AT&T's Third Quarter Operational Profits Were $1.00 Per Share, Excluding a Gain and Merger-Related Expenses.NEW YORK--(BUSINESS WIRE)--Oct. 26, 1998--AT&T today announced that third quarter operational profits from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the were $1.00 per share, an increase of 66.7 percent compared to year-ago earnings of 60 cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. , excluding a pension settlement gain and merger-related expenses. AT&T's total revenue rose 4.3 percent for the third quarter. On a consolidated basis, the company reported third quarter profits of $1.09 per share. This included a pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta gain of $602 million due to settlement of pension obligations for former employees who accepted the company's voluntary retirement incentive program and pre-tax Teleport Communications Group Teleport Communications Group (TCG) was the first Competitive local exchange carrier (CLEC) in the U.S. First formed in 1985, it competed with the existing telephone companies to provide dial tone and related services in the largest U.S. markets. Inc. (TCG (Trusted Computing Group, Beaverton, OR, www.trustedcomputinggroup.org) The successor to the Trusted Computer Platform Alliance (TCPA), announced in 2003 by founding members AMD, HP, IBM, Intel and Microsoft. ) merger-related expenses of $85 million. These two non-operational events resulted in a combined net gain of 16 cents per share. In addition, the company recognized an extraordinary loss of 7 cents per share, or $137 million, related to expenses incurred when the company retired $1.046 billion in debt obligations. However, this debt retirement will produce a significant amount of interest expense savings over time. For the third quarter of 1998, income from continuing operations rose to $2.096 billion, compared to $1.078 billion in the year-ago quarter, an increase of 94.4 percent. Excluding the settlement gain and merger-related expenses, income from continuing operations rose $730 million, or 67.8 percent. The significant rise can be attributed to the company's ongoing efforts in reducing expenses as well as realizing revenue growth. Total revenue for the quarter increased 4.3 percent to $13.653 billion, compared to $13.090 billion in the third quarter of 1997. Business services, wireless services, TCG, AT&T Solutions, international operations Internal Operations (I.O., IO or I/O) is a fictional American Intelligence Agency in Wildstorm comics. It was originally called International Operations. I.O. first appeared in WildC.A.T.S. volume 1 #1 (August, 1992) and was created by Brandon Choi and Jim Lee. and ventures and AT&T WorldNet See AT&T WorldNet. services all contributed to the revenue growth. As anticipated, AT&T's consumer services Consumer Services refers to the formulation, deformulation, technical consulting and testing of most consumer products, such as food, herbs, beverages, vitamins, pharmaceuticals, cosmetics, hair products, household cleaners, [paints, plastics, metals, waxes, coatings, minerals, revenue declined slightly as the company continued to implement its strategy of targeting and retaining profitable customers by migrating them to more favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. optional calling plans such as One Rate Plus. "AT&T's record earnings, coupled with revenue growth, demonstrate that we're we're Contraction of we are. we're we are successfully executing our strategy to reduce costs, achieve profitable growth and win in a competitive environment," said AT&T Chairman C. Michael Armstrong C Michael Armstong (born 18 October, 1938, in Detroit, Michigan) is the former AT&T chairman and CEO, who tried to reestablish AT&T as an end-to-end carrier. Unfortunately, due to the dot.com bust and various other issues, he was forced to break the group up in 2001. . "We're making the right decisions to deliver value to our investors and build innovative services for our customers." Stock Repurchase Stock repurchase A firm's repurchase of outstanding shares of its common stock. Update As announced last quarter, the AT&T Board of Directors authorized au·thor·ize tr.v. au·thor·ized, au·thor·iz·ing, au·thor·iz·es 1. To grant authority or power to. 2. To give permission for; sanction: the repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. of up to $3 billion of the company's common stock. The repurchase of about 53 million shares was completed during very favorable market conditions in September. The company plans to reissue re·is·sue v. re·is·sued, re·is·su·ing, re·is·sues v.tr. To issue again, especially to make available again. v.intr. To come forth again. n. 1. the repurchased shares as part of the shares to be issued in connection with the Tele-Communications, Inc. (TCI (Trustworthy Computing Initiative) An umbrella term from Microsoft for its efforts to improve security in Windows. TCI was announced in 2002 after