EX-99.2 3 ex99_2.htm AT&T INC. SELECTED FINANCIAL STATEMENTS AND OPERATING DATA ex99_2.htm
Financial Data
                             
                               
AT&T Inc.
                             
Consolidated Statements of Income
                             
Dollars in millions except per share amounts
                             
Unaudited
Three Months Ended
 
Twelve Months Ended
 
12/31/2013
 
12/31/2012
   
% Chg
   
12/31/2013
 
12/31/2012
   
% Chg
 
Operating Revenues
$ 33,163   $ 32,578     1.8 %   $ 128,752   $ 127,434     1.0 %
                                       
Operating Expenses
                                     
  Cost of services and sales (exclusive of depreciation and
     amortization shown separately below)
  12,237     17,555     -30.3 %     51,464     55,228     -6.8 %
  Selling, general and administrative
  4,008     16,409     -75.6 %     28,414     41,066     -30.8 %
  Depreciation and amortization
  4,680     4,572     2.4 %     18,395     18,143     1.4 %
    Total Operating Expenses
  20,925     38,536     -45.7 %     98,273     114,437     -14.1 %
Operating Income (Loss)
  12,238     (5,958 )   -       30,479     12,997     -  
Interest Expense
  1,459     820     77.9 %     3,940     3,444     14.4 %
Equity in Net Income of Affiliates
  148     215     -31.2 %     642     752     -14.6 %
Other Income (Expense) - Net
  226     12     -       596     134     -  
Income (Loss) Before Income Taxes
  11,153     (6,551 )   -       27,777     10,439     -  
Income Tax Expense (Benefit)
  4,158     (2,772 )   -       9,224     2,900     -  
Net Income (Loss)
  6,995     (3,779 )   -       18,553     7,539     -  
  Less: Net Income Attributable to Noncontrolling Interest
  (82 )   (78 )   -5.1 %     (304 )   (275 )   -10.5 %
Net Income (Loss) Attributable to AT&T
$ 6,913   $ (3,857 )   -     $ 18,249   $ 7,264     -  
                                       
                                       
Basic Earnings Per Share Attributable to AT&T
$ 1.31   $ (0.68 )   -     $ 3.39   $ 1.25     -  
Weighted Average Common
     Shares Outstanding (000,000)
  5,267     5,661     -7.0 %     5,368     5,801     -7.5 %
                                       
Diluted Earnings Per Share Attributable to AT&T
$ 1.31   $ (0.68 )   -     $ 3.39   $ 1.25     -  
Weighted Average Common
     Shares Outstanding with Dilution (000,000)
  5,283     5,680     -7.0 %     5,385     5,821     -7.5 %
                                       


 
 
 
 

Financial Data
                             
                               
AT&T Inc.
                             
Statements of Segment Income
                             
Dollars in millions
                             
Unaudited
                             
 
Three Months Ended
 
Twelve Months Ended
                               
Wireless
12/31/2013
   
12/31/2012
 
% Chg
   
12/31/2013
   
12/31/2012
 
% Chg
 
Segment Operating Revenues
                             
  Data
$ 5,729     $ 4,905     16.8 %   $ 21,719     $ 18,297     18.7 %
  Voice, text and other service
  9,931       10,044     -1.1 %     39,833       40,889     -2.6 %
  Equipment
  2,777       2,693     3.1 %     8,347       7,577     10.2 %
    Total Segment Operating Revenues
  18,437       17,642     4.5 %     69,899       66,763     4.7 %
                                           
Segment Operating Expenses
                                         
  Operations and support
  12,576       13,296     -5.4 %     44,508       43,296     2.8 %
  Depreciation and amortization
  1,915       1,781     7.5 %     7,468       6,873     8.7 %
    Total Segment Operating Expenses
  14,491       15,077     -3.9 %     51,976       50,169     3.6 %
Segment Operating Income
  3,946       2,565     53.8 %     17,923       16,594     8.0 %
Equity in Net Income (Loss) of Affiliates
  (20 )     (17 )   -17.6 %     (75 )     (62 )   -21.0 %
Segment Income
$ 3,926     $ 2,548     54.1 %   $ 17,848     $ 16,532     8.0 %
                                           
