AT&T Announces Second-Quarter 2005 Earnings.BEDMINSTER Bedminster may refer to:
See: New York Stock Exchange : T): --Second-quarter earnings per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share of $0.38 --Consolidated revenue of $6.8 billion --Operating income of $819 million AT&T (NYSE: T) today reported net income of $307 million, or earnings per diluted share of $0.38, for the second quarter of 2005. This performance includes the following pretax pre·tax adj. Existing before tax deductions: pretax income. pretax adj [profit] → vor (Abzug der) Steuern items: --a loss of $206 million, or $0.15 per diluted share, related to debt repurchases completed in the quarter --"deal costs" of $59 million, or $0.06 per diluted share, related to AT&T's pending merger with SBC (1) (SBC Communications Inc., San Antonio, TX, www.sbc.com) A large, national telecommunications company that grew from a multitude of local and regional companies, including Southwestern Bell, Pacific Bell and Nevada Bell, into a single, unified brand by 2002. Communications --net restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). and other charges of $36 million, or $0.03 per diluted share, primarily related to facilities closings When compared to last year, current quarter performance also reflects lower pretax depreciation expense of $548 million, or $0.42 per diluted share, resulting from asset impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. charges taken in the third quarter of 2004. The company's current-quarter net income compares to net income of $108 million, or earnings per diluted share of $0.14, in the second quarter of 2004, which included a pretax restructuring charge restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. of $54 million, or $0.04 per diluted share. "AT&T's second quarter results demonstrate our continued focus on executing in the marketplace, managing costs, and strengthening our competitive position with enterprise customers," said AT&T Chairman and Chief Executive Officer David W. Dorman Dorman is a surname originating in Germany with the spelling of Dohrman or Dohrmann, but mostly found in Austria, the United States, Canada and even Ukraine. It may refer to:
tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. approvals and completing this transaction in a timely manner." AT&T reported second-quarter 2005 consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: revenue of $6.8 billion, which included $5.2 billion from AT&T Business and $1.6 billion from AT&T Consumer. Consolidated revenue declined 11.5 percent versus the second quarter of 2004, primarily due to continued declines in long distance (LD) voice and data revenue. The company reported consolidated 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 , excluding $36 million of net restructuring and other charges, of $1.5 billion in the second quarter of 2005, for an EBITDA margin of 22.0 percent. EBITDA was negatively impacted by the $59 million of deal costs relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the pending merger with SBC Communications. This compares to consolidated EBITDA of $1.6 billion and an EBITDA margin of 21.4 percent in the prior-year second quarter, excluding net restructuring and other charges of $54 million. The company noted that ongoing efforts to reduce costs, including process improvement and related headcount head count or head·count n. 1. The act of counting people in a particular group. 2. The number of people counted in this way. Noun 1. reduction efforts, as well as strategic reductions in marketing expenses within AT&T Consumer, contributed to its improved EBITDA margin performance for the quarter. AT&T's second-quarter 2005 operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. totaled $819 million, yielding a consolidated operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: of 12.1 percent. The operating margin was negatively impacted by $59 million of deal costs related to the pending merger with SBC Communications and $36 million of net restructuring and other charges, and positively impacted by a benefit from lower depreciation of $548 million, resulting from asset impairment charges taken during the third quarter of 2004. The company's current-quarter performance compares to consolidated operating income of $348 million and a margin of 4.6 percent in the prior-year second quarter, which included $54 million of net restructuring and other charges. AT&T UNIT HIGHLIGHTS AT&T Business --Revenue was $5.2 billion, a decline of 8.1 percent from the prior-year second quarter, primarily driven by ongoing pricing pressure in traditional voice and data services. Revenue was positively impacted by strong year-over-year growth in IP&E services. --Long distance voice revenue decreased 12.8 percent from the prior-year second quarter. 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. were negatively affected by continued pricing pressure, partially offset by a slight increase in overall volumes, as growth in wholesale volumes more than offset the decline in retail volumes. --Local voice revenue declined 9.9 percent from the prior-year second quarter, reflecting declines in reciprocal Bilateral; two-sided; mutual; interchanged. Reciprocal obligations are duties owed by one individual to another and vice versa. A reciprocal contract is one in which the parties enter into mutual agreements. compensation revenue, as well as lower payphone-related revenue as a result of the sale of the company's National Public Markets business. The decline also reflects the company's ongoing strategy of selectively approaching the small business market, placing a greater focus on profitability than overall market share. AT&T continued to see the impact of this strategic change as the number of local access lines declined. --Data revenue declined 10.2 percent from the prior-year second quarter as a result of pricing pressure and technology migration. --IP&E-services An umbrella term for services on the Internet. E-services include e-commerce transaction services for handling online orders, application hosting by application service providers (ASPs) and any processing capability that is obtainable