income (loss) of affiliates
for investments managed within each operating segment. We have four
reportable segments: (1) Business Solutions, (2) Entertainment
Group, (3) Consumer Mobility and (4) International.
Additional information about our segments, including financial
information, is included under the heading "Segment Results" on
pages 13 through 21 and in Note 4 of the Annual Report and is
incorporated herein by reference pursuant to General Instruction
G(2).
BUSINESS SOLUTIONS
Our Business Solutions segment provides services to business
customers, including multinational companies; governmental and
wholesale customers; and individual subscribers who purchase
wireless services through employer-sponsored plans. We provide
advanced IP-based services including Virtual Private Networks
(VPN); Ethernet-related products and broadband, collectively
referred to as fixed strategic services; as well as traditional
data and voice products. We utilize our wireless and wired networks
(referred to as "wired" or "wireline") to provide a complete
integrated communications solution to our business customers. The
Business Solutions segment provided approximately 44% of 2016
segment operating revenues and 52% of our 2016 total Segment
Contribution. We divide Business Solutions revenue into the
following categories: wireless service, fixed strategic services,
legacy voice and data services, other services and wireless
equipment.
Wireless Service - We offer a comprehensive range of
high-quality nationwide wireless voice and data communications
services in a variety of pricing plans to approximately 81.4
million Business Solutions wireless subscribers. Our offerings are
tailored to meet the communications needs of targeted customer
categories. We classify our subscribers as either postpaid,
connected device or reseller.
Wireless data services continue to be a growing area for this
segment, representing an increasing share of overall subscriber
revenue. We are experiencing solid growth in this area as an
increasing number of our subscribers have upgraded their handsets
to more advanced integrated devices, are using data-centric devices
such as tablets and connected cars and are utilizing the network to
connect and control physical devices using embedded computing
systems and/or software, commonly called the Internet of Things
(IoT). We offer both Mobile Share plans and an integrated offer
combining unlimited wireless data with our video services. These
plans allow sharing of voice, text and data across multiple
devices. We also offer equipment installment programs, such as
AT&T Next(SM) (AT&T Next), a program allowing subscribers
to more frequently upgrade handsets using an installment payment
plan; and Rollover Data on Mobile Share plans, which allows unused
shareable plan data to be rolled over and used within the next
month. Such offerings are intended to encourage existing
subscribers to upgrade their current services and/or add connected
devices, attract subscribers from other providers and minimize
subscriber churn. Participation in these plans continues to
increase. Customers in our "connected device" category (e.g., users
of session-based tablets, monitoring devices and automobile
systems) purchase those devices from third-party suppliers that buy
data access supported by our network. We continue to upgrade our
network and coordinate with equipment manufacturers and
applications developers to further capitalize on the continued
growing demand for wireless data services.
During the first quarter of 2016, we discontinued offering
subsidized smartphones to most of our customers. Under our
no-subsidy model, subscribers must purchase a device under an
equipment installment program or choose to bring their own device,
with no annual service contract. Our wireless services include data
and voice services, including long-distance service and roaming
services. Roaming services enable our subscribers to utilize other
carriers' networks when they are "roaming" outside our network
footprint.
Fixed Strategic Services - Fixed strategic services (previously
known as strategic business services) are our most advanced
business solutions. Our offerings use high-capacity digital
circuits, and allow customers to create internal data networks and
access external data networks. Switched Transport services transmit
data using switching equipment to transfer the data between
multiple lines before reaching its destination. Dedicated transport
services use a single direct line to transmit data between
destinations. Due to advances in technology, our most advanced
business solutions are subject to change periodically. We review
and evaluate our fixed strategic service offerings annually, which
may result in an updated definition and the recast of our
historical financial information to conform to the current period
presentation. Any modifications will be reflected in the first
quarter.
We provide businesses voice applications over IP-based networks
(i.e., Enhanced Virtual Private Networks or "EVPN"). Over the past
several years, we have built out our new IP/MPLS (Internet
Protocol/MultiProtocol Label Switching) network, to supplement our
IP-based product set, and eventually replace our older
circuit-based networks and services. These products allow us to
provide highly complex global data networks. Additional IP-based
services include internet access and network integration, network
security, dedicated internet and enterprise networking services.
These advanced IP-based services continued to grow during 2016 as
customers shift from our older circuit-based services. We expect
this trend to continue in 2017 as customers continue to use more
services based on internet access and demand ever-increasing
transmission speeds, especially for video. To align with these
trends, we continue to reconfigure our wireline network to take
advantage of the latest technologies and services.
Packet services consist of data networks using packet switching
and transmission technologies, including traditional circuit-based
and IP connectivity services. Packet services enable customers to
transmit large volumes of data economically and securely and are
used for local area network (LAN) interconnection and inter-office
communications. High-speed packet services are used extensively by
enterprise (large business) customers.
Enterprise networking services provide comprehensive support
from network design, implementation and installation to ongoing
network operations and management for networks of varying scales,
including LANs and virtual private networks. These services include
applications such as e-mail, order entry systems, employee
directories, human resource transactions and other database
applications. We also offer Wi-Fi service.
Legacy Voice and Data Services - Voice services include
traditional local and long-distance service provided directly to
business and governmental customers, or through wholesale
arrangements with other service providers. Our circuit-based,
traditional data products include switched and dedicated transport
services that allow customers to transmit data at high speeds, as
well as access the internet using a DSL connection.
Revenues from our traditional voice services continue to decline
as customers switch to wireless or VoIP services provided by either
us, cable companies or other internet-based providers. In addition,
the continuing slow economic growth and business starts have led
some wireline customers to terminate their business phone service.
We have responded by offering packages of combined voice and data
services, including broadband and video, and intend to continue
this strategy during 2017.
Other Services - Other service revenues include project-based
revenue, which is nonrecurring in nature, as well as revenues from
other managed services, outsourcing, government professional
service and equipment.
We provide intrastate, interstate and international wholesale
networking capacity to other service providers. We offer a
combination of high-volume transmission capacity and conventional
dedicated line services on a regional, national and international
basis to our wholesale customers, which are primarily wireless
carriers, interexchange carriers, Internet Service Providers
(ISPs), and facility-based and switchless resellers.
Wireless Equipment - We sell a wide variety of handsets,
wirelessly enabled computers (e.g., tablets and notebooks) and
personal computer wireless data cards manufactured by various
suppliers for use with our voice and data services. We sell through
our own company-owned stores, agents and third-party retail stores.
Like other wireless service providers, we have historically
provided postpaid contract subscribers substantial equipment
subsidies to initiate, renew or upgrade service. We have now
largely eliminated these subsidies and provide our customers with
more service options, the ability to purchase handsets on an
installment basis and the opportunity to bring their own device.
With the elimination of handset subsidies, our subscribers have
been retaining their handsets for longer periods; accordingly, we
expect equipment revenues to be pressured in 2017. We also sell
accessories, such as carrying cases, hands-free devices and other
items.
Additional information on our Business Solutions segment is
contained in the Annual Report in the "Operating Environment
Overview" section beginning on page 14 and is incorporated herein
by reference pursuant to General Instruction G(2).
ENTERTAINMENT GROUP
Our Entertainment Group segment provides video, internet, voice
communication, and interactive and targeted advertising services to
customers in the United States and U.S. territories by utilizing
our copper and IP-based wired network and/or our satellite
technology. In July 2015, we acquired DIRECTV, a leading provider
of digital television entertainment engaged in acquiring,
promoting, selling and distributing digital entertainment
programming primarily via satellite to subscribers. The
Entertainment Group segment provided approximately 32% of 2016
segment operating revenues and 19% of our 2016 total Segment
Contribution. We divide this segment's revenue into the following
categories: video entertainment, high-speed internet, legacy voice
and data services, and equipment and other.
