AT&T Delivers Strong First-Quarter Earnings Growth, with Progress in Wireless, Broadband and Business Services.SAN ANTONIO San Antonio (săn ăntō`nēō, əntōn`), city (1990 pop. 935,933), seat of Bexar co., S central Tex., at the source of the San Antonio River; inc. 1837. -- AT&T Inc. (NYSE NYSE See: New York Stock Exchange : T): --Reported 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 $0.37, up 37.0 percent versus the year-earlier first quarter --Before merger-related costs, earnings per diluted share of $0.52, up 52.9 percent versus comparable results in the first quarter of 2005 --1.7 million net subscriber subscriber, n the person, usually the employee, who represents the family unit in relation to the prepayment plan. Other family members are dependents. Also called certificate holders or enrollees. gain at Cingular Wireless, with 1.9 percent monthly subscriber churn churn: see butter. overall, 1.6 percent postpaid post·paid adj. With the postage having been paid in advance. postpaid Adverb, adj with the postage prepaid Adj. 1. churn; net gain in postpaid subscribers up 41.5 percent versus preceding quarter --511,000 regional DSL DSL in full Digital Subscriber Line Broadband digital communications connection that operates over standard copper telephone wires. It requires a DSL modem, which splits transmissions into two frequency bands: the lower frequencies for voice (ordinary 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 lines added in the quarter to reach more than 7.4 million in service --SBC/AT&T merger integration projects off to solid start, on track to achieve previously targeted cost synergies Cost Synergy In the context of mergers, cost synergy is the savings in operating costs expected after two companies, who compliment each other's strengths, join. Notes: The savings in operating costs usually come in the form of laying off employees. Note: AT&T's first-quarter earnings conference call will be broadcast live via the Internet at 10 a.m. EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT on Tuesday Tuesday: see week. , April 25, 2006, at www.att.com/investor.relations. AT&T Inc. (NYSE: T) today reported strong first-quarter results that reflect advances in wireless, broadband broadband Term describing the radiation from a source that produces a broad, continuous spectrum of frequencies (contrasted with a laser, which produces a single frequency or very narrow range of frequencies). and business services, along with solid progress in merger integration. On a reported basis, earnings per diluted share totaled $0.37, up 37.0 percent versus the year-earlier first quarter. Before merger-related costs, earnings per diluted share totaled $0.52, up 52.9 percent versus comparable adjusted results in the first quarter of 2005. "AT&T executed executed 1) adj. to have been completed. (Example: "it is an executed contract") 2) v. to have completed or fully performed. (Example: "he executed all the promises made in the contract") 3) v. well and delivered a strong quarter," said Edward Edward killed his father at his mother’s instigation. [Br. Balladry: Edward in Benét, 302] See : Patricide E. Whitacre Jr., AT&T chairman and chief executive officer. "Cingular Wireless had outstanding results, as it further reduced churn, expanded margins and recorded its best-ever first-quarter subscriber growth. Our regional wireline operations posted revenue growth in consumer as well as small and medium business. And in the large-business space, customer response to the new AT&T continues to be very positive. "I am also very pleased to report that merger integration is moving forward on plan," Whitacre said. "Immediately after the SBC/AT&T merger closed in November November: see month. , we started the process of combining operations, and we've we've Contraction of we have. we've have made good progress. At this point, detailed network transition plans are in place, our front-line enterprise sales force consolidation is complete, and we are now able to sell our high-end high-end adj. Informal 1. Appealing to sophisticated and discerning customers: a high-end department store; high-end video equipment. 2. enterprise portfolio to the small- and medium-business space. We are very much on track to achieve our previously announced merger synergies of $600 million to $800 million this year, growing to approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $2 billion next year. "To further expand our opportunities, in early March, we agreed to merge See mail merge and concatenate. with BellSouth