on the Web. See e-speak. revenue grew 9.5 percent over the prior-year second quarter, reflecting AT&T's ongoing transformation to next-generation networking services such as Enhanced Virtual Private Network (E-VPN) and IP-enabled frame relay A high-speed packet switching protocol used in wide area networks (WANs). Providing a granular service of up to DS3 speed (45 Mbps), it has become popular for LAN to LAN connections across remote distances, and services are offered by most major carriers. services, partially offset by declines in Managed Internet Access See how to access the Internet. . --Operating income totaled $528 million for the second quarter of 2005, yielding an operating margin of 10.2 percent, compared with operating income of $152 million and an operating margin of 2.7 percent in the prior year second quarter. Operating income was positively impacted in the second quarter of 2005 by a $513 million net benefit from lower depreciation as a result of asset impairment charges taken during the third quarter of 2004, as well as an $18 million benefit from the reversal reversal n. the decision of a court of appeal ruling that the judgment of a lower court was incorrect and is reversed. The result is that the lower court which tried the case is instructed to dismiss the original action, retry the case, or is ordered to change its of net restructuring and other charges, and was negatively impacted in the second quarter of 2004 by $52 million of net restructuring and other charges. Exclusive of these items, the decline in operating income in the second quarter of 2005 reflects decreased long distance voice and data services revenue resulting from continued competitive pricing pressures and favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. access expense settlements in the second quarter of 2004. --EBITDA, excluding net restructuring and other charges, was $1.1 billion during the quarter, yielding a margin of 21.5 percent. This compares with EBITDA, excluding net restructuring and other charges, of $1.4 billion in the prior year second quarter, which yielded a margin of 24.6 percent. --Capital expenditures were $387 million as AT&T Business continues to upgrade its network and integrate its systems to further rationalize ra·tion·al·ize v. 1. To make rational. 2. To devise self-satisfying but false or inconsistent reasons for one's behavior, especially as an unconscious defense mechanism through which irrational acts or feelings are made to appear the company's cost structure, improve the customer experience and support growth in next-generation products and services. --During the quarter, a number of sizable siz·a·ble also size·a·ble adj. Of considerable size; fairly large. siz  a·ble·ness n. customer wins and
contract extensions were signed with such leading companies as Toyota
Industries Toyota Industries Corporation (豊田自動織機, Toyota Jidō Shokki) TYO: 6201 is a Japanese machine maker, founded in 1926 by Sakichi Toyoda, it was originally called Toyoda Automatic Loom Works, Ltd. Corporation, Bridgestone Group, Whirlpool whirlpool, revolving current in an ocean, river, or lake. It may be caused by the configuration of the shore, irregularities in the bottom of the body of water, the meeting of opposing currents or tides, or the action of the wind upon the water. , Prudential Prudential is the name of two different companies and buildings named after them:Companies:
--According to a recent study of U.S.-based multinational corporations
AT&T Consumer --Revenue was $1.6 billion, a decline of 20.8 percent versus the prior-year second quarter, largely driven by a decline in standalone stand·a·lone adj. Self-contained and usually independently operating: a standalone computer terminal. long distance revenue due to volume declines associated with competitive customer losses and the continued impact of wireless and 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 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. , partially offset by targeted price increases. Decreased bundled bun·dle n. 1. A group of objects held together, as by tying or wrapping. 2. Something wrapped or tied up for carrying; a package. 3. Biology A cluster or strand of closely bound muscle or nerve fibers. revenue also contributed to the revenue decline. --Operating income totaled $489 million, yielding an operating margin of 30.7 percent, compared with operating income of $240 million and an operating margin of 11.9 percent in the prior-year second quarter. Current-quarter operating income was negatively impacted by net restructuring and other charges of $10 million and was positively impacted by a $35 million net benefit from lower depreciation as a result of asset-impairment charges taken during the third quarter of 2004. --The year-over-year increase in operating income and margin reflects a significant reduction in selling, general and administrative expenses, primarily attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to the strategic decision to discontinue 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: marketing for residential local and standalone long distance (LD) customers. OTHER CONSOLIDATED FINANCIAL HIGHLIGHTS --Based on the trends experienced through the first half of 2005, AT&T now expects consolidated revenue for the full year to be at or slightly above the high end of its original range of $25.0 - $26.0 billion. --Free cash flow was $176 million for the quarter. Free cash flow is defined as cash flows provided by operating activities of $548 million less cash used for capital expenditures and other additions of $372 million. --AT&T ended the quarter with net debt of $5.6 billion. Net debt is defined as total debt of $7.7 billion less cash of $1.9 billion and net foreign debt fluctuations of $0.2 billion. --AT&T redeemed re·deem tr.v. re·deemed, re·deem·ing, re·deems 1. To recover ownership of by paying a specified sum. 2. To pay off (a promissory note, for example). 