Video Entertainment - We offer video entertainment services
using satellite and IP-based technologies (referred to as "linear")
as well as a streaming option that does not require either
satellite or wired IP services (referred to as "over-the-top"). Our
offerings are structured to provide customers with the best video
experience both inside and outside of the home by offering
subscribers attractive programming, technology and customer
service. Due to the rising cost of programming as well as higher
costs to acquire new subscribers in an increasingly competitive
industry, it is even more important to distinguish and elevate our
video entertainment experience for our new and existing
customers.
We provide approximately 25.3 million subscribers with access to
hundreds of channels of digital-quality video entertainment and
audio programming. For our satellite subscribers, we provide
video-on-demand (VOD) by "pushing" top-rated movies onto customers'
digital video recorders (DVRs) for instant viewing, as well as via
broadband to our subscribers who have connected their set-top
receiver to their broadband service. In addition, our video
entertainment subscribers have the ability to use the internet
and/or our mobile applications for smartphones and tablets to view
authorized content, search program listings and schedule DVR
recordings.
We believe it is critical that we continue to extend our brand
leadership as the premium pay-TV provider in the marketplace by
providing the best video experience both at home and on mobile
devices. We believe that our flexible platform that uses a
combination of satellite, IP-based and cloud infrastructure with a
broadband and wireless connection is the most efficient way to
transport content to subscribers when and where they want it.
Through this integrated approach, we're able to optimize the use of
storage in the home as well as in the cloud, while also providing a
seamless service for consumers across screens and locations.
High-Speed Internet - We offer broadband and internet services
to 12.9 million residential subscribers. Our IP-based technology
provides more advanced high-speed internet services.
Legacy Voice and Data Services - Voice services include
traditional local and long-distance service provided to residential
customers. Our circuit-based, traditional data products include DSL
internet access.
Revenues from our traditional voice services continue to decline
as customers switch to wireless or VoIP services provided by either
us, cable or other internet-based providers. We have responded by
offering packages of combined voice and data services, including
broadband, video and wireless, and intend to continue this strategy
during 2017.
Equipment and Other - Other service revenues include revenue
from voice services provided over IP-based technology (VoIP) as
well as revenues associated with technical support and other
customer service functions and equipment.
Additional information on our Entertainment Group segment is
contained in the Annual Report in the "Operating Environment
Overview" section beginning on page 16 and is incorporated herein
by reference pursuant to General Instruction G(2).
CONSUMER MOBILITY
Our Consumer Mobility segment consists of AT&T Mobility
operations that provide nationwide wireless services to consumers
and wholesale and resale wireless subscribers located in the United
States or U.S. territories by utilizing our network to provide
voice and data services, including high-speed internet, video and
home-monitoring services over wireless devices. Wireless services
include data and voice, including long-distance and roaming
services. Roaming services enable our subscribers to utilize other
carriers' networks when they are "roaming" outside our network
footprint. The Consumer Mobility segment provided approximately 20%
of 2016 total segment operating revenues and 31% of our 2016 total
Segment Contribution. We classify our subscribers as either
postpaid, prepaid, connected device or reseller. At December 31,
2016, we served 53.5 million Consumer Mobility subscribers,
including 27.1 million postpaid, 13.5 million prepaid, 11.9 million
reseller and 942,000 connected devices. We divide our revenue into
the following categories: services and equipment.
Wireless Services - We offer a comprehensive range of
high-quality nationwide wireless voice and data communications
services in a variety of postpaid and prepaid pricing plans.
Wireless data services continue to be a growing area of Consumer
Mobility's business, representing an increasing share of overall
subscriber revenue. Subscribers continue to upgrade their handsets
to more advanced integrated devices, contributing to growth from
wireless data services. We offer Mobile Share plans and an
integrated offer combining our unlimited wireless data with our
video services. These plans allow sharing of voice, text and data
across multiple devices. We also offer equipment installment
programs, such as AT&T Next, a program allowing subscribers to
more frequently upgrade handsets using an installment payment plan;
and Rollover Data on Mobile Share plans, which allows unused
shareable plan data to be rolled over and used within the next
month. We also launched in 2016 a program for wireless subscribers
that also purchase our video service to view such programming
without it counting against their wireless data allowances. Such
offerings are intended to encourage existing subscribers to upgrade
their current services and/or add connected devices, attract
subscribers from other providers, and minimize subscriber churn.
Participation in these plans continues to increase. Customers in
our "connected device" category (e.g., users of session-based
tablets) purchase those devices from third-party suppliers that buy
data access supported by our network. We continue to upgrade our
network and coordinate with equipment manufacturers and
applications developers in order to further capitalize on the
continued growth in the demand for wireless data services.
During the first quarter of 2016, we discontinued offering
subsidized smartphones to most of our customers. Under our
no-subsidy model, subscribers must purchase a device under an
equipment installment program or choose to bring their own device,
with no annual service contract. Market maturity, competition and
the migration of subscribers to employer plans offered by our
Business Solutions segment have slowed the growth in
subscribers.
We also offer nationwide wireless voice and data communications
to certain customers who prefer to pay in advance. These services
are offered under the Cricket and Go Phone brands and are typically
monthly prepaid services.
Other Service - Other services includes consulting, advertising,
application and co-location, as well as fees we charge to other
carriers for providing roaming services to their customers
utilizing our network.
Equipment - We sell a wide variety of handsets, wirelessly
enabled computers (e.g., tablets and notebooks) and personal
computer wireless data cards manufactured by various suppliers for
use with our voice and data services. We sell through our own
company-owned stores, agents and third-party retail stores. Like
other wireless service providers, we have historically provided
postpaid contract subscribers substantial equipment subsidies to
initiate, renew or upgrade service. We have now largely eliminated
these subsidies and provide our customers with more service
options, the ability to purchase handsets on an installment basis
and the opportunity to bring their own device. We also sell
accessories, such as carrying cases, hands-free devices, and other
items, to consumers, as well as to agents and third-party
distributors for resale.
Additional information on our Consumer Mobility segment is
contained in the Annual Report in the "Operating Environment
Overview" section beginning on page 18 and is incorporated herein
by reference pursuant to General Instruction G(2).
INTERNATIONAL
Our International segment provides entertainment services in
Latin America and wireless services in Mexico. Video entertainment
services are provided to primarily residential customers using
satellite technology. We utilize our regional and national wireless
networks in Mexico to provide consumer and business customers with
wireless data and voice communication services. The International
segment provided approximately 4% of 2016 segment operating
revenues. We divide our revenue into the following categories:
video entertainment, wireless service and wireless equipment.
Video Entertainment - We are a leading provider of digital
television services throughout Latin America, providing a wide
selection of local and international digital-quality video
entertainment and audio programming under the DIRECTV and SKY
brands. We believe we provide one of the most extensive collections
of programming available in the Latin America pay-TV market,
including HD sports video content and the most innovative
interactive technology across the region. In addition, we have the
unique ability to sell superior offerings of our differentiated
products and services on a continent-wide basis with an operational
cost structure that we believe to be lower than that of our
competition.
We have approximately 12.5 million video subscribers in Latin
America. Our operations are comprised of: PanAmericana, which
provides services in Argentina, Chile, Colombia, Ecuador, Peru,
Venezuela and certain other countries in the region; and SKY Brasil
Servicos Ltda., or SKY Brasil, which is a 93% owned subsidiary. Our
Latin American operations also include our 41% equity method
investment in Innova, S. de R.L. de C.V., or SKY Mexico, which we
include in our International segment. As of December 31, 2016,
PanAmericana had approximately 7.2 million subscribers and SKY
Brasil had approximately 5.3 million subscribers.
Wireless - We offer postpaid and prepaid wireless services in
Mexico to approximately 12.0 million subscribers under the AT&T
and Unefon brands. Postpaid services allow for (1) no annual
service contract for subscribers who bring their own device or
purchase a device on installment (the device must be paid in full
if the customer chooses to drop their service from AT&T); and
(2) service contracts for periods up to 24 months for subscribers
who purchase their equipment under the traditional device subsidy
model. All plans offer no roaming charges in the United States or
Canada, unlimited minutes and messages to the extended AT&T
community and unlimited social networking. We also offer prepaid
services to certain customers who prefer to pay in advance.
