AT&T Wireless 2008 Annual Report Download - page 61

AT&T Annual Report 2008
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includes minority interest reported as other income (expense)
– net in the consolidated statements of income. Therefore,
these items are not included in the calculation of each
segment’s percentage of our consolidated results. As a result
of the December 29, 2006 acquisition of BellSouth we have
revised our segment reporting to represent how we now
manage our business, restating prior periods to conform to
the current segments. The customers and long-lived assets
of our reportable segments are predominantly in the
United States. We have four reportable segments: (1)wireless,
(2)wireline, (3)advertising & publishing and (4)other.
The wireless segment provides voice, data and other
wireless communications services, and includes 100% of the
results of AT&T Mobility, which was our wireless joint venture
with BellSouth prior to the December 29, 2006 acquisition
and is now a wholly-owned subsidiary of AT&T. Prior to the
acquisition, we analyzed AT&T Mobility’s revenues and
expenses under the wireless segment, and we eliminated
the wireless segment in our consolidated financial statements.
In our 2006 and prior consolidated financial statements we
reported our 60% proportionate share of AT&T Mobility’s
results as equity in net income of affiliates.
The wireline segment provides both retail and wholesale
landline communications services, including local and long-
distance voice, switched access, Internet protocol and Internet
access data, messaging services, managed networking to
business customers, AT&T U-verseSM TV service and satellite
television services through our agency agreements with
EchoStar Communications Corp. (EchoStar) and the DIRECTV
Group, Inc.
The advertising & publishing segment includes our
directory operations, which publish Yellow and White Pages
directories and sell directory advertising and Internet-based
advertising and local search. This segment includes the
results of YPC, which was a joint venture with BellSouth
prior to the December 29, 2006 acquisition and is now a
wholly-owned subsidiary of AT&T. For segment reporting
disclosure, we have carried forward the deferred revenue
and deferred cost balances for BellSouth at the acquisition
date in order to reflect how the segment is managed. This
is different for consolidated reporting purposes as under
FAS 141, BellSouth deferred revenue and expenses from
directories published during the 12-month period ending
with the December 29, 2006 acquisition date, are not
recognized and therefore were not included in the opening
balance sheet. For management reporting purposes, we
continue to amortize these balances over the life of the
directory. Thus, our advertising & publishing segment
results in 2007 include revenue of $964 and expenses
of $308, related to directories published in the Southeast
region during 2006, prior to our acquisition of BellSouth.
These amounts are eliminated in the consolidations and
eliminations column in the following reconciliation.
The other segment includes results from Sterling
Commerce, Inc., customer information services and all
corporate and other operations. This segment includes
our portion of the results from our international equity
investments. Also included in the other segment are
impacts of corporate wide decisions for which the individual
operating segments are not being evaluated. Prior to
December 29, 2006, this segment also included our results
from AT&T Mobility as equity in net income of affiliates,
as discussed above.
In the following tables, we show how our segment
results are reconciled to our consolidated results reported in
accordance with GAAP. The Wireless, Wireline, Advertising &
Publishing and Other columns represent the segment results
of each such operating segment. The Consolidation and
Elimination column adds in those line items that we manage
on a consolidated basis only: interest expense, interest
income and other income (expense) – net. This column also
eliminates any intercompany transactions included in each
segment’s results as well as the advertising & publishing
revenue and expenses in 2007 related to directories
published in the Southeast region during 2006, mentioned
previously. In 2006, since our 60% share of the results from
AT&T Mobility is already included in the Other column, the
Wireless Elimination column removes the non-consolidated
results shown in the wireless segment. In the “Segment
assets” line item, we have eliminated the value of our
investments in our fully consolidated subsidiaries and the
intercompany financing assets as these have no impact to
the segments’ operations.