3. $1.25 billion in bonds tendered in a buyback Buyback The buying back of outstanding shares (repurchase) by a company in order to reduce the number of shares on the market. Companies will buyback shares either to increase the value of shares still available (reducing supply), or to eliminate any threats by shareholders who may offer that the company completed in early April 2005. The buyback will reduce interest expense by $0.1 billion throughout 2005 and resulted in a second quarter pretax loss pretax loss A loss reported before tax benefits are considered. of $0.2 billion recorded in other (expense) income. --Consolidated capital expenditures for the quarter were $393 million. DEFINITIONS and NOTES AT&T Business LD Voice - includes all of AT&T's domestic and international LD revenue, including Intralata Refers to a telephone call within the same LATA (same region). IntraLATA is local telephone service. InterLATA refers to a call from one LATA to another, which can be within a state or from state to state (interstate). See LATA. toll when purchased as part of an LD calling plan. Local Voice - includes all local calling and feature revenue, Intralata toll when purchased as part of a local calling plan, as well as Inter-carrier local revenue. Data Services- includes bandwidth bandwidth Measurement of the capacity of a communications signal. For digital signals, the bandwidth is the data speed or rate, measured in bits per second (bps). For analog signals, it is the difference between the highest and lowest frequency components, measured in hertz services (dedicated private line services through high-capacity optical transport), frame relay and asynchronous transfer mode See ATM. (communications) Asynchronous Transfer Mode - (ATM, or "fast packet") A method for the dynamic allocation of bandwidth using a fixed-size packet (called a cell). See also ATM Forum, Wideband ATM. ATM acronyms. Indiana acronyms. (ATM) revenue for LD and local, as well as revenue for managed data services. 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. & Enhanced Services Enhanced service is service offered over commercial carrier transmission facilities used in interstate communications, that employs computer processing applications that act on the format, content, code, protocol, or similar aspects of the subscriber's transmitted information; (IP&E-services) - includes all services that ride on the IP common backbone backbone: see spinal column. The part of a network that handles the major traffic. It employs the highest-speed transmission paths in the network and may also run the longest distances. or that use IP technology, including managed IP services, as well as application services See ASP and Web services. (e.g., hosting, security). 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. , Professional Services (job) professional services - A department of a supplier providing consultancy and programming manpower for the supplier's products. & Other - includes complex bundled solutions primarily in the wide area/local area network space, AT&T's professional services revenue associated with the company's federal government customers, as well as all other Business Services revenue (and eliminations) not previously defined. Data, IP&E-Services - Percent Managed - managed services An umbrella term for third-party monitoring and maintaining of computers, networks and software. The actual equipment may be inhouse or at the third-party's facilities, but the "managed" implies an ongoing effort; for example, making sure the equipment is running at a certain quality refers to AT&T's management of a client's network or network and applications including applications that extend to the customer premise equipment. Data, IP&E-Services - Percent International - a data service that either originates or terminates outside of the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , or an IP&E-service installed or wholly delivered outside the United States. AT&T Consumer Bundled Services - includes any customer with a local relationship as a starting point Noun 1. starting point - earliest limiting point terminus a quo commencement, get-go, offset, outset, showtime, starting time, beginning, start, kickoff, first - the time at which something is supposed to begin; "they got an early start"; "she knew from the , and all other AT&T subscription-based voice products provided to that customer. Standalone LD, Transactional & Other Services - includes any customer with solely a long distance relationship, non-voice products, or a non subscription-based relationship. Local Customers - residential customers who subscribe to Verb 1. subscribe to - receive or obtain regularly; "We take the Times every day" subscribe, take buy, purchase - obtain by purchase; acquire by means of a financial transaction; "The family purchased a new car"; "The conglomerate acquired a new company"; AT&T local service. Other Definitions and Notes EBITDA - represents operating income plus depreciation and amortization. Foreign currency fluctuations - represents mark-to-market Mark-to-market Adjustment of the book value or collateral value of a security to reflect current market value. adjustments, net of cash collateral collateral (kəlăt`ərəl), something of value given or pledged as security for payment of a loan. Collateral consists usually of financial instruments, such as stocks, bonds, and negotiable paper, rather than physical goods, although collected, that increased the debt balance by approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $0.2 billion at June June: see month. 30, 2005, from December December: see month. 31, 2004, on non-U non-U adj. Chiefly British Not characteristic of the upper class, especially in language usage. [non- + U2. .S. denominated debt of about $0.6 billion. AT&T has entered into foreign exchange hedges that substantially offset the fluctuations in the debt balance. The offsetting mark-to-market adjustments of the hedges are included in "other current assets Other Current Assets A balance sheet item that includes the value of non-cash assets due within one year. Notes: Examples are things like prepaid expenses and accounts receivable. " and "other assets other assets Assets of relatively small value. For financial reporting purposes, firms frequently combine small assets into a single category rather than listing each item separately. " on the balance sheet.
