Segment Information

9 Months Ended

Sep. 30, 2014

Segment Information

Segment Information

NOTE 4. SEGMENT INFORMATION

Our segments are strategic business units that offer different products and services over various technology platforms and are managed accordingly. We analyze our operating segments based on segment income before income taxes. We make our capital allocation decisions based on our strategic direction of the business, needs of the network (wireless or wireline) providing services and demands to provide emerging services to our customers. Actuarial gains and losses from pension and other postretirement benefits, interest expense and other income (expense) – net, are managed only on a total company basis and are, accordingly, reflected only in consolidated results. Therefore, these items are not included in each segment's reportable results. The customers and long-lived assets of our reportable segments are predominantly in the United States. We have two reportable segments: (1) Wireless and (2) Wireline.

The Wireless segment uses our nationwide network to provide consumer and business customers with wireless data and voice communications services. This segment includes our portion of the results from our SoftcardTMmobile wallet joint venture which is accounted for as an equity investment.

The Wireline segment uses our regional, national and global network to provide consumer and business customers with data and voice communications services, AT&T U-verse® high speed Internet, video and VoIP services and managed networking to business customers.

The Corporate and Other column includes unallocated corporate expenses, which includes costs to support corporate-driven activities and operations, 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 as well as our actuarial gains and losses on our pension and postretirement plan valuations. Results from equity method investments in AméricaMóvil (prior to the June 2014 disposal of our investment), YP Holdings LLC, and Otter Media (our joint venture with The Chernin Group), are also excluded from our segment results as those results are not considered in our assessment of segment performance. We have revised our prior-period presentation to conform to our current reporting.

In the following tables, we show how our segment results are reconciled to our consolidated results reported.

For the three months ended September 30, 2014								Consolidated Results
		Wireless		Wireline		Corporate and Other
Service	$	15,423	$	14,368	$	-	$	29,791
Equipment		2,914		247		5		3,166
Total segment operating revenues		18,337		14,615		5		32,957
Operations and support expenses		11,855		10,761		400		23,016
Depreciation and amortization expenses		1,965		2,571		3		4,539
Total segment operating expenses		13,820		13,332		403		27,555
Segment operating income (loss)		4,517		1,283		(398)		5,402
Interest expense		-		-		1,016		1,016
Equity in net income (loss) of affiliates		(26)		1		23		(2)
Other income (expense) – net		-		-		42		42
Segment income (loss) before income taxes	$	4,491	$	1,284	$	(1,349)	$	4,426
For the nine months ended September 30, 2014								Consolidated Results
		Wireless		Wireline		Corporate and Other
Service	$	45,958	$	43,165	$	-	$	89,123
Equipment		8,175		688		22		8,885
Total segment operating revenues		54,133		43,853		22		98,008
Operations and support expenses		34,305		31,918		783		67,006
Depreciation and amortization expenses		5,931		7,769		6		13,706
Total segment operating expenses		40,236		39,687		789		80,712
Segment operating income (loss)		13,897		4,166		(767)		17,296
Interest expense		-		-		2,757		2,757
Equity in net income (loss) of affiliates		(75)		2		261		188
Other income (expense) – net		-		-		1,456		1,456
Segment income (loss) before income taxes	$	13,822	$	4,168	$	(1,807)	$	16,183
For the three months ended September 30, 2013								Consolidated Results
		Wireless		Wireline		Corporate and Other
Service	$	15,460	$	14,403	$	-	$	29,863
Equipment		2,020		267		8		2,295
Total segment operating revenues		17,480		14,670		8		32,158
Operations and support expenses		10,982		10,385		(12)		21,355
Depreciation and amortization expenses		1,875		2,736		4		4,615
Total segment operating expenses		12,857		13,121		(8)		25,970
Segment operating income		4,623		1,549		16		6,188
Interest expense		-		-		829		829
Equity in net income (loss) of affiliates		(18)		-		109		91
Other income (expense) – net		-		-		50		50
Segment income (loss) before income taxes	$	4,605	$	1,549	$	(654)	$	5,500
For the nine months ended September 30, 2013								Consolidated Results
		Wireless		Wireline		Corporate and Other
Service	$	45,892	$	43,266	$	-	$	89,158
Equipment		5,570		832		29		6,431
Total segment operating revenues		51,462		44,098		29		95,589
Operations and support expenses		31,932		31,137		564		63,633
Depreciation and amortization expenses		5,553		8,146		16		13,715
Total segment operating expenses		37,485		39,283		580		77,348
Segment operating income (loss)		13,977		4,815		(551)		18,241
Interest expense		-		-		2,481		2,481
Equity in net income (loss) of affiliates		(55)		1		548		494
Other income (expense) – net		-		-		370		370
Segment income (loss) before income taxes	$	13,922	$	4,816	$	(2,114)	$	16,624