TIDM58KM
RNS Number : 4090F
AT & T Inc.
22 April 2011
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of report (Date of earliest event reported) April 20,
2011
AT&T INC.
(Exact Name of Registrant as Specified in Charter)
Delaware 1-8610 43-1301883
(State or Other (Commission File Number) (IRS Employer
Jurisdiction of Identification No.)
Incorporation)
208 S. Akard St., Dallas, Texas 75202
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (210)
821-4105
(Former Name or Former Address, if Changed Since Last
Report)
Check the appropriate box below if the Form 8-K filing is
intended to simultaneously satisfy the filing obligation of the
registrant under any of the following provisions (see General
Instruction A.2. below):
o Written communications pursuant to Rule 425 under
the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under
the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b)
under the Exchange Act (17 CFR 240-14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c)
under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition.
The registrant announced on April 20, 2011, its results of
operations for the first quarter of 2011. The text of the press
release and accompanying financial information are attached as
exhibits and incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
The following exhibits are furnished as part of this report:
(d) Exhibits
99.1 Press release dated April 20, 2011 reporting financial
results for the first quarter ended March 31, 2011.
99.2 AT&T Inc. selected financial statements and operating
data.
99.3 Discussion of EBITDA, Free Cash Flow, Free Cash Flow
Yield, and Free Cash Flow after Dividends
Signature
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly authorized.
AT&T INC.
Date: April 20, 2011 By: /s/ John J.
Stephens John J.
Stephens Senior Vice
President and
Controller
For more information, contact:
McCall Butler
917-209-5792
mbutler@attnews.us
10.2 Percent Wireless Revenue Growth, Record Net Adds and
Smartphone Sales Highlight AT&T's First-Quarter Results
-- $0.57 diluted EPS, compared to $0.41 diluted EPS,
and $0.58 per diluted share when excluding significant
items, in first quarter of 2010
-- Consolidated revenues of $31.2 billion in the first
quarter, up more than $700 million, or 2.3 percent,
versus the year-earlier period
-- 10.2 percent growth in wireless revenues, with an
8.6 percent increase in wireless service revenues
-- Best-ever first-quarter increase in total wireless
subscribers, up 2.0 million to reach 97.5 million
subscribers in service, with gains in every category
-- Best-ever first-quarter smartphone sales of more than
5.5 million
-- iPhone activations increased nearly 1 million year
over year to 3.6 million, with 23 percent of subscribers
new to AT&T; iPhone subscriber churn unchanged year
over year
-- Best-ever first-quarter connected device net adds
of 1.3 million
-- Branded computing subscribers (includes tablets, aircards
and other data-only devices) up 421,000, doubling
since the first quarter of 2010 to reach 3.4 million
-- 23.9 percent growth in wireless data revenues, up
almost $1 billion versus the year-earlier quarter
-- Postpaid subscriber ARPU (average monthly revenues
per subscriber) up 2.4 percent to $63.39, the ninth
consecutive quarter with a year-over-year increase
-- Postpaid churn stable excluding the impacts of the
Alltel and Centennial integration
-- Third consecutive quarter of year-over-year growth
in wireline consumer revenues, driven by AT&T U-verse(R)
services
-- 218,000 net gain in AT&T U-verse TV subscribers to
reach 3.2 million in service, with continued high
broadband and voice attach rates
-- 26.1 percent growth in wireline consumer IP data revenues,
driven by AT&T U-verse expansion
-- 175,000 net gain in wireline broadband connections
-- Strategic business services revenues continue to increase,
up 18.8 percent year over year, the best performance
in more than two years
Note: AT&T's first-quarter earnings conference call will be
broadcast live via the Internet at 10 a.m. ET on Wednesday, April
20, 2011, at www.att.com/investor.relations.
DALLAS, April 20, 2011 - AT&T Inc. (NYSE:T) today reported
first-quarter results, highlighted by continued robust mobile
broadband growth with record first-quarter smartphone sales and a
two-fold year-over-year increase in branded computing
subscribers.
"We delivered another robust mobile broadband growth quarter for
a very solid start to the year," said Randall Stephenson, AT&T
chairman and chief executive officer. "We posted double-digit
wireless revenue growth, and we set new first-quarter records in
total net adds, connected device net adds and smartphone sales.
Growth in tablets and other branded computing subscribers also
continues to be strong.
"Mobile broadband networks are driving unprecedented growth and
innovation, and AT&T is playing a leading role in bringing
these benefits to customers," Stephenson said. "That's why our
agreement to acquire T-Mobile USA, which we announced in March, is
so important. Combined, the two companies' spectrum and network
assets will allow us to simultaneously address spectrum issues
created by this increased demand and improve customers' network
experience as volumes continue to grow."
First-Quarter Financial Results
For the quarter ended March 31, 2011, AT&T's consolidated
revenues totaled $31.2 billion, up more than $700 million, or 2.3
percent, versus the year-earlier quarter, marking the company's
fifth consecutive quarter with a year-over-year revenue
increase.
Compared with results for the first quarter of 2010, operating
expenses were $25.4 billion versus $24.6 billion; operating income
was $5.8 billion, down from $6.0 billion; and AT&T's operating
income margin was 18.6 percent, compared to 19.6 percent.
First-quarter 2011 net income attributable to AT&T totaled
$3.4 billion, or $0.57 per diluted share. These results compare
with reported net income attributable to AT&T of $2.5 billion,
or $0.41 per diluted share, in the first quarter of 2010. Excluding
2010 significant items, earnings per share for the first quarter of
2011 was stable with earnings per share of $0.58 per diluted share
in the year-ago first quarter.
First-quarter 2011 cash from operating activities totaled $7.7
billion, and capital expenditures totaled $4.2 billion. Free cash
flow - cash from operating activities minus capital expenditures -
totaled $3.6 billion.
Wireless Operational Highlights
Led by strong performance in mobile broadband in the first
quarter, AT&T delivered continued solid growth in its wireless
business, including record first-quarter subscriber growth and
stable churn. Highlights included:
Mobile Broadband Drives Solid Subscriber Gains. AT&T posted
a net gain in total wireless subscribers of 2.0 million, to reach
97.5 million in service. This included gains in every customer
category. First-quarter net adds reflect adoption of smartphones,
increases in prepaid subscribers, strength in the reseller channel
and a record first quarter for connected devices such as eReaders,
security systems, fleet management systems and a host of other
products. Retail net adds for the quarter include postpaid net adds
of 62,000. Excluding the impacts of the Alltel and Centennial
integration migrations, postpaid net adds were approximately
165,000. Prepaid net adds were 85,000. Connected device net adds
were 1.3 million, and reseller net adds were 561,000.
2
Tablet Sales Drive Branded Computing Subscribers. AT&T had a
strong quarter with branded computing subscribers, a new growth
area for the company that includes tablets, aircards, MiFi devices,
tethering plans and other data-only devices. AT&T added 421,000
of these devices to reach 3.4 million, twice as many as a year ago.
Most of those new subscribers were tablets with 322,000 added in
the quarter. More than 80 percent of those tablets were booked to
the prepaid category.
Sequential Churn Stable. Churn levels were relatively stable
sequentially. Total churn was 1.36 percent versus 1.30 percent in
the first quarter of 2010 and 1.32 percent in the fourth quarter of
2010. Postpaid churn was 1.18 percent, compared to 1.07 percent in
the year-ago first quarter and 1.15 percent in the fourth quarter
of 2010. Excluding the impacts of the Alltel and Centennial
migrations, postpaid churn was 1.12 percent for the quarter,
compared with 1.05 percent in the year-ago quarter and 1.10 percent
in the fourth quarter of 2010.
Smartphone Sales Remain Strong. AT&T had another strong
quarter of smartphone sales. (Smartphones are voice and data
devices with an advanced operating system to better manage data and
Internet access.) More than 5.5 million smartphones were sold in
the first quarter, the third-highest quarter ever and an increase
of more than 60 percent year over year. During the quarter, 3.6
million iPhones were activated. Approximately 65 percent of
postpaid sales were smartphones.
At the end of the quarter, 46.2 percent of AT&T's 68.1
million postpaid subscribers had smartphones, up from 34.7 percent
a year earlier. The average ARPU for smartphones on AT&T's
network is 1.8 times that of the company's other devices. More than
80 percent of smartphone subscribers are on FamilyTalk and/or
business discount plans. Churn levels for these subscribers are
significantly lower than for other postpaid subscribers.
Double-Digit Wireless Revenue Growth.Total wireless revenues,
which include equipment sales, were up 10.2 percent year over year
to $15.3 billion. Wireless service revenues increased 8.6 percent,
to $14.0 billion, in the first quarter.
Wireless Data Revenues Lead Growth.Wireless data revenues -
driven by messaging, Internet access, access to applications and
related services - increased nearly $1 billion, or 23.9 percent,
from the year-earlier quarter to $5.1 billion. AT&T postpaid
wireless subscribers on monthly data plans increased by 18.7
percent over the past year. Versus the year-earlier quarter, total
text messages carried on the AT&T network increased by more
than 25 percent to 179.8 billion, and multimedia messages increased
by 54.2 percent to 3.7 billion.
Postpaid ARPU Expansion. Driven by strong data growth, postpaid
subscriber ARPU increased 2.4 percent versus the year-earlier
quarter to $63.39. This marked the ninth consecutive quarter
AT&T has posted a year-over-year increase in postpaid ARPU.
Excluding the impact of the Alltel merger, postpaid ARPU growth
would have been about 3 percent year over year. Postpaid data ARPU
reached $23.35, up 16.0 percent versus the year-earlier
quarter.
3
Wireless Margins Reflect Strong Smartphone Sales. First-quarter
wireless margins reflected increased operating costs associated
with strong smartphone sales, high customer upgrade levels and the
Alltel and Centennial merger costs, offset in part by improved
operating efficiencies and further revenue growth from the
company's base of high-quality smartphone subscribers. AT&T's
first-quarter wireless operating income margin was 25.8 percent
versus 30.0 percent in the year-earlier quarter, and AT&T's
wireless EBITDA service margin was 39.0 percent, compared with 44.5
percent in the first quarter of 2010. Without customer migration
costs from the Alltel and Centennial mergers, service margin would
have been 40.5 percent. (EBITDA service margin is earnings before
interest, taxes, depreciation and amortization, divided by total
service revenues.) First-quarter wireless operating expenses
totaled $11.4 billion, up 16.8 percent versus the year-earlier
quarter, and wireless operating income was $3.9 billion, down 5.3
percent year over year.
