8-K/AAcquisitions & DispositionsOther EventsExhibits & Filings

AT&T INC. 8-K/A Report, Acquisition Completed (Aug 27, 2018)

Filed August 27, 2018For Securities:TT-PCTBBT-PA

Summary

This 8-K/A filing from AT&T Inc. serves as an amendment to their previous 8-K report regarding the acquisition of Time Warner Inc. (now WarnerMedia). The primary purpose of this amendment is to include the required pro forma financial statements and related exhibits that illustrate the potential impact of the acquisition on AT&T's financial results. Investors should note that these are pro forma, illustrative, and estimated figures, not definitive historical results. The filing details the accounting treatment for the acquisition, focusing on three key areas: intercompany transactions, other intangible amortization, and film and television library amortization. These areas are expected to have the most significant impact on AT&T's consolidated financial statements, particularly in terms of increased depreciation and amortization expenses. AT&T is providing these pro forma figures to help investors understand the prospective financial implications, while also emphasizing that actual results may vary and that certain expenses related to purchase accounting will be adjusted for in non-GAAP metrics.

Key Highlights

  • 1Amendment to June 15, 2018 8-K filing regarding the acquisition of Time Warner Inc. (now WarnerMedia).
  • 2Inclusion of required pro forma financial statements and exhibits detailing the financial impact of the acquisition.
  • 3Focus on three key areas impacted by purchase accounting: intercompany transactions, other intangible amortization, and film/TV library amortization.
  • 4Significant estimated increase in depreciation and amortization expense due to the acquisition, particularly from intangible assets.
  • 5Specific estimated amortization expenses provided for finite-lived intangible assets (e.g., distribution networks, trademarks) and film/TV libraries for the second half of 2018 and beyond.
  • 6Clarification that certain purchase accounting-related amortization expenses will be adjusted for in non-GAAP metrics and adjusted earnings, while others will not.
  • 7Pro forma financial information is illustrative, prospective, and actual results may differ.

Frequently Asked Questions

This filing amends a previous 8-K to include necessary pro forma financial statements and exhibits related to the acquisition of Time Warner Inc. (now WarnerMedia). It aims to provide investors with an illustration of how the acquisition might impact AT&T's financial results going forward.

The filing identifies three key areas of significant accounting impact: intercompany transactions (licensing of content between WarnerMedia and AT&T's entertainment group), other intangible amortization (related to assets like distribution networks and trademarks), and film and television library amortization (including a significant 'step-up' in value for existing libraries).

Yes, the acquisition is expected to lead to a substantial increase in depreciation and amortization expenses. Specifically, amortization of intangible assets and the film/TV library step-up will be recorded. AT&T states that these specific purchase accounting-related expenses will be adjusted for when calculating non-GAAP metrics and adjusted earnings, but other amortization expenses related to pre-acquisition content will not be.

No, the financial figures presented, particularly the pro forma financial statements and estimated amortization expenses, are illustrative, prospective, and based on estimates. AT&T emphasizes that actual results may vary.