TIDM58KN
RNS Number : 1982H
AT & T Inc.
08 March 2018
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, 2017
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, a
smaller reporting company, or an emerging growth company. See
definition of "large accelerated filer," "accelerated filer,"
"smaller reporting company," and "emerging growth company" in Rule
12b-2 of the Exchange Act.
Large accelerated filer [X] Accelerated filer
[ ]
Non-accelerated filer [ ] (Do Smaller reporting
not check if a smaller reporting company [ ]
company)
Emerging growth
company [ ]
If an emerging growth company, indicate by check mark if the
registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting
standards provided pursuant to
Section 13(a) of the Exchange Act. [ ]
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 $37.73 per share on June 30, 2017,
the aggregate market value of our voting and non-voting common
stock held by non-affiliates was $232 billion.
At February 9, 2018, common shares outstanding were
6,141,532,706.
DOCUMENTS INCORPORATED BY REFERENCE
(1) Portions of AT&T Inc.'s Annual Report to Stockholders
for the fiscal year ended December 31, 2017 (Parts I and II).
(2) Portions of AT&T Inc.'s Notice of 2018 Annual Meeting
and Proxy Statement dated on or about March 12, 2018 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
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
Floating Rate AT&T Inc. New York Stock
Global Notes due September Exchange
4, 2023
1.05% AT&T Inc. New York Stock
Global Notes due September Exchange
4, 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
1.80% AT&T Inc. New York Stock
Global Notes due September Exchange
4, 2026
2.35% AT&T Inc. New York Stock
Global Notes due September Exchange
4, 2029
4.375% AT&T Inc. New York Stock
Global Notes due September Exchange
14, 2029
SCHEDULE A - Continued
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
2.45% AT&T Inc. New York Stock
Global Notes due March Exchange
15, 2035
3.15% AT&T Inc. New York Stock
Global Notes due September Exchange
4, 2036
3.55% AT&T Inc. New York Stock
Global Notes due September Exchange
14, 2037
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
5.35% AT&T Inc. New York Stock
Global Notes due November Exchange
1, 2066
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 16
Management's Discussion and Analysis
of Financial Condition
7. and Results of Operations 16
7A. Quantitative and Qualitative Disclosures 16
about Market Risk
Financial Statements and Supplementary
8. Data 16
Changes in and Disagreements with
Accountants on Accounting
9. and Financial Disclosure 16
9A. Controls and Procedures 16
9B. Other Information 17
PART III
Directors, Executive Officers and
10. Corporate Governance 17
11. Executive Compensation 17
12. Security Ownership of Certain Beneficial 17
Owners and
Management and Related Stockholder
Matters
13. Certain Relationships and Related 18
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, a joint venture that
aims to create media and digital brands 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 and wireline communications services, including
data/broadband and voice; digital video services,
telecommunications equipment; managed networking; and wholesale
services. Our operating segments are organized as follows:
-- 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; FlexWare, a service that relies
on Software Defined Networking (SDN) and Network Functions
Virtualization (NFV) to provide application-based routing, and
broadband, collectively referred to as strategic services, as well
as traditional data and voice products. We utilize our wireless and
wired networks to provide a complete 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 IP-based and copper network and our
satellite technology.
-- Consumer Mobility business units provide nationwide wireless
service to consumers, and wholesale and resale subscribers located
in the United States and in U.S. territories. We utilize our
network to provide voice and data services, including high-speed
internet 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 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 by using the nationwide reach of
DIRECTV and its superior content-owner relationships to improve our
video offerings. 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. (Time Warner), a global leader in
creating premium media and entertainment content. In 2018, we plan
to focus on the areas discussed below.
Wireless
We provide wireless 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, 2017, we served 157 million wireless
subscribers in North America, with nearly 142 million in the United
States. Our LTE technology covers over 400 million people in North
America, and, in the United States, we cover all major metropolitan
areas and over 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 are currently planning for deployment of the latest wireless
technology (5G) and are conducting 5G trials in multiple cities. We
expect to be the first U.S. company to introduce mobile 5G service
in 12 markets by late 2018. Additional, we are one of the top North
American wireless carrier contributors into 3rd Generation
Partnership Project's (3GPP) work on 5G standards since early 2016.
