AT&T Wireless Reports Fourth Quarter and Full Year Results -- 2003 Operating Free Cash Flow Exceeds $1 Billion.Business Editors/High-Tech Writers REDMOND Redmond, city (1990 pop. 35,800), King co., W Wash., a suburb of Seattle, on Lake Sammamish; inc. 1912. Its economy centers around computer software (Microsoft Corp. , Wash.--(BUSINESS WIRE)--Jan. 22, 2004 AT&T Wireless (NYSE NYSE See: New York Stock Exchange :AWE AWE - Advanced WavEffect ) said today its fourth quarter 2003 services revenue grew 4.4 percent from the year-ago quarter to $3.904 billion. Full-year services revenue of $15.659 billion increased 8.1 percent over 2002, meeting the company's guidance for the year. For the fourth quarter, net loss per share (EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. ), was ($0.03) per share compared with ($0.05) per share in the year ago quarter. Earnings per share for the year was $0.16, compared with a 2002 fiscal year net loss per share of ($0.87). Fourth quarter OIBDA OIBDA Operating Income Before Depreciation & Amortization (defined as 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. before depreciation and amortization) was $890 million, a decrease of 2.6 percent over the same period last year. The quarter-over-quarter decline in OIBDA was driven by both planned events, including a new brand advertising campaign, support of local number portability "LNP" redirects here. For the airport in Virginia with that IATA code, see Lonesome Pine Airport. For the compound InP, see Indium phosphide. Local number portability, (LNP) for fixed lines, and full mobile number portability (LNP (Local Number Portability) The capability of keeping the same local telephone number when switching carriers. See NP and WLNP. ) and additional restructuring charges 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. ; and unplanned events, such as higher than expected costs tied to both LNP and a newly installed customer relationship management software platform. These factors also contributed to a 160 basis point quarter-over-quarter decline in OIBDA margin, from 24.4 percent last year to 22.8 percent in this fourth quarter. (See Attachment See attach a file. A) Consistent with the company's previous guidance for growth in the mid- mid- pref. Middle: midbrain. to high teens, full-year OIBDA, excluding licensing costs impairments, climbed 17.1 percent to $4.477 billion, from $3.822 billion in 2002. 2003 OIBDA margin, excluding licensing costs impairments, was 28.6 percent, a 220 basis-point increase from 2002's OIBDA margin, excluding licensing costs impairments, of 26.4 percent. Full year OIBDA for 2003 was $4.394 billion, up 76.2 percent from 2002 full year OIBDA of $2.493 billion. Operating free cash flow for the year was $1.03 billion. (See Attachment B) "We had a good year, meeting our annual guidance, growing the business, and positioning AT&T Wireless well for future growth," said John D. Zeglis John D. Zeglis (1947- )served as the President of AT&T and the Chairman and Chief Executive Officer (CEO) of AT&T Wireless. References
"We did hit some operational rough spots in the fourth quarter, but the good news is that those issues are largely behind us. And we understand the challenges, such as churn churn: see butter. , that we must continue to focus on this year," said Zeglis. "Like any company in transition, we've we've Contraction of we have. we've have had our ups and downs ups and downs pl.n. Alternating periods of good and bad fortune or spirits. ups and downs Noun, pl alternating periods of good and bad luck or high and low spirits ," Zeglis explained. "But these have never interrupted in·ter·rupt v. in·ter·rupt·ed, in·ter·rupt·ing, in·ter·rupts v.tr. 1. To break the continuity or uniformity of: Rain interrupted our baseball game. 2. our consistent growth on all the metrics metrics Managed care A popular term for standards by which the quality of a product, service, or outcome of a particular form of Pt management is evaluated. See TQM. that count in our industry. We see a bright future and believe 2004 to be no exception to our trajectory Trajectory The curve described by a body moving through space, as of a meteor through the atmosphere, a planet around the Sun, a projectile fired from a gun, or a rocket in flight. of growth and profitability." ARPU (Average Revenue Per User) A calculation often used to determine the overall value of an application. It is also used to rate particular customers, especially in the wireless space, by comparing someone's account to the overall average. was $58.70 for the fourth quarter, down 2.2 percent from the same period last year. Steady ARPU was supported by data revenues, international toll, and higher regulatory reg·u·late 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. fees, while offset by continued pricing pressure and less breakage from wireless minute buckets. (See Attachment C) Churn for the year was 2.6 percent, matching 2002's full year level and reflecting the company's long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. strategy of improving the profitability of the overall 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. base. Fourth quarter churn was 3.3 percent, driven by a high number of contract expirations of the prior year's holiday contract signings, systems-related impacts on customer care, and LNP. Total revenue (services revenue plus equipment revenue) for the fourth quarter was $4.215 billion, an increase of 4.1 percent over the fourth quarter of 2002. Net subscriber additions were 128,000 for the fourth quarter and 1.060 million for the year, bringing the company's total 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: customer base at the end of 2003 to 22.0 million, an increase of 5.4 percent over 2002. Minutes of use per subscriber grew to 551 in the fourth quarter, an increase of 8.7 percent from the fourth quarter of 2002. Capital expenditures, including internal use software, totaled $1.164 billion in the fourth quarter, a decrease of 45.8 percent from the year-ago quarter. AT&T Wireless said the majority of its capital for the quarter related to the GSM/GPRS network, along with non-network spending related to system upgrades and consolidation. 