viruses such as Code Red and Nimda had succeeded in attacking numerous Windows computers. ) merger. TCI Merger and BT Joint Venture Update AT&T reported last week that it is on track with its timetable for the TCI merger and has completed all initial U.S. regulatory filings, including those with the Federal Communications Commission Federal Communications Commission (FCC), independent executive agency of the U.S. government established in 1934 to regulate interstate and foreign communications in the public interest. (FCC (1) (Federal Communications Commission, Washington, DC, www.fcc.gov) The U.S. government agency that regulates interstate and international communications including wire, cable, radio, TV and satellite. The FCC was created under the U.S. ), the Department of Justice, eight states and 940 local jurisdictions. The company also announced that it has filed confidentially with the Securities and Exchange Commission (SEC) a preliminary proxy/prospectus. Following SEC review, the company said it expects to make the proxy publicly available and send it to all AT&T and TCI shareowners. "We are aggressively moving forward with our merger plans," Armstrong added. "Presuming pre·sum·ing adj. Having or showing excessive and arrogant self-confidence; presumptuous. pre·sum  ing·ly adv. shareowner share·own·er n. See shareholder. Noun 1. shareowner - someone who holds shares of stock in a corporation shareholder, stockholder investor - someone who commits capital in order to gain financial returns and regulatory approvals, we expect to close the TCI merger in the first half of 1999." AT&T also said that it had reached a definitive agreement with BT on the final terms of the global joint venture announced last July. The company said that it expects to complete the initial filings of the appropriate documentation with regulatory authorities Noun 1. regulatory authority - a governmental agency that regulates businesses in the public interest regulatory agency administrative body, administrative unit - a unit with administrative responsibilities in the U.S. and Europe next week. Third Quarter Continuing Operations Highlights: - With the completion of AT&T's acquisition of TCG in July, prior-year results have been restated to reflect the merger. - Total revenue from business services increased $262 million compared with the year-ago quarter, or 4.7 percent, led by growth in high-speed data services. Revenue from wireless services rose $230 million, an increase of 19.4 percent from the third quarter of 1997. Revenue from consumer services decreased $171 million, or 2.9 percent compared with the third quarter of 1997. Total revenues for the third quarter were $13.653 billion, an increase of 4.3 percent compared with the $13.090 billion reported for the third quarter of 1997. - Total operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. for the third quarter of 1998 were $10.341 billion, an 8.8 percent decrease compared to the $11.343 billion reported for the third quarter of 1997. Excluding the pension settlement gain and TCG merger-related expenses, total operating expenses for the third quarter of 1998 decreased 4.3 percent to $10.858 billion. - Access and Other Interconnection in·ter·con·nect v. in·ter·con·nect·ed, in·ter·con·nect·ing, in·ter·con·nects v.intr. To be connected with each other: The two buildings interconnect. v.tr. expenses fell by 3.9 percent, compared with the third quarter of 1997. As was the case in the previous two quarters, the decline can be primarily attributed to access charge reduction and lower international settlement rates. As the company passes through access charge savings to its business and residential customers, revenue decreases. - Selling, General & Administrative (SG&A) expenses declined $564 million, or 14.5 percent, when compared to the third quarter of 1997. This demonstrates the company's ongoing success in reducing costs. For the quarter, SG&A expenses were 24.4 percent of revenue, down from 29.8 percent in the year-ago quarter. Excluding TCG, SG&A expenses declined $626 million for the quarter and $1.061 billion for the first nine months of 1998. AT&T has targeted a decline in SG&A expenses (excluding TCG) to an SG&A-to-revenue ratio of 22 percent by the end of 1999. - For the first nine months of 1998, the company showed income from continuing operations of $3.151 billion, or $1.74 per share, on revenues of $39.695 billion, compared with $2.998 billion, or $1.69 per share, on revenues of $38.674 billion in the first nine months of 1997. - On a consolidated basis, for the first nine months ended September 30, 1998, including charges, gains, discontinued dis·con·tin·ue v. dis·con·tin·ued, dis·con·tin·u·ing, dis·con·tin·ues v.tr. 1. To stop doing or providing (something); end or abandon: operations and the extraordinary loss, the company reported net income of $4.314 billion, or $2.38 per share compared with $3.153 billion, or $1.77 per share, for