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. We expect that 5G will be about the entire connected
experience, not just fast speeds.
As the wireless industry has matured, future wireless growth
will increasingly depend on our ability to offer innovative video
and data services on 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 obtaining additional spectrum that meets our long-term
needs. We have participated in recent FCC spectrum auctions and
have been redeploying spectrum previously used for more basic
services to support more advanced mobile internet services. We also
have been awarded the contract to provide national coverage for
emergency personnel (first responders) by the First Responder
Network Authority, which will give us access to a nationwide low
band 20 MHz of spectrum (see Other Business Matters). 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. This technology can
provide voice and data services at a lower cost because this
technology uses bandwidth more efficiently than a legacy copper
wire 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 are rapidly
converting our network to a software-based network and managing 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.
Software based technologies, like IP, align with AT&T's
global leadership in software defined network (SDN) and network
virtualization (NFV). This network approach, of which AT&T is a
global leader in its commitment to virtualize 75% of our network by
2020, delivers a demonstrable cost advantage in the deployment of
next-generation technology over the traditional, hardware-intensive
network approach.
AT&T's virtualized network will be able to support
next-generation applications like 5G and IP-based services quickly
and efficiently. In fact, we're building many of these
next-generation and SDN applications using open source software.
We're also contributing code back to the open source community so
other innovators can take advantage of what we've learned in this
transformation. We're leading the charge to the next generation of
the network.
Integration of Data/Broadband and Entertainment Services
As the communications industry continues to move toward
internet-based technologies that are capable of blending wireline,
satellite and wireless services, we are offering services that take
advantage of these more sophisticated technologies. In particular,
we continue to focus on expanding our high-speed internet and video
offerings and on developing IP-based services that allow customers
to integrate their home or business fixed services with their
mobile service. During 2018, we will continue to develop and
provide unique integrated video, mobile and broadband solutions. In
2017, we expanded our offering of DIRECTV NOW, an over-the-top
video service; data usage from DIRECTV NOW will not count toward
data limits for customers who bundle this product with our wireless
service. We believe bundling this offering facilitates our
customers' desire to view video anywhere on demand and encourages
customer retention.
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 over 400 million people
and businesses in the United States and Mexico. During 2018, we
will continue to build a world-class mobile business and network in
Mexico and expect to cover 100 million people and businesses.
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 17 through 25 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; FlexWare, a service that relies
on Software Defined Networking (SDN) and Network Functions
Virtualization (NFV) to provide application-based routing, and
broadband, collectively referred to as 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
43% of 2017 segment operating revenues and 54% of our 2017 total
Segment Contribution. We divide Business Solutions revenue into the
following categories: wireless service, 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 90 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 Mobile Share plans, including plans featuring
unlimited wireless data, which 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) generally 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 application 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.
Strategic Services - 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 path 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
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., Virtual Private Networks or "VPN"). Over the past several
years, we have built out our 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. To
align with these trends, we continue to reconfigure our wireline
network to take advantage of the latest technologies and services.
To that end, we have developed AT&T FlexWare, a service that
relies on our SDN and NFV to enhance business customers' digital
agility in a rapidly evolving environment. The service allows for
businesses to deploy, configure and change FlexWare applications
quickly and often without hardware changes, allowing for
virtualized functions across different sites and geographies
through a single appliance, increasing deployment speed and
flexibility.
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 more economically and securely and
are used for wide area network (WAN) and 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 to business
and governmental customers, either directly 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 to 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 us,
cable companies or other internet-based providers. In addition, the
continuing slow business starts during 2017 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 2018.
Other Services - Other service revenues include project-based
revenue, which is nonrecurring in nature, as well as revenues from
other managed services, outsourcing, 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 also sell
accessories, such as carrying cases, hands-free devices and other
items. 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 bringing their own devices or retaining their
handsets for longer periods, which could impact future upgrade
activity.
