AT&T Second Quarter Reported Earnings Per Share Are 53 Cents, Operational Profits Are 57 Cents Per Share, Pro Forma Revenue Increases 4.5 Percent, Reported Revenue Up 3.0 Percent.Business Editors NEW YORK--(BUSINESS WIRE)--July 25, 2000 AT&T said today reported second quarter earnings for AT&T Common Stock Group were $0.53 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, or $1.745 billion, compared to $0.49, per diluted share, for the year ago quarter. AT&T Common Stock Group's operational earnings, which exclude certain gains and charges as well as the impact of certain ownership interests, were $0.57 per diluted share, or $1.882 billion, an increase of 16.4 percent compared to the $0.49 per diluted share from the year-ago quarter. Revenue for the second quarter increased 4.5 percent year-over-year, after giving 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 effect to the MediaOne MediaOne was a cable company created by U S WEST in 1995. The cable service started as a division of U S WEST Media Group. In time the service also included pay-per-view, and a self-branded high-speed cable modem internet service named Hiway1 ("Highway One"). (now included within AT&T 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 the IBM (International Business Machines Corporation, Armonk, NY, www.ibm.com) The world's largest computer company. IBM's product lines include the S/390 mainframes (zSeries), AS/400 midrange business systems (iSeries), RS/6000 workstations and servers (pSeries), Intel-based servers (xSeries) Global Network (now AT&T Global Network Services) acquisitions, as well as the impact of the Concert joint venture, certain international divestments and closed cable transactions. Second quarter revenue was $16.221 billion compared to $15.752 billion for the year ago quarter on a reported basis. The increase includes the positive impact of the MediaOne and IBM Global Network acquisitions, partially offset by the effect of the Concert joint venture. The company's Business Services, Wireless Services and Broadband segments all reported revenue gains for the quarter. Lower Consumer Services Consumer Services refers to the formulation, deformulation, technical consulting and testing of most consumer products, such as food, herbs, beverages, vitamins, pharmaceuticals, cosmetics, hair products, household cleaners, [paints, plastics, metals, waxes, coatings, minerals, revenue reflects continued strong competition in the long distance market, movement of customers to optional calling plans and increased use of wireless services as a substitute for calling card and direct dial wireline services. "AT&T's transformation is happening," said AT&T Chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. C. Michael Armstrong C Michael Armstong (born 18 October, 1938, in Detroit, Michigan) is the former AT&T chairman and CEO, who tried to reestablish AT&T as an end-to-end carrier. Unfortunately, due to the dot.com bust and various other issues, he was forced to break the group up in 2001. . "Our second quarter results demonstrate that AT&T's focus on execution across the business is paying off. We are building momentum and scaling our growth businesses as we tackle the operational and competitive challenges outlined last quarter. "We grew wireless revenue nearly 32 percent, significantly expanded our wholly owned footprint The amount of geographic space covered by an object. A computer footprint is the desk or floor surface it occupies. A satellite's footprint is the earth area covered by its downlink. See form factor. 1. into four new major markets, and now serve nearly 12 million subscribers. On a pro forma basis, we increased revenue for our 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. data and 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. services more than 20 percent and grew our 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. business 23 percent. "During the quarter, we sold new broadband services See broadband and broadband service provider. to more than 400,000 additional households. In fact, we now have more digital video customers -- 2 million -- than all the rest of the industry combined. We have more high-speed data customers -- 689,000 -- than anyone else. And no one is adding cable telephony See cable telephone. customers at a faster clip -- an additional 86,000 in the second quarter. "We continue to cut costs in our legacy long distance voice businesses so we can invest in our high-growth businesses," he added. "We have taken action where we're we're Contraction of we are. we're we are not making the progress we should. We've we've Contraction of we have. we've have redeployed people from staff jobs to sales and marketing. And we're significantly increasing our coverage of large corporate accounts."
2nd Quarter at a Glance 2nd Quarter Highlights
2Q00 vs 2Q99 - Total Revenue $16.2b
-------------------------------------------- --------- ----------
Business Services Revenue (1) $7.1b 4.0% - Reported EPS $0.53
Consumer Services Revenue (1) $5.0b (7.2%) - Operational EPS (4)$0.57
Wireless Services Revenue (2) $2.5b 31.9% - Operational Cash
EPS (4) $0.65
Broadband Revenue (3) $1.7b 10.5% - SG&A and Costs of
Services and 44.5%
Products to-Revenue
-------------------------------------------- --------- ----------
Operational EBITDA (4) $5.8b 18.7%
Operational EBIT (4) $3.6b 21.2% - Total Assets $204.4b
-------------------------------------------- --------- ----------
Wireless Subscribers -
Consolidated Mkts (5) 11.7m 33.8% - Capital Expenditures$3.6b
Wireless Subscribers
- Total (6) 14.0m 22.3%
-------------------------------------------- --------- ----------
(1) Revenue growth represents a comparison to second quarter 1999
revenue, adjusted for the pro forma impact of the Concert joint
venture and IBM Global Network acquisition, as applicable
(2) Includes the acquisition of Vanguard Cellular Systems
(Vanguard) in 1999. Excluding Vanguard for April 2000, revenue
increased 29.4%
(3) Revenue growth is based on second quarter 2000 pro forma
revenue compared with the pro forma revenue for the year-ago quarter,
adjusted for the impact of the MediaOne acquisition and all closed
cable transactions
(4) Excludes certain gains and charges as well as the impact of
AT&T's ownership interests in Cablevision Systems Corp. (Cablevision)
and At Home Corporation (Excite@Home)
(5) Includes subscribers from the acquisition of CMT Partners (San
Francisco Bay Area properties) and Wireless One Network
(6) Includes partnership markets
Highlights
-- Revenue increased 4.5 percent from the year-ago quarter on a pro
forma basis adjusted for the impact of the MediaOne and IBM Global
Network acquisitions, the Concert joint venture, international
divestments and closed cable transactions. On this basis revenue
was $16.874 billion for second quarter 2000.
-- Reported earnings for the AT&T Common Stock Group were $0.53 per
diluted share, an increase of 8.2 percent compared to $0.49 per
share in the second quarter of 1999. The increase was principally
due to improved operating income as a result of improved margins
and an increase in interest income due to higher levels of
invested cash. The increases were partially offset by the benefit
from a change in the net operating loss utilization tax rules in
the second quarter of 1999.
-- Operational earnings for AT&T Common Stock Group (which excludes
certain gains, charges and ownership interests), were $0.57 per
diluted share, an increase of 16.4 percent from $0.49 per share
for the year-ago quarter, primarily as a result of improved
operating income due to improved margins and an increase in
interest income due to higher levels of invested cash.
-- Operational cash earnings for AT&T Common Stock Group per diluted
share, which excludes the amortization of franchise costs,
goodwill associated with acquisitions and equity investments, and
other purchased intangibles, were $0.65 for the second quarter.
-- Total operating expenses for the second quarter were $12.954
billion compared to $12.839 billion for the second quarter of
1999. Total operating expenses were negatively impacted by the
MediaOne and IBM Global Network acquisitions and positively
impacted by the formation of Concert. Excluding these items,
operating expenses were essentially flat, reflecting the company's
ongoing cost control initiatives in its core long distance
businesses. These cost savings were offset by increased costs to
support our growing wireless, outsourcing and broadband
businesses. AT&T's SG&A-to-total-revenue ratio was 19 percent for
the second quarter, a decline from 22 percent for the year-ago
period.
-- Total assets at June 30, 2000 were $204.356 billion, an increase
from the $130.973 billion reported at December 31, 1999. The
increase was primarily driven by the MediaOne acquisition.
-- Total debt at June 30, 2000 was $57.721 billion, an increase from
the $35.850 billion reported at December 31, 1999. The increase
was primarily driven by the MediaOne acquisition.
Business Unit Highlights:
-- Business Services second quarter revenue of $7.147 billion
represents an increase of 4.0 percent compared to pro forma
revenue of $6.870 billion for the second quarter of 1999. The
increase was driven by strength in data/IP (Internet protocol) and
outsourcing services partially offset by a decline in voice
services. Total calling volumes, including local services, grew at
a low-teens rate on a pro forma basis compared to the year-ago
quarter.
Business Services EBIT was $1.612 billion, an increase of 12.4
percent over the year-ago quarter. The increase was primarily due
to revenue growth combined with continued cost reductions,
partially offset by the impact of customer accounts contributed to
the Concert joint venture. The equity earnings of Concert are
reported within Corporate and Other.
AT&T Solutions, part of Business Services, increased outsourcing
revenue 23.2 percent to $839 million in the second quarter,
compared to pro forma revenue of $682 million for the second
quarter of 1999. Excluding the impact of the IBM outsourcing
contract, revenue grew nearly 40 percent in the second quarter
from the comparable 1999 period. The increase is primarily due to
new client contracts and additional business secured from existing
clients.
-- Consumer Services had $4.984 billion in revenue for the second
quarter, a decline of 7.2 percent compared to pro forma
revenue of $5.372 billion for the year-ago quarter. The
decline reflects continued strong competition in the long
distance market, movement of customers to optional calling
plans and increased use of wireless services as a substitute
for calling card and direct dial wireline services.
AT&T's One Rate offers continue to be well received with more
than 9 million customers enrolled since its introduction ten
months ago. In December AT&T introduced an any-distance New
York Local One Rate offer that combines local and long
distance services. By the end of June, AT&T's entry into New
York resulted in approximately 500,000 customers.
In support of our strategy to retain high-value customers,
Consumer Services recently announced an agreement with
Continental Airlines making AT&T the official
telecommunications partner of their OnePass(R) frequent flyer
program, and also introduced a joint-marketing offer in the
tri-state area with Cablevision.
Consumer Services EBIT increased 0.5 percent over the year-ago
quarter to $1.852 billion. EBIT margin continues to improve
and was 37.1 percent for the second quarter. The improvement
reflects continued cost control initiatives, primarily in
selling, general and administrative (SG&A) expenses and cost
of services and products.
-- Wireless Services, which includes mobility and fixed services,
grew second quarter revenue 31.9 percent to $2.477 billion
compared to $1.878 billion for the year-ago quarter. The
increase is primarily due to consolidated subscriber growth of
33.8 percent and increased average revenue per user. Average
monthly revenue per user continues to increase reaching $71.50
for the second quarter of 2000, an increase of 7.7 percent
from the $66.40 reported for the second quarter of 1999.
Consolidated subscribers totaled 11.7 million at the end of
the second quarter, including subscribers gained through the
wireless systems acquisitions in San Francisco and southern
Florida. Consolidated net subscribers additions totaled
532,000 in the second quarter, an increase of 27.1 percent
from the first quarter of this year. Total subscribers,
including partnership markets in which AT&T does not have a
controlling interest, were nearly 14.0 million at the end of
the second quarter, a 22.3 percent increase over the prior
year.
EBITDA, excluding other income, increased 58.5 percent to $508
million compared to $321 million in the second quarter of
1999. The increase was primarily the result of revenue growth
and improved cost efficiencies, primarily lower off-network
roaming expenses, partially offset by customer acquisition and
care expenses as well as higher information technology costs
associated with a growing subscriber base.
Additional second quarter financial results for AT&T Wireless
Group can be obtained in a supplemental news release the
company issued today, which is available at www.att.com. A
separate Earnings Commentary for AT&T Wireless Group is
available on the Internet at www.att.com/wirelessir.
-- Broadband had second quarter reported revenue of $1.717
billion an increase from reported revenue of $1.480
billion for the second quarter of 1999. Second quarter pro
forma revenue was $2.370 billion, an increase of 10.5
percent, compared to pro forma revenue of $2.144 billion
for the year-ago quarter. The increase is primarily due to
growth in high-speed data and digital video services as
well as modest rate increases. The pro forma results
include a full quarter impact of the MediaOne acquisition
in both periods.
With the completion of the MediaOne acquisition on June
15, AT&T became the country's largest broadband video
company, passing approximately 27.9 million homes with
service to approximately 16.1 million customers. The
combination of AT&T Broadband and MediaOne produces one of
the most advanced broadband networks.
Broadband's high-speed data service, AT&T@Home, had
approximately 689,000 customers at the end of the quarter,
compared to approximately 231,700 customers a year ago.
The company continues to ramp its broadband telephony
efforts. At the end of the second quarter, AT&T, including
MediaOne, provided broadband telephony service to about
223,600 customers, an increase from 137,800 customers at
the end of the first quarter. In the quarter, AT&T
installed an average of 1,300 telephony customers per day,
and ended the quarter at 1,600 per day.