2004 Outlook AT&T Wireless also provided financial guidance for 2004, saying it expects to grow services revenue at a mid-single digit A single character in a numbering system. In decimal, digits are 0 through 9. In binary, digits are 0 and 1. digit - An employee of Digital Equipment Corporation. See also VAX, VMS, PDP-10, TOPS-10, DEChead, double DECkers, field circus. percentage over 2003. OIBDA margin, excluding any impairments, measured as a percentage of services revenue, is expected to be in the low 30s, and capital expenditures are expected to remain around 20 percent of services revenue. The company also said it expects to increase positive operating free cash flow by around 20 percent over 2003. About AT&T Wireless AT&T Wireless (NYSE:AWE) is the second-largest wireless carrier, based on revenues, 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. . With 21.980 million subscribers as of December December: see month. 31, 2003, and revenues of more than $16.6 billion over the past four quarters, AT&T Wireless delivers advanced high-quality mobile wireless communications wireless communications System using radio-frequency, infrared, microwave, or other types of electromagnetic or acoustic waves in place of wires, cables, or fibre optics to transmit signals or data. services, voice and data, to businesses and consumers, in the U.S. and internationally. For more information, please visit us at www.attwireless.com. This press release contains "forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. statements'' which are based on management's beliefs as well as on a number of assumptions concerning future events made by management with information that is currently available to management. 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. may include, without limitation, management's expectations regarding: our future financial and operating performance and financial condition, including the company's outlook for the fiscal year 2004 and subsequent periods; our plans to evaluate strategic alternatives and the outcome of that evaluation; subscriber growth; industry conditions; the strength of our balance sheet; our liquidity and needs for additional financing; and our ability to increase revenue, margins and operating free cash flow. 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 Wireless' control, that could cause actual results to differ materially from such statements. Without limitation these factors include: the risks associated with the implementation of our technology migration strategy, our plans to evaluate strategic alternatives, our ability to continue to reduce costs and increase the efficiency of our distribution channels, the potential competitive impacts of industry consolidation or alternative technologies, potential impacts on revenue and ARPU from competitive pricing and slowing penetration The successful unauthorized breach of a security perimeter. See penetration test. in the wireless industry, the effects of vigorous competition in the markets in which we operate, the risk of decreased consumer spending Consumer demand or consumption is also known as personal consumption expenditure. It is the largest part of aggregate demand or effective demand at the macroeconomic level. due to softening softening /sof·ten·ing/ (sof´en-ing) malacia. softening a change of consistency, with loss of firmness or hardness. economic conditions, acts of terrorism terrorism, the threat or use of violence, often against the civilian population, to achieve political or social ends, to intimidate opponents, or to publicize grievances. , and consumer response to new service offerings. For a more detailed description of the factors that could cause such a difference, please see AT&T Wireless' filings with the Securities and Exchange Commission, including the information under the heading "Additional Factors That May Affect Our Business, Future Operating Results and Financial Condition" and "Forward Looking Statements" in its quarterly report on Form 10-Q Form 10-Q See 10-Q. filed on November November: see month. 14, 2003. Attachment A OIBDA is defined as operating income (loss) before depreciation and amortization. (In previous periods, we referred to OIBDA as 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 .) OIBDA margin is calculated as OIBDA divided by services revenue. These, along with OIBDA, excluding licensing costs impairments, and OIBDA margin, excluding licensing costs impairments, are non-GAAP financial measures, and differ from operating income (loss), as calculated 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 GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). in that they exclude depreciation and amortization and 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. of licensing costs, and differ from net income (loss) as calculated in accordance with GAAP in that they exclude (i) depreciation and amortization, (ii) impairment of licensing costs, (iii) other income (expense), (iv) interest expense, (v) provision for income taxes, (vi) net equity earnings (losses) from investments in unconsolidated subsidiaries, (vii) income (loss) from discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. , and (viii) cumulative effect of change in accounting principle. We believe these measures are relevant and useful information to our investors as they are an integral part of our internal management reporting and planning process and are the primary measures used by our management to evaluate the operating performance of our consolidated operations. They are used by management as a measurement of our success in acquiring, retaining, and servicing customers because we believe these measures reflect our ability to generate and grow subscriber revenues while providing a high level of customer service in a cost-effective cost-effective, n the minimal expenditure of dollars, time, and other elements necessary to achieve the health care result deemed necessary and appropriate. manner. Management also uses these measures as a method of comparing our performance with many of our competitors COMPETITORS, French law. Persons who compete or aspire to the same office, rank or employment. As an English word in common use, it has a much wider application. Ferriere, Dict. de Dr. h.t. . The components of OIBDA and OIBDA, excluding licensing costs impairments, include the key revenue and expense items for which our operating managers are responsible and upon which we evaluate their performance. Additionally, our $2.5 billion credit facility (under which no amounts are currently outstanding) requires us to maintain certain financial ratios, including a specified spec·i·fy tr.v. spec·i·fied, spec·i·fy·ing, spec·i·fies 1. To state explicitly or in detail: specified the amount needed. 2. To include in a specification. 3. ratio of net-debt-to-operating income before depreciation and amortization expenses and impairment charges. Lastly, we use OIBDA and OIBDA, excluding licensing costs impairments, for planning purposes, and in presentations to our board of directors, and we use multiples of current or projected OIBDA and OIBDA, excluding licensing costs impairments, in our discounted cash flow models to determine the value of our licensing costs and our overall enterprise valuation. OIBDA and OIBDA, excluding licensing costs impairments, excludes other income (expense) and net equity earnings (losses) from investments in our unconsolidated subsidiaries, as these do not reflect the operating results of our subscriber base and our national 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. that we utilize to obtain and service our subscribers. Net equity (losses) earnings from investments represent our proportionate pro·por·tion·ate adj. Being in due proportion; proportional. tr.v. pro·por·tion·at·ed, pro·por·tion·at·ing, pro·por·tion·ates To make proportionate. share of the net income (loss) of equity investments in which we exercise significant influence, but do not control. As we do not control these entities, our management excludes these results when evaluating the performance of our primary operations. Although excluded, net equity (losses) earnings from investments may include results that are material to our overall net income (loss). During 2002, net equity (losses) earnings from investments included $939 million representing our proportionate share of impairment charges recognized by these entities, as well as impairment charges that we recorded as the decline in fair value of several investments was deemed to be other than temporary. We may record impairment charges in the future if there are further declines in the fair values of our investments, which we deem to be other than temporary. OIBDA and OIBDA, excluding licensing costs impairments, also exclude interest expense and the provision for income taxes. Excluding these items eliminates the expenses associated with our capitalization capitalization n. 1) the act of counting anticipated earnings and expenses as capital assets (property, equipment, fixtures) for accounting purposes. 2) the amount of anticipated net earnings which hypothetically can be used for conversion into capital assets. and tax structures. Finally, OIBDA and OIBDA, excluding licensing costs impairments, exclude depreciation and amortization expenses and impairment charges, in order to eliminate the impact of capital investments, which management believes is better evaluated through its effect on Free Cash Flow. We believe OIBDA as a percentage of services revenue to be a more relevant measure of our operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: than OIBDA as a percentage of total revenue. We generally subsidize sub·si·dize tr.v. sub·si·dized, sub·si·diz·ing, sub·si·diz·es 1. To assist or support with a subsidy. 2. To secure the assistance of by granting a subsidy. a portion of our handset The part of the telephone that contains the speaker and the microphone. On a desktop phone, the part you hold in your hand is the handset. On a cellphone, the entire phone is the handset. See multihandset cordless and headset. sales, all of which is recognized in the period in which we sell the handset. This results in a disproportionate dis·pro·por·tion·ate adj. Out of proportion, as in size, shape, or amount. dis  pro·por impact on our margin in that period.
Management views this equipment subsidy subsidy, financial assistance granted by a government or philanthropic foundation to a person or association for the purpose of promoting an enterprise considered beneficial to the public welfare. as a cost to acquire or retain a
subscriber, which is recovered through the ongoing services revenue that
is generated by the subscriber and is more properly measured by the
metrics Cost per Gross Subscriber Addition (CPGA (Ceramic PGA) See PGA. CPGA - Ceramic Pin Grid Array ) and Cash Cost per User (CCPU CCPU Continuous Computing Corporation (stock symbol) CCPU Cash Cost Per User (Sprint) CCPU China Criminal Police University CCPU Cryptographic Central Processing Unit ). We also use services revenue to calculate margin to facilitate comparison, both internally and externally, with our competitors, as they calculate their margins using services revenue as well. There are material limitations to using these non-GAAP financial measures, including the difficulty associated with comparing these performance measures as we calculate them to similar performance measures presented by other companies, and the fact that these performance measures do not take into account certain significant items, including depreciation and amortization, impairment charges, interest, and tax expense, and net equity earnings (losses) from investments in unconsolidated subsidiaries that directly affect our net income or loss. Management compensates for these limitations by carefully analyzing how our competitors present performance measures that are similar in nature to OIBDA as we present it, and considering the economic effect of the excluded expense items independently as well as in connection with its analysis of net income as calculated in accordance with GAAP. OIBDA and OIBDA margin should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance with accounting principles generally accepted in the United States of America UNITED STATES OF AMERICA. The name of this country. The United States, now thirty-one in number, are Alabama, Arkansas, Connecticut, Delaware, Florida, Georgia, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Mississippi, Missouri, New Hampshire, . OIBDA and OIBDA margin, as we have defined them, may not be comparable to similarly titled measures reported by other companies. The following table summarizes the reconciliation of OIBDA and OIBDA, excluding licensing costs impairments, to consolidated net (loss) income:
(Unaudited) ($M) For the three months For the year
ended ended
Dec 31, Dec 31, Sept 30, Dec 31, Dec 31,
2003 2002 2003 2003 2002
------- ------- -------- ------- --------
OIBDA $890 $913 $1,208 $4,394 $2,493
Impairment of licensing
costs - - 83 83 1,329
------- ------- -------- ------- --------
OIBDA, excluding licensing
costs impairments 890 913 1,291 4,477 3,822
Depreciation and
amortization (870) (722) (841) (3,181) (2,751)
Impairment of licensing
costs - - (83) (83) (1,329)
Other (expense) income (4) 65 16 32 (123)
Interest expense (196) (179) (202) (789) (669)
Provision for income taxes - (125) (9) (112) (55)
Net equity earnings (losses)
from investments in
unconsolidated subs 96 (83) (16) 98 (1,100)
Income from discontinued
operations - - - - 47
Cumulative effect of change
in accounting principle - - - - (166)
------- ------- -------- ------- --------
Net (loss) income ($84) ($131) $156 $442 ($2,324)
======= ======= ======== ======= ========
The following table summarizes the reconciliation of OIBDA margin and OIBDA margin, excluding licensing costs impairments, to consolidated net (loss) income as a percentage of services revenue:
(Unaudited) (All items shown For the three months For the year
as a % of services revenue) ended ended
Dec 31, Dec 31, Sept 30, Dec 31, Dec 31,
2003 2002 2003 2003 2002
------- ------- -------- ------- -------
OIBDA 22.8% 24.4% 29.7% 28.1% 17.2%
Impairment of licensing
costs - - 2.0% 0.5% 9.2%
------- ------- -------- ------- -------
OIBDA, excluding licensing
costs impairments 22.8% 24.4% 31.7% 28.6% 26.4%
Depreciation and
amortization (22.3%) (19.3%) (20.7%) (20.3%) (19.0%)
Impairment of licensing
costs - - (2.0%) (0.5%) (9.2%)
Other (expense) income (0.1%) 1.7% 0.4% 0.2% (0.8%)
Interest expense (5.0%) (4.8%) (5.0%) (5.0%) (4.6%)
Provision for income taxes - (3.3%) (0.2%) (0.8%) (0.4%)
Net equity earnings (losses)
from investments in
unconsolidated subs 2.5% (2.2%) (0.4%) 0.6% (7.6%)
Income from discontinued
operations - - - - 0.3%
Cumulative effect of change
in accounting principle - - - - (1.1%)
------- ------- -------- ------- -------
Net (loss) income (2.1%) (3.5%) 3.8% 2.8% (16.0%)
======= ======= ======== ======= =======
Attachment B Free cash flow, as we have defined it, is calculated as the cash generated from our operating activities less cash payments for capital expenditures. We believe free cash flow and operating free cash flow to be relevant and useful information to our investors as these measures are used by our management in evaluating our liquidity and the cash generated by our consolidated operating businesses. Our definitions of free cash flow and operating free cash flow do not take into consideration cash generated in the sale of or used to purchase license spectrum, cash used to acquire other businesses, or cash generated or used related to our unconsolidated investments. Additionally, our definitions of free cash flow and operating free cash flow do not reflect cash used to 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. or fund debt obligations. Free cash flow and operating free cash flow reflect cash available for financing activities, to strengthen our balance sheet, or cash available for strategic investments, including spectrum acquisitions, acquisitions of businesses, or investments in joint ventures and other unconsolidated subsidiaries. Free cash flow and operating free cash flow should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance with accounting principles generally accepted in the United States of America. Free cash flow and operating free cash flow, as we have defined them, may not be comparable to similarly titled measures reported by other companies. The following table provides a reconciliation of Free cash flow and Operating free cash flow:
(Unaudited) ($M) For the three For the
months ended year ended
Dec 31, Sept 30, Dec 31,
2003 2003 2003
------- -------- -----------
Net cash provided by operating activities
of continuing operations $826 $1,028 $4,559
Less: Capital expenditures, including
internal use software 1,125 775 2,774
------- -------- -----------
Free cash flow ($299) $253 $1,785
Less: Cash received from termination of
interest rate swap agreements - - 245
Less: Cash received from the 2002 NOL
carryback - - 511
------- -------- -----------
Operating free cash flow ($299) $253 $1,029
======= ======== ===========
Attachment C Average Revenue Per User (ARPU): ARPU is used to measure the average monthly services revenue on a per subscriber basis. ARPU is calculated as services revenue generated by subscribers, including both our subscribers' revenue and the roaming The ability to use a communications device such as a cellphone or PDA and be able to move from one cell or access point to another without losing the connection. revenues we collect from other carrier's subscribers, divided by our average subscribers for the period. The following table summarizes our calculation of ARPU:
(Unaudited) ($ in M, For the three months For the year
except for ARPU amount) ended ended
Dec 31, Dec 31, Sept 30, Dec 31, Dec 31,
2003 2002 2003 2003 2002
------- ------- -------- -------- --------
Services revenue $3,904 $3,738 $4,073 $15,659 $14,483
Less: Revenues not
generated by wireless
subscribers 48 27 57 170 152