Additional information on our Business Solutions segment is
contained in the Annual Report in the "Overview" section beginning
on page 18 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 IP-based and copper 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 2017
segment operating revenues and 18% of our 2017 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 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 a 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 13.5 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 2018.
Equipment and Other - Other 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 "Overview" section beginning
on page 20 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 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 2017 total segment operating revenues and 29% of our 2017 total
Segment Contribution. We classify our subscribers as either
postpaid, prepaid, connected device or reseller. At December 31,
2017, we served 51 million Consumer Mobility subscribers, including
26 million postpaid, 15 million prepaid, 9 million reseller and
500,000 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. When subscribers upgrade their devices, they
are choosing 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 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. Combined with bundling wireless and video service,
these 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 AT&T PREPAID(SM) brands and
are typically monthly prepaid services.
Other Services - 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. With the elimination
of handset subsidies, our subscribers have been retaining their
handsets for longer periods, which could impact future upgrade
activity. We also sell accessories, such as carrying cases,
hands-free devices and other items.
Additional information on our Consumer Mobility segment is
contained in the Annual Report in the "Overview" section beginning
on page 22 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 5% of 2017 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 14 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, 2017,
PanAmericana had approximately 8 million subscribers and SKY Brasil
had approximately 5 million subscribers.
Wireless - We offer postpaid and prepaid wireless services in
Mexico to approximately 15 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 "Overview" section beginning on page 24
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
2017 2016 2015
-------------------------------- ---------- ---------- ---------
Business Solutions Segment
Wireless service 20% 19% 21%
Legacy voice and data services 9 10 12
Equipment (1) 5 5 6
Entertainment Group Segment
Video entertainment 23 22 14
Legacy voice and data services 2 3 4
Consumer Mobility Segment
Wireless service 16 17 20
Equipment 3 3 4
International Segment
Video entertainment 3 3 1
-------------------------------- ---- ---- ---- ---- ---- ---
(1) Includes customer premises equipment of $778 million in
2017, $982 million in 2016 and $929 million in 2015 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 58 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 classifying both
fixed and mobile consumer broadband internet access services as
telecommunications services subject to extensive public
utility-style regulation under the Telecom Act. The Order, which
represented a departure from longstanding bipartisan precedent
significantly expanded the FCC's authority to regulate broadband
internet access services, as well as internet interconnection
arrangements. AT&T and several other parties appealed the FCC's
order. In June 2016, a divided panel of the DC Court of Appeals
upheld the FCC's rules by a 2-1 vote, and petitions for rehearing
en banc were denied in May 2017. Petitions for a writ of Certiorari
at the U.S. Supreme Court remain pending. Meanwhile, on December
14, 2017, the FCC reversed its 2015 decision by reclassifying fixed
and mobile consumer broadband services as information services and
repealing most of the rules that were adopted in 2015. In lieu of
broad conduct prohibitions, the order requires internet service
providers to disclose information about their network practices and
terms of service, including whether they block or throttle Internet
traffic or offer paid prioritization. The order will take effect
after the Office of Management and Budget approves the new
disclosure requirements.
On April 20, 2017, the FCC adopted an order bringing to an end a
decade-long proceeding regarding pricing of high capacity data
services by incumbent local telephone companies, like AT&T. The
order declines to require advanced approval of rates for
packet-based services like Ethernet, opting instead to continue the
existing regime under which such rates are presumed lawful but may
be challenged in a complaint. In addition, the order extends this
"light touch" approach to high-speed TDM transport services and to
most of our TDM channel termination services, based on the
application of a competitive market test for such services. For
those services that do not qualify for light touch regulation, the
order continues to subject the services to price cap regulation but
allows companies to offer volume and term discounts, as well as
contract tariffs. Several parties appealed the FCC's decision.
These appeals were consolidated in the U.S. Court of Appeals for
the Eighth Circuit, where they remain pending.
In November 2017, the FCC updated and streamlined certain rules
governing pole attachments, copper retirement, and service
discontinuances. These changes should facilitate our ability to
replace legacy facilities and services with advanced broadband
infrastructure and services.