the first nine months of 1997. Third Quarter Results in Detail Business Services Total revenue from business services increased $262 million, or 4.7 percent, to $5.823 billion in the third quarter compared to $5.561 billion in the third quarter of 1997. This increase was driven primarily by strong double-digit growth in high-speed data services such as frame-relay and high-speed private line services. Business long distance revenue for the third quarter was $5.800 billion, an increase of 4.4 percent compared to the $5.555 billion of revenue reported for the third quarter of 1997. During the third quarter, business services won significant contracts with Microsoft, Massachusetts Port Authority Massachusetts Port Authority, or Massport, is a port district in the Commonwealth of Massachusetts. It operates the airports, seaport, and Mystic River Bridge in Boston, Massachusetts and the surrounding areas. , Countrywide coun·try·wide adv. & adj. Throughout a whole country; nationwide: launched a fundraising campaign countrywide; a countrywide search. Adj. 1. Home Loans, WESCO WESCO West Coast Shoe Company (manufacturer of motorcycle boots) WESCO Westinghouse Electric Supply Company Distribution and SmartStop, among others. EBIT EBIT See: Earnings Before Interest and Taxes EBIT See earnings before interest and taxes (EBIT). grew 32.5 percent to $1.471 billion. The increase can be primarily attributed to revenue growth and the company's ongoing successful cost-reduction efforts. Consumer Services Revenue from consumer services was $5.806 billion reflecting a sequential improvement for the third consecutive quarter while decreasing 2.9 percent in this quarter when compared to the year-ago period. As expected, the rate of decline in revenue has moderated from earlier in the year on a low single-digit decline in calling volumes as the company's strategy becomes more fully implemented. As the company reported last quarter, the decline in revenue reflects competitive pressures as well as reductions in access charges that the FCC imposed in 1997 and 1998. The company also remains committed to migrating customers to optional calling plans as a critical piece of its strategy to retain, cultivate cul·ti·vate tr.v. cul·ti·vat·ed, cul·ti·vat·ing, cul·ti·vates 1. a. To improve and prepare (land), as by plowing or fertilizing, for raising crops; till. b. and grow its customer base. For example, AT&T now has more than 25 million customers on its One Rate plans. Similar to the previous quarter, the company was affected by robust competition in domestic and international long-distance markets, including the impact of competitors' dial-around services, and the substitution Substitution Arsinoë put her own son in place of Orestes; her son was killed and Orestes was saved. [Gk. Myth.: Zimmerman, 32] Barabbas robber freed in Christ’s stead. [N.T.: Matthew 27:15–18; Swed. Lit. of wireless services for calling card and other higher-priced long distance services. These factors contributed to the negative revenue and volume growth rates Growth Rates The compounded annualized rate of growth of a company's revenues, earnings, dividends, or other figures. Notes: Remember, historically high growth rates don't always mean a high rate of growth looking into the future. for the third quarter. Recently, AT&T has launched a number of initiatives to address the competitive market. For example, in the third quarter, consumer services introduced a 5-cent weekend rate, which has had a positive response. Earlier this month, the company announced that popular AT&T pre-paid calling cards would be available for purchase at 5,000 participating 7-Eleven convenience stores The following is a list of convenience stores organized by geographical location. Stores are grouped by the lowest heading that contains all locales in which the brands have significant presence. nationwide. And college students across the U.S. can now purchase AT&T pre-paid calling cards at any of 300 on-campus on-campus adjective Referring to an on-site site of a medical complex with multiple buildings. Cf 'Off campus.'. Barnes & Noble bookstores. The company also introduced The Lucky Dog Phone Company, a new alternative dial-around service. By dialing 10-10-345, customers can call long distance for 10 cents per minute (plus a 10 cent connection fee) and have an opportunity to win one of 345 daily prizes. For consumer services, EBIT rose 32 percent to $1.755 billion, when compared to the third quarter of 1997, driven primarily by reduced SG&A expenses, including lower, yet more cost-effective cost-effective, n the minimal expenditure of dollars, time, and other elements necessary to achieve the health care result deemed necessary and appropriate. customer acquisition and retention programs targeted to high-value customers. Wireless Services Total revenue from wireless services, including product sales, increased $230 million, or 19.4 percent, to $1.420 billion, compared