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TIDM58KM
RNS Number : 2712W
AT & T Inc.
26 January 2012
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) January 26, 2012
AT&T INC.
(Exact Name of Registrant as Specified in Charter)
Hot Features
Premium
Delaware 1-8610 43-1301883
(State or Other Jurisdiction (Commission File (IRS Employer Identification
of Incorporation) Number) No.)
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):
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240-14d-2(b))
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 October 20, 2011, its results of operations for the third 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 October 20, 2011 reporting financial results for the third quarter ended
September 30, 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: January 26, By: /s/ Paul W. Stephens______________
2012 Paul W. Stephens
Senior Vice President and Controller
For more information, contact:
McCall Butler
917-209-5792
mbutler@attnews.us
Best-Ever Mobile Broadband Sales and Strong Cash Flows Highlight AT&T's Fourth-Quarter Results;
Stock Buyback Begins on Previous 300 Million Share Authorization
2012 Outlook: Solid Revenue, Margins and Earnings Growth with Strong Free Cash Flow
-- $(1.12) diluted EPS in fourth quarter compared to $0.18 diluted EPS in the year-ago period. Excluding significant items for both quarters, EPS of $0.42 compared to $0.55 in the year-ago quarter driven by the company's best-ever quarter for smartphone activations - up nearly 60 percent year over year
-- Consolidated revenues of $32.5 billion, up $1.1 billion, or 3.6 percent, versus the year-earlier period
-- In 2011, AT&T's growth engines - wireless, wireline data and managed services - represented 76 percent of total revenues and grew 7.5 percent versus 2010, led in the fourth quarter by:
o 10.0 percent growth in wireless revenues
o 19.4 percent growth in wireless data revenues, up $956 million versus the year-earlier quarter
o 16.4 percent growth in strategic business services revenues
o 43.7 percent growth in consumer U-verse revenues
-- 9.4 million smartphone sales, best-ever quarter and 50 percent more than previous quarterly record and nearly double 3Q11 sales; 82 percent of postpaid sales were smartphones
-- 717,000 wireless postpaid net adds, the largest increase in five quarters; 2.5 million increase in total net wireless subscribers, with gains in every customer category
-- Best-ever quarter for Android and Apple smartphones, including 7.6 million iPhone activations
-- 571,000 branded computing device (tablets, aircards, etc.) sales, best-ever quarter to reach 5.1 million total subscribers; up almost 70 percent from a year ago
-- 12(th) consecutive quarter with a year-over-year increase in postpaid wireless subscriber ARPU (average monthly revenues per subscriber), up 1.4 percent to $63.76 - more than $6 higher than nearest competitor's ARPU
-- Second consecutive quarter of sequential growth in wireline business revenues
-- Sixth consecutive quarter of year-over-year growth in wireline consumer revenues, driven by AT&T U-verse(R) services
-- 208,000 net gain in AT&T U-verse TV subscribers to reach 3.8 million in service, with continued high broadband and voice attach rates
Note: AT&T's fourth-quarter earnings conference call will be broadcast live via the Internet at 10 a.m. ET on Thursday, January 26, 2012, at www.att.com/investor.relations.
DALLAS, Jan. 26, 2012 - AT&T Inc. (NYSE:T) today reported fourth-quarter results highlighted by record mobile broadband sales, strong wireless network performance and improved wireline revenue trends.
"We had a tremendous year in terms of execution, and we have excellent momentum across our growth platforms," said Randall Stephenson, AT&T chairman and chief executive officer. "This was a blowout quarter for smartphone sales. Our network performance is at a high level on voice quality and best-in-class mobile download speeds. U-verse sales continue to be strong and business revenue trends are on a good track.
"Looking ahead, we start 2012 with the best visibility we've had in some time, and we're well positioned to deliver solid results - including continued revenue growth with margin expansion, solid earnings per share growth and strong cash flow," Stephenson said. "In short order, we will begin share repurchases to deliver significant value to our owners."
Fourth-Quarter Financial Results
For the quarter ended December 31, 2011, AT&T's consolidated revenues totaled $32.5 billion, up $1.1 billion, or 3.6 percent, versus the year-earlier quarter.
Compared with the fourth quarter of 2010, operating expenses were $41.5 billion versus $29.3 billion; operating loss was $9.0 billion, compared to operating income of $2.1 billion; and AT&T's operating income margin was (27.7) percent, compared to 6.7 percent. Excluding fourth-quarter significant items, operating expenses were $28.1 billion versus $25.8 billion; operating income was $4.4 billion, compared to $5.6 billion; and operating income margin was 13.5 percent, compared to 17.7 percent.
Fourth-quarter 2011 net income attributable to AT&T totaled $(6.7) billion, or $(1.12) per diluted share. Excluding significant non-cash charges of $0.65 from the actuarial loss on benefit plans and $0.48 for directory asset impairments, along with a one-time charge of $0.44 for termination of the T-Mobile USA acquisition and a one-time gain of $0.03 from a tax settlement, adjusted earnings per share was $0.42.
(The actuarial loss on benefit plans was driven by a reduction in the discount rate from 5.8 percent to 5.3 percent. While our investment returns were better than the overall market, they were less than expectations; this was largely offset by better-than-expected force and medical cost management. The directory asset impairment resulted from an annual review of intangible assets compared to fair value.)
These results compare with reported net income attributable to AT&T of $1.1 billion, or $0.18 per diluted share, in the fourth quarter of 2010. Excluding significant items, earnings per share for the fourth quarter of 2010 was $0.55 per diluted share.