Equipment - We sell a wide variety of handsets, including
smartphones manufactured by various suppliers for use with our
voice and data services. We sell through our own company-owned
stores, agents and third-party retail stores.
Additional information on our International segment is contained
in the Annual Report in the "Operating Environment Overview"
section beginning on page 20 and is incorporated herein by
reference pursuant to General Instruction G(2).
MAJOR CLASSES OF SERVICE
The following table sets forth the percentage of total
consolidated reported operating revenues by any class of service
that accounted for 10% or more of our consolidated total operating
revenues in any of the last three fiscal years:
Percentage of Total
Consolidated Operating
Revenues
2016 2015 2014
-------------------------------- ---------- ---------- ---------
Business Solutions Segment
Wireless service 19% 21% 23%
Legacy voice and data services 10 12 15
Equipment (1) 5 6 6
Entertainment Group Segment
Video entertainment 22 14 5
Legacy voice and data services 3 4 6
Consumer Mobility Segment
Wireless service 17 20 23
Equipment 3 4 4
International Segment
Video entertainment 3 1 -
-------------------------------- ---- ---- ---- ---- ---- ---
(1) Includes customer premises equipment of $982 million in
2016, $929 million in 2015 and $979 million in 2014 that is
reported as other service and equipment revenues in our Business
Solutions segment.
Additional information on our geographical distribution of
revenues is contained in the Annual Report in the "Segment
Information" section beginning on page 54 and is incorporated
herein by reference pursuant to General Instruction G(2).
GOVERNMENT REGULATION
Wireless communications providers must be licensed by the U.S.
Federal Communications Commission (FCC) to provide communications
services at specified spectrum frequencies within defined
geographic areas and must comply with the rules and policies
governing the use of the spectrum as adopted by the FCC. The FCC's
rules have a direct impact on whether the wireless industry has
sufficient spectrum available to support the high-quality,
innovative services our customers demand. Wireless licenses are
issued for a fixed time period, typically 10 years, and we must
seek renewal of these licenses. While the FCC has generally renewed
licenses given to operating companies such as us, the FCC has
authority to both revoke a license for cause and to deny a license
renewal if a renewal is not in the public interest. Additionally,
while wireless communications providers' prices and service
offerings are generally not subject to regulation, the federal
government and various states are considering new regulations and
legislation relating to various aspects of wireless services.
The Communications Act of 1934 and other related acts give the
FCC broad authority to regulate the U.S. operations of our
satellite services, which are licensed by the FCC. In addition,
states representing a majority of our local service access lines
have adopted legislation that enables us to provide IP-based video
service through a single statewide or state-approved franchise (as
opposed to the need to acquire hundreds or even thousands of
municipal-approved franchises) to offer a competitive video
product. We also are supporting efforts to update and improve
regulatory treatment for retail services. Regulatory reform and
passage of legislation is uncertain and depends on many
factors.
In February 2015, the FCC released an order in response to the
D.C. Circuit's January 2014 decision adopting new rules, and
classifying both fixed and mobile consumer broadband internet
access as telecommunications services, subject to comprehensive
regulation under the Telecommunications Act of 1996. The FCC's
decision significantly expands its existing authority to regulate
the provision of fixed and mobile broadband internet access
services. The FCC also asserted jurisdiction over internet
interconnection arrangements, which until now have been
unregulated. These actions could have an adverse impact on our
fixed and mobile broadband services and operating results. AT&T
and several other parties, including US Telecom and CTIA trade
groups, have challenged the FCC's order.
Our ILEC subsidiaries are subject to regulation by state
governments, which have the power to regulate intrastate rates and
services, including local, long-distance and network access
services, provided such state regulation is consistent with federal
law. Some states have eliminated or reduced regulations on our
retail offerings. These subsidiaries are also subject to the
jurisdiction of the FCC with respect to intercarrier compensation,
interconnection, and interstate and international rates and
services, including interstate access charges. Access charges are a
form of intercarrier compensation designed to reimburse our
wireline subsidiaries for the use of their networks by other
carriers.
Our subsidiaries operating outside the United States are subject
to the jurisdiction of national and supranational regulatory
authorities in the market where service is provided.
Additional information relating to regulation of our
subsidiaries is contained in the Annual Report under the headings
"Operating Environment Overview" beginning on page 24 and
"Regulatory Developments" beginning on page 27 and is incorporated
herein by reference pursuant to General Instruction G(2).
IMPORTANCE, DURATION AND EFFECT OF LICENSES
Certain of our subsidiaries own or have licenses to various
patents, copyrights, trademarks and other intellectual property
necessary to conduct business. Many of our subsidiaries also hold
government-issued licenses or franchises to provide wireline,
satellite or wireless services and additional information relating
to regulation affecting those rights is contained in the Annual
Report under the heading "Operating Environment Overview" beginning
on page 24 and is incorporated herein by reference pursuant to
General Instruction G(2). We actively pursue patents, trademarks
and service marks to protect our intellectual property within the
United States and abroad. We maintain a significant global
portfolio of patents, trademarks and service mark registrations. We
have also entered into agreements that permit other companies, in
exchange for fees and subject to appropriate safeguards and
restrictions, to utilize certain of our trademarks and service
marks. We periodically receive offers from third parties to obtain
licenses for patents and other intellectual rights in exchange for
royalties or other payments. We also receive notices asserting that
our products or services infringe on their patents and other
intellectual property rights. These claims, whether against us
directly or against third-party suppliers of products or services
that we, in turn, sell to our customers, such as wireless handsets,
could require us to pay damages, royalties, stop offering the
relevant products or services and/or cease other activities.
While the outcome of any litigation is uncertain, we do not believe
that the resolution of any of these infringement claims or the
expiration or non-renewal of any of our intellectual property
rights would have a material adverse effect on our results of
operations.
MAJOR CUSTOMER
No customer accounted for 10% or more of our consolidated
revenues in 2016, 2015 or 2014.
COMPETITION
Information relating to competition in each of our operating
segments is contained in the Annual Report under the heading
"Competition" beginning on page 27, and is incorporated herein by
reference pursuant to General Instruction G(2).
RESEARCH AND DEVELOPMENT
AT&T scientists and engineers conduct research in a variety
of areas, including IP networking, advanced network design and
architecture, network and cyber security, network operations
support systems, satellite technology and data analytics. The
majority of the development activities are performed to create new
services and to invent tools and systems to manage secure and
reliable networks for us and our customers. In recent years, we
initiated a technology outreach effort aimed at venture capital
funded startups with the objective of rapidly introducing new
solutions, products and applications developed by third parties.
Research and development expenses were $1,649 million in 2016,
$1,693 million in 2015, and $1,730 million in 2014.
EMPLOYEES
As of January 31, 2017, we employed approximately 268,000
persons. Approximately 48% of our employees are represented by the
Communications Workers of America, the International Brotherhood of
Electrical Workers or other unions. Contracts covering
approximately 20,000 mobility employees across the country and
approximately 25,000 traditional wireline employees in our
Southwest and Midwest regions will expire in 2017. Additionally,
negotiations continue with approximately 15,000 traditional
wireline employees in our West region where the contract expired in
April 2016. Approximately 11,000 former DIRECTV employees were
eligible for and chose union representation. Bargaining has
resulted in approximately 70% of these employees now being covered
under ratified contracts that expire between 2017 and 2020. After
expiration of the current agreements, work stoppages or labor
disruptions may occur in the absence of new contracts or other
agreements being reached.
At December 31, 2016, we had approximately 533,000 retirees and
dependents that were eligible to receive retiree benefits.