Wireline Operational Highlights
AT&T's first-quarter wireline results were highlighted by
continued growth in consumer revenues, sustained growth in revenues
from strategic business services and solid cost management.
Highlights included:
Growth in Wireline Consumer Revenues Continues. Driven by
strength in IP data services, revenue from residential customers
totaled $5.3 billion in the first quarter, up 0.5 percent year over
year, the third consecutive quarter of year-over-year growth.
U-verse Drives Consumer Growth. AT&T U-verse TV added
218,000 subscribers to reach 3.2 million in service. In the first
quarter, the AT&T U-verse High Speed Internet attach rate
continued to run above 90 percent and nearly 60 percent of
subscribers took AT&T U-verse Voice. More than three-fourths of
AT&T U-verse TV subscribers have a triple- or quad-play option
from AT&T. ARPU for U-verse triple-play customers was $168, up
14.3 percent year over year.
AT&T's U-verse deployment now reaches 28 million living
units. Companywide penetration of eligible living units is 15.3
percent, and across areas marketed to for 30 months or more,
overall penetration is 23.8 percent. AT&T's total video
subscribers, which combine the company's U-verse and bundled
satellite customers, reached 5.1 million at the end of the quarter,
representing 20.6 percent of households served.
Wireline Broadband Growth Remains Strong. Driven by strength in
AT&T U-verse High Speed Internet service and standalone
broadband, AT&T posted a 175,000 net gain in wireline broadband
connections. About two-thirds of consumers have a broadband plan of
3 Mbps or higher.
IP Data Growth Transforms Consumer. Increased AT&T U-verse
penetration and a significant number of subscribers on triple- or
quad-play options drove 26.1 percent year-over-year growth in IP
revenues from residential customers (broadband, U-verse TV and
U-verse Voice). IP revenues now represent 46.9 percent of total
wireline consumer revenue, up from 37.4 percent in the first
quarter of 2010.
4
Growth in Revenues Per Household. Wireline revenues per
household served increased 6.5 percent versus the year-earlier
first quarter and were up 1.4 percent sequentially (average revenue
per household is total consumer wireline revenue divided by the
average monthly households in service), driven by AT&T U-verse
services. This marked AT&T's 13th consecutive quarter with
year-over-year growth in wireline consumer revenues per
household.
Consumer Connection Trends. In the first quarter, AT&T
posted a decline in total consumer revenue connections due
primarily to expected declines in traditional voice access lines,
consistent with broader industry trends and somewhat offset by
increases in U-verse TV, broadband and VoIP (Voice over Internet
Protocol) connections. AT&T U-verse Voice connections increased
by 181,000 in the quarter and 716,000 over the past four quarters.
Total consumer revenue connections at the end of the first quarter
were 43.1 million, compared with 45.0 million at the end of the
first quarter of 2010 and 43.4 million at the end of the fourth
quarter of 2010.
Strongest Growth in Strategic Business Services in More than Two
Years. Revenues from new-generation capabilities that lead
AT&T's most advanced business solutions - including Ethernet,
VPNs, hosting, IP conferencing and application services - grew 18.8
percent versus the year-earlier quarter, their strongest growth in
more than two years, continuing AT&T's strong trends in this
category. Total business revenues were $9.3 billion, a decline of
4.5 percent versus the year-earlier quarter and down 2.0 percent
sequentially, reflecting economic weakness in voice and legacy data
products and the third-quarter 2010 sale of the company's Japan
assets. When normalized for the Japan sale, total business revenues
declined 3.6 percent, about the same rate as normalized results for
the fourth quarter of 2010 and improved from the year-ago quarter.
Business service revenues, which exclude CPE, declined 4.4 percent
year over year and were down slightly sequentially.
Growth in Business IP Revenues. Total business IP data revenues
grew 8.5 percent versus the year-earlier first quarter, led by
growth in VPN revenues. More than 70 percent of AT&T's frame
customers have made the transition to IP-based solutions, which
allow them to easily add managed services such as network security,
cloud services and IP conferencing on top of their infrastructures.
Total business data revenue growth was 0.3 percent when compared to
a year earlier.
Wireline Operating Expenses Down 2.7 Percent Year Over Year.
AT&T's first-quarter wireline operating income margin was 11.5
percent, down slightly compared to 12.0 percent in the year-earlier
quarter and 13.0 percent in the fourth quarter of 2010. Improved
consumer revenue trends and execution of cost initiatives helped to
partially offset declines in voice revenues and storm-related costs
in the West. First-quarter total wireline revenues were $15.0
billion, down 3.2 percent versus the year-earlier quarter.
First-quarter wireline operating expenses were $13.2 billion, down
2.7 percent versus the first quarter of 2010 and up 0.4 percent
sequentially. Wireline operating income totaled $1.7 billion,
compared to $1.9 billion in the first quarter of 2010 and $2.0
billion in the fourth quarter of 2010.
5
Web Site Links: Related Media Kits:
-------------------------------------- --------------------------------------
AT&T Web Site AT&T 2010 Annual Report AT&T Investor
AT&T Investor Relations Relations Events and Presentations
2011 AT&T Events Calendar
Related Releases: Related Fact Sheets:
-------------------------------------- --------------------------------------
AT&T Declares Quarterly Dividend AT&T AT&T Historical Dividend Data
to Release First-Quarter 2011 Earnings
April 20 AT&T to Hold 2011 Annual
Meeting of Stockholders in Little Rock
AT&T Reports Record 2.8 Million
Wireless Net Adds, Strong U-verse
Sales, Continued Revenue Gains in the
Fourth Quarter
*AT&T products and services are provided or offered by
subsidiaries and affiliates of AT&T Inc. under the AT&T
brand and not by AT&T Inc.
About AT&T
AT&T Inc. (NYSE:T) is a premier communications holding
company. Its subsidiaries and affiliates - AT&T operating
companies - are the providers of AT&T services in the United
States and around the world. With a powerful array of network
resources that includes the nation's fastest mobile broadband
network, AT&T is a leading provider of wireless, Wi-Fi, high
speed Internet and voice services. A leader in mobile broadband,
AT&T also offers the best wireless coverage worldwide, offering
the most wireless phones that work in the most countries. It also
offers advanced TV services under the AT&T U-verse(R) and
AT&T | DIRECTV brands. The company's suite of IP-based business
communications services is one of the most advanced in the world.
In domestic markets, AT&T Advertising Solutions and AT&T
Interactive are known for their leadership in local search and
advertising.
Additional information about AT&T Inc. and the products and
services provided by AT&T subsidiaries and affiliates is
available at http://www.att.com. This AT&T news release and
other announcements are available at http://www.att.com/newsroom
and as part of an RSS feed at www.att.com/rss. Or follow our news
on Twitter at @ATT. Find us on Facebook at www.Facebook.com/ATT to
discover more about our consumer and wireless services or at
www.Facebook.com/ATTSmallBiz to discover more about our small
business services.
(c) 2011 AT&T Intellectual Property. All rights reserved.
Mobile broadband not available in all areas. AT&T, the AT&T
logo and all other marks contained herein are trademarks of
AT&T Intellectual Property and/or AT&T affiliated
companies. All other marks contained herein are the property of
their respective owners.
Cautionary Language Concerning Forward-Looking Statements
Information set forth in this news release contains financial
estimates and other forward-looking statements that are subject to
risks and uncertainties, and actual results may differ materially.
A discussion of factors that may affect future results is contained
in AT&T's filings with the Securities and Exchange Commission.
AT&T disclaims any obligation to update or revise statements
contained in this news release based on new information or
otherwise. This news release may contain certain non-GAAP financial
measures. Reconciliations between the non-GAAP financial measures
and the GAAP financial measures are available on the company's
website at www.att.com/investor.relations. Accompanying financial
statements follow.
6
NOTE: EBITDA is defined as earnings before interests, taxes,
depreciation and amortization. EBITDA differs from Segment
Operating Income (loss), as calculated in accordance with generally
accepted accounting principles (GAAP), in that it excludes
depreciation and amortization. EBITDA does not give effect to cash
used for debt service requirements and thus does not reflect
available funds for distributions, reinvestment or other
discretionary uses. EBITDA is not presented as an alternative
measure of operating results or cash flows from operations, as
determined in accordance with GAAP. Our calculation of EBITDA, as
presented, may differ from similarly titled measures reported by
other companies.
NOTE: Free cash flow is defined as cash from operations minus
capital expenditures. We believe this metric provides useful
information to our investors because management regularly reviews
free cash flow as an important indicator of how much cash is
generated by normal business operations, including capital
expenditures, and makes decisions based on it. Management also
views it as a measure of cash available to pay debt and return cash
to shareowners.
NOTE: Adjusted Operating Income and Adjusted Operating Income
Margin are non-GAAP financial measures calculated by excluding from
operating revenues and operating expenses significant items that
are non-operational or non-recurring in nature. Management believes
that these measures provide relevant and useful information to
investors and other users of our financial data in evaluating the
effectiveness of our operations and underlying business trends.
Adjusted Operating Income and Adjusted Operating Income Margin
should be considered in addition to, but not as a substitute for,
other measures of financial performance reported in accordance with
GAAP. Our calculation of Adjusted Operating Income, as presented,
may differ from similarly titled measures reported by other
companies.
7
Exhibit 99.2
Financial Data
AT&T Inc.
--------------------------------- ----------- ----------- -----
Consolidated Statements of Income
Dollars in millions except per
share amounts
--------------------------------- ----------- ----------- -----
Unaudited Three Months Ended
-------------------------------------
3/31/2011 3/31/2010 % Chg
--------------------------------- ----------- ----------- ---------
Operating Revenues
Wireless service $ 13,961 $ 12,850 8.6%
Data 7,180 6,651 8.0%
Voice 6,551 7,483 -12.5%
Directory 868 1,041 -16.6%
Other 2,687 2,505 7.3%
--------------------------------- ------- ------- -----
Total Operating Revenues 31,247 30,530 2.3%
--------------------------------- ------- ------- -----
Operating Expenses
Cost of services and sales
(exclusive of depreciation and
amortization shown separately
below) 13,403 12,383 8.2%
Selling, general and
administrative 7,452 7,396 0.8%
Depreciation and amortization 4,584 4,780 -4.1%
--------------------------------- ------- ------- -----
Total Operating Expenses 25,439 24,559 3.6%
--------------------------------- ------- ------- -----
Operating Income 5,808 5,971 -2.7%
--------------------------------- ------- ------- -----
Interest Expense 846 765 10.6%
Equity in Net Income of
Affiliates 249 217 14.7%
Other Income (Expense) - Net 59 (22) -
--------------------------------- ------- ------- -----
Income from Continuing Operations
Before Income Taxes 5,270 5,401 -2.4%
Income Tax Expense 1,802 2,863 -37.1%
--------------------------------- ------- ------- -----
Income from Continuing Operations 3,468 2,538 36.6%
--------------------------------- ------- ------- -----
Income from Discontinued
Operations, net of tax - 2 -
--------------------------------- ------- ------- -----
Net Income 3,468 2,540 36.5%
--------------------------------- ------- ------- -----
Less: Net Income Attributable to
Noncontrolling Interest (60) (87) 31.0%
--------------------------------- ------- ------- -----
Net Income Attributable to AT&T $ 3,408 $ 2,453 38.9%
================================= ======= ======= =====
Basic Earnings Per Share from
Continuing
Operations Attributable to AT&T $ 0.57 $ 0.42 35.7%
Basic Earnings Per Share from
Discontinued
Operations Attributable to AT&T - - -
------- -------
Basic Earnings Per Share
Attributable to AT&T $ 0.57 $ 0.42 35.7%
======= =======
Weighted Average Common
Shares Outstanding (000,000) 5,925 5,905 0.3%
Diluted Earnings Per Share from
Continuing
Operations Attributable to AT&T $ 0.57 $ 0.41 39.0%
Diluted Earnings Per Share from
Discontinued
Operations Attributable to AT&T - - -
------- -------
Diluted Earnings Per Share
Attributable to AT&T $ 0.57 $ 0.41 39.0%
======= =======
Weighted Average Common
Shares Outstanding with Dilution
(000,000) 5,945 5,935 0.2%
Financial Data
AT&T Inc.
------------------------------- ----------- ----------- -----
Statements of Segment Income
Dollars in millions
------------------------------- ----------- ----------- -----
Unaudited
Three Months Ended
-------------------------------------------
Wireless 3/31/2011 3/31/2010 % Chg
------------------------------- ----------- ----------- ---------
Segment Operating Revenues
Service $ 13,961 $ 12,850 8.6%
Equipment 1,348 1,047 28.7%
------------------------------- ------- ------- -----
Total Segment Operating
Revenues 15,309 13,897 10.2%
------------------------------- ------- ------- -----
Segment Operating Expenses
Operations and support 9,858 8,173 20.6%
Depreciation and amortization 1,505 1,558 -3.4%
------------------------------- ------- ------- -----
Total Segment Operating
Expenses 11,363 9,731 16.8%
------------------------------- ------- ------- -----
Segment Operating Income 3,946 4,166 -5.3%
Equity in Net Income (Loss) of
Affiliates (4) 12 -
------------------------------- ------- ------- -----
Segment Income $ 3,942 $ 4,178 -5.6%
=============================== ======= ======= =====
Segment Operating Income Margin 25.8% 30.0%
Wireline
------------------------------- ------- ------- -----
Segment Operating Revenues
Data $ 7,180 $ 6,651 8.0%
Voice 6,551 7,483 -12.5%
Other 1,219 1,312 -7.1%
------------------------------- ------- ------- -----
Total Segment Operating
Revenues 14,950 15,446 -3.2%
------------------------------- ------- ------- -----
Segment Operating Expenses
Operations and support 10,266 10,512 -2.3%
Depreciation and amortization 2,958 3,076 -3.8%
------------------------------- ------- ------- -----
Total Segment Operating
Expenses 13,224 13,588 -2.7%
------------------------------- ------- ------- -----
Segment Operating Income 1,726 1,858 -7.1%
Equity in Net Income of
Affiliates - 5 -
------------------------------- ------- ------- -----
Segment Income $ 1,726 $ 1,863 -7.4%
=============================== ======= ======= =====
Segment Operating Income Margin 11.5% 12.0%
Advertising Solutions
------------------------------- ------- ------- -----
Segment Operating Revenues $ 868 $ 1,041 -16.6%
------------------------------- ------- ------- -----
Segment Operating Expenses
Operations and support 573 664 -13.7%
Depreciation and amortization 105 138 -23.9%
------------------------------- ------- ------- -----
Total Segment Operating
Expenses 678 802 -15.5%
------------------------------- ------- ------- -----
Segment Income $ 190 $ 239 -20.5%
=============================== ======= ======= =====
Segment Income Margin 21.9% 23.0%
Other
------------------------------- ------- ------- -----
Segment Operating Revenues $ 120 $ 146 -17.8%
Segment Operating Expenses 174 438 -60.3%
------------------------------- ------- ------- -----
Segment Operating Income (Loss) (54) (292) 81.5%
Equity in Net Income of
Affiliates 253 200 26.5%
------------------------------- ------- ------- -----
Segment Income (Loss) from
Continuing Operations $ 199 $ (92) -
=============================== ======= ======= =====
Financial Data
AT&T Inc.
----------------------------------------------- ----------- --------
Consolidated Balance Sheets
Dollars in millions except per share amounts
----------------------------------------------- ----------- --------
3/31/11 12/31/10
Unaudited
----------------------------------------------- ----------- --------
Assets
Current Assets
Cash and cash equivalents $ 1,391 $ 1,437
Accounts receivable - net of allowances for
doubtful accounts of $949 and $957 13,246 13,610
Prepaid expenses 1,674 1,458
Deferred income taxes 1,157 1,170
Other current assets 2,269 2,276
----------------------------------------------- ------- -------
Total current assets 19,737 19,951
----------------------------------------------- ------- -------
Property, Plant and Equipment - Net 103,369 103,196
Goodwill 73,602 73,601
Licenses 50,396 50,372
Customer Lists and Relationships - Net 4,154 4,708
Other Intangible Assets - Net 5,423 5,440
Investments in Equity Affiliates 4,845 4,515
Other Assets 6,559 6,705
----------------------------------------------- ------- -------
Total Assets $ 268,085 $268,488
=============================================== ======= =======
Liabilities and Stockholders' Equity
Current Liabilities
Debt maturing within one year $ 6,902 $ 7,196
Accounts payable and accrued liabilities 18,349 20,055
Advanced billing and customer deposits 3,959 4,086
Accrued taxes 1,499 72
Dividends payable 2,545 2,542
----------------------------------------------- ------- -------
Total current liabilities 33,254 33,951
----------------------------------------------- ------- -------
Long-Term Debt 58,126 58,971
----------------------------------------------- ------- -------
Deferred Credits and Other Noncurrent
Liabilities
Deferred income taxes 23,149 22,070
Postemployment benefit obligation 28,510 28,803
Other noncurrent liabilities 12,203 12,743
----------------------------------------------- ------- -------
Total deferred credits and other noncurrent
liabilities 63,862 63,616
----------------------------------------------- ------- -------
Stockholders' Equity
Common stock 6,495 6,495
Additional paid-in capital 91,636 91,731
Retained earnings 32,649 31,792
Treasury stock (20,949) (21,083)
Accumulated other comprehensive income 2,713 2,712
Noncontrolling interest 299 303
----------------------------------------------- ------- -------
Total stockholders' equity 112,843 111,950
----------------------------------------------- ------- -------
Total Liabilities and Stockholders' Equity $ 268,085 $268,488
=============================================== ======= =======
Financial Data
AT&T Inc.
-------------------------------------- --------------- --------------
Consolidated Statements of Cash Flows
Dollars in millions
-------------------------------------- --------------- --------------
Unaudited Three months ended March 31,
2011 2010
-------------------------------------- --------------- --------------
Operating Activities
Net income $ 3,468 $ 2,540
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization 4,584 4,780
Undistributed earnings from
investments in equity affiliates (233) (201)
Provision for uncollectible accounts 292 350
Deferred income tax expense and
noncurrent
unrecognized tax benefits 731 1,609
Net (gain) loss from impairment and
sale of investments (41) 50
Changes in operating assets and
liabilities:
Accounts receivable 72 395
Other current assets (196) 92
Accounts payable and accrued
liabilities (406) (2,043)
Net income attributable to
noncontrolling interest (60) (87)
Other - net (479) (247)
-------------------------------------- ----------- ----------
Total adjustments 4,264 4,698
-------------------------------------- ----------- ----------
Net Cash Provided by Operating
Activities 7,732 7,238
-------------------------------------- ----------- ----------
Investing Activities
Construction and capital expenditures
Capital expenditures (4,133) (3,148)
Interest during construction (35) (184)
Acquisitions, net of cash acquired (54) (178)
Dispositions 11 1
(Purchases) and sales of securities,
net 127 (20)
Other 9 7
-------------------------------------- ----------- ----------
Net Cash Used in Investing Activities (4,075) (3,522)
-------------------------------------- ----------- ----------
Financing Activities
Net change in short-term borrowings
with
original maturities of three months or
less (36) 323
Repayment of long-term debt (1,264) (2,512)
Issuance of treasury shares 18 3
Dividends paid (2,540) (2,479)
Other 119 (244)
-------------------------------------- ----------- ----------
Net Cash Used in Financing Activities (3,703) (4,909)
-------------------------------------- ----------- ----------
Net decrease in cash and cash
equivalents (46) (1,193)
Cash and cash equivalents beginning of
year 1,437 3,741
-------------------------------------- ----------- ----------
Cash and Cash Equivalents End of
Period $ 1,391 $ 2,548
====================================== =========== ==========
Financial Data
AT&T Inc.
------------------------------- ----------- ----------- -----
Supplementary Operating and
Financial Data
Dollars in millions except per
share amounts
------------------------------- ----------- ----------- -----
Unaudited Three Months Ended
-------------------------------------------
3/31/2011 3/31/2010 % Chg
------------------------------- ----------- ----------- ---------
Wireless
Volumes (000)
------------------------------- ----------- ----------- -----
Total 97,519 86,987 12.1%
------------------------------- ------- ------- -----
Postpaid6 68,062 65,108 4.5%
Prepaid6 6,613 5,377 23.0%
Reseller6 12,241 10,717 14.2%
Connected Devices6 10,603 5,785 83.3%
Wireless Net Adds (000)
------------------------------- ------- ------- -----
Total 1,984 1,857 6.8%
------------------------------- ------- ------- -----
Postpaid6 62 512 -87.9%
Prepaid6 85 24 -
Reseller6 561 269 -
Connected Devices6 1,276 1,052 21.3%
M&A Activity, Partitioned
Customers and Other Adjs. (1) 10
Wireless Churn
Postpaid Churn6 1.18% 1.07% 11 BP
Total Churn6 1.36% 1.30% 6 BP
Other
Licensed POPs (000,000) 313 307 2.0%
In-Region Wireline1
Voice
------------------------------- ------- -------
Total Wireline Voice
Connections 42,457 47,385 -10.4%
------------------------------- ------- -------
Net Change (1,106) (1,103) -0.3%
Broadband
------------------------------- ------- -------
Total Wireline Broadband
Connections 16,485 16,044 2.7%
------------------------------- ------- -------
Net Change 175 255 -31.4%
Video
U-verse 3,205 2,296 39.6%
Satellite 1,886 2,127 -11.3%
------------------------------- ------- -------
Total Video Connections 5,091 4,423 15.1%
------------------------------- ------- -------
Net Change 174 184 -5.4%
Consumer Revenue Connections
Broadband3 14,515 13,989 3.8%
Video Connections4 5,085 4,422 15.0%
Voice2 23,479 26,633 -11.8%
------- -------
Total Consumer Revenue
Connections 43,079 45,044 -4.4%
======= =======
Net Change (348) (243) -43.2%
AT&T Inc.
Construction and capital
expenditures
Capital expenditures $ 4,133 $ 3,148 31.3%
Interest during
construction $ 35 $ 184 -81.0%
Dividends Declared per
Share $ 0.43 $ 0.42 2.4%
End of Period Common Shares
Outstanding (000,000) 5,918 5,909 0.2%
Debt Ratio5 36.6% 40.5% -390 BP
Total Employees 260,690 276,280 -5.6%
1 In-region wireline represents access lines served
by AT&T's incumbent local exchange companies.
2 Includes consumer U-verse Voice over Internet Protocol
connections of 1,861 as of March 31, 2011.
3 Consumer wireline broadband connections include DSL
lines, U-verse High Speed Internet access and satellite
broadband.
4 Video connections include sales under agency agreements
with EchoStar and DirecTV customers and U-verse connections.
5 Total long-term debt plus debt maturing within one
year divided by total debt plus total stockholders'
equity.
6 Prior year amounts restated to conform to current
period reporting methodology.
Note: For the end of 1Q11, total switched access lines
were 40,596, retail business switched access lines
totaled 16,656, and wholesale
and coin switched access lines totaled
2,322.
Financial Data
AT&T Inc.
Non-GAAP
Wireless
Reconciliation
--------------- ----------- ----------- ----------- ------------ -----------
Wireless
Segment EBITDA
Dollars in
millions
Unaudited
Three Months Ended
3/31/2010 6/30/2010 9/30/2010 12/31/2010 3/31/2011
----------- ----------- ----------- ------------ -----------
Segment
Operating
Revenues
Service $ 12,850 $ 13,186 $ 13,675 $ 13,799 $ 13,961
Equipment 1,047 1,056 1,505 1,382 1,348
--------------- ------- ------- ------- -------- -------
Total Segment
Operating
Revenues 13,897 14,242 15,180 15,181 15,309
--------------- ------- ------- ------- -------- -------
Segment
Operating
Expenses
Operations and
support 8,173 8,553 10,032 9,988 9,858
Depreciation
and
amortization 1,558 1,578 1,640 1,721 1,505
--------------- ------- ------- ------- -------- -------
Total Segment
Operating
Expenses 9,731 10,131 11,672 11,709 11,363
--------------- ------- ------- ------- -------- -------
Segment
Operating
Income 4,166 4,111 3,508 3,472 3,946
Plus:
Depreciation
and
amortization 1,558 1,578 1,640 1,721 1,505
--------------- ------- ------- ------- -------- -------
EBITDA 5,724 5,689 5,148 5,193 5,451
--------------- ------- ------- ------- -------- -------
EBITDA as a %
of Service
Revenue 44.5% 43.1% 37.6% 37.6% 39.0%
EBITDA is defined as Earnings Before Interest, Taxes,
Depreciation and Amortization. Annual Service EBITDA Margin is
calculated as the sum of quarterly EBITDA divided by the sum of
quarterly Service Revenues.
Financial Data
AT&T Inc.
Non-GAAP Financial Reconciliation
-------------------------------------------- ----------- -------
Free Cash Flow
Dollars in Millions
Unaudited
Three Months Ended
March 31,
2010 2011
-------------------------------------------- ----------- -------
Net cash provided by operating activities $ 7,238 $ 7,732
Less: Construction and capital expenditures (3,332) (4,168)
Free Cash Flow $ 3,906 $ 3,564
-------------------------------------------- ------- ------
Free cash flow is defined as cash from operations minus capital
expenditures. We believe these metrics provide useful information
to our investors because management regularly reviews free cash
flow as an important indicator of how much cash is generated by
normal business operations, including capital expenditures, and
makes decisions based on it. Management also views free cash flow
as a measure of cash available to pay debt and return cash to
shareowners.
Free Cash Flow After Dividends
Dollars in Millions
Unaudited
Three Months Ended
3/31/2010 3/31/2011
-------------------------------------------- ----------- -----------
Net cash provided by operating activities $ 7,238 $ 7,732
Less: Construction and capital expenditures (3,332) (4,168)
Free Cash Flow 3,906 3,564
-------------------------------------------- ------- -------
Less: Dividends paid (2,479) (2,540)
Free Cash Flow After Dividends $ 1,427 $ 1,024
-------------------------------------------- ------- -------
Financial Data
AT&T Inc.
Non-GAAP Financial Reconciliation
--------------------------------------- ------------- ----------
Annualized Net Debt-to-EBITDA Ratio
Dollars in millions
Unaudited
Three Months Ended
3/31/2011 2011 YTD
--------------------------------------- ------------- ----------
Operating Revenues $ 31,247 $ 31,247
Operating Expenses 25,439 25,439
Total Operating Income 5,808 5,808
Add Back Depreciation and Amortization 4,584 4,584
Total Consolidated EBITDA 10,392 10,392
Annualized Consolidated EBITDA* 41,568
End-of-period current debt 6,902
End-of-period long-term debt 58,126
Total End-of-Period Debt 65,028
(Premiums) Discounts on long-term debt (163)
Normalized Debt Balance 64,865
Less Cash and Cash Equivalents 1,391
Normalized Net Debt Balance 63,474
Annualized Net Debt-to-EBITDA Ratio 1.53
*EBITDA is annualized by dividing YTD EBITDA by YTD number of
quarters and multiplying by four.
Note: 4Q11 EBITDA will exclude the impact of benefit plan
actuarial gains/losses in order to better represent AT&T's
operational performance.
EXHIBIT 99.3
EBITDA DISCUSSION
EBITDA is defined as earnings before interest, taxes,
depreciation and amortization. EBITDA service margin is calculated
as EBITDA divided by service revenues. EBITDA differs from Segment
Operating Income (Loss), as calculated in accordance with GAAP, in
that it excludes depreciation and amortization. EBITDA does not
give effect to cash used for debt service requirements and thus
does not reflect available funds for distributions, reinvestment or
other discretionary uses. EBITDA is not presented as an alternative
measure of operating results or cash flows from operations, as
determined in accordance with generally accepted accounting
principles. Our calculation of EBITDA, as presented, may differ
from similarly titled measures reported by other companies.
We believe these measures are relevant and useful information to
our investors as they are part of AT&T Mobility's internal
management reporting and planning processes and are important
metrics that AT&T Mobility's management uses to evaluate the
operating performance of its regional operations. These measures
are used by management as a gauge of AT&T Mobility's success in
acquiring, retaining and servicing subscribers because we believe
these measures reflect AT&T Mobility's ability to generate and
grow subscriber revenues while providing a high level of customer
service in a cost-effective manner. Management also uses these
measures as a method of comparing AT&T Mobility's performance
with that of many of its competitors. The financial and operating
metrics which affect EBITDA include the key revenue and expense
drivers for which AT&T Mobility's operating managers are
responsible and upon which we evaluate their performance.
EBITDA does not give effect to cash used for debt service
requirements and thus does not reflect available funds for
distributions, reinvestment or other discretionary uses. EBITDA
excludes other income (expense) - net, minority interest in
earnings of consolidated entities and equity in net income (loss)
of affiliates, as these do not reflect the operating results of
AT&T Mobility's subscriber base and its national footprint that
AT&T Mobility utilizes to obtain and service its customers.
Equity in net income (loss) of affiliates represents AT&T
Mobility's proportionate share of the net income (loss) of
affiliates in which it exercises significant influence, but does
not control. As AT&T Mobility does not control these entities,
our management excludes these results when evaluating the
performance of our primary operations. EBITDA excludes interest
expense and the provision for income taxes. Excluding these items
eliminates the expenses associated with its capitalization and tax
structures. Finally, EBITDA excludes depreciation and amortization,
in order to eliminate the impact of capital investments.
We believe EBITDA as a percentage of service revenues to be a
more relevant measure of AT&T Mobility's operating margin than
EBITDA as a percentage of total revenue. AT&T Mobility
generally subsidizes a portion of its handset sales, all of which
are recognized in the period in which AT&T Mobility sells the
handset. This results in a disproportionate impact on its margin in
that period. Management views this equipment subsidy as a cost to
acquire or retain a subscriber, which is recovered through the
ongoing service revenue that is generated by the subscriber.
AT&T Mobility also uses service revenues to calculate margin to
facilitate comparison, both internally and externally with its
competitors, as they calculate their margins using services revenue
as well.
There are material limitations to using these non-GAAP financial
measures. EBITDA and EBITDA service margin, as we have defined
them, may not be comparable to similarly titled measures reported
by other companies. Furthermore, these performance measures do not
take into account certain significant items, including depreciation
and amortization, interest expense, tax expense and equity in net
income (loss) of affiliates, which directly affect AT&T
Mobility's net income. Management compensates for these limitations
by carefully analyzing how its competitors present performance
measures that are similar in nature to EBITDA 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. EBITDA and EBITDA
service margin should be considered in addition to, but not as a
substitute for, other measures of financial performance reported in
accordance with GAAP.
FREE CASH FLOW DISCUSSION
Free cash flow is defined as cash from operations minus capital
expenditures. Free cash flow after dividends is defined as cash
from operations minus capital expenditures and dividends. Free cash
flow yield is defined as cash from continuing operations less
capital expenditures as a percentage of market capitalization
computed on the last trading day of the quarter. Market
capitalization is computed by multiplying the end of period stock
price by the end of period shares outstanding. We believe these
metrics provide useful information to our investors because
management monthly reviews free cash flow as an important indicator
of how much cash is generated by normal business operations,
including capital expenditures, and makes decisions based on it.
Management also views it as a measure of cash available to pay debt
and return cash to shareowners.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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