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. and a future of converged services." 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: Financial Results On Nov. 18, 2005, 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 Inc. completed its acquisition of AT&T Corp. and adopted AT&T Inc. as its name. Reported results for the first quarter of 2006 include costs related to this acquisition as well as to Cingular Wireless' fourth-quarter 2004 acquisition of AT&T Wireless. AT&T owns 60 percent of Cingular Wireless. In the first quarter, AT&T's portion of Cingular's $593 million of merger integration and noncash intangible amortization costs amounted to $0.06 per diluted share, and SBC/AT&T Corp. merger integration and noncash intangible amortization costs amounted to $529 million, or $0.09 per diluted share. --On a reported basis, AT&T's first-quarter earnings per diluted share were $0.37, up 37.0 percent from $0.27 in the first quarter of 2005. --Excluding the items noted above, first-quarter earnings were $0.52 per diluted share, up 52.9 percent versus first-quarter 2005 earnings per diluted share of $0.34, before Cingular merger-related costs. Major drivers of this improvement were revenue growth and margin expansion at Cingular Wireless, along with increased contributions from wireline operations, offset by an increased number of shares outstanding due to the acquisition of AT&T Corp. AT&T's reported first-quarter 2006 net income was $1.4 billion, versus $885 million in the year-earlier first quarter. Excluding the items noted above, first-quarter earnings were $2.0 billion, compared with 2005 first-quarter earnings before Cingular merger-related costs of $1.1 billion. Revenues totaled $15.8 billion, up 54.5 percent from $10.2 billion in the first quarter of 2005. 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. totaled $13.6 billion on a reported basis and $13.1 billion before merger-related costs. Operating expenses in the first quarter of 2005 totaled $8.7 billion. 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 $2.2 billion on a reported basis, up 40.8 percent versus first-quarter 2005 results. Before merger-related costs, AT&T's first-quarter operating income was $2.7 billion. AT&T's first-quarter operating income margin was 13.8 percent on a reported basis and 17.2 percent before merger-related expenses. The company's operating income margin in the year-earlier first quarter was 15.2 percent. Wireline Results, Pro Forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma Comparisons To provide investors with additional background on business trends, in addition to reported results, AT&T also has made available quarterly pro forma results for 2005 and 2004. Pro forma results combine results from the former SBC and the former AT&T Corp., with segments and revenue categories consistent in all periods. First-quarter 2006 revenues for the wireline segment, which includes former SBC and former AT&T wireline operations, totaled $14.7 billion, down 5.5 percent versus pro forma revenues of $15.6 billion for the first quarter of 2005. This reflects: --AT&T's best growth over the past five quarters in regional small/medium-business revenues, up 7.0 percent, driven by strength in transport and IP-based data services. --Solid growth in regional consumer revenues, up 2.1 percent, in line with increases in recent quarters. Growth was driven by strong consumer demand for 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. and broadband services See broadband and broadband service provider. , offsetting declines in retail access lines. Total consumer connections in service - retail lines, DSL lines and video connections - increased by 224,000 in the quarter. Regional retail consumer lines declined by 267,000 in the first quarter, generally in line with recent quarters. --A significantly smaller decline in enterprise revenues than in the preceding quarter - 6.9 percent versus a 9.0 percent decline in this category for the fourth quarter of 2005. --Expected declines for former AT&T Corp. national mass market revenues, which are composed of standalone stand·a·lone adj. Self-contained and usually independently operating: a standalone computer terminal. long distance and local bundled services for consumers and small businesses. First-quarter revenues in this category were down 27.3 percent, generally consistent with results in recent quarters, reflecting the former AT&T's pre-merger 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: proactive marketing in this space. AT&T's data revenues, which include results from several customer categories, totaled $4.4 billion in the first quarter of 2006, up 2.6 percent versus pro forma results for the year-earlier quarter. This increase reflects solid overall volume growth combined with customers' transition from traditional packet-based to IP-based services. Wireline data growth was led by a 14.0 percent increase in IP data revenues, which include DSL Internet, dedicated Internet access See how to access the Internet. , virtual private networks and hosting services. AT&T posted a total net gain of 511,000 regional DSL lines during the quarter to reach more than 7.4 million in service. Data transport revenues were up 1.6 percent, and revenues from packet-switched packet-switched - packet switching data, which includes 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. and ATM services, were down 12.5 percent, in line with industry trends. AT&T's first-quarter wireline voice revenues totaled $8.7 billion, representing a decline of 8.7 percent versus pro forma results for the first quarter of 2005, primarily driven by declines in the national mass market category. Wireless Results Cingular Wireless reported strong first-quarter results, driven by its lowest-ever churn levels and strong customer growth. Cingular posted a net subscriber gain of 1.7 million and ended the first quarter with 55.8 million subscribers, an increase of 5.5 million over the past four quarters. First-quarter retail subscriber additions totaled more than 1 million, and total postpaid additions were up more than 41 percent versus the preceding quarter. Average monthly churn was 1.9 percent overall, down 30 basis points versus the year-earlier first quarter and down 20 basis points sequentially se·quen·tial adj. 1. Forming or characterized by a sequence, as of units or musical notes. 2. Sequent. se·quen . Postpaid churn improved to 1.6 percent, down 30 basis points both year over year and sequentially. Driven by strong subscriber gains and strong growth in data revenues, Cingular's total revenues grew to $9.0 billion, up 9.1 percent versus the year-earlier first quarter. Reported operating expenses were $8.2 billion, compared with $8.1 billion in the year-earlier first quarter. Before merger-related costs of $593 million, first-quarter 2006 operating expenses were $7.6 billion versus $7.5 billion, excluding $596 million of merger-related costs in the first quarter of 2005. On a reported basis, Cingular's operating income was $807 million, compared with $114 million in the year-earlier first quarter. Before merger-related costs, operating income was $1.4 billion, up from a comparable $710 million in the first quarter of 2005. As required by 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 for joint ventures, AT&T includes Cingular Wireless' results in the Equity in Net Income of Affiliates line of its Consolidated Statements of Income rather than in consolidated revenues and expenses. Cingular's detailed financial results are shown in AT&T's Statements of Segment Income. BellSouth Merger Agreement, Expanded Share Repurchase Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. On March 5, 2006, AT&T Inc. and BellSouth Corporation announced an agreement to merge to create a more effective and efficient provider in the wireless, broadband, video, voice and data markets. Under terms of the agreement, which were approved by the boards of directors of both companies, shareholders of BellSouth will receive 1.325 shares of AT&T common stock for each common share of BellSouth. The merger is subject to approval by shareholders of both companies as well as 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 and to other customary closing conditions. AT&T expects to receive approvals to allow for completion of the transaction by the end of this year. AT&T also announced in March an expanded share repurchase authorization The right or permission to use a system resource; the process of granting access. See access control. of 400 million shares through 2008, replacing the existing program. Under this authorization, the company expects to buy back at least $10 billion of its common shares over the next 20 months. It expects at least $2 billion in repurchases during 2006, consistent with its previous guidance, and an additional $8 billion in repurchases in 2007. This 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. authorization is intended to approximate ap·prox·i·mate v. To bring together, as cut edges of tissue. adj. 1. Relating to the contact surfaces, either proximal or distal, of two adjacent teeth; proximate. 2. Close together. the share premium paid to BellSouth stockholders as part of this merger transaction. The timing and nature of these repurchases will depend on market conditions and applicable securities laws. AT&T Inc. is one of the world's largest telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. holding companies and is the largest in 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. . Operating globally under the AT&T brand, AT&T companies are recognized as the leading worldwide providers of IP-based communications services to business and as leading U.S. providers of high-speed high-speed adj. 1. Operated or designed for operation at high speed: a high-speed food processor. 