ITEM 1A. RISK FACTORS
Information required by this Item is included in the Annual
Report under the heading "Risk Factors" on pages 39 through 43
which is incorporated herein by reference pursuant to General
Instruction G(2).
CAUTIONARY LANGUAGE CONCERNING FORWARD-LOOKING STATEMENTS
Information set forth in this report contains forward-looking
statements that are subject to risks and uncertainties, and actual
results could differ materially. Many of these factors are
discussed in more detail in the "Risk Factors" section. We claim
the protection of the safe harbor for forward-looking statements
provided by the Private Securities Litigation Reform Act of
1995.
The following factors could cause our future results to differ
materially from those expressed in the forward-looking
statements:
-- Adverse economic and/or capital access changes in the markets
served by us or in countries in which we have significant
investments, including the impact on customer demand and our
ability and our suppliers' ability to access financial markets at
favorable rates and terms.
-- Changes in available technology and the effects of such
changes, including product substitutions and deployment costs.
-- Increases in our benefit plans' costs, including increases
due to adverse changes in the United States and foreign securities
markets, resulting in worse-than-assumed investment returns and
discount rates; adverse changes in mortality assumptions; adverse
medical cost trends; and unfavorable or delayed implementation or
repeal of healthcare legislation, regulations or related court
decisions.
-- The final outcome of FCC and other federal, state or foreign
government agency proceedings (including judicial review, if any,
of such proceedings) involving issues that are important to our
business, including, without limitation, special access and
business data services; intercarrier compensation; interconnection
obligations; pending Notices of Apparent Liability; the transition
from legacy technologies to IP-based infrastructure, including the
withdrawal of legacy TDM-based services; universal service;
broadband deployment; E911 services; competition policy; privacy
net neutrality, including the FCC's order classifying broadband as
Title II services subject to much more comprehensive regulation;
unbundled network elements and other wholesale obligations;
multi-channel video programming distributor services and equipment;
availability of new spectrum, on fair and balanced terms; and
wireless and satellite license awards and renewals.
-- The final outcome of state and federal legislative efforts
involving issues that are important to our business, including
deregulation of IP-based services, relief from Carrier of Last
Resort obligations and elimination of state commission review of
the withdrawal of services.
-- Enactment of additional state, local, federal and/or foreign
regulatory and tax laws and regulations, or changes to existing
standards and actions by tax agencies and judicial authorities
including the resolution of disputes with any taxing jurisdictions,
pertaining to our subsidiaries and foreign investments, including
laws and regulations that reduce our incentive to invest in our
networks, resulting in lower revenue growth and/or higher operating
costs.
-- Our ability to absorb revenue losses caused by increasing
competition, including offerings that use alternative technologies
or delivery methods (e.g., cable, wireless, VoIP and over-the-top
video service) and our ability to maintain capital
expenditures.
-- The extent of competition including from governmental
networks and other providers and the resulting pressure on customer
and access line totals and segment operating margins.
-- Our ability to develop attractive and profitable
product/service offerings to offset increasing competition.
-- The ability of our competitors to offer product/service
offerings at lower prices due to lower cost structures and
regulatory and legislative actions adverse to us, including state
regulatory proceedings relating to unbundled network elements and
non-regulation of comparable alternative technologies (e.g.,
VoIP).
-- The continued development and delivery of attractive and
profitable video offerings through satellite and IP-based networks;
the extent to which regulatory and build-out requirements apply to
our offerings; and the availability, cost and/or reliability of the
various technologies and/or content required to provide such
offerings.
-- Our continued ability to maintain margins, attract and offer
a diverse portfolio of wireless service and devices and device
financing plans.
-- The availability and cost of additional wireless spectrum and
regulations and conditions relating to spectrum use, licensing,
obtaining additional spectrum, technical standards and deployment
and usage, including network management rules.
-- Our ability to manage growth in wireless video and data
services, including network quality and acquisition of adequate
spectrum at reasonable costs and terms.
-- The outcome of pending, threatened or potential litigation
(which includes arbitrations), including, without limitation,
patent and product safety claims by or against third parties.
-- The impact from major equipment failures on our networks,
including satellites operated by DIRECTV; the effect of security
breaches related to the network or customer information; our
inability to obtain handsets, equipment/software or have handsets,
equipment/software serviced in a timely and cost-effective manner
from suppliers; and in the case of satellites launched, timely
provisioning of services from vendors; or severe weather
conditions, natural disasters, pandemics, energy shortages, wars or
terrorist attacks.
-- The issuance by the Financial Accounting Standards Board or
other accounting oversight bodies of new accounting standards or
changes to existing standards.
-- Our ability to integrate our acquisition of DIRECTV.
-- Our ability to close our pending acquisition of Time Warner
Inc. and successfully integrate its operations.
-- Our ability to adequately fund our wireless operations,
including payment for additional spectrum, network upgrades and
technological advancements.
-- Our increased exposure to video competition and foreign
economies due to our recent acquisitions of DIRECTV and Mexican
wireless properties, including foreign exchange fluctuations as
well as regulatory and political uncertainty.
-- Changes in our corporate strategies, such as changing
network-related requirements or acquisitions and dispositions,
which may require significant amounts of cash or stock, to respond
to competition and regulatory, legislative and technological
developments.
-- The uncertainty surrounding further congressional action to
address spending reductions, which may result in a significant
decrease in government spending and reluctance of businesses and
consumers to spend in general.
-- The uncertainty and impact of anticipated regulatory and
corporate tax reform, which may impact the overall economy and
incentives for business investments.
Readers are cautioned that other factors discussed in this
report, although not enumerated here, also could materially affect
our future earnings.
ITEM 2. PROPERTIES
Our properties do not lend themselves to description by
character and location of principal units. At December 31, 2016,
central office equipment represented 29%; outside plant (including
cable, wiring and other non-central office network equipment)
represented approximately 25%; satellites represented 1%; other
equipment, comprised principally of wireless network equipment
attached to towers, furniture and office equipment and vehicles and
other work equipment, represented 27%; land, building and wireless
communications towers represented 12%; and other miscellaneous
property represented 6%.
Substantially all of the installations of central office
equipment are located in buildings and on land we own. Many
garages, administrative and business offices, wireless towers,
telephone centers and retail stores are leased. Property on which
communication towers are located may be either owned or leased.
ITEM 3. LEGAL PROCEEDINGS
We are a party to numerous lawsuits, regulatory proceedings and
other matters arising in the ordinary course of business. As of the
date of this report, we do not believe any pending legal
proceedings to which we or our subsidiaries are subject are
required to be disclosed as material legal proceedings pursuant to
this item.
We are subject from time to time to judicial and administrative
proceedings brought by various governmental authorities under
federal, state or local environmental laws. We are required to
discuss three of these proceedings in our Forms 10-Q and 10-K,
because each could result in monetary sanctions (exclusive of
interest and costs) of $100,000 or more. However, we do not believe
that any of them currently pending will have a material adverse
effect on our results of operations.
(a) Waste Disposal Inquiry Involving DIRECTV In August 2012, a
unit organized by the California Attorney General and the District
Attorney for Alameda County, California notified DIRECTV that the
unit was examining allegations that DIRECTV had failed to properly
manage, store, transport and dispose of Hazardous and Universal
Waste in accordance with the California Health & Safety Code.
No litigation has been filed. DIRECTV is cooperating with the unit
and is seeking to resolve all claims. A monetary settlement has
been proposed and agreed to in principle by DIRECTV in an amount
that is not material. Negotiation of final terms is proceeding.
(b) San Diego County Inquiry Involving Cricket Communications,
Inc. In February 2014, the San Diego County Air Pollution Control
District began inquiring into alleged violations of California
regulations governing removal, handling and disposal of asbestos
containing materials arising from an independent dealer's
demolition and construction activity in preparation to install
upgraded point of purchase and fixtures in accordance with Cricket
Dealer Guidelines. While the independent dealer was in sole control
of contractors performing the work at issue, the County has focused
on Cricket Communications dealer agreement terms and interactions
with the independent dealer as a basis for asserting direct
liability against Cricket Communications, Inc. After discussions,
in November 2015, the County issued a penalty demand in excess of
$100,000. In October 2016, we reached a monetary settlement with
the County of this matter for an immaterial amount.
