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 NEW YORK, Jan. 23 /PRNewswire/ -- AT&T (NYSE: T) today reported

fourth-quarter profits of $635 million or 48 cents a share on revenues net of access costs of $11.945 billion, compared with $809 million or 64 cents per share on net revenues of $11.879 billion in the same 1990 quarter.
 The current quarter's earnings were reduced by 14 cents, from 62 cents per share, as a result of the previously reported reduction in the book value of AT&T's investment in Compagnie Industriali Riunite S.p.A. (CIR), an Italian holding company.
 AT&T said its long distance and financial services revenues continued to grow during the quarter despite the recession, but the effects of the economy reduced sales of many of the company's products.
 Revenue, expense and earnings figures for all periods include results of NCR Corporation, which merged with AT&T in September 1991.
 For the year, AT&T's net income was $522 million or 40 cents per share on net revenues of $44.651 billion, compared with $3.104 billion or $2.42 per share on net revenues of $43.619 billion in 1990.
 AT&T took approximately $4.2 billion of restructuring and other charges earlier in the year, primarily for changes in its computer and business-equipment operations, product distribution and other areas of its business, including force reductions.
 The communications and computer company also had one-time gains, adding 11 cents a share, from selling its investment in Sun Microsystems, Inc., and a portion of its equity in UNIX System Laboratories, a subsidiary.
 Excluding these charges and gains, AT&T's 1991 earnings were $3.242 billion, or $2.51 per share.
 "The year's charges mask what are fundamentally good trends in our business -- particularly the growth in communications and financial services, as well as some of our products," said AT&T Chairman Robert E. Allen.
 "Short-term profitability is important, but long-term growth is essential," Allen said. "We are determined to grow in the U.S. and in markets around the globe. We have set our long-term planning sights on an annual average growth rate of at least 10 percent for earnings."
 Net revenues from telecommunications services increased 6 percent for the fourth quarter, to $5.284 billion. For the year, net revenues rose 3.7 percent to $20.41 billion. Calling volumes increased nearly 6.5 percent for the quarter.
 AT&T said it stabilized its share of the domestic long distance market in 1991 and made progress in stabilizing share in international calling. The company said it anticipates stronger volume in domestic and international long distance when the economy rebounds.
 Overall, sales of products and systems declined 7 percent for the quarter, to $4.405 billion, and 1.1 percent for the year, to $15.941 billion.
 AT&T's sales of computer products and systems, which include computer products and systems sales from several AT&T units, reflected the industry's general weakness earlier in the year, falling 19.4 percent to $1.082 billion in the fourth quarter. For 1991, revenues from this category were $3.667 billion.
 The NCR unit, however, reported record orders for the quarter, reflecting strong customer acceptance of new products introduced during 1991.
 Revenues from consumer products increased for the quarter, primarily from higher sales of answering systems, security systems and telephone accessories. Sales of microelectronics products also were up.
 Sales of telecommunications network products and systems were $1.952 billion for the quarter, down 7.2 percent, as the recession held back the sale of switching, transmission and cable products, offsetting strong gains in the sale of cellular products. However, revenues for the year were $7.49 billion, up 2.6 percent.
 Internationally, demand remains strong for AT&T network products and systems, with revenues increasing 7 percent to more than $1.6 billion in 1991 after record growth to $1.5 billion in 1990. Most recently, AT&T said it was forming a joint venture with the Dutch PTT and the Ukraine to upgrade long-distance service in that former Soviet republic.
 Sales of communications systems to large and small businesses continued to be hurt by the economy, although the company believes it gained share in the large-business market and held its share of the small-business market.
 Revenues from rentals and other services were off slightly for the quarter and the year, primarily as a result of the expected continuing decline of the rental base which offset increases in global-messaging, information-technology and other communications services.
 Revenues from financial services and leasing advanced strongly, rising to $420 million compared with $309 million in the year-ago quarter. For 1991, revenues in this category surpassed the billion- dollar level for the first time to reach $1.384 billion, compared with $811 million for 1990.
 AT&T's total costs in the quarter were about level with the year-ago period, leading to an improvement in the overall gross-margin percentage.
 The company's selling, general and administrative expenses increased, however, reflecting higher spending for sales and customer support, advertising and promotion, and expansion internationally.
 Research and development spending increased 6.1 percent for the year to $3.114 billion, compared with $2.935 billion in 1990, as the company continued to invest in new products and services, such as the AT&T VideoPhone 2500, which was introduced January 6 and will be available at AT&T PhoneCenter stores in May and in mid summer at major retailers across the country.
 AT&T's total workforce, adjusted for the NCR merger, was 317,100 at the end of 1991, compared with 328,900 at the end of 1990.
 AT&T said it has changed how it reports access and interconnection costs paid to domestic and foreign telephone companies to connect customers to AT&T's long distance network.
 The change increased reported telecommunications services revenues and costs, but did not affect earnings. It was made so that the financial presentation matches the way AT&T manages its business.
 Revenues and costs in the new presentation are included at the bottom of the income statement, which shows gross telecommunications services revenues -- that is, revenues before access -- at $38.805 billion for 1991, a 1.4-percent increase compared with $38.263 for 1990. Total revenues for the year increased to $63.089 billion, compared with $62.191 billion in 1990.
 Costs of telecommunications services declined to $25.276 billion in 1991, compared with $25.633 billion in 1990. Total costs declined to $38.825 billion from $38.883 billion in 1990.
 The company's results are presented in the traditional way, as well as in the reclassified format, to help investors understand the change.
 AT&T's annual report, scheduled for release in late February, will include the income statement reported in the new fashion for 1991 and previous years.
 Reporters are invited to listen to a teleconference for security analysts scheduled for 11 a.m. EST today. Reporters may call either of the following toll-free numbers: 1-900-200-0190 or 1-800-225-1168.
 (Unaudited, dollars in millions except per share amounts)
 Periods ended: Three months Twelve months
 December: 1991 1990 1991 1990
 Sales and revenues
 Telecommunications services, net
 of access and other interconnection
 costs of $4,508; $4,672; $18,395,
 and $18,572 $ 5,284 $ 4,984 $20,410 $19,691
 Sales of products and systems 4,405 4,734 15,941 16,124
 Rentals and other services 1,836 1,852 6,916 6,993
 Financial services and leasing 420 309 1,384 811
 Total revenues 11,945 11,879 44,651 43,619
 Cost of telecommunications
 services 1,720 1,714 6,881 7,061
 Cost of products and systems 2,597 2,697 9,134 9,228
 Cost of rentals & other svcs. 851 847 3,301 3,377
 Cost of financial services
 and leasing 311 216 1,071 645
 Total costs 5,479 5,474 20,387 20,311
 Gross margin 6,466 6,405 24,264 23,308
 Operating expenses(C)
 SG&A expenses 4,318 4,126 16,220 14,782
 R&D expenses 776 756 3,114 2,935
 Provision for business
 restructuring 6 106 3,572 95
 Total operating expenses 5,100 4,988 22,906 17,812
 Operating income 1,366 1,417 1,358 5,496
 Other income-net(C)(D) (134) 62 251 257
 Interest expense 191 248 726 874
 Income before income taxes 1,041 1,231 883 4,879
 Provision for income taxes 406 422 361 1,775
 Net income $ 635 $ 809 $ 522 $ 3,104
 Earnings per share $ .48 $ .64 $ .40 $ 2.42
 Average shares (millions) 1,310 1,275 1,293 1,282
 Dividends declared per share $ .33 $ .33 $1.32 $ 1.32
 Reclassified Revenues and Costs (See Note B)
 Telecommunications services
 gross revenues $ 9,792 $ 9,656 $38,805 $38,263
 Total revenues 16,463 16,551 63,089 62,191
 Cost of telecommunications
 services 6,228 6,386 25,276 25,633
 Total costs 9,997 10,146 38,825 38,883
 (A) -- In September 1991, AT&T merged with NCR Corporation. As a result, approximately 71.4 million shares of NCR common stock were each converted into 2.839 shares of AT&T common stock. The merger was accounted for as a pooling of interests and, accordingly, the financial statements of AT&T have been restated for all periods prior to the merger to include NCR.
 (B) -- Effective Dec. 31, 1991, AT&T reclassified access and other interconnection costs to cost of telecommunications services.
 These costs were previously reported as direct reductions in telecommunications services revenues. This change in presentation had no impact on AT&T's gross margin or net income and previously reported amounts have been restated. Revenues and costs in the new format are shown on bottom of income statement.
 (C) -- In 1991, AT&T recorded approximately $4,500 of business restructuring and other charges. The charges were for changes in AT&T's computer operations, for restructuring PBX operations and product- distribution processes, and for other actions. The charges were recorded as a $3,572 provision for business restructuring, $501 of selling, general and administrative expenses, $123 cost of products and systems, and the remainder as other costs and expenses and other income-net. Fourth quarter 1991 includes a charge of $218 ($.14 per share after taxes) for the writedown of AT&T's investment in Compagnie Industriali Riunite S.p.A., an Italian holding company, due to a decline in its market value.
 During 1990, AT&T recorded net charges of $95 for business restructuring activities. Charges of $495 were primarily for restructuring operations that produce microelectronics components and systems and reclaim scrap metal, and reducing the product technician workforce. These charges were offset by a $400 net credit from the adjustment of the reserves established in 1988 for costs associated with the accelerated digitization of AT&T's telecommunications network. The credit reflects reductions in the cost to remove certain equipment offset by costs for force reductions and facility closings. Of the 1990 charges, $106 were recorded in the fourth quarter.
 (D) -- The 12 months ended Dec. 31, 1991, included a gain of $171 on the sales of AT&T's equity interests in Sun Microsystems, Inc., ($.08 per share after taxes) and a gain of $43 from the sale of equity interests in a subsidiary ($.03 per share after taxes).
 -0- 1/23/92
 /CONTACT: Jim Byrnes, 908-221-4011, or at home: 908-689-6040, or Dick Gray, 908-221-5057 or at home: 908-232-3706, both of AT&T/
 (T) CO: AT&T ST: New Jersey IN: TLS SU: ERN

TS -- NY011 -- 2616 01/23/92 08:36 EST
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Date:Jan 23, 1992

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