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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Atlantic Coal | LSE:ATC | London | Ordinary Share | GB00B142G994 | ORD 0.07P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0.09 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
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AT&T Announces Fourth-Quarter Results
* Fourth-quarter earnings per diluted share of $0.78
* Revenue for the fourth quarter of $7.3 billion
* Fourth-quarter operating income of $1.2 billion
BEDMINSTER, N.J., Jan. 20 -- AT&T (NYSE: T) today reported its fourth-
quarter and full-year 2004 results. The company reported net income of $625
million, or earnings per diluted share of $0.78, for the fourth quarter of 2004.
The company's current quarter net income included an after-tax depreciation
benefit from its third-quarter 2004 asset impairment charges of $337 million, or
$0.42 per diluted share. The company's current-quarter net income compares to
net income of $340 million, or earnings per diluted share of $0.43, in the
fourth quarter of 2003.
"AT&T's results reflect the solid progress we've made in transforming this
company for the long-term, and the considerable momentum we've established
entering 2005," said AT&T Chairman and Chief Executive Officer David W.
Dorman. "While the pricing environment in our industry remains challenging,
we're encouraged by the strengthening of AT&T's competitive position in the
enterprise market in recent quarters."
AT&T reported fourth-quarter 2004 consolidated revenue of $7.3 billion,
which included $5.5 billion from AT&T Business and $1.8 billion from AT&T
Consumer. Consolidated revenue declined 10.2 percent versus the fourth
quarter of 2003, primarily due to continued declines in long-distance (LD)
voice and data revenue, partially offset by an increase in bundled services
revenue and solid growth in key services in the enterprise market, such as
Internet Protocol & Enhanced services (IP&E-services). AT&T's fourth-quarter
2004 consolidated operating income was $1.2 billion, resulting in a
consolidated operating margin of 16.0 percent.
The company reported consolidated EBITDA, excluding net restructuring and
other charges, of $1.8 billion in the fourth quarter of 2004 for a margin of
25.2 percent. This compares to consolidated EBITDA of $2.0 billion and a
margin of 24.2 percent in the prior-year fourth quarter, on the same basis.
The company reported that success in cutting costs, including savings from
ongoing headcount reduction efforts and strategic reductions in marketing
expenses, contributed to strong margins for the quarter.
Full-Year 2004 Results
For the full year, AT&T reported a net loss of $6.1 billion, or loss per
diluted share of $7.68. The company's net loss included significant non-cash
asset impairment charges, as well as net restructuring and other charges, the
majority of which were taken during the third quarter. This compares to net
income of $1.9 billion, or earnings per diluted share of $2.36 in 2003.
Excluding the asset impairment and net restructuring and other charges
taken during 2004, and their associated tax benefits, adjusted net income for
the year was $1.8 billion, or adjusted earnings per diluted share of $2.25.
In addition, due to the asset impairment, the company received an after-tax
benefit from lower depreciation of $669 million, or $0.85 per diluted share.
A reconciliation of reported earnings per diluted share to adjusted earnings
per diluted share is provided in the appendices on page 12 of this document.
AT&T reported full-year 2004 consolidated revenue of $30.5 billion, which
included $22.6 billion from AT&T Business and $7.9 billion from AT&T Consumer.
This represents a consolidated revenue decline of 11.6 percent versus 2003,
primarily due to continued declines in LD voice and data revenue, partially
offset by an increase in bundled services revenue and growth in key services
in the enterprise market, such as IP&E-services.
AT&T's 2004 consolidated operating loss was $9.5 billion, including $12.8
billion in asset impairment and net restructuring and other charges taken in
2004, as well as a depreciation benefit of $1.1 billion due to the asset
impairment charges taken in the third quarter of 2004. The company reported
full-year consolidated EBITDA, excluding asset impairment and net
restructuring and other charges, of $7.0 billion and a margin of 22.9 percent.
This compares to consolidated EBITDA of $8.7 billion and a margin of 25.3
percent in 2003, on the same basis.
2005 OUTLOOK
AT&T also announced its full-year 2005 expectations:
* Consolidated revenue between $25 billion and $26 billion
* Year-over-year decline of several hundred million dollars in small
business revenue, primarily reflected within AT&T Business local voice,
as a result of changes in the regulatory environment
* Consolidated operating income margin in the low double-digits,
excluding any net restructuring and other charges
* Total capital expenditures of approximately $1.5 billion
* Up to $200 million of incremental expenses in the "Corporate & Other"
group, excluding any net restructuring and other charges, primarily
related to higher pension plan costs
AT&T UNIT HIGHLIGHTS
AT&T Business
* Revenue was $5.5 billion, a decline of 7.4 percent from the prior-year
fourth quarter. Pricing pressure and continued declines in retail
volumes negatively affected revenue performance. Partially offsetting
these declines was a reciprocal compensation settlement as well as
strength in IP&E-services. Full-year revenue declined by 9.9 percent
to $22.6 billion.