Segment Operating Income Margin
  21.4 %     14.5 %           25.6 %     24.9 %      
                                           
Wireline
                                         
Segment Operating Revenues
                                         
  Data
$ 8,574     $ 8,119     5.6 %   $ 33,593     $ 31,841     5.5 %
  Voice
  4,863       5,463     -11.0 %     20,333       22,614     -10.1 %
  Other
  1,279       1,341     -4.6 %     4,888       5,118     -4.5 %
    Total Segment Operating Revenues
  14,716       14,923     -1.4 %     58,814       59,573     -1.3 %
                                           
Segment Operating Expenses
                                         
  Operations and support
  10,501       10,358     1.4 %     41,638       41,207     1.0 %
  Depreciation and amortization
  2,761       2,775     -0.5 %     10,907       11,123     -1.9 %
    Total Segment Operating Expenses
  13,262       13,133     1.0 %     52,545       52,330     0.4 %
Segment Operating Income
  1,454       1,790     -18.8 %     6,269       7,243     -13.4 %
Equity in Net Income (Loss) of Affiliates
  1       -     -       2       (1 )   -  
Segment Income
$ 1,455     $ 1,790     -18.7 %   $ 6,271     $ 7,242     -13.4 %
                                           
Segment Operating Income Margin
  9.9 %     12.0 %           10.7 %     12.2 %      
                                           
Advertising Solutions
                                         
Segment Operating Revenues
$ -     $ -     -     $ -     $ 1,049     -  
                                           
Segment Operating Expenses
                                         
  Operations and support
  -       -     -       -       773     -  
  Depreciation and amortization
  -       -     -       -       106     -  
    Total Segment Operating Expenses
  -       -     -       -       879     -  
Segment Income
$ -     $ -     -     $ -     $ 170     -  
                                           
Segment Income Margin
  -       -             -       16.2 %      
                                           
Other
                                         
Segment Operating Revenues
$ 10     $ 13     -23.1 %   $ 39     $ 49     -20.4 %
Segment Operating Expenses
  756       332     -       1,336       1,065     25.4 %
Segment Operating Income (Loss)
  (746 )     (319 )   -       (1,297 )     (1,016 )   -27.7 %
Equity in Net Income of Affiliates
  167       232     -28.0 %     715       815     -12.3 %
Segment Income (Loss)
$ (579 )   $ (87 )   -     $ (582 )   $ (201 )   -  

 
 
 
 

Financial Data
       
         
AT&T Inc.
       
Consolidated Balance Sheets
       
Dollars in millions
       
 
December 31,
 
2013
2012
 
Unaudited
     
Assets
       
Current Assets
       
Cash and cash equivalents
$ 3,339   $ 4,868  
Accounts receivable - net of allowances for doubtful accounts of $483 and $547
  12,918     12,657  
Prepaid expenses
  960     1,035  
Deferred income taxes
  1,199     1,036  
Other current assets
  4,780     3,110  
Total current assets
  23,196     22,706  
Property, Plant and Equipment - Net
  110,968     109,767  
Goodwill
  69,273     69,773  
Licenses
  56,433     52,352  
Customer Lists and Relationships - Net
  763     1,391  
Other Intangible Assets - Net
  5,016     5,032  
Investments in and Advances to Equity Affiliates
  3,860     4,581  
Other Assets
  8,278     6,713  
Total Assets
$ 277,787   $ 272,315  
             
Liabilities and Stockholders' Equity
           
Current Liabilities
           
Debt maturing within one year
$ 5,498   $ 3,486  
Accounts payable and accrued liabilities
  21,107     20,494  
Advanced billing and customer deposits
  4,212     4,225  
Accrued taxes
  1,774     1,026  
Dividends payable
  2,404     2,556  
Total current liabilities
  34,995     31,787  
Long-Term Debt
  69,290     66,358  
Deferred Credits and Other Noncurrent Liabilities
           
Deferred income taxes
  36,308     28,491  
Postemployment benefit obligation
  29,946     41,392  
Other noncurrent liabilities
  15,766     11,592  
Total deferred credits and other noncurrent liabilities
  82,020     81,475  
Stockholders' Equity
           
Common stock
  6,495     6,495  
Additional paid-in capital
  91,091     91,038  
Retained earnings
  31,141     22,481  
Treasury stock
  (45,619 )   (32,888 )
Accumulated other comprehensive income
  7,880     5,236  
Noncontrolling interest
  494     333  
Total stockholders' equity
  91,482     92,695  
Total Liabilities and Stockholders' Equity
$ 277,787   $ 272,315  

 
 
 
 

Financial Data
       
         
AT&T Inc.
       
Consolidated Statements of Cash Flows
   
 
 
Dollars in millions
       
Unaudited
Twelve Months Ended December 31,
 
2013
2012
 
 
 
 
 
Operating Activities
       
Net income
$ 18,553   $ 7,539  
Adjustments to reconcile net income to
           
  net cash provided by operating activities:
           
    Depreciation and amortization
  18,395     18,143  
    Undistributed earnings from investments in equity affiliates
  (324 )   (615 )
    Provision for uncollectible accounts
  954     1,117  
    Deferred income tax expense
  6,242     1,747  
    Net (gain) loss from sale of investments, net of impairments
  (492 )   (19 )
    Actuarial (gain) loss on pension and postretirement benefits
  (7,584 )   9,994  
Changes in operating assets and liabilities:
           
    Accounts receivable
  (1,329 )   (1,365 )
    Other current assets
  412     1,017  
    Accounts payable and accrued liabilities
  (152 )   1,798  
Retirement benefit funding
  (209 )   -  
Other - net
  330     (180 )
Total adjustments
  16,243     31,637  
Net Cash Provided by Operating Activities
  34,796     39,176  
             
Investing Activities
           
Construction and capital expenditures:
           
    Capital expenditures
  (20,944 )   (19,465 )
    Interest during construction
  (284 )   (263 )
Acquisitions, net of cash acquired
  (4,113 )   (828 )
Dispositions
  1,923     812  
Sales (purchases) of securities, net
  -     65  
Return of advances to and investments in equity affiliates
  301     -  
Other
  (7 )   (1 )
Net Cash Used in Investing Activities
  (23,124 )   (19,680 )
             
Financing Activities
           
Net change in short-term borrowings with
           
  original maturities of three months or less
  20     1  
Issuance of other short-term borrowings
  1,476     -  
Repayment of other short-term borrowings
  (1,476 )   -  
Issuance of long-term debt
  12,040     13,486  
Repayment of long-term debt
  (7,698 )   (8,733 )
Issuance of other long-term financing obligations
  4,796     -  
Purchase of treasury stock
  (13,028 )   (12,752 )
Issuance of treasury stock
  114     477  
Dividends paid
  (9,696 )   (10,241 )
Other
  251     89  
Net Cash Used in Financing Activities
  (13,201 )   (17,673 )
Net (decrease) increase in cash and cash equivalents
  (1,529 )   1,823  
Cash and cash equivalents beginning of year
  4,868     3,045  
Cash and Cash Equivalents End of Year
$ 3,339   $ 4,868  

 
 
 
 

Financial Data
       
 
               
 
       
           
 
               
 
       
AT&T Inc.
                                   
Supplementary Operating and Financial Data
                                   
Dollars in millions except per share amounts, subscribers and connections in (000s)
                   
Unaudited
 
Three Months Ended
 
Twelve Months Ended
     
12/31/2013
 
12/31/2012
 
% Chg
 
12/31/2013
 
12/31/2012
 
% Chg
                                       
Wireless
                                   
Subscribers and Connections
                                   
 
Total
                      110,376       106,957       3.2 %
 
Postpaid
                      72,638       70,497       3.0 %
 
Prepaid
                      7,384       7,328       0.8 %
 
Reseller
                      14,028       14,875       -5.7 %
 
Connected Devices
                      16,326       14,257       14.5 %
                                             
Wireless Net Adds
                                         
 
Total
    809       1,094       -26.1 %     2,721       3,764       -27.7 %
 
Postpaid
    566       780       -27.4 %     1,776       1,438       23.5 %
 
Prepaid
    (32 )     (166 )     80.7 %     (13 )     128       -  
 
Reseller
    (123 )     234       -       (1,074 )     1,027       -  
 
Connected Devices
    398       246       61.8 %     2,032       1,171       73.5 %
 
M&A Activity, Partitioned Customers and Other Adjs.
    107       (8 )     -       698       (54 )     -  
                                                   
Wireless Churn
                                               
 
Postpaid Churn
    1.11 %     1.19 %  
-8 BP
      1.06 %     1.09 %  
-3 BP
 
 
Total Churn
    1.43 %     1.42 %  
1 BP
      1.37 %     1.35 %  
2 BP
 
                                                   
Other
                                               
 
Licensed POPs (000,000)
                            317       313       1.3 %
                                                   
Wireline
                                               
Voice
                                               
 
Total Wireline Voice Connections1
                            28,489       32,184       -11.5 %
 
Net Change
    (807 )     (992 )     18.6 %     (3,695 )     (4,148 )     10.9 %
                                                   
Broadband
                                               
 
Total Wireline Broadband Connections
                            16,425       16,390       0.2 %
 
Net Change
    (2 )     (2 )     -       35       (37 )     -  
                                                   
Video
                                               
 
Total U-verse Video Connections
                            5,460       4,536       20.4 %
 
Net Change
    194       192       1.0 %     924       745       24.0 %
                                                   
Consumer Revenue Connections
                                               
 
Broadband2
                            14,697       14,531       1.1 %
 
U-verse Video Connections1
                            5,442       4,524       20.3 %
 
Voice1,3
                            16,251       18,612       -12.7 %
Total Consumer Revenue Connections1
                            36,390       37,667       -3.4 %
 
Net Change
    (273 )     (386 )     29.3 %     (1,277 )     (1,839 )     30.6 %
                                                   
AT&T Inc.
                                               
 
Construction and capital expenditures:
                                               
 
Capital expenditures
  $ 5,379     $ 5,846       -8.0 %   $ 20,944     $ 19,465       7.6 %
 
Interest during construction
  $ 71     $ 66       7.6 %   $ 284     $ 263       8.0 %
 
Dividends Declared per Share
  $ 0.46     $ 0.45       2.2 %   $ 1.81     $ 1.77       2.3 %
 
End of Period Common Shares Outstanding (000,000)
                            5,226       5,581       -6.4 %
 
Debt Ratio4
                            45.0 %     43.0 %  
200 BP
 
 
Total Employees
                            243,360       241,810       0.6 %
                                                   
1
Prior year amounts restated to conform to current period reporting methodology.
2
Consumer wireline broadband connections include DSL lines, U-verse High Speed Internet access and satellite broadband.
3
Includes consumer U-verse Voice over Internet Protocol connections of 3,848 as of December 31, 2013.
4
Total long-term debt plus debt maturing within one year divided by total debt plus total stockholders' equity.
 
Note: For the end of 4Q13, total switched access lines were 24,639, retail business switched access lines totaled 10,364, and wholesale,
 
   national mass markets and coin switched access lines totaled 1,872. Restated switched access lines do not include ISDN lines.

 
 
 
 

Financial Data
                       
                         
AT&T Inc.
                       
Non-GAAP Financial Reconciliation
                       
Adjusted Operating Revenues, Operating Income and Margin
                   
Dollars in millions
                       
Unaudited
                       
   
Three Months Ended
 
Twelve Months Ended
   
December 31,
 
December 31,
   
2012
   
2013
 
2012
   
2013
                         
Reported Operating Revenues
  $ 32,578     $ 33,163     $ 127,434     $ 128,752  
Adjustments:
                               
Removal of Advertising Solutions
    -       -       (1,049 )     -  
Storm Impacts
    27       -       27       -  
Adjusted Operating Revenues
  $ 32,605     $ 33,163     $ 126,412     $ 128,752  
                                 
Year-over-year growth - Adjusted
            1.7 %             1.9 %
                                 
                                 
Adjusted Operating Revenues is a non-GAAP financial measure calculated by excluding from operating revenues significant items that are non-operational or non-recurring in nature, including dispositions. Management believes that these measures provide relevant and useful information to investors and other users of our financial data in evaluating the effectiveness of our operations and underlying business trends.
 