(c) South Coast Air Quality In January 2016, AT&T Mobility
received an offer to enter into an administrative settlement with
California's South Coast Air Quality Management District associated
with a Notice of Violation (NOV) received in 2015. The 2015 NOV
alleged violations of local environmental air permitting and
emissions rules issued by the District in connection with operation
of a back-up power generator system at one AT&T Mobility
facility. After discussions, the parties resolved the alleged
violations without admission of fault by AT&T Mobility for a
payment of civil penalties in an amount of less than $100,000.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
EXECUTIVE OFFICERS OF THE REGISTRANT
(As of February 1, 2017)
Name Age Position Held
Since
Chairman of the Board, Chief
Randall L. Executive Officer
Stephenson 56 and President 6/2007
F. Thaddeus Chief Executive Officer -
Arroyo 53 Business Solutions and International 1/2017
William A. Senior Executive Vice President
Blase Jr. 61 - Human Resources 6/2007
Chief Strategy Officer and
Group President - AT&T Technology
John M. Donovan 56 and Operations 2/2016
Senior Executive Vice President
David S. Huntley 58 and Chief Compliance Officer 12/2014
Senior Executive Vice President
Lori M. Lee 51 and Global Marketing Officer 4/2015
David R. McAtee Senior Executive Vice President
II 48 and General Counsel 10/2015
Senior Executive Vice President
Robert W. Quinn - External and Legislative
Jr. 56 Affairs, AT&T Services, Inc. 10/2016
Chief Executive Officer-AT&T
Entertainment Group,
John T. Stankey 54 AT&T Services, Inc. 7/2015
Senior Executive Vice President
John J. Stephens 57 and Chief Financial Officer 6/2011
All of the above executive officers have held high-level
managerial positions with AT&T or its subsidiaries for more
than the past five years. Executive officers are not appointed to a
fixed term of office.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED
STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY
SECURITIES
(a) Our common stock is listed on the New York Stock Exchange.
The number of stockholders of record as of December 31, 2016 and
2015 was 1,020,203 and 1,074,894. The number of stockholders of
record as of February 10, 2017, was 1,015,975. We declared
dividends, on a quarterly basis, totaling $1.93 per share in 2016
and $1.89 per share in 2015.
Other information required by this Item is included in the
Annual Report under the headings "Quarterly Financial Information"
on page 83, "Selected Financial and Operating Data" on page 10, and
"Stock Trading Information" on the back cover, which are
incorporated herein by reference pursuant to General Instruction
G(2).
(c) In July 2012, the Board of Directors approved an
authorization to repurchase 300 million shares, which we completed
in May 2013. In March 2013, our Board of Directors approved an
authorization to repurchase up to an additional 300 million shares
of our common stock. In March 2014, our Board of Directors approved
another authorization to repurchase up to an additional 300 million
shares of our common stock. For the year ended December 31, 2016,
we repurchased 11 million shares for distribution through our
employee benefit plans, totaling $444 million under the March 2013
authorization. For the year ended December 31, 2015, we repurchased
8 million shares totaling $269 million under the March 2013
authorization. The emphasis of our 2017 financing activities will
be the issuance of debt and the payment of dividends, subject to
approval by our Board of Directors, and the repayment of debt.
To implement these authorizations, we used open market
repurchase programs, relying on Rule 10b5-1 of the Securities
Exchange Act of 1934 where feasible.
We will continue to fund any share repurchases through a
combination of cash from operations, borrowings dependent on market
conditions, or cash from the disposition of certain non-strategic
investments.
A summary of our repurchases of common stock during the fourth
quarter of 2016 is as follows:
ISSUER PURCHASES OF EQUITY SECURITIES
(c)
(d)
(b)
(a) Total Number Maximum Number
of Shares (or Approximate
(or Units) Dollar Value)
Purchased of Shares
as Part of (or Units)
Total Number Average Price Publicly That May Yet
of Shares Paid Per Announced Be Purchased
(or Units) Share (or Plans or Under The
Period Purchased(1,2,3) Unit) Programs(1) Plans or Programs
--------------- --------------------- ---------------- -------------- -------------------
October 1,
2016 -
October 31,
2016 45,330 $ - - 395,550,000
November 1,
2016 -
November 30,
2016 1,841,719 - - 395,550,000
December 1,
2016 -
December 31,
2016 528,674 - - 395,550,000
--------------- --------------------- ------- ------- -------------- -------------------
Total 2,415,723 $ - -
=============== ===================== ======= ======= ============== ===================
In March 2014, our Board of Directors approved an
authorization to repurchase up to 300 million shares
(1) of our common
stock. In March 2013, our Board of Directors approved
an authorization to repurchase up to 300 million shares
of our
common stock. The authorizations have no expiration
date.
Of the shares purchased, 73,743 shares were acquired
through the withholding of taxes on the vesting of
(2) restricted stock or
through the payment in stock of taxes on the exercise
price of options.
Of the shares repurchased, 2,341,980 were acquired
(3) through reimbursements from the AT&T maintained Voluntary
Employee Benefit Association (VEBA) trusts or through
litigation settlement.
ITEM 6. SELECTED FINANCIAL DATA
Information required by this Item is included in the Annual
Report under the heading "Selected Financial and Operating Data" on
page 10, which is incorporated herein by reference pursuant to
General Instruction G(2).
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Information required by this Item is included in the Annual
Report on pages 11 through 44, which is incorporated herein by
reference pursuant to General Instruction G(2).
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
Information required by this Item is included in the Annual
Report under the heading "Market Risk" on page 38, which is
incorporated herein by reference pursuant to General Instruction
G(2).
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Information required by this Item is included in the Annual
Report on pages 45 through 83, which is incorporated herein by
reference pursuant to General Instruction G(2).
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING
AND FINANCIAL DISCLOSURE
During our two most recent fiscal years, there has been no
change in the independent accountant engaged as the principal
accountant to audit our financial statements, and the independent
accountant has not expressed reliance on other independent
accountants in its reports during such time period.
ITEM 9A. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
The registrant maintains disclosure controls and procedures that
are designed to ensure that information required to be disclosed by
the registrant is recorded, processed, summarized, accumulated and
communicated to its management, including its principal executive
and principal financial officers, to allow timely decisions
regarding required disclosure, and reported within the time periods
specified in the SEC's rules and forms. The Chief Executive Officer
and Chief Financial Officer have performed an evaluation of the
effectiveness of the design and operation of the registrant's
disclosure controls and procedures as of December 31, 2016. Based
on that evaluation, the Chief Executive Officer and Chief Financial
Officer concluded that the registrant's disclosure controls and
procedures were effective as of December 31, 2016.
Internal Control Over Financial Reporting
(a) Management's Annual Report on Internal Control over
Financial Reporting
The management of AT&T is responsible for establishing and
maintaining adequate internal control over financial reporting.
AT&T's internal control system was designed to provide
reasonable assurance as to the integrity and reliability of the
published financial statements. AT&T management assessed the
effectiveness of the company's internal control over financial
reporting as of December 31, 2016. In making this assessment, it
used the criteria set forth by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO) in Internal Control
- Integrated Framework (2013 framework). Based on its assessment,
AT&T management believes that, as of December 31, 2016, the
Company's internal control over financial reporting is effective
based on those criteria.
(b) Attestation Report of the Independent Registered Public
Accounting Firm
The independent registered public accounting firm that audited
the financial statements included in the Annual Report containing
the disclosure required by this Item, Ernst & Young LLP, has
issued an attestation report on the Company's internal control over
financial reporting. The attestation report issued by Ernst &
Young LLP is included in the Annual Report on page 85, which is
incorporated herein by reference pursuant to General Instruction
G(2).