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 28 and
"Regulatory Developments" beginning on page 30 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 28 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 rights, and subject to appropriate safeguards
and restrictions, to utilize certain of our patents, 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 2017, 2016 or 2015.
COMPETITION
Information relating to competition in each of our operating
segments is contained in the Annual Report under the heading
"Competition" beginning on page 31, 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, video platform development
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.
Research and development expenses were $1,503 million in 2017,
$1,649 million in 2016, and $1,693 million in 2015.
EMPLOYEES
As of January 31, 2018, we employed approximately 252,000
persons. Approximately 46 percent of our employees are represented
by the Communications Workers of America (CWA), the International
Brotherhood of Electrical Workers (IBEW) or other unions. Contracts
covering approximately 23,000 employees will expire during 2018,
including approximately 10,000 traditional wireline employees in
our five-state Midwest region and approximately 10,000 mobility
employees in our nine-state Southeast region. In February 2018, a
tentative agreement covering the mobility employees in the
Southeast region was reached, which is subject to ratification.
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, 2017, we had approximately 524,000 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 44 through 47
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; wireless equipment siting regulations; E911
services; competition policy; privacy; net neutrality; 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
privacy, net neutrality, 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), subscriber reluctance to purchase new wireless
handsets, and our ability to maintain capital expenditures.
-- The extent of competition including from governmental
networks and other providers and the resulting pressure on customer
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 and broadband offerings; the extent to which
regulatory and build-out requirements apply to our offerings; our
ability to match speeds offered by our competitors 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 video, 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 close our pending acquisition of Time Warner
Inc. and successfully reorganize our operations, including the
ability to manage various businesses in widely dispersed business
locations and with decentralized management.
-- 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, 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.
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, 2017, of
our total property, plant and equipment, central office equipment
represented 30%; outside plant (including cable, wiring and other
non-central office network equipment) represented approximately
22%; 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 29%; 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 below those proceedings in our Forms 10-Q and 10-K, which
could result in monetary sanctions (exclusive of interest and
costs) of $100,000 or more. However, we do not believe that any
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 was filed. In November 2017, DIRECTV settled this
matter for an immaterial amount and agreed to continue to abide by
processes to comply with California waste regulations already
implemented by AT&T affiliates in California for a period of 5
years.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
EXECUTIVE OFFICERS OF THE REGISTRANT
(As of February 1, 2018)
Name Age Position Held
Since
Chairman of the Board, Chief
Randall L. Executive Officer
Stephenson 57 and President 6/2007
William A. Senior Executive Vice President
Blase Jr. 62 - Human Resources 6/2007
Chief Executive Officer, AT&T
John M. Donovan 57 Communications, LLC 8/2017
Senior Executive Vice President
David S. Huntley 59 and Chief Compliance Officer 12/2014
Chief Executive Officer-AT&T
International and Global Marketing
Lori M. Lee 52 Officer 8/2017
Chief Executive Officer-AT&T
Advertising and Analytics,
Brian D. Lesser 43 AT&T Services, Inc. 9/2017
David R. McAtee Senior Executive Vice President
II 49 and General Counsel 10/2015
Senior Executive Vice President
Robert W. Quinn - External and Legislative
Jr. 57 Affairs, AT&T Services, Inc. 10/2016
John T. Stankey 55 Senior Executive Vice President-AT&T/Time 8/2017
Warner Merger Integration
Planning, AT&T Services, Inc.
Senior Executive Vice President
John J. Stephens 58 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, except for Mr. Lesser who was previously
CEO of GroupM in North America from November 2015 to September 2017
and CEO of Xaxis from January 2011 to November 2015. 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, 2017 and
2016 was 968,119 and 1,020,203. The number of stockholders of
record as of February 9, 2018, was 964,164. We declared dividends,
on a quarterly basis, totaling $1.97 per share in 2017 and $1.93
per share in 2016.
Other information required by this Item is included in the
Annual Report under the headings "Quarterly Financial Information"
on page 87, "Selected Financial and Operating Data" on page 14, 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 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, 2017, we
repurchased 7 million shares for distribution through our employee
benefit plans, totaling $279 million under the March 2014
authorization. For the year ended December 31, 2016, we repurchased
11 million shares totaling $444 million under the March 2014
authorization. Excluding the impact of acquisitions, the emphasis
of our 2018 financing activities will be the refinancing and/or
repayment of debt and the payment of dividends, subject to approval
by our Board of Directors. We plan to fund our financing uses of
cash through a combination of cash from operations, debt issuances
and asset sales. We have existing cash reserves and access to term
loan financing which may be used upon closing of our acquisition of
Time Warner. The timing and mix of any debt issuance will be guided
by credit market conditions and interest rate trends.
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 2017 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,
2017 -
October 31,
2017 35,955 $ 35.70 - 388,296,000
November 1,
2017 -
November 30,
2017 15,973 33.24 - 388,296,000
December 1,
2017 -
December 31,
2017 518,625 36.69 - 388,296,000
--------------- ------------------- ------------ ------------- ------------------
Total 570,553 $ 35.64 -
=============== =================== ============ ============= ==================
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, 86,942 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, 483,611 were acquired through
(3) 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 14, 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 15 through 48, 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 40, 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 49 through 87, 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, 2017. 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, 2017.
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, 2017. 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, 2017, 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 89, 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 2017 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
12, 2018 (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).
Information required by Item 201(d) of Regulation S-K is
incorporated herein by reference pursuant to General Instruction
G(3) from the registrant's Proxy Statement under the heading
"Equity Compensation Plan Information."
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," 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, 2017. (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 2018 Incentive Plan.
10-b 2016 Incentive Plan (Exhibit 10-a to
Form 10-Q filed for March 31, 2016.)
10-b(i) Resolution Regarding John Donovan.
10-b(ii) Resolution Regarding John Stankey.
10-b(iii) Resolution Regarding John Stephens.
10-c 2011 Incentive Plan, amended September
24, 2015. (Exhibit 10-a to Form 10-Q
filed for September 30, 2015.)
10-d Short Term Incentive Plan.
10-e Supplemental Life Insurance Plan, amended
September 24, 2015. (Exhibit 10-e to
Form 10-Q filed for September 30, 2015.)
10-f Supplemental Retirement Income Plan,
amended December 31, 2008. (Exhibit 10-e
to Form 10-K for 2013.)
10-g 2005 Supplemental Employee Retirement
Plan, amended September 28, 2017. (Exhibit
10.1 to Form 8-K dated October 3, 2017.)
10-h Salary and Incentive Award Deferral Plan,
amended December 31, 2004. (Exhibit 10-k
to Form 10-K for 2011.)
10-i Stock Savings Plan, amended December
31, 2004. (Exhibit 10-l to Form 10-K
for 2011.)
10-j Stock Purchase and Deferral Plan, amended
December 15, 2017.
10-k Cash Deferral Plan, amended March 30,
2017. (Exhibit 10-b to Form 10-Q filed
for March 31, 2017.)
10-l 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-m Officer Disability Plan, amended January
1, 2010. (Exhibit 10-i to Form 10-Q filed
for June 30, 2009.)
10-n AT&T Inc. Health Plan, amended February
1, 2018.
10-o Pension Benefit Makeup Plan No.1, amended
December 31, 2016. (Exhibit 10-n to Form
10-K filed for 2017.)
10-p AT&T Inc. Equity Retention and Hedging
Policy. (Exhibit 10.2 to Form 8-K dated
December 15, 2011.)
10-q Administrative Plan, amended September
24, 2015. (Exhibit 10-p to Form 10-K
for 2016.)
10-r 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-s AT&T Inc. Non-Employee Director Stock
Purchase Plan, dated June 27, 2008. (Exhibit
10-t to Form 10-K for 2013.)
10-t Communications Concession Program for
Directors, amended and restated February
1, 2013. (Exhibit 10-aa to Form 10-K
for 2012.)
10-u 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-v 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-w 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-x 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-x(i) First Amendment to Master Trust
Agreement, effective December
23, 1997. (Exhibit 10-nn(i) to
Form 10-K for 2011.)
10-y AT&T Corp. Non-Qualified Pension Plan,
amended December 31, 2008. (Exhibit 10-cc
to Form 10-K for 2013.)
10-z AT&T Corp. Excess Benefit and Compensation
Plan, amended December 31, 2008. (Exhibit
10-dd to Form 10-K for 2013.)
10-aa BellSouth Corporation Nonqualified Deferred
Compensation Plan, dated January 1, 2005.
(Exhibit 10-ss to Form 10-K for 2011.)
10-bb BellSouth Corporation Stock and Incentive
Compensation Plan, amended June 28, 2004.
(Exhibit 10-qq for Form 10-K for 2009.)
10-bb(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-bb(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-cc BellSouth Corporation Supplemental Executive
Retirement Plan, amended December 18,
2014. (Exhibit 10.2 to Form 8-K dated
December 18, 2014.)
10-dd BellSouth Nonqualified Deferred Income
Plan, amended May 1, 2012. (Exhibit 10-fff
to Form 10-K for 2012.)
10-ee Cingular Wireless Cash Deferral Plan,
dated November 1, 2001. (Exhibit 10-hhh
to Form 10-K for 2011.)
10-ff AT&T Mobility 2005 Cash Deferral Plan,
dated January 1, 2005. (Exhibit 10-lll
to Form 10-K for 2011.)
10-gg AT&T Executive Physical Program, dated
January 1, 2011. (Exhibit 10-ff to Form
10-K for 2016.)
10-hh Equalization Agreement for John Stankey
(Exhibit 10.1 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 $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-ll $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.)
10-ll(i) First Amendment to the $10,000,000,000
Term Loan Credit Agreement (increased
to $16,175,000,000), dated February
2, 2018. (Exhibit 10.1 to Form
8-K dated February 5, 2018.)
10-mm $2,250,000,000 Term Loan Credit Agreement,
dated as of September 29, 2017, among
AT&T Inc., certain lenders named therein
and The Bank of Nova Scotia, as Administrative
Agent (Exhibit 10-f to Form 10-Q filed
for September 30, 2017.)
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,
2017. 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 2017 $ 661 1,642 - - 1,640 $ 663
Year 2016 $ 704 1,474 - - 1,517 $ 661
Year 2015 $ 454 1,416 - 214 1,380 $ 704
(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 2017 $ 2,283 2,376 (19) - - $ 4,640
Year 2016 $ 2,141 81 61 - - $ 2,283
Year 2015 $ 1,182 283 373 420 117 $ 2,141
(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 20(th) day of February, 2018.
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 20, 2018
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,
-------------------------------------------
2017 2016 2015 2014 2013
------- ------- ------- ------- ------
Earnings:
Income from continuing operations
before income taxes $15,139 $19,812 $20,692 $10,355 $28,050
Equity in net (income) loss
of affiliates included above 128 (98) (79) (175) (642)
Fixed charges 8,854 7,296 6,592 5,295 5,452
Distributed income of equity
affiliates 46 61 30 148 318
Interest capitalized (903) (892) (797) (234) (284)
------ ------ ------ ------ ------
Earnings, as adjusted $23,264 $26,179 $26,438 $15,389 $32,894
====== ====== ====== ====== ======
Fixed Charges:
Interest expense $ 6,300 $ 4,910 $ 4,120 $ 3,613 $ 3,940
Interest capitalized 903 892 797 234 284
Portion of rental expense
representative of interest
factor 1,651 1,494 1,675 1,448 1,228
------ ------ ------ ------ ------
Fixed Charges $ 8,854 $ 7,296 $ 6,592 $ 5,295 $ 5,452
====== ====== ====== ====== ======
Ratio of Earnings to Fixed
Charges 2.63 3.59 4.01 2.91 6.03
This information is provided by RNS
The company news service from the London Stock Exchange
END
ACSLFFFFVDITIIT
(END) Dow Jones Newswires
March 09, 2018 02:00 ET (07:00 GMT)
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