AT&T Corp. Consolidated Statements of Income (Unaudited)
Dollars in millions (except per share amounts)
For the Three Months For the Six Months
Ended Ended
June 30, June 30,
2005 2004 2005 2004
REVENUE
-------
AT&T Business $5,155 $5,611 $10,474 $11,483
AT&T Consumer 1,593 2,011 3,278 4,118
Corporate and Other 12 14 23 25
--------------------------------------
Total Revenue 6,760 7,636 13,775 15,626
OPERATING EXPENSES
------------------
Access and other connection 2,390 2,481 4,794 5,119
Costs of services and products 1,560 1,759 3,188 3,623
Selling, general and
administrative 1,325 1,763 2,602 3,507
Depreciation and amortization 630 1,231 1,266 2,481
Asset impairment and net
restructuring and other charges 36 54 36 267
--------------------------------------
Total operating expenses 5,941 7,288 11,886 14,997
Operating income 819 348 1,889 629
Other (expense) income, net (153) 36 (123) (138)
Interest (expense) (169) (191) (372) (419)
--------------------------------------
Income before income taxes and
net income related to equity
investments 497 193 1,394 72
(Provision) benefit for income
taxes (198) (87) (566) 339
Minority interest income - 1 - 1
Net income related to equity
investments 8 1 8 -
--------------------------------------
Net income $307 $108 $836 $412
======================================
Weighted-average common shares
(millions) 801 794 801 794
Weighted-average common shares
and potential common shares
(millions) 809 797 807 796
Earnings per basic and diluted
share $0.38 $0.14 $1.04 $0.52
Dividends declared per share $0.2375 $0.2375 $0.4750 $0.4750
AT&T Corp. Consolidated Statements of Operations (Unaudited)
Dollars in millions (except per share amounts)
2Q05 1Q05 4Q04 3Q04 2Q04 1Q04 2004
REVENUE
-------
AT&T Business $5,155 $5,319 $5,454 $5,645 $5,611 $5,872 $22,582
AT&T Consumer 1,593 1,685 1,806 1,980 2,011 2,107 7,904
Corporate and
Other 12 11 13 13 14 11 51
Total revenue 6,760 7,015 7,273 7,638 7,636 7,990 30,537
OPERATING
EXPENSES
---------
Access and other
connection 2,390 2,404 2,924 2,411 2,481 2,638 10,454
Costs of services
and products 1,560 1,628 1,668 1,783 1,759 1,864 7,074
Selling, general
and
administrative 1,325 1,277 1,397 1,653 1,763 1,744 6,557
Depreciation and
amortization 630 636 640 647 1,231 1,250 3,768
Asset impairment
and net
restructuring
and other
charges 36 - 36 12,469 54 213 12,772
Total operating
expenses 5,941 5,945 6,665 18,963 7,288 7,709 40,625
Operating income
(loss) 819 1,070 608 (11,325) 348 281 (10,088)
Other (expense)
income, net (153) 30 28 (34) 36 (174) (144)
Interest
(expense) (169) (203) (192) (192) (191) (228) (803)
Income (loss)
before income
taxes, minority
interest income
and net earnings
(losses) related
to equity
investments 497 897 444 (11,551) 193 (121)(11,035)
(Provision)
benefit for
income taxes (198) (368) (181) 4,402 (87) 426 4,560
Minority interest
income - - - - 1 - 1
Net earnings
(losses) related
to equity
investments 8 - 3 2 1 (1) 5
Net income (loss) $307 $529 $266 $(7,147) $108 $304 $(6,469)
Weighted-average
common shares
(millions) 801 800 797 795 794 793 795
Weighted-average
common shares
and potential
common shares
(millions) 809 806 803 795 797 796 795
Earnings (loss)
per basic and
diluted share $0.38 $0.66 $0.33 $(8.99) $0.14 $0.38 $(8.14)
AT&T Corp. Historical Segment Data (Unaudited)
Dollars in millions
2Q05 1Q05 4Q04 3Q04 2Q04 1Q04 2004
AT&T Business
LD Voice $2,080 $2,168 $2,163 $2,364 $2,386 $2,613 $9,526
Local Voice 364 371 490 390 404 389 1,673
Total Voice 2,444 2,539 2,653 2,754 2,790 3,002 11,199
Data Services 1,518 1,585 1,595 1,693 1,690 1,715 6,693
IP&E-Services 619 589 625 587 565 553 2,330
Total Data and
IP&E-Services 2,137 2,174 2,220 2,280 2,255 2,268 9,023
Outsourcing,
Professional
Services & Other 574 606 581 611 566 602 2,360
Total revenue 5,155 5,319 5,454 5,645 5,611 5,872 22,582
Operating income
(loss) (1) (5) 528 588 781 (11,095) 152 83 (10,079)
Operating margin 10.2% 11.0% 14.3%(196.5%) 2.7% 1.4% (44.6%)
Capital
expenditures 387 332 377 391 463 470 1,701
Depreciation &
amortization (5) 596 601 607 610 1,176 1,192 3,585
Total Data and
IP&E-Services -
% managed 32% 32% 33% 32% 32% 32% 32%
Total Data and
IP&E-Services -
% international 16% 16% 16% 15% 15% 15% 15%
LD volume growth
- yr/yr 1% -3% -2% -2% 0% 2% 0%
LD volume %
wholesale 59% 57% 57% 56% 54% 54% 55%
AT&T Consumer
Standalone LD,
Transactional
and Other
Services $974 $1,025 $1,116 $1,256 $1,327 $1,462 $5,161
Bundled Services 619 660 690 724 684 645 2,743
Total revenue 1,593 1,685 1,806 1,980 2,011 2,107 7,904
Operating income
(loss) (2) (5)
(6) 489 575 (60) 281 240 371 832
Operating margin 30.7% 34.1% (3.3%) 14.2% 11.9% 17.6% 10.5%
Capital
expenditures - - 5 9 15 13 42
Depreciation &
amortization (5) 14 12 13 15 33 32 93
Local customers
(in thousands) 3,565 3,859 4,156 4,477 4,677 4,364 4,156
Corporate and
Other
Revenue $12 $11 $13 $13 $14 $11 $51
Operating (loss)
(3) (198) (93) (113) (511) (44) (173) (841)
Capital
expenditures 6 3 14 6 2 2 24
Depreciation &
amortization 20 23 20 22 22 26 90
Total AT&T
Revenue $6,760 $7,015 $7,273 $7,638 $7,636 $7,990 $30,537
Operating income
(loss) (4) (6) 819 1,070 608 (11,325) 348 281 (10,088)
Operating margin 12.1% 15.3% 8.4%(148.3%) 4.6% 3.5% (33.0%)
Capital
expenditures 393 335 396 406 480 485 1,767
Depreciation &
amortization (5) 630 636 640 647 1,231 1,250 3,768
(1) Includes asset impairment and net restructuring and other charges
of $(18M) in 2Q05, $9M in 4Q04, $11,859M in 3Q04, $52M in 2Q04 and
$91M in 1Q04, totaling $12,011M in 2004.
(2) Includes asset impairment and net restructuring and other charges
of $10M in 2Q05, $188M in 3Q04 and $1M in 1Q04, totaling $189M in
2004.
(3) Includes asset impairment and net restructuring and other charges
of $44M in 2Q05, $27M in 4Q04, $422M in 3Q04, $2M in 2Q04 and
$121M in 1Q04, totaling $572M in 2004.