Fourth-quarter 2011 cash from operating activities totaled $7.5 billion, and capital expenditures totaled $5.5 billion. Also included in the fourth quarter, the company made a $1.0 billion contribution to the company's pension fund. No additional funding is required in 2012. Free cash flow - cash from operating activities minus capital expenditures - totaled $2.0 billion.
Full-Year Results For the full year 2011, compared with 2010 results, AT&T's consolidated revenues totaled $126.7 billion versus $124.3 billion, up 2.0 percent; operating expenses were $117.5 billion, compared with $104.7 billion; net income attributable to AT&T was $3.9 billion versus $19.9 billion; and earnings per diluted share was $0.66 compared with $3.35. Excluding significant items, earnings per share totaled $2.20, compared with $2.29.
Compared with 2010 results, AT&T's full-year cash from operating activities totaled $34.6 billion, down from $35.0 billion. Capital expenditures, including capitalized interest, totaled $20.3 billion versus $20.3 billion, including a 6.4 percent increase in wireless-related capital investment versus 2010, as AT&T aggressively deployed next-generation mobile broadband networks. Free cash flow totaled $14.4 billion, compared with $14.7 billion.
Outlook
AT&T is well positioned to deliver solid revenue and earnings growth with improving margins while returning substantial value to shareowners. In 2012, AT&T expects continued consolidated revenue growth, including postpaid wireless ARPU growth around 2 percent for the year. The company also expects to expand consolidated and wireless margins while keeping wireline margins stable. Achieving these targets will lead to mid-single-digit or better earnings growth with an opportunity to accelerate earnings growth beyond 2012. Outlook excludes any significant items. Importantly, little economic lift is assumed with these expectations.
AT&T expects capital expenditures to be about $20 billion, stable with 2011, as increases in wireless spending offset declines in wireline capital expenditures. The company also expects strong free cash flow, with full-year free cash flow in the $15 to $16 billion range, and plans to begin execution of its existing 300 million share repurchase authorization immediately.
WIRELESS OPERATIONAL HIGHLIGHTS
Record-setting mobile broadband sales and the company's best postpaid subscriber growth in five quarters drove double-digit wireless revenue growth. AT&T continues to lead the industry in smartphone penetration, mobile broadband sales and postpaid ARPU. Highlights included:
Best Postpaid Growth in Five Quarters. AT&T posted a net increase in total wireless subscribers of 2.5 million in the fourth quarter to reach 103.2 million in service. This included gains in every customer category. Subscriber additions for the quarter include postpaid net adds of 717,000, the best gain in five quarters. Prepaid net adds were 159,000, connected device net adds were 1,029,000 and reseller net adds were 592,000. Fourth-quarter net adds reflect accelerated adoption of smartphones, including the October launch of the iPhone 4S, increases in prepaid and reseller subscribers and sales of tablets and connected devices such as automobile monitoring systems, security systems and a host of other emerging products.
Record Quarter for Smartphone Sales. AT&T delivered its best-ever smartphone sales quarter - up nearly 60 percent from the year-ago period. (Smartphones are devices with voice and data capabilities and an advanced operating system to better manage data and Internet access.) In the fourth quarter, the company set a new record with 9.4 million smartphones sold, nearly double the number sold in the third quarter and 50 percent more than the previous quarterly record. Fourth-quarter smartphone sales represented more than 80 percent of postpaid device sales. Both iPhone and Android device sales set records. During the quarter, more than 7.6 million iPhones were activated, the majority of which were iPhone 4S, which went on sale Oct. 14, and more than twice as many Android smartphones were sold versus the fourth quarter a year ago. iPhone sales were helped by a superior customer experience, with AT&T delivering download speeds up to three-times faster than on other U.S. carriers' networks.
At the end of the quarter, 56.8 percent of AT&T's 69.3 million postpaid subscribers had smartphones, up from 42.7 percent a year earlier and 32.8 percent two years ago. The average ARPU for smartphones on AT&T's network is 1.9 times that of the company's non-smartphone devices. About 87 percent of smartphone subscribers are on FamilyTalk(R) or business plans. Churn levels for these subscribers are significantly lower than for other postpaid subscribers.
Best-Ever Quarter for Branded Computing Device Sales.AT&T had its best sales quarter ever for branded computing subscribers, a new growth area for the company that includes tablets, aircards, mobile Wi-Fi hot spot devices, tethering plans and other data-only devices. AT&T added 571,000 of these devices to reach 5.1 million, an almost 70 percent increase in total subscribers from a year ago. Most of those new subscribers were tablets, with 311,000 added in the quarter, more than half of which were postpaid.
Double-Digit Growth for Wireless Revenues. Total wireless revenues, which include equipment sales, were up 10.0 percent year over year to $16.7 billion. Wireless service revenues increased 4.0 percent, to $14.3 billion, in the fourth quarter.
Wireless Data Revenues Increase 19.4 Percent. Wireless data revenues - driven by Internet access, access to applications, messaging and related services - increased by $956 million, or 19.4 percent, from the year-earlier quarter to $5.9 billion. AT&T's postpaid wireless subscribers on monthly data plans increased by 16.4 percent over the past year. The number of subscribers on tiered data plans also continues to increase. About 22 million, or 56 percent, of all smartphone subscribers are on tiered data plans, and about 70 percent have chosen the higher-tier plans.
Industry-Leading Postpaid ARPU Continues Growth. Driven by strong data growth, postpaid subscriber ARPU increased 1.4 percent versus the year-earlier quarter to $63.76. This marked the 12(th) consecutive quarter AT&T has posted a year-over-year increase in postpaid ARPU. AT&T continues to lead the industry with postpaid subscriber ARPU about $6 higher than the nearest competitor. Postpaid data ARPU reached $26.01, up 14.9 percent versus the year-earlier quarter.