------- ------- -------- -------- --------
Services revenue used to
calculate ARPU $3,856 $3,711 4,016 $15,489 $14,331
------- ------- -------- -------- --------
Average revenue per user
per month (ARPU) $58.70 $60.00 $61.20 $59.80 $60.20
======= ======= ======== ======== ========
AT&T Wireless Services, Inc. and Subsidiaries
Consolidated Statements of Operations
In millions, except per share amounts -- Unaudited
For the three months For the year ended
ended December 31, December 31,
2003 2002 Change 2003 2002 Change
------ ------ -------- ------- ------- ------
REVENUE
Services $3,904 $3,738 4.4% $15,659 $14,483 8.1%
Equipment 311 309 0.5% 1,036 1,148 (9.8%)
Total revenue 4,215 4,047 4.1% 16,695 15,631 6.8%
OPERATING EXPENSES
Costs of services 1,178 1,171 0.6% 4,749 4,558 4.2%
Costs of equipment
sales 617 572 7.7% 2,054 2,274 (9.7%)
Selling, general and
administrative 1,530 1,391 10.1% 5,415 4,977 8.8%
Depreciation and
amortization 870 722 20.6% 3,181 2,751 15.6%
Impairment of
licensing costs - - - 83 1,329 (93.7%)
Total operating
expenses 4,195 3,856 8.8% 15,482 15,889 (2.6%)
OPERATING INCOME
(LOSS) 20 191 (89.7%) 1,213 (258) 570.3%
Other (expense)
income (4) 65 (106.4%) 32 (123) 126.1%
Interest expense 196 179 9.9% 789 669 18.0%
(LOSS) INCOME FROM CONTINUING
OPERATIONS BEFORE INCOME
TAXES AND NET EQUITY
EARNINGS (LOSSES)FROM
INVESTMENTS IN
UNCONSOLIDATED
SUBSIDIARIES (180) 77 (333.4%) 456 (1,050) 143.4%
Provision for income
taxes - 125 (99.9%) 112 55 105.8%
Net equity earnings
(losses) from
investments
in unconsolidated
subsidiaries, net
of tax 96 (83) 215.9% 98 (1,100) 108.9%
(LOSS) INCOME FROM
CONTINUING
OPERATIONS (84) (131) (35.3%) 442 (2,205) 120.0%
INCOME FROM
DISCONTINUED
OPERATIONS, NET OF
TAX - - - - 47 (100.0%)
(LOSS) INCOME BEFORE
CUMULATIVE EFFECT
OF CHANGE IN
ACCOUNTING
PRINCIPLE (84) (131) (35.3%) 442 (2,158) 120.5%
CUMULATIVE EFFECT OF
CHANGE IN ACCOUNTING
PRINCIPLE, NET OF TAX - - - - (166) 100.0%
NET (LOSS) INCOME (84) (131) (35.3%) 442 (2,324) 119.0%
Accretion of
mandatorily
redeemable
preferred stock - 5 (100.0%) 13 18 (31.5%)
NET (LOSS) INCOME
AVAILABLE TO
COMMON SHAREHOLDERS $ (84) $ (136) (37.9%) $ 429 $(2,342) 118.3%
(LOSS) INCOME PER BASIC AND DILUTED SHARE:
(Loss) income from
continuing operations
available to common
shareholders $(0.03) $(0.05) $ 0.16 $ (0.82)
Income from
discontinued
operations $ - $ - $ - $ 0.01
Cumulative
effect of
change in
accounting
principle $ - $ - $ - $ (0.06)
Net (loss)
income
available to
common
shareholders $(0.03) $(0.05) $ 0.16 $ (0.87)
WEIGHTED AVERAGE SHARES USED TO
COMPUTE (LOSS) INCOME
PER SHARE:
Basic 2,715 2,709 2,713 2,686
Diluted 2,715 2,709 2,715 2,686
AT&T Wireless Services, Inc. and Subsidiaries
Consolidated Balance Sheets
In millions, except per share amounts - Unaudited
December 31, December 31,
2003 2002 Change
------------ ---------- --------
ASSETS
Cash and cash equivalents $ 4,339 $ 2,353 84.4%
Short-term investments 202 - 100.0%
Accounts receivable, less allowances
of $334 and $240 2,301 2,215 3.9%
Inventories 309 325 (5.0%)
Deferred income taxes 303 - 100.0%
Income tax receivable - 56 (100.0%)
Prepaid expenses and other current
assets 361 332 8.6%
TOTAL CURRENT ASSETS 7,815 5,281 48.0%
Property, plant and equipment, net
of accumulated depreciation and
amortization of $10,146 and $7,810 16,374 16,263 0.7%
Licensing costs 14,500 13,959 3.9%
Investments in and advances to
unconsolidated subsidiaries 1,169 2,225 (47.5%)
Goodwill 7,390 7,199 2.7%
Other assets, net of accumulated
amortization of $378 and $251 554 879 (36.9%)
TOTAL ASSETS $47,802 $45,806 4.4%
LIABILITIES
Accounts payable $ 1,174 $ 780 50.5%
Payroll and benefit-related liabilities 500 465 7.4%
Advertising and promotion accruals 149 173 (14.1%)
Business tax accruals 289 375 (23.1%)
Interest payable on long-term debt 240 245 (2.1%)
Other current liabilities 1,100 1,055 4.3%