* Long-distance voice revenue decreased 13.5 percent from the prior-year
fourth quarter, driven by continued pricing pressure in both the retail
and wholesale businesses, as well as a continued decline in retail
volumes. Total volumes were down slightly versus the prior-year fourth
quarter. Full-year LD voice revenue declined 15.0 percent compared to
2003, while volumes were essentially flat.
* Local voice revenue grew 26.6 percent for the fourth quarter and 12.7
percent for the full year versus the same prior-year periods. Revenue
was positively impacted by a reciprocal compensation settlement that
increased revenue by approximately $97 million. Local access lines
totaled nearly 4.7 million at the end of the current period,
representing an increase of approximately 11,000 lines compared with
the third quarter of 2004.
* Data revenue declined 13.7 percent from the prior-year fourth quarter.
Revenue was negatively affected by pricing pressure and technology
migration. On a full-year basis, data revenue decreased by 12.2
percent from the prior year.
* IP&E-services revenue grew 13.0 percent over the prior-year fourth
quarter. The year-over-year growth was primarily driven by strength in
Enhanced Virtual Private Network and IP-enabled frame. Full-year
revenue grew by 11.0 percent over the prior year.
* Outsourcing, professional services and other revenue declined 3.1
percent from the prior-year fourth quarter due to terminating
outsourcing contracts and customers reducing scope, partially offset by
strength in equipment sales. Full-year revenue declined by 11.6
percent from the prior year.
* Fourth-quarter operating income was $781 million, yielding a margin of
14.3 percent. The fourth-quarter operating income reflects a net
depreciation benefit of $0.5 billion as a result of the third-quarter
asset impairment charges. The full-year 2004 operating loss was $10.1
billion, including asset impairment and net restructuring and other
charges of $12.0 billion, as well as a net depreciation benefit of $1.0
billion realized in the second half of 2004 due to the asset impairment
charges.
* Fourth-quarter EBITDA was $1.4 billion, excluding net restructuring and
other charges, yielding a margin of 25.6 percent.
* During the fourth quarter, a number of sizable customer wins and
contract extensions were signed with companies including Fireman's Fund
Insurance Company, The Thomson Corporation, CVS, Raytheon and Sun
Microsystems, among many others.
AT&T Consumer
* Revenue was $1.8 billion for the fourth quarter of 2004 and $7.9
billion for the full year, representing declines of 17.9 percent and
15.9 percent, respectively, versus the same prior-year periods.
Declines were driven by lower standalone LD voice revenue as a result
of the continued impact of competition, wireless and Internet
substitution and customer migration to lower-priced products, partially
offset by targeted price increases. Also offsetting these declines was
an increase in bundled services revenue.
* Fourth-quarter operating income was $493 million, yielding an operating
margin of 27.3 percent. The fourth-quarter operating income reflects a
benefit of $38 million as a result of the third-quarter asset
impairment charges. Full-year 2004 operating income was $1.4 billion
and included asset impairment and net restructuring and other charges
of $0.2 billion, as well as a benefit of $0.1 billion due to the asset
impairment charges.
* At the end of 2004, AT&T Consumer offered its residential VoIP AT&T
CallVantage(SM) Service in over 170 major markets in the U.S. covering
39 states and Washington, D.C. The company also announced more retail
distribution partnerships with retail outlets such as Office Depot,
Buy.com and TigerDirect.com.
* At the end of the fourth quarter, AT&T Consumer had over 24 million
standalone LD and bundled customers.
OTHER CONSOLIDATED FINANCIAL HIGHLIGHTS
* As a result of a reciprocal compensation settlement, operating income
for AT&T Business increased by approximately $77 million and operating
income for AT&T Consumer increased by $28 million in the fourth
quarter, resulting in a net benefit of approximately $105 million to
consolidated operating income. This benefit had a positive impact of
approximately $0.08 per diluted share.
* AT&T recorded net restructuring and other charges of $36 million in the
fourth quarter, primarily for facility closings as a result of ongoing
real estate consolidation efforts due to employee separations, which
had a negative impact of approximately $0.03 per diluted share.
* AT&T repurchased $131 million of U.S. dollar- and Euro-denominated debt
during the fourth quarter, which resulted in a loss of $13 million
recorded in other income (expense).
* Free cash flow was $1.1 billion for the fourth quarter. Free cash flow
is defined as cash flows provided by operating activities of $1.5
billion less cash used for capital expenditures and other additions of
$0.4 billion. For the full year, free cash flow was $3.7 billion,
resulting from cash flows provided by operating activities of $5.5
billion less cash used for capital expenditures and other additions of
$1.8 billion.
* AT&T ended the year with net debt of $6.0 billion, a $1.0 billion
decrease from the end of the third quarter of 2004 and a $2.8 billion
decrease from the end of the prior year. Net debt is defined as total
debt of $10.7 billion less cash of $3.7 billion, restricted cash of
$0.5 billion and net foreign debt fluctuations of $0.5 billion.
* During the fourth quarter of 2004, AT&T generated EBITDA less capital
expenditures (excluding asset impairment and net restructuring and
other charges) of $1.4 billion, bringing the full-year 2004 total to
$5.2 billion.
* Capital expenditures for the quarter were $396 million and $1.8 billion
for the full year, as AT&T continued to prudently invest in upgrading
its network and integrating its systems in order to further rationalize
its cost structure and support growth in next-generation services.
DEFINITIONS and NOTES
AT&T Business
LD Voice - includes all of AT&T's domestic and international LD revenue,
including Intralata toll when purchased as part of an LD calling plan.
Local Voice - includes all local calling and feature revenue, Intralata
toll when purchased as part of a local calling plan, as well as Inter-carrier
local revenue.
Data Services - includes bandwidth services (dedicated private line
services through high-capacity optical transport), frame relay and
asynchronous transfer mode (ATM) revenue for LD and local, as well as revenue
for managed data services.
Internet Protocol & Enhanced Services (IP&E-services) - includes all
services that ride on the IP common backbone or that use IP technology,
including managed IP services, as well as application services (e.g., hosting,
security).
Outsourcing, Professional Services & Other - includes complex bundled
solutions primarily in the wide area/local area network space, AT&T's
professional services revenue associated with the company's federal government
customers, as well as all other Business revenue (and eliminations) not
previously defined.
Data, IP&E-Services - Percent Managed - managed services refers to AT&T's
management of a client's network or network and applications including
applications that extend to the customer premise equipment.
Data, IP&E-Services - Percent International - a data service that either
originates or terminates outside of the United States, or an IP&E-service
installed or wholly delivered outside the United States.
AT&T Consumer
Bundled Services - includes any customer with a local relationship as a
starting point, and all other AT&T subscription-based voice products provided
to that customer.
Standalone LD, Transactional & Other Services - includes any customer with
solely a long-distance relationship, non-voice products, or a non
subscription-based relationship.
Other Definitions and Notes
EBITDA - Earnings before interest, taxes, depreciation and amortization is
calculated as operating income plus depreciation and amortization.
Restricted cash - $0.5 billion of cash that collateralizes a portion of
private debt and is included in "other current assets" on the balance sheet.
Foreign currency fluctuations - represents mark-to-market adjustments, net
of cash collateral collected, that increased the debt balance by approximately
$0.5 billion at December 31, 2004, on non-U.S. denominated debt of about $1.4
billion. AT&T has entered into foreign exchange hedges that substantially
offset the fluctuations in the debt balance. The offsetting mark-to-market
adjustments of the hedges are included in "other current assets" and "other
assets" on the balance sheet.
Note to Financial
Media: AT&T executives will discuss the company's
performance in a two-way conference call for financial analysts at 8:15 a.m.
ET today. Reporters are invited to listen to the call. U.S. callers should
dial 888-428-4478 to access the call. Callers outside the U.S. should dial
+1-612-332-0530.
In addition, Internet rebroadcasts of the call will be available on the
AT&T web site beginning later today. The web site address is
http://www.att.com/ir. An audio rebroadcast of the conference call will also
be available beginning at 12:40PM on Thursday, January 20 through 11:59PM on
Sunday, January 30. To access the audio rebroadcast, U.S. callers can dial
800-475-6701, access code 763281. Callers outside the U.S. should dial
+1-320-365-3844, access code 763281.
The foregoing contains "forward-looking statements" which are based on
management's beliefs as well as on a number of assumptions concerning future
events made by and information currently available to management. Readers are
cautioned not to put undue reliance on such forward-looking statements, which
are not a guarantee of performance and are subject to a number of
uncertainties and other factors, many of which are outside AT&T's control,
that could cause actual results to differ materially from such statements.
These risk factors include the impact of increasing competition, continued
capacity oversupply, regulatory uncertainty and the effects of technological
substitution, among other risks. For a more detailed description of the
factors that could cause such a difference, please see AT&T's 10-K, 10-Q, 8-K
and other filings with the Securities and Exchange Commission. AT&T disclaims
any intention or obligation to update or revise any forward-looking
statements, whether as a result of new information, future events or
otherwise. This information is presented solely to provide additional
information to further understand the results of AT&T.
AT&T Corp. Consolidated Statements of Operations (Unaudited)
Dollars in millions (except per share amounts)
Three Months Ended Years Ended
December 31, December 31,
2004 2003 2004 2003
REVENUE (1)
AT&T Business $5,454 $5,887 $22,582 $25,075
AT&T Consumer 1,806 2,198 7,904 9,400
Corporate and Other 13 14 51 54
Total Revenue 7,273 8,099 30,537 34,529
OPERATING EXPENSES
Access and other connection 2,371 2,606 9,901 10,797
Costs of services and products 1,668 1,702 7,074 7,625
Selling, general and administrative 1,397 1,828 6,557 7,379
Depreciation and amortization 640 1,263 3,768 4,870
Asset impairment and net
restructuring and other charges 36 67 12,772 201
Total operating expenses 6,112 7,466 40,072 30,872
Operating income (loss) 1,161 633 (9,535) 3,657
Other income (expense), net 28 102 (144) 191
Interest (expense) (192) (241) (803) (1,158)
Income (loss) from continuing operations
before income taxes, minority interest
income and net earnings (losses) related
to equity investments 997 494 (10,482) 2,690
(Provision) benefit for income taxes (375) (139) 4,366 (816)
Minority interest income -- -- 1 1
Net earnings (losses) related to equity
investments 3 (15) 5 (12)
Income (loss) from continuing operations 625 340 (6,110) 1,863
(Loss) from discontinued operations -
net of income taxes -- -- -- (13)
Income (loss) before cumulative effect
of accounting change 625 340 (6,110) 1,850
Cumulative effect of accounting change -
net of income taxes -- -- -- 15
Net income (loss) $625 $340 $(6,110) $1,865
Weighted-average common shares (millions) 797 791 795 788
Weighted-average common shares and
potential common shares (millions) 803 793 795 789
PER BASIC SHARE:
Earnings (loss) from continuing operations $0.78 $0.43 $(7.68) $ 2.37
(Loss) from discontinued operations $ -- $ -- $ -- $(0.02)
Cumulative effect of accounting change $ -- $ -- $ -- $ 0.02
Earnings (loss) per basic share $0.78 $0.43 $(7.68) $ 2.37
PER DILUTED SHARE:
Earnings (loss) from continuing operations $0.78 $0.43 $(7.68) $ 2.36
(Loss) from discontinued operations $ -- $ -- $ -- $(0.02)
Cumulative effect of accounting change $ -- $ -- $ -- $ 0.02
Earnings (loss) per diluted share $0.78 $0.43 $(7.68) $ 2.36
Dividends declared per share $0.2375 $0.2375 $0.9500 $0.8500
(1) Prior period amounts have been restated to reflect the transfer of
the remaining payphone business from AT&T Consumer to AT&T Business.
AT&T Corp. Consolidated Statements of Operations (Unaudited)
Dollars in millions (except per share amounts)
4Q04 3Q04 2Q04 1Q04 2004
REVENUE (1)
AT&T Business $5,454 $5,645 $5,611 $5,872 $22,582
AT&T Consumer 1,806 1,980 2,011 2,107 7,904
Corporate and Other 13 13 14 11 51
Total revenue 7,273 7,638 7,636 7,990 30,537
OPERATING EXPENSES
Access and other connection 2,371 2,411 2,481 2,638 9,901
Costs of services and products 1,668 1,783 1,759 1,864 7,074
Selling, general and
administrative 1,397 1,653 1,763 1,744 6,557
Depreciation and amortization 640 647 1,231 1,250 3,768
Asset impairment and net
restructuring and other charges 36 12,469 54 213 12,772
Total operating expenses 6,112 18,963 7,288 7,709 40,072
Operating income (loss) 1,161 (11,325) 348 281 (9,535)
Other income (expense), net 28 (34) 36 (174) (144)
Interest (expense) (192) (192) (191) (228) (803)
Income (loss) from continuing
operations before income taxes,
minority interest income
and net earnings (losses)
related to equity investments 997 (11,551) 193 (121) (10,482)
(Provision) benefit for income
taxes (375) 4,402 (87) 426 4,366
Minority interest income -- -- 1 -- 1
Net earnings (losses) related to
equity investments 3 2 1 (1) 5
Income (loss) from continuing
operations 625 (7,147) 108 304 (6,110)
(Loss) from discontinued
operations - net of income taxes -- -- -- -- --
Income (loss) before cumulative
effect of accounting changes 625 (7,147) 108 304 (6,110)
Cumulative effect of accounting
changes, net of income taxes -- -- -- -- --
Net income (loss) $625 $(7,147) $108 $304 $(6,110)
Weighted-average common shares
(millions) 797 795 794 793 795
Weighted-average common shares
and potential common shares
(millions) 803 795 797 796 795
PER BASIC SHARE:
Earnings (loss) from continuing
operations $0.78 $(8.99) $0.14 $0.38 $(7.68)
(Loss) from discontinued
operations -- -- -- -- --
Cumulative effect of accounting
changes -- -- -- -- --
Earnings (loss) per basic share $0.78 $(8.99) $0.14 $0.38 $(7.68)
PER DILUTED SHARE:
Earnings (loss) from continuing
operations $0.78 $(8.99) $0.14 $0.38 $(7.68)
(Loss) from discontinued operations -- -- -- -- --
Cumulative effect of accounting
changes -- -- -- -- --
Earnings (loss) per diluted share $0.78 $(8.99) $0.14 $0.38 $(7.68)
4Q03 3Q03 2Q03 1Q03 2003
REVENUE (1)
AT&T Business $5,887 $6,301 $6,428 $6,459 $25,075
AT&T Consumer 2,198 2,334 2,354 2,514 9,400
Corporate and Other 14 14 13 13 54
Total revenue 8,099 8,649 8,795 8,986 34,529
OPERATING EXPENSES
Access and other connection 2,606 2,785 2,708 2,698 10,797
Costs of services and products 1,702 1,954 1,958 2,011 7,625
Selling, general and
administrative 1,828 1,793 1,837 1,921 7,379
Depreciation and amortization 1,263 1,224 1,197 1,186 4,870
Asset impairment and net
restructuring and other charges 67 64 66 4 201
Total operating expenses 7,466 7,820 7,766 7,820 30,872
Operating income (loss) 633 829 1,029 1,166 3,657
Other income (expense), net 102 (7) 86 10 191
Interest (expense) (241) (289) (296) (332) (1,158)
Income (loss) from continuing
operations before income taxes,
minority interest income
and net earnings (losses)
related to equity investments 494 533 819 844 2,690
(Provision) benefit for income
taxes (139) (72) (308) (297) (816)
Minority interest income -- -- -- 1 1
Net earnings (losses) related
to equity investments (15) (3) 25 (19) (12)
Income (loss) from continuing
operations 340 458 536 529 1,863
(Loss) from discontinued operations -
net of income taxes -- (13) -- -- (13)
Income (loss) before cumulative
effect of accounting changes 340 445 536 529 1,850
Cumulative effect of accounting
changes, net of income taxes -- (27) -- 42 15
Net income (loss) $340 $418 $536 $571 $1,865
Weighted-average common shares
(millions) 791 789 787 784 788
Weighted-average common shares
and potential common shares
(millions) 793 791 787 785 789
PER BASIC SHARE:
Earnings (loss) from continuing
operations $0.43 $0.58 $0.68 $0.67 $2.37
(Loss) from discontinued operations -- (0.02) -- -- (0.02)
Cumulative effect of accounting
changes -- (0.03) -- 0.06 0.02
Earnings (loss) per basic share $0.43 $0.53 $0.68 $0.73 $2.37
PER DILUTED SHARE:
Earnings (loss) from continuing
operations $0.43 $0.58 $0.68 $0.67 $2.36
(Loss) from discontinued operations -- (0.02) -- -- (0.02)
Cumulative effect of accounting
changes -- (0.03) -- 0.06 0.02
Earnings (loss) per diluted share $0.43 $0.53 $0.68 $0.73 $2.36
(1) Prior period amounts have been restated to reflect the transfer of
the remaining payphone business from AT&T Consumer to AT&T Business.
AT&T Corp. Historical Segment Data (Unaudited)
Dollars in millions
4Q04 3Q04 2Q04 1Q04 2004
AT&T Business (1)
LD Voice $2,163 $2,364 $2,386 $2,613 $9,526
Local Voice 490 390 404 389 1,673
Total Voice 2,653 2,754 2,790 3,002 11,199
Data Services (2) 1,595 1,693 1,690 1,715 6,693
IP&E-Services (2) 625 587 565 553 2,330
Total Data and IP&E-Services 2,220 2,280 2,255 2,268 9,023
Outsourcing, Professional
Services & Other 581 611 566 602 2,360
Total revenue 5,454 5,645 5,611 5,872 22,582
Operating income (loss)(3)(7) 781 (11,095) 152 83 (10,079)
Operating margin 14.3% (196.5%) 2.7% 1.4% (44.6%)
Capital expenditures(8) 377 391 463 470 1,701
Depreciation & amortization (7) 607 610 1,176 1,192 3,585
Total Data and IP&E-Services -
% managed (2) 33% 32% 32% 32% 32%
Total Data and IP&E-Services -
% international 16% 15% 15% 15% 15%
LD volume growth - yr/yr -2% -2% 0% 2% 0%
LD volume % wholesale 57% 56% 54% 54% 55%
AT&T Consumer (1)
Standalone LD, Transactional
and Other Services $1,116 $1,256 $1,327 $1,462 $5,161
Bundled Services 690 724 684 645 2,743
Total revenue 1,806 1,980 2,011 2,107 7,904
Operating income(4) (7) 493 281 240 371 1,385
Operating margin 27.3% 14.2% 11.9% 17.6% 17.5%
Capital expenditures 5 9 15 13 42
Depreciation & amortization (7) 13 15 33 32 93
Local customers (in thousands) 4,156 4,477 4,677 4,364 4,156
Corporate and Other (1)
Revenue $13 $13 $14 $11 $51
Operating (loss)(5) (113) (511) (44) (173) (841)
Capital expenditures(8) 14 6 2 2 24
Depreciation & amortization 20 22 22 26 90
Total AT&T
Revenue $7,273 $7,638 $7,636 $7,990 $30,537
Operating income (loss)(6) 1,161 (11,325) 348 281 (9,535)
Operating margin 16.0% (148.3%) 4.6% 3.5% (31.2%)
Capital expenditures(8) 396 406 480 485 1,767
Depreciation & amortization (7) 640 647 1,231 1,250 3,768
4Q03 3Q03 2Q03 1Q03 2003
AT&T Business (1)
LD Voice $2,501 $2,820 $2,895 $2,983 $11,199
Local Voice 386 379 384 335 1,484
Total Voice 2,887 3,199 3,279 3,318 12,683
Data Services (2) 1,846 1,875 1,943 1,956 7,620
IP&E-Services (2) 554 550 509 489 2,102
Total Data and IP&E-Services 2,400 2,425 2,452 2,445 9,722
Outsourcing, Professional
Services & Other 600 677 697 696 2,670
Total revenue 5,887 6,301 6,428 6,459 25,075
Operating income (loss)(3)(7) 282 413 601 599 1,895
Operating margin 4.8% 6.6% 9.3% 9.3% 7.6%
Capital expenditures(8) 740 995 763 636 3,134
Depreciation & amortization (7) 1,200 1,162 1,133 1,126 4,621
Total Data and IP&E-Services -
% managed (2) 32% 32% 31% 30% 31%
Total Data and IP&E-Services -
% international 14% 14% 14% 14% 14%
LD volume growth - yr/yr 7% 15% 12% 12% 11%
LD volume % wholesale 53% 51% 47% 45% 50%
AT&T Consumer (1)
Standalone LD,
Transactional and Other Services $1,604 $1,813 $1,894 $2,090 $7,401
Bundled Services 594 521 460 424 1,999
Total revenue 2,198 2,334 2,354 2,514 9,400
Operating income(4) (7) 435 503 485 633 2,056
Operating margin 19.8% 21.6% 20.6% 25.2% 21.9%
Capital expenditures 19 14 19 22 74
Depreciation & amortization (7) 35 35 36 35 141
Local customers (in thousands) 3,950 3,547 3,130 2,778 3,950
Corporate and Other (1)
Revenue $14 $14 $13 $13 $54
Operating (loss)(5) (84) (87) (57) (66) (294)
Capital expenditures(8) 13 198 8 4 223
Depreciation & amortization 28 27 28 25 108
Total AT&T
Revenue $8,099 $8,649 $8,795 $8,986 $34,529
Operating income (loss)(6) 633 829 1,029 1,166 3,657
Operating margin 7.8% 9.6% 11.7% 13.0% 10.6%
Capital expenditures(8) 772 1,207 790 662 3,431
Depreciation & amortization (7) 1,263 1,224 1,197 1,186 4,870
(1) Prior period amounts have been restated to reflect the transfer of
the remaining payphone business from AT&T Consumer to AT&T Business.
(2) Prior period amounts have been restated to reflect the division of
international managed services revenue into Data Services and
IP&E-Services, consistent with the classifications of domestic
managed services. This reclassification had no impact on "Total Data
and IP&E-Services revenue," or total revenue.
(3) Includes asset impairment and net restructuring and other (charges)
of ($9M) in 4Q04, ($11,859M) in 3Q04, ($52M) in 2Q04 and ($91M) in
1Q04, totaling ($12,011M) in 2004; ($33M) in 4Q03, ($53M) in 3Q03,
($47M) in 2Q03 and ($4M) in 1Q03, totaling ($137M) in 2003.
(4) Includes asset impairment and net restructuring and other (charges)
of ($188M) in 3Q04 and ($1M) in 1Q04, totaling ($189M) in 2004;
($17M) in 4Q03, ($4M) in 3Q03 and ($5M) in 2Q03, totaling ($26M) in
2003.
(5) Includes asset impairment and net restructuring and other (charges)
of ($27M) in 4Q04, ($422M) in 3Q04, ($2M) in 2Q04 and ($121M) in
1Q04, totaling ($572M) in 2004; ($17M) in 4Q03, ($7M) in 3Q03 and
($14M) in 2Q03, totaling ($38M) in 2003.
(6) Includes asset impairment and net restructuring and other (charges)
of ($36M) in 4Q04, ($12,469M) in 3Q04, ($54M) in 2Q04 and ($213M) in
1Q04, totaling ($12,772M) in 2004; ($67M) in 4Q03, ($64M) in 3Q03,
($66M) in 2Q03 and ($4M) in 1Q03, totaling ($201M) in 2003.
(7) As a result of the third-quarter 2004 asset impairment charge,
third-quarter 2004 and fourth-quarter 2004 depreciation and
amortization expense decreased by $527 million and $538 million,
respectively, for AT&T Business and $10 million and $8 million,
respectively, for AT&T Consumer. In addition, as a result of the
transport service arrangement between AT&T Business and AT&T
Consumer, network-related charges from AT&T Business (recorded as
contra-expense) to AT&T Consumer were reduced by $28 million in the
third quarter and $30 million in the fourth quarter as a result of
the lower depreciation and amortization expense recorded by AT&T
Business. This resulted in a reduction in AT&T Business' operating
income and an increase in AT&T Consumer's operating income.
(8) Includes $433M in 3Q03 related to the adoption of FIN 46 of which
$241M is included in Business and $192M is included in Corporate and
Other.
AT&T Corp. Consolidated Balance Sheets (Unaudited)
Dollars in millions
December 31, December 31,
2004 2003
ASSETS
Cash and cash equivalents $3,698 $4,353
Accounts receivable, less allowances
of $523 and $579 3,195 4,036
Deferred income taxes 980 715
Other current assets 1,383 744
Total Current Assets 9,256 9,848
Property, plant and equipment,
net of accumulated depreciation of
$1,588 and $34,300 11,509 24,376
Goodwill 4,888 4,801
Other purchased intangible assets,
net of accumulated amortization of $428 and $320 375 499
Prepaid pension costs 3,991 3,861
Other assets 2,654 4,603
TOTAL ASSETS $32,673 $47,988
LIABILITIES
Accounts payable and accrued expenses $2,505 $3,256
Compensation and benefit-related liabilities 2,193 1,783
Debt maturing within one year 1,886 1,343
Other current liabilities 2,293 2,501
Total Current Liabilities 8,877 8,883
Long-term debt 8,779 13,066
Long-term compensation and benefit-related
liabilities 3,322 3,528
Deferred income taxes 1,419 5,395
Other long-term liabilities and deferred credits 2,897 3,160
Total Liabilities 25,294 34,032
SHAREOWNERS' EQUITY
Common Stock, $1 par value, authorized 2,500,000,000
shares; issued and outstanding 798,570,623 shares
(net of 171,983,367 treasury shares) at December 31,
2004 and 791,911,022 shares (net of 172,179,303
treasury shares) at December 31, 2003 799 792
Additional paid-in capital 27,170 27,722
Accumulated deficit (20,821) (14,707)
Accumulated other comprehensive income 231 149
Total Shareowners' Equity 7,379 13,956
TOTAL LIABILITIES & SHAREOWNERS' EQUITY $32,673 $47,988
AT&T Corp. Consolidated Statements of Cash Flows (Unaudited)
Dollar in millions
Year Ended
December 31,
2004 2003
Operating Activities
Net (loss) income $(6,110) $1,865
Deduct:
Loss from discontinued operations -
net of income taxes -- (13)
Cumulative effect of accounting change -
net of income taxes -- 15
(Loss) income before cumulative effect of
accounting change (6,110) 1,863
Adjustments to reconcile income before cumulative
effect of accounting change to net cash provided
by operating activities:
Net gains on sales of businesses and investments (23) (53)
Loss on early extinguishment of debt 314 85
Asset impairment, net restructuring and other
charges 12,448 93
Depreciation and amortization 3,768 4,870
Provision for uncollectible receivables 437 703
Deferred income taxes (4,306) 1,402
Net pretax losses related to equity investments (9) (19)
Decrease in receivables 431 600
(Decrease) in accounts payable and accrued expenses (591) (494)
Net change in other operating assets and liabilities (735) (310)
Other adjustments, net (112) (210)
Net Cash Provided by Operating Activities of
Continuing Operations 5,512 8,530
Investing Activities
Capital expenditures and other additions (1,836) (3,157)
Proceeds from sale or disposal of property,
plant and equipment 95 163
Investment distributions and sales 37 126
Net dispositions (acquisitions) of businesses,
net of cash disposed/acquired 8 (158)
(Increase) in restricted cash (47) (57)
Other investing activities, net 39 (18)
Net Cash (Used in) Investing Activities of
Continuing Operations (1,704) (3,101)
Financing Activities
Retirement of long-term debt,
including redemption premiums (3,914) (8,002)
(Decrease) in short-term borrowings, net (300) (1,281)
Issuance of AT&T common shares 79 118
Dividends paid on common stock (754) (629)
Other financing activities, net 426 704
Net Cash (Used in) Financing Activities of
Continuing Operations (4,463) (9,090)
Net (decrease) in cash and cash equivalents (655) (3,661)
Cash and cash equivalents at beginning of year 4,353 8,014
Cash and Cash Equivalents at End of Period $3,698 $4,353
AT&T Corp. Reconciliation of Non-GAAP Measures
AT&T is providing information on net debt, EBITDA and related margins,
EBITDA less capital expenditures and free cash flows because these measures
are commonly used by the investment community for evaluation purposes. AT&T
is providing information on adjusted net income and adjusted earnings per
share due to the magnitude of the asset impairment and net restructuring and
other charges taken during the year and the distortion they have on reported
results and trends. Net debt, adjusted net income, adjusted earnings per
share, EBITDA, EBITDA less capital expenditures and free cash flows should be
considered in addition to, but not in lieu of, other measures of liquidity,
profitability and cash flows reported in accordance with generally accepted
accounting principles. Additionally, they may not be comparable to similarly
captioned measures reported by other companies.
Net (Loss) Income and Earnings Per Share
(dollars in millions, except per share amounts) For the year ended
December 31, 2004
Net (loss) income EPS
Reported (loss) ($6,110) ($7.68)
Add:
Asset impairment and net restructuring and
other charges 7,896 9.93
Adjusted earnings $1,786 $2.25
EBITDA, Excluding Asset Impairment and Net Restructuring and Other
Charges, to Net Income
(dollars in millions) For the three months ended For the year ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2004 2003 2004 2003
EBITDA margin (1) 25.2% 24.2% 22.9% 25.3%
EBITDA (1) $1,837 $1,963 $7,005 $8,728
Depreciation and amortization (640) (1,263) (3,768) (4,870)
Asset impairment and net
restructuring and other charges (36) (67) (12,772) (201)
Subtotal operating income (loss) $1,161 $633 ($9,535) $3,657
Other income (expense), net 28 102 (144) 191
Interest (expense) (192) (241) (803) (1,158)
(Provision) benefit for
income taxes (375) (139) 4,366 (816)
Minority interest income -- -- 1 1
Net income (losses) related to
equity investments 3 (15) 5 (12)
Net income (loss) from continuing
operations $625 $340 ($6,110) $1,863
Net (loss) from discontinued
operations -- -- -- (13)
Cumulative effect of accounting
change -- -- -- 15
Net income (loss) $625 $340 ($6,110) $1,865
(1) Excluding asset impairment and net restructuring and other charges
AT&T is providing information on net debt, EBITDA and related
margins, EBITDA less capital expenditures and free cash flows because
these measures are commonly used by the investment community for
evaluation purposes. AT&T is providing information on adjusted net
income and adjusted earnings per share due to the magnitude of the
asset impairment and net restructuring and other charges taken during
the year and the distortion they have on reported results and trends.
Net debt, adjusted net income, adjusted earnings per share, EBITDA,
EBITDA less capital expenditures and free cash flows should be
considered in addition to, but not in lieu of, other measures of
liquidity, profitability and cash flows reported in accordance with
generally accepted accounting principles. Additionally, they may not
be comparable to similarly captioned measures reported by other
companies.
AT&T Corp. Reconciliation of Non-GAAP Measures, continued
AT&T Business EBITDA, Excluding Net Restructuring and
Other Charges, to Operating Income
(dollars in millions) For the three months ended
December 31, 2004
EBITDA and margin (1) $1,397 25.6%
Depreciation and
amortization (607)
Net restructuring and other
charges (9)
Operating income and margin $781 14.3%
(1) Excluding net restructuring and other charges.
AT&T Corp. Reconciliation of Non-GAAP Measures, continued
EBITDA, Excluding Asset Impairment and Net Restructuring and Other Charges,
Less Capital Expenditures to Cash Provided by Operating Activities:
For the three For the
(dollars in millions) months ended year ended
December 31, December 31,
2004 2004
EBITDA (1) less capital
expenditures $1,441 $5,238
Add capital expenditures 396 1,767
EBITDA (1) $1,837 $7,005
Other cash (expenses)
receipts (2) (612) (1,143)
Changes in working capital
and other
operating assets &
liabilities 276 (350)
Cash provided by operating
activities $1,501 $5,512
(1) Excluding asset impairment and net restructuring and other
charges
(2) Other cash expenses primarily include taxes, interest expense and net
restructuring and other charges payments.
AT&T Corp. Reconciliation of Non-GAAP Measures, continued
Net Debt
Net debt is defined as total debt, less cash, restricted cash and net
foreign debt fluctuations:
(dollars in millions) December 31, 2004
Total debt $10,665
Less: Cash 3,698
Restricted cash 546
Foreign debt
fluctuations 462
Net debt $5,959
(Logo: http://www.newscom.com/cgi-bin/prnh/19991018/ATT )
SOURCE AT&T
-0- 01/20/2005
/CONTACT: Media: Andy Backover, +1-908-234-8632, or Joseph Jones,
+1-908-532-1617, Investor Relations: +1-908-532-1680, all for AT&T /
/Photo: http://www.newscom.com/cgi-bin/prnh/19991018/ATT /
/Web site: http://www.att.com
http://www.att.com/ir /
(T)
END
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