Postpaid Churn Up Only Slightly. Despite record smartphone sales and the first holiday sales period since the loss of AT&T's iPhone exclusivity, postpaid churn was up only slightly at 1.21 percent, compared to 1.15 percent in both the year-ago fourth quarter and in the third quarter of 2011. Total churn was up slightly at 1.39 percent versus 1.32 percent in the fourth quarter of 2010 and 1.28 percent in the third quarter of 2011.
Wireless Margins Reflect Record Sales. Fourth-quarter wireless margins reflect record-setting smartphone sales and customer upgrade levels. This was offset in part by improved operating efficiencies and further revenue gains from the company's growing base of high-quality smartphone subscribers.
AT&T's fourth-quarter wireless operating income margin was 15.2 percent versus 22.9 percent in the year-earlier quarter, and AT&T's wireless EBITDA service margin was 28.7 percent, compared with 37.6 percent in the fourth quarter of 2010. (EBITDA service margin is earnings before interest, taxes, depreciation and amortization, divided by total service revenues.) Fourth-quarter wireless operating expenses totaled $14.2 billion, up 20.9 percent versus the year-earlier quarter, and wireless operating income was $2.5 billion, down 27.0 percent year over year.
WIRELINE OPERATIONAL HIGHLIGHTS
AT&T's fourth-quarter wireline results were highlighted by the second consecutive quarter of sequential wireline business revenue growth, a 44 percent increase in U-verse revenues and solid cost management:
Sequential Wireline Business Revenue Growth Continues.Total business revenues grew sequentially for the second consecutive quarter. Revenues were $9.3 billion, down 1.4 percent versus the year-earlier quarter but a slight increase over the third quarter of 2011. The year-over-year decline reflects economic conditions and weakness in voice and legacy data products somewhat offset by growth in IP data. Business service revenues, which exclude CPE, declined 1.2 percent year over year, compared to a year-over-year decline of 4.3 percent in the year-ago quarter and were essentially flat sequentially, despite fewer business days in the fourth quarter.
Robust Strategic Business Services Revenues.Revenues from the new-generation capabilities that lead AT&T's most advanced business solutions - including Ethernet, VPNs, hosting, IP conferencing and application services - grew 16.4 percent versus the year-earlier quarter, continuing strong trends in this area. This now represents a nearly $6 billion annualized revenue stream.
VPN Growth Drives Business IP Revenues. Total business IP data revenues grew 9.2 percent versus the year-earlier fourth quarter, led by growth in VPN revenues. IP-based solutions allow customers to easily add managed services such as network security, cloud services and IP conferencing on top of their infrastructures. Total business data revenues grew 1.3 percent year over year.
Wireline Consumer Revenues Continue Growth. Driven by strength in IP data services, revenues from residential customers totaled $5.3 billion, an increase of 0.5 percent versus the fourth quarter a year ago. The fourth quarter marked the sixth consecutive quarter of year-over-year growth.
208,000 U-verse Net Adds. AT&T U-verse TV added 208,000 subscribers to reach 3.8 million in service. As U-verse scales, its margins improve, contributing to profitability. In the fourth quarter, the AT&T U-verse High Speed Internet attach rate was 90 percent and about half of new subscribers took AT&T U-verse Voice. About 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 almost $170, up 2.5 percent year over year.
AT&T's U-verse deployment has reached its goal of passing 30 million living units. Companywide penetration of eligible living units continues to grow and was at 15.9 percent in the fourth quarter, and 25.0 percent across areas marketed to for 36 months or more. AT&T's total video subscribers, which combine the company's U-verse and bundled satellite customers, reached 5.6 million at the end of the quarter, representing 23.9 percent of households served.
U-verse Broadband Continues Strong Growth.AT&T U-verse High Speed Internet delivered a fourth-quarter net gain of 587,000 subscribers to reach a total of 5.2 million, helping offset losses from DSL. Overall, AT&T lost 49,000 wireline broadband connections. About 74 percent of consumers have a broadband plan delivering speeds of 3 Mbps or higher versus 65 percent in the year-ago quarter.
U-verse Drives Consumer Revenue Transformation.U-verse continues to drive a transformation in wireline consumer, reflected by the fact that consumer IP revenues now represent 53.2 percent of wireline consumer revenues, up from 45.0 percent in the year-earlier quarter. Increased AT&T U-verse penetration and a significant number of subscribers on triple- or quad-play options drove 18.7 percent year-over-year growth in IP revenues from residential customers (broadband, U-verse TV and U-verse Voice) and 4.3 percent sequential growth. U-verse revenues grew 43.7 percent compared with the year-ago fourth quarter and were up 8.6 percent versus the third quarter of 2011.
Growth in Revenues Per Household Continues. Wireline revenues per household served increased 7.0 percent versus the year-earlier fourth quarter and were up 2.3 percent sequentially (average revenues per household is total wireline consumer revenues divided by the average monthly households in service), driven by AT&T U-verse services. This marked AT&T's 16(th) consecutive quarter with year-over-year growth in wireline consumer revenues per household as U-verse scales and represents a larger portion of this category.
Consumer Connection Trends. In the fourth quarter, AT&T posted a decline in total consumer revenue connections primarily due to expected declines in traditional voice access lines, consistent with broader industry trends and somewhat offset by increases in U-verse TV and VoIP (Voice over Internet Protocol) connections. AT&T U-verse Voice connections increased by 136,000 in the quarter and 598,000 over the past four quarters. Total consumer revenue connections at the end of the fourth quarter were 41.3 million, compared with 43.4 million at the end of the fourth quarter of 2010 and 41.9 million at the end of the third quarter of 2011.
Wireline Revenues Down Slightly. Total fourth-quarter wireline revenues were $14.9 billion, down
1.4 percent versus the year-earlier quarter and down slightly sequentially. Fourth-quarter wireline operating expenses were $13.1 billion, down 0.2 percent versus the fourth quarter of 2010 and down 0.1 percent sequentially. Wireline operating income totaled $1.8 billion, down from $2.0 billion in the fourth quarter of 2010 and down versus the third quarter of 2011. AT&T's fourth-quarter wireline operating income margin was 11.9 percent, compared to 13.0 percent in the year-earlier quarter and down slightly from 12.1 percent in the third quarter of 2011. Improved consumer and business IP data revenue trends and execution of cost initiatives helped to partially offset declines in voice revenues.
Website Links: Related Media Kits: =============== ====================
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.
Financial Data
AT&T Inc.
------------------------- ----------- ----------- ----- ----------- ----------- -----
Consolidated Statements
of Income
Dollars in millions
except per share amounts
------------------------- ----------- ----------- ----- ----------- ----------- -----
Twelve Months
Unaudited Three Months Ended Ended
-------------------------------------- -------------------------------------
12/31/2011 12/31/2010 % Chg 12/31/2011 12/31/2010 % Chg
------------------------- ------------ ------------ --------- ------------ ------------ ---------
Operating Revenues
Wireless service $ 14,347 $ 13,799 4.0% $ 56,726 $ 53,510 6.0%
Data 7,598 7,091 7.1% 29,606 27,555 7.4%
Voice 5,995 6,647 -9.8% 25,131 28,332 -11.3%
Directory 781 926 -15.7% 3,293 3,935 -16.3%
Other 3,782 2,898 30.5% 11,967 10,948 9.3%
-------------------------- ------- ------- ----- ------- ------- -----
Total Operating
Revenues 32,503 31,361 3.6% 126,723 124,280 2.0%
-------------------------- ------- ------- ----- ------- ------- -----
Operating Expenses
Cost of services and
sales (exclusive of
depreciation and
amortization shown
separately below) 17,474 13,939 25.4% 57,374 52,379 9.5%
Selling, general and
administrative 16,536 10,342 59.9% 38,844 32,864 18.2%
Impairment of intangible
assets 2,910 85 - 2,910 85 -
Depreciation and
amortization 4,573 4,907 -6.8% 18,377 19,379 -5.2%
-------------------------- ------- ------- ----- ------- ------- -----
Total Operating
Expenses 41,493 29,273 41.7% 117,505 104,707 12.2%
-------------------------- ------- ------- ----- ------- ------- -----
Operating Income (Loss) (8,990) 2,088 - 9,218 19,573 -52.9%
-------------------------- ------- ------- ----- ------- ------- -----
Interest Expense 952 746 27.6% 3,535 2,994 18.1%
Equity in Net Income of
Affiliates 135 133 1.5% 784 762 2.9%
Other Income (Expense) -
Net 117 72 62.5% 249 897 -72.2%
-------------------------- ------- ------- ----- ------- ------- -----
Income (Loss) from
Continuing Operations
Before Income Taxes (9,690) 1,547 - 6,716 18,238 -63.2%
Income Tax (Benefit)
Expense (3,062) 388 - 2,532 (1,162) -
-------------------------- ------- ------- ----- ------- ------- -----
Income (Loss) from
Continuing Operations (6,628) 1,159 - 4,184 19,400 -78.4%
-------------------------- ------- ------- ----- ------- ------- -----
Income from Discontinued
Operations, net
of tax - 2 - - 779 -
-------------------------- ------- ------- ----- ------- ------- -----
Net Income (Loss) (6,628) 1,161 - 4,184 20,179 -79.3%
-------------------------- ------- ------- ----- ------- ------- -----
Less: Net Income
Attributable to
Noncontrolling
Interest (50) (72) 30.6% (240) (315) 23.8%
-------------------------- ------- ------- ----- ------- ------- -----
Net Income (Loss)
Attributable to AT&T $ (6,678) $ 1,089 - $ 3,944 $ 19,864 -80.1%
========================== ======= ======= ===== ======= ======= =====
Basic Earnings (Loss) Per
Share from Continuing
Operations Attributable
to AT&T $ (1.12) $ 0.18 - $ 0.66 $ 3.23 -79.6%
Basic Earnings Per Share
from Discontinued
Operations Attributable
to AT&T - - - - 0.13 -
------- ------- ------- -------
Basic Earnings (Loss) Per
Share Attributable
to AT&T $ (1.12) $ 0.18 - $ 0.66 $ 3.36 -80.4%
======= ======= ======= =======
Weighted Average Common
Shares Outstanding
(000,000) 5,933 5,915 0.3% 5,928 5,913 0.3%
Diluted Earnings (Loss)
Per Share from Continuing
Operations Attributable
to AT&T $ (1.12) $ 0.18 - $ 0.66 $ 3.22 -79.5%
Diluted Earnings Per Share
from Discontinued
Operations Attributable
to AT&T - - - - 0.13 -
------- ------- ------- -------
Diluted Earnings (Loss)
Per Share Attributable
to AT&T $ (1.12) $ 0.18 - $ 0.66 $ 3.35 -80.3%
======= ======= ======= =======
Weighted Average Common
Shares Outstanding with
Dilution (000,000) 5,955 5,941 0.2% 5,950 5,938 0.2%
Financial Data
AT&T Inc.
------------------------ ---------- ---------- ----- ---------- ---------- -----
Statements of Segment
Income
Dollars in millions
------------------------ ---------- ---------- ----- ---------- ---------- -----
Unaudited
Three Months Ended Twelve Months Ended
----------------------------------------- ---------------------------------------------
% %
Wireless 12/31/2011 12/31/2010 Chg 12/31/2011 12/31/2010 Chg
------------------------ -------------- -------------- --------- -------------- -------------- ---------
Segment Operating
Revenues
Service $ 14,347 $ 13,799 4.0% $ 56,726 $ 53,510 6.0%
Equipment 2,348 1,382 69.9% 6,486 4,990 30.0%
------------------------ ------ ------ ----- ------ ------ -----
Total Segment
Operating Revenues 16,695 15,181 10.0% 63,212 58,500 8.1%
------------------------ ------ ------ ----- ------ ------ -----
Segment Operating
Expenses
Operations and support 12,574 9,988 25.9% 41,581 36,746 13.2%
Depreciation and
amortization 1,587 1,721 -7.8% 6,324 6,497 -2.7%
------------------------ ------ ------ ----- ------ ------ -----
Total Segment
Operating Expenses 14,161 11,709 20.9% 47,905 43,243 10.8%
------------------------ ------ ------ ----- ------ ------ -----
Segment Operating Income 2,534 3,472 -27.0% 15,307 15,257 0.3%
Equity in Net Income
(Loss) of Affiliates (10) (5) - (29) 9 -
------------------------ ------ ------ ----- ------ ------ -----
Segment Income $ 2,524 $ 3,467 -27.2% $ 15,278 $ 15,266 0.1%
======================== ====== ====== ===== ====== ====== =====
Segment Operating Income
Margin 15.2 % 22.9% 24.2 % 26.1%
Wireline
------------------------ ------ ------ ----- ------ ------ -----
Segment Operating
Revenues
Data $ 7,598 $ 7,091 7.1% $ 29,606 $ 27,555 7.4%
Voice 5,995 6,647 -9.8% 25,131 28,332 -11.3%
Other 1,326 1,390 -4.6% 5,028 5,413 -7.1%
------------------------ ------ ------ ----- ------ ------ -----
Total Segment
Operating Revenues 14,919 15,128 -1.4% 59,765 61,300 -2.5%
------------------------ ------ ------ ----- ------ ------ -----
Segment Operating
Expenses
Operations and support 10,250 10,075 1.7% 40,879 41,096 -0.5%
Depreciation and
amortization 2,889 3,091 -6.5% 11,615 12,371 -6.1%
------------------------ ------ ------ ----- ------ ------ -----
Total Segment
Operating Expenses 13,139 13,166 -0.2% 52,494 53,467 -1.8%
------------------------ ------ ------ ----- ------ ------ -----
Segment Operating Income 1,780 1,962 -9.3% 7,271 7,833 -7.2%
Equity in Net Income of
Affiliates - 4 - - 11 -
------------------------ ------ ------ ----- ------ ------ -----
Segment Income $ 1,780 $ 1,966 -9.5% $ 7,271 $ 7,844 -7.3%
======================== ====== ====== ===== ====== ====== =====
Segment Operating Income
Margin 11.9 % 13.0% 12.2 % 12.8%
Advertising Solutions
------------------------ ------ ------ ----- ------ ------ -----
Segment Operating
Revenues $ 781 $ 926 -15.7% $ 3,293 $ 3,935 -16.3%
Segment Operating
Expenses
Operations and support 558 626 -10.9% 2,264 2,583 -12.3%
Impairment of
Intangible Assets 2,910 - - 2,910 - -
Depreciation and
amortization 85 104 -18.3% 386 497 -22.3%
------------------------ ------ ------ ----- ------ ------ -----
Total Segment
Operating Expenses 3,553 730 - 5,560 3,080 80.5%
------------------------ ------ ------ ----- ------ ------ -----
Segment Income (Loss) $ (2,772) $ 196 - $ (2,267) $ 855 -
======================== ====== ====== ===== ====== ====== =====
Segment Income Margin - 21.2% (68.8) % 21.7%
Other
------------------------ ------ ------ ----- ------ ------ -----
Segment Operating
Revenues $ 108 $ 126 -14.3% $ 453 $ 545 -16.9%
Segment Operating
Expenses 4,360 1,147 - 5,266 2,396 -
------------------------ ------ ------ ----- ------ ------ -----
Segment Operating Loss (4,252) (1,021) - (4,813) (1,851) -
Equity in Net Income of
Affiliates 145 134 8.2% 813 742 9.6%
------------------------ ------ ------ ----- ------ ------ -----
Segment Loss from
Continuing Operations $ (4,107) $ (887) - $ (4,000) $ (1,109) -
======================== ====== ====== ===== ====== ====== =====
Financial Data
AT&T Inc.
---------------------------------------------------------- ------------ --------
Consolidated Balance Sheets
Dollars in millions except per share amounts
---------------------------------------------------------- ------------ --------
12/31/11 12/31/10
Unaudited
---------------------------------------------------------- ------------ --------
Assets
Current Assets
Cash and cash equivalents $ 3,185 $ 1,437
Accounts receivable - net of allowances for
doubtful accounts of $878 and $957 13,606 13,610
Prepaid expenses 1,155 1,458
Deferred income taxes 1,470 1,170
Other current assets 3,611 3,179
---------------------------------------------------------- --- ------- -------
Total current assets 23,027 20,854
---------------------------------------------------------- --- ------- -------
Property, Plant and Equipment - Net 107,087 103,196
Goodwill 70,842 73,601
Licenses 51,374 50,372
Customer Lists and Relationships - Net 2,757 4,708
Other Intangible Assets - Net 5,212 5,440
Investments in Equity Affiliates 3,718 4,515
Other Assets 6,327 6,705
---------------------------------------------------------- --- ------- -------
Total Assets $ 270,344 $269,391
========================================================== === ======= =======
Liabilities and Stockholders' Equity
Current Liabilities
Debt maturing within one year $ 3,453 $ 7,196
Accounts payable and accrued liabilities 19,858 20,055
Advanced billing and customer deposits 3,872 4,086
Accrued taxes 1,003 975
Dividends payable 2,608 2,542
---------------------------------------------------------- --- ------- -------
Total current liabilities 30,794 34,854
---------------------------------------------------------- --- ------- -------
Long-Term Debt 61,300 58,971
---------------------------------------------------------- --- ------- -------
Deferred Credits and Other Noncurrent Liabilities
Deferred income taxes 25,748 22,070
Postemployment benefit obligation 34,011 28,803
Other noncurrent liabilities 12,694 12,743
---------------------------------------------------------- --- ------- -------
Total deferred credits and other noncurrent liabilities 72,453 63,616
---------------------------------------------------------- --- ------- -------
Stockholders' Equity
Common stock 6,495 6,495
Additional paid-in capital 91,156 91,731
Retained earnings 25,453 31,792
Treasury stock (20,750) (21,083)
Accumulated other comprehensive income 3,180 2,712
Noncontrolling interest 263 303
---------------------------------------------------------- --- ------- -------
Total stockholders' equity 105,797 111,950
---------------------------------------------------------- --- ------- -------
Total Liabilities and Stockholders' Equity $ 270,344 $269,391
========================================================== === ======= =======
Financial Data
AT&T Inc.
----------------------------------------------------------------- -------- -------- --------
Consolidated Statements of Cash Flows
Dollars in millions
----------------------------------------------------------------- -------- -------- --------
Twelve Months
Unaudited Ended
12/31/11 12/31/10 12/31/09
----------------------------------------------------------------- --------- --------- -----------
Operating Activities
Net income $ 4,184 $ 20,179 $ 12,447
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 18,377 19,379 19,515
Undistributed earnings from investments in equity affiliates (623) (603) (419)
Provision for uncollectible accounts 1,136 1,334 1,762
Deferred income tax expense (benefit) and noncurrent
unrecognized tax benefits 2,937 (3,280) 1,885
Net gain from impairment and sale of investments (89) (802) -
Impairment of intangible assets 2,910 85 -
Remeasurement of pension and postretirement benefits 6,280 2,521 215
Income from discontinued operations - (779) (20)
Changes in operating assets and liabilities:
Accounts receivable (1,133) (99) (490)
Other current assets (428) (187) (617)
Accounts payable and accrued liabilities (383) (1,508) 943
Retirement benefit funding (1,000) - -
Other - net 2,480 (1,247) (816)
----------------------------------------------------------------- ------- ------- -------
Total adjustments 30,464 14,814 21,958
----------------------------------------------------------------- ------- ------- -------
Net Cash Provided by Operating Activities 34,648 34,993 34,405
----------------------------------------------------------------- ------- ------- -------
Investing Activities
Construction and capital expenditures:
Capital expenditures (20,110) (19,530) (16,554)
Interest during construction (162) (772) (740)
Acquisitions, net of cash acquired (2,368) (2,906) (983)
Dispositions 1,301 1,830 287
(Purchases) and sales of securities, net 62 (100) 55
Other 27 29 52
----------------------------------------------------------------- ------- ------- -------
Net Cash Used in Investing Activities (21,250) (21,449) (17,883)
----------------------------------------------------------------- ------- ------- -------
Financing Activities
Net change in short-term borrowings with
original maturities of three months or less (1,625) 1,592 (3,910)
Issuance of long-term debt 7,936 2,235 8,161
Repayment of long-term debt (7,574) (9,294) (8,652)
Issuance of treasury shares 237 50 28
Dividends paid (10,172) (9,916) (9,670)
Other (452) (515) (465)
----------------------------------------------------------------- ------- ------- -------
Net Cash Used in Financing Activities (11,650) (15,848) (14,508)
----------------------------------------------------------------- ------- ------- -------
Net increase (decrease) in cash and cash equivalents 1,748 (2,304) 2,014
Cash and cash equivalents beginning of year 1,437 3,741 1,727
----------------------------------------------------------------- ------- ------- -------
Cash and Cash Equivalents End of Year $ 3,185 $ 1,437 $ 3,741
================================================================= ======= ======= =======
Financial Data
AT&T Inc.
------------------------- ------------ ------------ ----- ------------ ------------ -----
Supplementary Operating
and Financial
Data
Dollars in millions
except per share
amounts
------------------------- ------------ ------------ ----- ------------ ------------ -----
Unaudited Three Months Ended Twelve Months Ended
--------------------------------------------- ---------------------------------------------
12/31/2011 12/31/2010 % Chg 12/31/2011 12/31/2010 % Chg
--------- ------------- ------------ ------------ ----- ------------ ------------ -----
Wireless
Volumes (000)
Total 103,247 95,536 8.1%
-------------- ------------ ------------ -------- --------
Postpaid6 69,309 68,041 1.9%
Prepaid6 7,225 6,524 10.7%
Reseller6 13,644 11,645 17.2%
Connected Devices6 13,069 9,326 40.1%
Wireless Net Adds (000)
Total 2,497 2,803 -10.9% 7,699 8,853 -13.0%
-------------- -------- -------- -------- --------
Postpaid6 717 400 79.3% 1,429 2,153 -33.6%
Prepaid6 159 307 -48.2% 674 952 -29.2%
Reseller6 592 595 -0.5% 1,874 1,140 64.4%
Connected Devices6 1,029 1,501 -31.4% 3,722 4,608 -19.2%
M&A Activity,
Partitioned
Customers
and Other
Adjs. 12 (28) - 12 1,563 -99.2%
Wireless Churn
Postpaid
Churn6 1.21% 1.15% 6 BP 1.18% 1.09% 9 BP
Total Churn6 1.39% 1.32% 7 BP 1.37% 1.31% 6 BP
Other
Licensed POPs
(000,000) 313 308 1.6%
In-Region Wireline1
Voice
Total Wireline
Voice
Connections 39,012 43,563 -10.4%
-------------- -------- -------- -------- --------
Net Change (1,086) (1,233) 11.9% (4,551) (4,925) 7.6%
Broadband
Total Wireline
Broadband
Connections 16,427 16,309 0.7%
-------------- -------- -------- -------- --------
Net Change (49) 209 - 118 520 -77.3%
Video
U-verse 3,791 2,987 26.9%
Satellite 1,765 1,930 -8.5%
----------------------- -------- -------- -------- --------
Total Video
Connections 5,556 4,917 13.0%
============== ======== ======== ======== ========
Net Change 164 182 -9.9% 639 678 -5.8%
Consumer Revenue
Connections
Broadband3 14,492 14,320 1.2%
Video
Connections4 5,542 4,912 12.8%
Voice2 21,232 24,195 -12.2%
-------------- -------- -------- -------- --------
Total Consumer Revenue
Connections 41,266 43,427 -5.0%
Net Change (586) (306) -91.5% (2,161) (1,861) -16.1%
AT&T Inc.
Construction
and capital
expenditures
Capital expenditures $ 5,485 $ 6,360 -13.8% $ 20,110 $ 19,530 3.0%
Interest during
construction $ 43 $ 195 -77.9% $ 162 $ 772 -79.0%
Dividends
Declared per
Share $ 0.44 $ 0.43 2.3% $ 1.73 $ 1.69 2.4%
End of Period
Common Shares
Outstanding
(000,000) 5,927 5,911 0.3%
90
Debt Ratio5 38.0% 37.1% BP
Total
Employees 256,420 266,590 -3.8%
In-region wireline represents access lines served
1 by AT&T's incumbent local exchange companies.
Includes
consumer
U-verse Voice
over
Internet
Protocol
connections
of 2,278
as of
December 31,
2 2011.
Consumer wireline broadband
connections
include DSL lines, U-verse
High Speed Internet
access and satellite
3 broadband.
Video connections include
sales under agency
agreements with EchoStar
and DirecTV customers
4 and U-verse connections.
Total long-term debt plus
debt maturing
within one year divided by
total debt plus
5 total stockholders' equity.
Prior year
amounts
restated to
conform
to current
period
reporting
6 methodology.
Note: For the end of 4Q11, total switched access
lines were 36,734, retail business switched access
lines totaled 15,613, and wholesale
and coin switched
access lines totaled
2,167.
Financial Data
AT&T Inc.
Non-GAAP
Wireless
Reconciliation
--------------- ---------- ------- ------- ------- ---------- ---------- ---------- ----------
Wireless
Segment EBITDA
Dollars in
millions
Unaudited
Three Months Ended Twelve Months Ended
12/31/10 3/31/11 6/30/11 9/30/11 12/31/11 12/31/09 12/31/10 12/31/11
---------- ------- ------- ------- ---------- ---------- ---------- ----------
Segment
Operating
Revenues
Service $ 13,799 $13,961 $14,157 $14,261 $ 14,347 $ 48,563 $ 53,510 $ 56,726
Equipment 1,382 1,348 1,445 1,345 2,348 4,941 4,990 6,486
--------------- ------ ------ ------ ------ ------ ------ ------ ------
Total
Segment
Operating
Revenues 15,181 15,309 15,602 15,606 16,695 53,504 58,500 63,212
--------------- ------ ------ ------ ------ ------ ------ ------ ------
Segment
Operating
Expenses
Operations and
support 9,988 9,858 9,782 9,367 12,574 33,631 36,746 41,581
Depreciation
and
amortization 1,721 1,505 1,613 1,619 1,587 6,043 6,497 6,324
--------------- ------ ------ ------ ------ ------ ------ ------ ------
Total
Segment
Operating
Expenses 11,709 11,363 11,395 10,986 14,161 39,674 43,243 47,905
--------------- ------ ------ ------ ------ ------ ------ ------ ------
Segment
Operating
Income 3,472 3,946 4,207 4,620 2,534 13,830 15,257 15,307
--------------- ------ ------ ------ ------ ------ ------ ------ ------
Segment
Operating
Income
Margin 22.9% 25.8% 27.0% 29.6% 15.2% 25.8% 26.1% 24.2%
Plus:
Depreciation
and
amortization 1,721 1,505 1,613 1,619 1,587 6,043 6,497 6,324
--------------- ------ ------ ------ ------ ------ ------ ------ ------
EBITDA 5,193 5,451 5,820 6,239 4,121 19,873 21,754 21,631
=============== ====== ====== ====== ====== ====== ====== ====== ======
EBITDA as a %
of Service
Revenue 37.6% 39.0% 41.1% 43.7% 28.7% 40.9% 40.7% 38.1%
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 Twelve Months Ended
12/31/10 12/31/11 12/31/10 12/31/11
--------------------------------------------- ----------- ---------- ----------- --------
Net cash provided by operating activities $ 9,643 $ 7,498 $ 34,993 $ 34,648
Less: Construction and capital expenditures (6,555) (5,528) (20,302) (20,272)
Free Cash Flow $ 3,088 $ 1,970 $ 14,691 $ 14,376
--------------------------------------------- --- ------ ------ ------- -------
Free cash flow is defined as cash from operations minus construction
and 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 Twelve Months Ended
12/31/10 12/31/11 12/31/10 12/31/11
--------------------------------------------- ----------- ---------- ----------- --------
Net cash provided by operating activities $ 9,643 $ 7,498 $ 34,993 $ 34,648
Less: Construction and capital expenditures (6,555) (5,528) (20,302) (20,272)
Free Cash Flow 3,088 1,970 14,691 14,376
--------------------------------------------- --- ------ ------ ------- -------
Less: Dividends paid (2,480) (2,545) (9,916) (10,172)
Free Cash Flow After Dividends $ 608 $ (575) $ 4,775 $ 4,204
--------------------------------------------- --- ------ ------ ------- -------
Financial Data
AT&T Inc.
Non-GAAP Financial Reconciliation
----------------------------------------- ------- ------- ------- ---------- --------
Net Debt-to-Adjusted EBITDA Ratio
Dollars in millions
Unaudited
Three Months Ended
3/31/11 6/30/11 9/30/11 12/31/11 2011
----------------------------------------- ------- ------- ------- ---------- --------
Operating Revenues $31,247 $31,495 $31,478 $ 32,503 $126,723
Operating Expenses 25,439 25,330 25,243 41,493 117,505
Total Operating Income 5,808 6,165 6,235 (8,990) 9,218
Add Back Depreciation and Amortization 4,584 4,602 4,618 4,573 18,377
Consolidated Reported EBITDA 10,392 10,767 10,853 (4,417) 27,595
Add Back:
Actuarial Loss on Benefit Plan 6,280 6,280
Termination of T-Mobile Acquistion 4,181 4,181
Directory Asset Impairments 2,910 2,910
Consolidated Adjusted EBITDA* 10,392 10,767 10,853 8,954 40,966
End-of-period current debt 3,453
End-of-period long-term debt 61,300
Total End-of-Period Debt 64,753
(Premiums) Discounts on long-term debt (45)
Normalized Debt Balance 64,708
Less Cash and Cash Equivalents 3,185
Normalized Net Debt Balance 61,523
----------------------------------------- ------ ------ ------ ------ -------
Net Debt-to-Adjusted EBITDA Ratio 1.50
----------------------------------------- ------ ------ ------ ------ -------
*Adjusted EBITDA excludes the impact of the benefit plan actuarial loss,
charges related to the termination of the T-Mobile acquisition and asset
impairments related to the the Directory business in order to better
represent AT&T's operational performance.
Financial Data
AT&T Inc.
Non-GAAP Financial Reconciliation
----------------------------------------- ---------- ---------- -------- --------
Adjusted Operating Income Margin
Dollars in millions
Unaudited
Three Months Twelve Months
Ended Ended
12/31/10 12/31/11 12/31/10 12/31/11
----------------------------------------- ---------- ---------- -------- --------
Operating Revenues $ 31,361 $ 32,503 $124,280 $126,723
Operating Expenses 29,273 41,493 104,707 117,505
Total Operating Income 2,088 (8,990) 19,573 9,218
Add Back:
Actuarial Loss on Benefit Plan 2,521 6,280 2,521 6,280
Termination of T-Mobile Acquisition 4,181 - 4,181
Asset Impairments 173 2,910 173 2,910
Severance Costs 769 769 -
Adjusted Operating Income 5,551 4,381 23,036 22,589
----------------------------------------- ------ ------ ------- -------
Adjusted Operating Income Margin 17.7% 13.5% 18.5% 17.8%
----------------------------------------- ------ ------ ------- -------
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.
Financial Data
AT&T Inc.
Non-GAAP Financial Reconciliation
------------------------------------------------ ---------- ---------- ---------- ----------
Adjusted Diluted EPS
Unaudited
Twelve
Three Months Months
Ended Ended
12/31/10 12/31/11 12/31/10 12/31/11
------------------------------------------------ ---------- ---------- ---------- ----------
Reported Diluted EPS $ 0.18 $ (1.12) $ 3.35 $ 0.66
Significant Items:
Actuarial Loss on Benefit Plan (0.26) (0.65) (0.26) (0.65)
Termination of T-Mobile Acquisition - (0.44) - (0.44)
Asset Impairments* (0.02) (0.48) (0.02) (0.48)
Tax Settlement - 0.03 1.40 0.03
Severance (0.09) - (0.09) -
Gain from Sterling Sale - - 0.13 -
Gain on Telmex Internacional Transaction - - 0.07 -
Tax Impact of Medicare Subsidy - - (0.17) -
------------------------------------------------ ------ ------ ------ ------
Adjusted Diluted EPS $ 0.55 $ 0.42 2.29 $ 2.20
------------------------------------------------ ------ ------ ------ ------
*Impairments in 2011 were all from intangible assets. Impairments in
2010 comprised several asset classes.
Adjusted diluted EPS is a non-GAAP financial measure calculated by excluding
from operating revenues and operating expenses significant items that
are non-operational or non-recurring in nature. Management believes that
this measure provides 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 diluted EPS 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 diluted EPS, as presented,
may differ from similarly titled measures reported by other companies.
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, net income attributable to noncontrolling interest 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 service revenues 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 construction and capital expenditures. Free cash flow after dividends is defined as cash from operations minus construction, capital expenditures and dividends. Free cash flow yield is defined as cash from continuing operations less construction and 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.
ADJUSTING ITEMS DISCUSSION
Adjusted Operating Income, Adjusted Operating Income Margin and Adjusted diluted EPS 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, Adjusted Operating Income Margin and Adjusted diluted EPS should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance with GAAP. Our calculations of Adjusted Operating Income and Adjusted diluted EPS, as presented, may differ from similarly titled measures reported by other companies.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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