TOTAL CURRENT LIABILITIES 3,452 3,093 11.6%
Long-term debt 10,459 11,057 (5.4%)
Mandatorily redeemable preferred stock
(liquidation value of $291 as of
December 31, 2003) 177 - 100.0%
Deferred income taxes 4,699 3,615 30.0%
Other long-term liabilities 658 481 36.8%
TOTAL LIABILITIES 19,445 18,246 6.6%
MINORITY INTEREST 30 48 (36.5%)
MANDATORILY REDEEMABLE PREFERRED STOCK
$0.01 par value, 1,000 shares authorized,
.233 shares issued and outstanding
(liquidation value of $273 as of
December 31, 2002) - 151 (100.0%)
MANDATORILY REDEEMABLE COMMON STOCK
$0.01 par value, 406 shares issued and
outstanding 7,664 7,664 -
SHAREHOLDERS' EQUITY
Common stock ($0.01 par value, 10,000
shares authorized, 2,308 and 2,303 shares
issued and outstanding) 23 23 0.2%
Additional paid-in capital 23,688 23,667 0.1%
Receivable from former parent, AT&T (25) (461) (94.6%)
Accumulated deficit (3,032) (3,474) (12.7%)
Accumulated other comprehensive income
(loss) 9 (58) 115.4%
TOTAL SHAREHOLDERS' EQUITY 20,663 19,697 4.9%
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $47,802 $45,806 4.4%
AT&T Wireless Services, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
In millions - Unaudited
For the year ended
December 31,
2003 2002
------- -------
OPERATING ACTIVITIES
Net income (loss) $ 442 $(2,324)
Deduct: Income from discontinued operations - 47
Net income (loss), excluding discontinued operations 442 (2,371)
Adjustments to reconcile net income (loss),
excluding discontinued operations, to net
cash provided by operating activities of
continuing operations:
Cumulative effect of change in accounting
principle, net of tax - 166
Losses on early extinguishments of debt 55 20
Losses from impairments of cost method
unconsolidated subsidiaries - 245
Net gains on sale/exchange of assets, businesses,
and cost method unconsolidated subsidiaries (46) (42)
Depreciation and amortization 3,181 2,751
Impairment of licensing costs 83 1,329
Amortization of debt premium/discount, interest
accretion, and deferred financing fees 28 59
Deferred income taxes 134 (198)
Net equity (earnings) losses from investments in
unconsolidated subsidiaries (109) 1,100
Provision for uncollectible receivables 553 551
Cash received from NOL carryback 511 -
Proceeds received from termination of interest
rate swap agreements 245 -
Increase in accounts receivable (629) (612)
Decrease in inventories 17 31
Increase (decrease) in accounts payable 99 (11)
Net change in other operating assets and
liabilities (5) (43)
NET CASH PROVIDED BY OPERATING ACTIVITIES
OF CONTINUING OPERATIONS 4,559 2,975
INVESTING ACTIVITIES
Capital expenditures, including internal use
software (2,774) (5,302)
Net dispositions of licenses 21 24
Distributions and sales of unconsolidated
subsidiaries 731 367
Contributions, advances, and purchases of
unconsolidated subsidiaries (71) (640)
Acquisitions of consolidated businesses,
including cash acquired (46) (78)
Purchases of held-to-maturity securities (184) -
Issuance of long-term note receivable to
unconsolidated subsidiary - (100)
Other investing activities, net 21 -
NET CASH USED IN INVESTING ACTIVITIES OF
CONTINUING OPERATIONS (2,302) (5,729)
FINANCING ACTIVITIES
Repayment of debt due to others (742) (1,619)
Proceeds from issuance of long-term debt to
others, net of issuance costs - 2,959
Proceeds from AT&T Wireless Services common
stock issued 30 427
Cash received from former parent, AT&T 436 -
Other financing activities, net (11) (4)
NET CASH (USED IN) PROVIDED BY FINANCING
ACTIVITIES OF CONTINUING OPERATIONS (287) 1,763
NET CASH USED BY DISCONTINUED
OPERATIONS - (8)
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 1,970 (999)
NET INCREASE IN CASH DUE TO ADOPTION OF FIN 46 16 -
CASH AND CASH EQUIVALENTS AT BEGINNING OF
PERIOD 2,353 3,352
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 4,339 $ 2,353
|
|
||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion