AT&T Reports First Quarter Profits Of 69 Cents A Share.NEW YORK--(BUSINESS WIRE)--April 21, 1997--AT&T today reported income 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 of $1.122 billion, or 69 cents a share, for the quarter ended March 31, compared with year-ago profits of $1.469 billion or 92 cents a share. Revenues from continuing operations in the first-quarter rose 1.5 percent to $13.048 billion, compared with $12.850 billion in the 1996 first quarter. The revenue increase was driven by growth in local and other initiatives, business long distance services and wireless services, partially offset by declines in financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. and consumer long distance services revenues. "Results are where we expected them to be as we implement our strategy," said AT&T Chairman Robert E. Allen. "As we move forward, we remain steadfast in our commitment to grow our core business, invest in growth initiatives, cut costs, focus our resources and meet our earnings targets." Results in Brief o The year-over-year decline in earnings per share reflects the expected higher level of network and other communications services and depreciation and amortization expenses including increased investment in growth initiatives, as well as continued competition in the long distance business. o Local and other initiatives 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. first-quarter 1997 results by approximately 25 cents, compared to the dilution of approximately 16 cents in the fourth quarter of 1996 and approximately 10 cents in the year-ago first quarter, as the company accelerated its presence in on-line, local and international markets. o Long distance calling volumes grew 6.7 percent over the same period in 1996 and 4.5 percent over the fourth quarter of 1996. o Revenues from communications services increased 2.3 percent to $12.658 billion, compared with $12.370 billion in the year-ago quarter. o Financial services revenues declined to $390 million, a decrease of 18.7 percent primarily reflecting the impact of the securitization Securitization The process of creating a financial instrument by combining other financial assets and then marketing them to investors. Notes: Mortgage backed securities are a perfect example of securitization. May also be spelled as "securitisation. program. o 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. declined 30 percent to $1.69 billion, yielding an operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: of 13.0 percent. Earnings before interest and taxes (EBIT EBIT See: Earnings Before Interest and Taxes EBIT See earnings before interest and taxes (EBIT). ), including other income, for continuing operations decreased 26.1 percent to $1.86 billion while earnings before interest, taxes, depreciation and amortization (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 ), including other income, decreased 11.9 percent to $2.806 billion. Results in Detail COMMUNICATIONS SERVICES: Long distance calling volumes rose 6.7 percent. Communications services revenues include business and consumer long distance services, wireless services and local and other initiatives. For the first quarter of 1997, communications services revenues increased $288 million or 2.3 percent from the year-ago quarter, driven primarily by growth in initiatives, business long distance services and wireless services, partially offset by the decline in consumer long distance services. Revenues from business long distance services increased $129 million to $5.452 billion in the quarter, a 2.4 percent increase from the comparable 1996 quarter, driven by double digit Noun 1. double digit - a two-digit integer; from 10 to 99 integer, whole number - any of the natural numbers (positive or negative) or zero; "an integer is a number that is not a fraction" growth in data services and solid double digit volume growth. Business toll-free services led the strong volume growth. The volume growth was partially offset by lower prices in new contracts with business customers and governmental agencies. In addition, the extra day for leap year leap year: see calendar. in 1996 depressed the revenue growth rate by about 1.1 percent. Revenues from consumer long distance services declined $62 million to $6.057 billion in the quarter, down 1 percent, with nearly flat volumes as growth in international calling was offset by declines in domestic volumes. In addition to continued competitive pressure, including non-RBOC local exchange carriers and dial-around companies, revenue growth was also impacted by a new retention and acquisition program that provides free minutes to customers. Similarly, the extra day for leap year in 1996 depressed the revenue growth this quarter by about 1.0 percent. Revenues from wireless services in the first quarter increased $124 million, or nearly 14 percent, to $1.020 billion. Consolidated cellular subscribers grew to 5.325 million, up 1.093 million or 25.8 percent from a year ago. Despite the growing subscriber base, net additions in the first quarter of 1997 declined 9.7 percent compared to the first quarter of 1996. The decline, following the record additions in the 1996 fourth-quarter, reflects increased competition from new entrants in some markets. Revenues from local and other initiatives increased $134 million in the quarter to $459 million, a 41.2 percent gain from the year-ago quarter. This category includes the company's consulting, 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. and systems integration offers for large business customers; on-line services; international expansion, and local service. The revenue growth was driven by the outsourcing business, as well as strong growth from on-line services. 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. increased 10.1 percent in the quarter to $11.020 billion, compared to $10.007 billion in the 1996 first quarter. As expected, the growth was led by increases in network and other communications services expenses. This quarter's expenses also include a $160 million charge to exit the wireless services two-way messaging business, approximately half of which was recorded to network and other communications services expenses and the remainder to depreciation and amortization expenses. Additionally, the quarter had a $100 million benefit from the reversal of pre- 1995 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). reserves, approximately half of which was recorded in network and other communications services expenses and the remainder in selling, general and administrative expenses. The higher network and other communications services expenses of $424 million were primarily related to expenses associated with growth initiatives, including the costs to exit the two-way messaging business, higher provision for uncollectibles and 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. mandated payphone payphone Noun a coin-operated telephone payphone pay n → Münztelefon nt; (card phone) → Kartentelefon nt compensation fees. In addition, depreciation and amortization expenses rose $275 million, driven principally by the significant increases in capital spending capital spending Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. during 1996. Selling, general and administrative expenses increased $230 million, primarily related to increased customer acquisition costs in consumer long distance services as well as increased customer care costs for existing wireless subscribers. Operating income for communications services decreased $725 million, or 30.7 percent, while operating margin decreased from 19.1 percent to 12.9 percent. Communications services earnings before interest and taxes In financial and business accounting, earnings before interest and taxes (EBIT) is a measure of a firm's profitability that excludes interest and income tax expenses.[1] EBIT = Operating Revenue – Operating Expenses + Non-operating Income (EBIT), including other income, decreased 26.8 percent to $1.805 billion, while earnings before interest, taxes, depreciation and amortization Earnings before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP metric that can be used to evaluate a company's profitability.
FINANCIAL SERVICES: Revenues declined $90 million to $390 million for the quarter, or 18.7 percent compared to the year-ago quarter. The decline was primarily due to the receivables securitization program at AT&T Universal Card Services The software support for PC Cards. PC Card applications talk to Card Services. See PC Card. (UCS (Universal Character Set) An ISO/IEC format for coding character sets. ISO/IEC 10646 was synchronized with Unicode; however, Unicode adds additional constraints, and compliance with 10646 does not guarantee compatibility with Unicode. See Unicode. ). UCS securitized securitized Of, related to, or being debt securities that are secured with assets. For example, mortgage purchase bonds are secured by mortgages that have been purchased with the bond issue's proceeds. $3 billion of receivables in 1996. The revenue decline was also due to lower card usage and promotional pricing. Revenues in the quarter were favorably fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. impacted by the adoption of SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System 125, which requires the company to recognize anticipated revenue from its securitization program. Financial services expenses decreased more than 21 percent compared to the first quarter last year, primarily due to the accounting treatment for securitization. Financial Services had an operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. of $52 million, a margin of 13.5 percent, as compared to $50 million and 10.4 percent in the year-ago quarter. A substantial portion of the operating profit for this quarter related to the adoption of SFAS 125. UCS' total managed receivables, including those securitized, were $12.8 billion at the end of the quarter and the number of customer accounts was 18.4 million. AT&T's total operating income declined $723 million to $1.69 billion. Earnings before interest and taxes (EBIT), including other income, for continuing operations decreased 26.1 percent to $1.86 billion. Interest expense decreased $74 million or 59.7 percent, due to lower levels of debt, partially offset by higher interest rates. As previously reported, AT&T continues to format results to reflect "Continuing Operations" and "Discontinued Operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. ." Discontinued Operations for the 1997 first quarter includes the results of businesses being divested, primarily AT&T's submarine submarine, naval craft capable of operating for an extended period of time underwater. Submarines are almost always warships, although a few are used for scientific or business purposes (see also submersible). systems business. Income for the consolidated AT&T, including income from discontinued operations, was $1.126 billion, or 69 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. for the quarter, compared with $1.362 billion or 85 cents per share in the year-ago quarter. NOTE TO FINANCIAL MEDIA: At 8:30 a.m. Eastern time today, AT&T Controller Maureen Tart and other senior executives will discuss the company's first-quarter results in a conference call for financial analysts. Reporters are welcome to listen to the call. The conference may be accessed by dialing 800- 260-0179. Callers outside 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. should dial 719- 447-0008. Continuous rebroadcasts of that call will be available beginning at 11 a.m. by calling 800-475-6701 and entering the access code 338707. Callers outside the United States may listen to the rebroadcast by dialing 320-365-3844, access code 338707. -0-
AT&T
Consolidated Statements of Income
Unaudited
For the Three For the Three
Months Ended Months Ended
Dollars in Millions March 31, March 31,
(except per share amounts) 1997 1996
Sales and Revenues
Communications services $12,658 $12,370
Financial services 390 480
Total Revenues 13,048 12,850
Operating Expenses
Access and other interconnection 4,252 4,168
Network and other communications
services 2,251 1,827
Depreciation and amortization 930 655
Selling, general and administrative 3,587 3,357
Total communications services
expenses 11,020 10,007
Financial services expenses 338 430
Total Operating Expenses 11,358 10,437
Operating Income 1,690 2,413
Other income - net 170 105
Interest expense 49 123
Income from continuing operations
before income taxes 1,811 2,395
Provision for income taxes 689 926
Income from continuing operations 1,122 1,469
Income (loss) from discontinued operations
net of tax of $3 in 1Q 1997 and ($316)
in 1Q 1996 4 (107)
Net Income $ 1,126 $ 1,362
Weighted average common shares and
common share equivalents (millions) 1,628 1,608
Per Common Share:
Income from continuing operations $ 0.69 $ 0.92
Income (loss) from discontinued
operations - $ (0.07)
Net Income $ 0.69 $ 0.85
Dividends declared per common share $ 0.33 $ 0.33
-0-
CONTACT: Eileen M. Connolly 908-221-6731 (work) 908-221-6900 (work) 914-361-4615 (home) econnolly@attmail.com |
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