to the third quarter of 1997. As seen in the last quarter, the increase was driven by continued strong market response to the company's Digital One Rate offer. Total net subscriber additions for the third quarter were 325,000, an increase of nearly 74 percent compared to the third quarter of 1997. The increase in part reflects the ongoing success of the Digital One Rate offer. In addition, AT&T continues to successfully migrate customers to digital services. Total digital subscribers represent 53 percent of the company's 6.8 million consolidated wireless customer base as of September 30, 1998, compared with 45 percent of the 6.5 million subscriber base at June 30, 1998. Including AT&T's partnership markets, of the total 9.1 million subscribers, approximately 4.2 million were digital subscribers at September 30, 1998. Core wireless EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become was $415 million for the third quarter, which excludes the impact of new wireless businesses (the new 1900 MHz (MegaHertZ) One million cycles per second. It is used to measure the transmission speed of electronic devices, including channels, buses and the computer's internal clock. A one-megahertz clock (1 MHz) means some number of bits (16, 32, 64, etc. markets, wireless data, and fixed wireless development). This represents a decrease of 6.9 percent compared to the third quarter of 1997. Core wireless EBIT was $176 million for the third quarter, a decrease of 26.2 percent compared to the third quarter of 1997. The decreases in EBITDA and EBIT are primarily due to increased customer acquisition costs and the costs associated with migrating customers from analog to digital service. Other/Corporate Revenue for other/corporate, which includes TCG, AT&T Solutions, AT&T WorldNet services and international operations and ventures, increased $221 million, or 31.8 percent, to $913 million compared with the year-ago quarter. For other/corporate, EBITDA was $389 million, compared to a loss of $567 million reported for the third quarter of 1997. Similarly, EBIT was $218 million, compared to a loss of $702 million. The respective increases of $956 million and $920 million reflect the net impact of the settlement gain and merger-related expenses of $517 million, as well as an improved cost structure. Supplemental Disclosures Local Services Local services revenue for the third quarter totaled $247 million, a substantial increase from the $147 million reported for the year-ago quarter. The increase was driven by the continued growth of TCG local operations. EBITDA (including merger-related expenses) for the third quarter was a negative $150 million versus a negative $187 million for the third quarter of 1997. EBIT (including merger-related expenses) for the third quarter was a negative $227 million, an 8.6 percent improvement from the negative $248 million for the third quarter of 1997. The improvements in both EBIT and EBITDA reflect revenue growth combined with improvements in cost structure, partially offset by TCG merger-related expenses. AT&T Solutions AT&T Solutions, the company's networking-centric, professional services (job) professional services - A department of a supplier providing consultancy and programming manpower for the supplier's products. business comprised of outsourcing (1) Contracting with outside consultants, software houses or service bureaus to perform systems analysis, programming and datacenter operations. Contrast with insourcing. See netsourcing, ASP, SSP and facilities management. , networking integration and multi-media call center services, grew revenue 34.5 percent in the third quarter to $273 million versus $204 million for the year-ago quarter. During the third quarter, AT&T Solutions announced that it had signed a six year contract with BANC [French, Bench.] The location where a court customarily or permanently sits. When a court is sitting in banc (or en banc), it means that a meeting or session of all the judges of a court is taking place. ONE valued at $1.4 billion, its largest to date. AT&T Solutions will assume management of BANC ONE's voice and data networking requirements, transforming the corporation's legacy communications networks The transmission channels interconnecting all client and server stations as well as all supporting hardware and software. to an integrated, state-of-the-art Internet Protocol See Internet and TCP/IP. (networking) Internet Protocol - (IP) The network layer for the TCP/IP protocol suite widely used on Ethernet networks, defined in STD 5, RFC 791. IP is a connectionless, best-effort packet switching protocol. (IP)-based networking platform. In addition to BANC ONE, the unit currently has more than $4 billion in long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. business under contract with clients such as Citibank, McGraw-Hill, United HealthCare, Textron, J.P. Morgan Morgan, American family of financiers and philanthropists. Junius Spencer Morgan, 1813–90, b. West Springfield, Mass., prospered at investment banking. , Merrill Lynch Merrill Lynch & Co., Inc. (NYSE: MER TYO: 8675 ), through its subsidiaries and affiliates, provides capital markets services, investment banking and advisory services, wealth management, asset management, insurance, banking and related products and services on a global basis. and MasterCard International. EBIT for AT&T Solutions was $16 million for the third quarter, compared to a loss of $37 million in the year-ago period. This marks the first EBIT-positive quarter for AT&T Solutions. On-line Services WorldNet and other on-line services includes AT&T WorldNet internet access See how to access the Internet. service for residential and business customers and web hosting Making a Web site available on the Internet. Many ISPs host a few personal Web pages for an individual at no additional cost above the monthly service fee, but the address is subordinate to the ISP; for example, www.friendlyisp.com/pat_smith. and other electronic commerce services. Revenue increased 65.1 percent to $100 million versus $61 million reported for the year-ago quarter. AT&T WorldNet Service serves 1.2 million subscribers and provides reliable, easy Internet access with 452 local dial-up points-of-presence across the nation. During the third quarter, the company announced additional cross-marketing agreements with leading Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the search engines companies, including Yahoo!, Excite, Lycos and Infoseek. EBIT improved $20 million to a negative $104 million, primarily reflecting the impact of increased AT&T WorldNet service revenue. International Operations and Ventures International operations and ventures include AT&T's consolidated foreign operations such as AT&T Communications Services UK and the company's transit and reorigination businesses. This category does not include bilateral bilateral /bi·lat·er·al/ (-lat´er-al) having two sides, or pertaining to both sides. bi·lat·er·al adj. 1. Having or formed of two sides; two-sided. 2. international long-distance traffic. The equity earnings or losses of AT&T's non-consolidated international joint ventures and alliances, such as Alestra in Mexico and AT&T Canada Long Distance Services, are also included. Revenue increased 22.7 percent to $218 million, versus $178 million for the year-ago quarter. EBIT also improved to a negative $40 million compared to a negative $82 million in the third quarter of 1997, as the company continued to streamline its international operations. On July 26, 1998, AT&T and BT announced that they will create a $10 billion global joint venture to serve the complete communications needs of individuals and businesses around the world. The venture will combine the trans-border assets and operations of each company, including their existing international networks, all of their international traffic, all of their international products for business customers -- including an expanded set of Concert services -- and AT&T and BT's multinational accounts in selected industry sectors. In the first year, the venture is expected to contribute positively to the earnings of both parents. The venture is pending regulatory approvals and is expected to close by next summer. NOTE TO FINANCIAL MEDIA: AT&T Chairman C. Michael Armstrong, Chief Financial Officer Dan Somers and members of the executive team will discuss the company's performance in a two-way conference call for financial analysts at 8:30 a.m. Eastern time today. Reporters are invited to listen into the call. From the U.S., callers should dial 1-800-553-0327 to access the call. Callers outside the U.S. should dial 612-332-0932. An audio rebroadcast of the conference call will be available from 11:00 a.m. Eastern time today (October 26, 1998) until midnight on Wednesday, October 28, 1998. To listen to the audio rebroadcast, U.S. callers can call 1-800-475-6701 and enter access code 410349. Outside the U.S., the rebroadcast is available by dialing 320-365-3844, and then entering the access code 410349. In addition, internet rebroadcasts of the call will be available on the AT&T website beginning later this morning at http://www.att.com/ir/. NOTE The foregoing are "forward looking statements" which are based on management's beliefs as well as on a number of assumptions concerning future events made by and information currently available to management. Readers are cautioned not to put undue reliance on such forward looking statements, which are not a guarantee of performance and are subject to a number of uncertainties and other factors, many of which are outside AT&T's control, that could cause actual results to differ materially from such statements. For a more detailed description of the factors that could cause such a difference, please see AT&T's filings with the Securities and Exchange Commission. AT&T disclaims any intention or obligation to update or revise any forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. , whether as a result of new information, future events or otherwise. -0-