2. Taking place at high speed: a high-speed chase. 3. DSL Internet, local and long distance voice, and directory publishing and advertising services. AT&T Inc. holds a 60 percent ownership interest in Cingular Wireless, which is the No. 1 U.S. wireless services provider with 55.8 million wireless customers. Additional information about AT&T Inc. and AT&T products and services is available at www.att.com. Cautionary Language Concerning 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. We have included or incorporated by reference in this document financial estimates and other forward-looking statements within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. These estimates and statements are subject to risks and uncertainties, and actual results might differ materially from these estimates and statements. Such estimates and statements include, but are not limited to, statements about the benefits of the merger, including future financial and operating results, the combined company's plans, objectives, expectations and intentions, and other statements that are not historical facts. Such statements are based upon the current beliefs and expectations of the management of AT&T Inc. and BellSouth Corporation and are subject to significant risks and uncertainties and outside of our control. The following factors, among others, could cause actual results to differ from those described in the forward-looking statements in this document: the ability to obtain governmental approvals of the merger on the proposed terms and schedule; the failure of AT&T shareholders to approve the issuance of AT&T common shares or the failure of BellSouth shareholders to approve the merger; the risk that the businesses of AT&T and BellSouth will not be integrated successfully or as quickly as expected; the risk that the cost savings and any other synergies from the merger, including any savings and other synergies relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the resulting sole ownership of Cingular Wireless LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control may not be fully realized or may take longer to realize than expected; disruption disruption /dis·rup·tion/ (dis-rup´shun) a morphologic defect resulting from the extrinsic breakdown of, or interference with, a developmental process. from the merger making it more difficult to maintain relationships with customers, employees or suppliers; and competition and its effect on pricing, spending, third-party relationships and revenues. Additional factors that may affect future results are contained in AT&T's, BellSouth's, and Cingular Wireless LLC's filings with the Securities and Exchange Commission ("SEC"), which are available at the SEC's Web site (http://www.sec.gov See .gov and GovNet. (networking) gov - The top-level domain for US government bodies. ). Neither AT&T nor BellSouth is under any obligation, and expressly disclaim dis·claim v. dis·claimed, dis·claim·ing, dis·claims v.tr. 1. To deny or renounce any claim to or connection with; disown. 2. To deny the validity of; repudiate. 3. any obligation, to update, alter or otherwise revise any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future events or otherwise. This news release may contain certain non-GAAP financial measures. Reconciliations between the non-GAAP financial measures and the GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). financial measures are available on the company's website at www.att.com/investor.relations. NOTE: In connection with the proposed merger, AT&T Inc. ("AT&T") filed a registration statement on Form S-4 (Registration No. 333-132904), containing a joint proxy See proxy server. (networking) proxy - A process that accepts requests for some service and passes them on to the real server. A proxy may run on dedicated hardware or may be purely software. statement/prospectus of AT&T and BellSouth Corporation ("BellSouth"), with the Securities and Exchange Commission (the "SEC") on March 31, 2006. Investors are urged to read the registration statement and the joint proxy statement/prospectus contained therein (including all amendments and supplements to it) because it contains important information. Investors may obtain free copies of the registration statement and joint proxy statement/prospectus, as well as other filings containing information about AT&T and BellSouth, without charge, at the SEC's Web site (www.sec.gov). Copies of AT&T's filings may also be obtained without charge from AT&T at AT&T's Web site (www.att.com) or by directing a request to AT&T Inc. Stockholder