AT&T Wireless 2009 Annual Report Download - page 72

Notes to Consolidated Financial Statements (continued)
Dollars in millions except per share amounts
70 AT&T 09 AR
At December 31, 2009, 2008 and 2007, we had issued and
outstanding options to purchase approximately 178 million,
204 million and 231 million shares of AT&T common stock.
The exercise prices of options to purchase a weighted-average
of 163 million, 144 million and 93 million shares in 2009,
2008, and 2007 were above the average market price of
AT&T stock. Accordingly, we did not include these amounts
in determining the dilutive potential common shares for the
respective periods. At December 31, 2009, the exercise price
of 19 million share options was below market price.
NOTE 4. SEGMENT INFORMATION
Our segments are strategic business units that offer different
products and services over various technology platforms and
are managed accordingly. Our operating segment results
presented in Note 4 and discussed below for each segment
follow our internal management reporting. We analyze our
various operating segments based on segment income
before income taxes. 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 the calculation
of each segment’s percentage of our consolidated results.
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 Solutions and (4)Other.
The Wireless segment uses our nationwide network to
provide consumer and business customers with wireless
voice and advanced data communications services.
The Wireline segment uses our regional, national and
global network to provide consumer and business customers
with landline voice and data communications services, AT&T
U-verseSM TV, high-speed broadband and voice services
(U-verse) and managed networking to business customers.
Additionally, we offer satellite television services through
our agency arrangements.
The Advertising Solutions 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
YELLOWPAGES.COM, LLC (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
where 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 Solutions 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 consolidation and elimination column in the following
reconciliation.
The Other segment includes results from Sterling
Commerce, Inc. (Sterling), 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.
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
Solutions 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 and other
income (expense)–net. This column also eliminates any
intercompany transactions included in each segment’s results
as well as the Advertising Solutions revenue and expense in
2007 related to directories published in the Southeast region
during 2006, mentioned previously. 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.