Note 13
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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.
The reconciliation of segment operating revenues and expenses to consolidated operating revenues and expenses below also includes those items of a non-recurring or non-operational nature. We exclude from segment results the effects of certain items that management does not consider in assessing segment performance, primarily because of their non-recurring or non-operational nature.
We have adjusted prior period consolidated and segment information, where applicable, to conform to current year presentation.
Our segments and their principal activities consist of the following:
| Segment | Description | |
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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. |
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Wireline |
Wireline’s voice, data and video communications products and enhanced services include broadband video and data, corporate networking solutions, data center and cloud services, security and managed network services and local and long distance voice 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. |
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The following table provides operating financial information for our two reportable segments:
| (dollars in millions) | ||||||||||||
| 2013 | Wireless | Wireline | Total Segments | |||||||||
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External Operating Revenues |
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Retail service |
$ | 66,282 | $ | – | $ | 66,282 | ||||||
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Other service |
2,691 | – | 2,691 | |||||||||
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Service revenue |
68,973 | – | 68,973 | |||||||||
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Equipment |
8,096 | – | 8,096 | |||||||||
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Other |
3,851 | – | 3,851 | |||||||||
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Consumer retail |
– | 14,737 | 14,737 | |||||||||
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Small business |
– | 2,587 | 2,587 | |||||||||
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Mass Markets |
– | 17,324 | 17,324 | |||||||||
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Strategic services |
– | 8,410 | 8,410 | |||||||||
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Core |
– | 6,267 | 6,267 | |||||||||
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Global Enterprise |
– | 14,677 | 14,677 | |||||||||
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Global Wholesale |
– | 5,703 | 5,703 | |||||||||
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Other |
– | 456 | 456 | |||||||||
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Intersegment revenues |
103 | 1,063 | 1,166 | |||||||||
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Total operating revenues |
81,023 | 39,223 | 120,246 | |||||||||
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Cost of services and sales |
23,648 | 21,928 | 45,576 | |||||||||
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Selling, general and administrative expense |
23,176 | 8,595 | 31,771 | |||||||||
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Depreciation and amortization expense |
8,202 | 8,327 | 16,529 | |||||||||
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Total operating expenses |
55,026 | 38,850 | 93,876 | |||||||||
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Operating income |
$ | 25,997 | $ | 373 | $ | 26,370 | ||||||
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Assets |
$ | 146,429 | $ | 84,573 | $ | 231,002 | ||||||
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Plant, property and equipment, net |
35,932 | 51,885 | 87,817 | |||||||||
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Capital expenditures |
9,425 | 6,229 | 15,654 | |||||||||
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(dollars in millions) |
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| 2012 | Wireless | Wireline | Total Segments | |||||||||
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External Operating Revenues |
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Retail service |
$ | 61,383 | $ | – | $ | 61,383 | ||||||
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Other service |
2,290 | – | 2,290 | |||||||||
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Service revenue |
63,673 | – | 63,673 | |||||||||
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Equipment |
8,010 | – | 8,010 | |||||||||
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Other |
4,096 | – | 4,096 | |||||||||
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Consumer retail |
– | 14,043 | 14,043 | |||||||||
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Small business |
– | 2,648 | 2,648 | |||||||||
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Mass Markets |
– | 16,691 | 16,691 | |||||||||
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Strategic services |
– | 8,052 | 8,052 | |||||||||
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Core |
– | 7,240 | 7,240 | |||||||||
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Global Enterprise |
– | 15,292 | 15,292 | |||||||||
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Global Wholesale |
– | 6,177 | 6,177 | |||||||||
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Other |
– | 508 | 508 | |||||||||
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Intersegment revenues |
89 | 1,112 | 1,201 | |||||||||
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Total operating revenues |
75,868 | 39,780 | 115,648 | |||||||||
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Cost of services and sales |
24,490 | 22,413 | 46,903 | |||||||||
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Selling, general and administrative expense |
21,650 | 8,883 | 30,533 | |||||||||
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Depreciation and amortization expense |
7,960 | 8,424 | 16,384 | |||||||||
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Total operating expenses |
54,100 | 39,720 | 93,820 | |||||||||
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Operating income |
$ | 21,768 | $ | 60 | $ | 21,828 | ||||||
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Assets |
$ | 142,485 | $ | 84,815 | $ | 227,300 | ||||||