Services, 175 E. Houston Houston, city (1990 pop. 1,630,553), seat of Harris co., SE Tex., a deepwater port on the Houston Ship Channel; inc. 1837. Economy The fourth largest city in the nation and the largest in the entire South and Southwest, Houston is a port of entry; , San Antonio, Texas “San Antonio” redirects here. For other uses, see San Antonio (disambiguation). San Antonio is the second most populous city in Texas, the third most populous metropolitan area in Texas, and is the seventh most populous city in the United States. As of the 2006 U.S. 78205. Copies of BellSouth's filings may be obtained without charge from BellSouth at BellSouth's Web site (www.bellsouth.com) or by directing a request to BellSouth at Investor Relations Investor relations The process by which the corporation communicates with its investors. , 1155 Peachtree Street Peachtree Street is the main north-south street of Atlanta, Georgia. The city grew up around this one street, and many of its historical and municipal buildings are or were located along it. , N.E., Atlanta Atlanta (ətlăn`tə, ăt–), city (1990 pop. 394,017), state capital and seat of Fulton co., NW Ga., on the Chattahoochee R. and Peachtree Creek, near the Appalachian foothills; inc. 1847. , Georgia Georgia, country, Asia Georgia (jôr`jə), Georgian Sakartvelo, Rus. Gruziya, officially Republic of Georgia, republic (2005 est. pop. 4,677,000), c.26,900 sq mi (69,700 sq km), in W Transcaucasia. 30309. AT&T, BellSouth and their respective directors and executive officers and other members of management and employees are potential participants in the solicitation solicitation In criminal law, the act of asking, inducing, or directing someone to commit a crime. The person soliciting another becomes an accomplice to the crime. The term also refers to the act of obtaining bribes, as well as to the crime of a prostitute who offers sexual of proxies in respect of the proposed merger. Information regarding AT&T's directors and executive officers is available in AT&T's 2005 Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. filed with the SEC on March 1, 2006 and AT&T's proxy statement Proxy Statement A document containing the information that a company is required by the SEC to provide to shareholders so they can make informed decisions about matters that will be brought up at an annual stockholder meeting. for its 2006 annual meeting of stockholders, filed with the SEC on March 10, 2006, and information regarding BellSouth's directors and executive officers is available in BellSouth's 2005 Annual Report on Form 10-K filed with the SEC on February February: see month. 28, 2006 and BellSouth's proxy statement for its 2006 annual meeting of shareholders, filed with the SEC on March 3, 2006. Additional information regarding the interests of such potential participants is included in the registration statement and joint proxy statement/prospectus contained therein, and other relevant documents filed with the SEC.
Financial Data
AT&T Inc.
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Consolidated Statements of Income
Dollars in millions except per share amounts
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Unaudited Three Months Ended
------------------------
3/31/06 3/31/05 %Chg
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Operating Revenues
Voice $ 8,722 $ 5,852 49.0%
Data 4,442 2,391 85.8%
Directory 901 905 -0.4%
Other 1,770 1,100 60.9%
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Total Operating Revenues 15,835 10,248 54.5%
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Operating Expenses
Cost of sales (exclusive of depreciation
and amortization shown separately below) 7,128 4,388 62.4%
Selling, general and administrative 4,024 2,479 62.3%
Depreciation and amortization 2,492 1,825 36.5%
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Total Operating Expenses 13,644 8,692 57.0%
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Operating Income 2,191 1,556 40.8%
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Interest Expense 464 353 31.4%
Interest Income 85 109 -22.0%
Equity in Net Income (Loss) of Affiliates 334 (58) -
Other Income (Expense) - Net 11 47 -76.6%
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Income Before Income Taxes 2,157 1,301 65.8%
Income Taxes 712 416 71.2%
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Net Income $ 1,445 $ 885 63.3%
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Basic Earnings Per Share:
Net Income $ 0.37 $ 0.27 37.0%
Weighted Average Common
Shares Outstanding (000,000) 3,882 3,303 17.5%
Diluted Earnings Per Share:
Net Income $ 0.37 $ 0.27 37.0%
Weighted Average Common
Shares Outstanding with Dilution (000,000) 3,902 3,315 17.7%
Financial Data
AT&T Inc.
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Statements of Segment Income
Dollars in millions
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Unaudited Three Months Ended
----------------------
Wireline 3/31/06 3/31/05 %Chg
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Segment Operating Revenues
Voice $8,722 $5,852 49.0%
Data 4,442 2,391 85.8%
Other 1,575 939 67.7%
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Total Segment Operating Revenues 14,739 9,182 60.5%
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Segment Operating Expenses
Cost of sales 6,856 4,123 66.3%
Selling, general and administrative 3,701 2,170 70.6%
Depreciation and amortization 2,430 1,773 37.1%
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Total Segment Operating Expenses 12,987 8,066 61.0%
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Segment Income $1,752 $1,116 57.0%
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Cingular(a)
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Segment Operating Revenues
Service revenues $8,005 $7,419 7.9%
Equipment sales 975 810 20.4%
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Total Segment Operating Revenues 8,980 8,229 9.1%
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Segment Operating Expenses
Cost of services and equipment sales 3,647 3,439 6.0%
Selling, general and administrative 2,846 3,001 -5.2%
Depreciation and amortization 1,680 1,675 0.3%
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Total Segment Operating Expenses 8,173 8,115 0.7%
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Segment Operating Income 807 114 -
Other Income (Expense) - Net (329) (332) 0.9%
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Segment Income (Loss) $478 $(218) -
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(a) Results reflect 100% of Cingular Wireless' actual results
Directory
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Segment Operating Revenues $923 $929 -0.6%
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Segment Operating Expenses
Cost of sales 288 280 2.9%
Selling, general and administrative 159 164 -3.0%
Depreciation and amortization 1 2 -50.0%
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Total Segment Operating Expenses 448 446 0.4%
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Segment Operating Income 475 483 -1.7%
Equity in Net Income (Loss) of Affiliates (5) (1) -
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Segment Income $470 $482 -2.5%
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Other(b)
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Segment Operating Revenues $203 $169 20.1%
Segment Operating Expenses 239 212 12.7%
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Segment Operating Income (Loss) (36) (43) 16.3%
Equity in Net Income (Loss) of Affiliates 339 (58) -
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Segment Income (Loss) $303 $(101) -
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(b) Equity in Net Income (Loss) of Affiliates includes our 60%
proportionate share of Cingular's results
Financial Data
AT&T Inc.
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Consolidated Balance Sheets
Dollars in millions except per share amounts
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3/31/06 12/31/05
Unaudited
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Assets
Current Assets
Cash and cash equivalents $1,057 $1,224
Accounts receivable - net of allowances for
uncollectibles of $1,131 and $1,176 8,647 9,351
Prepaid expenses 1,215 1,029
Deferred income taxes 1,874 2,011
Other current assets 1,057 1,039
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Total current assets 13,850 14,654
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Property, plant and equipment - at cost 150,516 149,238
Less: accumulated depreciation and amortization 92,149 90,511
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Property, Plant and Equipment - Net 58,367 58,727
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Goodwill 13,402 14,055
Intangible Assets - Net 8,214 8,503
Investments in Equity Affiliates 2,090 2,031
Investments in and Advances to Cingular Wireless 32,316 31,404
Other Assets 16,198 16,258
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Total Assets $144,437 $145,632
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Liabilities and Stockholders' Equity
Current Liabilities
Debt maturing within one year $5,712 $4,455
Accounts payable and accrued liabilities 15,510 17,088
Accrued taxes 2,240 2,586
Dividends payable 1,293 1,289
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Total current liabilities 24,755 25,418
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Long-Term Debt 25,829 26,115
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Deferred Credits and Other Noncurrent Liabilities
Deferred income taxes 14,902 15,713
Postemployment benefit obligation 18,278 18,133
Unamortized investment tax credits 202 209
Other noncurrent liabilities 5,382 5,354
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Total deferred credits and other noncurrent
liabilities 38,764 39,409
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Stockholders' Equity
Common shares issued ($1 par value) 4,065 4,065
Capital in excess of par value 27,262 27,499
Retained earnings 29,257 29,106
Treasury shares (at cost) (4,927) (5,406)
Additional minimum pension liability adjustment (218) (218)
Accumulated other comprehensive income (350) (356)
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Total stockholders' equity 55,089 54,690
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Total Liabilities and Stockholders' Equity $144,437 $145,632
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AT&T Inc.
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Consolidated Statements of Cash Flows
Dollars in millions, increase (decrease) in cash and cash equivalents
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Unaudited Three Months Ended
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3/31/06 3/31/05
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Operating Activities
Net income $ 1,445 $ 885
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 2,492 1,825
Undistributed earnings from investments in
equity affiliates (313) 74
Provision for uncollectible accounts 193 239
Amortization of investment tax credits (7) (6)
Deferred income tax (benefit) expense 66 (37)
Net gain on sales of investments (8) (66)
Changes in operating assets and liabilities:
Accounts receivable 509 128
Other current assets (189) (97)
Accounts payable and accrued liabilities (2,057) (1,624)
Stock-based compensation tax benefit (8) (3)
Other - net 335 (65)
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Total adjustments 1,013 368
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Net Cash Provided by Operating Activities 2,458 1,253
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Investing Activities
Construction and capital expenditures (1,821) (1,050)
Receipts from (investments in) affiliates - net (699) 596
Maturities of held-to-maturity securities - 64
Dispositions 27 73
Acquisitions (62) (169)
Proceeds from note repayment - 37
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Net Cash Used in Investing Activities (2,555) (449)
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Financing Activities
Net change in short-term borrowings with
original maturities of three months or less 1,271 761
Repayment of other short-term borrowings (2) -
Repayment of long-term debt (259) (572)
Issuance of treasury shares 201 47
Dividends paid (1,289) (1,066)
Stock-based compensation tax benefit 8 3
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Net Cash Used in Financing Activities (70) (827)
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Net increase (decrease) in cash and cash
equivalents from continuing operations (167) (23)
Net Cash Used in Operating Activities from
Discontinued Operations - (310)
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Net increase (decrease) in cash and cash
equivalents (167) (333)
Cash and cash equivalents beginning of year 1,224 760
----------------------------------------------------------------------
Cash and Cash Equivalents End of Period $ 1,057 $ 427
======================================================================
Financial Data
AT&T Inc.
----------------------------------------------------------------------
Supplementary Operating Data
----------------------------------------------------------------------
Unaudited Three Months Ended
------------------
3/31/06 3/31/05
----------------------------------------------------------------------
In-Region(1)
Switched Access Lines (000)
Retail Consumer - Primary 22,630 23,222
Retail Consumer - Additional 3,786 4,218
Retail Business 17,377 17,507
----------------
Retail 43,793 44,947
Wholesale(2) 4,667 6,503
Coin(3) 308 418
----------------
Total Switched Access Lines (000) 48,768 51,868
================
Unbundled Loops (000) 1,664 1,502
DSL Lines in Service (000) 7,432 5,608
Net DSL Line Additions (000) 511 504
Video Subscribers (000) 491 394
Net Video Subscriber Additions (000) 34 71
Cingular Wireless(4)(5)
Wireless Voice Customers (000) 55,810 50,350
Net Customer Additions (000) 1,679 1,367
M&A Activity, Partitioned Customers and Other Adjs. (13) (149)
POPs (000,000) 296 293
----------------------------------------------------------------------
(1) In-region represents access lines served by AT&T's incumbent local
exchange companies.
(2) Wholesale lines at 3-31-06 include approximately 1.51 million
lines purchased by AT&T Corp.
(3) Coin includes both retail and wholesale access lines.
(4) Amounts represent 100% of the results from Cingular Wireless.
(5) Prior year amounts restated to conform to current period reporting
methodology.
Non-GAAP Financial Data
AT&T Inc.
----------------------------------------------------------------------
Supplemental Consolidated Income Statements
Dollars in millions
----------------------------------------------------------------------
Unaudited Three Months Ended
----------------------
3/31/06 3/31/05 %Chg
----------------------------------------------------------------------
Total Operating Revenues $24,433 $18,295 33.6%
----------------------------------------------------------------------
Operating Expenses
Cost of sales (exclusive of depreciation
and amortization shown separately below) 10,393 7,645 35.9%
Selling, general and administrative 6,870 5,480 25.4%
Depreciation and amortization 4,172 3,500 19.2%
----------------------------------------------------------------------
Total Operating Expenses 21,435 16,625 28.9%
----------------------------------------------------------------------
Operating Income 2,998 1,670 79.5%
Interest Expense 694 600 15.7%
Interest Income 22 36 -38.9%
Minority Interest (192) 71 -
Equity in Net Income (Loss) of Affiliates 122 88 38.6%
Other Income (Expense) - Net 17 49 -65.3%
----------------------------------------------------------------------
Income Before Income Taxes 2,273 1,314 73.0%
----------------------------------------------------------------------
Income Taxes 828 429 93.0%
----------------------------------------------------------------------
Net Income $1,445 $885 63.3%
======================================================================
As required by GAAP rules for joint ventures, AT&T reflects
Cingular's results in the Equity in Net Income of Affiliates line
of its Consolidated Statements of Income rather than in revenues
and expenses. To facilitate peer comparisons, and in recognition
of AT&T's majority economic ownership of the nation's largest
wireless provider and Cingular's increased significance to AT&T's
overall operations, AT&T provides a supplemental consolidated
income statement that includes full consolidation of Cingular's
operating results. This supplemental information also includes
reconciliations to AT&T's Consolidated Statements of Income on the
following page.
Certain amounts in prior-period supplemental financial information
have been reclassified to conform to the current period's
presentation.
Non-GAAP Financial Data Reconciliation
AT&T Inc.
----------------------------------------------------------------------
Supplemental Consolidated Income Statements
For the Three Months Ended 3/31/06
Dollars in millions
----------------------------------------------------------------------
Unaudited Reported Non-GAAP
---------------- -------------------------
Consolidating Supplemental
AT&T Cingular Adjustments Consolidated
----------------------------------------------------------------------
Total Operating Revenues $15,835 $8,980 $(382) $24,433
----------------------------------------------------------------------
Operating Expenses
Cost of sales (exclusive
of depreciation and
amortization shown
separately below) 7,128 3,647 (382) 10,393
Selling, general and
administrative 4,024 2,846 - 6,870
Depreciation and
amortization 2,492 1,680 - 4,172
----------------------------------------------------------------------
Total Operating Expenses 13,644 8,173 (382) 21,435
----------------------------------------------------------------------
Operating Income 2,191 807 - 2,998
----------------------------------------------------------------------
Interest Expense 464 297 (67) 694
Interest Income 85 4 (67) 22
Minority Interest (1) (41) (150) (192)
Equity in Net Income (Loss)
of Affiliates 334 - (212) 122
Other Income (Expense) - Net 12 5 - 17
----------------------------------------------------------------------
Income Before Income Taxes 2,157 478 (362) 2,273
Income Taxes 712 124 (8) 828
----------------------------------------------------------------------
Net Income $1,445 $354 $(354) $1,445
======================================================================
For the Three Months Ended 3/31/05
Dollars in millions
----------------------------------------------------------------------
Unaudited Reported Non-GAAP
---------------- -------------------------
Consolidating Supplemental
AT&T Cingular Adjustments Consolidated
----------------------------------------------------------------------
Total Operating Revenues $10,248 $8,229 $(182) $18,295
----------------------------------------------------------------------
Operating Expenses
Cost of sales (exclusive
of depreciation and
amortization shown
separately below) 4,388 3,439 (182) 7,645
Selling, general and
administrative 2,479 3,001 - 5,480
Depreciation and
amortization 1,825 1,675 - 3,500
----------------------------------------------------------------------
Total Operating Expenses 8,692 8,115 (182) 16,625
----------------------------------------------------------------------
Operating Income 1,556 114 - 1,670
----------------------------------------------------------------------
Interest Expense 353 338 (91) 600
Interest Income 109 18 (91) 36
Minority Interest - (16) 87 71
Equity in Net Income (Loss)
of Affiliates (58) 2 144 88
Other Income (Expense) - Net 47 2 - 49
----------------------------------------------------------------------
Income (Loss) Before Income
Taxes 1,301 (218) 231 1,314
Income Taxes 416 22 (9) 429
----------------------------------------------------------------------
Net Income (Loss) $885 $(240) $240 $885
======================================================================
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