(4) Includes asset impairment and net restructuring and other charges
of $36M in 2Q05, $36M in 4Q04, $12,469M in 3Q04, $54M in 2Q04 and
$213M in 1Q04, totaling $12,772M in 2004.
(5) As a result of the third-quarter 2004 asset impairment charge,
second-quarter 2005, first-quarter 2005, fourth-quarter 2004 and
third-quarter 2004 depreciation and amortization expense decreased
by $542 million, $533 million, $538 million and $527 million,
respectively, for AT&T Business and $6 million, $7 million, $8
million and $10 million, respectively, for AT&T Consumer. In
addition, as a result of the transport service arrangement between
AT&T Business and AT&T Consumer, network-related charges from AT&T
Business (recorded as contra-expense) to AT&T Consumer were
reduced by $29 million, $24 million, $30 million and $28 million
in the second-quarter 2005, first-quarter 2005, fourth-quarter
2004 and third-quarter 2004, respectively, as a result of the
lower depreciation and amortization expense recorded by AT&T
Business. This resulted in a reduction in AT&T Business' operating
income and an increase in AT&T Consumer's operating income.
(6) Includes $553M prepaid card accrual in 4Q04.
AT&T Corp. Consolidated Balance Sheets (Unaudited)
Dollars in millions
June 30, December 31,
2005 2004
ASSETS
Cash and cash equivalents $1,913 $3,698
Accounts receivable, less allowances of $429 and
$523 2,993 3,195
Deferred income taxes 922 1,111
Other current assets 498 1,383
---------------------
Total Current Assets 6,326 9,387
Property, plant and equipment, net of
accumulated depreciation of $2,353 and $1,588 11,026 11,509
Goodwill 4,751 4,888
Other purchased intangible assets, net of
accumulated amortization of $411 and $428 316 375
Prepaid pension costs 4,099 3,991
Other assets 2,563 2,654
---------------------
TOTAL ASSETS $29,081 $32,804
=====================
LIABILITIES
Accounts payable and accrued expenses $2,365 $2,716
Compensation and benefit-related liabilities 1,661 2,193
Debt maturing within one year 529 1,886
Other current liabilities 2,309 2,293
---------------------
Total Current Liabilities 6,864 9,088
Long-term debt 7,175 8,779
Long-term compensation and benefit-related
liabilities 3,283 3,322
Deferred income taxes 1,448 1,356
Other long-term liabilities and deferred credits 2,832 3,240
---------------------
Total Liabilities 21,602 25,785
---------------------
SHAREOWNERS' EQUITY
Common Stock, $1 par value, authorized
2,500,000,000 shares; issued and outstanding
801,635,543 shares (net of 171,983,367 treasury
shares) at June 30, 2005 and 798,570,623 shares
(net of 171,983,367 treasury shares) at
December 31, 2004 802 799
Additional paid-in capital 26,911 27,170
Accumulated deficit (20,344) (21,180)
Accumulated other comprehensive income 110 230
---------------------
Total Shareowners' Equity 7,479 7,019
---------------------
TOTAL LIABILITIES & SHAREOWNERS' EQUITY $29,081 $32,804
=====================
AT&T Corp. Consolidated Statements of Cash Flows (Unaudited)
Dollars in millions
For the Six Months Ended
June 30,
2005 2004
Operating Activities
Net income $836 $412
Adjustments to reconcile net income to net
cash provided by operating activities:
Net losses (gains) on sales of businesses
and investments 5 (14)
Loss on early extinguishment of debt 206 274
Asset impairment and net restructuring and
other charges 36 226
Depreciation and amortization 1,266 2,481
Provision for uncollectible receivables 65 265
Deferred income taxes 352 (181)
Decrease in receivables 152 98
Decrease in accounts payable and accrued
expenses (407) (189)
Net change in other operating assets and
liabilities (1,097) (770)
Other adjustments, net (61) (139)
------------------------
Net Cash Provided by Operating Activities 1,353 2,463
------------------------
Investing Activities
Capital expenditures and other additions (698) (1,018)
Proceeds from sale or disposal of property,
plant and equipment 134 25
Investment distributions and sales 12 36
Net dispositions of businesses 72 8
Decrease (increase) in restricted cash 546 (1)
Other investing activities, net 13 6
------------------------
Net Cash Provided by (Used in) Investing
Activities 79 (944)
------------------------
Financing Activities
Retirement of long-term debt, including
redemption premiums (2,721) (3,210)
Decrease in short-term borrowings, net (310) (195)
Issuance of AT&T common shares 44 33
Dividends paid on common stock (380) (377)
Other financing activities, net 150 336
------------------------
Net Cash Used in Financing Activities (3,217) (3,413)
------------------------
Net decrease in cash and cash equivalents (1,785) (1,894)
Cash and cash equivalents at beginning of
year 3,698 4,353
------------------------
Cash and Cash Equivalents at End of Period $1,913 $2,459
========================
Reconciliation of Non-GAAP Measures AT&T is providing information on net debt and EBITDA and related margins because these measures are commonly used by the investment community for evaluation purposes. Net debt and EBITDA should be considered in addition to, but not in lieu of Instead of; in place of; in substitution of. It does not mean in addition to. , other measures of liquidity, profitability and cash flows reported in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting . Additionally, they may not be comparable to similarly captioned measures reported by other companies.