AT&T
Consolidated Statements of Income (Unaudited)
-----------------------------------------------------------------------
For the Three For the Nine
Months Ended Months Ended
Dollars in Millions September 30, September 30,
(except per share amounts) 1998 1997 1998 1997
----------------------------------------------------------------------
Revenues.......... $ 13,653 $13,090 $39,695 $38,674
Operating Expenses
Access and other
interconnection..... 3,819 3,975 11,649 12,488
Network and other
communications
services ......... 2,515 2,455 7,268 7,067
Depreciation and
amortization........ 1,194 1,019 3,388 2,927
Selling, general and
administrative... 3,330 3,894 10,419 11,347
Restructuring and
other
charges(Note 1)..... (517) - 2,827 -
------------ --------- --------- ----------
Total Operating
Expenses......... 10,341 11,343 35,551 33,829
--------- ---------- ------------ -----------
Operating Income....... 3,312 1,747 4,144 4,845
Other income - net..... 156 132 1,169 371
Interest expense.......... 114 75 322 241
---------- -------- ------- ---------
Income from continuing
operations before
income taxes........ .. 3,354 1,804 4,991 4,975
Provision for income
taxes.............. 1,258 726 1,840 1,977
-------- -------- -------- ---------
Income from continuing
operations....... 2,096 1,078 3,151 2,998
Income from discontinued
operations (net of taxes
of $6 in 3Q
1997, $6 YTD 1998
and $49 YTD 1997)....... - 20 10 89
Gain on sale of discontinued
operations (net of taxes
of $43 in 3Q 1997 and
$799 YTD 1998 and $43
YTD 1997)...... - 66 1,290 66
Extraordinary loss
(net of taxes of
($80) in 3Q 1998 and
YTD 1998)(Note 1) (137) - (137) -
--------- --------- ---------- ----------
Net Income ............. $ 1,959 $ 1,164 $ 4,314 $ 3,153
========== ========= ========== ===========
Weighted average common
shares and potential
common shares
(millions)* 1,804 1,787 1,810 1,784
Per Common Share - Basic:
Income from
continuing operations...$ 1.17 $ 0.60 $1.76 $ 1.69
Income from discontinued
operations .... - 0.01 0.01 0.04
Gain on sale of discontinued
operations - 0.04 0.71 0.04
Extraordinary loss........ (0.08) - (0.08) -
----------- --------- ---------- -----------
Net Income ............ $ 1.09 $ 0.65 $ 2.40 $ 1.77
============ ========== ========== ===========
Per Common Share - Diluted:
Income from continuing
operations....... $ 1.16 $ 0.60 $ 1.74 $ 1.69
Income from discontinued
operations .... - 0.01 - 0.04
Gain on sale of discontinued
operations - 0.04 0.71 0.04
Extraordinary loss...... (0.07) - (0.07) -
----------- ---------- --------- ----------
=========== ========== ========= ===========
Net Income .......... $ 1.09 $ 0.65 $ 2.38 $ 1.77
=========== ========= ======== ===========
Dividends declared
per common share.... $ 0.33 $ 0.33 $ 0.99 $ 0.99
- Amounts represent the weighted-average shares assuming dilution Dilution A reduction in earnings per share of common stock that occurs through the issuance of additional shares or the conversion of convertible securities. Notes: Adding to the number of shares outstanding reduces the value of holdings of existing shareholders. from the potential exercise of outstanding stock options (including SARS). Amounts are reduced by 13, 2, 15 and 5 million shares for 3Q1998, 3Q1997, YTD See Year-to-date. YTD See year to date (YTD). 1998 and YTD 1997 respectively, assuming no dilution.
After-tax Diluted earnings per
(dollars in share
millions)
--------------------- -----------------------
-------------------------------------------------------------------
Net Income $ 1,959 $ 1.09
------------------------------------------------------------
Pension Settlement
Gain ($602 pre-tax)
and TCG Merger (287) (0.16)
Related Expenses
($85 pre-tax)
---------------------------------------------------------------------
Extraordinary Loss
($217 pre-tax) 137 0.07
--------------------------------------------------------------------
Operational earnings
from continuing
operations $ 1,809 $ 1.00
---------------------------------------------------------------------
Note 1 During the third quarter 1998 AT&T recorded a net, pre-tax gain of $517 million. This included a pre-tax gain of $602 million due to the settlement of pension obligations for former employees who accepted the company's Voluntary Retirement Incentive Program (VRIP VRIP Voluntary Retirement Incentive Plan ), partially offset by $85 million of pre-tax TCG merger related expenses. The total after-tax benefit recorded was $287 million, or 16 cents per share. In the third quarter 1998 the company also recognized an extraordinary loss of $137 million, or 7 cents per share as a result of an early retirement of $1.046 billion of debt obligations. This debt reduction will produce significant savings in interest expense over time. |
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