Segment Information

9 Months Ended

Sep. 30, 2013

Segment Information

9. Segment Information

Reportable Segments

We have two reportable segments, which we operate and manage as strategic business units and organize by products and services. We measure and evaluate our reportable segments based on segment operating income, consistent with the chief operating decision maker’s assessment of segment performance.

Corporate, eliminations and other includes unallocated corporate expenses, intersegment eliminations recorded in consolidation, the results of other businesses, such as our investments in unconsolidated businesses, pension and other employee benefit related costs, lease financing, as well as other adjustments and gains and losses that are not allocated in assessing segment performance due to their non-operational nature. Although such transactions are excluded from the business segment results, they are included in reported consolidated earnings. Gains and losses that are not individually significant are included in all segment results as these items are included in the chief operating decision maker’s assessment of segment performance.

Our segments and their principal activities consist of the following:

Segment	Description
Wireless	Wireless’ communications products and services include wireless voice and data services and equipment sales, which are provided to consumer, business and government customers across the United States.
Wireline	Wireline’s voice, data and video communications products and enhanced services include local and long distance voice, broadband Internet access and video, corporate networking solutions, data center and cloud services and security and managed network services. We provide these products and services to consumers in the United States, as well as to carriers, businesses and government customers both in the United States and in over 150 other countries around the world.

The following table provides operating financial information for our two reportable segments:

	Three Months Ended     September 30,				Nine Months Ended September 30,
(dollars in millions)	2013		2012		2013		2012
External Operating Revenues
Wireless
Retail service	$	16,764	$	15,523	$	49,327	$	45,610
Other service		737		616		1,950		1,684
Service revenue		17,501		16,139		51,277		47,294
Equipment		1,921		1,855		5,679		5,456
Other		952		1,008		2,866		3,057
Total Wireless		20,374		19,002		59,822		55,807
Wireline
Consumer retail		3,709		3,554		10,941		10,473
Small business		650		667		1,945		1,990
Mass Markets		4,359		4,221		12,886		12,463
Strategic services		2,112		2,010		6,278		5,962
Core		1,551		1,769		4,760		5,488
Global Enterprise		3,663		3,779		11,038		11,450
Global Wholesale		1,412		1,512		4,320		4,666
Other		112		120		330		373
Total Wireline		9,546		9,632		28,574		28,952
Total segments		29,920		28,634		88,396		84,759
Corporate, eliminations and other		359		373		1,089		1,042
Total consolidated – reported	$	30,279	$	29,007	$	89,485	$	85,801
Intersegment Revenues
Wireless	$	25	$	22	$	76	$	67
Wireline		268		282		804		838
Total segments		293		304		880		905
Corporate, eliminations and other		(293)		(304)		(880)		(905	)
Total consolidated – reported	$	–	$	–	$	–	$	–
Total Operating Revenues
Wireless	$	20,399	$	19,024	$	59,898	$	55,874
Wireline		9,814		9,914		29,378		29,790
Total segments		30,213		28,938		89,276		85,664
Corporate, eliminations and other		66		69		209		137
Total consolidated – reported	$	30,279	$	29,007	$	89,485	$	85,801
Operating Income
Wireless	$	6,886	$	6,047	$	19,768	$	16,977
Wireline		155		41		242		386
Total segments		7,041		6,088		20,010		17,363
Reconciling items		87		(605)		(105)		(1,034	)
Total consolidated – reported	$	7,128	$	5,483	$	19,905	$	16,329

(dollars in millions)	At September 30, 2013		At December 31, 2012
Assets
Wireless	$	148,328	$	142,485
Wireline		86,593		84,815
Total segments		234,921		227,300
Reconciling items		41,754		(2,078	)
Total consolidated – reported	$	276,675	$	225,222

A reconciliation of the total of the reportable segments’ operating income to consolidated income before provision for income taxes is as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
(dollars in millions)	2013			2012			2013			2012
Total segment operating income	$	7,041		$	6,088		$	20,010		$	17,363
Gain on spectrum license transactions (Note 2)		278			–			278			–
Pension remeasurement (Note 7)		–			–			237			–
Litigation settlements (Note 10)		–			(384	)		–			(384	)
Corporate, eliminations and other		(191	)		(221	)		(620	)		(650	)
Total consolidated operating income		7,128			5,483			19,905			16,329
Equity in earnings of unconsolidated businesses		19			62			134			237
Other income, net		20			10			84			63
Interest expense		(555	)		(632	)		(1,606	)		(1,996	)
Income Before Provision For Income Taxes	$	6,612		$	4,923		$	18,517		$	14,633

We generally account for intersegment sales of products and services and asset transfers at current market prices. No single customer accounted for more than 10% of our total operating revenues during the three and nine months ended September 30, 2013 and 2012.