AT&T Corp. Reconciliation of Non-GAAP Measures
----------------------------------------------
Net Debt
----------------------------------------------------------------------
Net debt is defined as total debt, less cash and net foreign debt
fluctuations:
(dollars in millions) June 30, 2005
-------------
Total debt $7.7
Less: Cash 1.9
Foreign debt fluctuations 0.2
-------------
Net debt $5.6
=============
----------------------------------------------------------------------
AT&T Corp. Reconciliation of Non-GAAP Measures, continued
---------------------------------------------------------
AT&T Business EBITDA, Excluding Asset Impairment and Net Restructuring
and Other Charges, to Operating Income
----------------------------------------------------------------------
(dollars in millions) For the three months ended
June 30, 2005 June 30, 2004
--------------- ---------------
EBITDA and margin (1) $1,106 21.5% $1,380 24.6%
Depreciation and amortization (596) (1,176)
Asset impairment and net
restructuring and
other charges 18 (52)
--------------- ---------------
Operating income and margin $528 10.2% $152 2.7%
=============== ===============
(1) Excluding asset impairment and net restructuring and other
charges.
----------------------------------------------------------------------
AT&T Corp. Reconciliation of Non-GAAP Measures, continued
----------------------------------------------------------------------
EBITDA, Excluding Asset Impairment and Net Restructuring and Other
Charges, to Net Income
----------------------------------------------------------------------
(dollars in millions) For the three months ended
June 30, June 30,
2005 2004
------------ ------------
EBITDA margin (1) 22.0% 21.4%
EBITDA (1) $1,485 $1,633
Depreciation and amortization (630) (1,231)
Asset impairment and net restructuring and
other charges (36) (54)
------------ ------------
Subtotal operating income $819 $348
------------ ------------
Other (expense) income, net (153) 36
Interest (expense) (169) (191)
(Provision) for income taxes (198) (87)
Minority interest income 0 1
Net income related to equity investments 8 1
------------ ------------
Net income $307 $108
============ ============
(1) Excluding asset impairment and net restructuring and other
charges.
----------------------------------------------------------------------
NOTE TO FINANCIAL MEDIA: AT&T executives will discuss the company's performance in a two-way conference call for financial analysts at 5:00 p.m. ET today. Reporters are invited to listen to the call. U.S. callers should dial 888-428-4478 to access the call. Callers outside the U.S. should dial + 1-612-332-0630. In addition, Internet rebroadcasts of the call will be available on the AT&T Web site beginning later today. The Web site address is www.att.com/ir. An audio rebroadcast of the conference call will also be available beginning at 9:30 PM on Wednesday Wednesday: see week. , July July: see month. 20 through 12:00 AM on Wednesday, July 27. To access the audio rebroadcast, U.S. callers can dial 800-475-6701, access code 763284. Callers outside the U.S. should dial +1-320-365-3844, access code 763284. The foregoing contains "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. " 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. These risk factors include the impact of increasing competition, continued capacity oversupply o·ver·sup·ply n. pl. o·ver·sup·plies A supply in excess of what is appropriate or required. tr.v. o·ver·sup·plied, o·ver·sup·ply·ing, o·ver·sup·plies , regulatory uncertainty and the effects of technological substitution, among other risks. For a more detailed description of the factors that could cause such a difference, please see AT&T's10-K, 10-Q, 8-K and other filings with the Securities and Exchange Commission. AT&T disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. This information is presented solely to provide additional information to further understand the results of AT&T. |
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