ITEM 9B. Other Information
There is no information that was required to be disclosed in a
report on Form 8-K during the fourth quarter of 2016 but was not
reported.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE
GOVERNANCE
Information regarding executive officers required by Item 401 of
Regulation S-K is furnished in a separate disclosure at the end of
Part I of this report since the registrant did not furnish such
information in its definitive proxy statement prepared in
accordance with Schedule 14A. Information regarding directors
required by Item 401 of Regulation S-K is incorporated herein by
reference pursuant to General Instruction G(3) from the
registrant's definitive proxy statement, dated on or about March
10, 2017 (Proxy Statement) under the heading "Management Proposal
Item 1. Election of Directors."
Information required by Item 405 of Regulation S-K is
incorporated herein by reference pursuant to General Instruction
G(3) from the registrant's Proxy Statement under the heading
"Section 16(a) Beneficial Ownership Reporting Compliance."
The registrant has a separately-designated standing audit
committee established in accordance with Section 3(a)(58)(A) of the
Securities Exchange Act of 1934. The members of the committee are
Messrs. Di Piazza, Jr. and McCallister, and Mses. Taylor and Tyson.
The additional information required by Item 407(d)(5) of Regulation
S-K is incorporated herein by reference pursuant to General
Instruction G(3) from the registrant's Proxy Statement under the
heading "Audit Committee."
The registrant has adopted a code of ethics entitled "Code of
Ethics" that applies to the registrant's principal executive
officer, principal financial officer, principal accounting officer,
or controller or persons performing similar functions. The
additional information required by Item 406 of Regulation S-K is
provided in this report under the heading "General" under Part I,
Item 1. Business.
ITEM 11. EXECUTIVE COMPENSATION
Information required by Item 402(k) of Regulation S-K is
incorporated herein by reference pursuant to General Instruction
G(3) from the registrant's Proxy Statement under the heading
"Director Compensation." Information regarding officers is included
in the registrant's Proxy Statement on the pages beginning with the
heading "Compensation Discussion and Analysis" and ending with, and
including, the pages under the heading "Potential Payments upon
Change in Control" which are incorporated herein by reference
pursuant to General Instruction G(3). Information required by Item
407(e)(5) of Regulation S-K is included in the registrant's Proxy
Statement under the heading "Compensation Committee Report" and is
incorporated herein by reference pursuant to General Instruction
G(3) and shall be deemed furnished in this Annual Report on Form
10-K and will not be deemed incorporated by reference into any
filing under the Securities Act of 1933 or the Securities Exchange
Act of 1934.
Information required by this Item is included in the
registrant's Proxy Statement, under the heading "Director
Compensation," and the pages beginning with the heading "Summary
Compensation Table," and ending with, and including, the page
immediately before the heading "Cost of Proxy Solicitation" which
are incorporated herein by reference pursuant to General
Instruction G(3).
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDER MATTERS
Information required by Item 403 of Regulation S-K is included
in the registrant's Proxy Statement under the heading "Common Stock
Ownership," which is incorporated herein by reference pursuant to
General Instruction G(3).
Equity Compensation Plan Information
The following table provides information as of December 31,
2016, concerning shares of AT&T common stock authorized for
issuance under AT&T's existing equity compensation plans.
Equity Compensation Plan Information
Number of
securities
remaining
available
for future
Weighted-average issuance under
Number of securities exercise equity compensation
to be issued price of Plans (excluding
upon exercise outstanding securities
of outstanding options, reflected
options, warrants warrants in column
Plan Category and rights and rights (a))
--------------------- ---------------------- ------------------ ----------------------
(a) (b) (c)
--------------------- ---------------------- ------------------ ----------------------
Equity compensation
plans approved by 38,989,880
security holders (1) 29.46 129,216,883(2)
--------------------- ---------------------- ------------------ ----------------------
Equity compensation - - -
plans not approved
by security holders
--------------------- ---------------------- ------------------ ----------------------
38,989,880 129,216,883
Total (3) $29.46 (2)
===================== ====================== ================== ======================
(1) Includes stock to be issued in connection with the following
stockholder approved plans: (a) 5,684,800 stock options under the
Stock Purchase and Deferral Plan (SPDP), (b) 2,086,954 phantom
stock units under the Stock Savings Plan (SSP), 10,124,461 phantom
stock units under the SPDP, 13,515 restricted stock units under the
2016 Incentive Plan, and 6,094,321 restricted stock units under the
2011 Incentive Plan, and (c) 6,022 target number of stock-settled
performance shares under the 2016 Incentive Plan, and 12,690,355
target number of stock-settled performance shares under the 2011
Incentive Plan. At payout, the target number of performance shares
may be reduced to zero or increased by up to 150%. Each phantom
stock unit and performance share is settleable in stock on a 1-to-1
basis. The weighted-average exercise price in the table does not
include outstanding performance shares or phantom stock units.
The SSP was approved by stockholders in 1994 and then was
amended by the Board of Directors in 2000 to increase the number of
shares available for purchase under the plan (including shares from
the Company match and reinvested dividend equivalents). Stockholder
approval was not required for the amendment. To the extent
applicable, the amount shown for approved plans in column (a), in
addition to the above amounts, includes 2,289,453 phantom stock
units (computed on a first-in-first-out basis) that were approved
by the Board in 2000. Under the SSP, shares could be purchased with
payroll deductions and reinvested dividend equivalents by mid-level
and above managers and limited Company partial matching
contributions. No new contributions may be made to the plan.
(2) Includes 20,429,062 shares that remain available for future
issuance under the SPDP, 88,541,244 shares remaining under the 2011
Incentive Plan, and up to 2,943,330 shares that may be purchased
through reinvestment of dividends on phantom shares held in the
SSP.
(3) Does not include certain stock options issued by companies
acquired by AT&T that were converted into options to acquire
AT&T stock. As of December 31, 2016, there were 640,749 shares
of AT&T common stock subject to the converted options, having a
weighted-average exercise price of $19.34. Also, does not include
3,570,683 outstanding phantom stock units that were issued by
companies acquired by AT&T that are convertible into stock on a
1-to-1 basis, along with up to 120,227 shares that may be purchased
with reinvested dividend equivalents paid on the outstanding
phantom stock units. No further phantom stock units, other than
reinvested dividends, may be issued under the assumed plans. The
weighted-average exercise price in the table does not include
outstanding performance shares or phantom stock units.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND
DIRECTOR INDEPENCE
Information required by Item 404 of Regulation S-K is included
in the registrant's Proxy Statement under the heading "Related
Person Transactions Disclosure," which is incorporated herein by
reference pursuant to General Instruction G(3). Information
required by Item 407(a) of Regulation S-K is included in the
registrant's Proxy Statement under the heading "Director
Independence," which is incorporated herein by reference pursuant
to General Instruction G(3).
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Information required by this Item is included in the
registrant's Proxy Statement under the heading "Principal
Accountant Fees and Services," which is incorporated herein by
reference pursuant to General Instruction G(3).
Part IV
ITEM 15. EXHIBITS and FINANCIAL STATEMENT SCHEDULES
(a) Documents filed as a part of the report:
Page
(1) Report of Independent Registered Public Accounting
Firm.................................................. *
Financial Statements covered by Report of Independent Registered
Public Accounting Firm:
Consolidated Statements of
Income....................................................................................
*
Consolidated Statements of Comprehensive
Income....................................................... *
Consolidated Balance
Sheets...............................................................................................
*
Consolidated Statements of Cash
Flows............................................................................ *
Consolidated Statements of Changes in Stockholders'
Equity....................................... *
Notes to Consolidated Financial
Statements..................................................................... *
* Incorporated herein by reference to the appropriate portions
of the registrant's Annual Report to Stockholders for the fiscal
year ended December 31, 2016. (See Part II.)
Page
(2) Financial Statement Schedules:
II - Valuation and Qualifying
Accounts.............................................................................. 23
Financial statement schedules other than those listed above have
been omitted because the required information is contained in the
financial statements and notes thereto, or because such schedules
are not required or applicable.
(3) Exhibits:
Exhibits identified in parentheses below, on file with the SEC,
are incorporated herein by reference as exhibits hereto. Unless
otherwise indicated, all exhibits so incorporated are from File No.
1-8610.
Exhibit
Number
2 Agreement and Plan of Merger, dated as
of October 22, 2016, among AT&T Inc.,
Time Warner Inc. and West Merger Sub,
Inc. (Exhibit 10.1 to Form 8-K dated
October 24, 2016.)
3-a Restated Certificate of Incorporation,
filed with the Secretary of State of
Delaware on December 13, 2013. (Exhibit
3.1 to Form 8-K dated December 13, 2013.)
3-b Bylaws amended December 18, 2015. (Exhibit
3 to Form 8-K dated December 18, 2015.)
4-a No instrument which defines the rights
of holders of long-term debt of the registrant
and all of its consolidated subsidiaries
is filed herewith pursuant to Regulation
S-K, Item 601(b)(4)(iii)(A), except for
the instruments referred to in 4-b, 4-c,
4-d, 4-e, 4-f, 4-g, 4-h, 4-i, and 4-j
below. Pursuant to this regulation, the
registrant hereby agrees to furnish a
copy of any such instrument not filed
herewith to the SEC upon request.
4-b Guaranty of certain obligations of Pacific
Bell Telephone Co. and Southwestern Bell
Telephone Co. (Exhibit 4-c to Form 10-K
for 2011.)
4-c Guaranty of certain obligations of Ameritech
Capital Funding Corp., Indiana Bell Telephone
Co. Inc., Michigan Bell Telephone Co.,
Pacific Bell Telephone Co., Southwestern
Bell Telephone Company, Illinois Bell
Telephone Company, The Ohio Bell Telephone
Company, The Southern New England Telephone
Company, Southern New England Telecommunications
Corporation, and Wisconsin Bell, Inc.
(Exhibit 4-d to Form 10-K for 2011.)
4-d Guarantee of certain obligations of AT&T
Corp. (Exhibit 4-e to Form 10-K for 2011.)
4-e Indenture, dated as of May 15, 2013,
between AT&T Inc. and The Bank of New
York Mellon Trust Company, N.A. as Trustee.
(Exhibit 4.1 to Form 8-K dated May 15,
2013.)
4-f Indenture dated as of November 1, 1994
between SBC Communications Inc. and The
Bank of New York, as Trustee. (Exhibit
4-h to Form 10-K for 2013.)
10-a 2016 Incentive Plan (Exhibit 10-a to
Form 10-Q filed for March 31, 2016.)
10-b 2011 Incentive Plan, amended September
24, 2015. (Exhibit 10-a to Form 10-Q
filed for September 30, 2015.)
10-c Supplemental Life Insurance Plan, amended
September 24, 2015. (Exhibit 10-e to
Form 10-Q filed for September 30, 2015.)
10-d Supplemental Retirement Income Plan,
amended December 31, 2008. (Exhibit 10-e
to Form 10-K for 2013.)
10-e 2005 Supplemental Employee Retirement
Plan, amended December 18, 2014. (Exhibit
10.1 to Form 8-K dated December 18, 2014.)
10-f Senior Management Deferred Compensation
Program of 1988 (effective for Units
of Participation Having a Unit Start
Date of January 1, 1988 or later) as
amended through April 1, 2002. (Exhibit
10-g to Form 10-K for 2013.)
10-g Salary and Incentive Award Deferral Plan,
amended December 31, 2004. (Exhibit 10-k
to Form 10-K for 2011.)
10-h Stock Savings Plan, amended December
31, 2004. (Exhibit 10-l to Form 10-K
for 2011.)
10-i Stock Purchase and Deferral Plan, amended
September 24, 2015. (Exhibit 10-d to
Form 10-Q filed for September 30, 2015.)
10-j Cash Deferral Plan, amended September
24, 2015. (Exhibit 10-c to Form 10-Q
filed for September 30, 2015.)
10-k Master Trust Agreement for AT&T Inc.
Deferred Compensation Plans and Other
Executive Benefit Plans and subsequent
amendments dated August 1, 1995 and November
1, 1999. (Exhibit 10-dd to Form 10-K
for 2009.)
10-l Officer Disability Plan, amended January
1, 2010. (Exhibit 10-i to Form 10-Q filed
for June 30, 2009.)
10-m AT&T Inc. Health Plan, amended January
1, 2017. (Exhibit 10-a to Form 10-Q filed
for September 30, 2016.)
10-n Pension Benefit Makeup Plan No.1, amended
December 31, 2016.
10-o AT&T Inc. Equity Retention and Hedging
Policy. (Exhibit 10.2 to Form 8-K dated
December 15, 2011.)
10-p Administrative Plan, amended September
24, 2015.
10-q AT&T Inc. Non-Employee Director Stock
and Deferral Plan, amended September
25, 2015. (Exhibit 99.1 to Form 8-K dated
September 25, 2015.)
10-r AT&T Inc. Non-Employee Director Stock
Purchase Plan, dated June 27, 2008. (Exhibit
10-t to Form 10-K for 2013.)
10-s Communications Concession Program for
Directors, amended and restated February
1, 2013. (Exhibit 10-aa to Form 10-K
for 2012.)
10-t Form of Indemnity Agreement, effective
July 1, 1986, between SBC (now AT&T Inc.)
and its directors and officers. (Exhibit
10-bb to Form 10-K for 2011.)
10-u Transition Agreement by and between BellSouth
Corporation and Rafael de la Vega, dated
December 29, 2003. (Exhibit 10-cc to
Form 10-K for 2011.)
10-v AT&T Corp. Executive Deferred Compensation
Plan (formerly known as AT&T Corp. Senior
Management Incentive Award Deferral Plan),
amended and restated January 1, 2008.
(Exhibit 10-aa to Form 10-K for 2013.)
10-w Master Trust Agreement for AT&T Corp.
Deferred Compensation Plans and Other
Executive Benefit Plans, effective January
13, 1994. (Exhibit 10-nn to Form 10-K
for 2011.)
10-w(i) First Amendment to Master Trust
Agreement, effective December
23, 1997. (Exhibit 10-nn(i) to
Form 10-K for 2011.)
10-x AT&T Corp. Non-Qualified Pension Plan,
amended December 31, 2008. (Exhibit 10-cc
to Form 10-K for 2013.)
10-y AT&T Corp. Excess Benefit and Compensation
Plan, amended December 31, 2008. (Exhibit
10-dd to Form 10-K for 2013.)
10-z BellSouth Corporation Nonqualified Deferred
Compensation Plan, dated January 1, 2005.
(Exhibit 10-ss to Form 10-K for 2011.)
10-aa BellSouth Corporation Stock and Incentive
Compensation Plan, amended June 28, 2004.
(Exhibit 10-qq for Form 10-K for 2009.)
10-aa(i) First Amendment to the BellSouth
Corporation Stock and Incentive
Compensation Plan, dated September
26, 2005. (Exhibit 10-xx(i) to
Form 10-K for 2011.)
10-aa(ii) Second Amendment to BellSouth
Corporation Stock and Incentive
Compensation Plan, effective
June 26, 2008. (Exhibit 10-hh(ii)
to Form 10-K for 2013.)
10-bb BellSouth Corporation Supplemental Executive
Retirement Plan, amended December 18,
2014. (Exhibit 10.2 to Form 8-K dated
December 18, 2014.)
10-cc BellSouth Nonqualified Deferred Income
Plan, amended May 1, 2012. (Exhibit 10-fff
to Form 10-K for 2012.)
10-dd Cingular Wireless Cash Deferral Plan,
dated November 1, 2001. (Exhibit 10-hhh
to Form 10-K for 2011.)
10-ee AT&T Mobility 2005 Cash Deferral Plan,
dated January 1, 2005. (Exhibit 10-lll
to Form 10-K for 2011.)
10-ff AT&T Executive Physical Program, dated
January 1, 2011.
10-gg Equalization Agreement for John Stankey
(Exhibit 10.1 to Form 8-K dated August
20, 2015.)
10-hh Agreement between D. Wayne Watts and
AT&T Inc. (Exhibit 10.2 to Form 8-K dated
August 20, 2015.)
10-ii Agreement between James Cicconi and AT&T
Inc. (Exhibit 10-b to Form 10-Q filed
for September 30, 2016.)
10-jj Agreement between Ralph de la Vega and
AT&T Inc. (Exhibit 10.1 to Form 8-K dated
December 16, 2016.)
10-kk $9,155,000,000 Term Loan Credit Agreement,
dated January 21, 2015, among AT&T, certain
lenders named therein and Mizuho Bank,
Ltd., as administrative agent. (Exhibit
10.1 to Form 8-K dated January 21, 2015.)
10-ll $12,000,000,000 Amended and Restated
Credit Agreement, dated December 11,
2015,
among AT&T, certain lenders named therein
and Citibank, N.A., as administrative
agent. (Exhibit 10 to Form 8-K dated
December 15, 2015.)
10-mm $40,000,000,000 Term Loan Credit Agreement,
dated October 22, 2016, among AT&T Inc.,
certain lenders named therein, and JPMorgan
Chase Bank, N.A., as agent. (Exhibit
10.2 to Form 8-K dated October 24, 2016.)
10-mm (i) $30,000,000,000 Term Loan Credit
Agreement, dated October 22,
2016, amended November 15, 2016,
among AT&T Inc., the initial
lenders named therein, and JPMorgan
Chase Bank, N.A, as agent.
10-mm (ii) $30,000,000,000 Term Loan Credit
Agreement, dated October 22,
2016, amended February 10, 2017,
among AT&T Inc., the initial
lenders named therein, and JPMorgan
Chase Bank, N.A, as agent.
10-nn $10,000,000,000 Term Loan Credit Agreement,
dated as of November 15, 2016, among
AT&T Inc., the lenders named therein
and JPMorgan Chase Bank, N.A., as Agent
(Exhibit 10.1 to Form 8-K dated November
15, 2016.)
12 Computation of Ratios of Earnings to
Fixed Charges
13 Portions of AT&T's Annual Report to Stockholders
for the fiscal year ended December 31,
2016. Only the information incorporated
by reference into this Form 10-K is included
in the exhibit.
21 Subsidiaries of AT&T Inc.
23 Consent of Ernst & Young LLP
24 Powers of Attorney
31 Rule 13a-14(a)/15d-14(a) Certifications
31.1 Certification of Principal Executive
Officer
31.2 Certification of Principal Financial
Officer
32 Section 1350 Certification
99 Supplemental Interim Financial Information
101 XBRL Instance Document
We will furnish to stockholders upon request, and without
charge, a copy of the Annual Report to Stockholders and the Proxy
Statement, portions of which are incorporated by reference in the
Form 10-K. We will furnish any other exhibit at cost.
Schedule II - Sheet 1
AT&T INC.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
Allowance for Doubtful Accounts
Dollars in Millions
COL. A COL. COL. C COL. D COL.
B E
----------- ----- ---------- ----------------------------------------- ----------- ---- -------
Additions
-----------------------------------------
(1) (2) (3)
Charged Charged
Balance to Costs to Other Balance
at Beginning and Expenses Accounts Acquisitions Deductions at End
of Period (a) (b) (c) (d) of Period
----------- ----------------- -------------- ---------- ------------- ----------- -------------
Year 2016 $ 704 1,474 - - 1,517 $ 661
Year 2015 $ 454 1,416 - 214 1,380 $ 704
Year 2014 $ 483 1,032 (32) - 1,029 $ 454
(a) Includes amounts previously written off which were credited
directly to this account when recovered. Excludes direct charges
and credits to expense for nontrade receivables in the consolidated
statements of income.
(b) Includes amounts related to long-distance carrier receivables which were billed by AT&T.
(c) Acquisitions of DIRECTV and wireless properties in Mexico in 2015.
(d) Amounts written off as uncollectible, or related to divested entities.
Schedule II - Sheet 2
AT&T INC.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
Allowance for Deferred Tax Assets
Dollars in Millions
COL. A COL. COL. C COL. D COL.
B E
----------- ----- ---------- ----------------------------------------- ----------- --- --------
Additions
-----------------------------------------
(1) (2) (3)
Charged
Balance Charged to Other Balance
at Beginning to Costs Accounts Acquisitions Deductions at End
of Period and Expenses (a) (b) (c) of Period
----------- ----------------- -------------- ---------- ------------- ----------- -------------
Year 2016 $ 2,141 81 61 - - $ 2,283
Year 2015 $ 1,182 283 373 420 117 $ 2,141
Year 2014 $ 927 - 445 - 190 $ 1,182
(a) Includes current year reclassifications from other balance sheet accounts.
(b) Acquisitions of DIRECTV and wireless properties in Mexico in 2015.
(c) Reductions to valuation allowances related to deferred tax assets.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized, on the 17(th) day of February, 2017.
AT&T INC.
/s/ John J. Stephens
John J. Stephens
Senior Executive
Vice President
and Chief Financial
Officer
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the date
indicated.
Principal Executive Officer:
Randall Stephenson*
Chairman of the Board, Chief Executive Officer
and President
Principal Financial and Accounting Officer:
John J. Stephens
Senior Executive Vice President
and Chief Financial Officer
/s/ John J. Stephens
John J. Stephens,
as attorney-in-fact
and on his own
behalf as Principal
Financial Officer
and Principal
Accounting Officer
February 17, 2017
Directors:
------------------------
Randall L. Stephenson* Michael B. McCallister*
Samuel A. Di Piazza, Beth E. Mooney*
Jr.*
Richard W. Fisher* Joyce M. Roché*
Scott T. Ford* Matthew K. Rose*
Glenn H. Hutchins* Cynthia B. Taylor*
William E. Kennard* Laura D'Andrea Tyson*
Geoffrey Y. Yang*
* by power of attorney
EXHIBIT
12
AT&T INC.
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
Dollars in Millions
Year Ended December 31,
-------------------------------------------
2016 2015 2014 2013 2012
------- ------- ------- ------- ------
Earnings:
Income from continuing operations
before income taxes $19,812 $20,692 $10,355 $28,050 $10,496
Equity in net income of affiliates
included above (98) (79) (175) (642) (752)
Fixed charges 7,296 6,592 5,295 5,452 4,876
Distributed income of equity
affiliates 61 30 148 318 137
Interest capitalized (892) (797) (234) (284) (263)
------ ------ ------ ------ ------
Earnings, as adjusted $26,179 $26,438 $15,389 $32,894 $14,494
====== ====== ====== ====== ======
Fixed Charges:
Interest expense $ 4,910 $ 4,120 $ 3,613 $ 3,940 $ 3,444
Interest capitalized 892 797 234 284 263
Portion of rental expense
representative of interest
factor 1,494 1,675 1,448 1,228 1,169
------ ------ ------ ------ ------
Fixed Charges $ 7,296 $ 6,592 $ 5,295 $ 5,452 $ 4,876
====== ====== ====== ====== ======
Ratio of Earnings to Fixed
Charges 3.59 4.01 2.91 6.03 2.97
This information is provided by RNS
The company news service from the London Stock Exchange
END
ACSLLFEEVDIDIID
(END) Dow Jones Newswires
March 07, 2017 11:00 ET (16:00 GMT)
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