Adjusted Operating Revenues should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance with GAAP. Our calculations of Adjusted Operating Revenues may differ from similarly titled measures reported by other companies.
                                 
                                 
Adjusted Operating Income
                               
Dollars in millions
                               
Unaudited
                               
   
Three Months Ended
 
Twelve Months Ended
   
December 31,
 
December 31,
      2012     2013     2012     2013
                                 
Reported Operating Income
  $ (5,958 )   $ 12,238     $ 12,997     $ 30,479  
Adjustments:
                               
Removal of Advertising Solutions
    -       -       (170 )     -  
Storm Impacts
    176       -       176       -  
Actuarial (gain) / loss on benefit plan
    9,994       (7,584 )     9,994       (7,584 )
Employee separation charges
    -       501       -       501  
Gain on transfer of wireless spectrum
    -       -       -       (229 )
Adjusted Operating Income
  $ 4,212     $ 5,155     $ 22,997     $ 23,167  
                                 
Year-over-year growth - Adjusted
            22.4 %             0.7 %
                                 
Adjusted Operating Income Margin*
    12.9 %     15.5 %     18.2 %     18.0 %
                                 
Adjusted Operating Income and Margin are non-GAAP financial measure calculated by excluding from operating revenues and operating expenses significant items that are non-operational or non-recurring in nature. Management believes that these measures provide relevant and useful information to investors and other users of our financial data in evaluating the effectiveness of our operations and underlying business trends.
 
Adjusted Operating Income and Margin exclude all actuarial gains or losses ($7.6 billion gain in 2013) associated with our pension and postemployment benefit plans, which we immediately recognize in the income statement, pursuant to our accounting policy for the recognition of actuarial gains/losses. As a result, Adjusted Operating Income and Margin reflect an expected return on plan assets of $4.0 billion (based on an average expected return on plan assets of 7.75%), rather than the actual return on plan assets of $7.2 billion (actual return of 14.1%), as included in the GAAP measure of income.
 
Adjusted Operating Income and Margin should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance with GAAP. Our calculation of Adjusted Operating Income and Margin, as presented, may differ from similarly titled measures reported by other companies.
 
*Adjusted Operating Income Margin is calculated by dividing Adjusted Operating Income by Adjusted Operating Revenues.
                                 

 
 
 
 

Financial Data
             
               
AT&T Inc.
             
Non-GAAP Consolidated Reconciliation
             
Adjusted Operating Expenses
             
Dollars in Millions
             
Unaudited
             
 
                     Three Months Ended
 
                       December 31,
 
2012
 
2013
               
Reported Operating Expenses
$
38,536
    $
      20,925
 
Adjustments:
             
  Storm Impacts
 
              (149
)    
                              -
 
  Actuarial gain / (loss) on benefit plan
 
           (9,994
)    
            7,584
 
  Employee separation charges
 
                              -
     
              (501
)
Adjusted Operating Expenses
$
28,393
     $
    28,008
 
               
Year-over-year growth - Adjusted
         
-1.4%
 
               
               
Adjusted Operating Expenses is a non-GAAP financial measure calculated by excluding from operating expenses significant items that are non-operational or non-recurring in nature. Management believes that this measure provides relevant and useful information to investors and other users of our financial data in evaluating the effectiveness of our operations and underlying business trends.
 
Adjusted Operating Expenses excludes all actuarial gains ($7.6 billion in 2013) associated with our pension and postemployment benefit plans, which we immediately recognize in the income statement, pursuant to our accounting policy for the recognition of actuarial gains/losses. As a result, the Adjusted Operating Expenses reflects an expected return on plan assets of $4.0 billion (based on an average expected return on plan assets of 7.75%), rather than the actual return on plan assets of $7.2 billion (actual return of 14.1%), as included in the GAAP measure of income.
 
Adjusted Operating Expenses should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance with GAAP. Our calculation of Adjusted Operating Expenses, as presented, may differ from similarly titled measures reported by other companies.
 
               

 
 
 
 

Financial Data
                                         
                                           
AT&T Inc.
                                         
Non-GAAP Wireless Reconciliation
                                         
Wireless Segment EBITDA
                                         
Dollars in millions
                                         
Unaudited
                                         
   
Three Months Ended
   
Twelve Months Ended
   
12/31/12
 
3/31/13
 
6/30/13
 
9/30/13
 
12/31/13
 
12/31/12
 
12/31/13
                                           
Segment Operating Revenues
                                         
  Data
  $ 4,905     $ 5,125     $ 5,356     $ 5,509     $ 5,729     $ 18,297     $ 21,719  
  Voice, text and other service
    10,044       9,937       10,014       9,951       9,931       40,889       39,833  
  Equipment
    2,693       1,629       1,921       2,020       2,777       7,577       8,347  
    Total Segment Operating Revenues
    17,642       16,691       17,291       17,480       18,437       66,763       69,899  
                                                         
Segment Operating Expenses
                                                       
  Operations and support
    13,296       10,180       10,770       10,982       12,576       43,296       44,508  
  Depreciation and amortization
    1,781       1,835       1,843       1,875       1,915       6,873       7,468  
    Total Segment Operating Expenses
    15,077       12,015       12,613       12,857       14,491       50,169       51,976  
Segment Operating Income
    2,565       4,676       4,678       4,623       3,946       16,594       17,923  
Segment Operating Income Margin
    14.5 %     28.0 %     27.1 %     26.4 %     21.4 %     24.9 %     25.6 %
                                                         
Plus: Depreciation and amortization
    1,781       1,835       1,843       1,875       1,915       6,873       7,468  
EBITDA
  $ 4,346     $ 6,511     $ 6,521     $ 6,498     $ 5,861     $ 23,467     $ 25,391  
EBITDA as a % of Service Revenues1
    29.1 %     43.2 %     42.4 %     42.0 %     37.4 %     40 %     41.3 %
                                                         
  EBITDA is defined as Operating Income Before Depreciation and Amortization.
 
1Service revenues is defined as Wireless data and voice, text and other service revenues.
                                                         

 
 
 
 

Financial Data
                       
                         
AT&T Inc.
                       
Non-GAAP Consolidated Reconciliation
                       
Adjusted Diluted EPS
                       
AT&T Inc.
                       
Unaudited
                       
   
Three Months Ended
   
Twelve Months Ended
 
   
December 31,
   
December 31,
 
   
2012
 
2013
 
2012
 
2013
                         
Reported Diluted EPS
  $ (0.68 )   $ 1.31     $ 1.25     $ 3.39  
Adjustments:
                               
  Removal of Advertising Solutions
    -       -       (0.03 )     -  
  Storm Impacts
    0.02       -       0.02       -  
  Actuarial (gain) / loss on benefit plan
    1.10       (0.89 )     1.07       (0.88 )
  Gain on transfer of wireless spectrum
    -       -       -       (0.03 )
  Income tax settlement/items
    -       -       -       (0.05 )
  Early debt redemption costs
    -       0.07       -       0.07  
  Employee separation charges
    -       0.06       -       0.06  
  América Móvil - Gain from sale of shares
    -       (0.02 )     -       (0.06 )
Adjusted Diluted EPS
  $ 0.44     $ 0.53     $ 2.31     $ 2.50  
                                 
Year-over-year growth - Adjusted
            20.5 %             8.2 %
                                 
                                 
Weighted Average Common Shares Outstanding
                               
with Dilution (000,000)
    5,680       5,283       5,821       5,385  
                                 
Adjusted Diluted EPS is a non-GAAP financial measure calculated by excluding from operating revenues, operating expenses and equity in net income of affiliates certain significant items that are non-operational or non-recurring in nature, including dispositions. Management believes that this measure provides relevant and useful information to investors and other users of our financial data in evaluating the effectiveness of our operations and underlying business trends.
 
Adjusted Diluted EPS should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance with GAAP. Our calculation of Adjusted Diluted EPS, as presented, may differ from similarly titled measures reported by other companies.
                                 

 
 
 
 

Financial Data
                       
                         
AT&T Inc.
                       
Non-GAAP Consolidated Reconciliation
                       
Free Cash Flow
                       
Dollars in millions
                       
Unaudited
                       
   
Three Months Ended
 
Twelve Months Ended
   
December 31,
 
December 31,
   
2012
 
2013
 
2012
 
2013
                         
Net cash provided by operating activities
  $ 10,520     $ 7,917     $ 39,176     $ 34,796  
                                 
Less: Construction and capital expenditures
    (5,912 )     (5,450 )     (19,728 )     (21,228 )
                                 
Free Cash Flow
  $ 4,608     $ 2,467     $ 19,448     $ 13,568  
                                 
                                 
                                 
                                 
Free Cash Flow after Dividends
                               
Dollars in millions
                               
Unaudited
                               
   
Three Months Ended
 
Twelve Months Ended
   
December 31,
 
December 31,
      2012     2013     2012     2013
                                 
Net cash provided by operating activities
  $ 10,520     $ 7,917     $ 39,176     $ 34,796  
                                 
Less: Construction and capital expenditures
    (5,912 )     (5,450 )     (19,728 )     (21,228 )
                                 
Free Cash Flow
    4,608       2,467       19,448       13,568  
                                 
Less: Dividends paid
    (2,503 )     (2,371 )     (10,241 )     (9,696 )
                                 
Free Cash Flow After Dividends
  $ 2,105     $ 96     $ 9,207     $ 3,872  
                                 
Free cash flow includes reimbursements of certain postretirement benefits paid.
 
Free cash flow is defined as cash from operations minus construction and capital expenditures. Free cash flow after dividends is defined as cash from operations minus construction, capital expenditures and dividends. We believe these metrics provide useful information to our investors because management regularly reviews free cash flow as an important indicator of how much cash is generated by normal business operations, including capital expenditures, and makes decisions based on it. Management also views free cash flow as a measure of cash available to pay debt and return cash to shareowners.
                                 

 
 
 
 

Financial Data
                             
                               
AT&T Inc.
                             
Non-GAAP Consolidated Reconciliation
                             
Net-Debt-to-Adjusted-EBITDA Ratio
                             
Dollars in millions
                             
Unaudited
                             
   
Three Months Ended
   
3/31/13
   
6/30/13
   
9/30/13
   
12/31/13
   
2013
 
                               
  Operating Revenues
  $ 31,356     $ 32,075     $ 32,158     $ 33,163     $ 128,752  
  Operating Expenses
    25,416       25,962       25,970       20,925       98,273  
Total Operating Income
    5,940       6,113       6,188       12,238       30,479  
  Add Back Depreciation and Amortization
    4,529       4,571       4,615       4,680       18,395  
Consolidated Reported EBITDA
    10,469       10,684       10,803       16,918       48,874  
  Add back:
                                       
   Actuarial (gain) / loss on benefit plan
                            (7,584 )     (7,584 )
Consolidated Adjusted EBITDA
    10,469       10,684       10,803       9,334       41,290  
  End-of-period current debt
                                    5,498  
  End-of-period long-term debt
                                    69,290  
Total End-of-Period Debt
                                    74,788  
  Less Cash and Cash Equivalents
                                    3,339  
Net Debt Balance
                                    71,449  
Net-Debt-to-Adjusted-EBITDA Ratio
                                    1.73  
                                         
Net-Debt-to-EBITDA ratios are non-GAAP financial measures frequently used by investors and credit rating agencies. Management believes these measures provide relevant and useful information to investors and other users of our financial data. Net Debt is calculated by subtracting cash and cash equivalents from the sum of debt maturing within one year and long-term debt. The Net-Debt-to-EBITDA ratio is calculated by dividing the Net Debt by annualized EBITDA.
 
Adjusted EBITDA excludes all actuarial gains or losses ($7.6 billion gain in 2013) associated with our pension and postemployment benefit plans, which we immediately recognize in the income statement, pursuant to our accounting policy for the recognition of actuarial gains/losses. As a result, Adjusted EBITDA reflects an expected return on plan assets of $4.0 billion (based on an average expected return on plan assets of 7.75%), rather than the actual return on plan assets of $7.2 billion (actual return of 14.1%), as included in the GAAP measure of income.
 
Our calculation of Adjusted EBITDA, as presented, may differ from similarly titled measures reported by other companies.