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Plant, property and equipment, net |
34,545 | 52,911 | 87,456 | |||||||||
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Capital expenditures |
8,857 | 6,342 | 15,199 | |||||||||
| (dollars in millions) | ||||||||||||
| 2011 | Wireless | Wireline | Total Segments | |||||||||
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External Operating Revenues |
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Retail service |
$ | 56,601 | $ | – | $ | 56,601 | ||||||
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Other service |
2,497 | – | 2,497 | |||||||||
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Service revenue |
59,098 | – | 59,098 | |||||||||
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Equipment |
7,446 | – | 7,446 | |||||||||
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Other |
3,517 | – | 3,517 | |||||||||
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Consumer retail |
– | 13,605 | 13,605 | |||||||||
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Small business |
– | 2,720 | 2,720 | |||||||||
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Mass Markets |
– | 16,325 | 16,325 | |||||||||
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Strategic services |
– | 7,607 | 7,607 | |||||||||
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Core |
– | 8,014 | 8,014 | |||||||||
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Global Enterprise |
– | 15,621 | 15,621 | |||||||||
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Global Wholesale |
– | 6,795 | 6,795 | |||||||||
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Other |
– | 704 | 704 | |||||||||
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Intersegment revenues |
93 | 1,237 | 1,330 | |||||||||
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Total operating revenues |
70,154 | 40,682 | 110,836 | |||||||||
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Cost of services and sales |
24,086 | 22,158 | 46,244 | |||||||||
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Selling, general and administrative expense |
19,579 | 9,107 | 28,686 | |||||||||
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Depreciation and amortization expense |
7,962 | 8,458 | 16,420 | |||||||||
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Total operating expenses |
51,627 | 39,723 | 91,350 | |||||||||
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Operating income |
$ | 18,527 | $ | 959 | $ | 19,486 | ||||||
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Assets |
$ | 147,378 | $ | 86,185 | $ | 233,563 | ||||||
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Plant, property and equipment, net |
33,451 | 54,149 | 87,600 | |||||||||
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Capital expenditures |
8,973 | 6,399 | 15,372 | |||||||||
Reconciliation to Consolidated Financial Information
A reconciliation of the segment operating revenues to consolidated operating revenues is as follows:
| (dollars in millions) | ||||||||||||
| Years Ended December 31, | 2013 | 2012 | 2011 | |||||||||
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Operating Revenues |
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Total reportable segments |
$ | 120,246 | $ | 115,648 | $ | 110,836 | ||||||
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Reconciling items: |
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Corporate, eliminations and other |
304 | 198 | 39 | |||||||||
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Consolidated operating revenues |
$ | 120,550 | $ | 115,846 | $ | 110,875 | ||||||
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A reconciliation of the total of the reportable segments’ operating income to consolidated Income before (provision) benefit for income taxes is as follows:
| (dollars in millions) | ||||||||||||
| Years Ended December 31, | 2013 | 2012 | 2011 | |||||||||
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Operating Income |
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Total segment operating income |
$ | 26,370 | $ | 21,828 | $ | 19,486 | ||||||
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Severance, pension and benefit credits (charges) (Note 11) |
6,232 | (7,186 | ) | (5,954 | ) | |||||||
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Gain on spectrum license transaction (Note 2) |
278 | – | – | |||||||||
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Litigation settlements (Note 16) |
– | (384 | ) | – | ||||||||
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Other costs (Note 8) |
– | (276 | ) | – | ||||||||
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Corporate, eliminations and other |
(912 | ) | (822 | ) | (652 | ) | ||||||
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Consolidated operating income |
31,968 | 13,160 | 12,880 | |||||||||
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Equity in earnings of unconsolidated businesses |
142 | 324 | 444 | |||||||||
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Other income and (expense), net |
(166 | ) | (1,016 | ) | (14 | ) | ||||||
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Interest expense |
(2,667 | ) | (2,571 | ) | (2,827 | ) | ||||||
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Income Before (Provision) Benefit for Income Taxes |
$ | 29,277 | $ | 9,897 | $ | 10,483 | ||||||
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A reconciliation of the total of the reportable segments’ assets to consolidated assets is as follows:
| (dollars in millions) | ||||||||
| At December 31, | 2013 | 2012 | ||||||
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Assets |
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Total reportable segments |
$ | 231,002 | $ | 227,300 | ||||
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Corporate, eliminations and other |
43,096 | (2,078 | ) | |||||
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Total consolidated |
$ | 274,098 | $ | 225,222 | ||||
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Corporate, eliminations and other at December 31, 2013 is primarily comprised of cash and cash equivalents which were used to complete the Wireless Transaction on February 21, 2014.
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 years ended December 31, 2013, 2012 and 2011. International operating revenues and long-lived assets are not significant.