Including MediaOne, Broadband added more than 200,000
digital video customers in the second quarter to now total
more than 2.2 million.
Broadband pro forma operational EBITDA, excluding other
income, increased 5.9 percent in the second quarter of
2000 to $556 million, versus $525 million for the second
quarter of 1999. The increase was primarily due to higher
revenue and lower stock appreciation rights expense,
partially offset by increased cost of sports programming,
salary and benefit expenses, as well as costs associated
with the roll-out of new services.
-- Corporate and Other primarily includes the elimination of
inter-segment revenue and revenue from international
operations and ventures. Corporate and Other revenue was a
negative $104 million for the second quarter of 2000,
compared with pro forma revenue of negative $112 million
for the year-ago quarter.
Operational EBIT was $129 million for the second quarter
of 2000, compared to negative $82 million for the second
quarter of 1999. The improvement was primarily due to a
larger pension credit in 2000 as a result of a higher
pension trust asset base and an increased discount rate
used to measure the pension and post-retirement
obligations, higher interest income and equity earnings
from Concert.
Today's earnings announcement refers to AT&T Group which does not
include the financial results of Liberty Media Group, which reports
its results separately. A detailed explanation of second quarter
business unit performance can be found on the Internet at
http://www.att.com/ir/.
Definitions
EBIT refers to earnings before interest and taxes.
EBITDA refers to earnings before interest, taxes, depreciation and
amortization, and minority interest.
Operational Cash Earnings: Refers to operational earnings
excluding the amortization of franchise costs, goodwill associated
with acquisitions and equity investments, and other purchased
intangibles.
Operational Earnings: These results exclude certain gains and
charges as well as the impact of AT&T's ownership interests in
Cablevision and Excite @ Home.
Reported Earnings: The attached income statement reflects Reported
Earnings in accordance with generally accepted accounting principles.
Pro forma Revenue: Revenue is adjusted for the MediaOne
acquisition, all closed cable transactions, the IBM Global Network,
various divestments of international businesses and the impact of
Concert.
AT&T Group does not include operations from Liberty Media Group.
AT&T Wireless Group became a tracking stock of AT&T following an
initial public offering on April 27, 2000. It now trades on the New
York Stock Exchange under the symbol AWE. The results of AT&T Wireless
Group are included in the attached AT&T Group income statement and
balance sheet. Earnings of the AT&T Group are attributed to either the
AT&T Common Stock Group or AT&T Wireless Group.
The foregoing are "forward-looking statements" which are based on
management's beliefs as well as on a number of assumptions concerning
future events made by and information currently available to
management. Readers are cautioned not to put undue reliance on such
forward-looking statements, which are not a guarantee of performance
and are subject to a number of uncertainties and other factors, many
of which are outside AT&T's control, that could cause actual results
to differ materially from such statements. For a more detailed
description of the factors that could cause such a difference, please
see AT&T's filings with the Securities and Exchange Commission. AT&T
disclaims any intention or obligation to update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise. This document also contains certain
information such as operational EPS, operational cash EPS and reported
and operational EBIT and EBITDA that are not presented in accordance
with generally accepted accounting principles. This information is
presented solely to provide additional information to further
understand the results of AT&T.
ADDITIONAL NOTE TO FINANCIAL MEDIA: AT&T Chairman and CEO C.
Michael Armstrong, Chief Financial Officer Charles H. Noski and
members of the executive team will discuss the company's performance
in a two-way conference call for financial analysts at 8:15 a.m.
Eastern time today. Reporters are invited to listen to the call. From
the U.S., callers should dial 800-230-1074 to access the call. Callers
outside the U.S. should dial 612-288-0318.
An audio rebroadcast of the conference call will be available from
1 p.m. Eastern time on Tuesday, July 25, 2000 until midnight on July
27, 2000. To listen to the audio rebroadcast, U.S. callers can call
800-475-6701 and enter access code 519701. Outside the U.S., the
rebroadcast is available by dialing 320-365-3844, and then entering
the access code 519701. In addition, Internet rebroadcasts of the call
will be available on the AT&T Web site beginning later today. The Web
site address is http://www.att.com/ir/.
AT&T Wireless Chairman and CEO John D. Zeglis and members of the
executive team will also discuss AT&T Wireless performance in a
two-way conference call for financial analysts at 10 a.m. Eastern time
today. Reporters are invited to listen to the call. From the U.S.,
callers should dial 800-230-1092 to access the call. Callers outside
the U.S. should dial 612-288-0340.
An audio rebroadcast of the conference call will be available from
2:30 p.m. Eastern time on Tuesday, July 25, 2000 until midnight on
July 27, 2000. To listen to the audio rebroadcast, U.S. callers can
call 800-475-6701 and enter access code 529205. Outside the U.S., the
rebroadcast is available by dialing 320-365-3844, and then entering
the access code 529205. In addition, Internet rebroadcasts of the call
will be available on the AT&T Wireless Web site beginning later today.
The Web site address is http://www.att.com/wirelessir.
AT&T Group
Combined Statements of Income (Unaudited)
For the Three For the Six
Months Ended Months Ended
June 30, June 30,
Dollars in Millions
(except per share amounts) 2000 1999 2000 1999
------------------------------------------------------------------------
Revenue $16,221 $15,752 $32,122 $29,869
Operating Expenses
Access and other connection 3,617 3,668 7,205 7,400
Costs of services and products 4,116 3,835 8,031 6,728
Selling, general and
administrative 3,110 3,461 6,399 6,618
Depreciation and other
amortization 1,697 1,546 3,263 2,850
Amortization of goodwill, franchise
costs and other purchased
intangibles 414 358 782 542
Net restructuring and other
charges - (29) 773 702
Total operating expenses 12,954 12,839 26,453 24,840
-------------------------------------------------
Operating income 3,267 2,913 5,669 5,029
Other income (expense) 119 (40) 415 121
Interest expense 623 493 1,212 695
-------------------------------------------------
Income before income taxes 2,763 2,380 4,872 4,455
Provision for income taxes 996 792 1,364 1,791
Income available to common
shareowners $1,767 $ 1,588 $3,508 $ 2,664
==================================================
AT&T Common Stock Group:
Earnings $1,745 $1,588 $3,486 $2,664
Weighted-average shares and
potential common
shares (millions)(a) 3,314 3,267 3,285 3,038
Earnings per basic share $ 0.54 $0.50 $ 1.08 $0.90
Earnings per diluted share $ 0.53 $0.49 $ 1.07 $0.88
Dividends declared per share $ 0.22 $0.22 $ 0.44 $0.44
AT&T Wireless Group:
Earnings (b) $ 22 - $ 22 -
Weighted-average
shares (millions)(a) 360 - 360 -
Earnings per basic and diluted
share $ 0.06 - $ 0.06 -
1999 amounts have been restated to conform to the current year
presentation.
(a) Amounts represent the weighted-average shares assuming
dilution from the potential conversion of debt and equity securities
and the potential exercise of outstanding stock options and other
performance awards. Basic shares for AT&T Common Stock, assuming no
dilution, were 3,253 million and 3,189 million for the three month
periods ended June 30, 2000 and 1999, respectively, and 3,219 million
and 2,970 million for the six months ended June 30, 2000, and 1999,
respectively. No difference exists between the number of AT&T Wireless
Group basic and diluted shares for the periods displayed.
(b) Represents earnings since April 27, 2000, the effective date
of the initial public offering of AT&T Wireless Group tracking stock.
EPS Reconciliation
----------------------------------------------------------------------
For the three months ended
----------------------------------
(Dollars in millions, except
per share amounts) June 30, 2000 June 30, 1999
------------- -------------
After-tax Diluted EPS After-tax Diluted
EPS
Reported income attributable to
AT&T Common Stock Group $1,745 $0.53 $1,588 $0.49
Add:
Losses of Cablevision and Excite@Home
(pretax $295 2Q00 & $246 2Q99) 183 0.05 151 0.04
Less:
Gains on sales and other
(pretax $27 2Q00 and $88 2Q99) 46 0.01 55 0.02
Net restructuring and other charges
(pretax $29 2Q99) - - 21 -
Net operating loss tax benefit - - 75 0.02
Operational earnings attributable to AT&T Common
Stock Group $1,882 $0.57 $1,588 $0.49
|
|
||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion